Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Western Refining, Inc. | dp16747_8k.htm |
Exhibit 99.1
|
Investor
and Analyst Contact:
|
Media
Contact:
|
|
|
Jeffrey
S. Beyersdorfer
|
Gary
Hanson
|
|
|
(915)
534-1400
|
(915)
534-1400
|
WESTERN
REFINING REPORTS FOURTH QUARTER AND
FULL
YEAR 2009 FINANCIAL RESULTS
EL PASO,
Texas - March 4, 2010 – Western Refining, Inc. (NYSE: WNR) today reported for
the fourth quarter of 2009 a net loss, excluding special items, of $51.1
million, or $0.58 per diluted share. This compares to fourth quarter 2008 net
earnings, excluding special items, of $33.6 million, or $0.49 per diluted share.
On a GAAP basis, the company reported a fourth quarter 2009 net loss of $97.5
million, or $1.11 per diluted share, compared to the fourth quarter of 2008 net
loss of $12.8 million, or $0.19 per diluted share. The quarter-over-quarter
decline was driven by the impact of a continued weak economy, reduced demand for
transportation fuels, and narrowing differentials between light and heavy crude
oil prices, all of which resulted in lower refining margins. A
reconciliation of income (loss) before income taxes to net income (loss)
excluding special items, for all periods shown, is included in the accompanying
financial tables.
For the
year ended December 31, 2009, the company reported a net loss, excluding special
items, of $44.5 million, or $0.56 per diluted share. This compares to
full-year 2008 net income, excluding special items, of $110.6 million, or $1.62
per diluted share. The company reported on a GAAP basis a net loss of $350.6
million, or $4.43 per diluted share, for the full-year 2009, compared to net
earnings of $64.2 million, or $0.94 per diluted share, for the full-year
2008.
Cash flow
from operations was $140.8 million for the twelve months ended December 31,
2009. As of December 31, 2009, total debt was $1,116.7 million, which included
$50 million outstanding under the company's revolving credit
facility.
Jeff
Stevens, Western’s President and Chief Executive Officer, said, “To help manage
through what was a very challenging year for all refiners, Western made some
difficult, but necessary, decisions that improved our operational efficiency and
enhanced our financial flexibility. We are confident that the actions
we took and our continued focus on ensuring safe and efficient operations will
help position us for stronger and sustainable results as the market
recovers.”
During
2009, the company pursued several initiatives to enhance and streamline
operations, strengthen its balance sheet, and improve liquidity:
|
·
|
The
El Paso refinery began operations of a newly-constructed gasoline
hydrotreater unit giving the plant the ability to increase lower-cost sour
crude oil throughput. Additionally, the new unit gives Western
the ability to increase production of Phoenix grade gasoline from
approximately 12,000 barrels per day to 20,000 barrels per day.
Historically, Phoenix has been one of the more attractive markets in terms
of both product demand and gross
margin.
|
|
·
|
The
company consolidated its two Four Corners refineries into its Gallup, New
Mexico refinery. This consolidation will eliminate certain
operating costs totaling approximately $25 million per year beginning in
the first quarter of 2010, while maintaining the capability to process
similar volumes of crude oil that have been historically processed at both
Bloomfield and Gallup refineries combined. Western is
continuing to operate the Bloomfield refinery products terminal and will
supply the Four Corners with refined products by utilizing a new pipeline
connection and exchange supply agreements. The company will
also maintain its marketing assets, and, through an exchange agreement,
will supply barrels to the Bloomfield facility in exchange for barrels
produced at the El Paso refinery.
|
|
·
|
The
company identified and implemented approximately $25 million in additional
cost savings initiatives. These include the reduction of
contractor services at the company’s refineries, changes in its Wholesale
operations to respond to market conditions, closure of underperforming
retail outlets, and reductions in executive compensation and other
employee related costs. These initiatives began in late 2009
and will be fully realized beginning in
2010.
|
|
·
|
Western
successfully completed several transactions to enhance its balance sheet,
extend maturities, and increase its financial flexibility. In June,
Western issued $600 million in Senior Secured Notes, comprised of $325
million of 11.25% notes which mature in 2017 and $275 million of Floating
Rate Notes which mature in 2014. Additionally, the company
issued $215.5 million of 5.75% Senior Convertible Notes which mature in
2014 and 20,000,000 shares of common stock at $9 per share. In
November, Western secured an amendment from its lender group revising
certain covenants to further increase its financial
flexibility.
|
Commenting
on current market conditions, Stevens said, “We are pleased to have seen a
gradual improvement in refining margins during the fourth quarter and this
improvement has continued into the first quarter of 2010. Our
southwest refining margins remained stronger than overall US benchmarks during
the quarter. We expect to see continued modest improvements in
margins as we move into the driving season.”
Conference Call
Information
A
conference call is scheduled for March 4, 2010, at 9:00 a.m. ET to discuss
Western’s financial results. The call can be accessed at Western’s website,
www.wnr.com. The call can also be heard by dialing (888) 679-8034, passcode:
24370114. The audio replay will be available through March 11, 2010, and can be
accessed by dialing (888) 286-8010, passcode: 21023037.
