Alto Ingredients Q3 Earnings Call Highlights

Key Points

• Alto Ingredients posted its fifth consecutive quarter of positive gross profit, operating income, net income and adjusted EBITDA, with Q3 adjusted EBITDA of $21 million and sales of $258 million. Gross profit fell $8.7 million year over year to $14.8 million as the industry ethanol crush margin narrowed.
• The company raised its 2026 outlook to at least $20 million in 45Z clean-fuel tax-credit earnings, net of monetization costs, based on 90 million or more qualifying gallons. Its first three-year low-carbon corn agreement with a farmer cooperative covers up to 20 million bushels for the Pekin campus.
• Alto generated $13 million in Q3 operating cash flow and reduced year-to-date debt by $26.5 million; quarter-end cash was $24 million, with $108 million in borrowing availability. It is also shifting fuel sales toward the domestic market and expects Pekin upgrades to lift annual capacity by about 5 million gallons.

Alto Ingredients NASDAQ: ALTO reported a fifth consecutive quarter of positive gross profit, operating income, net income and adjusted EBITDA, while raising its expectations for 2026 clean fuel tax credit earnings.

On its Nov. 4 earnings call, the producer of specialty alcohols, renewable fuel and essential ingredients said third-quarter gross profit fell from a year earlier as industry ethanol crush margins narrowed. Adjusted EBITDA was $21 million, and consolidated net sales were $258 million.

President and CEO Bryon McGregor said the company’s core operations drove the results, with earnings from 45Z clean fuel production tax credits providing an additional contribution. Alto now expects at least $20 million in 2026 tax credit earnings, net of monetization costs, from 90 million or more qualifying gallons.

Margins narrowed from a year earlier

Third-quarter gross profit declined by $8.7 million to $14.8 million. CFO Rob Olander attributed most of the decline to the industry crush margin, which fell to $0.30 per gallon from $0.41 a year earlier. That change reduced gross profit by $6.5 million, he said.

Despite the year-over-year decline, McGregor described third-quarter margins as healthy and profitable. The industry crush margin averaged $0.27 per gallon for the first nine months of 2026, up $0.08 from the same period a year earlier, and was $0.32 in October.

Alto sold 89 million gallons of renewable fuel and specialty alcohol during the quarter, flat with the year-earlier period, at an average price of $2.23 per gallon, up $0.14. Specialty alcohol sales totaled 21.5 million gallons, down 900,000 gallons.

Essential ingredient sales rose $5.5 million to $58.8 million, supported by higher prices and slightly greater volumes. Olander said demand for corn oil as a renewable diesel and biodiesel feedstock helped lift prices for Alto’s corn oil and germ products.

Tax credit forecast and farmer agreements

Alto recognized $7.6 million in 2026-vintage 45Z tax credit earnings during the third quarter, bringing the year-to-date total to $15.8 million net of estimated transaction costs. The company expects to monetize those credits in the first half of 2027.

Olander said lower carbon-intensity scores mean Alto now projects its Columbia facility will qualify for a gross credit of $0.30 per gallon, up from $0.20 calculated through the second quarter. The Pekin dry mill remains targeted at $0.20 per gallon. Those rates do not include potential additional benefits from low-carbon-intensity corn, which would be shared with farmers, management said.

Alto signed its first multiyear agreement with a local farmer cooperative to supply low-carbon-intensity corn for its Pekin campus. Olander said the three-year agreement covers up to 20 million bushels. Management expects a modest earnings contribution in 2026, with benefits building in 2027 as participating farmers adopt additional practices.

McGregor said Alto is working on additional agreements and discussing opportunities to source qualifying corn for its Columbia plant. Olander noted that most corn used at Columbia is not sourced locally and said Alto will work with grain merchandising partners to pursue Midwest supply.

Domestic sales and capital projects

Alto completed shipments under a renewable fuel export contract entered in late 2025 and has shifted sales toward the domestic market, where management said returns are currently more favorable. Olander said Brazil has been a lower-cost supplier this year, but the company sees a potential opportunity to compete again in Europe in 2027.

At Pekin, a completed dry mill debottlenecking project is on track to raise annual capacity by about 5 million gallons, or 8%, with a targeted annual run rate of approximately 65 million gallons by year-end, McGregor said. The first phase of a barge dock project is operational, while improvements to the existing dock are expected to be completed by year-end.

Alto also expects to complete a third carbon dioxide storage tank at Columbia before year-end. Longer term, McGregor said the company is evaluating ways to generate revenue from carbon dioxide it currently vents, including utilization and sequestration opportunities, while weighing capital costs against other investments.

Cash flow and liquidity

Third-quarter operating cash flow was $13 million, supporting a $6.5 million line-of-credit repayment and $4 million in capital expenditures. Alto had $24 million in cash and $108 million in total borrowing availability at quarter-end. It remains on track for $25 million in capital spending for the year, Olander said.

Year to date, the company reduced total debt by $26.5 million. Olander said Alto has not used its at-the-market share issuance program, citing its liquidity position and market fundamentals, but will continue to evaluate it against capital needs, the share price and potential uses of proceeds.

Looking ahead, McGregor said California’s September legislation clearing the way for E15 sales could add an estimated 600 million gallons or more of annual ethanol demand as adoption increases. He said Alto’s Columbia plant and Western distribution capabilities position the company to serve that market.

About Alto Ingredients (NASDAQ:ALTO)

Alto Ingredients, Inc NASDAQ: ALTO is a renewable fuels and specialty ingredients company that produces low-carbon ethanol and other products derived primarily from corn. Its ethanol is used as a transportation fuel and as a blending component in gasoline, while the company's operations support markets focused on renewable energy and lower-carbon fuel alternatives.

In addition to ethanol, Alto Ingredients produces and markets co-products such as dried distillers grains, wet distillers grains and renewable corn oil.

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