Alon USA Partners, LP Reports Second Quarter 2017 Results and Declares Quarterly Cash Distribution

DALLAS, July 27, 2017 /PRNewswire/ -- Alon USA Partners, LP (NYSE: ALDW) ("Alon Partners") today announced results for the second quarter of 2017. Net income for the second quarter of 2017 was $21.7 million, or $0.35 per unit, compared to net income of $1.2 million, or $0.02 per unit, for the same period last year. Net income for the first half of 2017 was $41.8 million, or $0.67 per unit, compared to net loss of $(7.4) million, or $(0.12) 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 second quarter of 2017 of $0.35 per unit payable on August 24, 2017 to common unitholders of record at the close of business on August 17, 2017, based on cash available for distribution of $21.7 million.

Alan Moret, CEO, commented, "Our second quarter 2017 results benefited from an improvement in our benchmark Gulf Coast crack spread and discounts in Midland-sourced crude relative to WTI Cushing. The wholesale marketing environment remained strong as increased economic activity supported product demand in our markets."

Shai Even, President and CFO, commented, "The refinery achieved an operating margin of $12.68 per barrel in the second quarter of 2017. Our results were impacted by FCCU maintenance in the second quarter of 2017, which reduced adjusted EBITDA by $9.5 million and the distribution by $0.16 per unit. The FCCU maintenance negatively impacted the refinery's direct operating expense of $4.21 per barrel for the second quarter of 2017.

"We are encouraged by the production activity we have seen in the Permian Basin and the continued discounts for Midland crudes into the third quarter. 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 third quarter of 2017."

SECOND QUARTER 2017

Refinery operating margin was $12.68 per barrel for the second quarter of 2017 compared to $8.53 per barrel for the same period in 2016. This increase in operating margin was primarily due to a higher Gulf Coast 3/2/1 crack spread, a widening of both the WTI Cushing to WTI Midland and WTI Cushing to WTS spreads and a stronger wholesale marketing environment, partially offset by a reduced benefit from the contango market environment which increased the cost of crude. Refinery average throughput for the second quarter of 2017 was 72,763 barrels per day ("bpd") compared to 71,153 bpd for the same period in 2016. Refinery throughput for the second quarter of 2017 was affected by maintenance on the FCCU and refinery throughput for the second quarter of 2016 was affected by unplanned downtime due to a power outage caused by inclement weather, which affected multiple units.

The average Gulf Coast 3/2/1 crack spread was $15.07 per barrel for the second quarter of 2017 compared to $13.16 per barrel for the second quarter of 2016. The average WTI Cushing to WTI Midland spread for the second quarter of 2017 was $0.84 per barrel compared to $0.17 per barrel for the second quarter of 2016. The average WTI Cushing to WTS spread for the second quarter of 2017 was $1.24 per barrel compared to $0.75 per barrel for the second quarter of 2016. The average Brent to WTI Cushing spread for the second quarter of 2017 was $1.21 per barrel compared to $(0.18) per barrel for the same period in 2016. The contango environment in the second quarter of 2017 created an average cost of crude benefit of $0.55 per barrel compared to an average cost of crude benefit of $1.49 per barrel for the same period in 2016. The average RINs cost effect on refinery operating margin was $0.34 per barrel in the second quarter of 2017, compared to $0.32 per barrel for the same period in 2016.

YEAR-TO-DATE 2017

Refinery operating margin was $11.47 per barrel for the first half of 2017 compared to $8.16 per barrel for the same period in 2016. This increase in operating margin was primarily due to a higher Gulf Coast 3/2/1 crack spread and a widening of both the WTI Cushing to WTI Midland and WTI Cushing to WTS spreads, partially offset by increased RINs costs and a reduced benefit from the contango market environment which increased the cost of crude. Refinery average throughput for the first half of 2017 was 75,245 bpd compared to 69,345 bpd for the same period in 2016. Refinery throughput for the first half of 2017 was affected by maintenance on the FCCU. The lower throughput for the first half of 2016 was the result of a reformer regeneration and a catalyst replacement for our diesel hydrotreater unit in the first quarter of 2016, as well as 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 was $14.41 per barrel for the first half of 2017 compared to $12.20 per barrel for the same period in 2016. The average WTI Cushing to WTI Midland spread for the first half of 2017 was $0.11 per barrel compared to $0.02 per barrel for the same period in 2016. The average WTI Cushing to WTS spread for the first half of 2017 was $1.26 per barrel compared to $0.32 per barrel for the same period in 2016. The average Brent to WTI Cushing spread for the first half of 2017 was $1.44 per barrel compared to $0.15 per barrel for the same period in 2016. The contango environment for the first half of 2017 created an average cost of crude benefit of $0.77 per barrel compared to an average cost of crude benefit of $1.66 per barrel for the same period in 2016. The average RINs cost effect on refinery operating margin was $0.47 per barrel in the first half of 2017, compared to $0.23 per barrel for the same period in 2016.

