Q2 2026 Alto Ingredients Inc Earnings Call

August 5, 2026

Operator 2: Good afternoon, welcome to the Alto Ingredients Q2 2026 financial results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jody Burfening. Please go ahead.

Operator: Good afternoon, welcome to the Alto Ingredients Q2 2026 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Speaker #1: Good afternoon, and welcome to the Alto Ingredients second quarter, 2026 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker #1: presentation, there will be an opportunity to ask questions, to ask a question you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.

Operator: To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jody Burfening. Please go ahead.

Speaker #1: Please note this event is being recorded. I would now like to turn the conference over to Jodie Berfring, please go ahead.

Speaker #2: Thank you, Danielle, and thank you all for joining us today for Alto Ingredients' second quarter 2026 results conference call. With me on the call are our President and CEO, Bryon McGregor, and CFO, Rob Olander.

Jody Burfening: Thank you, Danielle, thank you all for joining us today for Alto Ingredients' Q2 2026 results conference call. With me on the call are our President and CEO, 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 Q2 2026. A webcast and webcast replay will be available on the Alto Ingredients website at altoingredients.com. Please note that the information on this call speaks only as of today, 5 August 2026. You are advised that time-sensitive information may no longer be accurate at the time of any replay. The company also prepared a presentation for today's call that is available on its website. Please refer to the company's safe harbor statement in the presentation, which states that some of the comments constitute forward-looking statements and considerations that involve risks and uncertainties.

Jody Burfening: Thank you, Danielle. Thank you all for joining us today for Alto Ingredients' Q2 2026 Results Conference Call. With me on the call are our President and CEO, 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 Q2 2026. A webcast and webcast replay will be available on the Alto Ingredients website at altoingredients.com.

Speaker #2: Alto Ingredients issued a press release after the market closed today providing details of the company's financial results for the second quarter of 2026. A webcast and webcast replay will be available on the Alto Ingredients website at altoingredients.com.

Speaker #2: Please note that the information on this call speaks only as of today, August 5th, 2026. You are advised that time-sensitive information may no longer be accurate at the time of any replay.

Jody Burfening: Please note that the information on this call speaks only as of today, 5 August 2026. You are advised that time-sensitive information may no longer be accurate at the time of any replay. The company also prepared a presentation for today's call that is available on its website. Please refer to the company's safe harbor statement in the presentation, which states that some of the comments constitute forward-looking statements and considerations that involve risks and uncertainties.

Speaker #2: The company also prepared a presentation for today's call that is available on its website. Please refer to the company's safe harbor statement in the presentation which states that some of the comments constitute forward-looking statements and considerations that involve risks and uncertainties.

Speaker #2: 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.

Jody Burfening: 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 company's 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 expenses, excess insurance proceeds, and depreciation and amortization expense.

Speaker #2: Except as required by applicable law, the company assumes no obligation to update any forward-looking statements. The management's prepared remarks non-GAAP measures will be referenced.

Speaker #2: Management uses these non-GAAP measures to monitor the company's financial performance of operations and believes these measures will assist investors in assessing the company's performance for the periods reported.

Jody Burfening: Management uses these non-GAAP measures to monitor the company's financial performance of operations and believes these measures will assist investors in assessing the company's performance for the periods reported.

Speaker #2: 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 expenses, excess insurance proceeds, and depreciation and amortization expense.

Jody Burfening: 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 expenses, excess insurance proceeds, and depreciation and amortization expense.

Speaker #2: To support the company's review of non-GAAP information, a reconciling table has been included in the second quarter earnings release and presentation. With that, it is now my pleasure to introduce Bryon McGregor.

Jody Burfening: To support the company's review of non-GAAP information, a reconciling table has been included in the Q2 earnings release and presentation. With that, it is now my pleasure to introduce Bryon McGregor. Bryon, please go ahead.

Speaker #2: Bryon, please go ahead.

Speaker #3: Thanks, Jodie. And thanks to everyone for joining us today. I'll begin with a high-level review of our second quarter results, and operational activities. Then I'll turn the call over to Rob for a detailed review of our financial results for the quarter.

Bryon McGregor: Thanks, Jody, and thanks to you everyone for joining us today. I'll begin with a high-level review of our Q2 results and operational activities. I'll turn the call over to Rob for a detailed review of our financial results for the quarter. I'll wrap up and open the call for Q&A. We delivered our fourth consecutive quarter of positive gross profit, income from operations, net income, and Adjusted EBITDA. We have been consistently profitable during this period, even without the contribution of 45Z tax credits. These results demonstrate the strength of our diversified operating model, which gives us the flexibility to shift production toward the most attractive end markets and capture premium value opportunities. We remain focused on disciplined execution of our strategic plan and unlocking additional values across our portfolio.

Speaker #3: After that, I'll wrap up and open the call for Q&A. We delivered our fourth consecutive quarter of positive gross profit, income from operations, net income, and adjusted EBITDA.

Speaker #3: We have been consistently profitable during this period, even without the contribution of 45Z tax credits. These results demonstrate the strength of our diversified operating model, which gives us the flexibility to shift production toward the most attractive end markets and capture premium value opportunities.

Bryon McGregor: We have been consistently profitable during this period, even without the contribution of 45Z tax credits. These results demonstrate the strength of our diversified operating model, which gives us the flexibility to shift production toward the most attractive end markets and capture premium value opportunities. We remain focused on disciplined execution of our strategic plan and unlocking additional values across our portfolio.

Speaker #3: We remain focused on disciplined execution of our strategic plan and unlocking additional values across our portfolio. Our latest 12-month results are also a testament to our efforts to drive profitability and maximize our asset base.

Bryon McGregor: Our latest 12-month results are also a testament to our efforts to drive profitability and maximize our asset base, and to make smart capital allocation decisions, including purchasing Alto Carbonic, investing in our dry mill optimization and carbon intensity reduction projects. We have executed well on these initiatives and more. For the Q2, our results reflect strong domestic demand and improved essential ingredient values compared to the same period last year. The quarter's market crush margins improved significantly to $0.33 per gallon from $0.11 per gallon in the same period last year. This increase was driven by robust export demand, strong domestic blending activity, and tighter ethanol inventories following industry-wide spring maintenance outages. As a result, ethanol prices improved during the quarter, supported by strong renewable volume obligation or RVO blending requirements.

Speaker #3: And to make smart capital allocation decisions, including purchasing Alto Carbonic, investing in our dry mill optimization and carbon intensity reduction projects. We have executed well on these initiatives and more.

Speaker #3: For the second quarter, our results reflect strong domestic demand and improved essential ingredient values compared to the same period last year. The quarter's market crush margins improved significantly to 33 cents per gallon from 11 cents per gallon in the same period last year.

Bryon McGregor: The quarter's market crush margins improved significantly to $0.33 per gallon from $0.11 per gallon in the same period last year. This increase was driven by robust export demand, strong domestic blending activity, and tighter ethanol inventories following industry-wide spring maintenance outages. As a result, ethanol prices improved during the quarter, supported by strong renewable volume obligation or RVO blending requirements.

Speaker #3: This increase was driven by robust export demand, strong domestic blending activity, and tighter ethanol inventories following industry-wide spring maintenance outages. As a result, ethanol prices improved during the quarter, supported by strong renewable volume obligation or RVO blending requirements.

Speaker #3: Meanwhile, favorable crop conditions and larger projected grain supplies contributed to lower corn costs and higher margins. Q2 crush margins were not only significantly higher than the same period last year, but were also strong by historical standards.

