Good day, and welcome to the Alto Ingredients First Quarter 2026 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal 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 a touch-tone phone. To withdraw your question, please press star, and then two. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Joanne Berfening, Alliance Advisors. Please go ahead.

Thank you, Nick, and thank you all for joining us today for Alta Ingredients' first quarter 2026 results conference call. With me today are President and CEO Brian McGregor and CFO Rob Olander. Alta Ingredients issued a press release after the market closed today, providing details of the company's financial results for the first quarter of 2026. The company also prepared a presentation for today's call that is available on its website at altoingredients.com. A webcast and webcast replay will be available on the Alto Ingredients website. Please note that the information on this call speaks only as of today, May 6, 2026. You are advised that time-sensitive information may no longer be accurate at the time of any replay. Please refer to the company's safe harbor statement in the slide deck posted to the company's website, which states that some of the comments in the presentation constitute forward-looking statements and considerations that involve risks and uncertainties. The actual results of all two ingredients could differ materially from those statements. Factors that could cause or contribute to such differences include, but are not limited to, events, risks, and other factors previously, and from time to time, disclosed in ALTO ingredients filings with the SEC. Except as required by applicable law, the company assumes no obligation to update any forward-looking statements. In management's prepared remarks, non-GAAP measures will be referenced. Management uses these non-GAAP measures to monitor the financial performance of operations and believes these measures will assist investors in assessing the company's performance for the periods reported. The company defines adjusted EBITDA as unaudited consolidated net income or loss before interest expense, interest income, provision or benefit for income taxes, asset impairments, unrealized derivative gains and losses, acquisition-related expense, excess insurance proceeds, and depreciation and amortization expense. To support the company's review of non-GAAP information, a reconciling table has been included in today's release. On today's call, Brian will review the company's first quarter performance, Rob will review the financial results, and then Brian will wrap up and open the call for Q&A. It's now my pleasure to introduce Brian McGregor. Brian, please do go ahead.

Thanks, Jody. Thanks, everyone, for joining us today. I'll begin with a high-level review of our first quarter results and operational activities. After that, I'll turn the call over to Rob for a detailed review of our financial results for the quarter. and then wrap up and open the call to Q&A. The first quarter is typically a seasonally weak period for both Alto and the industry, resulting from the buildup of ethanol inventories and lower demand. In contrast, we are reporting strong first quarter results relative to our historical performance in this period. We delivered profitability on an adjusted EBITDA and net income basis through the contribution of stronger export sales, higher crush margins, and incremental earnings from 45Z tax credits. Even without the contribution of tax credits, we were profitable. Our strategic realignment, our efforts to improve our operational model, and our success in capturing premiums over fuel ethanol have enhanced our earning power. We remain focused on maximizing value from our diversified portfolio of assets and on pursuing multiple revenue opportunities in response to market demands. To that end, we