Pacific Ethanol provides update of realignment plan

By Erin Voegele | November 10, 2020

Mike Kandris, CEO of Pacific Ethanol, provided an update on the company’s efforts to realign its business around specialty alcohols and essential ingredients during a third quarter earning call, held Nov. 10.

In addition to renewable fuel, Kandris said Pacific ethanol is focused on three key markets: health, home and beauty; food and beverage; and essential ingredients. He described those markets as offering stable growth and high demand for the company’s products. Kandris also confirmed that Pacific Ethanol will also continue to produce and market renewable fuel.

According to Kandris, Pacific Ethanol is finalizing the refurbishment of its existing grain neutral spirit (GNS) system located at its wet mill in Pekin, Illinois. Once complete, the upgrade will boost production of the company’s highest quality alcohol product by 30 MMgy. By the end of the year, Pacific Ethanol expects to have 140 MMgy of capacity in place to produce specialty alcohol, the majority of which will meet or exceed USP specifications, Kandris added, up from 85 MMgy of capacity in 2019.

Kandris said specialty alcohols contributed approximately 45 percent of Pacific Ethanol’s revenue during the first nine months of 2020, up from 15 percent for the entire year 2019.

He also briefly discussed the company’s plans to sell or repurpose its Western renewable fuel plants. Pacific Ethanol took an initial step earlier this month by announcing an agreement to sell 134 acres, the rail loop and grain handling assets at its Magic Valley, Idaho, plant to Liberty Basin LLC for $10 million. That sale is expected to close by the end of November. Kandris offered no additional information on plans for the Western facilities but noted the company will continue to update its investors on other initiatives to repurpose or sell the assets.

Pacific Ethanol reported net sales of $204.7 million for the quarter, down from $364.2 million during the same period of 2019. Gross profit was $20.9 million, up from $14.8 million. Operating income was $26.3 million, compared to an operating loss of $23.5 million reported for the same period of last year. Income available to common stockholders was $14.9 million, or 24 cents per share, compered to a loss of $27.6 million, or 58 cents per share. Adjusted EBITDA was $34.1 million, compared to negative $12.4 million in the third quarter of 2019.