EXHIBIT 99.1
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 07, 2007
GIANT INDUSTRIES, INC. ANNOUNCES
FIRST QUARTER 2007 OPERATING RESULTS
Scottsdale, Arizona, May 07, 2007 - Giant Industries, Inc. [NYSE: GI] today
reported net earnings for the first quarter ended March 31, 2007 of $7.2
million or $0.49 per diluted share. This compares to a net loss for the
first quarter ended March 31, 2006 of $12.4 million or $0.85 per diluted
share.
Fred Holliger, Giant's Chief Executive Officer, said, "Our first quarter 2007
earnings were negatively impacted by reduced operations at our Yorktown and
Ciniza refineries in the months of January and February as we made repairs
necessitated by the fires that occurred at these facilities in the fourth
quarter of 2006. The month of March was, however, exceptional for our
Refining operations as our refineries were operating at high utilization
rates and refining margins were strong throughout our markets.
We are currently in discussions with our insurers regarding our recoveries
relative to the property damage and business interruption loss at Yorktown,
as well as the property damage at Ciniza. In the month of April, we received
a partial advance from our insurers of approximately $1.5 million and we are
hopeful that we will be able to finalize the claim in a timely manner. It
should be noted that a significant portion of the insurance proceeds will be
booked as income at the time they are received. Due to the refining margin
environment at Yorktown during our outage, we believe that these
reimbursements will have an impact on our 2007 earnings."
"In our Retail operations, we continued to realize sales growth as same store
fuel volumes increased by approximately two percent and merchandise sales
increased approximately three percent in the quarter over last year's first
quarter levels. Retail operations' operating profit was; however, lower in
the quarter in comparison to the first quarter last year as a result of lower
fuel margins."
"Our Wholesale operations performed well in the first quarter of 2007 as the
operating income contribution from our Wholesale operations increased by
approximately ten percent, primarily as a result of the additional
contribution from an acquisition completed in January 2007."
Commenting on the 16-inch pipeline that will supply crude oil to the
Company's Four Corners refineries, Holliger commented, "We are nearing
completion of the necessary work to begin shipping crude oil on the
pipeline. We currently anticipate that we should have the pipeline
operational in May with new crude oil at the refineries by the end of June.
As previously noted, when fully operational, the pipeline has sufficient
capacity to allow us to again operate both Four Corners refineries at
maximum rates."
Commenting on second quarter operations, Holliger said, "Refining margins
at the Four Corners refineries and Yorktown refinery are currently higher
than the same time last year. We continue to believe that strong product
demand coupled with favorable market conditions support a positive second
quarter outlook for the industry as well as the remainder of 2007."
"The Wholesale group continues to experience growth in fuel volumes and
fuel margins are stable 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 been lower primarily due to increases in the cost of fuel,
while merchandise margins have remained stable."
Holliger provided the following update on the Company's proposed merger
with Western Refining Company, "On April 12, 2007, the Federal Trade
Commission filed suit against Western and Giant in the Federal District
Court for the District of New Mexico seeking to enjoin the companies'
proposed merger. Giant and Western have previously announced that we
believe the FTC's position is without basis and that we intend to
vigorously challenge the FTC in court. The preliminary injunction hearing
on the claim began on May 7, 2007. Consummation of the transaction remains
subject to this litigation."
