Highlights
- Reported record earnings of $186
million; adjusted EBITDA of $276 million
- Achieved annualized run-rate adjusted
EBITDA of $1.1 billion
- Increased quarterly distribution 5.3
percent to $0.752 per common unit
- Recently completed Gray Oak Pipeline
expansion open season
- Started construction of Clemens Caverns
expansion project
Phillips 66 Partners LP (NYSE: PSXP) announces second-quarter
2018 earnings of $186 million, or $0.94 per diluted common unit.
Cash from operations was $226 million, and distributable cash flow
was $204 million. Adjusted EBITDA was $276 million in the second
quarter, compared with $247 million in the prior quarter.
“This quarter we achieved our goal of a $1.1 billion annualized
run-rate adjusted EBITDA ahead of schedule,” said Greg Garland,
chairman and CEO of Phillips 66 Partners. “The strong operating
performance and rapid growth of PSXP allows us to undertake larger
organic projects, including the Gray Oak Pipeline, South Texas
Gateway Terminal and the expansion of our Clemens Caverns. Our
strong financial position allows us to fund our 2018 capital
program with cash on hand, debt capacity and selective use of our
ATM program.”
On July 18, 2018, the general partner’s board of directors
declared a second-quarter 2018 cash distribution of $0.752 per
common unit, a 5.3 percent increase over the previous quarter
distribution of $0.714 per common unit. The Partnership
has significantly increased its distribution per common unit every
quarter since its initial public offering in July 2013 and is
on pace to achieve a 30 percent five-year distribution compound
annual growth rate at year-end 2018.
Financial Results
Phillips 66 Partners’ second-quarter earnings were $186 million,
compared with $172 million in the prior quarter. The improvement
was driven by higher volumes at wholly owned pipelines and
terminals, reflecting completion of turnarounds at refineries
operated by Phillips 66. Equity earnings improved slightly during
the quarter, as record volumes on the Sand Hills and Bakken
pipelines were partially offset by the absence of a one-time
benefit from U.S. tax reform recorded by Explorer Pipeline in the
first quarter.
Liquidity, Capital Expenditures and Investments
As of June 30, 2018, total debt outstanding was $2.9
billion. The Partnership had $151 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
$179 million, which included $10 million of maintenance capital.
Expansion capital was $169 million, which included spending on
construction of a new isomerization unit at the Phillips 66 Lake
Charles Refinery, as well as investments in the Bayou Bridge, Sand
Hills and Gray Oak pipelines.
Strategic Update
Phillips 66 Partners recently completed the expansion open
season to determine the scope and capacity of the Gray Oak Pipeline
system. The pipeline will have initial capacity of 800,000
barrels per day (BPD) based on shipper commitments of 700,000 BPD
and the reservation of capacity for walk-up shippers. The
pipeline is expandable to approximately 1 million BPD subject to
additional shipper commitments. Gray Oak will provide crude
oil transportation from the Permian and Eagle Ford to destinations
in Corpus Christi and Sweeny/Freeport, including the Phillips 66
Sweeny Refinery. Phillips 66 Partners will be the largest equity
owner in this pipeline project with 75 percent interest. Third
parties have options to acquire up to 32.75 percent, which could
result in the Partnership owning a 42.25 percent share. The
pipeline is expected to be in service by the end of 2019, with
total cost of approximately $2 billion.
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 owns a 25 percent interest in the
joint venture that owns the terminal.
In connection with Phillips 66’s recently announced plan to
expand natural gas liquids (NGL) fractionation capacity at the
Sweeny Hub by 300,000 BPD, the Partnership is increasing NGL
storage capacity at Clemens Caverns from 9 million barrels to 15
million barrels. The expansion is expected to be completed in late
2020.
The Partnership is also constructing a 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. Expected
completion has been accelerated to the third quarter of 2019.
The Partnership expects both the extension of the Bayou Bridge
Pipeline from Lake Charles, Louisiana, to St. James, Louisiana, and
the expansion of the Sand Hills NGL Pipeline to be completed in the
fourth quarter of 2018. The Sacagawea raw natural gas pipeline
project and the Lake Charles pipeline project are also progressing
well and remain on schedule.
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 products and natural gas liquids pipelines and
terminals and other transportation and midstream assets. For more
information, visit www.phillips66partners.com.
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 Partners’ 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 the current quarter’s adjusted
EBITDA annualized. Run-rate adjusted EBITDA is included to
demonstrate the historical growth of the Partnership through the
second quarter of 2018. 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.
