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Alto Ingredients(ALTO) - 2024 Q3 - Quarterly Report
ALTOAlto Ingredients(ALTO)2024-11-08 21:20
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Production Capacity and Sales - The company has an annual alcohol production capacity of up to 350 million gallons, including 110 million gallons of specialty alcohols[65] - In 2023, the company marketed and distributed approximately 383 million gallons of alcohols and over 1.5 million tons of essential ingredients[65] - Specialty alcohol production at the Pekin Campus reached 42% of total sales volume in Q3 2024, a 7 percentage point increase from the same period last year[82] - The company expects to sell 90 million gallons of specialty alcohols in 2024 and match this volume in 2025[82] - Total renewable fuel gallons sold decreased by 5.4% to 74.3 million gallons in September 2024 from 78.5 million gallons in September 2023[100] - Specialty alcohol gallons sold increased by 21.0% to 22.5 million gallons in September 2024 compared to 18.6 million gallons in September 2023[100] - Total volume of production gallons sold increased by 0.8 million gallons, or 2%, to 52.8 million gallons for Q3 2024 compared to 52.0 million gallons in Q3 2023[105] Financial Performance - In Q3 2024, the company reported a consolidated gross profit of 6.0millionandAdjustedEBITDAof6.0 million and Adjusted EBITDA of 12.2 million, compared to 13.6millioninAdjustedEBITDAforQ32023[80]−ConsolidatednetlossforSeptember2024was13.6 million in Adjusted EBITDA for Q3 2023[80] - Consolidated net loss for September 2024 was 2,441,000, an improvement from a loss of 3,489,000inSeptember2023[96]−AdjustedEBITDAforSeptember2024was3,489,000 in September 2023[96] - Adjusted EBITDA for September 2024 was 12,164,000, compared to 13,596,000inSeptember2023,reflectingadecreaseof10.513,596,000 in September 2023, reflecting a decrease of 10.5%[96] - Net sales for the three months ended September 30, 2024, were 251,814,000, a decline of 20.8% from 318,127,000inthesameperiodof2023[103]−GrossprofitforSeptember2024was318,127,000 in the same period of 2023[103] - Gross profit for September 2024 was 5,960,000, representing 2.4% of net sales, compared to 4,161,000or1.34,161,000 or 1.3% of net sales in September 2023[103] - Consolidated gross profit decreased to 11.1 million for the nine months ended September 30, 2024, down from 18.2millionin2023,withgrossmarginsof1.518.2 million in 2023, with gross margins of 1.5% and 1.9% respectively[127] - Pekin Campus production segment's gross profit increased by 8.6 million to 22.4millionfortheninemonthsendedSeptember30,2024,primarilyduetohigheralcoholsalesmargins[129]−Westernproductionsegment′sgrossprofitdeclinedby22.4 million for the nine months ended September 30, 2024, primarily due to higher alcohol sales margins[129] - Western production segment's gross profit declined by 12.3 million to a gross loss of 14.1millionfortheninemonthsendedSeptember30,2024,attributedtolowerrenewablefuelmargins[131]−NetlossavailabletocommonstockholdersfortheninemonthsendedSeptember30,2024,was14.1 million for the nine months ended September 30, 2024, attributed to lower renewable fuel margins[131] - Net loss available to common stockholders for the nine months ended September 30, 2024, was 18.2 million, an increase of 82.1% compared to a loss of 10.0millionin2023[135]OperationalChangesandFuturePlans−ThecompanyplanstoidletheMagicValleyfacilitybeforetheendof2024unlesstherearemeaningfulimprovementsinoveralleconomics[72]−TheanticipatedcostforbuildingasecondalcoholloadingdockatthePekinCampusis10.0 million in 2023[135] Operational Changes and Future Plans - The company plans to idle the Magic Valley facility before the end of 2024 unless there are meaningful improvements in overall economics[72] - The anticipated cost for building a second alcohol loading dock at the Pekin Campus is 3.0 million, scheduled for completion in 2025[88] - The company is exploring alternatives to monetize or optimize its Western plants, including potential partnerships[86] - The hot-idling of the Magic Valley plant in January 2024 impacted sales, with the plant restarting in July 2024 but not reaching full capacity until October 2024[104] - Future commitments for capital projects total 8.6million,scheduledtobesatisfiedthrough2024and2025[152]MarketRisksandManagementStrategies−Thecompanyisexposedtomarketrisksrelatedtoethanolandcornpricing,withethanolsalespricedusingcontractsbasedonfixedorindexedpricestiedtospecificmarkets[155]−Asensitivityanalysisestimatedthatahypothetical108.6 million, scheduled to be satisfied through 2024 and 2025[152] Market Risks and Management Strategies - The company is exposed to market risks related to ethanol and corn pricing, with ethanol sales priced using contracts based on fixed or indexed prices tied to specific markets[155] - A sensitivity analysis estimated that a hypothetical 10% adverse change in ethanol prices could result in a pre-tax income decrease of approximately 34.8 million, while a similar change in corn prices could decrease pre-tax income by about 30.5million[160]−Thecompanymanagesitscornpurchasesthroughvolumecontractstofixprices,butremainssubjecttomarketrisksduetofluctuationsinfluencedbyweather,plantingdecisions,andglobalsupplyanddemand[156]−Thecompanyemploysriskmanagementstrategies,includingtheuseofderivativefinancialinstrumentslikefuturesandoptions,tomitigatemarketrisksassociatedwithethanolandcornprices[158]−Thecompanydoesnotenterintoderivativesfortradingorspeculativepurposes,focusinginsteadonmanagingrisksrelatedtocommodityprices[154]CashFlowandFinancialPosition−Cash,cashequivalents,andrestrictedcashdecreasedby15.430.5 million[160] - The company manages its corn purchases through volume contracts to fix prices, but remains subject to market risks due to fluctuations influenced by weather, planting decisions, and global supply and demand[156] - The company employs risk management strategies, including the use of derivative financial instruments like futures and options, to mitigate market risks associated with ethanol and corn prices[158] - The company does not enter into derivatives for trading or speculative purposes, focusing instead on managing risks related to commodity prices[154] Cash Flow and Financial Position - Cash, cash equivalents, and restricted cash decreased by 15.4% to 38.5 million as of September 30, 2024, compared to 45.5millionattheendof2023[138]−Workingcapitaldeclinedby45.5 million at the end of 2023[138] - Working capital declined by 3.5 million to 100.0millionatSeptember30,2024,duetoadecreaseincurrentassets[140]−Cashgeneratedfromoperatingactivitieswas100.0 million at September 30, 2024, due to a decrease in current assets[140] - Cash generated from operating activities was 6.3 million for the nine months ended September 30, 2024, down from 10.2millionin2023[142]−Kinergymaintainsanoperatinglineofcreditofupto10.2 million in 2023[142] - Kinergy maintains an operating line of credit of up to 100.0 million, with an outstanding balance of 30.6millionasofSeptember30,2024[145]−TheprincipalamountoutstandingundertheOrionTermLoanwas30.6 million as of September 30, 2024[145] - The principal amount outstanding under the Orion Term Loan was 60.0 million as of September 30, 2024[151] Legal and Regulatory Matters - Management believes that ongoing legal proceedings will not materially affect the company's financial condition or results of operations[164] - There have been no changes in internal control over financial reporting that materially affect the company's financial reporting processes during the last fiscal quarter[162]