What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-08 · 495 added, 549 removed, 179 unchanged (85% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

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

The following discussion and

7 unchanged sentences

include, relate to or be qualified by other important factors, including:

● 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, initiative;

● regulatory developments relating to our initiatives and projects

or to our business, including our CCS initiative, and the availability of, and our ability to qualify for and receive,

Section 45Z tax credits;

● the projected growth or contraction in the alcohol and essential

ingredients markets in which we operate;

● our strategies for expanding, maintaining or contracting our

presence in these markets;

● anticipated trends in our financial condition and results

of operations;

● our ability to distinguish ourselves from our current and

future competitors.

● fluctuations in the market prices of alcohols and essential ingredients;

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

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

our carbon capture and storage, or CCS, initiative;

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

of, and our ability to qualify for and receive, Section 45Z tax credits;

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

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

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

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

You are cautioned not to place

66 unchanged sentences

offering significant timing, product transportation cost and logistical advantages.

All of our production

facilities, other than our Magic Valley plant in Idaho, were operating for all of 2024 and 2025, subject to scheduled and

unscheduled downtimes to address facility repair and maintenance.

In January 2024, we

temporarily hot-idled our Magic Valley facility to minimize losses from negative regional crush margins – that is, revenue

from ethanol minus the cost of corn, also referred to as market crush – and to expedite the installation of additional

equipment to achieve the intended production rate, quality and consistency from our corn oil and high protein system at the

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.

cold-idling of our Magic Valley facility has had a positive impact on our overall financial results in 2025 compared to 2024.

All of our production facilities, other than our

Magic Valley plant in Idaho, were operating for all of 2024 and 2025, subject to scheduled and unscheduled downtimes to address facility

repair and maintenance.

In January 2024, we temporarily hot-idled our Magic

Valley facility to minimize losses from negative regional crush margins – that is, revenue from ethanol minus the cost of corn,

also referred to as market crush – and to expedite the installation of additional equipment to achieve the intended production rate,

quality and consistency from our corn oil and high protein system at the facility.

We restarted our Magic Valley facility in July 2024

and by October 2024, the facility consistently achieved average ethanol production rates at full capacity, the protein content yield from

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

Increases in regional corn basis and declining market

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

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

We continue to provide terminal

services at the plant and intend to resume operations at the facility when the economic environment in the region sustainably improves.

The cold-idling of our Magic Valley facility has had a positive impact on our overall financial results in 2025 compared to 2024.

As market conditions change, we may increase, decrease

24 unchanged sentences

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

See “Note 3 – Segments” to our

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

Financial Review, Current Initiatives and Outlook

Although our net loss worsened to $11.0 million

in the second quarter, primarily due to the non-cash effects of hedging activities, our Adjusted EBITDA improved by nearly $6.0 million

compared to the same period in 2024, reflecting the successful execution of our initiatives to increase efficiency and productivity.

quarter-over-quarter improvement in our Adjusted EBITDA reflects the benefit of multiple initiatives.

We improved our operating model

company-wide by rightsizing our corporate overhead to a level that aligns with our current business footprint and we are on track to exceed

our goal of saving approximately $8.0 million on an annualized basis from this initiative.

We will continue to evaluate our options to

improve operational efficiency and throughput, focus on growth in profitable market segments, and identify additional cost-saving opportunities

that, while smaller in amount than from our recent corporate reorganization, should in the aggregate meaningfully affect our long-term

“Note 3 – Segments” to our Notes to Consolidated Financial Statements included elsewhere in this report for financial

information about our business segments.

Financial Review, Current

Initiatives and Outlook

In the third quarter, strong market conditions combined

with the benefits realized from our recent strategic realignment delivered improvements across all segments of our business compared to

the same period in 2024.

Gross profit increased nearly $18 million and net income (loss) improved nearly $17 million while Adjusted EBITDA

grew by over $9 million.

These robust quarterly improvements were driven by multiple key factors.

First, we increased higher-margin renewable

fuel export sales, illustrating the advantage of our platform’s flexibility to shift our product mix to meet market demand to capture

the highest value for our products.

Second, we benefitted from strong demand for liquid CO 2 , particularly on the West Coast,

illustrating the success of our liquid CO 2 plant acquisition in early 2025.

Finally, we reduced costs and improved efficiencies,

including through the continued effects of rationalizing unprofitable business activities, successfully lowering expenses year-over-year.

We continue to prioritize

shorter-term projects based on their anticipated cost, timing and return on investment.

We believe this strategy will contribute incremental

profitability.

In the second quarter, the annual uptick in demand

from the summer driving season helped lift ethanol prices and improve crush spreads.

While it is difficult to predict market fluctuations,

we have seen additional spread improvement in the third quarter, with market crush averaging 30 cents per gallon for July, and we remain

optimistic for positive margins through the remainder of the summer.

Our Western assets turned profitable, improving

gross profit by $5.6 million compared to the prior year’s quarter, driven by our CO 2 facility acquisition at the beginning

of 2025 and other improvements at our Columbia ethanol plant, collectively improving gross profit by $3.0 million, as well as our decision

to cold-idle our Magic Valley facility due to adverse market conditions in the region, which improved gross profit by $2.6 million.

continue to use our Magic Valley facility primarily as a terminal.

Our marketing and distribution business also improved,

reflecting the integration of our bulk volume customers from our Eagle Alcohol business, a fostering of third-party ethanol marketing

relationships that met profitability criteria, and our transition away from business that offered limited returns.

Our Pekin Campus was negatively impacted by quarter-over-quarter

changes in derivatives and the continued impact of damage sustained to our loadout dock in April.

However, we partially offset these effects

by leveraging our operational flexibility by increasing sales of higher-margin International Sustainability and Carbon Certification,

or ISCC, products exported to Europe.

Given our success with these efforts, we continue

to focus on shorter-term projects with more immediate returns to support our path to profitability.

We intend to prioritize projects by

anticipated cost, timing and return on investment.

Projects under consideration include improvements to lower our carbon intensity and

capture more of the Section 45Z benefits available under the Inflation Reduction Act of 2022, expansion of our CO 2 utilization

at our Pekin Campus and at our Colombia facility, building on our success from our Alto Carbonic acquisition, and projects to improve

our prospects to monetize our Western assets.

In addition, as we did in the first and second quarters, we will continue projects to improve

efficiency and productivity.

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

Working with our bankers, we continue to make progress

on our plan to optimize and monetize our Western assets.

We are also evaluating strategic alternatives and interest for our Pekin Campus

and for the company as a whole.

Illinois Senate Bill 1723, which prohibits CO 2

sequestration directly through the Mahomet aquifer, as contemplated in our Class VI permit application with the EPA for our carbon capture

and storage, or CCS, project, was signed into law on August 1, 2025.

We are developing alternatives with Vault 44.01, our CCS partner,

and evaluating other promising, non-sequestration options to optimize the value of our CO 2 production.

The damage sustained by our Pekin Campus loadout

dock in April due to rapidly rising river levels impacted production, logistics and overall economics for most of the second quarter.

Since our last update in May, we have made progress recovering from this setback.

We were able to respond quickly to take interim steps

with third-party river transload vendors which, while more costly, helped minimize business interruption.

In addition, we worked with

our insurance carrier to confirm coverage for both property damage and business interruption.