A copy of
this press release, together with the reconciliations of certain non-GAAP
financial measures contained herein, can be accessed on the investor relations
menu on Western’s website, www.wnr.com.
About
Western Refining
Western
Refining, Inc. is an independent refining and marketing company headquartered in
El Paso, Texas. Western has refineries in El Paso, Texas, Gallup, New
Mexico and Yorktown, Virginia. Western’s asset portfolio also
includes refined products terminals in Albuquerque and Bloomfield, New Mexico
and Flagstaff, Arizona, asphalt terminals in Phoenix, Tucson, Albuquerque, and
El Paso, 150 retail service stations and convenience stores in Arizona,
Colorado, and New Mexico, a fleet of crude oil and finished product truck
transports, and wholesale petroleum products operations in Arizona, California,
Colorado, Nevada, New Mexico, Texas, and Utah. More information about
the company is available at www.wnr.com.
Cautionary
Statement on Forward-Looking Statements
This
press release contains forward-looking statements. The
forward-looking statements contained herein include statements about our
positioning for stronger and sustainable results, our competitiveness in the
refining industry, operational improvements at our refineries, expected cost
savings, our financial flexibility, and our expectations regarding margins.
These statements are subject to the general risks inherent in our
business. These expectations may or may not be
realized. Some of these expectations may be based upon assumptions or
judgments that prove to be incorrect. In addition, Western’s business
and operations involve numerous risks and uncertainties, many of which are
beyond Western’s control, which could result in Western’s expectations not being
realized or otherwise materially affect Western’s financial condition, results
of operations, and cash flows. Additional information relating to the
uncertainties affecting Western’s business is contained in its filings with the
Securities and Exchange Commission. The forward-looking statements
are only as of the date made, and Western does not undertake any obligation to
(and expressly disclaims any obligation to) update any forward-looking
statements to reflect events or circumstances after the date such statements
were made, or to reflect the occurrence of unanticipated events.
Consolidated
Financial Data
The
following tables set forth our summary historical financial and operating data
for the periods indicated below:
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per share
data)
|
|||||||||||||||||
|
Statement of Operations
Data:
|
|||||||||||||||||
|
Net sales
|
$
|
1,959,352
|
$
|
1,656,739
|
$
|
6,807,368
|
$
|
10,725,581
|
|||||||||
|
Operating costs and
expenses:
|
|||||||||||||||||
|
Cost of products sold (exclusive
of
|
|||||||||||||||||
|
depreciation and
amortization)
|
1,820,075
|
1,449,510
|
5,922,434
|
9,746,895
|
|||||||||||||
|
Direct operating expenses
(exclusive
|
|||||||||||||||||
|
of depreciation and
amortization)
|
111,969
|
132,822
|
486,164
|
532,325
|
|||||||||||||
|
Selling, general and
administrative expenses
|
23,794
|
25,913
|
109,697
|
115,913
|
|||||||||||||
|
Goodwill and other impairment
losses
|
52,788
|
—
|
352,340
|
—
|
|||||||||||||
|
Maintenance turnaround
expense
|
3,735
|
27,198
|
8,088
|
28,936
|
|||||||||||||
|
Depreciation and
amortization
|
36,599
|
31,044
|
145,981
|
113,611
|
|||||||||||||
|
Total operating costs and
expenses
|
2,048,960
|
1,666,487
|
7,024,704
|
10,537,680
|
|||||||||||||
|
Operating income
(loss)
|
( 89,608
|
)
|
( 9,748
|
)
|
( 217,336
|
)
|
187,901
|
||||||||||
|
Other income
(expense):
|
|||||||||||||||||
|
Interest
income
|
51
|
400
|
248
|
1,830
|
|||||||||||||
|
Interest
expense
|
( 33,274
|
)
|
( 32,364
|
)
|
( 121,321
|
)
|
( 102,202
|
)
|
|||||||||
|
Amortization of loan
fees
|
( 2,038
|
)
|
( 1,555
|
)
|
( 6,870
|
)
|
( 4,789
|
)
|
|||||||||
|
Write-off of unamortized loan
fees
|
—
|
—
|
( 9,047
|
)
|
( 10,890
|
)
|
|||||||||||
