What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-08 · 433 added, 563 removed, 182 unchanged (85% of the section changed)

10 unchanged sentences

● fluctuations in the market prices of alcohols and essential

● fluctuations in the costs of key production input commodities

such as corn and natural gas;

● our ability to fund, and the costs, timing and effects of,

our plant improvement initiatives and other capital projects, including our carbon capture and storage, or CCS, project;

● key regulatory developments relating to these projects or

to our business;

● the projected growth or contraction in the alcohol and essential

ingredients markets in which we operate;

● our strategies for expanding, maintaining or contracting our

presence in these markets;

● anticipated trends in our financial condition and results

of operations;

● our ability to distinguish ourselves from our current and

future competitors.

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

● our ability to fund, and the costs, timing and effects of, our plant improvement initiatives and other capital projects, including

our carbon capture and storage, or CCS, initiative;

● regulatory developments relating to our initiatives and projects or to our business, including our CCS initiative;

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

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

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

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

You are cautioned not to place

7 unchanged sentences

from prior results, which in turn could, among other things, cause the price of our common stock to fluctuate substantially.

We produce and distribute renewable fuel and essential

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

We are a leading producer and distributor of specialty

alcohols, renewable fuels and essential ingredients in the United States.

We operate five alcohol production facilities.

1 unchanged sentence

We have an annual

alcohol production capacity of up to 350 million gallons, including both renewable fuel 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 the highest quality beverage-grade alcohol and alcohols of other quality

specifications.

We market and distribute all of 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, produced by us and third-parties.

We 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) Pekin campus 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.

alcohol production capacity of 350 million gallons, including both renewable fuels and specialty alcohols ranging from industrial-, pharmaceutical-,

and high-quality food- and beverage-grade alcohols.

Of this amount, we can produce up to 110 million gallons annually of specialty alcohols,

depending on our product mix among high-quality beverage-grade alcohol and other quality specification alcohols.

We market and distribute

all of the alcohols produced at our facilities as well as alcohols produced by third parties.

In 2024, we marketed and distributed approximately

386 million gallons combined of our own produced alcohols as well as fuel-grade ethanol produced by third parties, and over 1.4 million

tons of essential ingredients on a dry matter basis.

We also own and operate a liquid CO 2

production facility adjacent to our plant in Oregon for the offtake of CO 2 gas from the plant for conversion to liquid CO 2

and subsequent sale.

In addition, we break bulk distribute specialty alcohols, produced by us and third parties, through our Eagle

Alcohol business.

We report our financial and operating performance

in three distinct segments:

● Pekin production , which includes the production

and sale of alcohols and essential ingredients produced at our three production facilities located in Pekin, Illinois, which we refer

to as our Pekin Campus;

● Marketing and distribution , which includes marketing

and merchant trading for company-produced alcohols and essential ingredients on an aggregated basis, and sales of fuel-grade ethanol

sourced from third parties;

● Western production , which includes the production

and sale of renewable fuels and essential ingredients and, beginning in 2025, liquid CO 2 produced at our western production

facilities, including our liquid CO 2 plant, on an aggregated basis, none of which are individually so significant as to be

considered a separately reportable segment.

Our mission is to produce the highest quality,

sustainable ingredients from renewable resources that make everyday products better.

We intend to accomplish this goal in part by investing

in our specialized and higher value specialty alcohol production and distribution infrastructure, expanding production in high-demand

essential ingredients, expanding and extending the sale of our products into new regional and international markets, building efficiencies

and economies of scale and by capturing a greater portion of the value stream.

sustainable ingredients that make everyday products better.

We intend to accomplish this goal in part by investing in our specialized

and higher value specialty alcohol production and distribution infrastructure, expanding production in high-demand essential ingredients,

expanding and extending the sale of our products into new regional and international markets, building efficiencies and economies of scale

and by capturing a greater portion of the value stream.

Production Segments

We produce specialty alcohols, renewable fuel and

essential ingredients, focusing on five key markets:

We produce specialty alcohols, renewable fuels

and essential ingredients, focusing on five key markets:

Health, Home & Beauty ;

Food & Beverage ;

Industry & Agriculture;

Agriculture ;

Essential Ingredients ;

and Renewable Fuels .

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 fertilizer s.

Products for Essential

Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, and distillers grains and liquid feed used

in commercial animal feed and pet foods.

We also sell yeast for human consumption.

Our products for the Renewable Fuels markets

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

Products for Health, Home & Beauty markets include

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

Products for Food &

Beverage markets include grain neutral spirits used in alcoholic beverages and vinegar and corn germ used for corn oils.

for Industry & Agriculture markets include alcohols and other products for paint applications and fertilizers.

Essential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, distillers grains, liquid CO 2

and liquid feed used in commercial animal feed and pet foods.

We also sell yeast and liquid CO 2 for human consumption.

products for the Renewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel

and biodiesel fuels.

We produce our alcohols and essential ingredients

at our production facilities.

at our facilities described below.

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

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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 are currently operating.

However, unless there are meaningful improvements in overall economics at our Magic Valley

facility, we plan to idle the plant before the end of 2024, which we believe will have a positive impact on our financial results.

In January 2024, we temporarily hot-idled our Magic Valley facility to minimize losses from negative regional crush margins and to

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

corn oil and high protein system at the facility.

We restarted our Magic Valley facility in July 2024.

As market conditions change,

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

offering significant timing, product transportation cost and logistical advantages.

All of our production facilities, other than our

Magic Valley plant, were operating for all of 2024, subject to scheduled and unscheduled downtimes to address facility repair and maintenance.

In January 2024, we temporarily hot-idled our Magic

Valley facility to minimize losses from negative regional crush margins and to expedite the installation of additional equipment to achieve

the intended production rate, quality and consistency from our corn oil and high protein system at the facility.

We restarted our Magic

Valley facility in July 2024 and by October 2024, the facility consistently achieved average ethanol production rates at full capacity,

the protein content yield from the plant reached 50% or greater, and we were able to expand our corn oil yields.

Increases in regional

corn basis and declining market prices for protein and corn oil resulted in overall margin compression, outweighing the economic benefits

of our plant improvements.

As a consequence, we cold-idled our Magic Valley facility on December 31, 2024 to minimize financial losses.

We continue to provide terminal services at the plant and intend to resume operations at the facility when the economic environment in

the region sustainably improves.

We believe that the cold-idling of our Magic Valley facility will have a positive impact on our overall

financial results in 2025 compared to 2024.

As market conditions change, we may increase, decrease

or idle production at one or more operating facilities or resume operations at any idled facility.

Marketing and Distribution Segment

We market and distribute all of the alcohols and

essential ingredients we produce at our facilities.

We market and distribute all the alcohols and essential

ingredients we produce at our facilities.

We also market and distribute alcohols produced by third parties.

We have extensive and long-standing customer relationships,

both domestic and international, for our specialty alcohols 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

both domestic and international, for our specialty alcohols, renewable fuels and essential ingredients.

These customers include producers

and distributors of ingredients for cosmetics, sanitizers and related products, distilled spirits producers, food products manufacturers,

producers of personal health/consumer health and personal care hygiene products, and global trading firms.

Our renewable fuels customers are located throughout

the Western and Midwestern United States and consist of integrated oil companies and gasoline marketers who blend fuel-grade ethanol into

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We market food-grade essential ingredients to human

and pet food markets, our feed products such as distillers grains primarily to export markets from our Pekin Campus, and other feed products

to dairies and feedlots, in many cases located near our production facilities.

These customers use our feed products for livestock as

a substitute for corn and other sources of starch and protein.

and pet food markets, our feed products (such as distillers grains) primarily to export markets from our Pekin Campus, and other feed

products to dairies and feedlots, in many cases located near our production facilities.

These customers use our feed products for livestock

as a substitute for corn and other sources of starch and protein.

We sell our corn oil to poultry, renewable diesel and biodiesel customers.

We do not market essential ingredients from other producers.

