Earnings call transcript: Aemetis Q4 2024 sees revenue rise, stock falls

Aemetis Inc. (AMTX) reported its financial results for the fourth quarter of 2024, highlighting a significant increase in annual revenue but a widening net loss. According to InvestingPro analysis, the company’s overall financial health score is rated as WEAK, with a concerning total debt of $451.31 million. Despite the revenue growth, the company’s stock fell by 5.93% in the open market, reflecting investor concerns over its financial performance and future outlook. The stock is currently trading close to its 52-week low, at $1.67 per share, down from the previous close of $1.77.

Key Takeaways

• Aemetis reported a 43% increase in annual revenue to $268 million in 2024.
• The company recorded a net loss of $87.5 million, up from $46.4 million in 2023.
• Capital expenditures focused on carbon intensity reduction and biogas production.
• Stock price declined by nearly 6% following the earnings announcement.
• The company is advancing in biogas, ethanol, and sustainable aviation fuel projects.

Company Performance

Aemetis demonstrated robust revenue growth in 2024, increasing from $187 million in 2023 to $268 million. This growth was driven by advancements in its biogas and ethanol segments. However, the company’s net loss widened significantly to $87.5 million, reflecting increased expenses and investments in new projects. The gross loss of $580,000 compared to a gross profit of $2 million the previous year highlighted operational challenges.

Financial Highlights

• Revenue: $268 million, up 43% from 2023.
• Net loss: $87.5 million, compared to $46.4 million in 2023.
• Gross loss: $580,000, down from a gross profit of $2 million in 2023.
• Cash at end of Q4 2024: $898,000.
• Capital expenditures: $20.3 million for carbon intensity reduction and biogas production.

Outlook & Guidance

Aemetis is targeting significant expansion in its biogas production, with a goal of reaching 1 million MMBtu by 2026. The company is also pursuing approvals for E15 ethanol blends across more states, which could potentially expand the ethanol market by up to 50%. Additionally, Aemetis is preparing for an IPO of its India Biodiesel segment, anticipated in late 2025 or early 2026.

Executive Commentary

"We are very pleased with the approval of the updated low carbon fuel standard in California," stated Eric McAfee, CEO of Aemetis. He emphasized the potential for a 15% ethanol blend to decrease gasoline prices by $0.20 per gallon, highlighting the company’s strategic focus on low-carbon fuel markets. McAfee also reiterated Aemetis’ commitment to building long-term value for its stockholders.

Risks and Challenges

• The company’s widening net loss and gross loss pose financial sustainability concerns.
• Market volatility in LCFS credit prices could impact revenue from environmental credits.
• The success of new projects, such as the sustainable aviation fuel plant, depends on regulatory approvals and market acceptance.
• Aemetis faces competition in the low-carbon fuel markets, requiring continuous innovation and investment.
• Delays in regulatory approvals, such as the E15 blend, could hinder market expansion efforts.

Q&A

During the earnings call, analysts inquired about the company’s confidence in USDA REAP financing and the delays in CARB LCFS implementation. Aemetis addressed challenges in the ethanol market and provided insights into its India Biodiesel market and IPO plans, underscoring the strategic importance of these initiatives for future growth.

Full transcript - Aemetis Inc (AMTX) Q4 2024:

Tom, Conference Call Operator: Welcome to the Aemetis Fourth Quarter and Year End twenty twenty four Earnings Review Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr.

Todd Waltz, the Executive Vice President and Chief Financial Officer of Aemetis. Mr. Waltz, you may begin.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Thank you, Tom. Welcome to the Aemetis fourth quarter and year end twenty twenty Earnings Review Conference Call. Joining us for the call today is Eric McAfee, the Founder, Chairman and CEO of Aemetis and Andy Foster, the President of Aemetis Advanced Fuels. We suggest visiting our website at aemetis.com to review today’s earnings press release, the Aemetis corporate and investor presentations, filings with the Securities and Exchange Commission, recent press releases and previous earnings conference calls. Before we begin our discussion today, I’d like to read the following disclaimer statement.

During today’s call, we’ll be making forward looking statements, including without limitations, statements with respect to our future stock performance, plans, opportunities and expectations with respect to financing activity and the execution of our business plans. These statements must be considered in conjunction with the disclosures and cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward looking statements made on this call involve risks and uncertainties and that future events may differ materially from the statements made. For additional information, please refer to the company’s Securities and Exchange Commission filings, which are posted on the SEC EDGAR system and on our own company website. Our discussions on this call will include a review of non GAAP measures as a supplement to the financial results based on GAAP because we believe these non GAAP measures serve as a proxy for our company’s sources and uses of cash.

