PHILADELPHIA, May 3 /PRNewswire-FirstCall/ -- Sunoco, Inc. (NYSE: SUN)
today reported net income of $79 million ($.59 per share diluted) for the
first quarter of 2006 versus $116 million ($.83 per share diluted) for the
first quarter of 2005. There were no special items in either quarter.
(Logo: http://www.newscom.com/cgi-bin/prnh/19981105/PHTH006 )
"First-quarter earnings were impacted by a high level of refinery
maintenance and rising crude oil prices during the quarter," said John G.
Drosdick, Sunoco Chairman and Chief Executive Officer. "High
beginning-of-the- year refined product inventories and unseasonably warm
winter weather in the northeastern United States negatively impacted
refining margins while rising crude oil prices squeezed retail gasoline and
chemical margins during the quarter."
Drosdick continued, "Utilization at our refining facilities was limited
to 93 percent for the quarter due to maintenance ahead of this year's
driving season. We recently completed a turnaround at our Toledo refinery
and are now positioned to run at capacity levels during the peak summer
demand months. We are also near completion of the necessary capital
investments to ready our refining system for the upcoming diesel fuel
specification changes. Still, the current roll-out of ethanol-blended
gasoline and the transition to ultra-low- sulfur diesel fuel present
significant manufacturing and logistical challenges for the industry. We
will direct our best efforts to being a reliable supplier through these
transitions.
"We will continue to invest significant capital in our refining
facilities. We have spent approximately $700 million to comply with the new
low-sulfur gasoline and on-road diesel requirements. Looking ahead, over
the next three years, we plan to spend approximately $2 billion to increase
production and further improve and maintain our refining system."
DETAILS OF FIRST QUARTER RESULTS
REFINING AND SUPPLY
Refining and Supply earned $73 million in the first quarter versus $108
million in the first quarter of 2005. The decrease in earnings was due to
lower production volumes in Northeast Refining and higher expenses. The
lower volumes were mainly a result of a previously announced scheduled
maintenance turnaround at the Philadelphia refinery in late February and
early March, and the Toledo refinery maintenance turnaround at the end of
March and the beginning of April. Higher expenses in the quarter were
mainly the result of higher purchased fuel costs and expenses associated
with maintenance activity. Also contributing to the increase in expenses
were operating costs to produce low-sulfur gasoline.
Realized margins for Refining and Supply in the first quarter were
slightly higher than the year-ago period with lower margins in Northeast
Refining being offset by higher margins in MidContinent Refining.
RETAIL MARKETING
Retail Marketing posted break-even results in the first quarter of 2006
versus an $8 million loss in the first quarter of 2005. While retail
gasoline margins were poor during most of the current quarter, they were
slightly higher than the year-ago period. Monthly gasoline and diesel
throughput per company owned or leased outlet was approximately the same
versus the first quarter of 2005.
CHEMICALS
Chemicals earned $14 million in the first quarter of 2006 versus $33
million in the prior-year period. The decrease in earnings was due
primarily to lower margins for both phenol and polypropylene and higher
expenses, due in part to higher fuel and utility costs.
LOGISTICS
Earnings for the Logistics segment were $6 million in the first quarter
versus $3 million in the first quarter of 2005. Earnings in last year's
first quarter were impacted by a $3 million after-tax charge associated
with a Mid- Valley pipeline spill and a $2 million unfavorable tax
adjustment.
COKE
The Coke business earned $14 million in the first quarter of 2006
versus $10 million in the first quarter of 2005. The increase is mainly
attributable to the addition of the Haverhill Coke Plant which began
operations in March 2005.
CORPORATE AND OTHER
Corporate administrative expenses were $16 million after tax in both
the first quarter of 2006 and the first quarter of 2005.
