News Release
| Sunoco Reports First Quarter Results |
| PHILADELPHIA, Apr 30, 2008 (BUSINESS WIRE) -- Sunoco, Inc. (NYSE:SUN) today reported a net loss of $59 million
($(.50) per share diluted) for the first quarter of 2008 versus net
income of $175 million ($1.44 per share diluted) for the first quarter
of 2007. Income before special items was $85 million ($0.70 per share
diluted) for the first quarter of 2007. There were no special items in
the first quarter of 2008.
"The first quarter market environment was clearly a challenging one for Sunoco and the refining industry," said John G. Drosdick, Sunoco Chairman and Chief Executive Officer. "While earnings from our non-refining businesses were significantly improved from prior periods, our Refining and Supply business lost $123 million. The loss in Refining and Supply was primarily the result of weakness in refined product margins, especially for gasoline, which were compressed by the combination of higher crude oil costs and lower product demand. "Sunoco's non-refining business units earned $84 million in the first quarter, with the largest contributions coming from Retail Marketing and SunCoke Energy. Retail Marketing earned $26 million, benefiting from expanded retail gasoline margins despite lower gasoline sales volumes versus a year ago. Earnings from SunCoke Energy were $25 million, aided by increased price realizations from our coal and coke production at our Jewell operations. With the anticipated completion later this year of a second cokemaking facility currently under construction at our Haverhill site, and with the recently announced agreements to construct, own and operate additional cokemaking plants in Middletown, Ohio and Granite City, Illinois, we are extremely pleased with the growth in this business." Commenting on the outlook for the second quarter, Drosdick said, "Recent declines in U.S. gasoline inventories and continued low refinery utilization rates have led to some improvement in refining market fundamentals as we enter the spring and summer driving seasons. While higher crude oil costs and lower gasoline demand continued to challenge refiners in April, margins for distillate products remain very strong and gasoline margins are beginning to improve as we progress through the quarter. Due to maintenance activity and some rate reductions related to the market environment, we expect crude runs and production levels in the second quarter to approximate 90 to 95 percent of capacity." DETAILS OF FIRST QUARTER RESULTS REFINING AND SUPPLY Refining and Supply had a loss of $123 million in the first quarter of 2008 versus income of $76 million in the first quarter of 2007. The decrease in earnings was due to lower realized margins and higher expenses, partially offset by higher production volumes. The lower margins reflect the negative impact of much higher average crude oil costs and lower product demand than a year ago, while the higher expenses were largely the result of increased prices for purchased fuel. Production volumes increased in the first quarter of 2008 compared to the year-ago period, although planned and unplanned maintenance work reduced production by approximately 11 million barrels throughout the refining system versus the record level of production in the fourth quarter of 2007. Production in the first quarter of 2007 was negatively impacted by major turnaround and expansion work at the Philadelphia refinery as well as downtime at the Tulsa and Marcus Hook refineries. RETAIL MARKETING Retail Marketing earned $26 million in the first quarter of 2008 versus $7 million in the first quarter of 2007. The increase in earnings was primarily due to higher average retail gasoline margins and lower expenses, partially offset by lower gasoline and distillate sales volumes. CHEMICALS Chemicals earned $18 million in the current quarter versus $9 million in the first quarter of 2007. The increase in earnings was due primarily to lower expenses and higher sales volumes. The lower expenses during the first quarter of 2008 were largely due to the transfer of cumene and propylene splitter assets to Refining and Supply, effective January 1, 2008. This asset transfer also reduced margins during the current quarter which was offset by higher realized margins on both phenol and polypropylene sales. LOGISTICS Earnings for the Logistics segment were $15 million in the first quarter of 2008 versus $9 million in the first quarter of 2007. The increase was due to record results from Sunoco Logistics Partners L.P. (NYSE:SXL) which benefited from strong performance in its western pipeline system and terminalling operations. Sunoco currently has a 43 percent interest in Sunoco Logistics Partners L.P., which includes its 2 percent general partnership interest. COKE The Coke business earned $25 million in the first quarter of 2008 versus $11 million in the prior year first quarter. The increase in earnings was primarily due to increased price realizations from coal and coke production at Jewell, partially offset by lower tax benefits from cokemaking operations. CORPORATE AND OTHER Corporate administrative expenses were $17 million after tax in the first quarter of 2008 versus $15 million in the first quarter of 2007. The increase was primarily due to a $9 million unfavorable income tax consolidation adjustment, partially offset by lower accruals for performance-related incentive compensation. Net financing expenses were $3 million after tax in the first quarter of 2008 versus $12 million after tax in the first quarter of 2007. The decrease was primarily due to lower interest expense, higher interest income and the absence of expense attributable to the preferential return of third-party investors in Sunoco's Indiana Harbor cokemaking operations. SPECIAL ITEM During the first quarter of 2007, Sunoco recognized a $90 million after-tax gain related to the prior issuance of limited partnership units of Sunoco Logistics Partners L.P. to the public. Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer and marketer of petroleum and petrochemical products. With 910 thousand barrels per day of refining capacity, nearly 4,700 retail sites selling gasoline and convenience items, approximately 5,500 miles of crude oil and refined product owned and operated pipelines and 38 product terminals, Sunoco is one of the largest independent refiner-marketers in the United States. Sunoco is a significant manufacturer of petrochemicals with annual sales of approximately five billion pounds, largely chemical intermediates used to make fibers, plastics, film and resins. Utilizing a unique, patented technology, Sunoco's cokemaking facilities in the United States have the capacity to manufacture over 2.5 million tons annually of high-quality metallurgical-grade coke for use in the steel industry. Sunoco also is the operator of, and has an equity interest in, a 1.7 million tons-per-year cokemaking facility in Vitoria, Brazil. Anyone interested in obtaining further insights into the first quarter's results can monitor the Company's quarterly teleconference call, which is scheduled for 3:00 p.m. ET on May 1, 2008. It can be accessed through Sunoco's website - www.SunocoInc.com. It is suggested that you visit the site prior to the teleconference to ensure that you have downloaded any necessary software. Those statements made in this release that are not historical facts are forward-looking statements intended to be covered by the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Sunoco believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect Sunoco's business prospects and performance, causing actual results to differ materially from those discussed in this release. Such risks and uncertainties include, by way of example and not of limitation: general economic, financial and business conditions which could affect Sunoco's financial condition and results of operations; changes in competition and competitive practices, including the impact of foreign imports; effects of weather conditions and natural disasters on the Company's operating facilities and on product supply and demand; changes in refining, marketing and chemical margins; changes in coal and coke prices; variation in petroleum-based commodity prices and availability of crude oil and feedstock supply or transportation; effects of transportation disruptions; changes in the price differentials between light-sweet and heavy-sour crude oils; changes in the marketplace which may affect supply and demand for Sunoco's products; changes in the level of capital expenditures or operating expenses; changes in product specifications; availability and pricing of ethanol; changes in the expected level of environmental capital, operating or remediation expenditures; age of, and changes in the reliability, efficiency and capacity of, the Company's operating facilities or those of third parties; effects of adverse events relating to the operation of the Company's facilities and to the transportation and storage of hazardous materials (including equipment malfunction, explosions, fires, spills, and the effects of severe weather conditions); risks related to labor relations and workplace safety; changes in, or new, statutes and government regulations or their interpretations, including those relating to the environment and global warming; changes in tax laws or their interpretations, including pension funding requirements; ability to identify acquisitions, execute them under favorable terms and integrate them into the Company's existing businesses; ability to enter into joint ventures and other similar arrangements under favorable terms; delays and/or costs related to construction, improvements and/or repairs of facilities (including shortages of skilled labor, the issuance of applicable permits and inflation); nonperformance or force majeure by, or disputes with, major customers, suppliers, dealers, distributors or other business partners; changes in financial markets impacting pension expense and funding requirements; political and economic conditions in the markets in which the Company, its suppliers or customers operate, including the impact of potential terrorist acts and international hostilities; military conflicts between, or internal instability in, one or more oil producing countries, governmental actions and other disruptions in the ability to obtain crude oil; and changes in the status of, or initiation of new, litigation, arbitration or other proceedings to which the Company is a party or liability resulting from such litigation, arbitration or other proceedings, including natural resource damage claims. These and other applicable risks and uncertainties have been described more fully in Sunoco's 2007 Form 10-K filed with the Securities and Exchange Commission on February 27, 2008 and in other periodic reports filed with the Securities and Exchange Commission. Sunoco undertakes no obligation to update any forward-looking statements in this release, whether as a result of new information or future events. -END OF TEXT, CHARTS FOLLOW-
Sunoco, Inc.