A reconciliation of the non GAAP measures to the most directly comparable GAAP measures is included in today’s earnings release. Adjusted EBITDA is defined as net income or loss plus to the extent deducted in calculating such net income, interest amortization expense, gain on debt extinguishment, USDA cash grants, income tax benefit or expense intangible and other amortization expense, accretion expense, depreciation expense, loss on asset disposal and share based compensation expense. Let’s review the financial results for the year ended 12/31/2024. Revenues were $268,000,000 for the twelve months ended 12/31/2024, compared to $187,000,000 for 2023 with all three segments reporting increases. Specifically, California ethanol increased by $57,700,000 from operating during the full year.

India Biodiesel increased $15,700,000 from stronger oil marketing company tender delivery volumes and California renewable natural gas increased $7,600,000 from increased production, stronger sales of RINs and sales of LCFS credits. Cost of goods sold increased from $184,700,000 during the twelve months ended 12/31/2023 to February during the same period in 2024 in keeping with the change in revenue for each of the segments. Gross loss for the twelve months ended 12/31/2024 was $580,000 compared to a gross profit of $2,000,000 during the same period in 2023. Our Dairy, Renewable Natural Gas segment accounted for $5,400,000 of gross profit, principally from the sale of environmental attributes for the year ended 12/31/2024. Selling, general and administrative expenses remained constant at $39,800,000 during the twelve month ended 12/31/2024, compared to $39,400,000 during the same period in 2023.

Operating loss was $40,400,000 for the twelve months ended 12/31/2024, compared to an operating loss of $37,400,000 for the same period in 2023. Interest expense was $59,300,000 during the year ended 12/31/2024, which was a $5,500,000 increase from interest expense of $64,800,000 during the year ended 12/31/2023. Income tax benefit of $10,800,000 during 2024 and $53,700,000 during 2023 represent tax credit sales of $12,300,000 and $55,000,000 respectively. Net loss was $87,500,000 for the twelve month ended 12/31/2024, compared to a net loss of $46,400,000 during the same period in 2023. Cash at the end of the fourth quarter of twenty twenty four was $898,000 compared to $2,700,000 on 12/31/2023.

Capital expenditures for carbon intensity reduction projects and the expansion of biogas production capacity were $20,300,000 for 2024 as our engineering and construction teams move forward with low carbon production capacity and energy efficiency projects. Now, I’d like to introduce the Founder, Chairman and Chief Executive Officer of Aemetis, Eric McAfee for a business update. Thanks, Todd. Aemetis benefits from public policy that supports domestic energy producers that grow markets for agricultural and waste products. The strong year over year growth that we achieved in 2024 businesses in biogas, ethanol and biodiesel is expected to be further supported by federal and state policies that are being implemented this year.

The President has repeatedly stated his strong support of ethanol and agricultural based biofuels in executive orders and public statements. So we are hopeful that the new administration will continue to support domestically produced renewable fuels that support energy independence. Let’s review some of the key government policy issues that had a significant impact on our businesses and we expect will be strongly supportive of our continued growth. First, the California LCFS credits. After four years of policy development, amendments to California’s low carbon fuel standard were approved by the California Air Resources Board on 11/08/2024, setting twenty years of increasing mandates for low carbon fuels in California.

The LCFS amendments mandate a 9% decrease in carbon intensity for fuels in 2025 and have an ongoing automatic adjustment mechanism to provide confidence in a higher price for LCFS credits in order to attract debt and equity investments in low emission transportation fuels, infrastructure and vehicles. In anticipation of the implementation of the new mandates, the price of LCFS credits increased from $44 last year to $75 by February 2025, a surprise delay occurred, however. Recently, the implementation of the amended LCFS was delayed by the California Office of Administrative Law due to a request to CARB to provide clarity in certain new language in the LCFS amendments. This unexpected delay in implementation of the LCFS amendment caused a rapid 30% decrease in the price of LCFS credits as the market waits for final adoption of the LCFS amendments to occur. We expect that the process of final adoption of the LCFS amendments will occur later this year.

LCFS prices should increase thereafter as the 9% reduction in 2025 will take effect as will a 20% limitation on the use of crop based feedstocks for renewable diesel. Additionally, slower than expected hydrogen truck and electric vehicle adoption anticipated by CARB is expected to result in a rapid decline in the LCFS credit bank during 2025 and 2026. By 2027, the implementation of the LCFS amendments is designed to reduce the 32,000,000 credits currently in the LCFS credit bank to zero. And according to CARB’s own estimate, the LCFS credit price is expected to increase significantly higher, eventually approaching $200 per ton. Aemetis biogas, ethanol, carbon sequestration and other businesses are designed to benefit from an increased LCFS credit price as we produce LCFS credits through the production of low carbon intensity renewable fuels.

