Western Refining Reports Fourth Quarter and Full Year 2013 Results

Western Refining Reports Fourth Quarter and Full Year 2013 Results    *Completed IPO of Western Refining Logistics, LP   *Acquired general partner interests in Northern Tier Energy LP   *Paid fourth quarter dividend of $0.22 per share  EL PASO, Texas, Feb. 27, 2014 (GLOBE NEWSWIRE) -- Western Refining, Inc. (NYSE:WNR) today reported fourth quarter 2013 net income, excluding special items, of $57.3 million, or $0.60 per diluted share. This compares to fourth quarter 2012 net income, excluding special items, of $155.7 million, or $1.45 per diluted share. Including special items, the Company recorded fourth quarter 2013 net loss attributable to Western Refining, Inc. of $7.3 million, or $(0.09) per diluted share as compared to net income of $207.6 million, or $1.92 per diluted share for the fourth quarter of 2012. The special items for the fourth quarter of 2013 primarily included a non-cash unrealized pre-tax hedging loss of $100.6 million. Western's financial results reflect the consolidation of financial results of both Western Refining Logistics, LP (NYSE:WNRL), a fee-based master limited partnership of which Western owns the general partner and approximately 65% of the limited partnership interests and Northern Tier Energy LP (NYSE:NTI), a variable distribution master limited partnership of which Western owns the general partner and 38.7% of the limited partnership interests.  For the year ended December 31, 2013, the Company reported net income, excluding special items, of $313.7 million, or $3.15 per diluted share as compared to net income, excluding special items, of $552.3 million, or $5.08 per diluted share for the year ended December 31, 2012. Including special items, Western recorded full year 2013 net income attributable to Western Refining, Inc. of $276.0 million, or $2.79 per diluted share compared to full year 2012 net income of $398.9 million, or $3.71 per diluted share.  A reconciliation of reported earnings and description of special items can be found in the accompanying financial tables.  The Company successfully completed a number of strategic initiatives during 2013:    *began operation of the crude gathering system in the fast-growing Permian     Basin   *expanded crude oil gathering capabilities in the Four Corners region   *completed the IPO of Western Refining Logistics, LP   *completed the strategic investment in Northern Tier Energy LP   *returned $305.3 million in cash to shareholders from dividends and share     repurchases  Jeff Stevens, Western's President and Chief Executive Officer, said, "Western had a truly transformational year in 2013. In the fourth quarter, we continued to benefit from our refinery locations which have both direct pipeline access to cost-advantaged crude oils and service areas with strong refined product values. We launched WNRL as a platform to grow our logistics business, and acquired NTI to further diversify our asset base and expand our direct pipeline access to cost-advantaged crude sources. We also implemented a number of successful capital projects and returned cash to shareholders. We will continue to focus on growing the earnings power of the Company and delivering long-term shareholder value."  Excluding WNRL and NTI, total debt as of December 31, 2013, was $1,108.2 million and cash was $298.3million resulting in net debt of $810.0million.  Stevens concluded, "We successfully achieved our ambitious goals that we set for 2013.As we look to the first quarter of 2014, we are seeing widening Midland/Cushing differentials, similar to what we saw in early 2013.We continue to grow our logistics business by expanding our direct pipeline access to cost-advantaged crude oils from some of the fastest growing basins in North America.As always, we will continue to focus on safety and reliability while continuing to increase value to our shareholders."  Conference Call Information  The management teams of Western Refining and Northern Tier Energy will hold a joint conference call to discuss financial results for the fourth quarter and full year ending December 31, 2013.The conference call is scheduled for Thursday,February27, 2014, at 10:00 a.m. ET. A slide presentation will also be available for reference during the conference call. The call, press release and slide presentation can be accessed on the Investor Relations section on Western's website, www.wnr.com. The call can also be heard by dialing (866) 566-8590 or (702) 224-9819, passcode: 31406191. The audio replay will be available two hours after the end of the call through March 6, 2014, by dialing (800) 585-8367 or (404) 537-3406, passcode: 31406191.  Non-GAAP Financial Measures  In a number of places in the press release and related tables, we have excluded the impact of gains, losses,and impairments on disposal of assets, the impact of the non-cash unrealized net gains and losses from our commodity hedging activities and the non-cash loss on extinguishment of debt. We believe it is useful for investors to understand our financial performance excluding these items so that investors can see the operating trends underlying our business. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that we report in accordance with GAAP.  