Highlights
-
Adjusted EBITDA of $73.4 million
-
Distributable cash flow of $64.5 million
-
Increased quarterly distribution by 7 percent to $0.428 per common unit
-
Agreed to acquire Phillips 66’s interest in the Bayou Bridge pipeline
-
Approved $314 million 2016 capital budget
-
Net income of $52.3 million
Phillips 66 Partners LP (NYSE: PSXP) announces third-quarter 2015
earnings of $52.3 million, or $0.50 per common unit. Distributable cash
flow was $64.5 million and adjusted earnings before interest, income
taxes, depreciation and amortization (adjusted EBITDA) were $73.4
million.
“We had another strong quarter, which highlights the consistent
performance of our fee-based portfolio. Distributions increased by 7
percent, in line with our five-year annual growth-rate objective of 30
percent through 2018,” said Greg Garland, Phillips 66 Partners’ chairman
and CEO. “In addition, Phillips 66 Partners has agreed to acquire the
Phillips 66 interest in the Bayou Bridge crude pipeline project, which
enhances our organic growth plans and portfolio.”
On Oct. 21, 2015, the general partner’s board of directors declared the
third-quarter 2015 cash distribution of $0.428 per common unit. This
distribution represents a 7 percent increase compared with the
second-quarter 2015 distribution of $0.40 per common unit and a 35
percent increase from the third quarter of 2014.
Financial Results
Total revenues and other income for the third quarter of 2015 were $91.4
million, an increase of $7.6 million from the second quarter of 2015.
The increase was due to improved equity earnings from the Explorer and
Sand Hills pipelines, as well as higher volumes in the Sweeny to
Pasadena Products System and Clifton Ridge Crude System. The Eagle Ford
Gathering System also experienced an increase in volumes driven by the
commencement of its second phase in September.
Total costs were $39.0 million in the third quarter of 2015, a decrease
of $2.9 million from the second quarter of 2015. The decrease was
largely due to lower costs at the Hartford Terminal and overall lower
maintenance activity.
Liquidity, Capital Expenditures and Investments
As of Sept. 30, 2015, total debt outstanding was $1.1 billion. The
partnership had $72.9 million in cash and cash equivalents and an
undrawn $500 million revolving credit facility, which may be increased
up to $750 million.
During the third quarter of 2015, capital expenditures and investments
totaled approximately $40 million, of which $38 million was for growth
projects and investments.
Acquisition Details
Phillips 66 Partners has agreed to acquire Phillips 66’s 40 percent
interest in the Bayou Bridge Pipeline, LLC joint venture for Phillips
66’s cost in the pipeline project as of closing, estimated to be $70
million. Phillips 66 Partners will fund its portion of the remainder of
the pipeline project costs under its expansion capital program.
Subsidiaries of Energy Transfer Partners, L.P. and Sunoco Logistics
Partners L.P. each hold a 30 percent interest in the joint venture, and
Sunoco Pipeline L.P. will serve as operator. The transaction is targeted
to close in December 2015, and will be funded through the issuance of
common and general partner units to Phillips 66 and cash, a portion of
which may be provided through the partnership’s revolving credit
facility.
The Bayou Bridge pipeline 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 pipeline,
which is expected to begin commercial operation in first-quarter 2016.
The joint venture launched a binding supplemental expansion open season
on Oct. 1, 2015, to assess additional interest in transportation to
refining markets in, and around, the St. James area. The results of the
supplemental expansion open season will be used to determine the
diameter of the pipeline segment to St. James, which is scheduled to
commence service in the second half of 2017.
Strategic Update
The partnership continues to make progress on its organic growth
projects. In September, the second phase of the Eagle Ford Gathering
System commenced operations. The partnership also continued to develop
the Cross-Channel Connector Products System with the final third-party
connection expected in November 2015.
The Palermo Rail Terminal remains on schedule to begin railcar-loading
from truck deliveries by the end of 2015. The Sacagawea Pipeline is
expected to start up in 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.
2016 Capital Budget
On Oct. 21, 2015, the board of directors approved a $314 million capital
budget for 2016. Of the total budget, $300 million is allocated to
growth projects, with the remainder targeted for maintenance.
Investor Webcast
Members of Phillips 66 Partners executive management will host a webcast
today at 2 p.m. EDT to discuss the Partnership’s third-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.unitholder.phillips66partners.com/financial-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,” and “distributable cash
flow.” These are non-GAAP financial measures. 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.
