Form 8-K PHILLIPS 66 PARTNERS LP For: Aug 03

August 3, 2021 9:22 AM EDT

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.

Exhibit 99.1
imagea.jpg


Phillips 66 Partners Reports Second-Quarter 2021 Financial Results


Reported second-quarter earnings of $225 million and adjusted EBITDA of $337 million
Announced quarterly distribution of $0.875 per common unit


HOUSTON, Aug. 3, 2021 – Phillips 66 Partners LP (NYSE: PSXP) announces second-quarter 2021 earnings of $225 million, or $0.91 per diluted common unit. Cash from operations was $286 million, and distributable cash flow was $267 million. Adjusted EBITDA was $337 million in the second quarter, compared with $289 million in the prior quarter.

“This quarter we operated well and delivered solid financial performance,” said Greg Garland, Phillips 66 Partners Chairman and CEO. “Our results reflect higher throughput on our wholly owned and joint venture assets. During the quarter, we advanced construction of the C2G Pipeline and plan to begin operations by the fourth quarter of this year. We continue to operate our assets safely and reliably and maintain our strong financial position through disciplined capital allocation.”

On July 20, 2021, the general partner’s board of directors declared a second-quarter 2021 cash distribution of $0.875 per common unit, or $3.50 per unit on an annualized basis.


Financial Results

Phillips 66 Partners’ second-quarter 2021 earnings were $225 million, compared with a loss of $18 million in the first quarter. First-quarter results included a $198 million impairment resulting from the Partnership’s decision to exit the Liberty Pipeline project. The Partnership reported adjusted EBITDA of $337 million in the second quarter, compared with $289 million in the prior quarter. The increase in second-quarter earnings and adjusted EBITDA reflect higher volumes and lower utility costs at the Partnership’s wholly owned and joint venture assets following the first-quarter winter storms and higher pipeline and terminal volumes from increased utilization at Phillips 66-operated refineries.


Liquidity, Capital Expenditures and Investments

As of June 30, 2021, total debt outstanding was $3.9 billion. The Partnership had $2 million in cash and cash equivalents and $734 million available under its revolving credit facility.

The Partnership’s capital expenditures and investments for the quarter were $61 million. Growth capital included spend on the C2G Pipeline project and funding for the Bakken Pipeline optimization project.

On April 1, 2021, Phillips 66 Partners repaid the remaining $50 million of tax-exempt bonds. Also in April, the Partnership borrowed $450 million under a new term loan agreement. Proceeds were primarily used to repay amounts borrowed under the Partnership’s $750 million revolving credit facility.
Page 1


Phillips 66 Partners Reports Second-Quarter 2021 Financial Results


Strategic Update

Phillips 66 Partners continued construction of the C2G Pipeline, a 16 inch ethane pipeline that will connect its Clemens Caverns storage facility to petrochemical facilities in Gregory, Texas, near Corpus Christi, Texas. The project is backed by long-term commitments. The pipeline is expected to be operational in the fourth quarter of 2021.

The Bakken Pipeline optimization project, supported by minimum volume commitments from long-term contracts, continues to progress with the next phase of incremental capacity commencing service in August.


Investor Webcast

Members of Phillips 66 Partners executive management will host a webcast today at 3 p.m. EDT to discuss the Partnership’s second-quarter performance. To listen to the conference call and view related presentation materials, go to www.phillips66partners.com/events. For detailed supplemental information, go to www.phillips66partners.com/reports.


About Phillips 66 Partners

Headquartered in Houston, Phillips 66 Partners is a master limited partnership formed by Phillips 66 to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids pipelines, terminals and other midstream assets. For more information, visit www.phillips66partners.com.

