Alto Ingredients (NASDAQ:ALTO) highlighted a sharp year-over-year swing to profitability in the fourth quarter and full year of 2025, citing improved crush margins, renewable fuel export sales, the contribution from its Carbonic acquisition, and earnings tied to 45Z transferable tax credits.
Strategic realignment and Q4 performance
President and CEO Bryon McGregor said the fourth quarter “capped a year of strong execution” and marked a “pivotal milestone” in the company’s strategic realignment. Management described tactical decisions made during 2025 to focus on factors within the company’s control to maximize earnings, including staffing reductions, cost savings, investments in plant throughput and efficiency, and the elimination of underperforming activities in the marketing and distribution segment.
Financial results: margins, exports, and costs
CFO Rob Olander provided additional detail on fourth-quarter drivers. Net sales were $232 million, down $4 million from the prior-year quarter, reflecting a reduction in volume sold of 10.6 million gallons “primarily due to our decision to idle our Magic Valley facility at the end of 2024.” The average sales price increased to $2.10 per gallon from $1.88 per gallon.
Gross profit was $15.2 million in Q4 2025 versus a gross loss of $1.4 million in Q4 2024. Olander attributed the improvement to several factors, including stronger crush margins and higher export activity at premium pricing. He said the market crush margin improved to $0.23 per gallon from $0.08 per gallon a year earlier, accounting for roughly $8 million of benefit. Increased renewable fuel export sales at premiums to domestic sales contributed $5 million on higher volume and higher average sales prices.
Additional tailwinds cited included lower compensation costs and carbon credit sales. Olander said the company realized $2.6 million less in compensation costs related to staffing reductions and a gain on its annual pension valuation adjustment. The sale of Oregon carbon credits contributed $2.9 million on improved market pricing. Offsetting some of these gains, he noted a net negative $4.2 million impact from combined realized and unrealized changes in derivatives.
SG&A expenses declined $500,000 to $6.9 million, which management again tied to right-sizing staffing levels earlier in the year.
Carbonic acquisition, CO2, and Western asset strategy
Management emphasized the impact of the Carbonic acquisition completed at the beginning of 2025. McGregor described the deal as an example of the company’s strategy to diversify revenue streams, saying the move into liquid CO2 improved the profitability of the Columbia ethanol plant. Olander said the Carbonic acquisition contributed $1.4 million to the Western production segment during the quarter, and he added that with the idling of Magic Valley, the Western segment posted positive gross profit for the quarter and full year.
Olander said the addition of high-value liquid CO2 improved the Western “essential ingredients return” to 48% in the fourth quarter from 30% a year ago, lifting consolidated return to 52% from 43%.
On asset optimization, McGregor said changes in market conditions and operational improvements—along with the positive impact of Alto Carbonic—have “materially changed the calculus for simply selling the facilities.” He said that given Columbia’s improved profitability, the company is “no longer actively marketing the asset.” The company continues to evaluate options for the Magic Valley facility, including selling the plant, restarting to capture 45Z credits, and monetizing the CO2 that would be produced.
45Z credits and plans to improve carbon intensity
Management said it made “significant progress” in determining the amount of 45Z transferable tax credits for 2025 and the associated earnings benefit. McGregor said the company expects to qualify approximately 90 million gallons of combined production annually for 45Z credits at its Columbia and Pekin Dry Mill facilities.
For 2025, the company recorded $7.5 million in 45Z credit earnings in the fourth quarter, which McGregor characterized as $0.10 per gallon net of estimated monetization costs. Looking ahead, he said that with the removal of indirect land use change (ILUC) from the GREET model, the company expects in 2026 to qualify for $0.20 per gallon at Columbia and Pekin Dry Mill and generate about $15 million in net proceeds. He added the company is pursuing additional ways to lower carbon scores further through energy reductions and sourcing changes, including traceability efforts related to corn and other inputs.
During Q&A, McGregor said traceability is an area where further work remains, noting the company is active on the issue but “I wouldn’t say that all of our… bushels are traced,” and added that progress will require broader industry adoption and regulatory support. Olander pointed to another lever for increasing 45Z benefits: higher production capacity. He said the company plans a project at the end of Q3 or early Q4 to expand Pekin Dry Mill production by about 8%, or roughly 5 million gallons, and that incremental 45Z credits “really justifies that project.”
