Alon USA Energy, Inc.

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Press Releases

Alon USA Reports Fourth Quarter and Full Year 2011 Results

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Company schedules conference call for March 9, 2012 at 10:00 a.m. Eastern

DALLAS, March 8, 2012 /PRNewswire/ -- Alon USA Energy, Inc. (NYSE: ALJ) ("Alon") today announced results for the quarter and year ended December 31, 2011.  All in all, we had a record year on an adjusted EBITDA basis, although net loss available to common stockholders for the fourth quarter of 2011 was $(12.9) million, or $(0.23) per share, compared to net loss available to common stockholders of $(25.1) million, or $(0.46) per share, for the same period last year.  Excluding special items, primarily non-cash gains on unrealized commodity swaps, Alon recorded net loss available to common stockholders of $(43.7) million, or $(0.78) per share, for the fourth quarter of 2011, compared to net loss available to common stockholders of $(20.2) million, or $(0.37) per share, for the same period last year.

Net income available to common stockholders for the year ended December 31, 2011 was $42.5 million, or $0.77 per share, compared to net loss available to common stockholders of $(122.9) million, or $(2.27) per share, for the same period last year.  Excluding special items, Alon recorded net income available to common stockholders of $30.9 million, or $0.56 per share, for the year ended December 31, 2011, compared to net loss available to common stockholders of $(130.6) million, or $(2.41) per share, for the same period last year.

Paul Eisman, CEO and President, commented, "2011 was an excellent year for our company with adjusted EBITDA over $300 million. In addition to our financial results, we made great strides in 2011 with improvements to our facilities that will benefit us both in 2012 and the years to come.

"At our Big Spring refinery, subsequent to our planned downtime in July to complete maintenance and capital projects, we increased the total throughput rate to over 70,000 barrels per day during the fourth quarter. At the same time, we generated yields of over 100% for the second consecutive quarter.

"At our Krotz Springs refinery, we completed several capital projects during the fourth quarter intended to improve crude slate flexibility, FCC capacity and yields, and jet fuel yield. The Krotz Springs refinery took an opportunistic shutdown in November to begin integrating these upgrades.  We have begun to see the benefit of these capital projects in 2012.  Additionally, we began receiving WTI priced crudes at Krotz Springs in December 2011, and expect to meet our goal of processing on average 20,000 to 25,000 barrels per day of these crudes in 2012.

"In June 2011 we completed a project to integrate the Bakersfield hydrocracker unit into the California refineries system to increase overall light product yields.  Since the completion of the project, we have increased light product yields by approximately 25%.  In light of the weak margin environment, we shutdown the California refineries in December to make minor revisions to the hydrocracker in preparation for receiving new crude blends that will further improve the liquid recovery and light product yields of these facilities.  We expect to restart the California refineries at the beginning of the second quarter of 2012.

"The high price of crude oils indexed to the WTI price on the Gulf Coast and West Coast together with the reduction in gasoline crack spreads materially affected refining margins during the fourth quarter.

"Our retail and branded marketing segment's wholesale fuel sales performance was impacted by the differential in gasoline prices on the Gulf Coast as compared to the markets in which we operate, but still delivered a strong fourth quarter performance with adjusted EBITDA of $7 million and adjusted EBITDA for the twelve months ended December 31, 2011 of $41 million.  Retail fuel sales increased 10% and merchandise sales increased 6% over the same period in 2010.

"In the first quarter of 2012, we expect the average throughput at both our Big Spring and Krotz Springs refineries to each be approximately 70,000 barrels per day."

FOURTH QUARTER 2011

Special items of $(30.8) million for the fourth quarter of 2011 included an after-tax gain of $(8.8) million associated with heating oil crack spread contracts, an after-tax gain of $(21.6) million associated with long-term mark-to-market commodity swaps and an after-tax gain recognized on disposition of assets of $(0.4) million.  Special items of $5.0 million for the fourth quarter of 2010 included an after-tax loss of $5.3 million for the unrealized loss associated with consignment inventory and an after-tax gain recognized on disposition of assets of $(0.3) million.

