Phillips 66 Reports Second-Quarter 2023 Financial Results
- Strong financial results and execution of strategic priorities
- Progress on business transformation cost reduction initiatives and increased expected synergy capture
- Operational excellence across the portfolio, running above industry-average utilization in refining and achieving record NGL frac volumes in Midstream
- Completion of the acquisition of DCP Midstream, LP public common units and execution of NGL wellhead-to-market strategy
- Returned $1.8 billion to shareholders through dividends and share repurchases
- Expected to capture over $400 million of commercial and operating synergies across its wellhead-to-market value chain by 2025
- Completion of the previously announced acquisition of all publicly held common units of DCP Midstream, LP on June 15, 2023
- CPChem continues to pursue a portfolio of high-return growth projects
- Phillips 66 is converting its San Francisco Refinery in Rodeo, California, into one of the world’s largest renewable fuels facilities
- None.
-
Reported second-quarter earnings of
or$1.7 billion per share; adjusted earnings of$3.72 or$1.8 billion per share$3.87 -
Generated
of operating cash flow,$1.0 billion excluding working capital$2.0 billion -
Returned
to shareholders through dividends and share repurchases$1.8 billion - Continued strong Refining operations with above industry-average crude utilization
- Achieved record NGL fractionation volumes
-
Completed
acquisition of DCP Midstream, LP public common units$3.8 billion
“We delivered strong financial results and continued executing on our strategic priorities,” said Mark Lashier, President and CEO of Phillips 66.
“We returned
Midstream
|
Millions of Dollars |
||||
|
Pre-Tax Income |
|
Adjusted Pre-Tax Income |
||
|
Q2 2023 |
Q1 2023 |
|
Q2 2023 |
Q1 2023 |
Transportation |
|
306 |
|
284 |
270 |
NGL and Other |
335 |
408 |
|
357 |
420 |
NOVONIX |
(15) |
(12) |
|
(15) |
(12) |
Midstream |
|
702 |
|
626 |
678 |
Midstream second-quarter 2023 pre-tax income was
Transportation second-quarter adjusted pre-tax income was
NGL and Other adjusted pre-tax income was
In the second quarter, the fair value of the company’s investment in NOVONIX, Ltd. decreased by
Chemicals
|
Millions of Dollars |
||||
|
Pre-Tax Income |
|
Adjusted Pre-Tax Income |
||
|
Q2 2023 |
Q1 2023 |
|
Q2 2023 |
Q1 2023 |
Chemicals |
|
198 |
|
192 |
198 |
The Chemicals segment reflects Phillips 66’s equity investment in Chevron Phillips Chemical Company LLC (CPChem). Chemicals second-quarter 2023 reported and adjusted pre-tax income was
Refining
|
Millions of Dollars |
||||
|
Pre-Tax Income |
|
Adjusted Pre-Tax Income |
||
|
Q2 2023 |
Q1 2023 |
|
Q2 2023 |
Q1 2023 |
Refining |
|
1,608 |
|
1,148 |
1,608 |
Refining second-quarter 2023 reported and adjusted pre-tax income was
The decrease was due to a decline in margins, partially offset by higher volumes and lower operating expenses. Realized margins decreased from
Pre-tax turnaround costs for the second quarter were
Marketing and Specialties
|
Millions of Dollars |
||||
|
Pre-Tax Income |
|
Adjusted Pre-Tax Income |
||
|
Q2 2023 |
Q1 2023 |
|
Q2 2023 |
Q1 2023 |
Marketing and Specialties |
|
426 |
|
644 |
426 |
Marketing and Specialties second-quarter 2023 reported and adjusted pre-tax income was
Corporate and Other
|
Millions of Dollars |
||||
|
Pre-Tax Loss |
|
Adjusted Pre-Tax Loss |
||
|
Q2 2023 |
Q1 2023 |
|
Q2 2023 |
Q1 2023 |
Corporate and Other |
|
(283) |
|
(236) |
(248) |
Corporate and Other second-quarter 2023 pre-tax costs were
Adjusted pre-tax costs were
Financial Position, Liquidity and Return of Capital
Phillips 66 generated
During the second quarter, Phillips 66 funded
Also during the quarter, the company completed the
As of June 30, 2023, the company had
Strategic Update
Since July 2022 the company has returned
Phillips 66’s business transformation is on track to deliver
In Midstream, the company completed the previously announced acquisition of all publicly held common units of DCP Midstream, LP on June 15, 2023. The total increase in the company’s economic interest in DCP Midstream, LP is expected to generate an incremental
In Chemicals, CPChem continues to pursue a portfolio of high-return growth projects. CPChem completed construction of the 1-hexene unit in
CPChem and QatarEnergy are building joint-venture petrochemical facilities on the
Phillips 66 is converting its San Francisco Refinery in
Investor Webcast
Later today, members of Phillips 66 executive management will host a webcast at noon EDT to discuss the company’s second-quarter performance and provide an update on strategic initiatives. To access the webcast and view related presentation materials, go to phillips66.com/investors and click on “Events & Presentations.” For detailed supplemental information, go to phillips66.com/supplemental.