2008 First Quarter Financial Summary
(Unaudited)
First Quarter 2008 2007
------------------------------------- ----------------- --------------
Revenues $12,813,000,000 $9,305,000,000
Net Income (Loss) $(59,000,000) $175,000,000
Net Income (Loss) Per Share of Common
Stock:
Basic $(.50) $1.44
Diluted $(.50)* $1.44
Weighted-Average Number of Shares
Outstanding (In Millions):
Basic 117.2 121.4
Diluted 117.2* 121.7
*Since the assumed issuance of common stock under stock incentive awards would not have been dilutive, the diluted per share amounts are equal to the basic per share amounts.
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
Three Months Ended
March 31
----------------------
2008 2007 Variance
------ ------ --------
Refining and Supply $(123) $76 $(199)
Retail Marketing 26 7 19
Chemicals 18 9 9
Logistics 15 9 6
Coke 25 11 14
Corporate and Other:
Corporate expenses (17) (15) (2)
Net financing expenses and other (3) (12) 9
------ ------ --------
(59) 85 (144)
Special items -- 90 (90)
------ ------ --------
Consolidated net income (loss) $(59) $175 $(234)
====== ====== ========
Earnings (loss) per share of common stock
(diluted):
Income (loss) before special items $(.50) $.70 $(1.20)
Special items -- .74 (.74)
------ ------ --------
Net income (loss) $(.50) $1.44 $(1.94)
====== ====== ========
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
----------------------------------------------------------------------
For the Three
Months Ended
March 31
--------------
2008 2007
------- ------
TOTAL REFINING AND SUPPLY
Income (Loss) (Millions of Dollars) $(123) $76
Realized Wholesale Margin* (Per Barrel of Production
Available for Sale) $3.43 $6.98
Crude Inputs as Percent of Crude Unit Rated Capacity 85** 85
Throughputs (Thousand Barrels Daily):
Crude Oil 777.9 761.5
Other Feedstocks 78.3 79.4
----------------------------------------------------------------------
Total Throughputs 856.2 840.9
======================================================================
Products Manufactured (Thousand Barrels Daily):
Gasoline 393.5 401.4
Middle Distillates 298.6 285.4
Residual Fuel 56.3 61.1
Petrochemicals 32.8 34.4
Lubricants 12.2 12.9
Other 95.3 75.8
----------------------------------------------------------------------
Total Production 888.7 871.0
Less: Production Used as Fuel in Refinery Operations 40.4 39.7
----------------------------------------------------------------------
Total Production Available for Sale 848.3 831.3
======================================================================
* Wholesale sales revenue less related cost of crude oil, other feedstocks, product purchases and terminalling and transportation divided by production available for sale. **Reflects the impact of a 10 thousand barrels-per-day increase in crude unit capacity in MidContinent Refining in July 2007 attributable to a crude unit debottleneck project at the Toledo refinery.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
----------------------------------------------------------------------
For the Three
Months Ended
March 31
------------------
2008 2007
-------- ---------
Northeast Refining*
Realized Wholesale Margin (Per Barrel of Production
Available for Sale) $3.50 $5.25
Market Benchmark 6-3-2-1 (Value Added ) (Per
Barrel) $5.78 $8.16
Crude Inputs as Percent of Crude Unit Rated
Capacity 87 82
Throughputs (Thousand Barrels Daily):
Crude Oil 569.5 539.1
Other Feedstocks 70.6 69.5
----------------------------------------------------------------------
Total Throughputs 640.1 608.6
======================================================================
Products Manufactured (Thousand Barrels Daily):
Gasoline 294.2 289.3
Middle Distillates 228.4 210.1
