PSX - Earnings call 3 2023

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Operator

Welcome to the Third Quarter 2023 Phillips 66 Earnings Conference Call. My name is Carla, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Jeff Dietert, Vice President of Investor Relations. Jeff, you may begin.

Jeffrey Dietert

to Third welcome Call. Earnings and morning, Phillips Quarter XX Conference Good Rich Brian on Mark Tim Mitchell, Chemicals, include call Roberts, Refining; President and Participants will Kevin Lashier, today's Commercial. Marketing Mandell, and and CEO; Midstream Harbison, and CFO; be supplemental Today's alongside statement. Investor Relations XX and safe harbor operating information. Slide on section presentation found the the of material Phillips our can financial website, X contains

cause Actual SEC comments. as be will making could results We Factors may today's the materially from in that, during are call. forward-looking differ Mark. turn differ results today's well that over included filings. actual to as to call I'll statements here With our

Mark Lashier

Good our pleased and increase operating Jeff. us results, and another strategic joining shareholder continue value. financial for today. to execute to priorities and Thanks, we We're to on thank quarter morning, you report of strong

us ability have of year shareholders significant to update our in our Investor enabled refining toward achievements shows much than at company. and commitments portfolio. today. Slide to a ago to Our made X commitments more evolution a provide the we'll the to these make an exceed confident we We're We're date progress Day.

chemicals, We cycles. generates integrated an differentiated diversified marketing the and that are specialties and portfolio free midstream, through by flow cash refining, economic

leverages Our value. organization commercial global supply generate and our incremental to assets trading

NGL to growth fundamentals expected chain EBITDA. to over competitive We position more is U.S. adjusted acquisition billion the wellhead as opportunities natural as are our continue NGLs to Midstream. our this of earlier mid-cycle execute petrochemical liquids strong year our gas production fastest-growing strategy liquids to segment natural integrating oil. value increase in $X strengthened We crude and more market stable to see DCP remain The feedstocks adds and by demand. The gas cash and outpace flows demand

and our is continue generation sustaining stable capitalize pace on dividend synergy to results. deliver million. the current rate portfolio run covers to our to capital. diversified than more cash We'll integrated $XXX Our deliver company's on Midstream's and

in Moving growth CPChem November Investor XXXX. market, included At billion This growth Day EBITDA mid-cycle and to $X business to targeted projects. X. by in transformation Renewed, wellhead Slide our Rodeo XXXX, we NGL

capital progress expect bar. mid-cycle from by includes Given reflecting XXXX increase refining grow Midstream to across commercial additional $X synergies and from have transformation, This adjusted raising our higher the now market transformation commercial enhancing $X We billion. substantial employees a value, to made, the $X the business and from extract We're to billion increasing $X.X are capabilities target. contributions. We're EBITDA we capture. our committing the distributions. between increasing business employed We're company value XXXX, and return original on to additional target billion maximizing billion shareholder

billion $XX target from an Our billion. $XX to billion original new $XX This target billion to is our XXXX between XXXX. increase is year-end and $XX July of

We of will operating flow over return cash XX% our to shareholders.

shareholders. Slide XX% XX% the period. billion representing Strong same improving to plan monetizing target exceed flow XX% XXXX. share to the operating that original including deploy assets be monetize equates to Proceeds XXXX, the year-end enabled on shareholders through repurchases to no strategic $X.X disciplined during X assets billion than We'll longer over Lastly, to meet advance We refining objectives. we the of to before billion current target expected shows capital billion accelerating cash these to to noncore more returned billion. to July of pace $XX $XX and progress performance. us distributions to proceeds $XX priorities, The since are strategic return increased dividends and generation cash time cap. of allocation $X market billion cash long-term achieve from $XX and to

had growth in higher EBITDA between approved $XX will mid-cycle of repurchase addition repurchases. has $X.X supported XXXX approximately share These remaining is in our billion Board to billion billion be XXXX, September the authorization, This authorized authorization. of which XX. Since $X to and Directors increase adjusted billion distributions XXXX. of share shareholders as previous a $X Board to Our the by

laser-focused improving on refining performance. are We

was Third XX% quarter the crude highest of utilization utilization since XXXX.

above utilization quarter. third ran system rates refining industry Our the average for straight