|
Gain (loss) from derivative
activities
|
( 8,443
|
)
|
19,221
|
( 21,694
|
)
|
11,395
|
|||||||||||
|
Other income (expense),
net
|
( 19,778
|
)
|
( 180
|
)
|
( 15,184
|
)
|
1,176
|
||||||||||
|
Income (loss) before income
taxes
|
( 153,090
|
)
|
( 24,226
|
)
|
( 391,204
|
)
|
84,421
|
||||||||||
|
Provision for income
taxes
|
55,640
|
11,397
|
40,583
|
( 20,224
|
)
|
||||||||||||
|
Net income
(loss)
|
$
|
( 97,450
|
)
|
$
|
( 12,829
|
)
|
$
|
( 350,621
|
)
|
$
|
64,197
|
||||||
|
Basic earnings (loss) per
share
|
$
|
( 1.11
|
)
|
$
|
( 0.19
|
)
|
$
|
( 4.43
|
)
|
$
|
( 0.94
|
)
|
|||||
|
Diluted earnings (loss) per
share
|
$
|
( 1.11
|
)
|
$
|
( 0.19
|
)
|
$
|
( 4.43
|
)
|
$
|
( 0.94
|
)
|
|||||
|
Dividends declared per common
share
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
0.06
|
|||||||||
|
Weighted average basic shares
outstanding
|
87,983
|
67,772
|
79,163
|
67,715
|
|||||||||||||
|
Weighted average dilutive shares
outstanding
|
87,983
|
67,772
|
79,163
|
67,757
|
|||||||||||||
|
Cash Flow
Data:
|
|||||||||||||||||
|
Net cash provided by (used
in):
|
|||||||||||||||||
|
Operating
activities
|
$
|
( 7,712
|
)
|
$
|
115,465
|
$
|
140,841
|
$
|
285,575
|
||||||||
|
Investing
activities
|
( 21,994
|
)
|
( 64,852
|
)
|
( 115,361
|
)
|
( 220,554
|
)
|
|||||||||
|
Financing
activities
|
39,557
|
( 143,291
|
)
|
( 30,407
|
)
|
( 274,769
|
)
|
||||||||||
|
Other Data:
|
|||||||||||||||||
|
Adjusted EBITDA
(1)
|
$
|
( 24,656
|
)
|
$
|
128,940
|
$
|
191,438
|
$
|
405,854
|
||||||||
|
Capital
expenditures
|
22,092
|
66,128
|
115,854
|
222,288
|
|||||||||||||
|
Balance Sheet Data (at end of
period):
|
|||||||||||||||||
|
Cash and cash
equivalents
|
$
|
74,890
|
$
|
79,817
|
|||||||||||||
|
Working
capital
|
311,254
|
314,521
|
|||||||||||||||
|
Total
assets
|
2,824,654
|
3,076,792
|
|||||||||||||||
|
Total debt
|
1,116,664
|
1,340,500
|
|||||||||||||||
|
Stockholders’
equity
|
688,452
|
811,489
|
|||||||||||||||
_________________
|
(1)
|
Adjusted EBITDA represents
earnings before interest expense, income tax expense, amortization of loan
fees, write-off of unamortized loan fees, loss on early extinguishment of
debt, depreciation, amortization, goodwill and other impairment losses,
maintenance
turnaround expense, and lower of cost or market, or LCM, inventory reserve
adjustments. Adjusted EBITDA is not, however, a recognized
measurement under United States generally accepted accounting
principles, or GAAP. Our management believes that the
presentation of Adjusted EBITDA is useful to investors because it is
frequently used by securities analysts, investors, and other interested
parties in the evaluation of companies in our industry. In
addition, our management believes that Adjusted EBITDA is useful in
evaluating our operating performance compared to that of other companies
in our industry because the calculation of Adjusted EBITDA generally
eliminates the effects of financings, income taxes, the accounting effects
of significant turnaround activities (that many of our competitors
capitalize and thereby exclude from their measures of EBITDA),
acquisitions, and other items that may vary for different companies for
reasons unrelated to overall operating
performance.
|
Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation, or as a substitute
for analysis of our results as reported under GAAP. Some of these
limitations are:
|
·
|
Adjusted
EBITDA does not reflect our cash expenditures or future requirements for
significant turnaround activities, capital expenditures, or contractual
commitments;
|
|
·
|
Adjusted EBITDA does not reflect
the interest expense or the cash requirements necessary to service
interest or principal payments on our
debt;
|
|
·
|
Adjusted EBITDA does not reflect
changes in, or cash requirements for, our working capital needs;
and
|
|
·
|
Our calculation of Adjusted EBITDA
may differ from the Adjusted EBITDA calculations of other companies in our
industry, limiting its usefulness as a comparative
measure.
