About Alto Ingredients

Alto Ingredients, Inc. operates as a producer and distributor of specialty alcohols and essential ingredients, and the producer of specialty alcohols in the United States. The company operates five alcohol production facilities. Three of the company’s production facilities are located in Illinois, one is located in Oregon and another is located in Idaho. The company has an annual alcohol production capacity of 350 million gallons, consisted of 210 million gallons of fuel-grade ethanol and up to 140 million gallons of specialty alcohols. The company markets and distributes all of the alcohols produced at its facilities, as well as fuel-grade ethanol produced by third parties. In 2022, the company marketed and distributed approximately 420 million gallons combined of the company’s own alcohols, as well as fuel-grade ethanol produced by third parties, and over 1.6 million tons of essential ingredients. The company’s wholly-owned subsidiary, Eagle Alcohol Company LLC, or Eagle Alcohol, specializes in break bulk distribution of specialty alcohols. Eagle Alcohol purchases bulk alcohol from suppliers and then stores, denatures, packages, and resells alcohol products in smaller sizes, including tank trucks, totes, and drums, that typically garner a premium price to bulk alcohols. Eagle Alcohol delivers products to customers in the beverage, food, industrial and related-process industries via its own dedicated trucking fleet and common carrier. Segments The company operates through three segments: Marketing and Distribution, Pekin Production, and Other Production. Marketing and Distribution segment includes marketing and merchant trading for company-produced alcohols and essential ingredients on an aggregated basis, and sales of fuel-grade ethanol sourced from third parties. Pekin Production segment includes the production and sale of alcohols and essential ingredients produced at the company’s three production facilities located in Pekin, Illinois, which the company refers to as its Pekin Campus. Other Production segment includes the production and sale of renewable fuel and essential ingredients produced at all of the company’s other production facilities on an aggregated basis. Production Segments The company produces specialty alcohols, fuel-grade ethanol and essential ingredients, focusing on four key markets: Health, Home & Beauty; Food & Beverage; Essential Ingredients; and Renewable Fuels. Products for the Health, Home & Beauty market include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners. Products for the Food & Beverage market include grain neutral spirits used in alcoholic beverages and vinegar, as well as corn germ used for corn oils. Products for Essential Ingredients market include dried yeast, corn gluten meal, corn gluten feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. The company also sells yeast for human consumption. Products for the Renewable Fuels market include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels. The company produces its alcohols and essential ingredients at the company’s production facilities. The company’s production facilities located in Illinois are in the heart of the Corn Belt, benefit from low-cost and abundant feedstock and enjoy logistical advantages that enable the company to provide its products to both domestic and international markets via truck, rail or barge. The company’s production facilities located in Oregon and Idaho are near their respective fuel and feed customers. The company’s production facilities were operating for all of 2022. On January 1, 2023, the company temporarily hot-idled its Magic Valley production facility due to extreme natural gas prices, other unfavorable market conditions and to facilitate the installation of the company’s new high protein systems. 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. Marketing and Distribution Segment The company markets and distributes all of the alcohols and essential ingredients the company produces at its facilities. The company also markets and distributes alcohol produced by third parties. The company has extensive and long-standing customer relationships, both domestic and international, for the company’s specialty alcohols and essential ingredients. These customers include producers and distributors of ingredients for cosmetics, sanitizers and related products, distilled spirits producers, food products manufacturers, producers of personal health/consumer health and personal care hygiene products, and global trading firms. The company’s renewable fuel customers are located throughout the Western and Midwestern United States and consist of integrated oil companies and gasoline marketers who blend fuel-grade ethanol into gasoline. The company’s customers depend on the company to provide a reliable supply of fuel-grade ethanol and manage the logistics and timing of delivery. Collectively, the company’s customers require fuel-grade ethanol volumes in excess of the supplies the company produces at its facilities. The company secures additional fuel-grade ethanol supplies from third-party ethanol producers. The company arranges for transportation, storage and delivery of fuel-grade ethanol purchased by the company’s customers through its agreements with a variety of third-party service providers in the Western United States, as well as in the Midwest. The company markets its essential ingredient feed products to dairies and feedlots, in many cases located near the company’s production facilities. These customers use the company’s feed products for livestock as a substitute for corn and other sources of starch and protein. The company sells its corn oil to poultry and biodiesel customers. The company does not market essential ingredients from other producers. Business Strategy The key elements of the company’s business and growth strategy are to focus on the company’s customer relationships; increase the company’s break bulk capabilities; expand product offerings; implement new equipment and technologies; and evaluate and pursue strategic opportunities. Key Markets The company produces specialty alcohols, fuel-grade ethanol and essential ingredients, focusing on four key markets: Health, Home & Beauty; Food & Beverage; Essential Ingredients; and Renewable Fuels. Health, Home & Beauty The company’s products for the health, home and beauty markets include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners. The company offers a variety of specialty alcohols for the health, home and beauty markets, depending on usage and regulatory requirements, including API-grade, United States Pharmacopeia, or USP, -grade ethyl alcohols, and industrial-grade ethyl alcohol. In 2020, the company expanded its range of available product offerings within the health, home and beauty markets through quality management systems certifications. The company has ISO 9001, ICH Q7 and EXCiPACT certifications at each of the company’s