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Alto Ingredients, Inc. (ALTO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue declined 7.6% year over year to $218.4M, and adjusted EBITDA improved to approximately breakeven (-$0.2M), driven by Western asset profitability, ISCC export mix shift, and cost actions; GAAP net loss widened to $11.3M due to unfavorable unrealized derivatives, lower crush, and lower high-quality alcohol premiums .
  • Western assets posted a $5.6M gross profit improvement vs. Q2 2024, aided by the Alto Carbonic liquid CO2 acquisition and the cold-idle of Magic Valley; Marketing & Distribution also improved following customer integration and exits from low-return business .
  • Operational headwinds included a Pekin loadout dock outage (approx. $2.7M impact) and lower crush and premium pricing; management is pursuing insurance recovery and expects continued European ISCC export premiums to mitigate impacts .
  • Regulatory tailwinds improved medium-term earnings potential: the 45Z credit extension supports quantified eligibility of roughly ~$4M (2025) and ~$8M (2026) for Columbia and ~$6M (2026) for Pekin dry mill, with additional CI-reduction projects under evaluation .

What Went Well and What Went Wrong

  • What Went Well

    • Western assets turned profitable: “our Western assets generated gross profit, reflecting the positive impact of our liquid CO2 facility acquisition and our decision to cold-idle our Magic Valley facility” .
    • Cost actions exceeded target: “this corporate reorganization exceeded our annualized savings goal of approximately $8 million” in Q2, lowering SG&A to $6.2M (vs. $9.0M LY) .
    • ISCC exports to Europe: “selling higher-margin ISCC export products into Europe” helped offset Pekin dock disruptions; M&D improved through client integration and pruning low-return business .

  • What Went Wrong

    • Derivatives and pricing headwinds: YoY change in unrealized non-cash derivatives (-$13.2M) and lower crush (≈$0.10/gal) reduced GP; high-quality alcohol premiums fell ~$0.15/gal, a ~$3M hit .
    • Pekin dock outage: damage in April impacted logistics and economics; Q2 impact estimated at ~$2.7M, with insurance recovery being pursued .
    • Higher interest expense and wider GAAP loss: interest expense rose to $2.8M (from $1.7M), and net loss attributable to common stockholders widened to $11.3M ($0.15) from $3.4M ($0.05) .

Financial Results

Overall P&L (YoY and QoQ)

MetricQ2 2024Q1 2025Q2 2025
Net Sales ($M)$236.5 $226.5 $218.4
Cost of Goods Sold ($M)$228.9 $228.3 $220.4
Gross Profit (Loss) ($M)$7.6 $(1.8) $(1.9)
SG&A ($M)$9.0 $7.2 $6.2
Interest Expense ($M)$1.7 $2.7 $2.8
Net Loss Attrib. to Common ($M)$(3.4) $(12.0) $(11.3)
Diluted EPS ($)$(0.05) $(0.16) $(0.15)
Adjusted EBITDA ($M)$(5.9) $(4.4) $(0.2)

Segment Net Sales and Gross Profit (Loss)

SegmentMetricQ2 2024Q1 2025Q2 2025
Pekin CampusNet Sales ($M)$140.3 $152.1 $133.9
Gross Profit (Loss) ($M)$10.1 $(3.1) $(5.8)
Marketing & DistributionNet Sales ($M)$72.6 $51.6 $60.5
Gross Profit ($M)$3.2 $3.9 $4.0
Western ProductionNet Sales ($M)$23.4 $24.3 $25.4
Gross Profit (Loss) ($M)$(3.8) $(1.3) $1.9
Corporate/Other/ElimsNet Sales ($M)$0.1 (corp 2.8; elims -2.7) $(1.4) (corp 1.6; elims -3.1) $(1.3) (corp 1.7; elims -3.0)
Gross Profit (Loss) ($M)$(2.0) (corp -0.2; elims -1.8) $(3.4) (corp 0.3; elims -2.0) $(2.0) (corp 0.0; elims -1.9)

