EL PASO, Texas, March 3, 2011 (GLOBE NEWSWIRE) -- Western Refining, Inc. (NYSE:WNR) today reported for the fourth quarter of 2010 a net loss, excluding special items, of $3.5 million, or $0.04 per diluted share. This compares to a fourth quarter 2009 net loss, excluding special items, of $51.1 million, or $0.58 per diluted share. On a GAAP basis, the Company reported a fourth quarter 2010 net loss of $7.6 million, or $0.09 per diluted share, compared to the fourth quarter 2009 net loss of $97.5 million, or $1.11 per diluted share. The quarter-over-quarter improvement was due in large part to higher refining margins and continued benefits generated from the Company's cost savings initiatives. A reconciliation of reported earnings excluding special items, for all periods shown, is included in the accompanying financial tables.
For the year ended December 31, 2010, the Company reported a net loss, excluding special items, of $10.1 million, or $0.11 per diluted share. This compares to full-year 2009 net loss, excluding special items, of $44.5 million, or $0.56 per diluted share. The Company reported on a GAAP basis a net loss of $17.0 million, or $0.19 per diluted share, for the full-year 2010, compared to a net loss of $350.6 million, or $4.43 per diluted share, for the full-year 2009.
The Company reported a fourth quarter Adjusted EBITDA, as defined and calculated in the accompanying financial tables, of $63.5 million compared to ($24.7) million for the same quarter in 2009. Adjusted EBITDA for the full-year 2010 was $288.1 million compared to $191.4 million for 2009.
Jeff Stevens, Western's President and Chief Executive Officer, said, "Throughout 2010, we took a number of steps to improve our financial and operating performance. We believe the actions we took, coupled with the strength of refining margins in our markets, position Western well for 2011."
During 2010, the Company pursued several initiatives to enhance and streamline operations, strengthen its balance sheet, and improve liquidity, including:
- Completing the consolidation of its two Four Corners refineries into its Gallup, New Mexico refinery.
- Achieving its goal of $50 million in annual cost savings through a number of successful initiatives which management believes are sustainable going forward.
- Temporarily suspending refining operations at its Yorktown refinery while continuing to successfully operate the products terminal and storage facility and supplying the region with finished products.
- Amending and extending its revolving credit facility to eliminate financial maintenance covenants under the revolver, lower the interest rate, increase borrowing capacity, and extend the maturity.
- Reducing total debt by $47.1 million.
Commenting on current market conditions, Stevens said, "We are currently seeing an extraordinary refining margin environment during a time of year when we traditionally experience seasonally weaker margins. As an inland refiner, the widening Brent/West Texas Intermediate (WTI) spreads, strengthening crude oil contango, and expanding sweet/sour differentials are all contributing to historically high margins. We are encouraged by the very strong refining margins as we start 2011 and are optimistic that Western is well positioned as we move into the higher demand driving season."
Conference Call Information
A conference call is scheduled for March 3, 2011, at 10:00 a.m. ET to discuss Western's financial results. The call can be accessed at Western's website, www.wnr.com. The call can also be heard by dialing (866) 566-8590, passcode: 25992210. The audio replay will be available through March 10, 2011, and can be accessed by dialing (800) 642-1687, passcode: 25992210.
A copy of this press release can be accessed on the Investor Relations section on Western's website, www.wnr.com.
Non-GAAP Financial Measures
In a number of places in the press release and related tables, we have excluded the impact of the non-cash goodwill and other impairment losses from our results of operations for the fourth quarters of 2010 and 2009 and years ended December 31, 2010 and 2009. We have also excluded fourth quarter and full year 2010 charges related to the temporary suspension of our refining operations at the Yorktown facility. Additionally, we have excluded certain fourth quarter and full year 2009 litigation charges. We have excluded these amounts to better analyze changes in our business from period-to-period as these are non-recurring charges.