Finally, we are reviewing remediation plans

with our carrier to ensure the best path forward.

While we expect work to extend into next year, we intend to commence the remediation

project ahead of the Midwest winter.

The One Big Beautiful Bill Act made positive updates

to the Section 45Z regulations, including extending tax credits through the end of 2029 as well as additional spending on farm programs,

that benefit the renewable fuels industry and improve our earnings profile and the intrinsic value of our production facilities.

also increased focus on domestic renewable fuel production and introduced new eligibility restrictions, particularly around foreign involvement.

For example, only fuel derived from feedstocks grown or produced in North America is eligible for the Section 45Z tax credit.

two of our plants, our Columbia plant and our Pekin dry mill, will participate in applying for Section 45Z tax credits.

An additional

benefit of the act is its disincentivizing exports from most dry mills, creating an opportunity for our Pekin Campus wet mill and ICP

distillery to place more of our products into European markets at a premium to domestic market prices.

We intend to pursue additional

options to capitalize on the Section 45Z tax credits, including through improvements to our Colombia plant to increase our anticipated

credit from 10 cents per gallon for 2025, based on our current carbon intensity scores, to up to 20 cents per gallon in 2026.

our Pekin Campus dry mill to qualify for 10 cents per gallon starting in 2026.

These credit amounts, based on nameplate production capacities

and carbon intensity scores, equal up to approximately $4.0 million in 2025 and $8.0 million in 2026 for which our Colombia plant may

be eligible and up to $6.0 million in 2026 for which our Pekin Campus dry mill may be eligible.

We plan to make improvements to our plants

to increase credit amounts across all eligible facilities.

One potential improvement is through low-carbon corn, which, while more expensive,

may be economically beneficial to source that particular feedstock to reduce our carbon footprint.

Through the two other plants at our Pekin Campus,

we will continue to produce higher quality alcohol and also take advantage of ISCC export market premiums for renewable fuel as the new

rules incentivize domestic ethanol sales from Section 45Z eligible dry mills.

The One Big Beautiful Bill Act also seeks to positively

impact farm programs by boosting sector profitability, reducing financial volatility, enhancing asset values and strengthening the overall

industry safety net with the intent to improve operational stability and long-term farm enterprise value.

Also contained in the act is

an increase in USDA commodity reference prices and base acres.

Corn will increase from $3.70 per bushel to $4.10 per bushel and soybeans

will increase from $8.40 per bushel to $10.00 per bushel.

Lastly, an additional 30 million base acres may now enroll in farm programs.

As a result, farmers will need new and expanded markets to absorb the additional production.

We believe these developments bode well for

the future of higher ethanol blends and new uses of American-grown feedstocks, making the U.S.

an even more attractive origin for international

sourcing of ethanol and other renewable fuel products.

The EPA extended E15 blending waivers nationally

for the duration of the summer, offering continued support for near-term domestic ethanol blending.

In California, regulatory momentum

continues to build for E15 blending but full-scale implementation is still pending further administrative review and regulatory updates.

In the second quarter, we finalized our Scope 1

and 2 greenhouse gas verifications and submitted our 2025 EcoVadis scorecard.

Use of Non-GAAP Financial Measures

Management believes that

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

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

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

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

depreciation and amortization expense.

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

expense, interest income, unrealized derivative gains and losses, acquisition-related income and expense, asset impairments,

provision for income taxes and depreciation and amortization expense.

A table is provided below

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

EBITDA and Adjusted EBITDA

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

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

flows or as a measure of liquidity.

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

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

Information reconciling

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

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

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 goals include lowering our carbon intensity score to capture a greater portion of the Section 45Z tax credits available

under the Inflation Reduction Act of 2022 and increasing our CO 2 utilization at our Pekin Campus and at our Columbia plant

in Boardman, Oregon, building on our successful liquid CO 2 plant acquisition.

As we manage liquidity and continue focusing on

our priorities, capital expenditures have been lower than historical averages.

In addition, through the third quarter, we recorded $24

million in repairs and maintenance expense, in line with our estimate of $32 million for the full year.

Once we complete the groundwork to qualify for Section

45Z tax credits, we expect to earn $0.10 per gallon at our Columbia plant for 2025.

In addition, with the updated indirect land use change,

referred to as iLUC, we expect to lower our carbon intensity scores for 2026, increasing available tax credits to $0.20 per gallon at

our Columbia facility and $0.10 per gallon at our Pekin Campus dry mill for the year.

If we produce at nameplate capacity at all of our

facilities, the total value of Section 45Z tax credits could be up to $18 million for 2025 and 2026, in aggregate, before any related

monetization costs.

Since Section 45Z tax credits are transferrable tax assets, we have started the process to forward sell these assets

to monetize the credits for 2026 through 2029.

The recent Section 45Z updates have improved the intrinsic value of our facilities as a

We have improved our CO 2 utilization

as a result of acquiring Kodiak Carbonic in early 2025 and related initial capital expenditure programs at our Columbia facility.

efforts to further improve plant reliability and ethanol production rates have improved synergies between the ethanol plant and adjacent

liquid CO 2 plant, and include measures to increase CO 2 throughput and add storage capacity.

A number of these ethanol

production improvements were completed in October.

Given the benefits of owning the liquid CO 2

plant adjacent to our Columbia ethanol facility, we are now considering options for other liquid CO 2 plants.

We also believe

the opportunity to add liquid CO 2 production capacity is compelling since the demand for liquid CO 2 continues to

rise, particularly in Oregon and Idaho, resulting from significant supply shortfalls and increased consumption in the region.

dynamics have positioned producers in the region to leverage strong liquid CO 2 market pricing.

We continue to evaluate options for our Magic Valley

facility in Idaho, including its sale, potential CO 2 utilization at the plant and Section 45Z tax credits, the latter two of

which may support restarting the facility from its current cold idled state.

At our Pekin Campus, our ability to react to market

signals and shift production enables us to capture the highest value for our products and continues to create opportunities.

As the export

market for renewable fuel began to grow, we earned the necessary certifications to export our products to Europe and began exports in

the fourth quarter of 2024.

This strategy continues to pay off.

In the third quarter, the fuel export market and related pricing was stronger

than the domestic market.

As such, we produced and sold more gallons into the export market, capturing more of the available demand for

this product.

In the third quarter, we also leveraged our production flexibility and these market dynamics to forward contract significant

export volumes for the fourth quarter and first-half of 2026 to lock in favorable premiums to domestic renewable fuel.

We believe the

export market for renewable fuel will continue to grow.

California Assembly Bill 30, which authorizes E15

fuel sales year-round in the state, unlocks significant demand for domestically produced ethanol.

California is the largest market that

allows E15 blends year-round, adding potentially over 600 million additional gallons per year at full blend rates for gasoline sold in

Assembly Bill 30 expands consumer choice for lower-carbon, cheaper fuels in California during a time when refineries are being

idled and gasoline capacity in the state is tightening.

We are well positioned to help fill the gap through our marketing and distribution

services on the West Coast.

Our high-quality alcohol products continue to deliver

a premium to domestic renewable fuel and our contracting season for 2026 is on pace with 2025.

Carbon capture and storage at our Pekin Campus is

delayed due to regulatory and environmental constraints enacted in Illinois, including drilling restrictions specifically impacting our

planned site.

