ALTO - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to the Alto Ingredients Inc.

Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Kirsten Chapman with LHS Investor Relations, a division of Alliance Advisors. Please go ahead.

Kirsten Chapman

thank Ingredients for Conference Second and for us Call. Kaley, 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 August on also the of of information McGregor; a financial August 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

income, advised prepared of Ingredients' these obligation will that risks uses The X constitute risks management's statements. as Alto company accurate assumes company's presentation to and may statements. events, press in non-GAAP defines amortization. of the factors in for adjusted the that on other statements assessing and and periods Slide any included reported. online, no and and believes time to on will remarks, the required Rob operations company Factors measures those that of You asset not financial Please On information and these in Bryon was Management will loss this The be the unrealized uncertainties. could Bryon taxes, today's company's non-GAAP materially consolidated McGregor. depreciation time comments review involve reconciling referenced. impairments, activities income Please before for by a Harbor comment of update unaudited forward-looking forward-looking debt, call considerations cause to be and and disclosed sir. actual or contribute previously the support Then for losses, and our pleasure and gains to wrap law, my acquisition-related net are measures performance information differ the expense, income limited company's states Q&A. a with ahead, monitor such differences which ingredients of loss to, no replay. measures introduce and derivative or up SEC. To financial to future performance and in provision interest In any non-GAAP applicable without results EBITDA to include, available the from of the from filings that but the Except strategic It longer time-sensitive Safe any as are our the time Bryon some the will the assist is investors presentation release. could at refer extinguishment expense table provide go results. review of today's plan will open call, now interest

Bryon McGregor

Pekin The customers well welcome the investors, many for joining future. into through XXX today. over producing other and years We Kirsten. cycles, you, value will has campus stakeholders Thank us our produce to we been continue and alcohol market

by to profitability. capital upgrades utilizing Over strengthen fund repair balance last we've improve on long-term few our to operations liquidity maintenance to strong leaning and and years, our the our flow facilities been sheet excess cash in from and

relating gross QX, there, to long-term we benefit production our on can will to efforts in we reap expenses outages, results, More impact positioning $X additional benefits. even are confident operational to further our efforts beginning our our a yield basis. operate Pekin these demonstrate initiatives increased While including campus, QX, in advantages million In improving improvements, short-term located profitably production of and consistent the from Pekin recent breakeven spring our rose regarding the generated These our in ethanol to are us with align specifically margins. the corn over margin XXXX facilities higher ability July, average strengthening of per supplies June. just on average $XX campus margins solid over the gallon. margins, optimism increased crush QX in we In QX, These from QX these with crush crush In reflecting the and above to profit, million in to export Chicago compared Chicago XXXX. growing per call up expressed demand. over QX, million $X.XX gallon programs to and $X.XX margin crush further improvements $X our

long on construction July to expect our or consolidated believe our moment. CCS strong, the QX. proposed add with biannual July Administration Columbia of said, carbon occurs were lower our pipelines. and also in on law the an losses Act dioxide SAFE carbon our moratorium carbon in respect our we recently, dynamic. the signed Illinois regulatory a of negatively ongoing realized in and we've more expanding wet finalizes cost financial detail facility maintenance mill the carbon stringent EBITDA construction To on federal initiatives, particularly adjusted That and industry current its although with results the new requirements repairs net establishing storage, and projects, basis. will revenue carbon schedules. anticipate This I'll compliance Rob preventative The Assuming aligns a streams. whichever clarity until and by insurance pipelines CCS loss into remains capture will actively act also on for CCS act margins profitability discuss permitting do all deliver affect hedging greater requirements. facilities, initiative at the project CCS. rules developments review to fluctuations and solid sustainable activities. on our strategic that and and and outage, imposes safety, with We market financial our prices, beginning and expect in XX, new sooner. will or results feed Materials Pipeline timing been term, X, market other on CCS the generate remain operations in XXXX this XXXX, QX, our we Most impacted Safety This We'll financial safety Hazardous increased

