PHILADELPHIA, May 5 /PRNewswire-FirstCall/ -- Sunoco, Inc. (NYSE: SUN)
today reported net income of $116 million ($1.67 per share diluted) for the
first quarter of 2005 versus $89 million ($1.17 per share diluted) for the
2004 first quarter.
(Logo: http://www.newscom.com/cgi-bin/prnh/19981105/PHTH006 )
"Our first quarter results reflect an excellent start to 2005," said John
G. Drosdick, Sunoco Chairman and Chief Executive Officer. "While Refining and
Supply results were up only modestly versus the first-quarter 2004,
significantly higher Chemicals earnings, lower net financing expenses and nine
percent fewer shares outstanding enabled us to increase earnings per share by
43 percent versus the year-ago quarter. With favorable market conditions
entering the driving season, momentum remains positive for the Company."
Regarding the first quarter's results, Drosdick said, "Our Refining and
Supply business continued to lead the way, earning $108 million for the
quarter. Margins, although lower than the 2004 fourth quarter in the
Northeast, were still well above historical norms. Our Refining and Supply
results also benefited from three percent higher production than last year's
first quarter and increased use of discounted high-acid crude oils in
Northeast Refining. We have gradually increased our processing of such crudes
over the past three quarters and averaged approximately 48,000 barrels per day
in the first quarter. With continued strong discounts to light-sweet crude
oils, we would expect to process approximately 60,000 - 70,000 barrels per day
of high-acid crude oils in the second quarter. Without new units or
additional capital, our refining organization has met the challenges of
processing these crude oils, improving our refining margins, and increasing
our crude oil options for the future.
"Chemicals improved most significantly versus last year's first quarter,
earning $33 million versus $12 million a year ago. Despite continued
feedstock cost pressures, Chemicals results have improved year-on-year for
eight consecutive quarters. Fundamentals remain positive and we expect the
recovery to continue.
"In other businesses, Retail Marketing lost $8 million, as retail margins
could not keep pace with persistently rising wholesale prices, which increased
over 40 cents per gallon during the quarter. As we approach the peak driving
season, market conditions for this business are improved.
"Coke and Logistics earned $10 million and $3 million, respectively, in
the quarter. We completed startup of our new coke plant in Haverhill, Ohio in
late March. This plant is expected to increase annual Coke earnings by
approximately $12 million and provide low-cost steam to our adjacent Chemicals
phenol facility. Logistics earnings include a $3 million after-tax charge
associated with a pipeline spill on the Mid-Valley crude oil pipeline.
"We also continued to act on our strategy to return cash to our
shareholders. During the quarter, we increased our dividend by 33 percent,
repurchased 724,500 shares ($70 million) and had our share repurchase
authorization increased by $500 million. With a strong balance sheet and a
favorable market outlook, we have the financial capacity to continue to invest
in our existing assets while opportunistically growing the portfolio and
returning cash to our shareholders."
DETAILS OF FIRST QUARTER RESULTS
REFINING AND SUPPLY
Refining and Supply earned $108 million in the current quarter versus $100
million in the first quarter of 2004. The $8 million increase was largely due
to higher realized margins and higher production volumes. The first quarter
of 2004 included significant scheduled maintenance activity in MidContinent
Refining. Partially offsetting these positive variances were higher expenses,
including fuel and other energy-related expenditures.
Total crude unit throughput averaged 875 thousand barrels daily (97
percent utilization) for the quarter, with total production available for sale
approximating 83 million barrels.
RETAIL MARKETING
Retail Marketing had a loss of $8 million in the first quarter of 2005
versus a loss of $4 million in the first quarter of 2004. The decrease in
results was due largely to lower retail margins for gasoline and distillate,
partially offset by lower expenses. Current quarter results included a $2
million income contribution from the ConocoPhillips sites acquired in April
2004.
CHEMICALS
Chemicals earned $33 million in the first quarter of 2005 versus $12
million in the prior-year period. The increase in earnings was due largely to
higher realized margins for phenol and polypropylene. Total sales volumes and
expenses were largely unchanged versus the year-ago period.
LOGISTICS
Earnings for the Logistics segment were $3 million versus $8 million in
the year-ago period. The decline in earnings was due largely to the $3
million after-tax charge associated with the Mid-Valley pipeline spill and a
$2 million unfavorable tax adjustment.
COKE
The Coke business earned $10 million in the first quarter of 2005 versus
$9 million in the first quarter of 2004.
