Swings to Profit in 2014 From Loss in 2013
March 4,2105
Investors appeared pleased after financial results from the latest quarter and full year were released today for Pacific Ethanol and were better than expected.
The company, based in Sacramento, the leading producer and marketer of low-carbon renewable fuels in the Western United States, reported its financial results for the three- and twelve-months ended December 31, 2014.
Shares were up after hours to $10.47, more than 11%, after results beat expectations on earnings per share for the the quarter at $0.41 compared to expectations of $0.18. Revenue was down slightly at $256.2 million compared to an expectation of $258.1 million.
Some feared the collapse of gas prices that helped drive down ethanol prices in recent months would put the hurt on the biofuel maker despite a pending merger deal.
Reported for the year ending December 31, 2014:
-For the year Pacific Ethanol earned $20 million on sales of $1.1 billion – up from a $2 million loss in 2013 and sales of $908 million.
-Net income of $20.0 million, or $0.88 per diluted share
-Adjusted Net Earnings of $59.9 million, or $2.64 per share
-Adjusted EBITDA of $95.0 million
Neil Koehler, the Company’s president and CEO, stated: “Our record financial and operating results in 2014 are a culmination of numerous efficiency and debt reduction initiatives we implemented over the past several years combined with strong market fundamentals. With our solid balance sheet and cash flow, we are both reinvesting in our production assets and pursuing a merger with Aventine that will redefine Pacific Ethanol’s competitive position in the ethanol industry, making us the fifth largest ethanol producer and marketer in the country. In 2015, we are focused on driving sustained profitable growth through successfully closing the Aventine merger, integrating our combined companies, further improving plant efficiencies, diversifying feedstock, introducing new revenue streams and pursuing advanced biofuels production.”
Financial Results for the Three Months Ended December 31, 2014
Net sales were $256.2 million for the fourth quarter of 2014, compared to $215.3 million for the fourth quarter of 2013. The increase in net sales was attributable to an increase in total gallons sold, slightly offset by a reduction in the Company’s average sales price per gallon.
Gross profit was $18.4 million for the fourth quarter of 2014, compared to $21.6 million for the fourth quarter of 2013. The decline in gross profit was due to particularly strong production margins in the fourth quarter of 2013.
Selling, general and administrative (“SG&A”) expenses were $4.7 million for the fourth quarter of 2014, compared to $4.4 million for the fourth quarter of 2013. The increase in SG&A expenses reflect an increase in professional fees related to the pending Aventine merger of approximately $1.0 million, partially offset by a reduction in year-end compensation expense of approximately $0.8 million.
Operating income for the fourth quarter of 2014 was $13.6 million, compared to $17.2 million for the same period in 2013.
Fair value adjustments resulted in income of $2.2 million for the fourth quarter of 2014, compared to an expense of $2.5 million for the same period in 2013.
Interest expense, net was $1.1 million for the fourth quarter of 2014, compared to $3.7 million for the fourth quarter of 2013. This reduction is due to the Company’s significantly reduced debt balances in 2014.
Provision for income taxes was $1.5 million for the fourth quarter of 2014. In the fourth quarter, the Company finalized its estimate of net operating losses available to be utilized in 2014, which resulted in a reduced provision for income taxes for the quarter.
Income available to common stockholders for the fourth quarter of 2014 was $12.2 million, or $0.50 per diluted share, compared to $8.3 million, or $0.54 per diluted share, for the fourth quarter of 2013.
Adjusted Net Earnings, which excludes fair value adjustments and warrant inducements and extinguishments of debt, was $10.0 million, or $0.41 per diluted share for the fourth quarter of 2014, compared to Adjusted Net Earnings of $12.0 million, or $0.79 per diluted share for the same period in 2013.
Adjusted EBITDA was $16.3 million for the fourth quarter of 2014, compared to Adjusted EBITDA of $18.3 million for the fourth quarter of 2013.
Financial Results for the Year Ended December 31, 2014
Net sales were a record $1.1 billion for 2014, compared to $908.4 million for 2013.
Gross profit was a record $108.5 million for 2014, compared to $32.9 million for 2013.
Operating income for 2014 was a record $91.4 million, compared to $18.9 million for 2013.
Net income available to common stockholders for 2014 was $20.0 million, or $0.88 per diluted share, compared to a loss of $2.0 million, or $0.17 per diluted share, for 2013.
Adjusted Net Earnings for 2014 was $59.9 million, or $2.64 per diluted share, compared to Adjusted Net Earnings of $2.0 million, or $0.16 per diluted share, for 2013.
Adjusted EBITDA for 2014 was a record $95.0 million, compared to Adjusted EBITDA of $28.6 million for 2013.