Williams Companies' Q3 2025: Contradictions Emerge on Long-Term Growth, FERC Timelines, and CapEx Spending

Date of Call: None provided

Financials Results

• EPS: $2.10 per share midpoint, targeting 9% growth over 2024

Guidance:

• Adjusted EBITDA guidance unchanged; midpoint $7.75B (~9% growth vs 2024)
• EPS midpoint $2.10 (~9% growth vs 2024)
• Full-year 2025 growth CapEx raised to $3.95B–$4.25B to include additional power innovation and wellhead‑to‑water LNG investments
• Leverage guidance approximately 3.7x
• Continue targeting multi‑year growth (5‑yr EBITDA CAGR ~9%, EPS CAGR ~14%)

Business Commentary:

* Revenue and EBITDA Growth: - Williams reported a 36% increase in adjusted EBITDA to $1.92 billion in Q3 2025 compared to the previous year. - This growth was driven by expansion projects in its transmission and power businesses, higher revenues from regional energy access, and stronger performance in its storage and gathering segments.

• Power Innovation and Growth Outlook:
• Williams has announced $5 billion worth of investments in power innovation projects, with plans to complete additional projects by 2027.

• These projects are aimed at delivering speed to market solutions in constrained markets, largely driven by robust engagement and interest from hyperscalers and data centers in need of power and natural gas supply.

• Strategic Investments and LNG partnership:

• Williams announced strategic investments, including a transaction with JERA for its upstream assets and a strategic partnership with Woodside Energy to build and operate a pipeline.

• The strategic aim is to enhance the company's core infrastructure business by aligning with international LNG markets to support producer customers and grow its integrated value chain.

• Capital Spending and Financial Guidance:

• Williams updated its full-year 2025 growth capital expenditure range to $3.95 billion to $4.25 billion.

• This includes investments in power innovation and wellhead to water LNG projects, with leverage guidance at approximately 3.7x, indicating confidence in managing future growth and capital needs.

• Utility and Power Landscape:

• Williams emphasized the role of natural gas as a key solution to manage energy affordability amid election pressures and utility bill concerns.
• The company expressed confidence in navigating regulatory challenges and expects progress on critical pipeline projects like NESE.

Sentiment Analysis:

Overall Tone: Positive

• Management reported adjusted EBITDA up 13% to $1.92B, highlighted a >$5B power innovation backlog and record transmission results, announced fully contracted 20‑year take‑or‑pay pipeline and LNG positions, and raised CapEx while keeping guidance and leverage ~3.7x — signaling confidence in growth and balance‑sheet positioning.

Q&A:

• Question from Jeremy Tonet (JPMorgan Securities): I just want to dive in a little bit more, if you could, to the power innovation side. And I was just wondering if you could provide us a refresh with regards to how you see the opportunity set at this point across your footprint? And what would -- how would you describe, I guess, the pace of conversations? Is it still an urgency and speed to market? Or just any other color would be great.
  Response: Very robust pipeline/backlog (>$5B, ~6 GW) across a broad footprint; management expects to continue layering in projects thoughtfully while managing balance sheet capacity.

• Question from Jeremy Tonet (JPMorgan Securities): I was just wondering if you might be able to expand a bit more, I guess, on the strategy -- industrial logic to this deal with the full wellhead to water connectivity here. And I was curious, I guess, as far as the offtake capacity is concerned, at the LNG facility, if that's something you intend to keep for yourself or contract out to customers or just walking through kind of where that strategy stands post this deal would be helpful.
  Response: The transaction is an integrated, demand‑driven move to pull volumes across Williams' systems into LNG markets; Williams takes a small 1.5 mtpa offtake (<1% of earnings) intended to be used as a fixed‑margin window for producer customers, not to take commodity price exposure.

• Question from Praneeth Satish (Wells Fargo): Maybe on the power side, can you give us a sense of where you are in the procurement cycle for turbines, so you have FID power projects now, the $5 billion you mentioned that come into service through mid-2027. Have you started placing orders or put yourself in the queue for long lead time items for the second half of 2027 or into 2028. I guess kind of how far does that go? And then at this point, could we see more projects gets slotted in for second half '27 deliveries? Or are the conversations kind of shifting towards 2028 now for new power projects?
  Response: Equipment planning is moving later into '27 and into '28 for new projects; Williams feels positioned with strategic partners to secure equipment and be ahead of needs through the end of the decade.

• Question from Praneeth Satish (Wells Fargo): Power Express looks like the scope was revised down again a little bit to 785 million cubic feet per day from 689 million cubic feet per day. I think that's the second time now. So can you just walk through what's driving that change? Is it tied to permitting commitments or just broader dynamics? And do you think -- and how should we think about the return and the in-service date of that project with this new scope?
  Response: Scope was adjusted to align with customer facility needs; current contracts cover 689 mmcf/d, returns remain in prior target range, FERC process expected next year and the project can scale if demand materializes.

• Question from Spiro Dounis (Citi): Based on what we see coming down the project pipeline, is this sort of $4 billion of CapEx per year on the growth side, the right target for the next few years? And maybe John, how do you think about the balance sheet's ability to sustain those levels and maybe even higher?
  Response: Management has line of sight to high‑return organic investments that will absorb balance‑sheet capacity while keeping leverage in the 3.5–4x target and generating meaningful cash tax deferrals.

• Question from Spiro Dounis (Citi): Election day today. Curious how you guys are thinking about the impact for Williams from both high utility bills/election politics and growing opposition to data centers; and tie in a status update on NESE and Constitution and how getting past the election could open progress?
  Response: Williams emphasizes natural gas as an affordability solution; NESE is progressing faster than Constitution, management expects elections won't materially impede needed permitting and remains prepared to proceed when permits are secured.

• Question from Julien Dumoulin-Smith (Jefferies): There's no mention of the 5% to 7% long-term growth outlook in the deck here, how should we interpret that removal? And you're targeting a 20-plus percent ROIC — what does this say about long-term growth and returns beyond power innovation?
  Response: Management declined to restate a long‑term numeric target and deferred detail to Analyst Day, saying balance‑sheet capacity plus a pipeline of high‑return projects supports continued industry‑leading growth and strong ROIC potential.

• Question from Julien Dumoulin-Smith (Jefferies): On power innovation, are you thinking more about upsizing existing sites like Socrates or finding new greenfield opportunities?
  Response: A mix of both: scale existing sites where economics and speed‑to‑market allow (Socrates example) and pursue new geographies, with projects intended to scale over multi‑decade horizons.

• Question from Jean Ann Salisbury (BofA): On the wellhead to water announcement, is it possible to disclose directionally what share of the EBITDA that you're projecting for the project is contracted take-or-pay either as today or in your eventual vision?
  Response: Pipeline portion (~80% of the investment) is 100% take‑or‑pay and fully contracted; LNG terminal equity is 10% but the terminal is 100% take‑or‑pay; Williams' 1.5 mtpa offtake is the only small non‑take‑or‑pay exposure (<1% of earnings).

• Question from Jean Ann Salisbury (BofA): The Gillis LNG pipeline is 3.1 Bcf — do you envision Williams sourcing all of the 3.1 from your own systems or needing third‑party pipes/expanded sources?
  Response: Supply will be a combination of LEG, Transco and other market sources with short‑term arrangements and Woodside handling long‑term supply; Williams will not solely source the full pipeline from its own upstream.

• Question from Keith Stanley (Wolfe Research): When you say you've gotten ahead of the equipment needs and turbine needs almost through the end of the decade, can you confirm the message that you can keep going at this type of cadence of power projects from a supply chain perspective through 2030?
  Response: Yes — management believes, via strategic supplier relationships, they can sustain the cadence of power projects through the end of the decade.

• Question from Keith Stanley (Wolfe Research): On the Louisiana LNG interest, when you say it's a take-or-pay contract on the facility itself fully pulled out, is that subscribed with Woodside directly given market perception the terminal is largely uncontracted?
  Response: Affirmed — the terminal is fully contracted with 20‑year take‑or‑pay contracts, primarily held by Woodside and partners (e.g., Stonepeak), generating tolling revenues to owners.

