Alon USA Energy, Inc.

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Alon USA Reports Second Quarter Results

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Declares Quarterly Cash Dividend

Company schedules conference call for August 6, 2010 at 10:00 A.M. Eastern

DALLAS, Aug. 5 /PRNewswire-FirstCall/ -- Alon USA Energy, Inc. (NYSE: ALJ) ("Alon") today announced results for the quarter and six months ended June 30, 2010. Net loss for the second quarter of 2010 was ($29.3) million, or ($0.54) per share, compared to net loss of ($15.3) million, or ($0.33) per share, for the same period last year. Excluding special items, Alon recorded a net loss of ($29.5) million, or ($0.55) per share, for the second quarter of 2010, compared to net loss of ($12.4) million, or ($0.26) per share, for the same period last year.

Net loss for the six months ended June 30, 2010, was ($82.2) million, or ($1.52) per share, compared to net income of $2.0 million, or $0.04 per share, for the six months ended June 30, 2009. Excluding special items, Alon recorded net loss of ($78.6) million or ($1.45) per share, for the six months ended June 30, 2010, compared to net income of $7.0 million, or $0.15 per share, for the same period last year.

Jeff Morris, Alon's CEO, commented, "Although our plan was to start earlier, we are pleased that in June the Krotz Springs refinery returned to operation with throughput of 65,000 barrels per day.

"Also, during the second quarter we consummated the acquisition of the Bakersfield refinery. We were able to complete the acquisition without modifying the capital structure of the company. We are planning to integrate the Bakersfield refinery with our other California refineries and expect to complete the integration during the first half of 2011. With the completion of the integration we will have a full conversion West Coast refinery without the need to build a hydrocracker. We are planning to increase the throughput of the integrated California refineries and are expecting substantial improvement to the operating margin.

"Once the Bakersfield refinery has been fully integrated, we will have completed our long term plan to have three complex refineries in Texas, California and Louisiana plus our asphalt business and retail operations.  

"We are pleased our consolidated results have improved on an Adjusted EBITDA basis from a negative $38.6 million in the first quarter of 2010 to near break-even in the second quarter, which included only one month of operations of the Krotz Springs refinery.  This improvement is the result of significantly improved margins at our Big Spring and California refineries, good results from Alon Brands, in addition to the start up of the Krotz Springs refinery.

"In addition, our board of directors has instructed us to pursue a Rights Offering of convertible preferred shares from which we are expecting net proceeds of $40 million or more. We have received an indication of interest from our shareholder, Alon Israel, to exercise its rights and to invest in the Rights Offering up to $30 million."

SECOND QUARTER 2010

Special items for the second quarter of 2010 included an after-tax gain of $0.3 million recognized on disposition of assets. Special items for the second 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 ($1.0) million.

Refinery operating margin at the Big Spring refinery was $9.58 per barrel for the second quarter of 2010 compared to $5.37 per barrel for the same period in 2009.  This increase was due to higher Gulf Coast 3/2/1 crack spreads, greater sweet/sour spreads, and increased light product yields.  Light product yields were approximately 90% for the second quarter of 2010 and 80% for the second quarter of 2009.  Refinery operating margin at the California refineries was $2.87 per barrel for the second quarter of 2010 compared to $2.47 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 second quarter of 2010 was ($1.95) per barrel compared to $5.85 per barrel for the same period in 2009.  The Krotz Springs refinery restarted operations in June after being down for the first five months of 2010 for a major turnaround.

The Big Spring and California refineries' combined throughput for the second quarter of 2010 averaged 62,218 barrels per day ("bpd"), consisting of an average of 42,775 bpd at the Big Spring refinery and an average of 19,443 bpd at the California refineries, compared to a combined average of 101,398 bpd in the second quarter of 2009, consisting of an average of 61,573 bpd at the Big Spring refinery and an average of 39,825 bpd at the California refineries.  The Krotz Springs refinery average throughput for the second quarter of 2010 averaged 21,960 bpd, reflecting one month's operations, compared to an average of 58,458 bpd for the second quarter of 2009.

