Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 08, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Pacific Ethanol, Inc. | |
Entity Central Index Key | 778,164 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 43,971,127 | |
Trading Symbol | PEIX | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 91,454 | $ 68,590 |
Accounts receivable, net (net of allowance for doubtful accounts of $16 and $331, respectively) | 46,438 | 86,275 |
Inventories | 63,087 | 60,070 |
Prepaid inventory | 10,432 | 9,946 |
Income tax receivables | 5,727 | 5,730 |
Derivative Instruments | 1,150 | 978 |
Other current assets | 2,483 | 3,612 |
Total current assets | 220,771 | 235,201 |
Property and equipment, net | 453,011 | 465,190 |
Other Assets: | ||
Intangible assets, net | 2,678 | 2,678 |
Other assets | 8,117 | 5,169 |
Total other assets | 10,795 | 7,847 |
Total Assets | 684,577 | 708,238 |
Current Liabilities: | ||
Accounts payable - trade | 28,234 | 37,051 |
Accrued liabilities | 17,823 | 20,280 |
Current portion - capital leases | 838 | 794 |
Current portion - long-term debt | 14,000 | 10,500 |
Derivative instruments | 1,721 | 4,115 |
Accrued PE Op Co. purchase | 3,828 | 3,828 |
Other current liabilities | 1,547 | 2,273 |
Total current liabilities | 67,991 | 78,841 |
Long-term debt, net of current portion | 199,599 | 188,028 |
Capital leases, net of current portion | 117 | 547 |
Warrant liabilities at fair value | 651 | |
Other liabilities | 20,446 | 21,910 |
Total Liabilities | 288,153 | 289,977 |
Pacific Ethanol, Inc. Stockholders' Equity: | ||
Common stock, $0.001 par value; 300,000 shares authorized; 43,909 and 39,772 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 44 | 40 |
Non-voting common stock, $0.001 par value; 3,553 shares authorized; 1 and 3,540 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 0 | 4 |
Additional paid-in capital | 924,911 | 922,698 |
Accumulated other comprehensive (loss) | (2,620) | (2,620) |
Accumulated deficit | (554,337) | (532,233) |
Total Pacific Ethanol, Inc. Stockholders' Equity | 367,999 | 387,890 |
Noncontrolling interests | 28,425 | 30,371 |
Total Stockholders' Equity | 396,424 | 418,261 |
Total Liabilities and Stockholders' Equity | 684,577 | 708,238 |
Series A Preferred Stock [Member] | ||
Pacific Ethanol, Inc. Stockholders' Equity: | ||
Preferred stock, $0.001 par value; 10,000 shares authorized; | 1 | 1 |
Series B Preferred Stock [Member] | ||
Pacific Ethanol, Inc. Stockholders' Equity: | ||
Preferred stock, $0.001 par value; 10,000 shares authorized; | $ 1 | $ 1 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts receivable, net of allowance | $ 16 | $ 331 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000 | 300,000 |
Common stock, shares issued | 43,909 | 39,772 |
Common stock, shares outstanding | 43,909 | 39,772 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1,684 | 1,684 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1,581 | 1,581 |
Preferred stock, shares issued | 927 | 927 |
Preferred stock, shares outstanding | 927 | 927 |
Liquidation preference | $ 18,075 | |
Nonvoting Common Stock [Member] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 3,553 | 3,553 |
Common stock, shares issued | 1 | 3,540 |
Common stock, shares outstanding | 1 | 3,540 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Net sales | $ 405,202 | $ 422,860 | $ 791,542 | $ 765,233 |
Cost of goods sold | 403,549 | 405,156 | 795,662 | 746,460 |
Gross profit (loss) | 1,653 | 17,704 | (4,120) | 18,773 |
Selling, general and administrative expenses | 8,762 | 6,148 | 14,212 | 14,465 |
Income (loss) from operations | (7,109) | 11,556 | (18,332) | 4,308 |
Fair value adjustments | 18 | (24) | 473 | 16 |
Interest expense, net | (2,694) | (6,536) | (5,331) | (12,769) |
Other income (expense), net | (153) | (155) | (233) | 60 |
Income (loss) before provision for income taxes | (9,938) | 4,841 | (23,423) | (8,385) |
Provision (benefit) for income taxes | 0 | (245) | 0 | (245) |
Consolidated net income (loss) | (9,938) | 5,086 | (23,423) | (8,140) |
Net loss attributed to noncontrolling interests | 1,097 | 0 | 1,946 | 0 |
Net income (loss) attributed to Pacific Ethanol, Inc. | (8,841) | 5,086 | (21,477) | (8,140) |
Preferred stock dividends | (315) | (315) | (627) | (630) |
Income allocated to participating securities | 0 | (71) | 0 | 0 |
Income (loss) available to common stockholders | $ (9,156) | $ 4,700 | $ (22,104) | $ (8,770) |
Net income (loss) per share, basic | $ (.22) | $ 0.11 | $ (0.52) | $ (0.21) |
Net income (loss) per share, diluted | $ (.22) | $ 0.11 | $ (0.52) | $ (0.21) |
Weighted-average shares outstanding, basic | 42,295 | 42,191 | 42,334 | 42,121 |
Weighted-average shares outstanding, diluted | 42,295 | 42,229 | 42,334 | 42,121 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating Activities: | ||
Consolidated net loss | $ (23,423) | $ (8,140) |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | ||
Depreciation and amortization of intangibles | 18,408 | 17,670 |
Interest expense added to term debt | 0 | 9,451 |
Fair value adjustments | (473) | (16) |
Amortization of debt discount | 273 | 610 |
Inventory valuation adjustment | 256 | 0 |
Amortization of deferred financing fees | 189 | 75 |
Non-cash compensation | 2,158 | 1,181 |
Loss (gain) on derivative instruments | 352 | (809) |
Bad debt expense | 2 | 286 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 39,835 | (10,886) |
Inventories | (3,273) | (5,108) |
Prepaid expenses and other assets | (4,454) | 4,909 |
Prepaid inventory | (486) | (4,346) |
Accounts payable and accrued expenses | (14,273) | (3,771) |
Net cash provided by operating activities | 15,091 | 1,106 |
Investing Activities: | ||
Additions to property and equipment | (6,229) | (7,485) |
Proceeds from cash collateralized letters of credit | 0 | 4,010 |
Net cash used in investing activities | (6,229) | (3,475) |
Financing Activities: | ||
Net proceeds on Kinergy's line of credit | 5,295 | 1,042 |
Net proceeds from notes | 13,530 | 0 |
Principal payments on borrowings | (4,500) | (17,003) |
Payments on capital leases | (386) | (2,079) |
Proceeds from exercise of warrants and options | 690 | 0 |
Preferred stock dividends paid | (627) | (630) |
Net cash provided by (used in) financing activities | 14,002 | (18,670) |
Net increase (decrease) in cash and cash equivalents | 22,864 | (21,039) |
Cash and cash equivalents at beginning of period | 68,590 | 52,712 |
Cash and cash equivalents at end of period | 91,454 | 31,673 |
Supplemental Information: | ||
Interest paid | 4,852 | 2,595 |
Income taxes received | 3 | 4,784 |
Noncash financing and investing activities: | ||
Reclass of warrant liability to equity upon warrant exercises | $ 178 | $ 0 |
