Highlights
- Delivered earnings of $103 million;
adjusted EBITDA of $170 million
- Increased quarterly distribution by 5
percent to $0.615 per common unit
- Additional Sand Hills joint venture
pipeline expansion project announced
Phillips 66 Partners LP (NYSE: PSXP) announces second-quarter
2017 earnings of $103 million, or $0.61 per common unit. Cash from
operations was $131 million, and distributable cash flow was $140
million. Adjusted EBITDA was $170 million in the second quarter,
compared with $155 million in the prior quarter.
“This quarter we operated well, delivered record earnings, and
increased our distribution per unit by 5 percent,” said Greg
Garland, Phillips 66 Partners’ chairman and CEO. “We continue to
advance several organic growth projects to support our goal of
achieving $1.1 billion of run-rate EBITDA and a 30 percent
five-year distribution CAGR by the end of 2018.”
On July 19, 2017, the General Partner’s board of directors
declared a second-quarter 2017 cash distribution of $0.615 per
common unit, a 5 percent increase over the first quarter of 2017.
The Partnership has increased its distribution every quarter since
its initial public offering in July 2013.
Financial Results
Phillips 66 Partners’ earnings were $103 million in the second
quarter of 2017, compared with earnings of $97 million in the prior
quarter. The increase was primarily attributable to lower operating
expenses as well as higher equity earnings due to increased volumes
on the Sand Hills and Explorer pipelines. First-quarter results
included the benefit of a make-whole payment from a joint
venture.
Liquidity, Capital Expenditures and Investments
As of June 30, 2017, total debt outstanding was $2.3
billion. The Partnership had $1 million in cash and cash
equivalents and $700 million available under its revolving credit
facility.
During the second quarter, the Partnership issued 2.6 million
common units under its at-the-market program, generating net
proceeds of $131 million.
The Partnership’s total capital spending for the quarter was $75
million. Expansion capital spending totaled $65 million, reflecting
investments in the STACK, Bayou Bridge, and Sand Hills joint
venture projects.
Strategic Update
The Sand Hills Pipeline expansion continues to progress. The
project will expand capacity from 280,000 barrels per day (BPD) to
365,000 BPD, with an expected in-service date by the end of 2017.
In addition, DCP Midstream, the operator of the pipeline, has
announced plans to further expand the line to approximately 450,000
BPD. Phillips 66 Partners owns a one-third interest in this joint
venture.
The STACK joint venture continued expansion activities that
include a loop of the existing pipeline and an extension further
into the STACK play. The project will increase capacity by 150,000
BPD, with completion anticipated by the end of 2017. The
Partnership owns a 50 percent interest in the joint venture.
The Bayou Bridge Pipeline, in which the Partnership holds a 40
percent interest, currently operates from the Phillips 66 Beaumont
Terminal to Lake Charles, Louisiana. Progress continues on the
segment from Lake Charles to St. James, Louisiana, with commercial
operations expected to begin in the first quarter of 2018.
Phillips 66 Partners is developing a new 25,000 BPD
isomerization unit to increase production of higher octane gasoline
blend components at the Phillips 66 Lake Charles Refinery. The
project is expected to cost approximately $200 million and include
a long-term agreement with Phillips 66 for processing services, and
a minimum volume commitment. Final project approval is expected in
the first half of 2018.
Investor Webcast
Members of Phillips 66 Partners’ executive management will host
a webcast today at 2 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
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.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This news release includes forward-looking statements. 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
Partners (including our joint venture operations) are based on
management’s expectations, estimates and projections about the
Partnership, 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,” and “run-rate EBITDA.” 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. 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. 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 EBITDA is a forecast of future EBITDA, and is based on
the Partnership’s projections of annual EBITDA inclusive of current
assets and future potential acquisitions by the Partnership.
Run-rate EBITDA is included to demonstrate management’s intention
of future growth through acquisitions and organic projects. We are
unable to present a reconciliation of run-rate 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
EBITDA being significantly higher than net income. 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 refer to net income
attributable to the Partnership. References to EBITDA refer to
earnings before interest, income taxes, depreciation and
amortization. References to CAGR refer to compound annual growth
rate.