Bryon McGregor: Meanwhile, favorable crop conditions and larger projected grain supplies contributed to lower corn costs and higher margins. Q2 crush margins were not only significantly higher than the same period last year, but were also strong by historical standards. Q3 margins, which in the past have marked the seasonal peak of the year, continue to be healthy and profitable. While European demand remained robust, ongoing geopolitical disruption in the Middle East negatively impacted export economics from the United States during the quarter. Higher freight costs and reduced certainty of vessel availability to move exports from the Gulf Coast compressed the US to Europe arbitrage, increasing the competitiveness of Brazil exports into Europe. As a result, our renewable fuel export volumes declined compared to Q2 of last year. Given the strength of domestic ethanol markets, we successfully optimized our product mix towards fuel-grade ethanol sales in the US markets.

Speaker #3: Q3 margins which in the past have marked a seasonal peak of the year continue to be healthy and profitable. While European demand remained robust, ongoing geopolitical disruption in the Middle East negatively impacted export economics from the United States during the quarter.

Bryon McGregor: Q3 margins, which in the past have marked the seasonal peak of the year, continue to be healthy and profitable. While European demand remained robust, ongoing geopolitical disruption in the Middle East negatively impacted export economics from the United States during the quarter.

Speaker #3: Higher freight costs and reduced certainty of vessel availability to move the exports from the Gulf Coast compressed the US to Europe arbitrage, increasing the competitiveness of Brazil exports into Europe.

Bryon McGregor: Higher freight costs and reduced certainty of vessel availability to move exports from the Gulf Coast compressed the US to Europe arbitrage, increasing the competitiveness of Brazil exports into Europe. As a result, our renewable fuel export volumes declined compared to Q2 of last year. Given the strength of domestic ethanol markets, we successfully optimized our product mix towards fuel-grade ethanol sales in the US markets.

Speaker #3: As a result, our renewable fuel export volumes declined compared to the second quarter of last year. Given the strength of domestic ethanol markets, we successfully optimized our product mix towards fuel-grade ethanol sales in the US markets.

Speaker #3: This underscores the benefits of our diversified commercial platform, enabling us to adapt and capture the value of strong crush margin environments. Also, we believe that the geopolitical disruption in the Middle East created favorable conditions that drive domestic support for implementing E15 blending.

Bryon McGregor: This underscores the benefits of our diversified commercial platform, enabling us to adapt and capture the value of strong crush margin environments. Also, we believe that the geopolitical disruption in the Middle East created favorable conditions that drive domestic support for implementing E15 blending. More on that in a minute. During the quarter, we continued to improve utilization, reliability, and throughput with the goal of increasing total 2026 volumes over 2025. At our Pekin campus, we completed the dry mill planned outage, along with our debottlenecking project to increase annual production capacity by about 8% or 5 million gallons. This project demonstrates our dedication to highly attractive ROI investments. By increasing production at our most efficient facility, we are positioning Alto for incremental gross margin and to qualify for additional 45Z tax credits.

Speaker #3: More on that in a minute. During the quarter, we continued to improve utilization, reliability, and throughput. With the goal of increasing total 2026 volumes over 2025.

Bryon McGregor: During the quarter, we continued to improve utilization, reliability, and throughput with the goal of increasing total 2026 volumes over 2025. At our Pekin campus, we completed the dry mill planned outage, along with our debottlenecking project to increase annual production capacity by about 8% or 5 million gallons. This project demonstrates our dedication to highly attractive ROI investments. By increasing production at our most efficient facility, we are positioning Alto for incremental gross margin and to qualify for additional 45Z tax credits.

Speaker #3: At our peak in campus, we completed the dry mill planned outage along with our debottlenecking project to increase annual production capacity by about 8%, or 5 million gallons.

Speaker #3: This project demonstrates our dedication to highly attractive ROI investments. By increasing production at our most efficient facility, we are positioning Alto for incremental gross margin and to qualify for additional 45Z tax credits.

Speaker #3: After a successful dry mill restart, we are now ramping up to our new production levels and still expect to realize the full benefit of the additional capacity in the fourth quarter.

Bryon McGregor: After a successful dry mill restart, we are now ramping up to our new production levels and still expect to realize the full benefit of the additional capacity in Q4. We also performed our routine spring outage at ICP during the quarter. We remain on track to finish the repairs on our existing dock and the installation of the second alcohol loadout by the end of the year, improving our logistics and loading capacity. At our Columbia facility, we began working to add a third CO2 storage tank and expect it to be operational in Q4. The expanded storage capacity will allow us to further capitalize on growing demand for premium CO2 in the Pacific Northwest. We continue advancing multiple pathways to further monetize our CO2 stream, including both utilization and sequestration opportunities.

Speaker #3: We also performed our routine spring outage at ICP during the quarter. We remain on track to finish the repairs on our existing dock and the installation of the second alcohol loadout by the end of the year, improving our logistics and loading capacity.

Speaker #3: At our Columbia facility, we began working to add a third CO2 storage tank and expect it to be operational in Q4. The expanded storage capacity will allow us to further capitalize on growing demand for premium CO2 in the Pacific Northwest.

Bryon McGregor: At our Columbia facility, we began working to add a third CO2 storage tank and expect it to be operational in Q4. The expanded storage capacity will allow us to further capitalize on growing demand for premium CO2 in the Pacific Northwest. We continue advancing multiple pathways to further monetize our CO2 stream, including both utilization and sequestration opportunities.

Speaker #3: We continue advancing multiple pathways to further monetize our CO2 stream, including both utilization and sequestration opportunities. Our strategy emphasizes low capital, high return projects while preserving flexibility as regulatory and commercial markets continue to evolve.

Bryon McGregor: Our strategy emphasizes low capital, high return projects while preserving flexibility as regulatory and commercial markets continue to evolve. Our intent is to move quickly by pursuing partnerships with stakeholders that already have compression capabilities, allowing us to accelerate commercialization. In the meantime, we're focused on increasing our 45Z credits by producing more volume. We also continue to explore opportunities to lower our carbon scores without significant capital investment by working with our farmer partners to encourage them to lower the carbon intensity of their corn. We remain on track to qualify 90 million gallons or more of combined production this year, supporting our expectation for generating a minimum of $15 million in income from tax credits after monetization costs. We're encouraged by the growing momentum for year-round E15 adoption.

Bryon McGregor: Our strategy emphasizes low-capital, high-return projects while preserving flexibility as regulatory and commercial markets continue to evolve. Our intent is to move quickly by pursuing partnerships with stakeholders that already have compression capabilities, allowing us to accelerate commercialization. In the meantime, we're focused on increasing our 45Z credits by producing more volume.

Speaker #3: Our intent is to move quickly by pursuing partnerships with stakeholders that already have compression capabilities, allowing us to accelerate commercialization. In the meantime, we're focused on increasing our 45Z credits by producing more volume.

Speaker #3: We also continue to explore opportunities to lower our carbon scores, without significant capital investment, by working with our farming farmer partners to encourage them to lower the carbon intensity of their corn.

Bryon McGregor: We also continue to explore opportunities to lower our carbon scores without significant capital investment by working with our farmer partners to encourage them to lower the carbon intensity of their corn. We remain on track to qualify 90 million gallons or more of combined production this year, supporting our expectation for generating a minimum of $15 million in income from tax credits after monetization costs. We're encouraged by the growing momentum for year-round E15 adoption.

Speaker #3: We remain on track to qualify 90 million gallons or more of combined production this year supporting our expectation for generating a minimum of 15 million dollars in income from tax credits after monetization costs.

Speaker #3: We're encouraged by the growing momentum for year-round E15 adoption. As an example, recently the renewable fuels association reported that about 72% of US voters support year-round 15 E15 blending.