- # # # -

CONTACTS
Jeff Dietert (investors)
832-765-2297
jeff.dietert@p66.com

Shannon Holy (investors)
832-765-2297
shannon.m.holy@p66.com

Thaddeus Herrick (media)
855-841-2368
thaddeus.f.herrick@p66.com

Page 2


Phillips 66 Partners Reports Second-Quarter 2021 Financial Results
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements as defined under the federal securities laws. Words and phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “continues,” “intends,” “will,” “would,” “objectives,” “goals,” “projects,” “efforts,” “strategies” and similar expressions are used to identify such 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 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: the continued ability of Phillips 66 to satisfy its obligations under our commercial and other agreements; the volume of crude oil, refined petroleum products and NGL we or our equity affiliates transport, fractionate, terminal and store; the tariff rates with respect to volumes transported through our regulated assets, which are subject to review and possible adjustment by federal and state regulators; fluctuations in the prices for crude oil, refined petroleum products and NGL; the continuing effects of the COVID-19 pandemic and its negative impact on the demand for refined products; changes in governmental policies relating to crude oil, refined petroleum products or NGL pricing, regulation, taxation, or exports; liabilities associated with the risks and operational hazards inherent in transporting, fractionating, terminaling and storing crude oil, refined petroleum products and NGL; curtailment of operations due to accidents, severe weather (including as a result of climate change) or natural disasters, riots, strikes or lockouts; the inability to obtain or maintain permits, in a timely manner or at all, and the possible revocation or modification of permits; the operation, financing and distribution decisions of our equity affiliates; costs to comply with environmental laws and safety regulations; failure of information technology due to various causes, including unauthorized access or attacks; changes to the costs to deliver and transport crude oil, refined petroleum products and NGL; potential liability from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations; the failure to complete construction of capital projects on time and within budget; general domestic and international economic and political developments including armed hostilities, expropriation of assets, and other political, economic or diplomatic developments, including those caused by public health issues; our ability to comply with our debt covenants and to incur additional indebtedness on favorable terms; changes in tax, environmental and other laws and regulations; and other economic, business, competitive and/or regulatory factors affecting Phillips 66 Partners’ businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 Partners 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.

Use of Non-GAAP Financial InformationThis news release includes the terms “EBITDA,” “adjusted EBITDA,” “distributable cash flow” and “coverage ratio.” These are non-GAAP financial measures. EBITDA and adjusted EBITDA are included to help facilitate comparisons of operating performance of the Partnership with other companies in our industry. EBITDA and distributable cash flow help facilitate an assessment of our ability to generate sufficient cash flow to make distributions to our partners. We believe that the presentation of EBITDA, adjusted EBITDA and distributable cash flow provides useful information to investors in assessing our financial condition and results of operations. Our coverage ratio is calculated as distributable cash flow divided by total cash distributions and is included to help indicate the Partnership’s ability to pay cash distributions from current earnings. The GAAP performance measure most directly comparable to EBITDA and adjusted EBITDA is net income (loss). The GAAP liquidity measure most comparable to EBITDA and distributable cash flow is net cash provided by operating activities. The GAAP financial measure most comparable to our coverage ratio is calculated as net cash provided by operating activities divided by total cash distributions. These non-GAAP financial measures should not be considered as alternatives to their comparable GAAP measures. They have important limitations as analytical tools because they exclude some but not all items that affect their corresponding GAAP measures. They should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because EBITDA, adjusted EBITDA, distributable cash flow and coverage ratio may be defined differently by other companies in our industry, our definition of those measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in this release.

References in the release to earnings or losses refer to net income or losses attributable to the Partnership. References to EBITDA refer to earnings before interest, income taxes, depreciation and amortization.
Page 3


Phillips 66 Partners Reports Second-Quarter 2021 Financial Results

Results of Operations (Unaudited)

Summarized Financial Statement Information
Millions of Dollars
Except as Indicated
Q2 2021Q1 2021
Selected Income Statement Data
Total revenues and other income$423 376 
Net income (loss)234 (11)
Net income (loss) attributable to the Partnership225 (18)
Adjusted EBITDA337 289 
Distributable cash flow267 233 
Net Income (Loss) Attributable to the Partnership Per Limited Partner Unit—Diluted (Dollars)
Common units$0.91 (0.13)
Selected Balance Sheet Data
Cash and cash equivalents$
Equity investments2,962 3,029 
Total assets7,001 7,053 
Total debt3,910 3,944 
Equity held by public
Preferred units729 749 
Common units 2,649 2,647 
Equity held by Phillips 66
Common units (820)(828)
Page 4


