Alon USA Partners, LP Reports Fourth Quarter and Full Year 2013 Results

Schedules conference call for March 7, 2014 at 10:00 a.m. Eastern

News provided by

Alon USA Partners, LP

Mar 04, 2014, 05:37 ET

DALLAS, March 4, 2014 /PRNewswire/ -- Alon USA Partners, LP (NYSE: ALDW) ("Alon Partners") today announced results for the quarter and year ended December 31, 2013. Net income for the fourth quarter of 2013 was $13.5 million compared to $113.2 million for the same period last year. Net income for the year ended December 31, 2013 was $136.2 million compared to $381.9 million for the same period last year.

Paul Eisman, CEO and President, commented, "The Big Spring refinery ran very well in the fourth quarter of 2013, achieving a record quarterly average throughput of 73,613 barrels per day. As a result of the strong operational performance, the refinery's direct operating expense was under $4.00 per barrel for the fourth quarter of 2013. We experienced a sequential improvement in our fourth quarter 2013 results as we benefited from widened discounts in Midland-priced crudes relative to Cushing-priced crudes.

"With the cash generated during the fourth quarter, we paid a cash distribution of $0.18 per unit on March 3, 2014. With this distribution, we have distributed, based on operations in 2013, a total of $2.37 per unit.

"For the first quarter of 2014, we expect throughput at the Big Spring refinery to average approximately 73,000 barrels per day. We remain focused on successfully executing our major turnaround in the second quarter of 2014. During the turnaround, we expect to make modifications to our vacuum unit to increase diesel recovery by 2,000 barrels per day, as well as enhance our ability to optimize our crude slate and improve energy efficiency. As a result of the turnaround, we expect to operate Big Spring at 46,000 barrels per day for the second quarter and 67,000 barrels per day for the year."

FOURTH QUARTER 2013

Refinery operating margin at the Big Spring refinery was $9.96 per barrel for the fourth quarter of 2013 compared to $25.26 per barrel for the same period in 2012. This decrease was mainly due to lower Gulf Coast 3/2/1 crack spreads and a narrowing WTI Cushing to WTS spread. The refinery's throughput for the fourth quarter of 2013 averaged 73,613 barrels per day ("bpd") compared to 72,109 bpd for the same period in 2012. The refinery operating margin was impacted by $5.7 million of costs associated with RINs obligations for the fourth quarter of 2013.

The average Gulf Coast 3/2/1 crack spread was $13.05 per barrel for the fourth quarter of 2013 compared to $27.10 per barrel for the same period in 2012. The average WTI Cushing to WTS spread for the fourth quarter of 2013 was $3.14 per barrel compared to $5.14 per barrel for the same period in 2012.

YEAR ENDED DECEMBER 31, 2013

Refinery operating margin at the Big Spring refinery was $14.59 per barrel for 2013 compared to $23.50 per barrel for 2012. This decrease was mainly due to lower Gulf Coast 3/2/1 crack spreads and a narrowing WTI Cushing to WTS spread. The refinery's throughput for 2013 averaged 67,103 bpd compared to 68,946 bpd for the same period in 2012. The refinery operating margin was impacted by $14.9 million of costs associated with RINs obligations for 2013.

The average Gulf Coast 3/2/1 crack spread for 2013 was $19.16 per barrel compared to $27.43 per barrel for 2012. The average WTI Cushing to WTS spread for 2013 was $3.72 per barrel compared to $4.09 per barrel for 2012.

CONFERENCE CALL

Alon Partners has scheduled a conference call which will also be webcast live on Friday, March 7, 2014, at 10:00 a.m. eastern time (9:00 a.m. central time), to discuss the fourth quarter 2013 results. To access the call, please dial 877-941-8609, or 480-629-9645, for international callers, at least 10 minutes prior to the start time and ask for the Alon USA Partners, LP call. Investors may also listen to the conference live by logging on to the Alon Partners' website, http://www.alonpartners.com. A telephonic replay of the conference call will be available through March 21, 2014, and may be accessed by calling 800-406-7325, or 303-590-3030, for international callers, and using the passcode 4668424#. The archived webcast will also be available at www.alonpartners.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.

This release serves as qualified notice to nominees under Treasury Regulation Section 1.1446-4(b). Please note that 100% of Alon Partners' distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of Alon Partners' distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not Alon Partners, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Any statements in this 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.

Alon USA Partners, LP is a Delaware limited partnership formed in August 2012 by Alon USA Energy, Inc. ("Alon Energy") (NYSE: ALJ). Alon Partners owns and operates a crude oil refinery in Big Spring, Texas with total throughput capacity of approximately 70,000 barrels per day. Alon Partners refines crude oil into finished products, which are marketed primarily in West Texas, Central Texas, Oklahoma, New Mexico and Arizona through its wholesale distribution network to both Alon Energy's retail convenience stores and other third-party distributors.

Contacts:

Stacey Hudson, Investor Relations Manager

Alon USA Partners GP, LLC
972-367-3808

Investors: Jack Lascar/ Sheila Stuewe
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 PARTNERS, LP 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, 2012, AND INCOME STATEMENT DATA FOR THE YEAR ENDED DECEMBER 31, 2012, IS UNAUDITED)

For the Three Months Ended

For the Year Ended

December 31,

December 31,

2013

2012

2013

2012

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

STATEMENT OF OPERATIONS DATA:







Net sales (1)

$

878,524

$

825,626

$

3,430,287

$

3,476,817

Operating costs and expenses:






   Cost of sales

811,096

658,039

3,073,044

2,883,741

   Direct operating expenses

26,923

27,685

110,940

100,908

   Selling, general and administrative expenses

5,412

4,737

22,276

22,807

   Depreciation and amortization

11,047

11,046

45,329

46,009

      Total operating costs and expenses

854,478

701,507

3,251,589

3,053,465

Loss on disposition of assets

—

—

(21)

—

Operating income

24,046

124,119

178,677

423,352

Interest expense

(9,985)

(7,165)

(40,474)

(22,235)

Interest expense - related parties

—

(2,701)

—

(15,691)

Other income (loss), net

5

(3)

23

8

Income before state income tax expense

14,066

114,250

138,226

385,434

State income tax expense

570

1,018

2,004

3,536

Net income

$

13,496

$

113,232

$

136,222

$

381,898






Net income

$

13,496

113,232

$

136,222

381,898

   Less: Net income attributable to predecessor operations

—

76,112

—

344,778

Net income attributable to Alon USA Partners, LP

$

13,496

$

37,120

$

136,222

$

37,120

Earnings per limited partner unit (2)

$

0.22

$

0.59

$

2.18

$

0.59

Weighted average common units outstanding (in thousands) (2)

62,502

62,500

62,502

62,500

Cash distribution per limited partner unit

$

—

$

—

$

2.76

$

—

CASH FLOW DATA:






Net cash provided by (used in):






   Operating activities

$

56,618

$

165,209

$

216,337

$

528,825

   Investing activities

(7,968)

(6,314)

(29,626)

(31,769)

   Financing activities

44,457

(122,308)

(99,129)

(567,000)

OTHER DATA:






Adjusted EBITDA (3)

$

35,098

$

135,162

$

224,050

$

469,369

Capital expenditures

6,756

6,314

23,390

24,490

Capital expenditures for turnaround and chemical catalysts

1,212

—

6,236

7,279

KEY OPERATING STATISTICS:






Per barrel of throughput:






   Refinery operating margin (4)

$

9.96

$

25.26

$

14.59

$

23.50

   Refinery direct operating expense (5)

3.98

4.17

4.53

4.00

For the Three Months Ended

For the Year Ended

December 31,

December 31,

2013

2012

2013

2012

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

PRICING STATISTICS:






Crack spreads (per barrel):






   Gulf Coast (WTI) 3/2/1 (6)

$

13.05

$

27.10

$

19.16

$

27.43

WTI Cushing crude oil (per barrel)

$

97.47

$

88.10

$

97.97

$

94.14

Crude oil differentials (per barrel):






   WTI Cushing less WTI Midland (7)

$

2.32

$

3.60

$

2.59

$

2.88

   WTI Cushing less WTS (7)

3.14

5.14

3.72

4.09

   Brent less WTI Cushing (7)

12.42

23.05

11.63

18.35

Product price (dollars per gallon):






   Gulf Coast unleaded gasoline

$

2.49

$

2.60

$

2.70

$

2.82

   Gulf Coast ultra-low sulfur diesel

2.92

3.04

2.97

3.05

   Natural gas (per MMBtu)

3.85

3.54

3.73

2.83


As of December 31,

2013

2012

BALANCE SHEET DATA (end of period):

(dollars in thousands)

Cash and cash equivalents

$

153,583

$

66,001

Working capital

18,007

1,702

Total assets

849,924

763,423

Total debt

344,322

295,311

Total debt less cash and cash equivalents

190,739

229,310

Total equity

145,442

181,726


THROUGHPUT AND PRODUCTION DATA:

For the Three Months Ended

For the Year Ended

December 31,

December 31,

2013

2012

2013

2012

bpd

%

bpd

%

bpd

%

bpd

%

Refinery throughput:














   WTS crude

39,775

54.0

48,894

67.8

43,705

65.1

52,190

75.7

   WTI crude

28,690

39.0

19,180

26.6

20,706

30.9

14,396

20.9

   Blendstocks

5,148

7.0

4,035

5.6

2,692

4.0

2,360

3.4

Total refinery throughput (8)

73,613

100.0

72,109

100.0

67,103

100.0

68,946

100.0

Refinery production:














   Gasoline

39,170

53.0

37,572

52.3

33,736

50.4

34,637

50.3

   Diesel/jet

24,529

33.3

22,612

31.4

22,404

33.5

22,329

32.5

   Asphalt

3,391

4.6

3,615

5.0

3,640

5.4

4,084

5.9

   Petrochemicals

4,651

6.3

4,199

5.8

4,152

6.2

4,054

5.9

   Other

2,029

2.8

3,939

5.5

3,033

4.5

3,706

5.4

Total refinery production (9)

73,770

100.0

71,937

100.0

66,965

100.0

68,810

100.0

Refinery utilization (10)

97.8%


97.2%


94.9%


97.3%

(1)

Includes sales to related parties of $138,430 and $138,412 for the three months ended December 31, 2013 and 2012, respectively, and $600,710 and $588,828 for the years ended December 31, 2013 and 2012, respectively.

(2)

The calculation of earnings per limited partner unit during 2012 includes only earnings for the period following the closing of the initial public offering through December 31, 2012 of $37,120 for the three months and year ended December 31, 2012.

(3)

Adjusted EBITDA represents earnings before state income tax expense, interest expense, depreciation and amortization and loss 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 state income tax expense, interest expense, loss 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 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 to Adjusted EBITDA for the three months and years ended December 31, 2013 and 2012, respectively:






For the Three Months Ended

For the Year Ended

December 31,

December 31,

2013

2012

2013

2012

(dollars in thousands)

 Net income

$

13,496

$

113,232

$

136,222

$

381,898

 State income tax expense

570

1,018

2,004

3,536

 Interest expense

9,985

7,165

40,474

22,235

 Interest expense - related parties

—

2,701

—

15,691

 Depreciation and amortization

11,047

11,046

45,329

46,009

 Loss on disposition of assets

—

—

21

—

 Adjusted EBITDA

$

35,098

$

135,162

$

224,050

$

469,369

(4)

Refinery operating margin is a per barrel measurement calculated by dividing the margin between net sales and cost of sales 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 margin to these crack spreads to assess our operating performance relative to other participants in our industry.

(5)

Refinery direct operating expense is a per barrel measurement calculated by dividing direct operating expenses by total throughput volumes.

(6)

We compare our refinery 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.

(7)

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

(8)

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

(9)

Total refinery production represents the barrels per day of various refined products produced from processing crude and other refinery feedstocks through the crude units and other conversion units.

(10)

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

SOURCE Alon USA Partners, LP