Tesoro
Corporation Reports Fourth Quarter and Record Full Year Results for
2015
-
Record full year net earnings from continuing
operations of $1.5 billion, or $12.39 per diluted share
-
Excluding special items, adjusted earnings for
2015 were $1.7 billion, or $13.91 per diluted share
-
Adjusted EBITDA for the quarter was $665 million
and adjusted earnings were $221 million, or $1.83 per diluted
share
-
Record marketing segment performance for the
year with operating income of $899 million
-
Estimated improvements of approximately $670
million in 2015
-
Returned $872 million to shareholders for the
year, including $209 million in the quarter
SAN ANTONIO -
February 1, 2016 - Tesoro Corporation (NYSE:TSO) today reported
fourth quarter 2015 net earnings of $54 million, or $0.45 per
diluted share versus $145 million or $1.13 per diluted share in the
fourth quarter of last year. These results include a pre-tax charge
of $276 million related to a lower of cost or market (LCM)
adjustment. This adjustment is a result of the significant decline
in crude oil and product prices relative to our LIFO inventory.
Excluding this LCM charge, adjusted earnings were $221 million, or
$1.83 per diluted share. Reported results in the quarter included
$24 million, or $0.07 per diluted share, from an environmental
accrual in our logistics business, $30 million, or $0.15 per
diluted share from the impact of purchasing additional RINs to
comply with the final requirements from the EPA which were
increased from the proposed levels for the Renewable Fuel Standard
program, and $15 million, or $0.07 per diluted share, of asset
impairments due to the current weak crude oil price
environment.
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
($ in millions, except per share data) |
2015 |
|
2014 |
|
2015 |
|
2014 |
Operating Income |
|
|
|
|
|
|
|
Refining |
$ |
4 |
|
|
$ |
90 |
|
|
$ |
1,849 |
|
|
$ |
1,178 |
|
TLLP |
104 |
|
|
32 |
|
|
419 |
|
|
187 |
|
Marketing |
175 |
|
|
261 |
|
|
899 |
|
|
553 |
|
Total
Segment Operating Income |
$ |
283 |
|
|
$ |
383 |
|
|
$ |
3,167 |
|
|
$ |
1,918 |
|
Net Earnings From Continuing Operations
Attributable to Tesoro |
$ |
54 |
|
|
$ |
172 |
|
|
$ |
1,544 |
|
|
$ |
872 |
|
|
|
|
|
|
|
|
|
Diluted EPS - Continuing Operations |
$ |
0.45 |
|
|
$ |
1.34 |
|
|
$ |
12.39 |
|
|
$ |
6.67 |
|
Diluted EPS - Discontinued Operations |
- |
|
|
(0.21 |
) |
|
(0.03 |
) |
|
(0.23 |
) |
Total Diluted EPS |
$ |
0.45 |
|
|
$ |
1.13 |
|
|
$ |
12.36 |
|
|
$ |
6.44 |
|
Adjusted Diluted EPS - Continuing Operations |
$ |
1.83 |
|
|
$ |
1.47 |
|
|
$ |
13.91 |
|
|
$ |
6.97 |
|
Full year 2015 net earnings of
$1.5 billion or $12.36 per diluted share were up 83% over 2014 net
earnings of $843 million or $6.44 per diluted share.
"2015 was a record year for
EBITDA, net income and earnings per share, despite a challenging
fourth quarter" said Greg Goff, Chairman and CEO. "We continued to
strengthen our business as we estimate that we delivered
approximately $670 million of improvements in 2015. We generated
solid free cash flow and returned over $870 million to shareholders
in the form of dividends and share repurchases. Going into 2016, we
remain focused on driving strong operating performance and
executing on our business plans in a challenging business
environment."
The refining segment's operating
income was $4 million for the quarter, compared to $90 million in
the fourth quarter of 2014. Excluding the lower of cost or market
adjustment this quarter, the refining segment's operating income
was $280 million. The segment's performance in the fourth quarter
was negatively impacted by unplanned downtime of both fluid
catalytic crackers at our Los Angeles refinery.
The Tesoro Index was $15.60/bbl
for the fourth quarter of 2015 with a realized gross refining
margin of $12.76/bbl or 82% of the Tesoro Index. Capture rates in
the quarter were impacted by a combination of weaker crude oil
differentials and the operational interruption at the Los Angeles
refinery.
Total refinery throughput for the
quarter was 807 thousand barrels per day, or 95% utilization.
Direct manufacturing costs in the fourth quarter were $5.62 per
barrel up $0.78 per barrel from the third quarter. This increase
was primarily due to unplanned repairs and maintenance during the
quarter.
The logistics segment's operating
income was $104 million in the fourth quarter compared to $32
million a year ago. This growth was primarily driven by
contributions from the Rockies natural gas business. Fourth quarter
results include a charge of $24 million for an environmental
accrual related to the 2013 crude oil pipeline release at Tioga,
North Dakota.
The marketing segment's operating
income was $175 million, down from $261 million in the fourth
quarter of last year, largely attributable to lower comparable
marketing margins. Same store fuel sales during the quarter were
higher by 1% versus fourth quarter last year, driven by strong
demand.
Corporate and unallocated costs
for the quarter were $97 million. The effective tax rate was 36.6%
in the fourth quarter.
Capital Spending
and Liquidity
Capital spending for the fourth quarter 2015 was $191 million for
Tesoro and $59 million for Tesoro Logistics (TLLP). Capital
spending for the full year 2015 was $710 million for Tesoro and
$296 million for TLLP.
Turnaround expenditures for the
fourth quarter were $70 million. Turnaround expenditures for the
full year were $290 million.
Tesoro ended the fourth quarter
with $942 million in cash and $2.5 billion of availability on the
revolving credit facility. There are currently no borrowings under
the revolving credit facility. Excluding TLLP debt and equity,
total debt was $1.3 billion or 19% of total capitalization at the
end of the fourth quarter 2015. On a consolidated basis, total
outstanding debt, net of unamortized issuance costs, was $4.1
billion or 34% of total capitalization. TLLP ended the quarter with
$305 million in borrowings under its separate revolving credit
facility.
Returning Cash to
Shareholders
During the fourth quarter, Tesoro returned $209 million to
shareholders through the purchase of nearly 1.4 million shares for
$150 million and its regular quarterly dividend of $59 million. For
the full year, Tesoro returned $872 million to shareholders through
share repurchases and dividends.
Tesoro has $1.4 billion remaining
under its approved share repurchase programs. The company expects
to continue to repurchase shares in 2016.
Tesoro Corporation today also
announced that the board of directors has approved a regular
quarterly dividend of $0.50 per share payable on March 15,
2016, to all holders of record as of February 29, 2016.
Strategic
Update
For 2015, we estimate that we delivered approximately $670 million
towards our ongoing focus to improve gross margin and manage our
costs to drive improvement in operating income. This includes about
$350 million related to West Coast improvements and capturing
margin improvements. We delivered approximately $320 million
from growing our logistics operations, which includes contributions
from the Rockies natural gas business.
Tesoro expects to deliver between
$400 and $500 million of improvements in 2016 through driving
operational improvements and growth in the Company's logistics and
marketing business segments.
