Alon USA posts Q3 net income of US$28.6M, versus net loss of US$15.6M a year ago, as net sales rose to US$2.06B, from US$1.25B a year ago, and company cut net debt

DALLAS , November 3, 2011 (press release) – Alon USA Energy, Inc. (NYSE:ALJ - News) ("Alon") today announced results for the third quarter of 2011. Net income for the third quarter of 2011 was $28.6 million, or $0.51 per share, compared to net loss of $(15.6) million, or $(0.29) per share, for the same period last year. Excluding special items, Alon recorded net income of $39.0 million, or $0.70 per share, for the third quarter of 2011, compared to net loss of $(31.8) million, or $(0.59) per share, for the same period last year.

Net income for the nine months ended September 30, 2011 was $55.4 million, or $1.00 per share, compared to net loss of $(97.8) million, or $(1.80) per share, for the same period last year. Excluding special items, Alon recorded net income of $74.5 million, or $1.35 per share, for the nine months ended September 30, 2011, compared to net loss of $(110.4) million, or $(2.04) per share, for the same period last year.

Paul Eisman, CEO and President, commented, "For the third quarter of 2011, I am happy both with the results for the quarter and with the progress we've made towards further improvements in our businesses. Our adjusted EBITDA was $114 million for the third quarter of 2011 which marks our best quarterly results in almost three years.

"At our Big Spring refinery, we successfully completed a turnaround in July. Since the turnaround, the operation at Big Spring has been excellent as we've increased the total throughput rate to over 70,000 barrels per day while at the same time generating very good yields with a liquid recovery yield of 100% during the third quarter.

"At our Krotz Springs refinery, we are completing several capital projects that are intended to improve crude slate flexibility, FCC capacity and yields, and jet fuel yield. In order to begin integrating these upgrades, the Krotz Springs refinery was shut down at the beginning of November. We anticipate that the tie-in of these capital projects will be completed during the first half of November. We've completed arrangements to begin receiving WTI priced crudes at Krotz Springs, and expect to begin receiving some volume of this material during the month of December with our goal of processing on average 20,000 to 25,000 barrels per day during 2012.

"We continue to be excited about our California refineries' prospects following the completion of the Bakersfield integration project. This project integrated the hydrocracker unit acquired in the Bakersfield acquisition into the California refineries system to increase overall light product yields. In the three months since the completion of the project, we have increased light product yields by approximately 25%. We look to further improve the liquid recovery and light product yields of our California refineries by optimizing the operations and crude blends processed at the facilities. We have scheduled a two-week shut down in December to make minor revisions to the hydrocracker in preparation for these new crude blends.

"Our retail and branded marketing segment's strong performance continued in the third quarter with adjusted EBITDA of $12 million and adjusted EBITDA for the last twelve months through September 30, 2011 of $42 million. Retail fuel sales increased 11% and merchandise sales increased 6% over the same period in 2010.

"During the third quarter of 2011, we reduced net debt by $78 million and improved our net debt to total capitalization ratio from 71% to 68%. Debt reduction is a priority for the Company, and we anticipate reducing net debt further as we lower excess inventory levels by approximately 700 thousand barrels by year end. In the fourth quarter of 2011, we expect the average throughput at our refineries to exceed 68,000 barrels per day at Big Spring, 62,000 barrels per day at Krotz Springs and 25,000 barrels per day at our California refineries."

THIRD QUARTER 2011

Special items for the third quarter of 2011 included an after-tax loss of $10.6 million associated with the mark to market of heating oil crack spread contracts and an after-tax gain recognized on disposition of assets of $(0.1) million. Special items for the third quarter of 2010 included a $(16.3) million gain on bargain purchase recognized from the Bakersfield refinery acquisition.

