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 04, 2005
GIANT INDUSTRIES, INC. ANNOUNCES RECORD
FIRST QUARTER 2005 NET EARNINGS
Scottsdale, Arizona, May 04, 2005 - Giant Industries, Inc. [NYSE: GI] today
reported net earnings for the first quarter ended March 31, 2005 of $10.1
million or $0.80 per diluted share. This compares to net earnings for the
first quarter of 2004 of $4.5 million or $0.50 per diluted share.
Fred Holliger, Giant's Chief Executive Officer, said, "We are pleased to be
able to report record first quarter net earnings for the second consecutive
year. Strong financial performances by our refining group and Phoenix Fuel
contributed to the record earnings. Net earnings for the quarter were also
positively impacted by a $2.1 million after-tax insurance reimbursement.
Refining margins at our Four Corners refineries and Yorktown refinery were
solid for the quarter and we believe that current refining fundamentals are
comparable to the same time last year. Operating income at our Four Corners
refineries was more-or-less even with the prior year level; however, Yorktown
operating income was approximately twenty-two percent higher than the first
quarter 2004 level."
"Phoenix Fuel continued to perform well financially as they achieved growth
across the board in the first quarter of 2005. Operating income in the first
quarter of 2005 were up in excess of seventy-five percent over the prior year
comparable quarter as wholesale fuel sales volumes increased in excess of six
percent and cardlock fuel sales increased approximately thirteen percent.
Phoenix Fuel continues to provide consistent cash flow and growth in the
markets that it serves."
"Retail operations profitability was negatively impacted by lower fuel
margins in the first quarter of 2005. Operationally, our retail group
continued to perform well as same store fuel volumes increased by more than
five percent in the first quarter of 2005 compared to the first quarter of
2004. Merchandise sales increased about one percent in the quarter over last
year's first quarter level. So far in the second quarter, retail fuel margins
have strengthened and fuel volumes and merchandise sales continue to grow
relative to the same time last year."
Holliger continued, "In addition to our strong operating earnings, we also
continued to strengthen our balance sheet. We recently completed the sale of
approximately one million shares of common stock with the net proceeds to be
used to redeem approximately $19 million of our 11% Senior Subordinated Notes
on May 5, 2005. As a result of these transactions, we will now have reduced
our debt from approximately $450 million to $274 million and improved our
debt-to-total capitalization ratio from 76.8% to 52.4% since June 30, 2002,
the month following the acquisition of the Yorktown refinery. As a result of
our past debt reduction initiatives, we have reduced our interest expense as
evidenced by the $2.4 million or 25% decrease in the first quarter of 2005 in
comparison to the first quarter of 2004. The redemption of the 11% notes,
mentioned above, will further reduce our interest expense on our Senior
Subordinated Notes by approximately $2.0 million per year. Obviously, we have
made great strides in improving our overall financial health and this remains
an important goal in the future. We believe the significant improvement in
our balance sheet, coupled with strong earnings, have now repositioned us to
pursue growth opportunities to further improve shareholder value."
Giant's senior management will hold a conference call at 1:00 p.m. EDT on May
5, 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 our refining fundamentals, including margins, will deteriorate,
the risk that Phoenix Fuel will not continue to produce consistent cash flow
and growth, the risk that retail fuel margins will not continue to strengthen
and retail fuel volumes and merchandise sales will not continue to grow, the
risk that we will incur additional debt in the future, 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)
Three Months Ended March 31,
- -------------------------------------------------------------------------------------------------------
2005 2004
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Net revenues $ 711,726 $ 540,807
Cost of products sold 625,790 460,767
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Gross margin 85,936 80,040
Operating expenses 46,244 44,196
Depreciation and amortization 10,970 9,098
Selling, general and administrative expenses 7,799 8,200
Net gain on disposal of assets, including assets held for sale (13) (4)
Gain from insurance settlement due to fire incident (3,492) -
- -------------------------------------------------------------------------------------------------------
Operating income 24,428 18,550
Interest expense (6,993) (9,361)
Amortization of financing costs (504) (958)
Interest and investment income 120 40
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Earnings from continuing operations before income taxes 17,051 8,271
Provision for income taxes 6,993 3,670
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Earnings from continuing operations 10,058 4,601
Loss from discontinued operations, net of
income tax benefit of $4 and $52 (7) (84)
- -------------------------------------------------------------------------------------------------------
Net earnings $ 10,051 $ 4,517
=======================================================================================================
Net earnings (loss) per common share:
Basic
Continuing operations $ 0.81 $ 0.52
Discontinued operations - (0.01)
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$ 0.81 $ 0.51
=======================================================================================================
Assuming dilution
Continuing operations $ 0.80 $ 0.51
Discontinued operations - (0.01)
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$ 0.80 $ 0.50
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Weighted average number of shares outstanding:
Basic 12,381,540 8,822,787
Assuming dilution 12,579,201 9,092,734
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
- ---------------------------------------------------------------------------------------
March 31, 2005 December 31, 2004
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Assets
Current assets $ 303,653 $ 232,005
- ---------------------------------------------------------------------------------------
Property, plant and equipment 682,546 671,851
Less accumulated depreciation and amortization (274,500) (265,475)
- ---------------------------------------------------------------------------------------
408,046 406,376
Other assets 85,809 64,025
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Total Assets $ 797,508 $ 702,406
=======================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 185,077 $ 128,833
Long-term debt 292,883 292,759
Deferred income taxes 46,549 41,039
Other liabilities and deferred income 24,117 23,336
Stockholders' equity 248,882 216,439
- ---------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 797,508 $ 702,406
=======================================================================================
Certain reclassifications have been made to the year 2004 financial statements to conform
to classifications used in 2005. These reclassifications had no effect on reported earnings
or stockholders' equity.
