DALLAS -- Alon USA Energy Inc. has announced results for the fourth quarter and for the year ended Dec. 31, 2006. Excluding special items, Alon has reported net income for the fourth quarter of 2006 of $26 million, or 56 cents per share, compared to $28.8 million, or 62 cents per share, for the same period last year. Including special items, net income for the fourth quarter of 2006 was $22 million, or 47 cents per share, compared to $29.7 million, or 64 cents per share, for the same period last year.
Special items for the fourth quarter included $6.1 [image-nocss] million of aggregate after-tax inventories adjustments related to the refinery acquisitions of Paramount Petroleum Corp. and Edgington Oil Corp. in the third quarter of 2006. Special items for the three months ended Dec. 31, 2006, and 2005 also included $2 million and $800,000, respectively, of after-tax gain recognized on disposition of assets in connection with the contribution of certain pipeline and terminal assets to Holly Energy Partners LP in first-quarter 2005.
Jeff Morris, Alon's president and CEO, said, "We are pleased with the record annual results for Alon with an increase in net income of more than 50% over net income for 2005, which was our second best year on record. We are continuing our integration of the California refineries and remain very excited about the opportunities we have identified from these acquisitions. In our March 19 analyst day, we will present to the market, for the first time, our three-to-four years growth and profit improvement capital expenditure plans in California. These plans will accomplish material throughput and complexity increases to allow our California refineries to better capture favorable West Coast market conditions."
For the year ended Dec. 31, 2006, Alon's net income was $138.5 million, or $2.96 per share, compared to $80.1 million, or $2.01 per share, for the year ended Dec. 31, 2005, excluding special items in both years. Including special items, net income for the year ended Dec. 31, 2006, was $157.4 million, or $3.37 per share, compared to net income of $104 million, or $2.61 per share, for the year ended Dec. 31, 2005.
Special items for the year ended Dec. 31, 2006 included $38.9 million of aggregate after-tax gains resulting from the sale of Alon's Amdel and White Oil crude pipelines in first-quarter 2006 and from the Holly contribution; $5.8 million of aggregate after-tax interest expense resulting from the prepayment of Alon's $100 million term loan facility and the prepayment of an approximately $30 million term loan by Alon's retail subsidiaries; $12.5 million of after-tax inventories adjustments related to the acquisitions of Paramount and Edgington; and a $1.8 million after-tax charge for a special employee bonus payment related to special dividend payments in September 2006. Special items for the year ended December 31, 2005 included $23.9 million of after-tax gain recognized in connection with the Holly contribution.
The decrease in net income for fourth-quarter 2006 over fourth-quarter 2005 was primarily attributable to lower refinery production at the Big Spring, Texas, refinery and other factors.
The increase in net income for the year ended Dec. 31, 2006, over the year ended Dec. 31, 2005, was primarily attributable to continued strong industry refining margins, favorable differentials between WTI and WTS crude oil and increased refinery production.
During third-quarter of 2006, Alon completed the acquisition of three refineries and seven asphalt terminals. The Paramount and Edgington refinery acquisitions are consistent with Alon's general business strategy of increasing cash flow and earnings through the acquisition of assets or businesses that are logical extensions of its existing assets or businesses.
The addition of the Paramount and Edgington assets has also increased the geographic diversity of Alon's Refining & Marketing segment and Asphalt segment by allowing Alon to expand throughout the Southwest region to the West Coast. With the addition of the Paramount and Edgington refineries, Alon said it believes it has diversified the risks associated with being a single-asset refinery. The Paramount and Edgington refineries are now operated as one integrated refinery. Alon intends to apply its experience of increasing reliability, capacity and yields at its Big Spring refinery to the newly acquired assets in order to maximize the return on these investments, it said.
In addition, Alon completed the acquisition of 40 convenience stores in El Paso, Texas effective July 3, 2006. This acquisition provided Alon a leading market position in El Paso and is consistent with Alon's integration strategy.
Alon USA, Dallas, owns and operates four sour and heavy crude oil refineries in Texas, California and Oregon, with total crude oil throughput capacity of approximately 170,000 barrels per day. It markets gasoline and diesel products under the FINA brand name and is a leading producer of asphalt. Alon also currently operates more than 200 convenience stores in West Texas and New Mexico under the 7-Eleven and FINA brand names and supplies motor fuels to these stores from its Big Spring refinery.
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