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
November 9, 2004
GIANT INDUSTRIES, INC. ANNOUNCES
THIRD QUARTER RESULTS
Scottsdale, Arizona (November 9, 2004) -- Giant Industries, Inc. [NYSE:
GI] today reported net earnings of $6.0 million, or $0.48 per diluted
share, for the third quarter ended September 30, 2004. Net earnings were
$7.5 million, or $0.85 per diluted share, in the third quarter of 2003.
The Company reported net earnings of $15.5 million, or $1.41 per diluted
share, for the first nine months of 2004 compared to net earnings of $9.6
million, or $1.09 per diluted share, in 2003.
Giant's Chairman and Chief Executive Officer, Fred Holliger commented,
"Good overall performance from each of our strategic business units
contributed to a very solid financial performance in the third quarter.
Our refining operations contributed operating earnings of $19.8 million
as refining margins continued the strong trend that we have experienced
throughout most of this year. Earnings at the Yorktown refinery were
negatively impacted in the month of September, as portions of the
refinery were shut down for the entire month as we made upgrades at the
refinery to enable us to process additional higher acid crude oil. Year-
to-date, refining margins at the Four Corners refineries have been
approximately $9.50 per barrel and Yorktown refining margins have been
approximately $6.00 per barrel."
"Our retail operations continued to see growth in fuel volumes and
merchandise sales over last year's third quarter as well as year-to-date.
Same store fuel volumes increased approximately 4% over last year's third
quarter level and same store merchandise sales increased approximately 5%
over the prior year third quarter level. Earnings, however, were
negatively impacted in the quarter versus the prior year level by lower
fuel and merchandise margins."
"In the quarter, Phoenix Fuel continued to achieve growth in both
wholesale and cardlock fuel volumes. These improved volumes coupled with
somewhat steady product margins contributed to increased earnings versus
the prior year level."
Holliger continued, "As I mentioned earlier, we recently completed
upgrades at our Yorktown refinery that increase the amount of higher acid
crude oil that it can process from approximately 20,000 to 40,000 barrels
per day. This change in crude mix could result in additional pre-tax
earnings potentially in excess of $20 million on an annual basis above
those we could have expected to see from our operations in a similar
market environment. The debt reduction and the refinancing that we
completed earlier this year will reduce our annual pre-tax interest
payments by approximately $10.6 million in comparison to the 2003 level
assuming no future borrowings on our revolving credit facility. These two
events combined could result in an increase in annual pre-tax earnings
and operating cash flow in excess of $30 million per year."
Commenting on current market conditions, Holliger said, "Domestic
distillate inventories continue to be tight as we head into what is
typically the peak distillate demand season. Gasoline inventories are
also running below historical levels for this time of year. These factors
could contribute to continued strong financial performance in the fourth
quarter of 2004."
Giant's senior management will hold a conference call at 1 p.m. ET on
November 10, 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 the
strong trend in refining margins experienced throughout most of this year
will not continue; the risk that we will not realize the expected
economic benefits from processing higher acid crude oil; possibility that
we will have borrowings on our revolving credit facility; the risk that
distillate inventories will not remain tight, distillate demand will not
grow, and that gasoline inventories will remain below historical levels;
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)
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Three Months Ended Nine Months Ended
September 30, September 30,
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2004 2003 2004 2003
- ----------------------------------------------------------------------------------------------------
Net revenues $ 642,370 $ 472,275 $ 1,837,084 $ 1,359,708
Cost of products sold 564,506 388,831 1,582,515 1,135,511
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Gross margin 77,864 83,444 254,569 224,197
Operating expenses 42,119 42,046 129,749 122,088
Depreciation and amortization 9,016 9,314 27,318 27,731
Selling, general and administrative expenses 10,110 8,124 28,361 22,419
Net (gain) loss on disposal/write-down of assets (907) 151 (327) 369
Gain from involuntary conversion (958) - (958) -
- ----------------------------------------------------------------------------------------------------
Operating income 18,484 23,809 70,426 51,590
Interest expense (7,173) (9,657) (25,222) (29,679)
Costs associated with early debt extinguishment - - (10,875) -
Amortization/write-off of financing costs (1,013) (1,202) (7,827) (3,591)
Interest and investment income 57 - 138 81
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Earnings from continuing operations
before income taxes 10,355 12,950 26,640 18,401
Provision for income taxes 4,347 5,257 10,978 7,499
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Earnings from continuing operations
before cumulative effect of change in
accounting principle 6,008 7,693 15,662 10,902
Discontinued operations, net of income tax
benefit of $13, $102, $105 and $370 (21) (164) (169) (596)
Cumulative effect of change in accounting
principle, net of income tax benefit of $469 - - - (704)
- ----------------------------------------------------------------------------------------------------
Earnings (loss) $ 5,987 $ 7,529 $ 15,493 $ 9,602
====================================================================================================
Earnings (loss) per common share:
Basic
Continuing operations $ 0.49 $ 0.88 $ 1.46 $ 1.25
Discontinued operations - (0.02) (0.02) (0.07)
Cumulative effect of change in
