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
March 14, 2005
GIANT INDUSTRIES, INC. ANNOUNCES 2004 OPERATING RESULTS
Scottsdale, Arizona, March 14, 2005 - Giant Industries, Inc. [NYSE: GI]
announced today full year 2004 net earnings of $16.2 million or $1.42 per
diluted share versus net earnings of $11.2 million or $1.27 per diluted
share in 2003. For the fourth quarter 2004, net earnings were $729,000 or
$0.06 per diluted share compared to net earnings of $1.6 million or $0.18
per diluted share for the fourth quarter of 2003.
Fred Holliger, Giant's Chief Executive Officer, commented, "This past
year was a very good year for Giant as we continued to make significant
progress in both earnings growth and the improvement of our balance
sheet. Earnings in our Refining and Phoenix Fuel strategic business units
improved over the prior year and the recent quarter was Giant's eighth
consecutive quarter with positive earnings. In our Refining operations,
stronger margins, both on the East Coast and in the Four Corners region,
contributed significantly to the improved bottom line in 2004 as
operating income from continuing operations was up approximately $19.7
million over the prior year level. Phoenix Fuel continued to grow both
wholesale and cardlock fuel volumes and achieved an improvement of
approximately $2.0 million in its operating income from continuing
operations over the 2003 level. Lastly, I am pleased that our Retail
operations continued to achieve growth in both merchandise and fuel sales
on a comparable store basis even though operating earnings were lower
than the prior year due to lower fuel and merchandise margins."
"Fourth quarter 2004 results were positively impacted by, among other
things, lower interest expense and the impact of insurance and tax
settlement recoveries. Earnings were negatively impacted by, among other
things, lower refining margins in the fourth quarter in comparison to the
first nine months of 2004, and lower throughput volumes at the Yorktown
refinery due to the delayed completion of the upgrades at the refinery in
order to process additional higher acid crude oil and unrelated operating
problems with two units that were resolved by early January."
"As to our balance sheet, it is greatly improved from the prior year
level as we reduced our outstanding debt from $367 million at the end of
2003 to $293 million at the end of 2004. This debt reduction, coupled
with our strong earnings and proceeds from the equity offering completed
earlier in 2004, improved our debt-to-total capitalization ratio to 58%
at year-end versus 72% at the end of 2003. While we are very pleased with
the significant progress achieved during 2004, we want to reaffirm to our
shareholders our continuing commitment to further strengthening our
overall financial condition."
Holliger continued, "In addition to our financial results, 2004 was
notable for the steps taken to achieve our long-term goal for improving
our competitive position at the Yorktown refinery. To that end, we have
completed the upgrades that will allow us to process additional higher
acid crude oil supplied under our long-term agreement with Statoil. We
are currently processing approximately 40,000 barrels per day of that
crude oil. We continue to believe this opportunity is a significant long-
term strategic improvement for our company, and we also believe that the
economic benefit from processing additional higher acid crude oil is
exceeding our original expectations."
Commenting on first quarter operations, Holliger said, "We believe that
our current refining fundamentals are strong, although not as robust as
the same time last year. Phoenix Fuel continues to provide consistent
cash flow and growth in the markets that it serves, with increased gross
margins as compared to the same time last year. Our Retail operations are
continuing to experience growth in both merchandise and fuel sales on a
comparable store basis. Recently, fuel margins within our Retail
operations have contracted primarily due to increases in the cost of
fuel; however merchandise margins have rebounded from their lower 2004
level."
Giant's senior management will hold a conference call at 1:00 p.m. EST
(11:00 a.m. MST) on March 15, 2005 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, retail merchandise margins will not
continue to improve, we will not be able to further strengthen our
overall financial condition, upgrades at our Yorktown refinery will not
achieve our projected results, anticipated benefits from the use of
higher acid crude oil 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)
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Three Months Ended Twelve Months Ended
December 31, December 31,
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2004 2003 2004 2003
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Net revenues $ 674,309 $ 448,956 $2,512,005 $1,809,662
Cost of products sold (excluding
depreciation and amortization) 603,414 375,717 2,186,426 1,512,306
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Gross margin 70,895 73,239 325,579 297,356
Operating expenses 45,953 43,142 175,957 164,240
Depreciation and amortization 9,769 9,111 37,129 36,887
Selling, general and administrative expenses 9,472 8,197 37,834 30,617
Net loss on disposal/write-down of assets 488 523 161 1,837
Gain from insurance settlement due to fire incident (2,949) - (3,907) -
- ---------------------------------------------------------------------------------------------------------
Operating income 8,162 12,266 78,405 63,775
Interest expense (7,685) (9,297) (32,907) (38,993)
Costs associated with early debt extinguishment 311 - (10,564) -
Amortization/write-off of financing costs (514) (1,105) (8,341) (4,696)
Interest income 216 65 354 162
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Earnings (loss) from continuing operations
before income taxes 490 1,929 26,947 20,248
Provision (benefit) for income taxes (253) 468 10,655 7,936
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Earnings (loss) from continuing operations before
