Quantcast

Alon USA Reports Second Quarter Results

August 5, 2010

DALLAS, Aug. 5 /PRNewswire-FirstCall/ — Alon USA Energy, Inc. (NYSE: ALJ) (“Alon”) today announced results for the quarter and six months ended June 30, 2010. Net loss for the second quarter of 2010 was ($29.3) million, or ($0.54) per share, compared to net loss of ($15.3) million, or ($0.33) per share, for the same period last year. Excluding special items, Alon recorded a net loss of ($29.5) million, or ($0.55) per share, for the second quarter of 2010, compared to net loss of ($12.4) million, or ($0.26) per share, for the same period last year.

Net loss for the six months ended June 30, 2010, was ($82.2) million, or ($1.52) per share, compared to net income of $2.0 million, or $0.04 per share, for the six months ended June 30, 2009. Excluding special items, Alon recorded net loss of ($78.6) million or ($1.45) per share, for the six months ended June 30, 2010, compared to net income of $7.0 million, or $0.15 per share, for the same period last year.

Jeff Morris, Alon’s CEO, commented, “Although our plan was to start earlier, we are pleased that in June the Krotz Springs refinery returned to operation with throughput of 65,000 barrels per day.

“Also, during the second quarter we consummated the acquisition of the Bakersfield refinery. We were able to complete the acquisition without modifying the capital structure of the company. We are planning to integrate the Bakersfield refinery with our other California refineries and expect to complete the integration during the first half of 2011. With the completion of the integration we will have a full conversion West Coast refinery without the need to build a hydrocracker. We are planning to increase the throughput of the integrated California refineries and are expecting substantial improvement to the operating margin.

“Once the Bakersfield refinery has been fully integrated, we will have completed our long term plan to have three complex refineries in Texas, California and Louisiana plus our asphalt business and retail operations.

“We are pleased our consolidated results have improved on an Adjusted EBITDA basis from a negative $38.6 million in the first quarter of 2010 to near break-even in the second quarter, which included only one month of operations of the Krotz Springs refinery. This improvement is the result of significantly improved margins at our Big Spring and California refineries, good results from Alon Brands, in addition to the start up of the Krotz Springs refinery.

“In addition, our board of directors has instructed us to pursue a Rights Offering of convertible preferred shares from which we are expecting net proceeds of $40 million or more. We have received an indication of interest from our shareholder, Alon Israel, to exercise its rights and to invest in the Rights Offering up to $30 million.”

SECOND QUARTER 2010

Special items for the second quarter of 2010 included an after-tax gain of $0.3 million recognized on disposition of assets. Special items for the second quarter of 2009 included accumulated dividends of ($2.0) million on the preferred shares of Alon Refining Krotz Springs prior to their conversion to common stock at December 31, 2009 and an after-tax loss on the disposition of assets of ($1.0) million.

Refinery operating margin at the Big Spring refinery was $9.58 per barrel for the second quarter of 2010 compared to $5.37 per barrel for the same period in 2009. This increase was due to higher Gulf Coast 3/2/1 crack spreads, greater sweet/sour spreads, and increased light product yields. Light product yields were approximately 90% for the second quarter of 2010 and 80% for the second quarter of 2009. Refinery operating margin at the California refineries was $2.87 per barrel for the second quarter of 2010 compared to $2.47 per barrel for the same period in 2009. This increase primarily resulted from higher West Coast 3/2/1 crack spreads and greater light/heavy spreads. The Krotz Springs refinery operating margin for the second quarter of 2010 was ($1.95) per barrel compared to $5.85 per barrel for the same period in 2009. The Krotz Springs refinery restarted operations in June after being down for the first five months of 2010 for a major turnaround.

The Big Spring and California refineries’ combined throughput for the second quarter of 2010 averaged 62,218 barrels per day (“bpd”), consisting of an average of 42,775 bpd at the Big Spring refinery and an average of 19,443 bpd at the California refineries, compared to a combined average of 101,398 bpd in the second quarter of 2009, consisting of an average of 61,573 bpd at the Big Spring refinery and an average of 39,825 bpd at the California refineries. The Krotz Springs refinery average throughput for the second quarter of 2010 averaged 21,960 bpd, reflecting one month’s operations, compared to an average of 58,458 bpd for the second quarter of 2009.

The average Gulf Coast 3/2/1 crack spread for the second quarter of 2010 was $9.75 per barrel compared to $8.30 per barrel for the same period in 2009. The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the second quarter of 2010 was $8.92 per barrel compared to $6.63 per barrel for the second quarter of 2009. Additionally, the average West Coast 3/2/1 crack spread for the second quarter of 2010 was $15.47 per barrel compared to $14.48 per barrel for the second quarter of 2009.

