Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
Barclays CEO Energy-Power Conference
September 12, 2013
- 2 - 2
Forward-Looking Statements
All statements contained in or made in connection with this presentation that are not statements of historical fact are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 or the Securities Exchange Act of 1934. The words “believe”, “intend”, “plan”, “expect”, “should”, “estimate”, “anticipate”, “potential”, “future”, “will” and similar terms and phrases identify forward-looking statements. Forward-looking statements reflect the current expectations of the management of Alon USA Energy, Inc. (“Alon”) regarding future events, results or outcomes. These expectations may or may not be realized and actual results could differ materially from those projected in forward-looking statements. Alon’s businesses and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in the expectations reflected in forward-looking statements not being realized or which may otherwise affect Alon’s financial condition, results of operations and cash flows. These risks and uncertainties include, among other things, changes in price or demand for our products; changes in the availability or cost of crude oil and other feedstocks; changes in market conditions; actions by governments, competitors, suppliers and customers; operating hazards, natural disasters or other disruptions at our or third-party facilities; and the costs and effects of compliance with current and future state and federal regulations. For more information concerning factors that could cause actual results to differ from those expressed in forward-looking statements, see Alon’s Form 10-Q for the quarter ended June 30, 2013 which has been filed with the Securities and Exchange Commission and is available on the company’s web site at http://www.alonusa.com. Alon undertakes no obligation to update or publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this presentation or to reflect the occurrence of unanticipated events.
- 3 - 3
Today’s Presenters
Paul Eisman
President, Chief Executive Officer
Investor Relations Contact:
Stacey Hudson Investor Relations Manager
972-367-3808 [email protected]
- 4 - 4
Table of Contents
I. Business Overview
II. Refining Fundamentals
III. Assets Overview
IV. Financial Summary
I. Business Overview
- 6 - 6
Overview of Alon USA Energy, Inc. (“Alon”)
Alon USA Partners, LP (“ALDW”)
Includes the Big Spring refinery (TX) with a throughput capacity of 70,000 bpd
Includes the wholesale fuels marketing business which is integrated through the Big Spring refinery system
Markets gasoline and diesel to ~640 sites under the ALON brand, including Alon stores
Krotz Springs Includes the Krotz Springs (LA) refinery with a throughput capacity of 74,000 bpd
California Includes the refining complex with a throughput capacity of 70,000 bpd
Asphalt
Operates 11 asphalt terminals in the western U.S. Operations include:
— 50% ownership in Paramount Nevada Asphalt Company, and
— 50% ownership in Wright Asphalt Products Company
Largest supplier of asphalt in California
Second largest supplier of asphalt in Texas (the largest asphalt consuming state in the U.S.)
Retail Largest 7-Eleven licensee in the U.S. with 298 retail gasoline / convenience stores in Central and West Texas
and New Mexico (~50% fee owned)
Alon conducts its operations through five business units: Big Spring Refining & Wholesale Fuels Marketing (“Alon USA Partners, LP”), Krotz Springs Refining (“Krotz Springs”), California Refining (“California”), Asphalt Marketing (“Asphalt”), and Retail. Alon owns the general partner and 81.6% of Alon USA Partners, LP
Alon generated $478 million of Adjusted EBITDA for the twelve months ending June 30, 20131 and $434 million of Adjusted EBITDA for calendar year 20121
