Slide 1: Second Quarter 2018 Conference Call
PHILLIPS 66 SECOND QUARTER 2018 CONFERENCE CALL July 27, 2018 1
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT 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. Wo
Slide 3: Executing the Strategy
EXECUTING THE STRATEGY Bayway Refinery, Linden, New Jersey 3
Slide 4: Overview 2Q 2018
OVERVIEW 2Q 2018 $MM (unless otherwise noted) 2Q 2018 Adjusted earnings $ 1,322 Adjusted EPS1 2.80 Operating cash flow 2,364 Capital expenditures and investments 538 Shareholder distributions2 602 (1) Dollars per share (2) Shareholder distributions include dividends and share repurchases 4
Slide 5: Adjusted Earnings 2Q 2018
ADJUSTED EARNINGS 2Q 2018 $MM 822 21 (21) (11) 1,322 30 (31) 512 1Q 2018 Midstream Chemicals Refining Marketing Corporate Noncontrolling 2Q 2018 Adjusted & Specialties & Other Interests Adjusted Earnings Earnings 202 262 911 195 (183) (65) 2Q 2018 Adjusted Net Income (Loss) 5
Slide 6: Midstream 2Q 2018
MIDSTREAM 2Q 2018 $MM Higher transportation volumes following refinery turnarounds 1 (23) (9) NGL volumes exceeded design capacity 233 202 Increased DCP volumes 1Q 2018 Transportation NGL and Other DCP 2Q 2018 Adjusted Midstream Adjusted Net Income Net Income 137 50 15 2Q 2018 6
Slide 7: Chemicals 2Q 2018
CHEMICALS 2Q 2018 $MM 95% O&P capacity utilization 14 23 (7) Strong operations at new U.S. Gulf Coast assets 262 232 Higher SA&S results following 1Q turnarounds 1Q 2018 Olefins & Specialties, Other 2Q 2018 Adjusted Polyolefins Aromatics & Adjusted Net Income Styrenics Net Income 247 32 (17) 2Q 2018
Slide 8: Refining 2Q 2018
REFINING 2Q 2018 $MM 100% crude utilization 155 84% clean product yield 189 274 $12.28/BBL realized margin 911 204 $60 MM pre-tax turnaround costs 89 1Q 2018 Atlantic Gulf Coast Central West Coast 2Q 2018 Adjusted Basin / Corridor Adjusted Net Income Europe Net Income 131 275 392 113 2Q 2018 8
Slide 9: Refining Margins – Market vs. Realized
REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 WORLDWIDE REFINING $/BBL 3.15 (2.17) (0.75) (2.81) 14.86 12.28 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Avg Market Crude: $72.41/BBL 83% Market Capture 9
Slide 10: Marketing and Specialties 2Q 2018
MARKETING AND SPECIALTIES 2Q 2018 $MM Strong marketing margins 16 5 Marketing volumes higher due to seasonal demand 195 174 Refined products exports of 200,000 BPD Reimaged 250 marketing sites 1Q 2018 Marketing Specialties 2Q 2018 Adjusted & Other Adjusted Net Income Net Income 145 50 2Q 2018 10
Slide 11: Corporate and Other 2Q 2018
CORPORATE AND OTHER 2Q 2018 $MM 1Q 2018 Corporate 2Q 2018 Adjusted Net Interest Overhead Adjusted Net Loss Expense & Other Net Loss (162) (183) (12) (9) 11
Slide 12: Cash Flow 2Q 2018
CASH FLOW 2Q 2018 $B 0.7 1.7 (0.5) 0.1 (0.6) (0.3) 1.9 0.8 March 31 CFO Working Capital Shareholder Debt Other June 30 Cash (excluding Capital Expenditures Distributions Cash Balance* Working & Investments Balance* Capital) * Includes cash and cash equivalents 12
Slide 13: Outlook 3Q 2018
OUTLOOK 3Q 2018 Global Olefins & Polyolefins utilization Mid-90% Refining crude utilization Mid-90% Refining turnaround expenses (pre-tax) $60 MM - $80 MM Corporate & Other costs (after-tax) $170 MM - $190 MM 13
Slide 14: Questions and Answers
PHILLIPS 66 SECOND QUARTER 2018 CONFERENCE CALL Questions and Answers 14
Slide 15: Appendix
PHILLIPS 66 SECOND QUARTER 2018 CONFERENCE CALL Appendix 15
Slide 16: Estimated Sensitivities
ESTIMATED SENSITIVITIES 2018 Annual Net Income $MM 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) 45 Wor
Slide 17: Capital Structure