Asphalt margins in the second quarter of 2010 increased to $67.12 per ton compared to $50.97 per ton in the second quarter of 2009. On a cash basis, asphalt margins in the second quarter of 2010 were $55.16 per ton compared to $65.42 per ton in the second quarter of 2009. This decrease was primarily due to higher crude oil costs. The average blended asphalt sales price increased 22.1% from $397.35 per ton in the second quarter of 2009 to $485.15 per ton in the second quarter of 2010 and the average non-blended asphalt sales price increased 160.8% from $145.04 per ton in the second quarter of 2009 to $378.25 per ton in the second quarter of 2010. The price for WTI crude increased 30.6%, from $59.54 per barrel in the second quarter of 2009, to $77.74 per barrel in the second quarter of 2010.

In our retail and branded marketing segment, retail fuel sales gallons increased by 17.2% from 30.2 million gallons in the second quarter of 2009 to 35.4 million gallons in the second quarter of 2010. Our branded fuel sales increased by 7.2% from 69.9 million gallons in the second quarter of 2009 to 74.9 million gallons in the second quarter of 2010. Operating income for our retail and branded marketing segment was $7.7 million for the second quarter of 2010 compared to $2.4 million for the same period in 2009.

YEAR-TO-DATE 2010

Special items for the first half of 2010 included an after-tax loss of ($3.9) million for the write-off of debt issuance costs associated with our prepayment of the Alon Refining Krotz Springs revolving credit facility and an after-tax gain on the disposition of assets of $0.3 million. Special items for the first half of 2009 included accumulated dividends of ($4.0) million on the preferred shares of Alon Refining Krotz Springs prior to their conversion to common stock at December 31, 2009, and an after-tax loss of ($1.0) million recognized on disposition of assets.

Refinery operating margin at the Big Spring refinery was $7.26 per barrel for the first half of 2010 compared to $8.83 per barrel for the same period in 2009. This decrease was due to lower Gulf Coast 3/2/1 crack spreads partially offset by increased light product yields. Light product yields were approximately 88% for the first half of 2010 and 81% for the first half of 2009. Refinery operating margin at the California refineries was $1.29 per barrel for the first half of 2010 compared to $3.99 per barrel for the same period in 2009. This decrease primarily resulted from lower West Coast 3/2/1 crack spreads. The Krotz Springs refinery operating margin for the first half of 2010 was ($1.48) per barrel compared to $8.91 per barrel for the same period last year. This decrease reflects the effects of the refinery being down for the first five months of 2010.

The Big Spring and California refineries’ combined throughput for the first half of 2010 averaged 61,636 bpd, consisting of an average of 42,779 bpd at the Big Spring refinery and an average of 18,857 bpd at the California refineries, compared to a combined average of 97,312 bpd in the first half of 2009, consisting of an average of 62,987 bpd at the Big Spring refinery and an average of 34,325 bpd at the California refineries. The Krotz Springs refinery average throughput for the first half of 2010 was an average of 11,041 bpd, reflecting one month’s operations, compared to an average of 56,099 bpd for the same period in 2009.

The average 3/2/1 Gulf Coast crack spread for the first half of 2010 was $8.43 per barrel compared to $8.97 per barrel for the same period in 2009. The average 2/1/1 Gulf Coast high sulfur diesel crack spread for the first half of 2010 was $7.59 per barrel compared to $8.04 per barrel for the first half of 2009. Additionally, the average 3/2/1 West Coast crack spread for the first half of 2010 was $12.81 per barrel compared to $16.19 per barrel for the first half of 2009.

Asphalt margins in the first half of 2010 increased to $28.10 per ton compared to $15.33 per ton in the first half of 2009. On a cash basis, asphalt margins in the first half of 2010 were $38.54 per ton compared to $80.44 per ton in the first half of 2009. This decrease was due primarily to higher crude oil costs. The average blended asphalt sales price increased 28.9% from $369.93 per ton in the first half of 2009 to $476.85 per ton in the first half of 2010 and the average non-blended asphalt sales price increased 157.9% from $135.54 per ton in the first half of 2009 to $349.50 per ton in the first half of 2010. The price for WTI crude increased 52.3%, from $51.36 per barrel in the first half of 2009 to $78.24 per barrel in the first half of 2010.

In our retail and branded marketing segment, retail fuel sales gallons increased by 16.6% from 58.4 million gallons in the first half of 2009 to 68.1 million gallons in the first half of 2010. Our branded fuel sales increased by 6.3% from 136.7 million gallons in the first half of 2009 to 145.3 million gallons in the first half of 2010. Operating income for our retail and branded marketing segment was $5.9 million for the first half of 2010 compared to $3.8 million for the same period in 2009.

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 September 15, 2010 to stockholders of record at the close of business on August 31, 2010.

