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
May 6, 2003
GIANT INDUSTRIES, INC. ANNOUNCES IMPROVED
FIRST QUARTER 2003 EARNINGS
Scottsdale, Arizona, May 6, 2003 - Giant Industries, Inc. [NYSE: GI] today
reported net earnings for the first quarter ended March 31, 2003 of $1.6
million or $0.19 per share. This compares to net earnings for the first
quarter of 2002 of $123,000 or $0.01 per share. Earnings from continuing
operations before recording the cumulative effect of a new accounting
standard related to asset retirement obligations were $2.3 million, or
$0.26 per share, for the first quarter ended March 31, 2003.
Fred Holliger, Giant's Chief Executive Officer, said, "We are pleased to
report our best first quarter operating earnings in the last ten years,
which were achieved in a period of extreme volatility for our refining
business unit. Refining margins at our Four Corners refineries improved
from the prior year level and Yorktown posted the strongest margins that
we've seen since we acquired the facility in May 2002. Our retail
operations also had a significant improvement in operating earnings of $1.7
million in the quarter compared to the first quarter of 2002. The earnings
improvement was primarily due to improved gasoline and merchandise margins,
continued tight control on operating costs and the elimination of non-
strategic stores. Phoenix Fuel's operating earnings also improved in the
first quarter as a result of higher wholesale fuel volumes."
"Net cash flow from operations was approximately $33 million in the first
quarter. In addition, we also completed the sale of approximately $2.6
million of non-strategic assets in the quarter bringing our total asset
sales to approximately $22 million since I announced our plan to divest
non-strategic assets in May of last year. We reduced our debt by
approximately $13.3 million during the quarter, as we retired approximately
$3.3 million of our term loan and reduced the outstanding balance on our
working capital line from $25 million to $15 million. We also increased our
cash position at quarter-end to $23.4 million up from $10.2 million at
year-end."
"We continue to pursue the sale of approximately $20 - $30 million of non-
strategic assets to further our goal of continued debt reduction. While the
weak economy and tight financial markets have slowed, or in a few specific
cases, resulted in potential transactions being cancelled, we are making
progress and remain optimistic that we will reach our goal before year-
end."
Holliger continued, "We believe that the refining fundamentals continue to
look attractive throughout the next several months. As we head into the
summer driving season, gasoline inventories are low compared to where they
are normally this time of year. Distillate inventories are also near
historic lows for this time of year. In our retail area, fuel margins
remain strong and fuel volumes are increasing as we approach what is
normally retail's peak season. Phoenix Fuel has been seeing good growth in
both wholesale and cardlock volumes."
On April 28, 2003, a large transformer failure disrupted operations at the
electric generation plant that supplies Giant's Yorktown refinery. As a
result, the refinery suffered a complete loss of power and shutdown of all
processing units. Processing and auxiliary units are being repaired and
brought on line. The refinery is expected to return to full capacity of
approximately 62,000 barrels per day in the next few days. Although the
impact is not believed to be material to the Company's overall operations,
the Company anticipates that the refinery outage will adversely impact
earnings in the second quarter.
Giant's senior management will hold a conference call at 2:00 p.m. EDT
(11:00 a.m. MDT) on May 6, 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, issues arising from the power outage at the Yorktown refinery,
the 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 circumstance.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands except shares and per share data)
Three Months Ended March 31,
- --------------------------------------------------------------------------------------
2003 2002
- --------------------------------------------------------------------------------------
Net revenues $ 490,524 $ 186,436
Cost of products sold 418,208 141,311
- --------------------------------------------------------------------------------------
Gross margin 72,316 45,125
Operating expenses 40,377 24,675
Depreciation and amortization 9,309 8,218
Selling, general and administrative expenses 7,024 5,425
Net loss on disposal/write-down of assets 410 4
- --------------------------------------------------------------------------------------
Operating income 15,196 6,803
Interest expense (10,159) (6,003)
Amortization of financing costs (1,192) (208)
Interest and investment income 24 64
- --------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 3,869 656
Provision for income taxes 1,603 265
- --------------------------------------------------------------------------------------
Earnings from continuing operations before cumulative
effect of change in accounting principle 2,266 391
Discontinued operations, net of income tax provision
(benefit) of $43 and $(179) 64 (268)
Cumulative effect of change in accounting principle
net of income tax benefit of $469 (704) -
- --------------------------------------------------------------------------------------
Net earnings $ 1,626 $ 123
======================================================================================
Net earnings (loss) per common share:
Basic
Continuing operations $ 0.26 $ 0.04
Discontinued operations 0.01 (0.03)
Cumulative effect of change in accounting principle (0.08) -
- --------------------------------------------------------------------------------------
$ 0.19 $ 0.01
======================================================================================
Assuming dilution
Continuing operations $ 0.26 $ 0.04
Discontinued operations 0.01 (0.03)
Cumulative effect of change in accounting principle (0.08) -
- --------------------------------------------------------------------------------------
$ 0.19 $ 0.01
======================================================================================
Weighted average number of shares outstanding:
Basic 8,571,779 8,553,879
Assuming dilution 8,614,640 8,571,722
======================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
- --------------------------------------------------------------------------------------
March 31, 2003 December 31, 2002
- --------------------------------------------------------------------------------------
Assets
Current assets $ 219,939 $ 211,919
- --------------------------------------------------------------------------------------
Property, plant and equipment 660,548 649,861
Less accumulated depreciation and amortization (235,409) (225,629)
- --------------------------------------------------------------------------------------
425,139 424,232
Other assets 62,121 66,135
- --------------------------------------------------------------------------------------
Total Assets $ 707,199 $ 702,286
======================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 132,316 $ 120,351
Long-term debt, net of current portion 386,111 398,069
Deferred income taxes 38,553 37,612
Other liabilities 21,276 18,937
Stockholders' equity 128,943 127,317
- --------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 707,199 $ 702,286
======================================================================================
Certain reclassifications have been made to the year 2002 financial statements to conform to
classifications used in 2003. These reclassifications had no effect on reported earnings or
stockholders' equity.
