Feb,Mar,April ... period 1Q16 FORECAST too high !
Top line equal to DEC,JAN, FEB top line --- not likely. DDG was a bummer as well as ethanol.
Bottom line of $1.01 per share implies $7M earnings... on a 50+ million gallons, this is 13-14cents net bottom per gallon. Check the rest of industry for Jan-March results - lost all over the place ....
So with 1Q such a big miss... all of 2016 is way at risk... specially if they spend cash to plan for a new plant to be built.
Sell here at $59
Last check,..LCFS did not hold 124 level ( which is the level I recall at CC time)...
LCFS lost about 15 point ( 124 to 109). Still good, but headed down.
This could be as a result of the production level locally.
Ethanol prices adjusted upward with CORN... but not enough to keep pace.
Corn is not letting go! SPECIALLY FOR west coast basis, this is hardknock on margin.
At least, some shorts were taken out. But this is not yet firm footing, if your corn buy/usage is day-to-day or week-to-week. PEIX and AMRS has a thougher June ahead... GPRE and REX better positioned with corn in stock or cheaper price.
(sell here to buy later - if No LaNina)
Thank you so much on the lessons of 'margin'. I am now enligthen!
1. As a 500mil gallon capacity company (round figure), 300 is in the midwest and 200 in the West. So, specially for DDG, start your reflections using the midwest market
2. And as you say the by-product yield in the midwest for PEIX is a lot higher, due to the mix of dried-mill.
I will add one last comment: The West Coast by-product yield is at a premium! ( corn basis is higher there, so WDG meal cost more).
Ethanol buisness has 3 legs: fuel, feed and oil. When one is negative, the other two has to make up. So now that feed(DDG) is not only positive but heading higher, the negative delta does not have to made up...
A bigger impact than one might think, looking at one of 3 products
By the way DDG is above cost of CORN... eventhough corn made a move up in past two weeks. China is buying and Soymeals is relatively higher, causing DDG to be bought instead!
1. Relationship between premium of soy meals meals (going hyperbolic) and DDG reacting
2. China buying both fuel and meal
3. Industry is keened on managing Inventory to restore margins
Learn how to read a BALANCE BALANCE SHEET.... they stuffed under the matress: inventory!
Sometimes it could also be : pockets...
Or pre-paid obligations(like leases, insurance, pensions...)
NY wants all the action tbe stock base.... new source of revenue to match Tech stocks in California.
Battle for SOURCE of Funds ( stocks vs debt)?
Good for ethanol, if business folks use their cars short trips.--- less than 300 miles!
I agree with 'story of its own'... But the way I see it:
o PEIX has enough debt free asset to load up on larger pool of bonds
o AMTX California plant uses milo. Was profitable in 1Q... afeat onto its itself
o Cellulosiic is a self - financing g from each plant buyer, Not by the seller(ie AMTX).
o Eliminate the Duplicate HQ costs ( at least lower SGA per gallon)
o India has to import fuelanyway... So creating a biodiesel, clean air, home grown subset of their demand is a small step toward self-suffciency... very small. AMTX should sell the business to someone with deeper pocket.
Next step is to restructure the DEBT.... spread it over ALL the assets at a CHEAPER cost and have some BUYING power.
If I was PEIX, I would load up with a line big enough to buy out AMTX: technology, capacity, LCFS, for a profit. sell the unit in India
Food fight between funding sources.
No problem with the actual loans!
A little culture clash with the CEO
Old vs N Money!
Creating a fence around old investors, vs new funding sources.
No problem at all with the model: Direct to Consumers!
Food fight for who will fund the loans!
The Public Loan is not the issue here who will benefit from funding LC.
To grow faster, CEO went to a NEW funding source. He got his knees cutoff,
Food fight fight, first pie thrown, was a set of loans whose issued date was adjusted to go to Jefferies, a new source of funding.
Funny, after the CEO was fired, Jefferies loans were repurchased by LC and sold to an OLD funding source - Cirrix.
Independent Assessment found no other Loan Packet were modified!
1. By selling the loan packet to a NEW source, it is like removing food from one mouth and feeding another.
The OLD source got MAD, causes HELL to come down on the change maker
Stockholders are left to HOLD THE BAG!
The BOARD ought to be sued for not seeing this FOOD FIGHT . letting it unravel with so little clarity