Form 8-K PHILLIPS 66 PARTNERS LP For: Apr 27
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 27, 2018
Phillips 66 Partners LP
(Exact name of registrant as specified in its charter)
Delaware | 001-36011 | 38-3899432 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
2331 CityWest Blvd., Houston, Texas 77042
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (855) 283-9237
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On April 27, 2018, Phillips 66 Partners LP issued a press release announcing the partnership’s financial and operating results for the quarter ended March 31, 2018. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference. Additional financial and operating information about the quarter is attached as Exhibit 99.2 hereto and incorporated herein by reference.
The information in this report and the exhibits hereto shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 — Press release issued by Phillips 66 Partners LP on April 27, 2018.
99.2 — Supplemental financial and operating information.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PHILLIPS 66 PARTNERS LP | ||
By: Phillips 66 Partners GP LLC, its general partner | ||
By: | /s/ Chukwuemeka A. Oyolu | |
Chukwuemeka A. Oyolu Vice President and Controller | ||
Date: April 27, 2018
2
EXHIBIT INDEX
3
Phillips 66 Partners Reports First-Quarter Earnings
Exhibit 99.1 | ||||
Phillips 66 Partners Reports
First-Quarter 2018 Earnings
Highlights
• | Reported earnings of $172 million; adjusted EBITDA of $247 million |
• | Increased quarterly distribution 5.3 percent to $0.714 per common unit |
• | Run-rate adjusted EBITDA of $1 billion |
• | Announced Gray Oak Pipeline project |
HOUSTON, April 27, 2018 – Phillips 66 Partners LP (NYSE: PSXP) announces first-quarter 2018 earnings of $172 million, or $0.87 per diluted common unit. Cash from operations was $171 million, and distributable cash flow was $194 million. Adjusted EBITDA was $247 million in the first quarter, compared with $254 million in the prior quarter.
“Our first-quarter operating results reflect a $1 billion run-rate adjusted EBITDA, nearing our $1.1 billion year-end target and 30 percent five-year distribution CAGR,” said Greg Garland, chairman and CEO of Phillips 66 Partners. “We recently announced the Gray Oak Pipeline project, our largest organic growth project to date, which expands our footprint in the high-growth Permian Basin. We will continue to fund our organic projects in 2018 with cash on hand, debt capacity and selective use of our ATM program.”
On April 18, 2018, the general partner’s board of directors declared a first-quarter 2018 cash distribution of $0.714 per common unit, a 5.3 percent increase over the previous quarter distribution of $0.678 per common unit. The Partnership has increased its distribution per common unit every quarter since its initial public offering in July 2013.
Page 1
Phillips 66 Partners Reports First-Quarter Earnings
Financial Results
Phillips 66 Partners’ earnings for the first quarter of 2018 were $172 million, compared with $162 million in the fourth quarter of 2017. The improvement reflects higher equity earnings, primarily driven by a one-time benefit from U.S. tax reform related to Explorer Pipeline, as well as improved joint venture volumes. These items were partially offset by lower volumes at certain wholly owned pipelines and terminals, reflecting the impact of turnarounds at refineries operated by Phillips 66.
Liquidity, Capital Expenditures and Investments
As of March 31, 2018, total debt outstanding was $2.9 billion. The Partnership had $167 million in cash and cash equivalents and $750 million available under its revolving credit facility.
The Partnership’s total capital spending for the quarter was $69 million, which included $12 million of maintenance capital. Expansion capital was $57 million, which included spending on construction of a new isomerization unit at the Phillips 66 Lake Charles Refinery, as well as investments in the Sand Hills and Bayou Bridge pipelines.
Strategic Update
Phillips 66 Partners recently announced it has received sufficient binding commitments to proceed with construction of the Gray Oak Pipeline system. The Gray Oak Pipeline will provide crude oil transportation from West Texas to destinations in the Corpus Christi and Sweeny/Freeport markets, including the Phillips 66 Sweeny Refinery. A second binding open season is underway to determine the final scope and capacity of the pipeline system, which could be up to 700,000 barrels per day (BPD). Assuming the pipeline is fully subscribed, its capacity could ultimately be expanded to approximately 1 million BPD of long-haul takeaway. Phillips 66 Partners will initially own a 75 percent interest in the pipeline system. Other third parties have an option to acquire up to 32.75 percent interest in the joint venture. If all options are exercised, Phillips 66 Partners would own 42.25 percent. The pipeline is expected to be placed in service by the end of 2019.
In Corpus Christi, the Gray Oak Pipeline will connect to the new South Texas Gateway Terminal under development by Buckeye Partners, L.P. The marine terminal will have an initial storage capacity of 3.4 million barrels and is expected to begin operations by the end of 2019. Phillips 66 Partners will have a 25 percent ownership interest in the joint venture that owns the terminal.
