• Alto Ingredients, Inc. Reports Second Quarter 2024 Results

    Source: Nasdaq GlobeNewswire / 06 Aug 2024 16:05:20   America/New_York

    PEKIN, Ill., Aug. 06, 2024 (GLOBE NEWSWIRE) -- Alto Ingredients, Inc. (NASDAQ: ALTO), a producer and distributor of renewable fuel, essential ingredients and specialty alcohols, reported its financial results for the quarter ended June 30, 2024.

    Bryon McGregor, President and CEO of Alto Ingredients, said, “Our Pekin Campus has been producing alcohol and serving customers for over 150 years throughout many market cycles. We continue to strengthen our facilities by reinvesting our cash flow from operations and excess liquidity in capital upgrades as well as repairs and maintenance. Most notably, our recent biennial outage at our Pekin wet mill improved capacity utilization, while reducing our fixed costs per unit at the mill. Even with over $5 million of expenses related to these planned facility outages, our Pekin Campus delivered over $10 million of gross profit in the second quarter of 2024, up from over $4 million in the first quarter of 2024.

    “Our Pekin Campus is fully operational and taking advantage of the favorable summer driving season economics. In July, average crush margins more than doubled compared to the second quarter. At Magic Valley, we resumed operations in early July and are encouraged by the initial results. We expect to increase production rates in the coming weeks as we complete the system upgrades.

    “If current margins hold and we continue to hit our production targets, we expect to deliver positive Adjusted EBITDA for the third quarter. We are excited to see our initiatives come to fruition, bolstering our ability to continue serving our customers for many years to come,” McGregor concluded.

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

    • Net sales were $236.5 million, compared to $317.3 million.
    • Cost of goods sold was $228.9 million, compared to $300.1 million.
    • Gross profit was $7.6 million, including $2.9 million in realized losses on derivatives and $5.4 million in costs related to the planned Pekin Campus outages, compared to a gross profit of $17.2 million, including $5.5 million in realized gains on derivatives.
    • Selling, general and administrative expenses were $9.0 million, compared to $7.9 million.
    • Net loss available to common stockholders was $3.4 million, or $0.05 per share, compared to net income available to common stockholders $7.2 million, or $0.10 per share.
    • Adjusted EBITDA was negative $5.9 million, including $2.9 million in realized losses on derivatives and $5.4 million in costs related to planned Pekin Campus outages, compared to positive $14.0 million, including $5.5 million in realized gains on derivatives.

    Cash and cash equivalents were $27.1 million at June 30, 2024, compared to $30.0 million at December 31, 2023. At June 30, 2024, the company’s borrowing availability was $95.0 million including $30.0 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 Six Months Ended June 30, 2024 Compared to 2023

    • Net sales were $477.1 million, compared to $631.2 million.
    • Net loss available to common stockholders was $15.5 million, or $0.21 per share, compared to $6.2 million, or $0.08 per share.
    • Adjusted EBITDA was negative $13.0 million, including $2.7 million in realized losses on derivatives and $5.4 million in costs related to the biennial outage, compared to positive $3.6 million, including $2.2 million in realized losses on derivatives.

    Second 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 Tuesday, August 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 Tuesday, August 6, 2024, through 8:00 p.m. Eastern Time on Tuesday, August 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 3306041.

    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, loss on extinguishment of debt, 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 renewable fuel, essential ingredients and specialty alcohols. 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, future performance, margin improvements and crush spreads; Alto Ingredients’ repair and maintenance programs, plant improvements and other capital projects, 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 renewable fuels, specialty alcohols 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 carbon capture and storage (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; 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 May 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
    June 30,
     Six Months Ended
    June 30,
     
     2024 2023 2024 2023 
                     
    Net sales$236,468  $317,297  $477,097  $631,188  
    Cost of goods sold 228,915   300,116   471,944   617,171  
    Gross profit 7,553   17,181   5,153   14,017  
    Selling, general and administrative expenses 8,961   7,911   16,893   15,793  
    Asset impairments          574  
    Income (loss) from operations (1,408)  9,270   (11,740)  (2,350) 
    Interest expense, net (1,669)  (1,734)  (3,303)  (3,299) 
    Other income (expense), net (29)  59   212   78  
    Income (loss) before provision for income taxes (3,106)  7,595   (14,831)  (5,571) 
    Provision for income taxes            
    Net income (loss)$(3,106) $7,595  $(14,831) $(5,571) 
    Preferred stock dividends$(316) $(315) $(631) $(627) 
    Net income allocated to participating securities    (96)       
    Net income (loss) available to common stockholders$(3,422) $7,184  $(15,462) $(6,198) 
    Net income (loss) per share, basic$(0.05) $0.10  $(0.21) $(0.08) 
    Net income (loss) per share, diluted$(0.05) $0.10  $(0.21) $(0.08) 
    Weighted-average shares outstanding, basic 73,486   73,394   73,126   73,603  
    Weighted-average shares outstanding, diluted 73,486   74,103   73,126   73,603  
      


