- Second-quarter earnings of $1.0 billion or $2.38 per share;
adjusted earnings of $984 million or $2.31 per share
- $1.3 billion returned to shareholders through dividends and
share repurchases
- Record Midstream NGL pipeline and fractionation volumes;
synergy capture driving lower costs
- Strong Refining operations with 98% crude utilization, 86%
clean product yield and lower costs
Phillips 66 (NYSE: PSX), a leading diversified and integrated
downstream energy provider, announced second-quarter earnings.
"We are systematically executing on our strategic priorities,
which is reflected in our second-quarter results," said Mark
Lashier, chairman and CEO of Phillips 66. “Refining crude
utilization was our highest in five years and we lowered our costs
by nearly a dollar per barrel, reflecting the success of our
business transformation efforts. In Midstream, strong results
reflect record NGL volumes and increased synergy capture.”
Lashier added, “We continue to increase shareholder value
through strong operating performance, disciplined capital
allocation and asset portfolio optimization.”
Financial Results Summary (in millions of dollars, except
as indicated)
2Q 2024
1Q 2024
Earnings
$
1,015
748
Adjusted Earnings1
984
822
Adjusted EBITDA1
2,183
1,943
Earnings Per Share
Earnings Per Share - Diluted
2.38
1.73
Adjusted Earnings Per Share - Diluted1
2.31
1.90
Cash Flow From Operations
2,097
(236
)
Cash Flow From Operations, Excluding
Working Capital1
1,181
1,211
Capital Expenditures
367
628
Return of Capital to Shareholders
1,325
1,612
Share repurchases
840
1,164
Dividends paid
485
448
Cash
2,444
1,570
Debt
19,960
20,154
Debt-to-capital ratio
40
%
40
%
Net debt-to-capital ratio1
36
%
38
%
1Represents a non-GAAP financial measure.
Reconciliations of these non-GAAP financial measures to the most
comparable GAAP financial measure are included within this
release.
Segment Financial and Operating Highlights (in millions
of dollars, except as indicated)
2Q 2024
1Q 2024
Change
Earnings1
$
1,015
748
267
Midstream
767
554
213
Chemicals
222
205
17
Refining
302
216
86
Marketing and Specialties
415
366
49
Renewable Fuels
(55
)
(55
)
—
Corporate and Other
(340
)
(322
)
(18
)
Income tax expense
(291
)
(203
)
(88
)
Noncontrolling interests
(5
)
(13
)
8
Adjusted Earnings1,2
$
984
822
162
Midstream
753
613
140
Chemicals
222
205
17
Refining
302
313
(11
)
Marketing and Specialties
415
307
108
Renewable Fuels
(55
)
(55
)
—
Corporate and Other
(340
)
(322
)
(18
)
Income tax expense
(278
)
(226
)
(52
)
Noncontrolling interests
(35
)
(13
)
(22
)
Adjusted EBITDA2
$
2,183
1,943
240
Midstream
971
861
110
Chemicals
348
325
23
Refining
531
545
(14
)
Marketing and Specialties
484
377
107
Renewable Fuels
(43
)
(49
)
6
Corporate and Other
(108
)
(116
)
8
Operating Highlights
Midstream NGL Fractionated Volumes
(MBD)
744
679
65
Chemicals Global O&P Utilization
98
%
96
%
2
%
Refining
Turnaround Expense ($)
100
124
(24
)
Realized Margin ($/BBL)
10.01
11.01
(1.00
)
Market Capture
64
%
70
%
(6
)%
Crude Capacity Utilization
98
%
92
%
6
%
Clean Product Yield
86
%
84
%
2
%
Renewable Fuels Produced (MBD)
31
9
22
1Segment reporting is pre-tax.
2Represents a non-GAAP financial measure.
Reconciliations of these non-GAAP financial measures to the most
comparable GAAP financial measure are included within this
release.
Second-Quarter 2024 Financial Results
- Midstream second-quarter 2024 adjusted pre-tax income increased
compared with the first quarter, primarily due to higher NGL
volumes and margins, as well as lower costs.
- Chemicals adjusted pre-tax income increased compared with the
first quarter, mainly due to higher margins, partially offset by
turnaround costs.
