Good day, and thank you for being here. Welcome to The Williams First Quarter 2024 Earnings Conference Call. Please note that this conference is being recorded. I will now turn the call over to your first speaker, Danilo Juvane, Vice President of Investor Relations, ESG, and Investment Analysis. Please proceed.

Thanks, Andrea, and good morning, everyone. Thank you for joining us and for your interest in The Williams Companies. Yesterday afternoon, we released our earnings and press release and the presentation that our President and CEO, Alan Armstrong; and our Chief Financial Officer, John Porter, will speak to this morning. Also joining us on the call are Micheal Dunn, our Chief Operating Officer; Lane Wilson, our General Counsel; and Chad Zamarin, 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, and you should review it. Also included in the presentation materials are non-GAAP measures that we reconcile with generally accepted accounting principles. And these reconciliation schedules appear at the back of the day's presentation material. And with that, I'll turn it over to Alan Armstrong.

Okay. Well, thanks, Danilo, and thank you all for joining us today. Well, another first quarter and another strong start for Williams. So let me begin here on Slide 2 by calling out a few operational financial and strategic achievements we saw this first quarter. Starting here on the left of this slide, yet again, we've set a record for contracted transmission capacity led by Transco, the largest and fastest-growing natural gas pipeline. And in January, we closed on our acquisition of a portfolio of Natural Gas Storage assets from an affiliate of Hartree partners for approximately $1.9 billion. The transaction included 6 underground natural gas storage facilities located in Louisiana and Mississippi, making us the largest owner of storage on the Gulf Coast. Demand for natural gas has greatly outpaced natural gas storage capacity since 2010. And our thesis of this underinvestment is now being realized as this newly acquired storage is being re-contracted at rates above our acquisition expectations. In fact, storage rates have reached the point of supporting Brownfield expansions, and we are gauging interest from customers willing to underwrite potential expansion of these facilities in the form of long-term contracts. Also in the first quarter, we announced the expansion of the Southeast Supply Enhancement project to roughly 1.6 Bcf a day of capacity, and we pre-filed this project with the FERC on February 1. We expect to make the official FERC filing later this year. And I'll remind you that this project will serve both the Mid-Atlantic and Southeast markets. These markets are experiencing increasing gas demand from power generation and the reshoring of industrial loads. Since the time of our open season, the large utilities that we serve in this area have come back and provided dramatic increases to their generation needs based on data centers to be built in the region, as well as reshoring of industrial markets. So we believe that we are in the early innings for expansions in these Mid-Atlantic and Southeast markets. Our project execution teams also delivered an impressive list of accomplishments this quarter. In total, we have 20 high-return projects in execution across our business, including approximately 3.1 Bcf per day of expansion on Transco, which equates to a 15% increase in fully contracted long-term capacity that will be coming online over the next few years. Within these Transco opportunities, a few noteworthy accomplishments to hit. First, we placed the Carolina Market Link in service and now began receiving the full revenues in this quarter. Next, we commenced construction for the Southside Reliability Enhancement and the Southeast Energy Connector projects, and we received the FERC order for the Alabama-Georgia Connector and the Texas to Louisiana Energy Pathway projects. And finally, we're advancing a number of modest but high-return expansion projects on our MountainWest Transmission System. This is a period where we have a tremendous amount of large projects and sometimes it's easy to overlook things as large as even the well deepwater project but I am happy to report to you that great execution by our teams there in some pretty difficult environments has that project coming in quite a bit below our original capital estimate on that project, and we do expect now this project to start up towards the end of this year. So congratulations to our deepwater team that has been working on that project for about 4 years now, and pretty remarkable accomplishments to get that project in on budget and actually below budget. And finally, our teams are well on their way to replacing 112 mainline compressor units with state-of-the-art low-emission turbines and electric drive units on Transco and Northwest Pipe. As a reminder, these projects will generate an incremental regulated return realized through a rate case or a traction mechanism that will begin in 2025. So again, a huge body of work there to go in and replace this compression that is well past its useful life, but the team is doing a great job. You can imagine the efforts that go into replacing that scale of operations. But we have so much going on. It's kind of easy to miss. So, and we're excited to see the earnings from that show up in '25. So now turning to the highlights of our first quarter financial performance. We delivered quarterly EBITDA of $1.934 billion, which was 8% higher than last year, an impressive feat given the tough comp we were up against and the 25% year-over-year decline in natural gas prices and the lack of severe winter weather in most of our markets. An important takeaway from the quarter is that our outperformance occurred despite year-over-year lower earnings in the marketing and upstream segments, which reaffirms the strength and resilience of our underlying business, no matter the commodity price environment. To this end, we expect to deliver our EBITDA in the top half of our earlier guidance. And to be clear, we think we can accomplish this with continued soft gas prices and without any further earnings contributions from our Marketing segment. Due to the ongoing steady growth and resilience of our business, we recently raised the 2024 dividend by 6.1%, underscoring our confidence in our ability to continue this strong record of per-share growth through even extreme low commodity price environments and with the slate of high-return growth projects under execution right now and in development. Williams remains well positioned to grow at this rate for many years to come. And with that, I'll turn it over to John to walk through the quarter and year-to-date financials.