Phillips 66 Partners is developing a new pipeline that will connect clean product storage in Lake Charles, Louisiana, to its Clifton Ridge Marine Terminal, which will expand product export capability for the Phillips 66 Lake Charles Refinery. The approximately $25 million project will be backed by a long-term agreement with Phillips 66 that includes a minimum volume commitment. The pipeline is expected to be completed in mid-2019.
Construction continues on the Bayou Bridge Pipeline extension from Lake Charles, Louisiana, to St. James, Louisiana. The pipeline is currently operating from Nederland, Texas, to Lake Charles, and commercial operations on the extension are expected to begin in the fourth quarter of 2018. The Partnership owns a 40 percent interest in the joint venture.
The Partnership began construction of a new 25,000 BPD isomerization unit at the Phillips 66 Lake Charles Refinery to increase production of higher octane gasoline blend components. The $200 million project includes a long-term agreement with Phillips 66 for processing services with a minimum volume commitment. Completion is expected by the end of 2019.
Page 2
Phillips 66 Partners Reports First-Quarter Earnings
The Sand Hills Pipeline capacity was close to 400,000 BPD at the end of the first quarter. Further expansion of the line to over 450,000 BPD is expected to be completed in the second half of 2018. Sand Hills transports NGLs from the Permian Basin to the Texas Gulf Coast. Phillips 66 Partners owns a one-third interest in this joint venture.
The Sacagawea Pipeline joint venture is constructing a 24-mile raw natural gas pipeline system linking production in Mountrail County, North Dakota, to gathering and processing capacity in McKenzie County, North Dakota. The project is anticipated to be completed in the third quarter of 2018. Phillips 66 Partners owns a 49.5 percent interest in the joint venture.
Page 3
Phillips 66 Partners Reports First-Quarter Earnings
Investor Webcast
Members of Phillips 66 Partners executive management will host a webcast today at 2 p.m. EDT to discuss the Partnership’s first-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 product and natural gas liquids pipelines and terminals and other transportation and midstream assets. For more information, visit www.phillips66partners.com.
- # # # -
CONTACTS | ||
Rosy Zuklic (investors) 832-765-2297 | Dennis Nuss (media) 832-765-1850 | |
Page 4
Phillips 66 Partners Reports First-Quarter Earnings
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. 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 relating to Phillips 66’s operations (including joint venture operations) are based on management’s expectations, estimates and projections about the company, its interests and the energy industry in general on the date this news release was prepared. These statements are not guarantees of future performance and 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 joint ventures transport, fractionate, terminal and store; the tariff rates with respect to volumes that we transport through our regulated assets, which rates are subject to review and possible adjustment by federal and state regulators; fluctuations in the prices for crude oil, refined petroleum products and NGL; liabilities associated with the risks and operational hazards inherent in transporting, fractionating, terminaling and storing crude oil, refined petroleum products and NGL; potential liability from litigation or for remedial actions, including removal and reclamation obligations under environmental 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,” “run-rate EBITDA,” 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 GAAP net income or net cash provided by operating activities. They have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. They should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because EBITDA, adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definition of EBITDA, adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Run-rate adjusted EBITDA is a forecast of future EBITDA, and is based on the Partnership’s projections of annual adjusted EBITDA inclusive of both currently owned assets ($1 billion) and future potential acquisitions and organic growth by the Partnership ($1.1 billion). Run-rate adjusted EBITDA is included to demonstrate the historical growth of the Partnership through the first quarter of 2018, as well as management’s intention of future growth through acquisitions and organic projects. We are unable to present a reconciliation of targeted run-rate adjusted EBITDA to net income, which is the nearest GAAP financial measure, because certain elements of net income, including interest, depreciation and taxes, were not used in the forecasts and are therefore not available. Together, these items generally result in run-rate adjusted EBITDA being significantly greater than net income. Current run-rate adjusted EBITDA is the current quarter’s adjusted EBITDA annualized, and a reconciliation of current quarter adjusted EBITDA to net income accompanies this release. The disaggregation of capital spending between expansion/growth and maintenance is not a distinction recognized under GAAP. We provide such disaggregation because the Partnership will generally fund maintenance capital spending with cash from operating activities and fund expansion/growth capital spending with financing activities. We believe this is an important distinction in our liquidity profile.
References in the release to earnings and capital spending refer to net income and capital spending attributable to the Partnership, respectively. References to EBITDA refer to earnings before interest, income taxes, depreciation and amortization.