Tesoro recently closed the
acquisition of Great Northern Midstream LLC, a crude oil logistics
provider which owns and operates a high-quality, recently
constructed crude oil pipeline, gathering system, transportation,
storage and rail loading facilities in the Williston Basin of North
Dakota. This transaction benefits Tesoro by providing direct access
to additional advantaged crude oil for its West Coast refineries
and has the potential to reduce supply costs as the Company
continues to strengthen its supply position. Additionally, the
system will provide ratable pipeline volumes that should ultimately
benefit Tesoro Logistics once offered to the master limited
partnership, which is expected in 2016.
Tesoro's Alaska subsidiary agreed
to acquire Flint Hills Resources' (FHR) wholesale marketing and
logistics assets in Anchorage and Fairbanks, Alaska. This
transaction improves Tesoro's ability to serve customers from its
existing Anchorage terminal, as a result of Tesoro gaining access
to rail loading capabilities located at the FHR Anchorage terminal.
This extends Tesoro's ability to efficiently and reliably serve the
Alaska interior. Tesoro plans to offer qualified third parties
access to the FHR Anchorage terminal. Additionally, Tesoro expects
to offer to Tesoro Logistics the opportunity to acquire these
assets.
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 fourth quarter and full
year 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
875,000 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 2,300 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 our ability to remain focused on driving strong
operating performance and executing our business improvements; our
expectation to continue repurchasing shares under our share
repurchase programs; expectations for delivery of business
improvement objectives for 2016, including driving operational
improvements and growth in the Company's logistics and marketing
business segments; plans to offer the Great Northern Midstream LLC
assets to Tesoro Logistics and the timing and benefits to TLLP of
such an offer; the offer to qualified third parties of access to
the FHR Anchorage terminal; the expected offer of the FHR wholesale
and logistics assets to TLLP; and expectations for throughput,
manufacturing costs, depreciation, corporate expense and interest
expense in the first quarter of 2016. 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
TESORO
CORPORATION
FIRST QUARTER 2016 GUIDANCE
(Unaudited)
Throughput (Mbpd) |
|
California |
465 - 490 |
Pacific Northwest |
180 - 190 |
Mid-Continent |
130 - 140 |
Consolidated |
775 - 820 |
|
|
Manufacturing Cost ($/throughput barrel) |
|
California |
$ 6.30 - 6.55 |
Pacific Northwest |
$ 3.60 - 3.80 |
Mid-Continent |
$ 3.70 - 3.95 |
Consolidated |
$ 5.20 - 5.45 |
|
|
Corporate/System ($ millions) |
|
Refining depreciation |
$ |
140 |
|
TLLP
depreciation |
$ |
45 |
|
Corporate expense (before depreciation) |
$ |
75 |
|
Interest expense (before interest income) |
$ |
60 |
|
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 and income
taxes. 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 define Free Cash Flow as cash flow from
operations less sustaining capital expenses comprised of
maintenance and regulatory capital expenditures and the return of
excess cash flows to shareholders through dividends and
distributions to noncontrolling interest.
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
In previous periods, our branded
operations represented the assets and operations that were
previously shown as the retail segment and a portion of our
marketing business related to sales in unbranded or wholesale
channels were presented within our refining operating 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 chief operating decision maker evaluates the
business, assesses performance and allocates resources. From this
analysis, we believed the presentation of a marketing segment
inclusive of both unbranded and branded marketing operations was
appropriate. As of the second quarter 2015, we revised our
operating segments to include refining, TLLP and a realigned
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 from Tesoro prior to the
effective date of each acquisition for all periods presented. The
TLLP financial data is derived from the combined financial results
of the TLLP predecessor (the "TLLP Predecessor"). We refer to the
TLLP Predecessor and, prior to each acquisition date, the
acquisitions from Tesoro collectively, as "TLLP's
Predecessors".
TLLP acquired assets related to
the Rockies Natural Gas Business on December 2, 2014, which is
engaged in natural gas gathering, transportation and processing in
or around the Green River Basin located in Wyoming and Colorado,
the Uinta Basin located in eastern Utah, the Vermillion Basin
located in Southern Wyoming, northwest Colorado and northeast Utah
and the portion of the Williston Basin located in North Dakota.
Certain 2014 financial information
has been revised to conform with current year presentation. In
addition, certain 2014 EBITDA financial information has been
revised to conform with EBITDA and Adjusted EBITDA presentation
disclosed by TLLP on a standalone basis.
TESORO
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited) (In millions)
|
December 31, |
|
2015 |
|
2014 |
ASSETS |
Current Assets |
|
|
|
Cash and cash equivalents (TLLP:
$16 and $19, respectively) |
$ |
942 |
|
|
$ |
1,000 |
|
Receivables, net of allowance for doubtful accounts |
792 |
|
|
1,435 |
|
Inventories (a) |
2,302 |
|
|
2,439 |
|
Prepayments and other current assets |
271 |
|
|
200 |
|
Total Current Assets |
4,307 |
|
|
5,074 |
|
Net
Property, Plant and Equipment (TLLP: $3,450 and
$3,343, respectively) |
9,541 |
|
|
9,045 |
|
Other Noncurrent Assets (TLLP:
$1,190 and $1,224, respectively) |
2,484 |
|
|
2,372 |
|
Total
Assets |
$ |
16,332 |
|
|
$ |
16,491 |
|
|
|
|
|
LIABILITIES
AND EQUITY |
Current Liabilities |
|
|
|
Accounts payable |
$ |
1,568 |
|
|
$ |
2,483 |
|
Other current liabilities |
962 |
|
|
947 |
|
Total
Current Liabilities |
2,530 |
|
|
3,430 |
|
Other Noncurrent Liabilities |
1,995 |
|
|
1,924 |
|
Debt,
Net of Unamortized Issuance Costs (TLLP: $2,844
and $2,544, respectively) |
4,067 |
|
|
4,161 |
|
Equity |
7,740 |
|
|
6,976 |
|
Total
Liabilities and Equity |
$ |
16,332 |
|
|
$ |
16,491 |
|
___________________
(a) Due to a lower crude oil and refined product
pricing environment experienced since the end of 2014, we recorded
lower of cost or market adjustments related to our inventories of
$359 million and $42 million at December 31, 2015 and 2014,
respectively. The net impact to cost of sales was $276 million
($167 million after-tax) and $317 million ($192 million after-tax)
for the three months and year ended December 31, 2015,
respectively, for our crude oil, refined products, oxygenates and
by-product inventories and $42 million ($25 million after-tax) for
the three months and year ended December 31, 2014 for the same
type of inventories. The year ended December 31, 2015 includes
a benefit of $42 million of the reversal for the lower of cost or
market inventory adjustment made in 2014.
