Materials Select Sector

Russell 2000

The Diluter

Comparable Companies - ALTO

The report covers a period with 1 discretionary insider purchase and no sales. Institutional ownership data is available, with Vanguard Group Inc. as the largest holder at 4.66%. Activist filings were noted from the Radoff/Torok Group. Short interest as of 2025-11-28 was 590,529 shares, representing 0.9% of the float.

CHIEF COMMERCIAL OFFICER

The Reporting Persons entered into an agreement with the Issuer whereby incumbent directors Douglas L. Kieta and Michael D. Kandris will not stand for re-election at the 2025 Annual Meeting. The Reporting Persons agreed to certain standstill restrictions.

The Reporting Persons stated the Board failed to manage assets profitably and demanded a strategic review, including a potential sale. They intend to vote against the reelection of current directors Douglas L. Kieta and Michael D. Kandris at the 2025 Annual Meeting.

The securities were acquired and are held in the ordinary course of business and were not acquired for the purpose of changing or influencing the control of the issuer.

Bryon T. McGregor

Todd E. Benton

Robert R. Olander

Auste M. Graham

James R. Sneed

Douglas L. Kieta

Michael D. Kandris

Maria G. Gray

Gilbert E. Nathan

Dianne S. Nury

Jeremy T. Bezdek

Alan R. Tank

Bryon T. McGregor's career demonstrates a strong financial foundation, progressing through various finance and treasury roles at significant companies like E*TRADE and BP before moving into executive leadership at Alto Ingredients. His tenure as CFO coincided with a period of significant financial challenges and strategic shifts for the company, including fluctuating revenues and net losses. His current role as CEO involves navigating these complexities and driving the company's future performance. His capital allocation history, particularly concerning the Series B Preferred Stock, indicates early involvement in significant financial structuring events for the company.

Sale of Series B Preferred Stock and warrants

Chief Executive Officer, President & Director

Todd E. Benton's long tenure as Chief Operating Officer at Alto Ingredients suggests a deep understanding of the company's operational landscape. His role is critical in translating strategic objectives into tangible operational results. While specific performance metrics from his tenure are not detailed in the provided documents, his continued presence in this key role indicates a consistent contribution to the company's operational execution.

Chief Operating Officer

Robert R. Olander's extensive 15-year tenure as CFO of Alto Ingredients highlights his deep involvement in the company's financial strategy and operations. His responsibilities have encompassed critical areas such as treasury, risk management, and compliance, as well as significant transactions like the Kodiak Carbonic deal and the exploration of strategic alternatives. His oversight of the company's capital structure, including its preferred stock, is a key aspect of his role. While specific performance metrics are not detailed, his long tenure suggests a consistent contribution to the company's financial management.

Chief Financial Officer

Auste M. Graham's seven-year tenure as Chief Legal Officer and Secretary at Alto Ingredients underscores her integral role in the company's legal and governance functions. Her responsibilities encompass ensuring compliance with laws and regulations, managing corporate governance, and providing legal counsel. While specific performance metrics are not publicly detailed, her position is vital for mitigating legal risks and upholding the company's integrity.

Chief Legal Officer & Secretary

James R. Sneed's 12-year tenure as Vice President & Chief Commercial Officer at Alto Ingredients highlights his significant contribution to the company's market presence and revenue generation. His role is central to developing and executing commercial strategies, including sales and marketing initiatives. While detailed performance metrics are not available, his sustained leadership in this commercial capacity suggests a consistent impact on the company's top-line performance.

Vice President & Chief Commercial Officer

Douglas L. Kieta's extensive experience, particularly his leadership roles with P&L responsibility at Calpine, provides a strong foundation for his current position as Chairman of the Board at Alto Ingredients. His background in large-scale construction, engineering, and plant operations offers valuable insights into the company's core business. His long tenure on the board (19 years) suggests a consistent commitment to guiding the company's strategic direction and governance.

Chairman of the Board

Michael D. Kandris's extensive background in ethanol production, operations, and transportation logistics, including his leadership roles at Ruan Transportation Management Systems, provides valuable operational and industry-specific expertise to the Alto Ingredients board. His 17-year tenure on the board indicates a long-standing involvement and commitment to the company's strategic oversight. His experience is particularly relevant to the company's core business operations and supply chain management.