Net financing expenses were $12 million after tax in the first quarter
of 2006 versus $14 million in the first quarter of 2005. The decline was
primarily due to higher interest income, partially offset by a decrease in
capitalized 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, over 4,700 retail sites
selling gasoline and convenience items, approximately 5,400 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 also has 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 4, 2006. 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 economic, financial and business conditions;
competitive products and pricing; effects of weather conditions and natural
disasters on the Company's operating facilities and on product supply and
demand; changes in refined product 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; fluctuations in supply of feedstocks and demand for products
manufactured; changes in product specifications; availability and pricing
of ethanol; changes in operating conditions and costs; changes in the
expected level of environmental capital, operating or remediation
expenditures; age of, and changes in the reliability and efficiency of, the
Company's or a third party's operating facilities; potential equipment
malfunction; potential labor relations problems; the legislative and
regulatory environment; 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; nonperformance 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, including the
impact of potential terrorist acts and international hostilities; and
changes in the status of, or initiation of new, litigation, arbitration or
other proceedings. These and other applicable risks and uncertainties have
been described more fully in Sunoco's 2005 Form 10-K filed with the
Securities and Exchange Commission on March 3, 2006 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.
2006 First Quarter Financial Summary
(Unaudited)
First Quarter 2006 2005
Revenues $8,593,000,000 $7,209,000,000
Net Income $79,000,000 $116,000,000
Net Income Per Share of Common Stock:
Basic $.59 $.84
Diluted $.59 $.83
Weighted-Average Number of Shares
Outstanding (In Millions):
Basic 132.9 138.2
Diluted 133.6 139.1
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
Three Months
Ended
March 31
2006 2005 Variance
Refining and Supply $73 $108 $(35)
Retail Marketing -- (8) 8
Chemicals 14 33 (19)
Logistics 6 3 3
Coke 14 10 4
Corporate and Other:
Corporate expenses (16) (16) --
Net financing expenses and other (12) (14) 2
Consolidated net income $79 $116 $(37)
Net income per share of common
stock (diluted) $.59 $.83 $(.24)
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2006 2005
TOTAL REFINING AND SUPPLY
Income (Millions of Dollars) $73 $108
Realized Wholesale Margin* (Per Barrel of
Production Available for Sale) $6.13 $5.93
Crude Inputs as Percent of Crude Unit Rated
Capacity 93 97
Throughputs (Thousand Barrels Daily):
Crude Oil 835.3 875.0
Other Feedstocks 68.8 52.7
Total Throughputs 904.1 927.7
Products Manufactured (Thousand Barrels Daily):
Gasoline 427.6 442.9
Middle Distillates 308.1 304.3
Residual Fuel 70.8 77.3
Petrochemicals 35.8 38.6
Lubricants 13.2 12.6
Other 85.4 89.5
Total Production 940.9 965.2
Less: Production Used as Fuel in Refinery
Operations 44.3 46.7
Total Production Available for Sale 896.6 918.5
*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
2006 2005
Northeast Refining*
Realized Wholesale Margin (Per Barrel of
Production Available for Sale) $5.35 $6.11
Market Benchmark 6-3-2-1 (Per Barrel) $4.49 $4.51
Crude Inputs as Percent of Crude Unit Rated
Capacity 93 99
Throughputs (Thousand Barrels Daily):
Crude Oil 610.1 646.2
Other Feedstocks 60.2 46.7
Total Throughputs 670.3 692.9
Products Manufactured (Thousand Barrels Daily):
Gasoline 319.2 328.6
Middle Distillates 230.2 230.7
Residual Fuel 66.4 73.2
Petrochemicals 28.9 30.1
Other 51.6 57.8
Total Production 696.3 720.4
Less: Production Used as Fuel in Refinery
Operations 32.5 35.5
Total Production Available for Sale 663.8 684.9
*Comprised of the Marcus Hook, Philadelphia and Eagle Point refineries.
