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 8, 2004
GIANT INDUSTRIES, INC. ANNOUNCES FOURTH QUARTER
AND FULL YEAR 2003 OPERATING RESULTS
Scottsdale, Arizona, March 8, 2004 - Giant Industries, Inc. [NYSE: GI]
announced today fourth quarter net earnings of $1.6 million or $0.18 per
basic share compared to a net loss of ($534,000) or ($0.06) per basic
share for the fourth quarter of 2002. For the year ended December 31,
2003, Giant reported net earnings of $11.2 million or $1.28 per basic
share versus a net loss of ($9.3) million or ($1.08) per basic share in
2002.
Fred Holliger, Giant's Chief Executive Officer, commented, "Obviously,
this past year represented a significant improvement in earnings and
outlook for Giant. Earnings in all three of our strategic business units
were improved over the prior year and the recent quarter was the fourth
consecutive quarter with positive earnings. In our refining operations,
stronger margins, both on the East Coast and in the Four Corners region,
and our first full year of operating the Yorktown refinery contributed
significantly to the improved bottom line in 2003 as operating income
from continuing operations was up approximately $39.5 million over the
prior year level. Execution of our goal to sell non-strategic/
underperforming retail stores has put our retail personnel in a better
position to focus on our core retail stores where we have a competitive
market position. I am pleased that our retail operations achieved growth
in both merchandise and fuel sales on a comparable store basis. These
improvements, combined with improved merchandise and fuel margins,
resulted in an increase in operating income from continuing operations of
approximately $8.9 million over the prior year. Lastly, Phoenix Fuel
continued to grow both wholesale and cardlock fuel volumes that resulted
in an improvement of approximately $1.5 million in its operating income
from continuing operations over the 2002 level."
"I am particularly pleased that we continued to make great strides in our
effort to improve our balance sheet as we reduced our debt by
approximately $42 million and increased our cash balance from $10.2
million to $27.3 million over the year. We have now reduced our total
debt by approximately $85 million since the acquisition of the Yorktown
refinery in May 2002."
Holliger continued, "In the refining area, we are off to a good start in
2004 as refining margins on the East Coast and Four Corners area have
been good to date in the first quarter. Demand for finished products has
continued to grow as the economic recovery has continued to maintain
momentum and gasoline supplies and inventories have tightened due to
refinery turnaround activity and changing fuel specifications in the
United States. Phoenix Fuel continues to provide consistent cash flows
and growth in the markets that it serves and our Retail division is
continuing to experience growth in both merchandise and fuel sales on a
comparable store basis. Recently, fuel margins within our retail
operations have contracted slightly primarily due to increases in the
cost of fuel; however, earnings continue to exceed our budgeted level."
"A few weeks ago we announced that we have entered into a long-term crude
oil supply agreement with Statoil Marketing and Trading (USA), Inc. for
our Yorktown refinery. The first shipment under this agreement arrived
recently, and we are currently processing this acidic crude oil.
Following equipment upgrades that are scheduled to be completed by the
fourth quarter of 2004, we will substantially increase the amount of
crude oil supplied under this agreement. This agreement to purchase
acidic crude oil is the completion of another significant goal that we
have had in our strategic plan since the acquisition of our Yorktown
refinery. This crude supply is a good fit for our Yorktown refinery. Our
evaluation of this opportunity indicated that when fully operational the
relatively lower cost of acidic crude oils, the increased volumes of this
crude oil that we will be able to process, and the higher value products
this crude oil produces could combine to create economic benefits
potentially in excess of $20 million a year above those we could have
expected to see from our prior operations in a similar market
environment."
