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Item 1. Business

2024-03-14 compared with 2023-03-14 · 533 added, 512 removed, 64 unchanged (94% of the section changed)

Business Overview

We are a leading producer and distributor of specialty

alcohols and essential ingredients, and the largest producer of specialty alcohols in the United States.

We produce and distribute renewable fuel and essential

We are also the largest producer of specialty alcohols in the United States.

We operate five alcohol production facilities.

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We have an annual

alcohol production capacity of 350 million gallons, comprised of 210 million gallons of fuel-grade ethanol and up to 140 million gallons

of specialty alcohols.

We market and distribute all of the alcohols produced at our facilities as well as fuel-grade ethanol produced

by third parties.

In 2022, we marketed and distributed approximately 420 million gallons combined of our own alcohols as well as fuel-grade

ethanol produced by third parties, and over 1.6 million tons of essential ingredients.

alcohol production capacity of 350 million gallons, including both fuel-grade ethanol 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 alcohols of other quality specifications.

We market and distribute all the alcohols produced at our facilities as well as alcohols produced by third parties.

In 2023, we marketed

and distributed approximately 383 million gallons combined of our own alcohols as well as fuel-grade ethanol produced by third parties,

and over 1.5 million tons of essential ingredients on a dry matter basis.

We also specialize in break bulk distribution of

specialty alcohols through our Eagle Alcohol subsidiary.

We purchase bulk alcohol from suppliers and then store, denature, package, and

resell alcohol products in smaller sizes, including tank trucks, totes and drums that typically garner a premium price to bulk alcohols.

We deliver products to customers in the beverage, food, industrial and related-process industries via our own dedicated trucking fleet

and common carrier.

We report our financial and operating performance

in three segments:

(1) 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, (2) 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, and (3) Other production, which includes the production and sale of renewable fuel and essential ingredients

produced at all of our other production facilities on an aggregated basis, none of which are individually so significant as to be considered

a separately reportable segment.

Our mission is to expand our business as a leading

producer and distributor of specialty alcohols and essential ingredients.

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.

Our wholly-owned subsidiary,

Eagle Alcohol Company LLC, or Eagle Alcohol, specializes in break bulk distribution of specialty alcohols.

Eagle Alcohol purchases bulk

alcohol from suppliers and then stores, denatures, packages, and resells alcohol products in smaller sizes, including tank trucks, totes,

and drums, that typically garner a premium price to bulk alcohols.

Eagle Alcohol delivers products to customers in the beverage, food,

industrial and related-process industries via its own dedicated trucking fleet and common carrier.

Production Segments

(1) 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, (2) 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 (3) Western production, which includes the production and sale of renewable fuel and essential

ingredients produced at our two western production facilities on an aggregated basis, none of which are individually so significant as

to be considered a separately reportable segment.

mission is to produce the highest quality, sustainable ingredients from renewable resources that make everyday products better.

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.

We produce specialty alcohols, fuel-grade ethanol

and essential ingredients, focusing on four key markets:

and essential ingredients, focusing on five key markets:

Health, Home & Beauty ;

Food & Beverage ;

Agriculture ;

Essential Ingredients ;

and Renewable Fuels .

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 market include grain neutral

spirits used in alcoholic beverages and vinegar as well as corn germ used for corn oils.

Products for Essential Ingredients market

include dried yeast, corn gluten meal, corn gluten feed, corn germ, and distillers grains and liquid feed used in commercial animal feed

and pet foods.

Products for the Health, Home & Beauty markets 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.

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.

We also sell yeast for human consumption.

Products for the Renewable Fuels market include fuel-grade ethanol and

distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels.

Our specialty alcohols for the Food & Beverage

and Health, Home & Beauty markets represented approximately 10% and 4%, respectively, of our sales in 2022 from our two production

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.

specialty alcohols for the Industry & Agriculture, Food & Beverage and Health, Home & Beauty markets represented

approximately 6%, 4% and 2%, respectively, of our sales in 2023 from these three product segments.

We produce our alcohols and essential ingredients

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Our production facilities located in Illinois are in the heart of the Corn Belt, benefit

from 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, transportation cost and logistical advantages.

Our production facilities were operating for

On January 1, 2023, we temporarily hot-idled our Magic Valley production facility due to extreme natural gas prices,

other unfavorable market conditions and to facilitate the installation of our new high protein systems.

As market conditions change, we may increase, decrease or idle production at one or more

operating facilities or resume operations at any idled facility.

Annual Alcohol Production Capacity

(estimated, in gallons)

Production Facility

Fuel-Grade Ethanol

Specialty Alcohol

Marketing and Distribution Segment

We market and distribute all of the alcohols and

essential ingredients we produce at our facilities.

We also market and distribute alcohol produced by third parties.

We have extensive and long-standing customer relationships,

both domestic and international, for our specialty alcohols 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 fuel 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

Our customers depend on us to provide a reliable supply of fuel-grade ethanol and manage the logistics and timing of delivery.

Collectively, our customers 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 a variety of third-party service providers in the Western United States as well

as in the Midwest.

We market our essential ingredient 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 and biodiesel customers.

We do not market

essential ingredients from other producers.

See “Note 5 – Segments” to our

Notes to Consolidated Financial Statements included elsewhere in this report for financial information about our business segments.

Company History

We are a Delaware corporation formed in February

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, transportation cost and logistical advantages.

All of our production facilities, other than our

Magic Valley plant, were operating for all of 2023, subject to scheduled and unscheduled downtimes to address facility repair and maintenance.

On January 1, 2023, we temporarily hot-idled our Magic Valley production facility due to extreme natural gas prices, other unfavorable

market conditions and to facilitate the installation of our new corn oil and high protein system.

We brought the facility back online

in April 2023.

In January 2024, we again temporarily hot-idled our Magic Valley production facility to minimize losses from negative regional

crush margins and to expedite the installation of additional equipment needed to achieve our intended production rate, quality and consistency

from our corn oil and high protein system.

We intend to restart Magic Valley production in the second quarter once the upgrades are complete

and crush margins have improved.

As market conditions change, we may increase, decrease or idle production at one or more operating facilities

or resume operations at any idled facility.

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.

have extensive and long-standing customer relationships, both domestic and international, for our specialty alcohols 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.

renewable fuel 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.

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.

market our essential ingredient 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

and biodiesel customers.

We do not market essential ingredients from other producers.

“Note 5 – Segments” to our Notes to Consolidated Financial Statements included elsewhere in this report for financial

information about our business segments.

are a Delaware corporation formed in 2005.

Our common stock trades on The Nasdaq Capital Market under the symbol “ALTO.”

Our Internet website address is http://www.altoingredients.com.

Information contained on our website is not part of this Annual Report on Form 10-K.

Our Annual Reports on Form 10-K, Quarterly Reports

on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed with or furnished to the Securities and Exchange Commission

and other Securities and Exchange Commission filings are available free of charge through our website as soon as reasonably practicable

after the reports are electronically filed with, or furnished to, the Securities and Exchange Commission.

Business Strategy

Our goal is to expand our business as a leading

producer and distributor of specialty alcohols and essential ingredients.

The key elements of our business and growth strategy to achieve

this objective include:

● Focus on our customer relationships.

Although we continue to produce more fuel-grade ethanol than specialty alcohols, we have

repositioned our business to focus on expanding the production and sale of specialty alcohols and essential ingredients.

our business is now more service-oriented and focused on specialty products compared to a price-oriented business focused on commodity

We strive to make our business ever more customer-centric to enable our premium services to support premium prices and new differentiated

and higher-margin products.

● Increase our break bulk capabilities.

With the addition of Eagle Alcohol, we have further diversified our business to include

break bulk distribution of specialty alcohols.