Bryon McGregor: As an example, recently, the Renewable Fuels Association reported that about 72% of US voters want year-round E15 blending, the highest level recorded since polling began in 2016. Nationally, support continues to build around the promise of E15 to reduce fuel costs, strengthen energy security, and to increase demand for domestically produced renewable fuels. Meanwhile, several Midwestern states have moved forward with permanent year-round E15 access, providing an important blueprint for broader adoption. California is also making progress following the passage of Assembly Bill 30. While final implementation steps remain, we believe the state's transition toward E15 represents a meaningful long-term demand opportunity, given its position as one of the largest gasoline markets in the country. Taken together, expanding E15 adoption at both the federal and state levels has the potential to drive significant incremental ethanol demand, improved industry capacity utilization, and support a more favorable margin environment over time.

Speaker #3: The highest level recorded since polling began in 2016. Nationally, support continues to build around the promise of E15 to reduce fuel costs, strengthen energy security, and to increase demand for domestically produced renewable fuels.

Speaker #3: Meanwhile, several Midwestern states have moved forward with permanent year-round E15 access, providing an important blueprint for broader adoption. California is also making progress following the passage of assembly bill 30.

Bryon McGregor: Meanwhile, several Midwestern states have moved forward with permanent year-round E15 access, providing an important blueprint for broader adoption. California is also making progress following the passage of Assembly Bill 30. While final implementation steps remain, we believe the state's transition toward E15 represents a meaningful long-term demand opportunity, given its position as one of the largest gasoline markets in the country.

Speaker #3: While final implementation steps remain, we believe the state's transition toward E15 represents a meaningful long-term demand opportunity given its position as one of the largest gasoline markets in the country.

Speaker #3: Taken together, expanding E15 adoption at both the federal and state levels has the potential to drive significant incremental ethanol demand. Improved industry capacity utilization and support a more favorable margin environment over time.

Bryon McGregor: Taken together, expanding E15 adoption at both the federal and state levels has the potential to drive significant incremental ethanol demand, improve industry capacity utilization, and support a more favorable margin environment over time. With that, I'll turn the call over to Rob for a more detailed review of our Q2 financial results.

Speaker #3: With that, I'll turn the call over to Rob for a more detailed review of our second quarter financial results.

Bryon McGregor: With that, I'll turn the call over to Rob for a more detailed review of our Q2 financial results.

Speaker #1: Thank you, Brion. I'll start with a review of the second quarter 2026 income statement compared to the second quarter of 2025. Consolidated net sales were 246 million dollars, up 27 million dollars.

Rob Olander: Thank you, Bryon. I'll start with a review of the Q2 2026 income statement compared to the Q2 2025. Consolidated net sales were $246 million, up $27 million. We sold 88.5 million gallons of ethanol and specialty alcohols, an increase of 1.8 million gallons at an average sales price of $2.15 per gallon, which was $0.20 per gallon or 10% higher than last year. With the 2026 RVO regulations finalized during the Q2, ethanol and RIN prices supported higher domestic ethanol sales and improved crush margins. With the diverse production capabilities at the Pekin campus, we are well-positioned to serve this changing market demand by shifting our production and sales mix. Revenue from renewable fuel exports increased by $800,000, reflecting a 2.2 million reduction in gallons sold at a significantly higher premium to domestic renewable fuel than last year.

Rob Olander: Thank you, Bryon. I'll start with a review of the Q2 2026 income statement compared to Q2 2025. Consolidated net sales were $246 million, up $27 million. We sold 88.5 million gallons of ethanol and specialty alcohols, an increase of 1.8 million gallons at an average sales price of $2.15 per gallon, which was $0.20 per gallon or 10% higher than last year. With the 2026 RVO regulations finalized during Q2, ethanol and RIN prices supported higher domestic ethanol sales and improved crush margins.

Speaker #1: We sold 88.5 million gallons of ethanol and specially alcohols, an increase of 1.8 million gallons at an average sales price of $2.15 per gallon which was 20 cents per gallon or 10% higher than last year.

Speaker #1: With the 2026 RVO regulations finalized during the second quarter, ethanol and wind prices supported higher domestic ethanol sales and improved crush margins. With the diverse production capabilities at the peak in campus, we are well positioned to serve this changing market demand by shifting our production and sales mix.

Rob Olander: With the diverse production capabilities at the Pekin campus, we are well-positioned to serve this changing market demand by shifting our production and sales mix. Revenue from renewable fuel exports increased by $800,000, reflecting a 2.2 million reduction in gallons sold at a significantly higher premium to domestic renewable fuel than last year.

Speaker #1: Revenue from renewable fuel exports increased by $800,000, reflecting a 2.2 million gallon reduction in gallons sold at a significantly higher premium to domestic renewable fuel than last year.

Speaker #1: This decrease in volume reflects the impacts of the conflict in the Middle East on the cost and availability of freight. High-quality alcohol volumes increased by 3.6 million gallons, although average premiums over ethanol narrowed reducing revenue by approximately 2.9 million dollars realized gains from our derivative positions largely offset the impact as intended, limiting the net premium decline to 2 cents per gallon.

Rob Olander: This decrease in volume reflects the impacts of the conflict in the Middle East on the cost and availability of freight. High-quality alcohol volumes increased by 3.6 million gallons. Although average premiums over ethanol narrowed, reducing revenue by approximately $2.9 million, realized gains from our derivative positions largely offset the impact as intended, limiting the net premium decline to $0.02 per gallon. As a result, the higher volumes generated a modest increase in profitability despite the lower premium environment. Essential ingredient sales increased to $6.1 million on overall improved average sales prices. Dry distillers' grain sales were supported by a strong export market and tighter domestic supply as a result of the seasonal spring maintenance downtime in the industry. In addition, the 2026 RVO set strong demand for corn oil and germ as a feedstock for biodiesel and renewable diesel drove prices up.

Speaker #1: As a result, the higher volumes generated a modest increase in profitability despite the lower premium environment. Essential ingredient sales increased 6.1 million dollars on overall improved average sales prices.

Rob Olander: As a result, the higher volumes generated a modest increase in profitability despite the lower premium environment. Essential ingredient sales increased to $6.1 million on overall improved average sales prices. Dry distillers' grain sales were supported by a strong export market and tighter domestic supply as a result of the seasonal spring maintenance downtime in the industry. In addition, the 2026 RVO set strong demand for corn oil and germ as a feedstock for biodiesel and renewable diesel drove prices up.

Speaker #1: Dried distillers grain sales were supported by a strong export market and tighter domestic supply as a result of the seasonal spring maintenance downtime in the industry.

Speaker #1: In addition, the 2026 RVO set strong demand for corn oil and germ as a feedstock for biodiesel and renewable diesel drove prices up. Coupled with the 5% decrease in our cost of corn, our essential ingredients return improved to 51.6% compared to 45.2% for the second quarter last year.

Rob Olander: Coupled with a 5% decrease in our cost of corn, our essential ingredients return improved to 51.6%, compared to 45.2% for Q2 last year. Gross profit increased by $19 million year over year to $17 million. In addition to the sales mix changes, the improvement was primarily driven by stronger industry crush margins, which increased to $0.33 per gallon from $0.11 per gallon in Q2 of last year, contributing approximately $17 million of incremental gross profit. We also benefited from lower utility costs, with natural gas and electricity expenses declining by nearly $600,000 year over year.

Speaker #1: Gross profit increased by 19 million dollars year over year to 17 million dollars. In addition to the sales mix changes, the improvement was primarily driven by stronger industry crush margins which increased the 33 cents per gallon from 11 cents per gallon in the second quarter of last year, contributing approximately 17 million dollars of incremental gross profit.

