Good afternoon and welcome to the Aemetis Fourth Quarter and Year End 2023 Earnings Review Conference Call. At this time, all participants are in a listen-only mode and a brief 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, Executive Vice President and Chief Financial Officer of Aemetis, Incorporated. Mr. Waltz, you may begin.

Thank you, Ali. Welcome to the Aemetis's fourth quarter and year end 2023 earnings review conference call. Joining us for the call today is Eric McAfee, Founder, Chairman and CEO of Aemetis and Andy Foster, President of Aemetis North America. We suggest visiting reading 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. The presentation for today's call is available for review or download on the Investors section of aemetis.com website. Before we begin our discussion today, I'd like to read the following disclaimer statement. During today's call, we will be making forward-looking statements, including, without limitation, statements with respect to our future stock performance, plans, opportunities and expectations with respect to financing activities and the execution of our business plan. 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 our website and are available from the Company without charge. Our discussion on the call today will include a review of non-GAAP measures as a supplement to financial results based on GAAP because we believe these non-GAAP measures serve as a proxy for the Company's sources or uses of cash during the periods presented. A reconciliation of non-GAAP measures to most directly comparable GAAP measures is included in our earnings release for the three and year ended December 31, 2023 which is available on our website. Adjusted EBITDA is defined as net income or loss…

Thanks, Todd. We released the updated Aemetis five-year plan about two weeks ago, and we encourage investors to closely review the extensive information provided in the presentation, which is available on the homepage of the Aemetis website. Before discussing the many milestones that we achieved in 2023, let's talk about financing. Since the understanding of how Aemetis plans to continue to grow rapidly in the current market environment is a key part of our five-year plan. The first important point regarding the Aemetis funding plan is that the financing of our projects is being completed on a project finance basis for each subsidiary. So, the debt position of the Aemetis parent company does not impair our funding of new projects. I make this point to clarify any suggestion that our well-established financing relationship with Third Eye Capital is somehow constraining our project financing or the growth of our company. In fact, the opposite is true. Third Eye Capital has been integral to our success in providing project development funding and then obtaining long-term project financing from our other lenders, enabling Aemetis to receive $50 million of 20-year financing in just the past year. We expect more than $100 million of 20-year financing for Aemetis Biogas capital expenditures to close in the current year in addition to other significant project financings that are in process now. Third Eye Capital is a primary beneficiary of the long-term lower interest rate project financings provided by other lenders as the excess cash flow from these new projects are expected to continue to reduce the amounts outstanding to Third Eye Capital. Rather than being a hindrance to the growth of Aemetis, for the past 15 years, Third Eye Capital has been funding the growth of our initiatives and continues to support Aemetis in attracting 20-year…

Thanks, Eric. In the Aemetis Biogas business, this summer, we closed the second $25 million USDA Guaranteed loan to build dairy biogas digesters for an additional eight dairies. This closing brought our total to $50 million of committed USDA REAP based project financing to build digesters receiving waste from 15 dairies that are designed to produce a combined 400,000 MMBtus of renewable natural gas each year. This month, we will have nine fully operating dairy digesters supplied with waste from 10 dairies. We plan to accelerate the rate of biogas digester development in 2024 as we close USDA guaranteed financing for the next projects for $75 million of new financing as well as other financing to accelerate project construction. We are very pleased to have passed the operational startup phase and are now positive cash flow from operations at Aemetis Biogas. Aemetis and other RNG producers have experienced significant delays in the CARB pathway approval process for LCFS credits, with some at 24 months and counting. We recently met with top staff at CARB, and they expect to address this issue in the rulemaking process in the upcoming reauthorization of the LCFS program in this year. We generated revenue from the sale of LCFS credits from our Aemetis Biogas operations for the first time in Q1 of 2024. In addition to the sale of renewable natural gas as a fuel and the sale of Federal D3 RINs, this new LCFS credit revenue stream will only increase as we build new digesters and as CARB approves the lower carbon intensity values that we have already demonstrated in actual operations. In October 2023, we repaid $30 million of the original Aemetis Biogas startup funding, and the balance of that financing was recently extended at an effective interest rate of less than 8.5%.…

