Exhibit 99.1
Tesoro Corporation Announces First Quarter Results
SAN ANTONIO--(BUSINESS WIRE)--May 4, 2006--Tesoro Corporation
(NYSE:TSO) today reported net earnings of $43 million, or $0.61 per
share for the first quarter of 2006 up 54% from net earnings of $28
million, or $0.40 per share for the first quarter of 2005.
Results for the first quarter 2006 included after-tax charges of
$4 million, or $0.06 per share, primarily relating to the previously
announced sale of 13 retail sites in western Washington.
"Tesoro's first quarter earnings improvement was a significant
achievement considering weaker market conditions, higher energy costs,
the substantial turnaround work at our Golden Eagle refinery and the
slow-down at our Alaska refinery due to extreme icing in the Cook
Inlet," said CEO Bruce Smith. "During January and February's low
margin environment, we completed the ultra low sulfur diesel project
at Golden Eagle and additional maintenance that enabled us to optimize
throughput and yields in March when margins improved."
The company's increase in net earnings during the 2006 first
quarter compared to the prior year was primarily due to higher
throughput levels, lower interest expense as a result of debt
reduction and refinancing in 2005, and decreased corporate general and
administrative expenses.
"By focusing on operational excellence, Tesoro continues to
demonstrate operational success and reliability. One example of the
focus on excellence was our employees' rapid response to the
mid-February incident in Alaska. This demonstrates the respect we have
for the environment and our focus on safe operations," Smith said.
"Reliability is a key to profitability and we are focused on
maximizing our production to supply our customers during the driving
season."
Board Declares Quarterly Dividend
Tesoro announced today that its Board of Directors has approved
the regular quarterly cash dividend of $0.10 per share. The dividend
is payable June 15, 2006 to shareholders of record as of June 1, 2006.
Public Invited to Listen to Analyst Conference Call via Internet
At 3:00 p.m., CDT, Thursday, May 4, 2006, Tesoro will broadcast,
live, its conference call with analysts regarding first quarter 2006
results. Interested parties may listen to the live conference call
over the Internet by logging on to Tesoro's Internet site at
http://www.tsocorp.com.
Tesoro Corporation, a Fortune 200 Company, is an independent
refiner and marketer of petroleum products. Tesoro operates six
refineries in the western United States with a combined capacity of
approximately 560,000 barrels per day. Tesoro's retail-marketing
system includes nearly 475 branded retail stations, of which over 200
are company owned and operated under the Tesoro(R) and Mirastar(R)
brands.
TESORO CORPORATION
STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited)
(In millions except per share amounts)
Three Months
Ended
March 31,
-----------------
2006 2005
------- -------
Revenues $ 3,877 $ 3,171
Costs and Expenses:
Costs of sales and operating expenses 3,689 2,997
Selling, general and administrative
expenses (a) 40 54
Depreciation and amortization 60 41
Loss on asset disposals and impairments 7 1
------- -------
Operating Income 81 78
Interest and Financing Costs (20) (32)
Interest Income and Other 10 1
------- -------
Earnings Before Income Taxes 71 47
Income Tax Provision 28 19
------- -------
Net Earnings $ 43 $ 28
======= =======
Net Earnings Per Share:
Basic $ 0.63 $ 0.41
Diluted $ 0.61 $ 0.40
Weighted Average Common Shares:
Basic 68.5 66.8
Diluted 70.6 70.1
- ------------
(a) Includes stock-based and other compensation charges totaling $11
million during the 2005 first quarter, related to the termination
and retirement of certain executive officers.
NET EARNINGS ADJUSTED FOR SPECIAL ITEMS
(Unaudited)
(In millions except per share amounts)
Three Months
Ended
March 31,
-----------------
2006 2005
------- -------
Net Earnings - U.S. GAAP $ 43 $ 28
Special Items, After-tax:
Termination and retirement costs (a) - 6
------- -------
Net Earnings Adjusted for Special Items $ 43 $ 34
======= =======
Net Earnings Per Share - U.S. GAAP $ 0.61 $ 0.40
Special Items Per Share, After-tax:
Termination and retirement costs (a) - 0.09
------- -------
Net Earnings Per Share Adjusted for Special Items $ 0.61 $ 0.49
======= =======
- ------------
Note: The special items present information that the Company believes
is useful to investors. The Company believes that the special
items described above are not indicative of its core operations.
