Alto Ingredients(US:ALTO)2025-03-13 20:15Production Capacity and Sales - The company has an annual alcohol production capacity of 350 million gallons, including up to 110 million gallons of specialty alcohols, and marketed approximately 386 million gallons of alcohols in 2024[207]. - Specialty alcohols for the Industry & Agriculture, Food & Beverage, and Health, Home & Beauty markets represented approximately 12%, 7%, and 3% of total sales in 2024, respectively[212]. - The company sold nearly 92 million gallons of specialty alcohols in 2024 and aims to balance production levels between specialty alcohols and ISCC renewable fuels in 2025[238]. - For Q4 2024, the company sold 95.1 million gallons, up from 92.5 million gallons in Q4 2023, but the average sales price per gallon decreased to $1.88 from $2.24, resulting in a $38 million reduction in net sales year-over-year[239]. - Total gallons sold increased by 3.5 million gallons, or 1%, to 386.0 million gallons for 2024 from 382.5 million gallons for 2023[249]. - Total volume of essential ingredients sold increased by 27,900 tons, or 3%, to 906,300 tons, but net sales declined by $48.4 million, or 22%, due to a 25% decrease in average sales price per ton[266]. - Total gallons sold increased by 4.7 million gallons, or 2%, to 213.6 million gallons for the Pekin Campus, despite a decline in average sales price[264]. Financial Performance - Consolidated net sales decreased by $0.3 billion to $1.0 billion for 2024 from $1.2 billion for 2023[248]. - 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[248]. - Consolidated net sales decreased by $257.7 million, or 21.1%, to $965.3 million for 2024 compared to 2023[259]. - Average sales price per gallon declined by $0.52, or 21%, to $1.95 for 2024 from $2.47 for 2023, primarily due to lower renewable fuel prices[249]. - Gross profit declined by $5.9 million to $9.7 million for 2024 from $15.7 million for 2023, impacted by weakened commodity crush margins[249]. - Consolidated gross profit decreased to $9.7 million, representing a gross margin of 1.0% for 2024, down from $15.7 million and a gross margin of 1.3% for 2023[272]. - Net sales of renewable fuel from the marketing and distribution segment decreased by $46.5 million, or 18%, to $216.5 million for 2024[267]. - Net sales of alcohol from the Western production segment declined by $51.6 million, or 31%, to $115.4 million, with total volume sold decreasing by 6.5 million gallons, or 10%[269]. Cost and Expenses - The company reduced its annual expense run rate by nearly $8 million and cold-idled its Magic Valley facility at the end of 2024 to minimize financial losses[223][231]. - Average cost of corn decreased by 28% to $4.72 per bushel for 2024 from $6.58 per bushel for 2023[252]. - Average price of fuel-grade ethanol declined by 24% to $1.69 per gallon for 2024 compared to $2.22 per gallon for 2023[252]. - Asset impairments for the fourth quarter totaled $24.8 million, including $21.4 million related to the cold idling of the Magic Valley plant[242]. - Acquisition-related expenses increased by $4.9 million to $7.7 million for 2024, relating to the acceleration of stock payments to former owners of Eagle Alcohol[279]. - Cash, cash equivalents, and restricted cash declined by 20% to $36.2 million as of December 31, 2024, from $45.5 million in 2023[287]. - Working capital decreased to $95.3 million at December 31, 2024, from $103.5 million at December 31, 2023, due to a $15.7 million decrease in current assets[289]. - Cash used in operating activities was $3.5 million in 2024, a significant decrease from $22.0 million generated in 2023, primarily due to lower commodity crush margins[291]. Market and Risk Management - The company obtained ISCC certification for its renewable fuels business, allowing it to export qualified renewable fuel to the European Union, where it can achieve premium prices[237]. - The company is exploring the sale of its production facilities in Oregon and Idaho and considering other strategic transactions to align with long-term value potential[224]. - The company is exposed to market risks related to ethanol and corn pricing, which are influenced by various factors including supply and demand dynamics and government regulations[324]. - The company employs risk management strategies, including the use of derivative financial instruments, to mitigate market risks associated with ethanol and corn prices[328]. - A sensitivity analysis estimated that a hypothetical 10% adverse change in ethanol prices could result in a pre-tax income decrease of approximately $31.6 million, while a similar change in corn prices could decrease pre-tax income by approximately $28.2 million[330]. Asset Management and Impairments - The company recorded asset impairments of $21.4 million and $0.6 million for the years ended December 31, 2024 and 2023, respectively, related to the Magic Valley facility and operating lease assets[313]. - The company recognized asset impairments of $3.4 million and $6.0 million against intangible assets and goodwill for the years ended December 31, 2024 and 2023, respectively[314]. - The company assesses the impairment of long-lived assets when events indicate that the fair value may be less than the net book value, leading to potential impairment expenses[313]. - The company evaluates deferred tax assets for realizability and has recorded a valuation allowance against net deferred tax assets due to insufficient evidence of future taxable income[317]. Revenue Recognition - The company recognizes revenue from sales of alcohols and essential ingredients at the point when control is transferred to the customer, typically upon delivery[308].