Page 5
Phillips 66 Partners Reports First-Quarter Earnings
Results of Operations (Unaudited)
Summarized Financial Statement Information | ||||||||
Millions of Dollars Except as Indicated | ||||||||
Q1 2018 | Q4 2017 | |||||||
Selected Income Statement Data | ||||||||
Total revenues and other income | $ | 355 | 331 | |||||
Net income | 172 | 164 | ||||||
Net income attributable to the Partnership | 172 | 162 | ||||||
Adjusted EBITDA | 247 | 254 | ||||||
Distributable cash flow | 194 | 172 | ||||||
Net Income Attributable to the Partnership Per Limited Partner Unit—Diluted (Dollars) | ||||||||
Common units | $ | 0.87 | 0.83 | |||||
Selected Balance Sheet Data | ||||||||
Cash and cash equivalents | $ | 167 | 185 | |||||
Equity investments | 1,986 | 1,932 | ||||||
Total assets | 5,386 | 5,334 | ||||||
Total debt | 2,946 | 2,945 | ||||||
Equity held by public | ||||||||
Preferred units | 746 | 746 | ||||||
Common units | 2,308 | 2,274 | ||||||
Equity held by Phillips 66 | ||||||||
Common units | 519 | 487 | ||||||
General partner | (1,338 | ) | (1,345 | ) | ||||
Page 6
Phillips 66 Partners Reports First-Quarter Earnings
Statement of Income | ||||||||
Millions of Dollars | ||||||||
Q1 2018 | Q4 2017 | |||||||
Revenues and Other Income | ||||||||
Operating revenues—related parties | $ | 249 | 246 | |||||
Operating revenues—third parties | 7 | 8 | ||||||
Equity in earnings of affiliates | 98 | 76 | ||||||
Other income | 1 | 1 | ||||||
Total revenues and other income | 355 | 331 | ||||||
Costs and Expenses | ||||||||
Operating and maintenance expenses | 97 | 82 | ||||||
Depreciation | 28 | 28 | ||||||
General and administrative expenses | 16 | 17 | ||||||
Taxes other than income taxes | 10 | 9 | ||||||
Interest and debt expense | 30 | 29 | ||||||
Total costs and expenses | 181 | 165 | ||||||
Income before income taxes | 174 | 166 | ||||||
Income tax expense | 2 | 2 | ||||||
Net income | 172 | 164 | ||||||
Less: Net income attributable to Predecessors | — | 2 | ||||||
Net income attributable to the Partnership | 172 | 162 | ||||||
Less: Preferred unitholders’ interest in net income attributable to the Partnership | 9 | 9 | ||||||
Less: General partner’s interest in net income attributable to the Partnership | 53 | 48 | ||||||
Limited partners' interest in net income attributable to the Partnership | $ | 110 | 105 | |||||
Page 7
Phillips 66 Partners Reports First-Quarter Earnings
Selected Operating Data | ||||||||
Q1 2018 | Q4 2017 | |||||||
Wholly Owned Operating Data | ||||||||
Pipelines | ||||||||
Pipeline revenues (millions of dollars) | $ | 102 | 110 | |||||
Pipeline volumes(1) (thousands of barrels daily) | ||||||||
Crude oil | 947 | 968 | ||||||
Refined products and natural gas liquids | 798 | 978 | ||||||
Total | 1,745 | 1,946 | ||||||
Average pipeline revenue per barrel (dollars) | $ | 0.65 | 0.62 | |||||
Terminals | ||||||||
Terminal revenues (millions of dollars) | $ | 39 | 40 | |||||
Terminal throughput (thousands of barrels daily) | ||||||||
Crude oil(2) | 447 | 478 | ||||||
Refined products | 719 | 798 | ||||||
Total | 1,166 | 1,276 | ||||||
Average terminaling revenue per barrel (dollars) | $ | 0.37 | 0.34 | |||||
Storage, processing and other revenues (millions of dollars) | $ | 115 | 104 | |||||
Total operating revenues (millions of dollars) | $ | 256 | 254 | |||||
Joint Venture Operating Data(3) | ||||||||
Crude oil, refined products and natural gas liquids (thousands of barrels daily) | 603 | 559 | ||||||
(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 volumes of joint ventures consistent with recognized equity in earnings of affiliates. | ||||||||
Capital Expenditures and Investments | ||||||
Millions of Dollars | ||||||
Q1 2018 | Q4 2017 | |||||
Capital Expenditures and Investments | ||||||
Expansion | $ | 57 | 106 | |||
Maintenance | 12 | 21 | ||||
Total Partnership | 69 | 127 | ||||
Predecessors | — | 1 | ||||
Total Consolidated | $ | 69 | 128 | |||
Page 8
Phillips 66 Partners Reports First-Quarter Earnings
Cash Distributions | ||||||||
Millions of Dollars | ||||||||
Q1 2018 | Q4 2017 | |||||||
Cash Distributions† | ||||||||
Common units—public | $ | 38 | 36 | |||||
Common units—Phillips 66 | 50 | 46 | ||||||
General partner—Phillips 66 | 51 | 47 | ||||||
Total | $ | 139 | 129 | |||||
Cash Distribution Per Common Unit (Dollars) | $ | 0.714 | 0.678 | |||||