Phillips 66 Partners Reports Second-Quarter 2021 Financial Results

Statement of Income (Loss)
Millions of Dollars
Q2 2021Q1 2021
Revenues and Other Income
Operating revenues—related parties$274 245 
Operating revenues—third parties
Equity in earnings of affiliates142 124 
Other income— 
Total revenues and other income423 376 
Costs and Expenses
Operating and maintenance expenses93 95 
Depreciation34 34 
Impairments— 198 
General and administrative expenses18 17 
Taxes other than income taxes11 10 
Interest and debt expense32 33 
Total costs and expenses188 387 
Income (loss) before income taxes235 (11)
Income tax expense— 
Net Income (Loss)234 (11)
Less: Net income attributable to noncontrolling interest
Net Income (Loss) Attributable to the Partnership
225 (18)
Less: Preferred unitholders’ interest in net income (loss) attributable to the Partnership
12 12 
Limited Partners’ Interest in Net Income (Loss) Attributable to the Partnership
$213 (30)
Page 5


Phillips 66 Partners Reports Second-Quarter 2021 Financial Results

Selected Operating Data
Q2 2021Q1 2021
Wholly Owned Operating Data
Pipelines
Pipeline revenues (millions of dollars)$121 104 
Pipeline volumes(1) (thousands of barrels daily)
Crude oil 957 796 
Refined petroleum products and NGL1,029 809 
Total1,986 1,605 
Average pipeline revenue per barrel (dollars)$0.66 0.71 
Terminals
Terminal revenues (millions of dollars)$43 39 
Terminal throughput (thousands of barrels daily)
Crude oil(2)
397 374 
Refined petroleum products827 657 
Total1,224 1,031 
Average terminaling revenue per barrel (dollars)$0.380.41
Storage, processing and other revenues (millions of dollars)$116109
Total Operating Revenues (millions of dollars)$280252
Joint Venture Operating Data(3)
Crude oil, refined petroleum products and NGL (thousands of barrels daily)1,3271,052
(1) Represents the sum of volumes transported through each separately tariffed pipeline segment.
(2) Bayway and Ferndale rail rack volumes included in crude oil terminals.
(3) Proportional share of total pipeline and terminal volumes of joint ventures consistent with recognized equity in earnings of affiliates.

Cash Distributions
Millions of Dollars
Except as Indicated
Q2 2021Q1 2021
Cash Distributions
Common units—public$51 52 
Common units—Phillips 66148 148 
Total$199 200 
Cash Distribution Per Common Unit (Dollars)$0.875 0.875 
Coverage Ratio*
1.34 1.17 
Cash distributions declared attributable to the indicated periods.
*Calculated as distributable cash flow divided by total cash distributions. Used to indicate the Partnership’s ability to pay cash distributions from current earnings. Net cash provided by operating activities divided by total cash distributions was 1.44x and 1.14x at Q2 2021 and Q1 2021, respectively.

Page 6


Phillips 66 Partners Reports Second-Quarter 2021 Financial Results

Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Income (Loss) Attributable to the Partnership
Millions of Dollars
Q2 2021Q1 2021
Net Income (Loss) Attributable to the Partnership$225 (18)
Plus:
Net income attributable to noncontrolling interest
Net Income (Loss)234 (11)
Plus:
Depreciation34 34 
Net interest expense32 33 
Income tax expense— 
EBITDA301 56 
Plus:
Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments51 49 
Expenses indemnified or prefunded by Phillips 66— 
Impairments— 198 
Less:
Adjusted EBITDA attributable to noncontrolling interest16 14 
Adjusted EBITDA337 289 
Plus:
Deferred revenue impacts*
(4)
Less:
Equity affiliate distributions less than proportional adjusted EBITDA14 
Maintenance capital expenditures
17 
Net interest expense32 33 
Preferred unit distributions12 12 
Income taxes paid— 
Distributable Cash Flow $267 233 
*Difference between cash receipts and revenue recognition.
Excludes Merey Sweeny capital reimbursements and turnaround impacts.
Page 7


