Pacific Ethanol; High Corn Costs Take a Toll Yet Future Looks Promising
Pacific Ethanol shares shot up as high as 10.15% yesterday in anticipation of the company's second quarter earnings release.
Did Pacific Ethanol deliver?
Yes and No
Corn Costs
Corn prices overwhelmed Pacific Ethanol as the company paid $4.23 per bushel; the most of any ethanol producer. Corn costs sequentially increased 54 cents which decreased Pacific Ethanol's quarter-to-quarter gross profit margin. Nonetheless, corn prices have declined since.
Comparing Prices:
Ethanol Sales
Ethanol sales were impressive. The company sold 43.9 million gallons of ethanol which was a 13% increase from first quarter. Pacific Ethanol managed to sell its ethanol at $2.32 per gallon; the highest of any ethanol producer.
Comparing Prices:
Did PEIX Beat Analyst Expectations?
Pacific Ethanol reported a diluted EPS of $0.03 which came short of analysts' expectation of $0.08. Record net sales of $113.8 million managed to beat analysts' expectation of 102 million.
What to Look Forward Too
The California Air Resource Board this summer passed a 10 percent ethanol blend mandate which will begin in 2008. This mandate will create new incremental demand for Pacific Ethanol as it is the largest west coast-based producer.
In today's conference call, Neil Koehler stated the 40 million-gallon-per-year Boardman plant will start production in a couple weeks. Pacific Ethanol's three other plants currently under construction are due in 2008.
This is great news for Pacific Ethanol; especially with California taking further initiative towards ethanol expansion.
Did Pacific Ethanol deliver?
Yes and No
Corn Costs
Corn prices overwhelmed Pacific Ethanol as the company paid $4.23 per bushel; the most of any ethanol producer. Corn costs sequentially increased 54 cents which decreased Pacific Ethanol's quarter-to-quarter gross profit margin. Nonetheless, corn prices have declined since.
Comparing Prices:
| Cost Per Bushel | Pacific Ethanol | VeraSun | Aventine |
| Second Quarter 2007 | $4.23 | $3.62 | $3.99 |
| First Quarter 2007 | $3.69 | $4.05 | $3.45 |
Ethanol Sales
Ethanol sales were impressive. The company sold 43.9 million gallons of ethanol which was a 13% increase from first quarter. Pacific Ethanol managed to sell its ethanol at $2.32 per gallon; the highest of any ethanol producer.
Comparing Prices:
| Price Per Gallon Sold | Pacific Ethanol | VeraSun | Aventine |
| Second Quarter 2007 | $2.32 | $2.21 | $2.29 |
| First Quarter 2007 | $2.28 | $2.13 | $2.10 |
Did PEIX Beat Analyst Expectations?
Pacific Ethanol reported a diluted EPS of $0.03 which came short of analysts' expectation of $0.08. Record net sales of $113.8 million managed to beat analysts' expectation of 102 million.
What to Look Forward Too
The California Air Resource Board this summer passed a 10 percent ethanol blend mandate which will begin in 2008. This mandate will create new incremental demand for Pacific Ethanol as it is the largest west coast-based producer.
In today's conference call, Neil Koehler stated the 40 million-gallon-per-year Boardman plant will start production in a couple weeks. Pacific Ethanol's three other plants currently under construction are due in 2008.
This is great news for Pacific Ethanol; especially with California taking further initiative towards ethanol expansion.
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