Phillips 66 (PSX, Financial) released its first-quarter 2017 earnings before the market opened on April 28, reporting gains after a disappointing year in 2016.
The company beat on earnings and revenue. Adjusted earnings of 56 cents came in far above estimates of three cents. Likewise, revenue of $23.7 billion surpassed estimates of $22.3 billion.
Earnings came in at $535 million, or $1.02 per share, an increase from $385 million, or 72 cents per share, in the prior-year quarter. Adjusted earnings for the quarter fell from $360 million a year ago to $294 million.
Phillips 66 shares rose 2.7% after the announcement.
The company’s midstream segment reported earnings of $77 million, compared with a loss of $1 million in fourth-quarter 2016 and up from $65 million in the prior-year quarter. Phillips attributed some of its gain in this segment to its new Freeport LPG Export Terminal, which began operations during the fourth quarter and allows the company to ship propane and butane worldwide.
The chemicals segment reported earnings of $181 million, up from $115 million in the fourth quarter and $156 million in first-quarter 2016 on the back of improved margins, higher volumes and lower operating costs.
The refining segment generated $259 million in earnings during the quarter, up from a $38 million loss in the fourth quarter and an increase from $86 million in the comparable quarter a year ago. While the segment’s adjusted loss was $2 million for the quarter, the improvement from the previous quarter was driven by higher margins that were partially offset by higher costs and lower volumes from turnaround activities.
Chairman and CEO Greg Garland commented on the company’s turnaround in these segments.
“We have successfully completed several major turnarounds in refining and chemicals,” Garland said in a statement. “First-quarter earnings reflect this downtime and also highlight the benefit of a diversified portfolio. Our chemicals business had solid results on good demand and improved margins. The Freeport LPG Export Terminal is fully operational, and we have several midstream and chemicals projects nearing completion."
The marketing and specialties segment generated $141 million in earnings, which was down from $190 million in the fourth quarter and down from $205 million in first-quarter 2016.
In the corporate and other segment, Phillips reported net costs that were in line with the prior quarter. Operating cash flow was $748 million. The company spent $470 million in capital expenditures and distributed $356 million in dividends and $285 million in share repurchases.
The company reported cash and equivalents of $1.5 billion as of March 31. Its debt amounted to $10.2 billion.
Headquartered in Houston, the diversified energy manufacturing and logistics company has a market cap of $42.18 billion; its shares were trading around $80.16 on Friday with a price-earnings (P/E) ratio of 27.5, a price-book (P/B) ratio of 1.8 and a price-sales (P/S) ratio of 0.5.
Warren Buffett (Trades, Portfolio) is Phillips 66’s largest shareholder with 15.6% of its outstanding shares, which represents 4.7% of his portfolio. In total, 15 other gurus hold the stock.
Disclosure: I do not own any stocks mentioned in the article.
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