Phillips 66 Partners Reports Second-Quarter 2021 Financial Results

Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities
Millions of Dollars
Q2 2021Q1 2021
Net Cash Provided by Operating Activities$286 227 
Plus:
Net interest expense32 33 
Income tax expense— 
Changes in working capital(11)(11)
Undistributed equity earnings(7)
Impairments— (198)
Deferred revenues and other liabilities— 
Other(2)— 
EBITDA301 56 
Plus:
Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments51 49 
Expenses indemnified or prefunded by Phillips 66— 
Impairments— 198 
Less:
Adjusted EBITDA attributable to noncontrolling interest16 14 
Adjusted EBITDA337 289 
Plus:
Deferred revenue impacts*
(4)
Less:
Equity affiliate distributions less than proportional adjusted EBITDA14 
Maintenance capital expenditures
17 
Net interest expense32 33 
Preferred unit distributions12 12 
Income taxes paid— 
Distributable Cash Flow $267 233 
*Difference between cash receipts and revenue recognition.
Excludes Merey Sweeny capital reimbursements and turnaround impacts.

Page 8

Exhibit 99.2
Phillips 66 Partners LP Earnings Release Supplemental Data
image.jpg
STATEMENT OF INCOME (LOSS)
CONSOLIDATED
Millions of Dollars, Except as Indicated
20212020
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Revenues and Other Income
Operating revenues—related parties
245 274 519 258 236 256 258 1,008 
Operating revenues—third parties
13 30 
Equity in earnings of affiliates
124 142 266 136 104 129 124 493 
Gain from equity interest transfer— — — — 84 — — 84 
Other income
— — 
Total revenues and other income
376 423 799 404 430 394 390 1,618 
Costs and Expenses
Operating and maintenance expenses95 93 188 88 84 85 85 342 
Depreciation34 34 68 30 31 35 39 135 
Impairments198 — 198 — — — 96 96 
General and administrative expenses17 18 35 17 17 16 16 66 
Taxes other than income taxes10 11 21 11 10 10 40 
Interest and debt expense33 32 65 29 28 32 32 121 
Other expenses— — — — — 
Total costs and expenses387 188 575 177 175 177 278 807 
Income (loss) before income taxes(11)235 224 227 255 217 112 811 
Income tax expense— — 
Net Income (Loss)(11)234 223 226 255 216 111 808 
Less: Net income attributable to noncontrolling interest16 — — 10 17 
Net Income (Loss) Attributable to the Partnership
(18)225 207 226 255 206 104 791 
Less: Preferred unitholders’ interest in net income (loss) attributable to the Partnership12 12 24 10 10 12 41 
Limited Partners’ Interest in Net Income (Loss) Attributable to the Partnership(30)213 183 216 246 196 92 750 
Adjusted EBITDA*
289 337 626 321 269 313 318 1,221 
Distributable Cash Flow*
233 267 500 269 218 243 240 970 
Net Income (Loss) Attributable to the Partnership Per Limited Partner Unit (dollars)
Common units—basic(0.13)0.91 0.78 0.95 1.07 0.86 0.40 3.29 
Common units—diluted(0.13)0.91 0.78 0.93 1.05 0.85 0.40 3.27 
Weighted-Average Limited Partner Units Outstanding (thousands)
Common units—basic228,340 228,340 228,340 228,312 228,340 228,340 228,340 228,333 
Common units—diluted228,340 228,340 228,340 242,132 242,160 242,160 228,340 242,153 
* See note on the use of non-GAAP measures.

