Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - Western Refining, Inc. | earningscall-wnrx123115.htm |
| 8-K - 8-K - Western Refining, Inc. | wnr8-kxearningsreleasex123.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 |
Michelle Clemente | |
(602) 286-1533 | |
WESTERN REFINING REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS
• Record year for refining throughput, retail fuel volumes, and merchandise sales |
• Expanded logistics assets in Delaware Basin and Four Corners, resulting in highly integrated crude oil distribution network |
• Sold TexNew Mex pipeline to WNRL for cash and WNRL units |
• Entered into a merger agreement with Northern Tier Energy to purchase remaining publicly-held units |
• Returned $234 million to shareholders through dividends and share repurchases in 2015 |
• Announced Q1 2016 dividend of $0.38 per share, a 27% increase versus Q1 2015 |
EL PASO, Texas - February 25, 2016 - Western Refining, Inc. (NYSE: WNR) today reported results for the fourth quarter ended December 31, 2015. Net income attributable to Western, excluding special items, was $52.2 million, or $0.56 per diluted share. This compares to fourth quarter 2014 net income, excluding special items, of $116.8 million, or $1.19 per diluted share. Including special items, the Company recorded fourth quarter 2015 net income attributable to Western Refining, Inc. of $13.5 million, or $0.14 per diluted share, as compared to net income of $130.9 million, or $1.33 per diluted share for the fourth quarter of 2014. Special items primarily consisted of a non-cash, pre-tax, lower of cost or market inventory adjustment. A reconciliation of reported earnings and description of special items can be found in the accompanying financial tables.
Western recorded full year 2015 net income attributable to Western Refining, Inc. of $406.8 million, or $4.28 per diluted share compared to full year 2014 net income of $559.9 million, or $5.61 per diluted share.
Jeff Stevens, Western's President and Chief Executive Officer, said, "Western had a successful 2015 despite a volatile crude oil pricing environment and challenging fourth quarter. We had good, reliable operations at both the El Paso and Gallup refineries as we increased refinery throughput to record levels. Additionally, our retail operations achieved record levels in fuel volumes, merchandise sales, and profitability. On a standalone basis, Western invested $127 million in discretionary capital during the year primarily to expand our logistics capabilities in the Permian and San Juan Basins. We now have a fully integrated crude oil pipeline logistics system able to move crude oil south to either our El Paso refinery or eastward to Midland and the Gulf Coast. Additionally, we continued to balance capital investment with returning cash to shareholders, and in 2015, we returned approximately $234 million in cash to shareholders through dividends and share repurchases."
Stevens concluded, "In 2016, we will remain focused on safe and reliable operations and maximizing operational efficiencies while managing our costs. We will continue to take a disciplined approach in evaluating growth opportunities balanced with returning cash to shareholders. We continue to maximize the benefits of our investments in NTI and WNRL. Overall, we have expanded and enhanced our asset base which provides
us maximum flexibility in these volatile market conditions. We believe that Western is well positioned for 2016."
Conference Call Information
A conference call is scheduled for Thursday, February 25, 2016, at 10:00 am ET to discuss Western's financial results for the fourth quarter and full year ended December 31, 2015. 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: 4417251. The audio replay will be available two hours after the end of the call through March 10, 2016, by dialing (800) 585-8367 or (404) 537-3406, passcode: 4417251.
Non-GAAP Financial Measures
In a number of places in the press release and related tables, we have excluded certain income and expense items from GAAP measures. The excluded items are generally non-cash in nature such as unrealized net gains and losses from commodity hedging activities or losses on disposal of assets; however, other items that have a cash impact, such as gains on disposal of assets are also excluded. We believe it is useful for investors and financial analysts to understand our financial performance excluding such items so that they can see the operating trends underlying our business. Readers of this press release 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 retail segment includes retail service stations, convenience stores, and unmanned fleet fueling locations in Arizona, Colorado, New Mexico, and Texas.
Western Refining, Inc. owns the general partner and approximately 66% of the limited partnership interest of Western Refining Logistics, LP (NYSE:WNRL). Western Refining, Inc. also owns the general partner and approximately 38% of the limited partnership interest in Northern Tier Energy LP (NYSE:NTI).
More information about Western Refining is available at www.wnr.com.
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements which are protected as forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements reflect Western’s current expectations regarding future events, results or outcomes. The forward-looking statements contained herein include statements related to, among other things: crude oil pricing environment; the focus on safe and reliable operations while maximizing operational efficiencies and managing costs; a disciplined approach in evaluating growth opportunities balanced with returning cash to shareholders; the ability to maximize investments in NTI and WNRL; the expansion of logistics capabilities in the Permian and San Juan Basins; the fully integrated crude oil pipeline logistics system and its ability to move crude oil south to either the El Paso refinery or eastward to Midland and the Gulf Coast; flexibility in volatile market conditions; the proposed merger with NTI; and the positioning of Western for 2016. These statements are subject to the general risks inherent in Western’s business. These expectations may or may not be realized and 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 its control, which could result in Western’s expectations not being realized, or otherwise materially affect Western’s financial condition, results of operations, and cash flows. Additional information relating to the uncertainties affecting Western's business is contained in its filings
with the Securities and Exchange Commission to which you are referred. The forward-looking statements are only as of the date made. Except as required by law, 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
We report our operating results in four business segments: refining, NTI, WNRL and retail.
