TLDR
- Phillips 66 posted an adjusted loss of $368 million in Q1 2025.
- The company raised its quarterly dividend by $0.05 per share.
- Revenue dropped to $31.73 billion, with net income also declining.
- Strategic moves included the acquisition of EPIC NGL and significant asset sales.
- Analysts forecast 21.5% annual earnings growth over the next three years.
Phillips 66 (NYSE: PSX) closed at $103.97 on April 25, 2025, slipping 0.69% for the day. The company reported Q1 earnings, revealing a net income of $487 million or $1.18 per share. However, after adjustments, the company posted a loss of $368 million, equivalent to $0.90 per share. Revenue fell to $31.73 billion compared to the previous year, aligning with broader market challenges.
Operating cash flow stood at $187 million, supported by $2 billion from asset sales. Phillips 66 paid down $1.3 billion in debt and ended the quarter with $1.5 billion in cash. Despite weaker financials, the company’s decision to increase its dividend by $0.05 per share, extending a growth streak since 2012, was well received by investors.
Segment Performance: Mixed Results
In the midstream segment, results declined due to lower volumes resulting from turnaround activities. However, the company achieved record fractionation volumes of 650,000 barrels per day at the Sweeny Hub. The chemicals segment improved thanks to higher volumes and lower costs.
The refining segment faced difficulties with lower volumes and higher costs, though these were partly offset by increased realized margins. Meanwhile, the marketing and specialties segment saw improved margins internationally, helping stabilize overall results. In renewable fuels, performance dropped due to tax credit transitions and weaker international results.
Strategic Moves and Shareholder Focus
Phillips 66 returned $716 million to shareholders through dividends and share repurchases. Its acquisition of EPIC NGL expands takeaway capacity from the Permian Basin, expected to bolster long-term fee-based earnings. Moreover, the company divested over $3.5 billion of noncore assets, streamlining operations and focusing on growth areas.
Debt reduction remains a priority. Although Phillips 66 continues to maintain a debt level above its targeted leverage ratio, it is actively working toward a $17 billion target.
Market Performance and Future Outlook
Despite reporting weaker quarterly results, Phillips 66’s stock price rose 4.91% over the past week, supported by market optimism and strategic updates. Analysts project annual earnings growth of 21.5% over the next three years, outpacing the US market average of 14.1%.
Currently priced at $100.90, the stock shows a potential 23.5% upside compared to the analyst consensus target of $131.97. This growth expectation assumes significant EPS expansion through 2028, requiring a PE ratio of 12.1x. Still, risks such as high debt, planned refinery closures, and volatile renewable fuel margins present challenges that could influence future performance.
Earnings Date Reminder
Note that Phillips 66’s Q1 2025 earnings were reported on April 25, 2025. The next key event is the ex-dividend date scheduled for May 19, 2025.