We continue to be flexible about our options to maximize CO 2 utilization as we collaborate with Vault 44.01 to

address changes in the law and determine a path forward.

Our long-standing CO 2 customers who sell into the food and beverage

markets have shown interest in a potential expansion of our CO 2 capture capabilities at our Pekin Campus.

We are vetting additional low-cost options at our

plants to further reduce our carbon intensity scores, including lowering our energy consumption, changing our energy sources to lower

their carbon intensity impact, shifting to low carbon corn, and undertaking smaller projects to improve efficiencies and throughput.

Our Pekin Campus dock, damaged in April by rapidly

rising river levels, remains under repair.

During the third quarter, our dock outage resulted in $0.8 million in business interruption,

additional logistics and preliminary property repairs.

Although we have temporarily remedied the situation, we continue to work with our

insurance carrier to assess our level of coverage and determine the timing of reimbursements.

To minimize business interruption, we are

relying on local third parties to transport our essential ingredients.

To create redundancy, we intend to build a second alcohol loadout

dock for use while we repair the original dock.

Once the original dock is restored, the second dock will effectively remove a frequent

bottleneck by improving loadout capacity, accelerating loadout times and lowering costs.

We are in the process of finalizing designs,

obtaining permits and contracting work crews to begin the repairs and new dock installation starting this coming spring.

of Non-GAAP Financial Measures

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 income and 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 Income (Loss)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands) (unaudited)

Interest expense

Net income (loss)

Interest expense, net

Interest income

4 unchanged sentences

Adjusted EBITDA

Critical Accounting Policies and Estimates

Our discussion and analysis

of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance

with accounting principles generally accepted in the United States of America.

The preparation of these financial statements requires

us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and

liabilities at the date of the financial statements and the reported amounts of net sales and expenses for each period.

We believe that

of our significant accounting policies, the following critical accounting policies and estimates are those policies that we believe are

the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult,

subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain:

Accounting Policies and Estimates

discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which

have been prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation of these

financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses for each

We believe that of our significant accounting policies, the following critical accounting policies and estimates are those policies

that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s

most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are

inherently uncertain:

accounting for business combinations;

1 unchanged sentence

impairment of long-lived assets;

valuation allowance for deferred taxes and

derivative instruments.

Except as noted below, these significant accounting principles are more fully described in “Management’s

Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our

Annual Report on Form 10-K for the year ended December 31, 2024.

valuation allowance

for deferred taxes and derivative instruments.

Except as noted below, these significant accounting principles are more fully described

in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies

and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Results of Operations

Selected Financial Information

The following selected financial

information should be read in conjunction with our consolidated financial statements and notes to our consolidated financial statements

included elsewhere in this report, and the other sections of “Management’s Discussion and Analysis of Financial Condition

and Results of Operations” contained in this report.

Certain performance metrics

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

Three Months Ended

Six Months Ended

Financial Information

following selected financial information should be read in conjunction with our consolidated financial statements and notes to our consolidated

financial statements included elsewhere in this report, and the other sections of “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” contained in this report.

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

September 30,

Alcohol Sales (gallons in millions)

19 unchanged sentences

Board corn crush per gallon (1)

Essential Ingredients Sold (in thousands of tons)

Essential Ingredients Sold (in

thousands of tons)

Distillers grains

16 unchanged sentences

costs consumed.

Net Sales, Cost of

Goods Sold and Gross Profit (Loss)

The following table presents

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):

Three Months Ended June 30,

Six Months Ended June 30,

Sales, Cost of Goods Sold and Gross Profit

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):

September 30,

Cost of goods sold

Gross profit (loss)

Percentage of net sales

* Not meaningful

Three Months ended June 30, 2025 as compared to the Three Months

ended June 30, 2024

The decrease in our

consolidated net sales for the three months ended June 30, 2025 as compared to the same period in 2024 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, specialty

alcohol and essential ingredients due to the cold-idling of our Magic Valley plant at the end of 2024 and logistical constraints at

our Pekin Campus due to a damaged loading dock starting in April 2025.

Pekin Campus Production

Net sales of alcohol from our

Pekin Campus production segment declined by $6.5 million, or 6%, to $94.2 million for the three months ended June 30, 2025 as compared

to $100.7 million for the same period in 2024.

Our total volume of production gallons sold decreased by 2.7 million gallons, or 5%, to

48.1 million gallons for the three months ended June 30, 2025 as compared to 50.8 million gallons for the same period in 2024.

of $0.03, or 2%, in the segment’s average sales price per gallon for the three months ended June 30, 2025 as compared to the same

period in 2024 reduced our net sales from the segment by $1.4 million.

With the segment’s average sales price per gallon of $1.95

for the three months ended June 30, 2025, we generated $5.1 million less in net sales from the 2.7 million fewer gallons of alcohol sold

in the three months ended June 30, 2025 as compared to the same period in 2024.

Net sales of essential ingredients

from our Pekin Campus production segment improved by $0.2 million, or less than 1%, to $39.6 million for the three months ended June

Three Months ended September

30, 2025 as compared to the Three Months ended September 30, 2024

The decrease in our consolidated net sales for the three months ended

September 30, 2025 as compared to the same period in 2024 is primarily attributable to lower sales volumes, predominately related to cold

idling our Magic Valley facility and rationalizing unprofitable business activities in our marketing and distribution segment, partially

offset by an increase in our average sales price per gallon.

Campus Production Segment

sales of alcohol from our Pekin Campus production segment increased $2.8 million, or 3%, to $109.3 million for the three months ended

September 30, 2025 as compared to $106.5 million for the same period in 2024.

Our total volume of production gallons sold increased by

0.5 million gallons, or 1%, to 53.3 million gallons for the three months ended September 30, 2025 as compared to 52.8 million gallons

for the same period in 2024.

The increase of $0.03, or 2%, in the segment’s average sales price per gallon for the three months

ended September 30, 2025 as compared to the same period in 2024 increased our net sales from the segment by $1.0 million.

With the segment’s

average sales price per gallon of $2.05 for the three months ended September 30, 2025, we generated $1.8 million in additional net sales

from the 0.5 million additional gallons of alcohol sold in the three months ended September 30, 2025 as compared to the same period in

sales of essential ingredients from our Pekin Campus production segment improved by $4.1 million, or 10%, to $45.3 million for the three

months ended September 30, 2025 as compared to $41.2 million for the same period in 2024.

Our total volume of essential ingredients sold

increased 5,600 tons, or 2%, to 242,200 tons for the three months ended September 30, 2025 from 236,600 tons for the same period in 2024.

The increase of $12.86, or 7%, in the segment’s average sales price per ton for the three months ended September 30, 2025 as compared

to the same period in 2024 increased our net sales from the segment by $3.0 million.

With the segment’s average sales price per

ton of $187.06 for the three months ended September 30, 2025, we generated $1.1 million in additional net sales from the 5,600 additional

tons of essential ingredients sold in the three months ended September 30, 2025 as compared to the same period in 2024.

and Distribution Segment

of alcohol from our marketing and distribution segment, excluding intersegment sales, increased $4.1 million, or 8%, to $58.7 million

for the three months ended September 30, 2025 as compared to $54.6 million for the same period in 2024.

of third-party alcohol sold reported gross by the segment increased 1.9 million gallons, or 8%, to 27.1 million gallons for the three

months ended September 30, 2025 as compared to 25.2 million gallons for the same period in 2024.