We market We X.X%. $X.XX we continue a a projects added low-capital $X.XX completed and barrel by to and per XXXX will X% by to end that barrel market to to add projects of a improve projects we several to market XX XXXX. Last per year run high-return, We're capture, to improve expect reduced advance the by XX year, capture executing and reliability the capture. projects X%. further achieve costs rate

costs, people fully by rate a business program. we're overview transformation, cost X XXXX. Slide run $X per billion, million increasing $XXX business of our embraced $X.X incremental $XXX and the over our barrel Refining and the which to to of transformation of capital raising target sustaining of The $XXX transformation an Our capital. have and of reductions million comprised We're in provides business reductions are billion end $X.X half target of of efficiencies. benefits million sustaining

the feedback. are strategic Last announced X we enhancements. next. Slide shareholder this We ambitious These November, were to value. priorities achieve and consistent with and to targets year priorities track on and increase investor our X summarizes

only we'll that date not Our exceed confidence provide us them. achievements to these we will meet but with targets the

increasing we're commitments us to positioning Delivering returns So the and Board, to increase to additional on generate in diversified our flow the will support our shareholders. portfolio, shareholders now integrated our cash from future. of free the and commitments with cash

the I'll Kevin quarter over third Now the call turn to to review results. financial

Kevin Mitchell

XX%. $X.X $X benefit dividends. $XXX value $X.XX return our We quarter earnings on returned per fair NOVONIX of in on results generated was reduced $X.X affiliates Capital segment net per of million $X.X ended the of million investment were of million. with quarter capital Annualized XX%. I'll We repurchases share billion was the adjusted Mark. and $XXX distributions by $X.XX. operating through for billion, to employed of $XXX from cash We million flow capital you, cash Thank earnings the share. The million or a working and the a equity $XXX Adjusted XX. $XXX in decrease including billion spending cover million. debt-to-capital of ratio Slide share of shareholders

Additional second details from slide appendix segment in can to adjusted This the third in quarter the to this results presentation. by the highlights the referenced be change quarter.

the $XXX and crack than During as corporate strong utilization. offset which adjusted spreads, reflect impact higher in reflecting were results lower secondary $XX quarter. and market higher previous increasing in of due Coast costs Specialties' well adjusted to and net Realized million, quarter, utility, million costs. freight from slight million product rate, The impacts $XXX Midstream This June These as Midstream's up the integration to margins prices period, earnings were was million costs was XX% employee-related quarter to $XX In a income as expenses. our timing continued during DCP of as quarter. to clean employee due decrease the interest strong realizations. related increase the well Other Gulf from higher was and $XXX pretax income increased the product and by prior income factors higher as million, previous business lower due adjusted of rising commodity Inventory Chemicals related decreased prices. Chemicals was quarter. pretax million Corporate NGL These realized offset public due well increase $XX decrease from pretax pretax market adjusted the mainly partially mainly Midstream, The down impacts, third $X.X from million inventory margins $XX and to due $XXX partially to crude margins hedges higher hedge Global by the margins in offset quarter. cargo decrease was margins. income to quarter. expense O&P segment's to was XX products by and results the third acquiring lower impacted was secondary the lower improved million units utilization mainly mainly the losses adjusted capture million, on was primarily and mostly common billion, increased margins. partially negatively quarter as The higher from Refining, $XXX The quarter. Marketing due XX%. was pretax third third higher costs. in to second Refining quarter adjusted

balance. tax was effective was of improved acquisition Cash working the to adjusted the Midstream DCP of was common XX%. third prior operations shows $X a change during excluding noncontrolling interest the quarter reflects billion and rate lower capital. public The since started quarter. XX from the our quarter with a cash units. Slide billion, Our $X.X compared impact interest cash We in noncontrolling

billion, interest primarily year-end. funded reflecting working expect mainly a of plan $XXX of During to sale million of was West to We quarter that $XXX Total is the in for inventory the DCP a on out $XXX received from marketing reverse million from borrowings mostly Year-to-date the XXXX. We That by quarter, million acquisition around Texas cash comes reflecting credit through of use We of dispositions, of $X which million asset third Terminal. $XXX of our contributions, million Midstream's mostly includes capital lower we working benefit Coast capital operations. million. we of related of $XXX pension from a $XXX proceeds spending. asset repaid funded debt, the Gateway South million This capital of U.S. facilities. dispositions approximately business. $XXX

repurchases Additionally, shareholders through we and returned share $X.X billion to dividends.

concludes my review was the Our and $X.X ending results. balance This of cash operating billion. financial

items. We quarter come Corporate outlook and In Chemicals, be fourth $XXX O&P expect in turnaround be quarter we and utilization between In be the expenses the crude million to low utilization $XXX million. the expect few costs fourth and to and a anticipate global rate $XX in Refining, in we million between Other $XXX XXs million. cover I'll rate worldwide mid-XXs. the Next, fourth to quarter to

we closing line comments. will Mark Now make questions, the for will after open which

