Alto Ingredients, Inc. · NASDAQ:ALTO
Alto Ingredients — Q3 2023 Earnings Presentation
26 slides from Alto Ingredients's earnings presentation, Nov 6, 2023
Slide 1: Alto Ingredients, Inc. Q3 2023 Investor Presentation
Alto Ingredients, Inc. Q3 2023 Investor Presentation November 6, 2023 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements and information contained in this communication that refer to or include Alto Ingredients’ Statements and information contained in this communication that refer to or include Alto Ingredients’ estimated or anticipated future results or other non-historical expression
Slide 3: Transforming grain into high-margin components
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 • Implementing efficiency initiatives: corn storage, natural gas pipeline, biogas RNG, and operating & equipment upgrades • Initi
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 and ultra low-moisture 200 proof GNS • On pace for 2024 contract gallons to exceed those delivered in 2023 • Maintaining capacity for lucrative spot sales • Leveraging high-quality, low-moisture and location differenti
Slide 7: Expanding High-Margin Offerings
Expanding High-Margin Offerings • Completed corn oil extraction and high protein technology installation at Magic Valley • Lining out operating systems to achieve the performance guarantees • Targeting goal of optimizing Magic Valley by year end • Evaluating roll out of technology at three other dry
Slide 8: Developing Primary Yeast Production
Developing Primary Yeast Production • Received preliminary findings from front-end engineering and design (FEED) study to determine plan, schedule and budget • Inflationary pressures have impacted: • Negatively, the cost of installation, estimated at 70% higher than originally anticipated • Positive
Slide 9: Pursuing Carbon Capture & Sequestration
Pursuing Carbon Capture & Sequestration • Working with pipeline development partner to develop an independent sequestration system • Designed as dedicated short-distance intrastate pipeline, which greatly limits disruption and risk concerns • Inflation Reduction Act of 2022 Section 45Q tax incentive
Slide 10: Increased Corn Storage Improving Efficiency
Increased Corn Storage Improving Efficiency • Installed silo at Pekin campus to build inventory to mitigate interruptions caused by holidays and weather • Fully operational in Q2 2023 • Reducing cost of delivered corn • Lowering silo cleaning expense • Increasing reliability of operations • Started:
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 • Negotiating engineering, procurement, and construction contracts • Installation of new natural
Slide 12: Evaluating Power Cogeneration
Evaluating Power Cogeneration • Initiated financing conversations • Completed FEED study • Cogeneration system to replace existing energy production and lower energy costs by: • Leveraging steam from production to generate MW at Pekin • Replacing obsolete equipment • Addressing energy needs • Provid
Slide 13: Goals for Expanding Incremental Annualized Adj. EBITDA
Goals for Expanding Incremental Annualized Adj. EBITDA Diversifying revenue, investing in assets and optimizing facilities ($ millions) ~$125 $120 Carbon Capture & $30 Sequestration $100 Cogeneration $15 $80 Primary Yeast ~$67 $25 Natural Gas & $60 $19 Biogas/RNG $6 $6 Corn Oil & High Protein* $40 $
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 at Pekin Campus • Safe Food/Safe Feed - another third-party product safety certification • 2 EcoVadis Silver Medals, 80th percentile among peers Completed materiality survey and initial roadmap • Strengthened environmental, health, safety,
Slide 18: Generated Positive Q3 2023 Adj. EBITDA
Generated Positive Q3 2023 Adj. EBITDA • Improving performance • Generated positive $5M Adj. EBITDA for Q3 2023 • Generated $23M cash flow from operations for Q3 2023 • Strong liquidity • $53M in availability under operating line of credit • $40M committed term loan balance • $25M option for additio
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 the growth of high-margin product sales and EBITDA • Expanding production: corn oil, GNS/specialty alcohol, yeast, etc.
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 Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net sales $ 318,127 $ 336,877 $ 949,315 $ 1,007,184 Cost of goods sold 313,966 356,716 931,137 1,013,406 Gross profit (loss) 4,161
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 Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net loss $ (3,489) $ (28,038) $ (9,060) $ (8,525) Adjustments: Interest expense 2,000 340 5,299 859 Interest income (179) (38) (590) (341) Asset impairments — —