We can now store, denature, package and resell alcohol in smaller sizes, including tank

trucks, totes and drums, that typically garner a premium price to bulk specialty alcohols.

We deliver these products to customers in the

Health, Home & Beauty , Food & Beverage and related-process industries using our own trucking fleet and common carrier.

● Expand product offerings.

We are pursuing initiatives to broaden our product offerings to appeal to a wider range of customers

and uses in our key markets.

For example, we have secured ISO 9001, ICH Q7 and EXCiPACT certifications at all of our Pekin Campus production

These certifications appeal to customers with stringent quality demands and enable us to offer alcohol certified for use as

an active pharmaceutical ingredient, or API, and as an excipient—an inactive component of a drug or medication, such as solvents,

carriers or tinctures—in the pharmaceutical industry.

All ingredients we produce for use in beverages, human and pet foods are third-party

certified for ISO 9001 and hazard analysis and critical control points (HACCP).

In addition, all of our alcohols with pharmaceutical end-uses

are ICH Q7, EXCiPACT and ISO 9001 certified, and our animal feed production, including at our Oregon and Idaho facilities, has undergone

third-party Food Safety Modernization Act (FSMA) auditing.

We are reviewing additional certifications and product positioning within our

key markets to expand the range of customers we serve and the uses our products support.

Information contained on our website is not part of this Annual Report

on Form 10-K.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such

reports filed with or furnished to the Securities and Exchange Commission and other Securities and Exchange Commission filings are available

free of charge through our website as soon as reasonably practicable after the reports are electronically filed with, or furnished to,

the Securities and Exchange Commission.

The key elements of our business

and growth strategy include:

on our customer relationships.

Although we continue to produce more fuel-grade ethanol

than specialty alcohols, we have repositioned our business to focus on expanding the production

and sale of specialty alcohols and essential ingredients.

As a result, our business is now

more service-oriented and focused on specialty products compared to a price-taking business

focused on commodity products.

We strive to make our business ever more customer-centric

to enable our premium services to support premium prices and new differentiated and higher-margin

● Implement carbon capture and storage at our Pekin Campus, lowering our carbon footprint .

Inflation Reduction Act of 2022 raised the carbon capture tax credit to $85 per metric ton, reflecting the 45Q tax incentive

benefits established under the Act.

We produce over 600,000 metric tons of carbon dioxide, CO 2, per year at our Pekin

Campus, which sits atop the Mount Simon formation, identified as one of the best and largest aquafers in the country for carbon

We are prioritizing our carbon capture and storage, or CCS, project over other long-term capital projects.

We believe the

financial benefits under the Inflation Reduction Act and the substantial additional economic benefits of the environmental

attributes associated with low carbon ethanol will result in excellent returns on investment.

product offerings .

We are pursuing initiatives to broaden our product offerings to appeal

to a wider range of customers and uses in our key markets.

For example, we have secured ISO

9001, ICH Q7 and EXCiPACT certifications at all of our Pekin Campus production facilities.

These certifications appeal to customers with stringent quality demands and enable us to

offer alcohol certified for use as an active pharmaceutical ingredient, or API, and as an

excipient—an inactive component of a drug or medication, such as solvents, carriers

or tinctures—in the pharmaceutical industry.

All ingredients we produce for use in

beverages, human and pet foods are third-party certified for ISO 9001 and hazard analysis

and critical control points (HACCP).

In addition, all of our alcohols with pharmaceutical

end-uses are ICH Q7, EXCiPACT and ISO 9001 certified, and our animal feed production, including

at our Oregon and Idaho facilities, has undergone third-party Food Safety Modernization Act

(FSMA) auditing.

We are reviewing additional certifications and product positioning within

our key markets to expand the range of customers we serve and the uses our products support.

● Implement new equipment and technologies.

We are evaluating and plan to implement new equipment and technologies to increase

our production yields, improve our operating efficiencies and reliability, reduce our overall carbon footprint, diversify our products

and revenues, and increase our profitability as financial resources and market conditions justify these investments.

In February 2023,

we completed Together for Sustainability, or TfS, certification at our Pekin Campus, which is an initiative to raise corporate social

responsibility (CSR) standards in our industry.

We are also conducting Scope 1 and 2 greenhouse gas emissions (GHG) third party verification

for all of our production facilities for 2021 and 2022.

See “Management’s Discussion and Analysis of Financial

Condition and Results of Operations—Current Initiatives and Outlook.”

● Evaluate and pursue strategic opportunities .

We are examining opportunities to expand our business such as joint ventures,

strategic partnerships, synergistic acquisitions and other opportunities.

We intend to pursue these opportunities as financial resources

and business prospects make these opportunities desirable.

Competitive Strengths

We are the largest producer of specialty alcohols

in the United States.

We are evaluating and plan to implement new equipment and technologies to increase our production yields, improve our operating efficiencies

and reliability, reduce our overall carbon footprint, diversify our products and revenues, and increase our profitability as financial

resources and market conditions justify these investments.

our break bulk capabilities.

With the addition of Eagle Alcohol, we have further diversified

our business to include break bulk distribution of specialty alcohols.

We can now store,

denature, package and resell alcohol in smaller sizes, including tank trucks, totes and drums

that typically garner a premium price to bulk specialty alcohols.

We deliver these products

to customers in the Health, Home & Beauty , Food & Beverage and related-process

industries using our own trucking fleet and common carrier.

We intend to leverage Eagle Alcohol’s

transportation expertise across our entire distribution platform, replacing a portion of

our third-party trucking services, reducing our logistics costs and improving margins.

are also in the process of expanding our distribution territory into new geographies such

as Southern California.

and pursue strategic opportunities .

We are examining opportunities to expand our business

such as joint ventures, strategic partnerships, synergistic acquisitions and other opportunities.

We intend to pursue these opportunities as financial resources and business prospects make

these opportunities desirable.

We believe that our competitive strengths include:

● Our customer and supplier relationships .

We have extensive and long-standing close customer and supplier relationships, both

domestic and international, for our specialty alcohols and essential ingredients.

We have an excellent reputation for developing specialty

alcohols under stringent quality control standards, particularly at our Pekin Campus.

Our quality management systems are supported by

ISO 9001, ICH Q7, TfS and EXCiPACT certifications which are viewed by our customers as important attestations of our quality control standards.

● Barriers to entry .

Our production facilities use specialized equipment, technologies and processes to achieve stringent quality

controls, higher yields and efficient production of alcohols and essential ingredients.

Our specialized equipment, technologies and processes,

together with our quality management certifications, strict regulatory requirements, and close customer and supplier relationships create

significant barriers to entry to new market participants.

● Our experienced management .

Our senior management team has a proven track record with significant operational and financial

expertise and many years of experience in the alcohol production industry.

Our senior executives have successfully navigated a wide variety

of business and industry-specific challenges and deeply understand the business of successfully producing and marketing specialty alcohols

● Customer and supplier relationships .

We have extensive and long-standing close customer and supplier relationships, both domestic and international, for our specialty alcohols

and essential ingredients.

● The strategic location of our Midwest production facilities .

We operate three distinct but integrated production facilities

at our Pekin Campus in the Midwest.

We are able to participate from that location in the largest regional specialty alcohol market in

the United States as well as international markets.

◾ We believe that our Midwest location enhances our overall hedging opportunities with a greater correlation to the highly-liquid physical

We have an excellent reputation for developing specialty alcohols under stringent quality control standards,

particularly at our Pekin Campus.

Our quality management systems are supported by ISO 9001, ICH Q7, and EXCiPACT certifications which

are viewed by our customers as important attestations of our quality control standards .

