What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-08 compared with 2025-11-07 · 422 added, 527 removed, 147 unchanged (87% of the section changed)

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

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and

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

elsewhere in this report.

This report and our consolidated financial statements and notes to consolidated financial statements contain

forward-looking statements, which generally include the plans and objectives of management for future operations, including plans and

objectives relating to our future economic performance and our current beliefs regarding revenues we might generate and profits we might

earn if we are successful in implementing our business and growth strategies.

The forward-looking statements and associated risks may

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

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

statements included elsewhere in this report.

This report and our condensed consolidated financial statements and notes to condensed consolidated

financial statements contain forward-looking statements, which generally include the plans and objectives of management for future operations,

including plans and objectives relating to our future economic performance and our current beliefs regarding revenues we might generate

and profits we might earn if we are successful in implementing our business and growth strategies.

The forward-looking statements and

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

● 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;

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

● regulatory developments relating to our initiatives and projects or to our business;

● our ability to qualify for and receive Section 45Z clean fuel production tax credits under the Internal Revenue Code, as added by

the Inflation Reduction Act of 2022, including in anticipated amounts and at the expected times;

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

24 unchanged sentences

350 million gallons combined of our own produced alcohols as well as fuel-grade ethanol produced by third parties, and over 1.2 million

tons of essential ingredients on a dry matter basis.

We also own and operate a liquid CO 2

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

and subsequent sale.

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

Alcohol business.

tons of essential ingredients.

We also own and operate a liquid carbon dioxide,

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

to liquid CO 2 and subsequent sale.

In addition, we break bulk and distribute specialty alcohols, produced by us and third parties.

We report our financial and operating performance

in three distinct segments:

● Pekin production , which includes the production and sale of alcohols and essential ingredients produced at our three

production facilities located in Pekin, Illinois, which we refer to as our Pekin Campus;

● Pekin production , which includes the production and sale of alcohols and other products we refer to as “essential

ingredients” described below, produced at our three production facilities located in Pekin, Illinois, which we refer to as our Pekin

● Marketing and distribution , which includes marketing and merchant trading for company-produced alcohols and essential

ingredients on an aggregated basis, and sales of fuel-grade ethanol sourced from third parties;

● Western production , which includes the production and sale of renewable fuels and essential ingredients and, beginning

in 2025, liquid CO 2 produced at our Western production facilities, including our liquid CO 2 plant, on an aggregated

basis, none of which are individually so significant as to be considered a separately reportable segment.

● Western production , which includes the production and sale of renewable fuels and essential ingredients produced at

our production facilities located in Burley, Idaho and Boardman, Oregon, including our liquid CO 2 plant, on an aggregated basis,

none of which are individually so significant as to be considered a separately reportable segment.

Our mission is to produce the highest quality,

15 unchanged sentences

Products for Food &

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

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

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

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

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

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

and biodiesel fuels.

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

for Industry & Agriculture markets include alcohols and other products for paint applications, inks, vehicle fluids and fertilizers.

Products for Essential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, distillers grains,

gas and liquid CO 2 and liquid feed used in commercial animal feed and pet foods.

We also sell yeast and gas and liquid CO 2

for human consumption.

Our products for the Renewable Fuels markets include fuel-grade ethanol and distillers corn oil used as

a feedstock for renewable diesel and biodiesel fuels.

Our specialty alcohols for the Industry & Agriculture, Food & Beverage

and Health, Home & Beauty markets represented approximately 11%, 6% and 2%, respectively, of our sales in 2025 to customers

in these three markets.

We produce our alcohols and essential ingredients

at our facilities described below.

at our facilities described above.

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

4 unchanged sentences

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.

Magic Valley plant, were operating for all of 2025, other than for scheduled and unscheduled downtimes to address facility repair and

Our Magic Valley facility remained cold-idled for

all of 2025, the first quarter of 2026 and through the filing of this report to minimize financial losses.

We continue to provide ethanol

terminaling services at the plant and may resume operations at the facility if the economic environment in the region sustainably improves.

