Pacific Ethanol reports record Q1 results, restarts Madera plant

By Erin Voegele | May 02, 2014

Pacific Ethanol Inc. has released its first quarter financial results, reporting record operating income of $34.9 million. The company also announced the restart of its 40 MMgy Madera, Calif.-based plant, which is expected to reach full production capacity within weeks.  

Net sales were $254.5 million for the quarter, a 13 percent increase compared to the $225.5 million reported for the same period of 2013. Pacific Ethanol attributed the net sales increase to an increase in production gallons sold and an increase in the company’s average sales price per gallon of ethanol. Gross profit was a record $38.5 million, up significantly from $800,000 during the same three-month period of the prior year. The improvement in gross profit is attributed to significantly improved margins and an increase in production gallons sold. Operating income also set a record at $34.9 million, compared to an operating loss of $3.2 million reported for the first quarter of 2013.

"Our first quarter 2014 results reflect the company's exceptional performance in both production and marketing at a time of overall favorable market conditions in the industry,” said Neil Koehler, president and CEO of Pacific Ethanol. “Our operating results allowed us to significantly reduce debt and improve our cash position, further strengthening our balance sheet. I am thrilled to announce that today we commenced ethanol production at our Madera plant. We have achieved this important milestone of bringing all 200 million gallons of annual operating capacity back on line. The company is in a strong position to meet the increasing demand for low-carbon renewable fuels and to continue to grow the business."

During a call to discuss the quarterly results, Koehler noted the record-setting results reflect the company’s focus on running its plants efficiently and cost effectively. It also reflects the continued positive operating environment of the ethanol industry, he said.

“During the quarter we benefited in particular from the location of our production facilities in the destination markets we serve, as logistic and weather conditions in the Midwest constrained product flow to our high-demand markets,” Koehler continued. “Our expectation is this strong demand for ethanol and distillers grains, both domestically and for export, coupled with still relatively low ethanol inventories in the U.S., and lower corn prices when compared to past years, will support continued favorable production margins.”

Koehler also spoke about Pacific Ethanol’s efforts to diversify its revenue streams and feedstocks. He said corn oil extraction technology is already in place at the company’s Magic Valley, Idaho, and Stockton, Calif., facilities, and is producing expected volumes and yields. Pacific Ethanol also plans to implement corn oil extraction technology at its’ Madera and Columbia, Ore., facilities.

The Stockton plant is operating with advanced grinding technology. That technology is also expected to be added to the Magic Valley plant during the second quarter of this year. “The advanced grinding technology increases corn oil production and ethanol yields, and also serves as a platform for the potential future production of advanced biofuels,” Koehler said.

With regard to feedstock diversification, Koehler noted that Pacific Ethanol ramped up the use of the 270 million pounds of beet sugar it procured last year through the USDA’s Feedstock Flexibility Program. The sugar is currently being blended at approximately 15 percent ratios at the company’s Magic Valley and Columbia facilities. That blending is expected to continue over the course of 2014. In addition, Koehler noted the Stockton and Boardman plans have utilized waste beverage products as feedstock. Pacific Ethanol has also focused efforts on corn fiber, grain sorghum and industrial sugar feedsocks.