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Last updated on April 24, 2014 at 10:11 EDT

Alon USA Reports Third Quarter Results

November 6, 2012

DALLAS, Nov. 5, 2012 /PRNewswire/ — Alon USA Energy, Inc. (NYSE: ALJ) (“Alon”) today announced results for the third quarter of 2012. Net income for the third quarter of 2012 was $43.2 million, or $0.76 per share, compared to net income of $28.6 million, or $0.51 per share, for the same period last year. Excluding special items, Alon recorded net income of $47.6 million, or $0.84 per share, for the third quarter of 2012, compared to net income of $39.0 million, or $0.70 per share, for the same period last year.

Net income for the first nine months of 2012 was $56.9 million, or $1.01 per share, compared to net income of $55.4 million, or $1.00 per share, for the same period last year. Excluding special items, Alon recorded net income of $91.3 million, or $1.62 per share, for the first nine months of 2012, compared to net income of $74.5 million, or $1.35 per share, for the same period last year.

Paul Eisman, CEO and President, commented, “We are pleased with our third quarter results, and the positive impact these results are having on our balance sheet. The Company continues to benefit from good operations in a positive margin environment. During the third quarter, we increased throughput at each of our refineries versus the second quarter, and also realized increased sales in both Asphalt Marketing and Alon Brands. We generated very favorable operating margins of $28.19 per barrel at our Big Spring Refinery and $11.28 per barrel at our Krotz Springs Refinery. In Krotz Springs we processed on average a record of over 23,000 barrels per day of WTI.

“During the third quarter, we generated over $100 million of cash flow from operating activities, which was used to reduce total debt by $75 million. We were able to achieve this even though our reported results for the quarter were negatively impacted by $39 million of losses on commodity swap hedge positions comprised of $34 million of realized losses and $5 million of unrealized losses.

“We filed an amendment to the Form S-1 of Alon USA Partners, LP. We intend to use the net proceeds of the offering to reduce our outstanding indebtedness.

“California remains challenging from an asphalt refining perspective, as low demand and value for produced asphalt in a high cost West Coast crude environment led to disappointing financial results. We are currently evaluating alternatives to improve the short and long term profitability of our California refining operations. With the end of the asphalt season, we are suspending refining operations in California. As mentioned last quarter, we have submitted permit applications to ship via rail lighter mid-continent crudes to replace the heavier West Coast crudes currently used in the California system. We expect to receive these permits, as well as to complete required infrastructure build out and to enter into the required supply arrangements, by the fourth quarter of 2013.

“For the fourth quarter of 2012, we expect the average throughput at the Big Spring refinery to be approximately 71,000 barrels per day and 74,000 barrels per day at the Krotz Springs refinery. At Krotz Springs, we expect to process 25,000 barrels per day of WTI increasing to 30,000 barrels per day of WTI by year end.”

THIRD QUARTER 2012

Special items reduced earnings by $4.4 million for the third quarter of 2012 which included after-tax losses of $2.8 million associated with unrealized losses on commodity swaps and $1.6 million associated with loss recognized on disposition of assets. Special items reduced earnings by $10.4 million for the third quarter of 2011 which primarily included an after-tax loss associated with heating oil call option crack spread contracts.

Refinery operating margin at the Big Spring refinery was $28.19 per barrel for the third quarter of 2012 compared to $23.05 per barrel for the same period in 2011. This increase is mainly due to higher Gulf Coast 3/2/1 crack spreads and a widening sweet/sour spread. Refinery operating margin at the California refineries was $0.12 per barrel for the third quarter of 2012, compared to $3.64 per barrel for the same period in 2011. This decrease is mainly due to the cost of crude oil used by the refinery. The Krotz Springs refinery operating margin was $11.28 per barrel for the third quarter of 2012, compared to $7.77 per barrel for the same period in 2011. This increase is mainly due to lower crude oil costs with the addition of WTI priced crude oils and higher Gulf Coast 2/1/1 high sulfur diesel crack spreads.

The refineries’ combined refinery throughput for the third quarter of 2012 averaged 171,086 barrels per day (“bpd”), consisting of 69,563 bpd at the Big Spring refinery, 32,298 bpd at the California refineries, and 69,225 bpd at the Krotz Springs refinery, compared to 162,214 bpd for the third quarter of 2011, consisting of 56,828 bpd at the Big Spring refinery, 39,056 bpd at the California refineries, and 66,330 bpd at the Krotz Springs refinery.

The average Gulf Coast 3/2/1 crack spread for the third quarter of 2012 was $31.76 per barrel compared to $31.28 per barrel for the same period in 2011. The average West Coast 3/1/1/1 crack spread for the third quarter of 2012 was $14.40 per barrel compared to $11.22 per barrel for the same period in 2011. The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the third quarter of 2012 was $15.91 per barrel compared to $12.44 per barrel for the same period in 2011.

The average WTI to WTS spread for the third quarter of 2012 was $3.34 per barrel compared to $0.82 per barrel for the same period in 2011. The average LLS to WTI spread for the third quarter of 2012 was $15.02 per barrel compared to $18.87 per barrel for the same period in 2011. The average WTI to Buena Vista spread for the third quarter of 2012 was $(14.14) per barrel compared to $(17.52) per barrel for the same period in 2011.

Asphalt margins for the third quarter of 2012 were $25.49 per ton compared to $25.68 per ton for same period in 2011. On a cash basis (i.e. excluding inventory effects), asphalt margins in the third quarter of 2012 were $37.13 per ton compared to $23.07 per ton in the third quarter of 2011. This increase is due primarily to higher asphalt sales prices. The average blended asphalt sales price increased 21.8% from $540.07 per ton in the third quarter of 2011 to $657.68 per ton in the third quarter of 2012 and the average non-blended asphalt sales price increased 2.3% from $383.87 per ton in the third quarter of 2011 to $392.76 per ton in the third quarter of 2012.

