Alto Ingredients, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS. ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2025 2024 (unaudited) * ASSETS Current Assets: Cash and cash equivalents $ 32,516 $ 35,469 Restricted cash 623 742 Accounts receivable (net of allowance for credit losses of $ 19 and $ 23 , respectively) 54,757 58,217 Inventories 53,390 49,914 Derivative instruments 3,602 3,313 Other current assets 6,035 5,463 Total current assets 150,923 153,118 Property and equipment, net 203,528 214,742 Other Assets: Right of use operating lease assets, net 18,001 20,553 Intangible assets, net 7,730 4,509 Other assets 8,292 8,516 Total other assets 34,023 33,578 Total Assets $ 388,474 $ 401,438 * Amounts derived from the audited consolidated financial statements for the year ended December 31, 2024. See accompanying notes to consolidated financial statements. 1 ALTO INGREDIENTS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) (in thousands, except par value) September 30, December 31, 2025 2024 (unaudited) * LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 15,521 $ 20,369 Accrued liabilities 16,191 24,214 Current portion – operating leases 5,140 4,851 Derivative instruments 108 1,177 Other current liabilities 5,459 7,193 Total current liabilities 42,419 57,804 Long-term debt, net 100,598 92,904 Operating leases, net of current portion 13,955 16,913 Other liabilities 9,100 8,754 Total Liabilities 166,072 176,375 Commitments and Contingencies (Note 6) Stockholders’ Equity: Preferred stock, $ 0.001 par value; 10,000 shares authorized; Series A: 1,684 shares authorized; no shares issued and outstanding as of September 30, 2025 and December 31, 2024; Series B: 1,581 shares authorized; 927 shares issued and outstanding as of September 30, 2025 and December 31, 2024; liquidation preference of $ 18,075 as of September 30, 2025 1 1 Common stock, $ 0.001 par value; 300,000 shares authorized; 77,342 and 76,565 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 77 77 Non-voting common stock, $ 0.001 par value; 3,553 shares authorized; 1 share issued and outstanding as of September 30, 2025 and December 31, 2024, respectively — — Additional paid-in capital 1,050,929 1,044,176 Accumulated other comprehensive income 4,975 4,975 Accumulated deficit ( 833,580 ) ( 824,166 ) Total Stockholders’ Equity 222,402 225,063 Total Liabilities and Stockholders’ Equity $ 388,474 $ 401,438 * Amounts derived from the audited consolidated financial statements for the year ended December 31, 2024. See accompanying notes to consolidated financial statements. 2 ALTO INGREDIENTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net sales $ 240,986 $ 251,814 $ 685,962 $ 728,911 Cost of goods sold 217,492 245,854 666,212 717,798 Gross profit 23,494 5,960 19,750 11,113 Selling, general and administrative expenses ( 6,514 ) ( 7,510 ) ( 19,875 ) ( 24,403 ) Gain on sale of assets — 830 — 830 Income (loss) from operations 16,980 ( 720 ) ( 125 ) ( 12,460 ) Interest expense, net ( 2,800 ) ( 1,867 ) ( 8,340 ) ( 5,170 ) Other income (expense), net 28 146 ( 3 ) 358 Income (loss) before provision for income taxes 14,208 ( 2,441 ) ( 8,468 ) ( 17,272 ) Provision for income taxes — — — — Net income (loss) $ 14,208 $ ( 2,441 ) $ ( 8,468 ) $ ( 17,272 ) Preferred stock dividends $ ( 319 ) $ ( 319 ) $ ( 946 ) $ ( 950 ) Net income (loss) attributable to common stockholders $ 13,889 $ ( 2,760 ) $ ( 9,414 ) $ ( 18,222 ) Net income (loss) per share, basic and diluted $ 0.19 $ ( 0.04 ) $ ( 0.13 ) $ ( 0.25 ) Weighted-average shares outstanding, basic and diluted 74,777 73,835 74,415 73,364 See accompanying notes to consolidated financial statements. 3 ALTO INGREDIENTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Nine Months Ended September 30, 2025 2024 Operating Activities: Net loss $ ( 8,468 ) $ ( 17,272 ) Adjustments to reconcile net loss to Net cash provided by operating activities: Depreciation and amortization 18,888 17,860 Gains on derivative instruments ( 10,179 ) ( 9,002 ) Gain on sale of assets — ( 830 ) Stock-based compensation 2,180 3,650 Amortization of deferred financing fees 759 761 Amortization of debt discount 599 602 Credit loss recovery ( 4 ) ( 23 ) Changes in operating assets and liabilities, net of business acquisition: Accounts receivable 3,180 6,714 Inventories ( 3,322 ) 8,434 Other assets 2,723 4,702 Operating leases ( 4,883 ) ( 4,424 ) Accounts payable and accrued liabilities 2,232 ( 4,903 ) Net cash provided by operating activities 3,705 6,269 Investing Activities: Additions to property and equipment ( 2,649 ) ( 9,788 ) Proceeds from sale of assets — 400 Purchase of Kodiak Carbonic, net of cash acquired ( 7,278 ) — Deferred purchase price payments for Eagle Alcohol ( 2,240 ) ( 2,800 ) Net cash used in investing