Williams Companies (NYSE:WMB) has traversed a rocky road over the past year. Its MLP, Williams Partners (NYSE:WPZ), has faced quarter after quarter of declining revenue and has failed to cover its fast-growing distribution. It has also now missed earnings for four quarters in a row. Let's look at this most recent miss to see whether Williams Companies and its MLPs are still worth owning. 

The earnings themselves
Williams Companies was expected to earn $0.19 a share and beat expectations by 5%, reporting $0.20 a share in net income. I should note that S&P Capital IQ has calculated Williams Companies' earnings minus non-recurring charges and thinks the company actually missed earnings by 17%.

Williams Partners, at first glance, appears to have fallen flat on its face. It reported $0.07 a share in earnings, missing analyst expectations of $0.39 a share by a stunning 82%. This quarter's earnings are down an even worse 86.5% from $0.52 a share in last year's third quarter.

Even Access Midstream Partners (UNKNOWN:ACMP.DL), the fast-growing MLP whose remaining general partner rights Williams Companies recently purchased for $6 billion, reported earnings of $0.22, falling 33% short of Wall Street expectations.

Access Midstream's net income was down a stunning 47.3%, while its distributable cash flow, or DCF, declined 30%, resulting in a distribution coverage ratio of 0.82.

At first glance, it seems as if unitholders in Williams Partners and Access Midstream might want to run for the exits. However, when one digs in to the actual results, as well as the company's near-term future outlook, things look far better. 

Drilling into the numbers
Let's start with Williams' seemingly horrific plunge in earnings. Last quarter's $0.52 per share in net income was largely due to a $50 million insurance payout resulting from the business interruption of its Geismar facility in Louisiana. 

Thus, the comparison to last year's quarter isn't valid, since those previous earnings were inflated by a non-business-related credit. However, this year's earnings still missed by a mile, and the two primary reasons were the continued downtime at the Geismar plant (which is scheduled to go back online in November) and continued margin compression in the partnership's NGL segment. 

US Producer Price Index: Natural Gas Liquids and Residue Plant Condensate, Ethane, Mixtures, Other Chart
US Producer Price Index: Natural Gas Liquids and Residue Plant Condensate, Ethane, Mixtures, Other data by YCharts

As this chart shows, NGLs such as ethane are down 30% this year, the result of booming gas production and insufficient NGL pipeline supply. As a result, many producers are rejecting the liquid, and that means choosing to allow the chemical to remain part of natural gas, rather than pay to have it separated out and transported in separate pipelines.

The combination of the offline Geismar plant, lower NGL margins, and $24 million in higher net interest expense knocked earnings down to $217 million. When factoring out the $50 million insurance payment, that means earnings declined by 7.8% compared with last year.

More important than this quarter's earnings is Williams Partners' year-to-date earnings, which clocked in at $801 million, or $0.53 a share. That's down from $899 million for the same time period last year, but when adjusted for the $225 million in insurance payments received for Geismar in 2013, year-to-date earnings were actually up 18.8%.

Similarly, Access Midstream's terrible earnings are just an accounting fluke. This quarter's earnings and DCF plunges were caused by one-time merger-related fees. Factoring those out, DCF (which pays the distribution) rose 42.2%, and the coverage ratio is a rock solid 1.67. This soaring DCF is the reason Access Midstream announced a 15% increase in its quarterly distribution. 

What about Williams Companies, the general partner of these two MLPs? Thanks to the acquisition of Access Midstream, quarterly distributions from its MLPs soared 57% to $521 million. Year-to-date distributions received jumped $1.485 billion, or 34%.

What to watch going forward
Williams Companies' management is optimistic about the future, with several major projects set to go online this quarter. Quoting President and CEO Alan Armstrong:

We expect dramatically higher results for Williams Partners in the fourth quarter and 2015. In November and December, we plan to place several major projects into service, including the expanded Geismar plant, the Gulfstar One facility, and the Keathley Canyon Connector pipeline. All three of these large-scale projects are mechanically complete and are expected to generate nearly $1 billion in 2015 cash flows.

In fact, Williams Companies is predicting full-year distributions from its MLPs of $2.06 billion, $2.488 billion, and $2.896 billion in 2014, 2015, and 2016, respectively. The merger of Access Midstream with Williams Partners is now expected to close sometime during the first quarter -- management is shooting for January. Williams Companies reiterated its earlier guidance of 15% dividend growth through 2017, following the 32% dividend increase management just announced. 

Meanwhile for the soon-to-be-merged Williams and Access Midstream, which will retain the name Williams Partners, management is guiding for $3.65 per unit in annual distributions, which represents a 50% and 30% increase over Access Midstream's 2014's second-quarter and full year guidance. 

Looking forward long-term, management believes that the larger Williams Partners' $30 billion of current and potential backlog can sustain industry-leading 10% to 12% distribution growth through 2017 while maintaining a healthy distribution coverage ratio of 1.1. 

Source: Williams Companies' third-quarter investor presentation.

What should current and prospective Williams investors look for going forward? Simply put, management needs to be able to deliver on its aggressive growth promises and timetables. Geismar's restart was originally scheduled for April and then pushed back to June for enhanced safety features. Now the restart is scheduled for November.

Similarly, the merger was supposed to be completed this quarter but is now scheduled for Q1 of 2015. With management's history of delays, I think it's vitally important for Williams to be able to stick to its guidance schedule if it's to deliver on the promised dividend and distribution growth.

Williams Companies and its MLPs seemingly missed earnings expectations yet again, and in a big way. Yet accounting for one-time charges related to the Geismar accident and Access Midstream/Williams Partners merger, the results are actually very good. With one of the largest backlogs in the industry projected to fuel some of the strongest dividend and distribution growth, Williams Companies and Williams Partners remain a strong income investment -- as long as management can keep its project timelines on track.