Phillips 66 (NYSE:PSX)

Current Income Tax Expense

The current income tax expense displays notable volatility over the five-year period. It begins positively at 1,281 million USD at the end of 2015, experiences a significant negative value of -63 million USD in 2016, indicating a tax benefit or refund during that year. It then returns to positive figures in 2017 and 2018, reaching a high of 1,320 million USD in 2018 before declining to 619 million USD in 2019. This pattern suggests fluctuations in taxable income or changes in tax payments and settlements.

Deferred Income Tax Expense

The deferred income tax expense demonstrates even greater variability, with both positive and negative values. Starting at 483 million USD in 2015, it increases to 610 million USD in 2016 before plummeting sharply to a large negative value of -1,889 million USD in 2017. In the following years, it returns positive but lower in magnitude, at 252 million USD in 2018 and 182 million USD in 2019. This indicates significant deferred tax asset or liability adjustments, particularly the substantial reversal or recognition in 2017.

Total Income Tax Expense (Benefit)

The total income tax expense, which combines current and deferred components, follows a somewhat irregular trend. Starting high at 1,764 million USD in 2015, it drops significantly to 547 million USD in 2016 and turns to a large tax benefit of -1,693 million USD in 2017, highlighting the impact of the deferred tax adjustments. It rebounds to 1,572 million USD in 2018 and then decreases to 801 million USD in 2019. This reflects considerable tax expense fluctuations likely influenced by underlying financial performance and tax-related accounting events.

Federal Statutory Income Tax Rate

The federal statutory income tax rate remained steady at 35% for 2015 through 2017. A significant reduction to 21% occurred in 2018 and remained unchanged in 2019, reflecting a major tax reform impact.

State Income Tax, Net of Federal Benefit

This rate fluctuated slightly across the periods, starting at 2.5% in 2015, dropping substantially to 0.6% in 2016, and then stabilizing around 2.1%-2.2% during 2017 to 2019. The volatility suggests varying state tax impacts and adjustments related to federal tax changes.

Foreign Rate Differential

The foreign rate differential was negative throughout the periods, indicating lower foreign tax rates compared to the domestic rate. The differential was most pronounced in 2016 at -6.9% but gradually narrowed to -0.7% by 2019, suggesting a convergence or increased foreign tax obligations over time.

Noncontrolling Interests

Noncontrolling interests consistently contributed a negative adjustment to the tax rate, with values ranging from -0.2% to -1.5%. The lowest impact was observed in 2015, increasing in magnitude intermittently, reaching -1.5% in 2019, indicating a growing share of income attributable to minority interests over time.

Change in Valuation Allowance

This component mostly stayed near zero, fluctuating slightly with a notable dip to -3.7% in 2016 and rising to 0.3% in 2019. These changes indicate minor adjustments to deferred tax assets valuation, reflecting evolving expectations about future tax benefits.

Federal Manufacturing Deduction

Data was sparse for this category, with a deduction of -1.3% in 2015 and a smaller deduction of -0.5% in 2017. The absence of values after 2017 suggests this benefit was phased out or no longer applicable in subsequent years.

Other Specific Tax Items

Several one-time or less frequent items, such as goodwill allocations, German tax legislation adjustments, and sale of foreign subsidiaries, appeared in earlier years with minor effects but were not present in later years. The 'Other' category varied from positive to negative impacts, ending at -1.1% in 2019, indicating miscellaneous tax effects that influenced the overall rate.

Effective Income Tax Rate Before Tax Cuts and Jobs Act

The effective tax rate before the Tax Cuts and Jobs Act showed a declining trend, from 29.2% in 2015 down to 20.2% in 2019, with a noticeable dip in 2018 at 20.6%, reflecting the combined effects of statutory rate changes and other tax items.

Tax Cuts and Jobs Act Impact

The Tax Cuts and Jobs Act introduced a substantial one-time tax rate adjustment of -76.5% in 2017, reflecting deferred tax adjustments related to legislative changes. This impact moderated sharply to 0.5% in 2018 and -1% in 2019, indicating the bulk of the adjustment was recognized in 2017.

