Exhibit 99.1
News Release | Williams Partners L.P. (NYSE: WPZ) One Williams Center Tulsa, OK 74172 800-600-3782 www.williamslp.com |
DATE:Feb. 20, 2013
MEDIA CONTACT: | INVESTOR CONTACTS: | |||
Jeff Pounds (918) 573-3332 | John Porter (918) 573-0797 | Sharna Reingold (918) 573-2078 |
Williams Partners Reports Year-End 2012 Financial Results
• | 2012 Net Income is $1.23 Billion, $1.89 per Common Unit |
• | Significantly Lower NGL Margins – Down 46% in 4Q – Drive Lower 2012 Net Income, DCF |
• | Midstream Fee-based Business Continues Strong Growth; Up 18% in 4Q vs. Prior Year, Up 17% for Full Year |
• | Reaffirming Strong Annual Cash Distribution Growth Guidance of 9% for 2013, 2014 |
• | Lowering 2013-14 Earnings Guidance; Expect Fee-Based Business Growth, Ethane-Consuming Gulf Olefins Business Will Partially Offset Effect of Sharply Lower Ethane, Propane Prices |
• | Robust Demand for Infrastructure, Related Projects, Investments Drive Strong Growth |
Summary Financial Information | Full Year | 4Q | ||||||||||||||
Amounts in millions, except per-unit and coverage ratio amounts. | 2012 | 2011 | 2012 | 2011 | ||||||||||||
(Unaudited) | ||||||||||||||||
Net income | $ | 1,232 | $ | 1,511 | $ | 291 | $ | 412 | ||||||||
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Net income per common L.P. unit | $ | 1.89 | $ | 3.69 | $ | 0.42 | $ | 1.05 | ||||||||
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Distributable cash flow (DCF) (1) | $ | 1,681 | $ | 1,786 | $ | 425 | $ | 466 | ||||||||
Less: Pre-partnership DCF (2) | (192 | ) | (136 | ) | (20 | ) | (22 | ) | ||||||||
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DCF attributable to partnership operations | $ | 1,489 | $ | 1,650 | $ | 405 | $ | 444 | ||||||||
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Cash distribution coverage ratio (1) | 0.95x | 1.41x | 0.92x | 1.43x |
(1) | Distributable Cash Flow and Cash Distribution Coverage Ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release. |
(2) | This amount represents DCF from the Gulf Olefins assets from January 2011 through its acquisition date in November 2012, since these periods were prior to the receipt of cash flows from the assets. |
TULSA, Okla. –Williams Partners L.P. (NYSE: WPZ) today announced unaudited 2012 net income of $1.23 billion, or
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 1 of 10 |
$1.89 per common limited-partner unit, compared with 2011 net income of $1.51 billion, or $3.69 per common limited-partner unit.
For fourth-quarter 2012, Williams Partners reported net income of $291 million, or $0.42 per common limited-partner unit, compared with $412 million, or $1.05 per common limited-partner unit, for fourth-quarter 2011.
The decline in net income during the 2012 periods is due to a significant decline in natural gas liquid (NGL) margins, primarily driven by a sharp mid-year decline in NGL prices during 2012, which led to lower results in the partnership’s midstream business. Higher expenses associated with developing businesses acquired during 2012, also contributed to the lower results for the year.
An increase in fee-based revenue partially offset the negative impacts of lower NGL prices and other factors. Fee-based revenue in Williams Partners’ midstream business increased by more than 18 percent in fourth-quarter 2012 compared with fourth-quarter 2011. For the full year, fee-based revenue in the partnership’s midstream business was up 17 percent over 2011.
There is a more detailed analysis of the partnership’s businesses later in this news release. Prior-period results throughout this release have been recast to include the results of the olefins production facility acquired from Williams in November 2012.
Distributable Cash Flow
For 2012, Williams Partners generated $1.49 billion in distributable cash flow attributable to partnership operations, compared with $1.65 billion in DCF attributable to partnership operations in 2011.
For the fourth quarter of 2012, Williams Partners generated $405 million in DCF attributable to partnership operations, compared with $444 million for the fourth quarter of 2011.
The previously noted significant decline in NGL margins was the key driver of the decline in distributable cash flow. Higher fee-based revenue in the midstream business partially offset the lower NGL margins. Although fourth-quarter 2012 distributable cash flow declined compared with fourth-quarter 2011, it increased 28 percent sequentially compared with the third-quarter 2012 amount of $316 million.
Williams Partners recently announced that it increased its quarterly cash distribution to unitholders to $0.8275 per unit, an 8.5 percent increase over the year-ago amount. As planned, the partnership’s previously strong cash distribution
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 2 of 10 |
coverage enabled it to continue its cash distribution growth during a period of significantly unfavorable commodity prices. Also, the partnership has issued a significant amount of additional partnership units this year to finance numerous projects that are in the early stages of development.
CEO Perspective
Alan Armstrong, chief executive officer of Williams Partners’ general partner, made the following comments:
“Our 2012 results were impacted by the significant decline in NGL margins during the year, but our fee-based business growth, including 18 percent growth in Midstream during the fourth quarter, helped mitigate our commodity exposure.
“We continue to rapidly grow our fee-based business. We are directing the vast majority of the $12 billion of our 2012-2014 growth capital to projects that serve to reduce the effect of NGL prices on our earnings. As well, our newly acquired and significantly expanding olefins business also has the effect of reducing our exposure to ethane prices.
“We expect to return our cash-distribution coverage to normal levels in 2014 as we bring into service this vast array of fee-based projects and benefit from the significant expansion of our olefins business.
“The need for reliable energy infrastructure is growing rapidly, as demand continues to grow for low-cost natural gas to serve winter heating loads and cleaner burning power generation, as well as the booming petrochemical and manufacturing sectors. We’re well positioned to help meet these demands; our focus now is executing on the wide variety of growth opportunities across our businesses,” Armstrong said.
2013-14 Guidance
Williams Partners is lowering its 2013-14 guidance for adjusted segment profit and distributable cash flow primarily to reflect sharply lower commodity margin assumptions.
Capital expenditures for 2013-14 are increasing, primarily due to increases of approximately $220 million in 2013 and $210 million in 2014 associated with a change in the forecasting presentation for Williams Partners’ Gulfstar FPS and Constitution Pipeline projects. Previous capital expenditure guidance only reflected Williams Partners’ 51-percent interest in Gulfstar and its 51-percent interest in Constitution. While Williams Partners’ interests in each project are unchanged, the new guidance reflects Gulfstar and Constitution on a fully consolidated basis with our partners non-controlling interests reflected separately. The capital increases associated with this presentation change will be fully offset by capital contributions from the partners on each project.
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 3 of 10 |
Earlier this month, Williams Partners announced that Marubeni Corporation agreed to acquire a 49-percent interest in the Gulfstar project. Cabot Oil & Gas (NYSE:COG) and Piedmont Natural Gas (NYSE: PNY) own 25-percent and 24-percent interests in Constitution, respectively.
