Williams Delivers Strong Second-Quarter Results

Williams (NYSE: WMB) today announced its unaudited financial results for the three and six months ended June 30, 2024.

Financial results build on track record of year-over-year consecutive growth

GAAP net income of $401 million, or $0.33 per diluted share (EPS)
Adjusted net income of $521 million, or $0.43 per diluted share (Adj. EPS)
Record 2Q Adjusted EBITDA of $1.667 billion – up $56 million or 3% vs. 2Q 2023
Cash flow from operations (CFFO) of $1.279 billion
Available funds from operations (AFFO) of $1.250 billion – up $35 million or 3% vs. 2Q 2023
Dividend coverage ratio of 2.16x (AFFO basis)
On track to achieve top half of 2024 financial guidance

Crisp project execution and accelerating natural gas demand drive strong financial outlook

Optimized portfolio by exiting Aux Sable joint venture position and consolidating ownership interest in Gulf of Mexico Discovery system
Placed Transco's Regional Energy Access into full service ahead of schedule on Aug. 1
Placed Marcellus South and MountainWest's Uinta Basin expansions in-service
Significant emissions reductions and cost savings accomplished in replacing 57 Transco and Northwest Pipeline compressor units to date
Initiated construction activities on Louisiana Energy Gateway gathering, treating and carbon capture & sequestration project
Began construction on Transco's Texas to Louisiana Energy Pathway expansion
Signed precedent agreement on Transco's Gillis West expansion
Published 2023 Sustainability Report; set 2028 methane intensity goal for OGMP 2.0

CEO Perspective

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

“Our record second quarter Adjusted EBITDA was driven primarily by the strong performance of our transmission and storage business. Even in this environment of low gas prices, we continue to deliver and are on track to achieve the top half of financial guidance this year and even higher levels of growth in 2025 with an expected five-year compound annual growth rate of over 12 percent on our Adjusted EPS, 2020 to 2025.

“Our teams have continued to execute on our strategy across all fronts, including placing projects into service in the Northeast, the West and the Deepwater Gulf of Mexico. In addition to bringing Transco’s Regional Energy Access expansion fully online ahead of schedule, we have initiated construction activities on the Louisiana Energy Gateway gathering, treating and carbon capture & sequestration project as well as Transco’s Texas to Louisiana Energy Pathway expansion. We also continued to optimize our portfolio by selling our stake in the Aux Sable joint venture at an attractive premium and consolidated our ownership interest in the Gulf of Mexico Discovery system at an attractive value, which allows us to improve efficiencies in this commercially active and growing region.”

Armstrong added, “We’ve been delivering consecutive year-over-year growth for more than a decade at Williams, and all signals indicate that the future will be even stronger as demand for natural gas accelerates due to increasing electrification and LNG exports. With our powerful backlog of projects and outstanding track record of execution, no other company is better positioned than Williams to convert these opportunities into compounding returns for our shareholders.”

Williams Summary Financial Information

Year to Date

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.

2024

2023

2024

2023

GAAP Measures

Net Income

$401

$547

$1,032

$1,473

Net Income Per Share

$0.33

$0.45

$0.84

$1.20

Cash Flow From Operations

$1,279

$1,377

$2,513

$2,891

Non-GAAP Measures (1)

Adjusted EBITDA

$1,667

$1,611

$3,601

$3,406

Adjusted Net Income

$521

$515

$1,240

$1,199

Adjusted Earnings Per Share

$0.43

$0.42

$1.01

$0.98

Available Funds from Operations

$1,250

$1,215

$2,757

$2,660

Dividend Coverage Ratio

2.16x

2.23x

2.38x

2.44x

Other

Debt-to-Adjusted EBITDA at Quarter End (2)

3.76x

3.50x

Capital Investments (Excluding Acquisitions) (3) (4)

$663

$715

$1,226

$1,240

(1) Schedules reconciling Adjusted Net 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 include increases to property, plant, and equipment (growth & maintenance capital), purchases of and contributions to equity-method investments and purchases of other long-term investments.

(4) Year-to-date 2024 capital excludes $1.844 billion for the acquisition of the Gulf Coast Storage assets, which closed in January 2024. Year-to-date 2023 capital excludes $1.053 billion for the acquisition of MountainWest, which closed in February 2023.

GAAP Measures

Second-quarter 2024 net income decreased by $146 million compared to the prior year reflecting an unfavorable change of $214 million in net unrealized gains/losses on commodity derivatives, higher net interest expense from recent debt issuances and retirements, as well as higher operating costs, depreciation and interest expense resulting from recent acquisitions. These unfavorable changes were partially offset by a $89 million increase in service revenues driven by acquisitions and expansion projects, as well as higher equity allowance for funds used during construction (equity AFUDC) associated with ongoing capital projects at our regulated natural gas pipelines. The tax provision decreased primarily due to lower pretax income.

Year-to-date 2024 net income decreased by $441 million compared to the prior year reflecting an unfavorable change of $633 million in net unrealized gains/losses on commodity derivatives, higher net interest expense from recent debt issuances and retirements, lower realized hedge gains in the West, as well as higher operating costs, depreciation and interest expense resulting from recent acquisitions. These unfavorable changes were partially offset by a $300 million increase in service revenues driven by acquisitions and expansion projects, higher commodity margins, and higher equity AFUDC. The tax provision decreased primarily due to lower pretax income.

