Alto Ingredients, Inc. Reports Fourth Quarter and Year-end 2024 Results

Rhea-AI Summary

Alto Ingredients (NASDAQ: ALTO) reported its Q4 and full-year 2024 financial results, implementing significant cost-saving measures including cold idling the Magic Valley plant and reducing headcount by 16%, expected to save $8 million annually starting Q2 2025.

Key Q4 2024 metrics vs Q4 2023:

• Net sales decreased to $236.3M from $273.6M
• Net loss widened to $42.0M ($0.57/share) from $19.3M ($0.26/share)
• Adjusted EBITDA turned negative at -$7.7M compared to positive $3.5M

The company acquired a beverage-grade liquid CO2 processor near its Columbia site, with expected payback within two years. Management is exploring strategic options including asset sales and merger possibilities. Cash position stood at $35.5M as of December 31, 2024, with $88.1M in borrowing availability.

Positive

• Cost reduction initiatives to save $8M annually
• Strategic acquisition of CO2 processor with <2-year payback
• Available borrowing capacity of $88.1M
• Cash position improved to $35.5M from $30.0M YoY

Negative

• Net sales declined 13.6% YoY to $236.3M in Q4
• Q4 net loss widened to $42.0M from $19.3M YoY
• Negative Q4 Adjusted EBITDA of -$7.7M vs +$3.5M YoY
• Asset impairments of $24.8M in Q4
• Full-year net loss increased to $60.3M from $29.3M

Insights

Financial Analyst

Alto Ingredients' Q4 and full-year 2024 results paint a concerning financial picture with deepening operational challenges. The company reported a Q4 net loss of $42.0 million ($0.57 per share), significantly worse than the $19.3 million loss in Q4 2023. Annual losses more than doubled to $60.3 million from $29.3 million.

The dramatic revenue decline is particularly troubling - Q4 sales fell 13.6% to $236.3 million, while full-year revenue dropped 21.1% to $965.3 million. Most concerning is the shift to negative EBITDA territory, with Q4 Adjusted EBITDA at negative $7.7 million versus positive $3.5 million in 2023, and full-year Adjusted EBITDA at negative $8.5 million compared to positive $20.8 million.

Management's response includes several defensive measures: cost reductions through a 16% workforce reduction (expected to save $8 million annually), cold idling the Magic Valley plant, and taking $24.8 million in asset impairments. The company's mention of exploring "asset sales, a merger or other strategic transactions" signals a potential fundamental restructuring of the business.

The acquisition of a beverage-grade liquid CO2 processor represents a bright spot, with management claiming a payback period under two years. However, this appears insufficient to offset broader operational challenges. With $35.5 million in cash and $88.1 million in borrowing availability, Alto has some financial flexibility, but the ongoing negative operational trajectory raises sustainability questions if performance doesn't improve in 2025.

Corporate Strategy Expert

Alto Ingredients is executing a multi-pronged defensive strategy typical of companies facing sustained margin pressure in commodity businesses. The 16% headcount reduction and plant idling represent classic cost-cutting maneuvers that address symptoms rather than underlying market fundamentals. These moves typically provide short-term relief but rarely solve structural industry challenges.

The beverage-grade CO₂ acquisition represents their attempt at vertical integration into higher-margin specialty products - a textbook strategic pivot to capture more value from existing operations. This transaction appears to have merit with its sub-two-year payback period, but it's insufficient to offset the company's broader challenges. The emphasis on "opportunities to optimize carbon" at Pekin suggests management correctly recognizes the need to extract more value from existing assets.

Most revealing is management's explicit statement about considering "asset sales, a merger or other strategic transactions." This signals the board has likely concluded that the current business configuration cannot generate acceptable returns. When companies publicly announce exploration of such options, it typically indicates internal discussions have already progressed significantly.

The structural reset described by the CFO - recognizing $30 million in asset impairments and acquisition-related expenses - suggests management is creating a cleaner financial foundation to facilitate potential transactions. This is classic preparation for major corporate action, effectively resetting expectations and valuations to make deals more attractive to potential counterparties.

Alto's strategy now appears focused on creating exit options rather than pursuing independent growth, with management seeking to maximize remaining value through operational improvements while simultaneously preparing for potential significant corporate transactions.

- Implemented Cost Savings Expected to Yield Approximately $8 Million Annually -
- Integrated Accretive Acquisition of a Beverage-grade Liquid CO₂ Processor -
- Considering Asset Sales, a Merger or Other Strategic Transactions -

PEKIN, Ill., March 05, 2025 (GLOBE NEWSWIRE) -- Alto Ingredients, Inc. (NASDAQ: ALTO), a leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients, reported its financial results for the quarter and year ended December 31, 2024.

Bryon McGregor, President and Chief Executive Officer of Alto Ingredients said, “During the fourth quarter of 2024 and the first quarter of 2025, we implemented cost saving initiatives, including cold idling our Magic Valley plant, and lowering total company headcount by 16%. We expect these staffing reductions to save approximately $8 million annually beginning in the second quarter of 2025. While ensuring high customer service, we rightsized the company to our smaller organizational footprint to position for long-term sustainable growth.

“On January 1^st, we acquired a beverage-grade liquid carbon dioxide processor adjacent to our Columbia site. Bolstering economics and increasing asset valuation, this immediately accretive transaction has a compelling payback of less than two years as well as opportunities for cost synergies and expanded production. At our Pekin Campus, we continue to diligently pursue opportunities to optimize carbon, which has been historically underutilized and undervalued. Lastly, with the assistance of our financial and legal advisors, we are considering a broad range of options, including asset sales, a merger or other strategic transactions to better align the long-term value potential of the company.”

Chief Financial Officer Rob Olander added, “Our restructuring has improved Alto’s financial position going forward. In doing so, during the fourth quarter of 2024, we recognized over $30 million in asset impairments and prior acquisition-related expenses, which reset our base. Combining our reduced expense run rate with our improved performance at the Pekin wet mill, our synergistic acquisition of premium liquid CO₂ processing and our entry into the European market, we are optimistic about 2025.”

Financial Results for the Three Months Ended December 31, 2024 Compared to 2023

• Net sales were $236.3 million, compared to $273.6 million.
• Cost of goods sold was $237.7 million, compared to $276.2 million.
• Gross loss was $1.4 million, including $3.5 million in realized losses on derivatives, compared to a gross loss of $2.5 million, including $2.3 million in realized losses on derivatives.
• Selling, general and administrative expenses were $7.4 million, compared to $7.8 million.
• Expenses related to the Eagle Alcohol acquisition were $5.7 million, compared to $0.7 million.
• Asset impairments were $24.8 million comprised of $21.4 million related to Magic Valley and $3.4 million related to Eagle Alcohol, compared to $6.0 million related to Eagle Alcohol.
• Net loss attributable to common stockholders was $42.0 million, or $0.57 per share, compared to $19.3 million, or $0.26 per share.
• Adjusted EBITDA was negative $7.7 million, including $3.5 million in realized losses on derivatives, compared to positive $3.5 million, including $2.3 million in realized losses on derivatives.

Cash and cash equivalents were $35.5 million at December 31, 2024, compared to $30.0 million at December 31, 2023. At December 31, 2024, the company’s borrowing availability was $88.1 million including $23.1 million under the company’s operating line of credit and $65.0 million under its term loan facility, subject to certain conditions.

Financial Results for the Twelve Months Ended December 31, 2024 Compared to 2023

• Net sales were $965.3 million, compared to $1,222.9 million.
• Net loss attributable to common stockholders was $60.3 million, including $32.5 million in expenses related to asset impairments and the company’s Eagle Alcohol acquisition, or $0.82 per share. This compares to $29.3 million, including $6.5 million in net expenses related to asset impairments, the company’s Eagle Alcohol acquisition and a USDA cash grant, or $0.40 per share.
• Adjusted EBITDA was negative $8.5 million, including $2.5 million in realized losses on derivatives and $5.4 million in costs related to the biennial outage in the second quarter, compared to positive $20.8 million, including $1.6 million in realized gains on derivatives.
  

Fourth Quarter 2024 Results Conference Call
Management will host a conference call at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on Wednesday, March 5, 2025, 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 up to twenty minutes prior to the scheduled call time, please 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 Wednesday, March 5, 2025, through 8:00 p.m. Eastern Time on Wednesday, March 12, 2025. To access the replay, please dial (877) 344-7529. International callers should dial 00-1 412-317-0088. The pass code will be 5306551.