1. Organization and Basis of Pr
1. Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Business On December 15, 2016, the Company and Aurora Cooperative Elevator Company, a Nebraska cooperative corporation (“ACEC”), closed a transaction under a contribution agreement under which the Company contributed its Aurora, Nebraska ethanol facilities and ACEC contributed its Aurora grain elevator and related grain handling assets to Pacific Aurora, LLC (“Pacific Aurora”) in exchange for equity interests in Pacific Aurora. On December 15, 2016, concurrently with the closing under the contribution agreement, the Company sold a portion of its equity interest in Pacific Aurora to ACEC. As a result, as of December 15, 2016 and through June 30, 2017, the Company owned 73.93% of Pacific Aurora and ACEC owned 26.07% of Pacific Aurora. The Company consolidates 100% of the results of Pacific Aurora and records ACEC’s 26.07% equity interest as noncontrolling interests in the accompanying financial statements. The Company is a leading producer and marketer of low-carbon renewable fuels and high-quality alcohol products in the United States. The Company owns and operates nine production facilities, four in the Western states of California, Oregon and Idaho, and five in the Midwestern states of Illinois and Nebraska. The Company’s four ethanol plants in the Western United States (together with their respective holding companies, the “Pacific Ethanol West Plants”) are located in close proximity to both feed and ethanol customers and thus enjoy unique advantages in efficiency, logistics and product pricing. These plants produce among the lowest-carbon ethanol produced in the United States due to low energy use in production. The Company has production capacity of 605 million gallons per year, markets, on an annualized basis, nearly 1.0 billion gallons of ethanol, and produces, on an annualized basis, over 2.5 million tons of co-products such as wet and dry distillers grains, wet and dry corn gluten feed, condensed distillers solubles, corn gluten meal, corn germ, distillers yeast and CO 2 Basis of Presentation – Interim Financial Statements Accounts Receivable and Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once uncollectibility has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of ability to make payments, additional allowances may be required. Of the accounts receivable balance, approximately $36,505,000 and $64,853,000 at June 30, 2017 and December 31, 2016, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $16,000 and $331,000 as of June 30, 2017 and December 31, 2016, respectively. The Company recorded a bad debt recovery of $5,000 and bad debt expense of $30,000 for the three months ended June 30, 2017 and 2016, respectively. The Company recorded a bad debt expense of $2,000 and $286,000 for the six months ended June 30, 2017 and 2016, respectively. The Company does not have any off-balance sheet credit exposure related to its customers. Provision for Income Taxes Financial Instruments Recent Accounting Pronouncements In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company’s adoption begins with the first fiscal quarter of fiscal year 2018. In March and April 2016, the FASB issued further revenue recognition guidance amending principal vs. agent considerations regarding whether an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Company is currently evaluating the impact of the adoption of this accounting standard update on its consolidated results of operations and financial condition. The Company has not yet selected a transition method, nor has it determined the effect of the standard on its ongoing financial reporting. The Company has begun the process in its evaluation and believes it is following an appropriate timeline to allow for proper recognition, presentation and disclosure effective beginning in the year ending December 31, 2018. In April 2016, the FASB issued new guidance to reduce the complexity of certain aspects of accounting for employee share-based payment transactions. Prior to adoption of the standard, accruals of compensation costs were based on an estimated forfeiture rate. The new guidance allows an entity to make an entity-wide accounting policy election to either continue using an estimate of forfeitures or account for forfeitures only when they occur. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Effective January 1, 2017, the Company elected to discontinue the use of an estimated forfeiture rate and instead account for actual forfeitures as they occur. The transition guidance requires an adjustment to retained earnings for any cumulative effect. The impact to the Company upon adoption was determined to be immaterial. Estimates and Assumptions |
2. Segments
2. Segments | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segments | The Company reports its financial and operating performance in two segments: (1) ethanol production, which includes the production and sale of ethanol and co-products, with all of the Company’s production facilities aggregated, and (2) marketing and distribution, which includes marketing and merchant trading for Company-produced ethanol and co-products and third-party ethanol. The following tables set forth certain financial data for the Company’s operating segments (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net Sales Ethanol Production: Net sales to external customers $ 256,125 $ 271,630 $ 499,199 $ 500,871 Intersegment net sales 188 260 499 523 Total ethanol production net sales 256,313 271,890 499,698 501,394 Marketing and distribution: Net sales to external customers 149,077 151,230 292,343 264,362 Intersegment net sales 1,963 2,091 3,800 3,843 Total marketing and distribution net sales 151,040 153,321 296,143 268,205 Intersegment eliminations (2,151 ) (2,351 ) (4,299 ) (4,366 ) Net sales as reported $ 405,202 $ 422,860 $ 791,542 $ 765,233 Cost of goods sold: Ethanol production $ 253,947 $ 260,237 $ 504,534 $ 496,246 Marketing and distribution 151,131 149,521 294,806 258,819 Intersegment eliminations (1,529 ) (4,602 ) (3,678 ) (8,605 ) Cost of goods sold as reported $ 403,549 $ 405,156 $ 795,662 $ 746,460 Income (loss) before provision for income taxes: Ethanol production $ (6,304 ) $ 794 $ (18,619 ) $ (16,330 ) Marketing and distribution (1,435 ) 2,209 (1,286 ) 6,178 Corporate activities (2,199 ) 1,838 (3,518 ) 1,767 $ (9,938 ) $ 4,841 $ (23,423 ) $ (8,385 ) Depreciation and amortization: Ethanol production $ 9,016 $ 8,793 $ 17,862 $ 17,209 Marketing and distribution – – – 3 Corporate activities 283 225 546 458 $ 9,299 $ 9,018 $ 18,408 $ 17,670 Interest expense: Ethanol production $ 1,119 $ 6,180 $ 2,211 $ 12,080 Marketing and distribution 302 356 610 689 Corporate activities 1,273 – 2,510 – $ 2,694 $ 6,536 $ 5,331 $ 12,769 The following table sets forth the Company’s total assets by operating segment (in thousands): June 30, 2017 December 31, 2016 Total assets: Ethanol production $ 545,835 $ 542,688 Marketing and distribution 128,689 146,356 Corporate assets 10,053 19,194 $ 684,577 $ 708,238 |