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
|
|
|
|
|
Q3 2015
|
|
|
Q2 2015
|
Selected Income Statement Data
|
|
|
|
|
|
|
|
|
|
Total revenues and other income
|
|
|
|
|
$
|
91.4
|
|
|
|
|
83.8
|
|
Net income
|
|
|
|
|
52.3
|
|
|
|
|
42.0
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
73.4
|
|
|
|
|
57.0
|
|
Distributable cash flow
|
|
|
|
|
64.5
|
|
|
|
|
47.8
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to the Partnership
|
|
|
|
|
|
|
|
|
|
Per Limited Partner Unit—Basic and Diluted (Dollars)
|
|
|
|
|
|
|
|
|
|
Common units
|
|
|
|
|
$
|
0.50
|
|
|
|
|
0.50
|
|
Subordinated units—Phillips 66
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
72.9
|
|
|
|
|
104.3
|
|
Equity investments
|
|
|
|
|
858.4
|
|
|
|
|
835.9
|
|
Total assets
|
|
|
|
|
1,471.0
|
|
|
|
|
1,469.1
|
|
Total debt
|
|
|
|
|
1,099.7
|
|
|
|
|
1,099.7
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
|
|
|
|
|
|
|
|
Equity held by public
|
|
|
|
|
|
|
|
|
|
Common units
|
|
|
|
|
$
|
804.5
|
|
|
|
|
802.2
|
|
Equity held by Phillips 66
|
|
|
|
|
|
|
|
|
|
Common units
|
|
|
|
|
182.9
|
|
|
|
|
177.1
|
|
Subordinated units
|
|
|
|
|
—
|
|
|
|
|
—
|
|
General partner
|
|
|
|
|
(649.8
|
)
|
|
|
|
(653.4
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
(1.5
|
)
|
|
|
|
(1.5
|
)
|
Total Equity
|
|
|
|
|
$
|
336.1
|
|
|
|
|
324.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
|
Q3 2015
|
|
|
Q2 2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
Transportation and terminaling services—related parties
|
|
|
|
|
$
|
65.4
|
|
|
|
|
62.3
|
|
Transportation and terminaling services—third parties
|
|
|
|
|
0.7
|
|
|
|
|
0.9
|
|
Equity in earnings of affiliates
|
|
|
|
|
25.2
|
|
|
|
|
20.6
|
|
Other income
|
|
|
|
|
0.1
|
|
|
|
|
—
|
|
Total revenues and other income
|
|
|
|
|
91.4
|
|
|
|
|
83.8
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Operating and maintenance expenses
|
|
|
|
|
15.5
|
|
|
|
|
17.5
|
|
Depreciation
|
|
|
|
|
5.7
|
|
|
|
|
5.3
|
|
General and administrative expenses
|
|
|
|
|
6.2
|
|
|
|
|
6.4
|
|
Taxes other than income taxes
|
|
|
|
|
2.4
|
|
|
|
|
3.1
|
|
Interest and debt expense
|
|
|
|
|
9.2
|
|
|
|
|
9.5
|
|
Other expenses
|
|
|
|
|
—
|
|
|
|
|
0.1
|
|
Total costs and expenses
|
|
|
|
|
39.0
|
|
|
|
|
41.9
|
|
Income before income taxes
|
|
|
|
|
52.4
|
|
|
|
|
41.9
|
|
Provision for (benefit from) income taxes
|
|
|
|
|
0.1
|
|
|
|
|
(0.1
|
)
|
Net Income
|
|
|
|
|
$
|
52.3
|
|
|
|
|
42.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Operating Data
|
|
|
|
|
Thousands of Barrels Daily
|
|
|
|
|
Q3 2015
|
|
|
Q2 2015
|
Pipeline, Terminal and Storage Volumes
|
|
|
|
|
|
|
|
|
|
Pipelines(1)
|
|
|
|
|
|
|
|
|
|
Pipeline throughput volumes
|
|
|
|
|
|
|
|
|
|
Wholly-Owned Pipelines
|
|
|
|
|
|
|
|
|
|
Crude oil
|
|
|
|
|
306
|
|
|
|
|
282
|
Refined products
|
|
|
|
|
438
|
|
|
|
|
446
|
Total
|
|
|
|
|
744
|
|
|
|
|
728
|
|
|
|
|
|
|
|
|
|
|
Select Joint Venture Pipelines(2)
|
|
|
|
|
|
|
|
|
|
Natural gas liquids
|
|
|
|
|
280
|
|
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
Terminals
|
|
|
|
|
|
|
|
|
|
Terminaling throughput and storage volumes
|
|
|
|
|
|
|
|
|
|
Crude oil(3)
|
|
|
|
|
536
|
|
|
|
|
518
|
Refined products
|
|
|
|
|
441
|
|
|
|
|
424
|
Total
|
|
|
|
|
977
|
|
|
|
|
942
|
(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
|
|
|
|
|
Q3 2015
|
|
|
Q2 2015
|
Revenue
|
|
|
|
|
|
|
|
|
|
Average pipeline revenue*
|
|
|
|
|
$
|
0.45
|
|
|
|
|
0.44
|
Average terminaling and storage revenue
|
|
|
|
|
0.39
|
|
|
|
|
0.39
|
* Excludes average pipeline revenue per barrel from equity
affiliates.
