– Net sales grew 13% to $386 million in Q1’17
compared to Q1’16 –– Total gallons sold increased 9% to 226 million
in Q1’17 compared to Q1’16 –– Net loss was $12.9 million and
Adjusted EBITDA was negative $1.9 million –
Pacific Ethanol, Inc. (NASDAQ:PEIX), a leading
producer and marketer of low-carbon renewable fuels in the United
States, reported its financial results for the three months ended
March 31, 2017.
Neil Koehler, the company’s president and CEO,
stated: “Year-over-year, first quarter net sales and total gallons
sold were up 13% and 9%, respectively, reflecting the expanded
capacity utilization of our production and marketing assets.
Compared to the first quarter of last year our production margins
improved, but our quarterly financial performance was negatively
impacted by sharply falling ethanol prices, which significantly
reduced gross profit in our ethanol marketing business. In
addition, the week-long shutdown of our Pekin wet mill for
scheduled maintenance reduced production and significantly
increased maintenance costs. However, the repairs have since
contributed positively to the wet mill’s performance.
“So far in the second quarter, we have seen an
improvement in ethanol production margins with increased seasonal
demand and a record pace of ethanol exports. As a result, we expect
a better operating environment and improved financial performance
for the company through 2017,” concluded Koehler.
Financial Results for the Three Months
Ended March 31, 2017 Compared to the Three Months Ended March 31,
2016
- Net sales were $386.3 million, compared to $342.4 million. The
increase was attributable to growth in both production and third
party gallons sold, as well as a higher average ethanol sales price
per gallon.
- Cost of goods sold was $392.1 million, compared to $341.3
million.
- Gross loss was $5.8 million, compared to gross profit of $1.1
million. The decrease in gross profit is primarily attributable to
the following factors:- $3.8 million was due to lower
gross profit from the company’s third-party marketing business,
which was primarily attributable to sharply falling ethanol prices
in the first quarter of 2017.- $4.0 million was
primarily associated with the scheduled shutdown of the Pekin,
Illinois wet mill facility for routine maintenance and $1.6 million
resulted from unanticipated repair and maintenance expenses at
the Pekin wet mill incurred over the quarter.
- Selling, general and administrative expenses were $5.5 million,
compared to $8.3 million. The decrease primarily resulted from a
net gain of approximately $3.6 million related to litigation
matters settled during the first quarter of 2017, which was
partially offset by higher cash and stock compensation
expenses.
- Operating loss was $11.2 million, compared to $7.2
million.
- Net loss available to common stockholders was $12.9 million, or
$0.31 per share, compared to a net loss of $13.5 million, or $0.32
per share.
- Adjusted EBITDA was negative $1.9 million, compared to positive
Adjusted EBITDA of $1.6 million.
- Cash and cash equivalents were $73.7 million at March 31, 2017,
compared to $68.6 million at December 31, 2016.
First Quarter 2017 Results Conference
CallManagement will host a conference call at 8:00 a.m.
Pacific Time/11:00 a.m. Eastern Time on May 10, 2017. CEO Neil
Koehler and CFO Bryon McGregor will deliver prepared remarks
followed by a question and answer session.
The webcast 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: 1 (877) 847-6066. International callers
should dial 00-1 (970) 315-0267. The pass code will be 16513368. 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 Wednesday, May 10, 2017 through 11:59 p.m. Eastern
Time on Wednesday, May 17, 2017. To access the replay, please dial
(855) 859-2056. International callers should dial 00-1-(404)
537-3406. The pass code will be 16513368.
Use of Non-GAAP
MeasuresManagement believes that certain financial
measures not in accordance with generally accepted accounting
principles ("GAAP") are useful measures of operations. The company
defines Adjusted EBITDA as unaudited net income (loss) attributed
to Pacific Ethanol before interest expense, benefit for income
taxes, asset impairments, purchase accounting adjustments, fair
value adjustments, and depreciation and amortization expense. A
table is provided at the end of this release that provides a
reconciliation of Adjusted EBITDA to its most directly comparable
GAAP measure. Management provides this non-GAAP measure 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
EBITDA is a not measure 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 EBITDA has
limitations as an analytical tool and you should not consider this
measure 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. With the
addition of four Midwestern ethanol plants in July 2015, Pacific
Ethanol more than doubled the scale of its operations, entered new
markets, and expanded its mission to advance its position as an
industry leader in the production and marketing of low carbon
renewable fuels. Pacific Ethanol owns and operates eight ethanol
production facilities, four in the Western states of California,
Oregon and Idaho, and four in the Midwestern states of Illinois and
Nebraska. The plants have a combined production capacity of 515
million gallons per year, produce over one million tons per year of
ethanol co-products – on a dry matter basis – such as wet and dry
distillers grains, wet and dry corn gluten feed, condensed
distillers solubles, corn gluten meal, corn germ, corn oil,
distillers yeast and CO2. Pacific Ethanol markets and distributes
ethanol and co-products domestically and internationally. Pacific
Ethanol’s subsidiary, Kinergy Marketing LLC, markets all ethanol
for Pacific Ethanol’s plants as well as for third parties,
approaching one billion gallons of ethanol marketed annually based
on historical volumes. Pacific Ethanol’s subsidiary, Pacific Ag.
Products LLC, markets wet and dry distillers grains. For more
information please visit www.pacificethanol.com.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995Statements and
information contained in this communication that refer to or
include the 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
the 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, market conditions, including the supply of and
domestic and international demand for ethanol and co-products;
margins for ethanol and co-products; expectations regarding the
overall operating environment and financial performance; and
Pacific Ethanol’s other plans, objectives, expectations and
intentions. It is important to note that Pacific Ethanol’s plans,
objectives, expectations and intentions 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. These factors
include, among others, adverse economic and market conditions,
including for ethanol and its co-products; export conditions and
international demand for ethanol and co-products; fluctuations in
the price of and demand for oil and gasoline; raw material costs,
including ethanol production input costs and changes in
governmental regulations and policies. These factors also include,
among others, the inherent uncertainty associated with financial
and other projections; the anticipated size of the markets and
continued demand for Pacific Ethanol’s products; the impact of
competitive products and pricing; the risks and uncertainties
normally incident to the ethanol production and marketing
industries; changes in generally accepted accounting principles;
successful compliance with governmental regulations applicable to
Pacific Ethanol’s facilities, products and/or businesses; changes
in laws and regulations; the loss of key senior management or
staff; 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 the Company’s Form
10-K filed with the Securities and Exchange Commission on March 15,
2017.
[Tables Follow]
|
PACIFIC ETHANOL, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited, in thousands, except per share
data) |
|
|
|
Three Months EndedMarch 31, |
|
|
2017 |
|
|
|
2016 |
|
Net sales |
$ |
386,340 |
|
|
$ |
342,373 |
|
Cost of goods sold |
|
392,113 |
|
|
|
341,304 |
|
Gross profit
(loss) |
|
(5,773 |
) |
|
|
1,069 |
|
Selling, general and
administrative expenses |
|
5,450 |
|
|
|
8,317 |
|
Loss from
operations |
|
(11,223 |
) |
|
|
(7,248 |
) |
Fair value
adjustments |
|
455 |
|
|
|
39 |
|
Interest expense,
net |
|
(2,637 |
) |
|
|
(6,233 |
) |
Other income (expense),
net |
|
(80 |
) |
|
|
216 |
|
Loss before benefit for
income taxes |
|
(13,485 |
) |
|
|
(13,226 |
) |
Benefit for income
taxes |
|
— |
|
|
|
— |
|
Consolidated net
loss |
|
(13,485 |
) |
|
|
(13,226 |
) |
Net loss attributed to
noncontrolling interests |
|
849 |
|
|
|
— |
|
Net loss attributed to
Pacific Ethanol, Inc. |
$ |
(12,636 |
) |
|
$ |
(13,226 |
) |
Preferred stock
dividends |
$ |
(312 |
) |
|
$ |
(315 |
) |
Net loss available to
common stockholders |
$ |
(12,948 |
) |
|
$ |
(13,541 |
) |
Net loss per share,
basic and diluted |
$ |
(0.31 |
) |
|
$ |
(0.32 |
) |
Weighted-average shares
outstanding, basic and diluted |
|
42,375 |
|
|
|
42,052 |
|
|
PACIFIC ETHANOL, INC. |
CONSOLIDATED BALANCE SHEETS |
(unaudited, in thousands, except par
value) |
|
|
|
ASSETS |
|
March 31, 2017 |
|
|
December 31, 2016 |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
73,734 |
|
$ |
68,590 |
Accounts receivable, net |
|
64,018 |
|
|
86,275 |
Inventories |
|
58,045 |
|
|
60,070 |
Prepaid inventory |
|
7,913 |
|
|
9,946 |
Income tax receivables |
|
5,727 |
|
|
5,730 |
Other current assets |
|
3,827 |
|
|
4,590 |
Total current assets |
|
213,264 |
|
|
235,201 |
Property and equipment, net |
