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Alon USA Reports First Quarter Results



                    Alon USA Reports First Quarter Results

Increases Quarterly Cash Dividend and Declares Special Dividend

Company schedules conference call for May 9, 2013 at 11:30 a.m. Eastern

PR Newswire

DALLAS, May 8, 2013

DALLAS, May 8, 2013 /PRNewswire/ -- Alon USA Energy, Inc. (NYSE: ALJ) ("Alon")
today announced results for the first quarter of 2013. Net income for the
first quarter of 2013 was $54.2 million, or $0.86 per share, compared to net
loss of $(29.4) million, or $(0.52) per share, for the same period last year.
Excluding special items, Alon recorded net income of $54.2 million, or $0.86
per share, for the first quarter of 2013, compared to net income of $8.5
million, or $0.15 per share, for the same period last year.

Paul Eisman, CEO and President, commented, "We continue to profit from the
strategic operational decisions that improve our crude slate at our refineries
as evidenced by our adjusted EBITDA of $157 million for the quarter and
adjusted EBITDA for the last twelve months of $524 million. Also, we had net
income of $74 million before non-controlling interest for the quarter.  We
achieved these results despite reduced refinery throughput rates resulting
from maintenance at both Big Spring and Krotz Springs during the quarter.
During the first quarter, we made additional progress towards our goal of
strengthening our balance sheet by reducing net debt an additional $137
million to $334 million. At the end of the first quarter our net debt to total
capitalization was 32% and net debt to adjusted EBITDA for the last twelve
months was 0.6:1 compared to 70% and 3.7:1 for the same periods last year.

"During the first quarter, we generated very favorable margins of $28.76 per
barrel at our Big Spring refinery, benefiting from the strong margin
environment as well as the WTI less WTS differentials. At Krotz Springs, we
generated an operating margin of $13.14 per barrel as we were able to take
greater advantage of cheaper WTI priced crudes.

"In California, as mentioned last quarter, we are continuing our engineering
study at our Bakersfield refinery location. Concurrently, we are monitoring
the progress of the submitted permit applications that would allow us to ship
via rail lighter mid-continent crudes to replace the heavier West Coast crudes
used in the California system. We still expect to receive these permits, as
well as to complete required infrastructure build out and to enter into the
required supply arrangements, during the fourth quarter of this year. In the
meantime, we have signed agreements with major companies to utilize our
logistical assets.

"For the second quarter of 2013, we expect the average throughput at the Big
Spring refinery to be approximately 72,000 barrels per day and only 57,000
barrels per day at the Krotz Springs refinery due to repairs being performed
on the reformer unit. At Krotz Springs, we are planning to process 30,000
barrels per day of WTI during the second quarter of 2013. In addition, we are
in the process of completing a railcar unloading terminal facility at the
Krotz Springs refinery with plans to ship an additional 6,000 barrels per day
of WTI crude oil with our existing railcars."

FIRST QUARTER 2013

There were no material special items that affected earnings for the first
quarter of 2013. Special items reduced earnings by $37.8 million for the first
quarter of 2012 which primarily included after-tax losses of $27.2 million
associated with losses on commodity swaps, $4.9 million associated with
heating oil call option crack spread contracts, $5.8 million associated with
the write-off of unamortized original issuance discount due to the repayment
of the Alon Brands term loan offset by $0.1 million associated with gain
recognized on disposition of assets.

The combined refinery throughput for the first quarter of 2013 averaged
117,915 barrels per day ("bpd"), consisting of 59,476 bpd at the Big Spring
refinery and 58,439 bpd at the Krotz Springs refinery, compared to 135,190 bpd
for the first quarter of 2012, consisting of 69,512 bpd at the Big Spring
refinery and 65,678 bpd at the Krotz Springs refinery. The lower throughput
rates for the first quarter of 2013 were due to maintenance work at both
refineries.

