Why Analysts Expect a Decline in Williams Partners’ 3Q17 Earnings
Williams Partners’ 3Q17 EBITDA estimates
Williams Companies (WMB) and its MLP subsidiary, Williams Partners (WPZ), are scheduled to release their 3Q17 earnings on November 1. In this series, we’ll talk about WMB’s and WPZ’s 3Q17 estimates, segments’ contribution to earnings, throughput volumes, and market performance.
We’ll also look into their valuations, technical indicators, and analyst recommendations. Let’s start with analysts’ earnings estimates.
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Williams Companies’ earnings are primarily dependent on distribution income from Williams Partners. As a result, WPZ’s EBITDA1 growth drives WMB’s earnings.
Wall Street analysts’ 3Q17 consensus EBITDA estimate for WPZ is ~$1.1 billion. WPZ’s 3Q17 estimate is 7.4% less than the 3Q16 adjusted EBITDA and 0.2% less than the 2Q17 adjusted EBITDA.
Williams Partners’ 3Q17 EBITDA drivers
The expected YoY decline in WPZ’s 3Q17 earnings could be driven by the following factors:
- divestiture of assets such as the Geismar Plant and Canadian assets
- lower throughput volumes in some regions due to decline in production
These positive factors could be offset by the following factors:
- Transco expansion projects placed into service during the recent quarters
- higher NGLs (natural gas liquids) margins due to higher average crude oil prices
- higher gathering volumes in the Northeast region, driven by strong production growth in the region
Among WMB’s peers, Kinder Morgan (KMI) reported its earnings on October 18. Kinder Morgan, the US midstream giant, reported a 0.8% YoY decline and a 2.4% YoY decline in adjusted EBITDA and distributable cash flow in 3Q17.
Williams Partners’ adjusted EBITDA versus consensus estimates
Williams Partners’ 2Q17 EBITDA estimate for WPZ was ~$1.1 billion, and its adjusted EBITDA was ~$1.1 billion, a miss of 0.8%. We’ll need to wait for the 3Q17 earnings release to see whether WPZ beats or misses its 3Q17 earnings estimates. We’ll cover this in our post-earnings series for WPZ and WPB once they report their 3Q17 results.
- earnings before interest, taxes, depreciation, and amortization ↩