Phillips 66 Profit Rebounds to $3.8 Billion on Refining Margins
Phillips 66 posted second-quarter net income of $3.8 billion, up from $207 million in the first quarter as refining margins more than doubled.
Phillips 66 (PSX), the refiner and midstream operator, reported net income of $3.8 billion, or $9.55 a share, in the second quarter, up from $207 million, or $0.51 a share, in the first quarter. Adjusted earnings per share rose to $9.41 from $0.49, and adjusted EBITDA climbed to $5.9 billion from $1.23 billion sequentially.
The swing followed a first quarter in which earnings fell to $207 million from $2.9 billion in the fourth quarter of 2024, weighed down by a $2.56 billion drop in Marketing and Specialties pre-tax income tied largely to a prior-quarter gain, along with a $614 million decline in Refining pre-tax income. The second quarter reversed both of those drags.
Refining was the primary driver. The segment's pre-tax income rose to $3.06 billion from $208 million in the first quarter, on an adjusted basis $3.09 billion, as the realized refining margin more than doubled to $24.08 a barrel from $10.11 a barrel. Crude capacity utilization improved to 96% from 95%, recovering part of the four-point sequential decline recorded in the first quarter, though clean product yield slipped slightly to 86% from 87%.
Marketing and Specialties swung to $583 million in pre-tax income from a $161 million loss, adjusted income moving from a $141 million loss to $514 million, on higher global marketing margins and favorable mark-to-market impacts. Renewable Fuels moved from a $41 million loss to $544 million in income on higher regulatory credits, while Midstream pre-tax income rose to $785 million from $591 million, partly reflecting the absence of first-quarter Winter Storm Fern disruptions. Chemicals adjusted pre-tax income rose to $404 million from $85 million even as Chemicals Global O&P capacity utilization fell to 91% from 94%.
Cash flow from operations swung to $7.26 billion from negative $2.26 billion; excluding working capital changes, it rose to $4.32 billion from $699 million. That cash generation let Phillips 66 cut total debt by $6.6 billion to $20.6 billion, reversing a first-quarter spike to $27.1 billion from $19.7 billion at the end of 2024. Net debt fell to $16.5 billion from $22.0 billion, and the net debt-to-capital ratio improved to 33% from 43%, after debt-to-capital had reached 48% in the first quarter.
NGL fractionation volumes and LPG export volumes each set records in the quarter, with NGL fractionated at 1,020 thousand barrels a day, up from 980,000 in the first quarter and 930,000 in the third quarter of 2024, continuing a multi-quarter growth trend in the company's midstream network.
Phillips 66 raised its quarterly dividend 7% on an annualized basis, a move disclosed in the first-quarter release ahead of the anchor quarter. Return of capital to shareholders rose to $887 million from $778 million in the first quarter, including share buybacks of $379 million, up from $269 million.