Scotia Howard Weil 47th Annual Energy Conference - WE MAKE ENERGY HAPPEN Alan Armstrong, President and CEO March 27, 2019 - Williams ...
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NYSE: WMB | williams.com
WE MAKE ENERGY HAPPEN
Scotia Howard Weil 47th Annual Energy Conference
Alan Armstrong, President and CEO
March 27, 2019
Gulf Connector Expansion Project
Transco, Atlantic-Gulf
Williams is a unique large-scale, low-volatility, growing natural gas
infrastructure company with high quality revenues
STABILITY GROWTH YIELD & COVERAGE
> Irreplaceable asset base handling 30% of > Nation’s largest and fastest growing > Attractive current dividend yield of 5.6%(1)
low-cost U.S. natural gas supplies interstate natural gas pipeline system, > 12.5% dividend growth CAGR 2017-2019
> Volume-driven, natural gas strategy Transco, with unrivaled proximity to
growing Mid-Atlantic, Southeast and Gulf > Maintaining strong dividend coverage of
drives low volatility in earnings and cash ~1.7x for reinvestment in growth capital
flow Coast demand centers
opportunities
> Large-scale energy company: ~$55 billion > 15% Northeast G&P gathered volume
CAGR expected 2018-2021 > ~$1.25 billion excess cash available after
enterprise value (1) with IG credit ratings dividends in 2019
> 2019 gross margin projected to be ~97% > 18.9% Adjusted EPS growth CAGR
expected 2017-2019 despite $4.6B in asset > Deleveraging through capital discipline,
fee-based reinvesting cash flow, and ongoing portfolio
sales since 2016 (1)
> Met or exceeded Adjusted EBITDA street optimization transactions
consensus each of the last 12 quarters (2) > Expecting 8% Adjusted EBITDA growth
2018-2019 (1); 5-7% annual Adjusted > 11.0x EV / 2019 EBITDA multiple (1) below
> Exceeded midpoint for 2017 and 2018 EBITDA growth longer term beyond 2019 long-term historical average of 12.7x (3)
key guidance metrics
(1) Data and estimates per Bloomberg as of February 26, 2019. WMB 2017-2019 growth rates based on midpoint of guidance.
(2) Per S&P Capital IQ, Williams’ adjusted EBITDA exceeded or was within 2% of the consensus estimate for EBITDA in each quarter 1Q 2016–4Q 2018.
(3) Represents peer average EV / NTM EBITDA multiple from January 1, 2013 to December 31, 2018; peers include ENB, EPD, ET, KMI, OKE, TRGP, and TRP
Note: This slide contains non-GAAP financial measures. A reconciliation of all non-GAAP financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 2
Consistently delivering on our promises
Key 2018 results exceeded guidance midpoints
In $Billions except for percentages, ratios and per share amounts
2018 GUIDANCE1
$0.193 (Reported) $1.108 (Adjusted)
Net Income
$0.975 $1.075 $1.175
$0.79
Adjusted EPS 25% increase vs. 2017
$0.76 $0.82
$4.64
Adjusted EBITDA
$4.45 $4.55 $4.65
$2.87
Distributable Cash Flow (DCF)
$2.60 $2.75 $2.90
Guidance Actual
Dividend Growth Rate 10-15% annual growth 13.33%
Guidance Midpoint Actual
Dividend Coverage Ratio ~1.6x 1.7x
Guidance Actual
Growth Capex $3.9 $3.6
Guidance Actual
Consolidated Debt / EBITDA2
~5.0x 4.8x
Note: This slide contains non-GAAP financial measures. A reconciliation of all non-GAAP financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation.
1) DCF shown Proforma as if the WPZ transaction had occurred 1/1/18. Dividend payments used in the coverage calculation include WPZ distribution payments to WPZ public unitholders for 1Q and 2Q.
2) Consolidated Debt / Adjusted EBITDA ratio does not represent leverage ratios measured for WMB credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. Consolidated debt is net of cash on hand.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 3
Environmental Social Governance (ESG): Creating value responsibly
SAFETY ENVIRONMENTAL
> Strong safety reporting and continuous improvement culture > Comprehensive Integrated Management System creates disciplined EHS
> Robust Pipeline Integrity Management Program
management with specific policies, procedures and standards; includes
external and internal audits
> Performing better than industry benchmark for Total Recordable Injury
> Extensive environmental monitoring and measurement, including
Rate (TRIR)
emissions tracking and reporting
> 50% reduction in process safety incidents from 2017 to 2018
> Signatory to INGAA’s Methane Emissions Commitments to minimize
> Strong commitment to safety and operational discipline by methane emissions
institutionalizing 12 Life Critical Operating Requirements
> Proud history of voluntary environmental conservation and restoration
> Leading damage prevention and public awareness programs projects that exceed regulatory requirements
GOVERNANCE SOCIAL
> Diverse and independent board comprised of industry leaders > Committed to increased diversity
> Oversight on ESG issues from Environmental, Health and Safety (EHS); > Dedicated to excellence in land use and landowner relationships
Nominating and Governance Committees
> Stakeholder input resulting in more than 400 changes to Atlantic Sunrise’s
> Compensation aligned with business strategies, including safety pipeline route
performance
> $107 million total charitable giving in last decade to more than 8,000
organizations
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 4
Consistent strategy focused on natural gas volume growth
WILLIAMS HANDLES ~30% OF U.S. NATURAL GAS VOLUMES
Gas End Users
Industrial Residential/
Commercial
Wellhead Gathering Gas Processing Plants Natural Gas
(onshore and (onshore and (onshore and Transportation Exports
Offshore) Offshore) Offshore) Lines / Storage
25.3 Bcf/d 11.3 Bcf/d 22.5 MMdth/d capacity Power Transport
16,480 miles inlet 14,545 miles
Multiple
Products
Mixed NGLs Fractionation NGLStorage NGL Transportation Olefins Olefins End
Pipelines/ Truck/ Rail Plant Users
500 Mbbl/d Facilities
730 Mbbl/d 24 MMbbls
352 Mbbl/d
Other NGL
End Users
Source: Figures represent 100% capacity for operated and non-operated assets, including those in which Williams has a share of ownership. All data as of December 31, 2018.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 5
Connecting the best supplies to the
best markets with advantaged infrastructure
Williams’ U.S. Asset Map
NORTHEAST G&P
Operating Area
> Large-scale asset footprint in place
> Significant production growth driven
by infrastructure de-bottlenecking
> Capital efficient expansions linked
to existing assets
WEST
Operating Area
> Extensive portfolio of reliable assets
ATLANTIC GULF
connecting sources of supply to demand Operating Area
markets > Irreplaceable infrastructure with low-risk
> Stable cash flows and operational revenue stream
efficiencies driving results > Unmatched growth opportunity linked to
> Growth opportunities continue to existing assets
reinforce long-term stability > Unique footprint with access to low-cost
supply sources and growing demand centers
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 6
Irreplaceable infrastructure supplying some of the nation’s largest cities
U.S. Counties Color-coded
by Population Density vs.
