Sign in

You're signed outSign in or to get full access.

AI

Alto Ingredients, Inc. (ALTO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 materially improved across all segments: Net sales $241.0M (-4% y/y, +10% q/q), gross profit $23.5M (+$17.5M y/y), net income to common $13.9M (vs. $(2.8)M y/y; Q2: $(11.3)M), and Adjusted EBITDA $21.4M (+$9.2M y/y; Q2: $(0.2)M). Drivers: stronger export ethanol pricing/volumes, higher liquid CO2 demand, cost actions, and favorable unrealized derivative swing (+$8M y/y) .
  • Pricing/operations tailwinds: consolidated sales price/gal rose to $2.09 (vs. $2.06 y/y; $1.95 in Q2), board crush held at $0.41/gal (vs. $0.11 in Q2), essential ingredients return rebounded to 52.5% (vs. 42.8% y/y; 45.2% in Q2) .
  • Strategic positioning: management locked in export volumes for Q4 2025 and 1H 2026; sees E15 adoption in California (AB 30) adding >600M gallons/year of potential demand, and expects 45Z credits of ~$0.10/gal in 2025 (Columbia), rising in 2026 with ILUC update; evaluating further CI-reduction levers and monetization of transferable credits .
  • Risks/offsets: high-quality alcohol premiums were lower y/y; interest expense rose; Pekin dock repairs shift to spring; Magic Valley remains cold-idled while options (including restart or sale) are assessed .

What Went Well and What Went Wrong

What Went Well

  • Broad-based profitability recovery: Gross profit up $17.5M y/y to $23.5M; Adjusted EBITDA up $9.2M y/y to $21.4M; Western Production swung to +$1.5M GP (vs. $(2.3)M y/y) on CO2 contribution and idling of unprofitable assets .
  • Export-led strength and price discipline: “We produced and sold more gallons in the export market” and “forward contracted significant volumes in Q4 and the first half of 2026,” stabilizing margins in seasonal lows .
  • Cost/CI strategy traction: SG&A down to $6.5M (vs. $7.5M y/y), essential ingredients return improved to 52.5%; management reiterated confidence in capturing 45Z credits and further CI reductions (e.g., low-carbon corn, RECs) to lift credit value .

What Went Wrong

  • Mixed product mix economics: Lower premiums in high-quality alcohol reduced benefit y/y (CFO cites ~$2.9M lower premiums y/y); net sales down 4% y/y on fewer gallons (89.2M vs. 96.8M y/y) despite better pricing .
  • Higher financing costs: Interest expense rose to $2.8M (vs. $1.9M y/y) given higher balances/rates .
  • Pekin dock repair timing/slippage: Business interruption costs in Q3 (~$0.8M) and repair plans now targeted for spring 2026 to build a second dock first; insurance recovery process ongoing .

Financial Results

Consolidated Results (GAAP and Non-GAAP)

MetricQ3 2024Q2 2025Q3 2025
Net Sales ($M)$251.8 $218.4 $241.0
Gross Profit ($M)$6.0 $(1.9) $23.5
Net Income (Loss) to Common ($M)$(2.8) $(11.3) $13.9
EPS, Basic & Diluted ($)$(0.04) $(0.15) $0.19
Adjusted EBITDA ($M)$12.2 $(0.23) $21.4

Margins (calculated from reported figures)

MarginQ3 2024Q2 2025Q3 2025
Gross Margin %2.4% (=$6.0/$251.8) -0.9% (=$(1.9)/$218.4) 9.7% (=$23.5/$241.0)
Adjusted EBITDA Margin %4.8% (=$12.2/$251.8) -0.1% (=$(0.23)/$218.4) 8.9% (=$21.4/$241.0)

Estimate Comparison

MetricActualS&P Global ConsensusSurprise
Revenue ($M)$241.0 N/A*N/A*
EPS ($)$0.19 N/A*N/A*
  • Consensus unavailable via S&P Global for Q3 2025; we will update if/when estimates are published. Values retrieved from S&P Global.*

Segment Breakdown (Q3)

