Alon USA Partners: Alon USA Partners, LP Reports Third Quarter 2017 Results and Declares Quarterly Cash Distribution

BRENTWOOD, Tenn., Nov. 08, 2017 (GLOBE NEWSWIRE) -- Alon USA Partners, LP (NYSE:ALDW) ("Alon Partners") today announced results for the third quarter of 2017. Net income for the third quarter of 2017 was $29.2 million, or $0.47 per unit, compared to net income of $2.1 million, or $0.03 per unit, for the same period last year. Included in the third quarter 2017 results was an approximately $22.0 million, or $0.35 per common unit charge for inventory fair value adjustment entries at Delek US Holdings, Inc. (NYSE:DK) ("Delek US") related to its acquisition of Alon USA Energy, Inc. on July 1, 2017 that were recorded at Alon Partners through push down accounting.On November 8, 2017, Delek US and Alon Partners announced the execution of a definitive merger agreement under which Delek US will acquire all of the outstanding Alon Partners common units representing limited partner interests of Alon Partners which Delek US and its affiliates do not already own in an all-stock for common units merger transaction. Delek US and its affiliates currently own approximately 51.0 million common units of Alon Partners, or approximately 81.6 percent of the outstanding units. Under the terms of the merger agreement, the owners of the outstanding common units in Alon Partners that Delek US and its affiliates do not currently own will receive a fixed exchange ratio of 0.49 shares of Delek US common stock for each common unit of Alon Partners. This implies a 5.0 percent premium to the 30 trading day volume weighted average ratio through and including November 7, 2017, of .4666 and a 2.9 percent premium to the ratio on November 7, 2017, which was the day before the parties announced this transaction. This transaction was approved by all voting members of the board of directors of Alon Partners' general partner, upon the recommendation from its conflicts committee and by the board of directors of Delek US. This transaction is expected to close in the first quarter 2018 and is subject to customary closing conditions.Fred Green, Chief Executive Officer of our general partner, commented, "Our third quarter 2017 results benefited from an improvement in our benchmark Gulf Coast crack spread and discounts in Midland-sourced crude oil relative to WTI Cushing. Our operations were unaffected by Hurricane Harvey and during late August and September we remained focused on supplying our customers as the hurricane reduced product supply on the Gulf Coast during that time period. During the third quarter 2017, we continued to increase the amount of WTI crude oil that we processed and our wholesale business performed well. The combination with Delek US in an all-equity transaction will provide our public unit holders with the opportunity to be a part of a larger, more diverse and growing company."On November 8, 2017, the Board of Directors of Alon USA Partners GP, LLC, the general partner of Alon Partners, declared a cash distribution for the third quarter of 2017 of $0.43 per unit payable on November 22, 2017 to common unitholders of record at the close of business on November 13, 2017, based on cash available for distribution of $26.9 million. During the quarter, capital expenditures included $9.2 million to buyout an operating lease, which reduced the distribution by approximately $0.14 per unit.Effective July 1, 2017, with the completion of the merger between Delek US and Alon USA Energy, Delek US indirectly owns 100% of our General Partner and 81.6% of our limited partner interest. As a result of these transactions, Alon Partners became a consolidated subsidiary of Delek US Holdings, Inc. and elected to apply "push down" accounting which required its assets and liabilities to be adjusted to fair value on the effective date. Due to the application of push-down accounting, Alon Partners' consolidated financial statements are presented in two distinct periods to indicate the application of two different basis of accounting between the periods presented. The periods prior to the merger effective date, July 1, 2017, are identified as "Predecessor" and the period from July 1, 2017 forward is identified as "Successor". Because of this change the periods are not directly comparable.THIRD QUARTER 2017 Refinery operating margin was $12.49 per barrel for the third quarter of 2017, which included approximately $22.0 million, or a $3.43 per barrel charge for inventory fair value adjustment at Delek US related to its acquisition of Alon USA on July 1, 2017 that were recorded at Alon Partners through push down accounting. Excluding this amount, the operating margin in the third quarter 2017 would have been $15.92 per barrel compared to $9.22 per barrel for the same period in 2016. This increase in operating margin was primarily due to a higher Gulf Coast 3/2/1 crack spread, a widening of the WTI Cushing to WTI Midland spread and a stronger wholesale marketing environment, partially offset by a reduced benefit from the contango environment which increased the cost of crude oil. The third quarter 2016 operating margin was negatively affected by costs associated with the reformer generation. Refinery average throughput for the third quarter of 2017 was 69,723 bpd compared to average throughput of 70,063 bpd for the same period in 2016.The average Gulf Coast 3/2/1 crack spread was $20.16 per barrel for the third quarter of 2017 compared to $13.31 per barrel for the third quarter of 2016. The average WTI Cushing to WTI Midland spread for the third quarter of 2017 was $0.79 per barrel compared to $0.31 per barrel for the third quarter of 2016. The average WTI Cushing to WTS spread for the third quarter of 2017 was $0.97 per barrel compared to $1.47 per barrel for the third quarter of 2016. The average Brent to WTI Cushing spread for the third quarter of 2017 was $4.04 per barrel compared to $2.05 per barrel for the same period in 2016. The contango environment in the third quarter of 2017 created an average cost of crude benefit of $0.24 per barrel compared to an average cost of crude benefit of $0.84 per barrel for the same period in 2016. The average RINs cost effect on refinery operating margin was $1.14 per barrel in the third quarter of 2017, compared to $0.58 per barrel for the same period in 2016.Third Quarter 2017 Results | Conference Call InformationAlon Partners has scheduled a conference call, which will be broadcast live over the Internet on Thursday, November 9, 2017 at 7:30 a.m. Central Time, to discuss the third quarter 2017 financial results. Investors may listen to the conference live by logging on to the Alon Partners website at www.alonpartners.com. A telephonic replay of the conference call will be available through February 9, 2017 and may be accessed by calling 855-859-2056 and using the passcode 99812665. A webcast archive will also be available at www.alonpartners.com shortly after the call and will be accessible for approximately 90 days.Tax ConsiderationsThis release serves as qualified notice to nominees under Treasury Regulation Section 1.1446-4(b). Please note that 100% of Alon Partners' distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of Alon Partners' distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not Alon Partners, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.Safe Harbor Provisions Regarding Forward-Looking StatementsAny statements in this release that are not statements of historical fact are forward-looking statements. Forward-looking statements reflect our 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, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows. These forward-looking statements include, but are not limited to, statements regarding the potential merger between Alon Partners and Delek US including the closing, timeline and benefits relating thereto; crude oil slates; crude oil and product costs, netbacks and margins; opportunities; anticipated performance and financial position; continued safe and reliable operations; and other factors. Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at or by which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Alon Partners undertakes no obligation to update or revise any such forward-looking statements, except as required by applicable law or regulation. Additional information regarding these and other risks is contained in our filings with the Securities and Exchange Commission.About Alon USA Partners, LPAlon USA Partners, LP is a Delaware limited partnership in which Delek US Holdings, Inc. (NYSE:DK) owns 100% of the general partner and 81.6% of the limited partner interest. Alon Partners owns and operates a crude oil refinery in Big Spring, Texas, with a crude oil throughput capacity of 73,000 barrels per day. Alon Partners refines crude oil into finished products, which are marketed primarily in Central and West Texas, Oklahoma, New Mexico and Arizona through its integrated wholesale distribution network to retail