Alto Ingredients Inc
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
ALTO$3.74+1.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001213900-24-066660
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001213900-24-095907
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 116 previous paragraphs and 121 current paragraphs.
54 unchanged; 32 reworded; 33 added; 28 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 23 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
In early November, we took a significant step forward in our commitment to sustainability by finalizing a definitive CO 2 Transportation and Sequestration Agreement with Vault 44.01 for our carbon capture and storage project, or CCS. Under the terms of the agreement, Vault will handle the transportation, injection and sequestration of CO 2 from our Pekin Campus to the Mt. Simon sandstone formation in Illinois. This partnership marks a critical milestone on our journey toward a more sustainable and prosperous future. While we await EPA submission and approval, address financing and source equipment, this agreement brings us closer to achieving our goals of lowering our carbon footprint and monetizing the value of the biogenic CO 2 we produce at our Pekin Campus.
Current report
In the third quarter of 2024, we improved our consolidated gross profit to $6.0 million and improved our Adjusted EBITDA to $12.2 million, including $3.6 million in realized gains on derivatives for the quarter. These results were primarily driven by an increase in our production capabilities and uptime at our Pekin Campus, increasing its profitability despite fluctuating market conditions, compared to the third quarter of 2023. These results compare to $13.6 million of Adjusted EBITDA for the same period in 2023, including $6.2 million in realized gains on derivatives and a cash grant of $2.8 million from the USDA’s Biofuel Producer Program.
Current report
The third quarter began with solid ethanol crush margins supported by strong exports. Domestic demand began to weaken as weather-related events reduced miles driven. Ethanol production remained relatively high, outpacing demand and resulting in higher ethanol inventory levels and lower market prices. In addition, in the third quarter, carbon prices were approximately 80% lower in Oregon and Washington and 20% lower in California compared to the third quarter of 2023. Although carbon prices remained low in October, we have begun to see some price recovery.
Current report
We increased productivity at our Pekin Campus wet mill to its highest level since 2020, reflecting in part the results of our successful biennial repairs and maintenance outage in April 2024. This translated into higher specialty alcohol production in the third quarter of 2024, reaching 42% of total sales volume at our Pekin Campus, seven percentage points higher than for the same period last year. We remain on track to sell 90 million gallons of specialty alcohols in 2024 and expect to match this volume in 2025.
Current report
For the fourth quarter, we expect corn prices to remain low, reflecting a good 2024 harvest, which we anticipate will result in a strong supply carryout and attractive prices into 2025. However, with domestic corn prices lower than international prices, demand for United States corn exports will likely increase, straining logistics and driving up transportation costs. Moreover, when domestic corn prices are low, suppliers typically require that prices cover at least their costs, driving up corn basis. This dynamic is one reason we expanded our corn storage capacity at our Pekin Campus and are considering a further increase in storage capacity at the site.
Current report
While higher corn transportation costs impact all ethanol producers, they have a more substantial impact on our Western operations, for which we source corn supplies from the Midwest, compared to Midwest ethanol producers that have access to local corn supplies and cheaper corn basis.
Current report
At our Magic Valley plant, we completed upgrades to Harvesting Technology’s system to capture high protein and corn oil products and restarted the plant in July to prove out the system and benefit from the positive crush margins at the time. In October, the Magic Valley facility consistently achieved average ethanol production rates at full capacity, the protein content yield from the plant reached 50% or greater, and we were able to expand our corn oil yields. This successful restart and operation has informed us of the technology system’s capabilities as we consider system deployment at our other dry mills. Unfortunately, recent increases in regional corn basis and declining market prices for protein and corn oil have resulted in overall margin compression, outweighing the economic benefits of our plant improvements. We will continue to explore operational opportunities and assess market trends, but unless there are meaningful improvements in overall economics at the facility, we plan to idle the plant before the end of 2024, which we believe will have a positive impact on our financial results.
Current report
To address these challenges, we continue to pursue opportunities to maximize the Western plants’ strengths and advantages. We have engaged Guggenheim Securities to actively explore our alternatives to monetize or optimize these assets, including through potential partnerships.
Current report
Notably, while our Columbia facility is also experiencing margin compression, the combination of lower transportation costs, premiums earned on low-carbon ethanol and revenues generated from the sale of CO 2 make the plant more economically resilient than our Magic Valley facility.
Current report
We continue to modernize our equipment and facilities to improve reliability, lower our operating costs and reduce our carbon footprint. For example, we are currently building a second alcohol loading dock at our Pekin Campus. Our goal for the project is to improve our river logistics by expediting the shipping process, adding redundancy and expanding our capabilities to accommodate a wider array of barges. We expect this project will yield a synergistic effect with our existing facilities and increase overall loading efficiencies. Our anticipated project cost is $3.0 million. The project is scheduled for completion in 2025.
Current report
Sustainability
Current report
We recently completed our sustainability report for 2023 and increased our disclosures on topics such as environmental, health, safety, quality and social metrics. Our core values of responsibility, integrity and quality drive our mission to produce the highest quality, sustainable ingredients that make everyday products better. We proudly offer 100% bio-based renewable products from our specialty alcohols and essential ingredients to renewable fuels and plant-based proteins. At our highly efficient dry grind facilities, we are striving for carbon intensity scores below 50 by optimizing efficiency, upgrading energy infrastructure and selecting sustainable feedstocks. Our dedication to sustainability and social responsibility extends to our customers, employees, investors, partners, suppliers and consumers, as well as our focus on product quality and safety.
Current report
We conducted materiality assessments with internal and external stakeholders and identified multiple long-term market opportunities to viably expand our bio-based renewable offerings. The third-party certifications we earned include such areas as oversight on risk management; chemical storage, handling, transportation and disposal; multiple food safety initiatives; quality management; good manufacturing practices and requirements for all active pharmaceutical ingredients and excipient products; and supply chains for waste streams.
Current report
Derivatives
Current report
We employ a variety of risk management strategies to mitigate the price volatility of different commodities throughout the year as a normal course of business. These strategies may include managing the spread between corn and ethanol prices, otherwise known as the crush margin. We may also take positions on corn and natural gas. Currently, our core strategy is to hedge the premium over fuel grade ethanol of our specialty alcohol contracts that have fixed sales prices of up to one year or longer. Using derivatives, we lock-in certain premiums for the duration of the specialty alcohol contract over production that otherwise would be sold as ethanol. For positions that settle, we record the cumulative unrealized gains or losses on those positions since inception to realized. On the remaining unsettled positions, the change in market values measured at the end of the reporting period is reflected as unrealized. Unrealized amounts are not determinate of amounts that will be realized in future periods. However, we believe that the most accurate method to assess the value or obligation to be realized in the future, measured as of a specific date, is to note the amounts on our balance sheet. The net derivative asset or liability amount on the balance sheet denotes the amount that we would realize if we liquidated all of our positions as of that specific period-end date.