Refinery operating margin at the Big Spring refinery was $14.22 per barrel for the fourth quarter of 2011 compared to $5.16 per barrel for the same period in 2010.  This increase is due to higher Gulf Coast 3/2/1 crack spreads and improved operating efficiencies at higher throughputs, partially offset by lower sweet/sour crude oil spreads.  Refinery operating margin at the California refineries was $(3.98) per barrel for the fourth quarter of 2011, compared to $2.13 per barrel for the same period in 2010.  This decrease is due to lower West Coast 3/1/1/1 crack spreads, partially offset by higher light product yields.  Refinery operating margin at the Krotz Springs refinery was $(6.03) per barrel for the fourth quarter of 2011, compared to $4.55 per barrel for the same period in 2010.  This decrease is due to lower Gulf Coast 2/1/1 crack spreads.

Combined refinery throughput for the fourth quarter of 2011 averaged 150,996 barrels per day ("bpd"), consisting of 71,700 bpd at the Big Spring refinery, 27,141 bpd at the California refineries, and 52,155 bpd at the Krotz Springs refinery, where throughput was reduced from a planned shutdown, compared to a combined refinery average of 138,783 bpd for the fourth quarter of 2010, consisting of 57,290 bpd at the Big Spring refinery, 11,675 bpd at the California refineries, and 69,818 bpd at the Krotz Springs refinery.

The average Gulf Coast 3/2/1 crack spread was $19.95 per barrel for the fourth quarter of 2011 compared to $8.27 per barrel for the fourth quarter of 2010.  The average West Coast  3/1/1/1 crack spread for the fourth quarter of 2011 was $3.58 per barrel compared to $7.56 per barrel for the fourth quarter of 2010.  The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the fourth quarter of 2011 was $(1.50) per barrel compared to $7.25 per barrel for the fourth quarter of 2010.

The average sweet/sour spread for the fourth quarter of 2011 was $0.84 per barrel compared to $2.72 per barrel for the same period in 2010.  The average WTI to Buena Vista spread for the fourth quarter of 2011 was $(19.80) per barrel compared to $0.47 per barrel for the same period in 2010.  The average LLS to WTI spread for the fourth quarter of 2011 was $23.32 per barrel compared to $1.54 per barrel for the same period in 2010.

Asphalt margins for the fourth quarter of 2011 were $65.83 per ton compared to $52.94 per ton for the fourth quarter of 2010.  On a cash basis, asphalt margins in the fourth quarter of 2011 were $22.41 per ton compared to $51.13 per ton in the fourth quarter of 2010.  This decrease was due primarily to higher crude oil costs without having the ability to increase asphalt sales prices accordingly.  The average blended asphalt sales price increased 15.4% from $475.56 per ton in the fourth quarter of 2010 to $548.87 per ton in the fourth quarter of 2011 and the average non-blended asphalt sales price increased 4.6% from $287.35 per ton in the fourth quarter of 2010 to $300.50 per ton in the fourth quarter of 2011.  The average price of Buena Vista crude increased 34.6% from $84.60 per barrel in the fourth quarter of 2010 to $113.83 per barrel in the fourth quarter of 2011.

Retail fuel sales volume increased by 9.1% from 37.3 million gallons in the fourth quarter of 2010 to 40.7 million gallons in the fourth quarter of 2011.  Branded fuel sales volume increased by 8.3% from 88.9 million gallons in the fourth quarter of 2010 to 96.3 million gallons in the fourth quarter of 2011.  Adjusted EBITDA for our retail and branded marketing segment was $7.2 million for the fourth quarter of 2011 compared to adjusted EBITDA of $8.5 million for the same period in 2010.

YEAR-TO-DATE 2011

Special items of $(11.7) million for 2011 included an after-tax loss of $23.9 million associated with heating oil crack spread contracts, an after-tax gain of $(21.6) million associated with long-term mark-to-market commodity swaps, an after-tax gain of $(13.5) million associated with a reduction in system inventories and an after-tax gain on disposition of assets of $(0.5) million.  Special items of $(7.7) million for 2010 included a $(16.3) million gain on bargain purchase recognized from the Bakersfield refinery acquisition, an after-tax loss of $5.3 million for the unrealized loss associated with consignment inventory, 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 disposition of assets of $(0.6) million.

