HOUSTON, Nov. 4 /PRNewswire-FirstCall/ -- Frontier Oil Corporation
(NYSE: FTO) announced net income of $23.8 million, or $0.87 per diluted share,
for the quarter ended September 30, 2004, compared to net income of
$3.8 million, or $0.14 per diluted share, for the third quarter of 2003. For
the nine months ended September 30, 2004, Frontier's net income totaled
$69.5 million, or $2.55 per diluted share, compared to a net loss of $870,000,
or $0.03 per share, for the nine-month period in 2003.
The stronger third quarter 2004 results are attributable to significant
improvements in the diesel crack spread, continued strength of the gasoline
crack spread, and wide crude oil differentials. The diesel crack spread
improved to an average of $8.10 per barrel in the third quarter of 2004
compared to an average of $4.75 per barrel for the third quarter of 2003. The
gasoline crack spread averaged $8.88 per barrel in the third quarter 2004,
slightly below the $9.70 per barrel average earned in the same period of 2003.
Crude oil spreads were considerably above historical averages in the third
quarter 2004 and subsequently have moved significantly higher through the
first two months of the fourth quarter. The WTI/WTS crude oil differential
averaged $2.95 per barrel for the third quarter 2004, compared to the $2.44
per barrel average in the third quarter of 2003. Frontier's light/heavy crude
oil differential averaged $9.28 per barrel for the third quarter 2004, well
above the average $6.81 per barrel in the same period of 2003. The 2003 third
quarter results were negatively impacted by $11.2 million, or $0.42 per share,
in after-tax expenses related to the failed merger with Holly Corporation.
Frontier's Chairman, President and CEO, James Gibbs, commented, "Third
quarter and year-to-date results are outstanding and we believe are indicative
of our future profitability. Although we expect there will always be short-
term volatility in our industry, we are extremely bullish on the future
profitability of the refining industry. Our crude oil differentials are at
record levels for this time of year, our diesel crack spread averaged above
$10 per barrel for the month of October and although the gasoline crack spread
is experiencing seasonal weakness, the fundamentals for our business are
extremely encouraging."
Frontier's cash balance of $122.7 million as of September 30, 2004
reflects an increase of $34.6 million from the $88.1 million cash balance as
of June 30, 2004. Short-term borrowings decreased slightly from $39.5 million
on June 30, 2004 to $36.3 million on September 30, 2004. On October 1, 2004
Frontier closed on the sale of $150 million of 6.625% Senior Notes due 2011.
These notes were issued to replace Frontier's existing $170 million 11.75%
Senior Notes due 2009. The approximately $20 million reduction in debt and
the 5.125% reduction in interest rate will lead to a significant decrease in
future interest expense.
The third quarter 2004 results include an after-tax inventory gain of
approximately $13.1 million, or $0.48 per share, compared to a loss of
$3.9 million, or $0.14 per share, for the same period of 2003. The nine
months ended September 30, 2004 include an after-tax inventory gain of
$27.9 million, or $1.02 per share, compared to a loss of $2.3 million, or
$0.09 per share, for the nine-month period ended September 30, 2003.
Conference Call
A conference call is scheduled for today, November 4, 2004, at 11:00 a.m.
eastern time, to discuss the financial results. To access the call, please
dial (888) 203-7667. For those individuals outside the United States, please
call (719) 955-1567. A recorded replay of the call may be heard through
November 18 by dialing (888) 203-1112 (international callers (719) 457-0820)
and entering the code 901156. In addition, the real-time conference call and
a recorded replay will be webcast by PR Newswire. To access the call or the
replay via the Internet, go to http://www.frontieroil.com and register from
the Investor Relations page of the site.
Frontier operates a 110,000 barrel-per-day refinery located in El Dorado,
Kansas, and a 46,000 barrel-per-day refinery located in Cheyenne, Wyoming, and
markets its refined products principally along the eastern slope of the Rocky
Mountains and in other neighboring plains states. Information about the
Company may be found on its web site http://www.frontieroil.com .
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning
strategic plans, expectations and objectives for future operations. All
statements, other than statements of historical facts, included in this press
release that address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future are forward-
looking statements. These statements are based on certain assumptions made by
the Company based on its experience and perception of historical trends,
current conditions, expected future developments and other factors it believes
are appropriate in the circumstances. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond the control
of the Company. Investors are cautioned that any such statements are not
guarantees of future performance and that actual results or developments may
differ materially from those projected in the forward-looking statements.
