Slide 1: Phillips 66 Fourth Quarter 2018 Conference Call
PHILLIPS 66 FOURTH QUARTER 2018 CONFERENCE CALL February 8, 2019 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 New fractionation site and Sweeny Refinery, Old Ocean, Texas 3
Slide 4: Overview 2018
OVERVIEW 2018 $MM (unless otherwise noted) Adjusted earnings $ 5,550 Adjusted EPS1 11.71 Operating cash flow 7,573 Capital expenditures and investments 2,639 Shareholder distributions2 6,081 Net-debt-to-capital ratio 23% ROCE3 17% (1) Dollars per share (2) Shareholder distributions include dividends
Slide 5: Cash Flow 2018
CASH FLOW 2018 $B 1.0 7.9 (0.3) (2.6) (6.1) 3.1 3.0 December 31, CFO Working Debt Capital Shareholder December 31, 2017 (excluding Capital Expenditures Distributions 2018 Cash Working & Investments Cash Balance* Capital) Balance* * Includes cash and cash equivalents 5
Slide 6: Overview 4Q 2018
OVERVIEW 4Q 2018 $MM (unless otherwise noted) Adjusted earnings $ 2,260 Adjusted EPS1 4.87 Operating cash flow 4,139 Capital expenditures and investments 994 Shareholder distributions2 864 (1) Dollars per share (2) Shareholder distributions include dividends and share repurchases 6
Slide 7: Adjusted Earnings 4Q 2018
ADJUSTED EARNINGS 4Q 2018 $MM 207 22 745 1 (157) 97 (111) 2,260 1,456 3Q 2018 Midstream Chemicals Refining Marketing Corporate Income Tax Noncontrolling 4Q 2018 Adjusted & Specialties & Other Expense Interests Adjusted Earnings Earnings 409 152 2,008 592 (201) (624) (76) 4Q 2018 Adjusted Pre-Tax Inc
Slide 8: Midstream 4Q 2018
MIDSTREAM 4Q 2018 $MM Strong Bakken Pipeline volumes 24 48 25 Increased transportation volumes associated with strong refinery utilization rates 409 312 DCP Midstream completed Sand Hills Pipeline expansion 3Q 2018 Transportation NGL and Other DCP 4Q 2018 Adjusted Midstream Adjusted Pre-Tax Income P
Slide 9: Chemicals 4Q 2018
CHEMICALS 4Q 2018 $MM Continued strong cash distributions 95% O&P capacity utilization (67) 263 (35) (9) Seasonally lower sales volumes 152 O&P and SA&S impacted by higher turnaround costs 3Q 2018 Olefins & Specialties, Other 4Q 2018 Adjusted Polyolefins Aromatics & Adjusted Pre-Tax Income Styrenics
Slide 10: Refining 4Q 2018
REFINING 4Q 2018 $MM 99% crude utilization 342 71 247 86% clean product yield 85 2,008 $16.53/BBL realized margin 1,263 $130 MM pre-tax turnaround costs 3Q 2018 Atlantic Gulf Central West 4Q 2018 Adjusted Basin / Coast Corridor Coast Adjusted Pre-Tax Income Europe Pre-Tax Income 301 468 1,188 51 4Q
Slide 11: Refining Margins – Market vs. Realized
REFINING MARGINS – MARKET VS. REALIZED 4Q 2018 WORLDWIDE REFINING $/BBL 3.57 3.79 0.35 (0.29) 16.53 9.11 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Avg Market Crude: $65.50/BBL 181% Market Capture 11
Slide 12: Marketing and Specialties 4Q 2018
MARKETING AND SPECIALTIES 4Q 2018 $MM Captured strong margins in a 205 2 favorable market Re-imaged 466 branded sites 592 385 Refined products exports of 249 MBPD 3Q 2018 Marketing Specialties 4Q 2018 Adjusted & Other Adjusted Pre-Tax Income Pre-Tax Income 528 64 4Q 2018 12
Slide 13: Corporate and Other 4Q 2018
CORPORATE AND OTHER 4Q 2018 $MM 3Q 2018 Net Interest Corporate 4Q 2018 Adjusted Expense Overhead Adjusted Pre-Tax Loss & Other Pre-Tax Loss (201) (223) 13 9 13
Slide 14: Outlook
OUTLOOK 1Q 2019 Global Olefins & Polyolefins utilization Mid-90% Refining crude utilization Mid-80% Refining turnaround expenses (pre-tax) $140 MM - $170 MM Corporate & Other costs (pre-tax) $210 MM - $240 MM 2019 Refining turnaround expenses (pre-tax) $550 MM - $600 MM Corporate & Other costs (pre-
Slide 15: Questions and Answers
PHILLIPS 66 FOURTH QUARTER 2018 CONFERENCE CALL Questions and Answers 15
Slide 16: Appendix
