Alto Ingredients, Inc. · NASDAQ:ALTO
Alto Ingredients — Q2 2023 Earnings Presentation
26 slides from Alto Ingredients's earnings presentation, Aug 7, 2023
Slide 1: Alto Ingredients, Inc. Q2 2023 Investor Presentation
Alto Ingredients, Inc. Q2 2023 Investor Presentation August 7, 2023 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements and information contained in this communication that refer to or include Alto Ingredients’ estimated or anticipated future results or other non-historical expressions of fact are forward-looking statements that reflect Alto Ingredients’ current perspective of existin
Slide 3: Transforming grain into high-margin components used in consumer and commercial products
Transforming grain into high-margin components used in a wide range of consumer and commercial products 3
Slide 4: Optimizing Asset Base and Reducing Carbon Footprint
Optimizing Asset Base and Reducing Carbon Footprint Increasing High-margin Product Sales and Growing EBITDA • Expanding production: corn oil, GNS/specialty alcohol, yeast, etc. • Implementing efficiency initiatives: corn storage, natural gas pipeline, biogas RNG, and operating & equipment upgrades •
Slide 5: Investing in Premier Assets, Expanding Markets Served
Investing in Premier Assets, Expanding Markets Served Major producer and distributor of specialty alcohols and essential ingredients Making Everyday Products Better: MAGIC VALLEY COLUMBIA Burley, ID • Health, Home & Beauty Boardman, OR • Food & Beverage PEKIN CAMPUS Pekin, IL • Essential Ingredients
Slide 6: Expanding High-quality Specialty Alcohol
Expanding High-quality Specialty Alcohol • Marketing new offerings: 192 proof GNS & ultra low-moisture 200 proof GNS • Attracting new and existing spot purchase customers • Garnering qualifications for the 2024 annual contracting period • Started: • Expected incremental annual Q1 2022 EBITDA run rat
Slide 7: Expanding High-Margin Offerings
Expanding High-Margin Offerings • Completed corn oil extraction and high protein technology installation at Magic Valley • Aligning operating systems to ensure optimal efficiency at Magic Valley • Expect to achieve full value for these products in Q4 2023 • Planning to roll out corn oil extraction a
Slide 8: Developing Primary Yeast Production
Developing Primary Yeast Production • Completed successful product trials • Continuing front-end engineering and design (FEED) study to determine plan, schedule and budget • Inflationary pressures have impacted • Negatively, the cost of installation to be higher than originally anticipated • Positiv
Slide 9: Pursuing Carbon Capture and Sequestration
Pursuing Carbon Capture and Sequestration • Inflation Reduction Act of 2022 Section 45Q tax incentive improves economics • $85 per metric ton for 12 years • ~700,000 MT/year capacity at Pekin Campus • Above the Mount Simon Sandstone formation and near the Illinois Basin • Selected FEED study and dev
Slide 10: Increased Corn Storage Improving Efficiency
Increased Corn Storage Improving Efficiency • Installed silo at Pekin campus to build inventory to mitigate interruptions, such as holidays, weather • Fully operational in Q2 2023 • Reducing cost of delivered corn • Lowering silo cleaning expense • Increasing reliability of operations • Started: • E
Slide 11: Enhancing Access to Natural Gas
Enhancing Access to Natural Gas • Completed new natural gas pipeline FEED study and working on initial routing steps • Advancing to definitive land agreements and construction permit application process • Installation of new natural gas pipeline to: • Improve energy procurement, consistent with sust
Slide 12: Evaluating Power Cogeneration
Evaluating Power Cogeneration • Initiated financing conversations • Completed FEED study • To replace existing energy production and lower energy costs • Leverages steam from production generating MW at Pekin • Replaces obsolete equipment • Addresses energy needs • Provides steam needed for processi
Slide 13: Expanding Annualized Adj. EBITDA Run Rate
