In California, Pacific Ethanol reported Net sales of $227.6 million, Gross profit of $6.3 million and Adjusted EBITDA of $5.4 million for Q2 2015, and reported record total gallons sold of 140.7 million.
Neil Koehler, the company’s president and CEO, stated: “We closed our stock-for-stock acquisition of Aventine Renewable Energy, establishing Pacific Ethanol as the sixth largest producer of ethanol in the U.S. with a strong presence across the entire ethanol value chain. As a result of the acquisition, we have expanded our mission statement: we now aim to be the leading producer and marketer of low-carbon renewable fuels in the United States.
Net sales were $227.6 million for the second quarter of 2015, a decrease of 29% when compared to $321.1 million for the second quarter of 2014. The decline in net sales was attributable to a decrease in the average sales price per gallon of ethanol, partially offset by an increase in total gallons sold. Gross profit was $6.3 million for the second quarter of 2015, compared $33.6 million for the second quarter of 2014, reflecting a decrease in production margins compared to the prior year.
Jeffrey Osborne at Cowen & Company commented, “Q2 reflected a recovery in spread, cost controls / SG&A well tightened, and smooth execution on key initiatives, namely the successful close of the Aventine merger, the start of corn oil production at the Boardman plant, and the acquiring of the remaining 4% ownership in its West Coast plants, which produced at 95% capacity. Adjusted EBITDA / total gal. was a positive $0.04, up from ($0.02) in Q1.
“We see the consolidation of Aventine as a catalyst over the coming quarters, due to the increased output and cost synergies, which management has noted are expected to be at least $1 mn / month. More specifically, the company expects the consolidated company to run at an ~$7 mn / quarter SG&A run rate, which is in line with our estimates and thus increases our confidence in our model.”