PSXP - Earnings call transcript Q3 2018

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Operator

Welcome to the Third 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. the to turn President, Dietert, now Relations. Investor will call Jeff over Vice I begin. may you Jeff,

Jeff Dietert

Slide will and presentation site, the the Phillips Good to a differ forward-looking call may Partners X using And will to Q&A contains Web as statements call will our that Tom conference Mitchell, afternoon. as operating welcome President included Events making Liberti, can results today. call. quarter results Operating to Officer. Safe Partners Actual be Vice differ Chief the call are Participants in materially earnings Harbor Vice SEC third President from on CFO today's I that, of The Factors and Mitchell. be will the and well Statement. Kevin be and with that section session. reminder financial turn With It's the the include supplemental and Kevin filings. what during we Phillips presentation the along information. materials we we over during found here cause on XX XX our could present actual

Kevin Mitchell

Jeff increase previous you, $XX million, net $XXX income from and an reported everyone. good of Partnership Thank The the quarter. record million of afternoon,

Bakken rate of billion schedule. Sand We our $X.X with the target strong delivered Hills record operated as our $XXX also performance EBITDA pipelines. achieved run assets, adjusted and achieved a ahead record EBITDA on volumes from We We million. great quarter adjusted as of well

of increase the unit, X.X% directors of from $X.XXX quarter approved per quarter. Board a common distribution Our third previous a

is ratio X.XX coverage Our distribution times.

of increases. enabled growth the XX since Moving consecutive its XXXX Partnerships' X, IPO substantial onto has distribution quarters Slide

$XX Onto the from our the target quarter. of next achieve quarter EBITDA million previous increase is Slide distribution growth adjusted will five annual $XXX of We million X, an third year quarter.

increased joint Explorer the Sand earnings contributed higher Bakken, including Our Hills venture volumes, from and pipelines.

owned assets day. barrels content the of result mid increased Phillips the high wholly region. from pipeline as the exceeded in utilization Earnings on our throughput quarter refineries XXX,XXX at a Bakken per Third operating XX

Third quarter adjusted offset EBITDA cash of increase capital. $XX prior $XXX partially was an by flow distributable million higher quarter. the from maintenance Increased was million,

in quarters cash the the As expected, third borrowings year. and liquidity. than outstanding Slide capital of higher first our $XXX financial and credit two was X facility. in no quarter $XXX We with third million revolving the the of million highlights maintenance under our flexibility quarter ended

financial Long XXXX EBITDA program. hand, The to with we selective basis the times. revolver ratio X.X times. and around expect X.X debt Partnerships' was position Our strong on covenant funding capacity term, cash enables use ATM of of to be debt our on the program leverage capital

like years. I at the five opportunities pace ahead intentionally I’d program. the capital of a rapid call us, make program. organic some Before scale, over strength a turn to capital grew our are our fund sustain With We and significant Tom, well-positioned about to first our during financial comments to we and

budget due announced, of approximately original Oak the million capital to million, $XXX As is our an we from increase previously have Gray $XXX XXXX pipeline. the program

For we billion. $X.X of expect XXXX budget the are be approximately capital portfolio that we robust our projects with to progressing,

our capital December. program more XXXX on provide will in We information

Now, an growth update Tom on will our provide projects.

Tom Liberti

the highlights by X will through our Slide everyone. drive XXXX. that EBITDA hello Kevin, Thanks projects mentioned Kevin

sustain this financial larger and capital us program. have to position scale Our enabled and fund

the during and our advance these is projects quarter. to-date into Gray the high-growth organic pipeline Permian to Oak The basin. project our continued footprint We expands largest

to remain Oak Total the of cost by by takeaway end and pipeline. being will was pipeline largest to in Gulf oil per Partners. be connect is will for crude Buckeye for $X.X demand terminal Texas the that the owner on capacity developed barrels be Supported billion XX Gray XXX,XXX customer customer strong by be Coast. the we pipeline Gateway Partners seeing commitments, completion anticipated of are We the South will schedule the Christi Phillips XXXX. the In for Corpus day.

