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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Andeavor | NYSE:ANDV | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 153.50 | 0 | 01:00:00 |
Delaware | 1-3473 | 95-0862768 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
19100 Ridgewood Pkwy San Antonio, Texas | 78259-1828 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. | |||
99.1 | Press release announcing second quarter financial results issued on August 5, 2015, by Tesoro Corporation. | |||
99.2 | Supplemental earnings presentation financial information dated as of August 5, 2015. |
TESORO CORPORATION | ||||
By: | /s/ STEVEN M. STERIN | |||
Steven M. Sterin | ||||
Executive Vice President and Chief Financial Officer | ||||
Exhibit Number | Description | |
99.1 | Press release announcing second quarter financial results issued on August 5, 2015, by Tesoro Corporation. | |
99.2 | Supplemental earnings presentation financial information dated as of August 5, 2015. |
• | Record second quarter net earnings from continuing operations of $586 million, or $4.62 per diluted share |
• | Approved a 18% increase to regularly quarterly dividend to $0.50 per share |
• | Returned over $300 million to shareholders in the second quarter |
• | Delivered over $325 million of business improvements in the first half of 2015 |
• | Company on target to achieve business improvements of approximately $670 million for 2015 |
• | Expects to offer drop down to TLLP of $50 million to $75 million of EBITDA |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
($ in millions, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Operating Income | |||||||||||||||
Refining | $ | 753 | $ | 358 | $ | 936 | $ | 538 | |||||||
TLLP | 109 | 48 | 217 | 108 | |||||||||||
Marketing | 212 | 88 | 345 | 112 | |||||||||||
Total Segment Operating Income | $ | 1,074 | $ | 494 | $ | 1,498 | $ | 758 | |||||||
Net Earnings From Continuing Operations Attributable to Tesoro | $ | 586 | $ | 224 | $ | 731 | $ | 303 | |||||||
Diluted EPS - Continuing Operations | $ | 4.62 | $ | 1.70 | $ | 5.77 | $ | 2.29 | |||||||
Diluted EPS - Discontinued Operations | (0.03 | ) | — | (0.03 | ) | (0.01 | ) | ||||||||
Total Diluted EPS | $ | 4.59 | $ | 1.70 | $ | 5.74 | $ | 2.28 | |||||||
Adjusted Diluted EPS - Continuing Operations | $ | 4.62 | $ | 1.70 | $ | 5.60 | $ | 2.42 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | $ | 8,232 | $ | 11,104 | $ | 14,695 | $ | 21,037 | |||||||
Costs and Expenses: | |||||||||||||||
Cost of sales (a) | 6,398 | 9,867 | 11,738 | 18,815 | |||||||||||
Operating expenses | 578 | 598 | 1,087 | 1,189 | |||||||||||
Selling, general and administrative expenses (b) | 61 | 92 | 152 | 123 | |||||||||||
Depreciation and amortization expense | 182 | 135 | 361 | 265 | |||||||||||
(Gain) loss on asset disposals and impairments (c) | 4 | 2 | 8 | (3 | ) | ||||||||||
Operating Income | 1,009 | 410 | 1,349 | 648 | |||||||||||
Interest and financing costs, net (d) | (54 | ) | (41 | ) | (109 | ) | (118 | ) | |||||||
Other income, net (e) | 3 | 3 | 2 | 2 | |||||||||||
Earnings Before Income Taxes | 958 | 372 | 1,242 | 532 | |||||||||||
Income tax expense | 334 | 132 | 430 | 188 | |||||||||||
Net Earnings From Continuing Operations | 624 | 240 | 812 | 344 | |||||||||||
Loss from discontinued operations, net of tax | (4 | ) | — | (4 | ) | (1 | ) | ||||||||
Net Earnings | 620 | 240 | 808 | 343 | |||||||||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 38 | 16 | 81 | 41 | |||||||||||
Net Earnings Attributable to Tesoro Corporation | $ | 582 | $ | 224 | $ | 727 | $ | 302 | |||||||
Net Earnings (Loss) Attributable to Tesoro Corporation | |||||||||||||||
Continuing operations | $ | 586 | $ | 224 | $ | 731 | $ | 303 | |||||||
Discontinued operations | (4 | ) | — | (4 | ) | (1 | ) | ||||||||
Total | $ | 582 | $ | 224 | $ | 727 | $ | 302 | |||||||
Net Earnings (Loss) Per Share - Basic: | |||||||||||||||
Continuing operations | $ | 4.67 | $ | 1.73 | $ | 5.84 | $ | 2.33 | |||||||
Discontinued operations | (0.03 | ) | — | (0.03 | ) | (0.01 | ) | ||||||||
Total | $ | 4.64 | $ | 1.73 | $ | 5.81 | $ | 2.32 | |||||||
Weighted average common shares outstanding - Basic | 125.2 | 129.3 | 125.2 | 130.3 | |||||||||||
Net Earnings (Loss) Per Share - Diluted: | |||||||||||||||