Second-quarter and year-to-date 2024 cash flow from operations decreased compared to the prior year primarily due to unfavorable net changes in both working capital and derivative collateral requirements, partially offset by higher operating results exclusive of non-cash items.

Non-GAAP Measures

Second-quarter 2024 Adjusted EBITDA increased by $56 million over the prior year, driven by the previously described favorable net contributions from acquisitions and expansion projects. Year-to-date 2024 Adjusted EBITDA increased by $195 million over the prior year, similarly reflecting favorable net contributions from acquisitions and expansion projects, as well as higher commodity margins.

Second-quarter and year-to-date 2024 Adjusted Net Income improved by $6 million and $41 million, respectively, over the prior year, driven by the previously described impacts to net income, adjusted primarily to remove the effects of net unrealized gains/losses on commodity derivatives and the related income tax effects.

Second-quarter and year-to-date Available Funds From Operations (AFFO) increased by $35 million and $97 million, respectively, compared to the prior year primarily due to higher results from continuing operations exclusive of non-cash items.

Business Segment Results & Form 10-Q

Williams' operations are comprised of the following reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services, as well as Other. For more information, see the company's second-quarter 2024 Form 10-Q.

Second Quarter

Year to Date

Amounts in millions

Modified EBITDA

Adjusted EBITDA

Modified EBITDA

Adjusted EBITDA

2Q 2024

2Q 2023

Change

2Q 2024

2Q 2023

Change

2024

2023

Change

2024

2023

Change

Transmission & Gulf of Mexico

$808

$731

$77

$812

$748

$64

$1,637

$1,446

$191

$1,651

$1,476

$175

Northeast G&P

481

515

(34

)

479

515

(36

)

985

—

983

985

)

West

318

312

319

312

645

616

647

598

Gas & NGL Marketing Services

(126

)

(194

)

(14

)

(16

)

(25

)

635

(660

)

175

215

(40

)

Other

123

115

145

132

Total

$1,528

$1,667

($139

)

$1,667

$1,611

$56

$3,365

$3,797

($432

)

$3,601

$3,406

$195

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

Second-quarter 2024 Modified and Adjusted EBITDA improved compared to the prior year driven by favorable net contributions from the Gulf Coast Storage acquisition and the Regional Energy Access expansion project, as well as higher equity AFUDC. Year-to-date 2024 Modified and Adjusted EBITDA also benefited from the MountainWest acquisition. Modified EBITDA for all periods was impacted by one-time acquisition costs, which are excluded from Adjusted EBITDA.

Northeast G&P

Second-quarter 2024 Modified and Adjusted EBITDA decreased compared to the prior year driven by lower gathering volumes, partially offset by higher rates at Susquehanna Supply Hub and Bradford. For the year-to-date comparison, both metrics were largely unchanged as these higher rates offset the lower gathering volumes.

West

Second-quarter 2024 Modified and Adjusted EBITDA increased compared to the prior year benefiting from the DJ Basin Acquisitions and higher volumes on the Overland Pass Pipeline, partially offset by lower gathering volumes and lower realized gains on natural gas hedges. Both metrics also improved for the year-to-date period reflecting similar drivers, as well as improved commodity margins reflecting favorable changes in shrink prices related to the absence of a short-term gas price spike at Opal in 2023. The year-to-date Modified EBITDA was also impacted by the absence of a first-quarter 2023 favorable contract settlement, which is excluded from Adjusted EBITDA.

Gas & NGL Marketing Services

Second-quarter 2024 Modified EBITDA decreased from the prior year primarily reflecting a $200 million net unfavorable change in unrealized gains/losses on commodity derivatives, which is excluded from Adjusted EBITDA. Year-to-date 2024 Modified EBITDA also decreased from the prior year reflecting a decline in gas marketing margins and a $628 million net unfavorable change in unrealized gains/losses on commodity derivatives, which is excluded from Adjusted EBITDA.

Strategic Transactions

Williams recently closed two strategic transactions to further derisk its portfolio from commodity price volatility and enhance the performance of commercially active and growing Gulf of Mexico assets.

Williams sold its 14 percent stake in a joint venture with Aux Sable for $160 million. The non-operated joint venture assets include a processing and fractionation facility near Chicago and a rich gas gathering pipeline and conditioning plant in North Dakota. Williams’ ownership in the joint venture was subject to cash flow volatility because the keep-whole arrangement made distributions sensitive to commodity prices.

Separately, Williams purchased from Phillips 66 for $170 million its 40 percent stake in Discovery pipeline in the Gulf of Mexico, bringing Williams’ ownership interest to 100 percent, as well as Phillips 66's Dauphin Island Gathering Partners system. Discovery's assets include approximately 600 miles of offshore gas pipelines, a 600 MMcf/d gas processing plant and a 35 Mbbls/d fractionator, both in Louisiana.

2024 Financial Guidance

Williams continues to expect Adjusted EBITDA at the top half of its 2024 guidance range of $6.8 billion and $7.1 billion. In addition, the company continues to expect 2024 growth capex between $1.45 billion and $1.75 billion and maintenance capex between $1.1 billion and $1.3 billion, which includes capital of $350 million for emissions reduction and modernization initiatives. For 2025, the company continues to expect Adjusted EBITDA between $7.2 billion and $7.6 billion with growth capex between $1.65 billion and $1.95 billion and maintenance capex between $750 million and $850 million, which includes capital of $100 million based on midpoint for emissions reduction and modernization initiatives. Williams continues to anticipate a leverage ratio midpoint for 2024 of 3.85x and increased the dividend by 6.1% on an annualized basis to $1.90 in 2024 from $1.79 in 2023.

