alto-20260630

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, 2026

☐ 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 6, 2026, there were 77,567,564 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

	Condensed Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025	1

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 (unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025 (unaudited)	5

	Notes to Condensed 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.	46

SIGNATURES		47

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

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

	June 30,		December 31,
	2026		2025
	(unaudited)		*
ASSETS
Current Assets:
Cash and cash equivalents	$	23,962	$	23,415
Restricted cash		—		2,258
Accounts receivable (net of allowance for credit losses of $38 and $76, respectively)		67,889		55,069
Inventories		51,609		61,676
Transferable tax credits, net		8,265		7,500
Derivative instruments		4,173		525
Other current assets		4,926		5,474
Total current assets		160,824		155,917
Property and equipment, net		197,479		198,501
Other Assets:
Right of use operating lease assets, net		21,492		16,931
Intangible assets, net		7,264		7,574
Other assets		10,011		9,863
Total other assets		38,767		34,368
Total Assets	$	397,070	$	388,786

Amounts derived from the audited consolidated financial statements for the year ended December 31, 2025.

See accompanying notes to condensed consolidated financial statements.

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

	June 30,			December 31,
	2026			2025
	(unaudited)			*
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	24,219		$	14,509
Accrued liabilities		16,424			16,691
Current portion – long-term debt		—			16,600
Current portion – operating leases		4,916			4,958
Derivative instruments		277			1,067
Other current liabilities		4,561			5,246
Total current liabilities		50,397			59,071

Long-term debt, net		60,469			63,027
Operating leases, net of current portion		17,553			13,012
Other liabilities		8,774			8,435
Total Liabilities		137,193			143,545
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, 2026 and December 31, 2025; Series B: 1,581 shares authorized; 927 shares issued and outstanding as of June 30, 2026 and December 31, 2025; liquidation preference of $18,075 as of June 30, 2026		1			1
Common stock, $0.001 par value; 300,000 shares authorized; 77,576 and 77,307 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		78			77
Non-voting common stock, $0.001 par value; 3,553 shares authorized; 1 share issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		—			—
Additional paid-in capital		1,051,085			1,051,795
Accumulated other comprehensive income		5,461			5,461
Accumulated deficit		(796,748	)		(812,093	)
Total Stockholders’ Equity		259,877			245,241
Total Liabilities and Stockholders’ Equity	$	397,070		$	388,786

Amounts derived from the audited consolidated financial statements for the year ended December 31, 2025.

See accompanying notes to condensed consolidated financial statements.

ALTO INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025

Net sales	$	245,698		$	218,436		$	470,378		$	444,976
Cost of goods sold		229,062			220,373			444,523			448,720
Gross profit (loss)		16,636			(1,937	)		25,855			(3,744	)
Selling, general and administrative expenses		8,017			6,171			14,716			13,361
Income (loss) from operations		8,619			(8,108	)		11,139			(17,105	)
Interest expense, net		(1,960	)		(2,811	)		(4,158	)		(5,540	)
Transferable tax credits, net		5,112			—			9,012			—
Other expense, net		(70	)		(78	)		(21	)		(31	)
Income (loss) before provision for income taxes		11,701			(10,997	)		15,972			(22,676	)
Provision for income taxes		—			—			—			—
Net income (loss)	$	11,701		$	(10,997	)	$	15,972		$	(22,676	)
Preferred stock dividends	$	(315	)	$	(315	)	$	(627	)	$	(627	)
Net income (loss) attributable to common stockholders	$	11,386		$	(11,312	)	$	15,345		$	(23,303	)
Net income (loss) per share, basic	$	0.15		$	(0.15	)	$	0.20		$	(0.31	)
Net income (loss) per share, diluted	$	0.15		$	(0.15	)	$	0.20		$	(0.31	)
Weighted-average shares outstanding, basic		75,588			74,611			75,191			74,232
Weighted-average shares outstanding, diluted		77,071			74,611			76,609			74,232

See accompanying notes to condensed consolidated financial statements.

