PART I - FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) The unaudited statements show decreased net sales, a shift to a gross loss, and a significantly wider net loss year-over-year Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $149,725 | $153,118 | | **Total Assets** | $393,065 | $401,438 | | **Total Current Liabilities** | $42,513 | $57,804 | | **Long-term debt, net** | $118,323 | $92,904 | | **Total Liabilities** | $185,220 | $176,375 | | **Total Stockholders' Equity** | $207,845 | $225,063 | Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $218,436 | $236,468 | $444,976 | $477,097 | | **Gross profit (loss)** | $(1,937) | $7,553 | $(3,744) | $5,153 | | **Loss from operations** | $(8,108) | $(1,408) | $(17,105) | $(11,740) | | **Net loss** | $(10,997) | $(3,106) | $(22,676) | $(14,831) | | **Net loss per share** | $(0.15) | $(0.05) | $(0.31) | $(0.21) | Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(19,079) | $(12,299) | | **Net cash used in investing activities** | $(10,534) | $(12,097) | | **Net cash provided by financing activities** | $23,893 | $7,327 | | **Net change in cash** | $(5,720) | $(17,069) | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the $7.6 million Kodiak Carbonic acquisition, segment performance shifts, increased debt, and commodity hedging activities - On January 1, 2025, the company acquired Kodiak Carbonic, LLC, a beverage-grade liquid CO2 processor, for **$7.6 million in cash** to achieve further vertical integration[27](index=27&type=chunk)[38](index=38&type=chunk) - Long-term debt increased to **$118.3 million** as of June 30, 2025, from $92.9 million at December 31, 2024, primarily due to increased borrowings on the Kinergy line of credit[55](index=55&type=chunk) - The company recognized net gains of **$4.4 million** and **$11.6 million** from non-designated commodity hedging contracts for the six months ended June 30, 2025 and 2024, respectively[51](index=51&type=chunk)[179](index=179&type=chunk) Gross Profit (Loss) by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Pekin Campus production** | $(5,845) | $10,144 | $(8,920) | $14,410 | | **Marketing and distribution** | $4,002 | $3,172 | $7,916 | $6,702 | | **Western production** | $1,858 | $(3,761) | $601 | $(12,347) | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=21&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Adjusted EBITDA improved by nearly $6.0 million YoY in Q2 2025 due to cost savings and operational enhancements [Financial Review, Current Initiatives and Outlook](index=24&type=section&id=Financial%20Review%2C%20Current%20Initiatives%20and%20Outlook) Adjusted EBITDA improved by nearly $6.0 million YoY despite a net loss, with a focus on high-return projects and Section 45Z tax credits - **Adjusted EBITDA improved by nearly $6.0 million** in Q2 2025 compared to Q2 2024, driven by rightsizing corporate overhead and other efficiency initiatives[94](index=94&type=chunk) - The Western assets segment became profitable, with **gross profit improving by $5.6 million** year-over-year, due to the CO2 facility acquisition and the decision to cold-idle the Magic Valley facility[96](index=96&type=chunk) - The company expects to benefit from the Section 45Z tax credits, estimating up to **$4.0 million in 2025** and **$8.0 million in 2026** for its Colombia plant, with plans to increase credits across all eligible facilities[103](index=103&type=chunk) - A new Illinois law (Senate Bill 1723) **prohibits CO2 sequestration through the Mahomet aquifer**, impacting the company's current carbon capture and storage (CCS) project plans[101](index=101&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q2 2025 saw a 7.6% YoY decrease in net sales and a wider net loss, driven by lower prices and operational issues - The decline in Q2 gross profit was primarily due to a net unfavorable change of **$5.6 million in derivatives**, **$5.5 million from lower market crush margins**, and a **$2.7 million adverse impact** from a loading dock outage[129](index=129&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk) - The Pekin Campus segment's gross profit **declined by $16.0 million YoY** in Q2, while the Western Production segment's gross profit **improved by $5.3 million**[133](index=133&type=chunk)[136](index=136&type=chunk) Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Variance ($) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $218,436 | $236,468 | $(18,032) | (7.6)% | | **Gross profit (loss)** | $(1,937) | $7,553 | $(9,490) | NM | | **SG&A expenses** | $6,171 | $8,961 | $(2,790) | (31.1)% | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity for the next twelve months with $30.5 million in cash and available credit - The company believes it has **sufficient liquidity** to meet its needs for at least the next twelve months, with $4.8 million available under its line of credit and $65.0 million potentially available for capital projects[155](index=155&type=chunk) - For the six months ended June 30, 2025, cash used in operations was **$19.1 million**, cash used in investing was **$10.5 million**, and cash provided by financing was **$23.9 million**[161](index=161&type=chunk) Liquidity Position (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash, cash equivalents and restricted cash** | $30,491 | $36,211 | | **Working capital** | $107,212 | $95,314 | | **Long-term debt, noncurrent portion** | $118,323 | $92,904 | [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) The company faces significant commodity price risk, with a 10% adverse change potentially impacting pre-tax income by over $12 million - The company's business is sensitive to price changes in ethanol and corn, and it uses derivative instruments to manage this risk[174](index=174&type=chunk)[178](index=178&type=chunk) Market Risk Sensitivity Analysis (Pre-Tax Income Impact) | Commodity | Hypothetical Adverse Change | Approximate Impact (in millions) | | :--- | :--- | :--- | | **Ethanol** | 10% | $(13.5) | | **Corn** | 10% | $(12.9) | [Controls and Procedures](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of June 30, 2025[181](index=181&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[182](index=182&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) Ordinary course legal proceedings are not expected to have a material adverse effect on the company's financials - The company is subject to ordinary course legal proceedings but **does not expect them to have a material adverse impact** on its financial condition or operations[186](index=186&type=chunk) [Risk Factors](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company faces significant business, financial, and regulatory risks, including commodity volatility and CCS project hurdles [Risks Related to our Business](index=42&type=section&id=Risks%20Related%20to%20our%20Business) Profitability is highly dependent on volatile commodity spreads, and the business is exposed to operational disruption risks - The company's results are **highly dependent on its ability to manage volatile commodity prices** for inputs like corn and natural gas against the prices of its alcohol and essential ingredient products[189](index=189&type=chunk) - Disruptions in production or distribution, such as the damage to the Pekin Campus loadout dock in April 2025, can **negatively impact logistics and increase costs**[199](index=199&type=chunk) - The company may suffer losses from hedging activities, which are used to mitigate price volatility but also **expose the company to counterparty and market risks**[196](index=196&type=chunk)[197](index=197&type=chunk) [Risks Related to our Finances](index=47&type=section&id=Risks%20Related%20to%20our%20Finances) A history of net losses, substantial indebtedness, and significant execution risks for capital projects threaten financial stability - The company has a history of significant losses, including a **consolidated net loss of $23.3 million** for the first six months of 2025[211](index=211&type=chunk) - The Carbon Capture and Storage (CCS) project is subject to significant risks, including regulatory hurdles and new Illinois legislation (Senate Bill 1723) that **prohibits sequestration through the Mahomet aquifer**, impacting current plans[212](index=212&type=chunk)[213](index=213&type=chunk) - The ability to qualify for and receive anticipated **Section 45Z tax credits is uncertain** and depends on producing low carbon fuel at specific volumes and carbon intensities[218](index=218&type=chunk) [Risks Related to Legal and Regulatory Matters](index=49&type=section&id=Risks%20Related%20to%20Legal%20and%20Regulatory%20Matters) Dependence on renewable fuel mandates and new state laws impacting the CCS project pose significant regulatory risks - The domestic market for fuel-grade ethanol is **significantly impacted by federal mandates**, and any changes to these regulations could materially harm results[233](index=233&type=chunk) - The company's CCS project may be adversely affected by the SAFE CCS Act and Illinois Senate Bill 1723, which impose new safety requirements, a **moratorium on pipeline construction**, and prohibit sequestration in a key aquifer[227](index=227&type=chunk)[228](index=228&type=chunk) - The recent Supreme Court decision overturning the Chevron doctrine may result in **less favorable agency interpretations of laws and regulations**, potentially affecting the Renewable Fuel Standard and