Annual report pursuant to Section 13 and 15(d)

Segments

v3.22.0.1
Segments
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
SEGMENTS
4. 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 third-party fuel-grade ethanol (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 reportable segment.

 

Income before provision for income taxes includes management fees charged by Alto Ingredients to the segments. The Pekin Campus production segment incurred $4,344,000, $4,344,000 and $4,014,000 in management fees for the years ended December 31, 2021, 2020 and 2019, respectively. The marketing and distribution segment incurred $3,480,000 in management fees for each of the years ended December 31, 2021, 2020 and 2019, respectively. The Other production segment incurred $1,950,000, $3,893,000 and $5,188,000 in management fees for the years ended December 31, 2021, 2020 and 2019, 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 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 in consolidation.

 

For the year ended December 31, 2021, capital expenditures incurred by the Pekin Campus segment and the Other production segment were approximately $14.3 million and $2.1 million, respectively. For the years ended December 31, 2020 and 2019, 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,  
    2021     2020     2019  
Net Sales                  
Pekin Campus production, recorded as gross:                  
Alcohol sales   $ 498,195     $ 330,432     $ 343,610  
Essential ingredient sales     189,535       130,270       138,987  
Intersegment sales     1,193       645       1,110  
Total Pekin Campus sales     688,923       461,347       483,707  
                         
Marketing and distribution:                        
Alcohol sales, gross   $ 379,422     $ 256,209     $ 355,101  
Alcohol sales, net     1,753       1,529       1,831  
Intersegment sales     10,061       9,648       18,219  
Total marketing and distribution sales     391,236       267,386       375,151  
                         
Other Production, recorded as gross:                        
Alcohol sales   $ 107,931     $ 137,703     $ 455,343  
Essential ingredient sales     31,056       40,880       130,009  
Intersegment sales     964       1,309       509  
Total Other production sales     139,951       179,892       585,861  
                         
Intersegment eliminations     (12,218 )     (11,602 )     (19,838 )
Net sales as reported   $ 1,207,892     $ 897,023     $ 1,424,881  

 

Cost of goods sold:                  
Pekin Campus production   $ 638,371     $ 389,125     $ 481,262  
Marketing and distribution     371,371       253,465       347,185  
Other production     136,401       206,412       612,040  
Intersegment eliminations     (6,035 )     (4,838 )     (5,668 )
Cost of goods sold as reported   $ 1,140,108     $ 844,164     $ 1,434,819  

 

Income (loss) before provision (benefit) for income taxes:                  
Pekin Campus production   $ 41,622     $ 53,898     $ (21,441 )
Marketing and distribution     11,756       4,889       12,533  
Other production     (3,762 )     (54,677 )     (77,019 )
Corporate activities     (2,065 )     (21,409 )     (15,375 )
    $ 47,551     $ (17,299 )   $ (101,302 )
Depreciation expense:                        
Pekin Campus production   $ 17,352     $ 17,450     $ 17,535  
Other production     5,890       12,691       30,107  
Corporate activities     50       127       267  
    $ 23,292     $ 30,268     $ 47,909  

 

Interest expense:                  
Pekin Campus production   $ 756     $ 6,038     $ 7,556  
Marketing and distribution     963       1,574       3,053  
Other production     167       334       13  
Corporate activities     1,701       9,997       9,584  
    $ 3,587     $ 17,943     $ 20,206  

 

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

 

    December 31,
2021		     December 31,
2020		  
Total assets:            
Pekin Campus production   $ 266,197     $ 234,439  
Marketing and distribution     130,302       89,337  
Other production     57,046       102,409  
Corporate assets     31,408       50,633  
    $ 484,953     $ 476,818