activities ( 12,167 ) ( 12,188 ) Financing Activities: Net proceeds from (payments on) Kinergy’s line of credit 6,336 ( 117 ) Preferred stock dividends paid ( 946 ) ( 950 ) Net cash provided by (used in) financing activities 5,390 ( 1,067 ) Net change in cash, cash equivalents and restricted cash ( 3,072 ) ( 6,986 ) Cash, cash equivalents and restricted cash at beginning of period 36,211 45,480 Cash, cash equivalents and restricted cash at end of period $ 33,139 $ 38,494 Reconciliation of total cash, cash equivalents and restricted cash: Cash and cash equivalents $ 32,516 $ 33,591 Restricted cash 623 4,903 Total cash, cash equivalents and restricted cash $ 33,139 $ 38,494 Supplemental Information: Interest paid $ 6,970 $ 6,211 Proceeds from sale of assets – note receivable $ — $ 1,012 Capitalized interest $ — $ 2,411 Shares vested for Eagle Alcohol $ 5,000 $ — See accompanying notes to consolidated financial statements. 4 ALTO INGREDIENTS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited, in thousands) Preferred Stock Common Stock Additional Paid-In Accumulated Accum. Other Comprehensive Shares Amount Shares Amount Capital Deficit Income Total Balances, January 1, 2025 927 $ 1 76,565 $ 77 $ 1,044,176 $ ( 824,166 ) $ 4,975 $ 225,063 Stock-based compensation — — — — 848 — — 848 Restricted stock issued to employees and directors, net of cancellations and tax — — ( 68 ) — — — — — Preferred stock dividends — — — — — ( 312 ) — ( 312 ) Net loss — — — — — ( 11,679 ) — ( 11,679 ) Balances, March 31, 2025 927 $ 1 76,497 $ 77 $ 1,045,024 $ ( 836,157 ) $ 4,975 $ 213,920 Stock-based compensation — — — — 626 — — 626 Restricted stock issued to employees and directors, net of cancellations and tax — — 704 — ( 389 ) — — ( 389 ) Shares vested for Eagle Alcohol — — — — 5,000 — — 5,000 Preferred stock dividends — — — — — ( 315 ) — ( 315 ) Net loss — — — — — ( 10,997 ) — ( 10,997 ) Balances, June 30, 2025 927 $ 1 77,201 $ 77 $ 1,050,261 $ ( 847,469 ) $ 4,975 $ 207,845 Stock-based compensation — — — — 706 — — 706 Restricted stock issued to employees and directors, net of cancellations and tax — — 141 — ( 38 ) — — ( 38 ) Preferred stock dividends — — — — — ( 319 ) — ( 319 ) Net income — — — — — 14,208 — 14,208 Balances, September 30, 2025 927 $ 1 77,342 $ 77 $ 1,050,929 $ ( 833,580 ) $ 4,975 $ 222,402 Balances, January 1, 2024 927 $ 1 75,703 $ 76 $ 1,040,912 $ ( 763,913 ) $ 2,481 $ 279,557 Stock-based compensation — — — — 1,142 — — 1,142 Restricted stock issued to employees and directors, net of cancellations and tax — — 1,315 1 ( 1 ) — — — Preferred stock dividends — — — — — ( 315 ) — ( 315 ) Net loss — — — — — ( 11,725 ) — ( 11,725 ) Balances, March 31, 2024 927 $ 1 77,018 $ 77 $ 1,042,053 $ ( 775,953 ) $ 2,481 $ 268,659 Stock-based compensation — — — — 1,646 — — 1,646 Restricted stock issued to employees and directors, net of cancellations and tax — — ( 373 ) — ( 1,060 ) — — ( 1,060 ) Preferred stock dividends — — — — — ( 316 ) — ( 316 ) Net loss — — — — — ( 3,106 ) — ( 3,106 ) Balances, June 30, 2024 927 $ 1 76,645 $ 77 $ 1,042,639 $ ( 779,375 ) $ 2,481 $ 265,823 Stock-based compensation — — — — 862 — — 862 Restricted stock issued to employees and directors, net of cancellations and tax — — ( 20 ) — — — — — Preferred stock dividends — — — — — ( 319 ) — ( 319 ) Net loss — — — — — ( 2,441 ) — ( 2,441 ) Balances, September 30, 2024 927 $ 1 76,625 $ 77 $ 1,043,501 $ ( 782,135 ) $ 2,481 $ 263,925 See accompanying notes to consolidated financial statements. 5 ALTO INGREDIENTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND BASIS OF PRESENTATION. Organization and Business – The consolidated financial statements include, for all periods presented, the accounts of Alto Ingredients, Inc., a Delaware corporation (“Alto Ingredients”), and its direct and indirect wholly-owned subsidiaries (collectively, the “Company”), including Kinergy Marketing LLC, an Oregon limited liability company (“Kinergy”), Alto Nutrients, LLC, a California limited liability company (“Alto Nutrients”), Alto Op Co., a Delaware corporation, Alto Pekin, LLC, a Delaware limited liability company (“Alto Pekin”) and Alto ICP, LLC, a Delaware limited liability company (“ICP”), and the Company’s production facilities in Oregon and Idaho. As discussed in Note 2, on January 1, 2025, the Company’s wholly-owned subsidiary, Alto Carbonic, LLC (“Alto Carbonic”), acquired Kodiak Carbonic, LLC, a beverage-grade liquid CO 2 processor, for $ 7.6 million. Alto Carbonic’s facility is co-located at the Company’s Columbia ethanol plant in Boardman, Oregon. The Company began reporting the results of Alto Carbonic in the Company’s Western Production segment on January 1, 2025. The Company produces and distributes renewable fuels, essential ingredients and specialty