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Alto Ingredients, Inc. Reports Third Quarter 2024 Results

- Enters CO2 Transportation and Sequestration Agreement with Vault 44.01 -

/EIN News/ -- PEKIN, Ill., Nov. 06, 2024 (GLOBE NEWSWIRE) -- Alto Ingredients, Inc. (NASDAQ: ALTO), a leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients, reported its financial results for the quarter ended September 30, 2024. In a separate press release, the company announced it entered into a CO2 Transportation and Sequestration Agreement (TSA) with Vault 44.01 to transport, inject and sequester carbon from the company’s Pekin campus into the Mt. Simon sandstone formation in Illinois.

Bryon McGregor, President and CEO of Alto Ingredients, said, “Our team is committed to delivering the highest quality products to our customers while improving profitability on a consistent basis. In Q3 2024, we increased the production capabilities and uptime at our Pekin campus, compared to the prior year quarter, reflecting the success of our scheduled repairs and maintenance outage in Q2. As a result, specialty alcohol sold increased by 4 million gallons compared to last year, positively shifting our sales mix. Consolidated gross profit for the quarter improved over 40% year-over-year to $6.0 million despite fluctuating market conditions.

“We are managing through the current market dynamics and positioning the company to leverage the opportunities presented by our unique facilities. In addition, consistent with our strategy to lower our carbon footprint, we entered into an agreement for the safe transportation and storage of our CO2 emissions from our Pekin campus. While we await EPA submission and approval, address financing and source equipment, the TSA marks a significant milestone on our path toward a more sustainable and prosperous future.”

Financial Results for the Three Months Ended September 30, 2024 Compared to 2023

  • Net sales were $251.8 million, compared to $318.1 million.
  • Cost of goods sold was $245.9 million, compared to $314.0 million.
  • Gross profit was $6.0 million, including $3.6 million in realized gains on derivatives, compared to a gross profit of $4.2 million, including $6.2 million in realized gains on derivatives.
  • Selling, general and administrative expenses were $7.5 million, compared to $8.5 million.
  • Gain on sale of certain idled assets was $0.8 million, compared to none in the prior year period.
  • Income from cash grant was $2.8 million in 2023, while none in 2024 as the USDA closed out the Biofuel Producer Program associated with the pandemic.
  • Net loss available to common stockholders was $2.8 million, or $0.04 per share, compared to $3.8 million, or $0.05 per share.
  • Adjusted EBITDA was positive $12.2 million, including $3.6 million in realized gains on derivatives, compared to positive $13.6 million, including $6.2 million dollars in realized gains on derivatives and $2.8 million income from cash grant.

Cash and cash equivalents were $33.6 million at September 30, 2024, compared to $30.0 million at December 31, 2023. At September 30, 2024, the company’s borrowing availability was $92.2 million including $27.2 million under the company’s operating line of credit and $65.0 million under its term loan facility, subject to certain conditions.

Financial Results for the Nine Months Ended September 30, 2024 Compared to 2023

  • Net sales were $728.9 million, compared to $949.3 million.
  • Net loss available to common stockholders was $18.2 million, or $0.25 per share, compared to $10.0 million, or $0.14 per share.
  • Adjusted EBITDA was negative $0.8 million, including $0.9 million in realized gains on derivatives and $5.4 million in costs related to the biennial outage in the second quarter, compared to positive $17.2 million, including $4.0 million in realized gains on derivatives and the aforementioned $2.8 million USDA cash grant.

Third Quarter 2024 Results Conference Call
Management will host a conference call at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on Wednesday, November 6, 2024, and will deliver prepared remarks via webcast followed by a question-and-answer session.

The webcast for the conference call can be accessed from Alto Ingredients’ website at www.altoingredients.com. Alternatively, to receive a number and unique PIN by email, register here. To dial directly up to twenty minutes prior to the scheduled call time, please dial (833) 630-0017 domestically and (412) 317-1806 internationally. The webcast will be archived for replay on the Alto Ingredients website for one year. In addition, a telephonic replay will be available at 8:00 p.m. Eastern Time on Wednesday, November 6, 2024, through 8:00 p.m. Eastern Time on Wednesday, November 13, 2024. To access the replay, please dial (877) 344-7529. International callers should dial 00-1 412-317-0088. The pass code will be 8828903.

Use of Non-GAAP Measures
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 consolidated net income (loss) before interest expense, interest income, provision for income taxes, asset impairments, unrealized derivative gains and losses, acquisition-related expense and depreciation and amortization expense. A table is provided at the end of this release that provides a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, net income (loss). Management provides this non-GAAP 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 as 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 this measure in isolation or as a substitute for analysis of the company's results as reported under GAAP.

About Alto Ingredients, Inc.
Alto Ingredients, Inc. (NASDAQ: ALTO) produces and distributes specialty alcohols, essential ingredients and renewable fuels. Leveraging the unique qualities of its facilities, the company serves customers in a wide range of consumer and commercial products in the Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels markets. For more information, please visit www.altoingredients.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements and information contained in this communication that refer to or include Alto Ingredients’ estimated or anticipated future results or other non-historical expressions of fact are forward-looking statements that reflect Alto Ingredients’ current perspective of existing trends and information as of the date of the communication. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “should,” “estimate,” “expect,” “forecast,” “outlook,” “guidance,” “intend,” “may,” “might,” “will,” “possible,” “potential,” “predict,” “project,” or other similar words, phrases or expressions. Such forward-looking statements include, but are not limited to, statements concerning Alto Ingredients’ projected outlook and future performance; Alto Ingredients’ repair and maintenance programs, plant improvements and other capital projects, including its carbon capture and storage (CCS) project, and their financing, costs, timing and effects; and Alto Ingredients’ other plans, objectives, expectations and intentions. It is important to note that Alto Ingredients’ plans, objectives, expectations and intentions are not predictions of actual performance. Actual results may differ materially from Alto Ingredients’ current expectations depending upon a number of factors affecting Alto Ingredients’ business and plans. These factors include, among others adverse economic and market conditions, including for specialty alcohols, renewable fuels and essential ingredients ; export conditions and international demand for the company’s products; fluctuations in the price of and demand for oil and gasoline; raw material costs, including production input costs, such as corn and natural gas; adverse impacts of inflation and supply chain constraints; and the cost, ability to fund, timing and effects of, including the financial and other results deriving from, Alto Ingredients’ repair and maintenance programs, plant improvements and other capital projects, including CCS, and other business initiatives and strategies. These factors also include, among others, the inherent uncertainty associated with financial and other projections and large-scale capital projects, including CCS; the anticipated size of the markets and continued demand for Alto Ingredients’ products; the impact of competitive products and pricing; the risks and uncertainties normally incident to the alcohol production, marketing and distribution industries; changes in generally accepted accounting principles; successful compliance with governmental regulations applicable to Alto Ingredients’ facilities, products and/or businesses; changes in laws, regulations and governmental policies, including with respect to the Inflation Reduction Act’s tax and other benefits Alto Ingredients expects to derive from CCS; the loss of key senior management or staff; and other events, factors and risks previously and from time to time disclosed in Alto Ingredients’ filings with the Securities and Exchange Commission including, specifically, those factors set forth in the “Risk Factors” section contained in Alto Ingredients’ Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2024.

Company IR and Media Contact:                 
Michael Kramer, Alto Ingredients, Inc., 916-403-2755, Investorrelations@altoingredients.com

IR Agency Contact:
Kirsten Chapman, LHA Investor Relations, 415-433-3777, Investorrelations@altoingredients.com



ALTO INGREDIENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
    2024     2023     2024     2023  
         
Net sales $ 251,814   $ 318,127   $         728,911   $         949,315  
Cost of goods sold   245,854     313,966             717,798             931,137  
Gross profit   5,960     4,161     11,113     18,178  
Selling, general and administrative expenses   (7,510 )   (8,488 )   (24,403 )   (24,281 )
Gain on sale of assets   830         830      
Asset impairments               (574 )
Loss from operations   (720 )   (4,327 )   (12,460 )   (6,677 )
Interest expense, net   (1,867 )   (2,000 )   (5,170 )   (5,299 )
Income from cash grant       2,812         2,812  
Other income, net   146     26     358     104  
Loss before provision for income taxes   (2,441 )   (3,489 )   (17,272 )   (9,060 )
Provision for income taxes                
Net loss $ (2,441 ) $ (3,489 ) $         (17,272 ) $         (9,060 )
Preferred stock dividends $ (319 ) $ (319 ) $         (950 ) $         (946 )
Net loss available to common stockholders $ (2,760 ) $ (3,808 ) $         (18,222 ) $         (10,006 )
Net loss per share, basic and diluted $         (0.04 ) $         (0.05 ) $          (0.25 ) $          (0.14 )
Weighted-average shares outstanding, basic and diluted           73,835             73,191             73,364             73,464  
 


ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value)

ASSETS September 30,
2024
    December 31,
2023
Current Assets:    
Cash and cash equivalents $ 33,591   $ 30,014
Restricted cash 4,903     15,466
Accounts receivable, net 52,038     58,729
Inventories 48,014     52,611
Derivative instruments 36     2,412
Other current assets 6,568     9,538
Total current assets 145,150     168,770
Property and equipment, net 238,892     248,748
Other Assets:
Right of use operating lease assets, net 19,283     22,597
Intangible assets, net 8,057     8,498
Other assets 6,029     5,628
Total other assets 33,369     36,723
Total Assets $ 417,411   $ 454,241
 


ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value)
    
LIABILITIES AND STOCKHOLDERS’ EQUITY
  September 30,
2024
    December 31,
2023
 
Current Liabilities:        
Accounts payable $         17,205   $         20,752  
Accrued liabilities   14,255     20,205  
Current portion – operating leases   4,440     4,333  
Derivative instruments   3,394     13,849  
Other current liabilities   5,808           6,149  
Total current liabilities   45,102     65,288  
     
Long-term debt, net   83,342     82,097  
Operating leases, net of current portion   15,740     19,029  
Other liabilities   9,302     8,270  
Total Liabilities   153,486     174,684  
     
Stockholders’ Equity:    
Preferred stock, $0.001 par value; 10,000 shares authorized; Series A: no shares issued and outstanding as of September 30, 2024 and December 31, 2023 Series B: 927 shares issued and outstanding as of September 30, 2024 and December 31, 2023   1     1  
Common stock, $0.001 par value; 300,000 shares authorized; 76,625 and 75,703 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively   77     76  
Non-voting common stock, $0.001 par value; 3,553 shares authorized; 1 share issued and outstanding as of September 30, 2024 and December 31, 2023        
Additional paid-in capital   1,043,501     1,040,912  
Accumulated other comprehensive income   2,481     2,481  
Accumulated deficit   (782,135 )   (763,913 )
Total Stockholders’ Equity   263,925     279,557  
Total Liabilities and Stockholders’ Equity
$ 417,411   $ 454,241  
 


Reconciliation of Adjusted EBITDA to Net Loss

 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands) (unaudited)             2024     2023     2024     2023  
Net loss $ (2,441 ) $ (3,489 ) $ (17,272 ) $ (9,060 )
Adjustments:        
Interest expense, net   1,867     2,000     5,170     5,299  
Interest income   (194 )   (179 )   (519 )   (590 )
Unrealized derivative (gains) losses   6,199     8,917     (8,079 )   1,517  
Acquisition-related expense   675     700     2,025     2,100  
Asset impairments               574  
Depreciation and amortization expense   6,058     5,647     17,860     17,382  
Total adjustments   14,605     17,085     16,457     26,282  
Adjusted EBITDA $ 12,164   $ 13,596   $ (815 ) $ 17,222  


Sales and Operating Metrics (unaudited)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2024     2023     2024     2023
Alcohol Sales (gallons in millions)        
Pekin Campus renewable fuel gallons sold   31.1     34.4     93.6     104.4
Western production renewable fuel gallons sold   18.0     22.2     38.2     46.6
Third party renewable fuel gallons sold   25.2     21.9     89.3     82.4
Total renewable fuel gallons sold   74.3     78.5     221.1     233.4
Specialty alcohol gallons sold   22.5     18.6     69.8     56.6
Total gallons sold   96.8     97.1     290.9     290.0
         
Sales Price per Gallon        
Pekin Campus $ 2.02   $ 2.48   $ 1.96   $ 2.46
Western production $ 2.02   $ 2.57   $ 1.94   $ 2.63
Marketing and distribution $ 2.17   $ 2.69   $ 2.01   $ 2.62
Total $ 2.06   $ 2.56   $ 1.97   $ 2.53
         
Alcohol Production (gallons in millions)        
Pekin Campus   53.4     51.8     157.0     158.1
Western production   19.2     22.5     37.5     47.3
Total   72.6     74.3     194.5     205.4
         
Corn Cost per Bushel        
Pekin Campus $ 4.40   $ 6.29   $ 4.55   $ 6.72
Western production $ 5.52   $ 7.37   $ 5.69   $ 7.91
Total $ 4.68   $ 6.60   $ 4.76   $ 6.98
         


Sales and Operating Metrics (unaudited)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2024       2023       2024       2023
 Average Market Metrics        
PLATTS Ethanol price per gallon $ 1.81     $ 2.29     $ 1.72     $ 2.32
CME Corn cost per bushel $ 3.92     $ 4.98     $ 4.23     $ 5.94
Board corn crush per gallons (1) $ 0.41     $ 0.51     $ 0.21     $ 0.20
         
Essential Ingredients Sold (thousand tons)        
Pekin Campus:        
Distillers grains   83.7       85.3       251.1       252.5
CO2   53.5       48.9       135.9       139.0
Corn wet feed   30.0       28.3       80.4       70.0
Corn dry feed   26.5       22.1       65.2       67.3
Corn oil and germ   18.8       17.8       54.1       55.6
Syrup and other   8.0       9.2       28.6       28.5
Corn meal   9.8       8.2       26.1       27.8
Yeast   6.3       6.4       17.8       19.7
Total Pekin Campus essential ingredients sold   236.6       226.2       659.2       660.4
         
Western production:        
Distillers grains   116.6       144.6       250.2       307.7
CO2   14.7       14.9       43.1       41.7
Syrup and other   21.4       35.2       37.6       71.6
Corn oil   2.1       2.3       4.5       5.2
Total Western production essential ingredients sold   154.8       197.0       335.4       426.2
         
Total Essential Ingredients Sold   391.4       423.2       994.6       1,086.6
         
         
Essential ingredients return % (2)          
Pekin Campus return   49.0%       44.8%       49.7%       44.1%  
Western production return   28.6%       31.3%       33.0%       32.3%  
Consolidated total return   42.8%       40.4%       46.0%       41.2%  
           

                                            

(1)   Assumes corn conversion of 2.80 gallons of alcohol per bushel of corn.
(2)   Essential ingredients revenues as a percentage of total corn costs consumed.


Segment Financials (unaudited, in thousands)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2024   2023     2024   2023
Net Sales                


Pekin Campus, recorded as gross:
               
Alcohol sales $ 106,459   $ 128,554     $ 315,494   $ 388,629
Essential ingredient sales 41,217   51,634     127,297   169,220
Intersegment sales 321   363     927   1,120
Total Pekin Campus sales 147,997   180,551     443,718   558,969
                 
Marketing and distribution:                
Alcohol sales, gross $ 54,531   $ 58,805     $ 179,118   $ 215,741
Alcohol sales, net 71   74     169   292
Intersegment sales 2,862   3,392     8,002   8,734
Total marketing and distribution sales 57,464   62,271     187,289   224,767
                 
Western production, recorded as gross:                
Alcohol sales $ 36,395   $ 57,159     $ 74,084   $ 122,477
Essential ingredient sales 10,408   17,841     24,184   40,614
Intersegment sales 8   37     (122)   99
Total Western production sales 46,811   75,037     98,146   163,190
                 
Corporate and other 2,733   4,060     8,565   12,342
Intersegment eliminations (3,191)   (3,792)     (8,807)   (9,953)
Net sales as reported $ 251,814   $ 318,127     $ 728,911   $ 949,315
                 
Cost of goods sold:                
Pekin Campus $ 141,823   $ 179,995     $ 423,135   $ 546,591
Marketing and distribution 53,553   58,051     176,676   212,923
Western production 49,079   73,584     112,762   165,401
Corporate and other 2,952   3,538     8,690   9,322
Intersegment eliminations (1,553)   (1,202)     (3,465)   (3,100)
Cost of goods sold as reported $ 245,854   $ 313,966     $ 717,798   $ 931,137
                 
Gross profit (loss):                
Pekin Campus $ 6,174   $ 556     $ 20,583   $ 12,378
Marketing and distribution 3,911   4,220     10,613   11,844
Western production (2,268)   1,453     (14,616)   (2,211)
Corporate and other (219)   522     (125)   3,020
Intersegment eliminations (1,638)   (2,590)     (5,342)   (6,853)
Gross profit (loss) as reported $ 5,960   $ 4,161     $ 11,113   $ 18,178



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