Good day, and welcome to Alto Ingredients Third Quarter 2025 Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Harriet Fried of Alliance Advisors. Please go ahead.

Thank you, operator, and thank you all for joining us today for the Alto Ingredients Third Quarter 2025 Results Conference Call. On the call today are 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 third quarter of 2025. The company also prepared a presentation for today's call that is available on its website at altoingredients.com. Telephone replay of today's call will be available through November 12, the details of which are included in today's press release. A webcast replay will also be available on the Alto Ingredients website. Please note that the information on this call speaks only as of today, November 5. You're 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 in this presentation constitute forward-looking statements and considerations that involve risks and uncertainties. The actual future 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 consolidated net income or loss before interest expense, interest income, provision for income taxes, asset impairments, unrealized derivative gains and losses, acquisition-related expense 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 provide a review of the company's strategic plan and activity. Rob will comment on its financial results. Then Bryon will wrap up and open the call for Q&A. It's now my pleasure to introduce Bryon McGregor. Bryon, go ahead, please.

Thank you, Harriet. Thank you all for joining us today. Strong market conditions combined with the benefits realized from our recent strategic realignment delivered improvements across all segments of our business in the third quarter of 2025 compared to the same period in 2024. Gross profit increased $18 million. Net income improved by $17 million and adjusted EBITDA grew $9 million. These robust improvements reflect several key factors. We increased renewable fuel export sales, illustrating the advantage of our platform's flexibility to shift our product mix to meet market demand to capture the highest value for our products. We benefited from strong demand for liquid CO2, particularly on the West Coast, and we reduced costs and improved efficiencies, including rationalizing unprofitable business activities, successfully lowering expenses year-over-year. As we've recently discussed, we've been prioritizing shorter-term projects based on cost, timing and most importantly, projected ROI. We continue to believe this strategy will pave the way to incremental profitability and an improved future. Our goals include lowering our carbon intensity score to capture more of the benefits from the Section 45Z tax regulations and increasing our CO2 utilization at our Pekin campus and in Columbia, building on our successful Carbonic acquisition. I'll provide some updates. We remain confident in our ability to generate Section 45Z tax credits on ethanol production. Once we complete our work to qualify for these credits, we expect to earn $0.10 per gallon at our Columbia plant for 2025. In addition, with the updated indirect land use change or ILUC in 2026, we expect to lower our carbon intensity scores, increasing available tax credits to $0.20 per gallon at our Columbia facility and earning $0.10 per gallon at our Pekin dry mill. As we mentioned last quarter, if our facilities produced at nameplate, this could amount to $18 million in aggregate gross Section 45Z tax credits over the two-year period before related monetization costs. Given the 45Z credits are transferable tax assets, we have begun the process to forward sell these assets and monetize the credits in 2026 through 2029. Notably, because of the recent Section 45Z updates, the intrinsic value of all of our facilities has improved. Our overall CO2 utilization has improved as a result of our acquisition of Kodiak Carbonic, now Alto Carbonic, in early 2025 and our initial CapEx programs at our Columbia facility. Our efforts continue to further improve plant reliability and ethanol production rates to create greater synergies, including implementing measures to increase CO2 throughput as well as adding storage capacity. A number of these ethanol production improvements were completed in October. Having proven the benefits of owning the system at our Columbia plant, we are now considering options for other liquid CO2 facilities. We believe this is a compelling opportunity as the demand for premium liquid CO2 continues to rise, particularly in Oregon and neighboring states like Idaho, generated by significant supply shortages and increased consumption in the region. This has positioned producers in the area to leverage strong market pricing and secure sales for liquid O2. We continue to evaluate all options for our Magic Valley facility in Idaho, including the sale of the asset, CO2 utilization, and 45Z tax credits. Turning to our Pekin campus, our ability to react to market signals and shift production enables us to capture the highest value for our product and continues to create opportunities. As the market for fuel ethanol eligible for exports began to grow, we earned the necessary certifications to export our products. This strategy is now paying off. In Q3, the fuel ethanol export market and related pricing was stronger than the domestic market. Accordingly, we produced and sold more gallons in the export market, capturing more of the demand. Furthermore, in Q3, we leveraged this advantage by forward contracting significant volumes in Q4 and the first half of 2026. Looking ahead, we believe the renewable fuel and export opportunities will continue to grow. The newly signed California Assembly Bill 30 authorizing E15 fuel cells year-round in California unlocks significant demand for domestically produced ethanol. California is the largest market to allow E15 blends, adding potentially over 600 million additional gallons per year. AB30 expands consumer choice for lower carbon, cheaper fuels in California during a time when the refineries are being idled and gasoline capacity in California is tightening. With our marketing and distribution services on the West Coast, Alto is well positioned to help fill the gap. High-quality alcohol continues to deliver a premium to domestic renewable fuel, and our 2026 contracting season is on pace with 2025. As previously discussed, our carbon capture and storage project at Pekin is delayed due to regulatory and environmental constraints enacted in Illinois, including drilling restrictions specifically impacting our planned site. We continue to be flexible about our options to maximize our CO2 utilization as we collaborate with relevant parties around the changes in the law and determine the optimal path forward. Additionally, our long-standing CO2 customers who sell into the food and beverage markets have shown keen interest in expanding CO2 capture capabilities at our Pekin campus. We're also exploring additional low-cost options in our plans to further reduce our carbon intensity scores. Possibilities include reducing our energy consumption, changing the energy source to one with a lower carbon intensity impact, shifting to low-carbon corn sourcing, and improving efficiencies and throughput with smaller projects. Now I'll turn the call to Rob for our financial review.