Key KPIs

KPIQ2 2024Q1 2025Q2 2025
Total Gallons Sold (M)95.1 89.6 86.7
Consolidated Sales Price/gal ($)$2.00 $1.93 $1.95
Board Corn Crush ($/gal)$0.21 $0.02 $0.11
Pekin Corn Cost ($/bu)$4.50 $4.65 $4.86
Western Corn Cost ($/bu)$5.78 $5.95 $5.71
Essential Ingredients Return – Pekin (%)48.8% 48.0% 44.2%
Essential Ingredients Return – Western (%)35.1% 49.0% 50.8%

Context and Drivers (Management detail)

  • Unfavorable YoY derivative mark-to-market (-$13.2M unrealized, +$7.6M realized; net -$5.6M), lower crush (~$0.10/gal; $5.5M impact), and lower high-quality alcohol premiums ($0.15/gal; ~$3M impact) weighed on results; Pekin dock outage impact ~$2.7M .
  • Western gross profit improved $5.6M YoY; Columbia GP +$3.0M to $2.3M; Magic Valley idling +$2.6M; SG&A reduced to $6.2M (-$2.8M YoY) via staffing rightsizing and non-cash comp reduction .
  • Cash/cash equivalents $29.8M (Jun 30), up from $26.8M (Mar 31); borrowing availability $70M ($5M revolver, $65M term loan, subject to conditions) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/UpdateChange
Formal Revenue/EPS/EBITDA GuidanceFY/Q3 2025NoneNone providedMaintained: no formal guidance
Annualized Cost SavingsFY 2025 run-rate~$8M targetExceeded run-rate savings goal in Q2Raised (execution ahead of plan)
Repairs & Maintenance ExpenseFY 2025n/a~$32M estimate for 2025New disclosure
CapExFY 2025n/a~$0.5M in Q2; cautious to manage liquidityQualitative (disciplined)
45Z Credit Eligibility2025–2026n/aColumbia: ~$4M (2025), ~$8M (2026); Pekin dry mill: ~$6M (2026), based on current CI and capacityNew quantified outlook
Pekin Dock Remediation2025–2026n/aWork expected to commence before Midwest winter; extend into next year; insurance recovery pursuedNew timing update
Western Asset Monetization2025Exploring optionsOngoing process with Guggenheim; positive 45Z impact to valuationsOngoing (no guide)

Note: The company did not issue formal financial guidance ranges (revenue/EPS/EBITDA).

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Cost Structure & SavingsQ4: implemented actions; ~$8M annual savings starting Q2 . Q1: headcount -16%; savings to begin Q2 .Exceeded ~$8M annualized savings goal; SG&A $6.2M .Accelerating execution.
ISCC Exports to EuropeQ1: ISCC mix grew, offset weaker domestic premiums .Higher-margin ISCC exports helped offset Pekin dock impact; continued demand .Strengthening channel.
Western Assets & CO2Q4: Alto Carbonic acquisition accretive; strategic alternatives under review . Q1: Columbia +$2.9M YoY; Magic Valley idled .Western GP +$5.6M YoY; Columbia GP +$3.0M; Magic Valley idling +$2.6M .Turnaround realized.
45Z Credits/RegulatoryQ1: monitoring E15 expansion and Illinois CTS .45Z extended; quantified credit potential (~$18M across two years); evaluating CI projects; E15 waivers extended .Positive regulatory tailwind.
Pekin Dock & InsuranceQ1: dock damaged; temp solutions; assessing remediation .~$2.7M impact; insurance coverage confirmed; repairs targeted before winter .Remediation progressing.
CCS/CO2 StrategyQ1: IL SB1723 could impact CCS; evaluating alternatives .IL SB1723 signed; developing alternatives with Vault; pursuing non-sequestration options .Re-scoping strategy.
Strategic Alternatives/MonetizationQ4: considering asset sales/merger .Ongoing sale/monetization discussions with Guggenheim; valuations aided by 45Z .Ongoing; potentially supportive backdrop.

