01—Abstract
Summary
Summary of the 10-K filed February 17, 2017. Cited figures are marked; the original filing is the authoritative source.
Phillips 66 (PSX) reported a net income of $1.6 billiona in 2016, a decrease from $4.3 billion in 2015, primarily due to lower refining margins and chemical margins.
The company generated $3.0 billionb in cash from operating activities, utilizing these funds for capital expenditures, dividends, and share repurchases. Strategic priorities for the company include operating excellence, growth through capital investments in its Midstream and Chemicals segments (notably CPChem's U.S. Gulf Coast ethane cracker project), delivering shareholder returns via dividends and buybacks, and fostering a high-performing organization. The company's diversified business model, encompassing Midstream, Chemicals, Refining, and Marketing & Specialties, demonstrated resilience in a low commodity price environment.
Significant capital expenditures were made in the Midstream segment, particularly on projects like the Sweeny Fractionator and Freeport LPG Export Terminal, and pipeline development. The Chemicals segment, through its 50%c investment in CPChem, saw continued construction of its U.S. Gulf Coast ethane cracker and polyethylene facilities, expected to be completed in 2017.
The Refining segment operated at a high utilization rate of 96% in 2016, an improvement from 2015, despite facing compressed refining margins. The company also returned value to shareholders by increasing its quarterly dividend by 13% and repurchasing approximately $1.0 billiond of its common stock.
02—Key points
Key Highlights
- Phillips 66 generated $3.0 billion in cash from operating activities in 2016.
- Net income for 2016 was $1.6 billion, a decrease from $4.3 billion in 2015, driven by lower refining and chemical margins.
- The company declared and paid $1.3 billion in dividends and repurchased $1.0 billion of its common stock.
- Phillips 66 maintained a 96% refining capacity utilization rate in 2016, an increase from 91% in 2015.
- Major growth initiatives include CPChem's U.S. Gulf Coast ethane cracker and polyethylene facilities, with expected completion in 2017.
- The Midstream segment saw significant capital investment, including projects related to the Sweeny Fractionator and Freeport LPG Export Terminal.
- The company's stock price ranged between $71.74 and $90.87 in 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Phillips 66 kept $0.02.
- Revenue$84.28B100.0%
- Cost of revenue−$62.47B74.1%
- Gross profit$21.81B25.9%
- Operating costs−$20.26B24.0%
- Operating income$1.55B1.8%
- Interest, other & tax−$6.0M0.0%
- Net income$1.55B1.8%
Where FY2016 revenue went
$84.28B- Cost of revenue: $62.47B, 74% of revenue
- Other operating costs: $18.56B, 22% of revenue
- Net income: $1.55B, 1.8% of revenue
- R&D: $60.0M, 0.1% of revenue
- SG&A: $1.64B, 1.9% of revenue
Kept 1.8% as net incomeNet income $1.55B · 1.8%R&D $60.0M · 0.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 17, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $84.28B$98.97B | −14.8% |
| Cost of Revenue | $62.47B— | — |
| Gross Profit | $21.81B— | — |
| R&D Expenses | $60.00M$65.00M | −7.7% |
| SG&A Expenses | $1.64B$1.67B | −1.9% |
| Operating Income | $1.55B$4.23B | −63.2% |
| Net Income | $1.55B$4.22B | −63.3% |
| EPS (Basic) | $2.94$7.78 | −62.2% |
| EPS (Diluted) | $2.92$7.73 | −62.2% |
| Shares Outstanding (Basic) | 527.53M542.36M | −2.7% |
| Shares Outstanding (Diluted) | 530.07M546.98M | −3.1% |
05—Questions
Frequently Asked Questions
What was Phillips 66's financial performance in 2016 compared to 2015?
In 2016, Phillips 66 reported a net income of $1.6 billion, a decrease from $4.3 billion in 2015. This decline was primarily attributed to lower refining margins and compression in olefins and polyolefins margins within the Chemicals segment. Despite lower net income, the company generated substantial operating cash flow of $3.0 billion.
How did Phillips 66 return value to shareholders in 2016?
Phillips 66 returned value to shareholders through a combination of dividends and share repurchases. The company increased its quarterly dividend by 13% and repurchased approximately $1.0 billion of its common stock. This reflects a commitment to disciplined capital allocation and shareholder returns.
What are the key growth initiatives or projects for Phillips 66?
Key growth initiatives include the continued construction of CPChem's U.S. Gulf Coast ethane cracker and polyethylene facilities, expected to be completed in 2017. The Midstream segment saw significant capital investment in projects like the Sweeny Fractionator and the Freeport LPG Export Terminal, as well as pipeline development. The company also focuses on smaller, high-return projects within its Refining segment.
How did the company's operational performance fare in 2016, particularly in refining?
The company's refining segment operated at a high utilization rate of 96% in 2016, an improvement from 91% in 2015, indicating efficient operations despite compressed refining margins. This was partly due to lower turnaround activities and reduced unplanned downtime.
06—Continue