Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Western Refining, Inc. | wnr20129308-k.htm |
FOR IMMEDIATE RELEASE
Investor and Analyst Contact: | Media Contact: |
Jeffrey S. Beyersdorfer | Gary W. Hanson |
(602) 286-1530 | (602) 286-1777 |
WESTERN REFINING ANNOUNCES THIRD QUARTER 2012 RESULTS
EL PASO, Texas - November 1, 2012 - Western Refining, Inc. (NYSE: WNR) today reported third quarter 2012 net income, excluding special items, of $105.2 million, or $0.99 per diluted share. This compares to third quarter 2011 net income, excluding special items, of $146.4 million, or $1.37 per diluted share. Including special items, the Company recorded third quarter 2012 net income of $6.3 million, or $0.07 per diluted share, as compared to net income of $84.9 million, or $0.81 per diluted share for the third quarter of 2011. The special item in the third quarter of 2012 was a non-cash, pre-tax, unrealized hedging loss of $152.8 million. The quarter-on-quarter decline in net income, excluding special items, was due in large part to lower crude oil throughputs and higher costs related to the turnaround at the Gallup refinery and the planned reformer repairs at the El Paso refinery. A reconciliation of reported earnings and description of special items can be found in the accompanying financial tables.
Jeff Stevens, Western's President and Chief Executive Officer, said, “We continue to reinvest in the business. During the quarter we made progress on a number of projects that will have a positive long-term impact for Western. The planned turnaround and expansion of our Gallup refinery started in September and was completed in mid-October. This is the first full plant turnaround at Gallup since Western acquired the refinery as part of the 2007 Giant acquisition. We believe the increased throughputs and reliability will have a positive impact on Gallup's performance going forward. We also announced a stock repurchase program and doubled our dividend in the third quarter."
For the third quarter of 2012, Adjusted EBITDA was $236.3 million compared to Adjusted EBITDA of $296.9 million for the third quarter of 2011. Total debt as of September 30, 2012 was $495.8 million and cash was $509.8 million. In the past 12 months, the Company has reduced total debt by $566.6 million.
Looking forward, Stevens said, "The fourth quarter is off to a great start. In October, we saw some of the strongest margins of the year and Western is well positioned to benefit from this margin environment. Looking forward to 2013, we are focused on implementing high return capital projects, returning cash to our shareholders, and continuing to build cash. We believe these priorities will result in strong future financial results for the Company and are positive for our shareholders."
Conference Call Information
A conference call is scheduled for Thursday, November 1, 2012, at 11:00 a.m. ET to discuss Western's financial results. A slide presentation will be available for reference during the conference call. The call, press release, and slide presentation can be accessed on the Investor Relations section on Western's website, www.wnr.com. The call can also be heard by dialing (866) 566-8590 or (702) 224-9819, passcode: 31527696. The audio replay will be available two hours after the end of the call through November 8, 2012, by dialing (800) 585-8367 or (404) 537-3406, passcode: 31527696.
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 unrealized net gains and losses from our commodity hedging activities and the non-cash loss on extinguishment of debt for the periods ended September 30, 2012 and 2011. We have excluded these amounts to provide a better analysis of changes in our business from period-to-period.
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 stand-alone refined products terminals in Albuquerque and Bloomfield, New Mexico, asphalt terminals in Albuquerque, El Paso, and Phoenix and Tucson, Arizona, retail service stations and convenience stores in Arizona, Colorado, New Mexico, and Texas, a fleet of crude oil and finished product truck transports, and wholesale petroleum products operations in Arizona, California, Colorado, Maryland, Nevada, New Mexico, Texas, and Virginia. More information about the Company is available at www.wnr.com.