alcohols. The Company also markets fuel-grade ethanol produced by third parties. The Company’s production facilities in Pekin, Illinois are located in the heart of the Corn Belt. The Company’s two production facilities in Boardman, Oregon and Burley, Idaho are located in close proximity to both feed and fuel-grade ethanol customers. The Company has a combined alcohol production capacity of 350 million gallons per year and produces, on an annualized basis, over 1.4 million tons of essential ingredients, such as dried yeast, corn protein meal, corn protein feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. In addition, the Company markets and distributes fuel-grade ethanol produced by third parties. The Company focuses on Health, Home & Beauty ; Food & Beverage ; Industry & Agriculture; Essential Ingredients ; and Renewable Fuels markets. Products for the Health, Home & Beauty market include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners. Products for the Food & Beverage markets include grain neutral spirits used in alcoholic beverages and vinegar as well as corn germ used for corn oils. Products for Industry & Agriculture markets include alcohols and other products for paint applications and fertilizers. Products for Essential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods. Products for Renewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels. The Company’s production facilities, other than its Magic Valley plant located in Burley, Idaho, were operating for all periods presented subject to scheduled and unscheduled downtimes to address facility repair and maintenance. In January 2024, the Company temporarily hot-idled its Magic Valley facility to minimize losses from negative regional crush margins and to expedite the installation of additional equipment to achieve the intended production rate, quality and consistency from the Company’s corn oil and high protein system at the facility. The Company restarted its Magic Valley facility in July 2024 and by October 2024, the facility consistently achieved average ethanol production rates at full capacity, the protein content yield from the plant reached 50 % or greater, and the Company was able to expand its corn oil yields. Increases in regional corn basis and declining market prices for protein and corn oil resulted in overall margin compression, outweighing the economic benefits of these plant improvements. As a consequence, the Company cold-idled its Magic Valley facility on December 31, 2024 to minimize financial losses. The Company continues to provide terminal services at the plant. 6 Basis of Presentation – Interim Financial Statements – The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Accounts Receivable and Allowance for Credit Losses – Trade accounts receivable is presented at original invoice amount, net of the allowance for credit losses. The Company sells specialty alcohols to large consumer product companies, sells fuel-grade ethanol to gasoline refining and distribution companies, sells essential ingredients such as dried yeast for human and pet food and to animal feed customers, including distillers grains to export markets, sells those same and other feed co-products to dairy operators and animal feedlots and sells corn oil to poultry, renewable diesel and biodiesel customers, in each case generally without requiring collateral. The carrying amount of accounts receivable is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected. The Company regularly reviews accounts receivable and based on assessments of current customer creditworthiness, estimates the portion, if any, of the customer balance that will not be collected. Of the accounts receivable balance, approximately $ 46,146,000 and $ 44,750,000 at September 30, 2025 and December 31, 2024, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for credit losses was $ 19 ,000 and $ 23 ,000 as of September 30, 2025 and December 31, 2024, respectively. The Company recorded a credit loss recovery of $ 3 ,000 and $ 24 ,000 for the three months ended September 30, 2025 and 2024, respectively. The Company recorded a credit loss recovery of $ 4 ,000 and $ 23 ,000 for the nine months ended September 30, 2025 and 2024, respectively. The Company does not have any off-balance sheet credit exposure related to its customers. Financial Instruments – The carrying values of cash and cash equivalents, restricted cash, accounts receivable, derivative assets, accounts payable, accrued liabilities and derivative liabilities are reasonable estimates of their fair values because of the short maturity of these items. The Company believes the carrying value of its long-term debt instruments are not considered materially different than fair value. Estimates and Assumptions – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates are required as part of determining the allowance for credit losses, net realizable value of inventory, long-lived asset impairments, valuation allowances on deferred income taxes, the potential outcome of future tax consequences of events recognized in the Company’s financial statements or tax returns, and the valuation of assets acquired and liabilities assumed as a result of business combinations. Actual results and outcomes may materially differ from management’s estimates and assumptions. 