[Management View]
Alto Ingredients reported material improvements in profitability and liquidity for Q3 2025, driven by strategic realignment, product mix optimization, and enhanced CO2 monetization. Management emphasized prioritizing short-term, high-ROI projects and leveraging Section 45Z tax credits to boost facility value. Bryon T. McGregor, CEO, highlighted the company's focus on lowering carbon intensity scores and increasing CO2 utilization to capture tax benefits and improve operational efficiency.

[Outlook]
Management provided performance guidance, projecting $0.10 per gallon in Section 45Z tax credits at Columbia for 2025, increasing to $0.20 per gallon in 2026 with updated ILUC regulations. The company plans to monetize these credits through forward sales from 2026 to 2029. Strategic initiatives include expanding CO2 utilization, improving plant reliability, and exploring options for the Magic Valley facility, including sale, restart, or CO2 utilization. California's AB 30 legislation is expected to unlock significant ethanol demand, positioning Alto to benefit from its West Coast marketing platform.

[Financial Performance]
- Net Sales: $241 million, down $11 million YoY due to lower volumes sold (89 million gallons vs. 97 million gallons in Q3 2024).
- Gross Profit: $23.5 million, up $17.5 million YoY, supported by favorable ethanol export markets and $8 million in non-cash derivative gains.
- Adjusted EBITDA: $21.4 million, up $9.2 million YoY, driven by improved gross profit and $1 million reduction in SG&A expenses.
- Net Income: $13.9 million ($0.19 per share), up $16.6 million YoY.
- Cash Balance: $32.5 million as of September 30, 2025, with $22.8 million generated from operations.

[Q&A Highlights]
Question 1: What initiatives are being undertaken to increase Section 45Z tax credit capture, and what is the investment impact?
Answer: Management is focusing on low-cost measures such as renewable energy credits and low-carbon corn sourcing to reduce carbon intensity scores. These initiatives are expected to enhance Section 45Z benefits, particularly at the Pekin dry mill and Columbia plant. While some projects are advanced, others are still under development, and management is prioritizing those with clear benefits.

Question 2: Could the Magic Valley facility be restarted to maximize Section 45Z capture or support European exports?
Answer: Management is evaluating options for Magic Valley, including restarting operations to leverage Section 45Z credits and meet growing CO2 demand on the West Coast. The facility's low carbon intensity ethanol could also benefit from California's E15 fuel sales expansion. However, any restart would require long-term sustainable operations and favorable market conditions.

Question 3: Can you provide more details on the export sales locked in for Q4 2025 and 2026?
Answer: Export sales primarily involve renewable fuel volumes, with favorable spreads over crush margins. These contracts provide stability during seasonal lows and are similar to high-quality product contracts. Specific volume details were not disclosed.

Question 4: Are European exports limited to high-quality products, and could Magic Valley support this market?
Answer: European exports include renewable fuel and essential ingredients, with certifications enabling compliance. Not all production qualifies for export, but the company is ramping up volumes. Magic Valley's ethanol is better suited for local markets or California's E15 expansion rather than European exports.

Question 5: Will insurance cover the costs of the new dock planned for spring 2026?
Answer: Insurance is expected to cover a significant portion of the costs, as the new dock mitigates business interruption. The claims process is nearing finalization, with more updates expected in Q4.

Question 6: Can SG&A expenses remain at current levels?
Answer: Management confirmed that cost-saving initiatives implemented in 2025 are sustainable, and SG&A expenses are expected to remain controlled at current levels.

[Sentiment Analysis]
Analysts expressed optimism about Alto's strategic initiatives, particularly its focus on Section 45Z tax credits and CO2 monetization. Management maintained a confident and forward-looking tone, emphasizing operational improvements and long-term growth opportunities.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|-------------------------|-----------------|-----------------|------------------|
| Net Sales | $241 million | $252 million | -$11 million |
| Gross Profit | $23.5 million | $6 million | +$17.5 million |
| Adjusted EBITDA | $21.4 million | $12.2 million | +$9.2 million |
| Net Income | $13.9 million | -$2.7 million | +$16.6 million |
| Gallons Sold | 89 million | 97 million | -8 million |

[Risks and Concerns]
- Regulatory delays in Illinois affecting CO2 capture projects at Pekin.
- Dependence on Section 45Z tax credits and potential changes in federal policies.
- Infrastructure risks, including dock outages and associated costs.
- Market dynamics, such as oversupply in renewable diesel and ethanol markets.

[Final Takeaway]
Alto Ingredients demonstrated strong financial performance in Q3 2025, driven by strategic realignment, cost control, and favorable market conditions. The company's focus on Section 45Z tax credits and CO2 monetization positions it for long-term growth, while initiatives to improve operational efficiency and product mix optimization continue to yield results. Despite infrastructure challenges and regulatory uncertainties, Alto's proactive measures and strategic priorities provide a solid foundation for future profitability and shareholder value.