Alto Ingredients Inc
For the period ended Dec 31, 2024. Filed Mar 13, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 13, 2025
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-K
Period ended 2023-12-31; filed 2024-03-14.
0001213900-24-022351
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-13.
0001213900-25-023709
Item 7. 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 155 previous paragraphs and 148 current paragraphs.
68 unchanged; 47 reworded; 31 added; 38 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 27 previous and 32 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 (31)
Current report
We are a leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients in the United States.
Current report
We also own and operate a liquid CO 2 production facility adjacent to our plant in Oregon for the offtake of CO 2 gas from the plant for conversion to liquid CO 2 and subsequent sale.
Current report
In addition, we break bulk distribute specialty alcohols, produced by us and third parties, through our Eagle Alcohol business.
Current report
All of our production facilities, other than our Magic Valley plant, were operating for all of 2024, subject to scheduled and unscheduled downtimes to address facility repair and maintenance.
Current report
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 to achieve the 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 and by October 2024, the 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. Increases in regional corn basis and declining market prices for protein and corn oil resulted in overall margin compression, outweighing the economic benefits of our plant improvements. As a consequence, we cold-idled our Magic Valley facility on December 31, 2024 to minimize financial losses. We continue to provide terminal services at the plant and intend to resume operations at the facility when the economic environment in the region sustainably improves. We believe that the cold-idling of our Magic Valley facility will have a positive impact on our overall financial results in 2025 compared to 2024.
Current report
Our fourth quarter and full-year financial results reflect challenging market conditions, including lower crush margins, compared to the fourth quarter of 2023 and the prior full year. As discussed below, we took decisive action to rationalize our business which, together with over $30 million in associated asset impairments, resulted in a material portion of the substantial non-cash, one-time expenses for the fourth quarter and full year 2024, resetting our base. We also reduced our annual expense run rate by nearly $8 million. Together with improved performance at our Pekin Campus wet mill, our synergistic acquisition of premium liquid CO 2 processing and our entry into the European market through International Sustainability and Carbon Certification, or ISCC, product sales, we are optimistic about 2025.
Current report
As part of our ongoing efforts to maximize shareholder value, we have engaged an investment banking firm to explore the sale of our production facilities located in Oregon and Idaho. In addition, with the assistance of our financial and legal advisors, we are considering a broad range of other options, including asset sales, a merger or other strategic transactions to better align our long-term value potential.
Current report
In January, we acquired Kodiak Carbonic, a beverage-grade liquid CO 2 processor, for $7.6 million. This processing facility, renamed Alto Carbonic, is located adjacent to our Columbia plant in Boardman, Oregon and has been operating profitably since 2015.
Current report
Alto Carbonic processes biogenic CO 2 gas produced as a byproduct of the fermentation process at our Columbia plant and converts it into premium liquid CO 2. The finished product is sold into the Northwestern region of the United States for use in food and beverage processing, industrial cooling, and other applications. The facility produces an average of approximately 56,000 tons annually of liquid CO 2 with the capacity to produce over 70,000 tons annually and the potential for further expansion. Alto Carbonic currently uses only 50% of our Columbia plant’s biogenic CO 2 gas.
Current report
Simultaneous with this acquisition, we entered into an amended long-term sales offtake agreement with a leading North American industrial gas supplier. The acquisition is immediately accretive and has a compelling payback of approximately two years. We are in the process of integrating the liquid CO 2 plant with our Columbia facility, improving coordination between operations. We expect to realize additional cost savings through synergies in production and overhead. We are also evaluating an opportunity to increase storage capacity at the site to improve logistics and take advantage of spot market demand for premium liquid CO 2.
Current report
The acquisition immediately stems the recent lack of profitability at our Columbia plant, provides a stronger financial foundation to overcome competitive challenges for destination plants and significantly increases the value of these combined assets.
Current report
We integrated Eagle Alcohol’s high quality alcohol bulk operations and customers into our Pekin Campus and Kinergy businesses and have now turned our focus to converting Eagle Alcohol’s break-bulk warehousing and trucking operations into a profitable service center.
Current report
We also decreased staff at other operations, reducing overhead run-rates of both costs of goods sold and selling, general and administrative expenses. In total, we reduced headcount by 16% and expect to save nearly $8 million annually from these efficiencies, improving our bottom-line run rate and helping us manage our liquidity. We expect to realize the full annualized financial benefit from these cost saving initiatives beginning in the second quarter.
Current report
As an additional cost saving initiative, we cold-idled our Magic Valley facility at the end of 2024. For context, starting in 2022, we saw an opportunity to take advantage of premium prices for high quality protein and corn oil. Consistent with our business strategy to improve yields of high margin products, we undertook the installation and ultimate commissioning of high-quality protein and corn oil technology at our Magic Valley plant. The installation took much longer and cost significantly more than expected. In addition, we underestimated the negative impact that the buildout of renewable diesel and soy crush capacity would have on market prices for protein and corn oil in the region. Compounded by the dramatic swing in delivered corn prices for Western operations compared to our Midwestern facilities, it became impossible to operate our Magic Valley facility profitably. By cold idling the plant and reducing our variable and fixed costs as much as possible, we have stopped this drag on the profitable areas of our business. In the fourth quarter, we took a significant impairment charge related to the Magic Valley plant. To partially offset remaining carry expenses, and to serve our customers in the area, we are opportunistically using the facility as a renewable fuel terminal.
Current report
At our Pekin Campus, we continue to pursue opportunities to optimize carbon, which historically was considered a waste stream with only marginal value. In November, we achieved an important milestone by finalizing our CO 2 transportation and sequestration agreement with Vault 44.01, or Vault. This partnership is critical to our carbon capture and storage, or CCS, project. In December, Vault submitted the formal application to the EPA for our CCS project to obtain the Class VI permit required to begin construction of the CCS pipeline and for long-term CO 2 storage in deep geological formations.
Current report
CCS operations require significant development and planning. The EPA requires extensive site analysis, monitoring and safety measures to safeguard underground water supplies. The approval process is currently estimated to take at least two years. We expect that this approval timeline will also allow the time necessary to address Illinois’s current moratorium on new CO 2 pipelines imposed as part of its SAFE CCS Act. The moratorium is in effect until the earlier of July 2026 or revised federal safety standards are established.
Current report
Although progress on our CCS project has been slow, significant changes have occurred in the political and regulatory environment, as well as the carbon market, during that time. Our deliberate pace has been advantageous as we navigate these changes and discover effective paths forward. The extended period required for regulatory approvals affords us additional time to develop the necessary infrastructure plans, including compression and energy solutions. We also intend to use the additional time to secure necessary financing. Finally, working with Vault, we are focused on meeting with local groups and authorities to educate the community about our CCS project, strengthen support and address concerns.
Current report
At our Pekin Campus, we are proactively modifying our operations to deliver higher value products. Following our biennial wet mill outage in spring 2024, we improved plant utilization, operating the wet mill at nameplate capacity of 100 million gallons. Pekin Campus production volume in the fourth quarter increased 3.8 million gallons over the prior year period. This 7% increase demonstrates the effectiveness of our maintenance program. Carrying these improvements into 2025, we expect to produce an additional 8 million gallons for the full year, lowering our per gallon cost of production and enabling us to produce a greater volume of specialty alcohols.
Current report
We applied for, and in late summer obtained for our Pekin Campus, ISCC certification for our renewable fuels business to allow us to ship qualified renewable fuel to the European Union where we typically are able to garner premium prices compared to domestic markets. We began exporting certified renewable fuel to European markets in the fourth quarter and anticipate expanding exports in 2025.
Current report
In our premium specialty alcohol business, we continue to materially differentiate our products through our certifications and customer relationships. For 2024, we sold nearly 92 million gallons of specialty alcohols. In 2025, our goal is to balance production levels between specialty alcohols and ISCC renewable fuels to maximize margins while addressing customer needs. We also completed another ISO 9001 audit with no adverse findings, a testament to our culture of quality.
Current report
For the fourth quarter, we sold 95.1 million gallons, up from 92.5 million gallons for the same period in 2023, largely reflecting production improvements at our Pekin Campus from our planned repairs and maintenance program. However, our sales price per gallon averaged $1.88 in the fourth quarter compared to $2.24 for the same period in 2023, reducing net sales by $38 million for the year over year period. Market crush margins declined nearly 18 cents per gallon in the fourth quarter resulting in an $8.7 million adverse impact to gross profit for the period. In addition, returns from protein sales were negatively impacted by expanded soy crush intended to meet renewable diesel demand, higher wet feed product mix and the inability of a key customer to take product deliveries following Hurricane Helene. Low carbon fuel credit prices also declined in the fourth quarter compared to the prior year period but improved sequentially from the third quarter of 2024 and continue to recover from market lows.
Current report
Our realized derivative losses, which are included in Adjusted EBITDA (defined below), were $3.5 million for the fourth quarter compared to $2.3 million for the prior year period. Unrealized derivative gains, which are excluded from Adjusted EBITDA, were $5.5 million for the fourth quarter compared to a loss of $8.2 million for the prior year period, resulting in a positive $13.7 million year-over-year net difference. Our non-cash, lower of cost or market adjustment on physical inventories and mark-to-market on corn commitments resulted in a $3.5 million reserve in the fourth quarter compared to $2.2 million in the prior year period. In the fourth quarter, we recognized final acquisition-related expenses for Eagle Alcohol of $5.7 million, of which $5.0 million was non-cash, compared to $0.7 million in the prior year period.
Current report
Asset impairments for the fourth quarter totaled $24.8 million, consisting of $21.4 million related to the cold idling of our Magic Valley plant and $3.4 million related to the impairment of intangibles from the integration of certain Eagle Alcohol activities, compared to a $6.0 million impairment in the prior year period related to Eagle Alcohol’s goodwill.
Current report
Partially offsetting these declines, we sold more total gallons for 2024 as compared to 2023 resulting primarily from an increase in our specialty alcohol gallons sold and third-party gallons sold, partially offset by lower renewable fuel production gallons sold due to downtime at both our Magic Valley facility and our Pekin Campus, as discussed above. We were able to produce and sell more specialty alcohol due in part to higher production from our Pekin Campus wet mill after our biennial maintenance outage during the year.
Current report
Net sales of alcohol from our Pekin Campus production segment declined by $86.5 million, or 17%, to $415.7 million for 2024 as compared to $502.2 million for 2023. Our total volume of production gallons sold, however, increased by 4.7 million gallons, or 2%, to 213.6 million gallons for 2024 as compared to 208.9 million gallons for 2023, due to production benefits realized in second half of the year from our biennial maintenance performed in Spring 2024 resulting in higher production rates.
Current report
Our consolidated gross profit declined to a gross profit of $9.7 million, representing a gross margin of 1.0% for 2024, from $15.7 million, representing a gross margin of 1.3%, for 2023. Our consolidated gross profit declined due to lower overall commodity crush margins, particularly for renewable fuel, primarily due to lower sales prices as well as lower margins on essential ingredients sold due to lower corn prices. We spent a total of $34.6 million for repairs and maintenance, in-line with our 2024 estimate.
Current report
Acquisition-related Expenses
Current report
Our acquisition-related expenses increased by $4.9 million to $7.7 million for 2024 as compared to $2.8 million for 2023. These expenses relate to the acceleration of stock payments to the former owners of Eagle Alcohol.
Current report
We recorded asset impairment charges of $24.8 million for 2024 as compared $6.5 million for 2023. The 2024 impairments reflect $21.4 million for our Magic Valley asset group, as we cold-idled the plant at the end of the year, and $3.4 million for intangible assets of Eagle Alcohol. The 2023 impairments relate to the goodwill associated with our acquisition of Eagle Alcohol.
Current report
Cash used in our Operating Activities
Current report
Impairment of Long-Lived Assets
Removed paragraphs (38)
Previous report
We produce and distribute renewable fuel and essential ingredients. We are also the largest producer of specialty alcohols in the United States.
Previous report
We also specialize in break bulk distribution of specialty alcohols through our Eagle Alcohol subsidiary. We purchase bulk alcohol from suppliers and then store, denature, package, and resell alcohol products in smaller sizes, including tank trucks, totes and drums that typically garner a premium price to bulk alcohols. We deliver products to customers in the beverage, food, industrial and related-process industries via our own dedicated trucking fleet and common carrier.
Previous report
In 2023, we continued our transformation to produce a variety of essential ingredients and the highest-grade beverage alcohol in the industry. We invested significant capital in our facilities to improve efficiency and capacity utilization rates and to expand margins long term. These strategies have begun to mitigate the impact of negative commodity price fluctuations. Although ethanol crush margins exhibited greater volatility in the second half of 2023, both our fourth quarter and full year 2023 results significantly outperformed those same periods in 2022 despite lower overall plant utilization rates.
Previous report
Gross loss declined by $18.8 million in the fourth quarter of 2023 compared to the same period in 2022. We generated $16 million in gross profit for the full year 2023, an improvement of $43 million over 2022.
Previous report
We reported positive Adjusted EBITDA of $3 million for the fourth quarter of 2023, an improvement of $19 million compared the same period in 2022. We also reported positive Adjusted EBITDA of approximately $21 million for all of 2023, an increase of $27 million over the prior year, representing a significant year-over-year improvement, particularly in light of $20 million less in USDA cash grants in 2023 as compared to 2022.
Previous report
Renewable fuel margins were strong for the second and third quarters of 2023. As a result, we shifted part of our production to renewable fuel to take advantage of the higher margin environment. Ethanol crush margins exhibited extreme volatility in the second half of 2023, peaking in the mid-60 cents per gallon in September and declining thereafter to slightly negative in December. Margin volatility impacted the production volumes we were willing to sell, the prices at which we sold and the volume of third-party production we contracted for sale. Overall sales volume declined for 2023 due to these factors as well as the hot-idling of our Magic Valley facility in the first quarter of the year, ongoing challenges with the corn oil and high protein system at the facility, and longer than expected unscheduled downtime in the third quarter at our Pekin Campus.
Previous report
Thus far in 2024, although crush margins have been break-even or slightly negative, they have begun to improve compared to the end of 2023. In addition, margins were approximately 20 cents per gallon higher for January and February 2024 compared to the same period in 2023. In January 2024, however, a polar vortex in the Midwest negatively impacted both operations and logistics at our Pekin Campus. Despite significant preparations ahead of the freeze and timely recovery response efforts, we experienced a shift to lower margin feed products and reduced alcohol production by approximately one million gallons due to frozen river conditions. In addition, the hot-idle of our Magic Valley facility in January 2024 will lower renewable fuel production, shifting sales volumes to higher third-party production compared to the fourth quarter of 2023.
Previous report
We have contracted approximately 93 million gallons of fixed-price, high-quality alcohol at an average premium to renewable fuel of 31 cents per gallon, with additional capacity to take advantage of spot sales.
Previous report
Our overall outlook for 2024 is favorable in light of good corn inventories, low corn and natural gas prices, higher sugar prices, domestic regulatory support for summer blending and expected global demand growth for U.S.-sourced ethanol. These factors should result in an improved crush margin environment in the coming months and yield positive crush spreads through most of 2024. Markets are dynamic but we remain agile and financially prudent while we seek to capitalize on the best opportunities. We remain enthusiastic about our prospects and confident in our long-term growth strategy.
Previous report
During the fourth quarter, repairs and maintenance expense across our plants was $7.7 million compared to $7.1 million for the same period in 2022, bringing total repairs and maintenance expense to $29.5 million for 2023 as compared to $30.0 million for 2022.
Previous report
Our wet mill, yeast facility and distillery capabilities at our Pekin Campus provide significant differentiation and greater production capabilities than the typical dry mill. However, given the nature and age of these facilities, they require consistent, ongoing repairs and maintenance, and capital upgrades integral to the longevity, sustainable performance and modernization of these assets. To maintain reliable and efficient operations, we normally address smaller concerns as needed and conduct larger scheduled outages approximately every two years.
Previous report
We originally scheduled our biennial Pekin Campus wet mill repair and maintenance outage for August 2023 but due to favorable crush margins and sufficient corn supply at the time, we postponed the outage to this coming April. We expect the repairs and maintenance activities will take approximately ten days, lowering production in the second quarter. The repairs and maintenance are projected to cost approximately $4.0 million. For the full year 2024, we expect to track to our typical repairs and maintenance run rate of around $30.0 million, bringing the total, including the upcoming outage expense, to $34.0 million for 2024.
Previous report
We invested $5.0 million in capital expenditures in the fourth quarter of 2023, bringing our year-end total to $30.0 million for all of 2023, compared to $13.0 million in the fourth quarter of 2022 and $38.0 million for all of 2022. We plan for capital expenditures of approximately $25.0 million in 2024 for equipment upgrades, process improvements and projects with short-term paybacks. We believe that these ongoing repairs and maintenance efforts and our capital improvement projects position us for a much stronger future. Our biennial outages have historically increased reliability and production run rates. We expect these positive effects will benefit 2024, in particular as we head into the typically more favorable summer months.
Previous report
We continue to pursue a number of strategic capital investment initiatives. In the fourth quarter of 2023 and into 2024, we continued our ongoing evaluation of these initiatives. Based on current market dynamics, recent findings from our updated front-end engineering and design (FEED) studies, interest from potential strategic partners and expected project return profiles, we decided to designate our carbon capture and storage, or CCS, project as our top priority.
Previous report
Under the Inflation Reduction Act, we have a compelling opportunity to capture and store biogenic CO 2 we generate at our Pekin Campus. Together with associated energy upgrades, we believe that our CCS project provides excellent economics. Given the significant time, personnel and financial resources necessary to complete our CCS project, we decided to pause further development of our primary yeast and biogas conversion projects. These projects continue as opportunities for potential future development as resources permit.
Previous report
We are encouraged by recent progress on many aspects of CCS. This progress includes overall system design, community outreach, financing, vendor negotiations, EPA application preparation and schedule alignment to procure equipment and install power and compression. We have also signed an exclusive non-binding letter of intent with Vault 44.01 and we are nearing the execution of definitive agreements to develop our CCS project. The project, as currently planned, involves our installation of equipment to capture CO 2 generated at our Pekin Campus and our project partner safely transporting and permanently storing those emissions deep underground in a secure geologic reservoir located in close proximity to the facility. Our intent is to substantially reduce CO 2 emissions from the alcohol production process while providing direct value to the surrounding communities. Unfortunately, the EPA has extended its CCS application approval process from 18 to 24 months, and equipment manufacturing and installation times have grown longer than originally anticipated. We intend to make positive use of this additional time to better align our various project schedules and reduce our overall financial risk. Overall, we believe we can generate over $30.0 million in EBITDA annually from our CCS project, after accounting for operating and storage costs, and excluding any of the substantial additional economic benefits of the environmental attributes associated with low carbon ethanol.
Previous report
In addition to CCS, we are pursuing two attractive alternatives to increase energy capacity at our Pekin Campus with either our current utility provider or a highly regarded, independent energy company that would build, own and operate onsite energy facilities. Both alternatives would greatly reduce our capital requirements and long-term energy costs while lowering our carbon footprint. These capital-light energy alternatives may result in better earnings accretion from our CCS project than originally estimated.
Previous report
We continue to assess our current portfolio of assets, especially our Western production facilities, as we evaluate our path to higher margins, improved profitability and the highest return to our shareholders. Our intent is to leverage the distinct strengths and opportunities of these facilities by investing in new equipment and applications. While we work on these projects, we may also consider disposing of one or both of our Western production facilities. As demonstrated with the sale of our California and Nebraska facilities, we remain steadfast in our commitment to appropriate decisions to optimize long-term value.
Previous report
Over the past two years we have completed numerous upgrades. Some of our larger in-progress or completed initiatives over the prior twelve months include the completion in February 2024 of a new, high efficiency boiler at our Pekin Campus that replaced two inefficient, high-pressure boilers. We expect full boiler utilization by the end of the first quarter, reducing our energy needs and operating costs, and increasing annualized incremental EBITDA by $2.0 million. In addition, in the second quarter of 2023, our new grain silo at our Pekin Campus became fully operational, doubling our days of corn storage capacity. This achieved our goal to increase flexibility around the timing of corn deliveries while lowering costs related to quick or last-minute shipments and to reduce corn premiums during extended weekends and harsh weather conditions. This project has already exceeded our target of contributing annualized incremental EBITDA of $2.0 million.
Previous report
We continue to expand into higher quality alcohol and our ability to differentiate our product offerings has been very important considering market trends. For example, in 2021 and for part of 2022, the higher margin for specialty alcohol attracted many new producers, increasing product availability and supply. These factors, combined with ebbing consumer demand growth and supply chain dynamics, resulted in margin compression over the past 18 months. Starting in 2022, in anticipation these changing market conditions, we began strategic investments to produce a higher volume of beverage grade alcohols that leverage the capabilities of our Pekin Campus. We developed our highly differentiated 192 proof and low-moisture 200 proof grain neutral spirits, or GNS, which became available in early 2023. These new products were well received by our customers and actively sold in the spot market, generating significant sales and bolstering our gross margins for the year.
