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Cision Canada
01-08-2025
- Business
- Cision Canada
ALTAGAS REPORTS STRONG SECOND QUARTER 2025 RESULTS
Robust Performance Across Platform Led by Midstream CALGARY, AB, Aug. 1, 2025 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) reported second quarter 2025 financial results and provided an update on its operations, projects and other corporate developments. SECOND QUARTER HIGHLIGHTS View PDF (all financial figures are unaudited and in Canadian dollars unless otherwise noted) FINANCIAL RESULTS Normalized EPS 1 was $0.27 in the second quarter of 2025 compared to $0.14 in the second quarter of 2024, while GAAP EPS 2 was $0.59 in the second quarter of 2025 compared to a loss of $0.14 in the second quarter of 2024. Normalized EBITDA 1 was $342 million in the second quarter of 2025 compared to $295 million in the second quarter of 2024, while income before income taxes was $226 million in the second quarter of 2025 compared to a loss of $46 million in the second quarter of 2024. The 16 percent year-over-year increase in normalized EBITDA was driven by strong performance across AltaGas' Midstream assets and Utilities growth from continued modernization investments. The Midstream segment reported normalized EBITDA of $215 million in the second quarter of 2025 compared to $175 million in the second quarter of 2024, while income before taxes was $263 million in the second quarter of 2025 compared to $46 million in the second quarter of 2024. The 23 percent year-over-year increase in normalized Midstream EBITDA was driven by strong global exports performance, higher gas processing volumes – particularly from AltaGas' Montney facilities, and improved earnings from the Mountain Valley Pipeline ("MVP"). The Utilities segment reported normalized EBITDA of $134 million in the second quarter of 2025 compared to $122 million in the second quarter of 2024, while income before taxes was $95 million in the second quarter of 2025 compared to $31 million in the second quarter of 2024. The 10 percent year-over-year increase in normalized Utilities EBITDA was driven by modernization investments, improved asset optimization, and colder weather in Michigan, partially offset by lower retail contributions. AltaGas' adjusted net debt to normalized EBITDA 1 exited the second quarter of 2025 at 4.6x on a trailing twelve-month basis, including 50 percent debt treatment for its subordinated hybrid notes and preferred shares. This is below the Company's long-term leverage target of 4.65x and compares to 5.1x at 2024 year-end. _______________________________________________________ (1) Non-GAAP measure; see discussion and reconciliation to US GAAP financial measures in the advisories of this news release or in AltaGas' Management's Discussion and Analysis (MD&A) as at and for the period ended June 30, 2025, which is available on (2) GAAP EPS is equivalent to Net income applicable to common shares divided by shares outstanding. OPERATIONAL AND BUSINESS HIGHLIGHTS AltaGas delivered record second quarter LPG export volumes of 127,814 Bbl/d to Asia, up four percent year-over-year despite a nine-day turnaround at the Ridley Island Propane Export Terminal ("RIPET"). This included 12 Very Large Gas Carriers ("VLGCs") shipped from RIPET and eight from the Ferndale Terminal ("Ferndale"). Midstream throughput was strong, with gas processing volumes up eight percent year-over-year, driven by a 12 percent increase from Montney assets, led by Townsend, Pipestone I, and Blair Creek. AltaGas' global exports business continues to benefit from robust demand for open-access terminal capacity under long-term tolling agreements with upstream and downstream customers. Recent agreements include: Keyera Corp ("Keyera") committing to an additional 12,500 Bbl/d of LPG tolling capacity over 15 years starting in 2028, doubling its total contracted capacity with AltaGas to 25,000 Bbl/d. Pembina Pipeline Corporation ("Pembina") signing a long-term tolling agreement to export an additional 10,000 Bbl/d of LPGs starting in April of 2026 and an additional 10,000 Bbl/d of LPGs starting in April of 2027 at AltaGas' global exports facilities. The agreement builds on Pembina's previous 10,000 Bbl/d of tolling capacity at RIPET. BASF Intertrade AG ("BASF") signing a long-term butane export capacity agreement at the Ridley Island Energy Export Facility ("REEF"). The agreement will provide BASF with reliable Western Canadian supply and diversify its cracker feedstock portfolio, and strengthen Canada-Asia trade ties. MVP delivered strong second quarter results, with higher year-over-year contributions as the comparative period only included a partial contribution when the pipeline was being brought into service. The 2.0 Bcf/d pipeline is backed by 20-year investment grade contracts and is expandable through additional compression and extendable into North Carolina through the Southgate project, both of which are progressing towards near-term final investment decisions ("FIDs"). AltaGas continues to advance a potential monetization of its interest in MVP with proceeds to be used for leverage reduction. On July 31, 2025, Washington Gas filed a rate case application to the Virginia State Corporation Commission ("SCC of VA") seeking a US$65 million increase to base rates, net of the transfer of US$39 million of charges currently being recovered under the modernization rider. Interim rates are expected by early 2026. PROJECT UPDATES REEF construction remains on budget and on track for a year-end 2026 in-service date ("ISD"). Site prep is effectively complete while LPG accumulators are 85 percent fabricated and expected on-site in the fourth quarter of 2025. Jetty progress includes nearly 60 percent of piles placed and 30 percent of trestle fabrication complete. Approximately 70 percent of project costs are incurred or committed, with nearly 60 percent of the total capital cost under fixed-price engineering, procurement and construction ("EPC") contracts. AltaGas is advancing engineering and other work to progress near-term optimization projects at REEF that will allow the Company to move incremental volumes through Phase I, which is currently under construction. This includes evaluating options to increase throughput by 15,000–20,000 Bbl/d within the first year following REEF's 2026 year-end ISD as well as advancing engineering, permitting and stakeholder work to move up to another 60,000 Bbls/d of exports by the end of the decade, when there is sufficient demand for additional export capacity. Pipestone II construction continues to be on budget and on track for a late 2025 ISD, with the facility construction now over 85 percent complete and the remaining work under fixed price contracting. The gas gathering system is currently in operation and being utilized to optimize throughput at AltaGas' Pipestone I deep cut facility. Pipestone II is fully contracted under long term take-or-pay agreements and will provide critical gas processing and liquids handling capacity in one of the most active liquids-rich natural gas producing regions in Canada. AltaGas continues to advance growth projects across its Utilities and has received regulatory approval for the Keweenaw Connector Pipeline in Michigan's Keweenaw Peninsula. The 30-mile pipeline is expected to have an approximate capital cost of US$120 million with a 2027 ISD. SEMCO has also been awarded a contract to construct a natural gas interconnect for DTE Energy's Belle River coal-to-natural gas power plant conversion project in Michigan, which is expected to be completed in the fourth quarter of 2025. AltaGas' Utilities continue to work with a number of data center developers and are actively advancing projects with front-end engineering and design ("FEED") studies across Virginia, Michigan and Maryland. The Company is focused on pursuing these ventures on a de-risked basis by building pipeline interconnects to onsite power generation through rate regulated investments. 2025 GUIDANCE Following AltaGas' strong second quarter of 2025, the Company is reiterating its 2025 full-year guidance, including normalized EBITDA of $1,775 million to $1,875 million and normalized EPS of $2.10 to $2.30. CEO MESSAGE "We're pleased with our strong second-quarter performance, which reflects continued execution of our strategic priorities and positions us well to meet our 2025 guidance," said Vern Yu, President and CEO of AltaGas. "As demonstrated this quarter, we continue to make meaningful progress on our strategic priorities. We've optimized our asset base to maximize returns by increasing Midstream throughput and reducing operating costs in our Utilities segment. We continue to actively de-risk our portfolio through long-term tolling agreements and by pursuing weather normalization in the District of Columbia. Our balance sheet is stronger, with trailing leverage now below our target. We're maintaining disciplined capital allocation while executing on our growth through network modernization and expansion in the Utilities and construction of our Pipestone II and REEF projects. "Customer demand for our open-access export terminals is robust, as reflected in the agreements we've announced with Keyera, BASF, and Pembina. We're advancing optimization projects at REEF that will enable us to move incremental volumes through Phase I. This includes finalizing detailed engineering and costing to increase near-term throughput by 15,000 to 20,000 Bbl/d within the first year of the terminal's year-end 2026 in-service date, as well as progressing engineering, permitting, and pre-engagement stakeholder work to support up to an additional 60,000 Bbl/d of export capacity by the end of the decade, when there is sufficient demand for export capacity. "We're excited about the long-term outlook for our Utilities, which continue to deliver the most reliable and cost-effective energy for space heating across our jurisdictions. The delivered cost of electricity is almost four times that of natural gas, and we're operating in a period of growing energy insecurity, particularly in the PJM market, where concerns about power capacity shortfalls are rising. In response, we're making significant investments to connect new customers and modernize our network to enhance long-term safety, reliability, and energy security. This includes securing regulatory approval for projects like the Keweenaw Connector Pipeline and advancing infrastructure to serve emerging opportunities such as data centers. We will continue to advocate on behalf of our customers against public policies that undermine reliability, affordability, and consumer choice – as the economic future of these regions depends on it. "We're excited about AltaGas' future and the value we can unlock through disciplined execution of our long-term strategy. We remain confident in the strong macro-outlook for natural gas, NGLs, and the enterprise." (1) Non‑GAAP financial measure; see discussion in Non‑GAAP Financial Measures section of this news