• Alto Ingredients, Inc. Reports Second Quarter 2022 Results

    Source: Nasdaq GlobeNewswire / 08 Aug 2022 16:05:02   America/New_York

    • Grew Net Sales to $362.2 Million, Up 21% from Q2 2021
    • Generated Net Income of $21.5 Million, $0.29 per Diluted Share, Up from $8.0 Million, $0.11 per Diluted Share in Q2 2021
    • Increased Adjusted EBITDA to $29.9 Million, Up from $17.0 Million in Q2 2021

    SACRAMENTO, Calif., Aug. 08, 2022 (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, 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 cash17,361 11,513
    Accounts receivable, net92,744 86,888
    Inventories67,438 54,373
    Derivative instruments27,488 15,839
    Other current assets           11,081            10,301
    Total current assets273,488 229,526
    Property and equipment, net222,946 222,550
    Other Assets:   
    Right of use operating lease assets, net14,004 13,413
    Notes receivable, noncurrent— 11,641
    Intangible assets, net9,381 2,678
    Goodwill5,908 —
    Other assets           5,592               5,145
    Total other assets34,885 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 liabilities15,340
    		  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, 202111 
    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    		7473 
    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 capital1,036,6921,037,205 
    Accumulated other comprehensive expense(284)(284) 
    Accumulated deficit(672,895) (691,781) 
    Total Stockholders’ Equity363,588 345,214 
    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 41.4 100.480.4
    Specialty alcohol production gallons sold (in millions)25.8 24.3 49.143.3
    Third party renewable fuel gallons sold (in millions) 30.0  59.3  60.8 113.3
    Total gallons sold (in millions)107.1 125.0 210.3237.0
           
    Total gallons produced (in millions)77.0 63.6 151.3121.5
    Production capacity utilization88% 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)414.1 304.0 812.9580.9
    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 Ended
    June 30,
    		 Six Months Ended
    June 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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