Q2 2024 Aemetis Inc Earnings Call

Speaker Change: Greetings and welcome to the Aemetis second quarter 2024 earnings review conference call.

Unknown Executive: quarter, 2024, Arning's review conference call. At this time, all participants are in a listen-only mode. And a question-and-answer session will follow the form of presentation.

Operator: November 24, 2024 Earnings Review Conference Call At this time, all participants are in a listen-only mode, and 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, Executive Vice President and Chief Financial Officer of Aemetis. Mr. Waltz, you may begin.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: And a question and answer session will follow the formal presentation.

Unknown Executive: As a reminder, this conference is being recorded.

Speaker Change: As a reminder, this conference is being recorded.

Todd Waltz: It is now my pleasure to introduce your host, Mr. Todd Waltz, Executive Vice President and Chief Financial Officer of Aemetis Inc.

Speaker Change: It is now my pleasure to introduce your host, Mr. Todd Waltz, Executive Vice President and Chief Financial Officer of Ametas, Inc.

Todd Waltz: Mr. Waltz, you may begin. Thank you, Oli.

Todd Waltz: Thank you, Ollie. Welcome to the AEMETIS Second Quarter 2024 Earnings Review Conference Call. Joining us for the call today is Eric McAfee, Founder, Chairman, and CEO of Aemetis, and Andy Foster, President of North America. We suggest visiting our website at aemetis.com to review today's earnings release, the earnings press release, the Ametis corporate and investor presentation, filings with the Securities Exchange Commission, recent press releases, and previous earnings conference calls. Before we begin our discussion today, I'd like to read you the following disclaimer statement.

Speaker Change: Mr. Waltz, you may begin.

Todd Waltz: Welcome to the Aemetis Second Quarter, 2024, Arning's Review Conference Call. Joining us for the call today is Eric McAfee, founder, chairman, and CEO of Aemetis, and Andy Foster, president of North America. We suggest visiting our website at aemetis.com to review today's earnings release, earnings, earnings press release, the Aemetis corporate and investor presentation, filings with the Securities and Exchange Commission, recent press releases, and previous earnings conference calls.

Speaker Change: Thank you, Ollie. Welcome to the AMETS second quarter 2024 earnings review conference call. Joining us for the call today is Eric McAfee, founder, chairman and CEO of AMETS, and Andy Foster, president of North America.

Speaker Change: We suggest visiting our website at aemetis.com to review today's earnings release, earnings press release, the Ametis corporate and investor presentation, filings with the Security and Exchange Commission, recent press releases, and previous earnings conference calls.

Todd Waltz: Before we begin our discussion today, I'd like to read the following disclaimer statement. During today's call, we'll be making forward-looking statements, including, without limitations, statements with respect to our future stock performance, plans, opportunities, and expectations with respect to financing activity and the execution of our business plans. These statements must be considered in conjunction with the disclosures and cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements made on this call involve risks and uncertainties, and the future events made differ materially from the statements made.

Speaker Change: Before we begin our discussion today, I'd like to read the following disclaimer statement.

Todd Waltz: 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 should 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.

Speaker Change: During today's call, we'll 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.

Speaker Change: These statements must be considered in conjunction with the disclosures and cautionary warnings that appear in our SEC filings.

Speaker Change: Investors are cautioned that all forward-looking statements made on this call involve risks and uncertainties.

Todd Waltz: For additional information, please refer to the Company's Securities and Exchange Commission filings, which are posted on the SEC's EDGAR system and our own company website. Our discussion in the call 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 our company's sources or uses of cash. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release for the three and six months ended June 30, 2024, which is available on our website.

Todd Waltz: For additional information, please refer to the company's Securities and Exchange Commission filings, which are posted on the SEC's EDGAR system and our own company website. Our discussion in the call will include a review of non-GAAP measures as a supplement to financial based, financial results based on GAAP, because we believe these non-GAAP measures serve as a proxy for our company's sources or uses of cash. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release for the three and six months ended June 30, 2024, which is available on our website.

Speaker Change: and that future events may differ materially from the statements made. For additional information, please refer to the company's Security Exchange Commission filings, which are posted on the SEC's EDGAR system and our own company website.

Speaker Change: Our discussion in the call 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 our company's

Speaker Change: Sources or Uses of Cash. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release for the three and six months ended June 30, 2024, which is available on our website.

Todd Waltz: Adjusted EBITDA is defined as net income or loss plus, to the extent deducted, and capitalizing such and calculating such net income. Interest expense, income tax expense, intangible and other amortization expense, accretion expense, depreciation expense, and share-based compensation expense.

Todd Waltz: Adjusted EBITDA is defined as net income or loss plus the extent deducted in capitalizing such and calculating such net income, interest expense, income tax expense, intangible and other amortization expense, accretion expense, depreciation expense, and share-based compensation expense.

Speaker Change: Adjusted EBITDA is defined as net income or loss plus to the extent deducted in capitalizing such and calculating such net income. Interest expense

Speaker Change: income tax expense, intangible and other amortization expense, accretion expense, depreciation expense, and share-based compensation expense.

Todd Waltz: Let's review financial results for the second quarter of 2024. Revenue during the second quarter of 2024 was $66.6 million compared to $45.1 million for the second quarter of 2023. Our keys plan operated during the entire quarter compared to its extended maintenance cycle during a portion of the second quarter of 2023. Our dairy natural gas segment produced 89,400 MMBTUs from aid operating dairy digesters and reported 1.6 million of revenue, and our ninth digester began producing biogas at the end of the second quarter. Our India biodiesel business recognized $24.8 million of revenue primarily from sales to the India Oil Marketing Company.

Todd Waltz: Let's review financial results for the second quarter of 2024. Revenue during the second quarter of 2024 was $66.6 million, compared to $45.1 million for the second quarter of 2023. Our Keys plan operated during the entire quarter, compared to its extended maintenance cycle during a portion of the second quarter of 2023.

Speaker Change: Let's review financial results for the second quarter of 2024.

Speaker Change: Revenue during the second quarter of 2024 was $66.6 million compared to $45.1 million for the second quarter of 2023. Our keys plan operated during the entire quarter compared to its extended maintenance cycle during a portion of the second quarter of 2023.

Todd Waltz: Our dairy natural gas segment produced 89,400 MMBTUs from eight operating dairy digesters and reported 1.6 million of revenue, and our ninth digester began producing biogas at the end of the second quarter. Our India biodiesel business recognized $24.8 million of revenue, primarily from sales to Indian oil marketing companies. Gross loss for the second quarter of 2024 was $1.8 million, compared to a $2 million profit during the second quarter of 2023. Selling general and administrative expenses were $11.8 million during the second quarter of 2024, from $9.7 million during the same period in 2023, driven primarily by the recognition of a loss on asset disposal of $3.6 million.

Speaker Change: Our dairy natural gas segment produced 89,400 MMBTUs from eight operating dairy digesters and reported 1.6 million of revenue.

Speaker Change: Our ninth digester began producing biogas at the end of the second quarter. Our India biodiesel business recognized $24.8 million of revenue, primarily from sales to the India oil marketing companies.

Todd Waltz: Gross loss for the second quarter of 2024 was $1.8 million compared to a $2 million profit during the second quarter of 2023. Selling, general and administrative expenses were $11.8 million during the second quarter of 2024, from $9.7 million during the same period in 2023, driven primarily by the recognition of a loss on asset disposal of $3.6 million. Operating loss was $13.6 million for the second quarter of 2024 compared to an operating loss of $8.7 million for the same period in 2023. Interest expense, including a creation of Series A preferred units in the Amitis Biogas LLC subsidiary, increased to $11.7 million during the second quarter of 2024 compared to $9.6 million during the second quarter of 2023.

Speaker Change: Gross loss for the second quarter of 2024 was 1.8 million dollars compared to a 2 million dollar profit during the second quarter of 2023.

Speaker Change: Selling general and administrative expenses were $11.8 million during the second quarter of 2024 from $9.7 million during the same period in 2023, driven primarily by the recognition of a loss on asset disposal of $3.6 million.

Todd Waltz: Operating loss was $13.6 million for the second quarter of 2024, compared to an operating loss of $8.7 million for the same period in 2023. Interest expense, including an accretion of Series A preferred units in the Ametis Biogas LLC subsidiary, increased to $11.7 million during the second quarter of 2024, compared to $9.6 million during the second quarter of 2023. Additionally, Ametis Biogas recognized $3.5 million of accretion of Series A preferred units during the second quarter of 2024, compared to $6.9 million during the second quarter of 2023.