release. BUSINESS PERFORMANCE Midstream The Midstream segment reported normalized EBITDA of $215 million in the second quarter of 2025 compared to $175 million in the second quarter of 2024, while income before income taxes was $263 million in the second quarter of 2025 compared to $46 million in the second quarter of 2024. The 23 percent year-over-year increase in normalized Midstream EBITDA was driven by strong global exports, higher gas processing volumes – particularly from AltaGas' Montney facilities, and stronger earnings from MVP. The quarter was also aided by lower processing operating expenses and stronger realized frac spreads. AltaGas exported 127,814 Bbl/d of LPGs to Asia through its open access terminals in the second quarter of 2025 across a total of 20 VLGCs, which included 12 ships at RIPET and eight at Ferndale. This represented a second quarter record with volumes up four percent year-over-year as the Company continues to focus on operational execution and logistics and expects to deliver year-over-year volume growth over the balance of 2025. AltaGas is positioned to benefit from the long-term fundamentals of growing Canadian natural gas and NGL production, strong Asian LPG demand, and the Company's structural shipping advantage from the west coast of North America to Asia. Performance across the balance of the Midstream platform was strong with gas processing volumes up eight percent year-over-year, driven by the Company's Montney exposed infrastructure, which saw 12 percent year-over-year volume growth. Extraction volumes increased by eight percent year-over-year with AltaGas benefiting from exposure to some of North America's leading gas resource plays, which continue to grow, despite soft Canadian natural gas prices. AltaGas continues to advance regulatory, engineering and commercial work for the Company's backlog of Midstream growth projects. This includes Pipestone III, North Pine, and the Dimsdale natural gas storage expansion project. The Company is advancing engineering and capital cost work for two optimization initiatives that will increase REEF's phase I throughput capacity. REEF is a multi-phased project that is positioned to meet Canada's long-term LPG export needs through low-cost capacity additions that will ensure Canada's excess LPGs are delivered to the strongest markets globally, which will benefit all stakeholders. Consistent with the Company's de-risking focus, AltaGas' Midstream operations are well-hedged for 2025 with approximately 98 percent of the remaining 2025 expected global export volumes tolled or financially hedged. Merchant volumes are hedged at an average Far East Index ("FEI") to North American financial hedge price of US$18.00/Bbl while tolling volumes are in line with historical rates. Approximately 84 percent of the Company's 2025 expected frac exposed volumes are hedged at US$26.48/Bbl, prior to transportation costs. AltaGas continues to actively manage risk across the Midstream platform through commercial contracting and a systematic hedging program to manage its commodity price exposure. For the remainder of 2025, AltaGas has materially hedged all of its expected Baltic freight exposure through time charters, financial hedges, and tolled volumes. (1) Approximate expected volumes hedged based on AltaGas' internally assumed export volumes. Hedged amounts include contracted tolling volumes and financial hedges. (2) Does not include physical differential to FSK for C3 volumes. Butane is hedged as a percentage of WTI. (3) Approximate average for the period. Utilities Utilities reported normalized EBITDA of $134 million in the second quarter of 2025 compared to $122 million in the second quarter of 2024, while income before income taxes was $95 million in the second quarter of 2025 compared to $31 million in the second quarter of 2024. The 10 percent year-over-year increase in normalized Utilities EBITDA was driven by modernization investments, stronger asset optimization, and colder weather in Michigan, partially offset by lower retail contributions. Washington Gas recently filed a new rate case in Virginia with the SCC where requested rates are designed to collect an incremental US$65 million in annual revenue, net of US$39 million in ARP surcharge related to Washington Gas' SAVE rate rider. The filing uses a December 2024 test year with select forward looking adjustments. Interim rates are expected to come into effect by early 2026. The Company also continues to work with the PSC of D.C. on the August 2024 rate case and anticipates resolution by year-end 2025. Washington Gas continues to work with the PSC of D.C. on the US$215 million asset modernization extension application under review in D.C. through its Strategic Accelerated Facilities Enhancement ("District SAFE") plan. The Company is continuing ARP work in the PROJECTpipes 2 modernization program with the program extended to December 31, 2025 with the additional US$34 million of modernization capital added from May 1, 2025. The extension of PROJECTpipes 2 ensures uninterrupted pipeline modernization work continues while District SAFE is being reviewed. AltaGas' Utilities continue to see progress on key growth initiatives and received regulatory approval for the Keweenaw Connector Pipeline in Michigan. The 30-mile transmission line is expected to be in service in early 2027 with the majority of the US$120 million capital spend expected to take place through 2026. AltaGas' Utilities continue to work with a number of data center developers and are actively advancing projects with front-end engineering and design ("FEED") studies across Virginia, Michigan and Maryland. The Company is focused on pursuing these ventures on a de-risked basis by building pipeline interconnects to onsite power generation through rate regulated investments. AltaGas continued to actively invest in its Utilities business during the second quarter of 2025 with $160 million of capital deployed across the Company's Utilities network. This included investing approximately $96 million in the quarter toward the Company's asset modernization programs. These investments improve the safety and reliability of the system while connecting customers to the critical energy they continue to rely on. AltaGas remains committed to making these investments, while balancing the need for ongoing customer affordability. The Corporate/Other segment reported normalized EBITDA for the second quarter of 2025 of a loss of $7 million, compared to a loss of $2 million in the same quarter of 2024. Loss before income taxes in the Corporate/Other segment was $132 million in the second quarter of 2025, compared to $123 million in the same quarter of 2024. The year-over-year decrease in normalized EBITDA was primarily driven by higher expenses related to employee incentive plans. (1) Non‑GAAP financial measure; see discussion in Non-GAAP Financial Measures section at the end of this news release. (2) "Other" includes accretion expense, net income applicable to non-controlling interests, foreign exchange gains (losses), and unrealized foreign exchange losses (gains) on intercompany balances. (3) Weighted average. Normalized EBITDA for the second quarter of 2025 was $342 million compared to $295 million for the same quarter in 2024. The largest factors contributing to the year-over-year increase are described in the Business Performance sections above. Income before income taxes was $226 million for the second quarter of 2025 compared to a loss of $46 million for the same quarter in 2024. The increase was mainly due to higher unrealized gains on risk management contracts, the same previously referenced factors impacting normalized EBITDA, and lower transition and restructuring costs, partially offset by higher depreciation and amortization expense and higher interest expense. Please refer to the "Three Months Ended June 30" s ection of the Q2 2025 Management's Discussion and Analysis ("MD&A") for further details on the variance in income before income taxes and net income applicable to common shareholders. Normalized net income was $81 million or $0.27 per share for the second quarter of 2025, compared to $41 million or $0.14 per share reported for the same quarter of 2024. Normalized FFO was $228 million or $0.76 per share for the second quarter of 2025, compared to $180 million or $0.61 per share for the same quarter in 2024. The increase was mainly due to the same previously referenced factors impacting normalized EBITDA, higher distributions from equity investments, and lower normalized current income tax expense, partially offset by higher non-cash items included in normalized EBITDA and higher interest expense. Cash from operations in the second quarter of 2025 was $365 million ($1.22 per share), compared to $452 million ($1.52 per share) for the same quarter of 2024. The decrease was mainly due to unfavourable variances in the net change in operating assets and liabilities, primarily as a result of fluctuations in commodity prices and sales volumes, partially offset by higher net income after taxes (after adjusting for non-cash items) and higher distributions from equity investments. Please refer to the Liquidity section of the MD&A for further details on the variance in cash from operations. Interest expense for the second quarter of 2025 was $114 million, compared to $111 million for the same quarter in 2024. The increase was mainly due to the issuance of additional subordinated hybrid notes in the third quarter of 2024 as well as a higher average Canadian/U.S. dollar exchange rate, partially offset by a decrease in average debt balances, higher capitalized interest, and lower average interest rates. Interest expense recorded on the subordinated hybrid notes in the second quarter of 2025 was $34 million, compared to $13 million in the second quarter of 2024. Income tax expense was $44 million for the second quarter of 2025, compared to an income tax recovery of $12 million for the same quarter of 2024. The increase in income tax expense was mainly due to higher income before income taxes. FORWARD FOCUS, GUIDANCE AND FUNDING AltaGas continues to focus on executing its corporate strategy of building a diversified platform that operates long-life energy infrastructure assets that connect customers and markets and are positioned to provide resilient and growing value for the Company's stakeholders. Following a strong second quarter of 2025, AltaGas is reiterating its previously disclosed 2025 guidance, including: 2025 Normalized EPS guidance of $2.10–$2.30, compared to normalized EPS of $2.18 and GAAP EPS of $1.95 in 2024; and 2025 Normalized EBITDA guidance of $1,775 million–$1,875 million, compared to actual normalized EBITDA of $1,769 million and income before taxes of $746 million in 2024. AltaGas is focused on delivering resilient and growing normalized EPS and normalized FFO per share while targeting lower financial leverage ratios. This strategy is designed to support steady dividend growth and provide the opportunity for continued