Alto Ingredients(US:ALTO)2023-11-07 16:00Production Capacity and Sales - The company has an annual alcohol production capacity of up to 350 million gallons, including 110 million gallons of specialty alcohols[74]. - In 2022, the company marketed and distributed approximately 420 million gallons of alcohols and over 1.6 million tons of essential ingredients[74]. - Renewable fuel production gallons sold increased by 6.8% to 56.6 million for the three months ended September 30, 2023, compared to 53.0 million for the same period in 2022[100]. - Specialty alcohol production gallons sold decreased by 20.2% to 18.6 million for the three months ended September 30, 2023, compared to 23.3 million for the same period in 2022[100]. - Total gallons sold decreased by 6.5% to 97.1 million for the three months ended September 30, 2023, compared to 103.9 million for the same period in 2022[100]. - Pekin Campus production segment's net sales of alcohol decreased by $4.9 million, or 1%, to $388.6 million for the nine months ended September 30, 2023, despite a 6% increase in total production gallons sold[120]. - Marketing and Distribution segment's net sales of alcohol increased by $42.3 million, or 24%, to $216.0 million for the nine months ended September 30, 2023[122]. - Other Production segment's net sales of alcohol decreased by $69.0 million, or 36%, to $122.5 million for the nine months ended September 30, 2023, with a 36% decline in total volume sold[125]. Financial Performance - The company generated positive Adjusted EBITDA of $4.679 million for the third quarter of 2023, a significant improvement compared to a loss of $20.601 million in the same quarter of 2022[97]. - The company expects an incremental increase in annualized Adjusted EBITDA by over $65 million by mid-2026 and approximately $125 million by year-end 2027[91]. - Net sales decreased by 5.6% to $318.1 million for the three months ended September 30, 2023, compared to $336.9 million for the same period in 2022[103]. - Gross profit increased to $4.2 million for the three months ended September 30, 2023, from a gross loss of $19.8 million for the same period in 2022, representing a gross margin of 1.3%[115]. - Consolidated gross profit increased to $18.2 million for the nine months ended September 30, 2023, from a gross loss of $6.2 million in the same period in 2022, reflecting improved commodity margins[128]. - Net loss available to common stockholders decreased to $(3,808) million for the three months ended September 30, 2023, compared to $(28,357) million in the same period in 2022, representing an improvement of 86.6%[141]. Capital Expenditures and Investments - Capital expenditures for the third quarter totaled $7 million, bringing total investments in plants to $25 million for the first nine months of 2023[85]. - Cash used in investing activities totaled $28.1 million, which included $24.6 million for property and equipment additions and $3.5 million for contingent purchase price payments related to the acquisition of Eagle Alcohol[149]. Operational Developments - The company is currently negotiating contracts for natural gas pipeline and cogeneration projects, alongside progress on its carbon capture and sequestration project[91]. - The new 850,000-bushel corn storage silo at the Pekin Campus is now fully operational, contributing to improved corn procurement costs and greater plant reliability[90]. - The company has completed several short-term projects, including the expansion of high-quality alcohol product offerings and installation of additional corn storage capacity[87]. Market Conditions and Consumer Demand - Lower consumer demand has impacted specialty alcohol sales in 2023, but the company is on pace to exceed 2023 delivered gallons at premiums to fuel-grade ethanol[84]. - Average sales price per gallon decreased by 5.2% to $2.56 for the three months ended September 30, 2023, compared to $2.70 for the same period in 2022[100]. - Essential ingredients revenues as a percentage of delivered cost of corn increased by 18.1% to 35.9% for the three months ended September 30, 2023, compared to 30.4% for the same period in 2022[100]. Debt and Financing - Interest expense increased significantly to $2.0 million for Q3 2023, up from $0.34 million in Q3 2022, due to higher debt balances and interest rates[136]. - As of September 30, 2023, the outstanding principal balance under the Orion Term Loan was $60 million, with a fixed interest rate of 10% per annum[157]. - Cash provided by financing activities was $3.2 million, reflecting net proceeds of $6.8 million from the operating line of credit, partially offset by stock repurchases and preferred stock dividends[150]. Cash Flow and Working Capital - Cash and cash equivalents as of September 30, 2023, were $34.9 million, down 29.6% from $49.5 million on December 31, 2022[144]. - Current assets decreased by 15.5% to $168.2 million, primarily due to a $14.7 million decline in cash, cash equivalents, and restricted cash[146]. - Cash generated from operating activities increased to $10.2 million for the nine months ended September 30, 2023, compared to $1.8 million for the same period in 2022[148]. - Working capital declined to $109.8 million as of September 30, 2023, from $121.1 million at December 31, 2022, a decrease of 9.3%[146]. - The fixed-charge coverage ratio was 4.09 for the three months ended September 30, 2023, significantly above the requirement of 1.10[153]. Shareholder Actions - The company repurchased 1,249,000 shares of common stock at an average price of $2.15, totaling $2.7 million for the nine months ended September 30, 2023[158].