Pacific Ethanol reports record ethanol sales during third quarter

Pacific Ethanol Inc.

November 3, 2016

BY Ann Bailey

Pacific Ethanol recorded a net loss of $3.8 million in the third quarter of 2016, said Neil Koehler, Pacific Ethanol president and CEO. The net loss was a result of $11 million in expenses, including higher beginning inventory valuation, significant repair expenses, non-cash market-to-market adjustments related to open hedge positions and lower margins in the company’s trading business that resulted from a drop in ethanol prices during the third quarter, Koehler said.

The company’s gross profit was $6.4 million in the third quarter of 2016. Last year, during the third quarter Pacific Ethanol had a gross loss of $7.4 million. Sales of a record amount of ethanol from production and from third-party sales resulted in the increase over last year, Koehler said.

On the sales side, Pacific Ethanol sold a record 243.7 million gallons of ethanol during the third quarter of 2016, he said. The increase reflected increased output from the company’s eight plants and a 16 percent increase in third-party sales over the same period in 2015. Net sales of $417.8 million in the third quarter of 2015 were 10 percent higher than they were the third quarter a year ago.

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This quarter, Pacific Ethanol is having nearly the best profit margins of the year because ethanol demand is strong and corn prices are low. Koehler said. “With our diverse platform of efficiently operating assets and multiple products, we are well-positioned to profit from the positive market conditions in the fourth quarter,” he said.  

“We see a supportive environment for ethanol into 2017,” Koehler said. Stable or modestly higher oil prices, balanced supply and demand, positive export forecasts and strengthened demand for E15, driven by new infrastructure and higher blending levels required by the RFS will support the ethanol market, he said.

Pacific Ethanol’s business highlights include:

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- Initiating startup of the industrial scale membrane system at the Madera, California, plant.

- Beginning commercial of cogeneration technology is expected to begin next month at the Stockton, California, plant.

- Contracted to install a 5 megawatt-solar photovoltaic power system at the Madera facility. The system is expected to displace more than 30 percent of the electricity that is being provided by the grid and reduce the carbon intensity of the ethanol produced, Pacific Energy said. The system is expected to be fully operational in 2018 after interconnection agreements with utility companies.

 

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