See “Note 3 – Segments” to our

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Current Initiatives and Outlook

In early November, we took

a significant step forward in our commitment to sustainability by finalizing a definitive CO 2 Transportation and Sequestration

Agreement with Vault 44.01 for our carbon capture and storage project, or CCS.

Under the terms of the agreement, Vault will handle the

transportation, injection and sequestration of CO 2 from our Pekin Campus to the Mt.

Simon sandstone formation in Illinois.

This partnership marks a critical milestone on our journey toward a more sustainable and prosperous future.

While we await EPA submission

and approval, address financing and source equipment, this agreement brings us closer to achieving our goals of lowering our carbon footprint

and monetizing the value of the biogenic CO 2 we produce at our Pekin Campus.

the third quarter of 2024, we improved our consolidated gross profit to $6.0 million and improved our Adjusted EBITDA to $12.2 million,

including $3.6 million in realized gains on derivatives for the quarter.

These results were primarily driven by an increase in our production

capabilities and uptime at our Pekin Campus, increasing its profitability despite fluctuating market conditions, compared to the third

quarter of 2023.

These results compare to $13.6 million of Adjusted EBITDA for the same period in 2023, including $6.2 million in realized

gains on derivatives and a cash grant of $2.8 million from the USDA’s Biofuel Producer Program.

third quarter began with solid ethanol crush margins supported by strong exports.

Domestic demand began to weaken as weather-related

events reduced miles driven.

Ethanol production remained relatively high, outpacing demand and resulting in higher ethanol inventory

levels and lower market prices.

In addition, in the third quarter, carbon prices were approximately 80% lower in Oregon and Washington

and 20% lower in California compared to the third quarter of 2023.

Although carbon prices remained low in October, we have begun to see

some price recovery.

increased productivity at our Pekin Campus wet mill to its highest level since 2020, reflecting in part the results of our successful

biennial repairs and maintenance outage in April 2024.

This translated into higher specialty alcohol production in the third quarter

of 2024, reaching 42% of total sales volume at our Pekin Campus, seven percentage points higher than for the same period last year.

remain on track to sell 90 million gallons of specialty alcohols in 2024 and expect to match this volume in 2025.

the fourth quarter, we expect corn prices to remain low, reflecting a good 2024 harvest, which we anticipate will result in a strong

supply carryout and attractive prices into 2025.

However, with domestic corn prices lower than international prices, demand for United

States corn exports will likely increase, straining logistics and driving up transportation costs.

Moreover, when domestic corn prices

are low, suppliers typically require that prices cover at least their costs, driving up corn basis.

This dynamic is one reason we expanded

our corn storage capacity at our Pekin Campus and are considering a further increase in storage capacity at the site.

higher corn transportation costs impact all ethanol producers, they have a more substantial impact on our Western operations, for which

we source corn supplies from the Midwest, compared to Midwest ethanol producers that have access to local corn supplies and cheaper corn

our Magic Valley plant, we completed upgrades to Harvesting Technology’s system to capture high protein and corn oil products and

restarted the plant in July to prove out the system and benefit from the positive crush margins at the time.

In October, the Magic Valley

facility consistently achieved average ethanol production rates at full capacity, the protein content yield from the plant reached 50%

or greater, and we were able to expand our corn oil yields.

This successful restart and operation has informed us of the technology system’s

capabilities as we consider system deployment at our other dry mills.

Unfortunately, recent increases in regional corn basis and declining

market prices for protein and corn oil have resulted in overall margin compression, outweighing the economic benefits of our plant improvements.

We will continue to explore operational opportunities and assess market trends, but unless there are meaningful improvements in overall

economics at the facility, we plan to idle the plant before the end of 2024, which we believe will have a positive impact on our financial

address these challenges, we continue to pursue opportunities to maximize the Western plants’ strengths and advantages.

engaged Guggenheim Securities to actively explore our alternatives to monetize or optimize these assets, including through potential

partnerships.

while our Columbia facility is also experiencing margin compression, the combination of lower transportation costs, premiums earned on

low-carbon ethanol and revenues generated from the sale of CO 2 make the plant more economically resilient than our Magic Valley

continue to modernize our equipment and facilities to improve reliability, lower our operating costs and reduce our carbon footprint.

For example, we are currently building a second alcohol loading dock at our Pekin Campus.

Our goal for the project is to improve our

river logistics by expediting the shipping process, adding redundancy and expanding our capabilities to accommodate a wider array of

We expect this project will yield a synergistic effect with our existing facilities and increase overall loading efficiencies.

Our anticipated project cost is $3.0 million.

The project is scheduled for completion in 2025.

Sustainability

recently completed our sustainability report for 2023 and increased our disclosures on topics such as environmental, health, safety,

quality and social metrics.

Our core values of responsibility, integrity and quality drive our mission to produce the highest quality,

sustainable ingredients that make everyday products better.

We proudly offer 100% bio-based renewable products from our specialty alcohols

and essential ingredients to renewable fuels and plant-based proteins.

At our highly efficient dry grind facilities, we are striving

for carbon intensity scores below 50 by optimizing efficiency, upgrading energy infrastructure and selecting sustainable feedstocks.

Our dedication to sustainability and social responsibility extends to our customers, employees, investors, partners, suppliers and consumers,

as well as our focus on product quality and safety.

conducted materiality assessments with internal and external stakeholders and identified multiple long-term market opportunities to viably

expand our bio-based renewable offerings.

The third-party certifications we earned include such areas as oversight on risk management;

chemical storage, handling, transportation and disposal;

multiple food safety initiatives;

quality management;

good manufacturing practices

and requirements for all active pharmaceutical ingredients and excipient products;

and supply chains for waste streams.

employ a variety of risk management strategies to mitigate the price volatility of different commodities throughout the year as a normal

course of business.

These strategies may include managing the spread between corn and ethanol prices, otherwise known as the crush margin.

We may also take positions on corn and natural gas.

Currently, our core strategy is to hedge the premium over fuel grade ethanol of our

specialty alcohol contracts that have fixed sales prices of up to one year or longer.

Using derivatives, we lock-in certain premiums

for the duration of the specialty alcohol contract over production that otherwise would be sold as ethanol.

For positions that settle,

we record the cumulative unrealized gains or losses on those positions since inception to realized.

On the remaining unsettled positions,

the change in market values measured at the end of the reporting period is reflected as unrealized.

Unrealized amounts are not determinate

of amounts that will be realized in future periods.

However, we believe that the most accurate method to assess the value or obligation

to be realized in the future, measured as of a specific date, is to note the amounts on our balance sheet.

The net derivative asset or

liability amount on the balance sheet denotes the amount that we would realize if we liquidated all of our positions as of that

specific period-end date.

Use of Non-GAAP Financial

believes that certain financial measures not in accordance with generally accepted accounting principles, or GAAP, are useful measures

of operations.

Management provides EBITDA and Adjusted EBITDA as non-GAAP financial measures so that investors will have the same financial

information that management uses, which may assist investors in properly assessing our performance on a period-over-period basis.

define EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, provision for income taxes and depreciation

and amortization expense.

We define Adjusted EBITDA as unaudited consolidated net income (loss) before interest expense, interest income,

unrealized derivative gains and losses, acquisition-related expense, asset impairments, provision for income taxes and depreciation and

amortization expense.

table is provided below to reconcile Adjusted EBITDA to its most directly comparable GAAP measure, consolidated net income (loss).

and Adjusted EBITDA are not measures of financial performance under GAAP and should not be considered as alternatives to consolidated

net income (loss) or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities

as an indicator of cash flows or as a measure of liquidity.

EBITDA and Adjusted EBITDA have limitations as analytical tools and you should

not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP.

reconciling forward-looking EBITDA or Adjusted EBITDA to forward-looking consolidated net income (loss) would require a forward-looking

statement of consolidated net income (loss) prepared in accordance with GAAP, which is unavailable to us without unreasonable effort.

