ethanol bear

Pacific Ethanol: 'Build-Ahead' is a Manufacturing Strategy

This article misses the whole point. Ethanol doesn't make money with ethanol, corn, natural gas, and distiller's grains (the co-product, bought for animal feed to replace corn) at their current prices. No matter how many "new markets" you open up, it loses money. PEIX has it even worse, because they sell "wet" distillers grains, which sell for a lot less than the "dry" distillers grains sold by the other major ethanol companies. The dry sells for about as much as corn, so you *almost* recover your corn costs. The wet sells for much less, which is one reason PEIX is losing more per gallon than the others. Also, they're now carrying close to $2 in debt per gallon capacity (if you include the new preferred shares, which pay 7% cumulative, as debt). They're not going to make enough to service the debt and pay off the preferreds, much less pay the common shareholders. Note that the headline numbers are a loss of $14 million, but if you read the statements the loss "available" to common shareholders is north of $18 million. These guys just keep digging deeper holes for themselves.

The article tries to tell a story but there are no numbers. That's because they're all bad, so bad. The bottom line is that these guys are burning (and mishandling) too much cash to explain away.