Pennzoil-Quaker State Reports Full-Year and Q4 2000 Results
16 February 2001
Pennzoil-Quaker State Company Reports Full-Year and Fourth Quarter 2000 Results
HOUSTON, Feb. 15 Pennzoil-Quaker State Company
today announced full-year 2000 net income of $49.4 million before nonrecurring
charges, or 63 cents per basic share, compared to net income of $44.5 million,
or 57 cents per basic share in 1999, as restated to reflect the previously
announced change in inventory accounting method. Total revenue was
$3.2 billion for 2000, a 7.2 percent increase compared to 1999.
The full-year results include a fourth quarter 2000 recurring net loss of
$4.9 million or six cents per share, versus a recurring net loss of two cents
per share a year ago. Including nonrecurring charges related to asset
impairments, liabilities incurred in connection with the pending sale of the
Shreveport refinery, and merger and restructuring costs, the reported net loss
was $101.3 million or $1.29 per share for the fourth quarter and $86.2 million
or $1.10 per share for the full year.
"Throughout 2000, we experienced an unprecedented rise in the cost of
basic raw materials and consequently some tough market conditions," said James
J. Postl, president and chief executive officer. "Gasoline prices
skyrocketed, causing motorists to cut back on driving, resulting in fewer oil
changes and a limited budget for the purchase of discretionary automotive
products. The rise in crude prices and decline in key foreign currencies
slowed the growth of the company's international business. In response to
these challenges, Pennzoil-Quaker State Company implemented the appropriate
price increases and accelerated cost cutting initiatives to weather the
economic storm."
Lubricants and Consumer Products: For the full-year 2000, lubricants and
consumer products, including international operations, reported operating
income of $201.6 million excluding nonrecurring charges, a 2.2 percent
increase compared to $197.4 million in 1999. Total revenue was $2 billion,
5.1 percent above the previous year's $1.9 billion.
Recurring operating income for this segment was $33.5 million in the
fourth quarter versus $45.7 million last year. Fourth quarter revenue
increased 5.1 percent to $473.1 million, driven by a 15.2 percent increase
from consumer products and a 22.4 percent increase from international.
Lubricants' revenue increased 3.8 percent versus a year ago.
Pennzoil(R) motor oil is entering its 15th consecutive year as America's
number one selling motor oil with an average 12-month market share of
22.4 percent, up 0.6 points versus prior year. Quaker State(R) motor oil is
the number two selling motor oil in the United States with an average market
share of 14.1 percent.
Jiffy Lube International: For the full-year 2000, Jiffy Lube reported
operating income of $27.9 million excluding nonrecurring charges, a
59.4 percent increase compared to $17.5 million in 1999. Total revenue for
2000 was $341.0 million, a decrease of 20.6 percent compared to $429.3 million
in 1999.
Recurring operating income for Jiffy Lube in the fourth quarter was
$7.7 million, a 67.4 percent increase from $4.6 million last year. Comparable
store sales were up 4.8 percent systemwide in the quarter. Revenues were
$82.7 million, an 11.3 percent decrease from the fourth quarter a year ago due
to the sale of company-owned stores to franchisees. The year-over-year
improvement in operating income highlights the continued turnaround begun late
in 1999 at the nation's number one fast lube operation. Jiffy Lube has
generated consistently higher company center comparable sales while increasing
royalty and rental income due to the greater number of franchise stores.
Excel: Due principally to higher base oil prices, revenues for the
full-year 2000 related to intersegment sales by Excel to lubricants and
consumer products combined with Excel's equity share of income from the
company's investment in Excel paralubes, totaled $185.7 million, a 47.8
percent increase over 1999. Recurring operating income for this segment
increased to $31.6 million, up $16.5 million from a year ago, primarily due to
higher base oil margins.
Recurring operating income for this segment was $0.6 million in the fourth
quarter compared to $5.1 million in 1999. The year over year decline was the
result of a scheduled turnaround that halted production for half of the
quarter. This shutdown resulted in lower total revenues before intersegment
sales eliminations of $23.9 million, a 39.1 percent decrease from $39.3
million for the fourth quarter of 1999.
Base Oil & Specialty Products: For the full-year 2000, revenue increased
25.4 percent while recurring operating loss decreased $4.2 million from a year
ago to $2.4 million due primarily to lower overhead expenses.
