Williams Companies, Inc. (The)

Good day, everyone, and welcome to the Williams First Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Danilo Giovanni, Vice President of Investor Relations, ESG, and Investment Analysis. Please go ahead.

Thanks, Ari, and good morning, everyone. Thank you for joining us and for your interest in the Williams Company. Yesterday afternoon, we released our earnings press release and the presentation that our president and CEO, Alan Armstrong, and our chief financial officer, John Porter, will speak to this morning. Also joining us on the call today are Larry Larson, our chief operating officer, Lane Wilson, our general counsel, and Chad Zemmer, our executive vice president of corporate strategic development. In our presentation material, you'll find a disclaimer related to forward-looking statements. This disclaimer is important and integral to our remarks, and you should review it. Also included in our presentation materials are non-GAAP measures that we reconciled to generally accepted accounting principles. And these reconciliation schedules appear at the back of today's presentation materials. So with that, I'll turn it over to Alan Armstrong.

Okay. Well, thanks, Danilo, and thank you all for joining us today. We do have a very positive story to share with you on our first quarter performance, which was really driven by the exceptional results within our base business in this quarter. So, but before I dive into my remarks, I do want to welcome Larry Larson, our new Chief Operating Officer to the call. This is technically day two for Larry, but he's been a valuable member of the Williams team for more than 25 years. So I know you're gonna come to value his perspective and knowledge of our operations, just as you have enjoyed that for Michael Dunn, who did retire this past Friday. So Larry has served as an important member of Michael's leadership team over the past several years. So this will be a seamless transition with Larry carrying forward the commitment to excellence that Michael established in all aspects of our operations. Obviously, some other leadership changes to hit on, but I'll save my remarks on that matter for the end of the call. So beginning here on slide two, you know, it really is staggering when you step back and consider all the facets of our businesses that are providing high return growth opportunities. The positive results in the near term, like the 9% growth this year, coupled with an improved credit rating already, continue to speak for themselves, but the continued string of very high return projects suggest that we are in the early innings of this long horizon of growth. So let me just share a few of the drivers for my optimism in this level of growth continuing. First, we will be a big beneficiary of the fast-rising data center power load. And we are very encouraged by the uptake we are seeing on the new model we have brought to market and the indirect business we are seeing on our gas transmission systems that is showing up as very high-return, large-scale expansions. Socrates is our first example on the direct service front. And we talked first about this project during our earnings call in February. And since then, we have fully contracted this project that will deliver speed-to-market solutions for the growing data center demand in Ohio. Williams will invest approximately $1.6 billion to provide committed power generation and associated gas pipeline infrastructure for our customer in this area, and the project is backed by a 10-year fixed-price power purchase agreement with an opportunity to extend the contract for another five years and beyond. Importantly, we expect the project to generate earnings consistent with a five times EBITDA build multiple, an impressive return given the low risk nature of the Power Purchase Agreement, and the fact that this project does not leverage William's existing asset footprint to a meaningful degree. We are full steam ahead on this project and anticipate completing the build out in the second half of 2026. We also have two other projects that are utilizing the same model in flight now and have ordered equipment that has the same backstopping agreements that we used in the original Socrates project. Much more to come on this, but it is clear that we have a model that works for this customer base and the opportunities are developing fast in this space. Next, on the indirect side, we are pleased to announce Transco's Power Express pipeline, a 950 million cubic feet per day expansion to markets north of Station 165, hoping to serve the power-hungry Virginia area. The project is backed by a significant commitment from an anchor shipper and will utilize existing right-of-ways and infrastructure to dramatically reduce permitting risk and provide scalability. This project will provide the same kind of return as our CESE project, and the demand for this capacity has been robust. And finally, We acquired a 10% interest in Cogentrix Energy, closing on this deal in early March. This investment enhances our sequent market intelligence and gives Williams insight into how to better serve the emerging power markets with natural gas supply. Importantly, we are excited to be working with the quantum team on this business and to ensure that the gas supply is optimized for these gas-fired power plants. Next, turning to our operational execution. Our team continues to flawlessly deliver on a string of high-return projects that will accelerate earnings growth throughout the balance of the year. This quarter, we successfully placed two projects into service, the Southeast Energy Connector in Alabama and the Texas to Louisiana Energy Pathway along the Gulf Coast. These fully contracted Transco expansions were designed to reduce land use and minimize community and environmental impacts while also delivering clean and affordable natural gas volumes to the region. These projects demonstrate both LNG export growth and coal-to-gas conversion opportunities. Our project execution team continues to deliver on projects throughout this year, starting construction on another expansion in the southeast on Transco. the leg project in Haynesville and out west on our overthrust westbound expansion. These projects represent nearly two BCF a day coming online for the balance of this year. Also, in the deepwater, the deepwater really is coming on strong this year and shows no signs of slowing down. We recently completed two expansions that add significant earnings growth. The whale expansion went into service in the first quarter and has been ramping up through the first quarter, and Chevron's Valley Moor started up two weeks ago. Both of these prospects are large-scale and will be significant contributors for the balance of the year. Additionally, in the deepwater, both the Shenandoah and Salamanca floaters are now being commissioned. and these will drive significant cash flows across our discovery assets, which is now wholly owned. These projects are expected to make meaningful contributions in the third quarter. And finally, let me just hit on a few key financial highlights from the quarter before I turn it over to John to walk through the results in detail. First of all, we are raising our adjusted EBITDA guidance midpoint by $50 million to $7.7 billion driven by our strong base business performance and our cogentrics investment addition. Our capex increase of $925 million reflects the update that we provided with the announcement of our Socrates project. And also in recognition of the resilient business model and balance sheet strength, we received an S&P credit rating upgrade to BBB plus during the quarter. and very recently were assigned a positive outlook by Moody's. The strength of the base business was really the story in the first quarter with both the transmission and gulf hitting new record EBITDA and strong rebounds from the west and northeast gathering. In the transmission and gulf, this record was driven by both record contract gas transmission capacity and record gathering processing and storage fee So the transmission business, we again saw now a record in the long-term transmission capacity, but also saw the fee-based revenue in the deepwater and in our storage business picked up. In the West, it was driven by strong gathering volume rebounds and bolt-on acquisitions. Given the strong volumes we are currently seeing, we expect to see more records surpassed again in the second quarter. Speaking of the second quarter, this marks the 37th consecutive quarter of meeting or beating consensus, and that is on top of this was the eighth time that we've raised our guidance during this same period. So lastly, we increased Williams quarterly dividend in the quarter up 5.3% to 50 cents per share and demonstrating continued commitment to William's longstanding and well-covered dividend program. And with that, I'm going to turn it over to John.