|
|
·
|
Because of these limitations,
Adjusted EBITDA should not be considered a measure of discretionary cash
available to us to invest in the
growth of our business. We compensate for these limitations by
relying primarily on our GAAP results and using Adjusted EBITDA only
supplementally. The following table reconciles net income
(loss) to Adjusted EBITDA for the periods
presented:
|
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per share
data)
|
|||||||||||||||||
|
Net income
(loss)
|
$
|
( 97,450
|
)
|
$
|
( 12,829
|
)
|
$
|
( 350,621
|
)
|
$
|
64,197
|
||||||
|
Interest
expense
|
33,274
|
32,364
|
121,321
|
102,202
|
|||||||||||||
|
Provision for income
taxes
|
( 55,640
|
)
|
( 11,397
|
)
|
( 40,583
|
)
|
20,224
|
||||||||||
|
Amortization of loan
fees
|
2,038
|
1,555
|
6,870
|
4,789
|
|||||||||||||
|
Write-off of unamortized loan
fees
|
—
|
—
|
9,047
|
10,890
|
|||||||||||||
|
Depreciation and
amortization
|
36,599
|
31,044
|
145,981
|
113,611
|
|||||||||||||
|
Maintenance turnaround
expense
|
3,735
|
27,198
|
8,088
|
28,936
|
|||||||||||||
|
Goodwill and other impairment
losses
|
52,788
|
—
|
352,340
|
—
|
|||||||||||||
|
Non-cash LCM inventory
adjustment
|
—
|
61,005
|
( 61,005
|
)
|
61,005
|
||||||||||||
|
Adjusted
EBITDA
|
$
|
( 24,656
|
)
|
$
|
128,940
|
$
|
191,438
|
$
|
405,854
|
||||||||
Refining Segment
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per barrel
data)
|
|||||||||||||||||
|
Statement of Operations
Data:
|
|||||||||||||||||
|
Net sales (including intersegment
sales)
|
$
|
1,962,366
|
$
|
1,550,885
|
$
|
6,608,075
|
$
|
10,455,602
|
|||||||||
|
Operating costs and
expenses:
|
|||||||||||||||||
|
Cost of products sold (exclusive
of
|
|||||||||||||||||
|
depreciation and amortization)
(1)
|
1,864,124
|
1,394,369
|
5,897,805
|
9,665,076
|
|||||||||||||
|
Direct operating expenses
(exclusive
|
|||||||||||||||||
|
of depreciation and
amortization)
|
87,013
|
104,466
|
375,690
|
418,628
|
|||||||||||||
|
Selling, general, and
administrative expenses
|
7,774
|
8,542
|
36,021
|
37,561
|
|||||||||||||
|
Goodwill and other impairment
losses
|
52,788
|
—
|
283,500
|
—
|
|||||||||||||
|
Maintenance turnaround
expense
|
3,735
|
27,198
|
8,088
|
28,936
|
|||||||||||||
|
Depreciation and
amortization
|
31,375
|
25,800
|
125,537
|
95,713
|
|||||||||||||
|
Total operating costs and
expenses
|
2,046,809
|
1,560,375
|
6,726,641
|
10,245,914
|
|||||||||||||
|
Operating income
(loss)
|
$
|
( 84,443
|
)
|
$
|
( 9,490
|
)
|
$
|
( 118,566
|
)
|
$
|
209,688
|
||||||
|
Key Operating
Statistics:
|
|||||||||||||||||
|
Total sales volume (bpd)
(2)
|
262,498
|
241,611
|
258,259
|
258,013
|
|||||||||||||
|
Total refinery production
(bpd)
|
197,210
|
205,285
|
213,833
|
225,740
|
|||||||||||||
|
Total refinery throughput (bpd)
(3)
|
199,739
|
206,052
|
215,815
|
227,130
|
|||||||||||||
|
Per barrel of
throughput:
|
|||||||||||||||||
|
Refinery gross margin (1)
(4)
|
$
|
5.35
|
$
|
8.26
|
$
|
9.02
|
$
|
9.51
|
|||||||||
|
Gross profit
(4)
|
3.64
|
6.90
|
7.42
|
8.36
|
|||||||||||||
|
Direct operating expenses
(5)
|
4.74
|
5.51
|
4.77
|
5.04
|
|||||||||||||
|
The following table reconciles gross profit to refinery gross margin for the periods presented: |
|||||||||||||||||
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per barrel
data)
|
|||||||||||||||||
|
Net sales
|
$
|
1,962,366
|
$
|
1,550,885
|
$
|
6,608,075
|
$
|
10,455,602
|
|||||||||
|
Cost of products sold (exclusive
of
|
|||||||||||||||||
|
depreciation and
amortization)
|
1,864,124
|
1,394,369
|
5,897,805
|
9,665,076
|
|||||||||||||
|
Depreciation and
amortization
|
31,375
|
25,800
|
125,537
|
95,713
|
|||||||||||||
|
Gross
profit
|
66,867
|
130,716
|
584,733
|
694,813
|
|||||||||||||
|
Plus depreciation and
amortization
|
31,375
|
25,800
|
125,537
|
95,713
|
|||||||||||||
|
Refinery gross
margin
|
$
|
98,242
|
$
|
156,516
|
$
|
710,270
|
$
|
790,526
|
|||||||||
|
Refinery gross margin per
refinery
|
|||||||||||||||||
|
throughput
barrel
|
$
|
5.35
|
$
|
8.26
|
$
|
9.02
|
$
|
9.51
|
|||||||||
|
Gross profit per
refinery
|
|||||||||||||||||
|
throughput
barrel
|
$
|
3.64
|
$
|
6.90
|
$
|
7.42
|
$
|
8.36
|
|||||||||
The following table sets forth our
summary refining throughput and production data for the periods presented
below:
All
Refineries
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
Refinery product yields
(bpd)
|
|||||||||||||||||
|
Gasoline
|
109,190
|
106,995
|
113,364
|
114,876
|
|||||||||||||
|
Diesel and jet
fuel
|
73,090
|
78,054
|
80,157
|
88,695
|
|||||||||||||
|
Residuum
|
5,007
|
