Adjusted earnings of $499 million or $0.94 per share
Highlights
-
Refining achieved 100 percent utilization
-
Strong Marketing sales volumes and margins
-
Improved Chemicals margins
-
Cash from operations of $1.2 billion
-
Cash proceeds of $656 million from Phillips 66 Partners equity offering
-
Increased quarterly dividend by 12.5 percent
Phillips 66 (NYSE: PSX), an energy manufacturing and logistics company,
announces second-quarter earnings of $496 million, compared with $385
million in the first quarter of 2016. Adjusted earnings were $499
million, an increase of $139 million from the last quarter.
"We operated well during the quarter and delivered industry-leading
safety performance," said Greg Garland, chairman and CEO of Phillips 66.
"Refining ran at record utilization rates, Chemicals successfully
completed major turnarounds, and DCP Midstream had improved results. We
experienced increased demand across our businesses."
"During the quarter, we generated $1.8 billion in cash from our
operations and a PSXP equity offering. We reinvested $620 million into
our businesses and returned $570 million of capital to shareholders
through dividends and share repurchases. In addition, during the quarter
we raised our quarterly dividend 12.5 percent, our sixth increase since
the formation of our company," said Garland.
|
|
|
Midstream
|
|
|
|
|
Millions of Dollars
|
|
|
Earnings
|
|
Adjusted Earnings*
|
|
|
Q2 2016
|
|
Q1 2016
|
|
Q2 2016
|
|
Q1 2016
|
Transportation
|
|
$
|
65
|
|
|
72
|
|
|
65
|
|
|
72
|
|
NGL
|
|
(17
|
)
|
|
(11
|
)
|
|
(17
|
)
|
|
(11
|
)
|
DCP Midstream
|
|
(9
|
)
|
|
4
|
|
|
(9
|
)
|
|
(21
|
)
|
Midstream
|
|
$
|
39
|
|
|
65
|
|
|
39
|
|
|
40
|
|
* Excludes special items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midstream's second-quarter earnings were $39 million, compared with $65
million in the first quarter of 2016. The first-quarter Midstream
earnings included a net benefit of $25 million from special items,
primarily related to proceeds from a favorable legal settlement at DCP
Midstream, LLC (DCP Midstream).
Midstream's second-quarter adjusted earnings were $39 million, in line
with the first quarter of 2016. The second-quarter results were impacted
by planned maintenance, losses from the timing of seasonal propane and
butane storage, project expenses related to the Freeport LPG Terminal
and lower earnings from the Rockies Express Pipeline joint venture.
These items were largely offset by higher fractionation and
transportation volumes, as well as improved results from DCP Midstream.
For the second quarter, the company’s equity investment in DCP Midstream
had a loss of $9 million, compared with a $21 million adjusted loss in
the prior quarter. Results benefited from improved commodity prices,
improved asset performance, favorable contract restructuring efforts and
cost reduction initiatives.
|
|
|
Chemicals
|
|
|
|
|
Millions of Dollars
|
|
|
Earnings
|
|
Adjusted Earnings*
|
|
|
Q2 2016
|
|
Q1 2016
|
|
Q2 2016
|
|
Q1 2016
|
Olefins and Polyolefins (O&P)
|
|
$
|
170
|
|
|
145
|
|
|
170
|
|
|
145
|
|
Specialties, Aromatics and Styrenics (SA&S)
|
|
25
|
|
|
16
|
|
|
25
|
|
|
16
|
|
Other
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
Chemicals
|
|
$
|
190
|
|
|
156
|
|
|
190
|
|
|
156
|
|
* Excludes special items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Chemicals segment reflects Phillips 66's equity investment in
Chevron Phillips Chemical Company LLC (CPChem). Chemicals'
second-quarter earnings were $190 million, compared with $156 million in
the first quarter of 2016.
During the second quarter, CPChem's Olefins and Polyolefins business
contributed $170 million to Phillips 66's Chemicals earnings. This was
an increase of $25 million compared with the prior quarter, primarily
due to higher polyethylene sales prices and margins. Equity earnings
were also up due to improved margins. Global utilization for O&P was 91
percent, reflecting planned maintenance, compared with 93 percent in the
first quarter.
CPChem's Specialties, Aromatics and Styrenics business contributed $25
million of earnings in the second quarter, an increase of $9 million
from the prior quarter. The increase was primarily from improved
earnings at CPChem's SA&S equity affiliates due to higher sales prices.
|
|
|
Refining
|
|
|
|
|
Millions of Dollars
|
|
|
Earnings
|
|
Adjusted Earnings*
|
|
|
Q2 2016
|
|
Q1 2016
|
|
Q2 2016
|
|
Q1 2016
|
Refining
|
|
$
|
149
|
|
|
86
|
|
|
152
|
|
|
86
|
* Excludes special items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refining's second-quarter earnings were $149 million, compared with $86
million in the first quarter of 2016. Refining earnings in the second
quarter of 2016 included a net charge of $3 million from special items,
primarily related to a long-term logistics commitment, partially offset
by a favorable U.K. tax settlement.
Refining's adjusted earnings were $152 million in the second quarter,
compared with $86 million in the first quarter of 2016. The increase in
adjusted earnings was largely driven by increased volumes. Phillips 66’s
worldwide refining operations achieved 100 percent crude utilization,
compared with 94 percent in the first quarter. Despite higher worldwide
market crack spreads, realized margins were flat compared to the prior
quarter primarily due to lower clean product differentials and lower
secondary product margins due to rising crude prices.
Turnaround costs for the second quarter were $69 million. Phillips 66's
worldwide clean product yield was 84 percent in the second quarter,
compared with 82 percent in the first quarter.
|
|
|
Marketing and Specialties
|
|
|
|
|
Millions of Dollars
|
|
|
Earnings
|
|
Adjusted Earnings*
|
|
|
Q2 2016
|
|
Q1 2016
|
|
Q2 2016
|
|
Q1 2016
|
Marketing and Other
|
|
$
|
199
|
|
|
162
|
|
|
199
|
|
|
162
|
Specialties
|
|
30
|
|
|
43
|
|
|
30
|
|
|
43
|
Marketing and Specialties
|
|
$
|
229
|
|
|
205
|
|
|
229
|
|
|
205
|
* Excludes special items.
|
|
|
|
|
|
|
|
|
Marketing and Specialties (M&S) second-quarter earnings were $229
million, compared with $205 million in the first quarter of 2016.
Earnings for Marketing and Other were $199 million, an increase of $37
million from the prior quarter. The increase in earnings was largely due
to improved international retail margins and higher domestic marketing
volumes reflecting improved seasonal demand. Refined product exports in
the second quarter were 174,000 barrels per day (BPD), versus 126,000
BPD in the prior quarter.
Phillips 66’s Specialties businesses generated earnings of $30 million
during the second quarter. The $13 million decrease from the prior
quarter was mainly due to narrower base oil margins.
|
|
|
Corporate and Other
|
|
|
|
|
Millions of Dollars
|
|
|
Earnings
|
|
Adjusted Earnings*
|
|
|
Q2 2016
|
|
Q1 2016
|
|
Q2 2016
|
|
Q1 2016
|
Corporate and Other
|
|
$
|
(111
|
)
|
|
(127
|
)
|
|
(111
|
)
|
|
(127
|
)
|
* Excludes special items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Other’s second-quarter net costs were $111 million,
compared with $127 million in the first quarter of 2016. The $16 million
improvement was primarily due to reduced environmental accruals and
lower taxes.
Financial Position, Liquidity and Return of Capital
During the second quarter, Phillips 66 generated $1.2 billion of cash
from operations. Excluding working capital impacts, operating cash flow
was $560 million. Working capital changes were primarily driven by
increases in commodity prices and the timing of Marketing receipts.
Capital expenditures and investments totaled $620 million.
