EX-99 2 exhibit99-1.txt GIANT INDUSTRIES, INC. EXHIBIT 99.1 EXHIBIT 99.1 GIANT INDUSTRIES, INC. NEWS RELEASE Contact: Mark B. Cox Executive Vice President, Treasurer, & Chief Financial Officer Giant Industries, Inc. (480) 585-8888 FOR IMMEDIATE RELEASE May 07, 2007 GIANT INDUSTRIES, INC. ANNOUNCES FIRST QUARTER 2007 OPERATING RESULTS Scottsdale, Arizona, May 07, 2007 - Giant Industries, Inc. [NYSE: GI] today reported net earnings for the first quarter ended March 31, 2007 of $7.2 million or $0.49 per diluted share. This compares to a net loss for the first quarter ended March 31, 2006 of $12.4 million or $0.85 per diluted share. Fred Holliger, Giant's Chief Executive Officer, said, "Our first quarter 2007 earnings were negatively impacted by reduced operations at our Yorktown and Ciniza refineries in the months of January and February as we made repairs necessitated by the fires that occurred at these facilities in the fourth quarter of 2006. The month of March was, however, exceptional for our Refining operations as our refineries were operating at high utilization rates and refining margins were strong throughout our markets. We are currently in discussions with our insurers regarding our recoveries relative to the property damage and business interruption loss at Yorktown, as well as the property damage at Ciniza. In the month of April, we received a partial advance from our insurers of approximately $1.5 million and we are hopeful that we will be able to finalize the claim in a timely manner. It should be noted that a significant portion of the insurance proceeds will be booked as income at the time they are received. Due to the refining margin environment at Yorktown during our outage, we believe that these reimbursements will have an impact on our 2007 earnings." "In our Retail operations, we continued to realize sales growth as same store fuel volumes increased by approximately two percent and merchandise sales increased approximately three percent in the quarter over last year's first quarter levels. Retail operations' operating profit was; however, lower in the quarter in comparison to the first quarter last year as a result of lower fuel margins." "Our Wholesale operations performed well in the first quarter of 2007 as the operating income contribution from our Wholesale operations increased by approximately ten percent, primarily as a result of the additional contribution from an acquisition completed in January 2007." Commenting on the 16-inch pipeline that will supply crude oil to the Company's Four Corners refineries, Holliger commented, "We are nearing completion of the necessary work to begin shipping crude oil on the pipeline. We currently anticipate that we should have the pipeline operational in May with new crude oil at the refineries by the end of June. As previously noted, when fully operational, the pipeline has sufficient capacity to allow us to again operate both Four Corners refineries at maximum rates." Commenting on second quarter operations, Holliger said, "Refining margins at the Four Corners refineries and Yorktown refinery are currently higher than the same time last year. We continue to believe that strong product demand coupled with favorable market conditions support a positive second quarter outlook for the industry as well as the remainder of 2007." "The Wholesale group continues to experience growth in fuel volumes and fuel margins are stable compared to the same time last year. Our Retail operations are continuing to experience growth in both merchandise and fuel sales on a comparable store basis. Recently, fuel margins within our Retail operations have been lower primarily due to increases in the cost of fuel, while merchandise margins have remained stable." Holliger provided the following update on the Company's proposed merger with Western Refining Company, "On April 12, 2007, the Federal Trade Commission filed suit against Western and Giant in the Federal District Court for the District of New Mexico seeking to enjoin the companies' proposed merger. Giant and Western have previously announced that we believe the FTC's position is without basis and that we intend to vigorously challenge the FTC in court. The preliminary injunction hearing on the claim began on May 7, 2007. Consummation of the transaction remains subject to this litigation." Giant's senior management will hold a conference call at 2:00 p.m. EDT on May 8, 2007 to discuss this earnings release and provide an update on company operations. The conference call will be broadcast live on the company's website at www.giant.com. Giant Industries, Inc., headquartered in Scottsdale, Arizona, is a refiner and marketer of petroleum products. Giant owns and operates one Virginia and two New Mexico crude oil refineries, a crude oil gathering pipeline system based in Farmington, New Mexico, which services the New Mexico refineries, finished products distribution terminals in Albuquerque, New Mexico and Flagstaff, Arizona, a fleet of crude oil and finished product truck transports, and a chain of retail service station/convenience stores