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What Does ALDW’s Cash Available for Distribution Indicate?



ALDW’s capital expenditures

Alon USA Partners’ (ALDW) capital expenditures in 1Q16 were $8.1 million compared to $2.3 million in 1Q15. Additionally, its capital expenditures for turnarounds and catalysts were $2.7 million in 1Q16.

ALDW’s total capital expenditure plan for 2016 is $29 million, which includes expenditures for catalysts and turnarounds.

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Cash available for distribution

The above graph shows Alon USA Partners’ available cash for distribution and total capital expenditures over the last five quarters. The right axis shows ALDW’s per-unit distribution.

Alon USA Partners didn’t generate any cash for distribution in 1Q16. “Market conditions and the planned downtime to complete a reformer regeneration and a catalyst replacement for our diesel hydrotreater unit during the first quarter did not allow us to generate sufficient cash to support a distribution,” said Paul Eisman, ALDW’s president and CEO in the partnership’s 1Q16 earnings release.

However, ALDW expects to generate sufficient cash for distribution in 2Q16. “Based on current forward curve crack spreads, it is our expectation that with operations consistent with our plan we should generate sufficient cash available for distribution during the second quarter,” said Eisman.

ALDW’s distributions

Along with its peer CVR Refining (CVRR), Alon USA Partners has a variable distribution policy. This means that these MLPs don’t have minimum quarterly distributions. Instead, their quarterly distributions vary depending on the cash they generate in each quarter. These MLPs distribute all cash available for distribution in each quarter. Thus, their quarterly distributions vary significantly.

ALDW didn’t generate available cash for distribution in 1Q16, so it didn’t pay any distributions in the quarter. Calumet Specialty Products Partners (CLMT) also suspended its 1Q16 distributions.

In an operational update provided on June 3, 2016, ALDW reiterated its expectations of generating sufficient cash to support distributions in 2Q16.


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