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Phillips 66 (PSX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was weak on headline earnings: revenue fell to $33.99B, diluted EPS was $0.01, and adjusted EPS was $(0.15), driven by refining margin compression and $230MM pre-tax accelerated depreciation related to the Los Angeles Refinery; Adjusted EBITDA declined to $1.13B .
  • Midstream provided resilience with record NGL fractionation and LPG exports and higher adjusted pre-tax income (up to $708MM), while Refining posted a large adjusted pre-tax loss ($(759)MM) and realized refining margin dropped to $6.08/BBL from $8.31/BBL in Q3 .
  • Management set new 2025–2027 priorities: return >50% of operating cash flow, target Refining adjusted controllable costs of $5.50/BBL (ex-turnaround), grow Midstream & Chemicals mid-cycle EBITDA by $1B by 2027, and reduce total debt to $17B (as early as end-2025, subject to conditions) .
  • Tactical catalysts: closing of EPIC NGL acquisition, continued asset sales (surpassed $3B announced), heavy Q1 2025 turnaround slate (Refining utilization guided to low 80s, turnaround expense $290–$310MM) and policy clarity on renewables credits (PTC/LCFS/RVO) .

What Went Well and What Went Wrong

What Went Well

  • Midstream set records and grew earnings: “record fractionation and LPG export volumes” with Midstream adjusted pre-tax income rising to $708MM and Adjusted EBITDA to $938MM in Q4 .
  • Refining operational excellence: record clean product yield (88% in Q4; 87% for FY) and sustained above-industry utilization; capture improved to 105% in Q4 supported by butane blending .
  • Strategic execution: exceeded $3B in announced asset dispositions and reaffirmed returning >50% of operating cash flow to shareholders, with $1.1B returned in Q4 (repurchases $647MM, dividends $472MM) .
  • Quote: “Supported by world-class operations, we are committed to returning over 50% of operating cash flow to shareholders.” — Mark Lashier, Chairman & CEO .
  • Quote: “We also delivered on our goal of improving Refining performance... setting record clean product yields and achieving our targeted cost reductions of $1 per barrel.” — Mark Lashier .

What Went Wrong

  • Refining profitability deteriorated materially: adjusted pre-tax loss widened to $(759)MM; realized refining margin fell to $6.08/BBL from $8.31/BBL; impact from weaker crack spreads and full-quarter accelerated depreciation at Los Angeles .
  • Marketing & Specialties earnings fell sequentially, with seasonally lower margins and reversal of a prior hedging benefit (~$100MM negative sequential impact); adjusted pre-tax income fell to $185MM .
  • Chemicals compressed: adjusted pre-tax income decreased to $72MM due to lower polyethylene chain margins and higher turnarounds/maintenance .
  • Analyst concern: Renewables credit uncertainty (PTC/RVO/LCFS, tariffs) keeps renewable margins on “weak footing,” requiring policy clarity for sustained profitability .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Total Revenues & Other Income ($MM)$38,739 $36,163 $33,986
Diluted EPS ($)$2.86 $0.82 $0.01
Adjusted Diluted EPS ($)$3.09 $2.04 $(0.15)
Adjusted EBITDA ($MM)$2,696 $1,998 $1,130
Realized Refining Margin ($/BBL)$13.88 $8.31 $6.08
Clean Product Yield (%) (Worldwide)87% 87% 88%
Crude Capacity Utilization (%) (Worldwide)92% 94% 94%

Segment Adjusted Pre-tax Income (Loss):

Segment ($MM)Q4 2023Q3 2024Q4 2024
Midstream$757 $672 $708
Chemicals$106 $342 $72
Refining$842 $(67) $(759)
Marketing & Specialties$396 $583 $185
Renewable Fuels$(11) $(116) $28
Corporate & Other$(298) $(327) $(294)

Selected KPIs:

KPIQ3 2024Q4 2024
Pipeline Throughput – Y-Grade to Market (MB/D)762 759
Renewable Fuels Produced (MB/D)44 42
Debt-to-Capital Ratio (%)40% 41%
Net Debt-to-Capital Ratio (%)38% 39%
Cash ($MM)$1,637 $1,738
Total Debt ($MM)$19,998 $20,062

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Refining Worldwide Crude Utilization (%)Q1 2025N/ALow 80s New
Refining Turnaround Expense ($MM)Q1 2025N/A$290–$310 New
Corporate & Other Costs ($MM)Q1 2025N/A$310–$330 New
Chemicals Global O&P Utilization (%)Q1 2025N/AMid-90s New
Full-year Turnaround Expense ($MM)FY 2024 vs FY 2025$485–$495 (FY 2024) $500–$550 (FY 2025) Raised vs prior year base
Depreciation & Amortization ($B)FY 2025N/A~$3.3; includes $230MM/quarter accelerated LA New
Refining Adjusted Controllable Costs ($/BBL, ex-turnaround)2025–2027 Target$5.90 (FY 2024 actual base) $5.50 target Lowered cost target
Shareholder Returns (% of OpCF)2025–2027 Target50%+ (framework) >50% Maintained
Total Debt ($B)As early as end-2025N/AReduce to $17 New target