Expanding Annualized Adj. EBITDA Run Rate Diversifying revenue, investing in assets and optimizing facilities Increasing annualized Adj. EBITDA by ~$67M by end of 2025 and ~$125M by end of 2026 ($ millions) ~$125 $120.0 Carbon Capture & $30 Sequestration $100.0 Cogeneration $15 $80.0 Primary Yeast ~
Slide 14: Producing High Value Products
Producing High Value Products Health, Home & Beauty Food & Beverage Essential Ingredients Renewable Fuels • API Grade Ethyl Alcohol • Grain Neutral Spirits • Alto Yeast • Transportation Fuel • USP Grade Ethyl Alcohol • Vinegar • Corn Protein • Ethanol • Industrial Grade Ethyl • Corn Oil and • Corn O
Slide 15: Certifications Create Differentiation
Certifications Create Differentiation Deepen Relationships and Open Doors to New Customers Specialty alcohols: • More challenging to produce • Require certifications, audit trails and paperwork • Create significant product performance impact for a small percentage of their cost 15
Slide 16: Expanding Customer Base
Expanding Customer Base Blue chip customers prioritize Alto’s certifications, reliability, service and quality Sample list follows: Health, Home & Beauty Food & Beverage Essential Ingredients Renewable Fuels 16
Slide 17: Sustainability: Committed to Carbon Reduction Targets
Sustainability: Committed to Carbon Reduction Targets Earned 2 EcoVadis Silver Medals, 80th percentile among peers Completed materiality survey and initial roadmap • Strengthened environmental, health, safety, and security policy and objectives • Improved Code of Ethics and Supplier Code of Conduct
Slide 18: Expect Positive Q3 2023 Adj. EBITDA
Expect Positive Q3 2023 Adj. EBITDA • Improving performance • Generated positive $16M Adj. EBITDA for Q2 2023 • Expect positive Adj. EBITDA for Q3 2023 • Strong liquidity • $49M in availability under operating line of credit • $40M committed term loan balance • $25M option for additional term loan f
Slide 19: Leveraging Technology to Capture Opportunity
Leveraging Technology to Capture Opportunity Optimizing Asset Base and Reducing Carbon Footprint • Capturing market trends and opportunities with expanded offerings • Investing in growing high-margin product sales and EBITDA • Expanding production: corn oil, GNS/specialty alcohol, yeast, etc. • Impl
Slide 20: Appendix
Appendix
Slide 21: Experienced Leadership Team
Experienced Leadership Team Bryon McGregor Mike Kandris Rob Olander, CPA Jim Sneed (1) Auste Graham President & CEO Director and Interim COO Chief Financial Officer Chief Commercial Officer General Counsel 16 years with Alto 15 years with Alto 16 years with Alto 29 years with Alto 2 years with Alto
Slide 22: Senior Management with Deep Bench Strength
Senior Management with Deep Bench Strength Todd Benton(1) Dan Croghan Michael Kramer Patrick McKenzie VP, Site Manager at Pekin VP, Eagle General Manager VP, Treasurer VP, Business Development 25 years with Alto 2 years with Alto 16 years with Alto and Engineering 13 years with Alto Prior Experience
Slide 23: Consolidated Statements of Operations
Consolidated Statements of Operations Unaudited, in thousands, except per share data Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net sales $ 317,297 $ 362,189 $ 631,188 $ 670,307 Cost of goods sold 300,116 353,345 617,171 656,690 Gross profit 17,181 8,844 14,017 13,617
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation
Slide 25: Use of Non-GAAP Measures
Use of Non-GAAP Measures Management believes that certain financial measures not in accordance with generally accepted accounting principles ("GAAP") are useful measures of operations. The company defines Adjusted EBITDA as unaudited consolidated net income (loss) before interest expense, interest i
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Unaudited, in thousands Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income (loss) $ 7,595 $ 22,115 $ (5,571) $ 19,513 Adjustments: Interest expense 1,734 319 3,299 519 Interest income (190) (145) (411) (303) Asset impairments — — 574 —