Phillips 66 (PSX) Q3 Earnings Beat on Higher Refining Margins

Phillips 66 PSX reported third-quarter 2022 adjusted earnings per share of $6.46, comfortably beating the Zacks Consensus Estimate of $4.98. The bottom line also improved from $3.18 per share in the year-ago quarter.

Strong quarterly earnings can be attributed to robust refining margins worldwide.

Phillips 66 Price, Consensus and EPS Surprise

Phillips 66 price-consensus-eps-surprise-chart | Phillips 66 Quote

Segmental Results

Midstream:

The segment generated adjusted pre-tax quarterly earnings of $645 million, up from $642 million in the year-ago quarter. Higher contributions from NGL and others aided the segment.

Chemicals:

The segment recorded adjusted pre-tax earnings of $135 million, down from $634 million in the prior-year quarter. Lower contributions from the olefins and polyolefins business primarily hurt the segment.

Refining:

The segment reported adjusted pre-tax earnings of $2,827 million, significantly up from $184 million in the prior-year quarter. The segment was backed by increased volumes and realized margins.

The segment’s realized refining margins worldwide improved to $26.58 per barrel from the year-ago quarter’s $8.57. The same in the Central Corridor and Atlantic Basin/Europe increased to $38.76 and $19.22 per barrel from the year-ago levels of $12.47 and $9.27, respectively.

In the Gulf Coast, the metric registered an improvement to $21.29 per barrel from $5.75 in the prior-year quarter. The West Coast witnessed an increase in margins from $7.46 per barrel in the year-ago quarter to $28.64 in the September-end quarter of 2022.

Marketing and Specialties

Pre-tax earnings increased to $847 million from $547 million in the year-ago quarter.

While realized marketing fuel margins in the United States increased to $2.49 per barrel from the year-ago quarter’s $2.29 per barrel, the same in the international markets increased to $12.40 from the year-ago level of $6.75.

Financial Condition

For the reported quarter, Phillips 66 generated $3.1 billion of net cash from operations. Its capital expenditure and investments totaled $735 million. It paid out dividends of $466 million in the reported quarter.

As of Sept 30, 2022, cash and cash equivalents were $3.7 billion. The company’s total liquidity was $10.5 billion. Total debt was $17.7 billion, reflecting a consolidated debt to capitalization of 35%.

Zacks Rank & Other Stocks to Consider

Phillips 66 currently carries a Zacks Rank #2 (Buy).

Investors interested in the energy sector might look at the following companies that also presently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EQT Corporation EQT reported third-quarter adjusted earnings from continuing operations of $1.04 per share, beating the Zacks Consensus Estimate of 99 cents. The strong quarterly earnings were driven by the higher realization of commodity prices.

EQT Corp is expected to see an earnings surge of 370% in 2022. Also, EQT expects to generate a free cash flow of $1.9-$2 billion this year, suggesting a massive improvement from $934.7 million reported last year.

Liberty Energy Inc. LBRT announced third-quarter 2022 earnings per share of 78 cents, which handily beat the Zacks Consensus Estimate of 63 cents. The outperformance reflects the impacts of strong execution, higher activity and increased service pricing, which more than offset rising costs.

As of Sep 30, 2022, Liberty had $298 million of available liquidity, including $24 million of cash on hand and supported by the revolving credit facility. LBRT’s debt-to-capitalization stands at just 15.2% compared with most peers that are hugely burdened with debts.

TotalEnergies SE TTE reported third-quarter 2022 operating earnings of $3.83 per share, which improved 117.6% from the year-ago figure of $1.76 per share. The improvement resulted from an increase in commodity prices.

TotalEnergies is managing long-term debt quite efficiently and trying to keep the same at manageable levels. Its debt to capital has been declining over the past few years. Net debt to capital was 9.5% at the end of third-quarter 2022, down from 22.1% at the end of third-quarter 2021.

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