Earnings Notes I (Q4 2024)

Exxon Mobil Corporation (XOM)
Exxon's free cash flow for the fourth quarter of 2024 was $8 billion, which was the same as a year earlier. For the full year, Exxon generated $34 billion of free cash flow versus $36 billion in 2023. (Note that Exxon acquired Pioneer Natural Resources in May 2024 for $60 billion, which added a large amount of production in the Permian.) The market capitalization of Exxon (at $108 per share) is $478 billion and the enterprise value is $500 billion, which puts the annualized FCF/EV yield at 6.4%.

Exxon's upstream earnings were $6.5 billion for the quarter (up 5.5% y/y), downstream earnings were $0.4 billion (down 70% y/y), chemical earnings were $120 million (down 87% y/y), and specialty products earnings were $746 million (down 6% y/y).

Imperial Oil Limited (IMO)
Imperial's free cash flow for the fourth quarter of 2024 was $3.5 million (USD), which was up 54% from a year earlier. For the full year, Imperial generated $2.9 billion of free cash flow versus $1.4 billion in 2023. The market capitalization of Imperial (at $66 per share) is $34 billion and the enterprise value is $36 billion, which puts the annualized FCF/EV yield at 10.8%.

The share count was down 5% year-over-year. They returned a total of $2.7 billion to shareholders in 2024, which is a shareholder yield of 8%. On the operations side, Imperial's cash cost per barrel in 2024 was $3 (USD) lower than in 2023. (Cornucopian.)

Suncor Energy Inc. (SU)
Suncor's free cash flow for the fourth quarter of 2024 was $2.5 billion (USD), which was up 27% from a year earlier. The market capitalization of Suncor (at $38.41 per share) is $49 billion and the enterprise value is $57 billion, which puts the annualized FCF/EV yield at 17.5%. They returned a total of $2.1 billion by way of share repurchases, dividends, and debt repayment in the fourth quarter, which is a yield on the market capitalization of 17%. Suncor has hit its net debt target and is now focused on buybacks and dividends. The oil sands segment produced 539k bbl/d in the fourth quarter with a cash operating cost of $18.59, which was down 14% ($3 per barrel) from the year earlier. 

Intercontinental Exchange Inc. (ICE)
For the full year 2024, ICE earned $3.9 billion of free cash flow on $9.3 billion of total revenue (less transaction-based expenses) for a royalty-like 42% free cash flow margin. Free cash flow for 2024 was up 26% from the prior year. The current market capitalization is $92 billion and the enterprise value is $113 billion, which makes the FCF/EV yield 3.5%.

Enterprise Products Partners L.P. (EPD)
The $0.74 earnings for the fourth quarter are a 9% annualized yield on the current unit price of $32.78. The quarterly distribution is only $0.535 because they are retaining earnings, so the current dividend yield is ~6.5%. The big question with Enterprise is whether all of the "growth" investments pay off by resulting in higher free cash flow generation? If so, cash from operations would increase and capital expenditures would (hopefully) decrease, resulting in a lot more cash available for distributions to unitholders.

General Motors Company (GM)
Was surprised to see that General Motors shares outstanding ended the year 17.53% lower. The market capitalization is $48 billion and in 2024 GM generated $20 billion of cash from operations, spent $11 billion on capital expenditures, and did $7 billion of share repurchases.

Cool Video of Volkswagon Factory

Nissan Leaf Review

Zero Hedge has a review of the Nissan Leaf by "madhedgefundtrader".

NYT: "Nissan Says Its Leaf Gets Equivalent of 99 M.P.G."

The Nissan Leaf is one of the new, pure-electric vehicles that is hitting the market. The <100 mile range is tiny, yet more than enough for commuting.

Some of the hardcore peak oil people like Kunstler dismiss the potential electric vehicles, but I think he is wrong. The MSRP on the Leaf (before federal tax credits) is $33,000, which is not that bad. I'd like to take one for a test drive.

It does seem like electric cars are becoming a reality. This will make the demand for oil more elastic.

The Market is Now a Zombie Movie

Here is the zombie movie all star cast, roughly in order from most to least outrageous:

General Motors - hovering at a half-billion dollar market cap, even though the stock is worthless.
Lehman Brothers - up 200% on Friday, even though it faces $100 billion in claims.
AIG - up over 5x since beginning of July, even though the CEO admits there is no equity in the company.
FNM - up hugely. But the preferred stock still less than 10 cents.
FRM - same as FNM,
Washington Mutual - up 35% on Friday. Why not buy the holding company notes for 70 cents?

Someone Broke the Market

My understanding is that current/old GM equity, which has a $1B mcap, is going to - optimistically - inherit 1% of the new GM equity.

That would value new GM equity at $100B. I'm not sure how much debt new GM will have but let's be generous and say none and the new GM will have an enterprise value of $100B.

GM reported negative gross profit in 2008. It's average annual gross profit the past three years is $17B. So the EV/trailing-bubble-gross-profit is 5.9x.

GM reported negative operating earnings the past two years. The cumulative operating earnings over the past three years are also negative. If we just take the operating earnings from 2006, $9B, the market is valuing new GM at 11x.

What is the deal? These multiples are ludicrous. Do people think the old equity is going to wind up with a much bigger chunk of the company than 1%? Is the market broken because you can't borrow GM and the holders are too stupid to sell?