CONFERENCE CALL

Alon has scheduled a conference call for Friday, August 6, 2010, at 10:00 a.m. Eastern, to discuss the second quarter 2010 results. To access the call, please dial 877-941-2332, or 480-629-9722, 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 August 20, 2010, and may be accessed by calling 800-406-7325, or 303-590-3030, for international callers, and using the passcode 4324014#. 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&E at 713-529-6600 or email dmw@drg-e.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 more than 300 convenience stores in Texas and New Mexico. Alon markets motor fuel products under the FINA brand at these locations and at approximately 610 distributor-serviced locations.

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:       Claire A. Hart, Senior Vice President
                    Alon USA Energy, Inc.
                    972-367-3649

                    Investors:  Jack Lascar/Sheila Stuewe
                    DRG&E / 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
     (ALL INFORMATION IN THIS PRESS RELEASE,
     EXCEPT FOR BALANCE SHEET DATA AS OF
     DECEMBER 31, 2009 IS UNAUDITED)        

                              For the Three Months      For the Six Months
                                     Ended                   Ended
                                    June 30,               June 30,
                                    --------               --------
                                2010        2009        2010        2009
                                ----        ----        ----        ----
                                  (dollars in            (dollars in
                               thousands, except      thousands, except
                                per share data)        per share data)
    STATEMENT OF
     OPERATIONS DATA:
    Net
     sales
     (1)                       $840,361  $1,106,398  $1,419,674  $1,828,578
    Operating costs and
     expenses:
      Cost of sales             751,075     988,318   1,289,790   1,528,048
      Direct operating
       expenses                  62,924      71,345     124,368     140,209
      Selling, general
       and administrative
       expenses (2)              29,182      31,581      60,989      63,496
       Depreciation and
       amortization (3)          25,368      23,561      51,690      45,651
                                 ------      ------      ------      ------
        Total
         operating
         costs and
         expenses               868,549   1,114,805   1,526,837   1,777,404
                                -------   ---------   ---------   ---------
    Gain (loss) on
     disposition of assets.         474      (1,600)        474      (1,600)
                                    ---      ------         ---      ------
    Operating
     income (loss)              (27,714)    (10,007)   (106,689)     49,574
    Interest expense (4)        (21,735)    (21,023)    (48,320)    (49,279)
    Equity earnings of
     investees                    1,209       8,376       1,106       8,373
    Other income (loss),
     net (5)                       (365)        191      13,839         448
                                   ----         ---      ------         ---
    Income (loss) before
     income tax expense
     (benefit), non- controlling
     interest in loss of
     subsidiaries and
     accumulated dividends
     on preferred stock of
     subsidiary                 (48,605)    (22,463)   (140,064)      9,116
    Income tax expense
     (benefit)                  (17,093)     (7,549)    (51,806)      3,446
                                -------      ------     -------       -----
    Income (loss) before
     non-controlling interest
     in loss of
     subsidiaries and
     accumulated dividends
     on preferred stock of
     subsidiary                 (31,512)    (14,914)    (88,258)      5,670
    Non-controlling interest
     in loss of
     subsidiaries                (2,253)     (1,724)     (6,057)       (641)
    Accumulated dividends
     on preferred stock of
     subsidiary                       -       2,150           -       4,300
                                    ---       -----         ---       -----
    Net income (loss)
     available to
     common stockholders       $(29,259)   $(15,340)   $(82,201)     $2,011
                               ========    ========    ========      ======
    Earnings (loss)
     per share, basic            $(0.54)     $(0.33)     $(1.52)      $0.04
                                 ======      ======      ======       =====
    Weighted average shares
     outstanding, basic
     (in thousands)              54,164      46,809      54,162      46,807
                                 ======      ======      ======      ======
    Earnings (loss)
     per share,
     diluted                     $(0.54)     $(0.33)     $(1.52)      $0.04
                                 ======      ======      ======       =====
    Weighted average
     shares outstanding,
     diluted (in thousands)      54,164      46,809      54,162      46,810
                                 ======      ======      ======      ======

    Cash dividends
     per share                    $0.04       $0.04       $0.08       $0.08
                                  =====       =====       =====       =====
    CASH FLOW DATA: (6)
    Net cash provided
     by (used in):
       Operating
       activities              $(20,581)   $177,437    $(61,560)   $296,964
       Investing
       activities                 2,275     (29,705)     (4,056)    (44,714)
       Financing
       activities                18,459    (122,548)     32,892    (227,227)
    OTHER DATA:
    Adjusted net
     income (loss)
     available to
     common stockholders (7)   $(29,539)   $(12,375)   $(78,607)     $6,973
    Earnings (loss)
     per share, excluding
     write-off of
     unamortized debt
     issuance costs, net of
     tax, (gain) loss on
     disposition of assets,
     net of tax, and accumulated
     dividends on preferred
     stock of subsidiary (7)     $(0.55)     $(0.26)     $(1.45)      $0.15
    Adjusted
     EBITDA (8)                  (1,976)     23,721     (40,528)    105,646
    Capital expenditures (9)      5,385      18,887      12,688      29,244
    Capital expenditures
     to rebuild the Big
     Spring refinery                  -       7,146           -      39,281
    Capital expenditures
     for turnaround and
     chemical catalyst            1,522       2,951      11,531      10,314