OPERATING STATISTICS
1 Qtr. 2003 4 Qtr. 2002 3 Qtr. 2002 2 Qtr. 2002 1 Qtr. 2002
- ---------------------------------------------------------------------------------------------------------
Refining
- --------
Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 31,146 32,389 30,902 33,144 33,785
Refinery Sourced Sales Barrels (BPD) 31,534 30,006 32,408 34,060 31,161
Avg. Crude Oil Costs ($/Bbl) $ 31.21 $ 26.68 $ 25.96 $ 23.48 $ 18.90
Refining Margins ($/Bbl) $ 8.32 $ 7.64 $ 6.04 $ 6.41 $ 7.36
Retail Fuel Volumes Sold as a % of
Four Corners Refinery's Sourced
Sales Barrels 36% 39% 41% 38% 41%
Yorktown Operations:(1)
Crude Oil/NGL Throughput (BPD) 56,256 61,629 54,677 53,563 --
Refinery Sourced Sales Barrels (BPD) 59,389 60,911 58,803 54,610 --
Avg. Crude Oil Costs ($/Bbl) $ 32.85 $ 27.50 $ 26.57 $ 26.77 --
Refining Margins ($/Bbl) $ 4.25 $ 3.21 $ 1.71 $ 1.68 --
Retail(2)
- ------
Fuel Gallons Sold (000's) 42,870 45,053 50,845 49,727 48,237
Fuel Margins ($/gal) $ 0.14 $ 0.15 $ 0.14 $ 0.16 $ 0.13
Merchandise Sales ($ in 000's) $ 30,934 $ 32,981 $ 38,069 $ 37,984 $ 32,837
Merchandise Margins 31% 27% 28% 28% 28%
Number of Operating Units at End of Period 135 136 140 146 150
Phoenix Fuel
- ------------
Fuel Gallons Sold (000's) 103,037 99,012 94,703 90,524 92,471
Fuel Margins ($/gal) $ 0.05 $ 0.06 $ 0.05 $ 0.05 $ 0.05
Lubricant Sales ($ in 000's) $ 5,615 $ 5,922 $ 5,234 $ 5,002 $ 5,387
Lubricant Margins 16% 17% 16% 18% 17%
- ---------------------------------------------------------------------------------------------------------
Operating Income (Loss) (in 000's)
- ----------------------------------
Refining - Four Corners Operations $ 9,503 $ 7,600 $ 5,816 $ 8,356 $ 9,050
- Yorktown Operations 8,358 2,696 (5,994) (3,090) --
Retail(2) 1,033 413 1,639 1,886 (689)
Phoenix Fuel 1,606 2,223 1,752 1,566 1,473
Corporate (4,924) (4,550) (4,725) (4,233) (3,474)
Net gain (loss) on disposal/write-down
of assets(2) (273) 1,996 4,961 (1,059) (4)
- ---------------------------------------------------------------------------------------------------------
Total(2) $ 15,303 $ 10,378 $ 3,449 $ 3,426 $ 6,356
=========================================================================================================
Capital Expenditures (in 000's)(3)
- ----------------------------------
Refining - Four Corners Operations $ 341 $ 344 $ 547 $ 4,170 $ 890
- Yorktown Operations 4,446 2,418 900 304 --
Retail 254 123 449 136 308
Phoenix Fuel 205 185 87 57 216
Corporate 26 137 248 553 918
- ---------------------------------------------------------------------------------------------------------
Total $ 5,272 $ 3,207 $ 2,231 $ 5,220 $ 2,332
=========================================================================================================
(1) The Yorktown Refinery was purchased on May 14, 2002.
(2) Includes discontinued operations.
(3) Excludes Yorktown Refinery acquisition contingent payments of $3,986,000 made in the first quarter
of 2003 and expenditures made for the acquisition of the Yorktown Refinery in the first and second
quarters of 2002.
Selected Financial Data
March 31, 2003 December 31, 2002
- -------------------------------------------------------------------------------------------
Working Capital (In Millions) $ 87,623 $ 91,568
Current Ratio 1.66:1 1.76:1
Long-Term Debt As A Percent of Total Capital 75.0% 75.8%
Net Debt As A Percent of Total Capital 73.8% 75.3%
Book Value Per Share $ 15.04 $ 14.85
Net cash provided by operating activities(4) $ 33,286 $ 38,068
(4) Net cash provided by operating activities for March 31, 2003 and December 31, 2002 is for
three and twelve months, respectively.
Share Price Data and Dividends (NYSE: GI)
High Low Close Dividends
- ----------------------------------------------------------------
2003 1st Quarter $ 5.50 $ 2.85 $ 4.89 $ --
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 $ --