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

	Six Months Ended June 30,
	2026			2025
Operating Activities:
Net income (loss)	$	15,972		$	(22,676	)
Adjustments to reconcile net income (loss) to Net cash provided by (used in) operating activities:
Depreciation and amortization		12,819			12,631
Transferable tax credits, net, generated		(9,012	)		—
Inventory valuation		—			1,649
Gains on derivative instruments		(10,666	)		(4,371	)
Stock-based compensation		1,518			1,474
Amortization of deferred financing fees		501			502
Amortization of debt discount		397			397
Credit loss recovery		(38	)		(1	)
Changes in operating assets and liabilities, net of business acquisition:
Accounts receivable		(12,782	)		480
Inventories		10,067			(5,448	)
Other assets		9,326			2,242
Operating leases		(3,275	)		(3,180	)
Accounts payable and accrued liabilities		17,861			(2,778	)
Net cash provided by (used in) operating activities		32,688			(19,079	)
Investing Activities:
Additions to property and equipment		(11,487	)		(1,016	)
Purchase of Kodiak Carbonic, net of cash acquired		—			(7,278	)
Deferred purchase price payments for Eagle Alcohol		—			(2,240	)
Net cash used in investing activities		(11,487	)		(10,534	)
Financing Activities:
Net proceeds from Kinergy’s line of credit		5,042			24,520
Taxes paid for employee stock vesting in lieu of shares		(2,227	)		—
Principal payments on term debt		(25,100	)		—
Preferred stock dividends paid		(627	)		(627	)
Net cash (used in) provided by financing activities		(22,912	)		23,893
Net change in cash, cash equivalents and restricted cash		(1,711	)		(5,720	)
Cash, cash equivalents and restricted cash at beginning of period		25,673			36,211
Cash, cash equivalents and restricted cash at end of period	$	23,962		$	30,491

Reconciliation of total cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	23,962		$	29,768
Restricted cash		—			723
Total cash, cash equivalents and restricted cash	$	23,962		$	30,491
Supplemental Information:
Interest paid	$	3,316		$	4,596
Noncash lease additions	$	4,998		$	—
Shares vested for Eagle Alcohol	$	—		$	5,000

See accompanying notes to condensed consolidated financial statements.

ALTO INGREDIENTS, INC.
CONDENSED 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, 2026		927	$	1		77,307		$	77	$	1,051,795		$	(812,093	)	$	5,461	$	245,241
Stock-based compensation		—		—		—			—		705			—			—		705
Restricted stock issued to employees and directors, net of cancellations and tax		—		—		639			1		(28	)		—			—		(27	)
Preferred stock dividends		—		—		—			—		—			(312	)		—		(312	)
Net income		—		—		—			—		—			4,271			—		4,271
Balances, March 31, 2026		927	$	1		77,946		$	78	$	1,052,472		$	(808,134	)	$	5,461	$	249,878
Stock-based compensation		—		—		—			—		813			—			—		813
Restricted stock issued to employees and directors, net of cancellations and tax		—		—		(370	)		—		(2,200	)		—			—		(2,200	)
Preferred stock dividends		—		—		—			—		—			(315	)		—		(315	)
Net income		—		—		—			—		—			11,701			—		11,701
Balances, June 30, 2026		927	$	1		77,576		$	78	$	1,051,085		$	(796,748	)	$	5,461	$	259,877
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

See accompanying notes to condensed consolidated financial statements.

ALTO INGREDIENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

ORGANIZATION AND BASIS OF PRESENTATION.

