10-QPeriod: Q1 FY2019

Phillips 66 Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 30, 2019For Securities:PSX

Summary

Phillips 66 reported a net income attributable to the company of $204 million ($0.44 per diluted share) for the first quarter of 2019. This represents a significant decrease from the $524 million ($1.07 per diluted share) reported in the same period of the prior year. The decline in profitability was primarily driven by lower realized refining margins and reduced equity earnings from CPChem, negatively impacted by lower chemical margins. Despite the decrease in net income, the company generated substantial revenues of $23.6 billion. Operationally, the company used $478 million in cash from operating activities, a notable shift from the $488 million provided in the prior year's first quarter, largely due to unfavorable working capital impacts and discretionary inventory builds. Significant capital expenditures of $1.1 billion were deployed, alongside dividend payments of $364 million and share repurchases totaling $344 million. The company maintained a strong liquidity position with $1.3 billion in cash and cash equivalents and significant capacity available under its revolving credit facilities.

Financial Highlights

47 data points
Beta

Revenue

$23.10B

8.9% Gross Margin

Net Income

$204.00M

0.9% Net Margin

EPS (Diluted)

$0.44

Total Assets

$57.85B

Cash & Equivalents

$1.25B

Free Cash Flow

-$478.00M

Financial Statements
Beta
Revenue$23.10B
Cost of Revenue$21.05B
Gross Profit$2.05B
SG&A Expenses$366.00M
Operating Income$204.00M
Net Income$204.00M
EPS (Basic)$0.44
EPS (Diluted)$0.44
Shares Outstanding (Basic)457.60M
Shares Outstanding (Diluted)459.29M

Key Highlights

  • 1Net income attributable to Phillips 66 decreased by 61% to $204 million in Q1 2019 compared to $524 million in Q1 2018.
  • 2Diluted EPS fell to $0.44 in Q1 2019 from $1.07 in Q1 2018.
  • 3Total revenues and other income were $23.66 billion, a slight decrease from $24.05 billion in the prior year's comparable quarter.
  • 4Cash used in operating activities was $478 million in Q1 2019, a significant change from cash provided by operating activities of $488 million in Q1 2018.
  • 5Capital expenditures and investments totaled $1.1 billion in Q1 2019, up from $328 million in Q1 2018, with a substantial portion allocated to the Midstream segment.
  • 6The company repurchased $344 million of its common stock and paid $364 million in dividends during Q1 2019.
  • 7Cash and cash equivalents decreased from $3.02 billion at the end of 2018 to $1.25 billion at the end of Q1 2019.

Frequently Asked Questions

The primary driver for the significant decrease in net income was lower realized refining margins and reduced equity earnings from CPChem, which were negatively impacted by lower chemical margins. Lower overall market crack spreads and feedstock advantages also contributed to the decline in refining profitability.

Cash used in operating activities was $478 million in Q1 2019, a substantial shift from cash provided by operating activities of $488 million in Q1 2018. This change was mainly due to lower realized refining margins and larger unfavorable working capital impacts, including discretionary inventory builds and the timing of payments and collections.

During the first quarter of 2019, Phillips 66 deployed $1.1 billion in capital expenditures and investments, primarily in the Midstream segment. The company also returned capital to shareholders through dividend payments of $364 million and share repurchases totaling $344 million.

The Refining segment experienced a significant decrease in pre-tax income due to declining realized refining margins, driven by lower market crack spreads and feedstock advantage. While capacity utilization decreased slightly, the company is investing in projects to improve product value and environmental compliance, suggesting a focus on operational efficiency and adaptation to evolving regulations.