What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-08 · 184 added, 118 removed, 364 unchanged (45% of the section changed)

6 unchanged sentences

Restricted cash

Accounts receivable (net of allowance for credit losses of $ 58 and $ 85 , respectively)

Accounts receivable, net (net of allowance for credit losses of $ 26 and $ 85 , respectively)

Derivative instruments

6 unchanged sentences

Total other assets

derived from the audited financial statements for the year ended December 31, 2023.

derived from the audited consolidated financial statements for the year ended December 31, 2023.

accompanying notes to consolidated financial statements.

10 unchanged sentences

Total current liabilities

Long-term debt

Long-term debt, net

Operating leases, net of current portion

6 unchanged sentences

1,684 shares authorized;

no shares issued and outstanding as of March 31, 2024 and December 31, 2023;

no shares issued and outstanding as of June 30, 2024 and December 31, 2023;

1,581 shares authorized;

927 shares issued and outstanding as of March 31, 2024 and December 31, 2023;

liquidation preference of $ 18,075 as of March 31, 2024

927 shares issued and outstanding as of June 30, 2024 and December 31, 2023;

liquidation preference of $ 18,075 as of June 30, 2024

Common stock, $ 0.001 par value;

300,000 shares authorized;

77,018 and 75,703 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

76,645 and 75,703 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Non-voting common stock, $ 0.001 par value;

3,553 shares authorized;

1 share issued and outstanding as of March 31, 2024 and December 31, 2023

1 share issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

3 unchanged sentences

Total Liabilities and Stockholders’ Equity

derived from the audited financial statements for the year ended December 31, 2023.

derived from the audited consolidated financial statements for the year ended December 31, 2023.

accompanying notes to consolidated financial statements.

3 unchanged sentences

Three Months Ended

Six Months Ended

Cost of goods sold

1 unchanged sentence

Asset impairments

Loss from operations

Income (loss) from operations

Interest expense, net

Other income, net

Loss before provision for income taxes

Other income (expense), net

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

Preferred stock dividends

Net loss available to common stockholders

Net loss per share, basic and diluted

Weighted-average shares outstanding, basic and diluted

Income allocated to participating securities

Net income (loss) available to common stockholders

Net income (loss) per share, basic

Net income (loss) per share, diluted

Weighted-average shares outstanding, basic

Weighted-average shares outstanding, diluted

accompanying notes to consolidated financial statements.

2 unchanged sentences

(unaudited, in thousands)

Three Months Ended

Six Months Ended

Operating Activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization of intangibles

(Gains) losses on derivative instruments

Non-cash compensation

Inventory valuation

Adjustments to reconcile net loss to net cash used in

operating activities:

Depreciation and amortization

Gains on derivative instruments

Asset impairments

Stock-based compensation

Amortization of deferred financing fees

Amortization of debt discount

Credit recovery

Credit loss recovery

Changes in operating assets and liabilities, net of business acquisition:

2 unchanged sentences

Accounts payable and accrued liabilities

Net cash provided by (used in) operating activities

Net cash used in operating activities

Investing Activities:

7 unchanged sentences

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

6 unchanged sentences

Interest paid

Interest expense capitalized

Capitalized interest

accompanying notes to consolidated financial statements.

11 unchanged sentences

$ ( 775,953 )

Stock-based compensation

Restricted stock cancellations and tax, net of issuances to employees and directors

Preferred stock dividends

Balances, June 30, 2024

$ ( 779,375 )

Balances, January 1, 2023

6 unchanged sentences

$ ( 748,121 )

ALTO INGREDIENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-based compensation

Restricted stock issued to employees and directors, net of cancellations and tax

Stock repurchases

Preferred stock dividends

Balances, June 30, 2023

$ ( 740,841 )

accompanying notes to consolidated financial statements.

INGREDIENTS, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND BASIS OF PRESENTATION.

6 unchanged sentences

Company produces and distributes renewable fuel, essential ingredients and specialty alcohols.

The Company also specializes in

purchase and break bulk distribution of specialty alcohols produced by the Company and third parties.

The Company also specializes in break bulk distribution of specialty alcohols produced by the Company and third parties.

The Company’s production

1 unchanged sentence

The Company’s two production facilities in Oregon and

Idaho are located in close proximity to both feed and fuel-grade ethanol customers.