Retail fuel sales volume increased by 7.9% from 40.8 million gallons in the third quarter of 2011 to 44.0 million gallons in the third quarter of 2012. Our branded fuel sales volume increased by 5.9% from 95.2 million gallons in the third quarter of 2011 to 100.8 million gallons in the third quarter of 2012.

Also impacting earnings for the third quarter of 2012 was pre-tax realized losses on commodity swaps of $33.8 million. There were no significant realized losses on commodity swaps for the third quarter of 2011.

YEAR-TO-DATE 2012

Special items reduced earnings by $34.3 million for the first nine months of 2012 which included after-tax losses of $22.4 million associated with unrealized losses on commodity swaps, $4.4 million associated with heating oil call option crack spread contracts, $5.8 million associated with the write-off of unamortized original issuance discount due to the repayment of the Alon Brands term loan and $1.7 million associated with loss recognized on disposition of assets. Special items reduced earnings by $19.1 million for the first nine months of 2011 which included primarily an after-tax loss of $32.7 million associated with heating oil call option crack spread contracts and an after-tax gain of $13.5 million associated with a reduction in system inventories.

Refinery operating margin at the Big Spring refinery was $23.85 per barrel for the first nine months of 2012 compared to $20.67 per barrel for the same period in 2011. This increase is primarily due to higher Gulf Coast 3/2/1 crack spreads and a widening of the sweet/sour spread. Refinery operating margin at the California refineries was $1.60 per barrel for the first nine months of 2012, compared to $(0.16) per barrel for the same period in 2011. This increase is mainly due to an increase in West Coast 3/1/1/1 crack spreads. Refinery operating margin at the Krotz Springs refinery was $7.55 per barrel for the first nine months of 2012 compared to $5.61 per barrel for the same period in 2011. This increase is mainly due to lower crude oil costs with the addition of WTI priced crude oils and higher Gulf Coast 2/1/1 high sulfur diesel crack spreads.

The refineries’ combined throughput for the first nine months of 2012 averaged 155,769 bpd, consisting of 67,884 bpd at the Big Spring refinery, 21,472 bpd at the California refineries and 66,413 bpd at the Krotz Springs refinery compared to 144,515 bpd in the first nine months of 2011, consisting of 60,889 bpd at the Big Spring refinery, 21,357 bpd at the California refineries and 62,269 bpd at the Krotz Springs refinery. The California refineries were not in operation for the first quarter of 2012 and 2011.

The average Gulf Coast 3/2/1 crack spread for the first nine months of 2012 was $27.54 per barrel compared to $24.53 per barrel for the same period in 2011. The average West Coast 3/1/1/1 crack spread for the first nine months of 2012 was $12.84 per barrel compared to $11.09 per barrel for the same period in 2011. The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the first nine months of 2012 was $12.05 per barrel compared to $9.87 per barrel for the first nine months of 2011.

The average WTI to WTS spread for the first nine months of 2012 was $4.09 per barrel compared to $2.47 per barrel for the first nine months of 2011. The average LLS to WTI spread for the first nine months of 2012 was $15.25 per barrel compared to $14.55 per barrel for the same period in 2011. The average WTI to Buena Vista spread for the first nine months of 2012 was $(13.97) per barrel compared to $(11.20) per barrel for the same period in 2011.

Asphalt margins in the first nine months of 2012 increased to $46.76 per ton compared to $15.99 per ton in the first nine months of 2011. On a cash basis, asphalt margins in the first nine months of 2012 were $31.10 per ton compared to $12.86 per ton in the first nine months of 2011. This increase was primarily due to asphalt sales prices increasing more than crude oil costs. The average blended asphalt sales price increased 15.5% from $539.52 per ton in the first nine months of 2011 to $623.24 per ton in the first nine months of 2012 and the average non-blended asphalt sales price increased 12.9% from $337.82 per ton in the first nine months of 2011 to $381.49 per ton in the first nine months of 2012. The average price for Buena Vista crude increased 3.3%, from $106.62 per barrel in the first nine months of 2011 to $110.14 per barrel in the first nine months of 2012.

Retail fuel sales volume increased by 9.4% from 115.9 million gallons in the first nine months of 2011 to 126.8 million gallons in the first nine months of 2012. Our branded fuel sales volume increased by 6.8% from 272.1 million gallons in the first nine months of 2011 to 290.7 million gallons in the first nine months of 2012.

Also impacting earnings for the first nine months of 2012 was pre-tax realized losses on commodity swaps of $68.3 million. There were no significant realized losses on commodity swaps for the first nine months of 2011.

Alon also announced today that its Board of Directors has approved the regular quarterly cash dividend of $0.04 per share. The dividend is payable on December 17, 2012 to stockholders of record at the close of business on December 3, 2012.

CONFERENCE CALL

The Company has scheduled a conference call for Wednesday, November 7, 2012, at 9:00 a.m. Eastern, to discuss the third quarter 2012 results. To access the call, please dial 877-941-8609, or 480-629-9692, for international callers, and ask for the Alon USA Energy call at least 10 minutes prior to the start time. Investors may also listen to the conference live on the Alon corporate website, http://www.alonusa.com, by logging onto that site and clicking “Investors”. A telephonic replay of the conference call will be available through November 23, 2012, and may be accessed by calling 800-406-7325, or 303-590-3030, for international callers, and using the passcode 4570319#. A web cast archive will also be available at http://www.alonusa.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Donna Washburn at DRG&L at 713-529-6600 or email dmw@drg-l.com.

Alon USA Energy, Inc., headquartered in Dallas, Texas, is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. The Company owns four crude oil refineries in Texas, California, Louisiana and Oregon, with an aggregate crude oil throughput capacity of approximately 250,000 barrels per day. Alon is a leading producer of asphalt, which it markets through its asphalt terminals predominately in the Western United States. Alon is the largest 7-Eleven licensee in the United States and operates approximately 300 convenience stores in Texas and New Mexico. Alon markets motor fuel products under the Alon brand name through a network of approximately 625 locations, including Alon’s convenience stores.