All right. Thanks, Alan. Starting here on Slide 3 with a summary of our year-over-year financial performance. Beginning with adjusted EBITDA, we saw an 8% year-over-year increase despite natural gas prices that averaged less than $2 for the first quarter of 2024. Now included in that 8% overall growth is almost 13% growth from our primarily fee-based infrastructure businesses, excluding marketing and the upstream JV. As we'll see on the next slide, our adjusted EBITDA growth was driven by strong growth from our core large-scale Natural Gas Transmission, Gathering and Processing, and Storage businesses, including the expected favorable effects of our recent acquisitions. And it also included strong performance from our Sequent Marketing business, which had another strong start to the year despite falling a bit short of the extraordinary start they had to 2023. Our adjusted EPS increased 5% for the quarter, continuing to grow off of the 19% 5-year CAGR we've had for EPS for 2018 through 2023. Available funds from operations growth was just over 4%. Also, you see our dividend coverage based on AFFO was a very strong 2.6x on a dividend that grew 6.1% over the prior year. Our debt to adjusted EBITDA was 3.79x in line with our expectations for slightly higher leverage in 2024 before dropping back down in 2025 to guidance of 3.6x. Before we move to the next slide and dig a little deeper into our adjusted EBITDA growth for the quarter, we will provide a few updates to our financial guidance. Overall, based on our strong start to 2024, we are now guiding to the upper half of our 2024 adjusted EBITDA range of $6.95 billion to $7.1 billion and we are also well positioned for upside to drive towards the high end of this original guidance. We also remain well positioned to deliver on our 2025 adjusted EBITDA range of $7.2 billion to $7.6 billion. Additionally, based on our improved adjusted EBITDA outlook and other changes, including interest expense and income assumption shifts, we now see our key per share metrics, adjusted EPS and AFFO per share coming in at the high end of their ranges for 2024, which in the case of AFFO per share would lead to a higher overall dividend coverage ratio as well. Now specifically for 2024, our transmission in Gulf of Mexico business is tracking a bit ahead of plan with a good first quarter and expectations of continued best-in-class execution on our many key high-returning organic projects, as well as immediate results from our Gulf Coast storage acquisition with strong performance expected going forward. Our Northeast Gathering and Processing business was basically right on plan for first quarter with drilling in the higher-margin wet gas areas and inflation adjusters offsetting lower volumes in some dry gas areas. The West got off to a strong start in the first quarter, where DJ performance following our recent transactions along with all the hard work our teams did in preparing for winter allowed for excellent execution, especially across our Rocky's assets. We see the West also tracking a bit ahead of plan, although we're also embedding a bit more conservatism around Haynesville volume assumptions. For both the Northeast and West G&P assets, our guidance update today provides room for additional volume reductions and for upside movement toward the higher end of the range if those don't occur. For the Marketing business, we've had a strong overall start to 2024. But again, beating the midpoint of our full year 2024 guidance doesn't rely on any additional help from Sequent at this point. And then finally, nice to see our upstream joint ventures off to a strong start versus our plan, again, supported by the preparation our team made for winter weather. So we expect our upstream joint ventures to perform well against their plan this year as well. So let's turn to the next slide and take a closer look at the first quarter results. Again, it was a strong start to the year with 8% growth over the prior year.