Speaker Change: Operating loss was $13.6 million for the second quarter of 2024 compared to an operating loss of $8.7 million for the same period in 2023.

Speaker Change: Interest expense, including a creation of Series A preferred units in the Ametis Biogas LLC subsidiary, increased to $11.7 million during the second quarter of 2024, compared to $9.6 million during the second quarter of 2023.

Todd Waltz: Additionally, Amitis Biogas recognized $3.5 million of a creation of Series A preferred units during the second quarter of 2024 compared to $6.9 million during the second quarter of 2023. Net loss was $29.2 million for the second quarter of 2024 compared to $25.3 million for the second quarter of 2023. Cash at the end of the second quarter of 2024 was $234,000 compared to $2.7 million at the close of the fourth quarter of 2023. We recorded investments in capital projects related to the reduction of carbon intensity of Amitis ethanol and construction of dairy digesters of $5.4 million for the second quarter of 2024.

Speaker Change: Additionally, Aemetis Biogas recognized $3.5 million of accretion of Series A preferred units during the second quarter of 2024 compared to $6.9 million during the second quarter of 2023.

Speaker Change: Net loss was $29.2 million for the second quarter of 2024 compared to $25.3 million for the second quarter of 2023.

Speaker Change: Cash at the end of the second quarter of 2024 was $234,000, compared to $2.7 million at the close of the fourth quarter of 2023.

Speaker Change: We recorded investments in capital projects related to the reduction of carbon intensity of ametase ethanol and construction of dairy digesters of $5.4 million for the second quarter of 2024.

Todd Waltz: The net loss was $29.2 million for the second quarter of 2024 compared to $25.3 million for the second quarter of 2023. Cash at the end of the second quarter of 2024 was $234,000, compared to $2.7 million at the close of the fourth quarter of 2023. We recorded investments in capital projects related to the reduction of the carbon intensity of Ametis ethanol and the construction of dairy digesters of $5.4 million for the second quarter of 2024. Now, I'd like to introduce the founder, chairman, and chief executive officer of Aemetis, Eric McAfee, for a business update. Eric.

Todd Waltz: Now I'd like to introduce the Founder, Chairman and Chief Executive Officer of Amitis, Eric McAfee, for a business update.

Eric McAfee: Now, I'd like to introduce the Founder, Chairman, and Chief Executive Officer of EMETIS, Eric McAfee, for a business update. Eric?

Eric McAfee: Eric? Thank you, Todd. Amitis is executing on a five-year plan that includes expanded positive cash flow from operations, combined with long-term, lower interest rate debt financing guaranteed by the U.S. Department of Agriculture to finance growth. We see solid progress across each of our five business units, as we will review today, and our currently positive cash flow from operations in all three of our operating businesses.

Eric McAfee: Thank you, Todd. Aemitis is executing on a five-year plan that includes expanded positive cash flow from operations, combined with long-term, lower interest rate, debt financing, guaranteed by the U.S. Department of Agriculture, to finance growth. We see solid progress across each of our five business units, as we will review today, and we are currently experiencing positive cash flow from operations in all three of our operating, However, before discussing our operations and projects, let's review regulatory events that are expected to have a significant positive impact on our business.

Eric McAfee: Thank you, Todd. Aemitis is executing on a five-year plan that includes expanded positive cash flow from operations combined with long-term lower interest rate debt financing guaranteed by the U.S. Department of Agriculture to finance growth.

Eric McAfee: We see solid progress across each of our five business units, as we will review today, and are currently positive cash flow from operations in all three of our operating businesses.

Eric McAfee: However, before discussing our operations of projects, let's review regulatory events that are expected to have a significant positive impact on our businesses. In addition to hearings and meetings with the California Air Resources Board, we recently hosted the representative of the U.S. DA Office of the Chief Economist for a biogas ethanol plant and S.E.F. plant site tour in California. I also visited Washington, D.C. for a week in May and again last week for meetings with top U.S. DA officials, EPA Secretary Michael Reagan, and various staff and senators and Senate committees that directly impact the Inflation Reduction Act incentives for renewable fuels and for ethanol E-15 blending approval.

Eric McAfee: However, before discussing our operations and projects, let's review regulatory events that are expected to have a significant positive impact on our businesses.

Eric McAfee: In addition to hearings and meetings with the California Air Resources Board, we recently hosted a representative of the USDA Office of the Chief Economist for a biogas, ethanol plant, and SEF plant site tour in California. I also visited Washington, D.C., for a week in May and again last week for meetings with top USDA officials, EPA Secretary Michael Reagan, and various staff of Senators and Senate committees that directly impact the Inflation Reduction Act incentives for renewable fuels and for ethanol E15 blending approval. From these meetings and discussions, I can highlight three important external regulatory events that are scheduled to occur over the next two quarters that strongly support the Ametis business.

Eric McAfee: In addition to hearings and meetings with the California Air Resources Board, we recently hosted a representative of the USDA Office of the Chief Economist for a biogas, ethanol plant, and SCF plant site tour in California.

Eric McAfee: I also visited Washington, D.C. for a week in May and again last week for meetings with top USDA officials, EPA Secretary Michael Reagan.

Eric McAfee: and various staff of Senators and Senate committees that directly impact the Inflation Reduction Act incentives for renewable fuels and for ethanol E15 blending approval.

Eric McAfee: From these meetings and discussions, I can highlight three important external regulatory events. There are scheduled to occur over the next two quarters that strongly support the METIS business. Plan.

Eric McAfee: From these meetings and discussions, I can highlight three important external regulatory events that are scheduled to occur over the next two quarters that strongly support the Ametis Business Plan.

Eric McAfee: The California Air Resources Board voted on November 8th that it is slated to approve the next 20 years of increased demand for renewable fuels and other low-carbon energy sources for transportation. The IRS guidance showing the calculation of the Inflation Reduction Act section 45 Z production tax credit that begins in January 2025 and the permanent approval of the 15% ethanol blend by the federal EPA, which has been scheduled for early next year as part of a legal settlement with eight Midwestern states.

Eric McAfee: The California Air Resources Board on November 8th that is slated to approve the next 20 years of increased demand for renewable fuels and other low carbon energy sources for transportation. The IRS guidance showing the calculation of the Inflation Reduction Act section 45Z, production tax credit that begins in January 2025. And the permanent approval of the 15% ethanol blend by the federal EPA, which has been scheduled for early next year as part of a legal settlement with eight Midwestern states. Combined, these three regulatory events significantly increase the value of our products and are expected to generate more than $50 million per year of increased positive cash flow starting in January 2025.

Eric McAfee: The California Air Resources Board voted on November 8th that is slated to approve the next 20 years of increased demand for renewable fuels and other low-carbon energy sources for transportation.

Eric McAfee: The IRS guidance showing the calculation of the Inflation Reduction Act Section 45Z Production Tax Credit that begins in January 2025.

Eric McAfee: and the permanent approval of the 15% ethanol blend by the federal EPA, which has been scheduled for early next year as part of a legal settlement with eight Midwestern states.

Eric McAfee: Combined, these three regulatory events significantly increase the value of our products and are expected to generate more than $50 million per year of increased positive cash flow starting in January 2025. Positive cash flow is expected to continue to grow strongly as the value of LCFS credits increases and as additional biogas digesters are built. I should note that in the current quarter, the third quarter of 2024.

Eric McAfee: Combined, these three regulatory events significantly increase the value of our products and are expected to generate more than $50 million per year of increased positive cash flow starting in January 2025.

Eric McAfee: Positive cash flow is expected to continue to grow strongly as the value of LCFS credits increases and as additional biogas digesters are built. I should note that in the current quarter, the third quarter of 2024, we are already showing positive cash flow from each of our three operating businesses, including ethanol production, dairy renewable natural gas, and India biodiesel. We have five additional digesters under construction, but the regulatory events on November 8th for LCFS by January 2025 for the 45Z production tax credit and the EPA adoption of E-15 are the key elements of strong cash flow and future profitability.

Eric McAfee: Positive cash flow is expected to continue to grow strongly as the value of LCFS credits increase and as additional biogas digesters are built.

Eric McAfee: I should note that in the current quarter, the third quarter of 2024, we are already showing positive cash flow from each of our three operating businesses, including ethanol production, dairy renewable natural gas, and India biodiesel.