About Western Refining  Western Refining, Inc. is an independent refining and marketing company headquartered in El Paso, Texas. The refining segment operates refineries in El Paso, and Gallup, New Mexico. The Wholesale segment includes a fleet of crude oil and finished product truck transports, and wholesale petroleum products operations in Arizona, California, Colorado, Georgia, Maryland, Nevada, New Mexico, Texas, and Virginia. The retail segment includes retail service stations and convenience stores in Arizona, Colorado, New Mexico, and Texas.  Western Refining, Inc. owns the general partner and approximately 65% of the limited partnership interest of Western Refining Logistics, LP (NYSE:WNRL).Western Refining, Inc. also owns the general partner and approximately 39% of the limited partnership interest in Northern Tier Energy LP (NYSE:NTI).  More information about Western Refining is available at www.wnr.com.  Cautionary Statement on Forward-Looking Statements  This press release contains forward-looking statements covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained herein include statements about: our commitment to return cash to shareholders; continued focus on safety and reliability; expectations for margins; growth of crude production in basins in North America; our ability to access cost-advantaged crude sources; ability to realize anticipated benefits of our acquisitions and strategic initiatives; the continued growth of our logistics capabilities; the attractiveness of our refinery locations; budgeted capital expenditures and the effectiveness of such capital expenditures; and the impact of the Midland/Cushing price differential on our El Paso refinery crude oil acquisition costs. These statements are subject to the general risks inherent in the Company's business. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized, or otherwise materially affect our financial condition, results of operations, and cash flows. Additional information relating to the uncertainties affecting Western's business is contained in its filings with the Securities and Exchange Commission. The forward-looking statements are only as of the date made, and Western does not undertake any obligation to (and expressly disclaims any obligation to) update any forward looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events.  Consolidated Financial Data  The following tables set forth our summary historical financial and operating data for the periods indicated below:                                   Three Months Ended    Year Ended                                  December 31,          December 31,                                  2013 (4)   2012       2013 (4)    2012                                  (In thousands, except per share data) Statements of Operations Data                                     Net sales (1)                     $3,022,281 $2,248,257 $10,086,070 $9,503,134 Operating costs and expenses:                                     Cost of products sold (exclusive of depreciation and amortization) 2,728,532  1,710,775  8,690,222   8,054,385 (1) Direct operating expenses (exclusive of depreciation and    164,641    122,813    523,836     483,070 amortization) (1) Selling, general and              52,252     34,545     137,031     114,628 administrative expenses (Gain) loss on disposal of        2,035      —          (4,989)     (1,891) assets, net Maintenance turnaround expense    4,151      13,763     50,249      47,140 Depreciation and amortization     38,638     24,799     117,848     93,907 Total operating costs and         2,990,249  1,906,695  9,514,197   8,791,239 expenses Operating income                  32,032     341,562    571,873     711,895 Other income (expense):                                           Interest income                   205        136        746         696 Interest expense and other        (21,939)   (17,419)   (68,040)    (81,349) financing costs Amortization of loan fees         (1,899)    (1,641)    (6,541)     (6,860) Loss on extinguishment of debt    (1)        —          (46,773)    (7,654) Other, net                        1,822      (278)      2,214       359 Income before income taxes        10,220     322,360    453,479     617,087 Provision for income taxes        6,012      (114,773)  (153,925)   (218,202) Net income                        16,232     207,587    299,554     398,885 Less net income attributed to     23,560     —          23,560      — non-controlling interest Net income (loss) attributable to $(7,328)   $207,587   $275,994    $398,885 Western Basic earnings (loss) per share   $(0.09)    $2.35      $3.35       $4.42 Diluted earnings (loss) per share $(0.09)    $1.92      $2.79       $3.71 (2) Weighted average basic shares     79,720     87,589     82,248      89,270 outstanding Weighted average dilutive shares  79,720     110,250    104,904     111,822 outstanding Cash Flow Data                                                    Net cash provided by (used in):                                   Operating activities              $92,880    $320,056   $442,293    $916,353 Investing activities              (756,703)  (71,418)   (897,025)   18,506 Financing activities              760,752    (304,515)  468,835     (651,721) Other Data                                                        Adjusted EBITDA (3)               $179,494   $298,463   $754,839    $1,083,669 Capital expenditures              57,888     71,434     205,677     202,157 Balance Sheet Data (at end