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Alto Ingredients, Inc. (ALTO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net sales were $226.5M, down 5.9% YoY, with gross loss improving to $(1.8)M and adjusted EBITDA improving to $(4.4)M; EPS was $(0.16) versus $(0.17) last year .
  • Management highlighted accretive benefits from the Alto Carbonic acquisition and rightsizing actions, with ~$8M annual cost savings expected to begin in Q2 2025; Columbia’s economics improved by ~$2.9M YoY due to integration synergies .
  • Strategic mix shift to ISCC-certified exports partially offset domestic weakness in premiums for high-quality alcohol and essential ingredients; ISCC delivered a ~$1.4M premium benefit in Q1 .
  • Near-term catalysts: E15 summer waivers and potential national year-round adoption (5–7B gallon demand boost), growing California momentum, and ongoing CCS initiatives at Pekin, balanced against tariff/export uncertainties and an April dock failure that temporarily impacted operations .

What Went Well and What Went Wrong

What Went Well

  • Integration of Alto Carbonic: immediate accretion and operational synergies; Columbia assets improved ~$2.9M vs Q1 2024, reflecting reduced overhead and enhanced coordination .
  • ISCC exports: Pekin flexed to higher-margin European renewable fuel, contributing ~$1.4M premium over domestic fuel-grade ethanol; ISCC share of Pekin renewable fuel volume rose QoQ .
  • Cost actions on track: Headcount reductions (~16%) and rightsizing expected to save ~$8M annually beginning Q2 2025; SG&A reduced by $0.7M YoY in Q1 .
    • “We expect to save approximately $8 million annually with the financial benefit starting in Q2.” — CFO Rob Olander .

What Went Wrong

  • Soft domestic pricing: Premiums on high-quality alcohol fell, reducing sales by ~$4.6M; essential ingredients returns declined to 48% from ~50%, impacting Pekin results .
  • Western production headwinds: Magic Valley remains cold idled; Western production gross loss of $(1.26)M in Q1 2025 despite improved pricing per gallon ($1.95 vs $1.80), reflecting structural corn basis/logistics challenges .
  • Operational disruption: Pekin barge dock failure in April curtailed output temporarily (dry mill offline ~1 week) and increased logistics complexity; insurance claims/remediation still being evaluated .

Financial Results

Quarterly trend (oldest → newest)

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$240.6 $251.8 $236.3 $226.5
Gross Profit/Loss ($USD Millions)$(2.4) $6.0 $(1.4) $(1.8)
Adjusted EBITDA ($USD Millions)$(7.1) $12.2 $(7.7) $(4.4)
EPS (Basic & Diluted, $USD)$(0.17) $(0.04) $(0.57) $(0.16)

Year-over-year comparison

MetricQ1 2024Q1 2025YoY Change
Net Sales ($USD Millions)$240.6 $226.5 −5.9%
Gross Profit/Loss ($USD Millions)$(2.4) $(1.8) +$0.6M
Adjusted EBITDA ($USD Millions)$(7.1) $(4.4) +$2.7M
EPS (Basic & Diluted, $USD)$(0.17) $(0.16) +$0.01

Segment net sales (YoY)

Segment ($USD Millions)Q1 2024Q1 2025
Pekin Campus$155.4 $152.1
Marketing & Distribution$57.2 $51.6
Western Production$28.1 $24.3
Corporate & Other$3.0 $1.6
Intersegment Eliminations$(3.1) $(3.1)
Net Sales (Reported)$240.6 $226.5

KPIs and Operating Metrics (YoY)

KPIQ1 2024Q1 2025
Total Gallons Sold (MM)99.0 89.6
Specialty Alcohol Gallons (MM)26.3 24.3
Renewable Fuel Gallons Sold (MM, total)72.7 65.3
Average Sales Price per Gallon ($)$1.86 $1.93
Corn Cost per Bushel (Consolidated, $)$4.92 $4.81
Essential Ingredients Sold (k tons)313.4 310.8
Essential Ingredients Return (Consolidated, %)49.8% 48.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Annual Cost Savings from RightsizingFY 2025 onward~$8M annually, benefit starting Q2 2025 ~$8M annually, benefit starting Q2 2025 Maintained
Repairs & Maintenance ExpenseFY 2025N/A~$32M estimate for 2025 New
Pekin Barge Dock Remediation2025N/AAssessing options; working with insurer; update next call N/A
ISCC Export Strategy2025Initiated in Q4 2024 Continued; premium pricing, higher share in Q1 2025 Expanded