have robust plans to improve utilization, reliability, and efficiencies, and to support higher-value revenue streams during 2026. Let me share with you some highlights of the operational activities we tackled during the first quarter and update you on the capital projects we have planned for 2026. First, as discussed on last quarter's call, an extended period of very cold weather in the first half of the quarter disrupted river logistics and caused us to curtail production at our peak in campus. We took the opportunity to accelerate a portion of our planned wet mill biennial outage work that was scheduled for the second quarter. This will allow us to recapture lost production when crush margins are typically stronger and keep us on track with our goal to increase total 2026 alcohol volumes and prioritize product mix that delivers a premium to domestic renewable fuel. Secondly, we had a planned outage at our Columbia facility during a seasonally slow quarter for CO2 sales. Combined with the outage we took last December, we addressed deferred process-related activities intended to improve production performance and plant reliability for the remainder of the year. This work will help ensure the plant is running at optimal rates to reliably support our CO2 offtake customers' growing demand in the coming summer months. It will also allow us to qualify more gallons for 45Z credits. We're still planning a normal outage at ICP during the second quarter consistent with 2025 in terms of capital projects that are peaking campus we started the repairs on the original dock and the construction of the second alcohol loadout and are on track to complete both projects by the end of 2026. as a reminder we are building the second alcohol dock to create redundancy and improve logistical capabilities we also kicked off a project to increase throughput and storage capacity in our Columbia liquid CO2 processing facility by adding a third storage tank. This project will position us to further capitalize on favorable market conditions, specifically the growing demand in the Pacific Northwest and limited supply for premium CO2. At our peak and dry mill, our most efficient plan, we are moving the planned outage to June from the third quarter. During this downtime, we are going to implement a de-bottlenecky project to increase annual production capacity by about 8% or 5 million gallons. We expect to fully realize these improved rates starting in the fourth quarter, which will provide incremental margin and allow us to qualify for more 45Z credits. Finally, in addition to the CAPEX projects we planned for 2026, we are continuing to assess large-scale CO2 utilization and sequestration opportunities at our peak in campus. These projects would position us to lower our carbon intensity score and monetize additional incremental earnings from 45Z credits and generate more liquid CO2 revenue. Before I turn the call over to Rob, we're closely monitoring macro conditions, including unrest in the Middle East, which can indirectly affect us through energy and commodity volatility and freight and export logistics, and we're actively managing these exposures. We're also encouraged by continued progress on E15. In California, AB30 has provided a pathway for a year-round E15 sales, and we're watching the state implementation process closely. Nationally, momentum for year-round E15 legislation continues to build in Congress. We view expanded access to E15 as an important demand-side complement to the production incentives in 45Z, helping ensure the market can absorb additional low-carbon gallons over time. Without demand growth, incentives alone can contribute to unintended consequences, including overproduction and pressure on industry margins. With that, I'll now turn the call over to Rob for a more detailed review of our Q100 financial results. Rob?