3. Inventories
3. Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted primarily of bulk ethanol, corn, co-products, Low-Carbon Fuel Standard (“LCFS”) credits and unleaded fuel, and are valued at the lower of cost and net realizable value, with cost determined on a first-in, first-out basis. Total inventories are net of a valuation adjustment of $256,000 as of June 30, 2017. Inventory balances consisted of the following (in thousands): Inventory balances consisted of the following (in thousands): June 30, 2017 December 31, 2016 Finished goods $ 38,144 $ 33,773 Work in progress 8,239 7,092 Raw materials 7,752 6,571 LCFS credits 7,300 10,926 Other 1,652 1,708 Total $ 63,087 $ 60,070 |
4. Derivatives
4. Derivatives | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | The business and activities of the Company expose it to a variety of market risks, including risks related to changes in commodity prices. The Company monitors and manages these financial exposures as an integral part of its risk management program. This program recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effects that market volatility could have on operating results. Commodity Risk – Cash Flow Hedges Commodity Risk – Non-Designated Hedges Non Designated Derivative Instruments As of June 30, 2017 Assets Liabilities Type of Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity contracts Derivative instruments $ 1,150 Derivative instruments $ 1,721 As of December 31, 2016 Assets Liabilities Type of Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity contracts Derivative instruments $ 978 Derivative instruments $ 4,115 The classification and amounts of the Company’s recognized gains (losses) for its derivatives not designated as hedging instruments are as follows (in thousands): Realized Losses Three Months Ended June 30, Type of Instrument Statements of Operations Location 2017 2016 Commodity contracts Cost of goods sold $ (574 ) $ (999 ) Unrealized Gains Three Months Ended June 30, Type of Instrument Statements of Operations Location 2017 2016 Commodity contracts Cost of goods sold $ 6 $ 1,227 Realized Losses Six Months Ended June 30, Type of Instrument Statements of Operations Location 2017 2016 Commodity contracts Cost of goods sold $ (2,918 ) $ (91 ) Unrealized Gains Six Months Ended June 30, Type of Instrument Statements of Operations Location 2017 2016 Commodity contracts Cost of goods sold $ 2,566 $ 900 |
5. Debt
5. Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Long-term borrowings are summarized as follows (in thousands): June 30, 2017 December 31, 2016 Kinergy line of credit $ 55,176 $ 49,862 Pekin term loan 60,500 64,000 Pekin revolving loan 32,000 32,000 Pacific Aurora line of credit – 1,000 Parent notes payable 68,948 55,000 216,624 201,862 Less unamortized debt discount (1,772 ) (1,626 ) Less unamortized debt financing costs (1,253 ) (1,708 ) Less short-term portion (14,000 ) (10,500 ) Long-term debt $ 199,599 $ 188,028 Kinergy Operating Line of Credit Parent Notes Payable Distribution Restrictions |
6. Warrants and stock options
6. Warrants and stock options | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
Warrants and stock options | Warrant and Option Exercises |
7. Commitments and Contingencie
7. Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Sales Commitments Purchase Commitments Litigation – General The Company assumed certain legal matters which were ongoing at July 1, 2015, the date of the Company’s acquisition of Aventine Renewable Energy Holdings, Inc (“PE Central”). Among them were lawsuits between Aventine Renewable Energy, Inc. (now known as Pacific Ethanol Pekin, LLC, or “PE Pekin”) and Glacial Lakes Energy, Aberdeen Energy and Redfield Energy, together, the “Defendants,” in which PE Pekin sought damages for breach of termination agreements that wound down ethanol marketing arrangements between PE Pekin and each of the Defendants. In February and March 2017, the Company and the Defendants entered into settlement agreements and the Defendants paid in cash to the Company $3.9 million in final resolution of these matters. The Company did not assign any value to the claims against the Defendants in its accounting for the Aventine acquisition as of July 1, 2015. The Company recorded a gain, net of legal fees, of $3.6 million upon receipt of the cash settlement and recognized the gain in selling, general and administrative expenses in the consolidated statements of operations for the six months ended June 30, 2017. |
8. Pension Plans
8. Pension Plans | 6 Months Ended |
Jun. 30, 2017 | |
Retirement Benefits [Abstract] | |
Pension Plans | The Company sponsors a defined benefit pension plan (the “Retirement Plan”) and a health care and life insurance plan (the “Postretirement Plan”). The Company assumed the Retirement Plan and the Postretirement Plan as part of its acquisition of PE Central on July 1, 2015. The Retirement Plan is noncontributory, and covers only “grandfathered” unionized employees at the Company’s Pekin, Illinois facility who fulfill minimum age and service requirements. Benefits are based on a prescribed formula based upon the employee’s years of service. The Retirement Plan, which is part of a collective bargaining agreement, covers only union employees hired prior to November 1, 2010. The Company uses a December 31 measurement date for its Retirement Plan. The Company’s funding policy is to make the minimum annual contributions that are required by applicable regulations. As of December 31, 2016, the Retirement Plan’s accumulated projected benefit obligation was $18.5 million, with a fair value of plan assets of $12.4 million. The underfunded amount of $6.1 million is recorded on the Company’s consolidated balance sheet in other noncurrent liabilities. The Company’s net periodic Retirement Plan costs are as follows (in thousands): Three Months Ended Six Months Ended 2017 2016 2017 2016 Interest cost $ 98 $ 172 $ 195 $ 344 Service cost 188 56 375 112 Expected return on plan assets (169 ) (199 ) (337 ) (398 ) Net periodic expense $ 117 $ 29 $ 233 $ 58 The Postretirement Plan provides postretirement medical benefits and life insurance to certain “grandfathered” unionized employees. Employees hired after December 31, 2000 are not eligible to participate in the Postretirement Plan. The Postretirement Plan is contributory, with contributions required at the same rate as active employees. Benefit eligibility under the plan reduces at age 65 from a defined benefit to a defined dollar cap based upon years of service. As of December 31, 2016, the Postretirement Plan’s accumulated projected benefit obligation was $5.4 million and is recorded on the Company’s consolidated balance sheet in other noncurrent liabilities. The Company’s funding policy is to make the minimum annual contributions that are required by applicable regulations. The Company’s net periodic Postretirement Plan costs are as follows (in thousands): Three Months Ended Six Months Ended 2017 2016 2017 2016 Interest cost $ 21 $ 35 $ 42 $ 70 Service cost 50 12 100 24 Amortization of (gain) loss 33 – 66 – Net periodic expense $ 104 $ 47 $ 208 $ 94 |
9. Fair Value Measurements
9. Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels, as follows: • Level 1 – Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities; • Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and • Level 3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable. For fair value measurements using significant unobservable inputs, a description of the inputs and the information used to develop the inputs is required along with a reconciliation of Level 3 values from the prior reporting period. Warrants Significant assumptions used and related fair values for the warrants as of December 31, 2016 were as follows: Original Issuance Exercise Price Volatility Risk Free Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 07/3/2012 $6.09 40.9% 0.62% 0.50 11.3% 211,000 $ 651,000 Other Derivative Instruments The following table summarizes recurring fair value measurements by level at June 30, 2017 (in thousands): Fair Value Level 1 Level 2 Level 3 Assets: Derivative instruments $ 1,150 $ 1,150 $ – $ – $ 1,150 $ 1,150 $ – $ – Liabilities: Warrants $ – $ – $ – $ – Derivative instruments (1,721 ) (1,721 ) – – $ (1,721 ) $ (1,721 ) $ – $ – The changes in the Company’s fair value of its Level 3 inputs with respect to its warrants were as follows (in thousands): Balance, December 31, 2016 $ 651 Exercised warrants (178 ) Adjustments to fair value for the period (473 ) Balance, June 30, 2017 $ – |
10. Earnings Per Share
10. Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | The following tables compute basic and diluted earnings per share (in thousands, except per share data): Three Months Ended June 30, 2017 Loss Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (8,841 ) Less: Preferred stock dividends (315 ) Basic and diluted loss per share: Loss available to common stockholders $ (9,156 ) 42,295 $ (0.22 ) Three Months Ended June 30, 2016 Income Numerator Shares Denominator Per-Share Amount Net income attributed to Pacific Ethanol $ 5,086 Less: Preferred stock dividends (315 ) Less: Income allocated to participating securities (71 ) Basic income per share: Income available to common stockholders $ 4,700 42,191 $ 0.11 Add: Options – 38 Diluted income per share: Income available to common stockholders $ 4,700 42,229 $ 0.11 Six Months Ended June 30, 2017 Loss Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (21,477 ) Less: Preferred stock dividends (627 ) Basic and diluted loss per share: Loss available to common stockholders $ (22,104 ) 42,334 $ (0.52 ) Six Months Ended June 30, 2016 Loss Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (8,140 ) Less: Preferred stock dividends (630 ) Basic and diluted loss per share: Loss available to common stockholders $ (8,770 ) 42,121 $ (0.21 ) There were an aggregate of 766,000 and 730,000 potentially dilutive weighted-average shares from the Company’s warrants and shares of Series B Cumulative Convertible Preferred Stock outstanding for the three and six months ended June 30, 2017, respectively. These convertible securities were not considered in calculating diluted net loss per share for the three and six months ended June 30, 2017, as their effect would have been anti-dilutive. |
11. Subsequent Events
11. Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Acquisition of Illinois Corn Processing LLC On June 26, 2017, the Company, through its wholly-owned direct and indirect subsidiaries PE Central, and ICP Merger Sub, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of PE Central (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ICP, Illinois Corn Processing Holdings Inc. (“ICPH”) and MGPI Processing, Inc. (“MGPI”, and together with ICPH, the “Sellers”) to acquire 100% of the equity interests of ICP. The acquisition of ICP under the Merger Agreement was closed on July 3, 2017. At the closing, Merger Sub merged with and into ICP (the “Merger”), and ICP continues as the surviving corporation of the Merger and as a wholly-owned direct subsidiary of PE Central and a wholly-owned indirect subsidiary of the Company. Upon closing and under the terms of the Merger Agreement, Merger Sub (i) paid to the Sellers $30,000,000 in cash (the “Cash Consideration Amount”) and (ii) issued to the Sellers secured promissory notes in the aggregate principal amount of approximately $46,926,000 (the “Seller Notes”). The Seller Notes are secured by a first priority lien on the assets of ICP and a pledge of the membership interests of ICP. ICP is a 90 million gallon per year fuel and industrial alcohol manufacturing, storage and distribution facility adjacent to the Pacific Ethanol Pekin facility and is located on the Illinois River. ICP produces fuel-grade ethanol, beverage and industrial-grade alcohol, dry distillers grain (DDG) and corn oil. The facility has direct access to end-markets via barge, rail, and truck, and expands Pacific Ethanol’s domestic and international distribution channels. The following allocation of the preliminary estimated purchase price assumes, with the exception of property and equipment, carrying values approximate fair value. Estimates of uncollectible accounts receivable are not considered material due to the short-term nature and customer collection history. The preliminary property and equipment fair value estimate is based on a preliminary valuation under review by management and is subject to change. A final valuation will be more detailed in its analysis including a further review of recent market transactions with comparable assets and a discounted cash flow analysis of the facility based on market conditions and future operational assumptions and capital expenditures plans. Preliminarily, no intangible assets or liabilities have been estimated due to ICP’s contracts being materially close to market prices. A final valuation may include either an asset or liability associated with any material out-of-market contract positions. Based upon these assumptions, the preliminary purchase price consideration allocation is as follows (in thousands): Cash and equivalents $ 1,078 Accounts receivable 11,636 Inventories 9,858 Other current assets 1,235 Total current assets 23,807 Property and equipment 60,497 Other assets – Total assets acquired $ 84,304 Accounts payable, trade $ 2,752 Other current liabilities 4,572 Total current liabilities 7,324 Other non-current liabilities 54 Total liabilities assumed $ 7,378 Net assets acquired $ 76,926 Estimated goodwill $ – Total purchase price $ 76,926 The actual determination of the purchase price allocation on the closing date will be based on the final net tangible and intangible assets of ICP on July 3, 2017 based on completion of the valuation of the fair value of such net assets. The Company anticipates that the ultimate purchase price allocation of balance sheet amounts such as current assets and liabilities, property and equipment, intangible assets and long-term assets and liabilities will differ from the preliminary assessment outlined above. Any changes to the initial estimates of the fair value of the acquired assets and assumed liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill if net assets acquired are less than the purchase price. If net assets acquired exceed the purchase price, the residual amount will result in a bargain purchase gain. The following table presents unaudited pro forma combined financial information assuming the acquisition occurred on January 1, 2016. Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenues – pro forma $ 444,878 $ 463,436 $ 869,604 $ 855,418 Net income (loss) – pro forma $ (13,569 ) $ 6,688 $ (26,624 ) $ (6,809 ) Diluted net income (loss) per share – pro forma $ (0.32 ) $ 0.16 $ (0.63 ) $ (0.16 ) Diluted weighted-average shares – pro forma 42,295 42,229 42,334 42,121 For the three and six months ended June 30, 2017, the Company recorded approximately $0.3 million in costs associated with the ICP acquisition. These costs are reflected in selling, general and administrative expenses on the Company’s consolidated statements of operations. Increase in Kinergy Line of Credit On August 2, 2017, Kinergy increased its revolving line of credit from $85 million to $100 million. Changes to Pekin Credit Facilities As of June 30, 2017, PE Pekin did not maintain the required working capital under its credit agreements of at least $20.0 million. On August 7, 2017, PE Pekin obtained from its lender a waiver effective as of June 30, 2017, of this covenant violation and is now in compliance with the terms of its loans. On August 7, 2017, PE Pekin amended its term and revolving credit facilities by agreeing to increase the interest rate under the facilities by 25 basis points to an annual rate equal to the 30-day LIBOR plus 4.00%. PE Pekin and its lender also agreed that PE Pekin is required to maintain working capital of not less than $17.5 million from August 31, 2017 through December 31, 2017 and working capital of not less than $20.0 million from January 1, 2018 and continuing at all times thereafter. |
1. Organization and Basis of 17
1. Organization and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Organization and Business | Organization and Business On December 15, 2016, the Company and Aurora Cooperative Elevator Company, a Nebraska cooperative corporation (“ACEC”), closed a transaction under a contribution agreement under which the Company contributed its Aurora, Nebraska ethanol facilities and ACEC contributed its Aurora grain elevator and related grain handling assets to Pacific Aurora, LLC (“Pacific Aurora”) in exchange for equity interests in Pacific Aurora. On December 15, 2016, concurrently with the closing under the contribution agreement, the Company sold a portion of its equity interest in Pacific Aurora to ACEC. As a result, as of December 15, 2016 and through June 30, 2017, the Company owned 73.93% of Pacific Aurora and ACEC owned 26.07% of Pacific Aurora. The Company consolidates 100% of the results of Pacific Aurora and records ACEC’s 26.07% equity interest as noncontrolling interests in the accompanying financial statements. The Company is a leading producer and marketer of low-carbon renewable fuels and high-quality alcohol products in the United States. The Company owns and operates nine production facilities, four in the Western states of California, Oregon and Idaho, and five in the Midwestern states of Illinois and Nebraska. The Company’s four ethanol plants in the Western United States (together with their respective holding companies, the “Pacific Ethanol West Plants”) are located in close proximity to both feed and ethanol customers and thus enjoy unique advantages in efficiency, logistics and product pricing. These plants produce among the lowest-carbon ethanol produced in the United States due to low energy use in production. The Company has production capacity of 605 million gallons per year, markets, on an annualized basis, nearly 1.0 billion gallons of ethanol, and produces, on an annualized basis, over 2.5 million tons of co-products such as wet and dry distillers grains, wet and dry corn gluten feed, condensed distillers solubles, corn gluten meal, corn germ, distillers yeast and CO 2 |
Basis of Presentation-Interim Financial Statements | Basis of Presentation – Interim Financial Statements |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once uncollectibility has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of ability to make payments, additional allowances may be required. Of the accounts receivable balance, approximately $36,505,000 and $64,853,000 at June 30, 2017 and December 31, 2016, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $16,000 and $331,000 as of June 30, 2017 and December 31, 2016, respectively. The Company recorded a bad debt recovery of $5,000 and bad debt expense of $30,000 for the three months ended June 30, 2017 and 2016, respectively. The Company recorded a bad debt expense of $2,000 and $286,000 for the six months ended June 30, 2017 and 2016, respectively. The Company does not have any off-balance sheet credit exposure related to its customers. |
Provision for Income Taxes | Provision for Income Taxes |
Financial Instruments | Financial Instruments |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company’s adoption begins with the first fiscal quarter of fiscal year 2018. In March and April 2016, the FASB issued further revenue recognition guidance amending principal vs. agent considerations regarding whether an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Company is currently evaluating the impact of the adoption of this accounting standard update on its consolidated results of operations and financial condition. The Company has not yet selected a transition method, nor has it determined the effect of the standard on its ongoing financial reporting. The Company has begun the process in its evaluation and believes it is following an appropriate timeline to allow for proper recognition, presentation and disclosure effective beginning in the year ending December 31, 2018. In April 2016, the FASB issued new guidance to reduce the complexity of certain aspects of accounting for employee share-based payment transactions. Prior to adoption of the standard, accruals of compensation costs were based on an estimated forfeiture rate. The new guidance allows an entity to make an entity-wide accounting policy election to either continue using an estimate of forfeitures or account for forfeitures only when they occur. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Effective January 1, 2017, the Company elected to discontinue the use of an estimated forfeiture rate and instead account for actual forfeitures as they occur. The transition guidance requires an adjustment to retained earnings for any cumulative effect. The impact to the Company upon adoption was determined to be immaterial. |
Estimates and Assumptions | Estimates and Assumptions |
2. Segments (Tables)
2. Segments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Financial Data for Operating Segments | The following tables set forth certain financial data for the Company’s operating segments (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net Sales Ethanol Production: Net sales to external customers $ 256,125 $ 271,630 $ 499,199 $ 500,871 Intersegment net sales 188 260 499 523 Total ethanol production net sales 256,313 271,890 499,698 501,394 Marketing and distribution: Net sales to external customers 149,077 151,230 292,343 264,362 Intersegment net sales 1,963 2,091 3,800 3,843 Total marketing and distribution net sales 151,040 153,321 296,143 268,205 Intersegment eliminations (2,151 ) (2,351 ) (4,299 ) (4,366 ) Net sales as reported $ 405,202 $ 422,860 $ 791,542 $ 765,233 Cost of goods sold: Ethanol production $ 253,947 $ 260,237 $ 504,534 $ 496,246 Marketing and distribution 151,131 149,521 294,806 258,819 Intersegment eliminations (1,529 ) (4,602 ) (3,678 ) (8,605 ) Cost of goods sold as reported $ 403,549 $ 405,156 $ 795,662 $ 746,460 Income (loss) before provision for income taxes: Ethanol production $ (6,304 ) $ 794 $ (18,619 ) $ (16,330 ) Marketing and distribution (1,435 ) 2,209 (1,286 ) 6,178 Corporate activities (2,199 ) 1,838 (3,518 ) 1,767 $ (9,938 ) $ 4,841 $ (23,423 ) $ (8,385 ) Depreciation and amortization: Ethanol production $ 9,016 $ 8,793 $ 17,862 $ 17,209 Marketing and distribution – – – 3 Corporate activities 283 225 546 458 $ 9,299 $ 9,018 $ 18,408 $ 17,670 Interest expense: Ethanol production $ 1,119 $ 6,180 $ 2,211 $ 12,080 Marketing and distribution 302 356 610 689 Corporate activities 1,273 – 2,510 – $ 2,694 $ 6,536 $ 5,331 $ 12,769 |
Schedule of Assets by Operating Segments | The following table sets forth the Company’s total assets by operating segment (in thousands): June 30, 2017 December 31, 2016 Total assets: Ethanol production $ 545,835 $ 542,688 Marketing and distribution 128,689 146,356 Corporate assets 10,053 19,194 $ 684,577 $ 708,238 |
3. Inventories (Tables)
3. Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventory balances consisted of the following (in thousands): June 30, 2017 December 31, 2016 Finished goods $ 38,144 $ 33,773 Work in progress 8,239 7,092 Raw materials 7,752 6,571 LCFS credits 7,300 10,926 Other 1,652 1,708 Total $ 63,087 $ 60,070 |
4. Derivatives (Tables)
4. Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivatives Not Designated as Hedging Instruments | Non Designated Derivative Instruments As of June 30, 2017 Assets Liabilities Type of Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity contracts Derivative instruments $ 1,150 Derivative instruments $ 1,721 As of December 31, 2016 Assets Liabilities Type of Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity contracts Derivative instruments $ 978 Derivative instruments $ 4,115 |
Schedule of Recognized Gains (Losses) for Derivatives | The classification and amounts of the Company’s recognized gains (losses) for its derivatives not designated as hedging instruments are as follows (in thousands): Realized Losses Three Months Ended June 30, Type of Instrument Statements of Operations Location 2017 2016 Commodity contracts Cost of goods sold $ (574 ) $ (999 ) Unrealized Gains Three Months Ended June 30, Type of Instrument Statements of Operations Location 2017 2016 Commodity contracts Cost of goods sold $ 6 $ 1,227 Realized Losses Six Months Ended June 30, Type of Instrument Statements of Operations Location 2017 2016 Commodity contracts Cost of goods sold $ (2,918 ) $ (91 ) Unrealized Gains Six Months Ended June 30, Type of Instrument Statements of Operations Location 2017 2016 Commodity contracts Cost of goods sold $ 2,566 $ 900 |
5. Debt (Tables)
5. Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long Term Debt | Long-term borrowings are summarized as follows (in thousands): June 30, 2017 December 31, 2016 Kinergy line of credit $ 55,176 $ 49,862 Pekin term loan 60,500 64,000 Pekin revolving loan 32,000 32,000 Pacific Aurora line of credit – 1,000 Parent notes payable 68,948 55,000 216,624 201,862 Less unamortized debt discount (1,772 ) (1,626 ) Less unamortized debt financing costs (1,253 ) (1,708 ) Less short-term portion (14,000 ) (10,500 ) Long-term debt $ 199,599 $ 188,028 |
8. Pension and Retirement Benef
8. Pension and Retirement Benefit Plans(Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Retirement Plan [Member] | |
Defined contribution plan schedule | The Company’s net periodic Retirement Plan costs are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Interest cost $ 98 $ 172 $ 195 $ 344 Service cost 188 56 375 112 Expected return on plan assets (169 ) (199 ) (337 ) (398 ) Net periodic expense $ 117 $ 29 $ 233 $ 58 |
Postretirement Plan [Member] | |
Defined contribution plan schedule | Three Months Ended Six Months Ended 2017 2016 2017 2016 Interest cost $ 21 $ 35 $ 42 $ 70 Service cost 50 12 100 24 Amortization of (gain) loss 33 – 66 – Net periodic expense $ 104 $ 47 $ 208 $ 94 |
9. Fair Value Measurements (Tab
9. Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Significant Assumptions Used and Related Fair Values for Warrants | Significant assumptions used and related fair values for the warrants as of December 31, 2016 were as follows: Original Issuance Exercise Price Volatility Risk Free Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 07/3/2012 $6.09 40.9% 0.62% 0.50 11.3% 211,000 $ 651,000 |
Summary of Recurring Fair Value Measurements by Level | The following table summarizes recurring fair value measurements by level at June 30, 2017 (in thousands): Fair Value Level 1 Level 2 Level 3 Assets: Derivative instruments $ 1,150 $ 1,150 $ – $ – $ 1,150 $ 1,150 $ – $ – Liabilities: Warrants $ – $ – $ – $ – Derivative instruments (1,721 ) (1,721 ) – – $ (1,721 ) $ (1,721 ) $ – $ – |
Schedule of Fair Value of Level 3 Inputs to Warrants | The changes in the Company’s fair value of its Level 3 inputs with respect to its warrants were as follows (in thousands): Balance, December 31, 2016 $ 651 Exercised warrants (178 ) Adjustments to fair value for the period (473 ) Balance, June 30, 2017 $ – |
10. Earnings Per Share (Tables)
10. Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Share | The following tables compute basic and diluted earnings per share (in thousands, except per share data): Three Months Ended June 30, 2017 Loss Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (8,841 ) Less: Preferred stock dividends (315 ) Basic and diluted loss per share: Loss available to common stockholders $ (9,156 ) 42,295 $ (0.22 ) Three Months Ended June 30, 2016 Income Numerator Shares Denominator Per-Share Amount Net income attributed to Pacific Ethanol $ 5,086 Less: Preferred stock dividends (315 ) Less: Income allocated to participating securities (71 ) Basic income per share: Income available to common stockholders $ 4,700 42,191 $ 0.11 Add: Options – 38 Diluted income per share: Income available to common stockholders $ 4,700 42,229 $ 0.11 Six Months Ended June 30, 2017 Loss Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (21,477 ) Less: Preferred stock dividends (627 ) Basic and diluted loss per share: Loss available to common stockholders $ (22,104 ) 42,334 $ (0.52 ) Six Months Ended June 30, 2016 Loss Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (8,140 ) Less: Preferred stock dividends (630 ) Basic and diluted loss per share: Loss available to common stockholders $ (8,770 ) 42,121 $ (0.21 ) |
1. Organization and Basis of 25
1. Organization and Basis of Presentation (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Ethanol production capacity per year | 605 million gallons per year | ||||
Ethanol market capacity per year | markets nearly 1.0 billion gallons of ethanol | ||||
Other products produced per year | produces over 2.5 million tons of co-products | ||||
Accounts receivable used as collateral | $ 36,505 | $ 36,505 | $ 64,853 | ||
Allowance for doubtful accounts | 16 | 16 | $ 331 | ||
Bad debt recovery | 5 | $ 5 | |||
Bad debt expense | 30 | 30 | 2 | $ 286 | |
Benefit for income taxes | $ 0 | $ 245 | $ 0 | $ 245 |
1. Organization and Basis of 26
1. Organization and Basis of Presentation (Details Narrative 2) | Jun. 30, 2017EthanolPlants |
Pacific Aurora [Member] | |
Ownership interest | 73.93% |
ACEC [Member] | |
Noncontrolling interest owned | 26.07% |
ACEC [Member] | Pacific Aurora [Member] | |
Ownership interest | 26.07% |
Pacific Ethanol Central Plants [Member] | |
Number of ethanol plants | 4 |
2. Segments - Schedule of Finan
2. Segments - Schedule of Financial Date for Operating Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net Sales | $ 405,202 | $ 422,860 | $ 791,542 | $ 765,233 |
Cost of goods sold | 403,549 | 405,156 | 795,662 | 746,460 |
Income (loss) before provision for income taxes | (9,938) | 4,841 | (23,423) | (8,385) |
Depreciation and amortization | 9,299 | 9,018 | 18,408 | 17,670 |
Interest expense | 2,694 | 6,536 | 5,331 | 12,769 |
Ethanol Production [Member] | ||||
Net Sales | 256,313 | 271,890 | 499,698 | 501,394 |
Cost of goods sold | 253,947 | 260,237 | 504,534 | 496,246 |
Income (loss) before provision for income taxes | (6,304) | 794 | (18,619) | (16,330) |
Depreciation and amortization | 9,016 | 8,793 | 17,862 | 17,209 |
Interest expense | 1,119 | 6,180 | 2,211 | 12,080 |
Marketing and Distribution [Member] | ||||
Net Sales | 151,040 | 153,321 | 296,143 | 268,205 |
Cost of goods sold | 151,131 | 149,521 | 294,806 | 258,819 |
Income (loss) before provision for income taxes | (1,435) | 2,209 | (1,286) | 6,178 |
Depreciation and amortization | 0 | 0 | 0 | 3 |
Interest expense | 302 | 356 | 610 | 689 |
Corporate Activities [Member] | ||||
Income (loss) before provision for income taxes | (2,199) | 1,838 | (3,518) | 1,767 |
Depreciation and amortization | 283 | 225 | 546 | 458 |
Interest expense | 1,273 | 0 | 2,510 | 0 |
External Customers [Member] | Ethanol Production [Member] | ||||
Net Sales | 256,125 | 271,630 | 499,199 | 500,871 |
External Customers [Member] | Marketing and Distribution [Member] | ||||
Net Sales | 149,077 | 151,230 | 292,343 | 264,362 |
Intersegment Net Sales [Member] | Ethanol Production [Member] | ||||
Net Sales | 188 | 260 | 499 | 523 |
Intersegment Net Sales [Member] | Marketing and Distribution [Member] | ||||
Net Sales | 1,963 | 2,091 | 3,800 | 3,843 |
Intersubsegment Eliminations [Member] | ||||
Net Sales | (2,151) | (2,351) | (4,299) | (4,366) |
Cost of goods sold | $ (1,529) | $ (4,602) | $ (3,678) | $ (8,605) |
2. Segments - Schedule of Asset
2. Segments - Schedule of Assets by Operating Segments (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | $ 684,577 | $ 708,238 |
Ethanol Production [Member] | ||
Assets | 545,835 | 542,688 |
Marketing and Distribution [Member] | ||
Assets | 128,689 | 146,356 |
Corporate Activities [Member] | ||
Assets | $ 10,053 | $ 19,194 |
2. Segments (Details Narrative)
2. Segments (Details Narrative) | 6 Months Ended |
Jun. 30, 2017Segments | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
3. Inventories - Schedule of In
3. Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 38,144 | $ 33,773 |
Work in progress | 8,239 | 7,092 |
Raw materials | 7,752 | 6,571 |
LCFS credits | 7,300 | 10,926 |
Other | 1,652 | 1,708 |
Total | $ 63,087 | $ 60,070 |
3. Inventories - Schedule of 31
3. Inventories - Schedule of Inventories (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | ||
Inventory valuation adjustment | $ 256 | $ 0 |
4. Derivatives - Schedule of De
4. Derivatives - Schedule of Derivatives Not Designated as Hedging Instruments (Details) - Commodity Contracts [Member] - Non Designated Derivative Instruments [Member] - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Commodity contracts - Derivative assets | $ 1,150 | $ 978 |
Commodity contracts - Derivative liabilities | $ 1,721 | $ 4,115 |
4. Derivatives - Schedule of Re
4. Derivatives - Schedule of Recognized Gains (Losses) for Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized Gains (Losses) | $ (574) | $ (999) | ||
Unrealized Gains (Losses) | $ 6 | $ 1,227 | ||
Commodity Contracts [Member] | Non Designated Derivative Instruments [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized Gains (Losses) | $ (2,918) | $ (91) | ||
Unrealized Gains (Losses) | $ 2,566 | $ 900 |
4. Derivatives (Details Narrati
4. Derivatives (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Recognized (loss) gain on derivative instruments | $ 568 | $ 228 | $ 352 | $ 809 |
5. Debt - Schedule of Long Term
5. Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Long-term borrowings are summarized as follows | ||
Notes payable | $ 68,948 | $ 55,000 |
Total debt | 216,624 | 201,862 |
Less unamortized discount | (1,772) | (1,626) |
Less unamortized debt financing costs | (1,253) | (1,708) |
Less short-term portion | (14,000) | (10,500) |
Long-term debt | 199,599 | 188,028 |
Kinergy [Member] | ||
Long-term borrowings are summarized as follows | ||
Credit line/Revolving loan | 55,176 | 49,862 |
Pekin [Member] | ||
Long-term borrowings are summarized as follows | ||
Credit line/Revolving loan | 32,000 | 32,000 |
Term loan | 60,500 | 64,000 |
Pacific Aurora [Member] | ||
Long-term borrowings are summarized as follows | ||
Credit line/Revolving loan | $ 0 | $ 1,000 |
5. Debt (Details Narrative)
5. Debt (Details Narrative) $ in Thousands | Jun. 30, 2017USD ($) |
Asset unavailable for transfer due to loan restrictions | $ 271,143 |
Senior Notes [Member] | |
Debt face value sold | 13,948 |
Unamortized debt discount | 418 |
Kinergy [Member] | |
Line of credit remaining borrowing availability | 8,526 |
Line of Credit [Member] | Kinergy [Member] | |
Line of credit maximum borrowing capacity | $ 85,000 |
6. Warrants and stock options (
6. Warrants and stock options (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Notes to Financial Statements | ||||
Warrants and options exercised | 107,000 | 0 | 117,000 | 0 |
Warrants and Options, Exercised | $ 652 | $ 690 | ||
Warrant Outstanding | 0 | 0 |
7. Commitments and Contingenc38
7. Commitments and Contingencies (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Proceeds from settlement | $ 3,900 |
Gain on settlement | $ 3,600 |
Co-products Sales Contracts [Member] | |
Open ethanol indexed-price sales contracts | 66,000 tons |
Open fixed-price sales contracts valued | $ 28,870 |
Ethanol Sales Contracts [Member] | |
Open ethanol indexed-price sales contracts | 32,009,000 gallons |
Open fixed-price sales contracts valued | $ 50,591 |
Ethanol Purchase Contracts [Member] | |
Indexed-price purchase contracts | 11,174,000 gallons |
Fixed-price purchase contracts value | $ 12,473 |
Ethanol Purchase Contracts [Member] | Suppliers [Member] | |
Fixed-price purchase contracts value | $ 19,959 |
8. Pension and Retirement Ben39
8. Pension and Retirement Benefit Plans (Details - Retirement Plans) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Retirement Plan [Member] | ||||
Interest cost | $ 98 | $ 172 | $ 195 | $ 344 |
Service cost | 188 | 56 | 375 | 112 |
Expected return on plan assets | (169) | (199) | (337) | (398) |
Net periodic benefit cost | 117 | 29 | 233 | 58 |
Postretirement Plan [Member] | ||||
Interest cost | 21 | 35 | 42 | 70 |
Service cost | 50 | 12 | 100 | 24 |
Amortization of (gain) loss | 33 | 0 | 66 | 0 |
Net periodic benefit cost | $ 104 | $ 47 | $ 208 | $ 94 |
8. Pension Plans (Details Narra
8. Pension Plans (Details Narrative) $ in Thousands | Dec. 31, 2016USD ($) |
Postretirement Plan [Member] | |
Accumulated projected benefit obligation | $ 5,400 |
Pension Plan [Member] | |
Accumulated projected benefit obligation | 18,500 |
Fair value of plan assets | 12,400 |
Underfunded amount | $ 6,100 |
9. Fair Value Measurements - Sc
9. Fair Value Measurements - Schedule of Significant Assumptions Used and Related Fair Values for Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2017 | |
Warrants Outstanding | 0 | |
Original issuance 7/3/2012 [Member] | ||
Exercise price | $ 6.09 | |
Volatility | 40.90% | |
Risk free interest rate | 0.62% | |
Term (years) | 6 months | |
Market Discount | 11.30% | |
Warrants Outstanding | 211,000 | |
Fair value | $ 651 |
9. Fair Value Measurements (Det
9. Fair Value Measurements (Details - Other derivatives) $ in Thousands | Jun. 30, 2017USD ($) |
Assets: | |
Assets | $ 1,150 |
Liabilities: | |
Liabilities | (1,721) |
Derivative Financial Instrument [Member] | |
Assets: | |
Assets | 1,150 |
Liabilities: | |
Liabilities | (1,721) |
Warrants [Member] | |
Liabilities: | |
Liabilities | 0 |
Level 1 [Member] | |
Assets: | |
Assets | 1,150 |
Liabilities: | |
Liabilities | (1,721) |
Level 1 [Member] | Derivative Financial Instrument [Member] | |
Assets: | |
Assets | 1,150 |
Liabilities: | |
Liabilities | (1,721) |
Level 1 [Member] | Warrants [Member] | |
Liabilities: | |
Liabilities | 0 |
Level 2 [Member] | |
Assets: | |
Assets | 0 |
Liabilities: | |
Liabilities | 0 |
Level 2 [Member] | Derivative Financial Instrument [Member] | |
Assets: | |
Assets | 0 |
Liabilities: | |
Liabilities | 0 |
Level 2 [Member] | Warrants [Member] | |
Liabilities: | |
Liabilities | 0 |
Level 3 [Member] | |
Assets: | |
Assets | 0 |
Liabilities: | |
Liabilities | 0 |
Level 3 [Member] | Derivative Financial Instrument [Member] | |
Assets: | |
Assets | 0 |
Liabilities: | |
Liabilities | 0 |
Level 3 [Member] | Warrants [Member] | |
Liabilities: | |
Liabilities | $ 0 |
9. Fair Value Measurements - 43
9. Fair Value Measurements - Schedule of Fair Value of Level 3 Inputs to Warrants (Details) - Level 3 [Member] - Warrants [Member] $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | $ 651 |
Exercised warrants | (178) |
Adjustments to fair value for the period | (473) |
Ending Balance | $ 0 |
10. Earnings Per Share - Schedu
10. Earnings Per Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net loss attributed to Pacific Ethanol, Inc. | $ (8,841) | $ 5,086 | $ (21,477) | $ (8,140) |
Less: Preferred stock dividends | (315) | (315) | (627) | (630) |
Less: Income allocated to participating securities | 0 | (71) | 0 | 0 |
Income (loss) available to common stockholders | $ (9,156) | 4,700 | $ (22,104) | $ (8,770) |
Add: Options | 0 | |||
Income available to common stockholders | $ 4,700 | |||
Weighted average number of shares outstanding basic | 42,295 | 42,191 | 42,334 | 42,121 |
Weighted average number shares outstanding adjustment | 38 | |||
Weighted average number of shares outstanding diluted | 42,295 | 42,229 | 42,334 | 42,121 |
Net loss per share, basic | $ (.22) | $ 0.11 | $ (0.52) | $ (0.21) |
Net loss per share, diluted | $ (.22) | $ 0.11 | $ (0.52) | $ (0.21) |
10. Earnings Per Share (Details
10. Earnings Per Share (Details Narrative) - shares | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||
Potentially dilutive weighted-average shares from convertible preferred stock outstanding | 766 | 730 |