SegmentNet Sales ($M) Q3-24Net Sales ($M) Q3-25Gross Profit ($M) Q3-24Gross Profit ($M) Q3-25
Pekin Campus Production$148.0 $154.9 $6.2 $18.9
Marketing & Distribution$57.5 $61.2 $3.9 $4.4
Western Production$46.8 $25.9 $(2.3) $1.5
Corporate & Other$2.7 $2.3 $(0.2) $0.2
Intersegment Eliminations$(3.2) $(3.3) $(1.6) $(1.6)
Total$251.8 $241.0 $6.0 $23.5

Key Operating KPIs

KPIQ3 2024Q2 2025Q3 2025
Total Gallons Sold (M)96.8 86.7 89.2
Specialty Alcohol Gallons (M)22.5 19.9 22.4
Total Renewable Fuel Gallons (M)74.3 66.8 66.8
Consolidated Sales Price/gal ($)$2.06 $1.95 $2.09
PLATTS Ethanol/gal ($)$1.81 $1.72 $1.84
CME Corn $/bu$3.92 $4.51 $4.01
Board Corn Crush $/gal$0.41 $0.11 $0.41
Essential Ingredients Return (Consol.)42.8% 45.2% 52.5%

Guidance Changes

MetricPeriodPrevious Guidance/CommentaryCurrent Guidance/CommentaryChange
45Z Credit – Columbia ($/gal)2025$0.10/gal expected (Q2 call) $0.10/gal remains expected (Q3 call) Maintained
45Z Credit – Columbia ($/gal)2026$0.20/gal with ILUC update (Q2 call) $0.20/gal reiterated (Q3 call) Maintained
45Z Credit – Pekin Dry Mill ($/gal)2026$0.10/gal expected (Q2 call) $0.10/gal reiterated (Q3 call) Maintained
Export Ethanol (forward)Q4’25–1H’26Not disclosed priorSignificant export volumes forward-contracted; no % disclosed New detail
CapEx2025Below historical averages (Q2) Below historical averages; $1.6M in Q3 Maintained
Repairs & Maintenance2025~$32M estimate for FY (Q2) YTD $24M; FY est. ~$32M reaffirmed Maintained
SG&A/Overhead SavingsOngoing>$8M annualized savings pace (Q2) Expense benefits to continue; SG&A $6.5M in Q3 Maintained
Pekin Loadout Dock2025–26Begin ahead of winter; extend into next year (Q2) Build second dock first; repairs/new install targeted for spring (timing update) Timing updated/extended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2 2025)Current Period (Q3 2025)Trend
45Z credits and CI reductionQ1: pursuing CI reduction; rightsizing; IL CCS bill risk; early 45Z planning . Q2: Columbia $0.10/gal (2025), $0.20 (2026); Pekin dry mill $0.10 (2026); exploring low-carbon corn/RECs .Reiterates $0.10 (’25) at Columbia; higher credits in ’26; adds plan to forward sell/monetize credits in 2026–2029; further CI levers (low-carbon corn, RECs) .Improving clarity/monetization pathway
Liquid CO2 strategyQ1: Alto Carbonic accretive; synergies at Columbia . Q2: Western gross profit +$5.6M y/y; more CO2 throughput/storage planned .Alto Carbonic contributed ~+$2M; considering additional CO2 facilities; strong West Coast demand .Strengthening
Export strategy (Europe)Q1: ISCC exports ramping; pricing premium . Q2: Leveraging exports to offset dock issues; building certifications .Export market stronger than domestic; forward-contracted Q4’25/1H’26 volumes .Expanding
Pekin dock outageQ1: temporary solutions; insurance process started . Q2: plan to commence repairs ahead of winter .$0.8M impact in Q3; build second dock first; spring start; insurance coverage being finalized .Resolution path defined; timeline extended
Cost actions/SG&AQ1: rightsized workforce; ~$8M annual savings expected from Q2 . Q2: exceeding $8M; SG&A $6.2M .SG&A $6.5M; benefits to persist .Sustained discipline
Magic Valley/Western assetsQ1: cold-idle; evaluating asset monetization/alternatives . Q2: working with Guggenheim; positive 45Z impact on valuations .Sale process continues; restart remains an option given 45Z/CO2 demand—but not near-term .Optionality preserved
California E15 (AB 30)Q1: growing support noted . Q2: continued regulatory progress .AB 30 signed; >600M gallons potential demand; Alto positioned to supply .Regulatory tailwind realized