TESORO
CORPORATION
RESULTS OF CONSOLIDATED OPERATIONS
(Unaudited)
(In millions, except per share amounts)
|
Three Months Ended December 31, |
|
Years
Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Revenues |
$ |
6,273 |
|
|
$ |
8,445 |
|
|
$ |
28,711 |
|
|
$ |
40,633 |
|
Costs and Expenses: |
|
|
|
|
|
|
|
Cost of sales (a) |
5,157 |
|
|
7,264 |
|
|
22,466 |
|
|
35,673 |
|
Operating expenses (b) |
602 |
|
|
607 |
|
|
2,278 |
|
|
2,420 |
|
Selling, general and administrative expenses
(c) |
95 |
|
|
133 |
|
|
342 |
|
|
342 |
|
Depreciation and amortization expense |
203 |
|
|
153 |
|
|
756 |
|
|
562 |
|
Loss on asset disposals and impairments (d) |
30 |
|
|
6 |
|
|
42 |
|
|
4 |
|
Operating Income |
186 |
|
|
282 |
|
|
2,827 |
|
|
1,632 |
|
Interest and financing costs, net (c) (e) |
(54 |
) |
|
(67 |
) |
|
(217 |
) |
|
(235 |
) |
Equity
in earnings (loss) of equity method investments (f) |
(2 |
) |
|
- |
|
|
7 |
|
|
10 |
|
Other income, net (b) (g) |
1 |
|
|
54 |
|
|
13 |
|
|
57 |
|
Earnings Before Income Taxes |
131 |
|
|
269 |
|
|
2,630 |
|
|
1,464 |
|
Income tax expense |
48 |
|
|
110 |
|
|
936 |
|
|
547 |
|
Net Earnings From Continuing Operations |
83 |
|
|
159 |
|
|
1,694 |
|
|
917 |
|
Loss from discontinued operations, net of tax
(h) |
- |
|
|
(27 |
) |
|
(4 |
) |
|
(29 |
) |
Net Earnings |
83 |
|
|
132 |
|
|
1,690 |
|
|
888 |
|
Less: Net earnings (loss) from continuing
operations attributable to
noncontrolling interest |
29 |
|
|
(13 |
) |
|
150 |
|
|
45 |
|
Net Earnings Attributable to Tesoro
Corporation |
$ |
54 |
|
|
$ |
145 |
|
|
$ |
1,540 |
|
|
$ |
843 |
|
|
|
|
|
|
|
|
|
Net Earnings (Loss) Attributable to Tesoro
Corporation |
|
|
|
|
|
|
|
Continuing operations |
$ |
54 |
|
|
$ |
172 |
|
|
$ |
1,544 |
|
|
$ |
872 |
|
Discontinued operations |
- |
|
|
(27 |
) |
|
(4 |
) |
|
(29 |
) |
Total |
$ |
54 |
|
|
$ |
145 |
|
|
$ |
1,540 |
|
|
$ |
843 |
|
|
|
|
|
|
|
|
|
Net Earnings (Loss) Per Share -
Basic: |
|
|
|
|
|
|
|
Continuing operations |
$ |
0.46 |
|
|
$ |
1.36 |
|
|
$ |
12.53 |
|
|
$ |
6.79 |
|
Discontinued operations |
- |
|
|
(0.21 |
) |
|
(0.03 |
) |
|
(0.23 |
) |
Total |
$ |
0.46 |
|
|
$ |
1.15 |
|
|
$ |
12.50 |
|
|
$ |
6.56 |
|
Weighted average common shares outstanding -
Basic |
120.0 |
|
125.8 |
|
123.2 |
|
128.5 |
|
|
|
|
|
|
|
|
Net Earnings (Loss) Per Share -
Diluted: |
|
|
|
|
|
|
|
Continuing operations |
$ |
0.45 |
|
|
$ |
1.34 |
|
|
$ |
12.39 |
|
|
$ |
6.67 |
|
Discontinued operations |
- |
|
|
(0.21 |
) |
|
(0.03 |
) |
|
(0.23 |
) |
Total |
$ |
0.45 |
|
|
$ |
1.13 |
|
|
$ |
12.36 |
|
|
$ |
6.44 |
|
Weighted average common shares outstanding -
Diluted |
121.4 |
|
127.8 |
|
124.6 |
|
130.8 |
____________________
(b) Other income, net includes a refund and settlement
from a crude pipeline network rate case of $59 million ($37 million
after tax) for the three months and year ended December 31,
2014, which was partially offset by accruals for legal reserves
that are pending resolution of $15 million ($12 million after tax)
for the three months and year ended December 31, 2014. Of
these accruals, $10 million is recorded in operating expenses for
both the three months and year ended December 31,
2014.
(c) Includes stock-based compensation expenses of
$18 million and $35 million for the three months ended
December 31, 2015 and 2014, respectively, and $75 million and
$55 million for the years ended December 31, 2015 and 2014,
respectively. Also includes transaction and integration costs
related to the following acquisitions:
· $18 million ($7 million to Tesoro, after-tax) for
the three months and $19 million ($7 million to Tesoro, after-tax)
year ended December 31, 2014 for TLLP's acquisition of the natural
gas gathering, processing, treating and transportation and crude
oil gathering assets of QEP Field Services, LLC (the "Rockies
Natural Gas Business");
· $16 million ($5 million to Tesoro, after-tax) in
bridge fees incurred for TLLP's acquisition of the Rockies Natural
Gas Business for the three months and year ended December 31, 2014.
These are recorded as interest and financing costs.
(d) Includes a gain of $5 million ($2 million to
Tesoro, after-tax) for the year ended December 31, 2014 resulting
from TLLP's sale of its Boise Terminal.
(e) Includes charges totaling $31 million and $10
million (together, $23 million to Tesoro, after-tax) for premiums
and unamortized debt issuance costs associated with the redemption
of Tesoro's 9.750% Senior Notes and TLLP's 5.875% Senior Notes,
respectively, during the year ended December 31, 2014.
(f) Includes equity in earnings of equity method
investments of $1 million and $7 million for the three months and
year ended December 31, 2015, respectively, and $1 million for
both the three months and year ended December 31, 2014, for
TLLP related to its investments in Three Rivers Gathering and Uinta
Basin Field Services. Our refining segment includes investments in
Watson Cogen Company and Vancouver Energy. We recognized equity in
loss from equity method investments of $3 million and $1 million
for the three months ended December 31, 2015 and 2014,
respectively, and equity in earnings from equity method investments
of $9 million for the year ended December 31, 2014.
(g) During the year ended December 31, 2015, we
recorded a gain of $11 million ($7 million after-tax) as other
income for insurance proceeds related to the settlement of claims
associated with the Washington Refinery Fire.
(h) Net loss from discontinued operations for the three
months and year ended December 31, 2014 includes $42 million
($25 million after-tax) of charges for obligations we have to make
certain improvements and resolve penalties and fines from our past
ownership of the Hawaii Refinery. The net loss for the year ended
December 31, 2015 of $6 million ($4 million after-tax) is
related to a change in estimate for those regulatory improvements
we are required to make.