example allows to late Charles day terminal, connect the Ridge In capability XX% million This connection is us in developing the project fractionation is clean per offer refinery, to Caverns mid-XXXX. is Terminal. will export on Gray a Sweeny to Clifton export from expected a in operations our another end in X is barrels. barrels Oak which storage Sand be one-third Phillips Commercial pipeline be the NGL is customers. of barrels at solution XX% for Nederland, Bayou million project the Lake to meet Project XXXX. a ownership Hills at basin. XX accretive Louisiana have and At Charles, to and and is strong new year. from from to is is how the of this projects We logistic for have our per year. demand. James, EBITDA hub, of of to storage pipeline at to completion the a the with expected completed Charles that complete XX to add the Hills in Phillips St. product ownership a by the growth. growing the Clemens the Marine XXX,XXX contributor increasing This to growth of crude Charles Texas Partnership $XX great to begin Partnership million integration reached expected the provide end takeaway capacity sponsor in day XX,XXX for increasing extension demand by the pipeline MLP. This operates our been expected The interest up Lake currently product day terminal it to the are and Lake interest. Lake to of Partners XXX,XXX product in adding own Bridge per barrels growing we a has NGL provides Sand We with pipeline Sand at third Hills this capacity Permian our meet capacity XX end quarter,

commitments agreement long-term have We the that Marine minimum volume pipeline and the dock. includes a with XX for Phillips

increase isomerization footprint octane expanding We The unit. further XX a the gasoline Lake are per blend XX,XXX Charles the unit with Phillips refinery components. of our higher production day barrel construction will of new of

long-term XX third minimum We of be agreement commitment. project have the prepared volume expected with including completed The in Phillips services, This to concludes a for XXXX. is quarter a processing remarks. our

We line will now the for questions. open

Operator

you. Thank

begin open. We will Goldman ahead, from your the Instructions]. please now line question-and-answer Jerren go Holder [Operator session is Sachs,

Jerren Holder

providing XXXX, already to what start just give sense with CapEx projects, What's XXXX? some in at us coming here. CapEx projects Thanks on Maybe XXXX the those of Can sense is a I'll and for XXXX capital -- online of you moment? the projects. the get for the detail granular just outlook in the been spent a the outlook

Tom Liberti

provided, the of at XXXX, at XXXX. the And looked If spills that in is this and XXXX. you capital XXX we XXXX for where project. There XXXX. an over we're been amount won't as then increase XXXX a budget you give you Kevin each spent into that looking for gave slide at small has we've -- we obviously then also. year approximation of is look on the But the I some that specifics the

see projects So, where you would when are and to where at can online be. think come the I are the the spend look bulk of they

projects that at haven't we this to time. been that, that haven't Now for have other read will spend there in announced in point we'll is XXXX that addition that have

Jerren Holder

guidance, to original we XX% XXX your Oakis. your fair? Is to back assume XXX of going that is Maybe XXX so Gray should that

Kevin Mitchell

reason primary and The Gray the right. was was set. That's increase for that Oak, original budget

Jerren Holder

by guys are like Oak, And that you guys then Gray number. you receive pumps adding or day per if barrels -- be DRAs to you looks expanded anything set guys that are were or commitments? the XXX,XXX on on more like Can

Tom Liberti

line, be to volume expanded. get with of time, a CapEx we investment. point get little would larger it any be might CapEx. significant But But Everything able a of little can this on be increase to bit in at bit that

Jerren Holder

million. $XX a maybe last and million that then rate your maintenance high for $XX $XX around going started Is continue a run lastly, the million little the range? And we have like the net bit expense, CapEx then at business, CapEx and been or decent on quarters year forward of off couple looks the to operating

Tom Liberti

the to from expense the there. Sweeny in quarters, expense had Merey turnaround first quarter, we the got some Difficulty] Yes, too you I the last in with think two remember [Technical

last the two more So, quarters are run rate. of a

Operator

ahead, is Spiro line Suisse, open. go please your Dounis from Credit

Spiro Dounis

just on season it's an currently full to start there could. in looking there, bump the if firm want you I in beyond performance. there's think point. pipeline, that much so we're current perspective. capacity I the this works hearing there? that Just on And Or do running? there your guess at pretty up a out up it's just you're what there expansion open Bakken curious pretty the We're to running an large I is Is that see And seeing