FRONTIER OIL CORPORATION
Nine Months Ended Three Months Ended
September 30 September 30
2004 2003 2004 2003
INCOME STATEMENT DATA
($000's except per share)
Revenues $2,058,312 $1,627,560 $785,076 $594,763
Refining operating
costs 1,881,975 1,550,460 727,121 551,218
Selling and general
expenses 20,921 14,926 7,075 5,132
Merger termination
and legal costs 3,820 3,953 157 3,953
Operating income
before depreciation 151,596 58,221 50,723 34,460
Depreciation 23,928 21,187 8,166 7,156
Operating income 127,668 37,034 42,557 27,304
Interest expense and
other financing costs 17,618 39,099 5,813 21,153
Interest income (890) (1,625) (485) (611)
Gain on involuntary
conversion of assets (594) 0 0 0
Provision for income
taxes 42,009 430 13,437 2,940
Net income (loss) $69,525 $(870) $23,792 $3,822
Net income (loss) per
diluted (basic) share $2.55 $(0.03) $0.87 $0.14
Average shares
outstanding (000's) 27,299 25,910 27,445 26,957
OTHER FINANCIAL
DATA ($000's)
Adjusted EBITDA (A) $152,190 $58,221 $50,723 $34,460
Cash flow before
changes in working
capital 125,942 30,989 40,799 21,986
Working capital
changes (18,766) (1,672) 4,759 7,355
Net cash provided by
operating activities 107,176 29,317 45,558 29,341
Net cash used by
investing activities (34,840) (26,756) (6,520) (7,193)
OPERATIONS
Consolidated
Operations (bpd)
Total charges 164,818 165,385 169,436 177,364
Gasoline yields 81,918 81,936 84,477 86,014
Diesel yields 52,487 53,188 55,057 57,321
Total sales 164,803 164,468 174,204 176,914
Refinery operating
margins information
($ per bbl)
Refined products
revenue $45.84 $36.20 $49.39 $36.51
Raw material,
freight and other
costs 38.09 31.21 41.89 30.89
Operating expenses
excluding
depreciation 3.59 3.32 3.48 2.98
Refinery depreciation 0.51 0.47 0.49 0.42
Light/Heavy crude spread
($ per bbl) (B) $8.75 $6.91 $9.28 $6.81
WTI/WTS Differential
($ per bbl) 3.04 2.67 2.95 2.44
BALANCE SHEET DATA
($000's) At September 30, 2004 At June 30, 2004
Cash, including cash
equivalents $122,741 $88,086
Working capital 129,315 91,786
Short-term and
current debt 36,250 39,500
Total long-term debt 168,853 168,796
Shareholders' equity 239,877 216,846
(A) Adjusted EBITDA represents income before interest expense, interest
income, merger financing termination costs (includes both interest
expense and income), income tax, and depreciation and amortization.
Adjusted EBITDA is not a calculation based upon generally accepted
accounting principles; however, the amounts included in the adjusted
EBITDA calculation are derived from amounts included in the
consolidated financial statements of the Company. Adjusted EBITDA
should not be considered as an alternative to net income or
operating income, as an indication of operating performance of the
Company or as an alternative to operating cash flow as a measure of
liquidity. Adjusted EBITDA is not necessarily comparable to
similarly titled measures of other companies. Adjusted EBITDA is
presented here because it enhances an investor's understanding of
Frontier's ability to satisfy principal and interest obligations
with respect to Frontier's indebtedness and to use cash for other
purposes, including capital expenditures. Adjusted EBITDA is also
used for internal analysis and as a basis for financial covenants.
Frontier's adjusted EBITDA for the nine and three months ended
September 30, 2004 and 2003 is reconciled to net income as follows:
Nine Months Ended Three Months Ended
September 30 September 30
2004 2003 2004 2003
(In Thousands)
Net income (loss) $69,525 $(870) $23,792 $3,822
Add provision for
income taxes 42,009 430 13,437 2,940
Add interest expense
and other financing
costs 17,618 20,749 5,813 6,590
Subtract interest income (890) (907) (485) (260)
Add merger financing
termination costs, net 0 17,632 0 14,212
Add depreciation and
amortization 23,928 21,187 8,166 7,156
Adjusted EBITDA $152,190 $58,221 $50,723 $34,460
(B) Average light/heavy crude oil spread is the differential between the
benchmark average West Texas Intermediate (WTI) crude priced at
Cushing, Oklahoma and the heavy crude oil priced delivered to the
Cheyenne Refinery. The light/heavy spread has been restated in
prior periods using WTI as the light crude oil in order to be
comparable with the WTI/WTS spread reported for the El Dorado
Refinery.
SOURCE Frontier Oil Corporation
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Related links:
http://www.frontieroil.com
Company News On-Call:
http://www.prnewswire.com/comp/118801.html
CONTACT:
Doug Aron of Frontier Oil Corporation,
+1-713-688-9600, ext. 145
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