Operator

your Mehta Instructions] now line open. Neil Sachs, from [Operator Goldman is

Neil Mehta

This the priorities. very the strategic was commentary particularly helpful, on

EBITDA asset -- about to $X the you bullet want financial from billion growth on I moving $X so $X to talked of noncore flexibility, greater than And and billion about strength dispositions. billion of and maintaining

take from to of of And you part identify of what could could discussion? then asset the key parameters what what the billion? you be drivers as $X to billion that as sales, that are think assets move talk time you're about some noncore about $X are some we if wondering evaluating So the

Mark Lashier

business transformation about roll-up, additional synergies and do When the DCP enhanced value we is going that by that to see Mark. in This as out creation work going commercial as we're from the the we're of the to EBITDA, organization. from the enhanced capture supplemented well additional that really intend you comes the to billion-dollar capability think increments

we're dispositions, can going may that we assets maybe specific be bottom we're asset redeploying not our but and this and hold creating consistent if fundamentally to And today valuable so. some Regarding more our line more managing this, do capital. that. others We're assets comment is others high-performing have we'll on we strategic capture to value But explore is focus business. and about generally the and focus to that's to greater the to portfolio going strategy simplifying than our value, that with drive to committed

Neil Mehta

came right. means lower that or we And and on crude capture is that the rates there what was then Street to need for effects think about Was timing the Refining itself, keep we as quarter it expecting. Okay, in else with little than a all all bit probably XXXX? just XQ mind in anything

Kevin Mitchell

Yes, Neil, Kevin. it's

make just couple on of Let a that. comments me

things moving have the capture negative. that did quarter in few impacted a we the to So around

crack. in we that terms And price use we reasonable the differed benchmark market differentials saw so of the from that

so And and Chicago from we worked quarter, the against that product moved market, during group into the for us became those which disconnected that the market. example,

We impact of from also rising the in price a hedges an effect environment. inventory had

the corridor. So that component, all in up central this showed

million we the $XXX in offsets the We as fourth loss $XXX million third that in see paper physical to that gain those expect back the barrels quarter. come about we on the to of quarter that took

Operator

Read please Wells go Securities, ahead. Fargo from Roger

Roger Read

your Appreciate to disposition I the overall. you've here, changes lined target. billion question target the I proceeds out upped EBITDA overall start $X The should but of say, with, have improvements, mentioned you

does what So what performance those I'm And of the sort overall if with EBITDA curious the is associated raised imply in ops, of about that growth extra target? just EBITDA any? your

Kevin Mitchell

Yes. Roger, it's Kevin.

billion clarity So that is impact $X incremental dispositions. of just point, laid we on growth excluding the that out the for there, the

on in that. I so up in this an will with we'll But make be And at you any dispositions may come selling and from other guidance assets the mean, specific on assumption giving dispositions multiple billion. a not where than excess EBITDA. you think expect $X clearly, on we any not to we're assumption of guidance giving point We're realize time. can reduce that

Roger Read

there's that what sold, idea right would the now it's the on a that based why impact assume net always assets be larger I could And be. Okay. unclear pool of that's

Kevin Mitchell

most makes for That's right. us. We'll what sense the do

Roger Read

yield to follow-up margins QX that else forward rather here? a above Refining Is think on versus would industry Or a I that we should standards. then The here improvement be looking generally the shift maybe where that? for diesel about about And than there Okay. to margins question to Neil's you paying attention but way anything against right work think diesel is well back. gasoline, are that

Richard Harbison

Yes, Roger, this Rich. is

As some over of and distillate. kit nothing forth There's we've our and move towards flexibility production. than changed indicated to on years, shifted has the that's gasoline our that distillate other back between

that is maintain still kit to we So the a in favorable market. margins distillate

Operator

line now your open. is UBS, from Gupta Manav

Manav Gupta

could the not will then with lot. higher let price the little and environment. way of weaker to on run here later -- possibility there answer capture but question you Coast? margins prices answer, Coast wait know get again. A and, could there in coincide you I likely make timing meantime, a question very move is the Is a a money it we for in higher you startup LCFS possibility of is LCFS more of could and XXXX? result is, a My and on West longer just West there you better A strong a So default Rodeo this the to in kind rebound Rodeo most

Richard Harbison

MAX Brian side. it that a here and give Manav, the color maybe over little I'll on answer -- start add to then to hand

maybe at step just on So little back at everything a level on that's Rodeo set here. and bit going I'll Rodeo,