Overall Effective Income Tax Rate

The overall effective tax rate mirrored the combined impact of statutory changes and the Tax Cuts and Jobs Act. It remained stable at approximately 29.2% in 2015 and 25% in 2016, dropped significantly to -47.6% in 2017 due to large deferred tax benefits, and then returned to more typical levels of slightly above 19% in 2018 and 2019.

Benefit plan accruals

The benefit plan accruals show a declining trend from 751 million USD in 2015 to 314 million USD in 2017, followed by a moderate increase to 460 million USD in 2019. This suggests an initial reduction in obligations related to employee benefits, with a subsequent upward adjustment in the later years.

Asset retirement obligations and accrued environmental costs

These obligations decreased steadily from 215 million USD in 2015 to 109 million USD in 2018, then slightly increased to 115 million USD in 2019. This indicates a general decline in environmental or retirement-related liabilities over the period with minor recent growth.

Loss and credit carryforwards

The values fluctuate with an increase from 227 million USD in 2015 to 261 million USD in 2016, followed by significant decreases to 54 million USD by 2019. This suggests that tax loss or credit utilization improved over time, reducing the carryforward amounts.

Other financial accruals and deferrals

There is high volatility in this category, with an increase from 175 million USD in 2015 to 188 million USD in 2016, then a sharp decline to 16 million USD in 2018, followed by a rise to 70 million USD in 2019. This reflects irregular fluctuations, possibly indicating changing financial contingencies or timing differences in accruals.

Inventory

Data for inventory is incomplete, but the available figures show small values of 10 million USD in 2017 and 28 million USD in 2019, suggesting relatively low inventory holdings or reporting inconsistencies.

Other (assets)

This category exhibits a substantial increase to 281 million USD in 2019 after relatively stable low levels in prior years. This sharp rise could indicate recognition of additional assets or reclassification in the latest period.

Deferred tax assets

These assets decreased notably from 1369 million USD in 2015 to 579 million USD in 2018 before rebounding to 1008 million USD in 2019. This pattern indicates initial reductions potentially linked to diminished future tax benefits, followed by recovery, possibly due to improved tax planning or profitability.

Valuation allowance

The valuation allowance shows a consistent decrease in negative value from -160 million USD in 2015 to -8 million USD in 2018, then slightly up to -22 million USD in 2019. This suggests a reduction in the doubtful collectability of deferred tax assets until 2018, with a small reversal in 2019.

Net deferred tax assets

Net deferred tax assets declined sharply from 1209 million USD in 2015 to 560 million USD in 2017, then stabilized around 571 million USD in 2018 and increased to 986 million USD in 2019. This trend aligns with the changes in deferred tax assets and valuation allowance, indicating a general contraction followed by partial recovery.

Properties, plants and equipment, and intangibles

The figures, presented as negatives, show decreasing absolute values from -4361 million USD in 2015 to -2942 million USD in 2017, then a slight increase in magnitude to -3297 million USD in 2019. This could denote asset disposals or impairments early on, followed by reinvestments or acquisitions increasing asset base.

Investment in joint ventures

Similarly recorded as negative values, these investments decreased in magnitude from -2442 million USD in 2016 to -1923 million USD in 2017, followed by gradual increases to -2137 million USD in 2019. This pattern suggests divestitures or write-downs initially, with some stabilizing transactions thereafter.

Investment in subsidiaries

The investments show wide fluctuations. The magnitude increased from -236 million USD in 2015 to -803 million USD in 2016, decreased to -594 million USD in 2017, then showed variability ending at -794 million USD in 2019. This indicates active management of subsidiary holdings, with acquisitions, disposals, or valuation changes affecting balances.

Inventory (negative values)

These entries reveal fluctuations between -176 million USD in 2015 and -66 million USD in 2018, with some missing data. The negative designations and inconsistent data imply adjustments or corrections rather than physical inventory stocks.

