Phillips 66 first Quarter Conference Calls22.q4cdn.com/.../Q2-2017-Press-Release-Slides-Final.pdf · 2017-09-29 · This presentation contains certain forward-looking statements within

PHILLIPS 66 SECOND QUARTER 2017 CONFERENCE CALL August 1, 2017

This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and

Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Words and

phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “intends,” “objectives,” “projects,”

“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 relating to Phillips 66’s operations (including joint venture operations) are based on

management’s expectations, estimates and projections about the company, its interests and the energy industry in general on the date this

presentation was prepared. These statements are not guarantees of future performance and 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

fluctuations in NGL, crude oil, petroleum products and natural gas prices, and refining, marketing and petrochemical margins; unexpected changes in

costs for constructing, modifying or operating our facilities; unexpected difficulties in manufacturing, refining or transporting our products; lack of, or

disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas and refined products; potential liability from litigation or for

remedial actions, including removal and reclamation obligations, under environmental regulations; limited access to capital or significantly higher cost

of capital related to illiquidity or uncertainty in the domestic or international financial markets; and other economic, business, competitive and/or

regulatory factors affecting Phillips 66’s businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 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.

This presentation includes non-GAAP financial measures. You can find the reconciliations to comparable GAAP financial measures at the end of the

presentation materials or in the “Investors” section of our website.

CAUTIONARY STATEMENT

2

3

EXECUTING THE STRATEGY

CPChem Polyethylene Units, Old Ocean, TX

4

OVERVIEW 2Q 2017

Adjusted earnings $569 MM

Adjusted EPS $1.09

Operating cash flow $1,865 MM

Capital expenditures and investments $458 MM

Shareholder distributions1 $741 MM

(1) Shareholder distributions include dividends and share repurchases

Net-debt-to-capital ratio 25%

Annualized adjusted YTD ROCE 6%

294

569 (13) (5)

235

77

(19)

1Q 2017

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

2Q 2017

Adjusted

Earnings

2Q 2017 Adjusted Earnings

$MM

64 (142) 233 196 218

ADJUSTED EARNINGS 2Q 2017

5

77 64

(4) (3)(4) (2)

1Q 2017

Adjusted

Earnings

Transportation NGL DCP

Midstream

Noncontrolling

Interests

2Q 2017

Adjusted

Earnings

MIDSTREAM 2Q 2017

74 14 13

2Q 2017 Adjusted Net Income

6

$MM

Transportation planned maintenance

Bakken Pipeline startup

Seasonally low U.S. LPG demand

First DCP Midstream cash

distribution since 2014

6

(37)

201 196

18

(24)

1

1Q 2017

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 2Q 2017

Adjusted

Earnings

CHEMICALS 2Q 2017

179 21 (4)


7

$MM

98% O&P capacity utilization

Higher O&P chain cash margin

Lower SA&S equity earnings

7

(2)

233

159

(11)

(33)

120

1Q 2017

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf Coast Central

Corridor

West Coast 2Q 2017

Adjusted

Earnings

$MM

REFINING 2Q 2017

8

109 29 56 39


98% crude utilization

85% clean product yield

$8.44/BBL realized margin

$154 MM pre-tax turnaround costs

14.06

8.44

(2.51)

(2.44)

0.63

(1.30)

Market

3:2:1

Configuration Secondary

Products

Feedstock Other Realized

Margin

WORLDWIDE REFINING $/BBL

REFINING MARGINS – MARKET VS. REALIZED 2Q 2017

9

Avg Market Crude: $49.77/BBL 60% Market Capture

141

218

61 16

1Q 2017

Adjusted

Earnings

Marketing

& Other

Specialties 2Q 2017

Adjusted

Earnings

MARKETING AND SPECIALTIES 2Q 2017

185 33


10

Strong global Marketing margins

Marketing volumes higher due to

seasonal demand

Improved base oil margins

$MM

(123)(142)

(2)

(17)

1Q 2017

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead

& Other

2Q 2017

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 2Q 2017

11

1.5

2.2

0.7

1.2 (0.5)

(0.7)

March 31

Cash Balance*

CFO

(excludingWorking

Capital)

Working

Capital

Capital

Expenditures & Investments

Shareholder

Distributions

June 30

Cash Balance*

$B

CASH FLOW 2Q 2017

12 * Includes cash and cash equivalents. March 31 balance excludes $0.1 B of restricted cash.