The partnership’s current commodity price assumptions and the corresponding guidance for its earnings, distributable cash flow and capital expenditures are displayed in the following table:
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 4 of 10 |
Commodity Price Assumptions and Average NGL Margins | 2013 | 2014 | ||||||||||||||||||||||
As of Feb. 20, 2013 | ||||||||||||||||||||||||
Low | Mid | High | Low | Mid | High | |||||||||||||||||||
Commodity Price Assumptions | ||||||||||||||||||||||||
Ethane ($ per gallon) | $ | 0.23 | $ | 0.33 | $ | 0.43 | $ | 0.30 | $ | 0.40 | $ | 0.50 | ||||||||||||
Propane ($ per gallon) | $ | 0.81 | $ | 0.96 | $ | 1.11 | $ | 1.05 | $ | 1.20 | $ | 1.35 | ||||||||||||
Natural Gas - NYMEX ($/MMBtu) | $ | 3.00 | $ | 3.50 | $ | 4.00 | $ | 3.50 | $ | 4.00 | $ | 4.50 | ||||||||||||
Ethylene Spot ($ per pound) | $ | 0.46 | $ | 0.56 | $ | 0.66 | $ | 0.46 | $ | 0.56 | $ | 0.66 | ||||||||||||
Propylene Spot ($ per pound) | $ | 0.50 | $ | 0.60 | $ | 0.70 | $ | 0.46 | $ | 0.56 | $ | 0.66 | ||||||||||||
Crude Oil - WTI ($ per barrel) | $ | 75 | $ | 90 | $ | 105 | $ | 75 | $ | 90 | $ | 105 | ||||||||||||
NGL to Crude Oil Relationship (1) | 40 | % | 40 | % | 39 | % | 45 | % | 44 | % | 43 | % | ||||||||||||
Crack Spread ($ per pound) (2) | $ | 0.36 | $ | 0.42 | $ | 0.48 | $ | 0.33 | $ | 0.39 | $ | 0.45 | ||||||||||||
Composite Frac Spread ($ per gallon) (3) | $ | 0.47 | $ | 0.56 | $ | 0.65 | $ | 0.52 | $ | 0.61 | $ | 0.71 | ||||||||||||
Williams Partners Guidance | ||||||||||||||||||||||||
Amounts are in millions except coverage ratio. | ||||||||||||||||||||||||
Low | Mid | High | Low | Mid | High | |||||||||||||||||||
DCF attributable to partnership ops. (4) | $ | 1,625 | $ | 1,800 | $ | 1,975 | $ | 2,270 | $ | 2,475 | $ | 2,680 | ||||||||||||
Total Cash Distribution (5) | $ | 1,992 | $ | 2,033 | $ | 2,073 | $ | 2,377 | $ | 2,445 | $ | 2,512 | ||||||||||||
Cash Distribution Coverage Ratio (4) | 0.82x | 0.89x | 0.95x | 0.95x | 1.01x | 1.07x | ||||||||||||||||||
Adjusted Segment Profit (4): | ||||||||||||||||||||||||
Gas Pipeline | $ | 725 | $ | 750 | $ | 775 | $ | 775 | $ | 800 | $ | 825 | ||||||||||||
Midstream | 900 | 1,088 | 1,275 | 1,525 | 1,775 | 2,025 | ||||||||||||||||||
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Total Adjusted Segment Profit | $ | 1,625 | $ | 1,838 | $ | 2,050 | $ | 2,300 | $ | 2,575 | $ | 2,850 | ||||||||||||
Adjusted Segment Profit + DD&A: | ||||||||||||||||||||||||
Gas Pipeline | $ | 1,095 | $ | 1,130 | $ | 1,165 | $ | 1,165 | $ | 1,200 | $ | 1,235 | ||||||||||||
Midstream | 1,315 | 1,513 | 1,710 | 2,045 | 2,305 | 2,565 | ||||||||||||||||||
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Total Adjusted Segment Profit + DD&A | $ | 2,410 | $ | 2,643 | $ | 2,875 | $ | 3,210 | $ | 3,505 | $ | 3,800 | ||||||||||||
Capital Expenditures: | ||||||||||||||||||||||||
Maintenance | $ | 315 | $ | 350 | $ | 385 | $ | 350 | $ | 385 | $ | 420 | ||||||||||||
Growth | 3,235 | 3,400 | 3,565 | 1,600 | 1,765 | 1,930 | ||||||||||||||||||
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Total Capital Expenditures | $ | 3,550 | $ | 3,750 | $ | 3,950 | $ | 1,950 | $ | 2,150 | $ | 2,350 |
(1) | Calculated as the price of natural gas liquids as a percentage of the price of crude oil on an equal volume basis. |
(2) | Crack spread is based on Delivered U.S. Gulf Coast Ethylene and Mont Belvieu Ethane. |
(3) | Composite frac spread is based on Henry Hub natural gas and Mont Belvieu NGLs. |
(4) | Distributable Cash Flow, Cash Distribution Coverage Ratio and Adjusted Segment Profit are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release. |
(5) | The cash distributions in guidance are on an accrual basis and reflect an approximate 7% (low), 9% (midpoint), and 11% (high) increase in quarterly limited partner cash distributions annually through 2014. |
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 5 of 10 |
Business Segment Performance
For its year-end 2012 results, Williams Partners’ operations are reported through two business segments,Gas Pipeline andMidstream Gas & Liquids.
Consolidated Segment Profit | Full Year | 4Q | ||||||||||||||
Amounts in millions | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Gas Pipeline | $ | 677 | $ | 673 | $ | 195 | $ | 176 | ||||||||
Midstream Gas & Liquids | 1,135 | 1,362 | 246 | 364 | ||||||||||||
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Total Segment Profit | $ | 1,812 | $ | 2,035 | $ | 441 | $ | 540 | ||||||||
Adjustments | 37 | 11 | 8 | 2 | ||||||||||||
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Adjusted Segment Profit* | $ | 1,849 | $ | 2,046 | $ | 449 | $ | 542 | ||||||||
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* | A schedule reconciling segment profit to adjusted segment profit is attached to this press release. |
Key Operational Metrics | 2011 | 2012 | ||||||||||||||||||||||||||||||||||||||
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 4Q Change | ||||||||||||||||||||||||||||||||
Fee-based Revenues (millions) | Year-over-year | Sequential | ||||||||||||||||||||||||||||||||||||||
Gas Pipeline | $ | 361 | $ | 359 | $ | 368 | $ | 384 | $ | 384 | $ | 366 | $ | 372 | $ | 392 | 2.1 | % | 5.4 | % | ||||||||||||||||||||
Midstream Gas & Liquids | 223 | 235 | 257 | 255 | 267 | 281 | 287 | 302 | 18.4 | % | 5.2 | % | ||||||||||||||||||||||||||||
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Total | $ | 584 | $ | 594 | $ | 625 | $ | 639 | $ | 651 | $ | 647 | $ | 659 | $ | 694 | 8.6 | % | 5.3 | % | ||||||||||||||||||||
NGL Margins | ||||||||||||||||||||||||||||||||||||||||
NGL margins (millions) | $ | 207 | $ | 253 | $ | 234 | $ | 287 | $ | 242 | $ | 189 | $ | 167 | $ | 154 | -46.3 | % | -7.8 | % | ||||||||||||||||||||
NGL equity volumes (gallons in millions) | 289 | 308 | 274 | 317 | 308 | 295 | 301 | 279 | -12.0 | % | -7.3 | % | ||||||||||||||||||||||||||||
Per-unit NGL margins ($/gallon) | $ | 0.71 | $ | 0.83 | $ | 0.85 | $ | 0.91 | $ | 0.79 | $ | 0.64 | $ | 0.55 | $ | 0.55 | -39.6 | % | 0.0 | % |
Gas Pipeline
Williams Partners owns two major interstate natural gas pipeline systems – Transco and Northwest Pipeline – and owns 50 percent of Gulfstream. These systems have a combined peak day delivery capacity of more than 14 billion cubic feet per day (Bcf/d), and transport approximately 14 percent of the natural gas consumed in the United States.
