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Alon USA Reports Fourth Quarter And Full Year 2009 Results

DALLAS, March 2 /PRNewswire-FirstCall/ -- Alon USA Energy, Inc. (NYSE: ALJ) (“Alon”) today announced results for the quarter and year ended December 31, 2009.  Alon had a net loss, excluding special items, of ($65.4) million, or ($1.39) per share, for the fourth quarter of 2009, compared to net income, excluding special items, of $65.1 million, or $1.39 per share, for the same period last year.  On a GAAP basis, net loss for the fourth quarter of 2009 was ($90.6) million, or ($1.93) per share, compared to net income of $60.9 million, or $1.30 per share, for the same period last year.

Alon reported a net loss, excluding special items, of ($82.7) million, or ($1.77) per share, for the year ended December 31, 2009, compared to net income, excluding special items, of $6.6 million, or $0.14 per share, for the same period last year.  On a GAAP basis, net loss for the year ended December 31, 2009, was ($115.2) million, or ($2.46) per share, compared to net income of $82.9 million, or $1.77 per share, for the year ended December 31, 2008.

Jeff Morris, Alon’s CEO, commented, “At the end of 2009, we converted preferred stock of our Krotz Springs subsidiary into Alon common stock at a conversion price of over $14.00 per common share.  The conversion increased total stockholders’ equity by approximately $106 million and in effect created a gain of approximately $55 million that is not reflected in our financial statements with a non-cash expense of approximately $21 million that is included in our financial statements. Our availability under our credit facilities was approximately $150 million at year end. In addition, we were able to obtain, with the support of our majority shareholder, a $60 million credit facility for three years to be used in our operations. Also, we improved our liquidity by selling two thirds of our investment in Holly Energy Partners (“HEP”) for approximately $23 million in January 2010. At year end our tax receivable was approximately $65 million and, to date, we have received refunds of approximately $31 million. Even in this challenging environment we were able to maintain our net debt to total capitalization by reducing net debt during 2009 by approximately $189 million.

“Alon Refining Krotz Springs successfully issued $216.5 million of senior secured notes in October 2009 and completed the exchange of substantially all these notes with publicly registered notes in February 2010.  In connection with the issuance of the senior secured notes, we prepaid in full the outstanding obligations under the Krotz Springs term loan.  As a result, we incurred a non-cash pre-tax charge of approximately $20 million for the write-off of unamortized costs on the Krotz Springs term loan in the fourth quarter of 2009.

“In January 2010, we started up the alkylation unit at our Big Spring refinery that had been inactive for almost two years, negatively impacting our 2009 margins on average, by approximately $1.80 per barrel or pre-tax income of approximately $40 million.  For our California refineries, we are pursuing the purchase of the Bakersfield refinery from Big West of California, LLC, a subsidiary of Flying J, Inc. as an alternative solution to convert our vacuum gas oil production into gasoline and distillate products.  Our Krotz Springs refinery was shutdown in November 2009 for turnaround and capital projects work and is expected to be back in operations in April 2010. Our asphalt business in 2009 remained strong as adjusted EBITDA, excluding inventory effects and including earnings in asphalt partnerships, was $57.3 million and equivalent to 2008 on the same basis.  As a result,  we look forward to this upcoming asphalt season.  Also, our retail and branded marketing segment continues to show increased sales volumes over prior periods.

“The silver lining is that our management has been through down cycles before and we are beginning to see reasons to be optimistic about the end of this down cycle.  In 2009 the strategy of Alon has become even more clear to us and we have become keenly focused on the heavy duty fleet.  We believed before we made the investments in Paramount and Krotz Springs that demand of fuels for the heavy duty fleet, primarily distillates, would exceed demand for the light duty fleet, primarily gasoline.”

