Alto Ingredients, Inc. (NASDAQ: ALTO), a leading
producer and distributor of specialty alcohols and essential
ingredients, reported its financial results for the quarter ended
March 31, 2023.
“In 2023, we continue to make good progress
executing our transformative capital initiatives to drive our
EBITDA expansion goals, and we are also pleased that current market
improvements are positively impacting our business,” said Mike
Kandris, CEO of Alto Ingredients. “Since December 2022, the market
environment has improved sequentially each month. For the month of
March, we generated positive bottom-line financial results. Based
on current ethanol crush margins, we expect positive Adjusted
EBITDA for the second quarter of 2023.”
“We are confident in our ability to fund our
near-term projects through a combination of working capital, our
term loan facility and cash generated from our operating
activities. We expect to achieve roughly $65 million of additional
annualized EBITDA by the end of 2025, which we expect to increase
to $125 million annualized EBITDA by the end of 2026. Overall, we
believe these initiatives will significantly improve long-term
shareholder value,” concluded Kandris.
Alto Ingredients produces renewable products,
specifically, specialty alcohols, essential ingredients and
renewable fuel. Each of the company’s initiatives to expand EBITDA
advances sustainability. Recent project updates follow.
- New 190 proof and low-moisture 200 proof grain neutral spirits
products are attracting new and existing beverage customers on a
spot purchase basis. The company expects to secure additional
volume commitments during the annual contracting period for
2024.
- Magic Valley’s corn oil and high protein technology
installation is complete, and the operating systems are undergoing
alignment for optimal efficiency.
- Fully operational, the new silo at the Pekin campus is already
reducing costs and improving plant reliability.
- Updates regarding several third-party, front-end engineering
and design (FEED) studies include:
- Engaged firm for primary yeast production.
- Selected a firm for carbon capture and sequestration (CCS) to
determine capture, compression, and energy requirements, and
evaluating partners to provide turnkey transportation,
sequestration, and monitoring services.
- Completed new natural gas pipeline study, started initial
routing steps and advanced to definitive land agreements and the
construction permit application process.
- Completed study for cogeneration, which is expected to reduce
energy costs at the company’s Pekin campus and support the
increased energy requirements for both the primary yeast and CCS
initiatives.
Financial Results for the Three Months
Ended March 31, 2023 Compared to 2022
- Net sales were $313.9 million, compared to $308.1 million.
- Cost of goods sold was $317.1 million, compared to $303.3
million.
- Gross loss was $3.2 million, compared to gross profit of $4.8
million.
- Selling, general and administrative expenses were $7.9 million,
compared to $7.6 million.
- Operating loss was $11.6 million, compared to $2.9
million.
- Net loss available to common stockholders was $13.5 million, or
$0.18 per share, compared to $2.9 million, or $0.04 per share.
- Adjusted EBITDA was negative $4.5 million, compared to positive
Adjusted EBITDA of $4.4 million.
Cash and cash equivalents were $21.2 million at
March 31, 2023, compared to $36.5 million at December 31, 2022.
Working capital was $117.8 million at March 31, 2023, compared to
$121.1 million at December 31, 2022. The company’s term loan
facility has $40 million of remaining borrowing availability and an
option to request up to an additional $25 million. These resources
represent more than $180 million to support business operations and
growth initiatives.
First 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, May 8, 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, May 8, 2023, through 8:00 p.m. Eastern Time on Monday, May
15, 2023. To access the replay, please dial 877-344-7529.
International callers should dial 00-1 412-317-0088. The pass code
will be 7191805.
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 business initiatives and strategies, and
their timing and effects, including, but not limited to, EBITDA
and/or Adjusted EBITDA that Alto Ingredients’ expects to generate
as a result of its initiatives and strategies; and Alto
Ingredients’ other plans, objectives, expectations and intentions;
estimates of future EBITDA or Adjusted EBITDA. 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
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 results deriving from, Alto Ingredients’ plant
improvement 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 and marketing 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; the inability
to timely and successfully implement business strategies, and fund
or complete capital improvement projects and other initiatives; 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’
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 14, 2023.