Gas Pipeline reported segment profit of $677 million for 2012, compared with $673 million for 2011. The increase in segment profit for the year was due to increased revenue from expansion projects placed into service, as well as higher equity earnings from Gulfstream due primarily to the partnership’s increased ownership percentage and a decrease in expenses related to the Eminence storage leak. These factors were mostly offset by higher costs and operating expenses.
For fourth-quarter 2012, Gas Pipeline reported segment profit of $195 million, compared with $176 million for the same time period in 2011. The reversal of project feasibility costs of three expansion projects from expense to capital, as well
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 6 of 10 |
as higher revenue from expansion projects, drove the fourth-quarter 2012 increase in segment profit. Higher costs and expenses partially offset these benefits in the fourth quarter.
Midstream Gas & Liquids
Midstream provides natural gas gathering, treating, and processing; deepwater production handling and oil transportation; and NGL fractionation, storage and transportation services; and olefin production.
The business reported segment profit of $1.14 billion for 2012, compared with segment profit of $1.36 billion for 2011. For fourth-quarter 2012, Midstream reported segment profit of $246 million, compared with $364 million for fourth-quarter 2011.
Significantly lower NGL prices, partially offset by lower natural gas prices, was the primary driver of the lower segment profit in the full-year and fourth-quarter 2012 results. Higher operating costs and selling, general and administrative (SG&A) expenses, both partially attributable to developing businesses acquired during the year, also contributed to the lower segment profit. Included in the full-year 2012 results are $25 million of acquisition and transition costs and $61 million of depreciation expense related to the Caiman (now part of Ohio Valley Midstream area) and Laser (now part of Susquehanna Supply Hub area) acquisitions of early 2012.
Higher fee-based revenues partially offset the negative impacts described above. The increase in fee-based revenues was primarily due to higher volumes in the Marcellus Shale area, including new volumes on the Ohio Valley Midstream system and Susquehanna Supply Hub gathering assets. Higher olefin margins, driven primarily by lower ethylene feedstock prices also partially offset the negative impacts.
Year-End Materials to be Posted Shortly, Q&A Webcast Scheduled for Tomorrow
Williams Partners’ year-end 2012 financial results package will be posted shortly atwww.williamslp.com. The package will include the data book and analyst package, and the investor presentation with a recorded commentary from Alan Armstrong, CEO of Williams Partners’ general partner.
Williams Partners L.P. and Williams will host a joint Q&A live webcast on Thursday, Feb. 21 at 9:30 a.m. EST. A limited number of phone lines will be available at (888) 401-4690. International callers should dial (719) 325-2461. A link to the live year-end webcast, as well as replays of the webcast in both streaming and downloadable podcast formats will be available for two weeks following the event atwww.williamslp.com andwww.williams.com.
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 7 of 10 |
Form 10-K
The partnership plans to file its 2012 Form 10-K with the Securities and Exchange Commission next week. Once filed, the document will be available on both the SEC and Williams Partners websites.
Definitions of Non-GAAP Financial Measures
This press release includes certain financial measures – distributable cash flow, cash distribution coverage ratio, and adjusted segment profit – that are non-GAAP financial measures as defined under the rules of the SEC.
For Williams Partners L.P., adjusted segment profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes adjusted segment profit provides investors meaningful insight into Williams Partners L.P.’s results from ongoing operations.
For Williams Partners L.P. we define distributable cash flow as net income plus depreciation and amortization and cash distributions from our equity investments less our earnings from our equity investments, distributions to noncontrolling interests and maintenance capital expenditures. We also adjust for payments and/or reimbursements under omnibus agreements with Williams and certain other items.
For Williams Partners L.P. we also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income.
This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the Partnership’s assets and the cash that the business is generating. Neither adjusted segment profit nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.
About Williams Partners L.P. (NYSE: WPZ)
Williams Partners L.P. is a leading diversified master limited partnership focused on natural gas transportation; gathering, treating, and processing; storage; natural gas liquid (NGL) fractionation; and oil transportation. The partnership owns interests in three major interstate natural gas pipelines that, combined, deliver 14 percent of the
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 8 of 10 |
natural gas consumed in the United States. The partnership’s gathering and processing assets include large-scale operations in the U.S. Rocky Mountains and both onshore and offshore along the Gulf of Mexico. Williams (NYSE: WMB) owns approximately 70 percent of Williams Partners, including the general-partner interest. More information is available atwww.williamslp.com, where the partnership routinely posts important information.
# # #
Williams Partners L.P. is a limited partnership formed by The Williams Companies, Inc. Our reports, filings, and other public announcements may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You typically can identify forward-looking statements by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “assumes,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “guidance,” “outlook,” “in service date,” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:
• | Amounts and nature of future capital expenditures; |
• | Expansion and growth of our business and operations; |
• | Financial condition and liquidity; |
• | Business strategy; |
• | Cash flow from operations or results of operations; |
• | The levels of cash distributions to unitholders; |
• | Seasonality of certain business components; and |
• | Natural gas, natural gas liquids, and olefins prices and demand. |
Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this announcement. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:
• | Whether we have sufficient cash from operations to enable us to pay current and expected levels of cash distributions, if any, following establishment of cash reserves and payment of fees and expenses, including payments to our general partner; |
• | Availability of supplies, market demand, volatility of prices, and the availability and cost of capital; |
• | Inflation, interest rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers); |
• | The strength and financial resources of our competitors; |
• | Ability to acquire new businesses and assets and integrate those operations and assets into our existing businesses, as well as expand our facilities; |
• | Development of alternative energy sources; |
• | The impact of operational and development hazards; |
• | Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), environmental liabilities, litigation and rate proceedings; |
• | Our allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates; |
• | Changes in maintenance and construction costs; |
• | Changes in the current geopolitical situation; |
• | Our exposure to the credit risk of our customers and counterparties; |
• | Risks related to strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit; |
• | The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate; |
• | Risks associated with future weather conditions; |
• | Acts of terrorism, including cybersecurity threats and related disruptions; and |
• | Additional risks described in our filings with the Securities and Exchange Commission (SEC). |
Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or to announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.
In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this announcement. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 9 of 10 |
without notice, based upon changes in such factors, our assumptions, or otherwise.
Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business.
Investors are urged to closely consider the disclosures and risk factors in our annual report on Form 10-K filed with the SEC on February 28, 2012, and our quarterly reports on Form 10-Q available from our offices or from our website.
Williams Partners L.P. (NYSE:WPZ) • Year-End 2012 Financial Results • Feb. 20, 2013 | Page 10 of 10 |
Financial Highlights and Operating Statistics
(UNAUDITED)
Final
December 31, 2012
Reconciliation of Non-GAAP Measures
(UNAUDITED)
This press release includes certain financial measures, adjusted segment profit, distributable cash flow, and cash distribution coverage ratio that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.
For Williams Partners L.P., adjusted segment profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes adjusted segment profit provides investors meaningful insight into Williams Partners L.P.‘s results from ongoing operations.
For Williams Partners L.P. we define distributable cash flow as net income plus depreciation and amortization and cash distributions from our equity investments less our earnings from equity investments, distributions to noncontrolling interest and maintenance capital expenditures. We also adjust for payments and/or reimbursements under omnibus agreements with Williams and certain other adjustments. Total distributable cash flow is reduced by any amounts associated with operations which occurred prior to our ownership of the underlying assets to arrive at distributable cash flow attributable to partnership operations.