Giant's senior management will hold a conference call at 1:00 p.m. EST
(11:00 a.m. MST) on March
9, 2004 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 risk that current
refining margins will not continue, demand for finished products will not
continue to grow, growth experienced by Phoenix Fuel and our retail
division will not continue, retail fuel margins will continue to contract
and negatively affect earnings, we will not be able to realize the
projected growth and cash flow from operations resulting from our Statoil
crude oil supply agreement, upgrades at our Yorktown refinery will not
occur when scheduled or achieve our projected results, anticipated
benefits from the use of crude oil purchased from Statoil will not be
realized, 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 Ended Twelve Months Ended
December 31, December 31,
- ----------------------------------------------------------------------------------------------------
2003 2002 2003 2002
- ----------------------------------------------------------------------------------------------------
Net revenues $ 448,602 $ 401,308 $1,808,259 $1,249,286
Cost of products sold (excluding depreciation
and amortization) 375,361 338,714 1,510,981 1,042,606
- ----------------------------------------------------------------------------------------------------
Gross margin 73,241 62,594 297,278 206,680
Operating expenses 43,182 37,586 164,214 126,252
Depreciation and amortization 9,059 9,298 36,776 35,058
Selling, general and administrative expenses 8,195 6,969 30,617 25,555
Net loss (gain) on disposal/write-down of assets 523 (461) 1,837 (741)
- ----------------------------------------------------------------------------------------------------
Operating income 12,282 9,202 63,834 20,556
Interest expense (9,297) (10,324) (38,993) (36,308)
Amortization/write-off of financing costs (1,105) (1,184) (4,696) (3,256)
Interest and investment income 65 32 163 432
- ----------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
before income taxes 1,945 (2,274) 20,308 (18,576)
Provision (benefit) for income taxes 471 (1,034) 7,971 (7,477)
- ----------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
before cumulative effect of change in
accounting principle 1,474 (1,240) 12,337 (11,099)
Discontinued operations, net of income tax (benefit)
provision of $95, $470, $(276) and $1,221 143 706 (414) 1,832
Cumulative effect of change in accounting
principle, net of income tax benefit of $468 - - (704) -
- ----------------------------------------------------------------------------------------------------
Net earnings (loss) $ 1,617 $ (534) $ 11,219 $ (9,267)
====================================================================================================
Net earnings (loss) per common share:
Basic
Continuing operations $ 0.17 $ (0.14) $ 1.41 $ (1.29)
Discontinued operations .01 0.08 (0.05) 0.21
Cumulative effect of change in
accounting principle - - (0.08) -
- ----------------------------------------------------------------------------------------------------
$ 0.18 $ (0.06) $ 1.28 $ (1.08)
====================================================================================================
Assuming dilution
Continuing operations $ 0.17 $ (0.14) $ 1.40 $ (1.29)
Discontinued operations .01 0.08 (0.05) 0.21
Cumulative effect of change in
accounting principle - - (0.08) -
- ----------------------------------------------------------------------------------------------------
$ 0.18 $ (0.06) $ 1.27 $ (1.08)
====================================================================================================
Weighted average number of shares outstanding:
Basic 8,785,555 8,571,779 8,731,672 8,565,992
Assuming dilution 8,954,352 8,571,779 8,830,364 8,565,992
====================================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
- ---------------------------------------------------------------------------------------
December 31, 2003 December 31, 2002
- ---------------------------------------------------------------------------------------
Assets
Current assets $ 259,402 $ 211,684
- ---------------------------------------------------------------------------------------
