Ultramar Diamond Shamrock Corp. Reports Record Results; Restart of No. 3 Crude Unit at Golden Eagle; Retail Improvement Program
SAN ANTONIO--April 26, 2001--Ultramar Diamond Shamrock Corp. today reported record net income for the first quarter 2001 of $136.7 million or $1.77 per basic share.For the same period last year the company reported net income of $69.1 million or $0.80 per basic share. This is the fifth consecutive quarter that UDS has posted record profits and the strongest quarterly profit since the merger of Ultramar and Diamond Shamrock in 1996.
Included in this year's results is a net after-tax gain of $4.2 million related to the sale of the company's Oklahoma crude oil gathering system. Before this gain, net income was $132.5 million or $1.71 per basic share.
Earnings before interest, income taxes, depreciation and amortization (EBITDA) in the quarter totaled $313.1 million compared to $206.7 million in the first quarter a year ago.
"UDS continues to deliver record earnings from good industry fundamentals, reliable operations and a strong competitive position," said Jean Gaulin, UDS chairman and chief executive officer. "Our geographic diversity combined with high refinery utilization produced the strong refining results we're reporting today. Our retail businesses in the Northeast reported good results as well, thanks to our strong competitive position in that market."
"The U.S. retail business continues to be impacted by low retail fuel margins and we are taking steps to improve our competitive position," said Chris Havens, executive vice president marketing. "The impact of increased competition, coupled with volatile wholesale product prices, have kept retail margins under pressure for the past 18 months and while significant improvements in the business productivity and general expense management have dampened the impact, we need to dig deeper to improve results.
"We have initiated a series of operational and organizational improvements aimed at lowering operating costs even further. Our target is $50 million in savings and revenue improvements and we expect to realize the full improvement in year 2002," added Havens.
The company restarted the No. 3 crude unit at its Golden Eagle refinery in early March according to plans announced at the time of the acquisition in August 2000.
"Our people can be proud of the work they've done in restarting this important unit," said Bill Klesse, executive vice president in charge of refining operations at UDS. "The restart of the crude unit will allow us to run more crude oil, increase the production of CARB gasoline and diesel, and raise total throughput at Golden Eagle to nearly 150,000 barrels per day."
Cash flows for the quarter were $2.92 per basic share compared to $1.82 per basic share in the first quarter of 2000. During the quarter, the company, through a combination of operating cash flows and short-term debt, bought back 17.1 million shares of common stock under its share repurchase program.
The buyback is being executed using a variety of methods including open market, direct and accelerated repurchases. The share repurchase program, as approved by the UDS Board, authorizes the company to repurchase $750 million worth of stock. In addition, the UDS Board also approved an annual $100 million repurchase program.
Shamrock Logistics LP successfully launched its initial public offering on April 10 with 5.2 million shares priced at $24.50 per share being sold to the public. The partnership owns and operates certain crude oil and refined product pipelines and terminals associated with Ultramar Diamond Shamrock's mid-continent refineries.
Commenting on the outlook for the second quarter, Gaulin noted, "Industry fundamentals are as strong as they have ever been at this point in the year. Inventories for both gasoline and distillate, especially reformulated gasoline, are near five-year lows. Given tight supplies and demand that remains strong, we would expect EBITDA to be between $400 million and $500 million for the second quarter. That translates into net income between $2.75 and $3.25 per basic share."
Public Invited to Listen, Live, to Analyst Conference Call
Via Internet
At 3:00 p.m. EST on Thursday, April 26, 2001, Ultramar Diamond Shamrock will broadcast, live, its conference call with analysts regarding first quarter 2001 results. To listen to the call, go to the Financial Information section of the Web site located at www.udscorp.com and select the "Live Webcast" link.
Ultramar Diamond Shamrock Corp. , with about $17.0 billion in annual revenues and more than 20,000 employees, is one of the largest independent refining and marketing companies in North America. The company operates seven refineries in the United States and Canada with a total throughput capacity of 850,000 barrels per day and has nearly 5,000 branded retail gasoline/convenience merchandise stores, the majority of which are branded Diamond Shamrock, Ultramar, Beacon or Total. The corporation also has growing petrochemicals and home heating oil businesses. Please visit our Web site at http://www.udscorp.com for more information including annual reports, press releases, SEC forms 10-K and 10-Q, and audio archives of recent conference calls.