Director

Maria G. Gray's career reflects a blend of technical expertise in process safety and operations consulting, coupled with experience in business development within the renewable energy sector. As Managing Member of Zoltan Consultants LLC, she brings current industry insights. Her three-year tenure on the Alto Ingredients board suggests a focused contribution to strategic discussions, particularly in areas related to operational efficiency and technical advancements.

Gilbert E. Nathan's career is marked by extensive experience in financial analysis, investment management, and leadership roles, including CEO of Keycon Power Holdings LLC. His current role as Managing Member of Jackson Square Advisors LLC and his qualification as an audit committee financial expert are particularly relevant to his board responsibilities at Alto Ingredients. His six-year tenure on the board, coupled with his financial acumen, positions him as a key contributor to the company's financial oversight and strategic decision-making. His involvement in the 2008 Series B Preferred Stock transaction also highlights his early engagement with the company's capital structure.

Dianne S. Nury's career as a CEO in the alcohol, beverage, and food ingredient industries provides her with deep sector-specific knowledge and leadership experience. Her certification as a sustainable facility and vineyard owner further highlights a commitment to responsible business practices. Her six-year tenure on the Alto Ingredients board suggests a consistent contribution to strategic oversight, particularly in areas relevant to the company's product markets and sustainability initiatives.

Jeremy T. Bezdek's profile as a senior executive with three decades of experience across leadership, business development, M&A, and strategy execution is complemented by his extensive service on ten boards since 2010. This broad governance experience suggests a well-rounded understanding of strategic oversight and risk management. As a director nominee, he is poised to bring this comprehensive perspective to Alto Ingredients, contributing to the board's collective expertise.

Director Nominee

Alan R. Tank's career is characterized by entrepreneurial leadership and deep expertise in the renewable energy, agriculture, and commodity trading sectors, as evidenced by his founding of Revolution Energy Solutions LLC and AgCert International Plc. His extensive experience in decarbonization and carbon capture further aligns with current industry trends. As a director nominee, his background provides a unique and valuable perspective on sustainable practices and market dynamics relevant to Alto Ingredients.

The Company's properties include its corporate headquarters and Pekin Campus (145 acres, owned) in Pekin, Illinois; a 25-acre facility in Boardman, Oregon (land leased until 2076); a 25-acre facility in Burley, Idaho (land owned); leased office space in Sacramento, California (expiring 2026); and leased warehouse space in St. Louis, Missouri (expiring 2030).

Alto Ingredients is a classic distressed turnaround scenario. The management team is executing a survival-focused strategy, evidenced by the exceptional capital allocation (Pillar 1) which has prioritized deleveraging over all else. However, the team lacks a proven external track record of saving companies from similar crises (Pillar 3), with the CEO having presided over the decline as CFO. Governance is a bright spot (Pillar 4), with an independent, refreshed board adding necessary expertise. Incentives (Pillar 2) are adequate but require further alignment to survival metrics. The team is doing the right things to survive, but lacks the 'war scars' and proven turnaround experience that would inspire higher confidence.

The business is highly sensitive to climate change and related regulations. Risks include reduced corn supplies and increased input costs due to extreme weather, and higher natural gas prices resulting from regulations disfavoring carbon-based energy. The company is subject to EPA regulations regarding water quality and air pollution. The SAFE CCS Act imposes stringent safety and insurance requirements on CO2 pipelines and a moratorium on new pipeline construction, potentially increasing costs and delaying the CCS project. The company is also subject to FDA regulations regarding product safety and manufacturing.

As of March 12, 2025, the company had approximately 393 full-time employees. Approximately 51% of employees are represented by a labor union. The company reduced headcount by 16% in 2024, expecting to save nearly $8 million annually.

The company's products are subject to FDA regulation under the Federal Food, Drug, and Cosmetic Act (FDCA), including the Modernization of Cosmetics Regulation Act (MoCRA). The company maintains various certifications including FSSC 22000, ISO 9001, ICH Q7, EXCiPACT, and HACCP for its products. The company discusses cybersecurity risks and management under the oversight of the Audit Committee, noting the use of EDR and SIEM systems.

