- Began production of corn oil at Madera, CA plant
- Planned merger with Aventine Renewable Energy on pace for late
Q2 2015 close
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-months
ended March 31, 2015.
Neil Koehler, the company's president and CEO, stated: "During
the first quarter of 2015, the ethanol industry was negatively
impacted by lower production margins resulting from high ethanol
inventory levels and volatile energy markets. As a result, we
reported a first quarter 2015 net loss of $4.7 million. We have
seen a solid improvement in margins so far in the second quarter,
as US ethanol production has moderated while the demand for
transportation fuels is strengthening. Looking forward in 2015, we
are optimistic about the financial performance of the company and
the industry. We began producing corn oil at our Madera facility
and are close to initiating corn oil production at our Columbia
plant, which will further diversify our revenues and contribute to
overall margins.
"2015 is expected to be a transformational year for Pacific
Ethanol as we extend our market reach through our planned merger
with Aventine Renewable Energy and amplify our destination market
strategy with key facilities in origin markets. In addition, as the
fifth largest producer and marketer of ethanol in the United States
post-merger, I am confident we will have the resources and strategy
in place to drive profitable growth for years to come," concluded
Koehler.
Financial Results for the Three Months
Ended March 31, 2015
Net sales were $206.2 million for the first quarter of 2015, a
decrease of 19% when compared to $254.5 million for the first
quarter of 2014. The decline in net sales was attributable to a
decrease in the company's average sales price per gallon of
ethanol, partially offset by an increase in production gallons sold
reflecting the restart of production at the company's Madera
facility in the second quarter of 2014.
Gross loss was $1.0 million for the first quarter of 2015,
compared to a gross profit of $38.5 million in the first quarter of
2014. The decline in gross profit was driven by significantly
reduced production margins compared to the prior year resulting
from lower ethanol prices.
Selling, general and administrative ("SG&A") expenses were
$4.9 million in the first quarter of 2015, compared to $3.7 million
in the first quarter of 2014. SG&A expenses in the first
quarter of 2015 include approximately $1.0 million in
merger-related costs.
Operating loss for the first quarter of 2015 was $5.9 million,
compared to operating income of $34.9 million for the first quarter
of 2014.
Fair value adjustments for the first quarter of 2015 were $0.2
million, compared to $35.8 million for the first quarter of
2014.
Interest expense, net for the first quarter of 2015 was $1.0
million, compared to $4.4 million for the first quarter of 2014.
The lower interest expense is related to a reduction in the
company's average outstanding debt balances.
Provision (benefit) for income taxes for the first quarter of
2015 was a tax benefit of $2.7 million, compared to an expense of
$3.3 million for the first quarter of 2014.
Net loss available to common stockholders for the first quarter
of 2015 was $4.7 million, compared to $11.1 million for the first
quarter of 2014.
Adjusted EBITDA declined to a loss of $2.7 million for the first
quarter of 2015, compared to Adjusted EBITDA of $35.4 million for
the first quarter of 2014.
Bryon McGregor, the company's CFO, stated, "Cash and cash
equivalents were $42.3 million at March 31, 2015, compared to $62.1
million at December 31, 2014. The reduction in cash reflects debt
payments of $17.5 million and capital expenditures of $8.2 million,
partially offset by cash flows from operations of $7.3 million.
Going forward, we will continue to balance our debt and cash
balances as we look to reduce our overall borrowing costs while
exploring options to consolidate and refinance our total debt
position after closing the Aventine merger."
Q1 Results Conference Call
Management will host a conference call at 8:00 a.m. PT/11:00
a.m. ET on May 12, 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.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 32277644#.
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 Tuesday, May 12, 2015 through 11:59 p.m.
Eastern Time on Tuesday, May 19, 2015. To access the replay, please
dial (855) 859-2056. International callers should dial 00-1-(404)
537-3406. The pass code will be 32277644#.
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
timing and effects of corn oil production; the ability of Pacific
Ethanol to successfully balance its debt and cash balances and
refinance its total debt, including Aventine's debt; 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-K/A filed
with the Securities and Exchange Commission on April 13, 2015 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
definitive joint proxy statement of Pacific Ethanol and Aventine
that also constitutes a prospectus of Pacific Ethanol. The
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 FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY 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 may obtain free copies of the
registration statement and the definitive joint proxy
statement/prospectus 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 are also
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 the definitive joint
proxy statement/prospectus. Additional information regarding the
participants in the proxy solicitations and a description of their
direct and indirect interests, by security holdings or otherwise,
is contained in the definitive joint proxy statement/prospectus
filed with the above-referenced registration statement on Form
S-4.
A more complete description is available in the registration
statement and the definitive joint proxy statement/prospectus.
- Tables Follow -
PACIFIC ETHANOL,
INC. |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(unaudited) |
(in thousands, except
per share data) |
|
|
|
Three Months Ended March
31, |
|
2015 |
2014 |
Net sales |
$ 206,176 |
$ 254,543 |
Cost of goods sold |
207,163 |
215,998 |
Gross profit (loss) |
(987) |
38,545 |
Selling, general and administrative
expenses |
4,905 |
3,670 |
Income (loss) from operations |
(5,892) |
34,875 |
Fair value adjustments |
(173) |
(35,844) |
Interest expense, net |
(1,015) |
(4,351) |
Other expense, net |
(129) |
(227) |
Loss before provision for income taxes |
(7,209) |
(5,547) |
Provision (benefit) for income taxes |
(2,700) |
3,270 |
Consolidated net loss |
(4,509) |
(8,817) |
Net (income) loss attributed to
noncontrolling interest |
129 |
(2,009) |
Net loss attributed to Pacific Ethanol,
Inc. |
$ (4,380) |
$ (10,826) |
Preferred stock dividends |
$ (312) |
$ (312) |
Net loss available to common
stockholders |
$ (4,692) |
$ (11,138) |
Net loss per share, basic and diluted |
$ (0.19) |
$ (0.69) |
Weighted-average shares outstanding, basic
and diluted |
24,104 |
16,181 |
|
PACIFIC ETHANOL,
INC. |
CONSOLIDATED BALANCE
SHEETS |
(unaudited) |
(in thousands, except
par value) |
|
|
|
ASSETS |
March 31, 2015 |
December 31, 2014 |
Current Assets: |
|
|
Cash and cash equivalents |
$ 42,274 |
$ 62,084 |
Accounts receivable, net |
27,342 |
34,612 |
Inventories |
17,840 |
18,550 |
Prepaid inventory |
8,431 |
11,595 |
Other current assets |
14,678 |
12,710 |
Total current assets |
110,565 |
139,551 |
Property and equipment, net |
160,179 |
155,302 |
Other Assets: |
|
|
Intangible assets, net |
2,678 |
2,786 |
Other assets |
1,803 |
1,863 |
Total other
assets |
4,481 |
4,649 |
Total Assets |
$ 275,225 |
$ 299,502 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current Liabilities: |
|
|
|
Accounts payable – trade |
$ 14,823 |
$ 13,122 |
|
Accrued liabilities |
4,230 |
6,203 |
|
Current portion – capital leases |
2,986 |
4,077 |
|
Other current liabilities |
800 |
2,045 |
|
Total current
liabilities |
22,839 |
25,447 |
|
|
|
|
|
Long-term debt, net of current portion |
17,003 |
34,533 |
|
Capital leases, net of current portion |
1,883 |
2,055 |
|
Warrant liabilities |
2,120 |
1,986 |
|
Deferred tax liabilities |
17,040 |
17,040 |
|
Other liabilities |
443 |
459 |
|
Total Liabilities |
61,328 |
81,520 |
|
|
|
|
|
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 March 31, 2015 and December 31, 2014 Series B: 927 shares
issued and outstanding as of March 31, 2015 and December 31,
2014 |
1 |
1 |
|
Common stock, $0.001 par value; 300,000
shares authorized; 24,715 and 24,500 shares issued and outstanding
as of March 31, 2015 and December 31, 2014, respectively |
25 |
25 |
|
Additional paid-in capital |
726,549 |
725,813 |
|
Accumulated deficit |
(517,024) |
(512,332) |
|
Total Pacific Ethanol, Inc.
Stockholders' Equity |
209,551 |
213,507 |
|
Noncontrolling interests |
4,346 |
4,475 |
|
Total Stockholders'
Equity |
213,897 |
217,982 |
|
Total Liabilities and Stockholders'
Equity |
$ 275,225 |
$ 299,502 |
|
|
Reconciliation of
Adjusted Net Earnings to Net Income (Loss) |
|
|
|
Three Months Ended March
31, |
(in thousands)
(unaudited) |
2015 |
2014 |
Net loss available to common
stockholders |
$ (4,692) |
$ (11,138) |
Adjustments: |
|
|
Fair value
adjustments |
173 |
35,844 |
Adjusted Net Earnings |
$ (4,519) |
$ 24,706 |
Adjusted Net Earnings per
share - diluted |
$ (0.19) |
$ 1.53 |
Weighted-average shares
outstanding, diluted |
24,104 |
16,181 |
|
Reconciliation of
Adjusted EBITDA to Net Income (Loss) |
|
|
|
Three Months Ended March
31, |
(in thousands) (unaudited) |
2015 |
2014 |
Net loss attributed to Pacific Ethanol,
Inc. |
$ (4,380) |
$ (10,826) |
Adjustments: |
|
|
Interest expense* |
921 |
4,044 |
Provision for income taxes |
(2,700) |
3,270 |
Fair value adjustments |
173 |
35,844 |
Depreciation and amortization
expense* |
3,292 |
3,063 |
Total adjustments |
1,686 |
46,221 |
Adjusted EBITDA |
$ (2,694) |
$ 35,395 |
_____________ |
|
|
* Adjusted for
noncontrolling interests. |
|
Commodity Price
Performance |
|
|
|
Three Months Ended March
31, |
(unaudited) |
2015 |
2014 |
Ethanol production gallons sold (in
millions) |
44.6 |
39.8 |
Ethanol third party gallons sold (in
millions) |
91.1 |
73.0 |
Total ethanol gallons sold (in
millions) |
135.7 |
112.8 |
|
|
|
Average ethanol sales price per
gallon |
$ 1.65 |
$ 2.70 |
Average CBOT ethanol price per
gallon |
$ 1.50 |
$ 2.20 |
|
|
|
Corn cost – CBOT equivalent |
$ 3.88 |
$ 4.48 |
Average basis |
$ 0.93 |
$ 1.28 |
Delivered corn cost |
$ 4.81 |
$ 5.76 |
|
|
|
Total co-product tons sold (1) (in
thousands) |
355.3 |
341.9 |
Co-product return % (2) |
33.8% |
34.6% |
_____________ |
|
|
(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
866-508-4969
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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