PSX - Earnings call transcript Q1 2024

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Operator

Welcome to the First Quarter 2024 Phillips 66 Earnings Conference Call. My name is Lydia, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I'll now turn the call over to Jeff Dietert, Vice President, Investor Relations. Jeff, you may begin.

Jeffrey Dietert

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

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

Mark Lashier

Welcome, call. Jeff. Thanks, first to quarter earnings everyone, our

to strategic We progress returned priorities our significant we our continued and shareholders. cash to

were well hedge were are prices meet effect strong our fuels as our rates and quarter, were products. limited we summer that of renewable ready utilization affected maintenance Rodeo our to impacted the the near results make highs ability higher-value conversion also commodity We running demand. Currently, during are crude our positions. peak rising the as historical by by at inventory to our on assets While

an Refining, received exemplary want priorities, our on recognize our in XXXX. have to performance safety Midstream, Before strategic honors provide and we which update businesses, their Chemicals we all for

CPChem honor. The received Sweeny earned operator the to we'll the of Our annual congratulate job Award. industry. AFPM This Distinguished Refinery Midstream AFPM highest large Elite on for the straight Slide Gold in to X, Safety refinery's Ponca received beginning employees In their Awards. well the our to progress the division. Platinum the very gathering is strategic City facilities Elite employees them highlight Lake secured I'm the third year CPChem the made and would which on the processing in I like Refining, done. Today, our both business and received In priorities. award GPA Charles and the top was Refinery Safety receive Award on XXXX of proud safety X commitment the safety. Award, and Safety the we've Chemicals, Rodeo Award, Sweeny a

our announced questions. monetize generate no proceeds. discuss will we long-term to to quarter The objectives, Then in assets to previously longer strategic including We priorities, to we'll first set we financial a your proceeds plans meet forward billion shareholders. that look over Next, our results. expected support our and returns $X target

of marketing divest plans process in This the quarter, retail and Germany is subject customary our to market satisfactory launched to employees. we the a Completion business communicated to dispositions Austria and and approvals. conditions

of almost We repurchases and through since July have distributed share $XX XXXX. dividends billion

focused component we over remaining $XX to cash enhance above the costs earnings consecutive since reducing average market return capital in our rates continue our approach run the at of fifth quarter. to to XX% a performance, have our we We're important achieve to barrel. remain shareholders. Refining, industry continue operating contributing rate The to growing flow a utilization committed XX% growth to a target. to Over increase in growing disciplined of mid-cycle will confidence flows be the quarterly compound of annual our crude reflects the billion we X cash increasing an allocation, to repurchases dividend. In and XX% announced our and for Recently, We increase improving to allocation. dividend we billion capture, our capital Share expect our on XXXX. quarters XXXX, competitive, and per generation secure, $XX including dividend,

transformation. cost barrel per reductions business achieved more We or million in from $XXX have rate over $X.XX than run

commercial synergies is per achieve Midstream, business our focused of end operating the year. the rate barrel to run NGL of full and expect by wellhead-to-market We our In $X on target capturing capital by $XXX that generation capital dividend. mid-cycle covers funding Midstream's XXXX. company's the XXXX sustaining year-end EBITDA top the over $X.X priorities, providing is million cash stable and adjusted estimated billion,

our During summarizes XXXX. major to quarter, Rodeo the energy our renewable a secure our returns. of superior the existing benefits We expected facilities. renewable with as we diesel into fuels from facility milestone producing renewable San of journey April complex. renewable location and feedstocks The generate Unit first project world's the market Slide hydrotreater X and startup transform in achieved one The Francisco strong a refinery largest the began is assets renewable leverages to of fuels. XXX to

our has that increased in per exceed We expanding have approximately positions production renewable knowledge gained market Unit and for business. day. continues us XX,XXX to operational fuels success to XXX and valuable experience expectations barrels

team's positions renewable jet, fuel. XX,XXX the Our second project their Rodeo by a on to as energy barrels fuels. the on update business produce an have day the to a capability increase component this commitment provides of per of fuels. Slide in renewable is ability XX Once operating Rodeo we'll approximately barrels rates track quarter. producing The X Phillips leader strong We're XX,XXX appreciate energy aviation day full sustainable renewable and the world proud of to complex of key renewable milestone. to We're complex of renewable transformation achieving end excellence progress. execution complete, per significant production in

to of as these $XXX Through billion $XXX $X.XX and achieved the margin. Our The reductions earnings quarter, first reductions. end SG&A we've sustaining of majority operating of and first of the reductions million to the relate comprised million in annualized run cost million quarter, gross cost capital rate $XXX cost as and at savings equity refining of benefits were well efficiencies. expenses

XXXX billion sustain track cost to $X cash generation. in on are to reductions higher of realize We

I are to are flows. want call and have to review the we priorities that market over to assets results, and path turn financial I Kevin achieving well, Before running a our our the to growing fundamentals clear stress the strategic good, cash

