Alon USA Energy 8K , Inc. Reports Record Quarter and Six-month Results | ALJ 16 Aug 05

Exhibit 99.1

ALON USA ENERGY, INC. REPORTS RECORD QUARTER AND SIX-MONTH RESULTS

DALLAS, TEXAS, August 16, 2005—Alon USA Energy, Inc. (NYSE: ALJ) (“Alon”) today announced net income of $27.5 million for the three months ended June 30, 2005, compared to net income of $15.3 million for the three months ended June 30, 2004, an increase of $12.2 million or 79.7%. This represents the highest quarterly income in the Company’s history. Net income for the six months ended June 30, 2005 was $49.9 million, compared to net income of $16.8 million for the six months ended June 30, 2004, an increase of $33.1 million or 197.0%. This represents the highest six-month period income in the Company’s history.

Operating income for the three months ended June 30, 2005 was $49.5 million, compared to operating income of $33.8 million for the three months ended June 30, 2004, an increase of $15.7 million or 46.4%. Operating income for the six months ended June 30, 2005, was $93.8 million compared to operating income of $42.6 million for the six months ended June 30, 2004, an increase of $51.2 million or 120.2%.

Alon’s six month 2005 results included a gain on disposition of assets which was related to the contribution of three product pipelines and three product terminals to Holly Energy Partners, L.P. (“HEP”) in the first quarter of this year. The gain contributed $17.8 million to net income and $29.2 million to operating income for the six months ended June 30, 2005. The HEP transaction also netted Alon approximately $118.0 million in cash. This cash, plus an increase in cash from operating activities to $49.0 million for the six months ended June 30, 2005 compared to $23.9 million for the six months ended June 30, 2004, allowed Alon to retire total debt of $33.8 million in the first six months of this year. As of June 30, 2005, Alon’s cash and cash equivalent balance was $168.5 million which was $10.6 million greater than its total debt balance of $157.9 million.

The first half 2005 results include the effects of a 25 day major, five-year cycle turnaround completed in the first quarter of this year at which time the Big Spring refinery’s crude oil throughput capacity was increased from 62,000 barrels per day to 70,000 barrels per day. Due to the Big Spring refinery expansion, total refinery throughput for the second quarter 2005 increased to a record 72,107 barrels per day compared to 62,578 barrels per day for the second quarter 2004. The second quarter results benefited from an increase in diesel/jet fuel yields compared to gasoline yields in the second quarter when average diesel and jet fuel prices were higher than average gasoline prices. The Big Spring refinery’s diesel/jet fuel yields increased to 36.1% in the second quarter 2005 compared to diesel/jet fuel yields of 32.2% in the second quarter 2004.

Alon’s first half 2005 results have benefited from record industry refining margins and above average differentials between WTI and WTS crude oil (“WTI/WTS”). For the second quarter 2005, Gulf Coast 3-2-1 crackspreads increased to an average of $10.18 per barrel compared to an average of $9.09 per barrel for the second quarter 2004, and for the second quarter 2005, WTI/WTS crude differentials increased to an average of $3.74 per barrel compared to an average of $2.87 per barrel for the second quarter 2004.

Because Alon is within the SEC required 25 day “quiet period” following its initial public offering, the Company will not sponsor a second quarter earnings conference call. The Company will sponsor conference calls to discuss results announced in subsequent quarters.

Alon USA Energy, Inc., headquartered in Dallas, Texas, is an independent refiner and marketer of petroleum products, operating primarily in the Southwestern and South Central regions of the United States. The Company owns and operates a sophisticated sour crude oil refinery in Big Spring, Texas, which has a crude oil throughput capacity of 70,000 barrels per day. Alon markets gasoline and diesel products under the FINA brand name and is a leading producer of asphalt in the State of Texas. The Company also operates convenience stores in West Texas and New Mexico under the 7-Eleven and FINA brand names and supplies motor fuels to these stores from its Big Spring refinery.

Any statements in this press release that are not statements of historical fact are forward-looking statements. Forward-looking statements reflect Alon’s 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, Alon’s business and operations involve numerous risks and uncertainties, many of which are beyond Alon’s control, which could result in Alon’s expectations not being realized or otherwise materially affect Alon’s financial condition, results of operation and cash flows. Additional information regarding these and other risks is contained in Alon’s filings with the Securities and Exchange Commission.

ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED
EARNINGS RELEASE
(Unaudited)


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2004			2005			2004			2005
	(dollars in thousands, except for per share data)
STATEMENT OF OPERATIONS DATA:
Net sales (1)	$	440,179		$	590,366		$	792,902		$	998,340
Operating costs and expenses:
Cost of sales (1)		365,046			498,047			668,026			849,601
Direct operating expenses		17,781			20,373			36,693			38,709
Selling, general and administrative expenses		19,208			18,983			36,526			35,648
Depreciation and amortization		4,504			5,018			9,266			9,852

Total operating costs and expenses		406,539			542,421			750,511			933,810

Gain on disposition of assets (2)		175			1,530			175			29,223

Operating income		33,815			49,475			42,566			93,753
Interest expense		5,676			4,745			11,691			9,752
Equity earnings in investee		—			(277	)		—			(412	)
Other income, net		(51	)		(830	)		(144	)		(1,080	)

Income before tax expense and minority interest in income of subsidiaries		28,190			45,837			31,019			85,493
Income tax expense		11,415			16,354			12,534			32,009

Income before minority interest in income of subsidiaries		16,775			29,483			18,485			53,484
Minority interest in income of subsidiaries		1,487			2,001			1,700			3,566

Net income	$	15,288		$	27,482		$	16,785		$	49,918


Earnings per share (3)	$	.44		$	.79		$	.48		$	1.43
Weighted average shares outstanding (3)		35,001,120			35,001,120			35,001,120			35,001,120

OTHER DATA:
Adjusted EBITDA (4)	$	38,195		$	54,070		$	51,801		$	75,874
Capital expenditures, net of disposition proceeds		21,880			5,361			23,022			(101,541	)
Capital expenditures for turnarounds and catalysts		410			399			1,500			10,781

CASH FLOW DATA:
Net cash provided by (used in):
Operating activities	$	35,126		$	65,413		$	23,926		$	48,976
Investing activities		(22,290	)		(5,244	)		(24,522	)		91,276
Financing activities		3,271			(612	)		32,683			(35,063	)

BALANCE SHEET DATA (end of period):
Cash and cash equivalents							$	39,343		$	168,546
Working capital								63,152			147,806
Total assets								460,583			612,882
Total debt								196,924			157,901
Stockholders equity								63,848			121,390

OTHER OPERATING DATA
(Unaudited)


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2004		2005		2004		2005
	(dollars in thousands, except for per barrel data)
KEY OPERATING STATISTICS:
Refining and operating:
Margin information (per barrel of throughput):
Refinery operating margin (5)	$	10.58	$	11.83	$	8.59	$	11.33
Direct operating expenses (6)		3.12		3.10		3.24		3.57

Other information (per barrel):
Gulf Coast crack spread (3/2/1) (7)	$	9.09	$	10.18	$	7.91	$	8.44
WTI/WTS (sweet/sour spread) (8)		2.87		3.74		3.20		4.41


	For the Three Months Ended								For the Six Months Ended
	June 30,								June 30,
	2004				2005				2004				2005
	Bpd		%		Bpd		%		Bpd		%		Bpd		%

Refinery crude throughput:
Sour crude		54,291		91.2		61,572		89.7		54,035		91.8		51,391		91.2

Sweet crude		4,924		8.8		7,033		10.3		4,851		8.2		4,943		8.8

Total crude throughput		59,215		100.0		68,605		100.0		58,886		100.0		56,334		100.0

Blendstocks		3,363				3,502				3,456				3,511

Total refinery throughput (9)		62,578				72,107				62,342				59,845

Refinery product yields (10):
Gasoline		29,045		46.6		31,340		43.8		29,228		47.4		26,478		44.6
Diesel/jet		20,100		32.2		25,867		36.1		19,937		31.9		20,579		34.6
Asphalt		6,325		10.1		6,374		8.9		5,714		8.2		5,341		9.0
Petrochemicals		4,970		8.0		5,145		7.2		4,753		7.3		4,386		7.4
Other		1,954		3.1		2,876		4.0		2,605		5.2		2,615		4.4

Total refined products manufactured		62,394		100.0		71,602		100.0		62,237		100.0		59,399		100.0


Retail:
Number of stores (end of period)		167			167			167			167
Fuel sales (thousands of gallons)	$	24,712		$	24,678		$	48,713		$	48,066
Fuel margin (cents per gallon) (11)		12.5	¢		10.3	¢		11.7	¢		11.5	¢
Merchandise sales	$	34,292		$	34,860		$	64,946		$	64,855
Merchandise margin (12)		33.1	%		33.5	%		32.9	%		33.4	%


(1)		Alon’s buy/sell arrangements involve linked purchases and sales related to refined product contracts entered into to address location, or grade requirements. Included in cost of sales are amounts which approximate the revenues resulting from these transactions.