Refinery operating margin at the Big Spring refinery was $18.84 per barrel for 2011 compared to $6.03 per barrel for 2010. This increase is due to higher Gulf Coast 3/2/1 crack spreads and improved operating efficiencies at higher throughput rates. Refinery operating margin at the California refineries was $(1.31) per barrel for 2011 compared to $1.08 per barrel for 2010. This decrease reflects the impact of the California refineries' shutdown until its restart in late March 2011 offset by higher West Coast 3/1/1/1 crack spreads and light product yields.  Refinery operating margin at the Krotz Springs refinery was $3.05 per barrel for 2011 compared to $2.24 per barrel for 2010. This increase reflects the effects of the refinery being down for the first five months of 2010 and the increase in the Gulf Coast 2/1/1 high sulfur diesel crack spread.

Combined refinery throughput for 2011 averaged 146,149 bpd, consisting of 63,614 bpd at the Big Spring refinery, 22,815 bpd at the California refineries and 59,720 bpd at the Krotz Springs refinery, where throughput was reduced during the second quarter of 2011 due to flooding in Louisiana and the impact on crude oil supply to the refinery, compared to 105,868 bpd in 2010, consisting of 49,028 bpd at the Big Spring refinery, 17,596 bpd at the California refineries, and 39,244 bpd at the Krotz Springs refinery.

The average Gulf Coast 3/2/1 crack spread for 2011 was $23.37 per barrel compared to $8.22 per barrel for 2010. The average West Coast 3/1/1/1 crack spread for 2011 was $9.20 per barrel compared to $8.34 per barrel for 2010.  The average Gulf Coast 2/1/1 high sulfur diesel crack spread for 2011 was $7.00 per barrel compared to $5.26 per barrel for 2010.

The average sweet/sour spread for 2011 was $2.06 per barrel compared to $2.15 per barrel for 2010.  The average WTI to Buena Vista spread for 2011 was $(13.36) per barrel compared to $1.33 per barrel for 2010.  The average LLS to WTI spread for 2011 was $16.76 per barrel compared to $2.49 per barrel for 2010.

Asphalt margins in 2011 decreased to $26.99 per ton compared to $51.06 per ton in 2010. On a cash basis, asphalt margins in 2011 were $14.97 per ton compared to $53.83 per ton in 2010. This decrease was due primarily to higher crude oil costs without having the ability to increase asphalt sales prices accordingly. The average blended asphalt sales price increased 13.4% from $477.26 per ton in 2010 to $541.44 per ton in 2011 and the average non-blended asphalt sales price increased 0.2% from $326.16 per ton in 2010 to $326.69 per ton in 2011. The average price for Buena Vista crude increased 38.9%, from $78.08 per barrel in 2010 to $108.43 per barrel in 2011.

Retail fuel sales volume increased by 10.2% from 142.2 million gallons in 2010 to 156.7 million gallons in 2011. Branded fuel sales volume increased by 15.5% from 318.9 million gallons in 2010 to 368.4 million gallons in 2011. Adjusted EBITDA for our retail and branded marketing segment was $40.5 million for 2011 compared to $33.0 million for 2010.

CONFERENCE CALL

The Company has scheduled a conference call for Friday, March 9, 2012, at 10:00 a.m. Eastern, to discuss the fourth quarter 2011 results. To access the call, please dial 877-941-0844, or 480-629-9835, 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 March 23, 2012, and may be accessed by calling 800-406-7325, or 303-590-3030, for international callers, and using the passcode 4510312#. 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 over 600 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, 2010, AND INCOME STATEMENT DATA FOR THE YEAR ENDED DECEMBER 31, 2010, IS UNAUDITED)

For the Three Months Ended


For the Year Ended


December 31,


December 31,


2011


2010


2011


2010


(dollars in thousands, except per share data)

STATEMENT OF OPERATIONS DATA:








Net sales (1)

$

1,882,869



$

1,362,500



$

7,186,257



$

4,030,743


Operating costs and expenses:








Cost of sales

1,745,274



1,268,825



6,462,947



3,712,358


Direct operating expenses

83,190



57,117



285,666



249,933


Selling, general and administrative expenses (2)

35,527



32,081



143,122



128,082


Depreciation and amortization (3)

33,684



23,625



113,730



102,096


Total operating costs and expenses

1,897,675



1,381,648



7,005,465



4,192,469


Gain on disposition of assets

568



471



729



945


Operating income (loss)

(14,238)



(18,677)



181,521



(160,781)


