Morris also announced that the company is continuing plans for an initial public offering (IPO) of stock and has received the second round of comments from its November Securities &[image-nocss] amp; Exchange Commission filing, although details on when the offering would occur are vague.
"We plan to update our yearend numbers and then proceed with the IPO when we believe we can obtain appropriate value for the company," Morris said. As previously reported in CSP Daily News, the company expects to raise as much as $100 million for the IPO. Alon Brands was established as a subsidiary of Alon USA in November with the intent of spinning it off as a public company.
Morris also said that several factors caused "significant noise" in Alon's financial numbers for 2008, including a fire at the company's Big Spring, Texas, refinery, the acquisition of the Krotz Springs, La., refinery and unprecedented volatility in crude oil prices.
He said the Big Spring refinery, which had an explosion in February 2008, was "back online and performing well." Total cost for repairs at the refinery are expected to be about $420 million, and Alon has received the full policy limit from its insurance of $385 million.
"We are very optimistic going forward through the first two months of 2009," he said. Big Spring is expected to contribute about $25 million of EBITDA (earnings before interest, taxes, depreciation and amortization) and is operating at about 65,000 barrels per day.
As for the Krotz Springs refinery, acquired from Valero Energy Corp. last July for $473 million, it has been an "excellent addition," according to Morris. He said the refinery is expected to contribute about $20 million of EBITDA for the first two months of 2009.
He said that due to excellent management of working capital, the company was slightly positive in cash from working capital in the fourth quarter, and $90 million positive for the entire year, which he called an "exceptional accomplishment" for the economic environment. And although the company is expecting a $100 million tax return in the second quarter that will further enhance its liquidity, Morris said, "Nevertheless, the dramatic reduction in crude price in the fourth quarter is requiring us to work with our lenders to adjust our debt at Krotz Springs to match the current environment. We have agreed in principal that an additional $50 million in cash and letters of credit support will be provided to this subsidiary."
Overall, Alon's net income for the fourth quarter of 2008 was $60.9 million, or $1.30 per share, compared to net loss of $39.9 million, or -$0.85 per share, for the same period last year. Excluding special items, Alon recorded net income of $63.1 million, or $1.35 per share, for the fourth quarter of 2008, compared to net loss of $41.5 million, or -$0.89 per share, for the same period last year.
Net income for the year ended Dec. 31, 2008, was $82.9 million, or $1.77 per share, compared to net income of $103.9 million, or $2.22 per share, for the year ended Dec. 31, 2007. Excluding special items, Alon recorded net income of $2.6 million, or $0.05 per share, for the year ended Dec. 31, 2008, compared to net income of $99.5 million, or $2.13 per share, for the same period last year.
Refinery operating margin at the Big Spring refinery was -$12.91 per barrel for the fourth quarter of 2008 compared to $3.79 per barrel for the same period in 2007. This decrease was partially a result of the rapid decline in crude-oil prices affecting inventory values during the fourth quarter of 2008. Refinery operating margin at Alon's California refineries was $11.74 per barrel for the fourth quarter of 2008 compared to -$5.04 per barrel for the same period in 2007. The Krotz Springs refinery operating margin for the fourth quarter of 2008 was $7.30 per barrel.
Alon USA Energy Inc., Dallas, is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. Alon operates more than 300 convenience stores primarily in West Texas and New Mexico substantially under the 7-Eleven and FINA brand names and supplies motor fuels to these stores primarily from its Big Spring refinery. In addition, Alon markets under the FINA branded name to approximately 700 additional locations.
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