Tom Liberti

about The it quarter, third XXX,XXX a ran barrels day.

have we'd we to XXX,XXX bump to a in capacity right, third second looking you barrels So up are the is The significant day. with go season more the specifics be we minimal expansion more a obviously, quarter. expense. would open about then at actually come That at did capital ETP to you would is go capital on we looking that no give If and that beyond this, expenditures. beyond operator. could if But

Spiro Dounis

this X closer have as more upsizing range. a really far of times XXX to six? open Or any that as the that depended then guys that to about needle think you X Oak type talked I on goes, in And rates Does the moves Gray to typical walk-up return capacity? getting is

Kevin Mitchell

the you're is, range. in think way that that to probably I look still

look we as to capacity the done, return upsize you the better. continues incremental As have

standpoint, overall improve. return continues So an from it to

Spiro Dounis

XQ in quarter. expect mind, if one, results impact and Bridge Hills fourth all Should and last Sand at And are much? an of coming on really much we just you don’t that Bayou not the

Tom Liberti

that first in been I Sand minor just as quarter increased get quarter every of then we'd quarter, impact going along, of Bayou and Sand expect impact of in so fourth the -- that ramping end next on XXX. effect of to full would Hills basis, capacity in the first a and that's its so Bridge, that's year the coming more an Hills has final then really quarter also.

Operator

Dennis is Coleman Bank please America line open. from ahead of Merrill your go Lynch, and

Dennis Coleman

guess questions I of some that or morning, early issues know this the up. come there call afternoon, about were the also have some parent this I on

were that, there competitors you I differently. XX run wondered think bit use And of I some of a up the MLP. a just comments to just little your major I little might PSXP Philip One if through again. why about their take rolled

Kevin Mitchell

This to is comments morning. reiterate the Kevin, just this from

rapidly ahead, look X.X it's order, that in where at so billion at this year of over grown look IPO, to-date And transitioning we very more organic it aligns you a from combination PSX the with XX PSXP rapid think five to really -- midstream the that EBITDA as we're PSXP drop and something we of You of it things overall -- growing to all I have strategy. investing organic. And period, strategy business growth. was is sets, so And being it been growth. then and integral and

there very out great and And for there provides PSX that in provide come of will still So, down this we're that the in ahead drop-down. growth of organically is PSXP great MLPs at to place from point for optionality we're that some MLP. at that company got those really a to us were assets purely MLP. time, could standpoint. and that different projects continue we've the But investing portfolio in than a Obviously, parent still the

Dennis Coleman

update the wonder, where IDRs scrutinizing high to any now I you just the does start people Obviously, updates broadly people level that are are -- thoughts be on there. across are Speakers] industry. And [Multiple the take updated up or XXs any IDR, so in

Kevin Mitchell

my the growth The That's right, been IDR reiterate comments successfully take. that the and around. grown has in -- growth in just the and MLP with I made very has I distribution,

know way works. We the way see the out. math know we we plays And so how And this this works.

to into for of LP just So great from transaction sense we one at the the got do I'd sense get a doing PSX we again holders, to for it's as the point. as that PSX acknowledge make to that shareholders. that, the comments as has obviously, some make will And standpoint, but reiterate well restructuring right IDR

it where So, have to for to to balance everyone. we be able that strike works

Dennis Coleman

or tie regard with do? to with it or might to project to make that the that completion more Anything little decision anything logical budget into regard

Kevin Mitchell

flight. projects We'll have have so hopper coming we coming on time. now in now the will but in projects projects We in point and many, online have any

a be we the we make structure we I So, don’t decision. would on it when it influence the way it, would think structure a would way major

