Alto Ingredients Inc Aktie

Good afternoon, and welcome to the Alto Ingredients Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Jody Burfening. Please go ahead.

Thank you, Danielle, and thank you all for joining us today for Alto Ingredients' Second Quarter 2026 Results Conference Call.

With me on the call 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 second quarter of 2026. A webcast and webcast replay will be available on the Alto Ingredients website at altoingredients.com. Please note that the information on this call speaks only as of today, August 5, 2026. You are advised that time-sensitive information may no longer be accurate at the time of any replay.

The company also prepared a presentation for today's call that is available on its website. Please refer to the company's safe harbor statement in the presentation, which states that some of the comments constitute forward-looking statements and considerations that involve risks and uncertainties. The actual 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 company's 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 expenses, 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 the second quarter earnings release and presentation.

With that, it is now my pleasure to introduce Bryon McGregor. Bryon, please go ahead.

Thanks, Jody, and thanks to everyone, for joining us today.

I'll begin with a high-level review of our second quarter results and operational activities. Then I'll turn the call over to Rob for a detailed review of our financial results for the quarter. After that, I'll wrap up and open the call for Q&A.

We delivered our fourth consecutive quarter of positive gross profit, income from operations, net income and adjusted EBITDA. We have been consistently profitable during this period even without the contribution of 45Z tax credits. These results demonstrate the strength of our diversified operating model, which gives us the flexibility to shift production toward the most attractive end markets and capture premium value opportunities. We remain focused on disciplined execution of our strategic plan and unlocking additional values across our portfolio.

Our latest 12-month results are also a testament to our efforts to drive profitability and maximize our asset base and to make smart capital allocation decisions, including purchasing Alto Carbonic, investing in our dry mill optimization and carbon intensity reduction projects. We have executed well on these initiatives and more. For the second quarter, our results reflect strong domestic demand and improved essential ingredient values compared to the same period last year. The quarter's market crush margins improved significantly to $0.33 per gallon from $0.11 per gallon in the same period last year. This increase was driven by robust export demand, strong domestic blending activity and tighter ethanol inventories following industry-wide spring maintenance outages. As a result, ethanol prices improved during the quarter, supported by strong renewable volume obligation or RVO blending requirements.

Meanwhile, favorable crop conditions and larger projected grain supplies contributed to lower corn costs and higher margins. Q2 crush margins were not only significantly higher than the same period last year, but were also strong by historical standards. Q3 margins, which in the past have marked the seasonal peak of the year, continue to be healthy and profitable. While European demand remained robust, ongoing geopolitical disruption in the Middle East negatively impacted export economics from the United States during the quarter. Higher freight costs and reduced certainty of vessel availability to move exports from the Gulf Coast compressed the U.S. to Europe arbitrage, increasing the competitiveness of Brazil exports into Europe. As a result, our renewable fuel export volumes declined compared to the second quarter last year.

Given the strength of domestic ethanol markets, we successfully optimized our product mix towards fuel-grade ethanol sales in the U.S. markets. This underscores the benefits of our diversified commercial platform, enabling us to adapt and capture the value of strong crush margin environment. Also, we believe that the geopolitical disruption in the Middle East created favorable conditions that drive domestic support for implementing E15 blending. More on that in a minute.

During the quarter, we continued to improve utilization, reliability and throughput with the goal of increasing total 2026 volumes over 2025. At our Pekin Campus, we completed the dry mill planned outage along with our debottlenecking project to increase annual production capacity by about 8% or 5 million gallons. This project demonstrates our dedication to highly attractive ROI investments. By increasing production at our most efficient facility, we are positioning Alto for incremental gross margin and to qualify for additional 45Z tax credits. After a successful dry mill restart, we are now ramping up to our new production levels and still expect to realize the full benefit of the additional capacity in the fourth quarter.

We also performed our routine spring outage at ICP during the quarter. We remain on track to finish the repairs on our existing dock and the installation of the second alcohol load out by the end of the year, improving our logistics and loading capacity. At our Columbia facility, we began working to add a third CO2 storage tank and expect it to be operational in Q4. The expanded storage capacity will allow us to further capitalize on growing demand for premium CO2 in the Pacific Northwest. We continue advancing multiple pathways to further monetize our CO2 stream, including both utilization and sequestration opportunities. Our strategy emphasizes low capital, high-return projects while preserving flexibility as regulatory and commercial markets continue to evolve. Our intent is to move quickly by pursuing partnerships with stakeholders that already have compression capabilities, allowing us to accelerate commercialization.

In the meantime, we're focused on increasing our 45Z credits by producing more volume. We also continue to explore opportunities to lower our carbon scores without significant capital investment by working with our farmer partners to encourage them to lower the carbon intensity of their corn. We remain on track to qualify 90 million gallons or more of combined production this year, supporting our expectation for generating a minimum of $15 million in income from tax credits after monetization costs. We're encouraged by the growing momentum for year-round E15 adoption. As an example, recently, the Renewable Fuels Association reported that about 72% of U.S. voters support year-round E15 blending, the highest level recorded since polling began in 2016. Nationally, support continues to build around the promise of E15 to reduce fuel costs, strengthen energy security and to increase demand for domestically produced renewable fuels. Meanwhile, several Midwestern states have moved forward with permanent year-round E15 access, providing an important blueprint for broader adoption.

California is also making progress following the passage of Assembly Bill 30. While final implementation steps remain, we believe the state's transition toward E15 represents a meaningful long-term demand opportunity given its position as one of the largest gasoline markets in the country. Taken together, expanding E15 adoption at both the federal and state levels has the potential to drive significant incremental ethanol demand, improved industry capacity utilization and support a more favorable margin environment over time.

With that, I'll turn the call over to Rob for a more detailed review of our second quarter financial results.

