Alto Ingredients (ALTO) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $236.5 million, down from $317.3 million year-over-year, with a net loss of $3.1 million compared to net income of $7.6 million in Q2 2023, driven by lower prices, higher repairs, and derivative losses.

• Pekin Campus delivered over $10 million in gross profit in Q2 2024, up from $4 million in Q1 2024, aided by improved capacity utilization and reduced fixed costs.

• Magic Valley facility was hot-idled in January 2024 and resumed operations in July after upgrades, with expectations to increase production rates.

• Strategic initiatives focused on capital upgrades, maintenance, expanding higher-margin specialty alcohols, carbon capture and storage (CCS), and sustainability certifications.

• Sustainability efforts were recognized with a 2024 Bronze Medal Sustainability Rating from EcoVadis for the ICP and Pekin plants.

Financial highlights

• Q2 2024 net sales were $236.5 million, down 25.5% year-over-year; gross profit was $7.6 million (3.2% margin), down from $17.2 million (5.4%) in Q2 2023.

• Net loss available to common stockholders was $3.4 million ($0.05 per share) in Q2 2024, compared to net income of $7.2 million ($0.10 per share) in Q2 2023.

• Adjusted EBITDA for Q2 2024 was $(5.9) million, including $2.9 million in realized derivative losses and $5.4 million in outage costs, versus $14.0 million in Q2 2023.

• Cash and cash equivalents at June 30, 2024 were $27.1 million, with $95 million in borrowing availability.

• Working capital at June 30, 2024 was $103.9 million; long-term debt was $91.0 million; fixed-charge coverage ratio was 4.29.

Outlook and guidance

• Positive Adjusted EBITDA is expected for Q3 2024 if strong margins and production targets are maintained.

• Pekin Campus is on track to achieve 90 million gallons or more of specialty alcohol sales in 2024.

• $25 million in capital expenditures planned for 2024, with $9.3 million spent year-to-date and more slated for H2, including a $3 million new loading dock.

• CCS project progress continues, but faces regulatory and market uncertainties; capital-light approach with partners is emphasized.

• Exploring new market opportunities such as sustainable aviation fuel, blue ethanol, and synthetic natural gas.