PSXP - Earnings call transcript Q2 2021

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Operator

Welcome to the Second Quarter 2021 Phillips 66 Partners Earnings Conference Call. My name is Hilary and I will 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

operating Good to will and Vice Call. Vice afternoon welcome and can Safe President General XX Participants Earnings Second with along Partners President materials Casey on on information. X Events our be and contains Conference Slide Manager, and statement. Quarter COO Operations. Today's today's section Gorder, the Harbor Tim website, supplemental found presentation call CFO; of include and Phillips financial the Mitchell, Phillips Kevin Roberts, XX Partners

We in presentations to may results will session. SEC I'll that, our that be over differ making our results actual as forward-looking cause differ statements filings. Kevin. With are Factors during Actual it comments. could and turn today's included materially here to today's from well Q&A as

Kevin Mitchell

Thank quarter, and and business. second everyone. Phillips financial In operating XX performance you, the results good solid the across reliable delivered Jeff afternoon, Partners

wholly earnings owned Our on venture assets. reflect joint and higher throughput our

During sheet committed approved capital reliable Board common first pipeline XX Directors a the per The remains allocation. advanced our project storage to be the to of pipeline this facilities the the from expected both the program, the supported second area. are commencing of pipeline service quarter disciplined of balance of long to operations, XXXX. in and the year. optimization is fourth quarter by connecting commitments. Clemens The phase Bakken CXG safe, petrochemical to with of in Phillips unchanged strong The July, Caverns this next to we month. term In quarter Corpus continue Partners Bakken CXG Christi the and pipeline operational unit, construction the continues pipeline of $X.XXX quarter the capital progress incremental capacity distribution

of million. million slide quarter X of financial second with $XX loss discuss reported $XXX a compared to quarter Partners Phillips to results. XX earnings first Moving

the $XX increase in and from $XXX volumes exit costs and Liberty impairment prior results an utilization XX $XXX the improvement the due pipeline EBITDA quarter from quarter a following include partnerships Our pipeline of decision well higher project. million million terminal earnings The resulting quarter, first was operated this EBITDA quarter. Adjusted to lower refineries. reflect increase winter volumes and storms, the as Phillips to utility adjusted as first higher million

debt financial our offset We million, on The We is Second the below Slide million million $XXX consistent in under with revolving prior $X quarter. distributable EBITDA ended remain credit improved flow project. during included liquidity. The maintenance second the our of cash capital reflects was the up on Bakken the basis second increase for target X.X, partly $XXX and quarter from a growth quarter pipeline of the a quarter. of by X.X. $XX optimization cash the CXG funded quarter. covenant flexibility revolver pipeline available earnings, This which $XX million with funding higher and highlights to X facility. capital are ratio was and spends to million which

of million $XX borrowed exempt partnerships revolving the term concludes remarks. our $XXX Proceeds under under new This used repaid April, million tax prepared primarily a In amounts X.XX. agreement. credit repay and was ratio were coverage to bonds distribution facility. Our borrowed loan

We will line now open questions. the for

Operator

Thank you.

Suisse. line Instructions] now answer Credit comes Your begin first [Operator session. the question with of Spiro and Dounis will We question the from

Spiro Dounis

on specific hear half the look what Maybe half? add year but of you're the and helpful we the in macro Anthony the team. be to drivers to second We'll relative just second environment. might into guidance your as here maybe not providing Hey, practice help the generally any the firm hoping Kevin, like was to first of thoughts performance frame half.

Kevin Mitchell

Spiro. Yes,

make to going Tim's think I few that. a on comments

Tim Roberts

macros, storms. the the coupled you impacted to first there with regard fact and quarter winter element there's obviously that mean, by had a the Yes. was Spiro. seasonal one I With

up you as to So We we've would seasonality. refining benefited And quarter picked production with basins. on generally you there demand been second in third through too But as obviously seen seeing picking the regard are overall things is fourth demand elements quarter, see from up clearly the quarter. also market as utilization. to I pick were the nothing through normalization up is moving And XQ some then continues in extreme. in But speaking, and some quarter globally. continue constructive, globally. expect into to a increasing we mean, especially then are out very COVID that that the there third we've going recovery nonetheless, some a feel