Continuing operations | $ | 4.62 | $ | 1.70 | $ | 5.77 | $ | 2.29 | |||||||
Discontinued operations | (0.03 | ) | — | (0.03 | ) | (0.01 | ) | ||||||||
Total | $ | 4.59 | $ | 1.70 | $ | 5.74 | $ | 2.28 | |||||||
Weighted average common shares outstanding - Diluted | 126.3 | 131.5 | 126.6 | 132.7 |
(a) | Includes a benefit of $42 million ($25 million after-tax) recognized during the six months ended June 30, 2015 resulting from the reversal of a lower of cost or market inventory valuation adjustment recorded in the fourth quarter of 2014. |
(b) | Includes stock-based compensation expense of $7 million and $26 million for the three months ended June 30, 2015 and 2014, respectively, and expense of $35 million and $8 million for the six months ended June 30, 2015 and 2014, respectively. The significant impact to stock-based compensation expense is primarily a result of changes in Tesoro’s stock price during the three and six months ended June 30, 2015 as compared to the three and six months ended June 30, 2014. |
(c) | Includes a gain of $5 million ($1 million to Tesoro, after-tax) for the six months ended June 30, 2014 resulting from TLLP’s sale of its Boise Terminal. |
(d) | Includes charges totaling $31 million ($19 million after-tax) for premiums and unamortized debt issuance costs associated with the redemption of the 2019 Notes during the six months ended June 30, 2014. |
(e) | Includes equity in earnings of equity method investments of $1 million and $4 million for the three and six months ended June 30, 2015, respectively, for TLLP related to its investments in Three Rivers Gathering and Uinta Basin Field Services. Also includes equity in earnings of equity method investments of $1 million for the six months ended June 30, 2015 and equity in loss of equity method investments of $2 million and $1 million for the three and six months ended June 30, 2014, respectively, for our refining segment related to its investments in Watson Cogen Company and Vancouver Energy. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Earnings Before Income Taxes | |||||||||||||||
Refining (a) (f) | $ | 753 | $ | 358 | $ | 936 | $ | 538 | |||||||
TLLP (c) | 109 | 48 | 217 | 108 | |||||||||||
Marketing (f) | 212 | 88 | 345 | 112 | |||||||||||
Total Segment Operating Income | 1,074 | 494 | 1,498 | 758 | |||||||||||
Corporate and unallocated costs (b) | (65 | ) | (84 | ) | (149 | ) | (110 | ) | |||||||
Operating Income | 1,009 | 410 | 1,349 | 648 | |||||||||||
Interest and financing costs, net (d) | (54 | ) | (41 | ) | (109 | ) | (118 | ) | |||||||
Other expense, net | 3 | 3 | 2 | 2 | |||||||||||
Earnings Before Income Taxes | $ | 958 | $ | 372 | $ | 1,242 | $ | 532 | |||||||
Depreciation and Amortization Expense | |||||||||||||||
Refining | $ | 122 | $ | 104 | $ | 241 | $ | 205 | |||||||
TLLP | 44 | 17 | 88 | 33 | |||||||||||
Marketing | 11 | 10 | 23 | 20 | |||||||||||
Corporate | 5 | 4 | 9 | 7 | |||||||||||
Total Depreciation and Amortization Expense | $ | 182 | $ | 135 | $ | 361 | $ | 265 | |||||||
Special Items, Before Taxes (g) | |||||||||||||||
Refining | $ | — | $ | — | $ | (42 | ) | $ | — | ||||||
TLLP | — | — | 13 | (5 | ) | ||||||||||
Total Special Items | $ | — | $ | — | $ | (29 | ) | $ | (5 | ) | |||||
Adjusted EBITDA | |||||||||||||||
Refining (e) | $ | 875 | $ | 464 | $ | 1,134 | $ | 744 | |||||||
TLLP (e) | 154 | 65 | 322 | 136 | |||||||||||
Marketing | 223 | 98 | 368 | 132 | |||||||||||
Corporate | (58 | ) | (79 | ) | (141 | ) | (102 | ) | |||||||
Total Adjusted EBITDA | $ | 1,194 | $ | 548 | $ | 1,683 | $ | 910 | |||||||
Capital Expenditures | |||||||||||||||
Refining | $ | 148 | $ | 94 | $ | 332 | $ | 162 | |||||||
TLLP | 77 | 48 | 143 | 74 | |||||||||||
Marketing | 8 | 13 | 12 | 18 | |||||||||||
Corporate | 4 | 12 | 10 | 16 | |||||||||||
Total Capital Expenditures | $ | 237 | $ | 167 | $ | 497 | $ | 270 |