Refinery operating margin at the Big Spring refinery was $28.76 per barrel for
the first quarter of 2013 compared to $15.24 per barrel for the same period in
2012. This increase is mainly due to higher Gulf Coast 3/2/1 crack spreads and
a widening WTI to WTS spread. The Krotz Springs refinery operating margin was
$13.14 per barrel for the first quarter of 2013 compared to $5.81 per barrel
for the same period in 2012. This increase is mainly due to the higher
utilization of lower crude oil costs with the addition of WTI priced crude
oils.

The average Gulf Coast 3/2/1 crack spread for the first quarter of 2013 was
$28.40 per barrel compared to $24.78 per barrel for the same period in 2012.
The average Gulf Coast 2/1/1 high sulfur diesel crack spread for the first
quarter of 2013 was $8.20 per barrel compared to $12.46 per barrel for the
same period in 2012.

The average WTI to WTS spread for the first quarter of 2013 was $11.41 per
barrel compared to $2.16 per barrel for the same period in 2012. The average
LLS to WTI spread for the first quarter of 2013 was $20.22 per barrel compared
to $12.61 per barrel for the same period in 2012.

Asphalt margins for the first quarter of 2013 were $61.51 per ton compared to
$55.18 per ton for same period in 2012. On a cash basis (i.e. excluding
inventory effects), asphalt margins in the first quarter of 2013 were $61.44
per ton compared to $3.01 per ton in the first quarter of 2012. The average
blended asphalt sales price decreased 5.6% from $572.54 per ton in the first
quarter of 2012 to $540.48 per ton in the first quarter of 2013 and the
average non-blended asphalt sales price increased 14.7% from $341.49 per ton
in the first quarter of 2012 to $391.77 per ton in the first quarter of 2013.

Retail fuel sales volume increased by 7.5% from 41.3 million gallons in the
first quarter of 2012 to 44.4 million gallons in the first quarter of 2013.

Alon also announced today that its Board of Directors has approved an increase
in its regular quarterly cash dividend of $0.04 per share to $0.06 per share,
or from $0.16 per share to $0.24 per share per annum, and a special
non-recurring dividend of $0.16 per share. Both dividends are payable on June
14, 2013 to stockholders of record at the close of business on May 31, 2013.

CONFERENCE CALL

The Company has scheduled a conference call for Thursday, May 9, 2013, at
11:30 a.m. Eastern, to discuss the first quarter 2013 results. To access the
call, please dial 877-941-6009, or 480-629-9818, for international callers, at
least 10 minutes prior to the start time and ask for the Alon USA Energy call.
Investors may also access the live webcast 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 May 23,
2013, and may be accessed by calling 800-406-7325, or 303-590-3030, for
international callers, and using the passcode 4614672#. The archived webcast
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 Dennard • Lascar Associates at 713-529-6600 or email
dwashburn@dennardlascar.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
directly owns crude oil refineries in California, Louisiana and Oregon, with
an aggregate crude oil throughput capacity of approximately 144,000 barrels
per day. Alon USA also owns 100% of the general partner and approximately 82%
of the limited partner interests in Alon USA Partners, LP (NYSE: ALDW), which
owns a crude oil refinery in Texas with an aggregate crude oil throughput
capacity of approximately 70,000 barrels per day. Alon USA is a leading
producer of asphalt, which it markets through its asphalt terminals
predominately in the Western United States. Alon USA is the largest 7-Eleven
licensee in the United States and operates approximately 300 convenience
stores in Texas and New Mexico.

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.

          Claire Hart, Senior Vice President

Contacts: Alon USA Energy, Inc.

