DATE: Monday, Oct. 31, 2022

TULSA, Okla. – Williams (NYSE: WMB) today announced its unaudited financial results for the three and nine months ended Sept. 30, 2022.

•GAAP net income of $599 million, or $0.49 per diluted share

•Adjusted net income of $592 million, or $0.48 per diluted share (Adjusted EPS)

•Adjusted EBITDA of $1.637 billion – up $217 million or 15% vs. 3Q 2021

•Cash flow from operations (CFFO) of $1.490 billion – up $656 million or 79% vs. 3Q 2021

•Available funds from operations (AFFO) of $1.241 billion – up $161 million or 15% vs. 3Q 2021

•Dividend coverage ratio of 2.40x (AFFO basis)

•Strong operational performance with gathering volumes of approximately 17 Bcf/d and contracted transmission capacity of 24.4 Bcf/d – up 11% and 3%, respectively from 3Q 2021

•Expect 2022 Adjusted EBITDA near high end of previously raised guidance range of $6.1 billion to $6.4 billion

•Expanded natural gas transmission and storage footprint with purchase of NorTex Midstream

•Entered agreement with PennEnergy Resources to market and deliver low-emission next gen gas

•Completed Gulfstream Phase VI expansion; executing slate of projects on Transco, Northeast G&P, Haynesville and Deepwater Gulf of Mexico

•Advancing clean hydrogen commercialization strategy in Wyoming with Daroga Power agreement

Alan Armstrong, president and chief executive officer, made the following comments:

"Williams third quarter Adjusted EBITDA growth of 15% demonstrates our ability to capture upside on top of the steady growth of our base business. Williams is thriving as demand for our critical services continues to expand, and we are well positioned to excel despite the macro-economic concerns for the broader markets. Our natural gas focused strategy and long-term approach to business is built to capture upside and at the same time weather commodity price down cycles like we saw in 2020. As an organization, we are energized by the opportunity to serve this growing demand for clean, secure and affordable energy.

"With the winter heating season now upon us, the need for secure natural gas supplies on a global scale has never been more pronounced, especially as the crisis in Ukraine continues to wreak havoc on energy markets and the global economy, which depends on access to affordable energy. The United States, with our abundance of natural gas, is well positioned to bring energy security to nations in need while at the same time reducing emissions, so long as we have comprehensive energy policies that allow us to build the infrastructure to connect these low cost supplies to growing demand here at home and abroad.

If we don’t deal with permitting reform, we will continue to see higher utility bills at home and the unnecessary destruction of our allies' economies.

Armstrong added, “Williams is executing a number of high-return growth projects across our portfolio to meet growing long-term natural gas demand domestically and around the world. As we bring this critical infrastructure on line to meet growing demand, we expect to see continued earnings growth and value creation for our shareholders."

Third-quarter 2022 net income increased by $435 million compared to the prior year reflecting the benefit of higher service revenues from commodity-based rates, higher Haynesville gathering volumes including the Trace Acquisition, and Transco’s Leidy South project being in service, higher results from our upstream operations, as well as a favorable change of $344 million in net unrealized gains/losses on commodity derivatives. These improvements were partially offset by higher operating and administrative expenses, including higher employee-related costs. The tax provision increased due to higher pretax income, partially offset by the net benefit from a reduction in our estimated state deferred income tax rate.

Year-to-date 2022 net income increased by $485 million compared to the prior year reflecting the benefit of higher service revenues as described above, higher results from our upstream operations, and higher commodity margins. These improvements were partially offset by increased intangible asset amortization, higher operating and administrative expenses driven by the increased scale of our upstream operations and higher employee-related costs, including costs from the Sequent acquisition for the full 2022 period, and the absence of a $77 million favorable impact in 2021 from Winter Storm Uri. The tax provision changed favorably as the impact of higher pretax income was more than offset by $134 million associated with the release of valuation allowances on deferred income tax assets and federal income tax settlements in the second quarter and the net benefit from a lower estimated state deferred income tax rate in the third quarter.

Cash flow from operations for the third quarter of 2022 increased as compared to 2021 primarily due to favorable changes in margin deposits associated with commodity derivatives, favorable net changes in working capital, higher operating results exclusive of non-cash items, and higher distributions from equity-method investments. Year-to-date cash flow from operations also increased compared to 2021 driven by similar factors.

Third-quarter 2022 Adjusted EBITDA increased by $217 million over the prior year, driven by the previously described benefits from service revenues and upstream operations, partially offset by higher operating and administrative costs. Year-to-date 2022 Adjusted EBITDA increased by $492 million over the prior year due to similar drivers and higher commodity margins, but also reflecting the absence of the favorable impact in 2021 from Winter Storm Uri.

