DALLAS, Nov. 4, 2010 /PRNewswire-FirstCall/ -- Alon USA Energy, Inc. ("Alon") today announced results for the quarter and nine months ended September 30, 2010. Net loss for the third quarter of 2010 was ($15.6) million, or ($0.29) per share, compared to net loss of ($26.6) million, or ($0.57) per share, for the same period last year. Excluding special items, Alon recorded a net loss of ($31.8) million, or ($0.59) per share, for the third quarter of 2010, compared to net loss of ($24.3) million, or ($0.52) per share, for the same period last year.
Net loss for the nine months ended September 30, 2010, was ($97.8) million, or ($1.80) per share, compared to net loss of ($24.5) million, or ($0.52) per share, for the nine months ended September 30, 2009. Excluding special items, Alon recorded net loss of ($110.4) million, or ($2.04) per share, for the nine months ended September 30, 2010, compared to a net loss of ($17.3) million, or ($0.37) per share, for the same period last year.
Jeff Morris, Alon's CEO, commented, "We are making very good progress on the integration of our Bakersfield refinery with our other California refineries. We plan for the Bakersfield hydrocracker unit to begin processing vacuum gas oil produced from our other California refineries by mid-year 2011. Upon completion of this integration, we intend to increase the throughput of the integrated California refineries and expect substantial improvement to the operating margin. We are also pleased that our Krotz Springs refinery completed its first full quarter of operation for the year with average refinery throughput of approximately 64,000 barrels per day. The Krotz Springs results were negatively affected by the much wider than historical WTI to LLS spreads thus we are undertaking initiatives with crude suppliers and other third parties to receive crudes such as WTI at our Krotz Springs refinery. This new crude flexibility will enable us to reduce our crude costs during these price spikes of Louisiana crudes.
"Our retail and branded marketing segment again had very positive earnings for the third quarter with adjusted EBITDA of $12 million. Our branded fuel margin increased over the second quarter by 39% while our branded fuel sales volume increased 13%. Asphalt marketing also had a profitable quarter with adjusted EBITDA of $11 million. Our specialty grades of asphalt, especially our ground tire rubber grades, continue strong growth.
"In October, we enhanced our liquidity by completing a registered direct offering of our preferred stock for $40 million and also obtained $23 million of letters of credit outside our existing credit facilities. We are also in a stage of evaluating offers and opportunities which would add $60 to $100 million to our resources.
"We are focused on three initiatives: continuing to increase the throughput at Big Spring, integrating our Bakersfield facility with Paramount, and revising our mode of operations at Krotz Springs to improve yields and develop alternative crudes to HLS/LLS."
THIRD QUARTER 2010
Special items for the third quarter of 2010 included $16.2 million from the bargain purchase gain recognized from the Bakersfield refinery acquisition. Special items for the third 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 ($0.3) million.
Refinery operating margin at the Big Spring refinery was $5.04 per barrel for the third quarter of 2010 compared to $1.34 per barrel for the same period in 2009. Light product yields increased in 2010 due to the operation of substantially all refinery units that were damaged in the 2008 fire. Light product yields were approximately 88.8% for the third quarter of 2010 and 80.6% for the third quarter of 2009. Refinery operating margin at the California refineries was $0.17 per barrel for the third quarter of 2010 compared to ($0.55) 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 third quarter of 2010 was $1.00 per barrel compared to $2.45 per barrel for the same period in 2009. The decrease is primarily due to higher HLS/LLS crude oil costs relative to WTI.
Combined refinery throughput for the third quarter of 2010 averaged 138,253 barrels per day ("bpd"), consisting of: 53,060 bpd at the Big Spring refinery, 21,035 bpd at the California refineries and 64,158 bpd at the Krotz Springs refinery compared to a combined average throughput of 157,660 bpd in the third quarter of 2009, consisting of 62,500 bpd at the Big Spring refinery, 35,470 bpd at the California refineries and 59,690 bpd at the Krotz Springs refinery. The Big Spring refinery throughput was lower as a result of efforts to implement new operating procedures and the California refineries' throughput was lower due to our continued efforts to optimize asphalt production with demand.