          972-367-3649
          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 ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED

EARNINGS RELEASE
RESULTS OF OPERATIONS -
FINANCIAL DATA

(ALL INFORMATION IN THIS PRESS   For the Three Months Ended
RELEASE EXCEPT FOR BALANCE SHEET
DATA AS OF DECEMBER 31, 2012, IS
UNAUDITED)
                                 March 31,
                                 2013                      2012
                                 (dollars in thousands, except per share data)
STATEMENTS OF OPERATIONS DATA:
Net sales (1)                    $    1,651,196            $    1,792,133
Operating costs and expenses:
Cost of sales                    1,378,257                 1,618,674
Unrealized losses on commodity   —                         45,312
swaps
Direct operating expenses        74,222                    72,209
Selling, general and             41,741                    35,140
administrative expenses (2)
Depreciation and amortization    31,163                    30,711
(3)
Total operating costs and        1,525,383                 1,802,046
expenses
Gain on disposition of assets    18                        131
Operating income (loss)          125,831                   (9,782)
Interest expense (4)             (21,292)                  (31,040)
Equity earnings (loss) of        (381)                     61
investees
Other income (loss), net (5)     83                        (8,100)
Income (loss) before income tax  104,241                   (48,861)
expense (benefit)
Income tax expense (benefit)     30,590                    (17,751)
Net income (loss)                73,651                    (31,110)
Net income (loss) attributable   19,467                    (1,743)
to non-controlling interest
Net income (loss) available to   $    54,184               $    (29,367)
stockholders
Earnings (loss) per share, basic $    0.86                 $    (0.52)
Weighted average shares
outstanding, basic (in           61,957                    56,028
thousands)
Earnings (loss) per share,       $    0.80                 $    (0.52)
diluted
Weighted average shares
outstanding, diluted (in         67,616                    56,028
thousands)
Cash dividends per share         $    0.04                 $    0.04
CASH FLOW DATA:
Net cash provided by (used in):
Operating activities             $    160,770              $    30,873
Investing activities             (13,573)                  (16,651)
Financing activities             (10,627)                  (120,999)
OTHER DATA:
Adjusted net income available to $    54,172               $    8,449
stockholders (6)
Adjusted earnings per share (6)  $    0.86                 $    0.15
Adjusted EBITDA (7)              156,678                   66,224
Capital expenditures (8)         8,414                     14,557
Capital expenditures for         5,216                     2,105
turnaround and chemical catalyst

 

                                          March 31,   December 31,

                                          2013        2012
BALANCE SHEET DATA (end of period):       (dollars in thousands)
Cash and cash equivalents                 $ 252,866   $  116,296
Working capital                           211,011     87,242
Total assets                              2,355,722   2,223,574
Total debt                                586,371     587,017
Total debt less cash and cash equivalents 333,505     470,721
Total equity                              693,267     621,186

 

REFINING AND MARKETING
SEGMENT (A)
                             For the Three Months Ended
                             March 31,
                             2013                        2012
                             (dollars in thousands, except per barrel data and
                             pricing statistics)
STATEMENTS OF OPERATIONS
DATA:
Net sales (9)                $     1,414,125             $    1,635,808
Operating costs and
expenses:
Cost of sales                1,183,322                   1,503,393
Unrealized losses on         —                           45,312
commodity swaps
Direct operating expenses    63,669                      63,219
Selling, general and         13,921                      8,536
administrative expenses
Depreciation and             26,505                      26,277
amortization
Total operating costs and    1,287,417                   1,646,737
expenses
Operating income (loss)      $     126,708               $    (10,929)
KEY OPERATING STATISTICS:
Per barrel of throughput:
Refinery operating margin –  $     28.76                 $    15.24
Big Spring (10)
Refinery operating margin –  N/A                         N/A
CA Refineries (10)
Refinery operating margin –  13.14                       5.81
Krotz Springs (10)
Refinery direct operating    5.68                        3.58
expense – Big Spring (11)
Refinery direct operating    N/A                         N/A
expense – CA Refineries (11)
Refinery direct operating    4.42                        3.99
expense – Krotz Springs (11)
Capital expenditures         $     5,969                 $    8,701
Capital expenditures for
turnaround and chemical      5,216                       2,105
catalyst
PRICING STATISTICS:
Crack spreads (3/2/1) (per
barrel):
Gulf Coast (12)              $     28.40                 $    24.78
Crack spreads (3/1/1/1) (per
barrel):
West Coast (12)              $     11.06                 $    12.64
Crack spreads (2/1/1) (per
barrel):
Gulf Coast high sulfur       $     8.20                  $    12.46
diesel (12)
WTI crude oil (per barrel)   94.27                       103.00
Crude oil differentials (per
barrel):
WTI less WTS (13)            $     11.41                 $    2.16
LLS less WTI (13)            20.22                       12.61
WTI less Buena Vista (13)    (15.76)                     (13.00)
Product prices (dollars per
gallon):
Gulf Coast unleaded gasoline $     2.84                  $    2.98
Gulf Coast ultra-low sulfur  3.09                        3.16
diesel
Gulf Coast high sulfur       3.01                        3.12
diesel
West Coast LA CARBOB         3.09                        3.20
(unleaded gasoline)
West Coast LA ultra-low      3.13                        3.24
sulfur diesel
Natural gas (per MMBTU)      3.48                        2.50

