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Why Williams Partners’ Stock Dipped after Its 1Q15 Earnings

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Williams Partners’ share price movement  

Williams Partners’ (WPZ) stock price decreased 1.1% from $49.90 per share to $49.40 per share after it announced its fiscal 1Q15 results on April 30, 2015. The stock price reacted negatively due to the company’s 45.7% fall in operating income. Its net income also fell ~74.7% on a YoY (year-over-year) basis.

Enterprise Product Partners (EPD) and EnLink Midstream Partners’ (ENLK) stock prices decreased by 0.5% and 3% after their results were announced.

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Earnings summary

Williams Partners’ adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for 1Q15 increased by 19.4% to $917 million—compared to $768 million for 1Q14. The increased EBITDA in 1Q15 was due to the Access Midstream segment’s contribution and higher contributions from the Atlantic-Gulf and Northeast G&P segments.

Higher EBITDA from these segments and contribution from Access Midstream helped partially offset the decrease in EBITDA from the NGL & Petchem Services segment. This segment earns 9.1% of its revenue from fee-based contracts. It earns 90.9% of its revenue from commodity-based contracts. Commodity-based contracts have a direct correlation with commodity prices.

The EBITDA margin stood at 53.6% for 1Q15—compared to 45.4% for 1Q14. The EBITDA margin improved because the product cost decreased by 39.8% to $463 million. This included cheaper natural gas—it helps lower the feed stock cost for processing.

Volume summary

The company’s Northeast G&P segment’s volumes increased by 31.8% in 1Q15 to 236 trillion Btu (British thermal units). The Atlantic-Gulf segment’s volumes increased 21.4% to 34 trillion Btu. The West segment’s gathering volumes decreased by 2.6% to 223 trillion Btu. The NGL & Petchem segment’s volumes increased by 33.3% to 36 million gallons.

Key ETFs and stocks

Some of the MLPs (master limited partnerships), like Williams Partners (WPZ), that saw a decline in their stock price after earnings announcements include Enterprise Product Partners (EPD), EnLink Midstream Partners (ENLK), and Western Gas Partners (WES). These MLPs have a combined weight of 25.5% in the Alerian MLP ETF (AMLP).

In the next part of this series, we’ll discuss how each of Williams Partners’ operating segments performed in 1Q15.

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