Alto Ingredients, Inc.

Alto Ingredients, Inc. operates as a leading producer and distributor of specialty alcohols, renewable fuels, and essential ingredients in the United States. The company focuses on five key markets: Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels. The domestic fuel-grade ethanol industry produced approximately 16.4 billion gallons of ethanol in 2025 ¹, up from approximately 16.1 billion gallons in 2024 ². According to the United States Department of Energy, total annual gasoline consumption in the United States is approximately 137 billion gallons ³, and total annual fuel-grade ethanol blended with gasoline represented approximately 10.5% of this amount in 2025 ⁴. The company operates five alcohol production facilities with an annual alcohol production capacity of 330 million gallons ⁵, including up to 110 million gallons annually of specialty alcohols ⁶. In 2025, the company marketed and distributed approximately 350 million gallons combined of its own produced alcohols and fuel-grade ethanol produced by third parties ⁷, and over 1.2 million tons of essential ingredients ⁸.

Alto Ingredients describes itself as a leading producer of specialty alcohols in the United States. Other significant producers of specialty alcohols named in the filing are Archer-Daniels-Midland Company, Grain Processing Corporation, Golden Triangle Energy, CIE, and Greenfield Global Inc. The largest producers of fuel-grade ethanol in the United States are POET, LLC, Valero Renewable Fuels Company, LLC, Archer-Daniels-Midland Company, and Green Plains Inc., collectively with approximately 39% of the total installed fuel-grade ethanol production capacity in the United States ⁹. The company believes there are over 190 fuel-grade ethanol production facilities in the United States with a total installed production capacity of approximately 18.5 billion gallons ¹⁰. The company's stated competitive strengths include strong customer and supplier relationships, a diverse product mix, barriers to entry from specialized equipment and certifications, experienced management, and the strategic location of its Midwest production facilities.

Alto Ingredients generates revenue through the production and sale of specialty alcohols, renewable fuels, and essential ingredients, as well as through the marketing and distribution of alcohols produced by third parties. The company reports its financial and operating performance in three distinct segments: Pekin production, which includes the production and sale of alcohols and essential ingredients at its three facilities in Pekin, Illinois; Marketing and distribution, which includes marketing and merchant trading for company-produced alcohols and essential ingredients and sales of fuel-grade ethanol sourced from third parties; and Western production, which includes the production and sale of renewable fuels and essential ingredients at its facilities in Oregon and Idaho. The company's marketing and distribution segment also provides transportation, storage, and delivery services through third-party service providers. The company's customers include integrated oil companies, gasoline marketers, producers and distributors of ingredients for cosmetics, sanitizers, distilled spirits producers, food products manufacturers, and global trading firms.

The company's products for the Health, Home & Beauty markets include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants, and cleaners. Products for the Food & Beverage markets include grain neutral spirits used in alcoholic beverages and vinegar, as well as corn germ used for corn oils. Products for the Industry & Agriculture markets include alcohols and other products for paint applications, inks, vehicle fluids, and fertilizers. Products for the Essential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, distillers grains, gas and liquid CO2, and liquid feed used in commercial animal feed and pet foods. Products for the Renewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels. Specialty alcohols for the Industry & Agriculture, Food & Beverage, and Health, Home & Beauty markets represented approximately 11% ¹¹, 6% ¹², and 2% ¹³, respectively, of the company's sales in 2025 to customers in these three markets.

The company's Pekin Campus production segment generated $416 million ¹⁴, $416 million ¹⁵, and $502 million ¹⁶ in net sales from the sale of alcohols for the years ended December 31, 2025, 2024, and 2023, respectively. The Pekin Campus production segment generated $175 million ¹⁷, $169 million ¹⁸, and $218 million ¹⁹ in net sales from the sale of essential ingredients for the same periods. During 2025, 2024, and 2023, the Pekin Campus production segment sold an aggregate of approximately 208 million ²⁰, 214 million ²¹, and 209 million ²² gallons of alcohols and 919,600 ²³, 906,300 ²⁴, and 878,400 ²⁵ tons of essential ingredients, respectively. The Western production segment generated $67 million ²⁶, $115 million ²⁷, and $167 million ²⁸ in net sales from the sale of alcohols for the years ended December 31, 2025, 2024, and 2023, respectively, and $32 million ²⁹, $37 million ³⁰, and $57 million ³¹ in net sales from the sale of essential ingredients. The marketing and distribution segment generated $221 million ³², $217 million ³³, and $263 million ³⁴ in net sales from the sale of its own alcohols and third-party produced alcohols for the same periods. The Corporate and other segment, which includes Eagle Alcohol's business, generated $7 million ³⁵, $11 million ³⁶, and $16 million ³⁷ in net sales for the years ended December 31, 2025, 2024, and 2023, respectively.