MidContinent Refining*
Realized Wholesale Margin (Per Barrel of
Production Available for Sale) $8.38 $5.42
Market Benchmark 3-2-1 (Per Barrel) $7.92 $6.24
Crude Inputs as Percent of Crude Unit Rated
Capacity 92 93
Throughputs (Thousand Barrels Daily):
Crude Oil 225.2 228.8
Other Feedstocks 8.6 6.0
Total Throughputs 233.8 234.8
* Comprised of the Toledo and Tulsa refineries.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2006 2005
MidContinent Refining (continued)
Products Manufactured (Thousand Barrels Daily):
Gasoline 108.4 114.3
Middle Distillates 77.9 73.6
Residual Fuel 4.4 4.1
Petrochemicals 6.9 8.5
Lubricants 13.2 12.6
Other 33.8 31.7
Total Production 244.6 244.8
Less: Production Used as Fuel in Refinery
Operations 11.8 11.2
Total Production Available for Sale 232.8 233.6
RETAIL MARKETING
Loss (Millions of Dollars) $-- $(8)
Retail Margin* (Per Barrel):
Gasoline $2.85 $2.37
Middle Distillates $5.02 $5.06
Sales of Petroleum Products (Thousand
Barrels Daily):
Gasoline 287.5 289.8
Middle Distillates 46.5 49.4
334.0 339.2
Total Retail Gasoline Outlets, End of Period 4,737 4,805
Gasoline and Diesel Throughput per Company
Owned or Leased Outlet (M Gal/Site/Month) 132 132
Convenience Stores:
Total Stores, End of Period 739 735
Merchandise Sales (M$/Store/Month) $71 $71
Merchandise Margin (Company Operated)
(% of Sales) 28% 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
2006* 2005
CHEMICALS
Income (Millions of Dollars) $14 $33
Margin** (Cents per Pound):
All Products*** 10.9 12.6
Phenol and Related Products 9.1 11.0
Polypropylene*** 13.2 15.4
Sales (Millions of Pounds):
Phenol and Related Products 633 681
Polypropylene 562 533
Other 21 33
1,216 1,247
*The income and margin data reflect a new pricing formula for 2006 sales
of phenol to Honeywell International Inc. based upon unfavorable
arbitration decisions in the third quarter of 2005 and first quarter of
2006. The new pricing formula remains in effect until another
arbitration establishes the price for 2005 and beyond.
**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) $6 $3
Pipeline and Terminal Throughput
(Thousand Barrels Daily)*:
Unaffiliated Customers 1,038 833
Affiliated Customers 1,619 1,650
2,657 2,483
* Excludes joint-venture operations.
COKE*
Income (Millions of Dollars) $14 $10
Coke Production (Thousands of Tons) 631 503
Coke Sales (Thousands of Tons) 647 497
*Includes amounts attributable to the Haverhill facility, which commenced
operations in March 2005.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2006 2005
CAPITAL EXPENDITURES (Millions of Dollars)
Refining and Supply $130 $149
Retail Marketing 12 11
Chemicals 11 18
Logistics 16* 8
Coke 3 22
$172 $208
*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 $49
Retail Marketing 25 27
Chemicals 18 18
Logistics 9 8
Coke 4 3
$112 $105
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
2005
1st 2nd 3rd 4th Total
Refining and Supply $108 $212 $341 $286 $947
Retail Marketing (8) 7 6 25 30
Chemicals 33 30 23 8 94
Logistics 3 9 7 3 22
Coke 10 13 15 10 48
Corporate and Other:
Corporate expenses (16) (16) (25) (27) (84)
Net financing expenses
and other (14) (13) (10) (8) (45)
116 242 357 297 1,012
Special items -- -- (28) (10) (38)
Consolidated net income $116 $242 $329 $287 $974
Earnings (loss) per share
of common stock
(diluted):
Income before special
items $.83 $1.75 $2.60 $2.19 $7.36
Special items -- -- (.21) (.07) (.28)
Net income $.83 $1.75 $2.39 $2.12 $7.08
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars, Except Per-Share Amounts)
(Unaudited)
2006
First Quarter
Refining and Supply $73
Retail Marketing --
Chemicals 14
Logistics 6
Coke 14
Corporate and Other:
Corporate expenses (16)
Net financing expenses and other (12)
79
Special items --
Consolidated net income $79
Earnings per share of common stock
(diluted):
Income before special items $.59
Special items --
Net income $.59
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2005
1st 2nd 3rd 4th Total
REVENUES
Sales and other operating
