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Phillips 66: Q3 EPS Beats Estimate, Refining Margins Surge

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Third-quarter estimated and actual performances

Phillips 66 (PSX) posted its third quarter of 2018 results on October 26. Let’s look at its performance compared to the estimates.

Revenues rose ~16% YoY (year-over-year) to $30 billion in the third quarter. Adjusted EPS was $3.10, which surpassed Wall Street analysts’ estimate of $2.50. Adjusted EPS rose 87% YoY.

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Earnings review

Phillips 66’s adjusted net income, attributable to its shareholders, rose from $0.9 billion in Q3 2017 to $1.5 billion in Q3 2018. Its adjusted earnings rose due to an across-the-board rise in segmental earnings. Adjusted net earnings from its Midstream, Chemicals, Refining, and Marketing segments rose YoY in the third quarter.

The Refining segment’s net earnings rose 75% YoY to $1 billion in the third quarter. That was due to higher refining margins. Phillips 66’s refining margins rose 27% YoY to $13.40 per barrel in the third quarter. Central Corridor’s refining margin rose the most compared to other regions.

Phillips 66’s adjusted Midstream net income rose 164% YoY to $261 million in the third quarter. Its adjusted Chemical earnings and Marketing earnings increased 37% YoY each in the quarter.

In the third quarter, Phillips 66 returned $775 million to its shareholders in the form of dividends ($370 million) and share repurchases ($405 million).

Peer performances

Valero Energy’s (VLO) earnings rose 5% YoY in the third quarter. The earnings for HollyFrontier (HFC) and Delek US Holdings (DK) are estimated to rise 56% YoY and 151% YoY, respectively, in the third quarter. However, earnings for Marathon Petroleum (MPC) and PBF Energy (PBF) are expected to fall 3% YoY and 28% YoY, respectively, in the third quarter.

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