Q3 2020 Pacific Ethanol Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Pacific Ethanol Inc. third quarter 2020 financial results Conference call. At this time, all participant lines, one on listen only mode.
The the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press Star then one of your telephone. Please be advised that todays conference is being recorded if you acquire any further assistance. Please press Star then zero I would now like to hand, the topic, so but to your house.
Why children with L.A.J. Investor Relations. Please go ahead.
Thank you Sarah and thank you all for joining us today for the Pacific ethanol third quarter Twentytwenty results Conference call.
On the call today are Mike can dress CEO and Bryon Mcgregor CFO Mike.
Mike will begin with a review of business highlights.
Brian will provide a summary of the financial and operating results.
Then Mike will return to discuss Pacific Ethanols outlook and open the call for questions.
Specific ethanol issued a press release yesterday, providing details of the company's quarterly results.
The company also prepared a presentation for today's call that is available on the company's website at Pacific ethanol Dotcom.
A telephone replay of today's call will be available through November 17.
The details of which are included in Yesterdays earnings press release.
A webcast replay will also be available at Pacific Ethanols website.
Please note that the information on this call speaks only as of today November 10th.
And therefore, you are advised that time sensitive information it will no longer be accurate at the time of any replay.
Please refer to the Companys Safe Harbor statement on slide two of the presentation available online.
Which says that some of the comments in this presentation constitute forward looking statements and considerations that involve a number of risks and uncertainties.
The actual future results of Pacific ethanol could differ materially from those statements.
Factors that could cause or contribute to such differences include but are not limited to events risks and other factors previously and from time to time disclosed in Pacific Ethanols filings with the SEC.
Except as required by applicable law the company assumes no obligation to update any forward looking statements.
In managements prepared remarks, non-GAAP measures will be referenced.
Management uses these non-GAAP measures to monitor the financial performance of operation and believes these measures will assist investors in assessing the company's performance for the periods being reported.
The company defines adjusted EBITDA as unaudited net income or loss attributed to Pacific ethanol before interest expense provision or benefit for income taxes asset impairment loss on extinguishment of debt purchase accounting adjustments fair value adjustments and depreciation and amortization expense.
Support the company's review of non-GAAP information later in this call a reconciling table was included in yesterday's press release.
It is now my pleasure to introduce Mike Andrus CEO Mike.
Thank you Brian. Thank you everyone for joining us today I'm excited to be with you. This morning to review the transformation P. E. Hi is undertaking to successfully repositioned the company to produce profitable sustainable results.
In the third quarter, we generated net income of $14.9 million and adjusted EBIT da of $34.1 million.
On the call today I'd like to cover three areas first I'll provide an overview of the company second I'd like to explore in greater detail the industry and markets and finally I'd like to provide some additional details around our brand strategy.
For the overview I feel it is important to emphasize that we have leveraged our strengths to transform P E hi into a leading producer of specialty alcohol and essential ingredients. In addition to renewable fuel we are focused on three key markets health home and.
Moody food and beverage and essential ingredients. These are stable nice markets generating strong demand for our products, we sell to blue chip customers and well known household brands.
Although most people when they consider alcohol think of either beverage or renewable fuel. These are the highest and lowest screech respectively.
There are actually many grades in between and a diverse number of applications in which they are used.
And our Pekin, Illinois campus, we produce multiple grades of alcohol that are then used in various consumer products that touch our lives on a daily basis.
These include products that we consume like spirits medicines and vinegar products that we use in applications like cleaning supplies paint and fertilizer and products applied topically like perfumes or hand, Sanitizers, which uses United States Pharmacopeia rate.
Alcohol.
You SP grade alcohol has certainly been in the news since March as it is used in hand, sanitizers disinfectants and cleaning supplies, we have been providing us be great product for hand, sanitizer for a long time and our customers know, we follow strict guidelines and our uniquely position.
To meet the precise consumer product specifications for each grade of alcohol we sell.
You other manufacturing facilities have this capability.
It is an advantage that we use to strengthen and deepen our customer base, including major food beverage and consumer product companies.
As mentioned last quarter, we are finalizing the refurbishment of our existing grain neutral spirits were GNS system located on wet mill.
When complete it will produce an additional 30 million gallons of our highest quality product, which is the core ingredient used in the production of distilled spirits.
Combined with the 110 million annualized gallons, we are producing today by the end of 2020, we will have increased our total annual capacity, especially alcohol to 140 million gallons. The mono majority of which will meet or exceed you Sp specifications.
