Alto Ingredients, Inc.

Good afternoon and welcome to the Aalto Ingredients Incorporated third quarter 2022 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, Please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Kirsten Chapman, LHA Investor Relations. Please go ahead.

Thank you, Gary, and thank you all for joining us today for the Alto Ingredients Third Quarter 2022 Results Conference Call. On the call today are Mike Kandris, 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 November 14th, the details of which are included in today's press release. A webcast replay will also be available at Alto Ingredients' website. Please note that the information on this call speaks only as of today, November 7th. 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 alto 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 ALTO Ingredients filings of 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-GAAP measures to monitor the financial performance of operations and believes that 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 before interest expense, interest income, provision and benefit for income taxes, asset impairments, loss on extinguishment of debt, acquisition-related expense, fair value adjustments, and depreciation and amortization expense. To support the company's review of non-GAAP information later in this call, a reconciling table was included in today's press release. On today's call, Mike will begin with some financial highlights and review our vision and quarterly activities. Brian will then provide additional detail on our Q3 2022 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 Kandra, CEO. Please go ahead, Mike.

Thank you, Kirsten, and thank you, everyone, for joining us today. We are excited about our recent developments and look forward to sharing them with you. In the quarter, we continued our efforts to improve our long-term position by upgrading equipment and operating systems. This will increase plant efficiency, reliability, redundancy, and capacity. And we have plans for larger capital intensive growth programs. We entered into a six-year term loan for up to $125 million announced today. recognizing the importance of accelerating our diversification growth strategies, including carbon capture, sequestration, corn oil, protein, and yeast expansion, as well as RNG and natural gas pipeline installations. As previously noted, we expect these projects to contribute significantly to both our top and bottom lines and to further insulate our results from commodity and margin swings. While expected, third quarter was challenging, and our results were negatively affected by low commodity margins driven by record corn basis, logistical constraints, and repairs and maintenance associated with the maintenance shutdown of our ICP facility. I am proud of our team who skillfully managed supply chain constraints and logistical issues and prevented disruption with our customer base. Brian will review the financial details later, yet I'll highlight year-to-date through September 30th, 2022, we have capitalized over $25 million of infrastructure improvements and spent an additional $3 million in related costs that flow through cost of goods sold further impacting both operating margins and our bottom line results. Now I'll review our progress on our major CapEx projects. At our Idaho plant, the first phase of the CoPro Max system to increase corn oil extraction is completed, and we are pleased that the yield has grown significantly, meeting our initial expectations. Given these positive results, we plan to proceed with similar installations at our other dry mills. The second phase to separate produced enhanced protein is on schedule to be completed in Q1 2023. Once the system is fully operational and tested, we will evaluate and schedule additional deployments. Regarding our corn storage expansion in Illinois, we are well into our construction, which we expect to complete before year-end. The doubling of our storage will enable us to hold corn reserves during holidays, winter weather, and through logistical issues with the supply chain. We expect this increased storage capacity to reduce the volatility of our production input costs. Regarding our efforts to enhance our specialty alcohol, we prioritized upgrading the equipment at our wet mill and have made great progress this quarter. This additional equipment, including a demethylizer column, has been delivered and installed, and we expect these upgrades to be fully operational in Q1 2023. With this best-in-class equipment and our recently achieved quality certifications, we will now be able to meet the highest quality requirements and service additional beverage customers at both our ICP distillery and Pekin wet mill. This will provide production redundancy, providing surety of supply to our customers, and enable us to improve our product mix and capture higher premiums in the alcohol value chain. In addition to our stated projects, we have also taken advantage of opportunities to replace and upgrade older equipment, specifically at our Pekin campus. For instance, the two new boilers we recently purchased, when installed, will increase efficiency, improve reliability, and reduce energy cost. As mentioned earlier, we entered into a term debt financing for up to $125 million. By increasing our financial flexibility with a supportive partner focused on our growth and development, we have created the ability to execute our CapEx strategy for long-term success. Circumventing the need to rely solely on organic cash flow, this financing will facilitate the timely completion of capital projects that are larger in magnitude, scope, and cost benefit to all stakeholders by building a more stable business. With our bolstered capital resources, we plan to undertake these key projects simultaneously. Consistent with our sustainability improvement program, we intend to add new natural gas and renewable natural gas pipelines to connect directly to nearby major hubs. This will increase our access to more competitive natural gas, better address our future energy needs, including supporting carbon capture, and improve our ability to monetize the renewable natural gas we currently produce at Flair. Overall, this will further reduce our carbon footprint and enhance the value of our products. This project is in the design and permitting phase and is expected to be completed in 2024. Additionally, after 24 years of being a valuable and reliable supplier to the pet food industry, we intend to commercially develop primary yeast through an aerobic fermentation process at our wet mill. Extending our brand along the value chain is a natural progression to other high-quality and increased margin markets, including flavors, nutrition, production, baking, and meat supplies. Although primary yeast production has a different process and different market, many existing as well as prospective customers have expressed interest in this product for years. Finally, our capital raise facilitates our decision process and speed to begin carbon capture sequestration. The options initially focused on just selling our CO2 to various pipeline developers at levels not attractive to us. The Inflation Reduction Act with changes to the Q45 and the benefits of producing clean ethanol are significant. As such, we are working with and are currently in ladder stage negotiations with various parties to finalize the best option for Alto's carbon sequestration future. To this end, We are finalizing the selection of both our front end engineering and design partner and our carbon transportation pipeline and sequestration developer. In summary, we are highly motivated to further reduce the impact of commodity exposure. These efforts are improving our position to capture a variety of new opportunities and drive profitable growth. With that, Brian, over to you for a review of the financials.