EX-99.2 3 dex992.htm SLIDE PRESENTATION Slide Presentation
3Q05 Earnings Conference Call
November 3, 2005
Exhibit 99.2
Safe Harbor Statement
This slide presentation should be reviewed in conjunction with Sunoco’s
Third
Quarter 2005 earnings conference
call, held on November 3, 2005 at 4:00 p.m. ET.  You may listen to the audio portion of the conference call on the
website or an audio recording will be available after the call’ s completion by calling 1-800-642-1687 and entering
conference ID# 9828910.
Those statements made by representatives of Sunoco during the course of this conference call 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 a number of assumptions by Sunoco concerning future conditions, any or all of which may ultimately
prove to be inaccurate.  Forward-looking
statements are inherently uncertain and necessarily involve risks that may
affect Sunoco's business prospects and performance, causing actual results to differ materially from those discussed
during this conference call.  Such risks and uncertainties include, by way of example and not of limitation: general
business and economic conditions; competitive products and pricing; effects of weather conditions and natural
disasters on the Company’ s operating facilities and on product supply and demand; changes
in
refining, marketing,
and chemical margins; variation in petroleum-based
commodity prices and availability of crude oil and feedstock
supply or transportation; effects of transportation disruptions;
changes in the price differentials between light-sweet
and heavy-sour crude oils; fluctuations in supply of feedstocks and
demand
for products manufactured; changes in
product specifications; availability and pricing of oxygenates;
phase-outs
or restrictions on the use of MTBE; changes
in operating conditions and costs; changes in the expected level
of
environmental capital, operating or remediation
expenditures; age of, and changes in the reliability, efficiency
and
capacity of, the Company’s or a third party’s
operating facilities; potential equipment malfunction; potential
labor relations problems; the legislative and regulatory
environment; ability to identify acquisitions, execute them under favorable terms and integrate them into the
Company’s
existing
businesses; ability to enter into joint ventures and other similar arrangements under favorable
terms; delays and/or costs related to plant construction, improvements, or repairs and the issuance of applicable
permits; non-performance
by
or disputes with major customers, suppliers, dealers, distributors or other business
partners; changes in financial markets impacting pension expense
and funding requirements; political and economic
conditions, including the impact of potential terrorist acts  and international hostilities; and changes in the status of, or
initiation of, new litigation and/or arbitration proceedings.  These and other applicable risks and uncertainties have
been described more fully in Sunoco's Third Quarter 2005 Form
10-Q
filed
with the Securities and Exchange
Commission on
November 3, 2005.
Other factors not discussed herein also could materially and adversely affect
Sunoco’s business prospects and/or performance.  All
forward-looking
statements
included in this conference call are
expressly qualified in their entirety by the foregoing cautionary statements.
Sunoco undertakes no obligation to update any forward-looking
statements
whether as a result of new
information or future events.
1
3Q05 Summary
Income excluding special items of $357 MM ($2.60/share)
Significant impact of storm-related disruptions on the industry . . .
minimal impact to Sunoco operating facilities
Record Refining & Supply operating performance in September . . .
unscheduled downtime mid-quarter reduced net production by
approximately 3.1 MMB
Special items include loss on arbitration concerning phenol
pricing
Share repurchase of $36 MM in 3Q05 and $167 MM through
9/30/05 . . . Net debt-to-capital (per revolving credit agreement) of
22% at 9/30/05
Expect Refining & Supply capital expenditures of approximately
$1.8 billion over 2006-2008…will discuss in more detail at Investor
Meeting in Philadelphia on Tuesday, December 6, 2005
2
Earnings Profile
3Q05
3Q04
2Q05
Net Income, MM$:
   Refining & Supply
341
  89
252
212
129
   Retail Marketing
    6
  22
  (16)
    7
    (1)
   Chemicals
  23
  30
    (7)
  30
    (7)
   Logistics
    7
    9
    (2)
    9
    (2)
   Coke
  15
  12
    3
  13
    2
   Corporate 
  (25)
  (15)
  (10)
  (16)
    (9)
   Net Financing
  (10)
  (19)
    9
  (13)
    3
      Income Before Special Items
357
128
229
242
115
         Special Items
  (28)
  (24)
    (4)
    -
  (28)
      Net Income
329
104
225
242
  87
EPS (Diluted) Before Special Items 
2.60
0.85
1.75
1.75
0.85
EPS (Diluted), Net Income
2.39
0.69
1.70
1.75
0.64
3
3Q05 Summary
Key variances vs. 3Q04:
Higher refining margins and 3.1 MMB more net production