cumulative effect of change in accounting principle 743 1,461 16,292 12,312
Discontinued operations, net of income tax (benefit)
provision of $(9), $96, $(44) and $(242) (14) 156 (71) (389)
Cumulative effect of change in accounting principle,
net of income tax benefit of $468 - - - (704)
- ---------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 729 $ 1,617 $ 16,221 $ 11,219
=========================================================================================================
Earnings (loss) per common share:
Basic
Continuing operations $ 0.06 $ 0.17 $ 1.47 $ 1.41
Discontinued operations - 0.01 (0.01) (0.05)
Cumulative effect of change in accounting
principle - - - (0.08)
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$ 0.06 $ 0.18 $ 1.46 $ 1.28
=========================================================================================================
Assuming dilution
Continuing operations $ 0.06 $ 0.17 $ 1.43 $ 1.40
Discontinued operations - 0.01 (0.01) (0.05)
Cumulative effect of change in accounting
principle - - - (0.08)
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$ 0.06 $ 0.18 $ 1.42 $ 1.27
=========================================================================================================
Weighted average number of shares outstanding:
Basic 12,330,646 8,785,555 11,104,938 8,731,672
Assuming dilution 12,535,479 8,954,352 11,358,298 8,830,364
=========================================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
- -----------------------------------------------------------------------------------------
December 31, 2004 December 31, 2003
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Assets
Current assets $ 232,005 $ 251,702
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Property, plant and equipment 671,851 628,718
Less accumulated depreciation and amortization (265,475) (235,539)
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406,376 393,179
Other assets 64,025 54,773
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Total Assets $ 702,406 $ 699,654
=========================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 128,833 $ 154,408
Long-term debt, net of current portion 292,759 355,601
Deferred income taxes 41,039 28,039
Other liabilities 23,336 22,170
Stockholders' equity 216,439 139,436
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Total Liabilities and Stockholders' Equity $ 702,406 $ 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
4 Qtr. 2004 3 Qtr. 2004 2 Qtr. 2004 1 Qtr. 2004 4 Qtr. 2003
- --------------------------------------------------------------------------------------------------------
Refining
- --------
Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 29,088 29,271 26,463 28,280 29,992
Refinery Sourced Sales Barrels (BPD) 28,198 28,412 25,175 27,615 27,489
Avg. Crude Oil Costs ($/Bbl) $ 47.18 $ 40.99 $ 35.97 $ 32.61 $ 29.24
Refining Margins ($/Bbl) $ 7.36 $ 8.14 $ 12.44 $ 8.35 $ 8.07
Retail Fuel Volumes Sold as a % of
Four Corners Refinery's Sourced
Sales Barrels 37% 38% 40% 36% 37%
Yorktown Operations:
Crude Oil/NGL Throughput (BPD) 52,941 53,991 67,639 61,200 61,540
Refinery Sourced Sales Barrels (BPD) 56,854 53,585 69,862 63,824 59,307
Avg. Crude Oil Costs ($/Bbl) $ 44.55 $ 38.43 $ 35.53 $ 32.68 $ 29.47
Refining Margins ($/Bbl) $ 4.56 $ 6.01 $ 6.20 $ 5.55 $ 4.47
Retail(1)
- ---------
Fuel Gallons Sold (000's) 40,253 41,244 38,439 37,681 38,782
Fuel Margins ($/gal) $ 0.17 $ 0.18 $ 0.21 $ 0.16 $ 0.19
Merchandise Sales ($ in 000's) $ 32,635 $ 36,214 $ 34,541 $ 30,844 $ 32,148
Merchandise Margins 26% 20% 24% 27% 28%
Number of Operating Units at
End of Period 124 125 125 127 127
Phoenix Fuel
- ------------
Fuel Gallons Sold (000's) 116,569 119,253 124,342 112,844 111,110
Fuel Margins ($/gal) $ 0.06 $ 0.05 $ 0.06 $ 0.05 $ 0.06
Lubricant Sales ($ in 000's) $ 7,962 $ 7,933 $ 7,827 $ 6,875 $ 6,508
Lubricant Margins 13% 13% 13% 13% 14%
- --------------------------------------------------------------------------------------------------------
Operating Income (Loss) (before
corporate allocations) (in 000's)
- ---------------------------------
Refining - Four Corners Operations $ 2,899 $ 8,150 $ 13,704 $ 6,161 $ 6,445
- Yorktown Operations 4,854 11,652 21,811 14,435 5,988
Retail(1) 1,658 1,428 2,614 988 2,582
Phoenix Fuel 3,194 2,216 2,963 2,113 2,492
Corporate (6,922) (6,879) (7,256) (5,268) (4,891)
Net gain (loss) on disposal/write-down
of assets(1) 2,455 1,883 (549) (14) (96)
- --------------------------------------------------------------------------------------------------------
Total(1) $ 8,138 $ 18,450 $ 33,287 $ 18,415 $ 12,520
========================================================================================================
Capital Expenditures (in 000's)(3)
- ----------------------------------
Refining - Four Corners Operations(2) $ 1,302 $ 5,915 $ 15,637 $ 744 $ 4,052
- Yorktown Operations 12,635 10,523 1,981 1,872 448
Retail 4,220 919 438 258 1,458
Phoenix Fuel 414 500 465 328 229
Corporate 259 135 115 11 102
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Total $ 18,830 $ 17,992 $ 18,636 $ 3,213 $ 6,289
========================================================================================================
(1) Includes discontinued operations.
(2) Includes payments related to the Ciniza fire incident.
(3) Excludes Yorktown refinery acquisition contingent payments.
Selected Financial Data
December 31, 2004 December 31, 2003
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- -------------------------------------------------------------------------------------
Working Capital (In Thousands) $103,172 $ 97,294
Current Ratio 1.80:1 1.63:1
Long-Term Debt As A Percent of Total Capital (4) 57.5% 71.8%
Net Debt As A Percent of Total Capital (5) 55.4% 70.2%
Book Value Per Share (6) $ 17.55 $ 15.87
Net cash provided by operating activities $ 76,514 $ 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.
Share Price Data (NYSE: GI)
High Low Close
- -------------------------------------------
2004 4th Quarter $28.98 $22.00 $26.51
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