(f) | Our refining segment uses RINs to satisfy its obligations under the Renewable Fuels Standard, in addition to physically blending required biofuels. Effective April 1, 2013, we changed our intersegment pricing methodology and no longer reduced the amount marketing pays for the biofuels by the market value of the RINs due to significant volatility in the value of RINs. At the end of 2014, given the price of RINs has become more transparent in the price of biofuels, we determined our intersegment pricing methodology should include the market value of RINs as a reduction to the price our marketing segment pays to our refining segment. We made this change effective January 1, 2015. We have not adjusted financial information presented for our refining and marketing segments for the three and six months ended June 30, 2014. Had we made this change effective January 1, 2014, operating income in our refining segment would have been reduced by $31 million and $59 million for the three and six months ended June 30, 2014, respectively, with a corresponding increase to operating income in our marketing segment. |
(g) | The effects of special items on net earnings before income taxes by segment include: |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in millions) | |||||||||||||||
Refining | |||||||||||||||
Inventory valuation adjustment (a) | $ | — | $ | — | $ | (42 | ) | $ | — | ||||||
TLLP | |||||||||||||||
Throughput deficiency receivables (h) | — | — | 13 | — | |||||||||||
Gain on sale of Boise Terminal (c) | — | — | — | (5 | ) |
(h) | During the six months ended June 30, 2015, TLLP invoiced QEPFS customers for deficiency payments. TLLP did not recognize $13 million ($4 million to Tesoro, after-tax) of revenue related to the billing period as it represented opening balance sheet assets for the acquisition of the Rockies Natural Gas Business; however, TLLP is entitled to the cash receipt from such billings. |
June 30, 2015 | December 31, 2014 | ||||||
Cash and cash equivalents (TLLP: $13 and $19, respectively) | $ | 978 | $ | 1,000 | |||
Inventories (i) | 2,444 | 2,439 | |||||
Current maturities of debt, net of unamortized issuance costs | 403 | 6 | |||||
Long-term debt, net of unamortized issuance costs (TLLP: $2,586 and $2,544, respectively) | 3,808 | 4,161 | |||||
Total equity | 7,383 | 6,976 | |||||
Total debt, net of unamortized issuance costs, to capitalization ratio | 36 | % | 37 | % | |||
Total debt, net of unamortized issuance costs, to capitalization ratio excluding TLLP debt (j) | 25 | % | 27 | % | |||
Working capital (current assets less current liabilities) | 1,494 | 1,608 | |||||
Total market value of TLLP units held by Tesoro (k) | 1,610 | 1,658 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cash distributions received from TLLP (l): | |||||||||||||||
For common/subordinated units held | $ | 19 | $ | 11 | $ | 38 | $ | 22 | |||||||
For general partner units held | 14 | 8 | 30 | 13 |
(i) | The total carrying value of our crude oil and refined product inventories was less than replacement cost by approximately $578 million at June 30, 2015. |
(j) | Excludes TLLP’s total debt, net of unamortized issuance costs, and capital leases of $2.6 billion and $2.5 billion at June 30, 2015 and December 31, 2014, respectively, which are non-recourse to Tesoro, except for Tesoro Logistics GP, LLC, and noncontrolling interest of $2.5 billion at both June 30, 2015 and December 31, 2014. |
(k) | Represents market value of the 28,181,748 common units held by Tesoro at both June 30, 2015 and December 31, 2014. The market values were $57.12 and $58.85 per unit based on the closing unit price at June 30, 2015 and December 31, 2014, respectively. |
(l) | Represents distributions received from TLLP during the three and six months ended June 30, 2015 and 2014 on common or subordinated units and general partner units held by Tesoro. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Refined Product Sales (Mbpd) (m) | |||||||||||||||
Gasoline and gasoline blendstocks | 512 | 505 | 500 | 509 | |||||||||||
Diesel fuel | 201 | 213 | 190 | 200 | |||||||||||
Jet fuel | 152 | 142 | 155 | 147 | |||||||||||
Heavy fuel oils, residual products and other | 98 | 90 | 86 | 83 | |||||||||||
Total Refined Product Sales | 963 | 950 | 931 | 939 | |||||||||||
Refined Product Sales Margin ($/barrel) (n) | |||||||||||||||
Average sales price | $ | 88.87 | $ | 123.35 | $ | 81.79 | $ | 119.19 | |||||||
Average costs of sales | 72.14 | 110.98 | 68.77 | 108.21 | |||||||||||
Refined Product Sales Margin | $ | 16.73 | $ | 12.37 | $ | 13.02 | $ | 10.98 |