- Refining adjusted pre-tax income decreased slightly compared
with the first quarter, primarily due to lower market crack
spreads, partially offset by higher volumes and lower costs.
- Marketing and Specialties adjusted pre-tax income increased
compared with the first quarter, mainly due to higher realized
margins.
- Renewable Fuels reporting segment established; the Rodeo
Renewable Energy Complex reached full processing rates of
approximately 50,000 barrels per day.
- As of June 30, 2024, the company had $2.4 billion of cash and
cash equivalents and $4.1 billion of committed capacity available
under a credit facility.
Business Highlights and Strategic Priorities Progress
- Distributed $11.2 billion through share repurchases and
dividends since July 2022 and on pace to achieve the company’s $13
billion to $15 billion target by year end.
- Achieved $1.3 billion in run-rate business transformation
savings as of June 30, nearing the $1.4 billion target.
- Progressed asset dispositions with the sale of the company’s
25% non-operated interest in Rockies Express Pipeline LLC,
generating cash proceeds of $685 million. Since 2022, total
proceeds from asset dispositions are $1.1 billion toward the
company’s previously announced target of over $3 billion.
- Advanced NGL wellhead-to-market strategy with the acquisition
of Pinnacle Midstream on July 1, 2024.
- Completed conversion of Rodeo Renewable Energy Complex,
expanding commercial-scale production and positioning the company
as a leader in renewable fuels.
Investor Webcast
Members of Phillips 66 executive management will host a webcast
at noon ET to provide an update on the company’s strategic
initiatives and discuss the company’s second-quarter performance.
To access the webcast and view related presentation materials, go
to phillips66.com/investors and click on “Events &
Presentations.” For detailed supplemental information, go to
phillips66.com/supplemental.
About Phillips 66
Phillips 66 (NYSE: PSX) is a leading diversified and integrated
downstream energy provider that manufactures, transports and
markets products that drive the global economy. The company’s
portfolio includes Midstream, Chemicals, Refining, Marketing and
Specialties, and Renewable Fuels businesses. Headquartered in
Houston, Phillips 66 has employees around the globe who are
committed to safely and reliably providing energy and improving
lives while pursuing a lower-carbon future. For more information,
visit phillips66.com or follow @Phillips66Co on LinkedIn.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE
“SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This news release contains forward-looking statements within the
meaning of the federal securities laws. Words such as
“anticipated,” “estimated,” “expected,” “planned,” “scheduled,”
“targeted,” “believe,” “continue,” “intend,” “will,” “would,”
“objective,” “goal,” “project,” “efforts,” “strategies” and similar
expressions that convey the prospective nature of events or
outcomes generally indicate forward-looking statements. However,
the absence of these words does not mean that a statement is not
forward-looking. Forward-looking statements included in this news
release are based on management’s expectations, estimates and
projections as of the date they are made. These statements are not
guarantees of future performance and you should not unduly rely on
them as they involve certain risks, uncertainties and assumptions
that are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecast in
such forward-looking statements. Factors that could cause actual
results or events to differ materially from those described in the
forward-looking statements include: fluctuations in NGL, crude oil,
refined petroleum and renewable fuels product and natural gas
prices, and refining, marketing and petrochemical margins; changes
in governmental policies or laws that relate to NGL, crude oil,
natural gas, refined petroleum products, or renewable fuels that
regulate profits, pricing, or taxation, or other regulations that
limit or restrict refining, marketing and midstream operations or
restrict exports; the effects of any widespread public health
crisis and its negative impact on commercial activity and demand
for refined petroleum or renewable fuels products; our ability to
timely obtain or maintain permits necessary for capital projects;
changes to worldwide government policies relating to renewable
fuels and greenhouse gas emissions that adversely affect programs
including the renewable fuel standards program, low carbon fuel
standards and tax credits for biofuels; our ability to achieve the
expected benefits of the integration of DCP Midstream, LP,
including the realization of synergies; the success of the
company’s business transformation initiatives and the realization
of savings and cost reductions from actions taken in connection
therewith; unexpected changes in costs for constructing, modifying
or operating our facilities; our ability to successfully complete,
or any material delay in the completion of, asset dispositions or
