PHILADELPHIA, April 22 /PRNewswire-FirstCall/ -- Sunoco, Inc. (NYSE: SUN)
today reported net income of $89 million ($1.17 per share diluted) for the
first quarter of 2004 versus $86 million ($1.12 per share diluted) for the
2003 first quarter.
(Logo: http://www.newscom.com/cgi-bin/prnh/19981105/PHTH006 )
"We are pleased with our first quarter results," said John G. Drosdick,
Sunoco Chairman and CEO. "Financially, earnings were slightly better than
last year's strong start and, strategically, our activities over the past year
are making significant contributions to the Company's earnings.
"Our financial performance for the quarter largely reflects strong results
from Refining and Supply, which had income of $100 million. Current quarter
refining margins were $5.68 per barrel, up slightly from the prior-year level.
Stronger gasoline margins more than offset the impact of a weaker distillate
market and sharply higher transportation and fuel costs. First quarter 2004
earnings included $23 million from the Eagle Point refinery, acquired
January 13, 2004. We have made significant progress in capturing synergies
and integrating this facility into our refining system and are pleased with
this addition to our asset base. With summer gasoline demand projected to
reach record levels, prospects for continued strong refining results through
the driving season remain favorable.
"Similar to the 2003 first quarter, however, rising crude oil costs
substantially squeezed product margins in our Retail Marketing and Chemicals
businesses. Retail Marketing lost $4 million, as retail gasoline price
increases lagged sharply higher wholesale prices throughout the quarter.
Additionally, Chemicals earnings of $12 million for the quarter were much
improved from the year-ago loss of $4 million, despite significant increases
in benzene and propylene feedstock costs which reduced margins in Chemicals
versus more recent quarters. Assuming crude prices level off or moderate, we
would expect margins in these businesses to improve, as fundamental product
demand growth continues to be fairly strong.
"Our other businesses, Logistics and Coke, earned $8 and $9 million,
respectively for the quarter."
Drosdick added, "We continued to move ahead on other strategic
initiatives. We expect to close shortly on our acquisition of retail sites
from ConocoPhillips. These high-quality sites will nicely expand and upgrade
our retail portfolio network in the mid-Atlantic region. In January, we
completed the divestment of our plasticizers operations, generating cash
proceeds of $90 million for a business that earned an average of $3 million
over the past three years. We sold certain logistics assets associated with
the Eagle Point refinery to Sunoco Logistics Partners L.P. and, in early
April, the Partnership completed an equity offering generating net proceeds of
approximately $130 million. We now have a 63 percent interest in Sunoco
Logistics Partners L.P. We also continued our share buyback program,
repurchasing 600,000 shares of Sunoco common stock for $37 million during the
quarter.
"The actions of the past year have included asset growth in each of our
five businesses, an increased dividend and significant share repurchase
activity. We have funded these activities with strong operating cash flow and
targeted portfolio divestments. This strategy of opportunistic and
diversified portfolio growth while maintaining prudent financial strength and
returning cash to shareholders will continue to guide our actions to increase
value for our shareholders."
DETAILS OF FIRST QUARTER RESULTS
REFINING AND SUPPLY
Refining and Supply earned $100 million in the current quarter versus
$93 million in the first quarter of 2003. The increase was largely due to the
$23 million income contribution from the Eagle Point refinery acquired on
January 13, 2004, higher production volumes in the Northeast Refining System
and slightly higher realized margins. Partially offsetting these positive
variances were higher expenses, including fuel and depreciation, and lower
production volumes in Sunoco's MidContinent Refining System due to planned
turnaround activity at both the Toledo and Tulsa refineries in March 2004.
Total crude unit throughput averaged 825 thousand barrels daily
(95 percent utilization) for the quarter, with total production available for
sale approximating 80 million barrels.
RETAIL MARKETING
Retail Marketing had a loss of $4 million in the first quarter of 2004
versus income of $10 million in the first quarter of 2003. The decrease in
results was due largely to lower retail gasoline margins, which averaged
6.4 cents per gallon and were down almost two cents per gallon from the prior-
year quarter. Current quarter results included a $1 million income
contribution from the Speedway sites acquired in June 2003.
