Alto Ingredients Inc (ALTO) 2024 Q1 法說會逐字稿

Good day, and welcome to the Alto Ingredients, Inc. First Quarter 2024 Financial Results Conference Call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Kirsten Chapman of LHA Investor. Please go ahead.

美好的一天，歡迎參加 Alto Ingredients, Inc. 2024 年第一季財務業績電話會議。 （操作員說明）請注意此事件正在被記錄。我現在想將會議轉交給 LHA Investor 的 Kirsten Chapman。請繼續。

Thank you, Cailey, and thank you all for joining us today for the Alta Ingredients First Quarter 2024 Results Conference Call. On the call today are President and CEO, Bryon McGregor; and CFO, Rob Olander. Alto Ingredients issued a press release after market closed today, providing details of the company's financial results. The company has 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 made available through May 13, 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, May 6. You are advised that any 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 risks and uncertainties.

謝謝 Cailey，也謝謝大家今天加入我們參加 Alta Ingredients 2024 年第一季業績電話會議。今天參加電話會議的是總裁兼執行長布萊恩·麥格雷戈 (Bryon McGregor)；財務長羅布‧奧蘭德 (Rob Olander)。 Alto Ingredients 在今天收盤後發布了一份新聞稿，提供了公司財務表現的詳細資訊。該公司還為今天的電話會議準備了演示文稿，可在該公司網站 altoingredients.com 上查看。今天通話的電話重播將持續到 5 月 13 日，詳細資訊包含在今天的新聞稿中。 Alto Ingredients 網站也將提供網路廣播重播。請注意，本次電話會議中的資訊僅截至今天 5 月 6 日。請參閱線上簡報投影片 2 上的公司安全港聲明，該聲明指出，本簡報中的一些評論構成涉及風險和不確定性的前瞻性聲明和考慮因素。

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 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 periods reported. The company defines adjusted EBITDA as unaudited consolidated net income or loss before interest expense, interest income, provision for income taxes, asset impairment, loss on extinguishment of debt, unrealized derivatives, gains and losses, acquisitions related expense and depreciation and amortization expense. To support the company's review of non-GAAP financial information a reconciling table was included in today's press release. On today's call, Brian will provide a review of our strategic plan and activities. Rob will comment on our financial results. Then Brian will wrap up and open the call for questions. It's now my pleasure to introduce Bryon McGregor. Please go ahead, sir.

Alto Ingredients 未來的實際結果可能與這些聲明有重大差異。可能導致或促成此類差異的因素包括但不限於 Alto Ingredients 先前向 SEC 提交的文件中不時揭露的事件、風險和其他因素。除適用法律要求外，本公司不承擔更新任何前瞻性聲明的義務。在管理階層準備好的評論中，將引用非公認會計原則措施。管理層使用這些非公認會計準則衡量標準來監控營運的財務業績，並相信這些衡量標準將有助於投資者評估公司在報告期間的業績。該公司將調整後的EBITDA 定義為未審計的利息費用前綜合淨收入或損失、利息收入、所得稅準備金、資產減值、債務清償損失、未實現的衍生性商品、損益、收購相關費用以及折舊和攤銷費用。為了支持公司對非公認會計準則財務資訊的審查，今天的新聞稿中包含了一個調節表。在今天的電話會議上，布萊恩將回顧我們的策略計畫和活動。羅布將對我們的財務業績發表評論。然後布萊恩將結束並開始提問。現在我很高興向大家介紹布萊恩·麥格雷戈。請繼續，先生。

Thank you, Kirsten. Thank you, everyone, for joining us today. We began 2024 with a refined vision to produce a variety of essential ingredients and the highest-grade beverage alcohol in the industry and prioritize our carbon capture and storage, or CCS, initiative. We are leveraging the unique capabilities of our peak and campus and our other assets to moderate the impact of crush margin fluctuations. I'm encouraged by the strategic and operational progress we've made so far this year. However, relatively low but improving crush margins and various weather factors impacted our financial results in the first quarter. That said, high-quality alcohol sales from our Pekin campus increased year-over-year, contributing toward an overall improved gross profit and adjusted EBITDA on a comparative basis. Rob will discuss our financial results in greater detail. I'll begin by reviewing CCS and our ongoing strategic projects. With CCS, our goal is to create value for Alto, our customers, our surrounding communities and our shareholders by substantially reducing our carbon footprint. Our Pekin campus facilities, their CO2 production and their location provide Alto a unique CCS opportunity. We continue to negotiate the terms of our proposed agreements with potential financial partners and with Walt, a leading CCS developer focused on the development, capitalization and operation of carbon storage assets.

謝謝你，克爾斯滕。謝謝大家今天加入我們。 2024 年伊始，我們的願景是生產各種必需成分和業內最高等級的飲料酒精，並優先考慮我們的碳捕獲和儲存 (CCS) 計劃。我們正在利用我們的高峰和校園以及其他資產的獨特能力來緩解擠壓利潤波動的影響。我對今年迄今為止我們所取得的策略和營運進展感到鼓舞。然而，相對較低但不斷改善的壓榨利潤和各種天氣因素影響了我們第一季的財務表現。儘管如此，我們北京園區的高品質酒類銷售量較去年同期成長，有助於毛利和調整後 EBITDA 的整體改善。羅布將更詳細地討論我們的財務表現。我將首先回顧 CCS 和我們正在進行的戰略項目。透過 CCS，我們的目標是透過大幅減少碳足跡，為 Alto、我們的客戶、週邊社區和股東創造價值。我們的北京園區設施、其二氧化碳生產及其位置為 Alto 提供了獨特的 CCS 機會。我們將繼續與潛在的金融合作夥伴以及專注於碳封存資產開發、資本化和營運的領先 CCS 開發商 Walt 就擬議協議的條款進行談判。

Our plan is to work with Vault to safely transport the CO2 to a geological reserve board, nearby in permanently stored securely deep underground. As noted in March, together with Vault, we are driving ahead with our respective activities for system design, community outreach, vendor negotiations and schedule alignment requirements to procure equipment for compression and to support the installation of additional power. Vault completed the 2D seismic geologic survey and has begun data analysis. They have also advanced the work required to submit the EPA Class VI permit applications. Our CCS project provides compelling economics that we believe we can enhance with more efficient, lower-cost energy production. To this end, we are evaluating multiple capital options. We are in discussions with a highly regarded independent energy company. This potential partner has been engaged to complete their field study for an energy cogeneration facility that would build -- that they would build on operating and maintain on our site. This facility with lower Alto's capital expenditures, improve operating efficiencies and reduce our forecasted long-term energy costs. We are also continuing conversations with our current utility provider to expand energy supply capabilities as an alternative to cogeneration.

我們的計劃是與 Vault 合作，將二氧化碳安全地運送到附近的地質儲備委員會，永久安全地儲存在地下深處。正如 3 月所指出的，我們正在與 Vault 一起推進各自的系統設計、社區外展、供應商談判和進度調整要求活動，以採購壓縮設備並支援額外電力的安裝。 Vault完成了二維地震地質調查並已開始數據分析。他們還推進了提交 EPA VI 類許可證申請所需的工作。我們的 CCS 專案提供了令人信服的經濟效益，我們相信我們可以透過更有效率、更低成本的能源生產來增強這種經濟效益。為此，我們正在評估多種資本選擇。我們正在與一家備受推崇的獨立能源公司進行討論。這個潛在的合作夥伴已參與完成他們對將建造的能源熱電聯產設施的實地研究——他們將在我們的網站上運營和維護該設施。該設施降低了 Alto 的資本支出，提高了營運效率並降低了我們預測的長期能源成本。我們也繼續與目前的公用事業提供者對話，以擴大能源供應能力，作為熱電聯產的替代方案。

Our specialty alcohol products include highly differentiated 192 proof and low moisture 200 proof grain neutral spirits that create customer opportunities higher up the value chain. In Q1 2024, we sold 26 million gallons of specialty alcohol, up from 21 million gallons in Q1 2023. As mentioned in March, for 2024, we contracted approximately 93 million gallons of fixed price, specialty alcohol at an average premium to renewal fuel of $0.31 per gallon. Our biennial part -- excuse me, our biennial Pekin campus wet mill outage was completed in April. The plant was offline for 10 days while we executed the scope of work with over 450 discrete tasks focused on corrective and preventative maintenance as well as upgrades to plant infrastructure. With the outage complete, the plant has safely returned to operation and is ramping up to target production rates. These efforts will result in more consistent and higher production rates, improving reliability as we approach the summer driving season. At Magic Valley, we have been diligently working on our corn oil and high-protein technology to return the facility to a more sustainable profitability by reducing the impact of periodic low fresh margins and higher destination corn basis.

我們的特殊酒精產品包括高度差異化的 192 度和低水分 200 度穀物中性烈酒，為價值鏈上游的客戶創造機會。 2024 年第一季度，我們銷售了2600 萬加侖特種酒精，高於2023 年第一季度的2100 萬加侖。 正如3 月份提到的，2024 年，我們簽訂了約9300 萬加侖固定價格特種酒精合同，平均溢價為更新燃料每加侖 0.31 美元。我們兩年一次的部分——對不起，我們兩年一次的北京園區濕磨機停駛已於四月完成。該工廠關閉了 10 天，期間我們執行了 450 多項離散任務，重點是糾正性和預防性維護以及工廠基礎設施的升級。停電完成後，該工廠已安全恢復運營，並正在逐步提高到目標生產率。隨著夏季駕駛季節的臨近，這些努力將帶來更一致和更高的生產力，並提高可靠性。在魔谷，我們一直在努力研究玉米油和高蛋白技術，透過減少週期性低新鮮利潤和較高目的地玉米基差的影響，使工廠恢復更永續的獲利能力。

As outlined in March, we are working with our high-protein system vendor, Harvest technology to achieve the intended production rate, quality and consistency of our corn oil and high protein output at the facility. While the plant is hot idled, we are using the downtime to accelerate routine maintenance activities to optimize plant efficiency upon restart. The equipment for the new system modifications has been ordered and based on current delivery and installation schedules, we expect to resume production in late June or early July. As a reminder, Harvest Technology is paying for the direct cost and equipment and design changes associated with the core oil and high protein systems. As noted previously, as always, we evaluate our path to increase margins, improve profitability and deliver the highest return to our shareholders. We continue to assess our current portfolio of assets. We will provide updates if and when appropriate.

如三月所述，我們正在與高蛋白系統供應商 Harvest technology 合作，以實現工廠玉米油和高蛋白質產量的預期生產率、品質和一致性。當工廠處於熱閒置狀態時，我們利用停機時間來加速日常維護活動，以在重新啟動後優化工廠效率。新系統改造的設備已經訂購，根據目前的交貨和安裝時間表，我們預計在6月底或7月初恢復生產。提醒一下，Harvest Technology 正在支付與核心油和高蛋白系統相關的直接成本以及設備和設計變更。如前所述，我們一如既往地評估提高利潤率、提高獲利能力並為股東提供最高回報的途徑。我們繼續評估我們目前的資產組合。我們將在適當的時候提供更新。

Before I turn the call over to Rob, I have a few corporate updates to review. As part of our sustainability efforts, we finished our annual Scope 1 and 2 greenhouse gas verifications during the quarter. In April, as part of our succession planning, we announced our new COO, Todd Benton. I'd like to congratulate Todd on his promotion and Mike Kandris on its forthcoming retirement. Todd has over 25 years' experience at the Peakon facility in 30 years in the industry with his good relations with the workforce, deep connection with the community and extensive record of achievement for operational excellence. The Board and I look forward to his contributions to our ongoing safety, operational efficiency, reliability and sustainability efforts. Now I'll turn the call over to our CFO, Rob Olander.

在將電話轉給 Rob 之前，我需要查看一些公司最新動態。作為永續發展努力的一部分，我們在本季度完成了年度範圍 1 和範圍 2 溫室氣體核查。 4 月份，作為繼任計畫的一部分，我們宣布了新任營運長 Todd Benton。我要祝賀托德晉升，並祝賀麥克坎德里斯即將退休。 Todd 在該行業工作了 30 年，在 Peakon 工廠擁有超過 25 年的經驗，與員工關係良好，與社區有著深厚的聯繫，並在卓越運營方面取得了廣泛的成就。我和董事會期待他為我們持續的安全、營運效率、可靠性和永續性工作做出貢獻。現在我將把電話轉給我們的財務長 Rob Olander。

Thanks, Bryon. I'll now review the financial results for the first quarter of 2024 compared to the first quarter of 2023. We sold 99 million gallons during both Q1 2024 and 2023. Q1 2024 net sales were $241 million compared to $314 million in Q1 2023, reflecting lower market prices in 2024. Yet Q1 2024 gross loss improved by $800,000 and adjusted EBITDA improved by $3.4 million compared to Q1 of 2023. These improved results reflect better than ethanol crush margins, increased sales, especially alcohol and the positive impact of our efforts to lower costs and expand operating efficiencies. However, the following factors impacted the results. First, as you know, we employ a variety of risk management strategies to mitigate the price volatility of different commodities throughout the year as a normal course of business. In recent years, we have seen extreme volatility in the price of natural gas, resulting from foreign wars, political events and extended periods of subzero weather conditions. To mitigate the risk of high price volatility, we locked in a significant portion of our gas needs at fixed prices in advance of Q1 2024. Year-to-date, the market has experienced historically low prices due to higher production and supply coupled with lower consumer demand. While our positions benefited us during the full call in January, we recognized an incremental loss of $4.9 million related to natural gas hedging activities in Q1 of 2024.

謝謝，布萊恩。現在，我將回顧2024 年第一季與2023 年第一季相比的財務表現。億美元，而2023 年第一季為3.14 億美元，反映出2024 年市場價格較低。 EBITDA 增加了340 萬美元。然而，以下因素影響了結果。首先，如您所知，作為正常業務流程，我們採用各種風險管理策略來減輕全年不同商品的價格波動。近年來，由於對外戰爭、政治事件和長期的零度以下天氣條件，我們看到天然氣價格劇烈波動。為了降低價格大幅波動的風險，我們在 2024 年第一季之前以固定價格鎖定了很大一部分天然氣需求。需求。雖然我們的部位在 1 月的全面電話會議中使我們受益，但我們認識到 2024 年第一季與天然氣對沖活動相關的增量損失為 490 萬美元。

Also, and as covered on our last call, the extreme cold weather in January at our Pekin campus restricted barge deliveries and increased standby fees. To manage inventory levels, we transported more product by rail, which is a higher-cost motor transportation. Further, this extreme cold weather necessitated a shift to lower-margin feed products and reduced production rates across the facility, decreasing specialty alcohol production. At our Columbia facility, our Q1 production was hindered by issues with our centric futures. To address this, in mid-March, we installed 2 upgraded, more reliable models that will reduce ongoing maintenance costs. We commissioned 1 unit and the other will begin operating in May. We also rebuilt the remaining units, enabling the plant to return to target run rate. Today, the plant is running well. Given these events, Q1 2024 repairs and maintenance expense was $7.5 million, $1 million higher compared to Q1 2023. As this increase reflects the timing of the accelerated costs, we remain on track for our estimate of $34 million in repairs and maintenance for 2024. As of March 31, our cash balance was $29 million, and our total loan borrowing availability was $91 million to support our business operations and capital investment initiatives. Our borrowing availability includes $26 million under our operating line of credit and $65 million subject to certain conditions under our term loan facility. In Q1 2024, we generated $1.4 million in positive cash flow from operations. We invested $4.6 million in CapEx, in line with our $25 million plan for 2024. With that, I'll turn the call back to Bryon.

此外，正如我們上次電話會議所述，我們北京園區一月份的極端寒冷天氣限制了駁船運輸並增加了等待費用。為了管理庫存水平，我們透過鐵路運輸更多的產品，這是一種成本較高的汽車運輸方式。此外，這種極端寒冷的天氣需要轉向利潤較低的飼料產品，並降低了整個工廠的生產率，從而減少了特殊酒精的產量。在我們的哥倫比亞工廠，我們第一季的生產因中心未來的問題而受到阻礙。為了解決這個問題，我們在 3 月中旬安裝了 2 個升級版、更可靠的型號，這將減少持續的維護成本。我們調試了 1 台機組，另一台將於 5 月開始營運。我們也重建了剩餘的裝置，使工廠恢復到目標運作率。如今，該工廠運作良好。鑑於這些事件，2024 年第一季的維修和維護費用為750 萬美元，比2023 年第一季高出100 萬美元。和維護費用為3400 萬美元的估計。我們的借款包括營運信貸額度下的 2,600 萬美元和定期貸款安排下的 6,500 萬美元，但須符合某些條件。 2024 年第一季度，我們的營運產生了 140 萬美元的正現金流。我們在資本支出上投資了 460 萬美元，符合 2024 年 2500 萬美元的計劃。

Thank you, Rob. Looking ahead, ethanol crush margins have continued to improve in Q2 and the market outlook for the next 3 quarters remains favorable. While we are forecasting lower feed prices for the rest of the year, we have solid foreign inventories and improved export demand for ethanol. In addition, the EPA summer waiver for the 15% blends will facilitate sustained use of higher blend renewable transportation fuel. Operationally, we expect that our recent work should result in more consistent and higher production rates, improving reliability and profitability. Longer term, the updated guidelines around tax credits for including ethanol in the production of sustainable aviation fuel further validates our CCS efforts. Finally, we are pleased with the progress we have made with our CCS initiative and the value we expect to deliver to stakeholders. Operator, we are ready to begin question-and-answer.

