The Williams' 2026 Q2 Earnings Call: Funding Timelines and EBITDA Growth Signals Don't Match

<<>>

Date of Call: Aug 4, 2026

Guidance:

• Full-year 2026 adjusted EBITDA outlook raised to $8.3B-$8.5B, incorporating accretive Momentum acquisition.
• Forecasted year-end leverage around 3.9x (including ~3 months of Momentum), with full-year run rate leverage at 3.75x, preserving capacity for additional near-term power projects.
• Long-term EBITDA growth rate target increased to 11%+ CAGR through 2030 from 10%+ CAGR previously.
• 2026 growth capex guidance updated to reflect initial spending on announced projects.

Business Commentary:

Power Innovation and Project Execution:

• Williams achieved in-service for Phase 1 of Socrates, delivering 200 megawatts of power to its customer in under 18 months since commercialization.
• The company remains on track to deliver the next phase before year-end, with many more projects to follow.
• The successful execution was due to strong collaboration with engineering, equipment, and construction partners.

Pipeline Expansion and Strategic Transactions:

• Williams signed customer agreements for the Lighty Access and Garden Connector projects, and upsized the Transco Power Express project to an 800 million cubic feet per day expansion.
• The company also executed a strategic acquisition of Momentum Midstream, enhancing its position in the Haynesville Basin.
• These actions were driven by the need to serve residential, commercial, and power demand in Pennsylvania, New Jersey, and Virginia.

Financial Performance and Guidance Increase:

• Williams reported a 6% increase in second-quarter EBITDA over the previous year, with a 10% year-to-date increase.
• The company raised its full-year 2026 EBITDA guidance by $200 million at the midpoint and increased its long-term EBITDA growth rate target to 11-plus percent.
• This improvement was supported by strong performance in transmission and Gulf Coast businesses, as well as strategic acquisitions.

Joint Venture and Equity Financing:

• Williams established a power innovation financing joint venture with Blackstone, providing $5.34 billion of committed capital with a capped cost of equity at 6.35%.
• This joint venture enhances project returns and creates immediate balance sheet capacity for future growth.
• The venture was structured to attract efficient equity capital while preserving Williams' operatorship and upside participation.

Sentiment Analysis:

Overall Tone: Positive

• Management stated 'strong execution and meaningful growth', 'raising full-year 2026 EBITDA guidance by $200 million at the midpoint', and 'increasing our long-term EBITDA growth rate target to 11-plus percent'. The tone was optimistic regarding project execution, commercialization, and strategic acquisitions, with statements like 'Williams really is firing on all cylinders' and 'we feel well-positioned with our flexibility to fund additional power innovation opportunities'.

Q&A:

• Question from Puneet Satish (Wells Fargo): Is the 11% EBITDA CAGR target incorporating conservatism, given projects like Momentum and Delta Express could imply a higher run-rate?
  Response: Management feels well-positioned to exceed 11% and the target is centered on the existing contracted book, excluding new power/pipes projects and incorporating conservatism across many business areas.

• Question from Puneet Satish (Wells Fargo): Beyond identified organic projects, what operating/cost synergies are expected from Momentum? Is the 8.5x acquisition multiple based on Momentum's consolidated EBITDA?
  Response: Synergies will be operational, with significant growth expected in the strategic Haynesville Basin. The multiple is based on consolidated EBITDA and is approximately 9x for next year's expected performance, expected to compress over time.

• Question from Jeremy Tonette (J.P. Morgan Securities, LLC): How is the behind-the-meter backlog progressing? Are you in discussions with multiple hyperscalers or is it limited to one?
  Response: Backlog remains strong with discussions ongoing with multiple counterparties. The company is not exclusive to any one customer and expects to commercialize additional projects between now and year-end.

• Question from Jeremy Tonette (J.P. Morgan Securities, LLC): What is the pipeline opportunity on Transco, particularly regarding larger projects?
  Response: Strong customer discussions continue across the Transco footprint. The backlog includes many Transco-related projects, with Delta Access as a first step, and additional demand response is being pursued, though timing depends on utility customer readiness.