McGregor also noted that Pekin Wet Mill and ICP do not currently qualify for 45Z credits, but are positioned to serve domestic and export markets that are “predominantly sold at a premium to ethanol.”
Balance sheet, insurance proceeds, and 2026 capital plan
Olander said net income attributable to common stockholders was $21.5 million, or $0.28 per diluted share, in Q4 2025, compared with the prior-year period, driven by improved gross profit, lower SG&A, recognition of 45Z credits, and insurance proceeds. For the full year, net income attributable to common stockholders was $12.1 million, or $0.16 per diluted share, compared with a loss of $60.3 million, or $0.82 per share, in 2024. Adjusted EBITDA was $27.9 million in Q4 2025 versus negative $7.7 million in Q4 2024; full-year adjusted EBITDA was $44.7 million compared with negative $8.5 million in 2024.
Olander also discussed an insurance recovery tied to damage at the Pekin campus river loading dock in April 2025. In the fourth quarter, the company received its maximum insurance coverage payment of $10 million. Of that amount, $1.5 million reduced cost of goods sold as reimbursement for previously recorded expenses, $1.8 million was recorded as other income for lost profits related to business interruption, and $6.7 million was recorded as excess insurance proceeds under GAAP to fund repairs and improvements in 2026. The company excluded the $6.7 million gain from adjusted EBITDA.
As of December 31, 2025, Alto had $23 million in cash. In the fourth quarter, the company generated $10 million in cash flow from operations and $5 million in cash flow from investing activities, including $7 million from excess insurance proceeds partially offset by $2 million in capital expenditures. Financing cash flow reflected $22 million of uses, including $16 million paid down on the operating line of credit and $5 million on term debt. The company ended 2025 with $55 million outstanding on its term loan and reported total borrowing availability of $102 million, consisting of $37 million under the operating line and $65 million under the term loan facility.
Olander said improved profitability in the second half of 2025 enabled additional term-debt paydowns in early 2026, including $10 million in February and an expected $6 million in March, which would reduce term debt principal to $39 million by the end of the first quarter.
For 2026, management said it plans to increase capital expenditures to roughly $25 million while maintaining cost discipline and prioritizing high return-on-investment projects. Olander said about 45% of the budget is earmarked for maintenance, with the remaining 55% for optimization projects, including continued steps to increase capacity at Pekin Dry Mill. The plan also includes completing repairs to the existing dock and adding a second alcohol load-out dock, with work expected to begin in the spring and finish by the end of 2026.
McGregor noted the first quarter is seasonally challenging and said extreme cold weather in January disrupted river logistics and curtailed production at Pekin. He said the company used downtime to complete repairs originally planned for the second quarter, deferring remaining work to spring 2027 and aiming to make up lost production in the next quarter. He also said the Pekin Dry Mill will have a longer outage in the second half of 2026 to implement the capacity expansion project.
Management said demand for liquid CO2 continues to rise and that Alto intends to increase throughput volume and storage capacity in 2026 to serve growth in the Pacific Northwest, while also assessing larger-scale CO2 utilization and sequestration opportunities at Pekin. The company also said it has contracted to sell a “significant volume” of renewable fuel exports in the first half of 2026 and sees opportunity to expand volumes and premiums in that market.
On the regulatory outlook, McGregor said the company views E15 as a long-term demand tailwind, noting the EPA has supported summer E15 sales through waivers and that political momentum has strengthened entering 2026, though permanent nationwide adoption remains pending.
About Alto Ingredients (NASDAQ:ALTO)
Alto Ingredients, Inc (NASDAQ: ALTO) is a diversified producer of alcohol-based products and specialty ingredients for industrial, food, beverage and personal care applications. The company’s core offering centers on ethanol produced for fuel markets, as well as an expanding portfolio of natural and organic alcohols, glycerin and other ingredient solutions. Alto’s product lines serve a range of end markets, including renewable fuels, confectionery, flavorings, cosmetics and sanitizers.
Headquartered in Dallas, Texas, Alto Ingredients operates a network of production facilities across the United States.
