Highlights
-
Adjusted EBITDA of $87 million
-
Distributable cash flow (DCF) of $74 million
-
Increased quarterly distribution by 7 percent to $0.458 per common unit
-
Acquired Phillips 66’s interest in the Bayou Bridge Pipeline joint
venture
-
Net income of $65 million
Phillips 66 Partners LP (NYSE: PSXP) announces fourth-quarter 2015
earnings of $65 million, or $0.61 per common unit. Adjusted earnings
before interest, income taxes, depreciation and amortization (adjusted
EBITDA) were $87 million and distributable cash flow was $74 million.
The coverage ratio for the fourth quarter was 1.44x.
“We had a strong fourth quarter, which supports our recently announced 7
percent quarterly distribution increase,” said Greg Garland, Phillips 66
Partners’ Chairman and CEO. “Our fee-based asset portfolio continues to
produce higher earnings. We delivered our planned growth in 2015 by
completing $1.1 billion in acquisitions and continuing the execution of
our organic growth program. These actions led to year-over-year
increases of 89 percent in adjusted EBITDA and 78 percent in DCF. We
remain on track to deliver our five-year annual distribution growth-rate
objective of 30 percent through 2018.”
On Jan. 21, 2016, the general partner’s board of directors declared a
fourth-quarter 2015 cash distribution of $0.458 per common unit. This
distribution represents a 7 percent increase compared with the
third-quarter 2015 distribution and a 35 percent increase from the
fourth quarter of 2014.
Financial Results
Total revenues and other income for the fourth quarter were $103
million, an increase of $11 million from the third quarter of 2015. The
increase in the fourth quarter was primarily due to higher volumes on
the partnership’s Gold Line Products System and a $5 million
nonrecurring make-whole payment from a joint venture. Volumes were also
higher on the Eagle Ford Gathering System, due to the September
completion of the project’s second phase, and on the Cross-Channel
Connector Products System.
Total costs were $38 million in the fourth quarter of 2015, in line with
the third quarter.
Liquidity, Capital Expenditures and Investments
As of Dec. 31, 2015, total debt outstanding was $1.1 billion. The
partnership had $48 million in cash and cash equivalents and an undrawn
$500 million revolving credit facility, which may be increased up to
$750 million.
During the fourth quarter of 2015, capital expenditures and investments
totaled $67 million, of which $65 million was for growth projects and
investments.
Strategic Update
On Dec. 1, 2015, Phillips 66 Partners closed on the acquisition of
Phillips 66’s 40 percent interest in Bayou Bridge Pipeline, LLC. Total
consideration for the transaction was $70 million, equally funded
through the issuance of units and cash to Phillips 66.
The Bayou Bridge joint venture is developing a pipeline that will
deliver crude oil from the Phillips 66 and Sunoco Logistics Partners
terminals in Nederland, Texas, to Lake Charles, Louisiana, and on to St.
James, Louisiana. Construction is underway on the 30-inch Nederland to
Lake Charles segment of the pipeline, which is expected to begin
commercial operation by the end of first-quarter 2016. The pipeline
segment to St. James is scheduled to commence service in the second half
of 2017.
Phillips 66 Partners continues to make progress on its organic growth
projects. The Palermo Rail Terminal began railcar-loading from truck
deliveries in December 2015. The Sacagawea Pipeline is expected to start
up in third-quarter 2016. The terminal and pipeline are projects in the
Bakken region being developed through a 70 percent-owned terminal joint
venture and a 50 percent-owned pipeline joint venture, each with
Paradigm Energy Partners. The Sacagawea Pipeline is 88 percent-owned by
the pipeline joint venture, with the remaining 12 percent owned by Grey
Wolf Midstream, LLC, an affiliate of Missouri River Resources.
The Cross-Channel Connector Products System is now providing shippers
with a connection from the partnership’s Pasadena Terminal to
third-party systems with water access on the Houston Ship Channel.
Investor Webcast
Members of Phillips 66 Partners executive management will host a webcast
today at 2 p.m. EST to discuss PSXP’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
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,” “intends,”
“objectives,” “projects,” “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; 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, 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 “growth capital.” These are non-GAAP financial measures.
