Pacific Ethanol, Inc. (NASD: PEIX) recently announced their first quarter 2008 financial figures. The company produces and sells ethanol and its co-products, which include wet distiller’s grains, throughout much of the western United States. They also engage in providing transportation, storage, and delivery of ethanol through third-party service providers. The sales of ethanol are primarily to gasoline refining and distribution companies, and wet distiller’s grains to dairy operators and animal feed distributors.
The company was pleased to report net sales of $161.5 million, a substantial increase of $62.3 million, compared to $99.2 million the year prior. The increase can be attributed to an increase in sales volume, which was offset by lower average sales prices. Sales volume increased by 21.7 million gallons up to 59.2 million gallons for the first quarter 2008, compared to 37.5 million gallons for the same period of 2007. There was a decrease in the company’s average sales price of ethanol by $0.04 per gallon; the price is currently at $2.30 per gallon.
The average price of corn has risen significantly compared to a year ago. The company partially offset the increase of corn costs with derivative gains of $2.2 million for the quarter ended March 31, 2008, and for the same time period of last year the company lost $303,000 from derivatives. Gross profit hit $15.7 million for the first quarter 2008 compared to $15.3 million in the first quarter of 2007. Gross margin was 9.7% for the first three months ended March 31, 2008; last year’s gross margin for the same period was a reported at 15.4%.
Net loss for the first quarter of 2008 totaled $35.2 million compared to net income of $3.0 million the previous year. The company also reported a non-cash goodwill impairment of $87.0 million. Included in this amount is $48.4 million related to non-controlling interests of the company’s variable interest entity, which resulted in net goodwill impairment of $38.6 million, and is included in the company’s net loss for the first quarter of 2008.
“We achieved record sales and are pleased to report solid operational results for the first quarter. Our Madera, Columbia and the Front Range facilities continue to produce over design basis and our Magic Valley plant has successfully completed start up. We continued to hold overhead costs relatively steady from the first quarter of 2007, even as we experience ongoing dynamic growth. Our destination model has increased the availability of renewable fuels and high quality feed products in the Western US. With high oil prices and limited expansion possibilities in oil production, we are providing a critically needed and valuable transportation fuel to the marketplace,” stated Pacific Ethanol’s CEO, Neil Koehler.
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