Organization and Business – The condensed 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. On January 1, 2025, the Company’s wholly-owned subsidiary, Alto Carbonic, LLC (“Alto Carbonic”), acquired Kodiak Carbonic, LLC, a beverage-grade liquid carbon dioxide, or CO₂, processor, for $7.6 million. Alto Carbonic’s facility is co-located at the Company’s Columbia ethanol plant in Boardman, Oregon. 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 specialty alcohols, renewable fuels and essential ingredients. 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 Boardman, Oregon and Burley, Idaho are located in close proximity to both feed and fuel-grade ethanol customers. The Company has a combined alcohol production capacity of 330 million gallons per year and produces, on an annualized basis, over 1.2 million tons of essential ingredients. The Company’s Eagle Alcohol business specializes in break bulk distribution of specialty alcohols.

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, inks, vehicle fluids and fertilizers. Products for Essential Ingredients markets include gas and liquid CO₂, 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 located in Burley, Idaho, 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, and through the filing of this report, to minimize financial losses. The Company continues to provide ethanol terminaling services at the plant.

Basis of Presentation–Interim Financial Statements – The accompanying unaudited condensed 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 condensed 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, 2025. The accounting policies used in preparing these condensed 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, 2025. 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 $59,716,000 and $41,379,000 at June 30, 2026 and December 31, 2025, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for credit losses was $38,000 and $76,000 as of June 30, 2026 and December 31, 2025, respectively. The Company recorded a credit loss recovery of $23,000 and $16,000 for the three months ended June 30, 2026 and 2025, respectively. The Company recorded a credit loss recovery of $38,000 and $1,000 for the six months ended June 30, 2026 and 2025, respectively. The Company does not have any off-balance sheet credit exposure related to its customers.

Transferable Tax Credits, net – The Company generates and recognizes tax credits under Section 45Z of the Internal Revenue Code for domestic clean fuel production. The Company accounts for these tax credits under IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, the tax credits are recognized when there is reasonable assurance the Company will comply with the applicable provisions of the Internal Revenue Code and that the tax credits will be received.

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 values of its long-term debt instruments are not considered materially different than their fair values.

Estimates and Assumptions – The preparation of the condensed 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.

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 three production facilities located 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 production facilities located in Burley, Idaho and Boardman, Oregon, and its liquid CO₂ plant on an aggregated basis (“Western production”).

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,
	2026			2025			2026			2025
Net Sales
Pekin Campus production:
Alcohol sales	$	114,370		$	94,155		$	222,321		$	201,390
Essential ingredient sales		45,071			39,565			89,064			84,183
Intersegment sales		229			183			492			481
Total Pekin Campus sales		159,670			133,903			311,877			286,054
Marketing and distribution:
Alcohol sales, gross	$	54,612		$	58,106		$	101,889		$	107,101
Alcohol sales, net		60			80			109			142
Intersegment sales		2,512			2,334			4,962			4,840
Total marketing and distribution sales		57,184			60,520			106,960			112,083

Western production:
Alcohol sales	$	20,798		$	16,604		$	37,479		$	32,798
Essential ingredient sales		8,843			8,250			16,123			16,058
Intersegment sales		449			505			848			769
Total Western production sales		30,090			25,359			54,450			49,625

