Exxon Mobil : 4Q 2022 Transcript

ExxonMobil Fourth Quarter 2022 Earnings Call Transcript

This transcript presents ExxonMobil's fourth quarter 2022 earnings call held on January 31, 2023.

Operator: Good day, everyone, and welcome to this ExxonMobil Corporation Fourth-Quarter 2022

Earnings Call. Today's call is being recorded. At this time, I'd like to turn the call over to the Vice President of Investor Relations, Mrs. Jennifer Driscoll. Please go ahead, ma'am.

Jennifer Driscoll: Good morning, and welcome to ExxonMobil's Fourth-Quarter 2022 Earnings Call.

Thanks for joining us today. Here with me are Darren Woods, Chairman and Chief Executive Officer, and Kathy Mikells, Senior Vice President and Chief Financial Officer. Our presentation and prerecorded remarks are available on the Investor Relations section of our website.

Our fourth-quarter earnings news release is posted in the same location, and will be joined by the transcript once it's available. Shortly, Darren will provide brief opening comments and reference a few slides from this presentation. That will give analysts more time to ask questions before we conclude at about 8:30 AM Central Time.

During the presentation, we'll make forward looking comments. So, we encourage you to read our cautionary statement on slide two. Additional information on the risks and uncertainties that apply to these comments is listed in our most recent form 10-Ks and 10-Qs. Please note that we also provided supplemental information at the end of our earnings slides, which are posted on the website. Also, as a reminder, we posted our Advancing Climate Solutions Report, Sustainability Report, and Energy Outlook online in mid-December.

We reference them in today's presentation. And you can find them on our website under the Sustainability Tab. Lastly, in the past, we've held an Annual Investor Day in March. We won't be

ExxonMobil 4Q22 Earnings Call

1

hosting an Investor Day in 2023. Last December, we laid out comprehensive plans for 2023 through 2027 as part of our Corporate Plan Update. And the company is already executing on these plans.

We've been enjoying the higher level of investor engagement that we've been having. We'll continue to seek your feedback to host events that give you access to our leaders and insights on parts of the business that interest you, and to share with you information about the company and our plans on more of a real-time basis. With that, I'll hand it over to Darren.

Darren Woods: Thanks, Jennifer. Good morning, and thanks for joining us today. Before covering our 2022 results, I want to start by recognizing our people, their hard work and commitment not only to the company, but to meeting the critical needs of society, are what drove the strong results we reported this morning. Their work is not easy, whether it's achieving industry-leading safety, driving record levels of environmental performance, increasing production, offsetting runaway inflation, effectively responding to expropriations, or quickly recovering for winter storms to name just a few of the challenges.

Our people delivered while, I'll add, continuing to manage significant ongoing organizational changes. As I cover our results, I think you'll see why we and the entire management team are so proud of their efforts. Of course, our results clearly benefited from a favorable market. To take full advantage of the undersupplied market, our work began years ago, well before the pandemic. And we chose to invest countercyclically.

We leaned in when others leaned out, bucking conventional wisdom. We continued with these investments through the pandemic and into today. This year, our improved asset portfolio, organization changes, and strong operating performance came together to deliver industry-leading

ExxonMobil 4Q22 Earnings Call

2

results, industry-leading earnings, cash flows, return on capital employed, and total shareholder returns.

Excluding asset sales, we had our best cash flow performance since the merger. And despite lower revenues, we delivered higher profits than 2012, our previous record year, with a 400-basis-point improvement in profit margin reflecting upgrades to our product mix, structural cost reductions, disciplined expense management. 2022 was also a year of strong progress across our five strategic priorities.

Importantly, we've continued to strengthen our industry-leading portfolio and increased production from high-return advantaged assets in Guyana and the Permian at a time when the world needed it most. We implemented a series of organizational changes to further leverage our scale and integration, improve effectiveness, and better serve our customers.

We combined our downstream and chemical companies to form Product Solutions, the world's largest fuels, chemicals, and lubricants business. This new integrated business is focused on developing high-value products, improving portfolio value, and leading in sustainability. We're also now supporting our businesses with corporate-wide organizations, including projects, technology, engineering, operations, safety, and sustainability.

We see further opportunities in supply chain, procurement, and finance. We continued to expand our Low Carbon Solutions business. We recently signed the first-of-its-kind customer contract to capture and permanently store up to 2 million metric tons per year of CO2. This agreement in a hard-

to-decarbonize sector highlights how ExxonMobil can leverage our advantages to help others reduce their emissions, and build an attractive business with strong returns, and significant opportunities for growth.

ExxonMobil 4Q22 Earnings Call

3

The recent passage of the U.S. Inflation Reduction Act, which incentivizes both hydrogen and carbon capture and storage, further reinforces this. To that end, in December, we shared our plans to invest approximately $17 billion in lower-emissions opportunities from 2022 through 2027, up from $15 billion in our prior plan. We also made significant progress reducing greenhouse gas emissions in our existing operations, and remain on track with our 2030 emissions reduction plans, including net zero Scope 1 and 2 emissions for our unconventional operations in the Permian Basin by 2030.

In addition to investing in industry-advantaged projects, we took advantage of the strong markets to further high-grade our asset portfolio with approximately $5 billion in divestments of non-core assets. Capex was in line with our guidance. To further increase transparency in 2022, we introduced three new reports. The Lobbying Report, which provides additional disclosure of our lobbying activities and expenditures.

Climate Lobbying Report, which provides details on our US activities at the Federal and State level. And our Investing in People Supplement, an addition to our updated Sustainability Report. Lastly, as I mentioned, the hard work of our people underpinned our success this past year, as it has done for decades. We build on this advantage every year by attracting and developing the best talent.

This past year, we were once again recognized as top in industry for most attractive employer among US engineering students, an honor we've received ten years in a row. Our 2022 financial results, which led the industry, further confirmed the strength of the strategy we developed five years ago. We grew earnings to nearly $56 billion, $59 billion excluding identified items, significantly outpacing peers.

ExxonMobil 4Q22 Earnings Call

4

We delivered an industry-leading total shareholder return of 87% and a return on capital employed of 25%, our highest one-year ROCE since 2012. Cash flow from operating activities was nearly $77 billion, also leading the industry. This enabled us to reduce net debt to 5%, fortifying the balance sheet and positioning us to continue our strategy of countercyclically investing.

Our continued focus on leveraging scale and integration drove further efficiencies with nearly $6.9 billion in structural cost savings versus 2019, up from $5.3 billion at the end of 2021. We remain on plan to meet our target of $9 billion in structural cost reductions by the end of 2023. Consistent with our capital allocation strategy, we continue to share our success with shareholders through a reliable and growing dividend.

In 2022, we boosted the quarterly dividend by more than 3% and marked the 40th consecutive annual increase. Additionally, we increased our share repurchase program twice during the year. In total, we returned $30 billion to shareholders in 2022, including about $15 billion in dividends, which also led peers. These actions reflect the confidence we have in our strategy, performance we've seen across our businesses, and the strength of our company's future.

We're proud of our people and their work to meet the evolving needs of society. As we advance our strategy and the "and" equation, we're committed to sharing their progress. Consistent with this, we continue to enhance our disclosures and increase transparency. In December, we updated several important online publications. Our latest Sustainability Report describes the 14 focus areas where we believe our company can have the most impact.

The Advancing Climate Solutions 2023 Progress Report outlines our approach to help reduce greenhouse gas emissions in support of a net-zero future. It includes updated resiliency modeling under the IEA Net-Zero Emissions by 2050 Scenario, including the addition of carbon and pricing

ExxonMobil 4Q22 Earnings Call

5