With the segment’s average sales

price per gallon of $2.17 for the three months ended September 30, 2025, we generated $4.1 million in additional net sales from the 1.9

million additional gallons of third-party alcohol sold gross in the three months ended September 30, 2025 as compared to the same period

Production Segment

sales of alcohol from our Western production segment declined by $19.0 million, or 52%, to $17.4 million for the three months ended September

30, 2025 as compared to $36.4 million for the same period in 2024.

Our total volume of essential ingredients sold remained stable at

210,000 tons for the three months ended June 30, 2025 and 2024.

The increase of $0.92, or less than 1%, in the segment’s average

sales price per ton for the three months ended June 30, 2025 as compared to the same period in 2024 increased our net sales from the

segment by $0.2 million.

Marketing and Distribution

Net sales of alcohol from our marketing and distribution

segment, excluding intersegment sales, declined by $12.0 million, or 17%, to $58.2 million for the three months ended June 30, 2025 as

compared to $70.2 million for the same period in 2024.

Our volume of

third-party alcohol sold reported gross by the segment decreased by 4.7 million gallons, or 14%, to 29.7 million gallons for the

three months ended June 30, 2025 as compared to 34.4 million gallons for the same period in 2024.

With the segment’s average

sales price per gallon of $1.96 for the three months ended June 30, 2025, we realized $2.8 million less in net sales from the 4.7

million fewer gallons of third-party alcohol sold gross in the three months ended June 30, 2025 as compared to the same period in

The $0.08 per gallon, or 4%, decrease in the segment’s

average sales price per gallon for the three months ended June 30, 2025 as compared to the same period in 2024 resulted in a $9.2 million

decline in our net sales from third-party renewable fuel sold by the segment.

Western Production Segment

Net sales of alcohol from our

Western production segment declined by $0.9 million, or 5%, to $16.6 million for the three months ended June 30, 2025 as compared to

$17.5 million for the same period in 2024.

Our total volume of alcohol sold decreased by 0.7 million gallons, or 8%, to 8.3 million gallons

for the three months ended June 30, 2025 as compared to 9.0 million gallons for the same period in 2024.

With the segment’s average

sales price per gallon of $2.00 for the three months ended June 30, 2025, we realized $1.4 million less in net sales from the 0.7 million

fewer gallons of alcohol sold in the three months ended June 30, 2025 as compared to the same period in 2024.

The increase of $0.06,

or 3%, in the segment’s average sales price per gallon for the three months ended June 30, 2025 as compared to the same period

in 2024 increased our net sales from the segment by $0.5 million.

Net sales of essential ingredients

from our Western production segment increased by $2.3 million, or 39%, to $8.2 million for the three months ended June 30, 2025 as compared

to $5.9 million for the same period in 2024.

Our total volume of essential ingredients sold decreased 1,400 tons, or 2%, to 78,400 tons

for the three months ended June 30, 2025 from 79,800 tons for the same period in 2024.

The increase of $30.67, or 41%, in our average

sales price per ton for the three months ended June 30, 2025 as compared to the same period in 2024 increased our net sales of essential

ingredients from the segment by $2.5 million.

With the segment’s average sales price per ton of $105.23 for the three months ended

June 30, 2025, we generated $0.2 million less in net sales from the 1,400 fewer tons of essential ingredients sold in the three months

ended June 30, 2025 as compared to the same period in 2024.

Corporate and other

Net sales of alcohol from corporate

and other declined by $1.1 million, or 40%, to $1.7 million for the three months ended June 30, 2025 as compared to $2.8 million for

the same period in 2024.

These sales are from Eagle Alcohol’s business.

Cost of Goods Sold and Gross Profit (Loss)

Our consolidated gross profit

(loss) declined to a gross loss of $1.9 million for the three months ended June 30, 2025 from gross profit of $7.6 million for the same

period in 2024, representing a gross margin of negative 0.9% and positive 3.2% for the three months ended June 30, 2025 and 2024, respectively.

Our consolidated gross profit declined due to lower

sales and lower gross margins driven by a few key factors.

Our period-over-period change in unrealized non-cash derivatives was negative

$13.2 million and our realized derivative gain was $7.6 million, resulting in a net unfavorable change of $5.6 million compared to the

same period in 2024.

Although crush margins continued to improve during

the second quarter, market crush was on average 10 cents per gallon lower than for the same period in 2024, totaling $5.5 million of lower

crush margin for the second quarter of 2025.

In addition, high quality alcohol premiums were

15 cents per gallon less in the second quarter than for the same period in 2024 due to increased competition during the annual contracting

This premium differential translated to $3.0 million in margin, which we were able to offset by shifting higher volumes into

more profitable ISCC export markets, demonstrating the benefits of our strategy to diversify production to take advantage of market opportunities.

Our essential ingredients return at our Pekin Campus declined to 44.2% but without affecting profitability as we offset the impact with

our effective hedging strategy.

The total adverse impact to gross profit of our

loading dock outage was $2.7 million for the second quarter.

We are working with our insurance carrier to recover losses in excess of

our deductibles.

Pekin Campus Production Segment

Our Pekin Campus production segment’s gross

profit, net of intercompany activity, declined by $16.0 million to a gross loss of $5.1 million for the three months ended June 30, 2025

as compared to gross profit of $10.9 million for the same period in 2024.

Of this decline, $16.3 million is attributable to lower alcohol

sales margins, partially offset by $0.3 million attributable to lower sales volumes at negative margins.

Marketing and Distribution Segment

Our marketing and distribution segment’s

gross profit, net of intercompany activity, increased by $1.0 million to a gross profit of $1.5 million for the three months ended June

30, 2025 as compared to a gross profit of $0.5 million for the same period in 2024.

Of this improvement, $1.3 million is attributable

to higher margins from sales of third-party renewable fuel, partially offset by $0.3 million attributable to lower sales volumes.

Western Production Segment

Our Western production segment’s gross profit,

net of intercompany activity, increased by $5.3 million to a gross profit of $1.6 million for the three months ended June 30, 2025 as

compared to a gross loss of $3.7 million for the same period in 2024.

Of this improvement, $5.4 million is attributable to higher renewable

fuel margins, partially offset by $0.1 million attributable to lower sales volumes.

Corporate and other

Gross profit from corporate

and other increased by $0.2 million to a breakeven gross profit for the three months ended June 30, 2025 as compared to a gross loss

of $0.2 million for the same period in 2024, all of which were from Eagle Alcohol’s business.

Six Months ended June 30, 2025 as compared to the Six Months ended

June 30, 2024

Our total volume of alcohol sold decreased by 9.9 million gallons,

or 55%, to 8.1 million gallons for the three months ended September 30, 2025 as compared to 18.0 million gallons for the same period

With the segment’s average sales price per gallon of $2.14 for the three months ended September 30, 2025, we realized

$21.2 million less in net sales from the 9.9 million fewer gallons of alcohol sold in the three months ended September 30, 2025 as compared

to the same period in 2024.

The increase of $0.12, or 6%, in the segment’s average sales price per gallon for the three months

ended September 30, 2025 as compared to the same period in 2024 increased our net sales from the segment by $2.2 million.