For low front, carbon instance, carbon markets are historic nascent. prices markets voluntary at the economic are standard fuel on the and in lows current

is As with to our CCS difficult the the environmental be the the $XX such, certainty life will a with project. the dollar ton attributes beyond that it of at proposed over project credits associated began value tax values of of metric XXQ

plans partners, benefits. the risks our to we appropriate various need to this and Alto approach retaining the to financial take best capital-light to resources bear various Given project, its a align while

important the we partners so right table, continue the bring we dynamics, Vault evolving collaboratively believe we're it's that work to and these doing parties. to we with other Given effectively as

operations. to Moving

our we binding within demonstrating budget and is operational and prior over wet performance. mill April. discussed, now previously also was campus maintenance in repairs Pekin This scheduled As conducted improvements time on completed outage

For XXXX. gallons unit. on example, at The and campus alcohol million the improving the mill while Pekin XX taking specialty wet utilization track fully production more advantage fixed economics. is capacity of operational cost to we increased in now summer or per We sales remain of achieve season reducing our driving

product. the in and our increase new proximity encouraged loading reduce will access and costs the demand us when building and to a campus dock river, to the from barge customers. overall We're provide which We're second -- the are on critical Pekin Gulf capitalizing to gives existing We existing transportation that for volume, export our ability redundancy. our

cost the dock expect than We $X of the be to less second million.

destination time our Now these when We a facilities value built and differentiated at review let's plants. plans proposition. pivot Western a solid to delivered

declined, major we to both technology prices. vendor, which sale Valley, our January oil At Also equipment them by We plants plant process had upon to to levels of that into As routine resumed improve and these higher this other operating are feed the flows. term produce activities, competition prior or and efficiency in to July to our garner that protein to long corn the made continue values additional challenges the include significant and operating oil at our began achieve from hot one and routine installation systems, carbon accelerated operate the plant of is system. with residuals. operations and plant corn high to products value, flushing investing as high-protein their we plant of in work year, goal maintenance modifications optimize in and the water streams included capacity our in regional the cleanings our part profitability. balance QX results. Magic performing to could excess due tuning early of the crush that results of to system ability or revenue corn production In negative target plants. we margins We encouraged including adjustments harvesting evaluating of basis broaden initial design process assets our and idled address increased mass increase portfolio Ultimately, to in the optimize and inhibited higher we and protein equipment restart,

a the we at of Columbia the complete of by and We anticipate we to later ensure summer. centrifuge expect that We improved intend to rates quality picture QX, as system this modifications the in limitations general the plant our production respect we system with in production so the and having plant the effectiveness coming addressing the balanced do weeks We performance increase significantly carefully clearer experienced QX. remains In upgrades. to meet to expectations. rates our process products

profitability result, As you working the coming summer ways over facility's continues. more increased a capacity improvements information anticipate we to We're as further the with driving on QX to other rates season in and share currently improve hope and utilization the quarters.

the received support honors efforts EcoVadis sustainability our have like a improve customers XX% turn service their -- globally from assessed. rating plants our sustainability Medal that ICP of footprint. corporate to call Bronze July, In to lower business our I to sets is and EcoVadis, XXXX that to Pekin I'd and our Before carbon of continue note which sustainability Rob, the sustainability standards. rating companies recognized the top indicated

the turn Now I'll Rob. to call

Robert Olander

second compared review of I'll of for the the Bryon. results quarter financial Thanks, to quarter second XXXX the XXXX.

