April 2012 - Exxon Mobil's First Quarter Results Are a Slight Disappointment

Abstract: Exxon Mobil announced its first quarter results today, and investors were slightly disappointed, as they bid the share price down almost 1%. On the plus side, the results indicate that the company is a solid performer and is in no financial danger.

Exxon Mobil Corporation (XOM) released its first quarter results on Thursday. Per the information on its website, Exxon's total revenues for Q1 2012 were roughly $124 billion, which is a $10 billion increase over Q1 of 2011. However, the company's expenses increased at a faster pace than its revenues for this same period, rising from approximately $95 billion to over $106.5 billion. The significant uptick in expenses was primarily responsible for the fact that Exxon's total Q1 2012 revenues of $9.45 billion represented an 11% decrease as compared to Q1 of 2011. On the positive side, Exxon's earnings per share of $2.00 only represented a drop of 7% as compared to the same quarter in 2011. The difference between the two figures can be attributed to the fact that the company spent about $5 billion on stock repurchases during the first quarter of this year.

Exxon's cash flows were also strong, as it generated $21.8 billion in the first quarter of 2012 "from operations and asset sales." Per Barron's, Exxon's cash on hand, totaling "more than $19 billion," and its strong cash flows will allow the company "to maintain its share buyback program, while supporting the higher yield [on its dividend payments]."

In its quarterly report, Exxon also touted its commitment to "invest about $37 billion per year over the next five years." The Barron's article notes that this investment will pay off for the company in the long run by helping it to maintain or increase production of oil and natural gas.

Investor reaction to Exxon Mobil's quarterly results was tepid. They bid Exxon shares down slightly; the per share price dropped by 0.9 % to finish at $86.07. An analyst interviewed by The New York Times reflected the views of many investors when he said that "the quarter was O.K."

While investors were not thrilled with Exxon's 2012 Q1 earnings report, many are likely satisfied with the company's stability. As the aforementioned Barron's article notes, the company is in excellent financial shape. More importantly, it recently increased its quarterly dividend by 21% to $0.57 per share and is spending significant amounts of money to buy back shares.

-- Anthony Hopper

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