The average Gulf Coast 3/2/1 crack spread for the third quarter of 2010 was $7.76 per barrel compared to $6.52 per barrel for the same period in 2009. The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the third quarter of 2010 was $7.02 per barrel compared to $5.36 per barrel for the third quarter of 2009. Additionally, the average West Coast 3/2/1 crack spread for the third quarter of 2010 was $15.30 per barrel compared to $14.85 per barrel for the third quarter of 2009.
Asphalt margins in the third quarter of 2010 decreased to $77.59 per ton compared to $82.99 per ton in the third quarter of 2009. On a cash basis, asphalt margins in the third quarter of 2010 were $73.90 per ton compared to $75.88 per ton in the third quarter of 2009. This decrease was primarily due to higher crude oil costs. The average blended asphalt sales price increased 7.3% from $446.26 per ton in the third quarter of 2009 to $478.65 per ton in the third quarter of 2010 and the average non-blended asphalt sales price increased 83.4% from $190.23 per ton in the third quarter of 2009 to $348.89 per ton in the third quarter of 2010. The price for WTI crude increased 11.6%, from $68.17 per barrel in the third quarter of 2009, to $76.05 per barrel in the third quarter of 2010.
In our retail and branded marketing segment, retail fuel sales gallons increased by 19.1% from 30.9 million gallons in the third quarter of 2009 to 36.8 million gallons in the third quarter of 2010. Our branded fuel sales increased by 24.1% from 68.3 million gallons in the third quarter of 2009 to 84.7 million gallons in the third quarter of 2010. Adjusted EBITDA for our retail and branded marketing segment was $12.2 million for the third quarter of 2010 compared to $8.1 million for the same period in 2009.
YEAR-TO-DATE 2010
Special items for the first nine months of 2010 included $16.2 million from the bargain purchase gain recognized from the Bakersfield refinery acquisition, 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 nine months of 2009 included accumulated dividends of ($6.0) 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 ($1.3) million recognized on disposition of assets.
Refinery operating margin at the Big Spring refinery was $6.39 per barrel for the first nine months of 2010 compared to $6.32 per barrel for the same period in 2009. Light product yields increased in 2010 due to the operation of substantially all refinery units that were damaged in the 2008 fire. Light product yields were approximately 87.6% for the first nine months of 2010 and 81.3% for the first nine months of 2009. Refinery operating margin at the California refineries was $0.92 per barrel for the first nine months of 2010 compared to $2.41 per barrel for the same period in 2009. The decrease was partially due to decreased West Coast 3/2/1 crack spreads. The Krotz Springs refinery operating margin for the first nine months of 2010 was $0.44 per barrel compared to $6.64 per barrel for the same period last year. This decrease reflects the effects of the refinery being down for turnaround activities for the first five months of 2010.
Combined refinery throughput for the nine months ended September 30, 2010, averaged 94,775 bpd, consisting of: 46,244 bpd at the Big Spring refinery, 19,590 bpd at the California refineries and 28,941 bpd at the Krotz Springs refinery, compared to a combined average of 154,952 bpd for the nine months ended September 30, 2009, consisting of: 62,933 bpd at the Big Spring refinery, 34,711 bpd at the California refineries and 57,308 bpd at the Krotz Springs refinery. The Big Spring refinery throughput was lower as a result of efforts to implement new operating procedures and the California refineries' throughput was lower due to continued efforts to optimize asphalt production with demand. The Krotz Springs refinery throughput was lower due its shut down for turnaround activities until June 2010.
The average 3/2/1 Gulf Coast crack spread for the first nine months of 2010 was $8.20 per barrel compared to $8.14 per barrel for the same period in 2009. The average 2/1/1 Gulf Coast high sulfur diesel crack spread for the first nine months of 2010 was $7.40 per barrel compared to $7.14 per barrel for the first nine months of 2009. Additionally, the average 3/2/1 West Coast crack spread for the first nine months of 2010 was $13.65 per barrel compared to $15.74 per barrel for the first nine months of 2009.
Asphalt margins in the first nine months of 2010 increased to $50.54 per ton compared to $45.55 per ton in the first nine months of 2009. On a cash basis, asphalt margins in the first nine months of 2010 were $54.58 per ton compared to $78.41 per ton in the first nine months of 2009. This decrease was due primarily to higher crude oil costs. The average blended asphalt sales price increased 18.1% from $404.39 per ton in the first nine months of 2009 to $477.68 per ton in the first nine months of 2010 and the average non-blended asphalt sales price increased 120.4% from $158.49 per ton in the first nine months of 2009 to $349.29 per ton in the first nine months of 2010. The price for WTI crude increased 35.9%, from $57.03 per barrel in the first nine months of 2009 to $77.50 per barrel in the first nine months of 2010.
In our retail and branded marketing segment, retail fuel sales gallons increased by 17.6% from 89.3 million gallons in the first nine months of 2009 to 104.9 million gallons in the first nine months of 2010. Our branded fuel sales increased by 12.2% from 204.9 million gallons in the first nine months of 2009 to 230.0 million gallons in the first nine months of 2010. Adjusted EBITDA for our retail and branded marketing segment was $24.4 million for the first nine months of 2010 compared to $18.7 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 December 15, 2010 to stockholders of record at the close of business on November 30, 2010.
CONFERENCE CALL
Alon has scheduled a conference call for Friday, November 5, 2010, at 10:00 a.m. Eastern, to discuss the third 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 November 19, 2010, and may be accessed by calling 800-406-7325, or 303-590-3030, for international callers, and using the passcode 4370018#. 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 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 640 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: 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, 2009 IS UNAUDITED) For the Three For the Nine Months Ended Months Ended September 30, September 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) $1,248,569 $1,253,113 $2,668,243 $3,081,691 Operating costs and expenses: Cost of sales 1,153,743 1,165,295 2,443,533 2,693,343 Direct operating expenses 68,448 64,091 192,816 204,300 Selling, general and administrative expenses (2) 35,012 32,276 96,001 95,772 Depreciation and amortization (3) 26,781 25,247 78,471 70,898 ------ ------ ------ ------ Total operating costs and expenses 1,283,984 1,286,909 2,810,821 3,064,313 --------- --------- --------- --------- Gain (loss) on disposition of assets - (547) 474 (2,147) --- ---- --- ------ Operating income (loss) (35,415) (34,343) (142,104) 15,231 Interest expense (4) (24,091) (21,460) (72,411) (70,739) Equity earnings of investees 3,864 12,811 4,970 21,184 Gain on bargain purchase (5) 17,480 - 17,480 - Other income (loss), net (6) (494) (180) 13,345 268 ---- ---- ------ --- Loss before income tax benefit, non- controlling interest in loss of subsidiaries and accumulated dividends on preferred stock of subsidiary (38,656) (43,172) (178,720) (34,056) Income tax benefit (21,905) (16,452) (73,711) (13,006) ------- ------- ------- ------- Loss before non- controlling interest in loss of subsidiaries and accumulated dividends on preferred stock of subsidiary (16,751) (26,720) (105,009) (21,050) Non- controlling interest in loss of subsidiaries (1,167) (2,312) (7,224) (2,953) Accumulated dividends on preferred stock of subsidiary - 2,150 - 6,450 --- ----- --- ----- Net loss available to common stockholders $(15,584) $(26,558) $(97,785) $(24,547) ======== ======== ======== ======== Loss per share, basic $(0.29) $(0.57) $(1.80) $(0.52) ====== ====== ====== ====== Weighted average shares outstanding, basic (in thousands) 54,181 46,810 54,177 46,808 ====== ====== ====== ====== Loss per share, diluted $(0.29) $(0.57) $(1.80) $(0.52) ====== ====== ====== ====== Weighted average shares outstanding, diluted (in thousands) 54,181 46,810 54,177 46,808 ====== ====== ====== ====== Cash dividends per share $0.04 $0.04 $0.12 $0.12 ===== ===== ===== ===== CASH FLOW DATA: (7) Net cash provided by (used in): Operating activities $24,285 $28,168 $(37,275) $325,132 Investing activities (11,162) (48,891) (15,218) (93,605) Financing activities 18,799 (4,676) 51,691 (231,903) OTHER DATA: Adjusted net loss available to common stockholders (8) $(31,837) $(24,280) $(110,448) $(17,307) Loss per share, excluding write-off of unamortized debt issuance costs, net of tax, (gain) loss on disposition of assets, net of tax, gain on bargain purchase and accumulated dividends on preferred stock of subsidiary (8) $(0.59) $(0.52) $(2.04) $(0.37) Adjusted EBITDA (9) (5,264) 4,082 (45,792) 109,728 Capital expenditures (10) 7,838 22,888 20,526 52,132 Capital expenditures to rebuild the Big Spring refinery - 5,791 - 45,072 Capital expenditures for turnaround and chemical catalyst 1,137 2,691 12,668 13,005 September December 30, 31, 2010 2009 ---- ---- BALANCE SHEET DATA (end of period): Cash and cash equivalents $39,635 $40,437 Working capital 5,593 84,257 Total assets 2,175,564 2,132,789 Total debt 953,523 937,024 Total equity 331,464 431,918 REFINING AND UNBRANDED MARKETING SEGMENT For the Three For the Nine Months Ended Months Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- (dollars in thousands, except per barrel data and pricing statistics) STATEMENTS OF OPERATIONS DATA: Net sales (11) $1,056,478 $1,058,517 $2,230,849 $2,652,917 Operating costs and expenses: Cost of sales 1,022,950 1,038,134 2,138,284 2,397,016 Direct operating expenses 57,711 51,286 159,556 171,295 Selling, general and administrative expenses 7,103 6,934 17,365 21,500 Depreciation and amortization 21,315 19,943 62,150 55,120 ------ ------ ------ ------ Total operating costs and expenses 1,109,079 1,116,297 2,377,355 2,644,931 --------- --------- --------- --------- Loss on disposition of assets - - - (1,600) --- --- --- ------ Operating income (loss) $(52,601) $(57,780) $(146,506) $6,386 ======== ======== ========= ====== KEY OPERATING STATISTICS: Total sales volume (bpd) 129,194 127,580 78,639 127,460 Per barrel of throughput: Refinery operating margin - Big Spring (12) $5.04 $1.34 $6.39 $6.32 Refinery operating margin - CA Refineries (12) 0.17 (0.55) 0.92 2.41 Refinery operating margin - Krotz Springs (12) 1.00 2.45 0.44 6.64 Refinery direct operating expense - Big Spring (13) 4.66 4.11 5.58 4.13 Refinery direct operating expense - CA Refineries (13) 6.86 3.85 7.66 4.37 Refinery direct operating expense - Krotz Springs (13) 3.39 2.75 5.82 3.77 Capital expenditures 4,707 19,859 15,234 46,182 Capital expenditures to rebuild the Big Spring refinery - 5,791 - 45,072 Capital expenditures for turnaround and chemical catalyst 1,137 2,691 12,668 13,005 PRICING STATISTICS: WTI crude oil (per barrel) $76.05 $68.17 $77.50 $57.03 WTS crude oil (per barrel) 73.89 66.49 75.55 55.69 MAYA crude oil (per barrel) 67.50 63.20 68.45 51.98 HLS crude oil (per barrel) 78.18 69.76 79.41 58.71 LLS crude oil (per barrel) 79.63 70.43 80.58 59.87 Crack spreads (3/2/1) (per barrel): Gulf Coast (14) $7.76 $6.52 $8.20 $8.14 Group III (14) 10.53 8.01 9.60 9.02 West Coast (14) 15.30 14.85 13.65 15.74 Crack spreads (6/1/2/3) (per barrel): West Coast (14) $4.68 $5.39 $3.66 $4.73 Crack spreads (2/1/1) (per barrel): Gulf Coast high sulfur diesel (14) $7.02 $5.36 $7.40 $7.14 Crude oil differentials (per barrel): WTI less WTS (15) $2.16 $1.68 $1.95 $1.34 WTI less MAYA (15) 8.55 4.97 9.05 5.05 HLS/LLS less WTI (15) 2.86 1.93 2.50 2.26 Product price (dollars per gallon): Gulf Coast unleaded gasoline $1.950 $1.773 $2.014 $1.545 Gulf Coast ultra- low sulfur diesel 2.086 1.789 2.094 1.565 Gulf Coast high sulfur diesel 2.006 1.728 2.029 1.510 Group III unleaded gasoline 2.031 1.814 2.056 1.575 Group III ultra- low sulfur diesel 2.123 1.814 2.110 1.567 West Coast LA CARBOB (unleaded gasoline) 2.183 2.042 2.183 1.798 West Coast LA ultra-low sulfur diesel 2.160 1.847 2.144 1.602 Natural gas (per MMBTU) 4.23 3.44 4.52 3.90 THROUGHPUT AND YIELD For the Three Months Ended DATA: September 30, BIG SPRING ------------- 2010 2009 ---- ---- bpd % bpd % Refinery throughput: Sour crude 42,680 80.4 44,924 71.9 Sweet crude 7,938 15.0 15,521 24.8 Blendstocks 2,442 4.6 2,055 3.3 ----- --- ----- --- Total refinery throughput (16) 53,060 100.0 62,500 100.0 ====== ===== ====== ===== Refinery production: Gasoline 25,937 49.2 27,366 44.1 Diesel/jet 17,772 33.7 19,690 31.8 Asphalt 3,193 6.1 5,830 9.4 Petrochemicals 3,382 6.4 3,340 5.4 Other 2,419 4.6 5,790 9.3 ----- --- ----- --- Total refinery production (17) 52,703 100.0 62,016 100.0 ====== ===== ====== ===== Refinery utilization (18) 72.3% 86.3% THROUGHPUT AND YIELD For the Nine Months Ended DATA: September 30, BIG SPRING ------------- 2010 2009 ---- ---- bpd % bpd % Refinery throughput: Sour crude 36,836 79.7 50,345 80.0 Sweet crude 7,021 15.1 10,411 16.5 Blendstocks 2,387 5.2 2,177 3.5 ----- --- ----- --- Total refinery throughput (16) 46,244 100.0 62,933 100.0 ====== ===== ====== ===== Refinery production: Gasoline 23,096 50.5 27,424 43.8 Diesel/jet 14,738 32.2 20,477 32.7 Asphalt 2,636 5.8 5,879 9.4 Petrochemicals 2,664 5.8 3,286 5.3 Other 2,620 5.7 5,524 8.8 ----- --- ----- --- Total refinery production (17) 45,754 100.0 62,590 100.0 ====== ===== ====== ===== Refinery utilization (18) 64.6% 86.8% THROUGHPUT AND YIELD For the Three Months Ended DATA: September 30, CALIFORNIA REFINERIES ------------- 2010 2009 ---- ---- bpd % bpd % Refinery throughput: Medium sour crude 4,635 22.0 16,073 45.3 Heavy crude 15,886 75.6 18,937 53.4 Blendstocks 514 2.4 460 1.3 --- --- --- --- Total refinery throughput (16) 21,035 100.0 35,470 100.0 ====== ===== ====== ===== Refinery production: Gasoline 3,401 16.6 5,456 15.8 Diesel/jet 4,758 23.3 8,434 24.5 Asphalt 6,974 34.1 10,441 30.3 Light unfinished - - - - Heavy unfinished 4,831 23.6 9,546 27.7 Other 498 2.4 585 1.7 --- --- --- --- Total refinery production (17) 20,462 100.0 34,462 100.0 ====== ===== ====== ===== Refinery utilization (18) 28.3% 48.3% THROUGHPUT AND YIELD For the Nine Months Ended DATA: September 30, CALIFORNIA REFINERIES ------------- 2010 2009 ---- ---- bpd % bpd % Refinery throughput: Medium sour crude 4,065 20.7 16,164 46.6 Heavy crude 15,082 77.0 18,259 52.6 Blendstocks 443 2.3 288 0.8 --- --- --- --- Total refinery throughput (16) 19,590 100.0 34,711 100.0 ====== ===== ====== ===== Refinery production: Gasoline 2,888 15.2 5,189 15.3 Diesel/jet 4,067 21.4 8,037 23.7 Asphalt 6,554 34.3 10,215 30.2 Light unfinished - - 467 1.4 Heavy unfinished 5,099 26.8 9,409 27.8 Other 439 2.3 551 1.6 --- --- --- --- Total refinery production (17) 19,047 100.0 33,868 100.0 ====== ===== ====== ===== Refinery utilization (18) 26.4% 53.1% THROUGHPUT AND YIELD For the Three Months Ended DATA: September 30, KROTZ SPRINGS (A) ------------- 2010 2009 ---- ---- bpd % bpd % Refinery throughput: Light sweet crude 38,597 60.1 30,741 51.5 Heavy sweet crude 23,854 37.2 27,547 46.2 Blendstocks 1,707 2.7 1,402 2.3 ----- --- ----- --- Total refinery throughput (16) 64,158 100.0 59,690 100.0 ====== ===== ====== ===== Refinery production: Gasoline 26,442 40.9 27,441 45.4 Diesel/jet 31,383 48.5 26,855 44.5 Heavy oils 1,487 2.3 1,205 2.0 Other 5,368 8.3 4,865 8.1 ----- --- ----- --- Total refinery production (17) 64,680 100.0 60,366 100.0 ====== ===== ====== ===== Refinery utilization (18) 75.2% 70.1% THROUGHPUT AND YIELD For the Nine Months Ended DATA: September 30, KROTZ SPRINGS (A) ------------- 2010 2009 ---- ---- bpd % bpd % Refinery throughput: Light sweet crude 16,460 56.9 28,755 50.2 Heavy sweet crude 11,603 40.1 24,691 43.1 Blendstocks 878 3.0 3,862 6.7 --- --- ----- --- Total refinery throughput (16) 28,941 100.0 57,308 100.0 ====== ===== ====== ===== Refinery production: Gasoline 11,720 40.3 26,628 45.8 Diesel/jet 13,609 46.9 25,288 43.4 Heavy oils 1,437 4.9 1,151 2.0 Other 2,304 7.9 5,090 8.8 ----- --- ----- --- Total refinery production (17) 29,070 100.0 58,157 100.0 ====== ===== ====== ===== Refinery utilization (18) 33.8% 64.3% (A) The throughput data for the nine months ended September 30, 2010, reflects substantially four months of operations beginning in June 2010 due to the restart of the Krotz Springs refinery after major turnaround activity. For the Three Months For the Nine Months ASPHALT SEGMENT Ended Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- (dollars in thousands, except per ton data) STATEMENTS OF OPERATIONS DATA: Net sales $144,610 $175,189 $316,715 $351,429 Operating costs and expenses: Cost of sales (19) 120,791 139,751 282,500 307,881 Direct operating expenses 10,737 12,805 33,260 33,005 Selling, general and administrative expenses 2,404 1,267 4,561 3,471 Depreciation and amortization 1,716 1,700 5,148 5,099 ----- ----- ----- ----- Total operating costs and expenses 135,648 155,523 325,469 349,456 ------- ------- ------- ------- Operating income (loss) $8,962 $19,666 $(8,754) $1,973 ====== ======= ======= ====== KEY OPERATING STATISTICS: Blended asphalt sales volume (tons in thousands) (20) 289 367 625 813 Non-blended asphalt sales volume (tons in thousands) (21) 18 60 52 143 Blended asphalt sales price per ton (20) $478.65 $446.26 $477.68 $404.39 Non-blended asphalt sales price per ton (21) 348.89 190.23 349.29 158.49 Asphalt margin per ton (22) 77.59 82.99 50.54 45.55 Capital expenditures $465 $523 $991 $1,099 RETAIL AND BRANDED For the Three Months For the Nine Months MARKETING SEGMENT Ended Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- (dollars in thousands, except per gallon data) STATEMENTS OF OPERATIONS DATA: Net sales $273,481 $217,232 $753,464 $591,163 Operating costs and expenses: Cost of sales (19) 236,002 185,235 655,534 502,264 Selling, general and administrative expenses 25,317 23,886 73,511 70,232 Depreciation and amortization 3,353 3,399 10,209 10,179 ----- ----- ------ ------ Total operating costs and expenses 264,672 212,520 739,254 582,675 ------- ------- ------- ------- Gain (loss) on disposition of assets - (547) 474 (547) --- ---- --- ---- Operating income $8,809 $4,165 $14,684 $7,941 ====== ====== ======= ====== KEY OPERATING STATISTICS: Branded fuel sales (thousands of gallons) (23) 84,711 68,280 230,031 204,929 Branded fuel margin (cents per gallon) (23) 8.9 9.6 6.7 5.6 Number of stores (end of period) 306 305 306 305 Retail fuel sales (thousands of gallons) 36,759 30,915 104,881 89,296 Retail fuel sales (thousands of gallons per site per month) 40 34 38 33 Retail fuel margin (cents per gallon) (24) 13.4 9.7 12.3 15.0 Retail fuel sales price (dollars per gallon) (25) $2.67 $2.48 $2.68 $2.22 Merchandise sales $74,932 $69,413 $211,660 $202,675 Merchandise sales (per site per month) 82 76 77 74 Merchandise margin (26) 32.2% 31.4% 31.7% 30.9% Capital expenditures $1,322 $751 $2,149 $1,864
(1) Includes excise taxes on sales by the retail and branded marketing segment of $14,204 and $12,073 for the three months ended September 30, 2010 and 2009, respectively, and $40,521 and $34,887 for the nine months ended September 30, 2010 and 2009, respectively. Net sales also include royalty and related net credit card fees of $873 and $744 for the three months ended September 30, 2010 and 2009, respectively, and $2,692 and $1,661 for the nine months ended September 30, 2010 and 2009, respectively.
(2) Includes corporate headquarters selling, general and administrative expenses of $188 and $189 for the three months ended September 30, 2010 and 2009, respectively, and $564 and $569 for the nine months ended September 30, 2010 and 2009, respectively, which are not allocated to our three operating segments.
(3) Includes corporate depreciation and amortization of $397 and $205 for the three months ended September 30, 2010 and 2009, respectively, and $964 and $500 for the nine months ended September 30, 2010 and 2009, respectively, which are not allocated to our three operating segments.
(4) Interest expense of $72,411 for the nine months ended September 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 $70,739 for the nine months ended September 30, 2009, includes $5,715 related to the unwind of the heating oil crack spread hedge.
(5) In connection with the Bakersfield refinery acquisition, the acquisition date fair value of the identifiable net assets acquired exceeded the fair value of the consideration transferred, resulting in a $17,480 bargain purchase gain.
(6) Other income (loss), net for the nine months ended September 30, 2010 substantially represents the gain from the sale of our investment in Holly Energy Partners.
(7) Cash provided by operating activities for the nine months ended September 30, 2009 includes proceeds from the liquidation of 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 nine months ended September 30, 2009 includes repayments on long-term debt and revolving credit facilities of $218,472 sourced primarily from the liquidation proceeds from the heating oil crack spread hedge and proceeds from the receipt of income tax receivables.
(8) The following table provides a reconciliation of net loss available to common stockholders under United States generally accepted accounting principles ("GAAP") to adjusted net loss available to common stockholders utilized in determining 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, gain on bargain purchase and accumulated dividends on preferred stock of subsidiary. Our management believes that the presentation of adjusted net loss available to common stockholders and 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 For the Nine Months Ended Months Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- (dollars in thousands, except earnings per share) Net loss available to common stockholders $(15,584) $(26,558) $(97,785) $(24,547) Plus: Loss on disposition of assets, net of tax - 282 - 1,251 Plus: Accumulated dividends on preferred stock of subsidiary - 1,996 - 5,989 Plus: Write-off of unamortized debt issuance costs, net of tax - - 3,865 - Less: Gain on bargain purchase (16,253) - (16,253) - Less: Gain on disposition of assets, net of tax - - (275) - --- --- ---- --- Adjusted net loss available to common stockholders $(31,837) $(24,280) $(110,448) $(17,307) ======== ======== ========= ======== Weighted average shares outstanding (in thousands) 54,181 46,810 54,177 46,808 ====== ====== ====== ====== Loss per share, excluding write-off of unamortized debt issuance costs, net of tax, gain (loss) on disposition of assets, net of tax, gain on bargain purchase and accumulated dividends on preferred stock of subsidiary $(0.59) $(0.52) $(2.04) $(0.37) ====== ====== ====== ======
(9) Adjusted EBITDA represents earnings before non-controlling interest in income of subsidiaries, income tax expense, interest expense, depreciation and amortization, gain on bargain purchase 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, gain on bargain purchase 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 loss available to common stockholders to Adjusted EBITDA for the three and nine months ended September 30, 2010 and 2009, respectively:
For the Three For the Nine Months Months Ended Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- (dollars in thousands) Net loss available to common stockholders $(15,584) $(26,558) $(97,785) $(24,547) Non-controlling interest in loss of subsidiaries (including accumulated dividends on preferred stock of subsidiary) (1,167) (162) (7,224) 3,497 Income tax benefit (21,905) (16,452) (73,711) (13,006) Interest expense 24,091 21,460 72,411 70,739 Depreciation and amortization 26,781 25,247 78,471 70,898 (Gain) on bargain purchase (17,480) - (17,480) - (Gain) loss on disposition of assets - 547 (474) 2,147 --- --- ---- ----- Adjusted EBITDA $(5,264) $4,082 $(45,792) $109,728 ======= ====== ======== ========
Adjusted EBITDA for our asphalt segment and our retail and branded marketing segment 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 but is also subject to many of the limitations discussed above; therefore Adjusted EBITDA for our asphalt segment and our retail and branded marketing segment 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 operating income to Adjusted EBITDA for our asphalt segment and our retail and branded marketing segment for the three and nine months ended September 30, 2010 and 2009, respectively:
For the Three For the Nine Months ASPHALT SEGMENT Months Ended Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- (dollars in thousands) Operating income (loss) $8,962 $19,666 $(8,754) $1,973 Depreciation and amortization 1,716 1,700 5,148 5,099 ----- ----- ----- ----- Adjusted EBITDA $10,678 $21,366 $(3,606) $7,072 ======= ======= ======= ====== RETAIL AND BRANDED MARKETING For the Three For the Nine Months SEGMENT Months Ended Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- (dollars in thousands) Operating income $8,809 $4,165 $14,684 $7,941 Depreciation and amortization 3,353 3,399 10,209 10,179 (Gain) loss on disposition of assets - 547 (474) 547 --- --- ---- --- Adjusted EBITDA $12,162 $8,111 $24,419 $18,667 ======= ====== ======= =======
(10) Includes corporate capital expenditures of $1,344 and $1,755 for the three months ended September 30, 2010 and 2009, respectively, and $2,152 and $2,987 for the nine months ended September 30, 2010 and 2009, respectively, which are not allocated to our three operating segments.
(11) 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.
(12) 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 nine months ended September 30, 2010, excludes a benefit of $2,990 and $4,515 to cost of sales for inventory adjustments related to the Bakersfield refinery acquisition. There were unrealized hedging gains of $1,019 for the Big Spring refinery for the three months ended September 30, 2009. There were unrealized hedging losses of $108 and $322 for the California refineries for the three and nine months ended September 30, 2010, respectively. There were unrealized hedging losses of $169 and $722 for the Krotz Springs refinery for the three and nine months ended September 30, 2010, respectively. Also, there was an unrealized gain of $20,369 for the Krotz Springs refinery for the nine months ended September 30, 2009. Additionally, the Krotz Springs refinery margin for the nine months ended September 30, 2009 excludes realized gains related to the unwind of the heating oil crack spread hedge of $139,290.
(13) 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 $1,712 and $2,122 have been excluded from the per barrel measurement calculation for the three and nine months ended September 30, 2010.
(14) 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.
(15) 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. The HLS/LLS less WTI spread represents the differential between the average value per barrel of HLS and LLS crude oil and the average value per barrel of WTI.
(16) Total refinery throughput represents the total barrels per day of crude oil and blendstock inputs in the refinery production process.
(17) 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.
(18) Refinery utilization represents average daily crude oil throughput divided by crude oil capacity, excluding planned periods of downtime for maintenance and turnarounds.
(19) 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.
(20) Blended asphalt represents base asphalt that has been blended with other materials necessary to sell the asphalt as a finished product.
(21) Non-blended asphalt represents base material asphalt and other components that require additional blending before being sold as a finished product.
(22) 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.
(23) 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.
(24) 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.
(25) Retail fuel sales price per gallon represents the average sales price for motor fuels sold through our retail convenience stores.
(26) 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.
Alon USA Energy, Inc.
CONTACT: Amir Barash, Vice President -IR of Alon USA Energy, Inc.,
+1-972-367-3808; or Investors, Jack Lascar or Sheila Stuewe, both of DRG&L,
+1-713-529-6600, or Media, Blake Lewis of Lewis Public Relations,
+1-214-635-3020; or Ruth Sheetrit of SMG Public Relations, 011-972-547-555551,
all for Alon USA Energy, Inc.
Web Site: http://www.alonusa.com/
