UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 000-21467

ALTO INGREDIENTS, INC.

(Exact name of registrant as specified in its charter)

Delaware		41-2170618
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1300 South Second Street, Pekin, Illinois		61554
(Address of principal executive offices)		(zip code)

(833) 710-2586

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class

Trading Symbol

Name of Exchange on Which Registered

Common Stock, $0.001 par value

ALTO

The Nasdaq Stock Market LLC

(Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 7, 2025, there were 77,396,807 shares of Alto Ingredients, Inc. common stock, $0.001 par value per share, and 896 shares of Alto Ingredients, Inc. non-voting common stock, $0.001 par value per share, outstanding.

PART I
FINANCIAL INFORMATION

		Page
ITEM 1.	FINANCIAL STATEMENTS.	1
	Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024	1
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	3
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited)	4
	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	16
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	30
ITEM 4.	CONTROLS AND PROCEDURES.	31

PART II
OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS.	32
ITEM 1A.	RISK FACTORS.	32
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	45
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	46
ITEM 4.	MINE SAFETY DISCLOSURES.	46
ITEM 5.	OTHER INFORMATION.	46
ITEM 6.	EXHIBITS.	47
SIGNATURES		48

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)

	June 30,		December 31,
	2025		2024
	(unaudited)		*
ASSETS
Current Assets:
Cash and cash equivalents	$	29,768	$	35,469
Restricted cash		723		742
Accounts receivable (net of allowance for credit losses of $22 and $23, respectively)		57,454		58,217
Inventories		53,867		49,914
Derivative instruments		2,563		3,313
Other current assets		5,350		5,463
Total current assets		149,725		153,118
Property and equipment, net		207,997		214,742
Other Assets:
Right of use operating lease assets, net		19,255		20,553
Intangible assets, net		7,885		4,509
Other assets		8,203		8,516
Total other assets		35,343		33,578
Total Assets	$	393,065	$	401,438

Amounts derived from the audited consolidated financial statements for the year ended December 31, 2024.

See accompanying notes to consolidated financial statements.

ALTO INGREDIENTS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(in thousands, except par value)

	June 30,			December 31,
	2025			2024
LIABILITIES AND STOCKHOLDERS’ EQUITY	(unaudited)			*

Current Liabilities:
Accounts payable	$	15,705		$	20,369
Accrued liabilities		16,021			24,214
Current portion – operating leases		4,984			4,851
Derivative instruments		910			1,177
Other current liabilities		4,893			7,193
Total current liabilities		42,513			57,804

Long-term debt, net		118,323			92,904
Operating leases, net of current portion		15,414			16,913
Other liabilities		8,970			8,754
Total Liabilities		185,220			176,375
Commitments and Contingencies (Note 6)
Stockholders’ Equity:
Preferred stock, $0.001 par value; 10,000 shares authorized; Series A: 1,684 shares authorized; no shares issued and outstanding as of June 30, 2025 and December 31, 2024; Series B: 1,581 shares authorized; 927 shares issued and outstanding as of June 30, 2025 and December 31, 2024; liquidation preference of $18,075 as of June 30, 2025		1			1
Common stock, $0.001 par value; 300,000 shares authorized; 77,201 and 76,565 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively		77			77
Non-voting common stock, $0.001 par value; 3,553 shares authorized; 1 share issued and outstanding as of June 30, 2025 and December 31, 2024, respectively		—			—
Additional paid-in capital		1,050,261			1,044,176
Accumulated other comprehensive income		4,975			4,975
Accumulated deficit		(847,469	)		(824,166	)
Total Stockholders’ Equity		207,845			225,063
Total Liabilities and Stockholders’ Equity	$	393,065		$	401,438

Amounts derived from the audited consolidated financial statements for the year ended December 31, 2024.

See accompanying notes to consolidated financial statements.

ALTO INGREDIENTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024

Net sales	$	218,436		$	236,468		$	444,976		$	477,097
Cost of goods sold		220,373			228,915			448,720			471,944
Gross profit (loss)		(1,937	)		7,553			(3,744	)		5,153
Selling, general and administrative expenses		6,171			8,961			13,361			16,893
Loss from operations		(8,108	)		(1,408	)		(17,105	)		(11,740	)
Interest expense, net		(2,811	)		(1,669	)		(5,540	)		(3,303	)
Other income (expense), net		(78	)		(29	)		(31	)		212
Loss before provision for income taxes		(10,997	)		(3,106	)		(22,676	)		(14,831	)
Provision for income taxes		—			—			—			—
Net loss	$	(10,997	)	$	(3,106	)	$	(22,676	)	$	(14,831	)
Preferred stock dividends	$	(315	)	$	(316	)	$	(627	)	$	(631	)
Net loss attributable to common stockholders	$	(11,312	)	$	(3,422	)	$	(23,303	)	$	(15,462	)
Net loss per share, basic and diluted	$	(0.15	)	$	(0.05	)	$	(0.31	)	$	(0.21	)
Weighted-average shares outstanding, basic and diluted		74,611			73,486			74,232			73,126

See accompanying notes to consolidated financial statements.

ALTO INGREDIENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

	Six Months Ended June 30,
	2025			2024
Operating Activities:
Net loss	$	(22,676	)	$	(14,831	)
Adjustments to reconcile net loss to Net cash used in operating activities:
Depreciation and amortization		12,631			11,802
Inventory valuation		1,649			—
Gains on derivative instruments		(4,371	)		(11,570	)
Stock-based compensation		1,474			2,788
Amortization of deferred financing fees		502			505
Amortization of debt discount		397			400
Credit loss recovery		(1	)		(47	)
Changes in operating assets and liabilities, net of business acquisition:
Accounts receivable		480			(5,305	)
Inventories		(5,448	)		7,014
Other assets		2,242			3,701
Operating leases		(3,180	)		(2,901	)
Accounts payable and accrued liabilities		(2,778	)		(3,855	)
Net cash used in operating activities		(19,079	)		(12,299	)
Investing Activities:
Additions to property and equipment		(1,016	)		(9,297	)
Purchase of Kodiak Carbonic, net of cash acquired		(7,278	)		—
Deferred purchase price payments for Eagle Alcohol		(2,240	)		(2,800	)
Net cash used in investing activities		(10,534	)		(12,097	)
Financing Activities:
Net proceeds from Kinergy’s line of credit		24,520			7,958
Preferred stock dividends paid		(627	)		(631	)
Net cash provided by financing activities		23,893			7,327
Net change in cash, cash equivalents and restricted cash		(5,720	)		(17,069	)
Cash, cash equivalents and restricted cash at beginning of period		36,211			45,480
Cash, cash equivalents and restricted cash at end of period	$	30,491		$	28,411


Reconciliation of total cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	29,768		$	27,124
Restricted cash		723			1,287
Total cash, cash equivalents and restricted cash	$	30,491		$	28,411
Supplemental Information:
Interest paid	$	4,596		$	4,080
Capitalized interest	$	—		$	1,725
Shares vested for Eagle Alcohol	$	5,000		$	—

See accompanying notes to consolidated financial statements.