Thank you, Bryon.

I'll start with a review of the second quarter 2026 income statement compared to the second quarter of 2025. Consolidated net sales were $246 million, up $27 million. We sold 88.5 million gallons of ethanol and specialty alcohols, an increase of 1.8 million gallons at an average sales price of $2.15 per gallon, which was $0.20 per gallon or 10% higher than last year. With the 2026 RDO regulations finalized during the second quarter, ethanol and RIN prices supported higher domestic ethanol sales and improved crush margins. With the diverse production capabilities at the Pekin Campus, we are well positioned to serve this changing market demand by shifting our production and sales mix.

Revenue from renewable fuel exports increased by $800,000, reflecting a $2.2 million reduction in gallons sold at a significantly higher premium to domestic renewable fuel than last year. This decrease in volume reflects the impact of the conflict in the Middle East on the cost and availability of freight. High-quality alcohol volumes increased by 3.6 million gallons. Although average premiums over ethanol narrowed, reducing revenue by approximately $2.9 million, realized gains from our derivative positions largely offset the impact as intended, limiting the net premium decline to $0.02 per gallon. As a result, the higher volumes generated a modest increase in profitability despite the lower premium environment.

Essential ingredient sales increased $6.1 million on overall improved average sales prices. Dry distiller grain sales were supported by a strong export market and tighter domestic supply as a result of the seasonal spring maintenance downtime in the industry. In addition, the 2026 RVO set strong demand for corn oil and germ as a feedstock for biodiesel and renewable diesel drove prices up. Coupled with a 5% decrease in our cost of corn, our essential ingredients return improved to 51.6% compared to 45.2% for the second quarter last year.

Gross profit increased by $19 million year-over-year to $17 million. In addition to the sales mix changes, the improvement was primarily driven by stronger industry crush margins, which increased to $0.33 per gallon from $0.11 per gallon in the second quarter of last year, contributing approximately $17 million of incremental gross profit. We also benefited from lower utility costs with natural gas and electricity expenses declining by nearly $600,000 year-over-year. Offsetting these positives, we incurred approximately $2 million more in repairs and maintenance expense due to our Pekin dry mill and ICP spring outages and continued work at our Carbonic facility to ensure we are prepared to reliably support the increased demand for our premium CO2 during the seasonally strong summer months. Even with these higher expenses, our Western facilities remain profitable on a gross profit basis for Q2 2026.

As a reminder, we employ hedging strategies to protect the premiums over ethanol on our high-quality alcohol contractual commitments and to adjust our fixed price corn back to market. For the second quarter, realized derivative gains increased $1.2 million while unrealized derivative losses related to future shipments increased $1.5 million. As of the end of the second quarter, our open derivative positions resulted in a net asset of $3.9 million.

SG&A expenses increased by $1.8 million. Because of our strong second quarter and year-to-date results, we accrued performance compensation for the first and second quarters in the amount of $800,000, whereas last year, we did not accrue performance compensation until the second half of the year. Last year's SG&A expense also included a onetime $800,000 gain related to the final payment for the Eagle Alcohol acquisition. Excluding these notable items, SG&A was comparable, reflecting the actions taken last year to right size our staffing levels and cut costs. We continue to maintain strict discipline over our spending.

Moving down the income statement. We generated $5.1 million in 45Z tax credit earnings, reflecting $4 million of credits earned in the second quarter and $1.1 million in final adjustments on our 2025 sales proceeds as we completed the sale of our 2025 credits in June. In Q2 2025, we did not recognize any 45Z tax credit earnings as we were not yet accounting for them on a quarterly basis. Year-to-date, we have accrued $7.9 million in net 2026 45Z tax credits, which we expect to monetize in the future. Interest expense decreased $900,000 on lower outstanding debt balances, reflecting our continued focus on minimizing idle cash and reducing our interest expense burden by paying down debt.

Adjusted EBITDA improved by $23.9 million to $23.7 million compared to negative adjusted EBITDA in the prior-year period. The improvement was driven by a combination of the $19 million swing to positive gross profit and a $5.1 million increase in 45Z tax credit earnings, partially offset by higher SG&A expenses. Net income attributable to common stockholders was $11.4 million or $0.15 per share compared to a net loss of $11.3 million or a negative $0.15 per share for Q2 2025, a significant improvement of $22.7 million. Our tax provision amount is 0 as we expect to use a portion of our NOLs to offset income this year.

Turning to the balance sheet. As of June 30, 2026, our cash balance was $24 million. During the second quarter, we generated $28.5 million in cash flow from operating activities. Capital expenditures for the quarter amounted to $10.6 million and $11.5 million year-to-date. We are on track with our annual targeted CapEx spend of $25 million. With strong earnings and positive cash flow from operations, we paid down an additional $8.5 million in principal on our term debt facility and ended the quarter with $29.9 million in term debt outstanding, bringing our total principal payments this year to $25.1 million. At quarter end, our total borrowing availability was $106 million, consisting of $41 million under our operating line of credit and $65 million under our term loan facility.

Today, we established a $50 million at-the-market equity program. Alongside our available borrowing capacity and operating cash flow, the ATM gives us additional financial flexibility and a prudent and low-cost tool to effectively access equity capital. We see a number of attractive high-return organic opportunities across our platform. Having the ATM in place allows us to remain prepared to pursue these opportunities when expected returns, market conditions and shareholder interests aligned. Any use of the program would be disciplined, measured and evaluated against other available sources of capital.

With that, I will turn the call back to Bryon.