acquisitions that we may pursue; unexpected difficulties in
manufacturing, refining or transporting our products; the level and
success of drilling and production volumes around our midstream
assets; risks and uncertainties with respect to the actions of
actual or potential competitive suppliers and transporters of
refined petroleum products, renewable fuels or specialty products;
lack of, or disruptions in, adequate and reliable transportation
for our products; potential liability from litigation or for
remedial actions, including removal and reclamation obligations
under environmental regulations; failure to complete construction
of capital projects on time and within budget; our ability to
comply with governmental regulations or make capital expenditures
to maintain compliance with laws; limited access to capital or
significantly higher cost of capital related to illiquidity or
uncertainty in the domestic or international financial markets,
which may also impact our ability to repurchase shares and declare
and pay dividends; potential disruption of our operations due to
accidents, weather events, including as a result of climate change,
acts of terrorism or cyberattacks; general domestic and
international economic and political developments, including armed
hostilities (such as the Russia-Ukraine war), expropriation of
assets, and other diplomatic developments; international monetary
conditions and exchange controls; changes in estimates or
projections used to assess fair value of intangible assets,
goodwill and property and equipment and/or strategic decisions with
respect to our asset portfolio that cause impairment charges;
investments required, or reduced demand for products, as a result
of environmental rules and regulations; changes in tax,
environmental and other laws and regulations (including alternative
energy mandates); political and societal concerns about climate
change that could result in changes to our business or increase
expenditures, including litigation-related expenses; the operation,
financing and distribution decisions of equity affiliates we do not
control; and other economic, business, competitive and/or
regulatory factors affecting Phillips 66’s businesses generally as
set forth in our filings with the Securities and Exchange
Commission. Phillips 66 is under no obligation (and expressly
disclaims any such obligation) to update or alter its
forward-looking statements, whether as a result of new information,
future events or otherwise.
Use of Non-GAAP Financial Information—This news release
includes the terms “adjusted earnings,” “adjusted pre-tax income
(loss),” “adjusted EBITDA,” “adjusted earnings per share,” “cash
from operations, excluding working capital,” and “net
debt-to-capital ratio.” These are non-GAAP financial measures that
are included to help facilitate comparisons of operating
performance across periods and to help facilitate comparisons with
other companies in our industry. Where applicable, these measures
exclude items that do not reflect the core operating results of our
businesses in the current period or other adjustments to reflect
how management analyzes results. Reconciliations of these non-GAAP
financial measures to the most comparable GAAP financial measure
are included within this release.
References in the release to earnings refer to net income
attributable to Phillips 66. References to run-rate business
transformation savings include cost savings and other benefits that
will be captured in the sales and other operating revenues;
purchased crude oil and products costs; operating expenses;
selling, general and administrative expenses; and equity in
earnings of affiliates lines on our consolidated statement of
income when realized. Run-rate savings include run-rate sustaining
capital savings. Run-rate sustaining capital savings include
savings that will be captured in the capital expenditures and
investments on our consolidated statement of cash flows when
realized.
Basis of Presentation - Effective April 1, 2024, we
changed the internal financial information reviewed by our chief
executive officer to evaluate performance and allocate resources to
our operating segments. This included changes in the composition of
our operating segments, as well as measurement changes for certain
activities between our operating segments. The primary effects of
this realignment included establishment of a Renewable Fuels
operating segment, which includes renewable fuels activities and
assets historically reported in our Refining, Marketing and
Specialties (M&S), and Midstream segments; change in method of
allocating results for certain Gulf Coast distillate export
activities from our M&S segment to our Refining segment;
reclassification of certain crude oil and international clean
products trading activities between our M&S segment and our
Refining segment; and change in reporting of our 16% investment in
NOVONIX from our Midstream segment to Corporate and Other.
Accordingly, prior period results have been recast for
comparability.
