SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
| Date of Report (Date of earliest event reported) |
|
July 30, 2014 |
PACIFIC ETHANOL, INC.
(Exact name
of registrant as specified in its charter)
| Delaware |
|
000-21467 |
|
41-2170618 |
| (State or other jurisdiction of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
| 400 Capitol Mall, Suite 2060, Sacramento, CA |
|
95814 |
| (Address of principal executive offices) |
|
(Zip Code) |
| Registrant’s telephone number, including area code: |
|
(916) 403-2123 |
(Former name or former address, if changed
since last report)
Check the appropriate
box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results
of Operations and Financial Condition.
On July 30, 2014, Pacific
Ethanol, Inc. issued a press release announcing certain results of operations for the three and six months ended June 30, 2014.
A copy of the press release is furnished (not filed) as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein
by reference.
Item 9.01. Financial
Statements and Exhibits.
(d) Exhibits.
| Number | Description |
| | | |
| 99.1 | Press Release dated July 30, 2014 |
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
| Date: July 30,
2014 |
PACIFIC ETHANOL, INC. |
| |
|
|
By: |
/s/ Bryon T. McGregor |
| |
|
Bryon T. McGregor
Chief Financial Officer |
EXHIBITS FILED
WITH THIS REPORT
| Number | Description |
| | | |
| 99.1 | Press Release dated July 30, 2014 |
EXHIBIT 99.1
| Company IR Contact: |
IR Agency Contact: |
Media Contact: |
| Pacific Ethanol, Inc. |
Becky Herrick |
Paul Koehler |
| 916-403-2755 |
LHA |
Pacific Ethanol, Inc. |
| 844-403-2755 |
415-433-3777 |
916-403-2790 |
| Investorrelations@pacificethanol.com |
|
paulk@pacificethanol.com |
Pacific Ethanol Reports Strong Second
Quarter 2014 Results
| o | Net income of $15.3 million or $0.68 per diluted share |
| o | Adjusted net income of $17.1 million or $0.77 per diluted share |
| o | Net sales of $321.1 million, compared to $233.8 million in Q2‘13 |
| o | Record total gallons sold at 132.2 million gallons, compared to 101.2 million in Q2‘13 |
| o | Adjusted EBITDA of $27.8 million, compared to $6.6 million in Q2‘13 |
| o | Cash of $25.9 million at June 30, 2014 and $48.0 million at July 29, 2014 |
| o | Eliminated all parent company debt and reduced consolidated plant debt by $30.7 million to $17.0
million |
Sacramento, CA, July 30, 2014 –
Pacific Ethanol, Inc. (NASDAQ: PEIX), the leading producer and marketer of low-carbon renewable fuels in the Western United
States, reported its financial results for the three- and six-months ended June 30, 2014.
Neil Koehler, the
company’s president and CEO, stated: “Our strong second quarter results reflect favorable market conditions and
our on-going initiatives to improve plant efficiencies. We repositioned our company for profitable growth in the past few
years by reacquiring and maintaining our production assets while improving our balance sheet. Going forward, we will focus
on leveraging our production and marketing advantages to further increase profitability and expand our share of the growing
market for low-carbon renewable fuels.”
Financial Results for the Three Months
Ended June 30, 2014
Net sales were $321.1 million, an increase
of 37.4%, compared to $233.8 million for the second quarter of 2013. The company’s increase in net sales is attributable
to its record total gallons sold resulting from increases in both production and third party gallons.
Gross profit was $33.6 million, compared
to $7.0 million for the second quarter of 2013. The improvement in gross profit was driven by significantly improved production
margins and corn oil production.
Selling, general and administrative (“SG&A”)
expenses were $4.3 million, compared to $3.1 million for the second quarter of 2013. The increase in SG&A is primarily due
to an increase in compensation costs tied to the company’s continued profitable results and an increase in professional fees
from higher corporate activity.
Operating income was $29.3 million, compared
to $3.8 million for the second quarter of 2013.
Interest expense, net, was $2.9
million, which included a one-time expense of approximately $0.9 million related to accelerated amortization of deferred
financing fees and debt discounts on early retired debt. Interest expense, net, was $4.0 million for the second quarter of
2013.
The company recorded a loss of $2.4 million
on the early extinguishment of $14.7 million in debt during the quarter.
