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 and six months
ended June 30, 2017.
Neil Koehler, the company’s president and CEO,
stated: “For the second quarter 2017, we recorded net sales of
$405.2 million, gross profit of $1.7 million, a net loss of $9.2
million, and adjusted EBITDA of $2.6 million. These results were
impacted by weak ethanol production margins in the face of record
ethanol production volumes and high ethanol inventory levels during
the quarter. Our geographic and revenue diversity enables us to
lessen our exposure to commodity price fluctuations. Our
acquisition of Illinois Corn Processing exemplifies this strategy.
With its high-quality, premium-priced alcohol products, ICP further
broadens our production capabilities and helps minimize the impacts
of fuel ethanol margin volatility.
“Overall, we remain encouraged by the long-term
demand for ethanol as supported by continued strong domestic and
export markets, and the growing demand for higher ethanol blends
and higher octane fuels. We remain focused on implementing
initiatives aimed at increasing operating efficiencies, improving
plant reliability, enhancing yields, improving our carbon scores,
and reducing operating costs.”
Financial Results for the Three Months
Ended June 30, 2017 Compared to the Three Months Ended June 30,
2016
- Net sales were $405.2 million, compared to $422.9 million.
- Cost of goods sold was $403.5 million, compared to $405.2
million.
- Gross profit was $1.7 million, compared to $17.7 million.
- Selling, general and administrative expenses were $8.8 million,
compared to $6.1 million. The year-over-year increase was primarily
attributable to higher professional expenses associated with the
ICP acquisition as well as increased benefits and non-cash
compensation adjustments.
- Operating loss was $7.1 million, compared to operating income
of $11.6 million.
- Net loss available to common stockholders was $9.2 million, or
$0.22 per share, compared to net income of $4.7 million, or $0.11
per share.
- Adjusted EBITDA was $2.6 million, compared to $20.4
million.
- Cash and cash equivalents were $91.5 million at June 30, 2017,
compared to $68.6 million at December 31, 2016.
Financial Results for the Six Months
Ended June 30, 2017 Compared to the Six Months Ended June 30,
2016
- Net sales were $791.5 million, compared to $765.2 million.
- Cost of goods sold was $795.7 million, compared to $746.5
million.
- Gross loss was $4.1 million, compared to gross profit of $18.8
million.
- Selling, general and administrative expenses were $14.2
million, compared to $14.5 million.
- Operating loss was $18.3 million, compared to operating income
of $4.3 million.
- Net loss available to common stockholders was $22.1 million, or
$0.52 per share, compared to a net loss of $8.8 million, or $0.21
per share.
- Adjusted EBITDA was $0.7 million, compared to $22.0
million.
Second Quarter 2017 Results Conference
CallManagement will host a conference call at 8:00 a.m.
Pacific Time/11:00 a.m. Eastern Time on August 3, 2017. CEO Neil
Koehler and CFO Bryon McGregor 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
54848121#. 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, August 3rd, 2017 through 11:59
p.m. Eastern Time on Thursday, August 10th, 2017. To access the
replay, please dial (855) 859-2056. International callers should
dial 00-1-(404) 537-3406. The pass code will be 54848121#.
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, provision (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 a leading producer and
marketer of low-carbon renewable fuels and high-quality alcohol
products in the United States. Pacific Ethanol owns and operates
nine production facilities, four in the Western states of
California, Oregon and Idaho, and five in the Midwestern states of
Illinois and Nebraska. The plants have a combined production
capacity of 605 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 fuel-grade ethanol, high-quality alcohol products and
co-products domestically and internationally. Pacific Ethanol’s
subsidiary, Kinergy Marketing LLC, markets all ethanol and alcohol
products 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; Pacific Ethanol’s ability to
lessen exposure to commodity price fluctuations as a result of
its geographic and revenue diversity; statements about the benefits
of the acquisition of ICP; 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 Pacific Ethanol’s
Form 10-Q filed with the Securities and Exchange Commission on May
10, 2017.