Phillips 66 returned $571 million to shareholders during the quarter,
consisting of $329 million in dividends and the repurchase of 3 million
shares of common stock for $242 million. Since July 2012, the company
has returned $12.3 billion to shareholders in the form of dividends,
share repurchases and share exchange. Phillips 66 ended the quarter with
523 million shares outstanding.
As of June 30, 2016, cash and cash equivalents were $2.2 billion and
debt was $8.9 billion, including $1.1 billion of debt at Phillips 66
Partners (PSXP). The company's consolidated debt-to-capital ratio and
net-debt-to-capital ratio were 27 percent and 22 percent, respectively.
Strategic Update
Phillips 66 continues to evaluate its portfolio of assets and
opportunities to ensure investments deliver value.
CPChem's world-scale U.S. Gulf Coast Petrochemicals Project is
approximately 80 percent complete, with startup expected in the second
half of 2017. This project consists of an ethane cracker and related
polyethylene facilities that will increase CPChem's global ethylene and
polyethylene capacity by approximately one-third.
In Refining, progress continues on several high-return projects. The
Wood River Refinery has debottlenecking and yield improvement projects
that are scheduled for completion in the third quarter. The Billings
Refinery is increasing its heavy Canadian crude run ability to 100
percent. This project is expected to be complete in the first half of
2017, while the Bayway Refinery is undergoing an FCC modernization to
increase gasoline yield, expected in 2018.
In Midstream, the Freeport LPG Export Terminal is nearing completion.
The project is on budget with startup expected by year-end.
Phillips 66 continues to invest in its Beaumont Terminal, the largest
terminal in the company's portfolio. The terminal has 3.2 million
barrels of new storage capacity under construction; 2 million barrels of
additional crude storage are expected to be in service by year-end and
1.2 million barrels of additional product storage are expected to be in
operation by mid-2017.
In May 2016, Phillips 66 contributed the remaining 75 percent interest
in the Sweeny fractionator and associated NGL storage caverns along with
the Standish Pipeline to PSXP for total consideration of $775 million.
Transaction consideration consisted of the Partnership assuming $675
million of notes payable to Phillips 66 and the company's receipt of
$100 million in newly issued PSXP units. PSXP used the net proceeds of
$656 million from a public unit offering to repay debt assumed.
Phillips 66 is participating in joint ventures to develop the
approximately 470,000 BPD Dakota Access Pipeline (DAPL) and Energy
Transfer Crude Oil Pipeline (ETCOP) projects. Phillips 66 has a 25
percent interest in these joint ventures. The pipeline projects remain
on schedule and are expected to be ready for service by the end of 2016.
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 www.phillips66.com/investors
and click on "Events & Presentations." For detailed supplemental
information, go to www.phillips66.com/supplemental.
|
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
2016
|
|
2015
|
|
|
Q2
|
|
Q2 YTD
|
|
Q1
|
|
Q2
|
|
Q2 YTD
|
Midstream
|
|
$
|
39
|
|
|
104
|
|
|
65
|
|
|
(78
|
)
|
|
(11
|
)
|
Chemicals
|
|
190
|
|
|
346
|
|
|
156
|
|
|
295
|
|
|
498
|
|
Refining
|
|
149
|
|
|
235
|
|
|
86
|
|
|
604
|
|
|
1,142
|
|
Marketing and Specialties
|
|
229
|
|
|
434
|
|
|
205
|
|
|
314
|
|
|
618
|
|
Corporate and Other
|
|
(111
|
)
|
|
(238
|
)
|
|
(127
|
)
|
|
(123
|
)
|
|
(248
|
)
|
Phillips 66
|
|
$
|
496
|
|
|
881
|
|
|
385
|
|
|
1,012
|
|
|
1,999
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
2016
|
|
2015
|
|
|
Q2
|
|
Q2 YTD
|
|
Q1
|
|
Q2
|
|
Q2 YTD
|
Midstream
|
|
$
|
39
|
|
|
79
|
|
|
40
|
|
|
48
|
|
|
115
|
|
Chemicals
|
|
190
|
|
|
346
|
|
|
156
|
|
|
295
|
|
|
498
|
|
Refining
|
|
152
|
|
|
238
|
|
|
86
|
|
|
604
|
|
|
1,099
|
|
Marketing and Specialties
|
|
229
|
|
|
434
|
|
|
205
|
|
|
182
|
|
|
376
|
|
Corporate and Other
|
|
(111
|
)
|
|
(238
|
)
|
|
(127
|
)
|
|
(127
|
)
|
|
(252
|
)
|
Phillips 66
|
|
$
|
499
|
|
|
859
|
|
|
360
|
|
|
1,002
|
|
|
1,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Phillips 66
Phillips 66 is a diversified energy manufacturing and logistics company.