Net income available to common stockholders
was $15.3 million, or $0.68 per diluted share, which includes an income tax provision of $7.2 million. Net income available to
common stockholders for the second quarter of 2013 was $0.7 million, or $0.07 per diluted share.
Adjusted net income, which excludes fair
value adjustments and warrant inducements and gain (loss) on extinguishments of debt, was $17.1 million, or $0.77 per diluted share,
compared to an adjusted net loss of $0.7 million, or $0.05 per diluted share, for the second quarter of 2013.
Adjusted EBITDA was $27.8 million, compared
to $6.6 million for the second quarter of 2013.
Cash at June 30, 2014 was $25.9 million,
compared to $5.2 million at December 31, 2013. Cash at July 29, 2014 was $48.0 million following $19.7 million of warrant exercises
in July.
Bryon McGregor, the company’s CFO,
stated: “During the second quarter, we made significant strides in further improving our balance sheet and liquidity to position
us for continued growth. We raised net proceeds of approximately $26.0 million through an underwritten public offering, eliminated
all indebtedness at the parent company level and we reduced our net consolidated plant term debt to $17.0 million. Since quarter-end,
we also raised approximately $19.7 million from the exercise of warrants, leaving us with warrants outstanding to purchase only
1.6 million shares of common stock. This drop in warrants outstanding will reduce GAAP earnings volatility in future quarters.”
Financial Results for the Six Months
Ended June 30, 2014
Net sales were $575.7 million, compared
to $459.3 million in the same period of 2013.
Net income available to common stockholders
was $4.1 million, compared to loss of $5.0 million in the same period of 2013.
Adjusted net income was $41.8 million,
or $2.04 per diluted share, compared to an adjusted net loss of $6.6 million, or $0.63 per diluted share, for the same period of
2013.
Adjusted EBITDA was $63.2 million, compared
to $6.9 million for the same period of 2013.
Second Quarter 2014 Results Conference
Call
Management will host a conference
call at 8:00 a.m. PT/11:00 a.m. ET on July 31, 2014. Neil Koehler, Chief Executive Officer, and Bryon McGregor, Chief
Financial Officer, will deliver prepared remarks followed by a question and answer session. The webcast for the call can be
accessed from Pacific Ethanol’s website at www.pacificethanol.com. Alternatively, you may dial the following number up
to ten minutes prior to the scheduled conference call time: (877) 847-6066. International callers should dial 00-1-(970)
315-0267. The pass code will be 78867900#.
If you are unable to participate on the
live call, the webcast will be archived for replay on Pacific Ethanol’s website for one year. In addition, a telephonic replay
will be available at 2:00 p.m. Eastern Time on Thursday, July 31, 2014 through 11:59 p.m. Eastern Time on Thursday, August 7, 2014.
To access the replay, please dial (855) 859-2056. International callers should dial 00-1-(404) 537-3406. The pass code will be
78867900#.
Use of Non-GAAP Measures
Management believes that certain financial
measures not in accordance with generally accepted accounting principles (“GAAP”) are useful measures of operations.
The company defines Adjusted Net Income (Loss) as unaudited earnings before fair value adjustments and warrant inducements and
gain (loss) on extinguishments of debt. The company defines Adjusted EBITDA as unaudited earnings before interest, provision for
income taxes, depreciation and amortization, fair value adjustments and warrant inducements and noncash gain (loss) on extinguishments
of debt. Tables are provided at the end of this release that provide a reconciliation of Adjusted Net Income (Loss) and Adjusted
EBITDA to their most directly comparable GAAP measures. Management provides these non-GAAP measures so that investors will have
the same financial information that management uses, which may assist investors in properly assessing the company’s performance
on a period-over-period basis. Adjusted Net Income (Loss) and Adjusted EBITDA are not measures of financial performance under GAAP,
and should not be considered alternatives to net income (loss) or any other measure of performance under GAAP, or to cash flows
from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Adjusted Net Income
(Loss) and Adjusted EBITDA have limitations as analytical tools and you should not consider these measures in isolation or as a
substitute for analysis of the company’s results as reported under GAAP.
About Pacific Ethanol, Inc.
