PSXP Phillips 66 Partners LP

• Fourth-quarter earnings of $286 million and adjusted EBITDA of $400 million
• Reached agreement for Phillips 66 to acquire all publicly held units

Phillips 66 Partners LP (NYSE: PSXP) announces fourth-quarter 2021 earnings of $286 million, or $1.19 per diluted common unit. Cash from operations was $302 million, and distributable cash flow was $267 million. Adjusted EBITDA was $400 million in the fourth quarter, compared with $367 million in the prior quarter.

On Jan. 18, 2022, the general partner’s board of directors declared a fourth-quarter 2021 cash distribution of $0.875 per common unit.

Financial Results

Phillips 66 Partners’ fourth-quarter 2021 earnings were $286 million, compared with $242 million in the third quarter. The Partnership reported adjusted EBITDA of $400 million in the fourth quarter, compared with $367 million in the prior quarter. The increases in fourth-quarter earnings and adjusted EBITDA mainly reflect the recognition of deferred revenue and increased volumes.

Liquidity, Capital Expenditures and Investments

As of Dec. 31, 2021, total debt outstanding was $3.9 billion. The Partnership had $62 million in cash and cash equivalents and $749 million available under its revolving credit facility. The Partnership’s capital expenditures and investments for the quarter were $74 million.

Merger Agreement with Phillips 66

In October, Phillips 66 entered into an agreement to acquire all of the limited partner interests in Phillips 66 Partners not already owned by Phillips 66 and its affiliates. The transaction is expected to close in the first quarter of 2022. Upon closing, the Partnership will be a wholly owned subsidiary of Phillips 66 and will no longer be a publicly traded partnership.

About Phillips 66 Partners

Headquartered in Houston, Phillips 66 Partners is a 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, terminals and other midstream assets. For more information, visit www.phillips66partners.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements as defined under the federal securities laws. 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 included in this news release are based on management’s expectations, estimates and projections as of the date they are made. These statements are not guarantees of future performance and you should not unduly rely on them as they 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 equity affiliates transport, fractionate, terminal and store; the tariff rates with respect to volumes transported through our regulated assets, which are subject to review and possible adjustment by federal and state regulators; fluctuations in the prices for crude oil, refined petroleum products and NGL; the continuing effects of the COVID-19 pandemic and its negative impact on the demand for refined products; changes in governmental policies relating to crude oil, refined petroleum products or NGL pricing, regulation, taxation, or exports; liabilities associated with the risks and operational hazards inherent in transporting, fractionating, terminaling and storing crude oil, refined petroleum products and NGL; curtailment of operations due to accidents, severe weather (including as a result of climate change) or natural disasters, riots, strikes or lockouts; the inability to obtain or maintain permits, in a timely manner or at all, and the possible revocation or modification of permits; the operation, financing and distribution decisions of our equity affiliates; costs to comply with environmental laws and safety regulations; failure of information technology due to various causes, including unauthorized access or attacks; changes to the costs to deliver and transport crude oil, refined petroleum products and NGL; potential liability from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations; the failure to complete construction of capital projects on time and within budget; general domestic and international economic and political developments including armed hostilities, expropriation of assets, and other political, economic or diplomatic developments, including those caused by public health issues; our ability to comply with our debt covenants and to incur additional indebtedness on favorable terms; changes in tax, environmental and other laws and 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 “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 (loss). 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 their comparable GAAP measures. They have important limitations as analytical tools because they exclude some but not all items that affect their corresponding GAAP measures. They should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because EBITDA, adjusted EBITDA, distributable cash flow and coverage ratio may be defined differently by other companies in our industry, our definition of those measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in this release.

