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Tesoro
BUAD 341, 3PM MWF
Mathias Escobar
December 2, 2016
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12/2/2016 2:00 PMTesoro
Mathias EscobarBUAD 341
Table of Contents
Introduction......................................................................................................................................1
Theme..........................................................................................................................................1
Product Line of the Company......................................................................................................2
Industry History and Analysis.....................................................................................................2
Major Competitors...................................................................................................................4
NAICS Numbers......................................................................................................................5
Relative Sales...........................................................................................................................5
Relative Returns……………………………………………………………………………...5
Product Life Cycle.......................................................................................................................6
Stock Performance.......................................................................................................................6
Financial Analysis...........................................................................................................................7
Overview......................................................................................................................................7
Ratio Analysis..............................................................................................................................8
Pro forma...................................................................................................................................10
Forecasting Assumptions.......................................................................................................10
Sources and Uses Analysis....................................................................................................11
Asset Acquisitions.................................................................................................................12
Financing Needs....................................................................................................................13
Conclusion.....................................................................................................................................13
Appendices....................................................................................................................................14
Income Statement......................................................................................................................14
Formulas for Income Statement and Balance Sheet..................................................................16
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Sources and Uses.......................................................................................................................18
Percentage of Sources and Uses................................................................................................19
Firm Ratios................................................................................................................................20
Industry Ratios...........................................................................................................................21
Graph of Ratios………………………………………………………………………………..22
Bibliography..................................................................................................................................27
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Introduction
This paper is providing a historical analysis of Tesoro, the petroleum and gasoline sectors
and Tesoro’s main competitors. Assuming these historical trends continue, a three year forecast
is generated that will explain the company’s ever improving financial situation, and steady
position as one of the top corporations in this industry.
Theme
Tesoro Corporation is an extremely competitive market right now. As gas prices are
slowly decreasing, Tesoro needs to adjust to this trend in order to keep its foothold in this
market. They may need to look into growing their company by acquiring newer assets in order
to get more sales and a higher profit margin. As of right now, Tesoro is on the right track as to
maintain its presence in the United States, especially in the western parts. This corporation
needs to maintain its grasp in this niche market and grow at the same rate or better as its major
competitor by buying more assets.
History of the Firm
Tesoro was founded in 1964 by Robert V. West, Jr., as a spinoff of Texstar Corporation. In
1969, Tesoro began operating its first refinery, near Kenai, Alaska. In the late 1990s, Tesoro
grew through a series of acquisitions and initiatives that created Tesoro Corporation, the
company focusing on a single core business: petroleum refining and marketing. 1
1 Our History
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Between 2000 and 2010, Tesoro acquired several refineries in Utah, California, North
Dakota and Washington. Tesoro also acquired 138 retail sites as well as the USA Gasoline™
brand and 138 retail sites. In 2010, Tesoro acquired 300 existing Shell®-branded wholesale
supply contracts, expanding operations to a total of 650 Shell- branded sites. In 2013, Tesoro
expanded to Los Angeles Refinery with acquisition of Carson, California’s operations. They
acquired the ARCO brand, a.m.p.m master franchisee license and approximately 800 dealer-
operated sites.2
Currently, Tesoro Corporation is one of the largest independent petroleum refiners and marketers
in the country, with a strategically concentrated presence in the western United States. Moving
ahead, they are committed to continuing to meet and exceed the standards of safe, reliable
operations, while focusing on improving profitability and increasing shareholder value.
Product Line of the CompanyTesoro is an independent refiner and marketer of petroleum products. Tesoro operates
seven refineries that are located throughout the western United States They have a combined
capacity of over 895,000 barrels per day in their facilities. Tesoro’s retail-marketing system
includes over 2,400 retail stations under the ARCO, Shell, Exxon, Mobil, USA Gasoline, Rebel
and Tesoro brands. In 2015 Tesoro was capable of creating 787 barrels of oil in a single day.3
Industry History and Analysis
2 Funding Universe
3 Company Profile
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The use of oil and gas has a long and fascinating history spanning thousands of years.
The development of oil and gas has evolved over time and its numerous uses have also expanded
and become an integral part of today's global economy.
In the early days, settlers used oil as an illuminant, for medicine, and as grease for
wagons and tools. Rock oil distilled from shale became available as kerosene.
The first oil corporation was the Pennsylvania Rock Oil Company of Connecticut.
George H. Bissell, a New York lawyer, and James Townsend, a New Haven businessman,
became interested when Dr. Benjamin Silliman of Yale University analyzed a bottle of the oil
and said it would make an excellent light. On August 27, 1859, they struck oil at a depth of sixty-
nine feet using a drill operation in the city of Drake. Additional discoveries near the Drake well
had led to the creation of numerous firms. One of these firms was the Standard Oil Company,
based in Cleveland Ohio. They managed to build a four-mile pipeline from Pithole,
Pennsylvania, to the nearest railroad. This in turn would provide cheap, efficient transportation
for the oil they got from the ground.
