Core Viewpoint - Elliott Investment Management L.P. is advocating for a change in leadership at Phillips 66, presenting a plan titled "Streamline 66" aimed at enhancing accountability and long-term performance for shareholders [1]. Group 1: Leadership and Performance - Elliott is positioning the current leadership of Phillips 66 as accepting poor performance and committed to maintaining the status quo, urging shareholders to consider electing new directors who can drive improvements [1]. - The upcoming Annual General Meeting on May 21st will serve as a pivotal moment for shareholders to decide between supporting the existing leadership or opting for Elliott's nominated directors [1]. Group 2: Proxy Solicitation - Elliott has filed a definitive proxy statement with the SEC to solicit proxies for the election of its director candidates and other proposals at the 2025 Annual Meeting [2]. - Shareholders are encouraged to review the proxy statement and related documents, which contain important information regarding the proxy solicitation [2]. Group 3: About Elliott - As of December 31, 2024, Elliott manages approximately $72.7 billion in assets, making it one of the largest investment management firms [3]. - Founded in 1977, Elliott has a diverse investor base, including pension plans, sovereign wealth funds, and high net worth individuals [3].

Core Viewpoint - Elliott Investment Management asserts that Phillips 66's current board has fostered a culture of complacency and poor governance, urging shareholders to support its independent director nominees to unlock the company's value-creation potential [1][2][5] Group 1: Governance Issues - Elliott highlights a breakdown in corporate governance at Phillips 66, citing a culture of deference to management and a lack of responsiveness to shareholder concerns [5][6][10] - The board's refusal to engage constructively with Elliott has led to a proxy contest, which Elliott views as indicative of the company's governance failures [3][6] - Phillips 66's classified board structure is criticized for insulating directors from accountability, with Elliott proposing a non-binding annual election policy to enhance governance [11][12][45] Group 2: Shareholder Engagement - Elliott claims that its attempts to engage with Phillips 66's leadership have been repeatedly rebuffed, necessitating direct appeals to shareholders [3][10] - The company has been accused of mischaracterizing Elliott's engagement efforts, framing them as lacking transparency [4][10] - Elliott emphasizes the importance of independent directors in improving the company's governance and performance, presenting its nominees as qualified candidates [14][39] Group 3: Performance and Strategy - Since CEO Mark Lashier assumed the dual role of CEO and Chairman, Phillips 66's performance has reportedly declined, with the company falling short of its mid-cycle EBITDA target of approximately $14 billion for 2025 [9][10] - Elliott argues that the board's focus on "empire building" rather than maximizing shareholder returns is detrimental to the company's interests [11][31] - The company has faced criticism for its lack of transparency regarding its operational performance and strategic direction, particularly in refining [9][10] Group 4: Response to Elliott's Campaign - Phillips 66 has publicly attacked Elliott's director nominees and their qualifications, claiming that their proposals lack independence and transparency [12][14][40] - The company has also questioned the motives of industry veteran Gregory Goff, who publicly supported Elliott's campaign, suggesting conflicts of interest where none exist [36][37] - Elliott counters that Phillips 66's attacks on Goff reflect a broader unwillingness to accept constructive criticism and input from experienced industry leaders [36][37]

Core Insights - Elliott Investment Management is a top-five shareholder in Phillips 66 and has launched a podcast series called "Streamline 66" to discuss the company's operations and potential value-unlocking strategies [1][5] Group 1: Podcast Insights - The latest episode features Michael Heim, a founder of Targa Resources, who emphasizes the need for Phillips 66 to adopt a strategy focused on organic growth and to have a board that supports this direction [2][6] - Heim notes that Phillips 66 possesses high-quality assets located in major U.S. basins, which should allow it to compete effectively with peers if managed properly [6] Group 2: Proxy Solicitation - Elliott has filed a definitive proxy statement with the SEC to solicit votes for its slate of director nominees at the upcoming annual meeting of Phillips 66 [4] - Stockholders are encouraged to review the proxy statement and related documents for important information regarding the election and the participants in the solicitation [4] Group 3: Company Background - As of December 31, 2024, Elliott manages approximately $72.7 billion in assets and has a diverse investor base, including pension plans and sovereign wealth funds [5]

