SACRAMENTO - Pacific Ethanol, Inc. (NASDAQ: PEIX), a leading producer of specialty alcohols and essential ingredients, reported its financial results for the three and nine months ended September 30, 2020.
'We have realigned our business around specialty alcohols and essential ingredients, focusing on the stable growth markets of Health, Home & Beauty, Food and Beverage and Essential Ingredients,' said Mike Kandris, Pacific Ethanol's CEO. 'Our 3rd quarter net income of $14.9 million and Adjusted EBITDA of $34.1 million reflect our efforts to reposition the company to produce sustainable and profitable results going forward. We have successfully transitioned production at our Pekin, Illinois campus to approximately 50% specialty alcohols. We are further expanding capacity at our Pekin facility and investing in quality assurance and certifications to expand addressable customers and markets to further build our business.
'To support these efforts, we raised $75 million in October through an equity offering, the net proceeds of which will significantly reduce legacy debt, improve our balance sheet, and be accretive to 2020 earnings per share on a pro forma basis. We took a further step with the recently announced agreement to sell the grain handling assets at our Burley, Idaho plant for $10 million, which will monetize idled assets at an accretive value. The proceeds will be used to prepay debt.
'We have many attractive reinvestment opportunities which we can complete with the support of our strengthened balance sheet. For example, we are investing in a capacity expansion of our yeast facility to increase annual production by 15%. We expect to complete this project by the third quarter of 2021.'
'We are reaffirming our second half of 2020 guidance of Adjusted EBITDA between $50 and $70 million dollars and $66 and $86 million dollars for the full year,' stated Bryon McGregor, Pacific Ethanol's CFO. 'The majority of our 2021 specialty alcohol production has already been contracted at fixed prices for terms of one year or more. We expect long-term tailwinds from continued growth in demand for specialty alcohols and essential ingredients.'
Financial Results for the Three Months Ended September 30, 2020 Compared to 2019
Net sales were $204.7 million, compared to $365.2 million.
Cost of goods sold was $183.8 million, compared to $380.0 million.
Gross profit was $20.9 million, compared to a gross loss of $14.8 million.
Selling, general and administrative expenses were $6.4 million, compared to $8.7 million.
Operating income was $26.3 million, compared to an operating loss of $23.5 million.
Income available to common stockholders was $14.9 million, or $0.24 per share, compared to a loss of $27.6 million, or $0.58 per share.
Adjusted EBITDA was positive $34.1 million, compared to negative $12.4 million.
Cash and cash equivalents were $38.7 million at September 30, 2020, compared to $19.0 million at December 31, 2019. Subsequent to the third quarter, on October 28, 2020, the company closed an underwritten public offering of common stock and pre-funded warrants and concurrent private offering of warrants, for net proceeds of approximately $70.0 million.
Financial Results for the Nine Months Ended September 30, 2020 Compared to 2019
Net sales were $728.2 million, compared to $1.1 billion.
Cost of goods sold was $689.0 million, compared to $1.1 billion.
Gross profit was $39.2 million, compared to a gross loss of $13.1 million.
Selling, general and administrative expenses were $25.2 million, compared to $23.6 million.
Operating income was $25.7 million, compared to an operating loss of $36.8 million.
Income available to common stockholders was $4.1 million, or $0.07 per share, compared to a loss of $48.8 million, or $1.04 per share.
Adjusted EBITDA was positive $50.6 million, compared to negative $3.6 million.
About Pacific Ethanol, Inc.
Pacific Ethanol, Inc. (PEIX) is a leading producer of specialty alcohols and essential ingredients. The company is focused on products for four key markets: Health, Home & Beauty, Food & Beverage, Essential Ingredients and Renewable Fuels. The company's customers include major food and beverage companies and consumer products companies. Pacific Ethanol's subsidiary, Kinergy Marketing LLC, markets all specialty alcohol products for Pacific Ethanol's distilleries as well as fuel grade ethanol for third parties. Pacific Ethanol's subsidiary, Pacific Ag. Products LLC, markets wet and dry distillers grains.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements and information contained in this communication that refer to or include Pacific Ethanol's estimated or anticipated future results or other non-historical expressions of fact are forward-looking statements that reflect Pacific Ethanol's current perspective of existing trends and information as of the date of the communication. Forward looking statements generally will be accompanied by words such as 'anticipate,' 'believe,' 'plan,' 'could,' 'should,' 'estimate,' 'expect,' 'forecast,' 'outlook,' 'guidance,' 'intend,' 'may,' 'might,' 'will,' 'possible,' 'potential,' 'predict,' 'project,' or other similar words, phrases or expressions. Such forward-looking statements include, but are not limited to, statements concerning future market conditions, including the supply of and domestic and international demand for specialty alcohols, fuel-grade ethanol and co-products; the timing and success of Pacific Ethanol's efforts to expand production capacity; the ability of Pacific Ethanol to timely close the sale of its grain handling assets at its Burley, Idaho plant; Adjusted EBITDA amounts that Pacific Ethanol might generate and Pacific Ethanol's other plans, objectives, expectations and intentions. It is important to note that Pacific Ethanol's plans, objectives, expectations and intentions are not predictions of actual performance. Actual results may differ materially from Pacific Ethanol's current expectations depending upon a number of factors affecting Pacific Ethanol's business. These factors include, among others, adverse economic and market conditions, including for specialty alcohols, fuel-grade ethanol and co-products; export conditions and international demand for fuel-grade ethanol and co-products; fluctuations in the price of and demand for oil and gasoline; raw material costs, including production input costs, such as corn and natural gas; the continued effects of the novel coronavirus on travel and the demand for transportation fuels, sanitizers and disinfectants and the ability of Pacific Ethanol to timely and successfully execute on its strategic realignment initiatives and remain in compliance with its debt covenants, including Pacific Ethanol's compliance with its prior and continuing obligation to obtain lender approval of a comprehensive plan to restructure its assets and liabilities, the failure of which currently enables its lenders to accelerate Pacific Ethanol's debt. These factors also include, among others, the inherent uncertainty associated with financial and other projections; the anticipated size of the markets and continued demand for Pacific Ethanol's products; the impact of competitive products and pricing; the risks and uncertainties normally incident to the specialty alcohols and fuel-grade ethanol production and marketing industries; changes in generally accepted accounting principles; successful compliance with governmental regulations applicable to Pacific Ethanol's facilities, products and/or businesses; changes in laws, regulations and governmental policies; the loss of key senior management or staff and other events, factors and risks previously and from time to time disclosed in Pacific Ethanol's filings with the Securities and Exchange Commission including, specifically, those factors set forth in the 'Risk Factors' section contained in Pacific Ethanol's Prospectus Supplement filed with the Securities and Exchange Commission on October 26, 2020.
Contact:
Tel: 916-403-2755
Email: Investorrelations@pacificethanol.com
ALTO INGREDIENTS, INC. 
