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CST: 19/07/2019 13:49:43   

Pacific Ethanol Reports Fourth Quarter and Full-Year 2018 Results

128 Days ago

SACRAMENTO, Calif., March 12, 2019 (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 twelve months ended December 31, 2018.

Neil Koehler, Pacific Ethanol’s president and CEO, stated: “We remain confident that the long-term demand for ethanol, both domestically and internationally, will continue to grow, and that market conditions will improve. Focused on delivering long-term sustainable growth and profitability for our investors, we have built a broad and diversified footprint through organic growth and acquisitions.

“Our financial results in the fourth quarter were negatively impacted by market conditions, regulatory uncertainty and trade disputes, which compressed production margins to record lows. Margins have improved in the first quarter but have further to go to restore profitability. In light of this and the fact that the intrinsic value of Pacific Ethanol’s platform is not fully recognized by our public equity valuation, we have initiated a strategic realignment of our business to improve liquidity and reduce our debt.

“Our vision remains to be a leading producer and marketer of low carbon renewable fuels and high-value feed and alcohol products. We have great assets and a strong team to fulfill this vision,” concluded Koehler. 

Financial Results for the Three Months Ended December 31, 2018 Compared to 2017

  • Net sales were $334.4 million, compared to $395.3 million.
  • Total gallons sold of 209.4 million, compared to 240.0 million.
  • Total production gallons sold of 131.1 million, compared to 150.4 million.
  • Cost of goods sold was $355.4 million, compared to $397.3 million.  
  • Gross loss was $21.0 million, compared to $2.0 million.
  • Selling, general and administrative expenses were $9.2 million, compared to $8.6 million.
  • Operating loss was $30.2 million, compared to $10.6 million.
  • Loss available to common stockholders was $32.3 million, or $0.74 per share, compared to $13.6 million, or $0.32 per share.
  • Adjusted EBITDA was negative $18.0 million compared to $0.3 million.
  • Cash and cash equivalents were $26.6 million at December 31, 2018, compared to $49.5 million at December 31, 2017.

Financial Results for the Twelve Months Ended December 31, 2018 Compared to 2017

  • Net sales were $1,515.4 million, compared to $1,632.3 million.
  • Cost of goods sold was $1,530.5 million, compared to $1,626.3 million.
  • Gross loss was $15.2 million, compared to a gross profit of $5.9 million.
  • Selling, general and administrative expenses were $36.4 million, compared to $31.5 million.
  • Operating loss was $51.5 million, compared to $25.6 million.
  • Loss available to common stockholders was $61.5 million, or $1.42 per share, compared to $36.2 million, or $0.85 per share.
  • Adjusted EBITDA was negative $5.1 million, compared to a positive adjusted EBITDA of $13.6 million.

Fourth 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 March 13, 2019. 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 4839123. 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, March 13, 2019, through 11:00 a.m. Eastern Time on Wednesday, March 20, 2019. To access the replay, please dial (855) 859-2056. International callers should dial 00-1-(404) 537-3406. The pass code will be 4839123.

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 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; 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, such as corn and natural gas. 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 November 2, 2018.


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


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

  Three Months Ended   Years Ended
  December 31,   December 31,
    2018       2017       2018       2017  
Net sales $ 334,415     $ 395,271     $ 1,515,371     $ 1,632,255  
Cost of goods sold   355,436       397,285       1,530,535       1,626,324  
Gross profit (loss)   (21,021 )     (2,014 )     (15,164 )     5,931  
Selling, general and administrative expenses   9,190       8,584       36,373       31,516  
Loss from operations   (30,211 )     (10,598 )     (51,537 )     (25,585 )
Fair value adjustments                     473  
Interest expense, net   (4,257 )     (3,781 )     (17,132 )     (12,938 )
Other income (expense), net   (62 )     (52 )     171       (345 )
Loss before provision (benefit) for income taxes   (34,530 )     (14,431 )     (68,498 )     (38,395 )
Provision (benefit) for income taxes   1       (321 )     (562 )     (321 )
Consolidated net loss   (34,531 )     (14,110 )     (67,936 )     (38,074 )
Net loss attributed to noncontrolling interests   2,521       825       7,663       3,110  
Net loss attributed to Pacific Ethanol, Inc. $   (32,010 )   $   (13,285 )   $   (60,273 )   $   (34,964 )
Preferred stock dividends $   (319 )   $   (319 )   $   (1,265 )   $   (1,265 )
Loss available to common stockholders $   (32,329 )   $   (13,604 )   $   (61,538 )   $   (36,229 )
Net loss per share, basic and diluted $   (0.74 )   $   (0.32 )   $   (1.42 )   $   (0.85 )
Weighted-average shares outstanding, basic and diluted   43,969       42,911       43,376       42,745  
               

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

 

       
  December 31,
ASSETS   2018     2017
Current Assets:          
Cash and cash equivalents $   26,627   $   49,489
Accounts receivable, net     67,636       80,344
Inventories     57,820       61,550
Prepaid inventory     3,090       3,281
Income tax receivables     612       743
Derivative assets     1,765       998
Other current assets     11,254       6,841
Total current assets     168,804       203,246
Property and equipment, net     482,657       508,352
Other Assets:          
Intangible assets     2,678       2,678
Other assets     5,842       6,020
Total other assets     8,520       8,698
Total Assets $   659,981   $   720,296
           

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

  December 31,
LIABILITIES AND STOCKHOLDERS’ EQUITY   2018       2017  
Current Liabilities:  
Accounts payable - trade $   48,176     $   39,738  
Accrued liabilities   23,421       21,673  
Current portion - capital leases   45       592  
Current portion - long-term debt   146,671       20,000  
Derivative liabilities   6,309       2,307  
Other current liabilities   7,237       6,396  
Total current liabilities   231,859       90,706  
   
Long-term debt, net of current portion   84,767       221,091  
Capital leases, net of current portion   78       123  
Other liabilities   23,912       24,676  
Total Liabilities   340,616       336,596  
               
Stockholders’ Equity:  
 
Preferred stock, $0.001 par value; 10,000 shares authorized;  
Series A: 0 shares issued and outstanding as of  
December 31, 2018 and 2017  
Series B: 927 shares issued and outstanding as of  
December 31, 2018 and 2017   1       1  
Common stock, $0.001 par value; 300,000 shares authorized;  
45,771 and 43,985 shares issued and outstanding as of  
December 31, 2018 and 2017, respectively   46       44  
Non-voting common stock, $0.001 par value; 3,553 shares  
authorized; 1 share issued and outstanding as of December  
31, 2018 and 2017          
Additional paid-in capital   932,179       927,090  
Accumulated other comprehensive loss     (2,459 )       (2,234 )
Accumulated deficit     (630,000 )       (568,462 )
Total Pacific Ethanol, Inc. Stockholders’ Equity   299,767       356,439  
Noncontrolling interests   19,598       27,261  
Total Stockholders’ Equity   319,365       383,700  
Total Liabilities and Stockholders’ Equity $   659,981     $   720,296  
               


Reconciliation of Adjusted EBITDA to Net Loss  
  Three Months Ended   Years Ended  
  December 31,   December 31,  
(in thousands) (unaudited)    2018       2017       2018       2017    
Net loss attributed to Pacific Ethanol $   (32,010 )   $   (13,285 )   $   (60,273 )   $   (34,964 )  
Adjustments:                
Interest expense*   4,255       3,675       16,898       12,738    
Provision (benefit) for income taxes     1         (321 )       (562 )       (321 )  
Fair value adjustments                        (473 )  
Depreciation and amortization expense*   9,706       9,658       38,806       36,632    
Total adjustments   13,962       13,012       55,142       48,576    
Adjusted EBITDA $   (18,048 )   $   (273 )   $   (5,131 )   $   13,612    
________________                
* Adjusted for noncontrolling interests.   
                 
Commodity Price Performance  
  Three Months Ended   Years Ended  
  December 31,   December 31,  
  (unaudited)    2018       2017       2018       2017    
 Production gallons sold (in millions)   131.1       150.4       556.2       527.2    
 Third party gallons sold (in millions)   78.3       89.6       326.8       424.8    
 Total gallons sold (in millions)   209.4       240.0       883.0       952.0    
                 
 Production capacity utilization   85 %     96 %     92 %     99 %  
                 
 Average ethanol sales price per gallon $   1.45     $   1.52     $   1.57     $   1.62    
 Average CBOT ethanol price per gallon $   1.26     $   1.38     $   1.37     $   1.50    
                 
 Corn cost – CBOT equivalent $   3.63     $   3.47     $   3.66     $   3.62    
 Average basis $   0.22     $   0.15     $   0.25     $   0.20    
 Delivered cost of corn $   3.85     $   3.62     $   3.91     $   3.82    
                 
 Total co-product tons sold (in thousands)   731.0       785.3       3,096.2       3,008.5    
 Co-product return % (1)   37.8 %     35.5 %     36.5 %     34.5 %  
________________                
 (1) Co-product revenue as a percentage of delivered cost of corn. 

 

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