Operator

is line open. go Barrett Blaschke Securities, ahead from please MUFG your

Barrett Blaschke

I distribution you're probably XXXX, the more budget capital we as one. far give I the what it seems what out. on look played think, Do might us know color thinking growth answer could But like as you any some this to clarity have like? around

Kevin Mitchell

given have we've At through a a go level; -- Partnership giving certainly, of the saying grow point. very we're the beyond this robust very the probably we're this the we're not would Obviously, XXXX No. of ability point, on cortile, I end on that a underlying suite continue distributions will But grow; to guidance healthy at distribution will to projects; specific very the continue at not at in competitive, DCF top investing to expect. going EBITDA specific growth. guidance to

Barrett Blaschke

asset could PSXPs PSX. are also, things year, And there one as of come into look to down still that's out obviously there to continuing from the is we that next

up, relatively on budget. does to your less like likely are With the point markets feel that more equity lien Do you decision? the organic at or to that still do influence toward lock this you and

Kevin Mitchell

way that, The at suite look we organic growth I to projects drive healthy MLP. will very that the of at continue a have

point resides that's for still at just options sense. makes future some when so, that PSX the up in the And assets remain

But we're does time sense in do at compelled have So it those. point to where to not probably be will same there make to time, go a so. the to

a got in we think set underway. drop-down So, we've really I the projects position a optionality that it's organic have of but to of to, nice because be got we've don’t assets that great

Tom Liberti

X has the time, program, number program organic of in portfolio the an so midstream assets PSX Barrett, as PSXPs organic from grow you can of continues PSXP got Slide that point is to projects and an But this has At option. too, things pretty an see significant.

Kevin Mitchell

on for really table projecting. you that gives tools X you the And Slide need

Operator

JP from line ahead open. Morgan, Jeremy is Tonet go your please

Jeremy Tonet

passed results this you the wanted XX%. quarter, with Just to medium about start here EBITDA by off street guys the estimate

if a or the bit leverage bit as seems to guys of we us run this granted could you seasonal as of here. And wondering some the it is maybe you that? How about just nature? potential is could in this on in in if generally the should expand best you go, like U.S. we're just the more a quarter so think rate help XQ calibrate is recurring can volume but increases -- the there nature more that just is operating far that year seeing And

Tom Liberti

DAPLs Jeremy Sand capacity. if where where at increased you were are look the and I pipeline Hills volumes the about a revenues mean, DAPL -- running increase.

Permian, would So NGL and we Sand continues. continue Hills in crude it. long the as that stays situation where been expect that has to it offtakes expanding the as

can the and whether that mentioned capacity. that So again, next quarter owned into high to Don’t year. wholly meet and of those know fourth quarter quarter keep morning, we to into fourth expect as next would asset year, levels. this think a On very up we the call third basis, ran numbers mid at I continue past refineries on

contributed those pipeline to pipeline So, -- volume. extra that lot really levels of a high that

if give obviously. rate So, fourth of forward as at number between quarter numbers. expect look X.XX, between would those look X.XX we quarter, would don’t you into and the run guidance, that two the we we quarter second third in something EBITDA But

Jeremy Tonet

takeaway barrels $XX,XXX what and a It the that there are wondering significantly another gets Would real basin. while in could your upsizing there how Bakken, from Is a need pipe more potential seeing resolved? a for potential there we some just look already pipe? And you bottlenecks seems for this of just you Bakken. day, the noted to more expansion like be takeaway of build into you the an And than Is given think growth situation? that.

the shortage Just a seems bit of like refinery structural there earlier of turnaround? previewed is a with some

Kevin Mitchell

justify more available, whether be to Yes, we for future view existing there's But compliant have expansion of so see Jeremy. I rail pipeline point I that infrastructure for assets that it's a over right, think many the at potential would And the be and as it or near There pickup. opportunities, in become demand Bakken. expect to this the will solution on whether incremental, investment are term, additional. that. sufficient don’t crude some new additional in railcars or does you constraints are

Jeremy Tonet

real touch-base And could on lastly how is just maybe Bridge that quick we Bayou and progressing?