Other (liabilities)

Negative values persist between -24 million USD and -19 million USD until a large jump to -263 million USD in 2019. This sharp increase suggests recognition of new liabilities or reassessment of existing obligations late in the period.

Deferred tax liabilities

Deferred tax liabilities showed an increasing negative trend from -7089 million USD in 2015 to -7943 million USD in 2016, before improving to -5477 million USD in 2017, followed by a gradual increase to -6491 million USD in 2019. This indicates volatility in tax obligations, with a significant reduction in 2017 but increased exposures subsequently.

Net deferred tax assets (liabilities)

The net position fluctuates between -5880 million USD in 2015 and -6651 million USD in 2016, with an improvement to -4917 million USD in 2017, then deterioration to -5505 million USD in 2019. Overall, this persistent negative balance confirms the dominance of deferred tax liabilities over assets, reflecting a considerable deferred tax burden throughout the period.

The analysis of the financial data over the five-year period reveals notable trends in the tax-related assets and liabilities. Deferred tax assets, as reported, show a steady decline from 161 million US dollars at the end of 2015 to 48 million US dollars by the end of 2019. This decline suggests a reduction in the temporary differences or losses that can be utilized to offset future taxable income.

Conversely, deferred tax liabilities demonstrate a different pattern. Starting at 6,041 million US dollars in 2015, the liabilities increased to 6,743 million in 2016, followed by a significant decrease to 5,008 million in 2017. Subsequently, the deferred tax liabilities slightly rose again to 5,275 million in 2018 and to 5,553 million in 2019. This fluctuation indicates changes in the timing differences between accounting income and taxable income, possibly due to variations in asset valuations or tax regulations.

Overall, the reduction in deferred tax assets alongside the oscillating deferred tax liabilities reflects shifting tax positions over the years. The decreasing deferred tax assets may impact future profit and loss statements by limiting the extent of tax benefits available. Meanwhile, the sizable deferred tax liabilities suggest that the company has substantial future tax obligations arising from temporary differences, with some volatility observed during the period analyzed.

The financial data for the subject displays several noteworthy trends and patterns over the five-year period ending December 31, 2019, with distinctions between reported and adjusted figures.

Total Assets

Both reported and adjusted total assets show a consistent upward trend, increasing from approximately $48.6 billion (reported) and $48.4 billion (adjusted) in 2015 to about $58.7 billion (reported) and $58.7 billion (adjusted) in 2019. This reflects an overall growth of around 20% over the period, indicating expansion in asset base irrespective of accounting adjustments.

Total Liabilities

The reported total liabilities rose from about $24.6 billion in 2015 to $31.6 billion in 2019, representing an increase of almost 28%. Adjusted total liabilities also increased, though from a lower base: approximately $18.6 billion in 2015 to roughly $26.0 billion in 2019, marking a sharper relative increase of nearly 40%. The widening gap between reported and adjusted liabilities suggests significant accounting reclassifications or deferred tax effects impacting liabilities.

Stockholders’ Equity

Reported stockholders’ equity remained relatively stable over the period, ranging between roughly $22.4 billion and $25.1 billion, with a slight increase observed between 2016 and 2017 but little overall movement by 2019. In contrast, adjusted stockholders’ equity consistently grew from about $29.0 billion in 2015 to approximately $30.4 billion in 2019. The higher adjusted equity levels, compared to reported, imply that the adjustments favorably reclassify certain elements increasing equity, thus portraying a stronger capital base after income tax adjustments.

Net Income Attributable to Phillips 66

Reported net income exhibited volatility, peaking in 2017 and 2018 at approximately $5.1 billion and $5.6 billion respectively, but then declining to about $3.1 billion in 2019. The adjusted net income figures show a similar pattern but with less pronounced fluctuations, including a smoother increase from 2015 ($4.7 billion) to 2018 ($5.8 billion) and a more moderate decrease to around $3.3 billion in 2019. This indicates that deferred income tax adjustments may serve to moderate earnings variability, providing a more stable picture of profitability across years.