Giant's senior management will hold a conference call at 2:00 p.m. EDT on
May 8, 2007 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., Dial Oil Co. and Empire Oil Co., all of which are
wholesale petroleum products distributors. 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 we will not receive
anticipated amounts of insurance proceeds; the risk that insurance proceeds
will not have an impact on 2007 earnings; the risk that the 16-inch
pipeline will not be operational in May with new crude oil at the
refineries by the end of June; the risk that, when fully operational, the
16-inch will not enable us to operate the Four Corners refineries at
maximum rates; the risk that refining margins will not remain higher than
the same time last year; the risk that product demand will not remain
strong; the risk that favorable market conditions will not continue; the
risk that the Wholesale group will not continue to experience growth in
fuel volumes and margins; the risk that our Retail group will not continue
to experience growth in both merchandise and fuel sales on a comparable
store basis; the risk that merchandise margins for our Retail group will
not remain stable; the risk that the Federal Trade Commission will obtain a
preliminary injunction prohibiting us from closing the Western transaction;
the risk that the Western transaction will not close; 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 March 31,
- ----------------------------------------------------------------------------------------------
2007 2006
- ----------------------------------------------------------------------------------------------
Net revenues $ 1,020,070 $ 863,025
Cost of products sold (excluding depreciation
and amortization) 908,711 810,552
- ----------------------------------------------------------------------------------------------
Operating expenses 68,962 52,688
Depreciation and amortization 12,857 9,567
Selling, general and administrative expenses 12,682 10,006
Net loss/(gain) on disposal/write-down of assets 15 (640)
Gain from insurance settlement due to fire incident - (2,853)
- ----------------------------------------------------------------------------------------------
Operating income/(loss) 16,843 (16,295)
Interest expense (5,701) (4,682)
Amortization of financing costs (399) (399)
Investment and other income 361 1,602
- ----------------------------------------------------------------------------------------------
Earnings/(Loss) before income taxes 11,104 (19,774)
Provision/(Benefit) for income taxes 3,868 (7,424)
- ----------------------------------------------------------------------------------------------
Net earnings/(loss) $ 7,236 $ (12,350)
==============================================================================================
Net earnings/(loss) per common share:
Basic $ 0.50 $ (0.85)
Assuming Dilution $ 0.49 $ (0.85)
==============================================================================================
Weighted average number of shares outstanding:
Basic 14,608,832 14,582,228
Assuming dilution 14,691,580 14,582,228
==============================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
- -----------------------------------------------------------------------------------------
March 31, 2007 December 31, 2006
- -----------------------------------------------------------------------------------------
Assets
Current assets $ 409,700 $ 429,287
- -----------------------------------------------------------------------------------------
Property, plant and equipment 1,055,060 995,710
Less accumulated depreciation and amortization (339,554) (327,460)
- -----------------------------------------------------------------------------------------
715,506 668,250
Other assets 89,415 78,640
- -----------------------------------------------------------------------------------------
Total Assets $1,214,621 $1,176,177
=========================================================================================
Liabilities and Stockholders' Equity
Current liabilities $ 242,216 $ 222,135
Long-term debt 330,526 325,387
Deferred income taxes 118,067 117,149
Other liabilities 32,101 27,138
Stockholders' equity 491,711 484,368
- -----------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $1,214,621 $1,176,177
=========================================================================================
OPERATING STATISTICS
1 Qtr. 2007 4 Qtr. 2006 3 Qtr. 2006 2 Qtr. 2006 1 Qtr. 2006
- -----------------------------------------------------------------------------------------------------------
Refining Group:
- ---------------
Four Corners Operations:
Crude Oil/NGL Throughput (BPD) 27,258 25,878 26,572 28,658 29,122
Refinery Sourced Sales Barrels (BPD) 27,791 25,157 27,102 27,084 28,471
Avg. Crude Oil Costs ($/Bbl) $ 57.74 $ 60.18 $ 70.50 $ 67.86 $ 62.30
