Good day, ladies and gentlemen, and welcome to the Pacific Ethanol First Quarter 2012 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference over to Becky Herrick of LHA. You may begin.

Thank you, operator, and thank you, everyone, for joining us today for the Pacific Ethanol First Quarter 2012 Results Conference Call. On the call today are Neil Koehler, President and CEO; and Bryon McGregor, CFO. Neil will begin with a review of business highlights, and then Bryon will provide details on the company's quarterly financial and operating results. Then Neil will return to discuss Pacific Ethanol's vision and open the call for questions. Before we get underway, let me first inform you that Pacific Ethanol issued a press release this afternoon that provides details of the company's quarterly financial and operating results. The company also prepared a presentation for today's conference call available for download on the company's website at www.pacificethanol.net. If you have any questions, please call LHA at (415) 433-3777. A telephone replay of today's call will be available until 11:59 p.m. Eastern Time on Wednesday May 16, 2012, the details for which are included in today's press release. A webcast replay will also be available at Pacific Ethanol's website. Please note that information in this call speaks only as of today May 10, 2012, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay. Before we begin, I will review a Safe Harbor statement. Management's comments today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Information about the potential factors that could affect the company's financial results is available in the company's risk factors as updated in the company's SEC filings. With the exception of historical information, the matters discussed in this conference call, including without limitation, stability of Pacific Ethanol to continue as a leading marketer and producer of low-carbon renewable fuels in the Western United States, the…

Thank you, Becky, and thank you all for joining us on the call today. For the first quarter of 2012, we reported growth of 14% in revenue and 36% in total gallons sold year-over-year and a 67% increase in third-party gallons sold over the same time frame. While an unfavorable industry-wide market environment impacted our bottom line this quarter, we are encouraged by signs of improvement as the ethanol market moves toward a better supply and demand balance. Currently, U.S. ethanol production is down approximately 10% from peak levels of late last year. Ethanol demand is increasing as we approach the peak summer driving season, and ethanol inventories, while still relatively high, are beginning to decline, down almost 4% just last week as reported by the Department of Energy. Consequently we believe the remainder of 2012 will demonstrate stronger commodity margins. This is a pattern that we have seen for the last number of years with the first quarter demonstrating the lowest margin of the year, margins then recover in the second quarter and strengthen in the third and fourth quarters. We continue to execute on our plan to take advantage of extraordinary opportunities in the growing biofuels industry. And while we, like others in the ethanol industry, were negatively impacted by historically poor margins in the first quarter, our progress to date in growing revenues, improving operating efficiencies, reducing debt, lowering costs and strengthening liquidity over the past 18 months, puts us in a much better financial position to weather the storms in economically challenging times and prosper and grow the business when market conditions permit. Today, we are more confident than ever that our industry expertise and diversified business model positions Pacific Ethanol for profitable growth and will enable us to gain market share in the markets we…

Thank you, Neil. For the first quarter of 2012, we reported net sales of $198 million, which grew 14% compared to $173 million for the first quarter of 2011. However, net sales were down 18% sequentially due to the average sales price per gallon decreasing 16% from last quarter. Total gallons sold increased 36% to 115 million gallons in the first quarter of 2012 compared to 85 million gallons in the prior year's quarter. Gross loss for the first quarter of 2012 was $7.5 million compared to gross profit of $2.6 million for the first quarter of 2011. The decrease in gross profit was attributable to the unfavorable commodity margin environment. SG&A expenses, including professional fees, were $3.4 million in the first quarter of 2012 compared to $4.2 million for the first quarter of 2011. Net loss available to common stockholders for the first quarter of 2012 was $5.3 million or $0.06 per share compared to a net loss of $294,000 or $0.02 per share for the first quarter of 2011. Adjusted EBITDA, which excludes fair value adjustments, was negative $2.5 million for the first quarter of 2012 compared to a positive $1.5 million in the first quarter of 2011. Turning to our balance sheet, working capital was $46 million at March 31, compared to $58 million at December 31, 2011. This decrease in working capital is attributable to a reduction in cash and inventories, which, in turn, stem from poor margins and reductions in plant production. Although the cash impact is unfavorable, the company's overall liquidity position remains strong with cash in excess working capital line availability totaling approximately $27 million as of March 31. In addition, we recently announced improvements in the financial terms of our line of credit for Kinergy, which effectively increases the total amount of credit facility from $35 million to $40 million, including a $10 million accordion feature. It extends the term by 2 additional years to the end of 2015 and folds in Pacific Ag Products accounts receivable as an additional component to the borrowing base. In addition to demonstrating the confidence our lenders have in Pacific Ethanol's business plan, the changes in the credit facility improve our liquidity borrowing costs and provide low-cost capital to fund future growth. As for the plants, it is our near-term goal to evaluate opportunities to strengthen their balance sheet by refinancing the existing plant debt and reducing the associated cost of capital. To that end, we are reviewing a number of strategic alternatives to further increase our ownership in the Pacific Ethanol plants and refinance the debt on terms favorable to Pacific Ethanol and our shareholders. With that, I'd like to return the call to Neil.