TESORO CORPORATION
SELECTED OPERATING SEGMENT DATA
(Unaudited)
(In millions)
Three Months
Ended
March 31,
-----------------
2006 2005
------- ------
Operating Income (Loss)
Refining $ 125 $ 132
Retail (12) (11)
------- ------
Total Segment Operating Income 113 121
Corporate and Unallocated Costs (a) (32) (43)
------- ------
Operating Income 81 78
Interest and Financing Costs (20) (32)
Interest Income and Other 10 1
------- ------
Earnings Before Income Taxes $ 71 $ 47
======= ======
Depreciation and Amortization
Refining $ 54 $ 35
Retail 4 4
Corporate 2 2
------- ------
Depreciation and Amortization $ 60 $ 41
======= ======
Capital Expenditures
Refining $ 55 $ 37
Retail 1 -
Corporate 2 27
------- ------
Capital Expenditures $ 58 $ 64
======= ======
BALANCE SHEET DATA
(Unaudited)
(Dollars in millions)
March 31, December 31,
2006 2005
------------ -------------
Cash and Cash Equivalents $ 306 $ 440
Total Assets $ 5,080 $ 5,097
Total Debt $ 1,049 $ 1,047
Total Stockholders' Equity $ 1,869 $ 1,887
Total Debt to Capitalization Ratio 36% 36%
TESORO CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
-------------------
2006 2005
-------- --------
REFINING SEGMENT
Total Refining Segment
Throughput (thousand barrels per day)
Heavy crude 244 263
Light crude 238 188
Other feedstocks 15 26
-------- --------
Total Throughput 497 477
======== ========
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 234 223
Jet fuel 69 65
Diesel fuel 100 91
Heavy oils, residual products, internally
produced fuel and other 114 116
-------- --------
Total Yield 517 495
======== ========
Refining Margin ($/throughput bbl) (b)
Gross $ 8.52 $ 8.37
Manufacturing cost before depreciation and
amortization (b) $ 3.77 $ 3.55
Segment Operating Income ($ millions)
Gross refining margin (after inventory
changes) (c) $ 395 $ 367
Expenses
Manufacturing costs 169 153
Other operating expenses 39 39
Selling, general and administrative 5 7
Depreciation and amortization (d) 54 35
Loss on asset disposals and impairments 3 1
-------- --------
Segment Operating Income $ 125 $ 132
======== ========
Product Sales (thousand barrels per day) (e)
Gasoline and gasoline blendstocks 271 267
Jet fuel 91 96
Diesel fuel 125 123
Heavy oils, residual products and other 82 69
-------- --------
Total Product Sales 569 555
======== ========
Product Sales Margin ($/barrel) (e)
Average sales price $ 73.36 $ 59.09
Average costs of sales 65.78 51.36
-------- --------
Product Sales Margin $ 7.58 $ 7.73
======== ========
- ------------
(b) Management uses gross refining margin per barrel to evaluate
performance, allocate resources and compare profitability to other
companies in the industry. Gross refining margin per barrel is
calculated by dividing gross refining margin before inventory
changes by total refining throughput and may not be calculated
similarly by other companies. Management uses manufacturing costs
per barrel to evaluate the efficiency of refinery operations and
allocate resources. Manufacturing costs per barrel may not be
comparable to similarly titled measures used by other companies.
Investors and analysts use these financial measures to help
analyze and compare companies in the industry on the basis of
operating performance. These financial measures should not be
considered as alternatives to segment operating income, revenues,
costs of sales and operating expenses or any other measure of
financial performance presented in accordance with accounting
principles generally accepted in the United States of America.
(c) Gross refining margin is revenues less costs of refining
feedstocks, purchased products, transportation and distribution.
Gross refining margin 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.
(d) Includes manufacturing depreciation and amortization per
throughput barrel of approximately $1.11 and $0.73 for the three
months ended March 31, 2006 and 2005, respectively.
(e) Sources of total product sales include products manufactured at
the refineries, products drawn from inventory balances and
products purchased from third parties. Total product sales margin
includes margins on sales of manufactured and purchased products
and the effects of inventory changes.
