On Aug. 3, Pacific Ethanol Inc. released second quarter financial results, providing an update of plant improvement projects and reporting improving market conditions and margins moving into the third quarter.
During an investor call, Neil Koehler, president and CEO of Pacific Ethanol, said second quarter margins were negatively impacted by elevated production volumes and high inventories across the industry. He said the company is currently seeking an improved spread between ethanol and corn and better plant production margins when compared to the second quarter. Gasoline demand has also picked up with the summer driving season, he said, noting that gasoline demand hit a record high last week as measured by the U.S. Energy Information Administration.
Koehler said Pacific Ethanol expects ethanol demand to remain strong and continue to grow as the domestic market blends above 10 percent and as international markets grow to meet carbon targets and demand for octane.
He also provided an update of continued efforts by Pacific Ethanol to upgrade its plants in order to increase operational efficiencies, improve reliability, enhance yield, improve carbon scores and reduce operating costs.
The 3.5 MW cogeneration system at the Stockton, California, plant is on track to reach full capacity by the third quarter, Koehler said. The system is expected to reduce annual energy costs at the plant by up to $4 million.
At the Madera, California, plant, Koehler said the Whitefox industrial membrane system is operating very well, noting the system is expected create energy savings while improving operational performance and the plant&rsquo;s carbon score. Pacific Ethanol expects the system to reduce natural gas costs at the plant by approximately 5 percent. Once the facility has three months of consistent operating history, Koehler said the company has submit for a new pathway with the California Air Resources Board. He also indicated Pacific Ethanol will evaluate expanding the membrane system to its other plants.
Regarding cellulosic ethanol, Koehler said production is continuing at the company&rsquo;s Stockton plant, with commercial production at the Madera facility expected to begin during the second half of this year. Pacific Ethanol is also petitioning the U.S. EPA for pathway approval to produce cellulosic ethanol at its Magic Valley plant in Idaho.
The solar power system at Madera is on schedule to begin full-scale operations early next year. Koehler lad the equipment has been procured and construction is underway. Once operational, the system is expected to reduce utility costs at the plant by up to $1 million annually.
Improvements have also been made to the plants in Aurora, Nebraska. Koehler said upgrades to boilers and dryers have improved production economics and plant reliability at the facilities.
Pacific Ethanol reported second quarter net sales of $405.2 million, down from $422.9 million during the same period of last year. Gross profit was $1.7 million, down from $17.7 million. Operating loss was $7.1 million, compared to an operating income of $11.6 million during the second quarter of 2016. Net loss available to common stockholders was $9.2 million, or 22 cents per share, compared to net income of $4.7 million, or 11 cents per share. Adjusted EBITDA was $2.6 million, down from $20.4 million during the second quarter of last year.
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On Aug. 3, Pacific Ethanol Inc. released second quarter financial results, providing an update of plant improvement projects and reporting improving market conditions and margins moving into the third quarter.



Pacific Ethanol provides update of plant improvement projects

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