Alto Ingredients, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Aalto Ingredients' fourth quarter 2021 and year-end financial results. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you need to press star then zero on your phone. I'm sorry, you will need to press star then one on your telephone to ask the question. Please be advised that today's conference is being recorded. If you require any further assistance, please press star, then zero. I would now like to turn the conference over to your speaker for today. Dusty Brule, you may begin.

Thank you, operator, and thank you all for joining us today for the Alto Ingredients fourth quarter and year-end 2021 results conference call. On the call today are Mike Kandra, CEO, and Brian McGregor, CFO. Alto Ingredients issued a press release after the market closed today providing details of the company's quarterly results. The company also prepared a presentation for today's call that is available on the company's website at altoingredients.com. A telephone replay of today's call will be available through March 17th, the details of which are included in today's earnings press release. A webcast replay will also be available at Alto Ingredients' website. Please note that information on this call speaks only as of today, March 10th. You are advised that time-sensitive information may no longer be accurate at the time of any replay. Please refer to the company's safe harbor statement on slide two of the presentation available online, which states that some of the comments in this presentation constitute forward-looking statements and considerations that involve a number of risks and uncertainties. The actual future results of ALCHO ingredients could differ materially from those statements. Factors that could cause or contribute to such differences include, but are not limited to, events, risks, and other factors previously and from time to time disclosed in auto ingredients filings with the SEC. Except as required by applicable law, the company assumes no obligation to update any forward-looking statements. In management's prepared remarks, non-GAAP measures will be referenced. Management uses these non-GAP measures to monitor their financial performance of operations and believes these measures will assist investors in assessing the company's performance for the periods being reported. The company defines adjusted EBITDA as unaudited net income or loss attributed to auto ingredients before interest expense, interest income, provision, or benefit for income taxes, asset impairments, loss on extinguishment of debt, purchase accounting adjustments, fair value adjustments, and depreciation expense. To support the company's review of non-GAAP information later on this call, a reconciling table was included in today's press release. On today's call, Mike will begin with some financial highlights and accomplishments for 2021, followed by key plans for the next few years. Brian will then provide additional detail on our Q4 and 2021 financial results. Then Mike will wrap up with a summary before opening the call for Q&A. It is now my pleasure to introduce Mike Kander, CEO. Mike?

Thank you, Dusty, and thank you, everyone, for joining us today to hear about the exciting progress we are making as we continue to execute on our strategic initiatives. We promised the market we would change the strategic vision and focus of the company, and I believe we have accomplished that goal. I'll begin with some financial highlights for full year 2021 over 2020. Our net sales reached $1.2 billion, an increase of 35%. Gross profit increased to $67.8 million, up 28%. Net income increased to $44.2 million, compared to a loss of $16.4 million in 2020, and adjusted EBITDA grew to $76.8 million, up 15%. This outstanding performance is the result of numerous achievements. To highlight a few, beginning in 2021, we renamed the company to Alto Ingredients. This was important for us, both internally and externally, to reinforce our broadened outlook, brand, and strategic direction. During the year, we invested in capacity, expanded our protein strategy, secured valuable certifications, optimized our asset base by selling non-core facilities, and became net debt free. In November of 2021, we restarted our Magic Valley facility, which we idled in 2020 due to low renewable fuel margins. Magic Valley has the advantage of being located in a market that is experiencing significant growth in cattle, poultry, pork, and aquaculture. Given these opportunities, we committed to resume operations of the facility and began upgrading this dry mill to produce concentrated protein feed and food ingredients by installing Harvesting Technologies' patented CoProMax system. When completed, the system will produce over 33,000 tons annually of feed with a protein content greater than 50%, increase corn oil yields by 50%, or almost 9 million pounds annually, and contribute over $9 million annually in adjusted EBITDA based on current market prices and the combination of additional sales of corn oil and high-value proteins. We expect to be able to commence our expanded production of corn oil at the facility in mid-2022 as planned, and we expect to be fully operational in oil and protein feed before year-end. Next, we invested in certifications for specialty alcohol production. Where high quality is table stakes in the specialty alcohol market, reliability and surety of supply as demonstrated through rigorous and robust certifications, are sought after and valuable market differentiators for our customers. After securing ISO 9001 certification, the world's most widely recognized standard for quality management systems, in December of 2020, we turned our focus on the comprehensive processes and procedures required for pharmaceutical and medical markets. In February of 2021, at ICP, we earned ICHQ-7, which is the Internationally Recognized Active Pharmaceutical Ingredient Certification, and EXIPAC Good Manufacturing Practices Certification, which is the Globally Recognized Standard for Use of Excipients, which are the inactive components of a drug or medication. Then, and most importantly, in February of 2022, we earned these same distinctions at our Alto Pekin facility, thus creating the advantage of having full redundancy of the certified product at our Pekin campus. These certifications appeal to customers using high-grade alcohols and health home, and beauty, as well as distilled spirits. They can deepen existing customer relationships and open the door to new opportunities in domestic markets as well as a growing export market. On to a review of monetizing assets. As discussed, we have focused on