tax credits[240](index=240&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) The company reported no unregistered sales, withheld shares for tax obligations, and does not plan to pay dividends - **No unregistered sales of equity securities** occurred during the period[257](index=257&type=chunk) - The company **does not intend to pay cash dividends** on its common stock in the foreseeable future[263](index=263&type=chunk) Repurchases of Equity Securities (Q2 2025) | Month | Number of Shares Withheld | Deemed Purchase Price Per Share | Aggregate Purchase Price | | :--- | :--- | :--- | :--- | | **April** | 340,886 | $1.12 | $381,792 | | **May** | — | $— | $— | | **June** | — | $— | $— | [Defaults Upon Senior Securities](index=56&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) The company reports no defaults upon senior securities during the period - There were **no defaults upon senior securities**[265](index=265&type=chunk) [Mine Safety Disclosures](index=56&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) The company has no mine safety disclosures to report for the period - There are **no mine safety disclosures**[266](index=266&type=chunk) [Other Information](index=56&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) No directors or officers reported the adoption or termination of Rule 10b5-1 trading arrangements during the quarter - **No directors or officers reported** the adoption or termination of a Rule 10b5-1 trading arrangement during the quarter[267](index=267&type=chunk) [Exhibits](index=57&type=section&id=ITEM%206.%20EXHIBITS.) The filing includes required CEO/CFO certifications and Inline XBRL data files as exhibits - The report includes required certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1) and XBRL data files[268](index=268&type=chunk)

Financial Performance - Alto Ingredients reported a quarterly loss of $0.15 per share, better than the Zacks Consensus Estimate of a loss of $0.18, but worse than a loss of $0.05 per share a year ago, indicating an earnings surprise of +16.67% [1] - The company posted revenues of $218.44 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.10%, but down from $236.47 million in the same quarter last year [2] - Over the last four quarters, Alto Ingredients has surpassed consensus EPS estimates just once and topped consensus revenue estimates three times [2] Stock Performance - Alto Ingredients shares have declined approximately 33.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] - The current Zacks Rank for Alto Ingredients is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.06 on revenues of $238.64 million, and for the current fiscal year, it is -$0.39 on revenues of $937.57 million [7] - The estimate revisions trend for Alto Ingredients was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Consumer Products - Discretionary industry, to which Alto Ingredients belongs, is currently in the top 28% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Adjusted EBITDA improved by nearly $6,000,000 compared to the previous year, reflecting successful productivity initiatives [6] - Consolidated net loss was $11,300,000 for Q2 2025, compared to a net loss of $3,400,000 in Q2 2024, primarily due to higher unrealized non-cash derivative losses and lower crush margins [21] - Net sales were $218,000,000, which is $18,000,000 lower than the prior year due to fewer gallons sold and lower average prices [17] Business Line Data and Key Metrics Changes - Sold 86,700,000 gallons compared to 95,100,000 gallons in the same quarter last year, reflecting a rationalization of unprofitable business [17] - Gross profit improved by $5,600,000 at Western facilities, with the addition of the Alto Carbonic Liquid CO2 Processing Facility contributing to a $3,000,000 improvement at the Columbia plant [21] - The Marketing and Distribution segment improved due to the integration of bulk volume customers and transitioning away from low-return businesses [8] Market Data and Key Metrics Changes - The annual uptick in demand from the summer driving season helped lift ethanol prices and improved crush spreads, with market crush averaging $0.30 per gallon for July [14][18] - The 45Z credit extensions through 2029 and new eligibility restrictions are expected to benefit domestic renewable fuel production [11] - Current carbon intensity scores indicate that Columbia will qualify for 10¢ per gallon for 2025 and up to 20¢ for 2026, equating to approximately $4,000,000 in 2025 and $8,000,000 in 2026 [12] Company Strategy and Development Direction - The company is focusing on short-term projects with immediate returns while laying groundwork for longer-term capital-intensive projects [7] - Evaluating