Alto Ingredients Files Q3 2024 10-Q

TL;DR

Alto Ingredients (ALTO) filed its Q3 2024 10-Q. Check financials.

AI Summary

Alto Ingredients, Inc. filed its 10-Q for the quarterly period ended September 30, 2024. The company, formerly known as Pacific Ethanol, Inc., is incorporated in Delaware and headquartered in Sacramento, California. This filing provides an update on its financial performance and operations for the third quarter of 2024.

Why It Matters

This filing provides investors with the latest financial results and operational details for Alto Ingredients, Inc., crucial for understanding the company's current performance and future outlook.

Risk Assessment

Risk Level: medium — Quarterly reports can reveal significant financial shifts, operational challenges, or strategic changes that impact a company's risk profile.

Key Numbers

• 000-21467 — Commission File Number (Identifies the company's filing with the SEC)
• 41-2170618 — IRS Number (Employer Identification Number for tax purposes)

Key Players & Entities

• Alto Ingredients, Inc. (company) — Registrant
• September 30, 2024 (date) — Quarterly period end date
• Pacific Ethanol, Inc. (company) — Former company name
• Delaware (location) — State of incorporation
• Sacramento, California (location) — Business address

FAQ

Key Financial Figures

• $0.001 — ange on Which Registered Common Stock, $0.001 par value ALTO The Nasdaq Stock Market

Filing Documents

• ea0220173-10q_altoingred.htm (10-Q) — 1019KB
• ea022017301ex31-1_altoingred.htm (EX-31.1) — 10KB
• ea022017301ex31-2_altoingred.htm (EX-31.2) — 10KB
• ea022017301ex32-1_altoingred.htm (EX-32.1) — 6KB
• 0001213900-24-095907.txt ( ) — 4768KB
• alto-20240930.xsd (EX-101.SCH) — 34KB
• alto-20240930_cal.xml (EX-101.CAL) — 35KB
• alto-20240930_def.xml (EX-101.DEF) — 168KB
• alto-20240930_lab.xml (EX-101.LAB) — 315KB
• alto-20240930_pre.xml (EX-101.PRE) — 176KB
• ea0220173-10q_altoingred_htm.xml (XML) — 646KB

FINANCIAL STATEMENTS. 1

ITEM 1. FINANCIAL STATEMENTS. 1 Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023 1 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) 3 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited) 4 Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) 5

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 6 ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 15 ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 29 ITEM 4.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES. 30 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. 31 ITEM 1A. RISK FACTORS. 31 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. 44 ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 44 ITEM 4. MINE SAFETY DISCLOSURES. 44 ITEM 5. OTHER INFORMATION. 44 ITEM 6. EXHIBITS. 45

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS. ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2024 2023 (unaudited) * ASSETS Current Assets: Cash and cash equivalents $ 33,591 $ 30,014 Restricted cash 4,903 15,466 Accounts receivable, net (net of allowance for credit losses of $ 50 and $ 85 , respectively) 52,038 58,729 Inventories 48,014 52,611 Derivative instruments 36 2,412 Other current assets 6,568 9,538 Total current assets 145,150 168,770 Property and equipment, net 238,892 248,748 Other Assets: Right of use operating lease assets, net 19,283 22,597 Intangible assets, net 8,057 8,498 Other assets 6,029 5,628 Total other assets 33,369 36,723 Total Assets $ 417,411 $ 454,241 * Amounts derived from the audited consolidated financial statements for the year ended December 31, 2023. See accompanying notes to consolidated

financial statements

financial statements. 1 ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) (in thousands, except par value) September 30, December 31, 2024 2023 (unaudited) * LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 17,205 $ 20,752 Accrued liabilities 14,255 20,205 Current portion – operating leases 4,440 4,333 Derivative instruments 3,394 13,849 Other current liabilities 5,808 6,149 Total current liabilities 45,102 65,288 Long-term debt, net 83,342 82,097 Operating leases, net of current portion 15,740 19,029 Other liabilities 9,302 8,270 Total Liabilities 153,486 174,684 Commitments and Contingencies (Note 6) Stockholders' Equity: Preferred stock, $ 0.001 par value; 10,000 shares authorized; Series A: 1,684 shares authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023; Series B: 1,581 shares authorized; 927 shares issued and outstanding as of September 30, 2024 and December 31, 2023; liquidation preference of $ 18,075 as of September 30, 2024 1 1 Common stock, $ 0.001 par value; 300,000 shares authorized; 76,625 and 75,703 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively 77 76 Non-voting common stock, $ 0.001 par value; 3,553 shares authorized; 1 share issued and outstanding as of September 30, 2024 and December 31, 2023, respectively — — Additional paid-in capital 1,043,501 1,040,912 Accumulated other comprehensive income 2,481 2,481 Accumulated deficit ( 782,135 ) ( 763,913 ) Total Stockholders' Equity 263,925 279,557 Total Liabilities and Stockholders' Equity $ 417,411 $ 454,241 * Amounts derived from the audited consolidated financial statements for the year ended December 31, 2023. See accompanying notes to consolidated

