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Form 8-K PHILLIPS 66 PARTNERS LP For: Jan 29

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January 29, 2021 9:57 AM EST

Exhibit 99.1
image1b.jpg


Phillips 66 Partners Reports
Fourth-Quarter 2020 Financial Results


Fourth Quarter
•Reported earnings of $104 million and adjusted EBITDA of $318 million
•Announced quarterly distribution of $0.875 per common unit
•Commissioned second dock and additional storage at South Texas Gateway Terminal
•Announced 2021 capital budget of $0.3 billion

Full-Year 2020
•Reported earnings of $791 million and adjusted EBITDA of $1.2 billion
•Started full operations on the Gray Oak Pipeline
•Completed Clemens Caverns and Sweeny to Pasadena Pipeline expansion projects
•Progressed construction of C2G Pipeline


HOUSTON, Jan. 29, 2021 – Phillips 66 Partners LP (NYSE: PSXP) announces fourth-quarter 2020 earnings of $104 million, or $0.40 per diluted common unit. Cash from operations was $170 million, and distributable cash flow was $240 million. Adjusted EBITDA was $318 million in the fourth quarter, compared with $313 million in the prior quarter.

“We delivered another quarter of strong operating performance, demonstrating the reliability of our assets and the stability of our portfolio in a challenging market environment,” said Greg Garland, Phillips 66 Partners’ chairman and CEO. “South Texas Gateway Terminal reached a major milestone with the completion of the second dock and loading of its first Very Large Crude Carrier, and we continue to advance C2G Pipeline construction. We remain focused on reliable operations, completing our projects and disciplined capital allocation.”

On Jan. 19, 2021, the general partner’s board of directors declared a fourth-quarter 2020 cash distribution of $0.875 per common unit, or $3.50 per unit on an annualized basis.
Page 1

Phillips 66 Partners Reports Fourth-Quarter 2020 Financial Results
Financial Results

Phillips 66 Partners’ fourth-quarter 2020 earnings were $104 million, compared with $206 million in the third quarter. The decrease was mainly due to $96 million of impairments related to the Partnership’s investments in two crude oil logistics joint ventures, reflecting the impact of lower crude oil production. The Partnership reported adjusted EBITDA of $318 million in the fourth quarter, compared with $313 million in the prior quarter. The increase in adjusted EBITDA is primarily due to higher Bakken Pipeline volumes, partially offset by lower volumes on the Sand Hills Pipeline.


Liquidity, Capital Expenditures and Investments

As of Dec. 31, 2020, total debt outstanding was $3.9 billion. The Partnership had $7 million in cash and cash equivalents and $334 million available under its revolving credit facility.

The Partnership’s capital expenditures and investments for the quarter were $120 million. Growth capital included spend on the C2G Pipeline project and investment in the South Texas Gateway Terminal.


Strategic Update

At the South Texas Gateway Terminal, which is being constructed by Buckeye Partners, L.P., the second dock commenced crude oil export operations in the fourth quarter. Upon completion in the first quarter of 2021, the marine export terminal will have storage capacity of 8.6 million barrels and up to 800,000 barrels per day of dock throughput capacity. Phillips 66 Partners owns a 25% interest in the terminal.

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 and is expected to be completed in mid-2021.
Page 2

Phillips 66 Partners Reports Fourth-Quarter 2020 Financial Results
Investor Webcast

Members of Phillips 66 Partners executive management will host a webcast today at 2 p.m. EST to discuss the Partnership’s fourth-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 growth-oriented 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 3

Phillips 66 Partners Reports Fourth-Quarter 2020 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; our ability to successfully execute growth strategies; 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 Information—This 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. 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 refer to net income attributable to the Partnership. References to EBITDA refer to earnings before interest, income taxes, depreciation and amortization.
Page 4

Phillips 66 Partners Reports Fourth-Quarter 2020 Financial Results

Results of Operations (Unaudited)

Summarized Financial Statement Information
Millions of Dollars
Except as Indicated
Q4 2020Q3 2020
Selected Income Statement Data
Total revenues and other income$390 394 
Net income111 216 
Net income attributable to the Partnership104 206 
Adjusted EBITDA318 313 
Distributable cash flow240 243 
Net Income Per Limited Partner Unit—Diluted (Dollars)
Common units$0.40 0.85 
Selected Balance Sheet Data
Cash and cash equivalents$7 2 
Equity investments3,244 3,373 
Total assets7,258 7,294 
Total debt3,909 3,783 
Equity held by public
Preferred units749 747 
Common units 2,706 2,734 
Equity held by Phillips 66
Common units (656)(578)
Page 5