This segment reported a recurring operating loss in the fourth quarter of
$3.3 million compared to a recurring operating loss of $15.0 million in 1999,
reflecting reduced losses due to asset sales and lower overhead expenses.
Total revenue was $267.4 million, a 4.0 percent decrease from $278.4 million
for the fourth quarter of 1999. Pennzoil-Quaker State Company plans to
complete its divestiture of its Base Oil and Specialty Products segment in
2001.
The following are the unaudited results of operations for the quarter and
twelve months ended December 31, 2000 and 1999.
Three Months Ended Twelve Months Ended
December 31 December 31
2000 1999 2000 1999
(Expressed in thousands except per share amounts)
REVENUES
Lubricants and
Consumer Products $473,123 $450,073 $2,001,389 $1,904,517
Base Oil and Specialty
Products 267,397 278,377 1,094,265 872,523
Jiffy Lube 82,673 93,221 340,996 429,252
Excel [A] 23,937 39,290 185,733 125,658
Other 111 (1,830) 5,303 (4,937)
Intersegment sales (80,546) (94,077) (423,645) (338,081)
Total revenues $766,695 $765,054 $3,204,041 $2,988,932
OPERATING INCOME
Lubricants and
Consumer Products $10,612 $37,512 $171,145 $171,691
Base Oil and Specialty
Products (3,329) (17,352) (16,166) (17,301)
Jiffy Lube 4,794 (15,239) 23,591 (16,435)
Excel [A] 592 5,111 31,589 15,112
Charges Related to
Asset Disposals (131,332) (493,910) (131,332) (493,910)
Other 1,396 (1,792) 480 3,366
Total operating
income (loss) (117,267) (485,670) 79,307 (337,477)
Corporate administrative
expenses 27,376 23,105 113,056 81,134
Interest charges, net 25,319 21,623 94,895 80,588
Loss before income tax (169,962) (530,398) (128,644) (499,199)
Income tax benefit (68,631) (207,249) (42,470) (188,056)
NET LOSS $(101,331) $(323,149) $(86,174) $(311,143)
BASIC AND DILUTED
LOSS PER SHARE $(1.29) $(4.14) $(1.10) $(4.00)
AVERAGE SHARES
OUTSTANDING
BASIC 78,698 78,094 78,468 77,850
DILUTED 78,698 78,094 78,468 77,850
END OF PERIOD SHARES
OUTSTANDING 78,744 78,286 78,744 78,286
[A] Operating income for Excel includes partnership income accounted for
using the equity method. Excel revenues totaling $24.6 million and
$36.6 million for the quarters ended December 31, 2000 and 1999,
respectively, and $166.8 million and $118.4 million for the twelve
months ended December 31, 2000 and 1999, respectively, are
eliminated in intersegment sales.
The following reconciles unaudited results of operations with recurring
results for the three months ended December 31, 2000.
Three Months Ended
December 31, 2000
Nonrecurring
Reported Items Recurring
(Expressed in millions except per
share amounts)
OPERATING INCOME
Lubricants and Consumer
Products $10.6 $22.9 [A] $33.5
Base Oil and Specialty Products (134.6) 131.3 [B] (3.3)
Jiffy Lube 4.8 2.9 [C] 7.7
Excel 0.6 --- 0.6
Other 1.4 --- 1.4
Total operating income
(loss) (117.2) 157.1 39.9
Corporate administrative expenses 27.4 (6.2)[D] 21.2
Interest charges, net 25.3 --- 25.3
Loss before income tax (169.9) 163.3 (6.6)
Income tax provision (benefit) (68.6) 66.9 (1.7)
NET LOSS $(101.3) $96.4 $(4.9)
BASIC AND DILUTED
LOSS PER SHARE $(1.29) $1.23 $(0.06)
Explanation of Nonrecurring Items
[A] Lubricants and Consumer Products
One-time merger costs 22.9
[B] Base Oil and Specialty Products
Charges related to asset disposals 131.3
[C] Jiffy Lube
One-time merger costs 2.9
[D] Corporate and administrative
One-time merger costs 6.2
The following reconciles unaudited results of operations with recurring
results for the twelve months ended December 31, 2000.