Interest expense (4)

(24,530)



(22,528)



(88,310)



(94,939)


Equity earnings of investees

1,353



469



5,128



5,439


Gain on bargain purchase (5)







17,480


Other income (loss), net (6)

15,392



(3,629)



(35,673)



9,716


Income (loss) before income tax expense (benefit)

(22,023)



(44,365)



62,666



(223,085)


Income tax expense (benefit)

(8,034)



(16,801)



18,918



(90,512)


Net income (loss)

(13,989



(27,564)



43,748



(132,573)


Net income (loss) attributable to non-controlling interest

(1,076)



(2,417)



1,241



(9,641)


Net income (loss) available to common stockholders

$

(12,913)



$

(25,147)



$

42,507



$

(122,932)


Earnings (loss) per share, basic

$

(0.23)



$

(0.46)



$

0.77



$

(2.27)


Weighted average shares outstanding, basic (in thousands)

55,853



54,215



55,431



54,186


Earnings (loss) per share, diluted

$

(0.23)



$

(0.46)



$

0.69



$

(2.27)


Weighted average shares outstanding, diluted (in thousands)

55,853



54,215



61,401



54,186


Cash dividends per share

$

0.04



$

0.04



$

0.16



$

0.16


CASH FLOW DATA:








Net cash provided by (used in):








Operating activities

$

11,198



$

58,605



$

69,560



$

21,330


Investing activities

(22,412)



(25,707)



(126,542)



(40,925)


Financing activities

(7,3210)



(846)



142,361



50,845


OTHER DATA:








Adjusted net income (loss) available to common stockholders (7)

$

(43,656)



$

(20,155)



$

30,850



$

(130,603)


Adjusted earnings (loss) per share (7)

(0.78)



(0.37)



0.56



(2.41)


Adjusted EBITDA (8)

20,810



1,317



300,257



(44,475)


Capital expenditures (9)

21,505



26,181



112,625



46,707


Capital expenditures for turnaround and chemical catalyst

2,739



463



9,734



13,131







December 31,
2011


December 31,
2010

BALANCE SHEET DATA (end of period):

(dollars in thousands)

Cash and cash equivalents

$

157,066



$

71,687


Working capital

99,452



990


Total assets

2,330,382



2,088,521


Total debt

1,050,196



916,305


Total equity

395,784



341,767






REFINING AND UNBRANDED MARKETING SEGMENT






For the Three Months Ended


For the Year Ended


December 31,


December 31,


2011


2010


2011


2010


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

STATEMENTS OF OPERATIONS DATA:








Net sales (10)

$

1,747,788



$

1,223,266



$

6,544,913



$

3,454,115


Operating costs and expenses:








Cost of sales

1,660,117



1,173,487



5,996,772



3,311,771


Direct operating expenses

72,804



46,282



243,018



205,838


Selling, general and administrative expenses

7,261



5,399



32,207



22,764


Depreciation and amortization

24,169



18,251



88,968



80,401


Total operating costs and expenses

1,764,351



1,243,419



6,360,965



3,620,774


Gain on disposition of assets



659



12



659


Operating income (loss)

$

(16,563)



$

(19,494)



$

183,960



$

(166,000)


KEY OPERATING STATISTICS:








Per barrel of throughput:








Refinery operating margin – Big Spring (11)

14.22



5.16



18.84



6.03


Refinery operating margin – CA Refineries (11)

(3.98)



2.13



(1.31)



1.08


Refinery operating margin – Krotz Springs (11)

(6.03)



4.55



3.05



2.24


Refinery direct operating expense – Big Spring (12)

3.87



3.78



4.25



5.06


Refinery direct operating expense – CA Refineries (12)

10.15



8.10



7.32



7.73


Refinery direct operating expense – Krotz Springs (12)

4.56



2.56



3.67



4.36


Capital expenditures

14,548



22,902



90,667



38,136


Capital expenditures for turnaround and chemical catalyst

2,739



463



9,734



13,131


PRICING STATISTICS:








WTI crude oil (per barrel)

$

94.03



$

85.07



$

95.07



$

79.41


WTS crude oil (per barrel)

93.19



82.35



93.01



77.26


Buena Vista crude oil (per barrel)

113.83



84.60



108.43



78.08


LLS crude oil (per barrel)