We are not able to provide a quantitative reconciliation of forward-looking EBITDA or Adjusted EBITDA to forward-looking consolidated

net income (loss) because certain items required for reconciliation are uncertain, outside of our control and/or cannot reasonably be

predicted, such as net sales, cost of goods sold, unrealized derivative gains and losses, asset impairments and provision (benefit) for

income taxes, which we view as the most material components of consolidated net income (loss) that are not presently estimable.

Reconciliation

of Adjusted EBITDA to Consolidated Net Loss

Our first quarter

results for 2025 improved compared to the same period in 2024, as reflected in part by better gross margin and Adjusted EBITDA.

Adjusted EBITDA improved to negative $4.4 million for the first quarter from negative $7.1 million for the same period in 2024.

Adjusted EBITDA is defined and reconciled against consolidated net loss below.

These results include a savings of $4.8 million due

to the cold-idling of our Magic Valley plant at the end of the fourth quarter.

These results also reflect our operational uptime and

our carbon optimization initiative, which was driven by our acquisition on January 1, 2025 of a beverage-grade liquid CO 2

processing plant adjacent to our Columbia facility.

The combined ownership of our Columbia assets contributed $2.9 million of

improvement to our Adjusted EBITDA for the first quarter and has enabled synergies, allowing for reduced management and staffing

costs while enhancing operational coordination and overall productivity across the combined site.

We continue to optimize these

assets, which should facilitate additional benefits, such as longer-term feed sales commitments and expanded premium liquid

As anticipated, this acquisition improved our Columbia facility’s economics and increased its asset

During the first quarter, we continued our efforts

to rationalize our business and right size our staffing to better align with our current operational footprint.

During the fourth quarter

and into the first quarter, we reduced headcount by a total of 16%.

As a result, we expect to save approximately $8 million annually,

with the financial benefit starting in the second quarter.

We have completed our planned reorganization but will continue to evaluate

opportunities to reduce expenses.

We are prioritizing quick-return projects, including water and energy optimization, that would reduce

utility costs and lower our carbon footprint.

Our Pekin Campus’s results for the first

quarter illustrate our ability to quickly shift production to capitalize on favorable market trends.

For example, to diversify our revenue

streams, we earned International Sustainability and Carbon Certification, or ISCC, in the third quarter and in the fourth quarter began

exporting qualified renewable fuel to European markets.

This certification has enabled us to access higher margin sales compared to domestic

During the first quarter, we experienced solid demand for ISCC certified renewable fuel priced at a premium to domestic fuel-grade

In the first quarter, we also grew ISCC sales as a percentage of our total renewable fuel volume sold from our Pekin Campus.

As a result, ISCC sales partially offset some domestic market challenges.

Premiums on domestic high quality alcohol for the

first quarter were generally lower than in the same period in 2024 due to increased competition in the marketplace.

In addition, prices

for essential ingredients declined as a result of higher industry supply from increased soy crush to support renewable diesel fuel demand.

In late March and early April, we completed our

scheduled seasonal outages at our Pekin Campus facilities.

The repairs and maintenance successfully achieved our goal of sustaining the

improved plant utilization rates set last year following our biennial outage in the second quarter of 2024.

Unfortunately, in early April,

during a period of rapidly rising river levels, our Pekin Campus loadout dock was damaged, negatively impacting production, logistics

and overall Pekin Campus economics.

In response, we implemented temporary solutions and we are now back to full operation.

We are assessing

our long-term remediation options and we are also working with our insurance carrier to mitigate the financial impact of the damage and

the interruption to our business.

Thus far in 2025, we have experienced typical seasonal

market patterns with spreads between corn and ethanol prices comparable year over year.

These crush margins improved sequentially each

month during the first quarter and have further improved in April as a result of lower production rates associated with industry-wide

scheduled springtime plant outages.

Despite these improvements, margin expansion remains largely restrained due to high industry inventory

levels with production outpacing demand.

Absent a meaningful reduction in ethanol supply or a relative increase in demand, substantial

crush spread improvements may be constrained.

Although we remain optimistic that margins will continue to improve with higher demand during

the summer driving season, we have concerns over tariffs and restrictions on Chinese vessels, introducing greater uncertainty

around the export market.

While these factors are largely beyond our control, we will continue our efforts to minimize their impact on

our business.

Nevertheless, as noted above, we have experienced solid exports in the first quarter from our ISCC sales into European markets.

The Environmental

Protection Agency, or EPA, issued a recent E15 fuel waiver allowing higher blending rates for an extended period through May

Although this is a temporary waiver, we expect the EPA to issue new waivers to permit E15 blending through summer.

We are also optimistic that pending national legislation will pass later this year resulting in long-sought after permanent

year-round E15 adoption nationwide.

In addition, there is growing support for E15 adoption in California.

The California Assembly

recently passed a bill aimed at accelerating the approval process for E15 fuel blends.

Moreover, California’s Governor Newsom

has directed the California Air Resources Board to expedite its review, citing potential benefits such as lower gas prices and

reduced emissions.

According to the latest Energy Information Administration reports, California’s 13.4 billion gallons of

annual fuel consumption represents 11.6% of national volume.

A five-percentage point increase in ethanol blending from 10% to 15% in

California alone could result in an additional 670 million gallons sold annually.

Further, national adoption of year-round E15

blending could boost ethanol demand by an estimated 5 to 7 billion gallons.

Since the U.S.

has approximately 18 billion gallons of

ethanol production capacity and domestic demand is approximately 14.4 billion gallons, the national adoption of year-round E15

blending combined with strong exports would utilize, over time, much of the excess production capacity and produce greater margin

Beyond supply and demand considerations, we also believe that year-round E15 adoption would have positive economic and

environmental impacts, such as reducing greenhouse gas emissions, supporting farmers and lowering fuel costs for consumers.

Senate Bill 1723 in Illinois is under consideration

to prevent CO 2 sequestration activity that overlies, underlies or passes through a sole-source aquifer.

This would include

the Mahomet Aquifer, which underlies multiple counties across Illinois including an area currently contemplated for storage in our Class

VI permit application for our CCS initiative.

Together with our CCS partner, Vault 44.01, and other potentially affected parties, we are

working with elected officials to address concerns to minimize or eliminate the potential legal impact of this legislation on our CCS

We are also developing alternatives to ensure that we optimize the value of our CO 2 production despite the outcome

of this legislation, including the potential relocation of our proposed CO 2 storage location.

In addition, we are working with

leaders in Illinois on Senate Bill 41, named the Clean Transportation Standard Act, to develop clean ground transportation standards to

reduce the lifecycle carbon intensity of fuels that are similar to the standards adopted on the West Coast.

We continue to execute our long-term plan to diversify revenue and

mitigate the volatility of commodities.

We have leveraged our plant flexibility and our efforts are working.

New initiatives in beverage-grade

CO 2 and ISCC qualified renewable fuel have been economically beneficial.

Additionally, our efficiency measures have reduced

our expense run rate going forward.

Although the regulatory environment remains dynamic, there are encouraging developments, including

the increasing state and potential national adoption of year-round E15 blending.

Also, as noted above, the Illinois Clean Transportation

Standard Act presents exciting possibilities that could further support industry growth and innovation.

Our team will continue to proactively

evaluate alternatives for new revenue streams and value, leverage our flexible and unique plant assets, and work to drive long-term shareholder

value on a sustainable, consistent basis.

Use of Non-GAAP Financial Measures

Management believes that

certain financial measures not in accordance with generally accepted accounting principles, or GAAP, are useful measures of operations.

Management provides EBITDA and Adjusted EBITDA as non-GAAP financial measures so that investors will have the same financial information

that management uses, which may assist investors in properly assessing our performance on a period-over-period basis.

We define EBITDA as unaudited

consolidated net income (loss) before interest expense, interest income, provision for income taxes and depreciation and amortization

We define Adjusted EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, unrealized derivative

gains and losses, acquisition-related expense, asset impairments, provision for income taxes and depreciation and amortization expense.

A table is provided below

to reconcile Adjusted EBITDA to its most directly comparable GAAP measure, consolidated net income (loss).

EBITDA and Adjusted EBITDA

are not measures of financial performance under GAAP and should not be considered as alternatives to consolidated net income (loss) or

any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash

flows or as a measure of liquidity.