• Question from Spiro Dounis (Citi): How might the next wave of power innovation projects differ from the first wave? What is the plan to recycle capital?
  Response: Projects will evolve to include more scale and hybrid solutions, with a focus on supportive geographies. The Blackstone JV is a key tool for capital recycling, enabling the company to fund new projects, with additional commercialization expected by year-end.

• Question from Spiro Dounis (Citi): How is the Socrates startup process going, and can learnings accelerate future project timelines?
  Response: Commissioning has gone extremely well, with first power delivered and ramp-up expected over the coming weeks. Lessons learned are being applied to other projects, which are currently trending on schedule and on budget.

• Question from Amit Thakkar (BMO Capital Markets): Regarding Woodside LNG and Line 200, how much capacity will be sourced from Transco LEG and Momentum?
  Response: Line 200 will source from multiple supply points, including the integrated Transco LEG and Momentum systems at Gillis, which is critical for serving the growing demand along the Louisiana Gulf Coast.

• Question from Amit Thakkar (BMO Capital Markets): How do you reconcile the $9.6B project capital estimate with the $5.34B JV capital commitment?
  Response: The difference is primarily due to capitalized interest, which is a non-cash component for the partnership.

• Question from John McKay (Goldman Sachs): Regarding funding for the next set of BTM projects, can you walk through the options, including JV expansion?
  Response: Over $2B of capacity is available through year-end 2026. Future funding could involve expanding the existing JV or different structures, but the Blackstone partnership provides a transferable model for attracting partners on attractive terms.

• Question from John McKay (Goldman Sachs): Is Delta Access part of the Momentum deal, and what is the expected return profile?
  Response: Delta Access was commercialized by Momentum but fits well within the combined platform. The investments fit within the targeted build multiple range, with returns expected to compress the acquisition multiple over time.

• Question from Jason Gableman (TD Cowen): Does the Momentum EBITDA multiple include the future growth from Shelby Connect and Delta Access?
  Response: The current multiple does not include future growth from those projects. The acquisition fits within the targeted build multiple range, and returns from growth projects will further compress the multiple over time.

• Question from Jason Gableman (TD Cowen): Are there large-scale organic Transco opportunities remaining, or are deals needed to unlock growth?
  Response: Organic opportunities exist on Transco, but many larger projects are more than a decade out, requiring continued customer engagement and timing alignment.

• Question from Julianne Dumoulin-Smith (Jefferies): How are you thinking about the lockup on shares issued in the Momentum transaction?
  Response: Shares will be released over 180 days, with subsequent trading restricted to a small percentage of average daily volume, minimizing negative market pressure.

• Question from Julianne Dumoulin-Smith (Jefferies): Given pre-leveraging for power innovation, what is the timeliness of deploying capital and the scope of the opportunity?
  Response: Significant capacity exists through year-end 2026 to fund new projects. The company is prepared to accelerate if needed, with a financing plan in place to match the pace of opportunities.

• Question from Gabe Dowd (Truist): What impacts your ability to accelerate execution beyond five power projects at once?
  Response: Execution pace is managed to meet customer needs and equipment availability. The company is scaling its team and capacity to handle more projects, with the goal of investing through the growing opportunity set.

• Question from Gabe Dowd (Truist): What are updated thoughts on the Appalachia GMP business and near-term growth?
  Response: Activity and demand in the region are strong, potentially offering upside to current conservative growth forecasts, though the outlook remains cautious in the near term.

• Question from Robert Cotelier (CIBC Capital Markets): What is the EBITDA CAGR for Momentum and the required basin production growth to support it?
  Response: Momentum's growth is additive to the company's long-term target, with a focus on opportunities that meet or exceed the 11%+ CAGR floor.

• Question from Robert Cotelier (CIBC Capital Markets): How will business segment balances evolve through the decade, particularly power?
  Response: The pipeline and power segments are expected to grow faster, increasing their relative share, while gathering and processing will remain important but shrink proportionally.