Kevin Mitchell

shareholders or $XXX Slide We $X.XX million Mark. per $XXX $X.X million. distributions were share. quarter million, of first you, debt the We repurchases Capital spending received $X.X XX%. Slide $XXX in affiliates distributed billion was our through million working venture dividends. the to from billion share a fourth Midstream quarter equity billion. excluding Net million X flow, results of earnings was by segment Thank Operating of ratio to quarter repayment. from for highlights including the joint results. capital X cash and $XXX first capital, change for was summarizes $XXX to debt Adjusted $X.X the quarter.

quarter. million Refining, results decreased decreased million, transportation lower Midstream, pretax earnings a million Transportation Chemicals. by due first due impacts was due as volumes, as NGL. and improved increase income of down Global million down reflecting adjusted Refining margins period, million, $XXX winter pretax increased decline margins O&P the first were pretax higher Marketing to $XXX lower in driven well Midstream, adjusted adjusted as Specialties, first and in in to offset margins. income realized quarter. and partially by to was $XXX in utilization results XX%. and costs well in primarily costs. quarter and lower the in turnaround to was deficiency throughput million This was lower $XXX decline from The the income from to lower partially $XXX $XX fourth During mainly to in results adjusted from results offset mostly seasonally due improved storms. Chemicals prices due a In polyethylene as The quarter mostly costs. the million was lower the by primarily business $XXX prior quarter, NGL maintenance decrease reflecting down decrease feedstock revenues, sales

ARBs. to part than were less previous favorable commercial environment due price rising a in advantageous the Our pipeline inventory less quarter, impacts in results hedging and

margins addition, due Coast decreased product realizations. clean lower In realized Gulf to

market Refining the adjusted at mainly $XXX million of the due maintenance Marketing marketing renewable Our conversion fuels conversion quarter activities $XX lubricant were margins. quarter. previous domestic to Rodeo. a pretax decrease first was and of results and as income downstream The million, well decrease lower units by capture XX% also Specialties impacted from and was negatively as on

in the excluding effective with was working the There billion included inventory, quarter. were adjusted cash first working which rate We a by issuances Net billion. $X.X the million. rising mainly capital, to shareholders prices. commodity returned increase and reflecting $X.X billion debt receivables, balance. $X.X benefits was $XXX and Cash payables We of $X.X a X $X.X use impact billion billion, in during dividends. in Our through repurchases cash accounts shows of change the operations, from capital started offset tax quarter a was partially XX%. Slide share

we Additionally, of funded spending. $XXX capital million

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

we for worldwide I'll to utilization O&P global to expect In cover in crude items In $XXX be the mid-XXs. be net expense. second the and corporate rate second Turnaround a expect million, we in Chemicals, other second few the the Rodeo. second expense outlook between Next, quarter rate and and quarter utilization expected Refining, is to million, in costs interest $XXX between the be $XXX We higher to reflecting million $XXX come million anticipate quarter excluding mid-XXs. quarter.

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

Operator

[Operator Instructions] Sachs. Our Goldman from Neil Mehta comes of first question

Neil Mehta

of West question you also were I that It the in Refining lot secondary on know Coast at The was first looks the really then guess was a noisy just quarter. I and of rates the Rodeo like because capture guys XX%. XX%. products. target

about what way maybe to the your a some happened as through the year. So just alluded but work about can our prepared remarks, bit this and you the in talk you confidence we of progression little there

Mark Lashier

Yes, is tailwinds asking you in first medium- Neil, and related that's activities looking a you that those are priorities. Refining us support our great position will strategic quarter of this all for The that. I'm Thank in that question. long-term to headwinds at way deliver mentioned to

and some the important. And underwent to around a are some of the activities work our little that can the more. will And on long-term including several And and turnarounds our in going drive success. we work commercial the over that bit contribute fundamental so of some around quarters, it's that of Rich critically Rodeo last into Kevin

in? do Rich, dive want So to you

Richard Harbison

and And pretty West and Mark. for the higher I metrics quarter, by when assets obviously good. and product in back It's primarily well. pretty XX% Gulf at reflect challenged, market yield, Neil, Yes, is year-over-year. capture look was an actually the on We clean the the driven our X% activity was achieved Coast. Coast But which ran I we about it the

forward. the as So move sign margin a line it actually bottom into here our we is playing projects that are

of move were It's the we X% over the towards than to our seasonal. clearly conversion fourth as lower summer butane blending X% quarter. related very quarter. quarter-over-quarter, that However, is gasoline we

increases to principally our when and the it clean intermediate it our X and was comes This product area. our across it Another X% higher-value really and effects products, concentrated the has produce Coast related really over to units was yield. this Gulf capture our ability period. inventories downstream turnaround It market in the catalytic system, is activity, to focused in reduces and