Phillips 66 Partners Reports Fourth-Quarter 2020 Financial Results

Statement of Income
Millions of Dollars
Q4 2020Q3 2020
Revenues and Other Income
Operating revenues—related parties$258 256 
Operating revenues—third parties7 9 
Equity in earnings of affiliates124 129 
Other income1 — 
Total revenues and other income390 394 
Costs and Expenses
Operating and maintenance expenses85 85 
Depreciation39 35 
Impairments96 — 
General and administrative expenses16 16 
Taxes other than income taxes10 9 
Interest and debt expense32 32 
Total costs and expenses278 177 
Income before income taxes112 217 
Income tax expense1 1 
Net Income111 216 
Less: Net income attributable to noncontrolling interest7 10 
Net Income Attributable to the Partnership
104 206 
Less: Preferred unitholders’ interest in net income attributable to the Partnership
12 10 
Limited Partners’ Interest in Net Income Attributable to the Partnership
$92 196 
Page 6

Phillips 66 Partners Reports Fourth-Quarter 2020 Financial Results

Selected Operating Data
Q4 2020Q3 2020
Wholly Owned Operating Data
Pipelines
Pipeline revenues (millions of dollars)$111 117 
Pipeline volumes(1) (thousands of barrels daily)
Crude oil 843 867 
Refined petroleum products and natural gas liquids877 907 
Total1,720 1,774 
Average pipeline revenue per barrel (dollars)$0.70 0.71 
Terminals
Terminal revenues (millions of dollars)$41 36 
Terminal throughput (thousands of barrels daily)
Crude oil(2)
283 296 
Refined petroleum products711 700 
Total994 996 
Average terminaling revenue per barrel (dollars)$0.440.39
Storage, processing and other revenues (millions of dollars)$113112
Total Operating Revenues (millions of dollars)$265265
Joint Venture Operating Data(3)
Crude oil, refined petroleum products and natural gas liquids (thousands of barrels daily)
1,1021,142
(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
Q4 2020Q3 2020
Cash Distributions†
Common units—public$51 52 
Common units—Phillips 66149 148 
Total$200 200 
Cash Distribution Per Common Unit (Dollars)$0.875 0.875 
Coverage Ratio*
1.20 1.22 
†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 0.85x and 1.48x at Q4 2020 and Q3 2020, respectively.

Page 7

Phillips 66 Partners Reports Fourth-Quarter 2020 Financial Results

Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Income Attributable to the Partnership
Millions of Dollars
2020
YearQ4Q3
Net Income Attributable to the Partnership$791 104 206 
Plus:
Net income attributable to noncontrolling interest17 7 10 
Net Income808 111 216 
Plus:
Depreciation135 39 35 
Net interest expense120 32 31 
Income tax expense3 1 1 
EBITDA1,066 183 283 
Plus:
Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments172 54 45 
Expenses indemnified or prefunded by Phillips 662 1 1 
Transaction costs associated with acquisitions1 — — 
Impairments96 96 — 
Less:
Gain from equity interest transfer84 — — 
Adjusted EBITDA attributable to noncontrolling interest32 16 16 
Adjusted EBITDA1,221 318 313 
Plus:
Deferred revenue impacts*†
8 4 (3)
Less:
Equity affiliate distributions less than proportional adjusted EBITDA— 5 4 
Maintenance capital expenditures†
97 33 21 
Net interest expense120 32 31 
Preferred unit distributions41 12 10 
Income taxes paid1 — 1 
Distributable Cash Flow $970 240 243 
*Difference between cash receipts and revenue recognition.
†Excludes Merey Sweeny capital reimbursements and turnaround impacts.
Page 8

Phillips 66 Partners Reports Fourth-Quarter 2020 Financial Results

Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities
Millions of Dollars
2020
YearQ4Q3
Net Cash Provided by Operating Activities$955 170 296 
Plus:
Net interest expense120 32 31 
Income tax expense3 1 1 
Changes in working capital15 75 (45)
Undistributed equity earnings(7)2 — 
Impairments(96)(96)— 
Gain from equity interest transfer84 — — 
Deferred revenues and other liabilities4 1 1 
Other(12)(2)(1)
EBITDA1,066 183 283 
Plus:
Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments172 54 45 
Expenses indemnified or prefunded by Phillips 662 1 1 
Transaction costs associated with acquisitions1 — — 
Impairments96 96 — 
Less:
Gain from equity interest transfer84 — — 
Adjusted EBITDA attributable to noncontrolling interest32 16 16 
Adjusted EBITDA1,221 318 313 
Plus:
Deferred revenue impacts*†
8 4 (3)
Less:
Equity affiliate distributions less than proportional adjusted EBITDA— 5 4 
Maintenance capital expenditures†
97 33 21 
Net interest expense120 32 31 
Preferred unit distributions41 12 10 
Income taxes paid1 — 1 
Distributable Cash Flow $970 240 243 
*Difference between cash receipts and revenue recognition.
†Excludes Merey Sweeny capital reimbursements and turnaround impacts.

