Revenues and Segment Information

9 Months Ended

Sep. 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 $5.3 billion and $4.7 billion as of September 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 September 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 (loss) by reportable segment (in millions):



	Refining		Ethanol			Renewable Diesel			Corporate and Eliminations			Total
Three months ended September 30, 2019:
Revenues:
Revenues from external customers	$	26,145	$	891		$	212		$	1		$	27,249
Intersegment revenues	2		57			50			(109		)	—
Total revenues	26,147		948			262			(108		)	27,249
Cost of sales:
Cost of materials and other	23,432		847			164			(108		)	24,335
Operating expenses (excluding depreciation and amortization expense reflected below)	1,100		121			18			—			1,239
Depreciation and amortization expense	518		23			15			—			556
Total cost of sales	25,050		991			197			(108		)	26,130
Other operating expenses	10		—			—			—			10
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—			—			217			217
Depreciation and amortization expense	—		—			—			11			11
Operating income (loss) by segment	$	1,087	$	(43	)	$	65		$	(228	)	$	881

Three months ended September 30, 2018:
Revenues:
Revenues from external customers	$	29,894	$	864		$	90		$	1		$	30,849
Intersegment revenues	5		68			15			(88		)	—
Total revenues	29,899		932			105			(87		)	30,849
Cost of sales:
Cost of materials and other	26,928		776			85			(88		)	27,701
Operating expenses (excluding depreciation and amortization expense reflected below)	1,058		116			19			—			1,193
Depreciation and amortization expense	479		19			6			—			504
Total cost of sales	28,465		911			110			(88		)	29,398
Other operating expenses	10		—			—			—			10
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—			—			209			209
Depreciation and amortization expense	—		—			—			13			13
Operating income (loss) by segment	$	1,424	$	21		$	(5	)	$	(221	)	$	1,219



	Refining		Ethanol			Renewable Diesel		Corporate and Eliminations			Total
Nine months ended September 30, 2019:
Revenues:
Revenues from external customers	$	77,109	$	2,648		$	686	$	2		$	80,445
Intersegment revenues	12		162			174		(348		)	—
Total revenues	77,121		2,810			860		(346		)	80,445
Cost of sales:
Cost of materials and other	69,769		2,396			577		(346		)	72,396
Operating expenses (excluding depreciation and amortization expense reflected below)	3,197		378			54		—			3,629
Depreciation and amortization expense	1,539		68			38		—			1,645
Total cost of sales	74,505		2,842			669		(346		)	77,670
Other operating expenses	13		1			—		—			14
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—			—		625			625
Depreciation and amortization expense	—		—			—		39			39
Operating income (loss) by segment	$	2,603	$	(33	)	$	191	$	(664	)	$	2,097

Nine months ended September 30, 2018:
Revenues:
Revenues from external customers	$	85,371	$	2,625		$	304	$	3		$	88,303
Intersegment revenues	20		156			103		(279		)	—
Total revenues	85,391		2,781			407		(276		)	88,303
Cost of sales:
Cost of materials and other	77,195		2,279			122		(279		)	79,317
Operating expenses (excluding depreciation and amortization expense reflected below)	3,057		336			46		—			3,439
Depreciation and amortization expense	1,423		57			19		—			1,499
Total cost of sales	81,675		2,672			187		(279		)	84,255
Other operating expenses	41		—			—		—			41
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—			—		695			695
Depreciation and amortization expense	—		—			—		39			39
Operating income by segment	$	3,675	$	109		$	220	$	(731	)	$	3,273

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Refining:
Gasolines and blendstocks	$	10,978	$	12,660	$	31,882	$	35,803
Distillates	12,861		13,963		38,254		40,866
Other product revenues	2,306		3,271		6,973		8,702
Total refining revenues	26,145		29,894		77,109		85,371
Ethanol:
Ethanol	714		695		2,108		2,092
Distillers grains	177		169		540		533
Total ethanol revenues	891		864		2,648		2,625
Renewable diesel:
Renewable diesel	212		90		686		304
Corporate – other revenues	1		1		2		3
Revenues	$	27,249	$	30,849	$	80,445	$	88,303

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



	September 30, 2019		December 31, 2018
Refining	$	45,646	$	43,488
Ethanol	1,617		1,691
Renewable diesel	878		787
Corporate and eliminations	3,088		4,189
Total assets	$	51,229	$	50,155