Third-quarter 2022 Adjusted Income improved by $166 million over the prior year, driven by the previously described impacts to net income, adjusted primarily to remove the effects of net unrealized gains/losses on commodity derivatives, amortization of certain assets from the Sequent acquisition, certain regulatory charges, and favorable income tax benefits. Year-to-date 2022 Adjusted Income improved by $393 million over the prior year for similar reasons.

Third-quarter 2022 Available Funds From Operations (AFFO) increased by $161 million compared to the prior year primarily due to higher operating results exclusive of non-cash items and higher distributions from equity-method investments. Year-to-date 2022 AFFO increased by $533 million reflecting similar drivers.

Williams' operations are comprised of the following reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services, as well as Other. For more information, see the company's third-quarter 2022 Form 10-Q.

Third-quarter and year-to-date 2022 Modified and Adjusted EBITDA improved compared to the prior year driven by higher service revenues from Transco’s Leidy South expansion project and reduced hurricane impacts in the Gulf Coast region, partially offset by higher operating and administrative costs. Modified EBITDA for the 2022 periods was further impacted by certain regulatory and abandonment charges which are excluded from Adjusted EBITDA.

Third-quarter 2022 Modified and Adjusted EBITDA increased over the prior year driven by higher service revenues from Ohio Valley Midstream, partially offset by higher operating and administrative costs. Contributions from equity-investees increased reflecting higher commodity-based rates partially offset lower cost-of-service rates and volumes.

Both Modified and Adjusted EBITDA also improved for the year-to-date 2022 period, driven by Ohio Valley Midstream and gathering rate escalations, partially offset by higher operating and administrative costs. Net equity-investee contributions increased as previously described.

Third-quarter and year-to-date 2022 Modified and Adjusted EBITDA increased compared to the prior year benefiting from higher commodity-based rates and higher Haynesville gathering volumes including contributions from Trace Midstream acquired in April, partially offset by higher operating and administrative costs.

Third-quarter 2022 Modified EBITDA improved from the prior year primarily reflecting a $299 million net favorable change in unrealized gains/losses on commodity derivatives, which is excluded from Adjusted EBITDA. Both measures reflected stable commodity margins which included write-downs of inventory to lower period-end market prices, as well as higher administrative costs.

Year-to-date 2022 Modified EBITDA declined from the prior year primarily reflecting a $43 million net unfavorable change in unrealized loss on commodity derivatives, which is excluded from Adjusted EBITDA. Both measures were also impacted by higher commodity margins which included the impact of write-downs of inventory to lower period-end market prices, more than offset by the absence of a $58 million favorable impact in 2021 from Winter Storm Uri and higher administrative costs associated with the Sequent business acquired in July 2021.

Third-quarter 2022 Modified EBITDA improved compared to the prior year primarily reflecting higher prices and volumes from our upstream operations and a $44 million net favorable change in unrealized gains/losses on commodity derivatives related to our upstream operations, which is excluded from Adjusted EBITDA.

Year-to-date 2022 Modified EBITDA also improved compared to the prior year primarily reflecting higher prices and volumes from our upstream operations and a $30 million net favorable change in unrealized gain/loss on commodity derivatives related to our upstream operations, which is excluded from Adjusted EBITDA. Both measures were also impacted by the absence of a $22 million favorable impact in 2021 from Winter Storm Uri.

The company continues to expect 2022 Adjusted EBITDA near the high end of its previously announced guidance range of $6.1 billion and $6.4 billion. The company is also maintaining guidance for 2022 growth capital expenditures between $1.25 billion to $1.35 billion, which excludes approximately $1.5 billion in total acquisitions and follow-on expenditures for Trace Midstream and NorTex Midstream assets. The company is reaffirming maintenance capital expenditures between $650 million and $750 million, which includes capital for emissions reduction and modernization initiatives. Williams anticipates achieving a leverage ratio (net debt-to-Adjusted EBITDA) of approximately 3.6x, below the original guidance of 3.8x.

Williams third-quarter 2022 earnings presentation will be posted at www.williams.com. The company’s third-quarter 2022 earnings conference call and webcast with analysts and investors is scheduled for Tuesday, Nov. 1, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). Participants who wish to join the call by phone must register using the following link: https://conferencingportals.com/event/MTgNWtxQ.

A webcast link to the conference call is available on Williams' Investor Relations website. A replay of the webcast will be available on the website for at least 90 days following the event.

