Sunoco Announces First Quarter 2012 Results
PHILADELPHIA, May 02, 2012 (BUSINESS WIRE) --
Copyright Business Wire 2012
Sunoco, Inc. (NYSE: SUN) reported net income attributable to Sunoco,
Inc. shareholders of $248 million ($2.32 per share diluted) for the
first quarter of 2012 versus a net loss attributable to Sunoco, Inc.
shareholders of $101 million ($0.84 per share diluted) for the first
quarter of 2011. Excluding special items, Sunoco had a loss of $53
million ($0.49 per share diluted) for the first quarter of 2012 versus a
loss of $121 million ($1.00 per share diluted) for the first quarter of
2011. Key first quarter details include:
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Logistics contributed pretax income of $57 million, while Retail
Marketing realized a $6 million pretax loss
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Refining and Supply reported a pretax loss of $87 million
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Pretax income from special items totaled $493 million including a $497
million LIFO inventory gain and a $104 million pretax gain related to
the participation payment received in April 2012 in connection with
the sale of the Toledo refinery in March 2011
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Completed the separation of SunCoke Energy, Inc. in January 2012
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Repurchased 1.26 million shares of Company stock for $50 million and
contributed $200 million to trusts established for retiree medical
benefits
"Sunoco's focus on the high-return logistics segment continues to bear
fruit as Sunoco Logistics Partners L.P. had another excellent quarter
and contributed $57 million in pretax income to Sunoco," said Brian P.
MacDonald, Sunoco's president and chief executive officer. "Sharply
rising crude prices pressured margins in Refining and Supply, as well as
Retail Marketing, resulting in losses in both segments."
"We also continued to make progress on our strategic initiatives,
spending approximately $380 million in the first quarter to reduce debt,
fund our retiree medical trusts and repurchase shares. However, our cash
position at the end of the quarter remains strong at $2 billion."
Commenting on the Company's recently announced merger with Energy
Transfer Partners, L.P. ("ETP"), MacDonald said, "The combination with
ETP is a strategically and financially compelling combination that
provides substantial value-creation opportunities for Sunoco
shareholders and ETP unitholders and will improve the ability of
Sunoco's logistics and retail businesses to deliver on their full
potential. We believe our shareholders will receive an attractive
premium. Because the consideration to be received by Sunoco shareholders
consists of both cash and ETP units, our shareholders can also benefit
from the potential upside of ETP's attractive yield and improving growth
profile. In addition, under the merger agreement, Sunoco will continue
its plans for exiting its refining business as previously announced, as
well as continue its plans for the proposed refinery joint venture being
discussed by Sunoco and The Carlyle Group."
DETAILS OF FIRST QUARTER RESULTS
Logistics
Logistics earned $57 million pretax in the first quarter of 2012 versus
$31 million in the first quarter of 2011. The increase in earnings was
primarily due to expanded crude oil volumes and margins resulting from
market related opportunities in West Texas. Higher crude oil pipeline
fees and earnings attributable to acquisitions completed during 2011
also contributed to the improved results.
Retail Marketing
Retail Marketing had a pretax loss of $6 million in the current quarter
versus pretax income of $12 million in the first quarter of 2011. The
decrease in earnings was primarily attributable to higher expenses
largely associated with the increase in company-operated sites and lower
retail gasoline margins which were negatively impacted by rising crude
oil costs during the quarter.
Refining and Supply
Refining and Supply had a pretax loss of $87 million in the current
quarter versus a $138 million loss in the first quarter of 2011. The
increase in earnings was largely due to lower expenses attributable to
the idling of the Marcus Hook refinery in December 2011 and lower
depreciation expense resulting from significant asset write-downs during
the second half of 2011. These positive factors were partially offset by
lower realized margins and production volumes. Average crude throughputs
were down 36 and 27 percent, respectively, versus the first and fourth
quarters of 2011 as a result of the sale of the Toledo refinery in March
2011 and the idling of the Marcus Hook refinery.
Other
Corporate administrative expenses were $14 million pretax in the current
quarter versus $22 million in the first quarter of 2011. The decrease
was largely driven by lower staffing and incentive compensation costs.
Net financing expenses and other were $31 million pretax in the first
quarter of 2012 compared to $28 million in the first quarter of 2011.
The increase is primarily attributable to higher interest expense
associated with borrowings of Sunoco Logistics Partners L.P.