CONFERENCE CALL

Alon Partners has scheduled a conference call, which will be broadcast live over the Internet on Friday, July 28, 2017 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time), to discuss the second quarter 2017 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 August 4, 2017 and may be accessed by calling 877-660-6853, or 201-612-7415 for international callers, and using the passcode 13666988#. 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 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 in which Delek US Holdings, Inc. (NYSE: DK) owns 100% of the general partner and 81.6% of the limited partner interest. 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 retail convenience stores owned by Delek US and other third-party distributors.

    Contacts:                        Keith Johnson

                                      Vice President of
                                      Investor Relations

                                     Delek US Holdings, Inc.

                                     615-435-1366

- Tables to follow -

                                                                                                                                            ALON USA PARTNERS, LP AND SUBSIDIARIES CONSOLIDATED
                                                                                                                                                             EARNINGS RELEASE


    RESULTS OF OPERATIONS - FINANCIAL DATA                                                                         For the Three Months Ended                                  For the Six Months Ended

    (ALL INFORMATION IN THIS PRESS RELEASE EXCEPT FOR BALANCE SHEET DATA AS OF DECEMBER 31, 2016, IS UNAUDITED)

                                                                                                                            June 30,                                                   June 30,
                                                                                                                            --------                                                   --------

                                                                                                                   2017                                    2016                      2017                                   2016
                                                                                                                   ----                                    ----                      ----                                   ----

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

    STATEMENTS OF OPERATIONS DATA:

    Net sales (1)                                                                                                                         $521,751                                                      $468,457                                        $1,066,283                 $836,466

    Operating costs and expenses:

    Cost of sales                                                                                               440,895                                             410,735                                         911,366                                 730,068

    Direct operating expenses                                                                                    27,878                                              23,255                                          52,638                                  48,299

    Selling, general and administrative expenses                                                                  7,392                                               8,802                                          14,156                                  16,111

    Depreciation and amortization                                                                                14,462                                              14,667                                          28,691                                  28,873
                                                                                                                 ------                                              ------                                          ------                                  ------

    Total operating costs and expenses                                                                          490,627                                             457,459                                       1,006,851                                 823,351
                                                                                                                -------                                             -------                                       ---------                                 -------

    Loss on disposition of assets                                                                                  (23)                                                  -                                           (23)                                      -
                                                                                                                    ---                                                 ---                                            ---                                     ---

    Operating income                                                                                             31,101                                              10,998                                          59,409                                  13,115

    Interest expense                                                                                            (8,652)                                            (9,920)                                       (16,497)                               (20,507)

    Other income (loss), net                                                                                      (459)                                                113                                           (554)                                    197
                                                                                                                   ----                                                 ---                                            ----                                     ---

    Income (loss) before state income tax expense                                                                21,990                                               1,191                                          42,358                                 (7,195)

    State income tax expense                                                                                        310                                                   -                                            566                                     176
                                                                                                                    ---                                                 ---                                            ---                                     ---

    Net income (loss)                                                                                                                      $21,680                                                        $1,191                                           $41,792                 $(7,371)
                                                                                                                                           =======                                                        ======                                           =======                  =======

    Earnings (loss) per unit                                                                                                                 $0.35                                                         $0.02                                             $0.67                  $(0.12)
                                                                                                                                             =====                                                         =====                                             =====                   ======

    Weighted average common units outstanding (in thousands)                                                     62,525                                              62,515                                          62,523                                  62,512
                                                                                                                 ======                                              ======                                          ======                                  ======

    Cash distribution per unit                                                                                                               $0.38                                     $                       -                                            $0.49                    $0.08
                                                                                                                                             =====                                   ===                     ===                                            =====                    =====

    CASH FLOW DATA:

    Net cash provided by (used in):

    Operating activities                                                                                                                   $35,373                                                       $39,925                                           $77,145                  $46,587

    Investing activities                                                                                        (7,316)                                           (10,131)                                       (13,191)                               (20,924)

    Financing activities                                                                                         30,148                                               8,830                                          29,761                                   3,204

    OTHER DATA:

    Adjusted EBITDA (2)                                                                                                                    $45,127                                                       $25,778                                           $87,569                  $42,185

    Capital expenditures                                                                                          7,149                                               4,588                                          12,175                                  12,700

    Capital expenditures for turnarounds and catalysts                                                              167                                               5,543                                           1,016                                   8,224

    KEY OPERATING STATISTICS:

    Per barrel of throughput:

    Refinery operating margin (3)                                                                                                           $12.68                                                         $8.53                                            $11.47                    $8.16

    Refinery direct operating expense (4)                                                                          4.21                                                3.59                                            3.86                                    3.83

    PRICING STATISTICS:

    Crack spreads (per barrel):

    Gulf Coast 3/2/1 (5)                                                                                                                    $15.07                                                        $13.16                                            $14.41                   $12.20

    WTI Cushing crude oil (per barrel)                                                                                                      $48.25                                                        $45.48                                            $50.00                   $39.39

    Crude oil differentials (per barrel):

    WTI Cushing less WTI Midland (6)                                                                                                         $0.84                                                         $0.17                                             $0.11                    $0.02

    WTI Cushing less WTS (6)                                                                                       1.24                                                0.75                                            1.26                                    0.32

    Brent less WTI Cushing (6)                                                                                     1.21                                              (0.18)                                           1.44                                    0.15

    Product price (dollars per gallon):

    Gulf Coast unleaded gasoline                                                                                                             $1.52                                                         $1.42                                             $1.54                    $1.25

    Gulf Coast ultra-low sulfur diesel                                                                             1.48                                                1.34                                            1.52                                    1.19

    Natural gas (per MMBtu)                                                                                        3.14                                                2.25                                            3.10                                    2.12




                                                                                                                                                                                                                                        June 30,                    December 31,
                                                                                                                                                                                                                                                   2017                      2016
                                                                                                                                                                                                                                                   ----                      ----

                                                                                                                                                                                                                                 (dollars in thousands)

    BALANCE SHEET DATA (end of period):

    Cash and cash equivalents                                                                                                                                                                                                                           $167,239                  $73,524

    Working capital                                                                                                                                                                                                                            (37,982)                 (73,563)

    Total assets                                                                                                                                                                                                                                787,442                   695,637

    Total debt                                                                                                                                                                                                                                  285,996                   236,319

    Total debt less cash and cash equivalents                                                                                                                                                                                                   118,757                   162,795

    Total partners' equity                                                                                                                                                                                                                      114,704                   103,503

    THROUGHPUT AND PRODUCTION
     DATA:                            For the Three Months Ended                    For the Six Months Ended

                                         June 30,                                                                        June 30,
                                         --------                                                                        --------

                                            2017                          2016                                 2017                  2016
                                            ----                          ----                                 ----                  ----

                               bpd                             %           bpd                              %             bpd                %         bpd         %

    Refinery throughput:

    WTS crude                  17,680                                24.3    25,698                                 36.1      23,955              31.8      31,126           44.9

    WTI crude                  52,207                                71.7    43,040                                 60.5      47,568              63.2      35,400           51.0

    Blendstocks                 2,876                                 4.0     2,415                                  3.4       3,722               5.0       2,819            4.1
                                -----                                 ---     -----                                  ---       -----               ---       -----            ---

    Total refinery throughput
     (7)                      72,763                               100.0    71,153                                100.0      75,245             100.0      69,345          100.0
                               ======                               =====    ======                                =====      ======             =====      ======          =====

    Refinery production:

    Gasoline                   33,506                                46.5    33,744                                 47.6      36,084              48.2      33,922           49.0

    Diesel/jet                 27,885                                38.7    26,627                                 37.6      28,375              37.9      24,655           35.6

    Asphalt                     2,020                                 2.8     2,572                                  3.6       2,454               3.3       2,860            4.2

    Petrochemicals              3,827                                 5.3     3,354                                  4.7       4,176               5.6       3,485            5.0