謝謝你，羅布。展望未來，第二季乙醇壓榨利潤率持續改善，未來三個季度的市場前景依然樂觀。雖然我們預計今年剩餘時間飼料價格將會下降，但我們擁有充足的國外庫存，乙醇的出口需求有所改善。此外，EPA 夏季對 15% 混合燃料的豁免將促進高混合再生運輸燃料的持續使用。在營運方面，我們預計我們最近的工作應該會帶來更一致和更高的生產力，從而提高可靠性和獲利能力。從長遠來看，關於將乙醇納入永續航空燃料生產的稅收抵免的更新指南進一步驗證了我們的 CCS 努力。最後，我們對 CCS 計劃所取得的進展以及我們期望為利害關係人提供的價值感到滿意。接線員，我們準備開始問答。

We will now begin the question-and-answer session. (Operator Insructions] Your first question comes from Eric Stine with Craig-Hallum Capital Group.

我們現在開始問答環節。 （操作員說明）您的第一個問題來自 Craig-Hallum Capital Group 的 Eric Stine。

So just starting with carbon capture. You gave a lot of detail there, but I guess I was unclear about things that had been done versus things that were to come. And so just curious if you could just run over that maybe with a little more detail. And then just talk about -- you gave some additional steps that are needed and maybe a time frame for some of those steps.

所以就從碳捕獲開始吧。你在那裡提供了很多細節，但我想我不清楚已經完成的事情和即將發生的事情。所以只是好奇你是否可以稍微詳細地介紹一下。然後談談——你給了一些需要的額外步驟，也許還有其中一些步驟的時間框架。

Yes. So Eric, there's -- I mean clearly coming to a final agreement with our -- with Vault is important as well as advancing discussions with financial partners and the like, given the amount of work that still needs to be completed. That said, we've made good progress with regards to Vault has made great progress with regards to a lot of the work that goes into the Classics permit. In addition to that, we're doing a lot of work with Vault around the community and making sure that we're responding to questions and comments and as well as reviewing siting. And there's probably a slew of other things that I'm missing. That said, our goal is to have -- if we stay on track as we are to have our application in call it, end of summer before fourth quarter of this year.

是的。艾瑞克，我的意思是，考慮到仍需要完成的工作量，與 Vault 達成最終協議很重要，並且推進與金融合作夥伴等的討論也很重要。也就是說，我們在 Vault 方面取得了良好進展，在經典許可方面的許多工作也取得了巨大進展。除此之外，我們還在社群中與 Vault 進行了大量合作，確保我們能夠回覆問題和評論並審查選址。我可能還缺少很多其他東西。也就是說，我們的目標是——如果我們保持在正軌，我們的申請將在今年第四季之前完成。

And is that -- you might have said in the past or maybe indications that that's an 18 months plus kind of review process? Or am I not thinking about that right?

您過去可能說過，或者可能有跡象表明這是一個 18 個月以上的審查過程？還是我沒有考慮到這一點？

That's correct. Under the EPA's latest indications they had upped the amount of time for review and expectations for 18 to 24 months. So our expectation is as conservatively as that we can keep that hopefully within a 24-month period of time.

這是正確的。根據 EPA 的最新跡象，他們已將審查和預期的時間延長至 18 至 24 個月。因此，我們的預期是保守的，希望能夠在 24 個月的時間內維持這一目標。

Okay. And then just on the equipment side, you mentioned I was unclear if you've ordered some of that equipment or are going to order that equipment. And I know that evaluating vendors that was something that you were very focused on or talked about last quarter? So maybe where does that stand?

好的。然後就設備方面而言，您提到我不清楚您是否已經訂購了某些設備或打算訂購該設備。我知道評估供應商是您上季度非常關注或談論的事情？那麼這到底是怎麼回事呢？

Yes. So Eric, the long pole in tens is clearly the EPA Class VI permit, right? And really, the work that we do around that is, clearly, you have to purchase your compression equipment. And then on top of that, we're layering in energy, right? So we need our energy, our power systems and the like to be up to speed. While those are also along the items, they're not as long as what you would expect under the Class VI. So it's really about staging those and making sure that you're spending the money at the right time and you don't want to be penny-wise and pound tuition. And and spend it all upfront or do you want to wait until you get your last permit before you start that process. So it's really about just finding that timing correctly, and we're still working on that. But we have a pretty good idea, and our goal is to actually to be able to -- if we can line up the plant is to be able to, once you get your Classics permit to be able to add all of your other systems up and operational at or before the time that you can go operationality full seclustration system.

是的。那麼埃里克，十位數的長桿顯然是 EPA VI 級許可證，對吧？事實上，我們圍繞這個問題所做的工作顯然是，你必須購買壓縮設備。然後最重要的是，我們正在分層能量，對嗎？因此，我們需要我們的能源、電力系統等跟上時代的腳步。雖然這些也在物品中，但它們並不像您在 VI 級中所期望的那麼長。所以這實際上是關於分階段進行這些活動並確保你在正確的時間花錢，並且你不想精打細算而浪費學費。並預先花掉所有費用，或者您想等到獲得最後一個許可證後再開始該過程。所以這其實只是找到正確的時機，我們仍在努力。但我們有一個很好的想法，我們的目標實際上是能夠 - 如果我們能夠將工廠排成一行，一旦您獲得經典許可，就能夠添加所有其他系統並在您可以使用完全隔離系統之前或之前進行操作。

Yes. Okay. Got it. Maybe just last topic for me. Just on the CoPromax or the high-protein initiatives and you mentioned that they're paying for the design and the upgrade and all that. I mean when do you think or anticipate maybe having the confidence that this is operating the way you originally envisioned? I mean, is this something where you think you need to see it run for 3 months, 6 months? How do you expect that to play out? Because I would assume that's a big part of whether you take it to other plants or not.

是的。好的。知道了。也許只是我的最後一個話題。就 CoPromax 或高蛋白計劃而言，您提到他們正在為設計和升級等付費。我的意思是，你什麼時候認為或預期可能有信心這會按照你最初設想的方式運作？我的意思是，您認為您需要讓它運行 3 個月、6 個月嗎？您預計結果如何？因為我認為這是決定是否將其帶到其他工廠的一個重要部分。

Well, I'd love to say the next day, but I think that only time will tell. Our expectations are the changes that we're making, the upgrades that are being made to the facility and the additional tolerances and capacity that's being built into the system, we'll be able to more adequately address what we need and be able to achieve our goals and part of the technology's goals around being able to improve not only meet the targets and the performance that we expect at Magic Valley but then for us and them to be able to move forward on other locations, both in ours and clearly Harvest technology is -- has interest in using their technology elsewhere.

好吧，我很想說第二天，但我認為只有時間才能證明一切。我們的期望是我們正在做出的改變、對設施進行的升級以及系統中內建的額外容差和容量，我們將能夠更充分地滿足我們的需求並能夠實現我們的目標和部分技術目標不僅能夠提高我們在魔谷所期望的目標和性能，並且能夠讓我們和他們在其他地點取得進展，無論是在我們的地方還是在Harvest 技術領域有興趣在其他地方使用他們的技術。

Our next question comes from Amit Dayal with HCW.

我們的下一個問題來自 HCW 的 Amit Dayal。

So Bryon, with respect to sort of margin recovery for the rest of the year, I know you had indicated previously that 1Q margins may be pressured. But with the visibility you have right now, do you see improvements? And are they already sort of showing up on your operations for 2Q so far?

因此，布萊恩，關於今年剩餘時間的利潤率恢復，我知道您之前曾表示第一季的利潤率可能會受到壓力。但根據您現在的可見性，您是否看到了改進？到目前為止，它們是否已經出現在您第二季度的運作中？

So the only thing I would comment on is beyond what I've said, which is we're seeing margins continue to improve. They're in positive areas today, and we would expect them to continue to improve, particularly as we move into the summer driving season. We did bring down the wet mill in in April of this year, and it was down for 10 days. And if you give yourself some additional time on top of that, call it, a week to be able to ramp up and meet your goals. It won't be the same as if we were running in a full out capacity for the quarter. That's a little too preliminary at this point to be able to provide exact ideas around Q2 results. But based on current operation -- operating rates, we're pleased with what we're seeing as results and figures cross, we continue to see further improvement.

因此，我唯一要評論的是超出我所說的，即我們看到利潤率持續改善。他們今天處於積極的領域，我們希望他們能夠繼續改善，特別是當我們進入夏季駕駛季節時。我們確實在今年 4 月關閉了濕磨機，並且關閉了 10 天。如果你除此之外還給自己一些額外的時間，可以稱之為一周，以便能夠提高並實現你的目標。這與我們本季全力以赴的情況不同。目前還有點太初步，無法提供有關第二季度結果的確切想法。但根據目前的營運情況——開工率，我們對所看到的結果和數字交叉感到滿意，我們繼續看到進一步的改善。

Okay. Understood. And then with respect to CCS, are there any expenses that are outside of your CapEx budget that need to go into CCS development efforts? Or is that part of your CapEx for this year?