ALTO INGREDIENTS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited, in thousands)

	Preferred Stock				Common Stock					Additional Paid-In			Accumulated			Accum. Other Comprehensive
	Shares		Amount		Shares			Amount		Capital			Deficit			Income		Total
Balances, January 1, 2025		927	$	1		76,565		$	77	$	1,044,176		$	(824,166	)	$	4,975	$	225,063
Stock-based compensation		—		—		—			—		848			—			—		848
Restricted stock issued to employees and directors, net of cancellations and tax		—		—		(68	)		—		—			—			—		—
Preferred stock dividends		—		—		—			—		—			(312	)		—		(312	)
Net loss		—		—		—			—		—			(11,679	)		—		(11,679	)
Balances, March 31, 2025		927	$	1		76,497		$	77	$	1,045,024		$	(836,157	)	$	4,975	$	213,920
Stock-based compensation		—		—		—			—		626			—			—		626
Restricted stock issued to employees and directors, net of cancellations and tax		—		—		704			—		(389	)		—			—		(389	)
Shares vested for Eagle Alcohol		—		—		—			—		5,000			—			—		5,000
Preferred stock dividends		—		—		—			—		—			(315	)		—		(315	)
Net loss		—		—		—			—		—			(10,997	)		—		(10,997	)
Balances, June 30, 2025		927	$	1		77,201		$	77	$	1,050,261		$	(847,469	)	$	4,975	$	207,845

Balances, January 1, 2024		927	$	1		75,703		$	76	$	1,040,912		$	(763,913	)	$	2,481	$	279,557
Stock-based compensation		—		—		—			—		1,142			—			—		1,142
Restricted stock issued to employees and directors, net of cancellations and tax		—		—		1,315			1		(1	)		—			—		—
Preferred stock dividends		—		—		—			—		—			(315	)		—		(315	)
Net loss		—		—		—			—		—			(11,725	)		—		(11,725	)
Balances, March 31, 2024		927	$	1		77,018		$	77	$	1,042,053		$	(775,953	)	$	2,481	$	268,659
Stock-based compensation		—		—		—			—		1,646			—			—		1,646
Restricted stock issued to employees and directors, net of cancellations and tax		—		—		(373	)		—		(1,060	)		—			—		(1,060	)
Preferred stock dividends		—		—		—			—		—			(316	)		—		(316	)
Net income		—		—		—			—		—			(3,106	)		—		(3,106	)
Balances, June 30, 2024		927	$	1		76,645		$	77	$	1,042,639		$	(779,375	)	$	2,481	$	265,823

See accompanying notes to consolidated financial statements.

ALTO INGREDIENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

ORGANIZATION AND BASIS OF PRESENTATION.

Organization and Business – The consolidated financial statements include, for all periods presented, the accounts of Alto Ingredients, Inc., a Delaware corporation (“Alto Ingredients”), and its direct and indirect wholly-owned subsidiaries (collectively, the “Company”), including Kinergy Marketing LLC, an Oregon limited liability company (“Kinergy”), Alto Nutrients, LLC, a California limited liability company (“Alto Nutrients”), Alto Op Co., a Delaware corporation, Alto Pekin, LLC, a Delaware limited liability company (“Alto Pekin”) and Alto ICP, LLC, a Delaware limited liability company (“ICP”), and the Company’s production facilities in Oregon and Idaho.

As discussed in Note 2, on January 1, 2025, the Company’s wholly-owned subsidiary, Alto Carbonic, LLC (“Alto Carbonic”), acquired Kodiak Carbonic, LLC, a beverage-grade liquid CO₂ processor, for $7.6 million. Alto Carbonic’s facility is co-located at the Company’s Columbia ethanol plant. The Company began reporting the results of Alto Carbonic in the Company’s Western Production segment on January 1, 2025.

The Company produces and distributes renewable fuels, essential ingredients and specialty alcohols. The Company also markets fuel-grade ethanol produced by third parties. The Company’s production facilities in Pekin, Illinois are located in the heart of the Corn Belt. The Company’s two production facilities in Oregon and Idaho are located in close proximity to both feed and fuel-grade ethanol customers.

The Company has a combined alcohol production capacity of 350 million gallons per year and produces, on an annualized basis, over 1.4 million tons of essential ingredients, such as dried yeast, corn protein meal, corn protein feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. In addition, the Company markets and distributes fuel-grade ethanol produced by third parties.

The Company focuses on Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels markets. Products for the Health, Home & Beauty market include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners. Products for the Food & Beverage markets include grain neutral spirits used in alcoholic beverages and vinegar as well as corn germ used for corn oils. Products for Industry & Agriculture markets include alcohols and other products for paint applications and fertilizers. Products for Essential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. Products for Renewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels.

The Company’s production facilities, other than its Magic Valley plant, were operating for all periods presented subject to scheduled and unscheduled downtimes to address facility repair and maintenance. In January 2024, the Company temporarily hot-idled its Magic Valley facility to minimize losses from negative regional crush margins and to expedite the installation of additional equipment to achieve the intended production rate, quality and consistency from the Company’s corn oil and high protein system at the facility. The Company restarted its Magic Valley facility in July 2024 and by October 2024, the facility consistently achieved average ethanol production rates at full capacity, the protein content yield from the plant reached 50% or greater, and the Company was able to expand its corn oil yields. Increases in regional corn basis and declining market prices for protein and corn oil resulted in overall margin compression, outweighing the economic benefits of these plant improvements. As a consequence, the Company cold-idled its Magic Valley facility on December 31, 2024 to minimize financial losses. The Company continues to provide terminal services at the plant and intends to resume operations at the facility when the economic environment in the region sustainably improves.

Basis of Presentation–Interim Financial Statements – The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounts Receivable and Allowance for Credit Losses – Trade accounts receivable is presented at original invoice amount, net of the allowance for credit losses. The Company sells specialty alcohols to large consumer product companies, sells fuel-grade ethanol to gasoline refining and distribution companies, sells essential ingredients such as dried yeast for human and pet food and to animal feed customers, including distillers grains to export markets, sells those same and other feed co-products to dairy operators and animal feedlots and sells corn oil to poultry, renewable diesel and biodiesel customers, in each case generally without requiring collateral.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected. The Company regularly reviews accounts receivable and based on assessments of current customer creditworthiness, estimates the portion, if any, of the customer balance that will not be collected.

