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Alon USA Energy Sees Most Profitable Quarter for Retail

Reports "very good" fuel, merchandise margins

DALLAS -- "The fourth quarter was the most profitable quarter in our retail marketing business history, and 2014 was our most profitable year," Paul Eisman, CEO and president of Alon USA Energy Inc., said during the company's quarterly and full-year 2014 earnings call. "It appears to us that lower prices are not only encouraging increases in fuel demand, but are also positively impacting merchandise sales and margins."

Alon USA Energy (CSP Daily News / Convenience Stores / Gas Stations)

As of Dec. 31, 2014, the company had 295 convenience stores, 283 offering fuel.

Same-store fuel sales were up 7% over the same quarter last year, he said, and the company achieved a "very good" retail fuel margin of 27.06 cents per gallon (at an average retail price of $2.73 per gallon), up from 18.2 cents per gallon (at $3.12) in fourth-quarter 2013. For year-end 2014 and 2013, retail fuel margins were 21.6 cents (at $3.20) and 19.3 cents per gallon (at $3.33), respectively.

Retail fuel sales volume increased 5.3% to 49.7 million gallons in the quarter from 47.2 million gallons in fourth-quarter 2013. For the year, retail fuel sales volume increased 2.2% to 192.6 million gallons, from 188.5 million gallons in 2013.

Retail fuel sales per site per month in fourth-quarter 2014 were 59,000 gallons, compared to 55,000 gallons in fourth-quarter 2013. For year-end 2014 and 2013, they were 57,000 and 55,000 gallons, respectively.

Same-store merchandise sales of $81 million were up nearly 6% over the same quarter last year, which were $76.2 million. Merchandise sales per store, per month were $91,000 for the 2014 quarter, $86,000 for the 2013 period. Merchandise margins for the quarter of improved to 32.3%, up from 31.9% in the same quarter last year. They fell for the year to 31.4% in 2014 from 32.1% in 2013.

Net income for fourth-quarter 2014 was $6.7 million, compared to net loss of $14 million for the same period last year.

The retail segment saw operating income for the quarter of $9.1 million, compared to $4.4 million in fourth-quarter 2013. For year-end 2014 and 2013, operating income was $25.7 million and $23.9 million, respectively.

In Alon USA Energy's wholesale marketing business, both branded and unbranded fuel sales during the fourth quarter were "very strong," said Eisman. Compared to the same quarter last year, branded sales were up 7%, while unbranded sales were up more than 12%. For the year, branded and unbranded sales were up 5.7% and 4.4%, respectively.

"We were able to achieve these increases despite the major turnaround at Big Spring [Texas, refinery] in the second quarter," he added.

Dallas-based Alon USA Energy is an independent refiner and marketer of petroleum products, operating primarily in the south central, southwestern and western regions of the United States. Alon owns 100% of the general partner and approximately 82% of the limited partner interests in Alon USA Partners LP, which owns a crude oil refinery in Big Spring, Texas. It also directly owns crude oil refineries in Krotz Springs, La., and in Bakersfield, Calif. Alon USA Energy is the largest 7-Eleven licensee in the United States and operates in central and west Texas and New Mexico. Alon Brands Inc. is the retail and branded marketing subsidiary of Alon USA Energy.

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