Williams’ Regulated Northwest
Natural Gas Pipelines
Pipeline
Legend Transco
Population per sq. mile
50 or less
50-100
100-200 Gulfstream
200-300
300 or more
Source: Data based off 2012 Census estimates
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 7
Natural gas will continue to win global market share
NATURAL GAS VS. OIL DEMAND GROWTH (2011 TO 2027); HENRY HUB AND WTI PRICES (MMBTU)
$18 45%
Cumulative Global Demand Growth Since ‘11
Forecast
$16 40%
$14 35%
Oil & Gas Price in MMBtu
$12 30%
$10 25%
$8 20%
$6 15%
$4 10%
$2 5%
$0 0%
Cumulative Global Demand for Nat Gas Cumulative Global Demand for Oil Henry Hub Forward Curve WTI Forward Curve
Sources: S&P Global Platts Analytics for global demand outlook; U.S. Energy Information Administration for price history; NYMEX for forward curves as of 2-18-19
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 8Robust domestic and global natural gas demand forecasts continue
to rise, reaching 103 Bcf/d by 2021
2018 UNITED STATES PRODUCTION
UNITED STATES NATURAL GAS DEMAND BY SECTOR (2014–2021) BY REGION IN BCF/D
120 $5
105 $4.37
CAGR ‘17-’18:
Haynesville,
11.2% $4 7.6
90
Permian,
$/MMBTU
75
Bcf/d
$3.07 $3 8.4
$2.99
$2.64 Northeast,
60
27.5
$2 All Other,
45 8.8
30
$1
15 Gulf Coast,
10.0
Rockies,
0 $0 Mid- 10.4
2014 2017 2018 2021 Continent,
10.0
$
Residential/ Power Industrial Transport/ Mexico LNG Henry Hub Gas
Commercial Generation Other Exports Exports Annual Average
Price
Sources: Wood Mackenzie 2H ’18 for demand & production; U.S. Energy Information Administration for price history; NYMEX for forward curves as of 2-18-19
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 9Natural gas continues to be the preferred fuel type for new power
generation projects in the United States, followed by renewables
Power Generation Projects Under Construction Fuel Type of > Carbon intensity from the U.S. power sector
by Fuel Type Choice fell by ~25% since 2008 as natural gas
displaced other fossil fuels in power
Natural Gas generation
> Capacity added by natural gas-fired power
Wind generation projects greater than all other
sources combined
Solar
Partnering with > As states make strides toward renewable
Nuclear Renewables power, it is vital for natural gas-fired
generation to follow as a backup fuel to
Coal Full bar represents
ensure grid reliability
nameplate capacity
> Natural gas pipeline capacity is
Dark blue represents
Other increasingly valuable as more capacity will
expected utilization
be needed to support the intermittent
0 5,000 10,000 15,000 20,000 nature of renewable power
Nameplate Capacity (MW)
Source: U.S. Energy Information Administration
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 102nd wave of U.S. LNG export projects expected to drive an additional
6 Bcf/d of growth through 2028
Williams’ Asset Map + Third-party Liquefaction Plants Sabine Pass Cove Point Corpus Christi
Cameron Elba Island Freeport
2nd Wave Gulf Coast Golden Pass Woodfibre
LNG Canada Prior 1H '18 Forecast
20,000
Forecasted Monthly LNG 18,000
Export Volumes
In MMcf/d 16,000
2nd Wave 14,000
LNG export
volumes to grow by 12,000
+13.4 Bcf/d Forecast
10,000
along
8,000
Transco states
through 2028 6,000
4,000
2,000
0
Source: Wood Mackenzie 2H ‘18
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 11Attractive returns on visible growth capital across the portfolio
2018 2019 2020 2021 2022+
> Transco – Atlantic Sunrise > West – North Seattle Lateral Upgrade > Transco – Hillabee Phase 2 > Transco – Gateway > Transco – Leidy South
DEMAND DRIVEN
1.7 MMDth/d 159 MDth/d 206 MDth/d 65 MDth/d 580 MDth/d
> Transco – Garden State > Transco – Gulf Connector 475 MDth/d > Transco – Southeastern > Transco – Northeast > Transco – Pursuing 20+
180 MMdth/d Trail 296 MDth/d Supply Enhancement expansion opportunities
> Transco – St. James Supply 162 MDth/d including “Project 1” from
400 MDth/d
> Transco – Emissions Analyst Day, Emissions
> Transco – Rivervale S. to Market 190 Mdth/d
Reduction Program > Transco – Emissions
Reduction Program
> Transco – Rate Case Reduction Program
> Gulfstream - Phase VI
78 Mdth/d
> Atlantic Gulf Deepwater – > West – DJ Processing Plants – 425 MMcf/d > Northeast G&P – > West – Bluestem NGL > West – DJ Processing
Stampede (Ft. Lupton III – 200 & Keenesburg I – 225) Susquehanna Gathering Pipeline Plants 225 MMcf/d
Expansion 300 MMcf/d (Milton II)
> Northeast G&P – > West – Wamsutter – High Point, Hansen Lake > West – DJ Processing
Susquehanna Gathering & Echo Springs G&P Expansions > Northeast G&P – Plants 225 MMcf/d > Northeast G&P – Rich Gas
Expansion 700 MMcf/d Bradford Gathering (Milton I) Growth Driving Additional
SUPPLY DRIVEN
> West – Niobrara – Jackalope Gathering &
Expansion 500 MMcf/d Oak Grove Expansions
Bucking Horse Processing 200 MMcf/d
> West – DJ Processing Plant > Atlantic Gulf Deepwater–
> Northeast G&P – Rich Gas Growth Driving
225 MMcf/d (Keenesburg II) Additional Tie-backs:
Oak Grove Expansions & Harrison Hub C3+
Shell Whale, Ballymore,
Pipeline
Tigris, Mexico Perdido &
> Northeast G&P – Susquehanna Gathering others
Expansion 500 MMcf/d
> Atlantic Gulf Deepwater – Shell Appomattox