7 2. ACQUISITION OF KODIAK CARBONIC. On January 1, 2025, Alto Carbonic purchased 100 % of the equity interests in Kodiak Carbonic, LLC, a beverage-grade liquid CO 2 processor, for $ 7.6 million in cash. Alto Carbonic’s facility is co-located at the Company’s Columbia ethanol plant. The acquisition has provided the Company further vertical integration and access to new markets in the liquid CO 2 market out of its Columbia plant. Kodiak Carbonic’s unaudited net sales for the three months ended September 30, 2025 and 2024 were $ 2.6 million and $ 1.4 million and its unaudited net income was $ 1.7 million and $ 0.5 million, respectively. Kodiak Carbonic’s unaudited net sales for the nine months ended September 30, 2025 and 2024 were $ 7.0 million and $ 4.1 million and its unaudited net income was $ 4.6 million and $ 1.4 million, respectively. The following table presents the Company’s unaudited pro forma combined financial information assuming the acquisition occurred on January 1, 2024 (dollars in thousands except per share amounts): Three Months Ended September 30, 2025 2024 Revenues – pro forma $ 240,986 $ 253,200 Net income (loss) attributable to common stockholders – pro forma $ 13,889 $ ( 2,189 ) Basic and diluted net income (loss) per share – pro forma $ 0.19 $ ( 0.03 ) Nine Months Ended September 30, 2025 2024 Revenues – pro forma $ 685,962 $ 733,043 Net loss attributable to common stockholders – pro forma $ ( 9,414 ) $ ( 16,603 ) Basic and diluted net loss per share – pro forma $ ( 0.13 ) $ ( 0.23 ) 8 The following allocation of the estimated purchase price assumes, with the exception of property and equipment and intangibles, that carrying values approximate fair value. Estimates of uncollectible accounts receivable are not considered material due to the short-term nature and customer collection history. The purchase price allocation is as follows (in thousands): Cash and equivalents $ 290 Accounts receivable 219 Inventories 154 Other assets 16 Total current assets 679 Property and equipment 3,564 Total tangible assets $ 4,243 Current liabilities $ 360 Total liabilities $ 360 Net tangible assets acquired $ 3,883 Customer relationships 3,685 Total Purchase Price $ 7,568 For the identifiable intangible assets, the Company has estimated 9 years for useful lives for customer relationships. For the three and nine months ended September 30, 2025, the Company recorded amortization of these intangibles of $ 102,000 and $ 306,000 , respectively. The Company did not incur any material acquisition costs. 3. SEGMENTS. A segment is a component of an enterprise whose operating results are regularly reviewed by the enterprise’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s CODM is the Company’s Executive Committee, which is led by the Company’s Chief Executive Officer (“CEO”) and includes its Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer and Chief Legal Officer (“Executive Committee”). The Company manages and assesses the performance of its reportable segments by its gross profit (loss). As part of the Executive Committee’s review of segment-level performance, each member of the Executive Committee reviews the gross profit of the Company’s reportable segments and provides expertise and analysis from their respective areas which drive the evaluation of the performance of the Company’s reportable segments and allocation of resources to those segments. Even though the CEO has the authority to override the other members for strategic or other reasons, key decisions are made jointly by the Executive Committee. The Company reports financial and operating performance in three reportable segments (1) Pekin production, which includes the entire campus in Pekin, Illinois (“Pekin Campus”), (2) marketing and distribution, which includes marketing and merchant trading for Company-produced specialty alcohols, fuel-grade ethanol and essential ingredients, and sales of fuel-grade ethanol sourced from third parties, and (3) Western production, which includes the Company’s two western production facilities in Boardman, Oregon and Burley, Idaho and, beginning for the three and nine months ended September 30, 2025, its liquid CO 2 plant on an aggregated basis (“Western production”). For the three and nine months ended September 30, 2025, capital expenditures incurred by the Pekin Campus segment were approximately $ 1.6 million and $ 2.6 million, respectively, and none for the Western production segment. For the three and nine months ended September 30, 2024, capital expenditures incurred by the Pekin Campus segment were approximately $ 0.2 million and $ 7.1 million, respectively, and $ 0.3 million and $ 2.7 million for the Western production segment, respectively. For all periods presented, there were no capital expenditures for the marketing and distribution segment. 