After facing several challenges in 2016 that pushed down results, Phillips 66 (PSX 1.22%) bounced back big-time in the first quarter. The company trounced the consensus estimate by a whopping $0.51 per share, which was roughly 10 times higher than the $0.05 per share analysts expected.

Needless to say, the company had a strong quarter, which CEO Greg Garland highlighted on the accompanying conference call. Here are five things Garland noted about those results and what they imply for the future.

Oil Refinery at Sunset with long shadows.

Image source: Getty Images.

Turnarounds are complete

Garland led off his prepared remarks by pointing out:

During the quarter, we successfully completed several major turnarounds in Refining and Chemicals. This represents our highest level of turnaround activity in a quarter since the formation of our company. Our first quarter earnings largely reflect the impact of this downtime, but also highlight the benefit of our diversified and engraved portfolio.

Downtime across several of its facilities acted as a negative headwind on results during the first quarter. In chemicals, for example, global utilization for olefins and polyolefins (O&P) was 89%, which was down from 93% in the year-ago quarter, though that was an improvement from 86% in the fourth quarter. Meanwhile, utilization across its refineries was 84% during the quarter, down from 93% last quarter and 94% a year ago. But while turnarounds remained a headwind in the first quarter, the company's diversified business model enabled it to overcome those issues. Furthermore, the successful completion of those projects should drive better results in future quarters.

Chemicals saved the day

Despite continued turnaround activity in the first quarter, the company's chemicals joint venture with Chevron (CVX -0.90%) was one of the key drivers of its improving results. Garland noted that the joint venture "had solid results on strong demand and improved margins." The O&P business was particularly robust, delivering $161 million in adjusted earnings, up 53.3% versus the fourth quarter thanks to improved margins, higher volumes, and lower costs.

Midstream continues to grow

Midstream was the other driver this quarter as the company "continue[s] to successfully execute our Midstream growth program," according to Garland. He noted that several of its largest growth projects are either complete or nearing completion, including the Freeport LPG Terminal, which operated at capacity during the quarter, driving a significant improvement in NGL-related earnings. Meanwhile, the company announced a slate of new growth projects in the segment, including the addition of 2 million more barrels of storage capacity at its Beaumont terminal by next year. It is also exploring the potential to build additional fractionating capacity and expects to sanction these projects later this year.

Oil refinery at twilight with oil storage tanks in front.

Image source: Getty Images.

Phillips 66 Partners remains on pace to hit its targets

While the company continues to invest in midstream projects on its balance sheet, however, Garland reiterated that its MLP, Phillips 66 Partners (PSXP), remains an important part of our midstream growth strategy." Garland reaffirmed the expectation that Phillips 66 Partners will "reach its growth goal of $1.1 billion in run-rate EBITDA by the end of 2018." That will require completing additional dropdown transactions between the two companies as well as the pursuit of new organic growth projects at the MLP.

Shareholder distributions remain an essential part of its value proposition

Garland concluded his prepared remarks on the call by reminding investors that:

[The company] continue[s] to maintain our commitment to our distributions to our shareholders. During the first quarter, we returned over $600 million to shareholders in the form of dividends and share buybacks. We remain committed to our strategy: executing our growth plans, enhancing returns and rewarding our shareholders. The projects we have coming online, they're well positioned to increase cash flow. We believe our integrated downstream portfolio remains a differentiating factor that provides upside in a rising U.S. production environment.

As Garland points out, it continues to return a substantial amount of cash to investors each quarter. Furthermore, with several projects recently coming on line and more expected to enter service shortly, the company should generate higher cash flows in the coming quarters. That suggests that shareholder distributions should keep trending higher, including the likelihood that Phillips 66 will increase the dividend this month, given that it has historically boosted the payout each May.

Investor takeaway

Phillip 66 delivered a much stronger-than-expected quarter despite facing significant headwinds resulting from several major turnarounds across its portfolio. Fueling those results was a marked improvement in the company's chemicals joint venture with Chevron and the positive impact of its growing midstream business. Meanwhile, with several more projects nearing completion, it expects to continue to reward shareholders by returning more cash their way in the future.