Eastern cities linked to the oil fields by rail and boat boomed as well. The export trade
from Philadelphia, New York, and Baltimore became so important that Standard and other
companies located refineries in those cities. As early as 1866 the value of petroleum products
exported to Europe provided a trade balance sufficient to pay the interest on U.S. bonds held
abroad.
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In 1901, one of the largest and most significant oil strikes in history occurred near
Beaumont, Texas, on a mound called Spindletop. Drillers brought in the greatest gusher ever
seen within the United States. This strike ended any possible monopoly by Standard Oil. One
year after the Spindletop discovery more than fifteen hundred oil companies had been chartered.
Of these, fewer than a dozen survived, 4
In 1909, as a result of antitrust laws, federal courts ordered the breakup of the Standard
Oil Company dividing it up into 34 separate companies. Standard Oil dominated the first two
decades of the oil and gas industry, and the U.S. accounted for more than half of the world's
production until around 1950. As the industry became more global in nature, other world markets
in Europe, Russia and Asia, began to play a much greater role
During the 1950's, oil consumption grew at a rate of 7 percent annually. Automobile
manufacturing expanded rapidly, leading to a dramatic increase in the demand for fuel. As the
world economy and the oil and gas industry evolved over time, various political and economic
events occurred, in particular wars in the Middle East during the late 1960's and 1970's, which
had substantial impacts on the world oil and gas industry. 5 This trend continues throughout the
2000’s.
Major CompetitorsDue to high entry barriers into the petroleum and oil industries, competitors will either
remain constant or be bought out by other companies. Some major competitors that Tesoro have
4 Oil History
5 Oil and Gas Industry
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are Chevron Corporation. Exxon Mobil Corporation, Phillips 66, Valero Energy Corporation and
BP p.l.c each one of these companies are in the petroleum industry and are located around the
world. 6
NAICS Numbers
There are a couple NAICS numbers for Tesoro. They are 4479190 (Other Gas Stations),
211111 (Crude Petroleum and Natural Gas Extraction) and 48611002 (Pipeline Transportation of
Crude Oil)
Relative Sales
This chart shows the relative sales of major oil
and gas companies for 2015. Overall, Tesoro is
behind all of these competitors. However, this
does not show the relative size of these
companies. Most, if not all, of these companies
have markets all over the world while Tesoro mostly operates in the western parts of the United
States. In order to see how well a company is actually doing, we need to see their return on
equity.
Relative Returns
This chart shows the return on equity for 2015. In
this scenario, Tesoro is heading in the right
6 Competitors
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direction. They are currently second on this list. Meanwhile, both BP and Chevron are doing
poorly7891011
Product Life CycleThe oil and gas sector is currently in the mature stage of the product life cycle. There are
a couple of companies that are still in this market than that of years before. Oil and gas is
everywhere and people buy it on a daily basis. These corporations have also set significant
barriers of entry for any new companies that want to get in. These barriers are as follows: High
startup costs mean that very few companies even attempt to enter the sector. This lowers
potential competition from the start, Proprietary technology forces even those with high startup
capital to face an immediate operating disadvantage upon entering the sector, High fixed
operating costs make companies with startup capital wary of entering the sector and Local and
foreign governments force companies within the industry to closely comply with environmental
regulations. These regulations often require capital to comply, forcing smaller companies out of
the sector.12
Stock Performance
7 BP
8 Valero
9 Phillips 66
10 Chevron
11 ExxonMobil
12 Barriers
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Tesoro’s stock prices have closely mimicked that of the Dow Jones Industrial Average.
The only exception in near the end of 2015, where Tesoro’s price fell and the DJIA stocks went
up.
Financial Analysis
OverviewThe financial analysis of Tesoro shows the decent conditions that the company has
faced recently in markets that it is in. This however is nothing new to this 86 year old company.
The company has faced many local and global downturns, and successfully used them to take
advantage of opportunities for the past 48 years. Moving forward Tesoro is focusing on demand
from low prices of gasoline, growth in current areas to grow sales and improving efficiency in all
of their refineries. The company will increase their budgets for acquisitions and research and
development to grow their product lines and efficiency. They will also make investments into
their current plants to grow their production capacity.
Tesoro has been seeing an increasing amount of sales in the past 5 years. This revenue is
relatively small when compared to other major competitors because this company operates in the
western parts of the United, not internationally. To keep this position, and to grow at a
sustainable rate for their stock holders the company has to increase its production at their home
base. Tesoro announced that they will acquire the Great Northern Midstream LLC and its crude
oil pipeline, gathering system, storage and rail loading facilities in the state of North Dakota.