                                                        June 30, December 31,
                                                          2010        2009
                                                          ----        ----
    BALANCE SHEET DATA (end of
     period):
    Cash and cash equivalents                            $7,713     $40,437
    Working capital                                      10,086      84,257
    Total assets                                      2,182,408   2,132,789
    Total debt                                          932,039     937,024
    Total equity                                        346,386     431,918


    REFINING AND UNBRANDED MARKETING
     SEGMENT                 For the Three Months      For the Six Months
                                     Ended                   Ended
                                    June 30,                June 30,
                                    --------                --------
                                2010        2009        2010        2009
                                ----        ----        ----        ----
                                 (dollars in thousands, except per barrel
                                       data and pricing statistics)
    STATEMENTS OF
     OPERATIONS DATA:
    Net sales (10)            $691,331    $961,103  $1,174,371  $1,594,400
    Operating costs and
     expenses:
      Cost of sales            651,470     889,519   1,115,334   1,358,882
      Direct operating
       expenses                 51,493      61,638     101,845     120,009
      Selling, general and
       administrative
       expenses                  3,874       7,239      10,262      14,566
      Depreciation and
       amortization             19,881      18,300      40,835      35,177
                                ------      ------      ------      ------
        Total operating costs
         and expenses          726,718     976,696   1,268,276   1,528,634
                               -------     -------   ---------   ---------
    Loss on disposition
     of assets                       -      (1,600)          -      (1,600)
                                   ---      ------         ---      ------
    Operating income
     (loss)                   $(35,387)   $(17,193)   $(93,905)    $64,166
                              ========    ========    ========     =======

    KEY OPERATING
     STATISTICS:
    Total sales volume
     (bpd)                      69,423     132,286      52,943     127,400
    Per barrel of
     throughput:
      Refinery operating
       margin - Big Spring
       (11)                      $9.58       $5.37       $7.26       $8.83
      Refinery operating
       margin - CA
       Refineries (11)            2.87        2.47        1.29        3.99
      Refinery operating
       margin - Krotz
       Springs (11)              (1.95)       5.85       (1.48)       8.91
      Refinery direct
       operating expense -
       Big Spring (12)            5.78        4.70        6.18        4.14
      Refinery direct
       operating expense -
       CA Refineries (12)         7.46        3.80        8.12        4.65
      Refinery direct
       operating expense -
       Krotz Springs (12)         7.69        4.04       12.96        4.32
    Capital expenditures         4,215      16,925      10,527      26,323
    Capital expenditures
     to rebuild the Big
     Spring refinery                 -       7,146           -      39,281
    Capital expenditures
     for turnaround and
     chemical catalyst           1,522       2,951      11,531      10,314

    PRICING STATISTICS:
    WTI crude oil (per
     barrel)                    $77.74      $59.54      $78.24      $51.36
    WTS crude oil (per
     barrel)                     75.92       58.15       76.39       50.20
    MAYA crude oil (per
     barrel)                     68.03       53.89       68.93       46.28
    Crack spreads (3/2/1)
     (per barrel):
      Gulf Coast (13)            $9.75       $8.30       $8.43       $8.97
      Group III (13)             11.47        9.34        9.13        9.53
      West Coast (13)            15.47       14.48       12.81       16.19
    Crack spreads
     (6/1/2/3) (per
     barrel):
      West Coast (13)            $4.82       $2.59       $3.15       $4.39
    Crack spreads (2/1/1)
     (per barrel):
      Gulf Coast high
       sulfur diesel (13)        $8.92       $6.63       $7.59       $8.04
    Crude oil
     differentials (per
     barrel):
      WTI less WTS (14)          $1.82       $1.39       $1.85       $1.16
      WTI less MAYA (14)          9.71        5.65        9.31        5.08
    Product price
     (dollars per
     gallon):
      Gulf Coast unleaded
       gasoline                 $2.053      $1.638      $2.046      $1.429
      Gulf Coast ultra low-
       sulfur diesel             2.143       1.569       2.098       1.451
      Gulf Coast high
       sulfur diesel             2.074       1.513       2.041       1.400
      Group III unleaded
       gasoline                  2.101       1.674       2.068       1.454
      Group III ultra low-
       sulfur diesel             2.171       1.571       2.103       1.441
      West Coast LA CARBOB
       (unleaded gasoline)       2.231       1.841       2.184       1.674
      West Coast LA ultra
       low-sulfur diesel         2.196       1.606       2.136       1.478
      Natural gas (per
       MMBTU)                     4.35        3.81        4.66        4.13


