Alto Ingredients, Inc. Q1 FY2025 earnings call

• Acquired a beverage-grade liquid CO2 processing plant on January 1, which improved the Columbia facility's economics and reduced management and staffing costs. Headcount was reduced by 16% in Q4 and Q1, saving ~$8 million annually starting in Q2.
• Pekin campus earned ISCC certification, enabling exports to European markets with premium pricing, and completed seasonal outages with sustained plant utilization.
• Dock damage at Pekin campus in early April led to temporary solutions, with ongoing assessment of long-term remediation.
• Regulatory updates: EPA E15 fuel waiver, potential national adoption of year-round E15, and Illinois bills affecting CO2 sequestration and clean transportation standards.

In Q1 2025, net sales were $227 million, down from $241 million in Q1 2024 due to idling Magic Valley and rationalizing warehouse break bulk. Gallons sold totaled 89.6 million vs. 99 million in Q1 2024. Gross margin and adjusted EBITDA improved compared to Q1 2024. The acquisition of the beverage-grade liquid CO2 plant adjacent to the Columbia facility enhanced the Columbia facility's economics. At the Pekin campus, ISCC renewable fuel sales grew, though domestic high-quality alcohol premiums were lower, with ISCC sales partially offsetting domestic market challenges.

• Expect $8 million annual savings from headcount reduction starting in Q2.
• Optimistic about E15 adoption leading to increased ethanol demand and margin stability.
• Continued evaluation of revenue streams and cost reduction opportunities.

• Illinois Bill SB1723 threatens CO2 sequestration activity over a sole-source aquifer, impacting CCS initiative.
• Dock damage at Pekin campus caused production and logistics issues, with ongoing assessment of remediation costs.
• Market volatility, including corn price fluctuations and competition affecting alcohol premiums.

Q: Was the January acquisition of liquid CO2 accretive in Q1?

A: Yes. The Columbia facility and Carbonic integration improved results, with Columbia assets showing a $2.9 million improvement compared to Q1 2024.

Q: Where do the $8 million annual savings come from?

A: Mostly from operating expenses, with approximately a 13% reduction in both cost of goods sold and SG&A.

Q: Impact of Illinois Bill SB1723 on CCS?

A: Difficult to assess currently, but working with officials to address concerns, possibly relocating CO2 storage.

Q: Cost of Beacon load dock damage?

A: Temporary solutions implemented, with ongoing assessment of long-term remediation and insurance mitigation.

Q: Magic Valley idling reasons and potential restart?

A: Plant-specific and location-specific issues with corn sourcing; restart would depend on feedstock costs and market conditions.