Assets include the 97-mile BakkenLink crude oil pipeline, which connects to several third-party
gathering systems, a 28-mile gathering system in the core of the Bakken, where most of the
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drilling in today's low price environment is being done, a 154,000 barrel-per-day rail loading and
a 657,000 barrel storage facility in the city of Fryburg. 13
Tesoro has also recently completed the expansion of its diesel desulfurization unit's
capacity which will add around $11 million to its annual earnings. Currently, it is working on its
Salt Lake City conversion project which will improve Salt Lake refinery's output and yield. The
project will be completed by the end of 2014 and will increase Tesoro's annual operating income
by $100 million. These projects in turn would considerably increase Tesoro's income in the
coming years.14
These projects shows Tesoro's dedication to growth. On their balance sheet the company
reported that their property plant and equipment alone has grown over the past five years. To
finance this growth they have increased their common stock by a small amount and added long
term liabilities to their balance sheet.
Looking purely at the profit breakdown, Tesoro was able to have a positive contribution
to retained earnings every year for the past five years. They have also seen a trend in both
growth in revenues and net income over the past five years. They are projected to continue this
trend in the near future.
Ratio Analysis
13 Great Northern Midstream LLC
14 Salt Lake City
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Looking purely at the numbers can show if a firm is doing well or not, but ratios need to
be analyzed to show how efficient the firm is, and how well it is doing against its competitors in
the market. The ratios that will be covered are profit margin, return on assets and return on
equity. These ratios will be able to show the relative profitability of the firm compared to its size
and its competitors. Other ratios of interest are in the appendix.
The profit margin of a firm shows the ability of a
firm to turn its sales into profits. It is calculated by
dividing the after tax income by the total sales and
revenue. As you can see by the graph in the left, Tesoro’s
ratio is consistently above industry average. Tesoro also
skyrocketed near the end of 2015 when compared to that
of the industry.
The return on assets that a firm has shown how
effectively that firm is able to turn its assets
into profits. It is calculated by dividing the after tax
income by the total assets of the firm. As the graph in
the left shows,
Tesoro’s return on
assets ratios are on
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pace with the industry average. The return on assets follows a similar pattern as the profit
margin, because they are both calculated using income. One difference however is when the
industry average tanked on year three while Tesoro was able to maintain its ROA.
The return on equity that a firm has shown the profits that a firm generates with the
investors’ equity. It is calculated by dividing the after tax income by the total investor equity of
the firm. As the graph in the right shows, Tesoro’s return on assets ratios are historically below
the industry average. This is mostly due to the fact that Tesoro is a smaller company than its
competitors. This leads to lower investments than that of its competitors.
Pro forma
Tesoro has operated in a sustainable growth rate over the years that were analyzed in this
paper. They kept a relatively stable debt to equity ratio. Using a similar ratio, a growth pattern
was forecast for the upcoming three years.
This market has a slim debt to equity ratio. The debt to equity ratio that the company was
forecasted to use was 6%, 3% and 2% for the following three years respectively. This
represented the previous data based on the different percentages of previous years. Using the
percent growth of sales method, increasing the company’s property, plant and equipment, and
long term debt accounts in the correct amounts yielded these different ratios ratio.
The percent growth of sales method that was used consisted of increasing the sales by a
certain percentage. Once the percentage was established the selling costs, and short term assets
and liabilities also spontaneously grew by that amount.
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To accomplish this, new machinery was purchased, and what wasn’t paid for by retained
earnings was financed with additional financing. This will take place as a new long term debt.
Forecasting Assumptions
This forecasting involves several different financial changes that would affect the balance
sheets. In this forecast, Tesoro would buy new machinery for 3 billion dollars every year. This
machine would have a straight line depreciation in 20 years. Any additional long term debt that
was incurred was assumed to have a 5% interest rate, and 10% of the principal would have to be
paid off per year. It was also assumed the company would keep the dividend payout percentage
at the historic average at around 15%.
Sources and Uses Analysis
Tesoro used a various amounts of sources and uses in order to run their company. Some
of the major sources they have used are retained earnings, accumulated other comprehensive loss
and additional paid in capital. Below are these accounts on a graph. Retained earnings is where
most of the source comes from.
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Tesoro's major uses are property, plant and equipment, accumulated depreciation and
other noncurrent assets. Below are these accounts in a graph. Property, plant and equipment is
where most of the uses come from
Asset Acquisitions
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In order for Tesoro to maintain and grow itself in the western parts of the United States,
they would need to purchase additional machinery so they can increase their production. One of
the things they are currently doing is to use $390 million for uses in planned upgrades at its
Anacortes oil refinery, partly intended to improve its export capabilities. Out of this $390
million, $300 million will go to a project to build a facility to produce “mixed xylenes,” a
complex hydrocarbon that can be extracted from crude oil and that is used as a solvent and in
plastics manufacturing. The other $90 million will be used to make a design that is better at
producing reduced-sulfur gasoline while running the refinery more efficiently.15 With these
upgrades, Tesoro will continue to take control of its market in the western parts of the United
States.
