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, 2022.

“Our strategy to diversify into specialty alcohols and essential ingredients continues to serve us well. Sales of these products, combined with a cash grant from the USDA, delivered solid performance and offset higher than usual freight expenses and repair and maintenance costs, resulting in positive gross profit, net income and Adjusted EBITDA in the second quarter,” said Mike Kandris, CEO of Alto Ingredients. “Anticipating the cash grant, we accelerated the timing of some of our infrastructure improvements. We are upgrading equipment and operating systems to increase efficiency and plant reliability, expanding our corn storage capacity, enhancing our specialty alcohol production and broadening its distribution, and reinvesting in essential ingredients capabilities. Building for the future, we are improving our position to capture a variety of opportunities, and our near- and long-term outlook is promising.”

Financial Results for the Three Months Ended June 30, 2022 Compared to 2021

  • Net sales were $362.2 million, compared to $298.1 million.
  • Cost of goods sold was $353.3 million, compared to $282.9 million.
  • Gross profit was $8.8 million, compared to $15.2 million.
  • Selling, general and administrative expenses were $9.0 million, compared to $7.2 million, reflecting Eagle Alcohol acquisition-related expenses and higher stock-compensation expenses
  • Income from a cash grant from the USDA’s Biofuel Producer Program was $22.7 million.
  • Net income available to common stockholders was $21.5 million, or $0.29 per diluted share, compared to $8.0 million, or $0.11 per diluted share.
  • Adjusted EBITDA was $29.9 million, compared to $17.0 million.
  • Cash and cash equivalents were $57.4 million at June 30, 2022, compared to $50.6 million at December 31, 2021.
  • Working capital was $178.4 million at June 30, 2022, compared to $159.9 million at December 31, 2021.

Second 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, August 8, 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 register for the conference by navigating to https://dpregister.com/sreg/10169223/f3aa59fe00 to receive a number and unique PIN by email or you may dial the following number up to twenty minutes prior to the scheduled conference call time: (833) 630-0017. International callers should dial (412) 317-1806. 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, August 8, 2022, through 8:00 p.m. Eastern Time on Monday, August 15, 2022. To access the replay, please dial (877) 344-7529. International callers should dial (412) 317-0088. The pass code will be 2155410.

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 Alto Ingredients’ near- and long-term outlook; 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 of the coronavirus pandemic, and its resurgence or abatement, and governmental, business and consumer responses to the pandemic. 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’ Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 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.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,
    2022       2021       2022       2021  
         
Net sales $ 362,189     $ 298,110     $ 670,307     $ 516,844  
Cost of goods sold   353,345       282,877       656,690       487,774  
Gross profit   8,844       15,233       13,617       29,070  
Selling, general and administrative expenses   8,996       7,230       16,625       14,244  
Asset impairments         1,900             3,100  
Income (loss) from operations   (152 )     6,103       (3,008 )     11,726  
Interest expense, net   (319 )     (1,045 )     (519 )     (2,930 )
Income from cash grant   22,652             22,652        
Income from loan forgiveness         3,887             3,887  
Other income (expense), net   (66 )     (555 )     388       385  
Income before provision for income taxes   22,115       8,390       19,513       13,068  
Provision for income taxes                      
Net income $ 22,115     $ 8,390     $ 19,513     $ 13,068  
Preferred stock dividends $ (315 )   $ (315 )   $ (627 )   $ (627 )
Net income allocated to participating securities   (284 )     (108 )     (251 )     (167 )
Net income available to common stockholders $ 21,516     $ 7,967     $ 18,635     $ 12,274  
Net income per share, basic $ 0.29     $ 0.11     $ 0.26     $ 0.17  
Net income per share, diluted $ 0.29     $ 0.11     $ 0.26     $ 0.17  
Weighted-average shares outstanding, basic   72,936       71,260       71,690       70,808  
Weighted-average shares outstanding, diluted   73,123       71,929       71,958       71,961  

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

ASSETS June 30,2022   December 31,2021
Current Assets:      
Cash and cash equivalents $         57,376   $         50,612
Restricted cash 17,361   11,513
Accounts receivable, net 92,744   86,888
Inventories 67,438   54,373
Derivative instruments 27,488   15,839
Other current assets            11,081              10,301
Total current assets 273,488   229,526
Property and equipment, net 222,946   222,550
Other Assets:      
Right of use operating lease assets, net 14,004   13,413
Notes receivable, noncurrent   11,641
Intangible assets, net 9,381   2,678
Goodwill 5,908  
Other assets            5,592                 5,145
Total other assets 34,885   32,877
Total Assets $         531,319   $         484,953

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

 

LIABILITIES AND STOCKHOLDERS’ EQUITY June 30,2022   December 31,2021
Current Liabilities:      
Accounts payable – trade $ 21,478   $ 23,251  
Accrued liabilities   21,404     21,307  
Current portion – operating leases   4,132     3,909  
Derivative instruments   32,770     13,582  
Other current liabilities 15,340     7,553  
Total current liabilities   95,124     69,602  
       