Rob Olander: In addition to the sales mix changes, the improvement was primarily driven by stronger industry crush margins, which increased to $0.33 per gallon from $0.11 per gallon in Q2 of last year, contributing approximately $17 million of incremental gross profit. We also benefited from lower utility costs, with natural gas and electricity expenses declining by nearly $600,000 year over year.

Speaker #1: We also benefited from lower utility costs with natural gas and electricity expenses declining by nearly 600,000 dollars year over year. While setting these positives, we incurred approximately 2 million dollars more in repairs and maintenance expense due to our peak in dry mill and ICP spring outages.

Rob Olander: Offsetting these positives, we incurred approximately $2 million more in repairs and maintenance expense due to our Pekin dry mill and ICP spring outages, and continued work at our carbonics facility to ensure we are prepared to reliably support the increased demand for our premium CO2 during the seasonally strong summer months. Even with these higher expenses, our Western facilities remained profitable on a gross profit basis for Q2 2026. As a reminder, we employ hedging strategies to protect the premiums over ethanol on our high-quality alcohol contractual commitments and to adjust our fixed price corn back to market. For Q2, realized derivative gains increased $1.2 million, while unrealized derivative losses related to future shipments increased $1.5 million. As of the end of Q2, our open derivative positions resulted in a net asset of $3.9 million. SG&A expenses increased by $1.8 million.

Speaker #1: And continued work at our carbonic facility to ensure we are prepared to reliably support the increased demand for our premium CO2 during the seasonally strong summer months.

Speaker #1: Even with these higher expenses, our western facilities remained profitable on our gross profit basis for Q2 2026. As a reminder, we employ hedging strategies to protect the premiums over ethanol on our high-quality alcohol contractual commitments and to adjust our fixed price corn back to market.

Rob Olander: As a reminder, we employ hedging strategies to protect the premiums over ethanol on our high-quality alcohol contractual commitments and to adjust our fixed price corn back to market. For Q2, realized derivative gains increased $1.2 million, while unrealized derivative losses related to future shipments increased $1.5 million. As of the end of Q2, our open derivative positions resulted in a net asset of $3.9 million. SG&A expenses increased by $1.8 million.

Speaker #1: For the second quarter, realized derivative gains increased $1.2 million, while unrealized derivative losses related to future shipments increased $1.5 million. As of the end of the second quarter, our open derivative positions resulted in a net asset of $3.9 million.

Speaker #1: SG&A expenses increased by 1.8 million dollars. Because of our strong second quarter and year-to-date results, we accrued performance compensation for the first and second quarters in the amount of 800,000 dollars whereas last year we did not accrue performance compensation until the second half of the year.

Rob Olander: Because of our strong Q2 and year-to-date results, we accrued performance compensation for Q1 and Q2 in the amount of $800,000, whereas last year, we did not accrue performance compensation until H2 of the year. Last year's SG&A expense also included a one-time $800,000 gain related to the final payment for the Eagle Alcohol acquisition. Excluding these notable items, SG&A was comparable, reflecting the actions taken last year to right-size our staffing levels and cut costs. We continue to maintain strict discipline over our spending. Moving down the income statement, we generated $5.1 million in 45Z tax credit earnings, reflecting $4 million of credits earned in Q2 and $1.1 million in final adjustments on our 2025 sales proceeds as we completed the sale of our 2025 credits in June.

Speaker #1: Last year's SG&A expense also included a one-time 800,000 dollar gain related to the final payment for the Eagle alcohol acquisition. Excluding these notable items, SG&A was comparable reflecting the actions taken last year to right size our staffing levels and cut costs.

Speaker #1: We continue to maintain strict discipline over our spending. Moving down the income statement, we generated 5.1 million dollars and 45Z tax credit earnings reflecting 4 million dollars of credits earned in the second quarter and 1.1 million dollars in final adjustments on our 2025 sales proceeds as we completed the sale of our 2025 credits in June.

Rob Olander: We continue to maintain strict discipline over our spending. Moving down the income statement, we generated $5.1 million in 45Z tax credit earnings, reflecting $4 million of credits earned in Q2 and $1.1 million in final adjustments on our 2025 sales proceeds as we completed the sale of our 2025 credits in June.

Speaker #1: In Q2 2025, we did not recognize any 45Z tax credit earnings as we were not yet accounting for them on a quarterly basis. Year to date, we have accrued 7.9 million dollars in net 2026 45Z tax credits which we expect to monetize in the future.

Rob Olander: In Q2 2025, we did not recognize any 45Z tax credit earnings as we were not yet accounting for them on a quarterly basis. Year to date, we have accrued $7.9 million in net 2026 45Z tax credits, which we expect to monetize in the future. Interest expense decreased to $900,000 on lower outstanding debt balances, reflecting our continued focus on minimizing idle cash and reducing our interest expense burden by paying down debt. Adjusted EBITDA improved by $23.9 million to $23.7 million compared to -Adjusted EBITDA in the prior year period. The improvement was driven by a combination of the $19 million swing to +gross profit and a $5.1 million increase in 45Z tax credit earnings, partially offset by higher SG&A expenses.

Speaker #1: Interest expense decreased by $900,000 on lower outstanding debt balances, reflecting our continued focus on minimizing idle cash and reducing our interest expense burden by paying down debt.

Speaker #1: Adjusted EBITDA improved by 23.9 million dollars to 23.7 million dollars compared to negative adjusted EBITDA in the prior year period. The improvement was driven by a combination of the 19 million dollar swing to positive gross profit and a 5.1 million dollar increase in 45Z tax credit earnings.

Rob Olander: Adjusted EBITDA improved by $23.9 million to $23.7 million compared to -Adjusted EBITDA in the prior year period. The improvement was driven by a combination of the $19 million swing to +gross profit and a $5.1 million increase in 45Z tax credit earnings, partially offset by higher SG&A expenses.

Speaker #1: Partially offset by higher SG&A expenses. Net income attributable to common stockholders was 11.4 million dollars or 15 cents per share compared to a net loss of 11.3 million dollars or a negative 15 cents per share for Q2 2025.

Rob Olander: Net income attributable to common stockholders was $11.4 million, or $0.15 per share, compared to a net loss of $11.3 million, or -$0.15 per share for Q2 2025, a significant improvement of $22.7 million. Our tax provision amount is zero as we expect to use a portion of our NOLs to offset income this year. Turning to the balance sheet, as of 30 June 2026, our cash balance was $24 million. During Q2, we generated $28.5 million in cash flow from operating activities. Capital expenditures for the quarter amounted to $10.6 million and $11.5 million year to date. We are on track with our annual targeted CapEx spend of $25 million.

Speaker #1: A significant improvement of 22.7 million dollars. Our tax provision amount is zero as we expect to use a portion of our NOLs to offset income this year.

Speaker #1: Turning to the balance sheet, as of June 30th, 2026, our cash balance was 24 million dollars. During the second quarter, we generated 28.5 million dollars in cash flow from operating activities.

Rob Olander: Turning to the balance sheet, as of 30 June 2026, our cash balance was $24 million. During Q2, we generated $28.5 million in cash flow from operating activities. Capital expenditures for the quarter amounted to $10.6 million and $11.5 million year to date. We are on track with our annual targeted CapEx spend of $25 million.

Speaker #1: Capital expenditures for the quarter amounted to 10.6 million dollars and 11.5 million dollars year to date. We are on track with our annual targeted capex spend of 25 million dollars.

Speaker #1: With strong earnings, and positive cash flow from operations, we paid down an additional 8.5 million dollars in principal on our term debt facility and ended the quarter with 29.9 million dollars in term debt outstanding bringing our total principal payments this year to 25.1 million dollars.