Eric McAfee: We are already showing positive cash flow from each of our three operating businesses, including ethanol production. Dairy Renewable Natural Gas, and India Biodiesel. We have five additional digesters under construction, but the regulatory events on November 8th for LCFS, by January 2025 for the 45Z production tax credit, and the EPA adoption of E15 are the key elements of strong cash flow and future profitability. In the Ametis biogas business, over the past year or so, we have closed $50 million in USDA-guaranteed 20-year loans to build dairy biogas digesters and to convert construction loans to term loans for digesters that have already completed construction.

Eric McAfee: We have five additional digesters under construction, but the regulatory events on November 8th for LCFS, by January 2025 for the 45Z production tax credit, and the EPA adoption of E15 are the key elements of strong cash flow and future profitability.

Eric McAfee: In the amidst biogas business over the past year or so, we have closed $50 million in the USDA guarantee to 20-year loans to build dairy biogas digesters and to convert construction loans to term loans for digesters that are already completely construction. We recently received the USDA Conditional Commitment approval for the next $25 million Renewable Energy Per America loan and expected close of funding later this month. An additional $50 million of USDA guaranteed funding is in process for closing later this year for a total of $75 million of new long-term financing from biogas digester and pipeline construction this year.

Eric McAfee: In the Ametis biogas business, over the past year or so, we have closed $50 million in USDA-guaranteed 20-year loans to build dairy biogas digesters and to convert construction loans to term loans for digesters that already completed construction.

Eric McAfee: We recently received the USDA conditional commitment approval for the next $25 million Renewable Energy for America loan and expect to close the funding later this month. An additional $50 million of USDA guaranteed funding is in the process for closing later this year for a total of $75 million of new long-term financing for biogas digester and pipeline construction this year. We stored a significant amount of our Q2 2024 renewable natural gas production until Q3, in order to generate almost 80% more LCFS credits under the provisional pathway approval that we expect later this year.

Eric McAfee: We recently received the USDA conditional commitment approval for the next $25 million Renewable Energy for America loan and expect to close the funding later this month.

Eric McAfee: An additional $50 million of USDA-guaranteed funding is in process for closing later this year for a total of $75 million of new, long-term financing for biogas digester and pipeline construction this year.

Eric McAfee: We store a significant amount of our Q2 2024 renewable natural gas production until Q3 in order to generate almost 80% more LCFS credits under the provisional pathway approval that we expect later this year. In July, we dispensed a portion of the RNG production and will continue to dispense storage inventory throughout Q3. Caching in later on the expected higher price of LCFS credits and more than an 80% increase in the number of credits earned at the provisional pathway rate instead of the negative 150 default carbon intensity. The California Air Resource and Board has stated that renewable natural gas is an important feedstock for the production of renewable hydrogen for future truck engines, allowing the trucks to be zero emission using a carbon negative fuel.

Eric McAfee: We stored a significant amount of our Q2 2024 Renewable Natural Gas production until Q3.

Eric McAfee: in order to generate almost 80% more LCFS credits under the provisional pathway approval that we expect later this year.

Eric McAfee: In July, we dispensed a portion of the R&G production and will continue to dispense storage inventory throughout Q3, cashing in later on the expected higher price of LCFS credits and more than an 80% increase in the number of credits earned at the provisional pathway rate instead of the negative 150 default carbon intensity.

Eric McAfee: cashing in later on the expected higher price of LCFS credits and more than a 80% increase in the number of credits earned at the provisional pathway rate instead of the negative 150 default carbon intensity.

Eric McAfee: The California Air Resources Board has stated that renewable natural gas is an important feedstock for the production of renewable hydrogen for future truck engines, allowing the trucks to be zero emission using a carbon negative fuel. We believe that Aemetis is well positioned to supply renewable natural gas, renewable hydrogen, and negative carbon intensity electricity to power future trucks and cars in California, enabling the transition to zero emission and below zero carbon intensity heavy duty and light duty vehicles.

Speaker Change: The California Air Resources Board has stated that renewable natural gas is an important feedstock for the production of renewable hydrogen for future truck engines, allowing the trucks to be zero emission using a carbon negative fuel.

Eric McAfee: We believe that any medicine's well-positioned supply to supply renewable natural gas, renewable hydrogen, and negative carbon intensity electricity to power future trucks and cars in California, enabling the transition to zero emission and below zero carbon intensity, heavy duty and light duty vehicles.

Speaker Change: We believe that Aemetis is well positioned to supply renewable natural gas, renewable hydrogen, and negative carbon intensity electricity.

Speaker Change: to power future trucks and cars in California, enabling the transition to zero emission and below zero carbon intensity, heavy duty and light duty vehicles.

Eric McAfee: In the development of our Ametis Sustainable Aviation Fuel and Renewal Diesel business, during the first quarter we received authority to construct air permits for our planned 90 million gallon per year sustainable aviation fuel and renewable diesel plant to be built in River Bank, California. When operated to produce only sustainable aviation fuel, the design capacity of the plant is about 78 million gallons per year of SAF. The need for sustainability and aviation fuel is expected to increase rapidly for the foreseeable future as the 90 billion gallon per year global aviation fuel industry seeks to reduce carbon emissions using renewable fuel to replace petroleum jet fuel.

Eric McAfee: In the development of our Ametis sustainable aviation fuel and renewable diesel business, during the first quarter, we received authority to construct air permits for our planned 90 million gallon per year sustainable aviation fuel and renewable diesel plant to be built in Riverbank, California. When operated to produce only sustainable aviation fuel, the design capacity of the plant is about 78 million gallons per year of SAF. The need for sustainable aviation fuel is expected to increase rapidly for the foreseeable future as the 90 billion gallon per year global aviation fuel industry seeks to reduce carbon emissions using renewable fuel to replace petroleum jet fuel.

Speaker Change: In the development of our A Meta-Sustainable Aviation Fuel and Renewable Diesel business,

Speaker Change: During the first quarter, we received authority to construct air permits.

Speaker Change: for our planned 90 million gallon per year sustainable aviation fuel and renewable diesel plant to be built in Riverbank, California. When operated to produce only sustainable aviation fuel, the design capacity of the plant is about 78 million gallons per year of SAF.

Speaker Change: The need for sustainable aviation fuel is expected to increase rapidly for the foreseeable future, as the 90 billion gallon per year global aviation fuel industry seeks to reduce carbon emissions using renewal fuel to replace petroleum jet fuel.

Eric McAfee: With the strong demand for SAF and with limited supply, we are now discussing the use of innovative pricing structures with our airline customers to accelerate the financing, construction, and operation of the SAF plant. As one of the very few companies with all the key permits needed to construct a large-scale SAF production facility in the United States, Ametis is building production facilities to supply renewable aviation fuel to an airline market that is currently not expected to meet its ambitious goals of transitioning to lower carbon intensity operations.

Eric McAfee: With the strong demand for SAF and with limited supply, we are now discussing the use of innovative pricing structures with our airline customers to accelerate the financing, construction, and operation of the SAF plant. It is one of the very few companies with all the key permits needed to construct a large-scale SAF production facility in the United States. Aemetis is building production facilities to supply renewable aviation fuel to an airline market that is currently not expected to meet its ambitious goals of transitioning to lower carbon intensity operations.

Speaker Change: With the strong demand for SAF and with limited supply, we are now discussing the use of innovative pricing structures with our airline customers to accelerate the financing, construction, and operation of the SAF plant.

Speaker Change: That's one of the very few companies with all the key permits needed to construct a large-scale SAF production facility in the United States.

Speaker Change: Aemetis is building production facilities to supply renewable aviation fuel to an airline market that is currently not expected to meet its ambitious goals of transitioning to lower carbon intensity operations.

Eric McAfee: In the India biofuels business, in late 2023, we announced that we received a $150 million one-year allocation for biodiesel sales to the three India Oil Marketing Companies, or OMCs, under a cost-plus contract structure. We began deliveries under this contract in October 23, 2023, and have achieved excellent production and delivery performance. The positive impact of cost-plus pricing that is now being used by the OMCs to purchase biodiesel is expected to continue for the foreseeable future. The India business has positive EBITDA and funds its own operations and capacity growth.

Eric McAfee: In the India biofuels business, in late 2023, we announced that we received a $150 million one-year allocation for biodiesel sales to the three Indian oil marketing companies, or OMCs, under a cost-plus contract structure. We began deliveries under this contract in October 2023, and have achieved excellent production and delivery performance. The positive impact of cost plus pricing that is now being used by OMCs to purchase biodiesel is expected to continue for the foreseeable future.

Speaker Change: In the India biofuels business, in late 2023, we announced that we received a $150 million one-year allocation for biodiesel sales to the three India oil marketing companies, or OMCs.

Speaker Change: under a cost-plus contract structure. We began deliveries under this contract in October 23, 2023, and have achieved excellent production and delivery performance.

