alon usa energy, inc.

126 Pages·2016·4.12 MB·English

WE ARE
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2015 ANNUAL REPORT
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FINANCIAL SUMMARY
Financial Highlights
(in thousands, except per-share data) 2015 2014 2013
Net sales $ 4,338,152 $ 6,779,456 $ 7,046,381
Adjusted EBITDA $ 374,103 $ 327,713 $ 270,896
Net income available to stockholders $ 52,751 $ 38,457 $ 22,986
Earnings per share, basic $ 0.76 $ 0.56 $ 0.33
Cash dividends per share $ 0.55 $ 0.53 $ 0.38
Net cash provided by operating activities $ 226,065 $ 193,658 $ 162,233
Total assets $ 2,176,138 $ 2,191,644 $ 2,235,024
Total debt $ 555,962 $ 554,457 $ 602,132
Total debt less cash and cash equivalents $ 321,835 $ 339,496 $ 377,633
Total equity $ 664,160 $ 673,778 $ 625,404
Operational Highlights
Total refinery throughput (barrels per day) 140,036 136,378 131,808
Total asphalt sales volume (thousands of tons) 510 581 789
Retail fuel sales (thousands of gallons) 199,147 192,582 188,493
Merchandise sales (thousands of dollars) $ 328,505 $ 322,262 $ 316,432
Number of employees 2,860 2,745 2,740
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WE ARE ALON
BIG SPRING KROTZ SPRINGS
Alon USA Energy,
The Big Spring refinery operated The Krotz Springs system
Inc. (NYSE: ALJ) is an very well in 2015, achieving achieved record annual
independent refiner and a new record for annual profitability since we acquired
marketer of petroleum throughput, liquid recovery the refinery. In the fourth
of over 100% and high-value quarter, the refinery successfully
products, operating
product yield of approximately completed a planned major
primarily in the western
89%. We continue to evaluate turnaround, during which
and south-central regions growth projects at the refinery, we invested approximately
of the United States. Our focused on enhancing refinery $15 million in reliability
operating margin. We are also improvements. Also in the
business is divided into
considering an expansion of fourth quarter, Krotz Springs
three key areas: refining
the refinery to further capitalize established a wholesale gasoline
and marketing, asphalt on Big Spring’s crude-sourcing business along the Colonial
and retail. advantage and access to niche Pipeline. The refinery achieved
product markets. liquid recovery of 102% in 2015.
We plan to add a sulfuric acid
alkylation unit at Krotz Springs,
3 4 which will enhance gasoline
margins at the facility.
CALIFORNIA RETAIL
We remain focused on Our retail business performed 5
repurposing our refining assets very well in 2015, having
in California. We received a achieved record fuel volumes ASPHALT
permit in September 2014 to and merchandise sales. We were
We saw significant improvement
construct a new 140,000 bpd pleased to grow our store count
in our asphalt business in
rail unloading facility at the in 2015 with the acquisition
2015, and we believe these
Bakersfield refinery; however, of 14 locations in New Mexico
improvements are sustainable.
the current crude differential and the opening of two new,
For the year, our operating
environment does not justify large-format stores in El Paso
income improved by $28 million
construction at this time. and Albuquerque. We plan to
relative to 2014. We also
continue growing this business
partnered with suppliers to
through building new stores and
improve our asphalt sourcing.
accretive acquisitions.
We believe the highway bill
signed into law in late 2015
will help improve demand for
asphalt over the next five years.
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LETTER TO OUR STOCKHOLDERS
DEAR FELLOW STOCKHOLDERS
We are proud of our strong financial and operational performance in 2015. We achieved the second highest
adjusted EBITDA in our history, we further advanced growth initiatives across our businesses, we reduced our
interest expense by over $30 million compared to 2014 and we increased the regular dividend by 50% to $0.15 per
share per quarter. Despite investments of over $160 million, substantially in capital expenditures and turnaround
costs, we were able to reduce our net debt to $322 million.
With the successful conclusion of the Krotz Springs turnaround in November and the completion of the Big
Spring turnaround in 2014, our assets are positioned to run well in the coming years. We expect no planned major
turnarounds at either refinery until 2019, allowing us to focus on implementing growth projects at both refineries.
This includes our plan to add a sulfuric acid alkylation unit at the Krotz Springs refinery. Additionally, we have
identified $71 million in existing logistics EBITDA at both Alon USA Energy and Alon USA Partners. Logistics
master limited partnerships (MLPs) continue to trade at a premium to independent refiners and refining MLPs,
implying that these assets are undervalued in our current structure. We are working to realize the value of these
assets for our stockholders.
In 2015, we remained focused on daily execution across our asset base. The Big Spring refinery had another
strong year, setting a new record for annual throughput while also achieving very good yields. The integrated
wholesale marketing business associated with Big Spring entered the attractive Phoenix market in May and sold
over 1 billion gallons of fuel for the first time ever. During the planned major turnaround in the fourth quarter, we
invested approximately $15 million to improve the Krotz Springs refinery’s reliability. Despite the turnaround, the
Krotz Springs system achieved record annual profitability under our ownership. Also in the fourth quarter, Krotz
Springs established a wholesale gasoline business along the Colonial Pipeline. Our retail business expanded in 2015
with the acquisition of 14 stores in New Mexico and the construction of two new large-format stores. We were also
pleased to achieve a $28 million improvement in the operating income of our asphalt business relative to 2014.
In 2015, we continued to actively support charitable causes within our community. This year we highlight our
employee-driven involvement with Metrocrest Services, which aids the communities near our Dallas headquarters.
This local organization assists individuals, families and seniors with services such as emergency assistance, food
pantry items and employment counseling in times of need. We are proud of the contributions our employees have
made over the years to support our neighbors through Metrocrest Services.
