Welcome to the Aemetis fourth quarter and year-end 2024 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.

Thank you, Tom. Welcome to the Aemetis fourth quarter and year-end 2024 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 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 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 or expense, intangible and other amortization expense, accretion expense, depreciation expense, loss on ASH disposal, and share-based compensation…

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 at each of our 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. 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 Resources Board on November 8, 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…

Thanks, Eric. 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 2025, increasing production capacity to one million 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 million rural energy for America loan. An additional $50 million of USDA guaranteed funding is in process with expected closings this year for a total of $75 million 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 2025. 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 the 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 Keys plant is the installation of a mechanical vapor recompression system or MVR. We have completed detailed engineering and have begun equipment procurement and fabrication of the site. Over the past…

Thanks, Andy. Appreciate that. In summary, all five of 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 45Q and 45Z tax credits will drive new investment and job creation as we continue to build new production from dairy waste ethanol from agricultural products, SAF and RD, 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, it is now expected to benefit from renewed commitment to biodiesel. 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. Let's take some questions from our call participants.

Thank you, Mr. McAfee. We will now be conducting a question and answer session. If you would like to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speakerphone today that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one on your telephone keypad at this time if you wish to join the queue to ask a question. Please hold a moment while we poll for questions. And the first question today is coming from Jordan Levy from Truist Securities. Jordan, your line is live. Please go ahead.

Thanks for all the details. Eric, maybe if you could just talk to your confidence levels around specifically the refinancing going forward given some of the pauses and reductions in government spending under this new administration.

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 REAP program, the business and industry program, and the 9003 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 million repo.

Got it. Thanks for that. And then just as a follow-up over to Riverbank. Yeah. I recognize 45Z clarification for SAF is pretty critical to getting financing on that plan 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?

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 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 million of what we show on 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 some of these assets. The 45Z, plus, as Andy mentioned, California's LCFS including jet fuel, would be two significant drivers. The inclusion of jet fuel in the LCFS would cause an increase in obligated party amounts. And so there was a failure actually, a 2% goal put in the LCFS amendment last year. It came out late in the process and they've discussed, you know, 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 45Z production tax credit to be adopted and clarified and the calculation come out of 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, 2022, and 2023, as we go through this transition.

Thank you, Eric.

Sure. Thank you.

Thank you. Your next question is from Sameer Joshi with H.C. Wainwright. Please proceed with your question.

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 their concerns? And it seems like there's at least going to be a 120-day delay because of this. Just wanted to see what your view is.

Oh, the OAL process. Office of Administrative Legal Log Administrator. 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 to include another fifteen to thirty-day comment period, it is not something that's gonna 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 I don't know what to say. 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 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.

Understood. Thanks for that. And on the India biodiesel, I know there were some air quality permits that were received late February, which you have allowed me 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 award for you? Like, are you operating with or waiting?

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 in the public domain today. The new tender actually was papered today. So the time period for the allocation is very short. It's March 20th is the end of the tendering process, and they're expecting shipments in April of 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 plant in order to get initial shipment started. On the third point about the local pollution control district, this happened to us in the past. This cycle is very similar to the previous cycle, and we engaged 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 a notice of shutdown. So it was one of those ironic government issues that we got resolved, and because of the OMC delivery schedule, it had virtually no impact on our production.

Understood. Thanks for that. And just one more. I know you did 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 an early 2026 event?

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'll be ready to go. We'll be then looking at the market conditions. If we see strong support for biodiesel blending even in an 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.

Understood. Thanks, Eric, for taking my questions.

Thank you.

Thank you. Your next question is from Derrick Whitfield from Texas Capital. Please proceed with your question.

Good afternoon, and thanks for taking my questions. Eric.

Hey. No.

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?

We are on course with a $75 million capital budget from USDA Redwood Initiative of America program loans. We also have a variety of grants. I think our total grants are in the $65 million range. And, of course, we have ongoing investment tax credits we've already netted about $17 million cash proceeds. In January, February this year, we expect additional cash proceeds from that. And so our capital spending on Aemetis Biogas is going to be accelerating in 2025. And we have some vendor support that's 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 and then pay them off through USDA and the other funds that come in including revenues. So we are looking to continue to accelerate biogas. We have fifty signed dairies. We have sixteen of them on operating or finishing steps of operations. And so we have thirty-four 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 45Z probably taking most of this year to get final treasury guidance out. We actually are running the numbers based on 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.

Great. And then maybe shifting over to ethanol, as you think about the progression of E15 approvals across the remaining forty-one states this year, what's your view on what this will do for ethanol margins for Aemetis and the industry?