Okay. Thanks, John. And so just a few closing remarks before we turn it over to your questions. First of all, natural gas demand is not just growing now, it is accelerating. This period of low natural gas prices is reaffirming the great bargain that natural gas offers as a practical low-cost, clean energy solution and the power-hungry world we live in is rapidly turning to natural gas to generate this power. This compounded with the hard-to-miss growth in LNG exports and data centers as well as the continued drumbeat of electrification and reshoring is accelerating demand and the expansions of our uniquely placed infrastructure will demand a premium. We have been betting on and setting our strategy around the benefits of natural gas for many years and have focused our investments in this space. So if you want to invest in natural gas infrastructure, no one is more concentrated than Williams. We are the most natural gas-centric large-scale midstream company around today, and our natural gas-focused strategy will be relevant for decades to come, thanks to the accelerating natural gas demand we are seeing today. Our strong conviction of the strategy led us to the bolt-on acquisitions of strategic assets like MountainWest Pipeline, Hartree Storage, and NorTex Storage. A couple of points on these acquisitions. First, these deals were directly in line with our strategy based on where we thought the puck was going. The synergies and commercial opportunities we expected are already being realized, thanks to clear plans and decisive actions. And finally, I'll reiterate our belief that Williams remains a compelling investment opportunity. Our conservative but distinct strategy continues to deliver steady, predictable growth and value to our shareholders and checks all the boxes that a long-term investor looks for in a durable and winning portfolio. We've now seen 11 consecutive years of adjusted EBITDA growth and an 8% CAGR of adjusted EBITDA since 2018 and I'll remind you that, that is without issuing equity to drive this growth. In addition, we have recognized a 19.5% return on our invested capital during the same period, and our steadfast project execution has led to record contracted transmission capacity and will continue to drive growth in 2024 and beyond. On the predictability front, we have met or beat analyst estimates for 33 quarters in a row now and beat the estimate 2/3 of the time over this 8-year period. And this year marks the 50th year in a row that The Williams Companies has paid a dividend. In closing, we've built a business that is delivering record profitability and strong financial returns in the present, but is positioned even better for the future. And with that, I'll open it up for your questions.

First one, maybe to start with the guidance, two-part question there. So John, you'd mentioned leaving room for some volume reductions from here. Curious if you could provide a little more detail there and how to think about maybe the cadence as we go throughout '24? And just given that you've left '25 EBITDA unchanged. Sounds like maybe '25 also contemplates some slower activity levels. So just curious to kind of get some confirmation around that?

Yes, I'll start and then Micheal can chime in as well. But yes, I think, overall, we are being cautious, obviously, with where natural gas prices are and especially during the shoulder months. So we started off with a plan that I think embedded a fair amount of caution, and I think since then, we've taken a little bit more caution just given where things finished from the time that we were at Analyst Day, which was really mid-winter to where we finished the year. So hopefully, we will actually experience some upside relative to these assumptions, but we are going into the rest of the year with quite a bit of caution, especially around the dry gas areas.