Thank you, Bryon. I'll review the financial results for Q3 2025 compared to Q3 2024. Net sales were $241 million, $11 million lower than the prior year. This reflects fewer gallons sold—89 million in Q3 2025 compared to 97 million in Q3 2024. As in prior quarters, the change in volume reflects our decision to idle Magic Valley at the end of 2024 and to rationalize unprofitable business activities in our Marketing and Distribution segment. Gross profit was $23.5 million, an increase of $17.5 million compared to the prior year. The strong crush margin was comparable in both quarters at $0.41 per gallon. As such, our significant improvement reflects the following factors. The year-over-year change in unrealized noncash derivatives was a positive $8 million. Fuel ethanol exports delivered $5.6 million more to gross profit than in Q3 2024. The stronger market demand and price offset the $2.9 million of lower premiums for our high-quality alcohol this quarter. Our essential ingredients return improved to 53% from 43% reflecting a strong rebound in corn oil pricing, a shift in our production mix to higher value proteins, and the idling of our Magic Valley facility. These factors contributed approximately $3.6 million to gross profit. Alto Carbonic contributed nearly $2 million this quarter, bringing our Western Production segment's gross profit to $1.5 million, up $3.8 million over Q3 2024. Notably, for the nine months ended September 30, our Western Production segment's gross profit increased to $2.9 million, up $17.5 million compared to the first nine months of 2024. During the third quarter, the dock outage resulted in $800,000 in business interruption, additional logistical costs, and preliminary property repairs. We continue to work with our insurance carrier on the level of coverage and timing of reimbursement. To provide more color on our Pekin loading dock, which was damaged in April by rapidly rising river levels, we have temporarily remedied the situation and are working with our insurance carrier to make the needed permanent repairs. To minimize further business interruption, we will rely on local third-party service providers to move our essential ingredients. To create redundancy, we will build a second alcohol load-out dock to be used when we repair the original dock. Once the original dock is restored to operations, the second dock will effectively remove a frequent bottleneck by improving capacity, accelerating load-out times, and lowering costs. We are in the process of finalizing designs, obtaining permits, and contracting work crews to begin the repairs and new dock installation this coming spring. For Q3 2025, SG&A expenses improved $1 million to $6.5 million. This is attributable to rightsizing our SG&A staffing levels and $700,000 less in costs related to our Eagle Alcohol acquisition, the last of which we recorded in Q4 of 2024. Interest expense increased $900,000, reflecting higher average outstanding loan balances and interest rates. Our consolidated net income was $13.9 million or $0.19 per share for Q3 2025, improving $16.6 million compared to Q3 2024. Adjusted EBITDA improved $9.2 million to $21.4 million in Q3 2025, reflecting the above-mentioned improvements in gross profit and SG&A. Year-to-date, adjusted EBITDA increased to $16.7 million, up $17.5 million over the first nine months of 2024. As of September 30, 2025, our cash balance was $32.5 million. During the third quarter of 2025, we generated $22.8 million in cash flow from operations. We used $1.6 million for CapEx and $18.5 million to repay debt on our asset-based line of credit. As such, our borrowing availability on our operating line of credit increased to $20 million available; availability under our term loan facility remained at $65 million, and total borrowing availability increased to $85 million as of September 30, 2025. As we manage liquidity and continue focusing on our priorities, CapEx has been lower than historical averages. Year-to-date, we recorded $24 million in repairs and maintenance expense in line with our estimate of $32 million for the full year. In summary, our entry into the European renewable fuel markets, our CO2 facility acquisition, our prior and ongoing cost reduction initiatives, and our efforts to address underperforming assets have collectively strengthened our financial position. Now I'll turn the call back to Bryon.