Thanks, Rob. Our results for the past 4 quarters demonstrate the success to date of the strategic realignment we began 3 years ago. With a diversified product portfolio, a leaner cost structure, we have positioned Alto to capture higher value revenue opportunities to enhance profitability and drive shareholder value. Our operating model is now capable of generating annual positive adjusted EBITDA through the commodity cycles while providing meaningful upside when market conditions are favorable.

In addition, this year, we're executing high-return capital projects focused on capacity expansion, CO2 optimization and process efficiency improvements. These projects represent over $10 million of capital investment, offering attractive returns and are expected to generate paybacks of just over 1 year on average. Importantly, these investments are within our control and are designed to enhance earnings and cash flow regardless of commodity market conditions. These are only a few of many compelling organic opportunities that we intend to pursue while maintaining our disciplined approach to capital allocation.

In summary, we remain on track to increase production volumes in 2026 compared to 2025. We will continue optimizing our product mix, capturing more value from our unique asset base and executing high-return opportunities that improve profitability and cash flow. Our diversified strategy is working. Our operating model is stronger, and our financial results reinforce our confidence in Alto's ability to generate sustainable earnings and create long-term shareholder value.

Danielle, we're ready to begin the Q&A session.

[Operator Instructions] The first question comes from Eric Stine from Craig-Hallum.

So I mean, obviously, you've kind of laid out these capital projects and the progress, pretty steady progress you're making, but also alluding to a host of others. Should we think about that as just kind of going deeper in the paths that you're already on? Or are there others? And if so, could you give some details on what those other areas might be?

Sure. So while in general, they are deeper moves along some of the same things that we've been talking about, right? We are -- it's clearly around monetizing CO2, capturing -- taking advantage of the 45Z opportunities that are available at least through 2023 (sic) [ 2029 ] to help monetize that value and be able to reinvest those dollars into other longer-term projects. It's about leaning into our efficient projects and expanding capacity where it makes sense to do so, particularly in our most efficient locations and making them those that may be less efficient, more efficient. Probably not appropriate to share the exact details yet because we haven't committed full capital to those yet, but we will certainly be sharing the quarters to come. But as I mentioned in our -- in the prepared remarks is that we see really exciting organic opportunities with excellent paybacks that we see as almost obligations to pursue. So with that, that's the focus of the company, and we'll share more as we commit capital to those projects.

Yes. Understood. I mean it's worth a shot to ask. But maybe just on the -- talking about to improve the CI scores and going down the path on the crop side and with farmers. I mean when you think about that, given that the -- I mean, 45Z has been in place, but it's relatively new to the market. I mean, do you feel like that is -- I mean, are farmers how open are they to that? Or what are you finding? Is that something an opportunity that people have kind of already mined or it really is ripe to make further strides in that area?

Yes, it's relatively fresh for the farmers, especially because the rules have not yet been established until earlier a month or 2 ago. But I think with the rules now and while there's still some clarifications that need to be made, I think that the pathway is clear for the farmers, and there's a lot of inquiry and a lot of work that's being done on our part and as well as others in the industry. And the farmers are very keen to it. I mean if you think about it from a context of -- on a relative basis, if we were to save an additional $0.10, we're going to generate additional $0.10 in carbon intensity credit or the credits around the 45Z, that translates into almost $0.30 per bushel for those farmers who are participating and that's real dollars, especially where the price for corn this year and last is somewhat difficult to justify the investment that the farmers are making. But these are -- some of the steps are incredibly easy for them to do as far as registration and doing some of the other things. And so we see this as a real opportunity. And I know that more and more farmers are only asking questions doing what they can to get on board.

Okay. Got it. Last one, just I know Q2, you had the dry mill planned outage there and got through that. It had a very good quarter, but limited to an extent by that outage. I mean when you think about third quarter, I know you're ramping that back up, if you feel like you get a -- with the market conditions still quite good, you get a greater capture of that since you're through the outage?

Yes. I mean, as we said in the prepared remarks, we expect to fully be able to realize it in Q4. I don't want to rush our team too quickly when you're making changes not only to debottlenecking, but making improvements to your DCO, your IT systems and the like. So you want to make sure you line all that out and keep things safe. That said, we're excited about the opportunity. We've seen some real promise and what we're seeing at the plant, excess capacity, things like that. So really excited about that. And the nice thing about that facility is not only just an additional amount of production. But as well, again, it's one of our lowest cost, if not our lowest cost facility in operations. So really driving profitability to the bottom line, but also those gallons are eligible for 45Z credit. So it has a multiplying effect. And again, really excited about that opportunity.

The next question comes from Sameer Joshi from H.C. Wainwright.

Congratulations on a great quarter. Just stepping back when you make decisions whether to delever or to invest because you do have these projects that you just have outlined to work on to improve CI scores, monetize this year to expand capacity. At the same time, you're also paying back some of the principal. What are the takes and puts in that decision-making?

So we have a full committed process around evaluating each one of our projects, stacking them against -- weighing them against other opportunities. And some of the projects may not have as solid as a return, but they're core and/or foundational in being able to then expand into other areas. So a good example of that would be the improvements in the debottlenecking that we did at the dry mill at the Pekin Campus, but it actually lays the foundation to be able to do an incremental or significantly higher expansion on that facility going forward. That said, that also requires an additional amount of capital or significantly more amount of capital than the debottlenecking. And so those are things that we have to take into account, weigh those against the cost of capital and against other projects that may have other more beneficial returns or less beneficial returns, right? And so we just tackle those.

Rob, anything you want to add to that?

Yes, sure. Thanks, Bryon. I guess I'd just add with our strong profitability and cash flows year-to-date, we've been able to fund a lot of our low-cost, high-return projects. And we commented before, as opposed to letting that cash sit idle in the bank, we'd rather put that to work and reduce our interest expense burden. So we're taking the opportunity to pay down debt, which also improves our profitability as well.

