Alto Ingredients Inc (ALTO) Reports Notable Fiscal Turnaround in 2023
Gross Profit: Achieved $15.7 million in 2023, a significant recovery from a gross loss of $27.6 million in 2022.
Net Loss Improvement: Reduced net loss by $13.6 million and bolstered Adjusted EBITDA by $26.5 million over the previous year.
Liquidity: Reported cash and cash equivalents of $30.0 million as of December 31, 2023, with borrowing availability of $98.3 million.
Operational Adjustments: Addressed production issues at Magic Valley facility, with plans to restart in Q2 2024.
CO2 Storage Initiative: Signed a Letter of Intent with Vault 44.01 for CO2 storage, advancing the company's carbon capture strategy.
Revenue: Net sales totaled $1,222,940 for the year, compared to $1,335,621 in the previous year.
Cost Management: Cost of goods sold decreased to $1,207,287 in 2023 from $1,363,171 in 2022.
On March 11, 2024, Alto Ingredients Inc (NASDAQ:ALTO) released its 8-K filing, detailing its financial results for the fourth quarter and the full year ended December 31, 2023. The company, a leading producer of specialty alcohols and essential ingredients, serves diverse markets including Health, Home and Beauty, Food and Beverage, Essential Ingredients, and Renewable Fuels. Alto Ingredients Inc operates through three segments: Marketing and distribution, Pekin Campus production, and Other production, with the Pekin Campus being a significant revenue contributor.
Financial Performance and Strategic Developments
Alto Ingredients Inc reported a gross profit of $15.7 million for 2023, marking a substantial improvement from the gross loss of $27.6 million in 2022. The net loss for the year was also reduced by $13.6 million, and Adjusted EBITDA increased by $26.5 million compared to the previous year. These improvements reflect the company's strategic efforts to diversify revenue streams, enhance capacity utilization, and optimize operating margins.
President and CEO Bryon McGregor expressed optimism for 2024, citing favorable market conditions and ongoing maintenance initiatives aimed at increasing production reliability. McGregor also highlighted the company's carbon capture and storage (CCS) program, which recently advanced with a Letter of Intent signed with Vault 44.01 for CO2 storage near the Pekin campus.
During 2023, our investments to diversify revenue, improve capacity utilization rates, reduce costs and expand operating margins contributed to our financial improvements and positioned Alto for stronger performance in 2024 and beyond," said Bryon McGregor, President and CEO of Alto Ingredients.
Challenges and Adjustments
Despite the positive developments, Alto Ingredients Inc faced challenges at its Magic Valley facility, where issues with the corn oil and high protein system necessitated design modifications. To address this and mitigate the impact of negative regional crush margins, the company temporarily hot-idled the plant, with plans to resume operations in the second quarter of 2024 following upgrades and anticipated margin improvements.
Financial Highlights
The company's liquidity position remains solid, with cash and cash equivalents standing at $30.0 million at the end of 2023. Alto Ingredients Inc's borrowing availability was reported at $98.3 million, including amounts under its operating line of credit and term loan facility.
For the full year, net sales reached $1,222,940, a decrease from the $1,335,621 reported in the previous year. However, the cost of goods sold saw a reduction to $1,207,287 in 2023 from $1,363,171 in 2022, contributing to the year's gross profit.
The company's commitment to transparency is evident in its decision to exclude unrealized non-cash gains and losses on derivative instruments when calculating Adjusted EBITDA, providing a clearer picture of operating physical margins.
Alto Ingredients Inc's strategic initiatives, including the CCS program and operational adjustments, are set to enhance its long-term growth trajectory and sustainability efforts, positioning the company for continued success in the dynamic markets it serves.
Explore the complete 8-K earnings release (here) from Alto Ingredients Inc for further details.
This article first appeared on GuruFocus.
