Williams Partners' (WPZ) Q1 Earnings Lag, Revenues Rise Y/Y

Williams Partners L.P. (NYSE:WPZ) reported first-quarter 2018 earnings of 37 cents per limited partner unit, which missed the Zacks Consensus Estimate of 41 cents. The figure also fell from earnings of 68 cents per limited partner unit in the prior-year quarter. The decline was mainly caused by the absence of revenues from the sale of the Geismar olefins facility.

Quarterly total revenues rose 5% year over year to $2,083 million from $1,983 million. The upside can be attributed to higher-fee based revenues from commissioning of Transco expansions as well as lower operating and maintenance expense. However, the top line came below the Zacks Consensus Estimate of $2,121 million.

Williams Partners' distributable cash flow (DCF) attributable to partnership operations in the reported quarter was $784 million, up from $752 million in the year-ago quarter.

Recently, the partnership announced a regular quarterly cash distribution of 61.4 cents per unit, up 2.33% sequentially.

Segment Performance

Consolidated adjusted segment profit was $1,122.0 million, up 0.5% from the year-ago quarter’s level of $1,117.0 million.

Northeast G&P: The segment reported profits of $250 million, up from $227 million in first-quarter 2017. The improvement was primarily driven by higher-fee revenues from the Susquehanna Supply Hub and Ohio River Supply Hub. Additionally, the partnership's increase in ownership in two Marcellus shale gathering systems in first-quarter 2017 along with higher volumes gathered by those systems also contributed to the growth. The profits, however, lagged the Zacks Consensus Estimate of $255 million.

Atlantic-Gulf: The segment reported profits of $466 million compared with $453 million in the year-ago quarter and the Zacks Consensus Estimate of $455 million. This was primarily due to higher revenues from commissioning of Transco expansion projects.

West: Segmental profit was $406 million against $389 million in the year-ago quarter and improving from the Zacks Consensus Estimate of $403 million. The increase can be attributed to increased fee revenues from higher volumes.

NGL & Petchem Services: The segment reported profits of $49 million, in the year-earlier quarter.

Following the sale of the Geismar olefins facility on Jul 6, 2017, this segment no longer contained any operating assets as of Jul 7, 2017.

Operating & Maintenance Expense

The partnership reported operating and maintenance expense of $351 million, down nearly 3% from the year-ago quarter’s level.

Guidance

For 2018, the partnership expects growth capital spending at $2.7 billion. The 2018 capital expenditure for the Transco growth project has been estimated at $1.7 billion.

The partnership projected distributable cash flow for 2018 between $2.9 billion and $3.2 billion.

Q1 Price Performance

During the January-to-March period, Williams Partners’ shares lost 11.2% compared with the industry’s 11.9% decline.

Zacks Rank & Key Picks

Williams Partners carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Nine Energy Service, Inc (NYSE:NINE) , Baytex Energy Corp (TO:BTE) and Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nine Energy Service is engaged in delivering onshore completion and production services to unconventional oil and gas resource development. The company pulled off a positive earnings surprise of 6.25% in the preceding quarter.

Baytex Energy is a conventional oil and gas income trust focused on maintaining its production and asset base through internal property development and delivering consistent returns to its unitholders. The company delivered an average positive earnings surprise of 77.3% in the trailing three quarters.

Solaris Oilfield Infrastructure manufactures as well as provides patented mobile proppant management systems which unload, store and deliver proppant at oil and natural gas well sites. The company delivered a positive earnings surprise of 5.26% in the preceding quarters.

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