Ladies and gentlemen, thank you for standing by, and welcome to Alto Ingredients Fourth Quarter 2021 and Year-end Financial Results. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the conference over to your speaker for today, Dusty Buell, 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 Kandris, CEO; and Bryon 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 17, 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 10, 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 2 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 an Alto 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-GAAP measures to monitor the financial performance of operations and believes these measures will assist investors in assessing the company's performance for the period being reported. The company defines adjusted EBITDA as unaudited net income or loss attributed to Alto Ingredients before interest expense, interest income, provision or benefit for income taxes, asset impairment, 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. Bryon will then provide additional detail on our Q4 -- 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 Kandris, 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 noncore 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 at 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 the protein content greater than 50%. Increased corn oil yields by 50% or almost 9 million pounds annually and contributed over $9 million annually in adjusted EBITDA based on current market prices and the combination of additional sales…

Thank you, Mike. I'll provide some additional color around our results and metrics for the quarter and full year. For the fourth quarter of 2021, net sales were $385 million, up from $306 million in the third quarter due to an increase in our average sales price per gallon. The average sales price per gallon of renewable fuel largely reflects supply constraints translating into strong ethanol prices. We had alcohol sales of $325 million and $60 million in revenue from this -- from sales of our essential ingredients. Of the 69 million production gallons sold in the fourth quarter, 26 million gallons consisted of specialty alcohols, up 10 million gallons over fourth quarter 2020, reflecting expanded capacity and increased export and industrial demand. Gross profit improved significantly to $42.1 million, up from a gross loss of $3.4 million last quarter. This reflects not only the profitable operations of our Pekin campus, but also over $7 million in gross profit at our Idaho and Oregon facilities, over a $10 million improvement quarter-over-quarter and an $11 million swing year-over-year for the same period. SG&A expenses in the quarter were $9.4 million, bringing our annual SG&A of $29.2 million in line with our previous guidance. This quarter, we had a gain of $4.6 million for selling our production facility in Stockton, California. Provision for income taxes was $1.5 million. While we have a considerable amount of federal NOLs, some states in which we operate suspended their use in 2021, resulting in a modest tax expense. Taking into account profits for 2021, NOLs available to offset taxable income in 2022 and beyond, totaled $169 million. Net income available to common shareholders was $35.4 million or $0.49 per diluted share. This compares to a net loss of $3.5 million or $0.05 per share in the…

Thank you, Bryon. I appreciate that. In summary, we are pleased with our successes, having turned the company into a profitable business with significant unique opportunities for top and bottom line growth, and we feel we are in a great position as we continue to execute on key initiatives in 2022 and beyond. Finally, I'd be remiss if I didn't acknowledge the efforts of our tremendous employees that have contributed significantly to our success. With that, I'd like to open the call for questions. Operator?

[Operator Instructions] First question comes from the line of Eric Stine with Craig-Hallum.

So I would love to just try to dig in on the guide a little bit, and I can certainly appreciate there are so many moving parts right now, very difficult to kind of think about that. But maybe putting the fuel ethanol aside and with your contracted volumes, are you able to look at that judging where pricing is today and maybe your expectations and think about maybe what your nonfuel grade EBITDA would be even if it's directionally versus 2021 when you think about 2022?

I normally would, Eric, with the challenges is that there's so much volatility that's occurring across the board. It's not just about ethanol and corn, it's about logistical costs. It's about interruptions in that -- in supply and everything. So it would -- while if we were looking at a more steady position, we’d probably feel comfortable in providing that information. I think the best we could do is, what we feel comfortable with is, if you look -- and you kind of look at our base business, we provide segmented information, you can see that and you can build off of that and make a determination as to what that looks like going forward.

Okay. Well, maybe then as we think about the difference between the 2 years, you mentioned the $18 million as a result of some of the operational things that you've done. So you called out -- I just want to make sure I'm thinking about this right. We've certainly got Eagle, which in 2022, I believe you said that'd be another $4 million incremental in EBITDA and then the corn storage potentially is another 2, now tell me, I could have the numbers wrong.

Yes, the corn storage would be in Q4. That would be completed. So what we did is we took the projects that we had identified in the Q3 earnings call, and we've just layered them in based on completion of those projects. While, they're all pretty much on track, we had a few disruptions from supply chain, not unlike the rest of the world. But pretty much all of those projects are on track and in net, if you add in the Eagle contribution, that's the $18 million bracket.

Okay. That's my fault. Yes, you are referring to what you had previously discussed. Those would be for 2022. And then what you laid out, the $8 million to $9 million for Eagle plus the $2 million for storage, think about an incremental 11-plus, somewhere in that range, at least at this point for 2023. Is that kind of the way to think about it?

Yes. Correct.

I also don't want to cause any kind of real -- real panic around thinking about fuel ethanol. Indeed, if you look at the crush margin today, ethanol is actually tracked relatively well with the other commodity prices, even though we're seeing the highest prices -- historical prices in corn. So it's actually tracked well and actually that crush margin is better than it was a year ago at the same time. So again, there's a lot of things moving around. And I just -- we think it's not -- it would be prudent to not put a stake in the ground yet and with regard to 2022 at least.

No, understood. I can certainly appreciate that. So thinking about the 90 million gallons contracted. Curious, I know that you got the key certification. So now all of Pekin is covered by the pharmaceutical and the medical grade certifications. Did those limit you in any way in terms of contracting for 2022, given that those were recently received or is it just that given what's going on in the overall market in the world today that you weren't able to lock in a higher number of your overall 140.

No. Yes, I think the way to look at that is you go back to 2019, we were at 50, that ramped up to 70, and then we're now sitting at 90. And what we've said all along is we have 140 capable, but we want to be really careful by the way we layer that in. It's more of a longer term. We want to be very diligent. We want to be very sensitive to the market, we don't want to just go out and try to place that entire 140 and do damage to the market. We want to be very thoughtful. And what we've been able to do is grow about 28% a year in contracted volume. I think Bryon mentioned that number. And we'll continue on that path. We're never going to contract the entire 140 because we want to maintain a certain level of ability to play in the spot market or to make sure we have adequate supply for our customers that we do contract with. The redundancy that we gained by having the Pekin inside of the campus certified is that surety of supply to our customers and being able to have redundant certified product that gives us a lot of comfort that -- and our customers a lot of comfort that we're going to be able to honor the contractual amounts.

It also allows us to be able to move product back and forth between the facilities, so you're no longer constrained by one or the other.

Got it. And that 90 -- just sticking with the 90. So I mean, obviously, that's not a number that you'd ever give given your outlook, I mean, is it fair to say that 90 is kind of in line with what your expectations were.

Yes. Yes. And I think it's also like if you look, we guided and provided indications early on last year that we were at 70 million gallons and we ended up on the year at about 90 million gallons sold. So we’d expect to be able to sell product this year.

[Operator Instructions] Our next question comes from the line of Amit Dayal with H.C. Wainwright.

I mean just sticking to that 90 million specialty alcohol number, is there any concentration on that? Or is that spread across multiple customers, any concentration there is?

Actually, not necessarily -- I mean, and indeed, if you look at the spread of that across the board, kind of business segments that we talked about, we actually were able to grow it across those all 4 segments. So we continue to make as we had -- as a goal we were able to actually execute on that goal and move product up the value chain and expand those year-over-year. So -- and that's not and just to know, that does not include Eagle.

Okay. Okay. Got it. With respect to sort of the inflationary environment we’re in right now, have you shifted towards this ingredients opportunity or market. How should we think about potential impact on margins, et cetera? Are you able to pass on increases in their own costs to customers? Or is there a lag between when you can do some of those types of things relative to how 2021 played out for you guys and what 2022 is shaping up on that front? How should we think about margins and costs for you guys?

Yes. Amit, you kind of broke up on the first part. Were you asking with regards to our essential ingredients or are you asking across the board across all our different product lines?

Primarily, on the ingredient side, Bryon. But I mean, any color you can provide across for --just generally as well would be helpful.

It's a great question. Clearly, depending on where you are and what products you're selling, you have the ability to pass on or they get built into the price, particularly if you're selling under index for some of the more fixed-price contracts that becomes more of a challenge. So we try to offset those -- or to fix our input costs as much as we can for those products to be able to lock in that spread. But yes, it's certainly a challenge and something that we're keeping an eye on and making sure that we can offset those pressures as much as possible.

Okay. All right. I had a question on the trials, but Mike has already provided color on that. I'll take the other questions off-line, guys.

Thank you. Ladies and gentlemen, I would now like to turn the call over to Mike for closing remarks.

Thank you, and thank you, everyone, for joining us today and your continued support. We're excited about the progress we have made, and as we continue to execute on our strategic plan, we feel extremely optimistic about the future of Alto. Thank you, everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.