Williams Reports Record 4Q and Full-Year 2021 Results; Analyst Day Set for Feb. 22

TULSA, Okla.–(BUSINESS WIRE)–Williams (NYSE: WMB) today announced its unaudited financial results for the three and 12 months ended Dec. 31, 2021.

Full-year 2021 results driven by strength of natural gas focused strategy

• GAAP net income of $1.514 billion, or $1.24 per diluted share (EPS)
• Adjusted net income of $1.658 billion, or $1.36 per diluted share (Adjusted EPS) – up 24% from 2020
• Adjusted EBITDA of $5.635 billion – up $530 million or 10% vs. 2020
• Cash flow from operations (CFFO) of $3.945 billion – up 13% vs. 2020
• Available funds from operations (AFFO) of $4.073 billion – up 12% vs. 2020
• Debt-to-Adjusted EBITDA at year end of 3.9x; improved from 4.35x year-end 2020
• Dividend coverage ratio of 2.04x (AFFO basis)
• Achieved record gathering volumes of 13.9 Bcf/d and contracted transmission capacity of 23.8 Bcf/d – up 5% and 3%, respectively, from 2020
• Expect 3% growth in 2022 with Adjusted EBITDA guidance midpoint of $5.8 billion, yielding 6% CAGR over the last five years

Strong 4Q results across key financial metrics

• GAAP net income of $621 million, or $0.51 per diluted share
• Adjusted net income of $476 million, or $0.39 per diluted share (Adjusted EPS) – up 25% and 26%, respectively, vs. 4Q 2020
• Adjusted EBITDA of $1.483 billion – up $147 million or 11% vs. 4Q 2020
• CFFO of $1.139 billion – up 2% vs. 4Q 2020
• AFFO of $1.045 billion – up 6% vs. 4Q 2020
• Dividend coverage ratio of 2.10x (AFFO basis)

Executed strategic transactions and expansion projects to drive optimization and growth across portfolio

• Finalized upstream JVs with GeoSouthern in Haynesville and with Crowheart in Wamsutter
• Closed Sequent Energy Management acquisition
• Signed agreements for Whale and Shenandoah Deepwater Gulf of Mexico expansions
• Placed Leidy South Transco expansion project in full service in 4Q 2021
• Fully contracted three new demand-pull transmission projects
• Completed multiple G&P customer expansion projects
• Announced MOU with Ørsted to explore clean energy opportunities in the U.S.
• Advanced 13 solar projects with current total of 350MW; expanded program to include battery storage

CEO Perspective

Alan Armstrong, president and chief executive officer, made the following comments:

“Williams broke records in contracted transmission capacity, natural gas gathering volumes and financial results in 2021, including 10% higher Adjusted EBITDA for the year, reflecting growth across our three major business segments as well as strong contributions from our upstream JV operations. We surpassed our financial guidance, even after raising it twice during the year, and we continued to strengthen our balance sheet, adding to our track record of financial stability.

“In addition to record financial and operational success in 2021, we received top ESG rankings for the midstream sector and won a prestigious award for industry leadership. We also kicked off a multi-year modernization and emissions reduction program across our transmission network as part of our long-term commitment to safe, reliable and environmentally friendly operations. Furthermore, we expanded our efforts to invest in new energy ventures that will keep Williams at the forefront of technology changes within the midstream natural gas industry.

“This tremendous momentum has set the pace for Williams to execute against our vision to provide the best transport, storage and delivery solutions for reliable, low-cost, low-carbon energy. We expect strong natural gas market fundamentals and steadfast project execution to drive additional growth for our business in 2022, and we are extremely well positioned to continue serving the growing need for clean energy far into the future.”