Property, plant and equipment 628,718 626,574
Less accumulated depreciation and amortization (235,539) (211,576)
- ---------------------------------------------------------------------------------------
393,179 414,998
Other assets 54,773 75,604
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Total Assets $ 707,354 $ 702,286
=======================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 151,055 $ 120,351
Long-term debt, net of current portion 355,601 398,069
Deferred income taxes 39,092 37,612
Other liabilities 22,170 18,937
Stockholders' equity 139,436 127,317
- ---------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 707,354 $ 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
4 Qtr. 2003 3 Qtr. 2003 2 Qtr. 2003 1 Qtr. 2003 4 Qtr. 2002
- ---------------------------------------------------------------------------------------------------------
Refining
- --------
Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 29,992 29,244 31,854 31,146 32,389
Refinery Sourced Sales Barrels (BPD) 27,489 30,147 30,472 31,534 30,006
Avg. Crude Oil Costs ($/Bbl) $ 29.24 $ 28.90 $ 27.90 $ 31.21 $ 26.68
Refining Margins ($/Bbl) $ 8.07 $ 9.51 $ 9.41 $ 8.32 $ 7.64
Retail Fuel Volumes Sold as a % of Four
Corners Refinery's Sourced Sales Barrels 37% 35% 38% 36% 39%
Yorktown Operations:
Crude Oil/NGL Throughput (BPD) 61,540 60,485 52,316 56,256 61,629
Refinery Sourced Sales Barrels (BPD) 59,307 62,937 54,046 59,389 60,911
Avg. Crude Oil Costs ($/Bbl) $ 29.47 $ 28.54 $ 28.06 $ 32.85 $ 27.50
Refining Margins ($/Bbl) $ 4.47 $ 4.61 $ 2.82 $ 4.25 $ 3.21
Retail(1)
- ---------
Fuel Gallons Sold (000's) 38,782 41,254 43,902 42,870 45,053
Fuel Margins ($/gal) $ 0.19 $ 0.21 $ 0.22 $ 0.14 $ 0.15
Merchandise Sales ($ in 000's) $ 32,148 $ 35,387 $ 34,570 $ 30,934 $ 32,981
Merchandise Margins 28% 29% 30% 31% 27%
Number of Operating Units at
End of Period 127 127 129 135 136
Phoenix Fuel
- ------------
Fuel Gallons Sold (000's) 111,110 109,903 105,148 103,037 99,012
Fuel Margins ($/gal) $ 0.06 $ 0.05 $ 0.05 $ 0.05 $ 0.06
Lubricant Sales ($ in 000's) $ 6,508 $ 6,140 $ 6,212 $ 5,615 $ 5,922
Lubricant Margins 14% 16% 15% 16% 17%
=========================================================================================================
Operating Income (Loss) (in 000's)
- ----------------------------------
Refining - Four Corners Operations $ 6,445 $ 13,269 $ 12,715 $ 9,503 $ 7,600
- Yorktown Operations 5,988 10,540 (2,847) 8,358 2,696
Retail(1) 2,582 5,052 4,809 1,033 413
Phoenix Fuel 2,492 2,101 2,284 1,606 2,223
Corporate (4,891) (6,147) (5,033) (4,924) (4,550)
Net (loss) gain on disposal/write-down
of assets(1) (96) (1,272) (150) (273) 1,996
- ---------------------------------------------------------------------------------------------------------
Total(1) $ 12,520 $ 23,543 $ 11,778 $ 15,303 $ 10,378
=========================================================================================================
Capital Expenditures (in 000's)
- -------------------------------
Refining - Four Corners Operations $ 4,052 $ 654 $ 257 $ 341 $ 344
- Yorktown Operations 448 (87) 4,317 4,446 2,418
Retail 1,458 490 120 254 123
Phoenix Fuel 229 271 129 205 185
Corporate 102 112 55 26 137
- ---------------------------------------------------------------------------------------------------------
Total $ 6,289 $ 1,440 $ 4,878 $ 5,272 $ 3,207
=========================================================================================================
(1) Includes discontinued operations.
Selected Financial Data
December 31, 2003 December 31, 2002
- ------------------------------------------------------------------------------------
Working Capital (In Millions) $108,347 $ 91,333
Current Ratio 1.72:1 1.76:1
Long-Term Debt As A Percent of Total Capital 71.8% 75.8%
Net Debt As A Percent of Total Capital 70.2% 75.3%
Book Value Per Share $ 15.87 $ 14.85
Net cash provided by operating activities $ 62,349 $ 38,068
Share Price Data (NYSE: GI)
High Low Close
- -------------------------------------------------
2003 4th Quarter $12.73 $ 7.10 $11.98
2003 3rd Quarter $ 8.10 $ 5.57 $ 7.23
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