ALTO - Natgas and commodity price volatility adds to Alto's woes in dismal Q4 stock down ~35%

2023-03-10 13:09:22 ET

Shares of Alto Ingredients ( NASDAQ: ALTO ) fell as much as 35% on Friday after the company missed its fourth quarter profit and revenue estimates widely.

ALTO, a producer and marketer of specialty alcohols and essential ingredients in the U.S., on Thursday after the bell posted Q4 GAAP EPS of -$0.46, missing by 40 cents.

The company's Q4 revenue came in at $328.4M, which was not only -14.7% Y/Y, but also short of consensus by nearly $14M.

Commenting on results, CEO Mike Kandris during an earnings call with analysts said, "the fourth quarter and December, in particular, were impacted by extreme commodity volatility in the form of regional natural gas price spikes, high corn basis, as well as a dramatic decline in ethanol prices. These factors outweighed our performance in what was already a challenging year."

ALTO CFO Bryon McGregor also pointed out that crush margins turned negative in Q4, which added to the company's woes as it struggled with soaring natural gas prices in the western region.

The company said its growth, revenue diversification and efficiency initiatives currently in place will expand its annualized EBITDA by more than $65M by 2025 end, and over $125M by the end of 2026.

Other Q4 metrics: adjusted EBITDA negative $23.5M vs. positive $43.4M last year, cash and cash equivalents $36.5 million at December 31, 2022, SG&A expenses $7.6M vs. $9.4M.

ALTO stock lost over 40% of its value in 2022.

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