- Set annual records in net sales, gross profit, operating
income, Adjusted EBITDA and total gallons sold
- Reported strong cash balance of $62 million and working capital
of $114 million
- Paid down $62 million in consolidated debt in 2014
- Announced merger agreement with Aventine Renewable Energy
Holdings
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
twelve-months ended December 31, 2014.
Financial Highlights
Reported for the three months ending December 31, 2014:
- Net income of $12.2 million, or $0.50 per diluted share
- Adjusted Net Earnings of $10.0 million, or $0.41 per share
- Adjusted EBITDA of $16.3 million
Reported for the year ending December 31, 2014:
- Net income of $20.0 million, or $0.88 per diluted share
- Adjusted Net Earnings of $59.9 million, or $2.64 per share
- Adjusted EBITDA of $95.0 million
Neil Koehler, the Company's president and CEO, stated: "Our
record financial and operating results in 2014 are a culmination of
numerous efficiency and debt reduction initiatives we implemented
over the past several years combined with strong market
fundamentals. With our solid balance sheet and cash flow, we are
both reinvesting in our production assets and pursuing a merger
with Aventine that will redefine Pacific Ethanol's competitive
position in the ethanol industry, making us the fifth largest
ethanol producer and marketer in the country. In 2015, we are
focused on driving sustained profitable growth through successfully
closing the Aventine merger, integrating our combined companies,
further improving plant efficiencies, diversifying feedstock,
introducing new revenue streams and pursuing advanced biofuels
production."
Financial Results for the Three Months
Ended December 31, 2014
Net sales were $256.2 million for the fourth quarter of 2014,
compared to $215.3 million for the fourth quarter of 2013. The
increase in net sales was attributable to an increase in total
gallons sold, slightly offset by a reduction in the Company's
average sales price per gallon.
Gross profit was $18.4 million for the fourth quarter of 2014,
compared to $21.6 million for the fourth quarter of 2013. The
decline in gross profit was due to particularly strong
production margins in the fourth quarter of 2013.
Selling, general and administrative ("SG&A") expenses were
$4.7 million for the fourth quarter of 2014, compared to $4.4
million for the fourth quarter of 2013. The increase in SG&A
expenses reflect an increase in professional fees related to the
pending Aventine merger of approximately $1.0 million, partially
offset by a reduction in year-end compensation expense of
approximately $0.8 million.
Operating income for the fourth quarter of 2014 was $13.6
million, compared to $17.2 million for the same period in 2013.
Fair value adjustments resulted in income of $2.2 million for
the fourth quarter of 2014, compared to an expense of $2.5 million
for the same period in 2013.
Interest expense, net was $1.1 million for the fourth quarter of
2014, compared to $3.7 million for the fourth quarter of 2013. This
reduction is due to the Company's significantly reduced debt
balances in 2014.
Provision for income taxes was $1.5 million for the fourth
quarter of 2014. In the fourth quarter, the Company finalized its
estimate of net operating losses available to be utilized in 2014,
which resulted in a reduced provision for income taxes for the
quarter.
Income available to common stockholders for the fourth quarter
of 2014 was $12.2 million, or $0.50 per diluted share, compared to
$8.3 million, or $0.54 per diluted share, for the fourth quarter of
2013.
Adjusted Net Earnings, which excludes fair value adjustments and
warrant inducements and extinguishments of debt, was $10.0 million,
or $0.41 per diluted share for the fourth quarter of 2014, compared
to Adjusted Net Earnings of $12.0 million, or $0.79 per diluted
share for the same period in 2013.
Adjusted EBITDA was $16.3 million for the fourth quarter of
2014, compared to Adjusted EBITDA of $18.3 million for the fourth
quarter of 2013.
Financial Results for the Year Ended
December 31, 2014
Net sales were a record $1.1 billion for 2014, compared to
$908.4 million for 2013.
Gross profit was a record $108.5 million for 2014, compared to
$32.9 million for 2013.
Operating income for 2014 was a record $91.4 million, compared
to $18.9 million for 2013.
