2013-02-06 22:32:20 -
* Net income of $0.19 per diluted share, or $1.34 per diluted share, excluding
special items
* Purchased $140 million in Tesoro shares to-date, nearly 30% of authorized
buyback program
* Increased the regular quarterly dividend 33% to $0.20 per share
* Interim financing for BP Carson acquisition in place
* Anacortes rail facility sold to Tesoro Logistics for $180 million
* Agreement to acquire Chevron Northwest Products System by Tesoro Logistics
SAN ANTONIO - February 6, 2013 - Tesoro Corporation (NYSE:TSO) today reported
fourth quarter 2012 net income of $27 million, or $0.19 per diluted share
compared to a net loss of $124 million, or $0.89 per diluted share for the
fourth quarter of 2011.
The fourth quarter 2012 results include after-tax expenses totaling $1.09 per
diluted share related to asset impairment charges, asset retirement obligations
and expense accruals primarily attributable to the decision to cease refining
operations at the Hawaii refinery. Results also include after-tax expenses
totaling $0.06 per diluted share primarily related to transaction costs from the
announced acquisition of BP's Southern California refining and marketing
business. Excluding these items, the Company earned $190 million, or $1.34 per
diluted share in the fourth quarter.
For the full year 2012, the Company reported net income of $743 million, or
$5.25 per diluted share, versus net income of $546 million, or $3.81 per diluted
share for the full year 2011. Excluding special items, for the full year 2012,
the Company earned net income of $956 million, or $6.76 per diluted share,
versus an adjusted net income of $581 million, or $4.05 per diluted share for
the full year 2011.
"Our solid operating performance allowed us to capture strong crack spreads and
report record fourth quarter adjusted earnings per share," said Greg Goff,
President and CEO. "For the full year 2012, we continued to demonstrate our
ability to drive fundamental improvements in the business while reporting the
highest adjusted earnings in the Company's history." With a focus on expanding
feedstock advantages and improving products yields, the Company completed three
of five large capital refinery projects in 2012, contributing significant
additional earnings during the year. In an effort to deliver value-driven
growth, the Company added over 225 retail stations during the year. Tesoro also
executed three asset sales to Tesoro Logistics and announced the acquisition of
Chevron Pipe Line Company's Northwest Products System by Tesoro Logistics,
driving significant growth in that business. And finally, the Company announced
the acquisition of BP's Southern California refining and marketing business,
providing a transformational growth opportunity for both Tesoro and Tesoro
Logistics.
For the fourth quarter, the Company recorded segment operating income of $150
million, or $405 million excluding special items, compared to a segment
operating loss of $96 million, or $89 million excluding special items, in the
fourth quarter of 2011. The increase in operating income was driven by a higher
margin environment and significantly improved crude oil differentials.
The Tesoro Index was $12.40 per barrel (/bbl) for the fourth quarter, up nearly
$5/bbl relative to a year ago. Higher light product crack spreads and more
attractive heavy crude oil discounts on the West Coast enhanced the benchmark.
During the quarter, heavy California crude oil traded at an $11/bbl discount
relative to Brent versus a narrow discount of $1/bbl a year ago. Additionally,
in the Mid-Continent, the discount of West Texas Intermediate (WTI) to Brent
widened by over $6/bbl relative to a year ago. The Company captured a gross
margin of $14.25/bbl.
Driving the Company's gross margin performance in excess of the Tesoro Index was
discounted crude oil compared to benchmark grades of crude oil. On the West
Coast, foreign heavy and Canadian light sweet crude oil continued to price at a
discount to domestic alternatives. Total throughput in the quarter was 604
thousand barrels per day (mbpd) or 89% utilization.
Direct manufacturing costs in the fourth quarter averaged $4.70/bbl, up
$0.28/bbl, a result of higher natural gas prices and lower refinery throughput
relative to the third quarter of 2012.
Retail fuel sales volumes in the fourth quarter were up 20% year-over-year
driven by the addition of over 225 retail stations in 2012. Same store fuel
sales during the quarter were lower by over 2% on a year-over-year basis, while
retail fuel margins were up relative to last year.
Corporate and unallocated costs, net of $9 million of corporate depreciation and
excluding $7 million in variable stock-based compensation expense and $10
million of transaction costs, primarily related to the acquisition of BP's
Southern California refining and marketing business, were $43 million in the
fourth quarter.
