Alto Ingredients Q1 Earnings Call Highlights

Key Points

• Alto delivered an unexpectedly strong Q1 2026, reporting $4 million net income (EPS $0.05) and adjusted EBITDA of $4.7 million versus negative $4.4 million a year ago, with management saying the quarter was profitable even without 45Z credits thanks to stronger export sales and higher crush margins.
• The company expects to qualify roughly 90 million gallons for 45Z at $0.20/gal in 2026 — about $15 million in net proceeds — recorded $3.9 million of 45Z earnings in Q1, and is in the process of monetizing its 2025 credits.
• Operationally, cold-weather disruptions prompted a Pekin curtailment and accelerated outage work, while planned 2026 projects — including a second Pekin loadout, a third Columbia CO2 tank, and a Pekin debottlenecking — are expected to improve logistics and reliability and increase annual capacity by about 8% (≈5 million gallons), enabling more 45Z-qualified volumes.

Alto Ingredients NASDAQ: ALTO reported first-quarter 2026 results that management described as unusually strong for a period that is typically seasonally weak for the company and the broader ethanol industry.

President and CEO Bryon McGregor said the quarter benefited from “stronger export sales, higher crush margins, and incremental earnings from 45Z tax credits,” adding that the company was profitable even without the tax credit contribution. McGregor attributed the performance to Alto’s strategic realignment, operational improvements, and its ability to capture premiums over domestic fuel ethanol.

Operational update: outages, logistics, and 2026 projects

McGregor noted that very cold weather early in the quarter disrupted river logistics and led Alto to curtail production at its Pekin campus. He said the company used the disruption to accelerate a portion of planned wet mill biennial outage work that had been scheduled for the second quarter, with the goal of recapturing production later in the year when crush margins are typically stronger.

At the Columbia facility, Alto completed a planned outage during what McGregor described as a seasonally slow period for CO₂ sales. He said the work, combined with an outage taken in December, addressed deferred process activities intended to improve reliability and support growing summer demand from CO₂ offtake customers. McGregor added that improved performance at Columbia would also allow Alto to qualify more gallons for 45Z credits. The company is still planning a normal outage at ICP in the second quarter, consistent with 2025, he said.

On capital and optimization projects for 2026, McGregor outlined several initiatives:

• Pekin campus logistics: Repairs to the original dock and construction of a second alcohol loadout are underway, with completion targeted by the end of 2026. McGregor said the second dock is intended to create redundancy and improve logistics.
• Columbia liquid CO₂: Alto has begun a project to increase throughput and storage capacity by adding a third storage tank, which McGregor said is aimed at meeting growing Pacific Northwest demand amid limited premium CO₂ supply.
• Pekin dry mill debottlenecking: The company is moving a planned outage to June (from the third quarter) to implement a debottlenecking project expected to increase annual production capacity by about 8%, or 5 million gallons. McGregor said improved rates should be fully realized starting in the fourth quarter, providing incremental margin and enabling additional 45Z-qualified volumes.

McGregor also said Alto continues to assess large-scale CO₂ utilization and sequestration opportunities at Pekin, which he said could lower carbon intensity scores, increase 45Z earnings, and generate more liquid CO₂ revenue.

Demand and policy themes: exports, E15, and macro uncertainty

McGregor said the company is monitoring macro conditions, including unrest in the Middle East, noting potential indirect impacts through energy and commodity volatility as well as freight and export logistics.

He also highlighted developments around E15. In California, McGregor said AB 30 “has provided a pathway for year-round E15 sales,” and the company is watching the state implementation process. Nationally, he said momentum for year-round E15 legislation continues to build in Congress. McGregor framed E15 expansion as an important complement to 45Z production incentives, arguing that demand growth is needed to avoid “unintended consequences, including overproduction and pressure on industry margins.”

In response to analyst questions, McGregor said industry margins remained strong into the spring, but cautioned that historically strong spring margins can lead to increased production and pressure on margins later in the year in an oversupplied market. He pointed to exports and “cautious optimism” around E15 as factors that could help support demand. He also said Alto had not seen significant changes in consumer fuel demand behavior and noted improving demand for renewable diesel, which he said has supported corn oil values.