Results of Operations
(Unaudited)
Summarized Financial Statement Information
Millions of Dollars
Except as Indicated
Q2 2018 Q1 2018 Selected Income
Statement Data Total revenues and other income $ 354 355
Net income 186 172 Net income attributable to the Partnership 186
172 Adjusted EBITDA 276 247 Distributable cash flow
204 194
Net Income Attributable to the
Partnership
Per Limited Partner
Unit—Diluted (Dollars)
Common units $ 0.94
0.87
Selected Balance Sheet Data
Cash and cash equivalents $ 151 167 Equity investments 2,104 1,986
Total assets 5,506 5,386 Total debt 2,946 2,946 Equity held by
public Preferred units 747 746 Common units 2,381 2,308 Equity held
by Phillips 66 Common units 538 519 General partner
(1,332 ) (1,338 )
Statement of Income Millions
of Dollars Q2 2018 Q1 2018
Revenues and Other Income Operating revenues—related
parties $ 244 249 Operating revenues—third parties 10 7 Equity in
earnings of affiliates 100 98 Other income
— 1
Total revenues and other
income 354
355 Costs and Expenses Operating and
maintenance expenses 85 97 Depreciation 29 28 General and
administrative expenses 16 16 Taxes other than income taxes 9 10
Interest and debt expense 29 30 Other expenses
— —
Total costs and expenses
168
181 Income before income taxes 186 174 Income tax expense
— 2
Net
income 186 172 Less: Net income attributable to
Predecessors — —
Net income attributable to the Partnership 186
172 Less: Preferred unitholders’ interest in net income
attributable to the Partnership 10 9 Less: General partner’s
interest in net income attributable to the Partnership
55 53
Limited
partners' interest in net income attributable to the
Partnership $
121 110 Selected Operating
Data Q2 2018
Q1 2018 Wholly Owned Operating Data
Pipelines Pipeline revenues (millions of dollars)
$ 111 102 Pipeline
volumes(1) (thousands of barrels daily) Crude oil 1,020 947 Refined
products and natural gas liquids
920 798
Total
1,940 1,745 Average
pipeline revenue per barrel (dollars)
$ 0.63 0.65
Terminals Terminal
revenues (millions of dollars) $
38 39 Terminal throughput (thousands of barrels
daily) Crude oil(2) 471 483 Refined products
806 719
Total
1,277 1,202
Average terminaling revenue per barrel (dollars)
$ 0.33 0.36 Storage,
processing and other revenues (millions of dollars)
$ 105 115
Total operating
revenues (millions of dollars)
$ 254 256 Joint
Venture Operating Data(3) Crude oil, refined products
and natural gas liquids (thousands of barrels daily)
638 603
(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.
Capital Expenditures and Investments
Millions of Dollars Q2 2018
Q1 2018 Capital Expenditures and
Investments Expansion $ 169 57 Maintenance
10 12
Total Partnership 179
69 Predecessors —
—
Total Consolidated $
179 69 Cash Distributions
Millions of Dollars
Except as Indicated
Q2 2018 Q1 2018 Cash
Distributions† Common units—public $ 40 38 Common
units—Phillips 66 51 50 General partner—Phillips 66
57 51
Total
$ 148 139
Cash Distribution Per Common Unit (Dollars)
$ 0.752
0.714 Coverage Ratio*
1.38 1.40
†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 1.53x and 1.23x at Q2 2018 and Q1 2018,
respectively.
Reconciliation of Adjusted EBITDA and Distributable Cash
Flow to Net Income
Millions of Dollars Q2 2018 Q1
2018 Net income attributable to the Partnership
$ 186 172 Plus: Net income attributable to
Predecessors —
—
Net Income 186 172 Plus: Depreciation
29 28 Net interest expense 29 29 Income tax expense
— 2
EBITDA
244 231 Proportional share of equity affiliates’ net
interest, taxes and depreciation 28 15 Expenses indemnified or
prefunded by Phillips 66 1 — Transaction costs associated with
acquisitions 3 1 EBITDA attributable to Predecessors
— —
Adjusted
EBITDA 276 247 Plus: Deferred revenue
impacts
*† (5 ) 5 Less: Equity affiliate distributions less
than proportional EBITDA 18 10 Maintenance capital expenditures† 10
10 Net interest expense 29 29 Preferred unit distributions
10 9
Distributable cash flow
$ 204 194
*Difference between cash receipts and
revenue recognition.
†Excludes MSLP capital reimbursements and
turnaround impacts.
Reconciliation of Adjusted EBITDA and Distributable Cash
Flow to Net Cash Provided by Operating Activities
Millions of Dollars Q2 2018
Q1 2018 Net Cash Provided by
Operating Activities $ 226 171 Plus: Net
interest expense 29 29 Income tax expense — 2 Changes in working
capital (10 ) (17 ) Undistributed equity earnings (1 ) 8 Deferred
revenues and other liabilities 5 38 Other
(5 ) —
EBITDA
244 231 Proportional share of equity affiliates’ net
interest, taxes and depreciation 28 15 Expenses indemnified or
prefunded by Phillips 66 1 — Transaction costs associated with
acquisitions 3 1 EBITDA attributable to Predecessors
— —
Adjusted EBITDA 276 247 Plus: Deferred revenue
impacts
*† (5 ) 5 Less: Equity affiliate distributions less
than proportional EBITDA 18 10 Maintenance capital expenditures† 10
10 Net interest expense 29 29 Preferred unit distributions
10 9
Distributable cash flow
$ 204 194
*Difference between cash receipts and
revenue recognition.
†Excludes MSLP capital reimbursements and
turnaround impacts.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180727005091/en/
Phillips 66 Partners LPJeff Dietert, 832-765-2297
(investors)jeff.dietert@p66.comorRosy
Zuklic, 832-765-2297 (investors)rosy.zuklic@p66.comorDennis Nuss, 832-765-1850
(media)dennis.h.nuss@p66.com
Phillips 66 Partners (NYSE:PSXP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Phillips 66 Partners (NYSE:PSXP)
Historical Stock Chart
From Apr 2023 to Apr 2024