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures and Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
|
Q3 2015
|
|
|
Q2 2015
|
Capital Expenditures and Investments
|
|
|
|
|
|
|
|
|
|
Expansion
|
|
|
|
|
$
|
38.1
|
|
|
|
|
63.0
|
Maintenance
|
|
|
|
|
2.2
|
|
|
|
|
1.5
|
Total
|
|
|
|
|
$
|
40.3
|
|
|
|
|
64.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Distributions
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
|
Q3 2015
|
|
|
Q2 2015
|
Cash Distributions*
|
|
|
|
|
|
|
|
|
|
Common units—public
|
|
|
|
|
$
|
10.3
|
|
|
|
|
9.7
|
Common units—Phillips 66
|
|
|
|
|
24.8
|
|
|
|
|
23.0
|
Subordinated units—Phillips 66
|
|
|
|
|
—
|
|
|
|
|
—
|
General partner—Phillips 66
|
|
|
|
|
11.1
|
|
|
|
|
8.8
|
Total
|
|
|
|
|
$
|
46.2
|
|
|
|
|
41.5
|
* Cash distributions declared attributable to the indicated
periods.
|
|
|
|
|
|
|
|
|
|
|
Cash Distribution Per Unit (Dollars)
|
|
|
|
|
$
|
0.4280
|
|
|
|
|
0.4000
|
|
|
|
|
|
|
|
|
|
|
Coverage Ratio
|
|
|
|
|
1.40
|
|
|
|
|
1.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA and Distributable Cash Flow to
Net Income
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
|
Q3 2015
|
|
|
Q2 2015
|
Reconciliation to Net Income
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
$
|
52.3
|
|
|
|
|
42.0
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
5.7
|
|
|
|
|
5.3
|
|
Net interest expense
|
|
|
|
|
9.1
|
|
|
|
|
9.5
|
|
Amortization of deferred rentals
|
|
|
|
|
0.1
|
|
|
|
|
0.1
|
|
Provision for (benefit from) income taxes
|
|
|
|
|
0.1
|
|
|
|
|
(0.1
|
)
|
EBITDA
|
|
|
|
|
67.3
|
|
|
|
|
56.8
|
|
Distributions in excess of equity earnings
|
|
|
|
|
4.6
|
|
|
|
|
0.2
|
|
Expenses indemnified or prefunded by Phillips 66
|
|
|
|
|
1.1
|
|
|
|
|
—
|
|
Transaction costs associated with acquisitions
|
|
|
|
|
0.4
|
|
|
|
|
—
|
|
Adjusted EBITDA
|
|
|
|
|
73.4
|
|
|
|
|
57.0
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Adjustments related to minimum volume commitments
|
|
|
|
|
2.4
|
|
|
|
|
2.2
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Net interest
|
|
|
|
|
9.1
|
|
|
|
|
9.5
|
|
Income taxes paid
|
|
|
|
|
—
|
|
|
|
|
0.4
|
|
Maintenance capital expenditures
|
|
|
|
|
2.2
|
|
|
|
|
1.5
|
|
Distributable Cash Flow
|
|
|
|
|
$
|
64.5
|
|
|
|
|
47.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Distributable Cash Flow to Net Cash Provided by
Operating Activities
|
|
|
|
|
|
|
|
|
|
Millions of Dollars
|
|
|
|
|
Q3 2015
|
|
|
Q2 2015
|
Reconciliation to Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
|
|
$
|
46.1
|
|
|
|
|
65.4
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
|
|
9.1
|
|
|
|
|
9.5
|
|
Provision for (benefit from) income taxes
|
|
|
|
|
0.1
|
|
|
|
|
(0.1
|
)
|
Changes in working capital
|
|
|
|
|
14.6
|
|
|
|
|
(15.9
|
)
|
Undistributed equity earnings
|
|
|
|
|
(0.9
|
)
|
|
|
|
(2.2
|
)
|
Accrued environmental costs
|
|
|
|
|
(0.5
|
)
|
|
|
|
(0.1
|
)
|
Other
|
|
|
|
|
(1.2
|
)
|
|
|
|
0.2
|
|
EBITDA
|
|
|
|
|
67.3
|
|
|
|
|
56.8
|
|
Distributions in excess of equity earnings
|
|
|
|
|
4.6
|
|
|
|
|
0.2
|
|
Expenses indemnified or prefunded by Phillips 66
|
|
|
|
|
1.1
|
|
|
|
|
—
|
|
Transaction costs associated with acquisitions
|
|
|
|
|
0.4
|
|
|
|
|
—
|
|
Adjusted EBITDA
|
|
|
|
|
73.4
|
|
|
|
|
57.0
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Adjustments related to minimum volume commitments
|
|
|
|
|
2.4
|
|
|
|
|
2.2
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Net interest
|
|
|
|
|
9.1
|
|
|
|
|
9.5
|
|
Income taxes paid
|
|
|
|
|
—
|
|
|
|
|
0.4
|
|
Maintenance capital expenditures
|
|
|
|
|
2.2
|
|
|
|
|
1.5
|
|
Distributable Cash Flow
|
|
|
|
|
$
|
64.5
|
|
|
|
|
47.8
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151030005156/en/
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