Sacramento’s Pacific Ethanol Inc. got back to full speed Monday, reporting record operating profits and resuming production at the last of its idle plants.
The West Coast ethanol producer said it restarted operations at its Madera plant, which had stood silent for five years, bringing the company back to full production. At the depth of its financial crisis in 2009, when ethanol prices crashed, Pacific Ethanol mothballed three of its plants and placed all four of them in Chapter 11 bankruptcy protection.
“We have achieved this important milestone of bringing all 200 million gallons of annual operating capacity back online,” said Neil Koehler, president and chief executive, in a prepared statement.
Also Monday, Pacific Ethanol reported record first-quarter operating profits of $34.9 million, compared with an operating loss of $3.2 million a year earlier. Revenue jumped 13 percent to $254.5 million, reflecting higher sales volumes and prices.
In terms of the bottom line, however, Pacific Ethanol reported a loss of $11.1 million, or 69 cents a share. That compared with a loss of $5.8 million, or 57 cents a share, a year earlier.
The reason for the loss: Pacific Ethanol’s stock price rose sharply during the quarter, which increased the value of its outstanding warrants. Warrants are contracts that allow investors to buy new shares at set prices. The big increase in the warrants’ worth cost the company nearly $36 million on paper, in what is known as a “fair value adjustment.” That left the company in the red for the quarter.
Company executives said the operating profits show a truer picture of the company’s continuing comeback from a deep slump. After losing control of its four plants to creditors through bankruptcy, Pacific Ethanol has been able to buy back 91 percent of the equity in the production facilities. Debts have been reduced and the company raised $26 million last month from a new stock sale.
“Our first-quarter 2014 results reflect the company’s exceptional performance in both production and marketing at a time of overall favorable market conditions in the industry,” Koehler said. Ethanol prices averaged $2.70 a gallon during the first quarter, up a dime from a year ago. Meanwhile, the price of Pacific Ethanol’s raw ingredient, corn, has fallen by nearly half.
Pacific Ethanol shares closed at $15.60, up 88 cents, on the Nasdaq. They fell 74 cents, to $14.86, in after-hours trading.
Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.