In 2025, the company acquired a liquid CO2 production facility located adjacent to its Oregon plant for $7.6 million ³⁸ in cash. The company also cold-idled its Magic Valley facility for all of 2025 and through the filing of this report to minimize financial losses. In April 2025, the company's loadout dock at its Pekin Campus was damaged, and the company filed a claim with its insurer and received gross proceeds of $10.0 million ³⁹. The company recorded $6.7 million ⁴⁰ in proceeds as a gain of excess insurance proceeds. The company recognized $7.5 million ⁴¹ in Section 45Z transferable tax credits, net of monetization costs, for the full year 2025. The company made a principal payment of $5.0 million ⁴² on its term debt and paid $1.3 million ⁴³ in preferred stock dividends during 2025. The company also paid down $10.1 million ⁴⁴ on Kinergy's line of credit.

For the fiscal year ended December 31, 2025, Alto Ingredients reported consolidated net sales of $917,927,000 ⁴⁵, a decrease from $965,258,000 ⁴⁶ in 2024. Gross profit increased to $34,913,000 ⁴⁷ from $9,722,000 ⁴⁸ in the prior year. Consolidated net income was $13,338,000 ⁴⁹ for 2025, compared to a net loss of $58,984,000 ⁵⁰ in 2024. Net income attributable to common stockholders was $12,073,000 ⁵¹ for 2025, compared to a net loss of $60,253,000 ⁵² in 2024. Diluted earnings per share were $0.16 ⁵³ for 2025, compared to a diluted loss per share of $0.82 ⁵⁴ in 2024. Adjusted EBITDA was $44,651,000 ⁵⁵ for 2025, compared to negative $8,531,000 ⁵⁶ in 2024.

Management provided specific forward-looking guidance for 2026. The company expects to qualify approximately 90 million gallons ⁵⁷ of combined production on an annual basis for Section 45Z credits at its Columbia and Pekin dry mill facilities. For 2026, with the removal of the indirect land use change (iLUC) from the GREET model, the company expects to qualify for $0.20 per gallon ⁵⁸ at its Columbia and Pekin dry mill facilities and to generate approximately $15 million ⁵⁹ in total net proceeds from Section 45Z tax credits. The company plans to boost its capital expenditures to approximately $25 million ⁶⁰ for 2026. The company expects to begin repairing the original dock and installing a second dock at its Pekin Campus in spring 2026, and anticipates completing both projects by the end of 2026 ⁶¹.

The company is pursuing carbon capture, utilization, and storage (CCUS) strategies, noting that the Inflation Reduction Act of 2022, together with changes under the One Big Beautiful Bill Act, increased the carbon capture tax credit to $85 per metric ton ⁶². At its Columbia facility, the company produces over 120,000 metric tons of CO2 gas per year ⁶³ and currently sells approximately 57,000 tons per year ⁶⁴ to customers, exploring ways to enhance CO2 capture and expand production. At its Pekin Campus, the company produces over 600,000 metric tons of CO2 gas per year ⁶⁵ and currently sells approximately 190,000 tons of CO2 annually ⁶⁶ with capacity for further growth. The company is assessing large scale CO2 utilization and sequestration opportunities at its Pekin Campus. In 2026, the company intends to capitalize further on demand growth in the Pacific Northwest for liquid CO2 by increasing throughput volume and storage capacity. The company has contracted to sell a significant volume of renewable fuel exports for the first half of 2026 and sees more opportunities to expand volumes and premiums in this market. The company is on track for 2026 to match its high-quality alcohol volumes in 2025.

The company's gross profit increased $25.2 million ⁶⁷ to $34.9 million ⁶⁸ for 2025 from $9.7 million ⁶⁹ for 2024, driven by stronger commodity crush margins from higher ethanol sales prices and lower corn costs. The company's consolidated average cost of corn declined by 1% to $4.68 per bushel ⁷⁰ for 2025 from $4.72 per bushel ⁷¹ for 2024. The company's essential ingredients return at its Western Production segment improved to 48% ⁷² in the fourth quarter of 2025 from 30% ⁷³ for the same period in 2024, contributing to an increase in the overall 2025 consolidated return of 52% ⁷⁴ compared to 43% ⁷⁵ for the full-year 2024. The company entered 2026 with a leaner cost structure, having realized $2.6 million ⁷⁶ less in compensation costs for the fourth quarter due to staff reductions implemented earlier in the year, including the impact of idling its Magic Valley plant and a gain on its annual pension valuation adjustment.

The company's production facilities, other than its Magic Valley plant, were operating for all of 2025, other than for scheduled and unscheduled downtimes. The company cold-idled its Magic Valley facility for all of 2025 and through the filing of this report to minimize financial losses, though it continues to provide ethanol terminaling services at the plant. In the first quarter of 2026, extreme cold weather disrupted river logistics and curtailed production at the Pekin Campus, but the company took advantage of the downtime to accelerate planned repairs. The company expects normal second quarter outages at its Columbia and ICP facilities in 2026, consistent with planned outages in 2025. In the second half of 2026, the Pekin dry mill is scheduled for a longer outage to implement a capacity project to increase production at the facility by approximately 8% ⁷⁷.

