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Alto Ingredients, Inc. Reports Second Quarter 2023 Results

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Alto Ingredients reported positive financial results for Q2 2023 with net income, positive Adjusted EBITDA, and positive operating cash flow. Expects positive Adjusted EBITDA in Q3 2023. Net sales decreased to $317.3 million compared to $362.2 million in 2022. Cash and cash equivalents decreased to $22.7 million at June 30, 2023. Company plans to increase annualized EBITDA by over $65 million by the end of 2025 and $125 million by the end of 2026 through investments in long-term projects.
Positive
  • Positive financial results with net income and positive Adjusted EBITDA
  • Expectation of positive Adjusted EBITDA in Q3 2023
  • Plan to increase annualized EBITDA by over $65 million by the end of 2025 and $125 million by the end of 2026
Negative
  • Decrease in net sales compared to 2022
  • Decrease in cash and cash equivalents at June 30, 2023

- Delivered net income, positive Adjusted EBITDA and positive operating cash flow, while making significant capital expenditures to support business transformation -

- Expects Positive Adjusted EBITDA in Q3 2023 -

PEKIN, Ill., Aug. 07, 2023 (GLOBE NEWSWIRE) -- Alto Ingredients, Inc. (NASDAQ: ALTO), a leading producer and distributor of specialty alcohols and essential ingredients, reported its financial results for the quarter ended June 30, 2023.

“We continue to pursue opportunities to maximize value through capital investments and onboarding strategic partners that share our vision. Our strategy is coming to fruition,” said Bryon McGregor, President and CEO of Alto Ingredients. “In the second quarter of 2023, improved ethanol crush margins complemented by favorable economics from our high-quality alcohol and essential ingredients delivered strong profitability and positive operating cash flow. Based on current trends, we expect to post positive Adjusted EBITDA in the third quarter of 2023 as well.

“We have accelerated our investments in longer-term capital projects to produce more high-quality products, including grain neutral spirits, corn oil and high protein, as well as to improve plant efficiency and reliability. Looking ahead, we plan to advance our business transformation with a natural gas pipeline, biogas conversion, enhanced cogeneration capabilities, primary yeast and carbon capture and sequestration. We have $137 million in cash and excess borrowing availability to support our business operations and near-term growth initiatives. For our longer-term projects, we continue to hold productive discussions with strategic partners, and we will judiciously finance capital needs for those projects, as appropriate. With these investments, we expect to increase annualized EBITDA incrementally by over $65 million by the end of 2025, with the completion of our near-term projects, and by approximately $125 million by the end of 2026, when our carbon capture and sequestration, cogeneration, and other long-term initiatives are fully realized.”

Financial Results for the Three Months Ended June 30, 2023 Compared to 2022

  • Net sales were $317.3 million, compared to $362.2 million.
  • Cost of goods sold was $300.1 million, compared to $353.3 million.
  • Gross profit was $17.2 million, compared to $8.8 million.
  • Selling, general and administrative expenses were $7.9 million, compared to $9.0 million.
  • Operating income was $9.3 million, compared to an operating loss of $152,000.
  • Net income available to common stockholders was $7.2 million, or $0.10 per diluted share, compared to $21.5 million, which included a $22.7 million USDA cash grant, or $0.29 per diluted share.
  • Adjusted EBITDA was $15.5 million, compared to $29.9 million, which included a $22.7 million USDA cash grant.

Cash and cash equivalents were $22.7 million at June 30, 2023, compared to $36.5 million at December 31, 2022. At June 30, 2023, the company’s borrowing availability included $49 million under its operating line of credit and $40 million under its term loan facility with an option to request up to an additional $25 million under the facility.

Financial Results for the Six Months Ended June 30, 2023 Compared to 2022

  • Net sales were $631.2 million, compared to $670.3 million.
  • Cost of goods sold was $617.2 million, compared to $656.7 million.
  • Gross profit was $14.0 million, compared to $13.6 million.
  • Selling, general and administrative expenses were $15.8 million, compared to $16.6 million.
  • Operating loss was $2.4 million, compared to $3.0 million.
  • Net loss available to common stockholders was $6.2 million, or $0.08 per diluted share, compared to net income available to common stockholders of $18.6 million, including the $22.7 million USDA cash grant, or $0.26 per diluted share.
  • Adjusted EBITDA was $11.0 million, compared to $34.3 million, including the aforementioned cash grant.