Understood. My second question is, you explained the European disruption and how it -- rather European exports impacted by the disruption in shipping. Would your EBITDA would have been higher if you had been able to avail of the European opportunity versus redirecting your efforts towards domestic savings?

Yes. So it's a dynamic market, clearly, right? I mean prices continue -- it's a commodity-based market. So it's a bit speculative. But all things being equal, if you had the same price and the same volume that you were experiencing in Q1 and Q4 of last year, yes, we would have generated more. That said, margins were significantly higher in Q2 than they were in Q1 for domestic fuel as well. So it's a bit of a speculative analysis. But we still continue -- as I think we said in my prepared remarks was it's still a very strong market. Of course, that market is going to always and those consumers in those markets are always going to look for the most competitive product.

And right now, there's an arbitrage opportunity with Brazil. And so it's an easier market to look to, but those change as share prices change and the supplies and the like. And depending on what happens with the U.S. dollar, particularly in relation to the real, we expect that to come around. And these are longer-term projects -- these are longer-term relationships as well. So some of the countries or some of the parties in the specific countries also are just engaging in what would be 2027 types of volumes. So we are -- we remain optimistic, and we're excited that there's a domestic market that we can turn to be able to place that product.

Understood. Yes. And I do understand that the dynamics and disruption does not only affect the European market, it also in turn impacts dynamics in the domestic market. So I understand. A clarification on this 45Z. I think maybe, Rob, I heard that you had already accounted for $7.9 million in credits that you are planning to sell in the second half. I was just not sure if I heard that right. Can you explain what that is?

Yes, that's correct. We had set a minimum baseline target expectation of $15 million in net 45Z proceeds, and that's on 90 million gallons. Now with that said, we are still pursuing opportunities to qualify more volume, both with the Pekin dry mill debottlenecking project as well as efforts to improve our reliability and uptime as well as potentially even qualifying other volume that is currently destined for other end markets outside of the United States. That as well as the efforts to reduce our energy consumption and what Bryon talked about earlier with the low carbon intensity corn. So getting back to your question, year-to-date, we have recognized just under $8 million in net 45Z credits for the year. So we're currently on track for the $15 million to $16 million range.

Understood. I will take my other questions offline.

The next question comes from Justin Dopierala from Domo Capital Management.

Just have 2 questions here. First, did I hear that correctly? So after the quarter ended, you paid down an additional $6 million approximately in debt?

No. During the quarter, we paid down an additional $8.5 million of debt.

Okay. The $8.5 million was all during the quarter. Got it. And then just piggybacking last question then. So with the 45Z credits you've generated, so that will be cash that's coming in the door later in the year that could be used for further debt reduction as well, I would assume.

Yes. We are in preliminary discussions with buyers on the 2026 credits. So we expect to monetize those in the not-too-distant future.

Justin, just one clarification is that it's not necessarily dedicated to the reduction of debt. We'll certainly evaluate that, and there are certain covenants that we have under our agreement with regards to -- that are based on EBITDA and ratios. So we will do that if it makes economic sense to do that rather than deploying it elsewhere, we'll certainly evaluate that.

Okay. And then regarding the farming practices, I know you guys like to be conservative, but I just want to ask, like is that something that could possibly be realized in 2026, where if you're able to get the farmers in line or whatever that you're able to realize extra $0.10 per gallon in '26? And if so, would that apply to all of the gallons that the dry mill in Pekin unless you're also looking to do this at Columbia, maybe clarifying that as well. But my question is, would that then apply to the gallons for the entire year's worth of production?

Rob, do you want to start and I'll fill in?

Yes, I'll take that one. We're currently in discussions with our farmer partners. We're not at the point that can support recognizing that benefit. We're definitely trying to set ourselves up for the future. But we're in the process of exploring how many bushels or how much volume could qualify under the low carbon intensity corn and then that would be applied against our production and then calculate what the carbon intensity reduction would be. So we can't say definitively one way or the other at this time. We are still in that process, but definitely laying the groundwork for the future.

And maybe what I'd add to that is if we can, clearly, we would, right, and we would dare like not to do that for 2026. But it's important to note that even if you do -- if you don't pick it up for 2026, I mean, it would be incremental or a relatively small change this year, but you should see much more significant, especially the more low carbon practices that are implemented, cover crops, things like that. Those won't apply this year unless they were already doing them. But if they enter this fall after harvest and doing cover crops and you really start to see the benefit in 2027.

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

Thanks, Danielle. Thanks to everyone for joining us today. As always, we appreciate your interest in and your support of Alto Ingredients. Have a great day.

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

Good day, and welcome to the Alto Ingredients First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Ms. Jody Burfening, Alliance Advisors. Please go ahead.

Thank you, Nick, and thank you all for joining us today for Alto Ingredients First Quarter 2026 Results Conference Call. With me 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 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 and presentation constitute forward-looking statements and considerations that involve risks and uncertainties. The actual 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 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, Bryon will review the company's first quarter performance. Rob will review the financial results, and then Bryon will wrap up and open the call for Q&A. It's now my pleasure to introduce Bryon McGregor. Bryon, 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 demand.

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 Pekin 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 at our Pekin campus, we started the repairs on the original dock and the construction of the second alcohol load out, 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 at 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 of premium CO2.

At our Pekin dry mill, our most efficient plant, we are moving the planned outage to June from the third quarter. During this downtime, we are going to implement a debottlenecking 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 Pekin 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, AB 30 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 Q1 financial results. Rob?

Thank you, Bryon. I'll start with a review of the 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 volumes 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 volumes sold, which was mainly related to the production curtailment at our Pekin campus, an improved product mix of higher renewable fuel export sales, reflecting both an increase in volumes sold and a significantly higher premium compared to domestic renewable fuel sales than last year contributed $6.7 million. 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.

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 Bryon 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 in 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 tax 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 a 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 Bryon.

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.

[Operator Instructions] The first question will come from Eric Stine with Craig-Hallum.

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 maybe can you just, I don't know, delve into that a little bit. What has kind of changed the thinking -- or it sounds like it's a little more optimistic on that front. Any details there would be very helpful.

Sure. So the -- 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 that -- those challenges, we found opportunities to -- along with the Big Beautiful Bill 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, Bryon.

Yes. I mean -- okay. So it does sound like though there have been some changes. I mean I get the utilization piece. I mean it's been a big success 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 things have kind of opened up a little bit. I mean, is -- that the pipeline moratorium or your ability to sequester -- 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 no longer feeling like we have to bring the whole solution to the table ourselves, where we had to commit to a singular pipeline that was dedicated solely for our use. But that there are other opportunities that are starting to avail themselves to us and discussions around where 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 Vault and there are opportunities… to continue. Think of it as more opportunities 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. Maybe could we just talk about -- I mean, the overall market environment, obviously, Q1 better than is typical. And I know that -- I know there are a lot more factors than simply just the basic crush. But by my estimation, it's as strong as it has been at this time of year in almost a decade. So just curious what kind of confidence that gives you for Q2? And is there the potential that this kind of lasts a little bit given that you've had some potentially structural changes in the market based on where gasoline prices are right now?

Yes. 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 same time last year. So that all bodes well. I think we're doing what we can to continue to monetize that value and capture that value. 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 a significant increase in production and then fundamental economics kick in and in an oversupplied market, margins start to give away in the second half.

But 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 balance. So we'll see.

I think a good thing to do is keep an eye on inventories. And then it will be interesting to see what the impact of the Middle East challenges and how they impact export logistics, commitments, people having to reroute and find other alternatives to -- 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 if -- there is a bit of wait-and-see efforts going on as much as possible. So it's a bit of a -- it's 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 and that provide, I think, a counter to what would otherwise be the norm.

Yes. I mean so many moving parts. I mean, such as gasoline prices are good, except for the fact that they potentially dampened 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.

Yes. 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 regards to 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 yes, I mean, time will tell, but fingers crossed, and God willing, and creek don't rise, we should have a good year generally, I think.

The next question will come from Sameer Joshi with H.C. Wainwright.

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. If you've done some analysis on what makes more sense.

Yes... Sorry about this, Sameer. 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 riff.

Yes. I was going to 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 projects that we view 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.

Understood. Actually, that was sort of a second question on the $25 million CapEx. On Slide 6, you have a nice table. Thanks for providing that. That gives a nice snapshot of what the impact of your CS coal reduction would be on potential benefits from 45Z. If you are able to do all the -- or execute on all the projects that you have planned for 2026, will we be at $0.30, $0.40? Like do you have a idea of what you're targeting there?

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

Yes, 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 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 debottleneck 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 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 Bryon commented, it will take a collaboration and a little more work and effort longer term working with other parties to move us down the CI score. And like Bryon said, a good opportunity is on potentially low carbon intensity corn and signing up farmers who 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.

Yes. No, understood. And then just a 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 mothballed 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 be or most of the projects that otherwise have been mothballed or idle are -- 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 -- debottlenecking at our dry mill to expand capacity. So I think that's already in the works for the most part, Sameer. 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 year-round E15 adoption, including California is I've seen numbers on the order of 1 billion gallons. So I don't think there's that much latent capacity currently in the market. So I think that all bodes 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. For the 2Q, of course, the LCFS scores are in the right -- 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.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Bryon 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.

Good day, and welcome to the Alto Ingredients Fourth Quarter and Year-End 2025 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Harriet C. Fried of Alliance Advisors. Please go ahead.

Thank you, operator, and thank you all for joining us today for the Alto Ingredients Fourth Quarter and Year-end 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 fourth quarter of 2025. The company also prepared a presentation for today's call that is available on its website at altoingredients.com. A webcast and a webcast replay will be available on the Alto Ingredient's website. .

Please note that the information on this call speaks only as of today, March 4. 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 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 finds 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, excess insurance proceeds, acquisition-related expense or recoveries 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 activities. 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, and thank you all for joining us today. I'll begin with a quick review of our fourth quarter results and achievements, after which I'll turn the call over to Rob for more details on our numbers. After that, I'll give you an overview of our major initiatives for 2026 and the opportunities we're seeing in our markets. We'll then open the call for Q&A. .

The fourth quarter capped a year of strong execution, and it was a pivotal milestone in our strategic realignment. Entering the year, we made tactical decisions to focus on opportunities that were within our control to maximize earnings. We adjusted staffing to align with our current organizational footprint, captured cost savings, invested in the throughput and efficiency of our plants, cold underperforming business activities in our marketing and distribution segment and maintain operational disciplines in support of our diversification efforts.

Earnings for the fourth quarter were $21 million, a $63 million improvement compared to the fourth quarter of 2024. For the full year 2025, earnings were $12 billion, a $72 million improvement. Further, adjusted EBITDA for the fourth quarter was $28 million, a $36 million positive swing last year. For 2025, adjusted EBITDA grew to $45 million, a $53 million improvement compared to 2024. Increased crush margins, qualified 45Z credits and strong renewable fuel export sales were major contributors to improved performance for both the quarter and the full year.

Our Carbonic acquisition in early 2025, is a perfect example of our focused strategy. This acquisition and the resulting diversification into liquid CO2 improved the profitability of our Columbia ethanol plant. Alto Carbonic also contributed positively to the profitability in our Western segment for both the fourth quarter and for all of 2025. Further, we made significant progress in determining the amount of 45Z [indiscernible] tax credits for 2025 and associated incremental earnings. We expect to qualify approximately 90 million gallons of combined production on an annual basis for 45Z credits at our Columbia and our peak and dry mill facilities.