TESORO
CORPORATION
SELECTED SEGMENT OPERATING DATA
(Unaudited) (In millions)
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Earnings Before Income Taxes |
|
|
|
|
|
|
|
Refining (a) (b) (i) |
$ |
4 |
|
|
$ |
90 |
|
|
$ |
1,849 |
|
|
$ |
1,178 |
|
TLLP
(c) (d) |
104 |
|
|
32 |
|
|
419 |
|
|
187 |
|
Marketing (i) |
175 |
|
|
261 |
|
|
899 |
|
|
553 |
|
Total
Segment Operating Income |
283 |
|
|
383 |
|
|
3,167 |
|
|
1,918 |
|
Corporate and unallocated costs (c) |
(97 |
) |
|
(101 |
) |
|
(340 |
) |
|
(286 |
) |
Operating Income |
186 |
|
|
282 |
|
|
2,827 |
|
|
1,632 |
|
Interest and financing costs, net (e) |
(54 |
) |
|
(67 |
) |
|
(217 |
) |
|
(235 |
) |
Equity
in earnings (loss) of equity method investments (f) |
(2 |
) |
|
- |
|
|
7 |
|
|
10 |
|
Other income, net (b) (g) |
1 |
|
|
54 |
|
|
13 |
|
|
57 |
|
Earnings Before Income Taxes |
$ |
131 |
|
|
$ |
269 |
|
|
$ |
2,630 |
|
|
$ |
1,464 |
|
|
|
|
|
|
|
|
|
Depreciation and Amortization Expense |
|
|
|
|
|
|
|
Refining |
$ |
140 |
|
|
$ |
111 |
|
|
$ |
512 |
|
|
$ |
427 |
|
TLLP |
46 |
|
|
26 |
|
|
179 |
|
|
78 |
|
Marketing |
12 |
|
|
12 |
|
|
46 |
|
|
42 |
|
Corporate |
5 |
|
|
4 |
|
|
19 |
|
|
15 |
|
Total Depreciation and Amortization Expense |
$ |
203 |
|
|
$ |
153 |
|
|
$ |
756 |
|
|
$ |
562 |
|
|
|
|
|
|
|
|
|
Special Items, Before Taxes
(j) |
|
|
|
|
|
|
|
Refining |
$ |
276 |
|
|
$ |
(6 |
) |
|
$ |
317 |
|
|
$ |
(7 |
) |
TLLP |
1 |
|
|
30 |
|
|
15 |
|
|
31 |
|
Corporate |
- |
|
|
4 |
|
|
(11 |
) |
|
5 |
|
Total Special Items |
$ |
277 |
|
|
$ |
28 |
|
|
$ |
321 |
|
|
$ |
29 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
Refining |
$ |
414 |
|
|
$ |
189 |
|
|
$ |
2,662 |
|
|
$ |
1,586 |
|
TLLP |
155 |
|
|
94 |
|
|
636 |
|
|
318 |
|
Marketing |
187 |
|
|
273 |
|
|
945 |
|
|
595 |
|
Corporate |
(91 |
) |
|
(39 |
) |
|
(319 |
) |
|
(209 |
) |
Total
Adjusted EBITDA |
$ |
665 |
|
|
$ |
517 |
|
|
$ |
3,924 |
|
|
$ |
2,290 |
|
|
|
|
|
|
|
|
|
Capital Expenditures |
|
|
|
|
|
|
|
Refining |
$ |
137 |
|
|
$ |
169 |
|
|
$ |
620 |
|
|
$ |
445 |
|
TLLP |
59 |
|
|
109 |
|
|
296 |
|
|
250 |
|
Marketing |
14 |
|
|
27 |
|
|
34 |
|
|
54 |
|
Corporate |
40 |
|
|
10 |
|
|
56 |
|
|
30 |
|
Total Capital Expenditures |
$ |
250 |
|
|
$ |
315 |
|
|
$ |
1,006 |
|
|
$ |
779 |
|
___________________
(i) Our refining segment uses Renewable
Identification Numbers ("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 had 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 months and year ended December 31, 2014. Had we made
this change effective January 1, 2014, operating income in our
refining segment would have been reduced by $31 million and $125
million for the three months and year ended December 31, 2014,
respectively, with a corresponding increase to operating income in
our marketing segment.
(j) The effects of special items on net earnings
before income taxes by segment include:
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Refining |
|
|
|
|
|
|
|
Lower of cost or market inventory adjustment
(a) |
$ |
276 |
|
|
$ |
42 |
|
|
$ |
317 |
|
|
$ |
42 |
|
Legal
settlements, net (b) |
- |
|
|
(48 |
) |
|
- |
|
|
(49 |
) |
TLLP |
|
|
|
|
|
|
|
Acquisition costs included in general and administrative expenses
(c) (k) |
1 |
|
|
18 |
|
|
2 |
|
|
19 |
|
Throughput deficiency receivable (l) |
- |
|
|
10 |
|
|
13 |
|
|
10 |
|
Gain
on sale of Boise Terminal (d) |
- |
|
|
- |
|
|
- |
|
|
(5 |
) |
Inspection and maintenance expenses associated with
the Northwest Products
System (m) |
- |
|
|
2 |
|
|
- |
|
|
7 |
|
Corporate and Other |
|
|
|
|
|
|
|
Legal settlements, net (b) |
- |
|
|
4 |
|
|
- |
|
|
5 |
|
Insurance settlement gain (g) |
- |
|
|
- |
|
|
(11 |
) |
|
- |
|
___________________
(k) Reflects acquisition costs included in general and
administrative expenses primarily related to the acquisition of the
Rockies Natural Gas Business.
(l) During the years ended December 31, 2015
and 2014, TLLP invoiced QEPFS customers for deficiency payments.
TLLP did not recognize $13 million ($4 million to Tesoro,
after-tax) and $10 million ($3 million to Tesoro, after-tax) for
the years ended December 31, 2015 and 2014, respectively, 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.
(m) Includes costs for detailed inspection and maintenance
program on TLLP's Northwest Products System Pipeline.
TESORO
CORPORATION
OTHER SUMMARY FINANCIAL INFORMATION
(Unaudited) (In millions)
|
Years Ended
December 31, |
|
2015 |
|
2014 |
Cash Flows From (Used in) |
|
|
|
Operating activities |
$ |
2,131 |
|
|
$ |
1,364 |
|
Investing activities |
(1,129 |
) |
|
(3,172 |
) |
Financing activities |
(1,060 |
) |
|
1,570 |
|
Decrease in Cash and Cash Equivalents |
$ |
(58 |
) |
|
$ |
(238 |
) |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
Total debt, net of unamortized
issuance costs, to capitalization ratio |
34 |
% |
|
37 |
% |
Total debt, net of unamortized issuance costs, to
capitalization ratio excluding TLLP
debt (n) |
19 |
% |
|
27 |
% |
Working capital (current assets
less current liabilities) |
$ |
1,777 |
|
|
$ |
1,644 |
|
Total market value of TLLP units held by Tesoro
(o) |
1,633 |
|
|
1,658 |
|
|
Three Months Ended
December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Cash distributions received from TLLP (p) |
|
|
|
|
|
|
|
For common/subordinated units held |
$ |
22 |
|
|
$ |
18 |
|
|
$ |
80 |
|
|
$ |
52 |
|
For
general partner units held |
20 |
|
|
14 |
|
|
68 |
|
|
35 |
|
Total Cash Distributions Received from TLLP |
$ |
42 |
|
|
$ |
32 |
|
|
$ |
148 |
|
|
$ |
87 |
|
___________________
(n) Excludes TLLP's total debt, net of unamortized
issuance costs, and capital leases of $2.8 billion and $2.5 billion
at December 31, 2015 and 2014, respectively, which are
non-recourse to Tesoro, except for Tesoro Logistics GP, LLC, and
noncontrolling interest of $2.5 billion at both December 31,
2015 and 2014.
