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DATE
Wednesday, May 6, 2026 at 5 p.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Bryon McGregor
- Chief Financial Officer — Robert Olander
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TAKEAWAYS
- Revenue -- $225 million, down $2 million, driven by a 4% decrease in volumes sold, partially offset by a 4% increase in average sales price per gallon to $2.
- Net Income -- $4 million, or $0.05 per share, a $16 million year-over-year increase from a net loss of $12 million, or $0.16 per share.
- Adjusted EBITDA -- $4.7 million, up $9.1 million from negative $4.4 million, with $6.4 million of unrealized derivative gains excluded from this calculation.
- Gross Profit -- $9.2 million, representing an $11 million swing from a $1.8 million gross loss due to stronger crush margins, export mix, and 45Z tax credits.
- Crush Margin -- $0.17 per gallon versus $0.02, generating $5.2 million incremental benefit.
- 45Z Tax Credits -- $3.9 million recognized, with an annual run-rate qualifying approximately 90 million gallons for $0.20 per gallon credits, targeting $15 million net proceeds after costs in 2026.
- Cash Balance -- $20 million at period end, with $4 million cash flow from operations generated.
- Term Loan Outstanding -- $38.4 million, after $16.6 million in principal payments this quarter.
- Total Borrowing Availability -- $94 million ($29 million on line of credit, $65 million on term facility).
- Capital Expenditures -- $1 million spent in the quarter toward a full-year CapEx budget of $25 million focused on maintenance and optimization projects.
- Operational Disruptions -- River logistics disruptions and planned outages at Pekin and Columbia advanced biennial maintenance work and affected production mix and volume.
- Pekin Dry Mill Project -- Debottlenecking project in June aims to boost annual production by 8%, or 5 million gallons, with full benefits expected from the fourth quarter.
- Western Production Segment -- $1.1 million gross loss, attributed mainly to increased repair and maintenance expenses at the Columbia facility.
- SG&A Expenses -- Decreased by $500,000 to $6.7 million due to staffing reductions in 2025.
- Essential Ingredients Margin -- Improved to 53.4% from 48.2%, supported by co-product pricing and a 4% drop in corn costs.
- Planned CO2 Projects -- Construction initiated for a third storage tank at Columbia and large-scale CO2 utilization and sequestration evaluated at Pekin, targeting incremental 45Z/45Q monetization and higher marketable CO2 volume.
- Management Guidance -- Strategic focus remains on capital discipline, maximizing 45Z credits, expanding biogenic CO2 value, and executing capital projects on time and budget.
SUMMARY
Alto Ingredients delivered improved earnings performance and profitability metrics, attributable in part to product mix shifts and enhanced operational execution. The company is advancing major capital initiatives to increase plant reliability, production efficiency, and the ability to capture federal tax credits. A combination of stable demand, elevated crush margins, and favorable regulatory trajectories contributed to a positive near-term outlook, while management emphasized the ongoing assessment of larger-scale CO2 utilization and sequestration as a key opportunity for incremental earnings growth.
- Management described the current forward visibility as “probably as cloudy as it ever has been,” highlighting the market's uncertainty due to export logistics and volatile commodity conditions.
- CEO McGregor stated, “We remain focused on maximizing value from our diversified portfolio of assets and on pursuing multiple revenue opportunities in response to market demand.”
- The Q&A revealed that progress on E15 legislation and ethanol industry exports are expected to support sustained demand, mitigating some historical volatility in industry margins.
- The company confirmed ongoing negotiations and partnership discussions intended to reduce capital outlay for CO2 sequestration projects, following state regulatory shifts and new utilization pathways.
- 45Z tax credit monetization strategy was reported as “underway,” with management prioritizing additional qualifying gallons and deeper carbon intensity (CI) score reductions through operational measures and grower engagement.
INDUSTRY GLOSSARY
- Crush Margin: The per-gallon profitability metric for converting corn into ethanol and co-products, reflecting the relationship between input costs and ethanol selling prices.
- 45Z Tax Credit: A transferable federal clean fuel production credit incentivizing low-carbon intensity U.S. fuel production, calculated per qualifying gallon and subject to third-party CI scoring.
- 45Q Credit: A U.S. federal credit for carbon capture, utilization, and sequestration projects, designed to encourage reductions in greenhouse gas emissions.
- CCS: Carbon Capture and Sequestration — the process of capturing carbon dioxide emissions from industrial sources and either using the CO2 in industrial processes or storing it underground in geological formations.
- E15: A gasoline blend containing up to 15% ethanol, the expansion of which is subject to federal and state regulatory approval and influences biofuel demand.
- CI Score: Carbon Intensity Score — a calculated value reflecting the lifecycle greenhouse gas emissions per unit of fuel produced, impacting eligibility for low-carbon fuel credits.
Full Conference Call Transcript
Bryon McGregor; and CFO, Rob Olander. Alto Ingredients issued a press release after the market closed today, providing details of the company's financial results for the first quarter of 2026. The company also prepared a presentation for today's call that is available on its website at altoingredients.com. A webcast and webcast replay will be available on the Alto Ingredients website. Please note that the information on this call speaks only as of today, May 6, 2026. You are advised that time-sensitive information may no longer be accurate at the time of any replay.
Please refer to the company's safe harbor statement in the slide deck posted to the company's website, which states that some of the comments and presentation constitute forward-looking statements and considerations that involve risks and uncertainties. The actual results of Alto Ingredients could differ materially from those statements. Factors that could cause or contribute to such differences include, but are not limited to, events, risks and other factors previously and from time to time disclosed in Alto Ingredients' filings with the SEC. Except as required by applicable law, the company assumes no obligation to update any forward-looking statements. In management's prepared remarks, non-GAAP measures will be referenced.
Management uses these non-GAAP measures to monitor the financial performance of operations and believes these measures will assist investors in assessing the company's performance for the periods reported. The company defines adjusted EBITDA as unaudited consolidated net income or loss before interest expense, interest income, provision or benefit for income taxes, asset impairments, unrealized derivative gains and losses, acquisition-related expense, excess insurance proceeds and depreciation and amortization expense. To support the company's review of non-GAAP information, a reconciling table has been included in today's release. On today's call, Bryon will review the company's first quarter performance. Rob will review the financial results, and then Bryon will wrap up and open the call for Q&A.
It's now my pleasure to introduce Bryon McGregor. Bryon, please do go ahead.
Bryon McGregor: Thanks, Jody. Thanks, everyone, for joining us today. I'll begin with a high-level review of our first quarter results and operational activities. After that, I'll turn the call over to Rob for a detailed review of our financial results for the quarter and then wrap up and open the call to Q&A. The first quarter is typically a seasonally weak period for both Alto and the industry resulting from the buildup of ethanol inventories and lower demand. In contrast, we are reporting strong first quarter results relative to our historical performance in this period.
We delivered -- profitability on an adjusted EBITDA and net income basis through the contribution of stronger export sales, higher crush margins and incremental earnings from 45Z tax credits. Even without the contribution of tax credits, we were profitable. Our strategic realignment, our efforts to improve our operational model and our success in capturing premiums over fuel ethanol have enhanced our earning power. We remain focused on maximizing value from our diversified portfolio of assets and on pursuing multiple revenue opportunities in response to market demand. To that end, we have robust plans to improve utilization, reliability and efficiencies and to support higher-value revenue streams during 2026.
Let me share with you some highlights of the operational activities we tackled during the first quarter and update you on the capital projects we have planned for 2026. First, as discussed on last quarter's call, an extended period of very cold weather in the first half of the quarter disrupted River Logistics and caused us to curtail production at our Pekin campus. We took the opportunity to accelerate a portion of our planned wet mill biennial outage work that was scheduled for the second quarter.
This will allow us to recapture lost production when crush margins are typically stronger and keep us on track with our goal to increase total 2026 alcohol volumes and prioritize product mix that delivers a premium to domestic renewable fuel. Secondly, we had a planned outage at our Columbia facility during a seasonally slow quarter for CO2 sales. Combined with the outage we took last December, we addressed deferred process-related activities intended to improve production performance and plant reliability for the remainder of the year. This work will help ensure the plant is running at optimal rates to reliably support our CO2 offtake, customers' growing demand in the coming summer months.