Pacific Ethanol, Inc. (PEIX) is the leading
producer and marketer of low-carbon renewable fuels in the Western United States. Pacific Ethanol also sells co-products, including
wet distillers grain ("WDG"), a nutritional animal feed. Serving integrated oil companies and gasoline marketers who
blend ethanol into gasoline, Pacific Ethanol provides transportation, storage and delivery of ethanol through third-party service
providers in the Western United States, primarily in California, Arizona, Nevada, Utah, Oregon, Colorado, Idaho and Washington.
Pacific Ethanol has a 91% ownership interest in PE Op Co., the owner of four ethanol production facilities. Pacific Ethanol operates
and manages the four ethanol production facilities, which have a combined annual production capacity of 200 million gallons. These
operating facilities are located in Boardman, Oregon, Burley, Idaho, Stockton, California and Madera, California. The facilities
are near their respective fuel and feed customers, offering significant timing, transportation cost and logistical advantages.
Pacific Ethanol's subsidiary, Kinergy Marketing LLC, markets ethanol from Pacific Ethanol's managed plants and from other third-party
production facilities, and another subsidiary, Pacific Ag. Products, LLC, markets WDG. For more information please visit www.pacificethanol.com.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995
With the exception of historical information,
the matters discussed in this press release including, without limitation, the ability of Pacific Ethanol to continue as leading
producer and marketer of low-carbon renewable fuels in the Western United States; the continuation of favorable market conditions;
Pacific Ethanol’s focus on leveraging its production and marketing advantages and expanding its market share; and reduced
GAAP earnings volatility are forward-looking statements and considerations that involve a number of risks and uncertainties. The
actual future results of Pacific Ethanol could differ from those statements. Factors that could cause or contribute to such differences
include, but are not limited to, adverse economic and market conditions; changes in governmental regulations and policies; and
other events, factors and risks previously and from time to time disclosed in Pacific Ethanol’s filings with the Securities
and Exchange Commission including, specifically, those factors set forth in the “Risk Factors” section contained in
Pacific Ethanol’s Form 10-Q filed with the Securities and Exchange Commission on May 9, 2014.
- Tables Follow -
PACIFIC ETHANOL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per
share data)
| | |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| | |
| | |
| | |
| | |
| |
| Net sales | |
$ | 321,144 | | |
$ | 233,808 | | |
$ | 575,687 | | |
$ | 459,267 | |
| Cost of goods sold | |
| 287,568 | | |
| 226,843 | | |
| 503,566 | | |
| 451,456 | |
| Gross profit | |
| 33,576 | | |
| 6,965 | | |
| 72,121 | | |
| 7,811 | |
| Selling, general and administrative expenses | |
| 4,315 | | |
| 3,133 | | |
| 7,985 | | |
| 7,138 | |
| Income from operations | |
| 29,261 | | |
| 3,832 | | |
| 64,136 | | |
| 673 | |
| Fair value adjustments and warrant inducements | |
| 485 | | |
| 1,437 | | |
| (35,359 | ) | |
| 745 | |
| Interest expense, net | |
| (2,886 | ) | |
| (3,972 | ) | |
| (7,237 | ) | |
| (7,453 | ) |
| Gain (loss) on extinguishments of debt | |
| (2,363 | ) | |
| (39 | ) | |
| (2,363 | ) | |
| 778 | |
| Other expense, net | |
| (335 | ) | |
| (128 | ) | |
| (562 | ) | |
| (215 | ) |
| Income (loss) before provision for income taxes | |