accounting principle - - - (0.08)
- ----------------------------------------------------------------------------------------------------
$ 0.49 $ 0.86 $ 1.44 $ 1.10
====================================================================================================
Assuming dilution
Continuing operations $ 0.48 $ 0.87 $ 1.43 $ 1.24
Discontinued operations - (0.02) (0.02) (0.07)
Cumulative effect of change in
accounting principle - - - (0.08)
- ----------------------------------------------------------------------------------------------------
$ 0.48 $ 0.85 $ 1.41 $ 1.09
====================================================================================================
Weighted average number of shares outstanding:
Basic 12,242,994 8,785,555 10,693,386 8,713,513
Assuming dilution 12,496,204 8,887,824 10,960,684 8,788,836
====================================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
- -----------------------------------------------------------------------------------------
September 30, 2004 December 31, 2003
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Assets
Current assets $ 252,498 $ 251,702
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Property, plant and equipment 654,608 628,718
Less accumulated depreciation and amortization (256,932) (235,539)
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397,676 393,179
Other assets 64,810 54,773
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Total Assets $ 714,984 $ 699,654
=========================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 152,220 $ 154,408
Long-term debt, net of current portion 292,638 355,601
Deferred income taxes 31,500 28,039
Other liabilities and deferred income 23,286 22,170
Stockholders' equity 215,340 139,436
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Total Liabilities and Stockholders' Equity $ 714,984 $ 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
3 Qtr. 2004 2 Qtr. 2004 1 Qtr. 2004 4 Qtr. 2003 3 Qtr. 2003
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Refining
- --------
Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 29,271 26,463 28,280 29,992 29,244
Refinery Sourced Sales Barrels (BPD) 28,412 25,175 27,615 27,489 30,147
Avg. Crude Oil Costs ($/Bbl) $ 40.99 $ 35.97 $ 32.61 $ 29.24 $ 28.90
Refining Margins ($/Bbl) $ 8.14 $ 12.44 $ 8.35 $ 8.07 $ 9.51
Retail Fuel Volumes Sold as a % of
Four Corners Refinery's Sourced
Sales Barrels 38% 40% 36% 37% 35%
Yorktown Operations:
Crude Oil/NGL Throughput (BPD) 53,991 67,639 61,200 61,540 60,485
Refinery Sourced Sales Barrels (BPD) 53,585 69,862 63,824 59,307 62,937
Avg. Crude Oil Costs ($/Bbl) $ 38.43 $ 35.53 $ 32.68 $ 29.47 $ 28.54
Refining Margins ($/Bbl) $ 6.01 $ 6.20 $ 5.55 $ 4.47 $ 4.61
Retail(1)
- ---------
Fuel Gallons Sold (000's) 41,244 38,439 37,681 38,782 39,524
Fuel Margins ($/gal) $ 0.18 $ 0.21 $ 0.16 $ 0.19 $ 0.21
Merchandise Sales ($ in 000's) $ 36,214 $ 34,541 $ 30,844 $ 32,148 $ 34,664
Merchandise Margins 20% 24% 27% 28% 29%
Number of Operating Units at
End of Period 125 125 127 127 125
Phoenix Fuel
- ------------
Fuel Gallons Sold (000's) 119,253 124,342 112,844 111,110 109,903
Fuel Margins ($/gal) $ 0.05 $ 0.06 $ 0.05 $ 0.06 $ 0.05
Lubricant Sales ($ in 000's) $ 7,933 $ 7,827 $ 6,875 $ 6,508 $ 6,140
Lubricant Margins 13% 13% 13% 14% 16%
- --------------------------------------------------------------------------------------------------------
Operating Income (Loss) (before
corporate allocations) (in 000's)
- ---------------------------------
Refining - Four Corners Operations $ 8,150 $ 13,704 $ 6,161 $ 6,445 $ 13,269
- Yorktown Operations 11,652 21,811 14,435 5,988 10,540
Retail(1) 1,428 2,614 988 2,582 4,153
Phoenix Fuel 2,216 2,963 2,113 2,492 2,101
Corporate (6,879) (7,256) (5,268) (4,891) (6,147)
Net gain (loss) on disposal/write-down
of assets(1) 1,883 (549) (14) (96) (373)
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Total(1) $ 18,450 $ 33,287 $ 18,415 $ 12,520 $ 23,543
========================================================================================================
Capital Expenditures (in 000's)(3)
- ----------------------------------
Refining - Four Corners Operations(2) $ 5,915 $ 15,637 $ 744 $ 4,052 $ 654
- Yorktown Operations 10,523 1,981 1,872 448 (87)
Retail 919 438 258 1,458 490
Phoenix Fuel 500 465 328 229 271
Corporate 135 115 11 102 112
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Total $ 17,992 $ 18,636 $ 3,213 $ 6,289 $ 1,440
========================================================================================================
(1) Includes discontinued operations.
(2) Includes payments related to the Ciniza fire incident.
(3) Excludes Yorktown refinery acquisition contingent payments.
Selected Financial Data
September 30, 2004 December 31, 2003
- --------------------------------------------------------------------------------------
Working Capital (In Millions) $ 100,278 $ 97,294
Current Ratio 1.66:1 1.63:1
Long-Term Debt As A Percent
of Total Capital(4) 57.6% 71.8%
Net Debt As A Percent of Total Capital(5) 54.5% 70.2%
Book Value Per Share(6) $ 17.67 $ 15.87
Net cash provided by operating activities(7) $ 71,871 $ 62,349
- --------------------------------------------------------------------------------------
(4) Long-term debt represents long-term debt, net of current portion. Total capital
represents long-term debt, net of current portion, plus total stockholders' equity.
(5) Net debt represents long-term debt, net of current portion, less cash and cash
equivalents. Total capital represents long-term debt, net of current portion, less
cash and cash equivalents plus total stockholders' equity.
(6) Book value per share represents total stockholders' equity divided by number of
common shares outstanding.
(7) Net cash provided by operating activities for September 30, 2004 and December 31,
2003 is for nine and twelve months, respectively.
Share Price Data (NYSE: GI)
High Low Close
- -------------------------------------------
2004 3rd Quarter $27.25 $20.29 $24.30
2004 2nd Quarter $22.16 $15.37 $22.00
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