1 See page 36 for a reconciliation of Adjusted EBITDA to Net Income under GAAP.
- 7 - 7
California
Arizona
Texas
Oklahoma
Arkansas
Louisiana
Bakersfield
Tucson
El Paso
Nederland
Duncan
Abilene
Wichita Falls
Big Spring
Albuquerque
Bloomfield
Moriarty
Midland / Odessa
New Mexico
Nevada
Oregon
Washington
Paramount/
Long Beach
Portland Willbridge
Richmond Beach
Elk Grove
Flagstaff
Mojave
Fernley
Tulsa
Corpus Christi
Houston
Krotz Springs
Lubbock
DFW
Third-Party Terminal
Asphalt Terminal
Refinery
Key Retail Cities
Exchange Terminal
Alon Pipelines
Third Party Pipelines
Alon USA Terminal
Phoenix
Orla
South Marsh
Island Loop
Empire
Refinery
Capacity (bpd)
Nelson Complexity
Big Spring 70,000 10.5
Krotz Springs 74,000 8.3
California 70,000 TBD
Strategically Located Assets
- 8 - 8
Business Strategy
Refining¹
Maintain focus on safety and reliability
Run Big Spring at maximum capacity
Run Krotz Springs at maximum capacity (using 30,000 bpd of WTI) to leverage recent capital improvements
Improve crude flexibility in our CA refineries via the ability to receive advantaged crude by rail
Maintain operating expense leadership
Leverage West Coast assets in growing logistics business
Optimize crude slate to take advantage of regional pricing dislocations
Optimize refined product slate to take advantage of distillate production capacity and strong margin environment
Maintain capital discipline and continued investments in high return growth projects
Enhance branded wholesale business
Asphalt
Optimize asphalt production and 3rd party purchases
Leverage existing distribution network
Focus in maintaining our market share in premium, specialty asphalt products (emulsions, polymer modified asphalt (“PMA”) and ground tire rubber (“GTR”) blends)
Optimize zero-pen shipments to the West Coast
Retail
Continue improvement of operations through Clean TEAM efforts: remodel interior and exterior retail sites; selectively increase store count
Increase fuels sold under ALON brand Increase sales of high margin food products and
inventory turns
Expand and grow the retail locations in target markets Optimize pricing and maintain high merchandise margin
Operational Focus Commercial Focus
1 Refining includes Big Spring and Wholesale Fuels Marketing, Krotz Springs and the California complex.
- 9 - 9
Alon’s Strategic Advantages
Strategically located refineries with advantageous sources of crude oil supply
Significant exposure to high margin distillates
Physically integrated refining and marketing system (captive wholesale and retail network) at Big Spring
Diversified operations provide stability
High quality assets with low operating costs
Leading blended and modified asphalt producer
Strong liquidity position and flexibility provided by supply & offtake agreements at each refinery
Experienced management team
II. Refining Fundamentals
- 11 - 11
Crude Types Driving Alon’s Profitability
Brent – Brent is the global crude benchmark. Brent pricing largely determines global product prices (prices for gasoline, diesel, etc.). The U.S. exports refined products, competing directly with other global refineries whose feedstock costs (crude purchase prices) are related to Brent crude
West Texas Intermediate (“WTI”) – WTI is the benchmark light sweet crude for the U.S. and is priced in Cushing, Oklahoma. An additional pricing point for WTI is Midland, TX, which is approximately 40 miles from Alon’s Big Spring refinery
− Big Spring was processing 25,000 bpd of WTI in early August
− Alon’s Krotz Springs refinery has access to 30,000 bpd of WTI Midland crude through the AMDEL pipeline
West Texas Sour (“WTS”) – WTS is priced in Midland, TX and contains higher sulfur content compared to WTI (the sulfur content is what makes it a sour crude)
− WTS has historically been the largest component of Big Spring’s crude slate, accounting for approximately 75% of Big Spring’s throughput in the first half of 2013
− WTS has historically priced below WTI in Midland due to the lower quality (higher sulfur content) of WTS relative to WTI
Light Louisiana Sweet (“LLS”) – LLS is a light sweet crude priced in St. James, LA and is the benchmark for light sweet Gulf Coast crude. Approximately 50% of the crude processed at Alon’s Krotz Springs refinery in the first half of 2013 was Gulf Coast sweet crude
