Alto Ingredients NASDAQ: ALTO reported a fourth consecutive quarter of positive gross profit, operating income, net income and adjusted EBITDA in the second quarter of 2026, citing stronger ethanol market conditions, improved essential ingredient pricing and contributions from federal 45Z tax credits.
President and CEO Bryon McGregor said the company remained profitable during the four-quarter period even without the contribution of 45Z credits, which are tied to qualifying low-carbon fuel production. He said Alto’s diversified operating model has enabled it to shift production toward more attractive end markets and capture higher-value opportunities.
“Our results for the past four quarters demonstrate the success to date of the strategic realignment we began three years ago,” McGregor said. “With a diversified product portfolio [and] a leaner cost structure, we have positioned Alto to capture higher value revenue opportunities to enhance profitability and drive shareholder value.”
Second-Quarter Financial Results
Consolidated net sales rose $27 million year over year to $246 million. Alto sold 88.5 million gallons of ethanol and specialty alcohols, up 1.8 million gallons from the prior-year quarter, while its average sales price increased 10% to $2.15 per gallon.
Gross profit increased $19 million from a year earlier to $17 million. Chief Financial Officer Rob Olander said the improvement was primarily driven by stronger industry crush margins, which increased to $0.33 per gallon from $0.11 per gallon in the second quarter of 2025. The higher margins contributed approximately $17 million of incremental gross profit, according to the company.
Alto also benefited from nearly $600,000 in lower natural-gas and electricity costs. Those gains were partly offset by approximately $2 million in additional repair and maintenance expense related to planned spring outages at the Pekin dry mill and ICP facilities, as well as ongoing work at its carbonic facility.
Net income attributable to common stockholders was $11.4 million, or $0.15 per share, compared with a net loss of $11.3 million, or negative $0.15 per share, in the prior-year period. Adjusted EBITDA improved by $23.9 million to $23.7 million.
The company recognized $5.1 million in 45Z tax-credit earnings during the quarter, including $4 million of credits earned in the second quarter and $1.1 million in final adjustments related to 2025 credit-sale proceeds. Alto said it had accrued $7.9 million in net 2026 45Z credits through the first half of the year and expects to monetize the credits in the future.
Market Conditions and Product Mix
McGregor said domestic ethanol demand was supported by export demand, domestic blending activity, tighter ethanol inventories following industry-wide spring maintenance outages and stronger renewable volume obligation requirements. Favorable crop conditions and larger projected grain supplies also contributed to lower corn costs.
While European demand remained robust, Alto said geopolitical disruption in the Middle East increased freight costs and reduced vessel availability from the Gulf Coast, compressing the arbitrage for U.S. ethanol exports to Europe. The company’s renewable fuel export volume declined year over year, though export revenue increased $800,000 because of higher premiums to domestic renewable fuel.
In response, Alto shifted more of its production and sales mix toward domestic fuel-grade ethanol. McGregor said the company’s commercial platform provided flexibility to redirect product into domestic markets when export economics were less favorable.
High-quality alcohol volumes increased by 3.6 million gallons. Although average premiums over ethanol narrowed, reducing revenue by about $2.9 million, Olander said realized derivative gains largely offset the impact. Essential ingredient sales increased to $6.1 million, aided by higher average sales prices for dried distillers grains, corn oil and germ. Alto’s essential ingredients return improved to 51.6% from 45.2% a year earlier, alongside a 5% reduction in corn costs.
Capital Projects, Debt Reduction and 45Z Outlook
At Alto’s Pekin campus, the company completed a planned outage and a dry-mill debottlenecking project expected to increase annual production capacity by about 8%, or 5 million gallons. McGregor said Alto is ramping toward the new production levels and expects to realize the full benefit of the added capacity in the fourth quarter.
The company is also repairing an existing dock and installing a second alcohol loadout at ICP, with completion expected by year-end. At its Columbia facility, Alto is adding a third carbon dioxide storage tank that is expected to be operational in the fourth quarter to support premium CO2 demand in the Pacific Northwest.
Alto said it remains on track to qualify 90 million gallons or more of combined production for 45Z credits in 2026, supporting its expectation for at least $15 million in income from tax credits after monetization costs. Management said it is also working with farmer partners to explore lower-carbon-intensity corn practices that could improve future credit generation, though it did not quantify the expected benefit.
As of June 30, Alto had $24 million in cash and generated $28.5 million in operating cash flow during the quarter. Capital expenditures totaled $10.6 million in the second quarter and $11.5 million year to date, with the company maintaining a $25 million annual capital-expenditure target.
Alto repaid $8.5 million of term debt during the quarter, bringing year-to-date principal payments to $25.1 million and term debt outstanding to $29.9 million. Total borrowing availability at quarter-end was $106 million. The company also established a $50 million at-the-market equity program, which Olander said provides additional flexibility to pursue high-return organic opportunities when market conditions and expected returns support doing so.
E15 Demand Opportunity
Management also pointed to growing support for year-round E15 gasoline blending as a potential long-term demand driver. McGregor cited Renewable Fuels Association polling showing that about 72% of U.S. voters support year-round E15 blending. He said progress in Midwestern states and California’s Assembly Bill 30 could provide a framework for expanded adoption.
According to McGregor, broader E15 adoption could increase ethanol demand, improve industry capacity utilization and support a more favorable margin environment over time.
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.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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