Alto Ingredients Reports Fourth Quarter and Full Year 2020 Results

Rhea-AI Summary

Alto Ingredients reported its financial results for 2020, revealing a net loss of $16.4 million and Adjusted EBITDA of $67.4 million. The company reduced total debt by $146 million and improved cash reserves to $47.7 million. Although net sales decreased to $897 million from $1.4 billion, gross profit rebounded to $52.9 million from a loss the previous year. Production of specialty alcohols increased, highlighting the firm’s shift towards more profitable operations. The company aims to leverage its improved balance sheet for future growth opportunities.

Positive

• Adjusted EBITDA increased to $67.4 million, a notable improvement compared to the previous year's negative EBITDA.
• Total debt reduced by approximately $146 million, enhancing the company's financial stability.
• Gross profit reached $52.9 million, a significant turnaround from a gross loss of $9.9 million in 2019.

Negative

• Net sales fell sharply to $897 million, down from $1.4 billion in 2019.
• Net loss available to common stockholders was $16.4 million, despite improvements in other metrics.

• Full year 2020 net loss of $16.4 million, which included a $24.4 million impairment charge
• Full year 2020 Adjusted EBITDA of $67.4 million
• Total debt reduced by approximately $146 million
  

SACRAMENTO, Calif., March 10, 2021 (GLOBE NEWSWIRE) -- Alto Ingredients, Inc. (NASDAQ: ALTO), a leading producer of specialty alcohols and essential ingredients, reported its financial results for the fourth quarter and full year ended December 31, 2020.

“In 2020, we significantly increased production of our profitable specialty alcohols, reduced the impact of unprofitable fuel-grade operations by idling or selling assets, and lowered operating and overhead expenses,” said Mike Kandris, CEO of Alto Ingredients. “These efforts increased our 2020 Adjusted EBITDA to over $67 million, a remarkable achievement that was within our August 2020 guidance. We also significantly improved our balance sheet, reducing our total debt by approximately $146 million during 2020.

“We are pursuing a more sustainable and profitable path forward, delivering quality products driven by solid consumer demand. We are currently operating plants with an annual production capacity of 290 million gallons, of which 70 million gallons of specialty alcohols are already contracted for 2021. Our transformation is far from complete and with a significantly improved balance sheet, we are actively developing and exploring new build and buy opportunities to grow and expand our business to further increase revenues and profitability while maintaining and controlling expenses. We believe we are well positioned to capitalize on the opportunities ahead to deliver long-term growth for all our stakeholders.”

Financial Results for the Three Months Ended December 31, 2020 Compared to 2019

• Net sales were $168.8 million, compared to $357.6 million.
• Cost of goods sold was $155.2 million, compared to $354.4 million.
• Gross profit was $13.6 million, compared to $3.2 million.
• Selling, general and administrative expenses were $6.7 million, compared to $11.8 million.
• Operating loss was $14.2 million, compared to $37.9 million.
• Net loss available to common stockholders was $20.5 million, or $0.30 per share, and included an impairment charge of $24.4 million related to the company’s Western assets. This compares to a loss of $41.4 million, or $0.85 per share, for the three months ended December 31, 2019.
• Adjusted EBITDA was $16.4 million, compared to $1.9 million.
• Cash and cash equivalents were $47.7 million at December 31, 2020, compared to $19.0 million at December 31, 2019.

Financial Results for the Full Year 2020 Compared to 2019

• Net sales were $897.0 million, compared to $1.4 billion.
• Cost of goods sold was $844.2 million, compared to $1.4 billion.
• Gross profit was $52.9 million, compared to a gross loss of $9.9 million.
• Selling, general and administrative expenses were $32.0 million, compared to $35.5 million.
• Operating income was $9.9 million, compared to an operating loss of $74.7 million.
• Net loss available to common stockholders was $16.4 million, or $0.28 per share, compared to a loss of $90.2 million, or $1.90 per share.
• Adjusted EBITDA was positive $67.4 million, compared to negative $1.7 million.
  

Fourth Quarter and Full Year 2020 Results Conference Call
Management will host a conference call at 8:00 a.m. Pacific Time / 11:00 a.m. Eastern Time on Thursday, March 11, 2021, and will deliver prepared remarks via webcast followed by a question-and-answer session.

