Alon USA Energy, Inc. Reports Second Quarter 2014 Results and Announces Increase in Quarterly Cash Dividend Schedules conference call for August 8, 2014 at 11:30 a.m. Eastern

DALLAS, Aug. 7, 2014 /PRNewswire/ -- Alon USA Energy, Inc. (NYSE: ALJ) ("Alon") today announced results for the second quarter of 2014. Net loss available to stockholders for the second quarter of 2014 was $(7.5) million, or $(0.11) per share, compared to net income available to stockholders of $11.5 million, or $0.17 per share, for the same period last year. Excluding special items, Alon recorded net loss available to stockholders of $(3.4) million, or $(0.05) per share, for the second quarter of 2014, compared to net income available to stockholders of $17.2 million, or $0.27 per share, for the same period last year.

Net loss available to stockholders for the first half of 2014 was $(6.7) million, or $(0.10) per share, compared to net income available to stockholders of $65.7 million, or $1.03 per share, for the same period last year. Excluding special items, Alon recorded net income available to stockholders of $0.5 million, or $0.01 per share, for the first half of 2014, compared to net income available to stockholders of $71.4 million, or $1.12 per share, for the same period last year.

Alon also announced today that its Board of Directors has approved an increase in its regular quarterly cash dividend of $0.06 per share to $0.10 per share, or from $0.24 per share to $0.40 per share per annum. The dividend of $0.10 per share is payable on September 22, 2014 to stockholders of record at the close of business on September 8, 2014.

Paul Eisman, CEO and President, commented, "Our results in the second quarter were largely impacted by the planned major turnaround at the Big Spring refinery, which resulted in reduced throughput rates in the quarter. However, this was partially offset by excellent operational performance at Krotz Springs, which achieved record quarterly throughput of almost 76,000 barrels per day and generated a refinery operating margin of $8.89 per barrel with operating expenses of $3.70 per barrel. We remain optimistic for the future performance of Krotz Springs as growing local crude production and additional pipeline capacity increases light-sweet crude supplies on the Gulf Coast resulting in wider discounts in LLS crude relative to Brent crude.

"During the second quarter we completed the planned major turnaround and the vacuum tower revamp project at the Big Spring refinery. The completion of the turnaround and the vacuum tower revamp project allows us to increase the refinery's crude throughput by 3,000 barrels per day to 73,000 barrels per day. The distillate recovery and energy savings resulting from the vacuum tower revamp project have exceeded expectations with distillate yield increasing by 3,000 barrels per day. This will drive an improvement in our margin capture rate going forward.

"The turnaround was challenging given its very significant scope. The turnaround duration was impacted by difficult weather conditions and a longer than expected maintenance period particularly in the FCC. This resulted in lower throughput than planned in the second quarter. However, we were very pleased with the good safety performance of our people and our contractors during the turnaround. We've also been encouraged by the operating performance of the Big Spring refinery since the turnaround.

"We expect total throughput at the Big Spring refinery for the third and fourth quarters to be 74,000 barrels per day and 75,000 barrels per day, respectively. At the Krotz Springs refinery we expect total throughput for the third and fourth quarters to be 75,000 barrels per day and 76,000 barrels per day, respectively. The profitability of both Big Spring and Krotz Springs should be supported in the third quarter by widening differentials for Midland-priced crude oil. Midland-priced crudes traded at attractive discounts to WTI Cushing in June and July, which will positively affect the cost of crude and refinery operating margins at our Big Spring and Krotz Springs refineries in the third quarter. The WTI Cushing to WTI Midland differentials that will favorably affect the cost of crude for July and August averaged $8.59 per barrel.

"In July we redeemed in full the remaining principal balance of $35.6 million on our Krotz Springs senior secured notes due October 2014."

