Alon USA Reports First Quarter Results

Contacts:

Amir Barash, Vice President-IR

Alon USA Energy, Inc.

972-367-3808

Investors:  Jack Lascar/ Sheila Stuewe

DRG&L / 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 RELEASE EXCEPT FOR BALANCE SHEET DATA AS OF DECEMBER 31, 2010, IS UNAUDITED)

For the Three Months Ended

March 31,

2011

2010

(dollars in thousands, except per

share data)

STATEMENT OF OPERATIONS DATA:

Net sales (1)

$

1,651,104

$

579,313

Operating costs and expenses:

Cost of sales

1,461,123

538,715

Direct operating expenses

56,923

61,444

Selling, general and administrative expenses (2)

34,330

31,807

Depreciation and amortization (3)

25,447

26,322

  Total operating costs and expenses

1,577,823

658,288

Gain on disposition of assets

12

—

Operating income (loss)

73,293

(78,975)

Interest expense (4)

(20,440)

(26,585)

Equity loss of investees

(245)

(103)

Other income (loss), net (5)

(31,913)

14,204

Income (loss) before income tax expense (benefit) and non-controlling interest in income (loss) of subsidiaries

20,695

(91,459)

Income tax expense (benefit)

7,470

(34,713)

Income (loss) before non-controlling interest in income (loss) of subsidiaries

13,225

(56,746)

Non-controlling interest in income (loss) of subsidiaries

160

(3,804)

Net income (loss) available to common stockholders

$

13,065

$

(52,942)

Income (loss) per share, basic

$

0.24

$

(0.98)

Weighted average shares outstanding, basic (in thousands)

54,549

54,161

Income (loss) per share, diluted

$

0.22

$

(0.98)

Weighted average shares outstanding, diluted (in thousands)

60,484

54,161

Cash dividends per share

$

0.04

$

0.04

CASH FLOW DATA:

Net cash provided by (used in):

Operating activities

$

24,381

$

(40,979)

Investing activities

(25,022)

(6,331)

Financing activities

48,399

14,433

OTHER DATA:

Adjusted net income (loss) available to common stockholders (6)

$

18,746

$

(49,068)

Income (loss) per share, excluding write-off of unamortized debt issuance costs, net of tax;  loss associated with heating oil crack spread contracts, net of tax; gain from reduction in system inventories, net of tax; and gain on disposition of assets, net of tax (6)

$

0.34

$

(0.91)

Adjusted EBITDA (7)

98,489

(38,552)

Capital expenditures (8)

25,163

7,303

Capital expenditures for turnaround and chemical catalyst

185

10,009

March 31,

2011

December 31,

2010

BALANCE SHEET DATA (end of period):

(dollars in thousands)

Cash and cash equivalents

$

119,445

$

71,687

Working capital

63,879

990

Total assets

2,199,796

2,088,521

Total debt

947,246

916,305

Total equity

373,968

341,767

REFINING AND UNBRANDED MARKETING SEGMENT

For the Three Months Ended

March 31,

2011

2010

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

STATEMENTS OF OPERATIONS DATA:

Net sales (9)

$

1,499,024

$

483,040

Operating costs and expenses:

Cost of sales

1,345,021

463,864

Direct operating expenses

46,949

50,352

Selling, general and administrative expenses

7,728

6,388

Depreciation and amortization

20,037

20,954

  Total operating costs and expenses

1,419,735

541,558

Operating income (loss)

$

79,289

$

(58,518)

KEY OPERATING STATISTICS:

Per barrel of throughput:

Refinery operating margin – Big Spring (10)

$

19.50

$

4.91

Refinery operating margin – CA Refineries (10)

                  N/A

(0.42)

Refinery operating margin – Krotz Springs (10)

5.06

                  N/A

Refinery direct operating expense – Big Spring (11)

4.13

6.57

Refinery direct operating expense – CA Refineries (11)

                  N/A

8.82

Refinery direct operating expense – Krotz Springs (11)

2.85

                  N/A

Capital expenditures

23,093

6,312

Capital expenditures for turnaround and chemical catalyst

185

10,009

PRICING STATISTICS:

WTI crude oil (per barrel)

$

94.13

$

78.75

WTS crude oil (per barrel)

90.03

76.87

Buena Vista crude oil (per barrel)

99.31

77.11

HLS crude oil (per barrel)

106.51

78.82

LLS crude oil (per barrel)

