ALTO — Alto Ingredients, Inc.

Summary of Alto Ingredients Q1 2026 Earnings Call

1. Key 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.

2. Strategic 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.

3. Forward 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.

4. Bad 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.

5. Notable 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.