Alon USA Partners, LP Reports First Quarter 2014 Results

Declares Quarterly Cash Distribution
Schedules conference call for May 2, 2014 at 10:00 a.m. Eastern

PR Newswire

DALLAS, May 1, 2014 /PRNewswire/ -- Alon USA Partners, LP (ALDW) ("Alon Partners") today announced results for the first quarter of 2014. Net income for the first quarter of 2014 was $42.2 million, or $0.68 per unit, compared to net income of $93.5 million, or $1.50 per unit, for the same period last year.

The Board of Directors of Alon USA Partners GP, LLC, the general partner of Alon Partners, declared a cash distribution for the first quarter of 2014 of $0.69 per unit payable on May 21, 2014 to common unitholders of record at the close of business on May 14, 2014, based on cash available for distribution of $43.1 million.

Paul Eisman, CEO and President, commented, "We are pleased with our first quarter financial results that generated favorable cash available for distribution for the quarter of $43.1 million. This was driven by our strong operational performance with a total refinery throughput of over 73,000 barrels per day. Relative to the fourth quarter of 2013, our first quarter results benefited from an improved Gulf Coast 3/2/1 crack spread driven predominantly by a strengthening in gasoline prices, but also from wider differentials for Midland-priced crudes. In addition, sweet crude oil in Midland is now discounted relative to sour crude, and we have adjusted our crude slate to take advantage of this by increasing the amount of sweet crude processed. Midland crude differentials widened further during the months of March and April, which will positively affect the cost of crude and refinery operating margin at Big Spring in the second quarter.

"During the second quarter, we intend to successfully execute the planned turnaround at the Big Spring refinery and also to complete the Vacuum Tower Revamp Project. This project will increase distillate yield, improve energy efficiency and allow us to better optimize our crude slate. The cost of the vacuum unit project will be paid over a period of six years, which allows the project to be immediately accretive to distributions to unitholders. For the second quarter, we currently expect throughput at the Big Spring refinery to average approximately 46,000 barrels per day as a result of the turnaround. We expect the refinery throughput to average 67,000 barrels per day for the year."

FIRST QUARTER 2014

Refinery operating margin was $14.77 per barrel for the first quarter of 2014 compared to $28.76 per barrel for the same period in 2013. This decrease was mainly due to lower Gulf Coast 3/2/1 crack spreads and a narrowing of both the WTI Cushing to WTS spread and the WTI Cushing to WTI Midland spread. The refinery's throughput for the first quarter of 2014 averaged 73,296 barrels per day ("bpd") compared to 59,476 bpd for the same period in 2013. The lower throughput rate during the first quarter of 2013 was due to maintenance on the crude vacuum tower as well as completion of a reformer catalyst regeneration and a diesel hydro-treater catalyst replacement. The refinery operating margin was impacted by $2.9 million of costs associated with RINs obligations for the first quarter of 2014, which were completely offset utilizing carryover RINs from 2012 for the first quarter of 2013.

The average Gulf Coast 3/2/1 crack spread was $16.81 per barrel for the first quarter of 2014 compared to $28.40 per barrel for the first quarter of 2013, which was influenced by a reduction in the Brent to WTI Cushing spread. The average Brent to WTI Cushing spread for the first quarter of 2014 was $10.46 per barrel compared to $19.25 per barrel for the same period in 2013. The average WTI Cushing to WTS spread for the first quarter of 2014 was $3.67 per barrel compared to $11.41 per barrel for the first quarter of 2013. The average WTI Cushing to WTI Midland spread for the first quarter of 2014 was $3.54 per barrel for the first quarter of 2014, compared to $7.72 per barrel for the first quarter of 2013.