Residual Fuel 52.1 57.4
Petrochemicals 27.0 25.6
Other 61.2 44.7
----------------------------------------------------------------------
Total Production 662.9 627.1
Less: Production Used as Fuel in Refinery
Operations 29.8 28.2
----------------------------------------------------------------------
Total Production Available for Sale 633.1 598.9
======================================================================
MidContinent Refining**
Realized Wholesale Margin (Per Barrel of Production
Available for Sale) $3.21 $11.42
Market Benchmark 3-2-1 (Per Barrel) $6.12 $11.06
Crude Inputs as Percent of Crude Unit Rated
Capacity 82*** 91
Throughputs (Thousand Barrels Daily):
Crude Oil 208.4 222.4
Other Feedstocks 7.7 9.9
----------------------------------------------------------------------
Total Throughputs 216.1 232.3
======================================================================
* Comprised of the Marcus Hook, Philadelphia and Eagle Point
refineries.
** Comprised of the Toledo and Tulsa refineries.
***Reflects the impact of a 10 thousand barrels-per-day increase in
crude unit capacity in July 2007 attributable to a crude unit
debottleneck project at the Toledo refinery.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
----------------------------------------------------------------------
For the Three
Months Ended
March 31
--------------
2008 2007
-------- -----
MidContinent Refining (continued)
Products Manufactured (Thousand Barrels
Daily):
Gasoline 99.3 112.1
Middle Distillates 70.2 75.3
Residual Fuel 4.2 3.7
Petrochemicals 5.8 8.8
Lubricants 12.2 12.9
Other 34.1 31.1
----------------------------------------------------------------------
Total Production 225.8 243.9
Less: Production Used as Fuel in Refinery Operations 10.6 11.5
----------------------------------------------------------------------
Total Production Available for Sale 215.2 232.4
======================================================================
RETAIL MARKETING
Income (Millions of Dollars) $26 $7
Retail Margin* (Per Barrel):
Gasoline $4.68 $3.48
Middle Distillates $7.12 $6.84
Sales (Thousand Barrels Daily):
Gasoline 280.1 299.3
Middle Distillates 37.7 46.9
----------------------------------------------------------------------
317.8 346.2
======================================================================
Total Retail Gasoline Outlets, End of Period 4,682 4,683
Gasoline and Diesel Throughput per Company-Owned or
Leased Outlet (M Gal/Site/Month) 146 142
Convenience Stores:
Total Stores, End of Period 719 736
Merchandise Sales (M$/Store/Month) $82 $76
Merchandise Margin (Company Operated) (% of Sales) 27% 26%
======================================================================
* Retail sales price less related wholesale price, terminalling and transportation costs and consumer excise taxes per barrel. The retail sales price is the weighted-average price received through the various branded marketing distribution channels.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
----------------------------------------------------------------------
For the Three
Months Ended
March 31
--------------
2008 2007
-------- -----
CHEMICALS
Income (Millions of Dollars) $18 $9
Margin* (Cents per Pound):
All Products** 10.6 10.5
Phenol and Related Products 9.2 8.8
Polypropylene** 12.5 12.7
Sales (Millions of Pounds):
Phenol and Related Products 599 592
Polypropylene 569 548
Other 24 20
----------------------------------------------------------------------
1,192 1,160
======================================================================
* Wholesale sales revenue less cost of feedstocks, product purchases
and related terminalling and transportation divided by sales volumes.