Thanks, Rob. We remain focused on improving all aspects of our business, although we cannot control the ethanol crush margin; better operations will enable us to capitalize in good margin environments and to stabilize when margins are depressed. Our guiding philosophy is to increase asset values by prioritizing strategies under our direct control. We aim for both achieving short-term gains and positioning Alto for future growth. We continue to scale our operations to be responsive to market changes. Our recent acquisition and forward-thinking projects are delivering results. Our initiatives to boost operational efficiency and throughput, target growth in higher-return market segments and implement cost savings have improved our financial performance in 2025 and have positioned us well for the future. Our encouraging results demonstrate our success in the ongoing execution of projects funded within our means with short-term paybacks and long-term benefits. As discussed, we are especially focused on lowering our carbon intensity and capturing Section 45Z tax benefits and increasing our CO2 utilization. Our goals are to maximize the value of our products and deliver profitability to our shareholders. We believe this quarter shows our progress, and we strive to continue to improve. With that, operator, we're ready to begin Q&A with sell-side analysts.

The first question comes from Eric Stine with Craig-Hallum Capital Group.

So I guess maybe where I'd like to start some of the initiatives you're talking about to increase the 45Z capture. You did mention that you are looking at some things that are relatively low from an investment perspective, whether it's energy source, amount of energy consumed, those sorts of things. But I mean, any thoughts on how close you are on those, what the actual investment might be? And what kind of impact that could have in terms of upside to some of that 45Z capture?

Yes. Great question, Eric. I think we've tried to, as you've noted in our prepared remarks, tried to address the items that we know are relatively sure things, right, things that aren't going to require additional lifting. Some of the items that we listed certainly will have an impact. But until we can be sure about them, I think we're somewhat reluctant to want to share that information. That said, we see a number of items, both relatively advanced and others that are still in development. So it kind of spreads across the spectrum. But certainly, it is—given the impact and the benefits associated with it, there are certainly compelling reasons to make those changes as quickly as possible. Rob, anything you want to add to that?

Yes. Sure. Just for example, another option that we're currently assessing is the potential of low-carbon corn sourcing and we're also planning to take advantage of an opportunity to acquire renewable energy credits, which allow us to lower our carbon score, particularly at our dry mill, to the next level to capture more of those 45Z credits.

Got it. And when we think about Magic Valley, I mean, is that—are there things that can be done that would mean maximizing a 45Z capture that potentially makes you rethink that, bring that on sooner? Or how should we think about that? I mean, I know it's been cold idled and it would take some time to come back. But I mean, is that something we should expect that it could come back perhaps in 2026? Or is it kind of more of a long-term thing now?

Yes. I'll take that one. It's a good question. As we mentioned before, we are following through with our Western Asset sale campaign. Just to see that through to make sure we make an informed decision of what the highest and best use is for that asset. But a lot's changed over the last year with the clarified guidance on the 45Z, which Magic Valley would qualify for the same level of credits as Columbia. That's definitely impacted positively the intrinsic value of that asset as well as our other plants. So that is one option that we will assess, particularly when you consider that the demand for CO2, particularly in the West Coast, has been getting better and better. Our Magic Valley plant has the ability to produce even more and capture more CO2 than our Columbia plant. So there is definitely a path forward of resuming operations. Clearly, that won't happen overnight, and we would make sure that if we were to pursue that path, that we would have a long-term option in front of us that would make sense. So more to come on that in future quarters.