Any statements in this press release that are not statements of historical fact are forward-looking statements. Forward-looking statements reflect our current expectations regarding future events, results or outcomes. 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 regarding these and other risks is contained in our filings with the Securities and Exchange Commission.

This press release does not constitute an offer to sell or the solicitation of offers to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful.

    Contacts:                   Amir Barash, Vice
                                President-IR
                               Alon USA Energy, Inc.
                               972-367-3808

                                Investors: Jack Lascar/
                                Sheila Stuewe
                               DRG&L / 713-529-6600
                               Media: Blake Lewis
                               Lewis Public Relations
                               214-635-3020
                               Ruth Sheetrit
                               SMG Public Relations
                               011-972-547-555551

- Tables to follow -

                                                                                                                       ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED
                                                                                                                                         EARNINGS RELEASE

    RESULTS OF OPERATIONS - FINANCIAL DATA                                         For the Three Months Ended                  For the Nine Months Ended
    (ALL INFORMATION IN THIS PRESS RELEASE EXCEPT FOR BALANCE SHEET DATA AS
     OF DECEMBER 31, 2011, IS UNAUDITED)
                                                                                         September 30,                              September 30,
                                                                                         -------------                              -------------
                                                                                 2012                                             2011                                     2012            2011
                                                                                 ----                                             ----                                     ----            ----
                                                                                         (dollars in thousands, except per share data)
    STATEMENTS OF OPERATIONS DATA:
    Net sales (1)                                                                                       $2,360,334                                                   $2,056,653                 $6,062,956  $5,303,388
    Operating costs and expenses:
    Cost of sales                                                           2,101,647                                        1,827,098                                          5,407,197        4,717,673
    Unrealized losses on commodity swaps                                        5,017                                                -                                             37,458                -
    Direct operating expenses                                                  81,160                                           83,338                                            230,243          202,476
    Selling, general and administrative expenses (2)                           47,670                                           34,680                                            119,018          107,595
    Depreciation and amortization (3)                                          31,870                                           29,812                                             93,000           80,046
                                                                               ------                                           ------                                             ------           ------
    Total operating costs and expenses                                      2,267,364                                        1,974,928                                          5,886,916        5,107,790
                                                                            ---------                                        ---------                                          ---------        ---------
    Gain (loss) on disposition of assets                                       (2,624)                                             229                                             (2,838)             161
                                                                               ------                                              ---                                             ------              ---
    Operating income                                                           90,346                                           81,954                                            173,202          195,759
    Interest expense (4)                                                      (22,773)                                         (22,582)                                           (78,113)         (63,780)
    Equity earnings of investees                                                4,542                                            2,005                                              6,112            3,775
    Other income (loss), net (5)                                                  202                                          (14,272)                                            (6,791)         (51,065)
                                                                                  ---                                          -------                                             ------          -------
    Income before income tax expense                                           72,317                                           47,105                                             94,410           84,689
    Income tax expense                                                         26,776                                           17,004                                             34,705           26,952
                                                                               ------                                           ------                                             ------           ------
    Net income                                                                 45,541                                           30,101                                             59,705           57,737
    Net income attributable to non-controlling interest                         2,318                                            1,480                                              2,758            2,317
                                                                                -----                                            -----
    Net income available to common stockholders                                                            $43,223                                                      $28,621                    $56,947     $55,420
                                                                                                           =======                                                      =======                    =======     =======
    Earnings per share, basic                                                                                $0.76                                                        $0.51                      $1.01       $1.00
                                                                                                             =====                                                        =====                      =====       =====
    Weighted average shares outstanding, basic (in thousands)                  56,699                                           55,755                                             56,322           55,290
                                                                               ======                                           ======                                             ======           ======
    Earnings per share, diluted                                                                              $0.69                                                        $0.46                      $0.91       $0.91
                                                                                                             =====                                                        =====                      =====       =====
    Weighted average shares outstanding, diluted (in thousands)                63,060                                           61,690                                             62,679           61,231
                                                                               ======                                           ======                                             ======           ======
    Cash dividends per share                                                                                 $0.04                                                        $0.04                      $0.12       $0.12
                                                                                                             =====                                                        =====                      =====       =====
    CASH FLOW DATA:
    Net cash provided by (used in):
    Operating activities                                                                                  $101,276                                                     $109,478                   $215,498     $58,362
    Investing activities                                                      (34,170)                                         (28,055)                                           (83,436)        (104,130)
    Financing activities                                                      (78,930)                                         (22,964)                                         (243,436)          149,682
    OTHER DATA:
    Adjusted net income available to common stockholders (6)                                               $47,587                                                      $39,028                    $91,255     $74,506
    Adjusted earnings per share (6)                                                                          $0.84                                                        $0.70                      $1.62       $1.35
    Adjusted EBITDA (7)                                                       134,601                                          113,539                                            313,116          279,447
    Capital expenditures (8)                                                   31,748                                           23,162                                             72,273           91,120
    Capital expenditures for turnaround and chemical catalyst                   2,680                                            2,733                                             11,437            6,995

                 September 30,                       December 31,
                          2012                                 2011
                          ----                                 ----
    BALANCE
     SHEET
     DATA (end
     of
     period):          (dollars in thousands)
    Cash and
     cash
     equivalents                             $45,692                $157,066
    Working
     capital
     (A)              (337,021)                              99,452
    Total
     assets          2,320,937                            2,330,382
    Total debt         798,733                            1,050,196
    Total
     equity            456,341                              395,784
    (A)            We have
                   launched
                   syndication
                   of
                   $450,000
                   of new
                   term debt
                   and expect
                   funding
                   within a
                   week;
                   proceeds
                   will be
                   used to
                   retire
                   existing
                   debt of
                   $421,875
                   due August
                   2013.