Thank you, Bryon. Our outlook for 2012 remains positive. As I mentioned in my opening remarks, there are signs of improvement in ethanol demand and stronger commodity margins in the second half of 2012. In addition, we are particularly encouraged by the most recent USDA report on the upcoming corn crop issued just this morning, projecting the largest corn crop in history this year of 14.8 billion bushels, which is 1.7 billion bushels higher than the previous record of 13.1 billion bushels in 2009. We remain focused on our vision to leverage our industry expertise, logistical advantage and strategy for growth to build our market share in the Western United States and position the business for profitable growth. We are making strong progress on our objectives and we look forward to updating you in the near future. With that, Latoya, I'd like to open the call up for any questions.

[Operator Instructions] Our first question is from Ian Gilson of Zacks Investments.

It's actually Giles Haycock calling on behalf of Ian from Zacks Investment Research. Can you just put some of your thought into the impact of the absence of subsidy going into the future?

The impact of the loss of the subsidy was really quite temporal in nature. What it did do was accelerated ethanol blending before the expiration at the end of last year. So we saw anywhere from 150 million to 200 million gallons of ethanol demand that really naturally, both on a domestic use and export basis, naturally would have occurred in 2012, which occurred in 2011. So that took what was already a challenging first quarter given the gasoline demand is historically at its lowest point in the first quarter and dropped the ethanol demand, a portion of that even further. So while the first quarter's margins typically, as I mentioned, are the lowest that we see in a year, that impact, that fairly temporary impact made them even worse than they might have been otherwise. Given that oil continues to trade in at around $100 a barrel and given that we are seeing, frankly, some moderation in corn prices, the value proposition between the cost of making ethanol without the subsidy and selling it into a gasoline market are still very attractive without that tax credit. That is why today, we are selling ethanol at close to $1 a gallon less than gasoline. We get could be selling it at $0.50 less than gasoline. We're making very strong profits as ethanol producers and still offering a very competitively priced product to the marketplace. So we think, frankly, that the tax credit was a distraction-- political distraction last year, and that given the current price relationship between corn and gasoline, that the industry is well-positioned to continue to prosper without that tax credit.

Lovely. Another question on the other side. What's the status of the lawsuit from the Low Carbon initiative?

Well, as you're aware and most people are aware of, the Low Carbon Fuel Standard, there was a federal court decision at the end of last year, very end of last year, that determined, on a preliminary decision, that the Low Carbon Fuel Standard was unconstitutional on an interstate commerce clause. The State of California, which feels very strongly about defending and implementing this program, immediately filed an appeal. As part of the original case, the federal judge granted an injunction from the California Air Resources Board in implementing-- actually, enforcing that program. What happened with the most recent decision from the -- and CARB then asked the 9th Circuit, where the appeal was filed, to stay that injunction. And that's what happened a couple of weeks ago, was that the court agreed with California and said we are going to stay the injunction while we continue to review the case on appeal. That could take, literally, a number of years and what that does is put the program firmly back in place. There was confusion, obviously, in the first quarter, on whether there was going to be a program or not. Now, there is certainty that until the appeal is decided, that the Low Carbon Fuel Standard is in place, being enforced, and that has a very positive impact for Pacific Ethanol, given that we produce the lowest carbon ethanol in the United States and our product, with that program, is in high demand.

[Operator Instructions] Our next question is from Paul Resnik of Uncommon Equities.

Zacks asked a couple of my questions but I have a couple more. On corn oil, do you feel that you'll be -- the chance you'll be producing corn oil before the end of this year?

That is our intention. We are very focused on that and are trying to put in place, the right pathway to make that a reality at one or more of our plants this year. The advantage of doing that are very strong, particularly in our markets where corn oil has even higher value than it does in the Midwest. It can have a very significant beneficial impact to our financial performance and we are very focused on implementing that this year.

And do you have handy your gallons per bushel that you achieved during the quarter?

I don't have that exact number but they're in and around that same 2.75 to 2.8 range that is average in the industry. We are achieving it. Current moment, we believe we are achieving a bit above average and that is clearly our objective. We have a tremendous focus on making sure that we're not at average conversion efficiencies, but above average.

Okay. And lastly, in the current market environment, did you reduce production at any of the facilities?

We did. As we sort of referenced in our comments and mentioned at the end of last year, that is a part of trying to do our share to balance supply and demand, given that we have been in an overproduction position as an industry. We have been running our plants in the first quarter and continuing into the second at roughly 90% of operating capacity. So we've been running them at about 10% less than capacity.

Thank you. There are no further questions at this time. I'll turn the call back over to Neil Koehler for closing remarks.

Thank you, Latoya, and thank you, all, for listening in to the call today and we look forward to updating you on our next call. Have a good day.

Ladies and gentlemen, this concludes today's program. You may now disconnect. Good day.