This will be an increase of 65% compared to annual capacity of 85 billion gallons in 2019.
In addition to specialty alcohol and renewable fuel we also produce a central ingredients for use in high protein to applications for beef dairy aquaculture and poultry feeds and in food like edible oils for consumption by people and pets.
As an example, we produce a high value distillery she's an important ingredient used in the production of patent human food. Our unique product is in great demand given its protein and flavor enhancing characteristics. Our yeast is produced and an A.I.B. international inspected facility.
And is kosher certified.
To put our refined business focusing context, I would like to remind everyone of our history, especially for those investors who may be new to our story.
Pacific Ethanol was founded 17 years ago as a west coast renewable fuel company to meet the demand for low carbon renewable fuels.
We subsequently expanded our operations regionally by acquiring production in the Midwest and broadened our offerings with the addition of high protein feed products and distillers yeast for sales into the food industry.
We further diversified into specialty alcohol sector in July of 2017, with our acquisition of Illinois, corn processing that we referred to as ice CP.
CP is adjacent to our Pekin wet mill dry mill and East plant and in fact is separated only buy a service road.
We have now integrated the facilities into a single campus, creating significant synergies, including favorable logistics that allow us to ship product by rail truck or barge through.
This unique combination we can more efficiently produce specialty alcohol high protein feed distillers yeast and renewable fuel.
And having established a more diversified platform, we were able to adapt to changes in markets to meet changing customer needs.
This is evidenced by a change in both the amount of specialty alcohol sold and a material reduction in the amount of renewable fuel produced and sold.
In the first nine months of 2020 specialty alcohol contributed approximately 45% of our revenues compared with only 15% for all of 2019.
This excludes sales of third party renewable fuel marketed by our energy subsidiary.
Equally it is minimized our exposure to markets that have recently seen over production and demand destruction.
Let's now review the specialty alcohol submarkets, the PPI serves well.
While it represents a more niche market specialty alcohol is integral to the production of a diverse number of end products driven by consumer demand rather than regulatory mandate space.
Specialty alcohol prices typically seed prices for renewable fuel, which provides an opportunity to earn higher margins than in the fuel market.
Several factors materially contribute to the reason for these premiums.
Roughly these products require additional equipment and processes folks in production and quality assurance as well as technical know how.
Further customers are focused first and foremost on quality and consistency and.
And finally specialty alcohols are not quoted commodities like fuel and generally do not trade in the spot market. Consequently, our customer contracts tend to be longer term arrangements with negotiated fixed prices based on customer requirements for volume and quality.
To put the pricing in perspective, historically, the higher the quality of the product the higher the price relative to renewable fuel there are of course periodic exceptions to this approach.
A perfect example is pricing for alcohol is used to make hand, sanitizers and disinfectants as demand materially outstrip supply in the first months of the cobot pandemic spot prices for this product significantly exceeded prices for more premium products.
Well the hand Sanitizers segment of the market continues to be highly dynamic spot demand has decreased and so to prices have come off the peeps seen in the second quarter.
Nevertheless, specialty alcohol premiums to renewable fuel currently remains greater than historic averages contributing to our optimistic outlook for 2021 and beyond.
To this point there are two particular market drivers I'd like to mention that give rise to our optimism.
The first is the increasing use of alcohol base Sanitizers as a result of Cove at 19, we.
We have seen significant increases in demand for specialty alcohols. The go into Sanitizers and disinfectants, such as Germany, and lysol that are being used in hospitals restaurants offices and schools.
We believe that when everyone starts to go back to the office or dining out or even concerts sanitizing and disinfecting demand will remain strong because people. We use these products frequently outside of their homes and businesses will be required to provide sanitary social.
Environments with continuing need for sanitizer products, we expect the demand will continue to have strong tailwinds.
A second longstanding tailwind is the continued growth in distilled spirits consumption.
As I discussed earlier, we are adding 30 million gallons of GNS production capacity in the fourth quarter to meet this rising demand.
To wrap up on markets I'd like to affirm that we will continue to produce and market renewable fuel over the last few years in the renewable fuel market have been challenging we are now seeing some signs of improvement.
Turning to our growth strategy in the near term, we are broadening our addressable market by obtaining enhanced certifications in.
In October we obtained our ISO 9001 certification that is the worlds most widely recognized quality management system certification.