Williams Summary Financial Information		4Q				Full Year
Amounts in millions, except ratios and per-share amounts. Per share amounts are reported on a diluted basis. Net income amounts are from continuing operations attributable to The Williams Companies, Inc. available to common stockholders.		2021		2020		2021		2020
GAAP Measures
Net Income		$621		$115		$1,514		$208
Net Income Per Share		$0.51		$0.09		$1.24		$0.17
Cash Flow From Operations		$1,139		$1,114		$3,945		$3,496
Non-GAAP Measures (1)
Adjusted EBITDA		$1,483		$1,336		$5,635		$5,105
Adjusted Net Income		$476		$382		$1,658		$1,333
Adjusted Earnings Per Share		$0.39		$0.31		$1.36		$1.10
Available Funds from Operations		$1,045		$983		$4,073		$3,638
Dividend Coverage Ratio		2.10x		2.03x		2.04x		1.87x
Other
Debt-to-Adjusted EBITDA at Quarter End (2)		3.90x		4.35x
Capital Investments (3)		$371		$423		$1,577		$1,485
(1) Schedules reconciling Adjusted Income, Adjusted EBITDA, Available Funds from Operations and Dividend Coverage Ratio (non-GAAP measures) to the most comparable GAAP measure are available at www.williams.com and as an attachment to this news release.
(2) Does not represent leverage ratios measured for WMB credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. Debt is net of cash on hand, and Adjusted EBITDA reflects the sum of the last four quarters.
(3) Capital Investments includes increases to property, plant, and equipment (growth & maintenance capital), purchases of businesses, net of cash acquired, purchases of and contributions to equity-method investments and purchases of other long-term investments.

GAAP Measures

• Fourth-quarter 2021 net income increased by $506 million compared to the prior year reflecting $66 million of increased earnings from our new upstream operations, $58 million higher service revenues, and $45 million of higher joint venture earnings in the Northeast G&P segment. The higher service revenues include $30 million from Transco expansion projects and a $24 million increase at Northeast G&P. In addition, we had a $188 million net unrealized gain on commodity derivatives, primarily in our Sequent business, partially offset by $93 million of higher operating and administrative expense including the impact of higher incentive and equity compensation expense as well as the absence of a prior year benefit associated with a change in employee benefit policy. Beyond these business drivers, we also benefited from the absence of $326 million of impairment-related impacts, partially offset by a higher provision for income taxes.
• The net unrealized gain on commodity derivatives includes $168 million related to derivative contracts within the Sequent segment that are not designated as hedges for accounting purposes. Sequent can experience significant earnings volatility from the fair value accounting required for the derivatives used to hedge a portion of the economic value of the underlying transportation and storage portfolio. However, the unrealized fair value measurement gains and losses are offset by valuation changes in the economic value of the underlying transportation and storage portfolio, which is not recognized until the underlying transportation and storage transaction occurs.
• Full-year 2021 net income improved by $1.3 billion over the prior year, reflecting $223 million of higher commodity margins, $181 million of increased earnings from equity-method investments within Northeast G&P, $111 million of earnings from upstream operations acquired this year, and $77 million of higher service revenues, partially offset by a $109 million net unrealized losses on commodity derivatives, $74 million of higher depreciation and amortization expense and $206 million of higher operating and administrative costs, including the previously described impacts of incentive and equity compensation expense and the change in employee benefit policy. The higher service revenues reflect $106 million from Transco expansion projects and $63 million in Northeast G&P reduced by lower West service revenues. The improvement over last year also reflects the absence of $1.5 billion in pre-tax charges in 2020 related to impairments of certain assets, equity-method investments, goodwill and goodwill at an equity investee, of which $65 million was attributable to noncontrolling interests. The provision for income taxes changed unfavorably by $432 million primarily due to higher pre-tax income.
• The severe winter weather impact in February 2021 and the associated effect on commodity prices is estimated to have had a net favorable impact on our pre-tax results of approximately $77 million, primarily within our commodity margins and results from upstream operations.
• Cash flow from operations for both the fourth quarter and full-year periods of 2021 increased as compared to 2020 primarily due to higher operating results exclusive of non-cash charges. The full-year period also benefited from higher distributions from equity-method investments and favorable changes in net working capital, partially offset by higher margin deposits associated with increasing derivative liabilities. Working capital changes compared to the prior year benefited from the absence of $284 million of rate refunds paid in 2020 associated with Transco’s completed rate case.

