Pacific Ethanol, Inc. (NASDAQ: PEIX), a leading
producer and marketer of low-carbon renewable fuels and
high-quality alcohol products in the United States, reported its
financial results for the three and six months ended June 30, 2018.
Neil Koehler, Pacific Ethanol’s president and CEO,
stated: “Even with a challenging first half, we believe market
fundamentals remain strong, supporting better production margins in
the second half of the year. However, questionable regulatory
actions have reduced short-term ethanol demand in both domestic and
export markets impacting both Pacific Ethanol and the ethanol
industry as a whole. During this period of continued compressed and
volatile production margins, our focus remains on initiatives and
investments to reduce costs, improve yields, lower carbon scores,
and maintain a healthy balance sheet. We are benefiting from
increased product diversification that supports stronger margins
and lessens our exposure to commodity price fluctuations in the
fuel ethanol markets.”
Financial Results for the Three Months
Ended June 30, 2018 Compared to 2017
- Net sales were $410.5 million, compared to $405.2 million.
- Total gallons sold of 227.4 million, compared to 235.8
million.
- Total production gallons sold of 144.4 million, compared to
120.0 million.
- Cost of goods sold was $411.8 million, compared to $403.5
million, and included approximately $5.0 million in higher repair
and maintenance items.
- Gross loss was $1.3 million, compared to gross profit of $1.7
million.
- Selling, general and administrative expenses were $8.9 million,
compared to $8.8 million.
- Operating loss was $10.2 million, compared to $7.1
million.
- Loss available to common stockholders was $13.2 million, or
$0.31 per share, compared to $9.2 million, or $0.22 per share.
- Adjusted EBITDA was $1.0 million compared to $2.6 million.
- Cash and cash equivalents were $62.6 million at June 30, 2018,
compared to $49.5 million at December 31, 2017.
Financial Results for the Six Months
Ended June 30, 2018 Compared to 2017
- Net sales were $810.5 million, compared to $791.5 million.
- Cost of goods sold was $808.5 million, compared to $795.7
million.
- Gross profit was $2.1 million, compared to a gross loss of $4.1
million.
- Selling, general and administrative expenses were $18.2
million, compared to $14.2 million, which includes $3.6 million in
one-time gains associated with legal matters in the prior
year.
- Operating loss was $16.1 million, compared to $18.3
million.
- Loss available to common stockholders was $21.4 million, or
$0.50 per share, compared to $22.1 million, or $0.52 per
share.
- Adjusted EBITDA was $6.7 million, compared to $0.7
million.
Second Quarter 2018 Results Conference Call
Management will host a conference call at 8:00
a.m. Pacific Time/11:00 a.m. Eastern Time on August 9, 2018. 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: (877) 847-6066. International callers should
dial 00-1 (970) 315-0267. The pass code will be 1666285. 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 9, 2018, through 11:59 p.m.
Eastern Time on Thursday, August 16, 2018. To access the replay,
please dial (855) 859-2056. International callers should dial
00-1-(404) 537-3406. The pass code will be 1666285.
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 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 not a measure of financial performance under GAAP, and
should not be considered as an alternative 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, statements concerning future market fundamentals
and conditions, including the supply of and domestic and
international demand for ethanol and co-products; future margins;
the effects of regulatory actions; the benefits of product
diversification; and Pacific Ethanol’s 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 and
high-quality alcohols; 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. 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,
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 Form 10-Q filed with the Securities and Exchange
Commission on May 10, 2018.
|
|
|
PACIFIC ETHANOL, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited, in thousands, except per share
data) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
Net sales |
$ |
410,522 |
|
|
$ |
405,202 |
|
|
$ |
810,549 |
|
|
$ |
791,542 |
|
Cost of goods sold |
|
411,795 |
|
|
|
403,549 |
|
|
|
808,460 |
|
|
|
795,662 |
|
Gross profit
(loss) |
|
(1,273 |
) |
|
|
1,653 |
|
|
|
2,089 |
|
|
|
(4,120 |
) |
Selling, general and
administrative expenses |
|
8,898 |
|
|
|
8,762 |
|
|
|
18,213 |
|
|
|
14,212 |
|
Loss from
operations |
|
(10,171 |
) |
|
|
(7,109 |
) |
|
|
(16,124 |
) |
|
|
(18,332 |
) |
Fair value
adjustments |
|
— |
|
|
|
18 |
|
|
|
— |
|
|
|
473 |
|
Interest expense,
net |
|
(4,177 |
) |
|
|
(2,694 |
) |
|
|
(8,682 |
) |
|
|
(5,331 |
) |
Other income (expense),
net |
|
(256 |
) |
|
|
(153 |
) |
|
|
142 |
|
|
|
(233 |
) |
Loss before benefit for
income taxes |
|
(14,604 |
) |
|
|
(9,938 |
) |
|
|
(24,664 |
) |
|
|
(23,423 |
) |
Benefit for income
taxes |
|
— |
|
|
|
— |
|
|
|
563 |
|
|
|
— |
|
Consolidated net
loss |
|
(14,604 |
) |
|
|
(9,938 |
) |
|
|
(24,101 |
) |
|
|
(23,423 |
) |
Net loss attributed to
noncontrolling interests |
|
1,696 |
|
|
|
1,097 |
|
|
|
3,352 |
|
|
|
1,946 |
|
Net loss attributed to
Pacific Ethanol, Inc. |
$ |
(12,908 |
) |
|
$ |
(8,841 |
) |
|
$ |
(20,749 |
) |
|
$ |
(21,477 |
) |
Preferred stock
dividends |
$ |
(315 |
) |
|
$ |
(315 |
) |
|
$ |
(627 |
) |
|
$ |
(627 |
) |
Loss available to
common stockholders |
$ |
(13,223 |
) |
|
$ |
(9,156 |
) |
|
$ |
(21,376 |
) |
|
$ |
(22,104 |
) |
Net loss per share,
basic and diluted |
$ |
(0.31 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.50 |
) |
|
$ |
(0.52 |
) |
Weighted-average shares
outstanding, basic and diluted |
|
43,285 |
|
|
|
42,295 |
|
|
|
43,098 |
|
|
|
42,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PACIFIC ETHANOL, INC. |
CONSOLIDATED BALANCE SHEETS |
(unaudited, in thousands, except par
value) |
|
|
June 30, |
|
December 31, |
ASSETS |
2018 |
|
2017 |
Current Assets: |
|
|
Cash and cash equivalents |
$ |
62,581 |
|
$ |
49,489 |
Accounts receivable, net |
|
72,518 |
|
|
80,344 |
Inventories |
|
67,305 |
|
|
61,550 |
Prepaid inventory |
|
1,796 |
|
|
3,281 |
Derivative assets |
|
7,634 |
|
|
998 |
Other current assets |
|
8,871 |
|
|
7,584 |
Total current assets |
|
220,705 |
|
|
203,246 |
Property and equipment, net |
|
495,274 |
|
|
508,352 |
Other Assets: |
|
|
Intangible assets, net |
|
2,678 |
|
|
2,678 |
Other assets |
|
4,575 |
|
|
6,020 |
Total other assets |
|
7,253 |
|
|
8,698 |
Total Assets |
$ |
723,232 |
|
$ |
720,296 |
|
|
|
|
|
|
|
|
PACIFIC ETHANOL, INC. |
CONSOLIDATED BALANCE SHEETS
(CONTINUED) |
(unaudited, in thousands, except par
value) |
|
|
June 30, |
|
December 31, |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
2018 |
|
2017 |
Current Liabilities: |
|
|
Accounts payable – trade |
$ |
40,966 |
|
|
$ |
39,738 |
|
Accrued liabilities |
|
21,790 |
|
|
|
21,673 |
|
Current portion – capital leases |
|
162 |
|
|
|
592 |
|
Current portion – long-term debt |
|
20,000 |
|
|
|
20,000 |
|
Derivative liabilities |
|
10,157 |
|
|
|
2,307 |
|
Other current liabilities |
|
6,567 |
|
|
|
6,396 |
|
Total current liabilities |
|
99,642 |
|
|
|
90,706 |
|
|
|
|
Long-term debt, net of current portion |
|
237,771 |
|
|
|
221,091 |
|
Capital leases, net of current portion |
|
101 |
|
|
|
123 |
|
Other liabilities |
|
25,457 |
|
|
|
24,676 |
|
Total Liabilities |
|
362,971 |
|
|
|
336,596 |
|
|
|
|
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, 2018 and
December 31, 2017 Series B: 927 shares issued and outstanding
as of June 30, 2018 and December 31, 2017 |
|
1 |
|
|
|
1 |
|
Common
stock, $0.001 par value; 300,000 shares authorized; 44,960 and
43,954 shares issued and outstanding as of June 30, 2018 and
December 31, 2017, respectively |
|
45 |
|
|
|
44 |
|
Non-voting common stock, $0.001 par value; 3,553 shares authorized;
1 share issued and outstanding as of June 30, 2018 and
December 31, 2017, respectively |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
928,378 |
|
|
|
927,090 |
|
Accumulated other comprehensive loss |
|
(2,234 |
) |
|
|
(2,234 |
) |
Accumulated deficit |
|
(589,838 |
) |
|
|
(568,462 |
) |
Total Pacific Ethanol, Inc. Stockholders’ Equity |
|
336,352 |
|
|
|
356,439 |
|
Noncontrolling interests |
|
23,909 |
|
|
|
27,261 |
|
Total Stockholders’ Equity |
|
360,261 |
|
|
|
383,700 |
|
Total Liabilities and Stockholders’ Equity |
$ |
723,232 |
|
|
$ |
720,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Net
Loss
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
(in
thousands) (unaudited) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Net loss attributed to
Pacific Ethanol |
$ |
(12,908 |
) |
|
$ |
(8,841 |
) |
|
$ |
(20,749 |
) |
|
$ |
(21,477 |
) |
Adjustments: |
|
|
|
|
Interest
expense* |
|
4,169 |
|
|
|
2,668 |
|
|
|
8,573 |
|
|
|
5,281 |
|
Benefit for
income taxes |
|
— |
|
|
|
— |
|
|
|
(563 |
) |
|
|
— |
|
Fair value
adjustments |
|
— |
|
|
|
(18 |
) |
|
|
— |
|
|
|
(473 |
) |
Depreciation and
amortization expense* |
|
9,735 |
|
|
|
8,794 |
|
|
|
19,389 |
|
|
|
17,402 |
|
Total
adjustments |
|
13,904 |
|
|
|
11,444 |
|
|
|
27,399 |
|
|
|
22,210 |
|
Adjusted EBITDA |
$ |
996 |
|
|
$ |
2,603 |
|
|
$ |
6,650 |
|
|
$ |
733 |
|
________________* Adjusted for noncontrolling
interests.
Commodity Price Performance
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
(unaudited) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Production
gallons sold (in millions) |
|
144.4 |
|
|
|
120.0 |
|
|
|
285.2 |
|
|
|
235.0 |
|
Third party
gallons sold (in millions) |
|
83.0 |
|
|
|
115.8 |
|
|
|
174.9 |
|
|
|
227.0 |
|
Total gallons
sold (in millions) |
|
227.4 |
|
|
|
235.8 |
|
|
|
460.1 |
|
|
|
462.0 |
|
|
|
|
|
|
|
Total gallons
produced (in millions) |
|
143.2 |
|
|
|
121.8 |
|
|
|
285.4 |
|
|
|
239.7 |
|
Production
capacity utilization |
|
95 |
% |
|
|
95 |
% |
|
|
94 |
% |
|
|
93 |
% |
|
|
|
|
|
|
Average ethanol
sales price per gallon |
$ |
1.66 |
|
|
$ |
1.66 |
|
|
$ |
1.61 |
|
|
$ |
1.64 |
|
Average CBOT
ethanol price per gallon |
$ |
1.45 |
|
|
$ |
1.55 |
|
|
$ |
1.44 |
|
|
$ |
1.53 |
|
|
|
|
|
|
|
Corn cost – CBOT
equivalent |
$ |
3.82 |
|
|
$ |
3.68 |
|
|
$ |
3.69 |
|
|
$ |
3.66 |
|
Average
basis |
|
0.29 |
|
|
|
0.23 |
|
|
|
0.29 |
|
|
|
0.26 |
|
Delivered corn
cost |
$ |
4.11 |
|
|
$ |
3.91 |
|
|
$ |
3.98 |
|
|
$ |
3.92 |
|
|
|
|
|
|
|
Total co-product
tons sold (in thousands) |
|
794.0 |
|
|
|
734.4 |
|
|
|
1,592.0 |
|
|
|
1,419.9 |
|
Co-product return
% (1) |
|
35.7 |
% |
|
|
33.5 |
% |
|
|
36.4 |
% |
|
|
34.2 |
% |
________________(1) Co-product revenue as a percentage of
delivered cost of corn.
Company IR Contact: |
IR Agency Contact: |
Media Contact: |
Pacific
Ethanol, Inc. |
Kirsten Chapman |
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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