As the world demands reliable, low-cost, low-carbon energy, Williams (NYSE: WMB) will be there with the best transport, storage and delivery solutions to reliably fuel the clean energy economy. Headquartered in Tulsa, Oklahoma, Williams is an industry-leading, investment grade C-Corp with operations across the natural gas value chain including gathering, processing, interstate transportation, storage, wholesale marketing and trading of natural gas and natural gas liquids. With major positions in top U.S. supply basins, Williams connects the best supplies with the growing demand for clean energy. Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately 30 percent of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use. Learn how the company is leveraging its nationwide footprint to incorporate clean hydrogen, next generation gas and other innovations at www.williams.com.

This news release and accompanying materials may include certain financial measures – adjusted EBITDA, adjusted income (“earnings”), adjusted earnings per share, available funds from operations and dividend coverage ratio – that are non-GAAP financial measures as defined under the rules of the SEC.

Our segment performance measure, modified EBITDA, is defined as net income (loss) before income (loss) from discontinued operations, income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, impairments of equity investments and goodwill, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of modified EBITDA of equity-method investments.

Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from net income to determine adjusted income and adjusted earnings per share. Management believes this measure provides investors meaningful insight into results from ongoing operations.

Available funds from operations is defined as cash flow from operations excluding the effect of changes in working capital and certain other changes in noncurrent assets and liabilities, reduced by preferred dividends and net distributions to noncontrolling interests.

This news release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of assets and the cash that the business is generating.

Neither adjusted EBITDA, adjusted income, nor available funds from operations are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

Reconciliation of "Net Income (Loss)" to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”
(UNAUDITED)
			2021																		2022
(Dollars in millions)			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year						1st Qtr			2nd Qtr			3rd Qtr						Year
Net income (loss)			$	435		$	322		$	173		$	632		$	1,562					$	392		$	407		$	621					$	1,420
Provision (benefit) for income taxes			141			119			53			198			511						118			(45)			96						169
Interest expense			294			298			292			295			1,179						286			281			291						858
Equity (earnings) losses			(131)			(135)			(157)			(185)			(608)						(136)			(163)			(193)						(492)
Other investing (income) loss - net			(2)			(2)			(2)			(1)			(7)						(1)			(2)			(1)						(4)
Proportional Modified EBITDA of equity-method investments			225			230			247			268			970						225			250			273						748
Depreciation and amortization expenses			438			463			487			454			1,842						498			506			500						1,504
Accretion expense associated with asset retirement obligations for nonregulated operations			10			11			12			12			45						11			13			12						36
Modified EBITDA			$	1,410		$	1,306		$	1,105		$	1,673		$	5,494					$	1,393		$	1,247		$	1,599					$	4,239
Transmission & Gulf of Mexico			$	660		$	646		$	630		$	685		$	2,621					$	697		$	652		$	638					$	1,987
Northeast G&P			402			409			442			459			1,712						418			450			464						1,332
West			222			223			257			259			961						260			288			337						885
Gas & NGL Marketing Services			93			8			(262)			183			22						13			(282)			20						(249)
Other			33			20			38			87			178						5			139			140						284
Total Modified EBITDA			$	1,410		$	1,306		$	1,105		$	1,673		$	5,494					$	1,393		$	1,247		$	1,599					$	4,239
Adjustments (1):
Transmission & Gulf of Mexico			$	—		$	2		$	—		$	—		$	2					$	—		$	—		$	33					$	33
West			—			—			—			—			—						—			8			—						8
Gas & NGL Marketing Services(2)			—			—			296			(172)			124						52			288			18						358
Other			5			9			19			(18)			15						66			(47)			(13)						6
Total Adjustments			$	5		$	11		$	315		$	(190)		$	141					$	118		$	249		$	38					$	405
Adjusted EBITDA:
Transmission & Gulf of Mexico			$	660		$	648		$	630		$	685		$	2,623					$	697		$	652		$	671					$	2,020
Northeast G&P			402			409			442			459			1,712						418			450			464						1,332
West			222			223			257			259			961						260			296			337						893
Gas & NGL Marketing Services			93			8			34			11			146						65			6			38						109
Other			38			29			57			69			193						71			92			127						290
Total Adjusted EBITDA			$	1,415		$	1,317		$	1,420		$	1,483		$	5,635					$	1,511		$	1,496		$	1,637					$	4,644
(1) Adjustments by segment are detailed in the "Reconciliation of Income (Loss) Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted Income," which is also included in these materials.
(2) 2022 Adjustments for Gas & NGL Marketing Services includes the impact of volatility on NGL linefill transactions. Had this adjustment been made in 2021, Adjusted EBITDA would have been reduced by ($15), ($5), ($15), $1, and ($34) for the 1st, 2nd, 3rd, and 4th quarters, and full year period, respectively.