WILLIAMS COMPANIES, INC. Q3 FY2026 earnings call

• Record Execution: Delivered record Q3 results with four expansion projects placed into service, adding over 400 million cubic feet per day (Mcf/d) of contracted capacity.
• Acquisition Integration: Successfully closed the Momentum Midstream acquisition one month ahead of schedule; integration is proceeding smoothly with early synergy capture and seamless tie-in to the Transco footprint.
• Power Innovation: Completed Phase 2 of the Socrates project ahead of schedule and within budget, demonstrating speed-to-power capabilities. Management expects to announce one to two additional power projects by year-end, focusing on high-quality hyperscalers and longer contract tenures.
• Pipeline Expansion: Announced SESI Phase 2 (150+ Mcf/d) on Transco and upsized the Garden Connector to 144 Mcf/d. The Shelby Connector and Delta Access projects are advancing to expand Haynesville gas delivery to Gulf Coast LNG and power customers.
• Storage Growth: Commercialized a 9.4 BCF expansion of the Mountain West Clay Basin facility, highlighting the increasing value of storage amid rising LNG and power demand.
• Strategic Positioning: Emphasized that natural gas remains the most abundant and affordable domestic energy resource, driving demand from LNG exports, industrial reshoring, and power surges.

Adjusted EBITDA for the third quarter reached a record $2.04 billion, representing a 6% year-over-year increase and contributing to a 9% year-to-date growth. The Transmission segment drove significant growth, increasing by approximately $83 million (9%), led by initial contributions from the Socrates power project, natural gas storage expansions, and pipeline capacity additions. The Northeast GMP segment grew by $37 million (7%), driven by higher volumes on liquids-rich and dry gas systems. The West segment increased by $34 million (9%), bolstered by the Momentum Midstream acquisition and stronger Haynesville production volumes. Conversely, the Sequential Marketing segment saw lower performance due to seasonal factors, and the Upstream/Other segment declined by $28 million primarily due to the divestiture of upstream Haynesville assets in January.

• EBITDA Guidance: Maintaining full-year 2026 adjusted EBITDA guidance in the upper half of the $8.3 billion to $8.5 billion range.
• Growth Targets: Reiterated the long-term target of 11% plus compound annual EBITDA growth through 2030, supported by a growing backlog extending into the 2030s.
• Leverage Outlook: Expects year-end leverage to be approximately 3.75 times on a full-year run rate basis including Momentum. This provides incremental capacity versus the internal 4.0x ceiling to fund potential additional power projects announced before year-end.
• Capex: Growth capital expenditure guidance remains unchanged.
• Future Financing: Balance sheet flexibility will guide financing plans for 2027, depending on the scale and speed of future power project announcements.

• Permitting and Regulatory Risk: The Third Circuit remand of the New Jersey certificate for the Nessie project highlights ongoing permitting challenges. Management cited the need for federal permitting reform (referencing the bipartisan Baja Bill) to provide certainty and avoid delays that could impact affordability and project timelines.
• Political Sensitivity: While management stated elections are not gating issues for current projects, they acknowledged the importance of supportive communities and regulatory environments for infrastructure development.
• Execution Complexity: Power innovation projects are described as "first-of-the-kind" and complex, requiring continuous learning and optimization to manage load following and commissioning efficiencies.
• Market Volatility: Shifts in interest rates and cost of capital may impact the viability of joint venture structures for financing new power projects, though multiple financing options remain available.

Q: Analyst asked about the customer base and timeline for upcoming power projects, specifically if counterparties are broadening or similar to existing ones, and how lessons from Socrates are being applied. / A: Chad Zamarin confirmed they are engaging with additional high-quality hyperscalers and expect to diversify the customer base while securing significantly longer contract tenures. He noted that while Socrates proved their capability, future projects will focus on scalability and clarity in backlog length. Larry Larsen added that the team is learning every day, optimizing execution and commissioning processes from these complex, first-of-kind projects to drive efficiency in future deliveries.

Q: Analyst inquired about the sensitivity of power project timelines to recent elections, particularly in Texas, and asked about the return profile and expansion potential of the SESI Phase 2 project. / A: Chad Zamarin stated that elections are not gating issues, emphasizing that Texas remains critical for data center infrastructure due to land availability and energy resources. Regarding SESI Phase 2, Larry Larsen explained that while currently contracted at 150 Mcf/d, the open season scope allows up to 390 Mcf/d. He indicated that returns are expected to be similar to other capital-efficient projects, with potential future expansion occurring in later phases like SESI Phase 3.

Q: Analyst sought details on the compensation framework's alignment with a 10-16% EBITDA CAGR target, asking what it would take to achieve the high end and how leverage would be managed. / A: Chad Zamarin explained that the compensation structure aligns the entire organization with sector-leading growth goals, noting that past 9% CAGR demonstrates the platform's capacity for investment. John Porter clarified that the 16% target is achievable through organic backlog wins and potentially bolt-ons, without exceeding a 4.0x leverage ratio. He highlighted financial flexibility via internally generated cash flow, balance sheet capacity, and potential partnerships, such as the Blackstone deal, to fund growth while preserving strong cash returns on invested capital.

Q: Analyst questioned the integration progress of the Momentum acquisition and the strategic value of the Woodside Louisiana LNG capacity in light of US LNG demand trends. / A: Rob Wingo reported that Momentum integration is off to a strong start with no surprises, capturing synergies earlier than modeled and seeing robust commercial engagement. Chad Zamarin and Larry Larsen discussed the Woodside capacity, stating it enhances their ability to offer international pricing services to producers. They emphasized patience and discipline, aiming to term out the capacity for fixed margins rather than creating price exposure, while anticipating further pipeline expansions in the Haynesville corridor to serve growing LNG demand.

Q: Analyst asked about the remaining expansion capacity on Transco, the status of the Nessie project permit, and the size/cadence of future power projects. / A: Larry Larsen described Transco expansion opportunities as nearly limitless, citing SESI Phase 2 as just one example of strategic brownfield expansions, with more projects expected to commercialize into 2027 and beyond. Lane Wilson updated that the Nessie project is not jeopardized by the Third Circuit remand but requires cooperation from New Jersey; she expressed optimism about impending Senate voting on permitting reform legislation. Chad Zamarin clarified that future power projects may crystallize as larger-scale announcements with phased capacity, leveraging lessons learned to maintain returns while driving down costs for customers.