Now went as pretax loss is it in conversion if is West of we're reactive first you Coast, think the it $XXX would to phase about the we on from actually facility, and the near the completion effectively and we're Rodeo income business, we event. idle the had adjusted wind-up quarter Rodeo news now. Essentially, have compounding quarter. conversion, million across which well the transformed business. I the And a this good say the into to The active a of

for out day So catalysts and facility the system fresh be positioned second Rodeo schedule, run did barrels rates upcoming the ample across driving to the in units production. a to achieved will season. that is add want I the renewable we anything? on our full guess fuels And of Approximately to inventories Kevin, with summarize, intermediate ramping start-up you quarter. XX,XXX conversion up of

Kevin Mitchell

Yes.

of these some put just to of couple numbers items. me Let a

we in was $XXX about, in earlier So which in the primarily Central that These terms first West for $XXX in a that headwind or I a terms Corridor, some then product terms, million Coast, million these was are pricing are the absolute the negative that in that first million quarter. The Coast $XX was impacts inventory the overall absolutes differentials, not Gulf Rodeo variances, quarter. loss referenced quarter. And impacts the in the headwind on talk quarter. on in of commercial hedges comments a

Coast Rodeo that conversion. drag West results the of So are from the bearing impact the

Mark Lashier

refinery and I And disadvantaged think into a it just put Yes. that world's one of facilities. context, the to in renewable converting fuels largest we're taking

push start by took quarter, we lift into from the design bridge crude about because clean it the turned on Coast, to had crude positioned way we to and intermediates Gulf still to Rodeo the that but maximizing turnaround we're And quarter. And that heavy through have so utilization to second work now again facility throughput, think of you full of the instead products we rates our then is underway. well the to this the we're delivering value as to continue that,

intermediates products into got that season. ramp So to back now poised we've we inventory up clean converted into continue to as of summer be the

So we're well forward. going positioned

Neil Mehta

net That's capital want and including And is get path So then there, just a lot that that your to What's Kevin, color. The sheet, that around working capital asset flow quarter about good QX on helpful. working for on the to bridge, always is get your really debt into to we sales? over a capital metric. But you how of just question is equation? potential do think follow-up getting where big balance noisy picture perspective cash time.

Kevin Mitchell

on the capital piece let first. working Neil, Yes, hit so me

payables a is have X items. was in AP/AR. negative function inventory billion net X.X receivables, price, aggregate, and some by and the [ of did partial One, rising we generally build, rising that of absolute in price benefit So is environment $X.X and the for that positive offsetting driven so about ]

So opportunity benefit commercial up also some function as and was like million we asset receivables on operational-driven build, showed on some inventory to those several that a inventory collecting, there. But think by commercial excess the into And will of build intermediates a on fourth say and in talked a there. first the margin we've saw generate quarter, barrels both inventory it's is sheet. as And from drawdown, build, in a it's hundred in cash the But inventory inventory. future in balance liquid it's point that benefited quarter will in the about. of that on dollars well realize The really would I sizable balances. that that we anything a time way will still return turn at operational the sitting will we be about fundamentally, the cash all

come talks the coming expect you'll end and would in that So working inventory us. year, that kind back of cash of to capital. And that consistent the -- some towards practice, to the to the you with normal down see of back

of above with leverage Still target XX% XX% terms levels, and our range, target. sheet are In range. so that to we comfortable targeted balance

that of EBITDA. adjusted quite see of in notice leaning that's the into You'll repurchases $XX we've in outlook, that billion function we been coming and share in business, growth heavily, confidence our the the terms the of a mid-cycle our

even opportunity And expense so it term, feels buying be in it's for at like still a if us the near of to pretty back shares compelling the that leverage metric.

the to leverage, debt expect objective. And that still comment able and our to there company is way much the ability businesses, on is or those Midstream So -- still metric, get level. this the That's for look non at to other bear the Marketing make the to our other commodity sensitive the less Specialties business, be we the I'd other the basically businesses that and has. the

of $XX for roughly businesses a debt, net that, And Xx, it, on think that's you call So billion of combined leverage is which that's of typical are. like $X billion where basis, we generation. circa EBITDA a multiple

the that's of at other the at. And that level. that volatility that, so Refining that being keeps look business, way And look we we avoids part the measure debt

keeps us a from comfortable sheet So very balance standpoint.

Operator

next Roger Securities. Our Wells Read from question of Fargo comes

Roger Read

million and, you're Refining to, margin. us from going $XXX juxtaposed it's cost OpEx during seeing X cumulative like kind look lot going where seeing X so maybe I of maybe stuff's if of and savings making Refining? manifest kind $XXX I but it's put the could over cash we're of guess the OpEx maybe basis. at combination to a If against the if I in of the in together the it's in on those you the that we're look Refining a cost overall say, I'd embedded on you first the OpEx, on, at impact last quarters. Recognize let's stable a see we help cash if reduction, million or Where could, -- actual quarter progress guess, in

Mark Lashier

Yes.