(2)		Gain on disposition of assets reported in the three and six months ended June 30, 2005, reflects the $26.7 million initial pre-tax gain recognized in connection with assets contributed in the HEP transaction and the monthly recognition of deferred gain recorded in connection with the HEP transaction.

(3)		Weighted average common shares outstanding and earnings per common share amounts for the three and six months ended June 30, 2004 and 2005, have been restated to reflect the effect of a 33,600-for-one split of Alon’s common stock which was effected on July 6, 2005.

(4)		Adjusted EBITDA represents earnings before minority interest, income tax expense, interest expense, depreciation, amortization and gain on dispositions of assets. However, Adjusted EBITDA is not a recognized measurement under GAAP. Alon’s 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 its industry. In addition, management believes that Adjusted EBITDA is useful in evaluating its operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of minority interests, interest expense, income taxes and dispositions of assets and the accounting effects of capital expenditures and acquisitions, items which may vary for different companies for reasons unrelated to overall operating performance.

Adjusted EBITDA, with adjustments specified in its credit agreements, is also the basis for calculating selected financial ratios as required in the debt covenants in its credit agreements.

Adjusted EBITDA has limitations as an analytical tool, and should not be considered it in isolation, or as a substitute for analysis of Alon’s results as reported under GAAP. Some of these limitations are:

	•		Adjusted EBITDA does not reflect Alon’s 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 Alon’s debt;

	•		Adjusted EBITDA does not reflect the prior claim that minority stockholders have on the income generated by Alon’s non-wholly- owned subsidiaries;

	•		Adjusted EBITDA does not reflect changes in or cash requirements for Alon’s working capital needs; and

	•		Alon’s calculation of Adjusted EBITDA may differ from the EBITDA calculations of other companies in Alon’s 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 Alon to invest in the growth of its business. Alon compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA only supplementally.

The following table reconciles net income to Adjusted EBITDA for the three months and six months ended June 30, 2004 and 2005, respectively:


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2004			2005			2004			2005
				(unaudited, dollars in thousands)
Net income	$	15,288		$	27,482		$	16,785		$	49,918
Minority interest		1,487			2,001			1,700			3,566
Income Tax Expense		11,415			16,354			12,534			32,009
Interest Expense		5,676			4,745			11,691			9,752
Depreciation and amortization		4,504			5,018			9,266			9,852
Gain on disposition of assets		(175	)		(1,530	)		(175	)		(29,233	)

Adjusted EBITDA	$	38,195		$	54,070		$	51,801		$	75,874

(5)		Refinery operating margin is a per barrel measurement calculated by dividing the margin between net sales and cost of sales attributable to Alon’s refining and marketing segment, exclusive of net sales and cost of sales relating to its non-integrated system, by its refinery’s throughput volumes.

(6)		Refinery direct operating expense is a per barrel measurement calculated by dividing direct operating expenses, exclusive of depreciation and amortization, by Alon’s refinery’s throughput volumes.

(7)		A 3/2/1 crack spread in a given region is calculated assuming that three barrels of crude oil are converted, or cracked, into two barrels of gasoline and one barrel of diesel. Alon calculates the Gulf Coast 3/2/1 crack spread using the market values of Gulf Coast conventional gasoline and low-sulfur diesel and the market value of WTI crude. Alon calculates the Group 3/2/1 crack spread using the market values of Group III conventional gasoline and low-sulfur diesel and the market value of WTI crude oil.

(8)		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.

(9)		Total refinery throughput represents the total of crude oil and blendstock inputs in the refinery production process.

(10)		Total refinery yield represents the barrels per day of various finished products produced from processing crude and other refinery feedstocks through the crude units and other conversion units at Alon’s refinery.

(11)		Fuel margin represents the difference between motor fuel revenues and the net cost of purchased motor fuel, including transportation costs and associated motor fuel taxes, expressed on a cents per gallon basis.

(12)		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.

# # # #

Alon USA Energy (ALJ) Inactive 8-KAlon Usa Energy, Inc. Reports Record Quarter and Six-month Results