Phillips 66 (PSX) posted adjusted fourth-quarter 2014 earnings of $1.63 per share, beating the Zacks Consensus Estimate of $1.33 by 22.6%. The beat came from higher refined volumes, higher throughput fees alongside record earnings from chemicals business.
The quarterly earnings also compare favorably with $1.34 per share earned a year ago.
Full-year earnings came in at $6.62 per share, up 12.4% from year-earlier earnings of $5.89. The earnings were also above the Zacks Consensus Estimate of $6.28.
Segment Results
Midstream
The segment generated adjusted quarterly earnings of $97 million compared with $115 million in the year-ago quarter.
Chemicals
The segment generated adjusted earnings of $270 million against $299 million in the comparable quarter last year. Higher planned maintenance costs led to the decrease.
Refining
The segment generated adjusted earnings of $322 million compared with earnings of $558 million in the prior-year quarter. The dismal results can be attributed to lower realized refining margins which, in turn, resulted from weak gasoline crack spreads and narrowing crude differentials. During the quarter, Phillips 66’s refining utilization was 95% and clean product yield was 84%.
Marketing and Specialties (M&S)
Segmental earnings were $324 million, up $259 million from the comparable quarter last year. The increase was mainly due to the reinstatement of biodiesel blending tax credits as well as strong margins.
Financial Condition
In the reported quarter, Phillips 66 generated $872 million of cash from operations. It also returned capital worth $807 million to shareholders. Of this, $275 million was disbursed as dividends while $532 million was used to repurchase 7 million shares of common stock.
As of Dec 31, 2014, cash and cash equivalents were $5.2 billion alongside $8.7 billion of debt. The company’s debt-to-capitalization ratio was 28% and return on capital employed was 14%.
Zacks Rank
Phillips 66 currently carries a Zacks Rank #3 (Hold). Better-ranked players like in the same space include Cheniere Energy Partners LP (CQP), Transocean Partners LLC (RIGP) and Phillips 66 Partners LP (PSXP). Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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