Exhibit 99.1
Tesoro First Quarter Earnings Rise 150%
SAN ANTONIO--(BUSINESS WIRE)--May 6, 2004--Tesoro Petroleum Corporation
(NYSE:TSO) today reported record net earnings of $50.4 million, or $0.75 per
share, for the first quarter of 2004 compared to net earnings of $20.4 million,
or $0.32 per share, for the first quarter of 2003.
"Net earnings were 150% better than last year's first quarter results and
the best first quarter results in the history of Tesoro," said Bruce A. Smith,
chairman, president and CEO of Tesoro. "Seasonally, product demand is weaker
during the first quarter in our markets, but this year, strong demand in
combination with below-average product inventories created better-than-normal
industry refining margins in all our refining regions. Given the market
environment, we increased total refining throughput to capture the higher
margin. Good reliability was a key factor in our success this quarter, even
though we had some unscheduled downtime at our California refinery."
"Net earnings also benefited from lower interest expense as a result of the
debt reduction we achieved last year. Our goal is to continue to improve
profitability and use free cash flow to reduce debt. The successful completion
of our consent solicitation in March gives us greater flexibility to repay
debt," stated Smith.
Public Invited to Listen to Analyst Conference Call via Internet
At 2 p.m., CDT, Thursday, May 6, 2004, Tesoro will broadcast, live, its
conference call with analysts regarding first quarter 2004 results. Interested
parties may listen to the live conference call over the Internet by logging on
to Tesoro's Internet site at http://www.tesoropetroleum.com and clicking on the
"What's New" section.
Tesoro Petroleum Corporation, a Fortune 500 Company, is an independent
refiner and marketer of petroleum products. Tesoro operates six refineries in
the western United States with a combined capacity of nearly 560,000 barrels per
day. Tesoro's retail-marketing system includes approximately 550 branded retail
stations, of which over 200 are company operated under the Tesoro(R) and
Mirastar(R) brands.
This news release contains certain statements that are "forward-looking"
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements concern the company's goals of improving profitability, generating
free cash flow and reducing debt. Factors which can cause actual results to
differ from these forward-looking statements include: changes in general
economic conditions, the timing and extent of changes in demand for refined
products, availability and cost of crude oil, other feedstocks or refined
products, throughput and yield levels, disruptions due to equipment
interruptions or failure at our or third-party facilities and other factors
beyond our control. For more information concerning these factors and other
factors that could cause such a difference, see our annual report on Form 10-K
and quarterly reports on Form 10-Q, filed with the Securities and Exchange
Commission. We undertake no obligation to publicly release the result of any
revisions to any such forward-looking statements that may be made to reflect
events or circumstances that occur, or which we become aware of, after the date
hereof.
TESORO PETROLEUM CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
(In million except per share amounts)
Three Months Ended
March 31,
2004 2003 (a)
------------- ------------
Revenues $ 2,429.9 $ 2,286.1
Costs and Expenses:
Costs of sales and
operating expenses 2,234.7 2,131.1
Selling, general and
administrative expenses 31.0 38.3
Depreciation and
amortization 37.0 37.0
Loss on asset sales and
impairments 0.6 0.2
------------- ------------
Operating Income 126.6 79.5
Interest and Financing
Costs, Net (b) (42.9) (47.0)
------------- ------------
Earnings Before
Income Taxes 83.7 32.5
Income Tax Provision 33.3 12.1
------------- ------------
Net Earnings $ 50.4 $ 20.4
============= ============
Net Earnings Per Share:
Basic $ 0.78 $ 0.32
Diluted $ 0.75 $ 0.32
Weighted Average Common Shares:
Basic 65.0 64.6
Diluted 67.3 64.7
- ---------------------
(a) The 2003 results include the Marine Services operations, which
were sold in December 2003.
(b) In March 2004 the Company amended both the 8% senior secured
notes and the senior secured term loans resulting in pretax
financing expenses of $2.5 million.