Results of Operations (Unaudited)
Summarized Financial Statement Information
Millions of Dollars
Except as Indicated
Q2 2017 Q1 2017 Selected Income Statement Data
Total revenues and other income $ 234 234 Net income 103 97 Net
income attributable to the Partnership 103 97 Adjusted
EBITDA 170 155 Distributable cash flow 140
124
Net Income
Attributable to the Partnership Per Limited Partner
Unit—Basic and Diluted (Dollars) Common units $
0.61 0.60
Selected
Balance Sheet Data Cash and cash equivalents $ 1 1 Equity
investments 1,212 1,176 Total assets 4,168 4,125 Total debt 2,252
2,359 Equity held by public Common units 1,970 1,837 Equity held by
Phillips 66 Common units 480 479 General partner
(678 ) (687 )
Statement of Income Millions of Dollars Q2
2017 Q1 2017 Revenues and Other Income Operating
revenues—related parties $ 186 184 Operating revenues—third parties
11 10 Equity in earnings of affiliates 37 33 Other income
-
7
Total revenues and other income
234 234 Costs and
Expenses Operating and maintenance expenses 57 62 Depreciation
26 26 General and administrative expenses 16 16 Taxes other than
income taxes 7 9 Interest and debt expense 24
24
Total costs and expenses 130
137 Income before income taxes 104 97 Provision for income
taxes 1
-
Net income 103 97 Less: Net income
attributable to Predecessors
-
-
Net income attributable to the Partnership 103
97 Less: General partner's interest in net income
attributable to the Partnership 37 32
Limited partners' interest in net income attributable to the
Partnership $ 66 65
Selected Operating Data Thousands of Barrels
Daily Q2 2017 Q1 2017 Pipeline, Terminal and
Storage Volumes Pipelines(1) Pipeline throughput
volumes
Wholly Owned Pipelines Crude oil 938 940 Refined
products and natural gas liquids 977 935
Total
1,915 1,875 Select Joint
Venture Pipelines(2) Natural gas liquids 372
354
Terminals Terminal throughput and storage
volumes(3) Crude oil(4) 494 485
Refined products and natural gas
liquids
840 898
Total 1,334
1,383
(1) Represents the sum of volumes
transported through each separately tariffed pipeline segment.
(2) Total pipeline system throughput
volumes for the Sand Hills and Southern Hills pipelines (100
percent basis) per day for each period presented.
(3) Terminal throughput and storage
volumes include leased capacity converted to a MBD-equivalent based
on capacity divided by days in the period.
(4) Crude oil terminals include Bayway and
Ferndale rail rack volumes.
Dollars per Barrel Q2 2017 Q1 2017
Revenue Average pipeline revenue* $ 0.61 0.63 Average
terminal and storage revenue 0.42 0.41 * Excludes
average pipeline revenue per barrel from equity affiliates.
Capital Expenditures and Investments Millions of
Dollars Q2 2017 Q1 2017 Capital Expenditures
and Investments Expansion $ 65 42 Maintenance 10
11
Total Partnership 75 53 Predecessors
— —
Total Consolidated $ 75
53 Cash Distributions
Millions of Dollars Q2 2017 Q1 2017 Cash
Distributions* Common units—public $ 28 26 Common
units—Phillips 66 40 37 General partner—Phillips 66
36 32
Total
$ 104 95 Cash
Distribution Per Unit (Dollars) $
0.615 0.586 Coverage
Ratio†
1.35
1.31 * 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.
Reconciliation of Adjusted EBITDA and
Distributable Cash Flow to Net Income Millions of
Dollars Q2 2017 Q1 2017 Reconciliation to Net
Income Net Income $ 103 97 Plus:
Depreciation 26 26 Net interest expense 24 24 Provision for income
taxes 1 —
EBITDA
154 147 Distributions in excess of equity earnings 16
4 Expenses indemnified by Phillips 66 — 3 Transaction costs
associated with acquisitions —
1
Adjusted EBITDA 170 155 Plus:
Deferred revenue impacts
* 4 4 Less: Net interest expense 24
24 Maintenance capital expenditures 10
11
Distributable cash flow
$ 140 124 *
Difference between cash receipts and revenue recognition.
Reconciliation of
Distributable Cash Flow to Net Cash Provided by Operating
Activities Millions of Dollars Q2 2017
Q1 2017 Reconciliation to Net Cash Provided by Operating
Activities Net Cash Provided by Operating Activities
$ 131 139 Plus: Net interest expense 24 24
Provision for income taxes 1 — Changes in working capital 6 (17 )
Adjustment to equity earnings for cash distributions received (6 )
4 Other (2 ) (3 )
EBITDA 154 147 Distributions in excess of
equity earnings 16 4 Expenses indemnified by Phillips 66 — 3
Transaction costs associated with acquisitions
— 1
Adjusted EBITDA
170 155 Plus: Deferred revenue impacts* 4 4 Less: Net
interest expense 24 24 Maintenance capital expenditures
10 11
Distributable cash flow $
140 124 *
Difference between cash receipts and revenue recognition.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170801005459/en/
Phillips 66 Partners LPJeff Dietert, 832-765-2297
(investors)jeff.dietert@p66.comorRosy Zuklic,
832-765-2297 (investors)rosy.zuklic@p66.comorC.W.
Mallon, 832-765-2297
(investors)c.w.mallon@p66.comorDennis Nuss,
832-765-1850 (media)dennis.h.nuss@p66.com
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