• Question from Elvira Scotto (RBC Capital Markets): On the 6 GW in the presentation, is that your total addressable market or can you do more than the 6 GW? What are the gating factors to doing more?
  Response: Market size exceeds 6 GW, but 6 GW represents a disciplined, deliverable pace given counterparty quality, geography, and internal execution capacity — Williams will only pursue high‑quality, manageable projects.

• Question from Elvira Scotto (RBC Capital Markets): What's the ability to continue to expand Transco and of the $14 billion of project opportunities, what portion represents Transco and how competitive are those projects?
  Response: Transco expansion opportunity is substantial and constitutes the majority of the backlog; Williams expects to win more than its fair share due to route advantages and system scale.

• Question from Ameet Thakkar (BMO Capital Markets): Clarifying: Woodside taking 8 million tons, Uniper 1, Williams 1.5 — does the remaining ~6 mtpa now have contracted take-or-pay status or is Woodside on the hook?
  Response: Woodside currently holds the equity/offtake for the facility and today the terminal is 100% contracted (primarily Woodside); any sell‑down of equity would transfer offtake obligations to other high‑quality counterparties.

• Question from Ameet Thakkar (BMO Capital Markets): Beyond turbines, are you using other technologies like fuel cells or nontraditional approaches for power innovation?
  Response: Primary focus remains gas turbines with some batteries added; other technologies are explored but represent a very small portion of investments.

• Question from Manav Gupta (UBS): Can you remind us the strategic rationale behind the Green River West expansion and how it adds to your Mountain West footprint?
  Response: Green River West expands capacity to serve industrial and mining load growth in Southwest Wyoming, tying Rockies supply to rising regional demand.

• Question from Manav Gupta (UBS): Can you go back to Cogentrix and talk a bit about how that investment is faring and any synergy surprises?
  Response: Cogentrix is on track and delivering expected results; early stages but providing strategic market insight and benefits across Williams' footprint.

• Question from Theresa Chen (Barclays): Can you quantify the potential uplift in utilization or underwriting additional expansion in pipeline assets (Gillis, Transco, LEG) on the heels of this deal?
  Response: Sequent will be the market face to ensure supply, and management expects the deal to identify and drive additional gathering, storage and transmission expansions and optimization opportunities beyond base case modeling.

• Question from Theresa Chen (Barclays): Provide an update on production activity levels in Haynesville and the Northeast and outlook on volumes into 2026?
  Response: Haynesville activity has picked up and is expected to continue into 2026; Northeast is mixed by area but showing pickup as prices rebound, with some facilities growing and others flat.

• Question from Robert Catellier (CIBC Capital Markets): On fees and contract tenor for the LNG opportunity: do you see a fee‑for‑service structure or linkage to LNG benchmarks, and how do you see contract tenors working given split sourcing?
  Response: Expect primarily fee‑for‑service fixed‑margin transactions for producer customers; pipeline and LNG facility have 20‑year contracts, and offtake supply will be built from a portfolio of tenors with pricing reflecting tenor.

• Question from Robert Catellier (CIBC Capital Markets): Smaller customers supplying volumes suggests potentially shorter tenors — would that change responsibilities?
  Response: Williams plans to aggregate supply across various customers and tenors, accepting higher margins for shorter tenors and building a diversified supply portfolio rather than concentrating on single long‑term deals.

• Question from Sunil Sibal (Seaport Partners): Is this Woodside deal a one‑off or an opening into a bigger LNG business for Williams?
  Response: Not a strategy to become a large international LNG marketer; this is an opportunistic, small equity position used to enable an integrated value‑chain opportunity that supports core infrastructure growth.

• Question from Sunil Sibal (Seaport Partners): What cost inflation are you seeing in supply chains for power innovation and how do you think about counterparty concentration as you grow the business?
  Response: Cost inflation for equipment is being experienced industry‑wide and managed with customers; Williams targets high‑credit counterparties (hyperscalers/AA) and has secured additional credit protections in agreements.