Global Olefins & Polyolefins utilization Mid-90%

Refining crude utilization Mid-90%

Corporate & Other costs (after-tax) $125 MM - $140 MM

Refining turnaround expenses (pre-tax) $50 MM - $80 MM

13

OUTLOOK 3Q 2017

PHILLIPS 66 SECOND QUARTER 2017 CONFERENCE CALL

Questions and Answers

PHILLIPS 66 SECOND QUARTER 2017 CONFERENCE CALL

Appendix

ESTIMATED SENSITIVITIES 2017

16 Sensitivities shown above are independent and are only valid within a limited price range

Midstream - DCP (net to Phillips 66)

10¢/Gal Increase in NGL price 5

10¢/MMBtu Increase in Natural Gas price 1

$1/BBL Increase in WTI price 1

Chemicals - CPChem (net to Phillips 66)

1¢/Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 35

Worldwide Refining

$1/BBL Increase in Gasoline Margin 215

$1/BBL Increase in Distillate Margin 190

$1/BBL Widening WTI / WCS Differential (WTI less WCS) 40

$1/BBL Widening LLS / Maya Differential (LLS less Maya) 35

$1/BBL Widening LLS / Medium Sour Differential (LLS less Medium Sour) 20

$1/BBL Widening WTI / WTS Differential (WTI less WTS) 10

$1/BBL Widening LLS / WTI Differential (LLS less WTI) 10

$1/BBL Widening ANS / Medium Sour Differential (ANS less Medium Sour) 10

$1/BBL Widening ANS / WCS Differential (ANS less WCS) 5

10¢/MMBtu Increase in Natural Gas price (10)

Impacts due to Actual Crude Feedstock Differing from Feedstock Assumed in Market Indicators:

Annual Net Income $MM

22. 0 23. 9 23. 7 23. 7 23. 8

21. 6 23. 1

22. 4 22. 4 22. 4

8. 6 8. 9

10. 1 10. 2 10. 0 8. 6 7. 8 7. 7 7. 9 7. 7

5.2 3.1 2.7

1.5 2.2

5.2 3.0 2.7 1.5 2.2

28%27%

30% 30% 30%28%

25% 26% 26% 26%

13%

20%

24%

27%

25%

14%

17%18%

22%

20%

2014 2015 2016 1Q

2017

2Q

2017

2014 2015 2016 1Q

2017

2Q

2017

Equity $B Debt $B Cash & Cash Equivalents $B Debt-to-Capital Net-Debt-to-Capital

CAPITAL STRUCTURE 2014 – 2017

17

Consolidated PSX Excluding PSXP

14.78

7.90

(2.58)(1.13)

(2.11)(1.06)

Market

3:2:1


Products


Margin

ATLANTIC BASIN / EUROPE $/BBL


18

Market 3:2:1 – Dated Brent / Gasoline 83.7 RBOB NYH / Diesel 15ppm NYH

Brent: $49.83/BBL 103% Crude Capacity Utilization 53% Market Capture

11.10

6.74

(2.42)

(2.98)

1.52

(0.48)

Market

3:2:1


Products


Margin

GULF COAST $/BBL


19

Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm

LLS: $50.31/BBL 96% Crude Capacity Utilization 61% Market Capture

14.27

9.96

(1.74)

(2.61)

1.73

(1.69)

Market

3:2:1


Products


Margin

CENTRAL CORRIDOR $/BBL


20

Market 3:2:1 – WTI / Gasoline Unl Sub Octane Group 3 / ULSD Group 3

WTI: $48.24/BBL 94% Crude Capacity Utilization 70% Market Capture

18.83

10.83

(2.88)

(3.16)

1.63

(3.59)

Market

3:2:1


Products


Margin

WEST COAST $/BBL


21

Market 3:2:1 – ANS / Los Angeles CARBOB / Los Angeles No. 2 CARB

ANS: $50.68/BBL 102% Crude Capacity Utilization 58% Market Capture

499 569

25 6

81

(11)(31)

2Q 2016

Adjusted

Earnings

Midstream Chemicals Refining Marketing

& Specialties

Corporate

& Other

2Q 2017

Adjusted

Earnings


$MM

ADJUSTED EARNINGS 2Q 2017 VS. 2Q 2016

22

64 (142) 233 196 218

39

64

22

(6)

23 (14)

2Q 2016

Adjusted

Earnings

Transportation NGL DCP

Midstream

Noncontrolling

Interests

2Q 2017

Adjusted

Earnings

$MM

MIDSTREAM 2Q 2017 VS. 2Q 2016

23

74 14 13

2Q 2017 Adjusted Net Income

(37)