- 12 - 12
Crude Oil & Product Crack Trends
Following an average discount of $11.41/bbl between WTS and WTI Cushing in Q1 of 2013, differentials narrowed towards parity in Q2 of 2013 relative to the 5-year average spread of $2.90/bbl and 2012 spreads of $5.46/bbl
Brent and WTI approached parity in July 2013 as several one-time issues led to a tightened Mid-Continent crude market. The Brent-WTI spread widened to over $6.00/bbl in late August as supply concerns related to geopolitical risk have supported Brent prices
The strength in Brent prices caused Brent to trade at a premium to LLS in late August after trading at a discount to LLS for much of 2013. As domestic crude production overwhelms light sweet refining capacity on the Gulf Coast, LLS is expected to trade at a sustainable discount to Brent benefiting light sweet crude refineries such as Krotz Springs
¹ 5 Year Average of 2007 to 2011 ² As reported in annual 10K filling ³ YTD as of June 2013
West Texas Sour
("WTS")
West Texas
Intermediate ("WTI")Brent
Louisiana Light Sweet
("LLS")
LLS - WTI 5 Year Average --$4.37
2012 ---$16.46 YTD 2013 ---$17.63
WTI 5 Year Average¹--$81.64
2012² ---$94.14 YTD 2013³---$94.23
WTI - WTS 5 Year Average --$2.90
2012 ---$5.46 YTD 2013 ---$5.86
GC321 5 Year Average --$12.86
2012 ---$27.43 YTD 2013---$24.76
GC 211 (HSD/LLS) 5 Year Average --$8.38
2012 ---$11.29 YTD 2013 ---$6.16
Brent - WTI 5 Year Average --$3.04
2012 ---$17.65 YTD 2013 ---$13.91
- 13 - 13
Analysts1 expect WTI-based crudes to trade at a discount to international benchmarks over the next few years, providing a sustainable feedstock advantage for Mid-Continent refineries like Big Spring
Analysts’ forecasts for the Brent-WTI spread are shown below:
Brent-WTI Spread Composite Forecast 2
1 We believe analysts’ forecasts are a better indication of the Brent-WTI spread in out years than the Brent and WTI forward curves due to the lower liquidity in out-year contracts and other factors that can skew the forward curves. Analysts’ projections take into consideration projections for growth in the U.S. crude supply, planned pipeline projects and transportation differentials that contribute to the discount in WTI.
2 Composite forecast consists of the average annual estimates from Barclays, Goldman Sachs & Morgan Stanley for 2014-2016; 2017 forecast from Morgan Stanley not available; forecasts as of August 16, 2013
Sustainable Feedstock Advantage
$8.17
$9.92$10.25
$8.88
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
2014 2015 2016 2017
$/b
bl
- 14 - 14
Big Spring sources substantially all of its crude oil locally from the Permian Basin
The Permian Basin is experiencing a drilling and production renaissance, with 470 active rigs in August 2013 vs. the full-year average in 2010 of less than 300 rigs
Analysts expect Permian production to exit 2015 above 1,770 Mbpd – a 42% increase from the 2012 exit rate of 1,244 Mbpd
¹ Source: Raymond James & Associates, Simmons & Company; based on annual exit rates 2 Source: Baker Hughes, RigData; Rig data as of August 9, 2013
Permian Basin Activity Overview 2
Oil Rig
Lubbock
Permian Basin Production Forecasts 1
Big Spring: Advantaged Location In the Heart of the Permian Basin
800
1,000
1,200
1,400
1,600
1,800
2,000
2010 2011 2012 2013 2014 2015
Raymond James Simmons & Company (Base case)
bp
d
- 15 - 15
Permian
Basin
Cushing Price point for WTI
PAA Basin pipeline to Cushing ̴500 Mbpd
Alon Big Spring 70 Mbpd
Midland pricing hub
Largest oil and natural gas producing basin in the United States based on total proved reserves
Commercial accumulations of hydrocarbons occur in several rock layers, at depths ranging from approximately 1,000 to over 25,000 feet
Stacked horizons of the Permian Basin allow significant opportunity for multiple completions in a single well bore and the potential for both vertical and horizontal completions
Reserves in the Permian Basin are generally characterized as long lived, and the basin has substantial existing infrastructure and well-developed network of oilfield service providers
Howard County, where Big Spring is located, had 30 rigs operating as of August1