in New Mexico, Colorado, and Arizona. Giant is also the parent Company of Phoenix Fuel Co., Inc., Dial Oil Co. and Empire Oil Co., all of which are wholesale petroleum products distributors. For more information, please visit Giant's website at www.giant.com. This press release contains forward-looking statements that involve known and unknown risks and uncertainties. Forward-looking statements are identified by words or phrases such as "believes," "expects," "anticipates," "estimates," "should," "could," "plans," "intends," "will," variations of such words and phrases, and other similar expressions. While these forward-looking statements are made in good faith, and reflect the Company's current judgment regarding such matters, actual results could vary materially from the forward-looking statements. Important factors that could cause actual results to differ from forward-looking statements include, but are not limited to: the risk that we will not receive anticipated amounts of insurance proceeds; the risk that insurance proceeds will not have an impact on 2007 earnings; the risk that the 16-inch pipeline will not be operational in May with new crude oil at the refineries by the end of June; the risk that, when fully operational, the 16-inch will not enable us to operate the Four Corners refineries at maximum rates; the risk that refining margins will not remain higher than the same time last year; the risk that product demand will not remain strong; the risk that favorable market conditions will not continue; the risk that the Wholesale group will not continue to experience growth in fuel volumes and margins; the risk that our Retail group will not continue to experience growth in both merchandise and fuel sales on a comparable store basis; the risk that merchandise margins for our Retail group will not remain stable; the risk that the Federal Trade Commission will obtain a preliminary injunction prohibiting us from closing the Western transaction; the risk that the Western transaction will not close; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on behalf of the Company, are expressly qualified in their entirety by the foregoing. Forward-looking statements made by the Company represent its judgment on the dates such statements are made. The Company assumes no obligation to update any forward-looking statements to reflect new or changed events or circumstance.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands except shares and per share data) ---------------------------------------------------------------------------------------------- Three Months Ended March 31, ---------------------------------------------------------------------------------------------- 2007 2006 ---------------------------------------------------------------------------------------------- Net revenues $ 1,020,070 $ 863,025 Cost of products sold (excluding depreciation and amortization) 908,711 810,552 ---------------------------------------------------------------------------------------------- Operating expenses 68,962 52,688 Depreciation and amortization 12,857 9,567 Selling, general and administrative expenses 12,682 10,006 Net loss/(gain) on disposal/write-down of assets 15 (640) Gain from insurance settlement due to fire incident - (2,853) ---------------------------------------------------------------------------------------------- Operating income/(loss) 16,843 (16,295) Interest expense (5,701) (4,682) Amortization of financing costs (399) (399) Investment and other income 361 1,602 ---------------------------------------------------------------------------------------------- Earnings/(Loss) before income taxes 11,104 (19,774) Provision/(Benefit) for income taxes 3,868 (7,424) ---------------------------------------------------------------------------------------------- Net earnings/(loss) $ 7,236 $ (12,350) ============================================================================================== Net earnings/(loss) per common share: Basic $ 0.50 $ (0.85) Assuming Dilution $ 0.49 $ (0.85) ============================================================================================== Weighted average number of shares outstanding: Basic 14,608,832 14,582,228 Assuming dilution 14,691,580 14,582,228 ==============================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) ----------------------------------------------------------------------------------------- March 31, 2007 December 31, 2006 ----------------------------------------------------------------------------------------- Assets Current assets $ 409,700 $ 429,287 ----------------------------------------------------------------------------------------- Property, plant and equipment 1,055,060 995,710 Less accumulated depreciation and amortization (339,554) (327,460) ----------------------------------------------------------------------------------------- 715,506 668,250 Other assets 89,415 78,640 ----------------------------------------------------------------------------------------- Total Assets $1,214,621 $1,176,177 ========================================================================================= Liabilities and Stockholders' Equity Current liabilities $ 242,216 $ 222,135 Long-term debt 330,526 325,387 Deferred income taxes 118,067 117,149 Other liabilities 32,101 27,138 Stockholders' equity 491,711 484,368 ----------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $1,214,621 $1,176,177 =========================================================================================
