EXHIBIT 99
GIANT INDUSTRIES, INC.
NEWS RELEASE
Contact: Mark B. Cox
Vice President, Treasurer, & Chief Financial Officer
Giant Industries, Inc.
(480) 585-8888
FOR IMMEDIATE RELEASE
March 11, 2003
GIANT INDUSTRIES, INC. ANNOUNCES FOURTH QUARTER
AND FULL YEAR 2002 OPERATING RESULTS
Scottsdale, Arizona, March 11, 2003 - Giant Industries, Inc. [NYSE: GI]
announced today a fourth quarter net loss of ($534,000) or ($.06) per share
compared to a net loss of ($5.7) million or ($0.66) per share for the
fourth quarter of 2001. For the year ended December 31, 2002, Giant
recorded a net loss of ($9.3) million or ($1.08) per share vs. 2001 net
earnings of $12.4 million or $1.40 per share.
Fred Holliger, Giant's Chief Executive Officer, commented, "The fourth
quarter reflected some encouraging signs in refining margins, really the
first sign of strengthening that the industry had seen in all of 2002.
While the year was disappointing from an earnings standpoint due to weak
refining margins, we did have several accomplishments. We integrated the
Yorktown refinery acquisition into our Company and successfully implemented
our strategies for enhancing its commercial opportunities. Phoenix Fuel
Company increased operating earnings before tax from $4.7 million in 2001
to $7.0 million in 2002. This increase in earnings was the result of
improved wholesale margins and tight control on operating costs. We also
refinanced, in May, our $100 million of Senior Subordinated Notes that
would have matured in November of this year with a new 10-year debt issue."
"Cash flow from operations was approximately $38 million dollars for the
year. We also closed on the sale of approximately $20 million of non-
strategic assets in the year, while controlling capital expenditures to a
level of approximately $13 million. These net cash inflows of approximately
$45 million were used to reduce our debt.
- As of March 1, 2003, we have repaid approximately $10 million
of our term loan used in the financing of the acquisition the
Yorktown refinery. The balance is presently $30 million.
- We reduced the outstanding balance on our working capital
line from $60 million in May 2002, soon after our acquisition
of the Yorktown refinery, to $25 million at year-end 2002.
- In the first quarter of 2003, we have repaid an additional
$10 million, reducing the working capital line to its current
balance of $15 million.
We also reduced our corporate overhead expense by $4.3 million from the
prior year level, of which $3.6 million was due to a reduction in
management incentive bonuses. While the management incentive bonuses may
resume as our financial performance improves, I believe the reduction is
significant given the fact that we made a large acquisition and
substantially increased the size of our company."
"We continue to target additional non-strategic asset sales of
approximately $20 - $30 million in 2003. When we complete these sales, we
will have met the higher end of our asset sales goal. We remain committed
to debt reduction, and we plan to continue to make additional progress in
this area throughout 2003. Further debt reduction not only improves our
balance sheet, it also reduces interest expense and improves earnings,
which hopefully translates into an improved stock price for our
shareholders."
"We mentioned in prior releases that we had applied for an extension
related to low sulfur standards at our Yorktown refinery. We received
notice this week from the Environmental Protection Agency that we have been
granted the requested relief. This waiver postpones in excess of $25
million of capital expenditures for up to three years. Giant must be in
full compliance with the sulfur standards at our Yorktown refinery by
January 1, 2008. This additional time will allow us to better evaluate
various clean fuel technologies and puts us in a position to utilize the
most successful and cost effective technology for Yorktown compliance."
Holliger continued, "We are anticipating that 2003 will be a much better
year than was 2002. Refining margins on the East Coast have continued to
improve throughout the first quarter as a result of the continued cold
weather and strong demand for refined products. Tight crude oil and
finished product inventories coupled with strong demand should contribute
to improved refining margins in 2003. We have also seen improvement in the
refining margins at our Four Corners refineries due to the general
improvement in refining margins experienced in the industry. Phoenix Fuel
Company continues to provide consistent cash flows and steady growth in the
markets that it serves. Due to the sale of some of our non-strategic sites,
our Retail division is better positioned to focus on our core retail stores
where we have a competitive market position."