• | Refining. Our refining segment owns and operates two refineries in the Southwest that process crude oil and other feedstocks primarily into gasoline, diesel fuel, jet fuel and asphalt. We market refined products to a diverse customer base including wholesale distributors and retail chains. The refining segment also sells refined products in the Mid-Atlantic region and Mexico. |
• | NTI. NTI owns and operates refining and transportation assets and operates and supports retail convenience stores primarily in the Upper Great Plains region of the U.S. |
• | WNRL. WNRL owns and operates terminal, storage, transportation and wholesale assets consisting of a fleet of crude oil and refined product truck transports and wholesale petroleum product operations in the Southwest region. We are WNRL's primary customer through our refining and retail segments. WNRL purchases its wholesale product supply from the refining segment and third-party suppliers. |
• | Retail. Our retail segment operates retail convenience stores and unmanned commercial fleet fueling locations located in the Southwest. The retail convenience stores sell gasoline, diesel fuel and convenience store merchandise. |
The following tables set forth our unaudited summary historical financial and operating data for the periods indicated below:
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Statements of Operations Data | |||||||||||||||
Net sales (1) | $ | 2,070,324 | $ | 3,024,816 | $ | 9,787,036 | $ | 15,153,573 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) (1) | 1,706,406 | 2,448,502 | 7,521,375 | 12,719,963 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) (1) | 228,451 | 230,639 | 902,925 | 850,634 | |||||||||||
Selling, general and administrative expenses | 55,437 | 55,442 | 225,245 | 226,020 | |||||||||||
Affiliate severance costs | — | — | — | 12,878 | |||||||||||
Loss (gain) and impairments on disposal of assets, net | 208 | 7,591 | 51 | 8,530 | |||||||||||
Maintenance turnaround expense | 836 | 140 | 2,024 | 48,469 | |||||||||||
Depreciation and amortization | 52,845 | 49,398 | 205,291 | 190,566 | |||||||||||
Total operating costs and expenses | 2,044,183 | 2,791,712 | 8,856,911 | 14,057,060 | |||||||||||
Operating income | 26,141 | 233,104 | 930,125 | 1,096,513 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 153 | 289 | 703 | 1,188 | |||||||||||
Interest expense and other financing costs | (26,434 | ) | (22,054 | ) | (105,603 | ) | (97,062 | ) | |||||||
Loss on extinguishment of debt | — | — | — | (9 | ) | ||||||||||
Other, net | 1,604 | 2,397 | 13,161 | 2,046 | |||||||||||
Income (loss) before income taxes | 1,464 | 213,736 | 838,386 | 1,002,676 | |||||||||||
Provision for income taxes | 6,034 | (69,285 | ) | (223,955 | ) | (292,604 | ) | ||||||||
Net income | 7,498 | 144,451 | 614,431 | 710,072 | |||||||||||
Less net income (loss) attributed to non-controlling interests (2) | (6,047 | ) | 13,516 | 207,675 | 150,146 | ||||||||||
Net income attributable to Western Refining, Inc. | $ | 13,545 | $ | 130,935 | $ | 406,756 | $ | 559,926 | |||||||
Basic earnings per share | $ | 0.14 | $ | 1.34 | $ | 4.28 | $ | 6.17 | |||||||
Diluted earnings per share (3) | 0.14 | 1.33 | 4.28 | 5.61 | |||||||||||
Dividends declared per common share | 0.38 | 2.30 | 1.36 | 3.08 | |||||||||||
Weighted average basic shares outstanding | 93,683 | 98,029 | 94,899 | 90,708 | |||||||||||
Weighted average dilutive shares outstanding | 93,785 | 79,720 | 94,999 | 101,190 | |||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
Economic Hedging Activities Recognized Within Cost of Products Sold | |||||||||||||||
Realized commodity hedging gain, net | $ | 41,374 | $ | 51,059 | $ | 93,699 | $ | 95,331 | |||||||
Unrealized commodity hedging gain (loss), net | (8,160 | ) | 58,052 | (50,233 | ) | 194,423 | |||||||||
Total realized and unrealized commodity hedging gain, net | $ | 33,214 | $ | 109,111 | $ | 43,466 | $ | 289,754 | |||||||
Cash Flow Data | |||||||||||||||
Net cash provided by (used in): | |||||||||||||||
Operating activities | $ | 177,419 | $ | 243,575 | $ | 843,083 | $ | 737,633 | |||||||
Investing activities | (157,392 | ) | (238,828 | ) | (191,846 | ) | (380,864 | ) | |||||||
Financing activities | 42,905 | (223,742 | ) | (309,894 | ) | (393,680 | ) | ||||||||
Capital expenditures | $ | 94,887 | $ | 76,017 | $ | 290,863 | $ | 223,271 | |||||||
Cash distributions received by Western from: | |||||||||||||||
NTI | $ | 37,047 | $ | 35,623 | $ | 135,365 | $ | 96,537 | |||||||
WNRL | 12,610 | 9,833 | 45,455 | 35,043 | |||||||||||
Other Data | |||||||||||||||
Adjusted EBITDA (4) | $ | 203,614 | $ | 313,421 | $ | 1,298,124 | $ | 1,231,443 | |||||||
Balance Sheet Data (at end of period) | |||||||||||||||
Cash and cash equivalents | $ | 772,502 | $ | 431,159 | |||||||||||
Restricted cash | 69,106 | 167,009 | |||||||||||||
Working capital | 1,114,366 | 812,711 | |||||||||||||
Total assets | 5,833,393 | 5,642,186 | |||||||||||||
Total debt and lease financing obligation | 1,703,626 | 1,507,654 | |||||||||||||
Total equity | 2,945,906 | 2,787,644 | |||||||||||||
(1) | Excludes $704.9 million, $3,222.2 million, $902.9 million and $4,390.7 million of intercompany sales; $704.9 million, $3,222.2 million, $898.6 million and $4,374.1 million of intercompany cost of products sold for the three and twelve months ended December 31, 2015 and 2014, respectively, and $4.3 million and $16.6 million of intercompany direct operating expenses for the three and twelve months ended December 31, 2014, respectively, with no comparable activity for the three and twelve months ended December 31, 2015. |