Capital Spending and Liquidity
Capital spending for the full year 2012 was $559 million. Turnaround spending
for the full year was $261 million. The Company currently anticipates
consolidated capital spending in 2013 to be approximately $530 million.
Expectations for full year 2013 turnaround spending remain at $310 million. The
Company ended the year with over $1.6 billion in cash and remained undrawn with
nearly $1.2 billion of availability on the Tesoro Corporation revolving credit
facility. Tesoro Logistics ended the quarter undrawn on its separate credit
facility.
2013 Strategic Focus
"Looking back at 2012, we continued to deliver sustainable improvements in the
business, we reinvested free cash flow into high-return capital projects, we
drove significant value growth in Tesoro Logistics and we began returning excess
cash to shareholders, all in-line with our plan for the year," said Goff.
Looking to 2013, the Company remains focused on delivering the announced large
capital refining projects, strengthening its West Coast business, capitalizing
on its advantaged position in the Mid-Continent, driving additional growth in
Tesoro Logistics and executing a cash strategy focused on investing for growth
and returning cash to shareholders.
Hawaii Refinery Conversion to Terminal
On January 8, 2013, Tesoro Corporation announced that it will cease refining
operations at its Hawaii refinery during April of this year, and begin the
process of converting the refinery to an import, storage and distribution
terminal. Tesoro Hawaii will maintain the existing distribution system to
support marketing operations and fulfill its supply commitments while continuing
to offer the terminal, distribution and retail assets for sale. The Company
expects to realize between $300 to 350 million in cash by the end of 2013,
driven by a reduction in working capital needs as a result of this conversion.
Acquisition Funding Update
Tesoro has put in place interim financing facilities for the acquisition of BP's
Southern California refining and marketing business. On January 4, 2013, Tesoro
amended its revolving credit facility expanding total available capacity from
$1.85 billion to $3.0 billion. Additionally, on January 28, 2013, Tesoro closed
a three year $500 million term loan credit facility with attractive borrowing
rates and flexible repayment provisions. Both facilities become effective upon
the transaction close. With the additional credit capacity in place, the Company
expects to fund the transaction with between $500 and $600 million of cash and
$500 million in term loan borrowings. The remaining $1.2 billion of required
funds is expected to be sourced with revolver borrowings and proceeds from the
sale of a portion of the logistics assets to Tesoro Logistics at closing. The
terms of the logistics sale have yet to be determined or negotiated.
Returning Cash to Shareholders
Tesoro Corporation today announced that the board of directors has approved a
33% increase in the Company's regular quarterly cash dividend from $0.15 per
share to $0.20 per share, effective with the quarterly dividend payable on March
15, 2013 to holders of record at the close of business on February 28, 2013.
During the fourth quarter of 2012, Tesoro returned $100 million to shareholders
via the purchase of over two and a half million of the Company's shares.
Recognizing the continued value opportunity, the Company bought an additional
$40 million of shares during the first quarter of 2013, bringing total purchases
to $140 million or nearly 30% of the outstanding buyback program.
Public Invited to Listen to Analyst Conference Call
At 7:30 a.m. CST tomorrow morning, Tesoro will broadcast, live, its conference
call with analysts regarding fourth quarter and full year 2012 results and other
business matters. Interested parties may listen to the live conference call
over the Internet by logging on to
www.tsocorp.com.
Tesoro Corporation, a Fortune 150 company, is an independent refiner and
marketer of petroleum products. Tesoro, through its subsidiaries, operates
seven refineries in the western United States with a combined capacity of
approximately 675,000 barrels per day. Tesoro's retail-marketing system
includes over 1,400 branded retail stations, of which 595 are company operated
under the Tesoro(®), Shell(®) and USA Gasoline(TM) brands.
This earnings release contains certain statements that are "forward-looking"
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 concerning our expectations
about capital and turnaround spending, the Company's focus in 2013, cash to be
generated from the reduction of working capital in Hawaii, funding for the
acquisition of BP's Southern California refining and marketing business, and the
sale of a portion of the logistics assets to Tesoro Logistics LP. For more
information concerning factors that could affect these statements see our annual
report on Form 10-K and quarterly reports on Form 10-Q, filed with the
Securities and Exchange Commission. We undertake no obligation to publicly
release the result of any revisions to any such forward-looking statements that
may be made to reflect events or circumstances that occur, or which we become
aware of, after the date hereof.