Spiro Dounis

Great, Kim, thanks for that.

just question re is return. given Seeing outlook. in to capital formalize programs peers some now the around growth distribution and and Second that stabilization macro commence start just that buyback

or right imagine around is scene attractive, that sort PSXP, sort north of but I'm today, So I'm first, and to now, see as will distribution growth your be either helpful levels seeing initiate to XX%, of duration buyback lay just of trading curious yields a sort say are we here that you've what of ECF at goals buyback program there you specifically, sure course we're peers you some or of how guys capital describe out. of got need that buyback reconvince return

Kevin Mitchell

Spiro. Yes

really As comes allocation priorities, the to and all overall manage you it look capital how coverage at leverage. down we

outflows, that's from maintenance got going the committed continue. to So in capital terms the a, which we've of

the a the the where we've into to that had the year, of limited or historically there's you is or that this than overall opportunities compared historical maintenance earlier future So time, from for MLP quite different million. and are probably this of you more so. much things is years look strong. that But million overall, the years, give think flexibility. I And in X.XX, at in $XXX actually which, standpoint $XXX continues that That's at that same scheme this you be low as anticipate budgets to levels. capital I we capital don't coverage as But year, quarter relatively dramatically PSXP growth the budget doesn't look being

the reasons think, it second because lower and we one is had I strong in a quarter the maintenance was capital. of

revert the of whatever you a maybe $XX capital of to discretionary some uses absolute that's more capital other capital to may terms million, maintenance basically normal quarter So then coverage in dollar you there. can growth and of have out fund

of So within available have we some of of is cash least growth think I much the the to overall room beyond lot there period don't modest construct at amounts a for that capital of do of time, sort available. a

Spiro Dounis

Kevin. thanks. covered. Thanks All right, that Got it. That’s a super for

Kevin Mitchell

Spiro. Thanks

Operator

the Wells with comes from next of line Your Blum Michael question Fargo.

Michael Blum

capital? the I afternoon. you you really your of small expand kind a on thoughts family of Thanks. just just to of stay little to want Good view not whether maybe then really a these either on on Can isn't growth within bit comments nature finance large your or potential any see those I the on just answer Do if any it on if projects structure the topics. maybe horizon you how and love is growth midstream. Philips need there latest the MLP in

Kevin Mitchell

Yes.

tend they is call they I attractive infrastructures. relatively around be optimization a to be And opportunities will them existing invest be projects of continue economics. think continued, to assets. those. small you'll that projects, really also to They to PSXP but around very I'll nice portfolio see tend the

that. continue to And so we'll do

needs where, at place the environment, step of the Given where already sort feed of just the macro right generally of back to is if major of you in and pieces look the there there. midstream are sort infrastructure

organic So projects. it's you're growth less in going that investment I think see much significant likely to

I on going So to that? be Tim any think standpoint. smaller of that projects perspective more continuation these type of from have other optimization you do it's some

Tim Roberts

[indiscernible] of We as give to had our on incremental covered and we our we're the you've To about as bit projects, us tank type pipe. of terminals, of some think may miles one scope racks. that's smaller little talking a opportunities. far storage is maybe context truck optimization XX at the going But we it. add the may in have sites, of to a add I Michael be of on

Unidentified Analyst

Great. Thank you very much.

Operator

Your comes question John Mackay the from of with Sachs. next Goldman line

John Mackay

part time. quite wanted didn't up there. everyone, I thanks that on question Michael's answer for the an Hey, just of get follow to

just or talking two about of PSX can outlook the what think could you looking a minute curious is from PSXP spend strategic there if and kind at be? a how I here standpoint

Kevin Mitchell

the Well, to a is ago. in XX-D do done, I we've to that can that filing a and coming must all year think this given PSXP I be we was what think call, up I is reference the in past iterate think said we

true particular any for it there PSX the it basically is about leave the that And certainly But year ago. I statements no Now a decisions at And the path that, this alternatives. around flexibility those or just the hold gives was XX-D flexibility the PSX point. that think on But MLP. forward it not gave we say does to path forward. to still consider that obligate to at consider alternatives more was really

