EL PASO, Texas, Nov 4, 2010 (GlobeNewswire via COMTEX) --
Western Refining, Inc. (NYSE:WNR) today reported net income of $6.9 million, or $0.08 per diluted share, for the third quarter of 2010 versus a net loss of $4.8 million, or $0.05 per diluted share, for the same period in 2009. Excluding special items, net income was $11.4 million, or $0.13 per share for the third quarter of 2010 versus a net loss of $8.7 million or $0.10 per share for the prior year period. A reconciliation of net income (loss) to net income (loss) excluding special items, for all periods shown, is included in the accompanying financial tables.
The year-over-year improvement reflects higher refining margins and the continued gains generated from the Company's 2010 cost savings initiatives. Western's Southwest refineries generated strong gross margins per barrel during the quarter with the El Paso refinery improving 21% and the Four Corners refinery improving 38% relative to the third quarter of 2009. Western's Retail business had a record quarter, posting operating income of $7.6 million, an increase of 13% as compared to the prior year quarter, driven by increases in fuel and merchandise volumes. In addition, the Company's Wholesale business performed well due to increased lubricants margins and improving demand for both fuels and lubricants.
Jeff Stevens, Western's Chief Executive Officer, said, "We are very pleased to report another profitable quarter. Our refineries ran well and we believe refining margins at our Southwest refineries continued to be some of the strongest in the U.S. We are optimistic about the fourth quarter due to the strength in diesel margins which offset the weaker gasoline margins that we typically see this time of year. Overall, both gasoline and diesel margins are significantly stronger than the fourth quarter of 2009."
During the third quarter, Western announced the safe and successful completion of the shutdown of its Yorktown refining operations and generated $56 million in cash from the partial liquidation of working capital. The Company also incurred costs of $4 million during the quarter related to the shutdown. Western continues to operate the products terminal and is supplying finished products to its local customers. Western is currently negotiating with a number of interested parties regarding strategic alternatives for Yorktown, including third-party storage and terminalling or the sale of the terminal assets.
Western continues to benefit from the successful implementation of the Four Corners refinery consolidation and other cost reductions announced in 2009. These initiatives had an initial target of $50 million in annualized savings starting in 2010.
"Our focus on the cost savings initiatives continues to show results," continued Stevens. "We are on track to exceed our target of $50 million in annualized cost savings and we continue to take the necessary steps to actively manage our business in a prudent and fiscally responsible manner."
Cash flow from operations during the quarter was $239.6 million and capital expenditures were $20 million. The Company reduced total debt by $159.2 million during the quarter, primarily related to the revolving credit facility, and ended the period with a cash balance of $77.5 million.
In conclusion, Stevens stated, "We are pleased with the earnings potential of our assets and are continuing to be pro-active to ensure we are running our operations in a safe, reliable, and cost effective manner, which we believe will allow us to remain profitable in these market conditions."
Conference Call Information
A conference call is scheduled for November 4, 2010, at 10:00 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 (866) 566-8590, passcode: 94459083. The audio replay will be available through November 11, 2010, by dialing (800) 642-1687, passcode: 94459083.
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.
Non-GAAP Financial Measures
In a number of places in the press release and related tables, we have excluded the impact of the non-cash goodwill and other impairment losses from our results of operations for the third quarter of 2010 and the second quarter of 2009. We have also excluded third quarter 2010 charges related to the suspension of our refining operations at the Yorktown facility. We have excluded these amounts to better analyze changes in our business from period-to-period as these are non-recurring charges.
About Western Refining
Western Refining, Inc. is an independent refining and marketing company headquartered in El Paso, Texas. Western operates refineries in El Paso, and Gallup, New Mexico. Western's asset portfolio also includes refined products terminals in Albuquerque and Bloomfield, New Mexico and Yorktown, Virginia, asphalt terminals in Phoenix and Tucson, Arizona, Albuquerque, and El Paso, 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.
The Western Refining, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7615
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements. The forward-looking statements contained herein include statements about demand for our products, our expectations for diesel and gasoline margins, potential strategic alternatives for the Yorktown refinery, expected cost savings from initiatives we are pursuing, and our expectations regarding our future profitability. These statements are subject to the general risks inherent in our business and reflect our current expectations regarding these matters. 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, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows. For additional information relating to the uncertainties affecting our business you are referred to our filings with the Securities and Exchange Commission. The forward-looking statements are only as of the date made, and we do not undertake any obligation to (and expressly disclaim 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 of historical and financial and operating data for the periods indicated below:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
(In thousands, except per share data)
Statement of Operations Data:
Net sales (1) $ 2,038,296 $ 1,896,273 $ 6,099,028 $ 4,848,016
Operating costs and expenses:
Cost of products sold
(exclusive of depreciation and
amortization) (1) 1,807,411 1,699,399 5,479,813 4,115,610
Direct operating expenses
(exclusive of depreciation and
amortization) (1) 116,982 116,717 337,930 374,195
Selling, general and
administrative expenses 24,031 23,725 61,604 85,903
Goodwill and other impairment
losses 3,963 -- 3,963 299,552
Maintenance turnaround expense -- 1,031 23,286 4,353
Depreciation and amortization 35,253 34,725 104,294 109,382
------------ ------------ ------------ ------------
Total operating costs and
expenses 1,987,640 1,875,597 6,010,890 4,988,995
------------ ------------ ------------ ------------
Operating income (loss) 50,656 20,676 88,138 (140,979)
Other income (expense):
Interest income 151 17 317 197
Interest expense (37,099) (33,024) (111,168) (88,047)
Amortization of loan fees (2,453) (1,795) (7,287) (4,832)
Write-off of unamortized loan
fees -- -- -- (9,047)
Other income (expense), net 712 ( 39) 4,631) 4,594)
------------ ------------ ------------ ------------
Income (loss) before income
taxes 11,967 (14,165) (25,369) (238,114)
Provision for income taxes (5,108) 9,383 15,892 (15,057)
------------ ------------ ------------ ------------
Net income (loss) $ 6,859 $ (4,782) $ (9,477) $ (253,171)
============ ============ ============ ============
Basic earnings per share $ 0.08 $ (0.05) $ (0.11) $ (3.29)
Diluted earnings per share $ 0.08 $ (0.05) $ (0.11) $ (3.29)
Dividends declared per common
share -- -- -- --
Weighted average basic shares
outstanding 88,280 87,973 88,170 76,191
Weighted average dilutive
shares outstanding 88,280 87,973 88,170 76,191
Cash Flow Data:
Net cash provided by (used in):
Operating activities $ 239,604 $ 28,018 $ 93,481 $ 148,553
Investing activities (19,208) (24,026) (56,099) (93,367)
Financing activities (163,250) (5,408) (34,750) (69,964)
Other Data:
Adjusted EBITDA (2) $ 90,735 $ 44,714 $ 224,629 $ 216,094
Capital expenditures 19,660 24,034 56,741 93,762
Balance Sheet Data (at end of
period):
Cash and cash equivalents $ 77,522 $ 65,039
Working capital 354,727 316,166
Total assets 2,661,682 2,918,468
Total debt 1,093,608 1,067,025
Stockholders' equity 680,291 783,462
(1) Excludes $833.2 million, $583.7 million, $2,317.0 million, and $1,450.6 million of intercompany sales; $831.6 million, $582.3 million, $2,312.6 million, and $1,446.4 million of intercompany cost of products sold; and $1.6 million, $1.4 million, $4.4 million, and $4.2 million of intercompany direct operating expenses for the three and nine months ended September 30, 2010 and 2009, respectively.
(2) Adjusted EBITDA represents earnings before interest expense, income tax expense, amortization of loan fees, depreciation, amortization, maintenance turnaround expense, LCM inventory reserve adjustments, and goodwill and other impairment losses. However, Adjusted EBITDA is not a recognized measurement under 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, and the accounting effects of significant turnaround activities (which many of our competitors capitalize and thereby exclude from their measures of EBITDA) and acquisitions, 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, thereby 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 Nine Months Ended
September 30, September 30,
---------------------- ------------------------
2010 2009 2010 2009
---------- ---------- ---------- ------------
(In thousands, except per share data)
Net income (loss) $ 6,859 $ (4,782) $ (9,477) $ (253,171)
Interest expense 37,099 33,024 111,168 88,047
Provision for income taxes 5,108 (9,383) (15,892) 15,057
Amortization of loan fees 2,453 1,795 7,287 4,832
Write-off of unamortized loan
fees -- -- -- 9,047
Depreciation and amortization 35,253 34,725 104,294 109,382
Maintenance turnaround expense -- 1,031 23,286 4,353
Goodwill and other impairment
losses 3,963 -- 3,963 299,552
Net change in LCM reserve -- (11,696) -- (61,005)
---------- ---------- ---------- ------------
Adjusted EBITDA $ 90,735 $ 44,714 $ 224,629 $ 216,094
========== ========== ========== ============
Refining Segment
The following tables present the segment financial data for our refining group, including other revenues and expenses not specific to a particular refinery:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
(In thousands, except per barrel data)
Statement of Operations Data:
Net sales (including intersegment
sales) $ 2,045,006 $ 1,834,130 $ 6,095,884 $ 4,645,709
Operating costs and expenses:
Cost of products sold (exclusive of
depreciation and amortization) (1) 1,864,165 1,685,451 5,611,868 4,046,932
Direct operating expenses (exclusive
of depreciation and amortization) 88,685 88,042 257,049 288,677
Selling, general, and administrative
expenses 6,018 8,470 14,208 28,247
Goodwill and other impairment losses 3,757 -- 3,757 230,712
Maintenance turnaround expense -- 1,031 23,286 4,353
Depreciation and amortization 30,434 29,686 89,211 94,162
------------ ------------ ------------ ------------
Total operating costs and expenses 1,993,059 1,812,680 5,999,379 4,693,083
------------ ------------ ------------ ------------
Operating income (loss) $ 51,947 $ 21,450 $ 96,505 $ (47,374)
============ ============ ============ ============
Key Operating Statistics:
Total sales volume (bpd) (2) 256,741 265,544 257,135 256,830
Total refinery production (bpd) 209,337 220,453 205,689 219,435
Total refinery throughput (bpd) (3) 211,167 223,129 207,111 221,232
Per barrel of throughput:
Refinery gross margin (1) (4) $ 9.31 $ 7.24 $ 8.56 $ 9.91
Gross profit (4) 7.74 5.80 6.98 8.36
Direct operating expenses (5) 4.56 4.29 4.55 4.78
The following tables set forth our summary refining throughput and production data for the periods presented below:
All Refineries
------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2010 2009 2010 2009
--------- -------- --------- --------
Refinery product yields (bpd)
Gasoline 112,302 115,536 108,753 114,771
Diesel and jet fuel 79,320 83,954 78,279 82,538
Residuum 5,281 5,458 4,838 5,672
Other 7,578 9,778 8,172 9,956
--------- -------- --------- --------
Liquid products 204,481 214,726 200,042 212,937
By-products 4,856 5,727 5,647 6,498
--------- -------- --------- --------
Total 209,337 220,453 205,689 219,435
========= ======== ========= ========
Refinery throughput (bpd)
Sweet crude oil 137,242 128,535 133,846 127,944
Sour or heavy crude oil 46,791 73,031 52,231 69,569
Other feedstocks/blendstocks 27,134 21,563 21,034 23,719
--------- -------- --------- --------
Total 211,167 223,129 207,111 221,232
========= ======== ========= ========
El Paso Refinery
------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2010 2009 2010 2009
--------- -------- --------- --------
Key Operating Statistics:
Refinery product yields (bpd)
Gasoline 69,748 64,852 64,597 65,737
Diesel and jet fuel 54,572 54,236 51,065 50,853
Residuum 5,281 5,458 4,838 5,672
Other 3,420 3,290 3,194 3,382
--------- -------- --------- --------
Total refinery production
(bpd) 133,021 127,836 123,694 125,644
========= ======== ========= ========
Refinery throughput (bpd)
Sweet crude oil 110,136 103,122 105,267 102,373
Sour crude oil 13,677 19,969 11,957 15,985
Other feedstocks/blendstocks 11,277 7,051 8,358 9,431
--------- -------- --------- --------
Total refinery throughput
(bpd) 135,090 130,142 125,582 127,789
========= ======== ========= ========
Total sales volume (bpd) (2) 151,936 150,823 152,578 143,905
Per barrel of throughput:
Refinery gross margin (4) $ 9.77 $ 8.05 $ 9.56 $ 10.29
Direct operating expenses (5) 3.27 3.01 3.47 3.51
Four Corners Refineries
------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2010 2009 (6) 2010 2009 (6)
--------- -------- --------- --------
Key Operating Statistics:
Refinery product yields (bpd)
Gasoline 16,786 19,020 16,113 17,667
Diesel and jet fuel 7,090 7,617 6,288 7,703
Other 692 1,081 779 1,084
--------- -------- --------- --------
Total refinery production
(bpd) 24,568 27,718 23,180 26,454
========= ======== ========= ========
Refinery throughput (bpd)
Sweet crude oil 21,679 25,413 20,866 25,562
Other feedstocks/blendstocks 3,635 3,036 2,899 1,696
--------- -------- --------- --------
Total refinery throughput
(bpd) 25,314 28,449 23,765 27,258
========= ======== ========= ========
Total sales volume (bpd) 40,542 37,711 36,395 36,877
Per barrel of throughput:
Refinery gross margin $ 19.44 $ 14.04 $ 17.78 $ 16.11
Direct operating expenses 6.21 7.64 6.60 8.56
Yorktown Refinery
------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2010 (7) 2009 2010 (7) 2009
--------- -------- --------- --------
Key Operating Statistics:
Refinery product yields (bpd)
Gasoline 25,768 31,664 28,043 31,367
Diesel and jet fuel 17,658 22,101 20,926 23,982
Other 3,466 5,407 4,199 5,490
--------- -------- --------- --------
Liquid products 46,892 59,172 53,168 60,839
By-products 4,856 5,727 5,647 6,498
--------- -------- --------- --------
Total refinery production
(bpd) 51,748 64,899 58,815 67,337
========= ======== ========= ========
Refinery throughput (bpd)
Sweet crude oil 5,427 -- 7,713 9
Heavy crude oil 33,114 53,062 40,274 53,584
Other feedstocks/blendstocks 12,222 11,476 9,777 12,592
--------- -------- --------- --------
Total refinery throughput
(bpd) 50,763 64,538 57,764 66,185
========= ======== ========= ========
Total sales volume (bpd) (2) 64,262 77,010 68,162 76,048
Per barrel of throughput:
Refinery gross margin (1) (4) $ 3.35 $ 2.67 $ 2.83 $ 7.32
Direct operating expenses (5) 6.17 4.98 5.09 5.20
(1) Cost of products sold for the three and nine months ended September 30, 2009 included non-cash LCM recovery adjustments of $11.7 million and $61.0 million, respectively, related to valuing our Yorktown inventories to net realizable market values. These non-cash adjustments resulted in a corresponding increase of $0.57 and $1.01 in combined refinery gross margin per throughput barrel for the three and nine months ended September 30, 2009, respectively. The increase in Yorktown's gross margin was $1.97 and $3.38 for the three and nine months ended September 30, 2009, respectively. Also included in cost of products sold for the three and nine months ended September 30, 2009 are $0.7 million and $13.3 million, respectively, in economic hedging losses previously reported in gain (loss) from derivative activities in the Condensed Consolidated Statements of Operations.
(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. Economic hedging gains and losses included in the combined refining segment gross margin are not allocated to the individual refineries. 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 may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.
The following table reconciles gross profit to refinery gross margin for the periods presented:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
(In thousands, except per barrel data)
Net sales (including intersegment sales) $ 2,045,006 $ 1,834,130 $ 6,095,884 $ 4,645,709
Cost of products sold (exclusive of
depreciation and amortization) 1,864,165 1,685,451 5,611,868 4,046,932
Depreciation and amortization 30,434 29,686 89,211 94,162
------------ ------------ ------------ ------------
Gross profit 150,407 118,993 394,805 504,615
Plus depreciation and amortization 30,434 29,686 89,211 94,162
------------ ------------ ------------ ------------
Refinery gross margin $ 180,841 $ 148,679 $ 484,016 $ 598,777
============ ============ ============ ============
Refinery gross margin per refinery throughput
barrel $ 9.31 $ 7.24 $ 8.56 $ 9.91
============ ============ ============ ============
Gross profit per refinery throughput barrel $ 7.74 $ 5.80 $ 6.98 $ 8.36
============ ============ ============ ============
(5) Refinery direct operating expenses 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) In late November 2009, we consolidated refining operations in the Four Corners region and indefinitely suspended refining operations at our Bloomfield refinery. Refinery production, throughput, and sales volumes for the three and nine months ended September 30, 2010 reflect production and sales of refined products at the Gallup refinery only.
(7) In early September 2010, we suspended refining operations at our Yorktown refinery. We calculated the refinery production, throughput, and sales volumes for the three and nine months ended September 30, 2010 by dividing total volumes for the period by 92 and 273 days, respectively.
Retail Segment
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
2010 2009 2010 2009
---------- ---------- ---------- -----------
(in thousands, except per gallon data)
Statement of Operations Data:
Net sales (including intersegment
sales) $ 195,138 $ 176,708 $ 537,930 $ 466,445
Operating costs and expenses:
Cost of products sold (exclusive
of depreciation and
amortization) 166,406 148,723 462,814 392,330
Direct operating expenses
(exclusive of depreciation and
amortization) 17,169 17,273 50,177 49,598
Selling, general and
administrative expenses 1,461 1,545 3,425 4,762
Goodwill impairment losses -- -- -- 27,610
Depreciation and amortization 2,496 2,415 7,631 7,298
---------- ---------- ---------- -----------
Total operating costs and
expenses 187,532 169,956 524,047 481,598
---------- ---------- ---------- -----------
Operating income $ 7,606 $ 6,752 $ 13,883 $ (15,153)
========== ========== ========== ===========
Operating Data:
Fuel gallons sold (in thousands) 56,583 53,708 155,831 155,216
Fuel margin per gallon (1) $ 0.22 $ 0.23 $ 0.19 $ 0.19
Merchandise sales $ 52,439 $ 51,129 $ 144,440 $ 144,339
Merchandise margin (2) 28.8% 28.4% 28.5% 28.4%
Operating retail outlets at
period end 150 152
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
2010 2009 2010 2009
---------- ---------- ---------- -----------
(in thousands, except per gallon data)
Net sales:
Fuel sales 158,736 139,028 435,124 357,542
Excise taxes included in fuel
revenues (21,764) (19,405) (59,697) (53,649)
Merchandise sales 52,439 51,129 144,440 144,339
Other sales 5,727 5,956 18,063 18,213
---------- ---------- ---------- -----------
Net sales $ 195,138 $ 176,708 $ 537,930 $ 466,445
========== ========== ========== ===========
Cost of products sold:
Fuel cost of products sold 146,465 126,841 405,333 328,384
Excise taxes included in fuel
cost of products sold (21,764) (19,405) (59,697) (53,649)
Merchandise cost of products sold 37,318 36,622 103,286 103,400
Other cost of products sold 4,387 4,665 13,892 14,195
---------- ---------- ---------- -----------
Cost of products sold $ 166,406 $ 148,723 $ 462,814 $ 392,330
========== ========== ========== ===========
Fuel margin per gallon $ 0.22 $ 0.23 $ 0.19 $ 0.19
========== ========== ========== ===========
(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 Nine Months Ended
September 30, September 30,
---------------------- --------------------------
2010 2009 2010 2009
---------- ---------- ------------ ------------
(in thousands, except per gallon data)
Statement of Operations Data:
Net sales (including intersegment
sales) $ 631,303 $ 469,142 $ 1,782,189 $ 1,186,466
Operating costs and expenses:
Cost of products sold (exclusive
of depreciation and
amortization) 608,406 447,543 1,717,703 1,122,719
Direct operating expenses
(exclusive of depreciation and
amortization) 12,713 12,791 35,107 40,153
Selling, general and
administrative expenses 3,823 3,734 8,699 12,634
Goodwill impairment losses -- -- -- 41,230
Depreciation and amortization 1,210 1,394 3,914 4,205
Total operating costs and
expenses 626,152 465,462 1,765,423 1,220,941
---------- ---------- ------------ ------------
Operating income $ 5,151 $ 3,680 $ 16,766 $ (34,475)
========== ========== ============ ============
Operating Data:
Fuel gallons sold (in thousands) 259,446 213,590 735,510 611,514
Fuel margin per gallon (1) $ 0.07 $ 0.07 $ 0.07 $ 0.07
Lubricant sales $ 28,015 $ 26,665 $ 77,477 $ 86,801
Lubricant margins (2) 12.6% 10.0% 11.8% 8.9%
(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.
