ExxonMobil just reported its 1Q 2013 earnings. Its Earnings Per Share were up 6.0% over the 1Q 2012. But its Pretax Income of $16,038 mil in the 1Q 2013 was down 8.4% from the $17,515 mil earned in the 1Q 2012.
So, just what in the world is up with the 14.4% positive earnings spread between the down 8.4% Pretax Income and the up 6.0% EPS?
Well, it's all about financial engineering.
First, ExxonMobil slashed its effective income tax rate on a book basis from 44.1% of Pretax Income in the 1Q 2012 to only 39.1% of Pretax Income in the 1Q 2013.
And second, due to its massive common stock buyback program, ExxonMobil added on 5.5% to its EPS growth in the 1Q 2013, taking it from a 0.5% growth on an after tax earnings basis to a 6.0% growth on an EPS basis.
ExxonMobil's accounting and finance team earned its pay in the 1Q 2013.