Long-term debt, net of current portion   52,518     50,361  
Operating leases, net of current portion   9,801     9,382  
Other liabilities   10,288     10,394  
Total Liabilities   167,731     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      
June 30, 2022 and December 31, 2021      
Series B: 927 shares issued and outstanding as of      
June 30, 2022 and December 31, 2021 1 1  
Common stock, $0.001 par value; 300,000 shares authorized;   74,188 and 72,778 shares issued and outstanding as of June   30, 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 June 30,   2022 and December 31, 2021  
Additional paid-in capital 1,036,692 1,037,205  
Accumulated other comprehensive expense (284) (284)  
Accumulated deficit (672,895)   (691,781)  
Total Stockholders’ Equity 363,588   345,214  
Total Liabilities and Stockholders’ Equity $ 531,319   $ 484,953  

 

Reconciliation of Adjusted EBITDA to Net Income

  Three Months Ended June 30,   Six Months Ended June 30,  
(in thousands) (unaudited)             2022     2021     2022     2021  
Net income $ 22,115   $ 8,390   $ 19,513   $ 13,068  
Adjustments:        
Interest expense   319     1,045     519     2,930  
Interest income   (145 )   (186 )   (303 )   (370 )
Asset impairments       1,900         3,100  
Acquisition-related expense   875         1,750      
Depreciation and amortization expense   6,728     5,811     12,861     11,669  
Total adjustments   7,777     8,570     14,827     17,329  
Adjusted EBITDA $ 29,892   $ 16,960   $ 34,340   $ 30,397  

Commodity Price Performance

  Three Months Ended June 30,   Six Months Ended June 30,
(unaudited)           2022   2021   2022   2021
Renewable fuel production gallons sold (in millions) 51.3   41.4   100.4 80.4
Specialty alcohol production gallons sold (in millions) 25.8   24.3   49.1 43.3
Third party renewable fuel gallons sold (in millions) 30.0   59.3   60.8 113.3
Total gallons sold (in millions) 107.1   125.0   210.3 237.0
             
Total gallons produced (in millions) 77.0   63.6   151.3 121.5
Production capacity utilization 88%   59%   85% 56%
             
Average sales price per gallon $ 2.84   $ 2.41   $ 2.65 $ 2.17
             
Average CBOT ethanol price per gallon $ 2.16   $ 2.30   $ 2.16 $ 2.00
             
Corn cost per bushel – CBOT equivalent $ 7.46   $ 6.05   $ 6.84 $ 5.51
Average basis 0.69   0.41   0.66 0.36
Delivered corn cost $ 8.15   $ 6.46   $ 7.50 $ 5.87
             
Total essential ingredients tons sold (in thousands) 414.1   304.0   812.9 580.9
Essential ingredients return % (1) 32.7%   32.2%   34.6%   35.9%

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

Segment Financials

  Three Months EndedJune 30,   Six Months EndedJune 30,    
    2022     2021     2022     2021    
Net Sales          
           
Pekin Campus, recorded as gross:          
Alcohol sales $ 143,768   $ 132,296   $ 259,818   $ 227,380    
Essential ingredient sales   59,853     49,578     115,133     94,655    
Intersegment sales   269     316     525     628    
Total Pekin Campus sales   203,890     182,190     375,476     322,663    
           
Marketing and distribution:          
Alcohol sales, gross $ 63,558   $ 86,299   $ 117,484   $ 143,309    
Alcohol sales, net   317     532     668     984    
Intersegment sales   3,242     2,618     6,239     4,862    
Total marketing and distribution sales   67,117     89,449     124,391     149,155    
           
Other production, recorded as gross:          
Alcohol sales $ 67,184   $ 22,153   $ 126,991   $ 38,121    
Essential ingredient sales   23,372     7,252     42,309     12,395    
Intersegment sales       332     12     637    
Total Other production sales   90,556     29,737     169,312     51,153    
           
Corporate and other   4,137         7,904        
Intersegment eliminations   (3,511 )   (3,266 )   (6,776 )   (6,127 )  
Net sales as reported $ 362,189   $ 298,110   $ 670,307   $ 516,844    
Cost of goods sold:        
Pekin Campus $ 195,691   $ 171,547   $ 364,573   $ 299,250  
Marketing and distribution   63,796               85,746     118,510     139,705  
Other production   91,606             27,325     169,851     51,442  
Corporate and other   3,197                     —     6,070      
Intersegment eliminations   (945 )   (1,741 )           (2,314 )           (2,623 )
Cost of goods sold as reported $ 353,345   $ 282,877   $ 656,690   $ 487,774  
         
Gross profit:        
Pekin Campus $ 8,199   $ 10,643   $ 10,903   $ 23,413  
Marketing and distribution   3,321     3,703     5,881     9,450  
Other production   (1,050 )   2,412     (539 )   (289 )
Corporate and other   940         1,834      
Intersegment eliminations   (2,566 )   (1,525 )           (4,462 )           (3,504 )
Gross profit as reported $ 8,844   $ 15,233   $ 13,617   $ 29,070  
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