● Diverse product mix .

a wide range of specialty alcohol, essential ingredient and other products to meet customer demand.

We offer multiple alcohol quality

grades ranging from industrial-grade alcohol to the highest beverage grade low moisture 200 proof alcohol available.

We also offer a wide

variety of essential ingredients and other products for food, feed and other markets.

Our production facilities use specialized equipment, technologies and processes

to achieve stringent quality controls, higher yields and efficient production of alcohols

and essential ingredients.

Our specialized equipment, technologies and processes, together

with our quality management certifications, strict regulatory requirements, and close customer

and supplier relationships create significant barriers to entry to new market participants.

experienced management .

Our senior management team has a proven track record with significant

operational and financial expertise and many years of experience in the alcohol production

Our senior executives have successfully navigated a wide variety of business and

industry-specific challenges and deeply understand the business of successfully producing

and marketing specialty alcohols and essential ingredients.

strategic location of our Midwest production facilities .

We operate three distinct but integrated production facilities at our Pekin

Campus in the Midwest.

We are able to participate from that location in the largest regional specialty alcohol market in the United States

as well as international markets.

believe that our Midwest location enhances our overall hedging opportunities with a greater correlation to the highly liquid physical

and paper markets in Chicago.

◾ Our Midwest location provides excellent logistical access via rail, truck and barge.

In particular, barge access via the Illinois

River to the Mississippi River enables us to efficiently bring our products to international markets.

◾ The relatively unique wet milling process at one of our production facilities at our Pekin Campus allows us to extract the highest

use and value from each component of the corn kernel.

As a result, the wet milling process generates a higher level of cost recovery from

corn than that produced at a dry mill.

◾ Our Midwest location allows us deep market insight and engagement in major specialty alcohol, fuel-grade ethanol, pet food and feed

markets, thereby improving pricing opportunities.

We believe that these competitive strengths will

help us attain our goal of expanding our business as a leading producer and distributor of specialty alcohols and essential ingredients.

Overview of Our Key Markets and Market Opportunity

Midwest location provides excellent logistical access via rail, truck and barge.

In particular,

barge access via the Illinois River to the Mississippi River enables us to efficiently bring

our products to international markets.

relatively unique wet milling process at one of our production facilities at our Pekin Campus

allows us to extract the highest use and value from each component of the corn kernel.

a result, the wet milling process generates a higher level of cost recovery from corn than

that produced at a dry mill.

Midwest location allows us deep market insight and engagement in major specialty alcohol,

fuel-grade ethanol, pet food and feed markets, thereby improving pricing opportunities.

● Our Midwest location sits atop the

Mount Simon formation, identified as one of the best and largest aquafers in the country for carbon storage, potentially allowing us to

benefit from this close proximity to store CO 2 .

of Our Key Markets and Market Opportunity

We produce specialty alcohols, fuel-grade ethanol

and essential ingredients, focusing on four key markets:

and essential ingredients, focusing on five key markets:

Health, Home & Beauty ;

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and Renewable Fuels .

Health, Home & Beauty

Our products for the health, home and beauty markets

include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners.

We offer a variety

of specialty alcohols for the health, home and beauty markets, depending on usage and regulatory requirements, including API-grade, United

States Pharmacopeia, or USP, -grade ethyl alcohols, and industrial-grade ethyl alcohol.

In 2020, we expanded our range of available product

offerings within the health, home and beauty markets through quality management systems certifications.

We have ISO 9001, ICH Q7 and EXCiPACT

certifications at each of our Pekin Campus production facilities, all of which are viewed as important attestations of quality control

In particular, our ICH Q7 certification qualifies our specialty alcohols for use as an API, and our EXCiPACT certification

qualifies our specialty alcohols for use as an excipient in the pharmaceutical industry.

These certifications enable us to offer products

to a wider group of customers and generally at more profitable margins.

Home & Beauty

products for the health, home and beauty markets include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers,

disinfectants and cleaners.

We offer a variety of specialty alcohols for the health, home and beauty markets, depending on usage and

regulatory requirements, including API-grade, United States Pharmacopeia, or USP, -grade ethyl alcohols, and industrial-grade ethyl alcohol.

have ISO 9001, ICH Q7 and EXCiPACT certifications at each of our Pekin Campus production facilities, all of which are viewed as important

attestations of quality control standards.

In particular, our ICH Q7 certification qualifies our specialty alcohols for use as an API,

and our EXCiPACT certification qualifies our specialty alcohols for use as an excipient in the pharmaceutical industry.

These certifications

enable us to offer products to a wider group of customers and generally at more profitable margins.

Food & Beverage

Our products for the food and beverage market include

specialty alcohols used in alcoholic beverages, flavor extracts and vinegar as well as corn germ used for corn oils and carbon dioxide,

or CO 2 , used for beverage carbonation and dry ice.

The principal specialty alcohol we offer for beverage-grade product is our

grain neutral spirits, or GNS, alcohol.

specialty alcohols used in alcoholic beverages, flavor extracts and vinegar as well as corn germ used for corn oils and CO 2

used for beverage carbonation and dry ice.

The principal specialty alcohol we offer for beverage-grade product is our grain neutral spirits,

or GNS, alcohol.

In addition, we primarily sell FCC 190 and USP 190 Ultra into vinegar markets.

We are also introducing new high-quality 190 proof and low-moisture 200-proof GNS products to our existing and

target customers in the beverage, food, flavor, personal care and pharmaceutical industries.

We believe the key drivers in the food and beverage

market include consumer preferences for the social currency of brand authenticity and heritage;

consumers seeking unique and personalized

We are also introducing new high-quality

192 proof and low-moisture 200-proof GNS products to our existing and target customers in the beverage, food, flavor, personal care and

pharmaceutical industries.

believe the key drivers in the food and beverage market include consumer preferences for the social currency of brand authenticity and

consumers seeking unique and personalized experiences;

improved consumer access to spirits products;

the growth of craft distillers;

and the ability to meet wide-ranging consumer

preferences through a broad diversity of spirits categories and cocktails.

Essential Ingredients

Our essential ingredients include dried

yeast, corn gluten meal, corn gluten feed, and distillers grains and liquid feed used in commercial animal feed and pet foods.

also sell yeast for human consumption.

The raw materials for our essential ingredients are generated as co-products from our

production of alcohols.

These co-products are further manufactured, altered and refined into our essential ingredients, including

for special customer applications.

Many of our essential ingredients are used in a

variety of food products to affect their nutrition, including protein and fat content, as well as other product attributes such as taste,

texture, palatability and stability.

Our high quality and high purity manufacturing enable our customers to use some of our essential

ingredients in human foods while others are used in pet foods and animal feed.

We expect the essential ingredients market to grow

significantly due to global demand for higher-grade protein feed, such as feed used in fisheries and other applications.

Renewable Fuels

Our renewable fuels products include fuel-grade

ethanol used as transportation fuel and distillers corn oil used as a biodiesel feedstock.

Our renewable fuels business is supported by

our own production of fuel-grade ethanol as well as fuel-grade ethanol produced by third parties.

Renewable fuels, primarily fuel-grade ethanol,

are used for a variety of purposes, including as octane enhancers for premium gasoline and to enable refiners to produce greater quantities

of lower octane blend stock;

for fuel blending to extend fuel supplies and reduce reliance on crude oil and refined products;

and to comply

with a variety of governmental programs, in particular, the national Renewable Fuel Standard, or RFS, which was enacted to promote alternatives

to fossil fuels.

Under the RFS, the mandated use of all renewable fuels rises incrementally and peaks at 36.0 billion gallons by 2022,

of which 15.0 billion gallons are required from conventional, or corn-based, ethanol.

