2008-08-11 08:00:00
Pacific Ethanol, Inc. Announces Second Quarter 2008 Financial Results
Highlights
- Net sales up 74% over Q2 of 2007 and up 69% over the six months ended
June 30, 2007
- Gallons sold up 52% from Q2 of 2007 to 66.8 million gallons
- Loss per diluted share of $0.23 for Q2 2008
- EBITDA was negative $0.8 million for Q2 2008 and positive $11.7 million
for the six months ended June 30, 2008
- Replaced Kinergy's line of credit with a new $40 million facility
- Additional issuance of common stock, preferred stock and related warrants
for $32.4 million in Q2
- Stockton plant to be completed in current quarter
SACRAMENTO, Calif., Aug. 11 /EMWNews/ -- Pacific Ethanol,
Inc. (Nasdaq: PEIX), the leading West Coast-based marketer and producer of
ethanol, today announced its financial results for the quarter ended June
30, 2008.
Three Months Ended June 30, 2008
For the three months ended June 30, 2008, the Company reported net
sales of $198.0 million, an increase of $84.2 million, or 74%, compared to
$113.8 million for the same period in 2007. This increase in net sales is
primarily due to a substantial increase in sales volume, coupled with
higher average sales prices. The Company's sales volume increased by 22.9
million gallons, or 52%, to 66.8 million gallons, compared to 43.9 million
gallons for the same period in 2007. The Company's average sales price of
ethanol increased by $0.23 per gallon, or 10%, to $2.55 per gallon compared
to an average sales price of $2.32 per gallon in the same period in 2007.
Average corn prices increased 67% for the three months ended June 30,
2008 as compared to the same period in 2007. Gross profit for the three
months ended June 30, 2008 totaled $0.4 million compared to $11.1 million
for the same period in 2007. The Company's gross margin was 0.2% for the
three months ended June 30, 2008 compared to 9.8% for the same period in
2007.
The Company's net loss for the three months ended June 30, 2008 was
$8.3 million compared to net income of $2.2 million for the same period in
2007. Loss available to common stockholders for the three months ended June
30, 2008 was $10.5 million compared to income available to common
stockholders of $1.1 million for the same period in 2007. The Company
reported loss per common share of $0.23 for the three months ended June 30,
2008 as compared to income per common share of $0.03 for the same period in
2007. The Company's weighted-average number of diluted shares outstanding
for the three months ended June 30, 2008 totaled 46.5 million.
During the second quarter, the Company raised $32.4 million in cash
from sales of common and preferred stock and related warrants, bringing in
additional working capital to operate its business in an environment of
challenging commodity prices.
Six Months Ended June 30, 2008
For the six months ended June 30, 2008, the Company reported net sales
of $359.5 million, an increase of $146.5 million, or 69%, compared to
$213.0 million for the same period in 2007. This increase in net sales is
primarily due to a substantial increase in sales volume, coupled with
modestly higher average sales prices. The Company's sales volume increased
by 43.2 million gallons, or 52%, to 126.0 million gallons, compared to 82.8
million gallons for the same period in 2007. The Company's average sales
price of ethanol increased by $0.14 per gallon, or 6%, to $2.43 per gallon
compared to an average sales price of $2.29 per gallon for the same period
in 2007.
Average corn prices increased 64% for the six months ended June 30,
2008 as compared to the same period in 2007. Gross profit for the six
months ended June 30, 2008 totaled $16.1 million compared to $26.5 million
for the same period in 2007. The Company's gross margin was 4.5% for the
six months ended June 30, 2008 compared to 12.4% in the same period in
2007.
The Company's net loss for the six months ended June 30, 2008 was $43.5
million compared to net income of $5.1 million for the same period in 2007.
Loss available to common stockholders for the six months ended June 30,
2008 was $46.7 million compared to income of $3.0 million for the same
period in 2007. The Company reported loss per common share of $1.08 for the
six months ended June 30, 2008 as compared to income per common share of
$0.08 for the same period in 2007. The Company's weighted-average number of
diluted shares outstanding for the six months ended June 30, 2008 totaled
43.3 million.
During the six months ended June 30, 2008, the Company completed its
annual goodwill impairment test and as a result, the Company recorded a
non-cash goodwill impairment of $87.0 million. Of this amount $48.4 million
related to noncontrolling interests of the Company's variable interest
entity, resulting in net goodwill impairment of $38.6 million, which is
included in the Company's net loss for the six months ended June 30, 2008.
Neil Koehler, the Company's President and CEO, commented, "We faced a
challenging commodity environment this quarter and are disappointed with
our net loss. Despite these difficulties, we continue to execute on our
plan to be a leading producer and marketer of ethanol with a differentiated
strategy. During the quarter, we continued to increase our sales through a
combination of production and third party gallons, and we strengthened our
balance sheet with $32.4 million in equity and a new $40.0 million credit
facility. We are nearing completion of our Stockton plant, which will
accomplish our goal of 220 million gallons of annual operating capacity in
2008. I am also pleased to announce that we have commenced marketing
ethanol for Calgren Renewable Fuels, LLC, who we congratulate on the
startup of their 55.0 million gallon per year plant located in Pixley,
California."
Reconciliation of EBITDA to Net Income (Loss)
This press release contains, and the Company's conference call will
include, references to unaudited earnings before interest, taxes,
depreciation and amortization, including goodwill impairment ("EBITDA"), a
financial measure that is not in accordance with generally accepted
accounting procedures ("GAAP"). The table set forth below provides a
reconciliation of EBITDA to net income (loss). Management believes that
EBITDA is a meaningful measure of liquidity and the Company's ability to
service debt because it provides a measure of cash available for such
purposes. Additionally, management provides an EBITDA measure so that
investors will have the same financial information that management uses
with the belief that it will assist investors in properly assessing the
Company's performance on a period-over-period basis. EBITDA is not a
measure of financial performance under GAAP, and should not be considered
an alternative to net income 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. EBITDA has
limitations as an analytical tool and you should not consider it in
isolation or as a substitute for analysis of the Company's results as
reported under GAAP.
Earnings Call
The Company will host a live conference call and webcast today at 10:00
AM EDT / 7:00 AM PDT. Neil Koehler, Chief Executive Officer, and Joseph
Hansen, Chief Financial Officer, will host the call.
To listen to the conference call, United States callers may dial
866-700-7101. International callers may dial 617-213-8837. All callers
should enter access code 47725694.
A link to the live audio webcast of the Company's earnings conference
call may be found on the Company's website at
http://www.pacificethanol.net.
Approximately one hour after the conclusion of the call, an audio
replay of the call will be available. To listen to the replay, United
States callers may dial 888-286-8010. International callers may dial
617-801-6888. All callers should enter access code 98592887. The replay
will be available through August 25, 2008.
About Pacific Ethanol, Inc.
Pacific Ethanol is the largest West Coast-based marketer and producer
of ethanol. Pacific Ethanol has ethanol plants in Madera, California;
Boardman, Oregon; and Burley, Idaho and has an additional plant under
construction in Stockton, California. Pacific Ethanol also owns a 42%
interest in Front Range Energy, LLC which owns an ethanol plant in Windsor,
Colorado. Central to Pacific Ethanol's growth strategy is its destination
business model, whereby each respective ethanol plant achieves lower
process and transportation costs by servicing local markets for both fuel
and feed. Pacific Ethanol's goal is to achieve 220 million gallons per year
of ethanol production capacity in 2008 and to increase total production
capacity to 420 million gallons per year in 2010. In addition, Pacific
Ethanol is working to identify and develop other renewable fuel
technologies, such as cellulose-based ethanol production and bio-diesel.
Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995
With the exception of historical information, the matters discussed in
this press release are forward-looking statements that involve a number of
risks and uncertainties. The actual future results of Pacific Ethanol could
differ from those statements. Factors that could cause or contribute to
such differences include, but are not limited to, the ability of Pacific
Ethanol to successfully and timely complete, in a cost-effective manner,
construction of its remaining ethanol plant under construction; the ability
of Pacific Ethanol to obtain all necessary financing to complete the
construction of its other planned ethanol production facilities; the
ability of Pacific Ethanol to timely complete its ethanol plant build-out
program and to successfully capitalize on its internal growth initiatives;
the ability of Pacific Ethanol to operate its plants at their planned
production capacities; the price of ethanol relative to the price of
gasoline; and the factors contained in the "Risk Factors" section of
Pacific Ethanol's Form 10-K filed with the Securities and Exchange
Commission on March 27, 2008.
PACIFIC ETHANOL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net sales $197,974 $113,763 $359,509 $213,005
Cost of goods sold 197,531 102,642 343,408 186,543
Gross profit 443 11,121 16,101 26,462
Selling, general and
administrative expenses 7,678 8,320 17,544 17,822
Goodwill impairment - - 87,047 -
Income (loss) from
operations (7,235) 2,801 (88,490) 8,640
Other income (expense), net 889 1,235 (1,410) 1,310
Income (loss) before
noncontrolling interest in
variable interest entity (6,346) 4,036 (89,900) 9,950
Noncontrolling interest in
variable interest entity (1,987) (1,880) 46,416 (4,819)
Net income (loss) before
provision for income
taxes (8,333) 2,156 (43,484) 5,131
Provision for income taxes - - - -
Net income (loss) $(8,333) $2,156 $(43,484) $5,131
Preferred stock
dividends $(1,388) $(1,050) $(2,489) $ (2,100)
Deemed dividend on
preferred stock $(761) $- $(761) $-
Income (loss) available
to common
stockholders $(10,482) $1,106 $(46,734) $3,031
Net income (loss) per
share, basic $(0.23) $ 0.03 $(1.08) $0.08
Net income (loss) per
share, diluted $(0.23) $ 0.03 $(1.08) $0.08
Weighted-average shares
outstanding, basic 46,455 39,894 43,254 39,784
Weighted-average shares
outstanding, diluted 46,455 40,273 43,254 40,256
PACIFIC ETHANOL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
ASSETS 2008 2007
(unaudited) *
Current Assets:
Cash and cash equivalents $19,102 $5,707
Investments in marketable securities 7,555 19,353
Accounts receivable, net 35,804 28,034
Restricted cash 8,349 780
Inventories 38,486 18,540
Prepaid expenses 1,378 1,498
Prepaid inventory 5,474 3,038
Derivative instruments 147 1,613
Other current assets 3,779 3,630
Total current assets 120,074 82,193
Property and equipment, net 560,860 468,704
Other Assets:
Goodwill -- 88,168
Intangible assets, net 5,934 6,324
Other assets 9,125 6,211
Total other assets 15,059 100,703
Total Assets $695,993 $651,600
* Amounts derived from the audited financial statements for the year
ended December 31, 2007.
PACIFIC ETHANOL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(in thousands, except par value)
June 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 2008 2007
(unaudited) *
Current Liabilities:
Accounts payable - trade $17,622 $22,641
Accrued liabilities 9,633 8,526
Accounts payable and accrued liabilities -
construction-related 47,128 55,203
Contract retentions 3,426 5,358
Other liabilities - related parties 255 900
Current portion - notes payable 43,800 11,098
Short-term note payable 3,000 6,000
Derivative instruments 10,240 10,353
Total current liabilities 135,104 120,079
Notes payable, net of current portion 194,614 151,188
Other liabilities 2,822 1,965
Total Liabilities 332,540 273,232
Commitments and Contingencies
Noncontrolling interest in variable
interest entity 49,957 96,082
Stockholders' Equity:
Preferred stock, $0.001 par value; 10,000
shares authorized;
Series A: 0 and 5,316 shares issued and
outstanding as of June 30, 2008 and
December 31, 2007, respectively
Series B: 2,346 and 0 shares issued and
outstanding as of June 30, 2008 and
December 31, 2007, respectively 2 5
Common stock, $0.001 par value; 100,000
shares authorized; 57,878 and 40,606
shares issued and outstanding as of
June 30, 2008 and December 31, 2007,
respectively 58 41
Additional paid-in capital 477,382 402,932
Accumulated other comprehensive income (loss) 1,097 (2,383)
Accumulated deficit (165,043) (118,309)
Total stockholders' equity 313,496 282,286
Total Liabilities and Stockholders' Equity $695,993 $651,600
* Amounts derived from the audited financial statements for the year
ended December 31, 2007.
Reconciliation of EBITDA to Net Income (Loss)
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) (unaudited) 2008 2007 2008 2007
Net income (loss) $(8,333) $2,156 $(43,484) $5,131
Adjustments:
Interest expense* 2,048 173 7,254 988
Interest income* (80) (1,532) (205) (3,205)
Income taxes -- -- -- --
Goodwill impairment* -- -- 38,636 --
Depreciation and
amortization expense* 5,607 2,683 9,478 5,367
Total adjustments 7,575 1,324 55,163 3,150
EBITDA $(758) $3,480 $11,679 $8,281
* adjusted for non-controlling interest.
Commodity Price Performance
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) 2008 2007 2008 2007
Ethanol sales (million gallons) 66.8 43.9 126.0 82.8
Ethanol sales price per gallon $2.55 $2.32 $2.43 $2.29
Delivered corn cost per bushel $6.73 $4.23 $6.15 $3.90
Average basis $0.75 $0.64 $0.76 $0.62
Corn cost - CBOT equivalent $5.98 $3.59 $5.39 $3.28
Co-product return % (1) 21.7% 26.5% 23.4% 28.5%
Production commodity margin per
gallon (2) $0.49 $1.10 $0.64 $1.21
(1) Co-product revenue as a percentage of delivered cost of corn
(2) Ethanol sales price per gallon less net cost of corn (delivered
cost of corn less co-product revenue)
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