Williams (WMB) Q3 2026 earnings review
Williams finishes major projects early, but construction costs double
Williams, the operator of natural gas pipelines and power plants, finished two major growth projects early while its construction bill more than doubled. Revenue rose 10% and operating cash profit excluding a January gas-field sale grew 8% by our math. Chief executive Chad Zamarin kept the full-year outlook unchanged and said results are tracking toward the top half, which by our math points to 10% operating profit growth in the fourth quarter.
| Operating cash profit, excluding upstream sale | +8.0% 6.2% headline growth from a year ago |
|---|---|
| Revenue | $3,223M +10.3% from a year ago |
| Profit per share, excluding one-offs | $0.54 +10.2% from a year ago |
| Full-year operating profit outlook | Unchanged tracking toward upper half of $8.3–8.5B |
⚖️ Verdict: 🟢 Bullish
The story got better because the company lowered its execution risk by bringing its first data-center power plant online and closing the $5.5 billion Momentum pipeline buyout ahead of schedule. The caution: property and equipment spending reached $2.5 billion this quarter, leaving a $1.6 billion cash gap after dividends, and management announced no new power contracts.
The question now is whether the data-center power business can keep signing new deals or is capped at the current five plants while heavy spending strains cash flow. If demand stays strong, new contracts will extend the growth backlog; if customers pause, the company will shoulder higher debt and 29 million new shares with fewer high-return projects. Project signings before year-end and the 2027 spending budget in February will settle it.
🐂 Bull Case
Socrates Power Plant and Momentum Deal Finished Early
Williams is building natural gas power plants for data centers and buying pipelines in the Haynesville gas basin of Louisiana and Texas. Investors worried that building five power plants at once while closing a large buyout would cause delays. Instead, chief executive Chad Zamarin said he was proud of the team's work "to bring Socrates fully online ahead of schedule", with its final Plato North unit starting by mid-November.
The pipeline operator also "closed the Momentum Midstream acquisition ahead of schedule" in September, paying $2.8 billion in cash alongside stock. Early completion matters because both assets start earning cash sooner than planned. New power revenue helped lift fees in the Transmission, Power and Gulf unit to $59 million from $6 million a year ago, while Momentum lifted West gathering volumes 17% to 7.18 billion cubic feet per day.
What to watch: the fourth-quarter earnings contribution from the completed Socrates facility and a full three months of Momentum. A strong fourth quarter will prove these early completions translate directly into the 10% profit growth management implies for the end of the year.
Pipeline and Storage Expansions Keep Extending the Backlog
The company targets 11% or higher yearly profit growth through 2030, which requires a steady stream of new pipeline and gas storage projects. During the third quarter, the energy group added several expansions to its construction list and finished four smaller pipeline jobs.
- Southeast Supply Enhancement II: a new project adding over 150 million cubic feet per day on the Transco pipeline
- Clay Basin storage: a 9.4 billion cubic feet expansion to hold more winter and power-plant gas
- Garden Connector: capacity increased by 84 million cubic feet per day on Transco
- Completed projects: 413 million cubic feet per day of pipeline capacity placed into service
These additions matter because regulated pipelines charge fixed reservation fees once they open, regardless of gas prices. By expanding Transco and Western storage alongside its Haynesville pipelines, management keeps filling the post-2027 project schedule.
What to watch: federal permitting progress on the larger Transco projects in the upcoming annual filing. On-time approvals are required to turn this construction list into cash flow by 2028.
Core Pipeline Growth Topped the Headline Rate
Headline operating cash profit (Adjusted EBITDA, which is earnings before interest, taxes, depreciation and one-offs) rose 6.2% from a year ago to $2.04 billion. That figure looks slow next to the company's 11% long-term target, but a January asset sale clouds the comparison. Williams sold its South Mansfield gas production fields early in the year, which cut profit in the Other unit by 31% to $62 million.
By our math, stripping out that unit leaves operating cash profit across the pipeline, power, gathering and marketing businesses up 8.0% from a year ago, even against a tough 12.7% comparison from last autumn. That keeps the group "on track toward the upper half of our 2026 guidance range", Zamarin said. What to watch: first-quarter 2027 results, when the upstream sale drops out of the year-ago comparison and headline growth should match the core business.
🐻 Bear Case
Doubled Capital Spending Pushed Cash Flow Deeply Negative
Building power plants and giant pipelines requires cash years before the projects earn a dime. In the third quarter, property and equipment spending more than doubled to $2.49 billion from $954 million a year ago, with $1.86 billion going into the Transmission, Power and Gulf division.
Operations brought in $1.51 billion of cash, so by our math the company ran a $984 million free cash flow deficit before paying $656 million in common dividends and $2.82 billion for Momentum. Management bridged the gap by collecting $3.74 billion from selling a partial stake in its power subsidiary and by issuing long-term debt, which lifted nine-month interest costs by $61 million.
What to watch: the 2027 capital spending budget when full-year results arrive in February. Another year of spending near $8 billion will keep free cash flow negative and test the company's 4.0x debt limit.
Power Plant Promises Came With Zero New Contracts
Zamarin highlighted the power business as a major growth engine, stating that "we are actively working to commercialize additional power projects, which we expect to announce soon". Management wants investors to view its power unit as an expanding platform rather than a one-time batch of five plants.