Media Contact: Bryon McGregor,
Alto Ingredients, Inc., 916-403-2768,
mediarelations@altoingredients.com
Company IR 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 March 31, |
|
|
2023 |
|
|
2022 |
|
Net sales |
$ |
313,891 |
|
$ |
308,118 |
|
Cost of goods sold |
|
317,055 |
|
|
303,345 |
|
Gross profit (loss) |
|
(3,164 |
) |
|
4,773 |
|
Selling, general and administrative expenses |
|
(7,882 |
) |
|
(7,629 |
) |
Asset impairments |
|
(574 |
) |
|
— |
|
Loss from operations |
|
(11,620 |
) |
|
(2,856 |
) |
Interest expense, net |
|
(1,565 |
) |
|
(200 |
) |
Other income, net |
|
19 |
|
|
454 |
|
Loss before provision for income taxes |
|
(13,166 |
) |
|
(2,602 |
) |
Provision for income taxes |
|
— |
|
|
— |
|
Net loss |
$ |
(13,166 |
) |
$ |
(2,602 |
) |
Preferred stock dividends |
$ |
(312 |
) |
$ |
(312 |
) |
Net loss available to common stockholders |
$ |
(13,478 |
) |
$ |
(2,914 |
) |
Net loss per share, basic and diluted |
$ |
(0.18 |
) |
$ |
(0.04 |
) |
Weighted-average shares outstanding, basic |
|
73,815 |
|
|
71,390 |
|
Weighted-average shares outstanding, diluted |
|
73,815 |
|
|
71,390 |
|
ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS (unaudited, in
thousands, except par value)
ASSETS |
March 31,2023 |
|
December 31,2022 |
Current Assets: |
|
|
Cash and cash equivalents |
$ |
21,173 |
|
$ |
36,456 |
Restricted cash |
5,263 |
13,069 |
Accounts receivable, net |
66,537 |
68,655 |
Inventories |
67,147 |
66,628 |
Derivative instruments |
6,267 |
4,973 |
Other current assets |
5,217 |
|
|
9,340 |
Total current assets |
171,604 |
|
|
199,121 |
Property and equipment, net |
244,172 |
|
|
239,069 |
Other
Assets: |
|
|
Right of use operating lease assets, net |
23,046 |
18,937 |
Intangible assets, net |
8,940 |
9,087 |
Goodwill |
5,970 |
5,970 |
Other assets |
6,172 |
|
|
6,137 |
Total other assets |
44,128 |
|
|
40,131 |
Total Assets |
$ |
459,904 |
|
$ |
478,321 |
ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value)
LIABILITIES AND STOCKHOLDERS’ EQUITY |
March 31,2023 |
|
|
December 31,2022 |
Current Liabilities: |
|
|
Accounts payable |
$ |
24,406 |
|
$ |
28,115 |
Accrued liabilities |
17,334 |
26,556 |
Current portion – operating leases |
3,856 |
3,849 |
Derivative instruments |
2,100 |
6,732 |
Other current liabilities |
6,150 |
|
12,765 |
|
Total current liabilities |
53,846 |
78,017 |
|
|
|
Long-term debt |
83,739 |
68,356 |
Operating leases, net of current portion |
19,678 |
15,062 |
Other liabilities |
8,966 |
|
8,797 |
Total Liabilities |
166,229 |
170,232 |
|
|
|
Stockholders’ Equity: |
|
|
Preferred stock, $0.001 par value; 10,000 shares authorized;
Series A: no shares issued and outstanding as of March 31,
2023 and December 31, 2022 Series B: 927 shares issued and
outstanding as of March 31, 2023 and December 31, 2022 |
1 |
1 |
Common stock, $0.001 par value; 300,000 shares authorized; 76,187
and 75,154 shares issued and outstanding as of March 31, 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 March 31, 2023 and December
31, 2022 |
— |
— |
Additional paid-in capital |
1,039,897 |
1,040,834 |
Accumulated other comprehensive income |
1,822 |
1,822 |
Accumulated deficit |
(748,121) |
|
(734,643) |
Total Stockholders’ Equity |
293,675 |
|
|
308,089 |
Total Liabilities and Stockholders’ Equity |
