Phillips 66 (PSX) investor relations material

Executive summary

• Q1 2026 was marked by extreme commodity price volatility, with major benchmarks exceeding the 95th percentile for price moves in March, driven by Middle East geopolitical events.

• Reported earnings were $207 million ($0.51/share); adjusted earnings were $200 million ($0.49/share), with a 7% annualized dividend increase.

• Operations maintained high utilization, leveraging U.S.-based assets and expanded NGL and LPG capacities, despite global disruptions.

• Commercial organization capitalized on volatility, optimizing feedstocks, product placement, and leveraging global trading capabilities.

• Strategic priorities focused on operational excellence, disciplined growth, financial strength, and returning over 50% of net operating cash to shareholders.

Financial highlights

• Revenues rose 7% year-over-year to $32.5 billion, driven by higher refined product sales volumes, but impacted by $839 million in mark-to-market losses on short derivative positions.

• Operating cash flow excluding working capital was ~$700 million; total operating cash flow was negative $2.3 billion due to working capital outflows and $3 billion in cash collateral for derivatives.

• Capital expenditures and investments totaled $582 million in Q1 2026.

• Cash and cash equivalents ended Q1 at $5.2 billion, supported by $7.7 billion in net debt borrowings.

• Net debt-to-capital ratio was 43% and debt-to-capital ratio was 48% at quarter-end.

Outlook and guidance

• Global Olefins & Polyolefins utilization expected in the low 80% range for Q2, with refining crude utilization in the low to mid-90% range and turnaround expenses forecasted at $120–$150 million.

• Corporate and other costs anticipated at $430–$450 million for Q2.

• Capital expenditures for 2026 are budgeted at $2.4 billion, with $1.3 billion allocated to growth, primarily in Midstream.

• Targeting total debt reduction to $17 billion and a lower debt-to-capital ratio by end of 2027.

• Management expects refining margins to remain constructive through year-end, with volatility likely to persist into next year.