Corporate and other		1,944			1,676			3,393			3,304
Intersegment eliminations		(3,190	)		(3,022	)		(6,302	)		(6,090	)
Net sales as reported	$	245,698		$	218,436		$	470,378		$	444,976
Cost of goods sold:
Pekin Campus production	$	148,148		$	139,748		$	292,918		$	294,974
Marketing and distribution		53,404			56,518			99,442			104,167
Western production		27,955			23,501			52,707			49,024
Corporate and other		1,010			1,705			2,046			3,386
Intersegment eliminations		(1,455	)		(1,099	)		(2,590	)		(2,831	)
Cost of goods sold as reported	$	229,062		$	220,373		$	444,523		$	448,720
Gross profit (loss):
Pekin Campus production	$	11,522		$	(5,845	)	$	18,959		$	(8,920	)
Marketing and distribution		3,780			4,002			7,518			7,916
Western production		2,135			1,858			1,743			601
Corporate and other		934			(29	)		1,347			(82	)
Intersegment eliminations		(1,735	)		(1,923	)		(3,712	)		(3,259	)
Gross profit (loss) as reported	$	16,636		$	(1,937	)	$	25,855		$	(3,744	)
Income (loss) before provision for income taxes:
Pekin Campus production	$	9,667		$	(9,923	)	$	15,276		$	(17,291	)
Marketing and distribution		1,282			1,795			2,707			3,359
Western production		2,106			(1,453	)		1,100			(5,356	)
Corporate and other		(1,354	)		(1,416	)		(3,111	)		(3,388	)
	$	11,701		$	(10,997	)	$	15,972		$	(22,676	)
Depreciation and amortization expense:
Pekin Campus production	$	5,589		$	5,348		$	11,091		$	10,804
Western production		735			845			1,472			1,483
Corporate and other		128			172			256			344
	$	6,452		$	6,365		$	12,819		$	12,631
Interest expense, net of capitalized interest:
Pekin Campus production	$	642		$	615		$	1,280		$	1,226
Marketing and distribution		76			81			162			163
Western production		478			1,430			1,228			2,789
Corporate and other		764			685			1,488			1,362
	$	1,960		$	2,811		$	4,158		$	5,540

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

	June 30, 2026		December 31, 2025
Total assets:
Pekin Campus production	$	215,965	$	208,947
Marketing and distribution		109,125		103,911
Western production		45,593		43,131
Corporate and other		26,387		32,797
	$	397,070	$	388,786

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 $0 and $1,007,000 as of June 30, 2026 and December 31, 2025, respectively. Inventory balances consisted of the following (in thousands):

	June 30, 2026		December 31, 2025
Finished goods	$	31,838	$	40,735
Raw materials		8,788		10,041
Work in progress		4,631		4,620
Other		6,352		6,280
Total	$	51,609	$	61,676

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, 2026 and 2025, 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 $2,250,000 and $2,598,000 as the change in the fair value of these contracts for the three months ended June 30, 2026 and 2025, respectively. The Company recognized net gains of $10,666,000 and $4,371,000 as the change in the fair value of these contracts for the six months ended June 30, 2026 and 2025, 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, 2026

Assets

Liabilities

 Type of Instrument

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Cash collateral balance

Restricted cash

—

Commodity contracts

Derivative instruments

4,173

Derivative instruments

277

As of December 31, 2025

Assets

Liabilities

Type of Instrument

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair
Value

Cash collateral balance

Restricted cash

2,258

Commodity contracts

Derivative instruments

525

Derivative instruments

1,067

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
		For the Three Months Ended June 30,
Type of Instrument	Statements of Operations Location	2026		2025

Commodity contracts	Cost of goods sold	$	5,884	$	4,715
		$	5,884	$	4,715

		Realized Gains
		For the Six Months Ended June 30,
Type of Instrument	Statements of Operations Location	2026		2025

Commodity contracts	Cost of goods sold	$	6,227	$	4,854
		$	6,227	$	4,854

		Unrealized Losses
		For the Three Months Ended June 30,
Type of Instrument	Statements of Operations Location	2026			2025

Commodity contracts	Cost of goods sold	$	(3,634	)	$	(2,117	)
		$	(3,634	)	$	(2,117	)

		Unrealized Gains (Losses)
		For the Six Months Ended June 30,
Type of Instrument	Statements of Operations Location	2026		2025

Commodity contracts	Cost of goods sold	$	4,439	$	(483	)
		$	4,439	$	(483	)

DEBT.

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

	June 30, 2026			December 31, 2025
Kinergy line of credit	$	34,628		$	29,586
Orion term loan		29,900			55,000
		64,528			84,586
Less unamortized debt discount		(1,891	)		(2,288	)
Less unamortized debt financing costs		(2,168	)		(2,671	)
Less current portion		—			(16,600	)
Long-term debt	$	60,469		$	63,027

Excess Availability – As of June 30, 2026, Kinergy had $41.3 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.

