Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Western Refining, Inc. | wnr20139308-k.htm |
FOR IMMEDIATE RELEASE | Exhibit 99.1 |
Investor and Analyst Contact: | Media Contact: |
Jeffrey S. Beyersdorfer | Gary W. Hanson |
(602) 286-1530 | (602) 286-1777 |
WESTERN REFINING ANNOUNCES THIRD QUARTER 2013 RESULTS
EL PASO, Texas - October 31, 2013 - Western Refining, Inc. (NYSE: WNR) today reported third quarter 2013 net income, excluding special items, of $29.6 million, or $0.33 per diluted share. This compares to third quarter 2012 net income, excluding special items, of $105.2 million, or $0.99 per diluted share. Including special items, the Company recorded third quarter 2013 net income of $50.3 million, or $0.53 per diluted share, as compared to net income of $6.3 million, or $0.07 per diluted share for the third quarter of 2012. Special items in the third quarter of 2013 primarily consisted of a non-cash unrealized pre-tax hedging gain of $25.7 million and a gain on disposal of assets of $7.0 million. A reconciliation of reported earnings and description of special items can be found in the accompanying financial tables.
During the third quarter, Adjusted EBITDA for Western was $92.2 million which compares to Adjusted EBITDA of $236.3 million for the third quarter of 2012. The quarter-on-quarter reduction in both net income and Adjusted EBITDA was primarily due to lower refining margins, excluding hedging activities.
On October 16, 2013, Western Refining Logistics (NYSE: WNRL), a traditional fee-based master limited partnership and subsidiary of Western, successfully completed its initial public offering. Western retained an approximate 65% limited partner interest in WNRL. Proceeds of the offering totaled approximately $325 million with WNRL retaining $75 million to fund future organic growth projects and Western receiving the remaining net proceeds of approximately $245 million. Jeff Stevens, Western's President and Chief Executive Officer, said, "The launch of WNRL provides a strong foundation for the continued growth of our logistics capabilities in the fast-growing Permian and San Juan Basins which supply crude oil to our Gallup and El Paso refineries."
Commenting on the third quarter, Stevens said, “Western realized another profitable quarter despite weaker industry refining margins. With our access to cost-advantaged crude oil and the continued strong demand for refined products in the Southwest, we were able to run profitably and at planned rates despite this margin environment. Additionally, a gain from our crack spread hedges partially offset the pressure on refining margins."
During the third quarter, Western returned approximately $69 million in cash to shareholders through its quarterly dividend and share repurchases. From the inception of the Company's share repurchase program through October 25, 2013, Western has purchased approximately 11.4 million shares at an average cost of $29.38 per share.
Looking forward, Stevens said, "In the fourth quarter, we are seeing improved refining margins as the Brent/WTI crude oil price differential has widened from the levels we saw in the third quarter. The Midland/Cushing price differential has also widened, which is having a positive impact on our El Paso crude oil acquisition costs."
Stevens concluded, "We recently announced a fourth quarter dividend of $0.22 per share. The significant growth in our dividend, enabled by our strong balance sheet, further demonstrates our commitment to return cash to our shareholders."
Conference Call Information
A conference call is scheduled for Thursday, October 31, 2013, at 11:00 a.m. EDT 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: 55096416. The audio replay will be available two hours after the end of the call through November 7, 2013, by dialing (800) 585-8367 or (404) 537-3406, passcode: 55096416.
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 loss on extinguishment of debt for the periods ending September 30, 2013 and 2012, and the net gain on disposal of assets for the period ending September 30, 2013. 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.
About Western Refining
Western Refining, Inc. is an independent refining and marketing company headquartered in El Paso, Texas. The refining segment operates refineries in El Paso, and Gallup, New Mexico. The Wholesale segment includes a fleet of crude oil and finished product truck transports, and wholesale petroleum products operations in Arizona, California, Colorado, Georgia, Maryland, Nevada, New Mexico, Texas, and Virginia. The retail segment includes retail service stations and convenience stores in Arizona, Colorado, New Mexico, and Texas.
Western Refining, Inc. also owns the general partner and approximately 65 percent of the limited partner interest of Western Refining Logistics Partners, LP (NYSE: WNRL) which owns and operates logistics assets related to the terminalling, transportation, and storage of crude oil and refined products.
