SAN ANTONIO - April 22, 2015 -
Tesoro Corporation (NYSE:TSO) today reported first quarter 2015 net
earnings of $145 million or $1.15 per diluted share compared to net
earnings of $78 million or $0.58 per diluted share for the first
quarter of 2014. Adjusted earnings for the first quarter,
excluding a net benefit from special items of $21 million after
tax, were $124 million or $0.98 per diluted share. Adjusted
EBITDA for the first quarter, excluding special items, was $489
million compared to $362 million last year.
"We managed through a very
difficult first quarter which resulted from the labor disruption at
our three West Coast refineries. Also during the quarter
planned maintenance was performed at three refineries, including
extended downtime at the Martinez refinery," said Greg Goff,
Chairman and CEO. "As of the beginning of April, the labor
disputes have been resolved and we are back on track to deliver on
our stated 2015 business improvement objectives. We are very
confident in our current 2015 Plan, which is consistent with
consensus EBITDA estimates of approximately $800 million for the
second quarter and $2.6 billion for full year 2015," said Goff.
The first quarter of 2015 was
impacted by work stoppages at the Anacortes, Washington and Los
Angeles and Martinez, California refineries. Also during the
first quarter, planned maintenance was performed at our Martinez,
Anacortes and Salt Lake City, Utah refineries. Our California
region was the most significantly impacted by the work
stoppage. The Martinez refinery was idled during February and
March and production was impacted at the Los Angeles
refinery. Compared to first quarter of 2014, California
region throughput was lower by approximately 100 thousand barrels
per day, resulting in increased operating costs of more than $1 per
barrel.
The impact of the work stoppage
and the planned turnarounds in the first quarter resulted in a
consolidated refining gross margin of $11.77 per barrel compared to
the consolidated Tesoro Index of $16.71 per barrel. The
combination of higher system throughput during January when margins
were low, the work stoppage impact in February and March and
inventory builds associated with the turnarounds resulted in lower
capture rates for the quarter. We expect to realize a
positive impact to system capture rates in the second quarter as we
are in the final steps of completing the planned maintenance.
We still expect to achieve our 2015 plan, which is consistent with
consensus EBITDA estimates of approximately $800 million for the
second quarter and $2.6 billion for full year 2015.
Tesoro plans to release its full
earnings for the first quarter 2015 after the market closes on
Thursday, May 7, 2015. The Company will broadcast, live, its
conference call with analysts regarding first quarter results and
other business matters on Friday, May 8, 2015, at 7:30 a.m. CT.
Interested parties may listen to the live conference call over the
Internet by logging on to www.tsocorp.com.
Tesoro
Corporation, a Fortune 100 company, is an independent refiner and
marketer of petroleum products. Tesoro, through its subsidiaries,
operates six refineries in the western United States with a
combined capacity of over 850,000 barrels per day and ownership in
a logistics business which includes a 36% interest in Tesoro
Logistics LP (NYSE: TLLP) and ownership of its general partner.
Tesoro's retail-marketing system includes over 2,200 retail
stations under the ARCO®, Shell®, Exxon®, Mobil®, USA Gasoline(TM)
and Tesoro® brands.
