Prepared remarks
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PREPARED REMARKS Page 1 Hello everyone, good morning and thank you for joining the Phillips 66 third quarter 2026 earnings conference call. Participants on today’s call will include: • Mark Lashier, Chairman and CEO, • Kevin Mitchell, CFO, • Don Baldridge, Midstream and Chemicals, • Rich Harbison, Refining, and • Brian Mandell, Marketing, Commercial and Renewable Fuels
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PREPARED REMARKS Page 2 Slide 2 contains our Safe Harbor Statement. We will be making forward- looking statements during today’s call. Actual results may differ materially from today’s comments. Factors that could cause actual results to differ are included here as well as in our SEC filings. We will also discuss both GAAP and non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are included in today's presentation and the Phillips 66 earnings release. Today’s presentation, the earnings release, and supplemental financial and operating information can be found on the Investor Relations section of the Phillips 66 website. With that, I’ll turn the call over to Mark.
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PREPARED REMARKS Page 3 Thank you, Sean. At Phillips 66, we are focused on operating our assets safely and reliably, enabling us to supply the products that our customers depend on, and to help the U.S. and global economy grow. In today’s remarks, I will focus on three strengths that define Phillips 66: • operating performance, • capital allocation, and • future growth. First, operating performance remains strong, underpinned by disciplined execution and industry-leading safety performance. We delivered strong Refining utilization of 98% and third-quarter record distillate yield of 41%. In Midstream, we achieved fractionation volumes of over 1 million barrels per day, wellhead volumes of 4.6 Bcf per day and 105% utilization at the Freeport LPG export dock. These results demonstrate our strong operating performance. Second, we remain committed to disciplined capital allocation and to returning greater than 50 percent of net operating cash flow, excluding working capital, to shareholders. We will also fund a disciplined capital program, including sustaining capital, while retaining flexibility for additional share repurchases and debt reduction.
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PREPARED REMARKS Page 4 Third, we have a clear path for future growth. All projects must compete on a risk-adjusted basis. This discipline keeps us focused on increasing return on capital employed by building the best business – not simply the biggest business. We have a compelling set of organic opportunities across the portfolio, and we are excited to bring them to fruition. These projects support the growth of normalized return of capital into 2030 and beyond. In our Midstream G&P business, we are increasing Permian volumes and adding processing capacity with the Iron Mesa and Zeus gas plants. In NGL transportation and fractionation, we are expanding the Coastal Bend pipeline system and building a third fractionator in Corpus Christi. Finally, our Western Gateway project creates an integrated value chain opportunity that is expected to generate returns across multiple segments. Through these Midstream projects, we are positioned to achieve our stated targets and deliver mid-single digit adjusted EBITDA growth through the decade. In Refining, the Humber Gasoline Quality Improvement Project will enable production of higher-quality gasoline for premium markets. We are delivering record operating performance in the Central Corridor, supported by the full integration of the Wood River and Borger refineries. Additionally, strong financial results have benefited from greater than $50 million of near-term, operational and commercial annual synergies from the WRB transaction, and we have line-of-sight to more. In Chemicals, CP Chem’s Golden Triangle Polymers and Ras Laffan Petrochemicals projects remain on track for full operations in 2027. These projects add earnings capacity while leveraging CP Chem’s advantaged feedstock position. Our integrated liquids portfolio is built to meet growing global demand. Continuous improvement across our operations, ratable midstream growth, an advantaged refining footprint, and top-quartile Chemicals assets strengthen our ability to reliably supply the markets we serve. Supported by attractive infrastructure and global commercial reach, we are well-positioned to create value through the cycle. Phillips 66 is defined by strong operating performance, disciplined capital allocation, and a clear path for growth. Together, these strengths deliver high- return opportunities and enable us to increase cash returns to shareholders.
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PREPARED REMARKS Page 5 We are prepared to compete in any environment and generate durable economic value. We have strengthened the foundation of the business and built a culture of continuous improvement. We are moving forward as a stronger, more agile company. Now I’ll turn the call over to Kevin.
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PREPARED REMARKS Page 6 Thank you, Mark. Moving to slide 4, our capital allocation framework remains unchanged. We fund the dividend and sustaining capital, invest selectively in high-return opportunities, maintain balance sheet strength and return cash through share repurchases. Our commitment to return greater than 50% of net operating cash flow excluding working capital is a priority. We recently announced a second dividend increase in 2026, reflecting our confidence in the durability of the business model and the company’s ability to generate sustainable cash flow. This represented a 10.8 percent increase compared with the 4 th quarter of 2025. During the quarter, we reduced debt by $2 billion by paying off the remaining balance of the March 2027 term loan, and through open market purchases of debt. Total debt ended the quarter at $18.5 billion and net debt was $12.7 billion. Additionally, we paid off a $500 million bond maturity on October 1st. We will continue to allocate capital prudently, returning cash through dividends and share repurchases while investing in high-return opportunities and strengthening the balance sheet to enhance long-term equity value.
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PREPARED REMARKS Page 7 On slide 5, reported and adjusted earnings were $5.6 billion, or $14.08 per share. Operating cash flow was $7.3 billion. Excluding the working capital benefit of $1.1 billion, operating cash flow was $6.2 billion. We continued to strengthen the balance sheet and reduced the net debt-to- capital ratio to 26%. We have achieved the 2027 net debt-to-capital ratio target ahead of schedule. Capital spending for the quarter was $680 million. We returned $2.8 billion to shareholders through share repurchases and dividends.
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PREPARED REMARKS Page 8 Looking ahead to the fourth quarter on slide 6. In Chemicals, we expect the Global O&P utilization rate to be in the mid 80s. In Refining, we expect the worldwide crude utilization rate to be in the mid 90s. Turnaround expense is expected to be between $140 and $170 million. We anticipate Corporate and Other costs to be between $350 and $380 million. Moving to slide 7, Mark will now provide some final thoughts. We will then open the line for questions.
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