Financing Needs
In order for Tesoro to achieve these goals, there are a couple of financial needs they will get.
Tesoro will not issue any new stocks because of a trend that was shown during the past data.
Stock prices did not go down or up in a large number. They will maintain its price. Additional
loans will be needed in order to pay off the new assets they will require in the next three years.
These loans will total at around $4,889,000,000.
ConclusionThe analysis of the company’s financial history and the forecast of their future performance
show that Tesoro has been a well-managed and profitable company with good growth prospects 15 Upgrades
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on the horizon. Their profitability ratios have been on a slight increase and they have managed to
take in a fairly large profit for a small company.
They are well on their way to increasing sales in their niche market in the western United
States, increasing their production capabilities and efficiency, and increasing their product
portfolio through acquisitions and asset purchases. To continue this growth they will need to
continue these acquisition programs, and as the forecast shows, they will have a very large
budget to do so.
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Appendices
Income Statement
15
Statements of Consolidated Operations - USD ($) shares in Millions, $ in Millions 2011 2012 2013 2014 2015 2016 2017 2018
Income Statement [Abstract]Revenues 27,182$ $ 29,809 37,601$ 40,633$ 28,711$ 30,434$ 31,955$ 32,914$ Cost and Expenses: - - - Cost of sales (excluding the lower of cost or market inventory valuation adjustment) 24,022 26,045 34,085 35,631 22,149 23,478 24,652 25,391 Lower of cost or market inventory valuation adjustment - - - 42 317 336 353 363 Operating expenses 1,349 1,405 1,911 2,420 2,278 2,415 2,535 2,611 Selling, general and administrative expenses 227 297 337 342 342 513 693 885 Depreciation and amortization expense 391 418 489 562 756 801 841 867 Loss on asset disposals and impairments 66 23 24 4 42 45 47 48 Operating Income 1,127 1,621 755 1,632 2,827 2,997 3,146 3,241 Interest and financing costs, net (179) (165) (149) (235) (217) (230) (242) (249) Equity in earnings of equity method investments - - 11 10 7 7 8 8 Other income, net 4 (26) 63 57 13 14 14 15 Earnings Before Income Taxes 952 1,430 680 1,464 2,630 2,788 2,927 3,015 Income tax expense 359 527 246 547 936 992 1,042 1,073 Net Earnings from Continuing Operations 593 903 434 917 1,694 1,796 1,885 1,942 Earnings (loss) from discontinued operations, net of tax (30) (133) 20 (29) (4) (4) (4) (5) Net earnings 563 770 454 888 1,690 1,791 1,881 1,937 Less: Net earnings from continuing operations attributable to noncontrolling interest 17 27 42 45 150 159 167 172 Net Earnings Attributable to Tesoro Corporation 546 743 412 843 1,540 1,632 1,714 1,765 Net Earnings (Loss) Attributable to Tesoro Corporation: - - - Continuing operations 576 876 392 872 1,544 1,637 1,718 1,770 Discontinued operations (30) (133) 20 (29) (4) (4) (4) (5) Total 546 743 412 843 1,540 1,632 1,714 1,765 Net Earnings (Loss) Per Share - Basic: - - - Continuing operations 4 6 3 7 13 13 14 14 Discontinued operations (0.21) (0.95) 0 (0) (0) (0) (0) (0) Total 4 5 3 7 13 13 14 14 Weighted average common shares outstanding - Basic 141 139 135 129 123 131 137 141 Net Earnings (Loss) Per Share - Diluted: - - - Continuing operations 4 6 3 7 12 13 14 14 Discontinued operations (0.21) (0.95) 0 (0) (0) (0) (0) (0) Total 4 5 3 6 12 13 14 14 Weighted average common shares outstanding - Diluted 143 142 137 131 125 132 139 143 Dividends per Share - 0 1 1 2 2 2 2 Supplemental Information: - - - (a) Includes excise taxes collected by our marketing segment 352 467 567 581 561 595 624 643 Dividends Paid 38 121 141 228 357 316 199 Contributions to Retained Earnings 705 291 702 1,312 1,275 1,398 1,567