Net sales of essential

ingredients from our Western production segment decreased by $2.4 million, or 23%, to $8.0 million for the three months ended September

30, 2025 as compared to $10.4 million for the same period in 2024.

Our total volume of essential ingredients sold decreased 77,900 tons,

or 50%, to 76,900 tons for the three months ended September 30, 2025 from 154,800 tons for the same period in 2024.

With the segment’s

average sales price per ton of $104.25 for the three months ended September 30, 2025, we generated $8.1 million less in net sales from

the 77,900 fewer tons of essential ingredients sold in the three months ended September 30, 2025 as compared to the same period in 2024.

The increase of $37.02, or 55%, in our average sales price per ton for the three months ended September 30, 2025 as compared to the same

period in 2024 increased our net sales of essential ingredients from the segment by $5.7 million.

sales of alcohol from corporate and other declined by $0.4 million, or 15%, to $2.3 million for the three months ended September 30,

2025 as compared to $2.7 million for the same period in 2024.

These sales are from Eagle Alcohol’s business, which represented

0.7 million gallons and 0.8 million gallons, respectively.

of Goods Sold and Gross Profit

Our consolidated gross profit improved to a gross

profit of $23.5 million for the three months ended September 30, 2025 from a gross profit of $6.0 million for the same period in 2024,

representing a gross margin of 9.7% and 2.4% for the three months ended September 30, 2025 and 2024, respectively.

Seasonally strong crush

margins remained comparable for both year-over-year quarterly periods at $0.41 per gallon.

Gross profit improved primarily due to an $8.0

million year-over-year change in unrealized noncash derivatives, $5.6 million of margin attributable to higher renewable fuel exports,

$2.0 million of margin attributable to our Alto Carbonic liquid CO 2 business at our Columbia site, $3.6 million attributable

to higher essential ingredients return resulting from strong corn oil pricing and a shift in our production mix to higher value proteins,

plus the cost savings associated with the cold idling of our Magic Valley facility, all of which were partially offset by $2.9 million

of lower premiums for high quality alcohol.

We also continued to benefit from other prior cost reduction efforts, including rationalization

of unprofitable businesses.

Campus Production Segment

Campus production segment’s gross profit, net of intercompany activity, improved by $12.8 million to a gross profit of $19.8 million

for the three months ended September 30, 2025 as compared to gross profit of $7.0 million for the same period in 2024.

Of this improvement,

$12.6 million is attributable to higher alcohol sales margins and $0.2 million is attributable to higher sales volumes.

and Distribution Segment

Our marketing

and distribution segment’s gross profit, net of intercompany activity, increased by $0.9 million to a gross profit of $2.2 million

for the three months ended September 30, 2025 as compared to a gross profit of $1.3 million for the same period in 2024.

Of this improvement,

$0.8 million is attributable to higher margins from sales of third-party renewable fuel and $0.1 million is attributable to higher sales

Production Segment

production segment’s gross profit, net of intercompany activity, increased by $3.4 million to a gross profit of $1.3 million for

the three months ended September 30, 2025 as compared to a gross loss of $2.1 million for the same period in 2024.

Of this improvement,

$4.9 million is attributable to higher renewable fuel margins, in part due to lower expenses due to the cold idling of our Magic Valley

plant, and increased CO 2 sales, partially offset by $1.5 million attributable to lower sales volumes.

profit from corporate and other increased by $0.4 million to a gross profit of $0.2 million for the three months ended September 30,

2025 as compared to a gross loss of $0.2 million for the same period in 2024, all of which were from Eagle Alcohol’s business.

Nine Months ended September

30, 2025 as compared to the Nine Months ended September 30, 2024

The decrease in our consolidated

net sales for the six months ended June 30, 2025 as compared to the same period in 2024 is primarily attributable to lower sales of renewable

fuel and essential ingredients, partially offset by higher average sales prices per gallon from both our western production and marketing

and distribution segments.

Pekin Campus Production

Net sales of alcohol from our

Pekin Campus production segment declined by $7.6 million, or 4%, to $201.4 million for the six months ended June 30, 2025 as compared

to $209.0 million for the same period in 2024.

Our total volume of production gallons sold decreased by 3.2 million gallons, or 3%, to

104.7 million gallons for the six months ended June 30, 2025 as compared to 107.9 million gallons for the same period in 2024.

of $0.02, or 1%, in the segment’s average sales price per gallon for the six months ended June 30, 2025 as compared to the same

period in 2024 reduced our net sales from the segment by $1.8 million.

With the segment’s average sales price per gallon of $1.92

for the six months ended June 30, 2025, we generated $5.8 million less in net sales from the 3.2 million fewer gallons of alcohol sold

in the six months ended June 30, 2025 as compared to the same period in 2024.

Net sales of essential ingredients

from our Pekin Campus production segment declined by $1.9 million, or 2%, to $84.2 million for the six months ended June 30, 2025 as

compared to $86.1 million for the same period in 2024.

Our total volume of essential ingredients sold increased by 25,300 tons, or 6%,

to 447,900 tons for the six months ended June 30, 2025 from 422,600 tons for the same period in 2024.

The decrease of $15.74, or 8%,

in the segment’s average sales price per ton for the six months ended June 30, 2025 as compared to the same period in 2024 reduced

our net sales from the segment by $6.6 million.

With the segment’s average sales price per ton of $187.95 for the six months ended

June 30, 2025, we generated $4.7 million in additional net sales from the 25,300 additional tons of essential ingredients sold in the

six months ended June 30, 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 $17.5 million, or 14%, to $107.2 million for the six months ended June 30, 2025 as

compared to $124.7 million for the same period in 2024.

Our volume of third-party renewable fuel sold

reported gross by the segment decreased by 10.0 million gallons, or 16%, to 54.1 million gallons for the six months ended June 30, 2025

as compared to 64.1 million gallons for the same period in 2024.

With the segment’s average sales price per gallon of $1.98 for

the six months ended June 30, 2025, we realized $19.8 million less in net sales from the 10.0 million fewer gallons of third-party

renewable fuel sold gross in the six months ended June 30, 2025 as compared to the same period in 2024.

The $0.04 per gallon, or 2%,

increase in the segment’s average sales price per gallon for the six months ended June 30, 2025 as compared to the same period

in 2024 resulted in a $2.3 million increase in our net sales from third-party renewable fuel sold by the segment.

Western Production Segment

Net sales of alcohol from our

Western production segment declined by $4.9 million, or 13%, to $32.8 million for the six months ended June 30, 2025 as compared to $37.7

million for the same period in 2024.

Our total volume of alcohol sold decreased by 3.6 million gallons, or 18%, to 16.6 million gallons

for the six months ended June 30, 2025 as compared to 20.2 million gallons for the same period in 2024.

net sales for the nine months ended September 30, 2025, as compared to the same period in 2024, is primarily attributable to lower sales

of renewable fuel and essential ingredients, predominately related to cold idling our Magic Valley facility and rationalizing unprofitable

business activities in our marketing and distribution segment, partially offset by higher average sales prices per gallon from both our

Western production and marketing and distribution segments.

Campus Production Segment

sales of alcohol from our Pekin Campus production segment declined by $4.8 million, or 2%, to $310.7 million for the nine months ended

September 30, 2025 as compared to $315.5 million for the same period in 2024.