The company utilizes a comprehensive due diligence process to manage third-party cybersecurity risks. The company engages in community volunteering and charitable drives.

This narrative is built upon a backdrop of severe financial distress, including a 21.1% year-over-year revenue decline to $965.3 million in FY 2024, deeply negative operating margins (-5.4%), and a catastrophic collapse in operating cash flow from $22.0 million in FY 2023 to -$3.5 million in FY 2024.

The P14 Innovation Dossier states the company's CapEx strategy is focused on 'Cost Reduction/Efficiency.' The P7 Transcripts confirm this pivot, with management in Q1 2025 stating they are 'prioritizing projects with short-term paybacks' and keeping CapEx low to manage liquidity. Major projects are limited to a new Pekin dock (Spring 2026) and the CCS project, which requires significant future capital that the company 'must raise' (P8 10-K).

The 10-K explicitly states the $24.8 million impairment in FY 2024 was 'primarily related to the cold-idling of its Magic Valley facility.' The auditor, RSM US LLP, identified 'Long-lived asset impairment' as a Critical Audit Matter (CAM), highlighting the subjective nature of valuing these assets. The P7 Transcripts reveal management is actively seeking to monetize Western assets via Guggenheim, indicating a lack of confidence in the asset base's value as a going concern.

Management's reinvestment is focused on the CCS project and CO2 optimization, as detailed in the P14 Innovation Dossier and P7 Transcripts. They believe these projects will generate 'excellent returns' via tax credits. However, the current capital base (PP&E of $235M) is generating negative returns, suggesting past reinvestment has failed.

Bradley L. Radoff and Michael Torok (Radoff/Torok Group)

P/Tangible Book Value

Normalized EV/EBITDA

Extensive experience in leadership positions with P&L responsibility; deep understanding of large-scale construction, engineering projects, and plant operations from service with Calpine.

Served as CFO since 2009; background in finance, international treasury, and project finance at E*TRADE and BP.

Extensive experience in ethanol production, operations, and rail/truck transportation logistics; former CEO of Ruan Transportation Management Systems.

Managing Member of Zoltan Consultants LLC; background in technical support, process safety, and operations/manufacturing consulting; Hispanic/Latinx origin.

Managing Member of Jackson Square Advisors LLC; experience in research, financial analysis, and trading of debt and equity investments; qualifies as an audit committee financial expert.

Former CEO; experience in alcohol, beverage, and food ingredient industries; certified sustainable facility/vineyard owner.

Senior executive with decades of experience in leadership, business development, M&A, strategy, and finance; has served on ten boards since 2010.

Founder and CEO of multiple businesses in renewable energy/waste-to-energy; extensive experience in commodity trading, agricultural, renewable energy, decarbonization, and carbon capture.

Common

Lyles United, LLC

Series B Preferred

Neil M. Koehler

SCF Investments LLC

All executive officers and directors as a group (10 persons)

Executive officers are required to hold 100% of net shares (shares remaining after withholding to pay taxes) of common stock acquired pursuant to the exercise of stock options or vesting of restricted stock for a minimum of twelve months or until termination of the executive officer’s employment.

Alto Ingredients, Inc. is a leading producer and distributor of specialty alcohols, renewable fuels, and essential ingredients in the United States. The company operates five alcohol production facilities located in Illinois, Oregon, and Idaho, with an annual alcohol production capacity of 350 million gallons. The company's history involves a strategic shift from a primary focus on commodity fuel-grade ethanol towards higher-margin specialty alcohols and essential ingredients. Its primary products serve five key markets: Health, Home & Beauty; Food & Beverage; Industry & Agriculture; Essential Ingredients; and Renewable Fuels.

Production and sale of alcohols and essential ingredients produced at the company's three production facilities located in Pekin, Illinois.

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.

Production and sale of renewable fuels and essential ingredients, including liquid CO2, produced at the company's two western production facilities and its liquid CO2 plant on an aggregated basis.

Held WACC (12.0%) and Terminal Multiple (5.0x) constant, and solved for the Year 5 Operating Margin required to justify the current enterprise value of $316.3 million.

