Alto Ingredients (ALTO) 6 Nov 242024 Q3 Earnings call transcript

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

Third 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 Alliance Advisors Investor Relations. Please go ahead.

thank Ingredients for Conference Third and for us Call. Megan, Alto the Quarter you, you joining all today Thank XXXX Results

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

periods statements. that disclosed referenced. of that The X company remarks, limited be forward-looking constitute update performance assessing risks accurate presentation time Factors of monitor applicable defines law, statements. McGregor. On and may non-GAAP asset derivatives, the to today's for any call by reported. taxes, these on company's risks statements Slide events, comment to, results. obligation on and call, provide SEC. interest performance online, the non-GAAP assumes To no believes consolidated of In as and was You're refer information provisions a go not on the Alto Bryon today's gains expense ahead, in or unaudited differences income uncertainties. investors will safe the non-GAAP materially depreciation financial comments that table management's involve will statement sir. from of measures forward-looking Except before for the expense of losses, financial measures It considerations and no included wrap income, to is adjusted plan be uses expense. net other Bryon with Rob will are support open time the those actual EBITDA loss differ could company's previously introduce required company's now in but unrealized and states which a Please the of Bryon cause such Ingredients or Please Ingredients' press and the to future the assist and prepared replay. of any acquisition-related include, to information, results available Management amortization The Alto impairments, and as my from factors reconciling and operations Then measures that Q&A. longer time-sensitive or these up filings income and pleasure today's contribute review review in will harbor our advised time some the strategic the call could at release. activities. our for to will to company

production capabilities its Thank quarter, us for to fluctuations uptime campus XXXX, year its and conditions. and market QX Pekin joining Kirsten. In you, improving our all increased compared despite you fluctuating prior the today. Thank profitability

discuss consolidated As Rob moment. million a results and million. adjusted XXXX in $X our profit detail was a to improved greater $XX.X gross result, QX in will EBITDA financial

Vault our sustainability a more significant sequestration transportation, injection on critical of COX comment into toward a Mount from campus to the and Under step milestone with a future. and commitment partnership in in our the the journey on like terms prosperous agreement, the This Illinois. finalizing Pekin handle Simon sustainable formation marks will Sandstone Sequestration Agreement I'd definitive COX announcement. a today's by TSA Vault. Transportation of to First, our We've and forward taken

equipment, us produce and this our the monetizing source we While COX closer goals lowering financing, carbon achieving we our to await of submission agreement biogenic EPA value at of footprint address campus. brings the Pekin and and our approval,

XXXX, volume, Regarding its our QX. part maintenance operations, since by our in biennial translated alcohols, XXXX. results the This track of XX% in QX, and of and gallons X successful our greater total Pekin X% remain period in reflecting than XXXX mill specialty repairs increased volume campus XX level reaching specialty production We outage wet of highest Pekin in into productivity percentage million expect higher match year. sales this points of -- sell same alcohols last in on the to to

carbon We continue our operational to to costs, footprint. our modernize equipment and our and improve reduce lower reliability, facilities

are alcohol Pekin our In the we TSA, addition to a second at campus. currently building signing loading dock

Our redundancy and to adding the array accommodate expediting to this costs, is of river project improve expanding by barges. shipping wider goal with capabilities a our logistics

completed In a corn system to products million and second full restart efficiencies. Magic protein synergistic is expect prove effect increased overall is this the than at planned consistently $X high margins and We The time. upgrades harvesting positive capture out for our of benefit facility to we facility our less and at loading dock technology capacity. average completion in At oil achieved cost Valley, XXXX. to rates and October, production system the the to crush and from ethanol scheduled

expand systems with and team, dry This [Soil yields. Net]. by technical in XX% Magic a of more on efforts along to oil reached commend or as the restart future. us we been Our yeoman provided corn support We have say minutes. deployment protein greater, the our has of few I'll informed mills at we've the in operational Valley our to other content consider our able the capabilities technology

to supported to began ethanol in attributable driven demand with weaken margins miles by began to Turning weather-related crush in solid a Domestic QX exports. part decline with market strong events. a review,

period in lower last same ethanol the ethanol in As outpaced and lower carbon ethanol Oregon XX% California compared Washington approximately has were prices. year. production prices XX% and it relatively remained high, demand, resulting In levels inventory in and to QX, higher lower

we to remain begun prices carbon some In good low low, While remained October, QX, good a corn strong carryout reflecting a which is in resulting in thing. we've prices recovery. harvest, expect XXXX, a to into see

