Segments

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

SEGMENTS

4. SEGMENTS.

The Company reports its financial and operating performance in three segments: (1) marketing and distribution, which includes marketing and merchant trading for Company-produced alcohols and essential ingredients on an aggregated basis, and third-party fuel-grade ethanol (2) Pekin Campus production, which includes the production and sale of alcohols and essential ingredients produced at the Company’s Pekin, Illinois campus, and (3) Other production, which includes the production and sale of fuel-grade ethanol and essential ingredients produced at all of the Company’s other production facilities on an aggregated basis, none of which are individually so significant to be considered a reportable segment.

Income before provision for income taxes includes management fees charged by Alto Ingredients to the segments. The Pekin Campus production segment incurred $4,344,000, $4,344,000 and $4,014,000 in management fees for the years ended December 31, 2021, 2020 and 2019, respectively. The marketing and distribution segment incurred $3,480,000 in management fees for each of the years ended December 31, 2021, 2020 and 2019, respectively. The Other production segment incurred $1,950,000, $3,893,000 and $5,188,000 in management fees for the years ended December 31, 2021, 2020 and 2019, respectively. Corporate activities include 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 segment markets alcohol produced by the production segments for a marketing fee, as discussed in Note 3. 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 in consolidation.

For the year ended December 31, 2021, capital expenditures incurred by the Pekin Campus segment and the Other production segment were approximately $14.3 million and $2.1 million, respectively. For the years ended December 31, 2020 and 2019, capital expenditures were substantially all incurred at the Company’s Pekin Campus production segment.

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

	Years Ended December 31,
	2021			2020			2019
Net Sales
Pekin Campus production, recorded as gross:
Alcohol sales	$	498,195		$	330,432		$	343,610
Essential ingredient sales		189,535			130,270			138,987
Intersegment sales		1,193			645			1,110
Total Pekin Campus sales		688,923			461,347			483,707
Marketing and distribution:
Alcohol sales, gross	$	379,422		$	256,209		$	355,101
Alcohol sales, net		1,753			1,529			1,831
Intersegment sales		10,061			9,648			18,219
Total marketing and distribution sales		391,236			267,386			375,151
Other Production, recorded as gross:
Alcohol sales	$	107,931		$	137,703		$	455,343
Essential ingredient sales		31,056			40,880			130,009
Intersegment sales		964			1,309			509
Total Other production sales		139,951			179,892			585,861
Intersegment eliminations		(12,218	)		(11,602	)		(19,838	)
Net sales as reported	$	1,207,892		$	897,023		$	1,424,881

Cost of goods sold:
Pekin Campus production	$	638,371		$	389,125		$	481,262
Marketing and distribution		371,371			253,465			347,185
Other production		136,401			206,412			612,040
Intersegment eliminations		(6,035	)		(4,838	)		(5,668	)
Cost of goods sold as reported	$	1,140,108		$	844,164		$	1,434,819

Income (loss) before provision (benefit) for income taxes:
Pekin Campus production	$	41,622		$	53,898		$	(21,441	)
Marketing and distribution		11,756			4,889			12,533
Other production		(3,762	)		(54,677	)		(77,019	)
Corporate activities		(2,065	)		(21,409	)		(15,375	)
	$	47,551		$	(17,299	)	$	(101,302	)
Depreciation expense:
Pekin Campus production	$	17,352		$	17,450		$	17,535
Other production		5,890			12,691			30,107
Corporate activities		50			127			267
	$	23,292		$	30,268		$	47,909

Interest expense:
Pekin Campus production	$	756	$	6,038	$	7,556
Marketing and distribution		963		1,574		3,053
Other production		167		334		13
Corporate activities		1,701		9,997		9,584
	$	3,587	$	17,943	$	20,206

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

	December 31, 2021		December 31, 2020
Total assets:
Pekin Campus production	$	266,197	$	234,439
Marketing and distribution		130,302		89,337
Other production		57,046		102,409
Corporate assets		31,408		50,633
	$	484,953	$	476,818