    ALTO INGREDIENTS, INC.
    CONSOLIDATED BALANCE SHEETS
    (unaudited, in thousands, except par value)
     
      
    ASSETS
    June 30,
    2024
     December 31,
    2023
     
    Current Assets:      
    Cash and cash equivalents$27,124 $30,014 
    Restricted cash 1,287  15,466 
    Accounts receivable, net 64,081  58,729 
    Inventories 49,434  52,611 
    Derivative instruments 5,606  2,412 
    Other current assets 6,126  9,538 
    Total current assets 153,658  168,770 
    Property and equipment, net 244,893  248,748 
    Other Assets:      
    Right of use operating lease assets, net 20,404  22,597 
    Intangible assets, net 8,204  8,498 
    Other assets 5,339  5,628 
    Total other assets 33,947  36,723 
    Total Assets$432,498 $454,241 
      


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

    LIABILITIES AND STOCKHOLDERS’ EQUITY
    June 30,
    2024
     December 31,
    2023
     
    Current Liabilities:        
    Accounts payable$20,132  $20,752  
    Accrued liabilities 16,504   20,205  
    Current portion – operating leases 4,481   4,333  
    Derivative instruments 2,764   13,849  
    Other current liabilities 5,886   6,149  
    Total current liabilities 49,767   65,288  
             
    Long-term debt, net 90,960   82,097  
    Operating leases, net of current portion 16,828   19,029  
    Other liabilities 9,120   8,270  
    Total Liabilities 166,675   174,684  
             
    Stockholders’ Equity:        
    Preferred stock, $0.001 par value; 10,000 shares authorized;
       Series A: no shares issued and outstanding as of
       June 30, 2024 and December 31, 2023
       Series B: 927 shares issued and outstanding as of
       June 30, 2024 and December 31, 2023
     1   1  
    Common stock, $0.001 par value; 300,000 shares authorized;
       76,645 and 75,703 shares issued and outstanding as of June
       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 June 30,
       2024 and December 31, 2023
          
    Additional paid-in capital 1,042,639   1,040,912  
    Accumulated other comprehensive income 2,481   2,481  
    Accumulated deficit (779,375)  (763,913) 
    Total Stockholders’ Equity 265,823   279,557  
    Total Liabilities and Stockholders’ Equity$432,498  $454,241  
      

    Reconciliation of Adjusted EBITDA to Net Income

     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
     
    (in thousands) (unaudited)2024 2023 2024 2023 
    Net income (loss)$(3,106) $7,595  $(14,831) $(5,571) 
    Adjustments:                
    Interest expense 1,669   1,734   3,303   3,299  
    Interest income (150)  (190)  (325)  (411) 
    Unrealized derivative (gains) losses (11,089)  (1,474)  (14,279)  (7,400) 
    Acquisition-related expense 675   700   1,350   1,400  
    Asset impairments          574  
    Depreciation and amortization expense 6,074   5,680   11,802   11,735  
    Total adjustments (2,821)  6,450   1,851   9,197  
    Adjusted EBITDA$(5,927) $14,045  $(12,980) $3,626  
      

    Sales and Operating Metrics (unaudited)

     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
     
     2024 2023 2024 2023 
    Alcohol Sales (gallons in millions)                
    Pekin Campus renewable fuel gallons sold 30.7   34.7   62.5   70.0  
    Western production renewable fuel gallons sold 9.0   16.5   20.2   24.4  
    Third party renewable fuel gallons sold 34.4   26.6   64.1   60.5  
    Total renewable fuel gallons sold 74.1   77.8   146.8   154.9  
    Specialty alcohol gallons sold 21.0   16.6   47.3   38.0  
    Total gallons sold 95.1   94.4   194.1   192.9  
                     
    Sales Price per Gallon                
    Pekin Campus$1.98  $2.54  $1.94  $2.46  
    Western production$1.94  $2.69  $1.86  $2.67  
    Marketing and distribution$2.04  $2.73  $1.94  $2.60  
    Total$2.00  $2.63  $1.93  $2.52  
                     
