Investors benefit as Phillips 66 shares tax relief
Phillips 66 reported flat earnings Friday but consoled investors with a $3.5 billion share buyback in the first quarter, a transaction that came after the sweeping U.S. tax overhaul padded its earnings.
The Houston refiner, chemical maker and pipeline operator repurchased 7 percent of its outstanding shares in a single transaction — a rare feat in the U.S. energy industry — and executives noted the company has returned $20 billion to shareholders in dividends and buybacks since its spinoff from ConocoPhillips in 2012.
“To put this in perspective, our market cap at inception was $20 billion,” Phillips 66 CEO Greg Garland told investors.
Share buybacks provide a way for companies to boost stock prices, which benefits shareholders. All told, Phillips 66 has repurchased about 30 percent of its shares in its six-year history.
Phillips 66 said it earned a profit of $524 million, or $1.07 per share, in the first three months of 2018, down from $535 million, or $1.02 per share, in the same period last year.
It spent $3.8 billion on share repurchases and dividends in the first quarter, buying 37 million shares. Its fourthquarter earnings of $3.2 billion were padded by a $2.7 billion corporate tax cut benefit.
The company said it spent $171 million on growth projects and a total of $328 million on capital expenditures and investments. It’s expanding its Beaumont terminal with tanks that can store 3.5 million barrels of oil, and is building several pipelines, including the recently announced Gray Oak Pipeline, which will extend from the Permian Basin to markets in South Texas and should be operational by the fourth quarter of 2019.
The company’s midstream segment, which transports and stores oil and gas, saw its income rise to $233 million in the first quarter, up from $139 million in the October-December period.
Phillips 66 ’s chemicals business rose sharply, bringing in $232 million, compared with $27 million in the fourth quarter. The refining segment came in at $91 million, down from $371 million.