Annual report pursuant to Section 13 and 15(d)

Segments

v3.22.4
Segments
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
SEGMENTS

5. SEGMENTS.

 

The Company reports its financial and operating performance in three segments: (1) 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 (2) Pekin Campus production, which includes the production and sale of alcohols and essential ingredients produced at the Company’s Pekin, Illinois campus, and (3) Other production, which includes the production and sale of fuel-grade ethanol and essential ingredients produced at all of the Company’s other production facilities on an aggregated basis, none of which are individually so significant to be considered a separately reportable segment.

 

Income before provision for income taxes includes management fees charged by Alto Ingredients to the segments. The Pekin Campus production segment incurred $5,046,000, $4,344,000 and $4,344,000 in management fees for the years ended December 31, 2022, 2021 and 2020, respectively. The marketing and distribution segment incurred $3,840,000, $3,480,000 and $3,480,000 in management fees for the years ended December 31, 2022, 2021 and 2020, respectively. The Other production segment incurred $2,400,000, $1,950,000 and $3,893,000 in management fees for the years ended December 31, 2022, 2021 and 2020, 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 4. 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, 2022 and 2021, capital expenditures incurred by the Pekin Campus segment were approximately $25.7 million and $14.3 million, and by the Other production segment were approximately $12.3 million $2.1 million, respectively. For the year ended December 31, 2020, capital expenditures were substantially all incurred at the Company’s Pekin Campus production segment.

 

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

 

    Years Ended December 31,  
  2022     2021     2020  
Net Sales                  
Pekin Campus production, recorded as gross:                  
Alcohol sales   $ 521,273     $ 498,195     $ 330,432  
Essential ingredient sales     225,871       189,535       130,270  
Intersegment sales     1,212       1,193       645  
Total Pekin Campus sales     748,356       688,923       461,347  
Marketing and distribution:                        
Alcohol sales, gross   $ 227,626     $ 379,422     $ 256,209  
Alcohol sales, net     1,225       1,753       1,529  
Intersegment sales     12,459       10,061       9,648  
Total marketing and distribution sales     241,310       391,236       267,386  
Other Production, recorded as gross:                        
Alcohol sales   $ 253,605     $ 107,931     $ 137,703  
Essential ingredient sales     90,209       31,056       40,880  
Intersegment sales     22       964       1,309  
Total Other production sales     343,836       139,951       179,892  
                         
Corporate and other     15,812      
—
      
—
  
Intersegment eliminations     (13,693 )     (12,218 )     (11,602 )
Net sales as reported   $ 1,335,621     $ 1,207,892     $ 897,023  
                   
Cost of goods sold:                  
Pekin Campus production   $ 772,755     $ 638,371     $ 389,125  
Marketing and distribution     229,288       371,371       253,465  
Other production     353,775       136,401       206,412  
Corporate and other     12,167      
—
      
—
  
Intersegment eliminations     (4,814 )     (6,035 )     (4,838 )
Cost of goods sold as reported   $ 1,363,171     $ 1,140,108     $ 844,164  
                   
Income (loss) before provision (benefit) for income taxes:                  
Pekin Campus production   $ (27,378 )   $ 41,622     $ 53,898  
Marketing and distribution     3,749       11,756       4,889  
Other production     (6,997 )     (3,762 )     (54,677 )
Corporate and other     (8,926 )     (2,065 )     (21,409 )
    $ (39,552 )   $ 47,551     $ (17,299 )
                       
Depreciation and amortization expense:                        
Pekin Campus production   $ 19,136     $ 17,352     $ 17,450  
Other production     5,085       5,890       12,691  
Corporate and other     874       50       127  
    $ 25,095     $ 23,292     $ 30,268  
                   
Interest expense, net of capitalized interest:                  
Pekin Campus production   $ (381 )   $ 756     $ 6,038  
Marketing and distribution     1,658       963       1,574  
Other production     (339 )     167       334  
Corporate and other     889       1,701       9,997  
    $ 1,827     $ 3,587     $ 17,943  

 

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

 

    December 31,
2022		     December 31,
2021		  
Total assets:            
Pekin Campus production   $ 257,089       266,197  
Marketing and distribution     114,755       130,302  
Other production     51,886       57,046  
Corporate and other     54,591       31,408  
    $ 478,321     $ 484,953