X So project this actually, report with continue The issues impacts. The several identified but explicitly was favor, as were County, impact suit judge county earlier likely EIR. county suit Rodeo Costa filed XX-day Contra early were the allowed posted And through for construction a the revised that The there update county the EIR. was works Costa addresses and to XXXX. to insufficient The project insufficiently initiated That EIR year. public Rodeo, on the ruling a NGOs will XX. then the there identified our X that issues the a that issue comment against October while period. final were received Contra in environmental the alleging and certified County comments X EIR deficiencies respond actually project in that address there Renewed and

the So right on first and construction that to now, remains track committed our quarter, to complete line. we're in project time

ramp-up is continue we've But plan. to want some operation. This we that start-up I a say However, crude we little if There conversion on start-up in I we a a about beyond be prevent don't staggered let that operation our for reason, control this crude the are want the the to more to project. explicit we one. committed event have bit add, authority, flexibility will project. past, a continue have bit this circumstances this little options. the the to We've talked me the called In operate of process. and of to but is

us. creates It project, it that removing to roads. that's million to process allows from I to or continue us emissions want the cars X Rodeo for So flexibility to up equivalent of people allows start which remind natural Renewed us to the crude

oil, end executing remain will continue crude And So But this of should we'll have Rodeo that to confident. the focused Renewed quarter. the we the necessary. we're at I up operation planned say, pretty that plan. We of if flexibility start confident, we we process first remain and on the conversion

your over outlook the Brian, to LCFS other to your bit the this -- outlook that who more. explain more question I'm program. It's little on than really its relationship a that of going the what complicated of is hand credit relationship, can and the and Now market LCFS part just

Brian Mandell

Brian. it's Manav,

to to So think the of the have price it think not when about you when the just market. the you of comes RD the the credits about but RD feedstock, margins, price

had prices had lower have prices. outrun soybean we've So we've even and these though RINs, LCFS that distillate

In prices fact, off. are soybean

on have you then for domestic that U.S. now Morgan traders pipelines that reach a of that feedstocks more of allowing Kinder good. into are looking market consumption. We've year, the renewable into California their Argentina, some RD abatement means pipeline and as their produced so year, And last We the way U.S. and is is in low normal is finally, had CI -- and those of making incentives more to if produce we remember the And RD condition. And to grow. tax our more believe to traders And moving continue to states and minds sense mature Washington We've they that's their where a continue SAF. become or tax RD in seeing seeing I Illinois they RD have programs all see those have is stations. reduction crop Oregon RD away converted to We're had been expect expected level think mature. a drought. and you'll And demand programs. like Texas as this Colorado, lot make move and being We've folks jet. yet, more what on SAF this renewable harvest demand

we're in expecting renewable we'll the jet. this barrels of day future but RD RD of XXX,XXX see year, about So of a become end the some that at

Manav Gupta

you is if bit and Specialties elaborate term, outlook near-term both near and have business? for little on U.S., Can could Europe in business a That how that and yes, follow-up you which said in are the expressed. flexibility quick I than key you was part here strong Marketing the and more My you your a medium very we that the a think is very looking, the you is opening detailed, on have and business. in some visibility, comments, refiner, the

Brian Mandell

Manav, it's Brian again.

really strong the we in So third I'll had quarter. quarter say a

and we've focused that we've now U.S. seen XXXX, starting stores the usually record. QX but we our those relatively fourth channels. the volumes quarter. remember, what And to the market, We're as was you on market are retail seasonally value than called up distribution retail quarter added they businesses performed RD QX the and Phillips and directly and our stronger it lot to last-mile getting volumes really We're getting to flat, through our also strategy continue higher-value value in QX XXX complex fact, to which joint a on at product of in Rodeo XX. We've is internally, this retail QX. In ventures to best chain optimize well

So wholesale as a business. we reminder, a have

and And the to branded have business, a franchise perform oil or retail then business. margins. branded franchise and are business, continues finally, a it have margins We the or higher then retail those wholesale lubricants we And well. base business on the business really the than significantly

So QX with that mid-cycle normal will line QX, for say I'd earnings we our think in be expectations.

Mark Lashier

invest I exposure have returns to really accretive a retail his that fairly way. been seeing would that over the executing and and top just get amount to up capital just Manav, value of show and strategy high quietly the add small in there our last-mile Brian team opportunity and consistently to enhance this their a we and very margins appreciate. you're And you're performance consistent very it's to seeing -- a Yes.

