Williams Companies Inc. (NYSE: WMB) is an energy infrastructure and transport company with an emphasis on natural gas. It consists of several companies, including MLP Williams Partners (NYSE: WPZ), operating separately and together in pipelines, natural gas gathering and other midstream activities. It is reported Q2 earnings on Monday, August 1, after market close.
1. The revenue and earnings forecast
The consensus EPS estimate for Williams is $ 0.23 $ 1.92B in sales. It is clear that this company has reached a difficult time, which is not surprising considering the sector in which it operates. prices of energy products have been severely depressed for quite some time and high market volatility. The company has missed estimates in the last two quarters of a batch that reported earnings per share of $ 0.01 to $ 0.03 in Q4 ’15 and Q1 ’16, respectively, while estimates were at $ 0.22 in both cases.
2. disastrous fourth
Williams was to merge with rival pipeline operator Energy Transfer Equity (NYSE: FTE), in a deal that was valued at $ 33B when signed last September. But on June 29, the deal fell through when ETE retired after he said he discovered a problem that would likely lead to unexpected taxes. Wiliams is currently struggling against the decision of ETE, but the agreement was unanimously refused the end of Williams either.
Its board approved the merger but the company’s CEO, Alan Armstrong, opposed the deal. Consequently, six of the 13 board members resigned Williams. termination of the agreement does not end Williams problems either. According to the company, the collapse of negotiations probably reflect a loss of between $ 4B and $ 10B in shareholder value. To this is added a charge cancellation $ 1.48B the company now must ETE, and you have a considerable success in the already shaky bottom line of the company.
3. Future prospects
big dividends of the company, quarterly $ 0.64, has been paid regularly since 1974-will probably be history very soon. The company is already highly leveraged-that has a ratio of debt to EBITDA is floating above 12x earnings, compared with between 4 and 8 times for competitors-so adding more debt to protect the dividend is not an option at this time. Canadian assets of the company are sold, in an attempt to reduce their leverage.
It is difficult to predict what is coming, with the company in the relative agitation of this writing. Investors are looking for today’s launch utilities to provide some quiet, but recent events, and the history of earnings this past year, they suggest the comfort shareholder may be difficult to achieve.