PHILADELPHIA, May 2 /PRNewswire-FirstCall/ -- Sunoco, Inc. (NYSE: SUN)
today reported net income of $175 million ($1.44 per share diluted) for the
first quarter of 2007 versus $79 million ($0.59 per share diluted) for the
first quarter of 2006. Excluding special items, income was $85 million
($0.70 per share diluted) for the current quarter. There were no special
items in the first quarter of 2006.
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"While refining margins and operating income were improved versus last
year's comparable period, our results were significantly limited by the
major turnaround and expansion work at our Philadelphia refinery," said
John G. Drosdick, Sunoco Chairman and Chief Executive Officer. "This $520
million project reduced first-quarter refinery production by approximately
nine million barrels and also contributed to higher average crude oil costs
and the sale of low-valued residual fuel inventory. The timing of this
downtime and its associated impacts occurred during the part of the quarter
when margins in the Northeast were at their highest levels. Also in the
Northeast, a loss of steam from a power outage at a third-party supplier
resulted in an unplanned shutdown of the Marcus Hook refinery in February
that reduced throughput by an additional one million barrels.
"With the recent completion of the Philadelphia turnaround and fluid
catalytic cracking unit expansion project," continued Drosdick, "our
Northeast refining system is now returning to normal operations as we enter
the summer driving season. In addition to the expansion of the catalytic
cracking unit's capacity from 70 to 85 thousand barrels per day, we expect
the project will provide us with the ability to upgrade an additional 15-20
thousand barrels per day of low-value residual fuel oil into higher-value
gasoline and distillate products and demonstrate the increased earnings
power of these assets."
Commenting on other 2007 capital projects in Refining and Supply,
Drosdick said, "Final tie-in work for the crude unit debottleneck project
at our Toledo refinery is scheduled to begin in May with completion
anticipated by the end of the quarter. We estimate that the work will
result in only a minimal reduction in crude throughput during the quarter.
In addition, our Tulsa refinery is currently scheduled to undergo a
maintenance turnaround beginning in June, which is expected to reduce
second quarter production at the facility by approximately 2.4 million
barrels. Following the completion of this work, we have no major turnaround
activity scheduled for the remainder of the year, providing the opportunity
to capture what we believe will continue to be a constructive market for
refined product margins."
DETAILS OF FIRST QUARTER RESULTS
REFINING AND SUPPLY
Refining and Supply earned $76 million in the first quarter of 2007
versus $73 million in the first quarter of 2006. The increase in earnings
was due to higher realized margins, particularly in the MidContinent,
essentially offset by lower production volumes and higher expenses. The
lower volumes were mainly the result of work related to the project to
expand capacity of a fluid catalytic cracking unit at the Philadelphia
refinery as well as a one-week outage at the Tulsa refinery and unscheduled
downtime at the Marcus Hook refinery due to a power outage at a third-party
steam supplier. The completion of the work at the Philadelphia refinery is
expected to reduce April production by approximately two million barrels.
The higher expenses were largely the result of costs associated with the
turnaround and expansion work and operating costs to produce low-sulfur
fuels.
RETAIL MARKETING
Retail Marketing earned $7 million in the first quarter of 2007 versus
break-even results in the first quarter of 2006. The increase in earnings
was primarily due to higher average retail gasoline and distillate margins.
Partially offsetting these positive factors were a $3 million after-tax
charge associated with a litigation settlement and a $4 million after-tax
decrease in divestment gains attributable to the Retail Portfolio
Management program. Monthly gasoline and diesel throughput per
company-owned or leased outlet increased approximately eight percent versus
the first quarter of 2006.
CHEMICALS
Chemicals earned $9 million in the first quarter of 2007 versus $14
million in the prior-year period. The decrease in earnings was due
primarily to lower margins and sales volumes for both phenol and
polypropylene, partially offset by lower expenses. Lower volumes resulted
in part from feedstock availability issues related to the turnaround work
at Sunoco's Philadelphia refinery and the power outage at a third-party
steam supplier for Sunoco's Marcus Hook refinery during the quarter.
LOGISTICS
Earnings for the Logistics segment were $9 million in the first quarter
of 2007 versus $6 million in the first quarter of 2006. The increase was
largely due to higher earnings from terminalling operations and from the
Partnership's acquisitions completed in 2006, partially offset by lower
crude oil acquisition and marketing results and Sunoco's reduced ownership
in the Partnership subsequent to a public equity offering in the second
quarter of 2006.
COKE
The Coke business earned $11 million in the first quarter of 2007
versus $14 million in the first quarter of 2006. The decrease in earnings
was due primarily to higher costs and lower selling prices at the Jewell
coal operations. In the first quarter of 2007, limited operations commenced
at a 1.7 million tons-per-year cokemaking facility in Vitoria, Brazil, with
full production expected in mid-2007. The Coke business is the operator and
has a one-percent ownership interest in this joint venture.
CORPORATE AND OTHER
Corporate administrative expenses were $15 million after tax in the
first quarter of 2007 versus $16 million in the first quarter of 2006.
Net financing expenses were $12 million after tax in both first-quarter
periods. Lower interest income and higher interest expense were offset by
higher capitalized interest and lower expenses attributable to the
preferential return of third-party investors in Sunoco's cokemaking
operations.
SPECIAL ITEM
During the first quarter of 2007, Sunoco recognized a $90 million
after- tax gain related to the prior issuance of limited partnership units
of Sunoco Logistics Partners L.P. (NYSE: SXL) to the public. Sunoco
currently has a 43 percent interest in Sunoco Logistics Partners L.P.,
which includes its 2 percent general partnership interest.
Sunoco, Inc., headquartered in Philadelphia, PA, is a leading
manufacturer and marketer of petroleum and petrochemical products. With
900,000 barrels per day of refining capacity, nearly 4,700 retail sites
selling gasoline and convenience items, approximately 5,500 miles of crude
oil and refined product owned and operated pipelines and 38 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's cokemaking facilities in the United
States also have the capacity to manufacture over 2.5 million tons annually
of high-quality metallurgical-grade coke for use in the steel industry.
Anyone interested in obtaining further insights into the first
quarter's results can monitor the Company's quarterly teleconference call,
which is scheduled for 3:00 p.m. ET on May 3, 2007. 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 materially from those
discussed in the foregoing release. Such risks and uncertainties include,
by way of example and not of limitation: general economic, financial and
business conditions which could affect Sunoco's financial condition and
results of operations; changes in competition and competitive practices,
including the impact of foreign imports; effects of weather conditions and
natural disasters on the Company's operating facilities and on product
supply and demand; changes in refining, marketing and chemical margins;
variation in petroleum-based commodity prices and availability of crude oil
and feedstock supply or transportation; effects of transportation
disruptions; changes in the price differentials between light-sweet and
heavy-sour crude oils; changes in the marketplace which may affect supply
and demand for Sunoco's products; changes in the level of capital
expenditures or operating expenses; changes in product specifications;
availability and pricing of ethanol; changes in the expected level of
environmental capital, operating or remediation expenditures; age of, and
changes in, the reliability, efficiency and capacity of, the Company's
operating facilities or those of third parties; effects of adverse events
relating to the operation of the Company's facilities and to the
transportation and storage of hazardous materials (including equipment
malfunction, explosions, fires, spills, and the effects of severe weather
conditions); risks related to labor relations and workplace safety; changes
in, or new, statutes and government regulations or their interpretations,
including those relating to the environment and global warming; changes in
tax laws or their interpretations, including pension funding requirements;
ability to identify acquisitions, execute them under favorable terms and
integrate them into the Company's existing businesses; ability to enter
into joint ventures and other similar arrangements under favorable terms;
delays and/or costs related to construction, improvements and/or repairs of
facilities (including shortages of skilled labor, the issuance of
applicable permits and inflation); nonperformance or force majeure by, or
disputes with, major customers, suppliers, dealers, distributors or other
business partners; changes in financial markets impacting pension expense
and funding requirements; political and economic conditions in the markets
in which the Company, its suppliers or customers operate, including the
impact of potential terrorist acts and international hostilities; military
conflicts between, or internal instability in, one or more oil producing
countries, governmental actions and other disruptions in the ability to
obtain crude oil; and changes in the status of, or initiation of new,
litigation, arbitration or other proceedings to which the Company is a
party or liability resulting from such litigation, arbitration or other
proceedings, including natural resource damage claims. These and other
applicable risks and uncertainties have been described more fully in
Sunoco's 2006 Form 10-K filed with the Securities and Exchange Commission
on February 26, 2007 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.
Sunoco, Inc.
2007 First Quarter Financial Summary
(Unaudited)
First Quarter 2007 2006
Revenues $9,305,000,000 $8,593,000,000
Net Income $175,000,000 $79,000,000
Earnings Per Share of Common
Stock:
Basic $1.44 $.59
Diluted $1.44 $.59
Weighted-Average Number of Shares
Outstanding (In Millions):
Basic 121.4 132.9
Diluted 121.7 133.6
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
Three Months
Ended
March 31
2007 2006 Variance
Refining and Supply $ 76 $ 73 $ 3
Retail Marketing 7 -- 7
Chemicals 9 14 (5)
Logistics 9 6 3
Coke 11 14 (3)
Corporate and Other:
Corporate expenses (15) (16) 1
Net financing expenses and other (12) (12) --
85 79 6
Special items 90 -- 90
Consolidated net income $175 $ 79 $96
Earnings per share of common
stock (diluted):
Income before special items $ .70 $.59 $.11
Special items .74 -- .74
Net income $1.44 $.59 $.85
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2007 2006
TOTAL REFINING AND SUPPLY
Income (Millions of Dollars) $76 $73
Realized Wholesale Margin* (Per Barrel of
Production Available for Sale) $6.98 $6.13
Crude Inputs as Percent of Crude Unit Rated
Capacity 85 93
Throughputs (Thousand Barrels Daily):
Crude Oil 761.5 835.3
Other Feedstocks 79.4 68.8
Total Throughputs 840.9 904.1
Products Manufactured (Thousand Barrels
Daily):
Gasoline 401.4 427.6
Middle Distillates 285.4 308.1
Residual Fuel 61.1 70.8
Petrochemicals 34.4 35.8
Lubricants 12.9 13.2
Other 75.8 85.4
Total Production 871.0 940.9
Less: Production Used as Fuel in Refinery
Operations 39.7 44.3
Total Production Available for Sale 831.3 896.6
*Wholesale sales revenue less related cost of crude oil, other feedstocks,
product purchases and terminalling and transportation divided by
production available for sale.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2007 2006
Northeast Refining*
Realized Wholesale Margin (Per Barrel of
Production Available for Sale) $5.25 $5.35
Market Benchmark 6-3-2-1 (Per Barrel) $7.14 $4.49
Crude Inputs as Percent of Crude Unit Rated
Capacity 82 93
Throughputs (Thousand Barrels Daily):
Crude Oil 539.1 610.1
Other Feedstocks 69.5 60.2
Total Throughputs 608.6 670.3
Products Manufactured (Thousand Barrels
Daily):
Gasoline 289.3 319.2
Middle Distillates 210.1 230.2
Residual Fuel 57.4 66.4
Petrochemicals 25.6 28.9
Other 44.7 51.6
Total Production 627.1 696.3
Less: Production Used as Fuel in
Refinery Operations 28.2 32.5
Total Production Available for
Sale 598.9 663.8
*Comprised of the Marcus Hook, Philadelphia and Eagle Point refineries.
