EL PASO, Texas, May 5, 2011 (GLOBE NEWSWIRE) -- Western Refining, Inc. (NYSE:WNR) today reported net earnings, excluding special items, of $15.2 million, or $0.17 per diluted share for the first quarter ended March 31, 2011. On a GAAP basis, the Company reported first quarter 2011 net earnings of $12.2 million, or $0.13 per diluted share. These results compare to a first quarter 2010 net loss of $30.7 million or $0.35 per diluted share. A reconciliation of net income (loss) to net income (loss) excluding special items, for all periods shown, is included in the accompanying financial tables.
Adjusted EBITDA for the quarter was $95.8 million compared to Adjusted EBITDA of $26.2 million for the first quarter of 2010. The improved results for the quarter, compared to the same period in 2010, were primarily due to much stronger refining margins. The higher margins were the result of improved market conditions and the continued price advantage of WTI crude oil as compared to Brent crude oil. The strong results were partially offset by approximately 30 days of planned and unplanned downtime at the El Paso refinery during January and February.
Jeff Stevens, Western's President and Chief Executive Officer, said, "We are pleased with our first quarter results and the positive momentum that we continue to achieve, despite the unplanned, weather-related outage at the El Paso refinery in February. Our operational improvements over the last year and strong refining margins for inland refineries contributed to our solid earnings growth in the quarter."
During the quarter, the Company made continued progress on strengthening its balance sheet. The Company refinanced its term loan credit agreement which resulted in a reduction of its annualized cash interest expense by approximately $9.5 million, an extension of the loan's maturity from 2014 to 2017, and the elimination of all financial maintenance covenants.
Commenting on the second quarter, Stevens said, "We are very encouraged by the strong market conditions. Our refineries are running well and we believe Western is well positioned to capitalize on this on-going strong margin environment."
Conference Call Information
A conference call is scheduled for May 5, 2011, at 10:00 am 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: 55481727. The audio replay will be available through May 12, 2011, and can be accessed by dialing (800) 642-1687, passcode: 55481727.
A copy of this press release, together with the reconciliations of certain non-GAAP financial measures contained herein, can be accessed on the investor relations menu on Western's website, www.wnr.com.
Non-GAAP Financial Measures
In a number of places in the press release and related tables, we have excluded the impact of the non-cash loss on extinguishment of debt from our results of operations for the first quarter of 2011. We have excluded these amounts to better analyze changes in our business from period-to-period as this is a non-recurring charge.
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 Company's positive momentum, the strong margin environment, the Company's actions to strengthen its balance sheet, and the Company's positioning in the current margin environment. 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 of historical financial and operating data for the periods indicated below:
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(1) Excludes $1,100.9 million and $675.0 million of intercompany sales; $1,099.4 million and $673.7 million of intercompany cost of products sold; and $2.4 million and $1.3 million of intercompany direct operating expenses for the three months ended March 31, 2011 and 2010, respectively.
Cost of products sold included $36.5 million and $2.8 million in realized and unrealized economic hedging losses for the three months ended March 31, 2011 and 2010, respectively.
(2) Adjusted EBITDA represents earnings before interest expense, income tax expense, amortization of loan fees, depreciation, amortization, maintenance turnaround expense, and loss on extinguishment of debt. However, Adjusted EBITDA is not a recognized measurement under GAAP. Our management believes that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. In addition, our management believes that Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of Adjusted EBITDA generally eliminates the effects of financings, income taxes, and the accounting effects of significant turnaround activities (which many of our competitors capitalize and thereby exclude from their measures of EBITDA) and acquisitions, items that may vary for different companies for reasons unrelated to overall operating performance.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect our cash expenditures or future requirements for significant turnaround activities, capital expenditures, or contractual commitments;
- Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and
- our calculation of Adjusted EBITDA may differ from the Adjusted EBITDA calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. The following table reconciles net income (loss) to Adjusted EBITDA for the periods presented:
Refining Segment
The following tables present the segment financial data for our refining group, including other revenues and expenses not specific to a particular refinery:
The following tables set forth our summary refining throughput and production data for the periods presented below:
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(1) Includes sales of refined products sourced from our refinery production as well as refined products purchased from third parties.
(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 refineries' total throughput volumes for the respective periods presented. Economic hedging gains and losses included in the combined refining segment gross margin are not allocated to the individual refineries. Cost of products sold does not include any depreciation or amortization. Refinery gross margin is a non‑GAAP performance measure that we believe is important to investors in evaluating our refinery performance as a general indication of the amount above our cost of products that we are able to sell refined products. Each of the components used in this calculation (net sales and cost of products sold) can be reconciled directly to our statement of operations. Our calculation of refinery gross margin may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.
The following table reconciles combined gross profit for all refineries to combined gross margin for all refineries for the periods presented:
The following table reconciles gross profit for our Southwest refineries to gross margin for our Southwest refineries for the periods presented:
(4) 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.
(5) In September 2010, we temporarily suspended refining operations at our Yorktown refinery. Refinery production data for our Southwest Refineries is equal to All Refineries production data for the three months ended March 31, 2011. As Yorktown did not operate during the first quarter of 2011, there is no production data presented for the current period.
Wholesale Segment
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(1) Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales and cost of fuel sales for our wholesale segment by the number of gallons sold.
(2) Lubricant margin is a measurement calculated by dividing the difference between lubricant sales and lubricant cost of products sold by lubricant sales. Lubricant margin is a measure frequently used in the petroleum products wholesale industry to measure operating results related to lubricant sales.
(3) Our wholesale segment began selling finished product through our Yorktown facility during January 2011. The majority of finished products sold through our Yorktown terminal were purchased from third parties. Net sales of $263.0 million, cost of products sold of $250.5 million, and direct operating costs of $1.6 million were from new wholesale activities through our Yorktown facility without comparable activity in the prior period.
Retail Segment
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(1) Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales and cost of fuel sales for our retail segment by the number of gallons sold.
(2) Merchandise margin is a measurement calculated by dividing the difference between merchandise sales and merchandise cost of products sold by merchandise sales. Merchandise margin is a measure frequently used in the convenience store industry to measure operating results related to merchandise sales.
Reconciliation of Special Items
We present below certain additional financial measures that are non-GAAP measures within the meaning of Regulation G under the Securities 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.
CONTACT: Investor and Analyst Contact: Jeffrey S. Beyersdorfer (915) 534-1400 Media Contact: Gary Hanson (915) 534-1400
