Alto Ingredients, Inc. Segments Disclosure

5.

SEGMENTS.

 

The Company reports its financial and operating performance in three segments: (1) Pekin Campus production, which includes the production and sale of alcohols and essential ingredients produced at the Company’s Pekin, Illinois campus, (2) marketing and distribution, which 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, and (3) Western production, which includes the production and sale of fuel-grade ethanol and essential ingredients, including liquid CO₂, produced at the Company’s two Western production facilities and its liquid CO₂ plant on an aggregated basis, none of which are individually so significant to be considered a separately reportable segment.

 

The Company manages and assesses the performance of its reportable segments by its gross profit (loss). As part of the Executive Committee’s review of segment-level performance, each member of the Executive Committee reviews the gross profit of the Company’s reportable segments and provides expertise and analysis from their respective areas which drive the evaluation of the performance of the Company’s reportable segments and allocation of resources to those segments. Even though the CEO has the authority to override the other members for strategic or other reasons, key decisions are made by the Executive Committee.

 

Included in income (loss) before provision (benefit) for income taxes are management fees charged by Alto Ingredients to each of the segments. The Pekin Campus production segment incurred $7,200,000, $7,200,000 and $5,280,000 in management fees for the years ended December 31, 2025, 2024 and 2023, respectively. The marketing and distribution segment incurred $5,400,000, $5,400,000 and $3,960,000 in management fees for the years ended December 31, 2025, 2024 and 2023, respectively. The Western production segment incurred $2,220,000, $3,600,000 and $2,640,000 in management fees for the years ended December 31, 2025, 2024 and 2023, respectively. Corporate and other includes the results of Eagle Alcohol and certain selling, general and administrative expenses, consisting primarily of corporate employee compensation, professional fees and overhead costs not directly related to a specific operating segment.

 

During the normal course of business, the segments do business with each other. The preponderance of this activity occurs when the Company’s marketing and distribution segment markets alcohol produced by the production segments for a marketing fee. These intersegment activities are considered arms’-length transactions. Consequently, although these transactions impact segment performance, they do not impact the Company’s consolidated results since all revenues and corresponding costs are eliminated upon consolidation.

 

For the years ended December 31, 2025, 2024 and 2023, capital expenditures incurred by the Pekin Campus segment were approximately $4.6 million, $6.8 million and $17.7 million, and capital expenditures incurred by the Western production segment were less than $0.1 million, and approximately $4.3 million and $11.8 million, respectively.

The following tables set forth certain financial data for the Company’s operating segments (in thousands):

 

		Years Ended December 31,
Net Sales		2025				2024				2023
Pekin Campus Production, recorded as gross:
Alcohol sales		$	415,801			$	415,710			$	502,217
Essential ingredient sales			174,598				169,308				217,702
Intersegment sales			1,088				1,243				1,427
Total Pekin Campus sales			591,487				586,261				721,346
Marketing and distribution:
Alcohol sales, gross		$	221,306			$	216,524			$	262,952
Intersegment sales			9,827				10,833				11,654
Total marketing and distribution sales			231,133				227,357				274,606
Western production, recorded as gross:
Alcohol sales		$	67,301			$	115,389			$	166,971
Essential ingredient sales			31,552				36,953				57,264
Intersegment sales			1,697				(122	)			134
Total Western production sales			100,550				152,220				224,369
Corporate and other			7,369				11,374				15,834
Intersegment eliminations			(12,612	)			(11,954	)			(13,215	)
Net sales as reported		$	917,927			$	965,258			$	1,222,940
Cost of goods sold:
Pekin Campus production		$	572,134			$	563,033			$	710,088
Marketing and distribution			214,095				213,023				259,234
Western production			96,897				172,209				230,445
Corporate and other			6,689				12,285				12,122
Intersegment eliminations			(6,801	)			(5,014	)			(4,602	)
Cost of goods sold as reported		$	883,014			$	955,536			$	1,207,287
Gross profit (loss):
Pekin Campus production		$	19,353			$	23,228			$	11,258
Marketing and distribution			17,038				14,334				15,372
Western production			3,653				(19,989	)			(6,076	)
Corporate and other			680				(911	)			3,712
Intersegment eliminations			(5,811	)			(6,940	)			(8,613	)
		$	34,913			$	9,722			$	15,653
Income (loss) before provision (benefit) for income taxes:
Pekin Campus production		$	15,059			$	6,308			$	(1,560	)
Marketing and distribution			7,698				5,261				7,644
Western production			(4,291	)			(51,086	)			(13,506	)
Corporate and other			(5,749	)			(19,294	)			(20,486	)
		$	12,717			$	(58,811	)		$	(27,908	)
Asset impairments:
Pekin Campus production		$	803			$	—			$	—
Western production			—				21,389				—
Corporate and other			—				3,401				6,544
		$	803			$	24,790			$	6,544
Depreciation and amortization expense:
Pekin Campus production		$	21,620			$	21,017			$	19,789
Western production			2,957				2,409				2,381
Corporate and other			639				982				910
		$	25,216			$	24,408			$	23,080
Interest expense, net of capitalized interest:
Pekin Campus production		$	2,421			$	1,765			$	(207	)
Marketing and distribution			342				389				822
Western production			5,391				2,829				1,164
Corporate and other			2,611				2,661				5,646
		$	10,765			$	7,644			$	7,425

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

 

		December 31, 2025				December 31, 2024
Total assets:
Pekin Campus production		$	208,947				223,934
Marketing and distribution			103,911				102,895
Western production			43,131				44,992
Corporate and other			32,797				29,617
		$	388,786			$	401,438