** The polypropylene and all products margins include the impact of a
long-term supply contract with Equistar Chemicals, L.P. which is
priced on a cost-based formula that includes a fixed discount.
LOGISTICS
Income (Millions of Dollars) $15 $9
Pipeline and Terminal Throughput (Thousand Barrels
Daily)*:
Unaffiliated Customers 1,254 1,156
Affiliated Customers 1,579 1,566
----------------------------------------------------------------------
2,833 2,722
======================================================================
* Excludes joint-venture operations.
COKE
Income (Millions of Dollars) $25 $11
Coke Production (Thousands of Tons):
United States 613 611
Brazil* 388 32
======================================================================
* Represents amounts attributable to the facility in Vitoria, Brazil
which commenced limited operations in March 2007, with full
production achieved during the fourth quarter of 2007.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
----------------------------------------------------------------------
For the Three
Months Ended
March 31
--------------
2008 2007
------- ------
CAPITAL EXPENDITURES (Millions of Dollars)
Refining and Supply $ 178 $ 270
Retail Marketing 13 13
Chemicals 6 14
Logistics 23 18
Coke 37 17
----------------------------------------------------------------------
$ 257 $ 332
======================================================================
DEPRECIATION, DEPLETION AND
AMORTIZATION (Millions of Dollars)
Refining and Supply $ 65 $ 56
Retail Marketing 26 26
Chemicals 17 19
Logistics 15 9
Coke 5 5
----------------------------------------------------------------------
$ 128 $ 115
======================================================================
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
2007
----------------------------------
1st 2nd 3rd 4th Total
----------------------------------
Refining and Supply $ 76 $ 482 $ 171 $ 43 $ 772
Retail Marketing 7 30 31 1 69
Chemicals 9 6 13 (2) 26
Logistics 9 10 14 12 45
Coke 11 13 7 (2) 29
Corporate and Other:
Corporate expenses (15) (18) (11) (23) (67)
Net financing expenses and other (12) (14) (9) (6) (41)
------ ------ ------ ------ ------
85 509 216 23 833
Special items 90 -- -- (32) 58
------ ------ ------ ------ ------
Consolidated net income (loss) $ 175 $ 509 $ 216 $ (9) $ 891
====== ====== ====== ====== ======
Earnings (loss) per share of common
stock (diluted):
Income before special items $ .70 $4.20 $1.81 $ .20 $6.94
Special items .74 -- -- (.28) .49
------ ------ ------ ------ ------
Net income (loss) $1.44 $4.20 $1.81 $(.08) $7.43
====== ====== ====== ====== ======
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
2008
First Quarter
--------------
Refining and Supply $(123)
Retail Marketing 26
Chemicals 18
Logistics 15
Coke 25
Corporate and Other:
Corporate expenses (17)
Net financing expenses and other (3)
--------------
(59)
Special Items --
--------------
Consolidated net income (loss) $ (59)
==============
Earnings (loss) per share of common stock (diluted):
Income (loss) before special items $(.50)
Special items --
--------------
Net income (loss) $(.50)
==============
Sunoco, Inc.
Consolidated Statements of Operations
(Millions of Dollars)
(Unaudited)
2007
-------------------------------------------
1st 2nd 3rd 4th Total
-------------------------------------------
REVENUES
Sales and other operating
revenue (including
consumer excise taxes) $9,135 $10,724 $11,475 $13,136 $44,470
Interest income 5 4 7 9 25
Gain related to issuance
of Sunoco Logistics
Partners L.P. limited
partnership units 151 -- -- -- 151
Other income, net 14 36 15 17 82
------- -------- -------- -------- --------
9,305 10,764 11,497 13,162 44,728
------- -------- -------- -------- --------
COSTS AND EXPENSES
Cost of products sold and
operating expenses 7,988 8,865 10,078 12,040 38,971
Consumer excise taxes 641 669 673 644 2,627
Selling, general and
administrative expenses 221 236 221 274 952
Depreciation, depletion
and amortization 115 117 123 125 480
Payroll, property and
other taxes 37 30 36 32 135
Provision for asset write-
downs and other matters -- -- -- 53 53
Interest cost and debt
expense 35 32 29 31 127
Interest capitalized (9) (5) (5) (7) (26)
------- -------- -------- -------- --------
9,028 9,944 11,155 13,192 43,319
Income (loss) before
income tax expense
(benefit) 277 820 342 (30) 1,409
Income tax expense
(benefit) 102 311 126 (21) 518
------- -------- -------- -------- --------
Net income (loss) $ 175 $ 509 $ 216 $ (9) $ 891
======= ======== ======== ======== ========
Sunoco, Inc.