Current report
Net sales of alcohol from our Pekin Campus production segment declined by $22.1 million, or 17%, to $106.5 million for the three months ended September 30, 2024 as compared to $128.6 million for the same period in 2023. Our total volume of production gallons sold increased by 0.8 million gallons, or 2%, to 52.8 million gallons for the three months ended September 30, 2024 as compared to 52.0 million gallons for the same period in 2023. The decrease of $0.46, or 19%, in the segment’s average sales price per gallon for the three months ended September 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $23.7 million. With the segment’s average sales price per gallon of $2.02 for the three months ended September 30, 2024, we generated $1.6 million more in net sales from the 0.8 million additional gallons of alcohol sold in the three months ended September 30, 2024 as compared to the same period in 2023.
Current report
Net sales of essential ingredients from our Pekin Campus production segment declined by $10.4 million, or 20%, to $41.2 million for the three months ended September 30, 2024 as compared to $51.6 million for the same period in 2023. Our total volume of essential ingredients sold increased by 10,400 tons, or 5%, to 236,600 tons for the three months ended September 30, 2024 from 226,200 tons for the same period in 2023. The decrease of $54.06, or 24%, in the segment’s average sales price per ton for the three months ended September 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $12.2 million. With the segment’s average sales price per ton of $174.21 for the three months ended September 30, 2024, we generated $1.8 million in additional net sales from the 10,400 additional tons of essential ingredients sold in the three months ended September 30, 2024 as compared to the same period in 2023.
Current report
Net sales of essential ingredients from our Western production segment declined by $7.4 million, or 42%, to $10.4 million for the three months ended September 30, 2024 as compared to $17.8 million for the same period in 2023. Our total volume of essential ingredients sold decreased 42,200 tons, or 21%, to 154,800 tons for the three months ended September 30, 2024 from 197,000 tons for the same period in 2023. The decrease of $23.33, or 26%, in our average sales price per ton for the three months ended September 30, 2024 as compared to the same period in 2023 reduced our net sales of essential ingredients from the segment by $4.6 million. With the segment’s average sales price per ton of $67.24 for the three months ended September 30, 2024, we generated $2.8 million less in net sales from the 42,200 fewer tons of essential ingredients sold in the three months ended September 30, 2024 as compared to the same period in 2023.
Current report
Our consolidated gross profit improved to $6.0 million for the three months ended September 30, 2024 from $4.2 million for the same period in 2023, representing a gross margin of 2.4% and 1.3% for the three months ended September 30, 2024 and 2023, respectively. With total alcohol sales volumes essentially flat, our consolidated gross profit increased due to lower overall corn costs, primarily from lower corn basis costs, which declined $0.63 per bushel compared to the same period in 2023. Our lower corn costs were, however, partially offset by a $0.10 decline in market crush margins to $0.41 per gallon compared to the same period in 2023.
Current report
Our Pekin Campus contributed $6.2 million to gross profit, improving tenfold year-over-year, in part due to productivity and other improvements resulting from our scheduled repairs and maintenance in April 2024 as well as a positive shift in sales mix to higher margin products. In particular, we sold 4.0 million gallons more of specialty alcohols for the three months ended September 30, 2024 compared to the same period in 2023. These improvements were partially offset by a 24% decline in our average sales price for essential ingredients compared to the same period in 2023.
Current report
Our Western facilities generated a gross loss of $2.3 million for the three months ended September 30, 2024 compared to a gross profit of $1.5 million for the same period in 2023. This $3.8 million year-over-year decline in gross profit is largely attributable to production downtime at our Magic Valley facility and higher costs associated with upgrading equipment at the plant and restarting the facility at the beginning of the third quarter of 2024. Production at our Magic Valley plant did not reach average full capacity until October 2024. In addition, our Columbia facility generated $1.6 million less in high margin revenue due to an 80% drop in carbon prices in the region.
Current report
We realized consolidated derivative gains of $3.6 million for the three months ended September 30, 2024 compared to $6.2 million for the same period in 2023.
Current report
During the third quarter of 2024, on a consolidated basis, we recorded $8.1 million dollars in repairs and maintenance expense, in line with the prior-year quarter, and we are on track to meet our 2024 full-year estimate of $34.0 million dollars of repairs and maintenance expense.
Current report
Our Pekin Campus production segment’s gross profit, net of intercompany activity, increased by $5.9 million to $7.0 million for the three months ended September 30, 2024 as compared to $1.1 million for the same period in 2023. Of this increase, $5.8 million is attributable to higher margins and $0.1 million is attributable to higher sales volumes.
Current report
Nine Months ended September 30, 2024 as compared to the Nine Months ended September 30, 2023
Current report
Net sales of essential ingredients from our Pekin Campus production segment declined by $41.9 million, or 25%, to $127.3 million for the nine months ended September 30, 2024 as compared to $169.2 million for the same period in 2023. Our total volume of essential ingredients sold decreased by 1,200 tons, or less than 1%, to 659,200 tons for the nine months ended September 30, 2024 from 660,400 tons for the same period in 2023. The decrease of $63.13, or 25%, in the segment’s average sales price per ton for the nine months ended September 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $41.7 million. With the segment’s average sales price per ton of $193.11 for the nine months ended September 30, 2024, we generated $0.2 million less in net sales from the 1,200 fewer tons of essential ingredients sold in the nine months ended September 30, 2024 as compared to the same period in 2023.
Current report
Net sales of alcohol from our Western production segment declined by $48.4 million, or 40%, to $74.1 million for the nine months ended September 30, 2024 as compared to $122.5 million for the same period in 2023. Our total volume of alcohol sold decreased by 8.4 million gallons, or 18%, to 38.2 million gallons for the nine months ended September 30, 2024 as compared to 46.6 million gallons for the same period in 2023. The decrease of $0.69, or 26%, in the segment’s average sales price per gallon for the nine months ended September 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $32.1 million. With the segment’s average sales price per gallon of $1.94 for the nine months ended September 30, 2024, we generated $16.3 million less in net sales from the 8.4 million fewer gallons of alcohol sold in the nine months ended September 30, 2024 as compared to the same period in 2023.
