Alto Ingredients Inc. released second quarter financial results on Aug. 8, reporting increased net sales and net income. During a second quarter earnings call, CEO Mike Kandris discussed various plant improvement and upgrade projects.
During the second quarter, the company accelerated a variety of repair and maintenance projects, as well as several equipment upgrades, he said. According to Kandris, Alto recently purchased two new boilers for its Pekin, Illinois, campus. The new boilers will enhance steam capabilities at both Pekin and ICP and increase the interconnectivity between the two facilities while lowering energy usage and costs, he added. In addition, Kandris said the company has prioritized the upgrade of its specialty alcohol equipment at its Pekin wet mill, which will allow the company to meet the highest quality requirements and enable Alto to service additional beverage customers.
Alto is on track with its essential ingredients expansion at its Magic Valley plant in Idaho, according to Kandris. The project consists of two phases, he said. The first includes the further extraction of corn oil, while the second includes the separation and production of enhanced protein. Construction of the corn oil extraction phase is now complete, Kandris said. Based on better than expected preliminary results, the company intends to accelerate the installation of the corn oil extraction technology at its other dry mills, he added. High protein production at the Magic Valley facility is expected to begin in early 2023.
In addition, Alto is expanding corn storage at its Pekin facilities. That project is expected to be complete by mid-November. The expansion will roughly double the number of days of storage at the site and meet Alto’s goal to have additional capacity in place before the holidays and winter weather.
Other improvements include an upgrade and expansion of ICP’s corn oil production. The company has also increased corn oil storage and railcar load out capabilities at all its location; made logistics improvements at ICP; and upgraded control systems at the wet mill. Alto is also engaged in longer-term projects regarding renewable natural gas (RNG) production at Pekin, Kandris said, noting the company is currently in the engineering and design phase of that project.
Kandris also discussed the potential for carbon capture and storage (CCS), particularly at the Pekin location. The Senate on Aug. 7 passed the Inflation Reduction Act of 2022, which, in part, would increase the 45Q tax credit for CCS to from $50 per metric ton to $85 per metric ton. According to Kandris, Alto produces approximately 700,000 metric tons of CO2 per year at its Pekin campus. To maximize the value of that carbon, the company has been actively pursing a number of options, he said, including the development of a standalone CCS project or the sale of CO2 to one of the various pipeline systems under development. Approval of the Inflation Reduction Act will greatly clarify Alto’s strategy and options and will accelerate the company’s decision and implementation of a CCS project, according to Kandris.
Alto reported net sales of $362.2 million for the second quarter, up from $298.1 million reported for the same period of last year. Gross profit was $8.8 million, compared to $15.2 million. Net income available to common stockholders was $21.5 million, or 29 cents per diluted share, compared to $8 million, or 11 cents per diluted share.