Contact:
Investors:
Louie Rubiola, Director, Investor Relations, (210) 626-4355
Media:
Tesoro Media Relations,
media@tsocorp.com, (210) 626-7702
TESORO CORPORATION
STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited)
(In millions except per share amounts)
Three Months Ended Years Ended
December 31, December 31,
----------------------- ------------------------
2012 2011 2012 2011
----------- ----------- ------------ -----------
Revenues $ 8,273 $ 7,713 $ 32,974 $ 30,303
Costs and Expenses:
Cost of sales 7,340 7,307 29,002 27,007
Operating expenses 408 378 1,544 1,495
Selling, general and
administrative expenses 72 71 310 237
Depreciation and
amortization expense 117 105 445 417
Loss on asset disposals and
impairments (a) 255 7 271 67
----------- ----------- ------------ -----------
Operating Income (Loss) (b)
(c) 81 (155 ) 1,402 1,080
Interest and financing
costs, net (d) (29 ) (37 ) (166 ) (179 )
Interest income - - 2 2
Other income (expense), net
(e) (5 ) 1 (26 ) 2
----------- ----------- ------------ -----------
Earnings (Loss) Before
Income Taxes 47 (191 ) 1,212 905
Income tax expense (benefit) 12 (73 ) 442 342
----------- ----------- ------------ -----------
Net Earnings (Loss) 35 (118 ) 770 563
Less net earnings
attributable to
noncontrolling interest 8 6 27 17
----------- ----------- ------------ -----------
NET EARNINGS (LOSS)
ATTRIBUTABLE TO TESORO
CORPORATION $ 27 $ (124 ) $ 743 $ 546
----------- ----------- ------------ -----------
Net Earnings (Loss) Per
Share:
Basic $ 0.19 $ (0.89 ) $ 5.33 $ 3.86
Diluted (f) $ 0.19 $ (0.89 ) $ 5.25 $ 3.81
Weighted Average Common
Shares:
Basic 139.1 138.7 139.4 141.4
Diluted (f) 141.6 138.7 141.5 143.3
________________
(a) Includes impairment charges and asset retirement obligations of $228
million and $20 million, respectively, for the three months and year ended
December 31, 2012, as a result of the decision to cease refining operations at
our Hawaii refinery, and begin the process of converting the refinery to an
import, storage and distribution terminal. Also includes impairment charges
related to the change in scope of a capital project at our Wilmington refinery
of $51 million for the year ended December 31, 2011. The after-tax impact of
losses on asset disposals and impairments was approximately $154 million and $4
million for the three months ended December 31, 2012 and 2011, respectively, and
$165 million and $41 million for the years ended December 31, 2012 and 2011,
respectively. The loss on asset disposals and impairments is included in
refining segment operating income but excluded from the regional operating costs
per barrel.
(b) Includes $37 million in business interruption and property damage insurance
recoveries pre-tax, or $23 million after-tax related to the April 2010 incident
at our Washington refinery for the year ended December 31, 2011.
(c) Includes an expense of $9 million for the year ended December 31, 2012, for
a supplemental vacation accrual related to a change in benefits for retirement
eligible employees. The after-tax impact of the expense was $5 million.
(d) Includes charges of $28 million, pre-tax, or $17 million, after-tax, for
premiums and unamortized debt issuance costs associated with the redemption of
our 6.625% and 6.500% Senior Notes, for the year ended December 31, 2012. Also
includes charges of $22 million, pre-tax, or $13 million, after-tax, related to
the early redemption of the Junior Subordinated Notes due 2012 and a portion of
our 6.250% and 6.500% Senior Notes for the year ended December 31, 2011.
(e) Includes pre-tax expenses related to certain legal matters of $4 million for
the three months ended December 31, 2012, and $26 million and $7 million for the
years ended December 31, 2012 and 2011, respectively. The after-tax impact of
these expenses was $3 million for the three months ended December 31, 2012, and
$16 million and $4 million for the years ended December 31, 2012 and 2011,
respectively.
(f) The assumed conversion of common stock equivalents produced anti-dilutive
results for the three months ended December 31, 2011, and was not included in
the dilutive calculation.