Of the accounts receivable balance, approximately $49,181,000 and $44,750,000 at June 30, 2025 and December 31, 2024, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for credit losses was $22,000 and $23,000 as of June 30, 2025 and December 31, 2024, respectively. The Company recorded a credit loss recovery $16,000 and of $20,000 for the three months ended June 30, 2025 and 2024, respectively. The Company recorded a credit loss recovery of $1,000 and $47,000 for the six months ended June 30, 2025 and 2024, respectively. The Company does not have any off-balance sheet credit exposure related to its customers.

Financial Instruments – The carrying values of cash and cash equivalents, restricted cash, accounts receivable, derivative assets, accounts payable, accrued liabilities and derivative liabilities are reasonable estimates of their fair values because of the short maturity of these items. The Company believes the carrying value of its long-term debt instruments are not considered materially different than fair value.

Estimates and Assumptions – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates are required as part of determining the allowance for credit losses, net realizable value of inventory, long-lived asset impairments, valuation allowances on deferred income taxes, the potential outcome of future tax consequences of events recognized in the Company’s financial statements or tax returns, and the valuation of assets acquired and liabilities assumed as a result of business combinations. Actual results and outcomes may materially differ from management’s estimates and assumptions.

ACQUISITION OF KODIAK CARBONIC.

On January 1, 2025, Alto Carbonic purchased 100% of the equity interests in Kodiak Carbonic, LLC, a beverage-grade liquid CO₂ processor, for $7.6 million in cash. Alto Carbonic’s facility is co-located at the Company’s Columbia ethanol plant. The acquisition will provide the Company further vertical integration and access to new markets in the liquid CO₂ market out of its Columbia plant.

Kodiak Carbonic’s unaudited net sales for the three months ended June 30, 2025 and 2024 were $2.4 million and $1.4 million and its unaudited net income was $1.5 million and $0.5 million, respectively. Kodiak Carbonic’s unaudited net sales for the six months ended June 30, 2025 and 2024 were $4.5 million and $2.7 million and its unaudited net income was $3.0 million and $0.9 million, respectively. The following table presents the Company’s unaudited pro forma combined financial information assuming the acquisition occurred on January 1, 2024 (dollars in thousands except per share amounts):

	Three Months Ended June 30,
	2025			2024

Revenues – pro forma	$	218,436		$	237,889
Net loss attributable to common stockholders – pro forma	$	(11,312	)	$	(2,852	)
Basic and diluted net loss per share – pro forma	$	(0.15	)	$	(0.04	)

	Six Months Ended June 30,
	2025			2024

Revenues – pro forma	$	444,976		$	479,843
Net loss attributable to common stockholders – pro forma	$	(23,303	)	$	(14,414	)
Basic and diluted net loss per share – pro forma	$	(0.31	)	$	(0.20	)

The following preliminary allocation of the estimated purchase price assumes, with the exception of property and equipment and intangibles, that carrying values approximate fair value. Estimates of uncollectible accounts receivable are not considered material due to the short-term nature and customer collection history. The purchase price allocation is as follows (in thousands):

Cash and equivalents	$	290
Accounts receivable		219
Inventories		154
Other assets		16
Total current assets		679

Property and equipment		3,564
Total tangible assets	$	4,243

Current liabilities	$	360
Total liabiltiies	$	360

Net tangible assets acquired	$	3,883
Customer relationships		3,685
Total Purchase Price	$	7,568

For the identifiable intangible assets, the Company has estimated 9 years for useful lives for customer relationships. For the three and six months ended June 30, 2025, the Company recorded amortization of these intangibles of $102,000 and $204,000, respectively. Any changes to the initial estimates of the fair value of the acquired assets and assumed liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill if net assets acquired are less than the purchase price. The Company did not incur any material acquisition costs.

SEGMENTS.

A segment is a component of an enterprise whose operating results are regularly reviewed by the enterprise’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s CODM is the Company’s executive committee, which is led by the Company’s Chief Executive Officer (“CEO”) and includes its Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer and Chief Legal Officer (“Executive Committee”). The Company manages and assesses the performance of its reportable segments by its gross profit (loss). As part of the Executive Committee’s review of segment-level performance, each member of the Executive Committee reviews the gross profit of the Company’s reportable segments and provides expertise and analysis from their respective areas which drive the evaluation of the performance of the Company’s reportable segments and allocation of resources to those segments. Even though the CEO has the authority to override the other members for strategic or other reasons, key decisions are made jointly by the Executive Committee.

The Company reports financial and operating performance in three reportable segments (1) Pekin production, which includes the entire campus in Pekin, Illinois (“Pekin Campus”), (2) marketing and distribution, which includes marketing and merchant trading for Company-produced specialty alcohols, fuel-grade ethanol and essential ingredients, and sales of fuel-grade ethanol sourced from third parties, and (3) Western production, which includes the Company’s two western production facilities and, beginning for the three and six months ended June 30, 2025, its liquid CO₂ plant on an aggregated basis (“Western production”).

For the three and six months ended June 30, 2025, capital expenditures incurred by the Pekin Campus segment were approximately $0.5 million and $1.0 million, respectively, and none for the Western production segment. For the three and six months ended June 30, 2024, capital expenditures incurred by the Pekin Campus segment were approximately $3.1 million and $6.9 million, respectively, and $1.6 million and $2.4 million for the Western production segment, respectively.

The following tables set forth certain financial data for the Company’s operating segments (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Net Sales
Pekin Campus production, recorded as gross:
Alcohol sales	$	94,155		$	100,687		$	201,390		$	209,035
Essential ingredient sales		39,565			39,371			84,183			86,080
Intersegment sales		183			286			481			606
Total Pekin Campus sales		133,903			140,344			286,054			295,721

Marketing and distribution:
Alcohol sales, gross	$	58,106		$	70,157		$	107,101		$	124,587
Alcohol sales, net		80			64			142			98
Intersegment sales		2,334			2,388			4,840			5,140
Total marketing and distribution sales		60,520			72,609			112,083			129,825

Western production, recorded as gross:
Alcohol sales	$	16,604		$	17,456		$	32,798		$	37,690
Essential ingredient sales		8,250			5,950			16,058			13,776
Intersegment sales		505			—			769			(130	)
Total Western production sales		25,359			23,406			49,625			51,336

Corporate and other		1,676			2,783			3,304			5,831
Intersegment eliminations		(3,022	)		(2,674	)		(6,090	)		(5,616	)
Net sales as reported	$	218,436		$	236,468		$	444,976		$	477,097

