Alto Ingredients (ALTO) 6 May 242024 Q1 Earnings call transcript

Good day, and welcome to the Alto Ingredients, Inc.

First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kirsten Chapman of LHA Investor. Please go ahead.

thank Ingredients for Conference First and for us Call. Cailey, Alta the Quarter you, you joining all today Thank XXXX Results

and at call will the The market website. today's be call on made closed On today, available are A CEO, in providing on for XX, details of telephone Ingredients are today's Alto today company's today, release. Please also altoingredients.com. also be a through CFO, financial May the prepared the the of information McGregor; presentation results. May replay this details issued included X. Ingredients after replay the available Alto that available at has Rob company's that will release President press which is of call website of Olander. company note as call A speaks Bryon today's and press webcast a only

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a refined with or storage, Thank capture to highest-grade of initiative. ingredients the XXXX carbon for essential vision prioritize CCS, the We and in and Thank and you, alcohol everyone, a us you, today. produce industry joining Kirsten. our began variety beverage

strategic and leveraging this so fluctuations. margin campus other moderate capabilities made we've encouraged far operational crush We our I'm the of are to and the of peak year. unique the impact and assets progress our by

adjusted our create from I'll results our comparative CCS, ongoing high-quality EBITDA surrounding alcohol our and goal low and quarter. sales strategic our projects. That is communities on financial discuss basis. in weather to customers, and but will by greater our improving profit our footprint. substantially by reducing carbon impacted the With However, financial increased our for factors CCS our begin relatively crush detail. improved year-over-year, in a Rob reviewing contributing gross campus an said, Pekin various toward results our shareholders Alto, overall first value margins and

Our provide unique a Pekin opportunity. COX and campus Alto production CCS their facilities, location their

of leading negotiate with proposed operation and partners terms of potential continue focused We agreements assets. and with the developer Walt, CCS our carbon capitalization storage financial to the development, on a

Our is deep nearby a COX to to plan stored reserve with Vault securely the work safely board, permanently geological underground. to transport in

begun As analysis. EPA support outreach, we with to alignment geologic to for Class activities survey and the advanced Vault, permit data Vault compression also and the have are schedule ahead seismic our March, driving community for installation system together of requirements work procure applications. additional vendor completed noted VI with equipment the respective in They negotiations to and required the XD power. has design, submit

project options. provides end, economics believe CCS enhance lower-cost more can this are compelling multiple capital with we that energy evaluating To efficient, Our we we production.

complete facility facility discussions cogeneration energy that reduce We forecasted our study in been build and operating their Alto's long-term lower are on to independent company. an with with This regarded that build has expenditures, our for a engaged energy efficiencies potential This they costs. site. operating -- would capital field energy partner maintain on highly and would improve

alternative We are continuing as with provider conversations to utility expand cogeneration. to energy current supply also our an capabilities

and million differentiated of the we spirits sold XX XXXX, higher chain. moisture QX Our that XXX from proof million highly alcohol, alcohol value gallons neutral specialty up low QX in XXX In specialty XXXX. up opportunities create products XX customer include grain proof gallons

per million March, mentioned alcohol contracted gallon. renewal XX for an to of at fixed we in As of average premium specialty approximately price, XXXX, gallons fuel $X.XX

discrete campus me, excuse days April. while Our plant of XX in was XXX for Pekin on offline we focused scope biennial preventative as to outage the plant with tasks work executed and upgrades over biennial -- well was The part wet infrastructure. as completed corrective our mill maintenance

fresh rates, the season. and reliability has outage the corn corn to target have driving more return safely we improving production efforts to higher plant we our periodic impact margins in and been sustainable is and on up oil At higher basis. profitability to These approach working With the technology production high-protein operation reducing returned facility and destination result Magic low ramping by the complete, the as rates. will a more to consistent of diligently summer Valley,

in technology achieve March, working at output our facility. are outlined consistency Harvest the production corn we vendor, to high quality rate, and intended and protein As system with high-protein our oil of the

or equipment schedules, expect idled, optimize to modifications new the is we to based using accelerate has the resume restart. to system installation delivery June routine July. been in production for activities on ordered hot While we efficiency plant the downtime are plant The and upon and maintenance early current late