Pekin Campus production facilities, all of which are viewed as important attestations of quality control standards. In particular, the company’s ICH Q7 certification qualifies the company’s specialty alcohols for use as an API, and the company’s EXCiPACT certification qualifies the company’s specialty alcohols for use as an excipient in the pharmaceutical industry. Food & Beverage The company’s products for the food and beverage market include specialty alcohols used in alcoholic beverages, flavor extracts and vinegar, as well as corn germ used for corn oils and carbon dioxide, or CO2, used for beverage carbonation and dry ice. The principal specialty alcohol the company offers for beverage-grade product is its grain neutral spirits, or GNS, alcohol. In addition, the company primarily sells FCC 190 and USP 190 Ultra into vinegar markets. The company is also introducing new high-quality 190 proof and low-moisture 200-proof GNS products to the company’s existing and target customers in the beverage, food, flavor, personal care and pharmaceutical industries. Essential Ingredients The company’s essential ingredients include dried yeast, corn gluten meal, corn gluten feed, and distillers grains and liquid feed used in commercial animal feed and pet foods. The company also sells yeast for human consumption. The raw materials for the company’s essential ingredients are generated as co-products from its production of alcohols. These co-products are further manufactured, altered and refined into the company’s essential ingredients, including for special customer applications. Many of the company’s essential ingredients are used in a variety of food products to affect their nutrition, including protein and fat content, as well as other product attributes, such as taste, texture, palatability and stability. The company’s high quality and high purity manufacturing enable the company’s customers to use some of its essential ingredients in human foods while others are used in pet foods and animal feed. The company expects the essential ingredients market to grow significantly due to global demand for higher-grade protein feed, such as feed used in fisheries and other applications. Renewable Fuels The company’s renewable fuels products include fuel-grade ethanol used as transportation fuel and distillers corn oil used as a biodiesel feedstock. The company’s renewable fuels business is supported by its own production of fuel-grade ethanol, as well as fuel-grade ethanol produced by third parties. Renewable fuels, primarily fuel-grade ethanol, are used for a variety of purposes, including as octane enhancers for premium gasoline and to enable refiners to produce greater quantities of lower octane blend stock; for fuel blending to extend fuel supplies and reduce reliance on crude oil and refined products; and to comply with a variety of governmental programs, in particular, the national Renewable Fuel Standard, or RFS, which was enacted to promote alternatives to fossil fuels. Customers The company markets and sells through its wholly-owned subsidiary, Kinergy Marketing LLC, or Kinergy, all of the alcohols the company produces. Kinergy also markets fuel-grade ethanol produced by third parties. The company markets and sells through its wholly-owned subsidiary, Alto Nutrients, LLC, all of the essential ingredients the company produces. The company also sells break bulk quantities through Eagle Alcohol to customers in the beverage, food, industrial and related-process industries. The company has extensive and long-standing customer relationships, both domestic and international, for the company’s specialty alcohols and essential ingredients, including yeast for pet food and human foods. These customers include producers and distributors of ingredients for cosmetics, sanitizers and related products, distilled spirits producers, food products manufacturers, producers of personal health/consumer health and personal care hygiene products, and global trading firms. The company’s renewable fuel customers are located throughout the Western and Midwestern United States and consist of integrated oil companies and gasoline marketers who blend fuel-grade ethanol into gasoline. The company’s customers depend on the company to provide a reliable supply of fuel-grade ethanol and manage the logistics and timing of delivery. The company secures additional fuel-grade ethanol supplies from third-party fuel-grade ethanol plants. The company markets its essential ingredient feed products to dairies and feedlots, in many cases located near the company’s production facilities. These customers use the company’s feed products for livestock as a substitute for corn and other sources of starch and protein. The company sells its corn oil to poultry, renewable diesel and biodiesel customers. The company does not market essential ingredients from other producers. During 2022, the company’s Pekin Campus production segment sold an aggregate of approximately 201.1 million gallons of alcohols and 851,500 tons of essential ingredients, on a dry matter basis. During 2022, the company’s Other production segment sold an aggregate of approximately 92.3 million gallons of alcohols and 785,900 tons of essential ingredients, on a dry matter basis. The company’s Corporate and other segment sold 7.6 million gallons of alcohols. During 2022, the company produced or purchased from third parties and resold an aggregate of 418.9 million gallons of alcohols to approximately 114 customers. For 2022, sales to the company’s two largest customers, Shell Trading US Company and Chevron Products USA, represented an aggregate of approximately 20% of the company’s net sales. Governmental Regulation The company’s business is subject to a wide range of federal, state and local laws and regulations directed at protecting public health and the environment, including those promulgated by the Occupational Safety and Health Administration, or OSHA, the U.S. Food and Drug Administration, or FDA, the EPA, and numerous state, local and international authorities. The company’s products for the Health, Home & Beauty, Food & Beverage and Essential Ingredients markets are subject to regulation by the FDA, as well as similar state agencies. Many of the FDA’s and FDCA’s rules and regulations apply directly to the company, as well as indirectly through their application in the company’s customers’ products. In addition to the governmental regulations applicable to the alcohol production and marketing industry described above, the company’s business is subject to additional federal, state and local environmental regulations, including regulations established by the EPA and state regulatory agencies related to water quality and air pollution control. History The company was founded in 2003. The company, a Delaware corporation, was incorporated in 2005. It was formerly known as Pacific Ethanol, Inc. and changed its name to Alto Ingredients, Inc. in 2021.