Previous report
In our pursuit to expand higher margin corn oil and high-protein products at our Magic Valley facility, working with our corn oil and high protein system vendor, Harvesting Technology, we engaged equipment manufacturers and independent third-party engineers in the fourth quarter of 2023 to conduct an in-depth analysis of our challenges. The team formulated a plan, including extensive design modifications, to achieve the intended production rate, quality and consistency. We decided in January 2024 to temporarily hot-idle the facility to minimize losses from negative regional crush margins and expedite the installation of additional equipment at the plant. Harvesting Technology has borne the direct costs associated with their design and equipment. We are confident in the extensive design modifications under way and in achieving our corn oil and high-protein targets in 2024. We intend to restart production in the second quarter once the upgrades are complete and crush margins have improved. The operation of the upgraded high-protein system at our Magic Valley facility will influence our decision and timing to roll out the system at our other dry mills. In the interim, we are operating the Magic Valley facility as a terminal to service our renewable fuel customers. We are also working with the local feed distributor and our feed customers to meet their supply requirements.
Previous report
Going forward, we intend to discuss our various capital projects individually and not in the aggregate, using three categories:In Operation, which includes completed projects, such as our corn storage and boiler upgrades, our beverage grade GNS alcohols and Eagle Alcohol distribution infrastructure;Under Development, which includes high priority strategic opportunities that have the greatest expected returns as well as initiatives that support our near-term operational goals, such as CCS and potential partnerships for cogeneration and a natural gas pipeline; andFor Future Evaluation, which includes potential opportunities with attractive expected returns to be assessed as resources permit, such as primary yeast, biogas conversion, the installation of higher margin corn oil and high protein systems at our three other dry mills, sustainable aviation fuel, blue ethanol, ethanol-to-jet fuel and synthetic natural gas.
Previous report
As a renewables company, we remain dedicated to implementing sustainable best practices that are good for our business, our stakeholders and our planet. In December, we published our first Sustainability Summary. Our Sustainability Summary provides a review of our strategy and vision for advancements in sustainability, responsible sourcing and risk management. We are focused on continuous improvement in environmental, health and safety, product quality, and diversification by integrating innovative practices at our facilities to ensure optimal efficiency, contributing to a lower carbon footprint. Our efforts improved our sustainability scores across the board with all three rating agencies, which is important to our customers. Looking ahead, we are working to obtain third-party greenhouse gas verifications, improve transportation safety and earn additional EcoVadis awards.
Previous report
To increase transparency to our operating physical margins and conform our reporting to management’s evaluation of our financial performance, we now exclude the impact of unrealized non-cash derivative gains and losses when calculating Adjusted EBITDA. Unrealized derivative gains and losses are non-cash, mark-to-market adjustments of derivative instruments on open positions related to future period purchases and sales that are recorded as part of cost of goods sold.
Previous report
Sales and Operating Metrics (unaudited)
Previous report
*** F***
Previous report
Our volume of third-party fuel-grade ethanol sold reported net by the segment declined by 37.4 million gallons, or 100%, to no gallons sold net for 2023 as compared to 37.4 million gallons for 2022. The decline in sales reported net resulted in a decrease of $0.9 million in net sales.
Previous report
Our consolidated gross profit (loss) improved to a gross profit of $15.7 million, representing a gross margin of 1.3% for 2023, from a gross loss of $27.6 million, representing a gross margin of negative 2.1%, for 2022. Our consolidated gross profit improved due to improved commodity crush margins, particularly for renewable fuel, primarily due to lower corn costs, but was partially offset by $9.7 million in unrealized non-cash derivative losses from mark-to-market adjustments on open positions related to future period sales and $2.2 million in lower-of-cost-or-market charges in the fourth quarter of 2023 on our ending renewable fuel inventories and related fixed corn purchase commitments due to negative crush margins heading into year-end 2023 and the first quarter of 2024.
Previous report
We recorded an asset impairment charge of $6.5 million for 2023 as compared to none for 2022, of which $6.0 million is attributable to an impairment to the goodwill associated with our acquisition of Eagle Alcohol in 2022. This charge primarily reflects revisions to current market premiums and adjustments to projections in our required annual goodwill valuation.
Previous report
Income from Cash Grant
Previous report
We received cash grants under the USDA’s Biofuel Producer Program in the amount of $2.8 million and $22.7 million for 2023 and 2022, respectively. The program was created as part of the CARES Act of 2020, which allocated $700 million to support biofuel producers that experienced market losses due to the pandemic. We are neither required to repay the grants nor will they recur in the future.
Previous report
Current assets declined primarily due to decreases in cash and cash equivalents, accounts receivable, inventories and derivative instruments, partially offset by an increase in restricted cash.
Previous report
The Lenders agreed to advance to us up to $125.0 million upon the satisfaction of certain conditions. We committed to issue to the Lenders pro rata an aggregate of 1,282,051 shares of our common stock at the initial funding and up to an additional 320,513 shares of our common stock based upon certain further fundings under the credit facility. On November 23, 2022, we received our initial funding of $60.0 million under the credit facility and issued an aggregate of 1,282,051 shares of our common stock to the Lenders. We received no separate consideration for the shares of common stock issued.
Previous report
Share Repurchase Program
Previous report
For the three months ended December 31, 2023, we repurchased 436,000 shares of our common stock as part of our publicly announced share repurchase program at an average price per share of $2.27 for an aggregate expenditure of approximately $1.0 million during the period. See “Item 5 – Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Purchases of Equity Securities by the Issuer and Affiliated Purchasers.”
Previous report
For the year ended December 31, 2023, we repurchased 1,685,000 shares of our common stock as part of our publicly announced share repurchase program at an average price per share of $2.18 for an aggregate expenditure of $3.7 million during the period.
Previous report
Impairment of Long-Lived Assets and Held-for-Sale Classification
Previous report
Assets held-for-sale are assessed for impairment by comparing the carrying values to their expected net sales proceeds. In 2020, our Board of Directors approved a plan to sell our fuel-grade ethanol production facilities in Madera and Stockton, California, which were ultimately sold in 2021. We reviewed the criteria for held-for-sale classification of the long-lived assets associated with these asset groups. Our analysis concluded that these assets should be classified as held-for-sale as of December 31, 2020, and as such, we estimated an aggregate corresponding asset impairment of $22.3 million for 2020. We further evaluated the original estimate and recorded an additional asset impairment on these assets held-for-sale of $1.2 million for 2021. In 2021, we decided to sell our property and equipment located in Canton, Illinois. We reviewed the criteria for held-for-sale classification of the long-lived assets for this asset group. We concluded that these assets should be classified as held-for-sale as of December 31, 2021, and as such, we estimated a corresponding asset impairment of $1.9 million for 2021. We did not record any impairments for assets held-for-sale for December 31, 2023 or 2022.
Reworded paragraphs (47)
Previous wording
We operate five alcohol production facilities. Three of our production facilities are located in Illinois, one is located in Oregon and another is located in Idaho. We have an annual alcohol production capacity of up to 350 million gallons, including both fuel-grade ethanol and specialty alcohols ranging from industrial-, pharmaceutical-, and high-quality food- and beverage-grade alcohols. Of this amount, we are able to produce up to 110 million gallons annually of specialty alcohols, depending on our product mix among high-quality beverage-grade alcohol and alcohols of other quality specifications. We market and distribute all of the alcohols produced at our facilities as well as alcohols produced by third parties. In 2023, we marketed and distributed approximately 383 million gallons combined of our own alcohols as well as fuel-grade ethanol produced by third parties, and over 1.5 million tons of essential ingredients on a dry matter basis.
Current wording
We operate five alcohol production facilities. Three of our production facilities are located in Illinois, one is located in Oregon and another is located in Idaho. We have an annual alcohol production capacity of 350 million gallons, including both renewable fuels and specialty alcohols ranging from industrial-, pharmaceutical-, and high-quality food- and beverage-grade alcohols. Of this amount, we can produce up to 110 million gallons annually of specialty alcohols, depending on our product mix among high-quality beverage-grade alcohol and other quality specification alcohols. We market and distribute all of the alcohols produced at our facilities as well as alcohols produced by third parties. In 2024, we marketed and distributed approximately 386 million gallons combined of our own produced alcohols as well as fuel-grade ethanol produced by third parties, and over 1.4 million tons of essential ingredients on a dry matter basis.
Previous wording
We report our financial and operating performance in three segments: (1) Pekin production, which includes the production and sale of alcohols and essential ingredients produced at our three production facilities located in Pekin, Illinois, which we refer to as our Pekin Campus, (2) marketing and distribution, which includes marketing and merchant trading for company-produced alcohols and essential ingredients on an aggregated basis, and sales of fuel-grade ethanol sourced from third parties, and (3) Western production, which includes the production and sale of renewable fuel and essential ingredients produced at our two western production facilities on an aggregated basis, none of which are individually so significant as to be considered a separately reportable segment.
Current wording
We report our financial and operating performance in three distinct segments:
Previous wording
Our mission is to produce the highest quality, sustainable ingredients from renewable resources that make everyday products better. We intend to accomplish this goal in part by investing in our specialized and higher value specialty alcohol production and distribution infrastructure, expanding production in high-demand essential ingredients, expanding and extending the sale of our products into new regional and international markets, building efficiencies and economies of scale and by capturing a greater portion of the value stream.
Current wording
Our mission is to produce the highest quality, sustainable ingredients that make everyday products better. We intend to accomplish this goal in part by investing in our specialized and higher value specialty alcohol production and distribution infrastructure, expanding production in high-demand essential ingredients, expanding and extending the sale of our products into new regional and international markets, building efficiencies and economies of scale and by capturing a greater portion of the value stream.
Previous wording
We produce specialty alcohols, fuel-grade ethanol and essential ingredients, focusing on five key markets:Health, Home & Beauty;Food & Beverage;Industry & Agriculture; Essential Ingredients; andRenewable Fuels. Products for theHealth, Home & Beauty markets include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners. Products for theFood & Beverage markets include grain neutral spirits used in alcoholic beverages and vinegar as well as corn germ used for corn oils. Products forIndustry & Agriculture markets include alcohols and other products for paint applications and fertilizers.Products forEssential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. We also sell yeast for human consumption. Our products for theRenewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels.
Current wording
We produce specialty alcohols, renewable fuels and essential ingredients, focusing on five key markets:Health, Home & Beauty;Food & Beverage;Industry & Agriculture;Essential Ingredients; andRenewable Fuels. Products forHealth, Home & Beauty markets include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners. Products forFood & Beverage markets include grain neutral spirits used in alcoholic beverages and vinegar and corn germ used for corn oils. Products forIndustry & Agriculture markets include alcohols and other products for paint applications and fertilizers. Products forEssential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, distillers grains, liquid CO 2 and liquid feed used in commercial animal feed and pet foods. We also sell yeast and liquid CO 2 for human consumption. Our products for theRenewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels. Our specialty alcohols for theIndustry & Agriculture, Food & Beverage andHealth, Home & Beauty markets represented approximately 12%, 7% and 3%, respectively, of our sales in 2024 from these three markets.
Previous wording
We produce our alcohols and essential ingredients at our production facilities. Our production facilities located in Illinois are in the heart of the Corn Belt, benefit from relatively low-cost and abundant feedstock and enjoy logistical advantages that enable us to provide our products to both domestic and international markets via truck, rail or barge. Our production facilities located in Oregon and Idaho are near their respective fuel and feed customers, offering significant timing, transportation cost and logistical advantages.
Current wording
We produce our alcohols and essential ingredients at our facilities described below. Our production facilities located in Illinois are in the heart of the Corn Belt, benefit from relatively low-cost and abundant feedstock and enjoy logistical advantages that enable us to provide our products to both domestic and international markets via truck, rail or barge. Our production facilities located in Oregon and Idaho are near their respective fuel and feed customers, offering significant timing, product transportation cost and logistical advantages.
Previous wording
All of our production facilities are currently operating except our Magic Valley plant, which we temporarily hot-idled in January 2024 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. We intend to restart Magic Valley production in the second quarter once the upgrades are complete and crush margins have improved. 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
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
We market and distribute all of the alcohols and essential ingredients we produce at our facilities. We also market and distribute alcohols produced by third parties.
Current wording
We market and distribute all the alcohols and essential ingredients we produce at our facilities. We also market and distribute alcohols produced by third parties.
Previous wording
We have extensive and long-standing customer relationships, both domestic and international, for our specialty alcohols and essential ingredients. These customers include producers and distributors of ingredients for cosmetics, sanitizers and related products, distilled spirits producers, food products manufacturers, producers of personal health/consumer health and personal care hygiene products, and global trading firms.
Current wording
We have extensive and long-standing customer relationships, both domestic and international, for our specialty alcohols, renewable fuels and essential ingredients. These customers include producers and distributors of ingredients for cosmetics, sanitizers and related products, distilled spirits producers, food products manufacturers, producers of personal health/consumer health and personal care hygiene products, and global trading firms.
Previous wording
Our renewable fuel customers are located throughout the Western and Midwestern United States and consist of integrated oil companies and gasoline marketers who blend fuel-grade ethanol into gasoline. Our customers depend on us to provide a reliable supply of fuel-grade ethanol and manage the logistics and timing of delivery. Our customers collectively require fuel-grade ethanol volumes in excess of the supplies we produce at our facilities. We secure additional fuel-grade ethanol supplies from third-party ethanol producers. We arrange for transportation, storage and delivery of fuel-grade ethanol purchased by our customers through our agreements with third-party service providers in the Western United States as well as in the Midwest from a variety of sources.
Current wording
Our renewable fuels customers are located throughout the Western and Midwestern United States and consist of integrated oil companies and gasoline marketers who blend fuel-grade ethanol into gasoline. Our customers depend on us to provide a reliable supply of fuel-grade ethanol and manage the logistics and timing of delivery. Our customers collectively require fuel-grade ethanol volumes in excess of the supplies we produce at our facilities. We secure additional fuel-grade ethanol supplies from third-party ethanol producers. We arrange for transportation, storage and delivery of fuel-grade ethanol purchased by our customers through our agreements with third-party service providers in the Western United States as well as in the Midwest from a variety of sources.
Previous wording
We market our essential ingredient feed products to dairies and feedlots, in many cases located near our production facilities. These customers use our feed products for livestock as a substitute for corn and other sources of starch and protein. We sell our corn oil to poultry and biodiesel customers. We do not market essential ingredients from other producers.
Current wording
We market food-grade essential ingredients to human and pet food markets, our feed products (such as distillers grains) primarily to export markets from our Pekin Campus, and other feed products to dairies and feedlots, in many cases located near our production facilities. These customers use our feed products for livestock as a substitute for corn and other sources of starch and protein. We sell our corn oil to poultry, renewable diesel and biodiesel customers.
Previous wording
We define EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, provision for income taxes and depreciation and amortization expense. We define Adjusted EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, unrealized derivative gains and losses, acquisition-related expense, asset impairments, provision for income taxes and depreciation and amortization expense.
Current wording
We define EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, provision for income taxes and depreciation and amortization expense. We define Adjusted EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, unrealized derivative gains and losses, acquisition-related expense, provision for income taxes, asset impairments, and depreciation and amortization expense.
Previous wording
Our consolidated net sales declined by $0.1 billion to $1.2 billion for 2023 from $1.3 billion for 2022. Our net loss available to common stockholders improved by $13.6 million to a net loss of $29.3 million for 2023 from a net loss of $42.9 million for 2022.
Current wording
Our consolidated net sales declined by $0.3 billion to $1.0 billion for 2024 from $1.2 billion for 2023. Our net loss attributable to common stockholders increased by $31.0 million to a net loss of $60.3 million for 2024 from a net loss of $29.3 million for 2023.
Previous wording
We generate sales by marketing all of the alcohols produced by our three production facilities in Illinois, all of the fuel-grade ethanol produced by our production facilities in Oregon and Idaho, and fuel-grade ethanol purchased from third-party suppliers throughout the United States. We also market essential ingredients produced by our production facilities, including dried yeast, corn gluten meal, corn gluten feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. We also sell yeast for human consumption.
Current wording
We generate sales by marketing all of the alcohols produced by our three production facilities in Illinois, all of the fuel-grade ethanol produced by our production facilities in Oregon and Idaho, and fuel-grade ethanol purchased from third-party suppliers throughout the United States. We also market essential ingredients produced by our production facilities, including dried yeast, corn protein meal, corn protein feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. We also sell yeast and liquid CO 2 for human consumption.
Previous wording
Our consolidated average alcohol sales price declined by 6% to $2.47 per gallon for 2023 compared to $2.64 per gallon for 2022. The average price of fuel-grade ethanol as reported by the Chicago Mercantile Exchange, or CME, declined by 10% to $2.22 per gallon for 2023 compared to $2.47 per gallon for 2022. Our average cost of corn declined by 15% to $6.58 per bushel for 2023 from $7.77 per bushel for 2022. The average price of corn as reported by the CME declined by 19% to $5.64 per bushel for 2023 from $6.94 per bushel for 2022.
Current wording
Our consolidated average alcohol sales price declined by 21% to $1.95 per gallon for 2024 compared to $2.47 per gallon for 2023. The average price of fuel-grade ethanol as reported by the Chicago Mercantile Exchange, or CME, declined by 24% to $1.69 per gallon for 2024 compared to $2.22 per gallon for 2023. Our average cost of corn declined by 28% to $4.72 per bushel for 2024 from $6.58 per bushel for 2023. The average price of corn as reported by the CME declined by 25% to $4.24 per bushel for 2024 from $5.64 per bushel for 2023.
Previous wording
We believe that our gross profit margins depend primarily on six key factors:
Current wording
We believe that our gross profit margins depend primarily on the following key factors:
Previous wording
The decline in our consolidated net sales for 2023 as compared to 2022 was due to a decrease in the average sales price per gallon for our alcohols, fewer total gallons sold and lower volumes of essential ingredients sold at lower prices. Our average sales price per gallon decreased primarily due to lower fuel-grade ethanol prices largely driven by lower oil and gasoline prices. Fewer total gallons sold for 2023 as compared to 2022 resulted primarily from the hot-idling of our Magic Valley facility in the first quarter of 2023 coupled with unusually high unscheduled production downtime later in the year at our Pekin Campus for repairs and maintenance. In addition, we produced and sold fewer tons of essential ingredients primarily due to lower alcohol production in 2023 compared to 2022. Our average sales price for our essential ingredients declined primarily due to lower corn prices. As we did in 2021 and 2022, we continued to intentionally reduce sales of third-party fuel-grade ethanol in geographical areas less important to our business and to instead focus on sales of inventory from our own production in 2023.
Current wording
The decline in our consolidated net sales for 2024 as compared to 2023 was due to a decrease in our average sales price per gallon for our alcohols and lower volumes of essential ingredients sold at lower prices, partially offset by a higher volume of alcohol sold. Our average sales price per gallon declined primarily due to lower fuel-grade ethanol prices largely driven by lower oil and gasoline prices in 2024 compared to the prior year.
Previous wording
Net sales of alcohol from our Pekin Campus production segment declined by $19.1 million, or 4%, to $502.2 million for 2023 as compared to $521.3 million for 2022. Our total volume of production gallons sold, however, increased by 4.3 million gallons, or 2%, to 208.9 million gallons for 2023 as compared to 204.6 million gallons for 2022, due to an extended shut down for maintenance during the summer of 2022. At the segment’s average sales price per gallon of $2.49 for 2023, we generated $10.3 million in additional net sales from the 4.3 million additional gallons of alcohol sold in 2023 as compared to 2022. However, a decrease of $0.14, or 6%, in the segment’s average sales price per gallon in 2023 as compared to 2022 resulted in a $29.4 million decline in net sales as compared to 2022.
Current wording
At the segment’s average sales price per gallon of $1.95 for 2024, we generated $9.1 million in additional net sales from the 4.7 million additional gallons of alcohol sold in 2024 as compared to 2023. However, a decrease of $0.45, or 19%, in the segment’s average sales price per gallon in 2024 as compared to 2023 resulted in a $95.6 million decline in net sales as compared to 2023.
Previous wording
Net sales of essential ingredients declined by $8.2 million, or 4%, to $217.7 million for 2023 as compared to $225.9 million for 2022. Our total volume of essential ingredients sold increased by 28,100 tons, or 3%, to 878,400 tons for 2023 from 850,300 tons for 2022. Sales volumes of essential ingredients were higher in 2023 due to an extended shut down for maintenance during the summer of 2022. At our average sales price per ton of $247.84 for 2023, we generated $6.9 million in additional net sales from the 28,100 additional tons of essential ingredients sold in 2023 as compared to 2022. A decrease of $17.80, or 7%, in our average sales price per ton in 2023 as compared to 2022 resulted in a $15.1 million decline in net sales as compared to 2022.
Current wording
Net sales of essential ingredients declined by $48.4 million, or 22%, to $169.3 million for 2024 as compared to $217.7 million for 2023. Our total volume of essential ingredients sold increased by 27,900 tons, or 3%, to 906,300 tons for 2024 from 878,400 tons for 2023. Sales volumes of essential ingredients from our Pekin Campus were higher in 2024 due to higher production rates for the year. At our average sales price per ton of $186.81 for 2024, we generated $5.2 million in additional net sales from the 27,900 additional tons of essential ingredients sold in 2024 as compared to 2023. A decrease of $61.03, or 25%, in our average sales price per ton in 2024 as compared to 2023 resulted in a $53.6 million decline in net sales as compared to 2023.