TESORO CORPORATION
OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
------------------
2006 2005
-------- -------
Refining By Region
California (f)
Throughput (thousand barrels per day)
Heavy crude 139 144
Light crude 5 -
Other feedstocks 8 5
-------- -------
Total Throughput 152 149
======== =======
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 91 82
Diesel fuel 37 40
Heavy oils, residual products, internally
produced fuel and other 34 34
-------- -------
Total Yield 162 156
======== =======
Refining Margin ($/throughput bbl)
Gross $ 13.26 $ 16.58
Manufacturing cost before depreciation and
amortization $ 6.06 $ 5.54
Pacific Northwest (Alaska & Washington) (f)
Throughput (thousand barrels per day)
Heavy crude 84 81
Light crude 66 42
Other feedstocks 4 17
-------- -------
Total Throughput 154 140
======== =======
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 65 62
Jet fuel 29 28
Diesel fuel 20 12
Heavy oils, residual products, internally
produced fuel and other 45 44
-------- -------
Total Yield 159 146
======== =======
Refining Margin ($/throughput bbl)
Gross $ 7.20 $ 4.57
Manufacturing cost before depreciation and
amortization $ 3.18 $ 3.20
Mid-Pacific (Hawaii)
Throughput (thousand barrels per day)
Heavy crude 21 38
Light crude 65 46
-------- -------
Total Throughput 86 84
======== =======
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 22 20
Jet fuel 29 26
Diesel fuel 13 12
Heavy oils, residual products, internally
produced fuel and other 24 27
-------- -------
Total Yield 88 85
======== =======
Refining Margin ($/throughput bbl)
Gross $ 3.23 $ 4.04
Manufacturing cost before depreciation and
amortization $ 1.56 $ 1.67
- ------------
(f) The Company experienced reduced throughput and yields during
scheduled maintenance turnarounds for the California refinery
during the 2006 and 2005 first quarters and the Washington
refinery during the 2005 first quarter.
TESORO CORPORATION
OPERATING DATA
(Unaudited)
Three Months
Ended
March 31,
-----------------
2006 2005
------- -------
Mid-Continent (North Dakota & Utah)
Throughput (thousand barrels per day)
Light crude 102 100
Other feedstocks 3 4
------- -------
Total Throughput 105 104
======= =======
Yield (thousand barrels per day)
Gasoline and gasoline blendstocks 56 59
Jet fuel 11 11
Diesel fuel 30 27
Heavy oils, residual products, internally
produced fuel and other 11 11
------- -------
Total Yield 108 108
======= =======
Refining Margin ($/throughput bbl)
Gross $ 8.17 $ 5.08
Manufacturing cost before depreciation and
amortization $ 3.18 $ 2.69
TESORO CORPORATION
OPERATING DATA
(Unaudited)
Three Months
Ended
March 31,
-----------------
2006 2005
------- -------
RETAIL SEGMENT
Number of Stations (end of period)
Company-operated 210 215
Branded jobber/dealer 260 289
------- -------
Total Stations 470 504
======= =======
Average Stations (during period)
Company-operated 210 215
Branded jobber/dealer 263 291
------- -------
Total Average Retail Stations 473 506
======= =======
Fuel Sales (millions of gallons)
Company-operated 59 65
Branded jobber/dealer 40 46
------- -------
Total Fuel Sales 99 111
======= =======
Fuel Margin ($/gallon) (g) $ 0.15 $ 0.12
Merchandise Sales ($ millions) $ 32 $ 30
Merchandise Margin ($ millions) $ 8 $ 8
Merchandise Margin % 25% 25%
Segment Operating Loss ($ millions)
Gross Margins
Fuel (h) $ 15 $ 13
Merchandise and other non-fuel margin 9 8
------- -------
Total Gross Margins 24 21
Expenses
Operating expenses 22 22
Selling, general and administrative 6 6
Depreciation and amortization 4 4
Loss on asset disposals and impairments 4 -
------- -------
Segment Operating Loss $ (12) $ (11)
======= =======
- ------------
(g) Management uses fuel margin per gallon to compare profitability to
other companies in the industry. Investors and analysts use fuel
margin per gallon to help analyze and compare companies in the
industry on the basis of operating performance. 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.
(h) Includes the effect of intersegment purchases from the refining
segment at prices which approximate market.
CONTACT: Tesoro Corporation, San Antonio
Investors:
Scott Phipps, 210-283-2882
or
Media:
Sarah Simpson, 210-283-2374