EXHIBIT 99
GIANT INDUSTRIES, INC.
NEWS RELEASE
Contact: Mark B. Cox
Executive Vice President, Treasurer, & Chief Financial Officer
Giant Industries, Inc.
(480) 585-8888
FOR IMMEDIATE RELEASE
May 12, 2004
GIANT INDUSTRIES, INC. ANNOUNCES RECORD
FIRST QUARTER EARNINGS
Scottsdale, Arizona, May 12, 2004 - Giant Industries, Inc. [NYSE: GI]
today reported net earnings for the first quarter ended March 31, 2004 of
$4.5 million or $0.50 per share. This compares to net earnings for the
first quarter of 2003 of $1.6 million or $0.19 per share.
Fred Holliger, Giant's Chief Executive Officer, said, "We are pleased to
report record first quarter net earnings. Refining margins at our Four
Corners refineries and Yorktown refinery were quite strong for the
quarter and have improved so far in the second quarter in spite of
continuing high crude oil prices. Our retail operations continued to
perform well as same store fuel volumes and merchandise sales increased
in excess of seven percent over last year first quarter levels. Retail
operations were positively impacted by higher fuel margins while these
improvements were partially offset by lower merchandise margins in the
first quarter of 2004. Phoenix Fuel's operating earnings increased in
excess of thirty percent over the first quarter 2003 level as a result of
higher wholesale fuel margins and sales volumes."
"In the first quarter of 2004, net cash flow from operations was
approximately $52 million. This level was a significant improvement
versus the $33 million of net cash flow from operations in the first
quarter of 2003. Additionally, our cash position at quarter-end was $70.3
million up from $27.3 million at year-end 2003."
"Refining fundamentals in the United States continue to look attractive
for the next several months. As we head into the summer driving season,
gasoline demand remains more than 3 percent above last year and
inventories are low in comparison to historical levels. We believe these
factors should contribute to continued strength in refining margins."
"We believe fuel margins for our retail group are stronger now than they
were this time last year, with same store fuel and merchandise volumes
above the prior year's levels. Merchandise margins are, however, lower
than they were this time last year. Phoenix Fuel is off to a very strong
start in the second quarter and is continuing to grow and contribute good
earnings and stable cash flow."
Holliger continued, "We recently completed the sale of approximately 3.3
million shares of common stock and the refinancing of our 9% Senior
Subordinated Notes. The proceeds from the equity offering will be used to
redeem approximately $51 million of our 11% Senior Subordinated Notes. We
have also given notice that we will be prepaying the approximate $20
million outstanding balance under our term loan on July 14, 2004. We plan
to use cash on hand to retire this debt. These debt reduction efforts
will reduce our annual interest payments by approximately $10.6 million
in comparison to the 2003 level, assuming no future borrowings on our
revolving credit facility. After we retire the term loan, we will have
reduced our debt from approximately $450 million to $294 million since
June 30, 2002, the month following the acquisition of the Yorktown
refinery. We remain committed to further improving our overall financial
health and evaluating growth opportunities to improve shareholder value."
Relative to the recent fire at the Ciniza refinery, Holliger stated, "We
have completed the turnaround at our Ciniza refinery and all units are
currently operating with the exception of the alkylation unit. We
currently expect that the repair of the alkylation unit should be
completed before the end of June."
Giant's senior management will hold a conference call at 1:00 p.m. EDT on
May 13, 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: inability to
attain expected debt reductions, continuation of the recent improvement
in refining margins, inability to repair the Ciniza refinery's alkylation
unit by the end of June, 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)
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Three Months Ended March 31,
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2004 2003
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Net revenues $ 541,596 $ 480,985
Cost of products sold 461,374 410,097
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Gross margin 80,222 70,888
Operating expenses 44,448 38,949
Depreciation and amortization 9,145 9,114
Selling, general and administrative expenses 8,200 7,024
Net loss on disposal/write-down of assets 14 410
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Operating income 18,415 15,391
Interest expense (9,361) (10,159)
Amortization of financing costs (958) (1,192)
Interest and investment income 39 24
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Earnings from continuing operations before income taxes 8,135 4,064
Provision for income taxes 3,618 1,681
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Earnings from continuing operations before cumulative
effect of change in accounting principle 4,517 2,383
Discontinued operations, net of income tax benefit of $35 - (53)
Cumulative effect of change in accounting principle net
of income tax benefit of $468 - (704)
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Net earnings $ 4,517 $ 1,626
====================================================================================================
Net earnings (loss) per common share:
Basic
Continuing operations $ 0.51 $ 0.28
Discontinued operations - (0.01)
Cumulative effect of change in accounting principle - (0.08)
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$ 0.51 $ 0.19
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Assuming dilution
Continuing operations $ 0.50 $ 0.28
Discontinued operations - (0.01)
Cumulative effect of change in accounting principle - (0.08)
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$ 0.50 $ 0.19
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Weighted average number of shares outstanding:
Basic 8,822,787 8,571,779
Assuming dilution 9,092,734 8,614,640
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
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March 31, 2004 December 31, 2003
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Assets
Current assets $ 275,687 $ 251,807
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Property, plant and equipment 632,596 631,355
Less accumulated depreciation and amortization (243,718) (236,441)
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388,878 394,914
Other assets 55,814 52,933
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Total Assets $ 720,379 $ 699,654
=======================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 170,105 $ 154,408
Long-term debt, net of current portion 352,364 355,601
Deferred income taxes 29,692 28,039
Other liabilities and deferred income 23,266 22,170
Stockholders' equity 144,952 139,436
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Total Liabilities and Stockholders' Equity $ 720,379 $ 699,654
=======================================================================================
Certain reclassifications have been made to the year 2003 financial statements to conform
to classifications used in 2004. These reclassifications had no effect on reported earnings
or stockholders' equity.