reminder, direct high and core cost design protein and paying changes the is associated with As for equipment Harvest the systems. Technology a oil and

and as As deliver to highest always, our our shareholders. margins, improve the increase path noted previously, profitability return to we evaluate

continue current We our assets. assess of portfolio to

We will if appropriate. provide updates and when

to a Before I corporate I turn updates to review. the have few Rob, call over

ongoing finished announced our and promotion over Todd succession As Todd we our Scope its efforts, on community new relations our in April, Benton. to XX reliability greenhouse his the forward the part of Todd years with I look the achievement forthcoming part annual during and of XX Kandris with operational operational in I'd X efforts. connection planning, extensive sustainability gas and our verifications years' Peakon safety, with has and The to at his on experience retirement. his of the our like record In congratulate COO, Board sustainability for good contributions excellence. Mike we efficiency, facility X as workforce, quarter. deep the and industry to

Now Rob I'll CFO, turn Olander. the call over to our

than Yet sales, gross adjusted and and during XXXX positive alcohol XXXX, quarter financial ethanol review now to net were for the I'll We market costs operating improved of to $X.X loss $XXX,XXX QX both XXXX. results of XXXX. of and of lower These sales quarter first QX efforts XXXX. million by and reflect XXXX compared results in QX crush QX prices lower Bryon. gallons increased margins, efficiencies. our QX compared $XXX the XX to improved XXXX. the expand in EBITDA reflecting million XXXX especially million million the first Thanks, impact to by compared $XXX improved XXXX sold better

the factors following the However, results. impacted

different know, historically have the the business. In at extreme of To subzero as low seen management of resulting consumer we normal of price has foreign the price to First, course to Year-to-date, a XXXX. coupled we in mitigate we locked weather gas, market price lower variety as the a you of throughout prices in year volatility fixed natural significant risk demand. experienced risk needs years, conditions. with political and wars, recent due of from of and higher supply prices high advance gas commodities employ periods strategies extended volatility volatility, of of a our QX in production mitigate portion the events

rates in Further, this cold in facility, alcohol extreme with cold gas was our at our transportation. by the we is and QX extreme January, decreasing lower-margin unit in ongoing related While benefited last loss mid-March, weather QX across rail, feed reliable futures. January upgraded, our production. issues Also, other our installed full reduce shift our will $X.X natural deliveries higher-cost we campus in address restricted as begin specialty incremental product which commissioned increased We and operating centric call reduced At motor fees. and production a transported the the us X products activities facility, of May. and of to on levels, to X hindered more will we manage To that covered call, more million this, Columbia the To inventory weather models standby barge our during production XXXX. costs. an positions in necessitated a recognized maintenance by Pekin hedging

rebuilt return run is Today, We plant rate. enabling well. to also plant units, the target to the running the remaining

compared events, and million, million QX these expense was $X higher QX $X.X maintenance XXXX XXXX. Given repairs to

this our XXXX. the of for million maintenance accelerated of on As for $XX estimate costs, the we remain in track repairs increase and reflects timing

and cash $XX was million total As of our support capital loan borrowing our balance our XX, $XX operations million, initiatives. availability March to business and investment was

million under We Our line certain our positive call term invested With cash loan $X.X that, under in with borrowing I'll our and in we $X.X CapEx, subject million in Bryon. million million In back operating conditions availability turn for credit to our from of to $XX generated the XXXX. million XXXX, line QX plan operations. flow facility. $XX $XX includes

Rob. you, Thank

the next market for favorable. quarters in ahead, ethanol to X remains and crush Looking have the margins improve continued outlook QX

forecasting the demand improved lower While for are of inventories foreign feed year, for ethanol. the solid prices we we have and export rest

our sustained addition, CCS should tax transportation In credits efforts. blends validates the higher waiver use expect we for term, XX% work rates, around improving aviation EPA profitability. facilitate blend fuel renewable in sustainable and recent our of result the for including higher consistent more the production that Longer ethanol and of production summer Operationally, reliability guidelines will the updated fuel. in further

progress and Finally, we the the our we question-and-answer. with Operator, we expect value ready begin to are with CCS pleased stakeholders. initiative have we to are to made deliver

session. Eric will Insructions] now question [Operator first Craig-Hallum with We Stine Capital Your comes the from Group. question-and-answer begin