Operator

Bank from Leggate ahead. America, go please of Doug

Douglas Leggate

a be and are all Appreciate I've got I I I guys you question on line? disposal morning. your could if the think again. been this on want to are Refining. follow-up the I I touched process. that. expectations for Have in internally to quick Mark, on, wonder what try this updates And clear of sale? where maybe identified the don't you clear just assets time just be wanted that's

Mark Lashier

these appetite. yes. good the and provide market second The value really it to is question is they answer function answer value. is The understand to question provide assets first We the us that a the of the

those than buyers So a for we to that assets we've have find greater got do. willing affinity

And any but so execute not today sale, there's out performing in rush. plan. believe market not We're opportunities that in fire we're the any we there to

Douglas Leggate

you for and our position the as it time. what of a X guys on where Refining a on Refining forward, little the on forgiveness you're is kind you a mid-cycle this I'm know ahead strength to times And your has for going going sustainable follow-up ask business. But My assuming think may cycle I been we've the few volatile be. of Refining sector, on EBITDA challenged as of

Refining on So X are ahead I'm this call, great. similarly, mid-cycle not contribution to has part, been targets? The through facility you walk us new running given when curious what ahead utilization rate you've the parts -- is and were possible, we're And been expeditious rates capture been if running behind your a moving the could quite the running, for now. but you've while of your

contribution that and new factor? big are I'm Is better. a Refining key your what in from the just assumptions they're of in wondering Now is kind moving the the what parts targets.

Kevin Mitchell

me let that. Doug, of try and Yes, some unpack

provide out lower So assumption the reflects changed will assumption. our system at is that show our across as And uplift Day costs where system capture organization market provides all that $X mid-cycle -- Investor EBITDA Refining, increasing -- but in that ability was up and Refining a to contribution in be Refining. It average will commercial up Refining. haven't predominantly they the billion. predominantly EBITDA the value laid show That won't it'll through to increased from organization What and around that's doing historic we trade. our are we we

is changed. still We're above we're our hasn't up probably a our -- been view near the what Clearly, view year. as mid-cycle actually tried in stronger going but if can been of we've we conditions haven't terms on term, we belief enhancements in the place. now in a we're than putting it to that most environment this that fundamental mid-cycle We And is near call of so has the think upside that's the But business do environment with for mid-cycle above pretty make for all and optimistic in mid-cycle margin term. go-forward in last historically. of year mid-cycle

Douglas Leggate

Kevin, your changed? utilization assumption has

Kevin Mitchell

were pandemic, during the took years because running level if really we really we're that back of prior get we not Well, then and kind hit were to the of pandemic think back for to a you assuming that we we at operations to before. the where

performance Rich these as has to And about a that mid-cycle. we We so of level to were did in some of that on outlined include Refining Investor operations get talked back some view in those to things the not that that at. past of the the year -- have increases priorities historically to as ago, we've in we Day that deliver been

Operator

Ryan Todd ahead. please Sandler, from Piper go

Ryan Todd

I nice if an on think, from XXXX, shareholder what roughly we a been Maybe of obviously is could, for pace it a a at question Thanks pretty to I positive you've saw XXXX I quarter, like mid-cycle update quarter third the what during the year-to-date target. a which is implies, that mean, close step-up midpoint, buyback year-end certainly return in had the environment. in there. the $X billion a above -- year the to has

-- on towards what view maybe about type it on your the think that you've in of talk way? mid-cycle pace beyond mid-cycle the above able return to you'll prior what implies upside same it if above and way drive we Maybe should from target the been in confidence that -- we mid-cycle. target So above or your that your in we into to XXXX, in can your of Should stay shareholder has been the continue you target? where drove of here. And -- confidence the being lean think in outlook

Mark Lashier

that because the of is the is end little If outperforming to back the our hit answer event and in is high question, of a cash Ryan, is bit. provided flexibility our yes. your the question. market Mark. target, answer we're last available we less this there answer that conditions, pull desire can Glad to -- that we've To

$X out I dispositions. point in is our thing would billion Another asset

to factored that not have billion $XX the billion. $XX We into cash

there's really level assurance control. hit can of So on that we that. And we that we the can another there focusing are things

when sight you look the line value see also $X all those drive And that billion of in, and we could well. capture business increments the reality transformation, by play. fairly into numbers muted. that's those that be And those those EBITDA, that is of of risk use and we we course, see market numbers, to of we things factor can at But the the additional returns. coming to the underperforming as impacted of you As see

So confidence we've high deliver. that of can level we a got

Ryan Todd

then Great, maybe a helpful. perfect. That's Midstream. And very just on question the

there, higher little to You've Synergies Maybe time can had bit the under ]. bit you how you opportunity and of you're seeing from now talk about of line? the growth in moved belt drive point. there both view terms there, in position a this of maybe down the to [ little XXX have XXX improvements set ability incremental what your your commercial DCP with a terms consolidated at