Distributable cash flow is generally defined as adjusted EBITDA less net
interest, maintenance capital expenditures and income taxes paid, plus
adjustments for deferred revenue from minimum volume commitments and
prefunded maintenance capital expenditures. EBITDA, adjusted EBITDA and
distributable cash flow 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 assets’ 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, adjusted EBITDA and distributable cash flow 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. Our
capital requirements consist of maintenance capital expenditures and
expansion capital expenditures, including contributions to our joint
ventures. Examples of maintenance capital expenditures are those made to
replace partially or fully depreciated assets, to maintain the existing
operating capacity of our assets and to extend their useful lives, or
other capital expenditures that are incurred in maintaining existing
system volumes and related cash flows. In contrast, expansion capital
expenditures are those made to expand and upgrade our systems and
facilities and to construct or acquire new systems or facilities to grow
our business, including contributions to joint ventures that are using
the contributed funds for such purposes. Although GAAP does not
recognize this distinction, our partnership agreement requires that we
make it, due to the difference in how maintenance and growth capital
expenditures are treated for purposes of calculating operating surplus.
References in the release to earnings refer to net income. 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
|
|
|
Q4 2015
|
|
Q3 2015
|
Selected Income Statement Data
|
|
|
|
|
Total revenues and other income
|
|
$
|
102.8
|
|
|
91.4
|
|
Net income
|
|
|
64.5
|
|
|
52.3
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
87.1
|
|
|
73.4
|
|
Distributable cash flow
|
|
|
74.0
|
|
|
64.5
|
|
|
|
|
|
|
Net Income Attributable to the Partnership
|
|
|
|
|
Per Limited Partner Unit—Basic and Diluted (Dollars)
|
|
|
|
|
Common units
|
|
$
|
0.61
|
|
|
0.50
|
|
|
|
|
|
|
Selected Balance Sheet Data
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
48.0
|
|
|
72.9
|
|
Equity investments
|
|
|
944.9
|
|
|
858.4
|
|
Total assets*
|
|
|
1,523.5
|
|
|
1,461.7
|
|
Total debt*
|
|
|
1,090.7
|
|
|
1,090.4
|
|
|
|
|
|
|
Total Equity
|
|
|
|
|
Equity held by public
|
|
|
|
|
Common units
|
|
$
|
808.9
|
|
|
804.5
|
|
Equity held by Phillips 66
|
|
|
|
|
Common units
|
|
|
233.0
|
|
|
182.9
|
|
General partner
|
|
|
(650.3
|
)
|
|
(649.8
|
)
|
Accumulated other comprehensive loss
|
|
|
(1.5
|
)
|
|
(1.5
|
)
|
Total Equity
|
|
$
|
390.1
|
|
|
336.1
|
|
*Q3 2015 amounts retrospectively adjusted for adoption of
Accounting Standards Update No. 2015-03.
|
|
|
|
|
|
|
Statement of Income
|
|
|
|
|
|
Millions of Dollars
|
|
|
Q4 2015
|
|
Q3 2015
|
Revenues
|
|
|
|
|
Transportation and terminaling services—related parties
|
|
$
|
70.1
|
|
65.4
|
Transportation and terminaling services—third parties
|
|
|
2.3
|
|
0.7
|
Equity in earnings of affiliates
|
|
|
25.2
|
|
25.2
|
Other income
|
|
|
5.2
|
|
0.1
|
Total revenues and other income
|
|
|
102.8
|
|
91.4
|
|
|
|
|
|
Costs and Expenses
|
|
|
|
|
Operating and maintenance expenses
|
|
|
14.4
|
|
15.5
|
Depreciation
|
|
|
5.7
|
|
5.7
|
General and administrative expenses
|
|
|
6.6
|
|
6.2
|
Taxes other than income taxes
|
|
|
2.2
|
|
2.4
|
Interest and debt expense
|
|
|
9.3
|
|
9.2
|
Other expenses
|
|
|
—
|
|
—
|
Total costs and expenses
|
|
|
38.2
|
|
39.0
|
Income before income taxes
|
|
|
64.6
|
|
52.4
|
Provision for income taxes
|
|
|
0.1
|
|
0.1
|
Net Income
|
|
$
|
64.5
|
|
52.3
|
|
|
|
|
|
|
|
Selected Operating Data
|
|
|
Thousands of Barrels Daily
|
|
|
Q4 2015
|
|
Q3 2015
|
Pipeline, Terminal and Storage Volumes
|
|
|
|
|
Pipelines(1)
|
|
|
|
|
Pipeline throughput volumes
|
|
|
|
|
Wholly-Owned Pipelines
|
|
|
|
|
Crude oil
|
|
|
283
|
|
306
|
Refined products
|
|
|
522
|
|
438
|
Total
|
|
|
805
|
|
744
|
|
|
|
|
|
Select Joint Venture Pipelines(2)
|
|
|
|
|
Natural gas liquids
|
|
|
280
|
|
280
|
|
|
|
|
|
Terminals
|
|
|
|
|
Terminaling throughput and storage volumes
|
|
|
|
|
Crude oil(3)
|
|
|
464
|
|
536
|
Refined products
|
|
|
443
|
|
441
|
Total
|
|
|
907
|
|
977
|
(1) Represents the sum of volumes transported
through each separately tariffed pipeline segment.