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: our commitment to return cash to shareholders; the continued growth of our logistics capabilities in the fast growing Permian and San Juan Basins; expectations for margins; and the impact of the Midland/Cushing price differential on our El Paso refinery crude oil acquisition costs. 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 unaudited summary historical financial and operating data for the periods indicated below:
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Statements of Operations Data | |||||||||||||||
Net sales (1) | $ | 2,447,610 | $ | 2,446,317 | $ | 7,063,789 | $ | 7,254,877 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) (1) | 2,177,623 | 2,207,424 | 5,961,690 | 6,343,610 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) (1) | 123,474 | 127,884 | 359,195 | 360,257 | |||||||||||
Selling, general, and administrative expenses | 28,777 | 26,986 | 84,779 | 80,083 | |||||||||||
Gain on disposal of assets, net | (7,024 | ) | — | (7,024 | ) | (1,891 | ) | ||||||||
Maintenance turnaround expense | 2,895 | 31,065 | 46,098 | 33,377 | |||||||||||
Depreciation and amortization | 27,735 | 23,577 | 79,210 | 69,108 | |||||||||||
Total operating costs and expenses | 2,353,480 | 2,416,936 | 6,523,948 | 6,884,544 | |||||||||||
Operating income | 94,130 | 29,381 | 539,841 | 370,333 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 155 | 165 | 541 | 560 | |||||||||||
Interest expense and other financing costs | (13,432 | ) | (18,000 | ) | (46,101 | ) | (63,930 | ) | |||||||
Amortization of loan fees | (1,523 | ) | (1,641 | ) | (4,642 | ) | (5,219 | ) | |||||||
Loss on extinguishment of debt | (6 | ) | — | (46,772 | ) | (7,654 | ) | ||||||||
Other, net | 94 | (646 | ) | 392 | 637 | ||||||||||
Income before income taxes | 79,418 | 9,259 | 443,259 | 294,727 | |||||||||||
Provision for income taxes | (29,074 | ) | (2,961 | ) | (159,937 | ) | (103,429 | ) | |||||||
Net income | $ | 50,344 | $ | 6,298 | $ | 283,322 | $ | 191,298 | |||||||
Basic earnings per share | $ | 0.63 | $ | 0.07 | $ | 3.40 | $ | 2.11 | |||||||
Diluted earnings per share | 0.53 | 0.07 | 2.80 | 1.84 | |||||||||||
Dividends declared per common share | $ | 0.18 | $ | 0.08 | $ | 0.42 | $ | 0.16 | |||||||
Weighted average basic shares outstanding | 80,254 | 90,134 | 83,100 | 89,835 | |||||||||||
Weighted average dilutive shares outstanding | 102,720 | 90,134 | 105,602 | 110,412 | |||||||||||
Cash Flow Data | |||||||||||||||
Net cash provided by (used in): | |||||||||||||||
Operating activities | $ | 106,665 | $ | 247,440 | $ | 365,989 | $ | 596,297 | |||||||
Investing activities | (38,902 | ) | (71,325 | ) | (140,322 | ) | 89,924 | ||||||||
Financing activities | (68,957 | ) | (12,368 | ) | (308,493 | ) | (347,206 | ) | |||||||
Other Data | |||||||||||||||
Adjusted EBITDA (2) | $ | 92,240 | $ | 236,326 | $ | 575,345 | $ | 785,206 | |||||||
Capital expenditures | 45,935 | 71,326 | 147,789 | 130,723 | |||||||||||
Balance Sheet Data (at end of period) | |||||||||||||||
Cash and cash equivalents | $ | 371,141 | $ | 509,844 | |||||||||||
Working capital | 371,392 | 700,767 | |||||||||||||
Total assets | 2,549,078 | 2,620,130 | |||||||||||||
Total debt | 554,487 | 495,789 | |||||||||||||
Shareholders’ equity | 917,070 | 999,271 | |||||||||||||