projects to lower carbon intensity and capture benefits from 45Z regulations, as well as improving efficiency and productivity [7][24] - The regulatory environment is seen as positive, creating opportunities for the company to capitalize on [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operational improvements and the potential for positive margins for the remainder of the summer [14] - The company is working on alternatives for CO2 sequestration following regulatory changes and is focused on optimizing the value of CO2 production [7][11] - Management highlighted the importance of repairing the dock to restore operational efficiency and capitalize on European sales opportunities [29] Other Important Information - The company has rightsized corporate overhead to align with its current footprint, aiming for annual savings of approximately $8,000,000 [9] - The annual meeting of stockholders resulted in the election of two new board members and the appointment of a new Chairman and Vice Chair [16] - The company is actively working with Guggenheim on Western asset optimization and monetization plans [24] Q&A Session Summary Question: Outlook for operational benefits from the Carbonic acquisition - Management indicated that there is still substantial capacity for growth at the Carbonic facility, with room to increase production [27][28] Question: Impact of dock damage on export strategy to Europe - Management confirmed that while dock damage has created challenges, they have developed workarounds and are exceeding initial sales projections for Europe [29][30] Question: Clarification on the Eagle Alcohol improvement - Management clarified that the $1,100,000 improvement was a one-time event related to deferred acquisition costs [34] Question: Further reductions in SG&A - Management noted ongoing efforts to scrutinize spending and negotiate better terms with suppliers, which collectively will have a meaningful impact [36] Question: Details on the Western asset monetization process - Management stated that they are in discussions with prospective buyers and evaluating opportunities, with the process taking time due to the unique nature of the assets [44][45]

Financial Performance - Western asset gross profit improved by $56 million from a loss of $(38) million in Q2 2024 to a profit of $18 million in Q2 2025[31] - Adjusted EBITDA improved by $57 million, from $(59) million to $(02) million comparing Q2 2024 to Q2 2025[32, 34] - The company's borrowing availability was $70 million as of June 30, 2025, including $5 million under the operating line and $65 million under the term loan facility[33] Regulatory and Market Opportunities - The 45Z credit is extended through the end of 2029, increasing the focus on domestic production[14] - National year-round E15 adoption could potentially increase U S ethanol demand by 50%, or 5-7 billion gallons annually[14] - California could see an increase of approximately 670 million gallons per year in ethanol demand when transitioning from E10 to E15, pending approval[14] Strategic Initiatives - The company is applying for 45Z credits for Alto Columbia and Alto Pekin Dry Mill, estimated to total approximately $18 million over the next two years[15] - The company is prioritizing projects to lower carbon intensity to capture more benefits from 45Z[7] - The company aims to increase CO2 utilization at the Pekin campus and at Columbia, building upon the successful Carbonic acquisition[7]

[Management Commentary and Business Update](index=1&type=section&id=Management%20Commentary%20and%20Business%20Update) Management initiatives improved Q2 2025 financial position, with Western assets profitable and corporate reorganization exceeding savings goals, anticipating regulatory credit benefits - Western assets generated a gross profit, increasing by **$5.6 million** compared to Q2 2024, aided by a liquid CO2 facility acquisition and cold-idling the Magic Valley facility[1](index=1&type=chunk)[3](index=3&type=chunk) - The marketing and distribution segment's performance improved through integrating bulk sales customers and focusing on profitable third-party ethanol marketing relationships[3](index=3&type=chunk) - A corporate reorganization was implemented, exceeding the annualized savings target of approximately **$8 million** in the second quarter[3](index=3&type=chunk) - Positive regulatory developments, specifically the 45Z credit extension, are expected to create opportunities for up to nearly **$18 million** in credits for at least two plants over the next two years[4](index=4&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) Net sales declined and gross profit shifted to loss in Q2 and H1 2025, with widening net losses, though cash and borrowing availability improved sequentially [Q2 2025 Financial Results (vs. Q2 2024)](index=1&type=section&id=Q2%202025%20Financial%20Results%20%28vs.%20Q2%202024%29) Q2 2025 saw net sales decline, a shift to gross loss, and a widened net loss due to unfavorable derivatives and lower market crush Q2 2025 vs. Q2 2024 Financial Highlights | Financial Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $218.4 million | $236.5 million | | Gross Profit (Loss) | ($1.9 million) | $7.6 million | | SG&A Expenses | $6.2 million | $9.0 million | | Net Loss Attributable to Common Stockholders | ($11.3 million) | ($3.4 million) | | Net Loss Per Share | ($0.15) | ($0.05) | | Adjusted EBITDA | ($0.2 million) | ($5.9 million) | - The decline in gross profit was impacted by a net unfavorable change of **$5.6 million** in derivatives and an average market crush that was **$0.10** lower than in Q2 2024[5](index=5&type=chunk) [H1 2025 Financial Results (vs. H1 2024)](index=2&type=section&id=H1%202025%20Financial%20Results%20%28vs.%20H1%202024%29) H1 2025 net sales decreased, resulting in a gross loss and a widened net loss compared to the prior year H1 2025 vs. H1 2024 Financial Highlights | Financial Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Sales | $445.0 million | $477.1 million | | Gross Profit (Loss) | ($3.7 million) | $5.2 million | | SG&A Expenses | $13.4 million | $16.9 million | | Net Loss Attributable to Common Stockholders | ($23.3 million) | ($15.5 million) | | Net Loss Per Share | ($0.31) | ($0.21) | | Adjusted EBITDA | ($4.6 million) | ($13.0 million) | - The year-over-year gross profit decline was affected by a net unfavorable impact of **$7.2 million** from derivatives[7](index=7&type=chunk) [Balance Sheet and Liquidity](index=3&type=section&id=Balance%20Sheet%20and%20Liquidity) Cash and equivalents increased sequentially to $29.8 million, with total borrowing availability of $70 million as of June 30, 2025 Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $29,768 | $35,469 | | Total Current Assets | $149,725 | $153,118 | | Total Assets | $393,065 | $401,438 | | Long-term debt, net | $118,323 | $92,904 | | Total Liabilities | $185,220 | $176,375 | | Total Stockholders' Equity | $207,845 | $225,063 | - The company had **$70 million** in borrowing availability as of June 30, 2025[8](index=8&type=chunk) [Segment Performance](index=10&type=section&id=Segment%20Performance) Q2 2025 segment performance varied, with Western production turning profitable, Pekin Campus shifting to a loss, and Marketing and distribution improving gross profit Gross Profit (Loss) by Segment (Q2, in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Pekin Campus production | $(5,845) | $10,144 | | Marketing and distribution | $4,002 | $3,172 | | Western production | $1,858 | $(3,761) | Gross Profit (Loss) by Segment (H1, in thousands) | Segment | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Pekin Campus production | $(8,920) | $14,410 | | Marketing and distribution | $7,916 | $6,702 | | Western production | $601 | $(12,347) | [Key Operating Metrics](index=8&type=section&id=Key%20Operating%20Metrics) Q2 2025 saw decreased alcohol gallons sold, stable production, increased corn costs, and a significant drop in market board corn crush per gallon Alcohol Sales and Production (Gallons in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total renewable fuel gallons sold | 66.8 | 74.1 | | Specialty alcohol gallons sold | 19.9 | 21.0 | | **Total gallons sold** | **86.7** | **95.1** | | **Total production gallons** | **59.2** | **58.6** | Cost and Market Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Consolidated corn cost per bushel | $4.98 | $4.68 | | Board corn crush per gallon | $0.11 | $0.21 | [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA, a non-GAAP measure, improved significantly to negative $0.2 million in Q2 2025, driven by lower derivative losses and reduced acquisition expenses - Management defines Adjusted EBITDA as net income (loss) adjusted for interest, taxes, depreciation, amortization, asset impairments, unrealized derivative gains/losses, and acquisition-related expenses[11](index=11&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss | $(10,997) | $(3,106) | | Total adjustments | $10,766 | $(2,821) | | **Adjusted EBITDA** | **$(231)** | **$(5,927)** | [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) Alto Ingredients will host a conference call and webcast on August 6, 2025, at 5:00 p.m. ET to discuss Q2 2025 financial results - Event: Q2 2025 Results Conference Call[9](index=9&type=chunk) - Date and Time: Wednesday, August 6, 2025, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time[9](index=9&type=chunk) - Access: The webcast will be available on the company's website. Dial-in and replay information is also provided[10](index=10&type=chunk)