Management Commentary

  • CEO framing: “We delivered robust improvements in all of our business segments, reflecting increased renewable fuel export sales, greater demand for liquid CO2, and the continued positive effects of our cost reduction efforts… Adjusted EBITDA was $21 million, growing $9 million, compared to the third quarter of 2024.”
  • Strategy and 45Z: “We remain confident in our ability to generate Section 45Z tax credits… we are evaluating additional methods of lowering our carbon intensity to further boost tax credit values.”
  • Monetization and CI levers: “We have begun the process to forward sell these [45Z] assets and monetize the credits in 2026 through 2029… options include low-carbon corn sourcing and renewable energy credits to knock our carbon score down.”
  • Operational flexibility: “We produced and sold more gallons in the export market… and forward contracted significant volumes in Q4 and the first half of 2026.”
  • Western/CO2 economics: “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.”

Q&A Highlights

  • 45Z upside and CI actions: Management is pursuing low-capex CI reductions (low-carbon corn, RECs) to enhance per-gallon credits; specifics withheld until finalized .
  • Magic Valley path: Restart is possible but contingent on sustained economics and long-term contracts; 45Z and rising West Coast CO2 demand increase asset value; sale/optimization under review with prior “for sale” process still ongoing .
  • Exports: Significant export volumes locked for Q4’25/1H’26; details withheld for competitive reasons .
  • Pekin dock: Insurance recoveries and permanent repair plan underway; second dock to mitigate interruption and reduce bottlenecks; spring construction timing .
  • SG&A cadence: Cost reductions are structural, with benefits expected to continue .

Estimates Context

  • S&P Global consensus for Q3 2025 (EPS, revenue, EBITDA) was not available at the time of this recap; therefore, we cannot quantify beats/misses versus Street. We will update as consensus becomes available. Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • Directionally, strong Q3 profitability (Adj. EBITDA $21.4M) and forward export contracts could lift Q4/1H’26 expectations for EBITDA and cash generation, while updated dock timelines and higher interest expense temper the outlook. The realized rebound in essential ingredients returns and CO2 contribution suggests upward revisions to segment profitability run-rates if market conditions persist .

Key Takeaways for Investors

  • Earnings power inflecting: Q3 showcased operating leverage under modestly better pricing, with exports/CO2/cost cuts driving an 890 bps sequential EBITDA margin swing; sustainability hinges on maintaining export spreads and CO2 volumes .
  • Structural tailwinds: AB 30 (E15 in California) and the 45Z framework (plus monetization) provide multi-year optionality to support margins and balance sheet flexibility .
  • Western asset optionality: Improved valuations under 45Z and CO2 demand keep sale/restart avenues open; a restart would require visibility into sustained economics and logistics .
  • Execution watch items: Dock repair timeline (spring start), continued export certification/volumes, CI reduction milestones (low-carbon corn/RECs), and SG&A discipline .
  • Trading setup: Positive narrative momentum (exports locked in, CO2 contribution, regulatory tailwinds) vs. known headwinds (weaker high-quality alcohol premiums, interest costs, repair timing) may drive estimate resets once Street coverage updates; catalysts include 45Z monetization progress and AB 30 ramp pace .
  • Liquidity and leverage: Q3 cash $32.5M; borrowing availability $85M; debt net of cash stepped down q/q on ABL repayments—watch working capital needs vs. export ramp and repair spend .

Appendix: Additional Data Points

  • Q3 derivative context: y/y change in unrealized non-cash derivatives +$8.0M; change in realized derivative gains nominal (contributing to y/y GP lift) .
  • Balance sheet snapshot (9/30/25): Cash $32.5M; LT debt (net) $100.6M; equity $222.4M .
  • Operating line/term loan availability (9/30/25): $20M/$65M, total $85M .

Notes:

  • All figures are GAAP unless noted; Adjusted EBITDA per company definition (see non-GAAP reconciliation) .
  • S&P Global consensus data for Q3 2025 was unavailable at time of analysis. Values retrieved from S&P Global.*