Impressive initial rate from first horizontal well drilled in Howard County (Midland basin) filed in August 2013
Permian Basin Overview
¹ Source: Baker Hughes, RigData; Rig data as of August 23, 2013
Growing Permian Oil Production Provides Advantaged Supply for Big Spring
III. Assets Overview
- 17 - 17
20.89 23.50
21.85
$23.37$27.43 $24.76
-
5.00
10.00
15.00
20.00
25.00
30.00
2011 2012 2Q 2013 YTD
$ /
bb
l
Big Spring Operating margin Gul f Coast 321 Crack Spread
49% 50% 49%
32% 32% 33%
7% 6% 6%
12% 11% 11%
99.8% 99.8% 99.6%
0%
20%
40%
60%
80%
100%
2011 2012 2Q 2013 YTD
Gasoline Diesel/jet Asphalt Other
80% 76% 75%
16%21%
22%
4%3%
3%63,614
68,94665,835
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2011 2012 2Q 2013 YTD
bpd
WTS crude WTI crude Blendstocks
Alon USA Partners, LP Overview
On November 20, 2012 Alon USA Partners, LP (“ALDW”) completed an initial public offering as a variable distribution MLP
− Issued 11.5 million of limited partner units raising gross proceeds of $184 million (The public owns an 18.4% of the limited partner units)
ALDW’s assets include the Big Spring, Texas refinery and the wholesale fuels marketing business which is integrated through the Big Spring refinery system
Big Spring refinery:
− 70,000 bpd (~26mm bbl/year) sour crude cracking refinery
− 10.5 Nelson Complexity
Captive wholesale fuels marketing business supplies substantially all of Alon’s retail locations plus unbranded and branded wholesale customers (approximately 640 locations)
Closest refinery to robust West Texas crude oil production (Permian Basin), which provides a significant crude cost advantage
Flexible refinery with the ability to process 100% WTS or 100% WTI
Benefitted from processing ~80% WTS, which traded at an average discount to WTI of $5.86/bbl year to date through June 2013
Entered into a supply and offtake agreement in March 2011
Refinery Operating Margin
Refinery Throughput
Refinery Product Yield
- 18 - 18
This is How We Make Money at Big Spring
Product Yields Crude / Blendstocks Refining Operating Margin¹
¹ Refining Margin represents liquid recovery of 99.63% 2 Graph is year-to-date through June 2013 3 Some numbers may not add due to rounding
Asphalt 6.0%
Other 11.0%
Gasoline 49.5%
Jet 5.4%
Diesel28.2%$124.86
$121.90
$115.82
$90.78
$58.23
$112.51
Per bbl
Gasoline $26.94
Diesel $33.01
Jet$35.97
Asphalt $(30.65)
Per bbl
Other $1.89
$13.32
$10.14
$1.78
$(1.56)
$(1.83)
$21.85
Sweet
Crude
21.8%
Sour
Crude
75.1%
Blend stock 3.1%
Per bbl
$89.21
- 19 - 19
Organic Growth Opportunities at Big Spring
Other projects under evaluation include an LPG recovery project and a project to significantly increase the refinery’s capacity
Short term low cost projects which will drive meaningful return at Big Spring
Project Status Timing Impact
Modifying vacuum tower to
increase distillate recovery
and debottleneck refinery
Approval in
Process
Coincide with 2014
turnaround
Estimated 2% increase in
distillate yield; increase
crude throughput by as much
as 3,000 bpd at a relatively
low cost
Increasing production of
toluene and aromatic
solvents
Implementation Year-end 2013 Annual EBITDA uplift of $14
million
Continued expansion of
truck receipts of crude
Implementation Year-end 2013 Benefit from delivered cost
and quality
- 20 - 20
42% 43% 42%
46% 42% 40%
13% 16% 20%
100.6% 101.2% 102.1%
0%
20%
40%
60%
80%
100%
2011 2012 2Q 2013 YTD
Gasoline Diesel/Jet Other
30%48%
99%
69% 49%
1%1%
3%
59,720
67,87758,622
-5,000
15,000
35,000
55,000
75,000
2011 2012 2Q 2013 YTD
bpd
WTI crude Gulf Coast sweet crude Blendstocks
Krotz Springs Refinery Overview
74,000 bpd sweet crude residual cracking refinery
8.3 Nelson Complexity
Historically processed a mix of LLS and HLS type crudes
Access to 30,000 bpd of WTI Midland priced crude through the AMDEL pipeline and ramping up crude receipts by rail, with current rack capacity of 9,000 bpd expandable to 14,000 bpd
High liquid recovery of over 102%
One of the newest refineries in the U.S. (1980)¹ with industry low operating costs
Access to domestic and foreign crude markets through the Louisiana Offshore Oil Port (“LOOP”)
High distillate yield capability of ~40%
¹ Source: US Energy Information Administration.