In the fourth quarter, we recorded for the full year $7.5 million in 45Z credit earnings or $0.10 per gallon, net of estimated monetization costs. For 2026, with the removal of the indirect land use change or ILEC, from the GREAT model, we expect to qualify for $0.20 per gallon at our Columbia and peak and dry mill facilities and to generate approximately $15 million in net proceeds. We continue to pursue opportunities to lower our carbon scores further. The peak and wet mill and ICP do not currently qualify for these credits, but are advantaged to serve a variety of domestic and export markets, which are predominantly sold at premium to ethanol.

Finally, with respect to our Western asset optimization and monetization plan, as I mentioned at last quarter's call, current market conditions, including operational improvements, together with the positive impact of our Alto Carbonic acquisition have materially changed the calculus for simply doing the facilities. Given Colombia's improved profitability, we are no longer actively marketing the asset. We continue, however, to evaluate all options for our Magic Valley facility, including selling the plant as well as restarting and capturing 45Z credits, and monetizing the valuable CO2 the facility would produce.

In summary, we are pleased with our Q4 and full year results that demonstrate the successful execution of our strategic realignment. I'll now turn the call over to Rob for a more detailed review of our financial performance. Rob?

Thank you, Bryon. Thank you. First, I'd like to review the financial results for the fourth quarter of 2025 compared to the fourth quarter of 2024. Net sales were $232 million, $4 million lower than in the prior year. This reflects a reduction in volumes sold of 10.6 million gallons, primarily due to our decision to idle our Mid-Valley facility at the end of 2024. On a consolidated basis, the average sales price per gallon increased to $2.10 from $1.88 per gallon, partially offsetting the reduction in volumes sold. .

Gross profit for Q4 2025 was $15.2 million, a significant increase of $16.6 million compared to Q4 2024s gross loss of $1.4 million. The significant improvement in gross profit was due to the following drivers: stronger market crush margin of $0.23 per gallon in Q4 2025 compared to $0.08 per gallon in 2024, accounted for approximately $8 million. An increase in renewable fuel export sales at premiums to domestic sales contributed $5 million on a higher volume and higher average sales price per gallon. We realized $2.6 million less in compensation costs for the quarter related to the stepping reduction implemented earlier in the year, including the impact of idling our Magic Valley plant and a gain on our annual pension valuation adjustment.

The sale of Oregon carbon credits contributed an additional $2.9 million on improved market pricing. We continue to benefit from our Carbonic acquisition which we completed at the beginning of 2025 as it contributed $1.4 million to our Western Production segment during the quarter. With the idling of Magic Valley, this segment had a positive gross profit for the quarter and the full year. With high-value liquid CO2 now on our product mix, our Western essential ingredients return improved to 48% in the fourth quarter from 30% a year ago and contributed to an increase in our consolidated return to 52% from 43%.

And partially offsetting these positives was a net negative $4.2 million in combined realized and unrealized changes in derivatives. SG&A expenses decreased by $500,000 to $6.9 million. Once again, this is attributable to rightsizing staffing levels in the first half of the year. As you may recall, in Q4 of 2024, we recorded the final acquisition-related expenses for Eagle alcohol of $5.7 million and $24.8 million of impairment charges related to Magic Valley and Eagle alcohol, both of which were excluded from adjusted EBITDA.

In the fourth quarter of 2025, we recorded $800,000 of asset impairment charges related to the cleanup of CapEx projects. As discussed on prior calls, in April 2025, we sustained damage to our Peak and campus river loading dock. After filing an insurance claim with our carrier, in Q4, we received our maximum insurance coverage payment of $10 million. Of these proceeds, $1.5 million was recorded as a reduction to cost of goods sold as a reimbursement for previously recorded expenses. $1.8 million was recorded in other income for lost profits related to the business interruption. And the remaining $6.7 million of income was recorded as excess [indiscernible] proceeds in accordance with GAAP, which will be used to fund the repairs and improvements in 2026.

Since the excess proceeds were not related to operations, we excluded this gain from our calculation of adjusted EBITDA. As Bryon mentioned, we made significant progress in quality for 45Z credits and are entering into contracts to sell these credits to third parties. The expected proceeds from selling the 2025 credits are $7.5 million net of selling costs, which directly strengthened our [indiscernible] in the fourth quarter. The combination of improved gross profit, lower SG&A expenses, recognition of 45Z tax credits, and the excess insurance proceeds resulted in net income attributable to common stockholders of $21.5 million or $0.28 per diluted share for Q4 2025, an increase of $63.5 million compared to Q4 2024.

For the year, net income attributable to common stockholders was $12.1 million or $0.16 per diluted share compared to a loss of $60.3 million or $0.82 per share. Adjusted EBITDA increased $35.6 million to $27.9 million for Q4 2025 compared to a negative adjusted EBITDA of $7.7 million for Q4 2024, reflecting the above-mentioned improvements in gross profit and SG&A but excluding the $6.7 million in excess insurance proceeds.

And for the year, adjusted EBITDA was $44.7 million, an improvement of $53.2 million compared to negative adjusted EBITDA of $8.5 million for 2024. Turning to our balance sheet. As of December 31, 2025, our cash balance was $23 million. During the fourth quarter, we generated $10 million in cash flow from operations. We generated $5 million in cash flow from investing activities, including $7 million from excess insurance proceeds partially offset by $2 million in CapEx. We used $22 million in our financing activities as we paid down $16 million on our operating line of credit and $5 million on our term debt.