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
ISCC Exports & Mix ShiftISCC certification and EU exports began; aiming to expand in 2025 ISCC sales grew as % of Pekin volume; ~$1.4M premium benefit Improving
CO2/Carbon InitiativesTSA with Vault for CCS; plan building, permitting timeline 2+ years Alto Carbonic acquired; accretive; Columbia improved ~$2.9M; CCS faces Illinois SB1723 risk; mitigation options discussed Mixed: Operations improving; regulatory risk rising
Western Operations (Magic Valley, Columbia)Magic Valley challenged; plan to idle; exploring monetization/partnerships; Columbia resilient Magic Valley cold idled; restart unlikely near term absent sustained market change; Columbia strengthened via CO2 Stabilizing at lower run-rate
Pricing/Macro (Crush, Tariffs, Exports)Lower carbon credit prices; crush margins fluctuating; inventory overhang Sequential crush improvement; export uncertainty (tariffs/China restrictions); E15 waivers supportive Tentative improvement, policy-dependent
Pekin Operations & LogisticsWet mill at nameplate 100M; second dock project planned April dock failure disrupted logistics; temporary fixes; insurance engagement Near-term headwind; remediation pending

Management Commentary

  • “Gross margin and Adjusted EBITDA improved year-over-year, reflecting our operational uptime and carbon optimization initiative driven by our recent acquisition... rightsizing... on track to save approximately $8 million annually beginning in the second quarter of 2025.” — CEO Bryon McGregor .
  • “We experienced solid demand for ISCC certified renewable fuel priced at a premium to domestic fuel-grade ethanol... grew ISCC sales as a percentage of our total renewable fuel volume sold at our Pekin Campus in Q1.” — CEO Bryon McGregor .
  • “Our entry into the European ISCC markets, our cost restructuring efforts and integration of Alto Carbonic has improved our financial position.” — CFO Rob Olander .
  • “EPA’s recent E15 fuel waiver... expected new waivers effectively extending allowance through the summer... pending national legislation could boost ethanol demand by 5–7 billion gallons.” — CEO Bryon McGregor .

Q&A Highlights

  • Accretive impact from Alto Carbonic: Columbia assets improved ~$2.9M YoY; immediate overhead synergies and enhanced operations .
  • Cost savings mechanics: ~$8M annual savings to drive ~13% reductions in both COGS and SG&A starting Q2 2025 .
  • CCS regulatory risk (Illinois SB1723): Potential need to relocate well path around aquifer and amend Class VI permit; evaluating optimization options .
  • Pekin dock failure: Temporary load-out solutions implemented; assessing long-term remediation; insurance engagement ongoing .
  • Magic Valley outlook: Restart requires sustained market improvement and/or alternative feedstocks; current economics unfavorable due to corn logistics and co-product price compression .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable for ALTO’s Q1 2025 EPS and revenue; as a result, we cannot assess beat/miss versus consensus for this quarter (Values retrieved from S&P Global).*

Key Takeaways for Investors

  • Cost actions and CO2 integration are dampening seasonal Q1 margin pressure; adjusted EBITDA improved by ~$2.7M YoY to $(4.4)M .
  • ISCC export premiums and Pekin’s operational flexibility are active levers to offset domestic premium softness; monitor continued ISCC mix gains .
  • Near-term policy catalysts (E15 waivers, potential national year-round E15, California momentum) could tighten crush spreads and support volumes/pricing through summer driving season .
  • Western footprint remains structurally challenged; cold idling and asset optimization likely to persist until sustained margin improvement or strategic alternatives materialize .
  • Operational risk from Pekin dock incident is being mitigated; insurance and remediation decisions are pending—watch for cost/timing updates next quarter .
  • Balance sheet liquidity remains adequate (cash ~$26.8M; borrowing availability ~$76.7M), but interest expense rose with higher balances/rates; monitor debt trajectory .
  • Strategic optionality (asset sales/merger/partnerships) continues to be evaluated; governance changes in June may further shape capital allocation and strategy .
Citations: Press release/8-K: **[778164_f4fac023f5014b8dbb6c9a6fa3b82db2_0]**, **[778164_0001213900-25-040642_ea0241175-8k_altoingred.htm:0]**; Q1 2025 call: **[778164_ALTO_3426287_0]**; Q4 2024 press release/call: **[778164_72e2bb7d5f2042f1b2aeda55dc53105c_0]**, **[778164_ALTO_3419432_0]**; Q3 2024 press release/call: **[778164_e8738d744a944d9da17190e2685842fd_0]**, **[778164_ALTO_3406402_0]**.