As market conditions change, we may increase, decrease

24 unchanged sentences

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

“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.

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

See “Note 2 – Segments” to our

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

Current Initiatives and Outlook

The first quarter is a seasonally weak period for

us and for the ethanol industry, reflecting the build-up of inventories and lower demand following the winter months.

In contrast, our

first quarter 2026 results were strong relative to our historical performance for this period.

We generated profitability on both an adjusted

EBITDA and net income basis, supported by higher crush margins, an improved product mix that emphasized higher-value renewable fuel export

sales and incremental earnings from transferrable Section 45Z clean fuel production tax credits.

Importantly, even without the contribution

from Section 45Z tax credits, our operations were profitable in the quarter.

We believe these results demonstrate the benefits of our

strategic realignment, operational improvements, and continued success in capturing premiums over domestic renewable fuel.

We remain focused on maximizing value from our

diversified portfolio of assets and on pursuing multiple revenue opportunities in response to market demand.

Our priorities are to improve

utilization and reliability across our platform, execute our 2026 optimization and capital projects on time and within budget, and advance

our commercial strategy, including expanding the value we capture from Section 45Z tax credits and optimally monetizing the value of our

biogenic CO 2 production across our facilities to lower our carbon footprint.

During the first quarter of 2026, unusually cold

weather in the first half of the quarter disrupted river logistics and led us to curtail production at our Pekin Campus.

unplanned downtime to accelerate a portion of our planned wet mill biennial outage work that had originally been scheduled for the second

This will allow us to recapture some of the lost production later in the year when crush margins are typically stronger and help

us stay on track toward our goal of increasing total 2026 alcohol volumes and prioritizing product mix that delivers premiums to domestic

renewable fuel.

We also executed a planned outage at our Columbia

facility during what is typically a seasonally slower quarter for liquid CO 2 sales.

Combined with an outage taken in December

2025, this work addressed certain deferred process-related activities intended to improve production performance and plant reliability

for the remainder of 2026.

These efforts are designed to help ensure our Columbia plant can run at optimal rates to support the growing

needs of our CO 2 offtake customers during the higher-demand summer months and to enable us to qualify additional gallons for

Section 45Z tax credits.

We are planning a normal outage at our ICP facility in the second quarter, consistent with 2025.

At our Pekin Campus, we began both the repairs

on our original loading dock and the construction of a second loadout dock.

As previously discussed, the second dock is intended to provide

redundancy and enhance our logistical capabilities.

We are currently on track to complete both projects by the end of 2026.

Once the original

dock is restored and the second dock is in service, we expect to reduce bottlenecks and increase loadout capacity.

We also commenced a project to increase throughput

and storage capacity at our Columbia liquid CO 2 processing facility by adding a third storage tank.

We believe this project

will position us to further capitalize on favorable liquid CO 2 market conditions, particularly the growing demand in the Pacific

Northwest and limited supply of premium liquid CO 2 in the region.

Combined with the process improvements described above, this

investment is intended to enhance our ability to serve existing customers, support incremental volumes and monetize more of the CO 2

produced at our Columbia plant.

At our Pekin dry mill, which is our most efficient

ethanol plant, we are moving the planned outage from the third quarter into June.

During this downtime, we expect to complete a debottlenecking

project designed to increase annual production capacity by approximately 8%, or about 5 million gallons.

We expect to fully realize the

benefits of these improved production rates in the fourth quarter of 2026.

If successful, this project should provide incremental margin

and allow us to qualify additional volumes for Section 45Z tax credits.

In addition to the capital projects already underway

or planned for 2026, we continue to evaluate large-scale CO 2 utilization and sequestration opportunities at our Pekin Campus.

These potential projects are intended to lower our facilities’ carbon intensity scores and provide additional earnings opportunities

through Section 45Z tax credits and higher-value liquid CO 2 sales.

With respect to Section 45Z transferable tax credits

for 2026, we expect to qualify approximately 90 million gallons of combined annual production at our Columbia and Pekin dry mill facilities

at $0.20 per gallon, which would result in approximately $15 million of net proceeds after estimated monetization costs.