The average Gulf Coast 3/2/1 crack spread for the second quarter of 2010 was $9.75 per barrel compared to $8.30 per barrel for the same period in 2009. The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the second quarter of 2010 was $8.92 per barrel compared to $6.63 per barrel for the second quarter of 2009.  Additionally, the average West Coast 3/2/1 crack spread for the second quarter of 2010 was $15.47 per barrel compared to $14.48 per barrel for the second quarter of 2009.  

Asphalt margins in the second quarter of 2010 increased to $67.12 per ton compared to $50.97 per ton in the second quarter of 2009.  On a cash basis, asphalt margins in the second quarter of 2010 were $55.16 per ton compared to $65.42 per ton in the second quarter of 2009.  This decrease was primarily due to higher crude oil costs.  The average blended asphalt sales price increased 22.1% from $397.35 per ton in the second quarter of 2009 to $485.15 per ton in the second quarter of 2010 and the average non-blended asphalt sales price increased 160.8% from $145.04 per ton in the second quarter of 2009 to $378.25 per ton in the second quarter of 2010.  The price for WTI crude increased 30.6%, from $59.54 per barrel in the second quarter of 2009, to $77.74 per barrel in the second quarter of 2010.

In our retail and branded marketing segment, retail fuel sales gallons increased by 17.2% from 30.2 million gallons in the second quarter of 2009 to 35.4 million gallons in the second quarter of 2010. Our branded fuel sales increased by 7.2% from 69.9 million gallons in the second quarter of 2009 to 74.9 million gallons in the second quarter of 2010.  Operating income for our retail and branded marketing segment was $7.7 million for the second quarter of 2010 compared to $2.4 million for the same period in 2009.

YEAR-TO-DATE 2010

Special items for the first half of 2010 included 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 half of 2009 included accumulated dividends of ($4.0) 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 ($1.0) million recognized on disposition of assets.  

Refinery operating margin at the Big Spring refinery was $7.26 per barrel for the first half of 2010 compared to $8.83 per barrel for the same period in 2009.  This decrease was due to lower Gulf Coast 3/2/1 crack spreads partially offset by increased light product yields.  Light product yields were approximately 88% for the first half of 2010 and 81% for the first half of 2009. Refinery operating margin at the California refineries was $1.29 per barrel for the first half of 2010 compared to $3.99 per barrel for the same period in 2009.  This decrease primarily resulted from lower West Coast 3/2/1 crack spreads.  The Krotz Springs refinery operating margin for the first half of 2010 was ($1.48) per barrel compared to $8.91 per barrel for the same period last year.  This decrease reflects the effects of the refinery being down for the first five months of 2010.

The Big Spring and California refineries' combined throughput for the first half of 2010 averaged 61,636 bpd, consisting of an average of 42,779 bpd at the Big Spring refinery and an average of 18,857 bpd at the California refineries, compared to a combined average of 97,312 bpd in the first half of 2009, consisting of an average of 62,987 bpd at the Big Spring refinery and an average of 34,325 bpd at the California refineries.  The Krotz Springs refinery average throughput for the first half of 2010 was an average of 11,041 bpd, reflecting one month's operations, compared to an average of 56,099 bpd for the same period in 2009.

The average 3/2/1 Gulf Coast crack spread for the first half of 2010 was $8.43 per barrel compared to $8.97 per barrel for the same period in 2009. The average 2/1/1 Gulf Coast high sulfur diesel crack spread for the first half of 2010 was $7.59 per barrel compared to $8.04 per barrel for the first half of 2009.  Additionally, the average 3/2/1 West Coast crack spread for the first half of 2010 was $12.81 per barrel compared to $16.19 per barrel for the first half of 2009.

Asphalt margins in the first half of 2010 increased to $28.10 per ton compared to $15.33 per ton in the first half of 2009.  On a cash basis, asphalt margins in the first half of 2010 were $38.54 per ton compared to $80.44 per ton in the first half of 2009.  This decrease was due primarily to higher crude oil costs.  The average blended asphalt sales price increased 28.9% from $369.93 per ton in the first half of 2009 to $476.85 per ton in the first half of 2010 and the average non-blended asphalt sales price increased 157.9% from $135.54 per ton in the first half of 2009 to $349.50 per ton in the first half of 2010.  The price for WTI crude increased 52.3%, from $51.36 per barrel in the first half of 2009 to $78.24 per barrel in the first half of 2010.