• Question from John Mackay (Goldman Sachs): You announced an upstream sale recently; what is the plan for the remaining upstream portfolio from here?
  Response: Wamsutter remains the principal upstream interest; management intends to further delineate and prove up the asset before any sale to ensure full development and protect midstream economics.

Contradiction Point 1

Long-Term Growth Outlook

It involves changes in the company's long-term growth outlook, which is a critical indicator for investors to understand the company's future prospects.

How should we interpret the removal of the 5-7% long-term growth outlook? - Julien Dumoulin-Smith (Jefferies)

20251104-2025 Q3: We're excited about the next 5 years... Strong balance sheet and high-return projects offer industry-leading results. - Chad Zamarin(CEO)

With the 9% CAGR over the past 5 years, does the 5%-7% EBITDA CAGR guidance reflect an upward bias? - Praneeth Satish (Wells Fargo Securities)

2025Q2: The company is healthier with a stronger balance sheet and better tailwinds. Growth is likely to exceed historical set growth rates. - Chad J. Zamarin

Contradiction Point 2

FERC Process and Timing

It pertains to the FERC process and timing, which are crucial for project approval and development timelines.

What is driving the scale reduction of Power Express? - Praneeth Satish (Wells Fargo)

20251104-2025 Q3: FERC process is planned for next year, with potential for expansion if demand materializes. - Larry Larsen(COO)

Will FIDs be received from Transco or the Northwest system in the second half of this year? - Jeremy Bryan Tonet (JPMorgan Chase & Co)

2025Q2: FERCs expected to act quickly, and the New York water permit is anticipated within months. - Chad J. Zamarin

Contradiction Point 3

Balance Sheet Capacity and CapEx Spending

It involves differing interpretations of the company's balance sheet capacity and its implications for capital expenditure spending, which are critical for financial planning and investor expectations.

Is $4 billion annual CapEx sustainable for power innovation growth? Is balance sheet capacity sufficient? - Spiro Dounis (Citi)

20251104-2025 Q3: We have balance sheet capacity to manage high-return organic investments. We have a strong pipeline of high-quality opportunities to fill our balance sheet capacity, with substantial cash tax deferrals through 2027 and beyond. - John Porter(CFO)

How do you view the high CapEx levels moving forward, and are there self-imposed spending caps? - Spiro Dounis (Citi)

2025Q1: We have excess balance sheet capacity, enabling us to fund high-return projects. We have stress-tested our capacity and are confident in our ability to fund upcoming projects while remaining disciplined with returns and credits. - John Porter(CFO)

Contradiction Point 4

FERC Process and Permitting Timeline

It involves differences in the expected permitting timeline for projects, which can impact project development plans and schedules.

What is driving the scale reduction of Power Express? - Praneeth Satish (Wells Fargo)

20251104-2025 Q3: FERC process is planned for next year, with potential for expansion if demand materializes. - Larry Larsen(COO)

Do you expect FIDs from Transco or the Northwest system in the second half of this year? - Jeremy Bryan Tonet (JPMorgan Chase & Co)

2025Q2: FERCs expected to act quickly, and the New York water permit is anticipated within months. - Chad J. Zamarin

Contradiction Point 5

Permitting Timeline for Projects

It involves differences in the expected permitting timeline for projects, which can impact project development plans and schedules.

Can you clarify the contracted take-or-pay terms for the LNG facility? - Jean Ann Salisbury (BofA)

20251104-2025 Q3: We expect increased gas demand and gathering volumes through our systems, boosting efficiency and capacity. - Chad Zamarin(CEO)

Can you provide details on the timeline for the Transco Southeast Supply Enhancement (SSE) project and possible earlier in-service dates? - John Ross Mackay (Goldman Sachs Group, Inc.)

2025Q2: Environmental assessment instead of full impact statement speeds permitting timeline. Notice to proceed expected next year, with partial service starting in early 2021 and full service in 2027. - Larry C. Larsen