For the first

quarter of 2026, we recorded $3.9 million in Section 45Z credit earnings.

The sale of all of our 2025 Section 45Z credits is underway

at values consistent with previously recorded estimates, and we currently expect to complete that transaction in the second quarter of

We are working to qualify additional gallons and further reduce our carbon intensity scores in order to capture more of the Section

45Z benefits in future periods.

As we manage liquidity and continue to focus on

our priorities, we remain disciplined in our capital allocation.

We expect to spend approximately $25 million on capital expenditures

in 2026, primarily on maintenance and optimization projects with the highest projected returns.

Capital expenditures in the first quarter

of 2026 were approximately $1 million, with the majority of spending planned over the remaining three quarters as our 2026 projects progress.

We also repaid $16.6 million of term debt in the first quarter, as planned, and ended the quarter with $38.4 million outstanding on our

With a lower debt balance, interest expense decreased compared to the prior-year quarter, reflecting our focus on minimizing

idle cash, maintaining ample borrowing availability and reducing our interest burden.

We are closely monitoring macroeconomic and geopolitical

developments, including unrest in the Middle East, which can indirectly affect our business through energy and commodity price volatility,

as well as freight and export logistics.

We seek to actively manage these exposures through our commercial strategy, hedging activities

and operational flexibility.

We are also encouraged by continued progress on E15.

In California, Assembly Bill 30 has provided a pathway

for year-round E15 sales, and we are monitoring the state’s implementation process.

At the federal level, momentum in Congress for

legislation allowing year-round E15 continues to build.

We view expanded E15 access as an important demand-side complement to production

incentives such as Section 45Z because it can help ensure the market is able to absorb additional low-carbon renewable fuel gallons over

Without corresponding demand growth, production incentives alone could contribute to industry overproduction and margin pressure.

Overall, we believe our first quarter 2026 results

demonstrate that our operating model—focusing on improving margins through higher-value revenue opportunities and disciplined cost

management—is working.

With multiple product streams, we have the flexibility to respond quickly as markets shift and we are continuing

to strengthen our ability to perform through commodity cycles.

We intend to continue executing on our 2026 optimization and capital projects,

improving utilization and reliability across our asset base, and advancing our commercial strategy, including expanding the value we capture

from Section 45Z credits and further monetizing our biogenic CO 2 production across our facilities.

We remain committed to further

enhancing shareholder value over both the near- and longer-term.

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 Adjusted EBITDA as a non-GAAP financial measure so that investors will have the same financial information that management

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

We define Adjusted EBITDA

as unaudited consolidated net income or loss before interest expense, interest income, unrealized derivative gains and losses, excess

insurance proceeds, acquisition-related expense or recoveries, provision or benefit for income taxes, asset impairments, 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)

A table is provided below

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

Adjusted EBITDA is not a measure

of financial performance under GAAP and should not be considered as an alternative 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.

Adjusted EBITDA has limitations as an analytical tool and you should not consider this measure in isolation or as a substitute

for analysis of our results as reported under GAAP.

Information reconciling

forward-looking 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 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

September 30,

Nine Months Ended

September 30,

(in thousands) (unaudited)

Net income (loss)

Consolidated net income (loss)

Interest expense, net

Interest income

Unrealized derivative losses (gains)

Acquisition-related (income) expense

Unrealized derivative gains

Depreciation and amortization expense

1 unchanged sentence

Adjusted EBITDA

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;

revenue recognition;

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.

Critical Accounting Estimates

Our discussion and analysis

of our financial condition and results of operations is based on our condensed 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.

that of our critical accounting estimates, defined as those estimates 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:

impairment of long-lived assets and valuation

allowance for deferred taxes.

These critical accounting estimates are more fully described in “Management’s Discussion and

Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K

for the year ended December 31, 2025.

