- Reported a first-quarter loss of $654 million or $1.49 per
share; adjusted loss of $509 million or $1.16 per share
- Financial and operating performance impacted by severe winter
storms
- Recognized for exemplary 2020 safety performance in Refining,
Midstream and Chemicals
- Recently started renewable diesel production at San Francisco
Refinery
- Continued to advance lower-carbon initiatives
Phillips 66 (NYSE: PSX), a diversified energy manufacturing and
logistics company, announces a first-quarter 2021 loss of $654
million, compared with a loss of $539 million in the fourth quarter
of 2020. Excluding special items of $145 million, the company had
an adjusted loss of $509 million in the first quarter, compared
with a fourth-quarter adjusted loss of $507 million.
“Our first-quarter results reflect the impact of severe winter
storms in the Central and Gulf Coast regions, as well as the
ongoing COVID-19 pandemic,” said Greg Garland, Chairman and CEO of
Phillips 66. “We realized lower utilization and higher costs across
our businesses. We safely resumed operations following
storm-related downtime and performed multiple turnarounds in the
first quarter. We are proud of our employees and their commitment
to operating excellence, particularly during these challenging
times.
“We continued to execute our strategy despite these challenges.
Earlier this month we commenced renewable diesel production at the
San Francisco Refinery with the completion of the diesel
hydrotreater conversion. Additionally, the South Texas Gateway
Terminal was completed, and we advanced construction of the C2G
Pipeline. We also published our inaugural Human Capital Management
Report, which provides a comprehensive look at our approach to
building a high-performing organization.
“We remain committed to a secure, competitive and growing
dividend. In the first quarter, we paid $394 million in dividends
to shareholders and repaid $500 million of debt. We will continue
to take a disciplined approach to capital allocation, including
debt repayment, as cash flow recovers.”
Midstream
Millions of Dollars
Pre-Tax Income
Adjusted Pre-Tax
Income
Q1 2021
Q4 2020
Q1 2021
Q4 2020
Transportation
$
7
97
206
196
NGL and Other
35
85
36
86
DCP Midstream
34
41
34
41
Midstream
$
76
223
276
323
Midstream first-quarter 2021 pre-tax income was $76 million,
compared with $223 million in the fourth quarter of 2020. Midstream
results in the first quarter included a $198 million impairment
resulting from Phillips 66 Partners’ decision to exit the Liberty
Pipeline project, as well as $2 million in maintenance and repair
costs resulting from the winter storms. Fourth-quarter results
included $96 million of impairments related to Phillips 66
Partners’ investments in two crude oil logistics joint ventures, $3
million of hurricane-related costs and $1 million of pension
settlement expense.
Transportation first-quarter adjusted pre-tax income of $206
million was $10 million higher than the fourth quarter. The
increase was primarily due to lower operating costs and higher
equity earnings, partially offset by decreased volumes.
NGL and Other adjusted pre-tax income was $36 million in the
first quarter, compared with $86 million in the fourth quarter. The
decrease was mainly due to higher operating costs resulting from
the winter storms.
The company’s equity investment in DCP Midstream, LLC generated
first-quarter adjusted pre-tax income of $34 million, a $7 million
decrease from the prior quarter, resulting from the winter
storms.
Chemicals
Millions of Dollars
Pre-Tax Income
Adjusted Pre-Tax
Income
Q1 2021
Q4 2020
Q1 2021
Q4 2020
Olefins and Polyolefins
$
145
204
174
216
Specialties, Aromatics and Styrenics
26
15
27
13
Other
(17)
(26)
(17)
(26)
Chemicals
$
154
193
184
203
The Chemicals segment reflects Phillips 66’s equity investment
in Chevron Phillips Chemical Company LLC (CPChem). Chemicals
first-quarter 2021 pre-tax income was $154 million, compared with
$193 million in the fourth quarter of 2020. Chemicals results in
the first quarter included a reduction to equity earnings of $30
million for maintenance and repair costs resulting from the winter
storms. Fourth-quarter results included a reduction to equity
earnings of $21 million for pension settlement expense and $1
million of hurricane-related costs, partially offset by a $12
million benefit from lower-of-cost-or-market inventory
adjustments.
