Alto Ingredients, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. 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. 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. 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. 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.

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.

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.

Bryon, please go ahead. Thanks, Jody, and thank you, everyone, for joining us today.

I'll begin with a high-level review of our second quarter results and operational activities. I'll turn the call over to Rob for a detailed review of our financial results for the quarter. 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. 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.

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 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 $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. Ethanol prices improved during the quarter, supported by strong renewable volume obligation or RVO blending requirements.

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 U.S. during the quarter. Higher freight costs and reduced certainty of vessel availability to move exports from the Gulf Coast compressed the U.S. to Europe arbitrage, increasing the competitiveness of Brazil exports into Europe. 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 U.S. markets.

This underscores the benefits of our diversified commercial platform, enabling us to adapt and capture the value of strong crush margin environments. 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.

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. 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 load out 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.

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.

As an example, recently, the Renewable Fuels Association reported that about 72% of U.S. voters support 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.

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