Alto Ingredients, Inc. Reports First Quarter 2024 Results

May 6, 2024

– Improved Q1 2024 Gross Profit by $0.8 Million, Net Loss by $1.4 Million and Adjusted EBITDA by $3.4 Million over Q1 2023 –

PEKIN, Ill., May 06, 2024 (GLOBE NEWSWIRE) — Alto Ingredients, Inc. (NASDAQ: ALTO), a producer and distributor of renewable fuel and essential ingredients and the largest producer of specialty alcohols in the U.S., reported its financial results for the quarter ended March 31, 2024. For the first quarter of 2024, gross loss improved by $0.8 million, net loss improved by $1.4 million and Adjusted EBITDA improved by $3.4 million over the first quarter of 2023.

Bryon McGregor, President and CEO of Alto Ingredients, said, “Our strategies to diversify revenue, improve capacity utilization rates, reduce costs and expand operating margins are coming to fruition. Our first quarter 2024 financial results benefited from improved crush margins and our efforts to increase essential ingredient returns and operating efficiencies. However, various weather factors materially impacted our first quarter’s performance. In January, a cold spike at our Pekin campus increased transportation related expenses, reduced production rates and caused a shift to lower margin feed products. For the remainder of the quarter, unseasonably moderate weather conditions and ensuing low natural gas prices resulted in an incremental loss of $4.9 million from our energy hedging activities.

“Our scheduled biennial outage at our Pekin wet mill was completed in April 2024 and will result in more consistent and higher production rates, improving reliability as we approach the summer driving season. The market outlook for the rest of 2024 remains favorable, supported by solid corn inventories, improved export demand for ethanol and the EPA’s summer waiver for 15% blends.

“We continue to progress our strategic carbon capture and storage (CCS) initiative that will substantially reduce our carbon footprint. CCS stands to create value for the communities surrounding the Pekin campus, our customers and Alto,” concluded McGregor.

In March, Alto announced that it had signed a letter of intent with Vault 44.01, a leading CCS developer focused on the development, capitalization and operation of carbon storage assets. The company continues to negotiate the terms of its proposed agreements with potential financial partners and with Vault. The plan is to partner for safe and permanent CO2 storage deep underground in a secure geological reservoir close to the Pekin campus. Vault completed the 2D seismic geological survey and has begun data analysis. They have advanced the work required to submit the EPA Class VI permit application.

Financial Results for the Three Months Ended March 31, 2024 Compared to 2023

Net sales were $240.6 million, compared to $313.9 million.Cost of goods sold was $243.0 million, compared to $317.1 million.Gross loss, including a $4.9 million incremental loss related to natural gas hedging activities, was $2.4 million, compared to a gross loss of $3.2 million.Selling, general and administrative expenses were $7.9 million for both periods.Operating loss was $10.3 million, compared to an operating loss of $11.6 million, which included an asset impairment charge of $0.6 million.Net loss available to common stockholders was $12.0 million, or $0.17 per share, compared to $13.5 million, or $0.18 per share.Adjusted EBITDA was negative $7.1 million, compared to negative $10.4 million.

Cash and cash equivalents were $29.3 million at March 31, 2024, compared to $30.0 million at December 31, 2023. At March 31, 2024, the company’s borrowing availability was $90.9 million including $25.9 million under the company’s operating line of credit and $65.0 million under its term loan facility, subject to certain conditions.

First Quarter 2024 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 6, 2024, 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, May 6, 2024 through 8:00 p.m. Eastern Time on Monday, May 13, 2024. To access the replay, please dial 877-344-7529. International callers should dial 00-1 412-317-0088. The pass code will be 8726641.

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, unrealized derivative gains (losses), acquisition-related expense 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. (NASDAQ: ALTO) produces and distributes renewable fuel and essential ingredients and is the largest producer of specialty alcohols in the United States. Leveraging the unique qualities of its facilities, the company serves customers in a wide range of consumer and commercial products in the Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels markets. 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’ projected outlook, future performance, margin improvements and crush spreads; Alto Ingredients’ plant improvement and other capital projects, including CCS, as well as repair and maintenance projects, and their financing, costs, timing and effects; 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, Alto Ingredients’ ability to finalize definitive documentation with Vault on acceptable terms and to fund and execute the CCS project as intended; adverse economic and market conditions, including for renewable fuels, 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; adverse impacts of inflation and supply chain constraints; 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, including CCS, and other business initiatives and strategies. These factors also include, among others, the inherent uncertainty associated with financial and other projections and large-scale capital projects; 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 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, including with respect to the Inflation Reduction Act’s tax and other benefits Alto Ingredients expects to derive from CCS; 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 14, 2024.

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
March 31,  2024   2023 Net sales$240,629  $313,891 Cost of goods sold 243,029   317,055 Gross loss (2,400)  (3,164)Selling, general and administrative expenses (7,932)  (7,882)Asset impairments —   (574)Loss from operations (10,332)  (11,620)Interest expense, net (1,634)  (1,565)Other income, net 241   19 Loss before provision for income taxes (11,725)  (13,166)Provision for income taxes —   — Net loss$(11,725) $(13,166)Preferred stock dividends$(315) $(312)Net loss available to common stockholders$(12,040) $(13,478)Net loss per share, basic and diluted$(0.17) $(0.18)Weighted-average shares outstanding, basic and diluted 72,766   73,815 

ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value) ASSETSMarch 31,
2024December 31,
2023Current Assets:
       Cash and cash equivalents$29,310  $30,014 Restricted cash 12,762   15,466 Accounts receivable, net 58,081   58,729 Inventories 42,610   52,611 Derivative instruments 52   2,412 Other current assets 8,028   9,538 Total current assets 150,843   168,770 Property and equipment, net 248,901   248,748 Other Assets:       Right of use operating lease assets, net 21,506   22,597 Intangible assets, net 8,351   8,498 Other assets 5,034   5,628 Total other assets 34,891   36,723 Total Assets$434,635  $454,241 

ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(unaudited, in thousands, except par value) LIABILITIES AND STOCKHOLDERS’ EQUITYMarch 31,
2024 December 31,
2023Current Liabilities:       Accounts payable$18,508  $20,752 Accrued liabilities 18,166   20,205 Current portion – operating leases 4,486   4,333 Derivative instruments 8,299   13,849 Other current liabilities 5,595   6,149 Total current liabilities 55,054   65,288         Long-term debt 84,069   82,097 Operating leases, net of current portion 17,895   19,029 Other liabilities 8,958   8,270 Total Liabilities 165,976   174,684         Stockholders’ Equity:       Preferred stock, $0.001 par value; 10,000 shares authorized; Series A: no shares issued and outstanding as of March 31, 2024 and December 31, 2023
Series B: 927 shares issued and outstanding as of March 31, 2024 and December 31, 2023 1   1 Common stock, $0.001 par value; 300,000 shares authorized; 77,018 and 75,703 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 77   76 Non-voting common stock, $0.001 par value; 3,553 shares authorized; 1 share issued and outstanding as of March 31, 2024 and December 31, 2023 —   — Additional paid-in capital 1,042,053   1,040,912 Accumulated other comprehensive income 2,481   2,481 Accumulated deficit (775,953)  (763,913)Total Stockholders’ Equity 268,659   279,557 Total Liabilities and Stockholders’ Equity$434,635  $454,241         

Reconciliation of Adjusted EBITDA to Net Loss

 Three Months Ended
March 31,(in thousands) (unaudited)           2024   2023 Net loss$(11,725) $(13,166)Adjustments:  Interest expense 1,634   1,565 Interest income (175)  (221)Unrealized derivatives gains (3,190)  (5,926)Acquisition-related expense 675   700 Asset impairments —   574 Depreciation and amortization expense 5,728   6,055 Total adjustments 4,672   2,747 Adjusted EBITDA$(7,053) $(10,419) 

Segment Financials

(in thousands) (unaudited) Three Months Ended
March 31,   2024   2023 Net sales               Pekin Campus production, recorded as gross:       Alcohol sales$108,350  $132,381 Essential ingredient sales 46,709   63,631 Intersegment sales 321   313 Total Pekin Campus sales 155,380   196,325    Marketing and distribution:  Alcohol sales, gross$54,431  $84,381 Alcohol sales, net 34   114 Intersegment sales 2,752   2,843 Total marketing and distribution sales 57,217   87,338    Western production, recorded as gross:  Alcohol sales$20,231  $20,932 Essential ingredient sales 7,826   8,353 Intersegment sales —   1 Total Western production sales 28,057   29,286    Corporate and other 3,048   4,099 Intersegment eliminations (3,073)  (3,157)Net sales as reported$240,629  $313,891         Cost of goods sold:       Pekin Campus production$151,112  $198,178 Marketing and distribution 53,685   83,126 Western production 36,517   33,982 Corporate and other 2,794   2,369 Intersegment eliminations (1,079)  (600)Cost of goods sold as reported$243,029  $317,055         Gross profit (loss):       Pekin Campus production$4,268   (1,853)Marketing and distribution 3,532   4,212 Western production (8,460)  (4,696) Corporate and other 254   1,730 Intersegment eliminations (1,994)  (2,557)Gross loss as reported$(2,400  $(3,164)

     Sales and Operating Metrics (unaudited)          Three Months Ended
March 31,
    2024   2023 Alcohol Sales (gallons in millions)   Pekin Campus renewable fuel gallons sold  31.8   35.3 Western production renewable fuel gallons sold  11.2   7.9 Third party renewable fuel gallons sold  29.7   33.9 Total renewable fuel gallons sold  72.7   77.1 Specialty alcohol gallons sold  26.3   21.4 Total gallons sold  99.0   98.5      Sales Price per Gallon   Pekin Campus $1.90  $2.38 Western production $1.80  $2.64 Marketing and distribution $1.83  $2.49 Total $1.86  $2.43      Alcohol Production (gallons in millions)   Pekin Campus  53.6   53.3 Western production  9.7   7.3 Total  63.3   60.6      Corn Cost per Bushel   Pekin Campus $4.73  $6.83 Western production $5.89  $9.34 Total $4.92  $7.07      Average Market Metrics   PLATTS Ethanol price per gallon $1.56  $2.19 CME Corn cost per bushel $4.35  $6.58 Board corn crush per gallon (1) $0.01  $(0.16)     Essential Ingredients Sold (thousand tons)   Pekin Campus:    Distillers grains  87.7   90.8  CO2  39.1   42.3  Corn wet feed  25.6   26.7  Corn dry feed  18.9   21.5  Corn oil and germ  17.8   19.3  Syrup and other  9.5   10.5  Corn meal  8.3   9.4  Yeast  5.7   6.4  Total Pekin Campus essential ingredients sold 212.6   226.9      Western production:    Distillers grains  71.8   54.0  Syrup and other  14.2   3.5  CO2  13.3   13.6  Corn oil  1.5   1.3  Total Western production essential ingredients sold 100.8   72.4      Total Essential Ingredients Sold  313.4   299.3      Essential Ingredients Return % (2)   Pekin Campus return  52.1%  46.2%Western production return  39.3%  40.0%Consolidated total return  49.8%  45.4%     (1) Assumes corn conversion of 2.80 gallons of alcohol per bushel of corn.(2) Essential ingredient revenues as a percentage of total corn costs consumed.     

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