Speaker Change: The positive impact of cost-plus pricing that is now being used by the OMCs to purchase biodiesel is expected to continue for the foreseeable future. The Indian business has positive EBITDA and funds its own operations and capacity growth.

Eric McAfee: The Indian business has positive EBITDA and funds its own operations and capacity growth. This July, our new managing director of the India business joined the company after serving as the chief executive officer of the GE joint venture in India to build renewable power plants. We are busy with the IPO process and working on the next annual contract for biodiesel sales to India's government-owned oil marketing company. For the Ametis ethanol business, the temporary approval of a 15% blend of ethanol in 49 states for this summer and the EPA's recent statement that a permanent E15 approval will be adopted effective next year is expected to have a positive impact on ethanol industry margins as retailers seek to provide lower cost fuel to consumers.

Eric McAfee: This July, our new managing director of the India business joined the company after serving as the Chief Executive Officer of the GE joint venture in India to build renewable power plants. We are busy with the IPO process and work on the next annual contract for biodiesel sales to India government-owned oil marketing companies.

Speaker Change: This July , our new Managing Director of the India Business joined the company after serving as the Chief Executive Officer of the GE Joint Venture in India to build renewable power plants.

Speaker Change: We are busy with the IPO process and work on the next annual contract for biodiesel sales to India government-owned oil marketing companies.

Eric McAfee: For the Amethyst ethanol business, the temporary approval of a 15 percent blend of ethanol in 49 states for this summer, and the EPA's recent statement that a permanent E15 approval will be adopted effective next year, is expected to have a positive impact on ethanol industry margins as retailers seek to provide lower cost fuel to consumers. A recent study by UC Berkeley and Naval Academy economists showed that the adoption of a 15 percent ethanol blend in California would provide a $2.7 billion per year savings and fuel costs for consumers equal to about $7 million per day or $0.20 per gallon in California.

Speaker Change: For the Ametis ethanol business, the temporary approval of a 15% blend of ethanol in 49 states for this summer, and the EPA's recent statement that a permanent E15 approval will be adopted effective next year.

Speaker Change: It's expected to have a positive impact on ethanol industry margins as retailers seek to provide lower cost fuel to consumers.

Eric McAfee: A recent study by UC Berkeley and Naval Academy economists showed that the adoption of a 15% ethanol blend in California would provide a $2.7 billion per year savings on fuel costs for consumers, equal to about $7 million per day or 20 cents per gallon in California.

Speaker Change: A recent study by UC Berkeley and Naval Academy economists

Speaker Change: Showed that the adoption of a 15% ethanol blend in California would provide a $2.7 billion per year savings on fuel costs for consumers, equal to about $7 million per day or $0.20 per gallon in California.

Eric McAfee: In Q2, we commissioned an on-site solar energy facility with battery storage to improve cash flow through the reduction of our energy costs and decrease the carbon intensity of the ethanol produced by our key plan, which generates more low-carbon fuel standard revenue per gallon using solar energy. The next major step in improving our cash flow and energy efficiency at the key plan is the installation of a mechanical vapor recompression system or MVR. We have completed process design and detailed engineering, and I know are now moving forward with the procurement of equipment. The MVR system is designed to reduce fossil natural gas usage by 80 percent and increase cash flow by $15 million to $29 million annually at the key plan, depending on the value of LCFS credit.

Eric McAfee: In Q2, we commissioned an on-site solar energy facility with battery storage to improve cash flow through the reduction of our energy costs and decrease the carbon intensity of the ethanol produced by our Keys plant, which generates more low-carbon fuel standard revenue per gallon using solar energy. The next 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.

Speaker Change: In Q2, we commissioned an on-site solar energy facility with battery storage to improve cash flow through the reduction of our energy costs and decrease the carbon intensity of the ethanol produced by our Keys plant, which generates more low-carbon fuel standard revenue per gallon using solar energy.

Speaker Change: The next major step in improving our cash flow and energy efficiency at the Keyes plant is the installation of a Mechanical Vapor Recompression System, or MVR.

Eric McAfee: We have completed process design and detailed engineering and are now moving forward with the procurement of equipment. The MVR system is designed to reduce fossil natural gas usage by 80% and increase cash flow by $15 million to $29 million annually at the Keys plant, depending on the value of LCFS credit. The MVR Energy Efficiency Project is budgeted for a direct cost of about $21 million and has been awarded $20 million of grants and tax credits from the California Energy Commission, Pacific Gas and Electric's Energy Incentive Program, and the Department of Energy and U.S. Treasury Department. Additionally, our Ametis Carbon Capture subsidiary has received California state approval to drill the characterization well. The first phase of drilling and installation of the conductor pipe is expected to occur within the next two months.

Speaker Change: We have completed process design and detailed engineering and are now moving forward with the procurement of equipment.

Speaker Change: The MVR system is designed to reduce fossil natural gas usage by 80% and increase cash flow by $15 million to $29 million annually at the Keys plant, depending on the value of LCFS credits.

Eric McAfee: The MVR Energy Efficiency Project is budgeted for a direct cost of about $21 million and has been rewarded $20 million of grants and tax credits from the California Energy Commission, Pacific Gas and Electric Energy, and Senate Program, and the Department of Energy and U.S. Treasury Department.

Speaker Change: The MDR Energy Efficiency Project is budgeted for a direct cost of about $21 million.

Speaker Change: and has been rewarded $20 million of grants and tax credits from the California Energy Commission, Pacific Gas and Electric's Energy Incentive Program, and the Department of Energy and U.S. Treasury Department.

Eric McAfee: Our Amitis Carbon Captures subsidiary has received California state approval to drill the characterization well. The first phase of drilling and installation of the conductor pipe is expected to occur in the next two months.

Speaker Change: Our Ametis Carbon Capture subsidiary has received California state approval to drill the characterization well. The first phase of drilling and installation of the conductor pipe is expected to occur in the next two months.

Eric McAfee: In summary, all five Aemetis business segments are synergistic and create what we refer to as a circular bi-economy. Our company's values include a long-term commitment to building value for stockholders, the empowerment of and respect for our employees and business partners, and making significant and positive contributions to the communities we serve.

Operator: In summary, all five Aemetis business segments are synergistic and create what we refer to as a circular bioeconomy. Our company's values include a long-term commitment to building value for stockholders, the empowerment of and respect for our employees and business partners, and making significant and positive contributions to the communities we serve. Now, we'll take some questions from our call participants. Olli?

Speaker Change: In summary, all five AMETIS business segments are synergistic and create what we refer to as a circular bioeconomy.

Speaker Change: Our company's values include a long-term commitment to building value for stockholders, the empowerment of and respect for our employees and business partners, and making significant and positive contributions to the communities we serve.

Unknown Executive: Now let's take some questions from our call participants. Paul Lee? Apologies for the fact.

Speaker Change: Now let's take some questions from our call participants. Ollie?

Unknown Executive: I don't know where that music was coming from.

Unknown Executive: Thank you, Mr. McAfee.

Speaker Change: Apologies for that, I don't know where that music was coming from. Thank you Mr. McAfee. We will now be conducting our question and answer session. If you would like to ask a question please press star 1 on your telephone keypad.

Operator: Apologies for that; I don't know where that music was coming from. Thank you, Mr. McAfee. We will now be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for questions. Thank you. Our first question is from Manav Gupta with UBS. Your line is live.

Unknown Executive: We will now be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker Change: A confirmation tone will indicate your line is in the question queue.

Speaker Change: and you may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment please while we poll for questions.

Unknown Executive: Thank you.

Manav Gupta: Our first question is coming from Manav Gupta with UBS. Your line is live. So, the credit bank is building. We saw the building last night, and we are at 26 million metric done. We are optimistic that something will happen in November, but do you think like what rate a seven or nine percent rate probably is now needed to bring this in check and move the credit price is higher. But like if we look at it by the time we end 2024, the credit bank could be at 32, 33 million metric done. So, won't it take a significant amount of time even if we go with 7 or 9 percent rate to actually get the carbon prices to move?

Speaker Change: Thank you. Our first question is coming from Manav Gupta with UBS. Your line is live.

Manav Gupta: So Eric and the team, I mean, the credit bank is building. We saw the building last night, and you know, it's been a 26 million metric ton. We are optimistic that something will happen in November. But do you think, like what rate, a seven or nine percent rate probably is now needed to bring this in check and move the credit prices higher? But, like, if we look at it, by the time we end 2024, the credit bank could be at 32-33 million metric tons. So won't it take a significant amount of time even if we go with a seven or nine percent rate to actually get the carbon prices to move? That's what I'm trying to understand.