CPChem’s Olefins and Polyolefins (O&P) business contributed
$174 million of adjusted pre-tax income in the first quarter,
compared with $216 million in the fourth quarter. The $42 million
decrease was primarily due to winter storm impacts, which resulted
in decreased production and higher utility costs. These items were
partially offset by higher margins primarily due to tight supplies,
low inventory levels and continued strong demand. Global O&P
utilization was 79% for the quarter.
CPChem’s Specialties, Aromatics and Styrenics (SA&S)
business contributed first-quarter adjusted pre-tax income of $27
million, compared with $13 million in the fourth quarter. The
increase primarily reflects improved margins.
Refining
Millions of Dollars
Pre-Tax Loss
Adjusted Pre-Tax Loss
Q1 2021
Q4 2020
Q1 2021
Q4 2020
Refining
$
(1,040)
(1,113)
(1,026)
(1,094)
Refining had a first-quarter 2021 pre-tax loss of $1.0 billion,
compared with a pre-tax loss of $1.1 billion in the fourth quarter
of 2020. First-quarter results included $14 million of maintenance
and repair costs resulting from the winter storms. Fourth-quarter
results included $22 million of hurricane-related costs and $3
million of pension settlement expense, partially offset by $6
million of favorable U.K. R&D credits.
Refining had an adjusted pre-tax loss of $1.0 billion in the
first quarter, compared with an adjusted pre-tax loss of $1.1
billion in the fourth quarter. Higher realized margins in the first
quarter were largely offset by increased turnaround costs, as well
as higher utilities resulting from the winter storms. First-quarter
realized margins were $4.36 per barrel, up from $2.18 in the prior
quarter, due to an increase in market crack spreads and the sale of
electricity to help meet demand in the Texas market, partially
offset by lower product differentials and higher RIN costs.
Pre-tax turnaround costs for the first quarter were $192
million, compared with fourth-quarter costs of $76 million. Crude
utilization rate was 74% in the first quarter, up from 69% in the
fourth quarter. Clean product yield was 82% in the first
quarter.
Marketing and Specialties
Millions of Dollars
Pre-Tax Income
Adjusted Pre-Tax
Income
Q1 2021
Q4 2020
Q1 2021
Q4 2020
Marketing and Other
$
211
180
211
181
Specialties
79
52
79
40
Marketing and Specialties
$
290
232
290
221
Marketing and Specialties (M&S) first-quarter 2021 pre-tax
income was $290 million, compared with $232 million in the fourth
quarter of 2020. Fourth-quarter results included a $14 million
benefit to equity earnings from a lower-of-cost-or-market inventory
adjustment, partially offset by $2 million of hurricane-related
costs and $1 million of pension settlement expense.
Adjusted pre-tax income for Marketing and Other was $211 million
in the first quarter, an increase of $30 million from the fourth
quarter. The increase was due to higher domestic margins, partially
offset by lower international margins. Refined product exports in
the first quarter were 204,000 barrels per day (BPD).
Specialties generated first-quarter adjusted pre-tax income of
$79 million, up from $40 million in the fourth quarter, largely due
to improved base oil and finished lubricant margins.
Corporate and Other
Millions of Dollars
Pre-Tax Loss
Adjusted Pre-Tax Loss
Q1 2021
Q4 2020
Q1 2021
Q4 2020
Corporate and Other
$
(251)
(226)
(251)
(235)
Corporate and Other first-quarter 2021 pre-tax costs were $251
million, compared with pre-tax costs of $226 million in the fourth
quarter of 2020. Fourth-quarter pre-tax costs included a $9 million
gain on an asset sale.
The $16 million increase in Corporate and Other adjusted pre-tax
costs in the first quarter was mainly driven by timing of
charitable contributions and environmental expenses, as well as
lower capitalized interest.
Financial Position, Liquidity and Return of Capital
Phillips 66 generated $271 million in cash from operations in
the first quarter of 2021, including $502 million of cash
distributions from equity affiliates. Excluding working capital
impacts, operating cash flow was $173 million.
During the quarter, Phillips 66 funded $331 million of capital
expenditures and investments and paid $394 million in dividends.