References in the release to earnings or losses refer to net income or losses attributable to the Partnership. 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 2021

 

Q3 2021

Selected Income Statement Data

 

 

 

 

Total revenues and other income

$

503

 

 

452

Net income

 

299

 

 

255

Net income attributable to the Partnership

 

286

 

 

242

 

 

 

 

 

Adjusted EBITDA

 

400

 

 

367

Distributable cash flow

 

267

 

 

268

 

 

 

 

 

Net Income Attributable to the Partnership Per Limited Partner Unit—Diluted (Dollars)

 

 

 

 

Common units

$

1.19

 

 

1.00

 

 

 

 

 

Selected Balance Sheet Data

 

 

 

 

Cash and cash equivalents

$

62

 

 

71

Equity investments

 

2,929

 

 

2,941

Total assets

 

7,101

 

 

7,077

Total debt

 

3,897

 

 

3,896

Equity held by public

 

 

 

 

Preferred units

 

729

 

 

729

Common units

 

2,676

 

 

2,657

Equity held by Phillips 66

 

 

 

 

Common units

 

(743)

 

 

(798)

 

Statement of Income

 

 

Millions of Dollars

 

Q4 2021

 

Q3 2021

Revenues and Other Income

 

 

 

 

Operating revenues—related parties

$

322

 

 

275

Operating revenues—third parties

 

9

 

 

8

Equity in earnings of affiliates

 

166

 

 

163

Other income

 

6

 

 

6

Total revenues and other income

 

503

 

 

452

 

 

 

 

 

Costs and Expenses

 

 

 

 

Operating and maintenance expenses

 

106

 

 

89

Depreciation

 

35

 

 

38

Impairments

 

—

 

 

10

General and administrative expenses

 

19

 

 

17

Taxes other than income taxes

 

10

 

 

10

Interest and debt expense

 

31

 

 

32

Other expenses

 

—

 

 

1

Total costs and expenses

 

201

 

 

197

Income before income taxes

 

302

 

 

255

Income tax expense

 

3

 

 

—

Net Income

 

299

 

 

255

Less: Net income attributable to noncontrolling interest

 

13

 

 

13

Net Income Attributable to the Partnership

 

286

 

 

242

Less: Preferred unitholders’ interest in net income attributable to the Partnership

 

12

 

 

12

Limited Partners’ Interest in Net Income Attributable to the Partnership

$

274

 

 

230

 

Selected Operating Data

 

 

Q4 2021

 

Q3 2021

Wholly Owned Operating Data

 

 

 

 

Pipelines

 

 

 

 

Pipeline revenues (millions of dollars)

$

144

 

 

121

Pipeline volumes(1) (thousands of barrels daily)

 

 

 

 

Crude oil

 

981

 

 

954

Refined petroleum products and NGL

 

1,072

 

 

994

Total

 

2,053

 

 

1,948

 

 

 

 

 

Average pipeline revenue per barrel (dollars)

$

0.76

 

 

0.67

 

 

 

 

 

Terminals

 

 

 

 

Terminal revenues (millions of dollars)

$

53

 

 

40

Terminal throughput (thousands of barrels daily)

 

 

 

 

Crude oil(2)

 

424

 

 

446

Refined petroleum products

 

856

 

 

780

Total

 

1,280

 

 

1,226

 

 

 

 

 

Average terminaling revenue per barrel (dollars)

$

0.44

 

 

0.36

 

 

 

 

 

Storage, processing and other revenues (millions of dollars)

$

134

 

 

122

Total Operating Revenues (millions of dollars)

$

331

 

 

283

 

 

 

 

 

Joint Venture Operating Data(3)

 

 

 

 

Crude oil, refined petroleum products and NGL (thousands of barrels daily)

 

1,342

 

 

1,294

(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.

 

Cash Distributions

   

 

Millions of Dollars

Except as Indicated

 

Q4 2021

 

Q3 2021

Cash Distributions†

 

 

 

 

Common units—public

$

51

 

 

51

Common units—Phillips 66

 

149

 

 

149

Total

$

200

 

 

200

 

 

 

 

 

Cash Distribution Per Common Unit (Dollars)

$

0.875

 

 

0.875

 

 

 

 

 

Coverage Ratio*

 

1.34

 

 

1.34

†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 distributions was 1.51x and 1.69x at Q4 2021 and Q3 2021, respectively. 