TESORO CORPORATION
SELECTED OPERATING SEGMENT DATA
(Unaudited)
(In millions)
Three Months Ended Years Ended
December 31, December 31,
-------------------- ----------------------
2012 2011 2012 2011
--------- ---------- ----------- ----------
Operating Income (Loss)
Refining (a) (b) $ 106 $ (123 ) $ 1,552 $ 1,179
Retail 44 27 132 89
--------- ---------- ----------- ----------
Total Segment Operating Income
(Loss) 150 (96 ) 1,684 1,268
Corporate and unallocated costs
(g) (69 ) (59 ) (282 ) (188 )
--------- ---------- ----------- ----------
Operating Income (Loss) (c) 81 (155 ) 1,402 1,080
Interest and financing costs, net
(d) (29 ) (37 ) (166 ) (179 )
Interest income - - 2 2
Other income (expense), net (e) (5 ) 1 (26 ) 2
--------- ---------- ----------- ----------
Earnings (Loss) Before Income
Taxes $ 47 $ (191 ) $ 1,212 $ 905
--------- ---------- ----------- ----------
Depreciation and Amortization
Expense
Refining $ 98 $ 93 $ 380 $ 369
Retail 10 10 39 38
Corporate 9 2 26 10
--------- ---------- ----------- ----------
Depreciation and Amortization
Expense $ 117 $ 105 $ 445 $ 417
--------- ---------- ----------- ----------
Capital Expenditures
Refining $ 144 $ 100 $ 472 $ 262
Retail 28 21 74 41
Corporate 4 8 13 17
--------- ---------- ----------- ----------
Capital Expenditures $ 176 $ 129 $ 559 $ 320
----------- ---------- ----------- ----------
BALANCE SHEET DATA
(Unaudited)
(Dollars in millions)
December December
31, 31,
2012 2011
------------ ----------
Cash and cash equivalents $ 1,639 $ 900
Inventories (h) $ 1,578 $ 1,763
Total Assets $ 10,702 $ 9,892
Current maturities of debt $ 3 $ 418
Long-Term Debt $ 1,587 $ 1,283
Total Equity $ 4,737 $ 3,978
Total Debt to Capitalization Ratio 25 % 30 %
Total Debt to Capitalization Ratio excluding TLLP (i) 23 % 31 %
_______________
(g) Includes stock-based compensation expense of $11 million and $28 million for
the three months ended December 31, 2012 and 2011, respectively, and $103
million and $53 million for the years ended December 31, 2012 and 2011,
respectively. The volatility is primarily a result of changes in Tesoro's stock
price during the periods as compared to the prior periods.
(h) The total carrying value of our crude oil and refined product inventories
was less than replacement cost by approximately $1.6 billion and $1.7 billion at
December 31, 2012 and 2011, respectively.
(i) Excludes Tesoro Logistic LP's ("TLLP") total debt of $354 million and $50
million and noncontrolling interest of $486 million and $310 million as of and
for the years ended December 31, 2012 and 2011, respectively. TLLP's debt was
primarily comprised of $350 million aggregate principal amount of Tesoro
Logistics LP Senior Notes and $50 million of borrowings on TLLP's revolving
credit facility as of December 31, 2012 and 2011, respectively, which are non-
recourse to Tesoro, except for Tesoro Logistics GP.
TESORO CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
------------------------- ------------------------
REFINING SEGMENT 2012 2011 2012 2011
------------ ------------ ------------ -----------
Total Refining Segment
Throughput (thousand
barrels ("bbls") per day)
Heavy crude (j) 152 148 161 171
Light crude 408 385 387 373
Other feedstocks 44 34 37 35
------------ ------------ ------------ -----------
Total Throughput 604 567 585 579
------------ ------------ ------------ -----------
Yield (thousand bbls per
day)
Gasoline and gasoline
blendstocks 313 281 290 285
Jet fuel 84 80 83 79
Diesel fuel 145 138 132 135
Heavy fuel oils, residual
products, internally
produced fuel and other 95 100 111 112
------------ ------------ ------------ -----------
Total Yield 637 599 616 611
------------ ------------ ------------ -----------
Gross refining margin
($/throughput bbl) (k) $ 14.25 $ 6.02 $ 16.37 $ 13.94
Manufacturing costs before
depreciation and
amortization expense
($/throughput bbl) (k) $ 4.70 $ 5.03 $ 4.72 $ 4.98
Segment Operating Income
(Loss) ($ millions)
Gross refining margin (l) $ 792 $ 313 $ 3,503 $ 2,944
Expenses
Manufacturing Costs 261 263 1,009 1,052
Other operating expenses 66 65 260 241
Selling, general and
administrative expenses 9 11 40 43
Depreciation and
amortization expense (m) 98 93 380 369
Loss on asset disposal and
impairments (a) 252 4 262 60
------------ ------------ ------------ -----------
Segment Operating Income
(Loss) (b) $ 106 $ (123 ) $ 1,552 $ 1,179
------------ ------------ ------------ -----------
Refined Product Sales
(thousand bbls per day)
(n)
Gasoline and gasoline
blendstocks 354 341 357 341
Jet fuel 97 93 97 91
Diesel fuel 158 153 154 143
Heavy fuel oils, residual
products and other 85 92 85 85
------------ ------------ ------------ -----------
Total Refined Product
Sales 694 679 693 660
------------ ------------ ------------ -----------
Refined Product Sales
Margin ($/bbl) (k) (n)
Average sales price $ 115.72 $ 119.00 $ 123.20 $ 121.09
Average costs of sales 105.18 112.89 110.76 109.96
------------ ------------ ------------ -----------
Refined Product Sales
Margin $ 10.54 $ 6.11 $ 12.44 $ 11.13
-------------- ------------ ------------ -----------
________________
(j) We define heavy crude oil as crude oil with an American Petroleum Institute
gravity of 24 degrees or less.