For Williams Partners L.P. we also calculate the ratio of distributable cash flow attributable to partnership operations to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income.
This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the Partnership’s assets and the cash that the business is generating. Neither adjusted segment profit nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.
2011* | 2012 | |||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except coverage ratios) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr | Year | ||||||||||||||||||||||||||||||||||
Williams Partners L.P. | ||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Non-GAAP “Distributable cash flow” to GAAP “Net income” | ||||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 342 | $ | 379 | $ | 378 | $ | 412 | $ | 1,511 | $ | 408 | $ | 243 | $ | 290 | $ | 291 | $ | 1,232 | ||||||||||||||||||||||||
Depreciation and amortization | 152 | 157 | 158 | 154 | 621 | 159 | 171 | 185 | 199 | 714 | ||||||||||||||||||||||||||||||||||
Non-cash amortization of debt issuance costs included in interest expense | 5 | 5 | 3 | 4 | 17 | 4 | 3 | 4 | 3 | 14 | ||||||||||||||||||||||||||||||||||
Equity earnings from investments | (25 | ) | (36 | ) | (40 | ) | (41 | ) | (142 | ) | (30 | ) | (27 | ) | (30 | ) | (24 | ) | (111 | ) | ||||||||||||||||||||||||
Gain on sale of assets | — | — | — | — | — | — | (6 | ) | — | — | (6 | ) | ||||||||||||||||||||||||||||||||
Acquisition and transition-related costs | — | — | — | — | — | — | 19 | 4 | 3 | 26 | ||||||||||||||||||||||||||||||||||
Allocated reorganization-related costs | — | — | — | — | — | — | 8 | 6 | 11 | 25 | ||||||||||||||||||||||||||||||||||
Impairment of certain assets | — | — | — | — | — | — | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||
Net reimbursements from Williams under omnibus agreements | 8 | 2 | 6 | 15 | 31 | 6 | 1 | 4 | 5 | 16 | ||||||||||||||||||||||||||||||||||
Maintenance capital expenditures | (36 | ) | (108 | ) | (150 | ) | (127 | ) | (421 | ) | (62 | ) | (113 | ) | (129 | ) | (103 | ) | (407 | ) | ||||||||||||||||||||||||
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Distributable cash flow excluding equity investments | 446 | 399 | 355 | 417 | 1,617 | 485 | 299 | 340 | 385 | 1,509 | ||||||||||||||||||||||||||||||||||
Plus: Equity investments cash distributions to Williams Partners L.P. | 30 | 40 | 50 | 49 | 169 | 52 | 46 | 34 | 40 | 172 | ||||||||||||||||||||||||||||||||||
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Distributable cash flow | 476 | 439 | 405 | 466 | 1,786 | 537 | 345 | 374 | 425 | 1,681 | ||||||||||||||||||||||||||||||||||
Less: Pre-partnership Distributable Cash Flow | 35 | 42 | 37 | 22 | 136 | 62 | 52 | 58 | 20 | 192 | ||||||||||||||||||||||||||||||||||
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Distributable cash flow attributable to partnership operations | $ | 441 | $ | 397 | $ | 368 | $ | 444 | $ | 1,650 | $ | 475 | $ | 293 | $ | 316 | $ | 405 | $ | 1,489 | ||||||||||||||||||||||||
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Total cash distributed: | $ | 276 | $ | 286 | $ | 294 | $ | 311 | $ | 1,167 | $ | 362 | $ | 373 | $ | 394 | $ | 442 | $ | 1,571 | ||||||||||||||||||||||||
Coverage ratios: | ||||||||||||||||||||||||||||||||||||||||||||
Distributable cash flow attributable to partnership operations divided by Total cash distributed | 1.60 | 1.39 | 1.25 | 1.43 | 1.41 | 1.31 | 0.79 | 0.80 | 0.92 | 0.95 | ||||||||||||||||||||||||||||||||||
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Net income divided by Total cash distributed | 1.24 | 1.33 | 1.29 | 1.32 | 1.29 | 1.13 | 0.65 | 0.74 | 0.66 | 0.78 | ||||||||||||||||||||||||||||||||||
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* | Recast to include the results of the olefins business, which was acquired from Williams in the fourth quarter of 2012. |
1
Reconciliation of GAAP “Segment Profit” to Non-GAAP “Adjusted Segment Profit”
(UNAUDITED)
2011* | 2012 | |||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Gas Pipeline | $ | 175 | $ | 152 | $ | 170 | $ | 176 | $ | 673 | $ | 180 | $ | 147 | $ | 155 | $ | 195 | $ | 677 | ||||||||||||||||||||
Midstream Gas & Liquids | 298 | 362 | 338 | 364 | 1,362 | 371 | 244 | 274 | 246 | 1,135 | ||||||||||||||||||||||||||||||
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Segment Profit | $ | 473 | $ | 514 | $ | 508 | $ | 540 | $ | 2,035 | $ | 551 | $ | 391 | $ | 429 | $ | 441 | $ | 1,812 | ||||||||||||||||||||
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Adjustments: | ||||||||||||||||||||||||||||||||||||||||
Gas Pipeline | ||||||||||||||||||||||||||||||||||||||||
Loss related to Eminence storage facility leak | 4 | 3 | 6 | 2 | 15 | 1 | — | 1 | — | 2 | ||||||||||||||||||||||||||||||
Gain on sale of base gas from Hester storage field | (4 | ) | — | — | — | (4 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
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Total Gas Pipeline adjustments | — | 3 | 6 | 2 | 11 | 1 | — | 1 | — | 2 | ||||||||||||||||||||||||||||||
Midstream Gas & Liquids | ||||||||||||||||||||||||||||||||||||||||
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Acquisition and transition-related costs | — | — | — | — | — | — | 19 | 4 | 2 | 25 | ||||||||||||||||||||||||||||||
Impairment of certain assets | — | — | — | — | — | — | — | 6 | — | 6 | ||||||||||||||||||||||||||||||
Share of impairments at equity method investee | — | — | — | — | — | — | — | — | 5 | 5 | ||||||||||||||||||||||||||||||
Loss due to Geismar furnace fire | — | — | — | — | — | — | — | 4 | 1 | 5 | ||||||||||||||||||||||||||||||
Gain on sale of certain assets | — | — | — | — | — | — | (6 | ) | — | — | (6 | ) | ||||||||||||||||||||||||||||
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Total Midstream Gas & Liquids adjustments | — | — | — | — | — | — | 13 | 14 | 8 | 35 | ||||||||||||||||||||||||||||||
Total adjustments included in segment profit | — | 3 | 6 | 2 | 11 | 1 | 13 | 15 | 8 | 37 | ||||||||||||||||||||||||||||||
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Adjusted segment profit | $ | 473 | $ | 517 | $ | 514 | $ | 542 | $ | 2,046 | $ | 552 | $ | 404 | $ | 444 | $ | 449 | $ | 1,849 | ||||||||||||||||||||
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* | Recast to include the results of the olefins business, which was acquired from Williams in the fourth quarter of 2012. |
2
Consolidated Statement of Income
(UNAUDITED)