SECOND QUARTER 2014

Special items reduced earnings by $4.1 million for the second quarter of 2014 primarily as a result of after-tax losses of $3.6 million associated with unrealized losses on commodity swaps and $0.5 million of costs associated with the May redemption of our Krotz Springs senior secured notes. Special items reduced earnings by $5.7 million for the second quarter of 2013 which primarily included after-tax costs for an unplanned reformer shutdown and repair of $11.6 million, partially offset by $5.9 million associated with gains recognized on disposition of assets.

The combined refinery average throughput for the second quarter of 2014 was 114,869 barrels per day ("bpd"), consisting of 38,994 bpd at the Big Spring refinery and 75,875 bpd at the Krotz Springs refinery, compared to a combined refinery average throughput of 130,928 bpd for the second quarter of 2013, consisting of 72,124 bpd at the Big Spring refinery and 58,804 bpd at the Krotz Springs refinery. The lower throughput at our Big Spring refinery during the second quarter of 2014 was due to our planned turnaround that was completed in June 2014. During the second quarter of 2013, the Krotz Springs refinery was impacted by the unplanned shut down and repair of the reformer unit for approximately one month.

Refinery operating margin at the Big Spring refinery was $17.04 per barrel for the second quarter of 2014 compared to $14.99 per barrel for the same period in 2013. This increase in operating margin was primarily due to a widening of both the WTI Cushing to WTS spread and the WTI Cushing to WTI Midland spread, partially offset by a lower Gulf Coast 3/2/1 crack spread. Also impacting the Big Spring refinery operating margin during the second quarter of 2014 were RINs credits of $0.8 million, generated as a result of reduced production during the planned turnaround at our refinery, compared to RINs costs of $8.0 million for the same period in 2013.

Refinery operating margin at the Krotz Springs refinery was $8.89 per barrel for the second quarter of 2014 compared to $1.97 per barrel for the same period in 2013. This increase was primarily due to a higher Gulf Coast 2/1/1 high sulfur diesel crack spread and a widening WTI Cushing to WTI Midland spread, partially offset by a narrowing LLS to WTI Cushing spread. The Krotz Springs refinery operating margin was also impacted during the second quarter of 2014 by $5.5 million of costs associated with RINs obligations. The Krotz Springs refinery received an exemption from the RFS2 requirements for 2013 and as a result did not record costs associated with RINs.

The average Gulf Coast 3/2/1 crack spread was $16.42 per barrel for the second quarter of 2014 compared to $21.17 per barrel for the same period in 2013, which was primarily influenced by a reduction in the Brent to WTI Cushing spread. The average Brent to WTI Cushing spread for the second quarter of 2014 was $7.56 per barrel compared to $12.51 per barrel for the same period in 2013. The average Gulf Coast 2/1/1 high sulfur diesel crack spread was $12.47 per barrel for the second quarter of 2014 compared to $4.15 per barrel for the same period in 2013, which was primarily influenced by an increase in the Brent to LLS spread. The average Brent to LLS spread for the second quarter of 2014 was $4.67 per barrel compared to $(2.56) per barrel for the same period in 2013.

The average WTI Cushing to WTS spread for the second quarter of 2014 was $7.88 per barrel compared to $0.36 per barrel for the same period in 2013. The average WTI Cushing to WTI Midland spread for the second quarter of 2014 was $8.37 per barrel compared to $0.14 per barrel for the same period in 2013. The average LLS to WTI Cushing spread for the second quarter of 2014 was $2.89 per barrel compared to $15.07 per barrel for the same period in 2013.

Asphalt margins for the second quarter of 2014 were $67.64 per ton compared to $83.27 per ton for the same period in 2013. On a cash basis (i.e., excluding inventory effects), asphalt margins in the second quarter of 2014 were $55.45 per ton compared to $90.06 per ton in the second quarter of 2013. This decrease was primarily due to lower asphalt sales prices during the second quarter of 2014 compared to the second quarter of 2013. The average blended asphalt sales price decreased 4.6% to $564.75 per ton in the second quarter of 2014 from $591.81 per ton in the second quarter of 2013, and the average non-blended asphalt sales price decreased 21.6% to $302.75 per ton in the second quarter of 2014 from $386.40 per ton in the second quarter of 2013.