We also are pursuing two additional certifications IC HQ, seven which sets forth good manufacturing practices for active pharmaceutical ingredients and X APAC, which set standards for each sippy in safety and quality.
We expect final audits for both these certifications by the end of 2020.
We have committed significant human and financial resources to obtain the highest certifications available.
With the consultation in support of our customers. We are further differentiating our offerings to strengthen our quality assurance programs and procedures.
This will be important domestically as the market raises the bar on product quality requirements and internationally to provide product to a growing export markets.
In addition, there are many attractive investment opportunities in our portfolio that we can now undertake with the support of our strengthened balance sheet.
For example, we are investing in the expansion of the capacity of our east facility, increasing its annual production by approximately 15% we.
We are starting the project this quarter and expect to completed in Q3 of 2021.
The project will require relatively low capital investment of five and a half million dollars and is expected to produce a payback in less than two years.
We also are actively pursuing a strategic realignment plan through selling or repurchasing our western renewable fuel plants.
We took the first step with our announced sale of 134 acres, the rail loop and grain grain handling assets at our Magic Valley plant in Burnley, Idaho for $10 million. The sale is expected to close on or before the end of this month and the proceeds will be used to prepay debt.
We are pleased we were able to monetize idled assets at an accretive value.
We will retain the alcohol production facility in terminal on the remaining 25 acres and will provide grain handling operations and maintenance services to the acquirer of the grain handling assets.
We will continue to update you on other initiatives to re purpose or sell our western assets.
And now I'll turn the call over to Brian to review the financial results in further detail.
Brian Thank you Mike.
For the third quarter of 2020, net sales were $205 million compared to $212 million in the second quarter.
The decline, resulting from the reduction in production gallons sold due to the anticipated, Illinois River closure in the third quarter.
Net sales were down by $161 million as compared to the same period in 2019 reflect reflecting the idling of most of our renewable fuel production.
We have built most of our renewable fuel commitments to third party trading resulting in no material change in third party gallons sold year over year for the same period.
Cost of goods sold was $184 million, which resulted in gross profit of $21 million compared to a gross profit of $31 million in the prior quarter. The decrease this quarter reflects the significant logistical constraints, we experienced by the anticipated, Illinois River closure requiring.
Greater use of less cost effective modes of transportation like rail and truck that translated into higher than typical costs.
Depletion of the lock repairs in mid to late October by the Army Corps of engineers.
Was approximately 30 days beyond the original anticipated date.
Cost of goods sold also included approximately $4.5 million and gross loss.
Associated with our idled production.
We expect these costs to be lower going forward as we implement our strategic initiatives and repositioning or monetizing.
Well facilities.
As gene expenses were $6.4 million compared to $8.6 million in the second quarter.
Reflecting our ongoing cost cutting efforts, particularly related to professional services.
As previously noted we expected general as unit expenses to be lower in the second half of 2020, and we continue efforts.
To resolve our remaining debt issues and further reduced professional costs.
Income available to common shareholders was $14.9 million or 24 cents per diluted share compared to income of $14.6 million or 27 cents per share in the second quarter.
Adjusted EBITDA.
It was positive $34.1 million up from $20.8 million in the second quarter of 2020.
Included in third quarter, EBITDA was $11.8 million from a settlement in favor in our favor of a commercial dispute.
We are reaffirming our second half of 2020 guidance of adjusted EBITDA between 50 and $70 million.
And 66 and $86 million for the full year.
Regarding 2021, the majority of our specialty alcohol production has already been contracted at fixed prices.
For terms of one year or more we look forward to providing our outlook for 2021, when we report our fourth quarter and year end 2020 results.
Turning to our balance sheet.
At September Thirtyth, 2020, our cash and cash equivalents were $38.7 million compared to $29.8 million at June Thirtyth 2020.
For the quarter, we reduced our total debt outstanding by $29.3 million comp.
Combination of $23 million in our term debt.
And $6.3 million.
In our lines of credit.
As a result, we have reduced our net debt by approximately $100 million from December 31st 2019 to September Thirtyth 2020.
And we have the potential to be net debt free in 2021.
Subsequent to quarter end, we closed an underwritten public offering.
Of common stock and concurrent private offering of warrants.
For initial total proceeds of approximately $70 million $75 million integral.
Integral to the private warrant issuance is the company sold right to determine if in the money warrants will be exchanged cashless and net share settlements for free cash. This option will allow us to assess in the future it would be better for us to use the cash proceeds or two instead minimize dilution and exercise our cash flow settlement.