Our total volume of production gallons sold decreased by

2.7 million gallons, or 2%, to 158.0 million gallons for the nine months ended September 30, 2025 as compared to 160.7 million gallons

for the same period in 2024.

With the segment’s average sales price per gallon of $1.97 for the nine months ended September 30,

2025, we generated $5.3 million less in net sales from the 2.7 million fewer gallons of alcohol sold in the nine months ended September

30, 2025 as compared to the same period in 2024.The increase of $0.01, or less than 1%, in the segment’s average sales price per

gallon for the nine months ended September 30, 2025 as compared to the same period in 2024 increased our net sales from the segment by

$0.5 million.

sales of essential ingredients from our Pekin Campus production segment increased by $2.2 million, or 2%, to $129.5 million for the nine

months ended September 30, 2025 as compared to $127.3 million for the same period in 2024.

Our total volume of essential ingredients

sold increased by 31,100 tons, or 5%, to 690,300 tons for the nine months ended September 30, 2025 from 659,200 tons for the same period

With the segment’s average sales price per ton of $187.59 for the nine months ended September 30, 2025, we generated $5.8

million in additional net sales from the 31,100 additional tons of essential ingredients sold in the nine months ended September 30,

2025 as compared to the same period in 2024.

The decrease of $5.52, or 3%, in the segment’s average sales price per ton for the

nine months ended September 30, 2025 as compared to the same period in 2024 reduced our net sales from the segment by $3.6 million.

and Distribution Segment

of alcohol from our marketing and distribution segment, excluding intersegment sales, declined by $13.4 million, or 7%, to $165.9 million

for the nine months ended September 30, 2025 as compared to $179.3 million for the same period in 2024.

of third-party renewable fuel sold reported gross by the segment decreased by 8.1 million gallons, or 9%, to 81.2 million gallons for

the nine months ended September 30, 2025 as compared to 89.3 million gallons for the same period in 2024.

With the segment’s average

sales price per gallon of $1.98 for the six months ended June 30, 2025, we generated $7.1 million less in net sales from the 3.6 million

fewer gallons of alcohol sold in the six months ended June 30, 2025 as compared to the same period in 2024.

The increase of $0.12, or

7%, in the segment’s average sales price per gallon for the six months ended June 30, 2025 as compared to the same period in 2024

increased our net sales from the segment by $2.2 million.

Net sales of essential ingredients

from our Western production segment increased by $2.3 million, or 17%, to $16.1 million for the six months ended June 30, 2025 as compared

to $13.8 million for the same period in 2024.

Our total volume of essential ingredients sold decreased 29,300 tons, or 16%, to 151,300

tons for the six months ended June 30, 2025 from 180,600 tons for the same period in 2024.

The increase of $29.85, or 39%, in our average

sales price per ton for the six months ended June 30, 2025 as compared to the same period in 2024 increased our net sales of essential

ingredients from the segment by $5.4 million.

With the segment’s average sales price per ton of $106.13 for the six months ended

June 30, 2025, we generated $3.1 million less in net sales from the 29,300 fewer tons of essential ingredients sold in the six months

ended June 30, 2025 as compared to the same period in 2024.

Corporate and other

Net sales of alcohol from corporate

and other declined by $2.5 million, or 43%, to $3.3 million for the six months ended June 30, 2025 as compared to $5.8 million for the

same period in 2024.

These sales are from Eagle Alcohol’s business.

Cost of Goods Sold and Gross Profit (Loss)

Our consolidated gross profit declined to a gross

loss of $3.7 million for the six months ended June 30, 2025 from gross profit of $5.2 million for the same period in 2024, representing

a gross margin of negative 0.8% and positive 1.1% for the six months ended June 30, 2025 and 2024, respectively.

Pekin Campus Production Segment

Our Pekin Campus production segment’s gross

profit, net of intercompany activity, declined by $23.5 million to a gross loss of $7.8 million for the six months ended June 30, 2025

as compared to gross profit of $15.7 million for the same period in 2024.

Of this decline, $23.8 million is attributable to lower alcohol

sales margins, partially offset by $0.3 million attributable to lower sales volumes.

Marketing and Distribution Segment

Our marketing and distribution segment’s

gross profit, net of intercompany activity, improved by $2.4 million to a gross profit of $3.8 million for the six months ended June

30, 2025 as compared to a gross profit of $1.4 million for the same period in 2024.

Of this improvement $3.1 million is attributable

primarily to higher margins from sales of third-party renewable fuel, partially offset by $0.7 million from lower sales volumes for the

six months ended June 30, 2025 as compared to the same period in 2024.

Western Production Segment

Our Western production segment’s

gross profit, net of intercompany activity, improved by $12.4 million to a gross profit of $0.4 million for the six months ended June

30, 2025 as compared to a gross loss of $12.0 million for the same period in 2024.

Of this improvement, $12.5 million is attributable

to higher renewable fuel margins and increased CO 2 sales, partially offset by $0.1 million attributable to lower sales volumes.

Corporate and other

Gross profit from corporate

and other declined by $0.2 million to a gross loss of $0.1 million for the six months ended June 30, 2025 as compared to gross profit

of $0.1 million for the same period in 2024, all of which were from Eagle Alcohol’s business.

sales price per gallon of $2.04 for the nine months ended September 30, 2025, we realized $16.5 million less in net sales from the 8.1

million fewer gallons of third-party renewable fuel sold gross in the nine months ended September 30, 2025 as compared to the same period

The $0.03 per gallon, or 1%, increase in the segment’s average sales price per gallon for the nine months ended September

30, 2025 as compared to the same period in 2024 resulted in a $3.1 million increase in our net sales from third-party renewable fuel

sold by the segment.

Production Segment

sales of alcohol from our Western production segment declined by $23.9 million, or 32%, to $50.2 million for the nine months ended September

30, 2025 as compared to $74.1 million for the same period in 2024.

Our total volume of alcohol sold decreased by 13.5 million gallons,

or 35%, to 24.7 million gallons for the nine months ended September 30, 2025 as compared to 38.2 million gallons for the same period

With the segment’s average sales price per gallon of $2.03 for the nine months ended September 30, 2025, we generated

$27.4 million less in net sales from the 13.5 million fewer gallons of alcohol sold in the nine months ended September 30, 2025 as compared

to the same period in 2024.

The increase of $0.09, or 5%, in the segment’s average sales price per gallon for the nine months ended

September 30, 2025 as compared to the same period in 2024 increased our net sales from the segment by $3.5 million.

sales of essential ingredients from our Western production segment decreased by $0.1 million, or less than 1%, to $24.1 million for the

nine months ended September 30, 2025 as compared to $24.2 million for the same period in 2024.

Our total volume of essential ingredients

sold decreased 107,300 tons, or 32%, to 228,100 tons for the nine months ended September 30, 2025 from 335,400 tons for the same period

With the segment’s average sales price per ton of $105.5 for the nine months ended September 30, 2025, we generated $11.3

million less in net sales from the 107,300 fewer tons of essential ingredients sold in the nine months ended September 30, 2025 as compared

to the same period in 2024.