Cost of goods sold:
Pekin Campus production	$	139,748		$	130,200		$	294,974		$	281,311
Marketing and distribution		56,518			69,437			104,167			123,123
Western production		23,501			27,167			49,024			63,683
Corporate and other		1,705			2,943			3,386			5,738
Intersegment eliminations		(1,099	)		(832	)		(2,831	)		(1,911	)
Cost of goods sold as reported	$	220,373		$	228,915		$	448,720		$	471,944

Gross profit (loss):
Pekin Campus production	$	(5,845	)	$	10,144		$	(8,920	)	$	14,410
Marketing and distribution		4,002			3,172			7,916			6,702
Western production		1,858			(3,761	)		601			(12,347	)
Corporate and other		(29	)		(160	)		(82	)		93
Intersegment eliminations		(1,923	)		(1,842	)		(3,259	)		(3,705	)
Gross profit (loss) as reported	$	(1,937	)	$	7,553		$	(3,744	)	$	5,153

Income (loss) before provision for income taxes:
Pekin Campus production	$	(9,923	)	$	5,971		$	(17,291	)	$	6,087
Marketing and distribution		1,795			806			3,359			2,108
Western production		(1,453	)		(5,977	)		(5,356	)		(16,954	)
Corporate and other		(1,416	)		(3,906	)		(3,388	)		(6,072	)
	$	(10,997	)	$	(3,106	)	$	(22,676	)	$	(14,831	)

*Depreciation and amortization expense:*
Pekin Campus production	$	5,348		$	5,369		$	10,804		$	10,404
Western production		843			478			1,483			943
Corporate and other		172			228			344			455
	$	6,363		$	6,075		$	12,631		$	11,802

Interest expense, net of capitalized interest:
Pekin Campus production	$	615		$	326		$	1,226		$	587
Marketing and distribution		81			98			163			193
Western production		1,430			598			2,789			1,229
Corporate and other		685			647			1,362			1,294
	$	2,811		$	1,669		$	5,540		$	3,303

The following table sets forth the Company’s total assets by operating segment (in thousands):

	June 30, 2025		December 31, 2024
Total assets:
Pekin Campus production	$	212,735	$	223,934
Marketing and distribution		118,773		102,895
Western production		43,603		44,992
Corporate and other		17,954		29,617
	$	393,065	$	401,438

INVENTORIES.

Inventories consisted primarily of bulk ethanol, specialty alcohols, corn, essential ingredients and unleaded fuel, and are valued at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Inventory is net of a valuation allowance of $1,649,000 and $2,050,000 as of June 30, 2025 and December 31, 2024, respectively. Inventory balances consisted of the following (in thousands):

	June 30, 2025		December 31, 2024
Finished goods	$	33,214	$	31,120
Work in progress		4,112		4,203
Raw materials		10,643		8,989
Other		5,898		5,602
Total	$	53,867	$	49,914

DERIVATIVES.

The business and activities of the Company expose it to a variety of market risks, including risks related to changes in commodity prices. The Company monitors and manages these financial exposures as an integral part of its risk management program. This program recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effects that market volatility could have on operating results.

Commodity Risk – Cash Flow Hedges – The Company uses derivative instruments to protect cash flows from fluctuations caused by volatility in commodity prices for periods of up to twelve months in order to protect gross profit margins from potentially adverse effects of market and price volatility on alcohol sales and purchase commitments where the prices are set at a future date and/or if the contracts specify a floating or index-based price. In addition, the Company hedges anticipated sales of alcohol to minimize its exposure to the potentially adverse effects of price volatility. These derivatives may be designated and documented as cash flow hedges and effectiveness is evaluated by assessing the probability of the anticipated transactions and regressing commodity futures prices against the Company’s purchase and sales prices. Ineffectiveness, which is defined as the degree to which the derivative does not offset the underlying exposure, is recognized immediately in cost of goods sold. For the three and six months ended June 30, 2025 and 2024, the Company did not designate any of its derivatives as cash flow hedges.

Commodity Risk – Non-Designated Hedges – The Company uses derivative instruments to lock in prices for certain amounts of corn and alcohols by entering into exchange-traded futures contracts or options for those commodities. These derivatives are not designated for hedge accounting treatment. The changes in fair value of these contracts are recorded on the balance sheet and recognized immediately in cost of goods sold. The Company recognized net gains of $2,598,000 and $8,231,000 as the change in the fair value of these contracts for the three months ended June 30, 2025 and 2024, respectively. The Company recognized net gains of $4,371,000 and $11,570,000 as the change in the fair value of these contracts for the six months ended June 30, 2025 and 2024, respectively.

Non-Designated Derivative Instruments – The classification and amounts of the Company’s derivatives not designated as hedging instruments, and related cash collateral balances, are as follows (in thousands):

As of June 30, 2025

Assets

Liabilities

Type of Instrument

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Cash collateral balance

Restricted cash

723

Commodity contracts

Derivative instruments

2,563

Derivative instruments

910

As of December 31, 2024

Assets

Liabilities

Type of Instrument

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Cash collateral balance

Restricted cash

742

Commodity contracts

Derivative instruments

3,313

Derivative instruments

1,177

The above amounts represent the gross balances of the contracts; however, the Company does have a right of offset with each of its derivative brokers, but the Company’s intent is to close out positions individually, therefore, the positions are reported at gross.

The classification and amounts of the Company’s realized and unrealized gains and losses for its derivatives not designated as hedging instruments are as follows (in thousands):

		Realized Gains (Losses)
		For the Three Months Ended June 30,
Type of Instrument	Statements of Operations Location	2025		2024

Commodity contracts	Cost of goods sold	$	4,715	$	(2,858	)
		$	4,715	$	(2,858	)

		Realized Gains (Losses)
		For the Six Months Ended June 30,
Type of Instrument	Statements of Operations Location	2025		2024

Commodity contracts	Cost of goods sold	$	4,854	$	(2,709	)
		$	4,854	$	(2,709	)

		Unrealized Gains (Losses)
		For the Three Months Ended June 30,
Type of Instrument	Statements of Operations Location	2025			2024

Commodity contracts	Cost of goods sold	$	(2,117	)	$	11,089
		$	(2,117	)	$	11,089

		Unrealized Gains (Losses)
		For the Six Months Ended June 30,
Type of Instrument	Statements of Operations Location	2025			2024

Commodity contracts	Cost of goods sold	$	(483	)	$	14,279
		$	(483	)	$	14,279

DEBT.

Long-term borrowings are summarized as follows (in thousands):

	June 30, 2025			December 31, 2024
Kinergy line of credit	$	64,197		$	39,677
Orion term loan		60,000			60,000
		124,197			99,677
Less unamortized debt discount		(2,692	)		(3,089	)
Less unamortized debt financing costs		(3,182	)		(3,684	)
Less current portion		—			—
Long-term debt	$	118,323		$	92,904

Excess Availability – As of June 30, 2025, Kinergy had $4.8 million in unused borrowing availability under its line of credit and the Company had $65.0 million that may be available for capital improvement projects under its Orion term loan, subject to certain conditions.