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Midstream growth & EPIC acquisitionClosed Pinnacle; organics + fee-based; REX sale; wellhead-to-market strategy Announced EPIC NGL acquisition; platform to grow G&P and NGL transportation; Adjusted EBITDA midstream $938MM Strengthening
Refining cost reduction, capture & yield$1/BBL cost cut; 98% utilization; yield 86%; new monthly indicator Record 88% clean product yield; capture 105%; Q1 2025 heavy turnarounds guide Operationally strong; margins weak
Renewable fuels margins & policyRodeo at 50 MB/D; expect RD margin improvement; PTC/RIN/LCFS uncertainties Break-even improved; no SAF in Q4; expect weak margins pending policy clarity Mixed; policy-driven
Asset dispositions & leverageActive on EU retail; plan >$3B dispositions; leverage flexibility Surpassed $3B; GCX sale; target debt $17B; sub-30% debt-to-cap path Progressing
Chemicals macro & tariffsImproving margins, advantaged ethane; export strength Lower Q4 margins; tariffs disrupted PE flows; expect rationalizations in EU/Asia Near-term soft, medium-term constructive
California refinery & supply chainTMX flow dynamics; West Coast supply adjustments LA accelerated depreciation; import strategy to reduce price volatility Transitioning footprint
Macro demand & tariffsGasoline/diesel/jet demand mixed; TMX near full; heavy crudes dynamics Gasoline demand outlook stronger in 2025; distillate inventories low; tariff scenarios assessed Demand steady-to-better

Management Commentary

  • “We have set new financial and operational targets that prioritize debt reduction, a lowered cost structure and EBITDA growth… committed to returning over 50% of operating cash flow to shareholders.” — Mark Lashier, CEO .
  • “Capture of the new market indicator was 105%. The increase… was partly the result of record clean product yield for the quarter, which included the benefits of butane blending.” — Kevin Mitchell, CFO .
  • “We will grow Midstream and Chemicals mid-cycle adjusted EBITDA by an additional $1 billion in total by 2027… reduce total debt to $17 billion.” — Mark Lashier .
  • “Renewable margins are indeed weak… we are running at reduced rates… focused on lowering costs and increasing SAF production optionality.” — Brian Mandell, EVP Marketing & Commercial .

Q&A Highlights

  • Midstream separation vs integration: Management prefers integrated model to capture value across NGL and petrochem chains; “option is always there” but not near-term plan .
  • Leverage path: Target <$17B total debt and sub-30% debt-to-cap via operating cash flow and asset sale proceeds; framework of returning >50% OpCF maintained .
  • EPIC capacity & G&P growth: EPIC adds needed Permian pipeline capacity; expect to grow G&P volumes and fill expansions through 2026; minimal integration costs .
  • Renewables credit uncertainty: PTC guidance remains unclear; company may defer recording credits until clarity; margins sensitive to credits, feedstock costs, and product values .
  • LA Refinery cessation impact: Shift to import logistics expected to reduce price volatility; California authorities engaged to enable infrastructure for imports .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS, revenue, and EBITDA were unavailable at the time of analysis due to data access limits. As a result, comparisons to Wall Street consensus cannot be provided. Values retrieved from S&P Global.

  • Implications: Given refining margin compression and accelerated depreciation, near-term Street models may adjust lower for Refining segment profitability and Q1 2025 (heavy turnarounds) while Midstream estimates could be biased upward on stronger NGL volumes and exports .

Key Takeaways for Investors

  • Q4 2024 miss driven by Refining: headline EPS $0.01 and adjusted EPS $(0.15) with realized margin down to $6.08/BBL; watch margin recovery and LA depreciation roll-off post-cessation timeline .
  • Midstream resilience: Adjusted EBITDA $938MM and record NGL/LPG throughput underpin cash generation; EPIC acquisition should enhance Permian-to-Gulf Coast integration .
  • 2025 setup: Heavy Q1 turnarounds and low-80s utilization likely depress near-term Refining; management targets cost per barrel to $5.50 (ex-turnaround) over next two years .
  • Balance sheet and capital returns: Debt reduction to $17B targeted alongside >50% OpCF returns; asset sale proceeds (e.g., GCX) provide flexibility .
  • Renewable fuels: Profitability hinges on policy clarity; company is lowering costs and scaling SAF optionality; expect volatility until PTC/RVO/LCFS path is clear .
  • Operational excellence is a lever: High clean product yield and market capture (105%) offset some margin weakness—positive sensitivity to any crack spread improvement .
  • Catalysts: EPIC deal close/integration, EU retail disposition progress, refining indicator tracking, macro demand (gasoline/distillate) trends, and renewables credit decisions will drive sentiment .

Citations: Press release and supplemental: . Earnings call (Q4 2024): . Prior calls (Q3/Q2 2024): .