Core Insights - Elliott Investment Management L.P. has proposed a plan titled "Streamline 66" aimed at transforming Phillips 66 through board enhancements, operational improvements, and portfolio simplification [1] - The firm is a top-five shareholder in Phillips 66, managing approximately $72.7 billion in assets as of December 31, 2024 [3] Group 1 - The "Streamline 66" plan is designed to unlock substantial upside by reversing the company's cycle of underperformance [1] - Elliott has filed a definitive proxy statement with the SEC to solicit proxies for the election of its director candidates at the 2025 annual meeting of stockholders [2] - Stockholders are encouraged to review the proxy statement and related documents for important information regarding the solicitation [2] Group 2 - Elliott Investment Management was founded in 1977 and is one of the oldest funds under continuous management [3] - The firm's investors include a diverse range of entities such as pension plans, sovereign wealth funds, and high net worth individuals [3]

Financial Performance - Phillips 66 reported a first-quarter 2025 adjusted loss of $368 million, or $090 per share, based on 409 million adjusted weighted-average diluted shares[24, 26, 57] - The company's operating cash flow for the first quarter of 2025 was $187 million[24] - Shareholder distributions totaled $716 million, and capital expenditures and investments amounted to $423 million[25] - Net debt-to-capital ratio stood at 38%[25, 61] Segment Performance (Adjusted Earnings) - Midstream segment earned $683 million, a decrease of $25 million compared to the fourth quarter of 2024[27] - Chemicals segment earned $113 million, an increase of $41 million from the previous quarter[27] - Refining segment incurred a loss of $937 million, which is $178 million lower than the loss in the fourth quarter of 2024[27] - Marketing and Specialties segment earned $265 million, an increase of $80 million compared to the previous quarter[27] - Renewable Fuels segment reported a loss of $185 million, a decrease of $213 million from the fourth quarter of 2024[27] - Corporate and Other segment had a loss of $355 million, which is $61 million lower than the loss in the previous quarter[27] Refining Margins - The worldwide realized refining margin was $681 per barrel in the first quarter of 2025[50, 55] - Refining crude utilization is expected to be in the mid-90% range for the second quarter of 2025[32] Outlook - Global Olefins & Polyolefins utilization is expected to be in the mid-90% range for the second quarter of 2025[32] - Refining turnaround expense is projected to be between $65 million and $75 million for the second quarter of 2025[32] - Corporate & Other costs are estimated to be between $340 million and $360 million for the second quarter of 2025[32]

Financial Data and Key Metrics Changes - First quarter reported earnings were $487 million or $1.18 per share, while the adjusted loss was $368 million or $0.90 per share, reflecting a significant impact from accelerated depreciation due to the planned cessation of operations at the Los Angeles Refinery [24][25] - The total company adjusted loss increased by $307 million compared to the prior quarter, with Midstream results decreasing mainly due to lower volumes from turnaround activities in Refining [26] Business Line Data and Key Metrics Changes - Midstream results decreased due to lower volumes, although higher commodity prices benefited gathering and processing results [26] - Chemicals results increased mainly due to higher volumes and lower costs driven by turnaround activity in the prior quarter [28] - Renewable Fuels results decreased mainly due to the transition from blenders tax credits to production tax credits, inventory impacts, and lower international results [28] Market Data and Key Metrics Changes - The Sweeny Hub achieved record fractionation volumes of 650,000 barrels per day [27] - US gasoline demand is forecasted to increase by about 1% for the year, with global gasoline demand expected to rise by 0.5% [106] - Distillate demand is projected to increase by 1% globally and 2% in the US for the year [108] Company Strategy and Development Direction - The company is focused on executing its transformational strategy, improving refining operations, enhancing the NGL value chain, and pursuing growth opportunities [7][21] - The acquisition of EPIC NGL is expected to expand takeaway capacity from the Permian and is immediately accretive [16] - The company plans to return over 50% of net operating cash flow to shareholders through share repurchases and dividends, with a recent increase in the quarterly dividend [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the macro environment for refining, renewables, and chemicals but emphasized the strength of the integrated business model [8][9] - The company expects to capture upside in the market for the remainder of the year, with refining operations positioned for high utilization rates [11][30] - Management expressed confidence in the long-term value creation strategy and the importance of disciplined capital allocation [57] Other Important Information - The company completed one of the largest spring turnaround programs in its history, impacting volumes and margins but completed safely, on time, and under budget [8][10] - The company has divested over $3.5 billion of non-core assets while making strategic acquisitions within Midstream [20] Q&A Session Summary Question: Discussion on strategic alternatives and board perspectives - Management