107.18

79.96

Crack spreads (3/2/1) (per barrel):

Gulf Coast (12)

$

18.09

$

7.09

West Coast (12)

24.59

10.12

Crack spreads (2/1/1) (per barrel):

Gulf Coast high sulfur diesel (12)

$

18.38

$

6.25

Crude oil differentials (per barrel):

WTI less WTS (13)

$

4.10

$

1.88

LLS less WTI (13)

13.05

1.21

WTI less Buena Vista (13)

(5.18)

1.64

Product prices (dollars per gallon):

Gulf Coast unleaded gasoline

$

2.595

$

2.040

Gulf Coast ultra-low sulfur diesel

2.825

2.052

Gulf Coast high sulfur diesel

2.762

2.008

West Coast LA CARBOB (unleaded gasoline)

2.786

2.136

West Coast LA ultra-low sulfur diesel

2.907

2.076

Natural gas (per MMBTU)

4.20

4.99

THROUGHPUT AND PRODUCTION DATA:

BIG SPRING REFINERY

For the Three Months Ended

March 31,

2011

2010

bpd

%

bpd

%

Refinery throughput:

Sour crude

52,124

83.8

35,978

84.1

Sweet crude

8,499

13.7

5,258

12.3

Blendstocks

1,558

2.5

1,548

3.6

Total refinery throughput (14)

62,181

100.0

42,784

100.0

Refinery production:

Gasoline

30,373

49.3

20,618

48.9

Diesel/jet

19,988

32.4

13,743

32.6

Asphalt

4,340

7.0

2,359

5.6

Petrochemicals

3,824

6.2

2,021

4.8

Other

3,165

5.1

3,396

8.1

Total refinery production (15)

61,690

100.0

42,137

100.0

Refinery utilization (16)

86.6

%

64.8

%

THROUGHPUT AND PRODUCTION DATA:

CALIFORNIA REFINERIES

For the Three Months Ended

March 31,

2011

2010

bpd

%

bpd

%

Refinery throughput:

Medium sour crude

—

—

4,106

22.5

Heavy crude

—

—

13,740

75.2

Blendstocks

—

—

417

2.3

Total refinery throughput (14)

—

—

18,263

100.0

Refinery production:

Gasoline

—

—

2,469

14.0

Diesel/jet

—

—

3,370

19.1

Asphalt

—

—

6,163

34.9

Light unfinished

—

—

—

—

Heavy unfinished

—

—

5,259

29.8

Other

—

—

393

2.2

Total refinery production (15)

—

—

17,654

100.0

Refinery utilization (16)

—

%

24.6

%

THROUGHPUT AND PRODUCTION DATA:

KROTZ SPRINGS REFINERY

For the Three Months Ended

March 31,

2011

2010

bpd

%

bpd

%

Refinery throughput:

Light sweet crude

52,930

72.0

—

—

Heavy sweet crude

19,224

26.2

—

—

Blendstocks

1,303

1.8

—

—

Total refinery throughput (14)

73,457

100.0

—

—

Refinery production:

Gasoline

31,175

42.4

—

—

Diesel/jet

34,542

46.9

—

—

Heavy Oils

1,659

2.3

—

—

Other

6,146

8.4

—

—

Total refinery production (15)

73,522

100.0

—

—

Refinery utilization (16)

86.8

%

—

%

ASPHALT SEGMENT

For the Three Months Ended

March 31,

2011

2010

(dollars in thousands, except per ton data)

STATEMENTS OF OPERATIONS DATA:

Net sales

$

86,243

$

67,141

Operating costs and expenses:

Cost of sales (17)

82,752

71,445

Direct operating expenses

9,974

11,092

Selling, general and administrative expenses

1,415

1,066

Depreciation and amortization

1,730

1,717

Total operating costs and expenses

95,871

85,320

Operating loss

$

(9,628)

$

(18,179)

KEY OPERATING STATISTICS:

Blended asphalt sales volume (tons in thousands) (18)

138

129

Non-blended asphalt sales volume (tons in thousands) (19)

54

22

Blended asphalt sales price per ton (18)

$

506.55

$

463.53

Non-blended asphalt sales price per ton (19)

302.57

333.82

Asphalt margin per ton (20)

18.18

(28.50)

Capital expenditures

$

660

$

179

RETAIL AND BRANDED MARKETING SEGMENT

For the Three Months Ended

March 31,

2011

2010

(dollars in thousands, except per gallon data)