112.41



81.33



110.98



80.61


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








Gulf Coast (13)

$

19.95



$

8.27



$

23.37



$

8.22


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








West Coast (13)

3.58



7.56



9.20



8.34


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








Gulf Coast high sulfur diesel (13)

$

(1.50)



$

7.25



$

7.00



$

5.26


Crude oil differentials (per barrel):








WTI less WTS (14)

$

0.84



$

2.72



$

2.06



$

2.15


WTI less Buena Vista (14)

(19.80)



0.47



(13.36)



1.33


LLS less WTI (14)

23.32



1.54



16.76



2.49


Product prices (dollars per gallon):








Gulf Coast unleaded gasoline

$

2.59



$

2.16



$

2.75



$

2.05


Gulf Coast ultra-low sulfur diesel

2.96



2.34



2.97



2.16


Gulf Coast high sulfur diesel

2.93



2.31



2.91



2.10


West Coast LA CARBOB (unleaded gasoline)

2.80



2.31



2.89



2.21


West Coast LA ultra-low sulfur diesel

3.06



2.41



3.05



2.21


Natural gas (per MMBTU)

3.48



3.98



4.03



4.38






THROUGHPUT AND

PRODUCTION DATA:

BIG SPRING REFINERY

For the Three Months Ended


For the Year Ended

December 31,


December 31,


2011


2010


2011


2010


bpd


%


bpd


%


bpd


%


bpd


%

Refinery throughput:
















Sour crude

57,335



80.0



46,808



81.7



51,202



80.4



39,349



80.2


Sweet crude

11,306



15.8



8,079



14.1



10,023



15.8



7,288



14.9


Blendstocks

3,059



4.2



2,403



4.2



2,389



3.8



2,391



4.9


Total refinery throughput (15)

71,700



100.0



57,290



100.0



63,614



100.0



49,028



100.0


Refinery production:
















Gasoline

37,443



52.1



29,160



51.1



31,105



49.1



24,625



50.7


Diesel/jet

23,035



32.0



19,227



33.7



20,544



32.3



15,869



32.7


Asphalt

4,638



6.4



3,392



5.9



4,539



7.1



2,827



5.8


Petrochemicals

4,354



6.1



3,755



6.6



3,837



6.0



2,939



6.0


Other

2,452



3.4



1,513



2.7



3,488



5.5



2,341



4.8


Total refinery production (16)

71,922



100.0



57,047



100.0



63,513



100.0



48,601



100.0


Refinery utilization (17)



98.1

%




78.4

%




90.8

%




68.2

%





THROUGHPUT AND

PRODUCTION DATA:

CALIFORNIA REFINERIES

For the Three Months Ended


For the Year Ended

December 31,


December 31,


2011


2010


2011


2010


bpd


%


bpd


%


bpd


%


bpd


%

Refinery throughput:
















Medium sour crude

8,778



32.4



1,828



15.7



5,677



24.9



3,502



19.9


Heavy crude

15,720



57.9



9,553



81.8



14,962



65.6



13,688



77.8


Blendstocks

2,643



9.7



294



2.5



2,176



9.5



406



2.3


Total refinery throughput (15)

27,141



100.0



11,675



100.0



22,815



100.0



17,596



100.0


Refinery production:
















Gasoline

6,350



23.8



1,861



16.4



4,969



22.0



2,629



15.4


Diesel/jet

10,601



39.6



2,623



23.1



7,938



35.1



3,704



21.6


Asphalt

7,154



26.8



4,034



35.5



6,632



29.4



5,919



34.6


Light unfinished
















Heavy unfinished

1,790



6.7



2,656



23.4



2,292



10.2



4,483



26.2


Other

816



3.1



176



1.6



735



3.3



372



2.2


Total refinery production (16)

26,711



100.0



11,350



100.0



22,566



100.0



17,107



100.0


Refinery utilization (17)



33.8

%




23.7

%




28.5

%




25.9

%





THROUGHPUT AND

PRODUCTION DATA:

KROTZ SPRINGS REFINERY

For the Three Months Ended


For the Year Ended

December 31,


December 31,


2011


2010


2011


2010


bpd


%


bpd


%


bpd


%


bpd


%

Refinery throughput:
