TESORO PETROLEUM CORPORATION
SELECTED OPERATING SEGMENT DATA
(Unaudited)
(In millions)
Three Months Ended
March 31,
------------------------
2004 2003
------------ ----------
Operating Income
Refining $ 151.6 $ 109.2
Retail (4.2) (8.1)
Marine Services (a) - 1.1
------------ ----------
Total Segment
Operating Income 147.4 102.2
Corporate and
Unallocated Costs (c) (20.2) (22.5)
Loss on Asset Sales and
Impairments (0.6) (0.2)
------------ ----------
Operating Income 126.6 79.5
Interest and Financing
Costs, Net (b) (42.9) (47.0)
------------ ----------
Earnings Before
Income Taxes $ 83.7 $ 32.5
============ ==========
Depreciation and Amortization
Refining $ 31.0 $ 29.8
Retail 4.4 5.0
Marine Services (a) -- 0.7
Corporate 1.6 1.5
----------- ----------
Depreciation and
Amortization $ 37.0 $ 37.0
============ ==========
Capital Expenditures
Refining $ 14.5 $ 27.0
Retail 0.1 0.2
Marine Services (a) -- 0.3
Corporate 0.3 0.2
------------ ----------
Capital Expenditures $ 14.9 $ 27.7
============ ==========
- ----------------------
(c) Corporate and unallocated costs in 2003 include charges of
$4.7 million in reorganization costs, primarily a non-cash charge
for voluntary early retirement benefits and severance payments. An
additional $4.3 million of reorganization costs were charged to
the operating segments during 2003, including $2.6 million in
Refining, $1.3 million in Retail and $0.4 million in Marine
Services.
BALANCE SHEET DATA
(Unaudited)
(Dollars in millions)
March 31, December 31,
2004 2003
------------- --------------
Total Assets $ 3,841.8 $ 3,661.3
Total Debt $ 1,610.2 $ 1,608.8
Total Stockholders' Equity $ 1,021.1 $ 965.4
Total Debt to Capitalization
Ratio 61% 62%
TESORO PETROLEUM CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
---------------------
2004 2003
----------- ---------
REFINING SEGMENT
Total Refining Segment
Throughput (thousand barrels per day)
Heavy crude 272.0 282.9
Light crude 211.6 167.5
Other feedstocks 14.1 14.1
----------- ---------
Total Throughput 497.7 464.5
=========== =========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 245.8 229.8
Jet fuel 64.1 56.5
Diesel fuel 103.4 97.7
Heavy oils, residual products,
internally produced fuel
and other 104.3 100.0
----------- ---------
Total Yield 517.6 484.0
=========== =========
Refining Margin ($/throughput bbl) (d)
Gross $ 7.58 $ 6.92
Manufacturing cost before depreciation
and amortization (e) $ 2.88 $ 2.90
Segment Operating Income ($ millions)
Gross refining margin (after inventory
changes) (f) $ 348.0 $ 294.8
Expenses
Manufacturing costs 130.5 121.3
Other operating expenses 29.5 26.4
Selling, general and administrative 5.4 8.1
Depreciation and amortization (g) 31.0 29.8
----------- ---------
Segment Operating Income $ 151.6 $ 109.2
=========== =========
Product Sales (thousand barrels per
day) (h)
Gasoline and gasoline blendstocks 289.4 270.0
Jet fuel 79.5 87.3
Diesel fuel 119.8 123.5
Heavy oils, residual products and
other 75.8 62.7
----------- ---------
Total Product Sales 564.5 543.5
=========== =========
Product Sales Margin ($/barrel) (h)
Average sales price $ 44.98 $ 42.59
Average costs of sales 37.90 36.60
----------- ---------
Product Sales Margin $ 7.08 $ 5.99
=========== =========
- -----------------------------------------
(d) Management uses gross refining margin per barrel to compare
profitability to other companies in the industry. Gross
refining margin per barrel is calculated by dividing gross
refining margin by total refining throughput and may not be
calculated similarly by other companies.
(e) Management uses manufacturing costs per barrel to evaluate
the efficiency of refinery operations. Manufacturing costs per
barrel may not be comparable to similarly titled measures used
by other companies.
(f) Gross refining margin is revenues less cost of refining
feedstock, which approximates total Refining segment throughput
times gross refining margin per barrel, adjusted for changes in
refined product inventory due to selling a volume and mix of
product that is different than actual volumes manufactured.
Also includes the effect of intersegment sales to the Retail
segment at prices which approximate market.
(g) Includes manufacturing depreciation and amortization per
throughput barrel of approximately $0.60 and $0.62 for the
three months ended March 31, 2004 and 2003, respectively.
(h) Sources of total product sales include products manufactured
at the refineries, products drawn from inventory balances and
products purchased from third parties. Total product sales
margin includes margins on sales of manufactured and purchased
products and the effects of inventory changes.