The company also repaid $500 million of floating rate senior notes
upon maturity.
As of March 31, 2021, Phillips 66 had $6.7 billion of liquidity,
reflecting $1.4 billion of cash and cash equivalents and
approximately $5.3 billion of total committed capacity under
revolving credit facilities. Consolidated debt was $15.4 billion at
March 31, 2021, including $3.9 billion at Phillips 66 Partners
(PSXP). The company’s consolidated debt-to-capital ratio was 43%
and its net debt-to-capital ratio was 41%. Excluding PSXP, the
debt-to-capital ratio was 39% and the net debt-to-capital ratio was
36%.
Strategic Update
The South Texas Gateway Terminal commissioned additional storage
capacity, bringing total capacity to 8.6 million barrels and
marking completion of the final construction phase. The marine
export terminal has two deepwater docks with up to 800,000 BPD of
export capacity. Phillips 66 Partners owns a 25% interest in the
terminal.
Phillips 66 Partners continued construction of the C2G Pipeline,
a 16 inch ethane pipeline that will connect its Clemens Caverns
storage facility to petrochemical facilities in Gregory, Texas,
near Corpus Christi, Texas. The project is backed by long-term
commitments and is expected to be completed in mid-2021.
At the Sweeny Hub, Phillips 66 plans to resume construction of
the fourth fractionator in the second half of 2021. Upon completion
of the 150,000-BPD Frac 4, the Sweeny Hub will have 550,000 BPD of
fractionation capacity. The fractionators are supported by
long-term customer commitments.
In Chemicals, CPChem and Qatar Petroleum are jointly pursuing
development of petrochemical facilities on the U.S. Gulf Coast and
in Ras Laffan, Qatar. CPChem is closely monitoring economic
developments and expects a final investment decision for its U.S.
Gulf Coast project in 2022.
CPChem is advancing optimization and debottlenecking
opportunities. This includes approved projects at its Cedar Bayou
facility in Baytown, Texas, that will increase production capacity
of ethylene and polyethylene. In addition, CPChem is pursuing
expansion of its normal alpha olefins capacity.
Phillips 66 is advancing its plans at the San Francisco Refinery
in Rodeo, California, to meet the growing demand for renewable
fuels. In April, the company completed its diesel hydrotreater
conversion, which will ramp up to 8,000 BPD (120 million gallons
per year) of renewable diesel production by the third quarter of
2021. Subject to permitting and approvals, full conversion of the
refinery is expected in early 2024. Upon completion, the facility
will have over 50,000 BPD (800 million gallons per year) of
renewable fuel production capacity. The conversion is expected to
reduce the facility’s greenhouse gas emissions by 50% and help
California meet its lower-carbon objectives.
Phillips 66 is increasing its focus on lower-carbon initiatives
across the company, including the creation of an Emerging Energy
group early this year and ongoing research in its Energy Research
and Innovation organization. New initiatives this year include:
- An investment in Shell Rock Soy Processing, a joint venture
that plans to construct a new soybean-processing facility in Iowa.
The project is expected to be completed in late 2022. The company
will purchase 100% of the soybean oil production.
- A memorandum of understanding with Southwest Airlines to
commercialize sustainable aviation fuel.
- A technical collaboration with Faradion, a leader in sodium-ion
battery technology, to develop lower-cost and higher-performing
anode materials for sodium-ion batteries.
Six Phillips 66 refineries were recognized by the American Fuel
and Petrochemical Manufacturers (AFPM) for exemplary 2020 safety
performance, including the Lake Charles, Ponca City and Santa Maria
refineries, which received Distinguished Safety Awards. This is the
highest annual safety award the industry recognizes and the fifth
year in a row that the company's refineries have received this
recognition.
In Midstream, Phillips 66 was awarded the American Petroleum
Institute (API) Distinguished Pipeline Safety Award for Large
Operators. This is the highest recognition by API for the midstream
industry.
In Chemicals, AFPM selected CPChem’s Conroe, Orange and Port
Arthur facilities as recipients of the Elite Silver Safety Award
for exemplary 2020 safety performance.
