After being dumped at the altar by suitor to end the second quarter, Williams (WMB) - Get Reportdidn't break down but instead, the midstream oil and gas company trimmed some fat and hit the drawing board.
Despite posting adjusted earnings of 19 cents per share, missing analysts estimates of 22 cents per share, and announcing it would cut its dividend by 66%, Williams' stock soared by as much as 8% Tuesday to above $24.30.
How does a company that missed earnings and cut its dividend from $2.56 per share to 80 cents per share following a dramatic breakup with Energy Transfer Equity (ETE) ---a move that could easily be read as a sign of separation anxiety---see shares skyrocket?
In this case, the answer is by posting solid fundamentals and throwing some red meat to investors with the details of its grand plan for the future, which includes investing about $1.7 billion into limited partner Williams Partners (WPZ) , and doing it with gusto.
The company's second quarter adjusted Ebitda rose by $48 million year-over-year, it cut costs by about $55 million, and it gave analysts some clarity with revised 2016 projected Ebitda and distributed cash flows of $4.3 billion and $2.3 billion.
Williams also provided insight into the sale of its struggling Canadian assets, which it expects to wrap up by the end of the third quarter. Armstrong said the divestiture will bring in more than $1 billion in proceeds, with $800 million headed right to WPZ's balance sheet.
But perhaps the most important takeaway Tuesday was the boisterous attitude of Williams CEO Alan Armstrong (pictured).
Armstrong, who has likely had better days at an organization that saw half its board run for the exit door to begin the third quarter following its unsuccessful attempt to oust the chief executive, came out with confidence on Tuesday's earnings call with analysts, boldly calling the company's new financial strategy the "best in the industry."
And company followers, along with the market, appear to be buying in.
Jefferies analysts wrote late Monday after the company's earnings release that hopeful investors of midstream peer Kinder Morgan (KMI) - Get Report should be love-struck with Williams and its designs for future growth.
Meanwhile, Credit Suisse analyst pointed out Tuesday how much the news benefits Williams' limited partner WMZ, which down the road could benefit Williams further as the firm expects it may roll-up its limited partner as early as 2018.
"WPZ is an investment grade [master limited partnership] with secure distributions and yielding ~10%, which in our view is an attractive outlook," Credit Suisse' John Edwards wrote. "With the broad plan laid out through 2017, we continue to expect the potential roll-up of WPZ into WMB to be a 2018 or later event."
Credit Suisse is not alone in that prediction, as Barclays analyst Christine Cho noted on Tuesday's call the continued high cost of equity at WPZ may force Williams to consider some restructuring of its master limited partnership structure in order to compete with peers who have done so in the past, such as Kinder Morgan.
Armstrong responded by highlighting that Williams is focused on the potential needle movers it announced Tuesday, but said it remains vigilant in considering "other possibilities, structure change or otherwise."
Some analysts, on the other hand, reasonably expected the market to respond negatively to Monday's earnings release with news of a dividend decrease.
Goldman Sachs advised investors to buy Williams on any weakness following the dividend cut, as the firm sees the parents' free cash flows strengthening between 2018 and 2020.
If investors were spooked by a cut to dividends, the market didn't show it for either WMB or its limited partner WPZ, the latter of which had climbed more than 5% by 1 p.m. EDT on Tuesday.
Another reason for this reaction may be the clear visibility into Williams' plan for the funds: funneling it directly into growth at WPZ. And sentiment over WPZ's future prospects is likely to be bolstered by Williams' decision to maintain the limited partner's distribution level at 85 cents per unit.
But regardless of the cause for investors' display of confidence Tuesday, one thing is certain about Williams' often close-to-the-vest management team: beaten and bruised, they've still got their gloves up.