10-QPeriod: Q2 FY2025

Phillips 66 Quarterly Report for Q2 Ended Jun 30, 2025

Filed July 28, 2025For Securities:PSX

Summary

Phillips 66 (PSX) reported a decrease in net income attributable to Phillips 66 for both the three and six months ended June 30, 2025, compared to the same periods in 2024. This decline was primarily driven by accelerated depreciation at the Los Angeles Refinery, lower equity earnings from CPChem, and the absence of a significant gain on the sale of an equity interest recognized in the prior year. Despite the decrease in net income, the company demonstrated strong operational performance in its Refining and Marketing and Specialties segments, with improved margins. The company also made significant strategic moves, including the acquisition of Coastal Bend in the Midstream segment and the agreement to divest a substantial portion of its Germany and Austria retail marketing business, signaling a focus on portfolio optimization and strategic growth. Liquidity remains solid, supported by substantial cash from operations and access to credit facilities. The company continues to return capital to shareholders through dividends and share repurchases, with a commitment to returning over 50% of net cash provided by operating activities. Management is focused on achieving operational excellence, disciplined growth in Midstream and Chemicals, and maintaining financial strength. Investors should note the ongoing legal proceedings, particularly the Propel Fuels litigation, which could have a material adverse effect on the company's financial position.

Financial Highlights

45 data points
Beta

Revenue

$33.32B

12.7% Gross Margin

Net Income

$877.00M

2.6% Net Margin

EPS (Diluted)

$2.15

Total Assets

$75.94B

Cash & Equivalents

$1.05B

Free Cash Flow

$845.00M

Financial Statements
Beta
Revenue$33.32B
Cost of Revenue$29.08B
Gross Profit$4.25B
SG&A Expenses$582.00M
Operating Income$1.36B
Net Income$877.00M
EPS (Basic)$2.15
EPS (Diluted)$2.15
Shares Outstanding (Basic)406.76M
Shares Outstanding (Diluted)407.93M

Key Highlights

  • 1Net income attributable to Phillips 66 decreased to $877 million for Q2 2025 and $1,364 million for YTD 2025, down from $1,015 million and $1,763 million respectively in the prior year.
  • 2The company acquired Coastal Bend in the Midstream segment for $2.2 billion and agreed to divest 65% of its Germany and Austria retail marketing business for approximately $1.6 billion.
  • 3Refining segment income increased by $57 million in Q2 2025, driven by improved realized margins and higher volumes, though six-month results were impacted by lower margins and accelerated depreciation at the Los Angeles Refinery.
  • 4Marketing and Specialties segment results saw significant increases, driven by higher U.S. and international marketing fuel margins and a substantial gain from the sale of an investment in Coop.
  • 5The company returned $1.4 billion to shareholders through dividends and share repurchases in the first six months of 2025.
  • 6Total debt increased to $20.9 billion as of June 30, 2025, with a debt-to-capital ratio of 42%.
  • 7A significant contingent liability exists from the Propel Fuels litigation, with a jury verdict of $604.9 million recorded in Q3 2024.

Frequently Asked Questions

The decrease in net income attributable to Phillips 66 for the six months ended June 30, 2025, was primarily due to lower realized refining margins, accelerated depreciation for the Los Angeles Refinery, and the absence of a large gain on sale of an equity interest (REX) recognized in the prior year. These were partially offset by a significant gain from the sale of the Coop investment and a prior year impairment of Midstream assets.

Phillips 66 is focused on shareholder returns through dividends and share repurchases, achieving world-class operations by optimizing refinery performance and costs, and pursuing disciplined growth and returns, particularly in its Midstream and Chemicals businesses. The company is also focused on maintaining financial strength and flexibility.

A jury returned a verdict of $604.9 million in compensatory damages against Phillips 66 Company in October 2024. The court is expected to rule on exemplary damages and attorney fees. Phillips 66 denies wrongdoing and intends to appeal. The company has accrued $604.9 million, but acknowledges that exemplary damages, if awarded, could have a material adverse effect on its financial position and results of operations.

Phillips 66 generated $1 billion in cash from operations in the first six months of 2025 and has approximately $3.7 billion in total committed capacity available under its credit facilities. The company is targeting reductions in total debt to $17 billion and a lower debt-to-capital ratio. While debt levels have increased due to acquisitions and borrowings, the company believes its current liquidity is sufficient to meet its obligations.