It will also allow us to qualify more gallons for 45Z credits. We're still planning a normal outage at ICP during the second quarter, consistent with 2025. In terms of capital projects at our Pekin campus, we started the repairs on the original dock and the construction of the second alcohol load out, and are on track to complete both projects by the end of 2026. As a reminder, we are building the second alcohol dock to create redundancy and improve logistical capabilities. We also kicked off a project to increase throughput and storage capacity at our Columbia liquid CO2 processing facility by adding a third storage tank.
This project will position us to further capitalize on favorable market conditions, specifically the growing demand in the Pacific Northwest and limited supply of premium CO2. At our Pekin dry mill, our most efficient plant, we are moving the planned outage to June from the third quarter. During this downtime, we are going to implement a debottlenecking project to increase annual production capacity by about 8% or 5 million gallons. We expect to fully realize these improved rates starting in the fourth quarter, which will provide incremental margin and allow us to qualify for more 45Z credits.
Finally, in addition to the CapEx projects we planned for 2026, we are continuing to assess large-scale CO2 utilization and sequestration opportunities at our Pekin campus. These projects would position us to lower our carbon intensity score and monetize additional incremental earnings from 45Z credits and generate more liquid CO2 revenue. Before I turn the call over to Rob, we're closely monitoring macro conditions, including unrest in the Middle East, which can indirectly affect us through energy and commodity volatility and freight and export logistics, and we're actively managing these exposures. We're also encouraged by continued progress on E15. In California, AB 30 has provided a pathway for a year-round E15 sales, and we're watching the state implementation process closely.
Nationally, momentum for year-round E15 legislation continues to build in Congress. We view expanded access to E15 as an important demand side complement to the production incentives in 45Z, helping ensure the market can absorb additional low-carbon gallons over time. Without demand growth, incentives alone can contribute to unintended consequences, including overproduction and pressure on industry margins. With that, I'll now turn the call over to Rob for a more detailed review of our Q1 financial results. Rob?
Robert Olander: Thank you, Bryon. I'll start with a review of the income statement for the first quarter of 2026 compared to the first quarter of 2025. Consolidated net sales were $225 million, $2 million lower than in the prior year. This reflects a 4% reduction in volumes sold or 3.7 million gallons, partially offset by a 4% increase in the average sales price per gallon from $1.93 to $2 on a consolidated basis.
The primary drivers impacting revenues were the net overall reduction in volumes sold, which was mainly related to the production curtailment at our Pekin campus, an improved product mix of higher renewable fuel export sales, reflecting both an increase in volumes sold and a significantly higher premium compared to domestic renewable fuel sales than last year contributed $6.7 million. High-quality alcohol volumes sold decreased by 1.3 million gallons, reflecting continued weak alcohol consumption and increased competition. In addition, the premium versus domestic fuel grade values were lower than last year. As a result, revenues declined by $1.4 million.
Co-product protein feed and fuel prices improved, supported by strong gains in corn oil used in renewable biofuels, which added an additional net $2.2 million in revenues. Coupled with a 4% lower cost of corn, our consolidated return on essential ingredients improved to 53.4% from 48.2% a year ago. Gross profit was $9.2 million compared to a gross loss of $1.8 million reported for Q1 2025 for an $11 million positive swing to profitability.
In addition to the revenue variances I just covered, the change in gross profit also encompassed the following factors: A seasonally strong market crush margin of $0.17 per gallon for Q1 2026 compared to $0.02 per gallon for the same period last year accounted for approximately $5.2 million of benefit. An increase in net unrealized gain on derivatives contributed $6.4 million as a result of our high-quality alcohol hedges associated with future shipments improved in relation to the rise in the market price of ethanol as we locked in the premium on our contracted fixed price, high-quality alcohol commitments.
And we incurred $500,000 less in production labor costs to the staffing reduction that we completed during the first quarter of 2025. These positive trends were partially offset by the following negative variances. Natural gas and electricity costs collectively increased $5.3 million due to higher prices related to volatile weather conditions and rising demand. Repair and maintenance expenses were $2.4 million higher this quarter compared to last year. This was driven by the acceleration of work at the wet mill originally planned for the second quarter, as Bryon mentioned, as well as increased costs from the planned outage at Columbia.
The increased repair and maintenance costs at Columbia were the primary contributors to the $1.1 million gross loss in our Western Production segment for the first quarter of 2026. SG&A expenses decreased by $500,000 to $6.7 million, also reflecting our decision to right-size staffing levels last year. With respect to 45Z transferable tax credits, as mentioned on the fourth quarter call, for 2026, we expect to qualify approximately 90 million gallons of combined production at the Columbia and Pekin dry mill facilities on an annual basis at $0.20 per gallon, resulting in approximately $15 million in net proceeds after all monetization costs. We recorded $3.9 million in 45Z credit earnings for the first quarter of 2026.
The sale of all of our 2025 45Z tax credits is currently underway at values consistent with our previously recorded estimates, and we expect to close on that transaction this month. We are working diligently to qualify additional gallons and further reduce our carbon intensity scores to capture more of the 45Z benefit, and we will provide updates as these efforts materialize.
As a result of an improvement in gross profit, lower SG&A expenses and recognition of 45Z tax credits, we reported net income attributable to common stockholders of $4 million or $0.05 per share for Q1 2026, an increase of $16 million compared to a net loss of $12 million or $0.16 per share for the first quarter of 2025. Adjusted EBITDA increased $9.1 million to $4.7 million compared to a negative adjusted EBITDA of $4.4 million for last year's first quarter. As a reminder, the $6.4 million increase of unrealized derivative gains is excluded from the calculation of adjusted EBITDA. Turning to our balance sheet. As of March 31, 2026, our cash balance was $20 million.
During the first quarter, we generated $4 million in cash flow from operating activities. As mentioned on last quarter's call, we plan to spend about $25 million in capital expenditures during 2026 on both maintenance and optimization projects with strong projected returns. With the major projects earmarked for the next three quarters, capital expenditures for the first quarter were only $1 million. We paid $16.6 million in principal on our term debt in the first quarter as planned and ended the quarter with $38.4 million outstanding on the term loan. With a lower debt balance, interest expense decreased by $531,000.
This reflects our focus on minimizing idle cash and maximizing excess borrowing capacity in order to reduce our interest expense burden. We ended the quarter with total borrowing availability of $94 million, consisting of $29 million under our operating line of credit and $65 million under our term loan facility. With that, I will now turn the call back to Bryon.
Bryon McGregor: Thanks, Rob. In summary, our first quarter results show that Alto's operating model is working, improving margins through higher-value revenue opportunities while maintaining a disciplined cost structure. With multiple product streams, we have the flexibility to respond quickly as markets shift, and we're continuing to strengthen our ability to perform through commodity cycles. Looking ahead, our priorities are straightforward: improve utilization and reliability, execute our 2026 optimization and capital projects on time and on budget and keep advancing our commercial strategy, which includes expanding the value we capture from 45Z credits and optimally monetizing the value of our biogenic CO2 production across our facilities to lower our carbon footprint.
With our focus on these priorities, we remain committed to further enhancing shareholder value in both the short and long term. Operator, we're ready to begin Q&A.
Operator: [Operator Instructions] The first question will come from Eric Stine with Craig-Hallum.
Eric Stine: So one thing that caught my attention, you talked about that at Pekin, you're looking at -- I'm not sure exactly how you termed it, but you're looking at continuing to look at large-scale CO2 utilization and sequestration. I know that there was a moratorium on sequestration in Illinois that's been in place for some time. So maybe can you just, I don't know, delve into that a little bit. What has kind of changed the thinking -- or it sounds like it's a little more optimistic on that front. Any details there would be very helpful.
Bryon McGregor: Sure. So the -- there's a couple of things that proved challenging under our prior plans, which was, first, the moratorium on pipelines. And then secondly, the legislation that was approved, which precluded the injection through the aquifer for sequestration, which impacted solely Alto for that matter. But out of that opportunity or out of that -- those challenges, we found opportunities to -- along with the Big Beautiful Bill changes to rethink and pursue utilization as well as sequestration. So now they are both opportunities to be able to take advantage of 45Q in the long run.
And then on top of that, with 45Z, there are opportunities now if we can monetize that value of CO2 quickly, particularly for the dry mill in Pekin. There's an opportunity to actually capture significant benefit that was otherwise not available when we were first developing that project. So -- we've been in discussions with numerous parties to be able to bring this to fruition. My guess is that it may end up looking a lot like a combination of the two, some utilization and some sequestration, but time will tell. And we're working diligently on that and aggressively on that to try and come to a clear plan and solution this year. Bob, anything else you want to add?
Robert Olander: No, it was good, Bryon.
Eric Stine: Yes. I mean -- okay. So it does sound like though there have been some changes. I mean I get the utilization piece. I mean it's been a big success at Columbia. And if you can replicate that to any extent, I mean, that's a great thing. But in terms of the sequestration piece, I know you're talking about that things have kind of opened up a little bit. I mean, is -- that the pipeline moratorium or your ability to sequester -- have things changed in that regard? Or you're kind of thinking outside the box in ways to access that opportunity?
Bryon McGregor: I guess what I'd say is that it's -- we're no longer feeling like we have to bring the whole solution to the table ourselves, where we had to commit to a singular pipeline that was dedicated solely for our use. But that there are other opportunities that are starting to avail themselves to us and discussions around where we may not have to make the kind of capital spend that we otherwise needed to spend previously under that prior project. That being said, it's still a viable option, and we have a good relationship with Vault and there are opportunities… to continue. Think of it as more opportunities rather than less.
Eric Stine: Okay. Got it. No, it's good to hear. I mean that hasn't really been on your plate for a while. It's been some time. So a good development there. Maybe could we just talk about -- I mean, the overall market environment, obviously, Q1 better than is typical. And I know that -- I know there are a lot more factors than simply just the basic crush. But by my estimation, it's as strong as it has been at this time of year in almost a decade. So just curious what kind of confidence that gives you for Q2?
And is there the potential that this kind of lasts a little bit given that you've had some potentially structural changes in the market based on where gasoline prices are right now?
Bryon McGregor: Yes. I mean I think it's a great point, Eric, in that margins continue to remain strong. They're actually slightly better than where they were same time last year. So that all bodes well. I think we're doing what we can to continue to monetize that value and capture that value. As we mentioned, there are going to be some scheduled outages, but that we remain optimistic around the future.
That said, there are -- historically, it's usually been more the norm than the exception that when you have strong spring margins, it ends up translating into a significant increase in production and then fundamental economics kick in and in an oversupplied market, margins start to give away in the second half. But I think the thing that changes that at least to date has been exports and the optimism, albeit cautious optimism around E15. And so demand has continued to remain strong and inventories remain on the whole balance. So we'll see. I think a good thing to do is keep an eye on inventories.
And then it will be interesting to see what the impact of the Middle East challenges and how they impact export logistics, commitments, people having to reroute and find other alternatives to -- for their fuel needs that may actually bode well for not only adoption of E15, but as well adoption of ethanol in the export markets. But if -- there is a bit of wait-and-see efforts going on as much as possible.
So it's a bit of a -- it's funny enough, it's probably as cloudy as it ever has been in looking forward, but I think that there are a lot of positives to be thinking about and that provide, I think, a counter to what would otherwise be the norm.
Eric Stine: Yes. I mean so many moving parts. I mean, such as gasoline prices are good, except for the fact that they potentially dampened gasoline demand, but then you've got jet fuel at extremely high prices. So I don't know, cautiously optimistic, I guess, is the best way to put it.
Bryon McGregor: Yes. I mean I think the interesting thing is we haven't seen a whole lot of change in demand right now for fuel. So it appears that we as consumers have not changed our behavior, at least with regards to fuel, but have changed our consumption behavior elsewhere to adapt. And I think that also we're seeing a good increase in demand for renewable diesel, which has, in turn, also resulted in improvements in corn oil values. So that's generally positive. So yes, I mean, time will tell, but fingers crossed, and God willing, and creek don't rise, we should have a good year generally, I think.
Operator: The next question will come from Sameer Joshi with H.C. Wainwright.