Investor Webcast
Later today, members of Phillips 66 executive management will
host a webcast at noon EDT to discuss the company’s first-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
(Loss)
Millions of Dollars
2021
2020
Q1
Q4
Q1
Midstream
$
76
223
(702)
Chemicals
154
193
169
Refining
(1,040)
(1,113)
(2,261)
Marketing and Specialties
290
232
513
Corporate and Other
(251)
(226)
(197)
Pre-Tax Loss
(771)
(691)
(2,478)
Less: Income tax benefit
(132)
(197)
(51)
Less: Noncontrolling interests
15
45
69
Phillips 66
$
(654)
(539)
(2,496)
Adjusted Earnings
(Loss)
Millions of Dollars
2021
2020
Q1
Q4
Q1
Midstream
$
276
323
460
Chemicals
184
203
193
Refining
(1,026)
(1,094)
(401)
Marketing and Specialties
290
221
488
Corporate and Other
(251)
(235)
(197)
Pre-Tax Income (Loss)
(527)
(582)
543
Less: Income tax expense (benefit)
(84)
(149)
24
Less: Noncontrolling interests
66
74
69
Phillips 66
$
(509)
(507)
450
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
integral to the portfolio. Headquartered in Houston, the company
has 14,200 employees committed to safety and operating excellence.
Phillips 66 had $55 billion of assets as of March 31, 2021. 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,” “continues,” “intends,” “will,” “would,”
“objectives,” “goals,” “projects,” “efforts,” “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
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 continuing effects of the COVID-19 pandemic 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 like 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; 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; the inability to
comply with governmental regulations or make capital expenditures
to maintain compliance; limited access to capital or significantly
higher cost of capital related to illiquidity or uncertainty in the
domestic or international financial markets; potential disruption
of our operations due to accidents, weather events, including as a
result of climate change, terrorism or cyberattacks; general
domestic and international economic and political developments
including armed hostilities, expropriation of assets, and other
political, economic or diplomatic developments, including those
caused by public health issues and international monetary
conditions and exchange controls; changes in governmental policies
relating to NGL, crude oil, natural gas, refined petroleum
products, or renewable fuels pricing, regulation or taxation,
including exports; changes in estimates or projections used to
assess fair value of intangible assets, goodwill and property and
equipment and/or strategic decisions with respect to our asset
portfolio that cause impairment charges; investments required, or
reduced demand for products, as a result of environmental rules and
regulations; changes in tax, environmental and other laws and
regulations (including alternative energy mandates); the operation,
financing and distribution decisions of equity affiliates we do not
control; the impact of adverse market conditions or other similar
risks to those identified herein affecting PSXP, as well as the
ability of PSXP to successfully execute its growth plans; 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 (loss),” “adjusted earnings
(loss) per share” and “adjusted pre-tax income (loss).” 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. This release also includes a
“debt-to-capital ratio excluding PSXP.” This non-GAAP measure is
provided to differentiate the capital structure of Phillips 66
compared with that of Phillips 66 Partners.
References in the release to total consolidated earnings (loss)
refer to net income (loss) attributable to Phillips 66. Effective
with the first quarter of 2021, refined product exports also
include refined products purchased by Phillips 66 for export. The
refined product export amounts on this basis in the fourth, third,
second and first quarters of 2020 were 157,000 BPD, 208,000 BPD,
176,000 BPD and 223,000 BPD, respectively.