(1) | Excludes $1,113.1 million, $3,253.0 million, $1,281.3 million, and $3,810.4 million of intercompany sales; $1,109.6 million, $3,244.3 million, $1,279.3 million, and $3,805.1 million of intercompany cost of products sold; and $3.5 million, $8.7 million, $2.0 million, and $5.3 million of intercompany direct operating expenses for the three and nine months ended September 30, 2013 and 2012, respectively. Cost of products sold includes $12.7 million and $25.7 million in net realized and net non-cash unrealized gains, respectively, from hedging activities for the three months ended September 30, 2013 and $2.2 million and $83.7 million in net realized and net non-cash unrealized gains, respectively, from hedging activities for the nine months ended September 30, 2013, respectively. Cost of products sold includes $73.1 million and $152.8 million in net realized and net non-cash unrealized losses, respectively, and $108.5 million and $311.2 million in net realized and net unrealized non-cash losses, respectively, from hedging activities for the three and nine months ended September 30, 2012, 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 ("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), and certain non-cash charges that 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, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) | |||||||||||||||
(In thousands) | |||||||||||||||
Net income | $ | 50,344 | $ | 6,298 | $ | 283,322 | $ | 191,298 | |||||||
Interest expense and other financing costs | 13,432 | 18,000 | 46,101 | 63,930 | |||||||||||
Provision for income taxes | 29,074 | 2,961 | 159,937 | 103,429 | |||||||||||
Amortization of loan fees | 1,523 | 1,641 | 4,642 | 5,219 | |||||||||||
Depreciation and amortization | 27,735 | 23,577 | 79,210 | 69,108 | |||||||||||
Maintenance turnaround expense | 2,895 | 31,065 | 46,098 | 33,377 | |||||||||||
Gain on disposal of assets, net | (7,024 | ) | — | (7,024 | ) | — | |||||||||
Loss on extinguishment of debt | 6 | — | 46,772 | 7,654 | |||||||||||
Unrealized (gain) loss on commodity hedging transactions | (25,745 | ) | 152,784 | (83,713 | ) | 311,191 | |||||||||
Adjusted EBITDA | $ | 92,240 | $ | 236,326 | $ | 575,345 | $ | 785,206 | |||||||
Refining Segment
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands, except per barrel data) | |||||||||||||||
Statement of Operations Data (Unaudited): | |||||||||||||||
Net sales (including intersegment sales) | $ | 1,996,642 | $ | 2,101,821 | $ | 5,774,210 | $ | 6,417,032 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) (1) | 1,787,848 | 1,918,395 | 4,852,728 | 5,686,430 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 82,893 | 85,848 | 238,106 | 237,536 | |||||||||||
Selling, general, and administrative expenses | 7,245 | 6,222 | 21,357 | 19,278 | |||||||||||
Gain on disposal of assets, net | (7,024 | ) | — | (7,024 | ) | (1,382 | ) | ||||||||
Maintenance turnaround expense | 2,895 | 31,065 | 46,098 | 33,377 | |||||||||||
Depreciation and amortization | 22,576 | 19,477 | 65,341 | 56,828 | |||||||||||
Total operating costs and expenses | 1,896,433 | 2,061,007 | 5,216,606 | 6,032,067 | |||||||||||
Operating income | $ | 100,209 | $ | 40,814 | $ | 557,604 | $ | 384,965 | |||||||
Key Operating Statistics | |||||||||||||||
Total sales volume (bpd) (2) | 176,675 | 184,728 | 173,911 | 187,564 | |||||||||||
Total refinery production (bpd) | 156,431 | 141,712 | 145,395 | 146,662 | |||||||||||
Total refinery throughput (bpd) (3) | 159,622 | 144,198 | 148,130 | 148,981 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (1) (4) | $ | 14.22 | $ | 13.83 | $ | 22.79 | $ | 17.90 | |||||||
Refinery gross margin excluding hedging activities (1) (4) | 11.60 | 28.89 | 20.66 | 27.60 | |||||||||||
Gross profit (1) (4) | 12.68 | 12.36 | 21.17 | 16.51 | |||||||||||
Direct operating expenses (5) | 5.64 | 6.47 | 5.89 | 5.82 | |||||||||||
The following tables set forth our summary refining throughput and production data for the periods and refineries presented:
All Refineries (El Paso and Gallup)