Refining Margins ($/Bbl) $ 16.03 $ 11.68 $ 18.31 $ 21.97 $ 10.84
Retail Fuel Volumes Sold as a % of Four
Corners Refineries' Sourced Sales Barrels 50% 54% 50% 47% 38%
Yorktown Operations:(1)
Crude Oil/NGL Throughput (BPD) 60,934 68,818 70,751 60,396 37,589
Refinery Sourced Sales Barrels (BPD) 59,343 73,028 68,360 61,668 33,466
Avg. Crude Oil Costs ($/Bbl) $ 56.07 $ 57.57 $ 68.92 $ 68.36 $ 59.02
Refining Margins ($/Bbl) $ 6.10 $ 5.19 $ 3.81 $ 6.65 $ (3.50)
Retail Group:(2)(3)
- -------------
Fuel Gallons Sold (000's) 52,801 52,881 52,426 49,021 46,261
Fuel Margins ($/gal) $ 0.12 $ 0.17 $ 0.25 $ 0.17 $ 0.15
Merchandise Sales ($ in 000's) $ 39,247 $ 39,835 $ 43,175 $ 40,972 $ 35,531
Merchandise Margins 28% 28% 27% 27% 27%
Number of Operating Units at End of Period 155 155 153 134 134
Wholesale Group: (4)
- ----------------
Fuel Gallons Sold (000's) 161,899 155,654 150,278 149,231 140,748
Fuel Margins ($/gal) $ 0.07 $ 0.06 $ 0.07 $ 0.06 $ 0.07
Lubricant Sales ($ in 000's) $ 32,093 $ 19,833 $ 18,388 $ 15,770 $ 17,644
Lubricant Margins 11% 13% 14% 14% 13%
===========================================================================================================
Operating Income/(loss)(before
corporate allocations) (in 000's)
- -----------------------------------
Refining - Four Corners Operations $ 19,800 $ 6,647 $ 24,572 $ 35,375 $ 11,233
- Yorktown Operations(5) 253 6,637 (802) 14,589 (30,805)
Retail(2)(3) 889 3,083 8,212 3,978 1,711
Wholesale(4) 4,573 3,901 5,202 3,527 4,175
Corporate (8,657) (8,878) (8,784) (8,392) (6,102)
Net (loss)/gain on disposal/write-down
of assets(6) (15) (1,764) 46,500 33,051 3,493
- -----------------------------------------------------------------------------------------------------------
Total $ 16,843 $ 9,626 $ 74,900 $ 82,128 $(16,295)
===========================================================================================================
Capital expenditures (in 000's)
Refining - Four Corners Operations(7) $ 26,450 $ 27,589 $ 25,168 $ 26,263 $ 9,783
- Yorktown Operations(8) 33,021 18,559 23,973 40,224 47,791
Retail 2,064 3,588 2,663 997 814
Wholesale 988 1,494 744 1,039 1,204
Corporate 380 172 395 398 105
- -----------------------------------------------------------------------------------------------------------
Total $ 62,903 $ 51,402 $ 52,943 $ 68,921 $ 59,697
===========================================================================================================
(1) Yorktown margins for quarter ended March 31, 2006 were negative as a result of the fire that occurred
in November 2005.
(2) Includes results of 12 convenience stores purchased from Dial Oil Co ("Dial") in July 2005.
(3) Includes results of 21 convenience stores purchased from Amigo Petroleum Company ("Amigo") in August
2006.
(4) Includes results of Wholesale operations of Dial that was purchased in July 2005, Amigo that was
purchased in August 2006, and Empire Oil Co. ("Empire"), which was purchased in January 2007.
(5) Excludes gain from insurance settlement due to the 2005 Yorktown fire.
(6) Includes gain from insurance settlement related to the Yorktown fire incident that occurred in
November 2005.
(7) Includes disbursements related to the October 2006 Ciniza fire incident.
(8) Includes disbursements related to the November 2005, September and December 2006 Yorktown fire
incidents.
Selected Financial Data
March 31, 2007 December 31, 2006
- -----------------------------------------------------------------------------------------
Working Capital (In Thousands) $ 167,484 $ 207,152
Current Ratio 1.69:1 1.93:1
Long-Term Debt As A Percent of Total Capital (9) 40.2% 40.2%
Net Debt As A Percent of Total Net Capital (10) 39.4% 38.8%
Book Value Per Share (11) $ 33.59 $ 33.08
Net cash provided by operating activities $ 62,597 $ 27,830
- -----------------------------------------------------------------------------------------
(9) Total capital represents long-term debt plus total stockholders' equity.
(10) 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.
(11) Book value per share represents total stockholders' equity divided by number of common
shares outstanding.
Share Price Data (NYSE: GI)
High Low Close
- -------------------------------------------
2007 1st Quarter $76.25 $71.16 $75.65
2006 4th Quarter $81.45 $74.20 $74.95
2006 3rd Quarter $82.30 $64.49 $81.20
2006 2nd Quarter $76.97 $56.09 $66.55
2006 1st Quarter $71.00 $52.44 $69.54
RECONCILIATIONS TO AMOUNTS REPORTED UNDER GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
REFINING GROUP
- --------------
Refining Margin
- ---------------
Refining margin is the difference between average net sales prices and
average cost of products produced per refinery sourced sales barrel of
refined product. Refining margins for each of our refineries and all of our
refineries on a consolidated basis are calculated as shown below.