highlighted the thorough analysis and strategic planning conducted with the board regarding potential structural changes, emphasizing the importance of understanding risks and consequences [34][40] Question: Path to reducing debt and maintaining shareholder returns - Management indicated a focus on achieving a $17 billion debt level while maintaining a commitment to returning over 50% of operating cash flow to shareholders [66][69] Question: Update on asset dispositions - Management confirmed ongoing negotiations for retail assets in Europe and indicated potential sales of non-core midstream assets [81][82] Question: Impact of tariffs on LPG exports - Management discussed the potential rerouting of LPG exports due to tariffs and the ability to optimize exports through strong international trading capabilities [92] Question: Insights on refining margins and market outlook - Management provided a positive outlook for refining margins, citing expected increases in gasoline and distillate demand, despite geopolitical uncertainties [106][109]

Core Insights - Phillips 66 reported a revenue of $31.73 billion for the quarter ended March 2025, which is a decrease of 12.9% compared to the same period last year [1] - The company's EPS was -$0.90, a significant drop from $1.90 in the year-ago quarter, indicating a negative performance [1] - The reported revenue exceeded the Zacks Consensus Estimate of $30.65 billion by 3.49%, while the EPS fell short of the consensus estimate of -$0.77 by 16.88% [1] Financial Performance Metrics - The refining margins for the Atlantic Basin/Europe were reported at $7.08 per barrel, surpassing the average estimate of $5.78 [4] - Worldwide refining margins were $6.81 per barrel, slightly below the average estimate of $6.98 [4] - Gulf Coast refining margins were $4.43 per barrel, lower than the estimated $5.65 [4] - Central Corridor refining margins were $8.29 per barrel, compared to the average estimate of $9.15 [4] - Total refined petroleum products sales in the U.S. were 1,828 thousand barrels per day, below the average estimate of 1,883.67 thousand barrels [4] - Total petroleum products sales volumes were 2,140 thousand barrels per day, also below the estimated 2,204.79 thousand barrels [4] - Midstream pipeline throughput was 2,893 thousand barrels per day, slightly below the estimate of 2,939.66 thousand barrels [4] - Midstream terminal throughput was 2,938 thousand barrels per day, compared to the average estimate of 3,051.71 thousand barrels [4] - Sales and other operating revenues were $30.43 billion, lower than the estimated $30.68 billion, reflecting a 15% decrease year over year [4] - Equity in earnings of affiliates was $153 million, significantly below the estimated $390.70 million, marking a 71% decline year over year [4] - Other income was reported at $56 million, compared to the average estimate of $61.52 million, representing a 42.3% year-over-year decrease [4] Stock Performance - Shares of Phillips 66 have declined by 16.1% over the past month, while the Zacks S&P 500 composite has decreased by 4.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Phillips 66 reported a wider-than-expected adjusted loss in Q1 2025, with total revenues declining from the previous year, primarily due to lower refining volumes and margins [1][2]. Financial Performance - The adjusted loss per share was 90 cents, compared to a consensus estimate of a 77-cent loss, and a decline from earnings of $1.90 in the same quarter last year [1]. - Total quarterly revenues were $32 billion, exceeding the consensus estimate of $31 billion but down from $36 billion year-over-year [1]. Segmental Results - **Midstream**: Adjusted pre-tax earnings increased to $683 million from $613 million year-over-year, surpassing estimates due to higher margins and NGL transportation volumes [3]. - **Chemicals**: Adjusted pre-tax earnings fell to $113 million from $205 million in the prior-year quarter, missing estimates [4]. - **Refining**: Reported an adjusted pre-tax loss of $937 million, a significant decline from earnings of $313 million in the previous year, primarily due to lower refining volumes and higher turnaround costs [5]. - **Marketing & Specialties**: Adjusted pre-tax earnings decreased to $265 million from $307 million, but exceeded projections [7]. - **Renewable Fuels**: Reported an adjusted pre-tax loss of $185 million, worsening from a loss of $55 million in the prior-year quarter, impacted by changes in tax credits and weak international results [8]. Refining Margins - Realized refining margins dropped to $6.81 per barrel from $11.01 year-over-year, with declines noted across various regions including the Central Corridor and Gulf Coast [6]. Costs and Expenses - Total costs and expenses decreased to $31.1 billion from $35.5 billion in the previous year, better than projections [9]. Financial Condition - The company generated $187 million in net cash from operations, an improvement from a net cash outflow of $236 million in the prior year [10]. - Capital expenditures totaled $423 million, with dividends paid out amounting to $469 million [10]. - As of March 31, 2025, cash and cash equivalents stood at $1.5 billion, with total debt at $18.8 billion, reflecting a debt-to-capitalization ratio of 40% [10].