Net income available to common stockholders for 2014 was $20.0
million, or $0.88 per diluted share, compared to a loss of $2.0
million, or $0.17 per diluted share, for 2013.
Adjusted Net Earnings for 2014 was $59.9 million, or $2.64 per
diluted share, compared to Adjusted Net Earnings of $2.0 million,
or $0.16 per diluted share, for 2013.
Adjusted EBITDA for 2014 was a record $95.0 million, compared to
Adjusted EBITDA of $28.6 million for 2013.
Q4 Results Conference Call
Management will host a conference call at 8:00 a.m. PT/11:00
a.m. ET on March 5, 2015. 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.net. 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 95713528#.
If you are unable to listen to 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, March 5, 2015 through 11:59 p.m. Eastern
Time on Thursday, March 12, 2015. To access the replay, please dial
(855) 859-2056. International callers should dial 00-1-(404)
537-3406. The pass code will be 95713528#.
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
Earnings as unaudited earnings before fair value adjustments and
warrant inducements and gain (loss) on extinguishments of debt. The
company defines Adjusted EBITDA as unaudited net income (loss)
attributed to Pacific Ethanol 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 Earnings 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 Earnings 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 Earnings 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
96% 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
Statements contained in this communication that refer to Pacific
Ethanol's estimated or anticipated future results or other
non-historical expressions of fact are forward-looking statements
that reflect Pacific Ethanol's current perspective of existing
trends and information as of the date of this communication.
Forward looking statements generally will be accompanied by words
such as "anticipate," "believe," "plan," "could," "should,"
"estimate," "expect," "forecast," "outlook," "guidance," "intend,"
"may," "might," "will," "possible," "potential," "predict,"
"project," or other similar words, phrases or expressions. Such
forward-looking statements include, but are not limited to, the
ability of Pacific Ethanol to timely and successfully execute on,
and the effects of, its initiatives to improve plant efficiencies
and increase yields, diversify feedstock, introduce new revenue
streams, and pursue advanced biofuels production; statements about
the benefits of the Aventine merger, including future financial and
operating results, Pacific Ethanol's or Aventine's plans,
objectives, expectations and intentions and the expected timing of
completion of the transaction. It is important to note that Pacific
Ethanol's goals and expectations are not predictions of actual
performance. Actual results may differ materially from Pacific
Ethanol's current expectations depending upon a number of factors
affecting Pacific Ethanol's business, Aventine's business and risks
associated with merger transactions. These factors include, among
others, adverse economic and market conditions, including for
ethanol and its co-products; raw material costs, including ethanol
production input costs; changes in governmental regulations and
policies; and insufficient capital resources. These factors also
include, among others, the inherent uncertainty associated with
financial projections; restructuring in connection with, and
successful closing of, the Aventine merger; subsequent integration
of Aventine and the ability to recognize the anticipated synergies
and benefits of the Aventine merger; the ability to obtain required
regulatory approvals for the transaction (including the approval of
antitrust authorities necessary to complete the acquisition), the
timing of obtaining such approvals and the risk that such approvals
may result in the imposition of conditions that could adversely
affect the combined company or the expected benefits of the
transaction; the ability to obtain the requisite Pacific Ethanol
and Aventine stockholder approvals; the risk that a condition to
closing the Aventine merger may not be satisfied on a timely basis
or at all; the failure of the proposed transaction to close for any
other reason; risks relating to the value of the Pacific Ethanol
shares to be issued in the transaction; the anticipated size of the
markets and continued demand for Pacific Ethanol's and Aventine's
products; the impact of competitive products and pricing; the risks
and uncertainties normally incident to the ethanol production and
marketing industries; the difficulty of predicting the timing or
outcome of pending or future litigation or government
investigations; changes in generally accepted accounting
principles; costs and efforts to defend or enforce intellectual
property rights; successful compliance with governmental
regulations applicable to Pacific Ethanol's and Aventine's
facilities, products and/or businesses; changes in the laws and
regulations; changes in tax laws or interpretations that could
increase Pacific Ethanol's consolidated tax liabilities; the loss
of key senior management or staff; and such other risks and
uncertainties detailed in Pacific Ethanol's periodic public filings
with the Securities and Exchange Commission, including but not
limited to Pacific Ethanol's "Risk Factors" section contained in
Pacific Ethanol's Form 10-Q filed with the Securities and Exchange
Commission on November 12, 2014 and from time to time in Pacific
Ethanol's other investor communications. Except as expressly
required by law, Pacific Ethanol disclaims any intent or obligation
to update or revise these forward-looking statements.