2011* | 2012 | |||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per- | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||
Service revenues | $ | 606 | $ | 611 | $ | 643 | $ | 657 | $ | 2,517 | $ | 673 | $ | 664 | $ | 668 | $ | 704 | $ | 2,709 | ||||||||||||||||||||
Product sales | 1,207 | 1,325 | 1,277 | 1,388 | 5,197 | 1,295 | 1,153 | 1,049 | 1,145 | 4,642 | ||||||||||||||||||||||||||||||
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Total revenues | 1,813 | 1,936 | 1,920 | 2,045 | 7,714 | 1,968 | 1,817 | 1,717 | 1,849 | 7,351 | ||||||||||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||||||||||||||
Product costs | 930 | 991 | 978 | 1,052 | 3,951 | 974 | 907 | 781 | 895 | 3,557 | ||||||||||||||||||||||||||||||
Operating and maintenance expenses | 221 | 237 | 242 | 248 | 948 | 220 | 264 | 252 | 251 | 987 | ||||||||||||||||||||||||||||||
Depreciation and amortization expenses | 152 | 157 | 158 | 154 | 621 | 159 | 171 | 185 | 199 | 714 | ||||||||||||||||||||||||||||||
Selling, general, and administrative expenses | 105 | 102 | 99 | 100 | 406 | 126 | 148 | 134 | 145 | 553 | ||||||||||||||||||||||||||||||
Other (income) expense - net | (12 | ) | — | 5 | 20 | 13 | 6 | 12 | 10 | (5 | ) | 23 | ||||||||||||||||||||||||||||
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Total costs and expenses | 1,396 | 1,487 | 1,482 | 1,574 | 5,939 | 1,485 | 1,502 | 1,362 | 1,485 | 5,834 | ||||||||||||||||||||||||||||||
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Equity earnings (losses) | 25 | 36 | 40 | 41 | 142 | 30 | 27 | 30 | 24 | 111 | ||||||||||||||||||||||||||||||
General corporate expenses | 31 | 29 | 30 | 28 | 118 | 38 | 49 | 44 | 53 | 184 | ||||||||||||||||||||||||||||||
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Total segment profit | 473 | 514 | 508 | 540 | 2,035 | 551 | 391 | 429 | 441 | 1,812 | ||||||||||||||||||||||||||||||
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Reclass equity earnings (losses) | (25 | ) | (36 | ) | (40 | ) | (41 | ) | (142 | ) | (30 | ) | (27 | ) | (30 | ) | (24 | ) | (111 | ) | ||||||||||||||||||||
Reclass general corporate expenses | (31 | ) | (29 | ) | (30 | ) | (28 | ) | (118 | ) | (38 | ) | (49 | ) | (44 | ) | (53 | ) | (184 | ) | ||||||||||||||||||||
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Operating income | 417 | 449 | 438 | 471 | 1,775 | 483 | 315 | 355 | 364 | 1,517 | ||||||||||||||||||||||||||||||
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Equity earnings (losses) | 25 | 36 | 40 | 41 | 142 | 30 | 27 | 30 | 24 | 111 | ||||||||||||||||||||||||||||||
Interest incurred | (108 | ) | (108 | ) | (104 | ) | (106 | ) | (426 | ) | (110 | ) | (110 | ) | (109 | ) | (112 | ) | (441 | ) | ||||||||||||||||||||
Interest capitalized | 2 | 3 | 3 | 3 | 11 | 3 | 5 | 8 | 20 | 36 | ||||||||||||||||||||||||||||||
Interest income | 1 | — | — | 1 | 2 | 1 | — | 1 | 1 | 3 | ||||||||||||||||||||||||||||||
Other income (expense) - net | 5 | (1 | ) | 1 | 2 | 7 | 1 | 6 | 5 | (6 | ) | 6 | ||||||||||||||||||||||||||||
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Net income | $ | 342 | $ | 379 | $ | 378 | $ | 412 | $ | 1,511 | $ | 408 | $ | 243 | $ | 290 | $ | 291 | $ | 1,232 | ||||||||||||||||||||
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Allocation of net income for calculation of earnings per common unit: | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 342 | $ | 379 | $ | 378 | $ | 412 | $ | 1,511 | $ | 408 | $ | 243 | $ | 290 | $ | 291 | $ | 1,232 | ||||||||||||||||||||
Allocation of net income to general partner | 106 | 115 | 115 | 105 | 441 | 154 | 146 | 157 | 130 | 587 | ||||||||||||||||||||||||||||||
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Allocation of net income to common units | $ | 236 | $ | 264 | $ | 263 | $ | 307 | $ | 1,070 | $ | 254 | $ | 97 | $ | 133 | $ | 161 | $ | 645 | ||||||||||||||||||||
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Net income, per common unit | $ | 0.81 | $ | 0.91 | $ | 0.91 | $ | 1.05 | $ | 3.69 | $ | 0.85 | $ | 0.29 | $ | 0.38 | $ | 0.42 | $ | 1.89 | ||||||||||||||||||||
Weighted-average number of common units outstanding (thousands) | 289,845 | 290,213 | 290,477 | 290,477 | 290,255 | 299,269 | 335,920 | 350,519 | 381,689 | 341,981 | ||||||||||||||||||||||||||||||
Cash distributions per common unit | $ | 0.7175 | $ | 0.7325 | $ | 0.7475 | $ | 0.7625 | $ | 2.9600 | $ | 0.7775 | $ | 0.7925 | $ | 0.8075 | $ | 0.8275 | $ | 3.2050 |
* | Recast to include the results of the olefins business, which was acquired from Williams in the fourth quarter of 2012. |
Note: | The sum of net income per common unit for the quarters may not equal the total income per common unit for the year due to changes in the weighted-average number of common units outstanding. |
3
Gas Pipeline
(UNAUDITED)
2011 | 2012 | |||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline GP | $ | 110 | $ | 106 | $ | 107 | $ | 111 | $ | 434 | $ | 111 | $ | 106 | $ | 108 | $ | 113 | $ | 438 | ||||||||||||||||||||
Transcontinental Gas Pipe Line | 305 | 301 | 322 | 315 | 1,243 | 310 | 293 | 304 | 327 | 1,234 | ||||||||||||||||||||||||||||||
Other | 1 | — | — | — | 1 | 1 | — | — | 1 | 2 | ||||||||||||||||||||||||||||||
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Total revenues | 416 | 407 | 429 | 426 | 1,678 | 422 | 399 | 412 | 441 | 1,674 | ||||||||||||||||||||||||||||||
Segment costs and expenses: | ||||||||||||||||||||||||||||||||||||||||
Costs and operating expenses | 135 | 140 | 151 | 132 | $ | 558 | 118 | 129 | 140 | 150 | $ | 537 | ||||||||||||||||||||||||||||
Selling, general and administrative expenses | 39 | 36 | 32 | 34 | 141 | 43 | 35 | 38 | 34 | 150 | ||||||||||||||||||||||||||||||
Depreciation and amortization expenses | 86 | 89 | 89 | 86 | 350 | 89 | 90 | 90 | 91 | 360 | ||||||||||||||||||||||||||||||
Other (income) expense - net | (10 | ) | 4 | 4 | 16 | 14 | 9 | 14 | 8 | (9 | ) | 22 | ||||||||||||||||||||||||||||
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Total segment costs and expenses | 250 | 269 | 276 | 268 | 1,063 | 259 | 268 | 276 | 266 | 1,069 | ||||||||||||||||||||||||||||||
Equity earnings | 9 | 14 | 17 | 18 | 58 | 17 | 16 | 19 | 20 | 72 | ||||||||||||||||||||||||||||||
Reported segment profit: | ||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline GP | 56 | 51 | 50 | 58 | 215 | 55 | 50 | 48 | 53 | 206 | ||||||||||||||||||||||||||||||
Transcontinental Gas Pipe Line | 111 | 89 | 102 | 104 | 406 | 109 | 84 | 89 | 123 | 405 | ||||||||||||||||||||||||||||||