that targets, that always keep run we impact to delivering And up Refining, and against going I and we've our that track of There's a into realized. in XXXX. think the capital in in at Refining, is where our cost out see our majority transformation realized continue the to certainly, cost savings. is is capital rate $X.X our about and over-delivering progress lag, and speedometer then sure forecasted talk we're And we and seeing certainly been in and business year make that billion throughout showing rate to. Run up seen about continue targets talk you the time. this point to this good actually The in what $XXX in as we're we'll synergies, million we rise show is up numbers. we've

cost Rich for into And that. you, color you drive can so Roger, give around some numbers those and

Richard Harbison

Yes.

a of barrel Roger, $X.XX or realized run last passed last million So $X.XX last rate year. the end a we, the of and basis, run year, on rate number that $XXX about year $X.XX, on roughly

the forward -- million, the realized up see first over number. As now we number through here, creeping we quarter million fast $XXX into the actually slightly $XXX to that

So it's a delay talking that in And roughly roughly that. Mark's at XX-day about, in coming it's $X.XX. that delay achieving that

spends, We back remember, completed the go separate we we across over spends we've revalidate and initiatives when go that organization. validate and back are XXX those these. So those and

of start of here it those at look over So to for inflation, that in our heavy faced pretty we period we the even are flowing noticeably lower Refining. face period line OpEx, time. year-over-year And seeing inflationary is bottom you if the the

to a by the equates barrel the the year-end about rate a with at year. which the is of end for a end quarter, rate, set that's of trajectory $X of for organization, $XXX million the $XXX on achieved roughly target first On run that's $X.XX. progress. So we've the the which we're of happy run basis million And

well that, seriatim earlier, and we're efficiencies hundreds, not that to pressing make work it or we a decisions, achieve if pace safety, thousands that And the And our how execute, we really to is for organization. process. mentioned reliability, we our sure on forward. and of that like not and that, as program power had work compromise it's So should do make to of want but drive influences out It to the it's I how initiatives earnings of happens, intended work. changes

Mark Lashier

workforce drive that the to whether in that committed out has home the we a driving really of said, to us Midstream, the what are. has can levels I organization Refining, and performance. And and front our right on field, have they impressive, out bought into Roger, there. to want what cultural it's understand particularly wherever and been just lines, Rich impact Yes, it's the it, at they are They getting strategic priorities higher contribute how understand you

commercial we're forward. line. front the organization, And people as better that digging And get whether cost simplifying support to people every move to simplify for those at they and continue they're also the we easier decisions and around they're we've faster, so streamlined the to so day. And can organization seeing got done, the on success that will so we're looking organization, make live performance, opportunity to or ensure digital and we an a in right whether and across sustainable operator work, it's both it's make that opportunities work get want we

Roger Read

follow-up the of there, of partial I retail a everybody. you does mainland assets the the that detail European have Europe, just sale How on Refining specifically? on assets. affect the appreciate the potential guess question ownership MiRO in I announcement

Kevin Mitchell

Roger, Kevin. Yes, it's

the we Germany high-performing selling the a doesn't countries. as retail sort X many a X,XXX model, a That's years Austria across of core integrate XX% strategic those a market really country. primarily dealer-operated sites assets, in row, that company-owned we great but and share almost areas said. each company. business, in like business A top-rated of So we're That's with focus have

the then include why refinery assets. It in in those And that interested focused be handle package the reason that's for buyer ownership there's separate a If of type not background that ownership. those little right we'll this our that So for does not those would assets to the MiRO assets. in of bit is and a conversation it's a is majority is marketing Refinery of But Germany. separately. buyers interested, now retail on as

Operator

Ryan of from The Sandler. next question comes Piper Todd

Ryan Todd

the running. Maybe on congrats if X Renewed I up start with the and project, I Rodeo. Rodeo could getting project mean, on

to You the walk early in performance. like and [indiscernible] maybe quarter and challenging feeds? mentioned How of you hitting do towards quarters do view over advantaged you anticipate over next quarters we negative profitability that of capacity? anticipate the And to there? the first over you year? million expect the the line what full production know days point next $XXX a as should you change capacity feedstock course loss about more these think as I few optimized mix are few from this how can the run When we time But look through moving

Richard Harbison

Sure, here. Ryan. This is I Rich that. got

time first, maybe I'll line with start Rodeo of So a the facility.

March in fuels know, of into you XXX they a in hit That milestone of renewable hydrocracker, facility occurred year. of year, a and as a this production of after site. first with of feedstock down February ramping shutdown and complete processing legacy transition on crude this been went we've first the the facility running this years As

produce up facility XX,XXX complement a allowed we're the with about mentioned talking phase running about Unit operation first the with earlier barrels that the is So first that that and here. And day hydrocracker and renewable milestone the fuels. XXX of to in that's, Mark comments in that's