|
(2) Total post-acquisition pipeline system
throughput volumes for the Sand Hills and Southern Hills pipelines
(100 percent basis) per day for each period presented.
|
(3) Crude oil terminals include Bayway and
Ferndale rail rack volumes.
|
|
|
|
Dollars per Barrel
|
|
|
Q4 2015
|
|
Q3 2015
|
Revenue
|
|
|
|
|
Average pipeline revenue*
|
|
$
|
0.51
|
|
0.45
|
Average terminaling and storage revenue
|
|
|
0.42
|
|
0.39
|
* Excludes average pipeline revenue per barrel from equity
affiliates.
|
|
|
Capital Expenditures and Investments
|
|
|
Millions of Dollars
|
|
|
Q4 2015
|
|
Q3 2015
|
Capital Expenditures and Investments
|
|
|
|
|
Expansion
|
|
$
|
65.0
|
|
38.1
|
Maintenance
|
|
|
2.3
|
|
2.2
|
Total
|
|
$
|
67.3
|
|
40.3
|
|
|
|
|
|
|
Cash Distributions
|
|
|
Millions of Dollars
|
|
|
Q4 2015
|
|
Q3 2015
|
Cash Distributions*
|
|
|
|
|
Common units—public
|
|
$
|
11.1
|
|
10.3
|
Common units—Phillips 66
|
|
|
26.7
|
|
24.8
|
General partner—Phillips 66
|
|
|
13.6
|
|
11.1
|
Total
|
|
$
|
51.4
|
|
46.2
|
* Cash distributions declared attributable to the indicated
periods.
|
|
|
|
|
|
Cash Distribution Per Unit (Dollars)
|
|
$
|
0.4580
|
|
0.4280
|
|
|
|
|
|
Coverage Ratio
|
|
|
1.44
|
|
1.40
|
|
|
Reconciliation of Adjusted EBITDA and Distributable Cash Flow to
Net Income
|
|
|
|
Millions of Dollars
|
|
|
Q4 2015
|
|
Q3 2015
|
|
YTD 2015
|
|
YTD 2014
|
Reconciliation to Net Income
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
64.5
|
|
|
52.3
|
|
194.2
|
|
124.4
|
|
Plus:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
5.7
|
|
|
5.7
|
|
21.8
|
|
16.2
|
|
Net interest expense
|
|
|
9.2
|
|
|
9.1
|
|
33.6
|
|
5.2
|
|
Amortization of deferred rentals
|
|
|
0.1
|
|
|
0.1
|
|
0.4
|
|
0.4
|
|
Provision for income taxes
|
|
|
0.1
|
|
|
0.1
|
|
0.3
|
|
0.8
|
|
EBITDA
|
|
|
79.6
|
|
|
67.3
|
|
250.3
|
|
147.0
|
|
Distributions in excess of equity earnings
|
|
|
6.6
|
|
|
4.6
|
|
12.1
|
|
—
|
|
Expenses indemnified or prefunded by Phillips 66
|
|
|
0.5
|
|
|
1.1
|
|
1.9
|
|
1.6
|
|
Transaction costs associated with acquisitions
|
|
|
0.4
|
|
|
0.4
|
|
2.2
|
|
2.7
|
|
EBITDA attributable to Predecessors
|
|
|
—
|
|
|
—
|
|
—
|
|
(10.3
|
)
|
Adjusted EBITDA
|
|
|
87.1
|
|
|
73.4
|
|
266.5
|
|
141.0
|
|
Plus:
|
|
|
|
|
|
|
|
|
Adjustments related to minimum volume commitments
|
|
|