    In the fourth quarter of 2012, based on a change in our internal reporting
    structure as a result of the Alon USA Partners, LP initial public
(A) offering, the branded marketing operations have been combined with the
    refining and marketing segment and are no longer included with the retail
    segment. Information for the three months ended March 31, 2012 has been
    recast to provide a comparison to the current period results.

 

THROUGHPUT AND PRODUCTION DATA: For the Three Months Ended

BIG SPRING REFINERY             March 31,
                                2013              2012
                                bpd      %        bpd      %
Refinery throughput:
WTS crude                       45,220   76.0     55,546   79.9
WTI crude                       11,549   19.4     12,206   17.6
Blendstocks                     2,707    4.6      1,760    2.5
Total refinery throughput (14)  59,476   100.0    69,512   100.0
Refinery production:
Gasoline                        29,785   50.4     35,140   50.7
Diesel/jet                      19,298   32.6     22,236   32.1
Asphalt                         3,359    5.7      4,535    6.6
Petrochemicals                  3,726    6.3      4,136    6.0
Other                           2,969    5.0      3,187    4.6
Total refinery production (15)  59,137   100.0    69,234   100.0
Refinery utilization (16)                92.4  %           96.8  %
THROUGHPUT AND PRODUCTION DATA: For the Three Months Ended

KROTZ SPRINGS REFINERY          March 31,
                                2013              2012
                                bpd      %        bpd      %
Refinery throughput:
WTI crude                       25,083   43.0     9,310    14.2
Gulf Coast sweet crude          31,516   53.9     55,352   84.3
Blendstocks                     1,840    3.1      1,016    1.5
Total refinery throughput (14)  58,439   100.0    65,678   100.0
Refinery production:
Gasoline                        26,916   45.0     27,533   41.6
Diesel/jet                      22,382   37.5     28,713   43.4
Heavy Oils                      1,773    3.0      5,045    7.6
Other                           8,687    14.5     4,927    7.4
Total refinery production (15)  59,758   100.0    66,218   100.0
Refinery utilization (16)                74.2  %           77.8  %

 

ASPHALT SEGMENT
                                   For the Three Months Ended
                                   March 31,
                                   2013                      2012
                                   (dollars in thousands, except per ton data)
STATEMENTS OF OPERATIONS DATA:
Net sales (17)                     $     154,865             $   92,549
Operating costs and expenses:
Cost of sales (17)(18)             145,516                   82,672
Direct operating expenses          10,553                    8,990
Selling, general and               1,648                     926
administrative expenses
Depreciation and amortization      1,549                     1,382
Total operating costs and expenses 159,266                   93,970
Operating loss                     $     (4,401)             $   (1,421)
KEY OPERATING STATISTICS:
Blended asphalt sales volume (tons 130                       136
in thousands) (19)
Non-blended asphalt sales volume   22                        43
(tons in thousands) (20)
Blended asphalt sales price per    $     540.48              $   572.54
ton (19)
Non-blended asphalt sales price    391.77                    341.49
per ton (20)
Asphalt margin per ton (21)        61.51                     55.18
Capital expenditures               $     1,792               $   1,491
RETAIL SEGMENT (A)
                                For the Three Months Ended
                                March 31,
                                2013                         2012
                                (dollars in thousands, except per gallon data)
STATEMENTS OF OPERATIONS DATA:
Net sales (1)                   $  224,105                   $   216,642
Operating costs and expenses:
Cost of sales (18)              191,318                      185,475
Selling, general and            25,997                       25,488
administrative expenses
Depreciation and amortization   2,268                        2,499
Total operating costs and       219,583                      213,462
expenses
Gain on disposition of assets   18                           131
Operating income                $  4,540                     $   3,311
KEY OPERATING STATISTICS:
Number of stores (end of        298                          300
period) (22)
Retail fuel sales (thousands of 44,406                       41,329
gallons)
Retail fuel sales (thousands of
gallons per site per month)     52                           48
(22)
Retail fuel margin (cents per   20.3                         18.0
gallon) (23)
Retail fuel sales price         $  3.39                      $   3.46
(dollars per gallon) (24)
Merchandise sales               $  73,333                    $   73,482
Merchandise sales (per site per $  82                        $   82
month) (22)
Merchandise margin (25)         32.3                 %       32.1          %
Capital expenditures            $  640                       $   4,239

