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Pacific Ethanol, Inc. (PEIX) Message Board

elahens 74 posts  |  Last Activity: Jul 18, 2014 6:42 PM Member since: Apr 10, 2013
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  • elahens Jul 18, 2014 6:42 PM Flag

    Review the 2Q results ( Gross Income and Costs, the IGNORE $49M charges for Debt re-tructuring ( which is a non-cash charge for getting lower DEBT). Then what do you see?

    Next, look ahead to 3Q:
    o higher shipments with some of the costs already built in 2Q
    o high volume due to holiday season
    o lower interest rate costs ( charges taken in 2Q and for a long no payment due until...)

  • DDG price correction went from140% PREMIUM to Corn to a DISCOUNT now.
    Downturn is now well documented as of mid-2Q.

    Pre-selling for 3Q,4Q of futures for DDG is limited ( not to say unavailalble).

    1) How much of 2Q earnings was impacted?
    2) Which Company will be the first to RESET total margin expectations?
    3) With corn so low and China stocks and supply positions, will DDG imports be resumed or wlll they switch to base corn as feedstock?

    One way to lower Corn stockpile: you can use it(commercial use), you can burn it(ethanol), you can eat it( feedstock). Will the high stock in China be moved more and ore to feedstock?

    Ethanol Industry Margins / Earnings still positive, but impacted by lower by-product returns!

    Sentiment: Buy

  • Started to follow AMD in ealry 2014. New turn-around is the question.

    Behyond the Wall Street cat and mouse game ( 1c miss,1C more...), let's summarize updates from last call.

    1- Cash / Current assets /Inventory
    o UP $225M ! WoW!

    o But about $100M of it is PRE-BUILT or assets to be shipped in 3Q for PEEK ship.
    a) One has to remember the fab is done before the factory gets the parts to make the boards and then the end-products ( game consoles...) are put together for HOLYDAYS.
    b) Some build and ship is done for October and November... Final consumption of on-shelf end-user prodcuts in January.
    c) so PEEK shipments in 3Q and Late shipments in October. EXTRA shipments might still happen in Mid-4Q if the end-user demand is over plan.

    o Cash and Market Assets went up from 850M to $950M as of 6/30. But in a Q&A is projected to around $1B...

    2- Segment Status
    - "PC" vs "Gaming"
    - Commercial vs User...
    - Highend Units vs Low-end user markets

    o 'Used Car' market syndrome when OLD units came back to market to soften APU unit demand.
    o AMD will not chase low-end. stay in profitable segment
    o 3Q high-end Units ( HP Elite) come to market, Other OEM
    o WIll Commercial demand stay strong pass WindowsXP bump?

    Overall Second HALF expects to be stronger than 1H

    3- Tight Tongue on Growth Design Plans.

    o but I heard BOEING Planes..
    Coud it be Cabin designs with Personal TVs???
    o I heard 'Living Room'
    Could it be more ""PC-TV" converged products?


    4 -EARNINGS!!

    o OP INCOME had a BUMP to $63M tfrom $49M
    EVEN with the GPU 'Used Car' syndrome
    o Regular Interest went down to $46M from 47M
    AND next quarter(3Q) will be $42M!!!
    o In this 2Q, due to DEBT RESTRUCTURE,
    earnings was impacted by Charges of 'Other Interests' of $49M.

    3Q : Lower Ineterests, Higher Volume, No debt charge, Cyclical period= Higher

    Sentiment: Buy

  • Reply to

    Natgas feedstock new price level

    by elahens Jul 7, 2014 11:38 AM elahens Jul 17, 2014 11:05 AM Flag

    Cool summer days, extra cool in NorthEast. Peek elecricity demand not in view. peek natgas turbines not required.... Natgas in the 3.90's!

    Sentiment: Buy

  • elahens Jul 14, 2014 10:28 AM Flag

    Value1008, i do not dispuite that livetsock needs feedings. But earlier DDG at $240/tonne was at a premium to corn. So why why not switch back to corn?
    Now DDG is almost 50%cheaper than 1Q ( from $240 to $135 avg), a discount to corn even at $4/bushel.
    So topline for REX is most likely lower than prior forecast.
    And margins thinner than 1Q. Why? Even if thye had locked in margins on crish spread for July, DDG these prices is a net cost to corn.
    So earnings might be closer to $2 than $3.
    We will see.

    One last factor: high demand for export gallons generae extra dry or wet DG,keeping DG prices down. One way to sell the corn but it does drive the overall ethanol margins down from 1Q when DDG was up and so was the crush spread.

    Better than no volume, but at lower margins.

    Sentiment: Hold

  • elahens Jul 10, 2014 11:04 AM Flag

    The window to issue common shares (to dilute) is what is driving the rush.
    1. warrants expire within 12 months, last 9% ownership. Soon MORE
    2. premium price narrowing from 40c to 19c and soon at par
    3. all US plants are producing at name plates. more fuel creates more byproduct
    4. DG stocks accoumulating ; impacts margins
    5. lower corn prices yields lower DG prices

    Need to release earnings and then issue shares.

  • Natgas prices back down to $4.25:

    Sentiment: Buy

  • elahens Jul 7, 2014 9:32 AM Flag

    1. add basis,
    2. look at futures curve
    3. DG becomes a net minus on spread

  • elahens Jul 6, 2014 9:53 PM Flag

    With California corn basis of $1.60 above midwest,
    and a fixed cost component ( not a percentage of selling price),
    and corn say at $4.20/bushel,
    then Basis as a percentage of Corn is 1.60 over $4.20. or 38%

    As corn heads down this Basis as a percentage goes up.

    So midest DDG at $150 is comparabl to $207 (138%) in California.
    West $187 quote is comparable to $135 in midwest.

    This BASIS fixed cost element is part of the equation!!!

  • Reply to

    World Cup - air traffic

    by elahens Jun 17, 2014 8:26 AM elahens Jul 1, 2014 10:10 AM Flag

    US has the most attendees at the WorldCup. Round of 16 extended a lot of stays, a lot of flight re-secheduling. But imagine how many more will fly in for the next round! Go USA. US-Belgium: 2 to 1!!

    Sentiment: Buy

  • elahens Jun 27, 2014 4:09 PM Flag

    Must be Hot,hot, hot where you are. Cool it,idiot!

  • elahens Jun 27, 2014 3:20 PM Flag

    Reference data from Midwest below... West may have a delayed price curve but sooner or later competition pulls prices in the same direction.
    So the final word is to tract all THREE outputs, not just spread between corn and ethanol. Be happy : corn-ethanol spread is positive, but smaller than before.

    here is the status:
    "... The DTN weekly spot price average fell another $12 in the past week, from $160 per ton last week to $148 this week. This is the lowest point the average has hit since mid-October 2010 and is the twelfth consecutive week the average has fallen, dropping a whopping $91 per ton since the first week of April...."

    Sentiment: Sell

  • elahens Jun 27, 2014 3:11 PM Flag

    Wet DG or DDG ?
    Cheaper corn brings cheaper DG.
    Percent of a lower price ( current DG price) is much LESS in absolute number when the price is high.
    ( example 10% of $4 = 40c, 10% of $6 = 60c, so when you are working
    on a Percentage BASIS, watch for the bottom line. )

    Plus, think of it this way,
    When DG was high, it aded to margins, When DG is LESS than corn, it takes away.

    Idiot? go figure your bottom line again.
    Re-evaluation is ahead.
    no laugh ( no lol).

    Sentiment: Sell

  • elahens Jun 27, 2014 2:22 PM Flag

    This industry has Three outputs: ethanol, DG and possibly corn oil.
    Higher production rate driven by exports generate extra DG and corn oil.
    Once these two byproducts are in excess of demand, then margins is NEGATIVELY impacted.

    The stock prices ( for all these companies) will need to be valued on a long margin curve ( seasonal up and downs), as well as feedcost ( corn harvest...).

    In any case we are in the 1-20c per gallon margin range rather than 40-60cents.

    Re-evalution coming up as the Futures moves next week to focus on August-September, and later margins.

    Sentiment: Sell

  • elahens Jun 20, 2014 1:14 PM Flag

    WDG Midwest Index went from 60( low) to 40(low) in that same timeframe.
    1/3 less along the same price curve as DDG
    Since PEIX is the major WDG seller in CA, not sure that there is an index figure

  • All the other ethanol vendors have quarter ending cycle. REX is May-June - July.
    As a result, with the deep in DDG prices, REX quaterly earnings will be impacted the MOST among the ethanol producers running on Apr-June cylce. (GPRE, VLO, ADM, PEIX, ...)

    In addition July Futures at or Below $2/gallon narrows margins considerably.

    Here is the DDG status:
    This also marks the tenth consecutive week the average has fallen, dropping $69 per ton since the first week of April when the average was $239 per ton.

    Allan Assman, manager of distillers grains sales for Valero Energy, said he has never seen such a steep decline in prices.

    "I can't remember the last time we have been this low, probably over two years," he said, adding that the current value of DDG to corn is at 85%. According to DTN statistics, the value of DDG to corn has hovered between 121% and 138% since the first of the year.

    Sentiment: Sell

  • elahens Jun 19, 2014 3:26 PM Flag

    DGwent from being an add-on to the bottom line
    to now being a negative to crush margins.

    With SPOT premium back to normal level, 3Q projections will be revised down.
    Here is the DDG index numbers from DTN:

    "... This also marks the tenth consecutive week the average has fallen, dropping $69 per ton since the first week of April when the average was $239 per ton.

    Allan Assman, manager of distillers grains sales for Valero Energy, said he has never seen such a steep decline in prices.

    "I can't remember the last time we have been this low, probably over two years," he said, adding that the current value of DDG to corn is at 85%. According to DTN statistics, the value of DDG to corn has hovered between 121% and 138% since the first of the year...."



    Sentiment: Hold

  • West spot premium(over midwest) back to 20cents. 20c does not cover Basis of $1.30-1.40.

    Industry margin narrows considerably with DG prices off 35%.

    Industry production capacity (EIA this week) reported at 14.9B rate.

    Sentiment: Hold

  • by elahens Jun 17, 2014 8:26 AM Flag

    Just hit me looking at the US match,crowds, cities in Brazil. What logitics to move 20K people just for one team, before and after each game! Do it more than once ! For each team! Distances(NY to LA like) are such that driving is out.

  • elahens Jun 14, 2014 12:05 PM Flag

    jt, thank you. Updates are ALWAYS extremely valuables. But news contrary to recent beliefs are gold.
    Please confirm or expand on this statement copied from above :
    "...Because of the complicated relationship revenue streams have on managements ability to access those funds it does not make much sense currently to install corn oil machineries in the other 2 plants. ""

    Second SURPRISE is this one :
    " the $26M of shares issued went ONLY to the Plant level Operations and MANAGEMENT has no control how to use this CASH "....

    It seems that the Parent company, of which the common shares are 'owners' is a front company with ALL the CASH proceeds going to the benefits of the Plant " 9% owners ".

    This is bad news on the day that Managent is again asking to take a BONUS!!!.

    Please confirm... ( it is Saturday , but come Monday, if this corn oil news is right, this is bad, bad, bad)

    Sentiment: Hold

21.59+0.29(+1.36%)Aug 19 4:00 PMEDT

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