(Source: Business Wire)
Sunoco, Inc. (NYSE: SUN) today reported a net loss attributable to Sunoco shareholders of $55 million ($0.47 per share diluted) for the second quarter of 2009 versus net income attributable to Sunoco shareholders of $82 million ($0.70 per share diluted) for the second quarter of 2008. Excluding special items, Sunoco had a loss for the 2009 second quarter of $31 million ($0.27 per share diluted) versus 2008 second quarter income of $61 million ($0.52 per share diluted).
For the first half of 2009, Sunoco reported a net loss attributable to Sunoco shareholders of $43 million ($0.37 per share diluted) versus net income attributable to Sunoco shareholders of $23 million ($0.20 per share diluted) for the first half of 2008. Excluding special items, Sunoco had income of $28 million ($0.24 per share diluted) in the first half of 2009 versus 2008 first half income of $2 million ($0.02 per share diluted).
"During the second quarter, refining and chemicals results were impacted by weak demand and rising crude prices, but our other businesses continued to generate steady earnings. Our refining operating results were also negatively affected by a $14 million after-tax charge associated with the permanent shutdown of the ethylene complex at our Marcus Hook refinery. This decision was made after a fire impacted the operations, and it was determined that the demand for those products did not justify repairing or replacing equipment damaged in the fire," said Lynn Elsenhans, Sunoco's Chairman and Chief Executive Officer. "The earnings contribution from our non-refining businesses improved to $78 million in the second quarter, up from $47 million in the prior-year period. Retail Marketing modestly improved from the prior year although weak demand and rising feedstock costs continued to limit its contributions. Logistics earned $26 million with strong results from Sunoco Logistics Partners L.P. and our Coke segment earned $42 million."
Commenting on the Company's outlook, Elsenhans said, "We continue to expect a challenging market for petroleum and chemical products due to ongoing economic weakness and additional global supply. However, the Company remains focused on executing our strategic plan by improving our competitive cost position and optimizing our portfolio and operational performance. Specifically, during the quarter, we completed the sale of the Tulsa refinery and related inventory on June 1 for $157 million and acquired Northeast Biofuels, LP, a 100 million gallon-per-year ethanol facility in New York, for $9 million. We also continued to make progress on cost reductions through our business improvement initiative. We remain focused on maintaining our financial flexibility and spending discipline as we manage through this refining down cycle."
DETAILS OF SECOND QUARTER RESULTS
REFINING AND SUPPLY- Continuing Operations
Refining and Supply had a loss from continuing operations totaling $77 million in the current quarter versus income of $27 million in the second quarter of 2008. The decrease in results was due to lower realized margins, a $14 million after-tax write-off of certain assets in connection with the shutdown of the ethylene complex at the Marcus Hook refinery and lower production volumes, partially offset by lower expenses. Our realized margins and crude utilization rate were negatively affected by market weakness and rising crude prices during the quarter. The overall crude utilization rate was 78 percent for the quarter. Third quarter production will also be impacted by a planned turnaround at our Toledo refinery which commenced in early August and will extend to mid-September. In addition, we are taking a one-month maintenance outage at a fluid catalytic cracking unit in our Philadelphia refinery for repairs that should improve the unit's operating performance.
REFINING AND SUPPLY- Discontinued Operations
Discontinued Tulsa refining operations had a loss of $6 million in the second quarter of 2009 versus income of $5 million in the second quarter of 2008. The decline in operating results was primarily attributable to lower realized margins and production volumes, partially offset by lower expenses. The second quarter of 2009 reflects only two months of production as the Tulsa refinery was sold on June 1, 2009.
RETAIL MARKETING
Retail Marketing earned $10 million in the current quarter versus break-even results in the second quarter of 2008. The increase in earnings was primarily due to lower expenses, partially offset by lower average retail gasoline margins. Sales volumes were relatively flat versus the year-ago quarter, but retail gasoline margins were negatively affected by rising wholesale prices and a weak demand environment.
CHEMICALS
Chemicals had break-even results in the second quarter of 2009 versus income of $3 million in the second quarter of 2008. The decrease in results was due primarily to lower margins and sales volumes, partially offset by lower expenses and a $2 million favorable after-tax lower of cost or market adjustment to its polypropylene inventory previously written down in the fourth quarter of 2008.
LOGISTICS
Logistics earned $26 million in the second quarter of 2009 versus $21 million in the second quarter of 2008. The increase was due to higher lease acquisition results, increased crude oil pipeline and storage revenues, and earnings from a refined products pipeline and terminal system acquired in November 2008.
COKE
Coke earned $42 million in the second quarter of 2009 compared to $23 million in the second quarter of 2008. The increase in earnings was primarily due to increased price realizations from coke production at Jewell and the receipt of a $6 million after-tax dividend in the second quarter of 2009 from the Brazilian cokemaking operations.
