Alon USA Energy, Inc. (ALJ) Q1 2010 Earnings Call Transcript May 7, 2010 10:00 am ET Executives Claire Hart – Senior Vice President. Jeff Morris – Chief Executive Officer Shai Even – Chief Financial Officer Analysts Ben Hur – Morgan Stanley Jeff Dietert – Simmons Paul Cheng – Barclays Capital Chi Chow – Macquarie Capital Ann Kohler – Caris & Company Evan Templeton – Jefferies and Company Presentation Operator
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Also let remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations, and include known and unknown risks uncertainties and other factors. Many of which the Company is unable to predict or control, that may cause the Company's actual results or performance to materially differ from any future results performance expressed or implied by those statements.These risks and uncertainties include the risk factors disclosed by the Company from time to time in its filings with the SEC. Furthermore as we start this call, please also refer the statement regarding forward-looking statements incorporated in our news release issued yesterday, and please note that these contents of our conference call today are covered by these statements. With that I will turn call over to Jeff. Jeff Morris Thank you, Claire. Excuse me. I will start by making a few commenting regarding the industry and then continue into the more specific comments regarding the Company, and then obviously take your questions. During the last conference call as I said my view was that we were near the end of the worst, and I can tell you my current view is that for a sector, and far as our company that we are at the end of the worst or using the quotes I have heard someone else worst is behind us. We can see the positives in the second quarter, and then feel very good about those. The key economic indicator that we need to is track which affects our industry right now is industrial production. As we know, the loss and distillate demand last year was greater than that for gasoline, and we are now seeing a real distillate recovery at this point in time.
We know that the long-term has been very high correlation between distillate demand and industrial production, and industrial production bottomed in the middle of last year, and has been steadily improving since, both here in the U.S. and worldwide. Therefore, I agree with the expectations of others that refining margins and utilizations will continue to improve going forward following the first quarter.Excuse me. I am getting over a cold. As far as our Company, we made significant progress financially this first quarter. As we previously announced we terminated our revolvers facility would be away, and have now replaced it with a multi-year agreement with another major financial institution. Not only will this new facility be at lower cost than our previous facility, it will allow us to operate Krotz Springs fully with no limitations. So, it's our intent to restart Krotz Springs within the next few weeks. We fully expect the cross springs will generate significant positive EBITDA at the current Gulf Coast 211 margins. Additionally we obtained in the first quarter, an additional $60 million facility from one of our existing lenders, where use is LC support, throughout the company. We certainly appreciate the trust and confidence we received from these financial institutions entering into these facilities with us. As we noted in our release, refining margins were low across the nation in the first quarter, were particularly low on the West Coast. Thus we took advantage of this time period to complete the restart of our Appalachian unit at Big Spring, and also completed a catalyst change in our reformer hydrotreaters in Big Spring, which we have previously scheduled for April. Therefore, our throughputs were usually low at Big Spring in the first quarter, but are now running to full rates. My view is that our equipment at Big Spring is now in the best condition that it has been in several years. Due to the very low West Coast margins we ran Paramount Refinery to only support our asphalt business in the first quarter. Now the West Coast margins are improving. We will begin to raise the rates at Paramount. Read the rest of this transcript for free on seekingalpha.com