Diamond Shamrock News Release
For more information contact:
Katherine Hughes, Public Relations
210/641-8846
or
Peggy Gowans, Investor Relations
210/641-9708
Diamond Shamrock Reports
Significantly Improved Earnings
SAN ANTONIO, TEXAS -- January 25, 1995 -- Diamond Shamrock, Inc. today reported
earnings for fiscal year ending December 31, 1994, of $75.8 million or $2.45 per
share, as compared to earnings of $18.4 million or $0.55 per share in 1993.
Fourth quarter earnings were $15.5 million or $0.49 per share, as compared to
$1.8 million or $0.02 per share for 1993.
Reported earnings for the year were positively impacted by an inventory
revaluation. On an underlying basis, without the effect of the estimated
inventory revaluation and after eliminating certain accounting adjustments,
earnings in 1994 were approximately $68.5 million or $2.20 per share. This is a
40% increase over underlying earnings reported in 1993 of $49.1 million or $1.62
per share.
Revenues for 1994 were $2.6 billion, a 2.0% increase over the previous year.
For the fourth quarter, revenues were $675.6 million, a 7.7% increase over the
same period last year.
Diamond Shamrock CEO Roger Hemminghaus comments, "1994 was an excellent year for
Diamond Shamrock. We saw the benefits of our integrated approach to business as
different parts of the company contributed to profitability at different times.
During the first half of the year, our refining business was supported by good
refining margins. During the last half of the year, as the refining margins
narrowed, we had excellent financial results from retail marketing. All year
long, our allied businesses provided strong financial performances, with several
of these setting records for profitability."
Refining margins were down significantly in the fourth quarter as uncertainty
about reformulated gasoline led to volatility in product markets. Despite this,
crude charge at the refineries averaged over 195,000 BPD in 1994, an 8.6%
increase over 1993. The capacity of the McKee Refinery was increased to 135,000
BPD by debottlenecking the plant, while the Three Rivers Refinery benefited from
the expansion project that came on-stream in mid-1993. In addition to
increasing the plant's capacity, this expansion significantly boosted the
refinery's gasoline production capability.
Retail marketing had a very good year in 1994, increasing fuel sales while also
improving profit margins. Merchandise sales were up 6.4% over the previous
year. During the year, the company added 43 Corner Stores, 17 newly constructed
stores as well as 26 stores from acquisition. The company began a "Pay the
Pump" program at selected locations which allows customers to pay by credit card
at the pump. Located primarily at high volume stores, "Pay the Pump" has been
very well received and will be expanded in 1995. In addition, the company
completed installation of its proprietary IRIS information system at all of its
800 company owned stores. This highly flexible information gathering and
communication system speeds customer transactions and allows for better
tracking, control, and merchandising of stores to match inventory to customer
requirements.
The company put its Colorado Springs Terminal into operation in April of 1994.
The terminal provides the fast growing front range of Colorado with an
additional source of refined products. Efforts continue to extend this pipeline
into the Denver area, and the company is working to resolve issues regarding
routing of this line. "We are committed to operating the safest and most
efficient pipeline system in the country," Hemminghaus said. "We remain
convinced that the pipeline to Denver gets these products to market in the
safest, least costly, and most dependable way possible." He is hopeful that the
issues will be resolved within the next few months so that the pipeline can be
completed as soon as possible this year.
The company is also actively working on its newest pipeline project, a line from
the McKee Refinery to El Paso, which it plans to have in service later this
year. Commenting, Mr. Hemminghaus said, "This will be a major focus in 1995, as
it gives us direct access to a market that is already very important to us. We
appreciate the support that the people of El Paso have demonstrated for this
project."
The allied businesses segment of the company contributed with strong earnings
from the propylene splitter, Mont Belvieu storage operations, Nitromite
Fertilizer, and North American InTeleCom. The propylene splitter benefited from
a general improvement in the petrochemical business and strong demand for
polymer grade propylene during the last half of the year while Nitromite
Fertilizer benefited from strong demand for anhydrous ammonia and depressed
natural gas prices. North American InTeleCom continues to expand its presence
in the inmate phone business and in pay phone management.
The outlook for 1995 is positive as refining margins are already beginning to
improve from their year end depressed levels. Based on the expectations of
tightening capacities, continued strong demand for gasoline spurred by a growing
economy, and industry wide low gasoline inventory levels, refining margins are
expected to strengthen as the summer driving season approaches. Given the
positive outlook, capital spending of $225 million is anticipated for 1995.
This will allow the company to complete the value adding projects currently
underway or to be approved. Capital spending has been increased from prior
estimates primarily as a result of the company's decision to own outright rather
than lease more of the retail outlets to be built or acquired in 1995 as the
company continues the strategic expansion of its retail network.
Diamond Shamrock, Inc. (NYSE: DRM) is a regional refiner and marketer of
petroleum products, headquartered in San Antonio, Texas. Diamond Shamrock has
two Texas refineries with a throughput capacity of 205,000 barrels per day and
markets gasoline through over 2,000 Diamond Shamrock branded outlets in eight
states.
DIAMOND SHAMROCK, INC.
(dollars in millions, except per share)
Preliminary Results Three Months Ended Twelve Months Ended
(unaudited) December 31, December 31,
1994 1993 1994 1993
Sales and Operating Revenues $675.6 $627.1 $2,606.3 $2,555.3
Income Before Tax Provision
and Cumulative Effect of
Accounting Changes 26.6 3.0 125.8 57.5
Income Before Cumulative
Effect of Accounting Changes 15.5 1.8 75.8 32.6
Cumulative Effect of Accounting
Changes - - - (14.2)
----- ----- ----- ------
Net Income $15.5 $ 1.8 $75.8 $18.4
Primary Earnings (Loss) Per
Common Share
Before Accounting Changes $0.49 $0.02 $2.45 $1.04
Cumulative Effect
of Accounting Changes - - - (0.49)
----- ----- ----- ------
Total $0.49 $0.02 $2.45 $0.55
Fully Diluted Earnings (Loss) Per
Common Share
Before Accounting Changes $0.48 $0.02 $2.34 $1.04
Cumulative Effect
of Accounting Changes - - - (0.49)
----- ----- ----- -----
Total $0.48 $0.02 $2.34 $0.55
Weighted Average Common
Shares Outstanding (millions)
Primary 29.1 29.0 29.1 28.9
Fully Diluted 32.3 32.3 32.4 30.8