June construction unit May the finish the second start hydrocracker in up the frame. we The those time pretreatment will and frame, in time and will both

by So facility end of second production at the rates. the full the be will quarter,

feedstocks. team comes over So And feedstocks. been a of business years Brian's of intensity couple that has the number in carbon in aggregating this is when engaged by mean last to margin lot all on driven it Now actively of what does the that a margin? the

pretreated at intensity So will a carbon But higher quarter. second with quarter the this see we the start feedstocks roughly end the we number. over the the third I fats, to then driven And primarily us oils greases to in CI that sustainable world. all aggregated range in third range. And the CI, and that, quarter, see CI interest throughout the essentially by the of as supplement of we're third XX through quarter, expect more seeing ramping growing a in fuel XXs the And down processing in that's continually our would we that mid to see as way aviation that lower material of of recycled are is, by well. a

So of the into And begin do a facility we on expect the fuel, the that. third quarter which a prominent in is positioned supplier that's have market jet to component capable to in production key that sustainable be well. is as that. And will aviation we be renewable starting blended the production

Rodeo's now that online we're that good in news call right is So up and process, now. process, phase, and production I'll through the start-up the ramp-up ramping shutdown/start-up we're it. It's

Mark Lashier

it's for marketplace. feedstocks is between And of split pretreatment going we'll day and renewable rates, up to be in we'll designed have on able flexibility. because Yes, to up diesel the fuel, great unit order the coming Ryan, optimization, of fuel jet of sustainable barrels produce something the a get the we'll have, full to then this kit aviation blended to jet be in continuous or fuel whether XX,XXX we when gets feed which the

are that optimize so the as CI, we'll as out on revenue cost there. And and incentives and well

fully interesting and it we're going and getting generating an online to kit, be So looking in forward our facility have it's cash. to to

Richard Harbison

from last-mile I as that think put well team there, user deliver out it's and Brian's as play in production place. product the the value we supplemented strategy as end that we of by That should facility. the leakage nicely prevents has increase the to

Ryan Todd

have have in signed contracts partners? negotiations you you ongoing there SAF do you -- the Are on front? And with

Brian Mandell

We've concurrently of negotiations SAF. interest in in lot We're a seen with partners.

Ryan Todd

underlying the gears talk signs chems, and side, Great. any changing in looking you're the kind about how of performance you seeing CPChem. you market Are better-than-expected Is drivers it at the improvement improvement to rest primarily on the the there? of chemical Can of conditions of of feedstock-related? Maybe maybe just year? one,

Timothy Roberts

Roberts and Tim things chat is there'll it. think this about other be Ryan, I I'll X because around that. cover Yes. questions I'll

he'll talk CEO a I about and wanted the more the to leadership, actually First CPChem. job missed. was retired at is who wanted really Bruce there, leadership be Chen, good recognize great side. I one to drive recently just for He on great did excellence,

assumed internal successful have take Prusak, his of we of ability and in who's confident next industry-leading performance. the very Steve and highly has We been role the phases lead CEO. the CPChem Steve in an all are business, to candidate, to level of chemical

both to I thank want of that, So guys. those

especially side, East. but the light versus talk macro with get positioned the a been Middle spread on me boon CPChem. Gulf feedstock, CPChem, heavy-light not Now and those let that only really can well Macro, it's about heavy Coast regard then U.S. being light I'll the who's the in clearly, to specific to to feed, feed that crack the

is it's wide advantage so right the And pretty now. --

so And advantage to it. they've take of been able

like industry the fact, light, it. cracking you're in In U.S., the you if

margins. good. really you, related that tell we is which more bottom, feedstock. will the I lot is about come mid-cycle However, It at are off A of not to has

gas has down as some it's come down and natural propane come well. subsequently, and So has off, with ethane's it butane come as

And up. relative that and the so also showing utility lower And subsequently, gas cost. anyway, to has then gap gotten natural And bigger. then feedstock that's

margin those bit chain little of help as just polyethylene support widen pricing, combination enough a up of on the that bit. as well So X lot, not to a but a little

that during it XXXX, think, We do we good. certainly, that's mid-cycle and it's still we rebalance although then into see think off though, to see we're it's getting can goes, But supply-demand environment. XXXX. been you bottom, think back fundamentals hard I a the So as mid-cycle that us still anytime get to sometime destocking after see

they're they've mid-cap the their one them do that projects and first another to the And with and CPChem onstream last added then they highlight late large of in Specifically earnings CX, come crackers splitter, did couple CX of adding that quarter. to there. though, unit, well had want as furnace I a X-hexene also to the year, X-hexene

running. they're furnace. the have shakedown startup have CPChem's good, in That see nameplate XQ, than earnings material really really more with up, something we're higher showing with side been mode that on And earnings they're you in the has you'll They're we're again, which through the results. a run and normal units. it it work is So up, up at hoping generating capacity, starting there, complete. They going And those too. will are

Mark Lashier

to out has flat done XX you're Europe profitably. Yes, did running almost that that at Ryan, the the of they're rates. rationalization seeing to you're last did at years they what CPChem of in position they the and And And bottom be while run cycle. seeing assets to able of live themselves flat-out

And years. that's next see in be to some We constructive, and of in that the the see to of come the of assets out will a from out bottom And the this cycle couple greener help less to to competitive that the CPChem accelerate that's so perspective. out down the industry pastures of of system. need and cycle going encouraging