(m) | Sources of total refined product sales include refined products manufactured at our refineries and refined products purchased from third parties. Total refined product sales margins include margins on sales of manufactured and purchased refined products. |
(n) | We calculate refined product sales margin per barrel by dividing refined product sales margin by total refined product sales (in barrels). Refined product sales margin represents refined product sales less refined product cost of sales. Average refined product sales price include all sales through our marketing segment as well as in bulk markets and exports through our refining segment. Average costs of sales and related sales margins include amounts recognized for the sale of refined products manufactured at our refineries along with the sale of refined products purchased from third parties to help fulfill supply commitments. Investors and analysts use these financial measures to help analyze and compare companies in the industry on the basis of operating performance. These financial measures should not be considered alternatives to segment operating income, revenues, costs of sales and operating expenses or any other measure of financial performance presented in accordance with U.S. GAAP. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
REFINING SEGMENT | 2015 | 2014 | 2015 | 2014 | |||||||||||
Total Refining Segment | |||||||||||||||
Throughput (Mbpd) | |||||||||||||||
Heavy crude (o) | 174 | 161 | 135 | 165 | |||||||||||
Light crude | 542 | 602 | 544 | 601 | |||||||||||
Other feedstocks | 67 | 53 | 61 | 51 | |||||||||||
Total Throughput | 783 | 816 | 740 | 817 | |||||||||||
Yield (Mbpd) | |||||||||||||||
Gasoline and gasoline blendstocks | 416 | 424 | 388 | 422 | |||||||||||
Diesel fuel | 158 | 187 | 151 | 194 | |||||||||||
Jet fuel | 118 | 121 | 118 | 124 | |||||||||||
Heavy fuel oils, residual products, internally produced fuel and other | 144 | 140 | 130 | 132 | |||||||||||
Total Yield | 836 | 872 | 787 | 872 | |||||||||||
Segment Operating Income ($ millions) | |||||||||||||||
Gross refining margin (p) (f) | $ | 1,363 | $ | 974 | $ | 2,133 | $ | 1,762 | |||||||
Expenses | |||||||||||||||
Manufacturing costs | 398 | 436 | 795 | 852 | |||||||||||
Other operating expenses | 84 | 71 | 151 | 162 | |||||||||||
Selling, general and administrative expenses | 3 | 4 | 4 | 5 | |||||||||||
Depreciation and amortization expense | 122 | 104 | 241 | 205 | |||||||||||
Loss on asset disposal and impairments | 3 | 1 | 6 | — | |||||||||||
Segment Operating Income (f) | $ | 753 | $ | 358 | $ | 936 | $ | 538 | |||||||
Gross Refining Margin ($/throughput barrel) (q) (r) | $ | 19.13 | $ | 13.11 | $ | 15.61 | $ | 11.92 | |||||||
Manufacturing Cost before Depreciation and Amortization Expense ($/throughput barrel) (q) | $ | 5.58 | $ | 5.88 | $ | 5.93 | $ | 5.77 |
(o) | We define heavy crude oil as crude oil with an American Petroleum Institute gravity of 24 degrees or less. |
(p) | Consolidated gross refining margin combines gross refining margin for each of our regions adjusted for other amounts not directly attributable to a specific region. Other amounts included $1 million for the three months ended June 30, 2014 and $1 million and $4 million for the six months ended June 30, 2015 and 2014, respectively. Gross refining margin includes the effect of intersegment sales to the marketing segment and fees charged by TLLP for the transportation and terminalling of crude oil and refined products. Gross refining margin approximates total refining throughput multiplied by the gross refining margin per barrel. |
(q) | Management uses various measures to evaluate performance and efficiency and to compare profitability to other companies in the industry, including gross refining margin per barrel, manufacturing costs before depreciation and amortization expense (“Manufacturing Costs”) per barrel and refined product sales margin per barrel. We calculate gross refining margin per barrel by dividing gross refining margin (revenues for manufactured refined products sold less costs of feedstocks, purchased refined products, transportation and distribution) by total refining throughput. We calculate Manufacturing Costs per barrel by dividing Manufacturing Costs by total refining throughput. Investors and analysts use these financial measures to help analyze and compare companies in the industry on the basis of operating performance. These financial measures should not be considered alternatives to segment operating income, revenues, costs of sales and operating expenses or any other measure of financial performance presented in accordance with U.S. GAAP. |