Coverage Ratio* | 1.40 | 1.33 | ||||||
†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 distribution was 1.23x and 1.84x at Q1 2018 and Q4 2017, respectively. | ||||||||
Page 9
Phillips 66 Partners Reports First-Quarter Earnings
Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Income | ||||||||
Millions of Dollars | ||||||||
Q1 2018 | Q4 2017 | |||||||
Reconciliation to Net Income Attributable to the Partnership | ||||||||
Net income attributable to the Partnership | $ | 172 | 162 | |||||
Plus: | ||||||||
Net income attributable to Predecessors | — | 2 | ||||||
Net Income | 172 | 164 | ||||||
Plus: | ||||||||
Depreciation | 28 | 28 | ||||||
Net interest expense | 29 | 29 | ||||||
Income tax expense | 2 | 2 | ||||||
EBITDA | 231 | 223 | ||||||
Proportional share of equity affiliates’ net interest, taxes and depreciation | 15 | 29 | ||||||
Expenses indemnified or prefunded by Phillips 66 | — | 1 | ||||||
Transaction costs associated with acquisitions | 1 | 1 | ||||||
EBITDA attributable to Predecessors | — | — | ||||||
Adjusted EBITDA | 247 | 254 | ||||||
Plus: | ||||||||
Deferred revenue impacts*† | 5 | (3 | ) | |||||
Less: | ||||||||
Equity affiliate distributions less than proportional EBITDA | 10 | 22 | ||||||
Maintenance capital expenditures† | 10 | 19 | ||||||
Net interest expense | 29 | 29 | ||||||
Preferred unit distributions | 9 | 9 | ||||||
Distributable cash flow | $ | 194 | 172 | |||||
*Difference between cash receipts and revenue recognition. | ||||||||
†Excludes MSLP capital reimbursements and turnaround impacts. | ||||||||
Page 10
Phillips 66 Partners Reports First-Quarter Earnings
Reconciliation of Distributable Cash Flow to Net Cash Provided by Operating Activities | ||||||||
Millions of Dollars | ||||||||
Q1 2018 | Q4 2017 | |||||||
Reconciliation to Net Cash Provided by Operating Activities | ||||||||
Net Cash Provided by Operating Activities | $ | 171 | 238 | |||||
Plus: | ||||||||
Net interest expense | 29 | 29 | ||||||
Income tax expense | 2 | 2 | ||||||
Changes in working capital | (17 | ) | — | |||||
Undistributed equity earnings | 8 | 1 | ||||||
Deferred revenues and other liabilities | 38 | (45 | ) | |||||
Other | — | (2 | ) | |||||
EBITDA | 231 | 223 | ||||||
Proportional share of equity affiliates’ net interest, taxes and depreciation | 15 | 29 | ||||||
Expenses indemnified or prefunded by Phillips 66 | — | 1 | ||||||
Transaction costs associated with acquisitions | 1 | 1 | ||||||
EBITDA attributable to Predecessors | — | — | ||||||
Adjusted EBITDA | 247 | 254 | ||||||
Plus: | ||||||||
Deferred revenue impacts*† | 5 | (3 | ) | |||||
Less: | ||||||||
Equity affiliate distributions less than proportional EBITDA | 10 | 22 | ||||||
Maintenance capital expenditures† | 10 | 19 | ||||||
Net interest expense | 29 | 29 | ||||||
Preferred unit distributions | 9 | 9 | ||||||
Distributable cash flow | $ | 194 | 172 | |||||
*Difference between cash receipts and revenue recognition. | ||||||||
†Excludes MSLP capital reimbursements and turnaround impacts. | ||||||||
Page 11
Exhibit 99.2
Phillips 66 Partners LP Earnings Release Supplemental Data | ||||
Factors Affecting Comparability
The following tables present our financial results and operating data for each quarterly period of the current and prior fiscal years. During the periods covered by this report, we acquired businesses from Phillips 66 that were considered transfers of businesses between entities under common control, which requires them to be accounted for as if the transfers had occurred at the beginning of the period of transfer, with financial statements for prior periods retrospectively adjusted to furnish comparative information. Accordingly, the consolidated financial and operating information included in the following tables has been retrospectively adjusted to include the historical financial and operating results of these acquired businesses prior to the effective date of acquisition. We refer to the results of these pre-acquisition periods as those of our “Predecessors” in the tables below. Tables labeled “Phillips 66 Partners LP” exclude Predecessors, while tables labeled “Consolidated” include Predecessors. The statements of income provided on pages 1 through 3 are designed to enable users to evaluate the financial effect of these business combinations in accordance with Accounting Standard Codification 805-10-50-1.