In our retail and branded marketing segment, retail fuel sales gallons increased by 16.6% from 58.4 million gallons in the first half of 2009 to 68.1 million gallons in the first half of 2010. Our branded fuel sales increased by 6.3% from 136.7 million gallons in the first half of 2009 to 145.3 million gallons in the first half of 2010.  Operating income for our retail and branded marketing segment was $5.9 million for the first half of 2010 compared to $3.8 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 September 15, 2010 to stockholders of record at the close of business on August 31, 2010.

CONFERENCE CALL

Alon has scheduled a conference call for Friday, August 6, 2010, at 10:00 a.m. Eastern, to discuss the second 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 August 20, 2010, and may be accessed by calling 800-406-7325, or 303-590-3030, for international callers, and using the passcode 4324014#. 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&E at 713-529-6600 or email dmw@drg-e.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 610 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: Claire A. Hart, Senior Vice President

          Alon USA Energy, Inc.

          972-367-3649



          Investors: Jack Lascar/Sheila Stuewe

          DRG&E / 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   For the Three Months Ended    For the Six Months Ended
IS UNAUDITED)       June 30,                      June 30,

                    2010       2009               2010        2009

                    (dollars in thousands, except (dollars in thousands, except
                    per share data)               per share data)

STATEMENT OF
OPERATIONS DATA:

Net sales (1)       $ 840,361  $ 1,106,398        $ 1,419,674 $ 1,828,578

Operating costs and
expenses:

Cost of sales       751,075    988,318            1,289,790   1,528,048

Direct operating
expenses            62,924     71,345             124,368     140,209

Selling, general
and administrative
expenses (2)        29,182     31,581             60,989      63,496

Depreciation and
amortization (3)    25,368     23,561             51,690      45,651

Total operating
costs and expenses  868,549    1,114,805          1,526,837   1,777,404

Gain (loss) on
disposition of
assets.             474        (1,600)            474         (1,600)

Operating income
(loss)              (27,714)   (10,007)           (106,689)   49,574

Interest expense
(4)                 (21,735)   (21,023)           (48,320)    (49,279)

Equity earnings of
investees           1,209      8,376              1,106       8,373

Other income
(loss), net (5)     (365)      191                13,839      448

Income (loss)
before income tax
expense (benefit),
non-controlling
interest in loss of
subsidiaries and
accumulated
dividends on
preferred stock of
subsidiary          (48,605)   (22,463)           (140,064)   9,116

Income tax expense
(benefit)           (17,093)   (7,549)            (51,806)    3,446

Income (loss)
before
non-controlling
interest in loss of
subsidiaries and
accumulated
dividends on
preferred stock of
subsidiary          (31,512)   (14,914)           (88,258)    5,670

Non-controlling
interest in loss of
subsidiaries        (2,253)    (1,724)            (6,057)     (641)

Accumulated
dividends on
preferred stock of
subsidiary          —        2,150              —         4,300

Net income (loss)
available to common
stockholders        $ (29,259) $ (15,340)         $ (82,201)  $ 2,011

Earnings (loss) per
share, basic        $ (0.54)   $ (0.33)           $ (1.52)    $ 0.04

Weighted average
shares outstanding,
basic (in
thousands)          54,164     46,809             54,162      46,807

Earnings (loss) per
share, diluted      $ (0.54)   $ (0.33)           $ (1.52)    $ 0.04

Weighted average
shares outstanding,
diluted (in
thousands)          54,164     46,809             54,162      46,810



Cash dividends per
share               $ 0.04     $ 0.04             $ 0.08      $ 0.08

CASH FLOW DATA:(6)

Net cash provided
by (used in):

Operating
activities          $ (20,581) $ 177,437          $ (61,560)  $ 296,964

Investing
activities          2,275      (29,705)           (4,056)     (44,714)

Financing
activities          18,459     (122,548)          32,892      (227,227)

OTHER DATA:

Adjusted net income
(loss) available to
common stockholders
(7)                 $ (29,539) $ (12,375)         $ (78,607)  $ 6,973

Earnings (loss) per
share, excluding
write-off of
unamortized debt
issuance costs, net
of tax, (gain) loss
on disposition of
assets, net of tax,
and accumulated
dividends on
preferred stock of
subsidiary (7)      $ (0.55)   $ (0.26)           $ (1.45)    $ 0.15