    In the fourth quarter of 2012, based on a change in our internal reporting
    structure as a result of the Alon USA Partners, LP initial public
(A) offering, the branded marketing operations have been combined with the
    refining and marketing segment and are no longer included with the retail
    segment. Information for the three months ended March 31, 2012 has been
    recast to provide a comparison to the current period results.
(1) Includes excise taxes on sales by the retail segment of $17,305 and
    $16,124 for the three months ended March 31, 2013 and 2012, respectively.
    Includes corporate headquarters selling, general and administrative
(2) expenses of $175 and $190 for the three months ended March 31, 2013 and
    2012, respectively, which are not allocated to our three operating
    segments.
    Includes corporate depreciation and amortization of $841 and $553 for the
(3) three months ended March 31, 2013 and 2012, respectively, which are not
    allocated to our three operating segments.
    Interest expense for the three months ended March 31, 2012, includes a
(4) charge of $9,624 for the write-off of unamortized original issuance
    discount associated with our repayment of the Alon Brands Term Loan.
(5) Other income (loss), net for the three months ended March 31, 2012, is
    substantially the loss on heating oil call option crack spread contracts.
    The following table provides a reconciliation of net income (loss)
    available to stockholders under United States generally accepted
    accounting principles ("GAAP") to adjusted net income available to
    stockholders utilized in determining adjusted earnings per share,
    excluding the after-tax loss on write-off of unamortized original issuance
(6) discount, after-tax loss on heating oil call option crack spread
    contracts, after-tax unrealized losses on commodity swaps and after-tax
    gain on disposition of assets. Our management believes that the
    presentation of adjusted net income available to stockholders and adjusted
    earnings per share, excluding these items, is useful to investors because
    it provides a more meaningful measurement for evaluation of our Company's
    operating results.

                              For the Three Months Ended
                              March 31,
                              2013                        2012
                              (dollars in thousands)
  Net income (loss) available $      54,184               $    (29,367)
  to stockholders
  Plus: Write-off of original
  issuance discount, net of   —                           5,781
  tax
  Plus: Loss on heating oil
  call option crack spread    —                           4,897
  contracts, net of tax
  Plus: Unrealized losses on  —                           27,217
  commodity swaps, net of tax
  Less: Gain on disposition   (12)                        (79)
  of assets, net of tax
  Adjusted net income         $      54,172               $    8,449
  available to stockholders
  Adjusted earnings per share $      0.86                 $    0.15
  *
  * Adjusted earnings per share includes the effects of dividends on preferred
  stock on adjusted net income available to stockholders necessary to
  calculate earnings per share.

