Exxon Mobil Corporation (XOM)

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Exxon Mobil (XOM)

Q4 2011 Earnings Call

January 31, 2012 11:00 am ET

Executives

David S. Rosenthal - Vice President of Investor Relations and Secretary

Analysts

Arjun N. Murti - Goldman Sachs Group Inc., Research Division

Paul Sankey - Deutsche Bank AG, Research Division

Faisel Khan - Citigroup Inc, Research Division

Edward Westlake - Crédit Suisse AG, Research Division

Paul Y. Cheng - Barclays Capital, Research Division

Douglas George Blyth Leggate - BofA Merrill Lynch, Research Division

Douglas Terreson - ISI Group Inc., Research Division

Robert A. Kessler - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Jason Gammel - Macquarie Research

Allen Good - Morningstar Inc., Research Division

Pavel Molchanov - Raymond James & Associates, Inc., Research Division

Philip Weiss - Argus Research Company

John P. Herrlin - Societe Generale Cross Asset Research

Katherine Lucas Minyard - JP Morgan Chase & Co, Research Division

Mark Gilman - The Benchmark Company, LLC, Research Division

Presentation

Operator

Good day, and welcome to this Exxon Mobil Corporation Fourth Quarter 2011 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks, I'd like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. David Rosenthal. Please go ahead, sir.

David S. Rosenthal

Good morning, and welcome to ExxonMobil's Fourth Quarter Earnings Call and Webcast. The focus of this call is ExxonMobil's financial and operating results for the fourth quarter and full year of 2011. I will refer to the slides that are available through the Investors section of our website.

Before we go further, I would like to draw your attention to our customary cautionary statement shown on Slide 2. Moving to Slide 3, I'll start with an overview of some of the external factors impacting our results. Global economic recovery was slower in the fourth quarter, largely due to weakness in Europe. GDP improvement in the United States and Japan was tempered by negative growth in the European Union. U.S. real GDP growth was 2.8%, improving from 1.8% in the third quarter, while Japan delivered another quarter of positive growth as post-earthquake recovery continues. In general, non-OECD growth remains robust, even with the slight decline in growth from China. Energy markets were mixed in the fourth quarter. Crude oil and non-U.S. natural gas prices remain strong, while worldwide industry refining margins saw significant declines, as did commodity chemicals margins.

Turning now to the fourth quarter financial results as shown on Slide 4. ExxonMobil's fourth quarter 2011 earnings, excluding special items, were $9.4 billion, an increase of $150 million from the fourth quarter of 2010. Our effective tax rate for the quarter was 47%. Earnings per share for the quarter, excluding special items, were $1.97, up $0.12 from a year ago. The corporation distributed more than $7.2 billion to shareholders in the fourth quarter through dividends and share purchases to reduce shares outstanding. Of that total, $5 billion was utilized to purchase shares. Share purchases to reduce shares outstanding are expected to be $5 billion in the first quarter of 2012. CapEx in the fourth quarter was $10 billion, consistent with the fourth quarter of 2010.

We continue to invest in robust projects throughout the business cycle, all of which served to help meet global demand for crude oil, natural gas and finished products, while supporting economic growth, including job creation. Our cash generation remains strong with $17.6 billion in cash flow from operations and asset sales, including $6.9 billion associated with asset sales. At the end of the fourth quarter 2011, cash and marketable securities totaled $13.1 billion, and debt was $17 billion.

The next slide provides additional detail on fourth quarter sources and uses of funds. Over the quarter, cash and marketable securities increased from $11.3 billion to $13.1 billion, including cash on deposit associated with potential asset sales, which have not yet closed and, therefore, are not reflected in earnings. The combined impact of strong earnings, depreciation expense, higher working capital and the benefit of our ongoing asset management program yielded $17.6 billion of cash flow from operations and asset sales. Uses included additions to plant, property and equipment, or PP&E, of $8.6 billion and shareholder distributions of $7.2 billion. Additional financing and investing activities had no net impact in the quarter.

Moving now to the full year results as shown on Slide 6. ExxonMobil's full year 2011 earnings, excluding special items, were $41.1 billion, up $10.6 billion from 2010. Earnings per share for the year, excluding special items, were $8.42, up $2.20 from 2010. The corporation distributed $29 billion to shareholders in 2011 through dividends and share purchases to reduce shares outstanding. Of that total, $20 billion was utilized to purchase shares. CapEx in 2011 was $36.8 billion, up $4.5 billion from 2010, mainly due to acquisitions of unconventional assets, including the Phillips companies, and continued progress on our world class project portfolio, including the Kearl oil sands project. Our cash generation was very strong with $66.5 billion in cash flow from operations and asset sales, including $11.1 billion associated with asset sales.

Moving now to the full year cash flow statement as shown on Slide 7. During the year, cash and marketable securities increased from $8.5 billion to $13.1 billion, including cash on deposit associated with potential asset sales which have not yet closed and, therefore, are not reflected in earnings. The combined impact of strong earnings, depreciation expense, higher working capital and the benefit of our ongoing asset management program yielded $66.5 billion of cash flow from operations and asset sales. Uses included additions to plant, property and equipment, or PP&E, of $31 billion and shareholder distributions of $29 billion. Additional financing and investing activities decreased our cash and marketable securities by $1.9 billion.

Moving on to Slide 8 and a review of our segmented results. ExxonMobil's fourth quarter 2011 earnings of $9.4 billion increased $150 million from the fourth quarter of 2010. Upstream earnings increased $1.3 billion, while Downstream earnings decreased by $725 million. Chemical earnings were down $524 million. Lower corporate and financing expenses increased earnings $50 million versus the fourth quarter of 2010.

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