    REFINING AND UNBRANDED MARKETING SEGMENT
                                                                     For the Three Months Ended                  For the Nine Months Ended
                                                                           September 30,                              September 30,
                                                                           -------------                              -------------
                                                                   2012                                             2011                         2012            2011
                                                                   ----                                             ----                         ----            ----
                                                               (dollars in thousands, except per barrel data and pricing statistics)
    STATEMENTS OF OPERATIONS DATA:
    Net sales (9)                                                                         $2,136,619                                       $1,862,181                 $5,527,395  $4,797,125
    Operating costs and expenses:
    Cost of sales                                             1,917,852                                        1,681,163                              5,005,249        4,336,655
    Unrealized losses on commodity swaps                          5,017                                                -                                 37,458                -
    Direct operating expenses                                    72,259                                           72,271                                204,001          170,214
    Selling, general and administrative expenses                 17,426                                            6,189                                 31,733           24,946
    Depreciation and amortization                                26,330                                           25,179                                 77,242           64,799
                                                                 ------                                           ------                                 ------           ------
    Total operating costs and expenses                        2,038,884                                        1,784,802                              5,355,683        4,596,614
    Gain (loss) on disposition of assets                         (2,532)                                               1                                 (2,528)              12
                                                                 ------                                              ---
    Operating income                                                                         $95,203                                          $77,380                   $169,184    $200,523
                                                                                             =======                                          =======                   ========    ========
    KEY OPERATING STATISTICS:
    Per barrel of throughput:
    Refinery operating margin - Big Spring (10)                                               $28.19                                           $23.05                     $23.85      $20.67
    Refinery operating margin - CA Refineries (10)                 0.12                                             3.64                                   1.60            (0.16)
    Refinery operating margin - Krotz Springs (10)                11.28                                             7.77                                   7.55             5.61
    Refinery direct operating expense - Big Spring (11)            3.92                                             4.68                                   3.92             4.40
    Refinery direct operating expense - CA Refineries (11)         7.82                                             7.20                                  10.35             6.13
    Refinery direct operating expense - Krotz Springs (11)         3.76                                             3.61                                   3.86             3.42
    Capital expenditures                                                                     $23,520                                          $14,931                    $45,606     $76,119
    Capital expenditures for turnaround and chemical catalyst     2,680                                            2,733                                 11,437            6,995
    PRICING STATISTICS:
    WTI crude oil (per barrel)                                                                $92.09                                           $89.75                     $96.17      $95.42
    WTS crude oil (per barrel)                                    88.75                                            88.93                                  92.08            92.95
    Buena Vista crude oil (per barrel)                           106.23                                           107.27                                 110.14           106.62
    LLS crude oil (per barrel)                                   102.54                                           112.94                                 111.81           110.50
    Crack spreads (3/2/1) (per barrel):
    Gulf Coast (12)                                                                           $31.76                                           $31.28                     $27.54      $24.53
    Crack spreads (3/1/1/1) (per barrel):
    West Coast (12)                                                                           $14.40                                           $11.22                     $12.84      $11.09
    Crack spreads (2/1/1) (per barrel):
    Gulf Coast high sulfur diesel (12)                                                        $15.91                                           $12.44                     $12.05       $9.87
    Crude oil differentials (per barrel):
    WTI less WTS (13)                                                                          $3.34                                            $0.82                      $4.09       $2.47
    LLS less WTI (13)                                             15.02                                            18.87                                  15.25            14.55
    WTI less Buena Vista (13)                                    (14.14)                                          (17.52)                                (13.97)          (11.20)
    Product prices (dollars per gallon):
    Gulf Coast unleaded gasoline                                                               $2.89                                            $2.82                      $2.89       $2.80
    Gulf Coast ultra-low sulfur diesel                             3.07                                             3.01                                   3.06             2.97
    Gulf Coast high sulfur diesel                                  2.97                                             2.95                                   2.99             2.91
    West Coast LA CARBOB (unleaded gasoline)                       3.04                                             2.89                                   3.09             2.92
    West Coast LA ultra-low sulfur diesel                          3.13                                             3.03                                   3.12             3.05
    Natural gas (per MMBTU)                                        2.89                                             4.05                                   2.58             4.21

    THROUGHPUT AND                              For the Three Months Ended                             For the Nine Months Ended
    PRODUCTION DATA:
    BIG SPRING REFINERY
                                         September 30,                                                                               September 30,
                                         -------------                                                                               -------------
                                                     2012                   2011                         2012                                 2011
                                                     ----                   ----                         ----                                 ----
                                    bpd               %                 bpd        %            bpd                 %                bpd           %
    Refinery throughput:
    WTS crude                      52,108                     74.9               42,769                  75.2                       53,297            78.6       48,882  80.2
    WTI crude                      15,398                     22.1               10,904                  19.2                       12,790            18.8        9,845  16.2
    Blendstocks                     2,057                      3.0                3,155                   5.6                        1,797             2.6        2,162   3.6
                                    -----                      ---                -----                   ---                        -----             ---        -----   ---
    Total refinery throughput (14) 69,563                    100.0               56,828                 100.0                       67,884           100.0       60,889 100.0
                                   ======                    =====               ======                 =====                       ======           =====       ====== =====
    Refinery production:
    Gasoline                       34,918                     50.3               26,846                  47.3                       33,653            49.6       28,969  47.8
    Diesel/jet                     23,215                     33.5               18,570                  32.6                       22,234            32.8       19,704  32.5
    Asphalt                         4,148                      6.0                4,619                   8.1                        4,241             6.3        4,505   7.4
    Petrochemicals                  4,040                      5.8                3,422                   6.0                        4,005             5.9        3,664   6.0
    Other                           3,045                      4.4                3,423                   6.0                        3,627             5.4        3,837   6.3
                                    -----                      ---                -----                   ---                        -----             ---        -----   ---
    Total refinery production (15) 69,366                    100.0               56,880                 100.0                       67,760           100.0       60,679 100.0
                                   ======                    =====               ======                 =====                       ======           =====       ====== =====
    Refinery utilization (16)                        96.4%                              89.9%                                         97.3%                88.3%

    THROUGHPUT AND                           For the Three Months Ended                      For the Nine Months Ended
    PRODUCTION DATA:
    CALIFORNIA REFINERIES
                                   September 30,                                                                                September 30,
                                   -------------                                                                                -------------
                                                     2012                   2011                         2012                                 2011
                                                     ----                   ----                         ----                                 ----
                                    bpd               %                 bpd        %            bpd                 %                bpd           %
    Refinery throughput:
    Medium sour crude              23,228                     71.9                9,363                  24.0                        9,903            46.1        4,632  21.7
    Heavy crude                     8,065                     25.0               23,928                  61.2                       10,259            47.8       14,707  68.9
    Blendstocks                     1,005                      3.1                5,765                  14.8                        1,310             6.1        2,018   9.4
                                    -----                      ---                -----                  ----                        -----             ---        -----   ---
    Total refinery throughput (14) 32,298                    100.0               39,056                 100.0                       21,472           100.0       21,357 100.0
                                   ======                    =====               ======                 =====                       ======           =====       ====== =====
    Refinery production:
    Gasoline                        7,867                     24.4               10,178                  26.1                        3,798            17.8        4,433  20.9
    Diesel/jet                     13,929                     43.2               14,863                  38.3                        7,152            33.4        6,933  32.9
    Asphalt                         7,528                     23.4               10,918                  28.0                        5,906            27.7        6,456  30.5
    Light unfinished                    -                        -                  525                   1.3                          267             1.3          177   0.8
    Heavy unfinished                1,833                      5.7                  960                   2.5                        3,668            17.2        2,462  11.6
    Other                           1,057                      3.3                1,498                   3.8                          554             2.6          708   3.3
                                    -----                      ---                -----                   ---                          ---             ---          ---   ---
    Total refinery production (15) 32,214                    100.0               38,942                 100.0                       21,345           100.0       21,169 100.0

    Refinery utilization (16)                        43.2%                              45.9%                                         27.8%                26.7%

    THROUGHPUT AND                                     For the Three Months Ended                           For the Nine Months Ended
    PRODUCTION DATA:
    KROTZ SPRINGS REFINERY
                                   September 30,                                                                  September 30,
                                   -------------                                                                  -------------
                                                            2012                   2011                2012                           2011
                                                            ----                   ----                ----                           ----
                                                 bpd         %                 bpd      %              bpd                         %        bpd    %
    Refinery throughput:
    WTI crude                                   23,159               33.5                      -                           -               16,640     25.1            -     -
    Gulf Coast sweet crude                      45,925               66.3                 66,265                        99.9               49,381     74.3       61,423  98.6
    Blendstocks                                    141                0.2                     65                         0.1                  392      0.6          846   1.4
                                                   ---                ---                    ---                         ---                  ---      ---          ---   ---
    Total refinery throughput (14)              69,225              100.0                 66,330                       100.0               66,413    100.0       62,269 100.0
                                                ======              =====                 ======                       =====               ======    =====       ====== =====
    Refinery production:
    Gasoline                                    28,693               41.1                 27,396                        41.1               27,170     40.5       25,905  41.5
    Diesel/jet                                  28,184               40.2                 30,491                        45.7               28,056     41.8       28,757  46.0
    Heavy Oils                                   2,554                3.6                  2,828                         4.2                2,737      4.1        2,577   4.1
    Other                                       10,605               15.1                  6,017                         9.0                9,162     13.6        5,245   8.4
                                                ------               ----                  -----                         ---                -----     ----        -----   ---
    Total refinery production (15)              70,036              100.0                 66,732                       100.0               67,125    100.0       62,484 100.0
                                                ======              =====                 ======                       =====               ======    =====       ====== =====
    Refinery utilization (16)                               83.1%                                79.7%                                       79.4%         80.2%


    ASPHALT SEGMENT
                                                                 For the Three Months Ended                For the Nine Months Ended
                                                                       September 30,                           September 30,
                                                                       -------------                           -------------
                                                                 2012                                       2011                         2012          2011
                                                                 ----                                       ----                         ----          ----
                                                                       (dollars in thousands, except per ton data)
    STATEMENTS OF OPERATIONS DATA:
    Net sales                                                                         $203,982                                       $201,081               $449,442 $435,135
    Operating costs and expenses:
    Cost of sales (17)                                        195,903                                    191,296                               414,323       421,480
    Direct operating expenses                                   8,901                                     11,067                                26,242        32,262
    Selling, general and administrative expenses                1,268                                      1,310                                 3,188         3,833
    Depreciation and amortization                               1,485                                      1,522                                 4,281         4,999
                                                                -----                                      -----                                 -----         -----
    Total operating costs and expenses                        207,557                                    205,195                               448,034       462,574
                                                              -------                                    -------                               -------       -------
    Gain on disposition of assets                                   1                                          -                                     1             -
                                                                  ---                                        ---                                   ---           ---
    Operating income (loss)                                                            $(3,574)                                       $(4,114)                $1,409 $(27,439)
                                                                                       =======                                        =======                 ====== ========
    KEY OPERATING STATISTICS:
    Blended asphalt sales volume (tons in thousands) (18)         300                                        351                                   674           727
    Non-blended asphalt sales volume (tons in thousands) (19)      17                                         30                                    77           127
    Blended asphalt sales price per ton (18)                                           $657.68                                        $540.07                $623.24  $539.52
    Non-blended asphalt sales price per ton (19)               392.76                                     383.87                                381.49        337.82
    Asphalt margin per ton (20)                                 25.49                                      25.68                                 46.76         15.99
    Capital expenditures                                                                $1,075                                           $125                 $8,535   $1,458

    RETAIL AND BRANDED MARKETING SEGMENT
                                                                        For the Three Months Ended                           For the Nine Months Ended
                                                                              September 30,                                        September 30,
                                                                              -------------                                        -------------
                                                                        2012                                 2011              2012                                     2011
                                                                        ----                                 ----              ----                                     ----
                                                                              (dollars in thousands, except per gallon data)
    STATEMENTS OF OPERATIONS DATA:
    Net sales (1)                                                                            $400,140                                               $383,636                 $1,159,369  $1,083,455
    Operating costs and expenses:
    Cost of sales (17)                                               368,299                                       344,884                                   1,060,875          971,865
    Selling, general and administrative expenses                      28,773                                        26,993                                      83,513           78,252
    Depreciation and amortization                                      3,444                                         2,707                                       9,689            9,037
                                                                       -----                                         -----                                       -----            -----
    Total operating costs and expenses                               400,516                                       374,584                                   1,154,077        1,059,154
                                                                     -------                                       -------                                   ---------        ---------
    Gain (loss) on disposition of assets                                 (93)                                          228                                        (311)             149
                                                                         ---                                           ---                                        ----              ---
    Operating income (loss)                                                                     $(469)                                                $9,280                     $4,981     $24,450
                                                                                                =====                                                 ======                     ======     =======
    KEY OPERATING STATISTICS:
    Branded fuel sales (thousands of gallons) (21)                   100,800                                        95,160                                     290,708          272,101
    Branded fuel margin (cents per gallon) (21)                         (2.5)                                          5.5                                        (0.6)             5.0
    Number of stores (end of period) (22)                                299                                           303                                         299              303
    Retail fuel sales (thousands of gallons)                          43,978                                        40,769                                     126,845          115,931
    Retail fuel sales (thousands of gallons per site per month) (22)      51                                            47                                          49               44
    Retail fuel margin (cents per gallon) (23)                          14.5                                          15.9                                        14.6             16.7
    Retail fuel sales price (dollars per gallon) (24)                                           $3.46                                                  $3.52                      $3.51       $3.47
    Merchandise sales                                                                         $82,069                                                $79,366                   $238,062    $225,812
    Merchandise sales (per site per month) (22)                                                   $91                                                    $87                        $88         $83
    Merchandise margin (25)                                             32.3%                                         32.4%                                       32.5%            33.0%
    Capital expenditures                                                                       $6,669                                                 $7,777                    $16,865     $12,271
    (1)           Includes excise taxes on sales
                  by the retail and branded
                  marketing segment of $17,159
                  and $15,476 for the three
                  months ended September 30, 2012
                  and 2011, respectively, and
                  $49,481 and $44,887 for the
                  nine months ended September 30,
                  2012 and 2011, respectively.
                  Net sales also includes net
                  royalty and related net credit
                  card fees of $1,427 and $1,265
                  for the three months ended
                  September 30, 2012 and 2011,
                  respectively, and $4,346 and
                  $4,177 for the nine months
                  ended September 30, 2012 and
                  2011, respectively.

    (2)           Includes corporate headquarters
                  selling, general and
                  administrative expenses of $203
                  and $188 for the three months
                  ended September 30, 2012 and
                  2011, respectively, and $584
                  and $564 for the nine months
                  ended September 30, 2012 and
                  2011, respectively, which are
                  not allocated to our three
                  operating segments.

    (3)           Includes corporate depreciation
                  and amortization of $611 and
                  $404 for the three months ended
                  September 30, 2012 and 2011,
                  respectively, and $1,788 and
                  $1,211 for the nine months
                  ended September 30, 2012 and
                  2011, respectively, which are
                  not allocated to our three
                  operating segments.

    (4)           Interest expense for the nine
                  months ended September 30,
                  2012, includes a charge of
                  $9,624 for the write-off of
                  unamortized original issuance
                  discount associated with our
                  repayment of the Alon Brands
                  Term Loan.

    (5)           Other income (loss), net for the
                  nine months ended September 30,
                  2012 and the three and nine
                  months ended September 30,
                  2011, is substantially the loss
                  on heating oil call option
                  crack spread contracts.

    (6)           The following table provides a
                  reconciliation of net income
                  available to common
                  stockholders under United
                  States generally accepted
                  accounting principles ("GAAP")
                  to adjusted net income
                  available to common
                  stockholders utilized in
                  determining adjusted earnings
                  per share, excluding the after-
                  tax loss on write-off of
                  unamortized original issuance
                  discount, after-tax loss on
                  heating oil call option crack
                  spread contracts, after-tax
                  unrealized losses on commodity
                  swaps, after-tax gain from
                  reduction in system inventories
                  and after-tax gain (loss) on
                  disposition of assets. Our
                  management believes that the
                  presentation of adjusted net
                  income available to common
                  stockholders and adjusted
                  earnings per share, excluding
                  these items, is useful to
                  investors because it provides a
                  more meaningful measurement for
                  evaluation of our Company's
                  operating results.

                     For the Three Months Ended               For the Nine Months Ended
                            September 30,                          September 30,
                            -------------                          -------------
                       2012                           2011                  2012                       2011
                       ----                           ----                  ----                       ----
                                       (dollars in thousands)
    Net income
     available to
     common
     stockholders                         $43,223                                       $28,621             $56,947  $55,420
    Plus: Write-off
     of original
     issuance
     discount, net
     of tax               -                                        -                             5,781            -
    Plus: Loss on
     heating oil
     call option
     crack spread
     contracts, net
     of tax               -                                   10,551                             4,413       32,697
    Plus: Unrealized
     losses on
     commodity
     swaps, net of
     tax              2,795                                        -                            22,416            -
    Less: Gain from
     reduction in
     system
     inventories,
     net of tax           -                                        -                                 -      (13,508)
    Less: (Gain)
     loss on
     disposition of
     assets, net of
     tax              1,569                                     (144)                            1,698         (103)
                      -----                                                                      -----         ----
    Adjusted net
     income
     available to
     common
     stockholders                         $47,587                                       $39,028             $91,255  $74,506
                                          =======                                       =======             =======  =======
    Adjusted
     earnings per
     share                                  $0.84                                         $0.70               $1.62    $1.35
                                            =====                                         =====               =====    =====
                                   (7)   Adjusted
                                         EBITDA
                                         represents
                                         earnings
                                         before net
                                         income
                                         attributable
                                         to non-
                                         controlling
                                         interest,
                                         income tax
                                         expense,
                                         interest
                                         expense,
                                         depreciation
                                         and
                                         amortization,
                                         gain (loss)
                                         on
                                         disposition
                                         of assets,
                                         unrealized
                                         losses on
                                         commodity
                                         swaps and
                                         loss on
                                         heating oil
                                         call option
                                         crack spread
                                         contracts.
                                         Adjusted
                                         EBITDA is
                                         not a
                                         recognized
                                         measurement
                                         under GAAP;
                                         however, the
                                         amounts
                                         included in
                                         Adjusted
                                         EBITDA are
                                         derived from
                                         amounts
                                         included in
                                         our
                                         consolidated
                                         financial
                                         statements.
                                         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 net
                                         income
                                         attributable
                                         to non-
                                         controlling
                                         interest,
                                         income tax
                                         expense,
                                         interest
                                         expense,
                                         gain (loss)
                                         on
                                         disposition
                                         of assets,
                                         unrealized
                                         losses on
                                         commodity
                                         swaps, loss
                                         on heating
                                         oil call
                                         option crack
                                         spread
                                         contracts
                                         and the
                                         accounting
                                         effects of
                                         capital
                                         expenditures
                                         and
                                         acquisitions,
                                         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 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
                                         the prior claim that non-
                                         controlling interest have on the
                                         income generated by non-wholly-
                                         owned subsidiaries;

    --                                    Adjusted EBITDA does not reflect
                                         changes in or cash requirements
                                         for our working capital needs;
                                         and

    --                                    Our calculation of Adjusted EBITDA
                                         may differ from EBITDA
                                         calculations of other companies
                                         in our industry, 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 available to common
     stockholders to Adjusted EBITDA
     for the three and nine months
     ended September 30, 2012 and
     2011:

                       For the Three Months Ended               For the Nine Months Ended
                             September 30,                          September 30,
                             -------------                          -------------
                       2012                                      2011                         2012        2011
                       ----                                      ----                         ----        ----
                                        (dollars in thousands)
    Net income
     available to
     common
     stockholders                            $43,223                                       $28,621              $56,947   $55,420
    Net income
     attributable to
     non-
     controlling
     interest         2,318                                     1,480                               2,758         2,317
    Income tax
     expense         26,776                                    17,004                              34,705        26,952
    Interest expense 22,773                                    22,582                              78,113        63,780
    Depreciation and
     amortization    31,870                                    29,812                              93,000        80,046
    (Gain) loss on
     disposition of
     assets           2,624                                      (229)                              2,838          (161)
    Unrealized
     losses on
     commodity swaps  5,017                                         -                              37,458             -
    Loss on heating
     oil call option
     crack spread
     contracts            -                                    14,269                               7,297        51,093
                        ---                                    ------                                            ------
    Adjusted EBITDA                         $134,601                                      $113,539             $313,116  $279,447
                                            ========                                      ========             ========  ========
              (8)   Includes
                    corporate
                    capital
                    expenditures
                    of $484 and
                    $329 for the
                    three months
                    ended
                    September
                    30, 2012 and
                    2011,
                    respectively,
                    and $1,267
                    and $1,272
                    for the nine
                    months ended
                    September
                    30, 2012 and
                    2011,
                    respectively,
                    which are
                    not
                    allocated to
                    our three
                    operating
                    segments.

              (9)   Net sales include intersegment
                    sales to our asphalt and retail
                    and branded marketing segments
                    at prices which approximate
                    wholesale market prices. These
                    intersegment sales are
                    eliminated through consolidation
                    of our financial statements.

             (10)   Refinery operating margin is a
                    per barrel measurement
                    calculated by dividing the
                    margin between net sales and
                    cost of sales (exclusive of
                    substantial hedge positions and
                    certain inventory adjustments)
                    attributable to each refinery by
                    the refinery's throughput
                    volumes. Industry-wide refining
                    results are driven and measured
                    by the margins between refined
                    product prices and the prices
                    for crude oil, which are
                    referred to as crack spreads. We
                    compare our refinery operating
                    margins to these crack spreads
                    to assess our operating
                    performance relative to other
                    participants in our industry.

                    The refinery operating margin
                    excludes unrealized losses on
                    commodity swaps of $5,017 and
                    $37,458 for the three and nine
                    months ended September 30, 2012,
                    as shown separately in the
                    statements of operations. The
                    refinery operating margin
                    excludes realized losses on
                    commodity swaps of $33,839 and
                    $68,260 for the three and nine
                    months ended September 30, 2012,
                    respectively.

                    The refinery operating margin for
                    the nine months ended September
                    30, 2011, excludes a benefit
                    from inventory reductions of
                    $22,460.

             (11)   Refinery direct operating expense
                    is a per barrel measurement
                    calculated by dividing direct
                    operating expenses at our Big
                    Spring, California, and Krotz
                    Springs refineries, exclusive of
                    depreciation and amortization,
                    by the applicable refinery's
                    total throughput volumes. Direct
                    operating expenses related to
                    the Bakersfield refinery of
                    $3,356 for the nine months ended
                    September 30, 2011 have been
                    excluded from the per barrel
                    measurement calculation.