好的。明白了。那麼就 CCS 而言，是否有任何超出資本支出預算的費用需要投入 CCS 開發工作？還是這是您今年資本支出的一部分？

Yes, I'll take this one. The majority of the costs are going to be involved in the CapEx plan, but there are some upfront more immaterial costs aspects of certain field studies Yes, certain legal costs to review commercial terms, contracts, things like that. But those are all fairly immaterial.

是的，我要這個。大部分成本將涉及資本支出計劃，但某些現場研究會產生一些前期的非物質成本方面，是的，審查商業條款、合約等的某些法律成本。但這些都是無關緊要的。

Okay. Okay. Understood. When do you expect to start incurring like larger portion of these costs for CCS? Is that like 25% in the second half of '25 time frame? Or any sense on when those leads will start coming up to you.

好的。好的。明白了。您預計什麼時候開始承擔 CCS 成本的大部分？是不是 25 年下半年的 25%？或知道這些線索何時會開始出現在您面前。

Yes. So we would probably expect to see those somewhere around beginning third quarter, second quarter of next year. Still a lot of the lift that's going to occur would be down payments on compression technology, right? Making sure that you're in your tube and you've got the system is starting to be built. And there won't be -- on a relative basis, the cost associated with developing the pipeline and the injection system really doesn't occur until after you've got your Classic permit in place. So it's a combination of things. But -- and again, that would be largely for the account of bulk, where ours will be more of a growing spend over that same period of time, call it, even 36 months of expense beginning mostly in next year. And that's why -- that's why it's important as well to bring the financial resources to the table to be able to connect the dots pretty well and so you know what's on balance sheet, that's being addressed elsewhere and how we're going to make those ends meet.

是的。因此，我們可能預計會在明年第三季、第二季開始左右看到這些情況。仍然有很多增長將來自壓縮技術的首付，對嗎？確保你在你的管子裡並且你已經得到了正在開始建造的系統。相對而言，在您獲得經典許可證之前，與開發管道和注入系統相關的成本實際上不會發生。所以這是多種因素的結合。但是——再說一次，這主要是出於大宗的考慮，我們的支出在同一時期內將更多地增長，稱之為，甚至是主要從明年開始的 36 個月的支出。這就是為什麼 - 這就是為什麼將財務資源帶到桌面上以便能夠很好地連接各個點也很重要，這樣你就知道資產負債表上有什麼，這在其他地方正在解決，以及我們將如何實現這些收支平衡。

Understood. Okay. Just last one for me. In the presentation, you highlight pursuing other opportunities like SAF, et cetera, like how should we read into that? I mean, is this sort of a serious effort already underway? Or are you just sort of exploring at a high level, just trying to get a sense of how some of those developments might take this.

明白了。好的。對我來說只是最後一張。在演講中，您強調了尋求其他機會，例如 SAF 等，例如我們應該如何解釋？我的意思是，這種認真的努力已經在進行了嗎？或者你只是在高層次上進行探索，只是想了解其中一些發展可能會如何發展。

Well, there's a lot of -- there's clearly a lot of interest around SAF. There's a lot of resources that are going into it, not necessary at Alto. Our focus is early on being able to make the product that would be eligible for SAF. That's how I think there's a lot of work that a lot of lifting that still needs to be done between now and when our product is available, a lot of things can change, but I think there's really a growing interest and particularly with the latest treasury announcements, there is now a pathway and there's an opportunity to be able to really make where you have the ability to be able to capture the CO2 and sequester to really make a difference and be able to produce product that is eligible for and available too to support the SAF industry.

嗯，顯然有很多人對 SAF 很感興趣。有很多資源正在投入其中，但 Alto 不需要。我們的重點是儘早生產出符合 SAF 資格的產品。這就是我認為從現在到我們的產品上市之間仍然需要做很多工作，很多事情都可以改變，但我認為人們的興趣確實在增長，尤其是最新的財務報告公告，現在有一條途徑，並且有機會真正能夠捕捉二氧化碳和封存，從而真正發揮作用，並能夠生產出符合條件並可用的產品來支援新加坡武裝部隊工業。

(Operator Instructions) Your next question comes from David Bastian with Kingdom Capital Advisors.

