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
August 12, 2003
GIANT INDUSTRIES, INC. ANNOUNCES IMPROVED
SECOND QUARTER EARNINGS
Scottsdale, AZ (August 12, 2003): Giant Industries, Inc. [NYSE: GI]
announced today net earnings from continuing operations of $769,000 or
$0.09 per share for the second quarter ended June 30, 2003. Net earnings,
including discontinued operations, were $447,000 or $0.05 per share, for
the second quarter ended June 30, 2003 compared to a net loss for the
second quarter of 2002 of ($4.3 million) or ($0.50) per share. For the
first half of 2003, the Company reported net earnings of $2.1 million or
$0.24 per share versus a net loss of ($4.2 million) or ($0.49) per share for
the first six months of 2002.
Fred Holliger, Giant's Chairman and CEO said, "The first six months of this
year were better than the first six months of last year as each of our
three business units posted significant improvement in operating results.
Our refining operations had earnings before tax of $27.7 million in the
first half of 2003 compared to $14.2 million for the same period last year.
The improvement was primarily the result of improved refining margins.
Refining's contribution to earnings was negatively impacted by a scheduled
turnaround at our Yorktown refinery that took place the last ten days of
March and the first two weeks of April. Additionally, an unscheduled outage
at our Yorktown refinery caused by a transformer failure at the third-party
owned and operated electric generation plant that supplies power to the
refinery negatively impacted earnings. As a result of this outage, we
incurred costs of approximately $1.3 million to repair damage caused by the
loss of power and estimate the reduced production resulted in lost earnings
of approximately $3.8 million. We are pursuing reimbursement from our power
supplier for these costs. We have no way, however, of predicting the
outcome of this effort."
"Our retail operations have also performed well in the first half of 2003.
Year-to-date, the earnings contribution from same store fuel sales is up
almost 25% over the prior year level and our same store merchandise
contribution is up approximately 10% over the prior year. These
improvements, coupled with continued cost containment, have resulted in
earnings before tax in the first six months of 2003 of approximately $5.6
million versus a loss of $90,000 in the first six months of last year. As a
result of this improved performance and our program to divest non-strategic
locations, our store level return on investment has increased to an
acceptable level."
"Phoenix Fuel Company continued to experience strong growth in both
wholesale and cardlock fuel sales that contributed to before tax earnings
growth of approximately 27% from approximately $3.0 million in the first
six months of 2002 to $3.9 million in the first six months of 2003."
Holliger continued, "We are continuing the sale of non-strategic assets and
remain committed to our debt reduction program. In the second quarter, we
received proceeds of approximately $6.6 million from the sale of retail
assets. We recently negotiated a Purchase and Sale Agreement for the sale
of our corporate office. The sale is contingent on, among other things, us
entering into a mutually acceptable leaseback arrangement. Upon completion
of this sale, we will have sold approximately $38.8 million of non-
strategic assets since we began the program in May of last year."
"In the second quarter, we funded approximately $4.9 million of capital
expenditures and reduced debt by approximately $8.0 million. We have
reduced our debt in excess of $62 million since the end of the second
quarter 2002. Today, we have no borrowings outstanding on our revolving
credit facility. Given the refining environment and the weak economic
conditions that have persisted for the past twelve months, I believe that
we have made significant strides in improving our financial performance and
reducing debt levels."
Giant's senior management will hold a conference call at 2:00 p.m. EDT on
August 12, 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, 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, recoverability of capital costs and earnings from the power
outage at the Yorktown refinery, the ability to complete targeted, non-
strategic asset sales including the sale of the corporate office,
continuation of current store level returns on investment 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 OPERATIONS
(Unaudited)
(In thousands except shares and per share data)
- ---------------------------------------------------------------------------------------------------
Three Months Six Months
Ended June 30, Ended June 30,
- ---------------------------------------------------------------------------------------------------
2003 2002 2003 2002
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Net revenues $ 409,708 $ 289,578 $ 891,015 $ 468,886
Cost of products sold 339,380 239,911 749,747 375,633
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Gross margin 70,328 49,667 141,268 93,253
Operating expenses 41,486 30,094 80,513 53,282
Depreciation and amortization 9,433 8,748 18,562 16,800
Selling, general and administrative expenses 7,272 6,130 14,296 11,555
Net (gain) loss on disposal/write-down of assets (177) 504 234 508
- ---------------------------------------------------------------------------------------------------
Operating income 12,314 4,191 27,663 11,108
Interest expense (9,865) (9,527) (20,024) (15,530)
Amortization/write-off of financing costs (1,197) (909) (2,388) (1,117)
Interest and investment income 59 261 83 325
- ---------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
before income taxes 1,311 (5,984) 5,334 (5,214)
Provision (benefit) for income taxes 542 (2,159) 2,207 (1,848)
- ---------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations before
cumulative effect of change in accounting principle 769 (3,825) 3,127 (3,366)
Discontinued operations, net of income tax benefit
of $214, $306, $233 and $531 (322) (459) (349) (795)
Cumulative effect of change in accounting principle,