Three Months Ended September 30,
--------------------------------------------------
2010 2009 2010 2009
---------- ---------- ------------ ------------
(in thousands, except per gallon data)
Net sales:
Fuel sales $ 656,888 $ 493,017 $ 1,863,682 $ 1,244,117
Excise taxes included in fuel
sales (61,377) (57,415) (181,378) (165,579)
Lubricant sales 28,015 26,665 77,477 86,801
Other sales 7,777 6,875 22,408 21,127
---------- ---------- ------------ ------------
Net sales $ 631,303 $ 469,142 $ 1,782,189 $ 1,186,466
========== ========== ============ ============
Cost of products sold:
Fuel cost of products sold $ 640,866 $ 477,838 $ 1,818,326 $ 1,200,856
Excise taxes included in fuel
sales (61,377) (57,415) (181,378) (165,579)
Lubricant cost of products sold 24,494 23,997 68,321 79,071
Other cost of products sold 4,423 3,123 12,434 8,371
---------- ---------- ------------ ------------
Cost of products sold $ 608,406 $ 447,543 $ 1,717,703 $ 1,122,719
========== ========== ============ ============
Fuel margin per gallon $ 0.07 $ 0.07 $ 0.07 $ 0.07
========== ========== ============ ============
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 and 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 Nine Months Ended
September 30, September 30,
---------------------- -----------------------
2010 2009 2010 2009
---------- ---------- ---------- -----------
(In thousands, except per share data)
Reported earnings (loss) per share $ 0.08 $ (0.05) $ (0.11) $ (3.29)
========== ========== ========== ===========
Earnings (loss) before income taxes $ 11,967 $ (14,165) $ (25,369) $ (238,114)
Non-cash goodwill and other impairment losses
(1) 3,963 -- 3,963 299,552
Non-cash LCM inventory adjustment (2) -- (11,696) -- (61,005)
Yorktown suspension costs (3) 3,978 -- 3,978 --
---------- ---------- ---------- -----------
Earnings (loss) before income taxes excluding
special items 19,908 (25,861) (17,428) 433
Recomputed income taxes after special items (8,501) 17,120 10,910 (106)
Net income (loss) excluding special items $ 11,407 $ (8,741) $ (6,518) $ 327
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Diluted earnings (loss) per share excluding
special items $ 0.13 $ (0.10) $ (0.07) $ 0.00
========== ========== ========== ===========
(1) During the third quarter of 2010, we ceased operating our refined products distribution terminal located in Flagstaff, Arizona. The Company's impairment analysis resulted in pre-tax and after-tax impairment loss of $4.0 million and $2.3 million, respectively.
During the second quarter of 2009, we determined that the goodwill in four of our six reporting units was impaired, which resulted in pre-tax and after-tax goodwill impairment loss of $299.6 million in that 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 that information comparable between periods.
(2) 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 third quarter 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 of $11.7 million and $61.0 million for the three and nine months ended September 30, 2009, respectively ($4.0 million and $46.1 million after tax). 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.
(3) During the third quarter of 2010, we temporarily suspended refining operations at our Yorktown facility. In connection with this change in operations, we recorded one-time termination benefits of $3.0 million and other refinery costs relating to the suspension of operations at Yorktown of $1.0 million. These were non-recurring charges. We expect to incur additional costs during the fourth quarter of 2010.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Western Refining, Inc.
CONTACT: Western Refining, Inc.
Investor and Analyst Contact:
Jeffrey S. Beyersdorfer
Media Contact:
Gary Hanson
(915) 534-1400