（操作員說明）您的下一個問題來自 Kingdom Capital Advisors 的 David Bastian。

A couple of quick ones. You mentioned -- you expected the co-product revenues to be down for the remainder of the year, at least as a percentage of sales. Is that expected to be roughly ratable the last year in terms of percentages? Or are there any major puts and takes we should be taking power?

幾個快速的。您提到，您預計今年剩餘時間副產品收入將下降，至少佔銷售額的百分比會下降。預計去年的百分比大致相同？或者我們應該奪取權力嗎？

It's tough to say at the moment. I think we're down 20% as an industry across the various different products, 20%, 30% from the peaks of last year. It's difficult to know whether they'll still continue to be some progression. I mean there's still clearly a spread significant benefit in that, and it still is a compelling argument as to why you should be able -- you should be differentiating your product as much as possible, taking advantage of that. But -- and that goes from everything from corn oil to the high-protein value products. That said, you're just not seeing the peaks that you would otherwise would have seen a year ago. And I don't -- that -- our expectation is that, that's going to be a bit of the cycle, right? You need to be able to produce product that then makes it its way and there are times where you'll have excess product, and it will soften prices and the demand will grow and find a place for it, and you'll start to see prices start to increase. It's difficult to know exactly the length of that cycle, but we do know over the long run that there is significant demand for the products. And so our expectation is to see over the long run, that those are the kind of investments that we should be making as well. And there's an opportunity to get to further differentiate the kinds of products that we make. And we will be willing to pay for that.

目前還很難說。我認為我們整個行業的各種不同產品的銷量下降了 20%，比去年的峰值下降了 20%、30%。很難知道它們是否仍會繼續取得進展。我的意思是，這顯然仍然具有廣泛的顯著好處，並且對於為什麼您應該能夠做到這一點仍然是一個令人信服的論點- 您應該利用這一點，盡可能地使您的產品與眾不同。但是——這包括從玉米油到高蛋白價值產品的一切。也就是說，您只是沒有看到一年前本來會看到的峰值。我不認為——我們的期望是，這將是一個循環，對吧？你需要能夠生產出能夠滿足市場需求的產品，有時你會出現產品過剩的情況，這會壓低價格，需求會成長並找到合適的地方，你會開始看到價格開始上漲。很難確切地知道這個週期的長度，但我們確實知道從長遠來看，對產品的需求很大。因此，我們的期望是從長遠來看，這些也是我們應該進行的投資。我們有機會進一步區分我們生產的產品種類。我們願意為此付出代價。

Thanks for the color on the CapEx with Carbon as well. I was curious if outside of the carbon capture opportunity that you guys expect CapEx to be at a similar level to last year as well on a quarterly basis or if there's any major changes there that we should be thinking about?

也感謝碳資本支出的顏色。我很好奇，除了碳捕獲機會之外，你們是否預計資本支出將按季度與去年相似，或者是否有我們應該考慮的重大變化？

Yes. I believe last year, we had about $30 million in CapEx for 2023, I believe, $40 million the year before. This year, we lowered the target to not exceed $25 million. And with about $4.5 million, $4.7 million in CapEx in Q1, we feel that we're coming in at that plan.

是的。我相信去年我們的 2023 年資本支出約為 3000 萬美元，前一年我相信為 4000 萬美元。今年，我們將目標降低至不超過 2,500 萬美元。第一季的資本支出約為 450 萬美元、470 萬美元，我們認為我們正在實現該計劃。

So David, is your question is going to be ratable? Or are you looking at -- are you asking if there's going to be a lull and a big spend in other periods or? Let me understand the question.

大衛，你的問題值得評價嗎？或者你是否在考慮——你是否在問其他時期是否會出現平靜和大筆支出？讓我理解這個問題。

Confirm what you guys are thinking? It sounds like '25 is about target year, and we're on track for that.

確認一下大家的想法嗎？聽起來 25 年就是目標年，我們正在朝著這個目標邁進。

Right. I would assume that would be pretty ratable throughout the year.

正確的。我認為全年的評級都會相當不錯。

This concludes our question-and-answer session. I would like to turn the conference back over to Bryon McGregor, CEO, for any closing remarks.

我們的問答環節到此結束。我想將會議轉回執行長布萊恩·麥格雷戈 (Bryon McGregor) 發表閉幕詞。

Thank you, Cailey. Thanks again for joining us today, everyone. We appreciate your ongoing feedback and support. Have a good day.

謝謝你，凱莉。再次感謝大家今天加入我們。我們感謝您持續的回饋和支持。祝你有美好的一天。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。