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Balance Sheet
16
Consolidated Balance Sheets - USD ($) $ in Millions 2011 2012 2013 2014 2015 2016 2017 2018Current AssetsCash and cash equivalents (TLLP: $16 and $19, respectively $900 $1,639 $1,238 $ 1,000 $ 942 999 1,048 1,080 Receivables, net of allowance for doubtful accounts 1,272 1,221 1,313 1,435 792 840 881 908 Inventories, net of lower of cost or market valuation 1,763 1,578 2,565 2,439 2,302 2,440 2,562 2,639 Prepayments and other current assets 216 198 210 200 271 287 302 311 Total Current Assets 4,151 4,636 5,326 5,074 4,307 4,565 4,794 4,938 Net Property, Plant, and Equipment - - Property, plant and equipment, at cost 7,055 7,257 9,123 11,633 12,562 15,562 18,562 21,562 Less accumulated depreciation and amortization 1,907 2,012 2,248 2,588 3,021 3,822 4,664 5,530 Net Property, Plant and Equipment (TLLP: $3,450 and $3,343, respectively) 5,148 5,245 6,875 9,045 9,541 11,740 13,898 16,032 Other Noncurrent AssetsAcquired intangibles, net (TLLP: $976 and $973, respectively) 226 214 263 1,222 1,211 1,284 1,348 1,388 Other, net (TLLP: $214 and $251, respectively) 367 607 925 1,150 1,273 1,349 1,417 1,459 Total Other Noncurrent Assets 593 821 1,188 2,372 2,484 2,633 2,765 2,848 Total Assets 9,892 10,702 13,389 16,491 16,332 18,938 21,457 23,817 Current LiabilitiesAccounts payable 2,305 2,213 2,596 2,483 1,568 1,662 1,745 1,798 Other current liabilities 944 668 812 947 962 1,020 1,071 1,103 Total Current Liabilities 3,249 2,881 3,408 3,430 2,530 2,682 2,816 2,900 Additional Financing 1,031 1,893 1,965 Deferred Income Taxes 815 850 1,018 1,134 1,222 1,295 1,360 1,401 Other Noncurrent Liabilities 567 647 655 790 773 773 773 773 Debt, Net of Unamortized Issuance Costs (TLLP: $2,844 and $2,544, respectively) 1,283 1,587 2,823 4,161 4,067 4,067 5,098 6,991 Commitments and Contingencies (Note 17) Tesoro Corporation Stockholder’s Equity Common stock, par value $0.162/3; authorized 200,000,000 shares; 158,457,663 shares issued (156,627,604 in 2014) 25 25 26 26 26 26 26 26 Additional paid-in capital 1,000 1,070 1,186 1,255 1,391 1,474 1,548 1,595 Retained earnings 2,944 3,649 3,940 4,642 5,954 7,229 7,591 7,818 Treasury stock, 39,064,342 common shares (31,667,195 in 2014), at cost (226) (356) (798) (1,320) (2,009) (2,009) (2,009) (2,009) Accumulated other comprehensive loss (75) (137) (52) (149) (149) (158) (166) (171) Total Tesoro Corporation Stockholders’ Equity 3,668 4,251 4,302 4,454 5,213 6,563 6,990 7,259 Noncontrolling Interest 310 486 1,183 2,522 2,527 2,527 2,527 2,527 Total Equity 3,978 4,737 5,485 6,976 7,740 9,090 9,517 9,786 Total Liabilities and Equity 9,892 10,702 13,389 16,491 16,332 18,938 21,457 23,816
Statements of Consolidated Operations - USD ($) shares in Millions, $ in Millions 2011
Income Statement [Abstract]Revenues 27182Cost and Expenses:Cost of sales (excluding the lower of cost or market inventory valuation adjustment) 24022Lower of cost or market inventory valuation adjustment 0Operating expenses 1349Selling, general and administrative expenses 227Depreciation and amortization expense 391Loss on asset disposals and impairments 66Operating Income 1127Interest and financing costs, net -179Equity in earnings of equity method investments 0Other income, net 4Earnings Before Income Taxes =B4-B6-B7-B8-B9-B10-B11+B12+B13+B14+B15-B12Income tax expense 359Net Earnings from Continuing Operations =B16-B17Earnings (loss) from discontinued operations, net of tax -30Net earnings =B18+B19Less: Net earnings from continuing operations attributable to noncontrolling interest 17Net Earnings Attributable to Tesoro Corporation =B20-B21Net Earnings (Loss) Attributable to Tesoro Corporation:Continuing operations 576Discontinued operations -30Total =B24+B25Net Earnings (Loss) Per Share - Basic:Continuing operations 4.07Discontinued operations (0.21)Total 3.86Weighted average common shares outstanding - Basic 141.4Net Earnings (Loss) Per Share - Diluted:Continuing operations 4.02Discontinued operations (0.21)Total 3.81Weighted average common shares outstanding - Diluted 143.3Dividends per Share 0Supplemental Information:(a) Includes excise taxes collected by our marketing segment 352Dividends PaidContributions to Retained Earnings
