Pacific Ethanol sells record volumes of ethanol during Q3

By Erin Voegele | November 08, 2017

Pacific Ethanol Inc. has released third quarter financial results, reporting the company achieved a record total gallons sold of 250 million and a record production gallons sold of 141.8 million.

“For the third quarter 2017, Pacific Ethanol reported improving financial performance in light of challenging commodity margin economics,” said Neil Koehler, president and CEO of Pacific Ethanol. “Combined with the positive impact of the July 3 [Illinois Corn Processing] acquisition, we reported year-over-year and sequential quarterly increases in net sales, gross profit, operating income and adjusted EBITDA. We now operate nine plants with a total annual production capacity of 605 million gallons. Shortly after the ICP acquisition, we refinanced the associated promissory notes, strengthening our balance sheet and reducing our cost of borrowing.”

During an investor call, Koehler said that the ICP acquisition made the company more diversified by adding high-quality alcohol products. He said high-value alcohol products contribute favorably to margins and represented approximately 10 percent of total ethanol sales during the third quarter.

According to Koehler, the third quarter saw a slow start, but margins improved throughout the three-month period. He said the fourth quarter is off to a similarly slow start as ethanol inventories are higher than they were a year ago. However, he said Pacific Ethanol is encouraged by continued strong gasoline demand, increasing penetration of higher ethanol blends, and growing export opportunities. He said the company will continue to manage the production level of its production facilities to optimize plant profitability.

Koehler indicated the cogeneration system at the Stockton, California, plant is in the final stages of start-up and is expected be at full capacity within the next two weeks. He also said that the industrial-scale membrane system at the Madera, California, plant is operational, with the plant realizing a 5 percent reduction in natural gas costs. Koehler noted the company is on track to begin the commercial production of cellulosic ethanol at the Madera plant during the fourth quarter, and has submitted a cellulosic pathway to the U.S. EPA for the Magic Valley, Idaho, plant. He said the company expects to have approval to generate D RINS at both facilities by early next year, at which point it will have three plants producing cellulosic ethanol from corn fiber. Koehler also said the construction of the solar power system at the Madera plant is underway and on schedule to begin operations in early 2018.

Pacific Ethanol reported net sales of $445.4 million for the third quarter, up from $417.8 million during the same period of last year. Gross profit was $12.1 million, up from $6.4 million. Operating income was $3.3 million, compared to $400,000 during the third quarter of 2016. Net loss was $500,000, or 1 cent per share, compared to $3.8 million, or 9 cents per share. Adjusted EBITDA was $13.2 million, up from $9.3 million during the same quarter of 2016.