(Norphlet Pipeline option), Lucius-Hadrian
North & Buckskin
Green = In-service; Black = In Progress; Blue = Potential/Under Negotiation
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 12Fully-contracted Transco expansions provide clear visibility into
forecasted revenue
TRANSCO FULLY-CONTRACTED YEAR-END DELIVERY CAPACITY AND FEE-BASED REVENUE
20 $2.75
Attractive Returns on Growth Projects 18.9
18.3
2017(1) 2018(2) 2019(3) 18.0 $2.50
18 17.3
Growth Capital Placed 16.7
~$1.4 ~$2.8 ~$0.35 $2.25
Fee Based Revenue, $ Billions
In-service ($ Bln)
16
Delivery Capacity MMDt/d
Full-year run-rate 14.8
~$0.24 ~$0.44 ~$0.06 $2.00
Modified EBITDA ($ Bln)
14
EBITDA multiple ~5.8x ~6.4x ~5.8x $1.75
11.8 11.9
12
10.6 10.6 $1.50
10.0 10.1
10
8.6 8.9 $1.25
8.5
8 $1.00
6 $0.75
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Year-end Delivery Capacity Forecasted Year-end Delivery Capacity Fee Revenue ($B) Targeting $2.5B fully contracted fee revenue by 2022
(1) Includes Gulf Trace, Hillabee (Ph. 1), Dalton, NY Bay Expansion, Virginia Southside II, Garden State I
(2) Includes Garden State II, Atlantic Sunrise
(3) Includes Gulf Connector, St. James Supply, Rivervale South to Market
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 13Fully contracted projects supplemented by significant backlog of
additional growth opportunities
U.S. Map of Williams’ Assets,
Highlighting Transco Pipeline
Pursuing 20+ different expansion opportunities
Transco’s
20+ Projects supporting new or converted gas
expansion
opportunities
5 power generation
6 Projects supporting LNG export
Projects supporting industrial, LDCs &
9 other demand sources
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 14Northeast G&P: Large footprint with room to grow
UTICA SUSQUEHANNA SUPPLY
SUPPLY HUB(1) HUB
> Cardinal Gathering(3) > 3.6 Bcf/d of gathering capacity in
> Flint Gathering dry gas
> Utica East Ohio (UEO)(2)
BRADFORD
> 2.7 Bcf/d of gathering capacity in
dry/rich gas SUPPLY HUB(3)
> 800 MMcf/d of processing capacity > 3.7 Bcf/d of gathering capacity in
dry gas
> 135,000 bpd fractionation capacity PA
OHIO RIVER
BLUE RACER SUPPLY HUB
MIDSTREAM(2) > Ohio Valley Midstream
> Laurel Mtn Midstream
> 720+ miles of gathering pipeline in
> Marcellus South
dry/rich gas
> 800 MMcf/d of processing capacity > 2.4 Bcf/d of gathering capacity in
dry/rich gas
> 134,000 bpd fractionation capacity
> 720 MMcf/d processing capacity
> 260 miles of NGL and condensate
transport > 139,000+ bpd fractionation and de-
ethanization capacity
(1) Gathering and processing statistics for Utica Supply Hub do not include Blue Racer (2) Non-operated joint venture (3) Primarily Cost-of-service based contracts
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 15Key producers in prime acreage driving Northeast G&P growth
1 BCF/D NORTHEAST GATHERING VOLUME GROWTH: DRIVERS OF EXPECTED 15% NORTHEAST GATHERING VOLUME
4Q 2018 vs. 4Q 2017 (BCF/D) CAGR 2018-2021
8 NORTHEAST PENNSYLVANIA
14%
> 5+ Bcf/d of incremental gas takeaway capacity on line ‘17-’21
growth
> Susquehanna & Bradford sub-plays have lowest average breakevens in the
6 5.6 nation and reserves that could supply ~2.2 years of U.S. gas consumption (1)
4.9 11% > Contracted gathering expansion projects increases Susquehanna system
capacity to 4.5 Bcf/d by 2020
growth
Bcf/d
4 > 6 active rigs in dedicated acreage
> Largest customers: Cabot Oil & Gas and Chesapeake Energy
2.3
2.1
2 SOUTHWEST MARCELLUS / UTICA
4Q 17’
4Q 18’
9+ Bcf/d of incremental gas takeaway capacity on line ‘17-’21
4Q 17’
4Q 18’
>
> Southwest Appalachia (2) has an average gas breakeven of $3/mcf (3) and
0 reserves that could supply +5.1 years of U.S. gas consumption
Supply Area Northeast PA Southwest Marcellus / Utica > Gathering and processing projects contracted with minimum volume
commitments
Williams SSH BSH ORSH USH > NGL takeaway capacity constraints lifted; Harrison Hub C3+ Pipeline project
Franchise
in 2019
Notes: Partially owned system volumes are shown at 100%. Excludes volumes for all non-operated assets. > 11 active rigs in dedicated acreage; Highest rig count since 2013
Source: Wood Mackenzie 2H ’18 for takeaway capacity; gas reserves and breakeven detail
(1) Based on EIA ‘18 annual avg. of US gas consumption; (2) Includes 10 Marcellus & Utica a sub-plays where > Largest customers: Encino Energy and Southwestern Energy
Williams has assets; (3) Wood Mackenzie, Henry Hub, 15% discount rate
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 16Consolidation of Northeast infrastructure through newly formed JV
> Transaction with Canadian Pension Plan Investment Board (“CPPIB”) to MAP OF ASSETS IN
NEWLY FORMED JV
form a $3.8 billion strategic joint venture partnership in the Marcellus
and Utica Basins
– Williams consolidates 100% interest in the Utica East Ohio Midstream (“UEO”)
partnership and assumes operatorship
– Williams contributes 100% of UEO and Ohio Valley Midstream (“OVM”) to newly formed
joint venture (JV)
– CPPIB contributes $1.34 billion for a 35% interest in the JV. Closing is expected to occur
in the second or third quarter of 2019.