The RFS allows the Environmental Protection Agency,

or EPA, to adjust the annual requirement based on certain facts and circumstances.

In 2022, the EPA proposed 15.0 billion gallons from

conventional ethanol for 2023, increasing to 15.25 billion gallons for both 2024 and 2025.

See “—Governmental Regulation”.

and the ability to meet wide-ranging consumer preferences through a broad diversity of spirits categories and cocktails.

Industry & Agriculture

Our products for the industry and agriculture market

include alcohols and other products for paint applications and fertilizers.

essential ingredients include dried yeast, corn gluten meal, corn gluten feed, and distillers grains and liquid feed used in commercial

animal feed and pet foods.

We also sell yeast for human consumption.

The raw materials for our essential ingredients are generated as

co-products from our production of alcohols.

These co-products are further manufactured, altered and refined into our essential ingredients,

including for special customer applications.

of our essential ingredients are used in a variety of food products to affect their nutrition, including protein and fat content, as

well as other product attributes such as taste, texture, palatability and stability.

Our high quality and high purity manufacturing enable

our customers to use some of our essential ingredients in human foods while others are used in pet foods and animal feed.

expect the essential ingredients market to grow significantly due to global demand for higher-grade protein feed, such as feed used in

fisheries and other applications.

renewable fuels products include fuel-grade ethanol used as transportation fuel and distillers corn oil used as a biodiesel feedstock.

Our renewable fuels business is supported by our own production of fuel-grade ethanol as well as fuel-grade ethanol produced by third

fuels, primarily fuel-grade ethanol, are used for a variety of purposes, including as octane enhancers for premium gasoline and to enable

refiners to produce greater quantities of lower octane blend stock;

for fuel blending to extend fuel supplies and reduce reliance on

crude oil and refined products;

and to comply with a variety of governmental programs, in particular, the national Renewable Fuel Standard,

or RFS, which was enacted to promote alternatives to fossil fuels.

Under the RFS, the mandated use of all renewable fuels rose incrementally

and peaked at 36.0 billion gallons in 2022, of which 15.0 billion gallons were required to be produced from conventional, or corn-based,

The RFS allows the Environmental Protection Agency, or EPA, to adjust the annual requirement based on certain facts and circumstances.

The EPA has set its annual requirements for conventional ethanol to 15.0 billion gallons for each of 2023, 2024 and 2025.

See “—Governmental

According to the Renewable Fuels Association, the

domestic fuel-grade ethanol industry produced 15.4 billion gallons of ethanol in 2022, up from 15.0 billion gallons in 2021.

domestic fuel-grade ethanol industry produced over 15.5 billion gallons of ethanol in 2023, up from 15.4 billion gallons in 2022.

to the United States Department of Energy, total annual gasoline consumption in the United States is approximately 137 billion gallons

and total annual fuel-grade ethanol consumption represented approximately 11% of this amount in 2021.

We anticipate that continued limited

opportunities for gasoline refinery expansions and the growing importance of reducing CO 2 emissions through the use of renewable

and total annual fuel-grade ethanol blended with gasoline represented approximately 10.4% of this amount in 2023.

We anticipate that continued

limited opportunities for gasoline refinery expansions and the growing importance of reducing CO 2 emissions using renewable

fuels will generate additional growth in the demand for fuel-grade ethanol.

Overview of Alcohol Production Process

Alcohol production from starch- or sugar-based

feedstock is a highly-efficient process.

Modern alcohol production requires large amounts of corn, or other high-starch grains, and water

as well as chemicals, enzymes and yeast, in addition to natural gas and electricity.

Dry Milling Process

In the dry milling process, corn or other high-starch

grain is first ground into flour, then slurried with water to form a mash.

Enzymes are added to the mash to convert the starch into dextrose,

a simple sugar.

The mash is processed through a high temperature cooking procedure, which reduces bacteria levels prior to fermentation.

The mash is then cooled and transferred to fermenters, where yeast is added and the conversion of sugar to alcohol and CO 2 begins.

of Alcohol Production Process

production from starch- or sugar-based feedstock is a highly-efficient process.

Modern alcohol production requires large amounts of corn,

or other high-starch grains, and water as well as chemicals, enzymes and yeast, in addition to natural gas and electricity.

Milling Process

the dry milling process, corn or other high-starch grain is first ground into flour, then slurried with water to form a mash.

are added to the mash to convert the starch into dextrose, a simple sugar.

The mash is processed through a high temperature cooking procedure,

which reduces bacteria levels prior to fermentation.

The mash is then cooled and transferred to fermenters, where yeast is added and

the conversion of sugar to alcohol and CO2 begins.

After fermentation, the resulting “beer”

is transferred to distillation where the alcohol is separated from the residual “stillage”.

The resulting alcohol is concentrated

is transferred to distillation where the alcohol is separated from the residual “stillage.” The resulting alcohol is concentrated

to 190 proof using conventional distillation methods and then is dehydrated to approximately 200 proof, representing 100% alcohol levels,

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customer specifications.

The residual stillage is separated into a coarse

grain portion and a liquid portion through a screw press or centrifugation process.

The soluble liquid portion is concentrated to about

40% dissolved solids by an evaporation process.

This intermediate state is called condensed distillers solubles, or syrup.

grain and syrup portions are then mixed to produce wet distillers grains, or WDG, or can be mixed and dried to produce dried distillers

grains with solubles, or DDGS.

residual stillage is separated into a coarse grain portion and a liquid portion through a screw press or centrifugation process.

soluble liquid portion is concentrated to about 40% dissolved solids by an evaporation process.

This intermediate state is called condensed

distillers solubles, or syrup.

The coarse grain and syrup portions are then mixed to produce wet distillers grains, or WDG, or can be

mixed and dried to produce dried distillers grains with solubles, or DDGS.

Both WDG and DDGS are high-protein animal feed products.

Wet Milling Process

In the wet milling process, corn or other high-starch

grain is first soaked or “steeped” in sulfurous acid for approximately 24 hours to soften the whole corn kernel ahead of milling.

After steeping, the grain goes through coarse milling to gently open the kernels to separate the corn germ from which the corn oil can

be further extracted in a separate process.

The remaining fiber, gluten and starch components are further separated and sold.

The stillage from the fermentation process is concentrated

in an evaporator and is co-dried with the fiber component to be sold as corn gluten feed.

The gluten component is filtered and dried to

produce a high protein corn gluten meal.

The starch is then processed into alcohol through

fermentation.

The fermentation process for alcohol at this stage is similar to the dry milling process.

In addition, we separate and dry

yeast to produce distillers yeast.

Overview of Distillers Grains Market

Distillers grains are produced as a co-product

of alcohol production and are valuable components of feed rations primarily to dairies and beef cattle markets, both nationally and internationally.

Milling Process

the wet milling process, corn or other high-starch grain is first soaked or “steeped” in sulfurous acid for approximately

24 hours to soften the whole corn kernel ahead of milling.

After steeping, the grain goes through coarse milling to gently open the kernels

to separate the corn germ from which the corn oil can be further extracted in a separate process.

The remaining fiber, gluten and starch

components are further separated and sold.

stillage from the fermentation process is concentrated in an evaporator and is co-dried with the fiber component to be sold as corn gluten

The gluten component is filtered and dried to produce a high protein corn gluten meal.

starch is then processed into alcohol through fermentation.

The fermentation process for alcohol at this stage is similar to the dry

milling process.

In addition, we separate and dry yeast to produce distillers yeast.

of Distillers Grains Market

grains are produced as a co-product of alcohol production and are valuable components of feed rations primarily to dairies and beef cattle

markets, both nationally and internationally.

Our plants produce both WDG and DDGS.