XX.X XX.X relatively of with consistent sold during XXXX. we XXXX, QX, During sold gallons, QX gallons million million

due million in XXXX lower QX, net $XXX compared market in million sales QX, However, were to XXXX. $XXX prices to XXXX,

remained materially not Although ethanol gross decreased, lower prices prices therefore, did margins consistent, impact crush ethanol profit.

increase its million derivative $XX million average even margins $X.X impacted bottom QX, XXXX. QX, loss an ingredients XXXX. over QX, compression for This considering XXXX profit $XX during to XXXX, million, soybean a QX Total is supply, and revenues in yet costs, of was decreased protein growth compared gross demand compared the production campus renewable prices soy due million our on improved the XXXX from Various to of line for and up quarter production crush, in gross return ago, over in results, of XX% our the fact, gross largely to QX, down driven in losses. profit after our a XXXX, year from XX% in essential result while meal profit to contributed In consequence $X.X a QX by Pekin factors diesel.

impacted at negatively renewable pricing. carbon bottom Next, Columbia revenue by and line were historic our low fuel plant results market

cost, the due outage cost $X.X Additionally, grind performance to important heading fewer X.X revenue into completed our $X.X wet and facilities and as initiatives, those are the Bryon costs costs. include maintenance than activities, with in the mill gallons. of wet XXXX. million on Pekin in million QX, improve extent that substantial call, mill approximately for outage QX. and QX, our more opportunity dry outage required This It's repairs note downtime bi-annual we operational production million last associated including to to and the associated planned the outlined The lost does nature not with ICP outages maintenance extended our

of in on a track costs, basis, expense the million XXXX repairs During total and plants. estimate a portion our and expense, maintenance we million recorded consolidated for remain maintenance repairs QX, we of for in all and including $XX.X outage on $XX

to in Finally, realized gains quarter million derivative million were XXXX. $X.X the XXXX losses of in QX for $X.X same for derivative compared realized

of year as variety the volatility a different strategies management normal commodities to course throughout As covered business. a of employ the of mitigate we previously, risk price

in including million income net to in million consolidated $X.X XXXX for Our of million QX was $X.X derivatives. and Adjusted related EBITDA net wet for of adjusted mill to in gains to including on in million, $X.X positive million compares million, $X.X in XXXX XXXX. QX, compared $X.X costs our $X.X was EBITDA loss QX, losses realized outage million QX, of negative XXXX. derivative $XX This realized the

our million million. in was the June term conditions of net loan we $XX bringing $XX.X $XX subject As of of plan balance line total loan $XX for cash was $XX use CapEx, $XX.X certain with operating under under a to XX, our and QX, million million, year-to-date borrowing $X.X $XX the million, our million bringing and in our credit million, to availability facility. operating total line million to including XXXX, in invested our total $X.X used our million We activities, year-to-date XXXX. In

with strong, adjusted remain we I'll margins the in we to With July QX. production positive our to we EBITDA meet and if As continue Bryon are that, for pleased turn Bryon. deliver back noted, they to the and expect call targets,

Bryon McGregor

begin years many Thank We've fruition, been crush to come. we strengths The XXXX. our our of to second us to ability half bolstering to plan quarter profitability to we're leverage second the margins you, in Operator, opportunities. Rob. excited completed our from the come positive initiatives ready our our in improve to Q&A. our executing outages positioned for to major continue serve benefit We're to customers and planned and see

Operator

now will our momentarily [Operator we will session. question-and-answer assemble Instructions] begin to this time, We At the roster. pause

question first Wainwright. comes Sameer with H. from Your Joshi C.

Sameer Joshi

start last me with Let about the are the discussed $XX the million CapEx target with on last line guidance. point in you of --

What $X.X half? slated have of is this you spent far, the million. second rest CapEx So for the

Robert Olander

got approved, less will I later but We've of in for variety a year. that spent different year-to-date, projects we XXXX. is the slated we've planned and that have reviewed of CapEx half sure. also Yes, we've there spend second more this note and

Sameer Joshi

you're that? Any focused for areas particular on

Robert Olander

we things involved that. efficiencies, increasing A lot the of like before, plant systems, that about various areas upgrading things the talked

Bryon McGregor

include $X million new from also the pipeline... new loading The Would the facility.

Robert Olander

The new yes. alcohol dock, Right.