CAPITAL STRUCTURE 2015 – 2018 Consolidated PSX Excluding PSXP 32% 31% 30% 31% 28% 27% 27% 28% 27% 26% 27% 25% 24% 23% 20% 22% 20% 18% 17% 27.4 23.9 24.3 25.0 25.1 14% 23.7 23.1 22.6 22.4 22.0 11.6 11.4 8.9 10.1 10.1 7.8 7.7 8.7 8.4 1.9 7.2 1.7 0.8 0.7 3.1 2.7 3.1 3.0 2.7 2.9 2015 2016 2017 1Q 2Q 201
Slide 18: Refining Margins – Atlantic Basin / Europe
REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 ATLANTIC BASIN / EUROPE $/BBL Brent: $74.35/BBL 92% Crude Capacity Utilization 73% Market Capture (2.03) (0.42) (1.10) (0.21) 14.18 10.42 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – Dated Brent / Gasoline
Slide 19: Refining Margins – Gulf Coast
REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 GULF COAST $/BBL LLS: $73.11/BBL 102% Crude Capacity Utilization 87% Market Capture 4.22 (1.92) (1.14) 11.39 (2.62) 9.93 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10pp
Slide 20: Refining Margins – Central Corridor
REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 CENTRAL CORRIDOR $/BBL WTI: $67.99/BBL 104% Crude Capacity Utilization 97% Market Capture 6.16 (0.69) (1.79) (4.21) 18.04 17.51 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – WTI / Gasoline Unl Sub Octane Gr
Slide 21: Refining Margins – West Coast
REFINING MARGINS – MARKET VS. REALIZED 2Q 2018 WEST COAST $/BBL ANS: $74.10/BBL 100% Crude Capacity Utilization 68% Market Capture (2.59) 2.26 (0.98) 18.74 (4.66) 12.77 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – ANS / Los Angeles CARBOB / Los Angeles
Slide 22: Adjusted Earnings 2Q 2018 vs. 2Q 2017
ADJUSTED EARNINGS 2Q 2018 VS. 2Q 2017 $MM 678 (23) (35) (34) 66 101 1,322 569 2Q 2017 Midstream Chemicals Refining Marketing Corporate Noncontrolling 2Q 2018 Adjusted & Specialties & Other Interests Adjusted Earnings Earnings 202 262 911 195 (183) (65) 2Q 2018 Adjusted Net Income (Loss) 22
Slide 23: Midstream 2Q 2018 vs. 2Q 2017
MIDSTREAM 2Q 2018 VS. 2Q 2017 $MM 36 2 63 202 101 2Q 2017 Transportation NGL and Other DCP 2Q 2018 Adjusted Midstream Adjusted Net Income Net Income 137 50 15 2Q 2018 23
Slide 24: Chemicals 2Q 2018 vs. 2Q 2017
CHEMICALS 2Q 2018 VS. 2Q 2017 $MM 11 68 (13) 262 196 2Q 2017 Olefins & Specialties, Other 2Q 2018 Adjusted Polyolefins Aromatics Adjusted Net Income & Styrenics Net Income 247 32 (17) 2Q 2018 24
Slide 25: Refining 2Q 2018 vs. 2Q 2017
REFINING 2Q 2018 VS. 2Q 2017 $MM 74 363 219 911 233 22 2Q 2017 Atlantic Gulf Central West Coast 2Q 2018 Adjusted Basin / Coast Corridor Adjusted Net Income Europe Net Income 131 275 392 113 2Q 2018 25
Slide 26: Marketing and Specialties 2Q 2018 vs. 2Q 2017
MARKETING AND SPECIALTIES 2Q 2018 VS. 2Q 2017 $MM 17 (40) 218 195 2Q 2017 Marketing Specialties 2Q 2018 Adjusted & Other Adjusted Net Income Net Income 145 50 2Q 2018 26
Slide 27: Corporate and Other 2Q 2018 vs. 2Q 2017
CORPORATE AND OTHER 2Q 2018 VS. 2Q 2017 $MM 2Q 2017 Corporate 2Q 2018 Adjusted Net Interest Overhead Adjusted Net Loss Expense & Other Net Loss (148) (183) (34) (1) 27
Slide 28: Cash Flow YTD 2018
CASH FLOW YTD 2018 $B 3.0 (0.1) (0.9) 1.2 3.1 $1.9 (4.4) December 31, CFO Working Capital Shareholder Debt June 30, 2017 (excluding Capital Expenditures Distributions 2018 Cash Working & Investments Cash Balance* Capital) Balance* * Includes cash and cash equivalents 28
Slide 29: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Jun YTD 2Q 1Q Jun YTD 2Q Phillips 66 Consolidated Earnings $ 1,863 1,339 524 1,085 550 Pre-tax Adjustments: Pending claims and settlements — — — (24) (24) Pension settlement expense — — — 55 55 Impairments by equity affiliate