Earnings
Millions of Dollars
2024
2023
2Q
1Q
Jun YTD
2Q
Jun YTD
Midstream
$
767
554
1,321
620
1,336
Chemicals
222
205
427
192
390
Refining
302
216
518
1,175
2,769
Marketing and Specialties
415
366
781
533
896
Renewable Fuels
(55
)
(55
)
(110
)
68
142
Corporate and Other
(340
)
(322
)
(662
)
(344
)
(638
)
Pre-Tax Income
1,311
964
2,275
2,244
4,895
Less: Income tax expense
291
203
494
510
1,084
Less: Noncontrolling interests
5
13
18
37
153
Phillips 66
$
1,015
748
1,763
1,697
3,658
Adjusted
Earnings
Millions of Dollars
2024
2023
2Q
1Q
Jun YTD
2Q
Jun YTD
Midstream
$
753
613
1,366
642
1,334
Chemicals
222
205
427
192
390
Refining
302
313
615
1,189
2,783
Marketing and Specialties
415
307
722
533
896
Renewable Fuels
(55
)
(55
)
(110
)
68
142
Corporate and Other
(340
)
(322
)
(662
)
(250
)
(509
)
Pre-Tax Income
1,297
1,061
2,358
2,374
5,036
Less: Income tax expense
278
226
504
532
1,108
Less: Noncontrolling interests
35
13
48
76
197
Phillips 66
$
984
822
1,806
1,766
3,731
Millions of Dollars
Except as Indicated
2024
2023
2Q
1Q
Jun YTD
2Q
Jun YTD
Reconciliation of Consolidated Earnings
to Adjusted Earnings
Consolidated Earnings
$
1,015
748
1,763
1,697
3,658
Pre-tax adjustments:
Impairments1
224
163
387
—
—
Net (gain) loss on asset dispositions2
(238
)
—
(238
)
14
(22
)
Legal settlement
—
(66
)
(66
)
—
—
Business transformation restructuring
costs3
—
—
—
41
76
Loss on early redemption of DCP debt
—
—
—
53
53
DCP integration restructuring costs4
—
—
—
22
34
Tax impact of adjustments5
13
(23
)
(10
)
(22
)
(24
)
Noncontrolling interests
(30
)
—
(30
)
(39
)
(44
)
Adjusted earnings
$
984
822
1,806
1,766
3,731
Earnings per share of common stock
(dollars)
$
2.38
1.73
4.10
3.72
7.92
Adjusted earnings per share of common
stock (dollars)6
$
2.31
1.90
4.21
3.87
8.08
Reconciliation of Segment Pre-Tax
Income (Loss) to Adjusted Pre-Tax Income (Loss)
Midstream Pre-Tax Income
$
767
554
1,321
620
1,336
Pre-tax adjustments:
Impairments1
224
59
283
—
—
Net gain on asset disposition2
(238
)
—
(238
)
—
(36
)
DCP integration restructuring costs4
—
—
—
22
34
Adjusted pre-tax income
$
753
613
1,366
642
1,334
Chemicals Pre-Tax Income
$
222
205
427
192
390
Pre-tax adjustments:
None
—
—
—
—
—
Adjusted pre-tax income
$
222
205
427
192
390
Refining Pre-Tax Income
$
302
216
518
1,175
2,769
Pre-tax adjustments:
Impairments1
—
104
104
—
—
Net loss on asset disposition
—
—
—
14
14
Legal settlement
—
(7
)
(7
)
—
—
Adjusted pre-tax income
$
302
313
615
1,189
2,783
Marketing and Specialties Pre-Tax
Income
$
415
366
781
533
896
Pre-tax adjustments:
Legal settlement
—
(59
)
(59
)
—
—
Adjusted pre-tax income
$
415
307
722
533
896
Renewable Fuels Pre-Tax Loss
$
(55
)
(55
)
(110
)
68
142
Pre-tax adjustments:
None
—
—
—
—
—
Adjusted pre-tax loss
$
(55
)
(55
)
(110
)
68
142
Corporate and Other Pre-Tax
Loss
$
(340
)
(322
)
(662
)
(344
)
(638
)
Pre-tax adjustments:
Business transformation restructuring
costs3
—
—
—
41
76
Loss on early redemption of DCP debt
—
—
—
53
53
Adjusted pre-tax loss
$
(340
)
(322
)
(662
)
(250
)
(509
)
1Impairment, related to certain gathering
and processing assets in the Midstream segment, as well as certain
crude oil processing and logistics assets in California, reported
in the Refining segment.