Non-GAAP Measures

• Fourth-quarter 2021 Adjusted EBITDA increased by $147 million over the prior year, driven by the previously described benefits from upstream operations and service revenues, as well as $86 million higher proportional EBITDA from Northeast G&P equity-method investments, partially offset by higher operating and administrative costs.
• Full-year Adjusted EBITDA increased by $530 million over the prior year, driven by the previously described benefits from commodity margins, upstream operations and service revenues, as well as $209 million higher proportional EBITDA from Northeast G&P equity-method investments, partially offset by higher operating and administrative costs.
• Fourth-quarter 2021 Adjusted Income improved by $94 million over the prior year, while full-year Adjusted Income improved by $325 million. Increases for both comparative periods were driven by the previously described impacts to net income, adjusted to remove the effects of net unrealized gains and losses on commodity derivatives, the absence of 2020 impairments, amortization of certain assets from the Sequent acquisition, and accelerated depreciation on decommissioning assets.
• Fourth-quarter and full-year 2021 Available Funds From Operations increased by $62 million and $435 million, respectively, compared to the prior periods primarily due to higher operating results exclusive of non-cash charges, while the full-year period also benefited from higher distributions from equity-method investments.

Business Segment Results & Form 10-K

Williams’ operations are comprised of the following reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West, Sequent and Other. For more information, see the company’s 2021 Form 10-K.

		Fourth Quarter												Full Year
Amounts in millions		Modified EBITDA						Adjusted EBITDA						Modified EBITDA						Adjusted EBITDA
		4Q 2021		4Q 2020		Change		4Q 2021		4Q 2020		Change		2021		2020		Change		2021		2020		Change
Transmission & Gulf of Mexico		$685		$486		$199		$685		$644		$41		$2,621		$2,379		$242		$2,623		$2,552		$71
Northeast G&P		459		363		96		459		406		53		1,712		1,489		223		1,712		1,535		177
West		273		283		(10)		253		277		(24)		1,095		998		97		1,092		990		102
Sequent		169		—		169		17		—		17		(112)		—		(112)		15		—		15
Other		87		(23)		110		69		9		60		178		(15)		193		193		28		165
Total		$1,673		$1,109		$564		$1,483		$1,336		$147		$5,494		$4,851		$643		$5,635		$5,105		$530
Note: Williams uses Modified EBITDA for its segment reporting. Definitions of Modified EBITDA and Adjusted EBITDA and schedules reconciling to net income are included in this news release.

Transmission & Gulf of Mexico

• Fourth-quarter and full-year Modified and Adjusted EBITDA improved compared to the prior year, as higher service revenues related to recent expansion projects were partially offset by higher operating and administrative costs. The full-year period also benefited from higher commodity margins and proportional EBITDA from the Discovery equity-method investment. Modified EBITDA for both periods also benefited from the absence of a $170 million 2020 impairment charge, which is excluded from Adjusted EBITDA.

Northeast G&P

• Fourth-quarter and full-year 2021 Modified and Adjusted EBITDA increased over the prior year driven by higher gathering volumes from equity-method investments and the benefit of our increased ownership in Blue Racer Midstream, acquired in November 2020. Modified EBITDA for both periods also benefited from the absence of our share of 2020 impairments at equity-method investees, which are excluded from Adjusted EBITDA.

• Gross gathering volumes for fourth-quarter 2021, including 100% of operated equity-method investments, increased by 5% over the same period in 2020.

West

• Fourth-quarter 2021 Modified and Adjusted EBITDA decreased compared to the prior year as the benefits of higher gathering volumes and rates were more than offset by the absence of certain volume deficiency payments. Modified EBITDA also benefited from a $20 million net unrealized gain on commodity derivatives, which is excluded from Adjusted EBITDA.