COMMITMENTS AND CONTINGENCIES.

Sales Commitments – At June 30, 2025, the Company had entered into sales contracts with its major customers to sell certain quantities of alcohol and essential ingredients. The Company had open indexed-price alcohol sales contracts for 73,711,000 gallons as of June 30, 2025 and open fixed-price alcohol sales contracts totaling $173,160,000 as of June 30, 2025. The Company had open fixed-price sales contracts for essential ingredients totaling $10,025,000 and open indexed-price sales contracts of essential ingredients for 75,000 tons as of June 30, 2025. These sales contracts are scheduled to be completed throughout 2025.

Purchase Commitments – At June 30, 2025, the Company had indexed-price purchase contracts to purchase 17,955,000 gallons of alcohol and fixed-price purchase contracts to purchase $563,000 of alcohol from its suppliers. The Company had fixed-price purchase contracts to purchase $32,816,000 of corn from its suppliers as of June 30, 2025. The Company had indexed-price contracts to purchase 4,116,000 MMBTU of natural gas as of June 30, 2025. The Company also had future commitments for certain capital projects totaling $11,498,000. These purchase commitments are scheduled to be satisfied throughout 2025.

Litigation – General – The Company is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, environmental regulations, and others. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. While the Company can provide no assurances, the Company does not expect that any of its pending legal proceedings will have a material impact on the Company’s financial condition or results of operations.

PENSION AND RETIREMENT BENEFIT PLANS.

The Company sponsors a defined benefit pension plan (the “Retirement Plan”) and a healthcare and life insurance plan (the “Postretirement Plan”).

The Retirement Plan is noncontributory and covers only “grandfathered” unionized employees at the Company’s Pekin, Illinois facility who fulfill minimum age and service requirements. Benefits are based on a prescribed formula based upon the employee’s years of service. The Retirement Plan, which is part of a collective bargaining agreement, covers only union employees hired prior to November 1, 2010.

The Company uses a December 31 measurement date for its Retirement Plan. The Company’s funding policy is to make the minimum annual contribution required by applicable regulations. As of December 31, 2024, the Retirement Plan’s accumulated projected benefit obligation was $17.5 million, with a fair value of plan assets of $20.1 million. The overfunded amount of $2.6 million is recorded on the Company’s consolidated balance sheet in other assets.

For the three months ended June 30, 2025, the Retirement Plan’s net periodic benefit was $22,000, comprised of $313,000 in expected return on plan assets, partially offset by $234,000 in interest cost and $57,000 in service cost. For the six months ended June 30, 2025, the Retirement Plan’s net periodic benefit was $43,000, comprised of $625,000 in expected return on plan assets, partially offset by $468,000 in interest cost and $114,000 in service cost. For the three months ended June 30, 2024, the Retirement Plan’s net periodic expense was $13,000, comprised of $222,000 in interest cost and $67,000 in service cost, partially offset by $276,000 of expected return on plan assets. For the six months ended June 30, 2024, the Retirement Plan’s net periodic expense was $26,000, comprised of $444,000 in interest cost and $134,000 in service cost, partially offset by $552,000 of expected return on plan assets.

The Postretirement Plan provides postretirement medical benefits and life insurance to certain “grandfathered” unionized employees at the Company’s Pekin, Illinois facility. Employees hired after December 31, 2000 are not eligible to participate in the Postretirement Plan. The Postretirement Plan is contributory, with contributions required at the same rate as active employees. Benefit eligibility under the plan reduces at age 65 from a defined benefit to a defined dollar cap based upon years of service. As of December 31, 2024, the Postretirement Plan’s accumulated projected benefit obligation was $3.8 million and is recorded on the Company’s consolidated balance sheet in other liabilities. The Company’s funding policy is to make the minimum annual contribution required by applicable regulations.

For the three months ended June 30, 2025, the Postretirement Plan’s net periodic expense was $25,000, comprised of $48,000 of interest cost and $4,000 of service cost, partially offset by $27,000 in amortization of net gains. For the six months ended June 30, 2025, the Postretirement Plan’s net periodic expense was $50,000, comprised of $97,000 of interest cost and $7,000 of service cost, partially offset by $54,000 in amortization of net gains. For the three months ended June 30, 2024, the Postretirement Plan’s net periodic expense was $54,000, comprised of $49,000 in interest cost and $5,000 in service cost. For the six months ended June 30, 2024, the Postretirement Plan’s net periodic expense was $108,000, comprised of $98,000 in interest cost and $10,000 in service cost.

FAIR VALUE MEASUREMENTS.

The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels, as follows:

●

Level 1 – Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities;

●

Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and

●

Level 3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable. For fair value measurements using significant unobservable inputs, a description of the inputs and the information used to develop the inputs is required along with a reconciliation of Level 3 values from the prior reporting period.

Pooled separate accounts – Pooled separate accounts invest primarily in domestic and international stocks, commercial paper or single mutual funds at December 31, 2024. The net asset value is used as a practical expedient to determine fair value for these accounts. Each pooled separate account provides for redemptions by the Retirement Plan at reported net asset values per share, with little to no advance notice requirement, therefore these funds are classified within Level 2 of the valuation hierarchy.

Other Derivative Instruments – The Company’s other derivative instruments consist of commodity positions. The fair values of the commodity positions are based on quoted prices on the commodity exchanges and are designated as Level 1 inputs.

Long-Lived Assets – Long-lived assets consist of the Company’s estimated fair value associated with its Magic Valley facility at December 31, 2024. The fair value of the long-lived assets are based on present value of estimated future cash flows and are designated as Level 3 inputs.

The following table summarizes recurring and nonrecurring fair value measurements by level at June 30, 2025 (in thousands):

	Fair Value			Level 1			Level 2		Level 3
Assets:
Derivative instruments	$	2,563		$	2,563		$	—	$	—
Liabilities:
Derivative instruments	$	(910	)	$	(910	)	$	—	$	—

The following table summarizes recurring and nonrecurring fair value measurements by level at December 31, 2024 (in thousands):

											Benefit Plan
	Fair										Percentage
	Value			Level 1			Level 2		Level 3		Allocation
Assets:
Derivative financial instruments	$	3,313		$	3,313		$	—	$	—
Long-lived assets – Magic Valley		19,397			—			—		19,397
Defined benefit plan assets(1)
(pooled separate accounts):
Large U.S. Equity(2)		6,962			—			6,962		—		34	%
Small/Mid U.S. Equity(3)		3,636			—			3,636		—		18	%
International Equity(4)		2,762			—			2,762		—		14	%
Fixed Income(5)		6,807			—			6,807		—		34	%
	$	42,877		$	3,313		$	20,167	$	19,397

Liabilities:

Derivative financial instruments	$	(1,177	)	$	(1,177	)	$	—	$	—

(1)

Included in other assets in the consolidated balance sheets.