With a portfolio of Midstream, Chemicals, Refining, and Marketing and
Specialties businesses, the company processes, transports, stores and
markets fuels and products globally. Phillips 66 Partners, the company's
master limited partnership, is an integral asset in the portfolio.
Headquartered in Houston, the company has 14,000 employees committed to
safety and operating excellence. Phillips 66 had $50 billion of assets
as of June 30, 2016. For more information, visit www.phillips66.com
or follow us on Twitter @Phillips66Co.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This news release contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors created thereby.
Words and phrases such as “is anticipated,” “is estimated,” “is
expected,” “is planned,” “is scheduled,” “is targeted,” “believes,”
“intends,” “objectives,” “projects,” “strategies” and similar
expressions are used to identify such forward-looking statements.
However, the absence of these words does not mean that a statement is
not forward-looking. Forward-looking statements relating to Phillips
66’s operations (including joint venture operations) are based on
management’s expectations, estimates and projections about the company,
its interests and the energy industry in general on the date this news
release was prepared. These statements are not guarantees of future
performance and 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 fluctuations in NGL, crude oil, and natural gas
prices, and petrochemical and refining margins; unexpected changes in
costs for constructing, modifying or operating our facilities;
unexpected difficulties in manufacturing, refining or transporting our
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; limited access to capital or significantly higher cost of
capital related to illiquidity or uncertainty in the domestic or
international financial markets; and other economic, business,
competitive and/or regulatory factors affecting Phillips 66’s businesses
generally as set forth in our filings with the Securities and Exchange
Commission. Phillips 66 is under no obligation (and expressly disclaims
any such obligation) to update or alter its forward-looking statements,
whether as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Information -- This news release
includes the terms adjusted earnings, adjusted earnings per share, and
operating cash flow excluding working capital impacts. These are
non-GAAP financial measures that are included to help facilitate
comparisons of company operating performance across periods and with
peer companies, by excluding items that don't 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.
|
|
Millions of Dollars
|
|
|
Except as Indicated
|
|
|
2016
|
|
2015
|
|
|
Q2
|
|
Q1
|
|
Jun YTD
|
|
Q2
|
|
Jun YTD
|
Reconciliation of Earnings to Adjusted Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Earnings
|
|
$
|
496
|
|
|
385
|
|
|
881
|
|
|
1,012
|
|
|
1,999
|
|
Pre-tax adjustments:
|
|
|
|
|
|
|
|
|
|
|
Impairments by equity affiliates
|
|
—
|
|
|
6
|
|
|
6
|
|
|
194
|
|
|
194
|
|
Pending claims and settlements
|
|
—
|
|
|
(45
|
)
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
Certain tax impacts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
Asset dispositions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(132
|
)
|
|
(250
|
)
|
Recognition of deferred logistics commitments
|
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
Tax impact of adjustments*
|
|
(27
|
)
|
|
14
|
|
|
