The acquisition of the Bakersfield refinery in California narrowed the losses Alon USA Energy Inc. (NYSE:ALJ) for the third quarter of 2010, but the company's refining business still weighs down on the company. The accumulated losses for Alon USA to raise $40 million in a secondary offering of preferred shares ten days ago at a premium of 17.5% on the market price.
Alon Israel Oil Company Ltd., owned by chairman David Weissman and Shraga Biran, owns 76% of Alon USA. The company owns refineries in Texas (like Delek US Holdings Inc. (NYSE:DK)), Krotz Springs in Louisiana, and California. It bought the Bakersfield refinery for $30 million earlier this year with the objective of merging its business with the Paramount refinery, also in California.
Alon USA's revenue was essentially flat, rising to $1.29 billion for the third quarter from $1.25 billion for the corresponding quarter.
The company narrowed its GAAP-based net loss to $15.6 million ($0.29 per share) for the third quarter from $26.6 million for the corresponding quarter of 2009. Non-GAAP net loss widened to $31.8 million ($0.59 per share) for the third quarter from $24.3 million for the corresponding quarter.
Although the Krotz Springs refinery boosted output and utilization in the third quarter, after undergoing regular maintenance, the performance Alon USA's two other refineries was not as good. Utilization by Big Springs refinery in Texas fell to 72.3% in the third quarter from 86.3% in the corresponding quarter, and utilization by the Bakersfield refinery nearly halved to just 28.3%.
Oil that Alon USA does not refine at its California refineries is made into asphalt, using a company patent for manufacturing high-grade asphalt from crude oil, recycled tires, and other materials. The company is one of the largest asphalt manufacturers in the US, and the largest on the West Coast.
However, revenue from asphalt fell 17.5% to $144.6 million for the third quarter from $175.2 million for the corresponding quarter, due to the economic weakness and falling state and local budgets.
Retail revenue rose to $273.5 million in the third quarter from $217.2 million in the corresponding quarter.
Alon Group had $39.6 million in cash at the end of September, before the secondary offering, and had a debt of $953.5 million.
Alon USA CEO Jeff Morris said, " We are focused on three initiatives: continuing to increase the throughput at Big Spring, integrating our Bakersfield facility with Paramount, and revising our mode of operations at Krotz Springs to improve yields and develop alternative crudes."
He added that the company was evaluating offers and opportunities which would add $60-100 million to the company's resources.
Alon USA's share price fell 0.2% at the opening in New York today to $5.67, after falling 4.5% on Friday, giving a market cap of $307 million.
Published by Globes [online], Israel business news - www.globes-online.com - on November 8, 2010
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