• Full-year 2021 Modified and Adjusted EBITDA increased over the prior year primarily due to an estimated $55 million net favorable impact from the February 2021 severe winter weather, $96 million of higher commodity margins, and lower operating and administrative costs. These favorable changes were partially offset by lower Barnett deferred revenue amortization and the absence of a deficiency fee, as well as lower proportional EBITDA from equity method investments driven by reduced transportation volumes on Overland Pass Pipeline.

Sequent

• Fourth-quarter and full-year 2021 Modified and Adjusted EBITDA reflect the results of this business acquired in July 2021. The fourth-quarter Modified EBITDA was driven by a $168 million net unrealized gain on commodity derivatives, which is excluded from Adjusted EBITDA. The full-year Modified EBITDA loss includes a $109 million net unrealized loss on commodity derivatives, which is excluded from Adjusted EBITDA. The related derivative contracts are not designated as hedges for accounting purposes. Sequent can experience significant earnings volatility from the fair value accounting required for the derivatives used to hedge a portion of the economic value of the underlying transportation and storage portfolio. However, the unrealized fair value measurement gains and losses are offset by valuation changes in the economic value of the underlying transportation and storage portfolio, which is not recognized until the underlying transportation and storage transaction occurs.

Other

• Fourth-quarter and full-year 2021 Modified and Adjusted EBITDA improved compared to the prior year primarily due to oil and gas producing properties acquired this year. The year-to-date increase reflects an estimated $22 million attributable to the February 2021 severe winter weather. Modified EBITDA for both periods also reflects the absence of a $24 million loss contingency accrual in 2020, which is excluded from Adjusted EBITDA.

2022 Financial Guidance

The company expects 2022 Adjusted EBITDA between $5.6 billion and $6 billion. The company also expects 2022 growth capex between $1.25 billion to $1.35 billion and maintenance capex between $650 million and $750 million, which includes capital for emissions reduction and modernization initiatives. Importantly, Williams anticipates achieving a leverage ratio midpoint of 3.8x, which along with expectations to generate positive free cash flow (after capex and dividends), will allow it to retain financial flexibility. Dividend guidance increased 3.7% on an annualized basis to $1.70 in 2022 from $1.64 in 2021.

Williams 2022 Analyst Day Scheduled for Tomorrow; Materials to be Posted Shortly

Williams is hosting its 2022 Analyst Day event on Tuesday, Feb. 22, 2022 beginning at 8:30 a.m. Eastern Time (7:30 a.m. Central Time). In addition to discussing 2021 results, Williams’ management will give in-depth presentations covering the company’s natural gas infrastructure strategy to meet growing clean energy demands. These presentations will highlight the company’s efficient operations, disciplined project execution, strong financial position and 2022 financial guidance. Presentation slides and earnings materials will be accessible on the Williams’ Investor Relations website shortly.

Participants who wish to view the live presentation can access the webcast here: https://event.on24.com/wcc/r/3631895/2D57BA768B960ACF8BA9532EE4911350

A replay of the 2022 Analyst Day webcast will also be available on the website for at least 90 days following the event.

About Williams

Williams (NYSE: WMB) is committed to being the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy. Headquartered in Tulsa, Oklahoma, Williams is an industry-leading, investment grade C-Corp with operations across the natural gas value chain including gathering, processing, interstate transportation and storage of natural gas and natural gas liquids. With major positions in top U.S. supply basins, Williams connects the best supplies with the growing demand for clean energy. Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately 30 percent of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use. www.williams.com