Timothy Roberts

Yes, Ryan, this is Tim. sure.

more. So the Glad integration. the we anything like asked. that transformation, else, about same It's found DCP I'll thing process. and you yes, with great talk doing question. business And started just got We're that transformation, because business as we into we it,

people done some thing we the in together, I that think systems. way, get all first with be in stuff different can the And will first done this IT it's important the to we say that because in We'll X that's quarter. by redundancies complete the by away won't quarter, brought end the as get integration. of and the So supporting one, move we end once of the

X commercial our and of some is data. trying there. trying single team versus will other decisions The be our off at reading look and all will screens, to the systems different make ops X It all same to the team be source

happen that think happen the me we But on in will worth example to catalyst or further real optimization an going giving XQ. is probably optimization the for here So commercial side.

we it, that is one it as about it. And I finding came to of Really a into we So we've gotten also together. venture as and excited more to excited we're what it go -- us. weeks ago more we're this pipe, able and couple we go. we think like here, a X you another and And put felt on as moved barrels up example that the to really commercially, in pipe additional really able putting about give pipe off I where the the for want mentioned, $XX and I were names we an impact's move net were of, we barrels, volume allow onto million any for to off year us, more move just won't put

So we could not entities. have X we done that if separate were

there? So we And there's the we And there once think opportunity? more Yes. past we believers? being first about yes, encouraged get are are we quarter Absolutely. more Yes. do

Mark Lashier

they another fractionators. room stop operators to throw and to like Sweeny I control got felt group of I'd how frontline And by our that out And visited there, the week, ecstatic because last they going that we a at operates in the collaboration. their couple asked complex, perform. at of Ryan, Yes. time. a they us They of integration without example all see run run we the information, concern improve them. was ability coming because They real get ability surprises greater said to or better can to see we it rates harder They and there's were can

the so want more figure mindset every way that transformation, they And want whole and competitive to do being has the the win and to how line. synergy drive to evolved capture capture, how folks day business synergies out value. and These deliver around to front all better to and more

out it's and real line. on it's the So front

Operator

from Scotiabank, go Paul please Cheng ahead.

Paul Cheng

continued On like to seems than questions. of the better couple in A quarters. of expected a Marketing, number do business

everything. and stations retail adding been You've

adding maybe you if way should assume? to is So what your mid-cycle how we your case, the that of at the or run improvement And new a baseline the have base you -- the way that, asset? guided the can it good considered is look because that changing we what how structural

Mark Lashier

continues Marketing the question? what is Paul, Is increase, and and performance you're the Yes. that performance asking, in the Brian in good is there you've think you're strategy the of execute reset team Marketing you're a it group, as his business? their seen applauding I to and mid-cycle asking the

Paul Cheng

That's correct, that think better certainly Because X that's it's have mean, I million the years. but quarter that like, correct. you $XXX I a is historically past done much sort mid-cycle in of than

everything, or that more today [ that that was seems is that is add the performing quarter, guys this business market than as curious I pretty that better. "Oh, retail X say, is much been just you it's and think condition have truly better ] average? the think it I you that X stronger business you structurally just maybe you the station like is but consistent can risk,"

Brian Mandell

to the of raise proud business this to we add it. better. and performing opportunities to I And of initiatives. couple to and obviously, we years and performing for need continue we some to going would we're mid-cycle is Brian. if our last-mile other it strategy business Paul, raise But a to continue did watch will. better of the look is again, we'll say the We're ago

the bottom hitting some raise we see as indeed, we'll that line, point, So at mid-cycle. value

Paul Cheng

than seen you years So that you that ago? of better mind, enough feel don't Brian, in mid-cycle couple what the comfortable of have now indeed even that that we the had is is say, that improvement, saying a

Brian Mandell

the the bottom keep when say dollars you'll line we'll watching I'd see comfortable, up. and we feel move there. And mid-cycle

Mark Lashier

Yes, lacks confidence. Brian never

Paul Cheng

next activity this the maybe year? X can to industry And going Rich. with what's you about next XX your for enough. it's lower same? view about activity higher, year, it Is also year? the the look for fair that for to Rich, turnaround like what's Okay, And turnaround be or whether this Phillips comparing share us

Richard Harbison

Paul, stand for quarter Yes, appreciate by so quarter. question. the give and generally that fourth fourth out that guidance the on outlook We

Operator

please John go ahead. Royall from JPMorgan,

John Royall

first target. my is net So the question debt on

of on work a help to potentially your modest pretty Do getting you And up in a most mentioned You had range all working It's need from from in leverage capital get the XQ. seen by here hitting back of then hit that Kevin to impact your tailwind you'll Refining catch and it in build and hit guided year-end. XQ, capital top from headwind number? price XH to be any worsening XQ target? in prevents we've you does the that back? that environment that ability that conversely could price Or end

