Aemetis, Inc. (AMTX) Q3 2026 Earnings Report, Transcript and Summary

Hello, and welcome to the Aemetis Third Quarter 26 Earnings Conference Call. Joining us on today's call are Eric A. McAfee, the chairman and chief executive officer, Todd A. Waltz, chief financial officer and Andy Foster, president of Aemetis Advanced Fuels.

I will now turn the call over to Todd A. Waltz. Thank you, and welcome, everyone. Before we begin, I would like to remind you that during the call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 2000. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Please refer to our earnings release and SEC filings for a discussion of these risks. We will also refer to adjusted EBITDA, a non-GAAP measure, A reconciliation to the most recently comparable GAAP measure is included in our earnings release. Before reviewing in detail, I want to highlight that the company posted net income of $5.2 million or $0.07 per basic share in the third quarter and adjusted EBITDA of $24.8 million For the third quarter of 26, revenues grew 49% to $88.2 million compared with $59.2 million in the third quarter of 25. With growth in both the California ethanol and dairy renewable natural gas operating segments, from both operations and 45Z clean fuel production tax credits. Section 45Z production tax credit revenue was 24.7 million in the quarter, comprised of $20.1 million from dairy renewable net-- Net-- dairy renewable natural gas and $4.6 million from California ethanol. 45Z revenue included an $11 million cumulative true up for the first and second quarter of 26 from the regulatory updates to the 45Z GREET model. Biodiesel sales in the third quarter were $7.3 million rebounding from $2.5 million in the second quarter as delivery to 3 India oil marketing companies resumed under a $17 million allocation to our India subsidiary. Operating income was $20.9 million in the third quarter, an improvement of $29.4 million compared to the third quarter of 2025 which had an operating loss of $8.5 million Net income was $5.2 million, equal to $0.07 per basic share. An improvement of $29 million compared to a $23.7 million loss in the third quarter of 25. Adjusted EBITDA was $24.8 million in the third quarter, an increase of $29.8 million compared to the negative $5 million in the third quarter of 25. For the first 9 months of 26, adjusted EBITDA was $33.2 million compared with negative $21.5 million during the same period of 2025. Cash at quarter end was $3.4 million In September, we received $22.4 million from the sale of section 45C production tax credits. In August, Aemetis Biogas amended its series a preferred unit agreement to extend the redemption date to December 31, 2026 and to reduce the interest rate on the credit agreement that would apply if the units are not redeemed to the greater prime plus 5% or 12%. Capital investments supporting our energy efficiency projects and investments in biogas production were $20.2 million in the third quarter, and $35.3 million for the first 9 months of 2026. With that overview, I will turn the call over to Eric A. McAfee.