– Williams net cash flow of $600 million to fund attractive growth capital projects and
reduce leverage
> Newly formed JV unlocks opportunities to realize significant operating
and capital cost synergies
– Upstream and downstream interests aligned as CPPIB is the sole owner of Encino,
UEO’s primary producer-customer
– Creates platform for capital efficiency and additional integration of adjacent systems, both
third party and WMB-owned
– O&M savings, G&A savings and capital avoidances
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 17Gulf of Mexico: Substantial discoveries in close proximity to existing
assets expected to facilitate long-term growth
MS AL
7 tiebacks contracted, expecting more
LA FL • Shell Appomattox dedication, Norphlet pipeline option
− Producer expected reserves: 650 MMboe
TX
Gulf East − Producer expected peak production: 175 Mboe/d
− Target in-service date: Mid 2019
NORPHLET
PIPELINE • Opportunities include Chevron/Total Ballymore discovery
3 miles from Blind Faith
− 0.5-1 Bboe resources. Largest discovery by Total in the GOM.
>1 TCF of gas discoveries within reach of KCC
APPOMATTOX
• Lucius-Hadrian North, Buckskin dedications
− Combined additional reserves: 85 Bcf
TIGRIS BALLYMORE Discovery − Lucius-Hadrian North target-in service date: 1H 2019
Buckskin target in-service date: 2H 2019
ANCHOR • Opportunities include discoveries at Anchor, Shenandoah
and Katmai
TRION & OTHER
MEXICO PERDIDO
Gas Gathering Only existing Oil & Gas pipelines near active
DISCOVERIES
WHALE
Oil Gathering Western Gulf exploration
LUCIUS – HADRIAN NORTH
Norphlet Pipeline
Gulf West • Opportunities include Shell Whale (15 miles from existing
& BUCKSKIN Deepwater Spar pipelines), Tigris, and Mexico Perdido discoveries
Growth Projects − Shell Whale: Targeting potential FID in 2020. One of Shell’s largest
Mexico Deepwater Basin finds in the GOM in the past decade, with over 1,400 feet of oil pay.
Sources: Total 1/31/2018 Ballymore Press Release, Total 9/25/2018 Investor Day-Deepwater Presentation, Shell 1/31/2018 Whale Press Release, Shell 1/31/2019 4Q 2018 Results Presentation
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 18Bluestem Pipeline Project:
Strategic partnership connecting Western supplies to Gulf Coast markets
> Growing NGL production from West G&P assets driving need for incremental
connectivity to premium markets
> Delivers a long-term infrastructure solution and a platform for growth
– Forms competitive G&P advantage by entering into a low-cost Transportation & Fractionation
arrangement with physical access to Mont Belvieu pricing
– Provides pipeline capacity and flow assurance for West G&P assets
– Provides opportunity to expand G&P businesses by leveraging downstream NGL assets
> Generates ability to monetize the Mont Belvieu to Conway spread
– Maintains Overland Pass Pipeline’s competitive advantage and supports throughput
– Strategically positions Conway NGL fractionator and storage assets
> Provides Williams with firm access to Mont Belvieu
– Williams to expand OPPL DJ lateral and make improvements at Conway NGL storage facility
– Williams to build a 188-mile NGL pipeline (Bluestem) from Conway, KS into an interconnect with
Targa’s Grand Prix NGL Pipeline in Kingfisher, OK
– Targa to build a 110-mile extension of Grand Prix NGL Pipeline from southern Oklahoma to the
Bluestem connection, with an initial capacity of ~120,000 BPD
– Williams has initial option to purchase 20% equity interest in one of Targa’s recently announced
new fractionation trains 7 or 8 in Mont Belvieu
> In-service Date: 1Q 2021
> Growth Capital: $350-$400MM, primarily in 2020 (1)
> EBITDA multiple: ~6x
(1) Includes Bluestem pipeline and related projects; excludes fractionator JV option.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 19Fee-based business structure reinforces stability in cash flows
~97% of 2019 Gross Margin from Fee-based Sources
2019 Gross Margin (1)
3% NGL and Other Commodity 38% Regulated Gas Pipeline
Exposure Fee-based Revenue
> Reduced commodity exposure with sale of 3% > Fully contracted demand charge revenue
Four Corners Area assets > Attractive positions exposed to growth
38%
36%
36% Volume-driven Non-regulated 23% Volume-protected Non-regulated
Fee-based Revenue Fee-based Revenue
> Volume-driven fee-based contracts for
23% > Mix of capacity payments, Minimum Volume
gathering, processing, NGL and oil
transportation and other non-regulated Commitments (MVCs) (2) and Cost of
services Service agreements
> Some contracts include escalation provisions
(1) Includes our proportional ownership of the gross margin of our equity method investments. Excludes certain regulated revenues, which are related to tracked operating costs.