Slide 30: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Jun YTD 2Q 1Q Jun YTD 2Q Midstream Net Income $ 435 202 233 208 96 Pre-tax Adjustments: Pension settlement expense — — — 8 8 Tax impact of adjustments — — — (3) (3) Adjusted Net Income $ 435 202 233 213 101 Chemicals Net Inco
Slide 31: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Jun YTD 2Q 1Q Jun YTD 2Q Refining Net Income $ 1,001 910 91 483 224 Pre-tax Adjustments: Pending claims and settlements — — — (21) (21) Gain on consolidation of business — — — (423) — Certain tax impacts (1) 1 (2) — — Pension
Slide 32: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Jun YTD 2Q 1Q Jun YTD 2Q Corporate and Other Net Loss $ (362) (207) (155) (279) (149) Pre-tax Adjustments: Pending claims and settlements — — — (3) (3) Pension settlement expense — — — 5 5 Tax impact of adjustments — — — (1)
Slide 33: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Jun YTD 2Q 1Q Jun YTD 2Q Midstream - Transportation Net Income $ 273 137 136 152 74 Pre-tax Adjustments: Tax impact of adjustments — — — — — Adjusted Net Income $ 273 137 136 152 74 Midstream - NGL and Other Net Income $ 123
Slide 34: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Jun YTD 2Q 1Q Jun YTD 2Q Refining - Atlantic Basin / Europe Net Income (Loss) $ 58 131 (73) 57 107 Pre-tax Adjustments: Pending claims and settlements — — — (5) (5) Pension settlement expense — — — 9 9 Tax impact of adjustmen
Slide 35: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Jun YTD 2Q 1Q Jun YTD 2Q Refining - Central Corridor Net Income $ 595 392 203 89 27 Pre-tax Adjustments: Pending claims and settlements — — — (5) (5) Pension settlement expense — — — 8 8 Tax impact of adjustments — — — (1) (1
Slide 36: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Jun YTD 2Q 1Q Jun YTD 2Q Marketing & Specialties - Marketing & Other Net Income $ 326 187 139 305 181 Pre-tax Adjustments: Certain tax impacts (69) (56) (13) — — Pension settlement expense — — — 7 7 Tax impact of adjustments
Slide 37: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars 2018 2Q Atlantic Central Basin/Europe Gulf Coast Corridor West Coast Worldwide Realized Refining Margins Net income $ 131 275 392 112 910 Plus: Income tax expense 33 91 129 27 280 Taxes other than income taxes 15 23 9 25 72 Depreciation, amortization and
Slide 38: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 2018 June YTD Phillips 66 Numerator ($MM) Net Income $ 1,989 After-tax interest expense 204 GAAP ROCE earnings $ 2,193 After-tax Special items (36) Adjusted ROCE earnings $ 2,157 Denominator ($MM) GAAP average capital employed* $ 36,932 2018 Annualized GAAP ROCE 12% 2018 Ann
Slide 39: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars 2018 2Q Phillips 66 Phillips 66 Adjusted Consolidated Partners * Phillips 66 Total Debt $ 11,364 2,946 8,418 Total Equity 24,960 2,391 22,569 Debt-to-Capital Ratio 31% 27% Total Cash & Cash Equivalents $ 1,884 151 $ 1,733 Net-Debt-to-Capital Ratio 28% 23%
Slide 40: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Millions of Dollars 2018 2018 2Q June YTD Growth Sustaining Total Growth Sustaining Total Capital Expenditures and Investments Midstream $ 300 39 339 $ 403 72 475 Refining 41 112 153 100 225 325 Marketing & Specialties 5 10 15 12 16 28 Corporate and Other
Slide 41: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS PSX Effective Tax Rate: Millions of Dollars 2018 2Q Effective Tax Rates Income before taxes $ 1,835 Special items (55) Adjusted income before taxes $ 1,780 Income tax expense $ 431 Special items (38) Adjusted provision for taxes $ 393 GAAP effective tax rate 23.5% Adjusted e