Income Taxes
Excluding the impact of special items, the tax benefit on the $81
million pretax loss from continuing operations attributable to Sunoco,
Inc. shareholders for the first quarter of 2012 was $28 million compared
to a tax benefit of $24 million on a $145 million pretax loss from
continuing operations attributable to Sunoco, Inc. shareholders during
the first quarter of 2011. The increase in the tax benefit was primarily
attributable to the absence of $6 million of unfavorable tax adjustments
in the first quarter of 2011. The first quarter of 2012 included $3
million of favorable adjustments.
Special Items
During the first quarter of 2012, Sunoco recognized gains of $497
million ($302 million after tax) attributable to the reduction of crude
oil and refined product LIFO inventories primarily attributable to the
idling of the Marcus Hook refinery; recognized a $104 million gain ($61
million after tax) attributable to the participation payment received
from PBF Energy, Inc. ("PBF") based on PBF's earnings of the Toledo
refinery which Sunoco divested in March 2011; recorded a $35 million
provision ($21 million after tax) for severance, contract terminations
and idling expenses largely attributable to the Marcus Hook idling;
recorded a $53 million provision ($31 million after tax) for additional
environmental reserves attributable to current and prior refining
operations; recorded a $21 million provision ($11 million after tax)
primarily related to additional stock-based compensation expense related
to the spin-off of SunCoke Energy and an insurance reserve adjustment;
and recognized income from discontinued cokemaking and chemicals
operations of $1 million ($1 million after tax). The total net impact of
special items during the first quarter of 2012 was income of $493
million ($301 million after tax).
During the first quarter of 2011, Sunoco recognized a $15 million gain
($4 million after tax) related to the divestment of the Toledo refinery
and related inventory; recognized a $42 million gain ($26 million after
tax) resulting from the reduction of crude oil and refined product
inventories at the Toledo refinery prior to its divestment; recorded a
$6 million provision ($4 million after tax) primarily for pension
settlement losses in connection with business improvement initiatives
carried out over the past few years; recorded a $5 million increase to
deferred income taxes in part due to apportionment changes as a result
of the sale of the Toledo refinery; and recognized pretax income from
discontinued cokemaking and chemicals operations of $4 million ($1
million loss after tax). The total net impact of special items during
the first quarter of 2011 was a pretax gain of $55 million ($20 million
after tax).
Sunoco is a leading logistics and retail company. The company owns the
general partner interest of Sunoco Logistics Partners L.P. (NYSE: SXL),
which consists of a 2-percent ownership interest and incentive
distribution rights, and owns a 32-percent interest in the Partnership's
limited partner units. Sunoco Logistics Partners L.P. is an owner and
operator of complementary pipeline, terminal and crude oil acquisition
and marketing assets. Sunoco also has a network of approximately 4,900
retail locations in 23 states.
Anyone interested in obtaining further insights into the first quarter's
results can monitor the Company's quarterly teleconference call, which
is scheduled for 5:00 p.m. ET on May 2, 2012. It can be accessed through
Sunoco's website - 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. These forward-looking statements
are based upon assumptions by the Company concerning future conditions,
any or all of which ultimately may prove to be inaccurate, and upon the
current knowledge, beliefs and expectations of Company management. These
forward-looking statements are not guarantees of future performance. The
reader should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. The
Company expressly disclaims any obligation to update or alter its
forward-looking statements, whether as a result of new information,
future events or otherwise.
Forward-looking statements are inherently uncertain and involve
significant known and unknown risks and uncertainties (many of which are
beyond the control of the Company) that could cause actual results to
differ materially from those discussed in this release.
Such risks and uncertainties include economic, business, competitive
and/or regulatory factors affecting the Company's business, as well as
uncertainties related to the outcomes of pending or future litigation,
legislation, or regulatory actions. Among such risks are: changes in
crude oil or natural gas prices, refining, marketing and chemicals
margins, or other market conditions affecting the oil and gas industry;
higher-than-expected costs of, or delays in, planned development or
completion of repair projects, capital projects, acquisitions, or
dispositions; operational interruptions, unforeseen technical
difficulties and/or changes in technical or operating conditions;
general domestic and international economic and political conditions,
wars and acts of terrorism or sabotage; the outcome of commercial
negotiations; the actions of competitors or regulators; the
competitiveness of alternate-energy sources or product substitutes;
technological developments; liability resulting from pending or future
litigation; significant investment or product changes and/or liability
for remedial actions or assessments under existing or future
environmental regulations; gains and losses related to the acquisition,
disposition or impairment of assets; recapitalizations; access to, or
significantly higher costs of, capital; the effects of changes in
accounting rules applicable to the Company; and changes in tax,
environmental and other laws and regulations applicable to the Company's
businesses. Unpredictable or unknown factors not discussed in this
release also could have material adverse effects on forward-looking
statements.