Previous wording
Net sales of renewable fuel from our marketing and distribution segment, excluding intersegment sales, increased by $34.1 million, or 15%, to $263.0 million for 2023 as compared to $228.9 million for 2022.
Current wording
Net sales of renewable fuel from our marketing and distribution segment, excluding intersegment sales, decreased by $46.5 million, or 18%, to $216.5 million for 2024 as compared to $263.0 million for 2023.
Previous wording
Our volume of third-party renewable fuel sold reported gross by the segment increased by 22.1 million gallons, or 28%, to 102.6 million gallons for 2023 as compared to 80.5 million gallons for 2022. This increase resulted from a shift in the source of renewable fuel from our Magic Valley facility, as we hot-idled the facility in early 2023, to third-party suppliers. At the segment’s average sales price per gallon of $2.56 for 2023, net sales were $56.6 million higher as a result of the 22.1 million additional gallons sold in 2023 as compared to 2022. This increase was partially offset by the $0.27 decrease in our average sales price per gallon for 2023. The decrease of $0.27, or 10%, in our average sales price per gallon in 2023 as compared to 2022 resulted in a $21.6 million decline in net sales from our third-party renewable fuel sold by the segment compared to 2022.
Current wording
Our volume of third-party renewable fuel sold reported gross by the segment increased by 5.7 million gallons, or 6%, to 108.3 million gallons for 2024 as compared to 102.6 million gallons for 2023. This increase resulted from a shift in the source of renewable fuel from our Magic Valley facility to third-party suppliers. At the segment’s average sales price per gallon of $2.00 for 2024, net sales were $11.4 million higher as a result of the 5.7 million additional gallons sold in 2024 as compared to 2023. This increase was partially offset by the $0.56 decrease in our average sales price per gallon for 2024. The decrease of $0.56, or 22%, in our average sales price per gallon in 2024 as compared to 2023 resulted in a $57.9 million decline in net sales from our third-party renewable fuel sold by the segment compared to 2023.
Previous wording
Net sales of alcohol from our Western production segment declined by $86.6 million, or 34%, to $167.0 million for 2023 as compared to $253.6 million for 2022. Our total volume of gallons sold declined by 25.4 million gallons, or 27%, to 67.0 million gallons for 2023 as compared to 92.4 million gallons for 2022. This decline in sales volume primarily resulted from lower production from our Magic Valley facility as we hot-idled the facility in the first quarter of 2023. At the segment’s average sales price of $2.49 per gallon for 2023, net sales were $63.2 million lower as a result of the 25.4 million fewer gallons sold in 2023 as compared to 2022. A decline of $0.26, or 9%, in our average sales price per gallon in 2023 as compared to 2022 resulted in a $23.4 million decrease in net sales of alcohol from the segment compared to 2022.
Current wording
Net sales of alcohol from our Western production segment declined by $51.6 million, or 31%, to $115.4 million for 2024 as compared to $167.0 million for 2023. Our total volume of gallons sold declined by 6.5 million gallons, or 10%, to 60.5 million gallons for 2024 as compared to 67.0 million gallons for 2023. This decline in sales volume primarily resulted from lower production from our Magic Valley facility. At the segment’s average sales price of $1.91 per gallon for 2024, net sales were $12.4 million lower as a result of the 6.5 million fewer gallons sold in 2024 as compared to 2023. A decline of $0.58, or 23%, in our average sales price per gallon in 2024 as compared to 2023 resulted in a $39.2 million decrease in net sales of alcohol from the segment compared to 2023.
Previous wording
Net sales of essential ingredients declined by $32.9 million, or 36%, to $57.3 million for 2023 as compared to $90.2 million for 2022. Our total volume of essential ingredients sold declined by 144,800 tons, or 18%, to 642,300 tons for 2023 from 787,100 tons for 2022. At our average sales price of $89.15 per ton for 2023, net sales were $12.9 million lower as a result of the 144,800 fewer tons sold in 2023 as compared to 2022. In addition, our sales price declined by $25.45 per ton for 2023. The decline of $25.45, or 22%, in our average sales price per ton in 2023 as compared to 2022 resulted in a decrease of $20.0 million in net sales of essential ingredients from the segment compared to 2022.
Current wording
Net sales of essential ingredients declined by $20.3 million, or 35%, to $37.0 million for 2024 as compared to $57.3 million for 2023. Our total volume of essential ingredients sold declined by 127,700 tons, or 20%, to 514,600 tons for 2024 from 642,300 tons for 2023. At our average sales price of $71.81 per ton for 2024, net sales were $9.2 million lower as a result of the 127,700 fewer tons sold in 2024 as compared to 2023. In addition, our sales price declined by $17.35 per ton for 2024. The decline of $17.35, or 19%, in our average sales price per ton in 2024 as compared to 2023 resulted in a decrease of $11.1 million in net sales of essential ingredients from the segment compared to 2023.
Previous wording
Net sales from our Corporate and other segment were flat at $15.8 million for each of 2023 and 2022. These sales are from Eagle Alcohol’s business.
Current wording
Net sales from our Corporate and other segment declined by $4.4 million or 28% to $11.4 million for 2024 as compared to $15.8 million for 2023. These results are from Eagle Alcohol’s business.
Previous wording
Cost of Goods Sold and Gross Profit (Loss)
Current wording
Cost of Goods Sold and Gross Profit
Previous wording
Our Pekin Campus production segment’s gross profit improved by $35.5 million to a gross profit of $13.7 million from a gross loss of $21.8 million. Of this increase, $35.2 million is attributable to higher commodity crush margins and $0.3 million is attributable to increased sales volumes in 2023 as compared to 2022.
Current wording
Our Pekin Campus production segment’s gross profit improved by $12.7 million to a gross profit of $25.9 million from $13.3 million. Of this increase, $12.1 million is attributable to higher commodity crush margins and $0.6 million is attributable to increased sales volumes in 2024 as compared to 2023.
Previous wording
Our marketing and distribution segment’s gross profit improved by $4.1 million to a gross profit of $3.7 million for 2023 from a gross loss of $0.4 million for 2022. Of this increase, $3.3 million is attributable to higher margins from sales of third-party renewable fuel, and $0.8 million attributable to higher marketing volumes of third-party renewable fuel sold reported gross in 2023 as compared to 2022.
Current wording
Our marketing and distribution segment’s gross profit declined by $0.2 million to a gross profit of $4.0 million for 2024 from $4.2 million for 2023. Of this decrease, $0.4 million is attributable to lower margins from sales of third-party renewable fuel, partially offset by an increase of $0.2 million attributable to higher marketing volumes of third-party renewable fuel sold reported gross in 2024 as compared to 2023.
