Segments

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

SEGMENTS

5. 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 sales of fuel-grade ethanol sourced from third parties (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 separately reportable segment.

Income before provision for income taxes includes management fees charged by Alto Ingredients to the segments. The Pekin Campus production segment incurred $5,046,000, $4,344,000 and $4,344,000 in management fees for the years ended December 31, 2022, 2021 and 2020, respectively. The marketing and distribution segment incurred $3,840,000, $3,480,000 and $3,480,000 in management fees for the years ended December 31, 2022, 2021 and 2020, respectively. The Other production segment incurred $2,400,000, $1,950,000 and $3,893,000 in management fees for the years ended December 31, 2022, 2021 and 2020, respectively. Corporate and other includes the results of Eagle Alcohol and 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, as discussed in Note 4. 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, 2022 and 2021, capital expenditures incurred by the Pekin Campus segment were approximately $25.7 million and $14.3 million, and by the Other production segment were approximately $12.3 million $2.1 million, respectively. For the year ended December 31, 2020, 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,
	2022			2021			2020
Net Sales
Pekin Campus production, recorded as gross:
Alcohol sales	$	521,273		$	498,195		$	330,432
Essential ingredient sales		225,871			189,535			130,270
Intersegment sales		1,212			1,193			645
Total Pekin Campus sales		748,356			688,923			461,347
Marketing and distribution:
Alcohol sales, gross	$	227,626		$	379,422		$	256,209
Alcohol sales, net		1,225			1,753			1,529
Intersegment sales		12,459			10,061			9,648
Total marketing and distribution sales		241,310			391,236			267,386
Other Production, recorded as gross:
Alcohol sales	$	253,605		$	107,931		$	137,703
Essential ingredient sales		90,209			31,056			40,880
Intersegment sales		22			964			1,309
Total Other production sales		343,836			139,951			179,892
Corporate and other		15,812			—			—
Intersegment eliminations		(13,693	)		(12,218	)		(11,602	)
Net sales as reported	$	1,335,621		$	1,207,892		$	897,023
Cost of goods sold:
Pekin Campus production	$	772,755		$	638,371		$	389,125
Marketing and distribution		229,288			371,371			253,465
Other production		353,775			136,401			206,412
Corporate and other		12,167			—			—
Intersegment eliminations		(4,814	)		(6,035	)		(4,838	)
Cost of goods sold as reported	$	1,363,171		$	1,140,108		$	844,164
Income (loss) before provision (benefit) for income taxes:
Pekin Campus production	$	(27,378	)	$	41,622		$	53,898
Marketing and distribution		3,749			11,756			4,889
Other production		(6,997	)		(3,762	)		(54,677	)
Corporate and other		(8,926	)		(2,065	)		(21,409	)
	$	(39,552	)	$	47,551		$	(17,299	)
Depreciation and amortization expense:
Pekin Campus production	$	19,136		$	17,352		$	17,450
Other production		5,085			5,890			12,691
Corporate and other		874			50			127
	$	25,095		$	23,292		$	30,268
Interest expense, net of capitalized interest:
Pekin Campus production	$	(381	)	$	756		$	6,038
Marketing and distribution		1,658			963			1,574
Other production		(339	)		167			334
Corporate and other		889			1,701			9,997
	$	1,827		$	3,587		$	17,943

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

	December 31, 2022		December 31, 2021
Total assets:
Pekin Campus production	$	257,089		266,197
Marketing and distribution		114,755		130,302
Other production		51,886		57,046
Corporate and other		54,591		31,408
	$	478,321	$	484,953