Sameer Joshi

achieving that upgrades. it these levels Is talked about each of like quantify XQ upgrades at being what quantifying the say, various for, these capacity increasing can as utilization maintenance these and levels plants? are like what a there then and you And are And of done, you you utilization -- were of -- each XQ and at expected before? result

Bryon McGregor

is talking we it from the Sameer, depends prior it what in what why seeing specific details about, it depends between and we're XX% somewhere an didn't So remarks. just improvements example, -- production about prepared And on that's -- But again, event. provide we've XX% as overall and to the we're to in quality including improvements improvement -- that I'm production. would both beverage -- fuel, that XX% would also specialty essential out A that of lot mill. we've a products in sorry, come it seen and Overall, include yeast and specialty up ethanol out, but our the essential XX% ingredients. wet come of seen

pleased. hope improvement over we very to overall, as -- operations. And continue line that we continued further the in the to So see out

Sameer Joshi

And other that OpEx up through the this in was there run have was one slight OpEx. I then bump maybe slightly. clarification, but these reason a line, not the costs know just for OpEx

Robert Olander

a there's I mean Yes. OpEx category. into the going lot in other

through forward of costs related line run that to One project, note upfront the of carbon storage path and capture approved some things we've the to is the until officially our item.

Sameer Joshi

about costs, okay Some out it.

thanks. Okay

Bryon McGregor

picked year-over-year. clearly Sameer activity picked sorry, clearly up... has up Yes, activity that That

portion that material for so account would it. of And a

Sameer Joshi

I'll take other questions off-line. my

Operator

comes question from Craig-Hallum Capital Group. next with Your Stine Eric

Eric Stine

carbon So on just capture.

and in So of can matches X are a of the But kind also in appreciate steps that July I that the know how were line interim. I of time targeted number up. XX there

the and the your that, into some with you about where about in that, your So they're Class thinking financing versus the various region running issue. how steps, those it's investment other how just think curious partners same negotiating permit, whether region are not thinking about an X maybe partners

some just great. thoughts on be would So that

Bryon McGregor

Sure.

We're having right address collaborative to They've and think working I arise. picked they issues we diligently been ahead. clearly our we that in mentioned cooperative As as partners. very prepared the remarks,

those enacted that need risks to you prepared that adjustments maybe SAFE reiterate and the Illinois are... would that the not that... example, As what pivoting is fully addressing make issues and and was wouldn't to an CCS are otherwise otherwise the those I need in not act assuming that and are you there are beforehand. recently in to organized also to doing you those take remarks, sheet, approach, we to you right? in it's all be so additional that in color way from that that parties you able and have don't and best an risks, think if in there there capital-light on just the to that but risks it but make were handle doing way need was balance soon

X-year out when to do for think you do that's that to if awaiting that right and and minimum at you you processes start make until classic So of permit, permit compression. as a -- that before a start final to assume Class you your as decisions Class need right, do and X ordering of from permits? have purchasing start approved you submitted example, And be the an approval the EPA. box you those your got you in X want Or place. program, your and Do to you've about have wait some to other

those when a all things try too approach? you're finance to calculus all So in in Or that up this There parties you into future? environmental are those out to do are you willing that come or a come well into through the that attributes going process. and the of things carbon those are working example, are credits number much? terms. that they things those values to that So giving to wait the appropriate consideration. their sell few the Is And advance retain are there for as are are are an the

don't and know and Eric, but helpful, that's if it's I return. So risk balance in

Eric Stine

some with the you right are -- or with partners Vault needed with of that with the with that wondering feel do flexibility you deal the to parties in negotiations just that effect, given the are willing situation? are net mean that those I financial Sure.

Bryon McGregor

Correct.