5,188
|
5,504
|
5,711
|
|||||||||||||
|
Other
|
7,547
|
8,188
|
9,349
|
9,649
|
|||||||||||||
|
Liquid
products
|
194,834
|
198,425
|
208,374
|
218,931
|
|||||||||||||
|
By-products
(coke)
|
2,376
|
6,860
|
5,459
|
6,809
|
|||||||||||||
|
Total
|
197,210
|
205,285
|
213,833
|
225,740
|
|||||||||||||
|
Refinery throughput
(bpd)
|
|||||||||||||||||
|
Sweet crude
oil
|
121,531
|
117,045
|
126,328
|
143,714
|
|||||||||||||
|
Sour or heavy crude
oil
|
52,475
|
63,340
|
65,260
|
62,349
|
|||||||||||||
|
Other
feedstocks/blendstocks
|
25,733
|
25,667
|
24,227
|
21,067
|
|||||||||||||
|
Total
|
199,739
|
206,052
|
215,815
|
227,130
|
|||||||||||||
|
El
Paso Refinery
|
|||||||||||||||||
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
Key Operating
Statistics:
|
|||||||||||||||||
|
Refinery product yields
(bpd)
|
|||||||||||||||||
|
Gasoline
|
63,450
|
54,720
|
65,160
|
62,557
|
|||||||||||||
|
Diesel and jet
fuel
|
49,548
|
46,379
|
50,524
|
52,754
|
|||||||||||||
|
Residuum
|
5,007
|
5,188
|
5,504
|
5,711
|
|||||||||||||
|
Other
|
3,222
|
2,970
|
3,341
|
3,612
|
|||||||||||||
|
Total refinery production
(bpd)
|
121,227
|
109,257
|
124,529
|
124,634
|
|||||||||||||
|
Refinery throughput
(bpd)
|
|||||||||||||||||
|
Sweet crude
oil
|
91,691
|
89,295
|
99,680
|
100,130
|
|||||||||||||
|
Sour crude
oil
|
22,396
|
15,460
|
17,601
|
16,985
|
|||||||||||||
|
Other
feedstocks/blendstocks
|
8,450
|
6,252
|
9,184
|
9,454
|
|||||||||||||
|
Total refinery throughput
(bpd)
|
122,537
|
111,007
|
126,465
|
126,569
|
|||||||||||||
|
Total sales volume
(bpd)
|
159,570
|
129,204
|
147,853
|
138,775
|
|||||||||||||
|
Per barrel of
throughput:
|
|||||||||||||||||
|
Refinery gross
margin
|
$
|
5.82
|
$
|
8.31
|
$
|
9.22
|
$
|
9.45
|
|||||||||
|
Direct operating
expenses
|
3.85
|
4.56
|
3.59
|
4.07
|
|||||||||||||
|
Yorktown
Refinery
|
|||||||||||||||||
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
Key Operating
Statistics:
|
|||||||||||||||||
|
Refinery product yields
(bpd)
|
|||||||||||||||||
|
Gasoline
|
29,214
|
34,692
|
30,824
|
32,597
|
|||||||||||||
|
Diesel and jet
fuel
|
16,834
|
23,798
|
22,181
|
27,143
|
|||||||||||||
|
Other
|
3,377
|
4,187
|
4,958
|
4,896
|
|||||||||||||
|
Liquid
products
|
49,425
|
62,677
|
57,963
|
64,636
|
|||||||||||||
|
By-products
(coke)
|
2,376
|
6,860
|
5,459
|
6,809
|
|||||||||||||
|
Total refinery production
(bpd)
|
51,801
|
69,537
|
63,422
|
71,445
|
|||||||||||||
|
Refinery throughput
(bpd)
|
|||||||||||||||||
|
Sweet crude
oil
|
7,450
|
2,451
|
1,885
|
15,291
|
|||||||||||||
|
Heavy crude
oil
|
30,079
|
47,880
|
47,659
|
45,364
|
|||||||||||||
|
Other
feedstocks/blendstocks
|
14,960
|
17,449
|
13,189
|
9,143
|
|||||||||||||
|
Total refinery throughput
(bpd)
|
52,489
|
67,780
|
62,733
|
69,798
|
|||||||||||||
|
Total sales volume
(bpd)
|
68,521
|
75,969
|
74,151
|
77,073
|
|||||||||||||
|
Per barrel of
throughput:
|
|||||||||||||||||
|
Refinery gross margin
(4)(6)
|
$
|
0.94
|
$
|
1.73
|
$
|
5.97
|
$
|
6.43
|
|||||||||
|
Direct operating
expenses
|
4.03
|
5.11
|
4.95
|
4.75
|
|||||||||||||
|
Four
Corners Refineries
|
|||||||||||||||||
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009(7)
|
2008
|
2009(7)
|
2008
|
||||||||||||||
|
Key Operating
Statistics:
|
|||||||||||||||||
|
Refinery product yields
(bpd)
|
|||||||||||||||||
|
Gasoline
|
16,256
|
17,583
|
17,380
|
19,722
|
|||||||||||||
|
Diesel and jet
fuel
|
6,708
|
7,877
|
7,452
|
8,798
|
|||||||||||||
|
Other
|
948
|
1,031
|
1,050
|
1,141
|
|||||||||||||
|
Total refinery production
(bpd)
|
24,182
|
26,491
|
25,882
|
29,661
|
|||||||||||||
|
Refinery throughput
(bpd)
|
|||||||||||||||||
|
Sweet crude
oil
|
22,390
|
25,299
|
24,763
|
28,293
|
|||||||||||||
|
Other
feedstocks/blendstocks
|
2,323
|
1,966
|
1,854
|
2,470
|
|||||||||||||
|
Total refinery throughput
(bpd)
|
24,713
|
27,265
|
26,617
|
30,763
|
|||||||||||||
|
Total sales volume
(bpd)
|
34,406
|
36,438
|
36,254
|
42,165
|
|||||||||||||
|
Per barrel of
throughput:
|
|||||||||||||||||
|
Refinery gross
margin
|
$
|
12.09
|
$
|
25.31
|
$
|
15.17
|
$
|
15.49
|
|||||||||
|
Direct operating
expenses
|
9.55
|
9.04
|
8.94
|
8.35
|
|||||||||||||
____________________
|
(1)
|
Cost of products sold includes a
non-cash adjustment of $(61.0) million and $61.0 million for
2009 and 2008, respectively, to value our Yorktown inventories to net realizable
market values. These non-cash adjustments resulted in a
corresponding increase of $0.78 and decrease of $0.73 in combined refinery gross margins for the
years ended December 31, 2009 and 2008,
respectively.