STATEMENTS OF OPERATIONS DATA:

Net sales (1)

$

316,184

$

226,028

Operating costs and expenses:

Cost of sales (17)

283,697

200,302

Selling, general and administrative expenses

24,999

24,165

Depreciation and amortization

3,277

3,420

 Total operating costs and expenses

311,973

227,887

Gain on disposition of assets

12

—

Operating income (loss)

$

4,223

$

(1,859)

KEY OPERATING STATISTICS:

Branded fuel sales (thousands of gallons) (21)

85,570

70,469

Branded fuel margin (cents per gallon) (21)

3.7

4.2

Number of stores (end of period)

304

308

Retail fuel sales (thousands of gallons)

36,655

32,714

Retail fuel sales (thousands of gallons per site per month)

40

35

Retail fuel margin (cents per gallon) (22)

14.6

9.0

Retail fuel sales price (dollars per gallon) (23)

$

3.19

$

2.63

Merchandise sales

$

68,001

$

63,482

Merchandise sales (per site per month)

$

75

$

69

Merchandise margin (24)

33.1

%

30.0

%

Capital expenditures

$

1,345

$

397

(1) Includes excise taxes on sales by the retail and branded marketing segment of $14,218 and $12,786 for the three months ended March 31, 2011 and 2010, respectively. Includes net royalty and related net credit card fees of $1,419 and $773 for the three months ended March 31, 2011 and 2010, respectively.

(2) Includes corporate headquarters selling, general and administrative expenses of $188 and $188 for the three months ended March 31, 2011 and 2010, respectively, which are not allocated to our three operating segments.

(3) Includes corporate depreciation and amortization of $403 and $231 for the three months ended March 31, 2011 and 2010, respectively, which are not allocated to our three operating segments.

(4) Interest expense of $26,585 for the three months ended March 31, 2010, includes a charge of $6,659 for the write-off of debt issuance costs associated with our prepayment of the Alon Refining Krotz Springs, Inc. revolving credit facility.

(5) Other income (loss) for the three months ended March 31, 2011 is substantially the loss on heating oil crack spread contracts. In the first quarter of 2010, Alon sold approximately two-thirds of its investment in Holly Energy Partners for $22,760, resulting in a gain of $8,047. Subsequently, Alon marked-to-market its remaining investment, resulting in an unrealized gain of $6,291.

(6) The following table provides a reconciliation of net income (loss) available to common stockholders under United States generally accepted accounting principles ("GAAP") to adjusted net income (loss) available to common stockholders utilized in determining income (loss) per common share, excluding the after-tax loss on write-off of unamortized debt issuance costs, after-tax loss on heating oil crack spread contracts, after-tax gain from reduction in system inventories and after-tax gain on disposition of assets. Our management believes that the presentation of adjusted net income (loss) available to common stockholders and income (loss) per common 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,

2011

2010

(dollars in thousands)

Net income (loss) available to common stockholders

$

13,065

$

(52,942)

Plus:  Write-off of unamortized debt issuance costs, net of tax

—

3,874

Plus:  Loss on heating oil crack spread contracts, net of tax

19,196

—

Less:  Gain from reduction in system inventories, net of tax

(13,508)

—

Less:  Gain on disposition of assets, net of tax

(7)

—

Adjusted net income (loss) available to common stockholders

$

18,746

$

(49,068)

Income (loss) per share, excluding write-off of unamortized debt issuance costs, net of tax; loss associated with heating oil crack spread contracts, net of tax; gain from reduction in system inventories, net of tax; and gain on disposition of assets, net of tax

$

0.34

$

(0.91)

(7) Adjusted EBITDA represents earnings before non-controlling interest in income of subsidiaries, income tax expense, interest expense, depreciation and amortization, gain on disposition of assets and loss on heating oil 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 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 non-controlling interest in income of subsidiaries, income tax expense, interest expense, gain on disposition of assets 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 common stockholders to Adjusted EBITDA for the three months ended March 31, 2011 and 2010, respectively:

For the Three Months Ended

March 31,

2011

2010

(dollars in thousands)

Net income (loss) available to common stockholders

$

13,065

$

(52,942)

Non-controlling interest in income (loss) of subsidiaries

160

(3,804)

Income tax expense (benefit)

7,470

(34,713)

Interest expense

20,440

26,585

Depreciation and amortization

25,447

26,322

Gain on disposition of assets

(12)

