Phillips 66 · NYSE:PSX
Phillips 66 — Bank of America Merrill Lynch Refining Conference 2019
24 slides from Phillips 66's conference presentation, March 2019
Slide 1: Lake Charles Refinery
Lake Charles Refinery MARCH 2019 BANK OF AMERICA MERRILL LYNCH REFINING CONFERENCE Robert A. Herman Executive Vice President, Refining 1 phillips66.com | NYSE: PSX
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation contains certain forward-looking statements. 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 t
Slide 3: Demonstrated Strategy Execution; 2017 – 2018 Highlights
DEMONSTRATED STRATEGY EXECUTION; 2017 – 2018 HIGHLIGHTS OPERATING EXCELLENCE Industry leading safety Top-tier refining utilization GROWTH $1.5+ B adjusted mid-cycle EBITDA from growth projects 31% increase in CPChem ethylene and polyethylene capacity 450 MBD growth in crude oil and NGL net pipeline
Slide 4: Operating Excellence
OPERATING EXCELLENCE TOTAL RECORDABLE RATES REFINING TIER 1 PROCESS SAFETY EVENT RATE Incidents per 200,000 Hours Worked Phillips 66 CPChem DCP Midstream 1.15 1.03 0.08 0.08 Industry Average .86 0.02 0.02 0.02 .79 14 15 16 17 18 .74 .76 .66 .66 .58 REFINING CRUDE CAPACITY UTILIZATION .54 .43 .41 .45
Slide 5: Environmental, Social, Governance
ENVIRONMENTAL, SOCIAL, GOVERNANCE INDUSTRY SAFETY METRICS Board engaged in setting company ESG strategy Incidents per 200,000 hours worked 6 Independent lead director 4 Extensive ESG engagement 2 Industry leading safety performance 0 Agricul., Food All Construction Prof. Petroleum Petchem. Phillips
Slide 6: Renewable Fuels
RENEWABLE FUELS Project at Humber Refinery to process used cooking oil in the FCC unit 6 MBD; start-up in 2020 Long-term supply and offtake agreement with Ryze Renewables for two renewable diesel production facilities PSX will supply agriculture oils and animal fat feedstocks and market 11 MBD renew
Slide 7: Midstream
MIDSTREAM Integrated with Refining, Marketing and Chemicals ADJUSTED EBITDA $B 1.9 Capital projects delivering EBITDA growth 1.3 1.2 PSXP integral to Midstream strategy 1.0 1.0 Crude and NGL pipelines from key shale basins to the Gulf Coast Export capability from strategic Gulf Coast terminals 14 15
Slide 8: Midstream Growth Projects
M I D S T R E AM G R O W T H P R O J E C T S Gray Oak Pipeline Sweeny fractionators Clemens Caverns Beaumont Terminal South Texas Gateway Terminal Bakken Pipeline Sand Hills Pipeline Bayou Bridge Pipeline Lake Charles products pipeline Lake Charles isom unit 8 phillips66.com | NYSE: PSX
Slide 9: Chemicals
CHEMICALS CPChem has a leading position in olefins and polyolefins with ADJUSTED EBITDA a feedstock advantaged portfolio $B Operating excellence focus Strong free cash flow generation 2.1 1.7 1.6 USGC petrochemical assets operating above design capacity 1.3 1.3 Developing second USGC project for inc
Slide 10: Refining
REFINING Complex, integrated refining system focused on safe and ADJUSTED EBITDA $B reliable operations Infrastructure network enables strong market capture; access to advantaged inland crude feedstocks 5.7 Cost and capital discipline; robust free cash flow 4.8 3.4 2.7 Investing in high-return capit
Slide 11: Refining Portfolio Competitiveness
REFINING PORTFOLIO COMPETITIVENESS Industry leading coking capacity and heavy crude processing DISTILLATE PRODUCTION capability % TOTAL THROUGHPUT Largest purchaser of advantaged Canadian crude oils High distillate yield 38.2% 37.9% 37.0% 34.0% 32.0% Low yield of high sulfur fuel oil PSX VLO HFC MPC
Slide 12: Marketing and Specialties
MARKETING AND SPECIALTIES High-return, low capital intensity business; optimize ADJUSTED EBITDA $B placement of Refining production $1.4B Average Enhancing US fuels brands; growing and reimage European sites 1.4 1.5 1.6 1.4 1.2 Pursuing renewable fuels opportunities Lubricants increasing value throu
