RELEASE
2005-20
FOR IMMEDIATE RELEASE
Contact: Doug Aron
(713) 688-9600 x145
FRONTIER OIL REPORTS MOST PROFITABLE QUARTER IN COMPANY HISTORY
HOUSTON, TEXAS, November 3, 2005 - Frontier Oil Corporation (NYSE: FTO) today announced record quarterly net income of $109.2 million, or $1.91 per diluted share for the quarter ended September 30, 2005, compared to net income of $23.8 million, or $0.43 per diluted share, for the same period of 2004. For the nine months ended September 30, 2005, net income totaled a record $209.6 million, or $3.70 per diluted share, compared to $69.5 million, or $1.27 per diluted share for the nine months ended September 30, 2004.
Frontier’s record quarterly earnings are attributable to outstanding diesel and gasoline crack spreads, wide crude oil differentials and improved refinery utilization. Although our refineries operated at their maximum capacity during the third quarter 2005, hurricanes Rita and Katrina caused substantial damage to refineries located on the Gulf Coast. Gasoline and diesel crack spreads increased sharply during the third quarter 2005, due in part to Gulf Coast refinery outages, as well as to the lack of domestic refining capacity. The diesel crack spread increased to an average of $18.38 per barrel for the third quarter 2005, well above the $8.10 per barrel in the third quarter of 2004. The gasoline crack spread also improved significantly to an average of $18.11 per barrel in the third quarter of 2005 compared to an average of $8.88 per barrel in the third quarter 2004. The light/heavy crude oil differential increased to $14.93 per barrel for the quarter ended September 30, 2005 compared to $9.28 for the quarter ended September 30, 2004. Similarly, the WTI/WTS crude oil differential increased to $3.13 per barrel for the quarter compared to $2.95 per barrel for the third quarter of 2004.
Frontier’s crude oil charge for the third quarter 2005 averaged 161,416 barrels per day (bpd), approximately 8,700 bpd more than the average 152,724 bpd the Company charged in the third quarter of 2004. As a result, total product sales averaged 177,196 bpd for the third quarter 2005, compared to 174,204 bpd in the third quarter of 2004.
For the nine months ending September 30, 2005, Frontier generated $239.7 million cash from operating activities while incurring $78.5 million of capital expenditures. Frontier’s balance sheet remains in excellent shape at quarter end with a cash balance of $286.6 million and no borrowings under the Company’s revolving credit facility. Frontier’s cash exceeded its debt by $136.6 million as of September 30, 2005.
Frontier’s Chairman, President and CEO, James Gibbs, commented, “Our year to date earnings have been exceptional and our October results were also outstanding. We have amassed significant cash from operations and along with considering capital improvement projects at our refineries, our Board of Directors will evaluate a number of alternatives to return value to our shareholders at the board meeting scheduled for the end of this month.”
The third quarter 2005 results include an after-tax inventory gain of approximately $25.4 million, or $0.44 per diluted share, compared to a gain of $13.1 million, or $0.24 per diluted share, for the same period of 2004. The nine months ended September 30, 2005 include an after-tax inventory gain of $43.7 million, or $0.77 per diluted share, compared to a gain of $27.9 million, or $0.51 per diluted share, for the nine-month period ended September 30, 2004.
Conference Call
A conference call is scheduled for today, November 3, 2005, at 11:00 a.m. eastern time, to discuss the financial results. To access the call, please dial (800) 289-0496. For those individuals outside the United States, please call (913) 981-5519. A recorded replay of the call may be heard through November 17, 2005 by dialing (888) 203-1112 (international callers (719) 457-0820) and entering the code 3285148. In addition, the real-time conference call and a recorded replay will be webcast by PR Newswire. To access the call or the replay via the Internet, go to www.frontieroil.com and register from the Investor Relations page of the site.
Frontier operates a 110,000 barrel-per-day refinery located in El Dorado, Kansas, and a 52,000 barrel-per-day refinery located in Cheyenne, Wyoming, and markets its refined products principally along the eastern slope of the Rocky Mountains and in other neighboring plains states. Information about the Company may be found on its web site www.frontieroil.com.
This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. Such statements are those concerning strategic plans, expectations and objectives for future operations. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Company based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.