(2) | Net income (loss) attributed to non-controlling interests for the three and twelve months ended December 31, 2015 and 2014, consisted of income from NTI of $(11.0) million, $186.5 million, $7.1 million and $131.9 million, respectively. Net income attributed to non-controlling interest for the three and twelve months ended December 31, 2015 and 2014, consisted of income from WNRL of $5.0 million, $21.2 million, $6.4 million and $18.2 million, respectively. |
(3) | Our computation of diluted earnings per share includes the 2014 dilutive effect of our Convertible Senior Unsecured Notes, redeemed during 2014, and any unvested restricted shares and share units. If determined to be dilutive to period earnings, these securities are included in the denominator of our diluted earnings per share calculation. For purposes of the diluted earnings per share calculation, we assumed issuance of 0.1 million restricted share units for both the three and twelve months ended December 31, 2015. We assumed issuance of 0.1 million restricted shares and share units for both the three and twelve months ended December 31, 2014 and assumed issuance of 10.3 million shares related to the Convertible Senior Notes for the twelve months ended December 31, 2014. |
(4) | 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 attributable to Western Refining, Inc. to Adjusted EBITDA for the periods presented:
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
Net income attributable to Western | $ | 13,545 | $ | 130,935 | $ | 406,756 | $ | 559,926 | |||||||
Net income (loss) attributed to non-controlling interests | (6,047 | ) | 13,516 | 207,675 | 150,146 | ||||||||||
Interest expense and other financing costs | 26,434 | 22,054 | 105,603 | 97,062 | |||||||||||
Provision for income taxes | (6,034 | ) | 69,285 | 223,955 | 292,604 | ||||||||||
Depreciation and amortization | 52,845 | 49,398 | 205,291 | 190,566 | |||||||||||
Maintenance turnaround expense | 836 | 140 | 2,024 | 48,469 | |||||||||||
Loss (gain) and impairments on disposal of assets, net | 208 | 7,591 | 51 | 8,530 | |||||||||||
Loss on extinguishment of debt | — | — | — | 9 | |||||||||||
Net change in lower of cost or market inventory reserve | 113,667 | 78,554 | 96,536 | 78,554 | |||||||||||
Unrealized loss (gain) on commodity hedging transactions, net | 8,160 | (58,052 | ) | 50,233 | (194,423 | ) | |||||||||
Adjusted EBITDA | $ | 203,614 | $ | 313,421 | $ | 1,298,124 | $ | 1,231,443 | |||||||
Adjusted EBITDA by Reporting Entity: | |||||||||||||||
Western Adjusted EBITDA | $ | 89,405 | $ | 170,235 | $ | 712,502 | $ | 763,829 | |||||||
NTI Adjusted EBITDA | 86,527 | 118,260 | 479,238 | 397,061 | |||||||||||
WNRL Adjusted EBITDA | 27,682 | 24,926 | 106,384 | 70,553 | |||||||||||
Adjusted EBITDA | $ | 203,614 | $ | 313,421 | $ | 1,298,124 | $ | 1,231,443 | |||||||
Three Months Ended | |||||||||||||||||||||||
December 31, | |||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||
Western | WNRL | NTI | Western | WNRL | NTI | ||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Net income (loss) attributable to Western Refining, Inc. | $ | 9,840 | $ | 9,846 | $ | (6,141 | ) | $ | 111,475 | $ | 12,458 | $ | 7,002 | ||||||||||
Net income (loss) attributable to non-controlling interests | — | 4,996 | (11,043 | ) | — | 6,361 | 7,155 | ||||||||||||||||
Interest expense and other financing costs | 14,310 | 6,691 | 5,433 | 13,985 | 1,286 | 6,783 | |||||||||||||||||
Provision for income taxes | (5,727 | ) | (307 | ) | — | 69,165 | 120 | — | |||||||||||||||
Depreciation and amortization | 26,257 | 6,477 | 20,111 | 25,205 | 4,478 | 19,715 | |||||||||||||||||
Maintenance turnaround expense | 836 | — | — | 140 | — | — | |||||||||||||||||
Loss (gain) and impairments on disposal of assets, net | 176 | (21 | ) | 53 | 7,359 | 223 | 9 | ||||||||||||||||
Net change in lower of cost or market inventory reserve | 40,689 | — | 72,978 | 4,883 | — | 73,671 | |||||||||||||||||
Unrealized loss (gain) on commodity hedging transactions, net | 3,024 | — | 5,136 | (61,977 | ) | — | 3,925 | ||||||||||||||||
Adjusted EBITDA | $ | 89,405 | $ | 27,682 | $ | 86,527 | $ | 170,235 | $ | 24,926 | $ | 118,260 | |||||||||||
Twelve Months Ended | |||||||||||||||||||||||
December 31, | |||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||
Western | WNRL | NTI | Western | WNRL | NTI | ||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Net income attributable to Western Refining, Inc. | $ | 242,234 | $ | 41,418 | $ | 123,104 | $ | 436,300 | $ | 34,787 | $ | 88,839 | |||||||||||
Net income attributable to non-controlling interests | — | 21,155 | 186,520 | — | 18,205 | 131,941 | |||||||||||||||||
Interest expense and other financing costs | 56,821 | 23,107 | 25,675 | 71,345 | 2,359 | 23,358 | |||||||||||||||||
Provision for income taxes | 223,908 | 47 | — | 292,145 | 459 | — | |||||||||||||||||
Depreciation and amortization | 105,619 | 20,935 | 78,737 | 99,502 | 14,520 | 76,544 | |||||||||||||||||
Maintenance turnaround expense | 2,024 | — | — | 48,469 | — | — | |||||||||||||||||
Loss (gain) and impairments on disposal of assets, net | 620 | (278 | ) | (291 | ) | 8,399 | 223 | (92 | ) | ||||||||||||||
Loss on extinguishment of debt | — | — | — | 9 | — | — | |||||||||||||||||
Net change in lower of cost or market inventory reserve | 35,806 | — | 60,730 | 4,883 | — | 73,671 | |||||||||||||||||
Unrealized loss (gain) on commodity hedging transactions, net | 45,470 | — | 4,763 | (197,223 | ) | — | 2,800 | ||||||||||||||||
Adjusted EBITDA | $ | 712,502 | $ | 106,384 | $ | 479,238 | $ | 763,829 | $ | 70,553 | $ | 397,061 | |||||||||||
Consolidating Financial Data
The following tables set forth our consolidating historical financial data for the periods presented below.