STATEMENT OF INCOME | ||||||||||||||||||
PHILLIPS 66 PARTNERS LP | ||||||||||||||||||
Millions of Dollars | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | |||||||||
Revenues and Other Income | ||||||||||||||||||
Operating revenues—related parties | 249 | 249 | 184 | 186 | 193 | 244 | 807 | |||||||||||
Operating revenues—third parties | 7 | 7 | 10 | 11 | 11 | 8 | 40 | |||||||||||
Equity in earnings of affiliates | 98 | 98 | 33 | 37 | 41 | 74 | 185 | |||||||||||
Other income | 1 | 1 | 7 | — | — | 1 | 8 | |||||||||||
Total revenues and other income | 355 | 355 | 234 | 234 | 245 | 327 | 1,040 | |||||||||||
Costs and Expenses | ||||||||||||||||||
Operating and maintenance expenses | 97 | 97 | 62 | 57 | 69 | 81 | 269 | |||||||||||
Depreciation | 28 | 28 | 26 | 26 | 30 | 28 | 110 | |||||||||||
General and administrative expenses | 16 | 16 | 16 | 16 | 16 | 17 | 65 | |||||||||||
Taxes other than income taxes | 10 | 10 | 9 | 7 | 7 | 8 | 31 | |||||||||||
Interest and debt expense | 30 | 30 | 24 | 24 | 23 | 29 | 100 | |||||||||||
Other expenses | — | — | — | — | 1 | — | 1 | |||||||||||
Total costs and expenses | 181 | 181 | 137 | 130 | 146 | 163 | 576 | |||||||||||
Income before income taxes | 174 | 174 | 97 | 104 | 99 | 164 | 464 | |||||||||||
Income tax expense | 2 | 2 | — | 1 | — | 2 | 3 | |||||||||||
Net income | 172 | 172 | 97 | 103 | 99 | 162 | 461 | |||||||||||
Less: Preferred unitholders’ interest in net income attributable to the Partnership | 9 | 9 | — | — | — | 9 | 9 | |||||||||||
Less: General partner’s interest in net income attributable to the Partnership | 53 | 53 | 32 | 37 | 43 | 48 | 160 | |||||||||||
Limited partners’ interest in net income attributable to the Partnership | 110 | 110 | 65 | 66 | 56 | 105 | 292 | |||||||||||
Adjusted EBITDA | 247 | 247 | 163 | 166 | 171 | 254 | 754 | |||||||||||
Distributable Cash Flow | 194 | 194 | 124 | 140 | 136 | 172 | 572 | |||||||||||
Page 1
Exhibit 99.2
STATEMENT OF INCOME (continued) | ||||||||||||||||||
PREDECESSORS | ||||||||||||||||||
Millions of Dollars | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr† | YTD | |||||||||
Revenues and Other Income | ||||||||||||||||||
Operating revenues—related parties | — | — | 26 | 30 | 29 | 2 | 87 | |||||||||||
Equity in earnings of affiliates | — | — | — | 11 | 25 | 2 | 38 | |||||||||||
Other income | — | — | 2 | 2 | — | — | 4 | |||||||||||
Total revenues and other income | — | — | 28 | 43 | 54 | 4 | 129 | |||||||||||
Costs and Expenses | ||||||||||||||||||
Operating and maintenance expenses | — | — | 12 | 22 | 17 | 1 | 52 | |||||||||||
Depreciation | — | — | 2 | 2 | 2 | — | 6 | |||||||||||
General and administrative expenses | — | — | 1 | 2 | 1 | — | 4 | |||||||||||
Taxes other than income taxes | — | — | — | 1 | — | 1 | 2 | |||||||||||
Interest and debt expense | — | — | — | — | 1 | — | 1 | |||||||||||
Total costs and expenses | — | — | 15 | 27 | 21 | 2 | 65 | |||||||||||
Income before income taxes | — | — | 13 | 16 | 33 | 2 | 64 | |||||||||||
Income tax expense | — | — | — | — | 1 | — | 1 | |||||||||||
Net income attributable to Predecessors | — | — | 13 | 16 | 32 | 2 | 63 | |||||||||||
EBITDA attributable to Predecessors* | — | — | 14 | 17 | 36 | 2 | 69 | |||||||||||
* Includes rounding impacts. | ||||||||||||||||||
† In accordance with contractual terms of the Bakken Pipeline/MSLP acquisition, Q4 2017 EBITDA attributable to Predecessors did not affect Q4 2017 Distributable Cash Flow as the effective closing date of the transaction was October 1, 2017. | ||||||||||||||||||
Page 2
Exhibit 99.2
STATEMENT OF INCOME (continued) | ||||||||||||||||||
CONSOLIDATED | ||||||||||||||||||
Millions of Dollars, Except as Indicated | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | |||||||||
