Phillips 66 second quarter 2026 earnings explained: segments, cash flow and valuation multiples

Phillips 66 reported its second quarter 2026 results on August 5, 2026. It has since reported its third quarter, on October 28, 2026, and a separate Dalsna Finance article covers those results. This article looks back at the three months ended June 30, 2026 and compares them with the first quarter. Earnings attributable to Phillips 66 under GAAP, the standard US accounting rules, were $3,847 million against $207 million, as reported. Adjusted earnings, a non GAAP measure the company reports itself, were $3,788 million against $200 million. Every figure is sourced and dated, and every number worked out by us is labelled as a Dalsna Finance calculation. ^[1][2]

Phillips 66 in brief

Phillips 66 calls itself an integrated downstream energy provider. In plain terms, it makes, transports and markets fuels and other energy products. The company is based in Houston, Texas, and its common stock trades on the New York Stock Exchange under the ticker PSX. It reported total assets of $81.8 billion at June 30, 2026. ^[1][3]

In the release chairman and chief executive officer Mark Lashier said "Second quarter results reflect the strength of our operations and value of our integrated portfolio." He also listed debt reduction alongside capital investment, dividends and share repurchases among the ways the company aims to create value. ^[1]

Five segments

Phillips 66 reports five segments plus Corporate and Other. Midstream offers transportation, terminal and storage services for crude oil and refined products. It also gathers, processes, transports, fractionates, stores and markets natural gas and natural gas liquids (NGL) and exports liquefied petroleum gas to world markets. Chemicals is the company's 50% stake in Chevron Phillips Chemical Company LLC (CPChem), which turns NGL and other feedstocks into petrochemicals and plastics such as polyethylene. Refining turns crude oil and other feedstocks into products such as gasoline, distillates and aviation fuels at 10 refineries in the United States and Europe. Marketing and Specialties buys refined products for resale and markets them, mainly in the United States and Europe, and makes and sells base oils and lubricants. Renewable Fuels makes renewable products at the Rodeo Renewable Energy Complex and the Humber Refinery and also buys renewable feedstocks, manages certain regulatory credits and markets renewable fuels. ^[3]

Against the first quarter every segment improved. Refining adjusted income before tax rose to $3,086 million from $208 million, mainly on higher realized margins, which the company said came primarily from wider market crack spreads and favorable mark to market impacts. A crack spread is the gap between the market prices of refined products and crude oil. Midstream rose mainly on higher margins and on higher volumes, largely because the first quarter's Winter Storm Fern impacts did not recur. Chemicals adjusted income rose mainly on higher margins. Marketing and Specialties swung to adjusted income of $514 million from a loss of $141 million, mainly on higher global marketing margins and favorable mark to market impacts. Renewable Fuels moved to income of $544 million from a loss of $41 million, mainly on higher regulatory credits, helped by higher pricing and more renewable fuels production, as well as favorable mark to market impacts. The Corporate and Other loss narrowed, primarily on lower net interest expense and employee related costs. ^[1][3]

Adjusted earnings leave out what Phillips 66 calls special items. In the second quarter they were a $110 million gain from closing adjustments on the December 2025 sale of 65% of its Germany and Austria retail marketing business and $65 million of legal accruals, primarily for its litigation with Propel Fuels, less $14 million of tax effects. That is why adjusted earnings of $3,788 million sat below GAAP earnings of $3,847 million. In the first quarter the items were a $29 million inventory adjustment gain in Chemicals, a $20 million legal accrual and $2 million of tax effects. ^[1]

Operating figures

The realized refining margin more than doubled to $24.08 a barrel from $10.11, and turnaround expense, the cost of planned maintenance shutdowns, fell to $123 million from $178 million. The company listed completed turnarounds at the Wood River and Humber refineries among the quarter's highlights and said it set records for NGL fractionation and liquefied petroleum gas export volumes. Renewable fuels output rose to 53 thousand barrels a day from 40 thousand. ^[1]

