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By Brian Nelson, CFA
Phillips 66 (PSX) recently reported fourth quarter results that came in better than expected on the bottom line. Adjusted earnings were $1.0 billion or $2.47 per share in the quarter, while the company achieved record NGL transportation and fractional volumes of over 1 MMBD each. Phillips 66 delivered record clean product yield of 88% in the quarter and operated at 99% crude capacity utilization in Refining. Phillips 66 generated $2.8 billion in net operating cash flow ($2.0 billion excluding working capital), and reduced debt by $2.0 billion during the quarter, ending the year at $19.7 billion.
Management had the following to say about the results:
2025 was a transformative year for Phillips 66. We sold the majority of our European retail business, acquired the remaining 50% interest in WRB, and improved our Midstream competitive position with the acquisition of Coastal Bend and expansion of Dos Picos II.
While enhancing our portfolio to focus on our core assets and geographies, we have also taken a disciplined approach to improving operations, particularly in refining, and upheld our unwavering commitment to safety. As we look to 2026, focused execution of our strategy, disciplined capital allocation and world-class operations will enable further debt reduction and our continuing commitment to return cash flow to shareholders.
During 2025, Phillips 66 returned $3.1 billion to shareholders, representing more than 50% of net operating cash flow. The company also raised its quarterly dividend by 5.8%, to $1.27 per share, and now boasts a forward estimated dividend yield of 2.9%. As of December 31, 2025, the company had $1.1 billion of cash and cash equivalents and $5.7 billion of committed capacity available under credit facilities. We like the integrated downstream energy provider and believe its target for approximately $4.5 billion in run rate adjusted EBITDA for its Midstream business by year-end 2027 is achievable.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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