10-QPeriod: Q2 FY2019

Phillips 66 Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 26, 2019For Securities:PSX

Summary

Phillips 66 (PSX) reported solid financial results for the second quarter and first six months of 2019. The company demonstrated consistent operational performance across its business segments, with notable strength in Midstream and Marketing & Specialties contributing to overall profitability. While the Refining segment experienced a decline in profitability due to lower refining margins, this was partially offset by improvements in other areas and managed effectively through operational adjustments and cost controls. Financially, Phillips 66 maintained a strong liquidity position, supported by robust operating cash flow and available credit facilities. The company continued to return value to shareholders through dividends and share repurchases. Strategic investments in growth projects, particularly in the Midstream segment, underscore a focus on long-term value creation. Despite some market headwinds, Phillips 66's diversified business model and disciplined capital allocation strategy position it favorably for continued performance.

Financial Highlights

47 data points
Beta

Revenue

$27.85B

11.8% Gross Margin

Net Income

$1.42B

5.1% Net Margin

EPS (Diluted)

$3.12

Total Assets

$57.78B

Cash & Equivalents

$1.82B

Free Cash Flow

$1.93B

Financial Statements
Beta
Revenue$27.85B
Cost of Revenue$24.55B
Gross Profit$3.29B
SG&A Expenses$408.00M
Operating Income$1.63B
Net Income$1.42B
EPS (Basic)$3.13
EPS (Diluted)$3.12
Shares Outstanding (Basic)453.68M
Shares Outstanding (Diluted)455.58M

Key Highlights

  • 1Net income attributable to Phillips 66 was $1.424 billion for the three months ended June 30, 2019, an increase from $1.339 billion in the prior year period.
  • 2Consolidated sales and other operating revenues were $27.847 billion for the three months ended June 30, 2019, down from $28.980 billion in the prior year period, primarily due to lower prices.
  • 3The Midstream segment saw increased pre-tax income of $423 million in Q2 2019, up from $238 million in Q2 2018, driven by higher volumes, tariffs, and storage rates.
  • 4Refining segment pre-tax income decreased to $983 million in Q2 2019 from $1,190 million in Q2 2018, primarily due to lower realized refining margins.
  • 5Marketing and Specialties segment pre-tax income increased to $353 million in Q2 2019 from $310 million in Q2 2018, driven by higher U.S. and international marketing margins and sales volumes.
  • 6Operating cash flow for the six months ended June 30, 2019, was $1.452 billion, a decrease from $2.852 billion in the prior year period, attributed to lower refining margins and unfavorable working capital impacts.
  • 7The company repurchased $455 million of its common stock in Q2 2019 and paid dividends of $406 million.

Frequently Asked Questions

For the three months ended June 30, 2019, Phillips 66 reported net income attributable to Phillips 66 of $1.424 billion, an increase from $1.339 billion in the same period of 2018. While consolidated sales and other operating revenues decreased slightly to $27.847 billion from $28.980 billion, this was primarily due to lower commodity prices. The Midstream and Marketing & Specialties segments showed improved profitability, while the Refining segment experienced lower margins.

The Midstream segment benefited from higher volumes, tariffs, and storage rates, leading to a significant increase in pre-tax income. The Marketing and Specialties segment saw improved results due to higher realized margins and sales volumes. Conversely, the Refining segment's pre-tax income declined primarily because of lower refining margins, impacted by factors such as feedstock costs and market crack spreads.

Phillips 66 maintained a strong liquidity position. Cash generated from operating activities for the first six months of 2019 was $1.452 billion. The company ended the period with $1.8 billion in cash and cash equivalents and approximately $5.7 billion in available committed capacity under its revolving credit facilities. These resources were used to fund capital expenditures, share repurchases, and dividend payments.

Yes, the company continues to invest in growth projects, particularly in the Midstream segment. Significant capital expenditures were made in the first half of 2019 for projects like the Gray Oak Pipeline and related ventures, as well as the formation of joint ventures for the Liberty and Red Oak Pipeline projects. The Chemicals segment also saw continued development of its petrochemical projects.