Refinery Operating Margin
$3.05
$8.30 $7.67
$7.00
$11.29
$6.16
($1.00)
$1.00
$3.00
$5.00
$7.00
$9.00
$11.00
$13.00
2011 2012 2Q 2013 YTD
$ /
bb
l
Krotz Springs Operating Margin Gul f Coast 211 (LLS) Crack Spread
Refinery Throughput
Refinery Product Yield
- 21 - 21
This is How We Make Money at Krotz Springs
Product Yields Crude / Blendstocks Refining Operating Margin¹
¹ Refining Margin represents liquid recovery of 102.06% 2 Graph is year-to-date through June 2013 3 Some numbers may not add due to rounding
Per bbl
Jet
$120.62 14.1%
Diesel
24.9%
Gasoline
$113.50 41.4%
$86.31 Other
19.6%
$110.97
$120.68
Per bbl
WTI
47.9%
Light Sweet
Crude
49.2%
Blendstock
2.9%
$104.35
Per bbl
Gasoline
2.90$ $6.99
Diesel
3.52$ $14.18
1.99$ Jet
$14.12
(0.74)$ Other
(20.19)$
$7.67
- 22 - 22
Organic Growth Opportunities at Krotz Springs
Terminal and Logistics Initiatives:
Completed work to put our Krotz Springs crude oil rail rack into service and received our first rail cars of crude in late June 2013
Crude oil receipts are ramping up, and Krotz Springs received approximately 2,500 bpd by rail in July 2013
The current capacity of the rack is 9,000 bpd, expandable to 14,000 bpd, but we will initially be restricted by railroad operations and tank car availability
Increasing the amount of crude delivered by truck to the refinery continues to be a goal, with volume now at about 10,000 bpd at Krotz Springs
Operational Initiatives:
Benefiting from efforts to improve distillate recovery and reduce FCC catalyst costs at the plant
Have begun selling a benzene-rich light product stream as a feedstock for BTX units. The contained Benzene is priced at $50/bbl above its value in gasoline contributing over $400,000/month to gross margins
Short term low cost projects which will drive meaningful return at Krotz Springs
- 23 - 23
California Refining Overview
Integrated refining complex with a throughput capacity of 70,000 bpd
In Q4 of 2012, ceased operations for interim period while reconfiguring crude mix from heavy to light crudes which will allow the system to utilize its high distillate production capability (~44%) and reduce lower value heavy product yields (primarily asphalt)
In the interim, significantly reduced operating expenses in California; leveraging logistics assets
- Providing rail and loading services to third parties; completed agreement with West Coast refiner to provide rail services from our Willbridge, Oregon terminal
- West Coast logistics business currently contributes $10 million in annual EBITDA
Submitted permit applications for rail unloading facility at Bakersfield capable of unloading two unit trains per day (140 Mbpd combined), which will allow rail shipments of light Mid-Continent crudes such as Bakken and WTI to replace heavy West Coast crudes (expect to receive permits by year-end 2013)
In the longer term, the California system is expected to benefit from a significant increase in light sweet Monterey shale oil production (the EIA estimates the Monterey shale has 20 billion barrels of recoverable resources representing 64% of the total recoverable shale oil in the lower 48 states)
- 24 - 24
Flexible Refining Assets Have Enabled Crude Slate Shift Towards Advantaged Crudes
Alon’s Consolidated Crude Slate 1
1 Other includes heavy crude, medium sour crude, and blendstocks. Chart includes California refining operations, which were suspended in November 2012.
Alon’s crude slate has shifted increasingly towards WTI-linked crudes to take advantage of discounted Mid Continent crude oil pricing since 2011
Processed 65% WTI-linked crudes in the twelve months ended June 30, 2013, up from 42% in 2011, reducing exposure to more expensive Gulf Coast sweet crudes (such as LLS)
LTM Average Discount of
~$19.50 vs. Brent
7%
22%30%
35%
34%
35%
40%
30%25%
18% 14% 10%
0%
20%
40%
60%
80%
100%
2011 2012 LTM Q2 2013
WTI WTS Gulf Coast Sweet Other
42%
56%65%
- 25 - 25
LTM Q2, 2013 Refinery Operating Expenses ($/bbl) – Mid-Continental and Gulf Coast Groups
Source: Derived from public company filings with SEC. Note: Refinery direct expense is a per barrel measurement calculated by dividing direct operating expenses by total throughput volume. (1) HFC Mid-Continent region includes the El Dorado and Tulsa Refineries. HFC Southwest region includes the Navajo refinery. (2) WNR 2Q 2013 operating expenses normalized for property tax refund benefit. (3) VLO Gulf Coast region includes the Corpus Christi , Port Arthur, St. Charles, Texas City, Houston, Three Rivers and Meraux Refineries.