Current report
Net sales of essential ingredients from our Western production segment declined by $16.4 million, or 40%, to $24.2 million for the nine months ended September 30, 2024 as compared to $40.6 million for the same period in 2023. Our total volume of essential ingredients sold decreased 90,800 tons, or 21%, to 335,400 tons for the nine months ended September 30, 2024 from 426,200 tons for the same period in 2023. The decrease of $23.19, or 24%, in our average sales price per ton for the nine months ended September 30, 2024 as compared to the same period in 2023 reduced our net sales of essential ingredients from the segment by $9.9 million. With the segment’s average sales price per ton of $72.10 for the nine months ended September 30, 2024, we generated $6.5 million less in net sales from the 90,800 fewer tons of essential ingredients sold in the nine months ended September 30, 2024 as compared to the same period in 2023.
Current report
Net Loss Available to Common Stockholders
Current report
Our net loss available to common stockholders for the three and nine months ended September 30, 2024 and 2023 is primarily due to lower margins resulting from increased repairs and maintenance expense, higher up-front project costs as we worked to advance our CCS project, and other factors affecting gross profit as discussed above, partially offset by $0.8 million in gains for the three months ended September 30, 2024 from the sale of noncore assets from a past business acquisition. In addition, for the three months ended September 30, 2023, we received a USDA cash grant of $2.8 million related to the Biofuel Producer Program. This grant did not recur in 2024.
Current report
Cash provided by our Operating Activities
Current report
Cash used in our Financing Activities
Current report
We used $1.0 million in cash during the nine months ended September 30, 2024 to fund $0.9 million in preferred stock dividends and $0.1 million in net payments on Kinergy’s operating line of credit.
Removed paragraphs (28)
Previous report
Over the last few years, we have used cash flow from operations and excess liquidity to fund capital upgrades and repairs and maintenance to strengthen our facilities and improve our long-term profitability. While these additional expenses can impact short-term results, our recent efforts have begun to yield operational improvements and we are confident of their long-term benefits.
Previous report
In the second quarter, we increased production at our Pekin Campus as a result of these initiatives, positioning us to benefit from improving ethanol margins. Our efforts further demonstrate our Pekin facilities’ advantages, including our ability to consistently operate them profitably. For example, despite over $5 million in expenses related to our biennial wet mill outage, which was completed on time and within budget, our Pekin Campus generated over $10 million of gross profit in the second quarter, up from over $4 million in the first quarter, reflecting the successful outcome of our capital upgrade and repairs and maintenance programs as well as higher crush margins starting in June. For the second quarter, the average Chicago crush margin increased to 21 cents per gallon compared to slightly above breakeven in the first quarter. In July, the average Chicago crush margin rose further to 48 cents per gallon. These improvements align with the optimism we expressed on our first quarter earnings call concerning stronger crush margins, solid corn supplies and growing export demand.
Previous report
Our Pekin Campus is fully operational and is taking advantage of the favorable summer driving season economics. We remain on track to achieve 90 million gallons or more of specialty alcohol sales in 2024 and we are encouraged by the demand from existing and new customers. Assuming crush margins hold at or near present levels, we expect to deliver strong third quarter financial results.
Previous report
Despite the strong performance from our Pekin Campus, our consolidated second quarter results and Adjusted EBITDA were negatively impacted by the cost of our biennial wet mill outage, preventative repairs and maintenance expenses at all our facilities, lower feed and carbon prices, particularly with respect to our Columbia facility, and losses on our hedging activities. We recorded $11.3 million in repairs and maintenance expense for the second quarter and remain on track for $34 million in total repairs and maintenance expense for all plants in 2024.
Previous report
We are capitalizing on our Pekin Campus’s proximity to the Illinois River, which provides us with access to the Gulf of Mexico and an ability to export product. We are building a second loading dock at our Pekin Campus that will increase barge volume, reduce our overall transportation costs and provide critical redundancy. We expect the cost of the second dock will be less than $3 million.
Previous report
To generate long-term sustainable profitability, we have been actively expanding our revenue streams, such as with initiatives to produce higher quality specialty alcohols, a diversity of essential ingredients, including corn oil and high protein feed, and carbon capture and storage, or CCS. We expect that regulatory developments and carbon market fluctuations will affect our CCS initiative on an ongoing basis. Most recently, Illinois passed the SAFE CCS Act in July, establishing stringent safety, financial and insurance requirements for carbon dioxide pipelines. The Act also imposes a moratorium on the construction of new carbon pipelines until the federal Pipeline and Hazardous Materials Safety Administration finalizes its new safety rules, or July 1, 2026, whichever occurs sooner. This timing aligns with our current proposed CCS project permitting and construction schedules. We believe the Act will add clarity for the industry on CCS projects, although we do anticipate increased compliance and other requirements.
Previous report
The CCS market remains dynamic. For example, on the economic front, current prices in Low Carbon Fuel Standard markets are at historic lows and voluntary carbon markets are nascent. As a result, we cannot project with certainty, beyond the value of 45Q tax credits that begin at $85 per metric ton, what the dollar values of the associated environmental attributes will be over the life of our proposed CCS project. Given our plans to take a capital-light approach to this project, we must align with our various partners so that each party bears appropriate risks while retaining appropriate financial benefits. Given these evolving dynamics, it is important that we pursue our CCS project with the right partners. We believe we are doing so effectively as we continue to work collaboratively with Vault and other parties.
Previous report
We continue to invest in our Western plants, which were built at a time when destination plants delivered a solid and differentiated value proposition. As competition and corn basis increased and carbon values declined, we began further investing in these plants to broaden our revenue streams and improve profitability. Our ultimate goal is to optimize their value, which could include operating them long-term as part of our portfolio of production assets or evaluating the sale of one or both plants.
Previous report
At our Magic Valley plant, we continue to work with our high-protein system vendor, Harvesting Technology, to produce increased levels of corn oil and higher protein feed products that garner higher prices. In January, we hot-idled our Magic Valley plant due to negative regional crush margins and to address the excess water and mass balance challenges that inhibited our ability to operate the plant at capacity and to achieve the target results from our corn oil and high protein system. We have implemented significant modifications that include installing additional equipment and adjusting designed process flows. In the second quarter, to optimize plant efficiency upon restart, we accelerated routine maintenance activities, including tuning other major plant equipment and operating systems, performing routine cleanings and flushing prior process residuals. We resumed operations at our Magic Valley facility in early July and we are encouraged by the initial results. We are currently running the plant at approximately 70% of capacity and expect to increase production rates in the coming weeks as we complete system upgrades. We intend to do so carefully to ensure the process remains balanced and our products meet quality expectations. We anticipate having a clearer picture in late summer, and in time for our third quarter earnings call, of the effectiveness of these system modifications and the general performance of the plant. The system’s effectiveness will be measured against project goals and system production targets to determine the advisability of rolling the system out to other plants.