|
|
(2)
|
Includes sales of refined products
sourced from our refinery production as well as refined products purchased
from third parties
|
|
(3)
|
Total refinery throughput includes
crude oil, other feedstocks, and
blendstocks.
|
|
(4)
|
Refinery gross margin is a per
barrel measurement calculated by dividing the difference between net sales
and cost of products sold by our refineries’ total throughput volumes for
the respective periods presented. Refinery gross profit is a
per barrel measurement calculated by dividing net sales less cost of
products sold and depreciation and amortization by our refineries’ total
throughput volumes for the respective periods presented. Our
economic hedging activities are used to minimize fluctuations in earnings
but are not taken into account in calculating refinery gross
margin. Cost of products sold does not include any depreciation
or amortization. Refinery gross margin is a non-GAAP
performance measure that we believe is important to investors in
evaluating our refinery performance as a general indication of the amount
above our cost of products that we are able to sell refined
products. Each of the components used in this calculation (net
sales and cost of products sold) can be reconciled directly to our
statement of operations. Our calculation of refinery gross
margin and profit may differ from similar calculations of other companies
in our industry, thereby limiting its usefulness as a comparative
measure.
|
|
(5)
|
Refinery direct operating expense
per throughput barrel is calculated by dividing direct operating expenses
by total throughput volumes for the respective periods
presented. Direct operating expenses do not include any
depreciation or
amortization.
|
|
(6)
|
Includes a net change in the LCM
reserve to value our Yorktown inventories to net realizable market values,
which increased Yorktown’s refinery gross margin by $2.66 per throughput
barrel for the year ended December 31, 2009; and decreased Yorktown’s
refinery gross margin by $2.39 for the year ended December 31,
2008.
|
|
(7)
|
Until late November 2009, the Four Corners
refineries operated
as two separate
facilities: the Bloomfield refinery and the Gallup refinery. In late
November 2009, we consolidated refining operations into the Gallup facility and have indefinitely suspended refining
operations at the Bloomfield
facility.
|
Retail Segment
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per gallon
data)
|
|||||||||||||||||
|
Statement of Operations
Data:
|
|||||||||||||||||
|
Net sales
|
$
|
163,493
|
$
|
163,392
|
$
|
629,938
|
$
|
838,197
|
|||||||||
|
Operating costs and
expenses:
|
|||||||||||||||||
|
Cost of products sold (exclusive
of
|
|||||||||||||||||
|
depreciation and
amortization)
|
141,151
|
138,528
|
533,481
|
744,691
|
|||||||||||||
|
Direct operating expenses
(exclusive
|
|||||||||||||||||
|
of depreciation and
amortization)
|
15,381
|
15,917
|
64,979
|
65,604
|
|||||||||||||
|
Selling, general and
administrative expenses
|
1,454
|
1,339
|
6,216
|
5,301
|
|||||||||||||
|
Goodwill impairment
losses
|
—
|
—
|
27,610
|
—
|
|||||||||||||
|
Depreciation and
amortization
|
2,522
|
2,297
|
9,820
|
8,479
|
|||||||||||||
|
Total operating costs and
expenses
|
160,508
|
158,081
|
642,106
|
824,075
|
|||||||||||||
|
Operating
income
|
$
|
2,985
|
$
|
5,311
|
$
|
( 12,168
|
)
|
$
|
14,122
|
||||||||
|
Operating
Data:
|
|||||||||||||||||
|
Fuel gallons sold (in
thousands)
|
50,316
|
52,322
|
205,532
|
210,401
|
|||||||||||||
|
Fuel margin per gallon
(1)
|
$
|
0.17
|
$
|
0.22
|
$
|
0.18
|
$
|
0.18
|
|||||||||
|
Merchandise
sales
|
44,757
|
45,536
|
189,096
|
185,712
|
|||||||||||||
|
Merchandise margin
(2)
|
28.4
|
%
|
26.8
|
%
|
28.4
|
%
|
27.4
|
%
|
|||||||||
|
Operating retail outlets at period
end
|
149
|
155
|
149
|
155
|
|||||||||||||
The following table
reconciles fuel sales and cost of fuel sales to
net sales and cost of products sold:
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per gallon
data)
|
|||||||||||||||||
|
Net sales:
|
|||||||||||||||||
|
Fuel sales
|
$
|
131,491
|
$
|
128,029
|
$
|
489,033
|
$
|
694,891
|
|||||||||
|
Excise taxes included in fuel
revenues
|
( 18,349
|
)
|
( 15,835
|
)
|
( 71,998
|
)
|