Thank you, Brian. I'll start with a review of an income statement for the first quarter of 2026 compared to the first quarter of 2025. Consolidated net sales were $225 million, $2 million lower than in the prior year. This reflects a 4% reduction in volume sold or 3.7 million gallons, partially offset by a 4% increase in the average sales price per gallon from $1.93 to $2 on a consolidated basis. The primary drivers impacting revenues were the net overall reduction in volume sold, which was mainly related to the production curtailment at our peak in campus. An improved product mix of higher renewable fuel export sales, reflecting both an increase in volume sold and a significantly higher premium compared to domestic renewable fuel sales than last year, contributed $6.7 million. dollars. High-quality alcohol volumes sold decreased by 1.3 million gallons, reflecting continued weak alcohol consumption and increased competition. In addition, the premium versus domestic fuel grade values were lower than last year. As a result, revenues declined by 1.4 million dollars. Co-product protein feed and fuel prices improved, supported by strong gains in corn oil used in renewable biofuels, which added an additional net $2.2 million in revenues. Coupled with a 4% lower cost of corn, our consolidated return on essential ingredients improved to 53.4% from 48.2% a year ago. Gross profit was $9.2 million compared to a gross loss of $1.8 million reported for Q1 2025 for an $11 million positive swing to profitability. In addition to the revenue variances I just covered, the change in gross profit also encompassed the following factors. A seasonally strong market crush margin of $0.17 per gallon for Q1 2026 compared to $0.02 per gallon for the same period last year accounted for approximately $5.2 million of benefit. An increase in net unrealized gain on derivatives contributed $6.4 million as a result of our high-quality alcohol hedges associated with future shipments improved in relation to the rise in the market price of ethanol as we locked in the premium on our contracted fixed-price high-quality alcohol commitments. And we incurred $500,000 less in production labor costs to the staffing reduction that we completed during the first quarter of 2025. These positive trends were partially offset by the following negative variances. Natural gas and electricity costs collectively increased $5.3 million due to higher prices related to volatile weather conditions and rising demand. Repair and Maintenance expenses were $2.4 million higher this quarter compared to last year. This was driven by the acceleration of work at the wet mill originally planned for the second quarter, as Brian mentioned, as well as increased costs from the planned outage at Columbia. The increased repair and maintenance costs at Columbia were the primary contributors to the $1.1 million gross loss in our Western production segment for the first quarter of 2026. SG&A expenses decreased by $500,000 to $6.7 million, also reflecting our decision to right-size staffing levels last year. With respect to 45Z transferable tax credits, as mentioned on the fourth quarter call, for 2026, we expect to qualify approximately 90 million gallons of combined production at the Columbia and Pekin dry mill facilities on an annual basis at $0.20 per gallon, resulting and approximately $15 million in net proceeds after all monetization costs. We recorded $3.9 million in 45Z credit earnings for the first quarter of 2026. The sale of all of our 2025 45Z DAX credits is currently underway at values consistent with our previously recorded estimates, and we expect to close on that transaction this month. We are working diligently to qualify additional gallons and further reduce our carbon intensity scores to capture more of the 45Z benefit, and we will provide updates as these efforts materialize. As a result of an improvement in gross profit, lower SG&A expenses, and recognition of 45Z tax credits, we reported net income attributable to common stockholders of $4 million, or $0.05 per share for Q1 2026, an increase of $16 million compared to a net loss of $12 million or $0.16 per share for the first quarter of 2025. Adjusted EBITDA increased $9.1 million to $4.7 million compared to a negative adjusted EBITDA of $4.4 million for last year's first quarter. As a reminder, the $6.4 million increase of unrealized derivative gains is excluded from the calculation of adjusted EBITDA. Turning to our balance sheet, as of March 31, 2026, our cash balance was $20 million. During the first quarter, we generated $4 million in cash flow from operating activities. As mentioned on last quarter's call, we plan to spend about $25 million in capital expenditures during 2026 on both maintenance and optimization projects with strong projected returns. With the major projects earmarked for the next three quarters, capital expenditures for the first quarter were only $1 million. We paid $16.6 million in principal on our term debt in the first quarter as planned and ended the quarter with $38.4 million outstanding on the term loan. With the lower debt balance, interest expense decreased by $531,000. This reflects our focus on minimizing idle cash and maximizing excess borrowing capacity in order to reduce our interest expense burden. We ended the quarter with total borrowing availability of $94 million, consisting of $29 million under our operating line of credit and $65 million under our term loan facility. With that, I will now turn the call back to Brian.