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Operating Income (Loss) | |||||||||||||||
Western, excluding NTI and WNRL | $ | 17,331 | $ | 194,400 | $ | 522,082 | $ | 799,493 | |||||||
NTI | (12,401 | ) | 18,494 | 322,382 | 241,229 | ||||||||||
WNRL | 21,211 | 20,210 | 85,661 | 55,791 | |||||||||||
Operating income | $ | 26,141 | $ | 233,104 | $ | 930,125 | $ | 1,096,513 | |||||||
Depreciation and Amortization | |||||||||||||||
Western, excluding NTI and WNRL | $ | 26,257 | $ | 25,205 | $ | 105,619 | $ | 99,502 | |||||||
NTI | 20,111 | 19,715 | 78,737 | 76,544 | |||||||||||
WNRL | 6,477 | 4,478 | 20,935 | 14,520 | |||||||||||
Depreciation and amortization expense | $ | 52,845 | $ | 49,398 | $ | 205,291 | $ | 190,566 | |||||||
Capital Expenditures | |||||||||||||||
Western, excluding NTI and WNRL | $ | 49,708 | $ | 60,478 | $ | 187,954 | $ | 161,968 | |||||||
NTI | 36,558 | 10,556 | 71,825 | 44,895 | |||||||||||
WNRL | 8,621 | 4,983 | 31,084 | 16,408 | |||||||||||
Capital expenditures | $ | 94,887 | $ | 76,017 | $ | 290,863 | $ | 223,271 | |||||||
Balance Sheet Data (at end of period) | |||||||||||||||
Cash and cash equivalents | |||||||||||||||
Western, excluding NTI and WNRL | $ | 656,987 | $ | 289,007 | |||||||||||
NTI | 70,910 | 87,854 | |||||||||||||
WNRL | 44,605 | 54,298 | |||||||||||||
Cash and cash equivalents | $ | 772,502 | $ | 431,159 | |||||||||||
Total debt | |||||||||||||||
Western, excluding NTI and WNRL | $ | 861,827 | $ | 861,037 | |||||||||||
NTI | 351,100 | 352,112 | |||||||||||||
WNRL | 437,467 | 267,016 | |||||||||||||
Total debt | $ | 1,650,394 | $ | 1,480,165 | |||||||||||
Total working capital | |||||||||||||||
Western, excluding NTI and WNRL | $ | 920,822 | $ | 558,983 | |||||||||||
NTI | 156,875 | 203,647 | |||||||||||||
WNRL | 36,669 | 50,081 | |||||||||||||
Total working capital | $ | 1,114,366 | $ | 812,711 | |||||||||||
Refining
El Paso and Gallup Refineries and Related Operations
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per barrel data) | |||||||||||||||
Statement of Operations Data: | |||||||||||||||
Net sales (including intersegment sales) (1) | $ | 1,277,517 | $ | 1,918,993 | $ | 6,233,330 | $ | 9,485,734 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) (7) | 1,136,045 | 1,596,601 | 5,234,779 | 8,175,332 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 77,555 | 81,008 | 307,617 | 305,279 | |||||||||||
Selling, general and administrative expenses | 7,757 | 6,770 | 31,968 | 28,470 | |||||||||||
Loss (gain) and impairments on disposal of assets, net | — | 7,427 | 495 | 8,202 | |||||||||||
Maintenance turnaround expense | 836 | 140 | 2,024 | 48,469 | |||||||||||
Depreciation and amortization | 20,550 | 20,780 | 81,180 | 78,911 | |||||||||||
Total operating costs and expenses | 1,242,743 | 1,712,726 | 5,658,063 | 8,644,663 | |||||||||||
Operating income | $ | 34,774 | $ | 206,267 | $ | 575,267 | $ | 841,071 | |||||||
Key Operating Statistics | |||||||||||||||
Total sales volume (bpd) (2) | 233,134 | 222,479 | 237,054 | 217,640 | |||||||||||
Total refinery production (bpd) | 151,719 | 156,637 | 159,691 | 152,942 | |||||||||||
Total refinery throughput (bpd) (3) | 153,470 | 158,231 | 161,807 | 155,019 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (4) (5) (7) | $ | 9.82 | $ | 22.13 | $ | 16.84 | $ | 23.11 | |||||||
Direct operating expenses (6) | 5.49 | 5.56 | 5.20 | 5.39 | |||||||||||
Mid-Atlantic sales volume (bbls) | 1,759 | 1,705 | 8,356 | 8,588 | |||||||||||
Mid-Atlantic margin per barrel | $ | 1.61 | $ | 0.12 | $ | 0.46 | $ | 0.32 | |||||||
El Paso and Gallup Refineries
Three Months Ended | Year Ended | ||||||||||
December 31, | December 31, | ||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||
Key Operating Statistics | |||||||||||
Refinery product yields (bpd): | |||||||||||
Gasoline | 86,044 | 83,869 | 87,266 | 79,279 | |||||||
Diesel and jet fuel | 56,541 | 62,370 | 62,076 | 63,359 | |||||||
Residuum | 2,524 | 4,763 | 4,174 | 5,121 | |||||||
Other | 6,610 | 5,635 | 6,175 | 5,183 | |||||||
Total refinery production (bpd) | 151,719 | 156,637 | 159,691 | 152,942 | |||||||
Refinery throughput (bpd): | |||||||||||
Sweet crude oil | 121,744 | 123,414 | 129,135 | 121,514 | |||||||
Sour or heavy crude oil | 22,634 | 25,922 | 22,949 | 25,113 | |||||||
Other feedstocks and blendstocks | 9,092 | 8,895 | 9,723 | 8,392 | |||||||
Total refinery throughput (bpd) (3) | 153,470 | 158,231 | 161,807 | 155,019 | |||||||
El Paso Refinery
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Key Operating Statistics | |||||||||||||||
Refinery product yields (bpd): | |||||||||||||||
Gasoline | 68,976 | 66,253 | 70,200 | 62,252 | |||||||||||
Diesel and jet fuel | 48,972 | 53,285 | 54,082 | 54,501 | |||||||||||
Residuum | 2,524 | 4,763 | 4,174 | 5,121 | |||||||||||
Other | 5,964 | 4,191 | 4,872 | 3,740 | |||||||||||
Total refinery production (bpd) | 126,436 | 128,492 | 133,328 | 125,614 | |||||||||||
Refinery throughput (bpd): | |||||||||||||||
Sweet crude oil | 99,765 | 97,874 | 105,064 | 96,384 | |||||||||||
Sour crude oil | 22,634 | 25,922 | 22,949 | 25,113 | |||||||||||
Other feedstocks and blendstocks | 5,459 | 5,828 | 7,064 | 5,739 | |||||||||||
Total refinery throughput (bpd) (3) | 127,858 | 129,624 | 135,077 | 127,236 | |||||||||||
Total sales volume (bpd) (2) | 144,423 | 140,299 | 148,897 | 139,216 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (4) (7) | $ | 9.55 | $ | 14.99 | $ | 16.48 | $ | 18.34 | |||||||
