Rainfall Blamed in Asphalt Firm’s $3.38-Million Loss

Huntway Partners, a Newhall-based company that produces asphalt at oil refineries in Wilmington and the Bay Area town of Benicia, posted what the company’s chief executive called “unprecedented negative earnings” in the first quarter that ended March 31.

Juan Forster, CEO of Huntway, said record winter rainfall in California led to a 32% drop in sales of asphalt in the first quarter, compared to a year earlier. As a result, the company reported a $3.38-million first-quarter loss, compared to a $949,000 loss in the same three-month period a year earlier.

Revenue dipped to $12.3 million in the first quarter, down 11% from $13.8 million a year earlier. To maintain cash flow, the company sold fuel oil, but rising crude oil costs pinched margins to their thinnest levels in 10 years, said Forster, who added that the collapse of the Mexican peso hurt the company’s export sales.

“On the positive side, the heavy rainfall caused a great deal of damage to California’s roads,” Forster said. “Paving activity will have to increase in future periods to repair this damage. However, when this work will occur is uncertain, as state funding for road construction remains a concern.”

Forster said the company met its scheduled first-quarter debt payment of $500,000, and that cash on hand stood at $2.29 million as of March 31, down from $5.98 million at the end of the year. “Management is pursuing a further restructuring of Huntway’s debt,” Forster said. “This restructuring will become a necessity within the next 12 months if operating margins do not improve.”