EBITDA and Adjusted EBITDA have limitations as analytical tools and you should not consider these

measures in isolation or as a substitute for analysis of our results as reported under GAAP.

Information reconciling

forward-looking EBITDA or Adjusted EBITDA to forward-looking consolidated net income (loss) would require a forward-looking statement

of consolidated net income (loss) prepared in accordance with GAAP, which is unavailable to us without unreasonable effort.

able to provide a quantitative reconciliation of forward-looking EBITDA or Adjusted EBITDA to forward-looking consolidated net income

(loss) because certain items required for reconciliation are uncertain, outside of our control and/or cannot reasonably be predicted,

such as net sales, cost of goods sold, unrealized derivative gains and losses, asset impairments and provision (benefit) for income taxes,

which we view as the most material components of consolidated net income (loss) that are not presently estimable.

Reconciliation of Adjusted

EBITDA to Consolidated Net Loss

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands) (unaudited)

2 unchanged sentences

Interest income

Unrealized derivative (gains) losses

Unrealized derivative gains

Acquisition-related expense

Asset impairments

Provision for income taxes

Depreciation and amortization expense

14 unchanged sentences

revenue recognition;

impairment of long-lived assets and held-for-sale classification;

impairment of long-lived assets;

allowance for deferred taxes and derivative instruments.

9 unchanged sentences

Certain performance metrics

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

that we believe are important indicators of our results of operations:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Sales (gallons in millions)

renewable fuel gallons sold

Western production renewable

fuel gallons sold

renewable fuel gallons sold

Total renewable fuel gallons

alcohol gallons sold

Alcohol Sales (gallons in millions)

Pekin Campus renewable fuel gallons sold

Western production renewable fuel gallons sold

Third party renewable fuel gallons sold

Total renewable fuel gallons sold

Specialty alcohol gallons sold

Total gallons sold

2 unchanged sentences

Marketing and distribution

Production (gallons in millions)

Average sales price per gallon

Alcohol Production (gallons in millions)

Western production

Corn Cost per Bushel

Western production

Average corn cost per bushel

Average Market Metrics

PLATTS Ethanol price per

PLATTS Ethanol price per gallon

CME Corn cost per bushel

Board corn crush per gallon

Ingredients Sold (in thousands of tons)

Board corn crush per gallons (1)

Essential Ingredients Sold (thousand tons)

Pekin Campus:

Distillers grains

3 unchanged sentences

Syrup and other

Total Pekin Campus

Total Pekin Campus essential ingredients sold

Western production:

Distillers grains

Syrup and other

Total Western Production

Total Essential Ingredients

Essential Ingredients

Total Western production essential ingredients sold

Total Essential Ingredients Sold

Essential ingredients return % (2)

Pekin Campus return

1 unchanged sentence

Consolidated total return

(1) Assumes corn conversion of 2.80 gallons of alcohol per bushel of corn.

(2) Essential ingredients revenues as a percentage of total corn costs consumed.

Net Sales, Cost of

Goods Sold and Gross Profit

(1) Assumes corn conversion of 2.80 gallons of alcohol per bushel

(2) Essential ingredients revenues as a percentage of total corn

costs consumed.

Net Sales, Cost of Goods

Sold and Gross Loss

The following table presents

our net sales, cost of goods sold and gross profit in dollars and gross profit as a percentage of net sales (in thousands, except percentages):

Three Months Ended

September 30,

Nine Months Ended

September 30,

our net sales, cost of goods sold and gross profit (loss) in dollars and gross profit (loss) as a percentage of net sales (in thousands,

except percentages):

Cost of goods sold

Percentage of net sales

* Not meaningful

Three Months ended September 30, 2024 as compared to the Three Months

ended September 30, 2023

The decline in our consolidated

net sales for the three months ended September 30, 2024 as compared to the same period in 2023 is primarily attributable to lower average

sales prices per gallon for both specialty alcohol and renewable fuel as well as lower average sales prices of essential ingredients due

to a lower commodity price environment.

In addition, we had lower sales of renewable fuel and essential ingredients due to the hot-idling

of our Magic Valley plant in January 2024, which we restarted in July 2024, but which did not reach average

full capacity until October 2024.

The decrease in our consolidated

net sales for the three months ended March 31, 2025 as compared to the same period in 2024 is attributable to fewer total gallons sold

as well as lower volumes and lower average sales prices of essential ingredients due to a lower commodity price environment, partially

offset by an increase in our average sales prices per gallon for both specialty alcohols and renewable fuel.

Pekin Campus Production Segment

Net sales of alcohol from our

Pekin Campus production segment declined by $22.1 million, or 17%, to $106.5 million for the three months ended September 30, 2024 as

compared to $128.6 million for the same period in 2023.

Our total volume of production gallons sold increased by 0.8 million gallons,

or 2%, to 52.8 million gallons for the three months ended September 30, 2024 as compared to 52.0 million gallons for the same period in

The decrease of $0.46, or 19%, in the segment’s average sales price per gallon for the three months ended September 30, 2024

as compared to the same period in 2023 reduced our net sales from the segment by $23.7 million.

With the segment’s average sales

price per gallon of $2.02 for the three months ended September 30, 2024, we generated $1.6 million more in net sales from the 0.8 million

additional gallons of alcohol sold in the three months ended September 30, 2024 as compared to the same period in 2023.

Net sales of essential ingredients

from our Pekin Campus production segment declined by $10.4 million, or 20%, to $41.2 million for the three months ended September 30,

2024 as compared to $51.6 million for the same period in 2023.

Our total volume of essential ingredients sold increased by 10,400 tons,

or 5%, to 236,600 tons for the three months ended September 30, 2024 from 226,200 tons for the same period in 2023.

The decrease of $54.06,

or 24%, in the segment’s average sales price per ton for the three months ended September 30, 2024 as compared to the same period

in 2023 reduced our net sales from the segment by $12.2 million.

With the segment’s average sales price per ton of $174.21 for the

three months ended September 30, 2024, we generated $1.8 million in additional net sales from the 10,400 additional tons of essential

ingredients sold in the three months ended September 30, 2024 as compared to the same period in 2023.

Marketing and Distribution

Net sales of alcohol from our marketing and distribution

segment, excluding intersegment sales, declined by $4.3 million, or 7%, to $54.6 million for the three months ended September 30, 2024

as compared to $58.9 million for the same period in 2023.

The $0.52 per gallon, or 19%, decrease in the segment’s

average sales price per gallon for the three months ended September 30, 2024 as compared to the same period in 2023 resulted in a $11.4

million decline in our net sales from third-party fuel-grade ethanol sold by the segment.

Our volume of third-party alcohol sold reported

gross by the segment increased by 3.3 million gallons, or 15%, to 25.2 million gallons for the three months ended September 30, 2024 as

compared to 21.9 million gallons for the same period in 2023.

With the segment’s average sales price per gallon of $2.17 for the

three months ended September 30, 2024, we realized $7.1 million in additional net sales from the 3.3 million additional gallons of third-party

alcohol sold gross in the three months ended September 30, 2024 as compared to the same period in 2023.

Western Production Segment

Net sales of alcohol from our

Western production segment declined by $20.8 million, or 36%, to $36.4 million for the three months ended September 30, 2024 as compared

Pekin Campus production segment declined by $1.2 million, or 1%, to $107.2 million for the three months ended March 31, 2025 as compared

to $108.4 million for the same period in 2024.

Our total volume of alcohol sold decreased by 4.2 million gallons, or 19%, to 18.0 million

gallons for the three months ended September 30, 2024 as compared to 22.2 million gallons for the same period in 2023.

The decrease of

$0.55, or 21%, in the segment’s average sales price per gallon for the three months ended September 30, 2024 as compared to the

same period in 2023 reduced our net sales from the segment by $12.3 million.

With the segment’s average sales price per gallon of

$2.02 for the three months ended September 30, 2024, we generated $8.5 million less in net sales from the 4.2 million fewer gallons of

alcohol sold in the three months ended September 30, 2024 as compared to the same period in 2023.