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements covered by the safe harbor provisions of the PSLRA. The forward-looking statements contained herein include statements about: continued reinvestment in our business; continued progress on projects and positive long-term impact from such projects; increased throughputs and reliability at Gallup and the positive impact thereof on Gallup's performance; future repurchases of stock under our stock repurchase program; strong margins and our ability to benefit from such margins; our ability to build cash, implement high return capital projects, and/or return cash to our shareholders; and, strong future financial results. These statements are subject to the general risks inherent in the Company's 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 the Company's 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 | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Statements of Operations Data | |||||||||||||||
Net sales (1) | $ | 2,446,317 | $ | 2,397,139 | $ | 7,254,877 | $ | 6,794,611 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) (1) | 2,207,424 | 2,053,409 | 6,343,610 | 5,854,320 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) (1) | 127,884 | 109,159 | 360,257 | 337,571 | |||||||||||
Selling, general, and administrative expenses | 26,986 | 27,153 | 80,083 | 75,987 | |||||||||||
Gain on disposal of assets, net | — | — | (1,891 | ) | (3,630 | ) | |||||||||
Maintenance turnaround expense | 31,065 | 632 | 33,377 | 1,336 | |||||||||||
Depreciation and amortization | 23,577 | 35,581 | 69,108 | 105,301 | |||||||||||
Total operating costs and expenses | 2,416,936 | 2,225,934 | 6,884,544 | 6,370,885 | |||||||||||
Operating income | 29,381 | 171,205 | 370,333 | 423,726 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 165 | 114 | 560 | 345 | |||||||||||
Interest expense and other financing costs | (18,000 | ) | (33,195 | ) | (63,930 | ) | (101,191 | ) | |||||||
Amortization of loan fees | (1,641 | ) | (2,295 | ) | (5,219 | ) | (6,869 | ) | |||||||
Loss on extinguishment of debt | — | — | (7,654 | ) | (4,641 | ) | |||||||||
Other, net | (646 | ) | (5,206 | ) | 637 | (4,038 | ) | ||||||||
Income before income taxes | 9,259 | 130,623 | 294,727 | 307,332 | |||||||||||
Provision for income taxes | (2,961 | ) | (45,695 | ) | (103,429 | ) | (110,108 | ) | |||||||
Net income | $ | 6,298 | $ | 84,928 | $ | 191,298 | $ | 197,224 | |||||||
Basic earnings per share | $ | 0.07 | $ | 0.94 | $ | 2.11 | $ | 2.17 | |||||||
Diluted earnings per share | $ | 0.07 | $ | 0.81 | $ | 1.84 | $ | 1.90 | |||||||
Cash dividends declared per common share | $ | 0.08 | $ | — | $ | 0.16 | $ | — | |||||||
Weighted average basic shares outstanding | 90,134 | 89,176 | 89,835 | 88,878 | |||||||||||
Weighted average dilutive shares outstanding | 90,134 | 109,935 | 110,412 | 109,733 | |||||||||||
Cash Flow Data | |||||||||||||||
Net cash provided by (used in): | |||||||||||||||
Operating activities | $ | 247,440 | $ | 255,789 | $ | 596,297 | $ | 400,551 | |||||||
Investing activities | (71,325 | ) | (18,678 | ) | 89,924 | (33,045 | ) | ||||||||
Financing activities | (12,368 | ) | (7,681 | ) | (347,206 | ) | (24,783 | ) | |||||||
Other Data | |||||||||||||||
Adjusted EBITDA (2) | $ | 236,326 | $ | 296,884 | $ | 785,206 | $ | 641,583 | |||||||
Capital expenditures | 71,326 | 18,653 | 130,723 | 44,655 | |||||||||||
Balance Sheet Data (at end of period) | |||||||||||||||
Cash and cash equivalents | $ | 509,844 | $ | 402,635 | |||||||||||
Working capital | 700,767 | 673,196 | |||||||||||||
Total assets | 2,620,130 | 3,021,390 | |||||||||||||
Total debt | 495,789 | 1,062,362 | |||||||||||||
Stockholders’ equity | 999,271 | 882,970 | |||||||||||||
(1) | Excludes $1,281.3 million, $3,810.4 million, $1,391.7 million, and $3,677.7 million of intercompany sales; $1,279.3 million, $3,805.1 million, $1,388.1 million, and $3,668.8 million of intercompany cost of products sold; and $2.0 million, $5.3 million, $3.6 million, and $8.9 million of intercompany direct operating expenses for the three and nine months ended September 30, 2012 and 2011, respectively. Cost of products sold includes $73.1 million and $152.8 million in net realized and net non-cash unrealized losses, respectively, from hedging activities for the three months ended September 30, 2012 and $108.5 million and $311.2 million in net realized and net non-cash unrealized losses, respectively, from hedging activities for the nine months ended September 30, 2012. Cost of products sold includes $11.3 million and $94.6 million in net realized and net non-cash unrealized losses, respectively, and $58.4 million and $114.9 million in net realized and net unrealized non-cash losses, respectively, from hedging activities for the three and nine months ended September 30, 2011, respectively. |
(2) | Adjusted EBITDA represents earnings before interest expense and other financing costs, amortization of loan fees, provision for income taxes, depreciation, amortization, maintenance turnaround expense, and certain other non-cash income and expense items. However, Adjusted EBITDA is not 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 (which many of our competitors capitalize and thereby exclude from their measures of EBITDA), and certain non-cash charges, which are 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 |
• | Adjusted EBITDA, as we calculate it, 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 to Adjusted EBITDA for the periods presented:
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands) | |||||||||||||||
Net income | $ | 6,298 | $ | 84,928 | $ | 191,298 | $ | 197,224 | |||||||
Interest expense and other financing costs | 18,000 | 33,195 | 63,930 | 101,191 | |||||||||||
Provision for income taxes | 2,961 | 45,695 | 103,429 | 110,108 | |||||||||||
Amortization of loan fees | 1,641 | 2,295 | 5,219 | 6,869 | |||||||||||
Depreciation and amortization | 23,577 | 35,581 | 69,108 | 105,301 | |||||||||||
Maintenance turnaround expense | 31,065 | 632 | 33,377 | 1,336 | |||||||||||
Loss on extinguishment of debt | — | — | 7,654 | 4,641 | |||||||||||
Unrealized loss on commodity hedging transactions (a) | 152,784 | 94,558 | 311,191 | 114,913 | |||||||||||
Adjusted EBITDA | $ | 236,326 | $ | 296,884 | $ | 785,206 | $ | 641,583 | |||||||
(a)Adjusted EBITDA for the three and nine months ended September 30, 2011 as previously reported has been adjusted for the impact of net non-cash unrealized gains and losses related to our commodity hedging transactions. We believe the inclusion of this component of net income provides a better representation of Adjusted EBITDA given the non-cash and potentially volatile nature of commodity hedging.
Refining Segment
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per barrel data) | |||||||||||||||
Statement of Operations Data: | |||||||||||||||
Net sales (including intersegment sales) | $ | 2,101,821 | $ | 2,279,022 | $ | 6,417,032 | $ | 6,248,365 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) (1) | 1,918,395 | 1,993,683 | 5,686,430 | 5,464,555 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 85,848 | 74,485 | 237,536 | 241,567 | |||||||||||
Selling, general, and administrative expenses | 6,222 | 7,336 | 19,278 | 20,233 | |||||||||||
Gain on disposal of assets, net | — | — | (1,382 | ) | (3,630 | ) | |||||||||
Maintenance turnaround expense | 31,065 | 632 | 33,377 | 1,336 | |||||||||||
Depreciation and amortization | 19,477 | 31,440 | 56,828 | 92,633 | |||||||||||
Total operating costs and expenses | 2,061,007 | 2,107,576 | 6,032,067 | 5,816,694 | |||||||||||
Operating income | $ | 40,814 | $ | 171,446 | $ | 384,965 | $ | 431,671 | |||||||
Key Operating Statistics | |||||||||||||||
Total sales volume (bpd) (2) | 184,728 | 201,382 | 187,564 | 186,141 | |||||||||||
Total refinery production (bpd) | 141,712 | 147,491 | 146,662 | 139,344 | |||||||||||
Total refinery throughput (bpd) (3) | 144,198 | 149,556 | 148,981 | 141,453 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (1)(4) | $ | 13.83 | $ | 20.74 | $ | 17.90 | $ | 20.30 | |||||||
Gross profit (1)(4) | 12.36 | 18.45 | 16.51 | 17.90 | |||||||||||
Direct operating expenses (5) | 6.47 | 5.41 | 5.82 | 6.26 | |||||||||||
The following tables set forth our summary refining throughput and production data for the periods and refineries presented:
All Refineries
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Key Operating Statistics | |||||||||||
Refinery product yields (bpd): | |||||||||||
Gasoline | 72,751 | 76,853 | 75,872 | 73,861 | |||||||
Diesel and jet fuel | 59,414 | 61,234 | 61,132 | 56,865 | |||||||
Residuum | 5,924 | 5,748 | 5,582 | 5,167 | |||||||
Other | 3,623 | 3,656 | 4,076 | 3,451 | |||||||
Total refinery production (bpd) | 141,712 | 147,491 | 146,662 | 139,344 | |||||||
Refinery throughput (bpd): | |||||||||||
Sweet crude oil | 111,922 | 123,677 | 114,055 | 113,043 | |||||||
Sour or heavy crude oil | 23,133 | 19,007 | 24,163 | 19,573 | |||||||
Other feedstocks and blendstocks | 9,143 | 6,872 | 10,763 | 8,837 | |||||||
Total refinery throughput (bpd) (3) | 144,198 | 149,556 | 148,981 | 141,453 | |||||||
El Paso Refinery
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Key Operating Statistics | |||||||||||||||
Refinery product yields (bpd): | |||||||||||||||
Gasoline | 60,105 | 60,012 | 60,673 | 57,763 | |||||||||||
Diesel and jet fuel | 53,609 | 54,016 | 54,447 | 50,037 | |||||||||||
Residuum | 5,924 | 5,748 | 5,582 | 5,167 | |||||||||||
Other | 2,938 | 2,879 | 3,234 | 2,679 | |||||||||||
Total refinery production (bpd) | 122,576 | 122,655 | 123,936 | 115,646 | |||||||||||
Refinery throughput (bpd): | |||||||||||||||
Sweet crude oil | 93,703 | 101,797 | 93,134 | 91,221 | |||||||||||
Sour or heavy crude oil | 23,133 | 19,007 | 24,163 | 19,573 | |||||||||||
Other feedstocks and blendstocks | 7,528 | 3,473 | 8,338 | 6,437 | |||||||||||
Total refinery throughput (bpd) (3) | 124,364 | 124,277 | 125,635 | 117,231 | |||||||||||
Total sales volume (bpd) (2) | 151,161 | 165,235 | 154,267 | 151,795 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (1)(4) | $ | 28.40 | $ | 27.48 | $ | 27.37 | $ | 24.05 | |||||||
Direct operating expenses (5) | 5.21 | 3.48 | 4.55 | 4.38 | |||||||||||
Gallup Refinery
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Key Operating Statistics | |||||||||||||||
Refinery product yields (bpd): | |||||||||||||||
Gasoline | 12,646 | 16,841 | 15,199 | 16,098 | |||||||||||
Diesel and jet fuel | 5,805 | 7,218 | 6,685 | 6,828 | |||||||||||
Other | 685 | 777 | 842 | 772 | |||||||||||
Total refinery production (bpd) | 19,136 | 24,836 | 22,726 | 23,698 | |||||||||||
Refinery throughput (bpd): | |||||||||||||||
Sweet crude oil | 18,219 | 21,880 | 20,921 | 21,822 | |||||||||||
Other feedstocks and blendstocks | 1,615 | 3,399 | 2,425 | 2,400 | |||||||||||
Total refinery throughput (bpd) (3) | 19,834 | 25,279 | 23,346 | 24,222 | |||||||||||
Total sales volume (bpd) (2) | 33,567 | 35,270 | 33,276 | 34,031 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (1)(4) | $ | 29.48 | $ | 35.47 | $ | 27.63 | $ | 28.23 | |||||||
Direct operating expenses (5) | 10.97 | 7.68 | 9.04 | 8.27 | |||||||||||
The following table reconciles combined gross profit for all refineries to combined gross margin for all refineries for the periods presented:
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per barrel data) | |||||||||||||||
Net sales (including intersegment sales) | $ | 2,101,821 | $ | 2,279,022 | $ | 6,417,032 | $ | 6,248,365 | |||||||
Cost of products sold (exclusive of depreciation and amortization) | 1,918,395 | 1,993,683 | 5,686,430 | 5,464,555 | |||||||||||
Depreciation and amortization | 19,477 | 31,440 | 56,828 | 92,633 | |||||||||||
Gross profit | 163,949 | 253,899 | 673,774 | 691,177 | |||||||||||
Plus depreciation and amortization | 19,477 | 31,440 | 56,828 | 92,633 | |||||||||||
Refinery gross margin | $ | 183,426 | $ | 285,339 | $ | 730,602 | $ | 783,810 | |||||||
Refinery gross margin per refinery throughput barrel | $ | 13.83 | $ | 20.74 | $ | 17.90 | $ | 20.30 | |||||||
Gross profit per refinery throughput barrel | $ | 12.36 | $ | 18.45 | $ | 16.51 | $ | 17.90 | |||||||
(1) | Cost of products sold for the combined refining segment includes $47.1 million and $152.8 million of net realized and net non-cash unrealized hedging losses, respectively, and $84.9 million and $311.2 million of net realized and net non-cash unrealized hedging losses, respectively, for the three and nine months ended September 30, 2012, respectively. Cost of products sold for the combined refining segment includes $17.1 million and $98.3 million of net realized and net non-cash unrealized hedging losses, respectively, and $62.6 million and $116.9 million of net realized and net non-cash unrealized hedging losses, respectively, for the three and nine months ended September 30, 2011, respectively. The net non-cash unrealized hedging gains and losses are also included in the combined gross profit and refinery gross margin. |
(2) | Sales volume includes sales of refined products sourced primarily from our refinery production as well as refined products purchased from third parties. We purchase additional refined products from third parties to supplement supply to our customers. These products are similar to the products that we currently manufacture and represented 15.1% and 13.3% of our total consolidated sales volumes for the three and nine months ended September 30, 2012, respectively. The majority of the purchased refined products are distributed through our wholesale refined product sales activities in the Mid-Atlantic region where we satisfy our refined product customer sales requirements through a third-party supply agreement. |
(3) | Total refinery throughput includes crude oil and 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. Net realized and net non-cash unrealized 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. |
(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. |
Wholesale Segment
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Statement of Operations Data | |||||||||||||||
Net sales (including intersegment sales) | $ | 1,303,750 | $ | 1,251,766 | $ | 3,739,836 | $ | 3,553,787 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) | 1,282,657 | 1,217,783 | 3,656,539 | 3,463,033 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 17,215 | 17,168 | 52,315 | 49,230 | |||||||||||
Selling, general, and administrative expenses | 2,483 | 3,075 | 7,607 | 7,992 | |||||||||||
Gain on disposal of assets, net | — | — | (509 | ) | — | ||||||||||
Depreciation and amortization | 922 | 1,033 | 2,826 | 3,257 | |||||||||||
Total operating costs and expenses | 1,303,277 | 1,239,059 | 3,718,778 | 3,523,512 | |||||||||||
Operating income | $ | 473 | $ | 12,707 | $ | 21,058 | $ | 30,275 | |||||||
Operating Data | |||||||||||||||
Fuel gallons sold (in thousands) | 411,024 | 400,277 | 1,164,398 | 1,141,867 | |||||||||||
Fuel margin per gallon (1) | $ | 0.04 | $ | 0.07 | $ | 0.06 | $ | 0.07 | |||||||
Lubricant sales | $ | 33,052 | $ | 30,888 | $ | 96,939 | $ | 86,242 | |||||||
Lubricant margin (2) | 9.9 | % | 11.2 | % | 10.0 | % | 12.0 | % | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Net Sales | |||||||||||||||
Fuel sales | $ | 1,355,561 | $ | 1,306,021 | $ | 3,887,313 | $ | 3,719,216 | |||||||
Excise taxes included in fuel sales | (93,023 | ) | (92,841 | ) | (270,096 | ) | (275,555 | ) | |||||||
Lubricant sales | 33,052 | 30,888 | 96,939 | 86,242 | |||||||||||
Other sales | 8,160 | 7,698 | 25,680 | 23,884 | |||||||||||
Net sales | $ | 1,303,750 | $ | 1,251,766 | $ | 3,739,836 | $ | 3,553,787 | |||||||
Cost of Products Sold | |||||||||||||||
Fuel cost of products sold | $ | 1,341,229 | $ | 1,280,306 | $ | 3,826,462 | $ | 3,653,258 | |||||||
Excise taxes included in fuel cost of products sold | (93,023 | ) | (92,841 | ) | (270,096 | ) | (275,555 | ) | |||||||
Lubricant cost of products sold | 29,791 | 27,426 | 87,271 | 75,850 | |||||||||||
Other cost of products sold | 4,660 | 2,892 | 12,902 | 9,480 | |||||||||||
Cost of products sold | $ | 1,282,657 | $ | 1,217,783 | $ | 3,656,539 | $ | 3,463,033 | |||||||
Fuel margin per gallon (1) | $ | 0.04 | $ | 0.07 | $ | 0.06 | $ | 0.07 | |||||||
(1) | Wholesale fuel margin per gallon is a function of the difference between wholesale fuel sales and cost of fuel sales divided by the number of total gallons sold less gallons sold to our retail segment. Fuel margin per gallon is a measure frequently used in the petroleum products wholesale industry to measure operating results related to fuel sales. |
