Houston Based Oil Refiner Phillips 66 Crush Earnings Generating $1.8 billion of Operating Cash Flow

Houston based oil refiner Phillips 66 on Friday reported better than expected second quarter earnings. PSX generated $1.8 billion of operating cash flow; $3.6 billion excluding working capital and repaid $1.5 billion of debt and returned $533 million to shareholders through dividends and share repurchases. The two largest American oil companies almost reported Friday. Energy giant ExxonMobil, the largest U.S. oil company, reported its second-quarter profit rose to $17.9 billion, its highest ever and nearly four times the same period a year ago. Chevron, the second-largest U.S. oil company said it made a record profit Friday of $11.6 billion, up from $3.1 billion in the same period last year.

Phillips66 Station

$PSX is diversified from refining in both its chemical and pipeline sectors.

Phillips 66 Inc. (NYSE: $PSX) Earnings Beat Before Open Friday

$6.77 beat $5.92 EPS and $49.31B Beat $34.37 forecast in revenue

Earnings Highlights

  • Second-quarter earnings of $3.17 billion or $6.53 per share; adjusted earnings of $595 million or $1.32 per share
  • Earnings, adjusted for non-recurring costs, were $6.77 per share. During the same quarter last year, the firm posted $0.74 EPS.
  • Revenue of $49.31 billion, up 76.8% compared to the same quarter last year.
  • Wall Street expectations was for earnings of $5.92 per share and revenue expected $34.37 billion.
  • Generated $1.8 billion of operating cash flow; $3.6 billion excluding working capital
  • Repaid $1.5 billion of debt
  • Returned $533 million to shareholders through dividends and share repurchases
  • Received API pipeline safety award for second consecutive year
  • Announced final investment decision on Rodeo Renewed project
  • Phillips 66 had a net margin of 1.97% and a return on equity of 17.07%.
  • Last quarter announced CEO transition plan. Mark Lashier will become President and CEO of Phillips 66 effective July 1.

““Our earnings reflect the strong market environment during the second quarter driven by a tight global product supply and demand balance,” said Mark Lashier, President and CEO of Phillips 66. “We are focused on reliably providing critical energy products, including transportation fuels, to meet peak summer demand. We also advanced strategic capital projects to help meet the growing demand for renewable fuels and NGLs.

“During the second quarter, we paid down $1.5 billion of debt, increased our dividend and resumed share repurchases. Additionally, we are transforming our business to achieve sustained annual cost savings of at least $700 million to ensure we remain competitive in any market environment. We will continue to prioritize operating excellence and disciplined capital allocation.”

Recent PSX News

  • California regulators allege PSX improperly began processing renewable diesel at its Rodeo, California refinery, Reuters reported. PSX disagreed with the claim but said it was working with the district to resolve the violation.
  • PSX signed a deal with FreeWire Technologies to explore deploying FreeWire’s technology in PSX’s U.S. fueling stations and other locations.
  • PSX raised its quarterly dividend by 5% which will be paid on Thursday, September 1st. Shareholders of record on Thursday, August 18th will be issued a dividend of $0.97 per share. This represents a $3.88 annualized dividend and a yield of 4.38%. The ex-dividend date is Wednesday, August 17th. Phillips 66’s dividend payout ratio is currently 67.60%.

Refinery margins hitting fresh highs in 2022

Phillips 66 has an edge over its peers as it is running light sweet crude at two of its three refineries in the Gulf Coast, which is short heavy sour barrels. Refiners in the United States have been struggling to find low-cost heavy crude due to factors including Alberta’s output cuts, sanctions on Venezuela and Iran.

  • Refining second-quarter 2022 pre-tax income was $3.0 billion, compared with pre-tax income of $123 million in the first quarter of 2022.
  • Refining results in the first quarter included $17 million of hurricane-related maintenance and repair costs.
  • Refining results in the second quarter included $70 million of costs related to the finalization of RIN obligations for prior year compliance periods and $26 million of costs related to the conversion of the Alliance Refinery to a terminal.

Adjusted pre-tax income for Refining was $3.1 billion in the second quarter, compared with adjusted pre-tax income of $140 million in the first quarter. The improvement was primarily due to higher realized margins driven by market crack spreads. The composite global market crack increased to $46.72 per barrel, up from $21.93 per barrel in the first quarter. Realized margins were $28.31 per barrel in the second quarter, up from $10.55 per barrel in the first quarter.

Pre-tax turnaround costs for the second quarter were $223 million, compared with first-quarter costs of $102 million. Crude utilization rate was 90% and clean product yield was 83% in the second quarter.

About Phillips 66

Phillips 66 (NYSE: PSX) manufactures, transports and markets products that drive the global economy. The diversified energy company’s portfolio includes Midstream, Chemicals, Refining, and Marketing and Specialties businesses. Headquartered in Houston, Phillips 66 has employees around the globe who are committed to safely and reliably providing energy and improving lives while pursuing a lower-carbon future. For more information, visit phillips66.com or follow @Phillips66Co on LinkedIn or Twitter. 

Source: Phillips 66

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