Pacific Ethanol reports 2014 was a record year

By Erin Voegele | March 05, 2015

Pacific Ethanol Inc. has released 2014 financial results, reporting record net sales, gross profit, operating income, adjusted EBITDA and gallons sold. Neil Koehler, CEO of Pacific Ethanol, called 2014 a pivotal year and stressed that the company met and exceeded all of its goals for 2014.

For the fourth quarter of 2014, Pacific Ethanol reported net sales of $256.2 million, up from $215.3 million during the same period of the prior year. Gross profit was $18.4 million, compared to $21.6 million for the same three-month period of 2013. Adjusted EBITDA was $16.3 million, down from $18.3 million during the fourth quarter of the previous year.

For the full year, Pacific Ethanol reported record net sales of $1.1 billion, up from $908.4 million in 2013. Gross profit also set a record at $108.5 million, up from $32.9 million. Operating income was a record $91.4 million, up from $18.9 million the previous year. Net income available to common stockholders was $20 million, or 88 cents per diluted share, compared to a loss of $2 million, or 17 cents per diluted share, in 2013. Adjusted net earnings were $59.9 million, or $2.64 per diluted share, compared to $2 million or 16 cents per diluted share, in 2013. Adjusted EBITDA was a record $95 million, up from $28.6 million the previous year.

During an investor call, Koehler noted Pacific Ethanol successfully restarted its Madera, California, ethanol plant during the second quarter of last year. The facility had been idle for more than five years. “We achieved efficient operations quickly at Medara, and it has operated very well since,” he said.

Koehler also said Pacific Ethanol has committed about $16 million in capital to improving plant efficiencies and increasing yields. Many of those projects are complete, but some are still underway, he said. “We these projects we have reduced our cost of production and increased revenue-generating opportunities at each of our facilities,” Koehler continued.

As part of the improvements, corn oil separation technology is being added to Pacific Ethanol’s final two plants. The corn oil system expected to be complete at the Medara plant during the first quarter, and at the Boardman, Oregon, and facility in the second quarter. A CO2 facility at the Boardman plant is also reaching completion, with the first sales of CO2 expected to begin at the end of the current quarter.

Koehler also spoke about the 3.5 MW cogeneration system that is being installed in the Stockton, California, facility. That project, which was announced in January, will convert waste gas from ethanol production and natural gas into electricity and steam. The technology is expected to allow the plant to have among the lowest air emissions in the ethanol, while reducing energy costs by $3 to $4 million per year. During the call, Koehler also spoke about Pacific Ethanol’s research into using grains sorghum, which is supported by a $3 million grant awarded by the California Energy Commission.

Regarding the recently announced merger with Aventine Renewable Energy, Koehler noted the transaction remains on track to close during the second quarter of this year.

In addition, Koehler addressed industry margins, noting that although margins have been under some pressure in 2015, margins have been picking up over the past week. He also noted that reduced gas prices have resulted in higher ethanol demand. A five percent increase in gasoline demand this year, he said, would translate into 700 million gallons of additional ethanol demand.