Rob Olander: With strong earnings and positive cash flow from operations, we paid down an additional $8.5 million in principal on our term debt facility and ended the quarter with $29.9 million in term debt outstanding, bringing our total principal payments this year to $25.1 million. At quarter end, our total borrowing availability was $106 million, consisting of $41 million under our operating line of credit and $65 million under our term loan facility. Today, we established a $50 million at-the-market equity program. Alongside our available borrowing capacity and operating cash flow, the ATM gives us additional financial flexibility and a prudent and low-cost tool to effectively access equity capital. We see a number of attractive, high-return organic opportunities across our platform. Having the ATM in place allows us to remain prepared to pursue these opportunities when expected returns, market conditions, and shareholder interests align.

Speaker #1: Our quarter end, our total borrowing availability was 106 million dollars consisting of 41 million dollars under our operating line of credit and 65 million dollars under our term loan facility.

Speaker #1: Today, we established a 50 million aftermarket equity program. Alongside our available borrowing capacity and operating cash flow, the ATM gives us additional financial flexibility and a prudent and low-cost tool to effectively access equity capital.

Rob Olander: Today, we established a $50 million at-the-market equity program. Alongside our available borrowing capacity and operating cash flow, the ATM gives us additional financial flexibility and a prudent and low-cost tool to effectively access equity capital. We see a number of attractive, high-return organic opportunities across our platform.

Speaker #1: We see a number of attractive high-return organic opportunities across our platform. Having the ATM in place, allows us to remain prepared to pursue these opportunities when expected returns market conditions and shareholder interests align.

Rob Olander: Having the ATM in place allows us to remain prepared to pursue these opportunities when expected returns, market conditions, and shareholder interests align. Any use of the program would be disciplined, measured, and evaluated against other available sources of capital. With that, I will turn the call back to Bryon.

Speaker #1: Any use of the program would be disciplined measured and evaluated against other available sources of capital. With that, I will turn the call back to Brian.

Rob Olander: Any use of the program would be disciplined, measured, and evaluated against other available sources of capital. With that, I will turn the call back to Bryon.

Speaker #2: Thanks, Rob. Our results for the past four quarters demonstrate the success to date of this the strategic realignment we began three years ago. With a diversified product portfolio a leaner cost structure we have positioned Alto to capture higher value revenue opportunities to enhance profitability and drive shareholder value.

Bryon McGregor: Thanks, Rob. Our results for the past four quarters demonstrate the success to date of the strategic realignment we began three years ago. With a diversified product portfolio, a leaner cost structure, we have positioned Alto to capture higher value revenue opportunities to enhance profitability and drive shareholder value. Our operating model is now capable of generating annual positive Adjusted EBITDA through the commodity cycles while providing meaningful upside when market conditions are favorable. In addition, this year we're executing high-return capital projects focused on capacity expansion, CO2 optimization, and process efficiency improvements. These projects represent over $10 million of capital investment, offering attractive returns, and are expected to generate paybacks of just over one year on average. Importantly, these investments are within our control and are designed to enhance earnings and cash flow regardless of commodity market conditions.

Speaker #2: Our operating model is now capable of generating annual positive adjusted EBITDA through the commodity cycles while providing meaningful upside when market conditions are favorable.

Bryon McGregor: Our operating model is now capable of generating annual positive Adjusted EBITDA through the commodity cycles while providing meaningful upside when market conditions are favorable. In addition, this year we're executing high-return capital projects focused on capacity expansion, CO2 optimization, and process efficiency improvements.

Speaker #2: In addition, this year we're executing high-return capital projects focused on capacity expansion, CO2 optimization, and process efficiency improvements. These projects represent over $10 million of capital investment.

Bryon McGregor: These projects represent over $10 million of capital investment, offering attractive returns, and are expected to generate paybacks of just over one year on average. Importantly, these investments are within our control and are designed to enhance earnings and cash flow regardless of commodity market conditions.

Speaker #2: Offering attractive returns and our expected to generate paybacks of just over one year on average. Importantly, these investments are within our control and are designed to enhance earnings and cash flow regardless of commodity market conditions.

Speaker #2: These are only a few of many compelling organic opportunities that we intend to pursue while maintaining our disciplined approach to capital allocation. In summary, we remain on track to increase production volumes in 2026 compared to 2025.

Bryon McGregor: These are only a few of many compelling organic opportunities that we intend to pursue while maintaining our disciplined approach to capital allocation. In summary, we remain on track to increase production volumes in 2026 compared to 2025. We will continue optimizing our product mix, capturing more value from our unique asset base, and executing high-return opportunities that improve profitability and cash flow. Our diversified strategy is working. Our operating model is stronger, and our financial results reinforce our confidence in Alto's ability to generate sustainable earnings and create long-term shareholder value. Danielle, we're ready to begin the Q&A session.

Speaker #2: We will continue optimizing our product mix capturing more value from our unique asset base and executing high-return opportunities and improved profitability and cash flow.

Speaker #2: Our diversified strategy is working our operating model is stronger and our financial results reinforce our confidence in Alto's ability to generate sustainable earnings and create long-term shareholder value.

Bryon McGregor: Our diversified strategy is working. Our operating model is stronger, and our financial results reinforce our confidence in Alto's ability to generate sustainable earnings and create long-term shareholder value. Danielle, we're ready to begin the Q&A session.

Speaker #2: Danielle, we're ready to begin the Q&A session.

Speaker #3: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad.

Operator 2: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question comes from Eric Stine from Craig-Hallum. Please go ahead.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question comes from Eric Stine from Craig-Hallum. Please go ahead.

Speaker #3: If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question comes from Eric Stein from Craig Hallam.

Speaker #3: Please go ahead.

Speaker #2: Hi Brian. Hi Rob.

Eric Stine: Hi, Bryon. Hi, Rob.

Bryon McGregor: Hey, Eric.

Speaker #4: Hello.

Speaker #2: Hey. So I mean, obviously you've kind of laid out these capital projects and the progress pretty steady progress you're making. But also alluding to a host of others should we think about that as this kind of going deeper in the paths that you're already on or are there others?

Eric Stine: Hey. Obviously, you've laid out these capital projects and the progress, pretty steady progress you're making. Also alluding to a host of others. Should we think about that as just kind of going deeper in the paths that you're already on or are there others? If so, could you give some details on what those other areas might be?

Speaker #2: And if so, could you give some details on what those other areas might be?

Speaker #4: Sure. So while in general they are deeper moves along some of the same things that we've been talking about, right? We are clearly around monetizing CO2 capturing taking advantage of the 45Z opportunities that are available at least through 2029.

Bryon McGregor: Sure. While in general, they are deeper moves along some of the same things that we've been talking about, right? It is clearly around monetizing CO2, capturing, taking advantage of the 45Z opportunities that are available at least through 2029 to help monetize that value and be able to reinvest those dollars into other longer-term projects. It is about leaning into our efficient projects and expanding capacity where it makes sense to do so, particularly in our most efficient locations and making those that may be less efficient, more efficient. Probably not appropriate to share the exact details yet because we haven't committed full capital to those yet, but we will certainly be sharing.

Speaker #4: To help monetize that value and be able to reinvest those dollars into other longer-term projects, it's about leaning into our efficient projects and expanding capacity where it makes sense to do so.

Bryon McGregor: It is about leaning into our efficient projects and expanding capacity where it makes sense to do so, particularly in our most efficient locations and making those that may be less efficient, more efficient. Probably not appropriate to share the exact details yet because we haven't committed full capital to those yet, but we will certainly be sharing.

