Annual report [Section 13 and 15(d), not S-K Item 405]

Segments

v3.25.0.1
Segments
 12 Months Ended
Dec. 31, 2024
Segments [Abstract]  
SEGMENTS
4. SEGMENTS.

 

The Company reports its financial and operating performance in three segments: (1) Pekin Campus production, which includes the production and sale of alcohols and essential ingredients produced at the Company’s Pekin, Illinois campus, (2) marketing and distribution, which includes marketing and merchant trading for Company-produced alcohols and essential ingredients on an aggregated basis, and sales of fuel-grade ethanol sourced from third parties, and (3) Western production, which includes the production and sale of fuel-grade ethanol and essential ingredients, including liquid CO2, produced at the Company’s two western production facilities and its liquid CO2 plant on an aggregated basis, none of which are individually so significant to be considered a separately reportable segment.

 

The Company manages and assesses the performance of its reportable segments by its gross profit (loss). As part of the Executive Committee’s review of segment-level performance, each member of the Executive Committee reviews the gross profit of the Company’s reportable segments and provides expertise and analysis from their respective areas which drive the evaluation of the performance of the Company’s reportable segments and allocation of resources to those segments. Even though the CEO has the authority to override the other members for strategic or other reasons, key decisions are made jointly by the Executive Committee.

 

Included in income (loss) before provision for income taxes are management fees charged by Alto Ingredients to each of the segments. The Pekin Campus production segment incurred $7,200,000, $5,280,000 and $5,046,000 in management fees for the years ended December 31, 2024, 2023 and 2022, respectively. The marketing and distribution segment incurred $5,400,000, $3,960,000 and $3,840,000 in management fees for the years ended December 31, 2024, 2023 and 2022, respectively. The Western production segment incurred $3,600,000, $2,640,000 and $2,400,000 in management fees for the years ended December 31, 2024, 2023 and 2022, respectively. Corporate and other includes the results of Eagle Alcohol and selling, general and administrative expenses, consisting primarily of corporate employee compensation, professional fees and overhead costs not directly related to a specific operating segment.

 

During the normal course of business, the segments do business with each other. The preponderance of this activity occurs when the Company’s marketing and distribution segment markets alcohol produced by the production segments for a marketing fee, as discussed in Note 3. These intersegment activities are considered arms’-length transactions. Consequently, although these transactions impact segment performance, they do not impact the Company’s consolidated results since all revenues and corresponding costs are eliminated upon consolidation.

 

For the years ended December 31, 2024, 2023 and 2022, capital expenditures incurred by the Pekin Campus segment were approximately $6.8 million, $17.7 million and $25.7 million, and capital expenditures incurred by the Western production segment were approximately $4.3 million, $11.8 million and $12.3 million, respectively.

The following tables set forth certain financial data for the Company’s operating segments (in thousands):

 

    Years Ended December 31,  
Net Sales   2024     2023     2022  
Pekin Campus production, recorded as gross:                  
Alcohol sales   $ 415,710     $ 502,217     $ 521,273  
Essential ingredient sales     169,308       217,702       225,871  
Intersegment sales     1,243       1,427       1,212  
Total Pekin Campus sales     586,261       721,346       748,356  
                         
Marketing and distribution:                        
Alcohol sales, gross   $ 216,295     $ 262,587     $ 227,626  
Alcohol sales, net     229       365       1,225  
Intersegment sales     10,833       11,654       12,459  
Total marketing and distribution sales     227,357       274,606       241,310  
                         
Western Production, recorded as gross:                        
Alcohol sales   $ 115,389     $ 166,971     $ 253,605  
Essential ingredient sales     36,953       57,264       90,209  
Intersegment sales     (122 )     134       22  
Total Western production sales     152,220       224,369       343,836  
                         
Corporate and other     11,374       15,834       15,812  
Intersegment eliminations     (11,954 )     (13,215 )     (13,693 )
Net sales as reported   $ 965,258     $ 1,222,940     $ 1,335,621  
                         
Cost of goods sold:                  
Pekin Campus production   $ 563,033     $ 710,088     $ 772,755  
Marketing and distribution     213,023       259,234       229,288  
Western production     172,209       230,445       353,775  
Corporate and other     12,285       12,122       12,167  
Intersegment eliminations     (5,014 )     (4,602 )     (4,814 )
Cost of goods sold as reported   $ 955,536     $ 1,207,287     $ 1,363,171  
                   
Gross profit (loss):                  
Pekin Campus production   $ 23,228     $ 11,258     $ (24,399 )
Marketing and distribution     14,334       15,372       12,022  
Western production     (19,989 )     (6,076 )     (9,939 )
Corporate and other     (911 )     3,712       3,645  
Intersegment eliminations     (6,940 )     (8,613 )     (8,879 )
    $ 9,722     $ 15,653     $ (27,550 )
Income (loss) before provision for income taxes:                        
Pekin Campus production   $ 6,308     $ (1,560 )   $ (27,376 )
Marketing and distribution     5,261       7,644       3,748  
Western production     (51,086 )     (13,506 )     (7,209 )
Corporate and other     (19,294 )     (20,486 )     (8,835 )
    $ (58,811 )   $ (27,908 )   $ (39,672 )
Asset impairments:                        
Western production   $ 21,389     $
—
     $
—
  
Corporate and other     3,401       6,544      
—
  
    $ 24,790     $ 6,544     $
—
  
Depreciation and amortization expense:                        
Pekin Campus production   $ 21,017     $ 19,789     $ 19,136  
Western production     2,409       2,381       5,085  
Corporate and other     982       910       874  
    $ 24,408     $ 23,080     $ 25,095  
Interest expense, net of capitalized interest:                  
Pekin Campus production   $ 1,765     $ (207 )   $ (381 )
Marketing and distribution     389       822       1,658  
Western production     2,829       1,164       (339 )
Corporate and other     2,661       5,646       889  
    $ 7,644     $ 7,425     $ 1,827  

The following table sets forth the Company’s total assets by operating segment (in thousands): 

 

    December 31,  
    2024     2023  
Total assets:            
Pekin Campus production   $ 223,934       251,048  
Marketing and distribution     102,895       101,196  
Western production     44,992       57,533  
Corporate and other     29,617       44,464  
    $ 401,438     $ 454,241