I think it's gonna be a slow megatrend. And when people look back on it, it'll seem that as if it really happened quickly. But looking forward from where we're sitting, it's gonna look like a melting ice cream now, because it's gonna take most of this year for the convenience stores and others to finally realize yep, 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 that's necessary for us to recapture probably fifty cents per gallon and still have a very significant margin available. Here in California, we sell our product for about a dollar eighty net of discounts and marketing fees and like. And at the pump, certainly, it's more than four dollars. So, fundamentally, our molecule goes to the blending rack and then gets trucked to a gas station and two dollars a gallon times sixty-five million gallons is a hundred and thirty million dollars a year of margin. To the oil company for trucking our product around and then dispensing it. And I think that there's definitely fifty cents a gallon of that leaving them with over a dollar. To profit on the thing. So if we get into strong adoption of E15 by probably 2027, I would expect we'd be above fifty cents a gallon, and it would drive new investment in new capacity. As we've cited, entire capacity in the US is eighteen billion gallons, two billion gallons being exported, and we're using about fourteen billion gallons, a little more than that, domestically. So we have a billion and a half 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 twenty billion gallons of demand with only even an ideal scenario, everybody running eighteen billion gallons of capacity. So you're going to see the new investment start to kick in driven by higher margins. Same cycle we saw in 2004, 2005 as the renewable fuel standard was adopted should happen in 2026, 2027, and 2028 as people realized we're short of ethanol in the United States.

Eric, one last, if I could, just to put 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?

I personally think we're probably two to three months away and 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 gonna happen. But I think with the political tea leaves here, it's gonna be sooner rather than later.

Thanks, Eric.

Thank you.

Thank you. Your next question is coming from Matthew Blair with TPH. Please proceed with your question.

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? 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.

Q4 was oversupply, and high corn prices, corn jumped the dollar, I think, in Q4. And Q1, for us, is a 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 the first quarter, but they've had some downward moves as well. So I think our performance in the first quarter will probably prove to be a little better than the 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 a market. 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, you know, EIA numbers yesterday were the first time we've seen this year that were relatively positive. And, you know, 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 you know, 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.

Sounds good. Then could you share any expectations on the D3 RVO going forward? You know, 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, you know, two or three-year RVO this spring and how much would the blending obligations go up by?

Two items on that. One was historical back in 2024. The EPA a couple of days ago said that they had extended the compliance period because they were intending to adopt the new lower number of D3 RINs mandate for 2024. So that's an indirect signal to the market that the proposal the EPA made to the White House of the previous administration is actually being followed 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 gonna be short because this is after the year was done, all the investments 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 RVO is. I'm just being frank with you. Might as well just skip the RVO. Let the oil companies buy whatever they want, and then end the year just set the RVO 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 RVO, 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 RVO with 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 $3.50 prior to this proposal by the EPA to remove excess requirements for D3 RINs.…

Great. Thanks for your comments.

Sure. Thank you, Matthew.

Thank you. Your next question is coming from Dave Storms from Stonegate. Please proceed with your question.

Good morning, and thank you for taking my questions. 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 MMBTUs, or is there another way we should think about this?

It's approximately 350,000 per year. It's that 25,000 average per dairy from a modeling perspective. We do have larger and we have smaller dairies. We have some digesters that actually have multiple dairies feeding them. But from the perspective of modeling 25,000 MMBtu per dairy, is probably a decent number to use currently.

Understood. That's very helpful. Thank you. And then just wanted to ask about the market for the sale of investment tax credits. How's that changed over the last year? It looks like, you know, roughly a quarter lag and a ten percent 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?

I think the market has settled on a bid-ask spread that as you've seen in now our multiple transactions is closed for a total of about $70 million 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 a 15% discount.

Understood. Thank you for taking my questions. Good luck in Q1.

Yeah. Thank you, Dave.

Thank you. Your next question is from Ed Woo from Ascendiant Capital. Please proceed with your question.

Yeah. Thank you for taking my question. You know, 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 US?

The India disciplined use of funds component that is not the way it works in the United States, I so we are being let's call diligent about disclosing our use of funds until we get through the in the IPO process. But you will see in other IPOs in India, funds that are repaying debt for from offshore investors or even private equity firms that are getting funds from their 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 subsidiary. So it's gonna be a while before we'll come up with a number that's definitive.

Great. And previously, you know, 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?

It is still the case and we do have a lot of investment in the inventory and operations and the like. So beginning shipments to OMCs will free up liquidity to India, but it is as in a 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.

Great. Well, thank you, and I wish you guys good luck.

Thank you, Ed. Appreciate it.

There are no further questions at this time. I would like to turn the floor back to management for closing comments.

Thank you to Aemetis stockholders, analysts, and others for joining us today. 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?

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.