Page 9

Exhibit 99.2
Phillips 66 Partners LP Earnings Release Supplemental Data
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STATEMENT OF INCOME
CONSOLIDATED
Millions of Dollars, Except as Indicated
20202019
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Revenues and Other Income
Operating revenues—related parties
258 236 256 258 1,008 296 256 262 283 1,097 
Operating revenues—third parties
9 5 9 7 30 6 7 8 8 29 
Equity in earnings of affiliates
136 104 129 124 493 119 137 139 140 535 
Gain from equity interest transfer— 84 — — 84 — — — — — 
Other income
1 1 — 1 3 2 1 2 1 6 
Total revenues and other income
404 430 394 390 1,618 423 401 411 432 1,667 
Costs and Expenses
Operating and maintenance expenses88 84 85 85 342 139 85 91 90 405 
Depreciation30 31 35 39 135 29 29 30 32 120 
Impairments— — — 96 96 — — — — — 
General and administrative expenses17 17 16 16 66 18 17 16 16 67 
Taxes other than income taxes11 10 9 10 40 11 9 10 9 39 
Interest and debt expense29 28 32 32 121 27 27 26 28 108 
Other expenses2 5 — — 7 — — — 2 2 
Total costs and expenses177 175 177 278 807 224 167 173 177 741 
Income before income taxes227 255 217 112 811 199 234 238 255 926 
Income tax expense1 — 1 1 3 1 1 1 — 3 
Net Income226 255 216 111 808 198 233 237 255 923 
Less: Net income attributable to noncontrolling interest— — 10 7 17 — — — — — 
Net Income Attributable to the Partnership
226 255 206 104 791 198 233 237 255 923 
Less: Preferred unitholders’ interest in net income attributable to the Partnership10 9 10 12 41 10 9 9 9 37 
Less: General partner’s interest in net income attributable to the Partnership— — — — — 69 71 — — 140 
Limited Partners’ Interest in Net Income Attributable to the Partnership216 246 196 92 750 119 153 228 246 746 
Adjusted EBITDA*
321 269 313 318 1,221 281 319 323 345 1,268 
Distributable Cash Flow*
269 218 243 240 970 226 254 255 254 989 
Net Income attributable to the Partnership Per Limited Partner Unit (dollars)
Common units—basic0.95 1.07 0.86 0.40 3.29 0.96 1.23 1.18 1.08 4.45 
Common units—diluted0.93 1.05 0.85 0.40 3.27 0.92 1.15 1.15 1.06 4.29 
Weighted-Average Limited Partner Units Outstanding (thousands)
Common units—basic228,312 228,340 228,340 228,340 228,333 124,258 124,824 192,274 227,857 167,655 
Common units—diluted242,132 242,160 242,160 242,160 242,153 138,078 138,644 206,093 241,676 181,475 
* 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
20202019
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Wholly Owned Operating Data
Pipelines
Pipeline revenues (millions of dollars)
111 97 117 111 436 109 117 121 126 473 
Pipeline volumes(1) (thousands of barrels daily)
Crude oil941 806 867 843 864 959 1,000 998 1,005 991 
Refined petroleum products and NGL866 825 907 877 869 768 995 990 1,033 947 
Total
1,807 1,631 1,774 1,720 1,733 1,727 1,995 1,988 2,038 1,938 
Average pipeline revenue per barrel (dollars)
0.67 0.65 0.71 0.70 0.68 0.70 0.64 0.66 0.67 0.67 
Terminals
Terminal revenues (millions of dollars)
43 33 36 41 153 40 39 41 47 167 
Terminal throughput (thousands of barrels daily)
Crude oil(2)
460 380 296 283 354 471 456 493 459 470 
Refined petroleum products748 690 700 711 713 736 809 819 852 804 
Total
1,208 1,070 996 994 1,067 1,207 1,265 1,312 1,311 1,274 
Average terminaling revenue per barrel (dollars)
0.39 0.33 0.39 0.44 0.39 0.36 0.33 0.33 0.38 0.35 
Storage, processing and other revenues (millions of dollars)
113 111 112 113 449 153 107 108 118 486 
Total Operating Revenues (millions of dollars)
267 241 265 265 1,038 302 263 270 291 1,126 
Joint Venture Operating Data(3)
Crude oil, refined petroleum products and NGL (thousands of barrels daily)
838 942 1,142 1,102 1,007 687 772 786 793 760 
(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
20202019
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Capital Expenditures and Investments
Expansion196 311160 90 757 195 102 136 146 579 
Maintenance15 2821 33 97 15 12 25 28 80 
Adjusted Capital Spending*211 339181 123 854 210 114 161 174 659 