The webcast for the call can be accessed from Alto Ingredients website at www.altoingredients.com. Alternatively, you may dial the following number up to ten minutes prior to the scheduled conference call time: (877) 847-6066. International callers should dial 00-1 (970) 315-0267. The pass code will be 8599307. If you are unable to participate in the live call, the webcast will be archived for replay on Alto Ingredients website for one year. In addition, a telephonic replay will be available at 2:00 p.m. Eastern Time on Thursday, March 11, 2021 through 11:59 p.m. Eastern Time on Thursday, March 18, 2021. To access the replay, please dial (855) 859-2056. International callers should dial 00-1 (404) 537-3406. The pass code will be 8599307.

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 net income (loss) attributed to Alto Ingredients, Inc. before interest expense, provision (benefit) for income taxes, asset impairments, loss on extinguishment of debt, purchase accounting adjustments, 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) attributed to Alto Ingredients, Inc. 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) attributed to Alto Ingredients, Inc. 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), formerly known as Pacific Ethanol, Inc., is a leading producer 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’ plans, objectives, expectations and intentions. It is important to note that Alto Ingredients’ 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. 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 effects – both positive and negative – of the coronavirus pandemic and its resurgence or abatement. 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’ distilleries, 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 November 16, 2020.

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:
Moriah Shilton, 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 December 31,								Year Ended December 31,
		2020				2019				2020				2019
Net sales	$	168,818			$	357,617			$	897,023			$	1,424,881
Cost of goods sold		155,181				354,421				844,164				1,434,819
Gross profit (loss)		13,637				3,196				52,859				(9,938		)
Selling, general and administrative expenses		(6,735	)			(11,823	)			(31,980	)			(35,453		)
Gain on litigation settlement		—				—				11,750				—
Gain on sale of assets		3,223				—				1,580				—
Asset impairments		(24,356	)			(29,292	)			(24,356	)			(29,292		)
Income (loss) from operations		(14,231	)			(37,919	)			9,853				(74,683		)
Loss on debt extinguishment		—				(6,517	)			—				(6,517		)
Interest expense, net		(3,790	)			(5,192	)			(17,943	)			(20,206		)
Fair value adjustments		(2,462	)			—				(9,959	)			—
Other income (expense), net		271				(147	)			750				104
Loss before benefit for income taxes		(20,212	)			(49,775	)			(17,299	)			(101,302		)
Benefit for income taxes		(17	)			(20	)			(17	)			(20		)
Consolidated net loss		(20,195	)			(49,755	)			(17,282	)			(101,282		)
Net loss attributed to noncontrolling interests		—				8,671				2,166				12,333
Net loss attributed to Alto Ingredients, Inc.	$	(20,195	)		$	(41,084	)		$	(15,116	)		$	(88,949		)
Preferred stock dividends	$	(319	)		$	(319	)		$	(1,268	)		$	(1,265		)
Net loss available to common stockholders	$	(20,514	)		$	(41,403	)		$	(16,384	)		$	(90,214		)
Net loss per share, basic and diluted	$	(0.30	)		$	(0.85	)		$	(0.28	)		$	(1.90		)
Weighted-average shares outstanding, basic and diluted		67,512				48,438				58,609				47,384

ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (unaudited, in thousands, except par value)
	December 31,			December 31,
ASSETS	2020			2019
Current Assets:
Cash and cash equivalents	$	47,667		$	18,997
Accounts receivable, net		43,491			74,307
Inventories		41,767			60,600
Prepaid inventory		891			1,528
Assets held-for-sale		58,295			69,764
Derivative assets		17,149			2,438
Other current assets		4,786			4,430
Total current assets		214,046			232,064
Property and equipment, net		229,486			332,526
Other Assets:
Right of use operating lease assets, net		11,046			24,346
Notes receivable		14,337			—
Assets held-for-sale		—			16,500
Intangible assets		2,678			2,678
Other assets		5,225			4,381
Total other assets		33,286			47,905
Total Assets	$	476,818		$	612,495

ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) (unaudited, in thousands, except par value)
	December 31,				December 31,
LIABILITIES AND STOCKHOLDERS’ EQUITY	2020				2019
Current Liabilities:
Accounts payable – trade	$	13,047			$	29,277
Accrued liabilities		11,101				22,331
Current portion – operating leases		2,180				3,457
Current portion – long-term debt		25,533				63,000
Derivative liabilities		—				1,860
Liabilities held-for-sale		19,542				34,413
Other current liabilities		15,524				6,060
Total current liabilities		86,927				160,398
Long-term debt, net of current portion		71,807				180,795
Operating leases, net of current portion		8,715				21,171
Other liabilities		13,134				23,086
Total Liabilities		180,583				385,450
Stockholders’ Equity:
Alto Ingredients, Inc. Stockholders’ Equity:
Preferred stock, $0.001 par value; 10,000 shares authorized;     Series A: 0 shares issued and outstanding as of December 31, 2020 and 2019     Series B: 927 shares issued and outstanding as of December 31, 2020 and 2019		1				1
Common stock, $0.001 par value; 300,000 shares authorized; 72,491 and 55,508 shares     issued and outstanding as of December 31, 2020 and 2019, respectively		72				56
Non-voting common stock, $0.001 par value; 3,553 shares authorized; 1 share issued and outstanding as of December 31, 2020 and 2019		—				—
Additional paid-in capital		1,036,638				942,307
Accumulated other comprehensive loss		(3,878	)			(2,370	)
Accumulated deficit		(736,598	)			(720,214	)
Total Alto Ingredients, Inc. Stockholders’ Equity		296,235				219,780
Noncontrolling Interests		—				7,265
Total Stockholders’ Equity		296,235				227,045
Total Liabilities and Stockholders’ Equity	$	476,818			$	612,495

Reconciliation of Adjusted EBITDA to Net Loss

	Three Months Ended December 31,									Years Ended December 31,
(unaudited)	2020				2019					2020				2019
Net loss attributed to Alto Ingredients, Inc.	$	(20,195	)		$	(41,084		)		$	(15,116	)		$	(88,949	)
Adjustments:
Interest expense, net		3,790				5,192					17,943				20,206
Asset impairments*		24,356				21,655					24,356				21,655
Fair value adjustments		2,462				—					9,959				—
Loss on debt extinguishment		—				6,517					—				6,517
Benefit for income taxes		(17	)			(20		)			(17	)			(20	)
Depreciation and amortization expense*		6,015				9,648					30,269				38,880
Total adjustments		36,606				42,992					82,510				87,238
Adjusted EBITDA	$	16,411			$	1,908				$	67,394			$	(1,711	)
________________
* Adjusted for noncontrolling interests.

Commodity Price Performance

		Three Months Ended December 31,								Years Ended December 31,
(unaudited)		2020				2019				2020					2019
Production gallons sold (in millions)			49.0				125.4				271.9					491.0
Third party gallons sold (in millions)			51.6				70.1				264.4					328.4
Total gallons sold (in millions)			100.6				195.5				536.3					819.4
Production capacity utilization			49%				82%				56%					82%
Average sales price per gallon		$	1.72			$	1.70			$	1.63				$	1.61
Average CBOT ethanol price per gallon		$	1.41			$	1.42			$	1.25				$	1.39
Corn cost – CBOT equivalent		$	3.79			$	3.93			$	3.56				$	3.83
Average basis		$	0.27			$	0.46			$	0.28				$	0.43
Delivered cost of corn		$	4.06			$	4.39			$	3.84				$	4.26
Total co-product tons sold (in thousands)			270.0				725.7				1,447.5					2,821.7
Co-product return % (1)			42.6%				35.6%				44.1%					35.1%
________________
(1) Co-product revenue as a percentage of delivered cost of corn.

FAQ

What were Alto Ingredients' financial results for the full year 2020?

Alto Ingredients reported a net loss of $16.4 million and Adjusted EBITDA of $67.4 million for the full year 2020.

How much did Alto Ingredients reduce its total debt in 2020?

Alto Ingredients reduced its total debt by approximately $146 million during 2020.

What was Alto Ingredients' gross profit for the full year 2020?

The gross profit for Alto Ingredients in 2020 was $52.9 million, compared to a gross loss of $9.9 million in 2019.

How did Alto Ingredients' net sales for the fourth quarter of 2020 compare to 2019?

Net sales for the fourth quarter of 2020 were $168.8 million, a decline from $357.6 million in the same period of 2019.

What is the significance of Adjusted EBITDA for Alto Ingredients?

Adjusted EBITDA is a key metric for Alto Ingredients, reflecting operational performance regardless of interest, taxes, asset impairments, and other non-operational factors.