|
460,192 |
|
|
465,190 |
Other Assets: |
|
Intangible assets, net |
|
2,678 |
|
|
2,678 |
Other assets |
|
5,620 |
|
|
5,169 |
Total other assets |
|
8,298 |
|
|
7,847 |
Total Assets |
$ |
681,754 |
|
$ |
708,238 |
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
March 31, 2017 |
|
December 31, 2016 |
|
Current Liabilities: |
|
|
|
|
|
Accounts payable – trade |
$ |
32,490 |
|
$ |
37,051 |
|
Accrued liabilities |
|
17,733 |
|
|
20,280 |
|
Current portion – capital leases |
|
794 |
|
|
794 |
|
Current portion – long-term debt |
|
14,000 |
|
|
10,500 |
|
Accrued PE Op Co. purchase |
|
3,828 |
|
|
3,828 |
|
Other current liabilities |
|
3,105 |
|
|
6,388 |
|
Total current liabilities |
|
71,950 |
|
|
78,841 |
|
|
|
|
|
Long-term debt, net of current portion |
|
182,383 |
|
|
188,028 |
|
Capital leases, net of current portion |
|
357 |
|
|
547 |
|
Warrant liabilities at fair value |
|
196 |
|
|
651 |
|
Other liabilities |
|
21,146 |
|
|
21,910 |
|
Total Liabilities |
|
276,032 |
|
|
289,977 |
|
|
|
|
|
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, 2017 and
December 31, 2016Series B: 927 shares issued and outstanding as of
March 31, 2017 and December 31, 2016 |
|
1 |
|
|
1 |
|
|
Common stock, $0.001 par value; 300,000 shares authorized;
40,414 and 39,772 shares issued and outstanding as of March 31,
2017 and December 31, 2016, respectively |
|
40 |
|
|
40 |
|
|
Non-voting common stock, $0.001 par value; 3,553 shares
authorized; 3,413 and 3,540 shares issued and outstanding as of
March 31, 2017 and December 31, 2016, respectively |
|
4 |
|
|
4 |
|
|
Additional paid-in capital |
|
|
923,956 |
|
|
922,698 |
|
|
Accumulated other comprehensive income (expense) |
|
|
(2,620 |
) |
|
(2,620 |
) |
|
Accumulated deficit |
|
|
(545,181 |
) |
|
(532,233 |
) |
|
Total
Pacific Ethanol, Inc. Stockholders’ Equity |
|
|
376,200 |
|
|
387,890 |
|
|
Noncontrolling interests |
|
|
29,522 |
|
|
30,371 |
|
|
Total
Stockholders’ Equity |
|
|
405,722 |
|
|
418,261 |
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
681,754 |
|
$ |
708,238 |
|
|
Reconciliation of Adjusted EBITDA to Net
Loss |
|
|
Three Months EndedMarch 31, |
(in
thousands) (unaudited) |
|
2017 |
|
|
|
2016 |
|
Net loss attributed to
Pacific Ethanol, Inc. |
$ |
(12,636 |
) |
|
$ |
(13,226 |
) |
Adjustments: |
|
|
Interest
expense* |
|
2,614 |
|
|
|
6,233 |
|
Benefit for
income taxes |
|
— |
|
|
|
— |
|
Fair value
adjustments |
|
(455 |
) |
|
|
(39 |
) |
Depreciation and
amortization expense* |
|
8,607 |
|
|
|
8,651 |
|
Total
adjustments |
|
10,766 |
|
|
|
14,845 |
|
Adjusted EBITDA |
$ |
(1,870 |
) |
|
$ |
1,619 |
|
________________* Adjusted for noncontrolling
interests.
Commodity Price Performance |
|
|
Three Months EndedMarch 31, |
(unaudited) |
|
2017 |
|
|
|
2016 |
|
Ethanol
production gallons sold (in millions) |
|
115.0 |
|
|
|
112.9 |
|
Ethanol third
party gallons sold (in millions) |
|
111.2 |
|
|
|
93.7 |
|
Total ethanol
gallons sold (in millions) |
|
226.2 |
|
|
|
206.6 |
|
|
|
|
Ethanol production
capacity utilization |
|
92 |
% |
|
|
87 |
% |
|
|
|
Average ethanol
sales price per gallon |
$ |
1.62 |
|
|
$ |
1.53 |
|
Average CBOT
ethanol price per gallon |
$ |
1.52 |
|
|
$ |
1.39 |
|
|
|
|
Corn cost – CBOT
equivalent |
$ |
3.64 |
|
|
$ |
3.65 |
|
Average
basis |
$ |
0.29 |
|
|
$ |
0.33 |
|
Delivered corn
cost |
$ |
3.93 |
|
|
$ |
3.98 |
|
|
|
|
Total co-product
tons sold (in thousands) |
|
685.5 |
|
|
|
661.4 |
|
Co-product return
% (1) |
|
34.9 |
% |
|
|
36.3 |
% |
________________(1) Co-product revenue as a percentage of
delivered cost of corn.
Company IR Contact:
Pacific Ethanol, Inc.
916-403-2755
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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