Mid-Continent Peer Group Gulf Coast Peer Group
Flexible Refineries with Low Operating Expenses
$4.43
$4.91 $4.95 $5.18
$5.67 $5.79
$3.63
$4.13 $4.28
ALJ Big Spring,TX
NTI St. Paul, MN DK Tyler, TX CVRR HFC Mid-Con &Southwestregions (1)
WNR (2) VLO Gulf Coast(3)
ALJ KrotzSprings, LA
DK El Dorado, AR
- 26 - 26
Mitigating RINs Exposure
The Renewable Fuel Standard (“RFS”) requires refiners to blend a certain amount of renewable fuels into gasoline and diesel. Compliance with the RFS is monitored through Renewable Identification Numbers (“RINs”)
RINs prices have increased as the industry approaches the “blend wall” – the point where the industry is required to blend more renewable fuels than can be supported by demand for E-10 and E-85 gasoline
Alon’s increasing branded and unbranded sales contributes to ability to generate RINs internally
– Branded and unbranded sales increased 16% year-over-year in 2Q 2013
Biodiesel blending at Big Spring is set to begin in September 2013
Full-year RINs cost expected to total $20 million (assuming RIN costs of approximately $1/gallon)
– $8 million in RINs costs expensed in 2Q 2013
EPA announcement on August 6 acknowledged the issues with the ethanol blend wall and indicated flexibility in setting the 2014 renewable blending requirement, resulting in lower RIN prices
Received correspondence from the EPA in August evidencing the approval of a one-year extension exempting Krotz Springs from the requirements of RFS. As a result, the Krotz Springs refinery will be exempt from RFS for calendar year 2013
- 27 - 27 ¹ Source: Internal Alon Asphalt marketing analysis and market studies.
Operates 11 asphalt terminals in the western U.S. Operations include:
‒ 50% ownership in Paramount Nevada Asphalt Company – the largest GTR/PMA plant in Nevada, and
‒ 50% ownership in Wright Asphalt Products Company which brings exclusive rights to Neste’s GTR technology
Largest supplier of asphalt in California and second largest asphalt supplier in Texas
Supplies advanced asphalt products such as rubberized asphalt, PMA and GTR
‒ Increasingly specified by government agencies for use in highway projects in Texas
Strategic access to the California asphalt market
‒ California and Texas are the largest asphalt consuming states in the U.S.
‒ California highway budget for asphalt is larger than in previous years
Krotz Springs
Paramount
Among U.S. Refiners¹:
#7 asphalt supplier in U.S.
#2 asphalt supplier West of Mississippi
#1 asphalt supplier in PADD V states
#1 Ground Tire Rubber asphalt marketer in U.S.
#1 purchaser of polymers for paving asphalt products
Houston
Tulsa
Phoenix
Flagstaff
Willbridge
(Portland)
Elk Grove
(Sacramento)
Bakersfield
Mojave
Fernley
(Reno)
Paramount /
Long Beach
Big Spring
Corpus Christi
Richmond Beach
(Seattle)
Refineries
Asphalt terminals
Legend
Leading Asphalt Supplier
- 28 - 28
Physically Integrated Retail Network
Alon Energy’s retail segment is the largest 7-Eleven licensee in the U.S. with 298 stores (~50% fee owned) in Central and West Texas and New Mexico
The retail segment has nearly doubled its store count since 2006
Recently completed re-branding effort from FINA branded gasoline stations to ALON brand
Locations in High Growth Markets
Location Total
Big Spring, Texas 8
Wichita Falls, Texas 11
Waco, Texas 11
Midland, Texas 17
Lubbock, Texas 21
Albuquerque, New Mexico 23
Odessa, Texas 34
Abilene, Texas 41
El Paso, Texas 84
Other locations in Central and West Texas 48
Total Stores 298
Retail Fuel Sold