    THROUGHPUT AND YIELD            For the Three Months Ended
     DATA:                                   June 30,
    BIG SPRING                               --------
                                     2010              2009
                                     ----              ----
                                  bpd       %       bpd       %
    Refinery throughput:
      Sour crude                31,776     74.3   50,771     82.5
      Sweet crude                7,839     18.3    7,768     12.6
      Blendstocks                3,160      7.4    3,034      4.9
                                 -----      ---    -----      ---
    Total refinery throughput
     (15)                       42,775    100.0   61,573    100.0
                                ======    =====   ======    =====
    Refinery production:
      Gasoline                  22,675     53.6   26,333     43.0
      Diesel/jet                12,654     29.9   19,571     32.0
      Asphalt                    2,346      5.5    6,444     10.5
      Petrochemicals             2,576      6.1    3,281      5.4
      Other                      2,056      4.9    5,595      9.1
                                 -----      ---    -----      ---
    Total refinery production
     (16)                       42,307    100.0   61,224    100.0
                                ======    =====   ======    =====
    Refinery utilization (17)              56.6%             83.6%

    THROUGHPUT AND YIELD             For the Six Months Ended
     DATA:                                   June 30,
    BIG SPRING                               --------
                                     2010              2009
                                     ----              ----
                                  bpd       %       bpd       %
    Refinery throughput:
      Sour crude                33,865     79.2   53,099     84.3
      Sweet crude                6,556     15.3    7,815     12.4
      Blendstocks                2,358      5.5    2,073      3.3
                                 -----      ---    -----      ---
    Total refinery throughput
     (15)                       42,779    100.0   62,987    100.0
                                ======    =====   ======    =====
    Refinery production:
      Gasoline                  21,652     51.3   27,294     43.4
      Diesel/jet                13,195     31.3   20,648     32.8
      Asphalt                    2,353      5.6    5,840      9.3
      Petrochemicals             2,300      5.4    3,154      5.0
      Other                      2,722      6.4    5,946      9.5
                                 -----      ---    -----      ---
    Total refinery production
     (16)                       42,222    100.0   62,882    100.0
                                ======    =====   ======    =====
    Refinery utilization (17)              60.5%             87.0%


    THROUGHPUT AND YIELD            For the Three Months Ended
    DATA:                                    June 30,
    CALIFORNIA REFINERIES                    --------
                                      2010              2009
                                      ----              ----
                                  bpd       %       bpd       %
    Refinery throughput:
      Medium sour crude          3,448     17.7   20,150     50.6
      Heavy crude               15,597     80.3   19,315     48.5
      Blendstocks                  398      2.0      360      0.9
                                   ---      ---      ---      ---
    Total refinery throughput
     (15)                       19,443    100.0   39,825    100.0
                                ======    =====   ======    =====
    Refinery production:
      Gasoline                   2,783     14.7    6,587     17.0
      Diesel/jet                 4,060     21.4    9,086     23.4
      Asphalt                    6,516     34.3   11,450     29.5
      Light unfinished               -        -       99      0.3
      Heavy unfinished           5,212     27.4   10,868     28.0
      Other                        423      2.2      697      1.8
                                   ---      ---      ---      ---
    Total refinery production
     (16)                       18,994    100.0   38,787    100.0
                                ======    =====   ======    =====
    Refinery utilization (17)              26.3%             54.4%

    THROUGHPUT AND YIELD             For the Six Months Ended
    DATA:                                    June 30,
    CALIFORNIA REFINERIES                    --------
                                      2010              2009
                                      ----              ----
                                  bpd       %       bpd       %
    Refinery throughput:
      Medium sour crude          3,775     20.0   16,209     47.2
      Heavy crude               14,674     77.8   17,914     52.2
      Blendstocks                  408      2.2      202      0.6
                                   ---      ---      ---      ---
    Total refinery throughput
     (15)                       18,857    100.0   34,325    100.0
                                ======    =====   ======    =====
    Refinery production:
      Gasoline                   2,626     14.3    4,936     14.7
      Diesel/jet                 3,717     20.3    7,658     22.8
      Asphalt                    6,341     34.6   10,100     30.1
      Light unfinished               -        -      999      3.0
      Heavy unfinished           5,235     28.6    9,340     27.8
      Other                        408      2.2      534      1.6
                                   ---      ---      ---      ---
    Total refinery production
     (16)                       18,327    100.0   33,567    100.0
                                ======    =====   ======    =====
    Refinery utilization (17)              25.4%             56.1%