The numbers, quarter over quarter

Sales and other operating revenues jumped to $51,004 million in the second quarter from $32,540 million in the first. Phillips 66 does not report an operating income line, so this article uses the lines it does report. Income before income taxes rose to $4,971 million from $260 million. Earnings attributable to Phillips 66 rose to $3,847 million from $207 million, and adjusted earnings to $3,788 million from $200 million. Adjusted EBITDA, the company's non GAAP measure of earnings before interest, taxes, depreciation and amortization, rose to $5,891 million from $1,230 million. ^[4][1]

Profit margin is earnings as a share of sales. On GAAP earnings it was 7.5% in the second quarter against 0.6% in the first, and on adjusted earnings it was 7.4% against 0.6% (Dalsna Finance calculation: for example $3,847 million divided by $51,004 million). Because first quarter earnings were so small, the percentage changes in the table below are very large and say little on their own. ^[4][1]

Against the second quarter of 2025, GAAP earnings rose from $877 million and sales rose 53.1% from $33,323 million (Dalsna Finance calculation). The quarterly report puts the composite market crack spread for its business at an average of $41.63 a barrel against $21.65 a year earlier, and West Texas Intermediate crude at an average of $93.21 a barrel against $63.86, a rise it mainly attributed to Middle East events that curbed global crude supply. Since October 1, 2025, when Phillips 66 bought the remaining 50% of WRB Refining LP, its results include all of the Borger and Wood River refineries rather than a share of WRB's equity earnings, so the two years are not fully alike. ^[1][4][3]

Cash flow and debt

Operating activities brought in $7,259 million of cash in the second quarter after using $2,264 million in the first. Cash from operations excluding working capital, a non GAAP measure, was $4,317 million against $699 million. Phillips 66 returned $887 million to shareholders, $379 million spent on share repurchases and $508 million of dividends, against $778 million in the first quarter. The quarterly report says it repurchased 4 million shares for about $0.6 billion in the first six months of 2026, and that on July 29, 2026 the board added $10 billion to its share repurchase authorization. ^[1][3]

The biggest change was on the balance sheet. Debt fell by $6.6 billion to $20,565 million at June 30 from $27,124 million at March 31, as reported, and net debt, which is debt less cash, fell to $16,466 million from $21,974 million. Cash and cash equivalents were $4,099 million at June 30. The board declared a quarterly dividend of $1.27 per share on April 17 and again on July 9, 2026. ^[1][3]

Earnings per share

Earnings per share, or EPS, is profit divided by the number of shares. The diluted figure also counts shares that could be created from stock awards. Phillips 66 reported diluted EPS of $9.55 for the second quarter and $0.51 for the first, and adjusted EPS of $9.41 and $0.49. Adjusted EPS uses adjusted earnings in place of GAAP earnings. Dividing each earnings figure by the weighted average diluted share count gives the same figures, except first quarter adjusted EPS, where the simple division gives $0.50 against the reported $0.49. The table shows both. ^[1][4]

The cover of the second quarter report gives 399,020,916 shares of common stock outstanding at June 30, 2026, and the valuation below uses that one count. ^[3]

What the market values Phillips 66 at

Market capitalization, or market cap, is what the stock market values the whole company at: the share price times the number of shares. Phillips 66 shares closed at $282.83 on Friday, October 30, 2026, as reported by StockAnalysis. Times the 399,020,916 cover shares, that gives a market cap of about $112.9 billion (Dalsna Finance calculation). ^[5][3]

Keep the timing in mind. The price is from after the third quarter results came out, so it reflects news that is not in this article. The earnings behind every multiple stop at June 30, 2026, and the share count is the one at that date. The multiples below are therefore a recent price set against the second quarter's numbers, not a current valuation on the latest results. ^[5][2]