John Mackay

the come like something if maybe of ago. it in on smaller one, you a in to could of would that be guys we of couple messaging. looks like XXXX could that -- these up. the fine like lot that about releases, a hey, or feels just it But terms think maybe keep talking where, projects terms to that's start year, been releases I in of kind just kind things see months have of thinking in I'm six expect just next thing don't like smaller lower? CapEx Are one

Kevin Mitchell

It's us about with $X it think million project. a a Yes. on be Look, of I for to the the project. regard hard maybe size does to depend talking release

of of it mean, adding I dollars the can XXs but onto the or of these, pipe existing pipe, you're the of stub millions a lateral not say you depends get what mean up with millions some of I XXXs there, some of project tanks. some into would would I size be. an pipeline if dollars. on a So

you some in feels that we me during completed. material our are earnings off, where underway So certainly are is or underway that projects and Qs about it we'll talk sort projects release have of obviously, are most on give or that PSXP hard it's being projects but cut depending for that even calls that to or would

John Mackay

sense. much. That makes you very Thank

Operator

JPMorgan. Your from the Tonet next question line of comes with Jeremy

Jeremy Tonet

Hi, good afternoon.

Kevin Mitchell

Hi Jeremy.

Jeremy Tonet

Wondering there capacity cost are there. put provide with to What just online And that? if with expansion for to any color expansion the first DAPL you in that want what approvals service? that was the start PSXP type first regulatory able are as of come online, some capacity here? coming to be as expansion needed was might far on I the this

Kevin Mitchell

thanks. question. Yes, Jeremy, Good

through that So the yes little be That's PSXP think The zero capital bit where is spending relative of so next around number. XXX,XXX million $XXX front. at we'll we day. the or expansion a kind year a kind barrels to $XXX kind invested capital XXXX of takes capacity of million. on under to up is in We a

Tim Roberts

regulatory those received. the have And already on approvals, been

So in nothing point outstanding time. at this

Kevin Mitchell

Starting up this month.

Tim Roberts

capability [indiscernible] permissioning and That it Yes. started and --

Jeremy Tonet

perspective then being helpful. cracker the Thanks to with very CXG other is to timeline That's just here tied pipeline any drivers to the that shift? that. And or [indiscernible]

Kevin Mitchell

last timeline bound of And kind real No, service between was it's some completion the be of flow the would all really we've and shift. But the to I some mechanical barrels weather in said there potential be end. North may still date material. wouldn't of commercial And related them anyway be then the of in that kind year along at that kind we year. and think window With North narrowed. those said for commercial weather delays volumes bound didn't expect expect be we to to material service has quarter, end

the underpinning NBCs to larger change project of or no in that the the So service ultimate project. date

Jeremy Tonet

if little It a it. been sneak the And has terminals, last has bit particularly activity Got in. seems And what very like helpful. That's Thanks. relates liquids, a it on midstream more to the changed one, M&A bit. side landscape you. I there logistics, could it as maybe have

consolidation, any sector want Just thought share all, if the midstream at there's you guess to wondering, on PSXP's I thoughts there.

Kevin Mitchell

down least And think we that consolidation view consolidation, value that idle I needs precludes create heard that capital space you Jeremy, midstream plants Difficulty] consolidation some a with it structure big a say past the part available shut the compete be, efficiencies, ultimately, of many one that with so picture, and at think you've across infrastructure potentially out happening. I I there governance that's be there these stream just probably the think if midstream. MLPs drive some way. we sort players impediments lot or of different of mid of more for just of is think to business in the think of that [Technical which to models I and and so to do needs But there's some to the across easier in us the well, leverage take

Operator

have today's now will the We of end over reached I to turn call. Jeff. call the back

Jeff Dietert

Shannon Thank have you Please interest give for a you. questions. any follow or your up you XX me Partners. call in if Thank Phillips

Operator

you. Thank Ladies concludes this today's gentlemen conference. and

You may now disconnect.

Phillips 66 Partners (PSXP) 3 Aug 212021 Q2 Earnings call transcript