9 The following tables set forth certain financial data for the Company’s operating segments (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net Sales Pekin Campus production, recorded as gross: Alcohol sales $ 109,276 $ 106,459 $ 310,666 $ 315,494 Essential ingredient sales 45,307 41,217 129,490 127,297 Intersegment sales 283 321 764 927 Total Pekin Campus sales 154,866 147,997 440,920 443,718 Marketing and distribution: Alcohol sales, gross $ 58,595 $ 54,531 $ 165,695 $ 179,118 Alcohol sales, net 74 71 215 169 Intersegment sales 2,497 2,862 7,338 8,002 Total marketing and distribution sales 61,166 57,464 173,248 187,289 Western production, recorded as gross: Alcohol sales $ 17,419 $ 36,395 $ 50,218 $ 74,084 Essential ingredient sales 8,017 10,408 24,076 24,184 Intersegment sales 513 8 1,281 ( 122 ) Total Western production sales 25,949 46,811 75,575 98,146 Corporate and other 2,298 2,733 5,602 8,565 Intersegment eliminations ( 3,293 ) ( 3,191 ) ( 9,383 ) ( 8,807 ) Net sales as reported $ 240,986 $ 251,814 $ 685,962 $ 728,911 Cost of goods sold: Pekin Campus production $ 135,942 $ 141,823 $ 431,669 $ 423,135 Marketing and distribution 56,738 53,553 160,904 176,676 Western production 24,447 49,079 72,719 112,762 Corporate and other 2,063 2,952 5,449 8,690 Intersegment eliminations ( 1,698 ) ( 1,553 ) ( 4,529 ) ( 3,465 ) Cost of goods sold as reported $ 217,492 $ 245,854 $ 666,212 $ 717,798 Gross profit (loss): Pekin Campus production $ 18,924 $ 6,174 $ 9,251 $ 20,583 Marketing and distribution 4,428 3,911 12,344 10,613 Western production 1,502 ( 2,268 ) 2,856 ( 14,616 ) Corporate and other 235 ( 219 ) 153 ( 125 ) Intersegment eliminations ( 1,595 ) ( 1,638 ) ( 4,854 ) ( 5,342 ) Gross profit as reported $ 23,494 $ 5,960 $ 19,750 $ 11,113 Income (loss) before provision for income taxes: Pekin Campus production $ 14,694 $ 1,997 $ ( 3,349 ) $ 8,083 Marketing and distribution 2,105 1,626 5,468 3,733 Western production ( 1,151 ) ( 4,119 ) ( 5,754 ) ( 21,075 ) Corporate and other ( 1,440 ) ( 1,945 ) ( 4,833 ) ( 8,013 ) $ 14,208 $ ( 2,441 ) $ ( 8,468 ) $ ( 17,272 ) Depreciation and amortization expense: Pekin Campus production $ 5,348 $ 5,328 $ 16,153 $ 15,733 Western production 738 502 2,221 1,445 Corporate and other 171 228 514 682 $ 6,257 $ 6,058 $ 18,888 $ 17,860 Interest expense, net of capitalized interest: Pekin Campus production $ 623 $ 496 $ 1,849 $ 1,083 Marketing and distribution 86 98 249 291 Western production 1,399 619 4,188 1,848 Corporate and other 692 654 2,054 1,948 $ 2,800 $ 1,867 $ 8,340 $ 5,170 10 The following table sets forth the Company’s total assets by operating segment (in thousands): September 30, 2025 December 31, 2024 Total assets: Pekin Campus production $ 228,979 $ 223,934 Marketing and distribution 97,855 102,895 Western production 42,975 44,992 Corporate and other 18,665 29,617 $ 388,474 $ 401,438 4. INVENTORIES. Inventories consisted primarily of bulk ethanol, specialty alcohols, corn, essential ingredients and unleaded fuel, and are valued at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Inventory is net of a valuation allowance of $ 0 and $ 2,050,000 as of September 30, 2025 and December 31, 2024, respectively. Inventory balances consisted of the following (in thousands): September 30, 2025 December 31, 2024 Finished goods $ 35,198 $ 31,120 Work in progress 3,969 4,203 Raw materials 8,392 8,989 Other 5,831 5,602 Total $ 53,390 $ 49,914 5. DERIVATIVES. The business and activities of the Company expose it to a variety of market risks, including risks related to changes in commodity prices. The Company monitors and manages these financial exposures as an integral part of its risk management program. This program recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effects that market volatility could have on operating results. Commodity Risk – Cash Flow Hedges – The Company uses derivative instruments to protect cash flows from fluctuations caused by volatility in commodity prices for periods of up to twelve months in order to protect gross profit margins from potentially adverse effects of market and price volatility on alcohol sales and purchase commitments where the