(Source: Business Wire)
Western Refining, Inc. (NYSE:WNR) today reported a net loss of $7.8 million, or $0.11 per diluted share for the second quarter of 2009, excluding a non-cash loss from the impairment of goodwill of approximately $299.6 million. Including the goodwill impairment loss, the company reported a second quarter 2009 net loss of $307.3 million, or $4.20 per diluted share. The Company's net income was $8.2 million, or $0.12 per diluted share, for the same period in 2008. The goodwill impairment loss represents a write-off of the entire balance of the Company's goodwill from the application of impairment testing criteria under existing accounting rules. This non-cash charge does not impact the Company's financial covenants.
Operating income for the second quarter of 2009, excluding the non-cash loss from the impairment of goodwill was $31.7 million. Including the goodwill impairment loss, the Company had an operating loss of $267.8 million for the second quarter of 2009. The Company's operating income was $59.0 million, for the same period in 2008. The decline in operating income was primarily due to lower refined product margins at the Yorktown refinery, excluding the lower of cost or market inventory adjustment, the goodwill impairment charge, and lower refinery throughput. The lower margins were the result of increased crude oil and other feedstocks costs, coupled with weakness in finished product prices and lower value products.
Paul Foster, Western's Chief Executive Officer, said, "Throughout much of the quarter, refining margins were unseasonably low as a result of the prolonged economic slowdown. Earnings at the El Paso refinery were also negatively impacted by a partial shutdown of the refinery for planned maintenance which decreased our throughput volumes in late May and early June. Financial results at the Yorktown refinery were adversely impacted by the continuation of narrowing heavy crude oil differentials and lower realized values for petroleum coke.
"In the quarter, we generated cash flow from operations of approximately $23.7 million, and year-to-date, we have generated cash flow from operations of $120.5 million. We had no cash borrowings outstanding under the Company's revolving credit facility in the quarter, and we have not made any cash borrowings under this facility since early in the first quarter of this year."
Foster continued, "We are pleased with the progress we have made in improving the Company's financial strength and flexibility. In the quarter, we completed several transactions that allowed us to reduce debt, extend maturities, and enhance our overall capital structure. We also renegotiated and improved our financial covenants, which give us additional financial flexibility. We believe the interest we received from investors in our new offerings is recognition of the improvements we have made at our refineries and the benefits they will deliver going forward. With this financial strength and the operational improvements we've made to our refineries, we believe Western has a strong foundation in place for future growth."
Commenting on current market conditions, Foster said, "Diesel margins continue to be soft as a result of high inventory levels and lower than normal seasonal demand. However, gasoline margins have improved in the past few weeks, and we are starting to experience a pickup in demand in our wholesale and retail business units."
Conference Call Information
A conference call is scheduled for August 6, 2009, at 9:00 a.m. ET to discuss Western's financial results. The call can be accessed at Western's website, www.wnr.com. The call can also be heard by dialing (888) 680-0865, passcode: 82286486. The audio replay will be available through August 13, 2009, by dialing (888) 286-8010, passcode: 44365478.
A copy of this press release, together with the reconciliations of certain non-GAAP financial measures contained herein, can be accessed on the investor relations menu on Western's website, www.wnr.com.
Non-GAAP Financial Measures
In a number of places in the press release, we have excluded the impact of the goodwill impairment loss on our results from operations for the second quarter of 2009. We have excluded this loss in order to analyze changes in our business from period to period, since the impairment loss is a non-recurring and non-cash loss.
About Western Refining
Western Refining, Inc. is an independent refining and marketing company headquartered in El Paso, Texas. Western has a refinery in El Paso, two refineries in the Four Corners region of northern New Mexico and a refinery in Yorktown, Virginia. Western's asset portfolio also includes refined products terminals in Albuquerque, New Mexico and Flagstaff, Arizona, asphalt terminals in Phoenix and Tucson, Arizona, Albuquerque and El Paso, retail service stations and convenience stores in Arizona, Colorado and New Mexico, a fleet of crude oil and finished product truck transports, and wholesale petroleum products operations in Arizona, California, Colorado, Nevada, New Mexico, Texas and Utah. More information about the Company is available at www.wnr.com.
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements. The forward-looking statements contained herein include statements about, our enhanced financial strength and flexibility, the enhancement and anticipated benefits of our capital structure, benefits from improvements at our refineries, our future growth, and future gasoline or diesel demand. These statements are subject to the general risks inherent in our business and reflect our current expectations regarding these matters. 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, Western's business and operations involve numerous risks and uncertainties, many of which are beyond Western's control, which could result in Western's expectations not being realized or otherwise materially affect Western's financial condition, results of operations and cash flows. For additional information relating to the uncertainties affecting Western's business you are referred to our 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
The following tables set forth our summary of historical financial and operating data for the periods indicated:
Exception caught in main.
1) Adjusted EBITDA represents earnings before interest expense, income tax expense, amortization of loan fees, depreciation, amortization, maintenance turnaround expense, LCM inventory reserve adjustment and goodwill impairment loss. However, Adjusted EBITDA is not a recognized measurement under 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 (which many of our competitors capitalize and thereby exclude from their measures of EBITDA), acquisitions, and certain non-cash charges, items that may vary for different companies for reasons unrelated to overall operating performance.