Three Months Ended March 31,
- ---------------------------------------------------------------------------------------------
2007 2006
- ---------------------------------------------------------------------------------------------
AVERAGE PER BARREL
Four Corners Operations
Net sales $ 77.15 $ 76.39
Less cost of products 61.12 65.55
- ---------------------------------------------------------------------------------------------
Refining margin $ 16.03 $ 10.84
=============================================================================================
Yorktown Operations*
Net sales $ 63.29 $ 62.11
Less cost of products 57.19 65.61
- ---------------------------------------------------------------------------------------------
Refining margin $ 6.10 $ (3.50)
=============================================================================================
Consolidated
Net sales $ 67.71 $ 68.68
Less cost of products 58.44 65.59
- ---------------------------------------------------------------------------------------------
Refining margin $ 9.27 $ 3.09
=============================================================================================
Reconciliations of refined product sales from produced
products sold per barrel to net revenues
Four Corners Operations
Average sales price per produced barrel sold $ 77.15 $ 76.39
Times refinery sourced sales barrels per day 27,791 28,471
Times number of days in period 90 90
- ---------------------------------------------------------------------------------------------
Refined product sales from produced products
sold** (000's) $ 192,967 $ 195,741
=============================================================================================
Yorktown Operations
Average sales price per produced barrel sold $ 63.29 $ 62.11
Times refinery sourced sales barrels per day 59,343 33,466
Times number of days in period 90 90
- ---------------------------------------------------------------------------------------------
Refined product sales from produced products
sold* (000's) $ 338,024 $ 187,072
=============================================================================================
Consolidated (000's)
Sum of refined product sales from produced products sold* $ 530,991 $ 382,813
Purchased product, Transportation and other revenues 147,124 183,571
- ---------------------------------------------------------------------------------------------
Net revenue $ 678,115 $ 566,384
=============================================================================================
* Yorktown margins for quarter ended March 31, 2006 were negative as a result of the fire
that occurred in November 2005.
** Includes inter-segment net revenues.
Three Months Ended March 31,
- ---------------------------------------------------------------------------------------------
2007 2006
- ---------------------------------------------------------------------------------------------
Reconciliation of average cost of products per
produced per barrel sold to total cost of products
sold (excluding depreciation and amortization)
Four Corners Operations
Average cost of products per produced barrel sold $ 61.12 $ 65.55
Times refinery sourced sales barrels per day 27,791 28,471
Times number of days in period 90 90
- ---------------------------------------------------------------------------------------------
Cost of products for produced products sold (000's) $ 152,873 $ 167,965
=============================================================================================
Yorktown Operations
Average cost of products per produced barrel sold $ 57.19 $ 65.61
Times refinery sourced sales barrels per day 59,343 33,466
Times number of days in period 90 90
- ---------------------------------------------------------------------------------------------
Cost of products for produced products sold (000's) $ 305,444 $ 197,613
=============================================================================================
Consolidated
Sum of refined cost of produced products sold $ 458,317 $ 365,578
Purchased product, transportation and other cost
of products sold 139,156 175,210
- ---------------------------------------------------------------------------------------------
Total cost of products sold (excluding depreciation
and amortization) $ 597,473 $ 540,788
=============================================================================================
RETAIL GROUP
- ------------
Fuel Margin
- -----------
Fuel margin is the difference between fuel sales less cost of fuel sales
divided by number of gallons sold.
Three Months Ended March 31,
- ---------------------------------------------------------------------------------------------
2007 2006
- ---------------------------------------------------------------------------------------------
(in 000's except fuel margin per gallon)
Fuel sales $ 125,466 $ 109,631
Less cost of fuel sold 119,035 102,913
- ---------------------------------------------------------------------------------------------
Fuel margin $ 6,431 $ 6,718
Number of gallons sold 52,801 46,261
Fuel margin per gallon $ 0.12 $ 0.15
Reconciliation of fuel sales to net revenues (000's)
Fuel sales $ 125,466 $ 109,631
Excise taxes included in sales (30,968) (15,484)
- ---------------------------------------------------------------------------------------------
Fuel sales, net of excise taxes 94,498 94,147
Merchandise sales 39,247 35,531
Other sales 6,375 5,101
- ---------------------------------------------------------------------------------------------
Net revenues $ 140,120 $ 134,779
=============================================================================================
Reconciliation of fuel cost of products sold
to total cost of products sold (excluding
depreciation and amortization) (000's)
Fuel cost of products sold $ 119,035 $ 102,913
Excise taxes included in cost of products sold (30,968) (15,484)
- ---------------------------------------------------------------------------------------------
Fuel cost of products sold, net of excise taxes 88,067 87,429
Merchandise cost of products sold 28,419 25,800
Other cost of products sold 5,035 4,015
- ---------------------------------------------------------------------------------------------
Total cost of products sold (excluding
depreciation and amortization) $ 121,521 $ 117,244
=============================================================================================
WHOLESALE GROUP
- ---------------
Fuel Margin
- -----------
Fuel margin is the difference between fuel sales less cost of fuel sales
divided by number of gallons sold.