In May 2015, Delek US Holdings acquired approximately 48% of our outstanding common stock from Alon Israel Oil
Company. With this transaction, five new directors were appointed to our board, and we are benefitting from the
rich industry experience of these new directors.
Looking ahead to 2016, we expect to make progress with our five-year organic growth initiatives.
We are grateful for the dedication of our employees and for the continued support of our stockholders.
Ezra Uzi Yemin Paul Eisman
Chairman of the President and Chief
Board of Directors Executive Officer
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2015 FORM 10 - K
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________TO __________
Commission file number: 001-32567
ALON USA ENERGY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 74-2966572
(State of incorporation) (I.R.S. Employer Identification No.)
12700 Park Central Dr., Suite 1600, Dallas, Texas 75251
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: [phone]
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value New York Stock Exchange
$0.01 per share
Securities registered pursuant to Section 12 (g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting
company)
Indicate by check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value for the registrant’s common stock held by non-affiliates as of June 30, 2015, the last day of the registrant’s most recently
completed second fiscal quarter was $582,306,184.
The number of shares of the Registrant’s common stock, par value $0.01 per share, outstanding as of February 19, 2016, was 71,076,808.
Documents incorporated by reference: Proxy statement of the registrant relating to the registrant’s 2016 annual meeting of stockholders, which is
incorporated into Part III of this Form 10-K.
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TABLE OF CONTENTS
Page
PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES 1
ITEM 1A. RISK FACTORS 12
ITEM 1B. UNRESOLVED STAFF COMMENTS 23
ITEM 3. LEGAL PROCEEDINGS 23
ITEM 4. MINE SAFETY DISCLOSURES 23
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES 24
ITEM 6. SELECTED FINANCIAL DATA 27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 28
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 56
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 57
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 58
ITEM 9A. CONTROLS AND PROCEDURES 58
ITEM 9B. OTHER INFORMATION 58
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 59
ITEM 11. EXECUTIVE COMPENSATION 59
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS 59
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE 59
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 59
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 60
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GLOSSARY OF TERMS
The following are definitions of certain industry terms used in this Annual Report on Form 10-K:
“2-1-1 crack spread” The approximate refining margin resulting from processing two barrels of crude oil to produce one
barrel gasoline and one barrel of distillate.
“3-2-1 crack spread” The approximate refining margin resulting from processing three barrels of crude oil to produce two
barrels of gasoline and one barrel of distillate.
“Alkylation” A process that chemically combines isobutane with other hydrocarbons through the control of temperature and
pressure in the presence of an acid catalyst. This process produces alkylates, which have a high octane value and are blended
into gasoline to improve octane values.
“Backwardation” A market is in backwardation when at a point in time the forward price is lower than the current (spot) price.
“Barrel” A common unit of measurement in the oil industry, which equates to 42 gallons.
“Biodiesel” A renewable fuel produced from vegetable oils or animal fats that can be blended with petroleum-derived diesel to
produce biodiesel blends for use in diesel engines. Pure biodiesel is referred to as B100, whereas blends of biodiesel are
referenced by how much biodiesel is in the blend (e.g., a B5 blend contains five volume percent biodiesel and 95 volume
percent ULSD).
“Blendstocks” The various compounds that are combined with gasoline or diesel from the crude oil refining process to make
finished gasoline and diesel; these may include natural gasoline, fluid catalytic cracking unit or FCCU gasoline, ethanol,
reformate or butane, among others.
“Bpd” An abbreviation for barrels per calendar day, which is defined by the EIA as the amount of input that a distillation
facility can process under usual operating conditions reduced for regular limitations that may delay, interrupt, or slow down
production such as downtime due to such conditions as mechanical problems, repairs, and slowdowns.
“Brent crude oil” A light sweet crude oil characterized by an API gravity of approximately 38 degrees, and a sulfur content of
approximately 0.4 weight percent.
“Catalyst” A substance that alters, accelerates, or instigates chemical changes, but is neither produced, consumed nor altered in
the process.
“Contango” A market is in contango when at a point in time the forward price is higher than the current (spot) price.
“Cpg” An abbreviation for cents per gallon.
“Cracking” The process of breaking down larger hydrocarbon molecules into smaller molecules, using catalysts and/or
elevated temperatures and pressures.
“Crack spread” A simplified calculation that measures the difference between the price for light products and crude oil.
“Delayed Coking Unit (Coker)” A refinery unit that processes (“cracks”) heavy oils, such as the bottom cuts of crude oil from
the crude or vacuum units, to produce blendstocks for light transportation fuels or feedstocks for other units and petroleum
coke.
“Distillates” Primarily diesel, kerosene and jet fuel.
“EPA” An abbreviation for the U.S. Environmental Protection Agency.
“Feedstocks” Petroleum products, such as crude oil, that are processed and blended into refined products.
“Fluid Catalytic Cracking” A process that breaks down larger, heavier, and more complex hydrocarbon molecules into
simpler and lighter molecules (LPG, gasoline, LCO, etc.) through the use of a catalytic agent and is used to increase the yield
of gasoline. Fluid catalytic cracking uses a catalyst in the form of very fine particles, which behave as a fluid when aerated with
a vapor.
“Gulf Coast 2-1-1 high sulfur diesel crack spread” The 2-1-1 crack spread calculated using the market value of Gulf Coast
conventional gasoline and Gulf Coast high sulfur diesel against the market value of LLS crude oil.
“Gulf Coast (WTI) 3-2-1 crack spread” The 3-2-1 crack spread calculated using the market value of Gulf Coast conventional
gasoline and ultra-low sulfur diesel against the market value of NYMEX Cushing WTI.
“Heavy Crude Oil” Crude oil with an API gravity of 24 degrees or less. Heavy crude oil is typically sold at a discount to
lighter crude oil.
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