( 66,736
|
)
|
|||||||||
|
Merchandise
sales
|
44,757
|
45,536
|
189,096
|
185,712
|
|||||||||||||
|
Other sales
|
5,591
|
5,662
|
23,804
|
24,330
|
|||||||||||||
|
Net sales
|
$
|
163,490
|
$
|
163,392
|
$
|
629,935
|
$
|
838,197
|
|||||||||
|
Cost of products
sold:
|
|||||||||||||||||
|
Fuel cost of products
sold
|
123,101
|
116,596
|
451,485
|
657,537
|
|||||||||||||
|
Excise taxes included in fuel cost
of
|
|||||||||||||||||
|
products
sold
|
( 18,349
|
)
|
( 15,835
|
)
|
( 71,998
|
)
|
( 66,736
|
)
|
|||||||||
|
Merchandise cost of products
sold
|
32,059
|
33,353
|
135,459
|
134,821
|
|||||||||||||
|
Other cost of products
sold
|
4,340
|
4,414
|
18,535
|
19,069
|
|||||||||||||
|
Cost of products
sold
|
$
|
141,151
|
$
|
138,528
|
$
|
533,481
|
$
|
744,691
|
|||||||||
|
Fuel margin per
gallon(1)
|
$
|
0.17
|
$
|
0.22
|
$
|
0.18
|
$
|
0.18
|
|||||||||
________________
|
(1)
|
Fuel margin per gallon is a
measurement calculated by dividing the difference between fuel sales and
cost of fuel sales for our retail segment by the number of gallons
sold.
|
|
(2)
|
Merchandise margin is a
measurement calculated by dividing the difference between merchandise
sales and merchandise cost of products sold by merchandise
sales. Merchandise margin is a measure frequently used in the
convenience store industry to measure operating results related to
merchandise sales.
|
Wholesale Segment
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per gallon
data)
|
|||||||||||||||||
|
Statement of Operations
Data:
|
|||||||||||||||||
|
Net sales
|
$
|
477,931
|
$
|
387,365
|
$
|
1,664,397
|
$
|
2,279,541
|
|||||||||
|
Operating costs and
expenses:
|
|||||||||||||||||
|
Cost of products sold (exclusive
of
|
|||||||||||||||||
|
depreciation and
amortization)
|
457,191
|
359,838
|
1,579,910
|
2,168,707
|
|||||||||||||
|
Direct operating expenses
(exclusive
|
|||||||||||||||||
|
of depreciation and
amortization)
|
11,622
|
14,117
|
51,775
|
64,273
|
|||||||||||||
|
Selling, general and
administrative expenses
|
3,932
|
4,520
|
16,566
|
18,915
|
|||||||||||||
|
Goodwill impairment
losses
|
—
|
—
|
41,230
|
—
|
|||||||||||||
|
Depreciation and
amortization
|
1,411
|
1,477
|
5,616
|
5,551
|
|||||||||||||
|
Total operating costs and
expenses
|
474,156
|
379,952
|
1,695,097
|
2,257,446
|
|||||||||||||
|
Operating
income
|
$
|
3,775
|
$
|
7,413
|
$
|
( 30,700
|
)
|
$
|
22,095
|
||||||||
|
Operating
Data:
|
|||||||||||||||||
|
Fuel gallons sold (in
thousands)
|
211,693
|
172,530
|
823,207
|
706,864
|
|||||||||||||
|
Fuel margin per gallon
(1)
|
$
|
0.07
|
$
|
0.12
|
$
|
0.07
|
$
|
0.09
|
|||||||||
|
Lubricant
sales
|
$
|
24,392
|
$
|
39,963
|
$
|
111,193
|
$
|
163,679
|
|||||||||
|
Lubricant margins
(2)
|
11.9
|
%
|
11.3
|
%
|
9.6
|
%
|
12.4
|
%
|
|||||||||
The following table reconciles fuel
sales and cost of fuel sales to net sales and cost of products
sold:
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per gallon
data)
|
|||||||||||||||||
|
Net sales:
|
|||||||||||||||||
|
Fuel sales
|
$
|
505,314
|
$
|
385,602
|
$
|
1,749,431
|
$
|
2,269,203
|
|||||||||
|
Excise taxes included in fuel
sales
|
( 59,192
|
)
|
( 46,335
|
)
|
( 224,771
|
)
|
( 193,634
|
)
|
|||||||||
|
Lubricant
sales
|
24,392
|
39,963
|
111,193
|
163,679
|
|||||||||||||
|
Other sales
|
7,417
|
8,135
|
28,544
|
40,293
|
|||||||||||||
|
Net sales
|
$
|
477,931
|
$
|
387,365
|
$
|
1,664,397
|
$
|
2,279,541
|
|||||||||
|
Cost of products
sold:
|
|||||||||||||||||
|
Fuel cost of products
sold
|
$
|
491,321
|
$
|
364,291
|
$
|
1,692,177
|
$
|
2,205,548
|
|||||||||
|
Excise taxes included in fuel
sales
|
( 59,192
|
)
|
( 46,335
|
)
|
( 224,771
|
)
|
( 193,634
|
)
|
|||||||||
|
Lubricant cost of products
sold
|
21,496
|
35,457
|
100,567
|
143,317
|
|||||||||||||
|
Other cost of products
sold
|
3,566
|
6,425
|
11,937
|
13,476
|
|||||||||||||
|
Cost of products
sold
|
$
|
457,191
|
$
|
359,838
|
$
|
1,579,910
|
$
|
2,168,707
|
|||||||||
|
Fuel margin per
gallon(1)
|
$
|
0.07
|
$
|
0.12
|
$
|
0.07
|
$
|
0.09
|
|||||||||
_________________
|
(1)
|
Fuel margin per gallon is a
measurement calculated by dividing the difference between fuel sales and
cost of fuel sales for our wholesale segment by the number of gallons
sold.