Consolidated Statements of Operations
(Millions of Dollars)
(Unaudited)
2008
First Quarter
-------------
REVENUES
Sales and other operating revenue (including consumer
excise taxes) $ 12,796
Interest income 9
Other income, net 8
-------------
12,813
-------------
COSTS AND EXPENSES
Cost of products sold and operating expenses 11,935
Consumer excise taxes 590
Selling, general and administrative expenses 198
Depreciation, depletion and amortization 128
Payroll, property and other taxes 42
Interest cost and debt expense 28
Interest capitalized (9)
-------------
12,912
Income (loss) before income tax expense (benefit) (99)
Income tax expense (benefit) (40)
-------------
Net income (loss) $ (59)
=============
Sunoco, Inc.
Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
At At
March 31 December 31
2008 2007
-------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 347 $ 648
Accounts and notes receivable, net 3,406 2,710
Inventories 1,082 1,150
Deferred income taxes 132 130
-------- -----------
Total Current Assets 4,967 4,638
Investments and long-term receivables 173 175
Properties, plants and equipment, net 7,169 7,039
Deferred charges and other assets 529 574
-------- -----------
Total Assets $ 12,838 $ 12,426
======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 6,125 $ 5,443
Current portion of long-term debt 3 4
Taxes payable 88 193
-------- -----------
Total Current Liabilities 6,216 5,640
Long-term debt 1,683 1,724
Retirement benefit liabilities 526 525
Deferred income taxes 1,084 1,027
Other deferred credits and liabilities 533 538
Minority interests 429 439
Shareholders' equity 2,367 2,533
-------- -----------
Total Liabilities and Shareholders' Equity $ 12,838 $ 12,426
======== ===========
Sunoco, Inc.
Consolidated Statements of Cash Flows
(Millions of Dollars)
(Unaudited)
For the Three Months
Ended March 31
---------------------
2008 2007
---------- ----------
INCREASES (DECREASES) IN CASH AND CASH
EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (59) $ 175
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Gain related to issuance of Sunoco Logistics
Partners L.P. limited partnership units -- (151)
Depreciation, depletion and amortization 128 115
Deferred income tax expense 49 92
Payments less than expense for retirement
plans 8 11
Changes in working capital pertaining to
operating activities (71) (22)
Other 14 17
---------- ----------
Net cash provided by operating activities 69 237
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (257) (332)
Proceeds from divestments 3 6
Other 40 (3)
---------- ----------
Net cash used in investing activities (214) (329)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from short-term borrowings -- 55
Net proceeds from issuance of long-term debt 5 48
Repayments of long-term debt (47) (4)
Cash distributions to investors in cokemaking
operations (17) (7)
Cash distributions to investors in Sunoco
Logistics Partners L.P. (14) (13)
Cash dividend payments (32) (30)
Purchases of common stock for treasury (49) --
Proceeds from issuance of common stock under
management incentive plans -- 4
Other (2) (2)
---------- ----------
Net cash provided by (used in) financing
activities (156) 51
---------- ----------
Net decrease in cash and cash equivalents (301) (41)
Cash and cash equivalents at beginning of period 648 263
---------- ----------
Cash and cash equivalents at end of period $ 347 $ 222
========== ==========
SOURCE: Sunoco, Inc. Sunoco, Inc. |