The Williams Companies, Inc. Consolidated Statement of Income
		Year Ended December 31,
		2021				2020				2019
		(Millions, except per-share amounts)
Revenues:
Service revenues		$	6,001			$	5,924			$	5,933
Service revenues – commodity consideration			238				129				203
Product sales			4,536				1,671				2,063
Net gain (loss) on commodity derivatives			(148	)			(5	)			2
Total revenues			10,627				7,719				8,201
Costs and expenses:
Product costs			3,931				1,545				1,961
Processing commodity expenses			101				68				105
Operating and maintenance expenses			1,548				1,326				1,468
Depreciation and amortization expenses			1,842				1,721				1,714
Selling, general, and administrative expenses			558				466				558
Impairment of certain assets			2				182				464
Impairment of goodwill			—				187				—
Other (income) expense – net			14				22				10
Total costs and expenses			7,996				5,517				6,280
Operating income (loss)			2,631				2,202				1,921
Equity earnings (losses)			608				328				375
Impairment of equity-method investments			—				(1,046	)			(186	)
Other investing income (loss) – net			7				8				107
Interest incurred			(1,190	)			(1,192	)			(1,218	)
Interest capitalized			11				20				32
Other income (expense) – net			6				(43	)			33
Income (loss) from continuing operations before income taxes			2,073				277				1,064
Less: Provision (benefit) for income taxes			511				79				335
Income (loss) from continuing operations			1,562				198				729
Income (loss) from discontinued operations			—				—				(15	)
Net income (loss)			1,562				198				714
Less: Net income (loss) attributable to noncontrolling interests			45				(13	)			(136	)
Net income (loss) attributable to The Williams Companies, Inc.			1,517				211				850
Less: Preferred stock dividends			3				3				3
Net income (loss) available to common stockholders		$	1,514			$	208			$	847
Amounts attributable to The Williams Companies, Inc. available to common stockholders:
Income (loss) from continuing operations		$	1,514			$	208			$	862
Income (loss) from discontinued operations			—				—				(15	)
Net income (loss)		$	1,514			$	208			$	847
Basic earnings (loss) per common share:
Income (loss) from continuing operations		$	1.25			$	.17			$	.71
Income (loss) from discontinued operations			—				—				(.01	)
Net income (loss)		$	1.25			$	.17			$	.70
Weighted-average shares (thousands)			1,215,221				1,213,631				1,212,037
Diluted earnings (loss) per common share:
Income (loss) from continuing operations		$	1.24			$	.17			$	.71
Income (loss) from discontinued operations			—				—				(.01	)
Net income (loss)		$	1.24			$	.17			$	.70
Weighted-average shares (thousands)			1,218,215				1,215,165				1,214,011

The Williams Companies, Inc. Consolidated Balance Sheet
		December 31,
		2021				2020
		(Millions, except per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents		$	1,680			$	142
Trade accounts and other receivables			1,986				1,000
Allowance for doubtful accounts			(8	)			(1	)
Trade accounts and other receivables – net			1,978				999
Inventories			379				136
Derivative assets			301				3
Other current assets and deferred charges			211				149
Total current assets			4,549				1,429
Investments			5,127				5,159
Property, plant, and equipment – net			29,258				28,929
Intangible assets – net of accumulated amortization			7,402				7,444
Regulatory assets, deferred charges, and other			1,276				1,204
Total assets		$	47,612			$	44,165
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	1,746			$	482
Accrued liabilities			1,201				944
Long-term debt due within one year			2,025				893
Total current liabilities			4,972				2,319
Long-term debt			21,650				21,451
Deferred income tax liabilities			2,453				1,923
Regulatory liabilities, deferred income, and other			4,436				3,889
Contingent liabilities and commitments
Equity:
Stockholders’ equity:
Preferred stock ($1 par value; 30 million shares authorized at December 31, 2021 and December 31, 2020; 35,000 shares issued at December 31, 2021 and December 31, 2020)			35				35
Common stock ($1 par value; 1,470 million shares authorized at December 31, 2021 and December 31, 2020; 1,250 million shares issued at December 31, 2021 and 1,248 million shares issued at December 31, 2020)			1,250				1,248
Capital in excess of par value			24,449				24,371
Retained deficit			(13,237	)			(12,748	)
Accumulated other comprehensive income (loss)			(33	)			(96	)
Treasury stock, at cost (35 million shares of common stock)			(1,041	)			(1,041	)
Total stockholders’ equity			11,423				11,769
Noncontrolling interests in consolidated subsidiaries			2,678				2,814
Total equity			14,101				14,583
Total liabilities and equity		$	47,612			$	44,165