To quantify the impact, Aemetis renewable natural gas generates about 40% of the price of LCFS credit per MMBtu of production. So a $200 LCFS price per ton equals about $80 of LCFS credit value per MMBtu once our provisional pathways are in place. At an average LCFS price of $150 per ton, Aemetis Biogas would generate credits worth $60,000,000 per year from the sale of 1,000,000 MMBtu of dairy RNG. Second, the federal renewable fuel standard. In addition to LCFS credits, the sale of renewable natural gas generates D3 RINs with a value from $28 to $40 per MMBTU.

Combined with the LCFS credit, this represents up to $120 per MMBtu from just these two credits alone. Third, the Federal Section 45 Production Tax Credit, which started on 01/01/2025. The U. S. Treasury released tax guidance in January 2025 that we are now using for the planned sale of tax credits for both our Keyes ethanol plant and our renewable natural gas businesses.

We expect further guidance from Treasury will be issued this year to assist in the calculation of the tax credits. Fourth, Federal Section 48 investment tax credits. After selling $63,000,000 of investment tax credits in September 2023, we completed the sale of additional investment tax credits generated by the Aemetis Biogas projects and our Keyes plant solar project in December 2024 and February of this year. We received net cash proceeds of about $11,000,000 in January and $6,000,000 in February 2025 for a total of $17,000,000 of cash received from investment tax credits so far this year. We expect the same buyer to purchase additional federal investment tax credits this year and potentially also purchase production tax credits.

Fifth, fifteen percent ethanol blend approvals. Two weeks ago, the U. S. EPA approved the year round sale of gasoline containing up to 15% ethanol known as E15 for eight Midwestern states with an indication that all 49 states other than California should be approved this year. Broad use of E15 would increase the size of The U.

U. S. Ethanol market by up to 50%. California is the only state that sets its own fuel blends and currently E15 is not authorized. However, California Governor Newsom issued a letter instructing CARB to complete the necessary regulatory work to be able to approve E15 in California as soon as possible, thereby reducing the state’s current 90% petroleum gasoline mandate that drives higher gasoline prices for consumers and businesses.

A 15% ethanol blend in California is projected to decrease gasoline prices by $0.2 per gallon, saving drivers about $400 per year in fuel costs equal to $2,700,000,000 per year statewide, according to a UC Berkeley and Naval Academy study. E15 approval in California would increase the market for ethanol by more than 600,000,000 gallons per year and a 15% ethanol blend nationwide would enable the ethanol industry to grow revenues by up to 50% to more than 20,000,000,000 gallons per year. Combined the ongoing implementation of these five policies directly and positively impact our business by significantly increasing the value of our fuels and by expanding the markets that we supply. Let’s review each of our businesses. In the Indian biofuels business, we completed deliveries of $112,000,000 dollars during the one year period ending September 2024, driven by biodiesel sales to the three government owned oil marketing companies or OMCs under a cost plus contract structure.

We completed these contracts with excellent production and delivery performance. The positive impact of cost plus pricing that has been used by the OMCs to purchase biodiesel is expected to continue for the foreseeable future. Our India business has generated positive EBITDA in the past and has funded its own operations and capacity growth from these OMC contracts. Unfortunately, the price of feedstock used in the OMC pricing formula increased significantly in Q4 twenty twenty four and OMCs delayed taking deliveries of biodiesel. After a six month period of negotiations, OMCs are expected to issue a new tender for biodiesel and begin taking deliveries in Q2 twenty twenty five.

This past July, our new Managing Director of the India business joined the company after serving as the Chief Executive Officer of the GE joint venture in India to build renewable power plants. We have signed an employment agreement with an outstanding professional with recent IPO agreement experience who will serve as our Chief Financial Officer beginning in June 2025. We have signed a lease to move our India headquarters into a newly built office building in Hyderabad next month to support our expanding management team for the operation of multiple plant sites and new products. The timing of the planned IPO is currently estimated for late twenty twenty five or the first half of twenty twenty six due to the delay in OMC deliveries. But we expect to benefit from a renewed government commitment to biodiesel blending and new OMC orders, supporting renewed retail and institutional investor interest in renewable biodiesel later this year.

Andy Foster, President of Aemetis Advanced Fuels will now review our North American businesses. Andy? Thanks, Eric.

Andy Foster, President of Aemetis Advanced Fuels, Aemetis: In the Aemetis Biogas business, we continue to grow the number of dairies and digesters to reach an expected 550,000 MMBtu per year of production capacity in 2025. Aemetis Biogas plans to expand our footprint to 26 dairies operating or under construction by the end of twenty twenty five, increasing production capacity to 1,000,000 MMBtu per year in 2026. Our existing projects are funded by twenty year loans guaranteed by the USDA Rural Energy for America or REAP program. We have received the draft USDA conditional commitment for the next $25,000,000 Rural Energy for America loan. An additional $50,000,000 of USDA guaranteed funding is in process with expected closings this year for a total of $75,000,000 of new USDA guaranteed long term financing for biogas digester construction.

