On April 26, 2024, Phillips 66 (PSX, Financial) disclosed its financial results for the first quarter of 2024 through its 8-K filing. The company reported earnings of $748 million, or $1.73 per share, falling short of analyst expectations of $2.17 per share. Adjusted for special items, earnings were $822 million, or $1.90 per share. This period also saw Phillips 66 returning $1.6 billion to shareholders through dividends and share repurchases, alongside a 10% increase in its quarterly dividend to $1.15 per share.
About Phillips 66
Phillips 66 is an independent refiner with a significant presence in the energy sector, operating 12 refineries with a crude throughput capacity of 1.8 million barrels per day. The company's Midstream segment includes extensive transportation assets and NGL processing capabilities, alongside its CPChem chemical joint venture which produces olefins and polyolefins in the United States and the Middle East.
Strategic and Operational Highlights
The first quarter saw Phillips 66 making notable progress in its strategic priorities, including the commencement of operations at the Rodeo Renewable Energy Complex and the initiation of a divestiture process for its retail marketing assets in Germany and Austria. The company's refining operations maintained a robust crude utilization rate of 92%, although maintenance activities impacted the production of higher-value products.
Phillips 66's Midstream segment reported a pre-tax income of $554 million, a decrease from $756 million in the previous quarter, primarily due to asset impairments and lower throughput revenues. The Chemicals segment, however, saw an increase in pre-tax income to $205 million, up from $106 million, driven by improved polyethylene margins and reduced feedstock costs.
Financial Position and Liquidity
Phillips 66 ended the quarter with $1.6 billion in cash and equivalents, and a consolidated debt-to-capital ratio of 40%. The company used $236 million in operations, mainly due to inventory builds, but managed to fund significant shareholder returns including $1.2 billion in share repurchases and $448 million in dividends.
Future Outlook and Challenges
Despite the underwhelming earnings per share this quarter, Phillips 66 remains committed to its strategic goals, including achieving $1.4 billion in business transformation cost and capital savings by the end of 2024. The company is also focused on enhancing its mid-cycle adjusted EBITDA to $14 billion by 2025 and continuing substantial shareholder returns. However, the ongoing adjustments in its operations, particularly in refining and marketing, alongside the volatile energy market, pose challenges that could impact future performance.
Overall, Phillips 66's first-quarter results reflect a complex balance of strategic advancement and operational challenges. The company's focus on transforming its business model towards more sustainable and efficient operations, while rewarding shareholders, underscores its adaptive strategies in a shifting energy landscape.
Investor Webcast and Additional Information
Phillips 66 management will host a webcast at noon ET to discuss these results and update on strategic initiatives. For more details, investors are encouraged to visit the Phillips 66 investor relations webpage.
Explore the complete 8-K earnings release (here) from Phillips 66 for further details.