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, unrealized derivative gains and losses, acquisition-related expense 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. (NASDAQ: ALTO) is a leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients. Leveraging the unique qualities of its facilities, the company serves customers in a wide range of consumer and commercial products in the Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels markets. 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’ projected outlook and future performance, including the timing and effects of its cost savings initiatives and its acquisition of a liquid carbon dioxide processor adjacent to its Columbia plant; Alto Ingredients’ capital projects, including its carbon capture and storage (CCS) project and opportunities to optimize carbon; and Alto Ingredients’ other plans, objectives, expectations and intentions. 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 renewable fuels, 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; adverse impacts of inflation and supply chain constraints; and the cost, ability to fund, timing and effects of, including the financial and other results deriving from, Alto Ingredients’ repair and maintenance programs, plant improvements and other capital projects, including CCS, and other business initiatives and strategies. These factors also include, among others, the inherent uncertainty associated with financial and other projections and large-scale capital projects, including CCS; 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 alcohol production, marketing and distribution 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, including with respect to the Inflation Reduction Act’s tax and other benefits Alto Ingredients expects to derive from CCS; the loss of key senior management or staff; 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’ Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 2024.

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

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

ALTO INGREDIENTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data)
	Three Months Ended December 31,								Years Ended December 31,
	2024				2023				2024				2023
Net sales	$	236,347			$	273,625			$	965,258			$	1,222,940
Cost of goods sold		237,738				276,150				955,536				1,207,287
Gross profit (loss)		(1,391	)			(2,525	)			9,722				15,653
Selling, general and administrative expenses		(7,358	)			(7,823	)			(29,736	)			(29,864	)
Acquisition-related expenses		(5,676	)			(700	)			(7,701	)			(2,800	)
Gain (loss) on sale of assets		—				(153	)			830				(293	)
Asset impairments		(24,790	)			(5,970	)			(24,790	)			(6,544	)
Loss from operations		(39,215	)			(17,171	)			(51,675	)			(23,848	)
Interest expense, net		(2,474	)			(2,126	)			(7,644	)			(7,425	)
Income from cash grant		—				—				—				2,812
Other income, net		150				449				508				553
Loss before provision for income taxes		(41,539	)			(18,848	)			(58,811	)			(27,908	)
Provision for income taxes		173				97				173				97
Net loss	$	(41,712	)		$	(18,945	)		$	(58,984	)		$	(28,005	)
Preferred stock dividends	$	(319	)		$	(319	)		$	(1,269	)		$	(1,265	)
Net loss attributable to common stockholders	$	(42,031	)		$	(19,264	)		$	(60,253	)		$	(29,270	)
Net loss per share, basic and diluted	$	(0.57	)		$	(0.26	)		$	(0.82	)		$	(0.40	)
Weighted-average shares outstanding, basic and diluted		73,835				72,969				73,482				73,339

ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (unaudited, in thousands, except par value)
ASSETS	December 31, 2024			December 31, 2023
Current Assets:
Cash and cash equivalents	$	35,469		$	30,014
Restricted cash		742			15,466
Accounts receivable, net		58,217			58,729
Inventories		49,914			52,611
Derivative instruments		3,313			2,412
Other current assets		5,463			9,538
Total current assets		153,118			168,770
Property and equipment, net		214,742			248,748
Other Assets:
Right of use operating lease assets, net		20,553			22,597
Intangible assets, net		4,509			8,498
Other assets		8,516			5,628
Total other assets		33,578			36,723
Total Assets	$	401,438		$	454,241

ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) (unaudited, in thousands, except par value)
LIABILITIES AND STOCKHOLDERS’ EQUITY		December 31, 2024				December 31, 2023
Current Liabilities:
Accounts payable		$	20,369			$	20,752
Accrued liabilities			24,214				20,205
Current portion – operating leases			4,851				4,333
Derivative instruments			1,177				13,849
Other current liabilities			7,193				6,149
Total current liabilities			57,804				65,288
Long-term debt, net			92,904				82,097
Operating leases, net of current portion			16,913				19,029
Other liabilities			8,754				8,270
Total Liabilities			176,375				174,684
Stockholders’ Equity:
Preferred stock, $0.001 par value; 10,000 shares authorized;     Series A: no shares issued and outstanding as of     December 31, 2024 and 2023     Series B: 927 shares issued and outstanding as of     December 31, 2024 and 2023			1				1
Common stock, $0.001 par value; 300,000 shares authorized;     76,565 and 75,703 shares issued and outstanding as of     December 31, 2024 and 2023, respectively			77				76
Non-voting common stock, $0.001 par value; 3,553 shares authorized;     1 share issued and outstanding as of December 31, 2024 and 2023			—				—
Additional paid-in capital			1,044,176				1,040,912
Accumulated other comprehensive income			4,975				2,481
Accumulated deficit			(824,166	)			(763,913	)
Total Stockholders’ Equity			225,063				279,557
Total Liabilities and Stockholders’ Equity		$	401,438			$	454,241

Reconciliation of Adjusted EBITDA to Net Loss

	Three Months Ended December 31,								Years Ended December 31,
(in thousands) (unaudited)	2024				2023				2024				2023
Net loss	$	(41,712	)		$	(18,945	)		$	(58,984	)		$	(28,005	)
Adjustments:
Interest expense		2,474				2,126				7,644				7,425
Interest income		(112	)			(265	)			(689	)			(854	)
Unrealized derivative (gains) losses		(5,495	)			8,162				(13,574	)			9,679
Acquisition-related expense		5,676				700				7,701				2,800
Provision for income taxes		173				97				173				97
Asset impairments		24,790				5,970				24,790				6,544
Depreciation and amortization expense		6,548				5,698				24,408				23,080
Total adjustments		34,054				22,488				50,453				48,771
Adjusted EBITDA	$	(7,658	)		$	3,543			$	(8,531	)		$	20,766

Segment Financials (unaudited, in thousands)

	Three Months Ended December 31,								Years Ended December 31,
	2024				2023				2024				2023
Net Sales
Pekin Campus, recorded as gross:
Alcohol sales	$	100,216			$	113,588			$	415,710			$	502,217
Essential ingredient sales		42,011				48,483				169,308				217,702
Intersegment sales		316				307				1,243				1,427
Total Pekin Campus sales		142,543				162,378				586,261				721,346
Marketing and distribution:
Alcohol sales, gross	$	37,230			$	46,844			$	216,295			$	262,587
Alcohol sales, net		60				73				229				365
Intersegment sales		2,831				2,920				10,833				11,654
Total marketing and distribution sales		40,121				49,837				227,357				274,606
Western production, recorded as gross:
Alcohol sales	$	41,306			$	44,496			$	115,389			$	166,971
Essential ingredient sales		12,769				16,650				36,953				57,264
Intersegment sales		—				35				(122	)			134
Total Western production sales		54,075				61,181				152,220				224,369
Corporate and other		2,755				3,491				11,374				15,834
Intersegment eliminations		(3,147	)			(3,262	)			(11,954	)			(13,215	)
Net sales as reported	$	236,347			$	273,625			$	965,258			$	1,222,940
Cost of goods sold:
Pekin Campus (1) (2)	$	139,899			$	163,497			$	563,033			$	710,089
Marketing and distribution		36,348				46,311				213,023				259,234
Western production (1)		59,449				65,042				172,209				230,444
Corporate and other		3,592				2,802				12,285				12,122
Intersegment eliminations		(1,550	)			(1,502	)			(5,014	)			(4,602	)
Cost of goods sold as reported	$	237,738			$	276,150			$	955,536			$	1,207,287
Gross profit (loss):
Pekin Campus	$	2,644			$	(1,119	)		$	23,228			$	11,257
Marketing and distribution		3,773				3,526				14,334				15,372
Western production		(5,374	)			(3,861	)			(19,989	)			(6,075	)
Corporate and other		(837	)			689				(911	)			3,712
Intersegment eliminations		(1,597	)			(1,760	)			(6,940	)			(8,613	)
Gross profit (loss) as reported	$	(1,391	)		$	(2,525	)		$	9,722			$	15,653