Our LCFS provisional pathways for seven dairies have been completed and have completed the third party verification process and are now in the final review and approval stage at CARB. We expect these pathways to be approved in March or April. In the event that the final approval is received in April instead of this month, we would begin to show the increased revenues and cash receipts from LCFS pathway approval in Q3 of twenty twenty five. For the Aemetis ethanol business, the eventual approval of an E15 blend in California as well as at the federal level is expected to have a positive impact on ethanol industry margins as retailers seek to provide lower cost fuel to consumers and to significantly expand the market demand for ethanol in California. A major step in improving our cash flow and energy efficiency at the Keyes plant is the installation of a mechanical vapor recompression system or MVR.

We have completed detailed engineering and have begun equipment procurement and fabrication off-site. Over the past year, we have also completed tie ins and other plant modifications that will accelerate the installation process, minimizing plant operation interruptions during the construction period. The MVR system is designed to reduce fossil natural gas use by 80% at the Keyes plant and increase cash flow by up to $35,000,000 annually, depending on the LCFS credit price and 45 Z tax credits when we begin operating the system in 2026. The MVR energy efficiency project is expected to cost approximately $30,000,000 and has been awarded about $20,000,000 in grants and tax credits from the CEC, PG and E and the U. S.

Department of Energy and Treasury. Our Aemetis Carbon Capture subsidiary has received California state approval to drill a characterization well. The first phase of drilling and installation of the conductor pipe for the characterization well was completed late last year. We plan to use the data from the characterization well to obtain a federal Class VI sequestration well permit and then construct a CO2 injection well and compression system at our Riverbank site to sequester approximately 1,400,000 tons of CO2 per year. CO2 sequestration has strong support from the oil and gas industry, so we expect the final 45 Q federal tax credit to be supported this year and the EPA Class six well approval process to be faster to obtain than under the prior administration.

In the development of our Aemetis sustainable aviation fuel and renewable diesel business, during 2024, we received authority to construct air permits for our planned 90,000,000 gallon per year SAFNRD plant to be built in Riverbank, California. When operated to produce only sustainable aviation fuel, the design capacity of the plant is about 78,000,000 gallons per year of SAF. With the expanding demand for SAF and with the limited supply, we continue to discuss the use of innovative pricing structures with our airline customers and to accelerate the financing, construction and operation of our SAF plant. A key issue for SAF production is the Federal 45 Z production tax credit, which replaces the former Blenders tax credit. Further clarification and confirmation of the calculation of the 45Z revenues will be needed to support the financing of the SAFRD plant.

Additionally, California regulators need to step up their efforts to enact strong SAF mandates by including this fuel in the LCFS and setting volumetric requirements. Most major airlines have expressed support for adopting SAF and are looking for additional regulatory support from the EPA and states to move investments forward to expand production capacity. Eric?

Eric McAfee, Founder, Chairman and CEO, Aemetis: Thanks, Andy. Appreciate that. In summary, all five Aemetis business segments are synergistic and create what we refer to as a circular bioeconomy. We are very pleased with the approval of the updated low carbon fuel standard in California and look forward to its formal implementation, as well as the expected approval of 15% ethanol plans to reduce gasoline prices at the pump and to expand domestic markets for agricultural and waste products. Continued progress on implementing federal 45 Q and 45 Z tax credits will drive new investment and job creation as we continue to build new production of natural gas from dairy waste, ethanol from agricultural products, SCF and R and D renewable diesel, as well as the sequestration of CO2.

We continue to work toward an IPO of the growing India Biodiesel business, though our pace was slowed by the delay in biodiesel deliveries to oil marketing companies, and now is expected to benefit from a renewed commitment to biodiesel blending by the India government and OMCs. Our company’s values include a long term commitment to building value for our stockholders, the empowerment of and respect for our employees and business partners and making significant and positive contributions to the communities we serve. Now let’s take some questions from our call participants.

Tom, Conference Call Operator: Thank you, Mr. McAfee. We will now be conducting a question and answer session. And the first question today is coming from Jordan Levy from Truist Securities. Jordan, your line is live.

Please go ahead.

Jordan Levy, Analyst, Truist Securities: Thanks for all the details. Eric, maybe if you could just talk to your confidence levels around specifically the REIT financing going forward given some of the the pauses and reductions in government spending under this new administration?

Eric McAfee, Founder, Chairman and CEO, Aemetis: We have a high degree of confidence in REAP. We’ve been very close to the USDA staff and we expect approvals this month for their next phase. And then we have two right behind it. So there has been a freezing of grants and loans that was throughout the entire government. And as they have gone through and looked at every program and then frankly looked at every single grant loan, we have been informed that the REIT program, the business and industry program and the 9,003 program have all been released for further transactional activity and we’ve received direct information that we’re moving forward this month on our next $25,000,000 repo.