Management Commentary

  • “In the second quarter of 2025, our Western assets generated gross profit, reflecting the positive impact of our liquid CO2 facility acquisition and our decision to cold-idle our Magic Valley facility… [and] this corporate reorganization exceeded our annualized savings goal of approximately $8 million.” – Bryon McGregor, CEO .
  • “Several positive regulatory developments, including the 45Z credit extension through the end of 2029…creating opportunities for at least two of our plants to apply for credits for up to nearly $18 million in the next two years based on our nameplate and targeted carbon intensity scores.” – Bryon McGregor, CEO .
  • “Adjusted EBITDA improved $5.7 million to negative $0.2 million in Q2 2025… The impact of the [Pekin] dock outage totaled $2.7 million for the quarter, and we are working with our insurance company to recover the losses in excess of our deductibles.” – Rob Olander, CFO .

Q&A Highlights

  • CO2 growth runway: Management sees substantial room to increase CO2 utilization at Columbia; current sales ~50k metric tons vs. ~70k capacity, with potential low-intensity capital to expand .
  • European ISCC exports: Demand remains strong; Pekin’s quality enables eligibility; dock workarounds helped, but full repair is imperative for efficiency .
  • SG&A sustainability: Overhead right-sized; exceeding ~$8M annual savings goal; additional smaller measures (supplier terms, taxes, insourcing) should add up .
  • 45Z quantification: Based on current CI assumptions, Columbia ~$0.10/gal (2025) and ~$0.20/gal (2026) equating to ~$4M and ~$8M; Pekin dry mill $0.10/gal in 2026 ($6M); further CI reductions could add upside .
  • Western monetization: Process ongoing with Guggenheim; unique destination plants require longer diligence; 45Z improves valuations; all strategic options considered, including broader company-level transactions .

Estimates Context

  • Wall Street (S&P Global) consensus for Q2 2025 EPS and revenue was unavailable; as a result, we cannot benchmark reported results versus estimates. Management did not provide formal financial guidance ranges in the quarter .

Key Takeaways for Investors

  • Operating inflection at Western assets is real: segment moved from loss to profit YoY, validating the Alto Carbonic acquisition and the Magic Valley idling decision .
  • Mix optimization matters: ISCC export premiums and M&D repositioning offset domestic pricing pressure and operational disruptions; this remains a lever into 2H25 .
  • Cost discipline is tracking ahead of plan: SG&A down to $6.2M and annualized savings above ~$8M underpin breakeven adjusted EBITDA despite commodity headwinds .
  • Regulatory upside is tangible: quantified 45Z credits (~$18M over 2025–2026 across facilities) enhance medium-term earnings power and asset valuations .
  • Near-term watch items: Pekin dock repair timing and insurance recovery; crush margin trajectory (management cited July spreads ~ $0.30/gal); high-quality alcohol premium dynamics .
  • Strategic optionality: Ongoing Western asset optimization/monetization and broader alternatives could crystallize value if 45Z tailwinds and improving operations persist .
  • Risk balance: Derivative mark-to-market, commodity spreads, and premium compression can still swing results; disciplined capex and liquidity ($29.8M cash; $70M availability) help bridge volatility .

Additional Detail: Select Disclosures

  • Quarter detail per 8-K/press release: Net sales $218.4M; COGS $220.4M; Gross loss $1.9M; SG&A $6.2M; Interest expense $2.8M; Net loss attributable to common $11.3M (EPS -$0.15); Adjusted EBITDA -$0.2M .
  • Sales and operating metrics: Total gallons sold 86.7M; consolidated sales price $1.95/gal; Board corn crush $0.11/gal; Pekin and Western corn costs $4.86 and $5.71/bu, respectively .
  • Liquidity: Cash $29.8M at 6/30; borrowing availability $70M (revolver $5M; term loan $65M, subject to conditions) .
  • Board and governance update during Q2: Gilbert Nathan named Chair; Dianne Nury Vice Chair; directors Alan R. Tank and Jeremy T. Bezdek elected (June 25–26) .