About Western Refining
Western Refining, Inc. is an independent refining and marketing company headquartered in El Paso, Texas. Western operates refineries in El Paso, and Gallup, New Mexico. Western's asset portfolio also includes refined products terminals in Albuquerque and Bloomfield, New Mexico and Yorktown, Virginia; asphalt terminals in Phoenix and Tucson, Arizona, Albuquerque, and El Paso; retail service stations and convenience stores in Arizona, Colorado, and New Mexico; a fleet of crude oil and finished product truck transports; and wholesale petroleum products operations in Arizona, California, Colorado, Nevada, New Mexico, Texas, and Utah. More information about the Company is available at www.wnr.com.
The Western Refining, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7615
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements. The forward-looking statements contained herein include statements about the strengthening refining market, the Company's position therein, the sustainability of certain cost savings, our expectations regarding margins and spreads, and our outlook for 2011. These statements are subject to the general risks inherent in our business. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, Western's business and operations involve numerous risks and uncertainties, many of which are beyond Western's control, which could result in Western's expectations not being realized or otherwise materially affect Western's financial condition, results of operations, and cash flows. Additional information relating to the uncertainties affecting Western's business is contained in its filings with the Securities and Exchange Commission. The forward-looking statements are only as of the date made, and Western does not undertake any obligation to (and expressly disclaims any obligation to) update any forward-looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events.
Consolidated Financial Data
The following tables set forth our summary historical financial and operating data for the periods indicated below:
(1) Excludes $977.0 million, $644.4 million, $3,294.0 million, and $2,095.0 million of intercompany sales, $974.9 million, $642.4 million, $3,287.5 million, and $2,088.8 million of intercompany cost of products sold, and $2.1 million, $2.0 million, $6.5 million, and $6.2 million of intercompany direct operating expenses for the three and twelve months ended December 31, 2010 and 2009, respectively.
(2) Adjusted EBITDA represents earnings before interest expense, income tax expense, amortization of loan fees, write-off of unamortized loan fees, loss on early extinguishment of debt, depreciation, amortization, goodwill and other impairment losses, maintenance turnaround expense, and Lower of Cost or Market, or LCM, inventory reserve adjustments. Adjusted EBITDA is not, however, a recognized measurement under United States generally accepted accounting principles, or GAAP. Our management believes that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. In addition, our management believes that Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of Adjusted EBITDA generally eliminates the effects of financings, income taxes, the accounting effects of significant turnaround activities (that many of our competitors capitalize and thereby exclude from their measures of EBITDA), acquisitions, and other items that may vary for different companies for reasons unrelated to overall operating performance.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect our cash expenditures or future requirements for significant turnaround activities, capital expenditures, or contractual commitments;
- Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and
- Our calculation of Adjusted EBITDA may differ from the Adjusted EBITDA calculations of other companies in our industry, limiting its usefulness as a comparative measure.
- Because of these limitations, Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. The following table reconciles net income (loss) to Adjusted EBITDA for the periods presented:
Refining Segment
The following table reconciles gross profit to refinery gross margin for the periods presented:
The following tables set forth our summary refining throughput and production data for the periods presented below:
(1) Cost of products sold includes non-cash LCM recoveries of $61.0 million for 2009 related to valuation of our Yorktown inventories to net realizable market values in 2008. The non-cash adjustment resulted in a corresponding increase of $0.78 in combined refinery gross margins for the year ended December 31, 2009. The non-cash adjustment resulted in a corresponding increase of $2.66 in Yorktown's refinery gross margins for the year ended December 31, 2009.
(2) Includes sales of refined products sourced from our refinery production as well as refined products purchased from third parties.
(3) Total refinery throughput includes crude oil, other feedstocks, and blendstocks.
(4) Refinery gross margin is a per barrel measurement calculated by dividing the difference between net sales and cost of products sold by our refineries' total throughput volumes for the respective periods presented. Economic hedging gains and losses included in the combined refining segment gross margin are not allocated to the individual refineries. Cost of products sold does not include any depreciation or amortization. Refinery gross margin is a non-GAAP performance measure that we believe is important to investors in evaluating our refinery performance as a general indication of the amount above our cost of products that we are able to sell refined products. Each of the components used in this calculation (net sales and cost of products sold) can be reconciled directly to our statement of operations. Our calculation of refinery gross margin may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.
(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, and combined refinery direct operating expenses include transportation and other related expenses not specific to a particular refinery.