Important Information for Investors and
Stockholders
This communication is being made partially in respect of the
proposed merger between Pacific Ethanol, Inc. and Aventine
Renewable Energy Holdings, Inc. In connection with the proposed
merger, Pacific Ethanol has filed with the Securities and Exchange
Commission a registration statement on Form S-4 that includes a
preliminary joint proxy statement of Pacific Ethanol and Aventine
that also constitutes a prospectus of Pacific Ethanol. Upon
effectiveness of the registration statement, a definitive joint
proxy statement/prospectus will be delivered to the stockholders of
Pacific Ethanol and Aventine.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE
JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval.
Investors and security holders will be able to obtain free
copies of the registration statement and the definitive joint proxy
statement/prospectus (when available) and other documents filed
with the Securities and Exchange Commission by Pacific Ethanol
through the website maintained by the Securities and Exchange
Commission at http://www.sec.gov. Copies of the documents filed
with the Securities and Exchange Commission by Pacific Ethanol will
be available free of charge on Pacific Ethanol's internet website
at www.pacificethanol.com or by contacting Pacific Ethanol's
investor relations agency, LHA, at (415) 433-3777.
Pacific Ethanol, Aventine, their respective directors and
certain of their executive officers and employees may be considered
participants in the solicitation of proxies in connection with the
proposed transaction. Information about the directors and executive
officers of Pacific Ethanol is set forth in its proxy statement for
its 2014 annual meeting of stockholders, which was filed with the
Securities and Exchange Commission on April 28, 2014. Additional
information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the definitive
joint proxy statement/prospectus filed with the above-referenced
registration statement on Form S-4 and other relevant materials to
be filed with the Securities and Exchange Commission when they
become available.
A more complete description will be available in the
registration statement and the definitive joint proxy
statement/prospectus.
| PACIFIC ETHANOL,
INC. |
| CONSOLIDATED STATEMENTS
OF OPERATIONS |
| (unaudited, in
thousands, except per share data) |
| |
| |
Three Months Ended |
Years Ended |
| |
December 31, |
December 31, |
| |
2014 |
2013 |
2014 |
2013 |
| |
|
|
|
|
| Net sales |
$ 256,152 |
$ 215,290 |
$ 1,107,412 |
$ 908,437 |
| Cost of goods sold |
237,774 |
193,694 |
998,927 |
875,507 |
| Gross profit |
18,378 |
21,596 |
108,485 |
32,930 |
| Selling, general and administrative
expenses |
4,731 |
4,372 |
17,108 |
14,021 |
| Income from operations |
13,647 |
17,224 |
91,377 |
18,909 |
| Fair value adjustments and warrant
inducements |
2,205 |
(2,520) |
(37,532) |
(1,013) |
| Interest expense, net |
(1,068) |
(3,688) |
(9,438) |
(15,671) |
| Loss on extinguishments of debt |
— |
(1,240) |
(2,363) |
(3,035) |