• Question from Manav Gupta (UBS): What could drive 2026 EBITDA guidance toward the top end of the $8.5B range?
  Response: Factors include hurricane season impact, gas prices, and winter demand levels. Project execution, including Socrates Phase 2, is progressing well.

• Question from Manav Gupta (UBS): What is the progress on the five major transmission projects for 2027, specifically Southeast and Northeast supply enhancements?
  Response: Projects are progressing well: Southeast Supply Enhancement is under construction with early in-service possible in early 2027; Northeast Supply Enhancement is kicking off, with offshore work mainly in 2027, all on time and on budget.

Contradiction Point 1

Capital Availability and Funding for Power Innovation Projects

Contradiction on the availability and timing of capital for funding new projects.

John McKay (Goldman Sachs) - John McKay (Goldman Sachs)

2026Q2: The >$2 billion capacity is available through year-end 2026, with more opening in 2027 as earnings grow. - [John Porter](CFO)

How will the $2+ billion in funding capacity for BTM projects be structured, and could the existing JV with Blackstone be expanded or will future projects use a different structure? - John McKay (Goldman Sachs)

2026Q2: The company has >$2B available to fund near-term Power Innovation projects through year-end 2026, based on a normalized leverage run-rate of 3.75x. - [John Porter](CFO)

Contradiction Point 2

Quantification and Disclosure of Momentum Acquisition Synergies

Contradiction on whether specific operational synergies have been quantified.

Puneet Satish (Wells Fargo) - Puneet Satish (Wells Fargo)

2026Q2: Operational synergies will arise from the overlapping footprints, but specific quantification is not yet provided. - [Chad Zamarin](CEO)

In addition to Delta Access projects, are specific operational or cost synergies expected from Momentum? - Puneet Satish (Wells Fargo)

2026Q2: No quantification of synergies yet, but operational synergies are expected due to footprint overlap. - [Chad Zamarin](CEO)

Contradiction Point 3

Business Outlook & Growth Targets

Contradiction in the stated baseline EBITDA growth rate for the company's long-term target.

Puneet Satish (Wells Fargo) - Puneet Satish (Wells Fargo)

2026Q2: The 11%+ target serves as an update from the previous 8% (February) and 9% (May) estimates. - [John Porter](CFO)

Is the 11% EBITDA CAGR target conservative, considering potential contributions from Momentum and Delta Express, and are there other factors to consider? - Spiro Dounis (Citigroup)

2026Q1: With the new projects announced, the base growth rate for the 10%+ CAGR has moved from ~8% to around 9%. - [John Porter](CFO)

Contradiction Point 4

Project Execution Cadence & Capacity

Contradiction on timeline control and capacity constraints for new power projects.

Gabe Dowd (Truist) - Gabe Dowd (Truist)

2026Q2: The organization is preparing to increase its capacity and is not running at maximum speed to ensure quality. The goal is to scale up responsibly to meet the growth cycle. - [Chad Zamarin](CEO)

Can the company accelerate project timelines beyond the current 5 or expand existing sites, considering equipment and talent availability? - Jeremy Tonet (JPMorgan Chase & Co)

2026Q1: The cadence of projects layering in over the next several years remains unchanged. - [Chad Zamarin](CEO)

Contradiction Point 5

EBITDA Growth Target CAGR and Its Basis

The confidence level and supporting factors for the 10-11%+ EBITDA CAGR target have shifted.

Puneet Satish (Wells Fargo) - Puneet Satish (Wells Fargo)

2026Q2: The 11%+ target... is an update from the previous 8% (February) and 9% (May) estimates. This figure centers on the existing contracted book of business and excludes new power or pipeline projects. - [John Porter](CFO)

Is the 11% EBITDA CAGR target conservative considering potential contributions from Momentum and Delta Express, and are there other factors to consider? - Keith Stanley (Wolf Research)

2025Q4: The current book of business (projects under execution) supports ~8% EBITDA CAGR through 2030... To reach 10%+, the additional growth will come from executing on the project backlog (Transmission and Power Innovation)... - [John Porter](CFO) & [Chad Zamarin](CEO)

<<>>