Other | 8 | 12 | 18 | 14 | 52 | 16 | 13 | 18 | 19 | 66 | ||||||||||||||||||||||||||||||
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Total reported segment profit | 175 | 152 | 170 | 176 | 673 | 180 | 147 | 155 | 195 | 677 | ||||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||
Transcontinental Gas Pipe Line | — | 3 | 6 | 2 | 11 | 1 | — | 1 | — | 2 | ||||||||||||||||||||||||||||||
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Total adjustments | — | 3 | 6 | 2 | 11 | 1 | — | 1 | — | 2 | ||||||||||||||||||||||||||||||
Adjusted segment profit: | ||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline GP | 56 | 51 | 50 | 58 | 215 | 55 | 50 | 48 | 53 | 206 | ||||||||||||||||||||||||||||||
Transcontinental Gas Pipe Line | 111 | 92 | 108 | 106 | 417 | 110 | 84 | 90 | 123 | 407 | ||||||||||||||||||||||||||||||
Other | 8 | 12 | 18 | 14 | 52 | 16 | 13 | 18 | 19 | 66 | ||||||||||||||||||||||||||||||
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Total adjusted segment profit | $ | 175 | $ | 155 | $ | 176 | $ | 178 | $ | 684 | $ | 181 | $ | 147 | $ | 156 | $ | 195 | $ | 679 | ||||||||||||||||||||
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Operating statistics (Tbtu) | ||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline GP | ||||||||||||||||||||||||||||||||||||||||
Throughput | 176.8 | 142.3 | 132.6 | 186.1 | 637.8 | 191.4 | 140.1 | 145.8 | 180.9 | 658.2 | ||||||||||||||||||||||||||||||
Avg. daily transportation volumes | 2.0 | 1.6 | 1.4 | 2.0 | 1.7 | 2.1 | 1.5 | 1.6 | 2.0 | 1.8 | ||||||||||||||||||||||||||||||
Avg. daily firm reserved capacity | 2.9 | 2.9 | 2.9 | 2.9 | 2.9 | 2.9 | 2.9 | 2.9 | 2.9 | 2.9 | ||||||||||||||||||||||||||||||
Transcontinental Gas Pipe Line | ||||||||||||||||||||||||||||||||||||||||
Throughput | 652.2 | 535.2 | 583.9 | 636.5 | 2,407.8 | 735.6 | 639.4 | 672.8 | 726.6 | 2,774.4 | ||||||||||||||||||||||||||||||
Avg. daily transportation volumes | 7.2 | 5.9 | 6.3 | 6.9 | 6.6 | 8.1 | 7.0 | 7.3 | 7.9 | 7.6 | ||||||||||||||||||||||||||||||
Avg. daily firm reserved capacity | 7.7 | 7.8 | 8.0 | 8.7 | 8.0 | 8.8 | 8.7 | 8.8 | 9.1 | 8.8 |
4
Midstream Gas & Liquids
(UNAUDITED)
2011* | 2012 | |||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||
Fee-based revenues: | ||||||||||||||||||||||||||||||||||||||||
Gathering & processing | $ | 163 | $ | 172 | $ | 182 | $ | 186 | $ | 703 | $ | 197 | $ | 207 | $ | 214 | $ | 227 | $ | 845 | ||||||||||||||||||||
Production handling and transportation | 28 | 28 | 35 | 32 | 123 | 33 | 35 | 34 | 34 | 136 | ||||||||||||||||||||||||||||||
Other fee-based revenues | 32 | 35 | 40 | 37 | 144 | 37 | 39 | 39 | 41 | 156 | ||||||||||||||||||||||||||||||
Commodity-based revenues: | ||||||||||||||||||||||||||||||||||||||||
NGL sales from gas processing | 306 | 360 | 331 | 384 | 1,381 | 313 | 242 | 232 | 228 | 1,015 | ||||||||||||||||||||||||||||||
Olefin sales | 200 | 232 | 217 | 201 | 850 | 235 | 198 | 151 | 189 | 773 | ||||||||||||||||||||||||||||||
Marketing sales | 1,189 | 1,306 | 1,265 | 1,432 | 5,192 | 1,253 | 1,136 | 1,073 | 1,102 | 4,564 | ||||||||||||||||||||||||||||||
Other sales | 14 | 15 | 7 | 17 | 53 | 20 | 11 | 7 | 12 | 50 | ||||||||||||||||||||||||||||||
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1,932 | 2,148 | 2,077 | 2,289 | 8,446 | 2,088 | 1,868 | 1,750 | 1,833 | 7,539 | |||||||||||||||||||||||||||||||
Intrasegment eliminations | (535 | ) | (619 | ) | (586 | ) | (670 | ) | (2,410 | ) | (542 | ) | (450 | ) | (445 | ) | (425 | ) | (1,862 | ) | ||||||||||||||||||||
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Total revenues | 1,397 | 1,529 | 1,491 | 1,619 | 6,036 | 1,546 | 1,418 | 1,305 | 1,408 | 5,677 | ||||||||||||||||||||||||||||||
Segment costs and expenses: | ||||||||||||||||||||||||||||||||||||||||
NGL cost of goods sold | 99 | 107 | 97 | 97 | 400 | 71 | 53 | 65 | 74 | 263 | ||||||||||||||||||||||||||||||
Olefins cost of goods sold | 154 | 173 | 167 | 164 | 658 | 161 | 128 | 74 | 112 | 475 | ||||||||||||||||||||||||||||||
Marketing cost of goods sold | 1,175 | 1,294 | 1,256 | 1,431 | 5,156 | 1,260 | 1,159 | 1,061 | 1,098 | 4,578 | ||||||||||||||||||||||||||||||
Other cost of goods sold | 7 | 8 | 7 | 10 | 32 | 13 | 5 | 4 | 7 | 29 | ||||||||||||||||||||||||||||||
Operating and maintenance expenses | 112 | 123 | 124 | 132 | 491 | 110 | 144 | 127 | 130 | 511 | ||||||||||||||||||||||||||||||
Depreciation and amortization expenses | 69 | 71 | 73 | 71 | 284 | 73 | 84 | 99 | 112 | 368 | ||||||||||||||||||||||||||||||
Selling, general, and administrative expenses | 35 | 38 | 36 | 39 | 148 | 45 | 64 | 53 | 57 | 219 | ||||||||||||||||||||||||||||||
Other (income) expense - net | (1 | ) | (6 | ) | 2 | 4 | (1 | ) | (3 | ) | (2 | ) | 4 | 1 | — | |||||||||||||||||||||||||
Intrasegment eliminations | (535 | ) | (619 | ) | (586 | ) | (670 | ) | (2,410 | ) | (542 | ) | (450 | ) | (445 | ) | (425 | ) | (1,862 | ) | ||||||||||||||||||||
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Total segment costs and expenses | 1,115 | 1,189 | 1,176 | 1,278 | 4,758 | 1,188 | 1,185 | 1,042 | 1,166 | 4,581 | ||||||||||||||||||||||||||||||
Equity earnings (losses) | 16 | 22 | 23 | 23 | 84 | 13 | 11 | 11 | 4 | 39 | ||||||||||||||||||||||||||||||
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Reported segment profit | 298 | 362 | 338 | 364 | 1,362 | 371 | 244 | 274 | 246 | 1,135 | ||||||||||||||||||||||||||||||
Adjustments | — | — | — | — | — | — | 13 | 14 | 8 | 35 | ||||||||||||||||||||||||||||||
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Adjusted segment profit | $ | 298 | $ | 362 | $ | 338 | $ | 364 | $ | 1,362 | $ | 371 | $ | 257 | $ | 288 | $ | 254 | $ | 1,170 | ||||||||||||||||||||
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Operating statistics | ||||||||||||||||||||||||||||||||||||||||
Gathering and Processing** | ||||||||||||||||||||||||||||||||||||||||
Gathering volumes (Tbtu) | 321 | 337 | 345 | 374 | 1,377 | 382 | 402 | 413 | 419 | 1,616 | ||||||||||||||||||||||||||||||
Plant inlet natural gas volumes (Tbtu) | 387 | 398 | 399 | 408 | 1,592 | 402 | 400 | 415 | 421 | 1,638 | ||||||||||||||||||||||||||||||
NGL equity sales (million gallons) | 289 | 308 | 274 | 317 | 1,188 | 308 | 295 | 301 | 279 | 1,183 | ||||||||||||||||||||||||||||||
NGL margin ($/gallon) | $ | 0.71 | $ | 0.83 | $ | 0.85 | $ | 0.91 | $ | 0.83 | $ | 0.79 | $ | 0.64 | $ | 0.55 | $ | 0.55 | $ | 0.64 | ||||||||||||||||||||
NGL production (million gallons) | 683 | 729 | 693 | 788 | 2,893 | 804 | 775 | 802 | 784 | 3,165 | ||||||||||||||||||||||||||||||