Direct operating expenses (6) | 4.22 | 4.55 | 4.02 | 4.37 | |||||||||||
Gallup Refinery
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Key Operating Statistics | |||||||||||||||
Refinery product yields (bpd): | |||||||||||||||
Gasoline | 17,068 | 17,616 | 17,066 | 17,027 | |||||||||||
Diesel and jet fuel | 7,569 | 9,085 | 7,994 | 8,858 | |||||||||||
Other | 646 | 1,444 | 1,303 | 1,443 | |||||||||||
Total refinery production (bpd) | 25,283 | 28,145 | 26,363 | 27,328 | |||||||||||
Refinery throughput (bpd): | |||||||||||||||
Sweet crude oil | 21,979 | 25,540 | 24,071 | 25,130 | |||||||||||
Other feedstocks and blendstocks | 3,633 | 3,067 | 2,659 | 2,653 | |||||||||||
Total refinery throughput (bpd) (3) | 25,612 | 28,607 | 26,730 | 27,783 | |||||||||||
Total sales volume (bpd) (2) | 32,014 | 34,429 | 33,005 | 34,300 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (4) (7) | $ | 13.61 | $ | 16.56 | $ | 18.34 | $ | 16.55 | |||||||
Direct operating expenses (6) | 8.60 | 7.90 | 8.38 | 8.40 | |||||||||||
(1) | Refining net sales for the three and twelve months ended December 31, 2015 and 2014, includes $222.0 million, $975.8 million, $325.8 million and $1,489.6 million, respectively, representing a period average of 56,697 bpd, 55,152 bpd, 47,751 bpd and 44,124, respectively. The majority of the crude oil sales resulted from the purchase of barrels in excess of what was required for production purposes in the El Paso and Gallup refineries. |
(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 7.9%, 9.1%, 8.5% and 9.8% of our total consolidated sales volumes for the three and twelve months ended December 31, 2015 and 2014, respectively. The majority of the purchased refined products are distributed through our 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, 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. |
Our calculation of refinery gross margin excludes the sales and costs related to our Mid-Atlantic business that we report within the refining segment. The following table reconciles the sales and cost of sales used to calculate refinery gross margin with the total sales and cost of sales reported in the refining statement of operations data above:
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
Refinery net sales (including intersegment sales) | $ | 1,174,434 | $ | 1,762,323 | $ | 5,633,384 | $ | 8,496,576 | |||||||
Mid-Atlantic sales | 103,083 | 156,670 | 599,946 | 989,158 | |||||||||||
Net sales (including intersegment sales) | $ | 1,277,517 | $ | 1,918,993 | $ | 6,233,330 | $ | 9,485,734 | |||||||
Refinery cost of products sold (exclusive of depreciation and amortization) | $ | 1,035,794 | $ | 1,440,144 | $ | 4,638,664 | $ | 7,188,928 | |||||||
Mid-Atlantic cost of products sold | 100,251 | 156,457 | 596,115 | 986,404 | |||||||||||
Cost of products sold (exclusive of depreciation and amortization) | $ | 1,136,045 | $ | 1,596,601 | $ | 5,234,779 | $ | 8,175,332 | |||||||
The following table reconciles combined gross profit for our refineries to combined gross margin for our refineries for the periods presented:
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per barrel data) | |||||||||||||||
Net sales (including intersegment sales) | $ | 1,174,434 | $ | 1,762,323 | $ | 5,633,384 | $ | 8,496,576 | |||||||
Cost of products sold (exclusive of depreciation and amortization) | 1,035,794 | 1,440,144 | 4,638,664 | 7,188,928 | |||||||||||
Depreciation and amortization | 20,550 | 20,780 | 81,180 | 78,911 | |||||||||||
Gross profit | 118,090 | 301,399 | 913,540 | 1,228,737 | |||||||||||
Plus depreciation and amortization | 20,550 | 20,780 | 81,180 | 78,911 | |||||||||||
Refinery gross margin | $ | 138,640 | $ | 322,179 | $ | 994,720 | $ | 1,307,648 | |||||||
Refinery gross margin per refinery throughput barrel | $ | 9.82 | $ | 22.13 | $ | 16.84 | $ | 23.11 | |||||||
Gross profit per refinery throughput barrel | $ | 8.36 | $ | 20.70 | $ | 15.47 | $ | 21.72 | |||||||
(5) | Cost of products sold for the combined refining segment includes changes in the lower of cost or market inventory reserve shown in the table below. The reserve changes are also included in the combined refinery gross margin but are not included in those measures for the individual refineries. The following table calculates the refinery gross margin per refinery throughput barrel excluding changes in the lower of cost or market inventory reserve: |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in thousands, except per barrel data) | |||||||||||||||
Refinery gross margin | $ | 138,640 | $ | 322,179 | $ | 994,720 | $ | 1,307,648 | |||||||
Net change in lower of cost or market inventory reserve | 40,689 | 4,883 | 35,806 | 4,883 | |||||||||||
Refinery gross margin, excluding LCM adjustment | $ | 179,329 | $ | 327,062 | $ | 1,030,526 | $ | 1,312,531 | |||||||
Refinery gross margin, excluding LCM adjustment, per refinery throughput barrel | $ | 12.70 | $ | 22.47 | $ | 17.45 | $ | 23.20 | |||||||
(6) | 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. |
(7) | 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 | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
Realized hedging gain, net | $ | 40,862 | $ | 41,538 | $ | 92,137 | $ | 82,937 | |||||||
Unrealized hedging gain (loss), net | (3,024 | ) | 61,977 | (45,470 | ) | 197,223 | |||||||||
Total hedging gain, net | $ | 37,838 | $ | 103,515 | $ | 46,667 | $ | 280,160 | |||||||
NTI
The following table sets forth the summary operating results for NTI.
