Larger Cap Refiners: What Are We Focused On Into EPS Results? In this note we update estimates for the US Larger Cap Refiners (MPC, VLO, PSX, DINO) ahead of 1Q25 earnings. Heading into the quarter, we are mindful of the tougher near-term setup where we note (a) softer global oil demand expectations, (b) tighter crude differentials with Brent-WTI tightening to $3/bbl (vs $5/bbl historical average) and WTI-WCS tightening to $9/bbl (vs $15/bbl historical average), and (c) depressed Renewable Diesel earnings. T ...

Company Overview - CVR Energy (CVI) is expected to report a year-over-year decline in earnings due to lower revenues, with a projected quarterly loss of $0.90 per share, representing a change of -2350% [3][12] - Revenues are anticipated to be $1.62 billion, down 13.1% from the same quarter last year [3] Earnings Expectations - The consensus EPS estimate has been revised 186.67% higher in the last 30 days, indicating a reassessment by analysts [4] - The Most Accurate Estimate for CVR matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, which complicates predictions of an earnings beat [10][11] Historical Performance - In the last reported quarter, CVR was expected to post a loss of $0.65 per share but actually reported a loss of $0.13, resulting in a surprise of +80% [12] - Over the past four quarters, CVR has beaten consensus EPS estimates two times [13] Market Sentiment - The stock may experience upward movement if the actual results exceed expectations, while a miss could lead to a decline [2] - The combination of a Zacks Rank of 3 (Hold) and an Earnings ESP of 0% suggests uncertainty regarding the likelihood of an earnings beat [11][18] Industry Comparison - Phillips 66 (PSX), another player in the Oil and Gas - Refining and Marketing industry, is expected to report earnings of $0.42 per share, reflecting a year-over-year change of -77.9% [17] - Phillips 66's revenues are projected to be $30.67 billion, down 15.8% from the previous year [17]

Core Insights - Elliott Investment Management is actively engaging with Phillips 66, aiming to unlock significant value for shareholders through a proxy solicitation for board nominations [1][3][4] - The latest podcast episode features discussions on the company's financial performance and strategic direction, emphasizing the need for long-term solutions rather than short-term fixes [2][5] Group 1: Elliott's Engagement Strategy - Elliott has filed a definitive proxy statement with the SEC to solicit votes for its slate of director candidates at the upcoming Annual Meeting of Phillips 66 [3] - The campaign, referred to as "Streamline 66," aims to highlight the qualifications of Elliott's director nominees and their vision for the company [1][2] Group 2: Financial Performance and Strategic Concerns - Elliott's representatives argue that if synergies within Phillips 66's businesses were effective, they would be reflected in the company's financial statements, suggesting current underperformance [5] - The company is perceived to be shifting focus towards midstream operations, which Elliott critiques as a strategy that may not resolve underlying refining issues [5]

Third-Party Findings Are Based on Feedback From Phillips 66 Investors Representing More Than 60% of the Company's Institutional Shares Outstanding Shareholders Do Not Believe the Company's Strategy or Conglomerate Structure Make Sense WEST PALM BEACH, Fla., April 16, 2025 /PRNewswire/ -- Elliott Investment Management L.P. ("Elliott"), which manages funds that together are a top-five shareholder in Phillips 66 (NYSE: PSX) (the "Company" or "Phillips"), today released findings from a recent Elliott-commissio ...

Market Capitalization Summary - The market capitalization of major companies shows significant variations, with Exxon Mobil leading at 6259.78 billion, followed by Netflix at 5351.16 billion and Procter & Gamble at 4727.85 billion [2]. - Other notable companies include Coca-Cola at 3707.19 billion, T-Mobile US Inc at 3048.46 billion, and Chevron at 2452.47 billion [2][3]. Stock Performance - Exxon Mobil's stock increased by 1.77 (+0.53%), while Netflix saw a rise of 6.11 (+1.19%). Procter & Gamble's stock decreased by 2.05 (-0.35%) [2]. - T-Mobile US Inc experienced a stock increase of 4.36 (+1.66%), and Chevron's stock rose by 0.65 (+0.26%) [2][3]. Company Comparisons - Disney's market capitalization is 115.26 billion, with a stock increase of 1.91 (+1.75%). AMD's market cap is 111.02 billion, with a slight decrease of 0.12 (-0.10%) [3]. - Pfizer's market cap stands at 1232.53 billion, with a stock increase of 0.27 (+1.22%), while Boeing's market cap is 1269.84 billion, with a decrease of 2.44 (-1.53%) [3][4]. Additional Insights - Companies like PayPal and Barclays have market capitalizations of 718.46 billion and 594.91 billion, respectively, with PayPal's stock decreasing by 0.06 (-0.09%) [4]. - General Motors and Honda have similar market caps at 442.88 billion and 442.12 billion, with GM's stock decreasing by 0.63 (-1.40%) [4].