(13
|
)
|
|
(67
|
)
|
|
(102
|
)
|
Adjusted earnings
|
|
$
|
499
|
|
|
360
|
|
|
859
|
|
|
1,002
|
|
|
1,836
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock (dollars)
|
|
$
|
0.93
|
|
|
0.72
|
|
|
1.65
|
|
|
1.84
|
|
|
3.63
|
|
Adjusted earnings per share of common stock (dollars)
|
|
$
|
0.94
|
|
|
0.67
|
|
|
1.61
|
|
|
1.83
|
|
|
3.33
|
|
|
|
|
|
|
|
|
|
|
|
|
Midstream Earnings (loss)
|
|
$
|
39
|
|
|
65
|
|
|
104
|
|
|
(78
|
)
|
|
(11
|
)
|
Pre-tax adjustments:
|
|
|
|
|
|
|
|
|
|
|
Pending claims and settlements
|
|
—
|
|
|
(45
|
)
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
Impairments by equity affiliates
|
|
—
|
|
|
6
|
|
|
6
|
|
|
194
|
|
|
194
|
|
Tax impact of adjustments*
|
|
—
|
|
|
14
|
|
|
14
|
|
|
(68
|
)
|
|
(68
|
)
|
Adjusted earnings
|
|
$
|
39
|
|
|
40
|
|
|
79
|
|
|
48
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
Refining Earnings
|
|
$
|
149
|
|
|
86
|
|
|
235
|
|
|
604
|
|
|
1,142
|
|
Pre-tax adjustments:
|
|
|
|
|
|
|
|
|
|
|
Asset dispositions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
Recognition of deferred logistics commitments
|
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
Tax impact of adjustments*
|
|
(27
|
)
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
(35
|
)
|
Adjusted earnings
|
|
$
|
152
|
|
|
86
|
|
|
238
|
|
|
604
|
|
|
1,099
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and Specialties Earnings
|
|
$
|
229
|
|
|
205
|
|
|
434
|
|
|
314
|
|
|
618
|
|
Pre-tax adjustments:
|
|
|
|
|
|
|
|
|
|
|
Asset dispositions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(132
|
)
|
|
(242
|
)
|
Tax impact of adjustments*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted earnings
|
|
$
|
229
|
|
|
205
|
|
|
434
|
|
|
182
|
|
|
376
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Other Earnings (loss)
|
|
$
|
(111
|
)
|
|
(127
|
)
|
|
(238
|
)
|
|
(123
|
)
|
|
(248
|
)
|
Pre-tax adjustments:
|
|
|
|
|
|
|
|
|
|
|
Certain tax impacts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
Tax impact of adjustments*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
Adjusted earnings (loss)
|
|
$
|
(111
|
)
|
|
(127
|
)
|
|
(238
|
)
|
|
(127
|
)
|
|
(252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*We generally tax effect taxable U.S.-based special items using
a combined federal and state statutory income tax rate of
approximately 38 percent. Taxable special items attributable to
foreign locations likewise use a local statutory income tax rate.
Nontaxable events reflect zero income tax. These events include,
but are not limited to, most goodwill impairments, transactions
legislatively exempt from income tax, transactions related to
entities for which we have made an assertion that the
undistributed earnings are permanently reinvested, or transactions
occurring in jurisdictions with a valuation allowance.
|
|
|
|
|
|
|
Millions of
|
|
|
Dollars
|
|
|
Q2 2016
|
Cash Flows from Operating Activities
|
|
|
|
|
|
Net Cash Provided by Operating Activities, excluding working
capital
|
|
$
|
560
|
Changes in working capital
|
|
595
|
Net Cash Provided by Operating Activities
|
|
$
|
1,155
|
|
|
|
|
|
|
|
|
|
Millions of
|
|
|
Dollars
|
|
|
Q2 2016
|
Debt-to-Capital Ratio
|
|
|
|
|
|
|
|
Total Debt
|
|
$
|
8,862
|
|
Total Equity
|
|
24,066
|
|
Debt-to-Capital Ratio
|
|
27
|
%
|
|
|
|
Total Cash
|
|
$
|
2,232
|
|
Net-Debt-to-Capital Ratio
|
|
22
|
%
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160729005177/en/
Copyright Business Wire 2016