Phillips 66 Reports 1Q 2024 Financial Results, Highlights Strategic Priorities Progress
First-Quarter Results
-- First-quarter earnings of $748 million or $1.73 per share; adjusted
earnings of $822 million or $1.90 per share
-- $1.6 billion returned to shareholders through dividends and share
repurchases
-- Refining operated at 92% crude utilization
-- Recently announced 10% increase to the quarterly dividend to $1.15 per
common share
-- Earned industry recognition for 2023 exemplary safety performance in
Midstream, Refining and Chemicals
Strategic Priorities Highlights
-- Returned $9.9 billion to shareholders through dividends and share
repurchases since July 2022
-- On track to achieve $1.4 billion of business transformation cost and
sustaining capital savings by year-end 2024
-- Launched process to divest retail marketing assets in Germany and
Austria
-- Commenced operations at Rodeo Renewable Energy Complex
HOUSTON--(BUSINESS WIRE)--April 26, 2024--
Phillips 66 (NYSE: PSX), a leading diversified and integrated downstream energy company, announced first-quarter earnings of $748 million, compared with earnings of $1.3 billion in the fourth quarter. Excluding special items of $74 million, the company had adjusted earnings of $822 million in the first quarter, compared with fourth-quarter adjusted earnings of $1.4 billion.
“In the first quarter, we progressed our strategic priorities and returned $1.6 billion to shareholders,” said Mark Lashier, president and CEO of Phillips 66. “While our crude utilization rates were strong, our results were affected by maintenance that limited our ability to make higher-value products. We were also impacted by the renewable fuels conversion at Rodeo, as well as the effect of rising commodity prices on our inventory hedge positions. The maintenance is behind us, our assets are currently running near historical highs and we are ready to meet peak summer demand.
“We recently launched a process to sell our retail marketing business in Germany and Austria, consistent with our plan to divest non-core assets. A major milestone was achieved with the startup of our Rodeo Renewable Energy Complex, positioning Phillips 66 as a world leader in renewable fuels.
“We remain committed to delivering increased value to our shareholders. We have returned $9.9 billion to shareholders through share repurchases and dividends since July 2022, on pace to meet our target of $13 billion to $15 billion by year-end 2024. Our strategic priorities put us on a clear path to achieve our $14 billion mid-cycle adjusted EBITDA target by 2025 and return over 50% of operating cash flows to shareholders.”
Midstream
Millions of Dollars
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Pre-Tax Income Adjusted Pre-Tax Income
----------------- -------------------------
1Q 2024 4Q 2023 1Q 2024 4Q 2023
------- ------- ------------ -----------
Transportation $ 243 334 302 334
NGL and Other 306 425 306 423
NOVONIX 5 (3) 5 (3)
--------------- ------- ------- ------------ -----------
Midstream $ 554 756 613 754
=============== ======= ======= ============ ===========
Midstream first-quarter 2024 pre-tax income was $554 million, compared with $756 million in the fourth quarter of 2023. Results in the first quarter included a $59 million asset impairment. Fourth-quarter results included a $2 million tax benefit.
Transportation first-quarter adjusted pre-tax income was $302 million, compared with adjusted pre-tax income of $334 million in the fourth quarter. The decline mainly reflects a decrease in throughput and deficiency revenues, partially offset by seasonally lower maintenance costs.
NGL and Other adjusted pre-tax income was $306 million in the first quarter, compared with adjusted pre-tax income of $423 million in the fourth quarter. The decrease was mainly due to a decline in margins, as well as lower volumes reflecting impacts from winter storms.
In the first quarter, the fair value of the company’s investment in NOVONIX, Ltd. increased by $5 million, compared with a $3 million decrease in the fourth quarter.