Idaho are located in close proximity to both feed and renewable fuel customers.

Company has a combined alcohol production capacity of 350 million gallons per year and produces, on an annualized basis, over 1.6 million

18 unchanged sentences

and biodiesel fuels.

of March 31, 2024, all of the Company’s production facilities were operating, except its Magic Valley facility in Idaho.

2024, the Company temporarily hot-idled the facility to minimize losses from negative regional crush margins and to expedite the installation

of additional equipment needed to achieve the Company’s intended production rate, quality and consistency from the corn oil and

high protein system.

As market conditions change, the Company may increase, decrease or idle production at one or more operating facilities

or resume operations at any idled facility.

of June 30, 2024, all of the Company’s production facilities were operating, with the exception of its Magic Valley facility.

In January 2024, the Company temporarily hot-idled

its Magic Valley facility to minimize losses from negative regional crush margins and to expedite the installation of additional equipment

needed to achieve the Company’s intended production rate, quality and consistency from the corn oil and high protein system at

the facility.

The Company restarted its Magic Valley facility in July 2024.

As market conditions change, the Company may increase, decrease

or idle production at one or more operating facilities or resume operations at any idled facility.

of Presentation – Interim Financial Statements – The accompanying unaudited consolidated financial statements

10 unchanged sentences

All significant intercompany accounts and transactions have been eliminated in consolidation.

Receivable and Allowance for Credit Losses – Trade accounts receivable are presented at original invoice amount,

net of the allowance for credit losses.

The Company sells specialty alcohols to large consumer product companies, sells fuel-grade ethanol

to gasoline refining and distribution companies, sells essential ingredients such as dried yeast for human and pet food and to animal

feed customers, including distillers grains to export markets, sells those same and other feed co-products to dairy operators and animal

feedlots and sells corn oil to poultry and biodiesel customers, in each case generally without requiring collateral.

Receivable and Allowance for Credit Losses – Trade accounts receivable are presented at original invoice amount, net of

the allowance for credit losses.

The Company sells specialty alcohols to large consumer product companies, sells renewable fuel to gasoline

refining and distribution companies, sells essential ingredients such as dried yeast for human and pet food and to animal feed customers,

including distillers grains to export markets, sells those same and other feed products to dairy operators and animal feedlots and

sells corn oil to poultry and biodiesel customers, in each case generally without requiring collateral.

carrying amount of accounts receivable is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts

2 unchanged sentences

estimates the portion, if any, of the customer balance that will not be collected.

the accounts receivable balance, approximately $ 50,008,000 and $ 51,315,000 at March 31, 2024 and December 31, 2023, respectively, were

the accounts receivable balance, approximately $ 59,135,000 and $ 51,315,000 at June 30, 2024 and December 31, 2023, respectively, were

used as collateral under Kinergy’s operating line of credit.

The allowance for credit losses was $ 58,000 and $ 85,000 as of March

The allowance for credit losses was $ 26,000 and $ 85,000 as of June

30, 2024 and December 31, 2023, respectively.

The Company recorded bad debt recoveries of $ 27,000 and $ 39,000 for the three months ended

March 31, 2024 and 2023, respectively.

The Company does not have any off-balance sheet credit exposure related to its customers.

The Company recorded a credit loss recovery of $ 20,000 and credit loss recovery of $ 7,000

for the three months ended June 30, 2024 and 2023, respectively.

The Company recorded a credit loss recovery of $ 47,000 and a credit

loss recovery of $ 46,000 for the six months ended June 30, 2024 and 2023, respectively.

The Company does not have any off-balance sheet

credit exposure related to its customers.

Instruments – The carrying values of cash and cash equivalents, restricted cash, accounts receivable, derivative assets,

22 unchanged sentences

Three Months Ended

Pekin Campus production, recorded as gross:

Six Months Ended

Pekin Campus, recorded as gross:

Alcohol sales

16 unchanged sentences

Cost of goods sold:

Pekin Campus production

Marketing and distribution

4 unchanged sentences

Gross profit (loss):

Pekin Campus production

Marketing and distribution

2 unchanged sentences

Intersegment eliminations

Gross loss as reported

Loss before provision for income taxes :

Pekin Campus production

Gross profit as reported

Income (loss) before provision for income taxes:

Marketing and distribution

1 unchanged sentence

Corporate and other

Depreciation and amortization expense:

Pekin Campus production

Depreciation and amortization:

Western production

1 unchanged sentence

Interest expense, net of capitalized interest:

Pekin Campus production

Marketing and distribution

2 unchanged sentences

following table sets forth the Company’s total assets by operating segment (in thousands):

March 31, 2024

Total assets:

Pekin Campus production

Marketing and distribution

3 unchanged sentences

cost or net realizable value, with cost determined on a first-in, first-out basis.