Previous wording
Our Western production segment’s gross loss improved by $3.5 million to a gross loss of $5.5 million for 2023 as compared to a gross loss of $9.0 million for 2022, despite lower production from our Magic Valley facility during the year. Of this improvement, $1.4 million is attributable to higher margins for renewable fuel and $2.1 million is attributable to lower sales volumes at negative margins in 2023 as compared to 2022.
Current wording
Our Western production segment’s gross loss worsened by $13.8 million to a gross loss of $19.3 million for 2024 as compared to a gross loss of $5.5 million for 2023. Of this decline, $15.8 million is attributable to significantly lower margins for renewable fuel, partially offset by $2.0 million attributable to lower sales volumes at negative margins in 2024 as compared to 2023.
Previous wording
Gross profit from our Corporate and other segment was flat at $3.7 million for each of 2023 and 2022. This gross profit was from Eagle Alcohol’s business.
Current wording
Gross profit and loss from our Corporate and other segment was a gross loss of $0.9 million for 2024 and a gross profit of $3.7 million for 2023, primarily from Eagle Alcohol’s business.
Previous wording
Our selling, general and administrative, or SG&A, expenses increased by $1.1 million to $32.7 million for 2023 as compared to $31.6 million for 2022. SG&A expenses increased primarily due to higher compensation-related expenses and litigation accruals, partially offset by lower accruals for deferred cash payments attributable to our acquisition of Eagle Alcohol.
Current wording
Our selling, general and administrative, or SG&A, expenses decreased by $0.1 million to $29.7 million for 2024 as compared to $29.8 million for 2023. SG&A expenses decreased primarily due to lower professional fees.
Previous wording
Interest expense, net, increased by $5.6 million to $7.4 million for 2023 from $1.8 million for 2022. The increase in interest expense, net, is primarily due to higher debt balances under our term loan to fund our capital improvement projects, as well as higher interest rates under Kinergy’s line of credit consistent with an overall higher interest rate environment.
Current wording
Interest expense, net, increased by $0.2 million to $7.6 million for 2024 from $7.4 million for 2023. The increase in interest expense, net, is primarily due to higher debt balances, as well as higher interest rates under Kinergy’s line of credit.
Previous wording
During the year ended December 31, 2023, we funded our operations primarily from cash on hand, cash flow from operations and proceeds from Kinergy’s operating line of credit. In addition to funding our operations, we used our capital resources to continue our capital improvement projects, make an annual payment related to our acquisition of Eagle Alcohol, repurchase shares of our common stock and pay preferred stock dividends.
Current wording
During the year ended December 31, 2024, we funded our operations primarily from cash on hand and proceeds from Kinergy’s operating line of credit. In addition to funding our operations, we used our capital resources to continue our capital improvement projects, make an annual cash payment related to our acquisition of Eagle Alcohol and pay preferred stock dividends.
Previous wording
As of December 31, 2023, we had $30.0 million in cash and cash equivalents and $33.3 million available for borrowing under Kinergy’s operating line of credit. In addition, we have up to an additional $65.0 million that may be available for capital improvement projects under our Orion term loan, subject to certain conditions. We believe we have sufficient sources of liquidity to meet our anticipated working capital, debt service, capital expenditure and other liquidity needs for at least the next twelve months from the date of this report.
Current wording
As of December 31, 2024, we had $35.5 million in cash and cash equivalents and $23.1 million available for borrowing under Kinergy’s operating line of credit. In addition, we have up to an additional $65.0 million that may be available for capital improvement projects under our Orion term loan discussed below, subject to certain conditions. We believe we have sufficient sources of liquidity to meet our anticipated working capital, debt service, capital expenditure and other liquidity needs for at least the next twelve months from the date of this report.
Previous wording
At December 31, 2023, we had approximately $64.6 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 December 31, 2024, we had approximately $54.1 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 declined to $103.5 million at December 31, 2023 from $121.1 million at December 31, 2022 as a result of a $30.3 million decrease in current assets, partially offset by a $12.7 million decrease in current liabilities.
Current wording
Working capital declined to $95.3 million at December 31, 2024 from $103.5 million at December 31, 2023 as a result of a $15.7 million decrease in current assets, partially offset by a $7.5 million decrease in current liabilities.
Previous wording
Our current liabilities declined primarily due to decreases in accounts payable, accrued liabilities and other current liabilities, partially offset by increases in derivative instruments and the current portion of our operating lease payment obligations.
Current wording
Current assets declined primarily due to decreases in restricted cash, inventories and other current assets. Our current liabilities declined primarily due to decreases in derivative instruments and accrued liabilities.
Previous wording
Our cash, cash equivalents and restricted cash declined by $4.0 million due to $33.0 million used in our investing activities primarily for our capital improvement projects, partially offset by $22.0 million in cash provided by our operating activities and $7.0 million in cash provided by our financing activities.
Current wording
Our cash, cash equivalents and restricted cash declined by $9.3 million due to $3.5 million of cash used in our operating activities and $13.5 million of cash used in our investing activities primarily for our capital improvement projects, partially offset by $7.7 million in cash provided by our financing activities, primarily due to proceeds from our operating line of credit.
Previous wording
We generated $22.0 million in cash from our operating activities during 2023, as compared to $6.0 million in 2022. Specific factors that contributed significantly to the change in cash generated by our operating activities include:
Current wording
We used $3.5 million in cash in our operating activities during 2024, as compared to $22.0 million in cash generated from our operating activities in 2023. Specific factors that contributed significantly to the change in cash generated by our operating activities include:
Previous wording
We used $33.0 million of cash in our investing activities for 2023, of which $29.5 million is attributable to additions to property and equipment resulting from our capital improvement projects and $3.5 million is attributable to cash paid for our acquisition of Eagle Alcohol.
Current wording
We used $13.5 million of cash in our investing activities for 2024, of which $11.1 million was for additions to property and equipment resulting from our capital improvement projects and $2.8 million is attributable to cash paid for our acquisition of Eagle Alcohol.
Previous wording
Cash provided by our financing activities was $7.0 million for 2023, of which $12.6 million is attributable to net proceeds from Kinergy’s line of credit, partially offset by $3.7 million in repurchases of our common stock, $1.3 million of preferred stock dividends and $0.7 million of debt issuance costs.
Current wording
Cash provided by our financing activities was $7.7 million for 2024, of which $9.0 million is attributable to net proceeds from Kinergy’s line of credit, partially offset by $1.3 million of preferred stock dividends.
Previous wording
Alto Ingredients, Inc. has guaranteed all of Kinergy’s obligations under the credit facility. As of December 31, 2023, Kinergy had an outstanding balance of $30.7 million and $33.3 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 December 31, 2024, Kinergy had an outstanding balance of $39.7 million and $23.1 million of unused borrowing availability under the credit facility.
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Current report — wording carried from elsewhere
Certain performance metrics that we believe are important indicators of our results of operations include the following:
Current report — wording carried from elsewhere
We also produced and sold fewer tons of essential ingredients primarily due to lower alcohol production in 2024 compared to 2023. Our average sales price for our essential ingredients declined primarily due to lower corn prices.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Cash provided by our Operating Activities
Previous report — wording carried elsewhere
Interest accrues on the unpaid principal amount of the Term Loan at a fixed rate of 10% per annum. The Term Loan matures on November 7, 2028, or earlier upon acceleration.