U.S. the suppliers storage to basis. for in to costs, prices driving international is up one likely compared increase, lower driving corn Pekin demand at their expanded prices cover corn prices, and typically least corn reason up corn are require prices storage increasing and corn logistics when we This with low, will Also, exports at capacity corn are However, straining costs. our considering transportation U.S. even further. why

higher While Western Midwest plants impact producers for cheaper that price on basis. to all our higher significantly costs a producers, have In corn supplies transportation access at compared they local have X corn the substantial impact Western operations. ethanol costs short, increase transportation to more our and delivered

financial prices we as in improvements on market engaged partnerships. our including to optimize Securities will plan the protein operational facility, at and the benefits we've release recent monetize have and overall and Western the maximize and address continue believe in on outweighing idle economic our margin regional increases have press Magic we made Although advantages. trends. or pursue the our the challenges, corn opportunities these resulted October Magic alternatives assess positive there company's the economics of oil Unless in we plant's to potential Further, results. delivered impact economic QX notable improvements. to Valley We've explore our before plant explore XX, compression, plant facility are market to declining will through to a of corn end these our opportunities To strengths assets, mentioned the we Valley Guggenheim in have benefits, at actively that continue basis improvements to and

transportation while than premiums experiencing costs, carbon our facility Valley. lower generated ethanol, earned make from margin resilient economically more also of our Colombia lower on Finally, Columbia the combination and COX revenues Magic sales is compression,

efforts, report increased and we topics on as social sustainability XXXX completed metrics. sustainability and our have health, our environmental, our to disclosure safety, quality such Turning

to responsibility, make and ingredients Our drive ingredients the and plant-based everyday We core XXX% alcohol renewable products products of specialty renewable mission proteins. values the from quality to produce fuels quality our sustainable offer essential integrity, and that proudly highest better. bio-based our

energy by optimizing striving and efficiency, upgrading scores sustainable Our selecting highly grind carbon intensity for are efficient below facilities dry infrastructure, XX feedstocks.

and conducted with and to product long-term multiple sustainability dedication to to our partners, expand social assessments and stakeholders opportunities on extends internal and and identified external We focus quality market customers, bio-based renewable suppliers consumers investors, viably and Our safety. material employees, responsibility our offerings.

and on good The oversight third-party we of disposal, products risk supply storage, certification for for ingredients chemical excipient streams. chains handling, practices, pharmaceutical waste active manufacturing multiple the management, transportation and management, requirements quality all areas included earned safety and initiatives, and food

Now I'll turn call to Rob. the

review sold with XXXX. XXXX quarter third the of the XX.X sold QX XX.X financial to Thanks, I'll gallons We Bryon. third results compared for during quarter million gallons, consistent the XXXX. million of

year by the part declining in $X per gross gross from I'll QX the $X.XX and were a which contributed sales sales net offset QX However, lower compared to Pekin million partially as to compared period due improvements scheduled increased This $X.X year-over-year, corn QX crush million Total in compared significantly due $X.XX consolidated tenfold to profit, same last XXXX, lower our margins review was million gallons resulting shift as contributing Specialty market was positive market a year. million declined to mix. to $X.XX $XXX benefited year. compared last XXXX. XXXX. ago in campus The QX sold $X.X per in basis, in prices from in alcohol from maintenance We to to a gallon. factors. million improving to bushel million well $XXX repairs $X various profit by

in compared XXXX. a QX our as this partially essential However, to price decrease was by for XX% ingredients offset average

profit decline had QX by million to of The associated facilities gross million Western greater a million a gross upgrading of restarting year-over-year $X.X and our of costs in and XXXX. driven with $X.X majority in this profit Magic facility. $X.X Our gross Valley downtime loss of was compared

$X.X our to detail will less Additionally, prices. due $X.X million I realized derivative the quarter to generated were hedging Also, greater same our the carbon in drop $X.X million a in in in revenue compared gains facility million consolidated for review moment. XXXX. XX% Columbia in an

assets This our quarter, purchase of we Aventine. certain recorded of sale $XXX,XXX gain idled to on related

and on in Our derivatives million producer $X.X million, This $XX.X net a consolidated on $X.X compares $X.X in EBITDA realized a to XXXX. million million was program was QX million, grant $XX.X gains loss biofuel million gains the to of XXXX. QX USDA for to related derivatives XXXX. compared $X.X QX Adjusted net million realized including $X.X the in in including loss

our was $XX under cash facility. As was our and generated of We September $XX bringing in subject We certain provided by $XX line after bringing of XX, total CapEx in credit cash million to loan $X.X of to flow for QX, cash various energy operations. borrowing our loan in million rebates, our million million, CapEx from balance our million $XXX,XXX term $XX.X availability year-to-date million, operations $XX operating including to total and year-to-date invested our conditions total million. under $X.X our accounting

and During $X.X QX, recorded XXXX million line basis, year prior on we are million. consolidated the repairs a our on in $XX with with maintenance expense, quarter, track of in and estimate we

hedging derivatives, our our they results. Turning about are back strategies asked to and we how the frequently impact financial