Manav Gupta: So Eric and team, I mean the credit bank is building, we saw the building last night.

Manav Gupta: and, you know, we have a 26 million metric done. We are optimistic that something will happen in November, but do you think...

Speaker Change: like what rate a seven or nine percent rate probably is now needed to bring this in check and move the credit prices higher. But like if we look at it, by the time we end 2024, the credit bank could be at 32-33 million metric tons. So

Speaker Change: Won't it take significant amount of time, even if we go with seven or nine percent rate, to actually get the carbon prices to move? That's what I'm trying to understand.

Manav Gupta: That's what I'm trying to understand. We think that the 9 percent step down is going to be necessary for the kind of price response that the California Resources Board is seeking because, as you know, this funds hydrogen and electrification zero emission goals. So, a continued low credit price basically postpones those projects. I think as they increasingly see the 30 million to 32 million credit bank number, they're going to realize that 9 percent basically is the minimum required, not the maximum, but the minimum required to move major oil companies forward on buying more credits now. And so, their range is 5 percent, 7 percent, and 9 percent in the most recent number that they came out, but in discussions directly with CARB executives, it's pretty clear that they had no idea that we'd be looking at 32 million credits.

Eric McAfee: We think that a 9% step down is going to be necessary for the kind of price response that the California Resources Board is seeking because, as you know, this funds hydrogen and electrification, zero emission goals, so a continued low credit price basically postpones those projects. I think as they increasingly see the $30 million to $32 million credit bank number, they're going to realize that 9% basically is the minimum required, not the maximum, but the minimum required to move major oil companies forward on buying more credits now.

Speaker Change: We think that a nine percent step down is going to be necessary for the kind of price response that the California Resources Board is seeking.

Speaker Change: because, as you know, this funds hydrogen and electrification zero-emission goals.

Speaker Change: So a continued low credit price basically postpones those projects.

Speaker Change: I think as they increasingly see the $30 million to $32 million...

Speaker Change: credit bank number, they're going to realize that 9% basically is the minimum required, not the maximum, but the minimum required to move major oil companies forward on buying more credits now.

Eric McAfee: And so their range is 5%, 7%, or 9% in the most recent number that came out, but in discussions directly with CARB executives, it's pretty clear that they had no idea that we'd be looking at $32 million in credits, so that was not even the range of possibility in the discussions I've had with them. So I think it's good that we have a November date because it gives them almost the entire year to see the buildup in inventory.

Speaker Change: And so their range is 5%, 7%, or 9% in the most recent number that came out.

Speaker Change: But in discussions directly with CARB executives, it's pretty clear that they had no idea that we'd be looking at 32 million credits. That was not even the range of possibility in the discussions I've had with them.

Manav Gupta: That was not even the range of possibility in the discussions I've had with them. So, I think it's good that we have a November date because it gives them almost the entire year to see the buildup in inventory. And if we had a March 2024 decision, I don't think they would have had that clarity.

Speaker Change: So I think that it's good that we have a November.

Speaker Change: date because it gives them almost the entire year to see the the buildup in inventory and if we had a March

Eric McAfee: And if we had a March 2024 decision, I don't think they would have had that clarity. So it's actually, in hindsight, a good thing for us that those numbers will have built up by the time this decision is made on November 8th.

Speaker Change: 2024 decision, I don't think they would have had that clarity. So it's actually, in hindsight, a good thing for us that those numbers will have built up by the time this decision being in November 8th.

Manav Gupta: So, it's actually, in hindsight, a good thing for us that those numbers will have built up by the timeless decision being in November 8th.

Manav Gupta: Perfect.

Manav Gupta: Perfect. So my follow-up quickly is on the ethanol business. U.S. ethanol margins are looking much stronger in CQ. And so hopefully, the answer is that you're not hedged, and you should be able to participate in this uptick in ethanol margins.

Unknown Executive: And I follow up quickly on the ethanol business that US ethanol margins are looking much stronger in 3Q. And so hopefully you're not hedged, and you should be able to participate in this uptick in ethanol margins.

Speaker Change: Perfect, so my follow-up quickly is on the ethanol business that US ethanol margins are looking much stronger in 3Q and so hopefully my answer is like you're not hedged and you should be able to participate in this uptick in ethanol margins.

Andrew Foster: Andy, do you want to take that?

Andrew Foster: Andy, you want to take that? Yeah, we've definitely seen an uptick in margin, certainly for the month of July. So yes, I think August, it's going to be a little softer as you probably noted yesterday, Manav, that the EIA numbers showed record production, which is, you know, everybody's trying to take advantage of the margin environment too much, so which typically happens with our industry. But no, right now with the price of corn, you know, showing has just been flat to down for most of the summer, we expect a larger crop than maybe what the USDA anticipated. Growing conditions in the Midwest have been very good, except for the upper Midwest, but I think if you look at the corn belt of, you know, Nebraska, Iowa, Illinois is, you know, expecting pretty significant crops.

Andrew Foster: Yeah, we've definitely seen an uptick in margin, certainly for the month of July. So yes, I think August is going to be a little softer. As you probably noted yesterday, Manav, that the EIA number showed record production, which is, you know, everybody's trying to take advantage of the margin environment. Too much so, which typically happens with our industry.

Speaker Change: Andy, you want to take that? Yeah, we've definitely seen an uptick in margin, certainly for the month of July.

Speaker Change: So yes, I think August is going to be a little softer as you probably noted yesterday, Manav, that the

Andy Foster: The EIA numbers showed record production, which is, you know, everybody's trying to take advantage of the margin environment, too much so, which typically happens with our industry. But right now, with the price of corn,

Andrew Foster: But no, right now with the price of corn, you know, showing has been just flat to down for most of most of the summer. We expect a larger crop than maybe what the USDA anticipated. Growing conditions in the Midwest have been very good, except for the upper Midwest. But I think if you look at the Corn Belt of, you know, Nebraska, Iowa, Illinois is, you know, expecting a pretty significant crop. So I think, given that, we'll probably see some softening in the ethanol price just because inventories are going to build over the next month.

Speaker Change: showing has just been flat to down for most of the summer. We expect a larger crop than maybe what the USDA anticipated. Growing conditions in the Midwest have been very good, except for the upper Midwest. But I think if you look at the Corn Belt of, you know,

Speaker Change: Nebraska, Iowa, Illinois is, you know, expecting.

Andrew Foster: So I think given that, we'll probably see some softening in the ethanol price just because inventories are going to build over the next month. But as we get into the fall, and there's been a pretty robust export program in ethanol this year, I think, you know, for the foreseeable future, we're expecting the margin environment to be much more favorable than it was in Q1.

Speaker Change: pretty significant crop. So I think given that, we'll probably see some...

Speaker Change: softening in the ethanol price just because inventories are going to build over the next month. But as we get into the fall and there's been a pretty robust export program in ethanol this year, I think for the foreseeable future, we're expecting the margin environment to be much more favorable than it was in Q1.

Andrew Foster: But as we get into the fall, and there's been a pretty robust export program for ethanol this year, I think, for the foreseeable future, we're expecting the margin environment to be much more favorable than it was in Q1.

Eric McAfee: Okay, my last and quick one is, Eric, how many dairy digesters should we expect to be online by year?

Eric McAfee: My last and quick one is, Eric, how many dairy digesters should we expect to be online by year? And I understand the volumes will take time because, you know, there is a certification process. But how many digesters do you think you can complete by year end 2024?

Speaker Change: My last and quick one is, Eric, how many dairy digesters should we expect to be online by year? And I understand the volumes will take time because, you know, there is a certification process, but how many digesters do you think you can complete by year end 2024?

Eric McAfee: And I understand the volumes will take time because, you know, there's a certification process. But how many digesters do you think you can complete by year end 2024? Because we have some multiple dairy digesters, we're giving guidance, so it'll be approximately 16 dairy. We have nine operating now; we have six under construction. So what about 15 total completed for sure, but we have a few that are on the cusp. So definitely expecting, though, that the number of dairies we're operating will be in the 16 dairy range. The nine we have currently operating covered 10 dairies, and we're adding six more.

Eric McAfee: Because we have some multiple dairy digesters, we're giving guidance that it'll be approximately 16 dairies. We have nine operating now. We have six under construction. So, what about 15 total completed? For sure, but we have a few that are on the cusp. So I'm definitely expecting, though, that the number of dairies we're operating will be in the 16 dairy range. The nine that we have currently operating cover 10 dairies, and we're adding six more, so about 16.