Revenues and Other Income | ||||||||||||||||||
Operating revenues—related parties | 249 | 249 | 210 | 216 | 222 | 246 | 894 | |||||||||||
Operating revenues—third parties | 7 | 7 | 10 | 11 | 11 | 8 | 40 | |||||||||||
Equity in earnings of affiliates | 98 | 98 | 33 | 48 | 66 | 76 | 223 | |||||||||||
Other income | 1 | 1 | 9 | 2 | — | 1 | 12 | |||||||||||
Total revenues and other income | 355 | 355 | 262 | 277 | 299 | 331 | 1,169 | |||||||||||
Costs and Expenses | ||||||||||||||||||
Operating and maintenance expenses | 97 | 97 | 74 | 79 | 86 | 82 | 321 | |||||||||||
Depreciation | 28 | 28 | 28 | 28 | 32 | 28 | 116 | |||||||||||
General and administrative expenses | 16 | 16 | 17 | 18 | 17 | 17 | 69 | |||||||||||
Taxes other than income taxes | 10 | 10 | 9 | 8 | 7 | 9 | 33 | |||||||||||
Interest and debt expense | 30 | 30 | 24 | 24 | 24 | 29 | 101 | |||||||||||
Other expenses | — | — | — | — | 1 | — | 1 | |||||||||||
Total costs and expenses | 181 | 181 | 152 | 157 | 167 | 165 | 641 | |||||||||||
Income before income taxes | 174 | 174 | 110 | 120 | 132 | 166 | 528 | |||||||||||
Income tax expense | 2 | 2 | — | 1 | 1 | 2 | 4 | |||||||||||
Net income | 172 | 172 | 110 | 119 | 131 | 164 | 524 | |||||||||||
Less: Net income attributable to Predecessors | — | — | 13 | 16 | 32 | 2 | 63 | |||||||||||
Net income attributable to the Partnership | 172 | 172 | 97 | 103 | 99 | 162 | 461 | |||||||||||
Less: Preferred unitholders’ interest in net income attributable to the Partnership | 9 | 9 | — | — | — | 9 | 9 | |||||||||||
Less: General partner’s interest in net income attributable to the Partnership | 53 | 53 | 32 | 37 | 43 | 48 | 160 | |||||||||||
Limited partners’ interest in net income attributable to the Partnership | 110 | 110 | 65 | 66 | 56 | 105 | 292 | |||||||||||
Net Income Attributable to the Partnership Per Limited Partner Unit (dollars) | ||||||||||||||||||
Common units—basic | 0.91 | 0.91 | 0.60 | 0.61 | 0.51 | 0.86 | 2.60 | |||||||||||
Common units—diluted | 0.87 | 0.87 | 0.60 | 0.61 | 0.51 | 0.83 | 2.59 | |||||||||||
Weighted-Average Limited Partner Units Outstanding (thousands) | ||||||||||||||||||
Common units—basic | 121,610 | 121,610 | 107,400 | 109,189 | 110,506 | 120,953 | 112,045 | |||||||||||
Common units—diluted | 135,429 | 135,429 | 107,400 | 109,189 | 110,506 | 134,021 | 115,339 | |||||||||||
Page 3
Exhibit 99.2
SELECTED OPERATING DATA | ||||||||||||||||||
PHILLIPS 66 PARTNERS LP | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | |||||||||
Wholly Owned Operating Data | ||||||||||||||||||
Pipelines | ||||||||||||||||||
Pipeline revenues (millions of dollars) | 102 | 102 | 102 | 103 | 109 | 110 | 424 | |||||||||||
Pipeline volumes(1) (thousands of barrels daily) | ||||||||||||||||||
Crude oil | 947 | 947 | 874 | 871 | 952 | 968 | 916 | |||||||||||
Refined products and NGL | 798 | 798 | 932 | 973 | 917 | 978 | 950 | |||||||||||
Total | 1,745 | 1,745 | 1,806 | 1,844 | 1,869 | 1,946 | 1,866 | |||||||||||
Average pipeline revenue per barrel (dollars) | 0.65 | 0.65 | 0.63 | 0.61 | 0.63 | 0.62 | 0.62 | |||||||||||
Terminals | ||||||||||||||||||
Terminal revenues (millions of dollars) | 39 | 39 | 37 | 37 | 38 | 40 | 152 | |||||||||||
Terminal throughput (thousands of barrels daily) | ||||||||||||||||||
Crude oil(2) | 447 | 447 | 363 | 374 | 467 | 478 | 421 | |||||||||||
Refined products | 719 | 719 | 801 | 742 | 726 | 798 | 767 | |||||||||||
Total | 1,166 | 1,166 | 1,164 | 1,116 | 1,193 | 1,276 | 1,188 | |||||||||||
Average terminaling revenue per barrel (dollars) | 0.37 | 0.37 | 0.35 | 0.36 | 0.35 | 0.34 | 0.35 | |||||||||||
Storage, processing and other revenues (millions of dollars) | 115 | 115 | 55 | 57 | 57 | 102 | 271 | |||||||||||