Page 1


Exhibit 99.2

Phillips 66 Partners LP Earnings Release Supplemental Data

SELECTED OPERATING DATA
CONSOLIDATED
20212020
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Wholly Owned Operating Data
Pipelines
Pipeline revenues (millions of dollars)
104 121 225 111 97 117 111 436 
Pipeline volumes(1) (thousands of barrels daily)
Crude oil796 957 877 941 806 867 843 864 
Refined petroleum products and NGL809 1,029 920 866 825 907 877 869 
Total
1,605 1,986 1,797 1,807 1,631 1,774 1,720 1,733 
Average pipeline revenue per barrel (dollars)
0.71 0.66 0.68 0.67 0.65 0.71 0.70 0.68 
Terminals
Terminal revenues (millions of dollars)
39 43 82 43 33 36 41 153 
Terminal throughput (thousands of barrels daily)
Crude oil(2)
374 397 386 460 380 296 283 354 
Refined petroleum products657 827 743 748 690 700 711 713 
Total
1,031 1,224 1,129 1,208 1,070 996 994 1,067 
Average terminaling revenue per barrel (dollars)
0.41 0.38 0.39 0.39 0.33 0.39 0.44 0.39 
Storage, processing and other revenues (millions of dollars)
109 116 225 113 111 112 113 449 
Total Operating Revenues (millions of dollars)
252 280 532 267 241 265 265 1,038 
Joint Venture Operating Data(3)
Crude oil, refined petroleum products and NGL (thousands of barrels daily)
1,052 1,327 1,190 838 942 1,142 1,102 1,007 
(1) Represents the sum of volumes transported through each separately tariffed pipeline segment.
(2) Bayway and Ferndale rail rack volumes included in crude oil terminals.
(3) Proportional share of total pipeline and terminal volumes of joint ventures consistent with recognized equity in earnings of affiliates.

Page 2


Exhibit 99.2

Phillips 66 Partners LP Earnings Release Supplemental Data

CAPITAL EXPENDITURES AND INVESTMENTS
Millions of Dollars
20212020
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Capital Expenditures and Investments
Expansion52 44 96 196 311 160 90 757 
Maintenance17 23 15 28 21 33 97 
Adjusted Capital Spending*58 61 119 211 339 181 123 854 
Capital expenditures and investments funded by certain joint venture partners**— — — 23 38 (3)61 
Capital Expenditures and Investments58 61 119 234 377 184 120 915 
 * See note on the use of non-GAAP measures.
** Includes previously funded capital returned to our joint venture partner in the fourth quarter of 2020.




CASH DISTRIBUTIONS
20212020
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Cash Distribution Per Common Unit (Dollars)
0.875 0.875 1.750 0.875 0.875 0.875 0.875 3.500 
Cash Distributions* ($ Millions)
Common units—public52 51 103 51 51 52 51 205 
Common units—Phillips 66148 148 296 148 149 148 149 594 
Total200 199 399 199 200 200 200 799 
Coverage Ratio**
1.17 1.34 1.25 1.35 1.09 1.22 1.20 1.21 
  * Cash distributions declared attributable to the indicated periods.
** See note on the use of non-GAAP measures.
 † Calculated as distributable cash flow divided by total cash distributions. Used to indicate the Partnership’s ability to pay cash distributions from
    current earnings.

Page 3


Exhibit 99.2

Phillips 66 Partners LP Earnings Release Supplemental Data

NON-GAAP FINANCIAL MEASURES RECONCILIATION
CONSOLIDATED
Millions of Dollars
20212020
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Reconciliation to Net Income (Loss) Attributable to the Partnership
Net Income (Loss) Attributable to the Partnership(18)225 207 226 255 206 104 791 
Plus:
Net income attributable to noncontrolling interest16 — — 10 17 
Net Income (Loss)(11)234 223 226 255 216 111 808 
Plus:
Depreciation34 34 68 30 31 35 39 135 
Net interest expense33 32 65 28 29 31 32 120 
Income tax expense— — 
EBITDA**56 301 357 285 315 283 183 1,066 
Plus:
Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments49 51 100 35 38 45 54 172 
Expenses indemnified or prefunded by Phillips 66— — — 
Transaction costs associated with acquisitions— — — — — — 
Impairments198 — 198 — — — 96 96 
Less:
Gain from equity interest transfer— — — — 84 — — 84 
Adjusted EBITDA attributable to noncontrolling interest14 16 30 — — 16 16 32 
Adjusted EBITDA**289 337 626 321 269 313 318 1,221 
Plus:
Deferred revenue impacts*
(4)(3)
Less:
Equity affiliate distributions less than (more than) proportional adjusted EBITDA14 17 (10)— 
Maintenance capital expenditures
17 23 15 28 21 33 97 
Net interest expense33 32 65 28 29 31 32 120 
Preferred unit distributions12 12 24 10 10 12 41 
Income taxes paid— — — — 
Distributable Cash Flow**233 267 500 269 218 243 240 970 
  * Difference between cash receipts and revenue recognition.
** See note on the use of non-GAAP measures.
 † Excludes Merey Sweeny capital reimbursements and turnaround impacts.
Page 4