(1.7
|
)
|
|
2.4
|
|
4.0
|
|
0.6
|
|
Phillips 66 prefunded maintenance capital expenditures
|
|
|
—
|
|
|
—
|
|
—
|
|
1.9
|
|
Less:
|
|
|
|
|
|
|
|
|
Net interest
|
|
|
9.2
|
|
|
9.1
|
|
34.3
|
|
3.2
|
|
Income taxes paid (refunded)
|
|
|
(0.1
|
)
|
|
—
|
|
0.3
|
|
0.2
|
|
Maintenance capital expenditures
|
|
|
2.3
|
|
|
2.2
|
|
7.7
|
|
11.9
|
|
Distributable Cash Flow
|
|
$
|
74.0
|
|
|
64.5
|
|
228.2
|
|
128.2
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Distributable Cash Flow to Net Cash Provided by
Operating Activities
|
|
|
|
Millions of Dollars
|
|
|
Q4 2015
|
|
Q3 2015
|
|
YTD 2015
|
|
YTD 2014
|
Reconciliation to Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
$
|
86.9
|
|
|
46.1
|
|
|
229.8
|
|
|
142.4
|
|
Plus:
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
9.2
|
|
|
9.1
|
|
|
33.6
|
|
|
5.2
|
|
Provision for income taxes
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.8
|
|
Changes in working capital
|
|
|
(13.1
|
)
|
|
14.6
|
|
|
(10.3
|
)
|
|
(0.3
|
)
|
Undistributed equity earnings
|
|
|
(2.6
|
)
|
|
(0.9
|
)
|
|
0.1
|
|
|
—
|
|
Accrued environmental costs
|
|
|
(0.2
|
)
|
|
(0.5
|
)
|
|
(0.8
|
)
|
|
—
|
|
Other
|
|
|
(0.7
|
)
|
|
(1.2
|
)
|
|
(2.4
|
)
|
|
(1.1
|
)
|
EBITDA
|
|
|
79.6
|
|
|
67.3
|
|
|
250.3
|
|
|
147.0
|
|
Distributions in excess of equity earnings
|
|
|
6.6
|
|
|
4.6
|
|
|
12.1
|
|
|
—
|
|
Expenses indemnified or prefunded by Phillips 66
|
|
|
0.5
|
|
|
1.1
|
|
|
1.9
|
|
|
1.6
|
|
Transaction costs associated with acquisitions
|
|
|
0.4
|
|
|
0.4
|
|
|
2.2
|
|
|
2.7
|
|
EBITDA attributable to Predecessors
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.3
|
)
|
Adjusted EBITDA
|
|
|
87.1
|
|
|
73.4
|
|
|
266.5
|
|
|
141.0
|
|
Plus:
|
|
|
|
|
|
|
|
|
Adjustments related to minimum volume commitments
|
|
|
(1.7
|
)
|
|
2.4
|
|
|
4.0
|
|
|
0.6
|
|
Phillips 66 prefunded maintenance capital expenditures
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
Less:
|
|
|
|
|
|
|
|
|
Net interest
|
|
|
9.2
|
|
|
9.1
|
|
|
34.3
|
|
|
3.2
|
|
Income taxes paid (refunded)
|
|
|
(0.1
|
)
|
|
—
|
|
|
0.3
|
|
|
0.2
|
|
Maintenance capital expenditures
|
|
|
2.3
|
|
|
2.2
|
|
|
7.7
|
|
|
11.9
|
|
Distributable Cash Flow
|
|
$
|
74.0
|
|
|
64.5
|
|
|
228.2
|
|
|
128.2
|
|
|
|
|
|
|
|
|
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