Giant's senior management will hold a conference call at 1:00 p.m. EDT
(11:00 a.m. MDT) on March 11, 2003 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, a Travel Center on I-40 east of Gallup, 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., an
Arizona wholesale petroleum products distributor. 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: inability to attain expected debt
reductions, continuation of the recent improvement in refining margins,
continuation of the improvement experienced in Yorktown refinery
operations, ability to complete targeted, non-strategic asset sales 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 circumstances.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except shares and per share data)
- -----------------------------------------------------------------------------------------------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
- -----------------------------------------------------------------------------------------------------------
2002 2001 2002 2001
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Net revenues $ 410,295 $ 188,021 $1,280,783 $ 941,780
Cost of products sold 345,897 140,877 1,066,744 719,135
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Gross margin 64,398 47,144 214,039 222,645
Operating expenses 39,492 26,890 134,276 107,431
Depreciation and amortization 9,539 8,471 36,064 31,857
Selling, general and administrative expenses 6,700 4,867 24,550 27,864
Net (gain) loss on disposal/write-down of assets (371) 4,519 116 6,132
Allowance for related party note and interest receivable -- 5,409 -- 5,409
- -----------------------------------------------------------------------------------------------------------
Operating income (loss) 9,038 (3,012) 19,033 43,952
Interest expense (10,324) (5,988) (36,308) (24,098)
Amortization/write-off of financing costs (1,184) (183) (3,256) (764)
Interest and investment income 32 249 432 1,661
- -----------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations before
income taxes (2,438) (8,934) (20,099) 20,751
Provision (benefit) for income taxes (1,100) (3,532) (8,086) 7,984
- -----------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations (1,338) (5,402) (12,013) 12,767
Discontinued operations:
Loss from operations (285) (344) (1,434) (563)
Gain on disposal 1,674 -- 6,464 --
Net loss on asset sales/write-downs (49) (80) (454) (80)
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1,340 (424) 4,576 (643)
Provision (benefit) for income taxes 536 (169) 1,830 (257)
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Earnings (loss) from discontinued operations 804 (255) 2,746 (386)
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Net earnings (loss) $ (534) $ (5,657) $ (9,267) $ 12,381
===========================================================================================================
Net earnings (loss) per common share:
Basic
Continuing operations $ (0.15) $ (0.63) $ (1.40) $ 1.44
Discontinued operations 0.09 (0.03) 0.32 (0.04)
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$ (0.06) $ (0.66) $ (1.08) $ 1.40
===========================================================================================================
Assuming dilution
Continuing operations $ (0.15) $ (0.63) $ (1.40) $ 1.43
Discontinued operations 0.09 (0.03) 0.32 (0.04)
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$ (0.06) $ (0.66) $ (1.08) $ 1.39
===========================================================================================================
Weighted average number of shares outstanding:
Basic 8,571,779 8,616,396 8,565,992 8,871,006
Assuming dilution 8,571,779 8,616,396 8,565,992 8,885,134
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
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December 31, 2002 December 31, 2001
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Assets
Current assets $ 211,919 $ 135,116
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Property, plant and equipment 649,861 506,718
Less accumulated depreciation
and amortization (225,629) (197,212)
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424,232 309,506
Other assets 66,135 62,552
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Total Assets $ 702,286 $ 507,174
=================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 120,351 $ 78,837
Long-term debt, net of current portion 398,069 256,749
Deferred income taxes 37,612 32,772
Other liabilities 18,937 2,406
Stockholders' equity 127,317 136,410
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Total Liabilities and Stockholders' Equity $ 702,286 $ 507,174
=================================================================================
Certain reclassifications have been made to the year 2001 financial statements
to conform to classifications used in 2002. These reclassifications had no
effect on reported earnings or stockholders' equity.