(1) – includes depreciation and amortization expense
(2) - includes unrealized gain (loss) on derivatives

Sales and Operating Metrics (unaudited)

	Three Months Ended December 31,						Years Ended December 31,
	2024			2023			2024			2023
Alcohol Sales (gallons in millions)
Pekin Campus renewable fuel gallons sold		32.1			31.8			125.7			136.2
Western production renewable fuel gallons sold		22.3			20.4			60.5			67.0
Third party renewable fuel gallons sold		19.0			20.2			108.3			102.6
Total renewable fuel gallons sold		73.4			72.4			294.5			305.8
Specialty alcohol gallons sold		21.7			20.1			91.5			76.7
Total gallons sold		95.1			92.5			386.0			382.5
Sales Price per Gallon
Pekin Campus	$	1.89		$	2.23		$	1.95		$	2.40
Western production	$	1.86		$	2.18		$	1.91		$	2.49
Marketing and distribution	$	1.96		$	2.32		$	2.00		$	2.56
Total	$	1.88		$	2.24		$	1.95		$	2.47
Alcohol Production (gallons in millions)
Pekin Campus		55.4			51.6			212.4			209.7
Western production		21.2			20.8			58.7			68.1
Total		76.6			72.4			271.1			277.8
Corn Cost per Bushel
Pekin Campus	$	4.17		$	5.10		$	4.45		$	6.32
Western production	$	5.79		$	6.44		$	5.73		$	7.45
Total	$	4.63		$	5.46		$	4.72		$	6.58
Average Market Metrics
PLATTS Ethanol price per gallon	$	1.60		$	1.96		$	1.69		$	2.22
CME Corn cost per bushel	$	4.26		$	4.76		$	4.24		$	5.64
Board corn crush per gallons (1)	$	0.08		$	0.26		$	0.18		$	0.21
Essential Ingredients Sold (thousand tons)
Pekin Campus:
Distillers grains		85.3			80.2			336.4			332.7
CO2		52.7			43.4			188.6			182.4
Corn wet feed		41.4			25.0			121.8			95.0
Corn dry feed		22.0			23.3			87.2			90.6
Corn oil and germ		21.0			18.2			75.1			73.8
Syrup and other		10.0			12.7			38.6			41.2
Corn meal		9.3			9.0			35.4			36.8
Yeast		5.4			6.2			23.2			25.9
Total Pekin Campus essential ingredients sold		247.1			218.0			906.3			878.4
Western production:
Distillers grains		144.3			152.0			394.5			459.7
CO2		14.6			13.8			57.7			55.5
Syrup and other		17.2			47.5			54.8			119.1
Corn oil		3.1			2.8			7.6			8.0
Total Western production essential ingredients sold		179.2			216.1			514.6			642.3
Total Essential Ingredients Sold		426.3			434.1			1,420.9			1,520.7
Essential ingredients return % (2)
Pekin Campus return		49.5%			51.9%			49.7%			45.7%
Western production return		30.3%			36.3%			32.0%			33.4%
Consolidated total return		43.1%			46.8%			45.2%			42.4%

________________
(1) Assumes corn conversion of 2.80 gallons of alcohol per bushel of corn.
(2) Essential ingredients revenues as a percentage of total corn costs consumed.

FAQ

What cost-saving measures did Alto Ingredients (ALTO) implement in Q4 2024?

ALTO implemented cold idling of Magic Valley plant and reduced total headcount by 16%, expected to save approximately $8 million annually starting Q2 2025.

How did Alto Ingredients (ALTO) perform financially in Q4 2024 compared to Q4 2023?

Net sales decreased to $236.3M from $273.6M, with net loss increasing to $42.0M ($0.57/share) from $19.3M ($0.26/share).

What strategic options is Alto Ingredients (ALTO) considering in 2025?

ALTO is considering asset sales, a merger, or other strategic transactions to better align long-term value potential.

What was Alto Ingredients' (ALTO) cash position at the end of 2024?

ALTO had $35.5M in cash and cash equivalents, with $88.1M in total borrowing availability.

What acquisition did Alto Ingredients (ALTO) complete in early 2025?

ALTO acquired a beverage-grade liquid CO2 processor adjacent to its Columbia site, with expected payback within two years.