Earnings |
|
|
|
|
|
|
|
Millions of Dollars |
|||||
|
2023 |
|
2022* |
|||
|
Q2 |
Q1 |
Jun YTD |
|
Q2 |
Jun YTD |
Midstream |
|
702 |
1,306 |
|
258 |
470 |
Chemicals |
192 |
198 |
390 |
|
273 |
669 |
Refining |
1,134 |
1,608 |
2,742 |
|
3,096 |
3,269 |
Marketing and Specialties |
644 |
426 |
1,070 |
|
739 |
1,035 |
Corporate and Other |
(330) |
(283) |
(613) |
|
(260) |
(509) |
Pre-Tax Income |
2,244 |
2,651 |
4,895 |
|
4,106 |
4,934 |
Less: Income tax expense |
510 |
574 |
1,084 |
|
924 |
1,095 |
Less: Noncontrolling interests |
37 |
116 |
153 |
|
15 |
90 |
Phillips 66 |
|
1,961 |
3,658 |
|
3,167 |
3,749 |
|
|
|
|
|
|
|
Adjusted Earnings |
|
|
|
|
|
|
|
Millions of Dollars |
|||||
|
2023 |
|
2022* |
|||
|
Q2 |
Q1 |
Jun YTD |
|
Q2 |
Jun YTD |
Midstream |
|
678 |
1,304 |
|
258 |
470 |
Chemicals |
192 |
198 |
390 |
|
273 |
669 |
Refining |
1,148 |
1,608 |
2,756 |
|
3,192 |
3,382 |
Marketing and Specialties |
644 |
426 |
1,070 |
|
739 |
1,035 |
Corporate and Other |
(236) |
(248) |
(484) |
|
(235) |
(484) |
Pre-Tax Income |
2,374 |
2,662 |
5,036 |
|
4,227 |
5,072 |
Less: Income tax expense |
532 |
576 |
1,108 |
|
927 |
1,102 |
Less: Noncontrolling interests |
76 |
121 |
197 |
|
15 |
90 |
Phillips 66 |
|
1,965 |
3,731 |
|
3,285 |
3,880 |
|
|
|
|
|
|
|
*Earnings and adjusted earnings for the second quarter of 2022 and the six-month period ended June 30,2022, have been recast to reflect a change in the composition of the company's segments made in the fourth quarter of 2022. See the Basis of Presentation section below for further information. |
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|
About Phillips 66
Phillips 66 (NYSE: PSX) manufactures, transports and markets products that drive the global economy. The diversified energy company’s portfolio includes Midstream, Chemicals, Refining, and Marketing and Specialties businesses. Headquartered in
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This news release contains forward-looking statements within the meaning of the federal securities laws. Words such as “anticipated,” “estimated,” “expected,” “planned,” “scheduled,” “targeted,” “believe,” “continue,” “intend,” “will,” “would,” “objective,” “goal,” “project,” “efforts,” “strategies” and similar expressions that convey the prospective nature of events or outcomes generally indicate forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements included in this news release are based on management’s expectations, estimates and projections as of the date they are made. These statements are not guarantees of future performance and you should not unduly rely on them as they involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include: the effects of any widespread public health crisis and its negative impact on commercial activity and demand for refined petroleum products; the inability to timely obtain or maintain permits necessary for capital projects; changes to worldwide government policies relating to renewable fuels and greenhouse gas emissions that adversely affect programs including the renewable fuel standards program, low carbon fuel standards and tax credits for biofuels; fluctuations in NGL, crude oil, and natural gas prices, and petrochemical and refining margins; our ability to achieve the expected benefits of the integration of DCP Midstream, LP (DCP) and our increased economic ownership of DCP; the diversion of management’s time on integration-related matters; the success of the company’s business transformation initiatives and the realization of savings from actions taken in connection therewith; unexpected changes in costs for constructing, modifying or operating our facilities; unexpected difficulties in manufacturing, refining or transporting our products; the level and success of drilling and production volumes around our midstream assets; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products, renewable fuels or specialty products; lack of, or disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas, and refined products; potential liability from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations; failure to complete construction of capital projects on time and within budget; current or contemplated changes in governmental policies or laws that relate to NGL, crude oil, natural gas, refined petroleum products, or renewable fuels that regulate profits, pricing, or taxation, or other regulations that limit or restrict refining, marketing and midstream operations or restrict exports; the inability to comply with governmental regulations or make capital expenditures to maintain compliance with laws; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets, which may also impact our ability to repurchase shares and declare and pay dividends; potential disruption of our operations due to accidents, weather events, including as a result of climate change, acts of terrorism or cyberattacks; general domestic and international economic and political developments including armed hostilities (including the
Use of Non-GAAP Financial Information—This news release includes the terms “adjusted earnings,” “adjusted pre-tax income (loss),” and “adjusted pre-tax costs.” These are non-GAAP financial measures that are included to help facilitate comparisons of operating performance across periods and to help facilitate comparisons with other companies in our industry, by excluding items that do not reflect the core operating results of our businesses in the current period. References in the release to earnings refer to net income attributable to Phillips 66.