190 196

9

(4)

1

2Q 2016

Adjusted

Earnings

Olefins &

Polyolefins

Specialties,

Aromatics &

Styrenics

Other 2Q 2017

Adjusted

Earnings

$MM

CHEMICALS 2Q 2017 VS. 2Q 2016

24

179 (4) 21


152

233

74

51

(26) (18)

2Q 2016

Adjusted

Earnings

Atlantic

Basin /

Europe

Gulf

Coast

Central

Corridor

West Coast 2Q 2017

Adjusted

Earnings

$MM

REFINING 2Q 2017 VS. 2Q 2016

25

109 29 56 39


229 218

(14)

3

2Q 2016

Adjusted

Earnings

Marketing

& Other

Specialties 2Q 2017

Adjusted

Earnings

$MM

MARKETING AND SPECIALTIES 2Q 2017 VS. 2Q 2016

26

185 33


(111)

(142)

(15)

(16)

2Q 2016

Adjusted

Net Loss

Net Interest

Expense

Corporate

Overhead

& Other

2Q 2017

Adjusted

Net Loss

$MM

CORPORATE AND OTHER 2Q 2017 VS. 2Q 2016

27

2.7 2.2

(0.9)

0.5

2.0

(0.7)

(1.4)

December 31,

2016Cash

Balance*

CFO

(excludingWorking

Capital)

Working

Capital

Capital

Expenditures& Investments

Shareholder

Distributions

Other June 30,

2017Cash

Balance*

$B

CASH FLOW YTD 2017

28 * Includes cash and cash equivalents.

29

NON-GAAP RECONCILIATIONS

* We generally tax effect taxable U.S.-based special items using a combined federal and state statutory income tax rate of approximately 38 percent. Taxable special items attributable to foreign locations

likewise use a local statutory income tax rate. Nontaxable events reflect zero income tax. These events include, but are not limited to, most goodwill impairments, transactions legislatively exempt from

income tax, transactions related to entities for which we have made an assertion that the undistributed earnings are permanently reinvested, or transactions occurring in jurisdictions with a valuation

allowance.

** Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the GAAP diluted

earnings per share calculation.

2017

Jun YTD 2Q 1Q Jun YTD 2Q

Phillips 66

Net Income (Loss) Attributable to Phillips 66 1,085$ 550$ 535$ 881$ 496$

Pre-tax Adjustments:

Pending claims and settlements (24) (24) (45)

Pension settlement expense 55 55

Impairments by equity affiliates 33 33 6

Recognition of deferred logistics commitments 30 30

Gain on consolidation of business (423) (423)

Tax impact of adjustments * 137 (12) 149 3 (11)

Other tax impacts - - - (16) (16)

Adjusted Net Income (Loss) Attributable to Phillips 66 863$ 569$ 294$ 859$ 499$

Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) ** 2.07$ 1.06$ 1.02$ 1.65$ 0.93$

Adjusted Net Income (Loss) Attributable to Phillips 66 Per Share of Common Stock (dollars) ** 1.65$ 1.09$ 0.56$ 1.61$ 0.94$

Millions of Dollars

Except as Indicated

2016

30



Midstream

Net Income (Loss) Attributable to Phillips 66 136$ 59$ 77$ 104$ 39$


Pending claims and settlements (45)


Impairments by equity affiliates 6

Tax impact of adjustments (3) (3) 14


Chemicals



Impairments by equity affiliates 33 33

Tax impact of adjustments (13) (13)


2017 2016

Millions of Dollars

Except as Indicated

31



Refining



Pending claims and settlements (21) (21)




Tax impact of adjustments 157 (5) 162 (11) (11)

Other tax impacts (16) (16)

Adjusted Net Income (Loss) Attributable to Phillips 66 231$ 233$ (2)$ 238$ 152$

Marketing & Specialties






Corporate and Other

Net Income (Loss) Attributable to Phillips 66 (266)$ (143)$ (123)$ (238)$ (111)$





Adjusted Net Income (Loss) Attributable to Phillips 66 (265)$ (142)$ (123)$ (238)$ (111)$

