I can't reply to private messages. I only have the basic membership Sorry.
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I do too. I don't think $20+ is out of the question in the run-up to earnings.
He may be a fly, but he doesn't seem to be aware that BIOF is no longer an ethanol play, hasn't produced or sold so much as a lick of ethanol in 2014, and in fact is about to do into the home building industry.
Institutional buying during Q1 was quite significant. Although I'm not a fan of Whale Wisdom because of the number of mistakes they make, here's the Q4 2013 vs Q1 2014 comparison:
Aggregate shares on 12/31/2013: 2,766,136
Aggregate shares on 03/31/2014: 5,019,055
http://whalewisdom.com/stock/peix
The large trades on Russell rebalance day would indicate that number has probably increased by at least that amount again in Q2.
I think it has a lot more to do with Yellen bashing biotechs than anything else.
Yes, that goes without saying. Easy to see it would of been a great move in hindsight. Especially considering how little the previous 6% cost to buy back. So, as I say, it sure would be nice to know how the buy-out amount on the remaining balance would be determined.
As for debt pay down, I think how and when they go about dealing with the balance will have to do with any additional conditions that may still be in place. I haven't gone back and read the details on the original agreements, however I did pick up that they were restricted in what they could or couldn't do, including how they went about re-starting up Madera, which in turn led to the last debt buy downs.
Sure be great to see that extra 9% in income that's going to the 3rd party owners right now. Would be nice to know what, if any, agreements are in place regarding how the buy-back is priced. They took $2M in cash in Q1, and if my estimate is in the ballpark, they'll take another $2.2M or better from Q2. Although it's a little early to forecast, it's shaping up like they'll pocket that kind of corn again in Q3. I bet Neil is kicking himself for not scraping the dough together to buy out the balance in the previous buy-back.
and the beat goes on . . .
Iowa and Illinois production margins obtained from the USDA Weekly Ethanol Corn & Co-Products Processing Values report for each State. The PEIX production margin is obtained by applying the formula provided by PEIX in their June presentation to the Global Hunter GHS 100 Conference. The terminal price was used for ethanol.
Ethanol Price - (CBOT corn + basis) * (1 - co-product return) / 2.74
Note that the Q1 PEIX number closely matches the number I derived earlier by assigning numerical values to the PEIX graph (there's a 7 cent difference). Once again, if anyone has access to the missing daily or weekly Cal Terminal ethanol prices for the first 3 weeks of Q2 as well as for Q1, that data would be much appreciated.
U.S. senators press for probe of report that oil companies blocked ethanol
(Reuters) - Two U.S. farm-state Senators on Wednesday urged federal regulators to investigate allegations raised by a biofuel trade group that the oil industry uses "strong arm tactics" to prevent widespread use of higher blends of ethanol in gasoline.
A report from the Renewable Fuels Association this week said major oil companies have discouraged the sale of ethanol at levels of 15 percent per gallon (E15) and 85 percent per gallon (E85) at retail stations, by using distribution contracts that make it expensive or nearly impossible for franchises to offer the blends.
Here's the rest of the story
Ok, this is interesting. It also relies on a couple assumptions
The first issue is examining the question of the percentage of net sales (revenue) attributable to the PEIX plants. I've included 3 calculations. The 1st calculation was the quick and dirty one I did to come up with a number to use in order to estimate how the start-up of Madera as well as the increased margins reported by PEIX in their presentation would impact the Q2 net sales. I always knew it was low (read as conservative) because for starters it didn't account for co-products.
The second one ignores the Net Sales and looks at the gross revenues based on gallons reported sold attributable to the Plants and to 3rd parties (Kinergy), as well as the average price/gallon and co-product revenue as reported in the 10-Q Needless to say the totals are problematic in terms of reconciling them back to the Net Sales Revenue.
That's where the 3rd calc comes in. It reconciles the value of plant production with the net sales figure from the 10-Q, based on the assumption that a percentage of the 3rd party sales only involves fees charged by Kinergy, as opposed to the full price for ethanol.
Thoughts? Does the 3rd calc make sense?
Assuming it does, I then returned to the NCI number (last calc above). Taking 53.6% of the the net sales revenue attributable to the Plant didn't reconcile with the reported number on the 10-Q. A number of factors could explain the discrepancy. The percentage of costs attributable to the plants may not reconcile with the percentage of sales attributable. The price of ethanol realized for the Oregon and Idaho plants may be higher than those realized for the California plant and 3rd party sales. Regardless, I would suggest that the discrepancy would seem to be acceptable limits for the purpose of an estimate.
That's ok, I made some errors last night(forgot what I already established a few weeks ago). I need to go back and take another look at this. The other FV adjustment numbers are not included in the FVA number reported in the Statement of Operations.
Here's the FV balance sheet numbers from the 10-Q (note the actual net change in FV is $24,464)
Balance, December 31, 2013 $ 8,215
Adjustments to fair value for the period 35,844
Exercises of warrants (11,377 )
Expiration of warrants (3 )
Balance, March 31, 2014 $ 32,679
I'm also breaking out the revenue numbers based on the info on pg 21. I did a quick calc earlier only using the plant and 3rd party gallons sold as a way to come up with the percentage of net sales attributable to the plant vs 3rd party sales (35%). However this number appears to be way low. I'll post it in a little while. The potential change should have a measurable impact on the increase in net sales calcs.
You don't think FVA's on commodity contracts (for example) affect the NCI? Sorry, I don't follow you.
Perhaps it lies in the FVA. The FVA number is not entirely attributable to warrants. It would make sense that while the NCI would not be accountable for the warrant FVA portion, they would be accountable for some or all of the balance (specifically the level 1 & 2 FVA attributable to operations).
Looking at Q1,$32,679 of the $35,844 FVA is attributable to warrants (a difference of $3,165)
adding that in to the calc in the previous post:
34,875 income
(4,351) interest expense
(227) other expenses
(3165) FVA
(3,270) taxes
$23,862
23,862 x 0.09 = $2,147. Ok it's still too high, but the $2,007 number is now within 0.6% of being 9%. If I look a little closer at the FVA I might be able to account for the remaining discrepancy.
Now moving on the the 2012 numbers, the FVA is $(1,013), however the warrant portion is actually a $646 credit in this case, so if you subtract it out, the FVA becomes $(1659)
18,909 (income)
(15,671) (interest)
(352) (other expenses)
(0) (taxes)
(1659) FVA
$1,227
If you then add in the loss on extinguishment of debt (3,035) it would now be showing a net loss of $1,808. The portion attributable to the NCI is $381 or 21%, which at first glance does not seem unreasonable for the NCI over the year.
There's another possible answer as well. Backing out the non-plant profits earned by Kinergy. I'm too tired to look at that tonight though.
Ok I have some time now to take another look. First of all, yes I agree that the non-controlling interest (NCI)percentage will be greater for the 2012 numbers.
Looking at Q1 14, I'm looking for $2,009. If I start with the income figure, deduct the interest expense, as well as the other expense:
34,875 (income)
(4,351) (interest expense)
(227) (other expenses)
$30,297
$30,297 x .09 = $2,727 (rounded)
Even if I deduct the taxes as well (which I just don't see as these are taxes levied against PEIX, not the NCI)
$27,027 x .09 = $2432
I mean yes it's in the ballpark, but even assessing the taxes as if they apply against the NCI, the $2009 is still only 7.4% not 9%.
As well, at this point the number is identified as net income, and then when it's backed out, it further increases the PEIX consolidated loss.
If I go now to the 10-K numbers and apply the exact same expenses against the NCI calc:
18,909 (income)
(15,671) (interest)
(352) (other expenses)
(0) (taxes)
$2,886
That's still a net profit at that point just as it was in Q1, not a loss. So if we are to be consistent in our logic, when it's backed out that number should increase the PEIX consolidated net loss, just as it did in Q1, right? But the opposite actually occurs in this case. I used the same approach and just as was the case in Q1, the number is a net income number at this point just as it was in Q1. However it's identified as a "Net loss attributed to noncontrolling interest" and deducted from the loss when it's backed out not added to it.
So I have 2 indicators that I'm missing something. Or that I the number is determined otherwise, and that PEIX screwed up the entry.
1. The number for Q1 is only 7.4% of the net profit before the FVA is assessed.
2. I end up with a net profit in both cases, however in Q1 that net profit is then added to the PEIX consolidated loss, while for 2012 it's deducted from the PEIX consolidated loss.
Can you show me otherwise? Cause I'm not comfortable that we have this figured out. I'm not seeing something that I'm comfortable hanging an assumption on.
Ok well that day's over. Sad to see it lose all that ground right at the eod.
Right up until I try to test it against the numbers in the 10K. Then it all falls apart.
Well, it comes down to looking at the previous quarter and seeing if you can come up with how that number was calculated. If you think you figured it out, test it against a previous quarter.
I'm sure we'll all slap out foreheads when we see it. But until one of us gets it, it remains a mystery.
lol well my spreadsheet is pretty simple. None of the entries are anything special. It's nothing more than a copied and pasted consolidated statement from the 10-Q that's been modified. If you paste the copied statement as unicode, it preserves all the column and row information. Then all you have to do is re-adjust the column widths and row heights. For the Q2 estimate I don't have a lot of formulas or anything. What I did is pretty basic in that I just have it auto-summing the totals.
All my assumptions are already posted.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=103881267
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=103906074
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=103906847
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=103909001
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=103922276
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=103941200
There are other posts but I think that's the main jist of it, other than the FV calc and Weighted Adjustment discussion which I posted a week or two prior.
To combine posts here instead of answering your other one separately, if by dropbox you mean the IH online storage, that only accepts a limited number of image formats and won't accept an excel file. As it goes I do happen to have a dropbox account, but as I use it for business I'm not about to post access info to that on a public posting board.
What I could do is post a disposable email address and if you want the excel file you can contact me there so I can send the file. If that sounds good, I'll post the address at a specific per-arranged time, and then edit the post to remove it 10 minutes later. I could do that today at the market close (2PM eastern) and remove it 10 minutes later.
Well, problem is that if you compare the previous filing with the Q1 filing, in both cases there was a net loss. However on one the non-controlling interest was added to the loss (?) and on the other, it was deducted from the loss.
Yes, I pretty much determined it's the plant ownership as well, and I couldn't determine what it was 9% of either.
A question on the start up costs. $6.6M (net)was earmarked for Madera start-up costs. I'm wondering if these costs would be primarily for the initial stocks of corn, etc. to get the plant into operation? If that's the case, would not those costs be incorporated and already accounted for in the $9.45M increase in operating expenses that were already added in to the estimate?
This is the main reason I haven't added that charge in. I meant to get around to this earlier, but tonight I looked back at the entries for the re-start of Stockton and there does not appear to be any outstanding charges that I can see beyond those costs the time it was restarted.
Yes I suppose that would work. It would require me constructing all my pieces of work into a single understandable spreadsheet. It's actually not all that complicated, but some of the elements are bit and pieces I've built as I went, like the sheet for the warrant FV.
I wonder who else would be interested. If it's just the two of us, we might as well just resort to email.
Are you proposing something more in depth than what I've done? I really haven't done anything all that complex in terms of the estimate. The most complex part was figuring out the warrant FV. If you're proposing something more in depth, then it would probably make more sense to just construct a spread sheet from scratch that accounted for more inputs.
The more complex part for me has been figuring out some of the entries, like the why in the world the "Net (income) loss attributed to non-controlling interest" entry in Q1 increased the net loss attributable to PEIX, when every other example I looked at, it reduced the loss. No one has offered any thought or explanation on that one so far. I should probably write IR on that one. I have a couple other questions as well, and have been holding off adding in the Madera plant start-up because I think they could pretty much offset that.
Are you thinking something along the lines of google docs? Or a board where we could continue to work on it and hold discussion? I could look at starting up a board over on IV as far as discussion goes, but I don't know how many are interested in actually participating. The overall interest seems rather low.
BTW I've broadened the data set I'm collecting for Q3. It will be interesting to see what turns out to be predictors in terms of performance over time.
I guess the problem I have with that is how the market was so blindsided by the FVA in Q1, let alone ignorant of the non-cash nature of the FVA. Seems to me it's primarily reactive, not pro-active. Especially considering the FVA essentially assigns a liability value to the outstanding warrants. It would seem to me that a market which had already taken the warrants into account would not have reacted to the Q1 EPS the way it did. That's not to say there weren't those who were in the know who didn't take advantage of the apparent ignorance, but the overall market response would appear to have had little basis in pre-knowledge.
Hence my interest in the EPS number that will be generated by PEIX in accordance with standard practice. In the short term, that's the number the market will react to.
My question was pertaining to your EPS estimate, not REX. My apologies in advance for any confusion.
It just seems to me that to include future dilution that has not yet happened in the calculation of a Q2 earnings number and not include the revenue those exercises will bring when they occur, highlights the problem of including future events in the calculation of what is now a past financial period.
That's not to say future dilution isn't factored into my buying decisions. That's why I was continuously bringing the warrant situation into discussion reaching back to a year ago. That's the reason I included full dilution when I looked at the PEIX market cap scenario.
I suppose when it comes to a discussion on EPS (and whether the discussion is based on GAAP), it always comes back to whether the goal is to understand what the range of immediate price response might be, as opposed to longer term. My own focus prevents me from attempting to predict EPS for Q3 or 2014 overall, as there are just too many moving targets. I do like to attempt to promote discussion on a current estimate, however, because I never cease learning from it. It's also why I put the underlying numbers, calculations and assumptions out there, rather than just a number. To be clear, my goal is not to promote (or bash for that matter) but to learn. But hey, when it comes right down to it, I'm just one of those old kids who hasn't stopped doing that yet.
Now that would of skewed things a bit, and explains the suggestion to trim April off the REX numbers.
Who is Miles Taylor? I googled the name and came up with everything from a football player at Iowa to a prof at the University of London :/
Well,if/when the warrants are fully diluted, I believe that number would be low. I have the fully diluted count at 25,177,000 (give or take a few). Also, if you include the future dilution, do you also reconcile the future cash they will generate in your earnings? Then what about the shares earmarked for management and employee option grants? Do you ignore those?
I suppose there are any number of ways to come up with an earnings number. One of those ways is to be consistent with the way they are reported, but it's obviously only one. Each clearly has it's flaws.
My bad, typos happen. That should read Q2 as you pointed out.
As for your other question, how would you go about taking out April numbers from REX? Their quarter ended April 30th. If you do that, you're then going to also add in January to their numbers. I suppose you could though, if you feel it's substantial enough as it pertains to the comparison of market caps.
I find the following comparison interesting
First, looking at the Market Cap side by side, then comparing some key financials:
If you factored in full dilution for all outstanding warrants (19%) at the current share price (something the market appears to be doing with the share price), that would boost the PEIX market cap to $379.00M. The current difference between the REX market cap and PEIX (638.5-379) would then be $249.5M
However, it's looking at that existing difference in market cap compared to the difference in equity where it gets interesting. The basic difference in net equity between REX ($336.3M) and PEIX ($142.3M) is $194M (note that I removed the liability for the warrants in the PEIX figure. I did this because they are accounted for when they are factored in below).
Subtract the additional PEIX debt paid down in Q3 (71.6-20.5) of $51.1M and that difference is reduced $142.9M
On that basis, is it reasonable to suggest a fair market cap for PEIX would be the current REX market cap less that difference? $638.5M less $142.9M suggests a fair market cap in the range of $495M.
At the current outstanding share count that would be in the range of $23.60/share. Even if all warrants were exercised today (which they aren't), that would still be in the range of $19.80/share.
One more thing: The Q1 numbers for REX include April, which along with March, was one of the two most profitable months of the year by far to date. April will be included in the Q2 numbers for PEIX.
Natural gas prices for Q2 appear to be a positive factor. I don't know who the supplier is for PEIX, but the Q2 procurement rates for SoCal Gas were slightly lower than Q1 (51.08 vs 52.87) when averaged over the quarter. The same holds true for PG&E (53.06 vs 55.37).
Remember, those are the gas company procurement prices, not their billing prices. The PG&E info (see link above) shows that while billing prices for large commercial users depend on volume, the overall rates were definitely lower in Q2.
Ok, so I updated the interest entry
This is what I did: First, I took the Q1 interest entry and deducted the one-time payment
Q1 interest (including one time payment) 4,351
Less Q1 one time payment 900
Q1 interest net 3,451
The reductions in debt during Q1 occurred throughout the quarter, so in order to reflect how that would impact interest payments in Q2, I took the reduction as a percentage, and reduced the Q1 payment by a factor of half that. I then applied the same approach to the reductions that occurred during Q2
Reduction (1/2 of Q1) = 3,451 x 0.81 = 2,795
Reduction (1/2 of Q2) = 2794 x 0.88 = 2,460
Finally, I added in the one time charge
Plus one time charge + 2,300
Q2 interest = 4,760
Here's the result. The bolded entries in the estimate below have been adjusted. Unbolded entries assume the same values as for Q1
Is it the warrants that are the primary cause? Or is it a combination of the April dilution combined with a continuing negative EPS? The market knows what the potential future dilution is due to unexercised warrants, and can factor that in. What it doesn't know is whether another secondary is right around the corner, and unless they've taken the time to examine PEIX in depth, what it also doesn't know given the past history, is how much of the current turnaround is due to strong management, as opposed to the overall turnaround of the industry. And then of course, there's the uninformed who react only to the media focus on numbers like EPS (and therefore believe the company is in fact, continuing to operate at a loss).
That said, I suspect the institutional investment in the company has increased considerably since the March 31 numbers became available. While dilution has affected that increase in terms of percentage, in terms of absolute numbers (based on the numbers provided on the Nasdaq summary page), institutional investment already increased from 1.520M shares on Dec 31 to 5.387M shares on March 31. Looking at the action we saw due to the Russell rebalance alone, that number has again increased significantly in Q2.
3 charts: Share Price vs Market Cap
This 3rd chart focuses in at the point where price vs market cap began to diverge due to warrant exercises.
Notice that divergence begins to accelerate at the beginning of April.
Keep in mind that note in the Q1 10-Q: From April 1, 2014 through May 8, 2014, certain holders exercised warrants on a cash or cashless basis for an aggregate of 145,000 and 493,000 shares of the Company’s common stock, respectively, for aggregate cash payments of $883,000. The book exercise price on those warrants was approx $4.6M. In other words, PEIX provided a $3.7M incentive to exercise those shares. Of course, the 1.75M share offering was also announced only two days later
While the market cap has now almost regained the April 1 level, the share price still has a ways to go. I can't help but wonder where the share price, market cap, and cash raised through warrant exercises would be now, had PEIX not offered that incentive to exercise warrants.
Net income (loss) attributed to noncontrolling interest entry:
In Q1 2014 this entry increased the net loss by $2.009M, from $8.817M to $10.826M.
By comparison, in prior quarters this entry decreased the next loss.
I'm confused. To add to that confusion, I can't seem to identify the 9% of what number it represents. It's not 9% of the consolidated loss, it's not 9% of anything I can identify. So, this raises two questions for me. First, where exactly is that number coming from? Second, did they screw this entry up last quarter? Should of it reduced the net loss attributed to Pacific Ethanol, rather than increased it?
Hi ID. I believe you're right. I found the following notes in the last Q1 pertaining to the net interest expense:
"Interest expense, net increased $0.9 million to $4.4 million for the three months ended March 31, 2014 from $3.5 million for the same period in 2013. The $0.9 million increase in interest expense, net is primarily due to increased amortization of debt discount due to our early retirement of a significant amount of our senior unsecured notes. We used the proceeds from exercises during the quarter of certain of our outstanding warrants to retire the senior unsecured notes earlier than originally projected."
That would suggest the approach would first be to deduct the $0.9 payment from last Q, then add in the $2.3M payment from this Q. The result would read as $5.7M. Make sense?
Then the question remains as to how the overall interest expense otherwise changed. The following was entered regarding debt that might reflect on the interest expense:
Pg. 11-12
Plant Owners’ Term Debt and Operating Lines of Credit – The Plant Owners’ debt as of March 31, 2014 consisted of a $32,487,000 tranche A-1 term loan and a $26,279,000 tranche A-2 term loan. Pacific Ethanol, Inc., holds a combined $27,088,000 of these term loans, which are eliminated in consolidation. The Plant Owners’ availability under their revolving lines of credit was $50,378,000, which was subsequently reduced to $35,000,000, as discussed below. The term debt requires monthly interest payments at a floating rate equal to the three-month LIBOR or the Prime Rate of interest, at the Plant Owners’ election, plus 10.0%. The revolving credit facilities require monthly interest payments at a floating rate equal to the three-month LIBOR or the Prime Rate of interest, at the Plant Owners’ election, plus 10.0% and 4.5% for the $20,000,000 and $15,000,000 facilities, respectively. At March 31, 2014, the average interest rate was approximately 11.0%. Repayments of principal are based on available free cash flow of the Plant Owners, until maturity, when all principal amounts are due.
For the three months ended March 31, 2014, the Company paid in cash $19,378,000 on its revolving credit facilities. As of April 25, 2014, the outstanding principal balance on these revolving credit facilities was fully repaid, with an aggregate of $35,000,000 of availability.
Debt Modifications – On April 1, 2014, the Company entered into amendments to its credit facilities and term loan arrangements to achieve the following changes:
· Adjust the terms of the credit agreements to take into account a restart of the Company’s Madera, California facility;
· Reduce the Company’s revolving credit facility from $35,000,000 to $20,000,000 while increasing the maximum amount of the term loan outstanding to $65,766,000, allowing the Company to immediately borrow an additional $7,000,000. The additional $7,000,000 in borrowings was subject to an original issue discount of 6.25%, representing loan fees payable to the lenders, resulting in net proceeds from the additional borrowings of approximately $6,600,000. The Company intends to use the net proceeds of the additional loan for transaction expenses and expenses associated with restarting operations at the Company’s Madera, California facility;
· Increase to $24,000,000 from $14,000,000 the level of permitted indebtedness, including capital lease liabilities that may be incurred for yield enhancing equipment or processing and separation equipment for corn oil and corn syrup at the Company’s ethanol production facilities; and
· Maintain the Company’s new revolving credit facility at $15,000,000 but allow the Company to terminate in whole or permanently reduce in part in $1,000,000 increments the lenders’ aggregate commitment.
Pg 17
Payments on Plant Owners’ Revolving Credit Facility – From April 1, 2014 through April 25, 2014, the Company made $16,000,000 in principal payments on its revolving lines of credit. As of May 9, 2014, the outstanding principal balance on these revolving lines of credit was $0, with $35,000,000 of availability.
Debt Modifications – On April 1, 2014, the Company entered into amendments to its credit facilities and term loan arrangements as discussed in detail in Note 5.
Pg 30
The Plant Owners’ debt as of March 31, 2014 consisted of a $32.5 million tranche A-1 term loan and a $26.3 million tranche A-2 term loan. Pacific Ethanol, Inc. holds $27.1 million of these term loans, which are eliminated in consolidation. The Plant Owners’ availability under their revolving lines of credit was $50.4 million, which was subsequently reduced to $35.0 million. The term debt requires monthly interest payments at a floating rate equal to the three-month LIBOR or the Prime Rate of interest, at the Plant Owners’ election, plus 10.0%. The revolving credit facilities require monthly interest payments at a floating rate equal to the three-month LIBOR or the Prime Rate of interest, at the Plant Owners’ election, plus 10.0% and 4.5% for the $20.0 million and $15.0 million facilities, respectively. At March 31, 2014, the average interest rate was approximately 11.00%. Repayments of principal are based on available free cash flow of the Plant Owners, until maturity, when all principal amounts are due.
Since April 1, 2014, we made $16.0 million in principal payments in cash under the revolving credit facility, resulting in an outstanding balance of $0 million as of April 25, 2014, with aggregate borrowing availability of $35.0 million.
All of the term loans and revolving credit facilities represent permanent financing and are secured by a perfected, first-priority security interest in all of the assets, including inventories and all rights, title and interest in all tangible and intangible assets, of the Plant Owners. The Plant Owners’ creditors do not have recourse to Pacific Ethanol, Inc.
also
As of March 31, 2014, the aggregate outstanding principal balance of the January 2013 Notes was $1.0 million. As of the filing of this report, we have fully repaid the remaining principal balance on these notes.
Do I really want to try to sort that all out? Ugg! :/
Hi BioFuel, I just looked at the explanatory note for that Q3 entry.
pg 29:
Loss on Extinguishments of Debt
For the nine months ended September 30, 2013, we extinguished New PE Holdco debt by paying $1.8 million in cash less than the amount of the debt, and as such, recorded a gain on extinguishment of debt in an equivalent amount. Further, for the three and nine months ended September 30, 2013 we recorded losses of $2.6 and $3.6 million, respectively, related to conversions of our convertible notes into shares of our common stock at a discount to prevailing market prices.
It seems to suggest that the extinguishment itself actually resulted in a gain, and that the loss was attributable to the conversion of notes into common stock.
That's interesting
Yes, thanks Biofuel. Now the question is, where would that be recorded? Would it be an entry in the Consolidated Statement of Operations, or would it be an entry in the Financing Activities section of the Consolidated Statements of Cash Flows?
Also, there was considerable debt reduction in both Q1 and Q2. I'm hoping someone who was more up on the debt situation knows how that will have impacted the interest expense going forward. It wouldn't surprise me to find out that the reduction in interest expense cancels out the $2.3M charge. I haven't dug into it because I was focused on the larger items.
ID, click in the link in your post and please read what I wrote. I fully explained what I did. If you have questions or input on how to proceed with the non-cash exercise after that, let me know. That's why I took the time to explain it all in that post to begin with.
Updated
Tax provision: Q2 3 month number is a straightforward 35% assessment of the Q2 consolidated net gain. The Q2 6 month number adds the Q1 assessment to the Q2 total.
As PEIX has approx $41M in accured tax credits, I suspect these can be applied to lower the tax assessment estimate. However, as I'm not familiar with US tax rules, I don't know how to proceed with this adjustment. I have also not adjusted the interest expense (this number would also be lower).
Both of the above would have an additional positive impact on the EPS, If anyone is familiar with the tax credits discussed in the Q1 10-Q and knows how to apply this, your input would be most welcome. The same applies to anyone who knows how to come up with the reduction in interest expense.
The Q1 figures are currently the same as the June figures, except as they were changed by the adjustment to the FVA.
On another note, I dropped the crush margins graph into illustrator and laid a grid over it to allow me to come up with values for the points on that graph. Here it is:
That gives the following values:
Q1: $1.03, $1.38, $1.25 ($1.22 average for Q1)
Q1: $1.60, $1.08, $1.20 ($1.29 average for Q2)
That translates into a 5.7% increase in Q2 :D
If we were to assume 50% production for Madera, that also brings total production from 40M to 45M gals for Q2, a 12.5% increase.
Now, how to apply that to net sales, as it wouldn't apply to 3rd party sales . . . anyone know if that breakout is in the 10-Q? The production increase would be reflected in cost of sales as well, whereas the increased crush spread would only reflect in the net sales, right?
How about if first we talk about the assumptions I used in coming up with that estimate? As I stated, the current values (other than those affected by the FVA estimate) are currently set to the same values as Q1. I think at least the following are factors:
1. Production increased as Madera came online? What would be a reasonable factor for the quarter? 30% of production? 50% of production?
2. The crush margins in this chart suggest the numbers are possibly even stronger than Q1.
3. A revised value for income tax
4. A revised value for interest expense (this should be lower, right?)
Or is it reasonable to assume the increase in income tax provisions would effectively be cancelled out by the production increase and stronger crush margins?
Thoughts?