Lower net financing expenses
Lower retail gasoline margins
Higher expenses, including fuel and stock-based incentive
compensation
Key variances vs. 2Q05:
Higher refining margins and lower net financing expenses
Lower R&S net production (2.4MMB), lower chemical margins
Higher expenses, particularly fuel and stock-based incentive
compensation
4
Earnings Profile: Nine Months
5
9M05
9M04
Net Income, MM$:
Refining & Supply
661
406
255
Retail Marketing
5
38
(33)
Chemicals
86
54
32
Logistics
19
26
(7)
Coke
38
30
8
Corporate
(57)
(40)
(17)
Net Financing
(37)
(63)
26
Income Before Special Items
715
451
264
Special Items
(28)
(24)
(4)
Net Income
687
427
260
EPS (Diluted) Before Special Items
5.17
2.97
2.20
EPS
(Diluted), Net Income
4.97
2.81
2.16
Avg. Shares O/S, MM (diluted)
138
152
(14)
3Q05 Earnings Highlights
Refining & Supply earnings of $341 MM
96% crude unit utilization for 3Q05 . . . Impacted by
unscheduled downtime at Philadelphia and Toledo
refineries mid-quarter . . . September record monthly crude
throughput and energy efficiency…record gasoline
production in Northeast Refining
Increased high-acid crude runs to approximately
72,000/BPD
Strong margins on premium fuel products but weaker
refinery chemicals margins
6
Refining & Supply –
Margins, $/B
7
3Q05
3Q04
2Q05
Northeast Refining:
   6-3-2-1 Benchmark
11.23
4.58
6.65
6.06
5.17
      Crude Differential
  (0.09)
(1.43)
1.34
0.15
(0.24)
      Product Differential
  (0.62)
1.94
(2.56)
1.34
(1.96)
   Realized Margin
10.52
5.09
5.43
7.55
2.97
MidContinent Refining:
   3-2-1 Benchmark
16.03
6.91
9.12
9.94
6.09
      Crude Differential
  (0.17)
(0.42)
0.25
(0.36)
0.19
      Product Differential
  (4.26)
(0.13)
(4.13)
(0.78)
(3.48)
   Realized Margin
11.60
6.36
5.24
8.80
2.80
3Q05 Earnings Highlights
Retail Marketing earnings of $6 MM . . . approximately
break-even post-Katrina
Total quarterly fuel volumes up slightly from 3Q04
Average retail gasoline margins of 7.7 cpg
for 3Q05
8
Retail Marketing
 
3Q05
3Q04
2Q05
Sales (MMgal):
   Gasoline
1,195
1,200
(5)
1,167
28
   Middle Distillates
   165
   155
10
   161
  4
      Total
1,360
1,355
5
1,328
32
Gasoline Margin (cpg)
7.7
10.1
(2.4)
7.9
(0.2)
Distillate Margin (cpg)
8.8
  6.2
2.6
7.9
0.9
Throughput per co-owned / leased site  
   (M Gal/Mo)
143
137
6
139
  4
Merchandise Sales
   (M$/Store/Mo)
  84
  78
6
  81
  3
Merchandise Margin
   (% of Sales)
  29
  26
3
  29
  0
9
3Q05 Earnings Highlights
Chemicals earnings of $23 MM . . . estimated impact of
hurricane-related losses of $4MM (after tax)
Vs. 2Q05: lower margins for Bisphenol-A and Propylene
supply contract with Equistar
Phenol arbitration loss reflected as special item . . . $46 MM
after-tax charge for period June, 2003 to April, 2005 . . .
Sunoco contesting findings of liability and determination of
damages
10
Sunoco Chemicals
3Q05
3Q04
2Q05
Margin (cp#)
    Phenol / Related
10.7
  9.3
1.4
12.8
(2.1)
    Polypropylene
12.7
14.8
(2.1)
13.2
(0.5)
       All Products 
11.5
11.4
0.1
12.8
(1.3)
Sales Volume (MM#)
    Phenol / Related
   662
  684
(22)
   617
45
    Polypropylene
  590
   561
29
   583
  7
    Other 
     20
     48
(28)
     16
  4
Total Volume
1,272
1,293
(21)
1,216
56
11
North American Merchant Polypropylene
Selling Price: Townsend (blended price)
Propylene Price: CMAI (40% refinery grade, 60% polymer grade less 8% discount)
1H04
2H04
1H05
Selling Price vs Raw Material Cost, cpp
2H05
12
15
20
25
30
35
40
45
50
55
60
65
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-05
Selling Price
Propylene Acquisition
20
25
30
35
40
45
50
55
60
65
70
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-05
Phenol Price
Cumene Price
North American Merchant Phenol
Selling Price vs Raw Material Cost, cpp
Phenol Price = Blend of CMAI Wtd Avg Phenol and Cumene Based Formula Price
Cumene Price = CMAI Formula Price + 1.75 cpp for freight, storage and natural gas adder
1H04
2H04
1H05
2H05
13
Share Repurchase Activity
Shares
Repurchased
Total
Cost
Average
Price     
(MM)
(MM$)
($/share)
2000
10.4
   144
13.87
2001
21.4
   393
18.32
2002
--
     --
--
2003
  5.8
   136
23.36
2004
15.9
   568
35.68
9M05
  3.2
   167
52.30
   Total
56.7
1,407
24.80
14
Sunoco Shares Outstanding*
179.7
169.7
151.1
152.9
150.8
138.7
136.1
100
120
140
160
180
12/31/99
12/31/00
12/31/01
12/31/02
12/31/03
12/31/04
9/30/05
15
24% Reduction Since 12/31/99
*Restated to reflect August 1, 2005 stock split
09/30/05
06/30/05
12/31/04
Net Debt *
   679
1,061
1,088
SXL ** Minority Interest
   398
   337
   232
Shareholders' Equity
2,062
1,802
1,607
Total Capital
3,139
3,200
2,927
Net Debt / Capital (%)
22
33
37
Debt / Cap Ratio –
Revolver Covenant, MM$
16
*  Net of cash, includes debt guarantees
** Sunoco Logistics Partners L.P. (NYSE: SXL)
For More Information
17
Press releases and SEC filings are available
on our website at www.SunocoInc.com
Contact for more information:
Terry Delaney
(215) 977-6106
John Sadlowski
(215) 977-6764