-
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
SAN ANTONIO -
August 5, 2015 - Tesoro Corporation (NYSE:TSO) today reported
second quarter 2015 net earnings of $582 million, or $4.59 per
diluted share compared to net earnings of $224 million, or $1.70
per diluted share for the second quarter of 2014. Net earnings from
continuing operations for the second quarter were $586 million or
$4.62 per diluted share. Adjusted EBITDA for the second quarter
2015 was $1.2 billion compared to $548 million last year.
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
($ 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 |
|
"We achieved record levels of
EBITDA, net income and EPS for the quarter, underscoring our
ability to efficiently optimize our assets across the value chain
and leverage favorable market conditions" said Greg Goff, Chairman
and CEO. "We returned in excess of $300 million to shareholders in
the second quarter and delivered over $325 million in business
improvements so far this year. The third quarter is off to an
excellent start in the current strong margin environment and we
expect our refineries to run at 95% to 100% utilization."
For the second quarter 2015, the
Company recorded segment operating income of $1.1 billion compared
to segment operating income of $494 million in the second quarter
of 2014. The increase was largely driven by strong demand,
continued growth in the logistics segment and business
improvements.
The refining segment's operating
income was $753 million for the quarter, compared to $358 million
in the second quarter of 2014. Our refineries benefited from a
substantially improved margin environment and lower operating
expenses partially offset by turnarounds and maintenance
activities.
Total refinery throughput for the
quarter was 783 thousand barrels per day, or 92% utilization.
Manufacturing costs in the second quarter of 2015 decreased
$0.30/bbl over last year to $5.58/bbl primarily attributable to
lower energy prices.
The Tesoro Index was $21.61/bbl
for the second quarter of 2015 with a realized gross refining
margin of $19.13/bbl or 89% of the Tesoro Index, compared to a
realized gross refining margin of $13.11 or 101% of the Tesoro
Index last year. Capture rates in the quarter were impacted by the
combination of refinery downtime, less advantaged crude oil
differentials, and increased processing of intermediate feedstocks
in our California and Pacific Northwest refineries.
The logistics segment's operating
income was $109 million in the second quarter of 2015 compared to
$48 million in the second quarter of 2014. This growth was driven
by the Rockies natural gas business and additional volumes from
last year's expansion and reversal project on the High Plains
Pipeline in North Dakota.
The retail segment is now referred
to as Marketing which includes all retail and wholesale operations.
The marketing segment's operating income was $212 million, up from
$88 million in the second quarter of last year. The increase was
due to strong market conditions and growing consumer demand.
Corporate and unallocated costs
for the second quarter 2015 were $65 million, including $5 million
of corporate depreciation and variable stock-based compensation
expense of $7 million.
Capital Spending
and Liquidity
Capital spending for the second quarter 2015 was $160 million for
Tesoro Corporation and $77 million for TLLP. The Company estimates
full year 2015 capital spending, excluding TLLP, of $600 million.
TLLP capital spending is estimated to be approximately $450
million. Turnaround expenditures for the second quarter were $77
million. The Company expects full year 2015 turnaround expenditures
of $280 million and deferred retail branding costs of $50
million.
The Company ended the second
quarter of 2015 with approximately $1.0 billion in cash and $2.9
billion of availability under the Company's revolving credit
facility with no current borrowings. Excluding TLLP debt and
equity, total debt, net of unamortized issuance costs was $1.6
billion or 25% of total capitalization at the end of the second
quarter of 2015. On a consolidated basis total outstanding debt,
net of unamortized issuance costs was $4.2 billion. TLLP ended the
second quarter with $299 million in borrowings under its separate
revolving credit facility.
Returning Cash to
Shareholders
During the second quarter of 2015, Tesoro returned $303 million to
shareholders through the purchase of nearly 2.8 million of the
Company's shares for $250 million and quarterly dividends of $53
million. The Company has $731 million remaining under the
authorized $1.0 billion share repurchase program and plans to
continue repurchasing shares in 2015.
Tesoro Corporation today also
announced that the board of directors has increased the quarterly
cash dividend by approximately 18% to $0.50 per share payable on
September 14, 2015, to all holders of record as of
August 28, 2015.
Strategic
Update
The Company is confident in achieving its 2015 plan of delivering
approximately $670 million of business improvements. During the
first half of 2015, we estimate that we delivered $325 million
towards our ongoing initiatives around synergies and business
improvement objectives, including approximately $70 million related
to West Coast improvements, approximately $100 million related to
capturing margin improvements, and approximately $155 million from
growing our logistics operations.