FOURTH QUARTER 2009

Special items for the fourth quarter of 2009 include an after-tax loss of ($11.6) million for the write-off of unamortized debt issuance costs related to the full prepayment of the Alon Refining Krotz Springs, Inc. term loan, and an after-tax gain of $0.4 million recognized on disposition of assets. Also, special items include dividends of ($12.0) million associated with the conversion by Alon Israel of its preferred shares in Alon Refining Louisiana to Alon common stock and accrued dividends of ($2.0) million on the preferred shares in Alon Refining Louisiana prior to conversion.  Special items for the fourth quarter of 2008 include after-tax losses of ($35.0) million associated with inventories acquired in the July 2008 Krotz Springs refinery acquisition due to the impact of lower commodity prices; ($6.1) million incurred for costs associated with the Big Spring refinery fire and after-tax gains of $37.8 million recognized from the involuntary conversion of assets due to the Big Spring refinery fire; and $1.0 million recognized on disposition of assets.  Also, special items include accrued dividends of ($2.0) million on the preferred shares in Alon Refining Louisiana.

Refinery operating margin at the Big Spring refinery was ($2.87) per barrel for the fourth quarter of 2009 compared to ($12.91) per barrel for the same period in 2008.  This increase resulted primarily from higher industry Gulf Coast 3/2/1 crack spreads and the improved commodity price environment compared to the 2008 fourth quarter when the rapid decline in crude oil prices affected inventory values.  Refinery operating margin at the California refineries was ($1.23) per barrel for the fourth quarter of 2009 compared to $11.74 per barrel for the same period in 2008.  Refinery operating margin at the Krotz Springs refinery was ($2.03) per barrel for the fourth quarter of 2009 compared to $7.30 per barrel for the same period in 2008.

The combined refineries throughput for the fourth quarter of 2009 averaged 93,113 barrels per day (“bpd”), consisting of 50,781 bpd at the Big Spring refinery, 20,618 bpd at the California refineries, and 21,714 bpd at the Krotz Springs refinery compared to a combined average of 132,751 bpd in the fourth quarter of 2008, consisting of 54,156 bpd at the Big Spring refinery, 20,613 bpd at the California refineries and 57,982 bpd at the Krotz Springs refinery.  Throughput at the Krotz Springs refinery was lower in the fourth quarter of 2009 as we moved-up a scheduled turnaround from the first quarter of 2010 to November 2009.

Gulf Coast 3/2/1 average crack spreads were $4.55 per barrel for the fourth quarter of 2009 compared to $3.49 per barrel for the fourth quarter of 2008. Gulf Coast 2/1/1 high sulfur diesel average crack spreads were $4.61 per barrel for the fourth quarter of 2009 compared to $5.70 per barrel for the fourth quarter of 2008. West Coast 3/2/1 average crack spreads were $8.51 per barrel for the fourth quarter of 2009 compared to $8.79 per barrel for the fourth quarter of 2008.

The average sweet/sour spread for the fourth quarter of 2009 was $2.07 per barrel compared to $3.69 per barrel for the same period in 2008. The average light/heavy spread for the fourth quarter of 2009 was $6.67 per barrel compared to $13.58 per barrel for the same period in 2008.

Asphalt margins for the fourth quarter of 2009 decreased to an average of $48.16 per ton compared to $422.29 per ton for the fourth quarter of 2008. On a cash basis, asphalt margins in the fourth quarter of 2009 were $22.31 per ton compared to $227.81 per ton in the fourth quarter of 2008. Adjusted EBITDA, including earnings in asphalt partnerships of $2.5 million, in the fourth quarter of 2009 was ($4.5) million after excluding positive inventory effects of $6.1 million compared to adjusted EBITDA, including earnings in asphalt partnerships of $0.5 million, in the fourth quarter of 2008 of $37.4 million after excluding positive inventory effects of $40.3 million.   The average blended asphalt sales price decreased 18.6% from $533.73 per ton in the fourth quarter of 2008 to $434.53 per ton in the fourth quarter of 2009 and the average non-blended asphalt sales price decreased 31.4% from $292.40 per ton in the fourth quarter of 2008 to $200.67 per ton in the fourth quarter of 2009.  The blended asphalt sales accounted for 88% of total asphalt sales in the fourth quarter of 2009.  

In our retail and branded marketing segment, retail fuel sales gallons increased by 31.4% from 23.9 million gallons in the fourth quarter of 2008 to 31.4 million gallons in the fourth quarter of 2009.  Our integrated branded fuel sales increased by 6.3% from 61.7 million gallons in the fourth quarter of 2008 to 65.6 million gallons in the fourth quarter of 2009.

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