Business Overview

Aemetis, Inc. (AMTX) is an international renewable natural gas and renewable fuels company that has been at the forefront of the clean energy transition. Founded in 2006 and headquartered in Cupertino, California, Aemetis has established itself as a leading player in the production and commercialization of innovative technologies to create low and negative carbon intensity renewable fuels.

Aemetis operates three key business segments: California Ethanol, California Dairy Renewable Natural Gas, and India Biodiesel. The company's strategic focus on building a local circular bioeconomy has allowed it to leverage agricultural products and waste to produce low-carbon, advanced renewable fuels that reduce greenhouse gas emissions and improve air quality. Over the years, Aemetis has faced various challenges, including operating in a volatile market with limited control over major input costs and product revenues. The company has been making investments in future facilities and facility upgrades to improve overall margins. Due to negative capital and negative operating results, Aemetis has been reliant on its senior secured lender to extend the maturity dates of its debt and loan facilities, as well as the collateralization of substantially all of its assets.

California Ethanol Segment

The California Ethanol segment consists of a 65 million gallon per year capacity ethanol production facility in Keyes, California that Aemetis owns and operates. In addition to renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (WDG), Distillers Corn Oil (DCO), and Condensed Distillers Solubles (CDS), all of which are sold as animal feed to local dairies and feedlots. The company is also implementing several energy efficiency initiatives at the Keyes Plant to further lower the carbon intensity of its ethanol. Additionally, Aemetis captures the carbon dioxide emissions from its fermenters and sells it to Messer Gas for use in producing liquid CO2 that is sold to food, beverage, and industrial customers.

For the three months ended September 30, 2024, the California Ethanol segment generated $44.93 million in revenue, with $33.92 million from ethanol sales, $8.96 million from WDG sales, and $2.05 million from other sales. The segment had a gross profit of $85,000 for the quarter. For the nine months ended September 30, 2024, the California Ethanol segment generated $121.16 million in revenue and had a gross profit of $9.49 million.

California Dairy Renewable Natural Gas Segment

Aemetis' California Dairy Renewable Natural Gas segment, known as Aemetis Biogas, operates anaerobic digesters at local dairies near the Keyes Plant. These digesters produce biogas from dairy waste, which is then transported via pipeline to the Keyes Plant site and converted into Renewable Natural Gas (RNG) for delivery to customers through the regional natural gas pipeline. As of September 30, 2024, Aemetis Biogas had nine operating digesters receiving waste from ten dairies, with an additional five digesters currently under construction.

For the three months ended September 30, 2024, the California Dairy Renewable Natural Gas segment generated $4.25 million in revenue from the sale of RNG, D3 RINs, and LCFS credits. The segment had a gross profit of $1.90 million for the quarter. For the nine months ended September 30, 2024, the California Dairy Renewable Natural Gas segment generated $9.64 million in revenue and had a gross profit of $3.97 million.

India Biodiesel Segment

The India Biodiesel segment includes a 60 million gallon per year biodiesel production plant in Kakinada, India. This facility produces high-quality distilled biodiesel and refined glycerin for customers in India, and is one of the largest biodiesel production facilities in the country. The plant can process a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meets applicable product standards.

For the three months ended September 30, 2024, the India Biodiesel segment generated $32.26 million in revenue, with $31.12 million from biodiesel sales and $1.14 million from other sales. The segment had a gross profit of $1.90 million for the quarter. For the nine months ended September 30, 2024, the India Biodiesel segment generated $89.84 million in revenue and had a gross profit of $6.98 million.

Future Projects

In addition to its existing operations, Aemetis is developing several key projects to further expand its sustainable energy footprint. These include a planned 90 million gallon per year sustainable aviation fuel and renewable diesel production plant in Riverbank, California, as well as carbon capture and underground sequestration (CCUS) facilities that will capture and store carbon dioxide emissions from its biofuel production.

Financials

Financially, Aemetis has faced some challenges in recent years, reporting net losses of $46.4 million in 2023 and $107.8 million in 2022. However, the company has taken steps to improve its liquidity and capital position, including securing USDA-guaranteed financing for its Aemetis Biogas expansion and seeking to sell investment tax credits.

For the most recent quarter ended September 30, 2024, Aemetis reported revenue of $81,441,000, representing an 18.6% increase compared to Q3 2023. The increase in revenue was primarily attributable to higher sales across all three of Aemetis' operating segments. However, the company still reported a net loss of $17,935,000 for the quarter.

In terms of cash flow, Aemetis reported negative operating cash flow of $4,980,000 and negative free cash flow of $9,470,000 for the quarter ended September 30, 2024.

Liquidity

As of September 30, 2024, Aemetis had $296,000 in cash and cash equivalents on its balance sheet. The company has a highly leveraged capital structure with a debt/equity ratio of -1.06, due to accumulated losses and a negative equity position.

Aemetis has access to additional liquidity through various credit facilities. The company has an $85 million reserve liquidity facility with Third Eye Capital, of which $0 was drawn as of the latest quarter. Additionally, Aemetis has access to a $50 million Fuels Revolving Line and a $50 million Carbon Revolving Line.

The company's current ratio stands at 0.26, while its quick ratio is 0.11, indicating potential short-term liquidity challenges.

Future Outlook and Guidance

Looking ahead, Aemetis is well-positioned to benefit from favorable regulatory tailwinds, such as the recent updates to California's Low Carbon Fuel Standard (LCFS) program and the federal Inflation Reduction Act's provisions for renewable natural gas and carbon capture incentives. The company's focus on building a diverse portfolio of renewable energy assets, combined with its technological expertise, puts it in a strong position to capitalize on the growing demand for low-carbon fuels and solutions.

Aemetis has provided some forward-looking guidance for its operations. The company exited 2024 producing over 500,000 MMBtus per year of renewable natural gas and plans to increase to a run rate of about 1 million MMBtus by the end of 2025 as they construct additional dairy digesters. At an average LCFS price of $100 next year, Aemetis' Biogas business is expected to generate $20 million in revenue from the sale of renewable natural gas. In 2026, assuming an average LCFS price of $150, the Biogas business is projected to generate $60 million in revenue from the sale of 1 million MMBtus of renewable natural gas.

The company is also finalizing the sale of investment tax credits from their Biogas projects, with expected net cash proceeds of about $11.5 million this month and an additional $10 million in Q1 2025. Aemetis' LCFS pathways are expected to be approved this quarter, allowing them to start generating increased LCFS credit revenues in Q2 2025.

Furthermore, Aemetis expects to close $25 million in USDA Renewable Energy for America Program loans this quarter and obtain commitment letters for an additional $50 million in Q1 2025.

While Aemetis has faced its share of challenges, the company's strategic vision, innovative technology, and commitment to sustainability make it an intriguing player in the renewable energy space. As the world continues its transition towards a more sustainable future, Aemetis stands ready to play a key role in driving the clean energy revolution.