Total operating revenues (millions of dollars) | 256 | 256 | 194 | 197 | 204 | 252 | 847 | |||||||||||
Joint-Venture Operating Data(3) | ||||||||||||||||||
Crude oil, refined products and NGL (thousands of barrels daily) | 603 | 603 | 350 | 443 | 533 | 559 | 472 | |||||||||||
(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 4
Exhibit 99.2
SELECTED OPERATING DATA (continued) | ||||||||||||||||||
CONSOLIDATED | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | |||||||||
Wholly Owned Operating Data | ||||||||||||||||||
Pipelines | ||||||||||||||||||
Pipeline revenues (millions of dollars) | 102 | 102 | 102 | 103 | 109 | 110 | 424 | |||||||||||
Pipeline volumes(1) (thousands of barrels daily) | ||||||||||||||||||
Crude oil | 947 | 947 | 874 | 871 | 952 | 968 | 916 | |||||||||||
Refined products and NGL | 798 | 798 | 932 | 973 | 917 | 978 | 950 | |||||||||||
Total | 1,745 | 1,745 | 1,806 | 1,844 | 1,869 | 1,946 | 1,866 | |||||||||||
Average pipeline revenue per barrel (dollars) | 0.65 | 0.65 | 0.63 | 0.61 | 0.63 | 0.62 | 0.62 | |||||||||||
Terminals | ||||||||||||||||||
Terminal revenues (millions of dollars) | 39 | 39 | 37 | 37 | 38 | 40 | 152 | |||||||||||
Terminal throughput (thousands of barrels daily) | ||||||||||||||||||
Crude oil(2) | 447 | 447 | 363 | 374 | 467 | 478 | 421 | |||||||||||
Refined products | 719 | 719 | 801 | 742 | 726 | 798 | 767 | |||||||||||
Total | 1,166 | 1,166 | 1,164 | 1,116 | 1,193 | 1,276 | 1,188 | |||||||||||
Average terminaling revenue per barrel (dollars) | 0.37 | 0.37 | 0.35 | 0.36 | 0.35 | 0.34 | 0.35 | |||||||||||
Storage, processing and other revenues (millions of dollars) | 115 | 115 | 81 | 87 | 86 | 104 | 358 | |||||||||||
Total operating revenues (millions of dollars) | 256 | 256 | 220 | 227 | 233 | 254 | 934 | |||||||||||
Joint-Venture Operating Data(3) | ||||||||||||||||||
Crude oil, refined products and NGL (thousands of barrels daily) | 603 | 603 | 350 | 443 | 533 | 559 | 472 | |||||||||||
(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 5
Exhibit 99.2
CAPITAL EXPENDITURES AND INVESTMENTS | ||||||||||||||||||
Millions of Dollars | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | |||||||||
Capital Expenditures and Investments | ||||||||||||||||||
Expansion | 57 | 57 | 42 | 65 | 87 | 106 | 300 | |||||||||||
Maintenance | 12 | 12 | 11 | 10 | 10 | 21 | 52 | |||||||||||
Total Partnership | 69 | 69 | 53 | 75 | 97 | 127 | 352 | |||||||||||
Predecessors | — | — | 5 | 55 | 21 | 1 | 82 | |||||||||||
Total Consolidated | 69 | 69 | 58 | 130 | 118 | 128 | 434 | |||||||||||
CASH DISTRIBUTIONS | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | |||||||||
Cash Distribution Per Common Unit (Dollars) | 0.714 | 0.714 | 0.586 | 0.615 | 0.646 | 0.678 | 2.525 | |||||||||||
Cash Distributions† ($ Millions) | ||||||||||||||||||
Common units—public | 38 | 38 | 26 | 28 | 34 | 36 | 124 | |||||||||||
Common units—Phillips 66 | 50 | 50 | 37 | 40 | 44 | 46 | 167 | |||||||||||
General partner—Phillips 66 | 51 | 51 | 32 | 36 | 43 | 47 | 158 | |||||||||||
Total | 139 | 139 | 95 | 104 | 121 | 129 | 449 | |||||||||||
Coverage Ratio* | 1.40 | 1.40 | 1.31 | 1.35 | 1.12 | 1.33 | 1.27 | |||||||||||
† 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. | ||||||||||||||||||
Page 6
Exhibit 99.2
NON-GAAP FINANCIAL MEASURES RECONCILIATION | ||||||||||||||||||
CONSOLIDATED | ||||||||||||||||||
Millions of Dollars | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | |||||||||
Reconciliation to Net Income Attributable to the Partnership | ||||||||||||||||||
Net income attributable to the Partnership | 172 | 172 | 97 | 103 | 99 | 162 | 461 | |||||||||||
Plus: | ||||||||||||||||||
