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Phillips 66 (PSX) Q2 Earnings Beat Estimates on Demand Recovery

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Phillips 66 PSX reported second-quarter 2021 adjusted earnings per share of 74 cents, beating the Zacks Consensus Estimate of 71 cents. The bottom line turned around from a loss of 74 cents in the year-ago quarter.

Quarterly revenues totaled $27,885 million, up from the year-ago quarter’s $11,183 million. The top line beat the Zacks Consensus Estimate of $20,652 million.

The strong quarterly results were driven by recovered product demand as more people are stepping out for work and leisure owing to the rapid rolling out of coronavirus vaccines.

Phillips 66 Price, Consensus and EPS Surprise

Phillips 66 Price, Consensus and EPS Surprise
Phillips 66 Price, Consensus and EPS Surprise

Phillips 66 price-consensus-eps-surprise-chart | Phillips 66 Quote

Segmental Results

Midstream

The segment generated adjusted pre-tax quarterly earnings of $316 million, up from $245 million in the year-ago quarter. Higher contributions from transportation activities aided the segment.

Chemicals

Record adjusted pre-tax earnings of $657 million rose from $89 million in the prior-year quarter. Contributions from olefins and polyolefins business, backed by high demand, aided the segment.

Refining

It reported an adjusted pre-tax loss of $706 million, narrower than the year-ago loss of $867 million. Increased volumes and a decline in utility and turnaround costs backed the segment.

The segment’s realized refining margins on a worldwide basis improved to $3.92 per barrel from the year-ago quarter’s $2.60. The same in Central Corridor, Gulf Coast and Atlantic Basin/Europe increased to $6.40, $2.1 and $4.63 per barrel from the year-ago level of $5.78, 36 cents and $1.53, respectively.

West Coast witnessed a drop in margins from $5.05 per barrel in the year-ago quarter to $3.37 for the June quarter of 2021.

Marketing and Specialties

Pre-tax earnings increased to $479 million from $293 million in the year-ago quarter.

While realized marketing fuel margins in the United States increased to $2.62 per barrel from the year-ago quarter’s $1.75, the same in international markets declined to $2.89 from the year-ago level of $5.07.

Costs and Expenses

Total costs and expenses for the second quarter increased to $27,449 million from $11,628 million in the year-ago period.

Financial Condition

For the reported quarter, Phillips 66 generated $1,743 million of net cash from operations. Its capital expenditures and investments totaled $380 million. It paid dividends of $394 million in the reported quarter.

As of Jun 30, 2021, cash and cash equivalents were $2.2 billion. Total liquidity of the company was $7.9 billion. Consolidated debt was $15.4 billion, reflecting a debt to capitalization of 43%.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #4 (Sell). Meanwhile, a few better-ranked players in the energy space include Whiting Petroleum Corporation WLL, Continental Resources, Inc. CLR and PDC Energy, Inc. PDCE. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Continental is expected to witness earnings growth of 256% in 2021.

PDC Energy is likely to see earnings growth of 111.8% in 2021.


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