OPERATING STATISTICS 1 Qtr. 2007 4 Qtr. 2006 3 Qtr. 2006 2 Qtr. 2006 1 Qtr. 2006 ----------------------------------------------------------------------------------------------------------- Refining Group: --------------- Four Corners Operations: Crude Oil/NGL Throughput (BPD) 27,258 25,878 26,572 28,658 29,122 Refinery Sourced Sales Barrels (BPD) 27,791 25,157 27,102 27,084 28,471 Avg. Crude Oil Costs ($/Bbl) $ 57.74 $ 60.18 $ 70.50 $ 67.86 $ 62.30 Refining Margins ($/Bbl) $ 16.03 $ 11.68 $ 18.31 $ 21.97 $ 10.84 Retail Fuel Volumes Sold as a % of Four Corners Refineries' Sourced Sales Barrels 50% 54% 50% 47% 38% Yorktown Operations:(1) Crude Oil/NGL Throughput (BPD) 60,934 68,818 70,751 60,396 37,589 Refinery Sourced Sales Barrels (BPD) 59,343 73,028 68,360 61,668 33,466 Avg. Crude Oil Costs ($/Bbl) $ 56.07 $ 57.57 $ 68.92 $ 68.36 $ 59.02 Refining Margins ($/Bbl) $ 6.10 $ 5.19 $ 3.81 $ 6.65 $ (3.50) Retail Group:(2)(3) ------------- Fuel Gallons Sold (000's) 52,801 52,881 52,426 49,021 46,261 Fuel Margins ($/gal) $ 0.12 $ 0.17 $ 0.25 $ 0.17 $ 0.15 Merchandise Sales ($ in 000's) $ 39,247 $ 39,835 $ 43,175 $ 40,972 $ 35,531 Merchandise Margins 28% 28% 27% 27% 27% Number of Operating Units at End of Period 155 155 153 134 134 Wholesale Group: (4) ---------------- Fuel Gallons Sold (000's) 161,899 155,654 150,278 149,231 140,748 Fuel Margins ($/gal) $ 0.07 $ 0.06 $ 0.07 $ 0.06 $ 0.07 Lubricant Sales ($ in 000's) $ 32,093 $ 19,833 $ 18,388 $ 15,770 $ 17,644 Lubricant Margins 11% 13% 14% 14% 13% =========================================================================================================== Operating Income/(loss)(before corporate allocations) (in 000's) ----------------------------------- Refining - Four Corners Operations $ 19,800 $ 6,647 $ 24,572 $ 35,375 $ 11,233 - Yorktown Operations(5) 253 6,637 (802) 14,589 (30,805) Retail(2)(3) 889 3,083 8,212 3,978 1,711 Wholesale(4) 4,573 3,901 5,202 3,527 4,175 Corporate (8,657) (8,878) (8,784) (8,392) (6,102) Net (loss)/gain on disposal/write-down of assets(6) (15) (1,764) 46,500 33,051 3,493 ----------------------------------------------------------------------------------------------------------- Total $ 16,843 $ 9,626 $ 74,900 $ 82,128 $(16,295) =========================================================================================================== Capital expenditures (in 000's) Refining - Four Corners Operations(7) $ 26,450 $ 27,589 $ 25,168 $ 26,263 $ 9,783 - Yorktown Operations(8) 33,021 18,559 23,973 40,224 47,791 Retail 2,064 3,588 2,663 997 814 Wholesale 988 1,494 744 1,039 1,204 Corporate 380 172 395 398 105 ----------------------------------------------------------------------------------------------------------- Total $ 62,903 $ 51,402 $ 52,943 $ 68,921 $ 59,697 =========================================================================================================== (1) Yorktown margins for quarter ended March 31, 2006 were negative as a result of the fire that occurred in November 2005. (2) Includes results of 12 convenience stores purchased from Dial Oil Co ("Dial") in July 2005. (3) Includes results of 21 convenience stores purchased from Amigo Petroleum Company ("Amigo") in August 2006. (4) Includes results of Wholesale operations of Dial that was purchased in July 2005, Amigo that was purchased in August 2006, and Empire Oil Co. ("Empire"), which was purchased in January 2007. (5) Excludes gain from insurance settlement due to the 2005 Yorktown fire. (6) Includes gain from insurance settlement related to the Yorktown fire incident that occurred in November 2005. (7) Includes disbursements related to the October 2006 Ciniza fire incident. (8) Includes disbursements related to the November 2005, September and December 2006 Yorktown fire incidents.
Selected Financial Data March 31, 2007 December 31, 2006 ----------------------------------------------------------------------------------------- Working Capital (In Thousands) $ 167,484 $ 207,152 Current Ratio 1.69:1 1.93:1 Long-Term Debt As A Percent of Total Capital (9) 40.2% 40.2% Net Debt As A Percent of Total Net Capital (10) 39.4% 38.8% Book Value Per Share (11) $ 33.59 $ 33.08 Net cash provided by operating activities $ 62,597 $ 27,830 ----------------------------------------------------------------------------------------- (9) Total capital represents long-term debt plus total stockholders' equity. (10) Net debt represents long-term debt less cash and cash equivalents. Total net capital represents long-term debt less cash and cash equivalents plus total stockholders' equity. (11) Book value per share represents total stockholders' equity divided by number of common shares outstanding.