Slide 13: Earnings and Capital Structure
EARNINGS AND CAPITAL STRUCTURE ADJUSTED EBITDA EQUITY AND DEBT $B 28% 27% 30% 29% 27% 28% 25% 26% 25% 10.1 22% 7.9 8.6 27.4 27.2 5.9 4.7 23.9 23.7 22.0 14 15 16 17 18 10.1 10.1 11.2 ADJUSTED RETURN ON CAPITAL EMPLOYED 8.6 8.9 % AFTER-TAX 14 15 16 17 18 PSX Equity $B PSX Debt $B 14 14 16 PSX Noncontr
Slide 14: Capital Allocation
CAPITAL ALLOCATION Disciplined capital allocation SOURCES AND USES OF CASH $B Fund sustaining capital to maintain asset integrity ~1 ~1.5 Committed to a secure, competitive and growing dividend 6.5 5.5 ~2 Investing in growth projects with attractive returns Intrinsic value approach to share repurcha
Slide 15: Executing Strategy
EXECUTING STRATEGY OPERATING EXCELLENCE Safe and reliable operations TOTAL SHAREHOLDER RETURN Technology driven cost efficiencies 340% GROWTH Pipelines from key shale basins to Gulf Coast PSX +247% 300% Crude export capability Peers +143% 260% NGL value chain – transportation, fractionation and expo
Slide 16: Appendix
Lake Charles FreeportRefinery Clipper AP P E N D I X phillips66.com | NYSE: PSX
Slide 17: Footnotes
FOOTNOTES Slide 3 Total share repurchases and exchanges include the PSPI share exchange in 2014. Dividend CAGR calculated from initial dividend of $0.20 per share in 3Q 2012 to last increase of $0.80 per share in 2Q 2018. $1.5 B reflects estimated mid-cycle run-rate adjusted EBITDA contributions fro
Slide 18: Footnotes
FOOTNOTES Slide 15 Chart reflects total shareholder return May 1, 2012 to January 31, 2019. Dividends assumed to be reinvested in stock. Source: Bloomberg. Peer average includes Delek US Holdings, Inc., HollyFrontier Corporation, Marathon Petroleum Corporation, PBF Energy Inc., Valero Energy Corpora
Slide 19: Non-GAAP Reconciliation
N O N - G A A P R E C O N C I L I AT I O N ( S L I D E 7 ) Millions of Dollars 2014 2015 2016 2017 2018 Reconciliation of Midstream Pre-Tax Income to Adjusted EBITDA Midstream pre-tax income $ 851 147 402 638 1,181 Plus: Interest revenue — — — (1) — Depreciation and amortization 91 127 215 299 320 M
Slide 20: Non-GAAP Reconciliation
N O N - G A A P R E C O N C I L I AT I O N ( S L I D E 9 ) Millions of Dollars 2014 2015 2016 2017 2018 Reconciliation of Chemicals Pre-Tax Income to Adjusted EBITDA Chemicals pre-tax income $ 1,632 1,315 839 716 1,025 Plus: None — — — — — Chemicals EBITDA 1,632 1,315 839 716 1,025 Special Item Adju
Slide 21: Non-GAAP Reconciliation
N O N - G A A P R E C O N C I L I AT I O N ( S L I D E 1 0 ) Millions of Dollars 2014 2015 2016 2017 2018 Reconciliation of Refining Pre-Tax Income to Adjusted EBITDA Refining pre-tax income $ 2,467 3,659 436 2,076 4,535 Plus: Depreciation and amortization 704 738 769 821 840 Refining EBITDA 3,171 4
Slide 22: Non-GAAP Reconciliation
N O N - G A A P R E C O N C I L I AT I O N ( S L I D E 1 2 ) Millions of Dollars 2014 2015 2016 2017 2018 Reconciliation of Marketing and Specialties Pre-Tax Income to Adjusted EBITDA Marketing and Specialties pre-tax income $ 1,475 1,652 1,261 1,020 1,557 Plus: Interest revenue — (2) — — — Deprecia
Slide 23: Non-GAAP Reconciliation
N O N - G A A P R E C O N C I L I AT I O N ( S L I D E 1 3 ) Millions of Dollars 2014 2015 2016 2017 2018 Reconciliation of Phillips 66 Pre-Tax Income to Adjusted EBITDA Phillips 66 pre-tax income $ 5,745 6,044 2,191 3,555 7,445 Plus: Net interest expense 246 283 321 407 459 Depreciation and amortiz
Slide 24: Non-GAAP Reconciliation
N O N - G A A P R E C O N C I L I AT I O N ( S L I D E 1 3 ) Millions of Dollars 2014 2015 2016 2017 2018 Phillips 66 ROCE Numerator Net income $ 4,797 4,280 1,644 5,248 5,873 After-tax interest expense 173 201 220 285 398 GAAP ROCE earnings 4,970 4,481 1,864 5,533 6,271 Special items (980) (34) (57
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