Tesoro Logistics completed the
integration of the Rockies natural gas business and closed the
merger of QEPM in July. Through the first half of 2015, the Rockies
natural gas business delivered approximately $141 million of
adjusted EBITDA, including $14 million of synergies. Tesoro
Logistics expects the Rockies natural gas business to deliver $25
million of synergies in 2015.
Tesoro expects to offer Tesoro
Logistics the opportunity to acquire crude oil and refined product
storage and pipeline assets in Los Angeles in the fourth quarter of
2015. Tesoro expects these assets to deliver an annual EBITDA of
$50 to $75 million to TLLP.
In the second quarter 2015, the
Company completed the second phase of the Salt Lake City Conversion
Project. The project is designed to improve yields of gasoline and
diesel, improve the flexibility of processing crude feedstocks and
increases total throughput capacity by 4 thousand barrels per day.
The refinery is currently processing approximately 22 thousand
barrels per day of waxy crude.
The permitting process for the
Vancouver Energy project to construct a 360 thousand barrel per day
crude oil rail-to-marine terminal has been delayed by the
Washington State's Energy Facility Site Evaluation Committee
("EFSEC"). EFSEC has begun the adjudicative phase and now indicates
that it expects to release the Draft Environmental Impact Statement
by November of 2015. The Company expects that EFSEC will submit its
recommendation to the governor of Washington once it completes the
adjudicative phase.
Public Invited to
Listen to Analyst and Investor Conference Call
At 7:30 a.m. CT tomorrow morning, Tesoro will broadcast, live, its
conference call with analysts regarding second quarter 2015 results
and other business matters. Interested parties may listen to the
live conference call over the Internet by logging on to
http://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 2,265 retail stations under the ARCO®,
Shell®,
Exxon®,
Mobil®, USA
Gasoline(TM) and Tesoro® 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 expectations for achievement of targeted business
improvement objectives for 2015; plans to offer dropdown assets to
TLLP and the related EBITDA to be generated by such assets; our
ability to efficiently optimize our assets across the value chain
and leverage favorable market conditions; expected refinery
utilization rates; expectations about capital spending, turnaround
expenditures and deferred retail branding costs; plans to continue
repurchasing shares in 2015;expectations regarding synergies from
TLLP's acquisition of the Rockies natural gas business; benefits,
including the increased throughput capacity, of the Salt Lake City
Conversion Project; and timing of the permitting and approval
process for the Vancouver Energy project. 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:
Sam Ramraj, Vice President, Investor Relations, (210) 626-4757
Media:
Tesoro Media Relations, media@tsocorp.com, (210) 626-7702
Non-GAAP Measures
Our management uses a variety of
financial and operating metrics to analyze operating segment
performance. To supplement our financial information presented in
accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP"), our management uses
additional metrics that are known as "non-GAAP" financial metrics
in its evaluation of past performance and prospects for the future.
These metrics are significant factors in assessing our operating
results and profitability and include earnings before interest,
income taxes, depreciation and amortization expenses ("EBITDA"). 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
(loss) in a certain period. We provide complete reconciliation and
discussion of items identified as special items with our
presentation of adjusted EBITDA.
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 are 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
alternatives to U.S. GAAP net earnings or net cash from operating
activities. EBITDA and adjusted EBITDA have important limitations
as analytical tools, because they exclude some, but not all, items
that affect net earnings and net cash from operating
activities.
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.
Items Impacting
Comparability
We changed our operating segment
presentation in the second quarter of 2015 to reflect the changing
nature of our underlying assets, operations and how our chief
operating decision maker ("CODM") manages our business. In previous
periods, a portion of our marketing business related to sales in
unbranded or wholesale channels was presented within our refining
operating segment. Our branded operations represent the assets and
operations that were previously shown as the retail segment. Upon
considering the changes in our business, including the transition
from company-owned retail operations to multi-site operator model,
we assessed how our CODM evaluates the business, assesses
performance and allocates resources. From this analysis, we believe
presentation of a marketing segment inclusive of both unbranded and
branded marketing operations is appropriate. As of June 30,
2015, we revised our operating segments to include refining, TLLP
and a new marketing segment. Comparable prior period information
has been recast to reflect our revised segment presentation. No
other changes were deemed necessary to our refining and TLLP
segments.
The TLLP financial and operational
data presented include the historical results of all assets
acquired from Tesoro prior to the acquisition dates. The
acquisitions from Tesoro were transfers between entities under
common control. Accordingly, the financial information of TLLP
contained herein has been retrospectively adjusted to include the
historical results of the assets acquired in the acquisitions from
Tesoro prior to the effective date of each acquisition for all
periods presented.