[Tables Follow]
PACIFIC ETHANOL, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited, in thousands, except per share
data) |
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
Net sales |
$ |
405,202 |
|
$ |
422,860 |
|
$ |
791,542 |
|
$ |
765,233 |
|
Cost of goods sold |
|
403,549 |
|
|
405,156 |
|
|
795,662 |
|
|
746,460 |
|
Gross profit
(loss) |
|
1,653 |
|
|
17,704 |
|
|
(4,120 |
) |
|
18,773 |
|
Selling, general and
administrative expenses |
|
8,762 |
|
|
6,148 |
|
|
14,212 |
|
|
14,465 |
|
Income (loss) from
operations |
|
(7,109 |
) |
|
11,556 |
|
|
(18,332 |
) |
|
4,308 |
|
Fair value
adjustments |
|
18 |
|
|
(24 |
) |
|
473 |
|
|
15 |
|
Interest expense,
net |
|
(2,694 |
) |
|
(6,536 |
) |
|
(5,331 |
) |
|
(12,769 |
) |
Other income (expense),
net |
|
(153 |
) |
|
(155 |
) |
|
(233 |
) |
|
61 |
|
Income (loss) before
provision for income taxes |
|
(9,938 |
) |
|
4,841 |
|
|
(23,423 |
) |
|
(8,385 |
) |
Provision (benefit) for
income taxes |
|
— |
|
|
(245 |
) |
|
— |
|
|
(245 |
) |
Consolidated net income
(loss) |
|
(9,938 |
) |
|
5,086 |
|
|
(23,423 |
) |
|
(8,140 |
) |
Net (income) loss
attributed to noncontrolling interests |
|
1,097 |
|
|
— |
|
|
1,946 |
|
|
— |
|
Net income (loss)
attributed to Pacific Ethanol |
$ |
(8,841 |
) |
$ |
5,086 |
|
$ |
(21,477 |
) |
$ |
(8,140 |
) |
Preferred stock
dividends |
$ |
(315 |
) |
$ |
(315 |
) |
$ |
(627 |
) |
$ |
(630 |
) |
Income allocated to
participating securities |
$ |
— |
|
$ |
(71 |
) |
$ |
— |
|
$ |
— |
|
Net income (loss)
available to common stockholders |
$ |
(9,156 |
) |
$ |
4,700 |
|
$ |
(22,104 |
) |
$ |
(8,770 |
) |
Net income (loss) per
share, basic |
$ |
(0.22 |
) |
$ |
0.11 |
|
$ |
(0.52 |
) |
$ |
(0.21 |
) |
Net income (loss) per
share, diluted |
$ |
(0.22 |
) |
$ |
0.11 |
|
$ |
(0.52 |
) |
$ |
(0.21 |
) |
Weighted-average shares
outstanding, basic |
|
42,295 |
|
|
42,191 |
|
|
42,334 |
|
|
42,121 |
|
Weighted-average shares
outstanding, diluted |
|
42,295 |
|
|
42,229 |
|
|
42,334 |
|
|
42,121 |
|
PACIFIC ETHANOL, INC. |
CONSOLIDATED BALANCE SHEETS |
(unaudited, in thousands, except par
value) |
|
|
June 30, |
December 31, |
ASSETS |
2017 |
2016 |
Current Assets: |
|
|
Cash and cash equivalents |
$ |
91,454 |
$ |
68,590 |
Accounts receivable, net |
|
46,438 |
|
86,275 |
Inventories |
|
63,087 |
|
60,070 |
Prepaid inventory |
|
10,432 |
|
9,946 |
Income tax receivables |
|
5,727 |
|
5,730 |
Derivative assets |
|
1,150 |
|
978 |
Other current assets |
|
2,483 |
|
3,612 |
Total current assets |
|
220,771 |
|
235,201 |
Property and equipment, net |
|
453,011 |
|
465,190 |
Other Assets: |
|
|
Intangible assets, net |
|
2,678 |
|
2,678 |
Other assets |
|
8,117 |
|
5,169 |
Total other assets |
|
10,795 |
|
7,847 |
Total Assets |
$ |
684,577 |
$ |
708,238 |
PACIFIC ETHANOL, INC. |
CONSOLIDATED BALANCE SHEETS
(CONTINUED) |
(unaudited, in thousands, except par
value) |
|
|
June 30, |
December 31, |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
2017 |
2016 |
Current Liabilities: |
|
|
Accounts payable – trade |
$ |
28,234 |
|
$ |
37,051 |
|
Accrued liabilities |
|
17,823 |
|
|
20,280 |
|
Current portion – capital leases |
|
838 |
|
|
794 |
|
Current portion – long-term debt |
|
14,000 |
|
|
10,500 |
|
Derivative liabilities |
|
1,721 |
|
|
4,115 |
|
Accrued PE Op Co. purchase |
|
3,828 |
|
|
3,828 |
|
Other current liabilities |
|
1,547 |
|
|
2,273 |
|
Total current liabilities |
|
67,991 |
|
|
78,841 |
|
|
|
|
Long-term debt, net of current portion |
|
199,599 |
|
|
188,028 |
|
Capital leases, net of current portion |
|
117 |
|
|
547 |
|
Warrant liabilities at fair value |
|
— |
|
|
651 |
|
Other
liabilities |
|
20,446 |
|
|
21,910 |
|
Total Liabilities |
|
288,153 |
|
|
289,977 |
|
|
|
|
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, 2017
and December 31, 2016 Series B: 927 shares issued
and outstanding as of June 30, 2017 and December 31, 2016 |
|
1 |
|
|
1 |
|
Common
stock, $0.001 par value; 300,000 shares authorized; 43,909 and
39,772 shares issued and outstanding as of June 30, 2017 and
December 31, 2016, respectively |
|
44 |
|
|
40 |
|
Non-voting common stock, $0.001 par value; 3,553 shares authorized;
1 and 3,540 shares issued and outstanding as of June 30, 2017 and
December 31, 2016, respectively |
|
— |
|
|
4 |
|
Additional paid-in capital |
|
924,911 |
|
|
922,698 |
|
Accumulated other comprehensive loss |
|
(2,620 |
) |
|
(2,620 |
) |
Accumulated deficit |
|
(554,337 |
) |
|
(532,233 |
) |
Total Pacific Ethanol, Inc. Stockholders’ Equity |
|
367,999 |
|
|
387,890 |
|
Noncontrolling interests |
|
28,425 |
|
|
30,371 |
|
Total Stockholders’ Equity |
|
396,424 |
|
|
418,261 |
|
Total Liabilities and Stockholders’ Equity |
$ |
684,577 |
|
$ |
708,238 |
|
Reconciliation of Adjusted EBITDA to Net
Income (Loss) |
|
|
Three Months EndedJune 30, |
Six Months EndedJune 30, |
(in
thousands) (unaudited) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net income (loss)
attributed to Pacific Ethanol |
$ |
(8,841 |
) |
$ |
5,086 |
|
$ |
(21,477 |
) |
$ |
(8,140 |
) |
Adjustments: |
|
|
|
|
Interest
expense* |
|
2,668 |
|
|
6,536 |
|
|
5,281 |
|
|
12,769 |
|
Provision
(benefit) for income taxes |
|
— |
|
|
(245 |
) |
|
— |
|
|
(245 |
) |
Fair
value adjustments |
|
(18 |
) |
|
24 |
|
|
(473 |
) |
|
(15 |
) |
Depreciation and amortization expense* |
|
8,794 |
|
|
9,018 |
|
|
17,402 |
|
|
17,669 |
|
Total
adjustments |
|
11,444 |
|
|
15,333 |
|
|
22,210 |
|
|
30,178 |
|
Adjusted EBITDA |
$ |
2,603 |
|
$ |
20,419 |
|
$ |
733 |
|
$ |
22,038 |
|
________________* Adjusted for noncontrolling
interests.
Commodity Price Performance |
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
(unaudited) |
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
Ethanol production
gallons sold (in millions) |
|
120.0 |
|
|
122.5 |
|
|
|
235.0 |
|
|
235.4 |
|
|
Ethanol third party
gallons sold (in millions) |
|
115.8 |
|
|
110.7 |
|
|
|
227.0 |
|
|
204.4 |
|
|
Total ethanol gallons
sold (in millions) |
|
235.8 |
|
|
233.2 |
|
|
|
462.0 |
|
|
439.8 |
|
|
|
|
|
|
|
|
Ethanol production
capacity utilization |
|
95 |
% |
|
94 |
% |
|
|
93 |
% |
|
90 |
% |
|
|
|
|
|
|
|
|
Average ethanol sales
price per gallon |
$ |
1.66 |
|
$ |
1.72 |
|
|
$ |
1.64 |
|
$ |
1.63 |
|
|
Average CBOT ethanol
price per gallon |
$ |
1.55 |
|
$ |
1.58 |
|
|
$ |
1.53 |
|
$ |
1.49 |
|
|
|
|
|
|
|
|
|
Corn cost – CBOT
equivalent |
$ |
3.68 |
|
$ |
3.86 |
|
|
$ |
3.66 |
|
$ |
3.76 |
|
|
Average basis |
|
0.23 |
|
|
0.23 |
|
|
|
0.26 |
|
|
0.28 |
|
|
Delivered corn
cost |
$ |
3.91 |
|
$ |
4.09 |
|
|
$ |
3.92 |
|
$ |
4.04 |
|
|
|
|
|
|
|
|
|
Total co-product tons
sold (in thousands) |
|
734.4 |
|
|
686.8 |
|
|
|
1,419.9 |
|
|
1,348.2 |
|
|
Co-product return %
(1) |
|
33.5 |
% |
|
34.2 |
% |
|
|
34.2 |
% |
|
35.2 |
% |
|
________________(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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