ConocoPhillips reported (https://tinyurl.com/y5m9cbjq) before the market opened on 29 October 2020 it lost $0.42 per diluted share in the quarter that ended on 30 September 2020, down from earnings of $2.75 in the same 3 months of the previous year. These figures are the earnings determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
ConocoPhillips is the biggest U.S.-based firm focused solely on energy exploration and production. It assumed its current name when it merged with Phillips Petroleum in 2002. A decade later, the midstream and downstream assets were spun off as "Phillips 66." ConocoPhillips, like many in the industry, is now struggling with low oil and gas prices, which reduce the company's earnings and cash flows. The industry has been consolidating as a result, and ConocoPhillips has been no exception. ConocoPhillips announced an agreement in October 2020 to acquire Concho Resources, which is a top producer in the Permian basin, in an all-stock transaction worth (when the deal was made) $9.7 billion plus $3.9 billion of debt assumed.
Adjusted earnings, a non-GAAP figure, fell to ($0.31) per share from $0.82 one year earlier. Adjusted earnings, by excluding unusual and non-cash items that could obscure the results of a business's principal, ongoing operations, are intended to be cleaner measures of corporate profits. However, caution is warranted when analyzing these figures because management has considerable leeway in choosing which GAAP-required items to exclude.
The principal exclusions contributing to the $0.11 per share difference in the latest quarter between GAAP earnings and Adjusted earnings were: Pending claims and settlements [($0.06) per share], Unrealized loss on CVE shares [$0.14 per share], and Pension settlement expense [$0.02 per share].
Because ConocoPhillips has repurchased a significant quantity of its own shares, the average number of shares outstanding during the last quarter was 3.2% lower than one year ago. The smaller share count boosted earnings per share by $0.02.
Adjusted earnings of ($0.31) per share in the latest quarter significantly beat the ($0.58) average ("consensus") of estimates made by Wall Street analysts. See https://tinyurl.com/uej9csu for ConocoPhillips's earnings record and forecasts.
Stock market traders reacted positively to ConocoPhillips exceeding expectations. The price of the company's shares rose 1.3% during the trading day following the report.
Looking deeper into the GAAP results, "top-line" revenue in the September 2020 quarter totaled $4.4 billion, 43% less than last year's $7.8 billion. The Crude Oil business was responsible for 53% of overall revenue, and this unit's revenue fell by 49.7% compared to the year-earlier result. The Natural Gas business contributed 34% of revenue, and this unit's revenue fell by 16.1%. The Natural Gas Liquids and Other unit supplied 13% of revenue, and the amount fell by 58.7%.
The gross margin weakened from 47.9% of revenue to 36.1%, a sign that ConocoPhillips sold its output and services at less profitable prices relative to production costs. Sales, general, and administrative expenses increased from 4.2% to 6.3% of quarterly revenue, which shows the company spent more per dollar of sales on other operational costs, such as marketing.
ConocoPhillips's operating activities generated $868 million in cash during the last quarter, down 62.9% from $2.3 billion in the year-earlier period. Notable uses for cash included $454 million to pay dividends to shareholders, and $1.1 billion to acquire property, plant and capital equipment.
Free cash flow over the last 12 months totaled $860 million, or $0.80 per share using the latest share count. At the current market price per share of $29.35, this translates into a modest Free Cash Flow Yield of 2.7%.
The accompanying charts illustrate several trends in ConocoPhillips's financial results, taken from data in regulatory filings. The text and the charts are intended to provide some limited historical context for readers interested in the company’s finances. No investment advice is provided, and no investment offer of any kind is made or solicited. The accuracy of the information presented is not guaranteed, and readers are encouraged to independently verify all data.
#conocophillips #cop #earnings #nac_financialanalysis
No comments:
Post a Comment