Yes, this is Micheal. I can add to that. We frequently communicate with our producer customers about their plans, which are constantly changing depending on price fluctuations. We feel very confident in our projected results for the second half of the year based on the volume expectations we are receiving from our customers. It's important to note that we have significant diversity in geography, customer base, and both rich and dry gas, which is advantageous for us. We are still observing activity in the rich gas sector, benefiting both our gathering and processing operations in the Northeast. We remain confident about the volumes included in our plans moving forward into 2024.

Great. Appreciate the color there. Second question, maybe going to data centers. Alan, you've been talking about data center demand for a few quarters now. It seems to be a bit more mainstream, to say the least, at this point. So curious to maybe get your updated thoughts on how you're thinking about that data center demand going forward? And really what I'd love to know more about is when do you think we start to see tangible sort of commercial discussions start to take place and filter through?

Yes, that's a great question. I believe that demand will grow over time. Individual data centers may not show significant demand on their own due to the scale of the larger transmission systems. Instead, it's the total number of data centers in these markets that will create demand. There is actually a lot of activity happening, particularly with our utility customers, and we are working closely with them to meet their evolving needs. It's worth noting that while data centers and AI receive considerable attention, the trend is even broader, as there is also significant reshoring of industrial loads, largely driven by the low cost of natural gas in the U.S. Compared to rising energy costs in other parts of the world, the U.S. benefits from low-cost energy, leading to reshoring of industrial operations. Therefore, the demand is influenced by these factors, focusing on affordable power. I want to emphasize that this is not a quick fix; the process may take longer than some anticipate due to the need for extensive planning to meet the future loads we are discussing with our customers. I do think that the eventual demand will be substantial and impactful, but it will take time and careful planning to address infrastructure constraints in these areas. We are collaborating closely with our customers and considering the integration of low-cost gas, land, and communication capacity. As Williams, we are committed to seizing these opportunities and have a dedicated team focused on this priority.

Just want to dive a bit further into the natural gas market, if I could. It appears a bit oversupplied at this point in time. And just wondering any thoughts you could share, I guess, in how you see supply-demand balancing over the course of this year and into 2025 and I guess how that might impact Williams trajectory at that point?

Yes, great question, Jeremy. I completely agree that the market is currently oversupplied. It’s an unusual situation because we have been experiencing strong contango for a considerable time, which has significantly increased the value of our storage assets. We feel fortunate to have acquired our storage at the right time and to have secured the contracts that Sequent had. There is significant value in our storage business due to the strong contango. This contango is also enabling some rigs to operate that might not otherwise be active, contributing to the oversupply. However, we are beginning to see producers and demand respond to this situation. I anticipate more of these responses this summer, as the market typically self-balances with lower prices. Currently, the market is definitely oversupplied. Looking ahead to mid-2025, as the expected demand materializes, I believe we will see a substantial increase in gas demand that will persist for years. Nonetheless, this period will require patience, and some short-term adjustments will be necessary. However, it is evident that there is a clear and transparent outlook for LNG demand and additional demand from our customers in both traditional and direct power generation. So, in the short term, while we face an oversupply leading to contango in the market, this contango is justified by the strong future demand that is anticipated.

