Weather Takes Its Toll on Alon's Retail Division

DALLAS -- Severe weather conditions caused most sales and margin figures to decline at Alon USA Energy Inc.'s retail division, President and CEO Paul Eisman noted during the company's 2013 fourth-quarter earnings call today.

Alon USA is the largest 7-Eleven licensee in the United States, operating 297 convenience stores in Texas and New Mexico as of Dec. 31. One of the worst winters in recent memory led to reduced fourth-quarter traffic at Alon's stores, Eisman stated during the call.

Net operating income for the retail division fell to $4.35 million, a decline of more than $1 million year over year. Net sales declined by about $1 million to $223 million. Retail fuel margins also declined by 2.4 cents per gallon vs. the same period in 2012, to 18.2 cents.

Total merchandise sales declined by approximately $800,000 year over year, while merchandise margins slid 0.8 percent to 31.9 percent when comparing the fourth quarters of 2013 and 2012, respectively.

On the positive side, retail fuel volume was up by more than 3 million gallons to 47.2 million gallons in the quarter. For all of 2013, fuel volume rose by 10 percent vs. 2012.

"Our retail segment faced seasonal challenges in the fourth quarter with the extreme cold weather conditions impacting merchandise sales volumes, as well as merchandise sales margins," Eisman said. "Despite the challenges in the fourth quarter, the retail segment achieved record fuel volume sales in 2013."

Companywide, Alon USA posted a net loss of $14 million for its most recent quarter, compared to a profit of $22.2 million in 2012's fourth quarter. Crude differentials, crack spreads and special one-time items were cited as the main reasons for the swing from a profit to a loss.

"We continue to make progress toward our long-term goals," Eisman stated.

One of these goals is to reduce debt. Alon USA reduced its debt by $83 million in 2013, the CEO noted. The company will be "happy" with its debt levels by the end of 2014, allowing it to invest more money into its business by the end of the year, he added.

Dallas-based Alon USA Energy Inc. is an independent refiner and marketer of petroleum products. The company also owns 100 percent of the general partner interest and 82 percent of the limited partner interest in Alon USA Partners LP, a master limited partnership.

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