Yes, Eric, probably just noting on top of that. Eric, one the other thing on that is you'll recognize as well that the fundamentals around the Magic Valley facility were not related necessarily to all the improvements that we made. Indeed, those are still beneficial. But what we saw was with the influx of soy crush and the glut of oil coming in for CO2—I'm sorry, for corn oil equivalents or for renewable diesel that you really saw a tightening in that space, truly an oversupply in under-demand. So I think some of those dynamics have changed. So that's something that we would also incorporate into our analysis. But I think the fundamentals still are important. And it certainly would not be our intention to restart that facility unless we, as Rob mentioned, could commit to long-term sustainable operations, particularly given the important relationships that we have with customers.

Right. Understood on that. Maybe last one for me, just on—you mentioned that you've locked in some export sales. Just curious, any color there, whether it be fourth quarter or into 2026?

Yes. So that's largely for export volume. And yes, that's—the good news is that it's a good solid spread over crush. And so it made a lot of sense to go ahead and lock that in and lock that volume and think of it somewhat similar to what we do when we fix volume for high-quality products. It gives us an opportunity to be able to stabilize and provide a foundation, particularly during what is normally a seasonal low where you have an oversupply of ethanol and under-demand for the product itself.

Yes. I'm just trying to get an understanding or more color on like how significant that could be or whether it's a percentage of volume or that sort of thing, not necessarily any commentary on the spread itself.

Yes, it's a great question. It's not something we normally would release, much like we wouldn't release the information on details around our high-quality. It's not an advantage to be sharing that information.

The next question comes from Sameer Joshi with H.C. Wainright.

Just further digging into the European exports. Are these only high-quality products that are being sold? Or— and what is the potential? Like can you sell all of your production into Europe? Or is there some limitation?

No. It's—well, it's a combination of things. Clearly, we also contract our high-quality product into that as well as a number of our essential ingredients to go over to Europe. But one that's specifically dynamic is around renewable fuel into that space. And then as you look at that product going into Europe versus being sold domestically, there's a beneficial premium associated with that we were able to lock in and be able to put that in the bank.

Yes. I'll just add, we entered that market in Q4 of 2024, and we've been ramping up our volume, and we're able to take advantage of this because of certain certifications that meet the compliance requirements over in Europe. But not all of our production qualifies under those certifications. So we could pivot to selling 100% of our renewable fuel into Europe. But we continue to progress and max out the volume that we can sell.

Understood. Yes. Because part of the reason to ask that question was irrespective of other dynamics, does it make sense to restart Magic Valley just to support the European exports? Sort of—that is where I was trying to get to.

Yes, it's a great question. I don't know that, that product would qualify nor is it really Eastern facing, right? That's a long haul from the Mountain West. It may actually be more beneficial to have that product sold into other—either in local markets. And that's historically where that product was sold, it was sold into the surrounding major metropolitan areas like Salt Lake City and Boise, Idaho, where your best netbacks were. That said, it is also a very low carbon intensity ethanol product. So it actually would make—I think the next best opportunity would be either selling it in the Oregon or the California markets, particularly if California is—with California going to E15, there may be a significant opportunity to be able to sell that as a premium and capture that carbon intensity value. So I think there's a number of items that probably stand in greater contrast and benefit locally than it would to put that product on a barge.

That makes sense. On the dock that—the new dock that is opening or being planned for spring 2026. I think we may have talked about this, but is that cost going to be paid for by the insurance? Or because it is a new dock, it will be paid by you and the fixing of the old dock will be done by the insurance money?

Yes. That's a good question. We're still working with our insurance carrier on the level of coverage and how much of that asset will be covered under our current policy. But we are confident that a good portion of it will because the reason that we need to build that second dock first is to mitigate the business interruption, which is our highest priority when it comes to our customers. So that's necessary to mitigate the business interruption from a financial perspective as well. We're getting close to finalizing the claims process, and we'll have—we expect to have more to comment on in Q4.

Got it. Last one for me. SG&A has been sort of nicely controlled. Should we expect current levels of SG&A going forward?

Yes, yes. I would say that the cost savings initiatives that we've taken year-to-date were not temporary in nature. So we expect the benefits of those decisions and those efforts to continue moving forward.

Congrats on a great quarter.

Thank you.

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

Thanks, Chloe. Thanks again for joining us today. As always, we appreciate your ongoing feedback and support. Have a great day.

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