capital appreciation for long-term shareholders. AltaGas is maintaining a disciplined, self-funded 2025 capital program of approximately $1.4 billion, excluding ARO. The Company is allocating approximately 51 percent of its consolidated 2025 capital to its Utilities business, approximately 45 percent to the Midstream business and the balance to the Corporate/Other segment. OPTION PLAN Shareholders approved the conversion of the rolling option plan to a fixed option plan at the last meeting of shareholders. The Board has not issued options since 2021 and currently has no intention of issuing options under the plan. Therefore, AltaGas has deferred listing the common shares issuable under the fixed plan with the TSX until such time as the Board resolves to resume issuing options. Shareholders will be advised, by way of future press release, if and when option grants under the plan will resume. The Board of Directors approved the following schedule of Dividends: (1) Dividends on common shares and preferred shares are eligible dividends for Canadian income tax purposes. CONFERENCE CALL AND WEBCAST AltaGas will hold a conference call today, August 1, 2025, at 9:00 a.m. MT (11:00 a.m. ET) to discuss second quarter of 2025 results and other corporate developments. Date: Friday, August 1, 2025 Time: 9:00 a.m. MT (11:00 a.m. ET) Webcast: Dial-in (Audio only): +1 437 900 0527 or toll free at +1 888 510 2154 Shortly after the conclusion of the call a replay will be available on the Company's website or by dialing +1 289 819 1450 or toll free +1 888 660 6345. Passcode 73282 #. AltaGas' Consolidated Financial Statements and accompanying notes for the second quarter of 2025, as well as its related MD&A, are now available online at All documents will be filed with the Canadian securities regulatory authorities and will be posted under AltaGas' SEDAR+ profile at NON-GAAP MEASURES This news release contains references to certain financial measures that do not have a standardized meaning prescribed by U.S. GAAP and may not be comparable to similar measures presented by other entities. The non-GAAP measures and their reconciliation to U.S. GAAP financial measures are shown below and within AltaGas' Management's Discussion and Analysis (MD&A) as at and for the period ended June 30, 2025. These non-GAAP measures provide additional information that Management believes is meaningful regarding AltaGas' operational performance, liquidity and capacity to fund dividends, capital expenditures, and other investing activities. Readers are cautioned that these non-GAAP measures should not be construed as alternatives to other measures of financial performance calculated in accordance with U.S. GAAP. Normalized EBITDA (1) Comprised of transaction costs related to acquisitions and dispositions of assets and/or equity investments in the period. These costs are included in the "operating and administrative" line item on the Consolidated Statements of Income (Loss). Transaction costs include expenses, such as legal fees, that are directly attributable to the acquisition or disposition. (2) Included in the "revenue", "cost of sales", and "foreign exchange gains (losses)" line items on the Consolidated Statements of Income (Loss). Please refer to Note 12 of the unaudited condensed interim Consolidated Financial Statements as at and for the three and six months ended June 30, 2025 for further details regarding AltaGas' risk management activities. (3) Included in the "other income" line item on the Consolidated Statements of Income (Loss). (4) Comprised of transition and restructuring costs (including CEO transition). These costs are included in the "operating and administrative" line item on the Consolidated Statements of Income (Loss). (5) Excludes unrealized losses (gains) on foreign exchange forward contracts that have been entered into for the purpose of cash management. These losses (gains) are included above in the line "unrealized gains (losses) on risk management contracts". EBITDA is a measure of AltaGas' operating profitability prior to how business activities are financed, assets are amortized, or earnings are taxed. EBITDA is calculated from the Consolidated Statements of Income (Loss) using income (loss) before income taxes adjusted for pre-tax depreciation and amortization and interest expense. AltaGas presents normalized EBITDA as a supplemental measure. Normalized EBITDA is used by Management to enhance the understanding of AltaGas' earnings over periods, as well as for budgeting and compensation related purposes. The metric is frequently used by analysts and investors in the evaluation of entities within the industry as it excludes items that can vary substantially between entities depending on the accounting policies chosen, the book value of assets, and the capital structure. (1) Comprised of transaction costs related to acquisitions and dispositions of assets and/or equity investments in the period. The pre-tax costs are included in the "operating and administrative" line item on the Consolidated Statements of Income (Loss). Transaction costs include expenses, such as legal fees, which are directly attributable to the acquisition or disposition. (2) The pre-tax amounts are included in the "revenue", "cost of sales", and "foreign exchange gains (losses)" line items on the Consolidated Statements of Income (Loss). Please refer to Note 12 of the unaudited condensed interim Consolidated Financial Statements as at and for the three and six months ended June 30, 2025 for further details regarding AltaGas' risk management activities. (3) The pre-tax amounts are included in the "other income" line item on the Consolidated Statements of Income (Loss). (4) Comprised of transition and restructuring costs (including CEO transition). These pre-tax costs are included in the "operating and administrative" line item on the Consolidated Statements of Income (Loss). (5) Relates to unrealized foreign exchange losses (gains) on intercompany accounts receivable and accounts payable balances between a U.S. subsidiary and Canadian entity, where the impact to the U.S. subsidiary is recorded through accumulated other comprehensive income as a gain (loss) on foreign currency translation, and the impact to the Canadian entity is recorded through the "foreign exchange gains (losses)" line item on the Consolidated Statements of Income (Loss). Normalized net income and normalized net income per share are used by Management to enhance the comparability of AltaGas' earnings, as these metrics reflect the underlying performance of AltaGas' business activities. Normalized Funds from Operations (1) Comprised of transaction costs related to acquisitions and dispositions of assets and/or equity investments in the period. These costs exclude non-cash amounts and are included in the "operating and administrative" line item on the Consolidated Statements of Income (Loss). Transaction costs include expenses, such as legal fees, which are directly attributable to the acquisition or disposition. (2) Comprised of transition and restructuring costs (including CEO transition). These pre-tax costs are included in the "operating and administrative" line item on the Consolidated Statements of Income (Loss). (3) Included in the "current income tax expense" line item on the Consolidated Statements of Income (Loss). Normalized funds from operations and funds from operations are used to assist Management and investors in analyzing the liquidity of the Corporation. Management uses these measures to understand the ability to generate funds for capital investments, debt repayment, dividend payments, and other investing activities. Funds from operations and normalized funds from operations as presented should not be viewed as an alternative to cash from operations or other cash flow measures calculated in accordance with GAAP. Invested Capital and Net Invested Capital (1) Comprised of non-cash capital expenditures included in the "accounts payable and accrued liabilities" line item on the Consolidated Balance Sheets. Please refer to Note 18 of the unaudited condensed interim Consolidated Financial Statements as at and for the three and six months ended June 30, 2025 for further details. (2) AFUDC is the amount that a rate-regulated enterprise is allowed to recover for its cost of financing assets under construction, and excludes any AFUDC within investments accounted for by the equity method. AFUDC is included in the "property, plant and equipment" line item on the Consolidated Balance Sheets. (3) Excludes cash received from advance cash calls related to forecasted capital spend. Invested capital is a measure of AltaGas' use of funds for capital expenditure activities. It includes expenditures relating to property, plant, and equipment and intangible assets, capital contributed to long term investments, and contributions from non-controlling interests. Net invested capital is invested capital presented net of cash paid for business acquisitions and proceeds from disposals of assets and equity investments in the period. Net invested capital is calculated based on the investing activities section in the Consolidated Statements of Cash Flows, adjusted for items such as non-cash capital expenditures, AFUDC, and contributions from non-controlling interests. Invested capital and net invested capital are used by Management, investors, and analysts to enhance the understanding of AltaGas' capital expenditures from period to period and provide additional detail on the Company's use of capital. Net Debt, Adjusted Net Debt, and Adjusted Net Debt to Normalized EBITDA ($ millions, except adjusted net debt to normalized EBITDA) June 30, 2025 December 31, 2024 Short-term debt $ — $ 10 Current portion of long-term debt (1) 452 858 Current portion of finance lease liabilities 24 23 Long-term debt (2) 7,189 6,992 Finance lease liabilities 126 126 Subordinated hybrid notes (3) 1,955 2,022 Total debt 9,746 10,031 Less: cash and cash equivalents (320) (85) Net debt $ 9,426 $ 9,946 Add (deduct): Current portion of finance lease liabilities (24) (23) Finance lease liabilities (126) (126) 50 percent debt treatment of subordinated hybrid notes (978) (1,011) 50 percent debt treatment of preferred shares 196 196 Adjusted net debt (4) $ 8,494 $ 8,982 Adjusted net debt to normalized EBITDA (4) (5) 4.6 5.1 (1) Net of debt issuance costs, unamortized premiums, and unamortized discounts of less than $1 million as at June 30, 2025 (December 31, 2024 - less than $1 million). (2) Net of debt issuance costs, unamortized premiums, and unamortized discounts of $28 million as at June 30, 2025 (December 31, 2024 - $29 million). (3) Net of debt issuance costs of $23 million as at June 30, 2025 (December 31, 2024 - $23 million (4) As noted on page 17 of the MD&A, in the second quarter of 2025, AltaGas changed its non-GAAP policy regarding the calculation of adjusted net debt to include 50 percent of subordinated hybrid notes and 50 percent of preferred shares. The amounts presented in this table