This 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 regarding estimates and expectations regarding our
business improvement objectives for 2015 and EBITDA estimates for
the second quarter and full year 2015. For more information
concerning factors that could affect these statements see our
annual report on Form 10-K 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:
Sam Ramraj, Vice President, Investor Relations, (210) 626-4757
Media:
Tesoro Media Relations, media@tsocorp.com, (210) 626-7702
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
Three Months Ended
March 31, |
REFINING SEGMENT |
2015 |
|
2014 |
Total Refining Segment |
|
|
|
Throughput (Mbpd) |
|
|
|
Heavy crude (a) |
96 |
|
|
170 |
|
Light
crude |
546 |
|
|
598 |
|
Other feedstocks |
54 |
|
|
49 |
|
Total
Throughput |
696 |
|
|
817 |
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
Gasoline and gasoline blendstocks |
358 |
|
|
421 |
|
Diesel
fuel |
144 |
|
|
200 |
|
Jet fuel |
119 |
|
|
128 |
|
Heavy
fuel oils, residual products, internally produced fuel and
other |
117 |
|
|
124 |
|
Total Yield |
738 |
|
|
873 |
|
|
|
|
|
Refined Product Sales (Mbpd) (b) |
|
|
|
Gasoline and gasoline blendstocks |
487 |
|
|
512 |
|
Diesel fuel |
180 |
|
|
187 |
|
Jet
fuel |
158 |
|
|
152 |
|
Heavy fuel oils, residual products and other |
74 |
|
|
77 |
|
Total
Refined Product Sales |
899 |
|
|
928 |
|
|
|
|
|
Segment Operating Income ($ millions) |
|
|
|
Gross refining margin (c) |
$ |
779 |
|
|
$ |
795 |
|
Expenses |
|
|
|
Manufacturing costs |
397 |
|
|
416 |
|
Other
operating expenses |
67 |
|
|
92 |
|
Selling, general and administrative expenses |
3 |
|
|
2 |
|
Depreciation and amortization expense |
119 |
|
|
101 |
|
Loss on asset disposal and impairments |
3 |
|
|
(1 |
) |
Segment Operating Income |
$ |
190 |
|
|
$ |
185 |
|
|
|
|
|
Gross
refining margin ($/throughput bbl) (d) (e) |
$ |
11.77 |
|
|
$ |
10.80 |
|
Manufacturing cost before depreciation and
amortization expense
($/throughput bbl) (c) |
$ |
6.33 |
|
|
$ |
5.65 |
|
Refined Product Sales Margin ($/bbl) (c) (d) |
|
|
|
Average sales price |
$ |
74.13 |
|
|
$ |
114.87 |
|
Average costs of sales |
65.11 |
|
|
105.34 |
|
Refined Product Sales Margin |
$ |
9.02 |
|
|
$ |
9.53 |
|
___________________________
(a) We define heavy crude oil as crude oil with
an American Petroleum Institute gravity of 24 degrees or
less.
(b) 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.
(c) Consolidated gross refining margin combines
gross refining margin for each of our regions adjusted for other
amounts not directly attributable to a specific region. Gross
refining margin includes the effect of intersegment sales to the
retail segment at prices which approximate market and fees charged
by TLLP for the transportation and terminalling of crude oil and
refined products at prices which we believe are no less favorable
to either party than those that could have been negotiated with
unaffiliated parties with respect to similar services. Gross
refining margin approximates total refining throughput multiplied
by the gross refining margin per barrel.
(d) 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 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. We calculate refined product sales
margin per barrel by dividing refined product sales margin by total
refining throughput. Refined product sales margin represents
refined product sales less refined product cost of sales. 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.
(e) The gross refining margin per throughput
barrel excludes the impact of the $42 million benefit recognized
during the three months ended March 31, 2015 from a lower of
cost or market inventory valuation adjustment recorded in the
fourth quarter of 2014 in the computation of the rate at a
consolidated or regional level.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
Three Months Ended
March 31, |
Refining By Region |
2015 |
|
2014 |
California (Martinez and Los Angeles) |
|
|
|
Throughput (Mbpd) |
|
|
|
Heavy crude (a) |
90 |
|
|
165 |
|
Light
crude |
295 |
|
|
327 |