Timothy Roberts

at place announcements some from of in is down the curve, even at and running they're or a great cost because Europe, your the right cost wrong at the Mark, will point, shutting seeing folks, add And place competition rates. you're in CPChem What reduced point. higher-cost think that X a lot that namely the shut And they're they're down we've of seen to extending on I or crackers maintenance reduced running on in whereas to facilities, rates that's curve. X there is that be some

Operator

next Gupta from comes UBS. Our question of Manav

Manav Gupta

quarter-on-quarter that us variation job a in on much, you go of big second the drove saw wasn't but on side. through Midstream? and transportation the a We business. the in variability mean, the we of variability NGL Guys, part Can I did of explaining off other earnings some what that in good understand that Refining. help the

Timothy Roberts

quarter I go there Yes. question. we're IBT at we billion and out I so and I hasn't and I with to let This guiding year. staying the changed. I the Manav, call, per address. want that earnings thing million make Roberts talked sure is good, the wanted thanks -- where first $X.X just that again, last about for is quarter $XXX mean, to still Tim we're to mean, lay feels were on ahead That's me towards that that.

you XQ thing. look and was XQ first XQ, okay? if strong a quarter, Now was the at That

that in And onetime impacted first one, that it especially number the and things showed quarter. You what up variance, had fourth storm. quarter, some in winter

storm, to impact the was, the and winter really So It our it not assets. too. really, us and it's other I noting, were And people, worth the was think impacted to producers. impacted

variety come issues. different of seeing really to we volumes a down So pipe the due other and freeze-offs weren't the

again a volumes So subsequently it back and system. and get up took for those then get working the way to running while their through start

some to So from commercial also, showed that and about impact fourth then true-ups, true-ups we timing some inventory there. And accruals to quarter, up quarter quarter. between had fourth $XX first million first commercial quarter

will issues more as we'll And right normalized second in if those not getting are you go is But will somewhere together, And into up. up kind in where We timing generally, inventory a the that quarter at. basis some million be you'll still but year. number a it. It's so big in million look the we that of throughout north see you on the that's positive. put XQ. $XXX show of really at think as show we see how We're we we're as $XXX number X quarters

Manav Gupta

on quick macro. follow-up My diesel Perfect. is the

have because to We in Wasn't which fully did some anticipated volumes not. seen pullback we expected they cracks. drop, Russia

so on year? detailed work know do as the diesel stronger could of expect the world in So get your going help in I the and you on Jeff what's ball cracks to you crystal lot with a if to us does this,

Brian Mandell

a Mandell. issues. are of had refineries say then warm a in Brian would winter, I for had northeast U.S. came that we've running number is they Prices We really this well. diesel and contango. Manav, back were

market. the We about We will Russian barrels distillate But off constructive. back. think have a we seen of day are XXX,XXX market the do come

hydrocracking with margins and run at -- in hydroskimming and You're see starting breakeven. to seeing cuts Asia Europe

As move driving into more mode. we see gasoline we could season,

issues. the Week, jet West exports see China's that could Golden less and Russia's that moving U.S., ahead If demand again, and you're geopolitical fixing production to Labor diesel real then Coast, well. diesel, strong more distillate Day, particularly into fact, as East the seeing coast that we In gasoline on jet over in and from drive continue to and distillate hit means

of are better here. of think we trough to out look going that things So coming this kind

Operator

today question of JPMorgan. next Royall Our comes from John

John Royall

in the follow-up new the could process. I'm a with that sense business retail trying Marketing out had in the be the majority sale in on I that this side there? of just strategic Marketing get any on U.S. shake less a integrated assets separate? might And the Europe. direction to is Are other to on light there international sales that strategic of too operations of marketing Refining side,

Kevin Mitchell

other U.K., with a Switzerland, venture marketing two business And Yes, very are in a and the U.K. have venture business, different a a of that Coop the integrated where so in the John. are that. standpoint, structure, somewhat businesses the little in Europe U.K. is is the very joint in From a in around with are Refining it's but also the we that bit dynamics Switzerland stand-alone joint The retail different our and marketing business

for more it's out Humber the really to integrated product much that's Refining coming the the the much placement very business across case with model, different It's akin the business the U.S. refinery. help to as serves U.S. And the where ensure system So Marketing well. of Marketing regions.

John Royall

be little this Mark is the And an to capture refinery? not on it we RD to what we've And structural on Neil. a to West rate think a his now how officially a West historically response the Coast result? should of But we it's Should Coast. and Great. alluded next my and unit expect about then be as with the question think sort higher to going the seen different how I Rodeo than in

Richard Harbison

start with to me want you Mark, that?

Mark Lashier

Sure.