Previous report
In the second quarter, we significantly improved production rates at our Columbia plant by addressing centrifuge limitations we experienced in the first quarter. As a result, we increased capacity utilization rates in the second quarter and anticipate further improvements as the summer driving season continues. We are currently working on other ways to improve the facility’s profitability and expect to share additional information in due course.
Previous report
At our Pekin Campus, we are seeing improvements of up to 10% of total ethanol production capacity utilization and up to 15% of total essential ingredients production. Total capital expenditures through the second quarter were $9.3 million and we continue to expect $25 million in total capital expenditures for the full year.
Previous report
We continue to make progress on the sustainability front and our customers have indicated their support of our efforts to continue to improve sustainability and lower our carbon footprint. In furtherance of those efforts, in July, our ICP and Pekin plants received the 2024 Bronze Medal Sustainability rating from EcoVadis, which honors the top 35% of companies assessed. EcoVadis is a globally recognized business sustainability rating service that sets corporate sustainability standards.
Previous report
Net sales of alcohol from our Pekin Campus production segment declined by $27.0 million, or 21%, to $100.7 million for the three months ended June 30, 2024 as compared to $127.7 million for the same period in 2023. Our total volume of production gallons sold increased by 0.6 million gallons, or 1%, to 50.8 million gallons for the three months ended June 30, 2024 as compared to 50.2 million gallons for the same period in 2023. The decrease of $0.56, or 22%, in the segment’s average sales price per gallon for the three months ended June 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $28.1 million. With the segment’s average sales price per gallon of $1.98 for the three months ended June 30, 2024, we generated $1.1 million more in net sales from the 0.6 million additional gallons of alcohol sold in the three months ended June 30, 2024 as compared to the same period in 2023.
Previous report
Net sales of essential ingredients from our Pekin Campus production segment declined by $14.6 million, or 27%, to $39.4 million for the three months ended June 30, 2024 as compared to $54.0 million for the same period in 2023. Our total volume of essential ingredients sold increased by 2,700 tons, or 1%, to 210,000 tons for the three months ended June 30, 2024 from 207,300 tons for the same period in 2023. The decrease of $72.80, or 28%, in the segment’s average sales price per ton for the three months ended June 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $15.0 million. With the segment’s average sales price per ton of $187.48 for the three months ended June 30, 2024, we generated $0.4 million in additional net sales from the 2,700 additional tons of essential ingredients sold in the three months ended June 30, 2024 as compared to the same period in 2023.
Previous report
Net sales of alcohol from our Western production segment declined by $26.9 million, or 61%, to $17.5 million for the three months ended June 30, 2024 as compared to $44.4 million for the same period in 2023. Our total volume of alcohol sold decreased by 7.5 million gallons, or 46%, to 9.0 million gallons for the three months ended June 30, 2024 as compared to 16.5 million gallons for the same period in 2023. With the segment’s average sales price per gallon of $1.94 for the three months ended June 30, 2024, we generated $14.6 million less in net sales from the 7.5 million fewer gallons of alcohol sold in the three months ended June 30, 2024 as compared to the same period in 2023. The decrease of $0.75, or 28%, in the segment’s average sales price per gallon for the three months ended June 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $12.3 million.
Previous report
Net sales of essential ingredients from our Western production segment declined by $8.5 million, or 59%, to $5.9 million for the three months ended June 30, 2024 as compared to $14.4 million for the same period in 2023. Our total volume of essential ingredients sold decreased 77,000 tons, or 49%, to 79,800 tons for the three months ended June 30, 2024 from 156,800 tons for the same period in 2023. With the segment’s average sales price per ton of $74.56 for the three months ended June 30, 2024, we generated $5.7 million less in net sales from the 77,000 fewer tons of essential ingredients sold in the three months ended June 30, 2024 as compared to the same period in 2023. The decrease of $17.41, or 19%, in our average sales price per ton for the three months ended June 30, 2024 as compared to the same period in 2023 reduced our net sales of essential ingredients from the segment by $2.8 million.
Previous report
Cost of Goods Sold and Gross Profit (Loss)
Previous report
Our consolidated gross profit declined to $7.6 million for the three months ended June 30, 2024 from $17.2 million for the same period in 2023, representing a gross margin of 3.2% and 5.4% for the three months ended June 30, 2024 and 2023, respectively. With sales volumes of alcohols being relatively flat, our consolidated gross profit declined due to higher repairs and maintenance expense, totaling $11.3 million across all plants, and lower average sales prices for our essential ingredients, in particular, a compression on protein prices due to an increase in soybean meal supply, a consequence of production growth in soy crush driven by the demand for renewable diesel. Gross profit was also negatively impacted by historic low carbon market pricing at our Columbia plant and significantly higher realized derivative losses of $2.9 million compared to $5.5 million in derivative gains for the prior year period.
Previous report
Our Pekin Campus production segment’s gross profit, net of intercompany activity, declined by $3.7 million to a gross profit of $10.6 million for the three months ended June 30, 2024 as compared to $14.3 million for the same period in 2023. Of this decline, $3.8 million is attributable to lower alcohol sales margins, partially offset by $0.1 million attributable to higher sales volumes.
Previous report
Six Months ended June 30, 2024 as compared to the Six Months ended June 30, 2023
Previous report
Net sales of essential ingredients from our Pekin Campus production segment declined by $31.5 million, or 27%, to $86.1 million for the six months ended June 30, 2024 as compared to $117.6 million for the same period in 2023. Our total volume of essential ingredients sold declined by 11,600 tons, or 3%, to 422,600 tons for the six months ended June 30, 2024 from 434,200 tons for the same period in 2023. The decrease of $67.12, or 25%, in the segment’s average sales price per ton for the six months ended June 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $29.1 million. With the segment’s average sales price per ton of $203.69 for the six months ended June 30, 2024, we generated $2.4 million less in net sales from the 11,600 fewer tons of essential ingredients sold in the six months ended June 30, 2024 as compared to the same period in 2023.
Previous report
Net sales of essential ingredients from our Western production segment declined by $9.0 million, or 39%, to $13.8 million for the six months ended June 30, 2024 as compared to $22.8 million for the same period in 2023. Our total volume of essential ingredients sold decreased 48,600 tons, or 21%, to 180,600 tons for the six months ended June 30, 2024 from 229,200 tons for the same period in 2023. With the segment’s average sales price per ton of $76.28 for the six months ended June 30, 2024, we generated $3.7 million less in net sales from the 48,600 fewer tons of essential ingredients sold in the six months ended June 30, 2024 as compared to the same period in 2023. The decrease of $23.08, or 23%, in our average sales price per ton for the six months ended June 30, 2024 as compared to the same period in 2023 reduced our net sales of essential ingredients from the segment by $5.3 million.