6.	COMMITMENTS AND CONTINGENCIES.

Sales Commitments – At June 30, 2026, 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 90,485,000 gallons as of June 30, 2026 and open fixed-price alcohol sales contracts totaling $193,341,000 as of June 30, 2026. The Company had open fixed-price sales contracts for essential ingredients totaling $10,004,000 and open indexed-price sales contracts of essential ingredients for 12,000 tons as of June 30, 2026. These sales contracts are scheduled to be completed throughout 2026.

Purchase Commitments – At June 30, 2026, the Company had indexed-price purchase contracts to purchase 22,534,000 gallons of alcohol and fixed-price purchase contracts to purchase $593,000 of alcohol from its suppliers. The Company had fixed-price purchase contracts to purchase $33,181,000 of corn from its suppliers as of June 30, 2026. The Company had indexed-price contracts to purchase 3,323,000 MMBTU of natural gas as of June 30, 2026. The Company also had future commitments for certain capital projects totaling $12,013,000. These purchase commitments are scheduled to be satisfied throughout 2026.

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.

7.	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, 2025, the Retirement Plan’s accumulated projected benefit obligation was $18.0 million, with a fair value of plan assets of $22.1 million. The overfunded amount of $4.1 million is recorded on the Company’s condensed consolidated balance sheets in other assets.

Components of the Retirement Plan’s net periodic cost are as follows (in thousands):

	Three Months Ended June 30,
	2026			2025
Interest cost	$	236		$	234
Service cost		50			57
Expected return on Plan Assets		(331	)		(313	)
Net periodic benefit	$	(45	)	$	(22	)

	Six Months Ended June 30,
	2026			2025
Interest cost	$	472		$	468
Service cost		100			114
Expected return on Plan Assets		(662	)		(625	)
Net periodic benefit	$	(90	)	$	(43	)

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, 2025, the Postretirement Plan’s accumulated projected benefit obligation was $4.0 million and is recorded on the Company’s condensed consolidated balance sheets in other liabilities. The Company’s funding policy is to make the minimum annual contribution required by applicable regulations.

Components of the Postretirement Plan’s net periodic cost are as follows (in thousands):

	Three Months Ended June 30,
	2026			2025
Interest cost	$	47		$	48
Service cost		4			4
Amortization of net gains		(7	)		(27	)
Net periodic expense	$	44		$	25

	Six Months Ended June 30,
	2026			2025
Interest cost	$	93		$	97
Service cost		8			7
Amortization of net gains		(13	)		(54	)
Net periodic expense	$	88		$	50

8.	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, 2025. 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.

Derivative Financial Instruments – The Company’s derivative financial 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.

Transferable Tax Credits – Transferable tax credits consist of the Company’s estimated net proceeds from the sale of credits. The fair value is based on estimates of, among others, actual gallons qualified for sale, gross tax credit per gallon, sales discount, broker fees and insurance costs and are designated as Level 3 inputs. See Note 1 for additional information.

The following table summarizes recurring and nonrecurring fair value measurements by level at June 30, 2026 (in thousands):

	Fair Value		Level 1		Level 2		Level 3
Assets:
Transferable tax credits, net	$	8,265	$	—	$	—	$	8,265
Derivative financial instruments		4,173		4,173		—		—
	$	12,438	$	4,173	$	—	$	8,265

Liabilities:
Derivative financial instruments	$	277	$	277	$	—	$	—

The following table summarizes recurring fair value measurements by level at December 31, 2025 (in thousands):

									Benefit Plan
									Percentage
	Fair Value		Level 1		Level 2		Level 3		Allocation
Assets:
Derivative financial instruments	$	525	$	525	$	—	$	—
Transferable tax credits		7,500		—		—		7,500
Defined benefit plan assets(1)
(pooled separate accounts):
Large U.S. Equity(2)		8,060		—		8,060		—