 

Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Income Attributable to the Partnership

 

 

Millions of Dollars

 

 

 

2021

 

 

 

Year

 

Q4

 

Q3

 

 

 

 

 

 

Net Income Attributable to the Partnership

$

735

 

286

 

242

Plus:

 

 

 

 

 

Net income attributable to noncontrolling interest

 

42

 

13

 

13

Net Income

 

777

 

299

 

255

Plus:

 

 

 

 

 

Depreciation

 

141

 

35

 

38

Net interest expense

 

127

 

31

 

31

Income tax expense

 

4

 

3

 

—

EBITDA

 

1,049

 

368

 

324

Plus:

 

 

 

 

 

Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments

 

201

 

50

 

51

Expenses indemnified or prefunded by Phillips 66

 

1

 

—

 

—

Impairments

 

208

 

—

 

10

Less:

 

 

 

 

 

Adjusted EBITDA attributable to noncontrolling interest

 

66

 

18

 

18

Adjusted EBITDA

 

1,393

 

400

 

367

Plus:

 

 

 

 

 

Deferred revenue impacts*†

 

(7)

 

(14)

 

2

Less:

 

 

 

 

 

Equity affiliate distributions less than proportional adjusted EBITDA

 

59

 

28

 

14

Maintenance capital expenditures†

 

115

 

48

 

44

Net interest expense

 

127

 

31

 

31

Preferred unit distributions

 

48

 

12

 

12

Income taxes paid

 

2

 

—

 

—

Distributable Cash Flow

$

1,035

 

267

 

268

*Difference between cash receipts and revenue recognition.

 

 

 

 

 

†Excludes Merey Sweeny capital reimbursements and turnaround impacts.

 

Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities

 

 

Millions of Dollars

 

 

 

2021

 

 

 

Year

 

Q4

 

Q3

 

 

 

 

 

 

Net Cash Provided by Operating Activities

$

1,153

 

302

 

338

Plus:

 

 

 

 

 

Net interest expense

 

127

 

31

 

31

Income tax expense

 

4

 

3

 

—

Changes in working capital

 

(29)

 

29

 

(36)

Undistributed equity earnings

 

4

 

4

 

2

Impairments

 

(208)

 

—

 

(10)

Deferred revenues and other liabilities

 

4

 

2

 

—

Other

 

(6)

 

(3)

 

(1)

EBITDA

 

1,049

 

368

 

324

Plus:

 

 

 

 

 

Proportional share of equity affiliates’ net interest, taxes, depreciation and amortization, and impairments

 

201

 

50

 

51

Expenses indemnified or prefunded by Phillips 66

 

1

 

—

 

—

Impairments

 

208

 

—

 

10

Less:

 

 

 

 

 

Adjusted EBITDA attributable to noncontrolling interest

 

66

 

18

 

18

Adjusted EBITDA

 

1,393

 

400

 

367

Plus:

 

 

 

 

 

Deferred revenue impacts*†

 

(7)

 

(14)

 

2

Less:

 

 

 

 

 

Equity affiliate distributions less than proportional adjusted EBITDA

 

59

 

28

 

14

Maintenance capital expenditures†

 

115

 

48

 

44

Net interest expense

 

127

 

31

 

31

Preferred unit distributions

 

48

 

12

 

12

Income taxes paid

 

2

 

—

 

—

Distributable Cash Flow

$

1,035

 

267

 

268

*Difference between cash receipts and revenue recognition.

 

 

 

 

 

†Excludes Merey Sweeny capital reimbursements and turnaround impacts. 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220126006024/en/

Jeff Dietert (investors) 832-765-2297 jeff.dietert@p66.com Shannon Holy (investors) 832-765-2297 shannon.m.holy@p66.com Thaddeus Herrick (media) 855-841-2368 thaddeus.f.herrick@p66.com