CHEMICALS
Chemicals earned $12 million in the first quarter of 2004 versus a loss of
$4 million in the prior-year period. The increase was due largely to higher
realized margins for phenol and by-products and a $5 million income
contribution associated with the 2003 propylene supply agreement with Equistar
Chemicals, L.P. and sales from the Bayport, TX polypropylene facility acquired
from Equistar. Phenol sales volumes declined from the prior-year quarter as
sales were limited by cumene availability issues in the industry.
Polypropylene sales volumes (excluding the Bayport facility) declined due to
sales from inventory during the prior-year quarter.
LOGISTICS
Earnings for the Logistics segment were $8 million versus $11 million in
the year-ago period. The decline in earnings was due largely to lower results
from the Western Crude System and lower joint-venture income.
COKE
The Coke business earned $9 million in the first quarter of 2004 versus
$10 million in the first quarter of 2003.
CORPORATE AND OTHER
Corporate administrative expenses were $12 million after tax in the
current quarter versus $9 million in the comparable quarter last year. The
increase was largely due to higher employee-related expenses, including
accruals associated with stock-based compensation.
Net financing expenses were $24 million after tax in the first quarter of
2004 versus $25 million in the prior-year quarter.
Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer
and marketer of petroleum and petrochemical products. With 890,000 barrels
per day of refining capacity, over 4,500 retail sites selling gasoline and
convenience items, over 4,500 miles of crude oil and refined product owned and
operated pipelines and 34 product terminals, Sunoco is one of the largest
independent refiner-marketers in the United States. Sunoco is a significant
manufacturer of petrochemicals with annual sales of approximately five billion
pounds, largely chemical intermediates used to make fibers, plastics, film and
resins. Utilizing a unique, patented technology, Sunoco also manufactures two
million tons annually of high-quality metallurgical-grade coke for use in the
steel industry.
Anyone interested in obtaining further insights into this quarter's
results can monitor the Company's quarterly teleconference call, which is
scheduled for 3:00 p.m. ET today (April 22, 2004). It can be accessed through
Sunoco's Web site - http://www.SunocoInc.com. It is suggested that you visit the
site prior to the teleconference to ensure that you have downloaded any
necessary software.
Those statements made in this release that are not historical facts are
forward-looking statements intended to be covered by the safe harbor
provisions of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although Sunoco believes that the
assumptions underlying these statements are reasonable, investors are
cautioned that such forward-looking statements are inherently uncertain and
necessarily involve risks that may affect Sunoco's business prospects and
performance causing actual results to differ from those discussed in the
foregoing release. Such risks and uncertainties include, by way of example
and not of limitation: general business and economic conditions; competitive
products and pricing; changes in refining, chemical and other product margins;
variation in petroleum-based commodity prices and availability of crude oil
supply or transportation; fluctuations in supply of feedstocks and demand for
products manufactured; changes in operating conditions and costs; changes in
the expected level of environmental capital, operating or remediation
expenditures; potential equipment malfunction; potential labor relations
problems; the legislative and regulatory environment; plant
construction/repair delays; nonperformance by major customers, suppliers or
other business partners; and political and economic conditions, including the
impact of potential terrorist acts and international hostilities. These and
other applicable risks and uncertainties have been described more fully in
Sunoco's Form 10-K filed with the Securities and Exchange Commission on
March 5, 2004 and in other periodic reports filed with the Securities and
Exchange Commission. Sunoco undertakes no obligation to update any forward-
looking statements in this release, whether as a result of new information or
future events.
-END OF TEXT, CHARTS FOLLOW-
Sunoco, Inc.
2004 First Quarter Financial Summary
(Unaudited)
First Quarter 2004 2003
Revenues $5,245,000,000 $4,596,000,000 *
Net Income $89,000,000 $86,000,000
Net Income Per Share of
Common Stock:
Basic $1.18 $1.12
Diluted $1.17 $1.12
Weighted Average Number of Shares
Outstanding (In Millions):
Basic 75.5 76.5
Diluted 76.3 77.1
* Restated to reflect the consolidation of the Epsilon Products Company,
LLC polypropylene joint venture, effective January 1, 2003, in
connection with the adoption of FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities," in the first quarter of
2004.