Inventory is net of a valuation allowance of $ 597,000

and $ 2,201,000 as of March 31, 2024 and December 31, 2023, respectively.

Inventory is net of a valuation adjustment of $ 0 and

$ 2,201,000 as of June 30, 2024 and December 31, 2023, respectively.

Inventory balances consisted of the following (in thousands):

7 unchanged sentences

Risk – Cash Flow Hedges – The Company uses derivative instruments to protect cash flows from fluctuations

caused by volatility in commodity prices for periods of up to twelve months in order to protect gross profit margins from potentially

adverse effects of market and price volatility on alcohol sales and purchase commitments where the prices are set at a future date and/or

if the contracts specify a floating or index-based price.

In addition, the Company hedges anticipated sales of alcohol to minimize its

exposure to the potentially adverse effects of price volatility.

These derivatives may be designated and documented as cash flow hedges

and effectiveness is evaluated by assessing the probability of the anticipated transactions and regressing commodity futures prices against

the Company’s purchase and sales prices.

Ineffectiveness, which is defined as the degree to which the derivative does not offset

the underlying exposure, is recognized immediately in cost of goods sold.

For the three months ended March 31, 2024 and 2023, the Company

did not designate any of its derivatives as cash flow hedges.

caused by volatility in commodity prices for periods of up to eighteen months to protect gross profit margins from potentially adverse

effects of market and price volatility on alcohol sales and purchase commitments where the prices are set at a future date and/or if

the contracts specify a floating or index-based price.

In addition, the Company hedges anticipated sales of alcohol to minimize its exposure

to the potentially adverse effects of price volatility.

These derivatives may be designated and documented as cash flow hedges and effectiveness

is evaluated by assessing the probability of the anticipated transactions and regressing commodity futures prices against the Company’s

purchase and sales prices.

Ineffectiveness, which is defined as the degree to which the derivative does not offset the underlying exposure,

is recognized immediately in cost of goods sold.

For the three and six months ended June 30, 2024 and 2023, the Company did not designate

any of its derivatives as cash flow hedges.

Risk – Non-Designated Hedges – The Company uses derivative instruments to lock in prices for certain amounts of corn

4 unchanged sentences

in cost of goods sold.

The Company recognized net gains of $ 3,338,000 and net losses of $ 1,777,000 as the change in the fair value of

these contracts for the three months ended March 31, 2024 and 2023, respectively.

Designated Derivative Instruments – The classification and amounts of the Company’s derivatives not designated as

hedging instruments, and related cash collateral balances, are as follows (in thousands):

As of March 31, 2024

The Company recognized net gains of $ 8,231 ,000 and $ 6,951 ,000 as the change in the fair value of these contracts

for the three months ended June 30, 2024 and 2023, respectively.

The Company recognized net gains of $ 11,570 ,000 and $ 5,174 ,000 as the

change in the fair value of these contracts for the six months ended June 30, 2024 and 2023, respectively.

Non-Designated

Derivative Instruments – The classification and amounts of the Company’s derivatives not designated as hedging instruments,

and related cash collateral balances, are as follows (in thousands):

As of June 30, 2024

Type of Instrument

18 unchanged sentences

brokers, but the Company’s intent is to close out positions individually, therefore, the positions are reported at gross.

classification and amounts of the Company’s realized gains (losses) for its derivatives not designated as hedging instruments are

as follows (in thousands):

classification and amounts of the Company’s realized and unrealized gains and losses for its derivatives not designated as hedging

instruments are as follows (in thousands):

Realized Gains (Losses)

4 unchanged sentences

Cost of goods sold

Realized Losses

For the Six Months Ended

Type of Instrument

Statements of Operations Location

Commodity contracts

Cost of goods sold

Unrealized Gains

4 unchanged sentences

Cost of goods sold

Unrealized Gains

For the Six Months Ended

Type of Instrument

Statements of Operations Location

Commodity contracts

Cost of goods sold

borrowings are summarized as follows (in thousands):

5 unchanged sentences

Long-term debt

Availability – As of March 31, 2024, Kinergy had $ 25.9 million in unused borrowing availability under its line of credit

and the Company had $ 65.0 million that may be available for capital improvement projects under its Orion term loan, subject to certain

Availability – As of June 30, 2024, Kinergy had $ 30.3 million in unused borrowing availability under its line of credit

and the Company had $ 65.0 million that may be available for capital improvement projects under its term loan with Orion Infrastructure

Capital, subject to certain conditions.

