Capital Spending Overview - Phillips 66 (PSX) has announced a $2.4 billion capital budget for 2026, an increase from $2.1 billion in 2025, indicating a strong focus on core business areas [1][11] - The budget allocates $1.1 billion for maintenance capital and $1.3 billion for growth capital [1] Segment Allocation - The majority of the capital spending is directed towards the midstream and refining segments, with minimal allocation to marketing specialties, renewable fuels, and corporate operations [2] - For the midstream segment, PSX has earmarked $400 million for sustaining projects and $700 million for growth projects, totaling $1.1 billion [3] Midstream Projects - Key midstream projects include: - Iron Mesa gas processing plant in the Permian Basin, with a capacity of 300 million cubic feet per day, expected to start operations in Q1 2027 [4] - Coastal Bend NGL pipeline expansion, set to increase daily transportation capacity from 225,000 barrels to 350,000 barrels, expected to be completed by late 2026 [4] - Proposed NGL fractionator in Corpus Christi, anticipated to increase fractionation capacity by 100 thousand barrels per day, with a final investment decision expected in early 2026 and completion in 2028 [5] - The midstream segment generates stable fee-based revenues, enhancing the stability of the company's business model [6] Refining Projects - The refining segment also receives $1.1 billion in capital spending, with $590 million for sustaining projects and $520 million for growth projects [7] - PSX has identified over 100 capital-efficient projects aimed at processing crude from various sources to produce cleaner, higher-value fuels [7] - A significant investment is directed towards the Humber gasoline quality improvement project, expected to begin operations in Q2 2027 [8]

Financial Data and Key Metrics Changes - The company generated $1.86 of diluted earnings per share in Q3, an 8% decrease from the same time last year, primarily due to declining sales prices in the plastics segment [5][18] - The midpoint of the 2025 earnings guidance was increased to $6.47 from $6.26 per share, driven by better-than-expected financial results in the plastics segment [6][22] Business Line Data and Key Metrics Changes - Electric segment earnings decreased by $0.03 per share in Q3, impacted by unfavorable weather and seasonal rate differences [18] - Manufacturing segment earnings increased by $0.04 per share, attributed to a lower cost structure and enhanced production efficiencies [19] - Plastic segment earnings decreased by $0.26 per share, driven by a 17% decline in average sales prices, partially offset by lower input material costs and a 4% increase in sales volumes [20] Market Data and Key Metrics Changes - The lawn and garden and agricultural end markets continue to face demand-related headwinds, while recreational vehicle and construction markets showed signs of improvement [14] - The cost of PVC resin decreased due to global supply and demand dynamics, benefiting the company's cost structure [16] Company Strategy and Development Direction - The updated five-year capital spending plan totals $1.9 billion, with a targeted long-term earnings per share growth rate increased to 7% to 9% [5][27] - The company aims to convert its rate-based growth into earnings per share growth at an approximate one-to-one ratio [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage costs and maintain low electric rates despite ongoing economic challenges [12][13] - The company anticipates the current low-demand environment in the manufacturing segment to persist through most of 2026 [15] Other Important Information - The company filed a request for a net revenue increase of $44.8 million with the Minnesota Public Utilities Commission, driven by infrastructure investments and inflation impacts [7][8] - The company is closely monitoring developments related to a complaint filed at FERC against MISO's Tranche 2.1 projects, which may cause potential delays [11] Q&A Session Summary Question: Inquiry about the updated EPS long-term growth rate - Management expects utility earnings to grow in line with the rate base, with year-to-year fluctuations anticipated [31] Question: Update on the antitrust case and DOJ involvement - Management provided an update on ongoing civil litigation and the DOJ's intervention, indicating no specific deadline for court decisions but anticipating developments in 2026 [33] Question: Discussion on cash usage and long-term strategy - Management emphasized prioritizing investments in utility growth and potential opportunistic M&A, while maintaining a focus on shareholder returns through dividends [38][39]