|
Other feedstocks |
37 |
|
|
29 |
|
Total
Throughput |
422 |
|
|
521 |
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
Gasoline and gasoline blendstocks |
223 |
|
|
277 |
|
Diesel
fuel |
83 |
|
|
134 |
|
Jet fuel |
73 |
|
|
78 |
|
Heavy
fuel oils, residual products, internally produced fuel and
other |
75 |
|
|
78 |
|
Total Yield |
454 |
|
|
567 |
|
|
|
|
|
Gross refining margin ($ millions) |
$ |
436 |
|
|
$ |
397 |
|
Gross
refining margin ($/throughput bbl) (d) (e) |
$ |
10.67 |
|
|
$ |
8.45 |
|
Manufacturing cost before depreciation and
amortization expense
($/throughput bbl) (c) |
$ |
7.53 |
|
|
$ |
6.48 |
|
Capital expenditures ($ millions) |
$ |
55 |
|
|
$ |
27 |
|
|
|
|
|
Pacific Northwest (Alaska &
Washington) |
|
|
|
Throughput (Mbpd) |
|
|
|
Heavy
crude (a) |
6 |
|
|
5 |
|
Light crude |
139 |
|
|
148 |
|
Other
feedstocks |
13 |
|
|
15 |
|
Total Throughput |
158 |
|
|
168 |
|
|
|
|
|
Yield (Mbpd) |
|
|
|
Gasoline and gasoline blendstocks |
69 |
|
|
74 |
|
Diesel fuel |
26 |
|
|
32 |
|
Jet
fuel |
33 |
|
|
32 |
|
Heavy fuel oils, residual products, internally
produced fuel and other |
35 |
|
|
36 |
|
Total
Yield |
163 |
|
|
174 |
|
|
|
|
|
Gross
refining margin ($ millions) |
$ |
172 |
|
|
$ |
136 |
|
Gross refining margin ($/throughput bbl) (d)
(e) |
$ |
11.52 |
|
|
$ |
9.04 |
|
Manufacturing cost before depreciation and amortization
expense
($/throughput bbl) (c) |
$ |
4.43 |
|
|
$ |
4.27 |
|
Capital expenditures ($ millions) |
$ |
26 |
|
|
$ |
5 |
|
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
Three Months Ended
March 31, |
|
2015 |
|
2014 |
Mid-Continent (North Dakota and Utah) |
|
|
|
Throughput (Mbpd) |
|
|
|
Light crude |
112 |
|
|
124 |
|
Other
feedstocks |
4 |
|
|
4 |
|
Total Throughput |
116 |
|
|
128 |
|
|
|
|
|
Yield (Mbpd) |
|
|
|
Gasoline and gasoline blendstocks |
66 |
|
|
70 |
|
Diesel fuel |
35 |
|
|
34 |
|
Jet
fuel |
13 |
|
|
18 |
|
Heavy fuel oils, residual products, internally
produced fuel and other |
7 |
|
|
10 |
|
Total
Yield |
121 |
|
|
132 |
|
|
|
|
|
Gross
refining margin ($ millions) |
$ |
172 |
|
|
$ |
260 |
|
Gross refining margin ($/throughput bbl) (d)
(e) |
$ |
16.06 |
|
|
$ |
22.56 |
|
Manufacturing cost before depreciation and amortization
expense
($/throughput bbl) (c) |
$ |
4.56 |
|
|
$ |
4.07 |
|
Capital expenditures ($ millions) |
$ |
103 |
|
|
$ |
36 |
|
TESORO
CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S.
GAAP
(Unaudited) (In millions)
|
Three Months Ended
March 31, |
|
2015 |
|
2014 |
Reconciliation of Net Earnings to EBITDA and
Adjusted EBITDA |
|
|
|
Net earnings |
$ |
188 |
|
|
$ |
103 |
|
Loss
from discontinued operations, net of tax |
- |
|
|
1 |
|
Depreciation and amortization expense |
179 |
|
|
130 |
|
Income
tax expense |
96 |
|
|
56 |
|
Interest and financing costs, net |
55 |
|
|
77 |
|
EBITDA (f) |
$ |
518 |
|
|
$ |
367 |
|
Special items (g) |
(29 |
) |
|
(5 |
) |
Adjusted EBITDA (f) |
$ |
489 |
|
|
$ |
362 |
|
|
|
|
|
Reconciliation of Cash Flows from (used in)
Operating Activities
to EBITDA and Adjusted EBITDA |
|
|
|
Net cash used in operating
activities |
$ |
(148 |
) |
|
$ |
(150 |
) |
Debt
redemption charges |
- |
|
|
(31 |
) |
Deferred charges |
83 |
|
|
60 |
|
Changes in current assets and current liabilities |
470 |
|
|
343 |
|
Income tax expense |
96 |
|
|
56 |
|
Stock-based compensation benefit (expense) |
(28 |
) |
|
18 |
|
Interest and financing costs, net |
55 |
|
|
77 |
|
Other |
(10 |
) |
|
(6 |
) |
EBITDA (f) |
$ |
518 |
|
|
$ |
367 |
|
Special items (g) |
(29 |
) |
|
(5 |
) |
Adjusted EBITDA (f) |
$ |
489 |
|
|
$ |
362 |
|
________________
(f) We define EBITDA as consolidated earnings,
including earnings attributable to noncontrolling interest,
excluding net earnings (loss) from discontinued operations, before
depreciation and amortization expense, net interest and financing
costs, income taxes and interest income. We define Adjusted EBITDA
as EBITDA plus or minus amounts determined to be "special items" by
our management based on their unusual nature and relative
significance to earnings in a certain period.