Second 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, August 7, 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, August 7, 2023 through 8:00 p.m. Eastern Time on Monday, August 14, 2023. To access the replay, please dial 877-344-7529. International callers should dial 00-1 412-317-0088. The pass code will be 6298351.

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 capital projects and other business initiatives and strategies, and their financing, costs, timing and effects, including, but not limited to, EBITDA and/or Adjusted EBITDA that Alto Ingredients’ expects to generate as a result of its projects, initiatives and strategies; estimates of EBITDA or Adjusted EBITDA 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 fuel-grade ethanol, 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 and other results deriving from, Alto Ingredients’ plant improvement and other capital projects 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, 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; 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 May 9, 2023.

Company IR and Media 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
June 30,
 Six Months Ended
June 30,
  2023 2022 2023 2022
         
Net sales $317,297  $362,189  $631,188  $670,307 
Cost of goods sold  300,116   353,345   617,171   656,690 
Gross profit  17,181   8,844   14,017   13,617 
Selling, general and administrative expenses  7,911   8,996   15,793   16,625 
Asset impairments        574    
Income (loss) from operations  9,270   (152)  (2,350)  (3,008)
Interest expense, net  (1,734)  (319)  (3,299)  (519)
Income from cash grant     22,652      22,652 
Other income (expense), net  59   (66)  78   388 
Income (loss) before provision for income taxes  7,595   22,115   (5,571)  19,513 
Provision for income taxes            
Net income (loss) $7,595  $22,115  $(5,571) $19,513 
Preferred stock dividends $(315) $(315) $(627) $(627)
Net income allocated to participating securities  (96)  (284)     (251)
Net income (loss) available to common stockholders $7,184  $21,516  $(6,198) $18,635 
Net income (loss) per share, basic $0.10  $0.29  $(0.08) $0.26 
Net income (loss) per share, diluted $0.10  $0.29  $(0.08) $0.26 
Weighted-average shares outstanding, basic  73,394   72,936   73,603   71,690 
Weighted-average shares outstanding, diluted  74,103   73,123   73,603   71,958 


ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value)
 
ASSETS June 30,
2023
 December 31,
2022
Current Assets:        
Cash and cash equivalents $22,739  $36,456 
Restricted cash  2,351   13,069 
Accounts receivable, net  63,367   68,655 
Inventories  71,115   66,628 
Derivative instruments  14,038   4,973 
Other current assets  5,919   9,340 
Total current assets  179,529   199,121 
Property and equipment, net  246,693   239,069 
Other Assets:        
Right of use operating lease assets, net  24,433   18,937 
Intangible assets, net  8,792   9,087 
Goodwill  5,970   5,970 
Other assets  5,993   6,137 
Total other assets  45,188   40,131 
Total Assets $471,410  $478,321 
         


ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value)
 
LIABILITIES AND STOCKHOLDERS’ EQUITY June 30,
2023
 December 31,
2022
Current Liabilities:        
Accounts payable $25,933  $28,115 
Accrued liabilities  15,328   26,556 
Current portion – operating leases  3,914   3,849 
Derivative instruments  8,396   6,732 
Other current liabilities  5,115   12,765 
Total current liabilities  58,686   78,017 
         
Long-term debt, net  82,082   68,356 
Operating leases, net of current portion  21,058   15,062 
Other liabilities  8,791   8,797 
Total Liabilities  170,617   170,232 
         
Stockholders’ Equity:        
Preferred stock, $0.001 par value; 10,000 shares authorized;
Series A: no shares issued and outstanding as of
June 30, 2023 and December 31, 2022
Series B: 927 shares issued and outstanding as of
June 30, 2023 and December 31, 2022
  1   1 
Common stock, $0.001 par value; 300,000 shares authorized;
75,923 and 75,154 shares issued and outstanding as of
June 30, 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 June 30, 2023 and December 31, 2022
      
Additional paid-in capital  1,039,735   1,040,834 
Accumulated other comprehensive income  1,822   1,822 
Accumulated deficit  (740,841)  (734,643)
Total Stockholders’ Equity  300,793   308,089 
Total Liabilities and Stockholders’ Equity $471,410  $478,321 
         