(2) MVC revenue includes revenue level guaranteed by MVC and excludes any revenue on volumes exceeding MVC. MVC revenue also includes amortization of upfront payments associated with canceled MVCs.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 20Steady and predictable growth despite assets sales and commodity
price volatility
Assets sales Williams Adjusted EPS 2017-2019
$1.10 of over
$4.6B High $1.01
$1.00 Canadian Olefins in ‘16;
Geismar in ’17; Four Corners
$0.90 & Gulf Pipes in ‘18 Midpoint $0.89
(Note ~$2B in book
gains are removed
$0.80 from Adjusted EPS) Low $0.77
$/Share
$0.79
$0.70
$0.60
$0.63
$0.50
$0.40
$0.30
$0.20
2017 2018 2019 Guidance Ranges
Note: This slide contains non-GAAP financial measures. A reconciliation of all non-GAAP financial measures used in this presentation to their nearest GAAP financial measures is included at the back of this presentation.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 21Reaffirming 2019 guidance metrics
Adjusted EBITDA growth driven by Transco and NE G&P fee-based revenue
In $Billions except for percentages, ratios and per share amounts
2019 GUIDANCE
Net Income $1.050 - $1.350 Bn
Adjusted EPS $0.77 - $1.01
Adjusted EBITDA $4.850 - $5.150 Bn
Distributable Cash Flow (DCF) $2.900 - $3.300 Bn
March 25, 2019 dividend of
10-15% annual growth $0.38/share reflects a 12.5%
Dividend Growth Rate (annual dividend increases) annual dividend growth rate
CAGR 2017-2019
Dividend Coverage Ratio ~1.7x
Midpoint of Guidance
Growth Capex increase driven
Growth Capex $2.7 - $2.9 Bn
primarily by carry-forward of
Prior Guidance: $2.6 Bn unspent 2018 capital
Consolidated Debt / EBITDA1 < 4.75x
Note: This slide contains non-GAAP financial measures. A reconciliation of all non-GAAP financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation..
1 Consolidated Debt / Adjusted EBITDA ratio does not represent leverage ratios measured for WMB credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. Consolidated debt is net of cash on hand.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 22Williams is a unique large-scale, low-volatility, growing natural gas
infrastructure company with high quality revenues
• Volume-driven, natural gas strategy built on irreplaceable asset base handling 30% of low-
cost U.S. natural gas supplies
• Competitively advantaged natural gas infrastructure positions generating abundant organic
growth opportunities with attractive returns
• Stable and predictable fee-based cash flows driving expected 8% Adjusted EBITDA growth
2018-2019 (1); 5-7% annual Adjusted EBITDA growth longer term beyond 2019
• Attractive current dividend yield of 5.6%(1)
• 12.5% dividend growth CAGR 2017-2019; maintaining strong dividend coverage of ~1.7x for
reinvestment in growth capital opportunities
• Deleveraging through capital discipline, reinvesting cash flow, and ongoing portfolio
optimization transactions
(1) Data and estimates per Bloomberg as of February 26, 2019. WMB 2017-2019 growth rates based on midpoint of guidance.
Note: This slide contains non-GAAP financial measures. A reconciliation of all non-GAAP financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 23Forward Looking Statements © 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 24
FORWARD-LOOKING STATEMENTS
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, outcome 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 herein 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 may include, among others, statements regarding:
– Financial performance including anticipated leverage and guidance for 2019;
– 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 and natural gas liquids prices, supply, and demand;
– Demand for our services.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 25FORWARD-LOOKING STATEMENTS
Forward-looking statements (cont’d)
> 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 herein. 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 are able to pay current and expected levels of dividends;
– Whether we will be able to effectively execute our financing plan;
– Availability of supplies, market demand, and volatility of prices;
– 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);
– The strength and financial resources of our competitors and the effects of competition;
– Whether we are able to successfully identify, evaluate and timely execute our capital projects and other investment opportunities;
– 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 to
consummate asset sales on acceptable terms;
– Development and rate of adoption of alternative energy sources;
– The impact of operational and developmental hazards and unforeseen interruptions;
– The impact of existing and future laws and regulations (including but not limited to the Tax Cuts and Jobs Act of 2017), the regulatory environment, environmental liabilities, and litigation, as
well as our ability to obtain necessary permits and approvals, and achieve favorable rate proceeding outcomes;
– 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;
– Changes in the current geopolitical situation;
– Our exposure to the credit risk of our customers and counterparties;
– 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 amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 26FORWARD-LOOKING STATEMENTS
Forward-looking statements (cont’d)
– Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities;
– Acts of terrorism, cybersecurity incidents, and related disruptions;
– 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 may cause our intentions to change from those statements of intention set forth
herein. 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 filed with the SEC on February 21, 2019 and in Part II, Item 1A. Risk Factors in our Quarterly Reports
on Form 10-Q.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 27Non-GAAP Reconciliations © 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 28
NON-GAAP RECONCILIATIONS
Non-GAAP Disclaimer
> This presentation may include certain financial measures – adjusted EBITDA, adjusted income (“earnings”), adjusted earnings per share, distributable
cash flow and dividend coverage ratio – that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.
> Our segment performance measure, modified EBITDA is defined as net income (loss) before income (loss) from discontinued operations, income tax
expense, net interest expense, equity earnings from equity-method investments, other net investing income, remeasurement gain on equity-method
investment, impairment 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. Management believes this
measure provides investors meaningful insight into results from ongoing operations.
> Distributable cash flow is defined as adjusted EBITDA less maintenance capital expenditures, cash portion of net interest expense, income attributable to
noncontrolling interests and cash income taxes, and certain other adjustments that management believes affects the comparability of results. Adjustments
for maintenance capital expenditures and cash portion of interest expense include our proportionate share of these items of our equity-method
investments. We also calculate the ratio of distributable cash flow to the total cash dividends paid (dividend coverage ratio). This measure reflects
Williams’ distributable cash flow relative to its actual cash dividends paid.
