Alto Ingredients, Inc. · NASDAQ:ALTO
Alto Ingredients — Q1 2023 Earnings Presentation
26 slides from Alto Ingredients's earnings presentation, May 8, 2023
Slide 1: Alto Ingredients, Inc. Q1 2023 Investor Presentation
Alto Ingredients, Inc. Q1 2023 Investor Presentation May 8, 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
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 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 • Initiat
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 Specialty, High-Quality Alcohol
Expanding Specialty, High-Quality Alcohol • Marketing new offerings: 190 proof GNS & low-moisture 200 proof GNS • Attracting new and existing spot purchase customers • Expect to place additional contracted volumes • Upgraded distillation to produce highest-quality, beverage-grade product • Added tot
Slide 7: Expanding High-Margin Offerings
Expanding High-Margin Offerings • Completed corn oil and high protein CoProMax technology material installation at Magic Valley • Aligning operating systems to ensure optimal efficiency at Magic Valley • Expect full production by end of Q2 2023 and start of sales in Q3 2023 • Planning to roll out co
Slide 8: Developing Primary Yeast Production
Developing Primary Yeast Production • Completed successful product trials • Selected front-end engineering and design (FEED) firm to determine plan, schedule and budget • Targeting H2 2023 for more info • Expected start: • Expected incremental annual - FEED study Q2 2023 EBITDA run rate*: - Construc
Slide 9: Pursuing Carbon Capture and Sequestration
Pursuing Carbon Capture and Sequestration • Inflation Reduction Act of 2022 Section 45Q incentive improves economics • $85 per metric ton for 12 years • ~700,000 MT/year capacity at Pekin Campus • Selected FEED study partner, defining implementation costs, reviewing pipeline preferences, evaluating
Slide 10: Increased Corn Storage Improving Efficiency
Increased Corn Storage Improving Efficiency • Installed silo at Pekin campus to build inventory for interruptions, such as holidays, weather • Commissioned in Q4 2022, already providing relief; conditioning silo expected to be fully operational in Q2 2023 • Reducing cost of delivered corn • Lowering
Slide 11: Enhancing Access to Natural Gas
Enhancing Access to Natural Gas • Completed the new natural gas pipeline FEED study and are working on initial routing steps • Advancing to definitive land agreements and the construction permit application process • Installation of new natural gas pipeline to improve energy procurement, consistent
Slide 12: Evaluating Power Cogeneration
Evaluating Power Cogeneration • 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 processing products • Completed FEED study:
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 up to ~$125M by end of 2026 ($ millions) ~$125 $120.0 Carbon Capture & $30 Sequestration $100.0 Cogeneration $15 $80.0 Primary Y
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 Deepens Relationships and Opens 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 Completed materiality survey and initial roadmap • Strengthened Environmental, Health, Safety, and Security Policy and Objectives, • Added consistent standards and details to our Code of Ethics and Supplier Code of Conduct • Implemented a supplie
Slide 18: Expects Positive Q2 2023 Adj. EBITDA
Expects Positive Q2 2023 Adj. EBITDA $180M+ in Cash and Liquidity to Support Operations and Growth • Improving performance • Generated sequential monthly performance improvements in 2023 • Delivered positive bottom-line financial results in March 2023 • Expects positive Adj. EBITDA for Q2 2023 based
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 sales and EBITDA • Expanding production: corn oil, GNS/specialty alcohol, yeast, etc. • Implementing
Slide 20: Appendix
Appendix
Slide 21: Experienced Leadership Team
Experienced Leadership Team Mike Kandris Bryon McGregor Jim Sneed (1) Auste Graham Director and CEO CFO Chief Commercial Officer General Counsel 15 years with Alto 16 years with Alto 29 years with Alto 2 years with Alto Prior Experience & Education Prior Experience & Education Prior Experience & Edu
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 Manger 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 Statement of Operations
Consolidated Statement of Operations Unaudited, in thousands, except per share data Three Months Ended March 31, 2023 2022 Net sales $ 313,891 $ 308,118 Cost of goods sold 317,055 303,345 Gross profit (loss) (3,164) 4,773 Selling, general and administrative expenses (7,882) (7,629) Asset impairments
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 March 31, 2023 2022 Net loss $ (13,166) $ (2,602) Adjustments: Interest expense 1,565 200 Interest income (221) (158) Acquisition-related expense 700 875 Asset impairments 574 — Depreciation and amortization expense 6,055 6,13