CROWN
(registered trademark)
Crown Central Petroleum Corporation
Refiners / marketers of petroleum products & petrochemicals
One North Charles Street, P.O. Box 1168, Baltimore, Maryland 21203, (410)
539-7400
EXHIBIT 20
October 30, 1997 RESULTS THIRD QUARTER 1997
Dear Shareholders:
Crown Central Petroleum Corporation announced today a net profit of
$11.3 million ($1.16 per share) compared to a net loss of $3.6 million
($.37 per share) for the same period in 1996. Sales and operating revenues
in the quarter amounted to $413 million compared to $398 million last year.
For the first nine months of the year, Crown reported a net profit of $19.9
million ($2.04 per share) on revenues of $1.2 billion. This compares to a
net loss of $13.6 million ($1.40 per share) on flat revenues for the same
period in 1996.
Crown experienced its strongest third quarter since 1988 and the best
quarter since the second quarter of 1990. For the nine months, refinery
operating gross profit was up from $97 million in 1996 to over $136
million, an increase of 41%. The U.S. Gulf Coast 3.2.1 instantaneous crack
spread, used for measuring refining margins, averaged $4.28 per barrel for
the third quarter as compared to $2.31 per barrel for the same period in
1996. Wholesale margins on gasoline were especially strong, driven by full
utilization of U.S. domestic refining capacity and low inventories. Crude
prices remained relatively stable throughout the period with the exception
of an upward spike at the end of September continuing into the fourth
quarter.
The long planned maintenance turnaround, involving the crude
distillation and coking process units at the Company's Pasadena, Texas
refinery, was carried out successfully and on budget within a three week
period beginning the middle of September. The turnaround was timed to
capture peak margins in the market during the summer driving season cycle.
Crown's retail marketing segment results were mixed for the quarter.
Third quarter same store merchandise sales and margins showed 7% and 11%
increases, respectively, over the same period of last year. Retail
gasoline gallonage was down 3%, as the Company had a less aggressive
gasoline pricing posture. As with most of the retail gasoline businesses,
Crown's gross retail gasoline margin was down for the third quarter
reflecting a change of 35% from the previous year; the petroleum industry
frequently experiences lower retail margins when refining margins are
higher.
Crown personnel have performed exceptionally well and achieved very
positive operating results. While margins have improved, the Company's
successful strategies have contributed to these earnings. I am more
confident than ever of Crown's future role in the domestic refining and
marketing industry despite the many challenges facing us.
Following passage of the Clean Air Act in 1990, domestic refiners
began investing heavily in capital facilities to achieve compliance. At
the same time, this provided the opportunity for the industry to engineer
refinements that led to increased capacity known as "capacity creep" and
the production of more higher priced transportation fuels (higher
conversion ratios). As a result, significant new transportation fuel
capacity was added to the domestic refining industry. More recently, this
increase has peaked but demand has continued to increase at the same time.
This has led to a classic supply demand scenario leading to the longer term
potential of higher margins and greater investment returns.
Thank you for your continued support and confidence during this
challenging period.
Sincerely,
HENRY A. ROSENBERG, JR.
Chairman of the Board,
Chief Executive Officer and President
Crown Central Petroleum Corporation and Subsidiaries
Dollars in thousands, except per share data
Nine Months Ended Three Months Ended
September 30 September 30
1997 1996 1997 1996
--------- -------- --------- --------
Sales and operating $1,198,76 $1,200,18 $412,798 $397,889
revenues 1 8
Income (loss) before 31,854 (20,970 ) 17,540 (
income taxes 4,343 )
Net income (loss) 19,896 (13,634 ) 11,265 (
3,636 )
Net income (loss) per 2.04 (1.40 ) 1.16 (
share .37 )
Weighted average shares
used in the computation 9,737,64 9,718,1529,745,62 9
of income (loss) per 0 6 ,732,378
share
CROWN CENTRAL PETROLEUM CORPORATION
OPERATING STATISTICS
Nine Months Ended Three Months Ended
September 30 September 30
1997 1996 1997 1996
--------- --------- -------- --------
- - -
COMBINED REFINERY
OPERATIONS
- -----------------------
Production (BPD - M) 159 151 158 153
Production (MMbbl) 43.4 41.4 14.5 14.1
Sales (MMbbl) 42.8 43.9 15.0 13.8
Gross Margin ($/bbl) 3.18 2.20 4.16 2.48
Gross Profit ($MM) 136.1 96.8 62.3 34.3
Operating Cost ($/bbl) (2.24 ) (2.13) (2.23) (2.33 )
Operating Cost ($MM) (96.1 ) (93.6) (33.4) (32.2 )
Refining Operating Profit 40.0 3.2 28.9 2.1
(Loss) ($MM)
RETAIL
- -----------------------
Number Stores 339 344 339 344
Volume (pmps - Mgal) 130 129 132 133
Volume (MMgal) 396 398 134 138
Gasoline Gross Margin 0.105 0.128 0.092 0.139
($/gal)
Gasoline Gross Profit ($MM) 41.5 51.1 12.3 19.2
Merchandise Sales (pmps - 25.8 24.9 27.6 26.1
$M)
Merchandise Sales ($MM) 78.7 77.2 28.1 26.9
Merchandise Gross Margin 30.6 28.9 30.1 29.2
(%)
Merchandise Gross Profit 24.1 22.3 8.4 7.9
($MM)
Retail Gross Profit ($MM) 65.6 73.4 20.7 27.1
Retail Operating Costs (18.0 ) (19.4) (18.5) (20.0 )
(pmps - $M)
Retail Operating Costs (54.9 ) (59.9) (18.8) (20.6 )
($MM)
Retail Non-Operating (0.9 ) 1.5 (0.1) (0.3 )
(Expense) Income ($MM)
Retail Operating Profit 9.8 15.0 1.8 6.2
($MM)
WHOLESALE / TERMINAL
OPERATING (LOSS) PROFIT (2.9 ) 1.0 1.2 1.5
($MM)
OTHER
- ----------
LIFO Recovery (Provision) 15.0 (15.7) (1.7) (6.8 )
($MM)
Corporate Overhead ($MM) (15.2 ) (14.8) (4.7) (4.7 )
Net Interest (Expense) (8.8 ) (9.5) (2.9) (3.3 )
($MM)
Other (Expense) Income (6.0 ) (0.2) (5.0) 0.7
($MM)
Income Tax (Expense) (12.0 ) 7.4 (6.3) 0.7
Benefit ($MM)
Total Net Income (Loss) 19.9 (13.6) 11.3 (3.6 )
($MM)
Depreciation & Amortization 23.2 24.0 7.9 8.0
($MM)
Net Interest Expense ($MM) 8.8 9.5 2.9 3.3
LIFO (Recovery) Provision (15.0 ) 15.7 1.7 6.8
($MM)
(Gain) loss from Asset (0.4 ) 0.1 (0.3) 0.1
Disposals ($MM)
Income Tax Expense 12.0 (7.4) 6.3 (0.7 )
(Benefit) ($MM)
EBITDAAL ($MM) 48.5 28.3 29.8 13.9
Capital Expenditures ($MM) 20.4 19.8 8.2 5.0
<FN>
BPD = Barrels Per Day
bbl = barrel or barrels as applicable
gal = gallon or gallons as applicable
pmps = per month per store
M = in thousands
MM = in millions