CORPORATE AND OTHER
Corporate Expenses -- Corporate administrative expenses were $15 million after tax in the second quarter of 2009 versus $11 million after tax in the second quarter of 2008. The increase was primarily due to a higher unfavorable income tax consolidation adjustment. Corporate expenses included income tax consolidation adjustments amounting to $5 and $2 million in the second quarters of 2009 and 2008, respectively.
Net Financing Expenses and Other -- Net financing expenses and other were $11 million after tax in the second quarter of 2009 versus $7 million after tax in the second quarter of 2008. The increase was primarily due to higher interest expense.
SPECIAL ITEMS
During the second quarter of 2009, Sunoco established a $44 million after-tax accrual for employee terminations and related costs in connection with its business improvement initiative, of which $39 million after tax was attributable to a noncash provision for pension and postretirement settlement and curtailment losses. Sunoco also recognized a $20 million net after-tax gain in the second quarter of 2009 related to the divestment of the discontinued Tulsa refining operations.
During the second quarter of 2008, Sunoco recognized an $11 million after-tax gain on an insurance recovery related to an MTBE litigation settlement and a $10 million after-tax gain related to the settlement of issues pertaining to certain state corporate income tax returns filed for prior years.
Sunoco, Inc., headquartered in Philadelphia, PA, is a leading manufacturer and marketer of petroleum and petrochemical products. With 825 thousand barrels per day of refining capacity, approximately 4,700 retail sites selling gasoline and convenience items, approximately 6,000 miles of crude oil and refined product owned and operated pipelines and 43 product terminals, Sunoco is one of the largest independent refiner-marketers in the United States. Sunoco is a significant manufacturer of petrochemicals with annual production capacity 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 have the capacity to manufacture approximately 3.0 million tons annually of high-quality metallurgical-grade coke for use in the steel industry. Sunoco also is the operator of, and has an equity interest in, a 1.7 million tons-per-year cokemaking facility in Vitória, Brazil.
Anyone interested in obtaining further insights into the second quarter's results can monitor the Company's quarterly teleconference call, which is scheduled for 3:00 p.m. ET on August 6, 2009. 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, 2008 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.
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Sunoco, Inc. 2009 Second Quarter and Six-Month Financial Summary (Unaudited) Second Quarter 2009 2008* Revenues $7,509,000,000 $15,179,000,000 Net Income (Loss) $(21,000,000 ) $108,000,000 Less: Net Income Attributable to Noncontrolling (Minority) Interests 34,000,000 26,000,000 Net Income (Loss) Attributable to Sunoco, Inc. Shareholders $(55,000,000 ) $ 82,000,000 Net Income (Loss) Attributable to Sunoco, Inc. Shareholders Per Share of Common Stock: Basic $(.47 ) $.70 Diluted $(.47 )** $.70 Weighted-Average Number of Shares Outstanding (In Millions): Basic 116.9 116.9 Diluted 116.9 ** 117.0 Six Months Revenues $13,644,000,000 $27,283,000,000 Net Income $ 30,000,000 $70,000,000 Less: Net Income Attributable to Noncontrolling (Minority) Interests 73,000,000 47,000,000 Net Income (Loss) Attributable to Sunoco, Inc. Shareholders $(43,000,000 ) $23,000,000 Net Income (Loss) Attributable to Sunoco, Inc. Shareholders Per Share of Common Stock: Basic $(.37 ) $.20 Diluted $(.37 )** $.20 Weighted-Average Number of Shares Outstanding (In Millions): Basic 116.9 117.0 Diluted 116.9 ** 117.2 -------------------------------------------------------------------------------
* Restated to reflect the adoption of the provisions of Statement of Financial Accounting Standards No.160, "Noncontrolling Interests in Consolidated Financial Statements" ("SFAS No. 160"). Net income attributable to noncontrolling (minority) interests relates to income from Sunoco Logistics Partners L.P. and SunCoke Energy's Indiana Harbor cokemaking operations. ** Since the assumed issuance of common stock under stock incentive awards would not have been dilutive, the diluted per share amounts are equal to the basic per share amounts. ------------------------------------------------------------------------------- Sunoco, Inc. Earnings Profile of Sunoco Businesses (after tax) (Millions of Dollars, Except Per-Share Amounts) (Unaudited) Three Months Ended June 30 2009 2008 Variance Refining and Supply: Continuing operations $(77 ) $ 27 $(104 ) Discontinued Tulsa operations (6 ) 5 (11 ) Retail Marketing 10 -- 10 Chemicals -- 3 (3 ) Logistics 26 21 5 Coke 42 23 19 Corporate and Other: Corporate expenses (15 ) (11 ) (4 ) Net financing expenses and other (11 ) (7 ) (4 ) (31 ) 61 (92 ) Special items (24 )* 21 (45 ) Net income (loss) attributable to Sunoco, Inc. shareholders $(55 ) $ 82 $(137 ) Earnings (loss) per share of common stock (diluted): Income (loss) attributable to Sunoco, Inc.
