Alon USA Reports Third Quarter Results Declares Quarterly Cash Dividend

Company schedules conference call for November 7, 2012 at 9:00 a.m. Eastern

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

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

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

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

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

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

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

THIRD QUARTER 2012

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

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

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

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

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

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

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

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

YEAR-TO-DATE 2012

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

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

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

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

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

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

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

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

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

CONFERENCE CALL

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

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

Any statements in this press release that are not statements of historical fact are forward-looking statements. Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows. Additional information regarding these and other risks is contained in our filings with the Securities and Exchange Commission.

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

Contacts:

Amir Barash, Vice President-IR

Alon USA Energy, Inc.

972-367-3808




Investors: Jack Lascar/ Sheila Stuewe

DRG&L / 713-529-6600

Media: Blake Lewis

Lewis Public Relations

214-635-3020

Ruth Sheetrit

SMG Public Relations

011-972-547-555551

- Tables to follow -

 

 

ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED

EARNINGS RELEASE

















RESULTS OF OPERATIONS - FINANCIAL DATA

(ALL INFORMATION IN THIS PRESS RELEASE EXCEPT FOR BALANCE SHEET DATA AS OF DECEMBER 31, 2011, IS UNAUDITED)

For the Three Months Ended


For the Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011


(dollars in thousands, except per share data)

STATEMENTS OF OPERATIONS DATA:








Net sales (1)

$

2,360,334



$

2,056,653



$

6,062,956



$

5,303,388


Operating costs and expenses:








Cost of sales

2,101,647



1,827,098



5,407,197



4,717,673


Unrealized losses on commodity swaps

5,017





37,458




Direct operating expenses

81,160



83,338



230,243



202,476


Selling, general and administrative expenses (2)

47,670



34,680



119,018



107,595


Depreciation and amortization (3)

31,870



29,812



93,000



80,046


Total operating costs and expenses

2,267,364



1,974,928



5,886,916



5,107,790


Gain (loss) on disposition of assets

(2,624)



229



(2,838)



161


Operating income

90,346



81,954



173,202



195,759


Interest expense (4)

(22,773)



(22,582)



(78,113)



(63,780)


Equity earnings of investees

4,542



2,005



6,112



3,775


Other income (loss), net (5)

202



(14,272)



(6,791)



(51,065)


Income before income tax expense

72,317



47,105



94,410



84,689


Income tax expense

26,776



17,004



34,705



26,952


Net income

45,541



30,101



59,705



57,737


Net income attributable to non-controlling interest

2,318



1,480



2,758



2,317


Net income available to common stockholders

$

43,223



$

28,621



$

56,947



$

55,420


Earnings per share, basic

$

0.76



$

0.51



$

1.01



$

1.00


Weighted average shares outstanding, basic (in thousands)

56,699



55,755



56,322



55,290


Earnings per share, diluted

$

0.69



$

0.46



$

0.91



$

0.91


Weighted average shares outstanding, diluted (in thousands)

63,060



61,690



62,679



61,231


Cash dividends per share

$

0.04



$

0.04



$

0.12



$

0.12


CASH FLOW DATA:








Net cash provided by (used in):








Operating activities

$

101,276



$

109,478



$

215,498



$

58,362


Investing activities

(34,170)



(28,055)



(83,436)



(104,130)


Financing activities

(78,930)



(22,964)



(243,436)



149,682


OTHER DATA:








Adjusted net income available to common stockholders (6)

$

47,587



$

39,028



$

91,255



$

74,506


Adjusted earnings per share (6)

$

0.84



$

0.70



$

1.62



$

1.35


Adjusted EBITDA (7)

134,601



113,539



313,116



279,447


Capital expenditures (8)

31,748



23,162



72,273



91,120


Capital expenditures for turnaround and chemical catalyst

2,680



2,733



11,437



6,995


 










September 30,

2012


December 31,

2011

BALANCE SHEET DATA (end of period):

(dollars in thousands)

Cash and cash equivalents

$

45,692



$

157,066


Working capital (A)

(337,021)



99,452


Total assets

2,320,937



2,330,382


Total debt

798,733



1,050,196


Total equity

456,341



395,784




(A)

We have launched syndication of $450,000 of new term debt and expect funding within a week; proceeds will be used to retire existing debt of $421,875 due August 2013.

 

















REFINING AND UNBRANDED MARKETING SEGMENT






For the Three Months Ended


For the Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011


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

STATEMENTS OF OPERATIONS DATA:








Net sales (9)

$

2,136,619



$

1,862,181



$

5,527,395



$

4,797,125


Operating costs and expenses:








Cost of sales

1,917,852



1,681,163



5,005,249



4,336,655


Unrealized losses on commodity swaps

5,017





37,458




Direct operating expenses

72,259



72,271



204,001



170,214


Selling, general and administrative expenses

17,426



6,189



31,733



24,946


Depreciation and amortization

26,330



25,179



77,242



64,799


Total operating costs and expenses

2,038,884



1,784,802



5,355,683



4,596,614


Gain (loss) on disposition of assets

(2,532)



1



(2,528)



12


Operating income

$

95,203



$

77,380



$

169,184



$

200,523


KEY OPERATING STATISTICS:








Per barrel of throughput:








Refinery operating margin – Big Spring (10)

$

28.19



$

23.05



$

23.85



$

20.67


Refinery operating margin – CA Refineries (10)

0.12



3.64



1.60



(0.16)


Refinery operating margin – Krotz Springs (10)

11.28



7.77



7.55



5.61


Refinery direct operating expense – Big Spring (11)

3.92



4.68



3.92



4.40


Refinery direct operating expense – CA Refineries (11)

7.82



7.20



10.35



6.13


Refinery direct operating expense – Krotz Springs (11)

3.76



3.61



3.86



3.42


Capital expenditures

$

23,520



$

14,931



$

45,606



$

76,119


Capital expenditures for turnaround and chemical catalyst

2,680



2,733



11,437



6,995


PRICING STATISTICS:








WTI crude oil (per barrel)

$

92.09



$

89.75



$

96.17



$

95.42


WTS crude oil (per barrel)

88.75



88.93



92.08



92.95


Buena Vista crude oil (per barrel)

106.23



107.27



110.14



106.62


LLS crude oil (per barrel)

102.54



112.94



111.81



110.50


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








Gulf Coast (12)

$

31.76



$

31.28



$

27.54



$

24.53


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








West Coast (12)

$

14.40



$

11.22



$

12.84



$

11.09


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








Gulf Coast high sulfur diesel (12)

$

15.91



$

12.44



$

12.05



$

9.87


Crude oil differentials (per barrel):








WTI less WTS (13)

$

3.34



$

0.82



$

4.09



$

2.47


LLS less WTI (13)

15.02



18.87



15.25



14.55


WTI less Buena Vista (13)

(14.14)



(17.52)



(13.97)



(11.20)


Product prices (dollars per gallon):








Gulf Coast unleaded gasoline

$

2.89



$

2.82



$

2.89



$

2.80


Gulf Coast ultra-low sulfur diesel

3.07



3.01



3.06



2.97


Gulf Coast high sulfur diesel

2.97



2.95



2.99



2.91


West Coast LA CARBOB (unleaded gasoline)

3.04



2.89



3.09



2.92


West Coast LA ultra-low sulfur diesel

3.13



3.03



3.12



3.05


Natural gas (per MMBTU)

2.89



4.05



2.58



4.21