Petrochemical Services | ||||||||||||||||||||||||||||||||||||||||
Geismar ethylene sales volumes (million lbs) | 272 | 254 | 270 | 242 | 1,038 | 284 | 250 | 263 | 261 | 1,058 | ||||||||||||||||||||||||||||||
Discovery Producer Services LLC (equity investment) - 100% | ||||||||||||||||||||||||||||||||||||||||
NGL equity sales (million gallons) | 20 | 19 | 21 | 19 | 79 | 20 | 16 | 17 | 19 | 72 | ||||||||||||||||||||||||||||||
NGL production (million gallons) | 83 | 80 | 76 | 68 | 307 | 71 | 62 | 58 | 69 | 260 | ||||||||||||||||||||||||||||||
Laurel Mountain Midstream, LLC (equity investment) - 100% | ||||||||||||||||||||||||||||||||||||||||
Gathering volumes (Tbtu) | 12 | 13 | 12 | 15 | 52 | 15 | 16 | 22 | 27 | 80 | ||||||||||||||||||||||||||||||
Overland Pass Pipeline Company LLC (equity investment) - 100% | ||||||||||||||||||||||||||||||||||||||||
NGL Transportation volumes (Mbbls) | 10,483 | 11,836 | 12,132 | 13,696 | 48,147 | 13,968 | 12,843 | 12,527 | 11,904 | 51,242 |
* | Recast to include the results of the olefins business, which was acquired from Williams in the fourth quarter of 2012. |
** | Excludes volumes associated with partially owned assets that are not consolidated for financial reporting purposes. |
5
Capital Expenditures and Investments
(UNAUDITED)
2011*** | 2012 | |||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr*** | 2nd Qtr*** | 3rd Qtr*** | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Capital expenditures: | ||||||||||||||||||||||||||||||||||||||||
Gas Pipeline: | ||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline GP | $ | 14 | $ | 22 | $ | 36 | $ | 43 | $ | 115 | $ | 21 | $ | 26 | $ | 44 | $ | 43 | $ | 134 | ||||||||||||||||||||
Transcontinental Gas Pipe Line | 84 | 77 | 107 | 118 | 386 | 62 | 130 | 135 | 148 | 475 | ||||||||||||||||||||||||||||||
Other | — | — | — | — | — | — | 2 | 8 | 11 | 21 | ||||||||||||||||||||||||||||||
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Total | 98 | 99 | 143 | 161 | 501 | 83 | 158 | 187 | 202 | 630 | ||||||||||||||||||||||||||||||
Midstream Gas & Liquids | 60 | 57 | 154 | 233 | 504 | 177 | 366 | 478 | 461 | 1,482 | ||||||||||||||||||||||||||||||
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Total* | $ | 158 | $ | 156 | $ | 297 | $ | 394 | $ | 1,005 | $ | 260 | $ | 524 | $ | 665 | $ | 663 | $ | 2,112 | ||||||||||||||||||||
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Purchase of businesses: | ||||||||||||||||||||||||||||||||||||||||
Gas Pipeline | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Midstream Gas & Liquids | — | — | 41 | — | 41 | (7 | ) | — | — | — | (7 | ) | ||||||||||||||||||||||||||||
Corporate | — | — | — | — | — | 332 | 1,724 | — | — | 2,056 | ||||||||||||||||||||||||||||||
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Total | $ | — | $ | — | $ | 41 | $ | — | $ | 41 | $ | 325 | $ | 1,724 | $ | — | $ | — | $ | 2,049 | ||||||||||||||||||||
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Purchase of investments: | ||||||||||||||||||||||||||||||||||||||||
Gas Pipeline** | $ | 8 | $ | 179 | $ | 2 | $ | 2 | $ | 191 | $ | 4 | $ | 2 | $ | — | $ | — | $ | 6 | ||||||||||||||||||||
Midstream Gas & Liquids**** | 28 | 60 | 37 | 55 | 180 | 44 | 134 | 98 | 214 | 490 | ||||||||||||||||||||||||||||||
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Total | $ | 36 | $ | 239 | $ | 39 | $ | 57 | $ | 371 | $ | 48 | $ | 136 | $ | 98 | $ | 214 | $ | 496 | ||||||||||||||||||||
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Summary: | ||||||||||||||||||||||||||||||||||||||||
Gas Pipeline | $ | 106 | $ | 278 | $ | 145 | $ | 163 | $ | 692 | $ | 87 | $ | 160 | $ | 187 | $ | 202 | $ | 636 | ||||||||||||||||||||
Midstream Gas & Liquids | 88 | 117 | 232 | 288 | 725 | 214 | 500 | 576 | 675 | 1,965 | ||||||||||||||||||||||||||||||
Corporate | — | — | — | — | — | 332 | 1,724 | — | — | 2,056 | ||||||||||||||||||||||||||||||
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Total | $ | 194 | $ | 395 | $ | 377 | $ | 451 | $ | 1,417 | $ | 633 | $ | 2,384 | $ | 763 | $ | 877 | $ | 4,657 | ||||||||||||||||||||
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Cumulative summary: | ||||||||||||||||||||||||||||||||||||||||
Gas Pipeline | $ | 106 | $ | 384 | $ | 529 | $ | 692 | $ | 692 | $ | 87 | $ | 247 | $ | 434 | $ | 636 | $ | 636 | ||||||||||||||||||||
Midstream Gas & Liquids | 88 | 205 | 437 | 725 | 725 | 214 | 714 | 1,290 | 1,965 | 1,965 | ||||||||||||||||||||||||||||||
Corporate | — | — | — | — | — | 332 | 2,056 | 2,056 | 2,056 | 2,056 | ||||||||||||||||||||||||||||||
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Total | $ | 194 | $ | 589 | $ | 966 | $ | 1,417 | $ | 1,417 | $ | 633 | $ | 3,017 | $ | 3,780 | $ | 4,657 | $ | 4,657 | ||||||||||||||||||||
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Capital expenditures incurred and purchase of investments: | ||||||||||||||||||||||||||||||||||||||||
Increases to property, plant, and equipment | $ | 145 | $ | 177 | $ | 342 | $ | 423 | $ | 1,087 | $ | 289 | $ | 565 | $ | 713 | $ | 739 | $ | 2,306 | ||||||||||||||||||||
Purchase of businesses | — | — | 41 | — | 41 | 325 | 1,724 | — | — | 2,049 | ||||||||||||||||||||||||||||||
Purchase of investments | 36 | 239 | 39 | 57 | 371 | 48 | 136 | 98 | 214 | 496 | ||||||||||||||||||||||||||||||
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Total | $ | 181 | $ | 416 | $ | 422 | $ | 480 | $ | 1,499 | $ | 662 | $ | 2,425 | $ | 811 | $ | 953 | $ | 4,851 | ||||||||||||||||||||
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*Increases to property, plant, and equipment | $ | 145 | $ | 177 | $ | 342 | $ | 423 | $ | 1,087 | $ | 289 | $ | 565 | $ | 713 | $ | 739 | $ | 2,306 | ||||||||||||||||||||
Changes in related accounts payable and accrued liabilities | 13 | (21 | ) | (45 | ) | (29 | ) | (82 | ) | (29 | ) | (41 | ) | (48 | ) | (76 | ) | (194 | ) | |||||||||||||||||||||
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Capital expenditures | $ | 158 | $ | 156 | $ | 297 | $ | 394 | $ | 1,005 | $ | 260 | $ | 524 | $ | 665 | $ | 663 | $ | 2,112 | ||||||||||||||||||||
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** | The second quarter of 2011 includes the acquisition of a 24.5 percent interest in Gulfstream Natural Gas System, L.L.C. from a subsidiary of Williams. |
*** | Recast to include the results of the olefins business, which was acquired from Williams. |
**** | The fourth quarter of 2012 includes the acquisition of the olefins business from a subsidiary of Williams. |
6
Williams Partners L.P.