(2)

This category includes investments in funds comprised of equity securities of large U.S. companies. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(3)

This category includes investments in funds comprised of equity securities of small- and medium-sized U.S. companies. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(4)

This category includes investments in funds comprised of equity securities of foreign companies including emerging markets. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(5)

This category includes investments in funds comprised of U.S. and foreign investment-grade fixed income securities, high-yield fixed income securities that are rated below investment-grade, U.S. treasury securities, mortgage-backed securities, and other asset-backed securities. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

10.

EARNINGS PER SHARE.

The following tables compute basic and diluted earnings per share (in thousands, except per share data):

	Three Months Ended June 30, 2025
	Loss Numerator			Shares Denominator		Per-Share Amount
Net loss	$	(10,997	)
Less: Preferred stock dividends		(315	)
Basic and diluted loss per share:
Loss attributable to common stockholders	$	(11,312	)		74,611	$	(0.15	)

	Six Months Ended June 30, 2025
	Loss Numerator			Shares Denominator		Per-Share Amount
Net loss	$	(22,676	)
Less: Preferred stock dividends		(627	)
Basic and diluted loss per share:
Loss attributable to common stockholders	$	(23,303	)		74,232	$	(0.31	)

	Three Months Ended June 30, 2024
	Loss Numerator			Shares Denominator		Per-Share Amount
Net loss	$	(3,106	)
Less: Preferred stock dividends		(316	)
Basic and diluted loss per share:
Loss attributable to common stockholders	$	(3,422	)		73,486	$	(0.05	)

	Six Months Ended June 30, 2024
	Loss Numerator			Shares Denominator		Per-Share Amount
Net loss	$	(14,831	)
Less: Preferred stock dividends		(631	)
Basic and diluted loss per share:
Loss attributable to common stockholders	$	(15,462	)		73,126	$	(0.21	)

There were an additional aggregate potentially dilutive weighted-average shares of 981,000 from convertible securities outstanding for the three and six months ended June 30, 2025 and June 30, 2024. These securities were not considered in calculating diluted net income (loss) per share for the three and six months ended June 30, 2025 and 2024, as their effect would have been anti-dilutive.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included elsewhere in this report. This report and our consolidated financial statements and notes to consolidated financial statements contain forward-looking statements, which generally include the plans and objectives of management for future operations, including plans and objectives relating to our future economic performance and our current beliefs regarding revenues we might generate and profits we might earn if we are successful in implementing our business and growth strategies. The forward-looking statements and associated risks may include, relate to or be qualified by other important factors, including:

●

fluctuations in the market prices of alcohols and essential ingredients;

●

fluctuations in the costs of key production input commodities such as corn and natural gas;

●

our ability to fund, and the costs, timing and effects of, our plant improvement initiatives and other capital projects, including our carbon capture and storage, or CCS, initiative;

●

regulatory developments relating to our initiatives and projects or to our business, including our CCS initiative, and the availability of, and our ability to qualify for and receive, Section 45Z tax credits;

●

the projected growth or contraction in the alcohol and essential ingredients markets in which we operate;

●

our strategies for expanding, maintaining or contracting our presence in these markets;

●

anticipated trends in our financial condition and results of operations; and

●

our ability to distinguish ourselves from our current and future competitors.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report, or in the case of a document incorporated by reference, as of the date of that document. We do not undertake to update, revise or correct any forward-looking statements, except as required by law.

Any of the factors described immediately above or referenced from time to time in our filings with the Securities and Exchange Commission or in the “Risk Factors” section below could cause our financial results, including our net income or loss or growth in net income or loss to differ materially from prior results, which in turn could, among other things, cause the price of our common stock to fluctuate substantially.

Overview

We are a leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients in the United States.

We operate five alcohol production facilities. Three of our production facilities are located in Illinois, one is located in Oregon and another is located in Idaho. We have an annual alcohol production capacity of 350 million gallons, including both renewable fuels and specialty alcohols ranging from industrial-, pharmaceutical-, and high-quality food- and beverage-grade alcohols. Of this amount, we can produce up to 110 million gallons annually of specialty alcohols, depending on our product mix among high-quality beverage-grade alcohol and other quality specification alcohols. We market and distribute all of the alcohols produced at our facilities as well as alcohols produced by third parties. In 2024, we marketed and distributed approximately 386 million gallons combined of our own produced alcohols as well as fuel-grade ethanol produced by third parties, and over 1.4 million tons of essential ingredients on a dry matter basis.

We also own and operate a liquid CO₂ production facility adjacent to our plant in Oregon for the offtake of CO₂ gas from the plant for conversion to liquid CO₂and subsequent sale. In addition, we break bulk distribute specialty alcohols, produced by us and third parties, through our Eagle Alcohol business.

We report our financial and operating performance in three distinct segments:

●

Pekin production, which includes the production and sale of alcohols and essential ingredients produced at our three production facilities located in Pekin, Illinois, which we refer to as our Pekin Campus;

●

Marketing and distribution, which includes marketing and merchant trading for company-produced alcohols and essential ingredients on an aggregated basis, and sales of fuel-grade ethanol sourced from third parties; and

●

Western production, which includes the production and sale of renewable fuels and essential ingredients and, beginning in 2025, liquid CO₂ produced at our Western production facilities, including our liquid CO₂ plant, on an aggregated basis, none of which are individually so significant as to be considered a separately reportable segment.

Our mission is to produce the highest quality, sustainable ingredients that make everyday products better. We intend to accomplish this goal in part by investing in our specialized and higher value specialty alcohol production and distribution infrastructure, expanding production in high-demand essential ingredients, expanding and extending the sale of our products into new regional and international markets, building efficiencies and economies of scale and by capturing a greater portion of the value stream.

Production Segments

We produce specialty alcohols, renewable fuels and essential ingredients, focusing on five key markets: Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels. Products for Health, Home & Beauty markets include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners. Products for Food & Beverage markets include grain neutral spirits used in alcoholic beverages and vinegar and corn germ used for corn oils. Products for Industry & Agriculture markets include alcohols and other products for paint applications and fertilizers. Products for Essential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, distillers grains, liquid CO₂ and liquid feed used in commercial animal feed and pet foods. We also sell yeast and liquid CO₂ for human consumption. Our products for the Renewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels.