Speaker #4: Particularly in our most efficient locations and making them those that may be less efficient more efficient. Probably not appropriate to share the exact details yet because we haven't committed full capital to those yet but we will certainly be sharing the quarters to come.

Bryon McGregor: in the quarters to come. As I mentioned in the prepared remarks, is that we see really exciting organic opportunities with excellent paybacks that we see as almost obligations to pursue. With that is the focus of the company, and we will share more as we commit capital to those projects.

Speaker #4: But as I mentioned in our in the prepared remarks is that we see really exciting organic opportunities with excellent paybacks that we see as almost obligations to pursue.

Speaker #4: So with that, that's the focus of the company and we'll share more as we as we commit capital to those projects.

Speaker #2: Yep, understood. I mean, as we're with the shot to ask. But maybe just on the topic of improving the CI scores and going down the path on the crop side and with farmers.

Eric Stine: Yep. Understood. It was worth a shot to ask. Maybe just on the talking about to improve the CI scores and going down the path on the crop side and with farmers, when you think about that, given that the 45Z has been in place but is relatively new to the market, do you feel like, are farmers, how open are they to that? Or what are you finding? Is that something, an opportunity that people have kind of already mined or it really is ripe to make further strides in that area?

Speaker #2: I mean, when you think about that given that the I mean, 45Z has been in place but is relatively new to the market. I mean, do you feel like that is I mean, are farmers how open are they to that or what are you finding is that something an opportunity that people have kind of already mined or it really is ripe to make further strides in that area?

Speaker #4: Yeah. It's relatively fresh for the farmers especially because the rules had not yet been established until earlier a month or two ago. But I think with the rules now and while there's still some clarifications that need to be made I think that the pathway is clear for the farmers and there's a lot of inquiry and a lot of work that's being done on our part and as well others in the industry.

Bryon McGregor: It's relatively fresh for the farmers, especially because the rules had not yet been established until earlier, a month or two ago. I think with the rules now, and while there's still some clarifications that need to be made, I think that the pathway is clear for the farmers, and there's a lot of inquiry and a lot of work that's being done on our part and as well others in the industry. The farmers are very keen to it. If you think about it from a context of on a relative basis, if we were to save an additional $0.10 or generate an additional $0.10 in carbon intensity credit or the credits around the 45Z, that translates into almost $0.30 per bushel for those farmers who are participating.

Speaker #4: And the farmers are very keen to it. I mean, if you think about it from a context of on a relative basis if we were to save an additional 10 cents or generate additional 10 cents in carbon intensity credit or the credits around the 45Z that translates into almost 30 cents per bushel for those farmers who are participating.

Bryon McGregor: If you think about it from a context of on a relative basis, if we were to save an additional $0.10 or generate an additional $0.10 in carbon intensity credit or the credits around the 45Z, that translates into almost $0.30 per bushel for those farmers who are participating.

Speaker #4: And that's real dollars especially where the price for corn this year and last is somewhat difficult to justify the investment that the farmers are making.

Bryon McGregor: That's real dollars, especially where the price for corn this year and last is somewhat difficult to justify the investment that the farmers are making. Some of the steps are incredibly easy for them to do as far as registration and doing some of the other things. We see this as a real opportunity, and I know that more and more farmers are asking questions, they're doing what they can to get on board.

Speaker #4: But these are easy some of the steps are incredibly easy for them to do as far as registration and doing some of the other things.

Speaker #4: And so we see this as a real opportunity and I know that the more and more farmers are only asking questions but doing what they can to get on board.

Speaker #2: Okay. Got it. Last one. Just I know Q2 you had the dry mill planned outage there and got through that. And had a very good quarter but limited to an extent by that outage.

Eric Stine: Okay. Got it. Last one. I know Q2 you had the dry mill planned outage there and got through that. Had a very good quarter, but limited to an extent by that outage. When you think about Q3, I know you're ramping that back up. Do you feel like you get, with the market conditions still quite good, that you get a greater capture of that since you're through the outage?

Speaker #2: I mean, when you think about third quarter I know you're ramping that back up but do you feel like you get a with the market conditions still quite good that you get a greater capture of that since you're through the outage?

Speaker #4: Yeah. I mean, as we said in the prepared remarks we expect to fully be able to realize it in Q4. Don't want to rush our team too quickly when you're making changes not only to debottlenecking but making improvements to your DCO your IT systems and the like.

Bryon McGregor: Yeah. As we said in the prepared remarks, we expect to fully be able to realize it in Q4. Don't want to rush our team too quickly when you're making changes not only to de-bottlenecking, but making improvements to your DCS, your IT systems, and the like. You want to make sure you line all that out and keep things safe. That said, we're excited about the opportunity. We've seen some real promise in what we're seeing at the plant, excess capacity, things like that. Really excited about that. The nice thing about that facility is not only just the additional amount of production, but as well, again, it's one of our lowest cost, if not our lowest cost facility in operations. Really driving profitability to the bottom line, but also those gallons are eligible for 45Z credit.

Speaker #4: So you want to make sure you line all that out and keep things safe. That said, we're excited about the opportunity we've seen at see some real promise in what we're seeing at the plant excess capacities, things like that.

Bryon McGregor: We've seen some real promise in what we're seeing at the plant, excess capacity, things like that. Really excited about that. The nice thing about that facility is not only just the additional amount of production, but as well, again, it's one of our lowest cost, if not our lowest cost facility in operations. Really driving profitability to the bottom line, but also those gallons are eligible for 45Z credit. It has a multiplying effect, and again, really excited about that opportunity.

Speaker #4: So really excited about that. And the nice thing about that facility is not only just an additional amount of production but as well again it's one of our lowest cost if not our lowest cost facility in operations.

Speaker #4: So, really driving profitability to the bottom line, but also those gallons are eligible for the 45Z credit. So it has a multiplying effect, and again, really excited about that opportunity.

Bryon McGregor: It has a multiplying effect, and again, really excited about that opportunity.

Eric Stine: Yep. Okay. Thank you.

Speaker #2: Okay. Okay. Thank you.

Speaker #4: Thanks, Eric.

Bryon McGregor: Thanks, Eric.

Speaker #2: Thank you.

Eric Stine: Thank you.

Speaker #1: The next question comes from Sameer Joshi from HC Wainwright. Please go ahead.

Operator 2: The next question comes from Sameer Joshi from H.C. Wainwright. Please go ahead.

Operator: The next question comes from Sameer Joshi from H.C. Wainwright. Please go ahead.

Speaker #4: Hey. Good afternoon, Brion. Rob, thanks for taking my question and congratulations on a great quarter. I'm just stepping back. Hey. Just stepping back when you make decisions whether to deliver or to invest because you do have these projects that you just have outlined to work on to improve CI scores monetize this year to expand the capacity.

Sameer Joshi: Hey, good afternoon, Bryon, Rob. Thanks for taking my question and congratulations on a great quarter.

Bryon McGregor: Hey, Sameer.

Sameer Joshi: Just stepping back. Hey. Just stepping back, when you make decisions whether to delever or to invest, because you do have these projects that you just have outlined to work on to improve CI scores, monetize the CO2, expand the capacity. At the same time, you're also paying back some of the principal. What are the takes and puts in that decision-making?

Speaker #4: At the same time you're also paying back some of the principal what are the takes and puts in that decision making? So we have a full committed process around evaluating each one of our projects, stacking them against and weighing them against other opportunities.

Bryon McGregor: We have a full committed process around evaluating each one of our projects, stacking them against, weighing them against other opportunities. Some of the projects may not have as solid as of a return, but they're core and/or foundational in being able to then expand into other areas. A good example of that would be the improvements in the debottlenecking that we did at the dry mill at the Pekin campus, but it actually lays a foundation to be able to do an incremental or a significantly higher expansion on that facility going forward. That said, that also requires an additional amount of capital or significantly more amount of capital than the debottlenecking.