At June 30, 2024, the interest rates for the Kinergy line of credit and the Orion term loan were

6.94 % and 10.00 %, respectively.

COMMITMENTS AND CONTINGENCIES.

Commitments – At March 31, 2024, the Company had entered into sales contracts with its major customers to sell certain

quantities of alcohol and essential ingredients.

The Company had open alcohol indexed-price contracts for 102,083,000 gallons as of March

31, 2024 and open fixed-price alcohol sales contracts totaling $ 233,854,000 as of March 31, 2024.

The Company had open fixed-price sales

contracts for essential ingredients totaling $ 5,454,000 and open indexed-price sales contracts of essential ingredients for 72,000 tons

as of March 31, 2024.

Commitments – At June 30, 2024, the Company had entered into sales contracts with its major customers to sell certain quantities

of alcohol and essential ingredients.

The Company had open alcohol indexed-price contracts for 90,560,000 gallons as of June 30, 2024

and open fixed-price alcohol sales contracts totaling $ 192,942,000 as of June 30, 2024.

The Company had open fixed-price sales contracts

for essential ingredients totaling $ 4,795,000 and open indexed-price sales contracts of essential ingredients for 59,000 tons as of June

These sales contracts are scheduled to be completed throughout 2024.

Commitments – At March 31, 2024, the Company had indexed-price purchase contracts to purchase 19,195,000 gallons of alcohol

Commitments – At June 30, 2024, the Company had indexed-price purchase contracts to purchase 18,171,000 gallons of alcohol

and fixed-price purchase contracts to purchase $ 1,625,000 of alcohol from its suppliers.

The Company had fixed-price purchase contracts

to purchase $ 40,521,000 of corn from its suppliers as of March 31, 2024.

The Company had indexed-price contracts to purchase 4,805,400

MMBTU for natural gas as of March 31, 2024.

to purchase $ 30,098,000 of corn from its suppliers as of June 30, 2024.

The Company had indexed-price purchase contracts for natural

gas totaling 3,799,000 MMBTU as of June 30, 2024.

The Company also had future commitments for certain capital projects totaling $ 7,783,000 .

11 unchanged sentences

of its pending legal proceedings will have a material impact on the Company’s financial condition or results of operations.

PENSION PLANS.

PENSION AND RETIREMENT BENEFIT PLANS.

Company sponsors a defined benefit pension plan (the “Retirement Plan”) and a healthcare and life insurance plan (the “Postretirement

12 unchanged sentences

consolidated balance sheet in other liabilities.

For the three months ended March 31, 2024, the Retirement Plan’s net periodic

the three months ended June 30, 2024, the Retirement Plan’s net periodic expense was $ 13,000 , comprised of $ 222,000 in interest

cost and $ 67,000 in service cost, partially offset by $ 276,000 of expected return on plan assets.

For the six months ended June 30, 2024,

the Retirement Plan’s net periodic expense was $ 26,000 , comprised of $ 444,000 in interest cost and $ 134,000 in service cost, partially

offset by $ 552,000 of expected return on plan assets.

For the three months ended June 30, 2023, the Retirement Plan’s net periodic

expense was $ 39,000 , comprised of $ 225,000 in interest cost and $ 62,000 in service cost, partially offset by $ 248,000 of expected return

on plan assets.

For the three months ended March 31, 2023, the Retirement Plan’s net periodic expense was $ 39,000 , comprised of

For the six months ended June 30, 2023, the Retirement Plan’s net periodic expense was $ 78,000 , comprised of $ 450,000

in interest cost and $ 124,000 in service cost, partially offset by $ 496,000 of expected return on plan assets.