This news release also includes the terms “sustaining capital” and “adjusted EBITDA,” which are non-GAAP financial measures. Sustaining capital is a component of total capital expenditures, which is the most directly comparable GAAP financial measure. Adjusted EBITDA, as used in this release, is a forward-looking non-GAAP financial measure. EBITDA is defined as estimated net income plus estimated net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as estimated EBITDA plus the proportional share of selected equity affiliates’ estimated net interest expense, income taxes, depreciation and amortization less the portion of estimated adjusted EBITDA attributable to noncontrolling interests. Net income is the most directly comparable GAAP financial measure for the consolidated company and income before income taxes is the most directly comparable GAAP financial measure for operating segments. Adjusted EBITDA estimates depend on future levels of revenues and expenses, including amounts that will be attributable to noncontrolling interests, which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between projected adjusted EBITDA to consolidated net income or segment income before income taxes without unreasonable effort.
Basis of Presentation— During the fourth quarter of 2022, we changed the internal financial information reviewed by our chief executive officer to evaluate results and allocate resources to reflect the realignment of certain businesses between segments and business lines. We determined this realignment resulted in a change in the composition of our operating segments. Accordingly, results in the second quarter of 2022 and the six-month period ended June 30, 2022, have been recast for comparability. The primary effects of this realignment included moving the results of certain processing assets at our
|
Millions of Dollars |
|||||
|
Except as Indicated |
|||||
|
2023 |
|
2022* |
|||
|
Q2 |
Q1 |
Jun YTD |
|
Q2 |
Jun YTD |
Reconciliation of Consolidated Earnings to Adjusted Earnings |
|
|
|
|
|
|
Consolidated Earnings |
|
1,961 |
3,658 |
|
3,167 |
3,749 |
Pre-tax adjustments: |
|
|
|
|
|
|
Hurricane-related costs |
— |
— |
— |
|
— |
17 |
Net (gain)/loss on asset disposition |
14 |
(36) |
(22) |
|
— |
— |
Alliance shutdown-related costs1 |
— |
— |
— |
|
26 |
26 |
Regulatory compliance costs |
— |
— |
— |
|
70 |
70 |
Business transformation restructuring costs2 |
41 |
35 |
76 |
|
25 |
25 |
DCP integration restructuring costs3 |
22 |
12 |
34 |
|
— |
— |
Loss on early redemption of DCP debt |
53 |
— |
53 |
|
— |
— |
Tax impact of adjustments4 |
(22) |
(2) |
(24) |
|
(28) |
(32) |
Other tax impacts |
— |
— |
— |
|
25 |
25 |
Noncontrolling interests |
(39) |
(5) |
(44) |
|
— |
— |
Adjusted earnings |
|
1,965 |
3,731 |
|
3,285 |
3,880 |
Earnings per share of common stock (dollars) |
|
4.20 |
7.92 |
|
6.53 |
8.00 |
Adjusted earnings per share of common stock (dollars)5 |
|
4.21 |
8.08 |
|
6.77 |
8.28 |
|
|
|
|
|
|
|
Reconciliation of Segment Pre-Tax Income (Loss) to Adjusted Pre-Tax Income (Loss) |
|
|
|
|
|
|
Midstream Pre-Tax Income |
|
702 |
1,306 |
|
258 |
470 |
Pre-tax adjustments: |
|
|
|
|
|
|
Net gain on asset disposition |
— |
(36) |
(36) |
|
— |
— |
DCP integration restructuring costs3 |
22 |
12 |
34 |
|
— |
— |
Adjusted pre-tax income |
|
678 |
1,304 |
|
258 |
470 |
Chemicals Pre-Tax Income |
|
198 |
390 |
|
273 |
669 |
Pre-tax adjustments: |
|
|
|
|
|
|
None |
— |
— |
— |
|
— |
— |
Adjusted pre-tax income |
|
198 |
390 |
|
273 |
669 |
Refining Pre-Tax Income |
|
1,608 |
2,742 |
|
3,096 |
3,269 |
Pre-tax adjustments: |
|
|
|
|
|
|
Hurricane-related costs |
— |
— |
— |
|
— |
17 |
Net loss on asset disposition |
14 |
— |
14 |
|
— |
— |
Alliance shutdown-related costs1 |
— |
— |
— |
|
26 |
26 |
Regulatory compliance costs |