Options we.
We intend to use the net proceeds of approximately $70 million to reduce debt and for general corporate purposes.
Repaying a portion of our senior notes and term loan, which have interest rates of 15% and 7% respectively.
Using proceeds from the equity offering is expected to be accretive to 2020 earnings per share on a pro forma basis.
Selling equity when we did that a favorable stock price was both timely and necessary.
We consider all available alternatives beforehand and concluded that we should seize the opportunity presented by the capital markets to act to creatively resolve our longstanding lender issues bolster our balance sheet reestablished normal credit terms with our vendors and suppliers.
And give comfort to our customers further the dramatic improvement in our cash resources allows us to better focus on accelerating our investment in profitable growth initiatives.
With that I'd like to turn the time back to Mike. Thank you Brian.
Before we open up the call for Q and a I'd like to highlight three key takeaways from our prepared remarks first PE is transforming to a stable high margin business. We have already successfully transitioned production to approximately 50% specialty alcohol.
Yes, as previously mentioned, we are focused on the health home and beauty food and beverage.
And essential ingredients markets. These are well established markets that we'll continue to see long term demand.
We are investing in quality assurance and certifications to expand addressable customers and markets and we expect long term tailwinds from continued growth in demand for specialty alcohol sales and essential ingredients second we are improving our balance sheet well and.
Floyd disciplined conservative financial policies and third with our strengthened balance sheet. We are now able to move towards executing on investment opportunities in our portfolio. The first of which is the expansion of the processing capacity of our east facility.
We believe there are multiple projects with attractive return on investments and we look forward to updating you as we take further steps.
I'll leave you with that and ask the operator to open the queue and aim for questions operator.
Thank you as a reminder to ask a question you need to press Star then one of your telephone to withdraw your question. Please press the pound key.
Our first question comes from the line of Eric Stine with Craig Hallum. Your.
Your line is now open.
Yes, good morning, Michael Brian Aaron Spychalla on for Eric Thanks for taking the question.
Morning, Arent Hi, Aaron.
Hello.
Maybe first on the specialty alcohol.
Really great information you kind of put in your in your recent slide deck.
At a high level can you just kind of give.
From from.
Color on just how the production breaks down between those various blocker and just some kind of ranges.
Use within those buckets and then maybe.
Maybe just talk a little bit about how you think about the trade off between pricing and contract duration as you look.
Those areas.
Yes, Aaron so we don't actually provide that level of detail I guess, what I would say, though is as you can imagine that there's probably.
In relation to pre coven that theres, a significant the higher balance that's going to and Sanitizers disinfectants at the moment.
That being said there is a significant portion of those specialty our goals going both across the spectrum from industrial up through.
GNS or effectively beverage grade alcohols.
And then I think your second part of your question was.
What is the nature of those contracts those contracts.
Does trialed some degree that may be a little bit shorter.
Those are as an example, industrial for export those maybe a shorter nature, but the rest of the the other specialty alcohols.
Our usually.
Six months to a year or.
Or longer.
Okay understood. Thanks for the color and then.
Yes, as we think about the vaccine news yesterday and Mike you had some commentary in your prepared remarks on your thoughts on demand I mean, what are you hearing from your customers on how they.
Our thinking the demand picture looks like as we head into next year and beyond hearing.
Hearing from a few of them it sounds like it's something that that they think is going to be here for quite some time.
Yeah, I would I would say air and that the what we're hearing from our customers course, everybody's trying to figure out what the new normal is going to look like.
Going forward the indications that we have received back from our customers. They feel that there is going to be a definite shift in the demand going forward people are going to even with the vaccine people are going to be more sensitive.
To what we've just gone through and.
I think you will see that wave rental cars are treated now.
What what hotels and motels are going through schools.
And any kind of a social environment I think people are going to be very cautious. So what we're hearing from our customers is there still going to be increased demand with that ultimately ends up with.
We're not sure and that's one reason why we're not just solely focused on that segment of the market was specialty alcohol. We were really looking at a whole variety of consumer products.
And part of that part of the motivation with the certifications is to make sure that we can continue to.
Developed further.
Further places for our specialty alcohols.
Okay, and then maybe last from me just on the on the reinvestment opportunities.
The.
The balance sheet improve being able to deploy some capital there.
Are there any other examples you can give and just maybe some color on the capital investment may be required.