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Formulas for Income Statement and Balance Sheet
17
Current AssetsCash and cash equivalents (TLLP: $16 and $19, respectively 900Receivables, net of allowance for doubtful accounts 1272Inventories, net of lower of cost or market valuation 1763Prepayments and other current assets 216Total Current Assets =B6+B5+B4+B3Net Property, Plant, and EquipmentProperty, plant and equipment, at cost 7055Less accumulated depreciation and amortization 1907Net Property, Plant and Equipment (TLLP: $3,450 and $3,343, respectively) =B9-B10Other Noncurrent AssetsAcquired intangibles, net (TLLP: $976 and $973, respectively) 226Other, net (TLLP: $214 and $251, respectively) 367Total Other Noncurrent Assets =B14+B13Total Assets =B15+B11+B7Current LiabilitiesAccounts payable 2305Other current liabilities 944Total Current Liabilities =B19+B18Additional FinancingDeferred Income Taxes 815Other Noncurrent Liabilities 567Debt, Net of Unamortized Issuance Costs (TLLP: $2,844 and $2,544, respectively) 1283Commitments and Contingencies (Note 17) Tesoro Corporation Stockholder’s EquityCommon stock, par value $0.162/3; authorized 200,000,000 shares; 158,457,663 shares issued (156,627,604 in 2014)
25Additional paid-in capital 1000Retained earnings 2944Treasury stock, 39,064,342 common shares (31,667,195 in 2014), at cost -226Accumulated other comprehensive loss -75Total Tesoro Corporation Stockholders’ Equity =B27+B28+B29+B30+B31Noncontrolling Interest 310Total Equity =B33+B32Total Liabilities and Equity =B34+B24+B23+B22+B20
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18
SourcesConsolidated Balance Sheets - USD ($) $ in Millions 2011 2012 2013 2014 2015 2016 2017 2018Cash and cash equivalents (TLLP: $16 and $19, respectively - 401 238 58 - - - Receivables, net of allowance for doubtful accounts 51 - - 643 - - - Inventories, net of lower of cost or market valuation 185 - 126 137 - - - Prepayments and other current assets 18 - 10 - - - - Property, plant and equipment, at cost - - - - - - - Less accumulated depreciation and amortization - - - - - - - Acquired intangibles, net (TLLP: $976 and $973, respectively) 12 - - 11 - - - Other, net (TLLP: $214 and $251, respectively) - - - - - - - Accounts payable - 383 - - 94 83 52 Other current liabilities - 144 315 15 58 51 32 Deferred Income Taxes 35 168 207 88 73 65 41 Other Noncurrent Liabilities 80 8 208 - - - - Debt, Net of Unamortized Issuance Costs (TLLP: $2,844 and $2,544, respectively) 304 1,236 1,338 - - - - Common stock, par value $0.162/3; authorized 200,000,000 shares; 158,457,663 shares issued (156,627,604 in 2014) - 1 - - - - - Additional paid-in capital 70 116 69 136 83 74 46 Retained earnings 705 291 1,128 1,312 357 316 199 Treasury stock, 39,064,342 common shares (31,667,195 in 2014), at cost - - - - - - - Accumulated other comprehensive loss 130 442 612 689 689 689 689 Noncontrolling Interest 62 - 115 - - - - TOTAL 1,652 3,190 4,366 3,089 1,355 1,277 1,060
UsesConsolidated Balance Sheets - USD ($) $ in Millions 2011 2012 2013 2014 2015 2016 2017 2018Cash and cash equivalents (TLLP: $16 and $19, respectively 739 - - - 57 50 31 Receivables, net of allowance for doubtful accounts - 92 122 - 48 42 26 Inventories, net of lower of cost or market valuation - 987 - - 138 122 77 Prepayments and other current assets - 12 - 71 16 14 9 Property, plant and equipment, at cost 202 1,411 2,510 1,436 754 703 625 Less accumulated depreciation and amortization 105 236 340 433 181 192 204 Acquired intangibles, net (TLLP: $976 and $973, respectively) - 49 959 - 73 69 40 Other, net (TLLP: $214 and $251, respectively) 219 318 225 123 80 77 43 Accounts payable 92 - 113 915 - - - Other current liabilities 233 - - - - - - Deferred Income Taxes - - - - - - - Other Noncurrent Liabilities - - - 17 - - - Debt, Net of Unamortized Issuance Costs (TLLP: $2,844 and $2,544, respectively) - - - 94 - - - Common stock, par value $0.162/3; authorized 200,000,000 shares; 158,457,663 shares issued (156,627,604 in 2014) - - - - - - - Additional paid-in capital - - - - - - - Retained earnings - - - - - - - Treasury stock, 39,064,342 common shares (31,667,195 in 2014), at cost - 85 - - - - - Accumulated other comprehensive loss 62 - 97 - 9 8 5 Noncontrolling Interest - - - - - - - TOTAL 1,652 3,190 4,366 3,089 1,355 1,277 1,060
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Sources and Uses
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SourcesConsolidated Balance Sheets - USD ($) $ in Millions 2011 2012 2013 2014 2015 2016 2017 2018Cash and cash equivalents (TLLP: $16 and $19, respectively 44.73% 0.00% 0.00% 0.00% 4.17% 3.91% 2.97%Receivables, net of allowance for doubtful accounts 0.00% 2.88% 2.79% 0.00% 3.51% 3.29% 2.49%Inventories, net of lower of cost or market valuation 0.00% 30.94% 0.00% 0.00% 10.19% 9.55% 7.25%Prepayments and other current assets 0.00% 0.38% 0.00% 2.30% 1.20% 1.12% 0.85%Property, plant and equipment, at cost 12.23% 44.23% 57.49% 46.49% 55.63% 55.04% 58.94%Less accumulated depreciation and amortization 6.36% 7.40% 7.79% 14.02% 13.38% 15.04% 19.21%Acquired intangibles, net (TLLP: $976 and $973, respectively) 0.00% 1.54% 21.97% 0.00% 5.36% 5.40% 3.81%Other, net (TLLP: $214 and $251, respectively) 13.26% 9.97% 5.15% 3.98% 5.90% 6.03% 4.01%Accounts payable 5.57% 0.00% 2.59% 29.62% 0.00% 0.00% 0.00%Other current liabilities 14.10% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Deferred Income Taxes 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Other Noncurrent Liabilities 0.00% 0.00% 0.00% 0.55% 0.00% 0.00% 0.00%Debt, Net of Unamortized Issuance Costs (TLLP: $2,844 and $2,544, respectively) 0.00% 0.00% 0.00% 3.04% 0.00% 0.00% 0.00%Common stock, par value $0.162/3; authorized 200,000,000 shares; 158,457,663 shares issued (156,627,604 in 2014) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Additional paid-in capital 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Retained earnings 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Treasury stock, 39,064,342 common shares (31,667,195 in 2014), at cost 0.00% 2.66% 0.00% 0.00% 0.00% 0.00% 0.00%Accumulated other comprehensive loss 3.75% 0.00% 2.22% 0.00% 0.66% 0.62% 0.47%Noncontrolling Interest 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
UsesConsolidated Balance Sheets - USD ($) $ in Millions 2011 2012 2013 2014 2015 2016 2017 2018Cash and cash equivalents (TLLP: $16 and $19, respectively 0.00% 12.57% 5.45% 1.88% 0.00% 0.00% 0.00%Receivables, net of allowance for doubtful accounts 3.09% 0.00% 0.00% 20.82% 0.00% 0.00% 0.00%Inventories, net of lower of cost or market valuation 11.20% 0.00% 2.89% 4.44% 0.00% 0.00% 0.00%Prepayments and other current assets 1.09% 0.00% 0.23% 0.00% 0.00% 0.00% 0.00%Property, plant and equipment, at cost 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Less accumulated depreciation and amortization 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Acquired intangibles, net (TLLP: $976 and $973, respectively) 0.73% 0.00% 0.00% 0.36% 0.00% 0.00% 0.00%Other, net (TLLP: $214 and $251, respectively) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Accounts payable 0.00% 12.01% 0.00% 0.00% 6.94% 6.51% 4.94%Other current liabilities 0.00% 4.51% 7.21% 0.49% 4.26% 3.99% 3.03%Deferred Income Taxes 2.12% 5.27% 4.74% 2.85% 5.41% 5.07% 3.85%Other Noncurrent Liabilities 4.84% 0.25% 4.76% 0.00% 0.00% 0.00% 0.00%Debt, Net of Unamortized