PHILLIPS 66 FOURTH QUARTER 2018 CONFERENCE CALL Appendix 16
Slide 17: Estimated Sensitivities
ESTIMATED SENSITIVITIES 2019 Annual EBITDA $MM Midstream - DCP (net to Phillips 66) 10¢/Gal Increase in NGL price 6 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) 65 Worldwi
Slide 18: Capital Structure
CAPITAL STRUCTURE 2016 – 2018 Consolidated PSX Excluding PSXP 32% 31% 31% 30% 31% 29% 29% 28% 27% 28% 26% 27% 26% 27% 25% 24% 25% 23% 23% 22% 20% 18% 17% 27.4 27.2 14% 25.0 25.8 25.1 24.7 23.7 24.3 23.4 22.4 22.0 22.6 11.6 11.4 11.3 11.2 10.1 10.1 7.7 8.7 8.4 8.4 8.1 7.2 1.7 0.8 0.9 3.0 0.7 0.8 3.0
Slide 19: Refining Margins – Atlantic Basin / Europe
REFINING MARGINS – MARKET VS. REALIZED 4Q 2018 ATLANTIC BASIN / EUROPE $/BBL Brent: $67.76/BBL 98% Crude Capacity Utilization 159% Market Capture 3.39 1.94 1.48 (2.53) 11.54 7.26 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – Dated Brent / Gasoline 83.7
Slide 20: Refining Margins – Gulf Coast
REFINING MARGINS – MARKET VS. REALIZED 4Q 2018 GULF COAST $/BBL LLS: $66.55/BBL 100% Crude Capacity Utilization 230% Market Capture 3.36 3.29 0.59 11.84 (0.54) 5.14 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – LLS / Gasoline 85 CBOB / Diesel 62 10ppm 2
Slide 21: Refining Margins – Central Corridor
REFINING MARGINS – MARKET VS. REALIZED 4Q 2018 CENTRAL CORRIDOR $/BBL WTI: $59.09/BBL 106% Crude Capacity Utilization 210% Market Capture 6.93 11.26 0.21 30.60 (2.37) 14.57 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – WTI / Gasoline Unl Sub Octane Grou
Slide 22: Refining Margins – West Coast
REFINING MARGINS – MARKET VS. REALIZED 4Q 2018 WEST COAST $/BBL ANS: $68.65/BBL 87% Crude Capacity Utilization 112% Market Capture 1.43 3.48 (0.51) (2.88) 14.18 12.66 Market Configuration Secondary Feedstock Other Realized 3:2:1 Products Margin Market 3:2:1 – ANS / Los Angeles CARBOB / Los Angeles N
Slide 23: Adjusted Earnings 4Q 2018 vs. 4Q 2017
ADJUSTED EARNINGS 4Q 2018 VS. 4Q 2017 $MM 424 25 1,498 (420) (19) 2,260 213 (9) 548 4Q 2017 Midstream Chemicals Refining Marketing Corporate Income Tax Noncontrolling 4Q 2018 Adjusted & Specialties & Other Expense Interests Adjusted Earnings Earnings 409 152 2,008 592 (201) (624) (76) 4Q 2018 Adjust
Slide 24: Midstream 4Q 2018 vs. 4Q 2017
MIDSTREAM 4Q 2018 VS. 4Q 2017 $MM 27 104 82 409 196 4Q 2017 Transportation NGL and Other DCP 4Q 2018 Adjusted Midstream Adjusted Pre-Tax Income Pre-Tax Income 234 122 53 4Q 2018 24
Slide 25: Chemicals 4Q 2018 vs. 4Q 2017
CHEMICALS 4Q 2018 VS. 4Q 2017 $MM 22 (19) (12) 161 152 4Q 2017 Olefins & Specialties, Other 4Q 2018 Adjusted Polyolefins Aromatics Adjusted Pre-Tax Income & Styrenics Pre-Tax Income 158 16 (22) 4Q 2018 25
Slide 26: Refining 4Q 2018 vs. 4Q 2017
REFINING 4Q 2018 VS. 4Q 2017 $MM 106 887 361 2,008 144 510 4Q 2017 Atlantic Gulf Central West Coast 4Q 2018 Adjusted Basin / Coast Corridor Adjusted Pre-Tax Income Europe Pre-Tax Income 301 468 1,188 51 4Q 2018 26
Slide 27: Marketing and Specialties 4Q 2018 vs. 4Q 2017
MARKETING AND SPECIALTIES 4Q 2018 VS. 4Q 2017 $MM 417 7 592 168 4Q 2017 Marketing Specialties 4Q 2018 Adjusted Pre- & Other Adjusted Tax Income Pre-Tax Income 528 64 4Q 2018 27
Slide 28: Corporate and Other 4Q 2018 vs. 4Q 2017
CORPORATE AND OTHER 4Q 2018 VS. 4Q 2017 $MM 4Q 2017 Net Interest Corporate 4Q 2018 Adjusted Expense Overhead Adjusted Pre-Tax Loss & Other Pre-Tax Loss (201) (226) 26 (1) 28
Slide 29: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Year 4Q 3Q Year 4Q Phillips 66 Consolidated Earnings $ 5,595 2,240 1,492 5,106 3,198 Pre-tax Adjustments: Pending claims and settlements 21 — 21 (60) — Pension settlement expense 67 18 49 83 7 Impairments by equity affiliates