Our total volume of production gallons sold decreased by 0.7 million gallons, or 1%, to

56.5 million gallons for the three months ended March 31, 2025 as compared to 57.2 million gallons for the same period in 2024.

The segment’s

average sales price per gallon remained flat for the three months ended March 31, 2025 as compared to the same period in 2024.

segment’s average sales price per gallon of $1.90 for the three months ended March 31, 2025, we generated $1.2 million less in net

sales from the 0.7 million fewer gallons of alcohol sold in the three months ended March 31, 2025 as compared to the same period in 2024.

Net sales of essential ingredients

from our Western production segment declined by $7.4 million, or 42%, to $10.4 million for the three months ended September 30, 2024 as

from our Pekin Campus production segment declined by $2.1 million, or 4%, to $44.6 million for the three months ended March 31, 2025 as

compared to $46.7 million for the same period in 2024.

Our total volume of essential ingredients sold decreased 42,200 tons, or 21%, to

154,800 tons for the three months ended September 30, 2024 from 197,000 tons for the same period in 2023.

Our total volume of essential ingredients sold increased by 25,300 tons, or 12%,

to 237,900 tons for the three months ended March 31, 2025 from 212,600 tons for the same period in 2024.

The decrease of $32.15, or 15%,

in our average sales price per ton for the three months ended September 30, 2024 as compared to the same period in 2023 reduced our net

sales of essential ingredients from the segment by $4.6 million.

With the segment’s average sales price per ton of $67.24 for the

three months ended September 30, 2024, we generated $2.8 million less in net sales from the 42,200 fewer tons of essential ingredients

sold in the three months ended September 30, 2024 as compared to the same period in 2023.

Corporate and other

Net sales of alcohol from corporate

and other declined by $1.4 million, or 34%, to $2.7 million for the three months ended September 30, 2024 as compared to $4.1 million

for the same period in 2023.

These sales are from Eagle Alcohol’s business.

Cost of Goods Sold and Gross Profit

Our consolidated gross profit improved to $6.0

million for the three months ended September 30, 2024 from $4.2 million for the same period in 2023, representing a gross margin of 2.4%

and 1.3% for the three months ended September 30, 2024 and 2023, respectively.

With total alcohol sales volumes essentially flat, our

consolidated gross profit increased due to lower overall corn costs, primarily from lower corn basis costs, which declined $0.63 per bushel

compared to the same period in 2023.

Our lower corn costs were, however, partially offset by a $0.10 decline in market crush margins to

$0.41 per gallon compared to the same period in 2023.

Our Pekin Campus contributed $6.2 million to gross

profit, improving tenfold year-over-year, in part due to productivity and other improvements resulting from our scheduled repairs and

maintenance in April 2024 as well as a positive shift in sales mix to higher margin products.

In particular, we sold 4.0 million gallons

more of specialty alcohols for the three months ended September 30, 2024 compared to the same period in 2023.

These improvements were

partially offset by a 24% decline in our average sales price for essential ingredients compared to the same period in 2023.

Our Western facilities generated a gross loss of

$2.3 million for the three months ended September 30, 2024 compared to a gross profit of $1.5 million for the same period in 2023.

$3.8 million year-over-year decline in gross profit is largely attributable to production downtime at our Magic Valley facility and higher

costs associated with upgrading equipment at the plant and restarting the facility at the beginning of the third quarter of 2024.

Production at our Magic Valley plant did not reach average full capacity

until October 2024.

our Columbia facility generated $1.6 million less in high margin revenue due to an 80% drop in carbon prices in the region.

realized consolidated derivative gains of $3.6 million for the three months ended September 30, 2024 compared to $6.2 million for the

same period in 2023.

During the third quarter of 2024, on a consolidated basis, we recorded $8.1 million dollars in repairs and maintenance

expense, in line with the prior-year quarter, and we are on track to meet our 2024 full-year estimate of $34.0 million dollars of repairs

and maintenance expense.

Pekin Campus Production Segment

Our Pekin Campus production segment’s gross

profit, net of intercompany activity, increased by $5.9 million to $7.0 million for the three months ended September 30, 2024 as compared

to $1.1 million for the same period in 2023.

Of this increase, $5.8 million is attributable to higher margins and $0.1 million is attributable

to higher sales volumes.

Marketing and Distribution Segment

Our marketing and distribution segment’s

gross profit, net of intercompany activity, increased by $0.4 million to $1.3 million for the three months ended September 30, 2024 as

compared to a gross profit of $0.9 million for the same period in 2023.

Of this improvement, $0.3 million is attributable to higher margins

from sales of third-party fuel-grade ethanol and $0.1 million attributable to higher sales volumes.

Western Production Segment

Our Western production segment’s gross profit,

net of intercompany activity, declined by $3.8 million to a gross loss of $2.1 million for the three months ended September 30, 2024 as

compared to a gross profit of $1.7 million for the same period in 2023.

Of this decline, $4.2 million is attributable to lower renewable

fuel margins, partially offset by $0.4 million attributable to lower sales volumes at negative margins.

Corporate and other

Gross profit from corporate

and other declined by $0.7 million to a gross loss of $0.2 million for the three months ended September 30, 2024 as compared to a gross

profit of $0.5 million for the same period in 2023, all of which were from Eagle Alcohol’s business.

Nine Months ended September 30, 2024 as compared to the Nine Months

ended September 30, 2023

The decrease in our consolidated

net sales for the nine months ended September 30, 2024 as compared to the same period in 2023 is primarily attributable to lower average

sales prices per gallon for both specialty alcohols and renewable fuel as well as lower average sales prices of essential ingredients due

to lower corn prices.

In addition, we had lower sales of renewable fuel and essential ingredients due to the hot-idling of our Magic Valley

plant in January 2024, and the biennial wet mill outage at our Pekin Campus for repairs and maintenance

in April 2024.

Pekin Campus Production Segment

Net sales of alcohol from our

Pekin Campus production segment declined by $73.1 million, or 19%, to $315.5 million for the nine months ended September 30, 2024 as compared

to $388.6 million for the same period in 2023.

Our total volume of production gallons sold increased by 2.8 million gallons, or 2%, to

160.7 million gallons for the nine months ended September 30, 2024 as compared to 157.9 million gallons for the same period in 2023.

decrease of $0.50, or 20%, in the segment’s average sales price per gallon for the nine months ended September 30, 2024 as compared

to the same period in 2023 reduced our net sales from the segment by $78.6 million.

With the segment’s average sales price per gallon

of $1.96 for the nine months ended September 30, 2024, we generated $5.5 million more in net sales from the 2.8 million additional gallons

of alcohol sold in the nine months ended September 30, 2024 as compared to the same period in 2023.

Net sales of essential ingredients

from our Pekin Campus production segment declined by $41.9 million, or 25%, to $127.3 million for the nine months ended September 30,

2024 as compared to $169.2 million for the same period in 2023.

Our total volume of essential ingredients sold decreased by 1,200 tons,

or less than 1%, to 659,200 tons for the nine months ended September 30, 2024 from 660,400 tons for the same period in 2023.

of $63.13, or 25%, in the segment’s average sales price per ton for the nine months ended September 30, 2024 as compared to the

same period in 2023 reduced our net sales from the segment by $41.7 million.

With the segment’s average sales price per ton of $193.11

for the nine months ended September 30, 2024, we generated $0.2 million less in net sales from the 1,200 fewer tons of essential ingredients

sold in the nine months ended September 30, 2024 as compared to the same period in 2023.

in the segment’s average sales price per ton for the three months ended March 31, 2025 as compared to the same period in 2024 reduced

our net sales from the segment by $6.8 million.

With the segment’s average sales price per ton of $187.55 for the three months ended

March 31, 2025, we generated $4.7 million more in net sales from the 25,300 additional tons of essential ingredients sold in the three

months ended March 31, 2025 as compared to the same period in 2024.

