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, 2022.

“Our first quarter results validated our strategy to invest in specialty alcohols and essential ingredients,” said Mike Kandris CEO of Alto Ingredients. “Product diversification, with increased sales from higher margin products combined with operational improvements, partially offset the impact of the challenging commodities market. To further our strategy, we acquired a small-package distributor serving premium spirits markets in January and qualified for additional certifications valuable to pharmaceutical customers in February. These initiatives broadened our opportunities and enhanced our position in the marketplace. We are evaluating new capital expenditure programs to create additional long-term stakeholder value. We remain focused on executing on our strategic goals, investing for future growth and diversifying our product portfolio.”

Financial Results for the Three Months Ended March 31, 2022 Compared to 2021

•  Net sales were $308.1 million, compared to $218.7 million.•  Cost of goods sold was $303.3 million, compared to $204.9 million.•  Gross profit was $4.8 million, compared to $13.8 million.•  Selling, general and administrative expenses were $7.6 million, compared to $7.0 million.•  Operating loss was $2.9 million, compared to operating income of $5.6 million.•  Net loss available to common stockholders was $2.9 million, or $0.04 per share, compared to net income of $4.4 million, or $0.06 per diluted share.•  Adjusted EBITDA was $4.4 million, compared to $13.4 million.•  Cash and cash equivalents were $36.2 million at March 31, 2022, compared to $50.6 million at December 31, 2021.

First Quarter 2022 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 9, 2022, 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: (866) 777-2509. International callers should dial (412) 317-5413. Please ask to join the Alto Ingredients call. The webcast will be archived for replay on Alto Ingredients’ website for one year. In addition, a telephonic replay will be available at 8:00 p.m. Eastern Time on Monday, May 9, 2022, through 8:00 p.m. Eastern Time on Wednesday, May 16, 2022. To access the replay, please dial (877) 344-7529. International callers should dial (412) 317-0088. The pass code will be 7162739.

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, interest income, provision (benefit) 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) 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) 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 the benefits of the acquisition of Eagle Alcohol and plant and product certifications; 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. 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’ 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’ Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2022.

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.comIR 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 EndedMarch 31,
    2022       2021  
Net sales $         308,118     $         218,734  
Cost of goods sold   303,345       204,897  
Gross profit   4,773       13,837  
Selling, general and administrative expenses   7,629       7,014  
Asset impairment         1,200  
Income (loss) from operations   (2,856 )     5,623  
Interest expense, net   (200 )     (1,885 )
Other income, net   454       940  
Income (loss) before provision for income taxes   (2,602 )     4,678  
Provision for income taxes          
Net income (loss) $         (2,602 )   $         4,678  
Preferred stock dividends $         (312 )   $         (312 )
Net income (loss) available to common stockholders $ (2,914 )   $ 4,366  
Net income (loss) per share, basic and diluted $ (0.04 )   $ 0.06  
Weighted-average shares outstanding, basic            71,390                70,351  
Weighted-average shares outstanding, diluted            71,390                72,464  

ALTO INGREDIENTS, INC.CONSOLIDATED BALANCE SHEETS(unaudited, in thousands, except par value)

ASSETS   March 31, 2022       December 31, 2021
Current Assets:    
Cash and cash equivalents $         36,184     $         50,612
Restricted cash   23,799       11,513
Accounts receivable, net   80,611       86,888
Inventories   58,491       54,373
Derivative instruments   19,498       15,839
Notes receivable, current   12,385       3,125
Other current assets              10,245                   7,176
Total current assets   241,213       229,526
Property and equipment, net   220,996       222,550
Other Assets:          
Right of use operating lease assets, net   15,099       13,413
Notes receivable, noncurrent         11,641
Intangible assets, net   9,460       2,678
Goodwill   5,958      
Other assets                5,142                    5,145
Total other assets   35,659       32,877
Total Assets $         497,868     $         484,953

ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED)(unaudited, in thousands, except par value)

LIABILITIES AND STOCKHOLDERS’ EQUITY    
               
    March 31, 2022       December 31, 2021  
Current Liabilities:              
Accounts payable – trade   $   21,750       $         23,251  
Accrued liabilities   19,479       21,307  
Current portion – operating leases   4,297       3,909  
Derivative instruments   27,487       13,582  
Other current liabilities     7,168                  7,553  
Total current liabilities   80,181       69,602  
               