Results of Operations

Financial Information

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

Selected Financial Information

The following selected financial

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

Certain performance metrics

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

Three Months Ended

Alcohol Sales (gallons in millions)

8 unchanged sentences

Marketing and distribution

Consolidated sales price per gallon

Average sales price per gallon

Alcohol Production (gallons in millions)

Western production

Total production gallons

Corn Cost per Bushel

Western production

Consolidated cost per bushel

Average corn cost per bushel

Average Market Metrics

2 unchanged sentences

Board corn crush per gallon (1)

Essential Ingredients Sold (in

thousands of tons)

Essential Ingredients Sold (thousand tons)

Pekin Campus:

Distillers grains

3 unchanged sentences

Syrup and other

Total Pekin Campus

Total Pekin Campus essential ingredients sold

Western production:

1 unchanged sentence

Syrup and other

Total Western Production

Total Western production essential ingredients sold

Total Essential Ingredients Sold

3 unchanged sentences

Consolidated total return

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

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

costs consumed.

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,

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

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

Net Sales, Cost of Goods

Sold and Gross Profit (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

Cost of goods sold

Gross profit (loss)

Percentage of net sales

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 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 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.

net sales for the three months ended March 31, 2026 as compared to the same period in 2025 is attributable to fewer total gallons sold

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

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

Pekin Campus Production Segment

Net sales of alcohol from our

Pekin Campus production segment increased by $0.7 million, or 1%, to $108.0 million for the three months ended March 31, 2026 as compared

to $107.3 million for the same period in 2025.

The segment’s average sales price per gallon increased by $0.10, or 5%, to $2.00

for the three months ended March 31, 2026 from $1.90 for the same period in 2025.

Our total volume of production gallons sold decreased

by 2.6 million gallons, or 5%, to 53.9 million gallons for the three months ended March 31, 2026 as compared to 56.5 million gallons for

the same period in 2025.

The increase of $0.10, or 5%, in the segment’s average sales price per gallon for the three months ended

March 31, 2026 as compared to the same period in 2025 increased our net sales from the segment by $5.9 million.

With the segment’s

average sales price per gallon of $2.00 for the three months ended March 31, 2026, we generated $5.2 million in fewer net sales from the

2.6 million fewer gallons of alcohol sold in the three months ended March 31, 2026 as compared to the same period in 2025.

Net sales of essential ingredients

from our Pekin Campus production segment declined by $0.6 million, or 1%, to $44.0 million for the three months ended March 31, 2026 as

compared to $44.6 million for the same period in 2025.

Our total volume of essential ingredients sold decreased by 20,400 tons, or 9%,

to 217,500 tons for the three months ended March 31, 2026 from 237,900 tons for the same period in 2025.

The increase of $14.72, or 8%,

in the segment’s average sales price per ton for the three months ended March 31, 2026 as compared to the same period in 2025 increased

our net sales from the segment by $3.5 million.

With the segment’s average sales price per ton of $202.27 for the three months ended

March 31, 2026, we generated $4.1 million less in net sales from the 20,400 fewer tons of essential ingredients sold in the three months

ended March 31, 2026 as compared to the same period in 2025.

Marketing and Distribution

Net sales of alcohol from our marketing and distribution

segment, excluding intersegment sales, declined by $1.7 million, or 3%, to $47.3 million for the three months ended March 31, 2026 as

compared to $49.0 million for the same period in 2025.

Our volume of third-party alcohol sold reported

gross by the segment declined by 0.9 million gallons, or 4%, to 23.5 million gallons for the three months ended March 31, 2026 as compared

to 24.4 million gallons for the same period in 2025.

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

ended March 31, 2026, we generated $1.7 million less in net sales from the 0.9 million fewer gallons of third-party alcohol sold gross

in the three months ended March 31, 2026 as compared to the same period in 2025.

Western Production Segment

Net sales of alcohol from our

Western production segment increased by $0.5 million, or 3%, to $16.7 million for the three months ended March 31, 2026 as compared to

$16.2 million for the same period in 2025.

Our total volume of alcohol sold decreased by 0.1 million gallons, or 1%, to 8.2 million gallons

for the three months ended March 31, 2026 as compared to 8.3 million gallons for the same period in 2025.