Marketing and Distribution

Net sales of alcohol from our marketing and distribution

segment, excluding intersegment sales, declined by $36.7 million, or 17%, to $179.3 million for the nine months ended September 30, 2024

as compared to $216.0 million for the same period in 2023.

segment, excluding intersegment sales, declined by $5.4 million, or 10%, to $49.1 million for the three months ended March 31, 2025 as

compared to $54.5 million for the same period in 2024.

Our volume of third-party alcohol sold reported

gross by the segment increased by 6.9 million gallons, or 8%, to 89.3 million gallons for the nine months ended September 30, 2024 as

compared to 82.4 million gallons for the same period in 2023.

The $0.61 per gallon, or 23%, decrease in the segment’s average sales

price per gallon for the nine months ended September 30, 2024 as compared to the same period in 2023 resulted in a $50.6 million decline

in our net sales from third-party fuel-grade ethanol sold by the segment.

With the segment’s average sales price per gallon of $2.01

for the nine months ended September 30, 2024, we realized $13.9 million in additional net sales from the 6.9 million additional gallons

of third-party alcohol sold gross in the nine months ended September 30, 2024 as compared to the same period in 2023.

gross by the segment declined by 5.3 million gallons, or 18%, to 24.4 million gallons for the three months ended March 31, 2025 as compared

to 29.7 million gallons for the same period in 2024.

With the segment’s average sales price per gallon of $2.01 for the three months

ended March 31, 2025, we generated $10.6 million less in net sales from the 5.3 million fewer gallons of third-party alcohol sold gross

in the three months ended March 31, 2025 as compared to the same period in 2024.

The $0.18 per gallon, or 10%, increase in the segment’s

average sales price per gallon for the three months ended March 31, 2025 as compared to the same period in 2024 resulted in a $5.2 million

increase in our net sales from third-party fuel-grade ethanol sold by the segment.

Western Production Segment

Net sales of alcohol from our

Western production segment declined by $48.4 million, or 40%, to $74.1 million for the nine months ended September 30, 2024 as compared

to $122.5 million for the same period in 2023.

Our total volume of alcohol sold decreased by 8.4 million gallons, or 18%, to 38.2 million

gallons for the nine months ended September 30, 2024 as compared to 46.6 million gallons for the same period in 2023.

The decrease of

$0.69, or 26%, in the segment’s average sales price per gallon for the nine months ended September 30, 2024 as compared to the same

period in 2023 reduced our net sales from the segment by $32.1 million.

With the segment’s average sales price per gallon of $1.94

for the nine months ended September 30, 2024, we generated $16.3 million less in net sales from the 8.4 million fewer gallons of alcohol

sold in the nine months ended September 30, 2024 as compared to the same period in 2023.

Western production segment declined by $4.0 million, or 20%, to $16.2 million for the three months ended March 31, 2025 as compared to

$20.2 million for the same period in 2024.

Our total volume of alcohol sold decreased by 2.9 million gallons, or 26%, to 8.3 million gallons

for the three months ended March 31, 2025 as compared to 11.2 million gallons for the same period in 2024.

With the segment’s average

sales price per gallon of $1.95 for the three months ended March 31, 2025, we generated $5.6 million less in net sales from the 2.9 million

fewer gallons of alcohol sold in the three months ended March 31, 2025 as compared to the same period in 2024.

However, the increase of

$0.15, or 8%, in the segment’s average sales price per gallon for the three months ended March 31, 2025 as compared to the same

period in 2024 increased our net sales from the segment by $1.6 million.

Net sales of essential ingredients

from our Western production segment declined by $16.4 million, or 40%, to $24.2 million for the nine months ended September 30, 2024 as

compared to $40.6 million for the same period in 2023.

Our total volume of essential ingredients sold decreased 90,800 tons, or 21%, to

335,400 tons for the nine months ended September 30, 2024 from 426,200 tons for the same period in 2023.

The decrease of $23.19, or 24%,

in our average sales price per ton for the nine months ended September 30, 2024 as compared to the same period in 2023 reduced our net

sales of essential ingredients from the segment by $9.9 million.

With the segment’s average sales price per ton of $72.10 for the

nine months ended September 30, 2024, we generated $6.5 million less in net sales from the 90,800 fewer tons of essential ingredients

sold in the nine months ended September 30, 2024 as compared to the same period in 2023.

from our Western production segment remained flat at $7.8 million for the three months ended March 31, 2025 and 2024.

Our total volume

of essential ingredients sold decreased by 27,900 tons, or 28%, to 72,900 tons for the three months ended March 31, 2025 from 100,800

tons for the same period in 2024.

With the segment’s average sales price per ton of $107.11 for the three months ended March 31,

2025, we generated $2.9 million less in net sales from the 27,900 fewer tons of essential ingredients sold in the three months ended March

31, 2025 as compared to the same period in 2024.

However, the increase of $29.47, or 38%, in our average sales price per ton for the three

months ended March 31, 2025 as compared to the same period in 2024 improved our net sales of essential ingredients from the segment by

$2.9 million.

Corporate and other

Net sales of alcohol from corporate

and other declined by $3.7 million, or 30%, to $8.6 million for the nine months ended September 30, 2024 as compared to $12.3 million

for the same period in 2023.

and other declined by $1.4 million, or 47%, to $1.6 million for the three months ended March 31, 2025 as compared to $3.0 million for

the same period in 2024.

These sales are from Eagle Alcohol’s business.

Cost of Goods Sold and Gross Profit

consolidated gross profit declined to $11.1 million for the nine months ended September 30, 2024 from $18.2 million for the same

period in 2023, representing a gross margin of 1.5% and 1.9% for the nine months ended September 30, 2024 and 2023, respectively.

Our consolidated gross profit declined primarily due to higher repairs and maintenance expense and lower average sales prices for

our essential ingredients due, in particular, to a compression on protein prices from an increase in soybean meal supply, a

consequence of production growth in soy crush driven by the demand for renewable diesel.

Another contributing factor to the

year-over-year decline in gross profit is production downtime at our Magic Valley facility and higher operating costs associated

with upgrading equipment at the plant.

We restarted our Magic Valley facility in July 2024, but production did not reach average full capacity until October

Cost of Goods Sold and Gross Loss

Our consolidated gross

loss improved to a gross loss of $1.8 million for the three months ended March 31, 2025 from a gross loss of $2.4 million for the

same period in 2024, representing a gross margin of negative 0.8% and 1.0% for the three months ended March 31, 2025 and 2024,

respectively.

Our gross loss and gross margin improved due to multiple factors, including the cold-idling of our Magic Valley

facility, which reduced cost of goods sold by $10.0 million including cost savings of $4.8 million, over $1.0 million in lower

repairs and maintenance expenses, premium liquid CO 2 sales from our newly acquired Alto Carbonic processing facility and

other synergistic benefits totaling $2.9 million at our Columbia facility, and a $1.4 million benefit from ISCC certified renewable

fuel exports priced at a premium to domestic fuel-grade ethanol, all of which were partially offset by $4.6 million in lower

premiums for high quality alcohol, $3.8 million associated with lower returns on our essential ingredients, predominately from our

Pekin Campus, and $1.6 million less in unrealized gains on derivatives compared to the prior year’s quarter.

For the first

quarter, we recorded $7.0 million in repairs and maintenance expense, in line with our full-year 2025 estimate of $32 million.

Pekin Campus Production Segment

Our Pekin Campus production segment’s gross

profit, net of intercompany activity, increased by $8.6 million to a gross profit of $22.4 million for the nine months ended September

30, 2024 as compared to $13.8 million for the same period in 2023.

Of this improvement, $8.3 million is attributable to higher alcohol

sales margins and $0.3 million is attributable to higher sales volumes.

profit, net of intercompany activity, declined by $7.3 million to a gross loss of $2.2 million for the three months ended March 31, 2025

as compared to a gross profit of $5.1 million for the same period in 2024.

All of this decline is attributable to lower ethanol margins.