Core Insights - Elliott Investment Management is a top five shareholder in Phillips 66 and is actively campaigning for board changes to enhance corporate governance and value creation [1][4] - The latest podcast episode features Stacy Nieuwoudt, a seasoned energy analyst, discussing the importance of an investor mindset in boardroom decisions [2] Company Overview - Phillips 66 is recognized as a company with strong assets, and there is a belief that restructuring could unlock additional value and improve operational efficiency [5] - The company is positioned in the energy sector, which is currently focused on optimizing core business operations and capital allocation [5] Industry Perspective - The energy investment landscape is shifting towards pure play companies that prioritize efficiency and effective capital management [5] - There is a noted disconnect between management perspectives on stock valuation and investor expectations, highlighting the need for better alignment in corporate strategy [5]

Core Viewpoint - Elliott Investment Management is seeking strategic, operational, and governance improvements at Phillips 66, supported by former Andeavor CEO Gregory Goff, to enhance shareholder value [1][3]. Group 1: Elliott's Campaign and Support - Elliott Investment Management is a top-five shareholder in Phillips 66 and has launched the "Streamline 66" campaign to boost shareholder value [1]. - Gregory Goff, with over 40 years of experience in the energy sector, including significant roles at ConocoPhillips and Andeavor, is supporting Elliott's efforts [2]. - Goff's leadership at Andeavor resulted in a remarkable 1,200% increase in shareholder returns, showcasing his capability in financial and operational transformations [2]. Group 2: Strategic Vision for Phillips 66 - Both Elliott and Goff believe that with necessary improvements, Phillips 66 can become a stronger and more valuable company for employees and investors [3]. - Elliott has filed a definitive proxy statement with the SEC to solicit proxies for the election of its director candidates at the upcoming 2025 annual meeting [4]. Group 3: Background on Elliott - Elliott Investment Management manages approximately $72.7 billion in assets as of December 31, 2024, and has a diverse investor base including pension plans and sovereign wealth funds [5].

Core Viewpoint - The breakdown in board governance at Phillips 66 has hindered the company's ability to deliver value to shareholders, necessitating a change in leadership and strategic focus to maximize long-term value [1][3][4]. Company Strategy and Governance - Phillips 66 has pursued a strategy that emphasizes midstream assets alongside its refining business, which has not yielded value for shareholders compared to more streamlined peers [4]. - A stronger board is needed to question the current business structure and initiate a review of alternatives to unlock shareholder value [4]. Leadership and Board Composition - Elliott Investment Management's nominees are expected to bring independence and expertise to the Phillips 66 board, fostering a culture that prioritizes long-term value creation [1][5]. - The current board lacks the necessary independence and expertise to effectively challenge management's assumptions and decisions [3]. Shareholder Considerations - A significant number of retail shareholders, including retirees and employees, rely on Phillips 66 for their financial goals, highlighting the need for a board committed to maximizing shareholder value [5]. - The engagement with Elliott Investment Management aims to ensure that management is held accountable and that the interests of all shareholders are prioritized [1][5]. Leadership Background - Gregory J. Goff, a 40-year veteran in the energy industry, emphasizes the potential for Phillips 66 to regain its stature through operational and strategic changes [2][7]. - Goff has a history of successful management and transformation in energy-related businesses, including leadership roles at Andeavor and ConocoPhillips [8].

Core Insights - Elliott Investment Management has launched the Streamline 66 Podcast to discuss its campaign for change at Phillips 66, featuring conversations with director nominees and industry experts [1][2] - The first episode features Brian Coffman, a seasoned operator with extensive experience in refining, including leadership roles at ConocoPhillips and Motiva [3] Company Overview - Phillips 66 is a major player in the refining industry, and Elliott Investment Management is a top five shareholder in the company [1][8] - Elliott is seeking to elect four highly qualified nominees to the Board of Directors during the upcoming Annual Meeting [2][5] Industry Context - Brian Coffman emphasizes the potential of Phillips 66's refining assets, countering the notion that they are outdated, and aims to restore the company's historical operating excellence [7] - The podcast aims to provide shareholders with insights into the nominees and Elliott's vision for Phillips 66 [2][3]

Core Viewpoint - Elliott Investment Management argues that Phillips 66 has consistently underperformed compared to its industry peers, with shares lagging behind Valero Energy and Marathon Petroleum by -138% and -188% over the past decade, respectively [1][10]. Group 1: Streamline 66 Plan - Elliott proposes a three-part "Streamline 66" plan aimed at increasing Phillips' stock price to over $200 per share, which includes simplifying the portfolio, reviewing refinery operations, and enhancing Board oversight [2][12]. - The plan emphasizes the need to divest non-core assets, such as the midstream business, which could be valued at over $40 billion, to focus on improving refining operations [21]. Group 2: Board Accountability and Governance - Elliott advocates for all directors to commit to a one-year term and stand for election at each Annual Meeting, enhancing accountability and governance [3][31]. - The current staggered Board structure limits accountability, and past proposals to address this have failed due to the high voting threshold required [32][34]. Group 3: Director Nominees - Elliott has nominated four highly qualified director candidates to bring necessary experience and perspectives to the Board, including individuals with significant backgrounds in refining and energy sectors [6][29]. - The nominees are expected to enhance Board independence and oversight, which is crucial for restoring investor trust and improving company performance [30]. Group 4: Historical Context and Comparisons - Elliott draws parallels with Marathon Petroleum, which successfully implemented changes after Elliott's engagement, resulting in a ~150% relative outperformance in share price [11]. - The letter highlights that Phillips 66's management has resisted necessary changes and has not prioritized shareholder value, leading to ongoing underperformance [9][25].