Tom Liberti

We start would up We're of to line that for still Bridge expect by end in estimate. Bayou the this year.

Operator

line open. Stanley, your Morgan from Abrams Tom ahead is please go

Tom Abrams

parent to sponsor level dropdown couple it as storage future or is inventory? million of Is come a that could the dollars First, PSXP more that when construction something of the announces project, storage.

Kevin Mitchell

to So, I the referring think you Beaumont terminal? you're

Tom Abrams

expenses… Yes,

Kevin Mitchell

That so, going a you would one terminal, to which I Beaumont asset at MLP. added the Beaumont storage see don't incremental being and that's that PSX being at sits all at storage think

view I at future future that a the the think down. and down at options portfolio and for candidate that look in it dropping drop could of in we drop entire asset that a certainly, be some point

Tom Liberti

mean, you're PSXP it it. I separate construct We've a organic done. could on contractually, got would a be this mean, we loss pretty if could asking, at It be point one property? though. I of long Tom, Could do that's PSX tank those.

Tom Abrams

I And that wanted know internally. just how worked to Sure.

about Corpus. was well. Texas of South it think soon as And then the Buckeye wanted back as one, LLCs thing and off port the just has or going mentioned time as second to The when gateway has is I build mentioned the

that So one? offshore when permitted, you agencies how those involved talking new permitting think And projects the side. once to can that about to for What we or built? be rapidly like the that? have do is I items, things have projects have which were new same secondly, something about think it about first gating should things get fixing think competing they is we And all off, that the

Tom Liberti

I I obviously, the out for think obviously competing as more couple load. terminal it's there with of familiar projects, and larger can we're there there exported don’t Corpus But needed. far as are permitting know for that easier that of you need capacity things. as is all ship crude be would more totally is Christi, the that

I So, there. are projects talking of down about couple different a people think

timing would will working be that permitting port just is going. The that with is simply and the So things all the over needed. working be of

Kevin Mitchell

an on don’t facility. offshore have do loading We specific to takes what VLCCs comments any it

Operator

please Jefferies, with your Sighinolfi Chris go is line open. ahead

ChrisSighinolfi

Just flight expansions and the in profiles of ramp construction some in maybe guess more face. organic you the you'll CapEx I have that with given these elongated

Just curious gets how long distribution and XXXX closer as range an target? intermediate you coverage that guys are thinking now or more to of

Kevin Mitchell

the so you As got -- from projects assets is can up it XXXX. as slide that's coming got put you've end next of that out we EBITDA we there DCF growth online. this up at the some that as at And coming some with year the new some placed. and look coming year are coming new into We've tell

you've ability finance So, phased-in to got a sheet. the using we've with growth DCF balance got of

really sheet So, is balance strong the shape. in

to So capacity to we've growth. help debt fund of plenty

around north X.X we're I'd funding at growth, reasonably so -- And very the capital respectable well ratios triangulating of leverage works coverage coverage X.X it distribution like it. to ratios, so, way program. say metrics we model very all And plus and then the respectable

ChrisSighinolfi

back up. Oak construction. -- for guess there, we then finance you this I be what had I where thinking as project of guess that’s guess follow I opportunities would Gray to up and a should in I terms I about me lied some as projects. be, And want on if XXXX Is lead close what in follow spend from the involves get some don’t about the ahead to actually thinking to asset if of But and you other myself. you too put I'm on XXXX So can on CapEx financing Do get itself. projects? to cash far on spend I

Kevin Mitchell

that we financing. point, certainly decisions Oak possibility we've But yet. lend we definitive at but It's haven’t Gray on itself is that degree project made decisions haven’t, any made a to something this there say, could doing of could firm some like any around that happen. I not

Operator

the have Jeff. time. further at I questions turn call We you back this to will over no now

Jeff Dietert

your call questions, Partners. me. Have in for interest or Thank further Any Phillips good XX please Rosie a weekend.

Operator

ladies concludes you, This conference. and today's gentlemen. Thank

disconnect. now You may

Phillips 66 Partners (PSXP) 26 Oct 182018 Q3 Earnings call transcript