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per barrel data) | |||||||||||||||
Statement of Operations Data: | |||||||||||||||
Net sales | $ | 653,535 | $ | 953,925 | $ | 3,002,156 | $ | 5,159,657 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) (1) | 550,377 | 807,601 | 2,213,325 | 4,439,512 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 77,392 | 88,507 | 305,648 | 298,104 | |||||||||||
Selling, general and administrative expenses | 18,003 | 19,599 | 82,355 | 91,482 | |||||||||||
Affiliate severance costs | — | — | — | 12,878 | |||||||||||
Loss (gain) and impairments on disposal of assets, net | 53 | 9 | (291 | ) | (92 | ) | |||||||||
Depreciation and amortization | 20,111 | 19,715 | 78,737 | 76,544 | |||||||||||
Total operating costs and expenses | 665,936 | 935,431 | 2,679,774 | 4,918,428 | |||||||||||
Operating income (loss) | $ | (12,401 | ) | $ | 18,494 | $ | 322,382 | $ | 241,229 | ||||||
Key Operating Statistics: | |||||||||||||||
Total sales volume (bpd) | 103,483 | 100,285 | 101,349 | 98,016 | |||||||||||
Total refinery production (bpd) | 102,602 | 92,422 | 96,506 | 93,838 | |||||||||||
Total refinery throughput (bpd) (2) | 102,377 | 91,964 | 96,515 | 93,525 | |||||||||||
Per barrel of throughput: | |||||||||||||||
Refinery gross margin (1) (3) (4) | $ | 6.23 | $ | 11.54 | $ | 17.16 | $ | 15.91 | |||||||
Direct operating expenses (5) | 4.63 | 5.91 | 4.71 | 4.77 | |||||||||||
Retail fuel gallons sold (in thousands) | 76,811 | 77,324 | 304,484 | 306,777 | |||||||||||
Retail fuel margin per gallon (6) | $ | 0.23 | $ | 0.28 | $ | 0.23 | $ | 0.22 | |||||||
Merchandise sales | 87,343 | 85,055 | 366,401 | 349,145 | |||||||||||
Merchandise margin (7) | 24.6 | % | 25.8 | % | 25.6 | % | 25.9 | % | |||||||
Company-operated retail outlets at period end | 168 | 165 | |||||||||||||
Franchised retail outlets at period end | 109 | 89 | |||||||||||||
(1) | Cost of products sold for NTI includes the net realized and net non-cash unrealized hedging activity shown in the table below. The hedging losses are also included in the combined gross profit and refinery gross margin. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
Realized hedging gain, net | $ | 512 | $ | 9,520 | $ | 1,562 | $ | 12,394 | |||||||
Unrealized hedging loss, net | (5,136 | ) | (3,925 | ) | (4,763 | ) | (2,800 | ) | |||||||
Total hedging gain (loss), net | $ | (4,624 | ) | $ | 5,595 | $ | (3,201 | ) | $ | 9,594 | |||||
(2) | Total refinery throughput includes crude oil, other feedstocks and blendstocks. |
(3) | Refinery gross margin is a per barrel measurement calculated by dividing the difference between net sales and cost of products sold by our refinery's total throughput volumes for the respective period presented. The net realized and net non‑cash unrealized economic hedging losses included in NTI's gross margin are not allocated to the refinery. Cost of products sold does not include any depreciation or amortization. Refinery net sales and cost of products sold include crude |
oil sales of $8.1 million, $102.5 million, $303.0 million, $1,194.7 million for the three and twelve months ended December 31, 2015 and 2014, respectively. 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 for the St. Paul Park refinery to gross margin for the St. Paul Park refinery for the period presented:
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per barrel data) | |||||||||||||||
Net sales (including intersegment sales) | $ | 645,077 | $ | 941,990 | $ | 2,936,758 | $ | 5,097,634 | |||||||
Cost of products sold (exclusive of depreciation and amortization) | 586,410 | 844,390 | 2,332,166 | 4,554,658 | |||||||||||
Depreciation and amortization | 17,660 | 17,160 | 69,394 | 67,538 | |||||||||||
Gross profit | 41,007 | 80,440 | 535,198 | 475,438 | |||||||||||
Plus depreciation and amortization | 17,660 | 17,160 | 69,394 | 67,538 | |||||||||||
Refinery gross margin | $ | 58,667 | $ | 97,600 | $ | 604,592 | $ | 542,976 | |||||||
Refinery gross margin per refinery throughput barrel | $ | 6.23 | $ | 11.54 | $ | 17.16 | $ | 15.91 | |||||||
Gross profit per refinery throughput barrel | $ | 4.35 | $ | 9.51 | $ | 15.19 | $ | 13.93 | |||||||
(4) | Cost of products sold for NTI includes changes in the lower of cost or market inventory reserve shown in the table below. The following table calculates the refinery gross margin per refinery throughput barrel excluding changes in the lower of cost or market inventory reserve: |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in thousands, except per barrel data) | |||||||||||||||
Refinery gross margin | $ | 58,667 | $ | 97,600 | $ | 604,592 | $ | 542,976 | |||||||
Net change in lower of cost or market inventory reserve | 71,743 | 72,235 | 60,029 | 72,235 | |||||||||||
Refinery gross margin, excluding LCM adjustment | $ | 130,410 | $ | 169,835 | $ | 664,621 | $ | 615,211 | |||||||
Refinery gross margin, excluding LCM adjustment, per refinery throughput barrel | $ | 13.86 | $ | 20.07 | $ | 18.87 | $ | 18.04 | |||||||