CORPORATE AND OTHER
Corporate administrative expenses were $16 million after tax in the
current quarter versus $12 million in the comparable quarter last year. The
increase was largely due to higher employee-related expenses, primarily
accruals for stock-based incentive compensation.
Net financing expenses were $14 million after tax in the first quarter of
2005 versus $24 million in the prior-year quarter. The decrease was primarily
due to lower interest expense resulting from 2004 debt restructuring
activities and increased 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, approximately 4,800 retail sites selling
gasoline and convenience items, over 4,300 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 today (May 5, 2005). 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; 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; fluctuations in
supply of feedstocks and demand for products manufactured; changes in product
specifications; availability and pricing of oxygenates; phase-outs or
restrictions on the use of MTBE; 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 with favorable terms; plant construction/repair delays;
nonperformance by 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. These and other applicable risks
and uncertainties have been described more fully in Sunoco's 2004 Form 10-K
filed with the Securities and Exchange Commission on March 4, 2005 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.
2005 First Quarter Financial Summary
(Unaudited)
First Quarter 2005 2004
Revenues $7,209,000,000 $5,245,000,000
Net Income $116,000,000 $89,000,000
Net Income Per Share of
Common Stock:
Basic $1.68 $1.18
Diluted $1.67 $1.17
Weighted-Average Number of Shares
Outstanding (In Millions):
Basic 69.1 75.5
Diluted 69.5 76.3
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars Except Per Share Amounts)
(Unaudited)
Three Months
Ended
March 31
2005 2004 Variance
Refining and Supply $108 $100 $8
Retail Marketing (8) (4) (4)
Chemicals 33 12 21
Logistics 3 8 (5)
Coke 10 9 1
Corporate and Other:
Corporate expenses (16) (12) (4)
Net financing expenses and other (14) (24) 10
Consolidated net income $116 $ 89 $27
Net income per share of common stock
(diluted) $1.67 $1.17 $.50
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2005 2004
TOTAL REFINING AND SUPPLY
Income (Millions of Dollars) $108 $100
Realized Wholesale Margin* (Per Barrel of
Production Available for Sale) $5.93 $5.68
Crude Inputs as Percent of Crude Unit Rated
Capacity** 97 95
Throughputs*** (Thousand Barrels Daily):
Crude Oil 875.0 824.6
Other Feedstocks 52.7 65.6
Total Throughputs 927.7 890.2
Products Manufactured*** (Thousand Barrels Daily):
Gasoline 442.9 419.0
Middle Distillates 304.3 285.1
Residual Fuel 77.3 77.5
Petrochemicals 38.6 33.3
Lubricants 12.6 13.0
Other 89.5 96.0
Total Production 965.2 923.9
Less: Production Used as Fuel in Refinery
Operations 46.7 42.9
Total Production Available for Sale 918.5 881.0
* Wholesale sales revenue less related cost of crude oil, other
feedstocks, product purchases and terminalling and transportation
divided by production available for sale.
** Effective January 1, 2005, crude unit capacity increased from 890 to
900 thousands of barrels daily due to a 10 thousand barrels-per-day
adjustment in MidContinent Refining.
*** Data pertaining to the Eagle Point refinery for the three months
ended March 31, 2004 are based on the amounts attributable to the
79-day ownership period (January 13, 2004 - March 31, 2004) divided
by 91, the number of days in the period.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2005 2004
Northeast Refining*
Realized Wholesale Margin (Per Barrel of
Production Available for Sale) $6.11 $5.74
Market Benchmark 6-3-2-1 (Per Barrel) $4.51 $7.14
Crude Inputs as Percent of Crude Unit Rated
Capacity 99 99
Throughputs** (Thousand Barrels Daily):
Crude Oil 646.2 630.9
Other Feedstocks 46.7 58.9
Total Throughputs 692.9 689.8
Products Manufactured** (Thousand Barrels Daily):
Gasoline 328.6 320.3
Middle Distillates 230.7 226.5
Residual Fuel 73.2 74.7
Petrochemicals 30.1 29.2
Other 57.8 65.3
Total Production 720.4 716.0
Less: Production Used as Fuel in
Refinery Operations 35.5 34.8
Total Production Available for Sale 684.9 681.2
* Comprised of the Marcus Hook, Philadelphia and Eagle Point refineries.
** Data pertaining to the Eagle Point refinery for the three months ended
March 31, 2004 are based on the amounts attributable to the 79-day
period subsequent to the January 13, 2004 acquisition date divided by
91, the number of days in the period.