Overall, the data indicate growth in asset base and liabilities, with equity demonstrating greater stability and increase when adjustments are considered. Income figures are subject to considerable variation year-on-year but appear more consistent on an adjusted basis, suggesting that deferred income tax adjustments play a significant role in smoothing financial results and affecting the balance sheet structure.

Net Profit Margin

The reported net profit margin exhibits fluctuations over the period, starting at 4.27% in 2015, declining to 1.85% in 2016, then rising again to its peak at 5.02% in 2018, before dropping to 2.87% in 2019. The adjusted net profit margin follows a similar pattern but remains slightly higher than the reported figures in most years, suggesting that adjustments for deferred income tax have a modest positive impact on the profit margin.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios show similar trends, indicating consistent adjustment methods. The ratio declines from 2.04 in 2015 to 1.63 in 2016, recovers slightly to 1.88 in 2017, peaks again at 2.05 in 2018, and then decreases to 1.83 in 2019. This pattern suggests some variability in asset utilization efficiency, with a general decrease by the end of the period compared to the start.

Financial Leverage

Financial leverage ratios display increasing tendencies over the years. The reported leverage moves upward from 2.1 in 2015 to 2.36 in 2019, with some minor fluctuations. The adjusted leverage starts at a lower base of 1.67 but similarly trends upward to 1.93 by 2019. The consistent increase in leverage ratios may reflect a growing reliance on debt financing or increased liabilities over equity during this period.

Return on Equity (ROE)

The reported ROE shows high volatility, dropping sharply from 18.3% in 2015 to 6.95% in 2016, recovering strongly to 22.7% in 2018, before declining again to 12.35% in 2019. The adjusted ROE exhibits a less volatile but generally declining trend after 2016, moving from 16.25% in 2015, declining to 7.45% in 2016, moderately increasing to 19.57% in 2018, then falling to 10.71% in 2019. These fluctuations indicate variations in profitability and the impact of tax adjustments that moderate but do not eliminate overall volatility.

Return on Assets (ROA)

Reported ROA indicates a notable decline from 8.7% in 2015 to 3.01% in 2016, followed by a sharp increase peaking at 10.3% in 2018 before dropping again to 5.24% in 2019. Adjusted ROA mirrors this pattern but with generally higher values, suggesting that deferred tax adjustments improve asset profitability measures. The pattern of ROA reflects variable efficiency in asset utilization and profitability throughout the period.

Summary of Trends

Overall, the financial ratios reveal considerable variability in profitability, asset efficiency, and leverage for the company from 2015 through 2019. There is a recurring pattern of decline in 2016 followed by recovery in 2017 and 2018, then a decrease in 2019 across most metrics. Adjusted figures consistently show a more favorable financial performance compared to reported figures, indicating that deferred income tax adjustments have a stabilizing and enhancing effect on profitability and returns. The increasing financial leverage implies a higher financial risk exposure over time. The variability in returns and asset turnover suggests that operational efficiency and profitability were subject to changing business conditions during these years.

Net Income Trends

The reported net income attributable to the company demonstrated significant fluctuations over the five-year period. Starting at 4,227 million US dollars in 2015, it declined sharply to 1,555 million in 2016. This was followed by a robust recovery in 2017 and 2018, reaching 5,106 million and 5,595 million respectively, before dropping again to 3,076 million in 2019.

In comparison, the adjusted net income followed a somewhat different pattern, initially rising from 4,710 million in 2015 to 2,165 million in 2016, a less pronounced decline compared to the reported figures. The adjusted net income then decreased to 3,217 million in 2017 but surged to a peak of 5,847 million in 2018, before falling to 3,258 million in 2019.

Profit Margin Analysis

The reported net profit margin exhibited a declining trend in 2016, dropping from 4.27% in 2015 to 1.85%, then improved significantly over the next two years, reaching 4.99% in 2017 and slightly increasing to 5.02% in 2018. However, it decreased substantially to 2.87% in 2019.

The adjusted net profit margin showed a somewhat similar trend but with generally higher values compared to the reported margin. It started at 4.76% in 2015, decreased to 2.57% in 2016, rose steadily to 3.14% in 2017, and peaked at 5.25% in 2018, before declining to 3.04% in 2019.