Millions of Dollars
Except as Indicated
2021
2020
Q1
Q4
Q1
Reconciliation of Consolidated Loss to
Adjusted Earnings (Loss)
Consolidated Loss
$
(654)
(539)
(2,496)
Pre-tax adjustments:
Pending claims and settlements
—
—
(37)
Pension settlement expense
—
26
—
Impairments
198
96
3,006
Lower-of-cost-or-market inventory
adjustments
—
(26)
52
Certain tax impacts
—
(6)
—
Asset dispositions
—
(9)
—
Hurricane-related costs
—
28
—
Winter-storm-related costs
46
—
—
Tax impact of adjustments*
(48)
(23)
(75)
Other tax impacts
—
(25)
—
Noncontrolling interests
(51)
(29)
—
Adjusted earnings (loss)
$
(509)
(507)
450
Loss per share of common stock
(dollars)
$
(1.49)
(1.23)
(5.66)
Adjusted earnings (loss) per share of
common stock (dollars)†
$
(1.16)
(1.16)
1.02
Reconciliation of Segment Pre-Tax
Income (Loss) to Adjusted Pre-Tax Income (Loss)
Midstream Pre-Tax Income (Loss)
$
76
223
(702)
Pre-tax adjustments:
Impairments
198
96
1,161
Pension settlement expense
—
1
—
Lower-of-cost-or-market inventory
adjustments
—
—
1
Hurricane-related costs
—
3
—
Winter-storm-related costs
2
—
—
Adjusted pre-tax income
$
276
323
460
Chemicals Pre-Tax Income
$
154
193
169
Pre-tax adjustments:
Lower-of-cost-or-market inventory
adjustments
—
(12)
24
Pension settlement expense
—
21
—
Hurricane-related costs
—
1
—
Winter-storm-related costs
30
—
—
Adjusted pre-tax income
$
184
203
193
Refining Pre-Tax Loss
$
(1,040)
(1,113)
(2,261)
Pre-tax adjustments:
Pension settlement expense
—
3
—
Impairments
—
—
1,845
Certain tax impacts
—
(6)
—
Lower-of-cost-or-market inventory
adjustments
—
—
15
Hurricane-related costs
—
22
—
Winter-storm-related costs
14
—
—
Adjusted pre-tax loss
$
(1,026)
(1,094)
(401)
Marketing and Specialties Pre-Tax
Income
$
290
232
513
Pre-tax adjustments:
Lower-of-cost-or-market inventory
adjustments
—
(14)
12
Pending claims and settlements
—
—
(37)
Pension settlement expense
—
1
—
Hurricane-related costs
—
2
—
Adjusted pre-tax income
$
290
221
488
Corporate and Other Pre-Tax
Loss
$
(251)
(226)
(197)
Pre-tax adjustments:
Asset dispositions
—
(9)
—
Adjusted pre-tax loss
$
(251)
(235)
(197)
*We generally tax effect taxable
U.S.-based special items using a combined federal and state annual
statutory income tax rate of approximately 25%. 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.
†Q1 2020 is based on adjusted
weighted-average diluted shares outstanding of 442,302 thousand,
and 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
March 31, 2021
Debt-to-Capital Ratio
Phillips 66
Consolidated
PSXP*
Phillips 66 Excluding
PSXP
Total Debt
$
15,422
3,944
11,478
Total Equity
20,457
2,447
18,010
Debt-to-Capital Ratio
43
%
39
%
Total Cash
$
1,351
3
1,348
Net Debt-to-Capital Ratio
41
%
36
%
*PSXP’s third-party debt and Phillips 66’s
noncontrolling interests attributable to PSXP.
Millions of Dollars
Except as Indicated
2021
2020
Q1
Q4
Realized Refining Margins
Loss before income taxes
$
(1,040)
(1,113)
Plus:
Taxes other than income taxes
85
57
Depreciation, amortization and
impairments
217
224
Selling, general and administrative
expenses
42
42
Operating expenses
1,138
934
Equity in losses of affiliates
122
122
Other segment expense, net
—
2
Proportional share of refining gross
margins contributed by equity affiliates
129
65
Special items:
Certain tax impacts
—
(6)
Realized refining margins
$
693
327
Total processed inputs (thousands of
barrels)
143,057
133,752
Adjusted total processed inputs (thousands
of barrels)*
159,014
149,863
Loss before income taxes (dollars per
barrel)**
$
(7.27)
(8.32)
Realized refining margins (dollars per
barrel)***
$
4.36
2.18
*Adjusted total processed inputs include
our proportional share of processed inputs of an equity
affiliate.
**Loss 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/20210430005072/en/
Jeff Dietert (investors) 832-765-2297 jeff.dietert@p66.com
Shannon Holy (investors) 832-765-2297 shannon.m.holy@p66.com
Thaddeus Herrick (media) 855-841-2368
thaddeus.f.herrick@p66.com
Phillips 66 (NYSE:PSX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Phillips 66 (NYSE:PSX)
Historical Stock Chart
From Apr 2023 to Apr 2024