TESORO PETROLEUM CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
-------------------
2004 2003
--------- --------
Refining By Region
California
Throughput (thousand barrels per
day)
Heavy crude 144.4 149.8
Light crude 4.0 3.8
Other feedstocks 4.8 4.2
--------- --------
Total Throughput 153.2 157.8
========= ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 97.7 100.9
Diesel fuel 37.0 39.6
Heavy oils, residual products,
internally produced fuel
and other 28.1 27.4
--------- --------
Total Yield 162.8 167.9
========= ========
Refining Margin ($/throughput bbl)
Gross $ 11.10 $ 10.56
Manufacturing cost before
depreciation and amortization $ 4.61 $ 4.27
Pacific Northwest (Alaska &
Washington)
Throughput (thousand barrels per
day)
Heavy crude 84.4 79.6
Light crude 72.9 62.9
Other feedstocks 5.2 7.4
--------- --------
Total Throughput 162.5 149.9
========= ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 69.3 66.3
Jet fuel 28.7 25.0
Diesel fuel 26.7 23.0
Heavy oils, residual products,
internally produced fuel
and other 42.5 40.9
--------- --------
Total Yield 167.2 155.2
========= ========
Refining Margin ($/throughput bbl)
Gross $ 6.44 $ 6.19
Manufacturing cost before
depreciation and amortization $ 2.38 $ 2.45
Mid-Pacific
(Hawaii)
Throughput (thousand barrels per
day)
Heavy crude 43.2 53.5
Light crude 41.2 21.9
--------- --------
Total Throughput 84.4 75.4
========= ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 23.2 17.7
Jet fuel 24.7 23.4
Diesel fuel 15.0 12.7
Heavy oils, residual products,
internally produced fuel
and other 23.0 22.8
--------- --------
Total Yield 85.9 76.6
========= ========
Refining Margin ($/throughput bbl)
Gross $ 4.54 $ 3.15
Manufacturing cost before
depreciation and amortization $ 1.32 $ 1.40
TESORO PETROLEUM CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
--------------------
2004 2003
--------- ---------
Mid-Continent (North Dakota &
Utah) (i)
Throughput (thousand barrels per
day)
Light crude 93.5 78.9
Other feedstocks 4.1 2.5
--------- ---------
Total Throughput 97.6 81.4
========= =========
Yield (thousand barrels per day)
Gasoline and gasoline
blendstocks 55.6 44.9
Jet fuel 10.7 8.1
Diesel fuel 24.7 22.4
Heavy oils, residual products,
internally produced fuel
and other 10.7 8.9
--------- ---------
Total Yield 101.7 84.3
========= =========
Refining Margin ($/throughput
bbl)
Gross $ 6.54 $ 4.71
Manufacturing cost before
depreciation and
amortization $ 2.35 $ 2.47
- -------------
(i) Throughput and yield levels were reduced in the 2003 quarter
during a scheduled maintenance turnaround at the Utah refinery.
TESORO PETROLEUM CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
----------------------
2004 2003
------------ ---------
RETAIL SEGMENT
Number of Stations (end of
period)
Company-operated 224 230
Branded jobber/dealer 324 354
------------ ---------
Total Stations 548 584
============ =========
Average Stations (during
period)
Company-operated 225 231
Branded jobber/dealer 326 360
------------ ---------
Total Average Retail Stations 551 591
============ =========
Fuel Sales (millions of
gallons)
Company-operated 69.6 77.1
Branded jobber/dealer 53.3 66.6
------------ ---------
Total Fuel Sales 122.9 143.7
============ =========
Fuel Margin ($/gallon) (j) $ 0.14 $ 0.11
Merchandise Sales ($ millions) $ 28.2 $ 24.9
Merchandise Margin ($ millions) $ 7.3 $ 6.2
Merchandise Margin % 26% 25%
Segment Operating Income (Loss)
($ millions)
Gross Margins
Fuel (k) $ 17.5 $ 16.4
Merchandise and other non-
fuel margin 8.2 7.3
------------ ---------
Total Gross Margins 25.7 23.7
Expenses
Operating expenses 18.5 18.4
Selling, general and
administrative 7.0 8.4
Depreciation and amortization 4.4 5.0
------------ ---------
Segment Operating Income
(Loss) $ (4.2)$ (8.1)
============ =========
- --------------
(j) Fuel margin per gallon is calculated by dividing fuel gross
margin by fuel sales volumes. Fuel margin per gallon may not
be calculated similarly by other companies. Management uses
fuel margin per gallon calculations to compare profitability
to other companies in the industry.
(k) Includes the effect of intersegment purchases from the Refining
segment at prices which approximate market.
CONTACT: Tesoro Petroleum Corporation, San Antonio
Investors:
John Robertson, 210-283-2687
or
Media:
Tara Ford, 210-283-2676