(r) | The gross refining margin per throughput barrel excludes the impact of the $42 million benefit recognized during the six months ended June 30, 2015 from the reversal of a lower of cost or market inventory valuation adjustment recorded in the fourth quarter of 2014 in the computation of the rate at a consolidated or regional level. There was no impact to the three months ended June 30, 2015. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Refining By Region | 2015 | 2014 | 2015 | 2014 | |||||||||||
California (Martinez and Los Angeles) | |||||||||||||||
Throughput (Mbpd) | |||||||||||||||
Heavy crude (o) | 169 | 155 | 129 | 160 | |||||||||||
Light crude | 313 | 333 | 305 | 331 | |||||||||||
Other feedstocks | 41 | 35 | 39 | 32 | |||||||||||
Total Throughput | 523 | 523 | 473 | 523 | |||||||||||
Yield (Mbpd) | |||||||||||||||
Gasoline and gasoline blendstocks | 290 | 282 | 258 | 279 | |||||||||||
Diesel fuel | 101 | 116 | 92 | 125 | |||||||||||
Jet fuel | 80 | 82 | 76 | 80 | |||||||||||
Heavy fuel oils, residual products, internally produced fuel and other | 98 | 89 | 86 | 84 | |||||||||||
Total Yield | 569 | 569 | 512 | 568 | |||||||||||
Gross Refining Margin ($ millions) | $ | 957 | $ | 578 | $ | 1,393 | $ | 979 | |||||||
Gross Refining Margin ($/throughput barrel) (q) (r) | $ | 20.10 | $ | 12.15 | $ | 15.92 | $ | 10.36 | |||||||
Manufacturing Cost before Depreciation and Amortization Expense ($/throughput barrel) (q) | $ | 5.89 | $ | 6.66 | $ | 6.62 | $ | 6.57 | |||||||
Capital Expenditures ($ millions) | $ | 59 | $ | 37 | $ | 114 | $ | 64 | |||||||
Pacific Northwest (Alaska & Washington) | |||||||||||||||
Throughput (Mbpd) | |||||||||||||||
Heavy crude (o) | 5 | 6 | 6 | 5 | |||||||||||
Light crude | 126 | 141 | 132 | 144 | |||||||||||
Other feedstocks | 23 | 13 | 18 | 14 | |||||||||||
Total Throughput | 154 | 160 | 156 | 163 | |||||||||||
Yield (Mbpd) | |||||||||||||||
Gasoline and gasoline blendstocks | 71 | 69 | 70 | 71 | |||||||||||
Diesel fuel | 23 | 28 | 25 | 30 | |||||||||||
Jet fuel | 31 | 29 | 32 | 30 | |||||||||||
Heavy fuel oils, residual products, internally produced fuel and other | 34 | 39 | 34 | 38 | |||||||||||
Total Yield | 159 | 165 | 161 | 169 | |||||||||||
Gross Refining Margin ($ millions) | $ | 240 | $ | 126 | $ | 404 | $ | 258 | |||||||
Gross Refining Margin ($/throughput barrel) (q) (r) | $ | 17.12 | $ | 8.66 | $ | 14.02 | $ | 8.71 | |||||||
Manufacturing Cost before Depreciation and Amortization Expense ($/throughput barrel) (q) | $ | 4.28 | $ | 4.78 | $ | 4.36 | $ | 4.52 | |||||||
Capital Expenditures ($ millions) | $ | 29 | $ | 8 | $ | 55 | $ | 13 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Mid-Continent (North Dakota and Utah) | |||||||||||||||
Throughput (Mbpd) | |||||||||||||||
Light crude | 103 | 128 | 107 | 126 | |||||||||||
Other feedstocks | 3 | 5 | 4 | 5 | |||||||||||
Total Throughput | 106 | 133 | 111 | 131 | |||||||||||
Yield (Mbpd) | |||||||||||||||
Gasoline and gasoline blendstocks | 55 | 73 | 60 | 72 | |||||||||||
Diesel fuel | 34 | 43 | 34 | 39 | |||||||||||
Jet fuel | 7 | 10 | 10 | 14 | |||||||||||
Heavy fuel oils, residual products, internally produced fuel and other | 12 | 12 | 10 | 10 | |||||||||||
Total Yield | 108 | 138 | 114 | 135 | |||||||||||
Gross Refining Margin ($ millions) | $ | 166 | $ | 269 | $ | 335 | $ | 521 | |||||||
Gross Refining Margin ($/throughput barrel) (q) (r) | $ | 17.15 | $ | 22.14 | $ | 16.46 | $ | 22.06 | |||||||
Manufacturing Cost before Depreciation and Amortization Expense ($/throughput barrel) (q) | $ | 5.94 | $ | 4.14 | $ | 5.22 | $ | 4.11 | |||||||
Capital Expenditures ($ millions) | $ | 60 | $ | 49 | $ | 163 | $ | 85 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
TLLP SEGMENT | 2015 | 2014 | 2015 | 2014 | |||||||||||
Gathering | |||||||||||||||
Crude oil gathering pipeline throughput (Mbpd) | 187 | 109 | 173 | 103 | |||||||||||
Average crude oil gathering pipeline revenue per barrel (s) | $ | 1.71 | $ | 1.34 | $ | 1.80 | $ | 1.34 | |||||||