Core Insights - Alto Ingredients, Inc. reported a gross profit increase of $5.6 million in Q2 2025 compared to Q2 2024, despite facing challenges in net sales and gross loss [1][4][6]. Financial Performance - For the three months ended June 30, 2025, net sales were $218.4 million, down from $236.5 million in the same period of 2024 [6][15]. - Cost of goods sold decreased to $220.4 million from $228.9 million year-over-year [6][15]. - The company experienced a gross loss of $1.9 million, compared to a gross profit of $7.6 million in Q2 2024 [6][15]. - Selling, general and administrative expenses were reduced to $6.2 million from $9.0 million [6][15]. - Interest expense increased to $2.8 million from $1.7 million [6][15]. - The net loss attributable to common stockholders was $11.3 million, or $0.15 per share, compared to a net loss of $3.4 million, or $0.05 per share, in Q2 2024 [6][15]. - Adjusted EBITDA was negative $0.2 million, an improvement from negative $5.9 million in the prior year [6][15]. Operational Highlights - The Western assets generated gross profit due to the acquisition of a liquid CO2 facility and strategic operational adjustments, including cold-idling the Magic Valley facility [2][3]. - The marketing and distribution segment improved through the integration of bulk sales customers and the continuation of profitable third-party ethanol marketing relationships [2][3]. - The company capitalized on operational flexibility by selling higher-margin ISCC export products into Europe [2][3]. Regulatory Environment - Positive regulatory developments, such as the extension of the 45Z credit through 2029, are expected to enhance the earnings profile and intrinsic valuation of the company's facilities [3]. - The company anticipates applying for credits amounting to nearly $18 million over the next two years based on targeted carbon intensity scores [3]. Sales and Production Metrics - Total renewable fuel gallons sold decreased to 66.8 million in Q2 2025 from 74.1 million in Q2 2024 [22][23]. - Specialty alcohol gallons sold were 19.9 million, down from 21.0 million year-over-year [22][23]. - The average market price for ethanol was $1.72 per gallon, slightly lower than the previous year [23][24].

Company Overview - Alto Ingredients, Inc. is a leading producer and distributor of specialty alcohols, renewable fuels, and essential ingredients [3] - The company serves a diverse range of markets including Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels [3] Upcoming Financial Results - Alto Ingredients will release its second quarter 2025 financial results after the market closes on August 6, 2025 [1] - A conference call will be hosted by management at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on the same day [1] Webcast and Replay Information - The webcast will be archived for replay on the Alto Ingredients website for one year [2] - A telephonic replay will be available from 8:00 p.m. Eastern Time on August 6, 2025, through 8:00 p.m. Eastern Time on August 13, 2025 [2]

Company Overview - Alto Ingredients, Inc. (NASDAQ: ALTO) is a leading producer and distributor of specialty alcohols, renewable fuels, and essential ingredients, serving various markets including Health, Home & Beauty, Food & Beverage, Industry & Agriculture, Essential Ingredients, and Renewable Fuels [6]. Board of Directors Update - Gilbert Nathan has been appointed as Chair and Dianne Nury as Vice-Chair of the board of directors, with Alan R. Tank and Jeremy T. Bezdek elected as new directors during the annual meeting on June 25, 2025 [1][2]. - Gilbert Nathan expressed his honor in serving as Chairman and emphasized the importance of the new board members' experience in enhancing shareholder value [2]. - Bryon McGregor, CEO of Alto Ingredients, highlighted the significance of the new directors' expertise in renewable energy and capital raising for the company's growth strategy and commitment to sustainability [2]. New Board Members' Expertise - Jeremy T. Bezdek brings over 30 years of experience in leadership, business development, M&A, and strategy execution across energy, renewables, and advanced manufacturing sectors. He has served on ten boards since 2010 and has a strong background in managing multi-billion-dollar investments [2][3]. - Alan R. Tank has over three decades of executive leadership in agriculture, food, and renewable energy sectors. He has held advisory roles in decarbonization opportunities and has co-owned a family farm, showcasing his diverse experience in the industry [4][5].

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) The company reported a Q1 2025 net loss of $11.7 million on sales of $226.5 million, alongside decreased cash, increased long-term debt, and negative operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly increased to $402.2 million while total liabilities grew to $188.3 million, resulting in a decrease in stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $26,778 | $35,469 | | Total current assets | $153,461 | $153,118 | | Total Assets | $402,209 | $401,438 | | **Liabilities & Equity** | | | | Total current liabilities | $53,116 | $57,804 | | Long-term debt | $110,664 | $92,904 | | Total Liabilities | $188,289 | $176,375 | | Total Stockholders' Equity | $213,920 | $225,063 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net sales decreased 5.9% year-over-year to $226.5 million, while the gross loss improved and the net loss per share remained relatively stable Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $226,540 | $240,629 | | Gross loss | $(1,807) | $(2,400) | | Loss from operations | $(8,997) | $(10,332) | | Net loss | $(11,679) | $(11,725) | | Net loss attributable to common stockholders | $(11,991) | $(12,040) | | Net loss per share, basic and diluted | $(0.16) | $(0.17) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $18.2 million, a significant negative shift from the prior year, driven by changes in working capital Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(18,231) | $1,429 | | Net cash used in investing activities | $(7,810) | $(6,043) | | Net cash provided by financing activities | $17,001 | $1,206 | | **Net decrease in cash** | **$(9,040)** | **$(3,408)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail the Kodiak Carbonic acquisition, segment performance shifts, commodity risk management, and an increase in long-term debt - On January 1, 2025, the company acquired Kodiak Carbonic, a beverage-grade liquid CO2 processor, for **$7.6 million in cash** to provide vertical integration and access to new markets[26](index=26&type=chunk)[39](index=39&type=chunk) - The company **cold-idled its Magic Valley facility** on December 31, 2024, to minimize financial losses from margin compression and intends to resume operations when regional economic conditions improve[30](index=30&type=chunk) Gross Profit (Loss) by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Pekin Campus production | $(3,073) | $4,268 | | Marketing and distribution | $3,914 | $3,532 | | Western production | $(1,258) | $(8,460) | - As of March 31, 2025, total long-term debt was **$110.7 million**, up from **$92.9 million** at year-end 2024, primarily due to increased borrowings on the Kinergy line of credit[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Management discusses improved Adjusted EBITDA driven by cost savings and acquisitions, despite challenges from lower prices and operational disruptions - **Adjusted EBITDA improved to $(4.4) million** in Q1 2025 from $(7.1) million in Q1 2024, benefiting from the cold-idling of the Magic Valley plant (**$4.8M savings**) and the acquisition of the CO2 facility (**$2.9M contribution**)[92](index=92&type=chunk)[106](index=106&type=chunk) - The company **reduced headcount by 16%** in Q4 2024 and Q1 2025, expecting approximately **$8 million in annual savings** starting in Q2 2025[93](index=93&type=chunk) - The company's Pekin Campus loadout dock was damaged in April due to rising river levels, negatively impacting production and logistics while temporary solutions are in place[97](index=97&type=chunk) - The company's Carbon Capture and Storage (CCS) initiative faces potential challenges from proposed Illinois legislation that could restrict sequestration activity near the Mahomet Aquifer[100](index=100&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Consolidated net sales decreased 5.9% due to lower volumes, though gross loss improved from cost savings, while net interest expense increased Q1 2025 vs Q1 2024 Results Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $226,540 | $240,629 | (5.9)% | | Cost of goods sold | $228,347 | $243,029 | (6.0)% | | Gross loss | $(1,807) | $(2,400) | (24.7)% | | SG&A expenses | $7,190 | $7,932 | (9.4)% | | Interest expense, net | $2,729 | $1,634 | 67.0% | - The Pekin Campus segment's gross profit declined by **$7.3 million to a gross loss of $2.2 million**, entirely due to lower ethanol margins[121](index=121&type=chunk) - The Western Production segment's gross loss improved by **$7.1 million**, primarily due to the cold-idling of the Magic Valley facility[123](index=123&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company believes it has sufficient liquidity for the next twelve months, supported by cash, credit availability, and compliance with debt covenants Liquidity Position (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $27,171 | $36,211 | | Working capital | $100,345 | $95,314 | | Long-term debt, noncurrent portion | $110,664 | $92,904 | - As of March 31, 2025, the company had **$11.7 million in unused borrowing availability** under its Kinergy