    Other                       4,755                                 6.7     4,569                                  6.5       3,700               5.0       4,298            6.2
                                -----                                 ---     -----                                  ---       -----               ---       -----            ---

    Total refinery production
     (8)                      71,993                               100.0    70,866                                100.0      74,789             100.0      69,220          100.0
                               ======                               =====    ======                                =====      ======             =====      ======          =====

    Refinery utilization (9)                                     99.0%                                        94.2%                       99.6%                      93.7%



    CASH AVAILABLE FOR DISTRIBUTION DATA:        For the Three
                                                  Months Ended

                                                 June 30, 2017
                                                 -------------

                                                  (dollars in
                                               thousands, except
                                                per unit data)


    Net sales (1)                                                $521,751

    Operating costs and expenses:

    Cost of sales                                        440,895

    Direct operating expenses                             27,878

    Selling, general and administrative
     expenses                                              7,392

    Depreciation and amortization                         14,462
                                                          ------

    Total operating costs and expenses                   490,627

    Operating income                                      31,101

    Interest expense                                     (8,652)

    Other loss, net                                        (459)
                                                            ----

    Income before state income tax expense                21,990

    State income tax expense                                 310

    Net income                                            21,680

    Adjustments to reconcile net income to
     Adjusted EBITDA:

    Interest expense                                       8,652

    State income tax expense                                 310

    Depreciation and amortization                         14,462

    Adjusted EBITDA (2)                                   45,127

    Adjustments to reconcile Adjusted EBITDA
     to cash available for distribution:

    less: Maintenance/growth capital
     expenditures                                          7,149

    less: Turnaround and catalyst replacement
     capital expenditures                                    167

    less: Major turnaround reserve for future
     years (a)                                             3,500

    less: Principal payments                                 625

    less: State income tax payments                          310

    less: Interest paid in cash                            7,690
                                                           -----

    Cash available for distribution before
     special expenses                                     25,686

    less: Special reserve for cost increase in
     capital expenditures associated with the
     consent decree (b)                                    4,000
                                                           -----

    Cash available for distribution                               $21,686
                                                                  =======


    Common units outstanding (in 000's)                   62,529


    Cash available for distribution per unit                        $0.35
                                                                    =====

            a.     Major
                   turnaround
                   reserve for
                   future years
                   was
                   increased
                   from $1,500
                   in prior
                   quarters to
                   $3,500 in
                   the first
                   quarter of
                   2017 to
                   reflect an
                   increase in
                   the
                   estimated
                   cost of the
                   next major
                   five-year
                   turnaround
                   from $30,000
                   to $50,000.


    b.             The Partnership is finalizing a
                   consent decree with the U.S.
                   Environmental Protection Agency
                   to reduce air emissions from the
                   Big Spring refinery, which will
                   require additional capital
                   expenditures. The Board of
                   Directors of our general partner
                   has elected to reserve $4 million
                   from cash available for
                   distribution each quarter through
                   the fourth quarter of 2018 to
                   cover a $28 million increase in
                   the expected costs.

________________

    (1)              Includes sales to
                     related parties
                     of $94,323 and
                     $76,884 for the
                     three months
                     ended June 30,
                     2017 and 2016,
                     respectively,
                     and $185,760 and
                     $139,994 for the
                     six months ended
                     June 30, 2017
                     and 2016,
                     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
                     and six months
                     ended June 30,
                     2017 and 2016:


                                                 For the Three Months Ended                          For the Six Months Ended

                                                          June 30,                                           June 30,
                                                          --------                                           --------

                                                    2017                  2016                      2017                  2016
                                                    ----                  ----                      ----                  ----

                                                                             (dollars in thousands)

            Net income (loss)                               $21,680                                         $1,191                          $41,792  $(7,371)

            State income tax expense                 310                                 -                               566                    176

            Interest expense                       8,652                             9,920                             16,497                 20,507

            Depreciation and amortization         14,462                            14,667                             28,691                 28,873

            Adjusted EBITDA                                 $45,127                                        $25,778                          $87,569   $42,185
                                                            =======                                        =======                          =======   =======


        (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 and six months ended June 30, 2017 excludes losses related to inventory adjustments of
             $(3,106) and $(1,264), respectively. Refinery operating margin for the three and six months ended June 30, 2016 excludes gains
             related to inventory adjustments of $2,519 and $3,465, 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