Six valuation multiples

The price to earnings ratio, or P/E, is market cap divided by a year of earnings. It shows how many dollars the market is paying for each dollar of yearly profit. Annualised means one quarter multiplied by four. On GAAP earnings of $3,847 million times 4, or $15,388 million, the annualised P/E is 7.3. On adjusted earnings of $3,788 million times 4, or $15,152 million, the adjusted annualised P/E is 7.4 (Dalsna Finance calculation). ^[1][5][3]

A forward P/E uses a published estimate of future earnings. Phillips 66 does not give earnings guidance in its release, and we did not find a dated full year 2026 earnings estimate, made after the first quarter results, that we could open and check against its source. So this article shows no forward P/E or adjusted forward P/E rather than use an unverified number. ^[1]

A trailing P/E, sometimes called a historical P/E, uses the last four reported quarters, here the twelve months to June 30, 2026. GAAP earnings over that period add up to $7,093 million and adjusted earnings to $6,015 million, giving a trailing P/E of 15.9 and an adjusted trailing P/E of 18.8 (Dalsna Finance calculation). Both sit well above the annualised multiples because the second quarter earned more than the three quarters before it combined. ^[4][5][3]

The last four quarters

Every figure here is as reported by Phillips 66 in its supplemental data for the second quarter of 2026, which lists each quarter of 2025 and 2026 to date. The third quarter of 2025 carried a $948 million impairment before tax on the company's then 50% stake in WRB Refining LP, which is excluded from adjusted earnings. In the fourth quarter of 2025 GAAP earnings of $2,906 million were far above adjusted earnings of $1,002 million, so special items added to that quarter. ^[4][2]

Two base cases: the second quarter held flat for a year

Suppose sales stayed at the second quarter's level for a full year, with no growth and no decline: $51,004 million times 4, or $204,016 million. The first base case keeps the 7.5% GAAP profit margin, which gives earnings of $15,388 million, or $38.56 per share on the cover share count. This case is simply the second quarter annualised, so at the annualised P/E it returns the October 30, 2026 close of $282.83 by construction. The other cells only show how the price moves when the same earnings are given a different multiple. ^[4][1][5][3]

The second base case uses the 7.4% adjusted margin, which leaves out the $110 million disposal gain, the legal accruals and their tax effects in the same way the company's adjusted earnings do: $15,152 million a year, or $37.97 per share. At the adjusted annualised P/E it also returns $282.83 by construction. Phillips 66 does not report operating income, so there is no operating margin case, and we make no adjustment of our own beyond the ones the company reports. ^[1][4][3]

No CEO scenario follows. The release gives no revenue figure for a future year, so there is no management revenue figure to put on the grid. ^[1]

Sector comparison

This table sets the second quarter at Phillips 66 beside seven other large US oil and gas companies, using each company's own reported figures for the three months ended June 30, 2026, though integrated companies, producers and refiners earn money in different ways, so margins are not like for like. Each P/E here divides the October 30, 2026 close by four times the quarter's diluted EPS, so it can differ a little from the market cap based P/E earlier in this article. ^[1][5]

What came next

Phillips 66 released its third quarter results on October 28, 2026. They are covered in a separate Dalsna Finance article, which is the place to look for whether Refining kept the margin gains of the second quarter. This article does not use any third quarter 2026 figures. ^[2]

One legal matter runs through these results. In the Propel Fuels trade secrets case, a California court entered a final judgment of $833 million against Phillips 66 Company on August 5, 2025, and interest of 10% has been accruing on it since. The company filed its opening appeal brief on July 10, 2026 and denies any wrongdoing. Legal accruals for this case are among the special items above. ^[3][1]

How these figures were made: inputs come from the Phillips 66 second quarter 2026 earnings release, its supplemental data and its second quarter 2026 quarterly report on SEC EDGAR, plus the dated closing price named above. Calculations use unrounded inputs and are rounded only at the end, with multiples to one decimal and per share figures and prices to the cent. ^[1][4][3][5]