Williams Companies Inc. (WMB: Quote) on Monday forecast earnings for the second quarter below analysts' estimates and lowered its earnings outlook for fiscal years 2012 as well as 2013. However, the company reiterated its outlook for robust dividend growth through 2014 and raised its earnings outlook for fiscal 2014.
For the second quarter of 2012, Williams expects adjusted earnings per share to be significantly lower than the preceding first quarter, primarily because of an unexpectedly sharp decline in natural-gas-liquids or NGL margins in May and June at its unit Williams Partners L.P. (WPZ: Quote).
Accordingly, the company forecasts second-quarter adjusted earnings per share of about $0.21, down from $0.39 in the first quarter and $0.29 in the year-ago period.
On average, analysts polled by Thomson Reuters expect the company to earn $0.33 per share for the quarter. Analysts' estimates typically exclude special items.
The company plans to report its finalized second-quarter financial results on August 1.
For fiscal 2012 and 2013, Williams lowered its earnings outlook primarily because of less-favorable commodity prices.
The company now forecasts fiscal 2012 and fiscal 2013 adjusted earnings midpoint of $1.15 per share and $1.38 per share, respectively. Earlier, the company forecast adjusted earnings midpoint of $1.40 per share and $1.55 per share, respectively, for the two years.
Analysts expect the company to earn $1.39 per share and $1.58 per share respectively for the two years.
Williams continues to expect the influence of NGL prices on its earnings to diminish over the next few years as it transitions to a business mix that is increasingly fee-based in its Williams Partners segment.
For fiscal 2014, Williams raised its adjusted earnings per share outlook to a range with midpoint of $1.95. Earlier, the company forecast adjusted earnings per share midpoint of $1.83 for the year.
The revised outlook represents a 59 percent increase over the company's earnings of $1.23 per share in 2011.
Williams said it has raised its earnings guidance for 2014 primarily as it expects to benefit from ethylene crack spreads similar to the first half of 2012 after spreads decline for the balance of this year and in 2013.
Williams continues to expect to pay a full-year 2012 shareholder dividend of $1.20 per share, representing a 55 percent increase over 2011.
The company also continues to expect the full-year dividend that it will pay to shareholders in 2013 and 2014 to increase by 20 percent each to $1.44 and $1.75 per share, respectively.
Meanwhile, Williams Partners (WPZ) will buy Williams' 83.3 percent interest and operatorship of the olefins-production facility in Geismar, Louisiana, the two companies said.
Williams Partners expects that the addition of olefins production to its business through the acquisition to be accretive to distributable cash flow, on a per-unit basis for the partnership's unitholders. The company expects to fund the transaction largely with the issuance of limited-partner units to Williams.
Williams owns 68 percent of Williams Partners, including the general-partner interest.
WMB is currently trading at $30.92, down $0.39 or 1.25 percent on 3.18 million shares. WPZ is trading at $53.76, down $1.45 or 2.63 percent on 138,586 shares.
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by RTT Staff Writer
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