So just capture. starting carbon with

You that were gave things but lot unclear detail been had to about come. things that there, versus a guess of I done I was

And are needed time and that so just about And you just curious of little if more you some additional a -- maybe maybe with just a talk for over that gave detail. some steps. frame could those then run steps

Yes.

financial important -- great work regards the So into be discussions to permit. the That made final progress a Vault of given like, lot our is the with advancing with with still and regards coming Eric, work Classics well I progress needs to to as as to -- that the that agreement made goes said, mean completed. Vault a has there's we've clearly amount of with with partners good

have our year. to it, in said, quarter of with to and other track around to addition stay as on doing call Vault probably if of we have work making slew -- to that we sure That And missing. well there's our responding siting. summer this application questions that, end a and and community of that as In lot things as I'm are we're the goal fourth we're is of reviewing a comments before

said have process? review am of indications in an that plus And past kind that or is maybe XX right? months that not thinking the might you -- that's about I Or

time of XX correct. EPA's expectations the review XX for Under to That's latest they and amount the indications had upped months. for

is a period can our So we time. hopefully of expectation within that as that conservatively XX-month keep as

maybe to side, mentioned Okay. equipment evaluating you've of focused where were I unclear And are So the that you if going equipment just last then some equipment. something I vendors And ordered stand? that on that that that that was was you know or on about quarter? does or talked order very

Yes.

pole And that top have So really, do the And our equipment. to is, in clearly, layering we systems around up compression that long of the purchase to our then tens is work need permit, to right? So clearly we're and Eric, VI your you Class like in right? the we EPA speed. that, the power energy, be energy, on

While long items, the under as they're as what would those the expect not are also along Class you VI.

really time and you penny-wise about making and start spending to before those that all and permit right that the pound you it spend it's the staging tuition. want sure wait money you do or be at So and last to And process. you don't upfront until want get your you're

the to permit to, on up if that your we're can up idea, So go correctly, pretty and timing really about all seclustration that. actually goal or be -- before be we to systems able it's and good still our at and is can is to working we able operational be But your you a just to line able have time system. finding the that get other operationality add plant Classics to once of full to you

Yes.

Got for Okay. me. just Maybe last it. topic

whether the high-protein or the this think I paying Just and having the mentioned they're you that. I run to all you I the take operating for mean, to months? or big is out? upgrade the mean when a that where and confidence this you and initiatives X think something X you maybe other would see do envisioned? assume way part design that it on the do CoPromax anticipate you originally is not. or of that months, you to you play need that's plants it Because expect How for

will only the to time that Well, I'd love say but next think day, tell. I

to at being technology and to around achieve changes the being to are the are in we'll clearly the improve the on and Our that's targets additional is adequately making, the technology's system, that be built and able to performance their and we're the address not Valley then both be able and capacity and our to move of but tolerances Harvest the Magic into expectations goals need ours other interest expect -- able using what more able that in forward we being goals and locations, meet facility to upgrades only the for technology we made be us elsewhere. them that has part

Dayal from Our with Amit next question comes HCW.

sort I of may know are so recovery So operations year, rest And do you indicated on your previously Bryon, XQ far? visibility had showing you now, have the the for with respect for the up to be they improvements? you that margin right of of see already margins pressured. XQ But with sort

meet call up too to operation based same be it, we're and to as -- a see in results That's with to would XX the was for areas around bring did particularly quarter. we the if in is results. a So to week able season. ramp point down seeing year, move that, we're some we're cross, summer we margins it this the what to we exact full for pleased seeing only what and I've as you continue give ideas today, mill further your top operating were of at and yourself which beyond out little They're would QX current driving I to we additional into of is on be improvement. April But on comment And thing this positive It a goals. in days. continue time on improve. to the We in improve, to expect capacity the down able provide running rates, figures said, continue preliminary wet be them and as won't if

any CCS, to is of then into are that Or need year? Understood. respect CCS outside this go your budget of there with Okay. And to are CapEx that expenses CapEx for your that efforts? part development

but all the those there legal Yes, that. of I'll more things The contracts, costs Yes, CapEx certain costs aspects But the upfront take one. costs field are fairly plan, studies this involved going in be like to commercial review of terms, to majority immaterial. are immaterial certain some are

Okay.