MidContinent Refining*
Realized Wholesale Margin (Per Barrel of
Production Available for Sale) $11.42 $8.38
Market Benchmark 3-2-1 (Per Barrel) $11.06 $7.92
Crude Inputs as Percent of Crude Unit Rated
Capacity 91 92
Throughputs (Thousand Barrels Daily):
Crude Oil 222.4 225.2
Other Feedstocks 9.9 8.6
Total Throughputs 232.3 233.8
*Comprised of the Toledo and Tulsa refineries.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2007 2006
MidContinent Refining (continued)
Products Manufactured (Thousand Barrels
Daily):
Gasoline 112.1 108.4
Middle Distillates 75.3 77.9
Residual Fuel 3.7 4.4
Petrochemicals 8.8 6.9
Lubricants 12.9 13.2
Other 31.1 33.8
Total Production 243.9 244.6
Less: Production Used as Fuel in Refinery
Operations 11.5 11.8
Total Production Available for Sale 232.4 232.8
RETAIL MARKETING
Income (Millions of Dollars) $7 $--
Retail Margin* (Per Barrel):
Gasoline $3.48 $2.85
Middle Distillates $6.84 $5.02
Sales of Petroleum Products (Thousand
Barrels Daily):
Gasoline 299.3 287.5
Middle Distillates 46.9 46.5
346.2 334.0
Total Retail Gasoline Outlets, End of Period 4,683 4,737
Gasoline and Diesel Throughput per Company
Owned or Leased Outlet (M Gal/Site/Month) 142 132
Convenience Stores:
Total Stores, End of Period 736 739
Merchandise Sales (M$/Store/Month) $76 $71
Merchandise Margin (Company Operated)
(% of Sales) 26% 28%
*Retail sales price less related wholesale price and terminalling and
transportation costs per barrel. 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
2007 2006
CHEMICALS
Income (Millions of Dollars) $9 $14
Margin* (Cents per Pound):
All Products** 10.5 10.9
Phenol and Related Products 8.8 9.1
Polypropylene** 12.7 13.2
Sales (Millions of Pounds):
Phenol and Related Products 592 633
Polypropylene 548 562
Other 20 21
1,160 1,216
*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 with Equistar Chemicals, L.P. which is priced on a
cost-based formula that includes a fixed discount.
LOGISTICS
Income (Millions of Dollars) $9 $6
Pipeline and Terminal Throughput
(Thousand Barrels Daily)*:
Unaffiliated Customers 1,168 1,027
Affiliated Customers 1,566 1,630
2,734 2,657
*Excludes joint-venture operations.
COKE*
Income (Millions of Dollars) $11 $14
Coke Production (Thousands of Tons) 642 631
*Includes amounts attributable to the facility in Vitoria, Brazil which
commenced limited operations in March 2007.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2007 2006
CAPITAL EXPENDITURES (Millions of Dollars)
Refining and Supply $270 $130
Retail Marketing 13 12
Chemicals 14 11
Logistics 18 16*
Coke 17 3
$332 $172
*Excludes the acquisition of two separate crude oil pipeline systems and
related storage facilities located in Texas, one from Alon USA Energy,
Inc. for $68 million and the other from Black Hills Energy, Inc. for $41
million.
DEPRECIATION, DEPLETION AND
AMORTIZATION (Millions of Dollars)
Refining and Supply $56 $56
Retail Marketing 26 25
Chemicals 19 18
Logistics 9 9
Coke 5 4
$115 $112
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
2006
1st 2nd 3rd 4th Total
Refining and Supply $73 $409 $273 $126 $881
Retail Marketing -- 10 77 (11) 76
Chemicals 14 8 5 16 43
Logistics 6 12 7 11 36
Coke 14 10 9 17 50
Corporate and Other:
Corporate expenses (16) (11) (11) (20) (58)
Net financing
expenses and
other (12) (12) (9) (16) (49)
79 426 351 123 979
Special items -- -- -- -- --
Consolidated net
income $79 $426 $351 $123 $979
Earnings per share
of common stock
(diluted):
Income before
special items $.59 $3.22 $2.76 $1.00 $7.59
Special items -- -- -- -- --
Net income $.59 $3.22 $2.76 $1.00 $7.59
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
2007
First Quarter
Refining and Supply $76
Retail Marketing 7
Chemicals 9
Logistics 9
Coke 11
Corporate and Other:
Corporate expenses (15)
Net financing expenses and other (12)
85
Special Items 90
Consolidated net income $175
Earnings per share of common stock (diluted):
Income before special items $.70
Special items .74
Net income $1.44
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2006
1st 2nd 3rd 4th Total
REVENUES
Sales and other
operating revenue
(including consumer
excise taxes) $8,569 $10,575 $10,480 $9,012 $38,636