Adjusted EBITDA (8) (1,976)    23,721             (40,528)    105,646

Capital
expenditures (9)    5,385      18,887             12,688      29,244

Capital
expenditures to
rebuild the Big
Spring refinery     —        7,146              —         39,281

Capital
expenditures for
turnaround and
chemical catalyst   1,522      2,951              11,531      10,314



                                                  June 30,    December 31,
                                                  2010        2009

BALANCE SHEET DATA (end of period):

Cash and cash equivalents                         $ 7,713     $ 40,437

Working capital                                   10,086      84,257

Total assets                                      2,182,408   2,132,789

Total debt                                        932,039     937,024

Total equity                                      346,386     431,918










REFINING AND
UNBRANDED MARKETING
SEGMENT
                      For the Three Months Ended For the Six Months Ended
                      June 30,                   June 30,

                      2010       2009            2010        2009

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

STATEMENTS OF
OPERATIONS DATA:

Net sales (10)        $ 691,331  $ 961,103       $ 1,174,371 $ 1,594,400

Operating costs and
expenses:

Cost of sales         651,470    889,519         1,115,334   1,358,882

Direct operating
expenses              51,493     61,638          101,845     120,009

Selling, general and
administrative
expenses              3,874      7,239           10,262      14,566

Depreciation and
amortization          19,881     18,300          40,835      35,177

Total operating costs
and expenses          726,718    976,696         1,268,276   1,528,634

Loss on disposition
of assets             —        (1,600)         —         (1,600)

Operating income
(loss)                $ (35,387) $ (17,193)      $ (93,905)  $ 64,166



KEY OPERATING
STATISTICS:

Total sales volume
(bpd)                 69,423     132,286         52,943      127,400

Per barrel of
throughput:

Refinery operating
margin – Big Spring
(11)                  $ 9.58     $ 5.37          $ 7.26      $ 8.83

Refinery operating
margin – CA
Refineries (11)       2.87       2.47            1.29        3.99

Refinery operating
margin – Krotz
Springs (11)          (1.95)     5.85            (1.48)      8.91

Refinery direct
operating expense –
Big Spring (12)       5.78       4.70            6.18        4.14

Refinery direct
operating expense –
CA Refineries (12)    7.46       3.80            8.12        4.65

Refinery direct
operating expense –
Krotz Springs (12)    7.69       4.04            12.96       4.32

Capital expenditures  4,215      16,925          10,527      26,323

Capital expenditures
to rebuild the Big
Spring refinery       —        7,146           —         39,281

Capital expenditures
for turnaround and
chemical catalyst     1,522      2,951           11,531      10,314



PRICING STATISTICS:

WTI crude oil (per
barrel)               $ 77.74    $ 59.54         $ 78.24     $ 51.36

WTS crude oil (per
barrel)               75.92      58.15           76.39       50.20

MAYA crude oil (per
barrel)               68.03      53.89           68.93       46.28

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

Gulf Coast (13)       $ 9.75     $ 8.30          $ 8.43      $ 8.97

Group III (13)        11.47      9.34            9.13        9.53

West Coast (13)       15.47      14.48           12.81       16.19

Crack spreads
(6/1/2/3) (per
barrel):

West Coast (13)       $ 4.82     $ 2.59          $ 3.15      $ 4.39

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

Gulf Coast high
sulfur diesel (13)    $ 8.92     $ 6.63          $ 7.59      $ 8.04

Crude oil
differentials (per
barrel):

WTI less WTS (14)     $ 1.82     $ 1.39          $ 1.85      $ 1.16

WTI less MAYA (14)    9.71       5.65            9.31        5.08

Product price
(dollars per gallon):

Gulf Coast unleaded
gasoline              $ 2.053    $ 1.638         $ 2.046     $ 1.429

Gulf Coast ultra
low-sulfur diesel     2.143      1.569           2.098       1.451

Gulf Coast high
sulfur diesel         2.074      1.513           2.041       1.400

Group III unleaded
gasoline              2.101      1.674           2.068       1.454

Group III ultra
low-sulfur diesel     2.171      1.571           2.103       1.441

West Coast LA CARBOB
(unleaded gasoline)   2.231      1.841           2.184       1.674