General Observations

Both reported and adjusted net income and profit margins experienced volatility during the period analyzed, with notable declines in 2016 and 2019. The adjusted figures consistently remained higher than the reported figures, indicating the impact of tax adjustments and perhaps other adjustments reflected in the adjusted data. The year 2018 represented a high point for profitability and income in the observed period, suggesting a strong operational performance that year.

Reported and Adjusted Total Assets

The total assets, both reported and adjusted for income tax considerations, display a generally increasing trend over the five-year period. Starting from approximately $48.6 billion at the end of 2015, the figures steadily rise to nearly $58.7 billion by the end of 2019. The adjusted total assets closely track the reported values, with minor deviations, indicating consistency in the adjustment process relative to the reported figures.

Reported and Adjusted Total Asset Turnover

The total asset turnover ratios, which measure efficiency in using assets to generate revenue, fluctuate over the analyzed period. Beginning at 2.04 in 2015, the ratio drops significantly to around 1.63 in 2016. It then recovers somewhat in 2017 and rises back to peak at approximately 2.05 in 2018, before declining again to 1.83 in 2019. The adjusted turnover ratios mirror the reported ratios closely, with negligible differences, suggesting that tax adjustments do not materially affect operational efficiency indicators.

Overall Observations

The steady increase in total assets suggests ongoing investment or asset accumulation. However, the fluctuations in asset turnover indicate varying efficiency levels in asset utilization across the years. The peak in turnover in 2018 could imply heightened operational efficiency or increased sales relative to assets during that period. The subsequent decline in 2019 might signal reduced efficiency or other operational challenges. The minimal difference between reported and adjusted values throughout the dataset implies that the income tax adjustments have limited impact on the core asset and efficiency measures.

Assets

The reported total assets increased steadily from US$48,580 million in 2015 to US$58,720 million in 2019, representing an overall growth trend. The adjusted total assets closely followed this pattern, rising from US$48,419 million to US$58,672 million over the same period, indicating consistent asset growth whether or not adjustments for deferred income tax are considered.

Stockholders’ Equity

Reported stockholders’ equity showed more variability, initially declining from US$23,100 million in 2015 to US$22,390 million in 2016, before increasing to US$24,910 million in 2019. In contrast, adjusted stockholders’ equity was consistently higher and displayed a continuous upward trend from US$28,980 million in 2015 to US$30,415 million in 2019. The adjustment for deferred income taxes results in significantly larger equity balances, suggesting that such adjustments have a substantial impact on the company’s net worth representation.

Financial Leverage

Reported financial leverage ratios fluctuated moderately, starting at 2.10 in 2015, peaking at 2.36 in 2019, with intermediate variations. Adjusted financial leverage ratios were consistently lower than the reported ones but showed a steady upward trend from 1.67 in 2015 to 1.93 in 2019. The divergence between reported and adjusted leverage indicates that deferred tax adjustments reduce the apparent leverage, implying lower financial risk when these adjustments are considered.

Overall Insights

The adjustments for deferred income tax consistently increase equity values and reduce financial leverage ratios relative to reported figures. This implies a more conservative view of liabilities and equity when these adjustments are incorporated. The steady increase in adjusted assets and equity over five years suggests balanced growth and strengthening financial position under the adjusted framework.

Net Income Trends

The reported net income attributable to the company experienced significant fluctuations over the five-year period. It started at 4,227 million USD in 2015, dropped markedly to 1,555 million USD in 2016, surged to a peak of 5,106 million USD in 2017, then slightly increased further to 5,595 million USD in 2018 before declining to 3,076 million USD in 2019. The adjusted net income follows a somewhat different pattern, beginning higher at 4,710 million USD in 2015 and peaking in 2018 at 5,847 million USD, with a notable dip in 2017 at 3,217 million USD. The adjusted figures generally present a smoother trend compared to the reported values, reflecting the impact of deferred income tax adjustments on the reported earnings.

