SCOTTSDALE, Ariz. -- Giant Industries Inc. has reported net earnings of $46.6 million, or $3.38 per diluted share for the third quarter ended Sept. 30, 2005. Net earnings were $6 million, or 48 cents per diluted share in third-quarter 2004. The company reported net earnings of $77.3 million, or $5.80 per diluted share, for the first nine months of 2005 compared to net earnings of $15.5 million, or $1.41 per diluted share in 2004.
Giant's chairman and CEO, Fred Holliger, said, Strong operating and financial performances from each of our strategic business [image-nocss] units contributed to the overall financial results in the third quarter. While two hurricanes had a negative impact on the supply of refined products nationwide, we had solid operating performance at our refineries throughout the quarter. The tightened supply and strong demand contributed to exceptional refining margins, and we were pleased to supply the gasoline and distillate requirements of both our Four Corners and East Coast customers.
He added, The refining industry requires significant capital commitments for ongoing operations as well as to meet government mandated environmental expenditures. We currently estimate that we will spend in excess of $100 million to produce ultra-low-sulfur gasoline and diesel and satisfy other regulatory mandates. In addition, our working capital requirements have more than doubled this year because of higher crude oil and finished product prices. The improved earnings and cash flow from operations over the past several quarters have placed us in a position to meet these capital requirements, improve the return on capital employed in our refining business, and enable us to consider opportunities for further enhancing shareholder value from the historically low returns in the industry.
Concerning the retail side, Holliger said, In the third quarter, our retail operations continued to see growth in fuel volumes and merchandise sales. Same-store fuel volumes increased approximately 3% and same store merchandise sales increased approximately 6% over the prior-year third-quarter level. Throughout the quarter, we also experienced improvement in both fuel and merchandise margins. All of these factors contributed to increased profitability from our retail operations.
He said, Phoenix Fuel continued to experience strong demand for gasoline and diesel in both wholesale and cardlock operations. These volumes, combined with improved fuel margins, contributed to increased earnings versus the prior year level.
Holliger continued, In July, we announced the acquisition of Dial Oil Co., one of the premier wholesale distributors of gasoline, diesel and lubricants in New Mexico, with operations throughout the Southwest. We are very pleased with this growth opportunity as Dial is complementing our Phoenix Fuel and retail operations and its financial contribution is exceeding our original expectations.
He concluded, We are moving forward with our plans to place our recently acquired crude oil pipeline back into service. Currently, we anticipate that we will begin hydrotesting the pipeline prior to the end of year and subsequent construction activity should begin early next year. We anticipate that we should have the pipeline operational before the end of 2006. As previously noted, when operational the pipeline has sufficient capacity to allow us to again operate both Four Corners refineries at maximum rates.
Giant, headquartered in Scottsdale, Ariz., is a refiner and marketer that owns and operates one Virginia and two New Mexico crude oil refineries, a crude oil gathering pipeline system based in Farmington, N.M., which services the New Mexico refineries, finished products distribution terminals in Albuquerque, N.M., and Flagstaff, Ariz., 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. and Dial Oil Co., both of which are wholesale petroleum products distributors.
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