(k) Management uses gross refining margin per barrel to evaluate performance and
compare profitability to other companies in the industry. There are a variety of
ways to calculate gross refining margin per barrel; different companies may
calculate it in different ways. We calculate gross refining margin per barrel by
dividing gross refining margin (revenues less costs of feedstocks, purchased
refined products, transportation and distribution) by total refining throughput.
Management uses manufacturing costs before depreciation amortization expense
("Manufacturing Costs") per barrel to evaluate the efficiency of refining
operations. There are a variety of ways to calculate Manufacturing Costs per
barrel; different companies may calculate it in different ways. We calculate
Manufacturing Costs per barrel by dividing Manufacturing Costs by total refining
throughput. Management uses refined product sales margin per barrel to evaluate
the profitability of manufactured and purchased refined products sales. There
are a variety of ways to calculate refined product sales margin per barrel;
different companies may calculate it in different ways. We calculate refined
products sales margin per barrel by dividing refined product sales and refined
product cost of sales by total refining throughput, and subtracting refined
product cost of sales per barrel from refined product sales per barrel.
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 accounting principles
generally accepted in the United States of America ("U.S. GAAP").
(l) 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 resulted in an increase of $2 million for both
the three months ended December 31, 2012 and 2011, respectively, and $4 million
and $6 million for the years ended December 31, 2012 and 2011, respectively.
Gross refining margin includes the effect of intersegment sales to the retail
segment at prices which approximate market. Gross refining margin approximates
total refining throughput times gross refining margin per barrel.
(m) Includes manufacturing depreciation and amortization expense per throughput
barrel of approximately $1.60 and $1.70 for the three months ended December 31,
2012 and 2011, respectively, and $1.67 for both the years ended December 31,
2012 and 2011.
(n) 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.
TESORO CORPORATION
OPERATING DATA
(Unaudited)
(Dollars in millions except per barrel amounts)
Three Months Ended Years Ended
December 31, December 31,
---------------------- ----------------------
Refining By Region 2012 2011 2012 2011
----------- ---------- ----------- ----------
California (Martinez and
Wilmington)
Throughput (thousand bbls per
day) (o)
Heavy crude (j) 141 138 151 156
Light crude 83 75 67 60
Other feedstocks 25 28 24 25
----------- ---------- ----------- ----------
Total Throughput 249 241 242 241
----------- ---------- ----------- ----------
Yield (thousand bbls per day)
Gasoline and gasoline
blendstocks 145 135 132 134
Jet fuel 18 19 21 20
Diesel fuel 74 69 61 63
Heavy fuel oils, residual
products, internally produced
fuel and other 35 39 48 45
----------- ---------- ----------- ----------
Total Yield 272 262 262 262
----------- ---------- ----------- ----------
Gross refining margin $ 255 $ 38 $ 1,005 $ 1,071
Gross refining margin
($/throughput bbl) (k) $ 11.14 $ 1.72 $ 11.35 $ 12.19
Manufacturing costs before
depreciation and amortization
expense
($/throughput bbl) (k) $ 6.48 $ 6.76 $ 6.30 $ 6.90
Capital expenditures $ 48 $ 46 $ 170 $ 121
Pacific Northwest (Alaska &
Washington)
Throughput (thousand bbls per
day) (o)
Heavy crude (j) 3 1 4 3
Light crude 142 137 142 144
Other feedstocks 15 1 9 6
----------- ---------- ----------- ----------
Total Throughput 160 139 155 153
----------- ---------- ----------- ----------
Yield (thousand bbls per day)
Gasoline and gasoline
blendstocks 75 59 69 66
Jet fuel 31 28 31 30
Diesel fuel 25 25 25 27
Heavy fuel oils, residual
products, internally produced
fuel and other 34 31 35 35
----------- ---------- ----------- ----------
Total Yield 165 143 160 158
----------- ---------- ----------- ----------
Gross refining margin $ 197 $ 76 $ 919 $ 693
Gross refining margin
($/throughput bbl) (k) $ 13.42 $ 5.96 $ 16.23 $ 12.40
Manufacturing costs before
depreciation and amortization
expense
($/throughput bbl) (k) $ 3.72 $ 4.31 $ 3.83 $ 3.64
Capital expenditures $ 27 $ 21 $ 114 $ 59
TESORO CORPORATION
OPERATING DATA
(Unaudited)
(Dollars in millions except per barrel amounts)
Three Months Ended Years Ended
December 31, December 31,
----------------------- ----------------------
2012 2011 2012 2011
----------- ----------- ----------- ----------
Mid-Pacific (Hawaii)
Throughput (thousand bbls per
day) (o)
Heavy crude (j) 8 9 6 12
Light crude 64 63 62 59
----------- ----------- ----------- ----------
Total Throughput 72 72 68 71
----------- ----------- ----------- ----------
Yield (thousand bbls per day)
Gasoline and gasoline
blendstocks 20 19 20 19
Jet fuel 21 20 19 18
Diesel fuel 14 13 13 13
Heavy fuel oils, residual
products, internally produced
fuel and other 18 22 18 22
----------- ----------- ----------- ----------
Total Yield 73 74 70 72
----------- ----------- ----------- ----------
Gross refining margin $ 23 $ (29 ) $ 174 $ 105
Gross refining margin
($/throughput bbl) (k) $ 3.57 $ (4.33 ) $ 6.96 $ 4.08
Manufacturing costs before
depreciation and amortization
expense
($/throughput bbl) (k) $ 3.38 $ 3.11 $ 3.43 $ 3.65
Capital expenditures $ 2 $ 5 $ 16 $ 13
Mid-Continent (North Dakota
and Utah)
Throughput (thousand bbls per
day)
Light crude 119 110 116 110
Other feedstocks 4 5 4 4
----------- ----------- ----------- ----------
Total Throughput 123 115 120 114
----------- ----------- ----------- ----------
Yield (thousand bbls per day)
Gasoline and gasoline
blendstocks 73 68 69 66
Jet fuel 14 13 12 11
Diesel fuel 32 31 33 32
Heavy fuel oils, residual
products, internally produced
fuel and other 8 8 10 10
----------- ----------- ----------- ----------
Total Yield 127 120 124 119
----------- ----------- ----------- ----------
Gross refining margin $ 315 $ 226 $ 1,401 $ 1,069
Gross refining margin
($/throughput bbl) (k) $ 27.88 $ 21.38 $ 32.00 $ 25.59
Manufacturing costs before
depreciation and amortization
expense
($/throughput bbl) (k) $ 3.11 $ 3.51 $ 3.40 $ 3.55
Capital expenditures $ 67 $ 28 $ 172 $ 69
________________
(o) We experienced reduced throughput due to scheduled turnarounds at our
Martinez refinery during the 2012 first quarter and 2011 second quarter, and our
Alaska and Hawaii refineries during the 2012 second quarter.
TESORO CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
--------------------- --------------------
Retail Segment 2012 2011 2012 2011
---------- ---------- ---------- ---------
Number of Stations (end of period)
Company-operated (p) 595 376 595 376
Branded jobber/dealer 807 799 807 799
---------- ---------- ---------- ---------
Total Stations 1,402 1,175 1,402 1,175
---------- ---------- ---------- ---------
Average Stations (during period)
Company-operated (p) 595 376 524 377
Branded jobber/dealer 800 804 794 780
---------- ---------- ---------- ---------
Total Average Retail Stations 1,395 1,180 1,318 1,157
---------- ---------- ---------- ---------
Fuel Sales (millions of gallons)
Company-operated (p) 270 185 953 733
Branded jobber/dealer 192 199 787 793
---------- ---------- ---------- ---------
Total Fuel Sales 462 384 1,740 1,526
---------- ---------- ---------- ---------
Fuel margin ($/gallon) (q) $ 0.26 $ 0.19 $ 0.22 $ 0.18
Merchandise Sales ($ millions) $ 53 $ 47 $ 212 $ 200
Merchandise Margin ($ millions) $ 13 $ 13 $ 54 $ 53
Merchandise Margin % 25 % 28 % 25 % 27 %
Segment Operating Income ($
millions)
Gross Margins
Fuel (q) $ 121 $ 73 $ 385 $ 274
Merchandise and other non-fuel
margin 20 20 84 78
---------- ---------- ---------- ---------
Total Gross Margins 141 93 469 352
Expenses
Operating expenses 79 50 273 202
Selling, general and
administrative expenses 5 4 17 17
Depreciation and amortization
expense 10 10 39 38
Loss on asset disposals and
impairments 3 2 8 6
---------- ---------- ---------- ---------
Segment Operating Income $ 44 $ 27 $ 132 $ 89
---------- ---------- ---------- ---------
________________
(p) Reflects the acquisition of 49 stations from SUPERVALU, Inc. and the
transition of 174 retail stations from Thrifty Oil Co. during 2012.
(q) Management uses fuel margin per gallon to compare profitability to other
companies in the industry. There are a variety of ways to calculate fuel margin
per gallon; 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 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 at prices which approximate
market.
TESORO CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited) (In millions)
Three Months Ended Years Ended
December 31, December 31,
-------------------- ----------------------
2012 2011 2012 2011
--------- ---------- ----------- ----------
Reconciliation of Net Earnings
(Loss) to EBITDA
Net earnings (loss) $ 27 $ (124 ) $ 743 $ 546
Add: Depreciation and
amortization expense 117 105 445 417
Add: Interest and financing
costs, net (r) 29 36 165 177
Add: Income tax expense (benefit) 12 (73 ) 442 342
Less: Interest income - - (2 ) (2 )
--------- ---------- ----------- ----------
EBITDA (s) $ 185 $ (56 ) $ 1,793 $ 1,480
--------- ---------- ----------- ----------
Reconciliation of Cash Flows from
(used in) Operating Activities to
EBITDA
Net cash from (used in) operating
activities $ 410 $ (173 ) $ 1,585 $ 689
Less: Loss on asset disposals and
impairments 255 7 271 67
Add: Changes in assets and
liabilities (170 ) 184 (270 ) 524
Add: Deferred income tax benefit
(expense) 113 (26 ) 8 (200 )
Add: Deferred charges 68 35 277 105
Add: Interest and financing
costs, net (r) 29 36 165 177
Add: Income tax expense (benefit) 12 (73 ) 442 342
Less: Stock-based compensation
expense 12 28 105 53
Less: Net earnings attributable
to noncontrolling interest 8 6 27 17
Less: Amortization of debt
issuance costs and discounts 3 3 12 17
Add: Other credits (charges) 1 5 1 (3 )
--------- ---------- ----------- ----------
EBITDA (s) $ 185 $ (56 ) $ 1,793 $ 1,480
--------- ---------- ----------- ----------
Three Months
Ended Year Ended
December December
31, 2012 31, 2012
---------------- --------------
EBITDA (s) $ 185 $ 1,793
Add: Hawaii impairment and asset retirement
obligations (a) 248 248
---------------- --------------
Adjusted EBITDA (s) $ 433 $ 2,041
---------------- --------------
________________
(r) Excludes foreign exchange loss of $1 million for the three months ended
December 31, 2011, and foreign exchange losses of $1 million and $2 million for
the years ended December 31, 2012 and 2011, respectively, in order to reconcile
EBITDA. Foreign exchange losses are included in interest and financing costs,
net in our statements of consolidated operations.