(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. |
Retail Segment
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Statement of Operations Data | |||||||||||||||
Net sales (including intersegment sales) | $ | 322,059 | $ | 258,001 | $ | 908,398 | $ | 670,163 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) | 285,690 | 230,001 | 805,697 | 595,514 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 26,816 | 21,098 | 75,739 | 55,696 | |||||||||||
Selling, general, and administrative expenses | 2,058 | 2,010 | 5,967 | 5,032 | |||||||||||
Depreciation and amortization | 2,736 | 2,410 | 7,858 | 7,232 | |||||||||||
Total operating costs and expenses | 317,300 | 255,519 | 895,261 | 663,474 | |||||||||||
Operating income | $ | 4,759 | $ | 2,482 | $ | 13,137 | $ | 6,689 | |||||||
Operating Data | |||||||||||||||
Fuel gallons sold (in thousands) | 77,695 | 62,170 | 216,220 | 160,133 | |||||||||||
Fuel margin per gallon (1) | $ | 0.20 | $ | 0.18 | $ | 0.20 | $ | 0.18 | |||||||
Merchandise sales | $ | 67,056 | $ | 55,478 | $ | 186,542 | $ | 148,596 | |||||||
Merchandise margin (2) | 28.6 | % | 27.9 | % | 29.1 | % | 28.2 | % | |||||||
Operating retail outlets at period end | 222 | 172 | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Net Sales | |||||||||||||||
Fuel sales | $ | 274,833 | $ | 218,261 | $ | 776,110 | $ | 562,692 | |||||||
Excise taxes included in fuel sales | (29,211 | ) | (22,092 | ) | (82,714 | ) | (59,757 | ) | |||||||
Merchandise sales | 67,056 | 55,478 | 186,542 | 148,596 | |||||||||||
Other sales | 9,381 | 6,354 | 28,460 | 18,632 | |||||||||||
Net sales | $ | 322,059 | $ | 258,001 | $ | 908,398 | $ | 670,163 | |||||||
Cost of Products Sold | |||||||||||||||
Fuel cost of products sold | $ | 259,645 | $ | 207,229 | $ | 733,874 | $ | 534,227 | |||||||
Excise taxes included in fuel cost of products sold | (29,211 | ) | (22,092 | ) | (82,714 | ) | (59,757 | ) | |||||||
Merchandise cost of products sold | 47,892 | 39,976 | 132,227 | 106,659 | |||||||||||
Other cost of products sold | 7,364 | 4,888 | 22,310 | 14,385 | |||||||||||
Cost of products sold | $ | 285,690 | $ | 230,001 | $ | 805,697 | $ | 595,514 | |||||||
Fuel margin per gallon (1) | $ | 0.20 | $ | 0.18 | $ | 0.20 | $ | 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. Fuel margin per gallon is a measure frequently used in the convenience store industry to measure operating results related to fuel sales. |
(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. |
Reconciliation of Special Items
We present certain additional financial measures below and elsewhere in this press release 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 | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Reported diluted earnings per share | $ | 0.07 | $ | 0.81 | $ | 1.84 | $ | 1.90 | |||||||
Income before income taxes | $ | 9,259 | $ | 130,623 | $ | 294,727 | $ | 307,332 | |||||||
Unrealized loss on commodity hedging transactions | 152,784 | 94,558 | 311,191 | 114,913 | |||||||||||
Loss on extinguishment of debt | — | — | 7,654 | 4,641 | |||||||||||
Earnings before income taxes excluding special items | 162,043 | 225,181 | 613,572 | 426,886 | |||||||||||
Recomputed income taxes after special items | (56,861 | ) | (78,768 | ) | (215,302 | ) | (152,953 | ) | |||||||
Net income excluding special items | $ | 105,182 | $ | 146,413 | $ | 398,270 | $ | 273,933 | |||||||
Diluted earnings per share excluding special items | $ | 0.99 | $ | 1.37 | $ | 3.71 | $ | 2.60 | |||||||
Net income excluding special items for the three months ended September 30, 2012 is computed using our effective tax rate for the nine months ended September 30, 2012 because we believe the use of the higher tax rate more accurately depicts the applicable tax rate when special items are excluded from our reported net income. Diluted earnings per share, excluding special items, includes tax-effected interest related to our convertible debt in the numerator and includes 20.63 million and 20.58 million as-if converted shares for our convertible debt and restricted stock in the denominator for the three and nine months ended September 30, 2012, respectively.