> This presentation 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 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.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 29NON-GAAP RECONCILIATIONS
Reconciliation of Income (Loss) Attributable to The Williams
Companies, Inc. to Adjusted Income
2017 2018
(Dollars in millions, except per-share amounts) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Income (loss) attributable to The Williams Companies, Inc. available to
common stockholders $ 373 $ 81 $ 33 $ 1,687 $ 2,174 $ 152 $ 135 $ 129 $ (572) $ (156)
Income (loss) - diluted earnings (loss) per common share $ .45 $ .10 $ .04 $ 2.03 $ 2.62 $ .18 $ .16 $ .13 $ (.47) $ (.16)
Adjustments:
Northeast G&P
Share of impairment at equity-method investments $ — $ — $ 1 $ — $ 1 $ — $ — $ — $ — $ —
Impairment of certain assets — — 121 — 121 — — — — —
Ad valorem obligation timing adjustment — — 7 — 7 — — — — —
Settlement charge from pension early payout program — — — 7 7 — — — 4 4
Organizational realignment-related costs 1 1 2 — 4 — — — — —
Total Northeast G&P adjustments 1 1 131 7 140 — — — 4 4
Atlantic-Gulf
Constitution Pipeline project development costs 2 6 4 4 16 2 1 1 — 4
Settlement charge from pension early payout program — — — 15 15 — — — 7 7
Regulatory adjustments resulting from Tax Reform — — — 493 493 11 (20) — — (9)
Benefit of regulatory asset associated with increase in Transco’s estimated
deferred state income tax rate following WPZ Merger — — — — — — — (3) — (3)
Share of regulatory charges resulting from Tax Reform for equity-method
investments — — — 11 11 2 — — — 2
Organizational realignment-related costs 1 2 2 1 6 — — — — —
Gain on sale of certain Gulf Coast pipeline assets — — — — — — — — (81) (81)
(Gain) loss on asset retirement — — (5) 5 — — — (10) (2) (12)
Total Atlantic-Gulf adjustments 3 8 1 529 541 15 (19) (12) (76) (92)
West
Estimated minimum volume commitments 15 15 18 (48) — — — — — —
Impairment of certain assets — — 1,021 9 1,030 — — — 1,849 1,849
Settlement charge from pension early payout program — — — 13 13 — — — 6 6
Organizational realignment-related costs 2 3 2 1 8 — — — — —
Regulatory adjustments resulting from Tax Reform — — — 220 220 (7) — — — (7)
Charge for regulatory liability associated with the decrease in Northwest
Pipeline’s estimated deferred state income tax rates following WPZ
Merger — — — — — — — 12 — 12
Gain on sale of Four Corners assets — — — — — — — — (591) (591)
Gains from contract settlements and terminations (13) (2) — — (15) — — — — —
Total West adjustments 4 16 1,041 195 1,256 (7) — 12 1,264 1,269
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 30NON-GAAP RECONCILIATIONS
Reconciliation of Income (Loss) Attributable to The Williams
Companies, Inc. to Adjusted Income (con’t)
2017 2018
(Dollars in millions, except per-share amounts) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Other
(Gain) loss related to Canada disposition (2) (1) 4 5 6 — — — — —
Expenses associated with strategic asset monetizations 1 4 — — 5 — — — — —
Geismar Incident adjustments (9) 2 8 (1) — — — — — —
Gain on sale of Geismar Interest — — (1,095) — (1,095) — — — — —
Gain on sale of RGP Splitter — (12) — — (12) — — — — —
Accrual for loss contingency 9 — — — 9 — — — — —
Severance and related costs 9 4 5 4 22 — — — — —
ACMP Merger and transition costs — 4 3 4 11 — — — — —
Expenses associated with Financial Repositioning 8 2 — — 10 — — — — —
(Gain) loss on early retirement of debt (30) — 3 — (27) 7 — — — 7
Impairment of certain assets — 23 68 — 91 — 66 — — 66
Expenses associated with strategic alternatives 1 3 5 — 9 — — — — —
Settlement charge from pension early payout program — — — 36 36 — — — 5 5
Regulatory adjustments resulting from Tax Reform — — — 63 63 — 1 — — 1
Benefit of regulatory assets associated with increase in Transco’s estimated deferred state
income tax rate following WPZ Merger — — — — — — — (45) — (45)
WPZ Merger costs — — — — — — 4 15 1 20
Gain on sale of certain Gulf Coast pipeline systems — — — — — — — — (20) (20)
Charitable contribution of preferred stock to Williams Foundation — — — — — — — 35 — 35
Total Other adjustments (13) 29 (999) 111 (872) 7 71 5 (14) 69
Adjustments included in Modified EBITDA (5) 54 174 842 1,065 15 52 5 1,178 1,250
Adjustments below Modified EBITDA
Gain on disposition of equity-method investment (269) — — — (269) — — — — —
Accelerated depreciation by equity-method investments — — — 9 9 — — — — —
Change in depreciable life associated with organizational realignment (7) — — — (7) — — — — —
Gain on deconsolidation of Jackalope interest — — — — — — (62) — — (62)
Investment impairment — — — — — — — — 32 32
Gain on deconsolidation of certain Permian assets — — — — — — — — (141) (141)
Allocation of adjustments to noncontrolling interests 77 (10) (28) (199) (160) (5) 21 — — 16
(199) (10) (28) (190) (427) (5) (41) — (109) (155)
Total adjustments (204) 44 146 652 638 10 11 5 1,069 1,095
Less tax effect for above items 77 (17) (55) (246) (241) (3) (3) (1) (267) (274)
Adjustments for tax-related items (1) (127) — — (1,923) (2,050) — — 110 — 110
Adjusted income available to common stockholders $ 119 $ 108 $ 124 $ 170 $ 521 $ 159 $ 143 $ 243 $ 230 $ 775
Adjusted diluted earnings per common share (2) $ .14 $ .13 $ .15 $ .20 $ .63 $ .19 $ .17 $ .24 $ .19 $ .79
Weighted-average shares - diluted (thousands) 826,476 828,575 829,368 829,607 828,518 830,197 830,107 1,026,504 1,212,822 976,097
(1) The first quarter of 2017 includes an unfavorable adjustment related to the release of a valuation allowance. The fourth quarter of 2017 includes an unfavorable adjustment to reverse the tax benefit associated with remeasuring our deferred tax balances at a lower corporate rate resulting from
Tax Reform. The third quarter of 2018 reflects tax adjustments driven by the WPZ Merger, primarily a valuation allowance for foreign tax credits.