2(Gain)/loss from asset dispositions,
primarily reflect a gain from the sale of the company’s 25%
interest in Rockies Express Pipeline LLC.
3Restructuring costs, related to Phillips
66’s multi-year business transformation efforts, are primarily due
to consulting fees.
4Restructuring costs, related to the
integration of DCP Midstream, primarily reflect severance costs,
consulting fees and contract exit costs. A portion of these costs
are attributable to noncontrolling interests.
5We generally tax effect taxable
U.S.-based special items using a combined federal and state
statutory income tax rate of approximately 24%. Taxable special
items attributable to foreign locations likewise use a local
statutory income tax rate. Nontaxable events reflect zero income
tax. These events include, but are not limited to, most goodwill
impairments, transactions legislatively exempt from income tax,
transactions related to entities for which we have made an
assertion that the undistributed earnings are permanently
reinvested, or transactions occurring in jurisdictions with a
valuation allowance.
6Q1 2024 and Q2 2023 are based on adjusted
weighted-average diluted shares of 432,158 thousand and 456,173
thousand, respectively. Other periods are based on the same
weighted-average diluted shares outstanding as that used in the
GAAP diluted earnings per share calculation. Income allocated to
participating securities, if applicable, in the adjusted earnings
per share calculation is the same as that used in the GAAP diluted
earnings per share calculation.
Millions of Dollars
Except as Indicated
2024
2Q
1Q
Reconciliation of Consolidated Net
Income to Adjusted EBITDA
Net Income
$
1,020
761
Plus:
Income tax expense
291
203
Net interest expense
200
186
Depreciation and amortization
497
504
Phillips 66 EBITDA
2,008
1,654
Special Item Adjustments (pre-tax):
Impairments
224
163
Net gain on asset disposition
(238
)
—
Legal settlement
—
(66
)
Total Special Item Adjustments
(pre-tax)
(14
)
97
Change in Fair Value of NOVONIX
Investment
7
(5
)
Phillips 66 EBITDA, Adjusted for
Special Items and Change in Fair Value of NOVONIX
Investment
$
2,001
1,746
Other Adjustments (pre-tax):
Proportional share of selected equity
affiliates income taxes
26
21
Proportional share of selected equity
affiliates net interest
19
23
Proportional share of selected equity
affiliates depreciation and amortization
195
188
Adjusted EBITDA attributable to
noncontrolling interests
(58
)
(35
)
Phillips 66 Adjusted EBITDA
$
2,183
1,943
Reconciliation of Segment Income (Loss)
before Income Taxes to Adjusted EBITDA
Midstream Income before income
taxes
$
767
554
Plus:
Depreciation and amortization
224
229
Midstream EBITDA
$
991
783
Special Item Adjustments (pre-tax):
Net gain on asset disposition
(238
)
—
Impairments
224
59
Midstream EBITDA, Adjusted for Special
Items
$
977
842
Other Adjustments (pre-tax):
Proportional share of selected equity
affiliates income taxes
5
3
Proportional share of selected equity
affiliates net interest
10
13
Proportional share of selected equity
affiliates depreciation and amortization
37
38
Adjusted EBITDA attributable to
noncontrolling interests
(58
)
(35
)
Midstream Adjusted EBITDA
$
971
861
Chemicals Income before income
taxes
$
222
205
Plus:
None
—
—
Chemicals EBITDA
$
222
205
Special Item Adjustments (pre-tax):
None
—
—
Chemicals EBITDA, Adjusted for Special
Items
$
222
205
Other Adjustments (pre-tax):
Proportional share of selected equity
affiliates income taxes
15
13
Proportional share of selected equity
affiliates net interest
—
1
Proportional share of selected equity
affiliates depreciation and amortization
111
106
Chemicals Adjusted EBITDA
$
348
325
Refining Income before income
taxes
$
302
216
Plus:
Depreciation and amortization
204
208
Refining EBITDA
$
506