reflect the restated figures to align with the revised policy. (5) Calculated as adjusted net debt at the balance sheet date, divided by normalized EBITDA for the preceding twelve month period. Net debt, adjusted net debt, and adjusted net debt to normalized EBITDA are used by the Corporation to monitor its capital structure and assess its capital structure relative to earnings. It is also used as a measure of the Corporation's overall financial strength and is presented to provide this perspective to analysts and investors. Net debt is defined as short-term debt, plus current and long-term portions of long-term debt, current and long-term portions of finance lease liabilities, and subordinated hybrid notes, less cash and cash equivalents. Adjusted net debt is defined as net debt adjusted for current and long-term portions of finance lease liabilities, 50 percent of subordinated hybrid notes, and 50 percent of preferred shares. Adjusted net debt to normalized EBITDA is calculated by dividing adjusted net debt as defined above by normalized EBITDA for the preceding twelve month period. (1) Non‑GAAP financial measure or non-GAAP financial ratio; see discussion in Non-GAAP Financial Measures section of the MD&A. (2) Dividends declared per common share per quarter: $0.2975 per share beginning March 2024, increased to $0.315 per share effective March 2025. (3) Weighted average. ABOUT ALTAGAS AltaGas is a leading North American infrastructure company that connects customers and markets to affordable and reliable sources of energy. The Company operates a diversified, lower-risk, high-growth Utilities and Midstream business that is focused on delivering resilient and durable value for its stakeholders. For more information visit or reach out to one of the following: Jon Morrison Senior Vice President, Corporate Development and Investor Relations [email protected] Aaron Swanson Vice President, Investor Relations [email protected] Investor Inquiries 1-877-691-7199 [email protected] Media Inquiries 1-403-206-2841 [email protected] FORWARD-LOOKING INFORMATION This news release contains forward-looking information (forward-looking statements). Words such as "may", "can", "would", "could", "should", "likely", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "future", "commit", "propose", "contemplate", "estimate", "focus", "strive", "forecast", "expect", "project", "potential", "target", "guarantee", "potential", "objective", "continue", "outlook", "guidance", "growth", "long-term", "vision", "opportunity" and similar expressions suggesting future events or future performance, as they relate to the Company or any affiliate of the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. Specifically, such forward-looking statements included in this document include, but are not limited to, statements with respect to the following: export tolling agreements, including the expected timing for commencement of volumes thereunder and the anticipated benefits thereof; the belief that the MVP expansion and Southgate expansion are advancing towards near-term FID; the potential monetization of AltaGas' interest in MVP and the use of proceeds therefrom; the potential District SAFE modernization program and the anticipated benefits therefrom; the expectation that REEF will remain on budget and on schedule to achieve its 2026 year-end in-service-date; the expectation that construction of Pipestone II will remain on schedule for a late 2025 in-service-date; anticipated benefits of Pipestone II; AltaGas' commitment to advancing growth projects across the Utilities segment including new customer growth and execution of existing asset monetization programs; progress on the Keweenaw Pipeline Connector project, projected capital cost of the project, the anticipated benefits therefrom and the estimated 2027 in-service date; SEMCO's construction of a natural gas interconnect for DTE Energy's Belle River coal-to-natural gas power plant conversion project and the anticipated timing for completion thereof; advancement of preliminary work with data center developers and AltaGas' plans with respect to such projects; AltaGas' commitment to advancing Midstream growth projects including Pipestone III, North Pine, the Dimsdale natural gas storage expansion project and their effect on the Midstream growth outlook; the Company's 2025 guidance including normalized EBITDA of $1,775 million to $1,875 million and normalized EPS of $2.10 to $2.30; the importance of building energy infrastructure that connects Canadian energy to global markets; optimization projects at REEF and the anticipated timing and benefits thereof; the belief that there will be sufficient demand for export capacity at REEF by the end of the decade to support future optimization projects; the belief that significant investments in Utilities to connect new customers and modernize our network will enhance long-term safety, reliability, and energy security; AltaGas' commitment to advocate for customers against public policies that undermine reliability, affordability and consumer choice; the anticipated benefits of REEF, including its ability to meet Canada's long-term LPG export needs and ensure Canada's excess LPGs are delivered to the strongest markets globally; the Company's focus on operational execution and its ability to deliver continued year-over-year export volume growth through 2025; the belief that AltaGas is positioned to benefit from the long-term fundamentals of growing Canadian natural gas and NGL production, strong Asian demand and the Company's structural shipping advantage from the west coast; the Company's hedging program and AltaGas' 2025 Midstream Hedge Program quarterly estimates; AltaGas' commitment to investing in its Utilities business to improve safety and reliability and connect customers to critical energy while balancing the need for customer affordability; expected filing, procedure and decision dates for rate cases in the Utilities business; timing of material regulatory filings, proceedings and decisions in the Utilities business; AltaGas' ability to execute its corporate strategy, including building a diversified platform that operates long-life energy infrastructure assets that are positioned to provide resilient and growing value for stakeholders and the Company's focus on growing normalized EPS and normalized FFO per share while targeting lower leverage ratios to support steady dividend growth and provide ongoing capital appreciation for long-term shareholders; AltaGas' commitment to maintaining a disciplined, self-funded 2025 capital program of approximately $1.4 billion, excluding ARO; the allocation of consolidated 2025 capital to the Company's Utilities, Midstream and Corporate/Other segments; the listing of common shares issuable under the fixed option plan on the TSX, and AltaGas' intention to issue a future press release in respect of any such listing; and AltaGas' dividend policy. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events, and achievements to differ materially from those expressed or implied by such statements. Such statements reflect AltaGas' current expectations, estimates, and projections based on certain material factors and assumptions at the time the statement was made. Material assumptions include: effective tax rates; U.S./Canadian dollar exchange rates; inflation; interest rates, credit ratings, regulatory approvals and policies; expected commodity supply, demand and pricing; volumes and rates; propane and butane price differentials; degree day variance from normal; pension discount rate; financing initiatives; the performance of the businesses underlying each sector; impacts of the hedging program; weather; frac spread; access to capital; future operating and capital costs; timing and receipt of regulatory approvals; seasonality; planned and unplanned plant outages; timing of in-service dates of new projects and acquisition and divestiture activities; taxes; operational expenses; returns on investments; dividend levels; and transaction costs. AltaGas' forward-looking statements are subject to certain risks and uncertainties which could cause results or events to differ from current expectations, including, without limitation: health and safety risks; operating risks; infrastructure; natural gas supply risks; volume throughput; service interruptions; transportation of petroleum products; market risk; inflation; general economic conditions; cybersecurity, information, and control systems; climate-related risks; environmental regulation risks; regulatory risks; litigation; changes in law; Indigenous and treaty rights; dependence on certain partners; political uncertainty and civil unrest; risks related to conflict, including the conflicts in Eastern Europe and the Middle East; decommissioning, abandonment and reclamation costs; reputation risk; weather data; capital market and liquidity risks; interest rates; internal credit risk; foreign exchange risk; debt financing, refinancing, and debt service risk; counterparty and supplier risk; technical systems and processes incidents; growth strategy risk; construction and development; underinsured and uninsured losses; impact of competition in AltaGas' businesses; counterparty credit risk; composition risk; collateral; rep agreements; market value of the common shares and other securities; variability of dividends; potential sales of additional shares; labor relations; key personnel; risk management costs and limitations; commitments associated with regulatory approvals for the acquisition of WGL; cost of providing retirement plan benefits; failure of service providers; risks related to pandemics, epidemics or disease outbreaks; and the other factors discussed under the heading "Risk Factors" in the Corporation's Annual Information Form for the year ended December 31, 2024 ("AIF") and set out in AltaGas' other continuous disclosure documents. Many factors could cause AltaGas' or any particular business segment's actual results, performance or achievements to vary from those described in this press release, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release as intended, planned, anticipated, believed, sought, proposed, estimated, forecasted, expected, projected or targeted and such forward-looking statements included in this news release, should not be unduly relied upon. The impact of any one assumption, risk, uncertainty, or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and AltaGas' future decisions and actions will depend on management's assessment of all information at the relevant time. Such statements speak only as of the date of this news release. AltaGas does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this news release are expressly qualified by these cautionary statements. Financial outlook information contained in this news release about prospective financial performance, financial position, or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on AltaGas management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein.