Eric Stine

And month for, just to got a so. to then you've restart, good going the Magic or turning and Valley, been that maybe so hear what, it's

what convinced like Just that little bit out approach terms you're of to a maybe be it kind out to plants? measured it, rolling you're in it on sounds to the where decision see of -- need this track? do -- technology the this curious right push you other but the is does like what you've taken right And to in

Bryon McGregor

to out expand process took equipment and pleased steps with additional So we far leniency that the are give we've so into the important. seen have have seeing around additional that able at of so the that capacity to add we're to what you aligned running XX% fully we be don't of everything value of all to the time today was And that probably today.

-- our prudent of are but think of been that still, see investors certainly investment. we implemented system define -- not -- within regards with So and the it's had option goals and to other open time, we the and achieve -- capacity able we able that we we with put be it's successes technology be the of would have, what being measured into long question harvesting the and within waiting targets saw I success we've only place or your to to so but is to this an as that because assets we to before portfolio results achieve see to maximum the that achieve to a than established to answer think the project to applications we given

going to before that So sites. we're through what forward do any at with decisions want to going see we our or we other regards make to comments

Operator

with Your from Dopierala Capital. Justin next question comes DOMO

Justin Dopierala

mentioned call Is expecting something tack thing. later prepared would this In to prior your last then? the summer. be update you're a next on Valley to remarks, Magic that to earnings that that you that Just

Bryon McGregor

there's that call. it disclosure, a to that appropriately material may question. It's sure Otherwise, third make that. -- the extent we the yes, do line out with Well we'll good quarter

penetration product what about were product. higher to is get think talking placement to it, oil you're and the really about you proteins reaching about you talking regards not and that only If for corn you're and with of that hoping being place capacity, achieving but able your also

we'd ear, we information that guess provide I but is whether we'll what say sure it by it's -- make let's to like appropriate. as So play

Justin Dopierala

the assets And success well. be long the a would Western imagine able that I monetize probably of go as to ability towards to way your

Bryon McGregor

that say? certainly be Well, Would it fair hurt it. wouldn't to

Justin Dopierala

were You higher...

Bryon McGregor

either these mean to asset It hasn't I right? have assets. us hurt are that on, unique

shareholders, whether it's is. So that whichever we maximize it way value for

Justin Dopierala

Western Pekin. And the impact gross of the shutdown was could if as costs far wondering you as highlighted being of well that idled you quantify Magic I Valley margin? as

Robert Olander

But environment to down typically was We those margin the don't less recall, when year you this plant specifics. of provide crush earlier favorable. Yes. bring chose we the levels if

underscores in more also to our we're that which challenging why losses, which technology, is And large, crush reason our kind of margins our so profitability the of environments. offset incorporating this operating and market kind improve and

to it's the opportunity So case. in kind cost hard that of quantify lost

Justin Dopierala

And crush for is, doubled. just guys last my I as you have margins July, noted, question guess you in

uncapitalized am or I coming major So should positive announcing by a Are just any be and your guidance conservative? of little out Or income. you QX bit of? versus EBITDA we adjusted net guiding aware ultra guys being are positive there costs surprised towards

Robert Olander

Yes, pleased results. being take with what's from that in Justin, to and be stem going the now I'll conservative I us our also us being financial behind we transparent comments In but July try on. mean, one.

operate on continue the produce markets. and the the at margins be crush the in levels are, stated we favorable commodity as our Keep we in call, it As -- mind, remain as we very we a long should quarter. to strong,

And so flow. ebb things and

Bryon McGregor

the like. an you are the losses just impact as were unrealized you're net some control not gains losses and there and gains realized that may And in able may and example, things or that derivatives and beyond be to income

falls under over probably deliver. has CAM. So in promise, conservative -- it the

Justin Dopierala

to Hold you it.

Bryon McGregor

will... you know I

Operator

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

Bryon McGregor

We a you, see Annual us hope support. September, In appreciate Thanks, and your Kaley. ongoing to for joining we everyone, feedback good Conference. Thank Have Right you at day. today. HCA the

Operator

presentation. attending today's for you Thank

disconnect. now may You

Alto Ingredients (ALTO) 6 Aug 242024 Q2 Earnings call transcript