(5) | NTI's 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) | Retail fuel margin per gallon is a measurement calculated by dividing the difference between retail fuel sales and retail fuel cost of products sold by the number of retail gallons sold. Retail fuel margin per gallon is a measure frequently used in the retail industry to measure operating results related to retail fuel sales. |
(7) | 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 retail industry to measure operating results related to merchandise sales. |
WNRL
The WNRL financial and operational data presented includes the historical results of all assets acquired from Western in the TexNew Mex Pipeline Acquisition. These acquisitions from Western were transfers of assets between entities under common control. Accordingly, the financial information contained herein for the WNRL Predecessor and WNRL has been retrospectively adjusted, to include the historical results of the WRW assets acquired, for periods prior to the effective date of the Wholesale Acquisition. The financial information includes the historical results of the WNRL Predecessor, retrospectively adjusted due to the Wholesale Acquisition, for periods prior to October 16, 2013, and the results of WNRL, retrospectively adjusted for the Wholesale Acquisition and the TexNew Mex Pipeline Acquisition beginning October 16, 2013, the date WNRL commenced operations.
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
Net sales, net of excise taxes (including intersegment sales) | $ | 575,897 | $ | 751,222 | $ | 2,599,867 | $ | 3,501,888 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold, net of excise taxes (exclusive of depreciation and amortization) | 500,853 | 683,134 | 2,308,137 | 3,244,919 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 39,472 | 34,980 | 154,267 | 143,702 | |||||||||||
Selling, general and administrative expenses | 6,288 | 5,286 | 24,116 | 22,628 | |||||||||||
Loss (gain) and impairments on disposal of assets, net | (21 | ) | 173 | (278 | ) | 157 | |||||||||
Depreciation and amortization | 7,549 | 5,275 | 26,912 | 20,187 | |||||||||||
Total operating costs and expenses | 554,141 | 728,848 | 2,513,154 | 3,431,593 | |||||||||||
Operating income | $ | 21,756 | $ | 22,374 | $ | 86,713 | $ | 70,295 | |||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per gallon/barrel data) | |||||||||||||||
Pipeline and gathering (bpd): | |||||||||||||||
Mainline movements (1): | |||||||||||||||
Permian/Delaware Basin system | 52,068 | 31,447 | 47,368 | 24,644 | |||||||||||
TexNew Mex system | 14,566 | — | 12,302 | — | |||||||||||
Four Corners system | 60,115 | 44,808 | 56,079 | 45,232 | |||||||||||
Gathering (truck offloading): | |||||||||||||||
Permian/Delaware Basin system | 21,865 | 24,050 | 23,617 | 24,166 | |||||||||||
Four Corners system | 13,589 | 12,627 | 13,438 | 11,550 | |||||||||||
Terminalling, transportation and storage (bpd): | |||||||||||||||
Shipments into and out of storage (includes asphalt) | 377,698 | 387,633 | 391,842 | 381,371 | |||||||||||
Wholesale: | |||||||||||||||
Fuel gallons sold | 318,186 | 297,020 | 1,237,994 | 1,147,860 | |||||||||||
Fuel gallons sold to retail (included in fuel gallons sold, above) | 78,780 | 73,395 | 314,604 | 268,148 | |||||||||||
Fuel margin per gallon (2) | $ | 0.026 | $ | 0.024 | $ | 0.030 | $ | 0.022 | |||||||
Lubricant gallons sold | 2,728 | 2,919 | 11,697 | 12,082 | |||||||||||
Lubricant margin per gallon (3) | $ | 0.77 | $ | 0.83 | $ | 0.73 | $ | 0.86 | |||||||
Crude oil trucking volume (bpd) | 39,675 | 41,369 | 45,337 | 36,314 | |||||||||||
Average crude oil revenue per barrel | $ | 2.35 | $ | 2.79 | $ | 2.53 | $ | 2.90 | |||||||
(1) | Some barrels of crude oil movements to Western’s Gallup refinery are transported on more than one of our mainlines. Mainline movements for the Four Corners system include each barrel transported on each mainline. During the second quarter, we began shipping crude oil from the Four Corners system, through the TexNew Mex Pipeline System, to the Permian/Delaware system. Additional activity resulting from the opening of the TexNew Mex Pipeline System caused us to re-evaluate our method for measuring average Four Corners mainline movements. As such, we have adjusted our 2014 average daily activity on the Four Corners system for consistency with our 2015 method. |
(2) | Fuel margin per gallon is a function of the difference between 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. |
(3) | Lubricant margin per gallon is a measurement calculated by dividing the difference between lubricant sales, net of transportation charges, 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
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Statement of Operations Data: | |||||||||||||||
Net sales (including intersegment sales) | $ | 268,273 | $ | 303,514 | $ | 1,173,842 | $ | 1,395,903 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) | 224,011 | 259,749 | 987,045 | 1,233,632 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 34,032 | 29,353 | 135,310 | 118,468 | |||||||||||
Selling, general and administrative expenses | 3,313 | 3,499 | 12,949 | 11,461 | |||||||||||