| Other expense, net |
(171) |
(31) |
(905) |
(352) |
| Income (loss) before provision for income
taxes |
14,613 |
9,745 |
41,139 |
(1,162) |
| Provision for income taxes |
1,508 |
— |
15,137 |
— |
| Consolidated net income (loss) |
13,105 |
9,745 |
26,002 |
(1,162) |
| Net (income) loss attributed to
noncontrolling interests |
(587) |
(1,152) |
(4,713) |
381 |
| Net income (loss) attributed to Pacific
Ethanol |
$ 12,518 |
$ 8,593 |
$ 21,289 |
$ (781) |
| Preferred stock dividends |
$ (319) |
$ (319) |
$ (1,265) |
$ (1,265) |
| Income (loss) available to common
stockholders |
$ 12,199 |
$ 8,274 |
$ 20,024 |
$ (2,046) |
| Net income (loss) per share, basic |
$ 0.51 |
$ 0.55 |
$ 0.96 |
$ (0.17) |
| Net income (loss) per share, diluted |
$ 0.50 |
$ 0.54 |
$ 0.88 |
$ (0.17) |
| Weighted-average shares outstanding,
basic |
24,055 |
15,081 |
20,810 |
12,264 |
| Weighted-average shares outstanding,
diluted |
24,633 |
15,293 |
22,669 |
12,264 |
| |
|
|
|
|
| PACIFIC ETHANOL,
INC. |
| CONSOLIDATED BALANCE
SHEETS |
| (unaudited, in
thousands, except par value) |
| |
| |
December 31, |
| ASSETS |
2014 |
2013 |
| Current Assets: |
|
|
| Cash and cash equivalents |
$ 62,084 |
$ 5,151 |
| Accounts receivable, net |
34,612 |
35,296 |
| Inventories |
18,550 |
23,386 |
| Prepaid inventory |
11,595 |
12,315 |
| Other current assets |
12,710 |
3,229 |
| Total current assets |
139,551 |
79,377 |
| Property and equipment, net |
155,302 |
155,194 |
| Other Assets: |
|
|
| Intangible assets, net |
2,786 |
3,260 |
| Other assets |
1,863 |
3,218 |
| Total other assets |
4,649 |
6,478 |
| Total Assets |
$ 299,502 |
$ 241,049 |
| |
|
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
| Current Liabilities: |
|
|
| Accounts payable – trade |
$ 13,122 |
$ 11,071 |
| Accrued liabilities |
6,203 |
5,851 |
| Current portion – capital leases |
4,077 |
4,830 |
| Current portion – long-term debt |
— |
750 |
| Other current liabilities |
2,045 |
5,714 |
| Total current liabilities |
25,447 |
28,216 |
| |
|
|
| Long-term debt, net of current portion |
34,533 |
98,408 |
| Accrued preferred dividends |
— |
3,657 |
| Capital leases, net of current portion |
2,055 |
6,041 |
| Warrant liabilities and conversion
features |
1,986 |
8,215 |
| Deferred tax liabilities |
17,040 |
1,091 |
| Other liabilities |
459 |
520 |
| Total Liabilities |
81,520 |
146,148 |
| |
|
|
| Stockholders' Equity: |
|
|
| Pacific Ethanol, Inc. Stockholders'
Equity: |
|
|
| Preferred stock, $0.001 par value; 10,000
shares authorized; |
|
|
| Series A: no shares issued and
outstanding as of December 31, 2014 and 2013 |
|
|
| Series B: 927 shares issued and
outstanding as of December 31, 2014 and 2013 |
1 |
1 |
| Common stock, $0.001 par value; 300,000
shares authorized; 24,500 and 16,126 shares issued and outstanding
as of December 31, 2014 and 2013, respectively |
25 |
16 |
| Additional paid-in capital |
725,813 |
621,557 |
| Accumulated deficit |
(512,332) |
(532,356) |
| Total Pacific Ethanol, Inc. Stockholders'
Equity |
213,507 |
89,218 |
| Noncontrolling interests |
4,475 |
5,683 |