financial statements

financial statements. 2 ALTO INGREDIENTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net sales $ 251,814 $ 318,127 $ 728,911 $ 949,315 Cost of goods sold 245,854 313,966 717,798 931,137 Gross profit 5,960 4,161 11,113 18,178 Selling, general and administrative expenses ( 7,510 ) ( 8,488 ) ( 24,403 ) ( 24,281 ) Gain on sale of assets 830 — 830 — Asset impairments — — — ( 574 ) Loss from operations ( 720 ) ( 4,327 ) ( 12,460 ) ( 6,677 ) Interest expense, net ( 1,867 ) ( 2,000 ) ( 5,170 ) ( 5,299 ) Income from cash grant — 2,812 — 2,812 Other income, net 146 26 358 104 Loss before provision for income taxes ( 2,441 ) ( 3,489 ) ( 17,272 ) ( 9,060 ) Provision for income taxes — — — — Net loss $ ( 2,441 ) $ ( 3,489 ) $ ( 17,272 ) $ ( 9,060 ) Preferred stock dividends $ ( 319 ) $ ( 319 ) $ ( 950 ) $ ( 946 ) Net loss available to common stockholders $ ( 2,760 ) $ ( 3,808 ) $ ( 18,222 ) $ ( 10,006 ) Net loss per share, basic and diluted $ ( 0.04 ) $ ( 0.05 ) $ ( 0.25 ) $ ( 0.14 ) Weighted-average shares outstanding, basic and diluted 73,835 73,191 73,364 73,464 See accompanying notes to consolidated

financial statements

financial statements. 3 ALTO INGREDIENTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Nine Months Ended September 30, 2024 2023 Operating Activities: Net loss $ ( 17,272 ) $ ( 9,060 ) Adjustments to reconcile net loss to Net cash provided by operating activities: Depreciation and amortization 17,860 17,382 Gains on derivative instruments ( 9,002 ) ( 2,463 ) Gain on sale of assets ( 830 ) — Asset impairments — 574 Stock-based compensation 3,650 2,718 Amortization of deferred financing fees 761 793 Amortization of debt discount 602 599 Credit loss recovery ( 23 ) ( 54 ) Changes in operating assets and liabilities: Accounts receivable 6,714 2,644 Inventories 8,434 9,536 Other assets 4,702 3,253 Operating leases ( 4,424 ) ( 4,014 ) Accounts payable and accrued liabilities ( 4,903 ) ( 11,679 ) Net cash provided by operating activities 6,269 10,229 Investing Activities: Additions to property and equipment ( 9,788 ) ( 24,611 ) Proceeds from sale of assets 400 — Deferred purchase price payments for Eagle Alcohol ( 2,800 ) ( 3,500 ) Net cash used in investing activities ( 12,188 ) ( 28,111 ) Financing Activities: Net (payments on) proceeds from Kinergy's line of credit ( 117 ) 6,847 Stock repurchases — ( 2,683 ) Preferred stock dividends paid ( 950 ) ( 946 ) Net cash (used in) provided by financing activities ( 1,067 ) 3,218 Net change in cash, cash equivalents and restricted cash ( 6,986 ) ( 14,664 ) Cash, cash equivalents and restricted cash at beginning of period 45,480 49,525 Cash, cash equivalents and restricted cash at end of period $ 38,494 $ 34,861 Reconciliation of total cash, cash equivalents and restricted cash: Cash and cash equivalents $ 33,591 $ 26,162 Restricted cash 4,903 8,699 Total cash, cash equivalents and restricted cash $ 38,494 $ 34,861 Supplemental Information: Interest paid $ 6,211 $ 6,0

