Phillips 66

Hello and welcome to the fourth quarter and full year 2023 Phillips 66 earnings conference call. My name is Emily and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded. I will now turn the call over to Jeff Dietert, Vice President, Investor Relations. Jeff, you may begin.

Thank you. Welcome to Phillips 66 Fourth Quarter Earnings Call. Participants on today's call will include Mark Lazor, President and CEO, Kevin Mitchell, CFO, Tim Roberts, Midstream and Chemicals, Rich Harbison, Refining, and Brian Mandel, Marketing and Commercial. Today's presentation can be found on the investor relations section of the Phillips 66 website along with supplemental financial and operating information. Slide two contains our safe harbor statement. We will be making forward-looking statements during today's call. Actual results may differ materially from today's comments. Factors that could cause actual results to differ are included here, as well as in our SEC filings. With that, I'll turn it over to Mark.

Thanks, Jeff. Welcome, everyone, to our fourth quarter earnings call. We delivered a strong quarter and a strong year. In 2023, our total shareholder return was 33%, and we increased our quarterly dividend by 8%. Today, we're going to cover a few major items, including the reasons why Phillips 66 is an attractive investment opportunity, and we'll highlight the progress we've made on our strategic priorities. Next, we'll discuss our fourth quarter financial results. Then we look forward to your questions. On slide three, we summarize the attributes that make us a differentiated and attractive value proposition. Our diversified and integrated portfolio delivers strong returns on capital employed and a high payout ratio supported by dividend growth. We're on a path to increase mid-cycle adjusted EBITDA by 40% to $14 billion by 2025. In addition, 75% of this growth will be outside of refinings. We expect this growth and more stable cash flow to support our valuation going forward and contribute to attractive total shareholder returns. Our disciplined approach to capital allocation across our portfolio has contributed to an average return on capital employed of 13% since our formation in 2012, almost double our cost of capital. We're committed to financial flexibility and our strong investment grade credit rating remains differentiated relative to our peers. We expect to return in excess of 50% of our growing operating cash flow to shareholders. All of these attributes will support a secure, competitive, and growing dividend, strong share repurchases, as well as debt reduction at mid-cycle margins. Slide four summarizes our achievements to date on our strategic priorities. On our last call, we raised our targets and continue to successfully execute our plan to increase mid-cycle adjusted EBITDA and grow shareholder distributions. Since July of 2022, we've distributed $8.3 billion through share repurchases and dividends. We're on track to achieve our $13 to $15 billion target by the end of 2024. The execution of our plan to enhance refining operating performance has resulted in crude utilization rates above the industry average for four consecutive quarters. In fact, we operated at our highest annual rate since 2019. We remain focused on improving performance, increasing market capture, and reducing cost to enhance our earnings per barrel. In midstream, our NGO wellhead to market business continues to exceed our expectations. The team has done a remarkable job of integrating DCP midstream and captured run rate synergies of $250 million as of year end. And we expect over $400 million of synergies by 2025. Since increasing our ownership of DCP, the midstream annual run rate for adjusted EBITDA has been $3.6 billion. The stable cash generation from our midstream business has grown to a level that covers the company's top capital priorities, funding sustaining capital and the dividend. We're delivering on business transformation targets and remain laser focused on further reducing our cost structure in 2024. Kevin will be providing more details. In addition, we plan to monetize assets that no longer fit our long-term strategy. These asset dispositions are expected to generate over $3 billion in proceeds that will support our strategic priorities, including returns to shareholders. Timing of these dispositions will be subject to satisfactory market conditions and any necessary regulatory approvals. Our total adjusted EBITDA in 2023 was $12.7 billion, reflecting above mid-cycle margins in refining, and nearly $6 billion contributed by our more stable midstream and marketing and specialties businesses. We're focused on disciplined capital allocation, only funding attractive, high-return projects across our portfolio. The Rodale Renewed project to convert our San Francisco refinery into one of the world's largest renewable fuels facilities is expected to generate strong returns. The project's progressing well, and we expect to start up later this quarter. Looking forward, We're well positioned to achieve our targets by capitalizing on the strength of our diversified and integrated portfolio. We'll do this through continued operating and commercial excellence to deliver significant shareholder value through the economic cycles as demonstrated by our total shareholder return of 33% in 2023. Our commitment to a secure, competitive, and growing dividend has resulted in a 16% compound annual growth rate since 2012. Before I turn the call over to Kevin to review the financial results, I'd like to thank the Phillips 66 team for their continued dedication to safe and reliable operations. Our employees enable us to execute on our strategic priorities and deliver on our mission to provide energy and improve lives. Kevin, over to you.