Alto Ingredients, Inc. Acquires CO2 Processing Plant Adjacent to Columbia Facility, Bolstering Economics and Increasing Asset Valuation

Rhea-AI Summary

Alto Ingredients (NASDAQ: ALTO) has announced that its subsidiary, Alto Carbonic, has acquired Kodiak Carbonic, a beverage-grade liquid CO2 processor, for $7.25 million in cash plus working capital on January 1, 2025. The acquisition includes an improved long-term CO2 sales contract that will be immediately accretive.

The acquired facility, located in Boardman, OR, processes CO2 gas from Alto's Columbia plant to produce liquid CO2 for food, beverage, and industrial applications in the Northwestern U.S. The plant, operational since 2015, can process over 200 tons of liquid CO2 daily. The transaction includes a long-term off-take contract with a leading gas supplier, which helps secure future cash flows while improving distribution efficiency and expanding margins.

Positive

• Immediate bottom-line accretion from improved CO2 sales contract
• Processing capacity of 200+ tons of liquid CO2 daily
• Secured long-term off-take agreement with leading supplier
• Strategic expansion of premium ingredients portfolio
• Enhanced distribution efficiency and margin expansion potential

Negative

• Cash outlay of $7.25 million plus working capital

Insights

Financial Analyst

The $7.25 million acquisition of Kodiak Carbonic represents a strategic vertical integration move that enhances ALTO's value chain. The CO2 processing facility's 200-ton daily capacity and immediate bottom-line accretion through an improved off-take contract demonstrate strong potential for ROI. This deal is particularly noteworthy given ALTO's market cap of $128.4 million, making it a manageable investment that leverages existing infrastructure. The Columbia facility's enhanced economics through improved distribution efficiency and expanded margins should positively impact EBITDA. The secured long-term contract with a leading gas supplier provides stable revenue visibility and reduces operational risk. For a company in the specialty alcohols and renewable fuels sector, vertical integration into CO2 processing represents a smart diversification of revenue streams while maximizing the value of existing production byproducts.

Industrial Process Engineer

The acquisition's technical merits are substantial. CO2 capture from ethanol production is a highly efficient process as the gas is already concentrated, requiring minimal additional energy for purification to beverage-grade quality. The 200-ton daily processing capacity aligns well with typical ethanol plant CO2 output ratios. The co-location aspect eliminates transportation costs and reduces carbon footprint, while the improved distribution efficiency suggests optimized logistics planning. The facility's 10-year operational history since 2015 indicates proven technology and established market presence. This vertical integration allows ALTO to capture value from what was previously just a byproduct, transforming a cost center into a profit center while meeting growing demand for food-grade CO2 in the Pacific Northwest market.

- Secures improved, long-term CO₂ sales contract,
creating immediate bottom-line accretion and future financial upside -

PEKIN, Ill., Jan. 06, 2025 (GLOBE NEWSWIRE) -- Alto Ingredients, Inc. (NASDAQ: ALTO), a leading producer and distributor of specialty alcohols, renewable fuels, and essential ingredients, announced its wholly-owned subsidiary, Alto Carbonic, LLC, has acquired Kodiak Carbonic, LLC, a beverage-grade liquid carbon dioxide (CO₂) processor, for $7.25 million in cash plus working capital on January 1, 2025. The transaction includes an improved, long-term contract for the sale of beverage-grade CO₂, which will be immediately accretive to the bottom line, has a compelling payback timeline and provides potential expansion opportunities.

Alto Carbonic, co-located in Boardman, OR, utilizes CO₂ gas produced from Alto Ingredients’ Columbia plant to produce and sell liquid CO₂ in the Northwestern region of the United States for applications in food and beverage processing, industrial cooling, and other industries. The facility, operational since 2015, has the capacity to process over 200 tons of liquid CO₂ daily.

“In our ongoing pursuit to optimize product value, we identified the beverage-grade liquid CO₂ plant as a significant opportunity and pursued the acquisition to continue to expand our premium ingredients portfolio,” said Alto Ingredients’ President and CEO Bryon McGregor. “By entering into an improved long-term off-take contract with a leading supplier of gases and related products and services, we further de-risk the future cash flows from this acquisition. Overall, we have augmented our CO₂ operations, positioning the Columbia facility to grow sales, improve distribution efficiency, and expand margins. The transaction boosts our economics and strengthens our asset valuation.”

About Alto Ingredients, Inc.
Alto Ingredients, Inc. (ALTO) is a leading producer and distributor of specialty alcohols, renewable fuels 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 the benefits and other effects of Alto Ingredients’ acquisition of Kodiak Carbonic, LLC and its liquid CO₂ production facility, including margin improvements and other benefits and effects; 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, Alto Ingredients’ ability to profitably and efficiently operate its liquid CO₂ production facility; economic and market conditions, including for liquid CO₂, specialty alcohols, renewable fuels and essential ingredients; export conditions and international demand for Alto Ingredients’ products; fluctuations in the price of and demand for oil and gasoline; and raw material costs, including production input costs, such as corn and natural gas. These factors also include, among others, the inherent uncertainty associated with operating large-scale chemical production facilities, and financial and other projections and 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’ Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 2024.

Company IR Contact:
Michael Kramer, Alto Ingredients, Inc., 916-403-2755, Investorrelations@altoingredients.com 

IR Agency Contact:
Kirsten Chapman, Alliance Advisors Investor Relations, 415-433-3777, Investorrelations@altoingredients.com 

FAQ

How much did Alto Ingredients (ALTO) pay for Kodiak Carbonic acquisition?

Alto Ingredients paid $7.25 million in cash plus working capital for Kodiak Carbonic acquisition on January 1, 2025.

What is the daily CO2 processing capacity of the acquired Boardman facility?

The Boardman facility has the capacity to process over 200 tons of liquid CO2 daily.

How will the Kodiak Carbonic acquisition impact ALTO's financial performance?

The acquisition will be immediately accretive to the bottom line, with improved margins through an enhanced long-term CO2 sales contract and distribution efficiency.

What are the main markets served by ALTO's newly acquired CO2 facility?

The facility serves the Northwestern United States market, providing liquid CO2 for food and beverage processing, industrial cooling, and other industries.

When did the acquired CO2 processing facility begin operations?

The CO2 processing facility has been operational since 2015.