Retail fuel sales volume increased by 2.7% to 48.8 million gallons in the second quarter of 2014 from 47.5 million gallons in the second quarter of 2013.

YEAR-TO-DATE 2014

Special items reduced earnings by $7.2 million for the first half of 2014 primarily as a result of after-tax losses of $8.7 million associated with unrealized losses on commodity swaps and $0.5 million of costs associated with the May redemption of our Krotz Springs senior secured notes, partially offset by $1.9 million associated with gains recognized on disposition of assets. Special items decreased earnings by $5.7 million for the first half of 2013 which primarily included after-tax costs for an unplanned reformer shutdown and repair of $11.6 million, offset by $6.0 million associated with gains recognized on disposition of assets.

The combined refinery average throughput for the first half of 2014 averaged 125,059 bpd, consisting of 56,050 bpd at the Big Spring refinery and 69,009 bpd at the Krotz Springs refinery, compared to a combined refinery average throughput of 124,457 bpd for the first half of 2013, consisting of 65,835 bpd at the Big Spring refinery and 58,622 bpd at the Krotz Springs refinery. The lower throughput at the Big Spring refinery was primarily due to the planned turnaround during the second quarter of 2014. During the first half of 2013, the Krotz Springs refinery was impacted by the unplanned shut down and repair of the reformer unit for approximately one month.

Refinery operating margin at the Big Spring refinery was $15.56 per barrel for the first half of 2014 compared to $21.18 per barrel for the same period in 2013. This decrease in operating margin was primarily due to a lower Gulf Coast 3/2/1 crack spread, partially offset by a widening WTI Cushing to WTI Midland spread. Also impacting refinery operating margin for the first half of 2014 was $2.2 million of costs associated with the purchase of RINs needed to satisfy our obligation to blend biofuels into the products we produce, compared to $8.0 million for the same period in 2013.

Refinery operating margin at the Krotz Springs refinery was $8.22 per barrel for the first half of 2014 compared to $7.51 per barrel for the same period in 2013. This increase is mainly due to higher Gulf Coast 2/1/1 high sulfur diesel crack spreads and a widening WTI Cushing to WTI Midland spread, partially offset by a narrowing LLS to WTI Cushing spread. Also impacting refinery operating margin for the first half of 2014 was $10.6 million of costs associated with the purchase of RINs needed to satisfy our obligation to blend biofuels into the products we produce. The Krotz Springs refinery received an exemption from the RFS2 requirements for 2013 and as a result did not record costs associated with RINs.

The average Gulf Coast 3/2/1 crack spread for the first half of 2014 was $16.61 per barrel compared to $24.76 per barrel for the same period in 2013, which was primarily influenced by a reduction in the Brent to WTI Cushing spread. The average Brent to WTI Cushing spread for the first half of 2014 was $10.25 per barrel compared to $16.98 per barrel for the same period in 2013. The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the first half of 2014 was $11.62 per barrel compared to $6.16 per barrel for the same period in 2013, which was primarily influenced by an increase in the Brent to LLS spread. The average Brent to LLS spread for the first half of 2014 was $5.81 per barrel compared to $(0.65) per barrel for the same period in 2013.

The average WTI Cushing to WTI Midland spread for the first half of 2014 was $5.96 per barrel compared to $3.91 per barrel for the same period in 2013. The average LLS to WTI Cushing spread for the first half of 2014 was $4.42 per barrel compared to $17.63 per barrel for the same period in 2013.

Asphalt margins for the first half of 2014 were $72.67 per ton compared to $73.74 per ton for same period in 2013. On a cash basis (i.e. excluding inventory effects), asphalt margins in the first half of 2014 were $69.48 per ton compared to $77.81 per ton in the first half of 2013. This decrease is primarily due to lower asphalt sales prices during the first half of 2014. The average blended asphalt sales price decreased 2.2% from $570.28 per ton in the first half of 2013 to $557.86 per ton in the first half of 2014 and the average non-blended asphalt sales price decreased 3.5% from $389.59 per ton in the first half of 2013 to $375.85 per ton in the first half of 2014.

