Pacific Ethanol Posts Impressive Second Quarter

Pacific Ethanol reported impressive second quarter results. Here are the key points from the press release and a brief synopsis of the second quarter and for the six months ending June 30th:

Second Quarter:

- Net sales for Q2 of 2006 double those of Q2 of 2005; 46.5 million as compared to 22.8 million for the second quarter of 2005 (104%). The increase resulted from:

-An increase in the Company's sales volume of 4.2 million gallons, or 27%, to 19.8 million gallons from 15.56 million gallons for the second quarter of 2005
-An increase in the Company's average price of ethanol by $0.99, or 68%, to $2.45 per gallon from $1.46 per gallon for the second quarter of 2005

- Construction of plants in California and Oregon are on schedule for completion in Q4 of 2006 and Q2 of 2007
- Three additional ethanol plant projects in advanced stages of development
- Gross profit for the second quarter of 2006 totaled $3.3 million, as compared to $151,525 for the second quarter of 2005
- Net loss for the second quarter of 2006 decreased to $182,373, as compared to $2.2 million for the second quarter of 2005
- Basic and diluted loss per common share of $2.56 for the second quarter of 2006 as compared to $0.08 for the same period in 2005. Reasoning:

-$2.53 of the total $2.56 in basic and diluted loss per common share is due to the Company recording a deemed dividend on its preferred stock in the amount of $84 million.

- Absent this one-time deemed dividend, the Company would have reported basic and diluted loss per common share of $0.03 for the second quarter of 2006.

For the Six Months Ended June 30, 2006:

- Company reported net sales of $84.7 million, an increase of $59.6 million, or 237%, as compared to $25.1 million for the same period in 2005
- Sales volume increased by 22.7 million gallons, or 134%, to 39.7 million gallons from 17.0 million gallons for the six months ended June 30, 2005
- Company's average sales price of ethanol increased by $0.70 per gallon, or 47%, to $2.18 per gallon from $1.48 per gallon for the six months ended June 30, 2005
- Gross profit for the six months ended June 30, 2006 increased by $5.4 million to $5.6 million, as compared to $199,152 for same period in 2005
- Net loss for the six months ended June 30, 2006 totaled $794,137 as compared to $3.9 million for the same period in 2005
- The Company reported basic and diluted loss per common share of $2.73 for the six months ended June 30, 2006 as compared to $0.18 for the same period in 2005
- As of June 30, 2006, the Company had cash totaling approximately $200 million due to the completion of two equity financings during the second quarter of 2006.

PEIX is bullish on the news. Will this be a one day thing? Or can Pacific Ethanol build off of this? It is leading all ethanol stocks as most are seeing green.

PEIX 1-yr chart:

And a look at the balance sheet:

PACIFIC ETHANOL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(UNAUDITED)

Comments

[NO DooDahs:]

"Investors" might want to wait until the day-traders are through playing with this equity before buying and holding. "Investors" might also want to consider the millions of shareholders who bought this stock for over $25 - they might be looking to sell at anything close to breakeven and may provide a good deal of overhead supply aka resistance.

Readers - please search the SA archives for previous comments (by me and by others) dating back a few months. You might enjoy them.

2006 Aug 21 09:24 AM

[CrossProfit_:]

No DooDahs-
As a service to SA readers please post your 'must read' list. We recommend starting with Evelyn Rubin's article; "Everything You Wanted to Know About Ethanol but Were Afraid to Ask"
energy.seekingalpha.co...
CrossProfit.com

2006 Aug 21 02:23 PM

[NO DooDahs:]

One can enter "peix" in the search box and read all the articles on this stock pretty easily.

My personal favorite was energy.seekingalpha.co... in mid-April, where I stated "PEIX is overvalued and a very poor long-term investment. That being said, there is a current market mania for all things ethanol, and PEIX is a good horse to ride up that hill. Just be forewarned, while it makes a good long play today, it will make a good short play in 2006, and all PEIX is, is a "play." Don't buy it and then go on a cruise .... "

PEIX is a prime example of the irrationality of markets. Take this chart and some of these threads to your finance prof when he starts babbling about the "efficient market hypothesis."

If you want evidence of PEIX play by day-traders, look here finance.yahoo.com/q/ks... for the volume average and divide it by the float. Turnover like that is only possible by daytraders. Oh wait, look here www.movethemarkets.com... and you'll see that PEIX is #7 on the top 100 list of stocks to day trade.

2006 Aug 21 04:07 PM

[NO DooDahs:]

Type PEIX in the top left corner of this page, in the search bar. Look for the mid-April comment where I spoke of the ethanol mania, said it was a good horse to ride on for the mania, and that it would be a good short in 2006. Then go to Yahoo!Finance and calculate the stock's float turnover. It's insane. Then a prospective investor should actually read the Q's and K's and proxy. That should scare them off.

See this link:
www.movethemarkets.com...

Daytraders love the volatility of PEIX.

2006 Aug 21 04:11 PM

[NO DooDahs:]

Wooops top right corner.

2006 Aug 21 05:02 PM