Phillips 66 (NYSE:PSX)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibits a consistent upward trend over the five-year period. Starting from 3,281 million USD in 2015, the figure rises steadily each year, reaching 5,344 million USD by the end of 2019. This indicates improving operational profitability and effective management of core business activities.

Cost of Capital

The cost of capital shows slight fluctuations but remains relatively stable throughout the years. It decreases marginally from 13.33% in 2015 to 12.53% in 2019, with minor variations in the intervening years. This mild decline suggests a modest reduction in the expected return required by investors or financing costs over the period.

Invested Capital

The invested capital demonstrates a general increasing trend, moving from 42,469 million USD in 2015 to 50,827 million USD in 2019. There is a slight decrease observed in 2018 compared to 2017, but this is followed by an increase in 2019. The overall growth points toward expanding assets or reinvestment of earnings to support future operations or growth strategies.

Economic Profit

Economic profit remains negative throughout the observed years, indicating that the net operating profit after taxes is insufficient to cover the cost of capital fully. However, the negative value improves over time, decreasing in magnitude from -2,379 million USD in 2015 to -1,023 million USD in 2019. This trend indicates that the gap between operating profit and capital costs is narrowing, reflecting progress toward value creation despite persistent shortfalls.

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

The economic profit demonstrates a persistent negative trend throughout the five-year period, indicating that the company has not generated value above its cost of capital. Although it remains negative each year, there is a noticeable improvement from -2379 million USD in 2015 to -1023 million USD by 2019. This suggests that losses have been decreasing, reflecting a potential move toward operational efficiency or better capital management over time.

Invested Capital

Invested capital shows a generally increasing trend from 42469 million USD in 2015 to 50827 million USD in 2019. Despite minor fluctuations, notably a slight dip from 49009 million USD in 2017 to 48544 million USD in 2018, overall capital investment has grown by approximately 20% over five years. This expansion indicates continued investment in assets or infrastructure, which may be part of a growth strategy or maintenance of existing operations.

Economic Spread Ratio

The economic spread ratio remains negative throughout the period but shows consistent improvement, moving from -5.6% in 2015 to -2.01% in 2019. This metric suggests that although the company's returns have been below its cost of capital, the gap has been narrowing progressively. The improvement in this ratio aligns with the decreasing negative economic profit, emphasizing a gradual recovery in profitability relative to invested capital costs.

Overall Analysis

The data reveals a pattern of recovery and gradual improvement in financial performance. While economic profit and economic spread ratio remain negative, the consistent upward trend in these measures suggests initiatives aimed at cost efficiency or improving return on capital. The steady increase in invested capital highlights ongoing commitment to asset investment, possibly to support future growth or operational enhancements. However, the negative economic profit indicates that the company still faces challenges in achieving full economic profitability.

The financial data exhibits several clear trends over the five-year period analyzed. Sales and other operating revenues demonstrate variability but generally maintain a high level of performance with a peak observed in the year ending December 31, 2018. Despite some fluctuations, revenues remain robust overall.

Economic profit, expressed in millions of US dollars, shows consistent negative values across all years, indicating that the company experienced economic losses each year within the period. However, this loss has shown a gradual improvement, with the negative economic profit decreasing in magnitude from -2379 million in 2015 to -1023 million in 2019. This trend suggests a movement toward improved profitability or more efficient capital utilization over time, although the company did not achieve positive economic profit during the period.

The economic profit margin, which provides a percentage measure of economic profitability relative to sales, also follows a pattern of improvement. Starting at -2.4% in 2015, the margin improves steadily to reach -0.95% in 2019. This steady increase aligns with the trend in economic profit, reflecting an enhancement in the company’s ability to generate returns above its cost of capital, despite remaining in negative territory.

Sales and Other Operating Revenues

Experienced fluctuations with an initial decrease followed by recovery and peak performance in 2018, then a slight decrease in 2019, suggesting variability but general strength in revenue generation.

Economic Profit

Remained negative throughout the period but showed consistent improvement each year, indicating progress in achieving economic value despite ongoing losses.

Economic Profit Margin

Improved incrementally from -2.4% to -0.95%, highlighting gradual enhancement in operational efficiency and return generation relative to total revenues.

Overall, the data depicts a company working to reduce economic losses while maintaining substantial revenue levels. The persistent negative economic profit suggests challenges remain in achieving full economic profitability, but the positive trends in both economic profit and margin are indicative of strategic improvements over the period analyzed.