OPERATING STATISTICS
1 Qtr. 2005 4 Qtr. 2004 3 Qtr. 2004 2 Qtr. 2004 1 Qtr. 2004
- ---------------------------------------------------------------------------------------------------------
Refining
- --------
Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 28,810 29,088 29,271 26,463 28,280
Refinery Sourced Sales Barrels (BPD) 28,559 28,198 28,412 25,175 27,615
Avg. Crude Oil Costs ($/Bbl) $ 47.46 $ 47.18 $ 40.99 $ 35.97 $ 32.61
Refining Margins ($/Bbl) $ 7.86 $ 7.36 $ 8.14 $ 12.44 $ 8.35
Retail Fuel Volumes Sold as a % of Four
Corners Refinery's Sourced Sales Barrels 37% 37% 38% 40% 36%
Yorktown Operations:
Crude Oil/NGL Throughput (BPD) 65,740 52,941 53,991 67,639 61,200
Refinery Sourced Sales Barrels (BPD) 62,726 56,854 53,585 69,862 63,824
Avg. Crude Oil Costs ($/Bbl) $ 44.96 $ 44.55 $ 38.43 $ 35.53 $ 32.68
Refining Margins ($/Bbl) $ 6.78 $ 4.56 $ 6.01 $ 6.20 $ 5.55
Retail(1)
- ---------
Fuel Gallons Sold (000's) 39,469 40,253 41,244 38,439 37,681
Fuel Margins ($/gal) $ 0.11 $ 0.17 $ 0.18 $ 0.21 $ 0.16
Merchandise Sales ($ in 000's) $ 31,287 $ 32,635 $ 36,214 $ 34,541 $ 30,844
Merchandise Margins 27% 26% 20% 24% 27%
Number of Operating Units at
End of Period 125 124 125 125 127
Phoenix Fuel
- ------------
Fuel Gallons Sold (000's) 120,865 116,569 119,253 124,342 112,844
Fuel Margins ($/gal) $ 0.06 $ 0.06 $ 0.05 $ 0.06 $ 0.05
Lubricant Sales ($ in 000's) $ 8,412 $ 7,962 $ 7,933 $ 7,827 $ 6,875
Lubricant Margins 14% 13% 13% 13% 13%
- ---------------------------------------------------------------------------------------------------------
Operating Income (Loss) (before
corporate allocations) (in 000's)
- -----------------------------------
Refining - Four Corners Operations $ 6,285 $ 2,899 $ 8,150 $ 13,704 $ 6,161
- Yorktown Operations 17,650 4,854 11,652 21,811 14,435
Retail(1) (1,679) 1,658 1,428 2,614 988
Phoenix Fuel 3,699 3,194 2,216 2,963 2,113
Corporate (5,043) (6,922) (6,879) (7,256) (5,269)
Net gain (loss) on disposal/write-down
of assets(1)(2) 3,505 2,455 1,883 (549) (14)
- ---------------------------------------------------------------------------------------------------------
Total(1) $ 24,417 $ 8,138 $ 18,450 $ 33,287 $ 18,414
=========================================================================================================
Capital Expenditures (in 000's)(3)
- ----------------------------------
Refining - Four Corners Operations(4) $ 1,167 $ 1,302 $ 5,915 $ 15,637 $ 744
- Yorktown Operations 9,837 12,635 10,523 1,981 1,872
Retail 780 4,220 919 438 258
Phoenix Fuel 458 414 500 465 328
Corporate 584 259 135 115 11
- ---------------------------------------------------------------------------------------------------------
Total $ 12,826 $ 18,830 $ 17,992 $ 18,636 $ 3,213
=========================================================================================================
(1) Includes discontinued operations.
(2) Includes insurance proceeds related to the Ciniza fire incident.
(3) Excludes Yorktown refinery acquisition contingent payments.
(4) Includes disbursements related to the Ciniza fire incident.
Selected Financial Data
March 31, 2005 December 31, 2004
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Working Capital (In Thousands) $ 118,576 $ 103,172
Current Ratio 1.64:1 1.80:1
Long-Term Debt As A Percent of Total Capital (5) 54.1% 57.5%
Net Debt As A Percent of Total Net Capital (6) 50.5% 55.4%
Book Value Per Share (7) $ 18.63 $ 17.55
Net cash provided by operating activities $ 23,015 $ 76,514
- -------------------------------------------------------------------------------------
(5) Total capital represents long-term debt plus total stockholders' equity.
(6) Net debt represents long-term debt less cash and cash equivalents. Total net
capital represents long-term debt less cash and cash equivalents plus total
stockholders' equity.
(7) Book value per share represents total stockholders' equity divided by number
of common shares outstanding.
Share Price Data (NYSE: GI)
High Low Close
- -------------------------------------------
2005 1st Quarter $31.81 $23.54 $25.70
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