Pacific Ethanol Inc. (NASDAQ: PEIX) reported fiscal third-quarter 2014 earnings after markets closed Wednesday afternoon. For the quarter, the ethanol fuel maker posted adjusted diluted earnings per share (EPS) of $0.33 on revenues of $275.6 million. In the same period a year ago, the company reported a net EPS loss of $0.26 on revenues of $233.88 million. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.21 and $261.55 million in revenues.

Net sales were up 18%, which the company attributed to record total gallons sold as a result of increases in production and third-party gallons. Gross profit rose to $18 million, driven by higher production margins and more corn oil production. Operating income rose from $1 million in the year ago quarter to $13.6 million. On a GAAP basis, EPS totaled $0.15.

The company did not offer guidance, but consensus estimates for the fourth quarter call for EPS of $0.16 on revenues of $231.95 million. For the full year, analysts expect EPS of $2.42 on revenues of $1.07 billion.

Ethanol production gallons sold in the third quarter totaled 46.8 million, up from 37.1 million in the year-ago quarter. Third-party gallons sold totaled 86.9 million, up from 67.8 million a year ago. The bad news is that the sales price fell from $2.62 a gallon to $2.32 a gallon, and it is likely to fall further in the current quarter.

Investors do not need a weatherman to see which way the wind is blowing here. The ethanol suppliers, like Pacific Ethanol, can’t sell more because the market is already taking all it can at a 10% blend of ethanol to gasoline. Therefore, the price will almost certainly fall and demand will be stagnant.

Pacific Ethanol’s shares were down more than 9% at $11.60 in after-hours trading, in a 52-week range of $2.33 to $23.97. The consensus price target for the shares was $21.50 before the report.

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