Bryan McGregor, president and CEO of Alto Ingredients Inc., discussed the company’s financial and operational performance during a second quarter earnings call held Aug. 7. He said Alto is pleased by the market’s continued improvements during the period, particularly the ethanol crush margins. Those strong margins were completement by favorable economics from the company’s specialty alcohol and essential ingredients. “We delivered a strong quarter, posting net income, positive adjusted EBITDA and positive operating cash flow,” McGregor said. 

According to McGregor, Alto is continuing to make significant capital expenditures to support its business transformation, diversify its revenue streams and reduce exposure to commodity markets. The company’s near-term focus has been to increase production of high-quality products, including grain neutral spirits, corn oil and high-protein while also executing strategies to improve plant efficiency and reliability by adding corn storage and other upgrades. 

McGregor said Alto is currently preparing to install a natural gas pipeline, convert its biogas into renewable natural gas (RNG), produce primary yeast, and expand the company’s cogeneration capabilities. Most importantly, he said, Alto is also working to launch carbon capture and sequestration (CCS). 

Regarding expanded production of corn oil and high protein, McGregor said Alto continues to align the system at its Magic Valley facility in Idaho and is working to obtain the dyer permits to achieve full capacity. That effort is integral to optimizing production of ethanol, corn oil, high protein and other feed ingredients on a low-cost basis, he said, noting that the company currently expects to reach its targeted level of optimization in the final quarter of this year. 

Design work related to Alto’s expansion into primary yest production is progressing well and on schedule, McGregor said. Inflation pressures have impacted project costs negatively, and Alto expects the cost of installation to be higher than originally anticipated, he added. 

Work is also progressing on a planned CCS project at Alto’s facility in Pekin, Illinois. McGregor said the company has contracted the FEED study firm to determine capture, compression and engineering design and has selected a development partner to provide turnkey transportation, sequestration and monitoring services. He said the company’s goal is to have the CCS project operational by the end of 2026.

Rob Olander, chief financial officer of Alto, said the company utilized 81 percent of its production capacity during the second quarter, up from 70 percent during the first quarter of this year. Looking ahead, he said capacity utilization is expected to increase. Strong margins are also continuing into the third quarter. 

Alto reported second quarter gross profit of $17.2 million, compared to $8.8 million during the same period of last year. Operating income was $9.3 million, compared to an operating loss of $152,000. Net income available to common stockholders was $7.2 million, or 10 cents per diluted share, compared to $21.5 million, which included a $22.7 million USDA cash grant, or 29 cents per diluted share. Adjusted EBITDA was $15.5 million, compared to $29.9 million, which included a $22.7 million USDA cash grant.