OPERATING STATISTICS
4 Qtr. 2002 3 Qtr. 2002 2 Qtr. 2002 1 Qtr. 2002 4 Qtr. 2001
- -----------------------------------------------------------------------------------------------------------------
Refining
Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 32,389 30,902 33,144 33,785 28,781
Refinery Sourced Sales Barrels (BPD) 30,006 32,408 34,060 31,161 28,919
Avg. Crude Oil Costs ($/Bbl) $ 26.68 $ 25.96 $ 23.48 $ 18.90 $ 19.74
Refining Margins ($/Bbl) $ 7.64 $ 6.04 $ 6.41 $ 7.36 $ 8.31
Retail Fuel Volumes Sold as a % of Four
Corners Refinery's Sourced Sales Barrels 39% 41% 38% 41% 45%
Yorktown Operations:(1)
Crude Oil/NGL Throughput (BPD) 61,629 54,677 53,563 -- --
Refinery Sourced Sales Barrels (BPD) 60,911 58,803 54,610 -- --
Avg. Crude Oil Costs ($/Bbl) $ 27.50 $ 26.57 $ 26.77 -- --
Refining Margins ($/Bbl) $ 3.21 $ 1.71 $ 1.68 -- --
Retail(2)
Fuel Gallons Sold (000's) 45,053 50,845 49,727 48,237 50,793
Fuel Margins ($/gal) $ 0.15 $ 0.14 $ 0.16 $ 0.13 $ 0.15
Merchandise Sales ($ in 000's) $ 32,981 $ 38,069 $ 37,984 $ 32,837 $ 35,217
Merchandise Margins 27% 28% 28% 28% 27%
Number of Units at End of Period 136 140 146 150 151
Phoenix Fuel
Fuel Gallons Sold (000's) 99,012 94,703 90,524 92,471 93,215
Fuel Margins ($/gal) $ 0.06 $ 0.05 $ 0.05 $ 0.05 $ 0.04
Lubricant Sales ($ in 000's) $ 5,922 $ 5,234 $ 5,002 $ 5,387 $ 5,655
Lubricant Margins 17% 16% 18% 17% 14%
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Operating Income (Loss) (in 000's)
Refining - Four Corners Operations $ 7,600 $ 5,816 $ 8,356 $ 9,050 $ 9,739
- Yorktown Operations 2,696 (5,994) (3,090) -- --
Retail(2) 413 1,639 1,886 (689) (137)
Phoenix Fuel 2,223 1,751 1,567 1,473 441
Corporate (4,550) (4,725) (4,233) (3,474) (3,471)
Net gain (loss) on disposal/write-down of
assets(2) 1,996 4,961 (1,059) (4) (4,599)
Allowance for related party note
and interest receivable -- -- -- -- (5,409)
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Total(2) $ 10,378 $ 3,448 $ 3,427 $ 6,356 $ (3,436)
=================================================================================================================
Capital Expenditures (in 000's)(3)
Refining - Four Corners Operations $ 344 $ 547 $ 4,170 $ 890 $ 6,148
- Yorktown Operations 2,418 900 304 -- --
Retail 123 449 136 308 1,493
Phoenix Fuel 185 87 57 216 203
Corporate 137 248 553 918 1,068
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Total $ 3,207 $ 2,231 $ 5,220 $ 2,332 $ 8,912
=================================================================================================================
(1) The Yorktown Refinery was purchased on May 14, 2002.
(2) Includes discontinued operations.
(3) Excludes the acquisition of the Yorktown Refinery in the second quarter of 2002.
Selected Financial Data
December 31, 2002 December 31, 2001
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Working Capital (In Millions) $ 91,568 $ 56,279
Current Ratio 1.76:1 1.71:1
Long-Term Debt As A Percent of Total Capital 75.8% 65.3%
Net Debt As A Percent of Total Capital 75.3% 62.8%
Book Value Per Share $ 14.85 $ 15.95
Net cash provided by operating activities $ 38,068 $ 65,256
EBITDA(4) $ 60,064 $ 93,004
(4) EBITDA is defined as earnings before interest expense, taxes, depreciation, amortization, and certain
non-cash charges. For the year 2002, non-cash items consisted of a $3.3 million gain for a lower of
cost or market inventory adjustment, which is included in cost of products sold, and certain non-cash
losses and write-downs of $2.2 million. For the year 2001, non-cash charges consisted of a loss on
the disposal or write-down of assets for $6.2 million, an allowance for a related party note and interest
receivable for $5.4 million, and a $3.3 million adjustment for lower of cost or market inventory write-
downs, which was included in cost of products sold. The calculation of EBITDA is not based on U.S. GAAP,
and you should not consider it as an alternative to net earnings or cash flows from operating activities
(which are determined in accordance with U.S. GAAP), as an indicator of operating performance or as a
measure of liquidity. EBITDA may not be comparable to similarly titled measures used by other entities.
Share Price Data and Dividends (NYSE: GI)
High Low Close Dividends
- ----------------------------------------------------------------
2002 4th Quarter $ 3.85 $ 1.86 $ 2.95 $ --
2002 3rd Quarter $ 8.13 $ 3.15 $ 3.75 $ --
2002 2nd Quarter $ 12.55 $ 7.50 $ 8.00 $ --
2002 1st Quarter $ 10.39 $ 8.21 $ 10.30 $ --
2001 4th Quarter $ 9.30 $ 7.80 $ 9.23 $ --