Phillips 66 (PSX) Q4 Earnings Beat, Revenues Lag Estimates
Phillips 66 PSX posted adjusted fourth-quarter 2017 earnings of $1.07 per share, which beat the Zacks Consensus Estimate of 86 cents and surpassed the year-ago figure of 16 cents. The improvement came on the back of higher contribution from the Refining and Midstream segment.
In 2017, adjusted earnings were $4.38 per share, which increased from $2.82 in the prior-year quarter and beat the Zacks Consensus Estimate of $4.19.
Quarterly revenues of $30,123 million lagged the Zacks Consensus Estimate of $30,705 million but rose from the year-ago quarter’s figure of $23,668 million.
In 2017, revenues jumped 27% year over year to $104,622 million from $85,777 million in 2016. Also, revenues surpassed the Zacks Consensus Estimate of $103,155.0 million.
Segmental Results
Midstream
The segment posted quarterly income of $139 million compared with $35 million in the year-ago quarter. The growth can be attributed to higher NGL prices and improved volumes.
Chemicals
The segment reported earnings of $27 million compared with $136 million in the year-earlier quarter. Lower volumes and higher depreciation, maintenance and operating costs led to the drop.
Refining
The segment posted quarterly income of $371 million versus a loss of $38 million in the prior-year quarter. Improved clean product differentials and increased volumes led to the growth. During the quarter, Phillips 66’s refining utilization was 100% and clean product yield was 87%.
Marketing and Specialties (M&S)
This segment recorded earnings of $123 million compared with $190 million in the year-ago quarter.
Financial Condition
In the reported quarter, Phillips 66 generated $1.9 billion of cash from operations. It also returned capital worth $816 million to shareholders. Of this, $353 million was disbursed as dividends, while $463 million was utilized to repurchase common stock.
As of Dec 31, 2017, the company had cash and cash equivalents of $3.1 billion and debt of $10.1 billion. The company’s debt-to-capitalization ratio was 27%.
Capital Expenditure Guidance
Phillips 66 lowered its capital expenditures for 2017 to $2 billion from $2.7 billion. Postponement of a final investment decision relating to incremental fractionation capacity is mainly responsible for the reduction. For 2018, capital expenditure is expected between $2 billion and $3 billion.
For 2018, Phillips 66 expects capital expenditure of $2.3 billion.
Q4 Price Performance
In the last three months, Phillips 66’s shares underperformed the industry. The company’s shares have gained 10.4% compared with 14.9%rally of industry.
Zacks Rank & Key Picks
Phillips 66 currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the same sector includes BP plc BP, Pioneer Natural Resources Company PXD and Royal Dutch Shell plc RDS.A. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
London-based BP plc (BP) is among the leading integrated energy players in the world. The company delivered an average positive earnings surprise of 26.80% over the preceding four quarters.
Headquartered at Irving, TX, Pioneer Natural Resources Company is an independent oil and gas exploration and production company. The company delivered an average positive earnings surprise of 67.62% over the preceding four quarters.
Netherlands based Royal Dutch Shell is an integrated oil and gas company. The company delivered a positive earnings surprise of 18.07% in the preceding quarter.
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