(o) Represents market value of units held at
December 31, 2015 and 2014. Tesoro held 32,445,115 common
units at a market value of $50.32 per unit based on the closing
unit price at December 31, 2015. Tesoro held 28,181,748 common
units at a market value of $58.85 per unit based on the closing
unit price at December 31, 2014.
(p) Represents distributions received from TLLP during
the three months and years ended December 31, 2015 and 2014 on
common or subordinated units and general partner units held by
Tesoro.
TESORO
CORPORATION
SELECTED CONSOLIDATED OPERATING DATA AND
RESULTS
(Unaudited)
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Refined Product Sales (Mbpd) (q) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
516 |
|
|
493 |
|
|
510 |
|
|
507 |
|
Diesel
fuel |
222 |
|
|
202 |
|
|
204 |
|
|
206 |
|
Jet fuel |
151 |
|
|
157 |
|
|
152 |
|
|
149 |
|
Heavy
fuel oils, residual products and other |
95 |
|
|
94 |
|
|
92 |
|
|
87 |
|
Total Refined Product Sales |
984 |
|
|
946 |
|
|
958 |
|
|
949 |
|
|
|
|
|
|
|
|
|
Refined Product Sales Margin
($/barrel) (q) (r) |
|
|
|
|
|
|
|
Average sales price |
$ |
65.81 |
|
|
$ |
91.71 |
|
|
$ |
77.70 |
|
|
$ |
112.17 |
|
Average costs of sales |
58.18 |
|
|
87.17 |
|
|
65.07 |
|
|
102.59 |
|
Refined Product Sales Margin |
$ |
7.63 |
|
|
$ |
4.54 |
|
|
$ |
12.63 |
|
|
$ |
9.58 |
|
___________________
(q) 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.
(r) 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 including unbranded and branded channels 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 December 31, |
|
Years Ended
December 31, |
REFINING SEGMENT |
2015 |
|
2014 |
|
2015 |
|
2014 |
Total Refining Segment |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy crude |
156 |
|
|
131 |
|
|
151 |
|
|
155 |
|
Light
crude |
596 |
|
|
609 |
|
|
580 |
|
|
613 |
|
Other feedstocks |
55 |
|
|
68 |
|
|
56 |
|
|
57 |
|
Total
Throughput |
807 |
|
|
808 |
|
|
787 |
|
|
825 |
|
Yield (Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
420 |
|
|
428 |
|
|
409 |
|
|
429 |
|
Diesel fuel |
181 |
|
|
179 |
|
|
169 |
|
|
191 |
|
Jet
fuel |
117 |
|
|
127 |
|
|
119 |
|
|
127 |
|
Heavy fuel oils, residual products, internally
produced fuel
and other |
136 |
|
|
124 |
|
|
139 |
|
|
132 |
|
Total
Yield |
854 |
|
|
858 |
|
|
836 |
|
|
879 |
|
Segment Operating Income ($ millions) |
|
|
|
|
|
|
|
Gross
refining margin (s) |
$ |
670 |
|
|
$ |
714 |
|
|
$ |
4,342 |
|
|
$ |
3,653 |
|
Expenses |
|
|
|
|
|
|
|
Manufacturing costs |
417 |
|
|
412 |
|
|
1,595 |
|
|
1,692 |
|
Other operating expenses |
84 |
|
|
95 |
|
|
346 |
|
|
340 |
|
Selling, general and administrative expenses |
1 |
|
|
4 |
|
|
8 |
|
|
13 |
|
Depreciation and amortization expense |
140 |
|
|
111 |
|
|
512 |
|
|
427 |
|
Loss
on asset disposals and impairments |
24 |
|
|
2 |
|
|
32 |
|
|
3 |
|
Segment Operating Income |
$ |
4 |
|
|
$ |
90 |
|
|
$ |
1,849 |
|
|
$ |
1,178 |
|
Gross
Refining Margin ($/throughput barrel) (t) (u) |
$ |
12.76 |
|
|
$ |
15.72 |
|
|
$ |
16.22 |
|
|
$ |
12.27 |
|
Manufacturing Cost before Depreciation and
Amortization
Expense ($/throughput barrel) (s) (t) |
$ |
5.62 |
|
|
$ |
5.54 |
|
|
$ |
5.55 |
|
|
$ |
5.62 |
|
__________________
(s) 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 both the three months ended
December 31, 2015 and 2014, and $2 million and $5 million for
the years ended December 31, 2015 and 2014, respectively.
Gross refining margin includes the effect of intersegment sales to
the marketing segment and services provided by TLLP. Gross refining
margin approximates total refining throughput multiplied by the
gross refining margin per barrel.
(t) 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.
(u) We recorded a $359 million and $42 million charge
for a lower of cost or market adjustment to our inventories at
December 31, 2015 and 2014, respectively. The gross refining
margin per throughput barrel for the three months and year ended
December 31, 2015 excludes the adjustment impact of $276
million and $317 million, respectively, in the computation of the
rate at a consolidated and regional level. The gross refining
margin per throughput barrel for the three months and year ended
December 31, 2014 excludes the impact of the $42 million
charge on a consolidated and regional level. On a regional basis,
gross refining margin would have reflected charges of $207 million,
$76 million and $34 million for California, Pacific Northwest and
Mid-Continent, respectively, for the year ended December 31,
2015.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
Refining By Region |
2015 |
|
2014 |
|
2015 |
|
2014 |
California (Martinez and Los Angeles) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy crude |
152 |
|
|
124 |
|
|
146 |
|
|
149 |
|
Light
crude |
296 |
|
|
332 |
|
|
309 |
|
|
334 |
|
Other feedstocks |
42 |
|
|
52 |
|
|
38 |
|
|
40 |
|
Total
Throughput |
490 |
|
|
508 |
|
|
493 |
|
|
523 |
|
|
|
|
|
|
|
|
|
Yield
(Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
262 |
|
|
276 |
|
|
264 |
|
|
282 |
|
Diesel
fuel |
105 |
|
|
113 |
|
|
100 |
|
|
120 |
|
Jet fuel |
67 |
|
|
76 |
|
|
74 |
|
|
80 |
|
Heavy
fuel oils, residual products, internally produced fuel
and other |
92 |
|
|
83 |