WDG is sold to customers proximate to the plants and DDGS is delivered by truck, rail and barge

to customers in domestic and international markets.

Producing WDG also allows us to use up to one-third less process energy, thus reducing

production costs and lowering the carbon footprint of our production facilities.

Historically, the market price for distillers grains

has generally tracked the price of corn.

We believe that the market price of WDG and DDGS is determined by a number of factors, including

the market prices of corn, soybean meal and other competitive ingredients, the performance or value of WDG and DDGS in a particular feed

formulation and general market forces of supply and demand, including export markets for these co-products.

The market price of distillers

grains is also often influenced by nutritional models that calculate the feed value of distillers grains by nutritional content, as well

as reliability of consistent supply.

We market and sell through our wholly-owned subsidiary, Kinergy Marketing

LLC, or Kinergy, all of the alcohols we produce.

Kinergy also markets fuel-grade ethanol produced by third parties.

We market and sell

through our wholly-owned subsidiary, Alto Nutrients, LLC, all of the essential ingredients we produce.

We also sell break bulk quantities

through Eagle Alcohol to customers in the beverage, food, industrial and related-process industries.

We have extensive and long-standing customer relationships,

both domestic and international, for our specialty alcohols and essential ingredients, including yeast for pet food and human foods.

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 fuel 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

Our customers depend on us to provide a reliable supply of fuel-grade ethanol and manage the logistics and timing of delivery.

We secure additional fuel-grade ethanol supplies from third-party fuel-grade ethanol plants.

We market our essential ingredient 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.

WDG is sold to customers proximate to the plants

and DDGS is delivered by truck, rail and barge to customers in domestic and international markets.

Producing WDG also allows us to use

up to one-third less process energy, thus reducing production costs and lowering the carbon footprint of our production facilities.

Historically,

the market price for distillers grains has generally tracked the price of corn.

We believe that the market price of WDG and DDGS is determined

by a number of factors, including the market prices of corn, soybean meal and other competitive ingredients, the performance or value

of WDG and DDGS in a particular feed formulation and general market forces of supply and demand, including export markets for these co-products.

The market price of distillers grains is also often influenced by nutritional models that calculate the feed value of distillers grains

by nutritional content, as well as reliability of consistent supply.

market and sell through our wholly-owned subsidiary, Kinergy Marketing LLC, or Kinergy, all of the alcohols we produce.

markets fuel-grade ethanol produced by third parties.

We market and sell through our wholly-owned subsidiary, Alto Nutrients, LLC, all

of the essential ingredients we produce.

We also sell break bulk quantities through Eagle Alcohol to customers in the beverage, food,

industrial and related-process industries.

have extensive and long-standing customer relationships, both domestic and international, for our specialty alcohols and essential ingredients,

including yeast for pet food and human foods.

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.

renewable fuel 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.

We secure additional fuel-grade ethanol supplies from third-party fuel-grade

ethanol plants.

market our essential ingredient 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.

We do not market essential ingredients from other producers.

Our Pekin Campus production segment generated $521.3

million, $498.2 million and $330.4 million in net sales for the years ended December 31, 2022, 2021 and 2020, respectively, from the sale

Our Pekin Campus production segment generated $225.8 million, $189.5 million and $130.3 million in net sales for the years

ended December 31, 2022, 2021 and 2020, respectively, from the sale of essential ingredients.

During 2022, 2021 and 2020, our Pekin Campus production segment sold

an aggregate of approximately 201.1 million, 213.0 million and 193.9 million gallons of alcohols and 851,500, 875,100 and 829,000 tons

of essential ingredients, respectively, on a dry matter basis.

Our Other production segment generated $253.6 million,

$107.9 million and $137.7 million in net sales for the years ended December 31, 2022, 2021 and 2020, respectively, from the sale of alcohols.

Our Other production segment generated $90.2 million, $31.1 million and $40.9 million in net sales for the years ended December 31, 2022,

2021 and 2020, respectively, from the sale of essential ingredients.

During 2022, 2021 and 2020, our Other production segment sold an aggregate

of approximately 92.3 million, 37.6 million and 78.0 million gallons of alcohols and 785,900, 361,000 and 619,000 tons of essential ingredients,

respectively, on a dry matter basis.

Our marketing and distribution segment generated $228.9 million, $381.2

million and $257.7 million in net sales for the years ended December 31, 2022, 2021 and 2020, respectively, from the sale of all alcohols.

Our Corporate and other segment generated $15.8 million in net sales

from Eagle Alcohol and sold 7.6 million gallons of alcohols.

Pekin Campus production segment generated $502.2 million, $521.3 million and $498.2 million in net sales for the years ended December

31, 2023, 2022 and 2021, respectively, from the sale of alcohols.

Our Pekin Campus production segment generated $217.7 million, $225.9

million and $189.5 million in net sales for the years ended December 31, 2023, 2022 and 2021, respectively, from the sale of essential

During 2023, 2022 and 2021, our Pekin Campus production

segment sold an aggregate of approximately 208.9 million, 204.6 million and 213.0 million gallons of alcohols and 878,400, 850,300 and

875,100 tons of essential ingredients, respectively, on a dry matter basis.

Western production segment generated $167.0 million, $253.6 million and $107.9 million in net sales for the years ended December 31,

2023, 2022 and 2021, respectively, from the sale of alcohols.

Our Western production segment generated $57.3 million, $90.2 million and

$31.1 million in net sales for the years ended December 31, 2023, 2022 and 2021, respectively, from the sale of essential ingredients.

During 2023, 2022 and 2021, our Western production

segment sold an aggregate of approximately 67.0 million, 92.4 million and 37.6 million gallons of alcohols and 642,300, 787,100 and 361,000

tons of essential ingredients, respectively, on a dry matter basis.

Our marketing and distribution segment generated

$263.0 million, $228.9 million and $381.2 million in net sales for the years ended December 31, 2023, 2022 and 2021, respectively, from

the sale of all alcohols.

Our Corporate and other segment generated $15.8

million in net sales from Eagle Alcohol’s business for each of the years ended December 31, 2023 and 2022, and sold 4.0 million

gallons of alcohols for each of those years.

During 2023, 2022 and 2021, we produced or purchased

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114 and 99 customers, respectively.

For 2022, 2021 and 2020, sales to our two largest customers, Shell Trading US Company and Chevron Products

USA represented an aggregate of approximately 20%, 22% and 12%, of our net sales, respectively.

For 2022, 2021 and 2020, sales to each

of our other customers represented less than 10% of our net sales.

Pekin Campus and Other Production Segments

Our production operations depend upon various raw

materials suppliers, including suppliers of corn, natural gas, electricity and water.

The cost of corn is the most important variable

cost associated with our alcohol production.

We source corn for our plants using standard contracts, including spot purchase, forward

purchase and basis contracts.

When resources are available, we seek to limit the exposure of our production operations to raw material

price fluctuations by purchasing forward a portion of our corn requirements on a fixed price basis and by purchasing corn and other raw

materials futures contracts and options.

During 2022, 2021 and 2020, purchases of corn from our two largest

suppliers represented an aggregate of approximately 27%, 16% and 16% of our total corn purchases, respectively, for those periods.

from each of our other corn suppliers represented less than 10% of total corn purchases in each of 2022, 2021 and 2020.

Marketing and Distribution Segment

Our marketing and distribution operations include alcohols and essential

ingredients we produce but also depend upon various third-party producers of fuel-grade ethanol.

In addition, we provide transportation,

storage and delivery services through third-party service providers with whom we have contracted to receive fuel-grade ethanol at agreed

upon locations from our third-party suppliers and to store and/or deliver the ethanol to agreed-upon locations on behalf of our customers.