The increase of $33.45, or 46%, in our average sales price per ton for the nine months ended September 30,

2025 as compared to the same period in 2024 increased our net sales of essential ingredients from the segment by $11.2 million.

sales of alcohol from corporate and other declined by $3.0 million, or 35%, to $5.6 million for the nine months ended September 30, 2025

as compared to $8.6 million for the same period in 2024.

These sales are from Eagle Alcohol’s business, which represented 1.7 million

gallons and 2.7 million gallons, respectively.

of Goods Sold and Gross Profit

Our consolidated gross profit increased to a gross

profit of $19.8 million for the nine months ended September 30, 2025 from gross profit of $11.1 million for the same period in 2024, representing

a gross margin of 2.9% and 1.5% for the nine months ended September 30, 2025 and 2024, respectively.

Similar to the three-month period

ending September 30, 2025, gross profit for the nine-month period improved due to higher renewable fuel exports, our Alto Carbonic liquid

CO 2 business at our Columbia site, a higher essential ingredients return and cost savings associated with the cold idling of

our Magic Valley facility as well as other prior cost reduction efforts, including rationalization of unprofitable businesses.

Campus Production Segment

Campus production segment’s gross profit, net of intercompany activity, declined by $11.4 million to a gross profit of $11.2 million

for the nine months ended September 30, 2025 as compared to gross profit of $22.6 million for the same period in 2024.

Of this decline,

$11.2 million is attributable to lower alcohol sales margins and $0.2 million is attributable to lower sales volumes.

and Distribution Segment

Our marketing

and distribution segment’s gross profit, net of intercompany activity, improved by $3.4 million to a gross profit of $6.1 million

for the nine months ended September 30, 2025 as compared to a gross profit of $2.7 million for the same period in 2024.

Of this improvement

$4.0 million is attributable primarily to higher margins from sales of third-party renewable fuel, partially offset by $0.6 million from

lower sales volumes for the nine months ended September 30, 2025 as compared to the same period in 2024.

Production Segment

production segment’s gross profit, net of intercompany activity, improved by $16.5 million to a gross profit of $2.4 million for

the nine months ended September 30, 2025 as compared to a gross loss of $14.1 million for the same period in 2024.

Of this improvement,

$17.8 million is attributable to higher renewable fuel margins, in part due to lower expenses due to the cold idling of our Magic Valley

plant, and increased CO 2 sales, partially offset by $1.3 million attributable to lower sales volumes.

profit from corporate and other increased by $0.3 million to a gross profit of $0.2 million for the nine months ended September 30, 2025

as compared to gross loss of $0.1 million for the same period in 2024, all of which were from Eagle Alcohol’s business.

General and Administrative Expenses

following table presents our selling, general and administrative, or SG&A, expenses in dollars and as a percentage of net sales (in

thousands, except percentages):

September 30,

Selling, general and

administrative expenses

The following table presents

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

Six Months Ended

Selling, general and administrative expenses

Percentage of net sales

Our SG&A expenses

declined for the three and six months ended June 30, 2025 as compared to the same periods in 2024.

The period over period decreases

in SG&A expenses are primarily due to a $1.1 million reduction in acquisition-related expenses for our acquisition of Eagle

Alcohol, a $0.9 million decrease in compensation expenses from our efforts to rationalize our business and right size our staffing

to better align with our current operational footprint and a $0.9 million reduction in non-cash stock compensation.

exceeding our target annualized overhead savings of $8.0 million.

We also took additional steps to further lower our future costs,

including, for example, negotiating lower property taxes, improving terms with suppliers, reducing reliance on outside services and

other changes which we expect, in aggregate, will make a meaningful difference to our future profitability.

Net Loss Attributable

to Common Stockholders

The following table presents

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

Three Months Ended

Six Months Ended

Net loss attributable to common stockholders

Our SG&A expenses declined for the three and

nine months ended September 30, 2025 as compared to the same periods in 2024.

The decrease in SG&A expenses for the three-month period

is primarily due to a realignment of our staffing levels and a $0.7 million reduction in acquisition-related expenses.

The decreases in

SG&A expenses for the nine-month period are primarily due to a $2.5 million reduction in acquisition-related expenses, a $0.2 million

decrease in compensation expenses from our efforts to rationalize our business and right size our staffing to better align with our current

operational footprint and a $1.3 million reduction in non-cash stock compensation.

We are now exceeding our target annualized total overhead

savings of $8.0 million.

We also took additional steps to further lower our future costs, including, for example, negotiating lower property

taxes, improving terms with suppliers, reducing reliance on outside services and other changes which we expect, in aggregate, will make

a meaningful difference to our future profitability.

We expect a continuation of these cost savings and similar SG&A levels going

Income (Loss) Attributable to Common Stockholders

following table presents our net income (loss) attributable to common stockholders in dollars and as a percentage of net sales (in thousands,

except percentages):

September 30,

Net income (loss)

attributable to common stockholders

Percentage of net sales

The increase in our net

loss attributable to common stockholders for the three and six months ended June 30, 2025 as compared to the same periods in 2024 is

primarily due to higher unrealized non-cash derivative losses, lower crush margins, lower high quality alcohol premiums and the impact of our loading dock outage, as discussed above.

* Not meaningful

The improvement

in our net income (loss) attributable to common stockholders for the three and nine months ended September 30, 2025 as compared to the

same periods in 2024 is primarily due to higher crush margins and lower operating costs at our Western production segment due to the

cold idling of our Magic Valley plant, as well as the other factors contributing to higher gross profit as discussed above.

Liquidity and Capital Resources

During the six months ended June 30, 2025, we

funded our operations primarily from cash on hand and proceeds from Kinergy’s operating line of credit.

During the nine months ended September 30, 2025,

we funded our operations primarily from cash on hand, cash flow from operating activities and proceeds from Kinergy’s operating

line of credit.

We generated $22.8 million of cash from our operations for the three months ended September 30, 2025.

In addition to funding

our operations, our capital resources were used to purchase Kodiak Carbonic, make our final payments relating to our acquisition of Eagle

Alcohol and for capital expenditures.

As of June 30, 2025, we had $30.5 million in cash, cash equivalents and restricted cash, $4.8 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.

As of June 30, 2025, our derivative net asset position was $1.7 million.

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 Period-End

Liquidity Status

We believe that the following

amounts provide insight into our liquidity and capital resources.

The following selected financial information should be read in conjunction

with our consolidated financial statements and notes to consolidated financial statements included elsewhere in this report, and the

other sections of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained

in this report (dollars in thousands).

Alcohol and for capital expenditures during the nine-month period.

As of September 30, 2025, we had $33.1 million in cash, cash equivalents

and restricted cash, $20.3 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.

As of September 30, 2025, our derivative

net asset position was $3.5 million.

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.

Period-End Liquidity Status

believe that the following amounts provide insight into our liquidity and capital resources.

The following selected financial information

should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included elsewhere

in this report, and the other sections of “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

contained in this report (dollars in thousands).

September 30,

Cash, cash equivalents and restricted cash

5 unchanged sentences

Working capital ratio

Restricted Net Assets

At June 30, 2025, we had approximately $49.5 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 improved to $107.2 million at

June 30, 2025 from $95.3 million at December 31, 2024 as a result of a decrease of $15.3 million in current liabilities, partially offset

by a decrease of $3.4 million in current assets.

Current assets decreased primarily due to a decrease

in cash and cash equivalents and restricted cash, partially offset by an increase in inventories from December 31, 2024.