Speaker #4: And then some of the projects may not have as solid as a return but they're core and/or foundational in being able to then expand into other areas.

Speaker #4: So a good example of that would be the improvements in the debottlenecking that we did at the dry mill. At the Pekin campus but it actually lays a foundation to be able to do an incremental or significantly higher expansion on that facility.

Bryon McGregor: A good example of that would be the improvements in the debottlenecking that we did at the dry mill at the Pekin campus, but it actually lays a foundation to be able to do an incremental or a significantly higher expansion on that facility going forward. That said, that also requires an additional amount of capital or significantly more amount of capital than the debottlenecking.

Speaker #4: Going forward. That said, that also requires an additional amount of capital or significantly more amount of capital than the debottlenecking. And so those are things that we have to take into account, weigh those against the cost of capital and against other projects that may have other more beneficial returns or less beneficial returns, right?

Bryon McGregor: Those are things that we have to take into account, weigh those against the cost of capital and against other projects that may have other more beneficial returns or less beneficial returns, right? We're going to tackle those.

Speaker #4: And so we're going to stack with those Rob, anything you want to add to that?

Bryon McGregor: Rob, anything you want to add to that?

Speaker #2: Yeah. Sure. Thanks, Brion. I guess I'd just add with a strong profitability and cash flows year to date we've been able to fund a lot of our low cost, high return projects and we've commented before as opposed to letting that cash sit idle in the bank we'd rather put that to work and reduce our interest expense burden.

Rob Olander: Yeah, sure. Thanks, Bryon. I guess I'd just add, with our strong profitability and cash flows year to date, we've been able to fund a lot of our low-cost, high-return projects. We've commented before, as opposed to letting that cash sit idle in the bank, we'd rather put that to work and reduce our interest expense burden. We're taking the opportunity to pay down debt, which also improves our profitability as well.

Rob Olander: Sure. Thanks, Bryon. I guess I'd just add, with our strong profitability and cash flows year to date, we've been able to fund a lot of our low-cost, high-return projects. We've commented before, as opposed to letting that cash sit idle in the bank, we'd rather put that to work and reduce our interest expense burden. We're taking the opportunity to pay down debt, which also improves our profitability as well.

Speaker #2: So we're taking the opportunity to pay down debt which also improves our profitability as well.

Speaker #4: Understood. Thanks for that color. My second question is you explained the European disruption and how it or rather European exports impacted by the disruption in shipping.

Sameer Joshi: Understood. Thanks for that color. My second question is, can you explain the European disruption and how it, or rather European exports impacted by the disruption in shipping? Would your EBITDA would have been higher, if you had been able to avail of the European opportunity versus redirecting your efforts towards domestic sales?

Speaker #4: Would your EBITDA would have been higher if you had been able to avail of the European opportunity versus redirecting your efforts towards domestic sales?

Speaker #4: Yeah. So it's a dynamic market clearly, right? I mean, prices continue it's a commodities-based market so it's a bit speculative but all things being equal if you had the same price and the same volume that you were experiencing in Q1 and Q4 of last year, yes, we would have generated more.

Bryon McGregor: Yeah. It's a dynamic market, clearly, right? I mean, prices continue.

Bryon McGregor: Yeah. It's a dynamic market, clearly, right? I mean, prices continue. It's a market, so it's a bit speculative. All things being equal, if you had the same price and the same volume that you were experiencing in Q1 and Q4 of last year, yes, we would've generated more. That said, margins were significantly higher in Q2 than they were in Q1 for domestic fuel as well. It's a bit of a speculative analysis.

Sameer Joshi: Yeah.

Bryon McGregor: It's a market, so it's a bit speculative. All things being equal, if you had the same price and the same volume that you were experiencing in Q1 and Q4 of last year, yes, we would've generated more. That said, margins were significantly higher in Q2 than they were in Q1 for domestic fuel as well. It's a bit of a speculative analysis.

Speaker #4: That said, margins were significantly higher in Q2 than they were in Q1 for domestic fuel as well. So it's a bit of a speculative analysis but we still continue as I think we said in my prepared remarks was it's still a very strong market.

Sameer Joshi: Mm-hmm. Yeah.

Bryon McGregor: We still continue, as I think we said in my prepared remarks, it's still a very strong market. Of course, that market's going to always, and those consumers in those markets are always going to look for the most competitive product. Right now, there's an arbitrage opportunity with Brazil, so it's an easier market to look to. Those change as share prices change and with supplies and the like. Depending on what happens with the US dollar, particularly in relation to the real, we expect that to fully come around. These are longer term relationships as well. Some of the countries or some of the parties in the specific countries also are just engaging in what would be 2027 types of volumes.

Speaker #4: Of course, that market's going to always in those consumers in those markets are always going to look for the most competitive product. And right now there's an arbitrage opportunity with Brazil and so it's an easier market to look to but those change as sugar prices change and the supplies and the like.

Speaker #4: And depending on what happens with the US dollar particularly in relation to the real we expect it to fully come around. And these are longer-term projects these are longer-term relationships as well.

Bryon McGregor: Depending on what happens with the US dollar, particularly in relation to the real, we expect that to fully come around. These are longer term relationships as well. Some of the countries or some of the parties in the specific countries also are just engaging in what would be 2027 types of volumes. We remain optimistic, and we're excited that there's a domestic market that we can turn to be able to place that product.

Speaker #4: So, some of the countries or some of the parties in the specific countries also are just engaging in what would be 2027 types of volumes.

Speaker #4: So we remain optimistic, and we're excited that there's a domestic market we can turn to in order to place that product.

Sameer Joshi: Yeah

Bryon McGregor: We remain optimistic, and we're excited that there's a domestic market that we can turn to be able to place that product.

Sameer Joshi: Understood. Yeah. I do understand that the dynamics and disruption does not only affect the European market, it also in turn impacts dynamics in the domestic market. I understand. A clarification on this 45Z. I think, maybe, Rob, I heard that you had already accounted for $7.9 million in credits that you are planning to sell in H2. I was just not sure if I heard that right. Can you explain what that is?

Sameer Joshi: Understood. Yeah. I do understand that the dynamics and disruption does not only affect the European market, it also in turn impacts dynamics in the domestic market. I understand. A clarification on this 45Z. Rob, I heard that you had already accounted for $7.9 million in credits that you are planning to sell in H2. I was just not sure if I heard that right. Can you explain what that is?

Speaker #2: Understood. Yeah. And I do understand that.

Speaker #4: The dynamics and disruption does not only affect the European market it's also in turn impacts dynamics in the domestic market. So I understand. A clarification on this 45Z I think maybe Rob I heard that you had already accounted for 7.9 million in credits that you are planning to sell in the second half.

Speaker #4: I was just not sure if I heard that right. Can you explain what that is?

Speaker #2: Yeah, that's correct. We had set a minimum baseline target expectation of $15 million in net 45Z proceeds, and that's on 90 million gallons. Now, with that said, we are still pursuing opportunities to qualify more volume—both with the Pekin dry mill debottlenecking project, as well as efforts to improve our reliability and uptime, and potentially even qualifying other volume that is currently destined for other end markets outside of the United States.

Rob Olander: Yeah. That's correct. We had set a minimum baseline target expectation of $15 million in net 45Z proceeds, and that's on 90 million gallons. With that said, we are still pursuing opportunities to qualify more volume, both with the Pekin dry mill debottlenecking project as well as efforts to improve our reliability and uptime, as well as potentially even qualifying other volume that is currently destined for other end markets outside of the United States. That, as well as the efforts to reduce our energy and consumption and what Bryon talked about earlier with the low carbon intensity corn. Getting back to your question, year to date, we have recognized just under $8 million in net 45Z credits for the year. We're currently on track for $15 to $16 million range.