Richard Harbison

Come over the top. This Rich is Harbison.

there's profile So time a has West stock. the John, a to we've renewable not and contributor Coast gone it for now. converted some fuels reason, been the on into a earnings It quite meaningful Rodeo to

change Coast say, that operate, Coast business. Angeles forward West will in the we're that -- that to facilities a the I'll West on money Refining to to to make side profitability. The and a have general, looking Ferndale they've getting change will marked the good So the is But Los fully the been and Coast. market think of implemented. West contributors And to the we challenging continue do

the for of Our of Los Angeles advantage with taken has been declining originally facility California a supply it lot that original refinery built. challenged was when the domestic has crudes, away which crude

to positive crude out dynamics, the West out and few which is Los pulling as on dynamic that a Angeles months the marked on flows TMX a a the impact works pipeline will here in crude we'll next so there's over the refinery flow potential have has a Coast. the change Rodeo up these And But the change how Now around. change changing have see opening facility.

Operator

Our next Pickering, question comes Holt. from Tudor, Matthew Blair of

Matthew Blair

EBITDA to the for, able target? approximate then Austrian buybacks? billion mean you would billion of the assets that if to retail share $XX increase for be those up sale? like, $XX to and the Are that so, would from And the cash contribution sale, German And share earmarked an

Kevin Mitchell

EUR the that million. for a $XXX give Matt, Yes, to the providing to range are It's conversion is XXX you XXX to million, we're information the which this buyers. EBITDA, that prospective Kevin. million -- the EUR The $XXX on that the is I'll is million numbers

probably $XXX If go with midpoint, number the you EBITDA of your best pick million is to that. on

$XX of generation, sales. cash return asset on proceeds $XX cash our of was terms stated to billion not target dependent previously from we've In billion

say through. quite does also But a And it any timing this point haven't run increase These at that. usually made would processes I on still have that exactly definitive anyway. cash how the also, the is decisions would to uncertain So be potential while we to take deployed.

on real. time make the will that a becomes that So be cash when will something near inflow determination that we

Matthew Blair

of the depreciation? versus EBITDA also, CI That's that hit fair it I in negative bit OpEx much we what sort conversion, And from were a then any to think the that breakout running $XXX can million was then than of increase? Rodeo that's the margins plant feeds like low it's assume drove that is And the expecting. versus And not What little gross since current how Rodeo provide is great. higher you on yet?

Kevin Mitchell

breakout. are first had assets is the the question, million that some a again service. And $XXX going I on So absolute out a loss we of say basis to give because not would number the taken impairments on related GAAP level we're of that bigger not -- include does asset-specific to

report way but areas, line that not does the the of on different earnings. breakout. in adjusted up level So provide the $XXX And we million is our the consistent -- with item it to going show we're

production we EBITDA generation positive up ramp-up around scale running early carbon ramp-up the migrating when barrels as in XX,XXX should all phases. the was series yet -- mode. of the up, per that ramp-up we're we in in day, question But we're economies the second is, into have to the transition challenged mode, units supplement the more start CI to intensity, be see others clearly, lower and can The feedstocks observation contribution. go the coming while through feedstocks. that in we're mode. we're higher to EBITDA bringing to don't My the of because We EBITDA going is this full

Richard Harbison

sustainable aviation Supported fuel. by

Kevin Mitchell

It's right. uplift. another That's

Operator

Paul Scotiabank. Our of next question from comes Cheng

Paul Cheng

the but question. the once look share into Coast. up like also the fully I West to is you And excluding want apologize Rodeo? OpEx the That's go that to is I first to of in what what Rodeo it's ramped back terms OpEx? have Can going

Kevin Mitchell

I asking -- see to transparency for. we the the renewable level will fuels Refining. to from providing that business is information on basis OpEx that excluding you going-forward a transparency Rodeo. don't more Yes, your periods, level questions reporting Coast more In give you're Rodeo we of be providing kind enable Paul, will the around detail be answer we that the because best asset way West But out. future that think level that of will of separate

around I would now, right know I we providing this of will terms you space watch just so And modeling in more say, that. but help just be that transparency because doesn't

Paul Cheng

in I Kevin, can some that to from onetime there's first quarter, related second understand the Right. ask the with that, transition I the quarter. first OpEx

as is level the be at we this going it's going stay that OpEx, the quarter down? to first to or actually assume should So that

Kevin Mitchell

that, that up the show and conversion as to Rodeo. guess, I classify, It's probably as little. the elevated down at turnaround-related would it. be costs We're way is with going the spend, trend there's past peak There's an to some, But well will a what associated the say still we downward. of is element

Operator

Gabelman next of comes Cowen Jason from Our question Company. and

Jason Gabelman

Yes.

try of The if maximize in journey, just us on that performance. plans clarification. Can first second, crude then what could level. to And and you at any terms benefit on had think commercial sell results. to the I'm one update rather you've you product seen profitability different you come a just portfolio through a if quick in site earnings of is is? and And than and desire that discussed an I how target integrate wondering just provide a remind the buy your cash balance you across