We produce our alcohols and essential ingredients at our facilities described below. Our production facilities located in Illinois are in the heart of the Corn Belt, benefit from relatively low-cost and abundant feedstock and enjoy logistical advantages that enable us to provide our products to both domestic and international markets via truck, rail or barge. Our production facilities located in Oregon and Idaho are near their respective fuel and feed customers, offering significant timing, product transportation cost and logistical advantages.

All of our production facilities, other than our Magic Valley plant in Idaho, were operating for all of 2024 and 2025, subject to scheduled and unscheduled downtimes to address facility repair and maintenance.

In January 2024, we temporarily hot-idled our Magic Valley facility to minimize losses from negative regional crush margins – that is, revenue from ethanol minus the cost of corn, also referred to as market crush – and to expedite the installation of additional equipment to achieve the intended production rate, quality and consistency from our corn oil and high protein system at the facility. We restarted our Magic Valley facility in July 2024 and by October 2024, the facility consistently achieved average ethanol production rates at full capacity, the protein content yield from the plant reached 50% or greater, and we were able to expand our corn oil yields. Increases in regional corn basis and declining market prices for protein and corn oil resulted in overall margin compression, outweighing the economic benefits of our plant improvements. As a consequence, we cold-idled our Magic Valley facility on December 31, 2024 to minimize financial losses. We continue to provide terminal services at the plant and intend to resume operations at the facility when the economic environment in the region sustainably improves. The cold-idling of our Magic Valley facility has had a positive impact on our overall financial results in 2025 compared to 2024.

As market conditions change, we may increase, decrease or idle production at one or more operating facilities or resume operations at any idled facility.

Marketing and Distribution Segment

We market and distribute all the alcohols and essential ingredients we produce at our facilities. We also market and distribute alcohols produced by third parties.

We have extensive and long-standing customer relationships, both domestic and international, for our specialty alcohols, renewable fuels and essential ingredients. These customers include producers and distributors of ingredients for cosmetics, sanitizers and related products, distilled spirits producers, food products manufacturers, producers of personal health/consumer health and personal care hygiene products, and global trading firms.

Our renewable fuels customers are located throughout the Western and Midwestern United States and consist of integrated oil companies and gasoline marketers who blend fuel-grade ethanol into gasoline. Our customers depend on us to provide a reliable supply of fuel-grade ethanol and manage the logistics and timing of delivery. Our customers collectively require fuel-grade ethanol volumes in excess of the supplies we produce at our facilities. We secure additional fuel-grade ethanol supplies from third-party ethanol producers. We arrange for transportation, storage and delivery of fuel-grade ethanol purchased by our customers through our agreements with third-party service providers in the Western United States as well as in the Midwest from a variety of sources.

We market food-grade essential ingredients to human and pet food markets, our feed products (such as distillers grains) primarily to export markets from our Pekin Campus, and other feed products to dairies and feedlots, in many cases located near our production facilities. These customers use our feed products for livestock as a substitute for corn and other sources of starch and protein. We sell our corn oil to poultry, renewable diesel and biodiesel customers.

See “Note 3 – Segments” to our Notes to Consolidated Financial Statements included elsewhere in this report for financial information about our business segments.

Financial Review, Current Initiatives and Outlook

Although our net loss worsened to $11.0 million in the second quarter, primarily due to the non-cash effects of hedging activities, our Adjusted EBITDA improved by nearly $6.0 million compared to the same period in 2024, reflecting the successful execution of our initiatives to increase efficiency and productivity. The quarter-over-quarter improvement in our Adjusted EBITDA reflects the benefit of multiple initiatives. We improved our operating model company-wide by rightsizing our corporate overhead to a level that aligns with our current business footprint and we are on track to exceed our goal of saving approximately $8.0 million on an annualized basis from this initiative. We will continue to evaluate our options to improve operational efficiency and throughput, focus on growth in profitable market segments, and identify additional cost-saving opportunities that, while smaller in amount than from our recent corporate reorganization, should in the aggregate meaningfully affect our long-term profitability.

In the second quarter, the annual uptick in demand from the summer driving season helped lift ethanol prices and improve crush spreads. While it is difficult to predict market fluctuations, we have seen additional spread improvement in the third quarter, with market crush averaging 30 cents per gallon for July, and we remain optimistic for positive margins through the remainder of the summer.

Our Western assets turned profitable, improving gross profit by $5.6 million compared to the prior year’s quarter, driven by our CO₂ facility acquisition at the beginning of 2025 and other improvements at our Columbia ethanol plant, collectively improving gross profit by $3.0 million, as well as our decision to cold-idle our Magic Valley facility due to adverse market conditions in the region, which improved gross profit by $2.6 million. We continue to use our Magic Valley facility primarily as a terminal.

Our marketing and distribution business also improved, reflecting the integration of our bulk volume customers from our Eagle Alcohol business, a fostering of third-party ethanol marketing relationships that met profitability criteria, and our transition away from business that offered limited returns.

Our Pekin Campus was negatively impacted by quarter-over-quarter changes in derivatives and the continued impact of damage sustained to our loadout dock in April. However, we partially offset these effects by leveraging our operational flexibility by increasing sales of higher-margin International Sustainability and Carbon Certification, or ISCC, products exported to Europe.

Given our success with these efforts, we continue to focus on shorter-term projects with more immediate returns to support our path to profitability. We intend to prioritize projects by anticipated cost, timing and return on investment. Projects under consideration include improvements to lower our carbon intensity and capture more of the Section 45Z benefits available under the Inflation Reduction Act of 2022, expansion of our CO₂ utilization at our Pekin Campus and at our Colombia facility, building on our success from our Alto Carbonic acquisition, and projects to improve our prospects to monetize our Western assets. In addition, as we did in the first and second quarters, we will continue projects to improve efficiency and productivity.

Year to date, we have recorded $16 million in repairs and maintenance expense, in line with our 2025 estimate of $32 million.

Working with our bankers, we continue to make progress on our plan to optimize and monetize our Western assets. We are also evaluating strategic alternatives and interest for our Pekin Campus and for the company as a whole.

Illinois Senate Bill 1723, which prohibits CO₂ sequestration directly through the Mahomet aquifer, as contemplated in our Class VI permit application with the EPA for our carbon capture and storage, or CCS, project, was signed into law on August 1, 2025. We are developing alternatives with Vault 44.01, our CCS partner, and evaluating other promising, non-sequestration options to optimize the value of our CO₂ production.

The damage sustained by our Pekin Campus loadout dock in April due to rapidly rising river levels impacted production, logistics and overall economics for most of the second quarter. Since our last update in May, we have made progress recovering from this setback. We were able to respond quickly to take interim steps with third-party river transload vendors which, while more costly, helped minimize business interruption. In addition, we worked with our insurance carrier to confirm coverage for both property damage and business interruption. Finally, we are reviewing remediation plans with our carrier to ensure the best path forward. While we expect work to extend into next year, we intend to commence the remediation project ahead of the Midwest winter.