424
Special Item Adjustments (pre-tax):
Impairments
—
104
Legal settlement
—
(7
)
Refining EBITDA, Adjusted for Special
Items
$
506
521
Other Adjustments (pre-tax):
Proportional share of selected equity
affiliates income taxes
1
—
Proportional share of selected equity
affiliates net interest
(2
)
(1
)
Proportional share of selected equity
affiliates depreciation and amortization
26
25
Refining Adjusted EBITDA
$
531
545
Marketing and Specialties Income before
income taxes
$
415
366
Plus:
Depreciation and amortization
32
36
Marketing and Specialties
EBITDA
$
447
402
Special Item Adjustments (pre-tax):
Legal settlement
—
(59
)
Marketing and Specialties EBITDA,
Adjusted for Special Items
$
447
343
Other Adjustments (pre-tax):
Proportional share of selected equity
affiliates income taxes
5
5
Proportional share of selected equity
affiliates net interest
11
10
Proportional share of selected equity
affiliates depreciation and amortization
21
19
Marketing and Specialties Adjusted
EBITDA
$
484
377
Renewable Fuels Loss before income
taxes
$
(55
)
(55
)
Plus:
Depreciation and amortization
12
6
Renewable Fuels EBITDA
(43
)
(49
)
Special Item Adjustments (pre-tax):
None
—
—
Renewable Fuels EBITDA, Adjusted for
Special Items
$
(43
)
(49
)
Corporate and Other Loss before income
taxes
$
(340
)
(322
)
Plus:
Net interest expense
200
186
Depreciation and amortization
25
25
Corporate & Other EBITDA
$
(115
)
(111
)
Special Item Adjustments (pre-tax):
None
—
—
Total Special Item Adjustments
(pre-tax)
—
—
Change in Fair Value of NOVONIX
Investment
7
(5
)
Corporate EBITDA, Adjusted for Special
Items and Change in Fair Value of NOVONIX Investment
$
(108
)
(116
)
Millions of Dollars
Except as Indicated
June 30, 2024
Debt-to-Capital Ratio
Total Debt
$
19,960
Total Equity
30,507
Debt-to-Capital Ratio
40
%
Total Cash
2,444
Net Debt-to-Capital Ratio
36
%
Millions of Dollars
June 30, 2024
Reconciliation of Net Cash Used in
Operating Activities to Operating Cash Flow, Excluding Working
Capital
Net Cash Used in Operating Activities
$
2,097
Less: Net Working Capital Changes
916
Operating Cash Flow, Excluding Working
Capital
$
1,181
Millions of Dollars
Except as Indicated
2024
2Q
1Q
Reconciliation of Refining Income
Before Income Taxes to Realized Refining Margins
Income before income taxes
$
302
216
Plus:
Taxes other than income taxes
74
121
Depreciation, amortization and
impairments
203
314
Selling, general and administrative
expenses
51
38
Operating expenses
884
953
Equity in earnings of affiliates
(33
)
(108
)
Other segment expense, net
(1
)
(30
)
Proportional share of refining gross
margins contributed by equity affiliates
260
331
Special items:
Legal settlement
—
(7
)
Realized refining margins
$
1,740
1,828
Total processed inputs (thousands of
barrels)
151,296
143,700
Adjusted total processed inputs (thousands
of barrels)*
174,107
165,954
Income before income taxes (dollars per
barrel)**
$
2.00
1.50
Realized refining margins (dollars per
barrel)***
$
10.01
11.01
*Adjusted total processed inputs include
our proportional share of processed inputs of an equity
affiliate.
**Income before income taxes divided by
total processed inputs.
***Realized refining margins per barrel,
as presented, are calculated using the underlying realized refining
margin amounts, in dollars, divided by adjusted total processed
inputs, in barrels. As such, recalculated per barrel amounts using
the rounded margins and barrels presented may differ from the
presented per barrel amounts.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240730161288/en/
Jeff Dietert (investors) 832-765-2297 jeff.dietert@p66.com
Owen Simpson (investors) 832-765-2297 owen.simpson@p66.com
Thaddeus Herrick (media) 855-841-2368
thaddeus.f.herrick@p66.com
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