Stockholders’ Equity

Reported stockholders’ equity displayed relative stability throughout the period. Starting at 23,100 million USD in 2015, it saw a slight decline in 2016 to 22,390 million USD, followed by an increase through 2017 to 25,085 million USD. It then remained fairly constant in 2018 and 2019, ending at 24,910 million USD. Adjusted stockholders’ equity figures are notably higher throughout the period, starting at 28,980 million USD in 2015 and gradually increasing to 30,415 million USD by 2019, indicating the adjustments for deferred income taxes have a consistent upward effect on the equity base.

Return on Equity (ROE)

The reported ROE shows a similar pattern of volatility as the net income. It started strongly at 18.3% in 2015, then declined sharply to 6.95% in 2016 before climbing to a high of 22.7% in 2018. By 2019 it fell again to 12.35%. The adjusted ROE values generally track lower than the reported ROE, beginning at 16.25% in 2015, dropping to 7.45% in 2016, and rising to 19.57% in 2018 before dropping to 10.71% in 2019. This suggests that adjustments for deferred income taxes temper the reported profitability ratios, providing a more conservative perspective on returns to equity holders.

Overall Insights

The data reflects volatility in profitability as evidenced by net income and ROE fluctuations, which may be influenced by external market conditions or internal management decisions. Adjusted financial measures provide a smoother and somewhat more conservative view, likely reflecting tax-related accounting adjustments that modulate reported figures. Stockholders’ equity remains relatively stable, especially when considering adjusted values, which show a gradual increase and indicate a steady foundation of equity capital over the analyzed periods.

Net Income Trends

The reported net income attributable to Phillips 66 exhibited notable volatility over the five-year period. Beginning at $4,227 million in 2015, it sharply declined to $1,555 million in 2016, representing a significant drop. This was followed by a strong recovery to $5,106 million in 2017 and a further increase to $5,595 million in 2018. However, the figure decreased again in 2019 to $3,076 million. The adjusted net income shows a somewhat smoother progression, starting at $4,710 million in 2015 and reaching a low of $2,165 million in 2016. After this, it fluctuated, increasing to $3,217 million in 2017, peaking at $5,847 million in 2018, and declining to $3,258 million in 2019. The adjusted figures generally reflect a similar trend as the reported values but with less pronounced declines, indicating that adjustments typically mitigate some volatility in net income.

Total Assets Trends

The reported total assets displayed a steady upward trajectory throughout the period. Starting at $48,580 million in 2015, assets increased to $51,653 million in 2016 and continued rising to $54,371 million in 2017. A slight decline to $54,302 million occurred in 2018, followed by a rebound to $58,720 million in 2019. Adjusted total assets paralleled this pattern closely, reflecting minimal differences compared to reported assets. This consistent growth in assets suggests ongoing investment or asset accumulation despite fluctuations in income.

Return on Assets (ROA) Trends

Reported ROA exhibited substantial fluctuation across the years. It started at 8.7% in 2015 but dropped markedly to 3.01% in 2016. A robust recovery followed with ROA rising to 9.39% in 2017 and further improving to 10.3% in 2018, before declined to 5.24% in 2019. Adjusted ROA showed a similar pattern but with less extreme variations. Starting higher at 9.73% in 2015, it dipped to 4.2% in 2016, then recovered more moderately to 5.93% in 2017. Adjusted ROA then peaked at 10.78% in 2018 and fell to 5.55% in 2019. The adjusted ROA implies that performance, when normalized for tax or other adjustments, remains more stable than indicated by the reported returns.

Overall Insights

The overall financial data reveal a cyclical pattern with earnings and profitability metrics experiencing sharp dips and recoveries over the five-year period. Total assets, however, demonstrated consistent growth, which may reflect strategic asset management independent of earnings volatility. The adjustments to income and ROA generally result in smoother trends, suggesting that deferred income tax and related adjustments significantly impact reported profitability metrics. The peaks in 2018 for both income and ROA indicate a particularly strong year, followed by a notable decline in 2019, illustrating variability that may relate to external economic or industry conditions affecting company performance.