TLLP acquired assets related to,
and entities engaged in, natural gas gathering, transportation and
processing in Wyoming, Colorado, Utah, and North Dakota (the
"Rockies Natural Gas Business") through its acquisition of QEP
Field Services, LLC ("QEPFS") from QEP Resources, Inc. on
December 2, 2014. QEPFS held an approximate 56% limited
partner interest in QEP Midstream Partners, LP ("QEPM") at
June 30, 2015 and 100% of QEPM's general partner, QEP
Midstream Partners GP, LLC, which itself holds a 2% general partner
interest and all of the incentive distribution rights in QEPM. All
intercompany transactions with TLLP and QEPM are eliminated upon
consolidation.
TESORO
CORPORATION
RESULTS OF CONSOLIDATED OPERATIONS
(Unaudited)
(In millions, except per share amounts)
|
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.
TESORO
CORPORATION
SELECTED SEGMENT OPERATING DATA
(Unaudited) (In millions)
|
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.
TESORO
CORPORATION
OTHER SUMMARY FINANCIAL INFORMATION
(Unaudited) (Dollars in millions)
|
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 $58.85
per unit based on the closing unit price at June 30, 2015 and
December 31, 2014, respectively.
(l) Represents distributions received from TLLP
during the three and six months ended June 30, 2015 and 2014
on common or subordinated units and general partner units held by
Tesoro.
TESORO
CORPORATION
SELECTED CONSOLIDATED OPERATING DATA AND
RESULTS
(Unaudited)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Refined Product Sales (Mbpd) (m) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
512 |
|
|
505 |
|
|
500 |
|
|
509 |
|
Diesel fuel |
201 |
|
|
213 |
|
|
190 |
|
|
200 |
|
Jet
fuel |
152 |
|
|
142 |
|
|
155 |
|
|
147 |
|
Heavy fuel oils, residual products and other |
98 |
|
|
90 |
|
|
86 |
|
|
83 |
|
Total
Refined Product Sales |
963 |
|
|
950 |
|
|
931 |
|
|
939 |
|
|
|
|
|
|
|
|
|
Refined Product Sales Margin ($/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.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
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 $42 million benefit recognized
during the six months ended June 30, 2015 from the reversal of
a lower of cost or market inventory valuation adjustment recorded
in the fourth quarter of 2014 in the computation of the rate at a
consolidated or regional level. There was no impact to the three
months ended June 30, 2015.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
Refining By Region |
2015 |
|
2014 |
|
2015 |
|
2014 |
California (Martinez and Los Angeles) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy crude (o) |
169 |
|
|
155 |
|
|
129 |
|
|
160 |
|
Light
crude |
313 |
|
|
333 |
|
|
305 |
|
|
331 |
|
Other feedstocks |
41 |
|
|
35 |
|
|
39 |
|
|
32 |
|
Total
Throughput |
523 |
|
|
523 |
|
|
473 |
|
|
523 |
|
|
|
|
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
290 |
|
|
282 |
|
|
258 |
|
|
279 |
|
Diesel
fuel |
101 |
|
|
116 |
|
|
92 |
|
|
125 |
|
Jet fuel |
80 |
|
|
82 |
|
|
76 |
|
|
80 |
|
Heavy
fuel oils, residual products, internally produced fuel
and other |
98 |
|
|
89 |
|
|
86 |
|
|
84 |
|
Total Yield |
569 |
|
|
569 |
|
|
512 |
|
|
568 |
|
|
|
|
|
|
|
|
|
Gross Refining Margin ($ 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 |
|
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
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 |
|
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
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 $17 million for
the six months ended June 30, 2015 and 2014, respectively, and
are eliminated upon consolidation. General and administrative
expenses are also reclassified to cost of sales.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
MARKETING SEGMENT |
2015 |
|
2014 |
|
2015 |
|
2014 |
Average Number of Branded Stations (during the period) |
|
|
|
|
|
|
|
Company/MSO-operated (x) |
583 |
|
|
581 |
|
|
584 |
|
|
578 |
|
Jobber/dealer operated |
1,680 |
|
|
1,693 |
|
|
1,679 |
|
|
1,695 |
|
Total Average Branded Stations |
2,263 |
|
|
2,274 |
|
|
2,263 |
|
|
2,273 |
|
|
|
|
|
|
|
|
|
Branded and Unbranded Fuel Sales (millions of
gallons) |
2,099 |
|
|
2,079 |
|
|
4,159 |
|
|
4,020 |
|
|
|
|
|
|
|
|
|
Branded and Unbranded Fuel Margin ($/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.
TESORO
CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S.
GAAP
(Unaudited) (In millions)
|
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 |
TESORO
CORPORATION
NET EARNINGS ADJUSTED FOR SPECIAL
ITEMS
(Unaudited) (In millions except per share
amounts)
|
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.
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#1943961
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