West Coast LA ultra
low-sulfur diesel     2.196      1.606           2.136       1.478

Natural gas (per
MMBTU)                4.35       3.81            4.66        4.13










THROUGHPUT AND YIELD
DATA:                      For the Three Months Ended For the Six Months Ended
BIG SPRING                 June 30,                   June 30,

                           2010         2009          2010         2009

                           bpd    %     bpd    %      bpd    %     bpd    %

Refinery throughput:

Sour crude                 31,776 74.3  50,771 82.5   33,865 79.2  53,099 84.3

Sweet crude                7,839  18.3  7,768  12.6   6,556  15.3  7,815  12.4

Blendstocks                3,160  7.4   3,034  4.9    2,358  5.5   2,073  3.3

Total refinery throughput
(15)                       42,775 100.0 61,573 100.0  42,779 100.0 62,987 100.0

Refinery production:

Gasoline                   22,675 53.6  26,333 43.0   21,652 51.3  27,294 43.4

Diesel/jet                 12,654 29.9  19,571 32.0   13,195 31.3  20,648 32.8

Asphalt                    2,346  5.5   6,444  10.5   2,353  5.6   5,840  9.3

Petrochemicals             2,576  6.1   3,281  5.4    2,300  5.4   3,154  5.0

Other                      2,056  4.9   5,595  9.1    2,722  6.4   5,946  9.5

Total refinery production
(16)                       42,307 100.0 61,224 100.0  42,222 100.0 62,882 100.0

Refinery utilization (17)         56.6%        83.6%         60.5%        87.0%










THROUGHPUT AND YIELD
DATA:                      For the Three Months Ended For the Six Months Ended
CALIFORNIA REFINERIES      June 30,                   June 30,

                           2010         2009          2010         2009

                           bpd    %     bpd    %      bpd    %     bpd    %

Refinery throughput:

Medium sour crude          3,448  17.7  20,150 50.6   3,775  20.0  16,209 47.2

Heavy crude                15,597 80.3  19,315 48.5   14,674 77.8  17,914 52.2

Blendstocks                398    2.0   360    0.9    408    2.2   202    0.6

Total refinery throughput
(15)                       19,443 100.0 39,825 100.0  18,857 100.0 34,325 100.0

Refinery production:

Gasoline                   2,783  14.7  6,587  17.0   2,626  14.3  4,936  14.7

Diesel/jet                 4,060  21.4  9,086  23.4   3,717  20.3  7,658  22.8

Asphalt                    6,516  34.3  11,450 29.5   6,341  34.6  10,100 30.1

Light unfinished           —    —   99     0.3    —    —   999    3.0

Heavy unfinished           5,212  27.4  10,868 28.0   5,235  28.6  9,340  27.8

Other                      423    2.2   697    1.8    408    2.2   534    1.6

Total refinery production
(16)                       18,994 100.0 38,787 100.0  18,327 100.0 33,567 100.0

Refinery utilization (17)         26.3%        54.4%         25.4%        56.1%










THROUGHPUT AND YIELD
DATA:                      For the Three Months Ended For the Six Months Ended
KROTZ SPRINGS (A)          June 30,                   June 30,

                           2010         2009          2010         2009

                           bpd    %     bpd    %      bpd    %     bpd    %

Refinery throughput:

Light sweet crude          10,358 47.2  28,065 48.0   5,208  47.2  27,746 49.5

Heavy sweet crude          10,693 48.7  26,362 45.1   5,376  48.7  23,240 41.4

Blendstocks                909    4.1   4,031  6.9    457    4.1   5,113  9.1

Total refinery throughput
(15)                       21,960 100.0 58,458 100.0  11,041 100.0 56,099 100.0

Refinery production:

Gasoline                   8,427  38.6  27,962 47.1   4,237  38.6  26,215 46.0

Diesel/jet                 9,098  41.7  24,514 41.3   4,575  41.7  24,491 42.9

Heavy oils                 2,809  12.9  1,358  2.3    1,412  12.9  1,124  2.0

Other                      1,485  6.8   5,521  9.3    746    6.8   5,205  9.1

Total refinery production
(16)                       21,819 100.0 59,355 100.0  10,970 100.0 57,035 100.0

Refinery utilization (17)         25.3%        65.5%         12.7%        61.4%



(A) The throughput data reflects substantially one month of operations in June
2010 due to the restart after major turnaround activity.










