01—Abstract
Summary
Summary of the 10-K filed February 21, 2024. Cited figures are marked; the original filing is the authoritative source.
Phillips 66 (PSX) reported strong financial performance in 2023, generating $7 billiona in net income attributable to Phillips 66 and $7 billion in cash from operating activities.
The company highlighted its commitment to shareholder returns, increasing its target for returns through share repurchases and dividends to a range of $13 billion to $15 billionb for the period July 2022 through year-end 2024. This included a significant $5 billion increase to its share repurchase authorization during the year.
Key strategic priorities for Phillips 66 included improving refining performance by optimizing utilization rates and product yields, with a 92% worldwide refining crude oil capacity utilization rate achieved in 2023. The company also advanced its Midstream segment strategy by increasing its economic interest in DCP LP to 86.8% and continued its business transformation, targeting $1.1 billionc in annual run-rate cost reductions by the end of 2024.
02—Key points
Key Highlights
- Phillips 66 generated $7.015 billion in net income attributable to Phillips 66 in 2023, compared to $11.024 billion in 2022, a decrease primarily due to lower realized refining margins and a large gain recognized in the Midstream segment in 2022 from the DCP Midstream Merger.
- The company's Midstream segment saw a decrease in income before income taxes from $4.734 billion in 2022 to $2.774 billion in 2023, mainly due to significant gains recognized in 2022 related to the DCP Midstream Merger.
- The Refining segment's income before income taxes decreased from $7.816 billion in 2022 to $5.266 billion in 2023, primarily driven by lower realized refining margins.
- Marketing and Specialties segment's income before income taxes decreased from $2.402 billion in 2022 to $2.135 billion in 2023, attributed to lower international marketing fuel margins.
- Phillips 66 completed the acquisition of all publicly held common units of DCP LP, increasing its aggregate direct and indirect economic interest to 86.8%.
- The company plans to return significant capital to shareholders, increasing its target for returns (dividends and share repurchases) to $13-$15 billion from July 2022 through year-end 2024.
- Phillips 66 is converting its San Francisco Refinery into a renewable fuels facility, with operations expected to begin in Q1 2024, and is investing in other capital-efficient renewable fuels projects.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Phillips 66 kept $0.05.
- Revenue$147.40B100.0%
- Cost of revenue−$128.09B86.9%
- Gross profit$19.31B13.1%
- Operating costs−$12.30B8.3%
- Operating income$7.01B4.8%
- Interest, other & tax$-00.0%
- Net income$7.01B4.8%
Where FY2023 revenue went
$147.40B- Cost of revenue: $128.09B, 87% of revenue
- Net income: $7.01B, 4.8% of revenue
- R&D: $27.0M, 0.0% of revenue
- SG&A: $2.52B, 1.7% of revenue
- Other operating costs: $9.75B, 6.6% of revenue
Kept 4.8% as net incomeNet income $7.01B · 4.8%R&D $27.0M · 0.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 21, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $147.40B$169.99B | −13.3% |
| Cost of Revenue | $128.09B$149.93B | −14.6% |
| Gross Profit | $19.31B$20.06B | −3.7% |
| R&D Expenses | $27.00M$42.00M | −35.7% |
| SG&A Expenses | $2.52B$2.17B | +16.5% |
| Operating Income | $7.01B$11.02B | −36.4% |
| Interest Expense | $842.00M$611.00M | +37.8% |
| Net Income | $7.01B$11.02B | −36.4% |
| EPS (Basic) | $15.56$23.36 | −33.4% |
| EPS (Diluted) | $15.48$23.27 | −33.5% |
| Shares Outstanding (Basic) | 450.14M471.50M | −4.5% |
| Shares Outstanding (Diluted) | 453.21M473.73M | −4.3% |
05—Questions
Frequently Asked Questions
What was Phillips 66's net income attributable to Phillips 66 for 2023?
Phillips 66 reported a net income attributable to Phillips 66 of $7,015 million for the year ended December 31, 2023.
What were the key strategic priorities for Phillips 66 in 2023?
Phillips 66's key strategic priorities included delivering shareholder returns through dividends and share repurchases, improving refining performance, capturing value from its wellhead-to-market NGL value chain, executing its business transformation to reduce costs, maintaining financial strength and flexibility, and driving disciplined growth and returns.
How did the acquisition of DCP Midstream, LP impact Phillips 66's business?
The completion of the DCP LP Merger on June 15, 2023, increased Phillips 66's aggregate direct and indirect economic interest in DCP LP to 86.8%. This consolidation is a key part of the company's strategy to grow its integrated NGL wellhead-to-market value chain and capture synergies.
What is Phillips 66's approach to returning capital to shareholders?
Phillips 66 is committed to returning capital to shareholders through a combination of competitive and growing dividends and share repurchases. The company increased its target for returns to shareholders (through share repurchases and dividends) to a range of $13 billion to $15 billion for the period from July 2022 through year-end 2024, and plans to return at least 50% of net cash provided by operating activities to shareholders.
06—Continue