Retail fuel sales volume increased by 2.6% from 91.9 million gallons in the first half of 2013 to 94.3 million gallons in the first half of 2014.

CONFERENCE CALL

Alon has scheduled a conference call for Friday, August 8, 2014, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time), to discuss the second quarter 2014 results. To access the call, please dial 888-427-9419, or 719-325-2144 for international callers, at least 10 minutes prior to the start time and ask for the Alon USA Energy call. Investors may also listen to the conference live on the Alon investor relations website, http://ir.alonusa.com. A telephonic replay of the conference call will be available through August 22, 2014, and may be accessed by calling 888-203-1112, or 719-457-0820 for international callers, and using the passcode 8791719#. The archived webcast will also be available at http://ir.alonusa.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Donna Washburn at Dennard § Lascar Associates at 713-529-6600 or email dwashburn@dennardlascar.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. Alon owns 100% of the general partner and approximately 82% of the limited partner interests in Alon USA Partners, LP, which owns a crude oil refinery in Texas with an aggregate crude oil throughput capacity of approximately 73,000 barrels per day. In addition, Alon directly owns crude oil refineries in Louisiana and California, with an aggregate crude oil throughput capacity of approximately 144,000 barrels per day. Alon is a leading marketer of asphalt, which it distributes 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.

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:

Stacey Hudson, Investor Relations Manager

Alon USA Energy, Inc.
972-367-3808




Investors: Jack Lascar
Dennard § Lascar Associates, LLC 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, 2013, IS UNAUDITED)

For the Three Months Ended


For the Six Months Ended


June 30,


June 30,


2014


2013


2014


2013


(dollars in thousands, except per share data)

STATEMENTS OF OPERATIONS DATA:








Net sales (1)

$

1,742,883


$

1,676,595


$

3,426,128


$

3,327,791

Operating costs and expenses:








Cost of sales

1,580,447


1,497,712


3,086,992


2,875,969

Direct operating expenses

67,630


71,446


138,308


145,668

Selling, general and administrative expenses (2)

46,333


43,101


85,722


84,842

Depreciation and amortization (3)

29,453


30,798


59,331


61,961

Total operating costs and expenses

1,723,863


1,643,057


3,370,353


3,168,440

Gain (loss) on disposition of assets

(88)


8,494


2,117


8,512

Operating income

18,932


42,032


57,892


167,863

Interest expense

(29,256)


(20,261)


(57,271)


(41,553)

Equity earnings of investees

1,278


2,110


819


1,729

Other income, net

638


46


621


129

Income (loss) before income tax expense

(8,408)


23,927


2,061


128,168

Income tax expense (benefit)

(1,971)


3,985


123


34,575

Net income (loss)

(6,437)


19,942


1,938


93,593

Net income attributable to non-controlling interest

1,080


8,446


8,670


27,913

Net income (loss) available to stockholders

$

(7,517)


$

11,496


$

(6,732)


$

65,680

Earnings (loss) per share, basic

$

(0.11)


$

0.17


$

(0.10)


$

1.03

Weighted average shares outstanding, basic (in thousands)

68,851


62,614


68,734


62,285

Earnings (loss) per share, diluted

$

(0.11)


$

0.17


$

(0.10)


$

0.97

Weighted average shares outstanding, diluted (in thousands)

68,851


68,071


68,734


67,743

Cash dividends per share

$

0.06


$

0.22


$

0.12


$

0.26

CASH FLOW DATA:








Net cash provided by (used in):








Operating activities

$

(31,072)


$

(31,016)


$

31,642


$

129,754

Investing activities

(47,403)


1,491


(41,007)


(12,082)

Financing activities

(79,666)


(88,873)


(17,983)


(99,500)

OTHER DATA:








Adjusted net income (loss) available to stockholders (4)

$

(3,420)


$

17,200


$

484


$

71,372

Adjusted earnings (loss) per share (4)

$

(0.05)


$

0.27


$

0.01


$

1.12

Adjusted EBITDA (5)

$

53,293


$

66,492


$

126,056


$

223,170

Capital expenditures (6)

36,495


22,208


54,655


30,622

Capital expenditures for turnarounds and catalysts

11,422


1,408


26,269


6,624

 











June 30,
2014


December 31,
2013

BALANCE SHEET DATA (end of period):

(dollars in thousands)

Cash and cash equivalents

$

197,151


$

224,499

Working capital

128,827


60,863

Total assets

2,234,107


2,245,140

Total debt

643,710


612,248

Total debt less cash and cash equivalents

446,559


387,749

Total equity

638,807


625,404


















REFINING AND MARKETING SEGMENT






For the Three Months Ended


For the Six Months Ended


June 30,


June 30,


2014


2013


2014


2013


(dollars in thousands, except per barrel data and pricing statistics)

STATEMENTS OF OPERATIONS DATA:








Net sales (7)

$

1,521,324


$

1,443,614


$

3,026,242


$

2,857,739

Operating costs and expenses:








Cost of sales

1,403,843


1,316,953


2,772,057


2,500,275

Direct operating expenses

57,478


60,347


118,276


124,016

Selling, general and administrative expenses

18,466


14,598


29,000


28,519

Depreciation and amortization

24,713


26,107


50,081


52,612

Total operating costs and expenses

1,504,500


1,418,005


2,969,414


2,705,422

Gain (loss) on disposition of assets

(59)


7,405


(59)


7,405

Operating income

$

16,765


$

33,014


$

56,769


$

159,722

KEY OPERATING STATISTICS:








Per barrel of throughput:








Refinery operating margin – Big Spring (8)

$

17.04


$

14.99


$

15.56


$

21.18

Refinery operating margin – Krotz Springs (8)

8.89


1.97


8.22


7.51

Refinery direct operating expense – Big Spring (9)

7.09


4.16


5.33


4.85

Refinery direct operating expense – Krotz Springs (9)

3.70


4.63


4.09


4.53

Capital expenditures

$

31,659


$

12,646


$

43,855


$

18,615

Capital expenditures for turnarounds and catalysts

11,422


1,408


26,269


6,624

PRICING STATISTICS:








Crack spreads (3/2/1) (per barrel):








Gulf Coast (10)

$

16.42


$

21.17


$

16.61


$

24.76

Crack spreads (2/1/1) (per barrel):








Gulf Coast high sulfur diesel (10)

$

12.47


$

4.15


$

11.62


$

6.16

WTI Cushing crude oil (per barrel)

$

103.04


$

94.20


$

100.86


$

94.23

Crude oil differentials (per barrel):








WTI Cushing less WTI Midland (11)

$

8.37


$

0.14


$

5.96


$

3.91

WTI Cushing less WTS (11)

7.88


0.36


5.79


5.86

LLS less WTI Cushing (11)

2.89


15.07


4.42


17.63

Brent less LLS (11)

4.67


(2.56)


5.81


(0.65)

Brent less WTI Cushing (11)

7.56


12.51


10.25


16.98

Product prices (dollars per gallon):








Gulf Coast unleaded gasoline

$

2.81


$

2.69


$

2.73


$

2.77

Gulf Coast ultra-low sulfur diesel

2.92


2.86


2.93


2.97

Gulf Coast high sulfur diesel

2.83


2.71


2.83


2.86

Natural gas (per MMBtu)

4.58


4.02


4.65


3.76

 


























THROUGHPUT AND PRODUCTION DATA:

BIG SPRING REFINERY

For the Three Months Ended


For the Six Months Ended

June 30,


June 30,


2014


2013


2014


2013


bpd


%


bpd


%


bpd


%


bpd


%

Refinery throughput:
















WTS crude

12,634


32.4


53,627


74.4


23,927


42.7


49,446


75.1

WTI crude

23,391


60.0


17,180


23.8


29,652


52.9


14,380


21.8

Blendstocks

2,969


7.6


1,317


1.8


2,471


4.4


2,009


3.1

Total refinery throughput (12)

38,994


100.0


72,124


100.0


56,050


100.0


65,835


100.0

Refinery production:
















Gasoline

17,484


45.1


35,057


48.7


26,835


48.0


32,436


49.4

Diesel/jet

12,315


31.8


24,748


34.4


18,461


33.0


22,038


33.6

Asphalt

1,660


4.3


4,453


6.2


2,529


4.5


3,909


6.0

Petrochemicals

1,825


4.7


4,628


6.4


3,111


5.5


4,179


6.4

Other

5,483


14.1


3,088


4.3


5,022


9.0


3,029


4.6

Total refinery production (13)

38,767


100.0


71,974


100.0


55,958


100.0


65,591


100.0

Refinery utilization (14)



85.4%




101.2%




95.7%




97.1%


























THROUGHPUT AND PRODUCTION DATA:

KROTZ SPRINGS REFINERY

For the Three Months Ended


For the Six Months Ended

June 30,


June 30,


2014


2013


2014


2013


bpd


%


bpd


%


bpd


%


bpd


%

Refinery throughput:
















WTI crude

29,737


39.2


31,060


52.8


26,904


39.0


28,088


47.9

Gulf Coast sweet crude

46,138


60.8


26,226


44.6


40,953


59.3


28,857


49.2

Blendstocks



1,518


2.6


1,152


1.7


1,677


2.9

Total refinery throughput (12)

75,875


100.0


58,804


100.0


69,009


100.0


58,622


100.0

Refinery production:
















Gasoline

33,909


43.7


22,710


37.9


32,407


46.0


24,800


41.5

Diesel/jet

33,665


43.4


24,267


40.5


29,791


42.3


23,330


39.0

Heavy Oils

1,362


1.8


521


0.9


980


1.4


1,144


1.9

Other

8,616


11.1


12,410


20.7


7,225


10.3


10,559


17.6

Total refinery production (13)

77,552


100.0


59,908


100.0


70,403


100.0


59,833


100.0

Refinery utilization (14)



102.5%




77.4%




91.7%




78.9%

 



ASPHALT SEGMENT









For the Three Months Ended


For the Six Months Ended


June 30,


June 30,


2014


2013


2014


2013


(dollars in thousands, except per ton data)

STATEMENTS OF OPERATIONS DATA:








Net sales (15)

$

117,677


$

144,191


$

213,848


$

299,056

Operating costs and expenses:








Cost of sales (15)(16)

107,801


127,953


195,535


273,469

Direct operating expenses

10,152


11,099


20,032


21,652

Selling, general and administrative expenses

2,299


1,555


5,027


3,203

Depreciation and amortization

1,162


1,563


2,362


3,112

Total operating costs and expenses

121,414


142,170


222,956


301,436

Gain (loss) on disposition of assets

(152)



2,014


Operating income (loss)

$

(3,889)


$

2,021


$

(7,094)


$

(2,380)

KEY OPERATING STATISTICS:








Blended asphalt sales volume (tons in thousands) (17)

142


180


226


310

Non-blended asphalt sales volume (tons in thousands) (18)

4


15


26


37

Blended asphalt sales price per ton (17)

$

564.75


$

591.81


$

557.86


$

570.28

Non-blended asphalt sales price per ton (18)

302.75


386.40


375.85


389.59

Asphalt margin per ton (19)

67.64


83.27


72.67


73.74

Capital expenditures

$

1,501


$

2,599


$

3,219


$

4,391


















RETAIL SEGMENT









For the Three Months Ended


For the Six Months Ended


June 30,


June 30,


2014


2013


2014


2013


(dollars in thousands, except per gallon data)

STATEMENTS OF OPERATIONS DATA:








Net sales (1)

$

252,659


$

244,833


$

473,907


$

468,938

Operating costs and expenses:








Cost of sales (16)

217,580


208,849


407,269


400,167

Selling, general and administrative expenses

25,393


26,755


51,345


52,752

Depreciation and amortization

2,983


2,554


5,697


4,822

Total operating costs and expenses

245,956


238,158


464,311


457,741

Gain on disposition of assets

123


1,089


163


1,107

Operating income

$

6,826


$

7,764


$

9,759


$

12,304

KEY OPERATING STATISTICS:








Number of stores (end of period) (20)

296


298


296


298

Retail fuel sales (thousands of gallons)

48,767


47,490


94,283


91,896

Retail fuel sales (thousands of gallons per site per month) (20)

57


55


55


54

Retail fuel margin (cents per gallon) (21)

19.4


20.2


18.9


20.2

Retail fuel sales price (dollars per gallon) (22)

$

3.47


$

3.40


$

3.36


$

3.40

Merchandise sales

$

83,182


$

83,243


$

156,517


$

156,576

Merchandise sales (per site per month) (20)

$

94


$

93


$

88


$

88

Merchandise margin (23)

30.7%


31.6%


31.1%


31.9%

Capital expenditures

$

2,841


$

6,537


$

6,222


$

7,177






















(1)

Includes excise taxes on sales by the retail segment of $19,101 and $18,531 for the three months ended June 30, 2014 and 2013, respectively, and $36,911 and $35,836 for the six months ended June 30, 2014 and 2013, respectively.



(2)

Includes corporate headquarters selling, general and administrative expenses of $175 and $193 for the three months ended June 30, 2014 and 2013, respectively, and $350 and $368 for the six months ended June 30, 2014 and 2013, respectively, which are not allocated to our three operating segments.



(3)

Includes corporate depreciation and amortization of $595 and $574 for the three months ended June 30, 2014 and 2013, respectively, and $1,191 and $1,415 for the six months ended June 30, 2014 and 2013, respectively, which are not allocated to our three operating segments.



(4)

The following table provides a reconciliation of net income (loss) available to stockholders under United States generally accepted accounting principles ("GAAP") to adjusted net income (loss) available to stockholders utilized in determining adjusted earnings (loss) per share, excluding after-tax write-off of original issuance discount, after-tax write-off of debt issuance costs, after-tax unrealized losses on commodity swaps, after-tax costs associated with the unplanned reformer shutdown and repair and after-tax gain (loss) on disposition of assets. Adjusted net income (loss) available to stockholders is not a recognized measurement under GAAP; however, the amounts included in adjusted net income (loss) available to stockholders are derived from amounts included in our consolidated financial statements. Our management believes that the presentation of adjusted net income (loss) available to stockholders and adjusted earnings (loss) 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 Six Months Ended




June 30,


June 30,




2014


2013


2014


2013




(dollars in thousands)



Net income (loss) available to stockholders

$

(7,517)


$

11,496


$

(6,732)


$

65,680



Plus: Write-off of original issuance discount, net of tax

232



232




Plus: Write-off of debt issuance costs, net of tax

231



231




Plus: Unrealized losses on commodity swaps, net of tax

3,568



8,687




Plus: Costs associated with the unplanned reformer shutdown and repair, net of tax


11,643



11,643



Less: (Gain) loss on disposition of assets, net of tax

66


(5,939)


(1,934)


(5,951)



Adjusted net income (loss) available to stockholders

$

(3,420)


$

17,200


$

484


$

71,372



Adjusted earnings (loss) per share *

$

(0.05)


$

0.27


$

0.01


$

1.12







* Adjusted earnings per share includes the effects of dividends on preferred stock on adjusted net income (loss) available to stockholders necessary to calculate earnings per share.



(5)

Adjusted EBITDA represents earnings before net income attributable to non-controlling interest, income tax expense (benefit), interest expense, depreciation and amortization, gain (loss) on disposition of assets and unrealized losses on commodity swaps. 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 (benefit), interest expense, gain (loss) on disposition of assets, unrealized losses on commodity swaps 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 stockholders to Adjusted EBITDA for the three and six months ended June 30, 2014 and 2013:

 











































For the Three Months Ended


For the Six Months Ended




June 30,


June 30,




2014


2013


2014


2013




(dollars in thousands)



Net income (loss) available to stockholders

$

(7,517)


$

11,496


$

(6,732)


$

65,680



Net income attributable to non-controlling interest

1,080


8,446


8,670


27,913



Income tax expense (benefit)

(1,971)


3,985


123


34,575



Interest expense

29,256


20,261


57,271


41,553



Depreciation and amortization

29,453


30,798


59,331


61,961



(Gain) loss on disposition of assets

88


(8,494)


(2,117)


(8,512)



Unrealized losses on commodity swaps

2,904



9,510




Adjusted EBITDA

$

53,293


$

66,492


$

126,056


$

223,170

 



(6)

Includes corporate capital expenditures of $494 and $426 for the three months ended June 30, 2014 and 2013, respectively, and $1,359 and $439 for the six months ended June 30, 2014 and 2013, respectively, which are not allocated to our three operating segments.



(7)

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



(8)

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 for the three and six months ended June 30, 2014 excludes losses on commodity swaps of $2,389 and $8,627, respectively, as well as negative inventory effects of $907 and $8,041, respectively.




The refinery operating margin for the three and six months ended June 30, 2013 excludes gains on commodity swaps of $10,018 and $9,994, respectively, as well as positive inventory effects of $3,830 and $6,794, respectively.



(9)

Refinery direct operating expense is a per barrel measurement calculated by dividing direct operating expenses at our Big Spring and Krotz Springs refineries by the applicable refinery's total throughput volumes.



(10)

We compare our Big Spring refinery's operating margin to the Gulf Coast 3/2/1 crack spread. A Gulf Coast 3/2/1 crack spread is calculated assuming that three barrels of WTI Cushing crude oil are converted, or cracked, into two barrels of Gulf Coast conventional gasoline and one barrel of Gulf Coast ultra-low sulfur diesel.




We compare our Krotz Springs refinery's operating margin to the Gulf Coast 2/1/1 high sulfur diesel crack spread. A Gulf Coast 2/1/1 high sulfur diesel crack spread is calculated assuming that two barrels of LLS crude oil are converted into one barrel of Gulf Coast conventional gasoline and one barrel of Gulf Coast high sulfur diesel.



(11)

The WTI Cushing less WTI Midland spread represents the differential between the average price per barrel of WTI Cushing crude oil and the average price per barrel of WTI Midland crude oil. The WTI Cushing less WTS, or sweet/sour, spread represents the differential between the average price per barrel of WTI Cushing crude oil and the average price per barrel of WTS crude oil. The LLS less WTI Cushing spread represents the differential between the average price per barrel of LLS crude oil and the average price per barrel of WTI Cushing crude oil. The Brent less LLS spread represents the differential between the average price per barrel of Brent crude oil and the average price per barrel of LLS crude oil. The Brent less WTI Cushing spread represents the differential between the average price per barrel of Brent crude oil and the average price per barrel of WTI Cushing crude oil.



(12)

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



(13)

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.



(14)

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



(15)

Net sales and cost of sales include asphalt purchases sold as part of a supply and offtake arrangement of approximately $36,000 and $32,000 for the three months and approximately $78,000 and $108,000 for the six months ended June 30, 2014 and 2013, respectively. The volumes associated with these sales are excluded from the Key Operating Statistics.



(16)

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



(17)

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



(18)

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



(19)

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.



(20)

At June 30, 2014 we had 296 retail convenience stores of which 285 sold fuel. At June 30, 2013 we had 298 retail convenience stores of which 286 sold fuel.



(21)

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



(22)

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



(23)

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.



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