10-QPeriod: Q3 FY2016

Phillips 66 Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 28, 2016For Securities:PSX

Summary

Phillips 66 reported a net income of $511 million for the third quarter of 2016, a significant decrease from $1,578 million in the same period of the previous year. This decline was primarily driven by lower refining margins due to compressed crack spreads and reduced olefins and polyolefins margins in the chemicals segment. Despite the lower net income, the company generated $883 million in cash from operating activities in the quarter, demonstrating operational cash generation capabilities. The company continues to focus on its strategic capital allocation, investing $661 million in capital expenditures and returning capital to shareholders through dividends ($329 million) and share repurchases ($179 million). Phillips 66 Partners also played a key role in financing activities, raising substantial proceeds through public offerings of common units. The company ended the quarter with a strong liquidity position, including $2.3 billion in cash and cash equivalents and $5.4 billion in available credit facilities.

Financial Highlights

44 data points
Beta

Revenue

$21.62B

Net Income

$509.00M

2.4% Net Margin

EPS (Diluted)

$0.96

Total Assets

$50.25B

Cash & Equivalents

$2.34B

Free Cash Flow

$883.00M

Financial Statements
Beta
Revenue$21.62B
SG&A Expenses$411.00M
Operating Income$1.39B
Net Income$509.00M
EPS (Basic)$0.97
EPS (Diluted)$0.96
Shares Outstanding (Basic)525.99M
Shares Outstanding (Diluted)528.80M

Key Highlights

  • 1Net income for the third quarter of 2016 was $511 million, a decrease from $1,578 million in the prior year period.
  • 2Total revenues decreased to $21,624 million in Q3 2016 from $25,792 million in Q3 2015, largely due to lower commodity prices.
  • 3The Refining segment experienced a significant drop in net income, contributing $177 million in Q3 2016 compared to $1,003 million in Q3 2015, attributed to lower refining margins.
  • 4The Chemicals segment also saw a decline in net income to $10 million in Q3 2016 from $252 million in Q3 2015, impacted by an impairment charge and lower olefins and polyolefins margins.
  • 5Cash generated from operating activities for the nine months ended September 30, 2016, was $2,296 million, down from $4,216 million in the prior year.
  • 6Phillips 66 Partners LP raised significant capital through public offerings of common units throughout the period.
  • 7The company maintained a strong liquidity position with $2.3 billion in cash and cash equivalents and $5.4 billion in available credit facilities as of September 30, 2016.

Frequently Asked Questions

The decrease in net income was primarily driven by lower realized refining margins, resulting from compressed market crack spreads, and reduced olefins and polyolefins margins in the Chemicals segment. Lower commodity prices also contributed to decreased revenues across the business.

Phillips 66 generated $883 million in operating cash flow in the third quarter. The company used available cash to fund capital expenditures of $661 million, pay dividends of $329 million, and repurchase $179 million of its common stock. Additionally, Phillips 66 Partners raised capital through equity offerings. The company maintained a robust liquidity position with $2.3 billion in cash and access to significant credit facilities.

The Refining segment's net income significantly decreased to $177 million from $1,003 million in the third quarter of 2015. This decline was mainly due to lower refining margins, influenced by decreased market crack spreads and higher costs associated with renewable fuels blending activities.

Yes, during the nine months ended September 30, 2016, Phillips 66 contributed midstream assets to Phillips 66 Partners in multiple transactions. Notably, in September 2016, the company sold its Whitegate Refinery and related marketing assets, recognizing an immaterial gain.