of                                     period) Cash and cash equivalents                             $468,070    $453,967 Working capital                                       451,094     559,213 Total assets                                          5,517,920   2,480,407 Total debt and lease financing                        1,411,517   499,863 obligation Total equity                                          2,570,587   909,070  (1)Excludes $1,024.8million, $4,277.8million, $1,099.0million, and $4,909.4million of intercompany sales; $1,012.0million, $4,265.0million, $1,096.4million, and $4,901.5million of intercompany cost of products sold; and $4.1million, $12.8million, $2.6million and $7.9million, of intercompany direct operating expenses for the three and twelve months ended December31, 2013 and 2012, respectively.  (2)Our computation of diluted earnings(loss) per share potentially includes our Convertible Senior Notes and our restricted shares and share units. If determined to be dilutive to period earnings, these securities are included in the denominator of our diluted earnings per share calculation. For purposes of the diluted earnings (loss) per share calculation, we assumed issuance of 0.2million restricted shares and share units and assumed issuance of 22.5million shares related to our Convertible Senior Notes for the twelve months ended December31, 2013. Our Convertible Senior Notes and our restricted shares and share units were determined to be anti-dilutive for the three months ended December31, 2013 and as such were not included in our computation of diluted earnings (loss) per share. We assumed issuance of 0.6million and 0.5million restricted shares and share units for the three and twelve months ended December31, 2012, respectively, and assumed issuance of 22.1million shares related to the Convertible Senior Notes, respectively for both periods.  (3) Adjusted EBITDA represents earnings before interest expense and other financing costs, amortization of loan fees, provision for income taxes, depreciation, amortization, maintenance turnaround expense, and certain other non-cash income and expense items. However, Adjusted EBITDA is not a recognized measurement under United States generally accepted accounting principles ("GAAP"). Our management believes that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. In addition, our management believes that Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of Adjusted EBITDA generally eliminates the effects of financings, income taxes, the accounting effects of significant turnaround activities (that many of our competitors capitalize and thereby exclude from their measures of EBITDA), and certain non-cash charges that are items that may vary for different companies for reasons unrelated to overall operating performance.  Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:    *Adjusted EBITDA does not reflect our cash expenditures or future     requirements for significant turnaround activities, capital expenditures,     or contractual commitments;   *Adjusted EBITDA does not reflect the interest expense or the cash     requirements necessary to service interest or principal payments on our     debt;   *Adjusted EBITDA does not reflect changes in, or cash requirements for, our     working capital needs; and   *Adjusted EBITDA, as we calculate it, may differ from the Adjusted EBITDA     calculations of other companies in our industry, thereby limiting its     usefulness as a comparative measure.  Because of these limitations, Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. The following table reconciles net income to Adjusted EBITDA for the periods presented:                                         Three Months Ended Twelve Months Ended                                        December31,       December31,                                        2013 (4)  2012     2013 (4) 2012                                        (In thousands) Net income (loss) attributable to       $(7,328)  $207,587 $275,994 $398,885 Western Net income attributed to                23,560    —        23,560   — non-controlling interest Interest expense and other financing    21,939    17,419   68,040   81,349 costs Amortization of loan fees               1,899     1,641    6,541    6,860 Provision for income taxes              (6,012)   114,773  153,925  218,202 Depreciation and amortization           38,638    24,799   117,848  93,907 Maintenance turnaround expense          4,151     13,763   50,249   47,140 Loss (gain) on disposal of assets, net  2,035     —        (4,989)  — Loss on extinguishment of debt          1         —        46,773   7,654 Unrealized loss (gain) on commodity     100,611   (81,519) 16,898   229,672 hedging transactions Adjusted EBITDA                         $179,494  $298,463 $754,839 $1,083,669  (4)The information presented includes the results of operations of NTI beginning November 12, 2013, the date the transactions contemplated by the Purchase Agreement were consummated. Additionally, the information presented includes the financial results for WNRL from the period beginning October 16, 2013 through the year ended December 31, 2013.  Consolidating Financial Data  The following tables set forth our consolidating historical financial data for the periods presented below.                                        Three Months Ended Year Ended                                       December 31,       December 31,                                       2013      2012     2013       2012                                       (In thousands, except per share data) Operating Income (Loss)                                            Refining                               $7,503    $350,777 $565,107   $735,742 Wholesale                              5,346     9,953    29,539     31,011 Retail                                 893       2,974    10,103     16,111 Corporate and other                    (27,985)  (22,142) (79,151)   (70,969) Total Western                          $(14,243) $341,562 $525,598   $711,895 WNRL (1)                               8,917     —        8,917      — NTI (2)                                37,358    —        37,358     — Operating income                       $32,032   $341,562 $571,873   $711,895                                                                   Depreciation and Amortization                                      Total Western                          $25,222   $24,799  $104,432   $93,907 WNRL (1)                               2,676     —        2,676      — NTI (2)                                10,740    —        10,740     — Depreciation and amortization expense  $38,638   $24,799  $117,848   $93,907                                                                   Capital Expenditures                                               Total Western                          $47,194   $71,434  $194,983   $202,157 WNRL (1)                               2,810     —        2,810      — NTI (2)                                7,884     —        7,884      — Capital expenditures                   $57,888   $71,434  $205,677   $202,157                                                                   Balance Sheet Data (at end of period)                              Cash and cash equivalents                                          Total Western                                           $298,256   $453,967 WNRL                                                    84,000     — NTI                                                     85,814     — Cash and cash equivalents                               $468,070   $453,967                                                                   Total debt                                                         Total Western                                           $1,108,238 $499,863 WNRL                                                    —          — NTI                                                     278,369    — Total debt                                              $1,386,607 $499,863                                                                   Total debt to capitalization ratio (3)                  55.3%      35.5%                                                                   Total working capital                                              Total Western                                           $259,082   $559,213 WNRL                                                    85,182     — NTI                                                     106,830    — Total working capital                                   $451,094   $559,213  (1)WNRL financial data represents financial results for the period beginning October 16, 2013 through December31, 2013.  (2)NTI financial data represents financial results for the period beginning November 12, 2013 through December31, 2013.  (3)Calculation of total debt to capitalization ratio excludes NTI debt of $278.4million and total equity of$1,676.5million attributable to non-controlling interest.  Refining Segment  El Paso and Gallup Refineries and Related Operations                                    Three Months Ended    Year Ended                                   December31,          December31,                                   2013       2012       2013       2012                                   (In thousands, except per barrel data) Statement of Operations Data:                                     Net sales (including intersegment  $1,919,619 $1,923,146 $7,693,829 $8,340,178 sales) Operating costs and expenses:                                     Cost of products sold (exclusive of depreciation and amortization)  1,804,050  1,446,878  6,656,778  7,133,308 (5) Direct operating expenses (exclusive of depreciation and     74,391     83,123     312,497    320,659 amortization) Selling, general and               7,128      7,858      28,485     27,136 administrative expenses (Gain) loss on disposal of         2,025      —          (4,999)    (1,382) assets,net Maintenance turnaround expense     4,151      13,763     50,249     47,140 Depreciation and amortization      20,371     20,747     85,712     77,575 Total operating costs and expenses 1,912,116  1,572,369  7,128,722  7,604,436 Operating income                   $7,503     $350,777   $565,107   $735,742 Key Operating Statistics                                          Total sales volume (bpd) (1)       184,790    173,726    176,653    184,086 Total refinery production (bpd)    154,908    149,842    147,793    147,461 Total refinery throughput (bpd)    157,252    152,280    150,429    149,809 (2) Per barrel of throughput:                                         Refinery gross margin (3) (5)      $7.99      $34.00     $18.89     $22.01 Refinery gross margin excluding    13.87      30.74      18.87      28.40 hedging activities (3) (5) Refinery gross margin excluding    9.82       34.00      19.37      22.01 fees paid to WNRL (3) (6) Gross profit (3) (5)               6.58       32.51      17.33      20.60 Direct operating expenses (4)      5.14       5.93       5.69       5.85 Direct operating expenses          5.45       5.93       5.38       5.85 including WNRL expenses (4) (7)  El Paso and Gallup Refineries                                     Three Months Ended Year Ended                                    December 31,       December 31,                                    2013      2012     2013    2012 Key Operating Statistics                                     Refinery product yields (bpd):                               Gasoline                            81,821    78,516   78,568  76,536 Diesel and jet fuel                 62,852    61,497   59,580  61,224 Residuum                            5,616     5,873    5,445   5,655 Other                               4,619     3,956    4,200   4,046 Total refinery production (bpd)     154,908   149,842  147,793 147,461 Refinery throughput (bpd):                                   Sweet crude oil                     124,460   119,187  117,289 115,345 Sour or heavy crude oil             24,907    26,665   25,195  24,792 Other feedstocks and blendstocks    7,885     6,428    7,945   9,672 Total refinery throughput (bpd) (2) 157,252   152,280  150,429 149,809  El Paso Refinery                                             Three Months Ended Year Ended                                            December31,       December31,                                            2013      2012     2013    2012 Key Operating Statistics                                             Refinery product yields (bpd):                                       Gasoline                                    66,323    64,637   61,893  61,669 Diesel and jet fuel                         56,244    55,056   52,600  54,600 Residuum                                    5,616     5,873    5,445   5,655 Other                                       3,858     3,417    3,442   3,280 Total refinery production (bpd)             132,041   128,983  123,380 125,204 Refinery throughput (bpd):                                           Sweet crude oil                             101,538   98,184   93,654  94,404 Sour crude oil                              24,907    26,665   25,195  24,792 Other feedstocks and blendstocks            7,278     5,936    6,488   7,734 Total refinery throughput (bpd) (2)         133,723   130,785  125,337 126,930 Total sales volume (bpd) (1)                148,437   142,671  141,894 151,352 Per barrel of throughput:                                            Refinery gross margin (3) (5)               $13.85    $30.77   $18.74  $28.25 Refinery gross margin excluding fees paid   15.30     30.77    19.13   28.25 to WNRL (3) (6) Direct operating expenses (4)               3.97      4.36     4.30    4.50 Direct operating expenses including WNRL    4.26      4.36     4.38    4.50 expenses (4) (7)  Gallup Refinery                                               Three Months Ended Year Ended                                              December31,       December31,                                              2013      2012     2013   2012 Key Operating Statistics                                              Refinery product yields (bpd):                                        Gasoline                                      15,498    13,879   16,675 14,867 Diesel and jet fuel                           6,608     6,441    6,980  6,624 Other                                         761       539      758    766 Total refinery production (bpd)               22,867    20,859   24,413 22,257 Refinery throughput (bpd):                                            Sweet crude oil                               22,922    21,003   23,635 20,941 Other feedstocks and blendstocks              607       492      1,457  1,938 Total refinery throughput (bpd) (2)           23,529    21,495   25,092 22,879 Total sales volume (bpd) (1)                  36,353    31,055   34,759 32,718 Per barrel of throughput:                                             Refinery gross margin (3) (5)                 $14.43    $30.26   $18.94 $28.25 Refinery gross margin excluding fees paid to  17.89     30.26    19.76  28.25 WNRL (3) (6) Direct operating expenses (4)                 11.24     11.43    10.13  9.60 Direct operating expenses including WNRL      12.18     11.43    10.36  9.60 expenses (4) (7)  (1)Sales volume includes sales of refined products sourced primarily from our refinery production as well as refined products purchased from third parties. We purchase additional refined products from third parties to supplement supply to our customers. These products are similar to the products that we currently manufacture and represented 14.44% and 13.83% of our total consolidated sales volumes for the years ended December31, 2013 and 2012, respectively. The majority of the purchased refined products are distributed through our wholesale refined product sales activities in the Mid-Atlantic region where we satisfy our refined product customer sales requirements through a third-party supply agreement.  (2) Total refinery throughput includes crude oil, other feedstocks and blendstocks.  (3)Refinery gross margin is a per barrel measurement calculated by dividing the difference between net sales and cost of products sold by our refineries' total throughput volumes for the respective periods presented. Net realized and net non-cash unrealized economic hedging gains and losses included in the combined refining segment gross margin are not allocated to the individual refineries. Cost of products sold does not include any depreciation or amortization. Refinery gross margin is a non-GAAP performance measure that we believe is important to investors in evaluating our refinery performance as a general indication of the amount above our cost of products that we are able to sell refined products. Each of the components used in this calculation (net sales and cost of products sold) can be reconciled directly to our statement of operations. Our calculation of refinery gross margin may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.  The following table reconciles combined gross profit for all refineries to combined gross margin for all refineries for the periods presented:                                    Three Months Ended    Year Ended                                   December31,          December31,                                   2013       2012       2013       2012                                   (In thousands, except per barrel data) Net sales (including intersegment  $1,919,619 $1,923,146 $7,693,829 $8,340,178 sales) Cost of products sold (exclusive   1,804,050  1,446,878  6,656,778  7,133,308 of depreciation and amortization) Depreciation and amortization      20,371     20,747     85,712     77,575 Gross profit                       95,198     455,521    951,339    1,129,295 Plus depreciation and amortization 20,371     20,747     85,712     77,575 Refinery gross margin              $115,569   $476,268   $1,037,051 $1,206,870 Refinery gross margin per refinery $7.99      $34.00     $18.89     $22.01 throughput barrel (4) Gross profit per refinery          $6.58      $32.51     $17.33     $20.60 throughput barrel (4)  (4)Refinery direct operating expenses per throughput barrel is calculated by dividing direct operating expenses by total throughput volumes for the respective periods presented. Direct operating expenses do not include any depreciation or amortization.  (5)Cost of products sold for the combined refining segment includes the net realized and net non-cash unrealized hedging activity shown in the table below. The hedging gains and losses are also included in the combined gross profit and refinery gross margin but are not included in those measures for the individual refineries.                                     Three Months Ended  Year Ended                                    December 31,        December 31,                                    2013      2012      2013     2012                                    (In thousands) Realized hedging gain (loss), net   $15,465   $(35,932) $17,714  $(120,805) Unrealized hedging gain (loss), net (100,611) 81,519    (16,898) (229,672) Total hedging gain (loss), net      $(85,146) $45,587   $816     $(350,477)  (6)For the quarter and year ended December 31, 2013, cost of products sold for the combined refining segment includes $17.8million and $8.7million from the El Paso and Gallup refineries, respectively, with no comparable activity in prior periods. Concurrent with the closing of its initial public offering on October 16, 2013, WNRL entered into fee-based commercial and service agreements with Western under which it operates assets contributed by Western for the purpose of generating fee-based revenues. Under these agreements, WNRL provides various pipeline, gathering, transportation, terminalling and storage services to Western and Western pays fees to WNRL based on minimum monthly throughput volumes of crude oil and refined and other products, and reserved storage capacity. Most of WNRL's assets are integral to the operations of Western's El Paso and Gallup refineries.  (7)Direct operating expenses including WNRL expenses per throughput barrel includes $5.9million and $2.0million of WNRL directing operating expenses associated with El Paso and Gallup refinery operations, respectively.  Wholesale Segment                                    Three Months Ended    Year Ended                                   December 31,          December 31,                                   2013       2012       2013       2012                                   (In thousands, except per gallon data) Statement of Operations Data                                      Net sales (including intersegment  $1,161,076 $1,120,455 $4,779,489 $4,860,291 sales) Operating costs and expenses:                                     Cost of products sold (exclusive   1,133,889  1,091,538  4,667,371  4,748,077 of depreciation and amortization) Direct operating expenses (exclusive of depreciation and     17,792     15,176     67,137     67,491 amortization) Selling, general and               2,936      2,800      11,385     10,407 administrative expenses (Gain) on disposal of assets,net  —          —          —          (509) Depreciation and amortization      1,113      988        4,057      3,814 Total operating costs and expenses 1,155,730  1,110,502  4,749,950  4,829,280 Operating income                   $5,346     $9,953     $29,539    $31,011 Operating Data                                                    Fuel gallons sold                  392,534    356,183    1,550,154  1,520,581 Fuel gallons sold to retail        63,444     62,937     254,907    244,906 Average fuel sales price per       $3.08      $3.28      $3.20      $3.32 gallon Average fuel cost per gallon       3.03       3.21       3.15       3.27 Fuel margin per gallon (1)         0.06       0.08       0.06       0.07                                                                  Lubricant gallons sold             2,854      2,811      11,793     11,492 Average lubricant sales price per  $11.71     $11.11     $11.28     $11.15 gallon Average lubricant cost per gallon  10.41      10.06      10.07      10.05 Lubricant margin (2)               11.1%      9.5%       10.8%      9.9%                                                                  Realized hedging loss              $ —        $ —        $ —        $(23,643)                                                                                            Three Months Ended    Year Ended                                   December 31,          December 31,                                   2013       2012       2013       2012                                   (In thousands, except per gallon data) Net Sales                                                         Fuel sales (including intersegment $1,207,523 $1,167,674 $4,965,856 $5,054,987 sales) Excise taxes included in fuel      (89,304)   (85,861)   (355,865)  (355,957) sales Lubricant sales                    33,421     31,232     133,082    128,171 Other sales (including             9,436      7,410      36,416     33,090 intersegment sales) Net sales                          $1,161,076 $1,120,455 $4,779,489 $4,860,291 Cost of Products Sold                                             Fuel cost of products sold         $1,188,381 $1,144,503 $4,882,430 $4,970,965 Excise taxes included in fuel cost (89,304)   (85,861)   (355,865)  (355,957) of products sold Lubricant cost of products sold    29,719     28,269     118,744    115,540 Other cost of products sold        5,093      4,627      22,062     17,529 Cost of products sold              $1,133,889 $1,091,538 $4,667,371 $4,748,077 Fuel margin per gallon (1)         $0.06      $0.08      $0.06      $0.07  (1) Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales and cost of fuel sales for our wholesale segment by the number of gallons sold. Fuel margin per gallon is a measure frequently used in the petroleum products wholesale industry to measure operating results related to fuel sales.  (2)Lubricant margin is a measurement calculated by dividing the difference between lubricant sales and lubricant cost of products sold by lubricant sales. Lubricant margin is a measure frequently used in the petroleum products wholesale industry to measure operating results related to lubricant sales.  Retail Segment                                       Three Months Ended Year Ended                                      December 31,       December 31,                                      2013      2012     2013       2012                                      (In thousands, except per gallon data) Statement of Operations Data                                      Net sales (including intersegment     $252,915  $303,672 $1,177,098 $1,212,070 sales) Operating costs and expenses:                                     Cost of products sold (exclusive of   219,320   268,835  1,039,130  1,074,532 depreciation and amortization) Direct operating expenses (exclusive  27,519    27,054   107,950    102,793 of depreciation and amortization) Selling, general and administrative   2,388     2,194    8,401      8,161 expenses Depreciation and amortization         2,795     2,615    11,514     10,473 Total operating costs and expenses    252,022   300,698  1,166,995  1,195,959 Operating income                      $893      $2,974   $10,103    $16,111 Operating Data                                                    Fuel gallons sold                     75,076    75,024   302,759    291,244 Average fuel sales price per gallon   $3.24     $3.47    $3.41      $3.56 Average fuel cost per gallon          3.06      3.27     3.23       3.36 Fuel margin per gallon (1)            0.18      0.20     0.18       0.20                                                                  Merchandise sales                     $61,745   $61,481  $253,096   $248,023 Merchandise margin (2)                28.9%     28.5%    28.8%      29.0% Operating retail outlets at period                     228        222 end                                                                                               Three Months Ended Year Ended                                      December 31,       December 31,                                      2013      2012     2013       2012                                      (In thousands, except per gallon data) Net Sales                                                         Fuel sales (including intersegment    $243,092  $260,294 $1,032,478 $1,036,404 sales) Excise taxes included in fuel sales   (29,466)  (29,091) (118,015)  (111,805) Merchandise sales                     61,745    61,481   253,096    248,023 Other sales                           (22,456)  10,988   9,539      39,448 Net sales                             $252,915  $303,672 $1,177,098 $1,212,070 Cost of Products Sold                                             Fuel cost of products sold            $229,669  $245,105 $976,589   $978,979 Excise taxes included in fuel cost of (29,466)  (29,091) (118,015)  (111,805) products sold Merchandise cost of products sold     43,887    43,988   180,284    176,215 Other cost of products sold           (24,770)  8,833    272        31,143 Cost of products sold                 $219,320  $268,835 $1,039,130 $1,074,532 Fuel margin per gallon (1)            $0.18     $0.20    $0.18      $0.20  (1)Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales and cost of fuel sales for our retail segment by the number of gallons sold. Fuel margin per gallon is a measure frequently used in the convenience store industry to measure operating results related to fuel sales.  (2)Merchandise margin is a measurement calculated by dividing the difference between merchandise sales and merchandise cost of products sold by merchandise sales. Merchandise margin is a measure frequently used in the convenience store industry to measure operating results related to merchandise sales.  WNRL  The following table sets forth the summary operating results for WNRL. The selected historical financial data for the 2013 period presented below represents the financial results from the period beginning October16, 2013 through the year ended December31, 2013. WNRL commenced operations on October16, 2013, therefore, there is no comparable activity in prior periods.                                     Year Ended December31,                                    2013                                    (In thousands) Revenues:                            Affiliate                           $25,942 Third-party                         698 Total revenues                      26,640 Operating costs and expenses:        Operating and maintenance expenses  13,940 General and administrative expenses 1,107 Depreciation and amortization       2,676 Total operating costs and expenses  17,723 Operating income                    $8,917  NTI  The following table sets forth the summary operating results for Northern Tier Energy, LP ("NTI"). The selected historical financial data for the 2013 period presented below represents the financial results from the period beginning November 12, 2013 through the year ended December31, 2013. We acquired NTI on November 12, 2013, therefore, there is no comparable activity in prior periods.                                                        Year Ended December31,                                                       2013                                                       (In thousands) Net sales                                              $686,824 Operating costs and expenses:                           Cost of products sold (exclusive of depreciation and   591,942 amortization) Direct operating expenses (exclusive of depreciation   35,123 and amortization) Selling, general and administrative expenses           11,651 Loss on disposal of assets,net                        10 Depreciation and amortization                          10,740 Total operating costs and expenses                     649,466 Operating income                                       $37,358  Reconciliation of Special Items  We present certain additional financial measures below that are non-GAAP measures within the meaning of Regulation G under the Securities Exchange Act of 1934.  We present these non-GAAP measures to provide investors with additional information to analyze our performance from period to period. We believe it is useful for investors to understand our financial performance excluding these special items so that investors can see the operating trends underlying our business. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that we report in accordance with GAAP. These non-GAAP measures reflect subjective determinations by management and may differ from similarly titled non-GAAP measures presented by other companies.                                         Three Months Ended Year Ended                                        December31,       December31,                                        2013      2012     2013      2012                                        (In thousands, except per share data) Reported diluted earnings per share     $(0.09)   $1.92    $2.79     $3.71 Earnings before income taxes            $10,220   $322,360 $453,479  $617,087 Loss (gain) on disposal of assets,net  2,035     —        (4,989)   — Unrealized (gain) loss from commodity   100,611   (81,519) 16,898    229,672 hedging transactions Loss on extinguishment of debt          1         —        46,773    7,654 Earnings before income taxes excluding  112,867   240,841  512,161   854,413 special items Recomputed income taxes after special   (31,972)  (85,161) (174,919) (302,120) items (1) Net income excluding special items      80,895    155,680  337,242   552,293 Net income attributed to                23,560    —        23,560    — non-controlling interest Net income attributable to Western      $57,335   $155,680 $313,682  $552,293 after special items Diluted earnings per share excluding    $0.60     $1.45    $3.15     $5.08 special items  (1)We recompute income taxes after deducting earnings attributed to non-controlling interest.  CONTACT: Investor and Analyst Contact:          Jeffrey S. Beyersdorfer          (602) 286-1530                   Media Contact:          Gary W. Hanson          (602) 286-1777  Western Refining Inc. Logo