ALON USA ENERGY, INC. DALLAS, Feb. 22, 2017 /PRNewswire/ -- Alon USA Partners, LP (NYSE: ALDW) ("Alon Partners") today announced results for the quarter and year ended December 31, 2016. Net income for the fourth quarter of 2016 was $0.9 million, or $0.01 per unit, compared to net income of $7.2 million, or $0.12 per unit, for the same period last year. Net loss for the full year 2016 was $(4.4) million, or $(0.07) per unit, compared to net income of $156.9 million, or $2.51 per unit, for the same period last year.
Alan Moret, CEO, commented, "Our fourth quarter results reflected the weak refining margin environment that existed throughout 2016, which was exacerbated by high RINs prices negatively impacting our refinery operating margin. The Partnership declared a cash distribution of $0.11 per unit on February 9, 2017 related to our performance in the fourth quarter of 2016. We have been encouraged by the improvement in refining fundamentals that we saw at the end of 2016 and into 2017, including widened discounts for domestic crude relative to Brent and widened discounts in WTS relative to WTI Cushing. We have also been pleased to see RIN prices decline."
During 2016, we generated cash available for distribution of $0.40 per unit compared to $2.81 per unit during 2015.
Shai Even, President and CFO, commented, "The Big Spring refinery ran well in the fourth quarter, achieving total throughput of almost 77,000 barrels per day. The refinery also set a new quarterly record by processing over 44,000 barrels per day of WTI Midland in the quarter, further demonstrating the flexibility of the asset. The refinery operating margin of $7.65 per barrel for the fourth quarter is net of a negative impact of approximately $1.10 per barrel related to RINs costs. Operating expense in the fourth quarter was low at $3.39 per barrel.
"As we've said before, we do not expect any major maintenance at Big Spring in 2017. We expect total throughput at the Big Spring refinery to average 77,000 barrels per day for the first quarter of 2017 and 75,000 barrels per day for the full year of 2017. Based on current forward curve crack spreads, it is our expectation that with operations consistent with our plan we should generate sufficient cash available for distribution during the first quarter of 2017."
FOURTH QUARTER 2016
Refinery operating margin was $7.65 per barrel for the fourth quarter of 2016 compared to $10.02 per barrel for the same period in 2015. This decrease in operating margin was primarily due to increased RINs costs, a reduced benefit from the contango market environment which increased the cost of crude and unfavorable differences in Group III to Gulf Coast gasoline and diesel prices in the fourth quarter of 2016 compared to the same period in 2015. Refinery average throughput for the fourth quarter of 2016 was 76,654 barrels per day ("bpd") compared to 75,925 bpd for the same period in 2015.
The average Gulf Coast 3/2/1 crack spread was $12.83 per barrel for the fourth quarter of 2016 compared to $10.90 per barrel for the same period in 2015. The average WTI Cushing to WTI Midland spread for the fourth quarter of 2016 was $0.25 per barrel compared to $(0.20) per barrel for the same period in 2015. The average WTI Cushing to WTS spread for the fourth quarter of 2016 was $1.33 per barrel compared to $(0.26) per barrel for the same period in 2015. The average Brent to WTI Cushing spread for the fourth quarter of 2016 was $(0.20) per barrel compared to $1.35 per barrel for the same period in 2015.
The contango environment in the fourth quarter of 2016 created an average cost of crude benefit of $0.79 per barrel compared to an average cost of crude benefit of $0.94 per barrel for the same period in 2015. The average RINs cost effect on refinery operating margin was $1.08 per barrel in the fourth quarter of 2016, compared to $0.45 per barrel for the same period in 2015.
FULL-YEAR 2016
Refinery operating margin was $8.28 per barrel for 2016 compared to $14.43 per barrel for 2015. This decrease in operating margin was primarily due to a lower Gulf Coast 3/2/1 crack spread, a narrowing of the WTI Cushing to WTI Midland spread and increased RINs costs, partially offset by a widening of the WTI Cushing to WTS spread and an increased benefit from the contango market environment which reduced the cost of crude. Refinery average throughput for 2016 was 71,363 bpd compared to 74,906 bpd for 2015. The reduced throughput during 2016 was the result of a reformer regeneration during the first quarter of 2016 and third quarter of 2016. Additionally, throughput was reduced as a result of a catalyst replacement for our diesel hydrotreater unit in the first quarter of 2016 and unplanned downtime during the second quarter of 2016 due to a power outage caused by inclement weather, which affected multiple units.
The average Gulf Coast 3/2/1 crack spread for 2016 was $12.64 per barrel compared to $17.02 per barrel for 2015. The average WTI Cushing to WTI Midland spread for 2016 was $0.15 per barrel compared to $0.39 per barrel for 2015. The average WTI Cushing to WTS spread for 2016 was $0.73 per barrel compared to $(0.06) per barrel for 2015. The average Brent to WTI Cushing spread for 2016 was $0.21 per barrel compared to $3.54 per barrel for 2015. The contango environment in 2016 created an average cost of crude benefit of $1.24 per barrel compared to an average cost of crude benefit of $1.01 per barrel in 2015. The average RINs cost effect on refinery operating margin was $0.55 per barrel in 2016, compared to $0.42 per barrel in 2015.
CONFERENCE CALL
Alon Partners has scheduled a conference call, which will be broadcast live over the Internet on Friday, February 24, 2017, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time), to discuss the fourth quarter and year-end 2016 financial results. To access the call, please dial 877-404-9648, or 412-902-0030 for international callers, and ask for the Alon Partners call at least 10 minutes prior to the start time. Investors may also listen to the conference live by logging on to the Alon Partners' website at www.alonpartners.com. A telephonic replay of the conference call will be available through March 3, 2017, and may be accessed by calling 877-660-6853, or 201-612-7415 for international callers, and using the passcode 13653001#. A webcast archive will also be available at 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 withholdings 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. (NYSE: ALJ) ("Alon Energy"). Alon Partners owns and operates a crude oil refinery in Big Spring, Texas, with a crude oil throughput capacity of 73,000 barrels per day. Alon Partners refines crude oil into finished products, which are marketed primarily in Central and West Texas, Oklahoma, New Mexico and Arizona through its integrated wholesale distribution network to both Alon Energy's retail convenience stores and other third-party distributors.
Contacts: Stacey Morris, Investor
Relations Manager
Alon USA Partners GP, LLC
972-367-3808
Investors: Jack Lascar
Dennard § Lascar Associates,
LLC
713-529-6600
Media: Blake Lewis
Lewis Public Relations
214-635-3020
- Tables to follow -
ALON USA PARTNERS, LP AND SUBSIDIARIES CONSOLIDATED
EARNINGS RELEASE
RESULTS OF OPERATIONS -
FINANCIAL DATA For the Three Months Ended For the Year Ended
(ALL INFORMATION IN THIS PRESS RELEASE EXCEPT FOR BALANCE
SHEET DATA AS OF DECEMBER 31, 2015, AND INCOME STATEMENT DATA
FOR THE YEAR ENDED DECEMBER 31, 2015, IS UNAUDITED)
December 31, December 31,
------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
(dollars in thousands, except per unit data, per barrel data and pricing statistics)
STATEMENTS OF OPERATIONS DATA:
Net sales (1) $509,009 $437,872 $1,807,732 $2,157,191
Operating costs and expenses:
Cost of sales 453,944 369,896 1,588,219 1,767,291
Direct operating
expenses 23,914 27,092 97,338 98,929
Selling, general and
administrative expenses 7,719 7,699 31,983 32,353
Depreciation and
amortization 14,070 13,831 57,524 55,112
Total operating costs
and expenses 499,647 418,518 1,775,064 1,953,685
Operating income 9,362 19,354 32,668 203,506
Interest expense (8,477) (11,942) (37,128) (45,987)
Other income, net 43 26 593 52
--- --- --- ---
Income (loss) before
state income tax
expense 928 7,438 (3,867) 157,571
State income tax expense 44 192 537 672
Net income (loss) $884 $7,246 $(4,404) $156,899
==== ====== ======= ========
Earnings (loss) per unit $0.01 $0.12 $(0.07) $2.51
===== ===== ====== =====
Weighted average common
units outstanding (in
thousands) 62,520 62,510 62,516 62,509
====== ====== ====== ======
Cash distribution per
unit $0.15 $0.98 $0.37 $3.43
===== ===== ===== =====
CASH FLOW DATA:
Net cash provided by (used in):
Operating activities $19,658 $20,513 $78,115 $239,745
Investing activities (6,473) (14,228) (33,351) (29,550)
Financing activities (143,424) (8,610) (104,193) (183,567)
OTHER DATA:
Adjusted EBITDA (2) $23,475 $33,211 $90,785 $258,670
Cash available for
distribution (2) 6,991 5,019
Capital expenditures 6,388 11,458 23,587 23,566
Capital expenditures for
turnarounds and
catalysts 85 2,770 9,764 5,984
KEY OPERATING STATISTICS:
Per barrel of throughput:
Refinery operating
margin (3) $7.65 $10.02 $8.28 $14.43
Refinery direct
operating expense (4) 3.39 3.88 3.73 3.62
For the Three Months Ended For the Year Ended
December 31, December 31,
------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
(dollars in thousands, except per unit data, per barrel data and pricing statistics)
PRICING STATISTICS:
Crack spreads (per barrel):
Gulf Coast 3/2/1 (5) $12.83 $10.90 $12.64 $17.02
WTI Cushing crude oil
(per barrel) $49.21 $42.05 $43.24 $48.68
Crude oil differentials (per barrel):
WTI Cushing less WTI
Midland (6) $0.25 $(0.20) $0.15 $0.39
WTI Cushing less WTS (6) 1.33 (0.26) 0.73 (0.06)
Brent less WTI Cushing
(6) (0.20) 1.35 0.21 3.54
Product price (dollars per gallon):
Gulf Coast unleaded
gasoline $1.45 $1.25 $1.34 $1.56
Gulf Coast ultra-low
sulfur diesel 1.52 1.29 1.32 1.58
Natural gas (per MMBtu) 3.18 2.23 2.55 2.63
As of December 31,
------------------
2016 2015
---- ----
(dollars in thousands)
BALANCE SHEET DATA (end of period):
Cash and cash equivalents $73,524 $132,953
Working capital (73,563) (53,804)
Total assets 695,637 748,584
Total debt 236,319 292,082
Total debt less cash and cash equivalents 162,795 159,129
Total partners' equity 103,503 130,957
THROUGHPUT AND PRODUCTION
DATA: For the Three Months Ended For the Year Ended
December 31, December 31,
------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
bpd % bpd % bpd % bpd %
Refinery throughput:
WTS crude 27,458 35.8 29,510 38.9 31,000 43.4 33,647 44.9
WTI crude 44,112 57.5 43,968 57.9 36,862 51.7 38,632 51.6
Blendstocks 5,084 6.7 2,447 3.2 3,501 4.9 2,627 3.5
----- --- ----- --- ----- --- ----- ---
Total refinery throughput
(7) 76,654 100.0 75,925 100.0 71,363 100.0 74,906 100.0
====== ===== ====== ===== ====== ===== ====== =====
Refinery production:
Gasoline 39,371 51.2 38,600 50.8 35,220 49.4 37,519 50.0
Diesel/jet 27,619 35.9 27,812 36.6 25,739 36.1 27,651 36.8
Asphalt 2,533 3.3 2,362 3.1 2,767 3.9 2,639 3.5
Petrochemicals 4,647 6.1 4,012 5.3 3,872 5.4 4,579 6.1
Other 2,714 3.5 3,176 4.2 3,740 5.2 2,678 3.6
----- --- ----- --- ----- --- ----- ---
Total refinery production
(8) 76,884 100.0 75,962 100.0 71,338 100.0 75,066 100.0
====== ===== ====== ===== ====== ===== ====== =====
Refinery utilization (9) 98.0% 100.7% 96.1% 99.0%
(1) Includes sales to
related parties
of $84,786 and
$77,058 for the
three months
ended December
31, 2016 and
2015,
respectively,
and $307,497 and
$358,194 for the
years ended
December 31,
2016 and 2015,
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
(loss) to
Adjusted EBITDA
for the three
months and years
ended December
31, 2016 and
2015:
For the Three Months Ended For the Year Ended
December 31, December 31,
------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
(dollars in thousands)
Net income (loss) $884 $7,246 $(4,404) $156,899
State income tax expense 44 192 537 672
Interest expense 8,477 11,942 37,128 45,987
Depreciation and amortization 14,070 13,831 57,524 55,112
Adjusted EBITDA $23,475 $33,211 $90,785 $258,670
======= ======= ======= ========
Cash available for distribution is
not a recognized term under GAAP.
Our management believes that the
presentation of cash available
for distribution is useful to
investors because it is
frequently used by securities
analysts, investors, and other
interested parties in the
evaluation of entities in our
industry. Cash available for
distribution should not be
considered in isolation or as an
alternative to net income or
operating income as a measure of
operating performance. In
addition, cash available for
distribution is not presented as,
and should not be considered, an
alternative to cash flows from
operations or as a measure of
liquidity. Cash available for
distribution as reported may not
be comparable to similarly titled
measures of other entities,
thereby limiting its usefulness
as a comparative measure.
Available cash for each quarter
generally equals our Adjusted
EBITDA for the quarter, less cash
needed for maintenance capital
expenditures, debt service and
other contractual obligations and
reserves for future operating or
capital needs that the board of
directors of our general partner
deems necessary or appropriate,
including reserves for our
expenses in the quarters in which
our planned major turnarounds and
catalyst replacements occur.
Actual distributions are set by
the board of directors of our
general partner. The board of
directors of our general partner
may modify our cash distribution
policy at any time, and our
partnership agreement does not
require us to make distributions
at all.
The following table reconciles
Adjusted EBITDA to cash available
for distribution for the three
months ended December 31, 2016
and 2015:
For the Three Months Ended
December 31,
------------
2016 2015
---- ----
(dollars in thousands)
Adjusted EBITDA $23,475 $33,211
less: Maintenance/growth capital expenditures 6,388 11,458
less: Turnaround and catalyst replacement capital
expenditures 85 2,770
less: Major turnaround reserve for future years 1,500 1,500
less: Principal payments 625 625
less: State income tax payments 44 377
less: Interest paid in cash 7,842 11,462
Cash available for distribution $6,991 $5,019
====== ======
(3) Refinery
operating
margin is a
per barrel
measurement
calculated
by dividing
the margin
between net
sales and
cost of
sales
(exclusive
of certain
inventory
adjustments)
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.
Refinery operating margin for the
three months and year ended
December 31, 2016 excludes gains
related to inventory adjustments
of $1,137 and $3,183,
respectively. Refinery operating
margin for the three months and
year ended December 31, 2015
excludes losses related to
inventory adjustments of $(1,983)
and $(4,746), respectively.
(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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SOURCE Alon USA Partners, LP