Light sweet crude

42,079



80.7



45,621



65.3



47,177



79.0



23,810



60.7


Heavy sweet crude

9,649



18.5



23,236



33.3



11,802



19.8



14,535



37.0


Blendstocks

427



0.8



961



1.4



741



1.2



899



2.3


Total refinery throughput (15)

52,155



100.0



69,818



100.0



59,720



100.0



39,244



100.0


Refinery production:
















Gasoline

21,733



41.0



27,956



39.9



24,852



41.4



15,812



40.1


Diesel/jet

23,515



44.3



34,940



49.8



27,436



45.6



18,986



48.2


Heavy Oils

3,873



7.3



1,746



2.5



2,904



4.8



1,515



3.8


Other

3,930



7.4



5,489



7.8



4,914



8.2



3,107



7.9


Total refinery production (16)

53,051



100.0



70,131



100.0



60,106



100.0



39,420



100.0


Refinery utilization (17)



70.7

%




82.9

%




77.9

%




46.1

%





ASPHALT SEGMENT









For the Three Months Ended


For the Year Ended


December 31,


December 31,


2011


2010


2011


2010


(dollars in thousands, except per ton data)

STATEMENTS OF OPERATIONS DATA:








Net sales

$

119,414



$

82,619



$

554,549



$

399,334


Operating costs and expenses:








Cost of sales (18)

103,484



72,772



524,964



355,272


Direct operating expenses

10,386



10,835



42,648



44,095


Selling, general and administrative expenses

1,247



981



5,080



5,542


Depreciation and amortization

1,377



1,727



6,376



6,875


Total operating costs and expenses

116,494



86,315



579,068



411,784


Operating income (loss)

$

2,920



$

(3,696)



$

(24,519)



$

(12,450)


KEY OPERATING STATISTICS:








Blended asphalt sales volume (tons in thousands) (19)

188



155



915



780


Non-blended asphalt sales volume (tons in thousands) (20)

54



31



181



83


Blended asphalt sales price per ton (19)

$

548.87



$

475.56



$

541.44



$

477.26


Non-blended asphalt sales price per ton (20)

300.50



287.35



326.69



326.16


Asphalt margin per ton (21)

65.83



52.94



26.99



51.06


Capital expenditures

$

1,767



$

566



$

3,225



$

1,557






RETAIL AND BRANDED MARKETING SEGMENT









For the Three Months Ended


For the Year Ended


December 31,


December 31,


2011


2010


2011


2010


(dollars in thousands, except per gallon data)

STATEMENTS OF OPERATIONS DATA:








Net sales (1)

$

353,994



$

291,387



$

1,437,449



$

1,044,851


Operating costs and expenses:








Cost of sales (18)

320,000



257,338



1,291,865



912,872


Selling, general and administrative expenses

26,831



25,513



105,083



99,024


Depreciation and amortization (3)

7,424



3,231



16,461



13,440


Total operating costs and expenses

354,255



286,082



1,413,409



1,025,336


Gain (loss) on disposition of assets

568



(188)



717



286


Operating income

$

307



$

5,117



$

24,757



$

19,801


KEY OPERATING STATISTICS:








Branded fuel sales (thousands of gallons) (22)

96,320



88,904



368,421



318,935


Branded fuel margin (cents per gallon) (22)

3.2



4.9



4.5



6.2


Number of stores (end of period)

302



304



302



304


Retail fuel sales (thousands of gallons)

40,731



37,273



156,662



142,155


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

45



41



43



39


Retail fuel margin (cents per gallon) (23)

15.7



14.8



16.4



12.9


Retail fuel sales price (dollars per gallon) (24)

$

3.24



$

2.76



$

3.41



$

2.70


Merchandise sales

$

72,421



$

70,014



$

298,233



$

281,674


Merchandise sales (per site per month)

$

80



$

77



$

82



$

77


Merchandise margin (25)

32.0

%


32.4

%


32.8

%


31.9

%

Capital expenditures

$

4,922



$

2,530



$

17,193



$

4,679





________________

(1)

Includes excise taxes on sales by the retail and branded marketing segment of $15,799 and $14,409 for the three months ended December 31, 2011 and 2010, respectively, and $60,686 and $54,930 for the year ended December 31, 2011 and 2010, respectively. Net sales also includes net royalty and related net credit card fees of $1,349 and $1,529 for the three months ended December 31, 2011 and 2010, respectively, and $5,526 and $4,221 for the year ended December 31, 2011 and 2010, respectively.