With the segment’s average

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,

sales price per gallon of $2.03 for the three months ended March 31, 2026, we generated $0.2 million less in net sales from the 0.1 million

fewer gallons of alcohol sold in the three months ended March 31, 2026 as compared to the same period in 2025.The increase of $0.08, or

4%, in the segment’s average sales price per gallon for the three months ended March 31, 2026 as compared to the same period in

2025 increased our net sales from the segment by $0.7 million.

Net sales of essential ingredients

from our Western production segment declined by $0.5 million, or 6%, to $7.3 million for the three months ended March 31, 2026 as compared

to $7.8 million for the same period in 2025.

Our total volume of essential ingredients sold increased by 1,600 tons, or 2%, to 74,500

tons for the three months ended March 31, 2026 from 72,900 tons for the same period in 2025.

With the segment’s average sales price

per ton of $97.72 for the three months ended March 31, 2026, we generated $0.2 million in increased net sales from the 1,600 additional

tons of essential ingredients sold in the three months ended March 31, 2026 as compared to the same period in 2025.

However, the decrease

of $9.39, or 9%, in our average sales price per ton for the three months ended March 31, 2026 as compared to the same period in 2025 reduced

our net sales of essential ingredients from the segment by $0.7 million.

Corporate and other

Net sales of alcohol from corporate

and other declined by $0.2 million, or 13%, to $1.4 million for the three months ended March 31, 2026 as compared to $1.6 million for

the same period in 2025.

These sales are from Eagle Alcohol’s business.

Cost of Goods Sold and Gross Profit (Loss)

Our consolidated gross profit improved to $9.2 million for the three

months ended March 31, 2026 from a gross loss of $1.8 million for the same period in 2025, representing a gross margin of 4.1% and a negative

gross margin of 0.8% for the three months ended March 31, 2026 and 2025, respectively.

Higher gross margin for the first quarter of 2026

was primarily driven by improved crush margins, including from a product mix that emphasized higher-value renewable fuel export sales,

and unrealized gains on our derivative instruments.

Pekin Campus Production Segment

Our Pekin Campus production segment’s gross

profit, net of intercompany activity, improved by $11.2 million to a gross profit of $9.0 million for the three months ended March 31,

2026 as compared to a gross loss of $2.2 million for the same period in 2025.

Of this improvement, $11.7 million is attributable to higher

margins, partially offset by $0.5 attributable to lower sales volumes for the three months ended March 31, 2026 as compared to the same

period in 2025.

Marketing and Distribution Segment

Our marketing and distribution segment’s

gross profit, net of intercompany activity, decreased by $0.7 million to a gross profit of $1.1 million for the three months ended March

31, 2026 as compared to a gross profit of $1.8 million for the same period in 2025.

Of this decrease, $0.6 million is attributable to

slightly lower margins from sales of third-party fuel-grade ethanol and $0.1 million is attributable to lower sales volumes for the three

months ended March 31, 2026 as compared to the same period in 2025.

Western Production Segment

Our Western production segment’s gross profit,

net of intercompany activity, remained flat at a gross loss of $1.3 million for the three months ended March 31, 2026 and 2025.

Corporate and other

Gross profit from corporate

and other improved by $0.5 million to a gross profit of $0.4 million for the three months ended March 31, 2026 as compared to a gross

loss of $0.1 million for the same period in 2025, all of which were from Eagle Alcohol’s business.

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

Selling, general and administrative expenses

Percentage of net sales

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

Our SG&A expenses declined by $0.5 million

for the three months ended March 31, 2026 as compared to the same period in 2025.

The decline in SG&A expenses primarily reflects

reduced compensation expenses and professional fees.

Net Income (Loss) Attributable

to Common Stockholders

The following table presents

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

Three Months Ended

Net income (loss) attributable to common stockholders

Percentage of net sales

* 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.

The significant improvement in

net income (loss) attributable to common stockholders is primarily due to higher margins, income from transferable tax credits, lower

SG&A expenses and lower interest expense as well as the other factors affecting gross profit discussed above.