Interest income 10 8 11 5 34
Other income, net 14 7 5 19 45
8,593 10,590 10,496 9,036 38,715
COSTS AND EXPENSES
Cost of products
sold and operating
expenses 7,454 8,858 8,867 7,768 32,947
Consumer excise taxes 628 663 679 664 2,634
Selling, general and
administrative expenses 210 210 215 246 881
Depreciation, depletion
and amortization 112 114 115 118 459
Payroll, property and
other taxes 34 31 33 27 125
Interest cost and debt
expense 26 27 25 27 105
Interest capitalized (1) (4) (5) (6) (16)
8,463 9,899 9,929 8,844 37,135
Income before income
tax expense 130 691 567 192 1,580
Income tax expense 51 265 216 69 601
Net income $79 $426 $351 $123 $979
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2007
First Quarter
REVENUES
Sales and other operating revenue (including
consumer excise taxes) $9,135
Interest income 5
Other income, net 165
9,305
COSTS AND EXPENSES
Cost of products sold and operating expenses 7,988
Consumer excise taxes 641
Selling, general and administrative expenses 221
Depreciation, depletion and amortization 115
Payroll, property and other taxes 37
Interest cost and debt expense 35
Interest capitalized (9)
9,028
Income before income tax expense 277
Income tax expense 102
Net income $175
Sunoco, Inc.
Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
At At
March 31 December 31
2007 2006
ASSETS
Current Assets
Cash and cash equivalents $222 $263
Accounts and notes receivable, net 2,439 2,440
Inventories 981 1,219
Deferred income taxes 93 93
Total Current Assets 3,735 4,015
Investments and long-term receivables 130 129
Properties, plants and equipment, net 6,580 6,365
Deferred charges and other assets 462 473
Total Assets $10,907 $10,982
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $4,035 $4,174
Short-term borrowings 330 275
Current portion of long-term debt 4 7
Taxes payable 233 299
Total Current Liabilities 4,602 4,755
Long-term debt 1,752 1,705
Retirement benefit liabilities 524 523
Deferred income taxes 889 829
Other deferred credits and liabilities 529 477
Minority interests 452 618
Shareholders' equity 2,159 2,075
Total Liabilities and Shareholders' Equity $10,907 $10,982
Sunoco, Inc.
Consolidated Statements of Cash Flows
(Millions of Dollars)
(Unaudited)
For the Three Months
Ended March 31
2007 2006
INCREASES (DECREASES) IN CASH AND CASH
EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $175 $79
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Gain related to issuance of Sunoco Logistics
Partners L.P. limited partnership units (151) --
Depreciation, depletion and amortization 115 112
Deferred income tax expense 92 17
Payments less than expense for retirement plans 11 4
Changes in working capital pertaining to operating
activities, net of effect of acquisitions (22) (518)
Other 17 (7)
Net cash provided by (used in) operating activities 237 (313)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (332) (172)
Acquisitions -- (109)
Proceeds from divestments 6 12
Other (3) (1)
Net cash used in investing activities (329) (270)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from short-term borrowings 55 --
Net proceeds from issuance of long-term debt 48 115
Repayments of long-term debt (4) (2)
Cash distributions to investors in cokemaking
operations (7) (4)
Cash distributions to investors in Sunoco
Logistics Partners L.P. (13) (10)
Cash dividend payments (30) (27)
Purchases of common stock for treasury -- (48)
Proceeds from issuance of common stock under
management incentive plans 4 1
Other (2) --
Net cash provided by financing activities 51 25
Net decrease in cash and cash equivalents (41) (558)
Cash and cash equivalents at beginning of period 263 919
Cash and cash equivalents at end of period $ 222 $ 361
SOURCE Sunoco, Inc.
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http://www.SunocoInc.com/
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PRN Photo Desk, photodesk@prnewswire.com
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CONTACT:
Jerry Davis (media), +1-215-977-6298, or Tom
Harr (investors), +1-215-977-6764, both of Sunoco, Inc.
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