2013 Guidance | 2014 Guidance | |||||||||||||||||||||||||||
(Dollars in millions, except coverage ratios) | Low | Midpoint | High | Low | Midpoint | High | ||||||||||||||||||||||
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net income” | ||||||||||||||||||||||||||||
Net income | $ | 1,100 | $ | 1,290 | $ | 1,480 | $ | 1,700 | $ | 1,925 | $ | 2,150 | ||||||||||||||||
Depreciation and amortization | 785 | 805 | 825 | 910 | 930 | 950 | ||||||||||||||||||||||
Maintenance capital expenditures | (315 | ) | (350 | ) | (385 | ) | (350 | ) | (385 | ) | (420 | ) | ||||||||||||||||
Gain on sale of assets | — | — | — | — | — | — | ||||||||||||||||||||||
Impairment of certain assets | — | — | — | — | — | — | ||||||||||||||||||||||
Acquisition and transition-related costs | — | — | — | — | — | — | ||||||||||||||||||||||
Allocated reorganization-related costs | — | — | — | — | — | — | ||||||||||||||||||||||
Attributable to Noncontrolling Interests | — | — | — | (70 | ) | (75 | ) | (80 | ) | |||||||||||||||||||
Other / Rounding | 55 | 55 | 55 | 80 | 80 | 80 | ||||||||||||||||||||||
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Distributable cash flow | $ | 1,625 | $ | 1,800 | $ | 1,975 | $ | 2,270 | $ | 2,475 | $ | 2,680 | ||||||||||||||||
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Total cash to be distributed * | $ | 1,992 | $ | 2,033 | $ | 2,073 | $ | 2,377 | $ | 2,445 | $ | 2,512 | ||||||||||||||||
Coverage ratios: | ||||||||||||||||||||||||||||
Distributable cash flow divided by Total cash to be distributed * | 0.82 | 0.89 | 0.95 | 0.95 | 1.01 | 1.07 | ||||||||||||||||||||||
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Net income divided by Total cash to be distributed * | 0.55 | 0.63 | 0.71 | 0.72 | 0.79 | 0.86 | ||||||||||||||||||||||
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* In 2013 and 2014, distributions reflect quarterly increases of $.015 in the low case, $.02 in the midpoint case, and $.025 in the high case. | ||||||||||||||||||||||||||||
Reconciliation of Non-GAAP “Adjusted Segment Profit” to GAAP “Segment Profit” | ||||||||||||||||||||||||||||
Segment Profit: | ||||||||||||||||||||||||||||
Midstream | $ | 900 | $ | 1,088 | $ | 1,275 | $ | 1,525 | $ | 1,775 | $ | 2,025 | ||||||||||||||||
Gas Pipeline | 725 | 750 | 775 | 775 | 800 | 825 | ||||||||||||||||||||||
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Total Segment Profit | 1,625 | 1,838 | 2,050 | 2,300 | 2,575 | 2,850 | ||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Midstream - Acquisition and transition-related costs | — | — | — | — | — | — | ||||||||||||||||||||||
Midstream - Gain on sale of certain assets | — | — | — | — | — | — | ||||||||||||||||||||||
Midstream - Impairment of certain assets | — | — | — | — | — | — | ||||||||||||||||||||||
Gas Pipeline - Loss related to Eminence storage facility leak | — | — | — | — | — | — | ||||||||||||||||||||||
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Adjusted segment profit | $ | 1,625 | $ | 1,838 | $ | 2,050 | $ | 2,300 | $ | 2,575 | $ | 2,850 | ||||||||||||||||
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7
Segment Revenues
(UNAUDITED)
2011 | 2012 | |||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Gas Pipeline revenues: | ||||||||||||||||||||||||||||||||||||||||
Fee-based revenues | $ | 361 | $ | 359 | $ | 368 | $ | 384 | $ | 1,472 | $ | 384 | $ | 366 | $ | 372 | $ | 392 | $ | 1,514 | ||||||||||||||||||||
Tracked revenues | 50 | 48 | 61 | 42 | 201 | 38 | 33 | 40 | $ | 49 | 160 | |||||||||||||||||||||||||||||
Other revenues | 5 | — | — | — | 5 | — | — | — | — | — | ||||||||||||||||||||||||||||||
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Total Gas Pipeline revenues | $ | 416 | $ | 407 | $ | 429 | $ | 426 | $ | 1,678 | $ | 422 | $ | 399 | $ | 412 | $ | 441 | $ | 1,674 | ||||||||||||||||||||
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Midstream Gas & Liquids revenues:* | ||||||||||||||||||||||||||||||||||||||||
Fee-based revenues | $ | 223 | $ | 235 | $ | 257 | $ | 255 | $ | 970 | $ | 267 | $ | 281 | $ | 287 | $ | 302 | $ | 1,137 | ||||||||||||||||||||
Commodity-based revenues | 1,709 | 1,913 | 1,820 | 2,034 | 7,476 | 1,821 | 1,587 | 1,463 | $ | 1,531 | 6,402 | |||||||||||||||||||||||||||||
Other/Elims | (535 | ) | (619 | ) | (586 | ) | (670 | ) | (2,410 | ) | (542 | ) | (450 | ) | (445 | ) | $ | (425 | ) | (1,862 | ) | |||||||||||||||||||
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Total Midstream Gas & Liquids revenues | $ | 1,397 | $ | 1,529 | $ | 1,491 | $ | 1,619 | $ | 6,036 | $ | 1,546 | $ | 1,418 | $ | 1,305 | $ | 1,408 | $ | 5,677 | ||||||||||||||||||||
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* | Recast to include the results of the olefins business, which was acquired from Williams in the fourth quarter of 2012. |
8