—

Loss on heating oil crack spread contracts

31,919

—

Adjusted EBITDA

$

98,489

$

(38,552)

Adjusted EBITDA for our retail and branded marketing segment 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 but is also subject to many of the limitations discussed above; therefore, Adjusted EBITDA for our retail and branded marketing segment 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 operating income (loss) to Adjusted EBITDA for our retail and branded marketing segment for the three months ended March 31, 2011 and 2010, respectively:

RETAIL AND BRANDED MARKETING SEGMENT

For the Year Ended

For the Three Months Ended

December 31,

March 31,

2010

2011

2010

(dollars in thousands)

Operating income (loss)

$

19,801

$

4,223

$

(1,859)

Depreciation and amortization

13,440

3,277

3,420

Gain on disposition of assets

(286)

(12)

—

Adjusted EBITDA

$

32,955

$

7,488

$

1,561

Adjusted EBITDA for our retail and branded marketing segment for the 12 months ended March 31, 2011 of $38,882 is equal to adjusted EBITDA for the year ended December 31, 2010, of $32,955, plus adjusted EBITDA for the three months ended March 31, 2011 of $7,488, less adjusted EBITDA for the three months ended March 31, 2010 of $1,561.

(8) Includes corporate capital expenditures of $65 and $415 for the three months ended March 31, 2011 and 2010, respectively, which are not allocated to our three operating segments.

(9) Net sales include intersegment sales to our asphalt and retail and branded marketing segments at prices which approximate wholesale market prices. These intersegment sales are eliminated through consolidation of our financial statements.

(10) Refinery operating margin is a per barrel measurement calculated by dividing the margin between net sales and cost of sales (exclusive of substantial unrealized hedge positions and inventory adjustments related to acquisitions) 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.

(11) Refinery direct operating expense is a per barrel measurement calculated by dividing direct operating expenses at our Big Spring, California, and Krotz Springs refineries, exclusive of depreciation and amortization, by the applicable refinery's total throughput volumes. Direct operating expenses related to the Bakersfield refinery of $1,512 have been excluded from the per barrel measurement calculation for the three months ended March 31, 2011.

(12) A 3/2/1 crack spread in a given region 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 values of Gulf Coast conventional gasoline and ultra-low sulfur diesel and the market value of West Texas Intermediate, or WTI, a light sweet crude oil. We calculate the West Coast 3/2/1 crack spread using the market values of West Coast LA CARBOB pipeline gasoline and LA ultra-low sulfur pipeline diesel and the market value of WTI crude oil.

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 high sulfur diesel 2/1/1 crack spread using the market values of Gulf Coast conventional gasoline and Gulf Coast high sulfur diesel and the market value of WTI crude oil.

(13) 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 differential between the average value per barrel of WTI crude and the average value per barrel Buena Vista crude oil. The Light Louisiana Sweet ("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.

(14) Total refinery throughput represents the total barrels per day of crude oil and blendstock inputs in the refinery production process.

(15) Total refinery production represents the barrels per day of various products produced from processing crude and other refinery feedstocks through the crude units and other conversion units at the refineries.

(16) Refinery utilization represents average daily crude oil throughput divided by crude oil capacity, excluding planned periods of downtime for maintenance and turnarounds.

(17) Cost of sales includes intersegment purchases of asphalt blends and motor fuels from our refining and unbranded marketing segment at prices which approximate wholesale market prices. These intersegment purchases are eliminated through consolidation of our financial statements.

(18) Blended asphalt represents base asphalt that has been blended with other materials necessary to sell the asphalt as a finished product.

(19) Non-blended asphalt represents base material asphalt and other components that require additional blending before being sold as a finished product.

(20) Asphalt margin is a per ton measurement calculated by dividing the margin 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.

(21) Branded fuel sales represent branded fuel sales to our wholesale marketing customers that are primarily supplied by the Big Spring refinery. The branded fuels that are not supplied by the Big Spring refinery are obtained from third-party suppliers. The branded fuel sales margin represents the margin between the net sales and cost of sales attributable to our branded fuel sales volume, expressed on a cents-per-gallon basis.

(22) Retail fuel margin represents the difference between motor fuel sales revenue and the net cost of purchased motor fuel, including 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.

(23) Retail fuel sales price per gallon represents the average sales price for motor fuels sold through our retail convenience stores.

(24) Merchandise margin represents the difference between merchandise sales revenues and the delivered cost of merchandise purchases, net of rebates 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.