Forward-Looking Statements
Certain statements in this press release may be considered to be "forward-looking statements" as that term is defined in The United States' Private Securities Litigation Reform Act of 1995, such as statements that include the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "guidance," "project," "outlook" or similar expressions, including statements regarding the adequacy of our cash flows, expected cash flows, expected future financial targets and margins, revenue growth, the continued availability and terms of financing, changes in the Company's ratings by the rating agencies and the timing and success of the re-capitalization. Such statements are not promises or guarantees, and are subject to risks and uncertainties which could cause actual results to differ materially from those suggested by any such statements. These statements are made as of the date hereof. We disclaim any obligation to update or supplement the information in this press release due to changed circumstances.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
CONSOLIDATED FINANCIAL INFORMATION
(unaudited, in millions, except per share amounts)
Three Month Ended March 31,
---------------------------
2001 2000
---------- -----------
SALES AND OTHER REVENUES $ 4,214.1 $ 3,645.4
Cost of products sold (2,784.3) (2,467.1)
Operating costs and other expenses (415.3) (306.3)
Taxes other than income taxes (702.2) (671.5)
Equity income from joint ventures 0.8 6.2
---------- -----------
EBITDA(a) 313.1 206.7
Gain on sale of assets 6.4 0.7
Interest expense, net (34.9) (26.6)
Depreciation and amortization (64.2) (62.1)
---------- -----------
INCOME BEFORE INCOME TAXES 220.4 118.7
Provision for income taxes (81.1) (47.0)
Dividend on preferred stock of a subsidiary (2.6) (2.6)
---------- -----------
NET INCOME $ 136.7 $ 69.1
========== ===========
Net income per share:
Basic $ 1.77 $ 0.80
Diluted $ 1.73 $ 0.80
Weighted average number of shares (in thousands)(b):
Basic 77,440 86,713
Diluted 78,883 86,814
BALANCE SHEET DATA As of March 31,
--------------------------
2001 2000
---------- ----------
Cash and cash equivalents $ 191.4 $ 96.3
Working capital 219.3 442.3
Property plant & equipment, net 3,596.4 3,008.8
Long-term debt, less current portion 1,917.8 1,532.0
Stockholders' equity 1,402.1 1,537.0
(a) Earnings before interest, income taxes, depreciation and
amortization (EBITDA) is defined as operating income plus equity
income from joint ventures less gain on sale of assets.
(b) Decrease in the weighted average number of shares in 2001 is due
to the shares re-purchased under the share buy-back program
implemented in February 2001.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
SCHEDULE OF EBITDA BY BUSINESS SEGMENT
(unaudited, in millions)
Three Months Ended March 31,
----------------------------
2001 2000
EBITDA by Business Segment -------- --------
Refining $ 305.7 $ 192.5
Retail -- US (2.8) 7.4
Retail -- NE 38.7 24.4
Petrochemical, NGL and Joint Ventures 1.5 8.8
-------- --------
Segment EBITDA Before
Administrative Expense 343.1 233.1
Administrative Expenses (30.0) (26.4)
-------- --------
Consolidated EBITDA $ 313.1 $ 206.7
======== ========
ULTRAMAR DIAMOND SHAMROCK CORPORATION
SCHEDULE OF DEPRECIATION AND AMORTIZATION BY BUSINESS SEGMENT
(unaudited, in millions)
Three Months Ended March 31,
----------------------------
2001 2000
------- -------
Depreciation and Amortization by Business Segment
Refining $ 42.8 $ 42.0
Retail -- US 13.4 12.5
Retail -- NE 4.9 4.8
Petrochemical and NGL -- 0.1
------- -------
Segment Depreciation and Amortization 61.1 59.4
Administrative Depreciation and Amortization 3.1 2.7
------- -------
Consolidated Depreciation and Amortization $ 64.2 $ 62.1
======= =======
ULTRAMAR DIAMOND SHAMROCK CORPORATION
OPERATING DATA
(unaudited)
First First
Quarter Quarter
2001 2000
------- -------
REFINING
--------
Mid-Continent Refineries
------------------------
Throughput (bpd) 371,600 353,000
Indicator spread -- G3/USGC 532 ($/bbl) 6.10 4.46
Refinery gross profit margin ($/bbl) 5.24 4.73
Operating cost ($/bbl) 2.74 1.92
West Coast Refineries(a)
------------------------
Throughput (bpd) 267,100 142,200
Indicator spread -- USWC 532 ($/bbl) 14.11 9.29
Refinery gross profit margin ($/bbl) 10.22 5.86
Operating cost ($/bbl) 4.07 1.65
Quebec Refinery
---------------
Throughput (bpd) 168,200 162,600
Indicator spread -- NYH 211 ($/bbl) 7.60 6.58
Refinery gross profit margin ($/bbl) 4.99 4.98
Operating cost ($/bbl) 0.80 0.87
WHOLESALE(b)
-----------
Volumes (bpd) 484,900 497,300
Margin (cents/gallon) 0.019 0.016
Operating cost ($/bbl) 0.014 0.017
RETAIL
------
US Retail
---------
Company operated retail outlets (average): 1,495 1,566
Company operated:
Fuel volume per store (gal/day) 4,446 4,110
Fuel margin (cents/gallon) 7.3 8.5
Merchandise sales per store ($/day) 1,800 1,768
Merchandise margin (% of sales) 27.5 28.2
NE Retail
---------
Fuel volume (bpd) 79,100 77,900
Fuel margin (cents/gallon) 26.8 22.2
Merchandise sales ($/day) 194,400 173,400
Merchandise margin (% of sales) 22.8 20.3
OVERALL
-------
ROCE%(c) 18.5 10.8
(a) On Aug. 31, 2000, the Company acquired the Golden Eagle refinery
which is included in the West Coast operations. For the quarter
ended March 31, 2001, Golden Eagle's throughput averaged 131,100
barrels per day and the refinery gross profit margin was $11.25
per barrel.
(b) Wholesale operations include sales to wholesale customers and to
company owned retail outlets.
(c) Based on return for last 12 months and average capital employed
during such period.