Thanks, Andy. In the Amedis sustainable aviation fuel and renewable diesel business, earlier this week, we announced that we received the authority to construct air permits for the construction of the 90 million gallon per year SAF and RD plant at the Riverbank site. Last September, the use permit and California Environmental Quality Act approval allowing the use of this 24-acre site for a sustainable aviation fuel and renewable diesel plant was were approved. We have signed $3.8 billion of final binding supply agreements with 10 airlines and a $3.2 billion renewable diesel supply contract with the National Travel Stop Company. These agreements are final contracts, not Letters of Intent or Memorandum of Understanding. So, we expect to update this agreements to reflect project timing as well as project timing as well as pricing terms to reflect current market conditions. Currently, the hydrotreated esters and fatty acids known as HEFA process for SAF production is significantly less expensive than the ethanol-to-jet process to produce SAF. Aemetis is deploying the Topsoe HydroFlex HEFA process that enables the production of SAF and renewable diesel at any output ratio, thereby allowing the maximization of pricing by the production sale of the higher value fuel. When operating at a fifty-fifty production allocation of SAF and RD, the plant is designed to produce 90 million gallons per year, comprised of 45 million gallons of SAF and 45 million gallons of renewable diesel. At a 100% allocation of production to SAF and no RD production, the plant is designed to produce 78 million gallons per year of SAF. The need for sustainable aviation fuel continues to increase, but the overall market supply of SAF continues to be delayed, resulting in significant supply shortages that are expected to continue for the foreseeable future as the 90 billion…

Thank you, Mr. Eric McAfee [Operator Instructions]. Our first question comes from Manav Gupta with UBS. You may proceed.

Good morning, Eric and Andy. So, my first question relates to the CARB timing here. There was a meeting somewhere in March. Looks like it's moved. There are two schools of thought again, they're having second considerations. The other school of thought is they looked at the program and thought it was not aggressive enough to reduce the rate at which the carbon credit bank was building and they're now looking at ways to bring it down at a faster pace. You talk to those guys, you're close to those guys. What's the thought process over there?

Hey Manav, it's Andy. So, thanks for your question. I think it's a combination of those things that you just mentioned. I think there were frankly some incorrect estimates in terms of what the credit market looked like as this year would evolve and where it would end up at the end of this year and I think it became readily apparent to CARB, especially when you saw the sharp decline in the LCFS price in the earlier part of this year that those estimates were not on target. And so, I think that was one contributing factor. I think they received a lot of feedback, a lot of public comment, which I think has also kind of slowed down their process a little bit. But I would suggest that a combination of the LCFS credit situation, which is a huge overhang in the market and sort of an unanticipated, but not by us, but I think by CARB in some respects. It was pretty apparent as we were exiting last year that this was going to be a problem. So, I think they're addressing that and I do expect certainly it's our hope that they will come back in April with at the next meeting with some more aggressive goals when it comes to the overall program. So, I think it is combination of the things but there clearly was a realization, Manav, that the LCFS credit overhang in the market was causing a serious deterioration the ability for companies like us to make return on investment and further invest in programs, but also to encourage new investment in the entire renewable sector. I mean, this was clearly something that they were getting a lot of feedback on. So, I would expect -- I'm hoping certainly that they will come back in April with some more aggressive numbers as a result of this delay.

Perfect. A quick follow-up is you indicated you have nine diaries on. So first, how many do you expect to be online by year end? And then when do you -- I mean, there's a delay period here, so you do have nine dairies, but how long will it take do you think to start seeing the revenues from these nine dairies to flow in, whether it's through the RFS credits or through the LCFS credits? And I'll turn it over after that. Thank you so much.

So, I think by the end of this year, we're expecting to have 18 dairies online. And the second part of your question, would you repeat that? I'm sorry.

Like by when do you expect to start monetizing these credits from these nine dairies? Because there is a lag period before the dairy actually comes on and then you're storing the gas. So, when do you expect to start monetizing these credits?

We actually started monetizing these credits this year, of course, at the lower the temporary pathway, the negative 150, but we actually started that process in in Q1, Manav. So, as we go through the application process, there's specific milestones you have to you get to from a timing perspective. But we've already begun that process and we expected that process to continue on. And then hopefully, our applications have been in for it will be almost a year in early May, I think is when we submitted. So, we are encouraging CARB to accelerate that process because obviously, once we get the full pathway, then the number of credits and goes up significantly. But we actually have already started that process.

Our next question is coming from John Annis with Stifel. Your line is live.

Hey, good afternoon and thanks for taking my questions. For my first one, Eric, if I heard you right in your prepared remarks, you mentioned the potential for SAF production in India. Can you frame how you see SAF economics in India stacking up against the U.S. markets? Are there any regulatory incentives in India that would support building out SAF capacity there?

