Phillips 66 Partners LP (NYSE:PSXP) Q4 2018 Earnings Conference Call Transcript

Feb 08, 2019 • 02:00 pm ET

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Phillips 66 Partners LP (NYSE:PSXP) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Welcome to the Fourth Quarter 2018 Phillips 66 Partners Earnings Conference Call. My name is Julie, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Jeff Dietert, Vice President, Investor Relations. Jeff, you may begin.

Executive
Jeff Dietert

Good afternoon. And welcome to the Phillips 66 Partners fourth quarter earnings call. Participants on today's call will include Kevin Mitchell, Vice President and CFO; Tim Roberts, Vice President, Operations and Rosy Zuklic, Vice President and Chief Operating Officer.

The presentation materials we will be using during the call can be found on the Events section of the Phillips 66 Partners website, along with supplemental financial and operating information. Slide 2 contains our safe harbor statement. It's a reminder that we will be making forward-looking statements during the presentation and the Q&A. Actual results may differ materially from what we present today. Factors that could cause actual results to differ are included here as well as in our SEC filings.

With that, I will turn the call over to Kevin Mitchell.

Executive
Kevin J. Mitchell

Thank you Jeff and good afternoon everyone. I will start on Slide 3 which shows our distribution history. Our Board of directors approved a fourth quarter distribution of $0.835 per common unit, a 5.4% increase from the previous quarter. We reached the significant milestone with partners achieving its five-year 30% compound annual distribution growth target. We have delivered 21 consecutive quarters of increases since our IPO demonstrating industry leading distribution growth.

Moving on to Slide 4. 2018 was a successful year for the partnership. We operated safely and reliably and achieved record financial results. The partnerships are strong volumes across its diversified portfolio of wholly owned assets and equity affiliates. The partnership reported 2018 earnings of $796 million, a 73% increase from the prior year. Adjusted EBITDA for the year was $1.1 billion, up 51% from the prior year.

We accomplished our $1.1 billion run rate adjusted EBITDA target ahead of schedule in the second quarter and ended 2018 at $1.2 billion run rate. As you can see from the chart on this slide, we have grown Phillips 66 Partners at a rapid pace with our scale, financial strength and the opportunities ahead of us. We are well positioned to find an organic capital program to deliver continued growth.

During the year, we sanctioned our largest project to-date, the Gray Oak pipeline and this quarter completed the expansion of the Sand Hills pipeline. On to Slide 5, the fourth adjusted EBITDA of $309 million is an increase of $4 million from the previous quarter. The improvement reflects strong performance from our equity affiliates, driven by higher Bakken Pipeline volumes that average more than 500,000 barrels per day. Our wholly owned assets benefited from increased volumes associated with higher utilization at Phillips 66 refineries. Fourth quarter distributable cash flow was $238 million, an increase