Phillips 66 (PSX) Q3 Earnings Miss Estimates, Revenues Fall Y/Y
Phillips 66 PSX reported third-quarter 2023 adjusted earnings of $4.63 per share, which missed the Zacks Consensus Estimate of $4.78. The bottom line was significantly lower than the year-ago quarter’s figure of $6.46.
Total quarterly revenues of $40,322 million beat the Zacks Consensus Estimate of $35,228 million. However, the top line declined from the year-ago quarter’s level of $48,764 million.
Such weak quarterly earnings can be primarily attributed to declining refining margins worldwide.
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 $569 million, down from $645 million recorded in the year-ago quarter. The reported figure also missed our estimate of $625.6 million.
Chemicals:
The unit recorded adjusted pre-tax earnings of $104 million, down from $135 million registered in the prior-year quarter. Our estimate for the same was pinned at $140.8 million.
Refining:
The segment reported adjusted pre-tax earnings of $1,740 million, down from $2,827 million recorded in the year-ago quarter. The reported figure beat our projection of $1,627.3 million. The segment was affected by lower realized margins. The negatives were partially offset by higher volumes and lower operating expenses.
Refining’s realized refining margins worldwide declined to $18.96 per barrel from the year-ago quarter’s level of $26.87. The same in the Central Corridor and Atlantic Basin/Europe declined to $18.05 and $16.85 per barrel from the year-ago quarter’s level of $38.76 and $19.22, respectively.
The West Coast’s margins increased to $32.23 per barrel from $28.64 in the year-ago quarter. In the Gulf Coast, the metric declined to $13.58 per barrel from $22.3 recorded a year ago.
Marketing and Specialties
Pre-tax earnings declined to $633 million from $847 million registered in the year-ago quarter.
While realized marketing fuel margins in the United States increased to $3.03 per barrel from the year-ago quarter’s level of $2.49, the same in the international markets declined to $5.27 from $12.40 recorded a year ago.
Costs and Expenses
Total costs and expenses in the third quarter declined to $37,509 million from $41,606 million in the year-ago period. The reported figure beat our projection of $28,885 million.
Financial Condition
For the reported quarter, Phillips 66 generated $2,685 million of net cash from operations, down from $3,144 million recorded a year ago. The company’s capital expenditure and investments totaled $855 million. It paid out dividends of $465 million in the third quarter.
As of Sep 30, 2023, cash and cash equivalents were $3.5 billion. Total debt was $19.4 billion, reflecting a consolidated debt to capitalization of 39%.
Zacks Rank & Other Stocks to Consider
Phillips 66 currently carries a Zacks Rank #2 (Buy).
Some other top-ranked players in the energy sector are Liberty Energy Inc. LBRT and Matador Resources Company MTDR, both currently sporting a Zacks Rank #1 (Strong Buy), and APA Corporation APA carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Liberty reported third-quarter 2023 earnings of 85 cents per share, which beat the Zacks Consensus Estimate of 74 cents. The Denver-CO-based oil and gas equipment company’s outperformance reflects the impacts of strong execution and increased service pricing.
Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable on Dec 20, 2023, to stockholders of record as of Dec 6, 2023. The dividend increased 40% from the previous quarter’s level.
Matador Resources reported third-quarter 2023 adjusted earnings of $1.86 per share, which beat the Zacks Consensus Estimate of $1.59. MTDR’s milestone led to better-than-expected third-quarter results, with the highest-ever total production averaging more than 135,000 barrels of oil and natural gas equivalent per day.
For the fourth quarter of 2023, MTDR expects an average daily oil equivalent production of 145,000 BOE. The recent guidance indicates a 2% upward revision from the previously mentioned 143,000 BOE/D.
APA released supplemental information regarding its financial and operational results for the third quarter of 2023. The company expects its quarterly total adjusted production and adjusted oil production to be in the upper half of its guidance range. This can be mainly attributed to strong Permian oil and U.K. North Sea volumes.
APA expects its adjusted production and adjusted oil production figures to fall within the upper half of its guided range. The company anticipates adjusted production in the range of 337-339 Mboe/d and adjusted oil production in the band of 159-161 Mboe/d. It is scheduled to release third-quarter results on Nov 1.
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