Summary of Alto Ingredients Q1 2026 Earnings Call

1Key Financial Results and Metrics

Net Sales: $225 million, a decrease of $2 million year-over-year, primarily due to a 4% reduction in volumes sold.

Average Sales Price: Increased by 4% from $1.93 to $2 per gallon.

Gross Profit: $9.2 million, a significant improvement from a gross loss of $1.8 million in Q1 2025.

Net Income: $4 million or $0.05 per share, compared to a net loss of $12 million or $0.16 per share in the prior year.

Adjusted EBITDA: Increased to $4.7 million from a negative $4.4 million in Q1 2025.

Cash Flow from Operations: Generated $4 million.

Debt: Paid down $16.6 million in principal, ending the quarter with $38.4 million outstanding on the term loan.

2Strategic Updates and Business Highlights

Operational Improvements: Enhanced profitability through stronger export sales, higher crush margins, and earnings from 45Z tax credits.

Capital Projects: Initiated repairs and construction at the Pekin campus, including a second alcohol load-out and increased CO2 storage capacity.

Production Strategy: Focused on maximizing value from diverse assets and improving operational reliability to support higher-value revenue streams.

CO2 Utilization: Exploring large-scale CO2 utilization and sequestration opportunities, with optimism around legislative changes that may facilitate these projects.

3Forward Guidance and Outlook

Market Conditions: Cautiously optimistic about Q2, with strong margins and demand for renewable diesel and E15. However, historical patterns suggest potential margin compression in the second half due to increased production.

Production Goals: Aiming to increase total alcohol volumes and optimize production to capture more 45Z tax credits, with expectations of improved production rates starting in Q4 2026.

Capital Expenditures: Planning to spend approximately $25 million in 2026 on maintenance and optimization projects.

4Bad News, Challenges, or Points of Concern

Volume Reduction: A 4% decrease in volumes sold due to production curtailments at the Pekin campus.

Cost Increases: Higher natural gas and electricity costs ($5.3 million increase) and increased repair and maintenance expenses ($2.4 million higher) impacted profitability.

Market Volatility: Monitoring macroeconomic conditions, including unrest in the Middle East, which could affect energy prices and logistics.

5Notable Q&A Insights

CO2 Sequestration: Management expressed optimism about pursuing CO2 utilization and sequestration, noting changes in legislation that may allow for more flexible project development.

E15 Legislation: There is cautious optimism regarding the impact of E15 on market demand, with potential for increased production and exports.

Debt vs. Capital Projects: Management indicated a balanced approach to debt reduction and capital investment, emphasizing that both strategies are interconnected.

Market Dynamics: Discussions highlighted the need to monitor inventory levels and the potential impact of external factors on future margins and demand. Overall, Alto Ingredients reported a strong Q1 performance with significant improvements in profitability and strategic initiatives aimed at enhancing operational efficiency and market positioning. However, challenges remain, particularly in managing costs and navigating market volatility.