The Williams Companies, Inc. Consolidated Statement of Cash Flows
		Year Ended December 31,
		2021				2020				2019
		(Millions)
OPERATING ACTIVITIES:
Net income (loss)		$	1,562			$	198			$	714
Adjustments to reconcile to net cash provided (used) by operating activities:
Depreciation and amortization			1,842				1,721				1,714
Provision (benefit) for deferred income taxes			509				108				376
Equity (earnings) losses			(608	)			(328	)			(375	)
Distributions from unconsolidated affiliates			757				653				657
Gain on disposition of equity-method investments			—				—				(122	)
(Gain) loss on deconsolidation of businesses			—				—				29
Impairment of goodwill			—				187				—
Impairment of equity-method investments			—				1,046				186
Impairment of certain assets			2				182				464
Net unrealized (gain) loss from derivative instruments			109				—				(3	)
Amortization of stock-based awards			81				52				57
Cash provided (used) by changes in current assets and liabilities:
Accounts receivable			(545	)			(2	)			34
Inventories			(124	)			(11	)			5
Other current assets and deferred charges			(63	)			11				21
Accounts payable			643				(7	)			(46	)
Accrued liabilities			58				(309	)			153
Changes in current and noncurrent derivative assets and liabilities			(277	)			(4	)			3
Other, including changes in noncurrent assets and liabilities			(1	)			(1	)			(174	)
Net cash provided (used) by operating activities			3,945				3,496				3,693
FINANCING ACTIVITIES:
Proceeds from long-term debt			2,155				3,899				767
Payments of long-term debt			(894	)			(3,841	)			(909	)
Proceeds from issuance of common stock			9				9				10
Proceeds from sale of partial interest in consolidated subsidiary			—				—				1,334
Common dividends paid			(1,992	)			(1,941	)			(1,842	)
Dividends and distributions paid to noncontrolling interests			(187	)			(185	)			(124	)
Contributions from noncontrolling interests			9				7				36
Payments for debt issuance costs			(26	)			(20	)			—
Other – net			(16	)			(13	)			(17	)
Net cash provided (used) by financing activities			(942	)			(2,085	)			(745	)
INVESTING ACTIVITIES:
Property, plant, and equipment:
Capital expenditures (1)			(1,239	)			(1,239	)			(2,109	)
Dispositions – net			(8	)			(36	)			(40	)
Contributions in aid of construction			52				37				52
Purchases of businesses, net of cash acquired			(151	)			—				(728	)
Proceeds from dispositions of equity-method investments			1				—				485
Purchases of and contributions to equity-method investments			(115	)			(325	)			(453	)
Other – net			(5	)			5				(34	)
Net cash provided (used) by investing activities			(1,465	)			(1,558	)			(2,827	)
Increase (decrease) in cash and cash equivalents			1,538				(147	)			121
Cash and cash equivalents at beginning of year			142				289				168
Cash and cash equivalents at end of year		$	1,680			$	142			$	289
_________
(1) Increases to property, plant, and equipment		$	(1,305	)		$	(1,160	)		$	(2,023	)
Changes in related accounts payable and accrued liabilities			66				(79	)			(86	)
Capital expenditures		$	(1,239	)		$	(1,239	)		$	(2,109	)

Contacts

MEDIA CONTACT:
media@williams.com
(800) 945-8723

INVESTOR CONTACT:
Danilo Juvane

(918) 573-5075

Grace Scott

(918) 573-1092

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