Chemicals
Millions of Dollars
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Pre-Tax Income Adjusted Pre-Tax Income
----------------- -------------------------
1Q 2024 4Q 2023 1Q 2024 4Q 2023
---------- ------- ------- ------------ -----------
Chemicals $ 205 106 205 106
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The Chemicals segment reflects Phillips 66’s equity investment in Chevron Phillips Chemical Company LLC (CPChem). Chemicals first-quarter 2024 reported and adjusted pre-tax income was $205 million, compared with fourth-quarter 2023 reported and adjusted pre-tax income of $106 million. The increase was mainly due to higher polyethylene margins driven by improved sales prices and a decline in feedstock costs, as well as lower turnaround costs.
Global olefins and polyolefins utilization was 96% for the quarter.
Refining
Millions of Dollars
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Pre-Tax Income Adjusted Pre-Tax Income
----------------- -------------------------
1Q 2024 4Q 2023 1Q 2024 4Q 2023
--------- ------- ------- ------------ -----------
Refining $ 131 814 228 797
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Refining first-quarter 2024 reported pre-tax income was $131 million, compared with pre-tax income of $814 million in the fourth quarter of 2023. Results in the first quarter included a $104 million asset impairment and a $7 million benefit related to a legal settlement. Fourth-quarter results included a $17 million tax benefit.
Adjusted pre-tax income for Refining was $228 million in the first quarter, compared with adjusted pre-tax income of $797 million in the fourth quarter. The decrease was primarily due to a decline in realized margins driven by less favorable commercial results, inventory hedging impacts and lower Gulf Coast clean product realizations.
Refining pre-tax turnaround expense for the first quarter was $160 million, including $36 million related to the Rodeo Renewable Energy Complex. The crude utilization rate was 92%, clean product yield was 84% and market capture was 69%.
Marketing and Specialties
Millions of Dollars
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Pre-Tax Income Adjusted Pre-Tax Income
----------------- -------------------------
1Q 2024 4Q 2023 1Q 2024 4Q 2023
-------------------------- ------- ------- ------------ -----------
Marketing and Specialties $ 404 432 345 432
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Marketing and Specialties first-quarter 2024 pre-tax income was $404 million, compared with $432 million in the fourth quarter of 2023. Results in the first quarter included a $59 million benefit related to a legal settlement.
Adjusted pre-tax income for Marketing and Specialties was $345 million in the first quarter, compared with $432 million in the fourth quarter. The decrease in the first quarter was mainly due to lower domestic marketing and lubricant margins.
Corporate and Other
Millions of Dollars
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Pre-Tax Loss Adjusted Pre-Tax Loss
----------------- -----------------------
1Q 2024 4Q 2023 1Q 2024 4Q 2023
-------------------- ------- ------- ----------- ----------
Corporate and Other $ (330) (347) (330) (297)
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Corporate and Other first-quarter 2024 pre-tax costs were $330 million, compared with pre-tax costs of $347 million in the fourth quarter of 2023. Results in the fourth quarter included restructuring costs of $50 million.
Adjusted pre-tax costs were $330 million in the first quarter of 2024, compared with $297 million in the fourth quarter. Increased costs in the first quarter were mainly due to higher net interest expense.
Financial Position, Liquidity and Return of Capital
Cash used in operations was $236 million in the first quarter. Operating cash flow was $1.2 billion, excluding $1.4 billion of working capital impacts mainly due to inventory builds. The company had net debt issuances of $802 million.
During the first quarter, Phillips 66 funded $1.2 billion of share repurchases, $448 million in dividends and $628 million of capital expenditures and investments.
As of March 31, 2024, the company had $1.6 billion of cash and cash equivalents and $3.5 billion of committed capacity available under its credit facility. The company’s consolidated debt-to-capital ratio was 40% and its net debt-to-capital ratio was 38%. The company ended the quarter with 424 million shares outstanding.
Strategic Priorities and Business Update
Phillips 66 is executing its strategic priorities to increase mid-cycle adjusted EBITDA to $14 billion by 2025 and return over 50% of operating cash flow to shareholders. Since July 2022, the company has distributed $9.9 billion through share repurchases and dividends and is on pace to achieve its $13 billion to $15 billion target by year-end 2024.