Twelve Months Ended
December 31, 2000
Nonrecurring
Reported Items Recurring
(Expressed in millions except per
share amounts)
OPERATING INCOME
Lubricants and Consumer
Products $171.1 $30.5 [A] $201.6
Base Oil and Specialty Products (147.5) 145.1 [B] (2.4)
Jiffy Lube 23.6 4.3 [C] 27.9
Excel 31.6 --- 31.6
Other 0.5 --- 0.5
Total operating income 79.3 179.9 259.2
Corporate administrative expenses 113.1 (44.2)[D] 68.9
Interest charges, net 94.9 --- 94.9
Income (loss) before income tax (128.7) 224.1 95.4
Income tax provision (benefit) (42.5) 88.5 46.0
NET INCOME (LOSS) $(86.2) $135.6 $49.4
BASIC AND DILUTED
EARNINGS (LOSS) PER SHARE $(1.10) $1.73 $0.63
Explanation of Nonrecurring Items
[A] Lubricants and Consumer Products
One-time merger costs 30.5
[B] Base Oil and Specialty Products
Charges related to asset
disposals 131.3
Restructuring costs 0.8
Costs associated with Shreveport
fire 13.0
145.1
[C] Jiffy Lube
One-time merger costs 4.3
[D] Corporate and administrative
G&A cost reduction project 34.6
One-time merger costs 9.6
44.2
PENNZOIL - QUAKER STATE COMPANY
OPERATING HIGHLIGHTS
(UNAUDITED)
Three Months Ended % Twelve Months Ended %
December 31 Change December 31 Change
2000 1999 2000 1999
LUBRICANTS AND
CONSUMER PRODUCTS
Total recurring
revenues
(in thousands):
Lubricants $341,245 $328,662 3.8% $1,426,023 $1,382,702 3.1%
Consumer
Products 81,326 70,566 15.2% 347,200 309,346 12.2%
International 65,389 53,433 22.4% 254,780 215,123 18.4%
Eliminations
& Other (1,134) (2,588) N/A (12,912) (2,654) N/A
Total
recurring
revenues $486,826 $450,073 8.2% $2,015,091 $1,904,517 5.8%
Recurring
operating
income
(in thousands):
Lubricants $26,606 $33,685 -21.0% $154,846 $148,182 4.5%
Consumer
Products 7,141 8,340 -14.4% 35,516 35,146 1.1%
International (193) 3,664 N/A 11,237 14,026 N/A
Total
recurring
operating
income $33,554 $45,689 -26.6% $201,599 $197,354 2.2%
JIFFY LUBE
Domestic
systemwide
sales (in
thousands) $297,085 $291,138 2.0% $1,185,690 $1,100,524 7.7%
Same center
sales Jiffy
Lube (in
thousands) $282,638 $269,763 4.8% $1,112,034 $1,055,022 5.4%
Systemwide
centers open 2,143 2,144 0.0% 2,143 2,144 0.0%
BASE OIL AND
SPECIALTY PRODUCTS
Shreveport raw
materials
processed
(bbls per day) 45,267 50,298 -10.0% 41,734 47,843 -12.8%
Shreveport
average
refiner's
margin
($ per bbl) $2.23 $2.79 -20.1% $4.19 $6.02 -30.4%
WTI Crude Oil
-average price $31.85 $24.52 29.9% $30.19 $19.23 57.0%
EXCEL
Base oil
production
(bbls per day) 4,553 9,784 -53.5% 8,652 9,041 -4.3%
Average base
oil margin
($ per bbl) $22.24 $15.38 44.6% $19.88 $15.98 24.4%
PENNZOIL-QUAKER STATE COMPANY
RECURRING RESULTS, RESTATED FOR CHANGE IN INVENTORY ACCOUNTING
(Expressed in millions, except per share amounts)
CONSOLIDATED STATEMENT OF RECURRING INCOME
Pro Forma
1998 Q199 Q299 Q399 Q499 1999
Net sales $2,963.8 $698.0 $746.5 $747.5 $759.3 $2,951.3
Other income, net 69.0 6.1 13.4 12.4 5.7 37.6
Total revenue 3,032.8 704.1 759.9 759.9 765.0 2,988.9
Cost of sales 2,108.6 507.1 525.8 545.9 587.0 2,165.8
Selling, general