Thanks, Todd. Let's highlight 3 key takeaways from the third quarter. First, Q3 continues the financial inflection points we noted during the Q2 earnings call with the posting of net income of $5.2 million and adjusted EBITDA of $24.8 million during the third quarter. We continue to grow with consolidated revenue up 49% year-over-year, and improvement in operating income of $29.4 million and increased adjusted EBITDA by $29.8 million compared to the third quarter of 25. Second, we now generate higher revenues due to the California Air Resources Board approval about a year ago, of 7 new low carbon fuel standard pathways for our renewable natural gas business. At an average carbon intensity score of negative 380 compared with the negative 150 default carbon intensity score for these digesters, which was shown in Q2 25 revenue. The approval of 7 diget-- Biogas digesters has been providing additional revenue with a higher LCFS value each quarter since Q3 25. And additional biogas digester pathways are nearing approval These LCFS pathway approvals substantially expand the LCFS credit generation per MMBtu of RNG produced. And will continue to drive meaningful revenue increases as we scale production. And third, our capital projects are advancing with $20.2 million of investment during the quarter. Review these projects and how we continue to create value as federal and state laws are being implemented. In our dairy renewable natural gas business, every MMBtu of dairy RNG generates 4 revenue streams, natural gas molecule, a California low carbon fuel standard credit that is sold to oil companies, a federal d 3 RIN that is also sold to oil companies, and a section 45Z production tax credit. The LCFS credit and the 45Z tax credit are calculated using the carbon intensity of our biofuel. So credits are generated in proportion to how far below the standard a biofuel is scored. An LCFS pathway at negative 380 generates substantially more credit per MMBtu than the negative 150 default score. We have 7 approved California LCFS pathways, averaging negative 380 carbon intensity, with 6 more pathways nearing approval by CARB. For the 45Z production tax credit, the Department of Energy issued its updated 45Z CF GREET model on September 8th of this year, Which decreased the carbon intensity scores used to calculate 45Z credits for dairy RNG credits we sold in July were valued at $15.20 per MMBtu. The credits we sold in September generated from ethanol and RNG production during 2026. Represent a tax credit value of approximately $62 per MMBtu for dairy RNG, and $0.33 per gallon of ethanol. For 2026, before sales debt discounts and transaction costs. We received $22.4 million from the September 45Z tax credit sale and our third quarter results included an approximately $11 million cumulative true up for RNG dispensed in the first half of the year. As dairy renewable natural gas volume grows, all 4 revenue streams grow. But the approval of LCFS pathways in California is expected to create significant increases in revenues from the renewable natural gas production. We operate 14 biogas digesters today, taking waste from 17 dairies and transporting biogas through a 36 mile pipeline to our RNG production facility that is connected to the utility gas pipeline. We have more than 50 dairies that have signed participation agreements. 2 new methane capture digesters were completed last month. And we have received 13 additional cleanup and compression units that will be located at the next 13 digesters to come online. Regarding our California ethanol business, we have 2 projects that are slated to significantly improve our financial performance. In addition to further improvements in 45Z values, and expected increases in LCFS credit prices. Our mechanical vapor recompression system installation is an energy efficiency project that is expected to add approximately $32 million in annual cash flow from 3 positive impacts on our operations. We will reduce about 80% of the natural gas needed for our operations, and the 45Z credit and the LCFS credit generated by every gallon of ethanol. The MVR project is making excellent progress. Key equipment arrived this summer, and we have completed major steps in construction of the system. Including placement of the 6 3.5 thousand-horsepower turbofans. Foundation concrete has been completed. And electricity transformers are scheduled to arrive in the next month. The MVR project has been awarded approximately $19.7 million in grants and section 48 c tax credits from the California Energy Commission, Pacific Gas and Electric Company, and the IRS. Second, in the past few months, we have installed 2 of the planned 3 corn oil separation units at the ethanol plant. With the third unit slated to be operating by the end of this year. Distilled corn oil is recovered from the ethanol process and sold as a low carbon feedstock into the renewable diesel biodiesel, and sustainable aviation fuel markets. Where demand has strengthened this year with higher federal renewable volume obligations issued by the federal EPA. Combined, the units are expected to approximately double corn oil production compared to our first quarter production rate. And prices have been increased significantly this year. Our India biofuels business shipped biodiesel to oil marketing companies and commercial customers during Q3 2026. Biodiesel sales rebounded to $7.3 million as we delivered biodiesel to the oil market companies under their new tender, also building our base of private commercial customers due to increases in the price of India petroleum diesel this year. And we have applied to the India and EU governments for approval to export biodiesel to Europe. India's stated goal is to raise biodiesel blending from less than 1% today to 5% by 2030, which would create about 1.2 billion gallons of additional biodiesel consumption. We continue to prepare documentation for a potential public offering of a minority stake in Universal Biofuels our subsidiary, subject to market conditions. Of the milestones we outlined last quarter, the 2 new dairy digesters are now operating and the Department of Energy has issued the dairy RNG update to the 45Z CF GREET model. Our outlook on short term milestones and timing is the third corn oil unit is scheduled to be operational in December, doubling corn oil productions over Q1 26. The Aemetis Dairy RNG Fuel Station Is Scheduled To Begin RNG Deliveries To Truck Fleets This Month. MVR Construction Is progressing toward completion. Additional LCFS Pathways Are Moving Through CARB With The Customary Look Back On Approval. And India deliveries across the current allocation period with a focus on exports to Europe after receiving our government approvals. Thank you to our shareholders, analysts, and our partners for your continued support Operator, let's take some questions.

Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing a question, please pick up your handset if you are listening on speakerphone to provide optimum sound quality. And once again, if you have any questions or comments, please press 1 on your phone. Your first question is coming from Amit Dayal from H. C. Wainwright. Your line is live.

Thank you. Good afternoon, everyone. So Eric, congrats on pretty solid results and cash flows this quarter. Just going to the MVR, it looks like all the equipment is in place. You know, the work is underway. The benefits from this should we expect that to come through in 2027 financials or 2028 financials?

For the MVR? Yes. Those are 2027 financials for sure. I mean, we should not say for sure. We should say we fully expect delivery in early 27 as we are completing construction. And the milestones we have stated or in the foundations, placing the units, we have we have extensive construction going on.