Crude oil gathering trucking volume (Mbpd) | 45 | 47 | 46 | 46 | |||||||||||
Average crude oil gathering trucking revenue per barrel (s) | $ | 3.32 | $ | 3.23 | $ | 3.28 | $ | 3.21 | |||||||
Gas gathering throughput (thousands of MMBtu/day) (t) | 1,071 | — | 1,046 | — | |||||||||||
Average gas gathering revenue per MMBtu (s) (t) | $ | 0.48 | $ | — | $ | 0.43 | $ | — | |||||||
Processing (t) | |||||||||||||||
NGL processing throughput (Mbpd) | 8 | — | 7 | — | |||||||||||
Average keep-whole fee per barrel of NGL (s) | $ | 35.14 | $ | — | $ | 33.60 | $ | — | |||||||
Fee-based processing throughput (thousands of MMBtu/day) | 768 | — | 729 | — | |||||||||||
Average fee-based processing revenue per MMBtu (s) | $ | 0.36 | $ | — | $ | 0.40 | $ | — | |||||||
Terminalling and Transportation | |||||||||||||||
Terminalling throughput (Mbpd) | 913 | 913 | 915 | 907 | |||||||||||
Average terminalling revenue per barrel (s) | $ | 1.10 | $ | 0.95 | $ | 1.10 | $ | 0.94 | |||||||
Pipeline transportation throughput (Mbpd) | 801 | 813 | 810 | 815 | |||||||||||
Average pipeline transportation revenue per barrel (s) | $ | 0.38 | $ | 0.36 | $ | 0.38 | $ | 0.36 | |||||||
Segment Operating Income ($ millions) | |||||||||||||||
Revenues | |||||||||||||||
Gathering | $ | 89 | $ | 27 | $ | 166 | $ | 52 | |||||||
Processing | 67 | — | 134 | — | |||||||||||
Terminalling and transportation | 119 | 106 | 238 | 208 | |||||||||||
Total Revenues (u) | 275 | 133 | 538 | 260 | |||||||||||
Expenses | |||||||||||||||
Operating expenses (v) | 94 | 55 | 180 | 100 | |||||||||||
General and administrative expenses (w) | 28 | 13 | 53 | 23 | |||||||||||
Depreciation and amortization expense | 44 | 17 | 88 | 33 | |||||||||||
Gain on asset disposals and impairments | — | — | — | (4 | ) | ||||||||||
Segment Operating Income | $ | 109 | $ | 48 | $ | 217 | $ | 108 |
(s) | Management uses average revenue per barrel and average revenue per MMBtu to evaluate performance and compare profitability to other companies in the industry. We calculate average revenue per barrel as revenue divided by total throughput or keep-whole processing volumes. We calculate average revenue per MMBtu as revenue divided by gas gathering and fee-based processing volume. Investors and analysts use these financial measures to help analyze and compare companies in the industry on the basis of operating performance. These financial measures should not be considered as an alternative to segment operating income, revenues and operating expenses or any other measure of financial performance presented in accordance with U.S. GAAP. |
(t) | TLLP commenced natural gas gathering and processing operations with the acquisition of the Rockies Natural Gas Business on December 2, 2014. |
(u) | TLLP segment revenues from services provided to our refining segment were $154 million and $117 million for the three months ended June 30, 2015 and 2014, respectively, and $302 million and $228 million for the six months ended June 30, 2015 and 2014, respectively. These amounts are eliminated upon consolidation. |
(v) | TLLP segment operating expenses include amounts billed by Tesoro for services provided to TLLP under various operational contracts. Amounts billed by Tesoro totaled $24 million and $20 million for the three months ended June 30, 2015 and 2014, respectively, and $49 million and $40 million for the six months ended June 30, 2015 and 2014, respectively. Operating expenses also include imbalance gains and reimbursements pursuant to the Amended Omnibus Agreement of $11 million and $8 million for the three months ended June 30, 2015 and 2014, respectively, and $19 million and $15 million for the six months ended June 30, 2015 and 2014, respectively. These amounts are eliminated upon consolidation. TLLP segment third-party operating expenses related to the transportation of crude oil and refined products are reclassified to cost of sales in our condensed statements of consolidated operations upon consolidation. |
(w) | TLLP segment general and administrative expenses include amounts charged by Tesoro for general and administrative services provided to TLLP under various operational and administrative contracts. These amounts totaled $18 million and $10 million for the three months ended June 30, 2015 and 2014, respectively, and $35 million and $17 million for the six months ended June 30, 2015 and 2014, respectively, and are eliminated upon consolidation. General and administrative expenses are also reclassified to cost of sales. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
MARKETING SEGMENT | 2015 | 2014 | 2015 | 2014 | |||||||||||
Average Number of Branded Stations (during the period) | |||||||||||||||
Company/MSO-operated (x) | 583 | 581 | 584 | 578 | |||||||||||
Jobber/dealer operated | 1,680 | 1,693 | 1,679 | 1,695 | |||||||||||
Total Average Branded Stations | 2,263 | 2,274 | 2,263 | 2,273 | |||||||||||
Branded and Unbranded Fuel Sales (millions of gallons) | 2,099 | 2,079 | 4,159 | 4,020 | |||||||||||
Branded and Unbranded Fuel Margin ($/gallon) (y) | $ | 0.14 | $ | 0.08 | $ | 0.12 | $ | 0.06 | |||||||
Segment Operating Income ($ millions) | |||||||||||||||
Gross Margins | |||||||||||||||
Fuel (y) (f) | $ | 287 | $ | 163 | $ | 491 | $ | 255 | |||||||
Other non-fuel (z) | 15 | 31 | 29 | 59 | |||||||||||
Total Gross Margins | 302 | 194 | 520 | 314 | |||||||||||
Expenses | |||||||||||||||
Operating expenses | 72 | 92 | 141 | 174 | |||||||||||
Selling, general and administrative expenses | 6 | 3 | 9 | 6 | |||||||||||
Depreciation and amortization expense | 11 | 10 | 23 | 20 | |||||||||||
Loss on asset disposals and impairments | 1 | 1 | 2 | 2 | |||||||||||
Segment Operating Income (f) | $ | 212 | $ | 88 | $ | 345 | $ | 112 |
(x) | During the fourth quarter 2014, we converted our company-operated locations to multi-site operators (“MSO”) retaining the transportation fuel sales. All employees and merchandise inventory were transferred to the MSOs. |
(y) | Management uses fuel margin per gallon to compare fuel results to other companies in the industry. There are a variety of ways to calculate fuel margin per gallon and different companies may calculate it in different ways. We calculate fuel margin per gallon by dividing fuel gross margin by fuel sales volumes. Investors and analysts may use fuel margin per gallon to help analyze and compare companies in the industry on the basis of operating performance. This financial measure should not be considered an alternative to revenues, segment operating income or any other measure of financial performance presented in accordance with U.S. GAAP. Fuel margin and fuel margin per gallon include the effect of intersegment purchases from the refining segment. |
(z) | Includes merchandise gross margins for the three and six months ended June 30, 2014. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA | |||||||||||||||
Net earnings | $ | 620 | $ | 240 | $ | 808 | $ | 343 | |||||||
Loss from discontinued operations, net of tax | 4 | — | 4 | 1 | |||||||||||
Depreciation and amortization expense | 182 | 135 | 361 | 265 | |||||||||||
Income tax expense | 334 | 132 | 430 | 188 | |||||||||||
Interest and financing costs, net | 54 | 41 | 109 | 118 | |||||||||||
EBITDA | 1,194 | 548 | 1,712 | 915 | |||||||||||
Special items (g) | — | — | (29 | ) | (5 | ) | |||||||||
Adjusted EBITDA | $ | 1,194 | $ | 548 | $ | 1,683 | $ | 910 | |||||||
Reconciliation of Cash Flows from Operating Activities to EBITDA and Adjusted EBITDA | |||||||||||||||
Net cash from operating activities | $ | 1,055 | $ | 526 | $ | 907 | $ | 376 | |||||||
Debt redemption charges | — | — | — | (31 | ) | ||||||||||
Deferred charges | 84 | 19 | 167 | 79 | |||||||||||
Changes in current assets and current liabilities | (249 | ) | (140 | ) | 221 | 203 | |||||||||
Income tax expense | 334 | 132 | 430 | 188 | |||||||||||
Stock-based compensation expense | (7 | ) | (26 | ) | (35 | ) | (8 | ) | |||||||
Interest and financing costs, net | 54 | 41 | 109 | 118 | |||||||||||
Deferred income tax expense | (42 | ) | (16 | ) | (46 | ) | (24 | ) | |||||||
Other | (35 | ) | 12 | (41 | ) | 14 | |||||||||
EBITDA | 1,194 | 548 | 1,712 | 915 | |||||||||||
Special items (g) | — | — | (29 | ) | (5 | ) | |||||||||
Adjusted EBITDA | $ | 1,194 | $ | 548 | $ | 1,683 | $ | 910 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Reconciliation of Refining Operating Income to Refining EBITDA and Adjusted EBITDA | |||||||||||||||
Operating income | $ | 753 | $ | 358 | $ | 936 | $ | 538 | |||||||
Depreciation and amortization expense | 122 | 104 | 241 | 205 | |||||||||||
