Pacific Ethanol CEO expects rapid expansion of ethanol industry
Pacific Ethanol Inc. (Nasdaq:PEIX) CEO Neil Koehler said the Sacramento, Calif.-based firm believes the United States ethanol industry will continue its robust growth. During a morning conference call with investors, the chief executive said corn supply can match the rapidly expanding production of ethanol and “when it can’t, the technology to convert cellulose to ethanol will be commercially viable.”
Soaring oil prices are enabling ethanol industry growth, he said.
“We are encouraged with ethanol market developments,” Koehler said. “With the high price of oil, limited and expensive opportunities to expand oil production and a robust renewable fuel standard, we do believe the domestic ethanol industry will continue a rapid expansion.”
Koehler said Pacific Ethanol’s customers are “aggressively increasing” their use of ethanol. In 2007, he said the U.S. ethanol industry produced approximately 6.5 billion gallons of ethanol and in 2008, the industry will produce an estimated 9.7 billion gallons to meet a renewable fuel standard requirement of 9 billion gallons. He said the fuel standard requirement will grow to 10.5 billion gallons in 2009 for conventional bio-fuels.
On Friday, Pacific Ethanol announced that it secured $40 million in new equity financing.
“Based on this new equity, we feel we have adequate working capital and financing for 2008,” CFO Joe Hansen said.
Pacific Ethanol was faced with a cash crisis, after incurring construction cost overruns of $27 million during the fourth quarter.
After Thursday’s close, Pacific Ethanol reported fourth-quarter revenue of $130.4 million, from $80.6 million a year earlier. Wall Street analysts expected $122.2 million in revenue.
The firm’s quarterly loss widened to $14.7 million, or $0.40 per share, from a loss of $3.1 million, or $0.11 per share, during the year-ago period. Analysts anticipated a loss of $0.17 per share.
In afternoon trading, PEIX shares are down 5.15%, or $0.25, at $4.60. Over the last 52 weeks, shares have ranged from $4.20 to $17.52.
