It's a little difficult to judge his statement that PEIX "faces bigger hurdles to strong earnings in 2015 than do its independent competitors" as he doesn't factor in the overall impact of the sybergies that are going to work in PEIX's favour as a result of the merger, nor does he really take into account the West Coast factor in any meaningful way in any of his discussion. As for the Iowa numbers, well, all I can say is that's Iowa, not the West Coast. Conflating the two can lead to very erroneous conclusions.
He crux of his article seems to be the fact that January and February were difficult months when it comes to ethanol margins. No surprise there. Anyone who isn't aware of that should probably not be in ethanol producers. However his premise that reduction of PEIX's long term liabilities in relation to current liabilities ratio is a bit of a crock. The ratio dropped because PEIX all but eliminated their long term debt, not because their current liabilities increased. In fact, if you take a look at the table he provided, their current liabilities by quarter have DECREASED by 9.8% over the prior Q4 while their cash has INCREASED by a whopping 1240%, not to mention that as a percentage of total assets the cash portion increased by 1050%.
Perhaps he might want to take that into account when discussing the ability of PEIX to improve their profit ratio going forward. I mean seriously, in the past year PEIX transformed from a company that was driven to it's knees by an almost all-consuming debt burden to a company capable of taking advantage of a severe downturn in the industry to become the 5th largest ethanol producer in the US.
As for his attempt to shake the tree regarding the LCFS, he completely ignored the impact of the co-generation plant upgrade, among other improvements currently being implemented.
Strangely enough, he also completely ignores the impact of Kinergy. How can you discuss PEIX revenue generating ability without including Kinergy?
After first cautioning against using current energy prices to predict future earnings, he repeatedly relies on exactly that crystal ball gazing strategy to paint a dreary picture for PEIX. He's clearly a holder of Mid-West ethanol producers. I'm sure he knows lots about Mid-West margins as they relate to Iowa. However, his complete lack of discussion about the factors that influence West Coast margins have me tending to dismiss his discussion.
I'm sure he wants a mad rush to occur with investors driving up the share prices of REX & GPRE (his recent articles discussing them continues to be extremely bullish). That may well happen, but there's certainly no need to attempt to accomplish that by misrepresenting PEIX.
He wrote two articles this quarter about PEIX. Prior to that his most recent was written in October of 2013. Strangely enough, the title was eerily similar to this one: "A New Headwind For Pacific Ethanol." Following that article, he went strangely quiet on covering PEIX until now. Meanwhile PEIX underwent a major transformation. Just sayin' . . .