& administrative 671.4 134.8 130.7 126.4 123.0 514.9
Depreciation &
amortization 136.6 33.5 30.4 31.7 27.8 123.4
Taxes other than
income 12.2 4.4 3.4 4.6 4.6 17.0
Total 2,928.8 679.8 690.3 708.6 742.4 2,821.1
Earnings/(loss)
before interest
and taxes 104.0 24.3 69.6 51.3 22.6 167.8
Interest charges 65.9 17.7 21.1 20.2 21.6 80.6
Income tax/
(benefit) 19.6 4.3 21.5 14.2 2.7 42.7
Net Income $18.5 $2.3 $27.0 $16.9 $(1.7) $44.5
Earnings per
share $0.24 $0.03 $0.35 $0.21 $(0.02) $0.57
PENNZOIL-QUAKER STATE COMPANY
RECURRING RESULTS, RESTATED FOR CHANGE IN INVENTORY ACCOUNTING
(Expressed in millions, except per share amounts)
CONSOLIDATED STATEMENT OF RECURRING INCOME CONTINUED
Q100 Q200 Q300 Q400 2000
Net sales $770.3 $842.1 $776.2 $770.3 $3,158.9
Other income, net 13.1 12.6 22.5 10.9 59.1
Total revenue 783.4 854.7 798.7 781.2 3,218.0
Cost of sales 568.9 635.1 592.0 598.8 2,394.8
Selling, general &
administrative 131.4 128.4 120.8 134.9 515.5
Depreciation &
amortization 25.9 24.2 24.8 24.3 99.2
Taxes other than income 4.3 4.0 5.4 4.5 18.2
Total 730.5 791.7 743.0 762.5 3,027.7
Earnings/(loss) before
interest and taxes 52.9 63.0 55.7 18.7 190.3
Interest charges 21.6 23.6 24.4 25.3 94.9
Income tax/(benefit) 13.9 17.1 16.7 (1.7) 46.0
Net Income $17.4 $22.3 $14.6 $(4.9) $49.4
Earnings per share $0.22 $0.28 $0.19 $(0.06) $0.63
CONSOLIDATED STATEMENT OF RECURRING INCOME BY SEGMENT
Pro Forma
Description 1998 Q199 Q299 Q399 Q499 1999
Income before interest and
income tax
Lubricants and consumer
products $155.7 $36.6 $61.6 $53.4 $45.7 $197.3
Jiffy Lube International 15.0 2.9 4.1 5.9 4.6 17.5
Base oil and specialty
products (7.4) (2.5) 4.1 6.8 (15.0) (6.6)
Excel (A) --- (0.7) 6.3 4.4 5.1 15.1
Other 0.2 3.5 7.2 (5.6) (1.8) 3.3
Total operating income 163.5 39.8 83.3 64.9 38.6 226.6
Corporate administrative
expense (59.5) (15.5) (13.7) (13.6) (16.0) (58.8)
Earnings/(loss) before
interest and taxes 104.0 24.3 69.6 51.3 22.6 167.8
Interest charges 65.9 17.7 21.1 20.2 21.6 80.6
Income tax 19.6 4.3 21.5 14.2 2.7 42.7
Net income/(loss) $18.5 $2.3 $27.0 $16.9 $(1.7) $44.5
Earnings per share $0.24 $0.03 $0.35 $0.21 $(0.02) $0.57
(A) In 1998, Excel IBIT was included in the base oil and specialty
products segment.
CONSOLIDATED STATEMENT OF RECURRING INCOME BY SEGMENT CONTINUED
Description Q100 Q200 Q300 Q400 2000
Income before interest and income
tax
Lubricants and consumer
products $53.0 $64.9 $50.2 $33.5 $201.6
Jiffy Lube International 3.7 8.6 7.9 7.7 27.9
Base oil and specialty
products 7.6 (4.1) (2.6) (3.3) (2.4)
Excel (A) 5.5 13.6 11.9 0.6 31.6
Other (1.3) (3.2) 3.6 1.4 0.5
Total operating income 68.5 79.8 71.0 39.9 259.2
Corporate administrative
expense (15.6) (16.8) (15.3) (21.2) (68.9)
Earnings/(loss) before
interest and taxes 52.9 63.0 55.7 18.7 190.3
Interest charges 21.6 23.6 24.4 25.3 94.9
Income tax 13.9 17.1 16.7 (1.7) 46.0
Net income/(loss) $17.4 $22.3 $14.6 $(4.9) $49.4
Earnings per share $0.22 $0.28 $0.19 $(0.06) $0.63
(A) In 1998, Excel IBIT was included in the base oil and specialty
products segment.