Q3-13 Pacific Ethanol
We tell each other that Q3 will be better than Q2. I agree, and now I will say why.
In Q2 the operating capacity was 87% = 34,8M gallon
In the Q2 webcast July 25 you can hear NK say the operating capacity Q3 is 92% and increasing = 36,8M gallon – that is plus 2,0M gallon in Q3 vs. Q2 (maybe more, because NK did say “and increasing”).
The operating margin is much better in Q3 than in Q2, but I do not know exactly how much better, but let us assume that it is not under $ 0.10 per gallon, and calculate with the figure of production applied for the quantity Pacific Ethanol produced in Q2.
$0.10 * 34,800,000 = $3,480,000 (better than Q2)
Then the operating capacity in Q3 is 2,0M gallons bigger than Q2 (not less), and can we calculate on that? - I do not think we can, but if we say a conservative margin in Q2 was $ 0.15 per gallon and in Q3 is $ 0.10 higher, and then a calculation will look like this:.
$0.25 * 2,000,000 = $500,000 (better than Q2) ... it will be a higher amount, but I do it conservatively.
Pacific Ethanol announced May 29 in Q2 Magic Valley plant begins production of corn oil, and then there was not corn oil production in the two month April and May – just one month corn oil production in Q2, and it was in June. Now in Q3 Magic Valley is producing corn oil in July, August and September.
There are new installations at the Magic Valley and Stockton who earn $ $, and when earnings are production dependent, I would assume that the two 60MGY plants running at MAX operating capacity, and Columbia is the "unit" that adjusts the "capacity" to 92% for 3 plants vs. capacity.
Then Magic Valley is producing 15,000,000 gallons in Q3 and the feedstock is 5,357,143 bushels. If Magic Valley is producing (in the beginning) 0.5 pound of corn oil per bushel, it will be 2,678,572 pound of corn oil in Q3 and with a price per pound $0.38 it will be $0.38 * 2,678,572 = $1,017,857 in Q3
If there was one month with corn oil production in Q2 = $1,017,857 / 3 = $339,286 in June Q2
Then Q3 will be better with 2 month, and it will be:
$1,017,857 / 3 * 2 = $678,571 (better than Q2) from the corn oil production at Magic Valley plant.
Then we do have the cellunators installed and operating at the Stockton plant. You can hear NK give this information 6:15 in the Q2 webcast July 25 – I do not know when Stockton did start their Cellunators, but I know that much, the Cellunator was not operating and earning $$ in Q2, and for Q3 I will calculate the amount for only two month. The Cellunators will increase the ethanol yield at the Stockton plant with 3.5%
15,000,000 gallons per Q / 100 * 3.5 = 525,000 gallons (without more feedstock use) – a conservative average gallon price in Q3 is $2.50 per gallon, and then the calculation will look like $2.50 * 525,000 gallons = $1,312,500 per Q, and the two month operating in Q3 will be:
$1,312,500 / 3 * 2 = $875,000 (better than Q2).
Then I have said Magic Valley is producing at capacity 15,000,000 gallons per Q (no need to lower your corn oil production) and Stockton is producing at capacity 15,000,000 gallons per Q (no need to lower your income from the cellunators, and no need to transport more ethanol down to California from Columbia than you need, so Columbia plant is a 10,000,000 gallons per Q plant, but is only producing 6,800,000 at the moment (maybe more) in total 36,800,000 gallons from the 3 plants = 92% as said above.
Then we can figure out how much better Q3 will be from the above things vs. Q2
A. $3,480,000 from a better margin
B. $ 500,000 from a better margin and higher operating capacity
C. $ 678,571 from corn oil production at the Magic Valley plant
D. $ 875,000 from the cellunators at the Stockton plant
Then the total from A,B,C,D will be $5,533,571 (and it is better than Q2)!
What I think is, Pacific Ethanol is above 92% operating capacity, because the company earn more $$ from ethanol gallons they produce themselves, than from third-party gallons. When the company was in the situation where they was losing $ per gallon the produced, it was a good idea buying third-party gallons to cover their customer contracts, but now with earnings per gallons they produce, it is a bad idea with third-party gallons instead gallons they can produce themselves.
So I think NK is at operating capacity now or close to, and then offsets in third-party ethanol.
Then it can be better than the above Q3 $5,533,571 better than Q2 (everything else would be stupid).
But anyway ... Q3 will be a lot better than the Q2
Courtisy of stock '
-----
For PEIX,
the model that I use is as follow
o Revenue 2.8 * CA ethanol spot price
o Cost : (Cash Corn - 25% cash corn for WDG revenue )
o Gross Margin per gallon = rev minus cost above / in-house gallons
o Operational and Interest = 48c 'gallon
o Profits/gallon = grosss margins/allon - 48c/gallon.
o add some corn-oil profits ... for now 5c/gallon of corn oil ( not the same volume as above since not 100% corn oil yet).
Try it, as a guess.
For the quarter, if September is computed with today's cost and revenue,
and assuming Jul and Aug are done... I get 50c/share earnings on 14.4 mil shares..
Courtisy of elahens
AI
