Sunoco's CEO Discusses Q1 2012 Results - Earnings Call Transcript
Two, our retail performance was challenged this quarter by rapidly rising wholesale gasoline prices. During the quarter, we experienced an unprecedented runup in spot gasoline costs of $0.67 per gallon. This is the highest increase we have seen during the first quarter period.
As we have said before, this business does see quarter-to-quarter volatility, but as our trend shows, the business tends to deliver consistent and stable earnings and cash flow year after year. And in April, we benefited from a slightly improved margin environment, as wholesale gasoline prices retreated.
Third, Refining and Supply had a poor financial performance this quarter. The business continued to experience challenging market conditions, but also was burdened by anticipated transition costs after the idling of Marcus Hook. Mike Colavita will explain some of the drivers of this performance later in the call.
However, I do want to note that the refinery operations were very strong in the first quarter, which owed to the great focus of our employees and management at the refinery in what is a very challenging period for them. Additionally, we are pleased to see improved market conditions in the second quarter and are working hard to realize the potential market opportunities through continued strong operations and sharp focus on optimization of the product supply.I'll take the time now to talk about the status of our refinery exit process, which we have been focused on for some time. As we announced last week, we have entered into exclusive discussions with The Carlyle Group regarding the potential joint venture involving the Philadelphia refinery. Such a transaction would entail Sunoco contributing its refinery assets in exchange for a minority nonoperating stake. Sunoco would have no ongoing capital obligations with respect to the refinery. If a suitable transaction cannot be completed, we will idle the refinery in August of 2012. We believe that having a strong partner like The Carlyle Group is necessary to preserve the future of the facility. Read the rest of this transcript for free on seekingalpha.com
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