Exchange: NYSE | Sector: Energy | Industry: Oil Gas Integrated
Q4 2024
Published: Feb 21, 2025
Earnings Highlights
Revenue of $52.23B up 6.7% year-over-year
EPS of $1.84 increased by 52.9% from previous year
Gross margin of 32.8%
Net income of 3.24B
""We expect to add $10 billion of annual free cash flow in 2026" - Mike Wirth" - Mike Wirth
Chevron Corporation (CVX) Q4 2024 Financial Results: Strong Production Growth and Shareholder Returns Drive Performance
Executive Summary
In Q4 2024, Chevron Corporation realized robust financial results, echoing growth across its operational fronts. The company reported a revenue growth of 6.73% year-over-year, totaling $52.2 billion, supported by a strategic boost in production capacities, particularly in the Permian Basin which grew approximately 18% year-over-year. Chevron's earnings per share (EPS) stood at $1.84, reflecting strength against a backdrop of rising operational costs due to market pressures disrupting the refining segment. Notably, Chevron returned $27 billion to shareholders through dividends and share buybacks, reinforcing its commitment to shareholder value amid an environment of fiscal discipline. Management emphasized plans for sustainable cash flow growth and maintaining a strong balance sheet while optimizing upstream and downstream operations to adapt to evolving market dynamics.
Management noted adjustments to operating expenses due to weaker refining margins and asset impairments, which should realign by investing in competitive projects that promise better returns.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
52.23B
6.73%
6.74%
Gross Profit
17.11B
20.44%
19.93%
Operating Income
6.06B
12.06%
22.18%
Net Income
3.24B
43.38%
-27.81%
EPS
1.85
52.89%
-25.70%
Key Financial Ratios
grossProfitMargin
32.8%
operatingProfitMargin
11.6%
netProfitMargin
6.2%
returnOnAssets
1.26%
returnOnEquity
2.13%
debtEquityRatio
0.16
operatingCashFlowPerShare
$4.91
freeCashFlowPerShare
$2.46
dividendPayoutRatio
89.1%
priceToBookRatio
1.68
priceEarningsRatio
19.79
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Themes:
1. Production Growth:
- CEO Mike Wirth highlighted, "Chevron delivered another year of strong results in 2024. We achieved record production both globally and in the United States and reached key milestones that are expected to underpin years of future cash flow."
Management pointed out the Permian's 18% growth exceeding expectations and optimizing the portfolio through asset sales and swaps.
2. Shareholder Returns:
- CFO Eimear Bonner mentioned, "We returned a record $27 billion in cash to shareholders through dividends and buybacks. Over the past two years, we’ve repurchased $30 billion and reduced our outstanding share count by 10%."
3. Focus on New Energies:
- Wirth affirmed, "We continued to build our new energies business and complete projects to lower the carbon intensity of our operations ... completing projects designed to abate over 700 thousand tons of CO2 emissions annually."
"We expect to add $10 billion of annual free cash flow in 2026" - Mike Wirth
— Mike Wirth
"Our long-standing financial priorities have created value for shareholders and will continue to govern how we allocate capital." - Eimear Bonner
— Eimear Bonner
Forward Guidance
For 2025 and 2026, Chevron anticipates raising its capital expenditure (CapEx) to maintain production levels while targeting a reduction in structural costs by $2 to $3 billion by 2026. Management aims for significant free cash flow growth, projecting $5 billion in 2025 and $6 billion in 2026 at a $70 Brent price. CEO Mike Wirth noted, "Chevron is poised for industry-leading free cash flow growth... our objective is unchanged, to safely deliver higher returns and lower carbon."
The focus remains on operational efficiencies and a robust return on capital employed as new projects come online.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CVX Focus
32.75%
11.60%
2.13%
19.79%
BP
12.70%
3.31%
-3.31%
-10.24%
SHEL
25.40%
19.70%
0.52%
51.63%
PBR
48.00%
6.13%
-4.70%
-6.77%
SU
26.70%
13.20%
1.84%
19.90%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investors seeking stability with growth potential may find Chevron attractive, given its focus on maintaining production growth and expanding its new energies capabilities. The commitment to shareholder returns underscores the confidence management has in its operational strategy and market positioning. The current financial health, supported by a strong balance sheet and forecasted cash flows, aligns with long-term investment objectives. Monitoring commodity prices and geopolitical developments will be crucial for gauging Chevron's performance moving forward.
Key Investment Factors
Growth Potential
Chevron's strategic investments in high-margin production areas such as the Permian and Gulf of America, along with advancements in its new energies segment, promise continued revenue and cash flow expansion.
Profitability Risk
Exposure to volatile commodity prices in the oil and gas industry and potential operational disruptions due to geopolitical factors could impact earnings stability.
Financial Position
A strong balance sheet characterized by a net debt ratio of 10% and ongoing commitment to capital discipline indicates long-term durability in Chevron's operational strategy.
SWOT Analysis
Strengths
Robust production growth driven by strategic investments in high-yield assets like the Permian Basin.
Strong commitment to returning capital to shareholders through significant dividends and share buybacks.
Weaknesses
Refining business facing weaker margins and impacts from one-off charges affecting earnings stability; recent declines in downstream profitability may challenge overall profitability.
Dependence on oil and gas price volatility impacts long-term financial predictability.
Opportunities
Expansion into new energies for sustainable operations and reduced carbon emissions, tapping into growing demand for renewable energy solutions.
Potential for further exploration and development in the Gulf of America and international opportunities in regions like West Africa and the Eastern Mediterranean.
Threats
Ongoing geopolitical risks and market volatility could impact operational consistency and affect commodity prices.
Competitive pressure from major oil and gas players necessitating continued focus on operational efficiency and shareholder value.