— |
— |
— |
|
70 |
70 |
Adjusted pre-tax income |
|
1,608 |
2,756 |
|
3,192 |
3,382 |
|
|
|
|
|
|
|
Marketing and Specialties Pre-Tax Income |
|
426 |
1,070 |
|
739 |
1,035 |
Pre-tax adjustments: |
|
|
|
|
|
|
None |
— |
— |
— |
|
— |
— |
Adjusted pre-tax income |
|
426 |
1,070 |
|
739 |
1,035 |
Corporate and Other Pre-Tax Loss |
|
(283) |
(613) |
|
(260) |
(509) |
Pre-tax adjustments: |
|
|
|
|
|
|
Business transformation restructuring costs2 |
41 |
35 |
76 |
|
25 |
25 |
Loss on early redemption of DCP debt |
53 |
— |
53 |
|
— |
— |
Adjusted pre-tax loss |
|
(248) |
(484) |
|
(235) |
(484) |
|
|
|
|
|
|
|
*Earnings and adjusted earnings for the second quarter of 2022 and the six-month period ended June 30,2022, have been recast to reflect a change in the composition of the company's segments made in the fourth quarter of 2022. See the Basis of Presentation section above for further information. |
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1Costs related to the shutdown of the Alliance Refinery totaled |
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2Restructuring costs, related to Phillips 66’s multi-year business transformation efforts, are primarily due to consulting fees. |
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3Restructuring costs, related to the integration of DCP Midstream, mainly reflect severance costs, consulting fees and contract exit costs. A portion of these costs are attributable to noncontrolling interests. |
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4We generally tax effect taxable |
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5Q2 2023 is based on adjusted weighted-average diluted shares of 456,173 thousand. Other periods are based on the same weighted-average diluted shares outstanding as that used in the GAAP diluted earnings per share calculation. Income allocated to participating securities, if applicable, in the adjusted earnings per share calculation is the same as that used in the GAAP diluted earnings per share calculation. |
|
|
|
|
|
Millions of Dollars |
|
Except as Indicated |
|
June 30, 2023 |
Debt-to-Capital Ratio |
|
Total Debt |
|
Total Equity |
31,060 |
Debt-to-Capital Ratio |
39 % |
Total Cash |
3,029 |
Net Debt-to-Capital Ratio |
35 % |
|
|
Millions of Dollars |
|
|
Except as Indicated |
|
|
2023 |
|
|
Q2 |
Q1 |
Realized Refining Margins |
|
|
Income before income taxes |
|
1,608 |
Plus: |
|
|
Taxes other than income taxes |
99 |
113 |
Depreciation, amortization and impairments |
209 |
202 |
Selling, general and administrative expenses |
37 |
45 |
Operating expenses |
941 |
1,167 |
Equity in earnings of affiliates |
(117) |
(199) |
Other segment expense, net |
15 |
25 |
Proportional share of refining gross margins contributed by equity affiliates |
335 |
428 |
Special items: |
|
|
None |
— |
— |
Realized refining margins |
|
3,389 |
Total processed inputs (thousands of barrels) |
153,663 |
145,241 |
Adjusted total processed inputs (thousands of barrels)* |
173,134 |
163,552 |
Income before income taxes (dollars per barrel)** |
|
11.07 |
Realized refining margins (dollars per barrel)*** |
|
20.72 |
*Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate. |
||
**Income before income taxes divided by total processed inputs. |
||
***Realized refining margins per barrel, as presented, are calculated using the underlying realized refining margin amounts, in dollars, divided by adjusted total processed inputs, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230801657507/en/
Jeff Dietert (investors)
832-765-2297
jeff.dietert@p66.com
Owen Simpson (investors)
832-765-2297
owen.simpson@p66.com
Thaddeus Herrick (media)
855-841-2368
thaddeus.f.herrick@p66.com
Source: Phillips 66
FAQ
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