PEKIN, Ill., Nov. 06, 2023 (GLOBE NEWSWIRE) — Alto Ingredients, Inc. (NASDAQ: ALTO), a leading producer and distributor of specialty alcohols and essential ingredients, reported its financial results for the quarter ended September 30, 2023.
“Our transition to provide high margin, differentiated specialty alcohols and essential ingredients in consumer, pharmaceutical, food, beverage and industrial products has greatly improved our financial profile over the past three years,” said Bryon McGregor, President and CEO of Alto Ingredients. “We continue to make good progress, yet we remain subject to operational and commodity market challenges. Our third quarter results reflect the contribution from stronger ethanol crush margins partially offset by the impact of unusually high unscheduled downtime that lowered our anticipated production volumes and shifted our mix toward lower margin products. Regardless, we delivered positive Adjusted EBITDA and positive operating cash flow for the quarter. We also completed numerous repairs and maintenance projects that we expect will benefit production going forward.
“Throughout our strategic realignment, we have been committed to creating and pursuing opportunities that target long-term profitability and maximize shareholder value. While the path has been and will continue to be dynamic, we remain agile and financially prudent and will continue to capitalize on the most promising and profitable opportunities. The preliminary findings from our primary yeast front-end engineering design study are promising, yet both our revenue upside and our projected installation costs increased significantly, reflecting inflationary pressures and supply chain constraints. Based on these findings, changing capital requirements, and current capital market conditions, we have extended our EBITDA expansion goals by six to twelve months. We continue to evaluate various funding alternatives with potential financing partners and will prioritize projects with the greatest return on investment within an appropriate time frame. We remain enthusiastic about the prospects and confident in our long-term growth strategy.”
Financial Results for the Three Months Ended September 30, 2023 Compared to 2022
Net sales were $318.1 million, compared to $336.9 million.Cost of goods sold was $314.0 million, compared to $356.7 million.Gross profit was $4.2 million, compared to a gross loss of $19.8 million.Selling, general and administrative expenses were $8.5 million, compared to $7.4 million.Operating loss was $4.3 million, compared to an operating loss of $27.2 million.Net loss available to common stockholders, including a $2.8 million USDA cash grant, was $3.8 million, or $0.05 per share, compared to $28.4 million, or $0.39 per share.Adjusted EBITDA, including the aforementioned USDA cash grant, was positive $4.7 million, compared to negative $20.6 million.
Cash and cash equivalents were $26.2 million at September 30, 2023, compared to $36.5 million at December 31, 2022. At September 30, 2023, the company’s borrowing availability included $53.4 million under its operating line of credit and $40 million under its term loan facility with an option to request up to an additional $25 million under the facility.
Financial Results for the Nine Months Ended September 30, 2023 Compared to 2022
Net sales were $949.3 million, compared to $1,007.2 million.Cost of goods sold was $931.1 million, compared to $1,013.4 million.Gross profit was $18.2 million, compared to a gross loss of $6.2 million.Selling, general and administrative expenses were $24.3 million, compared to $24.0 million.Operating loss was $6.7 million, compared to an operating loss of $30.3 million.Net loss available to common stockholders, including a $2.8 million USDA cash grant, was $10.0 million, or $0.14 per share, compared to $9.5 million, including a $22.7 million USDA cash grant, or $0.13 per share.Adjusted EBITDA, including the $2.8 million USDA cash grant, was $15.7 million, compared to $13.7 million, including the aforementioned $22.7 million USDA cash grant.
Third Quarter 2023 Results Conference Call
Management will host a conference call at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on Monday, November 6, 2023, 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 twenty minutes prior to the scheduled call time, 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 Monday, November 6, 2023 through 8:00 p.m. Eastern Time on Monday, November 13, 2023. To access the replay, please dial 877-344-7529. International callers should dial 00-1 412-317-0088. The pass code will be 7294905.