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars)
(Unaudited)
Three Months
Ended
March 31
2004 2003 Variance
Refining and Supply $100 $93 $ 7
Retail Marketing (4) 10 (14)
Chemicals 12 (4) 16
Logistics 8 11 (3)
Coke 9 10 (1)
Corporate and Other:
Corporate expenses (12) (9) (3)
Net financing expenses and other (24) (25) 1
Consolidated net income $89 $86 $ 3
Net income per share of common stock
(diluted) $1.17 $1.12 $.05
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
Certain revisions have been made to Sunoco's Financial and Operating
Statistics presented below. In Refining and Supply, operating data is now
provided for the MidContinent Refining Complex (previously, separate data had
been provided for the Toledo and Tulsa refineries). Also, the Chemicals
margin and volume data as well as certain other financial information reflect
the impact of consolidating the Epsilon Products Company, LLC polypropylene
joint venture in connection with the adoption of FASB Interpretation No. 46.
The polypropylene margin information also now includes the impact of a long-
term supply contract entered into on March 31, 2003 with Equistar Chemicals,
L.P. and the cost of additives. Prior-period amounts have been restated to
conform to the first quarter of 2004 presentation.
For the Three
Months Ended
March 31
2004 2003
TOTAL REFINING AND SUPPLY
Income (Millions of Dollars) $100 $93
Realized Wholesale Margin* (Per Barrel of
Production Available for Sale) $5.68 $5.35
Crude Inputs as Percent of Crude Unit Rated
Capacity** 95 96
Throughputs*** (Thousand Barrels Daily):
Crude Oil 824.6 700.2
Other Feedstocks 65.6 57.6
Total Throughputs 890.2 757.8
Products Manufactured*** (Thousand Barrels
Daily):
Gasoline 419.0 359.6
Middle Distillates 285.1 238.1
Residual Fuel 77.5 58.7
Petrochemicals 33.3 25.3
Lubricants 13.0 13.2
Other 96.0 93.5
Total Production 923.9 788.4
Less: Production Used as Fuel in Refinery
Operations 42.9 36.8
Total Production Available for Sale 881.0 751.6
* Wholesale sales revenue less cost of crude oil, other feedstocks,
product purchases and related terminalling and transportation divided
by production available for sale.
** In January 2004, crude unit capacity increased from 730 to 890
thousands of barrels daily. This change reflects the acquisition of
the 150 thousand barrels-per-day Eagle Point refinery effective
January 13, 2004 and a 10 thousand barrels-per-day adjustment at the
Toledo refinery reflecting the increased reliability and enhanced
operations at this facility in recent years. The calculation of the
crude inputs as a percent of crude unit rated capacity for the three
months ended March 31, 2004 includes the Eagle Point refinery,
effective January 13, 2004.
*** Data pertaining to the Eagle Point refinery for the three months
ended March 31, 2004 are included based on the amounts attributable
to the 79-day ownership period (January 13, 2004 - March 31, 2004)
divided by 91 days.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2004 2003
Northeast Refining Complex*
Realized Wholesale Margin (Per Barrel of
Production Available for Sale) $5.74 $5.68
Market Benchmark 6-3-2-1 (Per Barrel) $7.14 $7.84
Crude Inputs as Percent of Crude Unit Rated
Capacity** 99 95
Throughputs*** (Thousand Barrels Daily):
Crude Oil 630.9 477.5
Other Feedstocks 58.9 50.4
Total Throughputs 689.8 527.9
Products Manufactured*** (Thousand Barrels
Daily):
Gasoline 320.3 253.9
Middle Distillates 226.5 166.3
Residual Fuel 74.7 54.2
Petrochemicals 29.2 18.7
Other 65.3 56.9
Total Production 716.0 550.0
Less: Production Used as Fuel in
Refinery Operations 34.8 26.4
Total Production Available for Sale 681.2 523.6
* Comprised of the Marcus Hook, Philadelphia and Eagle Point
refineries.
