Williams Companies Inc. 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Williams reported second quarter 2026 EBITDA of $1.92 billion, up 6% over 2025 and 10% year to date.
- The company achieved a milestone with phase one of Socrates, delivering 200MW of power in under 18 months, on time and within budget.
- Williams signed customer agreements for Transco access and Garden connector projects, and upsized the Transco Power Express project to 800 million cubic feet per day expansion.
- They commercialized an extension of line 200 with a new lateral serving power demand in Lake Charles, Louisiana.
- Williams executed a power innovation financing joint venture with Blackstone and acquired Momentum Midstream for $5.5 billion, funded by $3.5 billion in cash and debt and $2 billion in equity.
- The financing JV provides $5.34 billion of committed capital at a capped 6.35% cost of equity, enhancing project returns by about 56% on invested capital over contract terms.
- Momentum acquisition complements Williams’ Haynesville gathering and Transco Gulf Coast pipeline footprints, expanding East Texas and Louisiana presence with about 6 Bcf per day of gathering capacity and over 4 Bcf per day of take-or-pay pipeline capacity.
- Full year 2026 EBITDA guidance was raised by $200 million at the midpoint to $8.3 billion to $8.5 billion.
- Long-term EBITDA growth target was increased to 11% plus compound annual growth through 2030, up from the prior 10% plus target.
- Second quarter segment growth was led by transmission and Gulf businesses with 6% growth, Gulf businesses up 23%, natural gas storage up 23%, Northeast GMP up 8%, and West up 5%.
- Upstream businesses declined by $14 million due to divestiture of upstream Haynesville assets.
- Williams expects 2026 year-end leverage around 3.9 times debt to EBITDA including three months of Momentum contribution, or 3.75 times normalized leverage, preserving capacity for additional projects.
- Two strategic pipeline expansions announced alongside Momentum acquisition: Shelby Connector (750 million cubic feet per day initial capacity, expandable to 1.5 Bcf per day, in service first half 2028) and Delta Access (2.25 Bcf per day initial capacity, expandable to 3.5 Bcf per day, in service early 2029).
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Transcript
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Good day everyone, welcome to the Williams second quarter 2026 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 Mrs. Caroline Sardella, Director of Investor Relations.
Please go ahead. Thank you, good morning, everyone.
Thank you for joining us and for your interest in Williams. Yesterday afternoon, we released our earnings press release and the presentation that our President and Chief Executive Officer, Chad Zamarin, and our Chief Financial Officer, John Porter, will speak to you this morning. Also joining us on the call today are Larry Larsen, our Chief Operating Officer, and Rob Wingo, our Executive Vice President of Corporate Strategic Development. In our presentation materials, you'll find a disclaimer related to forward-looking statements. This disclaimer is important and integral to our remarks, please review it. Also included in the presentation materials are non-GAAP measures that we reconciled with generally accepted accounting principles. These reconciliation schedules appear at the back of today's presentation materials. With that, I'll turn it over to Chad.
Thanks, Caroline. This is another quarter of accomplishment for Williams, with strong execution and meaningful growth across our business. I want to start by recognizing an awesome milestone for our Power Innovation business. Last week, we achieved in-service for phase 1 of Socrates, delivering a utility scale 200 MW of power to our customer in under 18 months since commercialization. This is how America wins the race for the next generation of technology. A huge shout-out to the Williams team and the incredible group of engineering, equipment, and construction partners that have worked to make this possible. We remain on track to deliver the next phase of Socrates before year-end, with many more projects to come thereafter.
With the phase 1 of Socrates completed on time and within budget, we have proven our ability to deliver, and we are well-positioned to advance the commercialization and scaling of future Power Innovation projects. On Transco, we signed customer agreements for the Leidy Access and Garden Connector projects, two pipeline expansions that serve residential, commercial, and power demand in Pennsylvania and New Jersey. We also further upsized our Transco Power Express project, which now represents an 800 million cubic feet per day expansion of Transco to serve load growth, power demand, and data center growth in Virginia. Additionally, the team commercialized an extension of Line 200, which you'll recall is the 3.1 BCF per day transmission pipeline that Williams is building from Gillis to serve the Woodside LNG terminal.
The extension of Line 200 includes a new lateral to serve growing power demand in the Lake Charles, Louisiana area and is a nice upside to the Woodside partnership. In the second quarter, we also executed on two strategic transactions, including a Power Innovation financing joint venture with Blackstone and the strategic acquisition of Momentum Midstream. I'll let John provide more color in a minute, but I want to highlight that our financing JV creates a flexible source of low-cost equity that will enable us to continue the rapid growth and ongoing commercialization of near-term Power Innovation projects. I want to congratulate the Williams and Blackstone teams, as well as key partners Apollo and KKR, for achieving a great outcome and for supporting this exciting business. As noted in our earnings release, we announced the highly strategic acquisition of Momentum Midstream.
