Alto Ingredients, Inc. Reports Second Quarter 2023 Results

- Delivered net income, positive Adjusted EBITDA and positive operating cash flow, while making significant capital expenditures to support business transformation -

- Expects Positive Adjusted EBITDA in Q3 2023 -

PEKIN, Ill., Aug. 07, 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 June 30, 2023.

“We continue to pursue opportunities to maximize value through capital investments and onboarding strategic partners that share our vision. Our strategy is coming to fruition,” said Bryon McGregor, President and CEO of Alto Ingredients. “In the second quarter of 2023, improved ethanol crush margins complemented by favorable economics from our high-quality alcohol and essential ingredients delivered strong profitability and positive operating cash flow. Based on current trends, we expect to post positive Adjusted EBITDA in the third quarter of 2023 as well.

“We have accelerated our investments in longer-term capital projects to produce more high-quality products, including grain neutral spirits, corn oil and high protein, as well as to improve plant efficiency and reliability. Looking ahead, we plan to advance our business transformation with a natural gas pipeline, biogas conversion, enhanced cogeneration capabilities, primary yeast and carbon capture and sequestration. We have $137 million in cash and excess borrowing availability to support our business operations and near-term growth initiatives. For our longer-term projects, we continue to hold productive discussions with strategic partners, and we will judiciously finance capital needs for those projects, as appropriate. With these investments, we expect to increase annualized EBITDA incrementally by over $65 million by the end of 2025, with the completion of our near-term projects, and by approximately $125 million by the end of 2026, when our carbon capture and sequestration, cogeneration, and other long-term initiatives are fully realized.”

Financial Results for the Three Months Ended June 30, 2023 Compared to 2022

  • Net sales were $317.3 million, compared to $362.2 million.
  • Cost of goods sold was $300.1 million, compared to $353.3 million.
  • Gross profit was $17.2 million, compared to $8.8 million.
  • Selling, general and administrative expenses were $7.9 million, compared to $9.0 million.
  • Operating income was $9.3 million, compared to an operating loss of $152,000.
  • Net income available to common stockholders was $7.2 million, or $0.10 per diluted share, compared to $21.5 million, which included a $22.7 million USDA cash grant, or $0.29 per diluted share.
  • Adjusted EBITDA was $15.5 million, compared to $29.9 million, which included a $22.7 million USDA cash grant.

Cash and cash equivalents were $22.7 million at June 30, 2023, compared to $36.5 million at December 31, 2022. At June 30, 2023, the company’s borrowing availability included $49 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 Six Months Ended June 30, 2023 Compared to 2022

  • Net sales were $631.2 million, compared to $670.3 million.
  • Cost of goods sold was $617.2 million, compared to $656.7 million.
  • Gross profit was $14.0 million, compared to $13.6 million.
  • Selling, general and administrative expenses were $15.8 million, compared to $16.6 million.
  • Operating loss was $2.4 million, compared to $3.0 million.
  • Net loss available to common stockholders was $6.2 million, or $0.08 per diluted share, compared to net income available to common stockholders of $18.6 million, including the $22.7 million USDA cash grant, or $0.26 per diluted share.
  • Adjusted EBITDA was $11.0 million, compared to $34.3 million, including the aforementioned cash grant.

Second 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, August 7, 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, August 7, 2023 through 8:00 p.m. Eastern Time on Monday, August 14, 2023. To access the replay, please dial 877-344-7529. International callers should dial 00-1 412-317-0088. The pass code will be 6298351.

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; estimates of EBITDA or Adjusted EBITDA 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 May 9, 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
June 30,
  Six Months Ended
June 30,
    2023   2022   2023   2022
                 
Net sales   $ 317,297     $ 362,189     $ 631,188     $ 670,307  
Cost of goods sold     300,116       353,345       617,171       656,690  
Gross profit     17,181       8,844       14,017       13,617  
Selling, general and administrative expenses     7,911       8,996       15,793       16,625  
Asset impairments                 574        
Income (loss) from operations     9,270       (152 )     (2,350 )     (3,008 )
Interest expense, net     (1,734 )     (319 )     (3,299 )     (519 )
Income from cash grant           22,652             22,652  
Other income (expense), net     59       (66 )     78       388  
Income (loss) before provision for income taxes     7,595       22,115       (5,571 )     19,513  
Provision for income taxes                        
Net income (loss)   $ 7,595     $ 22,115     $ (5,571 )   $ 19,513  
Preferred stock dividends   $ (315 )   $ (315 )   $ (627 )   $ (627 )
Net income allocated to participating securities     (96 )     (284 )           (251 )
Net income (loss) available to common stockholders   $ 7,184     $ 21,516     $ (6,198 )   $ 18,635  
Net income (loss) per share, basic   $ 0.10     $ 0.29     $ (0.08 )   $ 0.26  
Net income (loss) per share, diluted   $ 0.10     $ 0.29     $ (0.08 )   $ 0.26  
Weighted-average shares outstanding, basic     73,394       72,936       73,603       71,690  
Weighted-average shares outstanding, diluted     74,103       73,123       73,603       71,958  


ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value)
 
ASSETS   June 30,
2023
  December 31,
2022
Current Assets:                
Cash and cash equivalents   $ 22,739     $ 36,456  
Restricted cash     2,351       13,069  
Accounts receivable, net     63,367       68,655  
Inventories     71,115       66,628  
Derivative instruments     14,038       4,973  
Other current assets     5,919       9,340  
Total current assets     179,529       199,121  
Property and equipment, net     246,693       239,069  
Other Assets:                
Right of use operating lease assets, net     24,433       18,937  
Intangible assets, net     8,792       9,087  
Goodwill     5,970       5,970  
Other assets     5,993       6,137  
Total other assets     45,188       40,131  
Total Assets   $ 471,410     $ 478,321  
                 


ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value)
 
LIABILITIES AND STOCKHOLDERS’ EQUITY   June 30,
2023
  December 31,
2022
Current Liabilities:                
Accounts payable   $ 25,933     $ 28,115  
Accrued liabilities     15,328       26,556  
Current portion – operating leases     3,914       3,849  
Derivative instruments     8,396       6,732  
Other current liabilities     5,115       12,765  
Total current liabilities     58,686       78,017  
                 
Long-term debt, net     82,082       68,356  
Operating leases, net of current portion     21,058       15,062  
Other liabilities     8,791       8,797  
Total Liabilities     170,617       170,232  
                 
Stockholders’ Equity:                
Preferred stock, $0.001 par value; 10,000 shares authorized;
Series A: no shares issued and outstanding as of
June 30, 2023 and December 31, 2022
Series B: 927 shares issued and outstanding as of
June 30, 2023 and December 31, 2022
    1       1  
Common stock, $0.001 par value; 300,000 shares authorized;
75,923 and 75,154 shares issued and outstanding as of
June 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 June 30, 2023 and December 31, 2022
           
Additional paid-in capital     1,039,735       1,040,834  
Accumulated other comprehensive income     1,822       1,822  
Accumulated deficit     (740,841 )     (734,643 )
Total Stockholders’ Equity     300,793       308,089  
Total Liabilities and Stockholders’ Equity   $ 471,410     $ 478,321  
                 

Reconciliation of Adjusted EBITDA to Net Income

    Three Months Ended
June 30,
  Six Months Ended
June 30,
(in thousands) (unaudited)   2023   2022   2023   2022
Net income (loss)   $ 7,595     $ 22,115     $ (5,571 )   $ 19,513  
Adjustments:                                
Interest expense     1,734       319       3,299       519  
Interest income     (190 )     (145 )     (411 )     (303 )
Asset impairments                 574        
Acquisition-related expense     700       875       1,400       1,750  
Depreciation and amortization expense     5,681       6,728       11,735       12,861  
Total adjustments     7,925       7,777       16,597       14,827  
Adjusted EBITDA   $ 15,520     $ 29,892     $ 11,026     $ 34,340  
                                 

Commodity Price Performance

    Three Months Ended
June 30,
  Six Months Ended
June 30,
(unaudited)   2023   2022   2023   2022
Renewable fuel production gallons sold (in millions)     51.2       51.3       94.5       100.4  
Specialty alcohol production gallons sold (in millions)     16.6       25.8       38.0       49.1  
Third party renewable fuel gallons sold (in millions)     26.6       30.0       60.4       60.8  
Total gallons sold (in millions)     94.4       107.1       192.9       210.3  
                                 
Total gallons produced (in millions)     70.5       77.0       131.1       151.3  
Production capacity utilization     81 %     88 %     76 %     85 %
                                 
Average sales price per gallon   $ 2.63     $ 2.84     $ 2.53     $ 2.65  
                                 
Average CBOT ethanol price per gallon   $ 2.46     $ 2.73     $ 2.33     $ 2.50  
                                 
Corn cost per bushel – CBOT equivalent   $ 6.52     $ 7.46     $ 6.56     $ 6.84  
Average basis     0.80       0.69       0.63       0.66  
Delivered corn cost   $ 7.32     $ 8.15     $ 7.19     $ 7.50  
                                 
Total essential ingredients tons sold (in thousands)     364.1       414.1       663.4       812.9  
Essential ingredients return % (1)     37.6 %     32.7 %     38.6 %     34.6 %

________________
(1) Essential ingredients revenue as a percentage of delivered cost of corn.

Segment Financials

    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2023   2022   2023   2022
Net Sales                
Pekin Campus, recorded as gross:                                
Alcohol sales   $ 127,694     $ 143,768     $ 260,075     $ 259,818  
Essential ingredient sales     53,954       59,853       117,585       115,133  
Intersegment sales     444       269       757       525  
Total Pekin Campus sales     182,092       203,890       378,417       375,476  
                                 
Marketing and distribution:                                
Alcohol sales, gross   $ 72,589     $ 63,558     $ 156,936     $ 117,484  
Alcohol sales, net     104       317       218       668  
Intersegment sales     2,499       3,242       5,342       6,239  
Total marketing and distribution sales     75,192       67,117       162,496       124,391  
                                 
Other production, recorded as gross:                                
Alcohol sales   $ 44,384     $ 67,184     $ 65,316     $ 126,991  
Essential ingredient sales     14,421       23,372       22,773       42,309  
Intersegment sales     62             62       12  
Total Other production sales     58,867       90,556       88,151       169,312  
                                 
Corporate and other     4,151       4,137       8,285       7,904  
Intersegment eliminations     (3,005 )     (3,511 )     (6,161 )     (6,776 )
Net sales as reported   $ 317,297     $ 362,189     $ 631,188     $ 670,307  
                                 
Cost of goods sold:                
Pekin Campus   $ 168,419     $ 195,691     $ 366,596     $ 364,573  
Marketing and distribution     71,746       63,796       154,871       118,510  
Other production     57,834       91,606       91,815       169,851  
Corporate and other     3,414       3,197       5,786       6,070  
Intersegment eliminations     (1,297 )     (945 )     (1,897 )     (2,314 )
Cost of goods sold as reported   $ 300,116     $ 353,345     $ 617,171     $ 656,690  
                                 
Gross profit:                                
Pekin Campus   $ 13,673     $ 8,199     $ 11,821     $ 10,903  
Marketing and distribution     3,446       3,321       7,625       5,881  
Other production     1,033       (1,050 )     (3,664 )     (539 )
Corporate and other     737       940       2,499       1,834  
Intersegment eliminations     (1,708 )     (2,566 )     (4,264 )     (4,462 )
Gross profit as reported   $ 17,181     $ 8,844     $ 14,017     $ 13,617  
                                 

  


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Source: Alto Ingredients, Inc.