Alto Ingredients, Inc. General form of registration statement for all companies including face-amount certificate companies

General form of registration statement for all companies including face-amount certificate companies

SEGMENTS.

SEGMENTS.

9 Months Ended

12 Months Ended

Sep. 30, 2019

Dec. 31, 2018

Segment Reporting [Abstract]

SEGMENTS.

The Company reports its financial and operating performance in two segments: (1) ethanol production, which includes the production and sale of ethanol, specialty alcohols and co-products, with all of the Company's production facilities aggregated, and (2) marketing and distribution, which includes marketing and merchant trading for Company-produced ethanol, specialty alcohols and co-products and third-party ethanol.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
Net Sales	2019			2018			2019			2018
Production, recorded as gross:
Ethanol/alcohol sales	$	212,897		$	216,788		$	586,680		$	670,304
Co-product sales		65,693			73,259			199,177			226,307
Intersegment sales		403			518			1,187			1,531
Total production sales		278,993			290,565			787,044			898,142

Marketing and distribution:
Ethanol/alcohol sales, gross	$	86,124		$	79,877		$	280,032		$	282,940
Ethanol/alcohol sales, net		446			483			1,375			1,405
Intersegment sales		2,079			2,201			5,839			6,757
Total marketing and distribution sales		88,649			82,561			287,246			291,102

Intersegment eliminations		(2,482	)		(2,719	)		(7,026	)		(8,288	)
Net sales as reported	$	365,160		$	370,407		$	1,067,264		$	1,180,956

Cost of goods sold:
Production	$	294,888		$	295,574		$	810,670		$	914,638
Marketing and distribution		87,976			73,784			277,545			268,917
Intersegment eliminations		(2,888	)		(2,719	)		(7,817	)		(8,456	)
Cost of goods sold as reported	$	379,976		$	366,639		$	1,080,398		$	1,175,099

Income (loss) before benefit for income taxes:
Production	$	(25,999	)	$	(15,571	)	$	(50,682	)	$	(45,355	)
Marketing and distribution		(998	)		7,416			4,991			18,095
Corporate activities		(2,076	)		(1,149	)		(5,833	)		(6,708	)
	$	(29,073	)	$	(9,304	)	$	(51,524	)	$	(33,968	)

Depreciation and amortization:
Production	$	11,833		$	10,040		$	35,390		$	30,017
Corporate activities		195			177			554			618
	$	12,028		$	10,217		$	35,944		$	30,635

Interest expense:
Production	$	1,969		$	1,692		$	5,724		$	5,416
Marketing and distribution		929			344			2,291			1,042
Corporate activities		2,265			2,157			6,999			6,417
	$	5,163		$	4,193		$	15,014		$	12,875

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

Total assets:	September 30, 2019		December 31, 2018
Production	$	527,950	$	532,790
Marketing and distribution		108,960		112,984
Corporate assets		15,950		14,117
	$	652,860	$	659,891

SEGMENTS.

Income before provision for income taxes includes management fees charged by Pacific Ethanol to the segment. The production segment incurred $10,248,000, $9,744,000 and $9,968,000 in management fees for the years ended December 31, 2018, 2017 and 2016, respectively. The marketing and distribution segment incurred $2,160,000, $2,160,000 and $3,000,000 in management fees for the years ended December 31, 2018, 2017 and 2016, respectively. Corporate activities include 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 segment markets ethanol produced by the production segment 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 in consolidation.

Capital expenditures are substantially all incurred at the Company's production segment.

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

	Years Ended December 31,
	2018			2017			2016
Net Sales
Production, recorded as gross:
Ethanol/alcohol sales	$	859,815		$	845,692		$	797,363
Co-product sales		296,686			257,031			248,444
Intersegment sales		1,995			1,898			1,169
Total production sales		1,158,496			1,104,621			1,046,976

Marketing and distribution:
Ethanol/alcohol sales, gross	$	357,011		$	527,869		$	577,347
Ethanol/alcohol sales, net		1,859			1,663			1,604
Intersegment sales		8,773			8,464			8,029
Total marketing and distribution sales		367,643			537,996			586,980

Intersegment eliminations		(10,768	)		(10,362	)		(9,198	)
Net sales as reported	$	1,515,371		$	1,632,255		$	1,624,758

Cost of goods sold:
Production	$	1,197,507		$	1,101,651		$	1,003,679
Marketing and distribution		343,991			535,033			575,920
Intersegment eliminations		(10,963	)		(10,360	)		(9,199	)
Cost of goods sold as reported	$	1,530,535		$	1,626,324		$	1,570,400

Income (loss) before benefit for income taxes:
Production	$	(77,833	)	$	(27,457	)	$	(6,879	)
Marketing and distribution		18,191			(2,463	)		4,517
Corporate activities		(8,856	)		(8,475	)		2,907
	$	(68,498	)	$	(38,395	)	$	545
Depreciation:
Production	$	40,099		$	37,637		$	34,528
Corporate activities		750			1,014			913
	$	40,849		$	38,651		$	35,441

Interest expense:
Production	$	7,116	$	5,887	$	20,794
Marketing and distribution		1,388		1,271		1,404
Corporate activities		8,628		5,780		208
	$	17,132	$	12,938	$	22,406

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

	December 31, 2018		December 31, 2017
Total assets:

Production	$	532,790	$	583,696
Marketing and distribution		112,984		127,242
Corporate assets		14,117		9,358
	$	659,891	$	720,296