This bolt-on acquisition complements our Haynesville Gathering and Transco Gulf Coast pipeline footprints and strengthens our position in the most important natural gas growth basin tied to the fastest-growing and largest natural gas demand corridor. As a result of one financial quarter of assumed ownership of Momentum and improved performance across our base business, we are raising full year 2026 EBITDA guidance by $200 million at the midpoint, and we are increasing our long-term EBITDA growth rate target to 11-plus % compound annual growth through 2030 versus our previously announced 10-plus % compound annual growth target. Just as important, we are preserving near-term investment capacity with forecasted leverage of 3.75 times debt to EBITDA, which preserves our ability to execute on additional near-term power and pipeline projects. Williams really is firing on all cylinders.
I'll now turn the call over to John to talk about our Power Innovation financing JV and to provide an overview of our quarterly financial results. After John is done, I'll come back to provide additional color on the Momentum acquisition, and I'll highlight two exciting pipeline expansion projects that we are announcing alongside the acquisition.
John? Thanks, Chad. I'm happy to spend a moment on the Power Innovation joint venture.
It's an important example of how we are enhancing shareholder value with our unique growth opportunities. I also think it's important to emphasize that as attractive as this joint venture is, we would not have done it at all if it not for the expectations we have in driving substantial additional growth in our Power Innovation business. Let's talk about the value this joint venture creates. First, our high-quality Power Innovation business attracted a highly efficient source of equity capital while preserving Williams' operatorship, key decision-making authority, and upside participation. The joint venture provides $5.34 billion of committed capital, including $4.4 billion for 49% of the expected total growth capital expenditures, plus $900 million of additional consideration to Williams.
Importantly, that capital comes at an attractive capped 6.35% cost of equity, which is a very efficient way to fund these near-term Power Innovation projects without diluting the value of the platform we are building. Second, that $900 million of additional consideration significantly enhances our compelling project returns across the five Power Innovation projects currently underway. Lots of different ways to illustrate how this joint venture enhances our project returns, the effect on the multiple on invested capital over the primary term of the underlying contracts is pretty striking. Specifically, if you look at the ratio of the total cash flow Williams will see from these five projects to the total invested capital, that ratio improves about 56% with the joint venture.
Again, that is only over the primary term of the contracts and doesn't include any of the upside we expect to develop both within the primary term and well beyond. Additionally, the joint venture includes an attractive buyout option at the remaining partner investment balance beginning in 2033. Back to where I started. The full equity treatment creates immediate balance sheet capacity for the expected continued growth in our Power Innovation business. I'll walk you through that capacity when I cover our updated 2026 guidance later in the presentation. With that, let's move now to a quick look at our second quarter financial performance. We've continued our strong start to 2026 with second quarter 2026 EBITDA up 6% over 2025 and now up 10% year to date.
Bridging from last year's $1.8 billion to this year's $1.92 billion, our overall financial performance continues to be led by our Transmission, Power & Gulf businesses, which improved $56 million or about 6%. Growth in this segment was led by our Gulf businesses, which grew 23%, reflecting the combined effects of our recent Gulf expansion projects. We also saw a 23% increase from our natural gas storage businesses, and we had growth from expansion projects at Transco and Mountain West Pipeline. Our Northeast G&P business grew $39 million, or 8%, primarily due to growth in the rich gas areas. The West grew $18 million, or about 5%, led by our Haynesville investments, including our Louisiana Energy Gateway Pipeline. Our Sequent marketing business did a bit better than last year, although second quarters present seasonally lower opportunities for this business.
Finally, our other segment, which includes our upstream businesses, was down about $14 million, primarily due to our divestiture of the upstream Haynesville assets, which closed in January of 2026. Again, continuing our strong start to 2026 with second quarter EBITDA up 6% over 2025 and now up 10% year to date. Now I'll turn it back over to Chad to discuss our strategic acquisition of Momentum Midstream.
Thanks, John. Looking at slide 6, I want to start by highlighting the importance of the Haynesville Basin, as it will be the single most important U.S. supply basin in answering the near term call for natural gas, especially in order to supply the growth of LNG exports along our Gulf Coast Transco footprint. Over the next decade, the Haynesville is expected to grow by over 10 BCF per day, and LNG exports are expected to double from where they are today. The combined Williams and Momentum assets will form the backbone that connects our country's fastest growing supply basin with our fastest growing demand corridor. With this combination, we solidify our position as the largest gatherer of Haynesville gas connected to Transco, the largest gas transmission pipeline system along the Gulf Coast corridor.
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