Merchandise Sales
156.7
170.8
179.9
145
150
155
160
165
170
175
180
185
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
2011 2012 LTM 2Q 2013
Gallons Sold (in millions) Fuel Margin ($ per gallon)
298.2
315.1 315.7
25.0%
26.0%
27.0%
28.0%
29.0%
30.0%
31.0%
32.0%
33.0%
34.0%
$285
$290
$295
$300
$305
$310
$315
$320
2011 2012 LTM 2Q 2013
Merch Sales (in $ millions) Merch Gross Profit % of Revenue
- 29 - 29
Retail Fuel Volumes & In-Store Sales
Retail: 2nd Quarter Gallons per Site per Month
Retail Fuel Sales YTD Gallons
Retail: 2nd Quarter In-Store Sales
Retail: 2nd Quarter YTD In-Store Sales
39.0
42.0
48.0
55.0
2Q-10 2Q-11 2Q-12 2Q-13
(# in thousands)
$73.2
$78.4 $82.5 $83.2
2Q-10 2Q-11 2Q-12 2Q-13
(# in thousands)
68,122
75,162
82,867
91,896
YTD 2Q-10 YTD 2Q-11 YTD 2Q-12 YTD 2Q-13
(# in thousands)
$136.7 $146.4
$156.0 $156.6
YTD 2Q-10 YTD 2Q-11 YTD 2Q-12 YTD 2Q-13
(# in thousands)
IV. Financial Summary
- 31 - 31
Key Financial Metrics
Adjusted EBITDA 1
Capital Expenditures & Turnarounds
Net Income
Net Leverage (Net Debt/Adjusted EBITDA)
$ 268
$ 434 $ 478
2011 2012 LTM Q2 2013
$ 43
$ 79
$ 131
2011 2012 LTM Q2 2013
$ 893
$ 471 $ 395
3.3 x
1.1 x0.8 x
2011 2012 Q2 2013Net Debt Net Leverage
$ 113 $ 94 $ 84
$ 10 $ 11
$ 9
$ 122 $ 105
$ 93
2011 2012 LTM Q2 2013Capital Expenditures Capex for Turnaround & Catalyst
(in $ millions)
1 See page 36 for a reconciliation of Adjusted EBITDA to Net Income under GAAP.
- 32 - 32
Adjusted EBITDA Reconciliation
Note: Adjusted EBITDA above includes the elimination of unrealized gains (losses) on commodity swaps of $31,936 and $(31,936) for the years ended December 31, 2011 and 2012, respectively. Adjusted EBITDA also excludes losses on heating oil call option crack spread contracts of $36,280 and $7,297 for the years ended December 31, 2011 and 2012, respectively. Adjusted EBITDA including the impact of these items would be $263,977 and $394,291 for the years ended December 31, 2011 and 2012, respectively. Adjusted EBITDA excludes unrealized losses on commodity swaps of $32,441 and losses on heating oil call option crack spread contracts of $7,297 for the six months ended June 30, 2012. Adjusted EBITDA including the impact of these items would be $138,777 for the six months ended June 30, 2012
(in $ millions) 2011 2012
Six Months
Ended June 30,
2012
Six Months
Ended June 30,
2013 LTM 2Q 2013
Net Income 42.51 79.13 13.72 65.68 131.09
Non-controlling interest in income (loss) of subsidiaries 1.24 11.46 0.44 27.91 38.94
Income tax expense (benefit) 18.92 49.88 7.93 34.58 76.53
Interest expense 88.31 129.57 55.34 41.55 115.79
Depreciation and Amortization 113.73 121.93 61.13 61.96 122.76
(Gain) loss on disposition of assets (0.73) 2.31 0.21 (8.51) (6.42)
Unrealized (gains) losses on commodity swaps (31.94) 31.94 32.44 0.00 (0.51)
(Gain) loss on heating oil call option crack spread contracts 36.28 7.30 7.30 0.00 0.00
Adjusted EBITDA 268.32 433.52 178.52 223.17 478.18
- 33 - 33
Debt Reduction
In Q4 2012 reduced net debt by $282 million of which: – $171 million from the proceeds of IPO
of ALDW – Additional reduction in debt with
cash flows from operations
YTD Q2 2013 further reduced net debt by $75 million
Net debt reduction since Q1 2012 by $469 million
$-
$200
$400
$600
$800
$1,000
1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 2Q-13
Total Debt Net Debt
(in $ millions) 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 2Q-13
Total Debt 914$ 874$ 799$ 587$ 586$ 530$
Net Debt 864$ 817$ 753$ 471$ 334$ 395$
(in $ millions)