MidContinent Refining*
Realized Wholesale Margin (Per Barrel of
Production Available for Sale) $5.42 $5.46
Market Benchmark 3-2-1 (Per Barrel) $6.24 $6.39
Crude Inputs as Percent of Crude Unit Rated
Capacity** 93 82
Throughputs (Thousand Barrels Daily):
Crude Oil 228.8 193.7
Other Feedstocks 6.0 6.7
Total Throughputs 234.8 200.4
* Comprised of the Toledo and Tulsa refineries.
** Effective January 1, 2005, crude unit capacity increased from 235 to
245 thousands of barrels daily as a result of a 10 thousand barrels-
per-day adjustment.
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2005 2004
MidContinent Refining (continued)
Products Manufactured (Thousand Barrels Daily):
Gasoline 114.3 98.7
Middle Distillates 73.6 58.6
Residual Fuel 4.1 2.8
Petrochemicals 8.5 4.1
Lubricants 12.6 13.0
Other 31.7 30.7
Total Production 244.8 207.9
Less: Production Used as Fuel in Refinery
Operations 11.2 8.1
Total Production Available for Sale 233.6 199.8
RETAIL MARKETING
Loss (Millions of Dollars) $(8) $(4)
Retail Margin* (Per Barrel):
Gasoline $2.37 $2.68
Middle Distillates $5.06 $6.27
Sales of Petroleum Products (Thousand
Barrels Daily):
Gasoline 289.8 273.7
Middle Distillates 49.4 44.5
339.2 318.2
Total Retail Gasoline Outlets, End of Period 4,805 4,532
Gasoline and Diesel Throughput per Company
Owned or Leased Outlet (M Gal/Site/Month) 132 125
Convenience Stores:
Total Stores, End of Period 735 804
Merchandise Sales (M$/Store/Month) $71 $68
Merchandise Margin (Company Operated)
(% of Sales) 28% 24%
* 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
2005 2004
CHEMICALS
Income (Millions of Dollars) $33 $12
Margin* (Cents per Pound):
All Products** 12.6 9.1
Phenol and Related Products 11.0 8.6
Polypropylene** 15.4 10.4
Sales (Millions of Pounds):
Phenol and Related Products 681 614
Polypropylene 533 575
Plasticizers*** -- 28
Other 33 48
1,247 1,265
* 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.
*** The plasticizer business was divested in January 2004.
COKE
Income (Millions of Dollars) $10 $9
Coke Production (Thousands of Tons) 503 478
Coke Sales (Thousands of Tons) 497 482
Sunoco, Inc.
Financial and Operating Statistics (Unaudited)
For the Three
Months Ended
March 31
2005 2004
CAPITAL EXPENDITURES (Millions of Dollars)
Refining and Supply $149 $70 *
Retail Marketing 11 16
Chemicals 18 6 *
Logistics 8 4 *
Coke 22 16
$208 $112
* Excludes $250 million acquisition from El Paso Corporation of the Eagle
Point refinery and related chemical and logistics assets, which
includes inventory. The purchase price is comprised of $190, $40 and
$20 million attributable to Refining and Supply, Chemicals and
Logistics, respectively.
DEPRECIATION, DEPLETION AND
AMORTIZATION (Millions of Dollars)
Refining and Supply $49 $48
Retail Marketing 27 25
Chemicals 18 17
Logistics 8 7
Coke 3 3
$105 $100
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars Except Per Share Amounts)
(Unaudited)
2004
1st 2nd 3rd 4th Total
Refining and Supply $100 $217 $89 $135 $541
Retail Marketing (4) 20 22 30 68
Chemicals 12 12 30 40 94
Logistics 8 9 9 5 31
Coke 9 9 12 10 40
Corporate and Other:
Corporate expenses (12) (13) (15) (27) (67)
Net financing expenses
and other (24) (20) (19) (15) (78)
89 234 128 178 629
Special items -- -- (24) -- (24)
Consolidated net income $89 $234 $104 $178 $605
Earnings (loss) per share of
common stock (diluted):
Income before special items $1.17 $3.07 $1.71 $2.48 $8.40
Special items -- -- (.32) -- (.32)
Net income $1.17 $3.07 $1.39 $2.48 $8.08
Sunoco, Inc.