    Alcohol Production (gallons in millions)                
    Pekin Campus 50.0   53.0   103.6   106.3  
    Western production 8.6   17.5   18.3   24.8  
    Total 58.6   70.5   121.9   131.1  
                     
    Corn Cost per Bushel                
    Pekin Campus$4.50  $7.06  $4.62  $6.83  
    Western production$5.78  $8.14  $5.84  $8.42  
    Total$4.68  $7.32  $4.81  $7.19  


    Average Market Metrics                
    PLATTS Ethanol price per gallon$1.79  $2.45  $1.67  $2.33  
    CME Corn cost per bushel$4.43  $6.25  $4.39  $6.42  
    Board corn crush per gallons (1)$0.21  $0.22  $0.10  $0.03  
                     
    Essential Ingredients Sold (thousand tons)                
    Pekin Campus:                
    Distillers grains 79.7   76.4   167.4   167.2  
    CO2 43.3   47.8   82.4   90.1  
    Corn wet feed 24.8   15.0   50.4   41.7  
    Corn dry feed 19.8   23.7   38.7   45.2  
    Corn oil and germ 17.5   18.5   35.3   37.8  
    Syrup and other 11.1   8.8   20.6   19.3  
    Corn meal 8.0   10.2   16.3   19.6  
    Yeast 5.8   6.9   11.5   13.3  
    Total Pekin Campus essential ingredients sold 210.0   207.3   422.6   434.2  
                     
    Western production:                
    Distillers grains 61.8   109.1   133.6   163.1  
    CO2 15.1   13.2   28.4   26.8  
    Syrup and other 2.0   32.9   16.2   36.4  
    Corn oil 0.9   1.6   2.4   2.9  
    Total Western production essential ingredients sold 79.8   156.8   180.6   229.2  
                     
    Total Essential Ingredients Sold 289.8   364.1   603.2   663.4  
                     
                     
    Essential ingredients return % (2)                
    Pekin Campus return 48.8%  41.3%  50.0%  43.8% 
    Western production return 35.1%  30.3%  37.4%  33.2% 
    Consolidated total return 45.6%  38.3%  47.8%  41.7% 
                     
       
    (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
     June 30,
     Six Months Ended
     June 30,
     
     2024 2023 2024 2023 
    Net Sales                
                     
    Pekin Campus, recorded as gross:                
    Alcohol sales$100,687  $127,694  $209,035  $260,075  
    Essential ingredient sales 39,371   53,954   86,080   117,585  
    Intersegment sales 286   444   606   757  
       Total Pekin Campus sales 140,344   182,092   295,721   378,417  
                     
    Marketing and distribution:                
    Alcohol sales, gross$70,157  $72,589  $124,587  $156,936  
    Alcohol sales, net 64   104   98   218  
    Intersegment sales 2,388   2,499   5,140   5,342  
       Total marketing and distribution sales 72,609   75,192   129,825   162,496  
                     
    Western production, recorded as gross:                
    Alcohol sales$17,456  $44,384  $37,690  $65,316  
    Essential ingredient sales 5,950   14,421   13,776   22,773  
    Intersegment sales    62   (130)  62  
       Total Western production sales 23,406   58,867   51,336   88,151  
                     
    Corporate and other 2,783   4,151   5,831   8,285  
    Intersegment eliminations (2,674)  (3,005)  (5,616)  (6,161) 
    Net sales as reported$236,468  $317,297  $477,097  $631,188  
                     
    Cost of goods sold:                
    Pekin Campus$130,200  $168,419  $281,311  $366,596  
    Marketing and distribution 69,437   71,746   123,123   154,871  
    Western production 27,167   57,834   63,683   91,815  
    Corporate and other 2,943   3,414   5,738   5,786  
    Intersegment eliminations (832)  (1,297)  (1,911)  (1,897) 
    Cost of goods sold as reported$228,915  $300,116  $471,944  $617,171  
                     
    Gross profit (loss):                
    Pekin Campus$10,144  $13,673  $14,410  $11,821  
    Marketing and distribution 3,172   3,446   6,702   7,625  
    Western production (3,761)  1,033   (12,347)  (3,664) 
    Corporate and other (160)  737   93   2,499  
    Intersegment eliminations (1,842)  (1,708)  (3,705)  (4,264) 
    Gross profit as reported$7,553  $17,181  $5,153  $14,017  

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