revenue (including
consumer excise taxes) $7,191 $7,970 $9,345 $9,248 $33,754
Interest income 3 3 6 11 23
Other income (loss), net 15 17 (56) 11 (13)
7,209 7,990 9,295 9,270 33,764
COSTS AND EXPENSES
Cost of products sold and
operating expenses 6,059 6,581 7,702 7,686 28,028
Consumer excise taxes 585 640 675 688 2,588
Selling, general and
administrative expenses 209 225 242 270 946
Depreciation, depletion
and amortization 105 102 109 113 429
Payroll, property and
other taxes 36 28 33 27 124
Interest cost and debt
expense 23 23 25 23 94
Interest capitalized (6) (6) (8) (5) (25)
7,011 7,593 8,778 8,802 32,184
Income before income tax
expense 198 397 517 468 1,580
Income tax expense 82 155 188 181 606
Net income $116 $242 $329 $287 $974
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2006
First Quarter
REVENUES
Sales and other operating revenue (including
consumer excise taxes) $8,569
Interest income 10
Other income, net 14
8,593
COSTS AND EXPENSES
Cost of products sold and operating expenses 7,454
Consumer excise taxes 628
Selling, general and administrative expenses 210
Depreciation, depletion and amortization 112
Payroll, property and other taxes 34
Interest cost and debt expense 26
Interest capitalized (1)
8,463
Income before income tax expense 130
Income tax expense 51
Net income $79
Sunoco, Inc.
Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
At At
March 31 December 31
2006 2005
ASSETS
Current Assets
Cash and cash equivalents $361 $919
Accounts and notes receivable, net 1,873 1,754
Inventories 1,136 799
Deferred income taxes 216 215
Total Current Assets 3,586 3,687
Investments and long-term receivables 144 143
Properties, plants and equipment, net 5,826 5,658
Prepaid retirement costs 12 12
Deferred charges and other assets 445 431
Total Assets $10,013 $9,931
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $3,680 $3,695
Current portion of long-term debt 240 177
Taxes payable 336 338
Total Current Liabilities 4,256 4,210
Long-term debt 1,284 1,234
Retirement benefit liabilities 567 563
Deferred income taxes 844 817
Other deferred credits and liabilities 400 409
Minority interests 635 647
Shareholders' equity 2,027 2,051
Total Liabilities and Shareholders' Equity $10,013 $9,931
Sunoco, Inc.
Consolidated Statements of Cash Flows
(Millions of Dollars)
(Unaudited)
For the Three Months
Ended March 31
2006 2005
INCREASES (DECREASES) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $79 $116
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation, depletion and amortization 112 105
Deferred income tax expense 17 26
Proceeds from power contract restructuring -- 48
Payments less than (in excess of) expense for
retirement plans 4 (1)
Changes in working capital pertaining to operating
activities, net of effect of acquisitions (518) (51)
Other (7) 4
Net cash provided by (used in) operating activities (313) 247
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (172) (208)
Acquisitions (109) --
Proceeds from divestments 12 12
Other (1) 3
Net cash used in investing activities (270) (193)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of long-term debt 115 1
Repayments of long-term debt (2) (5)
Cash distributions to investors in
cokemaking operations (4) (11)
Cash distributions to investors in
Sunoco Logistics Partners L.P. (10) (6)
Cash dividend payments (27) (21)
Purchases of common stock for treasury (48) (70)
Proceeds from issuance of common stock under
management incentive plans 1 5
Other -- (6)
Net cash provided by (used in) financing activities 25 (113)
Net decrease in cash and cash equivalents (558) (59)
Cash and cash equivalents at beginning of period 919 405
Cash and cash equivalents at end of period $361 $346
SOURCE Sunoco, Inc.
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http://www.SunocoInc.com
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CONTACT:
Jerry Davis (media), +1-215-977-6298, or Tom
Harr (investors), +1-215-977-6764, both of Sunoco
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