(2)

Includes corporate headquarters selling, general and administrative expenses of $188 and $188 for the three months ended December 31, 2011 and 2010, respectively, and $752 and $752 for the year ended December 31, 2011 and 2010, respectively, which are not allocated to our three operating segments. The increase in consolidated selling, general and administrative expenses for the year ended December 31, 2011 compared to the year ended December 31, 2010 is primarily due to increased employee related costs, $6,026 related to the retail and branded marketing segment and $3,476 related to net bad debt recoveries and insurance premium refunds in the year ended December 31, 2010.

(3)

Includes corporate depreciation and amortization of $714 and $416 for the three months ended December 31, 2011 and 2010, respectively, and $1,925 and $1,380 for the year ended December 31, 2011 and 2010, respectively, which are not allocated to our three operating segments. In the retail and branded marketing segment for the three months and year ended December 31, 2011, depreciation and amortization includes $4,625 for the write-off of deferred costs.

(4)

Interest expense of $94,939 for the year ended December 31, 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.

(5)

In connection with the Bakersfield refinery acquisition in 2010, 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 three months and year ended December 31, 2011 and the three months ended December 31, 2010 is substantially the gain (loss) on heating oil crack spread contracts. Other income (loss), net for the year ended December 31, 2010 also includes a gain from the sale of our investment in Holly Energy Partners.

(7)

The following table provides a reconciliation of net income (loss) available to common stockholders under United States generally accepted accounting principles ("GAAP") to adjusted net income (loss) available to common stockholders utilized in determining adjusted earnings (loss) per share, excluding the after-tax loss on write-off of unamortized debt issuance costs, after-tax (gain) loss on heating oil crack spread contracts, after-tax unrealized loss associated with consignment inventory, after-tax gain on long-term mark-to-market commodity swaps, after-tax gain from reduction in system inventories, gain on bargain purchase and after-tax gain on disposition of assets. Our management believes that the presentation of adjusted net income (loss) available to common 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 Year Ended


December 31,


December 31,


2011


2010


2011


2010


(dollars in thousands)

Net income (loss) available to common stockholders

$

(12,913)



$

(25,147)



$

42,507



$

(122,932)


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







3,865


Plus:  (Gain) loss on heating oil crack spread contracts, net of tax

(8,803)





23,894




Plus:  Unrealized loss associated with consignment inventory, net of tax



5,268





5,268


Less:  Gain on long-term mark-to-market commodity swaps, net of tax

(21,563)





(21,563)




Less:  Gain from reduction in system inventories, net of tax





(13,508)




Less:  Gain on bargain purchase







(16,253)


Less:  Gain on disposition of assets, net of tax

(377)



(276)



(480)



(551)


Adjusted net income (loss) available to common stockholders

$

(43,656)



$

(20,155)



$

30,850



$

(130,603)


Adjusted earnings (loss) per share

$

(0.78)



$

(0.37)



$

0.56



$

(2.41)





(8)

Adjusted EBITDA represents earnings before net income (loss) attributable to non-controlling interest, income tax expense, interest expense, depreciation and amortization, gain on bargain purchase, gain on disposition of assets and (gain) loss on heating oil crack spread contracts. 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 (loss) attributable to non-controlling interest, income tax expense, interest expense, gain on bargain purchase, gain on disposition of assets, (gain) loss on heating oil crack spread contracts 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 common stockholders to Adjusted EBITDA for the three months and years ended December 31, 2011 and 2010, respectively:





For the Three Months Ended


For the Year Ended


December 31,


December 31,


2011


2010


2011


2010


(dollars in thousands)

Net income (loss) available to common stockholders

$

(12,913)



$

(25,147)



$

42,507



$

(122,932)


Net income (loss) attributable to non-controlling interest

(1,076)



(2,417)



1,241



(9,641)


Income tax expense (benefit)

(8,034)



(16,801)



18,918



(90,512)


Interest expense

24,530



22,528



88,310



94,939


Depreciation and amortization

33,684



23,625



113,730



102,096


Gain on bargain purchase







(17,480)


Gain on disposition of assets

(568)



(471)



(729)



(945)