                            For the Three Months Ended For the Six Months Ended
ASPHALT SEGMENT             June 30,                   June 30,

                            2010      2009             2010       2009

                            (dollars in thousands, except per ton data)

STATEMENTS OF OPERATIONS
DATA:

Net sales                   $ 104,964 $ 125,480        $ 172,105  $ 176,240

Operating costs and
expenses:

Cost of sales (18)          90,264    107,897          161,709    168,130

Direct operating expenses   11,431    9,707            22,523     20,200

Selling, general and
administrative expenses     1,091     1,050            2,157      2,204

Depreciation and
amortization                1,715     1,701            3,432      3,399

Total operating costs and
expenses                    104,501   120,355          189,821    193,933

Operating income (loss)     $ 463     $ 5,125          $ (17,716) $ (17,693)



KEY OPERATING STATISTICS:

Blended asphalt sales
volume (tons in thousands)
(19)                        207       299              336        446

Non-blended asphalt sales
volume (tons in thousands)
(20)                        12        46               34         83

Blended asphalt sales price
per ton (19)                $ 485.15  $ 397.35         $ 476.85   $ 369.93

Non-blended asphalt sales
price per ton (20)          378.25    145.04           349.50     135.54

Asphalt margin per ton (21) 67.12     50.97            28.10      15.33

Capital expenditures        $ 347     $ 414            $ 526      $ 576










RETAIL AND BRANDED          For the Three Months Ended For the Six Months Ended
MARKETING SEGMENT           June 30,                   June 30,

                            2010      2009             2010      2009

                            (dollars in thousands, except per gallon data)

STATEMENTS OF OPERATIONS
DATA:

Net sales                   $ 253,955 $ 206,461        $ 479,983 $ 373,931

Operating costs and
expenses:

Cost of sales (18)          219,230   177,548          419,532   317,029

Selling, general and
administrative expenses     24,029    23,102           48,194    46,346

Depreciation and
amortization                3,436     3,412            6,856     6,780

Total operating costs and
expenses                    246,695   204,062          474,582   370,155

Gain on disposition of
assets                      474       —              474       —

Operating income            $ 7,734   $ 2,399          $ 5,875   $ 3,776



KEY OPERATING STATISTICS:

Branded fuel sales
(thousands of gallons) (22) 74,852    69,858           145,321   136,650

Branded fuel margin (cents
per gallon) (22)            6.4       4.7              5.3       5.1



Number of stores (end of
period)                     306       306              306       306

Retail fuel sales
(thousands of gallons)      35,408    30,198           68,122    58,381

Retail fuel sales
(thousands of gallons per
site per month)             39        33               37        32

Retail fuel margin (cents
per gallon) (23)            14.1      12.5             11.7      14.1

Retail fuel sales price
(dollars per gallon) (24)   $ 2.74    $ 2.26           $ 2.69    $ 2.08

Merchandise sales           $ 73,247  $ 70,650         $ 136,728 $ 133,262

Merchandise sales (per site
per month)                  80        76               74        73

Merchandise margin (25)     32.6%     30.2%            31.4%     30.7%

Capital expenditures        $ 430     $ 894            $ 827     $ 1,113







(1)     Includes excise taxes on sales by the retail and branded marketing segment of $13,531 and $11,770 for the three months ended June 30, 2010 and 2009, respectively, and $26,317 and $22,814 for the six months ended June 30, 2010 and 2009, respectively.  Net sales also include royalty and related net credit card fees of $1,046 and $559 for the three months ended June 30, 2010 and 2009, respectively, and $1,819 and $792 for the six months ended June 30, 2010 and 2009, respectively.

(2)     Includes corporate headquarters selling, general and administrative expenses of $188 and $190 for the three months ended June 30, 2010 and 2009, respectively, and $376 and $380 for the six months ended June 30, 2010 and 2009, respectively, which are not allocated to our three operating segments.

(3)     Includes corporate depreciation and amortization of $336 and $148 for the three months ended June 30, 2010 and 2009, respectively, and $567 and $295 for the six months ended June 30, 2010 and 2009, respectively, which are not allocated to our three operating segments.