(g) Special items included in EBITDA but excluded for
presentation of adjusted EBITDA consist of the following:
|
Three Months Ended
March 31, |
|
2015 |
|
2014 |
|
(In
millions) |
Inventory valuation adjustment (h) |
$ |
(42 |
) |
|
$ |
- |
|
Throughput deficiency receivable (i) |
13 |
|
|
- |
|
Gain on sale of Boise Terminal (j) |
- |
|
|
(5 |
) |
Total
special items included in EBITDA |
$ |
(29 |
) |
|
$ |
(5 |
) |
____________________
(h) Includes a benefit of $42 million ($25 million
after tax) recognized during the three months ended March 31,
2015 resulting from a lower of cost or market inventory valuation
adjustment recorded in the fourth quarter of 2014.
(i) During the three months ended March 31,
2015, TLLP invoiced a QEPFS customer for a shortfall payment. TLLP
did not recognize $13 million ($4 million to Tesoro, after tax) of
revenue related to the billing period as it represented an opening
balance sheet asset for the acquisition of the Rockies Natural Gas
Business; however, TLLP is entitled to the cash receipt from such
billing.
(j) Includes a gain of $5 million ($1 million to
Tesoro, after-tax) for the three months ended March 31, 2014
resulting from TLLP's sale of its Boise Terminal.
TESORO
CORPORATION
RECONCILIATION OF AMOUNTS PROJECTED UNDER U.S.
GAAP
(Unaudited) (In millions)
|
Three
Months |
|
Year
Ended |
|
Ended June
30, |
|
December
31, |
Reconciliation of Projected Net Earnings to
Projected EBITDA |
2015 |
|
2015 |
Projected net earnings |
$ |
379 |
|
|
$ |
1,086 |
|
Depreciation and amortization expense |
178 |
|
|
716 |
|
Income tax expense |
186 |
|
|
560 |
|
Interest and financing costs, net |
57 |
|
|
238 |
|
Projected EBITDA (f) |
$ |
800 |
|
|
$ |
2,600 |
|
TESORO
CORPORATION
NET EARNINGS ADJUSTED FOR SPECIAL
ITEMS
(Unaudited) (In millions except per share
amounts)
|
Three Months Ended
March 31, |
|
2015 |
|
2014 |
Net Earnings Attributable to
Tesoro Corporation from
Continuing Operations - U.S. GAAP |
$ |
145 |
|
|
$ |
79 |
|
Special Items, After-tax: (k) |
|
|
|
Inventory valuation adjustment (h) |
(25 |
) |
|
- |
|
Throughput deficiency receivable (i) |
4 |
|
|
- |
|
Debt redemption charges (l) |
- |
|
|
19 |
|
Gain
on sale of Boise Terminal (j) |
- |
|
|
(1 |
) |
Adjusted Earnings (m) |
$ |
124 |
|
|
$ |
97 |
|
|
|
|
|
Diluted Net Earnings per Share
from Continuing Operations
Attributable to Tesoro Corporation - U.S.
GAAP |
$ |
1.15 |
|
|
$ |
0.59 |
|
Special Items Per Share, After-tax: (k) |
|
|
|
Inventory valuation adjustment (h) |
(0.20 |
) |
|
- |
|
Throughput deficiency receivable (i) |
0.03 |
|
|
- |
|
Debt redemption charges (l) |
- |
|
|
0.14 |
|
Gain
on sale of Boise Terminal (j) |
- |
|
|
(0.01 |
) |
Adjusted Diluted EPS (m) |
$ |
0.98 |
|
|
$ |
0.72 |
|
________________________
(k) 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.
(l) 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 three
months ended March 31, 2014.
(m) 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.
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Tesoro Corporation via Globenewswire
HUG#1913750
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