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
Key Operating Statistics | |||||||||||
Refinery product yields (bpd): | |||||||||||
Gasoline | 80,773 | 72,751 | 77,471 | 75,872 | |||||||
Diesel and jet fuel | 65,076 | 59,414 | 58,477 | 61,132 | |||||||
Residuum | 6,188 | 5,924 | 5,388 | 5,582 | |||||||
Other | 4,394 | 3,623 | 4,059 | 4,076 | |||||||
Total refinery production (bpd) | 156,431 | 141,712 | 145,395 | 146,662 | |||||||
Refinery throughput (bpd): | |||||||||||
Sweet crude oil | 125,875 | 111,922 | 114,873 | 114,055 | |||||||
Sour crude oil | 26,583 | 23,133 | 25,292 | 24,163 | |||||||
Other feedstocks and blendstocks | 7,164 | 9,143 | 7,965 | 10,763 | |||||||
Total refinery throughput (bpd) (3) | 159,622 | 144,198 | 148,130 | 148,981 | |||||||
El Paso Refinery
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Key Operating Statistics | |||||||||||||||
Refinery product yields (bpd): | |||||||||||||||
Gasoline | 63,737 | 60,105 | 60,399 | 60,673 | |||||||||||
Diesel and jet fuel | 57,686 | 53,609 | 51,371 | 54,447 | |||||||||||
Residuum | 6,188 | 5,924 | 5,388 | 5,582 | |||||||||||
Other | 3,645 | 2,938 | 3,302 | 3,234 | |||||||||||
Total refinery production (bpd) | 131,256 | 122,576 | 120,460 | 123,936 | |||||||||||
Refinery throughput (bpd): | |||||||||||||||
Sweet crude oil | 101,660 | 93,703 | 90,997 | 93,134 | |||||||||||
Sour crude oil | 26,583 | 23,133 | 25,292 | 24,163 | |||||||||||
Other feedstocks and blendstocks | 5,315 | 7,528 | 6,222 | 8,338 | |||||||||||
Total refinery throughput (bpd) (3) | 133,558 | 124,364 | 122,511 | 125,635 | |||||||||||
Total sales volume (bpd) (2) | 142,151 | 151,161 | 139,689 | 154,267 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (1) (4) | $ | 11.56 | $ | 28.40 | $ | 20.54 | $ | 27.37 | |||||||
Direct operating expenses (5) | 4.35 | 5.21 | 4.43 | 4.55 | |||||||||||
Gallup Refinery
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Key Operating Statistics | |||||||||||||||
Refinery product yields (bpd): | |||||||||||||||
Gasoline | 17,036 | 12,646 | 17,072 | 15,199 | |||||||||||
Diesel and jet fuel | 7,390 | 5,805 | 7,106 | 6,685 | |||||||||||
Other | 749 | 685 | 757 | 842 | |||||||||||
Total refinery production (bpd) | 25,175 | 19,136 | 24,935 | 22,726 | |||||||||||
Refinery throughput (bpd): | |||||||||||||||
Sweet crude oil | 24,215 | 18,219 | 23,876 | 20,921 | |||||||||||
Other feedstocks and blendstocks | 1,849 | 1,615 | 1,743 | 2,425 | |||||||||||
Total refinery throughput (bpd) (3) | 26,064 | 19,834 | 25,619 | 23,346 | |||||||||||
Total sales volume (bpd) (2) | 34,524 | 33,567 | 34,222 | 33,276 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (1) (4) | $ | 10.63 | $ | 29.48 | $ | 20.38 | $ | 27.63 | |||||||
Direct operating expenses (5) | 8.91 | 10.97 | 9.79 | 9.04 | |||||||||||
(1) | Cost of products sold for the combined refining segment includes the net realized and net non-cash unrealized hedging activity shown in the table below. The hedging gains and losses are also included in the combined gross profit and refinery gross margin but are not included in those measures for the individual refineries. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) | |||||||||||||||
(In thousands) | |||||||||||||||
Realized hedging gain (loss), net | $ | 12,739 | $ | (47,102 | ) | $ | 2,250 | $ | (84,873 | ) | |||||
Unrealized hedging gain (loss), net | 25,745 | (152,784 | ) | 83,713 | (311,191 | ) | |||||||||
Total hedging gain (loss), net | $ | 38,484 | $ | (199,886 | ) | $ | 85,963 | $ | (396,064 | ) | |||||
(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 11.4% and 13.9% of our total consolidated sales volumes for the three and nine months ended September 30, 2013, 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. |