Marketing and Distribution Segment

Our marketing and distribution segment’s

gross profit, net of intercompany activity, declined by $0.3 million to a gross profit of $2.9 million for the nine months ended September

gross profit, net of intercompany activity, improved by $1.1 million to a gross profit of $1.7 million for the three months ended March

31, 2025 as compared to a gross profit of $0.6 million for the same period in 2024.

Of this decline, $0.5 million is attributable to lower

margins from sales of third-party fuel-grade ethanol, partially offset by $0.2 million attributable to higher sales volumes.

Of this improvement, $1.5 million is attributable

to higher margins from sales of third-party fuel-grade ethanol, partially offset by $0.4 million attributable to lower sales volumes for

the three months ended March 31, 2025 as compared to the same period in 2024.

Western Production Segment

Our Western production segment’s gross profit,

net of intercompany activity, declined by $12.3 million to a gross loss of $14.1 million for the nine months ended September 30, 2024

as compared to a gross loss of $1.8 million for the same period in 2023.

Of this decline, $15.4 million is attributable to lower renewable

fuel margins and hot-idling costs at our Magic Valley facility, partially offset by $3.1 million attributable to lower sales volumes at

negative margins.

Our Western production

segment’s gross profit, net of intercompany activity, improved by $7.1 million to a gross loss of $1.3 million for the three

months ended March 31, 2025 as compared to a gross loss of $8.4 million for the same period in 2024.

Of this improvement, $6.7

million is attributable to improved renewable fuel margins and $0.4 million is attributable to lower sales volumes at negative

margins of both renewable fuel and essential ingredients, both of which are primarily due to the cold-idling of our Magic Valley

Corporate and other

Gross profit from corporate

and other declined by $3.1 million to a gross loss of $0.1 million for the nine months ended September 30, 2024 as compared to a gross

profit of $3.0 million for the same period in 2023, all of which were from Eagle Alcohol’s business.

and other declined by $0.4 million to a gross loss of less than $0.1 million for the three months ended March 31, 2025 as compared to

a gross profit of $0.3 million for the same period in 2024, all of which were from Eagle Alcohol’s business.

Selling, General and

2 unchanged sentences

our selling, general and administrative, or SG&A, expenses in dollars and as a percentage of net sales (in thousands, except percentages):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Selling, general and administrative expenses

Percentage of net sales

Our SG&A expenses decreased for the three months

ended September 30, 2024 as compared to the same period in 2023.

The period over period decrease in SG&A expenses is primarily due

to lower professional services fees from diligence work on strategic capital projects and other related up-front project costs, such as

with respect to our CCS project, which are expensed until the project is at a stage where costs are capitalized.

SG&A expenses remained

essentially flat for the nine months ended September 30, 2024 and 2023.

Net Loss Available

Our SG&A expenses decreased $0.7 million for

the three months ended March 31, 2025 as compared to the same period in 2024.

The reduction in SG&A expenses primarily reflects the conclusion of our acquisition-related

expenses for our acquisition of Eagle Alcohol.

Interest Expense, net

The following table presents

our interest expense, net, in dollars and as a percentage of net sales (in thousands, except percentages):

Interest expense, net

Percentage of net sales

Our interest expense,

net, increased for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to higher average

debt balances and higher average interest rates compared to the prior year period.

Net Loss Attributable

to Common Stockholders

The following table presents

our net loss available to common stockholders in dollars and as a percentage of net sales (in thousands, except percentages):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net loss available to common stockholders

our net loss attributable to common stockholders in dollars and as a percentage of net sales (in thousands, except percentages):

Net loss attributable to Common Stockholders

Percentage of net sales

Our net loss available to common stockholders for

the three and nine months ended September 30, 2024 and 2023 is primarily due to lower margins resulting from increased repairs and maintenance

expense, higher up-front project costs as we worked to advance our CCS project, and other factors affecting gross profit as discussed

above, partially offset by $0.8 million in gains for the three months ended September 30, 2024 from the sale of noncore assets from a past

business acquisition.

In addition, for the three months ended September 30, 2023, we received a USDA cash grant of $2.8 million related

to the Biofuel Producer Program.

This grant did not recur in 2024.

The slight decrease in net loss attributable to common stockholders

is primarily due to lower SG&A expenses and lower net sales at negative margins as well as the other factors affecting gross profit

discussed above, partially offset by lower premiums for high quality alcohol, lower unrealized gains on derivatives and higher interest

expense, as also discussed above.

Liquidity and Capital Resources

During the nine months ended September 30, 2024,

we funded our operations primarily from cash on hand, cash provided by our operations and Kinergy’s operating line of credit.

addition to funding our operations, we used our capital resources to advance our capital improvement projects and make an annual payment

relating to our acquisition of Eagle Alcohol.

As of September 30, 2024, we had $38.5 million in cash, cash equivalents and restricted

cash, $27.2 million available for borrowing under Kinergy’s operating line of credit and $65.0 million that may be available for

capital improvement projects under our term loan with Orion Infrastructure Capital, subject to certain conditions.

We believe we have

sufficient liquidity to meet our anticipated working capital, debt service and other liquidity needs to fund our operations for at least

the next twelve months from the date of this report.

We must, however, raise significant additional capital to advance and complete some

of our capital improvement projects, including our CCS project.

Quantitative Period-End Liquidity

During the three months

ended March 31, 2025, we funded our operations primarily from cash on hand and proceeds from Kinergy’s operating line of

In addition to funding our operations, our capital resources were used to purchase Kodiak Carbonic and for capital

expenditures.

As of March 31, 2025, we had $27.2 million in cash, cash equivalents and restricted cash, $11.7 million available for

borrowing under Kinergy’s operating line of credit and $65.0 million that may be available for capital improvement projects

under our Orion term loan, subject to certain conditions.

We believe we have sufficient liquidity to meet our anticipated working

capital, debt service and other liquidity needs for at least the next twelve months from the date of this report.

Quantitative Year-End Liquidity

We believe that the following

4 unchanged sentences

report (dollars in thousands).

September 30,

Cash, cash equivalents and restricted cash

6 unchanged sentences

Restricted Net Assets

At September 30, 2024, we had approximately $56.3

million of net assets at our subsidiaries that were not available to be transferred to Alto Ingredients, Inc.

in the form of dividends,

distributions, loans or advances due to restrictions contained in our subsidiaries’ credit facilities.

At March 31, 2025, we had approximately $55.6 million

of net assets at our subsidiaries that were not available to be transferred to Alto Ingredients, Inc.

in the form of dividends, distributions,

loans or advances due to restrictions contained in our subsidiaries’ credit facilities.

Changes in Working Capital and Cash Flows

Working capital declined by $3.5 million to $100.0

million at September 30, 2024 compared to $103.5 million at December 31, 2023 due to a decrease of $23.7 million in current assets, partially

offset by a decrease of $20.2 million in current liabilities.

Current assets declined due to decreases in cash,

cash equivalents and restricted cash, accounts receivable, inventories, derivative assets and other assets for the nine months ended September

30, 2024 as compared to the same period in 2023.

Working capital improved to $100.3 million at March

31, 2025 from $95.3 million at December 31, 2024 as a result of a decrease of $4.7 million in current liabilities and an increase of $0.3

million in current assets.

Current assets increased primarily due to an increase

in accounts receivable, inventories, other current assets and derivative instruments, partially offset by a decrease in cash and cash

equivalents and restricted cash.

Our current liabilities decreased primarily due

to a decrease in accrued liabilities, derivative instruments and other current liabilities.

to lower accounts payable and accrued liabilities as a result of timing of payments, and a decrease in derivative liabilities from changes

in commodity prices for open contracts.

Our cash, cash equivalents and restricted cash

declined by $7.0 million primarily due to $12.0 million in cash used in our investing activities and $1.0 million in cash used in our

financing activities, partially offset by $6.0 million of cash provided by our operating activities.

Cash provided by our Operating Activities

We generated $6.3 million in cash from our operating

activities during the nine months ended September 30, 2024 as compared to $10.2 million for the same period in 2023.