Williams' Second-Quarter 2024 Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams' second-quarter 2024 earnings presentation will be posted at www.williams.com. The company's second-quarter 2024 earnings conference call and webcast with analysts and investors is scheduled for Tuesday, Aug. 6, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). Participants who wish to join the call by phone must register using the following link: https://register.vevent.com/register/BI8cf6dbf9f06f47fabd194ab9f38a7eb8

A webcast link to the conference call will be provided on Williams' Investor Relations website. A replay of the webcast will also be available on the website for at least 90 days following the event.

About Williams

Williams (NYSE: WMB) is a trusted energy industry leader committed to safely, reliably, and responsibly meeting growing energy demand. We use our 33,000-mile pipeline infrastructure to move a third of the nation’s natural gas to where it's needed most, supplying the energy used to heat our homes, cook our food and generate low-carbon electricity. For over a century, we’ve been driven by a passion for doing things the right way. Today, our team of problem solvers is leading the charge into the clean energy future – by powering the global economy while delivering immediate emissions reductions within our natural gas network and investing in new energy technologies. Learn more at www.williams.com.

The Williams Companies, Inc.

Consolidated Statement of Income

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

(Millions, except per-share amounts)

Revenues:

Service revenues

1,837

1,748

3,742

3,442

Service revenues – commodity consideration

Product sales

610

593

1,455

1,438

Net gain (loss) from commodity derivatives

(129

)

115

(138

)

621

Total revenues

2,336

2,483

5,107

5,564

Costs and expenses:

Product costs

424

421

950

974

Net processing commodity expenses

Operating and maintenance expenses

522

481

1,033

944

Depreciation and amortization expenses

540

515

1,088

1,021

Selling, general, and administrative expenses

164

161

350

337

Other (income) expense – net

(27

)

(44

)

(40

)

Total costs and expenses

1,640

1,613

3,399

3,334

Operating income (loss)

696

870

1,708

2,230

Equity earnings (losses)

147

160

284

307

Other investing income (loss) – net

Interest expense

(339

)

(306

)

(688

)

(600

)

Other income (expense) – net

Income (loss) before income taxes

555

756

1,410

1,997

Less: Provision (benefit) for income taxes.

129

175

322

459

Income (loss) from continuing operations

426

581

1,088

1,538

Income (loss) from discontinued operations)

—

(87

)

—

(87

)

Net income (loss)

426

494

1,088

1,451

Less: Net income (loss) attributable to noncontrolling interests.

Net income (loss) attributable to The Williams Companies, Inc.

401

460

1,033

1,387

Less: Preferred stock dividends.

—

Net income (loss) available to common stockholders

401

460

1,032

1,386

Amounts attributable to The Williams Companies, Inc. available to common stockholders:

Income (loss) from continuing operations

401

547

1,032

1,473

Income (loss) from discontinued operations

—

(87

)

—

(87

)

Net income (loss) available to common stockholders

401

460

1,032

1,386

Basic earnings (loss) per common share:

Income (loss) from continuing operations

.33

.45

.85

1.21

Income (loss) from discontinued operations

—

(.07

)

—

(.07

)

Net income (loss) available to common stockholders

.33

.38

.85

1.14

Weighted-average shares (thousands)

1,219,367

1,217,673

1,218,761

1,218,564

Diluted earnings (loss) per common share:

Income (loss) from continuing operations

.33

.45

.84

1.20

Income (loss) from discontinued operations

—

(.07

)

—

(.07

)

Net income (loss) available to common stockholders

.33

.38

.84

1.13

Weighted-average shares (thousands)

1,222,236

1,219,915

1,222,229

1,223,429

The Williams Companies, Inc.

Consolidated Balance Sheet

(Unaudited)

June 30,

December 31,

2024

2023

(Millions, except per-share amounts)

ASSETS

Current assets:

Cash and cash equivalents.

2,150

Trade accounts and other receivables (net of allowance of $4 at June 30, 2024 and $3 at December 31, 2023)

1,398

1,655

Inventories.

274

Derivative assets.

218

239

Other current assets and deferred charges.

170

195

Total current assets

2,115

4,513

Investments.

4,612

4,637

Property, plant, and equipment.

54,930

51,842

Accumulated depreciation and amortization.

(18,228

)

(17,531

)

Property, plant, and equipment – net.

36,702

34,311

Intangible assets – net of accumulated amortization.

7,402

7,593

Regulatory assets, deferred charges, and other.

1,578

1,573

Total assets

52,409

52,627

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable.

1,192

1,379

Derivative liabilities.

109

105

Accrued and other current liabilities.

1,229

1,284

Commercial paper.

630

725

Long-term debt due within one year.

1,536

2,337

Total current liabilities

4,696

5,830

Long-term debt.

24,096

23,376

Deferred income tax liabilities.

4,107

3,846

Regulatory liabilities, deferred income, and other.

4,764

4,684

Contingent liabilities and commitments

Equity:

Stockholders’ equity:

Preferred stock ($1 par value; 30 million shares authorized at June 30, 2024 and December 31, 2023; 35 thousand shares issued at June 30, 2024 and December 31, 2023)

Common stock ($1 par value; 1,470 million shares authorized at June 30, 2024 and December 31, 2023; 1,258 million shares issued at June 30, 2024 and 1,256 million shares issued at December 31, 2023)

1,258

1,256

Capital in excess of par value

24,589

24,578

Retained deficit

(12,419

)

(12,287

)

Accumulated other comprehensive income (loss)

—

Treasury stock, at cost (39 million shares at June 30, 2024 and December 31, 2023 of common stock)

(1,180

)

(1,180

)

Total stockholders’ equity.

12,296

12,402

Noncontrolling interests in consolidated subsidiaries.

2,450

2,489

Total equity

14,746

14,891

Total liabilities and equity.

52,409

52,627

The Williams Companies, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

Six Months Ended June 30,

2024

2023

(Millions)

OPERATING ACTIVITIES:

Net income (loss)

1,088

1,451

Adjustments to reconcile to net cash provided (used) by operating activities:

Depreciation and amortization.

1,088

1,021

Provision (benefit) for deferred income taxes.

258

427

Equity (earnings) losses.

(284

)

(307

)

Distributions from equity-method investees.

394

418

Net unrealized (gain) loss from commodity derivative instruments.

223

(410

)

Inventory write-downs.

Amortization of stock-based awards.

Cash provided (used) by changes in current assets and liabilities:

Accounts receivable

270

1,423

Inventories

)

Other current assets and deferred charges

Accounts payable

(219

)

(1,220

)

Accrued and other current liabilities

(76

)

(72

)

Changes in current and noncurrent commodity derivative assets and liabilities.

(141

)

119

Other, including changes in noncurrent assets and liabilities.

(151

)

(87

)

Net cash provided (used) by operating activities

2,513

2,891

FINANCING ACTIVITIES:

Proceeds from (payments of) commercial paper – net

(95

)

(352

)

Proceeds from long-term debt

2,100

1,503

Payments of long-term debt

(2,274

)

(14

)

Payments for debt issuance costs

(18

)

(13

)

Proceeds from issuance of common stock

Purchases of treasury stock

—

(130

)

Common dividends paid

(1,158

)

(1,091

)

Dividends and distributions paid to noncontrolling interests

(130

)

(112

)

Contributions from noncontrolling interests

Other – net

(18

)

(17

)

Net cash provided (used) by financing activities

(1,552

)

(204

)

INVESTING ACTIVITIES:

Property, plant, and equipment:

Capital expenditures (1)

(1,123

)

(1,155

)

Dispositions - net.

(27

)

(21

)

Purchases of businesses, net of cash acquired

(1,844

)

(1,053

)

Purchases of and contributions to equity-method investments

(82

)

(69

)

Other – net

Net cash provided (used) by investing activities

(3,056

)

(2,288

)

Increase (decrease) in cash and cash equivalents

(2,095

)

399

Cash and cash equivalents at beginning of year

2,150

152

Cash and cash equivalents at end of period

551

_________

(1) Increases to property, plant, and equipment

(1,141

)

(1,168

)

Changes in related accounts payable and accrued liabilities.

Capital expenditures.

(1,123

)

(1,155

)

Transmission & Gulf of Mexico

(UNAUDITED)

2023

2024

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Regulated interstate natural gas transportation, storage, and other revenues (1)

774

786

794

822

3,176

836

805

1,641

Gathering, processing, storage and transportation revenues

100

104

114

100

418

137

147

284

Other fee revenues (1)

Commodity margins

Operating and administrative costs (1)

(254

)

(254

)

(257

)

(270

)

(1,035

)

(254

)

(261

)

(515

)

Other segment income (expenses) - net (1)

119

Gain on sale of business

—

130

)

129

—

Proportional Modified EBITDA of equity-method investments

205

Modified EBITDA

715

731

881

741

3,068

829

808

1,637

Adjustments

(127

)

(86

)

Adjusted EBITDA

728

748

754

752

2,982

839

812

1,651

Statistics for Operated Assets

Natural Gas Transmission (2)

Transcontinental Gas Pipe Line

Avg. daily transportation volumes (MMdth)

14.3

13.2

14.0

13.9

14.6

12.9

13.8

Avg. daily firm reserved capacity (MMdth)

19.5

19.4

19.3

19.4

20.3

19.7

20.0

Northwest Pipeline LLC

Avg. daily transportation volumes (MMdth)

3.1

2.3

2.8

2.6

3.1

2.2

2.7

Avg. daily firm reserved capacity (MMdth)

3.8

3.7

3.8

MountainWest (3)

Avg. daily transportation volumes (MMdth)

4.2

3.2

3.8

4.2

3.9

4.3

3.2

3.8

Avg. daily firm reserved capacity (MMdth)

7.8

7.5

7.9

7.7

8.4

8.0

8.2

Gulfstream - Non-consolidated

Avg. daily transportation volumes (MMdth)

1.0

1.2

1.4

1.1

1.2

1.0

1.2

1.1

Avg. daily firm reserved capacity (MMdth)

1.4

Gathering, Processing, and Crude Oil Transportation

Consolidated (4)

Gathering volumes (Bcf/d)

0.28

0.23

0.27

0.26

0.25

0.23

0.24

Plant inlet natural gas volumes (Bcf/d)

0.43

0.40

0.46

0.44

0.45

0.27

0.36

NGL production (Mbbls/d)

NGL equity sales (Mbbls/d)

Crude oil transportation volumes (Mbbls/d)

119

111

134

130

123

118

114

116

Non-consolidated (5)

Gathering volumes (Bcf/d)

0.36

0.30

0.36

0.33

0.34

0.27

0.35

0.31

Plant inlet natural gas volumes (Bcf/d)

0.36

0.30

0.36

0.33

0.34

0.27

0.35

0.31

NGL production (Mbbls/d)

NGL equity sales (Mbbls/d)

(1) Excludes certain amounts associated with revenues and operating costs for tracked or reimbursable charges.

(2) Tbtu converted to MMdth at one trillion British thermal units = one million dekatherms.

(3) Includes 100% of the volumes associated with the MountainWest Acquisition transmission assets after the purchase on February 14, 2023, including 100% of the volumes associated with the operated equity-method investment White River Hub, LLC. Average volumes were calculated over the period owned.

(4) Excludes volumes associated with equity-method investments that are not consolidated in our results.

(5) Includes 100% of the volumes associated with operated equity-method investments, including Discovery Producer Services.

Northeast G&P

(UNAUDITED)

2023

2024

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Gathering, processing, transportation, and fractionation revenues

391

431

417

411

1,650

411

398

809

Other fee revenues (1)

114

Commodity margins

)

—

Operating and administrative costs (1)

(101

)

(101

)

(115

)

(107

)

(424

)

(108

)

(108

)

(216

)

Other segment income (expenses) - net

—

)

(10

)

Proportional Modified EBITDA of equity-method investments

143

159

119

153

574

157

153

310

Modified EBITDA

470

515

454

477

1,916

504

481

985

Adjustments

—

)

Adjusted EBITDA

470

515

485

1,955

504

479

983

Statistics for Operated Assets

Gathering and Processing

Consolidated (2)

Gathering volumes (Bcf/d)

4.42

4.61

4.41

4.37

4.45

4.33

4.11

4.22

Plant inlet natural gas volumes (Bcf/d)

1.92

1.79

1.93

1.89

1.76

1.77

NGL production (Mbbls/d)

144

135

144

133

139

133

136

135

NGL equity sales (Mbbls/d)

—

Non-consolidated (3)

Gathering volumes (Bcf/d)

6.97

7.03

6.83

6.85

6.92

6.79

6.42

6.61

Plant inlet natural gas volumes (Bcf/d)

0.77

0.93

0.99

1.01

0.93

0.98

0.94

0.96

NGL production (Mbbls/d)

NGL equity sales (Mbbls/d)

(1) Excludes certain amounts associated with revenues and operating costs for reimbursable charges.

(2) Includes volumes associated with Susquehanna Supply Hub, the Northeast JV, and Utica Supply Hub, all of which are consolidated.

(3) Includes 100% of the volumes associated with operated equity-method investments, including the Laurel Mountain Midstream partnership, Blue Racer Midstream, and the Bradford Supply Hub and the Marcellus South Supply Hub within the Appalachia Midstream Services partnership.

West

(UNAUDITED)

2023

2024

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Net gathering, processing, transportation, storage, and fractionation revenues

382

373

371

397

1,523

421

397

818

Other fee revenues (1)

Commodity margins

(24

)

Operating and administrative costs (1)

(115

)

(122

)

(122

)

(144

)

(503

)

(139

)

(148

)

(287

)

Other segment income (expenses) - net

)

(14

)

—

)

Proportional Modified EBITDA of equity-method investments

162

Modified EBITDA

304

312

315

307

1,238

327

318

645

Adjustments

(18

)

—

)

Adjusted EBITDA

286

312

315

323

1,236

328

319

647

Statistics for Operated Assets

Gathering and Processing

Consolidated (2)

Gathering volumes (Bcf/d) (3)

5.47

5.51

5.60

6.03

6.02

5.75

5.25

5.50

Plant inlet natural gas volumes (Bcf/d)

0.92

1.06

1.12

1.63

1.54

1.52

1.48

1.50

NGL production (Mbbls/d)

NGL equity sales (Mbbls/d)

Non-consolidated

Gathering volumes (Bcf/d)

0.32

0.33

—

Plant inlet natural gas volumes (Bcf/d)

0.32

—

NGL production (Mbbls/d)

—

NGL and Crude Oil Transportation volumes (Mbbls/d) (4)

161

217

244

250

218

220

292

256

(1) Excludes certain amounts associated with revenues and operating costs for reimbursable charges.

(2) Excludes volumes associated with equity-method investments that are not consolidated in our results.

(3) Includes 100% of the volumes associated with the Cureton Acquisition gathering assets after the purchase on November 30, 2023. Average volumes were calculated over the period owned.

(4) Includes 100% of the volumes associated with Overland Pass Pipeline Company (an operated equity-method investment), RMM (during the first three quarters of 2023), as well as volumes for our consolidated Bluestem pipeline.

Gas & NGL Marketing Services

(UNAUDITED)

2023

2024

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Commodity margins

265

)

389

236

239

Other fee revenues

—

Net unrealized gain (loss) from derivative instruments

333

208

659

(95

)

(106

)

(201

)

Operating and administrative costs

(32

)

(24

)

(19

)

(24

)

(99

)

(40

)

(23

)

(63

)

Modified EBITDA

567

272

950

101

(126

)

(25

)

Adjustments

(336

)

(84

)

(27

)

(203

)

(650

)

112

200

Adjusted EBITDA

231

(16

)

300

189

(14

)

175

Statistics

Product Sales Volumes

Natural Gas (Bcf/d)

7.24

6.56

7.31

7.11

7.05

7.53

6.98

7.25

NGLs (Mbbls/d)

234

239

245

173

223

170

162

166

Other

(UNAUDITED)

2023

2024

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Service revenues

Net realized product sales

120

127

145

489

113

109

222

Net unrealized gain (loss) from derivative instruments

)

(11

)

(25

)

(22

)

Operating and administrative costs

(48

)

(54

)

(58

)

(65

)

(225

)

(51

)

(50

)

(101

)

Other segment income (expenses) - net

Net gain from Energy Transfer litigation judgment

—

534

—

Proportional Modified EBITDA of equity-method investments

—

)

—

)

—

Modified EBITDA

645

841

123

Adjustments

(553

)

(535

)

Adjusted EBITDA

306

145

Statistics

Net Product Sales Volumes

Natural Gas (Bcf/d)

0.26

0.29

0.31

0.30

0.29

0.28

0.24

0.26

NGLs (Mbbls/d)

Crude Oil (Mbbls/d)

Capital Expenditures and Investments

(UNAUDITED)

2023

2024

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Capital expenditures:

Transmission & Gulf of Mexico

205

263

382

404

1,254

310

397

707

Northeast G&P

115

359

117

West

169

197

141

121

628

120

210

Other

275

Total (1)

545

610

690

671

2,516

544

579

1,123

Purchases of and contributions to equity-method investments:

Transmission & Gulf of Mexico

Northeast G&P

West

—

Other

—

Total

141

Summary:

Transmission & Gulf of Mexico

213

281

388

413

1,295

337

407

744

Northeast G&P

130

119

123

458

161

West

169

197

142

121

629

120

211

Other

275

Total

584

640

701

732

2,657

596

609

1,205

Capital investments:

Increases to property, plant, and equipment

484

684

792

604

2,564

509

632

1,141

Purchases of businesses, net of cash acquired

1,056

(3)

(29)

544

1,568

1,851

(7)

1,844

Purchases of and contributions to equity-method investments

141

Purchases of other long-term investments

Total

1,581

712

776

1,210

4,279

2,414

656

3,070

(1) Increases to property, plant, and equipment

484

684

792

604

2,564

509

632

1,141

Changes in related accounts payable and accrued liabilities

(74)

(102)

(48)

(53)

(18)

Capital expenditures

545

610

690

671

2,516

544

579

1,123

Contributions from noncontrolling interests

—

Contributions in aid of construction

Proceeds from sale of business

—

348

(2)

346

—

Non-GAAP Measures

This news release and accompanying materials may include certain financial measures – adjusted EBITDA, adjusted income (“earnings”), adjusted earnings per share, available funds from operations and dividend coverage ratio – that are non-GAAP financial measures as defined under the rules of the SEC.

Our segment performance measure, modified EBITDA, is defined as net income (loss) before income (loss) from discontinued operations, income tax expense, interest expense, equity earnings from equity-method investments, other net investing income, impairments of equity investments and goodwill, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of modified EBITDA of equity-method investments.

Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from net income to determine adjusted income and adjusted earnings per share. Management believes this measure provides investors meaningful insight into results from ongoing operations.

Available funds from operations (AFFO) is defined as net income (loss) excluding the effect of certain noncash items, reduced by distributions from equity-method investees, net distributions to noncontrolling interests, and preferred dividends. AFFO may also be adjusted to exclude certain items that we characterize as unrepresentative of our ongoing operations.

This news 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 assets and the cash that the business is generating.

Neither adjusted EBITDA, adjusted income, nor available funds from operations 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.

Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted Income

(UNAUDITED)

2023

2024

(Dollars in millions, except per-share amounts)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders

926

547

654

1,146

3,273

631

401

1,032

Income (loss) from continuing operations - diluted earnings (loss) per common share (1)

.76

.45

.54

.94

2.68

.52

.33

.84

Adjustments:

Transmission & Gulf of Mexico

MountainWest acquisition and transition-related costs*

—

Gulf Coast Storage acquisition and transition-related costs*

—

Gain on sale of business

—

(130

)

(129

)

—

Total Transmission & Gulf of Mexico adjustments

(127

)

(86

)

Northeast G&P

Accrual for loss contingency*

—

)

Our share of operator transition costs at Blue Racer Midstream*

—

Our share of accrual for loss contingency at Aux Sable Liquid

Products LP

—

)

—

Total Northeast G&P adjustments

—

)

West

Cureton acquisition and transition-related costs*

—

Gain from contract settlement

(18

)

—

(18

)

—

Impairment of assets held for sale

—

Total West adjustments

(18

)

—

)

Gas & NGL Marketing Services

Impact of volatility on NGL linefill transactions*

)

Net unrealized (gain) loss from derivative instruments

(333

)

(94

)

(24

)

(208

)

(659

)

107

201

Total Gas & NGL Marketing Services adjustments

(336

)

(84

)

(27

)

(203

)

(650

)

112

200

Other

Net unrealized (gain) loss from derivative instruments

(19

)

Net gain from Energy Transfer litigation judgment

—

(534

)

(534

)

—

Total Other adjustments

(553

)

(535

)

Adjustments included in Modified EBITDA

(335

)

(56

)

(122

)

(721

)

(1,234

)

139

236

Adjustments below Modified EBITDA

Gain on remeasurement of RMM investment

—

(30

)

(30

)

—

Imputed interest expense on deferred consideration obligations*

—

Amortization of intangible assets from Sequent acquisition

(15

)

Total adjustments

(320

)

(42

)

(107

)

(736

)

(1,205

)

116

158

274

Less tax effect for above items

178

291

(28

)

(38

)

(66

)

Adjustments for tax-related items (2)

—

(25

)

—

(25

)

—

Adjusted income from continuing operations available to common stockholders

684

515

547

588

2,334

719

521

1,240

Adjusted income from continuing operations - diluted earnings per common share (1)

.56

.42

.45

.48

1.91

.59

.43

1.01

Weighted-average shares - diluted (thousands)

1,225,781

1,219,915

1,220,073

1,221,894

1,221,616

1,222,222

1,222,236

1,222,229

(1) The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.

(2) The third quarter of 2023 includes an adjustment associated with a decrease in our estimated deferred state income tax rate.

*Amounts for the 2024 periods are included in Additional adjustments on the Reconciliation of Cash Flow from Operating Activities to Non-GAAP Available Funds from Operations (AFFO).

Reconciliation of "Net Income (Loss)" to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”

(UNAUDITED)

2023

2024

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Net income (loss)

957

494

684

1,168

3,303

662

426

1,088

Provision (benefit) for income taxes

284

175

176

370

1,005

193

129

322

Interest expense

294

306

314

322

1,236

349

339

688

Equity (earnings) losses

(147

)

(160

)

(127

)

(155

)

(589

)

(137

)

(147

)

(284

)

Other investing (income) loss - net

)

(13

)

(24

)

(63

)

(108

)

(24

)

(18

)

(42

)

Proportional Modified EBITDA of equity-method investments

229

249

215

246

939

228

238

466

Depreciation and amortization expenses

506

515

521

529

2,071

548

540

1,088

Accretion expense associated with asset retirement obligations for nonregulated operations

(Income) loss from discontinued operations, net of tax

—

Modified EBITDA

2,130

1,667

1,774

2,442

8,013

1,837

1,528

3,365

Transmission & Gulf of Mexico

715

731

881

741

3,068

829

808

1,637

Northeast G&P

470

515

454

477

1,916

504

481

985

West

304

312

315

307

1,238

327

318

645

Gas & NGL Marketing Services

567

272

950

101

(126

)

(25

)

Other

645

841

123

Total Modified EBITDA

2,130

1,667

1,774

2,442

8,013

1,837

1,528

3,365

Adjustments (1):

Transmission & Gulf of Mexico

(127

)

(86

)

Northeast G&P

—

)

West

(18

)

—

)

Gas & NGL Marketing Services

(336

)

(84

)

(27

)

(203

)

(650

)

112

200

Other

(553

)

(535

)

Total Adjustments

(335

)

(56

)

(122

)

(721

)

(1,234

)

139

236

Adjusted EBITDA:

Transmission & Gulf of Mexico

728

748

754

752

2,982

839

812

1,651

Northeast G&P

470

515

485

1,955

504

479

983

West

286

312

315

323

1,236

328

319

647

Gas & NGL Marketing Services

231

(16

)

300

189

(14

)

175

Other

306

145

Total Adjusted EBITDA

1,795

1,611

1,652

1,721

6,779

1,934

1,667

3,601

(1) Adjustments by segment are detailed in the "Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted Income," which is also included in these materials.

Reconciliation of Cash Flow from Operating Activities to Non-GAAP Available Funds from Operations (AFFO)

(UNAUDITED)

2023

2024

(Dollars in millions, except coverage ratios)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Net cash provided (used) by operating activities

1,514

1,377

1,234

1,813

5,938

1,234

1,279

2,513

Exclude: Cash (provided) used by changes in:

Accounts receivable

(1,269

)

(154

)

128

206

(1,089

)

(314

)

(270

)

Inventories, including write-downs

(45

)

(19

)

(43

)

(38

)

Other current assets and deferred charges

(28

)

(65

)

(60

)

(12

)

Accounts payable

1,017

203

(148

)

(63

)

1,009

309

(90

)

219

Accrued and other current liabilities

318

(246

)

(95

)

218

(142

)

Changes in current and noncurrent commodity derivative assets and liabilities

(82

)

(37

)

(53

)

(28

)

(200

)

141

Other, including changes in noncurrent assets and liabilities

106

246

151

Preferred dividends paid

)

—

)

—

)

Dividends and distributions paid to noncontrolling interests

(54

)

(58

)

(62

)

(39

)

(213

)

(64

)

(66

)

(130

)

Contributions from noncontrolling interests

—

Adjustment to exclude litigation-related charges in discontinued operations

—

115

125

—

Adjustment to exclude net gain from Energy Transfer litigation judgment

—

(534

)

(534

)

—

Additional Adjustments *

—

Available funds from operations

1,445

1,215

1,230

1,323

5,213

1,507

1,250

2,757

Common dividends paid

546

545

544

2,179

579

1,158

Coverage ratio:

Available funds from operations divided by Common dividends paid

2.65

2.23

2.26

2.43

2.39

2.60

2.16

2.38

* See detail on Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted Income.

Reconciliation of Net Income (Loss) from Continuing Operations to Modified EBITDA, Non-GAAP Adjusted EBITDA and Cash Flow from Operating Activities to Non-GAAP Available Funds from Operations (AFFO)

2024 Guidance

2025 Guidance

(Dollars in millions, except per-share amounts and coverage ratio)

Low

Mid

High

Low

Mid

High

Net income (loss) from continuing operations

2,094

2,219

2,344

2,373

2,523

2,673

Provision (benefit) for income taxes

670

695

720

735

785

835

Interest expense

1,380

1,390

Equity (earnings) losses

(535

)

(610

)

Proportional Modified EBITDA of equity-method investments

895

990

Depreciation and amortization expenses and accretion for asset retirement obligations associated with nonregulated operations

2,270

2,325

Other

)

Modified EBITDA

6,768

6,918

7,068

7,195

7,395

7,595

EBITDA Adjustments

Adjusted EBITDA

6,800

6,950

7,100

7,200

7,400

7,600

Net income (loss) from continuing operations

2,094

2,219

2,344

2,373

2,523

2,673

Less: Net income (loss) attributable to noncontrolling interests and preferred dividends

115

Net income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders

1,979

2,104

2,229

2,258

2,408

2,558

Adjustments:

Adjustments included in Modified EBITDA (1)

Adjustments below Modified EBITDA (2)

Allocation of adjustments to noncontrolling interests

—

Total adjustments

Less tax effect for above items

(15

)

Adjusted income from continuing operations available to common stockholders

2,025

2,150

2,275

2,425

2,575

Adjusted income from continuing operations - diluted earnings per common share

1.65

1.76

1.86

1.85

1.97

2.10

Weighted-average shares - diluted (millions)

1,224

1,228

Available Funds from Operations (AFFO):

Net cash provided by operating activities (net of changes in working capital, changes in current and noncurrent derivative assets and liabilities, and changes in other, including changes in noncurrent assets and liabilities)

5,125

5,250

5,375

5,295

5,445

5,595

Preferred dividends paid

)

Dividends and distributions paid to noncontrolling interests

(215

)

(235

)

Contributions from noncontrolling interests

Available funds from operations (AFFO)

4,925

5,050

5,175

5,075

5,225

5,375

AFFO per common share

4.02

4.13

4.23

4.13

4.25

4.38

Common dividends paid

2,320

5%-7% Dividend growth

Coverage Ratio (AFFO/Common dividends paid)

2.12x

2.18x

2.23x

~2.12x

(1) Adjustments reflect transaction and transition costs of acquisitions

(2) Adjustments reflect amortization of intangible assets from Sequent acquisition

Forward-Looking Statements

The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) 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 (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcomes of regulatory proceedings, market conditions, and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this report that address activities, events, or developments that we expect, believe, or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “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:

Levels of dividends to Williams stockholders;
Future credit ratings of Williams and its affiliates;
Amounts and nature of future capital expenditures;
Expansion and growth of our business and operations;
Expected in-service dates for capital projects;
Financial condition and liquidity;
Business strategy;
Cash flow from operations or results of operations;
Seasonality of certain business components;
Natural gas, natural gas liquids, and crude oil prices, supply, and demand;
Demand for our services.

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 report. 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:

Availability of supplies, market demand, and volatility of prices;
Development and rate of adoption of alternative energy sources;
The impact of existing and future laws and regulations, the regulatory environment, environmental matters, and litigation, as well as our ability and the ability of other energy companies with whom we conduct or seek to conduct business, to obtain necessary permits and approvals, and our ability to achieve favorable rate proceeding outcomes;
Our exposure to the credit risk of our customers and counterparties;
Our ability to acquire new businesses and assets and successfully integrate those operations and assets into existing businesses as well as successfully expand our facilities, and consummate asset sales on acceptable terms;
Whether we are able to successfully identify, evaluate, and timely execute our capital projects and investment opportunities;
The strength and financial resources of our competitors and the effects of competition;
The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;
Whether we will be able to effectively execute our financing plan;
Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social, and governance practices;
The physical and financial risks associated with climate change;
The impacts of operational and developmental hazards and unforeseen interruptions;
The risks resulting from outbreaks or other public health crises;
Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities;
Acts of terrorism, cybersecurity incidents, and related disruptions;
Our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;
Changes in maintenance and construction costs, as well as our ability to obtain sufficient construction-related inputs, including skilled labor;
Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);
Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally recognized credit rating agencies, and the availability and cost of capital;
The ability of the members of the Organization of Petroleum Exporting Countries and other oil exporting nations to agree to and maintain oil price and production controls and the impact on domestic production;
Changes in the current geopolitical situation, including the Russian invasion of Ukraine and conflicts in the Middle East, including between Israel and Hamas and conflicts involving Iran and its proxy forces;
Changes in U.S. governmental administration and policies;
Whether we are able to pay current and expected levels of dividends;
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 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 and referred to below may cause our intentions to change from those statements of intention set forth in this report. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 21, 2024, and as may be supplemented by disclosures in Part II, Item 1A. Risk Factors in subsequent Quarterly Reports on Form 10-Q.

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

INVESTOR CONTACTS: Danilo Juvane (918) 573-5075

Caroline Sardella (918) 230-9992

Williams Companies (NYSE:WMB)
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