our strengths, leaning towards more profitable and less commoditized markets. To that end, we chose to dispose of our non-core facilities in Nebraska and California. Upon exiting these businesses, we utilized the proceeds from the sales combined with strong cash flow from our operations to retire restricted debt. Today, we have a stronger balance sheet and are net debt free. Brian will elaborate more on this in a moment. On January 14, 2022, we completed the downstream acquisition of Eagle Alcohol, an established leader in premium alcohol distribution. Eagle expands our scope of offerings, customer base, and commercial opportunities, and we expect it to accelerate our penetration into new high-margin markets. Eagle specializes in small package products preferred by a large segment of the specialty alcohol market, including beverage alcohol companies. Concentrating in break-bulk distribution, Eagle purchases bulk alcohol from suppliers, including Alto, then stores, denatures, packages, and resells alcohol products in smaller sizes, including tank trucks, totes, and drums. that garner a premium to bulk alcohols. Eagle also delivers products to customers in the beverage, food, pharma, and related process industries via its own dedicated trucking fleet and common carrier. Between Alto's bulk production and EGLE's differentiated distribution capabilities and established customer relationships, we look forward to lowering our exposure to bulk alcohol price volatility, increasing our margins, and creating new opportunities for organic growth. We are excited to welcome former EGLE President Dan Kruegan to our team as Vice President of Elto and General Manager of EGLE. He and his team bring over 60 years of combined experience and expertise in the chemical and alcohol distribution industry. As we have worked with Eagle for some time, the integration efforts are minimal and progressing smoothly. Eagle fits perfectly into our strategic roadmap. As we continue to raise the quality of our production to the highest grades of grain-neutral spirits, by further enhancing our distillation process, optimizing our production capabilities, and integrating EGLE's strong distribution and sales services. In summary today, we operate three biorefinery campuses with one wet and four dry mills located in Pekin, Illinois, Burley, Idaho, and Boardman, Oregon. and are able to produce 350 million gallons of alcohol annually. In addition, we now also operate Eagle's Distribution Center, located in St. Louis, Missouri. Our numerous Blue Chip customers incorporate our various high-quality products into a range of vital finished goods that touch people's lives every day, from pharmaceuticals to pet foods. For example, in the health, home, and beauty markets, Our products include API-grade ethyl alcohol used in mouthwashes, cosmetics, and pharmaceuticals, USP-grade ethyl alcohol used in hand sanitizer disinfectant cleaning products, and industrial-grade ethyl alcohol. In the food and beverage market, our products include grain-neutral spirits, or GNS, used in alcohol products, beverages, and vinegar, and CO2 used in industrial applications and dry ice. In the essential ingredients markets, our products include alto yeast, corn gluten, corn condensed distillers, corn oil and germ, and distillers grains, all used in pet food, food production, and animal feed. And in the renewable fuels markets, our products are used in transportation fuels. In 2022, we intend to reinvest further. Regarding EGLE, we plan to invest $5 million in 2022 to further optimize specialty alcohol distribution. We expect EGLE to contribute $4 million of EBITDA in 2022 and an additional $4 to $5 million annually beginning in 2023 for a total of $8 to $9 million annually. Also, we will expand corn storage at our Pekin campus. This will increase the company's corn buying flexibility, enabling Elta to reduce the need to purchase product at premium prices when farmers and elevators are not shipping corn during holidays or unfavorable weather conditions. We will spend approximately $6 million and expect this project to provide over $2 million of EBITDA annually with a payback in less than three years beginning in Q4 of 2022. Naturally, we will continue to reinvest in our facilities, upgrading and improving systems to increase efficiency and plant uptime. These capital expenditures will be more ongoing in nature and and we will provide color on these projects periodically as the year progresses. As previously discussed, also in 2022, we are focused on completing the CoPro MAX system at Magic Valley. Then, in 2023 and beyond, we plan to roll out these upgrades to our other three dry mills with the goal to have them fully operational by no later than year-end 2024. The total investment planned is approximately $70 million for all four facilities. The benefit is expected to exceed $34 million in EBITDA annually based on current market values. There are other opportunities in development. For example, we are evaluating investing in a natural gas bypass at our Pekin campus. reducing the price we pay for natural gas by approximately 11% based on 2021 values and bypassing the local utility. This would create the opportunity to sell renewable natural gas produced by the plant directly into the pipeline in the future. We would expect to invest approximately $9 million in 2023 for a return of approximately $5 million in EVA-DA annually beginning in 2024. Regarding carbon capture and sequestration, the various options include developing the project as a standalone system sized to our facility or interconnecting with other viable gathering and sequestration systems under development in close proximity to our Pekin campus. Prior to signing commitments, we want to ensure that we fully evaluate risks and benefits to affect the highest and best probable outcome for investors, the company, and the communities in which we live and operate. At the same time, we also believe that this is a high priority for us, and we look forward to providing more information at a later date. We began our transformation 18 months ago. and have turned Alto into a consistently profitable company. We are committed to continue to transform the company by pursuing additional profitable opportunities with a focus on 2024 and beyond. Before I turn the call over to Pariah, I would like to welcome Austa Graham, our new Vice President and General Counsel. Austa has over 15 years of legal experience in multiple industries, including specialty chemicals, components, and industrial coatings, and she will be a valuable addition to our executive team. I would now turn the call over to Brian to review the financials.