Giant Industries, Inc. Announces Record First Quarter 2005 Net Earning

    Business Editors/Energy Writers

    SCOTTSDALE, Ariz.--(BUSINESS WIRE)--May 4, 2005--Giant Industries, Inc. (NYSE:GI) today reported net earnings for the first quarter ended March 31, 2005 of $10.1 million or $0.80 per diluted share. This compares to net earnings for the first quarter of 2004 of $4.5 million or $0.50 per diluted share.
    Fred Holliger, Giant's Chief Executive Officer, said, "We are pleased to be able to report record first quarter net earnings for the second consecutive year. Strong financial performances by our refining group and Phoenix Fuel contributed to the record earnings. Net earnings for the quarter were also positively impacted by a $2.1 million after-tax insurance reimbursement. Refining margins at our Four Corners refineries and Yorktown refinery were solid for the quarter and we believe that current refining fundamentals are comparable to the same time last year. Operating income at our Four Corners refineries was more-or-less even with the prior year level; however, Yorktown operating income was approximately twenty-two percent higher than the first quarter 2004 level."
    "Phoenix Fuel continued to perform well financially as they achieved growth across the board in the first quarter of 2005. Operating income in the first quarter of 2005 were up in excess of seventy-five percent over the prior year comparable quarter as wholesale fuel sales volumes increased in excess of six percent and cardlock fuel sales increased approximately thirteen percent. Phoenix Fuel continues to provide consistent cash flow and growth in the markets that it serves."
    "Retail operations profitability was negatively impacted by lower fuel margins in the first quarter of 2005. Operationally, our retail group continued to perform well as same store fuel volumes increased by more than five percent in the first quarter of 2005 compared to the first quarter of 2004. Merchandise sales increased about one percent in the quarter over last year's first quarter level. So far in the second quarter, retail fuel margins have strengthened and fuel volumes and merchandise sales continue to grow relative to the same time last year."
    Holliger continued, "In addition to our strong operating earnings, we also continued to strengthen our balance sheet. We recently completed the sale of approximately one million shares of common stock with the net proceeds to be used to redeem approximately $19 million of our 11% Senior Subordinated Notes on May 5, 2005. As a result of these transactions, we will now have reduced our debt from approximately $450 million to $274 million and improved our debt-to-total capitalization ratio from 76.8% to 52.4% since June 30, 2002, the month following the acquisition of the Yorktown refinery. As a result of our past debt reduction initiatives, we have reduced our interest expense as evidenced by the $2.4 million or 25% decrease in the first quarter of 2005 in comparison to the first quarter of 2004. The redemption of the 11% notes, mentioned above, will further reduce our interest expense on our Senior Subordinated Notes by approximately $2.0 million per year. Obviously, we have made great strides in improving our overall financial health and this remains an important goal in the future. We believe the significant improvement in our balance sheet, coupled with strong earnings, have now repositioned us to pursue growth opportunities to further improve shareholder value."
    Giant's senior management will hold a conference call at 1:00 p.m. EDT on May 5, 2005 to discuss this earnings release and provide an update on company operations. The conference call will be broadcast live on the company's website at www.giant.com.
    Giant Industries, Inc., headquartered in Scottsdale, Arizona, is a refiner and marketer of petroleum products. Giant owns and operates one Virginia and two New Mexico crude oil refineries, a crude oil gathering pipeline system based in Farmington, New Mexico, which services the New Mexico refineries, finished products distribution terminals in Albuquerque, New Mexico and Flagstaff, Arizona, a fleet of crude oil and finished product truck transports and a chain of retail service station/convenience stores in New Mexico, Colorado, and Arizona. Giant is also the parent Company of Phoenix Fuel Co., Inc., an Arizona wholesale petroleum products distributor. For more information, please visit Giant's website at www.giant.com.

    This press release contains forward-looking statements that involve known and unknown risks and uncertainties. Forward-looking statements are identified by words or phrases such as "believes," "expects," "anticipates," "estimates," "should," "could," "plans," "intends," "will," variations of such words and phrases, and other similar expressions. While these forward-looking statements are made in good faith, and reflect the Company's current judgment regarding such matters, actual results could vary materially from the forward-looking statements. Important factors that could cause actual results to differ from forward-looking statements include, but are not limited to: the risk that our refining fundamentals, including margins, will deteriorate, the risk that Phoenix Fuel will not continue to produce consistent cash flow and growth, the risk that retail fuel margins will not continue to strengthen and retail fuel volumes and merchandise sales will not continue to grow, the risk that we will incur additional debt in the future, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on behalf of the Company, are expressly qualified in their entirety by the foregoing. Forward-looking statements made by the Company represent its judgment on the dates such statements are made. The Company assumes no obligation to update any forward-looking statements to reflect new or changed events or circumstance.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands except shares and per share data) Three Months Ended March 31, ---------------------------------------------------------------------- 2005 2004 ----------------------------------------------- ----------- ---------- Net revenues $ 711,726 $ 540,807 Cost of products sold 625,790 460,767 ----------------------------------------------- ----------- ---------- Gross margin 85,936 80,040 Operating expenses 46,244 44,196 Depreciation and amortization 10,970 9,098 Selling, general and administrative expenses 7,799 8,200 Net gain on disposal of assets, including assets held for sale (13) (4) Gain from insurance settlement due to fire incident (3,492) - ----------------------------------------------- ----------- ---------- Operating income 24,428 18,550 Interest expense (6,993) (9,361) Amortization of financing costs (504) (958) Interest and investment income 120 40 ----------------------------------------------- ----------- ---------- Earnings from continuing operations before income taxes 17,051 8,271 Provision for income taxes 6,993 3,670 ----------------------------------------------- ----------- ---------- Earnings from continuing operations 10,058 4,601 Loss from discontinued operations, net of income tax benefit of $4 and $52 (7) (84) ----------------------------------------------- ----------- ---------- Net earnings $ 10,051 $ 4,517 ----------------------------------------------- ----------- ---------- Net earnings (loss) per common share: Basic Continuing operations $ 0.81 $ 0.52 Discontinued operations - (0.01) ----------------------------------------------- ----------- ---------- $ 0.81 $ 0.51 ----------------------------------------------- ----------- ---------- Assuming dilution Continuing operations $ 0.80 $ 0.51 Discontinued operations - (0.01) ----------------------------------------------- ----------- ---------- $ 0.80 $ 0.50 ----------------------------------------------- ----------- ---------- Weighted average number of shares outstanding: Basic 12,381,540 8,822,787 Assuming dilution 12,579,201 9,092,734 ----------------------------------------------- ----------- ----------

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands) ---------------------------------------------------------------------- March 31, December 2005 31, 2004 ---------------------------------------------------------------------- Assets Current assets $ 303,653 $ 232,005 -------------------------------------------------- --------- --------- Property, plant and equipment 682,546 671,851 Less accumulated depreciation and amortization (274,500) (265,475) -------------------------------------------------- --------- --------- 408,046 406,376 Other assets 85,809 64,025 -------------------------------------------------- --------- --------- Total Assets $ 797,508 $ 702,406 -------------------------------------------------- --------- --------- Liabilities and Stockholders' Equity Current liabilities $ 185,077 $ 128,833 Long-term debt 292,883 292,759 Deferred income taxes 46,549 41,039 Other liabilities and deferred income 24,117 23,336 Stockholders' equity 248,882 216,439 -------------------------------------------------- --------- --------- Total Liabilities and Stockholders' Equity $ 797,508 $ 702,406 -------------------------------------------------- --------- ---------

Certain reclassifications have been made to the year 2004 financial statements to conform to classifications used in 2005. These reclassifications had no effect on reported earnings or stockholders' equity.

OPERATING STATISTICS

1 Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1 Qtr. 2005 2004 2004 2004 2004 --------------------------------------------- Refining ------------------------- Four Corners Operations: Crude Oil/NGL Throughput (BPD) 28,810 29,088 29,271 26,463 28,280 Refinery Sourced Sales Barrels (BPD) 28,559 28,198 28,412 25,175 27,615 Avg. Crude Oil Costs ($/Bbl) $ 47.46 $ 47.18 $ 40.99 $ 35.97 $ 32.61 Refining Margins ($/Bbl) $ 7.86 $ 7.36 $ 8.14 $ 12.44 $ 8.35 Retail Fuel Volumes Sold as a % of Four Corners Refinery's Sourced Sales Barrels 37% 37% 38% 40% 36%

Yorktown Operations: Crude Oil/NGL Throughput (BPD) 65,740 52,941 53,991 67,639 61,200 Refinery Sourced Sales Barrels (BPD) 62,726 56,854 53,585 69,862 63,824 Avg. Crude Oil Costs ($/Bbl) $ 44.96 $ 44.55 $ 38.43 $ 35.53 $ 32.68 Refining Margins ($/Bbl) $ 6.78 $ 4.56 $ 6.01 $ 6.20 $ 5.55

