What was the main driver of Phillips 66's improved financial performance in the third quarter of 2012?

The primary driver was the strong performance of the Refining and Marketing (R&M) segment, which benefited from higher refining margins due to improved industry crack spreads and favorable crude oil pricing in U.S. regions. Lower operating expenses and increased refinery utilization also contributed positively.

What are the key challenges or negative impacts on Phillips 66's financial results during this period?

The Midstream segment faced significant headwinds, including impairments on the Rockies Express Pipeline (REX) investment and lower equity earnings from DCP Midstream due to declining natural gas liquids (NGL) prices. Additionally, the company incurred substantial costs related to its recent separation from ConocoPhillips and new debt issuances, which increased interest expenses.

How did the separation from ConocoPhillips impact the financial statements presented?

The financial statements reflect the results of Phillips 66 as a standalone company from April 30, 2012, onwards. Prior periods are presented as combined results of the downstream businesses that now constitute Phillips 66. The separation also incurred significant costs, and the company issued substantial debt to establish its independent capital structure.

What is the company's outlook on liquidity and capital resources?

Phillips 66 believes its liquidity will be adequate to fund operations, capital spending, dividends, and other obligations. Key sources of capital include cash generated from operations, proceeds from asset dispositions, and access to a $4 billion revolving credit facility and a $1.2 billion trade receivables securitization facility, although no amounts were drawn on these facilities as of the reporting date. Significant debt was issued to fund its standalone operations.

PSX 10-Q Quarterly Report Q3 FY2012 — Revenue, Net Income, EPS

Summary

Phillips 66 reported a significant increase in net income for the third quarter and the first nine months of 2012 compared to the prior year, driven primarily by improved performance in its Refining and Marketing (R&M) segment. This segment benefited from higher refining margins and increased utilization rates, partly due to favorable crack spreads and advantageous crude oil pricing in certain U.S. regions. The company also saw a positive impact from lower operating expenses, including the absence of costs from recently divested refineries. Despite the strong R&M performance, the Midstream segment experienced a decline in earnings, largely due to impairments related to its investment in Rockies Express Pipeline LLC (REX) and lower equity earnings from DCP Midstream, driven by decreased natural gas liquids (NGL) prices. The Chemicals segment, primarily its equity investment in CPChem, saw a slight decrease in quarterly earnings due to debt extinguishment costs and impairments, though full nine-month earnings showed a modest increase. The company also incurred significant costs related to its separation from ConocoPhillips and new debt issuances to finance its operations as a standalone entity.

Financial Highlights

42 data points

Beta

Revenue

$42.95B

Net Income

$1.60B

0.0% Net Margin

EPS (Diluted)

$2.51

Total Assets

$52.23B

Cash & Equivalents

$4.43B

Free Cash Flow

$1.92B

Financial Statements

Beta

Revenue	$42.95B
SG&A Expenses	$432.00M
Net Income	$1.60B
EPS (Basic)	$2.53
EPS (Diluted)	$2.51
Shares Outstanding (Basic)	630.67M
Shares Outstanding (Diluted)	637.91M

Key Highlights

1Net income attributable to Phillips 66 increased by 52% in Q3 2012 and 24% in the first nine months of 2012 compared to the prior year.
2The Refining and Marketing (R&M) segment was the primary driver of improved earnings, with refining margins increasing significantly due to favorable market conditions.
3Midstream segment earnings decreased significantly due to impairments on the Rockies Express Pipeline (REX) investment and lower earnings from DCP Midstream.
4The company completed the separation from ConocoPhillips on April 30, 2012, and incurred significant costs related to this transaction.
5Phillips 66 issued approximately $7.8 billion in new debt in March and April 2012, leading to a substantial increase in interest and debt expense.
6Capital expenditures for the first nine months of 2012 were $827 million, primarily focused on R&M segment environmental compliance and upgrade projects.
7The company initiated a $1 billion stock repurchase program in July 2012.

Phillips 66 Quarterly Report for Q3 Ended Sep 30, 2012

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions