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So, do we now move on to inserting new numbers into the Statement of Operations?
I took the Q1 Statement of Operations, dropped it into excel, and modified it for the purpose of coming up with a Q2 estimate. This is just meant to stimulate discussion, all the values are negotiable. I'm proposing that as the board reaches something approaching consensus I'll modify the values as appropriate. As it's in Excel, the values are all easy to change.
As Q2 crush margins (at least as shown in the chart from the PEIX presentation that was posted yesterday) appear to be as strong as Q1, I figured a good starting point for discussion was to assume the same numbers for Q2 as Q1. So, for the 3 month column:
*Except for the figures in GREEN, all values are currently set to mirror last quarter.
*The GREEN figures have been changed to reflect the FVA estimate. As we go forward, I will show any additional changes in GREEN as well
The values in the 6 month column reflect the values in the 3 month column added to the Q1 values. Clicking on the image should open a larger version.
There is considerable information available online on how to calculate the weighted average shares outstanding. For example
As for warrant sales, I simply used the numbers released, including those warrants included in the 3rd party offering that hadn't been converted yet as of the time of the last filing dealing with it. It seemed like a reasonable estimate.
The volatility numbers came right off the tables in the 10-Q, as did the marketability restriction figures. I explained the basis of the changes I made to the marketability numbers.
BTW just to be clear, the negative value of the FVA estimate means that it's actually a credit (see the statement of operations in the Q1 10-Q).
ADVFN, here's what I've got on the FVA
Before I say anything else, just a reminder to anyone reading this post that I have no training or expertise in this area. Everything I state is based on my own observations and conclusions. What I present in this post is for discussion purposes. Posts on a posting board are no substitute for conducting your own due diligence.
BTW, for those who are not interested in a discussion on an estimate of the GAAP EPS, fair enough. However, there are a number of us posting on this board who are, as that's what the market reacts to on earnings release.
I'll start with a note from the March 2014 10Q, followed by the summary of warrant exercises. Keep in mind that summary makes two assumptions: that all the warrants involved in the 3rd party offering were actually exercised by June 30, and that no other warrants were exercised after the May 8th summary other than the warrants involved in the 3rd party offering.
That's followed by a summary of shares outstanding, and the sources used to gather all the above information.
Next comes the calculation of weighted shares:
(I haven't done this before, so let me know if I made a mistake)
Moving on to the calculation of the Fair Value. I am showing the tables from the Q4 2013 and Q1 2014 filings to provide perspective for the June 30 estimate.
Again I remind you about the assumptions applied to the number of warrants exercised. In addition, the following assumptions were applied to the factors shown in the June 30th table that were used to calculate the fair value for each series:
*I have assumed no change in volatility.
*The marketability restriction discount was decreased by the same amount as they decreased from Q4 2013 to Q1 2014.
*The interest rates were derived from the closest applicable treasury rate, based on the time left on each warrant series.
In addition, the time remaining on each warrant issue was decrease by 90 days from the March 31 value. Please note that the actual breakdown of the number of warrants exercised for the combined total of the $7.59 warrants was not provided in any PEIX filing (see the 1st image), so I have arbitrarily assigned those values as they appear in the June 30 table for the purpose of the fair value calculation.
Finally, the Fair Value Adjustment. Note the top half of the table for the March 31 calculation. That is the balance sheet entry for fair value shown in the Q1 10-Q In the bottom half of the first table I rearranged the entries so that the entries would provide a way to determine the actual fair value adjustment. I then applied that method to the June 30 figures to derive the June 30 FVA estimate (the FVA is unknown unless this 2nd) calculation is performed first).
Ok, now a couple notes on the above FVA. First, it onlu covers the FVA for the warrant and does not include any other Fair Value Adjustment that may apply for the quarter.
Second, as highlighted above in the first image, a non-cash exercise applied to a significant number of warrants exercised in Q2. In the fair value adjustment, the value of warrants exercised was derived by first deducting the value of those warrants exercised on a cashless basis from the total value of warrants exercised for the quarter. I have not found any guidance or example on how to approach this issue. If anyone has any insight on whether that approach was correct, please let me know. Needless to say, that applies for everything shown in this post. After all, the purpose in posting this information is solely to help the board work towards an estimate of the GAAP EPS for Q2. If you see where I've made an error, please post a correction (don't just say it's wrong, that doesn't help us move forward).
If no one sees any errors, next comes an attempt at estimating the EPS.
Looks like about another 707k after the close, so about 2.1M in all. (edit: 234k & 33k blocks crossed the tape while I was writing this, so pushing towards 2.4M and there could still be more to come)
I believe that the theory goes that institutional ownership brings better liquidity and should lead to better valuation. We shall see . . . I think it all comes down to the nature of the 'tutes/funds involved.
edit: I'm also watching INO (also added to the Russell), a 3.5M block crossed the tape right after their close.
Russell rebalancing day.
Some are in, some are out.
Reconstitution additions & deletions
Always makes for some heavy manipulation. The final list isn't posted until Monday, but today is the day.
It was even better in January, 2013
Scroll down to "Lift Off"
How's that for a closing order? 1,386,004
Ah yes, got to love the Russell.
BioFuell99, disregard my remarks on Wednesday about a pleasant surprise. Still looking ok overall though.
That's not it. The time premium on warrants erodes rather slowly. More to the point though, assuming the fair value of the individual warrants remains relatively unchanged, there's less warrants now than there was March 31st :D
For those who missed the call, here's the transcript
direct from shrieking alpha
Week 25
I don't know if anyone else picked up on it, but the last Allendale graph was different than the previous ones - I noticed that some of the earlier points had moved. I contacted Allendale and asked them wtf? They responded and said the preliminary data they use makes assumptions on costs, etc., and that they update that data and replot the points when the final costs are known. They sent me all the updated weekly values for the year, and those updated numbers are now reflected in the Iowa Crush Spread column.
One other note: I added a 9 week average for the Cal and Cal T ethanol prices, as I don't have the Cal T values for the 1st three weeks of the quarter. This doesn't help with knowing the Cal T average for the quarter of itself, but a reasonable estimate could be drawn by subtracting the difference between the two from the Cal prices for the 1st three weeks. Now if only I had the missing numbers on the California spot corn :/ Oh well, the scope of what I've been tracking grew as I located more sources. Next quarter. Unless of course, someone has them?
Anyway, here's the update. The next numbers I'm going to post is an estimate of the FVA after the June 30 close. Sorry, no advance peeks (it would be meaningless anyway), but I will say this: no matter what the share price, I think more than a few people are going to be in for a little surprise. Even were the price to close at the same close as Q1 :D
I can understand dividing the existing market cap by the fully diluted share count to determine the equivalent fully diluted share value at present. You're not adding any money that wasn't already there. But multiplying current share price by fully diluted share count adds non-existent money to the market cap, I don't follow. That count is a future value, not a present value.
Market cap at the close: $293.11M
source: quote media
Closing share price x 25M shares: $363.11M
See? You add $70M that doesn't exist. Maybe I'm missing something, but I don't understand, especially when trying to compare to another company's present market value.
Seeking Alpha say UNXL short squeeze quite possible tomorrow
http://seekingalpha.com/news/1818193-unipixel-starts-intouch-pilot-production-shares-plus-18_5-percent-ah?app=1&uprof=11
PEIX current MC is $296M. Looks like you're adding in unexercised warrants to compute the current MC.
From what I can see, GPRE has:
$379.4M in long term debt
$134.6M in additional long term debt maturing this Q
$128.4 in short term debt
Take a look at pg 14 of the March 31 10Q.
Add up the total number of warrants outstanding in the March 31 Warrant Fair Value table. Note that those totals are as of March 31.
That gives you the number of warrants used to calculate the fair value of warrants for Q1.
That will not be the number of warrants used to determine the fair value of the warrants for Q2.
Now, take a look at the Fair value total for that table.
Compare it to the line "Warrant liabilities at fair value" in the consolidated balance sheet on pg 4. Same number, isn't it?
Now, if you want even more mystery subtract the total fair warrant value of the Dec 31 table on p4 14 from the March 31 table. That will give you the total change in outstanding warrant value from Dec 31 to March 31.
The FVA for warrants does not scale dollar for dollar with the share price. Plus there are other factors in addition to the share price that can affect any FVA, including 2 major ones.
If you go back and look at the calculations I posted last month, you'll see that assuming the volatility stays in the same range as last quarter, the difference in the warrant FV between $15.58 and $13.40 was $5.45M. That's assuming 4.09M warrants outstanding at the end of the quarter. That's a $2.18 drop in share price, compared to a $1.33 shift in FV. And it's not scalable, it falls on a curve.
And that's not what the FVA would be. You then have to complete a separate calculation.
They'd have to push it up considerably to have a big effect. Fifty cents one way or the other will not have that big of impact. As long as we don't get some way over the top volatility to close out the quarter, everything's going to be just fine.
Yes, it's the closing price as of the last trading day of the quarter, not the average share price. The books will be as of June 30th, so just as it's the cash on hand as of the end of the quarter that matters, so too it's the value of the warrants as of the end of the quarter.
Yes it's been talked about lots. On the other hand, the inclusion in the Russell has been largely ignored.
ID Super, the non-cash charge does not impact the bottom line. Those institutions and funds buying this week because of the inclusion in the Russell know how to read past the GAAP EPS number.
There's another difference between the models. The Neeley Model is discussed in this article. The Neeley Model assumes the ethanol plant is carrying no capital costs - in other words, the plant is paid for.
By comparison, if you look at the downloadable file for the Iowa State model, it assumes the plant was built in 2007 and is not paid for.
The other difference I found between them is the Neeley Model is based on a 50M gal annual production, while the Iowa State Model is based on 100M gal/yr.
I think that's the Iowa State model. There are three of them, Platts, Neeley and the Iowa State model.
Here's an excerpt from an article that discusses the differences between them.
In the Platts model, based on a typical 50 MMgy Midwestern dry mill ethanol plant, 2013 started out with a margin of around 30 cents per gallon and stayed around that level until fall, Godwin explained. “The week ending Aug. 23, margins stood at 60 cents and two weeks later were over $1 per gallon,” he said. The profit margin for the model hit its peak at $1.45 per gallon for the week ending Nov. 22. Since then, both the ethanol and corn markets have stabilized, with corn trading around the $4.29 mark and the Argo assessment hovering around $2.40 and margins dropping in the Platts model to under $1.
Rick Kment, biofuels analyst for Telvent DTN, tracks ethanol profitability through the DTN model dubbed Neeley Ethanol, which includes depreciation and debt service. That model showed more modest, but still very strong profits. Neeley Ethanol was seeing a 62-cent-per-gallon profit in early January, down a bit from a high of 80 cents per gallon a couple of months earlier in November, Kment said. The model showed red ink for most of 2012 and the first two-thirds of last year, he added, with losses running between 20 and 30 cents per gallon of ethanol produced. The negative margins reflected tight corn supplies and high corn prices as well as struggling energy demand from the gasoline and ethanol markets that kept inventories high and margins low, he explained.
A third model ethanol plant, developed by now retired Iowa State University ag economist Don Hofstrand, shows the average November net return per gallon at 46 cents and a big jump in the December average to 82 cents per gallon of ethanol produced.
The differences in modeled margins is due to the basic assumptions. A model based on nearby future prices for ethanol and corn will give a different margin than a model based on regional cash prices. One based on futures prices would give a better estimation of hedging opportunities, whereas one based on regional cash prices would give an indication of a spot margin. Ethanol producers will often use a mix of both approaches as they develop their risk management strategies.
The assumptions for the Iowa economic model are given in a downloadable spreadsheet that is updated monthly. (Available at the Ag Marketing Resource Center’s website, under the renewable energy heading and labeled “ethanol profitability.”) In this model, the prices used for ethanol, corn and distillers grains are pulled from USDA reports of Iowa-based cash prices. The ethanol yield is based on 2.8 gallons per bushel of corn processed and other assumptions, such as debt service, labor and other operating costs are given.
The rest of the article can be found here:
Special Report: Ethanol plant margins strong in uncertain times
You can actually download a copy of the Iowa State model from the link in the article. BTW the linked one doesn't have the data updated in it yet. They seem to be rather slow at that.
If anything, I see it as all the more reason for Tullow to drill and prove up resources in Guinea. One of the key underpinnings of Tullow's business model has always been to prove up resources and then sell off part or all of the find.
Tullow Business Model
Intentional delay for any reason other than receiving an assurance that they will not lose their lease interest regardless of any potential wrongdoing on the part of HDY is counter to their best interests and stated business model. Even more so in this case, given the exploration lease expires in Sept 2016.
At present, the value of exploration and production plays is at a low point to the extent that companies like Tullow are seen as attractive takeover targets:
For a company to be more likely to be taken out, it has to have certain features. It should have world-class assets, and these assets have to be undervalued by the market. If you look at those criteria, the names that come to mind are Nostrum Oil & Gas L.P. (NOG:LSE), Ophir Energy Plc (OPHR:LSE), Bankers Petroleum Ltd. (BNK:TSX) and Tullow Oil Plc (TLW:LSE). Companies with smaller producing assets and very compelling valuations could be added to that list.
Source
At the same time, it affects their ability to realize the kinds of gains they might of seen a few years ago from farming out portions of their current holdings in locations like Kenya. Now I'm no financial expert, but I don't put a lot of stock in an article like the one that's the subject of this post. While they prognosticate on one hand about the impact of future capital costs to develop Tullow's finds in Kenya, they totally ignore future value at a time when others see those same finds as attractively undervalued. That points to one of the key weaknesses in their projections:
“Assuming no farm-outs, we see net debt/EBITDA peaking at 2.4-times in 2016 on our oil price deck (of $90 per barrel) and gearing (or net debt to equity ratio) peaking at 80 per cent in 2017,” said the investment bankers.
If they want to project out two or three years on how the current situation will impact Tullow's business model, they can't ignore or completely discount out of hand one of the key underpinnings of the Tullow business plan - let alone how a recovery from the current lows in the valuation of exploration and production plays like Tullow will impact any potential for that business model to fund future development costs (let alone current exploration budgets, which aren't even part of their analysis).
Sounds to me like the reporter is mixing up names of ethanol companies. In the article the reporter refers to Columbia Pacific Bio-Refinery, which is adjacent to the docks in question. He's interchanging the name with Pacific Ethanol Columbia. Columbia Pacific Bio-Refinery is owned by Global Partners LP. The plant is located west and downstream from Portland, adjacent to the Port of St Helens docks the author is referring to. Considering their main business, it's no wonder they would be very motivated to fund dock development.
Global Partners LP
Panamax ships are already able to navigate further upriver in the main channel, to the Port of Portland. Adding Panamax terminals at the Port of St Helens would provide additional facilities between the Port of Longview, which is further downstream, and the Port of Portland.
Considering the author put Pacific Ethanol Columbia in the title, if nothing else it might result in some speculation buying on Monday by unwary investors. Anyone subscribed to Pacific Ethanol news alerts probably got this article.
Some interesting ethanol production numbers from around the country for this week(as provided by the USDA). These are the only States that provide this level of breakdown. Remember, these are not operating margins.
Illinois
ethanol: $2.18/gal
corn: $4.48/bushel
difference including corn oil & DDGS: $3.16/bushel ($1.13/gal)
(ethanol yield/bushel 2.80 gal)
Iowa
ethanol: $2.08/gal
corn: $4.44/bushel
difference including corn oil & DDGS: $2.72/bushel ($0.97/gal)
Nebraska
ethanol: $2.08/gal
corn: $4.38/bushel
difference including corn oil & DDGS: $2.73/bushel ($0.97/gal)
A number of other States do provide prices for corn, ethanol, corn oil & DDGS (as do the above States) so if anyone wanted to they could get a wider sample. Unfortunately, California is not one of the States that does that.
Awesome, thanks! Got them entered. They'll be in the next update
Things can change in a heartbeat when it comes to op ex. All it takes is someone closing out a big position. Just saw it happen on another stock (VHC) about an hour ago. Max pain was $21, (share price was right around $17) then a very large (11.5k) $25 put position was closed. Probably dropped the max pain down to the $16-17 level in an instant :/
I don't try to play it so much as just watch the manipulation to learn from it. Mind you I do look for buy and sell opportunities, because it's all just a one-day event. It's not untypical for them to push the price higher to get people to panic and sell their puts, lower to get the same reaction to calls, then try to nail the final price they want where they profit the most from the balance remaining. There's a few web sites that report max pain, but those numbers are always as of the close the night before. Any substantial move in option trades throughout the day impact that. I watch to spot their moves. At best, it's all nothing but educated guesswork :D
lol it might be easier if you include a title so you're not trying to insert the link into the message title :D
They're a little hard to read (low res) but I can make them out. I'll update with them later, thanks! Too busy with another stock right now.
LOL well now you can blame it on us Canucks
http://www.opisnet.com/events/rfs2rins/headlines.html
US weekly supply-demand (week ending June 13)
"Stocks of ethanol stood at 17.9 million barrels. That is a 3.1% decrease from last week, and stocks returned to the 20-day supply level."
Source: Renewable Fuels Association
The fun day will be a week from Friday. Russell Rebalancing Day. Craziest close of the year.
I wouldn't underestimate the effect of op ex tomorrow, as it's triple witching day. Max pain for Peix was @ $14 as of this morning's open. Given a slow day, you just know the big boyz are going to push it down to $14 or lower if max pain didn't climb above that today (which I doubt, because not a lot of June options sold today other than some $14's). Does it always follow the script? No. Is it something to be aware of? Well, I've seen the effect too many times to ignore it.
Definition of 'Triple Witching'
Definition of 'Triple Witching'
An event that occurs when the contracts for stock index futures, stock index options and stock options all expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December.
This phenomenon is sometimes referred to as "freaky Friday".
Apparently not.
RFS Rule Delay Seen Likely
Bio, to post an image, it first has to be uploaded to the net somewhere so you can then link to it. I use either tinypic or postimage.org (actually postimage.org is easier and lets up upload larger formats if you need to).
link to postimage.org
When you see the page, just use the "browse to locate the image on your hard drive. Then set the size (you'll have to play with that until you understand how to scale it appropriately for a posting board).
Hit upload. Once it uploads, you'll see a list of links. Click on "copy to clipboard" for direct link.
Ok, now go compose a message. And no, you can't put the link in the message title :D
On the left side menu beside the composing box, click on "Image" then paste the link you copied from postimage.org between the tags. Hit preview, and you should see the image in the post preview. If you don't, try again, you'll figure it out.
Btw, I've looked at the opis site, but it seems you have to take out a paid subscription to actually get any prices :/
The Cal T price is the daily Nor Cal price directly from the PFL daily sheet, averaged out for the week (see the explanation though, as I missed the odd day here and there).
The short answer is they vary. Those with a T or P suffix are explained & the source is provided, as are the sources of all the corn prices. I just realized that I'm missing the source on the chart for the Cal, Oregon, Wash, Iowa and Illinois ethanol prices (which are rack). This is it:
http://www.dtnprogressivefarmer.com/dtnag/renewable-fuels
btw, although the table reads "today" the prices are actually from the day prior. I know because I've been watching it long enough and have compared the quotes to other sources.
A comparison of the daily California spot price data that I reported all along, to the California terminal data from the PFL daily sheet. I thought I would post it due to the earlier conversations about the worth of the the spot prices.
BTW, if someone actually saved the daily PFL reports, I would be very grateful for any numbers for the missing weeks - especially for Q2 - that you could provide.
(A note about the red cells - those are days where I didn't record the actual number. The value I show is the average between the previous and next day price)
Also of interest is the Allendale graph for Iowa production margins (Kel hasn't posted this for a while). While the number for week 24 was lower, note that it's still above the lowest numbers for Q1 (see the table in the previous post), as is the Q2 average over Q1.
Spot ethanol price chart updated as of June 13th (week 24). I've added two more columns: Cal T in the ethanol prices, and Cal in the corn prices. The Cal T ethanol price is the terminal bid/as reported by PFL. The Cal corn price is the Stockton-Modesto-Oakdale-Turlock terminal price as reported by the USDA.
With 2 weeks to go in the quarter:
link to original
Well if we're going to account for it, let's look at the history first and understand how the employee benefit plan works.
"A total of 914,286 shares of common stock are authorized for issuance under the 2006 Plan. A total of 1,715,000 shares of common stock will be authorized for issuance under the 2006 Plan upon stockholder approval of this proposal. Currently, equity awards totaling 831,127 shares of common stock, net of forfeitures and shares withheld to satisfy tax withholding obligations, have been issued under the 2006 Plan. We believe that the 2006 Plan will be exhausted of shares available for issuance in 2014, leaving insufficient shares available for equity grants in 2014. By increasing the number of shares authorized for issuance under the 2006 Plan by 800,714, a total of 883,873 additional shares of common stock would be available for issuance."
http://ir.stockpr.com/pacificethanol/sec-filings?page=3#document-27314-0001019687-14-001556
So it's not like these are all going to fly out the door tomorrow. In fact, over the past three years, the average number of shares and options granted was 291,947. Of those, an average of 258,343 per year remain unvested. Since the plan's incorporation, an average of 103,890 shares and options were granted on average per year.
Now as to the numbers granted last year. Keep in mind that the number granted was to cover 2012 as well as 2013. That isn't to say the number granted for 2013, once you take out the numbers included for 2012, aren't generous, but I would look back at the averages since the plan's incorporation and take into consideration, as well as the numbers granted per year. There were some years where the numbers were pretty low.
But back to accounting for these in dilution. Would it be a fair assumption to use the 3 year average going forward? If so, then we're talking around 292,000 granted, with 258,000 of those remaining unvested for 2014.