Our current liabilities

decreased primarily due to lower accounts payable and accrued liabilities as a result of the timing of payments, and a decrease in

other current liabilities as we paid the remaining purchase price for our acquisition of Eagle Alcohol.

Our cash, cash

equivalents and restricted cash declined by $5.7 million due to $19.1 million in cash used in our operating activities and $10.5

million in cash used in our investing activities, partially offset by $23.9 million in cash provided by our financing

Cash used in our Operating Activities

We used $19.1 million of cash in our operations

for the six months ended June 30, 2025 as compared to $12.3 million for the same period in 2024.

Significant factors that contributed

to the change in cash provided by our operating activities include:

● a decrease of $12.5

million related to lower inventories due to reduced production volumes and the timing of

● an increase of $7.8

million in net loss due to lower margins;

● a decrease of $1.5

million related to other assets, primarily due to the timing of payments on prepaid assets.

These amounts were partially offset by:

● an increase of $7.2

million related to period-end commodity prices applicable to our derivative instruments;

● an increase of $5.8

million related to changes in accounts receivable balances due to the timing of our collections.

Cash used in our Investing Activities

We used a total of $10.5

million in cash during the period for our acquisition of Kodiak Carbonic, the final payment for our acquisition of Eagle Alcohol and

various capital expenditures.

During the second quarter, we used $0.5 million for capital expenditures, an amount much lower than

historical averages to manage liquidity and focus on our priorities.

Cash provided by our Financing Activities

30, 2025, we had approximately $47.2 million of net assets at our subsidiaries that were not available to be transferred to Alto Ingredients,

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

in Working Capital and Cash Flows

capital improved to $108.5 million at September 30, 2025 from $95.3 million at December 31, 2024 as a result of a decrease of $15.4 million

in current liabilities, partially offset by a decrease of $2.2 million in current assets.

assets decreased primarily due to decreases in cash and cash equivalents, restricted cash and accounts receivable, partially offset by

an increase in inventories from December 31, 2024.

liabilities decreased primarily due to lower accounts payable and accrued liabilities as a result of the timing of payments, and a decrease

in other current liabilities as we paid the remaining purchase price for our acquisition of Eagle Alcohol.

cash equivalents and restricted cash declined by $3.1 million due to $12.2 million in cash used in our investing activities, partially

offset by $3.7 million in cash provided by our operating activities and $5.4 million in cash provided by our financing activities.

provided by our Operating Activities

$3.7 million of cash from our operations for the nine months ended September 30, 2025 as compared to $6.3 million for the same period

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

● an increase of $11.8 million related to inventories

due to reduced production volumes and the timing of sales;

● an increase of $3.5 million related to changes in accounts

receivable balances due to the timing of our collections.

These amounts were partially

● an improvement in our net loss of $8.8 million due to higher

● an increase in our accounts payable and accrued expenses

of $7.1 million due to timing of payments.

used in our Investing Activities

a total of $12.2 million in cash during the period for our acquisition of Kodiak Carbonic, the final payment for our acquisition of Eagle

Alcohol and various capital expenditures.

During the third quarter, we used $1.6 million for capital expenditures, an amount much lower

than historical averages to manage our liquidity and focus on other priorities.

provided by our Financing Activities

Cash provided by our financing activities was $5.4

$23.9 million for the six months ended June 30, 2025, which reflects net proceeds of $24.5 million from Kinergy’s operating line

million for the nine months ended September 30, 2025, which reflects net proceeds of $6.3 million from Kinergy’s operating line

of credit, partially offset by $0.9 million in preferred stock dividends paid.

Kinergy’s Operating Line of Credit

Kinergy maintains an operating line of credit

for an aggregate amount of up to $100.0 million.

During the third quarter, we used $18.5 million in cash

to repay debt on Kinergy’s operating line of credit to lower our interest expense and pay preferred dividends.

Operating Line of Credit

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

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,

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.

For all monthly periods in which excess borrowing

availability falls below a specified level, Kinergy and Alto Nutrients must collectively maintain a fixed-charge coverage ratio (calculated

as a twelve-month rolling earnings before interest, taxes, depreciation and amortization divided by the sum of interest expense, capital

expenditures, principal payments of indebtedness, indebtedness from capital leases and taxes paid during such twelve-month rolling period)

of at least 1.1 and are prohibited from incurring certain additional indebtedness (other than specific intercompany indebtedness).

obligations of Kinergy and Alto Nutrients under the credit facility are secured by all of our tangible and intangible assets.

We believe Kinergy and Alto Nutrients are in compliance

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:

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.

that may be made by Kinergy to Alto Ingredients, Inc.

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

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.

that may be made by Alto Nutrients to Alto Ingredients, Inc.

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

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.

monthly periods in which excess borrowing availability falls below a specified level, Kinergy and Alto Nutrients must collectively maintain

a fixed-charge coverage ratio (calculated as a twelve-month rolling earnings before interest, taxes, depreciation and amortization divided

by the sum of interest expense, capital expenditures, principal payments of indebtedness, indebtedness from capital leases and taxes

paid during such twelve-month rolling period) of at least 1.1 and are prohibited from incurring certain additional indebtedness (other

than specific intercompany indebtedness).

The obligations of Kinergy and Alto Nutrients under the credit facility are secured by all

of our tangible and intangible assets.

Kinergy and Alto Nutrients are in compliance 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

Alto Ingredients, Inc.

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

As of June 30, 2025, Kinergy had an outstanding balance of $64.2

million and $4.8 million of unused borrowing availability under the credit facility.

Orion Term Loan

On November 7, 2022, we

entered into a credit agreement with certain funds managed by Orion Infrastructure Capital, or Lenders, under which the Lenders extended

a senior secured credit facility in the amount of up to $125.0 million, or Term Loan.

The Term Loan matures on November 7, 2028, or earlier

upon acceleration.

The Term Loan is secured by a first priority lien on certain of our assets and a second priority lien on certain assets

of Kinergy and Alto Nutrients.

Ingredients, Inc.

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

As of September 30, 2025, Kinergy had

an outstanding balance of $46.0 million and $20.3 million of unused borrowing availability under the credit facility.

November 7, 2022, we entered into a credit agreement with certain funds managed by Orion Infrastructure Capital, or Lenders, under which

the Lenders extended a senior secured credit facility in the amount of up to $125.0 million, or Term Loan.

The Term Loan matures on November

The Term Loan is secured by a first priority lien on certain of our assets and a second priority lien on certain assets of Kinergy

and Alto Nutrients.

Interest accrues on the unpaid principal amount of the Term Loan at a fixed rate of 10% per annum.

We must prepay amounts outstanding

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 and six months ended June 30, 2025 and 2024.

As of June 30, 2025 and

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

Other Cash Obligations

As of June 30, 2025, we had

future commitments for certain capital projects totaling $11.5 million.

These commitments are scheduled to be satisfied through 2025.

must prepay amounts outstanding 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 and nine months ended September 30, 2025 and 2024.

of September 30, 2025 and December 31, 2024, the principal amount outstanding under the Term Loan was $60.0 million.

Cash Obligations

of September 30, 2025, we had future commitments for certain capital projects totaling $6.3 million.

These commitments are scheduled

to be satisfied through 2025.

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