Revenues and Segment Information

6 Months Ended

Jun. 30, 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 $5.6 billion and $4.7 billion as of June 30, 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 June 30, 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 June 30, 2019:
Revenues:
Revenues from external customers	$	27,746	$	964	$	222	$	1		$	28,933
Intersegment revenues	8		53		73		(134		)	—
Total revenues	27,754		1,017		295		(133		)	28,933
Cost of sales:
Cost of materials and other	25,172		855		189		(133		)	26,083
Operating expenses (excluding depreciation and amortization expense reflected below)	1,026		132		17		—			1,175
Depreciation and amortization expense	518		22		12		—			552
Total cost of sales	26,716		1,009		218		(133		)	27,810
Other operating expenses	1		1		—		—			2
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		199			199
Depreciation and amortization expense	—		—		—		14			14
Operating income by segment	$	1,037	$	7	$	77	$	(213	)	$	908

Three months ended June 30, 2018:
Revenues:
Revenues from external customers	$	30,024	$	884	$	106	$	1		$	31,015
Intersegment revenues	11		42		46		(99		)	—
Total revenues	30,035		926		152		(98		)	31,015
Cost of sales:
Cost of materials and other	27,103		754		102		(99		)	27,860
Operating expenses (excluding depreciation and amortization expense reflected below)	988		109		13		—			1,110
Depreciation and amortization expense	483		20		7		—			510
Total cost of sales	28,574		883		122		(99		)	29,480
Other operating expenses	21		—		—		—			21
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		248			248
Depreciation and amortization expense	—		—		—		13			13
Operating income by segment	$	1,440	$	43	$	30	$	(260	)	$	1,253



	Refining		Ethanol		Renewable Diesel		Corporate and Eliminations			Total
Six months ended June 30, 2019:
Revenues:
Revenues from external customers	$	50,964	$	1,757	$	474	$	1		$	53,196
Intersegment revenues	10		105		124		(239		)	—
Total revenues	50,974		1,862		598		(238		)	53,196
Cost of sales:
Cost of materials and other	46,337		1,549		413		(238		)	48,061
Operating expenses (excluding depreciation and amortization expense reflected below)	2,097		257		36		—			2,390
Depreciation and amortization expense	1,021		45		23		—			1,089
Total cost of sales	49,455		1,851		472		(238		)	51,540
Other operating expenses	3		1		—		—			4
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		408			408
Depreciation and amortization expense	—		—		—		28			28
Operating income by segment	$	1,516	$	10	$	126	$	(436	)	$	1,216

Six months ended June 30, 2018:
Revenues:
Revenues from external customers	$	55,477	$	1,761	$	214	$	2		$	57,454
Intersegment revenues	15		88		88		(191		)	—
Total revenues	55,492		1,849		302		(189		)	57,454
Cost of sales:
Cost of materials and other	50,267		1,503		37		(191		)	51,616
Operating expenses (excluding depreciation and amortization expense reflected below)	1,999		220		27		—			2,246
Depreciation and amortization expense	944		38		13		—			995
Total cost of sales	53,210		1,761		77		(191		)	54,857
Other operating expenses	31		—		—		—			31
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		486			486
Depreciation and amortization expense	—		—		—		26			26
Operating income by segment	$	2,251	$	88	$	225	$	(510	)	$	2,054

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Refining:
Gasolines and blendstocks	$	11,530	$	12,514	$	20,904	$	23,143
Distillates	13,476		14,353		25,393		26,903
Other product revenues	2,740		3,157		4,667		5,431
Total refining revenues	27,746		30,024		50,964		55,477
Ethanol:
Ethanol	774		696		1,394		1,397
Distillers grains	190		188		363		364
Total ethanol revenues	964		884		1,757		1,761
Renewable diesel:
Renewable diesel	222		106		474		214
Corporate – other revenues	1		1		1		2
Revenues	$	28,933	$	31,015	$	53,196	$	57,454

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



	June 30, 2019		December 31, 2018
Refining	$	46,524	$	43,488
Ethanol	1,676		1,691
Renewable diesel	898		787
Corporate and eliminations	2,924		4,189
Total assets	$	52,022	$	50,155