As a result, we ended the year with $55 million outstanding on our term loan. At year-end, we had a total loan borrowing availability of $102 million, consisting of $37 million under our operating line of credit and $65 million under our term loan facility. Our improved profitability in the last half of 2025 allowed us to further pay down $10 million of principal on our term debt in February of 2026 and we expect to pay down an additional $6 million in March. This will reduce the principal amount of our term debt to $39 million by the end of the first quarter. We are pleased to significantly reduce our debt and continue to strengthen our balance sheet.

In 2026, we plan to elevate our capital expenditures to roughly $25 million while maintaining strong cost discipline and prioritizing the highest ROI projects. Approximately 45% of our capital expenditure is earmarked for maintenance projects, while the remaining 55% is for optimization projects including taking further steps to implement capacity increases at our peak and dry mill. Included in the $25 million budget are the cost to complete the repairs of the existing dock and adding the second alcohol load-out dock. As a reminder, we are building the second dock to mitigate future business interruption and enhance the logistical capabilities by expanding throughput and creating redundancy.

We expect to begin the repairs on the original dock and the installation of the second dock this spring and to complete both projects by the end of 2026.

I'll now turn the call back to Bryon.

Thank you, Rob. In summary, we entered 2026 with a leaner cost structure, a higher mix of premium exports and carbon advantage volumes, expanded CO2 opportunities and potential upside from 45Z tax credits. We've completed the heavy lifting of addressing losses at underperforming assets, removing structural costs and repositioning our portfolio towards higher value and more consistent revenue streams and are moving forward with plans to improve the company's return on assets. By continuing to improve operations, we believe we will strengthen Alto's ability to capitalize on favorable margin environments to stabilize when margins are compressed and to ensure that our assets are producing positive returns.

In 2026, we intend to stay focused on what is within our control on driving improved profitability and executing on multiple opportunities to grow earnings. As a reminder, the first quarter is a seasonally challenging period for us. And in January of this year, extreme cold weather disrupted River Logistics and curtailed production at our Beacon campus. We took advantage of the downtime to make some of the repairs we have planned to be completed in the second quarter during our biannual wet mill outage. This has allowed us to defer the remaining work until the spring of 2027 and to make up for January's lost production next quarter.

With respect to additional outages planned for 2026, we expect normal Q2 outages at ICP and Colombia consistent with those in 2025. In the second half of the year, the Beacon dry mill will take a longer outage to implement a project to increase production capacity by approximately 8%, further improving the plant's profitability. As Rob mentioned, we have important capital projects planned for 2026 and intend to maintain strong cost discipline, and we'll continue to prioritize the highest ROI projects. CO2 utilization remains a compelling opportunity for us as demand for liquid CO2 continue to rise.

In 2026, we intend to capitalize further on demand growth in the Pacific Northwest, and on our liquid CO2 processing capabilities by increasing our throughput volume and storage capacity. We're also assessing large-scale CO2 utilization and sequestration opportunities at our peak in campus and developing plans to capture more value for R CO2 as quickly as possible. We have contracted to sell a significant volume of renewable fuel exports for the first half of 2026 and believe there are increasing opportunities for us to expand volumes and premiums in this market.

We are on track to match our 2025 high-quality alcohol volumes. And on the regulatory front, we continue to view E15 as a meaningful long-term demand tailwind for the farming and ethanol industries. While permanent nationwide adoption remains pending, the EPA has consistently supported summer E15 sales through waivers and political momentum has strengthened entering 2026 with renewed administration and bipartisan congressional support. Taken together, we believe the trajectory for E15 remains clearly positive and supportive of incremental ethanol demand over time.

I'm proud of the progress our team has made and excited about the path forward. Our focus remains on operational excellence and disciplined capital allocation. We entered 2026 from a position of greater strength with an improved ability to navigate market volatility and a clear strategy to drive higher-margin diversification and enhance asset value.

Operator, we're now ready to begin Q&A with sell-side analysts.

[Operator Instructions] And the first question will come from Amit Dayal with H.C. Wainwright.

Bryon, congratulations on a very strong quarter. It looks like a lot of drivers in place for a strong 2026 as well. But I just want to focus on the 45Z tax credits, you're guiding for around $15 million in those benefits in the year at $0.20 per gallon. What steps are you taking that could maybe get you even more in those benefits? And will that potentially come through in 2026? Or will that -- are you working on it for maybe 2027 and beyond?

Sure. I'll take the front part of this, and then, Rob, if you want to round out anything that I otherwise missed. It's -- a lot of the drivers and opportunities around 45Z for us at these plants is around lowering our carbon intensity scores in some form or another either reducing our energy demand or sourcing -- changes in sourcing and products and/or services. So anything that we can do in that regard or the way that we -- and the types of products that we purchased, whether it's corn, right, and traceability and the like. And so -- but it's clear that and compelling that anything that you can do to lower your score further as quickly as possible, the better. And so it's really a priority for us. I don't know that it's appropriate to share more than that with regards to some of the projects, but we're actively pursuing it on many fronts and making sure that we can do what we can to lower those scores further. Rob, anything else you want to add?

Yes, sure. Thanks, Bryon. As we mentioned, one opportunity to capitalize further on the 45Z tax credits, it's also to increase our production capacity. And we do have a project scheduled for end of Q3, early Q4 to expand the production capability of our peak and dry mill. It's already one of our lowest cost producing asset, but adding additional 45Z credits on that additional production really justifies that project. And our intent is to improve the capacity by about 8% or 5 million gallons.

Understood. And then you just mentioned it, Bryon, the traceability of the feedstock, this -- are we already in compliance with that? There's a treasury proposal around 45Z [indiscernible]. So just wanted to see how we stand on that front.