(Gain) loss on heating oil crack spread contracts

(14,813)





36,280




Adjusted EBITDA

$

20,810



$

1,317



$

300,257



$

(44,475)





Adjusted EBITDA for 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 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 retail and branded marketing segment for the three months and years ended December 31, 2011 and 2010, respectively:




RETAIL AND BRANDED MARKETING SEGMENT

For the Three Months Ended


For the Year Ended


December 31,


December 31,


2011


2010


2011


2010


(dollars in thousands)

Operating income

$

307



$

5,117



$

24,757



$

19,801


Depreciation and amortization

7,424



3,231



16,461



13,440


(Gain) loss on disposition of assets

(568)



188



(717)



(286)


Adjusted EBITDA

$

7,163



$

8,536



$

40,501



$

32,955





(9)

Includes corporate capital expenditures of $268 and $183 for the three months ended December 31, 2011 and 2010, respectively, and $1,540 and $2,335 for the years ended December 31, 2011 and 2010, respectively, which are not allocated to our three operating segments.

(10)

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.

(11)

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 year ended December 31, 2011, excludes a benefit from inventory reductions of $22,460. The refinery operating margin for the three months and year ended December 31, 2011, for the Krotz Springs refinery excludes unrealized hedging gains of $32,742. The refinery operating margin for the three months and year ended December 31, 2010, excludes an unrealized loss associated with consignment inventory of $8,942. The refinery operating margin for the year ended December 31, 2010, excludes a benefit of $4,515 to cost of sales for inventory adjustments related to the Bakersfield refinery acquisition.

(12)

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 period prior to the start-up of the Bakersfield refinery of $3,356 for the year ended December 31, 2011 and $1,251 and $3,373 for the three months and year ended December 31, 2010, respectively, have been excluded from the per barrel measurement calculation.

(13)

We compare our Big Spring refinery's per barrel operating margin to the Gulf Coast 3/2/1 crack spread. A 3/2/1 crack spread 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 compare our California refineries' per barrel operating margin to the West Coast 3/1/1/1 crack spread. A 3/1/1/1 crack spread is calculated assuming that three barrels of a benchmark crude oil are converted into one barrel of gasoline, one barrel of diesel and one barrel of fuel oil. We calculate the West Coast 3/1/1/1 crack spread using the market values of West Coast LA CARBOB pipeline gasoline, LA ultra-low sulfur pipeline diesel, and LA 380 pipeline CST (fuel oil) and the market value of Buena Vista crude oil.


We compare our Krotz Springs refinery's per barrel operating margin to the Gulf Coast 2/1/1 crack spread. A 2/1/1 crack spread is calculated assuming that two barrels of a benchmark crude oil are converted into one barrel of gasoline and one barrel of diesel. We calculate the Gulf Coast 2/1/1 crack spread using the market values of Gulf Coast conventional gasoline and Gulf Coast high sulfur diesel and the market value of Light Louisiana Sweet, LLS, crude oil.

(14)

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 less Buena Vista spread represents the differential between the average value per barrel of WTI crude oil and the average value per barrel of Buena Vista crude oil. The LLS less WTI spread represents the differential between the average value per barrel of LLS crude oil and the average value per barrel of WTI crude oil.

(15)

Total refinery throughput represents the total barrels per day of crude oil and blendstock inputs in the refinery production process. The throughput data of the California refineries for the year ended December 31, 2011, reflects substantially eight months of operations due to the integration during the first three months of the year and revisions in December to the Bakersfield hydrocracker unit. The throughput data of the California refineries for the year ended December 31, 2010, reflects eleven months of throughput data as the California refineries were shutdown in December to redeploy resources for the integration of the Bakersfield refinery acquired in June 2010. The throughput data of the Krotz Springs refinery for the year ended December 31, 2011, reflects approximately a one month shutdown due to flooding in Louisiana and the impact on crude supply to the refinery and a two week shutdown in November for the tie-in of capital projects work. The throughput data of the Krotz Springs refinery for the year ended December 31, 2010, reflects substantially seven months of operations beginning in June 2010 due to the restart after major turnaround activity.

(16)

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.

(17)

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

(18)

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.

(19)

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

(20)

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

(21)

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.

(22)

Branded fuel sales represent 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 branded fuel 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.

(23)

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.

(24)

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

(25)

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.