The One Big Beautiful Bill Act made positive updates to the Section 45Z regulations, including extending tax credits through the end of 2029 as well as additional spending on farm programs, that benefit the renewable fuels industry and improve our earnings profile and the intrinsic value of our production facilities. The act also increased focus on domestic renewable fuel production and introduced new eligibility restrictions, particularly around foreign involvement. For example, only fuel derived from feedstocks grown or produced in North America is eligible for the Section 45Z tax credit. Initially, two of our plants, our Columbia plant and our Pekin dry mill, will participate in applying for Section 45Z tax credits. An additional benefit of the act is its disincentivizing exports from most dry mills, creating an opportunity for our Pekin Campus wet mill and ICP distillery to place more of our products into European markets at a premium to domestic market prices. We intend to pursue additional options to capitalize on the Section 45Z tax credits, including through improvements to our Colombia plant to increase our anticipated credit from 10 cents per gallon for 2025, based on our current carbon intensity scores, to up to 20 cents per gallon in 2026. We expect our Pekin Campus dry mill to qualify for 10 cents per gallon starting in 2026. These credit amounts, based on nameplate production capacities and carbon intensity scores, equal up to approximately $4.0 million in 2025 and $8.0 million in 2026 for which our Colombia plant may be eligible and up to $6.0 million in 2026 for which our Pekin Campus dry mill may be eligible. We plan to make improvements to our plants to increase credit amounts across all eligible facilities. One potential improvement is through low-carbon corn, which, while more expensive, may be economically beneficial to source that particular feedstock to reduce our carbon footprint.

Through the two other plants at our Pekin Campus, we will continue to produce higher quality alcohol and also take advantage of ISCC export market premiums for renewable fuel as the new rules incentivize domestic ethanol sales from Section 45Z eligible dry mills.

The One Big Beautiful Bill Act also seeks to positively impact farm programs by boosting sector profitability, reducing financial volatility, enhancing asset values and strengthening the overall industry safety net with the intent to improve operational stability and long-term farm enterprise value. Also contained in the act is an increase in USDA commodity reference prices and base acres. Corn will increase from $3.70 per bushel to $4.10 per bushel and soybeans will increase from $8.40 per bushel to $10.00 per bushel. Lastly, an additional 30 million base acres may now enroll in farm programs. As a result, farmers will need new and expanded markets to absorb the additional production. We believe these developments bode well for the future of higher ethanol blends and new uses of American-grown feedstocks, making the U.S. an even more attractive origin for international sourcing of ethanol and other renewable fuel products.

The EPA extended E15 blending waivers nationally for the duration of the summer, offering continued support for near-term domestic ethanol blending. In California, regulatory momentum continues to build for E15 blending but full-scale implementation is still pending further administrative review and regulatory updates.

In the second quarter, we finalized our Scope 1 and 2 greenhouse gas verifications and submitted our 2025 EcoVadis scorecard.

Use of Non-GAAP Financial Measures

Management believes that certain financial measures not in accordance with generally accepted accounting principles, or GAAP, are useful measures of operations. Management provides EBITDA and Adjusted EBITDA as non-GAAP financial measures so that investors will have the same financial information that management uses, which may assist investors in properly assessing our performance on a period-over-period basis.

We define EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, provision for income taxes and depreciation and amortization expense. We define Adjusted EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, unrealized derivative gains and losses, acquisition-related income and expense, asset impairments, provision for income taxes and depreciation and amortization expense.

A table is provided below to reconcile Adjusted EBITDA to its most directly comparable GAAP measure, consolidated net income (loss). EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP and should not be considered as alternatives to consolidated net income (loss) or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP.

Information reconciling forward-looking EBITDA or Adjusted EBITDA to forward-looking consolidated net income (loss) would require a forward-looking statement of consolidated net income (loss) prepared in accordance with GAAP, which is unavailable to us without unreasonable effort. We are not able to provide a quantitative reconciliation of forward-looking EBITDA or Adjusted EBITDA to forward-looking consolidated net income (loss) because certain items required for reconciliation are uncertain, outside of our control and/or cannot reasonably be predicted, such as net sales, cost of goods sold, unrealized derivative gains and losses, asset impairments and provision (benefit) for income taxes, which we view as the most material components of consolidated net income (loss) that are not presently estimable.

Reconciliation of Adjusted EBITDA to Consolidated Net Loss

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands) (unaudited)	2025			2024			2025			2024
Net loss	$	(10,997	)	$	(3,106	)	$	(22,676	)	$	(14,831	)
Adjustments:
Interest expense		2,811			1,669			5,540			3,303
Interest income		(67	)		(150	)		(150	)		(325	)
Unrealized derivative losses (gains)		2,117			(11,089	)		483			(14,279	)
Acquisition-related (income) expense		(460	)		675			(460	)		1,350
Depreciation and amortization expense		6,365			6,074			12,631			11,802
Total adjustments		10,766			(2,821	)		18,044			1,851
Adjusted EBITDA	$	(231	)	$	(5,927	)	$	(4,632	)	$	(12,980	)

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses for each period. We believe that of our significant accounting policies, the following critical accounting policies and estimates are those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain: accounting for business combinations; revenue recognition; impairment of long-lived assets; valuation allowance for deferred taxes and derivative instruments. Except as noted below, these significant accounting principles are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Results of Operations

Selected Financial Information

The following selected financial information should be read in conjunction with our consolidated financial statements and notes to our consolidated financial statements included elsewhere in this report, and the other sections of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report.

Certain performance metrics that we believe are important indicators of our results of operations include the following:

	Three Months Ended June 30,				Percentage			Six Months Ended June 30,				Percentage
	2025		2024		Variance			2025		2024		Variance
Alcohol Sales (gallons in millions)
Pekin Campus renewable fuel gallons sold		28.8		30.7		(6.2	)%		61.4		62.5		(1.8	)%
Western production renewable fuel gallons sold		8.3		9.0		(7.8	)%		16.6		20.2		(17.8	)%
Third-party renewable fuel gallons sold		29.7		34.4		(13.7	)%		54.1		64.1		(15.6	)%
Total renewable fuel gallons sold		66.8		74.1		(9.9	)%		132.1		146.8		(10.0	)%
Specialty alcohol gallons sold		19.9		21.0		(5.2	)%		44.2		47.3		(6.6	)%
Total gallons sold		86.7		95.1		(8.8	)%		176.3		194.1		(9.2	)%

Sales Price per Gallon
Pekin Campus	$	1.95	$	1.98		(1.5	)%	$	1.92