Phillips 66 delivered a substantial miss on earnings due to changing market conditions and strategic shifts.Phillips 66 (PSX -1.15%), an energy company with a focus on the refining, midstream, and chemical sectors, released its fourth-quarter earnings results on Jan. 31. The company reported an adjusted loss per share of $0.15, significantly missing analysts' consensus expectation for a $0.03 loss. GAAP earnings for the quarter were $8 million, while on an adjusted basis, the company lost $61 million. Reven ...

Exhibit 99.2 | | | | | | | Millions of Dollars, Except as Indicated | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 2024 | | | | | 2023 | | | | | 1st | 2nd | 3rd | 4th | | 1st | 2nd | 3rd | 4th | | | Revenues and | Qtr | Qtr | Qtr | Qtr | YTD | Qtr | Qtr | Qtr | Qtr | YTD | | Other Income | | | | | | | | | | | | Sales and other | | | | | | | | | | | | operating | | | | | | | | | | | | revenues | 35,811 | 38,129 | 35,528 | 33,685 | 143,153 | 34,396 | 35,090 | 39,643 | 38 ...

Phillips 66 (PSX) came out with a quarterly loss of $0.15 per share versus the Zacks Consensus Estimate of a loss of $0.20. This compares to earnings of $3.09 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 25%. A quarter ago, it was expected that this oil refiner would post earnings of $1.63 per share when it actually produced earnings of $2.04, delivering a surprise of 25.15%.Over the last four quarters, the company has surp ...

Phillips 66 PSX will release its fourth-quarter financial results, before the opening bell, on Friday, Jan. 31, 2025.Analysts expect the Houston, Texas-based company to report a quarterly loss at 23 cents per share, versus year-ago earnings of $3.09 per share. Phillips 66 projects quarterly revenue of $32.24 billion, compared to $38.74 billion a year earlier, according to data from Benzinga Pro.On Jan. 6, the company disclosed a definitive deal to acquire EPIC Y-Grade, LP's natural gas liquids (NGL) busines ...

Core Viewpoint - Phillips 66 (PSX) is expected to report a significant decline in fourth-quarter earnings for 2024, with estimates suggesting a 94.5% drop compared to the previous year, primarily due to challenges in refining margins and fluctuating crude oil prices [3][4]. Group 1: Earnings Performance - In the last reported quarter, PSX's earnings were $2.04 per share, surpassing the Zacks Consensus Estimate of $1.63, attributed to cost reductions and achieving Midstream synergy targets [2]. - PSX has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 14.29% [3]. - The Zacks Consensus Estimate for fourth-quarter earnings per share is $0.17, reflecting a significant decline from the previous year's figure [3]. Group 2: Revenue Expectations - The Zacks Consensus Estimate for revenues in the fourth quarter is $32.25 billion, indicating a 16.8% decrease from the year-ago reported figure [4]. Group 3: Market Conditions - Demand for gasoline in the U.S. remained resilient during the fourth quarter, which may have helped stabilize performance despite global challenges such as regional supply imbalances [5]. - A decline in refining margins is evident, with EIA data showing softer gasoline and distillate crack spreads, which could negatively impact PSX's refining business [6]. - The average spot price for West Texas Intermediate crude was $71.99 per barrel in October 2024, down from $85.64 in the same period of 2023, which may affect revenues across PSX's diverse portfolio [7]. Group 4: Margin Pressures - Volatility in natural gas prices could have squeezed margins, particularly if the company faced higher energy costs without sufficient pricing power in the downstream market [8]. - Adjusted pre-tax income from the refining business is predicted to decline nearly 95% year over year in the fourth quarter [8]. Group 5: Earnings Outlook - The current model does not indicate an earnings beat for PSX, with an Earnings ESP of -95.22% and a Zacks Rank of 3 [9].

Company Performance - Phillips 66's stock closed at $121.86, reflecting a -0.62% change from the previous trading day, underperforming the S&P 500's daily loss of 0.29% [1] - Over the past month, shares of Phillips 66 gained 9.29%, outperforming the Oils-Energy sector, which saw a loss of 1.71%, and the S&P 500, which gained 2.52% [1] Upcoming Earnings - The company's earnings report is scheduled for January 31, 2025, with an anticipated EPS of $0.17, representing a 94.5% decline compared to the same quarter last year [2] - Revenue is projected at $32.25 billion, reflecting a 16.75% decrease from the equivalent quarter last year [2] Analyst Estimates - Recent changes to analyst estimates for Phillips 66 indicate shifting short-term business dynamics, with positive alterations suggesting analyst optimism regarding the company's profitability [3] - The Zacks Consensus EPS estimate has decreased by 12.99% over the past month, and Phillips 66 currently holds a Zacks Rank of 3 (Hold) [5] Valuation Metrics - Phillips 66 is trading at a Forward P/E ratio of 15.64, which is below the industry average Forward P/E of 16.98 [6] - The company has a PEG ratio of 3.91, compared to the average PEG ratio of 2.93 for the Oil and Gas - Refining and Marketing industry [7] Industry Context - The Oil and Gas - Refining and Marketing industry is part of the Oils-Energy sector and holds a Zacks Industry Rank of 68, placing it in the top 28% of over 250 industries [8]

