Pacific Ethanol, Inc. (NASDAQ: PEIX), a leading
producer and marketer of high quality alcohol products and
low-carbon renewable fuels in the United States, reported its
financial results for the three and six months ended June 30, 2020.
“Our strong second quarter financial results,
including net income of $14.6 million and Adjusted EBITDA of $28.8
million, were driven by our diversified product portfolio and
expanded production of high quality alcohol,” said Mike Kandris,
Pacific Ethanol’s Co-CEO. “Our Pekin campus has produced
industrial, chemical and beverage grade alcohol for over 100 years,
and we recently announced an expansion of our production capacity
to meet the demand for our high quality alcohol used in sanitizers
and disinfectants, which has increased significantly due to the
ongoing coronavirus pandemic. We also continue to experience strong
demand for our high value feed and food products, which our Pekin
facilities have produced for over 20 years.”
“Looking at the second half of the year, we
expect Adjusted EBITDA to range between $50 and $70 million, with
momentum continuing into 2021,” stated Bryon McGregor, Pacific
Ethanol’s CFO. “In addition to reducing our debt by $34.4 million
in the second quarter, we continue to work with our lenders to
satisfy our continuing obligation to agree on a plan to eliminate
or refinance our term debt. To this end, our goal is to reduce our
total term debt outstanding at year end by at least $70 million. We
believe that continued debt reduction and profitable growth will
position us well for delivering long-term growth and value for our
stakeholders.”
Financial Results for the Three Months
Ended June 30, 2020 Compared to 2019
- Net sales were $212.1 million, compared to $346.3 million.
- Cost of goods sold was $180.9 million, compared to $342.3
million.
- Gross profit was $31.2 million, compared to $4.0 million.
- Selling, general and administrative expenses were $8.6 million,
compared to $6.7 million.
- Operating income was $22.6 million, compared to a loss of $2.7
million.
- Income available to common stockholders was $14.6 million, or
$0.27 per share, compared to a loss of $8.0 million, or $0.17 per
share.
- Adjusted EBITDA was $28.8 million, compared to $7.2
million.
- Cash and cash equivalents were $29.8 million at June 30, 2020,
compared to $19.0 million at December 31, 2019.
Financial Results for the Six Months
Ended June 30, 2020 Compared to 2019
- Net sales were $523.5 million, compared to $702.1 million.
- Cost of goods sold was $505.2 million, compared to $700.4
million.
- Gross profit was $18.3 million, compared to $1.7 million.
- Selling, general and administrative expenses were $18.8
million, compared to $14.9 million.
- Operating loss was $0.5 million, compared to $13.3
million.
- Loss available to common stockholders was $10.8 million, or
$0.20 per share, compared to $21.2 million, or $0.45 per
share.
- Adjusted EBITDA was $16.5 million, compared to $8.8
million.
Second Quarter 2020 Results Conference
Call Management will host a conference call at 8:00 a.m.
Pacific Time/11:00 a.m. Eastern Time on August 12, 2020. Management
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 7598331. If you are unable to participate
in 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, August 12, 2020 through 11:59 p.m. Eastern Time on
Wednesday, August 19, 2020. To access the replay, please dial
(855) 859-2056. International callers should dial 00-1 (404)
537-3406. The pass code will be 7598331.
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, Inc. before interest expense, provision
(benefit) for income taxes, asset impairments, loss on
extinguishment of debt, 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,
net income (loss) attributed to Pacific Ethanol, Inc. 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 not a measure of
financial performance under GAAP and should not be considered as an
alternative to net income (loss) attributed to Pacific Ethanol,
Inc. 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.
Information reconciling forward-looking Adjusted
EBITDA to forward-looking net income (loss) attributed to Pacific
Ethanol, Inc. would require a forward-looking statement of net
income (loss) attributed to Pacific Ethanol, Inc. prepared in
accordance with GAAP, which is unavailable to the company without
unreasonable effort. The company is not able to provide a
quantitative reconciliation of forward-looking Adjusted EBITDA to
forward-looking net income (loss) attributed to Pacific Ethanol,
Inc. because certain items required for reconciliation are
uncertain, outside of the company’s control and/or cannot be
reasonably predicted, such as fair value adjustments, asset
impairments, if any, and provision (benefit) for income taxes,
which the company views as the most material components of net
income (loss) attributed to Pacific Ethanol, Inc. that are not
presently estimable.
About Pacific Ethanol,
Inc.Pacific Ethanol, Inc. (PEIX) is a leading producer and
marketer of low-carbon renewable fuels and high-quality alcohol
products in the United States. Pacific Ethanol owns and operates
seven production facilities in California, Idaho, Illinois and
Oregon. The plants have a combined production capacity of 450
million gallons per year, and produce over two million tons per
year of 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, based on historical volumes. Pacific
Ethanol markets and distributes fuel-grade ethanol, high-quality
alcohol products and co-products domestically and internationally.
Pacific Ethanol’s subsidiary, Kinergy Marketing LLC, markets all
ethanol and high-quality alcohol products for Pacific Ethanol’s
plants as well as for third parties. 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 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, statements concerning future market conditions,
including the supply of and domestic and international demand for
high quality alcohol, ethanol and co-products; and Adjusted EBITDA
that Pacific Ethanol may generate; 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 high quality alcohol,
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
production input costs, such as corn and natural gas; the continued
effects of the novel coronavirus on travel and the demand for
transportation fuels, sanitizers and disinfectants; and the ability
of Pacific Ethanol to timely and successfully execute on its
strategic initiatives and remain in compliance with its debt
covenants, including Pacific Ethanol’s compliance with its prior
and continuing obligation to obtain lender approval of a
comprehensive plan to restructure its assets and liabilities, the
failure of which currently enables its lenders to accelerate
Pacific Ethanol’s debt. 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 high quality alcohol and 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, regulations and governmental policies; 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 Pacific Ethanol’s Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission on May 14, 2020.
PACIFIC ETHANOL, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, in thousands, except per
share data)
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
Net sales |
$ |
212,074 |
|
$ |
346,301 |
|
$ |
523,478 |
|
$ |
702,104 |
|
Cost of goods sold |
|
180,892 |
|
|
342,330 |
|
|
505,186 |
|
|
700,422 |
|
Gross profit |
|
31,182 |
|
|
3,971 |
|
|
18,292 |
|
|
1,682 |
|
Selling, general and
administrative expenses |
|
8,629 |
|
|
6,708 |
|
|
18,841 |
|
|
14,943 |
|
Income (loss) from
operations |
|
22,553 |
|
|
(2,737 |
) |
|
(549 |
) |
|
(13,261 |
) |
Interest expense, net |
|
(4,647 |
) |
|
(5,115 |
) |
|
(9,954 |
) |
|
(9,851 |
) |
Fair value adjustments |
|
(1,314 |
) |
|
— |
|
|
(641 |
) |
|
— |
|
Other income (expense),
net |
|
(1,738 |
) |
|
(438 |
) |
|
(1,158 |
) |
|
661 |
|
Income (loss) before benefit
for income taxes |
|
14,854 |
|
|
(8,290 |
) |
|
(12,302 |
) |
|
(22,451 |
) |
Benefit for income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Consolidated net income
(loss) |
|
14,854 |
|
|
(8,290 |
) |
|
(12,302 |
) |
|
(22,451 |
) |
Net loss attributed to
noncontrolling interests |
|
110 |
|
|
644 |
|
|
2,166 |
|
|
1,915 |
|
Net income (loss) attributed
to Pacific Ethanol, Inc. |
$ |
14,964 |
|
$ |
(7,646 |
) |
$ |
(10,136 |
) |
$ |
(20,536 |
) |
Preferred stock dividends |
$ |
(315 |
) |
$ |
(315 |
) |
$ |
(630 |
) |
$ |
(627 |
) |
Income (loss) available to
common stockholders |
$ |
14,649 |
|
$ |
(7,961 |
) |
$ |
(10,766 |
) |
$ |
(21,163 |
) |
Net income (loss) per share,
basic and diluted |
$ |
0.27 |
|
$ |
(0.17 |
) |
$ |
(0.20 |
) |
$ |
(0.45 |
) |
Weighted-average shares
outstanding, basic and diluted |
|
54,498 |
|
|
47,771 |
|
|
54,163 |
|
|
46,651 |
|
|
PACIFIC ETHANOL, INC.
CONSOLIDATED BALANCE SHEETS (unaudited, in
thousands, except par value)
|
|
ASSETS |
June 30, 2020 |
|
December 31, 2019 |
|
Current Assets: |
|
|
Cash and cash equivalents |
$ |
29,783 |
$ |
18,997 |
|
Accounts receivable, net |
|
48,871 |
|
74,307 |
|
Inventories |
|
46,326 |
|
60,600 |
|
Prepaid inventory |
|
3,180 |
|
1,528 |
|
Derivative instruments |
|
— |
|
2,438 |
|
Assets held-for-sale |
|
— |
|
69,764 |
|
Other current assets |
|
3,630 |
|
4,430 |
|
Total current assets |
|
131,790 |
|
232,064 |
|
Property and equipment, net |
|
317,950 |
|
332,526 |
|
Other Assets: |
|
Right of use operating lease assets, net |
|
22,625 |
|
24,346 |
|
Notes receivable |
|
16,500 |
|
— |
|
Assets held-for-sale |
|
— |
|
16,500 |
|
Intangible asset |
|
2,678 |
|
2,678 |
|
Other assets |
|
5,586 |
|
4,381 |
|
Total other assets |
|
47,389 |
|
47,905 |
|
Total Assets |
$ |
497,129 |
$ |
612,495 |
|
|
|
|
|
|
|
PACIFIC ETHANOL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value)
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY |
|
June 30,2020 |
|
December 31, 2019 |
|
|
Current Liabilities: |
|
|
|
Accounts payable – trade |
$ |
27,721 |
$ |
29,277 |
|
|
Accrued liabilities |
|
13,628 |
|
22,331 |
|
|
Current portion – operating leases |
|
2,898 |
|
3,457 |
|
|
Current portion – long-term debt |
|
96,000 |
|
63,000 |
|
|
Derivative instruments |
|
— |
|
1,860 |
|
|
Liabilities held-for-sale |
|
— |
|
34,413 |
|
|
Other current liabilities |
|
6,707 |
|
6,060 |
|
|
Total current liabilities |
|
146,954 |
|
160,398 |
|
|
|
|
|
|
Long-term debt, net of current portion |
|
95,888 |
|
180,795 |
|
|
Operating leases, net of current portion |
|
20,164 |
|
21,171 |
|
|
Other liabilities |
|
23,382 |
|
23,086 |
|
|
Total Liabilities |
|
286,388 |
|
385,450 |
|
|
|
|
|
|
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 June 30,
2020 and December 31, 2019 Series B: 927 shares issued and
outstanding as of June 30, 2020 and December 31, 2019 |
1 |
|
1 |
|
|
Common stock, $0.001 par value; 300,000 shares authorized; 55,482
and 55,508 shares issued and outstanding as of June 30, 2020 and
December 31, 2019, respectively |
|
55 |
|
56 |
|
|
Non-voting common stock, $0.001 par value; 3,553 shares authorized;
1 share issued and outstanding as of June 30, 2020 and December 31,
2019 |
— |
|
— |
|
|
Additional paid-in capital |
944,035 |
|
942,307 |
|
|
Accumulated other comprehensive expense |
(2,370 |
) |
(2,370 |
) |
|
Accumulated deficit |
(730,980 |
) |
(720,214 |
) |
|
Total Pacific Ethanol, Inc. Stockholders’ Equity |
210,741 |
|
219,780 |
|
|
Noncontrolling interests |
— |
|
7,265 |
|
|
Total Stockholders’ Equity |
210,741 |
|
227,045 |
|
|
Total Liabilities and Stockholders’ Equity |
$ |
497,129 |
$ |
612,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Net
Income (Loss)
|
|
|
|
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
(in thousands) (unaudited) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net income (loss) attributed
to Pacific Ethanol, Inc. |
$ |
14,964 |
|
$ |
(7,646 |
) |
$ |
(10,136 |
) |
$ |
(20,536 |
) |
Adjustments: |
|
|
|
|
Interest income |
|
(172 |
) |
|
— |
|
|
(172 |
) |
|
— |
|
Interest expense* |
|
4,647 |
|
|
5,115 |
|
|
9,954 |
|
|
9,851 |
|
Fair value
adjustments |
|
1,314 |
|
|
— |
|
|
641 |
|
|
— |
|
Depreciation and
amortization expense* |
|
8,089 |
|
|
9,774 |
|
|
16,205 |
|
|
19,480 |
|
Total adjustments |
|
13,878 |
|
|
14,889 |
|
|
26,628 |
|
|
29,331 |
|
Adjusted EBITDA |
$ |
28,842 |
|
$ |
7,243 |
|
$ |
16,492 |
|
$ |
8,795 |
|
________________* Adjusted for noncontrolling
interests.
Commodity Price Performance
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
(unaudited) __ |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Production gallons sold
(in millions) |
|
56.9 |
|
|
118.6 |
|
|
179.5 |
|
|
235.5 |
|
Third party gallons sold
(in millions) |
|
73.9 |
|
|
83.2 |
|
|
136.3 |
|
|
178.0 |
|
Total gallons sold (in
millions) |
|
130.8 |
|
|
201.8 |
|
|
315.8 |
|
|
413.5 |
|
|
|
|
|
|
|
Total gallons produced
(in millions) |
|
47.6 |
|
|
121.3 |
|
|
163.9 |
|
|
243.8 |
|
Production capacity
utilization |
|
40 |
% |
|
80 |
% |
|
82 |
% |
|
82 |
% |
|
|
|
|
|
|
Average ethanol sales
price per gallon |
$ |
1.59 |
|
$ |
1.61 |
|
$ |
1.55 |
|
$ |
1.57 |
|
Average CBOT ethanol
price per gallon |
$ |
1.08 |
|
$ |
1.41 |
|
$ |
1.16 |
|
$ |
1.36 |
|
|
|
|
|
|
|
Corn cost – CBOT
equivalent |
$ |
3.39 |
|
$ |
3.81 |
|
$ |
3.59 |
|
$ |
3.77 |
|
Average basis |
|
0.20 |
|
|
0.41 |
|
|
0.32 |
|
|
0.40 |
|
Delivered corn cost |
$ |
3.59 |
|
$ |
4.22 |
|
$ |
3.91 |
|
$ |
4.17 |
|
|
|
|
|
|
|
Total co-product tons
sold (in thousands) |
|
250.1 |
|
|
691.5 |
|
|
922.0 |
|
|
1,375.6 |
|
Co-product return %
(1) |
|
46.5 |
% |
|
35.5 |
% |
|
41.8 |
% |
|
37.2 |
% |
_______________(1) Co-product revenue as a
percentage of delivered cost of corn.
Company IR Contact: |
IR Agency Contact: |
IR Agency Contact: |
Pacific Ethanol, Inc. |
Moriah Shilton |
Paul Koehler |
916-403-2755 |
LHA |
Pacific Ethanol, Inc. |
Investorrelations@pacificethanol.com |
415-433-3777 |
916-403-2790 |
|
|
paulk@pacificethanol.com |
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