Retail(1) ------------------------- Fuel Gallons Sold (000's) 39,469 40,253 41,244 38,439 37,681 Fuel Margins ($/gal) $ 0.11 $ 0.17 $ 0.18 $ 0.21 $ 0.16 Merchandise Sales ($ in 000's) $ 31,287 $ 32,635 $ 36,214 $ 34,541 $ 30,844 Merchandise Margins 27% 26% 20% 24% 27% Number of Operating Units at End of Period 125 124 125 125 127

Phoenix Fuel ------------------------- Fuel Gallons Sold (000's) 120,865 116,569 119,253 124,342 112,844 Fuel Margins ($/gal) $ 0.06 $ 0.06 $ 0.05 $ 0.06 $ 0.05 Lubricant Sales ($ in 000's) $ 8,412 $ 7,962 $ 7,933 $ 7,827 $ 6,875 Lubricant Margins 14% 13% 13% 13% 13% ------------------------- -------- -------- -------- -------- -------- Operating Income (Loss) (before corporate allocations) (in 000's) ------------------------- Refining - Four Corners Operations $ 6,285 $ 2,899 $ 8,150 $ 13,704 $ 6,161 - Yorktown Operations 17,650 4,854 11,652 21,811 14,435 Retail(1) (1,679) 1,658 1,428 2,614 988 Phoenix Fuel 3,699 3,194 2,216 2,963 2,113 Corporate (5,043) (6,922) (6,879) (7,256) (5,269) Net gain (loss) on disposal/write-down of assets(1)(2) 3,505 2,455 1,883 (549) (14) ------------------------- -------- -------- -------- -------- -------- Total(1) $ 24,417 $ 8,138 $ 18,450 $ 33,287 $ 18,414 ------------------------- -------- -------- -------- -------- -------- Capital Expenditures (in 000's)(3) ------------------------- Refining - Four Corners Operations(4) $ 1,167 $ 1,302 $ 5,915 $ 15,637 $ 744 - Yorktown Operations 9,837 12,635 10,523 1,981 1,872 Retail 780 4,220 919 438 258 Phoenix Fuel 458 414 500 465 328 Corporate 584 259 135 115 11 ------------------------- -------- -------- -------- -------- -------- Total $ 12,826 $ 18,830 $ 17,992 $ 18,636 $ 3,213 ------------------------- -------- -------- -------- -------- --------

Selected Financial Data --------------------------------------------------------------------- March 31, 2005 December 31, 2004 Working Capital (In Thousands) $ 118,576 $ 103,172 Current Ratio 1.64:1 1.80:1 Long-Term Debt As A Percent of Total Capital (5) 54.1% 57.5% Net Debt As A Percent of Total Net Capital (6) 50.5% 55.4% Book Value Per Share (7) $ 18.63 $ 17.55 Net cash provided by operating activities $ 23,015 $ 76,514 ---------------------------------------------------------------------

Share Price Data (NYSE: GI) ----------------------------------------------------- High Low Close ---- --- ----- 2005 1st Quarter $31.81 $23.54 $25.70 2004 4th Quarter $28.98 $22.00 $26.51 2004 3rd Quarter $27.25 $20.29 $24.30 2004 2nd Quarter $22.16 $15.37 $22.00 2004 1st Quarter $25.44 $11.71 $20.70 -----------------------------------------------------

(1) Includes discontinued operations.

(2) Includes insurance proceeds related to the Ciniza fire incident.

(3) Excludes Yorktown refinery acquisition contingent payments.

(4) Includes disbursements related to the Ciniza fire incident.

(5) Total capital represents long-term debt plus total stockholders' equity.

(6) Net debt represents long-term debt less cash and cash equivalents. Total net capital represents long-term debt less cash and cash equivalents plus total stockholders' equity.

(7) Book value per share represents total stockholders' equity divided by number of common shares outstanding.

--30--BRM/se*

CONTACT: Giant Industries, Inc. Mark B. Cox, 480-585-8888

KEYWORD: COLORADO ARIZONA NEW MEXICO INDUSTRY KEYWORD: OIL/GAS ENERGY UTILITIES EARNINGS CONFERENCE CALLS SOURCE: Giant Industries, Inc.

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