prices are set at a future date and/or if the contracts specify a floating or index-based price. In addition, the Company hedges anticipated sales of alcohol to minimize its exposure to the potentially adverse effects of price volatility. These derivatives may be designated and documented as cash flow hedges and effectiveness is evaluated by assessing the probability of the anticipated transactions and regressing commodity futures prices against the Company’s purchase and sales prices. Ineffectiveness, which is defined as the degree to which the derivative does not offset the underlying exposure, is recognized immediately in cost of goods sold. For the three and nine months ended September 30, 2025 and 2024, the Company did not designate any of its derivatives as cash flow hedges. Commodity Risk – Non-Designated Hedges – The Company uses derivative instruments to lock in prices for certain amounts of corn and alcohols by entering into exchange-traded futures contracts or options for those commodities. These derivatives are not designated for hedge accounting treatment. The changes in fair value of these contracts are recorded on the balance sheet and recognized immediately in cost of goods sold. The Company recognized net gains of $ 5,809,000 and net losses of $ 2,566,000 as the change in the fair value of these contracts for the three months ended September 30, 2025 and 2024, respectively. The Company recognized net gains of $ 10,179,000 and $ 9,002,000 as the change in the fair value of these contracts for the nine months ended September 30, 2025 and 2024, respectively. 11 Non-Designated Derivative Instruments – The classification and amounts of the Company’s derivatives not designated as hedging instruments, and related cash collateral balances, are as follows (in thousands): As of September 30, 2025 Assets Liabilities Type of Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Cash collateral balance Restricted cash $ 623 Commodity contracts Derivative instruments $ 3,602 Derivative instruments $ 108 As of December 31, 2024 Assets Liabilities Type of Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Cash collateral balance Restricted cash $ 742 Commodity contracts Derivative instruments $ 3,313 Derivative instruments $ 1,177 The above amounts represent the gross balances of the contracts; however, the Company does have a right of offset with each of its derivative brokers, but the Company’s intent is to close out positions individually, therefore, the positions are reported at gross. The classification and amounts of the Company’s realized and unrealized gains and losses for its derivatives not designated as hedging instruments are as follows (in thousands): Realized Gains For the Three Months Ended September 30, Type of Instrument Statements of Operations Location 2025 2024 Commodity contracts Cost of goods sold $ 3,968 $ 3,633 $ 3,968 $ 3,633 Realized Gains For the Nine Months Ended September 30, Type of Instrument Statements of Operations Location 2025 2024 Commodity contracts Cost of goods sold $ 8,822 $ 923 $ 8,822 $ 923 Unrealized Gains (Losses) For the Three Months Ended September 30, Type of Instrument Statements of Operations Location 2025 2024 Commodity contracts Cost of goods sold $ 1,841 $ ( 6,199 ) $ 1,841 $ ( 6,199 ) Unrealized Gains For the Nine Months Ended September 30, Type of Instrument Statements of Operations Location 2025 2024 Commodity contracts Cost of goods sold $ 1,357 $ 8,079 $ 1,357 $ 8,079 12 6. DEBT. Long-term borrowings are summarized as follows (in thousands): September 30, 2025 December 31, 2024 Kinergy line of credit $ 46,013 $ 39,677 Orion term loan 60,000 60,000 106,013 99,677 Less unamortized debt discount ( 2,490 ) ( 3,089 ) Less unamortized debt financing costs ( 2,925 ) ( 3,684 ) Less current portion — — Long-term debt $ 100,598 $ 92,904 Excess Availability – As of September 30, 2025, Kinergy had $ 20.3 million in unused borrowing availability under its line of credit and the Company had $ 65.0 million that may be available for capital improvement projects under its Orion term loan, subject to certain conditions. 