Alto Ingredients (ALTO) Q4 2023 earnings summary

Executive summary

• FY2023 gross profit reached $15.653M from a $27.550M loss; Adjusted EBITDA was $20.766M versus a $5.743M loss, while GAAP net losses continued.

• Management cited diversification, utilization, cost controls and margin expansion; priorities include higher-margin specialty products, asset efficiency, customer growth and Pekin CCS.

Financial highlights

• Q4 net sales were $273.625M vs. $328.437M; FY net sales were $1,222.940M vs. $1,335.621M.

• Q4 gross loss was $2.525M vs. $21.328M and operating loss was $17.2M vs. $31.1M; FY gross profit was $15.653M vs. a $27.550M loss and operating loss was $23.8M vs. $61.4M.

• Net loss was $18.945M in Q4 vs. $33.072M and $28.005M for FY vs. $41.597M; net loss available to common stockholders was $19.3M and $29.3M, respectively.

• Adjusted EBITDA was $3.543M in Q4 vs. a $15.463M loss; FY Adjusted EBITDA was $20.766M vs. a $5.743M loss.

Outlook and guidance

• Management expects improving crush margins and positive spreads through most of 2024; maintenance is intended to improve reliability and production run rates ahead of summer.

• Magic Valley was hot-idled to limit Q1 losses and install upgrades, with restart planned for Q2 2024 after upgrades and improved crush margins.

• Specialty alcohol distillery upgrades support 192-proof and ultra-low-moisture 200-proof grain neutral spirits; 93 MG was contracted for 2024.

• In-operation and developing initiatives, including specialty alcohol distribution, CCS, corn storage and boiler upgrades, target annual Adjusted EBITDA of $30M+.

• Pekin CCS plans include ~600,000 metric tons/year capacity; the Inflation Reduction Act Section 45Q incentive is $85/metric ton for 12 years.