Net income attributable to the Predecessors | — | — | 13 | 16 | 32 | 2 | 63 | |||||||||||
Net income | 172 | 172 | 110 | 119 | 131 | 164 | 524 | |||||||||||
Plus: | ||||||||||||||||||
Depreciation | 28 | 28 | 28 | 28 | 32 | 28 | 116 | |||||||||||
Net interest expense | 29 | 29 | 23 | 23 | 24 | 29 | 99 | |||||||||||
Income tax expense | 2 | 2 | — | 1 | 1 | 2 | 4 | |||||||||||
EBITDA | 231 | 231 | 161 | 171 | 188 | 223 | 743 | |||||||||||
Proportional share of equity affiliates’ net interest, taxes and depreciation | 15 | 15 | 12 | 12 | 13 | 29 | 66 | |||||||||||
Expenses indemnified or prefunded by Phillips 66 | — | — | 3 | — | 4 | 1 | 8 | |||||||||||
Transaction costs associated with acquisitions | 1 | 1 | 1 | — | 2 | 1 | 4 | |||||||||||
EBITDA attributable to Predecessors | — | — | (14 | ) | (17 | ) | (36 | ) | — | (67 | ) | |||||||
Adjusted EBITDA | 247 | 247 | 163 | 166 | 171 | 254 | 754 | |||||||||||
Plus: | ||||||||||||||||||
Deferred revenue impacts*† | 5 | 5 | 4 | 4 | 1 | (3 | ) | 6 | ||||||||||
Less: | ||||||||||||||||||
Equity affiliate distributions less than proportional EBITDA | 10 | 10 | 8 | (4 | ) | 3 | 22 | 29 | ||||||||||
Maintenance capital expenditures† | 10 | 10 | 11 | 10 | 10 | 19 | 50 | |||||||||||
Net interest expense | 29 | 29 | 24 | 24 | 23 | 29 | 100 | |||||||||||
Preferred unit distributions | 9 | 9 | — | — | — | 9 | 9 | |||||||||||
Distributable cash flow | 194 | 194 | 124 | 140 | 136 | 172 | 572 | |||||||||||
* Difference between cash receipts and revenue recognition. | ||||||||||||||||||
† Excludes MSLP capital reimbursements and turnaround impacts. | ||||||||||||||||||
Page 7
Exhibit 99.2
NON-GAAP FINANCIAL MEASURES RECONCILIATION (continued) | ||||||||||||||||||
CONSOLIDATED | ||||||||||||||||||
Millions of Dollars | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | YTD | |||||||||
Reconciliation to Net Cash Provided by Operating Activities | ||||||||||||||||||
Net cash provided by operating activities | 171 | 171 | 155 | 136 | 195 | 238 | 724 | |||||||||||
Plus: | ||||||||||||||||||
Net interest expense | 29 | 29 | 23 | 23 | 24 | 29 | 99 | |||||||||||
Income tax expense | 2 | 2 | — | 1 | 1 | 2 | 4 | |||||||||||
Changes in working capital | (17 | ) | (17 | ) | (19 | ) | 8 | (19 | ) | — | (30 | ) | ||||||
Undistributed equity earnings | 8 | 8 | 4 | 5 | (9 | ) | 1 | 1 | ||||||||||
Deferred revenues and other liabilities | 38 | 38 | — | — | 2 | (45 | ) | (43 | ) | |||||||||
Other | — | — | (2 | ) | (2 | ) | (6 | ) | (2 | ) | (12 | ) | ||||||
EBITDA | 231 | 231 | 161 | 171 | 188 | 223 | 743 | |||||||||||
Proportional share of equity affiliates’ net interest, taxes and depreciation | 15 | 15 | 12 | 12 | 13 | 29 | 66 | |||||||||||
Expenses indemnified or prefunded by Phillips 66 | — | — | 3 | — | 4 | 1 | 8 | |||||||||||
Transaction costs associated with acquisitions | 1 | 1 | 1 | — | 2 | 1 | 4 | |||||||||||
EBITDA attributable to Predecessors | — | — | (14 | ) | (17 | ) | (36 | ) | — | (67 | ) | |||||||
Adjusted EBITDA | 247 | 247 | 163 | 166 | 171 | 254 | 754 | |||||||||||
Plus: | ||||||||||||||||||
Deferred revenue impacts*† | 5 | 5 | 4 | 4 | 1 | (3 | ) | 6 | ||||||||||
Less: | ||||||||||||||||||
Equity affiliate distributions less than proportional EBITDA | 10 | 10 | 8 | (4 | ) | 3 | 22 | 29 | ||||||||||
Maintenance capital expenditures† | 10 | 10 | 11 | 10 | 10 | 19 | 50 | |||||||||||
Net interest expense | 29 | 29 | 24 | 24 | 23 | 29 | 100 | |||||||||||
Preferred unit distributions | 9 | 9 | — | — | — | 9 | 9 | |||||||||||
Distributable cash flow | 194 | 194 | 124 | 140 | 136 | 172 | 572 | |||||||||||
* Difference between cash receipts and revenue recognition. | ||||||||||||||||||
† Excludes MSLP capital reimbursements and turnaround impacts. | ||||||||||||||||||
Page 8