Financial Performance - In Q1 2025, Phillips 66 reported net income attributable to the company of $487 million, a decrease of 35% from $748 million in Q1 2024, primarily due to lower refining margins and higher costs[137][148]. - The company generated cash provided by operating activities of $187 million and funded capital expenditures of $423 million during the same quarter[137]. - Phillips 66's Midstream segment reported income before income taxes of $751 million, up from $554 million in Q1 2024, while the Refining segment experienced a loss of $937 million compared to a profit of $216 million in the prior year[148]. - Chemicals segment income before income taxes decreased to $113 million in Q1 2025 from $205 million in Q1 2024, driven by lower polyethylene margins and increased utility costs[168][169]. - Refining segment results decreased by $1,153 million for the three months ended March 31, 2025, with a worldwide loss before income taxes of $937 million compared to a profit of $216 million in 2024[175]. - Renewable Fuels segment reported a loss before income taxes of $185 million in Q1 2025, compared to a loss of $55 million in Q1 2024, despite increased renewable fuel sales[182][184]. - Corporate and Other segment reported a total loss before income taxes of $376 million for the three months ended March 31, 2025, an increase from a loss of $322 million in 2024[186]. - For the three months ended March 31, 2025, the Obligor Group reported sales and other operating revenues of $22,482 million, with a net loss of $1,073 million[247]. Cash Flow and Capital Expenditures - The company completed the sale of its 49% ownership in Coop Mineraloel AG and DCP Midstream, LP's 25% ownership in Gulf Coast Express Pipeline LLC, receiving total proceeds of $2 billion[139]. - Operating expenses increased by 12% in Q1 2025, primarily due to higher turnaround and utility costs[153]. - Cash and cash equivalents decreased to $1,489 million as of March 31, 2025, down from $1,738 million at the end of 2024[190]. - Total debt decreased to $18,803 million as of March 31, 2025, from $20,062 million at the end of 2024, with total equity slightly down to $28,353 million[190]. - The company funded capital expenditures and investments totaling $423 million and repaid $1.3 billion of debt during the first three months of 2025[191]. - For the three months ended March 31, 2025, total capital expenditures and investments were $423 million, down from $628 million in the same period of 2024[226]. - Capital spending in the Midstream segment was $216 million for the first three months of 2025, while Refining segment capital spending was $176 million[227][229]. - The company repurchased 2 million shares at an aggregate cost of approximately $0.2 billion during the three months ended March 31, 2025[224]. Market Conditions and Pricing - The weighted-average NGL price increased to $0.74 per gallon in Q1 2025 from $0.70 per gallon in Q1 2024, and the Henry Hub natural gas price rose to $4.27 per MMBtu from $2.41 per MMBtu[141]. - The composite 3:2:1 market crack spread decreased to an average of $15.83 per barrel in Q1 2025 from $19.45 per barrel in Q1 2024, reflecting market instability and geopolitical events[143]. - Realized refining margins for the three months ended March 31, 2025, amounted to $990 million, with a realized refining margin per barrel of $6.81[251]. - The total processed inputs for refining during the same period were 124,453 thousand barrels, with a loss before income taxes per barrel of $(7.53)[251]. - In the marketing segment, realized marketing fuel margins reached $224 million in the U.S. and $136 million internationally for the three months ended March 31, 2025[254]. - Total fuel sales volumes in the U.S. were 164,499 thousand barrels, with an income before income taxes per barrel of $0.67[254]. Shareholder Returns and Dividends - The company declared a quarterly cash dividend of $1.20 per common share in April 2025, representing a $0.05 increase, reflecting its commitment to shareholder returns[139]. - The company declared a quarterly cash dividend of $1.15 per common share on February 12, 2025, and a subsequent dividend of $1.20 per common