These contracts generally run from year-to-year, subject to termination by either party upon advance written notice before the end of

the then-current annual term.

During 2022, 2021 and 2020, we purchased and resold

from third parties an aggregate of approximately 220 million, 204 million and 163 million gallons, respectively, of fuel-grade ethanol.

During 2022, 2021 and 2020, purchases of fuel-grade

ethanol from our four largest third-party suppliers represented 69%, 76% and 62%, respectively, of our total third-party ethanol purchases

for each of those periods.

Purchases from each of our other third-party ethanol suppliers represented less than 10% of total third-party

ethanol purchases in each of 2022, 2021 and 2020.

For 2023, 2022 and 2021, sales to our two largest customers, Shell Trading US Company and Chevron

Products USA represented an aggregate of approximately 16%, 20% and 22% of our net sales, respectively.

For 2023, 2022 and 2021, sales

to each of our other customers represented less than 10% of our net sales.

Campus and Western Production Segments

production operations depend upon various raw materials suppliers, including suppliers of corn, natural gas, electricity and water.

cost of corn is the most important variable cost associated with our alcohol production.

We source corn for our plants using standard

contracts, including spot purchase, forward purchase and basis contracts.

When resources are available, we seek to limit the exposure

of our production operations to raw material price fluctuations by purchasing forward a portion of our corn requirements on a fixed price

basis and by purchasing corn and other raw materials futures contracts and options.

2023, 2022 and 2021, purchases of corn from our three largest suppliers represented an aggregate of approximately 26%, 38% and 28% of

our total corn purchases, respectively, for those periods.

Purchases from each of our other corn suppliers represented less than 10%

of total corn purchases in each of 2023, 2022 and 2021.

and Distribution Segment

marketing and distribution operations include alcohols and essential ingredients we produce but also depend upon various third-party

producers of fuel-grade ethanol.

In addition, we provide transportation, storage and delivery services through third-party service providers

with whom we have contracted to receive fuel-grade ethanol at agreed upon locations from our third-party suppliers and to store and/or

deliver the ethanol to agreed-upon locations on behalf of our customers.

These contracts generally run from year-to-year, subject to

termination by either party upon advance written notice before the end of the then-current annual term.

2023, 2022 and 2021, we purchased and resold from third parties an aggregate of approximately 103 million, 118 million and 229 million

gallons, respectively, of fuel-grade ethanol.

2023, 2022 and 2021, purchases of fuel-grade ethanol from our four largest third-party suppliers represented 86%, 69% and 76%, respectively,

of our total third-party ethanol purchases for each of those periods.

Purchases from each of our other third-party ethanol suppliers

represented less than 10% of total third-party ethanol purchases in each of 2023, 2022 and 2021.

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 up to 350 million gallons, including both fuel-grade ethanol

and specialty alcohols ranging from industrial-, pharmaceutical-, and high-quality food- and beverage-grade alcohols.

Of this amount,

we are able to produce up to 110 million gallons annually of specialty alcohols, depending on our product mix among high-quality beverage-grade

alcohol and alcohols of other quality specifications.

As market conditions change, we may increase, decrease or idle production at one

or more operating facilities or resume operations at any idled facility.

The tables below provide an overview of our five production

Campus Production Facilities

operating status

maximum annual alcohol production capacity (in millions of gallons)

maximum annual specialty alcohol production capacity (in millions of gallons)

milling process

energy source

Production Facilities

We operate five production facilities.

our production facilities are located in Pekin, Illinois at our Pekin Campus, one is located in Oregon and another is located in Idaho.

We have an annual alcohol production capacity of 350 million gallons, comprised of 210 million gallons of fuel-grade ethanol and up to

140 million gallons of specialty alcohols.

As market conditions change, we may increase, decrease or idle production at one or more operating

facilities or resume operations at any idled facility.

The tables below provide an overview of our five production facilities.

Pekin Campus Production Facilities

Current operating status

Approximate maximum annual alcohol production capacity (in millions of gallons)

Approximate maximum annual specialty alcohol production capacity (in millions of gallons)

Production milling process

Primary energy source

Western Production Facilities

Current operating status

Approximate maximum annual fuel-grade ethanol production capacity (in millions of gallons)

Production milling process

Primary energy source

Commodity Risk Management

We employ various risk mitigation techniques.

example, we may seek to mitigate our exposure to commodity price fluctuations by purchasing forward a portion of our corn and natural

gas requirements through fixed-price or variable-price contracts with our suppliers, as well as entering into derivative contracts for

fuel-grade ethanol, corn and natural gas.

To mitigate fuel-grade ethanol inventory price risks, we may sell a portion of our production

forward under fixed- or index-price contracts, or both.

We may hedge a portion of the price risks by entering into exchange-traded futures

contracts and options.

Proper execution of these risk mitigation strategies can reduce the volatility of our gross profit margins.

operating status

maximum annual fuel-grade ethanol production capacity (in millions of gallons)

milling process

energy source

Risk Management

employ various risk mitigation techniques.

For example, we may seek to mitigate our exposure to commodity price fluctuations by purchasing

forward a portion of our corn and natural gas requirements through fixed-price or variable-price contracts with our suppliers, as well

as entering derivative contracts for fuel-grade ethanol, corn and natural gas.

To mitigate fuel-grade ethanol inventory price risks,

we may sell a portion of our production forward under fixed- or index-price contracts, or both.

We may hedge a portion of the price risks

by entering exchange-traded futures contracts and options.

Proper execution of these risk mitigation strategies can reduce the volatility

of our gross profit margins.

Specialty alcohols have relatively low price volatility

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Given the nature of our business, we cannot effectively hedge against extreme volatility or certain market

For example, fuel-grade ethanol prices, as reported by the Chicago Board of Trade, or CBOT, ranged from $2.00 to $2.88 per

gallon during 2022, $1.48 to $3.75 per gallon during 2021 and from $0.81 to $1.62 per gallon during 2020;

and corn prices, as reported

by the CBOT, ranged from $5.64 to $8.18 per bushel during 2022, $4.84 to $7.73 per bushel during 2021 and from $3.03 to $4.84 per bushel

Climate-Related and Other Risks

Short- to medium-term climate-related and other risks include high

sensitivity to certain commodity prices such as corn and natural gas;

regulatory changes and political volatility, both domestic and international;

For example, fuel-grade ethanol prices, as reported by the Chicago Mercantile Exchange, or CME, ranged from $1.58 to $2.67

per gallon during 2023, from $2.00 to $2.88 per gallon during 2022 and from $1.48 to $3.75 per gallon during 2021;

and corn prices, as

reported by the CME, ranged from $4.50 to $6.85 per bushel during 2023, from $5.64 to $8.18 per bushel during 2022 and from $4.84 to $7.73

per bushel during 2021.

Climate-Related

and Other Risks

to medium-term climate-related and other risks include high sensitivity to certain commodity prices such as corn and natural gas;

changes and political volatility, both domestic and international;

ethanol supply and demand imbalances;

logistics and storage constraints from river access during inclement or volatile weather conditions;

logistics and storage constraints

from river access during inclement or volatile weather conditions;

lack of automation of process optimization;

high repair, maintenance and production costs resulting from older facilities;

capacity of our older facilities as water temperatures increase;

and international market competition.

Long-term climate-related risks include water resource limitations;

high repair, maintenance

and production costs resulting from older facilities;

poor cooling capacity of our older facilities as water temperatures increase;

international market competition.

climate-related risks include water resource limitations;

lower or volatile grain availability in local markets;

market transition away from combustion fuels that include renewables;

and the energy

cost impact of technology such as wet milling and multiple distillation processes for high-quality alcohol.