Issuance Costs (TLLP: $2,844 and $2,544, respectively) 18.40% 38.75% 30.65% 0.00% 0.00% 0.00% 0.00%Common stock, par value $0.162/3; authorized 200,000,000 shares; 158,457,663 shares issued (156,627,604 in 2014) 0.00% 0.03% 0.00% 0.00% 0.00% 0.00% 0.00%Additional paid-in capital 4.24% 3.64% 1.58% 4.40% 6.16% 5.77% 4.38%Retained earnings 42.68% 9.12% 25.84% 42.47% 26.37% 24.71% 18.76%Treasury stock, 39,064,342 common shares (31,667,195 in 2014), at cost 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Accumulated other comprehensive loss 7.87% 13.86% 14.02% 22.30% 50.86% 53.95% 65.03%Noncontrolling Interest 3.75% 0.00% 2.63% 0.00% 0.00% 0.00% 0.00%TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
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Percentage of Sources and Uses
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Firm Ratios
2011 2012 2013 2014 2015 2016 2017 2018Short Term Solvency
Current Ratio 1.28 1.61 1.56 1.48 1.70 1.70 1.70 1.70Quick Ratio 0.73 1.06 0.81 0.77 0.79 0.79 0.79 0.79Cash Ratio 0.28 0.57 0.36 0.29 0.37 0.37 0.37 0.37
NWC to Total Assets 0.09 0.16 0.14 0.10 0.11 0.11 0.11 0.11
AssetTurnover RatiosInventory Turnover 13.63 16.51 13.29 14.61 9.62 9.62 9.62 9.62
Days Sales in Inventory 26.79 22.11 27.47 24.98 37.94 37.94 37.94 37.94Receivables Turnover 21.37 24.41 28.64 28.32 36.25 36.25 36.25 36.25
Days Sales in Receivables 17.08 14.95 12.75 12.89 10.07 10.07 10.07 10.07NWC turnover 30.14 16.99 19.60 24.72 16.16 16.16 16.16 16.16
Fixed Asset Turnover 5.28 5.68 5.47 4.49 3.01 3.01 3.02 3.05Total Asset Turnover 2.75 2.79 2.81 2.46 1.76 1.76 1.76 1.77
Operating Cycle n/A n/A n/A n/A n/A n/A n/A n/ACash Cycle N/A N/A N/A N/A N/A N/A N/A N/A
Long Term SovencyTotal Debt Ratio 0.60 0.56 0.59 0.58 0.53 0.53 0.53 0.53
Debt-Equity Ratio 0.13 0.15 0.21 0.25 0.25 0.23 0.22 0.22Equity Multiplier 2.49 2.26 2.44 2.36 2.11 2.12 2.12 2.11
LT Debt Ratio 0.24 0.25 0.34 0.37 0.34 0.33 0.32 0.32Times Interest Earned 2.65 2.71 2.76 2.68 2.81 2.81 2.81 2.81
ProfitabilityProfit Margin 0.02 0.02 0.01 0.02 0.05 0.05 0.05 0.05
Return on Assets 0.06 0.07 0.03 0.05 0.09 0.09 0.09 0.09Return on Equity 6.83 6.29 6.86 5.82 3.71 3.72 3.74 3.74
Market Value RatiosPrice-Earnings Ratio $6.22 $4.03 $8.77 $3.75 $2.02 $1.90 $1.81 $1.76
Price Sales Ratio n/a n/a n/a n/a n/a n/a n/a n/aMarket to Book Value Ratio n/a n/a n/a n/a n/a n/a n/a n/a
16
16 EDGAR
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Industry Ratios
2011 2012 2013 2014 2015Short Term Solvency
Current Ratio 1.65 1.83 1.78 1.65 1.6Quick Ratio 0.88 0.96 0.93 0.87 0.85Cash Ratio 0.62 0.71 0.66 0.6 0.58
NWC to Total Assets 0.17 0.18 0.18 0.16 0.15
AssetTurnover RatiosInventory Turnover 24.73 51.11 54.58 57.27 59.51
Days Sales in Inventory 14.76 7.14 6.69 6.37 6.13Receivables Turnover 54.23 121.88 132.87 125.73 114.9
Days Sales in Receivables 6.73 2.99 2.75 2.90 3.18NWC turnover 21.74 40.97 45.06 50.59 52.46
Fixed Asset Turnover 7.57 15.23 16.62 16.39 15.14Total Asset Turnover 3.62 7.51 8.1 8.05 7.64
Operating Cycle n/a n/a n/a n/a n/aCash Cycle n/a n/a n/a n/a n/a
Long Term SovencyTotal Debt Ratio 2.34 1.96 1.95 2.01 2.03
Debt-Equity Ratio 0.44 0.44 0.43 0.42 0.43Equity Multiplier 3.34 2.96 2.95 3.01 3.03
LT Debt Ratio 0.6 0.57 0.56 0.56 0.57Times Interest Earned 5.93 5.54 6.22 6.46 3.96
ProfitabilityProfit Margin 0.01 0.01 0 0.01 0.02
Return on Assets 0.04 0.09 -0.02 0.08 0.14Return on Equity 12.1 22.2 23.9 24.25 23.17
Market Value RatiosPrice-Earnings Ratio n/a n/a n/a n/a n/a
Price Sales Ratio n/a n/a n/a n/a n/aMarket to Book Value Ratio n/a n/a n/a n/a n/a 17
17 BizMiner
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Graphs of Ratios
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"TSO Historical Prices | Tesoro Corporation Common Stock Stock." Yahoo Finance. Yahoo, n.d. Web. 17 Oct. 2016.
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