Analysis of Debt
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- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2012
- Current Ratio since 2012
- Price to Earnings (P/E) since 2012
- Price to Sales (P/S) since 2012
- Aggregate Accruals
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Total Debt (Carrying Amount)
Phillips 66, balance sheet: debt
US$ in millions
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Short-term debt | ||||||
| Long-term debt | ||||||
| Total debt (carrying amount) |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The analysis of the annual reported debt data reveals several notable trends and changes over the five-year period from 2015 to 2019.
- Short-term debt
- The short-term debt figures exhibit significant volatility during the observed period. Initially, the reported value was 44 million USD at the end of 2015, followed by a sharp increase to 550 million USD in 2016. This was succeeded by a decline to 41 million USD in 2017, a modest rise to 67 million USD in 2018, and another substantial increase to 547 million USD by the end of 2019. This fluctuation suggests variability in short-term financing activity, possibly influenced by changes in working capital management or short-term liquidity requirements.
- Long-term debt
- The long-term debt demonstrates a consistent upward trend throughout the period. Starting at 8,843 million USD in 2015, it increased steadily each year, reaching 9,588 million USD in 2016, 10,069 million USD in 2017, 11,093 million USD in 2018, and finally 11,216 million USD in 2019. This gradual increase highlights a progressive reliance on long-term financing, which may reflect strategic capital investment or refinancing of existing obligations over time.
- Total debt (carrying amount)
- Total debt, encompassing both short-term and long-term components, follows a pattern consistent with the changes in its constituent parts. The total debt rose from 8,887 million USD in 2015 to 10,138 million USD in 2016, then slightly declined to 10,110 million USD in 2017. Afterward, it increased steadily to 11,160 million USD in 2018 and to 11,763 million USD in 2019. The relatively small decline in 2017 appears to be influenced mainly by the reduction in short-term debt observed in that year. Overall, the total debt growth suggests an expanding capital structure, driven primarily by increases in long-term borrowing.
In summary, while the short-term debt exhibits marked fluctuations, the consistent rise in long-term debt underlies a trend of increased overall indebtedness. This evolving debt profile may indicate strategic financing decisions aimed at balancing liquidity needs with long-term investment goals.
Total Debt (Fair Value)
| Dec 31, 2019 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Floating-rate debt | |
| Fixed-rate debt, excluding finance leases | |
| Finance leases | |
| Software obligations | |
| Other | |
| Total debt (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2019-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Phillips 66, interest costs incurred
US$ in millions
| 12 months ended: | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest and debt expense | |||||||||||
| Interest capitalized | |||||||||||
| Interest and debt expense incurred |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Interest and Debt Expense
- The interest and debt expense exhibited an overall upward trend from 2015 to 2018, increasing from 310 million USD to 504 million USD. This represents a significant rise over the four-year period. However, in 2019, there was a noticeable decline to 458 million USD, indicating a reduction in interest and debt costs during that year.
- Interest Capitalized
- Interest capitalized showed a fluctuating pattern throughout the period. It started at 106 million USD in 2015, decreased sharply to 81 million USD in 2016, and plunged further to 15 million USD by 2017. In 2018, the capitalized interest slightly increased to 17 million USD, followed by a marked recovery to 77 million USD in 2019. This suggests variability in the amount of interest added to asset costs over time.
- Interest and Debt Expense Incurred
- The interest and debt expense incurred, representing the sum of the two previously mentioned items, remained relatively stable from 2015 to 2017, with a slight increase from 416 million USD to 453 million USD. In 2018, it rose to 521 million USD, reaching the highest point in the five-year period. In 2019, the expense incurred increased marginally to 535 million USD, despite the decline in reported interest and debt expense, primarily due to the rise in capitalized interest.
- Overall Analysis
- The data indicates that while direct interest and debt expenses peaked in 2018 and declined in 2019, the increasing interest capitalization in 2019 contributed to maintaining the total interest and debt expense incurred at a high level. This shift suggests possible changes in accounting practices or investment activities impacting the allocation of interest costs. The variable capitalized interest trend may reflect adjustments in capital expenditure or asset capitalization policies over the analyzed period.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest and debt expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest and debt expense incurred
= ÷ =
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio showed significant fluctuations over the five-year period. Starting at a high level of 20.5 in 2015, it sharply declined to 7.48 in 2016. Subsequently, the ratio experienced a moderate increase to 9.12 in 2017, followed by a substantial rise to 15.77 in 2018. The value then decreased again to 10.12 in 2019. This pattern suggests variability in the company's ability to cover interest expenses, with a notable dip in 2016 and improvements thereafter, albeit not reaching the initial 2015 level by the end of the period.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio mirrors the trend of the unadjusted ratio but consistently reflects lower values, indicating the effect of capitalized interest on the company's interest coverage. Beginning at 15.27 in 2015, the ratio dropped sharply to 6.04 in 2016. It then increased to 8.81 in 2017 and further to 15.26 in 2018, before declining to 8.67 in 2019. The trend highlights fluctuations in coverage capacity, with the lowest point in 2016 and a partial recovery over the next two years, followed by a decline in the final year observed.
- Overall Insights
- Both ratios demonstrate marked volatility during the timeframe, with the lowest coverage observed in 2016 and the highest levels reached in 2018. The presence of capitalized interest reduces the coverage ratios, emphasizing the impact of such accounting adjustments. The fluctuations suggest changing financial performance regarding interest expense coverage, with possible influences from variations in earnings or interest expenses. The partial recovery in 2017 and 2018 indicates improving financial health during those years, though not consistently maintained through 2019.