We also may be impacted by

costs and regulatory burdens associated with carbon emissions from our production and distribution as well as truck transport and packaging

associated with Eagle Alcohol’s use of drums and totes.

See “Risk Factors.”

Marketing Arrangements

market transition away

from combustion fuels that include renewables;

and the energy cost impact of technology such as wet milling and multiple distillation

processes for high-quality alcohol.

We also may be impacted by costs and regulatory burdens associated with carbon emissions from our

production and distribution as well as truck transport and packaging associated with Eagle Alcohol’s use of drums and totes.

“Risk Factors.”

We market all the alcohols and essential ingredients

produced at our facilities.

In addition, we market and sell the entire fuel-grade ethanol production volume of a third-party producer.

We are the largest producer of specialty alcohols

in the United States.

Other significant producers of specialty alcohols

in the United States are Archer-Daniels-Midland Company, MGP Ingredients, Inc., Grain Processing Corporation, CIE and Greenfield Global

Inc., which collectively make up a significant majority of the total installed specialty alcohol production capacity in the United States

along with many smaller producers.

The largest producers of fuel-grade ethanol in the United States are

POET, LLC, Valero Renewable Fuels Company, LLC, Archer-Daniels-Midland Company and Green Plains Inc., collectively with approximately

41% of the total installed fuel-grade ethanol production capacity in the United States.

In addition, there are many mid-sized fuel-grade

ethanol producers with several plants under ownership, smaller producers each with one or two plants, and several fuel-grade ethanol marketers

that create significant competition.

Overall, we believe there are over 200 fuel-grade ethanol production facilities in the United States

with a total installed production capacity of approximately 17.5 billion gallons and many brokers and marketers with whom we compete for

sales of fuel-grade ethanol and its co-products.

Our fuel-grade ethanol also competes on a global

market against production from other countries, such as Brazil, which may have lower production costs than United States producers.

feedstock input costs such as sugarcane used in Brazil as compared to corn used in the Unites States may give foreign producers a competitive

In addition, fuel-grade ethanol from sugarcane feedstock qualifies as an advanced biofuel, unlike corn ethanol, allowing certain

producers to economically satisfy an advanced biofuel standard.

Moreover, new products and production technologies are under continuous

development, many of which, if adopted by competitors, could harm our ability to compete.

We also market and distribute alcohols produced by third parties.

are the largest producer of specialty alcohols in the United States.

significant producers of specialty alcohols in the United States are Archer-Daniels-Midland Company, Grain Processing Corporation, CIE

and Greenfield Global Inc., which collectively make up a significant majority of the total installed specialty alcohol production capacity

in the United States along with many smaller producers.

largest producers of fuel-grade ethanol in the United States are POET, LLC, Valero Renewable Fuels Company, LLC, Archer-Daniels-Midland

Company and Green Plains Inc., collectively with approximately 40% of the total installed fuel-grade ethanol production capacity in the

United States.

In addition, there are many mid-sized fuel-grade ethanol producers with several plants under ownership, smaller producers

each with one or two plants, and several fuel-grade ethanol marketers that create significant competition.

Overall, we believe there

are over 200 fuel-grade ethanol production facilities in the United States with a total installed production capacity of approximately

17.8 billion gallons and many brokers and marketers with whom we compete for sales of fuel-grade ethanol and its co-products.

fuel-grade ethanol also competes on a global market against production from other countries, such as Brazil, which may have lower production

costs than United States producers.

Lower feedstock input costs such as sugarcane used in Brazil as compared to corn used in the Unites

States may give foreign producers a competitive advantage.

In addition, fuel-grade ethanol from sugarcane feedstock qualifies as an advanced

biofuel, unlike corn ethanol, allowing certain producers to economically satisfy an advanced biofuel standard.

Moreover, new products

and production technologies are under continuous development, many of which, if adopted by competitors, could harm our ability to compete.

We believe that our competitive strengths include

our customer and supplier relationships, the barriers to entry to our most profitable lines of business—including our modern technologies

and certifications at our production facilities—our experienced management, and the strategic location of our Midwest production

We believe that these advantages will help us to attain our goal to expand our business as a leading producer and distributor

of specialty alcohols and essential ingredients.

our customer and supplier relationships, our diverse product mix, the barriers to entry to our most profitable lines of business—including

our modern technologies and certifications at our production facilities—our experienced management, and the strategic location of

our Midwest production facilities.

See “—Competitive Strengths.”

Governmental Regulation

Our business is subject to a wide range of federal,

state and local laws and regulations directed at protecting public health and the environment, including those promulgated by the Occupational

Safety and Health Administration, or OSHA, the U.S.

Food and Drug Administration, or FDA, the EPA, and numerous state, local and international

These laws, their underlying regulatory requirements and their potential enforcement, some of which are described below,

impact, or may impact, nearly every aspect of our operations, including our production of alcohols (including distillation), our production

of essential ingredients, our storage facilities, and our water usage, wastewater discharge, disposal of hazardous wastes and emissions,

and other matters pertaining to our existing and proposed business by imposing:

● restrictions on our existing and proposed operations and/or the need to install enhanced or additional controls;

● special requirements applicable to food and drug additives;

● the need to obtain and comply with permits and authorizations;

● liability for exceeding applicable permit limits or legal requirements, in some cases for the remediation of contaminated soil and

groundwater at our production facilities, contiguous and adjacent properties and other properties owned and/or operated by third parties;

● other specifications for the specialty alcohols and essential ingredients we produce and market.

In addition, some governmental regulations are

helpful to our production and marketing business.

The fuel-grade ethanol industry in particular is supported by federal and state mandates

and environmental regulations that favor the use of fuel-grade ethanol in motor fuel blends in North America.

Some of the governmental

regulations applicable to our production and marketing business are briefly described below.

Food and Drug Regulation

Our products for the Health, Home & Beauty ,

Food & Beverage and Essential Ingredients markets are subject to regulation by the FDA as well as similar state agencies.

Under the Federal Food, Drug, and Cosmetic Act, or FDCA, the FDA regulates the processing, formulation, safety, manufacture, packaging,

labeling and distribution of food ingredients, vitamins, cosmetics and pharmaceuticals for active and inactive ingredients.

FDA’s and FDCA’s rules and regulations apply directly to us as well as indirectly through their application in our customers’

To be properly marketed and sold in the United States, a relevant product must be generally recognized as safe, approved and

not adulterated or misbranded under the FDCA and relevant regulations issued under the FDCA.

The FDA has broad authority to enforce the

provisions of the FDCA.

Failure to comply with the laws and regulations of the FDA or similar state agencies could prevent us from selling

certain of our products or subject us to liability.

Renewable Fuels Energy Legislation

Under the RFS, the mandated use of all renewable

fuels, including fuel-grade ethanol, rose incrementally and peaked at 36.0 billion gallons in 2022, of which 15.0 billion gallons are

required from conventional, or corn-based, ethanol.

Under the provisions of the Energy Independence and Security Act of 2007, the EPA

has the authority to waive the mandated RFS requirements in whole or in part.

To grant a waiver, the EPA administrator must determine,

in consultation with the Secretaries of Agriculture and Energy, that there is inadequate domestic renewable fuel supply or implementation

of the requirement would severely harm the economy or environment of a state, region or the United States as a whole.

Various bills in Congress introduced from time to time are also directed

at altering existing renewable fuels energy legislation, but none have passed in recent years.

Some legislative bills are directed at

halting or reversing expansion of, or even eliminating, the renewable fuel program, while other bills are directed at bolstering the program

or enacting further mandates or grants that would support the renewable fuels industry.

business is subject to a wide range of federal, state and local laws and regulations directed at protecting public health and the environment,

including those promulgated by the Occupational Safety and Health Administration, or OSHA, the U.S.