** On January 13, 2004, crude unit capacity increased from 505 to 655
thousands of barrels daily as a result of the Eagle Point refinery
acquisition. The calculation of the crude inputs as a percent of
crude unit rated capacity for the three months ended March 31, 2004
includes the Eagle Point refinery, effective January 13, 2004.
*** Data pertaining to the Eagle Point refinery for the three months
ended March 31, 2004 are included based on the amounts attributable
to the 79-day period subsequent to the acquisition date divided by 91
days.
MidContinent Refining Complex*
Realized Wholesale Margin (Per Barrel of
Production Available for Sale) $5.46 $4.59
Market Benchmark 3-2-1 (Per Barrel) $6.39 $5.98
Crude Inputs as Percent of Crude Unit Rated
Capacity** 82 99
Throughputs (Thousand Barrels Daily):
Crude Oil 193.7 222.7
Other Feedstocks 6.7 7.2
Total Throughputs 200.4 229.9
* Comprised of the Toledo and Tulsa refineries.
** Effective January 1, 2004, crude unit capacity increased from 225 to
235 thousands of barrels daily as a result of a 10 thousand barrels-
per-day adjustment at the Toledo refinery.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2004 2003
MidContinent Refining Complex (continued)
Products Manufactured (Thousand Barrels
Daily):
Gasoline 98.7 105.7
Middle Distillates 58.6 71.8
Residual Fuel 2.8 4.5
Petrochemicals 4.1 6.6
Lubricants 13.0 13.2
Other 30.7 36.6
Total Production 207.9 238.4
Less: Production Used as Fuel in Refinery
Operations 8.1 10.4
Total Production Available for Sale 199.8 228.0
RETAIL MARKETING
Income (Loss) (Millions of Dollars) $(4) $10
Retail Margin* (Per Barrel):
Gasoline $2.68 $3.48
Middle Distillates $6.27 $5.98
Sales of Petroleum Products (Thousand
Barrels Daily):
Gasoline 273.7 251.2
Middle Distillates 44.5 44.3
318.2 295.5
Total Retail Gasoline Outlets, End of Period 4,532 4,368
Gasoline and Diesel Throughput per Company
Owned or Leased Outlet (M Gal/Site/Month) 125 114
Convenience Stores:
Total Stores, End of Period 804 637
Merchandise Sales (M$/Store/Month) $73 $66
Merchandise Margin (Company Operated)
(% of Sales) 24% 24%
* Retail sales price less wholesale price and related terminalling and
transportation costs divided by total sales volumes. The retail sales
price is the weighted average price received through the various
branded marketing distribution channels.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2004 2003
CHEMICALS*
Income (Loss) (Millions of Dollars) $12 $(4)
Margin** (Cents per Pound):
All Products*** 9.2 6.8
Phenol and Related Products 8.6 6.6
Polypropylene*** 10.4 7.4
Sales (Millions of Pounds):
Phenol and Related Products 614 670
Polypropylene# 575 550
Plasticizers## 28 157
Other 48 46
1,265 1,423
* Prior-period amounts have been restated to reflect the consolidation
of the Epsilon joint venture, effective January 1, 2003, in
connection with the adoption of FASB Interpretation No. 46 in the
first quarter of 2004.
** Wholesale sales revenue less cost of feedstocks, product purchases
and related terminalling and transportation divided by sales volumes.
*** The polypropylene and all products margins include the impact of a
long-term supply contract entered into on March 31, 2003 with
Equistar Chemicals, L.P. which is priced on a cost-based formula that
includes a fixed discount.
# Includes amounts attributable to the Bayport facility subsequent to
its purchase, effective March 31, 2003.
## Consists of amounts attributable to the plasticizer business, which
was divested in January 2004.
COKE
Income (Millions of Dollars) $9 $10
Coke Production (Thousands of Tons) 478 492
Coke Sales (Thousands of Tons) 482 493
CAPITAL EXPENDITURES (Millions of Dollars)
Refining and Supply $ 70 * $43
Retail Marketing 16 14
Chemicals 6 * 4 **
Logistics 4 * 7
Coke 16 --
$112 $68
* Excludes $235 million acquisition from El Paso Corporation of the
Eagle Point refinery and related chemical and logistics assets, which
includes $124 million for inventory.