Thanks, Rob. In summary, our first quarter results show that Alto's operating model is working, improving margins through higher value revenue opportunities while maintaining a disciplined cost structure. With multiple product streams, we have the flexibility to respond quickly as markets shift, and we're continuing to strengthen our ability to perform through commodity cycles. Looking ahead, our priorities are straightforward. Improve utilization and reliability, execute our 2026 optimization and capital projects on time and on budget, and keep advancing our commercial strategy, which includes expanding the value we capture from 45Z credits and optimally monetizing the value of our biogenic CO2 production across our facilities to lower our carbon footprint. With our focus on these priorities, we remain committed to further enhancing shareholder value in both the short and long term. Operator, we're ready to begin Q&A.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, and then two. The first question will come from Eric Stein with Craig Hallam. Please go ahead.

Hi, Brian. Hi, Eric. Hey, so one thing that caught my attention, you talked about that at Pekin you're looking at, I'm not sure exactly how you termed it, but you're looking at continuing to look at large-scale CO2 utilization and sequestration. I know that there was a moratorium on sequestration in Illinois that's been in place for some time. So, you know, maybe can you just, I don't know, delve into that a little bit? You know, what has kind of changed the thinking where it sounds like it's a little more optimistic on that front? You know, any details there would be very helpful.

Sure. So there's a couple of things that proved challenging under our prior plans, which was first the moratorium on pipelines, and then secondly, the legislation that was approved, which precluded the injection through the aquifer for sequestration, which impacted solely Alto, for that matter. But out of that opportunity or out of those challenges, we found opportunities to, along with the Big Beautiful Build changes, to rethink and pursue utilization as well as sequestration. So now they are both opportunities to be able to take advantage of 45Q in the long run. And then on top of that, with 45Z, there are opportunities now if we can monetize that value of CO2 quickly, particularly for the dry mill in Pekin, there's an opportunity to actually capture significant benefit that was otherwise not available when we were first developing that project. So, we've been in discussions with numerous parties to be able to bring this to fruition. My guess is that it may end up looking a lot like a combination of the two, some utilization and some sequestration, but time will tell. And we're working diligently on that and aggressively on that to try and come to a clear plan and solution this year. Bob, anything else you want to add?

no it was good brian okay yeah i mean so okay so it does sound like though there have been some changes i mean i get the utilization piece um you know i mean it's been a big success at at columbia and if you can replicate that to any extent i mean that's a great thing but in terms of the sequestration piece i know you're talking about that you know things have kind of opened up a little bit i mean is is that you know the the pipeline moratorium or or you know the the your ability to sequester um has have things changed in that regard or you're kind of thinking outside the box in ways to access that opportunity i guess what i'd say is that it's we're not we're

no longer feeling like we have to bring the whole solution uh to the table ourselves where we had to commit to a singular pipeline was dedicated solely for our use but that there are other opportunities that are starting to avail themselves to us and discussions around okay where well we may not have to make the kind of capital spend that we otherwise needed to spend previously under that prior project that being said it's still a viable option and we have a good relationship with and there are opportunities to go to these rather than less.

Okay, got it. No, it's good to hear. I mean, that hasn't really been on your plate for a while. It's been some time, so a good development there. You know, maybe could we just talk about, I mean, the overall market environment, obviously Q1, better than is typical. and I know that, you know, I know there are a lot more factors than simply just the basic crush, but, you know, by my estimation, it's as strong as it has been at this time of year in almost a decade. So just curious, you know, what kind of confidence that gives you for Q2 and, you know, is there the potential that this kind of lasts a little bit given that you've had some, you know, of potentially structural changes in the market based on where gasoline prices are right now.

Yeah, I mean, I think it's a great point, Eric, in that margins continue to remain strong. They're actually slightly better than where they were at the same time last So that all bodes well. I think we're, you know, we're doing what we can to continue to monetize that value and capture that As we mentioned, there are going to be some scheduled outages, but that we remain optimistic around the future. That said, there are historically, it's usually been more the norm than the exception that when you have strong spring margins, it ends up translating into significant increase in production and then fundamental economics can, in an oversupplied market, margins start to give way. in the second half. I think the thing that changes that, at least to date, has been exports and the optimism, albeit cautious optimism, around E15. And so demand has continued to remain strong, and inventories remain on the whole. So we'll see. I think a good thing to do is keep an eye on inventory And then it will be interesting to see what the impact of the Middle East and how they impact export logistics, you know, commitments, people having to reroute and find other alternatives for their fuel needs. That may actually bode well for not only adoption of E15, but as well adoption of ethanol in the export markets. But there is a bit of wait-and-see efforts going on as much as possible. So it's a bit of a – funny enough, it's probably as cloudy as it ever has been in looking forward. But I think that there are a lot of positives to be thinking about that provide, I think, a counter to what would otherwise be the norm.

Yeah, I mean, so many moving parts. I mean, such as, you know, gasoline prices aren't good, except for the fact that they potentially dampen gasoline demand, but then you've got jet fuel at extremely high prices. So, I don't know, cautiously optimistic, I guess, is the best way to put it.

Yeah, I mean, I think the interesting thing is we haven't seen a whole lot of change in demand right now for fuel. So it appears that we as consumers have not changed our behavior, at least with regression of fuel, but have changed our consumption behavior elsewhere to adapt. And I think that also we're seeing a good increase in demand for renewable diesel, which has in turn also resulted in improvements in corn oil values. So that's generally positive. So, yeah, I mean, time will tell, but, you know, fingers crossed and God willing, the crate don't rise. We should have a good year generally, I think. Okay. I appreciate it. Thanks, Eric. Thanks, Eric.

The next question will come from Samir Joshi with H.C. Please go ahead.