| Total Stockholders' Equity |
217,982 |
94,901 |
| Total Liabilities and Stockholders'
Equity |
$ 299,502 |
$ 241,049 |
| |
|
|
| Reconciliation of
Adjusted Net Earnings to Net Income (Loss) |
| |
| |
Three Months Ended |
Years Ended |
| |
December 31, |
December 31, |
| (in thousands) (unaudited) |
2014 |
2013 |
2014 |
2013 |
| Net income (loss) attributed to common
stockholders |
$ 12,199 |
$ 8,274 |
$ 20,024 |
$ (2,046) |
| Adjustments: |
|
|
|
|
| Fair value adjustments and warrant
inducements |
(2,205) |
2,520 |
37,532 |
1,013 |
| Extinguishments of debt |
— |
1,240 |
2,363 |
3,035 |
| Total adjustments |
(2,205) |
3,760 |
39,895 |
4,048 |
| Adjusted Net Earnings |
$ 9,994 |
$ 12,034 |
$ 59,919 |
$ 2,002 |
| |
|
|
|
|
| Adjusted Net Earnings per share -
diluted |
$ 0.41 |
$ 0.79 |
$ 2.64 |
$ 0.16 |
| |
|
|
|
|
| Weighted-average shares outstanding,
diluted |
24,633 |
15,293 |
22,669 |
12,264 |
| |
|
|
|
|
| |
|
|
|
|
| Reconciliation of
Adjusted EBITDA to Net Income (Loss) |
| |
| |
Three Months Ended |
Years Ended |
| |
December 31, |
December 31, |
| (in thousands) (unaudited) |
2014 |
2013 |
2014 |
2013 |
| Net income (loss) attributed to Pacific
Ethanol |
$ 12,518 |
$ 8,593 |
$ 21,289 |
$ (781) |
| Adjustments: |
|
|
|
|
| Interest expense* |
967 |
3,138 |
8,490 |
13,260 |
| Provision for income taxes* |
1,637 |
— |
15,109 |
— |
| Extinguishments of debt – noncash |
— |
1,240 |
— |
4,850 |
| Fair value adjustments |
(2,205) |
2,520 |
37,532 |
1,013 |
| Depreciation and amortization
expense* |
3,413 |
2,768 |
12,581 |
10,291 |
| Total adjustments |
3,812 |
9,666 |
73,712 |
29,414 |
| Adjusted EBITDA |
$ 16,330 |
$ 18,259 |
$ 95,001 |
$ 28,633 |
| |
|
|
|
|
| * Adjusted for noncontrolling
interests. |
| |
|
|
|
|
| |
|
|
|
|
| Commodity Price
Performance |
| |
| |
Three Months Ended |
Years Ended |
| |
December 31, |
December 31, |
| (unaudited) |
2014 |
2013 |
2014 |
2013 |
| Ethanol production gallons sold (in
millions) |
50.4 |
40.5 |
183.5 |
149.7 |
| Ethanol third party gallons sold (in
millions) |
84.2 |
66.5 |
329.7 |
264.2 |
| Total ethanol gallons sold (in
millions) |
134.6 |
107.0 |
513.2 |
413.9 |
| |
|
|
|
|
| Ethanol average sales price per gallon |
$ 2.15 |
$ 2.36 |
$ 2.48 |
$ 2.59 |
| Average CBOT ethanol price per gallon |
$ 1.80 |
$ 1.86 |
$ 2.07 |
$ 2.25 |
| |
|
|
|
|
| Corn cost – CBOT equivalent |
$ 3.67 |
$ 4.35 |
$ 4.21 |
$ 5.72 |
| Average basis |
$ 1.30 |
$ 1.35 |
$ 1.24 |
$ 1.60 |
| Delivered cost of corn |
$ 4.97 |
$ 5.70 |
$ 5.45 |
$ 7.32 |
| |
|
|
|
|
| Total co-product tons sold (1) (in
thousands) |
395.2 |
352.8 |
1,496.0 |
1,327.0 |
| Co-product return % (2) |
28.5% |
35.2% |
32.5% |
29.6% |
| |
|
|
|
|
| (1) Includes corn oil. |
| (2) Co-product revenue as a
percentage of delivered cost of corn. |
CONTACT: Company IR Contact:
Pacific Ethanol, Inc.
916-403-2755
844-403-2755
Investorrelations@pacificethanol.com
IR Agency Contact:
Becky Herrick
LHA
415-433-3777
Media Contact:
Paul Koehler
Pacific Ethanol, Inc.
916-403-2790
paulk@pacificethanol.com
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