Liquidity and Capital Resources

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

During the three months ended March 31, 2026, our

operations generated positive cash flow, and we supplemented our liquidity with cash on hand and net 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 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”

In addition to funding our operations, our capital resources were used to make principal payments on our term debt.

of March 31, 2026, we had $21.6 million in cash, cash equivalents and restricted cash, $29.3 million of unused borrowing availability

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

We believe we have sufficient liquidity to meet our anticipated working capital, debt service and other liquidity needs for

at least the next twelve months from the date of this report.

Quantitative Year-End Liquidity

We believe that the following

amounts provide insight into our liquidity and capital resources.

The following selected financial information should be read in conjunction

with our condensed consolidated financial statements and notes to condensed 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

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

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.

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.

Restricted Net Assets

At March 31, 2026, we had approximately $59.1 million

in 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 $116.9 million at March

31, 2026 from $96.8 million at December 31, 2025 as a result of a decrease of $17.4 million in current liabilities and an increase of

$2.6 million in current assets.

Current assets increased primarily due to an increase

in accounts receivable, transferable tax credits and derivative instruments, partially offset by a decrease in cash and cash equivalents

and restricted cash and inventories.

Our current liabilities decreased primarily due

to lower current portion of long-term debt and derivative instruments, partially offset by increases in accounts payable and accrued liabilities

as a result of timing of payments.

Our cash, cash equivalents and restricted cash

declined by $4.0 million due to $7.3 million in cash used in our financing activities and $0.9 million used in our investing activities,

partially offset by $4.2 million in cash provided by our operating activities.

Cash provided by our Operating Activities

We generated $4.2 million of cash from our operations

for the three months ended March 31, 2026 as compared to $18.2 million of cash used in our operations for the same period in 2025.

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

● an increase in net income of $15.9 million;

● an increase of $10.6 million related to lower inventories due to reduced production volumes and the timing of sales;

● an increase of $3.9 million related to changes in accounts payable and accrued liabilities.

These amounts were partially offset by:

● income from transferable tax credits of $3.9 million;

● an increase of $2.4 million related to changes in accounts receivables;

● an increase of approximately $6.6 million related to our derivative instruments.

Cash used in our Investing Activities

We used $0.9 million in cash during the three months

ended March 31, 2026 for capital expenditures.

Cash used in our Financing Activities

Cash used in our financing activities was $7.3

million for the three months ended March 31, 2026, which reflects $16.6 million in principal payments on our term debt and $0.3 million

in preferred stock dividends paid, partially offset by $9.6 million in proceeds from Kinergy’s operating line of credit.

Kinergy’s Operating Line of Credit

Kinergy maintains an operating line of credit for

an aggregate amount of up to $85.0 million.

The credit facility matures on November 7, 2027.

Interest accrues under the credit facility at a rate equal to (i) the daily Secured Overnight Financing Rate, plus (ii) a specified

applicable margin ranging from 1.25% to 1.75%.

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

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

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,

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 provides for an unused line fee, payable monthly in arrears, at an annual rate of 0.25% to 0.375% on the amount

by which the maximum credit under the facility exceeds the average daily principal balance during the preceding month.

Payments that may

be made by Kinergy to Alto Ingredients, Inc.

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

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

The credit facility also includes the accounts

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

Payments that may

be made by Alto Nutrients to Alto Ingredients, Inc.

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.

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:

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 1.10 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:

Three Months Ended

September 30,

Fixed-Charge Coverage Ratio Requirement

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.

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.

Alto Ingredients, Inc.

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

As of March 31, 2026, Kinergy had an outstanding balance of $39.2

million and $29.3 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 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.

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

We must prepay amounts outstanding

under the Term Loan on a semi-annual basis beginning with the six-month period ending December 31, 2023 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.

As of March 31, 2026 and

December 31, 2025, the principal amount outstanding under the Term Loan was $38.4 million and $55.0 million, respectively.

Other Cash Obligations

As of March 31, 2026, we had

future commitments for certain capital projects totaling $18.4 million.

These commitments are scheduled to be satisfied in 2026.

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