| 24,162 | | |
| 1,130 | | |
| 18,615 | | |
| (5,472 | ) |
| Provision for income taxes | |
| 7,196 | | |
| – | | |
| 10,466 | | |
| – | |
| Consolidated net income (loss) | |
| 16,966 | | |
| 1,130 | | |
| 8,149 | | |
| (5,472 | ) |
| Net (income) loss attributed to noncontrolling interests | |
| (1,394 | ) | |
| (79 | ) | |
| (3,403 | ) | |
| 1,069 | |
| Net income (loss) attributed to Pacific Ethanol | |
$ | 15,572 | | |
$ | 1,051 | | |
$ | 4,746 | | |
$ | (4,403 | ) |
| Preferred stock dividends | |
$ | (315 | ) | |
$ | (315 | ) | |
$ | (627 | ) | |
$ | (627 | ) |
| Income (loss) available to common stockholders | |
$ | 15,257 | | |
$ | 736 | | |
$ | 4,119 | | |
$ | (5,030 | ) |
| Net income (loss) per share, basic | |
$ | 0.77 | | |
$ | 0.07 | | |
$ | 0.23 | | |
$ | (0.48 | ) |
| Net income (loss) per share, diluted | |
$ | 0.68 | | |
$ | 0.07 | | |
$ | 0.20 | | |
$ | (0.48 | ) |
| Weighted-average shares outstanding, basic | |
| 19,903 | | |
| 10,853 | | |
| 18,053 | | |
| 10,462 | |
| Weighted-average shares outstanding, diluted | |
| 22,276 | | |
| 12,135 | | |
| 20,514 | | |
| 10,462 | |
PACIFIC ETHANOL, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value)
| | |
June 30, | | |
December 31, | |
| ASSETS | |
2014 | | |
2013 | |
| Current Assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 25,923 | | |
$ | 5,151 | |
| Accounts receivable, net | |
| 43,063 | | |
| 35,296 | |
| Inventories | |
| 27,580 | | |
| 23,386 | |
| Prepaid inventory | |
| 14,814 | | |
| 12,315 | |
| Other current assets | |
| 1,033 | | |
| 3,229 | |
| Total current assets | |
| 112,413 | | |
| 79,377 | |
| Property and equipment, net | |
| 155,528 | | |
| 155,194 | |
| Other Assets: | |
| | | |
| | |
| Intangible assets, net | |
| 3,023 | | |
| 3,260 | |
| Other assets | |
| 1,749 | | |
| 3,218 | |
| Total other assets | |
| 4,772 | | |
| 6,478 | |
| Total Assets | |
$ | 272,713 | | |
$ | 241,049 | |
PACIFIC ETHANOL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value)
| | |
June 30, | | |
December 31, | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
2014 | | |
2013 | |
| Current Liabilities: | |
| | | |
| | |
| Accounts payable – trade | |
$ | 16,619 | | |
$ | 11,071 | |
| Accrued liabilities | |
| 10,440 | | |
| 5,851 | |
| Current portion – capital leases | |
| 4,802 | | |
| 4,830 | |
| Current portion – long-term debt | |
| – | | |
| 750 | |
| Other current liabilities | |
| 1,419 | | |
| 5,714 | |
| Total current liabilities | |
| 33,280 | | |
| 28,216 | |
| | |
| | | |
| | |
| Long-term debt, net of current portion | |
| 38,374 | | |
| 98,408 | |
| Accrued preferred dividends | |
| 2,194 | | |
| 3,657 | |
| Capital leases, net of current portion | |
| 3,710 | | |
| 6,041 | |
| Warrant liabilities at fair value | |
| 22,763 | | |
| 8,215 | |
| Other liabilities | |
| 4,495 | | |
| 1,611 | |
| Total Liabilities | |
| 104,816 | | |
| 146,148 | |
| | |
| | | |
| | |
| Stockholders’ Equity: | |
| | | |
| | |
| Pacific Ethanol, Inc. Stockholders’ Equity: | |
| | | |
| | |
| Preferred stock, $0.001 par value; 10,000 shares authorized; Series A: 0 shares issued and outstanding as of June 30, 2014 and December 31, 2013 Series B: 927 shares issued and outstanding as of June 30, 2014 and December 31, 2013 | |
| 1 | | |
| 1 | |
| Common stock, $0.001 par value; 300,000 shares authorized; 21,235 and 16,126 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively | |
| 21 | | |
| 16 | |
| Additional paid-in capital | |
| 687,026 | | |
| 621,557 | |
| Accumulated deficit | |
| (528,237 | ) | |
| (532,356 | ) |
| Total Pacific Ethanol, Inc. Stockholders’ Equity | |