The Big Spring refinery operating margin was $23.05 per barrel for the third quarter of 2011 compared to $5.04 per barrel for the same period in 2010. The increase is due to higher Gulf Coast 3/2/1 crack spreads and improved operating efficiencies at higher throughputs. Refinery operating margin at the California refineries was $3.64 per barrel for the third quarter of 2011, compared to $0.12 per barrel for the same period in 2010. This increase reflects the higher margin received on greater yield of light products due to the integration of the Bakersfield hydrocracker and a slight increase in the West Coast 3/1/1/1 crack spread. The Krotz Springs refinery operating margin was $7.77 per barrel for the third quarter of 2011, compared to $0.97 per barrel for the same period in 2010. This increase is due to higher Gulf Coast 2/1/1 crack spreads.

Combined refinery throughput for the third quarter of 2011 averaged 162,214 barrels per day ("bpd"), consisting of 56,828 bpd at the Big Spring refinery, 39,056 bpd at the California refineries, and 66,330 bpd at the Krotz Springs refinery, compared to a combined refinery average of 138,253 bpd for the third quarter of 2010, consisting of 53,060 bpd at the Big Spring refinery, 21,035 bpd at the California refineries, and 64,158 bpd at the Krotz Springs refinery.

The average Gulf Coast 3/2/1 crack spread was $31.28 per barrel for the third quarter of 2011 compared to $7.76 per barrel for the third quarter of 2010. The average West Coast 3/1/1/1 crack spread for the third quarter of 2011 was $11.22 per barrel compared to $9.09 per barrel for the third quarter of 2010. The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the third quarter of 2011 was $12.44 per barrel compared to $3.91 per barrel for the third quarter of 2010.

The average sweet/sour spread for the third quarter of 2011 was $0.82 per barrel compared to $2.16 per barrel for the same period in 2010. The average LLS to WTI spread for the third quarter of 2011 was $18.87 per barrel compared to $3.11 per barrel for the same period in 2010. The average WTI to Buena Vista spread for the third quarter of 2011 was $(17.52) per barrel compared to $0.87 per barrel for the same period in 2010.

Asphalt margins for the third quarter of 2011 were $25.68 per ton compared to $77.59 per ton for the third quarter of 2010. On a cash basis, asphalt margins in the third quarter of 2011 were $23.07 per ton compared to $73.90 per ton in the third 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 12.8% from $478.65 per ton in the third quarter of 2010 to $540.07 per ton in the third quarter of 2011 and the average non-blended asphalt sales price increased 10.0% from $348.89 per ton in the third quarter of 2010 to $383.87 per ton in the third quarter of 2011. The average price of Buena Vista crude increased 42.68% from $75.18 per barrel in the third quarter of 2010 to $107.27 per barrel in the third quarter of 2011.

Retail fuel sales volume increased by 10.9% from 36.8 million gallons in the third quarter of 2010 to 40.8 million gallons in the third quarter of 2011. Our branded fuel sales volume increased by 12.4% from 84.7 million gallons in the third quarter of 2010 to 95.2 million gallons in the third quarter of 2011. Adjusted EBITDA for our retail and branded marketing segment was $11.8 million for the third quarter of 2011 compared to adjusted EBITDA of $12.2 million for the same period in 2010.

YEAR-TO-DATE 2011

Special items for the first nine months of 2011 included an after-tax loss of $32.7 million associated with heating oil crack spread contracts, 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 $(0.1) million. The net after-tax loss from these special items for the first nine months of 2011 was $19.1 million. Special items for the first nine months of 2010 included the gain on bargain purchase of $(16.3) million, 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 $(0.3) million. The net after-tax gain from these special items for the first nine months of 2010 was $(12.7) million.

Refinery operating margin at the Big Spring refinery was $20.67 per barrel for the first nine months of 2011 compared to $6.39 per barrel for the same period in 2010. The increase is due to higher Gulf Coast 3/2/1 crack spreads, improved operating efficiencies at higher throughput rates and a widening of the sweet/sour differentials. Refinery operating margin at the California refineries was $(0.16) per barrel for the first nine months of 2011 compared to $0.86 per barrel for the same period in 2010. This decrease reflects the impact of the California refineries' shutdown until its restart in late March 2011 offset by the higher West Coast 3/1/1/1 crack spreads. The Krotz Springs refinery operating margin for the first nine months of 2011 was $5.61 per barrel compared to $0.35 per barrel for the same period last year. 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.

