L.A.’s thirst for energy is pumping the growth of alternative fuel – and that has the industry’s leading provider hoping to burn it up here.
Seal Beach-based Clean Energy Fuels Corp. not only opened its largest station near the ports of Los Angeles and Long Beach this summer, but also has 16 other stations within Los Angeles County.
It’s the highest regional concentration of its 170 nationwide stations, thanks mainly to local trucking fleets and governments embracing the technology.
“Los Angeles is where alternative fuel was first embraced at a dramatic level, and with the push to get off foreign oil and cut down on diesel emissions in California, this is our hottest market,” said Greg Roche, director of business development for Clean Energy Fuels, a public company founded by legendary oilman T. Boone Pickens.
Clean Energy Fuels has inked deals in the last couple of years to build stations in cooperation with large public transit agencies, including the two ports, Los Angeles World Airports, Santa Monica’s Big Blue Bus and Foothill Transit, all of which run natural gas vehicles. One trucking company, Southern Counties Express in Rancho Dominguez, also partnered on a station for its heavy-duty fleet servicing the harbor.
“We’re focused on going after any business or municipality looking for natural gas for their vehicle fleets,” Roche said. “There isn’t a big market yet for passenger vehicles but they can use our stations, too.”
A gallon equivalent of compressed natural gas, CNG, or liquefied natural gas, LNG, usually costs about 70 cents less than gasoline or diesel, Roche said. A downside is that natural gas produces less energy compared with diesel.
Industry analysts see a bright future for the company, with six out of 10 of analysts rating the company a “buy,” according to Bloomberg News. Though the company continues to lose money, its shares closed Dec. 3 at $11.80, more than double the $4-$5 range of last year.
“Government business and incentives it’ll offer, especially with (Obama’s) administration, will accelerate the natural gas need,” said Robert Brown, an analyst with Craig-Hallum Capital Group in Minneapolis. “Profitability is an issue, but the company has the largest market share and a strong business model that knows where to target.”
UTi Uptick
Long Beach freight transportation company UTi Worldwide Inc. saw its stock take off last week after announcing an unexpected boost from air freight business in the third quarter.
After the company’s quarterly results were announced, shares rose about 12 percent to close at $14.85 on Dec. 3. The stock had dipped to as low as $10.03 in the past year amid the global recession and slowdown in cargo movement.
“Volumes improved throughout the third quarter particularly in air freight, which experienced an increase in the month of October, the first increase since early 2008,” said a company statement that attributed the bump to last-minute Christmas orders.
Still, the company said its third quarter profit plunged 53 percent to about $18 million (18 cents per share) from $37.9 million (38 cents) in the same period a year ago. Revenue fell 20 percent to $967 million.
That hasn’t scared Wall Street. Seven analysts rate the stock a “buy,” with a consensus that the stock will reach about $19 within the next 12 months. The company met expectations for its return of 18 cents per share.
“They have done a lot internally to streamline operations amid acquisitions over the last few years,” said Todd Fowler, an analyst with Cleveland-based KeyBanc Capital Markets Inc. who raised his target price from $17 to $19. “I think they’ve turned the corner in cutting costs internally by $60 million and are suited to deal with the macroenvironment they operate in.”
Trucker Registration
Motor carriers servicing the Port of Long Beach have until Dec. 15 to meet the port’s truck registration deadline as part of a recent settlement with the American Trucking Association.
Carriers wishing to access port terminals must sign and submit a five-page registration form and pay a one-time $250 registration fee. Then starting next month, companies must pay a $100 annual fee per truck to operate at the port. There is a final fee and paperwork deadline of Feb. 1.
The registration process replaces a controversial concession agreement promulgated by the Long Beach and Los Angeles ports as part of their joint Clean Truck Program. The broader concession program established financial and even off-street parking requirements for firms.
The Port of Los Angeles is still defending its concession plan and is awaiting a trial with the ATA in February.
Staff reporter Francisco Vara-Orta can be reached at [email protected] or (323) 549-5225, ext. 241.