(2) 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.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 31NON-GAAP RECONCILIATIONS
Reconciliation of Net Income to Adjusted Net Income
(Dollars in millions) 2018
Net Income $ 193
Adjustments (1)
Total adjustments $ 1,095
Allocation of adjustments to noncontrolling interests (16)
Tax effect for above items (274)
Adjustments for tax-related items 110
Adjusted Net Income $ 1,108
(1) Adjustments per the accompanying Reconciliation of Income (Loss) Attributable to
The Williams Companies, Inc. to Adjusted Income
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 32NON-GAAP RECONCILIATIONS
Reconciliation of Income (Loss) Attributable to The Williams
Companies, Inc. to Adjusted Income (con’t)
GUI DANCE RANGES
2018 2019
Midpt. High Low Midpt. High
(Dol l a rs i n mi l l i ons , except per-s ha re a mounts )
Net income (loss) $1,385 $1,460 $1,050 $1,200 $1,350
Less: Net income (loss) attributable to noncontrolling interests 325 345 115 115 115
Net income (loss) attributable to The Williams Companies, Inc. 1,060 1,115 935 1,085 1,235
Adjustments 1:
Adjustments included in Modified EBITDA 2 (521) (521) - - -
Adjustments below Modified EBITDA (62) (62) - - -
Allocation of adjustments to noncontrolling interests 16 16 - - -
Total adjustments (567) (567) - - -
Less tax effect for above items 141 141 - - -
Adjustments for tax-related items 3 110 110 - - -
Adjusted income available to common stockholders $744 $799 $935 $1,085 $1,235
Adjusted diluted earnings per common share $0.76 $0.82 $0.77 $0.89 $1.01
Weighted-average shares - diluted (millions) 976 976 1,217 1,217 1,217
Note: Reconci l i a ti on s hown wi th a cqui s i ti on of WPZ compl eted on Augus t 10, 2018
(1) A deta i l ed l i s t of a djus tments i s i ncl uded i n thi s pres enta ti on
(2) Pri ma ri l y a $591 mi l l i on ga i n on the s a l e of Four Corners a s s ets
(3) Refl ects ta x a djus tments dri ven by the WPZ Merger, pri ma ri l y a va l ua ti on a l l owa nce for forei gn ta x credi ts
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 33NON-GAAP RECONCILIATIONS
Reconciliation of Income (Loss) Attributable to The Williams
Companies, Inc. to Adjusted Income (con’t)
2018 Guidance 2018 Guidance
(Dollars in millions, except per-share amounts) Midpoint High Adjustments (continued) Midpoint High
Income (loss) attributable to The Williams Companies, Inc. available to Other
common stockholders $1,060 $1,115 (Gain) loss on early retirement of debt 7 7
Impairment of certain assets 66 66
Income (loss) - diluted earnings (loss) per common share $1.09 $1.14
Regulatory adjustments resulting from Tax Reform 1 1
Adjustments: Benefit of regulatory assets associated with increase in Transco’s estimated
Northeast G&P deferred state income tax rate following WPZ Merger (45) (45)
Total Northeast G&P adjustments — — WPZ Merger costs 19 19
Atlantic-Gulf Charitable contribution of preferred stock to Williams Foundation 35 35
Constitution Pipeline project development costs 4 4 Total Other adjustments 83 83
Regulatory adjustments resulting from Tax Reform (9) (9) Adjustments included in Modified EBITDA (521) (521)
Benefit of regulatory asset associated with increase in Transco’s
Adjustments below Modified EBITDA
estimated deferred state income tax rate following WPZ Merger (3) (3)
Share of regulatory charges resulting from Tax Reform for equity-method Gain on deconsolidation of Jackalope interest (62) (62)
investments 2 2 Allocation of adjustments to noncontrolling interests 16 16
(Gain) loss on asset retirement (10) (10) (46) (46)
Total Atlantic-Gulf adjustments (16) (16) Total adjustments (567) (567)
West Less tax effect for above items 141 141
(1)
Gain on Sale of Four Corners assets (593) (593) Adjustments for tax-related items 110 110
Regulatory adjustments resulting from Tax Reform (7) (7)
Adjusted income available to common stockholders $744 $799
Charge for regulatory liability associated with the decrease in Northwest
Pipeline’s estimated deferred state income tax rates following WPZ 12 12 Adjusted diluted earnings per common share $0.76 $0.82
Total West adjustments (588) (588) Weighted-average shares - diluted (millions) 976 976
(1) Reflects tax adjustments driven by the WPZ Merger, primarily a valuation allowance for foreign tax credit
Note: Reconciliation shown with acquisition of WPZ completed on August 10, 2018
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 34NON-GAAP RECONCILIATIONS
Reconciliation of Net Income to Modified EBITDA,
Adjusted EBITDA and Distributable Cash Flow
2017 2018
(Dollars in millions, except coverage ratios) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Net income (loss) $ 569 $ 193 $ 125 $ 1,622 $ 2,509 $ 270 $ 269 $ 200 $ (546) $ 193
Provision (benefit) for income taxes 37 65 24 (2,100) (1,974) 55 52 190 (159) 138
Interest expense 280 271 267 265 1,083 273 275 270 294 1,112
Equity (earnings) losses (107) (125) (115) (87) (434) (82) (92) (105) (117) (396)
Impairment of equity-method investments — — — — — — — — 32 32