Food and Drug Administration, or

FDA, the EPA, and numerous state, local and international authorities.

These laws, their underlying regulatory requirements and their

potential enforcement, some of which are described below, impact, or may impact, nearly every aspect of our operations, including our

production of alcohols (including distillation), our production of essential ingredients, our storage facilities, and our water usage,

wastewater discharge, disposal of hazardous wastes and emissions, and other matters pertaining to our existing and proposed business

● restrictions

on our existing and proposed operations and/or the need to install enhanced or additional

requirements applicable to food and drug additives;

need to obtain and comply with permits and authorizations;

for exceeding applicable permit limits or legal requirements, in some cases for the remediation

of contaminated soil and groundwater at our production facilities, contiguous and adjacent

properties and other properties owned and/or operated by third parties;

specifications for the specialty alcohols and essential ingredients we produce and market.

addition, some governmental regulations are helpful to our production and marketing business.

The fuel-grade ethanol industry in particular

is supported by federal and state mandates and environmental regulations that favor the use of fuel-grade ethanol in motor fuel blends

in North America.

Some of the governmental regulations applicable to our production and marketing business are briefly described below.

and Drug Regulation

products for the Health, Home & Beauty , Food & Beverage and Essential Ingredients markets are subject to

regulation by the FDA as well as similar state agencies.

Under the Federal Food, Drug, and Cosmetic Act, or FDCA, the FDA regulates the

processing, formulation, safety, manufacture, packaging, labeling and distribution of food ingredients, vitamins, cosmetics and pharmaceuticals

for active and inactive ingredients.

Many of the FDA’s and FDCA’s rules and regulations apply directly to us as well as indirectly

through their application in our customers’ products.

To be properly marketed and sold in the United States, a relevant product

must be generally recognized as safe, approved and not adulterated or misbranded under the FDCA and relevant regulations issued under

The FDA has broad authority to enforce the provisions of the FDCA.

Failure to comply with the laws and regulations of the FDA

or similar state agencies could prevent us from selling certain of our products or subject us to liability.

Fuels Energy Legislation

the RFS, the mandated use of all renewable fuels, including fuel-grade ethanol, rose incrementally and peaked at 36.0 billion gallons

in 2022, of which 15.0 billion gallons are required from conventional, or corn-based, ethanol for each of 2023, 2024 and 2025.

the provisions of the Energy Independence and Security Act of 2007, the EPA has the authority to waive the mandated RFS requirements

in whole or in part.

To grant a waiver, the EPA administrator must determine, in consultation with the Secretaries of Agriculture and

Energy, that there is inadequate domestic renewable fuel supply or implementation of the requirement would severely harm the economy

or environment of a state, region or the United States as a whole.

bills in Congress introduced from time to time are also directed at altering existing renewable fuels energy legislation, but none have

passed in recent years.

Some legislative bills are directed at halting or reversing expansion of, or even eliminating, the renewable

fuel program, while other bills are directed at bolstering the program or enacting further mandates or grants that would support the

renewable fuels industry.

The EPA has allowed fuel and fuel-additive manufacturers

to introduce into commercial gasoline up to 15% fuel-grade ethanol by volume, or E15, for vehicles from model year 2001 and beyond.

sale of E15 has begun in a majority of states, and the EPA has enacted a rule allowing for year-round use of E15.

to introduce into commercial gasoline up to 15% fuel-grade ethanol by volume, or E15, for vehicles from model year 2001 and after.

to the Renewable Fuels Association, E15 is explicitly approved by the manufacturer for use in approximately 95% of model year 2024 cars

and light trucks based on its annual review of vehicle owner’s manuals and warranty statements.

Commercial sales of E15 have begun

in a majority of states.

E15 has historically been prohibited in most states during the summer driving season due to concerns over evaporative

emissions and to meet federal clean air standards.

For the 2022 and 2023 summer driving seasons, the EPA issued emergency fuel waivers

to allow the sale of E15 to help alleviate high gasoline prices.

E15 may, however, be sold year-round in states that have a reformulated

gasoline program.

In addition, the EPA proposed in late 2023 that E15 be permitted for sale year-round in various Midwestern states effective

in April 2024.

Office of Management and Budget approved the proposal in February 2024 but deferred the effective date to April

Various states including California, Oregon and

1 unchanged sentence

reducing the carbon intensity of transportation fuels.

Blending fuel-grade ethanol into gasoline is one of the primary means of attaining

Additional Environmental Regulations

In addition to the governmental regulations applicable

to the alcohol production and marketing industry described above, our business is subject to additional federal, state and local environmental

regulations, including regulations established by the EPA and state regulatory agencies related to water quality and air pollution control.

We cannot predict the manner by which, or extent to which, these regulations will harm or help our business or the alcohol production

and marketing industry in general.

Human Capital Resources

As of March 13, 2023, we had approximately 439

employees, including 439 full-time employees.

Our human capital resources objectives include attracting and retaining well-qualified and

highly skilled and motivated employees and executives.

As of that same date, approximately 44% of our employees were represented by a

labor union and covered by a collective bargaining agreement.

We have never had a work stoppage or strike and we consider our relations

with our employees to be good.

Our compensation program is designed to attract,

retain and motivate our personnel.

We use a mix of competitive salaries and other benefits to attract and retain employees and executives.

Some of these benefits include matching 401K contributions of up to 6% of salary, health and wellness programs and a paid service day

for employees to give back to their communities.

At the direction and with the involvement of an environmental, social and governance,

or ESG, committee established by our board of directors, we have established an ESG working committee that draws from our many administrative

and operational departments to review key policies and procedures, conduct employee engagement surveys and training, champion volunteering

and charitable drives, develop and implement recruiting efforts which promote diversity and inclusion and prioritize collecting and improving

on key metrics from industry frameworks such as the Global Reporting Initiative and Sustainability Accounting Standards Board standards

which are maintained by the International Sustainability Standards Board of the IFRS Foundation.

Other states, including New York, Vermont, Massachusetts, Michigan, Illinois, Colorado

and New Mexico, currently have proposed legislation or policies that would establish a low carbon fuel standard program.

Blending fuel-grade

ethanol into gasoline is one of the primary means of attaining these goals.

Environmental Regulations

addition to the governmental regulations applicable to the alcohol production and marketing industry described above, our business is

subject to additional federal, state and local environmental regulations, including regulations established by the EPA and state regulatory

agencies related to water quality and air pollution control.

We cannot predict the manner by which, or extent to which, these regulations

will harm or help our business or the alcohol production and marketing industry in general.

Capital Resources

of March 12, 2024, we had approximately 460 full-time employees.

Our human capital resources objectives include attracting and retaining

well-qualified and highly skilled and motivated employees and executives.

As of that same date, approximately 44% of our employees were

represented by a labor union and covered by a collective bargaining agreement.

We have never had a work stoppage or strike and we consider

our relations with our employees to be good.

compensation program is designed to attract, retain and motivate our personnel.

We use a mix of competitive salaries and other benefits

to attract and retain employees and executives.

Some of these benefits include matching 401K contributions of up to 6% of salary, health

and wellness programs and a paid service day for employees to give back to their communities.

At the direction and with the involvement

of an environmental, social and governance, or ESG, committee established by our board of directors, we have established an ESG working

committee that draws from our many administrative and operational departments to review key policies and procedures, conduct employee

engagement surveys and training, champion volunteering and charitable drives, develop and implement recruiting efforts which promote

diversity and inclusion and prioritize collecting and improving on key metrics from industry frameworks such as the Global Reporting

Initiative and Sustainability Accounting Standards Board standards which are maintained by the International Sustainability Standards

Board of the IFRS Foundation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business