We're active in that front. I wouldn't say that all of our bushels are traced. I think that there is some work that needs to be done around [indiscernible] our farmers to provide that information. So I think -- and it's not just something that we can do on a stand-alone basis, but it's going to require regulatory support as well and adoption across the entire industry. That said, we're doing what we can, and we're making some headway there.

Okay. And then just last one for me. On the Western assets, should we expect revenue pickup in 2026? I know operationally that is performing much better now. But do we see -- can we think of any revenue improvements coming through in 2026 for that segment?

Certainly intend to try and increase production capacity there or increase our overall -- we're looking for. .

Yes, [indiscernible] and to work on improving our production utilization rate. And then as I think Bryon mentioned in the call, we're exploring opportunities to expand our CO2 throughput as well.

Your next question will come from Eric Stine with Craig-Hallum.

So you mentioned ethanol exports that you had locked in a portion of that. It sounds like a meaningful portion of that for the first half. I'm wondering if you can kind of quantify that a little bit? And then also curious, as you think about going forward, increasing volumes and increasing margins there? I know you have to have certain certifications to even access other markets. So I'm just curious what kind of steps that would entail to both increased volumes and potentially the margins you get.

Yes, sure. So while we don't specifically provide that level of detail, what's I think important to understand for us is that it's to try and find the optimal balance to optimize the value of the product that we're making. So particularly for ICP and for -- or the distillery and the wet mill, to the extent that we can produce higher quality products or export fuel products would be the highest marginal value for those products and they sell at a premium to -- predominantly sell at a premium to what would be domestic fuel even including 45Z credits. .

But where we can as well at other plants, which are largely designed to be selling into the domestic fuel markets that we're doing all that we can to continue to optimize those values to obtain as much 45Z credit as we can. So it's really, again, finding a balance. And what we've been able to do is to sell more of that product for increasing demand in Europe for those products. So while we've seen somewhat of a marginal -- a margin compression around some of the high-quality products that we sell, we've been able to see an increase in demand for that in the export market. That answers your question. Rob, would there be anything you want to add to that?

Yes. No, that's good. .

Yes. I mean, clearly, back half of the year, I mean the purchases or the exports of some of those European markets were quite significant. So okay, then I mean I think the main question that I have is -- and this might be, Bryon, a really hard question to answer. But I mean you've clearly raised the floor here to the business. I mean I know in the past, you had the platform when the crush as strong that you would do quite well. But conversely, when it was really tough, I mean, it would definitely show in results. I mean, is there a way to think about what the business looks like, maybe not in a worst-case scenario, but in some of the bad markets that we've seen in the past because correct me if I'm wrong, but it seems like you have -- you've raised the floor pretty meaningfully versus where it's been in the past.

Yes. So I think there's a number of factors that go into that. I think part of it is as you think back at the maturation and kind of the evolution of the company, where we are originally focused around destination facilities. The brilliance in the destination was is that they're able to -- they performed really, really well when you see supply constraints, right? But they also demonstrate their vulnerability when you get an oversupplied ethanol market, which has been largely the case for most of the, call it, 18, 20 years, where we've been producing over 14 billion gallons of capacity in the industry. .

So what we've been able to do is, to some degree, both through monetization and in certain locations, but as well then being able to shore up the financial viability of those assets with other revenue sources and be able to lower operating costs around that, you're able to take out some of the vulnerabilities around the floor in tight crush margins. And then, again, the other focus and what would be the origin facilities at Peakon is around optimizing the value of those revenue streams or the value of those products that generate that revenue stream and then being diligent and efficient about how we execute. So it's about cost management. and then making sure that we're investing in projects that not only either increase revenue, but also reduce operating expenses and/or improve efficiencies as well. So if we can do all 3, that's on run. And I think we've been able to see a lot of those benefits over the last couple of years.

Got it. And so this is -- I mean, it sounds like you'd characterize it more as -- I mean, this has been many, many, many years in the making, if you've gotten rid of a lot or you've sold the 2 California plants, but then what you've done in the next -- I'm sorry, in the last call it 2-plus years, you've just kind of taken into that next level.

Yes, I think that's right.

And that will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Bryon McGregor for any closing remarks. Please go ahead.

Thank you, Chuck. Thanks again, everyone, for joining us to hear about our progress that we've been able to make and our initiatives for 2026. As always, we appreciate your feedback and support. Have a great day.

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

Good day, and welcome to Alto Ingredients Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] 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 his 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 $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 lowered 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 peak in Canvas 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 and 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 [indiscernible] 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 2-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 have 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 disposition 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 signal and shift production enables us to capture the highest value for our product and continues to create opportunities. As a market 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 disadvantage by forwarding -- 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, unlock significant demand for domestically produced ethanol. California is the largest market to allowing E15 blends, adding potentially over 600 million additional gallons per year. AV30 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 Vault 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 bidding 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 9 months ended September 30, our Western Production segment's gross profit increased to $2.9 million, up $17.5 million compared to the first 9 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 peak and 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 loadout 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.

In 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 9 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.

[Operator Instructions] 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 short 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 knock our carbon score down, 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 Colombia. 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 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 net losses. 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 in 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 how into 2026. .

So that's largely for export volume. And yes, it'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 that we normally would release, much like we wouldn't release the information on details around our high-quality, not an advantage to be sharing the information.

[Operator Instructions] The next question comes from Sameer Joshi with H.C. Wainright. .

Bryon, just a few 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 the ones that specifically dynamic is around renewable fuel into that space. And then as you look at that product going into Europe versus being sold domestically, that there's a beneficial premium associated with that we were able to lock in. And be able to -- if you will put that in the bank [indiscernible]

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 value 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 second best opportunity would be either selling it in the Oregon or the California markets, particularly of California 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 in or being -- or 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 rollout 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 like 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 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, Colie. 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.