|
|
93 |
|
|
85 |
|
Total Yield |
526 |
|
|
548 |
|
|
531 |
|
|
567 |
|
|
|
|
|
|
|
|
|
Gross Refining Margin ($ millions) |
$ |
520 |
|
|
$ |
391 |
|
|
$ |
2,928 |
|
|
$ |
2,007 |
|
Gross
Refining Margin ($/throughput barrel) (t) (u) |
$ |
15.54 |
|
|
$ |
8.98 |
|
|
$ |
17.44 |
|
|
$ |
10.67 |
|
Manufacturing Cost before Depreciation and
Amortization
Expense ($/throughput barrel) (s) (t) |
$ |
6.51 |
|
|
$ |
6.35 |
|
|
$ |
6.37 |
|
|
$ |
6.43 |
|
Capital Expenditures ($ millions) |
$ |
92 |
|
|
$ |
65 |
|
|
$ |
290 |
|
|
$ |
161 |
|
|
|
|
|
|
|
|
|
Pacific Northwest (Alaska &
Washington) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Heavy
crude |
4 |
|
|
7 |
|
|
5 |
|
|
6 |
|
Light crude |
164 |
|
|
150 |
|
|
151 |
|
|
153 |
|
Other
feedstocks |
9 |
|
|
11 |
|
|
14 |
|
|
12 |
|
Total Throughput |
177 |
|
|
168 |
|
|
170 |
|
|
171 |
|
|
|
|
|
|
|
|
|
Yield (Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
76 |
|
|
76 |
|
|
75 |
|
|
74 |
|
Diesel fuel |
34 |
|
|
28 |
|
|
31 |
|
|
32 |
|
Jet
fuel |
36 |
|
|
35 |
|
|
34 |
|
|
33 |
|
Heavy fuel oils, residual products, internally
produced fuel
and other |
37 |
|
|
34 |
|
|
36 |
|
|
37 |
|
Total
Yield |
183 |
|
|
173 |
|
|
176 |
|
|
176 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($ millions) |
$ |
40 |
|
|
$ |
78 |
|
|
$ |
681 |
|
|
$ |
584 |
|
Gross Refining Margin ($/throughput barrel) (t)
(u) |
$ |
6.45 |
|
|
$ |
5.54 |
|
|
$ |
12.17 |
|
|
$ |
9.49 |
|
Manufacturing Cost before Depreciation and Amortization
Expense ($/throughput barrel) (s) (t) |
$ |
4.61 |
|
|
$ |
4.50 |
|
|
$ |
4.14 |
|
|
$ |
4.37 |
|
Capital Expenditures ($ millions) |
$ |
26 |
|
|
$ |
23 |
|
|
$ |
113 |
|
|
$ |
54 |
|
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Mid-Continent (North Dakota and Utah) |
|
|
|
|
|
|
|
Throughput (Mbpd) |
|
|
|
|
|
|
|
Light crude |
135 |
|
|
127 |
|
|
120 |
|
|
126 |
|
Other
feedstocks |
5 |
|
|
5 |
|
|
4 |
|
|
5 |
|
Total Throughput |
140 |
|
|
132 |
|
|
124 |
|
|
131 |
|
|
|
|
|
|
|
|
|
Yield (Mbpd) |
|
|
|
|
|
|
|
Gasoline and gasoline blendstocks |
82 |
|
|
76 |
|
|
70 |
|
|
73 |
|
Diesel fuel |
14 |
|
|
38 |
|
|
38 |
|
|
39 |
|
Jet
fuel |
42 |
|
|
16 |
|
|
11 |
|
|
14 |
|
Heavy fuel oils, residual products, internally
produced fuel
and other |
7 |
|
|
7 |
|
|
10 |
|
|
10 |
|
Total
Yield |
145 |
|
|
137 |
|
|
129 |
|
|
136 |
|
|
|
|
|
|
|
|
|
Gross
Refining Margin ($ millions) |
$ |
111 |
|
|
$ |
244 |
|
|
$ |
731 |
|
|
$ |
1,057 |
|
Gross Refining Margin ($/throughput barrel) (t)
(u) |
$ |
10.98 |
|
|
$ |
20.52 |
|
|
$ |
16.88 |
|
|
$ |
22.14 |
|
Manufacturing Cost before Depreciation and Amortization
Expense ($/throughput barrel) (s) (t) |
$ |
3.79 |
|
|
$ |
3.78 |
|
|
$ |
4.26 |
|
|
$ |
4.00 |
|
Capital Expenditures ($ millions) |
$ |
19 |
|
|
$ |
81 |
|
|
$ |
217 |
|
|
$ |
230 |
|
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
TLLP SEGMENT |
2015 |
|
2014 |
|
2015 |
|
2014 |
Gathering |
|
|
|
|
|
|
|
Crude oil gathering pipeline throughput (Mbpd) |
205 |
|
|
150 |
|
|
188 |
|
|
123 |
|
Average crude oil gathering pipeline revenue per barrel (v) |
$ |
1.86 |
|
|
$ |
1.69 |
|
|
$ |
1.79 |
|
|
$ |
1.46 |
|
Crude oil gathering trucking volume (Mbpd) |
28 |
|
|
55 |
|
|
38 |
|
|
49 |
|
Average crude oil gathering trucking revenue per barrel (v) |
$ |
3.27 |
|
|
$ |
3.22 |
|
|
$ |
3.25 |
|
|
$ |
3.23 |
|
Gas gathering throughput (thousands of MMBtu/day)
(w) |
1,102 |
|
|
1,046 |
|
|
1,077 |
|
|
1,046 |
|
Average gas gathering revenue per MMBtu (v) (w) |
$ |
0.42 |
|
|
$ |
0.41 |
|
|
$ |
0.43 |
|
|
$ |
0.41 |
|
Processing (w) |
|
|
|
|
|
|
|
NGL
processing throughput (Mbpd) |
8 |
|
|
7 |
|
|
8 |
|
|
7 |
|
Average keep-whole fee per barrel of NGL (v) |
$ |
35.00 |
|
|
$ |
35.51 |
|
|
$ |
34.46 |
|
|
$ |
35.51 |
|
Fee-based processing throughput (thousands of MMBtu/day) |
748 |
|
|
693 |
|
|
743 |
|
|
693 |
|
Average fee-based processing revenue per MMBtu
(v) |
$ |
0.38 |
|
|
$ |
0.30 |
|
|
$ |
0.39 |
|
|
$ |
0.30 |
|
Terminalling and Transportation |
|
|
|
|
|
|
|
Terminalling throughput (Mbpd) |
943 |
|
|
911 |
|
|
935 |
|
|
917 |
|
Average terminalling revenue per barrel (v) |
$ |
1.19 |
|
|
$ |
1.07 |
|
|
$ |
1.11 |
|
|
$ |
1.00 |
|
Pipeline transportation throughput (Mbpd) |
841 |
|
|
814 |
|
|
825 |
|
|
822 |
|
Average pipeline transportation revenue per barrel (v) |
$ |
0.39 |
|
|
$ |
0.37 |
|
|
$ |
0.39 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
Segment Operating Income ($ millions) |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Gathering |
$ |
86 |
|
|
$ |
51 |
|
|
$ |
339 |
|
|
$ |
135 |
|
Processing |
73 |
|
|
23 |
|
|
278 |
|
|
23 |
|
Terminalling and Transportation |
133 |
|
|
116 |
|
|
495 |
|
|
442 |
|
Total Revenues (x) |
292 |
|
|
190 |
|
|
1,112 |
|
|
600 |
|
Expenses |
|
|
|
|
|
|
|
Operating expenses (y) |
120 |
|
|
97 |
|
|
411 |
|
|
265 |
|
General and administrative expenses (z) |
21 |
|
|
35 |
|
|
102 |
|
|
74 |
|
Depreciation and amortization expense |
46 |
|
|
26 |
|
|
179 |
|
|
78 |
|
(Gain)
loss on asset disposals and impairments |
1 |
|
|
- |
|
|
1 |
|
|
(4 |
) |
Segment Operating Income |
$ |
104 |
|
|
$ |
32 |
|
|
$ |
419 |
|
|
$ |
187 |
|
________________
(v) 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.