    THROUGHPUT AND YIELD           For the Three Months Ended
     DATA:                                  June 30,
    KROTZ SPRINGS (A)                       --------
                                      2010            2009
                                      ----            ----
                                  bpd       %       bpd      %
    Refinery throughput:
      Light sweet crude         10,358     47.2   28,065   48.0
      Heavy sweet crude         10,693     48.7   26,362   45.1
      Blendstocks                  909      4.1    4,031    6.9
                                   ---      ---    -----    ---
    Total refinery throughput
     (15)                       21,960    100.0   58,458  100.0
                                ======    =====   ======  =====
    Refinery production:
      Gasoline                   8,427     38.6   27,962   47.1
      Diesel/jet                 9,098     41.7   24,514   41.3
      Heavy oils                 2,809     12.9    1,358    2.3
      Other                      1,485      6.8    5,521    9.3
                                 -----      ---    -----    ---
    Total refinery production
     (16)                       21,819    100.0   59,355  100.0
                                ======    =====   ======  =====
    Refinery utilization (17)              25.3%           65.5%

    THROUGHPUT AND YIELD         For the Six Months Ended
     DATA:                                June 30,
    KROTZ SPRINGS (A)                     --------
                                     2010           2009
                                     ----           ----
                                  bpd      %      bpd      %
    Refinery throughput:
      Light sweet crude          5,208   47.2   27,746   49.5
      Heavy sweet crude          5,376   48.7   23,240   41.4
      Blendstocks                  457    4.1    5,113    9.1
                                   ---    ---    -----    ---
    Total refinery throughput
     (15)                       11,041  100.0   56,099  100.0
                                ======  =====   ======  =====
    Refinery production:
      Gasoline                   4,237   38.6   26,215   46.0
      Diesel/jet                 4,575   41.7   24,491   42.9
      Heavy oils                 1,412   12.9    1,124    2.0
      Other                        746    6.8    5,205    9.1
                                   ---    ---    -----    ---
    Total refinery production
     (16)                       10,970  100.0   57,035  100.0
                                ======  =====   ======  =====
    Refinery utilization (17)            12.7%           61.4%

    (A)  The throughput data reflects substantially one month of
    operations in June 2010 due to the restart after major turnaround
    activity.


                               For the Three Months       For the Six Months
    ASPHALT SEGMENT                   Ended                     Ended
                                    June 30,                  June 30,
                                    --------                  --------
                                  2010        2009        2010        2009
                                  ----        ----        ----        ----
                               (dollars in thousands, except per ton data)
    STATEMENTS OF
     OPERATIONS DATA:
    Net sales                 $104,964    $125,480    $172,105    $176,240
    Operating costs and
     expenses:
      Cost of sales (18)        90,264     107,897     161,709     168,130
      Direct operating
       expenses                 11,431       9,707      22,523      20,200
      Selling, general and
       administrative
       expenses                  1,091       1,050       2,157       2,204
      Depreciation and
       amortization              1,715       1,701       3,432       3,399
                                 -----       -----       -----       -----
        Total operating costs
         and expenses          104,501     120,355     189,821     193,933
                               -------     -------     -------     -------
    Operating income (loss)       $463      $5,125    $(17,716)   $(17,693)
                                  ====      ======    ========    ========

    KEY OPERATING
     STATISTICS:
    Blended asphalt sales
     volume (tons in
     thousands) (19)               207         299         336         446
    Non-blended asphalt
     sales volume (tons in
     thousands) (20)                12          46          34          83
    Blended asphalt sales
     price per ton (19)        $485.15     $397.35     $476.85     $369.93
    Non-blended asphalt
     sales price per ton
     (20)                       378.25      145.04      349.50      135.54
    Asphalt margin per ton
     (21)                        67.12       50.97       28.10       15.33
    Capital expenditures          $347        $414        $526        $576


    RETAIL AND BRANDED         For the Three Months       For the Six Months
     MARKETING SEGMENT                Ended                     Ended
                                    June 30,                  June 30,
                                    --------                  --------
                                  2010        2009        2010        2009
                                  ----        ----        ----        ----
                                 (dollars in thousands, except per gallon
                                                  data)
    STATEMENTS OF
     OPERATIONS DATA:
    Net sales                 $253,955    $206,461    $479,983    $373,931
    Operating costs and
     expenses:
      Cost of sales (18)       219,230     177,548     419,532     317,029
      Selling, general and
       administrative
       expenses                 24,029      23,102      48,194      46,346
      Depreciation and
       amortization              3,436       3,412       6,856       6,780
                                 -----       -----       -----       -----
        Total operating costs
         and expenses          246,695     204,062     474,582     370,155
                               -------     -------     -------     -------
      Gain on disposition
       of assets                   474           -         474           -
                                   ---         ---         ---         ---
    Operating income            $7,734      $2,399      $5,875      $3,776
                                ======      ======      ======      ======

