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, 2015.
Second quarter 2015 Financial Highlights
- Net sales of $227.6 million
- Gross profit of $6.3 million
- Operating income of $2.3 million
- EPS of $0.03
- Adjusted EBITDA of $5.4 million
- Record total gallons sold of 140.7 million
Neil Koehler, the company’s president and CEO, stated: “Our second quarter 2015 financial results reflect improved performance as we grew net sales 10% sequentially while reporting a record total gallons sold. With ethanol now integral to the U.S. transportation fuel supply and ethanol demand expanding in both the U.S. and world markets, we are confident in the growth opportunities for our business.
“On July 1, 2015, we closed our stock-for-stock acquisition of Aventine Renewable Energy, establishing Pacific Ethanol as the sixth largest producer of ethanol in the U.S. with a strong presence across the entire ethanol value chain. As a result of the acquisition, we have expanded our mission statement: we now aim to be the leading producer and marketer of low-carbon renewable fuels in the United States.
“In the second quarter we accomplished several other important strategic initiatives. We fully consolidated ownership of the four western Pacific Ethanol plants, which reduces administrative costs and increases our earnings capacity. With the initiation of corn oil production at our Boardman, Oregon facility, we are now producing corn oil at all of our eight plants.
“Significantly, we also just reached a settlement with the Aurora Cooperative, which dismisses all outstanding litigation with the co-op. This very positive development facilitates a mutually beneficial commercial relationship that expands our corn purchase options and should improve the value of our co-product feed,” concluded Koehler.
Bryon McGregor, the company’s CFO, stated, “As we integrate the Aventine business, our objective over time is to generate synergistic benefits of at least $1.0 million per month in increased efficiencies and reduced expenses. As the Aventine business will be consolidated into our financial results beginning in the third quarter of 2015, we expect an SG&A run rate of approximately $7.0 million and capital expenditures of approximately $10.0 million per quarter through year end. In July, we increased our Wells Fargo line of credit to $75.0 million to support the working capital needs of the combined company and retired Aventine’s more expensive legacy line of credit. We are evaluating opportunities to consolidate and refinance our term debt with the intent to lower our overall cost of borrowing.”
Financial Results for the Three Months Ended June 30, 2015
Net sales were $227.6 million for the second quarter of 2015, a decrease of 29% when compared to $321.1 million for the second quarter of 2014. The decline in net sales was attributable to a decrease in the average sales price per gallon of ethanol, partially offset by an increase in total gallons sold.
Gross profit was $6.3 million for the second quarter of 2015, compared $33.6 million for the second quarter of 2014, reflecting a decrease in production margins compared to the prior year.
Selling, general and administrative (“SG&A”) expenses were $4.0 million for the second quarter of 2015, compared to $4.3 million for the second quarter of 2014.
Operating income for the second quarter of 2015 was $2.3 million, compared to $29.3 million for the second quarter of 2014.
Interest expense, net for the second quarter of 2015 was $1.0 million, compared to $2.9 million for the second quarter of 2014. The lower interest expense is related to a reduction in the company’s average outstanding debt balances.
Provision for income taxes for the second quarter of 2015 was $0.5 million, compared to $7.2 million for the second quarter of 2014.
Net income available to common stockholders for the second quarter of 2015 was $0.7 million, or $0.03 per diluted share, compared to $15.3 million, or $0.68 per diluted share, for the second quarter of 2014.
Adjusted EBITDA was $5.4 million for the second quarter of 2015, compared to $27.8 million for the second quarter of 2014.
Cash and cash equivalents were $49.3 million at June 30, 2015, compared to $62.1 million at December 31, 2014. The reduction in cash reflects debt payments of $12.0 million and capital expenditures of $12.2 million, which were partially offset by cash flows from operations of $11.4 million.
Financial Results for the Six Months Ended June 30, 2015
Net sales were $433.8 million for the first six months of 2015, compared to $575.7 million for the same period of 2014.
Gross profit was $5.3 million for the first six months of 2015, compared to $72.1 million for the same period of 2014.
SG&A expenses were $8.9 million and included approximately $1.3 million in Aventine acquisition -related expenses for the first six months of 2015, compared to SG&A expenses of $8.0 million for the same period of 2014.
Operating loss for the first six months of 2015 was $3.6 million, compared to operating income of $64.1 million for the same period of 2014.
Net loss available to common stockholders was $4.0 million for the first six months of 2015, compared to net income of $4.1 million for the same period of 2014.
Adjusted EBITDA was $2.7 million, compared to $63.2 million for the same period of 2014. The 2014 period includes approximately $35.4 million in fair value adjustments and warrant inducements. (Original Source)
Shares of Pacific Ethanol closed today at $7.98, up $0.45 or 5.98%. PEIX has a 1-year high of $23.97 and a 1-year low of $7.05. The stock’s 50-day moving average is $9.68 and its 200-day moving average is $10.41.
On the ratings front, Roth Capital analyst Craig Irwin maintained a Buy rating on PEIX, with a price target of $16, in a report issued on June 22. The current price target represents a potential upside of 101.8% from where the stock is currently trading. According to TipRanks.com, Irwin has a total average return of -7.3%, a 33.3% success rate, and is ranked #3577 out of 3718 analysts.
Pacific Ethanol Inc is engaged in producing and marketing low-carbon renewable fuels in the Western United States. It also sells ethanol co-products, including wet distillers grain, a nutritious animal feed, and corn oil.