Reuters
30-07-2025
- Business
- Reuters
Five Point in talks to sell Northwind Midstream to MPLX for $2.3 billion, Bloomberg News reports
July 30 (Reuters) - Private equity firm Five Point Infrastructure is in talks to sell Northwind Midstream Partners for about $2.3 billion to U.S. midstream company MPLX (MPLX.N), opens new tab, Bloomberg News reported on Wednesday, citing people familiar with the matter. In May, Reuters had reported that Five Point is exploring a potential sale of the Permian Basin gas infrastructure operator, with any deal expected to value the company upwards of $2 billion, including debt. The deal could be reached in the coming weeks but talks could still be delayed or falter, the Bloomberg report said. Dealmaking in the pipeline sector has been picking up pace as companies look to cut costs, add scale or access attractive oil and gas producing regions. In February, MPLX said it would buy the remaining 55% interest in the BANGL natural gas pipeline from the affiliates of WhiteWater and Diamondback Energy (FANG.O), opens new tab for $715 million, as it looks to expand in the Permian Basin. Five Point Infrastructure, MPLX and Northwind Midstream Partners did not immediately respond to Reuters requests for comment. Formed by Five Point in 2022, Northwind Midstream has developed a system of pipelines, compressor stations and a treatment facility in New Mexico.
Reuters
30-07-2025
- Business
- Reuters
Five Point Infrastructure in talks to sell Northwind Midstream to MPLX, Bloomberg News reports
July 30 (Reuters) - Five Point Infrastructure is in talks to sell Northwind Midstream Partners LLC for about $2.3 billion to MPLX (MPLX.N), opens new tab, Bloomberg News reported on Wednesday, citing people familiar with the matter.
Yahoo
26-07-2025
- Business
- Yahoo
Phillips 66 (PSX) Q2 2025 Earnings Call Highlights: Record Refining Utilization and Strong ...
Refining Utilization: 98% utilization, highest since 2018. Clean Product Yield: Over 86% yield. Midstream Adjusted EBITDA: Approximately $1 billion. Shareholder Returns: Over $900 million returned, including $490 million in share repurchases. Reported Earnings: $877 million or $2.15 per share. Adjusted Earnings: $973 million or $2.38 per share. Operating Cash Flow: $845 million; excluding working capital, $1.9 billion. Net Debt to Capital: 41%. Refining Market Capture: 99% of market indicator. Cash from Operations: $1.9 billion, excluding working capital. Capital Spending: $587 million. Ending Cash Balance: $1.1 billion. Warning! GuruFocus has detected 8 Warning Sign with PSX. Release Date: July 25, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Phillips 66 (NYSE:PSX) achieved a refining utilization rate of 98%, the highest since 2018, and a clean product yield of over 86%. The Midstream segment generated an adjusted EBITDA of approximately $1 billion, on track to achieve the $4.5 billion annual EBITDA target by 2027. Marketing and Specialties reported its strongest quarter since 2022, contributing to a robust capital allocation framework. Phillips 66 (NYSE:PSX) returned over $900 million to shareholders this quarter, demonstrating strong shareholder returns. The company achieved the lowest adjusted refining cost per barrel since 2021, with plans to reduce it further by 2027. Negative Points The Chemicals segment saw decreased results due to lower polyethylene margins driven by lower sales prices. Phillips 66 (NYSE:PSX) reported a $239 million pre-tax impact of accelerated depreciation due to the planned cessation of operations at the Los Angeles refinery. Net debt to capital was 41%, reflecting the impact of the Coastal Bend asset acquisition, indicating a need to reduce debt levels. Renewable fuels margins were weak, leading to reduced operational rates at the Rodeo facility. The company faces regulatory challenges in the renewable fuels segment, including changes in eligible feedstocks for PTC credits. Q & A Highlights Q: After the recent shareholder engagement, are you still comfortable with the current strategy of Phillips 66 as an integrated company, or do you foresee any changes? A: Mark Lashier, Chairman and CEO, stated that the company remains committed to its current strategy, which has been supported by shareholder feedback. The board continuously evaluates strategic alternatives to ensure long-term shareholder value creation, and there are no sacred cows except for the focus on shareholder value. Q: Given the strong quarter, how does the current environment affect your $15 billion EBITDA target, and what is the right level of debt for the company? A: Mark Lashier explained that the refining EBITDA was $867 million for the quarter, which annualizes to $3.5 billion at an $11 market indicator. The company aims for a $14 market indicator as mid-cycle, which would bring refining EBITDA to over $5 billion. Kevin Mitchell, CFO, added that the target debt level is $17 billion, which they plan to achieve through cash flow and asset dispositions. Q: What drove the significant quarter-over-quarter improvement in refining results, achieving 99% market capture and 98% crude utilization? A: Rich Harbison, Executive Vice President of Refining, attributed the improvement to a focus on safe and reliable operations, comprehensive reliability programs, and small capital high-return projects that enhanced clean product yield and flexibility. The company also managed costs effectively, achieving a refining cost of $5.46 per barrel. Q: Can you provide insights into the global refining capacity additions and the impact of China's export capacity on the market? A: Brian Mandell, Executive Vice President of Marketing and Commercial, noted that net refinery additions are expected to be below demand expectations through the decade, with low clean product yields from new Asian refineries. This supports a strong margin environment, despite potential unplanned shutdowns and rationalizations in Europe and Asia. Q: How is Phillips 66 addressing the challenges in the renewable fuels segment, given the weak margins? A: Brian Mandell mentioned that the company is running its renewable diesel plant at reduced rates due to weak margins. They are working on lowering operating costs, increasing SAF production, and enhancing feedstock optionality. Regulatory changes and market dynamics are being closely monitored to ensure profitability. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
25-07-2025
- Business
- Business Wire
Phillips 66 Reports Second-Quarter Results
HOUSTON--(BUSINESS WIRE)--Phillips 66 (NYSE: PSX) announced second-quarter earnings. 'Phillips 66 delivered strong financial and operating results across our integrated value chain, reflecting the continued execution of our strategy. During the quarter, Refining ran at the highest utilization since 2018, achieved its lowest cost per barrel since 2021, strong market capture and record year-to-date clean product yield. Our results were made possible through disciplined execution and investment,' said Mark Lashier, chairman and CEO of Phillips 66. 'We also continued our strong growth trajectory in Midstream, which generated approximately $1 billion of adjusted EBITDA following the acquisition of Coastal Bend. The Dos Picos II gas processing plant in the Midland Basin recently came online ahead of schedule and on budget. These assets further our stable earnings growth, enhance returns and increase shareholder value as we progress our wellhead-to-market strategy. Looking ahead, we are focused on organic Midstream growth as we advance toward our 2027 targets.' Financial Results Summary (in millions of dollars, except as indicated) 2Q 2025 1Q 2025 Earnings $ 877 487 Adjusted Earnings (Loss) 1 973 (368) Adjusted EBITDA 1 2,501 736 Earnings (Loss) Per Share Earnings Per Share - Diluted 2.15 1.18 Adjusted Earnings (Loss) Per Share - Diluted 1 2.38 (0.90) Cash Flow From Operations 845 187 Cash Flow From Operations, Excluding Working Capital 1 1,920 259 Capital Expenditures & Investments 587 423 Acquisitions, net of cash acquired 2,220 — Return of Capital to Shareholders 906 716 Repurchases of common stock 419 247 Dividends paid on common stock 487 469 Cash and Cash Equivalents, including cash classified within Assets held for sale 2 1,144 1,489 Debt 20,935 18,803 Debt-to-capital ratio 42% 40% Net debt-to-capital ratio 1 41% 38% 1 Represents a non-GAAP financial measure. Reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure are included within this release. 