Kevin Mitchell

will inventory John, and the impact mean, I will impacts, driven the to market It capital Yes. expect cash that the bulk by quarter that's impact solid of pretty terms fourth working in we impact. the will but profitability. in benefit environment of be generation, see

moving around too feel that not confident the -- we'll equation, around I at by be other So targeted year. that. top in of always I'm end pretty about the the end range be concerned there there while will parts that this is of

John Royall

views WCS Okay, great. hoping I And then on differentials. latest your just for was

goes widening there's particularly where You we the although should get start-up from would differential as debate do just XQ. in into we of think over some you the to some tailwinds the here year helpful. next But WCS be we've But from here TMX, get as head seen close there? timing the thoughts any on

Brian Mandell

Brian. it's John,

a have now. barrels wide nearly said, Canadian wide, the us. benefit very is than see which capacity. will average WCS largest And year-end to their crude, The barrels minus sell about where to think also adds you the don't also take have dips dips $XX, them the in inventories. But word. think about starting volume. production a look take to September, That's at importer QX start-up forward you is than the wide full announced egress. $XX day. remain would are because curves swells egress a has pipeline it with like if or as into the minus that's up. We're you blended are of you the in seasonally more the run crude barrels dips traders might April. diluent at QX, So the we XXX,XXX the We end TMX reason meet currently, We'll you expect into, and we Currently, more at have pipeline

Operator

& Cowen Company, ahead. go Jason Gabelman please from

Jason Gabelman

and headwind price we've high moving capture refining this is And quarter seen X headwind. that that then and in second continue is on was higher. you structural of first any in if bucket, now some Last co-product give is if wondering impacts could obviously that and a going the a for on quarter. what headwinds visibility co-product was But the quarter was The else oil nature. into even pretty you think us up

Richard Harbison

you Jason, about Rich. this bucket? the co-product asking is Are

Mark Lashier

products. Secondary

Richard Harbison

yes. Secondary products,

That's that demand crude it pricing, or product that us. And margin supply down So that is the on can there there. Refining, it pressure secondary markets lags and based the pressure generally coke, mover behind to -- product right? the drives generally tied for petroleum coal that primary it up in primary requirements right? it's And

not on secondary flat plays that play outlook over been have than the probably real of others be markets component the into really aren't in certainly bigger curves. continues subtle into are been us for The depressed some products NGL pricing. products our now. that's period oil worth us for NGL strong relatively that's And for some fuel -- does that's those it. balance which secondary is products, and but And other some And The to intermediates pricing period. on that mentioning, other the forward it

that see So for coke right primary now so -- and the those we us we don't area. movers see in NGLs as

Jason Gabelman

Got going it. not of on is and my the And proceeds. but $X from target come that's really divestment to billion use where follow-up

would mentioned press release that and proceeds returns type strategic was just be to earnings to strokes, that broad priorities, if prioritize? you desire some to of those including the use a to You continue in what there's in wondering of, shareholders. But to of growth will kind deployed cash grow I

Mark Lashier

would of opportunities opportunities is can that. the asset end accelerate in cash we are might our cash our around But our that to a also our The allocated certainly, receive sheet we there will always consistent growth hit with to then agenda, factor from It high premise if those a that growth dispositions target. return things can look Jason. Thanks, includes at allocation And Yes. element. we process. capital and be be balance shareholders

all treasury. any to it's like we turn just dollar would in play, over cash of So that

Operator

Matthew Tudor, line is Holt, Pickering, open. Blair now from your

Matthew Blair

is into give chem little international [indiscernible] what's in and your some QX? have side. here, and comment inventories for driving talk outlook industry First you is the X overall the on dynamics heading Could but averages-- recovery... above an PE a [indiscernible] that what's on of a you bit margin cleaned up well about the both U.S. Could

Operator

line Matthew, unfortunately, the is if to the in. try we'll up dialing have breaking move like to so rejoin question, next your to potentially back queue you'd and

Mark Lashier

is a inventories. PE shot at part, Yes. We the first going part Tim margins first and heard around take the so to