Industry and Investment Strategy - The analyst leverages professional expertise in the nuclear power and energy industries to evaluate long-term investment opportunities in equities and rental real estate properties [1] - The focus is on income-producing equities and real estate for cash flow and long-term appreciation [1] - Articles aim to present the underlying fundamentals and long-term potential of each equity or business [1] Market Timing and Cyclical Opportunities - The bottom of a cyclical business cycle presents an opportune time for long-term investors to accumulate a company's stock [4] - This period allows investors to capture underlying value that is not yet appreciated by the market [4]

Capital Budget Overview - Phillips 66 has announced a 2025 capital budget of $2.1 billion, focusing on sustaining capital and growth investments, with $998 million for sustaining capital and $1.1 billion for growth initiatives [1] - The total capital program, including joint venture investments, is projected to reach $3 billion, indicating a commitment to strategic growth and operational optimization [12] Refining Division Investments - The company has allocated $822 million to its Refining division, with $414 million for sustaining capital and $408 million for growth capital aimed at enhancing refining competitiveness through high-return, low-capital projects [2] Midstream Segment Investments - A significant portion of the capital budget, $975 million, is dedicated to the Midstream segment, with $429 million for sustaining projects and $546 million for growth projects, focusing on increasing gas processing capacity [6] Joint Ventures and Capital Spending - Phillips 66's share of capital spending by joint ventures, including Chevron Phillips Chemical Company and WRB Refining LP, is expected to total $877 million, with CPChem's growth capital supporting the construction of petrochemical facilities [3] Corporate and Other Allocations - The Corporate and Other capital allocation will prioritize information technology projects to enhance internal capabilities [7] Strategic Focus and Leadership - Mark Lashier, chairman and CEO, emphasized the company's focus on capital discipline and alignment of investments with strategic priorities to deliver shareholder value [10] Marketing and Renewable Fuels Investments - Continued investments in the branded network and further investments at the Rodeo Renewable Energy Complex for renewable diesel and sustainable aviation fuel production are planned [11]

Core Viewpoint - Phillips 66 is strategically divesting non-core assets to enhance financial health and maintain stable investor returns amid fluctuating refining margins [1][4]. Group 1: Asset Divestiture - Phillips 66 plans to sell its 25% stake in the Gulf Coast Express pipeline for $865 million, contributing to its goal of exceeding $3 billion in non-core asset divestitures [1]. - The company has already raised $2.7 billion through the sale of fuel terminals, pipelines, and its stake in a Swiss retail joint venture [2]. Group 2: Financial Management - Despite declining refining profits, Phillips 66 is committed to cost-cutting measures, expecting costs to decrease from $1.07 billion in 2024 to $822 million in 2025 [3]. - For 2025, overall expenditures are projected at $2.1 billion, slightly below the $2.2 billion forecast for 2024, reflecting a prudent approach to managing fluctuating refining margins [3]. Group 3: Market Outlook - U.S. refining margins are expected to stabilize in 2025 due to increased industrial demand and refinery closures, including Phillips 66's Los Angeles facility [4]. - The divestiture and cost optimization efforts align with the company's strategy to sustain shareholder value in a dynamic market environment [4].

Core Viewpoint - Phillips 66 has effectively returned value to shareholders since its spinoff from ConocoPhillips in 2012, distributing $43 billion in cash, exceeding 200% of its initial market capitalization [1] Group 1: Cash Flow and Business Model - Phillips 66 operates a diversified business model that includes downstream services, midstream facilities, chemicals, and renewable fuels, allowing for higher returns and lower volatility compared to peers [2] - The company has focused on expanding non-refining operations, aiming to grow annual earnings capacity by $4 billion to $14 billion by 2025, which is expected to increase cash flow from operations by over 50% from $7 billion to over $10 billion [3] Group 2: Shareholder Returns - The company set a target of $13 billion to $15 billion in cumulative cash distributions to shareholders by the end of 2023, which would bring total distributions since 2012 to $43 billion at the low end [4] - Phillips 66 has consistently increased its dividend since 2012, achieving a 16% compound annual growth rate, including a 10% increase earlier this year, and has repurchased 34% of its outstanding shares [5] Group 3: Future Outlook - In 2025, Phillips 66 expects to achieve $14 billion in earnings and over $10 billion in cash flow from operations, with plans to reinvest approximately $2.1 billion into sustaining and growing operations [6][7] - The company anticipates generating more free cash flow in 2024 due to a slightly reduced capital budget and has exceeded its $3 billion target for non-core asset sales, enhancing its balance sheet [8] - With rising cash flow and a strengthened balance sheet, Phillips 66 is positioned to return over $5 billion in cash to shareholders in 2024, aiming to distribute more than 50% of its cash flow from operations [9] Group 4: Investment Appeal - The strategy of diversifying and investing in downstream operations has resulted in significant earnings growth and reduced cash flow volatility, making Phillips 66 an attractive option for investors seeking lower-risk exposure in the energy sector [11]