Share Price Data (NYSE: GI) High Low Close ------------------------------------------- 2007 1st Quarter $76.25 $71.16 $75.65 2006 4th Quarter $81.45 $74.20 $74.95 2006 3rd Quarter $82.30 $64.49 $81.20 2006 2nd Quarter $76.97 $56.09 $66.55 2006 1st Quarter $71.00 $52.44 $69.54
RECONCILIATIONS TO AMOUNTS REPORTED UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES REFINING GROUP -------------- Refining Margin --------------- Refining margin is the difference between average net sales prices and average cost of products produced per refinery sourced sales barrel of refined product. Refining margins for each of our refineries and all of our refineries on a consolidated basis are calculated as shown below.
Three Months Ended March 31, --------------------------------------------------------------------------------------------- 2007 2006 --------------------------------------------------------------------------------------------- AVERAGE PER BARREL Four Corners Operations Net sales $ 77.15 $ 76.39 Less cost of products 61.12 65.55 --------------------------------------------------------------------------------------------- Refining margin $ 16.03 $ 10.84 ============================================================================================= Yorktown Operations* Net sales $ 63.29 $ 62.11 Less cost of products 57.19 65.61 --------------------------------------------------------------------------------------------- Refining margin $ 6.10 $ (3.50) ============================================================================================= Consolidated Net sales $ 67.71 $ 68.68 Less cost of products 58.44 65.59 --------------------------------------------------------------------------------------------- Refining margin $ 9.27 $ 3.09 ============================================================================================= Reconciliations of refined product sales from produced products sold per barrel to net revenues Four Corners Operations Average sales price per produced barrel sold $ 77.15 $ 76.39 Times refinery sourced sales barrels per day 27,791 28,471 Times number of days in period 90 90 --------------------------------------------------------------------------------------------- Refined product sales from produced products sold** (000's) $ 192,967 $ 195,741 ============================================================================================= Yorktown Operations Average sales price per produced barrel sold $ 63.29 $ 62.11 Times refinery sourced sales barrels per day 59,343 33,466 Times number of days in period 90 90 --------------------------------------------------------------------------------------------- Refined product sales from produced products sold* (000's) $ 338,024 $ 187,072 ============================================================================================= Consolidated (000's) Sum of refined product sales from produced products sold* $ 530,991 $ 382,813 Purchased product, Transportation and other revenues 147,124 183,571 --------------------------------------------------------------------------------------------- Net revenue $ 678,115 $ 566,384 ============================================================================================= * Yorktown margins for quarter ended March 31, 2006 were negative as a result of the fire that occurred in November 2005. ** Includes inter-segment net revenues.
Three Months Ended March 31, --------------------------------------------------------------------------------------------- 2007 2006 --------------------------------------------------------------------------------------------- Reconciliation of average cost of products per produced per barrel sold to total cost of products sold (excluding depreciation and amortization) Four Corners Operations Average cost of products per produced barrel sold $ 61.12 $ 65.55 Times refinery sourced sales barrels per day 27,791 28,471 Times number of days in period 90 90 --------------------------------------------------------------------------------------------- Cost of products for produced products sold (000's) $ 152,873 $ 167,965 ============================================================================================= Yorktown Operations Average cost of products per produced barrel sold $ 57.19 $ 65.61 Times refinery sourced sales barrels per day 59,343 33,466 Times number of days in period 90 90 --------------------------------------------------------------------------------------------- Cost of products for produced products sold (000's) $ 305,444 $ 197,613 ============================================================================================= Consolidated Sum of refined cost of produced products sold $ 458,317 $ 365,578 Purchased product, transportation and other cost of products sold 139,156 175,210 --------------------------------------------------------------------------------------------- Total cost of products sold (excluding depreciation and amortization) $ 597,473 $ 540,788 =============================================================================================
RETAIL GROUP ------------ Fuel Margin ----------- Fuel margin is the difference between fuel sales less cost of fuel sales divided by number of gallons sold.
Three Months Ended March 31, --------------------------------------------------------------------------------------------- 2007 2006 --------------------------------------------------------------------------------------------- (in 000's except fuel margin per gallon) Fuel sales $ 125,466 $ 109,631 Less cost of fuel sold 119,035 102,913 --------------------------------------------------------------------------------------------- Fuel margin $ 6,431 $ 6,718 Number of gallons sold 52,801 46,261 Fuel margin per gallon $ 0.12 $ 0.15 Reconciliation of fuel sales to net revenues (000's) Fuel sales $ 125,466 $ 109,631 Excise taxes included in sales (30,968) (15,484) --------------------------------------------------------------------------------------------- Fuel sales, net of excise taxes 94,498 94,147 Merchandise sales 39,247 35,531 Other sales 6,375 5,101 --------------------------------------------------------------------------------------------- Net revenues $ 140,120 $ 134,779 ============================================================================================= Reconciliation of fuel cost of products sold to total cost of products sold (excluding depreciation and amortization) (000's) Fuel cost of products sold $ 119,035 $ 102,913 Excise taxes included in cost of products sold (30,968) (15,484) --------------------------------------------------------------------------------------------- Fuel cost of products sold, net of excise taxes 88,067 87,429 Merchandise cost of products sold 28,419 25,800 Other cost of products sold 5,035 4,015 --------------------------------------------------------------------------------------------- Total cost of products sold (excluding depreciation and amortization) $ 121,521 $ 117,244 =============================================================================================
WHOLESALE GROUP --------------- Fuel Margin ----------- Fuel margin is the difference between fuel sales less cost of fuel sales divided by number of gallons sold.
Three Months Ended March 31, --------------------------------------------------------------------------------------------- 2007 2006 --------------------------------------------------------------------------------------------- (in 000's except fuel margin per gallon) Fuel sales $ 360,701 $ 309,141 Less cost of fuel sold 348,845 299,502 --------------------------------------------------------------------------------------------- Fuel margin $ 11,856 $ 9,639 Number of gallons sold 161,899 140,748 Fuel margin per gallon $ 0.07 $ 0.07 Reconciliation of fuel sales to net revenues (000's) Fuel sales $ 360,701 $ 309,141 Excise taxes included in sales (44,131) (45,431) --------------------------------------------------------------------------------------------- Fuel sales, net of excise taxes 316,570 263,710 Lubricant sales 32,093 18,355 Other sales 2,464 1,008 --------------------------------------------------------------------------------------------- Net revenues $ 351,127 $ 283,073 ============================================================================================= Reconciliation of fuel cost of products sold to total cost of products sold (excluding depreciation and amortization) (000's) Fuel cost of products sold $ 348,845 $ 299,502 Excise taxes included in cost of products sold (44,131) (45,431) --------------------------------------------------------------------------------------------- Fuel cost of products sold, net of excise taxes 304,714 254,071 Lubricant cost of products sold 28,485 15,348 Other cost of products sold 1,195 414 --------------------------------------------------------------------------------------------- Total cost of products sold (excluding depreciation and amortization) $ 334,394 $ 269,833 =============================================================================================
CONSOLIDATED ------------
Three Months Ended March 31, --------------------------------------------------------------------------------------------- 2007 2006 --------------------------------------------------------------------------------------------- Reconciliation to net revenues reported in Condensed Consolidated Statement of Operations (000's) Net revenues - Refinery Group $ 678,115 $ 566,384 Net revenues - Retail Group 140,120 134,779 Net revenues - Wholesale Group: 351,127 283,073 Net revenues - Other 71 71 Eliminations (149,363) (121,282) --------------------------------------------------------------------------------------------- Total net revenues reported in Condensed Consolidated Statement of Earnings $1,020,070 $ 863,025 ============================================================================================= Reconciliation to cost of products sold (excluding depreciation and amortization) in Condensed Consolidated Statement of Operations (000's) Cost of products sold - Refinery Group (excluding depreciation and amortization) $ 597,473 $ 540,788 Cost of products sold - Retail Group (excluding depreciation and amortization) 121,521 117,244 Cost of products sold - Wholesale Group: 334,394 269,833 Eliminations (149,363) (121,282) Other 4,686 3,969 --------------------------------------------------------------------------------------------- Total cost of products sold (excluding depreciation and amortization) reported in Condensed Consolidated Statement of Operations $ 908,711 $ 810,552 ============================================================================================= Our refining margin per barrel is calculated by subtracting cost of products from net sales and dividing the result by the number of barrels sold for the period. Our fuel margin per gallon is calculated by subtracting cost of fuel sold from fuel sales and dividing the result by the number of gallons sold for the period. We use refining margin per barrel and fuel margin per gallon to evaluate performance, and allocate resources. These measures may not be comparable to similarly titled measures used by other companies. Investors and analysts use these financial measures to help analyze and compare companies in the industry on the basis of operating performance. These financial measures should not be considered as alternatives to segment operating income, revenues, costs of sales and operating expenses or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America.