Previous report
Cost of Goods Sold and Gross Profit (Loss)
Previous report
Net Income (Loss) Available to Common Stockholders
Previous report
The decrease in our net income available to common stockholders for the three and six months ended June 30, 2024 as compared to the same periods in 2023 is primarily due to lower margins caused by increased repairs and maintenance expense, realized derivative losses from hedging activities, higher up-front project costs, and other factors affecting gross profit (loss) as discussed above.
Previous report
Cash used in our Operating Activities
Previous report
Cash provided by our Financing Activities
Previous report
Cash provided by our financing activities was $7.3 million for the six months ended June 30, 2024, which reflects net proceeds of $8.0 million from Kinergy’s operating line of credit, partially offset by $0.6 million paid in preferred stock dividends.
Reworded paragraphs (32)
Previous wording
All of our production facilities are currently operating. In January 2024, we temporarily hot-idled our Magic Valley facility to minimize losses from negative regional crush margins and to expedite the installation of additional equipment needed to achieve our intended production rate, quality and consistency from our corn oil and high protein system at the facility. We restarted our Magic Valley facility in July 2024. As market conditions change, we may increase, decrease or idle production at one or more operating facilities or resume operations at any idled facility.
Current wording
All of our production facilities are currently operating. However, unless there are meaningful improvements in overall economics at our Magic Valley facility, we plan to idle the plant before the end of 2024, which we believe will have a positive impact on our financial results. In January 2024, we temporarily hot-idled our Magic Valley facility to minimize losses from negative regional crush margins and to expedite the installation of additional equipment needed to achieve the intended production rate, quality and consistency from the corn oil and high protein system at the facility. We restarted our Magic Valley facility in July 2024. As market conditions change, we may increase, decrease or idle production at one or more operating facilities or resume operations at any idled facility.
Previous wording
Reconciliation of Adjusted EBITDA to Consolidated Net Income (Loss)
Current wording
Reconciliation of Adjusted EBITDA to Consolidated Net Loss
Previous wording
The decrease in our consolidated net sales for the three months ended June 30, 2024 as compared to the same period in 2023 is primarily attributable to lower average sales prices per gallon for both specialty alcohol and renewable fuel as well as lower average sales prices of essential ingredients due to a lower commodity price environment. In addition, we had lower sales of renewable fuel and essential ingredients due to the hot-idling of our Magic Valley plant in January 2024 and the biennial wet mill outage at our Pekin Campus for repairs and maintenance in April 2024.
Current wording
The decline in our consolidated net sales for the three months ended September 30, 2024 as compared to the same period in 2023 is primarily attributable to lower average sales prices per gallon for both specialty alcohol and renewable fuel as well as lower average sales prices of essential ingredients due to a lower commodity price environment. In addition, we had lower sales of renewable fuel and essential ingredients due to the hot-idling of our Magic Valley plant in January 2024, which we restarted in July 2024, but which did not reach average full capacity until October 2024.
Previous wording
Net sales of alcohol from our marketing and distribution segment, excluding intersegment sales, declined by $2.5 million, or 3%, to $70.2 million for the three months ended June 30, 2024 as compared to $72.7 million for the same period in 2023.
Current wording
Net sales of alcohol from our marketing and distribution segment, excluding intersegment sales, declined by $4.3 million, or 7%, to $54.6 million for the three months ended September 30, 2024 as compared to $58.9 million for the same period in 2023.
Previous wording
Our volume of third-party alcohol sold reported gross by the segment increased by 7.8 million gallons, or 29%, to 34.4 million gallons for the three months ended June 30, 2024 as compared to 26.6 million gallons for the same period in 2023. With the segment’s average sales price per gallon of $2.04 for the three months ended June 30, 2024, we realized $15.9 million in additional net sales from the 7.8 million additional gallons of third-party alcohol sold gross in the three months ended June 30, 2024 as compared to the same period in 2023.
Current wording
The $0.52 per gallon, or 19%, decrease in the segment’s average sales price per gallon for the three months ended September 30, 2024 as compared to the same period in 2023 resulted in a $11.4 million decline in our net sales from third-party fuel-grade ethanol sold by the segment. Our volume of third-party alcohol sold reported gross by the segment increased by 3.3 million gallons, or 15%, to 25.2 million gallons for the three months ended September 30, 2024 as compared to 21.9 million gallons for the same period in 2023. With the segment’s average sales price per gallon of $2.17 for the three months ended September 30, 2024, we realized $7.1 million in additional net sales from the 3.3 million additional gallons of third-party alcohol sold gross in the three months ended September 30, 2024 as compared to the same period in 2023.
Previous wording
Net sales of alcohol from our Western production segment declined by $27.6 million, or 42%, to $37.7 million for the six months ended June 30, 2024 as compared to $65.3 million for the same period in 2023. Our total volume of alcohol sold decreased by 4.2 million gallons, or 17%, to 20.2 million gallons for the six months ended June 30, 2024 as compared to 24.4 million gallons for the same period in 2023. With the segment’s average sales price per gallon of $1.86 for the six months ended June 30, 2024, we generated $7.8 million less in net sales from the 4.2 million fewer gallons of alcohol sold in the six months ended June 30, 2024 as compared to the same period in 2023. The decrease of $0.81, or 30%, in the segment’s average sales price per gallon for the six months ended June 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $19.8 million.
Current wording
Net sales of alcohol from our Western production segment declined by $20.8 million, or 36%, to $36.4 million for the three months ended September 30, 2024 as compared to $57.2 million for the same period in 2023. Our total volume of alcohol sold decreased by 4.2 million gallons, or 19%, to 18.0 million gallons for the three months ended September 30, 2024 as compared to 22.2 million gallons for the same period in 2023. The decrease of $0.55, or 21%, in the segment’s average sales price per gallon for the three months ended September 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $12.3 million. With the segment’s average sales price per gallon of $2.02 for the three months ended September 30, 2024, we generated $8.5 million less in net sales from the 4.2 million fewer gallons of alcohol sold in the three months ended September 30, 2024 as compared to the same period in 2023.
Previous wording
Net sales of alcohol from corporate and other declined by $1.4 million, or 33%, to $2.8 million for the three months ended June 30, 2024 as compared to $4.2 million for the same period in 2023. These sales are from Eagle Alcohol’s business.
Current wording
Net sales of alcohol from corporate and other declined by $1.4 million, or 34%, to $2.7 million for the three months ended September 30, 2024 as compared to $4.1 million for the same period in 2023. These sales are from Eagle Alcohol’s business.
Previous wording
Our marketing and distribution segment’s gross profit, net of intercompany activity, declined by $0.8 million to a gross profit of $1.6 million for the six months ended June 30, 2024 as compared to a gross profit of $2.4 million for the same period in 2023. This decline is attributable primarily to lower margins from sales of third-party fuel-grade ethanol for the six months ended June 30, 2024 as compared to the same period in 2023.
