Revenues and Segment Information

3 Months Ended

Mar. 31, 2019

11.

REVENUES AND SEGMENT INFORMATION

Revenue from Contracts with Customers

Disaggregation of Revenue

Revenue is presented in the table below under “Segment Information” disaggregated by product because this is the level of disaggregation that management has determined to be beneficial to users of our financial statements.

Receivables from Contracts with Customers

Our receivables from contracts with customers are included in “receivables, net” and totaled $5.3 billion and $4.7 billion as of March 31, 2019 and December 31, 2018, respectively.

Remaining Performance Obligations

We have spot and term contracts with customers, the majority of which are spot contracts with no remaining performance obligations. We do not disclose remaining performance obligations for contracts that have terms of one year or less. The transaction price for our remaining term contracts includes a fixed component and variable consideration (i.e., a commodity price), both of which are allocated entirely to a wholly unsatisfied promise to transfer a distinct good that forms part of a single performance obligation. The fixed component is not material and the variable consideration is highly uncertain. Therefore, as of March 31, 2019, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations.

Segment Information

Effective January 1, 2019, we revised our reportable segments to align with certain changes in how our chief operating decision maker manages and allocates resources to our business. Accordingly, we created a new reportable segment — renewable diesel — because of the growing importance of renewable fuels in the market and the growth of our investments in renewable fuels production. The renewable diesel segment includes the operations of DGD, which were transferred from the refining segment on January 1, 2019. Also effective January 1, 2019, we no longer have a VLP segment, and we include the operations of VLP in our refining segment. This change was made because of the Merger Transaction with VLP, as described in Note 2, and the resulting change in how we manage VLP’s operations. We no longer manage VLP as a business but as logistics assets that support the operations of our refining segment. Our prior period segment information has been retrospectively adjusted to reflect our current segment presentation.

We have three reportable segments – refining, ethanol, and renewable diesel. Each segment is a strategic business unit that offers different products and services by employing unique technologies and marketing strategies and whose operations and operating performance are managed and evaluated separately. Operating performance is measured based on the operating income generated by the segment, which includes revenues and expenses that are directly attributable to the management of the respective segment. Intersegment sales are generally derived from transactions made at prevailing market rates. The following is a description of each segment’s business operations.


•	The refining segment includes the operations of our 15 petroleum refineries, the associated marketing activities, and logistics assets that support our refining operations. The principal products manufactured by our refineries and sold by this segment include gasolines and blendstocks, distillates, and other products.

•

The ethanol segment includes the operations of our 14 ethanol plants, the associated marketing activities, and logistics assets that support our ethanol operations. The principal products manufactured by our ethanol plants are ethanol and distillers grains. This segment sells some ethanol to the refining segment for blending into gasoline, which is sold to that segment’s customers as a finished gasoline product.


•	The renewable diesel segment includes the operations of DGD, our consolidated joint venture as discussed in Note 8. The principal product manufactured by DGD and sold by this segment is renewable diesel. This segment sells some renewable diesel to the refining segment, which is then sold to that segment’s customers.

Operations that are not included in any of the reportable segments are included in the corporate category.

The following tables reflect information about our operating income by reportable segment (in millions):



	Refining		Ethanol		Renewable Diesel		Corporate and Eliminations			Total
Three months ended March 31, 2019:
Revenues:
Revenues from external customers	$	23,218	$	793	$	252	$	—		$	24,263
Intersegment revenues	2		52		51		(105		)	—
Total revenues	23,220		845		303		(105		)	24,263
Cost of sales:
Cost of materials and other	21,165		694		224		(105		)	21,978
Operating expenses (excluding depreciation and amortization expense reflected below)	1,071		125		19		—			1,215
Depreciation and amortization expense	503		23		11		—			537
Total cost of sales	22,739		842		254		(105		)	23,730
Other operating expenses	2		—		—		—			2
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		209			209
Depreciation and amortization expense	—		—		—		14			14
Operating income by segment	$	479	$	3	$	49	$	(223	)	$	308



	Refining		Ethanol		Renewable Diesel			Corporate and Eliminations			Total
Three months ended March 31, 2018:
Revenues:
Revenues from external customers	$	25,453	$	877	$	108		$	1		$	26,439
Intersegment revenues	4		46		42			(92		)	—
Total revenues	25,457		923		150			(91		)	26,439
Cost of sales:
Cost of materials and other	23,164		749		(65		)	(92		)	23,756
Operating expenses (excluding depreciation and amortization expense reflected below)	1,011		111		14			—			1,136
Depreciation and amortization expense	461		18		6			—			485
Total cost of sales	24,636		878		(45		)	(92		)	25,377
Other operating expenses	10		—		—			—			10
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—			238			238
Depreciation and amortization expense	—		—		—			13			13
Operating income by segment	$	811	$	45	$	195		$	(250	)	$	801

The following table provides a disaggregation of revenues from external customers for our principal products by reportable segment (in millions).



	Three Months Ended March 31,
	2019		2018
Refining:
Gasolines and blendstocks	$	9,374	$	10,629
Distillates	11,917		12,550
Other product revenues	1,927		2,274
Total refining revenues	23,218		25,453
Ethanol:
Ethanol	620		701
Distillers grains	173		176
Total ethanol revenues	793		877
Renewable diesel:
Renewable diesel	252		108
Corporate – other revenues	—		1
Revenues	$	24,263	$	26,439

Total assets by reportable segment were as follows (in millions):



	March 31, 2019		December 31, 2018
Refining	$	45,487	$	43,488
Ethanol	1,718		1,691
Renewable diesel	844		787
Corporate and eliminations	4,046		4,189
Total assets	$	52,095	$	50,155