Millions of Dollars

Except as Indicated

2017 2016

32



Midstream - Transportation

Net Income (Loss) 152$ 74$ 78$ 162$ 80$


Tax impact of adjustments

Adjusted Net Income (Loss) 152$ 74$ 78$ 162$ 80$

Midstream - NGL

Net Income (Loss) 26$ 9$ 17$ (15)$ (9)$




Adjusted Net Income (Loss) 31$ 14$ 17$ (15)$ (9)$

Midstream - DCP Midstream

Net Income (Loss) Attributable to Phillips 66 30$ 13$ 17$ (5)$ (9)$


Pending claims and settlements (45)

Impairments by equity affiliates 6

Tax impact of adjustments 14

Adjusted Net Income (Loss) Attributable to Phillips 66 30$ 13$ 17$ (30)$ (9)$

Millions of Dollars

Except as Indicated

2017 2016

33



Refining - Atlantic Basin / Europe

Net Income (Loss) Attributable to Phillips 66 57$ 107$ (50)$ 36$ 32$





Tax impact of adjustments (2) (2) (11) (11)

Other tax impacts (16) (16)

Adjusted Net Income (Loss) Attributable to Phillips 66 59$ 109$ (50)$ 39$ 35$

Refining - Gulf Coast






Tax impact of adjustments 160 (2) 162


Millions of Dollars

Except as Indicated

2017 2016

34



Refining - Central Corridor







Refining - West Coast

Net Income (Loss) Attributable to Phillips 66 (44)$ 37$ (81)$ 51$ 57$





Adjusted Net Income (Loss) Attributable to Phillips 66 (42)$ 39$ (81)$ 51$ 57$

Millions of Dollars

Except as Indicated

2017 2016

35



Marketing & Specialties - Marketing & Other



Asset dispositions 7 7



Marketing & Specialties - Specialties





Millions of Dollars

Except as Indicated

20162017

36

* Capital employed is total equity plus total debt


2017 June YTD Phillips 66

Numerator ($MM)

Net Income 1,144$

After-tax interest expense 138$

GAAP ROCE earnings 1,282$

After-tax special items (222)$

Adjusted ROCE earnings 1,060$

Denominator ($MM)

GAAP average capital employed * 33,817$

2017 Annualized GAAP ROCE 8%

2017 Annualized Adjusted ROCE 6%

37


* PSXP's third-party debt and Phillips 66's noncontrolling interest attributable to PSXP

Phillips 66

Consolidated

Phillips 66

Partners *

Adjusted

Phillips 66

Total Debt 9,965$ 2,252$ 7,713$

Total Equity 23,806$ 1,410$ 22,396$

Debt-to-Capital Ratio 30% 26%

Total Cash & Cash Equivalents 2,161$ 1$ 2,160$

Net-Debt-to-Capital Ratio 25% 20%

2017

2Q

Millions of Dollars

38


Growth Sustaining Total Growth Sustaining Total

Capital Expenditures and Investments

Midstream 161$ 38$ 199$ 309$ 72$ 381$

Refining 97$ 119$ 216$ 208$ 267$ 475$

Marketing & Specialties 13$ 10$ 23$ 21$ 17$ 38$

Corporate and Other -$ 20$ 20$ 1$ 33$ 34$

Total 271$ 187$ 458$ 539$ 389$ 928$

Millions of Dollars

2017

June YTD2Q

Millions of Dollars

2017

39


PSX Effective Tax Rate Millions of Dollars

2017

2Q

Effective Tax Rates

Income before taxes 848$

Special items 31$

Adjusted income before taxes 879$

Provision for taxes 267$

Special items 12$

Adjusted provision for taxes 279$

GAAP effective tax rate 31.5%

Adjusted effective tax rate 31.7%

PSXP Run-rate EBITDA:

PSXP’s run-rate EBITDA is a forecast of future EBITDA, and is based on the Partnership’s projections of annual EBITDA inclusive of both

currently owned assets ($675 million) and future potential acquisitions by the Partnership ($1.1 billion). Run-rate EBITDA is included to

demonstrate the historical growth of the Partnership through June 30, 2017, as well as management’s intention of future growth through

acquisitions and organic projects. We are unable to present a reconciliation of run-rate EBITDA to net income, which is the nearest GAAP

financial measure, because certain elements of net income, including interest, depreciation and taxes, were not used in the forecasts and are

therefore not available. Together, these items generally result in run-rate EBITDA being significantly greater than net income.

Documents

Phillips 66 first Quarter Conference Calls22.q4cdn.com/.../Q2-2017-Press-Release-Slides-Final.pdf · 2017-09-29 · This presentation contains certain forward-looking statements within