Eric McAfee: Because we have some multiple dairy digesters, we're giving guidance that'll be approximately 16 dairies.

Eric McAfee: We have nine operating now, we have six under construction, so what about 15 total completed for sure, but we have a few that are on the cusp.

Eric McAfee: Definitely expecting though that the number of dairies we're operating will be in the 16 dairy range. The nine that we have currently operating cover 10 dairies.

Eric McAfee: So about 16, one of the guidance that we're looking to increasingly focus people on is what our annual run rate of MMVTU production is, because you can directly multiply that times the value for MMVTU to get our revenues. And so we issued a press release a few weeks ago about hitting a 300,000 per year run rate, and then we'll probably update that either late in fourth quarter or early first quarter with our new run rate. We did project that we'd be at 800,000 approximately 12 months from now. So we're scaling from 300,000 run rate from the year to 800,000.

Eric McAfee: One of the guidances that we're looking to increasingly focus people on is what our annual run rate of MMBTU production is because you can directly multiply that times the value of an MMBTU to get our revenues. And so we issued a press release a few weeks ago about hitting a 300,000 per year run rate, and then we'll probably update that either late in the fourth quarter or early in the first quarter with our new run rate.

Eric McAfee: and we're adding six more, so about 16.

Eric McAfee: One of the the guidances that we're looking to increasingly focus people on is what our annual run rate of MMBTU production is.

Eric McAfee: Because you can directly multiply that times the value per MMBTU to get our revenues.

Eric McAfee: And so we issued a press release a few weeks ago about hitting a 300,000 per year run rate and then we'll probably update that either late in fourth quarter or early first quarter with our new run rate. We did project that we'd be at 800,000 approximately 12 months from now.

Eric McAfee: We did project that we'd be at 800,000 approximately 12 months from now, so we're scaling from 300,000 run rate per year to 800,000. And then by giving guidance later this year about exactly what the revenue is per MMBTU when we have 45Z and LCFS in place, I think it'll be rather easy to calculate what our annual revenues are at the company from the R&G business. Thank you so much. Thank you. I appreciate your work.

Eric McAfee: So we're scaling from $300,000 runaway from the year to $800,000, and then by giving guidance later on this year about exactly what the revenue is per MMBQ when we have 45Z and LCFS in place, I think it'll be rather easy to calculate what our annual revenues are at the company.

Eric McAfee: And then, by giving guidance later on this year about exactly what the revenue is per MMVTU when we have 45C and LCFS in place, I think it'll be rather easy to calculate what our annual revenues are at the company from the RNG business. Thank you so much, Eric. No, thank you. I appreciate your work. Thank you.

Eric McAfee: from the R&G business.

Eric McAfee: Thank you so much, Eric.

Eric McAfee: Thank you. I appreciate your work.

Operator: Thank you. Our next question is coming from Jordan Levy with Truist. Your line is live.

Jordan Levy: Our next question is coming from Jordan Levy with Truist. Your line is live. Afternoon. I'll appreciate all the commentary.

Speaker Change: Thank you. Our next question is coming from Jordan Levy with Truist. Your line is live.

Jordan Levy: Afternoon, I appreciate all the commentary. Eric, maybe just to start on the MVR side of things, the project's been in the works for a while now. Can you just give us some thoughts around the competence level and getting that project up and running?

Eric McAfee: Eric, maybe just to start on the MBR side of things that the project's been in the works for a while now. Can you just give us some thoughts around the competence level and getting that project up and running for, I guess, next year, maybe. Very high level confidence. The fabrication of the equipment already has our first million dollar deposits, and this has been paid. Engineering design has been completed; permitting at this phase is completed for what we need to do right now. So we're in a fabrication cycle. And we would expect it within 12 months.

Jordan Levy: Afternoon, I'll appreciate all the commentary. Eric, maybe just to start on the the MVR side of things, the project's been in the works for a while now, can you just give us some thoughts around the confidence level in getting that project

Speaker Change: up and running for, I guess, next year.

Eric McAfee: Very high level of confidence. The fabrication of the equipment already has our first million dollar deposits that have been paid. Engineering design has been completed. Permitting, at this phase, has been completed for what we need to do right now.

Eric McAfee: Very high level of confidence, the

Eric McAfee: Fabrication of the equipment already has our first million dollar deposits that's been paid. Engineering design has has been completed. Permitting at this phase is completed for what we need to do right now. So we're in a fabrication cycle.

Eric McAfee: So we're in a fabrication cycle, and we would expect that within 12 months, we would be completed with the project. So this is a third quarter 2025 target. I would always suggest we have to hold that a little bit loosely. If it slips by a quarter, we shouldn't be surprised. But certainly, we're operating toward a third quarter 2025 implementation. Great. And then, so sorry.

Eric McAfee: We would be completed with the project. So this is the third quarter 2025 target. I would always suggest we have to hold that a little bit loosely if it slips by a quarter. We shouldn't be surprised, but certainly we're operating toward a third quarter 2025 implementation.

Eric McAfee: and we would expect that within 12 months we would be completed with the project. So this is a third quarter 2025 target.

Eric McAfee: I would always suggest we have to pull that a little bit loosely if it slips by a quarter we shouldn't be surprised, but certainly we're operating toward a third quarter 2025 implementation.

Jordan Levy: Great.

Jordan Levy: Great, and then sorry if you talked about this already in the opening, out. But could you just talk about some of the importance and thinking around 45Z guidance, especially in the biogas segment and some of the impacts that could have in the range there of

Eric McAfee: And then it's a sorry if you talked about a talk on this already in the opening remarks. My phone was cutting out, but could you just talk to some of the importance and thinking around 45 Z guidance, especially on the biogas segment and some of the impacts that could have in the range there of outcomes. 45 Z is a production tax credit based upon the amount of fuel is produced. There are two issues in the biogas calculation because the calculations are pretty simple. You take one gallon or whatever fuel it is; you multiply times its carbon intensity, and you end up with a number of tax credits.

Speaker Change: Great, and then sorry if you talked about talked on this already in the opening remarks.

Speaker Change: Could you just talk to some of the importance and thinking around 45Z guidance, especially on the biogas segment and some of the impacts that could have in the range there of outcomes?

Speaker Change: 45Z.

Eric McAfee: is a production tax credit based upon the amount of fuel produced. There are two issues in the biogas calculation because the calculation is pretty simple. You take one gallon of whatever fuel it is, you multiply it times its carbon intensity, and you end up with a number of tax credits. There are some methods to get this, but essentially those are the two variables.

Speaker Change: is a production tax credit based on the amount of...

Speaker Change: fuel is produced.

Speaker Change: There are two issues in the biogas calculation, because the calculation is pretty simple. You take one gallon of whatever fuel it is, you multiply it times its carbon intensity, and you end up with a number of tax credits. There's some methods to get this, but essentially those are the two variables.

Eric McAfee: There's some methods to get this, but essentially those are the two variables. The first question is: what is the energy density of a gallon of ethanol? This has been a focus of the meetings I didn't watch in DC last week and in a tour in May. It's pretty clear to us that the energy density of a gallon of renewable natural gas should be consistent with the 20 years of policy from the Renewable Fuel Standard. There is one written one renewable notification number for a gallon of ethanol, which is the reference gallon energy density in the Renewable Fuel Standard passed originally in 2005.

Eric McAfee: The first question is, what is the energy density of a gallon of ethanol? This has been the focus of the meetings I did in Washington, D.C. last week and a tour in May. It's pretty clear to us that the energy density of a gallon of renewable natural gas should be consistent with the 20 years of policy from the Renewable Fuel Standard. There is one RIN, one Renewable Identification Number, for a gallon of ethanol, which is the reference gallon energy density in the Renewable Fuel Standard passed originally in 2005, and to change that reference to something else is to change that reference. And as I joke, I say, should it be one gallon of whale oil? Should it be one gallon of melted butter?

Speaker Change: The first question is, what is the energy density of a gallon of ethanol?

Speaker Change: This has been a focus of the meetings I did in Washington, D.C. last week and a tour in May. It's pretty clear to us that the energy density of a gallon of renewable natural gas should be consistent with the 20 years of policy from the Renewable Fuel Standard.

Speaker Change: There is one RIN, one Renewable Identification Number, for a gallon of ethanol, which is the reference gallon energy density in the Renewable Fuel Standard passed originally in 2005.