Three Months Ended March 31,
- ---------------------------------------------------------------------------------------------
2007 2006
- ---------------------------------------------------------------------------------------------
(in 000's except fuel margin per gallon)
Fuel sales $ 360,701 $ 309,141
Less cost of fuel sold 348,845 299,502
- ---------------------------------------------------------------------------------------------
Fuel margin $ 11,856 $ 9,639
Number of gallons sold 161,899 140,748
Fuel margin per gallon $ 0.07 $ 0.07
Reconciliation of fuel sales to net revenues (000's)
Fuel sales $ 360,701 $ 309,141
Excise taxes included in sales (44,131) (45,431)
- ---------------------------------------------------------------------------------------------
Fuel sales, net of excise taxes 316,570 263,710
Lubricant sales 32,093 18,355
Other sales 2,464 1,008
- ---------------------------------------------------------------------------------------------
Net revenues $ 351,127 $ 283,073
=============================================================================================
Reconciliation of fuel cost of products sold to
total cost of products sold (excluding depreciation
and amortization) (000's)
Fuel cost of products sold $ 348,845 $ 299,502
Excise taxes included in cost of products sold (44,131) (45,431)
- ---------------------------------------------------------------------------------------------
Fuel cost of products sold, net of excise taxes 304,714 254,071
Lubricant cost of products sold 28,485 15,348
Other cost of products sold 1,195 414
- ---------------------------------------------------------------------------------------------
Total cost of products sold (excluding depreciation
and amortization) $ 334,394 $ 269,833
=============================================================================================
CONSOLIDATED
- ------------
Three Months Ended March 31,
- ---------------------------------------------------------------------------------------------
2007 2006
- ---------------------------------------------------------------------------------------------
Reconciliation to net revenues reported in Condensed
Consolidated Statement of Operations (000's)
Net revenues - Refinery Group $ 678,115 $ 566,384
Net revenues - Retail Group 140,120 134,779
Net revenues - Wholesale Group: 351,127 283,073
Net revenues - Other 71 71
Eliminations (149,363) (121,282)
- ---------------------------------------------------------------------------------------------
Total net revenues reported in Condensed
Consolidated Statement of Earnings $1,020,070 $ 863,025
=============================================================================================
Reconciliation to cost of products sold (excluding
depreciation and amortization) in Condensed Consolidated
Statement of Operations (000's)
Cost of products sold - Refinery Group (excluding
depreciation and amortization) $ 597,473 $ 540,788
Cost of products sold - Retail Group (excluding
depreciation and amortization) 121,521 117,244
Cost of products sold - Wholesale Group: 334,394 269,833
Eliminations (149,363) (121,282)
Other 4,686 3,969
- ---------------------------------------------------------------------------------------------
Total cost of products sold (excluding depreciation
and amortization) reported in Condensed Consolidated
Statement of Operations $ 908,711 $ 810,552
=============================================================================================
Our refining margin per barrel is calculated by subtracting cost of products from net sales
and dividing the result by the number of barrels sold for the period. Our fuel margin per
gallon is calculated by subtracting cost of fuel sold from fuel sales and dividing the result
by the number of gallons sold for the period. We use refining margin per barrel and fuel
margin per gallon to evaluate performance, and allocate resources. These measures may not be
comparable to similarly titled measures used by other companies. Investors and analysts use
these financial measures to help analyze and compare companies in the industry on the basis of
operating performance. These financial measures should not be considered as alternatives to
segment operating income, revenues, costs of sales and operating expenses or any other measure
of financial performance presented in accordance with accounting principles generally accepted
in the United States of America.