However, the third-quarter release contained no new power contracts and gave no update on how many customers back the existing plants. Worse, the release omitted a project-by-project table of megawatts, budgets and schedules for the other four plants under construction (Apollo, Aquila, Socrates the Younger and Neo). Because data-center builders can pause spending after a big wave of orders, a quiet quarter on signings leaves the expansion thesis unproven.
What to watch: signed power contracts with megawatt and cost figures before year-end, along with the project table in the quarterly filing. A fourth quarter without a new deal would show that data-center power demand is harder to lock in than management claims.
Producer Caution and Permitting Risks Remain Unresolved
While construction moved ahead in the third quarter, the release noted that nine-month West gathering gains were "partially offset by lower minimum volume commitment revenues", and three wider risks got no new answers.
- Gas producer drilling: Northeast gathering volumes were flat at 4.14 billion cubic feet per day; winter gas prices will show if drillers ramp up.
- Multi-state pipeline permits: state water and air approvals for Northeast Supply Enhancement were not updated; the quarterly filing will give the status.
- Momentum share overhang and integration: common shares issued rose by 29 million to 1,290 million for the buyout; fourth-quarter results will show standalone profit.
What to watch: Northeast and Haynesville gathering volumes in the fourth quarter. Stagnant volumes would mean low gas prices are holding back the drilling needed to fill the newly acquired pipelines.
👓 Other Themes
Deal Costs and Asset Sales Shifted Operating Margins
Reported operating profit margin fell 2.7 percentage points from a year ago to 35.2% in the third quarter. General and administrative overhead rose 2.8 percentage points of revenue to 8.5% ($275 million vs $168 million) because Williams paid $63 million in one-off acquisition and joint-venture fees. An $83 million gain from selling a Permian gathering system partly offset those deal costs, and the company strips both items out of its core profit measures.
💲 Other KPIs
Cash from operations before working capital changes and after noncontrolling partner payouts rose 9.7% from a year ago, up from 6.2% growth in the third quarter of last year. That cash covered the $656 million common dividend 2.42 times, improving from 2.37 times a year earlier.
Total debt rose 15.6% from $29.36 billion at the end of 2025 as the pipeline operator borrowed $5.54 billion over the first nine months and paid off $700 million of short-term commercial paper. Cash on hand jumped to $1.76 billion from $63 million after a partner paid $3.74 billion into the power joint venture, leaving quarter-end debt at 3.80 times trailing cash profit.
Average diluted shares rose 1.1% from 1,225 million a year ago because the group issued 29 million common shares in September to help pay for Momentum Midstream. Because the deal closed near the end of the quarter, the full share count increase will weigh on per-share profit starting in the fourth quarter.
🔮 Guidance
Unchanged. The plan calls for 8.4% operating cash profit growth at the $8.4 billion middle of the range, and Zamarin said results are tracking toward the upper half. By our math, the middle of the range leaves 7.5% growth for the fourth quarter ($2.19 billion), while the upper half implies about 10% growth. Management raised this target by $200 million last quarter after announcing the Momentum deal.
Unchanged. The expansion budget sits at $7.6 billion in the middle of the range, excluding acquisitions and reimbursable power equipment. Williams raised this budget twice earlier in the year — by $900 million in the first quarter and $300 million in the second — as it added power plants and Gulf Coast pipelines.
Unchanged. The full-year target stays at 3.75 times, slightly below the 3.80 times reported at the end of September. Management cut this target from 4.0x to 4.1x down to 3.75x over the first half of the year after bringing a partner into the power business and using stock for part of the Momentum purchase.
Unchanged. The full-year plan calls for 11.9% growth in per-share profit excluding one-offs, up from $2.10 in 2025. By our math, subtracting the $1.77 earned in the first nine months leaves $0.58 for the fourth quarter, or 5.5% growth from a year ago as new shares from the Momentum deal and partner payouts take effect.
Unchanged. The outlook calls for 8.8% full-year cash flow growth and a 2.47x dividend coverage ratio on $2,585 million of common dividends. By our math, the $6,375 million target leaves $1,566 million for the fourth quarter, a 4.9% drop from a strong fourth quarter last year as distributions to noncontrolling partners rise to $328 million for the year.
Unchanged. The plan points to $3,135 million of net profit for common shareholders after deducting $220 million for noncontrolling partners and preferred dividends. Through nine months, reported net income for common shareholders is already at $2,390 million, lifted by $404 million of asset sale gains.
❓ Key Questions
What are the updated schedules for Apollo and Aquila?
The earnings release dropped the project-level table for the remaining four power plants under construction. Investors need the megawatt sizes, budgets and target start dates in the quarterly filing to verify that the 2027 and 2028 builds remain on time.
How much profit did Momentum add in September?
Williams closed the $5.5 billion Momentum Midstream buyout in September, ahead of its fourth-quarter plan, and issued 29 million common shares. Management did not break out how much revenue or cash profit the new pipelines contributed in the third quarter.
When will the next data-center power contract be signed?
Chief executive Chad Zamarin said the team expects to announce additional power projects soon, after previously aiming to sign deals before year-end. With no contracts signed in the third quarter, the timeline and customer mix for the next wave remain open.
How much will capital spending rise in 2027?
Third-quarter capital spending hit $2.49 billion, creating a $1.64 billion cash deficit after dividends, and Williams just added new Transco and Clay Basin expansions. Investors need to know if 2027 spending will exceed this year's $7.6 billion budget.