Payback periods for any of those opportunities as well.
Yes. So I think my gave a couple of them mode clearly the GNS system, which was revenue you're looking at about six and a half $7 million of expenditure that we will believe effectively completed this year.
In addition, you've got another five and a half million dollars associated with.
[music].
With the use that I guess I'd call. It the first first of what could be a series of it of expansion our capacity expansions at your use facility.
There is also I think it's fair to represent the Theres a number of pent up projects and opportunities that are available just within our own system that we've not been able to invest capital in.
And if you will exploit.
Given the end of the difficulties in the.
Transportation fuel market for the last three or four years, and where we've had to redeploy capital instead into debt repayment and the like.
We have and.
I guess there was all there is also opportunities to think about if you can if you would capturing more of the value chain.
And providing some of those services differentiating with how you deliver product we are both deliver product.
We shipped by rail trucking and barge and available this supply product and smaller packages and the like is an interesting opportunity.
But until we actually have committed projects, we're going to withhold describing specifically, what we intend to do and hopefully we'll be able to give you. Some color on our next call about 2021, where we're going to reinvest dollars and and and.
In return, but I would say finally that.
We're looking at projects that have less than two year payback for this that's a very accretive return on investment for for shareholders and for the company.
Right. Okay. Okay, we'll stay tuned there thanks for taking the questions I'll hop back in queue.
Thank you.
Next question comes on the line of Amit Dayal with HC Wainwright. Your line is now open.
Thank you good morning, Mike Good morning, Brad.
Thanks for taking my questions.
Good morning.
With respect to sort of your debt burden quarterly debt burden, how should we think about you know how this will play out in 2021 relative to.
2020, I mean, if you could give us a sense of how we should be modeling and I know you said.
Would be potentially net decree with in terms of how we should potentially model. This on a quarterly basis, if you could give us some direction.
I guess I'd say generally this is it doesn't it does no good to have cash on our balance sheet and debt on our balance sheet. This chain paying 7%, 50%. So we're working quickly with our lenders to.
To repay that debt.
As much as possible in a in a rational way.
And address any remaining issues.
So I guess I would say is.
And if things aligned the way, we'd like to I would expect that most of that will be repaid on or before year end.
There may be still some residual and and we'll address that in 2021.
Look on or before year end 2020, or 2020, yes, sorry, so yes, we should address it before year end or by year end. This year and and then we will have a residual maybe running into 2021.
But that that would not be thats related to the term debt not necessarily to our.
Functioning and.
And productive low cost working capital line of credit.
Thank you for that Brian.
Are there any additional drilling potential gains.
That may play out in the fourth quarter.
Additional gains as well as Mike mentioned, we're working on we want to this clearly monetize or re repo.
Repositioned, our our western assets.
[music].
And.
So as I think we noted you can see that we had and we incurred about four and a half million dollars and cost associated gross.
Gross loss.
In the quarter for those assets so it's not.
Idling. These plans is not a cheap alternative and certainly the lease cost into alternative at the moment.
As compared to the third returning into operation, but given current margins for most of those plants, except for the dry mill at peak in which would be profitable.
But it certainly makes sense for us to either to be quick and and resolute about what we're doing on those on those with regard to this plan.
Understood and then with respect to sort of the outlook for 2021, it looks like you have.
No.
Okay visibility on the pricing youre going to see it.
The variability is going to come from the volume side, especially related to you know.
Products is bringing to those markets.
Yes, I think Thats fair I mean, clearly the contracts are for volumes and price but.
As Mike mentioned earlier that our customers are have expectations there.
We are working as well with.
With their final.
Final consumers in or out.
Outlets retail outlets and the like.
But it wouldn't do anyone any good as an example to.
Force customers to take product that hasn't had cleared the show to make room for so really I guess the way that we would think about it is that if as an example, there wasn't as much volume as we otherwise contracted for that that would be pushed into 2022. So it's not a question of.
If but when.
And how you work with customers in a good good business practices.
I guess you could hold your customers due to the fire, but that wouldn't be particularly productive.
Nor would it be long term type of relationship building.
Building.
Listen just last one for me.
Could you give us some color on.
What margins are going to look like once the business has been sort of invested in.
We've been would this be sort of accretive to current levels of margins.
Yes, I mean, I think what Weve often indicated is is if you look in our U.S product.
It's in multiples of what you would otherwise make illustrates right on a dry distillers grain basis somewhere between.