Eric McAfee: And to change that reference to something else, and as I joke, I say should it be one gallon of oil, oil should be one gallon of melted butter. What arbitrary other gallon are we going to throw in there because we're rejecting 20 years of federal law if you don't use ethanol. And that's been persuasive in every single meeting I've had with senators and USDA and EPA Administrator Michael Reagan last week, etc. So we are meeting with all of the members of the committee; they're advising the Treasury Department, and so far, every meeting I've exited, they've all agreed it should be consistent with prior policy: should be ethanol.

Eric McAfee: You know, what arbitrary other gallon are we going to throw in there? Because we're rejecting 20 years of federal law if you don't use ethanol. And that's been persuasive in every single meeting I've had with senators and USDA and EPA Administrator Michael Reagan last week, etc. So we are meeting with all of the members of the committee; they're advising the Treasury Department.

Speaker Change: And to change that reference to something else, and as I joke, I say, should it be one gallon of whale oil? Should it be one gallon of melted butter? You know, what arbitrary other gallon are we going to throw in there? Because we're rejecting 20 years of...

Speaker Change: federal law if you don't use ethanol and that's been persuasive in every single meeting I've had with Senators and USDA and EPA Administrator Michael Reagan last week etc. So we are

Eric McAfee: And so far, every meeting I've attended, they've all agreed that it should be consistent with prior policy, it should be ethanol. Ethanol is approximately 76,000 mMBTUs, I'm sorry, BTUs, British Thermal Units, for one gallon. And the way natural gas is defined is 1 million British thermal units. So it's very simple math. If you subtract the divide 1 million by 76,000, you get about 13 gallons, which is what the energy density of one MMBTU is.

Speaker Change: meeting with all of the members of the committee they're advising the Treasury Department and so far every meeting I've exited they've all agreed it should be consistent with prior policy it should be ethanol. Ethanol is approximately 76,000 mm BTUs, I'm sorry BTUs, British Thermal Units.

Eric McAfee: Ethanol is approximately 76,000 mmBtu. I'm sorry, a BT is digital in the middle unit. for one gallon. And the way the natural gas is defined as 1 million British Thermal Units. So it's very simple math. You subtract, divide 1 million by 76,000. You get about 13 gallons, is what the energy density of one MMBtu to you is. That might sound complicated for investors, but it's pretty simple, because remember you're only in both my two numbers together. The first number being 13.15. We're getting some music in the background here. Can you guys hear me? Hello. Jordan, do you hear us?

Speaker Change: for one gallon. And the way the natural gas is defined is one million British thermal units. So it's very simple math. You subtract, divide one million by 76,000, you get about 13 gallons.

Speaker Change: is what the energy density of one MMBTU is.

Eric McAfee: That might sound complicated for investors, but it's pretty simple because remember, you're only multiplying two numbers together. The first number being 13.15. We're getting some music in the background here. Can you guys hear me? Hello Jordan. Do you hear us?

Speaker Change: That might sound complicated for investors, but it's pretty simple, because remember you're only multiplying two numbers together. The first number being 13.15. We're getting some music in the background here. Can you guys hear me?

Speaker Change: Hello? Jordan, do you hear us?

Jordan Levy: Yep. Yeah, I got you now. Sorry to block that out.

Eric McAfee: Yeah. So the second calculations, rather simple, it's just carbon intensity in California. We've been doing this for 15 years. It's using the GREAT model. And so twice, the guidance has come from Treasury, most recent June 8th of this, 18th of this year saying that you just calculate your GREAT model carbon intensity. We know what that is because we do LCFS pathways for all of our bio gas. So it ranges from negative 320 to negative 370. So when you multiply 13.15 times our carbon intensity with that calculation, we end up with about $99 per MMBtu of value at a negative 350 carbon intensity.

Eric McAfee: Yeah. So the second calculation is rather simple. It's just carbon intensity. In California, we've been doing this for 15 years. It uses the GREET model.

Jordan Levy: Yeah, yeah, I got you now. Sorry, the line cut out. Yeah.

Jordan Levy: So the second calculation is rather simple. It's just carbon intensity. In California, we've been doing this for 15 years.

Speaker Change: It's using the GREET model.

Eric McAfee: And so twice the guidance has come from Treasury, the most recent on June 18th of this year, saying that you just calculate your GREET model carbon intensity. We know what that is because we do LCFS pathways for all of our biogas. So it ranges from negative 320 to negative 370. So when you multiply 13.15 times our carbon intensity by that calculation, we end up with about $99 per mmBtu of value at a negative 350 carbon intensity.

Speaker Change: and so twice.

Speaker Change: The guidance has come from Treasury most recent June 18th of this year.

Speaker Change: saying that you just calculate your grid model carbon intensity. We know what that is.

Speaker Change: because we do LCFS pathways for all of our biogas. So it ranges from negative 320 to negative 370.

Speaker Change: So, when you multiply 13.15 times our carbon intensity with that calculation, we end up with about $99 per mmBtu of value.

Eric McAfee: And again, ours includes carbon intensities of negative 370 or even more. So, we are waiting for IRS guidance that confirms that ethanol will be consistent with prior federal law and simply that the great model will be the great model, which they've twice said that that's what it's going to be. But there's a table to be issued that will describe different fuels and what their carbon intensity is. Now, because we're talking to investors a lot, I always describe that there's a range of values and that the range of values is between $99 for a negative 350 carbon intensity down to $7.20.

Eric McAfee: And again, ours includes carbon intensity as negative 370 or even more. So we are waiting for IRS guidance. The confirms that ethanol will be consistent with prior federal law. And simply that the GREAT model will be the GREAT model, which they've twice said that that's what it's going to be. But there's a table to be issued that will describe different fuels and what the carbon intensity is. Now, because we're talking to investors a lot, I always describe that there's a range of values, and that the range of values is between $99 for negative 350 carbon intensity down to $7.20.

Speaker Change: at a negative 350 carbon intensity. And again, ours includes carbon intensity as negative 370 or even more. So,

Speaker Change: We are waiting for IRS guidance that confirms that ethanol will be consistent with prior federal law

Speaker Change: And simply that the great model will be the great model, which they've twice said that that's what it's going to be. But there's a table to be issued that will describe different fuels and what the carbon intensity is. Now, because we're talking to investors a lot

Speaker Change: I always describe that there's a range of values.

Speaker Change: and that the range of values is between $99 for a negative 350 carbon intensity down to

Eric McAfee: So it's a very wide range that the IRS could determine. $7.20 is the carbon intensity of diesel, 720, and a cap on a dollar per gallon that they do not allow negative carbon intensity, even though the legislation itself has negative carbon intensity in it. What we consider to be a worst-case scenario is $7.20. And I personally think there would be some discussion to change that.

Speaker Change: $7.20

Speaker Change: So, it's a very wide range that the IRS could determine. $7.20 is the carbon intensity of diesel, 720, and a cap.

Eric McAfee: So is the carbon intensity of diesel 720 and the cap on a dollar per gallon that they do not allow negative carbon intensity. Even though the legislation itself has negative in it, what we consider to be a worst-case scenario is $7.20. And I personally think there would be some discussion to change that. So that's one of the reasons we spent so much time with the decision makers is that we are expecting that everybody will have the consensus that it should be the ethanol molecule and it should be the GREAT model. And that's just implementation; what's already in legislation.

Speaker Change: on a dollar per gallon that they do not allow negative carbon intensity, even though the legislation itself has negative in it. What we consider to be a worst case scenario $7.20. And I personally think there would be some discussion to change that. So

Eric McAfee: So that's one of the reasons we've spent so much time with the decision makers is that we are expecting that everybody will have the consensus that it should be the ethanol molecule and it should be a great model. And that's just the implementation of what's already in legislation. And if that's the case, it'll be $99 per MMBT. But remember, this is only the 45Z value. In addition to that, you have the D3 RIN, which is 11.727 RINs per MMBTU times the current price of $3.40, meaning roughly $35 for the D3 federal RIN.

Speaker Change: That's one of the reasons we spent so much time with the decision makers, is that

Speaker Change: We are expecting that everybody will have the consensus that it should be the ethanol molecule, and it should be the great model and that's

Eric McAfee: That would be on top of the $99. And then we add the low-carbon fuel standard value, which at our carbon intensity runs roughly in the $25 range but would quadruple by the provisional approval and the credit price doubling. The certainty that we will have in the fourth quarter with IRS guidance plus LCFS mandates and increased credit prices, I think will put us in a position to give investors a solid number that they can then calculate against the MMBTs per year number we have. Justin, is that clear, Jordan? Yeah, absolutely. Thanks so much.

