Pacific Ethanol reports improved margins, considers asset sales

By Erin Voegele | May 03, 2019

Pacific Ethanol Inc. held an earnings call to discuss first quarter 2019 financial results May 2. The company reported significant improvement when compared to the fourth quarter of 2018 but is continuing to consider the sale of production assets.

During the call, Neil Koehler, president and CEO of Pacific Ethanol, said the overall ethanol market is emerging from the bottom of a cycle that occurred in the fourth quarter of last year, when crush margins fell to a historic low. “The first quarter of 2019 results reflect this improvement, resulting in a promising start to the year,” he said, noting net sales were up approximately 6 percent when compared to the final quarter of 2018.

Koehler also said Pacific Ethanol continues to believe that the cost of octane and carbon benefits of ethanol will drive new demand in 2019, above 2018 levels. He said two significant drivers of this growth are expected to be new exports and E15. In the export market, Koehler said the company is looking forward to the resolution of trade disputes with China, which should open up a new market for U.S. ethanol. For E15, he said retailers have steadily been adopting the fuel blend, with more than 1,700 stations spanning 30 states currently offering E15. Pre-blended E15 now available at more than 100 U.S. terminals, he continued, and noted the U.S. EPA is expecting to finalize a rule allowing year-round E15 sales by June 1.

Pacific Ethanol reported net sales of $355.8 million for the quarter, compared to $400 million during the first quarter of 208. Total gallons old was 211.8 million, down from 232.7 million. Total production gallons sold was 116.9 million, down from 140.8 million.

Gross loss for the first quarter was $2.3 million, compared to a gross profit of $3.4 million during the same period of 2018. Operating loss was $10.5 million compared to $6 million. Loss available to common stockholders was $13.2 million, or 29 cents per share, compared to $8.2 million, or 19 cents per share. Adjusted EBITDA was $1.6 million, down from $5.7 million during the first quarter of 2018.