2 Includes cash and cash equivalents of $92 million classified within Assets held for sale at June 30, 2025. Expand Segment Financial and Operating Highlights (Millions of dollars, except as indicated) 2Q 2025 1Q 2025 Change Earnings (Loss) 1 $ 877 487 390 Midstream 731 751 (20) Chemicals 20 113 (93) Refining 359 (937) 1,296 Marketing and Specialties 571 1,282 (711) Renewable Fuels (133) (185) 52 Corporate and Other (428) (376) (52) Income tax (expense) benefit (212) (122) (90) Noncontrolling interests (31) (39) 8 Adjusted Earnings (Loss) 1,2 $ 973 (368) 1,341 Midstream 731 683 48 Chemicals 20 113 (93) Refining 392 (937) 1,329 Marketing and Specialties 660 265 395 Renewable Fuels (133) (185) 52 Corporate and Other (383) (355) (28) Income tax (expense) benefit (283) 78 (361) Noncontrolling interests (31) (30) (1) Adjusted EBITDA 2 $ 2,501 736 1,765 Midstream 972 885 87 Chemicals 148 244 (96) Refining 867 (452) 1,319 Marketing and Specialties 718 315 403 Renewable Fuels (110) (162) 52 Corporate and Other (94) (94) — Operating Highlights Pipeline Throughput - Y-Grade to Market (MB/D) 3 956 704 252 Chemicals Global O&P Capacity Utilization 92% 100% (8%) Refining Turnaround Expense 4 53 270 (217) Realized Margin ($/BBL) 2 11.25 6.81 4.44 Crude Capacity Utilization 98% 80% 18% Clean Product Yield 86% 87% (1%) Renewable Fuels Produced (MB/D) 40 44 (4) 1 Segment reporting is pre-tax. 2 Represents a non-GAAP financial measure. Reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure are included within this release. 3 Represents volumes delivered to fractionation hubs, including Mont Belvieu, Sweeny and Conway. Includes 100% of DCP Midstream Class A Segment and Phillips 66's direct interest in DCP Sand Hills Pipeline, LLC and DCP Southern Hills Pipeline, LLC. 4 Excludes turnaround expense of all equity affiliates. Expand Second-Quarter 2025 Financial Results Reported earnings were $877 million for the second quarter of 2025 versus $487 million in the first quarter of 2025. Second-quarter earnings included pre-tax special item adjustments of $(89) million in the Marketing and Specialties segment, $(45) million impacting Corporate and Other and $(33) million in the Refining segment. Adjusted earnings for the second quarter were $973 million versus an adjusted loss of $368 million in the first quarter. Midstream second-quarter 2025 adjusted pre-tax income increased compared with the first quarter mainly due to higher volumes, largely driven by the acquisition of Coastal Bend, partially offset by seasonal maintenance expense and property taxes. Chemicals adjusted pre-tax income decreased mainly due to lower margins driven by lower sales prices. Refining adjusted pre-tax results increased mainly due to higher realized margins resulting from improved market crack spreads, as well as higher volumes and lower costs. Marketing and Specialties adjusted pre-tax income increased primarily due to higher margins and volumes. Renewable Fuels pre-tax results improved primarily due to higher realized margins including inventory impacts, as well as increased credits. Corporate and Other adjusted pre-tax loss increased mainly due to higher net interest expense, partially offset by impacts from our investment in NOVONIX. As of June 30, 2025, the company had $1.1 billion of cash and cash equivalents and $3.7 billion of committed capacity available under credit facilities. Business Highlights and Strategic Priorities Progress Advanced NGL wellhead-to-market strategy by acquiring Coastal Bend and nearing completion of a related pipeline expansion project, expected to increase capacity from 175 MBD to 225 MBD Expanded natural gas gathering and processing capacity with the startup of Dos Picos II, a 220 MMCF/D plant in the Midland Basin Maintained disciplined operations in Refining and achieved $5.46 per barrel in Refining Adjusted Controllable Costs 1, excluding adjusted turnaround expense in the second quarter and $6.17 per barrel year-to-date Achieved a record year-to-date clean product yield of 87%, reflecting a 2% increase from the same period in 2024 On track to cease operations at the Los Angeles Refinery, as well as complete the Germany and Austria transaction by year-end. Investor Webcast Members of Phillips 66 executive management will host a webcast at noon ET to provide an update on the company's strategic initiatives and discuss the company's second-quarter performance. To access the webcast and view related presentation materials, go to and click on 'Events & Presentations.' For detailed supplemental information, go to About Phillips 66 Phillips 66 (NYSE: PSX) is a leading integrated downstream energy provider that manufactures, transports and markets products that drive the global economy. The company's portfolio includes Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels businesses. Headquartered in Houston, Phillips 66 has employees around the globe who are committed to safely and reliably providing energy and improving lives while pursuing a lower-carbon future. For more information, visit or follow @Phillips66Co on LinkedIn. Use of Non-GAAP Financial Information —This news release includes the terms 'adjusted earnings (loss),' 'adjusted pre-tax income (loss),' 'adjusted EBITDA,' 'adjusted earnings (loss) per share,' 'adjusted controllable cost,' 'cash from operations, excluding working capital,' 'net debt-to-capital ratio,' and 'realized refining margin per barrel.' These are non-GAAP financial measures that are included to help facilitate comparisons of operating performance across periods, to help facilitate comparisons with other companies in our industry and to help facilitate determination of enterprise value. Where applicable, these measures exclude items that do not reflect the core operating results of our businesses in the current period or other adjustments to reflect how management analyzes results. Reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure are included within this release. References in the release to earnings refer to net income attributable to Phillips 66. Basis of Presentation — Effective April 1, 2024, we changed the internal financial information reviewed by our chief executive officer to evaluate performance and allocate resources to our operating segments. This included changes in the composition of our operating segments, as well as measurement changes for certain activities between our operating segments. The primary effects of this realignment included establishment of a Renewable Fuels operating segment, which includes renewable fuels activities and assets historically reported in our Refining, Marketing and Specialties (M&S), and Midstream segments; change in method of allocating results for certain Gulf Coast distillate export activities from our M&S segment to our Refining segment; reclassification of certain crude oil and international clean products trading activities between our M&S segment and our Refining segment; and change in reporting of our investment in NOVONIX from our Midstream segment to Corporate and Other. Accordingly, prior period results have been recast for comparability. In the third quarter of 2024, we began presenting the line item 'Capital expenditures and investments' on our consolidated statement of cash flows exclusive of acquisitions, net of cash acquired. Accordingly, prior period information has been reclassified for comparability. Cautionary Statement for the Purposes of the 'Safe Harbor' Provisions of the Private Securities Litigation Reform Act of 1995 —This news release contains forward-looking statements within the meaning of the federal securities laws relating to Phillips 66's operations, strategy and performance. Words such as 'anticipated,' 'estimated,' 'expected,' 'planned,' 'scheduled,' 'targeted,' 'believe,' 'continue,' 'intend,' 'will,' 'would,' 'objective,' 'goal,' 'project,' 'efforts,' 'strategies' and similar expressions that convey the prospective nature of events or outcomes generally indicate forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements included in this news release are based on management's expectations, estimates and projections as of the date they are made. These statements are not guarantees of future events or performance, and you should not unduly rely on them as they involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include: changes in governmental policies relating to NGL, crude oil, natural gas, refined petroleum or renewable fuels products pricing, regulation or taxation, including exports; our ability to timely obtain or maintain permits, including those necessary for capital projects; fluctuations in NGL, crude oil, refined petroleum products, renewable fuels, renewable feedstocks and natural gas prices, and refined product, marketing and petrochemical margins; the effects of any widespread public health crisis and its negative impact on commercial activity and demand for our products; changes to government policies relating to renewable fuels and greenhouse gas emissions that adversely affect programs including the renewable fuel standards program, low carbon fuel standards and tax credits for biofuels; liability resulting from pending or future litigation or other legal proceedings; liability for remedial actions, including removal and reclamation obligations under environmental regulations; unexpected changes in costs or technical requirements for constructing, modifying or operating our facilities or transporting our products; our ability to successfully complete, or any material delay in the completion of, any asset disposition, acquisition, shutdown or conversion that we may pursue, including receipt of any necessary regulatory approvals or permits related thereto; unexpected technological or commercial difficulties in manufacturing, refining or transporting our products, including chemical products; the level and success of producers' drilling plans and the amount and quality of production volumes around our midstream assets; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products, renewable fuels or specialty products; changes in the cost or availability of adequate and reliable transportation for our NGL, crude oil, natural gas and refined petroleum and renewable fuels products; failure to complete definitive agreements and feasibility studies for, and to complete construction of, announced and future capital projects on time or within budget; our ability to comply with governmental regulations or make capital expenditures to maintain compliance; limited access to capital or significantly higher cost of capital related to our credit profile or illiquidity or uncertainty in the domestic or international financial markets; damage to our facilities due to accidents, weather and climate events, civil unrest, insurrections, political events, terrorism or cyberattacks; domestic and international economic and political developments including armed hostilities, such as the war in Eastern Europe, instability in the financial services and banking sector, excess inflation, expropriation of assets and changes in fiscal policy, including interest rates; international monetary conditions and exchange controls; changes in estimates or projections used to assess fair value of intangible assets, goodwill and properties, plants and equipment and/or strategic decisions or other developments with respect to our asset portfolio that cause impairment charges; substantial investments required, or reduced demand for products, as a result of existing or future environmental rules and regulations, including greenhouse gas emissions reductions and reduced consumer demand for refined petroleum products; changes in tax, environmental and other laws and regulations (including alternative energy mandates) applicable to our business; political and societal concerns about climate change that could result in changes to our business or increase expenditures, including litigation-related expenses; the operation, financing and distribution decisions of our joint ventures that we do not control; the potential impact of activist shareholder actions or tactics; and other economic, business, competitive and/or regulatory factors affecting Phillips 66's businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Earnings (Loss) Millions of Dollars 2025 2024 2Q 1Q Jun YTD 2Q Jun YTD Midstream $ 731 751 1,482 767 1,321 Chemicals 20 113 133 222 427 Refining 359 (937 ) (578 ) 302 518 Marketing and Specialties 571 1,282 1,853 415 781 Renewable Fuels (133 ) (185 ) (318 ) (55 ) (110 ) Corporate and Other (428 ) (376 ) (804 ) (340 ) (662 ) Pre-Tax Income (Loss) 1,120 648 1,768 1,311 2,275 Less: Income tax expense (benefit) 212 122 334 291 494 Less: Noncontrolling interests 31 39 70 5 18 Phillips 66 $ 877 487 1,364 1,015 1,763 Adjusted Earnings (Loss) Millions of Dollars 2025 2024 2Q 1Q Jun YTD 2Q Jun YTD Midstream $ 731 683 1,414 753 1,366 Chemicals 20 113 133 222 427 Refining 392 (937 ) (545 ) 302 615 Marketing and Specialties 660 265 925 415 722 Renewable Fuels (133 ) (185 ) (318 ) (55 ) (110 ) Corporate and Other (383 ) (355 ) (738 ) (340 ) (662 ) Pre-Tax Income (Loss) 1,287 (416 ) 871 1,297 2,358 Less: Income tax expense (benefit) 283 (78 ) 205 278 504 Less: Noncontrolling interests 31 30 61 35 48 Phillips 66 $ 973 (368 ) 605 984 1,806 Expand Millions of Dollars Except as Indicated 2025 2024 2Q 1Q Jun YTD 2Q Jun YTD Reconciliation of Consolidated Earnings to Adjusted Earnings (Loss) Consolidated Earnings $ 877 487 1,364 1,015 1,763 Pre-tax adjustments: Impairments — 21 21 224 387 Net (gain) loss on asset dispositions 1 89 (1,085 ) (996 ) (238 ) (238 ) Legal accrual 33 — 33 — — Legal settlement — — — — (66 ) Professional advisory fees 45 — 45 — — Tax impact of adjustments 2 (40 ) 200 160 13 (10 ) Other tax impacts (31 ) — (31 ) — — Noncontrolling interests — 9 9 (30 ) (30 ) Adjusted earnings (loss) $ 973 (368 ) 605 984 1,806 Earnings per share of common stock (dollars) $ 2.15 1.18 3.32 2.38 4.10 Adjusted earnings (loss) per share of common stock (dollars) $ 2.38 (0.90 ) 1.47 2.31 4.21 Adjusted Weighted-Average Diluted Common Shares Outstanding (thousands) 407,934 409,182 409,012 425,734 429,003 Midstream Pre-Tax Income $ 731 751 1,482 767 1,321 Pre-tax adjustments: Impairments — — — 224 283 Net gain on asset dispositions 1 — (68 ) (68 ) (238 ) (238 ) Adjusted pre-tax income $ 731 683 1,414 753 1,366 Chemicals Pre-Tax Income $ 20 113 133 222 427 Pre-tax adjustments: None — — — — — Adjusted pre-tax income $ 20 113 133 222 427 Refining Pre-Tax Income (Loss) $ 359 (937 ) (578 ) 302 518 Pre-tax adjustments: Impairments — — — — 104 Legal settlement — — — — (7 ) Legal accrual 33 — 33 — — Adjusted pre-tax income (loss) $ 392 (937 ) (545 ) (302 ) (615 ) Marketing and Specialties Pre-Tax Income $ 571 1,282 1,853 415 781 Pre-tax adjustments: Net (gain) loss on asset dispositions 1 89 (1,017 ) (928 ) — — Legal settlement — — — — (59 ) Adjusted pre-tax income $ 660 265 925 415 722 Renewable Fuels Pre-Tax Loss $ (133 ) (185 ) (318 ) (55 ) (110 ) Pre-tax adjustments: None — — — — — Adjusted pre-tax loss $ (133 ) (185 ) (318 ) (55 ) (110 ) Corporate and Other Pre-Tax Loss $ (428 ) (376 ) (804 ) (340 ) (662 ) Pre-tax adjustments: Impairments — 21 21 — — Professional advisory fees 45 — 45 — — Adjusted pre-tax loss $ (383 ) (355 ) (738 ) (340 ) (662 ) 1. Gain on disposition of our 49% non-operated equity interest in Coop Mineraloel AG in 1Q 2025. In connection with our pending disposition of our Germany and Austria retail marketing business, in the second quarter of 2025 we recognized a before-tax unrealized loss from foreign currency derivatives. 2. We generally tax effect taxable U.S.