Earnings Profile of Sunoco Businesses (after tax)
(Millions of Dollars Except Per Share Amounts)
(Unaudited)
2005
First Quarter
Refining and Supply $108
Retail Marketing (8)
Chemicals 33
Logistics 3
Coke 10
Corporate and Other:
Corporate expenses (16)
Net financing expenses and other (14)
116
Special items --
Consolidated net income $116
Earnings per share of common stock (diluted):
Income before special items $1.67
Special items --
Net income $1.67
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2004
1st 2nd 3rd 4th Total
REVENUES
Sales and other operating
revenue (including consumer
excise taxes) $5,232 $6,265 $6,575 $7,396 $25,468
Interest income 2 1 4 3 10
Other income (loss), net 11 10 (21) 30 30
5,245 6,276 6,558 7,429 25,508
COSTS AND EXPENSES
Cost of products sold and
operating expenses 4,254 4,949 5,417 6,114 20,734
Consumer excise taxes 498 571 611 602 2,282
Selling, general and
administrative expenses 187 223 203 260 873
Depreciation, depletion and
amortization 100 100 103 106 409
Payroll, property and
other taxes 33 28 30 27 118
Interest cost and debt expense 29 28 28 23 108
Interest capitalized (1) (2) (3) (5) (11)
5,100 5,897 6,389 7,127 24,513
Income before income
tax expense 145 379 169 302 995
Income tax expense 56 145 65 124 390
Net income $89 $234 $104 $178 $605
Sunoco, Inc.
Consolidated Statements of Income
(Millions of Dollars)
(Unaudited)
2005
First Quarter
REVENUES
Sales and other operating revenue (including
consumer excise taxes) $7,191
Interest income 3
Other income, net 15
7,209
COSTS AND EXPENSES
Cost of products sold and operating expenses 6,059
Consumer excise taxes 585
Selling, general and administrative expenses 209
Depreciation, depletion and amortization 105
Payroll, property and other taxes 36
Interest cost and debt expense 23
Interest capitalized (6)
7,011
Income before income tax expense 198
Income tax expense 82
Net income $116
Sunoco, Inc.
Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
At At
March 31 December 31
2005 2004
ASSETS
Current Assets
Cash and cash equivalents $346 $405
Accounts and notes receivable, net 1,656 1,271
Inventories 912 765
Deferred income taxes 110 110
Total Current Assets 3,024 2,551
Investments and long-term receivables 104 115
Properties, plants and equipment, net 5,094 4,966
Prepaid retirement costs 12 11
Deferred charges and other assets 445 436
Total Assets $8,679 $8,079
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $3,094 $2,570
Short-term borrowings and current portion
of long-term debt 103 103
Taxes payable 331 349
Total Current Liabilities 3,528 3,022
Long-term debt 1,374 1,379
Retirement benefit liabilities 538 539
Deferred income taxes 781 755
Other deferred credits and liabilities 323 247
Minority interests 521 530
Shareholders' equity 1,614 1,607
Total Liabilities and Shareholders' Equity $8,679 $8,079
Sunoco, Inc.
Consolidated Statements of Cash Flows
(Millions of Dollars)
(Unaudited)
For the Three Months
Ended March 31
2005 2004
INCREASES (DECREASES) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $116 $89
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 105 100
Deferred income tax expense 26 35
Proceeds from power contract restructuring 48 --
Payments less than (in excess of) expense
for retirement plans (1) 1
Changes in working capital pertaining to
operating activities, net of effect of
acquisitions (51) (33)
Other 4 (4)
Net cash provided by operating activities 247 188
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (208) (112)
Acquisitions -- (235)
Proceeds from divestments 12 97
Other 3 1
Net cash used in investing activities (193) (249)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from short-term borrowings -- 100
Net proceeds from issuance of long-term debt 1 2
Repayments of long-term debt (5) (102)
Cash distributions to investors in
cokemaking operations (11) (19)
Cash distributions to investors in
Sunoco Logistics Partners L.P. (6) (3)
Cash dividend payments (21) (21)
Purchases of common stock for treasury (70) (37)
Proceeds from issuance of common stock under
management incentive and employee option plans 5 24
Other (6) (3)
Net cash used in financing activities (113) (59)
Net decrease in cash and cash equivalents (59) (120)
Cash and cash equivalents at beginning of period 405 431
Cash and cash equivalents at end of period $346 $311
SOURCE Sunoco, Inc.
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http://www.SunocoInc.com
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/19981105/PHTH006
PRN Photo Desk, photodesk@prnewswire.com
Company News On-Call:
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CONTACT:
Jerry Davis (media), +1-215-977-6298, or
Terry Delaney (investors), +1-215-977-6106, both of Sunoco, Inc.
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