Western Refining Expecting Strong Retail 2012

Encouraged by recent same-store sales trends, performance of new sites

EL PASO, Texas -- Based on the company's 2011 performance, Jeff Stevens, president and CEO of Western Refining Inc., said during the company's fourth-quarter 2011 conference call that he is expecting 2012 to be a strong year for its retail segment.

"In our retail business in 2011, we successfully integrated 59 new sites, a 39% increase in our network in key areas, which are integrated with our refining and logistic assets. For the quarter and full year, same-store fuel volumes and merchandise sales were relatively flat; however, lower fuel margins and one-time costs associated with acquisition activity led to lower operating income. We are encouraged by our recent same-store sales trends and performance of our acquisition sites, and we are confident retail will have a strong year," he said.

In addition to the 59 sites added to the company's retail network, it added 10 sites to its cardlock network, "providing additional ratable demand for our refined products. These achievements set Western up to execute our plan for 2012," said Stevens.

In a statement, he said, "The year 2011 was extraordinary for Western Refining. We established an aggressive strategic plan at the beginning of the year and we delivered against that plan. The company took advantage of a strong margin environment, generated cash, reduced debt and implemented a crack spread hedging strategy that locked in margins on a portion of our 2012-14 production. These actions positioned us well and give us significantly more financial flexibility in 2012."

During the call, he also addressed the company's wholesale business, which "performed well in the quarter for the full-year 2011. Fuel gallons were up slightly in the quarter versus fourth-quarter 2010 and lube sales exceeded fourth-quarter 2010 by more than 26%. For the full-year 2011, fuel gallons were up more than 7% and lubricant sales were up 15% compared to the full-year 2010."

He added, "We're also seeing positive sales trends for the first two months of 2012. We continued to develop our Mid-Atlantic wholesale business, and with the refinery closures on the East Coast, we believe this business will become more valuable over time."

Western Refining reported fourth-quarter 2011 net income, excluding special items, of $48.6 million, or 48 cents per diluted share. This compares to a fourth-quarter 2010 loss, excluding special items, of $3.5 million, or four cents per diluted share. Including special items, the company recorded a fourth quarter 2011 net loss of $64.6 million, or 72 cents per diluted share as compared to a net loss of $7.6 million, or nine cents per diluted share for fourth-quarter 2010.

Fourth-quarter 2011 versus fourth-quarter 2010 improvement was due in large part to higher refining margins.

For the year ended December 31, 2011, the company reported net income, excluding special items, of $318.2 million, or $3.03 per diluted share versus a net loss, excluding special items, of $10.1 million, or 11 cents per diluted share for the year ended December 31, 2010. Including special items, Western recorded full-year 2011 net income of $132.7 million, or $1.34 per diluted share compared to full-year 2010 net loss of $17.0 million, or 19 cents per diluted share.

The company successfully completed a number of initiatives during 2011, including the sale of the Yorktown, Va., facility and a segment of an underutilized crude oil pipeline in southeastern New Mexico for $220 million.

Western Refining is an independent refining and marketing company with headquarters in El Paso, Texas. Western operates refineries in El Paso, and Gallup, N.M. Western's asset portfolio also includes stand-alone refined products terminals in Albuquerque and Bloomfield, N.M., asphalt terminals in Albuquerque, El Paso and Phoenix and Tucson, Ariz., retail stations and convenience stores in Arizona, Colorado, New Mexico and Texas, a fleet of crude oil and finished product truck transports and wholesale petroleum products operations in Arizona, California, Colorado, Maryland, Nevada, New Mexico, Texas and Virginia.