| 158,811 | | |
| 89,218 | |
| Noncontrolling interests | |
| 9,086 | | |
| 5,683 | |
| Total Stockholders’ Equity | |
| 167,897 | | |
| 94,901 | |
| Total Liabilities and Stockholders’ Equity | |
$ | 272,713 | | |
$ | 241,049 | |
Reconciliation of Adjusted Net Income
(Loss) to Net Income (Loss)
| | |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| (in thousands) (unaudited) | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| Net income (loss) attributed to common shareholders | |
$ | 15,257 | | |
$ | 736 | | |
$ | 4,119 | | |
$ | (5,030 | ) |
| Adjustments: | |
| | | |
| | | |
| | | |
| | |
| Fair value adjustments and warrant inducements | |
| (485 | ) | |
| (1,437 | ) | |
| 35,359 | | |
| (745 | ) |
| Extinguishments of debt | |
| 2,363 | | |
| 39 | | |
| 2,363 | | |
| (778 | ) |
| Total adjustments | |
| 1,878 | | |
| (1,398 | ) | |
| 37,722 | | |
| (1,523 | ) |
| Adjusted net income | |
$ | 17,135 | | |
$ | (662 | ) | |
$ | 41,841 | | |
$ | (6,553 | ) |
| Adjusted net income (loss) per share - diluted | |
$ | 0.77 | | |
$ | (0.05 | ) | |
$ | 2.04 | | |
$ | (0.63 | ) |
| Weighted-average shares outstanding, diluted | |
| 22,276 | | |
| 12,135 | | |
| 20,514 | | |
| 10,462 | |
________________
Reconciliation of Adjusted EBITDA to
Net Income (Loss)
| | |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| (in thousands) (unaudited) | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| Net income (loss) attributed to Pacific Ethanol | |
$ | 15,572 | | |
$ | 1,051 | | |
$ | 4,746 | | |
$ | (4,403 | ) |
| Adjustments: | |
| | | |
| | | |
| | | |
| | |
| Interest expense* | |
| 2,551 | | |
| 3,393 | | |
| 6,595 | | |
| 6,125 | |
| Provision for income taxes | |
| 7,196 | | |
| – | | |
| 10,466 | | |
| – | |
| Extinguishments of debt - noncash | |
| – | | |
| 1,037 | | |
| – | | |
| 1,037 | |
| Fair value adjustments and warrant inducements | |
| (485 | ) | |
| (1,437 | ) | |
| 35,359 | | |
| (745 | ) |
| Depreciation and amortization expense* | |
| 2,989 | | |
| 2,529 | | |
| 6,052 | | |
| 4,915 | |
| Total adjustments | |
| 12,251 | | |
| 5,522 | | |
| 58,472 | | |
| 11,332 | |
| Adjusted EBITDA | |
$ | 27,823 | | |
$ | 6,573 | | |
$ | 63,218 | | |
$ | 6,929 | |
________________
* Adjusted for noncontrolling interests.
Commodity Price Performance
| | |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| (unaudited) | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| Ethanol production gallons sold (in millions) | |
| 46.5 | | |
| 36.8 | | |
| 86.3 | | |
| 72.1 | |
| Ethanol third party gallons sold (in millions) | |
| 85.7 | | |
| 64.4 | | |
| 158.6 | | |
| 129.9 | |
| Total ethanol gallons sold (in millions) | |
| 132.2 | | |
| 101.2 | | |
| 244.9 | | |
| 202.0 | |
| | |
| | | |
| | | |
| | | |
| | |
| Average ethanol sales price per gallon | |
$ | 2.78 | | |
$ | 2.79 | | |
$ | 2.75 | | |
$ | 2.69 | |
| Average CBOT ethanol price per gallon | |
$ | 2.25 | | |
$ | 2.53 | | |
$ | 2.23 | | |
$ | 2.47 | |
| | |
| | | |
| | | |
| | | |
| | |
| Corn cost – CBOT equivalent | |
$ | 4.84 | | |
$ | 6.55 | | |
$ | 4.67 | | |
$ | 6.85 | |
| Average basis | |
| 1.13 | | |
| 1.41 | | |
| 1.20 | | |
| 1.30 | |
| Delivered corn cost | |
$ | 5.97 | | |
$ | 7.96 | | |
$ | 5.87 | | |
$ | 8.15 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total co-product tons sold (in thousands) | |
| 373.9 | | |
| 337.4 | | |
| 715.8 | | |
| 638.3 | |
| Co-product return % (1) | |
| 39.5 | % | |
| 27.6 | % | |
| 35.3 | % | |
| 27.9 | % |
________________
(1) Co-product revenue
as a percentage of delivered cost of corn.
####
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