Reconciliation of Adjusted EBITDA to Net Income

  Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands) (unaudited) 2023 2022 2023 2022
Net income (loss) $7,595  $22,115  $(5,571) $19,513 
Adjustments:                
Interest expense  1,734   319   3,299   519 
Interest income  (190)  (145)  (411)  (303)
Asset impairments        574    
Acquisition-related expense  700   875   1,400   1,750 
Depreciation and amortization expense  5,681   6,728   11,735   12,861 
Total adjustments  7,925   7,777   16,597   14,827 
Adjusted EBITDA $15,520  $29,892  $11,026  $34,340 
                 

Commodity Price Performance

  Three Months Ended
June 30,
 Six Months Ended
June 30,
(unaudited) 2023 2022 2023 2022
Renewable fuel production gallons sold (in millions)  51.2   51.3   94.5   100.4 
Specialty alcohol production gallons sold (in millions)  16.6   25.8   38.0   49.1 
Third party renewable fuel gallons sold (in millions)  26.6   30.0   60.4   60.8 
Total gallons sold (in millions)  94.4   107.1   192.9   210.3 
                 
Total gallons produced (in millions)  70.5   77.0   131.1   151.3 
Production capacity utilization  81%  88%  76%  85%
                 
Average sales price per gallon $2.63  $2.84  $2.53  $2.65 
                 
Average CBOT ethanol price per gallon $2.46  $2.73  $2.33  $2.50 
                 
Corn cost per bushel – CBOT equivalent $6.52  $7.46  $6.56  $6.84 
Average basis  0.80   0.69   0.63   0.66 
Delivered corn cost $7.32  $8.15  $7.19  $7.50 
                 
Total essential ingredients tons sold (in thousands)  364.1   414.1   663.4   812.9 
Essential ingredients return % (1)  37.6%  32.7%  38.6%  34.6%

________________
(1) Essential ingredients revenue as a percentage of delivered cost of corn.

Segment Financials

  Three Months Ended
June 30,
 Six Months Ended
June 30,
  2023 2022 2023 2022
Net Sales        
Pekin Campus, recorded as gross:                
Alcohol sales $127,694  $143,768  $260,075  $259,818 
Essential ingredient sales  53,954   59,853   117,585   115,133 
Intersegment sales  444   269   757   525 
Total Pekin Campus sales  182,092   203,890   378,417   375,476 
                 
Marketing and distribution:                
Alcohol sales, gross $72,589  $63,558  $156,936  $117,484 
Alcohol sales, net  104   317   218   668 
Intersegment sales  2,499   3,242   5,342   6,239 
Total marketing and distribution sales  75,192   67,117   162,496   124,391 
                 
Other production, recorded as gross:                
Alcohol sales $44,384  $67,184  $65,316  $126,991 
Essential ingredient sales  14,421   23,372   22,773   42,309 
Intersegment sales  62      62   12 
Total Other production sales  58,867   90,556   88,151   169,312 
                 
Corporate and other  4,151   4,137   8,285   7,904 
Intersegment eliminations  (3,005)  (3,511)  (6,161)  (6,776)
Net sales as reported $317,297  $362,189  $631,188  $670,307 
                 
Cost of goods sold:        
Pekin Campus $168,419  $195,691  $366,596  $364,573 
Marketing and distribution  71,746   63,796   154,871   118,510 
Other production  57,834   91,606   91,815   169,851 
Corporate and other  3,414   3,197   5,786   6,070 
Intersegment eliminations  (1,297)  (945)  (1,897)  (2,314)
Cost of goods sold as reported $300,116  $353,345  $617,171  $656,690 
                 
Gross profit:                
Pekin Campus $13,673  $8,199  $11,821  $10,903 
Marketing and distribution  3,446   3,321   7,625   5,881 
Other production  1,033   (1,050)  (3,664)  (539)
Corporate and other  737   940   2,499   1,834 
Intersegment eliminations  (1,708)  (2,566)  (4,264)  (4,462)
Gross profit as reported $17,181  $8,844  $14,017  $13,617 
                 

  


Alto Ingredients, Inc.

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