Exchange: NYSE | Sector: Energy | Industry: Oil Gas Integrated
Q1 2024
Published: Apr 29, 2024
Earnings Highlights
Revenue of $80.41B down 3.9% year-over-year
EPS of $2.06 decreased by 26.2% from previous year
Gross margin of 23.5%
Net income of 8.22B
"We have created tremendous value through our operations and continue to strengthen the underlying earnings power of the company. - Darren Woods, CEO" - Darren Woods
Exxon Mobil Corporation (XOM) Q1 2024 Financial Results: Strengthening Foundations for Future Growth
Executive Summary
In the first quarter of 2024, Exxon Mobil Corporation reported earnings of $8.2 billion, reflecting a decline from the record earnings in the same quarter last year, primarily due to lower gas prices and increased maintenance costs. However, management emphasized a strong cash flow of $14.7 billion, driven by strategic investments in high-value projects and operational efficiencies. With a continued focus on structural cost savings, which have reached $10.1 billion since 2019, the company is well-positioned to enhance its earnings power and shareholder returns moving forward. Management expressed confidence in meeting their goal of $15 billion in savings by 2027, while also committing to significant shareholder distributions of $6.8 billion in the first quarter, including $3.8 billion in dividends.
Key Performance Indicators
Revenue
80.41B
QoQ: -1.56% | YoY:-3.87%
Gross Profit
18.91B
23.51% margin
QoQ: 6.80% | YoY:-21.09%
Operating Income
9.94B
QoQ: 17.53% | YoY:-30.04%
Net Income
8.22B
QoQ: 7.73% | YoY:-28.08%
EPS
2.06
QoQ: 7.29% | YoY:-26.16%
Revenue Trend
Margin Analysis
Key Insights
Q1 2024 revenue was $80.4 billion, a decrease of 3.9% year-over-year (YoY) and 1.6% quarter-over-quarter (QoQ).
Gross profit stood at $18.9 billion, reflecting a YoY decline of 21.1% but a QoQ increase of 6.8%.
Operating income for Q1 2024 was reported at $9.9 billion, with an operating margin of 12.4%, marking a significant decrease of 30% YoY.
The net income of $8.2 billion corresponds to a net profit margin of 10.2%, down from prior year performance.
The first-quarter free cash flow was $10.1 billion, underpinning the company’s commitments to dividends and share repurchases.
Financial Highlights
Revenue Analysis:
- Q1 2024 revenue was $80.4 billion, a decrease of 3.9% year-over-year (YoY) and 1.6% quarter-over-quarter (QoQ).
- Gross profit stood at $18.9 billion, reflecting a YoY decline of 21.1% but a QoQ increase of 6.8%.
Profitability Ratios:
- Operating income for Q1 2024 was reported at $9.9 billion, with an operating margin of 12.4%, marking a significant decrease of 30% YoY.
- The net income of $8.2 billion corresponds to a net profit margin of 10.2%, down from prior year performance.
Cash Flow and Balance Sheet:
- The first-quarter free cash flow was $10.1 billion, underpinning the company’s commitments to dividends and share repurchases.
- Net cash from operating activities was robust at $14.7 billion, indicating strong operational efficiency.
- Current ratio stood at 1.38 and net debt-to-capital decreased to 3%, demonstrating improved balance sheet health.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
80.41B
-3.87%
-1.56%
Gross Profit
18.91B
-21.09%
6.80%
Operating Income
9.94B
-30.04%
17.53%
Net Income
8.22B
-28.08%
7.73%
EPS
2.06
-26.16%
7.29%
Key Financial Ratios
currentRatio
1.38
grossProfitMargin
23.5%
operatingProfitMargin
12.4%
netProfitMargin
10.2%
returnOnAssets
2.18%
returnOnEquity
4%
debtEquityRatio
0.2
operatingCashFlowPerShare
$3.67
freeCashFlowPerShare
$2.4
dividendPayoutRatio
46.3%
priceToBookRatio
2.28
priceEarningsRatio
14.23
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Insights:
- Darren Woods, CEO: "Our strategy and the way our people are executing created significant value in the first quarter. We delivered $8.2 billion of earnings and $14.7 billion of cash flow."
- Kathy Mikells, CFO: "Our ability to deliver industry-leading earnings growth reflects our unique competitive advantages, consistent strategy, and differentiated execution capabilities."
Themes from the transcript include a strong focus on shareholder returns, cost management, and growth in advantaged asset production.
We have created tremendous value through our operations and continue to strengthen the underlying earnings power of the company. - Darren Woods, CEO
— Darren Woods
Our ongoing success this quarter reflects the intense focus we've had for the past seven years on improving every aspect of our business. - Darren Woods, CEO
— Darren Woods
Forward Guidance
ExxonMobil expects to generate an additional $12 billion in earnings potential over the 2023-2027 period, equivalent to a compounded annual growth rate (CAGR) of more than 10%. Key growth drivers include volume increases from high-value projects, continued structural cost reductions, and a focus on enhancing the margins through product mix improvements. Management also indicated that buyback initiatives would ramp up to a pace of $20 billion annually post-Pioneer merger completion, suggesting a robust commitment to returning capital to shareholders.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
XOM Focus
23.51%
12.40%
4.00%
14.23%
SHEL
19.50%
17.10%
3.94%
7.46%
BP
20.00%
12.70%
3.24%
11.81%
SU
48.10%
18.00%
3.63%
10.13%
PBR
51.60%
37.80%
5.86%
4.69%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investors should closely monitor Exxon Mobil’s path to achieving its ambitious cost-saving goals and its ongoing investment in high-value growth projects. While current earnings have faced some headwinds, the underlying financial strength and strategic direction management has outlined suggest that Exxon Mobil remains a compelling investment for those looking at long-term prospects in the energy sector. The company's commitment to returning capital to shareholders through dividends and buybacks also enhances its attractiveness in a volatile market.
Key Investment Factors
Growth Potential
ExxonMobil's strategic acquisitions, particularly in Guyana, and advancements in technology, including carbon capture and hydrogen development, position it strongly for future growth.
Profitability Risk
Market volatility in oil and gas prices, regulatory pressures related to environmental policies, and increased competition from renewable energy sources pose significant risks.
Financial Position
The company maintains a solid balance sheet with a low net debt-to-capital ratio of 3% and a current ratio of 1.38, indicating good liquidity.
SWOT Analysis
Strengths
Strong financial performance with a significant cash flow of $14.7 billion.
Diversified operations across upstream, downstream, and chemical segments.
A robust balance sheet with a low debt-to-capital ratio.
Weaknesses
Declining earnings YoY due to lower gas prices and increased operational costs.
Heavy reliance on fossil fuel markets, which are subject to regulatory and market pressures.
Opportunities
Expansion of high-value projects, especially in Guyana and new technology ventures.
Increased investment in low-carbon technologies and renewable energy initiatives.
Threats
Regulatory pressures and transitioning energy policies impacting traditional fossil fuel operations.
Intensified competition from renewable energy technologies and rivals in the energy sector.