Jordan Levy, Analyst, Truist Securities: Got it. Thanks for that. And then just as a follow-up over to Riverbank. I recognize 45 gs clarification for SAS is pretty critical to getting financing on that plant and the economics more broadly. But just wanted to get a sense of how you’re thinking about, one, how much has been spent from a CapEx perspective there thus far?

And then two, if we do get to kind of the end of the year or beginning of next year or however long and we haven’t gotten that clarification from the federal administrations, what’s the plan kind of going forward as it relates to that project?

Eric McAfee, Founder, Chairman and CEO, Aemetis: Because of the way that the accounting is recognized for the capitalization, there’s two different capitalization numbers. One is for project financing and the other is that our internal accounting is very conservative. So we expense our investments there largely. So the GAAP recognition and the project financing recognition are rather significant significantly different. So we do not expect that we’re going to be reflecting the entire amount on our GAAP books of what we’ve invested about $43,000,000 of what we show in our project financing.

And then our GAAP books are more conservative because you have to be within a certain short period of time of construction before we can start capitalizing for these assets. The 45Z plus, as Andy mentioned, California’s LCFS, including jet fuel would be two significant drivers. So the inclusion of jet fuel in LCFS would cause an increase in obligated party amounts. And so there was actually a 2% goal put in the LCFS amendment last year. It came out late in the process and they’ve discussed the process of putting it back in.

So we think there are several different market drivers mandates for the physical volumes plus mandates at the federal level for the 45 Z production tax credit to be adopted and clarified and then the calculation come out in treasury guidance. And we think it will take most of this year for that kind of clarification to occur. And we don’t think most SAF projects are moving forward certainly at this at the pace that we were seeing in 2021, ’20 ’20 ’2 and 2023 as we go through this transition.

Jordan Levy, Analyst, Truist Securities: Thank you, Eric.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Thank you.

Tom, Conference Call Operator: Thank you. Your next question is from Sameer Joshi with H. C. Wainwright. Please proceed with your question.

Sameer Joshi, Analyst, H.C. Wainwright: Hey guys, thanks for taking my questions. Eric, do you have any insight into why the OAL asked for revisions late in the game and not earlier on? Like what was the process like and what are the concerns? And it seems like there’s at least going to be a one hundred and twenty day delay because of this. Just wanted to see what your view is.

Eric McAfee, Founder, Chairman and CEO, Aemetis: The OAL process, Office of Administrative Legal. Administrative law. The LCFS is a complicated piece of legislation. And the surprise wasn’t that it’s complicated and needs some clarification. That was no surprise to anybody.

The surprise is that that wasn’t resolved prior to the date in which the OAL had to consent to the publishing of the amendment. And since that delay could take another comment period, actually I would say at this point we expect it to include another fifteen to thirty day comment period. It is not something that’s going to get fixed next week. This will probably be a couple of months of internal process to get this fixed. Lastly, there is no endpoint.

They could take three, four, five, six months and that’s one of the things that caused the LCFS prices to go down as there is no guaranteed time period in which this gets fixed. That being said, we know from personal experience, there’s a tremendous amount of staff time being invested at CARB to move this along and get it done as quickly as possible. Did you have any other comments?

Andy Foster, President of Aemetis Advanced Fuels, Aemetis: No, I would just this is Andy. I would just add to that, that I think this is an opportunity for the governor to show some leadership stepping in. This is sort of, I think, an embarrassing handoff between two state agencies that should have been sort of resolved before it happened. I’m being a little harsh, but the stakes are high for the stakeholders in all of this. So we’re hopeful, I know in my communication with CARB, it seems that that’s all the staff is working on instead of processing applications for pathways.

So, we’re hoping that the governor will step in and the governor’s office at least will step in and provide some strong leadership to get this resolved because it’s this has been going on for many years and probably is something that should have been worked out in the conference room before it got public. So our hope is that the heat is on and they realize the stakes that are involved in getting this resolved.

Sameer Joshi, Analyst, H.C. Wainwright: Understood. Thanks for that color. On the India biodiesel, are we I know there was some air quality permits that were received late February, which you have allowed you to restart the plant. But are you restarting and building inventory or are you waiting for the OMCs to renew or have a new round of cost plus awards for you? Like are you operating it or waiting?

Eric McAfee, Founder, Chairman and CEO, Aemetis: I’ll separate that into two parts. One is our production. The second was the OMC tender process. Today, news in India indicates that they will be issuing a new tender that the new tender actually was papered today. So it’s in the public domain today.

The time period for the allocation is very short. It’s March 20 is the end of the tendering process and they’re expecting shipments in April under this new tender. Regarding our production, we queued up production under the previous tender. And so we’re sitting on a significant amount of inventory, which will not require that we have to operate the plan in order to get initial shipment started. On the third point about local pollution control district, this has happened to us in the past.