$ |
459,904 |
|
$ |
478,321 |
Reconciliation of Adjusted EBITDA to Net
Income (Loss)
|
Three Months Ended March 31, |
(in thousands) (unaudited) |
|
2023 |
|
|
2022 |
|
Net loss |
$ |
(13,166 |
) |
$ |
(2,602 |
) |
Adjustments: |
|
|
Interest expense |
|
1,565 |
|
|
200 |
|
Interest income |
|
(221 |
) |
|
(158 |
) |
Acquisition-related expense |
|
700 |
|
|
875 |
|
Asset impairments |
|
574 |
|
|
— |
|
Depreciation and amortization expense |
|
6,055 |
|
|
6,134 |
|
Total adjustments |
|
8,673 |
|
|
7,051 |
|
Adjusted EBITDA |
$ |
(4,493 |
) |
$ |
4,449 |
|
Commodity Price Performance
|
Three Months Ended March 31, |
|
(unaudited) |
|
2023 |
|
|
2022 |
|
Renewable fuel production gallons sold (in millions) |
|
37.1 |
|
|
49.2 |
|
Specialty alcohol production gallons sold (in millions) |
|
21.4 |
|
|
23.3 |
|
Third party renewable fuel gallons sold (in millions) |
|
33.9 |
|
|
30.7 |
|
Total gallons sold (in millions) |
|
92.4 |
|
|
103.2 |
|
|
|
|
Total gallons produced (in millions) |
|
60.6 |
|
|
74.3 |
|
Production capacity utilization |
|
70% |
|
|
86% |
|
|
|
|
Average sales price per gallon |
$ |
2.43 |
|
$ |
2.46 |
|
Average CBOT ethanol price per gallon |
$ |
2.21 |
|
$ |
2.16 |
|
|
|
|
Corn cost per bushel – CBOT equivalent |
$ |
6.61 |
|
$ |
6.22 |
|
Average basis |
$ |
0.46 |
|
$ |
0.64 |
|
Delivered corn cost |
$ |
7.07 |
|
$ |
6.86 |
|
|
|
|
Total essential ingredients tons sold (in thousands) |
|
299.3 |
|
|
398.8 |
|
Essential ingredient return % (1) |
|
44.5% |
|
|
36.4% |
|
________________ (1) Essential ingredients revenue
as a percentage of delivered cost of corn.
Segment Financials
(in thousands) (unaudited) |
Three Months Ended March 31, |
|
2023 |
|
2022 |
Net sales |
|
|
Pekin Campus production, recorded as gross: |
|
|
Alcohol sales |
$ |
132,381 |
|
$ |
116,050 |
Essential ingredient sales |
63,631 |
55,280 |
Intersegment sales |
313 |
|
|
256 |
Total Pekin Campus sales |
196,325 |
171,586 |
Marketing and distribution: |
|
|
Alcohol sales, gross |
$ |
84,381 |
|
$ |
53,926 |
Alcohol sales, net |
114 |
351 |
Intersegment sales |
2,843 |
|
|
2,996 |
Total marketing and distribution sales |
87,338 |
57,273 |
Other production, recorded as gross: |
|
|
Alcohol sales |
$ |
20,932 |
|
$ |
59,805 |
Essential ingredient sales |
8,353 |
18,938 |
Intersegment sales |
1 |
|
|
12 |
Total Other production sales |
29,286 |
78,755 |
|
|
|
Corporate and other |
4,099 |
3,768 |
Intersegment eliminations |
(3,157) |
|
|
(3,264) |
Net sales as reported |
$ |
313,891 |
|
$ |
308,118 |
|
|
|
|
|
|
Cost of goods sold: |
|
|
|
|
|
Pekin Campus production |
$ |
198,178 |
|
$ |
168,881 |
Marketing and distribution |
|
83,126 |
|
|
54,716 |
Other production |
|
33,982 |
|
|
78,244 |
Corporate and other |
|
2,369 |
|
|
2,872 |
Intersegment eliminations |
|
(600) |
|
|
(1,368) |
Cost of goods sold as reported |
$ |
317,055 |
|
$ |
303,345 |
|
|
|
|
|
|
Gross profit (loss): |
|
|
|
|
|
Pekin Campus production |
$ |
(1,853) |
|
$ |
2,705 |
Marketing and distribution |
|
4,212 |
|
|
2,557 |
Other production |
|
(4,696) |
|
|
511 |
Corporate and other |
|
1,730 |
|
|
896 |
Intersegment eliminations |
|
(2,557) |
|
|
(1,896) |
Gross profit (loss) as reported |
$ |
(3,164) |
|
$ |
4,773 |
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