While premiums hedge managing strategies our volatility Currently, duration to mitigate provide employ sold we alcohol crush the the year take use few would this of strategies as are up course complex throughout use between of These our positions derivatives, gas. have production We a as area, how of on prices over commodities the natural Through core premium business. able also that and fixed is of will corn to sales We over may for a that the of margin. to strategy a specialty may prices, of or fuel-grade known on include X price to corn different longer. we contracts management derivatives. the I is variety of otherwise be the a the in as spread year ethanol normal ethanol. highlights ethanol contract the lock and otherwise risk

record that inception on positions to the realize. we positions For cumulative unrealized the losses these since settle, gains or

measured future, indication activity in Unrealized The in change value realized the each future at On end not obligation remaining the an I'll what our Alto of market be realized is realize reflects or call periods. to is date. of way the the as all on will be of liquidated what Bryon. to specific or of asset the we our specific period The of to reflected as unsettled that sheet. back period reporting is as derivative note amounts positions, best a that, net unrealized. would With end in determine positions liability the date, if the to balance values turn

day. every deliver we the on our to vision, ingredients Thanks, highest our Rob. quality Executing customers

and carbon initiative scheduled campus. to Our capture into entering facilitate furthered maintenance our improved initiatives by CCS reduce carbon of agreement storage our an repairs to from productivity. well advanced and emissions CapEx are as emissions strategy delivering We've safe as our and the Pekin our

We presented are positioned to and by capitalize on facilities. changing the our manage unique dynamics to market opportunities

team on the about Our consistent basis, answer. a begin question improving ready Operator, to future. sustainable, is we're and committed are profitability optimistic to we and

Eric (Operator Instructions) Craig-Hallum Stine The with first comes question from Group. Capital

Eric This is for on today. Stine Persons Luke

of a have We couple questions here.

about should how First, EBITDA far? Magic been that million so what's around that uplift be we originally given outlook outlined? targeted $X demonstrated thinking Valley's was of annual still stand Does

corn values, the originally difficult moment. a that today. they changed what conditions we're on the built that actually market ascertain is based since corn significantly that's values, than based forecasts, The around protein Luke, were challenge were a those particularly price on to original higher expectations contribution. we when -- the seeing was Those fundamental at and have dramatically oil

As from those the facilities. more crush given than material prepared significant improvement. we benefits deterioration, are by that any said the for in experienced material remarks, that we deterioration we offset in Western this see market, of margin our the in benefit currently the But particularly

helpful, on you ADM do you. to here. And given permits thank moratorium follow-up any Touching Act, recent leaks? envision the a just new change the quick the and carbon side capture That's question for timeline CCS the

significant ADM though, there's completed I question. -- but from had then that the the What from any not particularly originally the certainly anyone in good approval, I into say, whether outward would depth, time or said, is ours That time a even work, that only will I completed that casings, and way we generally ground It's well, done, submitted EPA. response going seen haven't well the of to the the and the the be the applicable know mean would changes is work been the the like. quality that strength don't tell. the else's it's today. it

(Operator next comes Instructions) LLC. Capital Justin from question Management, The with Dopierala DOMO

for they Valley, have as guys sounds It Magic millions lost CoPromax, recourse implementation thought. tens some it considered the as harvesting of like in technologies mean, I seeking compensated of I is guess that, mean, you I losses likely as against dollars. must of my responsible far is, way be you the have were in operating But that question to for?

and had take benefit the significant happening to but elsewhere. not and to and permanent your probably we most, to in were We to opportunities. We pain to I to the this probably last the would both but all experience have than a of able the those be that question fore. and from and Valley we less it is would that over be also sound. expect it this years to clearly it what's try not do productive It was, Justin, explored options, the and fundamentals bring we still a this And are account. opportunities that the more only if is understand, it are still exploring was is we've see fundamentals see we That the that's struggle certainly market, and posed way. do all productive there response what said, earlier permanent, improvement, at also I say expect into comments, all to state. in doing of so technology current reflection don't the of guess we couple behind and Magic the that

actually of tens I that be dollars. like millions based your could does what potentially Would fair you on sound recourse of to of it seeking say? be Okay. are mean, response, potentially

already than what I've I wouldn't mentioned. clarify mean I any more Yeah,

a you at and more there? or bit And hire color Guggenheim provide is Okay. on what process little what precisely the they're could thought looking comment and the

to and times aspects as all we're it's with Yes, banks whether have and multiple the said whether would not evaluated if make that, on partners, to return make as process and It to investment sure considering see investment asset, other Guggenheim with it's sell and the of the to we've all time bring include it's that and the time from it's maximizing options, have engaged company this historically, shareholders. -- we any to in on to and to the keep you to facilities. the at can and certain lot the whether for and can optimizing for it's elsewhere. in asset further they the sites the of make improvements face, of also they a to that's shareholders. that those part still best those that duplicate of yes, as locations? you company the but all What's liberate moment, benefit that and there's unique those want of sure the I benefits about way and that are the qualities mean, real are significantly to material contribute that, see of to evaluate opportunities challenges we untapped And strategy. We and can't there

one your much is I absolutely. than Yes, worth. have each sites currently greater value stock the mean clearly of

even Given of the entire operating this quite in the the that given environments, profitability favorable would or somewhat and company? lack also sale of consider review favorable

said, time. As it our owe calculate options are we we've and or all of to always include and we responsibilities shareholders, the all those we

Excellent.

process. I you. think need Thank to the you expedite

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

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

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

may You disconnect. now