** Excludes $198 million associated with the formation of a propylene
partnership with Equistar Chemicals, L.P. and a related supply
contract and the acquisition of Equistar's Bayport polypropylene
facility, which includes $11 million for inventory.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2004 2003
DEPRECIATION, DEPLETION AND
AMORTIZATION (Millions of Dollars)
Refining and Supply $48 $39
Retail Marketing 25 24
Chemicals 17 12
Logistics 7 7
Coke 3 3
$100 $85
At At
BALANCE SHEET INFORMATION March 31 December 31
(Millions of Dollars) 2004 2003
Cash and Cash Equivalents $311 $431
Total Borrowings (including Current Portion)* $1,601 $1,601
Shareholders' Equity $1,616 $1,556
* At March 31, 2004 and December 31, 2003, includes $150 and $148
million, respectively, attributable to the Epsilon joint venture, which
is now consolidated in connection with the adoption of FASB
Interpretation No. 46.
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars)
(Unaudited)
2003
1st 2nd 3rd 4th Total
Refining and Supply $ 93 $ 50 $ 98 $ 20 $261
Retail Marketing 10 36 20 25 91
Chemicals (4) 10 21 26 53
Logistics 11 9 9 (3) 26
Coke 10 11 11 11 43
Corporate and Other:
Corporate expenses (9) (10) (10) (11) (40)
Net financing expenses
and other (25) (25) (25) (24) (99)
86 81 124 44 335
Special items -- -- (15) (8) (23)
Consolidated net income $ 86 $ 81 $109 $ 36 $312
Earnings (loss) per share
of common stock (diluted):
Income before special
items $1.12 $1.04 $1.59 $ .57 $4.32
Special items -- -- (.19) (.10) (.29)
Net income $1.12 $1.04 $1.40 $ .47 $4.03
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars)
(Unaudited)
2004
First Quarter
Refining and Supply $100
Retail Marketing (4)
Chemicals 12
Logistics 8
Coke 9
Corporate and Other:
Corporate expenses (12)
Net financing expenses and other (24)
Consolidated net income $ 89
Net income per share of common stock (diluted) $1.17
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2003*
1st 2nd 3rd 4th Total
REVENUES
Sales and other operating
revenue (including
consumer excise taxes) $4,589 $4,189 $4,630 $4,561 $17,969
Interest income 2 2 1 2 7
Other income (loss) 5 13 (11) 33 40
4,596 4,204 4,620 4,596 18,016
COSTS AND EXPENSES
Cost of products sold and
operating expenses 3,722 3,261 3,536 3,635 14,154
Consumer excise taxes 437 490 556 516 1,999
Selling, general and
administrative expenses 163 180 202 207 752
Depreciation, depletion
and amortization 85 92 94 98 369
Payroll, property and
other taxes 27 24 30 24 105
Provision for write-down
of assets and other
matters -- -- -- 28 28
Interest cost and debt
expense 29 29 29 30 117
Interest capitalized (1) -- (1) (1) (3)
4,462 4,076 4,446 4,537 17,521
Income before income tax
expense 134 128 174 59 495
Income tax expense 48 47 65 23 183
Net Income $86 $81 $109 $36 $312
* Restated to reflect the consolidation of the Epsilon joint venture,
effective January 1, 2003, in connection with the adoption of FASB
Interpretation No. 46 in the first quarter of 2004.
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2004
First Quarter
REVENUES
Sales and other operating revenue (including
consumer excise taxes) $5,232
Interest income 2
Other income 11
5,245
COSTS AND EXPENSES
Cost of products sold and operating expenses 4,254
Consumer excise taxes 498
Selling, general and administrative expenses 187
Depreciation, depletion and amortization 100
Payroll, property and other taxes 33
Interest cost and debt expense 29
Interest capitalized (1)
5,100
Income before income tax expense 145
Income tax expense 56
Net Income $89
SOURCE Sunoco, Inc.
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CONTACT:
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