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, acquisition-related expense, fair value adjustments, 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. (ALTO) is a leading producer and distributor of specialty alcohols and essential ingredients. The company is focused on products for four key markets: Health, Home & Beauty; Food & Beverage; Essential Ingredients; and Renewable Fuels. The company’s customers include major food and beverage companies and consumer products companies. 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’ plant improvement and other capital projects and other business initiatives and strategies, and their financing, costs, timing and effects, including, but not limited to, EBITDA and/or Adjusted EBITDA that Alto Ingredients’ expects to generate as a result of its projects, initiatives and strategies; 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 fuel-grade ethanol, 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; and the cost, ability to fund, timing and effects of, including the financial and other results deriving from, Alto Ingredients’ plant improvement and other capital projects and other business initiatives and strategies. These factors also include, among others, the inherent uncertainty associated with financial and other projections; 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 specialty 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; 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, 2023.
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, 2023 2022 2023 2022 Net sales$ 318,127 $ 336,877 $ 949,315 $1,007,184 Cost of goods sold 313,966 356,716 931,137 1,013,406 Gross profit (loss) 4,161 (19,839) 18,178 (6,222)Selling, general and administrative expenses (8,488) (7,403) (24,281) (24,028)Asset impairments — — (574) — Loss from operations (4,327) (27,242) (6,677) (30,250)Interest expense, net (2,000) (340) (5,299) (859)Income from cash grant 2,812 — 2,812 22,652 Other income (expense), net 26 (456) 104 (68)Loss before provision for income taxes (3,489) (28,038) (9,060) (8,525)Provision for income taxes — — — — Net loss$ (3,489) $ (28,038) $ (9,060) $ (8,525)Preferred stock dividends$ (319) $ (319) $ (946) $ (946)Net loss available to common stockholders$ (3,808) $ (28,357) $ (10,006) $ (9,471)Net loss per share, basic and diluted$ (0.05) $ (0.39) $ (0.14) $ (0.13)Weighted-average shares outstanding, basic and diluted 73,191 73,011 73,464 71,815
ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value) September 30,December 31,ASSETS 2023 2022Current Assets: Cash and cash equivalents$ 26,162 $ 36,456Restricted cash 8,699 13,069Accounts receivable, net 66,065 68,655Inventories 57,092 66,628Derivative instruments 3,974 4,973Other current assets 6,213 9,340Total current assets 168,205 199,121Property and equipment, net 248,882 239,069Other Assets: Right of use operating lease assets, net 23,387 18,937Intangible assets, net 8,645 9,087Goodwill 5,970 5,970Other assets 6,013 6,137Total other assets 44,015 40,131Total Assets$ 461,102 $ 478,321
ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value) September 30,December 31,LIABILITIES AND STOCKHOLDERS’ EQUITY 2023 2022 Current Liabilities: Accounts payable$ 23,990 $ 28,115 Accrued liabilities 16,644 26,556 Current portion – operating leases 4,044 3,849 Derivative instruments 7,249 6,732 Other current liabilities 6,488 12,765 Total current liabilities 58,415 78,017 Long-term debt 75,878 68,356 Operating leases, net of current portion 19,942 15,062 Other liabilities 8,870 8,797 Total Liabilities 163,105 170,232 Stockholders’ Equity: Preferred stock, $0.001 par value; 10,000 shares authorized;
Series A: 0 shares issued and outstanding as of
September 30, 2023 and December 31, 2022