(w) TLLP commenced natural gas gathering and processing
operations with the acquisition of the Rockies Natural Gas Business
on December 2, 2014. Per day calculations for 2014 only
reflect the period that TLLP owned the Rockies Natural Gas
Business.
(x) TLLP segment revenues from services provided to our
refining segment were $161 million and $139 million for the three
months ended December 31, 2015 and 2014, respectively, and
$615 million and $497 million for the years ended December 31,
2015 and 2014, respectively. These amounts are eliminated upon
consolidation.
(y) TLLP segment operating expenses include amounts
billed by Tesoro for services provided to TLLP under various
operational contracts. Amounts billed by Tesoro totaled $18 million
and $15 million for the three months ended December 31, 2015
and 2014, respectively, and $76 million and $52 million for the
years ended December 31, 2015 and 2014, respectively. These
amounts are net of imbalance gains and reimbursements pursuant to
the Amended Omnibus Agreement of $10 million and $11 million for
the three months ended December 31, 2015 and 2014,
respectively, and $42 million and $43 million for the years ended
December 31, 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.
(z) 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 $14 million and
$11 million for the three months ended December 31, 2015 and
2014, respectively, and $65 million and $39 million for the years
ended December 31, 2015 and 2014, respectively, and are
eliminated upon consolidation. General and administrative expenses
are also reclassified to cost of sales.
TESORO
CORPORATION
SEGMENT OPERATING DATA AND RESULTS
(Unaudited)
MARKETING SEGMENT |
|
|
|
|
Years Ended
December 31, |
Number of Branded Stations (at the end of the
year) |
2015 |
|
2014 |
Company/MSO-operated (aa) |
592 |
|
|
584 |
|
Jobber/dealer operated |
1,805 |
|
|
1,683 |
|
Total Stations |
2,397 |
|
|
2,267 |
|
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Fuel Sales (millions of
gallons) |
2,203 |
|
|
2,131 |
|
|
8,611 |
|
|
8,306 |
|
|
|
|
|
|
|
|
|
Fuel Margin ($/gallon)
(ab) |
$ |
0.12 |
|
|
$ |
0.16 |
|
|
$ |
0.14 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
Segment Operating Income ($ millions) |
|
|
|
|
|
|
|
Gross
Margins |
|
|
|
|
|
|
|
Fuel (ab) |
$ |
257 |
|
|
$ |
345 |
|
|
$ |
1,208 |
|
|
$ |
859 |
|
Other
non-fuel (aa) (ac) |
13 |
|
|
19 |
|
|
58 |
|
|
111 |
|
Total Gross Margins |
270 |
|
|
364 |
|
|
1,266 |
|
|
970 |
|
Expenses |
|
|
|
|
|
|
|
Operating expenses |
77 |
|
|
81 |
|
|
300 |
|
|
352 |
|
Selling, general and administrative expenses |
3 |
|
|
6 |
|
|
15 |
|
|
17 |
|
Depreciation and amortization expense |
12 |
|
|
12 |
|
|
46 |
|
|
42 |
|
Loss
on asset disposals and impairments |
3 |
|
|
4 |
|
|
6 |
|
|
6 |
|
Segment Operating Income |
$ |
175 |
|
|
$ |
261 |
|
|
$ |
899 |
|
|
$ |
553 |
|
________________
(aa) In December 2014, we converted our company-operated
retail locations to multi-site operators retail stations. The
impact of this change was not material to our marketing segment
results.
(ab) 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.
(ac) Primarily includes rental income for the three months
and year ended December 31, 2015 and primarily merchandise
revenue for the three months and year ended December 31,
2014.
TESORO
CORPORATION
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S.
GAAP
(Unaudited) (In millions)
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Reconciliation of Net Earnings to EBITDA and
Adjusted EBITDA |
|
|
|
|
|
|
|
Net earnings |
$ |
83 |
|
|
$ |
132 |
|
|
$ |
1,690 |
|
|
$ |
888 |
|
Loss
from discontinued operations, net of tax |
- |
|
|
27 |
|
|
4 |
|
|
29 |
|
Depreciation and amortization expense |
203 |
|
|
153 |
|
|
756 |
|
|
562 |
|
Interest and financing costs, net |
54 |
|
|
67 |
|
|
217 |
|
|
235 |
|
Income tax expense |
48 |
|
|
110 |
|
|
936 |
|
|
547 |
|
EBITDA |
388 |
|
|
489 |
|
|
3,603 |
|
|
2,261 |
|
Special items (j) |
277 |
|
|
28 |
|
|
321 |
|
|
29 |
|
Adjusted EBITDA |
$ |
665 |
|
|
$ |
517 |
|
|
$ |
3,924 |
|
|
$ |
2,290 |
|
|
|
|
|
|
|
|
|
Reconciliation of Cash Flows from Operating
Activities to EBITDA
and Adjusted EBITDA |
|
|
|
|
|
|
|
Net cash from operating
activities |
$ |
284 |
|
|
$ |
317 |
|
|
$ |
2,131 |
|
|
$ |
1,364 |
|
Net
cash used in discontinued operations |
3 |
|
|
1 |
|
|
5 |
|
|
3 |
|
Debt redemption charges |
- |
|
|
- |
|
|
(1 |
) |
|
(41 |
) |
Turnaround and branding charges |
94 |
|
|
137 |
|
|
342 |
|
|
256 |
|
Changes in current assets and current
liabilities |
(83 |
) |
|
(42 |
) |
|
164 |
|
|
186 |
|
Income
tax expense |
48 |
|
|
110 |
|
|
936 |
|
|
547 |
|
Stock-based compensation expense |
(18 |
) |
|
(35 |
) |
|
(75 |
) |
|
(55 |
) |
Interest and financing costs, net |
54 |
|
|
67 |
|
|
217 |
|
|
235 |
|
Deferred income tax benefit (expense) |
92 |
|
|
(19 |
) |
|
(65 |
) |
|
(246 |
) |
Loss
on asset disposals and impairments |
(30 |
) |
|
(6 |
) |
|
(42 |
) |
|
(4 |
) |
Other |
(56 |
) |
|
(41 |
) |
|
(9 |
) |
|
16 |
|
EBITDA |
388 |
|
|
489 |
|
|
3,603 |
|
|
2,261 |
|
Special items (j) |
277 |
|
|
28 |
|
|
321 |
|
|
29 |
|
Adjusted EBITDA |
$ |
665 |
|
|
$ |
517 |
|
|
$ |
3,924 |
|
|
$ |
2,290 |
|
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Reconciliation of Refining Operating Income to
Refining EBITDA
and Adjusted EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
4 |
|
|
$ |
90 |
|
|
$ |
1,849 |
|
|
$ |
1,178 |
|
Impact