Hey, Brian. Thanks for taking my questions and congrats on a solid quarter. So just in terms of priorities, your debt servicing was around $10.8 million last year, $2.2 million this quarter, is the focus on reducing the debt or is the focus on actually increasing this, or rather reducing CI scores by spending on these various projects that you talked about you've done some analysis on what makes more sense yeah

I don't think that's not good sorry about this in here let me start by saying I don't think it's a binary question or a binary answer and I'll let

Rob go ahead and yeah I was gonna say the same thing one's dependent upon the other I mean we have a repayment mechanism which has worked out well for Alto, that when we do well, then there's a cash flow sweep that pays down the debt. And so we like paying it down. We commented on the interest expense savings, but we're also managing our liquidity and our availability to go after the products that we do provide the strongest returns. And to that effect, as mentioned before, we do have a capital expenditure budget of $25 million for 2026. So there are several projects in our sites that we're excited to go after.

Actually, that was sort of a second question on the 25 million capex. On slide six, you have a nice table. Thanks for providing that. That gives a nice snapshot of what the impact of your CS score reduction would be on potential benefits from 45 . If you are able to do or execute on all the projects that you have planned for 2026, will we be at 30 cents or 40 cents like do you have a idea of what you are targeting

there it's a generally we do have an idea but we're not prepared to share that yet because some of the some of the efforts certainly require more than just our efforts you know thing we try and control everything we all that we can but there is significant dependence on third parties including you know farmers and the relationships that we have there. But I think we remain very optimistic about an ability to capture more of that 45Z and they're keenly focused on it.

So more to come. Yeah, I'll just add to that. Our near-term focus is to capture more 45Z benefits is to optimize our production. And that kind of speaks to the maintenance activities we did at our Columbia facility in Q1 to, you know, improve the reliability moving forward, and our expectation is that we will be able to increase our production output moving forward, particularly compared to 2025. And then later this year, we are going to de-bottleneck the dry mill starting in the second quarter, hoping to complete that by the end of the third quarter, where we expand our production by about 5 million gallons on an annual run rate basis. And so in that mechanism, you know, in the near term, at least for 2026, is how we're hoping to capture more of the value from the 45Z credits. And then as Brian commented, you know, it'll take collaboration and a little more work and effort, longer term working with other parties to, you know, move us down the CI score. And like Brian said, a good opportunity is on potentially for low-carbon-intensity corn and, you know, sign up farmers who, you know, are employing, I guess, carbon-smart practices, such as reduced-till or no-till, low-nitrogen fertilizers, or the use of cover crops. But that's going to take time to develop, and fortunately, this program is currently available through the end of 2029, and we hope it gets extended further.

Yeah, no, understood. Thanks for that. And then just an industry question, sort of the benefit or impact of E15. Of course, it would create excess demand, but that would also drive some of the moss-billed refineries or ethanol plants to be reactivated. And would that flood the market? What do you see from where you sit right now? any adverse impact from the benefits that emanate from E15?

I guess my general thought is first is if you can capture E15, you're already seeing anything that would be or most of the projects that otherwise have been mothballed or idle. There's some effort to resume that production and there are certainly lots of rumors and a lot of work that we're seeing behind the scenes, including ourselves, right? We're talking about de-bottlenecking at our dry mill to expand capacity. So I think that's already in the works for the most part, Samir. I think that E15 will only help balance out what is otherwise a demand or a production push and incentivize production to also incentivize demand. And I think that complement that with a good export program will help provide significant balance going forward. And certainly the number of gallons that would come from a year-round E15 adoption, including California, is, you know, I've seen numbers on the order of a billion gallons. So I don't think there's that much latent capacity currently in the market. So I think that all votes pretty positive and gives really consumers an opportunity to have more options at the pump. which they haven't been able to have for a very long time.

Understood. Thanks for that insight. For 2Q, of course, the LCFS scores are moving in the right direction. The RINs are moving in the right direction. Good luck with the second quarter and second half of the year. Thanks for taking my questions.

Thank you. Thanks, Samir. This concludes our question and answer session. I would like to turn the conference back over to Mr. Brian McGregor for any closing remarks.

Thanks, Nick. Thanks, everyone, for joining us again today. We look forward to speaking to you soon.

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