Other investing (income) loss - net (272) (2) (4) (4) (282) (4) (68) (2) (145) (219)
Proportional Modified EBITDA of equity-method investments 194 215 202 184 795 169 178 205 218 770
Depreciation and amortization expenses 442 433 433 428 1,736 431 434 425 435 1,725
Accretion for asset retirement obligations associated with nonregulated operations 7 9 7 10 33 8 10 8 7 33
Modified EBITDA 1,150 1,059 939 318 3,466 1,120 1,058 1,191 19 3,388
EBITDA adjustments (5) 54 174 842 1,065 15 52 5 1,178 1,250
Adjusted EBITDA 1,145 1,113 1,113 1,160 4,531 1,135 1,110 1,196 1,197 4,638
Maintenance capital expenditures (1) (58) (105) (143) (165) (471) (110) (160) (138) (122) (530)
Preferred dividends — — — — — — — — (1) (1)
Net interest expense - cash portion (2) (5) (289) (280) (271) (271) (1,111) (276) (279) (274) (299) (1,128)
Cash taxes (5) (1) (11) (11) (28) (1) (10) (1) 1 (11)
Income attributable to noncontrolling interests (3) (27) (32) (27) (27) (113) (25) (24) (19) (28) (96)
WPZ restricted stock unit non-cash compensation 2 1 1 1 5 — — — — —
Amortization of deferred revenue associated with certain 2016 contract restructurings (4) (58) (58) (59) (58) (233) — — — — —
Distributable cash flow (5) $ 710 $ 638 $ 603 $ 629 $ 2,580 $ 723 $ 637 $ 764 $ 748 $ 2,872
Total cash distributed (6) $ 400 $ 400 $ 400 $ 401 $ 1,601 $ 438 $ 443 $ 412 $ 411 $ 1,704
Coverage ratios:
Distributable cash flow divided by Total cash distributed (5) 1.78 1.60 1.51 1.57 1.61 1.65 1.44 1.85 1.82 1.69
Net income (loss) divided by Total cash distributed 1.42 0.48 0.31 4.04 1.57 0.62 0.61 0.49 (1.33) 0.11
(1) Includes proportionate share of maintenance capital expenditures of equity investments.
(2) Includes proportionate share of interest expense of equity investments.
(3) Excludes allocable share of certain EBITDA adjustments.
(4) Beginning first quarter 2018, as a result of the extended deferred revenue amortization period under the new GAAP revenue standard, we have discontinued the adjustment associated with these 2016 contract restructuring payments. For each quarter of 2018, the adjustments would have been $32
million, $31 million, $32 million, and $33 million, respectively.
(5) The first, second, and third quarters of 2018 have been corrected to increase amounts reported as Net interest expense - cash portion by $3 million, $4 million, and $4 million, respectively.
(6) Includes cash dividends paid each quarter by WMB, as well as the public unitholders share of distributions declared by WPZ for the 2017 periods and the first two quarters of 2018.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 35NON-GAAP RECONCILIATIONS
Reconciliation of Modified EBITDA to Non-GAAP Adjusted EBITDA
2017 2018
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Northeast G&P $ 226 $ 247 $ 115 $ 231 $ 819 $ 250 $ 255 $ 281 $ 300 $ 1,086
Atlantic-Gulf 450 454 430 (96) 1,238 451 475 492 605 2,023
West 385 356 (615) 286 412 413 389 412 (906) 308
Other 89 2 1,009 (103) 997 6 (61) 6 20 (29)
Total Modified EBITDA $ 1,150 $ 1,059 $ 939 $ 318 $ 3,466 $ 1,120 $ 1,058 $ 1,191 $ 19 $ 3,388
Adjustments included in Modified
EBITDA (1):
Northeast G&P $ 1 $ 1 $ 131 $ 7 $ 140 $ — $ — $ — $ 4 $ 4
Atlantic-Gulf 3 8 1 529 541 15 (19) (12) (76) (92)
West 4 16 1,041 195 1,256 (7) — 12 1,264 1,269
Other (13) 29 (999) 111 (872) 7 71 5 (14) 69
Total Adjustments included in
Modified EBITDA $ (5) $ 54 $ 174 $ 842 $ 1,065 $ 15 $ 52 $ 5 $ 1,178 $ 1,250
Adjusted EBITDA:
Northeast G&P $ 227 $ 248 $ 246 $ 238 $ 959 $ 250 $ 255 $ 281 $ 304 $ 1,090
Atlantic-Gulf 453 462 431 433 1,779 466 456 480 529 1,931
West 389 372 426 481 1,668 406 389 424 358 1,577
Other 76 31 10 8 125 13 10 11 6 40
Total Adjusted EBITDA $ 1,145 $ 1,113 $ 1,113 $ 1,160 $ 4,531 $ 1,135 $ 1,110 $ 1,196 $ 1,197 $ 4,638
(1) Adjustments by segment are detailed in the "Reconciliation of Income (Loss) Attributable to The Williams Companies, Inc. to Adjusted Income," which is also included in
these materials.
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 36NON-GAAP RECONCILIATIONS
Reconciliation of Net Income to Modified EBITDA and Non-GAAP
Adjusted EBITDA
2018 2019
($ in billions) Guidance Guidance
Low Mid High Low Mid High
Net income (loss) $0.975 $1.075 $1.175 $1.050 $1.200 $1.350
Provision (benefit) for income taxes
Interest expense
Equity (earnings) losses
Proportional Modified EBITDA of equity-method investments
Depreciation and amortization expenses and accretion expense
associated with asset retirement obligations for nonregulated operatio
Modified EBITDA $4.435 $4.535 $4.635 $4.850 $5.000 $5.150
Adjustments included in Modified EBITDA:
Constitution Pipeline project development costs - - -
(Gain) loss on early retirement of debt - - -
Regulatory charges resulting from Tax Reform - - -
Share of regulatory charges resulting from Tax Reform
for equity-method investments - - -
Total Adjustments included in Modified EBITDA - - -
Adjusted EBITDA $4.450 $4.550 $4.650 $4.850 $5.000 $5.150
© 2019 The Williams Companies, Inc. All rights reserved. Scotia Howard Weil 47th Annual Energy Conference I March 2019 37You can also read