related to TLLP Predecessor presentation (ad) |
(3 |
) |
|
(5 |
) |
|
(16 |
) |
|
(21 |
) |
Depreciation and amortization expense |
140 |
|
|
111 |
|
|
512 |
|
|
427 |
|
Equity
in earnings (loss) of equity method investments (f) |
(3 |
) |
|
(1 |
) |
|
- |
|
|
9 |
|
EBITDA |
138 |
|
|
195 |
|
|
2,345 |
|
|
1,593 |
|
Special items (j) |
276 |
|
|
(6 |
) |
|
317 |
|
|
(7 |
) |
Adjusted EBITDA |
$ |
414 |
|
|
$ |
189 |
|
|
$ |
2,662 |
|
|
$ |
1,586 |
|
|
|
|
|
|
|
|
|
Reconciliation of TLLP Operating Income to TLLP
EBITDA and
Adjusted EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
104 |
|
|
$ |
32 |
|
|
$ |
419 |
|
|
$ |
187 |
|
Loss
attributable to Predecessor (ad) |
3 |
|
|
5 |
|
|
16 |
|
|
21 |
|
Depreciation and amortization expense |
46 |
|
|
26 |
|
|
179 |
|
|
78 |
|
Equity
in earnings of equity method investments (f) |
1 |
|
|
1 |
|
|
7 |
|
|
1 |
|
EBITDA |
$ |
154 |
|
|
$ |
64 |
|
|
$ |
621 |
|
|
$ |
287 |
|
Special items (j) |
1 |
|
|
30 |
|
|
15 |
|
|
31 |
|
Adjusted EBITDA |
$ |
155 |
|
|
$ |
94 |
|
|
$ |
636 |
|
|
$ |
318 |
|
|
|
|
|
|
|
|
|
Reconciliation of Marketing Operating Income to
Marketing
EBITDA and Adjusted EBITDA |
|
|
|
|
|
|
|
Operating income |
$ |
175 |
|
|
$ |
261 |
|
|
$ |
899 |
|
|
$ |
553 |
|
Depreciation and amortization expense |
12 |
|
|
12 |
|
|
46 |
|
|
42 |
|
EBITDA and Adjusted
EBITDA |
$ |
187 |
|
|
$ |
273 |
|
|
$ |
945 |
|
|
$ |
595 |
|
|
|
|
|
|
|
|
|
Reconciliation of Corporate and Other Operating
Loss to
Corporate and Other EBITDA and Adjusted
EBITDA |
|
|
|
|
|
|
|
Operating loss |
$ |
(97 |
) |
|
$ |
(101 |
) |
|
$ |
(340 |
) |
|
$ |
(286 |
) |
Depreciation and amortization expense |
5 |
|
|
4 |
|
|
19 |
|
|
15 |
|
Other income, net (b) (g) |
1 |
|
|
54 |
|
|
13 |
|
|
57 |
|
EBITDA |
(91 |
) |
|
(43 |
) |
|
(308 |
) |
|
(214 |
) |
Special items (j) |
- |
|
|
4 |
|
|
(11 |
) |
|
5 |
|
Adjusted EBITDA |
$ |
(91 |
) |
|
$ |
(39 |
) |
|
$ |
(319 |
) |
|
$ |
(209 |
) |
___________________
(ad) 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. The
TLLP financial data is derived from the combined financial results
of the TLLP predecessor (the "TLLP Predecessor"). We refer to the
TLLP Predecessor and, prior to each acquisition date, the
acquisitions from Tesoro collectively, as "TLLP's
Predecessors."
|
Rockies Natural Gas
Business
Year Ended December 31, 2015 |
Reconciliation of Operating Income to EBITDA and
Adjusted EBITDA |
|
Operating income |
$ |
179 |
|
Depreciation and amortization expense |
93 |
|
EBITDA |
272 |
|
Throughput deficiency receivables (l) |
13 |
|
Adjusted EBITDA |
$ |
285 |
|
|
Rockies Natural Gas Business 2015
Projected Annual EBITDA attributable to TLLP |
Reconciliation of Projected Net Earnings to
Projected Annual EBITDA |
|
Projected net earnings |
$ |
93 |
|
Depreciation and amortization expense |
96 |
|
Interest and financing costs, net |
86 |
|
Projected Adjusted EBITDA |
$ |
275 |
|
|
Year Ended December 31, 2015 |
Free Cash Flow Reconciliation |
|
Net cash flow from operating
activities |
$ |
2,131 |
|
Less:
Sustaining (Maintenance and Regulatory) capital |
(454 |
) |
Less: Dividend payments |
(228 |
) |
Less:
Distributions to noncontrolling interest |
(182 |
) |
Free Cash Flow |
$ |
1,267 |
|
NET EARNINGS
ADJUSTED FOR SPECIAL ITEMS
(Unaudited) (In millions except per share
amounts)
|
Three Months Ended December 31, |
|
Years Ended
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Net Earnings Attributable to
Tesoro Corporation from
Continuing Operations - U.S. GAAP |
$ |
54 |
|
|
$ |
172 |
|
|
$ |
1,544 |
|
|
$ |
872 |
|
Special Items, After-tax: (ae) |
|
|
|
|
|
|
|
Transaction and integration costs (c) |
- |
|
|
12 |
|
|
1 |
|
|
12 |
|
Lower
of cost or market inventory adjustment (a) |
167 |
|
|
25 |
|
|
192 |
|
|
25 |
|
Throughput deficiency receivable (l) |
- |
|
|
3 |
|
|
4 |
|
|
3 |
|
Legal
settlements, net (b) |
- |
|
|
(25 |
) |
|
- |
|
|
(25 |
) |
Insurance settlement gain (g) |
- |
|
|
- |
|
|
(7 |
) |
|
- |
|
Gain
on sale of Boise Terminal (d) |
- |
|
|
- |
|
|
- |
|
|
(2 |
) |
Inspection and maintenance expenses associated with
the Northwest
Products System (m) |
- |
|
|
1 |
|
|
- |
|
|
3 |
|
Debt
redemption charges (e) |
- |
|
|
- |
|
|
- |
|
|
23 |
|
Adjusted Earnings |
$ |
221 |
|
|
$ |
188 |
|
|
$ |
1,734 |
|
|
$ |
911 |
|
|
|
|
|
|
|
|
|
Diluted Net Earnings per Share
from Continuing Operations
Attributable to Tesoro Corporation - U.S.
GAAP |
$ |
0.45 |
|
|
$ |
1.34 |
|
|
$ |
12.39 |
|
|
$ |
6.67 |
|
Special Items Per Share, After-tax: (ae) |
|
|
|
|
|
|
|
Transaction and integration costs (c) |
- |
|
|
0.09 |
|
|
0.01 |
|
|
0.09 |
|
Lower
of cost or market inventory adjustment (a) |
1.38 |
|
|
0.20 |
|
|
1.54 |
|
|
0.19 |
|
Throughput deficiency receivable (l) |
- |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
Legal
settlements, net (b) |
- |
|
|
(0.20 |
) |
|
- |
|
|
(0.19 |
) |
Insurance settlement gain (g) |
- |
|
|
- |
|
|
(0.06 |
) |
|
- |
|
Gain
on sale of Boise Terminal (d) |
- |
|
|
- |
|
|
- |
|
|
(0.02 |
) |
Inspection and maintenance expenses associated with
the Northwest
Products System (m) |
- |
|
|
0.01 |
|
|
- |
|
|
0.02 |
|
Debt
redemption charges (e) |
- |
|
|
- |
|
|
- |
|
|
0.18 |
|
Adjusted Diluted EPS |
$ |
1.83 |
|
|
$ |
1.47 |
|
|
$ |
13.91 |
|
|
$ |
6.97 |
|
________________
(ae) 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.
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#1982911
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