Other income (expense), net (e) | — | 2 | (1 | ) | 1 | ||||||||||
EBITDA | 875 | 464 | 1,176 | 744 | |||||||||||
Special items (g) | — | — | (42 | ) | — | ||||||||||
Adjusted EBITDA | $ | 875 | $ | 464 | $ | 1,134 | $ | 744 | |||||||
Reconciliation of TLLP Operating Income to TLLP EBITDA and Adjusted EBITDA | |||||||||||||||
Operating income | $ | 109 | $ | 48 | $ | 217 | $ | 108 | |||||||
Depreciation and amortization expense | 44 | 17 | 88 | 33 | |||||||||||
Other income, net (e) | 1 | — | 4 | — | |||||||||||
EBITDA | 154 | 65 | 309 | 141 | |||||||||||
Special items (g) | — | — | 13 | (5 | ) | ||||||||||
Adjusted EBITDA | $ | 154 | $ | 65 | $ | 322 | $ | 136 | |||||||
Reconciliation of Marketing Operating Income to Marketing EBITDA and Adjusted EBITDA | |||||||||||||||
Operating income | $ | 212 | $ | 88 | $ | 345 | $ | 112 | |||||||
Depreciation and amortization expense | 11 | 10 | 23 | 20 | |||||||||||
EBITDA and Adjusted EBITDA | $ | 223 | $ | 98 | $ | 368 | $ | 132 | |||||||
Reconciliation of Corporate and Other Operating Loss to Corporate and Other EBITDA and Adjusted EBITDA | |||||||||||||||
Operating loss | $ | (65 | ) | $ | (84 | ) | $ | (149 | ) | $ | (110 | ) | |||
Depreciation and amortization expense | 5 | 4 | 9 | 7 | |||||||||||
Other income (expense), net (e) | 2 | 1 | (1 | ) | 1 | ||||||||||
EBITDA and Adjusted EBITDA | $ | (58 | ) | $ | (79 | ) | $ | (141 | ) | $ | (102 | ) |
Rockies Natural Gas Business | |||
Six Months Ended June 30, 2015 | |||
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA | |||
Net earnings | $ | 81 | |
Depreciation and amortization expense | 47 | ||
EBITDA | 128 | ||
Throughput deficiency receivables (h) | 13 | ||
Adjusted EBITDA | $ | 141 |
TLLP Projected Annual EBITDA Contribution from Drop Down | ||
Reconciliation of TLLP Projected Net Earnings to Projected Annual EBITDA | ||
Projected net earnings | $ 28 - 53 | |
Depreciation and amortization expense | 2 | |
Interest and financing costs, net | 20 | |
Projected Annual EBITDA | $ 50 - 75 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net Earnings Attributable to Tesoro Corporation from Continuing Operations - U.S. GAAP | $ | 586 | $ | 224 | $ | 731 | $ | 303 | |||||||
Special Items, After-tax: (aa) | |||||||||||||||
Inventory valuation adjustment (a) | — | — | (25 | ) | — | ||||||||||
Throughput deficiency receivables (h) | — | — | 4 | — | |||||||||||
Debt redemption charges (d) | — | — | — | 19 | |||||||||||
Gain on sale of Boise Terminal (c) | — | — | — | (1 | ) | ||||||||||
Adjusted Earnings (ab) | $ | 586 | $ | 224 | $ | 710 | $ | 321 | |||||||
Diluted Net Earnings per Share from Continuing Operations Attributable to Tesoro Corporation - U.S. GAAP | $ | 4.62 | $ | 1.70 | $ | 5.77 | $ | 2.29 | |||||||
Special Items Per Share, After-tax: (aa) | |||||||||||||||
Inventory valuation adjustment (a) | — | — | (0.20 | ) | — | ||||||||||
Throughput deficiency receivables (h) | — | — | 0.03 | — | |||||||||||
Debt redemption charges (d) | — | — | — | 0.14 | |||||||||||
Gain on sale of Boise Terminal (c) | — | — | — | (0.01 | ) | ||||||||||
Adjusted Diluted EPS (ab) | $ | 4.62 | $ | 1.70 | $ | 5.60 | $ | 2.42 |
(aa) | For the purpose of reconciling net earnings, special items have been adjusted pre-tax to reflect our limited and general partner interests in TLLP including amounts attributable to our incentive distribution rights. |
(ab) | We present net earnings from continuing operations adjusted for special items (“Adjusted Earnings”) and net earnings per diluted share from continuing operations adjusted for special items (“Adjusted Diluted EPS”) as management believes that the impact of these items on net earnings from continuing operations and diluted earnings per share from continuing operations is important information for an investor’s understanding of the operations of our business and the financial information presented. Adjusted Earnings and Adjusted Diluted EPS should not be considered as an alternative to net earnings, earnings per diluted share or any other measure of financial performance presented in accordance with U.S. GAAP. Adjusted Earnings and Adjusted Diluted EPS may not be comparable to similarly titled measures used by other entities. |
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