Balance Sheet - Supplemental

Balance Sheet

Cash Flow Statement - Supplemental

Cash Flow Statement

Income Statement - Supplemental

Income Statement

Ratios

Valuation

Historical Ratios & Multiples - ALTO

The industry is in a 'Bust' phase of the capital cycle, with CapEx contracting 25% over the last three years. While low corn prices provide a tailwind for crush margins, regulatory uncertainty regarding biofuel mandates remains a persistent headwind.

Alto Ingredients is at a critical juncture as the activist-led board refresh and the impending monetization of 45Z tax credits create a window for significant value realization in the next 12 months.

Monetization of 45Z Tax Credits. Management expects to capture $0.10/gal in 2025 and $0.20/gal in 2026. This would provide a high-margin revenue stream that is decoupled from commodity crush spreads.

Sale of Western Production Assets. Divesting the Oregon and Idaho facilities would eliminate the primary source of operating losses ($51.1M in FY24) and provide a cash infusion to deleverage the balance sheet.

Existential Liquidity and Solvency Risk. The company is in a 'race against time' to monetize credits or sell assets before negative interest coverage (-3.6x) and operational cash burn exhaust its $32.5 million cash balance.

Alto Ingredients, Inc. operates five alcohol production facilities and one liquid CO2 production facility. The Pekin Campus in Illinois includes a Wet Facility with 100 million gallons per year (MMgy) annual alcohol production capacity, a Dry Facility with 60 MMgy capacity, and an ICP Facility with 90 MMgy capacity. The Western Production segment includes the Columbia Facility in Boardman, Oregon, with 40 MMgy fuel-grade ethanol capacity, and the Magic Valley Facility in Burley, Idaho, with 60 MMgy fuel-grade ethanol capacity, which is currently cold-idled but used as a terminal. The company also operates a liquid CO2 production facility adjacent to its Columbia plant in Boardman, Oregon, with an annual capacity of 70 thousand tons. The Columbia facility has been integrated with the Alto Carbonic acquisition, which has a 56k ton capacity for beverage-grade liquid CO2. Total ethanol production capacity is 350 MMgy. A new alcohol load-out dock construction is planned for Spring 2026 at Pekin, representing future capital expenditure not yet fully operational.

Abengoa SA sold 326 million gallons per year (MMgy) ethanol capacity for no less than $350 million, implying a value of approximately $1.07 per gallon of capacity in a distressed sale scenario.

Green Plains Inc. plans to sell its Tennessee ethanol plant to POET for $190 million, including approximately $20 million in working capital. Assuming a typical 100 MMgy plant, this implies a plant value of $170 million or $1.70 per gallon of capacity.

Cash & Equivalents

Accounts Receivable

The inventory valuation is based on the reported balance of $49,914,000 as of December 31, 2024, comprising a mix of commodity (e.g., bulk ethanol, corn), fungible/branded (e.g., specialty alcohols, essential ingredients), and work-in-progress items. A critical factor supporting a relatively strong recovery rate is the company's healthy inventory turnover of 17.67 times TTM, translating to approximately 20.65 days of inventory on hand. This indicates that the inventory is fresh and actively moving through the production and sales cycle, reducing the risk of obsolescence or spoilage typically associated with distressed inventory. The liquidation logic applies blended recovery rates, with the base case at 70%, reflecting the balance between the inventory's inherent value and the discounts expected in an orderly liquidation. The high case of 85% assumes favorable market demand for the specific product mix, while the low case of 55% accounts for potential market saturation or aggressive discounting required to expedite sales in a less favorable environment.

Inventory

Other Current Assets

**Primary Transaction Comps:**
- Abengoa SA sold 326 million gallons per year (MMgy) ethanol capacity for no less than $350 million, implying a value of approximately $1.07 per gallon of capacity in a distressed sale scenario. ($1.07/gallon)
- Green Plains Inc. plans to sell its Tennessee ethanol plant to POET for $190 million, including approximately $20 million in working capital. Assuming a typical 100 MMgy plant, this implies a plant value of $170 million or $1.70 per gallon of capacity. ($1.70/gallon)

**Replacement/Scrap Data:**
New ethanol plant construction costs have ranged from $1.05 to $3.00 per gallon of capacity (2002 data), with more recent estimates suggesting $1.25 to $1.50 per annual gallon, and some estimates around $2.00 per gallon of annual capacity (2025 data). For small-scale liquid CO2 liquefaction plants (100-500 tons per day), capital costs range from $5 million to $15 million, translating to approximately $30 to $50 per annual ton of capacity.

Net PP&E

Intangibles

Other Non-Current

Accounts Payable

Current Debt

Other Current Liabilities

Non-Current Debt

Other Non-Current Liabilities

Exhibit 99.1

UNITED STATES

SCHEDULE 14A INFORMATION

SCHEDULE 13D/A

SCHEDULE 13D

Exhibit

ALTO INGREDIENTS, INC. ENTERS LETTER OF INTENT WITH VAULT TO ADVANCE CARBON CAPTURE AND STORAGE INITIATIVE

altoingredientsinc

us0215131063_070723.txt

Agco Recognizes Top Performing Suppliers At 2023 Supplier Event At Lanier Islands, Ga

BOOMI INCORPORA A JOSH RUTBERG COMO DIRECTOR DE ATENCIÓN AL CLIENTE

BOOMI NOMEIA JOSH RUTBERG COMO DIRETOR DE ATENDIMENTO AO CLIENTE

us0215131063_013123.txt

Situation: Alto Ingredients is a distressed ethanol producer currently undergoing a high-stakes pivot toward specialty alcohols and carbon capture, complicated by an active board refresh forced by the Radoff/Torok activist group. Debate: The market views the company as a structurally unprofitable commodity player with a precarious liquidity position, while we believe the underlying asset value of the Pekin Campus and the potential for 45Z tax credit monetization are being obscured by the failing Western segment. Conclusion: While the asset-based floor is significant, the current expected return of 5.7% to our $3.14 fair value suggests the risk/reward is not yet asymmetric enough for a new position; we recommend a Starter posture only at lower entry levels.

Executive Summary

Alto Ingredients is transitioning from a commodity fuel ethanol producer to an asset-light, high-margin specialty alcohol and carbon utilization business. This turnaround is supported by a hard asset floor and forced by activist-led governance changes, though it remains a race against liquidity constraints.<ul><li>Driver: Strategic pivot to high-margin specialty alcohols and 45Z tax credit monetization.</li><li>Catalyst: Monetization of Western assets and successful capture of carbon sequestration credits.</li><li>Protection: Tangible asset floor anchored by the Pekin Campus and liquid CO2 infrastructure.</li></ul>Our variant perception is that the market has priced this company for inevitable bankruptcy (Option Value). However, our analysis of the liquidity runway and non-core asset values suggests they have sufficient bridge capital to execute the turnaround, making the current price a highly asymmetric call option on survival. While the market focuses on the $51.1 million operating loss in the Western segment, it is ignoring the $4.07 per share base-case net liquidation value and the potential for $0.20 per gallon in 45Z credits by 2026.This is therefore not a bet on an operational turnaround by current management, but a special situation, asset-based investment with a clearly defined catalyst path.

Core Investment Rationale

Alto Ingredients operates as a producer and distributor of specialty alcohols, renewable fuels, and essential ingredients. The business is divided into three segments: Pekin Campus Production (60.7% of revenue), Marketing and Distribution (23.6%), and Western Production (15.8%). The strategy is a 'Shrink-to-Grow' model, where management is rationalizing unprofitable commodity volumes to focus on higher-margin specialty products for the health, beauty, and beverage markets.The company's core assets include the Pekin Campus, a 145-acre owned facility in Illinois with a 100 million gallon wet mill capacity, and two Western facilities in Oregon and Idaho. Key products include specialty alcohols for pharmaceuticals and disinfectants, grain neutral spirits for beverages, and distillers corn oil. A critical emerging asset is the liquid CO2 production capacity (70,000 tons), which serves the food and beverage markets and provides a foundation for carbon capture initiatives.The industry is a destructive commodity environment where competition is driven by cost leadership and proximity to distribution hubs. Alto is a niche player attempting to escape this cycle by moving into specialty alcohols, where quality certifications (ISO 9001, FSSC 22000) create modest barriers to entry compared to the pure fuel ethanol market.The historical narrative is one of decline and distress. Revenue collapsed 21.1% YoY to $965.3 million in FY 2024, and the company has recorded significant asset impairments, including $24.8 million in 2024 primarily related to the cold-idling of the Magic Valley facility. Strategic missteps in the Western segment led to a $51.1 million operating loss in FY 2024, which completely erased the $6.3 million profit from the Pekin Campus. Currently, the company is in the midst of an active proxy battle and leadership crisis. The Radoff/Torok Group (4.7% stake) has forced a board refresh, resulting in a standstill agreement where two long-tenured directors will not stand for re-election. This activism is the defining context for the investment, as it puts a floor on valuation and accelerates the review of strategic alternatives, including a potential sale of the company.

Business & Situation

<ul><li>Bull Case: Successful monetization of 45Z tax credits ($0.20/gal by 2026) and the sale of Western assets at a premium to their $2.33/share liquidation floor.</li><li>Bear Case: Liquidity exhaustion before the turnaround takes hold, driven by negative interest coverage (-3.6x) and a failure to refinance the $114.7 million debt load.</li></ul>The consensus view is that Alto Ingredients is a failing commodity producer with a broken balance sheet and a value-destroying Western segment. The market is pricing the stock at a discount to its tangible book value of $3.06, reflecting skepticism about management's ability to pivot to specialty alcohols before running out of cash.The industry is in a 'Bust' phase of the capital cycle, with CapEx contracting 25% over the last three years. While low corn prices provide a tailwind for crush margins, regulatory uncertainty regarding biofuel mandates remains a persistent headwind.Our differentiated view is that the market is pricing in bankruptcy while ignoring the value of the assets and the probability of a forced catalyst. The activism from the Radoff/Torok Group prevents 'value drift' by forcing a strategic review and board refresh. We contrast the operational failure of the Western segment with the quantifiable asset floor of the Pekin Campus, which we value at $1.00 per gallon of capacity. The governance friction is not a distraction but a mechanism to unlock the $4.07 per share base-case liquidation value.The debate hinges on whether the company can survive long enough to monetize its carbon credits. Given the current ratio of 3.56 and the activist-led focus on liquidity, we believe the probability of survival is higher than the market implies, though the current price offers limited immediate upside to our $3.14 fair value.Our analytical edge stems from a forensic analysis of the balance sheet and creditor agreements, giving us higher conviction in the monetizable value of the company's assets and its ability to survive a liquidity crunch, a factor the equity market, focused on operational losses, is currently ignoring.

Core Thesis

CEO Bryon McGregor has a weak track record, having served as CFO during the company's precipitous decline from 2020 to 2023. He is currently overseeing a contested transition; while he remains CEO, the activist group has already forced the removal of two directors, signaling a lack of confidence in the legacy leadership's ability to execute the turnaround.Capital allocation has been poor historically, evidenced by an M&A effectiveness score of -1.8x and a massive 13.8x SBC offset ratio. However, recent actions show a pivot toward survival, with CapEx slashed 64% to $10.7 million and $18.5 million used for debt repayment in Q3 2025.Management's credibility is low, as they continue to tout 'high-ROI projects' while consolidated gross margins remain at a razor-thin 1.0%.<ul><li>Board Independence: 75% (6 of 8 directors)</li><li>Chairman/CEO Roles: Separate</li><li>Chairman Tenure: 19 years (Douglas L. Kieta)</li><li>Insider Ownership: 5.26% (Common); 21.38% (Total including Preferred)</li><li>Shareholder Rights: Majority Voting for Directors; Standstill Agreement in place</li></ul>The Governance Outcome Tree is as follows: 1. Status Quo: Management continues the slow pivot, likely leading to further dilution. 2. Compromise: The current standstill leads to a strategic review and asset sales (Western segment), which would be a major positive for the stock. 3. Reset: The activist wins a full board sweep at the 2025 meeting, likely leading to a sale of the entire company. We believe a Compromise or Reset is the most likely outcome, providing a floor for the stock.

Leadership & Governance

We rely on the Low Case Net Liquidation Value of $2.33, which provides a tangible backstop below the current price.The base case assumes a 'Shrink-to-Grow' recovery where revenue stabilizes as unprofitable volumes are shed, and margins improve to 4.0% by Year 5 through cost-cutting and 45Z credit capture.The bull case assumes a rapid sale of Western assets and a re-rating of the Pekin Campus as a high-margin specialty alcohol leader. Blue-Sky Potential: $6.06 per share.The bear case is a failed turnaround where liquidity is exhausted. In this scenario, we anchor the fair value to the Net Liquidation Value (NLV) of $2.33, reflecting a distressed sale of the company's industrial assets.

Valuation Context

<ul><li>Monetization of 45Z Tax Credits. Management expects to capture $0.10/gal in 2025 and $0.20/gal in 2026. This would provide a high-margin revenue stream that is decoupled from commodity crush spreads.</li><li>Sale of Western Production Assets. Divesting the Oregon and Idaho facilities would eliminate the primary source of operating losses ($51.1M in FY24) and provide a cash infusion to deleverage the balance sheet.</li></ul>Alto Ingredients is at a critical juncture as the activist-led board refresh and the impending monetization of 45Z tax credits create a window for significant value realization in the next 12 months.

Catalyst Path & Context

<ul><li>Existential Liquidity and Solvency Risk. The company is in a 'race against time' to monetize credits or sell assets before negative interest coverage (-3.6x) and operational cash burn exhaust its $32.5 million cash balance. Free Cash Flow was negative $10.0 million over the TTM, and the company has $114.7 million in total debt.</li></ul>

Primary Risks

<ul><li>Entry Target: Calculated threshold price required to restore a 30% expected return based on internal valuation.</li><li>Stop Loss: Set the stop-loss at a price that represents a clear, sustained break below the 2-year technical low. A break of this magnitude indicates the asset-based protection is failing.</li><li>Position Size: Sizing reflects a 'Maintenance' or 'Starter' posture while awaiting a more attractive valuation-based entry point. The final size was constrained by the structural risks inherent to the Turnaround_Candidate model.</li><li>Time Horizon: A 12-24 month horizon is required to allow restructuring actions and 45Z credit monetization to hit the P&L.</li></ul><ul><li>Quarterly Adjusted EBITDA at the Pekin Campus</li><li>Progress on the sale of Western Production assets</li><li>Submission and approval status of the EPA Class VI permit for CCS</li></ul>The thesis killer is a liquidity event, specifically a failure to refinance upcoming maturities or a dilutive equity raise that significantly impairs the per-share asset value.

Actionable Parameters & Monitoring

Alto Ingredients is a high-risk, high-reward turnaround play where the downside is protected by a $2.33 per share liquidation floor and the upside is driven by a strategic pivot to carbon credits and activist-led governance. While the asset value is compelling, the current expected return of 5.7% does not provide a sufficient margin of safety for a full position. We recommend a Starter position with a final Fair Value Target of $3.14.

Final Conclusion

Strategic pivot to high-margin specialty alcohols and 45Z tax credit monetization.

Driver

Monetization of Western assets and successful capture of carbon sequestration credits.

Catalyst

Tangible asset floor anchored by the Pekin Campus and liquid CO2 infrastructure.

Protection

Successful monetization of 45Z tax credits ($0.20/gal by 2026) and the sale of Western assets at a premium to their $2.33/share liquidation floor.

Bull Case

Liquidity exhaustion before the turnaround takes hold, driven by negative interest coverage (-3.6x) and a failure to refinance the $114.7 million debt load.

Bear Case

Situation: Alto Ingredients is a distressed ethanol producer currently undergoing a high-stakes pivot toward specialty alcohols and carbon capture, complicated by an active board refresh forced by the Radoff/Torok activist group. Debate: The market views the company as a structurally unprofitable commodity player with a precarious liquidity position, while we believe the underlying asset value of the Pekin Campus and the potential for 45Z tax credit monetization are being obscured by the failing Western segment. Conclusion: While the asset-based floor is significant, the current expected return of 5.7% to our $3.14 fair value suggests the risk/reward is not yet asymmetric enough for a new position; we recommend a Starter posture only at lower entry levels.

From Growth-at-all-costs to Profitability and Strategic Realignment

Method	Implied Value	Weight	Weighted Value
DCF	$2.40	56%	$1.33
NLV	$4.07	44%	$1.81
Total Weighted			$3.14

ALTO

Company Overview

Price History