Sameer Joshi: Congrats on a solid quarter. So just in terms of priorities, your debt servicing was around $10.8 million last year, $2.2 million this quarter. Is the focus on reducing the debt? Or is the focus on actually increasing this -- or rather reducing CI scores by spending on these various projects that you talked about. If you've done some analysis on what makes more sense.
Bryon McGregor: Yes... Sorry about this, Sameer. Let me start by saying I don't think it's a binary question or a binary answer, and I'll let Rob go ahead and riff.
Robert Olander: Yes. I was going to say the same thing one's dependent upon the other. I mean we have a repayment mechanism, which has worked out well for Alto that when we do well, then there's a cash flow sweep that pays down the debt. And so we like paying it down. We commented on the interest expense savings, but we're also managing our liquidity and our availability to go after the projects that we view provide the strongest returns. And to that effect, as mentioned before, we do have a capital expenditure budget of $25 million for 2026. So there are several projects in our sites that we're excited to go after.
Sameer Joshi: Understood. Actually, that was sort of a second question on the $25 million CapEx. On Slide 6, you have a nice table. Thanks for providing that. That gives a nice snapshot of what the impact of your CS coal reduction would be on potential benefits from 45Z. If you are able to do all the -- or execute on all the projects that you have planned for 2026, will we be at $0.30, $0.40? Like do you have a idea of what you're targeting there?
Bryon McGregor: I think generally, we do have an idea, but we're not prepared to share that yet because some of the efforts certainly require more than just our efforts. We'll try and control everything all that we can, but there is significant dependence on third parties, including farmers and then the relationships that we have there. But I think we remain very optimistic about our ability to capture more of that 45Z and are keenly focused on it. So...
Robert Olander: Yes, I'll just add to that. Our near-term focus is to capture more 45Z benefits is to optimize our production. And that kind of speaks to the maintenance activities we did at our Columbia facility in Q1 to improve the reliability moving forward. And our expectation is that we will be able to increase our production output moving forward, particularly compared to 2025. And then later this year, we are going to debottleneck the dry mill starting in the second quarter, hoping to complete that by the end of the third quarter, where we expand our production by about 5 million gallons on an annual run rate basis.
And so in that mechanism in the near term, at least for 2026 is how we're hoping to capture more of the value from the 45Z credits. And then as Bryon commented, it will take a collaboration and a little more work and effort longer term working with other parties to move us down the CI score. And like Bryon said, a good opportunity is on potentially low carbon intensity corn and signing up farmers who are employing, I guess, carbon smart practices such as reduced [till or no till], low nitrogen fertilizers or the use of cover crops. But that's going to take time to develop.
And fortunately, this program is currently available through the end of 2029, and we hope it gets extended further.
Sameer Joshi: Yes. No, understood. And then just a industry question sort of the benefit or impact of E15. Of course, it would create excess demand, but that would also drive some of the mothballed refineries or ethanol plants to be reactivated. And would that flood the market? What do you see from where you sit right now, any adverse impact from the benefits that emanate from E15?
Bryon McGregor: I guess my general thought is first is if you can capture E15, you're already seeing anything that be or most of the projects that otherwise have been mothballed or idle are -- there's some effort to resume that production, and there are certainly lots of rumors and a lot of work that we're seeing behind the scenes, including ourselves, right? We're talking about -- debottlenecking at our dry mill to expand capacity. So I think that's already in the works for the most part, Sameer. I think that E15 will only help balance out what is otherwise a demand or a production push and incentivize production to also incentivize demand.
And I think that complement that with a good export program will help provide significant balance going forward. And certainly, the number of gallons that would come from year-round E15 adoption, including California is I've seen numbers on the order of 1 billion gallons. So I don't think there's that much latent capacity currently in the market. So I think that all bodes positive and gives really consumers an opportunity to have more options at the pump, which they haven't been able to have for a very long time.
Sameer Joshi: Understood. For the 2Q, of course, the LCFS scores are in the right -- moving in the right direction. The RINs are moving in the right direction. Good luck with the second quarter and second half of the year.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Bryon McGregor for any closing remarks.
Bryon McGregor: Thanks, Nick. Thanks, everyone, for joining us again today. We look forward to speaking to you soon.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