             (12)   We compare our Big Spring
                    refinery's per barrel operating
                    margin to the Gulf Coast 3/2/1
                    crack spread. A 3/2/1 crack
                    spread is calculated assuming
                    that three barrels of a
                    benchmark crude oil are
                    converted, or cracked, into two
                    barrels of gasoline and one
                    barrel of diesel. We calculate
                    the Gulf Coast 3/2/1 crack
                    spread using the market values
                    of Gulf Coast conventional
                    gasoline and ultra-low sulfur
                    diesel and the market value of
                    West Texas Intermediate Cushing,
                    or WTI, a light, sweet crude
                    oil.

                    We compare our California
                    refineries' per barrel operating
                    margin to the West Coast 3/1/1/1
                    crack spread. A 3/1/1/1 crack
                    spread is calculated assuming
                    that three barrels of a
                    benchmark crude oil are
                    converted into one barrel of
                    gasoline, one barrel of diesel
                    and one barrel of fuel oil. We
                    calculate the West Coast 3/1/1/1
                    crack spread using the market
                    values of West Coast LA CARBOB
                    pipeline gasoline, LA ultra-low
                    sulfur pipeline diesel, and LA
                    380 pipeline CST (fuel oil) and
                    the market value of Buena Vista
                    crude oil.

                    We compare our Krotz Springs
                    refinery's per barrel operating
                    margin to the Gulf Coast 2/1/1
                    crack spread. A 2/1/1 crack
                    spread is calculated assuming
                    that two barrels of a benchmark
                    crude oil are converted into one
                    barrel of gasoline and one
                    barrel of diesel. We calculate
                    the Gulf Coast 2/1/1 crack
                    spread using the market values
                    of Gulf Coast conventional
                    gasoline and Gulf Coast high
                    sulfur diesel and the market
                    value of Light Louisiana Sweet,
                    or LLS, crude oil.

             (13)   The WTI/WTS, or sweet/sour,
                    spread represents the
                    differential between the average
                    value per barrel of WTI crude
                    oil and the average value per
                    barrel of WTS crude oil. The WTI
                    less Buena Vista spread
                    represents the differential
                    between the average value per
                    barrel of WTI crude oil and the
                    average value per barrel of
                    Buena Vista crude oil. The LLS
                    less WTI spread represents the
                    differential between the average
                    value per barrel of LLS crude
                    oil and the average value per
                    barrel of WTI crude oil.

             (14)   Total refinery throughput
                    represents the total barrels per
                    day of crude oil and blendstock
                    inputs in the refinery
                    production process. Throughput
                    data for the California
                    refineries for the nine months
                    ended September 30, 2012 and
                    2011 reflects substantially six
                    months of operations as the
                    California refineries were not
                    in operation for the first
                    quarter of 2012 and 2011. The
                    throughput data of the Krotz
                    Springs refinery for the nine
                    months ended September 30, 2011,
                    reflects approximately a one
                    month shutdown due to flooding
                    in Louisiana and the impact on
                    crude oil supply to the
                    refinery.

             (15)   Total refinery production
                    represents the barrels per day
                    of various products produced
                    from processing crude and other
                    refinery feedstocks through the
                    crude units and other conversion
                    units at the refineries.

             (16)   Refinery utilization represents
                    average daily crude oil
                    throughput divided by crude oil
                    capacity, excluding planned
                    periods of downtime for
                    maintenance and turnarounds.

             (17)   Cost of sales includes
                    intersegment purchases of
                    asphalt blends and motor fuels
                    from our refining and unbranded
                    marketing segment at prices
                    which approximate wholesale
                    market prices. These
                    intersegment purchases are
                    eliminated through consolidation
                    of our financial statements.

             (18)   Blended asphalt represents base
                    asphalt that has been blended
                    with other materials necessary
                    to sell the asphalt as a
                    finished product.

             (19)   Non-blended asphalt represents
                    base material asphalt and other
                    components that require
                    additional blending before being
                    sold as a finished product.

             (20)   Asphalt margin is a per ton
                    measurement calculated by
                    dividing the margin between net
                    sales and cost of sales by the
                    total sales volume. Asphalt
                    margins are used in the asphalt
                    industry to measure operating
                    results related to asphalt
                    sales.

             (21)   Branded fuel sales represent
                    branded fuel sales to our
                    wholesale marketing customers
                    that are primarily supplied by
                    the Big Spring refinery. The
                    branded fuels that are not
                    supplied by the Big Spring
                    refinery are obtained from
                    third-party suppliers. The
                    branded fuel margin represents
                    the margin between the net sales
                    and cost of sales attributable
                    to our branded fuel sales
                    volume, expressed on a cents-
                    per-gallon basis.

             (22)   At September 30, 2012 we had 299
                    retail convenience stores of
                    which 286 sold fuel. At
                    September 30, 2011 we had 303
                    retail convenience stores of
                    which 290 sold fuel.

             (23)   Retail fuel margin represents the
                    difference between motor fuel
                    sales revenue and the net cost
                    of purchased motor fuel,
                    including transportation costs
                    and associated motor fuel taxes,
                    expressed on a cents-per-
                    gallon basis. Motor fuel margins
                    are frequently used in the
                    retail industry to measure
                    operating results related to
                    motor fuel sales.

             (24)   Retail fuel sales price per
                    gallon represents the average
                    sales price for motor fuels sold
                    through our retail convenience
                    stores.

             (25)   Merchandise margin represents the
                    difference between merchandise
                    sales revenues and the delivered
                    cost of merchandise purchases,
                    net of rebates and commissions,
                    expressed as a percentage of
                    merchandise sales revenues.
                    Merchandise margins, also
                    referred to as in-store
                    margins, are commonly used in
                    the retail industry to measure
                    in-store, or non-fuel,
                    operating results.

SOURCE Alon USA Energy, Inc.


Source: PR Newswire