Quarterly report pursuant to Section 13 or 15(d)

Segment Data

v3.7.0.1
Segment Data
3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Segment Data
Segment Data
Our revenues are derived from three operating segments: (i) refining and marketing, (ii) asphalt and (iii) retail. The reportable operating segments are strategic business units that offer different products and services. The segments are managed separately as each segment requires unique technology, marketing strategies and distinct operational emphasis. Each operating segment’s performance is evaluated primarily based on operating income.
(a)Refining and Marketing Segment
Our refining and marketing segment includes a sour crude oil refinery located in Big Spring, Texas, a light sweet crude oil refinery located in Krotz Springs, Louisiana, and heavy crude oil refineries located in Paramount, Bakersfield and Long Beach, California (the “California refineries”). We primarily refine crude oil into petroleum products, including various grades of gasoline, diesel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt and other petroleum-based products, which are marketed primarily in the South Central, Southwestern and Western regions of the United States. We are also shipping and selling gasoline into wholesale markets in the Southern and Eastern United States. Our California refineries have not processed crude oil since 2012 due to the high cost of crude oil relative to product yield and low asphalt demand.
The Partnership sells motor fuels under the Alon brand through various terminals to supply 636 Alon branded retail sites, including our retail segment convenience stores. In addition, the Partnership sells motor fuels through our wholesale distribution network on an unbranded basis.
We are the majority owner of a renewable fuels facility in California that began commercial production in February 2016 and converts tallow and vegetable oils into renewable fuels. The produced renewable fuels are drop-in replacements for petroleum-based fuels. The renewable fuels facility generates both state and federal environmental credits as well as the federal blender’s tax credit, when effective.
(b)Asphalt Segment
We own or operate 11 asphalt terminals located in Texas (Big Spring), California (Paramount, Long Beach, Elk Grove, Bakersfield and Mojave), Washington (Richmond Beach), Arizona (Phoenix and Flagstaff) as well as asphalt terminals in which we own a 50% interest located in Fernley, Nevada, and Brownwood, Texas. The operations in which we have a 50% interest are recorded under the equity method of accounting and the investments are included as part of total assets in the asphalt segment data. Asphalt produced by our Big Spring refinery is transferred to the asphalt segment at prices substantially determined by reference to the cost of crude oil and Rocky Mountain asphalt, which is intended to approximate wholesale market prices.
(c)Retail Segment
Our retail segment operates 304 convenience stores located in Central and West Texas and New Mexico. These convenience stores typically offer various grades of gasoline and diesel under the Alon brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven brand name. Substantially all of the motor fuel sold through our retail segment are supplied by our Big Spring refinery, which are transferred to the retail segment at prices substantially determined by reference to published commodity pricing information.
(d)Corporate
Operations that are not included in any of the three segments are included in the corporate category. These operations consist primarily of corporate headquarters operating and depreciation expenses.
Segment data for the three month periods ended March 31, 2017 and 2016 is presented below:
 
Refining and
Marketing
 
Asphalt
 
Retail
 
Corporate
 
Consolidated
Total
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
 
Net sales to external customers
$
915,629

 
$
44,821

 
$
190,143

 
$

 
$
1,150,593

Intersegment sales (purchases)
91,000

 
(6,883
)
 
(84,117
)
 

 

Depreciation and amortization
31,353

 
1,219

 
3,291

 
684

 
36,547

Operating income (loss)
24,525

 
(1,481
)
 
6,014

 
(877
)
 
28,181

Turnarounds, catalysts and capital expenditures
7,903

 
1,482

 
4,945

 
86

 
14,416

 
Refining and
Marketing
 
Asphalt
 
Retail
 
Corporate
 
Consolidated
Total
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
Net sales to external customers
$
633,503

 
$
53,499

 
$
162,971

 
$

 
$
849,973

Intersegment sales (purchases)
63,110

 
(5,448
)
 
(57,662
)
 

 

Depreciation and amortization
29,784

 
1,260

 
3,399

 
419

 
34,862

Operating income (loss)
(42,363
)
 
(648
)
 
4,182

 
(610
)
 
(39,439
)
Turnarounds, catalysts and capital expenditures
35,169

 
740

 
2,711

 
1,436

 
40,056


Total assets by reportable segment consisted of the following:
 
March 31,
2017
 
December 31,
2016
Refining and marketing
$
1,742,211

 
$
1,724,982

Asphalt
115,635

 
111,941

Retail
238,524

 
241,272

Corporate
15,834

 
17,106

Total assets
$
2,112,204

 
$
2,095,301


Operating income (loss) for each segment consists of net sales less cost of sales, direct operating expenses, selling, general and administrative expenses, depreciation and amortization, and gain (loss) on disposition of assets. Intersegment sales are intended to approximate wholesale market prices. Consolidated totals presented are after intersegment eliminations.
Total assets of each segment consist of net property, plant and equipment, inventories, cash and cash equivalents, accounts and other receivables and other assets directly associated with the segment’s operations. Corporate assets consist primarily of corporate headquarters information technology and administrative equipment.