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, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) | |||||||||||||||
(In thousands, except per barrel data) | |||||||||||||||
Net sales (including intersegment sales) | $ | 1,996,642 | $ | 2,101,821 | $ | 5,774,210 | $ | 6,417,032 | |||||||
Cost of products sold (exclusive of depreciation and amortization) | 1,787,848 | 1,918,395 | 4,852,728 | 5,686,430 | |||||||||||
Depreciation and amortization | 22,576 | 19,477 | 65,341 | 56,828 | |||||||||||
Gross profit | 186,218 | 163,949 | 856,141 | 673,774 | |||||||||||
Plus depreciation and amortization | 22,576 | 19,477 | 65,341 | 56,828 | |||||||||||
Refinery gross margin | $ | 208,794 | $ | 183,426 | $ | 921,482 | $ | 730,602 | |||||||
Refinery gross margin per refinery throughput barrel | $ | 14.22 | $ | 13.83 | $ | 22.79 | $ | 17.90 | |||||||
Gross profit per refinery throughput barrel | $ | 12.68 | $ | 12.36 | $ | 21.17 | $ | 16.51 | |||||||
(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, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Statement of Operations Data (Unaudited) | |||||||||||||||
Net sales (including intersegment sales) | $ | 1,242,365 | $ | 1,303,750 | $ | 3,618,413 | $ | 3,739,836 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) | 1,216,132 | 1,282,657 | 3,533,482 | 3,656,539 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 16,557 | 17,215 | 49,345 | 52,315 | |||||||||||
Selling, general, and administrative expenses | 2,424 | 2,483 | 8,449 | 7,607 | |||||||||||
Gain on disposal of assets, net | — | — | — | (509 | ) | ||||||||||
Depreciation and amortization | 979 | 922 | 2,944 | 2,826 | |||||||||||
Total operating costs and expenses | 1,236,092 | 1,303,277 | 3,594,220 | 3,718,778 | |||||||||||
Operating income | $ | 6,273 | $ | 473 | $ | 24,193 | $ | 21,058 | |||||||
Operating Data | |||||||||||||||
Fuel gallons sold | 399,291 | 411,024 | 1,157,620 | 1,164,398 | |||||||||||
Fuel gallons sold to retail (included in fuel gallons sold) | 65,705 | 65,592 | 191,463 | 181,969 | |||||||||||
Average fuel sales price per gallon | $ | 3.23 | $ | 3.30 | 3.25 | $ | 3.34 | ||||||||
Average fuel cost per gallon | 3.18 | 3.26 | 3.19 | 3.29 | |||||||||||
Fuel margin per gallon (1) | 0.06 | 0.04 | 0.07 | 0.06 | |||||||||||
Lubricant gallons sold | 2,986 | 2,965 | 8,939 | 8,681 | |||||||||||
Average lubricant sales price per gallon | $ | 11.27 | $ | 11.15 | $ | 11.15 | $ | 11.17 | |||||||
Average lubricant cost per gallon | 10.10 | 10.05 | 9.96 | 10.05 | |||||||||||
Lubricant margin (2) | 10.3 | % | 9.9 | % | 10.7 | % | 10.0 | % | |||||||
Realized hedging loss | $ | — | $ | (26,048 | ) | $ | — | $ | (23,643 | ) | |||||
Unrealized hedging loss | — | — | — | — | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) | |||||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Net Sales | |||||||||||||||
Fuel sales | $ | 1,289,556 | $ | 1,355,561 | $ | 3,758,333 | $ | 3,887,313 | |||||||
Excise taxes included in fuel sales | (89,791 | ) | (93,023 | ) | (266,561 | ) | (270,096 | ) | |||||||
Lubricant sales | 33,644 | 33,052 | 99,661 | 96,939 | |||||||||||
Other sales | 8,956 | 8,160 | 26,980 | 25,680 | |||||||||||
Net sales | $ | 1,242,365 | $ | 1,303,750 | $ | 3,618,413 | $ | 3,739,836 | |||||||
Cost of Products Sold | |||||||||||||||
Fuel cost of products sold | $ | 1,270,421 | $ | 1,341,229 | $ | 3,694,049 | $ | 3,826,462 | |||||||
Excise taxes included in fuel cost of products sold | (89,791 | ) | (93,023 | ) | (266,561 | ) | (270,096 | ) | |||||||
Lubricant cost of products sold | 30,164 | 29,791 | 89,025 | 87,271 | |||||||||||
