Pacific Ethanol Reports 3Q 2017 Results

Sacramento, CA., Nov. 07, 2017 (GLOBE NEWSWIRE) -- 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 nine months ended September 30, 2017.

Neil Koehler, Pacific Ethanol’s president and CEO, stated: “For the third quarter 2017, Pacific Ethanol reported improving financial performance in light of challenging commodity margin economics. 

Combined with the positive impact of the July 3rd ICP acquisition, we reported year-over-year and sequential quarterly increases in net sales, gross profit, operating income and Adjusted EBITDA. 

We now operate nine plants with a total annual production capacity of 605 million gallons. 

Shortly after the ICP acquisition, we refinanced the associated promissory notes, strengthening our balance sheet and reducing our cost of borrowing.”

Financial Results for the Three Months Ended September 30, 2017 Compared to 2016  The year-over-year increases reflect the impact of the ICP acquisition, including higher professional expenses associated with the acquisition.

  • Net sales were $445.4 million, compared to $417.8 million.
  • Record total gallons sold of 250.0 million, compared to 243.7 million.
  • Record production gallons sold of 141.8 million, compared to 125.5 million.
  • Cost of goods sold was $433.4 million, compared to $411.4 million.
  • Gross profit was $12.1 million, compared to $6.4 million.
  • Selling, general and administrative expenses were $8.7 million, compared to $6.0 million, reflecting increased benefits, non-cash compensation and transaction costs associated with the acquisition of ICP.  
  • Operating income was $3.3 million, compared to $0.4 million.
  • Net loss available to common stockholders was $0.5 million, or $0.01 per share, compared to $3.8 million, or $0.09 per share.
  • Adjusted EBITDA was $13.2 million, compared to $9.3 million.
  • Cash and cash equivalents were $56.9 million at September 30, 2017, compared to $68.6 million at December 31, 2016.

Financial Results for the Nine Months Ended September 30, 2017 Compared to 2016

  • Net sales were $1,237.0 million, compared to $1,183.0 million.
  • Cost of goods sold was $1,229.0 million, compared to $1,157.9 million.
  • Gross profit was $7.9 million, compared $25.1 million.
  • Selling, general and administrative expenses were $22.9 million, compared to $20.4 million.
  • Operating loss was $15.0 million, compared to operating income of $4.7 million.
  • Net loss available to common stockholders was $22.6 million, or $0.53 per share, compared to $12.6 million, or $0.30 per share.
  • Adjusted EBITDA was $13.9 million, compared to $31.3 million.

Third Quarter 2017 Results Conference Call Management will host a conference call at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time on November 8th, 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 7063879#. 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, November 8th, 2017 through 11:59 p.m. Eastern Time on Wednesday, November 15th, 2017. 

To access the replay, please dial (855) 859-2056. International callers should dial 00-1-(404) 537-3406. The pass code will be 7063879#.

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 1995 Statements 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; statements about the benefits of Pacific Ethanol’s refinancing of the ICP promissory notes; 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; 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 August 9, 2017.

 

PACIFIC ETHANOL, INC.  CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2017

 

 

 

2016

 

 

 

2017

 

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

445,442

 

 

$

417,806

 

 

$

1,236,984

 

 

$

1,183,039

 

Cost of goods sold

 

433,377

 

 

 

411,442

 

 

 

1,229,039

 

 

 

1,157,902

 

Gross profit

 

12,065

 

 

 

6,364

 

 

 

7,945

 

 

 

25,137

 

Selling, general and administrative expenses

 

8,720

 

 

 

5,971

 

 

 

22,932

 

 

 

20,436

 

Income (loss) from operations

 

3,345

 

 

 

393

 

 

 

(14,987

)

 

 

4,701

 

Fair value adjustments

 

 

 

 

(69

)

 

 

473

 

 

 

(53

)

Interest expense, net

 

(3,826

)

 

 

(3,874

)

 

 

(9,157

)

 

 

(16,643

)

Other income (expense), net

 

(60

)

 

 

32

 

 

 

(293

)

 

 

92

 

Loss before provision (benefit) for income taxes

 

(541

)

 

 

(3,518

)

 

 

(23,964

)

 

 

(11,903

)

Provision (benefit) for income taxes

 

 

 

 

 

 

 

 

 

 

(245

)

Consolidated net loss

 

(541

)

 

 

(3,518

)

 

 

(23,964

)

 

 

(11,658

)

Net loss attributed to noncontrolling interests

 

339

 

 

 

 

 

 

2,285

 

 

 

 

Net loss attributed to Pacific Ethanol

$

(202

)

 

$

(3,518

)

 

$

(21,679

)

 

$

(11,658

)

Preferred stock dividends

$

(319

)

 

$

(319

)

 

$

(946

)

 

$

(949

)

Net loss available to common stockholders

$

(521

)

 

$

(3,837

)

 

$

(22,625

)

 

$

(12,607

)

Net loss per share, basic and diluted

$

(0.01

)

 

$

(0.09

)

 

$

(0.53

)

 

$

(0.30

)

Weighted-average shares outstanding, basic and diluted

 

42,475

 

 

 

42,226

 

 

 

42,358

 

 

 

42,156

 

 

 

 

PACIFIC ETHANOL, INC. CONSOLIDATED BALANCE SHEETS (unaudited, in thousands, except par value)

 

 

September 30,

 

December 31,

ASSETS

2017

 

2016

Current Assets:

 

 

 

 

 

Cash and cash equivalents

$

  56,923

 

$

  68,590

Accounts receivable, net

 

72,282

 

 

86,275

Inventories

 

71,819

 

 

60,070

Prepaid inventory

 

5,622

 

 

9,946

Income tax receivables

 

129

 

 

5,730

Derivative instruments

 

3,017

 

 

978

Other current assets

 

3,026

 

 

3,612

Total current assets

 

212,818

 

 

235,201

Property and equipment, net

 

509,369

 

 

465,190

Other Assets:

 

 

 

 

 

Intangible assets, net

 

2,678

 

 

2,678

Other assets

 

5,785

 

 

5,169

Total other assets

 

8,463

 

 

7,847

Total Assets

$

  730,650

 

$

  708,238

 

 

 

PACIFIC ETHANOL, INC.  CONSOLIDATED BALANCE SHEETS (CONTINUED) (unaudited, in thousands, except par value)

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

December 31,

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

2017

 

 

 

2016

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable – trade

$

  41,178

 

 

$

  37,051

 

Accrued liabilities

 

22,245

 

 

 

20,280

 

Current portion – capital leases

 

799

 

 

 

794

 

Current portion – long-term debt

 

20,000

 

 

 

10,500

 

Derivative instruments

 

2,755

 

 

 

4,115

 

Accrued PE Op Co. purchase

 

3,828

 

 

 

3,828

 

Other current liabilities

 

1,591

 

 

 

2,273

 

Total current liabilities

 

92,396

 

 

 

78,841

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

220,304

 

 

 

188,028

 

Capital leases, net of current portion

 

134

 

 

 

547

 

Warrant liabilities at fair value

 

 

 

 

651

 

Other liabilities

 

20,915

 

 

 

21,910

 

Total Liabilities

 

333,749

 

 

 

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    September 30, 2017 and December 31, 2016   Series B: 927 shares issued and outstanding as of    September 30, 2017 and December 31, 2016

 

1

 

 

 

1

 

Common stock, $0.001 par value; 300,000 shares authorized;   43,971 and 39,772 shares issued and outstanding as of   September 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   September 30, 2017 and December 31, 2016, respectively

 

 

 

 

4

 

Additional paid-in capital

 

926,248

 

 

 

922,698

 

Accumulated other comprehensive loss

 

(2,620

)

 

 

(2,620

)

Accumulated deficit

 

(554,858

)

 

 

(532,233

)

Total Pacific Ethanol, Inc. Stockholders’ Equity

 

368,815

 

 

 

387,890

 

Noncontrolling Interests

 

28,086

 

 

 

30,371

 

Total Stockholders’ Equity

 

396,901

 

 

 

418,261

 

Total Liabilities and Stockholders’ Equity

$

  730,650

 

 

$

  708,238

 

 

 

 

Reconciliation of Adjusted EBITDA to Net Loss

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands) (unaudited)   

 

2017

 

 

 

2016

 

 

 

2017

 

 

 

2016

 

Net loss attributed to Pacific Ethanol

$

  (202

)

 

$

  (3,518

)

 

$

(21,679

)

 

$

(11,658

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense*

 

3,781

 

 

 

3,874

 

 

 

9,062

 

 

 

16,643

 

Provision (benefit) for income taxes

 

 

 

 

 

 

 

 

 

 

(245

)

Fair value adjustments

 

 

 

 

69

 

 

 

(473

)

 

 

53

 

Depreciation and amortization expense*

 

  9,573

 

 

 

  8,857

 

 

 

26,975

 

 

 

26,526

 

Total adjustments

 

  13,354

 

 

 

  12,800

 

 

 

35,564

 

 

 

42,977

 

Adjusted EBITDA

$

  13,152

 

 

$

  9,282

 

 

$

13,885

 

 

$

31,319

 

________________

* Adjusted for noncontrolling interests.

 

 

 

 

Commodity Price Performance

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(unaudited)   

2017

 

2016

 

2017

 

2016

Production gallons sold (in millions)

 

141.8

 

 

125.5

 

 

374.0

 

 

360.9

Third party gallons sold (in millions)

 

108.2

 

 

118.2

 

 

335.2

 

 

322.6

Total gallons sold (in millions)

 

250.0

 

 

243.7

 

 

709.2

 

 

683.5

 

 

 

 

 

 

 

 

 

 

 

 

Production capacity utilization

 

93%

 

 

96%

 

 

91%

 

 

92%

 

 

 

 

 

 

 

 

 

 

 

 

Average ethanol sales price per gallon

$

1.69

 

$

1.62

 

$

1.66

 

$

1.63

Average CBOT ethanol price per gallon

$

1.55

 

$

1.49

 

$

1.54

 

$

1.49

 

 

 

 

 

 

 

 

 

 

 

 

Corn cost – CBOT equivalent

$

3.69

 

$

3.58

 

$

3.67

 

$

3.70

Average basis

 

0.11

 

 

0.25

 

 

0.21

 

 

0.27

Delivered corn cost

$

3.80

 

$

3.83

 

$

3.88

 

$

3.97

 

 

 

 

 

 

 

 

 

 

 

 

Total co-product tons sold (in thousands)

 

803.4

 

 

702.1

 

 

2,223.2

 

 

2,050.3

Co-product return % (1)

 

34.0%

 

 

35.7%

 

 

34.2%

 

 

35.3%

________________

 

 

 

 

 

 

 

 

 

 

 

(1)  Co-product revenue as a percentage of delivered cost of corn.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company IR Contact:

IR Agency Contact:

Media Contact:

Pacific Ethanol, Inc.

Becky Herrick

Paul Koehler

916-403-2755

LHA

Pacific Ethanol, Inc.

Investorrelations@pacificethanol.com

415-433-3777

916-403-2790