Phillips 66 (PSX, Financial) is showing up strong this quarter, with adjusted earnings hitting $859 million, or $2.04 per share—comfortably ahead of analyst expectations. The company doubled down on its shareholder returns, distributing $1.3 billion through dividends and buybacks, signaling unwavering confidence in its long-term strategy. One big win this quarter? Achieving the $1.4 billion run-rate savings target, including a $1-per-barrel reduction in refining costs—a clear testament to Phillips 66's disciplined approach to cost management and value creation.
But it wasn't all smooth sailing. Reported earnings came in lower at $346 million, mainly due to a hefty $605 million legal charge and the costs associated with winding down operations at the Los Angeles Refinery. The refining segment took a hit as well, posting a $108 million pre-tax loss, thanks to shrinking market crack spreads. Renewable fuels also saw tighter margins, resulting in a $116 million pre-tax loss despite ramped-up production. These results highlight a few of the pressures Phillips 66 is managing, even as it leans on the strength of its diversified portfolio.
Looking ahead, Phillips 66's position remains resilient. The company is close to reaching its $3 billion asset disposition target, with $2.7 billion already banked, providing ample room for growth-oriented moves. With solid cash reserves and a steady hand on cost efficiencies, Phillips 66 is positioned to meet its 2024 goals. In a volatile energy market, this kind of balance and disciplined execution offers investors a confident, forward-looking play.
