Alto Ingredients (ALTO) LD Micro Main Event XIX Investor Conference summary

Company Evolution and Strategic Diversification

• Originated as a small ethanol broker, later building West Coast plants and pioneering the destination model, but shifted strategy after regional corn costs eroded margins.

• Divested California plants and idled the Idaho facility due to uncompetitive corn basis and market shifts, while investing in high-protein and corn oil technology projects.

• Acquired Midwest assets (Pekin Campus) to diversify into industrial, pharmaceutical, beverage, and agricultural markets, stabilizing profitability by shifting production to higher-value segments.

• Rebranded in 2021 to reflect a broader product portfolio beyond ethanol, focusing on operational efficiency, cost reduction, and projects with strong ROI.

• Integrated distribution and marketing operations, reduced staffing and discretionary spend, and prioritized profitable customer relationships.

Strategic Initiatives and Project Focus

• Emphasizing projects with short-term paybacks and long-term benefits to drive incremental profitability and valuation.

• Prioritizing cost, timing, and ROI in project selection, including efforts to lower carbon intensity and increase CO2 utilization.

• Ongoing cost containment and asset monetization strategies, especially for Western assets.

• Advancing traceability, sustainability certifications, and supplier transparency programs.

• Targeting premium markets with high-quality, certified products across health, food, industry, and renewable fuels.

Operational Improvements and Market Opportunities

• Acquired a CO2 processing facility at the Oregon site, renegotiated offtake agreements, and achieved profitability at the plant for the first time in six quarters.

• Exploring CO2 market expansion at both Oregon and Pekin sites, with potential for increased capture and storage, leveraging regulatory incentives like 45Z and 45Q credits.

• Facing regulatory setbacks in Illinois for carbon sequestration, but assessing alternative well locations and keeping options open for future CO2 capture projects.

• CO2 demand is rising, especially on the West Coast, presenting significant growth potential, particularly in food and beverage markets.

• High-quality alcohols and ethanol exports to Europe currently yield the highest margins, with flexibility to shift production based on market conditions.