line of credit and **$65.0 million potentially available** under its Orion term loan[129](index=129&type=chunk) - Net assets of approximately **$55.6 million at subsidiaries were restricted** and not available for transfer to the parent company due to credit facility terms[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) The company is primarily exposed to commodity price risk for ethanol and corn, which it manages using non-speculative derivative instruments - The company's business is sensitive to changes in the prices of ethanol and corn and uses derivative instruments to manage this risk but not for trading or speculative purposes[148](index=148&type=chunk) Market Risk Sensitivity Analysis (in millions) | Commodity | Approximate Adverse Change to Pre-Tax Income (from 10% price change) | | :--- | :--- | | Ethanol | $(7.0) | | Corn | $(6.9) | [Item 4. Controls and Procedures](index=36&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes during the quarter - Management, including the CEO and CFO, concluded that as of March 31, 2025, the company's **disclosure controls and procedures were effective** at a reasonable assurance level[155](index=155&type=chunk) - **No material changes** to the company's internal control over financial reporting occurred during the most recently completed fiscal quarter[156](index=156&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=38&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) Management believes that pending legal matters from the ordinary course of business will not have a material adverse effect on the company - Based on currently available facts, management believes that pending legal proceedings **will not adversely affect the company's financial condition**, results of operations, or cash flows in any material respect[161](index=161&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company faces significant risks from commodity price volatility, production disruptions, government regulations, and the execution of its CCS initiative - Business results are highly dependent on the **volatile and uncertain prices of corn, natural gas, alcohols, and essential ingredients**, which can cause results to fluctuate significantly[164](index=164&type=chunk) - Capital improvement projects, particularly the **CCS initiative, face significant execution, financing, and regulatory risks**, and may not achieve expected results, including projected EBITDA[189](index=189&type=chunk)[190](index=190&type=chunk) - The fuel-ethanol industry is **highly dependent on federal and state laws**, such as the Renewable Fuel Standard (RFS), and changes could materially harm results[210](index=210&type=chunk) - The **CCS project in Illinois may be adversely affected by new state legislation** that imposes stringent requirements and could restrict storage locations, adding costs and potential delays[203](index=203&type=chunk)[204](index=204&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) The company paid dividends on its preferred stock but has no history of or plans for paying dividends on its common stock - The company paid **$0.3 million in dividends on its Series B Preferred Stock** for the three months ended March 31, 2025[239](index=239&type=chunk) - The company has **never declared or paid cash dividends on its common stock** and does not currently intend to do so[239](index=239&type=chunk) [Item 3. Defaults Upon Senior Securities](index=52&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) Not applicable [Item 4. Mine Safety Disclosures](index=52&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) Not applicable [Item 5. Other Information](index=52&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) No directors or officers reported the adoption or termination of a Rule 10b5-1 trading arrangement during the first quarter of 2025 - **No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement** during the three months ended March 31, 2025[243](index=243&type=chunk) [Item 6. Exhibits](index=53&type=section&id=ITEM%206.%20EXHIBITS.) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files

分组1 - Alto Ingredients reported a quarterly loss of $0.16 per share, slightly worse than the Zacks Consensus Estimate of a loss of $0.15, but an improvement from a loss of $0.17 per share a year ago, indicating a -6.67% earnings surprise [1] - The company posted revenues of $226.54 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.05%, but down from $240.63 million in the same quarter last year [2] - Alto Ingredients has underperformed the market, with shares down approximately 45.6% year-to-date compared to the S&P 500's decline of 4.7% [3] 分组2 - The earnings outlook for Alto Ingredients is mixed, with the current consensus EPS estimate for the upcoming quarter at -$0.09 on revenues of $234.34 million, and -$0.27 on revenues of $957.81 million for the current fiscal year [7] - The Zacks Industry Rank places the Consumer Products - Discretionary sector in the bottom 32% of over 250 Zacks industries, suggesting that the industry outlook could significantly impact stock performance [8]