EXHIBIT 99.1
 
 

 
Company IR Contact:
IR Agency Contact:
Media Contact:
Pacific Ethanol, Inc.
Becky Herrick
Paul Koehler
916-403-2755
Lippert/Heilshorn & Assoc.
Pacific Ethanol, Inc.
866-508-4969
415-433-3777
503-235-8241
Investorrelations@pacificethanol.net
paulk@pacificethanol.net

PACIFIC ETHANOL, INC. REPORTS
SECOND QUARTER 2011 FINANCIAL RESULTS
   
 
Record net sales and total gallons sold
       
    o
Net sales for the second quarter of 2011 grew 180% over the same period in 2010
       
    o
Total gallons sold for the second quarter of 2011 increased 54% over the same period in 2010
       
 
Adjusted EBITDA for the second quarter of 2011 improved to $1.2 million from a loss of $6.7 million in the same period of 2010
     
Sacramento, CA, July 28, 2011 – Pacific Ethanol, Inc. (NASDAQ: PEIX), the leading marketer and producer of low-carbon renewable fuels in the Western United States, reported its financial results for the three- and six-month periods ended June 30, 2011.
  
Neil Koehler, the company’s president and CEO, stated: “In the second quarter of 2011, Pacific Ethanol achieved the highest revenues and gallons sold in our company’s history.  We have recorded our eighth consecutive quarter of growth in gallons sold, delivering a compound annual growth rate of 70 percent. These results reflect the strength of our diversified business strategy with strong performance in our marketing business, margin improvements at the Pacific Ethanol plants, and solid recurring revenues from our asset management business.  Overall ethanol market conditions continue to improve, as demonstrated by stronger producer margins in July and we are well-positioned to generate positive operating income.”
   
 
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Financial Results for the Three Months Ended June 30, 2011
Net sales were at an all-time high of $214.6 million for the second quarter of 2011, compared to $76.8 million for the second quarter of 2010. Total gallons sold were 100.6 million for the second quarter of 2011, an increase of 54% over the 65.4 million gallons sold in the second quarter of 2010. The increase in net sales was primarily driven by the continued strength in Kinergy’s marketing business with a 49% increase in third party gallons sold and a 67% increase in average sales price per gallon. In addition, the second quarter 2011 results include the impact of the Stockton plant being in operation whereas it was idled during the second quarter of 2010.

Gross profit was $1.3 million for the second quarter of 2011, compared to a gross loss of $2.7 million in the second quarter of 2010. The increase in gross profit was attributable to an improving commodity margin environment and the contribution from the three Pacific Ethanol plants that were operational during the period. SG&A expenses, including professional fees, were $4.1 million in the second quarter of 2011, compared to $3.2 million for the second quarter of 2010 when $2.7 million of the professional fees were recorded as reorganization costs. Operating loss for the second quarter of 2011 improved to $2.8 million from $5.9 million for the same period in 2010.

During the second quarter of 2011, the company recorded a non-cash gain of $1.9 million for fair value adjustments on convertible notes and warrants, representing the company’s quarterly fair value adjustments. The company anticipates that it will continue to revalue the convertible notes and warrants on a quarterly basis.

Net income available to common stockholders for the second quarter of 2011 was $435,000, compared to net income of $107.8 million for the second quarter of 2010, which included a gain from bankruptcy exit of $119.4 million. Adjusted EBITDA, which excludes the fair value adjustments and gain from bankruptcy exit, improved to $1.2 million for the second quarter of 2011 from a loss of $6.7 million in the second quarter of 2010.
   
 
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Financial Results for the Six Months Ended June 30, 2011
For the six months ended June 30, 2011, net sales were $387.7 million, compared to $148.0 million in the same period in 2010. For the first six months of 2011, net income available to common stockholders was $141,000, compared to $96.1 million in the same period in 2010, which included the non-cash gain from bankruptcy exit of $119.4 million. Adjusted EBITDA for the first six months of 2011 was a positive $2.7 million, an improvement from a loss of $13.2 million for the first six months of 2010.

Earnings Call
Management will host a conference call at 2:00 p.m. PT/5:00 p.m. ET today, Thursday, July 28, 2011. Neil Koehler, Chief Executive Officer, and Bryon McGregor, Chief Financial Officer will deliver prepared remarks and conduct a slide presentation via webcast followed by a question and answer session. To listen to the conference call, United States callers may dial (877) 847-6066 up to ten minutes prior to the scheduled call time. International callers should dial 00-1-(970) 315-0267. The access code will be 85112183#.