Understood. for you. XX% you Okay. that like when start half those When of Is sense in CCS? 'XX will costs of coming start like on expect leads these incurring second time frame? up Or to portion larger the any do to

Yes.

payments those and right? to the to and system So to probably until a Classic around see developing really on in you've that second of you're you've pipeline Making lift expect we in would lot with third quarter got sure a occur the associated on your somewhere technology, won't Still of -- year. permit there be would basis, after down built. system got doesn't beginning the be the the going occur relative tube quarter, your next be And cost is compression injection starting place. that's

that's that But the account time, mostly of ours it's beginning And a bring those balance it, things. be year. months dots of going resources as even be to period important So know that of expense the growing combination would for why what's the that's the financial again, a well table pretty call and it's bulk, able same sheet, spend how being ends that's -- next you to make will why and to over of XX more where be in so and meet. we're connect of elsewhere addressed -- on largely well to to

Understood.

Okay.

trying of like of one I to read this. me. those cetera, get some Or of might take we underway? this already of highlight exploring just sense effort the how that? last level, at into sort a et serious In a are how sort should for you SAF, just presentation, you other opportunities developments Just high pursuing like a is mean,

of are that a resources There's Alto. necessary interest of a SAF. of Well, not there's lot going at lot -- there's around a into it, lot clearly

announcements, would there's work is between is of lot how a our really product and when focus early lifting things think change, interest there's still product of eligible a Our now SAF. able lot and being on with to an make ability a now too be that able that to where the opportunity capture available support produce and make make a and that latest of for think product you the have to SAF That's really be that really a growing to is but to be I COX pathway a treasury to available, industry. eligible particularly to is and done be needs difference for lot to can I able and to there sequester the the be the able there's

Your next question Advisors. from Instructions] Capital with Kingdom comes David Bastian [Operator

A ones. of couple quick

You year, to remainder as there terms revenues any roughly be of at the be sales. last percentage percentages? taking the expected should be puts takes we you are -- and mentioned to the a of that co-product major for power? Is year ratable down expected in the Or of least

It's the tough say to at moment.

product you would products. as just you otherwise XX% taking some as progression. know be argument last not continue of difficult should be I where and it in That the it length the place from the industry to I from said, the difficult think makes we going that and that But a as products, to to mean we're value corn oil down but grow able of will the prices the still run product differentiating goes then to do to XX% still demand the of be prices -- is peaks the and need that, that And seen it, as everything a year. I and there why product, start don't they'll have much peaks from be should would expectation XX%, that. you soften that benefit advantage and that that's that, seeing various It's compelling high-protein exactly you're possible, of and to -- spread an for still -- see the year find increase. there your clearly it significant a be across that to different whether significant It's is right? and times our is -- to way cycle, products. for able long demand will excess know over are to a know you'll you'll cycle, You its produce to have bit a there's ago. start

are see as we And so the we to well. investments expectation there's further And is kind the get for run, of opportunity be the our we of to over should And those to kinds that be an long pay differentiate that that that. will making products willing make. to

outside on a to the that with as if that I the there curious about? if Thanks capture changes guys well last similar be carbon well. thinking opportunity any major for quarterly at of to Carbon as basis you CapEx color expect level year the CapEx we on should be was or there's a

Yes. the feel million. I in in that about year, in to target $X.X This for believe I at XXXX, year, we $X.X we're $XX CapEx before. exceed And QX, year million in we million with million had not believe, about coming last the CapEx that $XX lowered plan. $XX we million,

is to or? you other going a lull the going David, is are are your a at So Or me -- if asking question. looking Let be in and big ratable? understand periods you spend to be there's question

thinking? guys are that. about 'XX and sounds year, like target is for you Confirm on what It track we're

the would assume ratable would year. throughout I pretty that Right. be

question-and-answer I This over session. the would for CEO, concludes remarks. Bryon to like conference back to McGregor, our closing turn any

We Thanks ongoing good feedback your appreciate for Have joining support. everyone. Cailey. you, Thank and us a today, again day.

you attending The now concluded. has for conference Thank presentation. today's

disconnect. now may You