Brian Mandell

Mandell. it's give some journey Jason, I'll Brian for of commercial. of you our kind flavor

an know, global commercial Our business. supply trading organization integrated is, as you and

value additional company. Last of our drive capabilities internally, announced commercial reorganization And various and the of mentioned, value to the value business really then our integration year, for of Singapore. this focus to of group, to segments We assets have Calgary, back office fully some optimize year. now offices generations. is reducing our the We've and that hires capture in between to a our capture continuing Houston, costs and all London, you we strong goal value made optionality the embedded and in the and advance as kind

Refining thinking on continually ultimately, we're while the for increasing this our segment optimization We across market continue best interest capture integrated VCO value capital organization decisions. And whose call a increased corporate business. to kind chain that our and work companion we function the and also general make ensure have value chain growing maximizing employed for earnings, to about all of the to return continuous on driving that short, we group, and improvement doing focused is the

Kevin Mitchell

on in on quarter. cash And that as We also slightly cash quarter the the at quarter. Jason, heavy the below the first typically cash $X we've of said say the the $X billion. drain past, level same is target number, were the to end I'd billion a balance,

as So that with we level. target comfortable look ahead, very still we're

Operator

question final comes Theresa Chen our And Barclays. today of from

Theresa Chen

quarter capture third maybe for second as First in on well. the outlook near-term and

barrels have different the do noise moving onetime about and first on narrowing it from be you your magnitude sizable assets. or sensitivity indirectly PADD items have help less headwind. should online, that later X you Coast [indiscernible] that bring date, [ based we've be a seen And ] quarter, West whether thinking to WCS impacting from presumably but Just the the ramping should Rodeo, parts, directly, maybe turnarounds then to TMX your with or that

Just variables to help the how these capture in think as look to about reconcile near we us term, please.

Mark Lashier

the high I that's we Theresa, things laser can what a what on, on focused at and and we're think level, we and that's control, focus focus Rich Brian on.

the Rich capture to Brian in I over see control quarters I we're can chime think what perspective. the potential, -- and be talk of our things we and couple speculative. But from commercial with respect about market out can of a what doing next to think would that

Richard Harbison

Yes.

and that we first news catalysts we've moving chain perspective, downstream is on our all is capture, make. they're up headwinds products product value So it's to that it's And some we some We of this Good ready Rich capture some market bit Are clean then I that? here. a headwinds from the when conversion Refining So market we unit on little about with think quarter, the certainly talked run -- the yield. Theresa, talked a product refreshed again. which about turnaround activity. now,

we But values season, them. Some bit product roll you'll little clean into our the of that product and did about place the we quarter. best see driving in bleed summer into the yield as can put second a

that to at we that expect the bar XX [ Through are construction continue an this increasing front this the the seen ] completed out with market that as well these by in in this last and in as the of years of projects capture have of X year, additional that put we continue to of we've invest projects close that our a projects currently X% X number mid-cycle raised X%, well. from program over on balance We've year basis. that last a with by a target we Now and through sites. year

as capture So through turnaround something the and our at build think this XX%, lower when about facilities quarter move on of we as we that market the come quarter market see part as the rest the of of cycle. a to I out

Brian Mandell

Theresa, is Brian And this Mandell.

we flat commercial Jet this diesel advantage year, add fuel, that I talked kind some to side. roughly the to say I bit in commercial comment. organization, seeing assets. take would the little around curve about heavy, year will of continue of that. And well. a to made move year. up I gasoline can Just moving stronger this our Canadian do thinking we our as terms last of in can What a appetite, we grades how you we're we can WCS, WCS have that remain good optionality We'll so would volatile. Canadian about demand. color run on different then to say and run lights

commercial WCS grades Latin integrated the can grade. Coast American unfavorable, an a on Gulf have is grades We we particularly our such AG Coast and plants system, West as big And if plants, other footprint. to switch or

of our in So a lot system. flexibility

Theresa Chen

to point, of not portion third-party portion leverage. fits earlier commentary how what your related more about customers it. is flows Midstream Can a bear cash comments appropriate your by Kevin's what us stable the leverage is the Got and Phillips some what Refining could company follow-up Midstream? if the more with of I related to can at the share for just And of paid ask EBITDA businesses and this you business

Timothy Roberts

the I third XX% XX% to say, I'll number, Theresa, would but it's into, verify we're well parties.

Operator

call This session. remarks. turn Mark for concludes Lashier to closing now I'll the the question-and-answer over back

Mark Lashier

great fundamentals are all, maintenance strong for your are that assets you, supportive, Thank completion at our The seasonal of questions. since running the and activities. we're looking market

is peak support strategic for to you significant positioned for XXXX path shareholders. a and your that value our $XX meet to mid-cycle grow billion XXXX. to portfolio Thank to We're forward confident by interest EBITDA long-term create integrated $X well XX. summer We've and market got flows from cash Phillips Our demand. in growth opportunities in priorities our of to clear adjusted capture our the achieve billion ability our target

If you today's have questions after you. please Owen. call Thank call, Jeff or

Operator

joining. Thank today's concludes you call. This for

lines. now may your You disconnect

Phillips 66 (PSX) 26 Apr 242024 Q1 Earnings call transcript