The webcast for the call can be accessed from Pacific Ethanol’s website at www.pacificethanol.net. If you are unable to participate, the webcast will be archived for replay on Pacific Ethanol’s website for one year. In addition, a telephonic replay will be available beginning at 8:00 p.m. ET on Thursday, July 28, 2011 through 11:59 p.m. ET on Wednesday, August 3, 2011. To access the replay, please dial (855) 859-2056. International callers should dial 00-1-(404) 537-3406. The pass code will be 85112183#.

Reconciliation of Adjusted EBITDA to Net Income (Loss)
Management believes that certain financial measures not in accordance with generally accepted accounting principles (“GAAP”) are useful measures of operations. The company defines Adjusted EBITDA as unaudited earnings before interest, taxes, depreciation and amortization, fair value adjustments and gain from bankruptcy exit. The table at the end of this release provides a reconciliation of Adjusted EBITDA to net income (loss) attributed to Pacific Ethanol, Inc. Management provides an Adjusted EBITDA measure so that investors will have the same financial information that management uses, which may assist investors in properly assessing the company’s performance on a period-over-period basis. Adjusted EBITDA is not a measure of financial performance under GAAP, and should not be considered an alternative to net income (loss) or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Adjusted EBITDA has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of the company’s results as reported under GAAP.
  
 
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About Pacific Ethanol, Inc.
Pacific Ethanol, Inc. (NASDAQ: PEIX) is the leading marketer and producer of low-carbon renewable fuels in the Western United States. Pacific Ethanol also sells co-products, including wet distillers grain (WDG), a nutritional animal feed. Serving integrated oil companies and gasoline marketers who blend ethanol into gasoline, Pacific Ethanol provides transportation, storage and delivery of ethanol through third-party service providers in the Western United States, primarily in California, Nevada, Arizona, Oregon, Colorado, Idaho and Washington. Pacific Ethanol has a 20% ownership interest in New PE Holdco LLC, the owner of four ethanol production facilities. Pacific Ethanol operates and manages the four ethanol production facilities, which have a combined annual production capacity of 200 million gallons. The facilities in operation are located in Boardman, Oregon, Burley, Idaho and Stockton, California, and one idled facility is located in Madera, California. The facilities are near their respective fuel and feed customers, offering significant timing, transportation cost and logistical advantages. Pacific Ethanol’s subsidiary, Kinergy Marketing LLC, markets ethanol from Pacific Ethanol’s managed plants and from other third-party production facilities, and another subsidiary, Pacific Ag. Products, LLC, markets WDG. For more information please visit www.pacificethanol.net.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
With the exception of historical information, the matters discussed in this press release including, without limitation, the ability of Pacific Ethanol to continue as the leading marketer and producer of low-carbon renewable fuels in the Western United States; Pacific Ethanol’s view that market conditions continue to improve; and Pacific Ethanol’s view of its position to generate positive operating income are forward-looking statements and considerations that involve a number of risks and uncertainties. The actual future results of Pacific Ethanol could differ from those statements. Pacific Ethanol refers you to the “Risk Factors” section contained in its most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2011 and in its most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 13, 2011.

(Tables follow)
  
 
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PACIFIC ETHANOL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
     
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Net sales
  $ 214,593     $ 76,758     $ 387,741     $ 148,048  
Cost of goods sold
    213,310       79,487       383,894       153,825  
Gross profit (loss)
    1,283       (2,729 )     3,847       (5,777 )
Selling, general and administrative expenses
    4,059       3,177       8,247       6,333  
Loss from operations
    (2,776 )     (5,906 )     (4,400 )     (12,110 )
Fair value adjustments on convertible debt and warrants
    1,929             2,855        
Loss on extinguishments of debt
          (544 )           (2,159 )
Interest expense, net
    (3,628 )     (1,271 )     (7,266 )     (2,863 )
Other expense, net
    (200 )     (421 )     (543 )     (466 )
Loss before reorganization costs, gain from bankruptcy exit and income taxes
    (4,675 )     (8,142 )     (9,354 )     (17,598 )
Reorganization costs
          (2,714 )           (4,153 )
Gain from bankruptcy exit
          119,408             119,408  
Provision for income taxes
                       
