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What’s Expected for Phillips 66’s 1Q18 Results

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PSX’s estimated and actual performance in 4Q17

Phillips 66 (PSX) is anticipated to post its 1Q18 results on April 27, 2018. Before we proceed with its 1Q18 estimates, let’s review its 4Q17 performance.

In 4Q17, PSX’s revenue missed Wall Street analysts’ estimate by ~2%. However, its adjusted EPS (earnings per share) of $1.10 surpassed analysts’ estimate of $0.90, and its refining margins expanded YoY (year-over-year). The company’s EPS were a whopping 7x higher than its 4Q16 adjusted EPS.

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PSX’s adjusted net income, attributable to shareholders, rose from $83 million in 4Q16 to $548 million in 4Q17. PSX’s earnings were adjusted for tax benefits of ~$2.7 billion in 4Q17. The increase in PSX’s adjusted earnings was led mainly by a YoY rise in its adjusted refining earnings, and its adjusted midstream earnings supported its overall earnings growth. However, its adjusted marketing earnings and adjusted chemical earnings fell YoY in 4Q17.

Phillips 66’s 1Q18 estimates

Analysts expect Phillips 66 to post EPS of $0.90 in 1Q18, 59% higher than its 1Q17 adjusted EPS, though 17% lower than its 4Q17 adjusted EPS. PSX’s revenue is estimated to be ~$29.5 billion in 1Q18, ~24% higher than its 1Q17 revenue.

In 1Q18, average regional refining cracks have shown mixed trends. While Andeavor’s (ANDV) and Valero Energy’s (VLO) refining cracks have expanded YoY in 1Q18, Marathon Petroleum’s (MPC) and HollyFrontier’s (HFC) have narrowed. The benchmark crack indicator, the US Gulf Coast WTI (West Texas Intermediate) 3-2-1, has widened. We’ll discuss refining margins’ outlook in the next part of this series.

Peers’ performance in 1Q18

Valero Energy’s EPS are expected to rise 53% YoY in 1Q18. PBF Energy (PBF) and HollyFrontier, which posted losses in 1Q17, are expected to post positive EPS in 1Q18. Also, Marathon Petroleum’s and Andeavor’s EPS are expected to rise 508% and 46%, respectively.

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