7. COMMITMENTS AND CONTINGENCIES. Sales Commitments – At September 30, 2025, the Company had entered into sales contracts with its major customers to sell certain quantities of alcohol and essential ingredients. The Company had open indexed-price alcohol sales contracts for 66,860,000 gallons as of September 30, 2025 and open fixed-price alcohol sales contracts totaling $ 111,979,000 as of September 30, 2025. The Company had open fixed-price sales contracts for essential ingredients totaling $ 10,025,000 and open indexed-price sales contracts of essential ingredients for 61,000 tons as of September 30, 2025. These sales contracts are scheduled to be completed throughout 2025. Purchase Commitments – At September 30, 2025, the Company had indexed-price purchase contracts to purchase 21,188,000 gallons of alcohol from its suppliers. The Company had fixed-price purchase contracts to purchase $ 8,997,000 of corn from its suppliers as of September 30, 2025. The Company had indexed-price contracts to purchase 10,974,000 MMBTU of natural gas as of September 30, 2025. The Company also had future commitments for certain capital projects totaling $ 6,257,000 . These purchase commitments are scheduled to be satisfied throughout 2025. Litigation – General – The Company is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, environmental regulations, and others. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. While the Company can provide no assurances, the Company does not expect that any of its pending legal proceedings will have a material impact on the Company’s financial condition or results of operations. 8. PENSION AND RETIREMENT BENEFIT PLANS. The Company sponsors a defined benefit pension plan (the “Retirement Plan”) and a healthcare and life insurance plan (the “Postretirement Plan”). The Retirement Plan is noncontributory and covers only “grandfathered” unionized employees at the Company’s Pekin, Illinois facility who fulfill minimum age and service requirements. Benefits are based on a prescribed formula based upon the employee’s years of service. The Retirement Plan, which is part of a collective bargaining agreement, covers only union employees hired prior to November 1, 2010. The Company uses a December 31 measurement date for its Retirement Plan. The Company’s funding policy is to make the minimum annual contribution required by applicable regulations. As of December 31, 2024, the Retirement Plan’s accumulated projected benefit obligation was $ 17.5 million, with a fair value of plan assets of $ 20.1 million. The overfunded amount of $ 2.6 million is recorded on the Company’s consolidated balance sheet in other assets. 13 For the three months ended September 30, 2025, the Retirement Plan’s net periodic benefit was $ 22,000 , comprised of $ 313,000 in expected return on plan assets, partially offset by $ 234,000 in interest cost and $ 57,000 in service cost. For the nine months ended September 30, 2025, the Retirement Plan’s net periodic benefit was $ 65,000 , comprised of $ 938,000 in expected return on plan assets, partially offset by $ 702,000 in interest cost and $ 171,000 in service cost. For the three months ended September 30, 2024, the Retirement Plan’s net periodic expense was $ 13,000 , comprised of $ 222,000 in interest cost and $ 67,000 in service cost, partially offset by $ 276,000 of expected return on plan assets. For the nine months ended September 30, 2024, the Retirement Plan’s net periodic expense was $ 39,000 , comprised of $ 666,000 in interest cost and $ 201,000 in service cost, partially offset by $ 828,000 of expected return on plan assets. The Postretirement Plan provides postretirement medical benefits and life insurance to certain “grandfathered” unionized employees at the Company’s Pekin, Illinois facility. Employees hired after December 31, 2000 are not eligible to participate in the Postretirement Plan. The Postretirement Plan is contributory, with contributions required at the same rate as active employees. Benefit eligibility under the plan reduces at age 65 from a defined benefit to a defined dollar cap based upon years of service. As of December 31, 2024, the Postretirement Plan’s accumulated projected benefit obligation was $ 3.8 million and is recorded on the Company’s consolidated balance sheet in other liabilities. The Company’s funding policy is to make the minimum annual contribution required by applicable regulations. For the three months ended September 30, 2025, the Postretirement Plan’s net periodic expense was $ 25,000 , comprised of $ 48,000 of interest cost and $ 4,000 of service cost, partially offset by $ 27,000 in amortization of net gains. For the nine months ended September 30, 2025, the Postretirement Plan’s net periodic expense was $ 75,000 , comprised of $ 145,000 of interest cost and $ 11,000 of service cost, partially offset by $ 81,000 in amortization of net gains. For the three months ended September 30, 2024, the Postretirement Plan’s net periodic expense was $ 54,000 , comprised of $ 49,000 in interest cost and $ 5,000 in service cost. For the nine months ended September 30, 2024, the Postretirement Plan’s net periodic expense was $ 162,000 , comprised of $ 147,000 in interest cost and $ 15,000 in service cost. 9. FAIR VALUE MEASUREMENTS. The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels, as follows: ● Level 1 – Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities; ● Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and ● Level 3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable. For fair value measurements using significant unobservable inputs, a description of the inputs and the information used to develop the inputs is required along with a reconciliation of Level 3 values from the prior reporting period. Pooled separate accounts – Pooled separate accounts invest primarily in domestic and international stocks, commercial paper or single mutual funds at December 31, 2024. The net asset value is used as a practical expedient to determine fair value for these accounts. Each pooled separate account provides for redemptions by the Retirement Plan at reported net asset values per share, with little to no advance notice requirement, therefore these funds are classified within Level 2 of the valuation hierarchy. Other Derivative Instruments – The Company’s other derivative instruments consist of commodity positions. The fair values of the commodity positions are based on quoted prices on the commodity exchanges and are designated as Level 1 inputs. 14 Long-Lived Assets – Long-lived assets consist of the Company’s estimated fair value associated with its Magic Valley facility at December 31, 2024. The fair value of the long-lived assets are based on present value of estimated future cash flows and are designated as Level 3 inputs. The following table summarizes recurring and nonrecurring fair value measurements by level at September 30, 2025 (in thousands): Fair Value Level 1 Level 2 Level 3 Assets: Derivative instruments $ 3,602 $ 3,602 $ — $ — Liabilities: Derivative instruments $ ( 108 ) $ ( 108 ) $ — $ — The following table summarizes recurring and nonrecurring fair value measurements by level at December 31, 2024 (in thousands): Benefit Plan Fair Percentage Value Level 1 Level 2 Level 3 Allocation Assets: Derivative instruments $ 3,313 $ 3,313 $ — $ — Long-lived assets – Magic Valley 19,397 — — 19,397 Defined benefit plan assets(1) (pooled separate accounts): Large U.S. Equity(2) 6,962 — 6,962 — 34 % Small/Mid U.S. Equity(3) 3,636 — 3,636 — 18 % International Equity(4) 2,762 — 2,762 — 14 % Fixed Income(5) 6,807 — 6,807 — 34 % $ 42,877 $ 3,313 $ 20,167 $ 19,397 Liabilities: Derivative instruments $ ( 1,177 ) $ ( 1,177 ) $ — $ — (1) Included in other assets in the consolidated balance sheets. (2) This category includes investments in funds comprised of equity securities of large U.S. companies. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. (3) This category includes investments in funds comprised of equity securities of small- and medium-sized U.S. companies. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. (4) This category includes investments in funds comprised of equity securities of foreign companies including emerging markets. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. (5) This category includes investments in funds comprised of U.S. and foreign investment-grade fixed income securities, high-yield fixed income securities that are rated below investment-grade, U.S. treasury securities, mortgage-backed securities, and other asset-backed securities. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. 15 10. EARNINGS PER SHARE. The following tables compute basic and diluted earnings per share (in thousands, except per share data): Three Months Ended September 30, 2025 Income Numerator Shares Denominator Per-Share Amount Net income $ 14,208 Less: Preferred stock dividends ( 319 ) Basic and diluted income per share: Income attributable to common stockholders $ 13,889 74,777 $ 0.19 Nine Months Ended September 30, 2025 Loss Numerator Shares Denominator Per-Share Amount Net loss $ ( 8,468 ) Less: Preferred stock dividends ( 946 ) Basic and diluted loss per share: Loss attributable to common stockholders $ ( 9,414 ) 74,415 $ ( 0.13 ) Three Months Ended September 30, 2024 Loss Numerator Shares Denominator Per-Share Amount Net loss $ ( 2,441 ) Less: Preferred stock dividends ( 319 ) Basic and diluted loss per share: Loss attributable to common stockholders $ ( 2,760 ) 73,835 $ ( 0.04 ) Nine Months Ended September 30, 2024 Loss Numerator Shares Denominator Per-Share Amount Net loss $ ( 17,272 ) Less: Preferred stock dividends ( 950 ) Basic and diluted loss per share: Loss attributable to common stockholders $ ( 18,222 ) 73,364 $ ( 0.25 ) There were an additional aggregate potentially dilutive weighted-average shares of 981,000 from convertible securities outstanding for the three and nine months ended September 30, 2025 and September 30, 2024. These securities were not considered in calculating diluted net income (loss) per share for the three and nine months ended September 30, 2025 and 2024, as their effects would have been anti-dilutive. 16