OPERATING STATISTICS
1 Qtr. 2004 4 Qtr. 2003 3 Qtr. 2003 2 Qtr. 2003 1 Qtr. 2003
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Refining
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Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 28,280 29,992 29,244 31,854 31,146
Refinery Sourced Sales Barrels (BPD) 27,615 27,489 30,147 30,472 31,534
Avg. Crude Oil Costs ($/Bbl) $ 32.61 $ 29.24 $ 28.90 $ 27.90 $ 31.21
Refining Margins ($/Bbl) $ 8.35 $ 8.07 $ 9.51 $ 9.41 $ 8.32
Retail Fuel Volumes Sold as a % of Four
Corners Refinery's Sourced Sales Barrels 36% 37% 35% 38% 36%
Yorktown Operations:
Crude Oil/NGL Throughput (BPD) 61,200 61,540 60,485 52,316 56,256
Refinery Sourced Sales Barrels (BPD) 63,824 59,307 62,937 54,046 59,389
Avg. Crude Oil Costs ($/Bbl) $ 32.68 $ 29.47 $ 28.54 $ 28.06 $ 32.85
Refining Margins ($/Bbl) $ 5.55 $ 4.47 $ 4.61 $ 2.82 $ 4.25
Retail(1)
- ---------
Fuel Gallons Sold (000's) 37,681 38,782 41,254 43,902 42,870
Fuel Margins ($/gal) $ 0.16 $ 0.19 $ 0.21 $ 0.22 $ 0.14
Merchandise Sales ($ in 000's) $ 30,844 $ 32,148 $ 35,387 $ 34,570 $ 30,934
Merchandise Margins 27% 28% 29% 30% 31%
Number of Operating Units at End of Period 127 127 127 129 135
Phoenix Fuel
- ------------
Fuel Gallons Sold (000's) 112,844 111,110 109,903 105,148 103,037
Fuel Margins ($/gal) $ 0.05 $ 0.06 $ 0.05 $ 0.05 $ 0.05
Lubricant Sales ($ in 000's) $ 6,875 $ 6,508 $ 6,140 $ 6,212 $ 5,615
Lubricant Margins 13% 14% 16% 15% 16%
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Operating Income (Loss) (in 000's)
- ----------------------------------
Refining - Four Corners Operations $ 6,161 $ 6,445 $ 13,269 $ 12,715 $ 9,503
- Yorktown Operations 14,435 5,988 10,540 (2,847) 8,358
Retail(1) 988 2,582 5,052 4,809 1,033
Phoenix Fuel 2,113 2,492 2,101 2,284 1,606
Corporate (5,268) (4,891) (6,147) (5,033) (4,924)
Net (loss) gain on disposal/write-down
of assets(1) (14) (96) (1,272) (150) (273)
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Total(1) $ 18,415 $ 12,520 $ 23,543 $ 11,778 $ 15,303
=========================================================================================================
Capital Expenditures (in 000's)(2)
- ----------------------------------
Refining - Four Corners Operations $ 744 $ 4,052 $ 654 $ 257 $ 341
- Yorktown Operations 1,872 448 (87) 4,317 4,446
Retail 258 1,458 490 120 254
Phoenix Fuel 328 229 271 129 205
Corporate 11 102 112 55 26
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Total $ 3,213 $ 6,289 $ 1,440 $ 4,878 $ 5,272
=========================================================================================================
(1) Includes discontinued operations.
(2) Excludes Yorktown refinery acquisition contingent payments.
Selected Financial Data
March 31, 2004 December 31, 2003
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Working Capital (In Millions) $ 105,582 $ 97,399
Current Ratio 1.62:1 1.63:1
Long-Term Debt As A Percent of Total Capital 70.9% 71.8%
Net Debt As A Percent of Total Capital 66.1% 70.2%
Book Value Per Share $ 16.34 $ 15.87
Net cash provided by operating activities(3) $ 51,811 $ 62,349
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(3) Net cash provided by operating activities for March 31, 2004 and December 31,
2003 is for three and twelve months, respectively.
Share Price Data (NYSE: GI)
High Low Close
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2004 1st Quarter $ 25.44 $ 11.71 $ 20.70
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
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