(s) EBITDA represents earnings (loss) before depreciation and amortization
expense, interest and financing costs, net, income taxes and interest income. We
define Adjusted EBITDA as EBITDA plus the impairment charges and asset
retirement obligations related to our Hawaii refinery of $248 million for the
three months and year ended December 31, 2012, respectively. We present EBITDA
and Adjusted EBITDA because we believe some investors and analysts use EBITDA
and Adjusted EBITDA to help analyze our cash flows including our ability to
satisfy principal and interest obligations with respect to our indebtedness and
use cash for other purposes, including capital expenditures. EBITDA and Adjusted
EBITDA is also used by some investors and analysts to analyze and compare
companies on the basis of operating performance and by management for internal
analysis. EBITDA and Adjusted EBITDA should not be considered as an alternative
to U.S. GAAP net income or net cash from operating activities. EBITDA and
Adjusted EBITDA have important limitations as an analytical tool, because it
excludes some, but not all, items that affect net income and net cash from
operating activities.
SEGMENT OPERATING INCOME (LOSS) ADJUSTED FOR SPECIAL ITEMS
(Unaudited) (In millions)
Three Months Three Months
Ended Ended
December December
31, 2012 31, 2011
---------------- ---------------
Total Segment Operating Income (Loss) $ 150 $ (96 )
Special Items, before-tax:
Loss on asset disposals and impairments (a) 255 7
---------------- ---------------
Segment Operating Income (Loss) Adjusted for
Special Items (t) $ 405 $ (89 )
---------------- ---------------
NET EARNINGS (LOSS) ADJUSTED FOR SPECIAL ITEMS
(Unaudited) (In millions except per share amounts)
Three Months Ended Years Ended
December 31, December 31,
---------------------- --------------------
2012 2011 2012 2011
---------- ----------- ---------- ---------
Net Earnings (Loss) - U.S. GAAP $ 27 $ (124 ) $ 743 $ 546
Special Items, After-tax:
Loss on asset disposals and
impairments (a) 154 4 165 41
Transaction costs (u) 6 - 8 -
Legal accrual (e) 3 - 16 4
Debt redemption charges (d) - - 17 13
Supplemental vacation accrual (c) - - 5 -
MF Global Holding Ltd. loss (v) - - 2 -
Washington refinery incident (b) - - - (23 )
---------- ----------- ---------- ---------
Net Earnings (Loss) Adjusted for
Special Items (t) 190 (120 ) 956 581
---------- ----------- ---------- ---------
Net Earnings (Loss) per Diluted
Share - U.S. GAAP $ 0.19 $ (0.89 ) $ 5.25 $ 3.81
Special Items Per Share, After-
tax:
Loss on asset disposals and
impairments (a) 1.09 0.02 1.17 0.28
Transaction costs (u) 0.04 - 0.06 -
Legal accrual (e) 0.02 - 0.11 0.03
Debt redemption charges (d) - - 0.12 0.09
Supplemental vacation accrual (c) - - 0.04 -
MF Global Holding Ltd. loss (v) - - 0.01 -
Washington refinery incident (b) - - - (0.16 )
---------- ----------- ---------- ---------
Net Earnings (Loss) per Diluted
Share Adjusted for
Special Items (t) $ 1.34 $ (0.87 ) 6.76 4.05
---------- ----------- ---------- ---------
________________
(t) We present segment operating income (loss) adjusted for special items
("Adjusted Segment Income"), net earnings (loss) adjusted for special items
("Adjusted Earnings") and net earnings (loss) per diluted share adjusted for
special items ("Adjusted Diluted EPS") as management believes that the impact of
these items on segment operating income, net earnings and diluted earnings per
share is important information for an investor's understanding of the operations
of our business and the financial information presented. Adjusted Segment
Income, Adjusted Earnings and Adjusted Diluted EPS should not be considered as
an alternative to segment operating income (loss), net earnings (loss), earnings
(loss) per diluted share or any other measure of financial performance
presented in accordance with U.S. GAAP. Adjusted Segment Income, Adjusted
Earnings and Adjusted Diluted EPS may not be comparable to similarly titled
measures used by other entities.
(u) Represents the after-tax impact of $10 million and $13 million transaction
and integration costs related to the BP Acquisition, TLLP's purchase of the
Northwest Products System and the sales of various assets to TLLP for the three
months and year ended December 31, 2012, respectively.
(v) Includes a loss of $2 million, after-tax, related to the liquidation of
our outstanding accounts receivable balance with MF Global Holding Ltd. for the
year ended December 31, 2012.
TSO 4Q 2012 Earnings Release:
hugin.info/144238/R/1676203/546250.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Tesoro Corporation via Thomson Reuters ONE
[HUG#1676203]
