Alto Ingredients Inc., formerly known as Pacific Ethanol Inc., announced on March 11 plans to sell its two idle ethanol plants located in California as part of its effort to focus on the production of specialty alcohols and essential ingredients.

Mike Kandris, CEO of Alto Ingredients, made the announcement during fourth quarter earnings call. While Kandris stressed Alto will continue to produce fuel ethanol and is optimistic about industry discussions around carbon reduction, he said ethanol margins have remained depressed—particularly for the company’s Western operations.

“After considering all reasonable alternatives and determining how and where to optimally deploy our resources and capital, we have decided it best to consider monetizing both of our idled California facilities,” he said. “Doing so will not only further strengthen our balance sheet, but also improve profitability by eliminating fixed carrying costs on idled assets.” Alto’s California facilities include a 60 MMgy facility in Stockton and a 40 MMgy facility in Madera.

Kandris noted Alto entered 2020 with an annual ethanol production capacity of 605 million gallons, including 85 million gallons of specialty alcohol. Over the course of 2020, the company reduced its production capacity by 55 percent through idling unprofitable fuel ethanol plants and selling certain assets. Today, Kandris said Alto has total production capacity of 450 million gallons, with 290 million gallons of that capacity currently operational.

Alto reported net sales of $168.8 million for the fourth quarter, down from $357.6 million in the fourth quarter of 2019. Gross profit was $13.6 million, up from $3.2 million. Operating loss was $14.2 million, compared to $37.9 million during the same period of last year. Net loss available to common stockholders was $20.5 million, or 30 cents per share, compared to a net loss of $41.4 million, or 85 cents per share, during the fourth quarter of 2019.