Financial results: profitability improves on higher margins and 45Z

CFO Rob Olander reported consolidated net sales of $225 million, down $2 million from the first quarter of 2025. He said volumes sold fell 4% (3.7 million gallons), partially offset by a 4% increase in average consolidated sales price per gallon to $2.00 from $1.93.

Olander said the lower volume was mainly related to the Pekin production curtailment. He highlighted several revenue drivers, including an improved mix from higher renewable fuel export sales, which he said contributed $6.7 million due to both higher volume and a “significantly higher premium” versus domestic renewable fuel compared with last year.

High-quality alcohol volume sold decreased by 1.3 million gallons amid what Olander called continued weak consumption and increased competition, and he said the premium versus domestic fuel-grade values was lower than last year, resulting in a $1.4 million decline in revenue. He also said co-product protein feed and fuel prices improved, including gains in corn oil used in renewable biofuels, adding $2.2 million in revenue. With corn costs down 4%, Olander said consolidated return on essential ingredients improved to 53.4% from 48.2% a year ago.

Gross profit was $9.2 million, compared with a gross loss of $1.8 million in the first quarter of 2025. Olander cited a seasonally strong market crush margin of $0.17 per gallon, up from $0.02 per gallon a year earlier, which he said provided about $5.2 million of benefit. He also pointed to a $6.4 million increase in net unrealized gains on derivatives tied to high-quality alcohol hedges.

Offsetting factors included $5.3 million higher natural gas and electricity costs due to higher prices tied to volatile weather and rising demand, and $2.4 million higher repair and maintenance expense driven by accelerated wet mill work and the planned Columbia outage. Olander said increased repair and maintenance costs at Columbia were the primary contributors to a $1.1 million gross loss in Alto’s Western production segment during the quarter.

SG&A expenses decreased by $500,000 to $6.7 million, which Olander attributed to staffing reductions completed in the first quarter of 2025.

45Z tax credits and balance sheet

On 45Z transferable tax credits, Olander reiterated the company’s expectation that in 2026 it will qualify approximately 90 million gallons of combined production at the Columbia and Pekin dry mill facilities at $0.20 per gallon, translating to about $15 million in net proceeds after monetization costs. Alto recorded $3.9 million in 45Z credit earnings in the first quarter of 2026.

Olander said the sale of Alto’s 2025 45Z tax credits is underway at values consistent with previously recorded estimates, and the company expects to close that transaction in May. He added that Alto is working to qualify additional gallons and further reduce carbon intensity scores to capture more 45Z benefit.

For the quarter, Alto reported net income attributable to common stockholders of $4 million, or $0.05 per share, compared with a net loss of $12 million, or $0.16 per share, in the first quarter of 2025. Adjusted EBITDA increased to $4.7 million from negative $4.4 million a year earlier. Olander noted the $6.4 million increase in unrealized derivative gains is excluded from adjusted EBITDA.

As of March 31, 2026, Alto had $20 million in cash and generated $4 million in cash flow from operating activities during the quarter. Olander said the company plans to spend about $25 million in capital expenditures during 2026 on maintenance and optimization projects, with only $1 million spent in the first quarter given that major projects are planned over the next three quarters.

Alto paid $16.6 million in term debt principal during the quarter and ended with $38.4 million outstanding. Olander said interest expense decreased by $531,000 due to the lower debt balance and the company’s approach to minimizing idle cash. Alto ended the quarter with total borrowing availability of $94 million, consisting of $29 million under its operating line of credit and $65 million under its term loan facility.

In closing remarks, McGregor said the quarter’s performance showed the company’s operating model is “working,” and listed priorities that include improving utilization and reliability, executing 2026 optimization and capital projects on time and on budget, and advancing its commercial strategy, including expanding 45Z value capture and monetizing biogenic CO₂ production.

About Alto Ingredients NASDAQ: ALTO

Alto Ingredients, Inc NASDAQ: ALTO is a diversified producer of alcohol-based products and specialty ingredients for industrial, food, beverage and personal care applications. The company’s core offering centers on ethanol produced for fuel markets, as well as an expanding portfolio of natural and organic alcohols, glycerin and other ingredient solutions. Alto’s product lines serve a range of end markets, including renewable fuels, confectionery, flavorings, cosmetics and sanitizers.

Headquartered in Dallas, Texas, Alto Ingredients operates a network of production facilities across the United States.

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