    KEY OPERATING
     STATISTICS:
    Branded fuel sales
     (thousands of
     gallons) (22)              74,852      69,858     145,321     136,650
    Branded fuel margin
     (cents per gallon)
     (22)                          6.4         4.7         5.3         5.1

    Number of stores (end
     of period)                    306         306         306         306
    Retail fuel sales
     (thousands of
     gallons)                   35,408      30,198      68,122      58,381
    Retail fuel sales
     (thousands of
     gallons per site per
     month)                         39          33          37          32
    Retail fuel margin
     (cents per gallon)
     (23)                         14.1        12.5        11.7        14.1
    Retail fuel sales
     price (dollars per
     gallon) (24)                $2.74       $2.26       $2.69       $2.08
    Merchandise sales          $73,247     $70,650    $136,728    $133,262
    Merchandise sales
     (per site per month)           80          76          74          73
    Merchandise margin
     (25)                         32.6%       30.2%       31.4%       30.7%
    Capital expenditures          $430        $894        $827      $1,113

(1) Includes excise taxes on sales by the retail and branded marketing segment of $13,531 and $11,770 for the three months ended June 30, 2010 and 2009, respectively, and $26,317 and $22,814 for the six months ended June 30, 2010 and 2009, respectively. Net sales also include royalty and related net credit card fees of $1,046 and $559 for the three months ended June 30, 2010 and 2009, respectively, and $1,819 and $792 for the six months ended June 30, 2010 and 2009, respectively.

(2) Includes corporate headquarters selling, general and administrative expenses of $188 and $190 for the three months ended June 30, 2010 and 2009, respectively, and $376 and $380 for the six months ended June 30, 2010 and 2009, respectively, which are not allocated to our three operating segments.

(3) Includes corporate depreciation and amortization of $336 and $148 for the three months ended June 30, 2010 and 2009, respectively, and $567 and $295 for the six months ended June 30, 2010 and 2009, respectively, which are not allocated to our three operating segments.

(4) Interest expense of $48,320 for the six months ended June 30, 2010, includes a charge of $6,659 for the write-off of debt issuance costs associated with our prepayment of the Alon Refining Krotz Springs, Inc. revolving credit facility. Interest expense of $49,279 for the six months ended June 30, 2009, includes $5,715 related to the unwind of the heating oil crack spread hedge at the Krotz Springs refinery.

(5) Other income (loss), net for the six months ended June 30, 2010 substantially represents the gain from the sale of our investment in Holly Energy Partners.

(6) Cash provided by operating activities for the three months ended June 30, 2009 includes cash from the liquidation proceeds from the heating oil crack spread hedge of $133,581 and cash provided by operating activities for the first half of 2009 includes cash from the liquidation proceeds from the heating oil crack spread hedge of $133,581 and proceeds from the receipt of income tax receivables of $112,952. Cash used in financing activities for the three months ended June 30, 2009 includes repayments on long-term debt and revolving credit facilities of $117,988 sourced primarily from the liquidation proceeds from the heating oil crack spread hedge and cash used in financing activities for the first half of 2009 includes repayments on long-term debt and revolving credit facilities of $219,214 sourced primarily from the liquidation proceeds from the heating oil crack spread hedge and proceeds from the receipt of income tax receivables.

(7) The following table provides a reconciliation of net income (loss) available to common stockholders under United States generally accepted accounting principles (“GAAP”) to adjusted net income (loss) available to common stockholders utilized in determining earnings (loss) per common share, excluding the after-tax loss on write-off of unamortized debt issuance costs, after-tax gain (loss) on disposition of assets and accumulated dividends on preferred stock of subsidiary. Our management believes that the presentation of adjusted net income (loss) available to common stockholders and earnings (loss) per common 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   For the Six Months
                                    Ended                 Ended
                                   June 30,              June 30,
                                   --------              --------
                               2010       2009       2010       2009
                               ----       ----       ----       ----
                                   (dollars in thousands, except
                                        earnings per share)
    Net income (loss)
     available to common
     stockholders           $(29,259)  $(15,340)  $(82,201)    $2,011
       Plus:  Loss on
        disposition of
        assets, net of tax         -        969          -        969
       Plus:  Accumulated
        dividends on
        preferred stock of
        subsidiary                 -      1,996          -      3,993
       Plus:  Write-off of
        unamortized debt
        issuance costs, net
        of tax                     -          -      3,874          -
       Less:  Gain on
        disposition of
        assets, net of tax      (280)         -       (280)         -
                                ----        ---       ----        ---
    Adjusted net income
     (loss) available to
     common stockholders    $(29,539)  $(12,375)  $(78,607)    $6,973
                            --------   --------   --------     ------

