Exxon tops expectations; On track to meet 2027 cost-savings targets
Exxon Mobil Corporation (XOM) posted strong third-quarter 2024 earnings, with adjusted EPS of $1.92, narrowly surpassing the consensus estimate of $1.87. Total revenue and other income came in at $90.02 billion, beating the $87.15 billion expected, reflecting solid performance across key segments despite headwinds in refining margins. This earnings beat was bolstered by stronger-than-expected refining operations, which drove higher results for the energy products segment, alongside steady upstream production that slightly outpaced analyst expectations.
Upstream production for Q3 was robust, reaching 4.582 million oil-equivalent barrels per day, above the 4.522 million expected. This included 3.187 million barrels per day in crude oil, natural gas liquids, and bitumen, exceeding estimates as well. Exxon's refining throughput also topped forecasts, coming in at 3.985 million barrels per day, underscoring the company’s continued strength in refining operations amid weaker industry margins. CEO Darren Woods noted that Exxon’s focus on transforming its operations over the past eight years is now delivering results, with the company on track to meet its structural cost savings target of $15 billion by 2027.
The energy products segment saw adjusted net income of $1.31 billion, far surpassing expectations of $838.4 million due to favorable timing effects, lower maintenance, and a solid rebound from last quarter's challenges. Exxon's U.S. refining footprint, particularly with expanded Beaumont refinery volumes, continues to provide a competitive edge, offsetting margin pressures and costs from scheduled maintenance. Meanwhile, the upstream segment’s adjusted net income came in at $6.16 billion, ahead of the $6.04 billion consensus, benefitting from increased production and advantageous international gas realizations.
Exxon’s chemical products segment also contributed positively, posting $893 million in Q3 adjusted net income, beating the $868.9 million consensus. The segment leveraged its North American footprint, taking advantage of lower ethane feed costs and achieving record high-value product sales, which were up 9% year-over-year. Exxon continues to see strategic growth in this segment, with future projects set to enhance capacity and efficiency as they come online over the next few years.
Exxon generated significant cash flow from operating activities at $17.6 billion, with free cash flow of $11.3 billion, driven in part by a $2.3 billion tailwind from working capital. Capital and exploration expenditures for the quarter reached $7.2 billion, bringing year-to-date spending in line with Exxon’s annual guidance of $28 billion. Exxon's dividend was increased by 4%, marking the 42nd consecutive year of dividend hikes, with share repurchases totaling $5.4 billion for the quarter, consistent with guidance and underscoring a stable capital return framework.
Looking ahead, Exxon provided guidance for the fourth quarter, noting a modest $70 million upstream maintenance headwind and a $30 million decrease in downstream maintenance costs quarter-over-quarter. The company reaffirmed its full-year production guidance and capital expenditure projections, signaling operational stability and continued strategic execution. Exxon's expansion in advantaged assets is set to drive growth, with 60% of its production expected from these assets by 2027, along with incremental cost savings.
The company highlighted ongoing progress in its sustainable product offerings, with the Proximma steel-replacement product targeting a $30 billion market by 2030. Exxon's long-term plan includes focusing on high-value product growth while reducing its carbon footprint, with CEO Woods emphasizing the company's readiness to navigate the energy transition in collaboration with government support, particularly in areas like plastic recycling where regulatory and operational complexities persist.
Despite macroeconomic challenges, Exxon’s Q3 performance reflects resilience across segments, supported by favorable product realizations and disciplined cost management. While supply-driven price dynamics and high global oil demand provide tailwinds, industry challenges such as fluctuating refining margins and geopolitical factors remain on the horizon. Nevertheless, Exxon's steady financial results and strategic positioning continue to drive investor confidence, positioning it well for the upcoming quarters.