In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company has included in its Annual
Report on Form 10-K for the year ended December 31, 2011 and in its
subsequent Form 10-Q and Form 8-K filings, cautionary language
identifying other important factors (though not necessarily all such
factors) that could cause future outcomes to differ materially from
those set forth in the forward-looking statements. For more information
concerning these factors, see the Company's Securities and Exchange
Commission filings, available on the Company's website at www.SunocoInc.com.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
In connection with the proposed business combination transaction between
Energy Transfer Partners, L.P. ("ETP") and Sunoco, Inc. ("Sunoco"), ETP
plans to file with the U.S. Securities and Exchange Commission (the
"SEC") a registration statement on Form S-4 that will contain a proxy
statement/prospectus to be mailed to the Sunoco shareholders in
connection with the proposed transaction. THE REGISTRATION STATEMENT AND
THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT
ETP, SUNOCO, THE PROPOSED TRANSACTION AND RELATED MATTERS. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE
PROXY/PROSPECTUS CAREFULLY WHEN THEY BECOME AVAILABLE. Investors and
security holders will be able to obtain free copies of the registration
statement and the proxy statement/prospectus and other documents filed
with the SEC by ETP and Sunoco through the web site maintained by the
SEC at www.sec.gov.
In addition, investors and security holders will be able to obtain free
copies of the registration statement and the proxy statement/prospectus
by phone, e-mail or written request by contacting the investor relations
department of ETP or Sunoco at the following:
PARTICIPANTS IN THE SOLICITATION
ETP and Sunoco, and their respective directors, executive officers and
affiliates, may be deemed to be participants in the solicitation of
proxies in respect of the proposed transactions contemplated by the
merger agreement. Information regarding directors and executive officers
of ETP's general partner is contained in ETP's Form 10-K for the year
ended December 31, 2011, which has been filed with the SEC. Information
regarding Sunoco's directors and executive officers is contained in
Sunoco's definitive proxy statement dated March 16, 2012, which is filed
with the SEC. A more complete description will be available in the
registration statement and the proxy statement/prospectus.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this document regarding the proposed transaction between
ETP and Sunoco, the expected timetable for completing the proposed
transaction, future financial and operating results, benefits and
synergies of the proposed transaction, future opportunities for the
combined company, and any other statements about ETP, Energy Transfer
Equity, L.P. ("ETE"), Sunoco Logistics Partners L.P. ("SXL") or Sunoco
managements' future expectations, beliefs, goals, plans or prospects
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that are not
statements of historical fact (including statements containing the words
"believes," "plans," "anticipates," "expects," "estimates" and similar
expressions) should also be considered to be forward looking statements.
There are a number of important factors that could cause actual results
or events to differ materially from those indicated by such forward
looking statements, including: the ability to consummate the proposed
transaction; the ability to obtain the requisite regulatory approvals,
Sunoco shareholder approval and the satisfaction of other conditions to
consummation of the transaction; the ability of ETP to successfully
integrate Sunoco's operations and employees; the ability to realize
anticipated synergies and cost savings; the potential impact of
announcement of the transaction or consummation of the transaction on
relationships, including with employees, suppliers, customers and
competitors; the ability to achieve revenue growth; national,
international, regional and local economic, competitive and regulatory
conditions and developments; technological developments; capital and
credit markets conditions; inflation rates; interest rates; the
political and economic stability of oil producing nations; energy
markets, including changes in the price of certain commodities; weather
conditions; environmental conditions; business and regulatory or legal
decisions; the pace of deregulation of retail natural gas and
electricity and certain agricultural products; the timing and success of
business development efforts; terrorism; and the other factors described
in the Annual Reports on Form 10-K for the year ended December 31, 2011
filed with the SEC by ETP, ETE, SXL and Sunoco. ETP, ETE, SXL and Sunoco
disclaim any intention or obligation to update any forward looking
statements as a result of developments occurring after the date of this
document.
SOURCE: Sunoco, Inc.
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