|
|
(2)
|
Lubricant margin is a measurement
calculated by dividing the difference between lubricant sales and
lubricant cost of products sold by lubricant sales. Lubricant
margin is a measure frequently used in the petroleum products wholesale
industry to measure operating results related to lubricant
sales.
|
Reconciliation of Special
Items
We present below certain additional
financial measures that are non-GAAP measures within the meaning of Regulation G
under the Securities Exchange Act of 1934.
We present these non-GAAP measures to
provide investors with additional information to analyze our performance from
period to period. We believe it is useful for investors to understand
our financial performance excluding these special items so that investors can
see the operating trends underlying our business. Investors should
not consider these non-GAAP measures in isolation from, or as a substitute for,
the financial information that we report in accordance with
GAAP. These non-GAAP measures reflect subjective determinations by
management, and may differ from similarly titled non-GAAP measures presented by
other companies.
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
(In thousands, except per share
data)
|
|||||||||||||||||
|
Income (loss) before income
taxes
|
$
|
( 153,090
|
)
|
$
|
( 24,226
|
)
|
$
|
( 391,204
|
)
|
$
|
84,421
|
||||||
|
Goodwill impairment losses
(1)
|
—
|
—
|
299,552
|
—
|
|||||||||||||
|
Other impairment losses
(2)
|
52,788
|
—
|
52,788
|
—
|
|||||||||||||
|
Settlement of lawsuit
(3)
|
20,000
|
—
|
20,000
|
—
|
|||||||||||||
|
Non-cash LCM inventory adjustment
(4)
|
—
|
61,005
|
( 61,005
|
)
|
61,005
|
||||||||||||
|
Income (loss) before income
taxes
|
|||||||||||||||||
|
excluding special
items
|
( 80,302
|
)
|
36,779
|
( 79,869
|
)
|
145,426
|
|||||||||||
|
Recomputed income taxes after
special items
|
29,189
|
( 3,214
|
)
|
35,365
|
( 34,865
|
)
|
|||||||||||
|
Net income (loss) excluding
special items
|
$
|
( 51,113
|
)
|
$
|
33,565
|
$
|
( 44,504
|
)
|
$
|
110,561
|
|||||||
|
Diluted earnings (loss) per
share
|
|||||||||||||||||
|
excluding special
items
|
$
|
( 0.58
|
)
|
$
|
0.49
|
$
|
( 0.56
|
)
|
$
|
1.62
|
|||||||
___________________
|
(1)
|
During the second quarter of 2009,
we determined that the goodwill in four of our six reporting units was
impaired, which resulted in a pre-tax and after-tax goodwill impairment
loss of $299.6 million in the quarter. The goodwill
impairment loss is included in the refining, retail, and wholesale
segments’ operating income but is excluded from the operating results
presented here in order to make information comparable between
periods.
|
|
(2)
|
During the fourth quarter of 2009,
we indefinitely suspended the refining operations at our Bloomfield facility, which resulted in a
pre-tax impairment loss of $52.8 million related to certain of the
Bloomfield long-lived and intangible
assets. The other impairment losses are included in the
refining segment’s operating income but are excluded from the operating
results presented here in order to make information comparable between
periods.
|
|
(3)
|
During the fourth quarter of 2009,
we recorded a $20 million pre-tax charge from the settlement of a
lawsuit with Statoil Marketing & Trading (US) Inc. in which we were
the defendant. We intend to make a cash payment of
$10 million in March 2010, with the remainder to be paid within the
next three years. The settlement charge is excluded from the
refining segment’s operating income but is included in the operating
results presented here in order to make information comparable between
periods.
|
|
(4)
|
During the fourth quarter of 2008,
we recorded an adjustment to reduce the carrying value of our inventories
to the lower of cost or market, which resulted in a pre-tax increase of
cost of products sold of $61.0 million. During the first
through the third quarters of 2009, reversing adjustments to value our
inventories at the lower of cost or market were recorded, which resulted
in a pre-tax decrease in cost of products sold for
$61.0 million. This charge and reversal are included in
the refining segment’s operating income but are excluded from the
operating results presented here in order to make that information
comparable between periods.
|