Williams Partners L.P. (WPZ) registered first-quarter 2011 earnings of 81 cents per limited-partner unit, which failed to match up with the Zacks Consensus Estimate of 84 cents. However, the earnings improved almost 33% from the year-ago profit of 61 cents per unit.
Higher natural gas liquid (NGL) margins in its midstream business, higher fee-based revenue as well as an improvement in the gas pipeline business led to the significant year-over-year improvement.
Total revenue increased 6% year over year to $1,579 million, surpassing of the Zacks Consensus Estimate of $1,501 million.
Notably, Williams Partners’ distributable cash flow (DCF) attributable to partnership operations witnessed a substantial improvement at $441 million in the first quarter, compared with $273 million recorded in the year-ago quarter. First-quarter 2010 asset contribution transactions led to DCF growth in the partnership.
The partnership increased its quarterly cash distribution 9% year over year to 71.75 cents per unit. Williams Partners remains confident of increasing distributions to its limited-partner unitholders by approximately 6% to 10% annually.
Segment Performance
Consolidated adjusted segment profit was $437 million, up 4% from the year-ago level of $419 million.
Gas Pipeline: The segment reported profits of $175 million, showing a modest improvement of more than 3% year over year. Higher transportation revenues were offset by higher operating costs.
Midstream Gas & Liquids: The segment’s profits increased almost 3% year over year to $262 million, owing to higher per-unit NGL margins and fee-based revenues.
Guidance
Williams Partners raised its adjusted segment profit guidance owing to higher expected per-unit NGL margins and benefits of growth capital. The partnership now expects its total adjusted segment profit in the range of $1,695–$2,085 million for 2011 and $1,780–$2,320 million for 2012.
Total capital expenditure is expected to be around $1,890−$2,215 million for 2011 and $1,480−$1,780 million for 2012.
Outlook
We believe William Partners is well positioned for future growth owing to its geographically diverse assets, a sizable project backlog as well as its sound distribution history.
Moreover, its gas pipeline and midstream businesses continue to progress on a number of ongoing organic expansion projects, along with major growth projects in the Gulf of Mexico over the next two years. The company currently holds a Zacks #2 Rank, which is equivalent to a short-term Buy rating.
Williams Partners is an energy master limited partnership (MLP) occupied in gathering, transportation, treating, and processing of natural gas as well as the fractionation and storage of NGLs. The general partner of the partnership is owned and managed by Williams Companies Inc. (WMB).
The partnership’s peer company, Enterprise Products Partners LP (EPD) is scheduled to report its first quarter results later this week.
ENTERPRISE PROD (EPD): Free Stock Analysis Report
WILLIAMS COS (WMB): Free Stock Analysis Report
WILLIAMS PTNRS (WPZ): Free Stock Analysis Report
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