The company plans to boost its capital expenditures to approximately $25 million ⁷⁸ for 2026 while maintaining strong cost discipline and prioritizing projects with the highest return on investment. Approximately 45% ⁷⁹ of the capital expenditures budget is earmarked for maintenance projects, while the remaining 55% ⁸⁰ is allocated to optimization projects, including to implement higher production capacity at the Pekin dry mill. Included in the $25 million ⁸¹ budget are the costs to complete repairs of the existing damaged Pekin Campus dock and to add a second alcohol loadout dock. The company had future commitments for certain capital projects totaling $17.5 million ⁸² as of December 31, 2025, scheduled to be satisfied through 2026.

The company identified several headwinds and constraints. The company's results of operations are highly impacted by commodity prices, including the cost of corn, natural gas, and other production inputs, and the prices of alcohols and essential ingredients. The company noted that fuel-grade ethanol prices, as reported by the Chicago Mercantile Exchange, ranged from $1.57 to $2.07 per gallon during 2025 ⁸³, and corn prices ranged from $3.72 to $5.02 per bushel during 2025 ⁸⁴. The company's Magic Valley facility was cold-idled due to challenging market economics, including increases in regional corn basis and declining market prices for protein and corn oil. The company also noted that the EPA has proposed annual requirements for conventional ethanol of 15.0 billion gallons for each of 2026 and 2027 ⁸⁵, and that the EPA may grant small refinery exemptions that could materially and adversely affect overall demand for and the price of fuel-grade ethanol. The company also flagged that the Loper Bright Enterprises v. Raimondo Supreme Court decision could result in less industry-favorable rulemaking and agency interpretations, potentially affecting the Section 45Z clean fuel production tax credit and other industry-favorable regulations.

The company's results of operations are highly dependent on managing the costs of corn, natural gas, and other production inputs relative to the prices of alcohols and essential ingredients, all of which are subject to significant volatility and uncertainty. A sustained negative or narrow spread between corn and fuel-grade ethanol prices would adversely affect results, and the company has previously idled its Magic Valley facility due to unfavorable market conditions. The company recognized asset impairments of $0.8 million ⁸⁶ in 2025 and $24.8 million ⁸⁷ in 2024, and may recognize additional impairments in the future. The company has incurred significant losses and negative operating cash flow in the past, including consolidated net losses of approximately $59.0 million ⁸⁸ in 2024 and $28.0 million ⁸⁹ in 2023, and negative operating cash flow of $3.5 million ⁹⁰ in 2024. The company's ability to qualify for and receive anticipated Section 45Z tax credits is subject to risks, including the ability to produce qualifying low carbon fuel in anticipated volumes and to achieve required carbon intensity levels; the company recorded $7.5 million ⁹¹ in such credits for 2025. The domestic market for fuel-grade ethanol is highly dependent on federal and state laws and regulations, including the Renewable Fuel Standard, and any changes or reinterpretations, including the granting of small refinery exemptions, could materially and adversely affect demand and prices. The company's indebtedness, including a $55.0 million ⁹² term loan and a $29.6 million ⁹³ line of credit balance as of December 31, 2025, could require substantial cash flows for debt service and limit financial flexibility.

Management's message in the Q4 Financial Review, Current Initiatives and Outlook section of the filing conveys a tone of strong execution and strategic realignment, describing the fourth quarter of 2025 as a pivotal milestone. Management stated that for the fourth quarter, gross profit increased $16.6 million ⁹⁴ and net income improved $63.5 million ⁹⁵ while Adjusted EBITDA grew by $35.6 million ⁹⁶ compared to the same period in 2024. For the full year, gross profit increased $25.2 million ⁹⁷ and net income improved $72.4 million ⁹⁸ while Adjusted EBITDA grew by $53.2 million ⁹⁹ compared to the full year 2024. Management emphasized that these improvements were driven by increased crush margins, qualified Section 45Z tax credits, strong renewable fuel export sales, and receipt of excess insurance proceeds. Management stated that for 2026, the company plans to boost capital expenditures to approximately $25 million ¹⁰⁰ while maintaining strong cost discipline and prioritizing projects with the highest return on investment. Management also stated that the company expects to qualify for $0.20 per gallon ¹⁰¹ at its Columbia and Pekin dry mill facilities for Section 45Z credits in 2026 and to generate approximately $15 million ¹⁰² in total net proceeds. The strategic priorities emphasized for the period ahead include focusing on factors within the company's control, driving improved profitability, executing on multiple opportunities to grow earnings, capitalizing on CO2 utilization opportunities, expanding renewable fuel export sales, and improving return on assets.