    Adjusted EBITDA represents earnings before net income (loss) attributable
    to non-controlling interest, income tax expense (benefit), interest
    expense, depreciation and amortization, gain (loss) on disposition of
    assets, unrealized gains (losses) on commodity swaps and loss on heating
    oil call option crack spread contracts. Adjusted EBITDA is not a
    recognized measurement under GAAP; however, the amounts included in
    Adjusted EBITDA are derived from amounts included in our consolidated
    financial statements. Our management believes that the presentation of
    Adjusted EBITDA is useful to investors because it is frequently used by
(7) securities analysts, investors, and other interested parties in the
    evaluation of companies in our industry. In addition, our management
    believes that Adjusted EBITDA is useful in evaluating our operating
    performance compared to that of other companies in our industry because
    the calculation of Adjusted EBITDA generally eliminates the effects of net
    income (loss) attributable to non-controlling interest, income tax expense
    (benefit), interest expense, gain (loss) on disposition of assets,
    unrealized gains (losses) on commodity swaps, loss on heating oil call
    option crack spread contracts and the accounting effects of capital
    expenditures and acquisitions, items that may vary for different companies
    for reasons unrelated to overall operating performance.
    Adjusted EBITDA has limitations as an analytical tool, and you should not
    consider it in isolation, or as a substitute for analysis of our results
    as reported under GAAP. Some of these limitations are:
                   Adjusted EBITDA does not reflect our cash expenditures or
    •              future requirements for capital expenditures or contractual
                   commitments;
                   Adjusted EBITDA does not reflect the interest expense or
    •              the cash requirements necessary to service interest or
                   principal payments on our debt;
                   Adjusted EBITDA does not reflect the prior claim that
    •              non-controlling interest have on the income generated by
                   non-wholly-owned subsidiaries;
    •              Adjusted EBITDA does not reflect changes in or cash
                   requirements for our working capital needs; and
                   Our calculation of Adjusted EBITDA may differ from EBITDA
    •              calculations of other companies in our industry, limiting
                   its usefulness as a comparative measure.
    Because of these limitations, Adjusted EBITDA should not be considered a
    measure of discretionary cash available to us to invest in the growth of
    our business. We compensate for these limitations by relying primarily on
    our GAAP results and using Adjusted EBITDA only supplementally.
    The following table reconciles net income (loss) available to stockholders
    to Adjusted EBITDA for the years ended December 31, 2012 and 2011 and for
    the three months ended March 31, 2013, 2012 and 2011:

                    For the     For the     For the Three Months Ended
                    Year Ended  Year Ended
                    December    December    March 31,
                    31,         31,
                    2012        2011        2013        2012         2011
                    (dollars in thousands)
  Net income (loss)
  available to      $ 79,134    $ 42,507    $ 54,184    $ (29,367)   $ 13,065
  stockholders
  Net income (loss)
  attributable to   11,463      1,241       19,467      (1,743)      160
  non-controlling
  interest
  Income tax        49,884      18,918      30,590      (17,751)     7,470
  expense (benefit)
  Interest expense  129,572     88,310      21,292      31,040       20,440
  Depreciation and  121,929     113,730     31,163      30,711       25,447
  amortization
  (Gain) loss on
  disposition of    2,309       (729)       (18)        (131)        (12)
  assets
  Unrealized
  (gains) losses on 31,936      (31,936)    —           45,312       —
  commodity swaps
  Loss on heating
  oil call option   7,297       36,280      —           8,153        31,919
  crack spread
  contracts
  Adjusted EBITDA   $ 433,524   $ 268,321   $ 156,678   $ 66,224     $ 98,489

     Adjusted EBITDA for the 12 months ended March 31, 2013 of $523,978 is
     equal to adjusted EBITDA for the year ended December 31, 2012 of
     $433,524, plus adjusted EBITDA for the three months ended March 31, 2013
     of $156,678, less adjusted EBITDA for the three months ended March 31,
     2012 of $66,224.
     Adjusted EBITDA for the 12 months ended March 31, 2012 of $236,056 is
     equal to adjusted EBITDA for the year ended December 31, 2011 of
     $268,321, plus adjusted EBITDA for the three months ended March 31, 2012
     of $66,224, less adjusted EBITDA for the three months ended March 31,
     2011 of $98,489.
     Includes corporate capital expenditures of $13 and $126 for the three
(8)  months ended March 31, 2013 and 2012, respectively, which are not
     allocated to our three operating segments.
     Net sales include intersegment sales to our asphalt and retail segments
(9)  at prices which approximate wholesale market prices. These intersegment
     sales are eliminated through consolidation of our financial statements.
     Refinery operating margin is a per barrel measurement calculated by
     dividing the margin between net sales and cost of sales (exclusive of
     substantial hedge positions and certain inventory adjustments)
     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.
(10)
      

     The refinery operating margin for the three months ended March 31, 2013
     includes $2,965 of negative inventory effects.

      

     The refinery operating margin excludes realized losses on commodity swaps
     of $5,434 for the three months ended March 31, 2012.
     Refinery direct operating expense is a per barrel measurement calculated
(11) by dividing direct operating expenses at our Big Spring, California, and
     Krotz Springs refineries by the applicable refinery's total throughput
     volumes.
     We compare our Big Spring refinery's per barrel operating margin to the
     Gulf Coast 3/2/1 crack spread. A 3/2/1 crack spread is calculated
     assuming that three barrels of a benchmark crude oil are converted, or
     cracked, into two barrels of gasoline and one barrel of diesel. We
     calculate the Gulf Coast 3/2/1 crack spread using the market value of
     WTI, a light, sweet crude oil, the market values of Gulf Coast
     conventional gasoline and ultra-low sulfur diesel.

      

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

      

     We compare our Krotz Springs refinery's per barrel operating margin to
     the Gulf Coast 2/1/1 crack spread. A 2/1/1 crack spread is calculated
     assuming that two barrels of a benchmark crude oil are converted into one
     barrel of gasoline and one barrel of diesel. We calculate the Gulf Coast
     2/1/1 crack spread using the market value of Light Louisiana Sweet, or
     LLS, crude oil, the market values of Gulf Coast conventional gasoline and
     Gulf Coast high sulfur diesel.
     The WTI/WTS, or sweet/sour, spread represents the differential between
     the average value per barrel of WTI crude oil and the average value per
     barrel of WTS crude oil. The WTI less Buena Vista spread represents the
(13) differential between the average value per barrel of WTI crude oil and
     the average value per barrel of Buena Vista crude oil. The LLS less WTI
     spread represents the differential between the average value per barrel
     of LLS crude oil and the average value per barrel of WTI crude oil.
     Total refinery throughput represents the total barrels per day of crude
(14) oil and blendstock inputs in the refinery production process. The
     California refineries were not in operation for the first quarter of 2013
     and 2012 and a result, the throughput data has been omitted.
     Total refinery production represents the barrels per day of various
(15) products produced from processing crude and other refinery feedstocks
     through the crude units and other conversion units at the refineries.
     Refinery utilization represents average daily crude oil throughput
(16) divided by crude oil capacity, excluding planned periods of downtime for
     maintenance and turnarounds.
     Net sales and cost of sales for the first quarter of 2013 includes
(17) $76,000 of inventory winter fill purchases sold to J. Aron and Company as
     part of a supply and offtake arrangement. The volumes associated with
     these sales are excluded from the Key Operating Statistics.
     Cost of sales includes intersegment purchases of asphalt blends and motor
(18) fuels from our refining and 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.
     Asphalt margin is a per ton measurement calculated by dividing the margin
(21) 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.
     At March 31, 2013 we had 298 retail convenience stores of which 286 sold
(22) fuel. At March 31, 2012 we had 300 retail convenience stores of which 287
     sold fuel.
     Retail fuel margin represents the difference between motor fuel sales
     revenue and the net cost of purchased motor fuel, including
(23) 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.
     Merchandise margin represents the difference between merchandise sales
     revenues and the delivered cost of merchandise purchases, net of rebates
(25) and commissions, expressed as a percentage of merchandise sales revenues.
     Merchandise margins, also referred to as in-store margins, are commonly
     used in the retail industry to measure in-store, or non-fuel, operating
     results.

SOURCE Alon USA Energy, Inc.

Website: http://www.alonusa.com
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