(4)     Interest expense of $48,320 for the six months ended June 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 $49,279 for the six months ended June 30, 2009, includes $5,715 related to the unwind of the heating oil crack spread hedge at the Krotz Springs refinery.

(5)     Other income (loss), net for the six months ended June 30, 2010 substantially represents the gain from the sale of our investment in Holly Energy Partners.

(6)     Cash provided by operating activities for the three months ended June 30, 2009 includes cash from the liquidation proceeds from the heating oil crack spread hedge of $133,581 and cash provided by operating activities for the first half of 2009 includes cash from the liquidation proceeds from 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 three months ended June 30, 2009 includes repayments on long-term debt and revolving credit facilities of $117,988 sourced primarily from the liquidation proceeds from the heating oil crack spread hedge and cash used in financing activities for the first half of 2009 includes repayments on long-term debt and revolving credit facilities of $219,214 sourced primarily from the liquidation proceeds from the heating oil crack spread hedge and proceeds from the receipt of income tax receivables.

(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 earnings (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 and accumulated dividends on preferred stock of subsidiary.  Our management believes that the presentation of adjusted net income (loss) available to common stockholders and earnings (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 Months Ended For the Six Months Ended
                            June 30,                   June 30,

                            2010       2009            2010       2009

                            (dollars in thousands, except earnings per share)

Net income (loss) available
to common stockholders      $ (29,259) $ (15,340)      $ (82,201) $ 2,011

Plus: Loss on disposition
of assets, net of tax       —        969             —        969

Plus: Accumulated dividends
on preferred stock of
subsidiary                  —        1,996           —        3,993

Plus: Write-off of
unamortized debt issuance
costs, net of tax           —        —             3,874      —

Less: Gain on disposition
of assets, net of tax       (280)      —             (280)      —

Adjusted net income (loss)
available to common
stockholders                $ (29,539) $ (12,375)      $ (78,607) $ 6,973



Weighted average shares
outstanding (in thousands)  54,164     46,809          54,162     46,807

Earnings (loss) per share,
excluding write-off of
unamortized debt issuance
costs, net of tax, gain
(loss) on disposition of
assets, net of tax, and
accumulated dividends on
preferred stock of
subsidiary                  $ (0.55)   $ (0.26)        $ (1.45)   $ 0.15







(8)     Adjusted EBITDA represents earnings before non-controlling interest in income of subsidiaries, income tax expense, interest expense, depreciation and amortization 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 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 and six months ended June 30, 2010 and 2009, respectively:




                            For the Three Months Ended For the Six Months Ended
                            June 30,                   June 30,

                            2010       2009            2010       2009

                            (dollars in thousands)

Net income (loss) available
to common stockholders      $ (29,259) $ (15,340)      $ (82,201) $ 2,011

Non-controlling interest in
loss of subsidiaries
(including accumulated
dividends on preferred
stock of subsidiary)        (2,253)    426             (6,057)    3,659

Income tax expense
(benefit)                   (17,093)   (7,549)         (51,806)   3,446

Interest expense            21,735     21,023          48,320     49,279

Depreciation and
amortization                25,368     23,561          51,690     45,651

(Gain) loss on disposition
of assets                   (474)      1,600           (474)      1,600

Adjusted EBITDA             $ (1,976)  $ 23,721        $ (40,528) $ 105,646







(9)     Includes corporate capital expenditures of $393 and $654 for the three months ended June 30, 2010 and 2009, respectively, and $808 and $1,232 for the six months ended June 30, 2010 and 2009, 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 three and six months ended June 30, 2010, excludes a benefit of $1,400 to cost of sales for inventory adjustments related to the Bakersfield refinery acquisition.  There were unrealized hedging gains of $2,373 and $20,399 for the Krotz Springs refinery for the three and six months ended June 30, 2009, respectively.  Additionally, realized gains related to the unwind of the heating oil crack spread hedge of $133,581 were excluded from the Krotz Springs refinery margin for the three and six months ended June 30, 2009.

(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 Bakersfield refinery of $410 have been excluded from the per barrel measurement calculation for the three and six months ended June 30, 2010.

(13)   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.  

(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/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.

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

(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 refinery.  

(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)   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.

(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 convenience store industry to measure in-store, or non-fuel, operating results.

SOURCE Alon USA Energy, Inc.