Phillips 66 (NYSE:PSX)

The financial data reveals several noteworthy trends over the five-year period from 2015 to 2019. Net operating profit after taxes (NOPAT) demonstrated a consistent upward trajectory, increasing from 3,281 million US dollars in 2015 to 5,344 million US dollars in 2019. This indicates a steady improvement in operational profitability.

The cost of capital remained relatively stable throughout the period, fluctuating slightly between 12.49% and 13.29%. While minor variations occurred, the overall cost of capital did not exhibit any significant upward or downward trend, implying a relatively steady cost environment for financing.

Invested capital showed a general increase, rising from 42,469 million US dollars in 2015 to 50,827 million US dollars in 2019. This growth suggests ongoing investments in assets or capital projects, with a notable stabilization in 2018 before continuing to rise in 2019.

Despite improvements in NOPAT and growth in invested capital, economic profit remained negative throughout the entire period. Although the economic loss narrowed from -2,363 million US dollars in 2015 to -1,005 million US dollars in 2019, the persistence of negative economic profit indicates that returns did not exceed the cost of capital during these years. This highlights that while operational performance improved, it was insufficient to generate positive economic value after accounting for the capital cost.

Net Operating Profit After Taxes (NOPAT)

Consistent growth indicating enhanced profitability.

Cost of Capital

Minor fluctuations with overall stability, suggesting unchanged financing conditions.

Invested Capital

Incremental increases, pointing to expansion or reinvestment in capital assets.

Economic Profit

Negative but improving, reflecting ongoing challenges in generating returns above the cost of capital.

The financial data reveals distinct trends in net income and net operating profit after taxes (NOPAT) over the five-year period.

Net Income Attributable to Phillips 66

Net income experienced significant volatility throughout the period. Starting at US$4,227 million in 2015, net income decreased sharply to US$1,555 million in 2016, representing a notable decline. However, in the following years, net income rebounded strongly, rising to US$5,106 million in 2017 and further increasing to US$5,595 million in 2018. In 2019, net income declined again to US$3,076 million. This pattern indicates fluctuating profitability with considerable short-term variations.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a more consistent upward trend over the same period. Beginning at US$3,281 million in 2015, NOPAT increased steadily to US$4,480 million in 2016, US$4,664 million in 2017, US$5,129 million in 2018, and finally US$5,344 million in 2019. This gradual growth suggests improving core operational efficiency and profitability despite the fluctuations in net income.

In summary, while net income experienced notable fluctuations, particularly with a steep drop in 2016 followed by a peak in 2018, NOPAT demonstrated a steady and gradual improvement throughout the period. This contrast may indicate effects from non-operational factors influencing net income, whereas operating performance exhibited consistent enhancement.

The financial data reveals considerable fluctuations in both income tax expense (benefit) and cash operating taxes over the five-year period.

Income Tax Expense (Benefit)

There is a notable volatility in income tax expense figures, beginning with a high expense of 1,764 million USD in 2015, dropping sharply to 547 million USD in 2016. In 2017, the data shows a significant income tax benefit reflected by a negative value of -1,693 million USD. This is followed by a rebound to a positive expense of 1,572 million USD in 2018, before declining again to 801 million USD in 2019. This pattern indicates substantial variability, which could be due to changes in taxable income, tax rate adjustments, or extraordinary tax items within the company’s operational framework.

Cash Operating Taxes

The cash operating taxes also display considerable variation. The taxes paid almost drop from 1,407 million USD in 2015 to just 70 million USD in 2016, then rise to 363 million USD in 2017. A sharp increase occurs in 2018 to 1,429 million USD, followed by a decrease to 716 million USD in 2019. This trend, although somewhat aligned with the income tax expense, suggests fluctuating cash outflows related to tax operations, potentially reflecting changes in operational profitability, deferred tax payments, or differences between cash and accounting tax treatments.

Overall, the data suggests a highly dynamic tax position with considerable year-to-year changes. The negative income tax figure in 2017 particularly stands out as an anomaly, indicating either a tax benefit or adjustment that significantly reduced the tax expense for that year. The disparity between cash operating taxes and income tax expense in some years also implies timing differences between recorded tax expense and actual tax payments.

Total reported debt & leases

The total reported debt and leases show a continuous upward trend from 2015 through 2019. The value increased steadily each year from $10,643 million in 2015 to $13,024 million in 2019, indicating a rise in the company’s financial obligations over the period.

Stockholders’ equity

Stockholders' equity experienced fluctuations during the period. It decreased slightly from $23,100 million in 2015 to $22,390 million in 2016, then increased to a peak of $25,085 million in 2017. This was followed by a marginal decline in 2018 and a minor recovery in 2019, ending at $24,910 million. Overall, equity remained relatively stable with modest variations.

Invested capital

Invested capital showed a consistent growth trend over the five years. Beginning at $42,469 million in 2015, it rose each year and reached $50,827 million in 2019. This increase suggests ongoing capital investment and expansion activities.

Economic Profit

Economic profit demonstrates a consistent improvement over the five-year span, moving from a loss of $-2,363 million in 2015 to a reduced loss of $-1,005 million in 2019. Although the value remains negative throughout the period, the decreasing magnitude of the loss indicates a gradual enhancement in profitability or operational efficiency.

Invested Capital

The invested capital shows an upward trend, increasing from $42,469 million in 2015 to $50,827 million in 2019. This suggests ongoing investment in the company's assets, possibly to support growth or update operations.

Economic Spread Ratio

The economic spread ratio remains negative throughout the period but steadily improves from -5.56% in 2015 to -1.98% in 2019. This indicates a reduction in the negative return spread relative to invested capital, aligning with the observed improvements in economic profit.

The financial data for the analyzed periods reveals several notable trends related to economic profit, sales and operating revenues, and the economic profit margin.

Economic Profit

Economic profit demonstrates a persistent negative trend across the observed timeframe, indicating the company experienced economic losses throughout. Although the values remain below zero, there is a gradual improvement in economic profit, moving from -2363 million US dollars in 2015 to -1005 million US dollars by 2019. This trend suggests the company is reducing its losses consistently over the years.

Sales and Other Operating Revenues

Sales and other operating revenues show a fluctuation pattern, with a decline in 2016 to 84279 million US dollars from 98975 million US dollars in 2015. Subsequently, revenues increase steadily, peaking at 111461 million US dollars in 2018 before slightly decreasing to 107293 million US dollars in 2019. This fluctuation may reflect market conditions or operational adjustments impacting the top line.

Economic Profit Margin

The economic profit margin, expressed as a percentage, indicates consistent negative margins throughout the period, though there is a steady improvement. The margin improves from -2.39% in 2015 to -0.94% in 2019, suggesting better efficiency or profitability trends relative to revenues. The reduction in the negative margin aligns with the trend observed in economic profit, underscoring gradual progress in financial performance despite remaining in negative territory.

Overall, the data reflects a company facing ongoing economic challenges, as indicated by consistent negative economic profits and profit margins. Despite this, the improvements over the five-year period in both absolute economic profit and margin, alongside relatively stable revenues following an initial dip, point to efforts that may be enhancing operational effectiveness and financial resilience.