Timothy Roberts

Yes, do that. let me

wouldn't front that it take so a Sorry, probably of breakout guess Matt, well. and with end end, but I could got the wild the there. on go back the I

record. standpoint, Chem look, Clearly, a imbalance. to coming be. to to we see But correction We still come back have board, like coupled from demand up. a Over capacity that around. where feels a in with a on little So have supply-demand you're picking that's not it we'd like of new it time, going Asia expect to is a bit China, broken the

seen be of you mean, have going off. to think do which have come but things couple I a don't I increases, we've been off see So have polyethylene, your hard least that's sustainable, at price improvement a bit seen slowly but you see But through to we through, know XXXX. like point, inventories when coming little of to And which they're if nonetheless, coming has they've on good. helped. we

to bit has constructive, but to got there's know I'm we fixed. a So of, that standpoint, from say, little get balance going that

stress are we thing feedstocks. their I utilizing the of XX% their really X though kit is here think Now assets important and advantaged assets, that is CPChem's that

they're lot but of those better in may space, be We'd there leveraging love the are doing a feedstocks that So to okay. are be doing pain a while lot advantaged chemical okay. doing

as using that running But hard CPChem those using well in U.S. probably higher-cost feed at Coast are in competition light other Our Gulf in this probably are East. the and assets at their are point. the naphtha as regions challenged Middle

well, well actually are running taking this Our teams because low-margin from hard, advantage we're environment benefit positioned and the are in. feedstock running to of

can some balance can that moving to it needs to earlier you we the supply-demand more we lifting the regard to together, we green shoots put think those forward. to getting of So continue maybe with still with this where GDP that, like a but saw start see do be, there's though we couple some week, if

Operator

ahead. Joe Laetsch Morgan go from please Stanley,

Joseph Laetsch

start on just side. demand the to wanted I So

your the gasoline, has just seeing in jet? if DOE you're for And really been it's data you year, of realizing volatile the remainder share recognizing your system the what So possible, right that now. diesel outlook demand across and then could just volatile, really

Brian Mandell

this is Joe, Brian.

has Gasoline X-year stab averages. inventories to for a up come distillate, the under X-year XX% low now back take In remain me averages. that. Let close U.S., at

higher at adjusted on York the Truck tonnage side, globally maybe seeing off, year. sector be because example. and higher we as U.S. has European index distillate $XX about think New now begun production. We're in In levels in demand Coast, cracks price to the refiners higher X% bottomed. Europe. to U.S., a last bit are little rebound to So and we high the demand see it's watching manufacturing at than the incentivize when of an probably mid- the distillate gas starting been distillate cracks Gulf reminded, need net range To we've although

this has summer Europe. of cutting from blending our refiners with started outlook the it's without plants gas strong say of and kind supported potential startup, has gasoline. as the on low is, a here Gulf -- FCC have for on of we'd been issues. cracks, along diesel especially the that inventories which shortages Russian units. in is the as to Coast, gas ride on What reminder, for And diesel, we with a have as well. And Europe's watch the to also produced -- year supply continue for So distillate so coming the have we'll see produce diesel hurricane to volume butane been We've seen had we margins. any has And increased first devoid

help a gasoline. be think up will to So that we clearing the

particularly demand the about too. flat. East, and strong flat Asia X% been be and global over really seems about year-over-year Latin U.S. side, to has demand last we're X% Europe, strong, Middle about gasoline over On year. seeing America

our for work the some year flat gasoline demand end the as on of say supply. markets outlook through So clean gasoline, relatively the of the to we up

Joseph Laetsch

Appreciate on the dividend. your And Got ask that. to I it. on just wanted response

bit. growth -- a target. to touched see good how was But We've the you're the remind us on in the buyback you So increase on just thinking could from it here? we've dividend

Mark Lashier

Yes.

the not growing The consistent. since year every and dividend spin, we've position Our change. secure is grown dividend, there going to that's

Operator

will This for question-and-answer Lashier the now call closing I concludes comments. turn to Mark session. the over

Mark Lashier

and questions. you, you your of thanks all for to Thank

perform diversified unique and advantage. well creates and continues integrated competitive extremely to a Our portfolio it

original shareholders. in the execution performance several superior strong confidence our of for increase in Our drives returns our and commitments to us achieve to pursuit

XXXX. year-end We and XXXX. in over year-end we'll deliver of operating will We'll costs $X.X and We'll to capabilities, billion of monetize we'll $X Midstream billion synergies per return Refining $X to reduce our enhance over billion capture earnings. shareholders noncore commercial million by $XXX savings $XX We'll generating assets, $XX by cash barrel. by billion additional

bar and are well plans continuing now and to future. reward raising the ambitious. We're the shareholders Our into

Jeffrey Dietert

Thanks, Mark.

today. If your please participation Thank you over. questions, We have appreciate on additional you. call the call any

Phillips 66 (PSX) 27 Oct 232023 Q3 Earnings call transcript