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Alto Ingredients(ALTO) - 2024 Q4 - Earnings Call Transcript
ALTOAlto Ingredients(ALTO)2025-03-06 04:22
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Financial Data and Key Metrics Changes - For Q4 2024, the company reported a consolidated net loss of 41.7million,whichincluded41.7 million, which included 30.5 million in asset impairments and acquisition-related expenses, compared to a net loss of 18.9millioninQ42023[39]−AdjustedEBITDAforQ42024wasnegative18.9 million in Q4 2023 [39] - Adjusted EBITDA for Q4 2024 was negative 7.7 million, a decline from positive 3.5millioninQ42023[39]−Thecompanysold95.1milliongallonsinQ42024,anincreasefrom92.5milliongallonsinQ42023,buttheaveragesalespricepergallondroppedto3.5 million in Q4 2023 [39] - The company sold 95.1 million gallons in Q4 2024, an increase from 92.5 million gallons in Q4 2023, but the average sales price per gallon dropped to 1.88 from 2.24year−over−year[34]BusinessLineDataandKeyMetricsChanges−ThecompanycoldidledtheMagicValleyfacility,leadingtoasignificantimpairmentchargeof2.24 year-over-year [34] Business Line Data and Key Metrics Changes - The company cold idled the Magic Valley facility, leading to a significant impairment charge of 21.4 million for this plant in Q4 2024 [38] - The Eagle Alcohol operations were rationalized, resulting in a reduction of headcount and a focus on turning remaining operations into a profitable service center [16][31] - The Pekin campus production volume increased by 3.8 million gallons over the prior year, demonstrating the effectiveness of maintenance programs [27] Market Data and Key Metrics Changes - Market crush margins declined nearly 0.18,resultinginan0.18, resulting in an 8.7 million adverse impact to gross profit [35] - Low carbon fuel credit prices were down compared to the previous year but showed improvement from Q3 2024 [35] - The company began exporting certified renewable fuel to European markets in Q4 2024, anticipating further expansion in 2025 [29] Company Strategy and Development Direction - The company is considering a range of strategic options, including asset sales and mergers, to maximize shareholder value [12][57] - The acquisition of Kodiak Carbonic for over 7millionisexpectedtobolstereconomicsandincreaseassetvaluationattheColumbiafacility[19]−ThecompanyaimstobalanceproductionlevelsbetweenspecialtyalcoholandISCCproductstomaximizemargins[30]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementacknowledgedchallengingmarketconditionsinQ42024,withcrushmarginsdowncomparedtothepriorquarterandyear[12]−Thecompanyisoptimisticabout2025,citingimprovedperformanceatthePekinwetmillandthesynergisticacquisitionoftheCO2processingfacility[42]−Managementemphasizedtheimportanceofexceedingcustomerexpectationsandmaximizingthevalueofspecialtyalcoholandessentialingredients[43]OtherImportantInformation−Thecompanyexpectstosaveapproximately7 million is expected to bolster economics and increase asset valuation at the Columbia facility [19] - The company aims to balance production levels between specialty alcohol and ISCC products to maximize margins [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenging market conditions in Q4 2024, with crush margins down compared to the prior quarter and year [12] - The company is optimistic about 2025, citing improved performance at the Pekin wet mill and the synergistic acquisition of the CO2 processing facility [42] - Management emphasized the importance of exceeding customer expectations and maximizing the value of specialty alcohol and essential ingredients [43] Other Important Information - The company expects to save approximately 8 million annually from cost-cutting initiatives, which will improve the bottom-line run rate and manage liquidity [18] - The company recorded 34.6millioninrepairsandmaintenanceexpensesinlinewithits2024estimate[41]−Thecompanyhasacashbalanceof34.6 million in repairs and maintenance expenses in line with its 2024 estimate [41] - The company has a cash balance of 35 million and total loan borrowing availability of $88 million as of December 31, 2024 [41] Q&A Session Summary Question: How is the company planning to balance carbon sequestration versus high-premium carbon dioxide for the beverage industry? - Management indicated that while there are opportunities for carbon sequestration, the unique market conditions in the Pacific Northwest make the carbonic structure beneficial for long-term contracts [48] Question: Is the site certified for the 45Q incentives? - Management stated that the facility is very close to qualifying for the 45Q incentives, with ongoing work needed [50] Question: What is the expected ratio of specialty alcohol sent to the EU versus domestic markets? - Management explained that the pricing varies by country in the EU, and the goal is to continue achieving high volumes while optimizing profitability [52][54] Question: How far along are discussions regarding asset sales or mergers? - Management confirmed that all options are being considered to maximize shareholder value, but specific details on M&A activities were not disclosed [56] Question: What is the timeline for the CCUS project and its potential contributions? - Management indicated that the EPA permit process could take two years, followed by an additional one to two years for construction, potentially leading to contributions by 2029 or 2030 [66]