Andy, you wanna give some update Yeah. I would say the, the system we are making good progress on construction. As you can imagine with the demand for materials, for data centers in particular, it is creating kind of a crunch on some of the electric components, but I think we are we are pretty well lined up with that. So our estimate right now is that we will we will have the project completed by the end of the first quarter I say that loosely, we are saying kind of the first half, but you know, who knows? Super El Nino and some other things that could play into that. But our. We are making good progress and expect hopefully, by March, we will be completed with construction. Commissioning will take some time. it is a new system. And so I would say, you know, in terms of financial impact, you are probably gonna see it more in the second half of next year than you will in the first half of next year because we will be completing construction sort of commissioning the system, getting it up and running, and then and then we will start to see that, that impact The natural gas impact will happen pretty quickly, though, because once we switch over to the MVR system, we will not be drawing down the 37 hundred MMBtus that we are currently using daily. So, we will start to see a financial impact almost immediately on the gas side. But as far as, you know, getting things lined out, it. It will probably take a month or 2 to get that system lined out. And then be really, you know, kinda cranking it by the second half of the year.

Understood. And just as a follow-up to that, guys, you know, just for, like, how. You know, those are audit process, etcetera. There was a little bit of lag when, you know, the credits are being generated versus monetized. Should we expect something similar for MDR to play out as well or would that be a little bit different?

Our revenue recognition for 45Z revenue, is now quarterly. So we would potentially have receivables at the end of the month that are nonmonetized 45Zs. Which will have a tendency to line up the quarter in which we generate the production, generate 45Z The cash, however, may be deferred into further late. Nate quarters. The initial start up of 45Z in the in the q. First half of 27 is by necessity gonna require us to have a new LCFS pathway update that will cause us to, as Andy said, push much of the cash into the second half of the year. But we are going to try to accrue revenue as it is generated and for things that are not investment tax credits, it should show up in the quarter once they are generated.

Understood. Thank you, Eric. And just last 1, I guess. You know, this India biodiesel to Europe sounds very interesting. You know, how long could this approval process take, and would you be capped at what portion of that capacity can be exported?

The approvals are largely in process. We do expect them to be completed in the fourth quarter of this year. And we have not a cap on export. it is called an export oriented unit. So in theory, we could send our entire 80 million gallons of capacity to foreign shores. We have just practical execution of inbound shipments of feedstock and outbound shipments of biodiesel that will be larger constraints on the on the amount we ship. But, we, we will have an operational gap And then as a part of this, can we maybe expect some announcement around an off taker for this volume? Probably not an off taker. Like, I would. We have done this before. We used to be the largest biodiesel supplier to Europe from India, until Europe changed their rules. Now they have changed their rules again, and so India has again started shipping to Europe. there is roughly half a dozen suppliers that started this business over the last year or so. And so we are, cooperating with existing suppliers. I think this is 1 of the strengths of the business. It will be importing feedstock together, and we will be exporting to the same customers in Europe I do not expect to do it on a long term offtake arrangement. I think we will be. Just be doing it on a supply chain sales to traders out of Singapore and Europe. that is all I have, Eric. Thank you so much, and congrats on the quarter. Thanks, Amit.

Thank you. Your next question is coming from Derrick Whitfield from Texas Cap. Your line is live.

Good morning, Eric and Todd. Thanks for taking my questions. Wanted to start with ethanol. Arguably, the quarter, while strong, still does not reflect the full value of where your ethanol margins could grow. Over time With that said, could you provide just a walk through on where margins currently sit per gallon? And where you expect them to be post MDR, CO 2 reuse, and the benefit of potentially lower CI corn?