This cycle is very similar to the previous cycle and we engage with a wide variety of government leaders in resolving their concerns about emissions. I can state that I do not believe our emissions were actually what led to the shutdown notice because we had shut down our plant a month earlier. We shut down in December, the notice was in mid January and we believe it was other producers in the local area where there’s a wide variety of edible oil and other businesses that use similar feedstocks. And so that it was a part of resolving the issue was that we’ve been shut down for thirty days when they gave us a notice of shutdown. So it was one of those ironic government issues that we got resolved.

And we because of the OMC delivery schedule, it had virtually no impact on our production.

Sameer Joshi, Analyst, H.C. Wainwright: Understood. Thanks for that. And just one more, I know you did touch touch upon it in your prepared remarks of the India IPO. Do you expect this to happen during 2025 or should we think of this as early twenty twenty six event?

Eric McAfee, Founder, Chairman and CEO, Aemetis: It’s an IPO. So we know the market actually controls it. We expect to have our process completed so we can complete it in 2025. And as every IPO is discussed, it’s always discussed subject to market conditions. So we will be ready to go.

We’ll be then looking at the market conditions. If we see strong support for biodiesel blending, even in a otherwise not attractive market, we can get a very solid IPO done because of the size of this growth industry. And I think that our job is to get the paperwork done and be ready to go. And if we delay it for a quarter or two, that’ll be purely because we see better market conditions ahead.

Sameer Joshi, Analyst, H.C. Wainwright: Understood. Thanks, Eric, for taking my questions.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Thank you.

Tom, Conference Call Operator: Thank you. Your next question is from Derrick Whitfield from Texas Capital. Please proceed with your question.

Derrick Whitfield, Analyst, Texas Capital: Good afternoon and thanks for taking my questions. Hey, Derek. Good, thanks. Bigger picture, could you speak to your expected spending plans for 2025 given the turbulence in the regulatory markets and the lack of clarity and or value with 45Z?

Eric McAfee, Founder, Chairman and CEO, Aemetis: We are on course with a $75,000,000 capital budget from USDA Renewable Energy of America program loans. We also have a variety of grants. I think our total grants are in the $65,000,000 range. And of course, we have ongoing investment tax credits who’ve already netted about $17,000,000 cash proceeds in January, February. This year we expect additional cash proceeds from that.

And so our capital spending on Metis Biogas is going to be accelerating in 2025 and we have some vendor support that helped us in the past. We built our pipeline with very strong financial support from a vendor. We expect to expand that vendor support, which enables us to execute quickly and then pay them off through USDA and other funds that come in, including revenues. So we are looking to continue to accelerate biogas. We have 50 signed dairies.

We have 16 of them on operating or finishing steps of operations. And so we have 34 dairies to go and we have more dairies coming on board. So we have gone to the USDA lenders as well as our vendors and laid out a plan that enables us to accelerate in 2025 and 2026. And as you know with 45C probably taking most of this year to get final treasury guidance out, we actually are running the numbers based upon low carbon fuel standard credits and D3 RINs as well as selling them the actual fuel itself, the molecule and that’s supporting all of our expansion plans at the current time.

Derrick Whitfield, Analyst, Texas Capital: Great. And then maybe shifting over to ethanol, as you think about the progression of E15 approvals across the remaining 41 states this year, what’s your view on what this will do for ethanol margins for a medicine industry?

Eric McAfee, Founder, Chairman and CEO, Aemetis: I think it’s going to be a slow mega trend. And when people look back on it, it’ll seem as if it really happened quickly. But looking forward from where we’re sitting, it’s going to look like a melting ice cream cone because it’s going to take most of this year for the convenience stores and others to finally realize, yes, I guess we could make more money for competitive factors to kick in that the guy across the street is already doing it and his fuel is cheaper. And I think it will see acceleration in 2026 as more states come online. It’s a commodity marketplace.

So the absorption of the gallons that are currently out of the market will be all this necessary for us to recapture probably $0.5 per gallon and still have a very significant margin available. Here in California, we sell our product for about $1.8 net of discounts and marketing fees and like. And at the pump, certainly it’s more than $4 So fundamentally our molecule goes to the blending rack and then gets trucked to a gas station and $2 a gallon times 65,000,000 gallons is $130,000,000 a year of margin to the oil company for trucking our product around and then dispensing it. And I think that there’s definitely $0.5 a gallon of that, leaving them with over $1 to profit on the thing. So if we get into strong adoption of E15 by probably 2027, I would expect we’d be above $0.5 a gallon and it would drive new investment in new capacity as we’ve cited entire capacity in The U.

S. Is 18,000,000,000 gallons, 2,000,000,000 gallons being exported and we’re using about 14,000,000,000 gallons, a little more than that domestically. So we have 1,500,000,000 gallons of capacity that’s offline due to maintenance cycles, other things. When that gets absorbed, the only solution is quite frankly new capacity. And so we would exceed 20,000,000,000 gallons of demand with only even an ideal scenario, everybody running 18,000,000,000 gallons of capacity.

So you’re going to see that new investment start to kick in driven by higher margins. Same cycle we saw in 02/2004, ’2 thousand and ’5 as the renewable fuel standard was adopted should happen in 2026, ’20 ’20 ’7 and 2028 as people realize we’re short of ethanol in The United States.

Derrick Whitfield, Analyst, Texas Capital: Kirk, One last if I could just about a kind of a bow on carb policy. When would that likely go into effect in your opinion? And will the obligations be backdated to cover 2025?

Eric McAfee, Founder, Chairman and CEO, Aemetis: I personally think we’re probably two to three months away and then we have no facts to back that up at all. It’s the pace of the internal CARB staff and the internal OAL staff. And frankly, as Andy mentioned, it’s the amount of encouragement offered by Governor Newsom for them to work extra hours to get this done. We do know that CARB is working very, very hard on this. We just have no idea about how long that’s going to happen.

But I think with the political tea leaves here, it’s going to be sooner rather than later.

Derrick Whitfield, Analyst, Texas Capital: Thanks, Eric.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Thank you.

Tom, Conference Call Operator: Thank you. Your next question is coming from Matthew Blair with TPH. Please proceed with your question.

Matthew Blair, Analyst, TPH: Thank you and good morning. Eric, could you provide any more color on what drove the negative EBITDA results in the fourth quarter? Was that mostly due to ethanol? And could you also talk about ethanol fundamentals in the first quarter? And we’re seeing pretty high utilization, very high inventories.

Do you think ethanol is on track for an even weaker Q1 than it was in Q4? Thank you.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Q4 was oversupply and high corn prices, corn jumped the dollar I think in Q4. And Q1 for us is little better than Q4. We’ve adjusted some operations to reflect the oversupply of ethanol and the corn prices as you know have moved both up as well as down in the first quarter, but they’ve had some downward moves as well. So I I think our performance in first quarter will probably prove to be a little better than fourth quarter. We did I should make note that it’s the operational changes that I think led to the improvement.

I don’t think it was

Andy Foster, President of Aemetis Advanced Fuels, Aemetis: We slowed down our grind and I think what we’re seeing certainly from yesterday’s EIA numbers is that others are responding similarly. There was EIA numbers yesterday were the first time we’ve seen this year that were relatively positive. And the folks that we work with from a marketing perspective are sort of seeing light at the end of the tunnel as we get through this period. The other thing I think that influenced some of the price of gas, while not historically high from a use perspective, I just saw a chart that showed that this is the strongest demand for gas maybe on record. So natural gas pricing went up a little bit.

Obviously, corn price went up a little bit or a lot, but we’ve adjusted our grind as have I think other Midwestern plants. In April, you’ll start to see some of those plants go into their annual turnaround, which will help us get rid of some of this inventory. So we’re kind of feeling like hopefully there’s some light here at the end of the tunnel as we head into Q2.

Matthew Blair, Analyst, TPH: Sounds good. And then could you share any expectations on the D3 RVO going forward? Last time around, we had a three year RVO. I think the average increase was about 30% a year in the blending obligation. Do you have any expectations on just what that might look like?

Should we expect a new two or three year RBO this spring? And how much would the blending obligations go up by?

Eric McAfee, Founder, Chairman and CEO, Aemetis: Two items on that one was historical back in the 2024, the EPA a couple of days ago said they had extended the compliance period because they were intending to adopt the new lower number of D3 rents mandated for 2024. So that’s an indirect signal to the market that the proposal of the EPA made to the White House on the previous administration is actually being fall through so that there is not a mandate that’s any higher than the actual production in 2024. And actually I’d say, it’s a very indirect way of saying, oh, by the way, guys, you’re never going to be short because this was after the year was done, all the investments have made, all the products have been shipped and then they changed the rules of the game, which was that the obligated parties didn’t have to worry about being short. If that becomes the pattern, then it won’t matter what the RBO is. I’m just being frank with you, might as well just skip the RBO, let the oil companies buy whatever they want and at the end of the year just set the RBO to whatever the oil companies actually did.

Now, why do I say that? Because that’s what they did with ethanol for eight years. Starting in 2014, they just didn’t issue an RBO and then you later had a couple of federal court cases lost by the EPA. They were in violation of federal law and they set the RBO at whatever was actually consumed. So it’s not a great commentary on the management of the program by the EPA, but let’s just face the facts that that’s what’s going on.

The price of the credits was approximately $3.5 prior to this proposal by the EPA to remove excess requirements for D3 RINs. It has settled around February. After this news has hit the market, there’s some reasons why that is the case. And my personal view is we’re probably at $2.45 until the President decides he wants more investment in domestic renewable energy driven by waste. And when he decides that, then I think we will be at four or even higher because the entire system is structured to attract new investment.

And when you destroy excess demand, then nobody should make new investment. And that’s what the signal is from the EPA is don’t go put more investment into D3 written creation because there’s no market for the product. And so we’re extremely cynical about the behavior of last administration on this particular topic. I’m not surprised at all in the current administration, but there is going to be some backlash in which people point out that if the market is not growing, then farmers aren’t getting any additional revenue and there’s no new investment, no new job creation in domestic energy and that violates the unleashing America Energy executive order. So I think we’re all kind of watching the new administration, see where the priorities are and I think eventually the D3RIN RVO will come back into being relevant to new investment growth.

The question is whether it’s going to be this year or next year.

Matthew Blair, Analyst, TPH: Great. Thanks for your comments.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Thank you, Matthew.

Tom, Conference Call Operator: Thank you. Your next question is coming from Dave Storms from Stonegate. Please proceed with your question.

Dave Storms, Analyst, Stonegate: Good morning and thank you for taking my questions. My first one, I wanted to start with a modeling question. With seven digesters on the cusp of CARB approval, can you break out maybe the MMBtu contribution from those digesters? Is it as easy as being roughly 45% of your yearly MMV to use or is there another way we should think about this?

Eric McAfee, Founder, Chairman and CEO, Aemetis: It’s approximately $350,000 per year. It’s about $25,000 average per dairy from a modeling perspective. We do have larger and we have smaller dairies and we have some digesters actually have multiple dairies feeding them. But from the perspective of modeling 25,000 millimeters millimeters millimeters millimeters millimeters

Derrick Whitfield, Analyst, Texas Capital: millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters

Eric McAfee, Founder, Chairman and CEO, Aemetis: millimeters millimeters millimeters millimeters millimeters mill

Dave Storms, Analyst, Stonegate: Understood. That’s very helpful. Thank you. And then just wanted to ask about the market for the sale of investment tax credits. How has that changed over the last year?

It looks like roughly a quarter lag and a 10% discount when you go to sell those credits. Is that market anticipated to maybe have condensed spreads over 2025 or anything else that you’re expecting in that market?

Eric McAfee, Founder, Chairman and CEO, Aemetis: I think the market is settled on a bid ask spread that as you’ve seen in now our multiple transactions disclosed for total about $70,000,000 of net proceeds. It’s about a 15% total discount between the discount, the lawyers, the insurance policy, the brokers, everybody in the whole process ends up being a little bit less than 15% discount.

Dave Storms, Analyst, Stonegate: Understood. Thank you for taking my questions. Good luck in Q1.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Yes. Thank you, Dave.

Tom, Conference Call Operator: Thank you. Your next question is from Ed Woo from Ascendiant Capital. Please proceed with your question.

Ed Woo, Analyst, Ascendiant Capital: Yes. Thank you for taking my question. The India IPO, have you thought further about what you may possibly do with the proceeds either invest it in India or bring it back to The U. S?

Eric McAfee, Founder, Chairman and CEO, Aemetis: The India IPO process has a very disciplined use of funds component that is not the way it works in The United States. So we are being, let’s call it diligent about disclosing our use of funds until we get through the India IPO process. But you will see in other IPOs in India funds that are repaying debt from offshore investors or even private equity firms that are getting funds from their IPO. The actual calculation is actually a part of sizing the IPO and even looking at market acceptance of the IPO will determine the amount of funds that could be repaid to the parent company for funds that were invested in the subsidiary. So it’s going to be a while before we’ll come up with a number that’s definitive.

Ed Woo, Analyst, Ascendiant Capital: Great. And previously, you disclosed that India was pretty much self sufficient. Is that still the case? And you think it will be that way until after the IPO is completed?

Eric McAfee, Founder, Chairman and CEO, Aemetis: It is still the case and we do have a lot of investment in inventory and operations and the like. So beginning shipments to OMCs will free up liquidity to India. But it is as in the long term debt, it is it’s investing in inventory to be well positioned for timely delivery. And that’s been our highest priority. And the good news is the India team is well positioned to do that again on multiple OMC contracts that we expect to see this year.

Ed Woo, Analyst, Ascendiant Capital: Great. Well, thank you and I wish you guys good luck.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Thank you, Ed. Appreciate it.

Tom, Conference Call Operator: There are no further questions at this time. I would like to turn the floor back to management for closing comments.

Eric McAfee, Founder, Chairman and CEO, Aemetis: Thank you to Aemetis stockholders, analysts and others for joining us today. We look forward to talking with you about participating in the growth opportunities at Aemetis. Thank you for attending today’s Aemetis earnings conference call. Please visit the Investors section of the Aemetis website, where we’ll post a written version and an audio version of this Aemetis earnings review and business update. Tom?

Tom, Conference Call Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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