10-QPeriod: Q1 FY2021

Phillips 66 Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 30, 2021For Securities:PSX

Summary

Phillips 66 (PSX) reported a net loss attributable to the company of $654 million, or $1.49 per diluted share, for the first quarter of 2021. This represents a significant improvement compared to the $2,496 million net loss, or $5.66 per diluted share, reported in the same period of the prior year. The improvement was largely driven by substantially lower impairment charges in the current quarter ($198 million) compared to the first quarter of 2020 ($3,006 million), which included impairments related to DCP Midstream and goodwill in the Refining segment. Despite the reduced net loss, the company faced headwinds in the first quarter of 2021 due to the ongoing impact of the COVID-19 pandemic on refined product demand and refining margins. Additionally, severe winter storms in February 2021 disrupted refining, midstream, and chemical operations, leading to lower asset utilization and increased costs. The company generated $271 million in cash from operating activities, but ended the quarter with $1.35 billion in cash and cash equivalents, a decrease from $2.51 billion at the end of 2020, due to capital expenditures, debt repayments, and dividend payments.

Financial Statements
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Key Highlights

  • 1Net loss attributable to Phillips 66 significantly narrowed to $654 million ($1.49/share) in Q1 2021 from $2.5 billion ($5.66/share) in Q1 2020, primarily due to lower impairment charges.
  • 2Total revenues increased slightly to $21.9 billion in Q1 2021 from $21.2 billion in Q1 2020, driven by higher product prices across most segments.
  • 3Operating expenses saw an increase to $22.7 billion in Q1 2021 from $23.7 billion in Q1 2020, with a notable increase in purchased crude oil and products.
  • 4Impairment charges decreased substantially to $198 million in Q1 2021 from $3,006 million in Q1 2020, reflecting a significant reduction in asset write-downs.
  • 5Cash flow from operating activities improved to $271 million in Q1 2021 from $217 million in Q1 2020, indicating better operational cash generation.
  • 6The company's cash and cash equivalents decreased from $2.51 billion at December 31, 2020, to $1.35 billion at March 31, 2021, due to capital expenditures, debt repayments, and dividend payments.
  • 7Refining segment reported a loss of $1.04 billion, an improvement from a $2.26 billion loss in the prior year, partly due to significantly lower impairment charges.

Frequently Asked Questions

Phillips 66 reported a net loss attributable to the company of $654 million, or $1.49 per diluted share, for the first quarter of 2021. This is an improvement from a net loss of $2,496 million, or $5.66 per diluted share, in the first quarter of 2020.

The primary driver for the improved net loss was a significant reduction in impairment charges. In Q1 2021, impairments totaled $198 million, a substantial decrease from $3,006 million in Q1 2020. While revenues saw a modest increase, other operational costs and the lingering effects of the COVID-19 pandemic and winter storms impacted overall profitability.

The company noted that the COVID-19 pandemic continued to impact economic activities, leading to reduced demand for refined petroleum products and affecting refining margins. The severe winter storms in February 2021 also caused operational disruptions across refining, midstream, and chemical segments, resulting in lower asset utilization and increased costs.

Phillips 66 ended the first quarter of 2021 with $1.35 billion in cash and cash equivalents. This is a decrease from $2.51 billion at the end of 2020. The company generated $271 million in cash from operations but used cash for capital expenditures ($331 million), debt repayments ($500 million), and dividend payments ($394 million).