FRONTIER OIL CORPORATION | |
| | | | | | | | | | |
| | | Nine Months Ended | | Three Months Ended | |
| | | September 30 | | September 30 | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
INCOME STATEMENT DATA ($000's except per share) | | | | | | | | | |
| Revenues | | $ | 2,850,850 | | $ | 2,058,312 | | $ | 1,185,930 | | $ | 785,076 | |
| Raw material, freight and other costs | | | 2,282,546 | | | 1,719,851 | | | 931,495 | | | 671,400 | |
| Refinery operating expenses, excluding depreciation | | | 173,877 | | | 162,124 | | | 58,702 | | | 55,721 | |
| Selling and general expenses | | | 25,118 | | | 20,921 | | | 8,677 | | | 7,075 | |
| Merger termination and legal costs | | | 47 | | | 3,820 | | | 10 | | | 157 | |
| Operating income before depreciation | | | 369,262 | | | 151,596 | | | 187,046 | | | 50,723 | |
| Depreciation and amortization | | | 26,661 | | | 23,928 | | | 9,796 | | | 8,166 | |
| Operating income | | | 342,601 | | | 127,668 | | | 177,250 | | | 42,557 | |
| Interest expense and other financing costs | | | 8,335 | | | 17,618 | | | 2,359 | | | 5,813 | |
| Interest and investment income | | | (3,864 | ) | | (890 | ) | | (2,137 | ) | | (485 | ) |
| Gain on involuntary conversion of assets | | | - | | | (594 | ) | | - | | | - | |
| Provision for income taxes | | | 128,548 | | | 42,009 | | | 67,843 | | | 13,437 | |
| Net income | | $ | 209,582 | | $ | 69,525 | | $ | 109,185 | | $ | 23,792 | |
| Net income per diluted share | | $ | 3.70 | | $ | 1.27 | | $ | 1.91 | | $ | 0.43 | |
| Average shares outstanding (000's) | | | 56,699 | | | 54,598 | | | 57,303 | | | 54,890 | |
| | | | | | | | | | | | | | |
OTHER FINANCIAL DATA ($000's) | | | | | | | | | | | | | |
| Adjusted EBITDA (1) | | $ | 369,262 | | $ | 152,190 | | $ | 187,046 | | $ | 50,723 | |
| Cash flow before changes in working capital | | | 286,192 | | | 124,222 | | | 139,534 | | | 40,799 | |
| Working capital changes | | | (46,450 | ) | | (18,766 | ) | | 1,044 | | | 1,259 | |
| Net cash provided by operating activities | | | 239,742 | | | 105,456 | | | 140,578 | | | 42,058 | |
| Net cash used in investing activities | | | (78,533 | ) | | (33,120 | ) | | (20,158 | ) | | (3,020 | ) |
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OPERATIONS | | | | | | | | | | | | | |
Consolidated | | | | | | | | | | | | | |
Operations (bpd) | | | | | | | | | | | | | |
| Total charges | | | 166,249 | | | 164,818 | | | 176,566 | | | 169,436 | |
| Gasoline yields | | | 80,449 | | | 81,918 | | | 85,827 | | | 84,477 | |
| Diesel and jet fuel yields | | | 54,216 | | | 52,487 | | | 55,409 | | | 55,057 | |
| Total sales | | | 166,656 | | | 164,803 | | | 177,196 | | | 174,204 | |
| | | | | | | | | | | | | | |
Refinery operating margin information ( per sales bbl) | | | | | | | | | | | | | |
| Refined products revenue | | $ | 62.69 | | $ | 45.84 | | $ | 72.85 | | $ | 49.39 | |
| Raw material, freight and other costs | | | 50.17 | | | 38.09 | | | 57.14 | | | 41.89 | |
| Refinery operating expenses, excluding depreciation | | | 3.82 | | | 3.59 | | | 3.60 | | | 3.48 | |
| Depreciation and amortization | | | 0.58 | | | 0.51 | | | 0.60 | | | 0.49 | |
| | | | | | | | | | | | | | |
Light/Heavy crude oil differential (per bbl) | | $ | 14.39 | | $ | 8.75 | | $ | 14.93 | | $ | 9.28 | |
WTI/WTS crude oil differential (per bbl) | | | 4.16 | | | 3.04 | | | 3.13 | | | 2.95 | |
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BALANCE SHEET DATA ($000's) | | | At September 30, 2005 | | | At December 31, 2004 | |
| Cash, including cash equivalents (a) | | | | | | $ 286,553 | | | | | | $ 124,389 | |
| Working capital | | | | | | 295,045 | | | | | | 97,261 | |
| Short-term and current debt (b) | | | | | | - | | | | | | - | |
| Total long-term debt (c) | | | | | | 150,000 | | | | | | 150,000 | |
| Shareholders’ equity (d) | | | | | | 471,033 | | | | | | 240,113 | |
| Net debt to book capitalization (b+c-a)/(b+c-a+d) | | | | | | -40.8 | % | | | | | 9.6 | % |
(1) Adjusted EBITDA represents income before interest expense, interest and investment income, income tax, and depreciation and amortization. Adjusted EBITDA is not a calculation based upon generally accepted accounting principles; however, the amounts included in the adjusted EBITDA calculation are derived from amounts included in the consolidated financial statements of the Company. Adjusted EBITDA should not be considered as an alternative to net income or operating income, as an indication of operating performance of the Company or as an alternative to operating cash flow as a measure of liquidity. Adjusted EBITDA is not necessarily comparable to similarly titled measures of other companies. Adjusted EBITDA is presented here because it enhances an investor’s understanding of Frontier’s ability to satisfy principal and interest obligations with respect to Frontier’s indebtedness and to use cash for other purposes, including capital expenditures. Adjusted EBITDA is also used for internal analysis and as a basis for financial covenants. Frontier’s adjusted EBITDA for the nine and three months ended September 30, 2005 and 2004 is reconciled to net income as follows:
| | | Nine Months Ended | | Three Months Ended | |
| | | September 30 | | September 30 | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| Net income | | $ | 209,582 | | $ | 69,525 | | $ | 109,185 | | $ | 23,792 | |
| Add provision for income taxes | | | 128,548 | | | 42,009 | | | 67,843 | | | 13,437 | |
| Add interest expense and other financing costs | | | 8,335 | | | 17,618 | | | 2,359 | | | 5,813 | |
| Subtract interest and investment income | | | (3,864 | ) | | (890 | ) | | (2,137 | ) | | (485 | ) |
| Add depreciation and amortization | | | 26,661 | | | 23,928 | | | 9,796 | | | 8,166 | |
| Adjusted EBITDA | | $ | 369,262 | | $ | 152,190 | | $ | 187,046 | | $ | 50,723 | |
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