Other cost of products sold | 5,338 | 4,660 | 16,969 | 12,902 | |||||||||||
Cost of products sold | $ | 1,216,132 | $ | 1,282,657 | $ | 3,533,482 | $ | 3,656,539 | |||||||
Fuel margin per gallon (1) | $ | 0.06 | $ | 0.04 | $ | 0.07 | $ | 0.06 | |||||||
(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, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Statement of Operations Data (Unaudited) | |||||||||||||||
Net sales (including intersegment sales) | $ | 321,710 | $ | 322,059 | $ | 924,183 | $ | 908,398 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) | 283,282 | 285,690 | 819,810 | 805,697 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 27,492 | 26,816 | 80,431 | 75,739 | |||||||||||
Selling, general, and administrative expenses | 2,082 | 2,058 | 6,013 | 5,967 | |||||||||||
Depreciation and amortization | 3,362 | 2,736 | 8,719 | 7,858 | |||||||||||
Total operating costs and expenses | 316,218 | 317,300 | 914,973 | 895,261 | |||||||||||
Operating income | $ | 5,492 | $ | 4,759 | $ | 9,210 | $ | 13,137 | |||||||
Operating Data | |||||||||||||||
Fuel gallons sold | 78,132 | 77,695 | 227,683 | 216,220 | |||||||||||
Average fuel sales price per gallon | $ | 3.51 | $ | 3.54 | $ | 3.47 | $ | 3.59 | |||||||
Average fuel cost per gallon | 3.29 | 3.34 | 3.28 | 3.39 | |||||||||||
Fuel margin per gallon (1) | 0.22 | 0.20 | 0.19 | 0.20 | |||||||||||
Merchandise sales | $ | 67,398 | $ | 67,056 | $ | 191,351 | $ | 186,542 | |||||||
Merchandise margin (2) | 28.9 | % | 28.6 | % | 28.7 | % | 29.1 | % | |||||||
Operating retail outlets at period end | 221 | 222 | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) | |||||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Net Sales | |||||||||||||||
Fuel sales | $ | 274,195 | $ | 274,833 | $ | 789,386 | $ | 776,110 | |||||||
Excise taxes included in fuel sales | (30,137 | ) | (29,211 | ) | (88,549 | ) | (82,714 | ) | |||||||
Merchandise sales | 67,398 | 67,056 | 191,351 | 186,542 | |||||||||||
Other sales | 10,254 | 9,381 | 31,995 | 28,460 | |||||||||||
Net sales | $ | 321,710 | $ | 322,059 | $ | 924,183 | $ | 908,398 | |||||||
Cost of Products Sold | |||||||||||||||
Fuel cost of products sold | $ | 257,378 | $ | 259,645 | $ | 746,920 | $ | 733,874 | |||||||
Excise taxes included in fuel cost of products sold | (30,137 | ) | (29,211 | ) | (88,549 | ) | (82,714 | ) | |||||||
Merchandise cost of products sold | 47,893 | 47,892 | 136,397 | 132,227 | |||||||||||
Other cost of products sold | 8,148 | 7,364 | 25,042 | 22,310 | |||||||||||
Cost of products sold | $ | 283,282 | $ | 285,690 | $ | 819,810 | $ | 805,697 | |||||||
Fuel margin per gallon (1) | $ | 0.22 | $ | 0.20 | $ | 0.19 | $ | 0.20 | |||||||
(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, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Reported diluted earnings per share | $ | 0.53 | $ | 0.07 | $ | 2.80 | $ | 1.84 | |||||||
Income before income taxes | $ | 79,418 | $ | 9,259 | $ | 443,259 | $ | 294,727 | |||||||
Unrealized loss (gain) on commodity hedging transactions | (25,745 | ) | 152,784 | (83,713 | ) | 311,191 | |||||||||
Gain on disposal of assets, net | (7,024 | ) | — | (7,024 | ) | — | |||||||||
Loss on extinguishment of debt | 6 | — | 46,772 | 7,654 | |||||||||||
Earnings before income taxes excluding special items | 46,655 | 162,043 | 399,294 | 613,572 | |||||||||||
Recomputed income taxes after special items | (17,080 | ) | (56,861 | ) | (144,065 | ) | (215,302 | ) | |||||||
Net income excluding special items | $ | 29,575 | $ | 105,182 | $ | 255,229 | $ | 398,270 | |||||||
Diluted earnings per share excluding special items | $ | 0.33 | $ | 0.99 | $ | 2.54 | $ | 3.71 | |||||||