Jeremy, this is Micheal. I'll take that. I'll start with a bit of a higher level in regard to pipeline crossings and generally we have almost 26,000 pipeline crossings in the U.S. that have been built over the last several decades, just under 2,200 of those are with energy transfer. And for the most part, those are all being done by our operators in the field unless you have some design issues that you've got to get your engineers involved with. But for the most part, each of our companies work that out in the field until most recently. So we've been challenged in Louisiana and some other states by Energy Transfer and our ability to cross their pipeline. And I would say the tide is turning now on the legal issues. We're seeing the appellate ruling from the Louisiana court that overturned the lower court ruling in the DTM case. We certainly think that's going to be the same outcome that we'll have on our cases, ultimately, it certainly is troubling that we're having these difficulties with an industry peer. But ultimately, we're going to get our pipeline project built out of the Haynesville, there's definitely a need to move volumes to our gathering systems. To the demand centers in the Gulf Coast area and ultimately, we'll get through the legal process. We'll get through the FERC process, has now been initiated by Energy Transfer. Certainly, this was a move that we expected Energy Transfer to do. And so it was anticipated, and that was established within our project schedule that I talked about at the Analyst Day. So we still expect the second half of 2025 in-service date. And just in closing, we filed permitted and installed more FERC regulated pipelines in the U.S. than any operator over the last decade. We fully know well when a project is when it comes to either being a designated gathering line or when it should be FERC regulated. And we've taken that certainly into consideration in the formulation in the design of the LEG project. And ultimately, we'll get it built. It's unfortunate that we're having these delays, but I'm very confident in our ability to finish this project as we've outlined in our most recent schedule. It's going to be needed. The growth in the LNG demand in the Gulf Coast is going to happen. We're certainly seeing the expectations of that occurring late this year and early 2025 when some of the new facilities are coming online. And so we're as I said, very confident about the project and looking forward to getting the legal issues behind us and getting on with construction.

Yes, absolutely. So when we look at 2025, we've got really quite a bit of spend expected on the Louisiana Energy Gateway project that Micheal just referred to. So that would be in the category of gathering and processing expansions. And by far, the biggest in the gathering and processing area would be the Louisiana Energy Gateway pipeline project. We do have some new Energy Ventures investments that we're expecting to begin to spend some money on, including our first Carbon Capture and Sequestration project, which is at the terminus of the Louisiana Energy Gateway project. So it's related to that LEG project. But we also have some solar projects that we'll be investing in. We will have some of our contributions to our upstream JVs, those are typically smaller amounts of capital. But then finally, you can see the long list of transmission projects that we have on Transco and MountainWest that are still in execution. Obviously, we're wrapping up regional energy access this year, but you'll see many, many that will continue to have a spend going into 2025 as those reach their in-service dates in 2025. So that would be the main pieces of the growth capital for 2025.

I would add that for growth in 2025, we have several significant deepwater projects where most of the capital has already been invested. These projects are expected to come online towards the end of this year and into next year, which has us very enthusiastic about the substantial increase in deepwater growth and our strong positioning in that sector. Additionally, another growth driver is the rate case on Transco. The investments we are making in emission reduction projects will yield benefits when we implement our new rates in March 2025. These are some of the primary drivers for growth.

Yes, I didn't do a great job of connecting that to growth. So thanks, Alan. Just specifically, we have 6 Transco growth projects that are in service between the second half of '24 and 2025, and 5 major Gulf of Mexico projects that are in service as well as well as that Transco rate case that Alan mentioned. But in many cases, those are projects where we've already spent the capital or in some of the cases of some of the deepwater projects, there were no capital requirements at all.

Maybe let me start with a data center question here. So most of the expansions on Transco over the last few years have taking place in the Northeast. But if we start to see large AI data center build-out or even some of the reshoring that you talked about in other regions along Transco's path like the Southeast and that the bottleneck for more capacity shifts south on Transco. Just trying to think about how that impacts things. Is there more opportunity for maybe higher return compression expansions on the southeastern part of Transco or just more available capacity there? Or do you think expansions anywhere along Transco are kind of uniform in terms of return?