No.
Call it.
And if you're paying if you're running at a 100 bucks.
10 times that for the U.S now you're not generating that same kind of volume product.
Product, but that being said if I think you can probably do the math, if we're going to spend five and a half million Bucks and bill pay back in less than two years.
To give you an idea for 15% increase in that use product the benefits of doing that you certainly here in this space a lot of disk.
Discussion.
Renewable fuel producers and ethanol producers.
Of looking to high grade and take advantage of these.
What is effectively.
Pro team.
Deficit.
In the world right and so there's opportunities to continue to produce that that protein and if you can produce more of that from these facilities.
That's a that's a real winner.
And the benefits that we have is we have a wet mill right now that.
Well you know.
Its unique or generally unique in this space.
Good and then provides great co product return for our company that theres still opportunities to to be more efficient in what we do with that with that volume and then as well again to reposition our dry mills.
Be able to take advantage of some of those additional protein.
Values.
Okay.
Thank you guys. That's all I have I appreciate it okay. Thank you.
Thank you as a reminder to ask a question you need to press Star then one on your telephone.
Our next question comes from the line of Corson with VW as financial your line is now open.
Hi, I just wanted to first ask it the majority of the contracts you've entered into for next year is that based off of 140 million gallons or 85 million gallons.
Yes, it's it's based off the higher capacity.
Okay and then.
On the competitive landscape you guys have talked a lot about the.
Especially alcohol seeing less and less competition because of the FDA rules is that changing pricing at all for you.
The change in pricing.
And as Mike mentioned in the prepared remarks, you certainly not seeing the prices that you saw what was otherwise in a supply deficient in Ohio peak period that being said we are still seeing prices that are in on average above those that we've seen historically, so I think thats being.
Captured across the value chain.
Of of the various specialty alcohol.
And then it of course is so dynamic related changes from day to day right. We haven't we have the vaccine. We have vaccines that are no longer approved they're going to take longer they are going to take shorter you've got product that sitting on the shelf that Nelson. This is no longer accepted because of changes in regulations.
So you effectively have customers now are really demanding higher quality product, they're not waiting for regulatory changes earlier.
They are saying we want we want the.
The lower.
Right the lower required products due to be off the shelf and demanding basically the higher quality products SP grade product going forward.
Yes, I would just add to that excuse me that.
In in addition to what's going to happen in their hand sanitizer market.
A lot of the things that we're doing to position the company really are too.
To look at different consumer products, and and really broaden our reach.
If you look back even into 2019 are specialty alcohol that we were producing the 85 million.
Million going into this year.
Going into 2020 was a was a profitable was a good margin business and.
Again, what we saw when in Q2, when when everything spiked.
There was a spot market.
That.
Took that took that up substantially but we really are focusing on the longer term to look at a variety of consumer products and making sure that we're positioned with our alcohol specialty alcohol production.
We can tap into a variety of markets not just hand sanitizer.
Okay, and how fast would you be able to change here.
The composition of different alcohol given demand changes up on you.
We have tremendous flexibility in our production and.
The other thing that we're doing is making sure that all of our production.
Can meet very high standards and to give us that flexibility and with GNS that is that the highest.
Quality product that we can produce and will have expanded capability in that area also.
And my name is Brian and just one thing I mentioned as well as maybe to bring to the point.
As as Mike mentioned in it we are producing in 2019.
5 million gallons that.
That was pre coated right and so hand, sanitizers made a relatively modest portion of that business, but.
Well, we certainly expect to not only continue to bid to produce that and it's not as if demand significantly diminished on that product is just that you saw a spike in what was otherwise a.
Fairly small.
Small portion of the specialty alcohol market, France advertisers. So you certainly can make have the benefit of that but also you still have the business and and the desire and the and the opportunity to continue to expand.
In the other areas.
Okay, great. Thank you.
Okay. Thank you.
Thank you. This concludes today's question and answer session I would now like to turn the call back to my candidacy OPEC closing remarks.
Thank you for joining us today, we are very proud of the progress we have made so far and fully believe with our refined focus on products and markets with strong growth trends. This will enable us to deliver greater and more consistent profitability for our shareholders. We will be at two upcoming virtual investor.
Our conferences Stifel on November 12, and Craig Hallum on November 17, and we look forward to continuing our dialogue as we make further progress again want to thank everybody for your support at Pacific ethanol and have a good day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
[music].