01—Abstract
Summary
Summary of the 10-Q filed April 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Phillips 66 reported a net income attributable to Phillips 66 of $207 milliona for the three months ended March 31, 2026, a decrease from $487 million in the same period of 2025.
This decline was significantly influenced by the absence of a large gain on asset disposition that occurred in the prior year's quarter. Despite this, the company's total revenues increased by 7% year-over-year, driven by higher refined petroleum product sales volumes, though partially offset by commodity derivative losses. The company's financial position saw a substantial increase in cash and cash equivalents to $5.15 billionb, up from $1.116 billion at the end of 2025.
This was supported by net debt borrowings of $7.7 billionc during the quarter, which also helped preserve liquidity amidst volatile commodity prices driven by geopolitical events. The company continues to prioritize operational excellence, disciplined growth, financial strength, and shareholder returns, with strategic investments focused on the Midstream and Chemicals segments.
02—Key points
Key Highlights
- Net income attributable to Phillips 66 decreased to $207 million in Q1 2026 from $487 million in Q1 2025, primarily due to the absence of a significant gain on asset disposition in the prior year.
- Total revenues increased by 7% to $33.0 billion for the three months ended March 31, 2026, compared to $31.7 billion in the prior year period.
- The company's cash and cash equivalents significantly increased to $5.15 billion as of March 31, 2026, from $1.116 billion as of December 31, 2025.
- The company reported net cash used in operating activities of $2.3 billion for Q1 2026, a reversal from net cash provided by operating activities of $187 million in Q1 2025, mainly due to unfavorable working capital movements and cash collateral for derivative positions.
- Total debt increased to $27.1 billion at March 31, 2026, from $19.7 billion at December 31, 2025, resulting in a higher debt-to-capital ratio of 48% from 39%.
- The Refining segment saw a significant improvement, with income before income taxes increasing to $208 million from a loss of $937 million in the prior year, driven by improved crack spreads and feedstock advantages.
- A significant legal judgment of $833 million against Phillips 66 Company in the Propel Fuels litigation is being appealed, with $887 million accrued as of March 31, 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Phillips 66 kept $0.01.
- Revenue$32.54B100.0%
- Cost of revenue−$29.22B89.8%
- Gross profit$3.32B10.2%
- Operating costs−$3.12B9.6%
- Operating income$207.0M0.6%
- Interest, other & tax$-00.0%
- Net income$207.0M0.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 29, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $32.54B$30.43B | +6.9% |
| Cost of Revenue | $29.22B$27.66B | +5.6% |
| Gross Profit | $3.32B$2.77B | +20.0% |
| SG&A Expenses | $537.00M$519.00M | +3.5% |
| Operating Income | $207.00M$487.00M | −57.5% |
| Net Income | $207.00M$487.00M | −57.5% |
| EPS (Basic) | $0.51$1.19 | −57.1% |
| EPS (Diluted) | $0.51$1.18 | −56.8% |
| Shares Outstanding (Basic) | 402.04M409.18M | −1.7% |
| Shares Outstanding (Diluted) | 403.27M410.50M | −1.8% |
05—Questions
Frequently Asked Questions
What caused the significant decrease in net income for the first quarter of 2026 compared to the first quarter of 2025?
The primary driver for the decrease in net income attributable to Phillips 66 from $487 million in Q1 2025 to $207 million in Q1 2026 was the absence of a substantial gain on asset disposition recognized in the prior year's quarter. Specifically, the sale of the investment in Coop Mineraloel AG in January 2025 contributed a before-tax gain of $1 billion, which was not present in the current quarter's results.
How has the company's liquidity position changed, and what factors influenced it?
Phillips 66 significantly strengthened its liquidity position, with cash and cash equivalents increasing to $5.15 billion as of March 31, 2026, from $1.116 billion at the end of 2025. This increase was primarily funded by net debt borrowings of $7.7 billion during the quarter. The company utilized these funds to manage volatile commodity prices driven by geopolitical events, support operating activities, capital expenditures, and shareholder returns.
What is the status of the Propel Fuels litigation, and what is the potential financial impact?
Phillips 66 Company was found liable in the Propel Fuels litigation, resulting in a final judgment of $833 million. The company has appealed this judgment and has accrued $887 million as of March 31, 2026. While the company denies wrongdoing and is vigorously defending its position, it acknowledges that losses in excess of the amount recorded are possible and could materially affect its financial position.
How did the company's business segments perform in the first quarter of 2026 compared to the prior year?
The Refining segment showed a strong turnaround, moving from a loss of $937 million in Q1 2025 to an income before taxes of $208 million in Q1 2026, driven by higher market crack spreads and feedstock advantages. The Midstream segment saw a decrease in income, mainly due to a gain on disposition in the prior year. The Marketing and Specialties segment also experienced a significant decline, largely due to the absence of the prior year's asset sale gain and lower fuel margins. The Chemicals segment remained relatively stable, while the Renewable Fuels segment improved due to higher product pricing and credit generation.
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