Loss (gain) and impairments on disposal of assets, net | 176 | (14 | ) | 125 | (154 | ) | |||||||||
Depreciation and amortization | 3,699 | 2,912 | 14,692 | 11,733 | |||||||||||
Total operating costs and expenses | 265,231 | 295,499 | 1,150,121 | 1,375,140 | |||||||||||
Operating income | $ | 3,042 | $ | 8,015 | $ | 23,721 | $ | 20,763 | |||||||
Key Operating Statistics: | |||||||||||||||
Retail fuel gallons sold | 90,733 | 77,649 | 357,835 | 309,884 | |||||||||||
Average retail fuel sales price per gallon, net of excise taxes | $ | 1.78 | $ | 2.86 | $ | 2.02 | $ | 3.31 | |||||||
Average retail fuel cost per gallon, net of excise taxes | 1.59 | 2.61 | 1.82 | 3.11 | |||||||||||
Retail fuel margin per gallon (1) | 0.19 | 0.24 | 0.20 | 0.20 | |||||||||||
Merchandise sales | $ | 77,640 | $ | 66,993 | $ | 311,654 | $ | 266,677 | |||||||
Merchandise margin (2) | 29.1 | % | 28.8 | % | 29.4 | % | 28.8 | % | |||||||
Operating retail outlets at period end | 258 | 230 | |||||||||||||
Cardlock gallons sold | 15,495 | 16,185 | 65,508 | 67,420 | |||||||||||
Cardlock margin per gallon | $ | 0.127 | $ | 0.184 | $ | 0.163 | $ | 0.178 | |||||||
Operating cardlocks at period end | 52 | 50 | |||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per gallon data) | |||||||||||||||
Net Sales | |||||||||||||||
Retail fuel sales, net of excise taxes | $ | 161,306 | $ | 191,109 | $ | 722,722 | $ | 903,948 | |||||||
Merchandise sales | 77,640 | 66,993 | 311,654 | 266,677 | |||||||||||
Cardlock sales | 26,453 | 42,959 | 127,413 | 214,714 | |||||||||||
Other sales | 2,874 | 2,453 | 12,053 | 10,564 | |||||||||||
Net sales | $ | 268,273 | $ | 303,514 | $ | 1,173,842 | $ | 1,395,903 | |||||||
Cost of Products Sold | |||||||||||||||
Retail fuel cost of products sold, net of excise taxes | $ | 144,452 | $ | 172,169 | $ | 650,327 | $ | 840,811 | |||||||
Merchandise cost of products sold | 55,070 | 47,722 | 219,976 | 189,957 | |||||||||||
Cardlock cost of products sold | 24,429 | 39,833 | 116,506 | 202,489 | |||||||||||
Other cost of products sold | 60 | 25 | 236 | 375 | |||||||||||
Cost of products sold | $ | 224,011 | $ | 259,749 | $ | 987,045 | $ | 1,233,632 | |||||||
Retail fuel margin per gallon (1) | $ | 0.19 | $ | 0.24 | $ | 0.20 | $ | 0.20 | |||||||
(1) | Retail fuel margin per gallon is a measurement calculated by dividing the difference between retail fuel sales and cost of retail fuel sales for our retail segment by the number of gallons sold. Retail fuel margin per gallon is a measure frequently used in the convenience store industry to measure operating results related to retail 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 that are non-GAAP measures within the meaning of Regulation G under the Securities Exchange Act of 1934.
We present these non-GAAP measures to provide investors with additional information to analyze our performance from period to period. We believe it is useful for investors to understand our financial performance excluding these special items so that investors can see the operating trends underlying our business. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that we report in accordance with GAAP. These non-GAAP measures reflect subjective determinations by management and may differ from similarly titled non-GAAP measures presented by other companies.
Three Months Ended | |||||||
December 31, | |||||||
2015 | 2014 | ||||||
(In thousands, except per share data) | |||||||
Reported diluted earnings per share | $ | 0.14 | $ | 1.33 | |||
Income (loss) before income taxes | $ | 1,464 | $ | 213,736 | |||
Special items: | |||||||
Loss (gain) and impairments on disposal of assets, net | 208 | 7,591 | |||||
Unrealized loss (gain) from commodity hedging transactions, net (1) | 8,160 | (58,052 | ) | ||||
Net change in lower of cost or market inventory reserve (1) | 113,667 | 78,554 | |||||
Earnings before income taxes excluding special items | 123,499 | 241,829 | |||||
Recomputed income taxes after special items (2) | (28,737 | ) | (61,795 | ) | |||
Net income excluding special items | 94,762 | 180,034 | |||||
Net income attributable to non-controlling interests | 42,572 | 63,253 | |||||
Net income attributable to Western excluding special items | $ | 52,190 | $ | 116,781 | |||
Diluted earnings per share excluding special items | $ | 0.56 | $ | 1.19 | |||
(1) | Unrealized loss (gain) from commodity hedging transactions, net, includes $3.0 million and $5.1 million in unrealized losses for Western and NTI, respectively, for the three months ended December 31, 2015 and $62.0 million in unrealized gains and $3.9 million in unrealized losses for Western and NTI, respectively, for the three months ended December 31, 2014. Net change in lower of cost or market inventory reserve includes $40.7 million and $73.0 million for Western and NTI, respectively, for the three months ended December 31, 2015 and $4.9 million and $73.7 million, respectively, for Western and NTI for the three months ended December 31, 2014. |
(2) | We recompute income taxes after deducting special items and earnings attributable to non-controlling interests based on the year-to-date tax rate. |