Phillips 66 Partners Reports Fourth-Quarter 2021 Financial Results
01/28/2022 - 07:20 AM
Fourth-quarter earnings of $286 million and adjusted EBITDA of $400 million
Reached agreement for Phillips 66 to acquire all publicly held units
HOUSTON --(BUSINESS WIRE)--
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 $0.87 5 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
Source: Phillips 66 Partners LP