The refineries' combined throughput for the first nine months of 2011 averaged 144,515 bpd, consisting of 60,889 bpd at the Big Spring refinery, 21,357 bpd at the California refineries and 62,269 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 94,775 bpd in the first nine months of 2010, consisting of 46,244 bpd at the Big Spring refinery, 19,590 bpd at the California refineries, and 28,941 bpd at the Krotz Springs refinery.

The average Gulf Coast 3/2/1 crack spread for the first nine months of 2011 was $24.53 per barrel compared to $8.20 per barrel for the same period in 2010. The average West Coast 3/1/1/1 crack spread for the first nine months of 2011 was $11.09 per barrel compared to $8.60 per barrel for the first nine months of 2010. The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the first nine months of 2011 was $9.87 per barrel compared to $4.59 per barrel for the first nine months of 2010.

The average sweet/sour spread for the first nine months of 2011 was $2.47 per barrel compared to $1.95 per barrel for the same period in 2010. The average LLS to WTI spread for the first nine months of 2011 was $14.55 per barrel compared to $2.81 per barrel for the same period in 2010. The average WTI to Buena Vista spread for the first nine months of 2011 was $(11.20) per barrel compared to $1.61 per barrel for the same period in 2010.

Asphalt margins in the first nine months of 2011 decreased to $15.99 per ton compared to $50.54 per ton in the first nine months of 2010. On a cash basis, asphalt margins in the first nine months of 2011 were $12.86 per ton compared to $54.58 per ton in the first nine months 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 12.9% from $477.68 per ton in the first nine months of 2010 to $539.52 per ton in the first nine months of 2011 and the average non-blended asphalt sales price decreased 3.3% from $349.29 per ton in the first nine months of 2010 to $337.82 per ton in the first nine months of 2011. The average price for Buena Vista crude increased 40.49%, from $75.89 per barrel in the first nine months of 2010 to $106.62 per barrel in the first nine months of 2011.

Retail fuel sales volume increased by 10.5% from 104.9 million gallons in the first nine months of 2010 to 115.9 million gallons in the first nine months of 2011. Our branded fuel sales volume increased by 18.3% from 230.0 million gallons in the first nine months of 2010 to 272.1 million gallons in the first nine months of 2011. Adjusted EBITDA for our retail and branded marketing segment was $33.3 million for the first nine months of 2011 compared to $24.4 million for the same period in 2010.

Alon also announced today that its Board of Directors has approved the regular quarterly cash dividend of $0.04 per share. The dividend is payable on December 15, 2011 to stockholders of record at the close of business on December 1, 2011.

CONFERENCE CALL

The Company has scheduled a conference call for Friday, November 4, 2011, at 10:00 a.m. Eastern, to discuss the third quarter 2011 results. To access the call, please dial 877-941-8609, or 480-629-9692, for international callers, and ask for the Alon USA Energy call at least 10 minutes prior to the start time. Investors may also listen to the conference live on the Alon corporate website, http://www.alonusa.com, by logging onto that site and clicking "Investors". A telephonic replay of the conference call will be available through November 18, 2011, and may be accessed by calling 800-406-7325, or 303-590-3030, for international callers, and using the passcode 4476348#. 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.  