    Weighted average
     shares outstanding
     (in thousands)           54,164     46,809     54,162     46,807
                              ======     ======     ======     ======
    Earnings (loss) per
     share, excluding
     write-off of
     unamortized debt
     issuance costs, net
     of tax, gain (loss)
     on disposition of
     assets, net of tax,
     and accumulated
     dividends on
     preferred stock of
     subsidiary               $(0.55)    $(0.26)    $(1.45)     $0.15
                              ======     ======     ======      =====

(8) Adjusted EBITDA represents earnings before non-controlling interest in income of subsidiaries, income tax expense, interest expense, depreciation and amortization and gain on disposition of assets. 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 non-controlling interest in income of subsidiaries, income tax expense, interest expense, gain on disposition of assets 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 (loss) available to common stockholders to Adjusted EBITDA for the three and six months ended June 30, 2010 and 2009, respectively:


                             For the Three Months      For the Six Months
                                    Ended                    Ended
                                  June 30,                 June 30,
                                  --------                 --------
                                 2010       2009       2010       2009
                                 ----       ----       ----       ----
                                      (dollars in thousands)
    Net income (loss)
     available to common
     stockholders            $(29,259)  $(15,340)  $(82,201)    $2,011
    Non-controlling interest
     in loss of subsidiaries
     (including accumulated
     dividends on preferred
     stock of subsidiary)      (2,253)       426     (6,057)     3,659
    Income tax expense
     (benefit)                (17,093)    (7,549)   (51,806)     3,446
    Interest expense           21,735     21,023     48,320     49,279
    Depreciation and
     amortization              25,368     23,561     51,690     45,651
    (Gain) loss on
     disposition of assets       (474)     1,600       (474)     1,600
                                 ----      -----       ----      -----
    Adjusted EBITDA           $(1,976)   $23,721   $(40,528)  $105,646
                              =======    =======   ========   ========

(9) Includes corporate capital expenditures of $393 and $654 for the three months ended June 30, 2010 and 2009, respectively, and $808 and $1,232 for the six months ended June 30, 2010 and 2009, respectively, which are not allocated to our three operating segments.

(10) 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.

(11) Refinery operating margin is a per barrel measurement calculated by dividing the margin between net sales and cost of sales (exclusive of substantial unrealized hedge positions and inventory adjustments related to acquisitions) 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 for the three and six months ended June 30, 2010, excludes a benefit of $1,400 to cost of sales for inventory adjustments related to the Bakersfield refinery acquisition. There were unrealized hedging gains of $2,373 and $20,399 for the Krotz Springs refinery for the three and six months ended June 30, 2009, respectively. Additionally, realized gains related to the unwind of the heating oil crack spread hedge of $133,581 were excluded from the Krotz Springs refinery margin for the three and six months ended June 30, 2009.

(12) 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 $410 have been excluded from the per barrel measurement calculation for the three and six months ended June 30, 2010.

(13) A 3/2/1 crack spread in a given region 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, or WTI, a light sweet crude oil. We calculate the Group III 3/2/1 crack spread using the market values of Group III conventional gasoline and ultra low-sulfur diesel and the market value of WTI crude oil. We calculate the West Coast 3/2/1 crack spread using the market values of West Coast LA CARBOB pipeline gasoline and LA ultra low-sulfur pipeline diesel and the market value of WTI crude oil. A 6/1/2/3 crack spread is calculated assuming that six barrels of a benchmark crude oil are converted, or cracked, into one barrel of gasoline, two barrels of diesel and three barrels of fuel oil. We calculate the West Coast 6/1/2/3 crack spread using the market values of West Coast LA CARBOB pipeline gasoline, LA ultra low-sulfur pipeline diesel, LA 380 pipeline CST (fuel oil) and the market value of WTI crude oil. We calculate the Gulf Coast 2/1/1 crack spread using the market values of Gulf Coast conventional gasoline and high sulfur diesel and the market value of WTI crude oil.

(14) 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/Maya, or light/heavy, spread represents the differential between the average value per barrel of WTI crude oil and the average value per barrel of Maya crude oil.

(15) Total refinery throughput represents the total barrels per day of crude oil and blendstock inputs in the refinery production process.

(16) 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 refinery.

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

(18) 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.

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

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

(21) 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.

(22) Marketing sales volume represents 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 marketing 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.

(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 convenience store industry to measure in-store, or non-fuel, operating results.

SOURCE Alon USA Energy, Inc.


Source: newswire



comments powered by Disqus