Long-term debt   53,681       50,361  
Operating leases, net of current portion   10,705       9,382  
Other liabilities     10,336       10,394   
Total Liabilities   154,903       139,739  
               
Stockholders’ Equity:              
Alto Ingredients, Inc. Stockholders’ Equity:              
Preferred stock, $0.001 par value; 10,000 shares authorized; Series A: no shares issued and outstanding as of              
March 31, 2022 and December 31, 2021              
Series B: 927 shares issued and outstanding as of              
March 31, 2022 and December 31, 2021   1       1  
Common stock, $0.001 par value; 300,000 shares authorized;               
74,411 and 72,778 shares issued and outstanding as of               
March 31, 2022 and December 31, 2021, respectively    74        73  
Non-voting common stock, $0.001 par value; 3,553 shares               
authorized; 1 share issued and outstanding as of March 31,              
2022 and December 31, 2021          
Additional paid-in capital   1,037,869       1,037,205  
Accumulated other comprehensive loss   (284 )     (284 )
Accumulated deficit   (694,695 )     (691,781 )
Total Stockholders’ Equity   342,965       345,214  
Total Liabilities and Stockholders’ Equity $         497,868     $         484,953  

Reconciliation of Adjusted EBITDA to Net Income (Loss)

  Three Months EndedMarch 31,
(in thousands) (unaudited)     2022       2021  
Net income (loss) $ (2,602 )   $ 4,678  
Adjustments:    
Interest expense   200       1,885  
Interest income   (158 )     (184 )
Acquisition-related expense   875        
Asset impairments         1,200  
Depreciation and amortization expense   6,134       5,860  
Total adjustments   7,051       8,761  
Adjusted EBITDA $ 4,449     $ 13,439  

Commodity Price Performance

  Three Months EndedMarch 31,
(unaudited)    2022       2021  
Renewable fuel production gallons sold (in millions)   49.2       39.0  
Specialty alcohol production gallons sold (in millions)   23.3       19.0  
Third party renewable fuel gallons sold (in millions)   30.7       54.0  
Total gallons sold (in millions)   103.2       112.0  
     
Total gallons produced (in millions)   74.3       58.0  
Production capacity utilization   86 %     52 %
     
Average sales price per gallon $ 2.46     $ 1.94  
Average CBOT ethanol price per gallon $ 2.16     $ 1.60  
     
Corn cost per bushel – CBOT equivalent $ 6.22     $ 4.98  
Average basis $ 0.64     $ 0.29  
Delivered corn cost $ 6.86     $ 5.27  
     
Total essential ingredients tons sold (in thousands)   398.8       276.9  
Essential ingredient return % (1)   36.4 %     40.0 %

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

Segment Financials

     
(in thousands) (unaudited)   Three Months EndedMarch 31,  
    2022       2021  
Net sales              
               
Pekin Campus production, recorded as gross:               
Alcohol sales $ 116,050     $ 95,083  
Essential ingredient sales          55,280              45,077  
Intersegment sales          256             1,473  
Total Pekin Campus sales        171,586            141,633  
Marketing and distribution:              
Alcohol sales, gross $ 53,926     $ 57,010  
Alcohol sales, net                351                    452  
Intersegment sales             2,996                 2,244  
Total marketing and distribution sales         57,273               59,706  
     
Other production, recorded as gross:    
Alcohol sales $ 59,805     $ 15,969  
Essential ingredient sales          18,938                 5,143  
Intersegment sales               12                    305  
Total Other production sales           78,755               21,417  
Corporate and other          3,768                    —  
Intersegment eliminations            (3,264 )     (4,022 )
Net sales as reported $ 308,118     $ 218,734  
               
Cost of goods sold:              
 Pekin Campus production  $ 168,881     $ 128,864  
 Marketing and distribution   54,716       53,958  
 Other production   78,244       24,117  
 Corporate and other    2,872        
 Intersegment eliminations   (1,368 )     (2,042 )
 Cost of goods sold as reported 303,345      $ 204,897  
               
Gross profit (loss):              
Pekin Campus production $ 2,705     $       12,769  
Marketing and distribution   2,557       5,748  
Other production   511         (2,700 )
Corporate and other           896        
Intersegment eliminations   (1,896 )     (1,980 )
Gross profit (loss) as reported $ 4,773     $ 13,837  
               
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