Exhibit 99.2

Phillips 66 Partners LP Earnings Release Supplemental Data

NON-GAAP FINANCIAL MEASURES RECONCILIATION (continued)
CONSOLIDATED
Millions of Dollars
20212020
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Reconciliation to Net Cash Provided by Operating Activities
Net Cash Provided by Operating Activities227 286 513 274 215 296 170 955 
Plus:
Net interest expense33 32 65 28 29 31 32 120 
Income tax expense— — 
Changes in working capital(11)(11)(22)(12)(3)(45)75 15 
Undistributed equity earnings(7)(2)(4)(5)— (7)
Impairments(198)— (198)— — — (96)(96)
Gain from equity interest transfer— — — — 84 — — 84 
Deferred revenues and other liabilities— — 
Other— (2)(2)(2)(7)(1)(2)(12)
EBITDA**56 301 357 285 315 283 183 1,066 
Plus:
Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments49 51 100 35 38 45 54 172 
Expenses indemnified or prefunded by Phillips 66— — — 
Transaction costs associated with acquisitions— — — — — — 
Impairments198 — 198 — — — 96 96 
Less:
Gain from equity interest transfer— — — — 84 — — 84 
Adjusted EBITDA attributable to noncontrolling interest14 16 30 — — 16 16 32 
Adjusted EBITDA**289 337 626 321 269 313 318 1,221 
Plus:
Deferred revenue impacts*
(4)(3)
Less:
Equity affiliate distributions less than (more than) proportional adjusted EBITDA14 17 (10)— 
Maintenance capital expenditures
17 23 15 28 21 33 97 
Net interest expense33 32 65 28 29 31 32 120 
Preferred unit distributions12 12 24 10 10 12 41 
Income taxes paid— — — — 
Distributable Cash Flow**233 267 500 269 218 243 240 970 
 * Difference between cash receipts and revenue recognition.
** See note on the use of non-GAAP measures.
 † Excludes Merey Sweeny capital reimbursements and turnaround impacts.

Page 5


Exhibit 99.2
Use of Non-GAAP Financial Information—This earnings release supplemental data includes the terms “EBITDA,” “adjusted EBITDA,” “distributable cash flow,” “coverage ratio,” and “adjusted capital spending.” These are non-GAAP financial measures. EBITDA and adjusted EBITDA are included to help facilitate comparisons of operating performance of the Partnership with other companies in our industry. EBITDA and distributable cash flow help facilitate an assessment of our ability to generate sufficient cash flow to make distributions to our partners. We believe that the presentation of EBITDA, adjusted EBITDA and distributable cash flow provides useful information to investors in assessing our financial condition and results of operations. Our coverage ratio is calculated as distributable cash flow divided by total cash distributions and is included to help indicate the Partnership’s ability to pay cash distributions from current earnings. Additionally, adjusted capital spending is a non-GAAP financial measure that demonstrates Phillips 66 Partners' net share of capital spending. The GAAP performance measure most directly comparable to EBITDA and adjusted EBITDA is net income (loss). The GAAP liquidity measure most comparable to EBITDA and distributable cash flow is net cash provided by operating activities. The GAAP financial measure most comparable to our coverage ratio is calculated as net cash provided by operating activities divided by total cash distributions. The GAAP financial measure most comparable to adjusted capital spending is capital expenditures and investments. These non-GAAP financial measures should not be considered as alternatives to their comparable GAAP measures. They have important limitations as analytical tools because they exclude some but not all items that affect their corresponding GAAP measures. They should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because EBITDA, adjusted EBITDA, distributable cash flow, coverage ratio and adjusted capital spending may be defined differently by other companies in our industry, our definition of those measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in this earnings release supplemental data. Additionally, the disaggregation of adjusted capital spending between expansion and maintenance is not a distinction recognized under GAAP. We provide such disaggregation because our partnership agreement requires that we treat expansion and maintenance capital differently for certain surplus determinations. Further, we generally fund expansion capital spending with both operating and financing cash flows and fund maintenance capital spending with operating cash flows. We believe this is an important distinction in our liquidity profile.
Page 6


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings