Pacific Ethanol (PEIX) shares rally on strong Q2 results

Posted on: Tuesday, August 17th, 2010
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Pacific Ethanol, Inc. (Nasdaq: PEIX) skyrocketed Tuesday as much as 42 percent from Monday’s closing price after the company reported second quarter financial results.
The company experienced an even-greater surge in share price at the end of June, rising nearly 60 percent, after announcing that four of its wholly-owned subsidiaries had emerged from bankruptcy.

For the three months ended June 30, Pacific Ethanol posted earnings of $107.8 million or $1.43 per share compared to a loss of $28.2 million or 49 cents per share in the same period last year. The boost in earnings was primarily due a non-cash gain of $119 million, and an 88 percent increase in total gallons sold, offset by a lower average price per gallon.

Net sales in the quarter increased 9 percent to $76.8 million, compared to $70.1 million in the same quarter a year ago. The company also reduced its SG&A expenses by 49 percent, and improved adjusted EBITDA by $8.4 million, compared to the second quarter of 2009.

In a statement regarding the “pivotal” second quarter, Pacific Ethanol’s Chief Executive Officer Neil Koehler said: “We delivered sales growth, dramatically reduced operating expenses, and improved adjusted EBITDA. We successfully led the production facilities out of bankruptcy effective June 29th, substantially reducing our debt and other liabilities by $295 million. During the quarter, we also reduced other debt by $9 million. In addition to strengthening our balance sheet, we reduced selling, general and administrative expenses to less than half of what they were for the same quarter last year, thus establishing a stable platform for growth.”

At the end of June, Pacific Ethanol’s wholly-owned plant holding company, PEH, and its four plant subsidiaries exited bankruptcy, and ownership of PEH was transferred to certain lenders. As a result, PEI recorded a $119.4 million non-cash gain from the disposition of liabilities of $294.5 million net of assets of $175.1 million that were removed from its balance sheet. Simultaneously, PEI began operating under its newly announced operating and marketing agreements with the ethanol production facilities upon their emergence from bankruptcy.

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Category: Energy Stocks
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