Our initial opportunity is simply to tap into the less expensive waste feedstock in India and then export these SAF to the San Francisco airport where we have $3.8 billion of existing contracts with 10 airlines. And so, it's a direct feedstock arbitrage from a country that has a tremendous amount of underutilized feedstock. And we already have a 50 million gallon per year tallow refinery in place, direct relationships, we used to export biodiesel to Europe using tallow as a feedstock. So, we are well positioned to be a leading player in just doing that business model. The cost-plus structure with oil marketing companies is an opportunity for SAF adoption in India. So that would be what I would call a secondary market opportunity would be to arbitrage the California price against the India price and the cost-plus structure that they are using for biofuels in India. And certainly, the third element is the feedstock itself that we make in India positions us just amazingly well due to the demand for waste feedstocks. And as you listen to California Air Resource Support and others, there is an increasing emphasis on waste feedstocks and the values of those feedstocks will, I believe, continue to increase.

Makes sense. And for my follow-up, regarding the RNG fueling station that's under construction at Keyes ethanol plant, can you provide some color on the potential margin uplift associated with selling your own RNG versus using a third party? And then secondly, just in terms of volume, what percentage of your RNG production could be sold through your owned fueling station there?

There are two elements of increased margin. First is that the molecule itself currently is sold into the pipeline as brown gas. So, we get approximately $4 per MMBtu for doing that. However, we're selling the energy equivalent of 7.2 gallons of diesel, so 7.2 gallons times in MMBtu is somewhere in the $35 of value. So, if we were to sell it at the equivalent price of diesel instead of selling at $5 per MMBtu, we'd be selling at $35. As a part of incentivizing customers and attracting new adoption of RNG into truck fleets, we of course will be selling at a discount. So, we would expect an uplift somewhere from $5 to around the $15 or $20 range as we sell at essentially a 50% off price compared to running petroleum diesel. The second benefit is that current discounts are in the 15% to 20% range for RNG sold through other third-party fueling stations. And so, we would not incur any of that and that's 15% to 20% of revenues. The low carbon fuel standard revenues and the Federal D3 RIN revenues are both being hampered by the need to sell through other fueling stations. In answer to your last question, our goal would be that 100% of our product would go through our own fueling stations. We're in the middle of probably one of the most active trucking environments in the world. Virtually all agricultural products at some point in time touch a truck. There aren't a lot of railroad depots next to almond orchards or other crops in Central Valley, California. So trucking is very active and literally a quarter mile from our plant are probably tens of thousands of trucks that drive by every week. So, the North American Adoption Center of Innovation for both PepsiCo as well as Frito-Lay are within 15 minutes of our facility. It's absolutely a hotbed for innovation in trucking. So, we have a goal of setting up multiple fueling stations and arrangements to use our RNG not only with third parties, but moving our own products, animal feed, biofuels, carbon sequestration, CO2 for us as well as for people that seek to get the environmental benefits of low carbon fuels.

Our next question is coming from Jordan Levy with Truist. Your line is live.

Good afternoon, all. Maybe just to start, now that you've passed that important milestone with the authority to construct permits. Just curious, I know it's very recent since that announcement was made, but if you could just help us landmark sort of the next steps in terms of financing at Riverbank and the options you're pursuing there?

We are well into a process of project financing. Of course, that has been delayed waiting for the three key permits, all three of which we now or sets of permits essentially, all three of which we have now. So, we have been working on a preferred equity, what's called as mezzanine financing structure as well as senior secured debt. We in the Riverbank project have already signed a USDA Biorefinery Assistance Program, it's called Program #9003 for senior debt supportive 20-year financing. But we have multiple opportunities in senior secured debt and we've got a very active customer base among airlines, several of whom have already actually many of whom have already funded into funds that are dedicated to the growth of SAF production and airlines as well as manufacturers of the wide body jets have all joined in together to provide, let's call it mezzanine or even equity financing to support SAF. And we have active discussions with the largest of those investors. So now that we have a permit, we can actually have constructive closure on those discussions. Up to today, we've had uncertainty around when we'd actually get the permitting. And so now that's in place, I would expect this year is going to show a lot of action in closing project financing.

Appreciate that. That's super helpful. And then maybe just jumping over to the India Biodiesel side. You made a mention of the potential for an IPO process on the Indian Stock Exchange there. Maybe what are some of the -- what's the process in getting that through the wire? And then how are you thinking about that progressing through the year?

As with any IPO process, we see it as an evolving process. We've already gotten pretty well acquainted with many of the investment bankers. Certainly, we have some of the world's leading lawyers for IPOs in India. We've set that kind of infrastructure in place, but we're also expanding the senior management of our India subsidiary and are looking forward to just some very, very talented people joining our business there. And certainly, we have seen consistent success of IPOs in the India market. If that continues, I think we're very well positioned for completing something this year, but we are subject to market conditions. We are doing everything we're supposed to do to go through the process. And to a certain extent, I would say it's a faster process in the U.S. There's just a different way that you interact with regulators in the India market. But I think that we'll be learning over the next quarter about valuations and other terms, and we've already been approached by very large investors about a pre-IPO investment. So, I want to say that we are open to that discussion as it strengthens the valuation of our company. So, it's a very active opportunity in India and we're pursuing it.

Our next question is coming from Amit Dayal - H. C. Wainwright. Your line is live.

Thank you. Good afternoon, everyone. Eric, just with respect to timing, it looks like at least from your recent updated business plan, roughly $100 million plus in CapEx is going towards the SAF and RD facility. So, when will sort of this start getting deployed? Do you have sort of a timeline? Is it second half, I'm assuming? But is there a catalyst that sort of triggers all of this and when would that materialize?

The $100 million we referred to is related to our biogas operations. We have $50 million which we closed last year. We expect to be getting $75 million --well actually $100 million of financing probably closing $75 million with the last $25 million dribbling into next year. So that's actually it's actually going to the biogas business. Separately, the SAF project financing is much larger than that. It's in the $0.5 billion range. So, we have also a little bit of carbon sequestration financing going on, some mechanical vapor recompression of the ethanol plant going on, India expansion going on. And so, looking at each one of our subsidiaries as we described, India is self-funding its expansion from operating cash flow. The USDA is helping us with some of the other smaller financings with 20-year amortized loans. And then we basically have one large financing this year that's really not been achieved before and that's financing this one SAF plant. But I tell you, the airlines and the aircraft manufacturers don't have a lot of new permitted facilities in North America and certainly ones that are not massive $2 billion projects. So, we're getting a lot of support and looking forward to cooperating with these customers, so we can get this production facility operating.

Understood. Thank you for that, Eric. And then with respect to the India Biodiesel Facility, I know you're at 60 million gallons capacity now available. The business plan shows roughly 50% to 60% of that being utilized. Are you just being conservative with that outlook? Or is that just the visibility you have right now in terms of working with these oil marketing companies?

You are correct that we have continued to expand capacity. So, we're ahead of the oil marketing companies. Since they are government owned, they tend to move a little slower than everybody else. But we have seen them now get a pricing model that has reduced the constraints on expanding production. So, we saw that coming. And so, over the last two years, we have expanded capacity to 60 million gallons. We're continuing to invest to expand capacity. And I think we'll have some upside surprises in terms of what our revenue will be out of India because capacity won't be as much of a constraint. We'll be literally able to contract 60 million gallons as we are building the plant capacity to 80, and then eventually 100. And so, our strategy is to be ahead of the market and then let the market catch up with us. And we expect that to later on this year when we get our next 12-month allocation with these three oil marketing companies, it could be substantially more than the $150 million which we committed to last year.

Our next question is coming from Dave Storms with Stonegate Capital Market. Your line is live.

My first question is just around the pacing of the dairy digesters. I know you mentioned you plan to be at 2018 by year end, but how should we think about how that will be spaced out through the year?

We'll be operating digesters for 18 dairies and we're increasingly going to be talking by the way about Wet Cow Equivalents because you can multiply that times a certain number of MMBtus per year and get the revenue in one step. So, over the course of this year during our earnings call and other messaging, we'll be working toward Wet Cow Equivalents, which make everybody's life a lot easier. We have two dairies coming online this month and that will be followed with in about six months in the third quarter with another round of dairies coming online. So, the third and fourth quarter is when you're going to see some of the ramp up. The USDA financing process has temporarily made it somewhat chunky the way that we roll these processes out. We get them all permitted, we get environmental approval and all these other things all done and then we kind of wait. We are putting some things in place that will allow us to not wait as much. And so, over the course of second quarter, I think you'll see some additional liquidity provided that will enable us to just smooth out that process and accelerated. So especially as we exit 2024, I think we're going to have an upside surprise on the pace of development in the biogas business.

Understood. That's very helpful. And then just as a follow-up on that, as you're bringing on this next cohort of areas beyond 2018, how do you prioritize construction? Is it the Cow Equivalents that the dairy would have? Is it contingent on permits? Is it distance from either existing or future pipelines? Just how do you think about that?

Good question. Thank you. So, I think obviously we want to maximize the distance -- the proximity to the pipeline because obviously we're making a pretty significant investment there. Some of this has to do with, as Eric mentioned, the USDA funding and the various vehicles that we're using to fund them in terms of how the timing works out because you sort of lump these into five or six dairies into a specific, we call it AB1, AB2, AB3 and it's sort of -- so that creates some of the timing and it doesn't always necessarily make sense if you look at a map, unfortunately. If they were crisp, we would do it the most efficient way we possibly can. The good news is these dairies are all generally located in a very close proximity to one another. So, it sort of doesn't really matter. Obviously, the larger the Wet Cow Equivalent count, the faster we can get the bigger dairies on. That's a good thing for all of us. But to some extent, it's a little bit beyond our control with how the USDA funding rolls out. And the other thing to keep in mind, and I'm glad Eric mentioned it in terms of the Wet Cow Equivalent, is really how we're going to start to refer to this business because in the past, dairy counts was sort of a metric we used of X amount of dairies. But what we're finding is on many of these projects, it's more economical for us to take three or four dairies and create one digester that these dairies all feed. We call them mega digesters or cluster digesters; however, you want to refer to it. So, the number of dairies that you'll see reported can kind of get a little clunky and confusing. So, we think on a Wet Cow Equivalent basis, you can measure MMBtus of gas and it's pretty much more straightforward way to do it. But back to your question, I think we obviously, if we can group areas together as we're doing construction from a labor perspective, that makes tons of sense. And so, we're trying to do that as much as we can and then obviously proximity to the pipeline, but as I said the USDA funding mechanism, the REAP loans don’t necessarily all develop in exact sequence for which dairies are assigned to each loan and that constrains our ability a little bit in terms of how we plan.

And I should note that we have 43 dairies signed either participation agreements or lease agreements and expect to be above 50. We don't really put press releases out every week or month when we sign an additional dairy or two. So, we'll probably press release when we cross 50. But in general, we already feed animals at roughly 80 dairies. So, we'll just continue to exercise our relationship with dairies. Our five-year plan is 75 dairies constructed and that's less than the total aggregate number of dairies we supply with animal feed already today. So, our expectation is that we'll continue to sign dairies far ahead of our construction and our opportunity this year is to provide additional liquidity to the process to prepurchase equipment, etc., and just accelerate the dairy development phase. Specifically, because we have the interconnect and the pipeline already in place, we're focusing really just on building dairy digesters and seeking to increase that pace.

Our final question today will be coming from Ed Woo from Ascendiant Capital. Your line is live.

Yes, congratulations on all your progress. Talking going back to the India potential IPO, have you thought about listing in the U.S.? And also, what are your plans with the capital infusion when you do India IPO, especially you said that India was cash flow positive already and doesn't necessarily need funding going forward?

If the U.S. market were to be extremely excited about India, today, we'd absolutely take that in consideration. We will discover that over the next few months. India stock market is very, very hot and there seems to be a strong appetite to invest in companies in that country. And so even international funds are coming in India to do that. Use of funds would include sustainable aviation fuel because it is 90-billion-gallon market. There are not going to be hydrogen, electric or nuclear-powered airplanes flying in passenger or cargo jets across the oceans anytime soon. And so, the major engine manufacturers and airframe manufacturers have all committed themselves to sustainable aviation fuel as a major initiative. What's lacking is any of the fuel. And so being one of the few companies that's actually executed well in this space, we see really tremendous growth opportunities. In our India plant having access to cheap waste, low carbon, low-cost feedstock in a country of more than 1.3 billion people is just a very unique positioning we have. So, we'll leave it open to the markets to tell us where they want us to go. But I got to tell you, even the European market is very interested in this business model. So, we think the India Stock Market probably were going to end up, but we're certainly open to the feedback we get from investors and investment bankers.

Thank you. As we have no further questions at this time, I would like to turn the floor back over to management for closing remarks.

Thank you to Aemetis shareholders, analysts and others for joining us today. Please review the Aemetis five-year plan that is posted on the homepage of the Aemetis website. 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. Ali?

This concludes today’s teleconference. [Operator Closing Remarks].