Slide 30: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Year 4Q 3Q Year 4Q Midstream Pre-Tax Income $ 1,181 379 284 638 189 Pre-tax Adjustments: Pending claims and settlements 21 — 21 (37) — Pension settlement expense 9 2 7 12 1 Impairments by equity affiliates 28 28 — — — Hurrica
Slide 31: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Year 4Q 3Q Year 4Q Refining Pre-Tax Income $ 4,535 2,001 1,232 2,076 516 Pre-tax Adjustments: Pending claims and settlements — — — (51) — Gain on consolidation of business — — — (423) — Certain tax impacts (6) (4) (1) (23) (2
Slide 32: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Year 4Q 3Q Year 4Q Corporate and Other Pre-Tax Loss $ (853) (203) (227) (895) (226) Pre-tax Adjustments: Pending claims and settlements — — — 28 — Pension settlement expense 6 2 4 7 — U.S. Tax Reform (16) — — — — Adjusted Pre
Slide 33: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Year 4Q 3Q Year 4Q Midstream - Transportation Pre-Tax Income $ 770 234 209 530 147 Pre-tax Adjustments: Pending claims and settlements — — — (37) — Hurricane-related costs — — — 8 5 Adjusted Pre-Tax Income $ 770 234 209 501 1
Slide 34: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Year 4Q 3Q Year 4Q Refining - Atlantic Basin / Europe Pre-Tax Income $ 567 302 209 448 179 Pre-tax Adjustments: Pending claims and settlements — — — (7) — Certain tax impacts (5) (4) (1) (23) (23) Pension settlement expense 1
Slide 35: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Year 4Q 3Q Year 4Q Refining - Central Corridor Pre-Tax Income $ 2,817 1,185 839 755 299 Pre-tax Adjustments: Pending claims and settlements — — — (7) — Pension settlement expense 10 3 7 13 2 Adjusted Pre-Tax Income $ 2,827 1,
Slide 36: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Except as Indicated 2018 2017 Year 4Q 3Q Year 4Q Marketing & Specialties - Marketing & Other Pre-Tax Income $ 1,306 525 361 808 110 Pre-tax Adjustments: Certain tax impacts (113) — (44) — — Pension settlement expense 9 3 6 11 1 Hurricane-related costs — —
Slide 37: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars (Except as Indicated) 2018 4Q Atlantic Central Basin/Europe Gulf Coast Corridor West Coast Worldwide Realized Refining Margins Income before income taxes $ 302 464 1,185 50 2,001 Plus: Taxes other than income taxes 13 17 12 24 66 Depreciation, amortizatio
Slide 38: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 2018 Phillips 66 Numerator ($MM) Net Income $ 5,873 After-tax interest expense 398 GAAP ROCE earnings $ 6,271 After-tax Special items (51) Adjusted ROCE earnings $ 6,220 Denominator ($MM) GAAP average capital employed* $ 37,925 2018 GAAP ROCE 17% 2018 Adjusted ROCE 16% * Cap
Slide 39: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars 2018 December 31 Phillips 66 Phillips 66 Adjusted Consolidated Partners * Phillips 66 Total Debt $ 11,160 3,048 8,112 Total Equity 27,153 2,469 24,684 Debt-to-Capital Ratio 29% 25% Total Cash & Cash Equivalents $ 3,019 1 3,018 Net-Debt-to-Capital Ratio 23
Slide 40: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Millions of Dollars Millions of Dollars 2018 2018 4Q Year Growth Sustaining Total Growth Sustaining Total Capital Expenditures and Investments Midstream $ 510 60 570 $ 1,360 188 1,548 Refining 102 199 301 267 559 826 Marketing & Specialties 34 26 60 71 54 125 Corporate and O
Slide 41: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS PSX Effective Tax Rate: Millions of Dollars 2018 4Q Year Effective Tax Rates Income before income taxes $ 2,918 7,445 Special items 42 (19) Adjusted income before income taxes $ 2,960 7,426 Income tax expense $ 602 1,572 Special items 22 32 Adjusted income tax expense $ 624