Series B: 927 shares issued and outstanding as of
September 30, 2023 and December 31, 2022 1 1 Common stock, $0.001 par value; 300,000 shares authorized; 76,115 and 75,154 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 76 75 Non-voting common stock, $0.001 par value; 3,553 shares authorized; 1 share issued and outstanding as of September 30, 2023 and December 31, 2022 — — Additional paid-in capital 1,040,747 1,040,834 Accumulated other comprehensive income 1,822 1,822 Accumulated deficit (744,649) (734,643)Total Stockholders’ Equity 297,997 308,089 Total Liabilities and Stockholders’ Equity$ 461,102 $ 478,321
Reconciliation of Adjusted EBITDA to Net Loss
Three Months Ended
September 30,Nine Months Ended
September 30,(in thousands) (unaudited) 2023 2022 2023 2022 Net loss$ (3,489) $ (28,038) $ (9,060 ) $ (8,525 ) Adjustments: Interest expense 2,000 340 5,299 859 Interest income (179) (38) (590) (341) Asset impairments — — 574 — Acquisition-related expense 700 875 2,100 2,625 Provision for income taxes — — — — Depreciation and amortization expense 5,647 6,260 17,382 19,122 Total adjustments 8,168 7,437 24,765 22,265 Adjusted EBITDA$ 4,679 $ (20,601) $ 15,705 $ 13,740
Commodity Price Performance
Three Months Ended
September 30,Nine Months Ended
September 30, (unaudited) 2023 2022 2023 2022 Renewable fuel production gallons sold (in millions) 56.6 53.0 151.1 153.4 Specialty alcohol production gallons sold (in millions) 18.6 23.3 56.6 72.4 Third party renewable fuel gallons sold (in millions) 21.9 27.6 82.3 88.4 Total gallons sold (in millions) 97.1 103.9 290.0 314.2 Total gallons produced (in millions) 74.3 74.7 205.4 226.0 Production capacity utilization 84% 85% 78% 86% Average sales price per gallon$ 2.56 $ 2.70 $ 2.54 $ 2.66 Average CBOT ethanol price per gallon$ 2.32 $ 2.51 $ 2.33 $ 2.50 Corn cost per bushel – CBOT equivalent$ 5.49 $ 7.27 $ 6.21 $ 6.98 Average basis 1.11 1.08 0.79 0.80 Delivered cost of corn$ 6.60 $ 8.35 $ 7.00 $ 7.78 Total essential ingredients tons sold (in thousands) 423.2 422.0 1,086.6 1,234.9 Essential ingredients revenues as % of delivered cost of corn 35.9% 30.4% 37.7% 33.2%
Segment Financials
Three Months Ended
September 30, Nine Months Ended
September 30, 2023 2022 2023 2022Net sales
Pekin Campus, recorded as gross: Alcohol sales $128,554 $133,680 $388,629 $393,498Essential ingredient sales 51,634 54,537 169,220 169,670Intersegment sales 363 332 1,120 857Total Pekin Campus sales 180,551 188,549 558,969 564,025
Marketing and distribution: Alcohol sales, gross $58,805 $55,262 $215,741 $172,746Alcohol sales, net 74 308 292 975Intersegment sales 3,392 3,121 8,734 9,360Total marketing and distribution sales 62,271 58,691 224,767 183,081 Other production, recorded as gross: Alcohol sales $57,159 $64,492 $122,477 $191,483Essential ingredient sales 17,841 24,439 40,614 66,748Intersegment sales 37 3 99 14Total Other production sales 75,037 88,934 163,190 258,245Corporate and other 4,060 4,159 12,342 12,064Intersegment eliminations (3,792) (3,456) (9,953) (10,231)Net sales as reported $318,127 $336,877 $949,315 $1,007,184 Cost of goods sold: Pekin Campus $179,995 $207,939 $546,591 $572,512Marketing and distribution 58,051 55,159 212,923 173,670Other production 73,584 91,663 165,401 261,514Corporate and other 3,538 2,925 9,322 8,995Intersegment eliminations (1,202) (970) (3,100) (3,285)Cost of goods sold as reported $313,966 $356,716 $931,137 $1,013,406 Gross profit (loss): Pekin Campus $556 $(19,390) $12,378 $(8,487)Marketing and distribution 4,220 3,532 11,844 9,411Other production 1,453 (2,729) (2,211) (3,269)Corporate and other 522 1,234 3,020 3,069Intersegment eliminations (2,590) (2,486) (6,853) (6,946)Gross profit (loss) as reported $4,161 $(19,839 $18,178 $(6,222)
