Phillips 66 Q3 FY2025 earnings call

• Recognized Jeff Dietert's retirement and expressed gratitude. - Refining executed on strategy with strong performance, achieving 99% utilization; Midstream and Marketing/Specialties provided a strong foundation; Chemicals had solid returns with above 100% utilization. - Milestones: Dos Pico's two gas plant fully operational, Coastal Bend pipeline first expansion completed, achieving record NGL throughput and fractionation volume; closed acquisition of remaining 50% of Wood River and Borger refineries; open season for Western Gateway refined products pipeline. - Refining focus on five pillars of excellence: safety, people, reliability, margin, cost efficiency; targeting adjusted controllable cost per barrel to be approximately $5.50 on an annual basis by 2027.

Refining: Achieved 99% utilization (highest since 2018, above industry average); year-to-date clean product yield of 87% (record); adjusted cost per barrel $7.07, impacted by $0.40 per barrel environmental accrual related to Los Angeles refinery. Midstream: Results decreased mainly due to lower margins, partially offset by higher volumes; includes $30 million additional depreciation from Los Angeles refinery assets. Chemicals: Improved on higher margins and lower costs, driven by decrease in turnaround spend; year-to-date adjusted chemicals EBITDA $700 million. Marketing and specialties: Decreased due to lower margins, primarily from more favorable market conditions in Q2. Renewable fuels: Improved primarily due to higher margins including inventory impacts and international renewable credits. Revenue contribution details were not explicitly provided in absolute percentages in the transcript but the financial performance for each segment is as above.

• Third quarter reported earnings $133 million ($0.32 per share); adjusted earnings $1 billion ($2.52 per share). Both include $241 million pretax impact of accelerated depreciation and ~$100 million charges related to Los Angeles refinery idling. - Operating cash flow $1.2 billion; returned $751 million to shareholders including $267 million in share repurchases. - Fourth quarter guidance: Chemicals global O&P utilization rate mid-nineties; Refining worldwide crude utilization rate low to mid-nineties; turnaround expense $125-$145 million; corporate and other costs $340-$360 million. - Capital budget revised to $2.5 billion, with $300 million for Wood River and Borger refineries (WRB); net addition of $150 million relative to previous capital budget due to WRB integration.

No specific risks detailed in the transcript beyond general factors from SEC filings affecting forward-looking statements, which are not elaborated further in the provided call.

Q: Regarding WRB, details on benefits and organic growth A: Mark Lashier mentioned it opens up integration optionality for WRB, Ponca City, and Borger; Rich Harbison talked about added processing capacity and increased crude processing optionality; Brian Mandell discussed commercial synergies like cross-functional team initiatives.

Q: Western Gateway project rationale A: Mark Lashier stated it aligns with mission to provide energy, addresses refining capacity evolution in West; Don Baldridge and Brian Mandell discussed project framework, comparison to competitors, and regulatory outlook.

Q: Debt reduction pathway A: Mark Lashier mentioned focus on debt reduction as priority; Kevin Mitchell explained debt target of $17 billion, cash flow allocation to dividends, buybacks, capital spending, and debt reduction.

Q: Chemical margins A: Mark Lashier discussed feedstock blend difference from IHS Marker, impact of downtime, and future industry rationalization.

Q: Refining utilization and turnarounds A: Rich Harbison talked about reliability programs, margin improvements, and utilization as a new normal.

Q: Western Gateway integration and permits A: Mark Lashier and Don Baldridge discussed integration across refining, commercial, midstream, and positive regulatory feedback.

Q: China policies and chemicals A: Mark Lashier mentioned industry rationalization in China affecting chemicals.

Q: Renewable fuels segment A: Brian Mandell discussed Q3 performance, Q4 outlook, and policy clarity.

Q: Refining margin capture and progress on 5% goal A: Rich Harbison and Brian Mandell discussed regional performance, headwinds, and progress on margin capture and clean product yield targets