(6) Until November 2009, Four Corners refining was comprised of two separate facilities; the Bloomfield refinery and the Gallup refinery. In late November 2009, we consolidated refining operations into the Gallup facility and indefinitely suspended refining operations at the Bloomfield refinery. We calculated total barrels per day sales volume, refinery production, and refinery throughput related to the Four Corners refineries by dividing the year ended December 31, 2009 by 365 days.
(7) In September 2010, we temporarily suspended refining operations at our Yorktown refinery. We calculated Yorktown total barrels per day refinery production and refinery throughput by dividing total volumes by 273 days. Total Yorktown sales volume includes refined product sales, following the temporary suspension through December 31, 2010. We calculated Yorktown's barrels per day sales volume by dividing total refinery sales volume by 365 days.
For our combined refining operating statistics, we calculated total barrels per day sales volume, refinery production, refinery throughput, and refinery products yields by dividing all refineries' operations by 365 days.
Wholesale Segment
The following table reconciles fuel sales and cost of fuel sales to net sales and cost of products sold:
(1) Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales and cost of fuel sales for our wholesale segment by the number of gallons sold. 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 lubricants 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 lubricants sales.
Retail Segment
The following table reconciles fuel sales and cost of fuel sales to net sales and cost of products sold:
(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 retail 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.
Reconciliations of Special Items
We present below certain additional financial measures that are non-GAAP measures within the meaning of Regulation G under the Securities Exchange Act of 1934.
We present these non-GAAP measures to provide investors with additional information to analyze our performance from period to period. We believe that 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.
(1) During the second quarter of 2009, we determined that the goodwill in four of our six reporting units was impaired, which resulted in a pre-tax and after-tax goodwill impairment loss of $299.6 million in the quarter. The goodwill impairment loss is included in the refining, retail, and wholesale segments' operating income but is excluded from the operating results presented here in order to make information comparable between periods.
(2) During the fourth quarter of 2009, we indefinitely suspended the refining operations at our Bloomfield facility, which resulted in a pre-tax impairment loss of $52.8 million related to certain of the Bloomfield long-lived and intangible assets. The other impairment losses are included in the refining segment's operating income but are excluded from the operating results presented here in order to make information comparable between periods. During the fourth quarter of 2010, the Company recorded an additional impairment charge of $9.1 million resulting from its fourth quarter 2010 analysis of specific assets that the Company had previously planned to relocate from the Bloomfield facility to the Gallup refinery. Based on the current operations of the Gallup refinery, the Company has determined that one of the three assets set aside for relocation to Gallup was no longer required to attain the Company's desired levels of production. During the third quarter of 2010, the Company permanently closed its product distribution terminal in Flagstaff, Arizona and recorded an impairment charge of $3.8 million.
(3) During the fourth quarter of 2009, we recorded a $20.0 million pre-tax charge from the settlement of a lawsuit with Statoil Marketing & Trading (US) Inc. in which we were the defendant. We made a cash payment of $10.0 million in March 2010, with the remainder to be paid within the next two years. The settlement charge is excluded from the refining segment's operating income but is included in the operating results presented here in order to make information comparable between periods.
(4) During the fourth quarter of 2008, we recorded an adjustment to reduce the carrying value of our inventories to the lower of cost or market, which resulted in a pre-tax increase of cost of products sold of $61.0 million. During the first through the third quarters of 2009, reversing adjustments to value our inventories at the lower of cost or market were recorded, which resulted in a pre-tax decrease in cost of products sold for $61.0 million. This reversal is included in the refining segment's operating income but is excluded from the operating results presented here in order to make that information comparable between periods.
(5) During the third quarter of 2010, we temporarily suspended refining operations at our Yorktown facility. In connection with this change in operations, we recorded one-time termination benefits of $3.0 million and other refinery costs relating to the temporary suspension of operations at Yorktown of $1.5 million in the third and fourth quarters of 2010. These were non-recurring charges.
CONTACT: Investor and Analyst Contact: Jeffrey S. Beyersdorfer (915) 534-1400 Media Contact: Gary Hanson (915) 534-1400