-based special items using a combined federal and state annual statutory income tax rate of approximately 24%. Taxable special items attributable to foreign locations likewise generally use a local statutory income tax rate. Nontaxable events reflect zero income tax. These events include, but are not limited to, most goodwill impairments, transactions legislatively exempt from income tax, transactions related to entities for which we have made an assertion that the undistributed earnings are permanently reinvested, or transactions occurring in jurisdictions with a valuation allowance. Expand Except as Indicated 2025 2Q 1Q Reconciliation of Consolidated Net Income to Adjusted EBITDA Attributable to Phillips 66 Net Income $ 908 526 Plus: Income tax expense 212 122 Net interest expense 230 187 Depreciation and amortization 816 791 Phillips 66 EBITDA $ 2,166 1,626 Special Item Adjustments (pre-tax): Impairments — 21 Net (gain) loss on asset dispositions 89 (1,085 ) Legal accrual 33 — Professional advisory fees 45 — Total Special Item Adjustments (pre-tax) 167 (1,064 ) Change in Fair Value of NOVONIX Investment 2 15 Phillips 66 EBITDA, Adjusted for Special Items and Change in Fair Value of NOVONIX Investment $ 2,335 577 Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes 17 18 Proportional share of selected equity affiliates net interest 15 14 Proportional share of selected equity affiliates depreciation and amortization 184 187 Adjusted EBITDA attributable to noncontrolling interests (50 ) (60 ) Phillips 66 Adjusted EBITDA $ 2,501 736 Reconciliation of Segment Income before Income Taxes to Adjusted EBITDA Midstream Income before income taxes $ 731 751 Plus: Depreciation and amortization 260 233 Midstream EBITDA $ 991 984 Special Item Adjustments (pre-tax): Net gain on asset dispositions — (68 ) Midstream EBITDA, Adjusted for Special Items $ 991 916 Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes 4 3 Proportional share of selected equity affiliates net interest 3 3 Proportional share of selected equity affiliates depreciation and amortization 24 23 Adjusted EBITDA attributable to noncontrolling interests (50 ) (60 ) Midstream Adjusted EBITDA $ 972 885 Chemicals Income before income taxes $ 20 113 Plus: None — — Chemicals EBITDA $ 20 113 Special Item Adjustments (pre-tax): None — — Chemicals EBITDA, Adjusted for Special Items $ 20 113 Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes 13 13 Proportional share of selected equity affiliates net interest (1 ) (1 ) Proportional share of selected equity affiliates depreciation and amortization 116 119 Chemicals Adjusted EBITDA $ 148 244 Refining Income (loss) before income taxes $ 359 (937 ) Plus: Depreciation and amortization 443 456 Refining EBITDA $ 802 (481 ) Special Item Adjustments (pre-tax): Legal accrual 33 — Refining EBITDA, Adjusted for Special Items $ 835 (481 ) Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes — — Proportional share of selected equity affiliates net interest 3 2 Proportional share of selected equity affiliates depreciation and amortization 29 27 Refining Adjusted EBITDA $ 867 (452 ) Marketing and Specialties Income before income taxes $ 571 1,282 Plus: Depreciation and amortization 33 20 Marketing and Specialties EBITDA $ 604 1,302 Special Item Adjustments (pre-tax): Net gain on asset disposition 89 (1,017 ) Marketing and Specialties EBITDA, Adjusted for Special Items $ 693 285 Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes — 2 Proportional share of selected equity affiliates net interest 10 10 Proportional share of selected equity affiliates depreciation and amortization 15 18 Marketing and Specialties Adjusted EBITDA $ 718 315 Renewable Fuels Loss before income taxes $ (133 ) (185 ) Plus: Depreciation and amortization 23 23 Renewable Fuels EBITDA $ (110 ) (162 ) Special Item Adjustments (pre-tax): None — — Renewable Fuels EBITDA, Adjusted for Special Items $ (110 ) (162 ) Corporate and Other Loss before income taxes $ (428 ) (376 ) Plus: Net interest expense 230 187 Depreciation and amortization 57 59 Corporate and Other EBITDA $ (141 ) (130 ) Special Item Adjustments (pre-tax): Impairments — 21 Professional advisory fees 45 — Total Special Item Adjustments (pre-tax) 45 21 Change in Fair Value of NOVONIX Investment 2 15 Corporate EBITDA, Adjusted for Special Items and Change in Fair Value of NOVONIX Investment $ (94 ) (94 ) Expand Millions of Dollars Except as Indicated 2025 2Q 1Q Reconciliation of Refining Income (Loss) Before Income Taxes to Realized Refining Margins Income (loss) before income taxes $ 359 (937 ) Plus: Taxes other than income taxes 94 110 Depreciation, amortization and impairments 446 457 Selling, general and administrative expenses 32 46 Operating expenses 848 1,074 Equity in earnings of affiliates 2 105 Other segment expense, net (47 ) (5 ) Proportional share of refining gross margins contributed by equity affiliates 234 141 Special items: None — — Realized refining margins $ 1,968 991 Total processed inputs (thousands of barrels) 152,005 124,453 Adjusted total processed inputs (thousands of barrels)* 174,772 145,559 Income (loss) before income taxes (dollars per barrel)** $ 2.36 (7.53 ) Realized refining margins (dollars per barrel)*** $ 11.25 6.81 *Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate. **Income (loss) before income taxes divided by total processed inputs. ***Realized refining margins per barrel, as presented, are calculated using the underlying realized refining margin amounts, in dollars, divided by adjusted total processed inputs, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. Expand Millions of Dollars Except as Indicated 2025 2Q 1Q June YTD Reconciliation of Refining Operating and SG&A Expenses to Refining Adjusted Controllable Costs Turnaround expenses $ 53 270 323 Other operating expenses 795 804 1,599 Total operating expenses 848 1,074 1,922 Selling, general and administrative expenses 32 46 78 Refining Controllable Costs 880 1,120 2,000 Plus: Proportional share of equity affiliate turnaround expenses 1 24 27 51 Proportional share of equity affiliate other operating and SG&A expenses 1 161 173 334 Total proportional share of equity affiliate operating and SG&A expenses 1 185 200 385 Special item adjustments (pre-tax): Legal accrual (33 ) — (33 ) Refining Adjusted Controllable Costs 1,032 1,320 2,352 Total processed inputs (MB) 152,005 124,453 276,458 Adjusted total processed inputs (MB) 2 174,772 145,559 320,331 Refining turnaround expense ($/BBL) 3 0.35 2.17 1.17 Refining controllable costs, excluding turnaround expense ($/BBL) 3 5.44 6.83 6.07 Refining Controllable Costs per Barrel ($/BBL) 3 5.79 9.00 7.24 Refining adjusted turnaround expense ($/BBL) 4 0.44 2.04 1.17 Refining adjusted controllable costs, excluding adjusted turnaround expense ($/BBL) 4 5.46 7.03 6.17 Refining Adjusted Controllable Costs ($/BBL) 4 5.90 9.07 7.34 1. Represents proportional share of operating and SG&A of equity affiliates for our Refining segment that are reflected as a component of equity in earnings of affiliates on our consolidated statement of income. 2. Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate. 3. Denominator is total processed inputs. 4. Denominator is adjusted total processed inputs. Expand Millions of Dollars Except as Indicated 2024 2023 2022 2021 Reconciliation of Refining Operating and SG&A Expenses to Refining Adjusted Controllable Costs Turnaround expenses $ 484 538 772 497 Other operating expenses 3,243 3,707 3,958 3,663 Total operating expenses 3,727 4,245 4,730 4,160 Selling, general and administrative expenses 209 169 152 131 Refining Controllable Costs 3,936 4,414 4,882 4,291 Plus: Proportional share of equity affiliate turnaround expenses 1 68 93 118 118 Proportional share of equity affiliate other operating and SG&A expenses 1 626 641 721 619 Total proportional share of equity affiliate operating and SG&A expenses 1 694 734 839 737 Special item adjustments (pre-tax): Hurricane-related (costs) recovery — — 21 (40 ) Winter-storm-related costs — — — (17 ) Alliance shutdown-related costs — — (20 ) (32 ) Legal accrual (22 ) (30 ) — — Los Angeles Refinery cessation costs (44 ) — — — Refining Adjusted Controllable Costs 4,564 5,118 5,722 4,939 Total processed inputs (MB) 588,316 607,958 612,741 638,145 Adjusted total processed inputs (MB) 2 680,043 685,435 691,855 715,780 Refining turnaround expense ($/BBL) 3 0.82 0.88 1.26 0.78 Refining controllable costs, excluding turnaround expense ($/BBL) 3 5.87 6.38 6.71 5.95 Refining Controllable Costs per Barrel ($/BBL) 3 6.69 7.26 7.97 6.72 Refining adjusted turnaround expense ($/BBL) 4 0.81 0.92 1.29 0.86 Refining adjusted controllable costs, excluding adjusted turnaround expense ($/BBL) 4 5.90 6.55 6.98 6.04 Refining Adjusted Controllable Costs ($/BBL) 4 6.71 7.47 8.27 6.90 1. Represents proportional share of operating and SG&A of equity affiliates for our Refining segment that are reflected as a component of equity in earnings of affiliates on our consolidated statement of income. 2. Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate. 3. Denominator is total processed inputs. 4. Denominator is adjusted total processed inputs. Expand