EMVR is projected to generate about $32 million on a levelized basis annually from decreased cost of natural gas and increased LCFS and 45Z revenue. That comes in at roughly $0.50 a gallon. Of additional margin, and that is in cash. So that is a significant, sustainable competitive advantage that we will have. I believe we are the first installer of MVRs in this cycle. I think ADM might have had 1 at some point or something, but I think we will be the first 1 in the country. And what is unique about our plant is that we are located on the California electricity grid which has a very diligent commitment to getting to zero carbon intensity. So as the grid decarbonizes in California using more solar, wind, and hydroelectric, that directly will improve our CI score. So tapping into that decarbonized grid is an advantage we have here in California that not all states provide. So the MVR is a uniquely, energy efficient implementation in our particular plant. We also have the impact of e 15. We have. We did not talk about e 15 on this call, but California is the first state in the country to adopt year round e 15 at the state level. As you know, California is the only state that can set its own fuel rules. And so the senate bill 95 recently passed, and it has implementation slated for January 1, 2027. That will be additional capacity requirements about equal to 10 of our plants. So somebody across the country has to either build a new plant or expand their existing plant, to meet this California capacity requirement. And then nationally, of course, the house has already approved, and the senate is pending approval v 15. We do not have any particular projections on when that would happen. But, certainly, the recent political events would support biofuels in rural areas. So we think that e 15 has some strength in it. That is our underlying margin. The last time we actually had support for the international. The national demand for ethanol. We made 40 million of positive cash flow. So in, the actual molecule, this business should be a 50¢ or more per gallon molecule. And then lastly, is the LCFS credit price, even generating the same number credits. Last year, we only got $42 per credit. Now we are at 90 The cap is 275 this year. there is a long way to run, and, the LCFS credits have continued to be not produced at the rate necessary to meet compliance, so there is a deficit. And there is over 10 million credits that disappeared out of the, excess bank over the 12 months. We expect that to continue, and there should be theoretically no excess inventory of credits within the next 24 months. So we are going to benefit from that. Our revenue goes up even the same number of gallons. So we have a number of significant drivers. Last point I wanna make is we have not talked much about corn oil. But corn oil is the most attractive lowest emission rate feedstock for renewable diesel, biodiesel, and sustainable aviation fuel. It only has a 10 emissions rate. Is 18 to 20. UCO is 20 to 25. Soybeans is 30. So the use of distillers corn oil, as renewable diesel were sustainable aviation fuel feedstock should really be a top priority for all those producers. And we are the largest producer to source corn oil in California. And through Andy's team's, implementation of 2 of 3. But by the end of this quarter, we will have 3 operating units separate in corn oil. We will be doubling our corn oil production at a time which the price is roughly doubled. So it is a very promising additional margin for the business. it is, of course, very sustainable. Great. And Eric, maybe just touching on a point that you kinda highlighted there on policy. Biofuels generally tends to be supported by both Democrat and Republican. Republicans. But again, given what we have seen with the change given the democratic sweep, I mean, are you expecting any changes or anything that might have occurred in California that was surprised And anything that you could offer us as color as to how you see policy come together at both the federal and state level would be appreciated? I would say that generally, the rural areas and farmers played an outsized role in this election. And I think, we have Democrats now as governors in Iowa and, senators from Texas that are Democrats. But that are being voted into play. In these rural states and that is always good for corn and soybeans, which is good for ethanol. Really, the only growth market for corn is ethanol. So the initiative we are looking for, I think, will be supported A second factor, and I will make this very brief, is we are gonna have a congress that really cannot get things for the White House, and the White House who really cannot get things through congress, is very, very good for the biofuels business. Stability in policy is just tremendously supportive of our financing efforts, our growth efforts. It is really a wonderful situation we find ourselves where we do not have to worry about Congress coming up with an idea and immediately implementing it. it is it is it is probably the opposite of what investors thinking, but I can tell you, as operators of this business, we are looking forward to the stability and policy which we should see and supported policy when it happen. Then, Eric, 1 last, if I could. Just on the dairy RNG business, As you look out into next year and the pipeline of the farms that you guys have to bring on, what is the what kind of pace would you expect for next year? We have financing in process right now. I think that news is something we will be reporting here over the next couple months. And we have 13 long lead time items that we have received very strong support from a vendor to get built. So our ability to deploy those 13 rapidly is certainly in place. We just need the financial closing to accelerate beyond the current pace we have right now. Terrific. Thanks for your time, Eric.

Thank you, Derek. Thank you. Your next question is coming from David Storms from Stonegate. Your line is live.

Morning, and thank you for taking my questions. Wanted to start maybe with our good morning. With, when I am thinking about RNG production, it looks like the last 2 quarters you were running about 600 thousand MMBtus on an annualized basis. I know in the recent release in October, it was also reiterated that the 600 thousand should be a good run rate With the addition, you know, again, up to the 14, though, how should we be thinking about the out year and term of MMBtu generation?

We have a seasonality, directly correlated to the weather. Our technology is a passive solar dairy biogas digester. So the solar component of that means that during the winter time, there is less solar energy. We do not have quite as much production. So if you look back over a 6 month span, you are looking back over the summer. And when you analyze from that, yes, 600 thousand plus would easily be calculated I can say, though, that we have performed above expectation. Andy, you wanna talk about yields and some other things?

Yeah. So we are. I mean, I think originally on our models, we had ourselves at about 13. MMBtus per white cow equivalent, and we are running closer to 15. At this point. So we, I think, run a very efficient operation And as Eric mentioned, you know, during the summer months, obviously, things crank. You know, ambient temperature digesters do get impacted seasonally. So as we as we head into the cooler months, that number probably goes down a little bit. But we have found that our systems are very efficient and our, you know, production has exceeded our forecast for the last 2 years. So I would anticipate as we continue to add digesters that trend will continue.

Understood. that is great commentary. Thank you. Turning to the 45 z production tax credits. You know, it is mentioned that there is obviously a discount that you, receive in the market with the update to the model, are you starting to see those discounts decrease or just maybe any comments you have on the tax credit market?

Yeah. Our, observation has been that the production tax credit market has not changed very much. We usually model about a 15% discount all-in, including insurance and lawyers and brokers and tax lawyers and more tax lawyers. that is probably more of a discount than we are actually getting, but that is the way we usually model it. That includes a discount to the buyer. Understood.

And then maybe just 1 more if I could. Looking out, you have mentioned earlier in the call, Super El Nino. Just any thoughts on the impact that might have on ethanol?

In the coming 12- to 15-month it sorta depends on where the weather pattern settles in, but all the forecast that we have looked at are showing a warmer, drier Upper Midwest kind of plain states, winter, And that is generally when we think about the impact, it is really in transportation. it is in rail getting the corn to California. If you go back to. And I do not remember what year it was, 2015, somewhere in there, where we had all a series of these polar vortexes where the railroads were severely impacted. That. that is that is really what we are keeping our eye on. As far as California goes, we are expecting you know, a lot of rain is what they are saying. Good news is the plant is in an area that does not have flooding. So we are equipped to operate the plant in all kinds of conditions. So that. that is less of a risk for us. I think it is really more around what happens with rail transportation as this as this system sort of settles in and where it is gonna be impacted. You know, some of the trains do come through the South through Texas. That could be a liability if there is ice storms down there. So you know, at this point, I would I would say from a. We are not you know, we are not really worried, from the perspective of an ongoing operations unless we start seeing major disruption in the rail system in The United States, that could cause us some issues.

And we happen to have 2 things that come to California that impact our business. Number 1 is corn. there is 1.7 million dairy cows in California that have to be fed, including corn. So that tends to be a high priority cargo company in California. In the past, there is been a lot of hand wringing and issues, but some reason, they always seem to get the corn through Yeah. Just the last minute, which is good. The other thing coming to California is ethanol. With California adopting 15% ethanol, another 600 million gallons that is coming from California, And a couple times, the polar vortex has just been this magic moment which California is very short ethanol. And they decide not bring the ethanol cars through. that is nothing to plan on it is just something that happens once in a while and this is. That would be 1 of the factors in our business model is does ethanol flow to California at a slower rate because some know, track out positions at And I would just add in those in those scenarios, the railroads tend to prioritize feed over fuel because there is live animals on the other side of it. So if you go back again when we have had rail disruptions, they typically find a way to prioritize corn because you have. Whether it is chick poultry or cattle that are being fed and rely upon that they tend to get prioritization. But again, you know, the way the current weather pattern, at least what we have been looking at is setting up you know, hopefully, it will not be a big impact from a rail perspective. it is it is as the Midwest does not look to be having a real super cold winter with a lot of precipitation. 1 other item that I am sure everybody's looking at is corn going to be in short supply and therefore price increase? The opposite was what the USDA came out with recently, which I think was a bit of a surprise to the market. And caused price of corn to go down quite a bit. So there will be a little struggling around the idea of is there a lot more current come. Coming out of South America or even Ukraine or elsewhere? Than what people expected Understood. Thanks for all that commentary, and good luck in the next quarter. Thank you. Appreciate it.

Thank you. Your next question is coming from Edward Woo from Ascendiant Capital. Your line is live.

Yes. Congratulations on the quarter. My question is going back to India. You said you guys are preparing still for the IPO, the minority stake. Due to market conditions. What are the market conditions right now for listings on the India stock market?

India stock market has had a tough year They have had a 5 year run with excellent IPOs, and now they are about to start recovering. The IPO of Jio, the largest cell phone company owned by the family owned Reliance, is sort of a rejuvenation of the India market. 1 thing that has been resilient in India is retail investors and the. it is a socialist country, so 50% of every IPO must be sold to retail. And retail has been very resilient in India. So with the we expect to be, what we plan to be, the start of exports to Europe, that would drive revenues as well as profits out of India. Operations, and we are excited how that would be lined up in an IPO transaction. I wish you guys good luck. Thank you. Thank you, Edward.

Thank you. This concludes our Q and A session. I will now hand the conference back to Eric A. McAfee for closing remarks. Please go ahead.

Thank you to Aemetis stockholders, analysts and others for joining us today. We look forward to speaking with you about participating in the growth opportunities at Aemetis. Todd?

You for attending today's Aemetis earnings conference call. A written and audio version of this earnings review will be posted to the Investors section of the Aemetis website.

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