financial statements

financial statements. 4 ALTO INGREDIENTS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited, in thousands) Preferred Stock Common Stock Additional Paid-In Accumulated Accum. Other Comprehensive Shares Amount Shares Amount Capital Deficit Income Total Balances, January 1, 2024 927 $ 1 75,703 $ 76 $ 1,040,912 $ ( 763,913 ) $ 2,481 $ 279,557 Stock-based compensation — — — — 1,142 — — 1,142 Restricted stock issued to employees and directors, net of cancellations and tax — — 1,315 1 ( 1 ) — — — Preferred stock dividends — — — — — ( 315 ) — ( 315 ) Net loss — — — — — ( 11,725 ) — ( 11,725 ) Balances, March 31, 2024 927 $ 1 77,018 $ 77 $ 1,042,053 $ ( 775,953 ) $ 2,481 $ 268,659 Stock-based compensation — — — — 1,646 — — 1,646 Restricted stock cancellations and tax, net of issuances to employees and directors — — ( 373 ) — ( 1,060 ) — — ( 1,060 ) Preferred stock dividends — — — — — ( 316 ) — ( 316 ) Net loss — — — — — ( 3,106 ) — ( 3,106 ) Balances, June 30, 2024 927 $ 1 76,645 $ 77 $ 1,042,639 $ ( 779,375 ) $ 2,481 $ 265,823 Stock-based compensation — — — — 862 — — 862 Restricted stock cancellations and tax, net of issuances to employees and directors — — ( 20 ) — — — — — Preferred stock dividends — — — — — ( 319 ) — ( 319 ) Net loss — — — — — ( 2,441 ) — ( 2,441 ) Balances, September 30, 2024 927 $ 1 76,625 $ 77 $ 1,043,501 $ ( 782,135 ) $ 2,481 $ 263,925 Balances, January 1, 2023 927 $ 1 75,154 $ 75 $ 1,040,834 $ ( 734,643 ) $ 1,822 $ 308,089 Stock-based compensation — — — — 752 — — 752 Restricted stock issued to employees and directors, net of cancellations and tax — — 1,893 2 ( 8 ) — — ( 6 ) Stock repurchases — — ( 860 ) ( 1 ) ( 1,681 ) — — ( 1,682 ) Preferred stock dividends — — — — — ( 312 ) — ( 312 ) Net loss — — — — —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND BASIS OF PRESENTATION. Organization and Business – The consolidated financial statements include, for all periods presented, the accounts of Alto Ingredients, Inc., a Delaware corporation, and its direct and indirect wholly-owned subsidiaries (collectively, the "Company"), including Kinergy Marketing LLC, an Oregon limited liability company ("Kinergy"), Alto Nutrients, LLC, a California limited liability company, Eagle Alcohol Company, LLC, a Delaware limited liability company ("Eagle Alcohol"), Alto Op Co., a Delaware corporation, Alto Pekin, LLC, a Delaware limited liability company, and Alto ICP, LLC, a Delaware limited liability company, and the Company's production facilities in Oregon and Idaho. The Company produces and distributes renewable fuel, essential ingredients and specialty alcohols. The Company also specializes in break bulk distribution of specialty alcohols produced by the Company and third parties. The Company's production facilities in Pekin, Illinois are located in the heart of the Corn Belt. The Company's two production facilities in Oregon and Idaho are located in close proximity to both feed and renewable fuel customers. The Company has a combined alcohol production capacity of 350 million gallons per year and produces, on an annualized basis, over 1.6 million tons of essential ingredients, such as dried yeast, corn protein meal, corn protein feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. In addition, the Company markets and distributes renewable fuel produced by third parties. The Company focuses on five key markets: Health, Home & Beauty ; Food & Beverage ; Industry & Agriculture; Essential Ingredients ; and Renewable Fuels . Products for the Health, Home & Beauty market include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners. Products for the

Financial Statements – The accompanying unaudited consolidated financial statements and related notes have been prepared

Financial Statements – The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note 1 to the consolidated financial (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Accounts Receivable and Allowance for Credit Losses – Trade accounts receivable are presented at original invoice amount, net of the allowance for credit losses. The Company sells specialty alcohols to large consumer product companies, sells renewable fuel to gasoline refining and distribution companies, sells essential ingredients such as dried yeast for human and pet food and to animal feed customers, including distillers grains to export markets, sells those same and other feed products to dairy operators and animal feedlots and sells corn oil to poultry and biodiesel customers, in each case generally without requiring collateral. The carrying amount of accounts receivable is reduced by a valuation allowance that reflects the Company's best estimate of the amounts that will not be collected. The Company regularly reviews accoun

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