Yes, that's a great question. The initial evidence of this came from our Southeast Supply Enhancement project. We announced this and filed for it in the first quarter for 1.6 Bcf a day, which will support both the Mid-Atlantic and Southeast markets. Since then, utilities have indicated that they are significantly missing their growth targets. For example, Southern companies stated they missed their original growth for power generation by 17 times. There's a lot happening in these markets, and we are very well positioned to meet their needs. The Southeast Supply Enhancement project is a prime example of our capability, set to serve projects along Transco to the Mid-Atlantic and Southeast, starting at Station-165, where we will utilize supplies from the Mountain Valley Pipeline. Looking ahead, we are exploring continued expansion along our system and restoring pipeline pressures in areas that have been derated over time due to population growth. We have several strategies for expansion within our existing capacity. Our teams are actively collaborating with customers in these regions to identify the best solutions to meet their growth needs. Although we can't disclose everything at this moment, there is significant expansion planned for that corridor, and Transco is ideally positioned to facilitate it with upgrades to our existing systems. How critical is sort of permitting reform or at least a more amenable regulatory environment for energy supply to kind of meet this accelerating demand growth you guys have talked about today and the slide you talked about with sort of the 3x demand you're seeing over the next decade? Yes. As the world moves away from coal as a reliable energy source and increasingly relies on natural gas, the issue of reliability will become crucial. Our ongoing reluctance to acknowledge the actual capacity needed in these markets will become more apparent. We're already hearing concerns from the Independent System Operators and even utility commissions about the necessity of access to natural gas. In places like Connecticut, there is frustration over the lack of affordable gas supply due to halted projects. Unfortunately, infrastructure and political factors often clash. Similar to how a bridge failure prompts investment in safety, we need to recognize that our gas infrastructure is underfunded to meet the rising demand. The situation will likely draw a lot of attention, especially from the tech industry, which requires reliable energy for data centers. We are at a critical juncture, having narrowly avoided service disruptions last winter due to minor pipeline failures. While we have managed to maintain gas service, it’s important to note that losing gas service isn’t as simple as a power outage; it could lead to significant consequences. We need to invest appropriately in our infrastructure, which will require reform in permitting processes. We are optimistic about gaining support from the moderate left as they recognize the importance of this issue for their constituents. Progress is being made, but addressing the demand will require better infrastructure development in the U.S. Now just a final word on the storage side to give a sense of the volumes we can accommodate, and then I'll conclude. The fact is we have the right-of-way through those areas, which allows for a large capacity, but it's not a simple or finite number and it does have economic limits. In other words, while there may not be physical limits due to our right-of-way, the economic constraints are significant. The easiest solution is to add compression in the area, followed by replacing lines that we have had to derate over time.

Yes, it's crucial to monitor our ability to establish infrastructure that capitalizes on volatility and pricing that enhances extraction value. We're observing a significant transition, particularly with the increased volatility in power markets. For instance, PJM's data indicates that by 2040, peak demand will more than double, which poses a challenge given that our existing infrastructure is already at capacity. Consequently, assets like storage will be influenced not only by price fluctuations over time, such as the current contango in the market, but also by the growing recognition that these assets are essential for reliability. Power producers will require storage, as will LNG companies, due to the anticipated rise in variable demand. Therefore, while we are positioned to leverage storage value in the short term amid price dislocations like the current market situation, there is also a market evolution acknowledging that the value of storage will increase even without obvious price fluctuations, driven by the need for reliability in supply and the capability to store gas during disruptive conditions. Overall, we are well-positioned to capitalize on both current market value dislocations and the long-term fundamentals that necessitate storage for reliability. In summary, the contango in the market is not the sole driver of long-term storage value; rather, we see this value stemming from price dislocations as well as the essential long-term need for reliability that storage fulfills.

This concludes the question-and-answer session. I would now like to turn it back to Alan Armstrong for closing remarks.

Okay. Well, thank you all very much. We're very excited to deliver another record at the company and not just for the quarter that it produced in terms of the present a lot of people are talking about what they're going to do in the future. We continue to deliver in the present. But we also have a very strong future ahead of us and are extremely well positioned for not just the next couple of years, but for the next decades, as we were contracting for these major expansions on our system. So very excited to see a strategy that we've stuck with for years now really coming home and all the benefits that we thought natural gas had to offer the market start to be realized by others and putting a lot of demand on our infrastructure. So very excited to see this turn here in the quarter and very thankful for all the extraordinary efforts of the employees and the leadership of this company and the management team that I get to work with for continuing to deliver such great results. So thanks for joining us today.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.