Net income (loss)
    (4,675 )     108,552       (9,354 )     97,657  
Net loss attributed to noncontrolling interest in variable interest entity
    (5,425 )           (10,122 )      
Net income attributed to Pacific Ethanol
  $ 750     $ 108,552     $ 768     $ 97,657  
Preferred stock dividends
  $ (315 )   $ (798 )   $ (627 )   $ (1,588 )
Income available to common stockholders
  $ 435     $ 107,754     $ 141     $ 96,069  
Net income per share, basic
  $ 0.03     $ 10.95     $ 0.01     $ 10.61  
Net income per share, diluted
  $ 0.03     $ 10.01     $ 0.01     $ 9.71  
Weighted-average shares outstanding, basic
    16,768       9,842       15,183       9,057  
Weighted-average shares outstanding, diluted
    16,768       10,847       15,183       10,062  
   
 
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PACIFIC ETHANOL, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value)

ASSETS
 
June 30,
2011
   
December 31,
2010
 
Current Assets:
           
Cash and cash equivalents
  $ 9,832     $ 8,736  
Accounts receivable, net
    34,281       25,855  
Inventories
    20,851       17,306  
Prepaid inventory
    6,141       2,715  
Other current assets
    2,057       2,712  
Total current assets
    73,162       57,324  
Property and equipment, net
    164,483       168,976  
Other Assets:
               
Intangible assets, net
    4,920       5,382  
Other assets
    2,135       2,401  
Total other assets
    7,055       7,783  
Total Assets
  $ 244,700     $ 234,083  
   
 
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PACIFIC ETHANOL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value)

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
June 30,
2011
   
December 31,
2010
 
Current Liabilities:
           
Accounts payable – trade
  $ 9,853     $ 6,472  
Accrued liabilities
    2,783       3,251  
Current portion – long-term debt
    26,384       38,108  
Total current liabilities
    39,020       47,831  
                 
Long-term debt, net of current portion
    100,190       84,981  
Accrued preferred dividends
    6,677       6,050  
Other liabilities
    2,723       7,406  
Total Liabilities
    148,610       146,268  
Commitments and Contingencies
               
Stockholders’ Equity:
               
Pacific Ethanol, Inc. Stockholders’ Equity (Deficit):
               
Preferred stock, $0.001 par value; 10,000 shares authorized;
Series A: 0 shares issued and outstanding as of June 30, 2011 and December 31, 2010
Series B: 927 shares issued and outstanding as of June 30, 2011 and December 31, 2010
    1       1  
Common stock, $0.001 par value; 300,000 shares authorized; 19,511 and 12,918 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively
    20       13  
Additional paid-in capital
    522,872       504,623  
Accumulated deficit
    (511,653 )     (511,794 )
Total Pacific Ethanol, Inc. Stockholders’ Equity (Deficit)
    11,240       (7,157 )
Noncontrolling interest in variable interest entity
    84,850       94,972  
Total Stockholders’ Equity
    96,090       87,815  
Total Liabilities and Stockholders’ Equity
  $ 244,700     $ 234,083  
    
 
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Reconciliation of Adjusted EBITDA to Net Income (Loss)

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
(in thousands) (unaudited)          
 
2011
   
2010
   
2011
   
2010
 
Net income attributed to Pacific Ethanol
  $ 750     $ 108,552     $ 768     $ 97,657  
Adjustments:
                               
Interest expense*
    1,447       1,271       2,981       2,863  
Interest income*
 
   
   
   
 
Fair value adjustments
    (1,929 )  
      (2,855 )  
 
Gain from bankruptcy exit
 
      (119,408 )  
      (119,408 )
Depreciation and amortization expense*
    897       2,847       1,769       5,708  
Total adjustments
    415       (115,290 )     1,895       (110,837 )
Adjusted EBITDA
  $ 1,165     $ (6,738 )   $ 2,663     $ (13,180 )
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* Adjusted for noncontrolling interest in variable interest entity for the three and six months ended June 30, 2011.


Commodity Price Performance
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
(unaudited)          
 
2011
   
2010
   
2011
   
2010
 
Ethanol production gallons sold (in millions)
    38.1       23.5       75.0       43.2  
Ethanol third party gallons sold (in millions)
    62.5       41.9       110.1       80.9  
Total ethanol gallons sold (in millions)
    100.6       65.4       185.1       124.1  
                                 
Ethanol average sales price per gallon
  $ 2.79     $ 1.67     $ 2.67     $ 1.74  
Corn cost – CBOT equivalent
  $ 7.30     $ 3.55     $ 6.96     $ 3.62  
                                 
Total co-product tons sold (in thousands)
    353.6       207.2       694.2       403.8  
Co-product return % (1)
    22.3%       22.7%       22.5%       21.9%  
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 (1) Co-product revenue as a percentage of delivered cost of corn.

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