Current wording
Our marketing and distribution segment’s gross profit, net of intercompany activity, increased by $0.4 million to $1.3 million for the three months ended September 30, 2024 as compared to a gross profit of $0.9 million for the same period in 2023. Of this improvement, $0.3 million is attributable to higher margins from sales of third-party fuel-grade ethanol and $0.1 million attributable to higher sales volumes.
Previous wording
Our Western production segment’s gross profit, net of intercompany activity, declined by $4.8 million to a gross loss of $3.7 million for the three months ended June 30, 2024 as compared to a gross profit of $1.1 million for the same period in 2023. Of this decline, $7.8 million is attributable to lower renewable fuel margins, partially offset by $3.0 million attributable to lower sales volumes at negative margins.
Current wording
Our Western production segment’s gross profit, net of intercompany activity, declined by $3.8 million to a gross loss of $2.1 million for the three months ended September 30, 2024 as compared to a gross profit of $1.7 million for the same period in 2023. Of this decline, $4.2 million is attributable to lower renewable fuel margins, partially offset by $0.4 million attributable to lower sales volumes at negative margins.
Previous wording
Gross profit from corporate and other declined by $0.9 million to a gross loss of $0.1 million for the three months ended June 30, 2024 as compared to a gross profit of $0.8 million for the same period in 2023, all of which were from Eagle Alcohol’s business.
Current wording
Gross profit from corporate and other declined by $0.7 million to a gross loss of $0.2 million for the three months ended September 30, 2024 as compared to a gross profit of $0.5 million for the same period in 2023, all of which were from Eagle Alcohol’s business.
Previous wording
The decrease in our consolidated net sales for the six months ended June 30, 2024 as compared to the same period in 2023 is primarily attributable to lower average sales prices per gallon for both specialty alcohol and renewable fuel as well as lower average sales prices of essential ingredients due to lower corn prices. In addition, we had lower sales of renewable fuel and essential ingredients due to the hot-idling of our Magic Valley plant in January 2024 and the biennial wet mill outage at our Pekin Campus for repairs and maintenance in April 2024.
Current wording
The decrease in our consolidated net sales for the nine months ended September 30, 2024 as compared to the same period in 2023 is primarily attributable to lower average sales prices per gallon for both specialty alcohols and renewable fuel as well as lower average sales prices of essential ingredients due to lower corn prices. In addition, we had lower sales of renewable fuel and essential ingredients due to the hot-idling of our Magic Valley plant in January 2024, and the biennial wet mill outage at our Pekin Campus for repairs and maintenance in April 2024.
Previous wording
Net sales of alcohol from our Pekin Campus production segment declined by $51.1 million, or 20%, to $209.0 million for the six months ended June 30, 2024 as compared to $260.1 million for the same period in 2023. Our total volume of production gallons sold increased by 2.0 million gallons, or 2%, to 107.9 million gallons for the six months ended June 30, 2024 as compared to 105.9 million gallons for the same period in 2023. The decrease of $0.52, or 21%, in the segment’s average sales price per gallon for the six months ended June 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $55.0 million. With the segment’s average sales price per gallon of $1.94 for the six months ended June 30, 2024, we generated $3.9 million more in net sales from the 2.0 million additional gallons of alcohol sold in the six months ended June 30, 2024 as compared to the same period in 2023.
Current wording
Net sales of alcohol from our Pekin Campus production segment declined by $73.1 million, or 19%, to $315.5 million for the nine months ended September 30, 2024 as compared to $388.6 million for the same period in 2023. Our total volume of production gallons sold increased by 2.8 million gallons, or 2%, to 160.7 million gallons for the nine months ended September 30, 2024 as compared to 157.9 million gallons for the same period in 2023. The decrease of $0.50, or 20%, in the segment’s average sales price per gallon for the nine months ended September 30, 2024 as compared to the same period in 2023 reduced our net sales from the segment by $78.6 million. With the segment’s average sales price per gallon of $1.96 for the nine months ended September 30, 2024, we generated $5.5 million more in net sales from the 2.8 million additional gallons of alcohol sold in the nine months ended September 30, 2024 as compared to the same period in 2023.
Previous wording
Net sales of alcohol from our marketing and distribution segment, excluding intersegment sales, declined by $32.4 million, or 21%, to $124.7 million for the six months ended June 30, 2024 as compared to $157.1 million for the same period in 2023.
Current wording
Net sales of alcohol from our marketing and distribution segment, excluding intersegment sales, declined by $36.7 million, or 17%, to $179.3 million for the nine months ended September 30, 2024 as compared to $216.0 million for the same period in 2023.
Previous wording
Our volume of third-party alcohol sold reported gross by the segment increased by 3.6 million gallons, or 6%, to 64.1 million gallons for the six months ended June 30, 2024 as compared to 60.5 million gallons for the same period in 2023. With the segment’s average sales price per gallon of $1.94 for the six months ended June 30, 2024, we realized $7.0 million in additional net sales from the 3.6 million additional gallons of third-party alcohol sold gross in the six months ended June 30, 2024 as compared to the same period in 2023.
Current wording
Our volume of third-party alcohol sold reported gross by the segment increased by 6.9 million gallons, or 8%, to 89.3 million gallons for the nine months ended September 30, 2024 as compared to 82.4 million gallons for the same period in 2023. The $0.61 per gallon, or 23%, decrease in the segment’s average sales price per gallon for the nine months ended September 30, 2024 as compared to the same period in 2023 resulted in a $50.6 million decline in our net sales from third-party fuel-grade ethanol sold by the segment. With the segment’s average sales price per gallon of $2.01 for the nine months ended September 30, 2024, we realized $13.9 million in additional net sales from the 6.9 million additional gallons of third-party alcohol sold gross in the nine months ended September 30, 2024 as compared to the same period in 2023.
Previous wording
Net sales of alcohol from corporate and other declined by $2.5 million, or 30%, to $5.8 million for the six months ended June 30, 2024 as compared to $8.3 million for the same period in 2023. These sales are from Eagle Alcohol’s business.
Current wording
Net sales of alcohol from corporate and other declined by $3.7 million, or 30%, to $8.6 million for the nine months ended September 30, 2024 as compared to $12.3 million for the same period in 2023. These sales are from Eagle Alcohol’s business.
Previous wording
Our consolidated gross profit declined to $5.2 million for the six months ended June 30, 2024 from $14.0 million for the same period in 2023, representing a gross margin of 1.1% and 2.2% for the six months ended June 30, 2024 and 2023, respectively. Our consolidated gross profit declined due to higher repairs and maintenance expense and lower average sales prices for our essential ingredients, in particular, a compression on protein prices due to an increase in soybean meal supply, a consequence of production growth in soy crush driven by the demand for renewable diesel. Gross profit was also negatively impacted by historic low carbon market pricing at our Columbia plant and significantly higher realized derivative losses compared to the prior year period.
Current wording
Our consolidated gross profit declined to $11.1 million for the nine months ended September 30, 2024 from $18.2 million for the same period in 2023, representing a gross margin of 1.5% and 1.9% for the nine months ended September 30, 2024 and 2023, respectively. Our consolidated gross profit declined primarily due to higher repairs and maintenance expense and lower average sales prices for our essential ingredients due, in particular, to a compression on protein prices from an increase in soybean meal supply, a consequence of production growth in soy crush driven by the demand for renewable diesel. Another contributing factor to the year-over-year decline in gross profit is production downtime at our Magic Valley facility and higher operating costs associated with upgrading equipment at the plant. We restarted our Magic Valley facility in July 2024, but production did not reach average full capacity until October 2024.
Previous wording
Our Pekin Campus production segment’s gross profit, net of intercompany activity, increased by $2.9 million to a gross profit of $15.5 million for the six months ended June 30, 2024 as compared to $12.6 million for the same period in 2023. Of this improvement, $2.6 million is attributable to higher alcohol sales margins and $0.3 million attributable to higher sales volumes.
Current wording
Our Pekin Campus production segment’s gross profit, net of intercompany activity, increased by $8.6 million to a gross profit of $22.4 million for the nine months ended September 30, 2024 as compared to $13.8 million for the same period in 2023. Of this improvement, $8.3 million is attributable to higher alcohol sales margins and $0.3 million is attributable to higher sales volumes.
Previous wording
Our marketing and distribution segment’s gross profit, net of intercompany activity, declined by $0.2 million to a gross profit of $0.8 million for the three months ended June 30, 2024 as compared to a gross profit of $1.0 million for the same period in 2023. Of this decline, $0.3 million is attributable to lower margins from sales of third-party fuel-grade ethanol, partially offset by $0.1 million attributable to higher sales volumes.
Current wording
Our marketing and distribution segment’s gross profit, net of intercompany activity, declined by $0.3 million to a gross profit of $2.9 million for the nine months ended September 30, 2024 as compared to a gross profit of $3.2 million for the same period in 2023. Of this decline, $0.5 million is attributable to lower margins from sales of third-party fuel-grade ethanol, partially offset by $0.2 million attributable to higher sales volumes.
Previous wording
Our Western production segment’s gross profit, net of intercompany activity, declined by $8.5 million to a gross loss of $12.0 million for the six months ended June 30, 2024 as compared to a gross loss of $3.5 million for the same period in 2023. Of this decline, $11.1 million is attributable to lower renewable fuel margins and hot-idling costs attributable to our Magic Valley facility, partially offset by $2.6 million attributable to lower sales volumes at negative margins.
Current wording
Our Western production segment’s gross profit, net of intercompany activity, declined by $12.3 million to a gross loss of $14.1 million for the nine months ended September 30, 2024 as compared to a gross loss of $1.8 million for the same period in 2023. Of this decline, $15.4 million is attributable to lower renewable fuel margins and hot-idling costs at our Magic Valley facility, partially offset by $3.1 million attributable to lower sales volumes at negative margins.
Previous wording
Gross profit from corporate and other declined by $2.4 million to a gross profit of $0.1 million for the six months ended June 30, 2024 as compared to $2.5 million for the same period in 2023, all of which were from Eagle Alcohol’s business.
Current wording
Gross profit from corporate and other declined by $3.1 million to a gross loss of $0.1 million for the nine months ended September 30, 2024 as compared to a gross profit of $3.0 million for the same period in 2023, all of which were from Eagle Alcohol’s business.
Previous wording
Our SG&A expenses increased for the three and six months ended June 30, 2024 as compared to the same periods in 2023. The period over period increases in SG&A expenses are primarily due to increased non-cash compensation and higher professional services fees from diligence work on strategic capital projects and other related up-front project costs, such as with respect to our CCS project, which are expensed until the project is at a stage where costs are capitalized.
Current wording
Our SG&A expenses decreased for the three months ended September 30, 2024 as compared to the same period in 2023. The period over period decrease in SG&A expenses is primarily due to lower professional services fees from diligence work on strategic capital projects and other related up-front project costs, such as with respect to our CCS project, which are expensed until the project is at a stage where costs are capitalized. SG&A expenses remained essentially flat for the nine months ended September 30, 2024 and 2023.
Previous wording
The following table presents our net income (loss) available to common stockholders in dollars and as a percentage of net sales (in thousands, except percentages):
Current wording
The following table presents our net loss available to common stockholders in dollars and as a percentage of net sales (in thousands, except percentages):
Previous wording
During the six months ended June 30, 2024, we funded our operations primarily from cash on hand and Kinergy’s operating line of credit. In addition to funding our operations, our capital resources were used to advance our capital improvement projects and make an annual payment relating to our acquisition of Eagle Alcohol. As of June 30, 2024, we had $28.4 million in cash, cash equivalents and restricted cash, $30.3 million available for borrowing under Kinergy’s operating line of credit and $65.0 million that may be available for capital improvement projects under our term loan with Orion Infrastructure Capital, subject to certain conditions. We believe we have sufficient liquidity to meet our anticipated working capital, debt service and other liquidity needs to fund our operations for at least the next twelve months from the date of this report. We must, however, raise significant additional capital to advance and complete some of our capital improvement projects, including our CCS project.
Current wording
During the nine months ended September 30, 2024, we funded our operations primarily from cash on hand, cash provided by our operations and Kinergy’s operating line of credit. In addition to funding our operations, we used our capital resources to advance our capital improvement projects and make an annual payment relating to our acquisition of Eagle Alcohol. As of September 30, 2024, we had $38.5 million in cash, cash equivalents and restricted cash, $27.2 million available for borrowing under Kinergy’s operating line of credit and $65.0 million that may be available for capital improvement projects under our term loan with Orion Infrastructure Capital, subject to certain conditions. We believe we have sufficient liquidity to meet our anticipated working capital, debt service and other liquidity needs to fund our operations for at least the next twelve months from the date of this report. We must, however, raise significant additional capital to advance and complete some of our capital improvement projects, including our CCS project.
Previous wording
At June 30, 2024, we had approximately $57.4 million of net assets at our subsidiaries that were not available to be transferred to Alto Ingredients, Inc. in the form of dividends, distributions, loans or advances due to restrictions contained in our subsidiaries’ credit facilities.
Current wording
At September 30, 2024, we had approximately $56.3 million of net assets at our subsidiaries that were not available to be transferred to Alto Ingredients, Inc. in the form of dividends, distributions, loans or advances due to restrictions contained in our subsidiaries’ credit facilities.
Previous wording
Working capital remained relatively flat at $103.9 million at June 30, 2024 compared to $103.5 million at December 31, 2023 due to a decrease of $15.5 million in current liabilities and a decrease of $15.1 million in current assets.
Current wording
Working capital declined by $3.5 million to $100.0 million at September 30, 2024 compared to $103.5 million at December 31, 2023 due to a decrease of $23.7 million in current assets, partially offset by a decrease of $20.2 million in current liabilities.
Previous wording
Current assets declined primarily due to a decrease in cash, cash equivalents and restricted cash and a decrease in inventories, partially offset by an increase in accounts receivable and derivative assets for the six months ended June 30, 2024 as compared to the same period in 2023.
Current wording
Current assets declined due to decreases in cash, cash equivalents and restricted cash, accounts receivable, inventories, derivative assets and other assets for the nine months ended September 30, 2024 as compared to the same period in 2023.
Previous wording
Our cash, cash equivalents and restricted cash declined by $17.1 million primarily due to $12.3 million in cash used in our operating activities and $12.1 million in cash used in our investing activities, partially offset by $7.3 million in cash provided by our financing activities, as further detailed below.
Current wording
Our cash, cash equivalents and restricted cash declined by $7.0 million primarily due to $12.0 million in cash used in our investing activities and $1.0 million in cash used in our financing activities, partially offset by $6.0 million of cash provided by our operating activities.
Previous wording
We used $12.3 million in cash for our operating activities during the six months ended June 30, 2024 as compared to $12.9 million in cash used in our operations for the same period in 2023. Specific factors that contributed to the change in cash from our operating activities include:
Current wording
We generated $6.3 million in cash from our operating activities during the nine months ended September 30, 2024 as compared to $10.2 million for the same period in 2023. Specific factors that contributed to the change in cash from our operating activities include:
Previous wording
We used $12.1 million in cash during the six months ended June 30, 2024 to fund $9.3 million of additions to property and equipment, including for our capital improvement projects, and to fund $2.8 million of contingent purchase price payments for our acquisition of Eagle Alcohol.
Current wording
We used $12.2 million in cash during the nine months ended September 30, 2024 to fund $9.8 million of additions to property and equipment, including for our capital improvement projects, and to fund $2.8 million of contingent purchase price payments for our acquisition of Eagle Alcohol, partially offset by $0.4 million in proceeds from the sale of assets. Our capital expenditures for the third quarter of 2024 totaled $0.5 million, net of various energy rebates.
Previous wording
Kinergy maintains an operating line of credit for an aggregate amount of up to $100.0 million. The credit facility matures on November 7, 2027. Interest accrues under the credit facility at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin ranging from 1.25% to 1.75%. The credit facility’s monthly unused line fee is 0.25% to 0.375% of the amount by which the maximum credit under the facility exceeds the average daily principal balance during the immediately preceding month. Payments that may be made by Kinergy to Alto Ingredients, Inc. as reimbursement for management and other services provided by Alto Ingredients, Inc. to Kinergy are limited under the terms of the credit facility to $1.5 million per fiscal quarter. The credit facility also includes the accounts receivable of our indirect wholly-owned subsidiary, Alto Nutrients, LLC, or Alto Nutrients, as additional collateral. Payments that may be made by Alto Nutrients to Alto Ingredients, Inc. as reimbursement for management and other services provided by Alto Ingredients, Inc. to Alto Nutrients are limited under the terms of the credit facility to $0.5 million per fiscal quarter. Alto Nutrients markets our essential ingredients and also provides raw material procurement services to our subsidiaries. In addition, the amount of cash distributions that Kinergy or Alto Nutrients may make to us is also limited to up to 75% of excess cash flow.
Current wording
Kinergy maintains an operating line of credit with Wells Fargo Bank for an aggregate amount of up to $100.0 million. The credit facility matures on November 7, 2027. Interest accrues under the credit facility at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin ranging from 1.25% to 1.75%. The credit facility’s monthly unused line fee is 0.25% to 0.375% of the amount by which the maximum credit under the facility exceeds the average daily principal balance during the immediately preceding month. Payments that may be made by Kinergy to Alto Ingredients, Inc. as reimbursement for management and other services provided by Alto Ingredients, Inc. to Kinergy are limited under the terms of the credit facility to $1.5 million per fiscal quarter. The credit facility also includes the accounts receivable of our indirect wholly-owned subsidiary, Alto Nutrients, LLC, or Alto Nutrients, as additional collateral. Payments that may be made by Alto Nutrients to Alto Ingredients, Inc. as reimbursement for management and other services provided by Alto Ingredients, Inc. to Alto Nutrients are limited under the terms of the credit facility to $0.5 million per fiscal quarter. Alto Nutrients markets our essential ingredients and also provides raw material procurement services to our subsidiaries. In addition, the amount of cash distributions that Kinergy or Alto Nutrients may make to us is also limited to up to 75% of excess cash flow.
Previous wording
Alto Ingredients, Inc. has guaranteed all of Kinergy’s obligations under the credit facility. As of June 30, 2024, Kinergy had an outstanding balance of $38.6 million and $30.3 million of unused borrowing availability under the credit facility.
Current wording
Alto Ingredients, Inc. has guaranteed all of Kinergy’s obligations under the credit facility. As of September 30, 2024, Kinergy had an outstanding balance of $30.6 million and $27.2 million of unused borrowing availability under the credit facility.
Previous wording
As of June 30, 2024, we had future commitments for certain capital projects totaling $7.8 million. These commitments are scheduled to be satisfied through 2024.
Current wording
As of September 30, 2024, we had future commitments for certain capital projects totaling $8.6 million. These commitments are scheduled to be satisfied through 2024 and 2025.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Cost of Goods Sold and Gross Profit
Current report — wording carried from elsewhere
Cost of Goods Sold and Gross Profit
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The $0.69 per gallon, or 25%, decrease in the segment’s average sales price per gallon for the three months ended June 30, 2024 as compared to the same period in 2023 resulted in a $18.4 million decline in our net sales from third-party fuel-grade ethanol sold by the segment.
Previous report — wording carried elsewhere
The $0.66 per gallon, or 25%, decrease in the segment’s average sales price per gallon for the six months ended June 30, 2024 as compared to the same period in 2023 resulted in a $39.4 million decline in our net sales from third-party fuel-grade ethanol sold by the segment.