share on April 21, 2025[223]. Debt and Liquidity - The percentage of total debt to capital improved to 40% as of March 31, 2025, compared to 41% at the end of 2024[190]. - The company has a $500 million accounts receivable securitization facility, of which $130 million was utilized as of March 31, 2025[199]. - A new $5 billion revolving credit agreement was established, replacing a previous facility, with no amounts drawn as of March 31, 2025[204]. - The company has approximately $5.4 billion of total committed capacity available under credit facilities as of March 31, 2025[207]. - The company has a $5 billion uncommitted commercial paper program for short-term working capital needs, with no borrowings outstanding as of March 31, 2025[205]. - The aggregate principal amount outstanding of Dakota Access' senior unsecured notes was $850 million as of March 31, 2025[216]. - As of March 31, 2025, the company's debt balance was $18.8 billion, with a total debt-to-capital ratio of 40%[221]. Strategic Initiatives and Future Outlook - Phillips 66 plans to maintain total annual capital expenditures and investments of approximately $2 billion, excluding acquisitions, with a focus on growing its Midstream and Chemicals businesses[139]. - The company acquired EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP for $2.2 billion on April 1, 2025, expanding its midstream operations[222]. - The company anticipates continued focus on optimizing operations and enhancing refining margins in the upcoming quarters[256]. - The company emphasizes that forward-looking statements are based on current expectations and may not guarantee future performance, highlighting risks and uncertainties that could lead to material differences in actual outcomes[257]. - Market conditions and demand fluctuations could significantly impact prices of NGL, crude oil, and natural gas, affecting overall revenue[257]. - The company faces potential capacity constraints in pipelines and storage facilities, which could limit the delivery of natural gas and NGL[257]. - Changes in governmental policies regarding pricing and regulation of crude oil and renewable fuels could adversely affect the company's operations[258]. - The company is focused on sustainability goals, including reducing GHG emissions intensity and developing lower-carbon technologies[258]. - The impact of public health crises on commercial activity and product demand remains a concern for future performance[258]. - The company acknowledges the risk of delays in completing capital projects and asset acquisitions, which could affect growth strategies[258]. - Cybersecurity incidents pose a risk to the company's operations and could expose it to liability[258]. - The company’s commodity price risk and interest rate risk as of March 31, 2025, remain consistent with previous disclosures[259].

Company Performance - Phillips 66 reported a wider-than-expected loss for Q1, with an adjusted loss of 90 cents per share, missing the consensus estimate of a loss of 72 cents per share [2] - The company achieved quarterly revenue of $31.73 billion, surpassing the consensus of $31.33 billion [2] Stock Movements - Coursera, Inc. shares increased by 13% to $8.70 following better-than-expected quarterly results [8] - Baijiayun Group Ltd saw a significant surge of 65% to $0.3053 after announcing plans to invest tens of millions of dollars over the next five years for autism rehabilitation [8] - SES AI Corporation shares rose by 23% to $1.07 after reporting better-than-expected Q1 EPS results and authorizing a $30 million share repurchase program [8] - Saia, Inc. shares dropped by 30% to $249.41 due to weaker-than-expected quarterly results [8] - Coeptis Therapeutics Holdings, Inc. shares fell by 36% to $8.00 following the announcement of a merger agreement with Z Squared Inc. [8] - Lexaria Bioscience Corp. shares decreased by 20% to $1.34 after announcing a $2 million registered direct offering of common stock [8] Market Trends - In commodity news, oil prices increased by 0.3% to $62.97, while gold prices decreased by 1.7% to $3,291.10 [4] - Silver and copper also saw declines of 1.7% to $32.945 and 1% to $4.8085, respectively [4]