Specific factors

that contributed to the change in cash from our operating activities include:

● an increase of $8.2 million in our net loss primarily due to lower commodity margins;

● a decrease of $6.5 million related to derivative instruments due to changes in commodity prices.

declined by $9.0 million due to $18.2 million in cash used in our operating activities and $7.8 million used in our investing activities,

partially offset by $17.0 million in cash provided by our financing activities.

Cash used in our Operating Activities

We used $18.2 million of cash in our operations

for the three months ended March 31, 2025 as compared to $1.4 million of cash provided by our operations for the same period in 2024.

Significant factors that contributed to the change in cash provided by our operating activities include:

● a decrease of $11.1 million related to lower inventories due

to reduced production volumes and the timing of sales;

● a decrease of $7.7 million related to accounts receivable balances

due to the timing of collections;

● a decrease of $1.7 million related to other assets, primarily due to the timing of payments on prepaid assets;

● an increase of $1.4 million related to accounts payable and accrued expenses due to the timing of payments.

These amounts were partially offset by:

● an increase of $6.8 million related to accounts payable and accrued liabilities due to the timing of payments;

● an increase of $4.1 million related to changes in accounts receivable balances due to the timing of our collections.

● an increase of $1.6 million related to period-end commodity prices applicable to our derivative instruments.

Cash used in our Investing Activities

We used $12.2 million in cash during the nine months

ended September 30, 2024 to fund $9.8 million of additions to property and equipment, including for our capital improvement projects,

and to fund $2.8 million of contingent purchase price payments for our acquisition of Eagle Alcohol, partially offset by $0.4 million

in proceeds from the sale of assets.

Our capital expenditures for the third quarter of 2024 totaled $0.5

million, net of various energy rebates.

Cash used in our Financing Activities

We used $1.0 million in cash during the nine months

ended September 30, 2024 to fund $0.9 million in preferred stock dividends and $0.1 million in net payments on Kinergy’s operating

line of credit.

We used $7.8 million in cash during the quarter

for the acquisition of Kodiak Carbonic and other capital expenditures.

Cash provided by our Financing Activities

Cash provided by our financing activities was $17.0

million for the three months ended March 31, 2025, which reflects net proceeds of $17.3 million from Kinergy’s operating line of

credit, partially offset by $0.3 million in preferred stock dividends paid.

Kinergy’s Operating Line of Credit

Kinergy maintains an operating line of credit with

Wells Fargo Bank for an aggregate amount of up to $100.0 million.

Kinergy maintains an operating line of credit for

an aggregate amount of up to $100.0 million.

The credit facility matures on November 7, 2027.

Interest accrues under

the credit facility at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin ranging

from 1.25% to 1.75%.

The credit facility’s monthly unused line fee is 0.25% to 0.375% of the amount by which the maximum credit

under the facility exceeds the average daily principal balance during the immediately preceding month.

Payments that may be made by Kinergy

to Alto Ingredients, Inc.

Interest accrues under the credit facility

at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified applicable margin ranging from 1.25% to

The credit facility’s monthly unused line fee is 0.25% to 0.375% of the amount by which the maximum credit under the facility

exceeds the average daily principal balance during the immediately preceding month.

Payments that may be made by Kinergy to Alto Ingredients,

as reimbursement for management and other services provided by Alto Ingredients, Inc.

to Kinergy are limited

under the terms of the credit facility to $1.5 million per fiscal quarter.

The credit facility also includes the accounts receivable of

our indirect wholly-owned subsidiary, Alto Nutrients, LLC, or Alto Nutrients, as additional collateral.

Payments that may be made by Alto

Nutrients to Alto Ingredients, Inc.

to Kinergy are limited under the terms of the

credit facility to $1.5 million per fiscal quarter.

The credit facility also includes the accounts receivable of our indirect wholly-owned

subsidiary, Alto Nutrients, LLC, or Alto Nutrients, as additional collateral.

Payments that may be made by Alto Nutrients to Alto Ingredients,

as reimbursement for management and other services provided by Alto Ingredients, Inc.

to Alto Nutrients

are limited under the terms of the credit facility to $0.5 million per fiscal quarter.

Alto Nutrients markets our essential ingredients

and also provides raw material procurement services to our subsidiaries.

In addition, the amount of cash distributions that Kinergy or

Alto Nutrients may make to us is also limited to up to 75% of excess cash flow.

to Alto Nutrients are limited under the terms

of the credit facility to $0.5 million per fiscal quarter.

Alto Nutrients markets our essential ingredients and also provides raw material

procurement services to our subsidiaries.

In addition, the amount of cash distributions that Kinergy or Alto Nutrients may make to us

is also limited to up to 75% of excess cash flow.

For all monthly periods in which excess borrowing

5 unchanged sentences

We believe Kinergy and Alto Nutrients are in compliance

with the fixed-charge coverage ratio covenant as of the filing of this report.

The following table sets forth the fixed-charge coverage

ratio financial covenant and the actual results for the periods presented:

with the fixed-charge coverage ratio financial covenant as of the filing of this report.

The following table sets forth the fixed-charge

coverage ratio financial covenant and the actual results for the periods presented:

Three Months Ended

September 30,

Fixed-Charge Coverage Ratio Requirement

1 unchanged sentence

guaranteed all of Kinergy’s obligations under the credit facility.

As of September 30, 2024, Kinergy had an outstanding balance

of $30.6 million and $27.2 million of unused borrowing availability under the credit facility.

As of March 31, 2025, Kinergy had an outstanding balance of $57.0

million and $11.7 million of unused borrowing availability under the credit facility.

Orion Term Loan

4 unchanged sentences

of our assets and a second priority lien on certain assets of Kinergy and Alto Nutrients.

The Lenders agreed to advance to us up to $125.0

million upon the satisfaction of certain conditions.

Interest accrues on the unpaid principal amount of the Term Loan at a fixed rate

of 10% per annum.

Interest accrues on the unpaid principal amount

of the Term Loan at a fixed rate of 10% per annum.

The Term Loan matures on November 7, 2028, or earlier upon acceleration.

We must prepay amounts outstanding

under the Term Loan on a semi-annual basis in an amount equal to a percentage of our excess cash flow based on a specified leverage ratio,

(i) if our leverage ratio is greater than or equal to 3.0x, then the mandatory prepayment amount will equal 100% of our excess

cash flow, (ii) if our leverage ratio is less than 3.0x and greater than or equal to 1.5x, then the mandatory prepayment amount will equal

50% of our excess cash flow, and (iii) if our leverage ratio is less than 1.5x, then the mandatory prepayment amount will equal 25% of

our excess cash flow.

As of September 30, 2024, the principal amount

outstanding under the Term Loan was $60,000,000.

under the Term Loan on a semi-annual basis on each June 30 th and December 31 st in an amount equal to a percentage

of our excess cash flow based on a specified leverage ratio, as follows:

(i) if our leverage ratio is greater than or equal to 3.0x, then

the mandatory prepayment amount will equal 100% of our excess cash flow, (ii) if our leverage ratio is less than 3.0x and greater than

or equal to 1.5x, then the mandatory prepayment amount will equal 50% of our excess cash flow, and (iii) if our leverage ratio is less

than 1.5x, then the mandatory prepayment amount will equal 25% of our excess cash flow.

No prepayment was made or required to be made

for the three months ended March 31, 2025 and 2024.

As of March 31, 2025 and

December 31, 2024, the principal amount outstanding under the Term Loan was $60.0 million.

Other Cash Obligations

As of September 30, 2024, we

had future commitments for certain capital projects totaling $8.6 million.

These commitments are scheduled to be satisfied through 2024

As of March 31, 2025, we had

future commitments for certain capital projects totaling $10.8 million.

These commitments are scheduled to be satisfied in 2025.

In connection with our acquisition

of Eagle Alcohol, we committed to contingent payments of up to $2.7 million in cash in early 2025 if certain targets are met.

of Eagle Alcohol, contingent payments of up to $2.7 million in cash and 948,932 shares of common stock

are contractually scheduled for the first half of 2025, all of which were accrued for in 2024.

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-Q

Item 2. Management’s Discussion and Analysis