Capital expenditures and investments funded by certain joint venture partners**23 383 (3)61 422 — — 1 423 
Capital Expenditures and Investments234 377184 120 915 632 114 161 175 1,082 
 * 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
20202019
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Cash Distribution Per Common Unit (Dollars)
0.875 0.875 0.875 0.875 3.500 0.845 0.855 0.865 0.875 3.440 
Cash Distributions* ($ Millions)
Common units—public51 51 52 51 205 47 49 50 51 197 
Common units—Phillips 66148 149 148 149 594 58 58 147 149 412 
General partner—Phillips 66— — — — — 69 70 — — 139 
Total199 200 200 200 799 174 177 197 200 748 
Coverage Ratio†**
1.35 1.09 1.22 1.20 1.21 1.30 1.44 1.29 1.27 1.32 
 * 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
20202019
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Reconciliation to Net Income Attributable to the Partnership
Net Income Attributable to the Partnership226 255 206 104 791 198 233 237 255 923 
Plus:
Net Income attributable to noncontrolling interest— — 10 7 17 — — — — — 
Net Income226 255 216 111 808 198 233 237 255 923 
Plus:
Depreciation30 31 35 39 135 29 29 30 32 120 
Net interest expense28 29 31 32 120 27 26 25 27 105 
Income tax expense1 — 1 1 3 1 1 1 — 3 
EBITDA**285 315 283 183 1,066 255 289 293 314 1,151 
Plus:
Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments35 38 45 54 172 26 29 30 31 116 
Expenses indemnified or prefunded by Phillips 66— — 1 1 2 — 1 — — 1 
Transaction costs associated with acquisitions1 — — — 1 — — — — — 
Impairments— — — 96 96 — — — — — 
Less:
Gain from equity interest transfer— 84 — — 84 — — — — — 
Adjusted EBITDA attributable to noncontrolling interest— — 16 16 32 — — — — — 
Adjusted EBITDA**321 269 313 318 1,221 281 319 323 345 1,268 
Plus:
Deferred revenue impacts*†
2 5 (3)4 8 — (4)— (2)(6)
Less:
Equity affiliate distributions less than (more than) proportional adjusted EBITDA1 (10)4 5 — 9 13 9 25 56 
Maintenance capital expenditures†
15 28 21 33 97 9 12 25 28 74 
Net interest expense28 29 31 32 120 27 26 25 27 105 
Preferred unit distributions10 9 10 12 41 10 9 9 9 37 
Income taxes paid— — 1 — 1 — 1 — — 1 
Distributable Cash Flow **269 218 243 240 970 226 254 255 254 989 
 * 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
20202019
1st Qtr2nd Qtr3rd Qtr4th QtrYTD1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Reconciliation to Net Cash Provided by Operating Activities
Net Cash Provided by Operating Activities274 215 296 170 955 205 276 276 259 1,016 
Plus:
Net interest expense28 29 31 32 120 27 26 25 27 105 
Income tax expense1 — 1 1 3 1 1 1 — 3 
Changes in working capital(12)(3)(45)75 15 34 (11)(9)20 34 
Undistributed equity earnings(4)(5)— 2 (7)(2)(1)(4)10 3 
Impairments— — — (96)(96)— — — — — 
Gain from equity interest transfer— 84 — — 84 — — — — — 
Deferred revenues and other liabilities— 2 1 1 4 (9)1 2 1 (5)
Other(2)(7)(1)(2)(12)(1)(3)2 (3)(5)
EBITDA**285 315 283 183 1,066 255 289 293 314 1,151 
Plus:
Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments35 38 45 54 172 26 29 30 31 116 
Expenses indemnified or prefunded by Phillips 66— — 1 1 2 — 1 — — 1 
Transaction costs associated with acquisitions1 — — — 1 — — — — — 
Impairments— — — 96 96 — — — — — 
Less:
Gain from equity interest transfer— 84 — — 84 — — — — — 
Adjusted EBITDA attributable to noncontrolling interest— — 16 16 32 — — — — — 
Adjusted EBITDA**321 269 313 318 1,221 281 319 323 345 1,268 
Plus:
Deferred revenue impacts*†
2 5 (3)4 8 — (4)— (2)(6)
Less:
Equity affiliate distributions less than (more than) proportional adjusted EBITDA1 (10)4 5 — 9 13 9 25 56 
Maintenance capital expenditures†
15 28 21 33 97 9 12 25 28 74 
Net interest expense28 29 31 32 120 27 26 25 27 105 
Preferred unit distributions10 9 10 12 41 10 9 9 9 37 
Income taxes paid— — 1 — 1 — 1 — — 1 
Distributable Cash Flow**269 218 243 240 970 226 254 255 254 989 
 * 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. 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.
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