CONFERENCE CALL

Alon Partners has scheduled a conference call which will also be webcast live on Friday, May 2, 2014 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time), to discuss the first quarter 2014 results. To access the call, please dial 877-941-9205, or 480-629-9711 for international callers, at least 10 minutes prior to the start time and ask for the Alon Partners call. Investors may also listen to the conference live by logging on to the Alon Partners' website, http://www.alonpartners.com. A telephonic replay of the conference call will be available through May 16, 2014, and may be accessed by calling 800-406-7325, or 303-590-3030 for international callers, and using the passcode 4678354#. The archived webcast will also be available at http://www.alonpartners.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Donna Washburn at Dennard § Lascar Associates at 713-529-6600 or email dwashburn@dennardlascar.com.

This release serves as qualified notice to nominees under Treasury Regulation Section 1.1446-4(b). Please note that 100% of Alon Partners' distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of Alon Partners' distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not Alon Partners, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Any statements in this 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.

Alon USA Partners, LP is a Delaware limited partnership formed in August 2012 by Alon USA Energy, Inc. ("Alon Energy") (ALJ). Alon Partners owns and operates a crude oil refinery in Big Spring, Texas with total throughput capacity of approximately 70,000 barrels per day. Alon Partners refines crude oil into finished products, which are marketed primarily in West Texas, Central Texas, Oklahoma, New Mexico and Arizona through its wholesale distribution network to both Alon Energy's retail convenience stores and other third-party distributors.

Contacts:

Stacey Hudson, Investor Relations Manager

Alon USA Partners GP, LLC
972-367-3808




Investors: Jack Lascar/ Sheila Stuewe
Dennard § Lascar Associates, LLC 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 PARTNERS, LP 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, 2013, IS UNAUDITED)

For the Three Months Ended


March 31,


2014


2013


(dollars in thousands, except per unit

data, per barrel data and pricing

statistics)

STATEMENTS OF OPERATIONS DATA:




Net sales (1)

$

856,460



$

804,167


Operating costs and expenses:




  Cost of sales

759,046



650,203


  Direct operating expenses

28,941



30,422


  Selling, general and administrative expenses

4,368



7,665


  Depreciation and amortization

10,067



12,064


  Total operating costs and expenses

802,422



700,354


Operating income

54,038



103,813


Interest expense

(11,324)



(9,392)


Other income, net

12



4


Income before state income tax expense

42,726



94,425


State income tax expense

485



900


Net income

$

42,241



$

93,525


Earnings per unit

$

0.68



$

1.50


Weighted average common units outstanding (in thousands)

62,502



62,501


Cash distribution per unit

$

0.18



$

0.57


CASH FLOW DATA:




Net cash provided by (used in):




  Operating activities

$

45,267



$

166,646


  Investing activities

(18,627)



(6,719)


  Financing activities

(11,875)



(35,456)


OTHER DATA:




Adjusted EBITDA (2)

$

64,117



$

115,881


Capital expenditures

4,162



2,941


Capital expenditures for turnarounds and catalysts

14,465



3,778


KEY OPERATING STATISTICS:




Per barrel of throughput:




  Refinery operating margin (3)

$

14.77



$

28.76


  Refinery direct operating expense (4)

4.39



5.68


PRICING STATISTICS:




Crack spreads (per barrel):




  Gulf Coast 3/2/1 (5)

$

16.81



$

28.40


WTI Cushing crude oil (per barrel)

$

98.65



$

94.27


Crude oil differentials (per barrel):




  WTI Cushing less WTI Midland (6)

$

3.54



$

7.72


  WTI Cushing less WTS (6)

3.67



11.41


  Brent less WTI Cushing (6)

10.46



19.25


Product price (dollars per gallon):




  Gulf Coast unleaded gasoline

$

2.66



$

2.84


  Gulf Coast ultra-low sulfur diesel

2.93



3.09


  Natural gas (per MMBtu)

4.72



3.48


 

 











March 31,
2014


December 31,
2013

BALANCE SHEET DATA (end of period):

(dollars in thousands)

Cash and cash equivalents

$

168,348



$

153,583


Working capital

54,199



18,007


Total assets

884,595



849,924


Total debt

343,832



344,322


Total debt less cash and cash equivalents

175,484



190,739


Total partners' equity

176,433



145,442















THROUGHPUT AND PRODUCTION DATA:

For the Three Months Ended

March 31,


2014


2013


bpd


%


bpd


%

Refinery throughput:








  WTS crude

35,345


48.2


45,220


76.0

  WTI crude

35,982


49.1


11,549


19.4

  Blendstocks

1,969


2.7


2,707


4.6

Total refinery throughput (7)

73,296


100.0


59,476


100.0

Refinery production:








  Gasoline

36,290


49.6


29,785


50.4

  Diesel/jet

24,674


33.6


19,298


32.6

  Asphalt

3,406


4.6


3,359


5.7

  Petrochemicals

4,412


6.0


3,726


6.3

  Other

4,557


6.2


2,969


5.0

Total refinery production (8)

73,339


100.0


59,137


100.0

Refinery utilization (9)



101.9%




92.4%

 

 







CASH AVAILABLE FOR DISTRIBUTION DATA:


For the Three

Months Ended



March 31, 2014



(dollars in

thousands, except

per unit data)




Net sales (1)


$

856,460


Operating costs and expenses:



  Cost of sales


759,046


  Direct operating expenses


28,941


  Selling, general and administrative expenses


4,368


  Depreciation and amortization


10,067


    Total operating costs and expenses


802,422


Operating income


54,038


Interest expense


(11,324)


Other income, net


12


Income before state income tax expense


42,726


State income tax expense


485


Net income


42,241


Adjustments to reconcile net income to Adjusted EBITDA:



Interest expense


11,324


State income tax expense


485


Depreciation and amortization


10,067


Adjusted EBITDA (2)


64,117


Adjustments to reconcile Adjusted EBITDA to cash available for distribution:



  less: Maintenance/growth capital expenditures


4,162


  less: Major and non-major turnaround and catalyst replacement capital expenditures


14,465


  add: Major turnaround and catalyst replacement capital expenditures previously reserved


(11,989)


  less: Major turnaround reserve for future years


1,150


  less: Principal payments


625


  less: State income tax expense


485


  less: Interest paid in cash


12,097


Cash available for distribution


$

43,122





Common units outstanding (in 000's)


62,502





Cash available for distribution per unit


$

0.69


 




(1)

Includes sales to related parties of $139,013 and $141,899 for the three months ended March 31, 2014 and 2013, respectively.



(2)

Adjusted EBITDA represents earnings before state income tax expense, interest expense and depreciation and amortization. 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 state income tax expense, interest expense 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 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 to Adjusted EBITDA for the three months ended March 31, 2014 and 2013, respectively:







For the Three Months Ended




March 31,




2014


2013




(dollars in thousands)



Net income

$

42,241



$

93,525




State income tax expense

485



900




Interest expense

11,324



9,392




Depreciation and amortization

10,067



12,064




Adjusted EBITDA

$

64,117



$

115,881






(3)

Refinery operating margin is a per barrel measurement calculated by dividing the margin between net sales and cost of sales 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 margin to these crack spreads to assess our operating performance relative to other participants in our industry.



(4)

Refinery direct operating expense is a per barrel measurement calculated by dividing direct operating expenses by total throughput volumes.



(5)

We compare our refinery operating margin to the Gulf Coast 3/2/1 crack spread. A Gulf Coast 3/2/1 crack spread is calculated assuming that three barrels of WTI Cushing crude oil are converted, or cracked, into two barrels of Gulf Coast conventional gasoline and one barrel of Gulf Coast ultra-low sulfur diesel.



(6)

The WTI Cushing less WTI Midland spread represents the differential between the average price per barrel of WTI Cushing crude oil and the average price per barrel of WTI Midland crude oil. The WTI Cushing less WTS, or sweet/sour, spread represents the differential between the average price per barrel of WTI Cushing crude oil and the average price per barrel of WTS crude oil. The Brent less WTI Cushing spread represents the differential between the average price per barrel of Brent crude oil and the average price per barrel of WTI Cushing crude oil.



(7)

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



(8)

Total refinery production represents the barrels per day of various refined products produced from processing crude and other refinery feedstocks through the crude units and other conversion units.



(9)

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

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