Phillips 66 (NYSE:PSX) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 12:00 pm ET


Phillips 66 (NYSE:PSX) Q2 2020 Earnings Conference Call - Final Transcript


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Welcome to the Second Quarter 2020 Phillips 66 Earnings Conference Call. My name is David, 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 would now turn the call over to Jeff Dietert. Vice President, Investor Relations. Jeff, you may begin.

Jeff A. Dietert

Good morning and welcome to Phillips 66 second quarter earnings conference call. Participants on today's call will include Greg Garland, Chairman and CEO; Kevin Mitchell, Executive Vice President and CFO; Bob Herman, EVP, Refining; Brian Mandell, EVP Marketing and Commercial; and Tim Roberts, EVP Midstream. Today's presentation material can be found on the Investor Relations section of the Phillips 66 website, along with supplement financial and operating information.

Slide 2 contains our Safe Harbor statement. We will be making forward-looking statements during the presentation, and our Q&A session. Actual results may differ materially from today's comments. Factors that could cause actual results to differ are included here, as well as in our SEC filings.

With that, I'll turn the call over to Greg Garland.

Greg C. Garland

Thanks Jeff. Good morning everyone and thanks for joining us today. In the second quarter, we experienced an unprecedented disruption to our business from COVID-19, resulting in a challenging operating environment. Going into the second quarter, we anticipated demand for our products would be weak, as states were under lockdown and people were working remotely. Across our businesses, we've seen demand recovery from the trough, although uncertainty remains for the second half of the year.

We continue to focus on the wellbeing of our employees, their families, communities, maintaining safe and reliable operations and ensuring the financial and operational strength of our company. Our business is an essential business and we're committed to safely providing critical energy products and services for our customers. Phillips 66 implemented the appropriate steps to protect our workforce, consistent with CEC, National, State and local directives. We have safely and successfully operated our facilities, in support of our commitment to provide essential services.

During the quarter, we issued $2 billion of senior notes and increased our term loan capacity by $1 billion. We expect to exceed $500 million in cost reductions, and reduced consolidated capital spending by $700 million this year. These actions protect the security of the dividend, and our strong investment grade credit rating, as we navigate this challenging business environment.

We will continue to exercise disciplined capital allocation, with a focus on long-term value creation for our shareholders. In the second quarter, we had an adjusted loss of $324 million or sort of $0.74 per share. We generated $764 million of operating cash flow and returned $393 million to our shareholders through dividends. During the quarter, we achieved strong safety performance. We continued to strive towards a zero incident, zero accident workplace. We're executing our strategy in pressing major growth projects.

The Gray Oak Pipeline commenced full operations from West Texas and the