9 unchanged sentences

The Company’s funding policy is to make the minimum annual contribution required by applicable

For the three months ended March 31, 2024, the Postretirement Plan’s net periodic expense was $ 54,000 , comprised of

$ 49,000 of interest cost and $ 5,000 of service cost.

For the three months ended March 31, 2023, the Postretirement Plan’s net periodic

expense was $ 36,000 , comprised of $ 46,000 of interest cost and $ 3,000 of service cost, partially offset by $ 13,000 in amortization of

the three months ended June 30, 2024, the Postretirement Plan’s net periodic expense was $ 54,000 , comprised of $ 49,000 in interest

cost and $ 5,000 in service cost.

For the six months ended June 30, 2024, the Postretirement Plan’s net periodic expense was $ 108,000 ,

comprised of $ 98,000 in interest cost and $ 10,000 in service cost.

For the three months ended June 30, 2023, the Postretirement Plan’s

net periodic expense was $ 36,000 , comprised of $ 46,000 in interest cost and $ 3,000 in service cost, partially offset by $ 13,000 of expected

return on plan assets.

For the six months ended June 30, 2023, the Postretirement Plan’s net periodic expense was $ 72,000 , comprised

of $ 92,000 in interest cost and $ 6,000 in service cost, partially offset by $ 26,000 of expected return on plan assets.

FAIR VALUE MEASUREMENTS.

fair value hierarchy prioritizes the inputs used in valuation techniques into three levels, as follows:

1 – Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities;

2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration

with market data;

3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable.

For fair value measurements using significant unobservable inputs, a description of the inputs and the information used to develop the

inputs is required along with a reconciliation of Level 3 values from the prior reporting period.

1 – Observable inputs – unadjusted quoted prices in active markets for identical

assets and liabilities;

2 – Observable inputs other than quoted prices included in Level 1 that are observable

for the asset or liability through corroboration with market data;

3 – Unobservable inputs – includes amounts derived from valuation models where

one or more significant inputs are unobservable.

For fair value measurements using significant

unobservable inputs, a description of the inputs and the information used to develop the

inputs is required along with a reconciliation of Level 3 values from the prior reporting

separate accounts – Pooled separate accounts invest primarily in domestic and international stocks, commercial paper or

7 unchanged sentences

of the commodity positions are based on quoted prices on the commodity exchanges and are designated as Level 1 inputs.

following table summarizes recurring and nonrecurring fair value measurements by level at March 31, 2024 (in thousands):

Derivative financial instruments

following table summarizes recurring and nonrecurring fair value measurements by level at June 30, 2024 (in thousands):

Derivative instruments

following table summarizes recurring and nonrecurring fair value measurements by level at December 31, 2023 (in thousands):

Derivative financial instruments

Defined benefit plan assets(1) (pooled separate accounts):

Defined benefit plan assets(1)

(pooled separate accounts):

Small/Mid U.S.

21 unchanged sentences

Three Months Ended

March 31, 2024

June 30, 2024

Shares Denominator

Per-Share Amount

Preferred stock dividends

Basic and diluted loss per share:

Net loss available to common stockholders

Loss available to common stockholders

Three Months Ended

March 31, 2023

Loss Numerator

June 30, 2023

Income Numerator

Shares Denominator

1 unchanged sentence

Preferred stock dividends

Income allocated to participating securities

Basic income per share:

Income available to common stockholders

Dilutive instruments

Diluted income per share:

Income available to common stockholders

Six Months Ended

June 30, 2024

Shares Denominator

Per-Share Amount

Preferred stock dividends

Basic and diluted loss per share:

Net loss available to common stockholders

were an additional aggregate potentially dilutive weighted-average shares of 981,000 and 964,000 from convertible securities outstanding

for the three months ended March 31, 2024 and 2023.

These securities were not considered in calculating diluted net loss per share for

the three months ended March 31, 2024 and 2023, as their effect would have been anti-dilutive.

Loss available to common stockholders

Six Months Ended

June 30, 2023

Shares Denominator

Per-Share Amount

Preferred stock dividends

Basic and diluted loss per share:

Loss available to common stockholders

were an additional aggregate potentially dilutive weighted-average shares of 981,000 from convertible securities outstanding for the

three and six months ended June 30, 2024 and June 30, 2023.

These securities were not considered in calculating diluted net income (loss)

per share for the three and six months ended June 30, 2024 and the six months ended June 30, 2023, as their effect would have been anti-dilutive.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements