• Pacific Ethanol Reports Second Quarter 2017 Results

    Source: Nasdaq GlobeNewswire / 02 Aug 2017 16:05:33   Eastern Standard Time

    SACRAMENTO, Calif., Aug. 02, 2017 (GLOBE NEWSWIRE) -- 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 Call
    Management 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 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 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 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; 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 Ended
    June 30,
    Six Months Ended
    June 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,
    ASSETS20172016
    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’ EQUITY2017 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 Ended
    June 30,
    Six Months Ended
    June 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 Ended
    June 30,
     Six Months Ended
    June 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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