net of income tax benefit of $469 - - (704) -
- ---------------------------------------------------------------------------------------------------
Net earnings (loss) $ 447 $ (4,284) $ 2,074 $ (4,161)
===================================================================================================
Net earnings (loss) per common share:
Basic
Continuing operations $ 0.09 $ (0.45) $ 0.36 $ (0.40)
Discontinued operations (0.04) (0.05) (0.04) (0.09)
Cumulative effect of change in
accounting principle - - (0.08) -
- ---------------------------------------------------------------------------------------------------
$ 0.05 $ (0.50) $ 0.24 $ (0.49)
===================================================================================================
Assuming dilution
Continuing operations $ 0.09 $ (0.45) $ 0.36 $ (0.40)
Discontinued operations (0.04) (0.05) (0.04) (0.09)
Cumulative effect of change in
accounting principle - - (0.08) -
- ---------------------------------------------------------------------------------------------------
$ 0.05 $ (0.50) $ 0.24 $ (0.49)
===================================================================================================
Weighted average number of shares outstanding:
Basic 8,780,857 8,566,271 8,676,895 8,560,109
Assuming dilution 8,861,823 8,566,271 8,738,746 8,560,109
===================================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
- --------------------------------------------------------------------------------------
June 30, 2003 December 31, 2002
- --------------------------------------------------------------------------------------
Assets
Current assets $ 222,145 $ 211,882
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Property, plant and equipment 645,385 630,950
Less accumulated depreciation and amortization (230,030) (212,801)
- --------------------------------------------------------------------------------------
415,355 418,149
Other assets 60,514 72,255
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Total Assets $ 698,014 $ 702,286
======================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 128,000 $ 120,351
Long-term debt, net of current portion 378,748 398,069
Deferred income taxes 39,185 37,612
Other liabilities 21,790 18,937
Stockholders' equity 130,291 127,317
- --------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 698,014 $ 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
2 Qtr. 2003 1 Qtr. 2003 4 Qtr. 2002 3 Qtr. 2002 2 Qtr. 2002
- ---------------------------------------------------------------------------------------------------------
Refining
- --------
Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 31,854 31,146 32,389 30,902 33,144
Refinery Sourced Sales Barrels (BPD) 30,472 31,534 30,006 32,408 34,060
Avg. Crude Oil Costs ($/Bbl) $ 27.90 $ 31.21 $ 26.68 $ 25.96 $ 23.48
Refining Margins ($/Bbl) $ 9.41 $ 8.32 $ 7.64 $ 6.04 $ 6.41
Retail Fuel Volumes Sold as a % of
Four Corners Refinery's Sourced
Sales Barrels 38% 36% 39% 41% 38%
Yorktown Operations:(1)
Crude Oil/NGL Throughput (BPD) 52,316 56,256 61,629 54,677 53,563
Refinery Sourced Sales Barrels (BPD) 54,046 59,389 60,911 58,803 54,610
Avg. Crude Oil Costs ($/Bbl) $ 28.06 $ 32.85 $ 27.50 $ 26.57 $ 26.77
Refining Margins ($/Bbl) $ 2.82 $ 4.25 $ 3.21 $ 1.71 $ 1.68
Retail(2)
- ---------
Fuel Gallons Sold (000's) 43,902 42,870 45,053 50,845 49,727
Fuel Margins ($/gal) $ 0.22 $ 0.14 $ 0.15 $ 0.14 $ 0.16
Merchandise Sales ($ in 000's) $ 34,570 $ 30,934 $ 32,981 $ 38,069 $ 37,984
Merchandise Margins 30% 31% 27% 28% 28%
Number of Operating Units at End of Period 129 135 136 140 146
Phoenix Fuel
- ------------
Fuel Gallons Sold (000's) 105,148 103,037 99,012 94,703 90,524
Fuel Margins ($/gal) $ 0.05 $ 0.05 $ 0.06 $ 0.05 $ 0.05
Lubricant Sales ($ in 000's) $ 6,212 $ 5,615 $ 5,922 $ 5,234 $ 5,002
Lubricant Margins 15% 16% 17% 16% 18%
- ---------------------------------------------------------------------------------------------------------
Operating Income (Loss) (in 000's)
- ----------------------------------
Refining: Four Corners Operations $ 12,715 $ 9,503 $ 7,600 $ 5,816 $ 8,356
Yorktown Operations (2,847) 8,358 2,696 (5,994) (3,090)
Retail(2) 4,809 1,033 413 1,639 1,886
Phoenix Fuel 2,284 1,606 2,223 1,752 1,566
Corporate (5,033) (4,924) (4,550) (4,725) (4,233)
Net gain (loss) on disposal/write-down
of assets(2) (150) (273) 1,996 4,961 (1,059)
- ---------------------------------------------------------------------------------------------------------
Total(2) $ 11,778 $ 15,303 $ 10,378 $ 3,449 $ 3,426
=========================================================================================================
Capital Expenditures (in 000's)(3)
- ----------------------------------
Refining: Four Corners Operations $ 257 $ 341 $ 344 $ 547 $ 4,170
Yorktown Operations 4,317 4,446 2,418 900 304
Retail 120 254 123 449 136
Phoenix Fuel 129 205 185 87 57
Corporate 55 26 137 248 553
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Total $ 4,878 $ 5,272 $ 3,207 $ 2,231 $ 5,220
=========================================================================================================
(1) The Yorktown Refinery was purchased on May 14, 2002.
(2) Includes discontinued operations.
(3) Excludes Yorktown Refinery acquisition contingent payments in the first and second quarters of 2003
and the acquisition of the Yorktown Refinery in the second quarter of 2002.
Selected Financial Data
June 30, 2003 December 31, 2002
- --------------------------------------------------------------------------------
Working Capital (In Millions) $ 94,145 $ 91,531
Current Ratio 1.74:1 1.76:1
Long-Term Debt As A Percent of Total Capital 74.4% 75.8%
Net Debt As A Percent of Total Capital 73.9% 75.3%
Book Value Per Share $ 14.83 $ 14.85
Net cash provided by operating activities(4) $ 28,208 $ 38,068
(4) Net cash provided by operating activities for June 30, 2003 and December 31,
2002 is for six and twelve months, respectively.
Share Price Data and Dividends (NYSE: GI)
High Low Close Dividends
- -----------------------------------------------------------
2003 2nd Quarter $ 6.32 $ 4.42 $ 5.96 $ --
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 $ --