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, IS UNAUDITED)

For the Three Months Ended

 

For the Nine Months Ended

 
 

September 30,

 

September 30,

 
 

2011

 

2010

 

2011

 

2010

 
 

(dollars in thousands, except per share data)

 

STATEMENT OF OPERATIONS DATA:

               

Net sales (1)

$

2,056,653

   

$

1,248,569

   

$

5,303,388

   

$

2,668,243

   

Operating costs and expenses:

               

Cost of sales

1,827,098

   

1,153,743

   

4,717,673

   

2,443,533

   

Direct operating expenses

83,338

   

68,448

   

202,476

   

192,816

   

Selling, general and administrative expenses (2)

34,680

   

35,012

   

107,595

   

96,001

   

Depreciation and amortization (3)

29,812

   

26,781

   

80,046

   

78,471

   

    Total operating costs and expenses

1,974,928

   

1,283,984

   

5,107,790

   

2,810,821

   

Gain on disposition of assets

229

   

   

161

   

474

   

Operating income (loss)

81,954

   

(35,415)

   

195,759

   

(142,104)

   

Interest expense (4)

(22,582)

   

(24,091)

   

(63,780)

   

(72,411)

   

Equity earnings of investees

2,005

   

3,864

   

3,775

   

4,970

   

Gain on bargain purchase (5)

   

17,480

   

   

17,480

   

Other income (loss), net (6)

(14,272)

   

(494)

   

(51,065)

   

13,345

   

Income (loss) before income tax expense (benefit) and non-controlling interest in income (loss) of subsidiaries

47,105

   

(38,656)

   

84,689

   

(178,720)

   

Income tax expense (benefit)

17,004

   

(21,905)

   

26,952

   

(73,711)

   

Income (loss) before non-controlling interest in income (loss) of subsidiaries

30,101

   

(16,751)

   

57,737

   

(105,009)

   

Non-controlling interest in income (loss) of subsidiaries

1,480

   

(1,167)

   

2,317

   

(7,224)

   

Net income (loss) available to common stockholders

$

28,621

   

$

(15,584)

   

$

55,420

   

$

(97,785)

   

Income (loss) per share, basic

$

0.51

   

$

(0.29)

   

$

1.00

   

$

(1.80)

   

Weighted average shares outstanding, basic (in thousands)

55,755

   

54,181

   

55,290

   

54,177

   

Income (loss) per share, diluted

$

0.46

   

$

(0.29)

   

$

0.91

   

$

(1.80)

   

Weighted average shares outstanding, diluted (in thousands)

61,690

   

54,181

   

61,231

   

54,177

   

Cash dividends per share

$

0.04

   

$

0.04

   

$

0.12

   

$

0.12

   

CASH FLOW DATA:

               

Net cash provided by (used in):

               

Operating activities

$

109,478

   

$

24,285

   

$

58,362

   

$

(37,275)

   

Investing activities

(28,055)

   

(11,162)

   

(104,130)

   

(15,218)

   

Financing activities

(22,964)

   

18,799

   

149,682

   

51,691

   

OTHER DATA:

               

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

$

39,028

   

$

(31,837)

   

$

74,506

   

$

(110,448)

   

Income (loss) per share, excluding write-off of unamortized debt issuance costs, net of tax; loss associated with heating oil crack spread contracts, net of tax; gain from reduction in system inventories, net of tax; gain on bargain purchase; and gain on disposition of assets, net of tax (7)

0.70

   

(0.59)

   

1.35

   

(2.04)

   

Adjusted EBITDA (8)

113,539

   

(5,264)

   

279,447

   

(45,792)

   

Capital expenditures (9)

23,162

   

7,838

   

91,120

   

20,526

   

Capital expenditures for turnaround and chemical catalyst

2,733

   

1,137

   

6,995

   

12,668

   
                               

 

 

 

September 30,
2011

 

December 31,
2010

 

BALANCE SHEET DATA (end of period):

(dollars in thousands)

 

Cash and cash equivalents

$

175,601

   

$

71,687

   

Working capital

99,558

   

990

   

Total assets

2,419,897

   

2,088,521

   

Total debt

1,054,008

   

916,305

   

Total equity

417,916

   

341,767

   
               

 

 

 

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.