Speaker #2: That as well as the efforts to reduce our energy consumption and what Brian talked about earlier with the low carbon intensity corn. So getting back to your question, year to date we have recognized just under 8 million in 45 net 45Z credits for the year.

Rob Olander: That, as well as the efforts to reduce our energy and consumption and what Bryon talked about earlier with the low carbon intensity corn. Getting back to your question, year to date, we have recognized just under $8 million in net 45Z credits for the year. We're currently on track for $15 to $16 million range.

Speaker #2: So we're currently on track for 15 to 16 million dollar range.

Sameer Joshi: Understood. Great. Thanks for that clarification. I will take my other questions offline. Thanks.

Speaker #4: Understood. Great. Thanks for that clarification. I will take my other questions offline. Thanks.

Speaker #2: Thanks, Mary. Thank you.

Bryon McGregor: Thanks, Amir.

Rob Olander: Thank you.

Speaker #1: The next question comes from Justin Doberella from Domo Capital Management. Please go ahead.

Operator 2: The next question comes from Justin Dopierala from Domo Capital Management. Please go ahead.

Operator: The next question comes from Justin Dopierala from Domo Capital Management. Please go ahead.

Speaker #5: Hey, thanks for taking my phone call. I just have two questions here. First, did I hear that correctly? So after the quarter ended, you paid down an additional approximately $6 million in debt?

Justin Dopierala: Hey, thanks for taking my phone call.

Bryon McGregor: You bet.

Rob Olander: Yes, sir, Justin.

Justin Dopierala: Hey, just have two questions here. First, did I hear that correctly? After the quarter ended, you paid down an additional $6 million approximately in debt?

Speaker #2: No. During the quarter we paid down an additional 8 and a half million dollars of debt.

Rob Olander: No. During the quarter, we paid down an additional $8.5 million of debt.

Speaker #5: Oh, okay. The 8 and a half was all during the quarter. Got it. And then just piggybacking on the last question then. So with the 45Z credits you've generated so that will be cash that's coming in the door later in the year that could be used for further debt reduction as well I would assume.

Justin Dopierala: Oh, okay. The eight and a half was all during the quarter. Got it.

Justin Dopierala: The eight and a half was all during the quarter. Got it.

Rob Olander: Sure.

Justin Dopierala: Just piggyback in last question then. With the 45Z credits you've generated, that will be cash that's coming in the door later in the year that could be used for further debt reduction as well, I would assume?

Speaker #2: Yes. We are in preliminary discussions with buyers on the 2026 credits. So we expect to monetize those in the not too distant future.

Rob Olander: Yes. We are in preliminary discussions with buyers on the 2026 credits. We expect to monetize those in the not too distant future.

Speaker #5: Excellent.

Justin Dopierala: Excellent.

Speaker #4: But I should add, Justin, just one clarification: it's not necessarily dedicated to the reduction of debt. I mean, we'll certainly evaluate that, and there are certain covenants that we have under our agreement in regards to that, which are based on EBITDA and ratios.

Bryon McGregor: I should add, Justin, just one clarification is that it's not necessarily dedicated to the reduction of debt. We will certainly evaluate that, and there are certain covenants that we have under our agreement that are based on EBITDA and ratios. We will do that. If it makes economic sense to do that rather than deploying it elsewhere, we'll certainly evaluate that.

Speaker #4: So we will do that. But if it makes economic sense to do that rather than deploying it elsewhere we'll certainly evaluate that.

Speaker #5: Okay. And then regarding the farming practices I know you guys like to be conservative but I just want to ask. Is that something that could possibly be realized in 2026 where if you're able to get the farmers in line or whatever that you're able to realize the extra 10 cents per gallon in '26 and if so would that apply to all of the gallons that the dry mill and Pekin or unless you're also looking to do this at Columbia maybe clarifying that as well.

Justin Dopierala: Okay. Regarding the farming practices, I know you guys like to be conservative, but I just want to ask. Is that something that could possibly be realized in 2026, where if you're able to get the farmers in line or whatever, that you're able to realize an extra $0.10 per gallon in 2026? If so, would that apply to all of the gallons that the dry mill in Pekin, or unless you're also looking to do this at Columbia, maybe clarifying that as well. My question is, would that apply to the gallons for the entire year's worth of production?

Speaker #5: But my question is would that then apply to the gallons for the entire year's worth of production?

Speaker #4: Rob, you want to start, and I'll fill in.

Bryon McGregor: Rob, you want to start and I'll fill in?

Speaker #2: Yeah. I'll take that one. We're currently in discussions with our farmer partners we're not at the point that can support recognizing that benefit. We're definitely trying to set ourselves up for the future but we're in the process of exploring how many bushels or how much volume could qualify under the low carbon intensity corn and then that would be applied against our production and then calculate what the carbon intensity reduction would be.

Rob Olander: Yeah, I'll take that one. We're currently in discussions with our farmer partners. We're not at the point that can support recognizing that benefit. We're definitely trying to set ourselves up for the future. We're in the process of exploring how many bushels or how much volume could qualify under the low carbon intensity corn, and then that would be applied against our production and then calculate what the carbon intensity reduction would be. We can't say definitively one way or the other at this time. We are still in that process, but definitely laying the groundwork for the future.

Rob Olander: We're in the process of exploring how many bushels or how much volume could qualify under the low carbon intensity corn, and then that would be applied against our production and then calculate what the carbon intensity reduction would be. We can't say definitively one way or the other at this time. We are still in that process, but definitely laying the groundwork for the future.

Speaker #2: So we can't say definitively one way or the other at this time. We are still in that process. But definitely laying the groundwork for the future.

Speaker #4: And maybe what I'd add to that is if we can clearly we would, right? It would be derelict not to do that. For 2026.

Bryon McGregor: Maybe what I'd add to that is, if we can, clearly we would, right? It would be derelict not to do that for 2026. It's important to note that even if you don't pick it up for 2026, it would be incremental or a relatively small change this year, you should see much more significant, especially the more low carbon practices that are implemented, cover crops, things like that. Those won't apply this year unless they were already doing them. If they enter this fall after harvest and doing cover crops, you really start to see the benefit in 2027.

Speaker #4: But it's important to note that even if you do if you don't pick it up for 2026 I mean, it would be incremental or a relatively small change this year but you should see much more significant especially the more low carbon practices that are implemented.

Speaker #4: Cover crops, things like that. Those won't apply this year unless they were already doing them. But if they entered this fall after harvest and doing cover crops and you really start to see the benefit in 2027.

Speaker #5: All right. Thank you. Fantastic quarter.

Justin Dopierala: All right. Thank you. Fantastic quarter.

Speaker #4: Thanks, Justin. Appreciate it.

Rob Olander: Thank you.

Bryon McGregor: Thanks, Justin. Appreciate it.

Speaker #1: This concludes our question and answer session. I would like to turn the conference back over to Brian McGregor for closing remarks.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over to Bryon McGregor for closing remarks.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Bryon McGregor for closing remarks.

Speaker #4: Thanks, Danielle. Thanks to everyone for joining us today. As always, we appreciate your interest in and your support of Alto Ingredients. Have a great day.

Bryon McGregor: Thanks, Danielle. Thanks to everyone for joining us today. As always, we appreciate your interest in and your support of Alto Ingredients. Have a great day.

Operator 2: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Q2 2026 Alto Ingredients Inc Earnings Call

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