Alto announces its intention to further diversify its activities

On November 7, Alto Ingredients Inc. released its third quarter financial results and announced that it had entered into a $125 million senior secured term loan facility that will support efforts to complete upgrades strategic, including those related to corn oil, protein and yeast production, renewable natural products natural gas (RNG) and carbon capture and storage (CCS) opportunities

Alto Ingredients CEO Mike Kandris discussed the loan during the company’s third quarter earnings call, noting that it will help accelerate Alto’s diversification growth strategies, help significantly to the company’s turnover and net income and will further insulate it from fluctuations in raw materials and margins. He said the funding circumvents the need to rely solely on organic cash flow, facilitating the timely completion of capital projects that are of a scale, scope and cost. -significant benefits for all stakeholders by creating a more stable business. With capital resources bolstered, Kandris said the company plans to undertake these key projects simultaneously.

According to Kandris, Alto plans to add new natural gas and RNG pipelines to connect directly to nearby major hubs. He said the project will increase the company’s access to more competitive natural gas, better meet future energy needs, including supporting carbon capture, and improve Alto’s ability to monetize RNG than the company currently produces and burns. Kandris said the natural gas/RNG project is in the design and licensing phase and is expected to be completed in 2024.

Citing the company’s 24 years as a trusted supplier to the pet food industry, Kandris also announced plans to expand into commercial yeast production through an aerobic fermentation process in its wet grinder. “Although primary yeast production has a different process and market, many existing and potential customers have expressed interest in this product for years,” he said.

The $125 million in funding will also support CCS implementation efforts. Kandris said Alto is currently working with “various parties to finalize the best option for Alto’s carbon sequestration future,” adding that the company is finalizing the selection of its front-end engineering and design partner and its carbon transport pipeline and sequestration developer.

Regarding third-quarter operations, Kandris called the three-month period “challenging” and said Alto’s results were negatively impacted by low margins, high corn prices, logistical constraints and shutdown for maintenance of its ICP installation. He also discussed the status of ongoing improvement projects. He said the first phase of the CoPromax system installation at the company’s Idaho plant was complete, with corn oil production meeting expectations. Given the positive results at the Idaho plant, Kandris said Alto plans to proceed with a similar installation at its other dry plants. The second phase of the CoPromax facility at the Idaho plant will improve protein production. This facility is expected to be completed in the first quarter of 2023.

Kandris also reported that construction is underway on the Illinois Corn Storage Expansion Project, with the project expected to be completed before the end of the year. The project will double the maize storage capacity at the site, helping to reduce the volatility of production input costs. In addition, Alto is modernizing equipment related to its specialty alcohol production and has replaced two boilers at its Beijing campus.

Alto produced 74.7 million gallons of ethanol during the third quarter, compared to 60.6 million gallons produced during the same period last year. Capacity utilization was 85%, down from 59%.

Gallons of fuel ethanol sold reached 53 million in the third quarter, compared to 38.3 million gallons reported for the same quarter of 2021. Gallons of specialty alcohol sold reached 23.3 million, compared to 19 .87 million, with gallons of third-party renewable fuel sold at 27.6 million, down from 67.2 million.

Net sales for the third quarter were $336.9 million, compared to $305.6 million in the third quarter last year. Gross loss was $356.7 million, down from $3.4 million. Net loss available to common shareholders was $28.4 million, or 39 cents per share, compared to $3.5 million, or 5 cents per share.

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