Eric McAfee: And if that's the case, it'll be $90, $9 per MB2. Remember, this is only the 45Z value. In addition to that, you have the D3 RIN, which is 11.727 RINs per MB2 times current price of $3.40, as roughly $35 for the D3 federal RIN that would be on top of the $99. And then we add the low carbon fuel standard value, which is our carbon intensity runs roughly in the $25 range, but with quadruple by the provisional approval and the credit price doubling. The certainty that we will have in the fourth quarter with IRS guidance plus LCFS mandates and increased credit prices, I think we'll put us in a position to give investors a solid number that they can then calculate against the MMBT use per year number we have.

Speaker Change: Just implementation of what's already in legislation and if that's the case, it'll be $99 per MMB2. Remember this is only the 45Z value.

Speaker Change: In addition to that, you have the D3 RIN, which is 11.727 RINs per MMBTU, times current price of $3.40, is roughly $35 for the D3 Federal RIN.

Speaker Change: That would be on top of the $99 and then we add the low carbon fuel standard value Which at our carbon intensity runs roughly in the $25 range, but would quadruple by the provisional Approval and the credit price doubling so

Speaker Change: The certainty that we will have in the fourth quarter with IRS guidance plus LCFS mandates and increased credit prices, I think will put us in a position to give investors a solid number that they can then calculate against the MMBTUs per year number we have.

Jordan Levy: Is that clear, Jordan? Yeah, absolutely. Thanks so much for the color, Eric. Sure.

Jordan Levy: Yeah, absolutely. Thanks so much for the call, Aaron.

Jordan Levy: Is that clear, Jordan?

Jordan Levy: Yeah, absolutely. Thanks so much for the call, Eric.

Matthew Blair: Anki, our next question is coming from Matthew Blair with TPH. Your line is live. Thank you and good morning.

Operator: Thank you. Our next question is coming from Matthew Blair with TPH. Your line is live.

Jordan Levy: Sure.

Speaker Change: Thank you. Our next question is coming from Matthew Blair with TPH. Your line is live.

Matthew Blair: Thank you and good morning. My first question is on India biodiesel. Could you talk about the overall profitability in the second quarter and, hopefully, disclose an EBITDA level for this segment? And were you able to switch to PFAD feedstocks, or sorry, switch away from PFAD feedstocks and switch over to sunflower oil in the quarter?

Matthew Blair: First question is on India, biodiesel. Could you talk about the overall profitability in the second quarter and hopefully disclose an EBITDA level for this segment? And were you able to switch to PFAD deep stocks, or sorry, switch away from PFAD deep stocks and switch over to sunflower oil in the quarter? The winter time oils are ones that can handle colder temperatures, and so the winter time for us is November, December, January, and February. So the second quarter did not include any of the winter-time sunflower oil feedstock.

Matthew Blair: Thank you and good morning. First question is on India biodiesel. Could you talk about the overall profitability in the second quarter and hopefully disclose an EBITDA level for this segment?

Matthew Blair: And were you able to switch to PFAD feedstocks, or sorry, switch away from PFAD feedstocks and switch over to sunflower oil in the quarter?

Eric McAfee: The wintertime oils are ones that can handle colder temperatures, and so wintertime for us is November, December, January, and February. Therefore, the second quarter did not include any of the wintertime sunflower oil feedstock. Second point is we don't disclose close margins because we're in a competitive environment in India, but you can see in our Disclosures various calculations that would show that it was a multi-million dollar EBITDA quarter and we expect to continue to grow that, grow the revenues as well as grow the EBITDA numbers.

Speaker Change: The wintertime oils are ones that can handle colder temperatures, and so the wintertime for us is November, December, January, and February, so the second quarter did not include any of the wintertime sunflower oil feedstock.

Matthew Blair: Second point is we don't disclose close margins because we're in a competitive environment in India, but you can see in our disclosures various calculations that would show that it was a multi-million dollar EBITDA quarter, and we expect to continue to grow that, grow revenues as well as grow the EBITDA numbers.

Speaker Change: Second point is we don't disclose close margins because we're in a competitive environment in India, but you can see in our...

Speaker Change: disclosures, various calculations that would show that it was a multi-million dollar EBITDA quarter and we expect to continue to grow that, grow the revenues as well as grow the EBITDA numbers.

Matthew Blair: Sounds good, and then on the ethanol side, I wanted to clarify that the 10.5 million of IRA tax credits that came through for the MBR system, was any of that 10.5 million either recognized in your EBITDA for the second quarter, and is any of that in your cash balance for the second quarter? Now, unfortunately, the way that the 10.5 million is, this is a 48-C credit. So it's an investment tax credit. You have to complete the construction of the facility, run it for, I think it is a 90-day period, demonstrating that it's hitting the energy efficiency targets it's designed to do, and then you get your tax credit.

Matthew Blair: Sounds good. And then on the ethanol side, I wanted to clarify that the $10.5 million of IRA tax credits that came through for the MVR system, was any of that $10.5 million recognized in your EBITDA for the second quarter? And is any of that in your cash balance for the second quarter?

Speaker Change: Sounds good. And then on the ethanol side, I wanted to clarify that the $10.5 million of IRA tax credits that

Speaker Change: that came through for the MBR system. Was any of that 10.5 million either recognized in your EBITDA for the second quarter? And is any of that in your cash balance for the second quarter?

Eric McAfee: Now, unfortunately, the way that the $10.5 million is structured is that it's a 48C credit. So it's an investment tax credit. You have to complete the construction of the facility, run it for, I think it is, a 90 day period, demonstrating that it's hitting the energy efficiency targets it's designed to do.

Speaker Change: Now, unfortunately, the way that the $10.5 million is, is this is a

Speaker Change: 48C credit, so it's investment tax credit. You have to complete the construction of the facility.

Speaker Change: run it for, I think it is a 90-day period, demonstrating that it's hitting the energy efficiency targets it's designed to do, and then you get your tax credit. So, we will not actually show that $10.5 million, less about a 15%.

Eric McAfee: And then you get your tax credit. So we will not actually show that 10.5 million, less about 15% of the cost of sale between all the things that go on to sell the credits. So we would expect to pocket about 9 million in cash, probably in the fourth quarter of next year, if things go according to the current plan. And that would show up in that quarter as other income and be in the tax credit sale category.

Matthew Blair: So we will not actually show that 10.5 million less about a 15 percent all in cost of sale between all the things that go on to sell the credits. So we would expect to pocket about 9 million of cash probably in the fourth quarter of next year if things go according to current plan, and that would show up in that quarter as other income and being the tax credit sale category. Okay, that's helpful.

Speaker Change: all in cost of sale between all the things that go on to sell the credits. So we would expect to pocket about $9 million of cash.

Speaker Change: probably in the fourth quarter of next year if things go according to current plan and that would show up in that quarter as other income it being the tax credit sale category.

Matthew Blair: Okay, that's helpful. And then, just to wrap it up, circling back to your LCFS comments, which I thought were pretty interesting. My question is, if CARB holds a vote on November 8, would you expect implementation to start on January 1, 2025? Or is this something that could slip into like Q2 2025, or even the back half of the year?

Matthew Blair: And then just to wrap it up, circling back to your LCFS comments, which I thought were pretty interesting. My question is, if Carb holds a vote on November 8th, would you expect implementation to start up on January 1st, 2025, or is this something that could slip into like 225 or even the back half of the year? I think it's going to slip past the first quarter. I wouldn't be surprised to see July 1, 2025, in sort of the way that they think. To me, it's much more important about how big this stepdown is in 2025, because what you have is a lot of major oil company traders that see access, inventory of LCFS credits is 32 million that Manav was talking about, is basically 32 million reasons not to be in a hurry to buy credits.

Speaker Change: Okay, that's helpful. And then just to wrap it up, circling back to your LCFS comments.

Speaker Change: which I thought were pretty interesting. My question is, if CARB holds a vote on November 8th, would you expect implementation to start up on January 1st, 2025? Or is this something that could slip into like Q2, 25 or even the back half of the year?

Eric McAfee: I think it's going to slip past the first quarter. I wouldn't be surprised to see a July 1, 2025 in sort of the way that they think. To me, it's much more important how big this step down is in 2025 because what you have is a lot of major oil company traders that see excess inventory of LCFS credits. This $32 million that Manav was talking about is basically $32 million reasons not to be in a hurry to buy credits.

Speaker Change: I think it's going to slip past the first quarter. I wouldn't be surprised to see a July 1, 2025 in sort of the way that they think.

Speaker Change: To me, it's much more important about how big this step down is in 2025 because what you have is a lot of major oil company traders that see excess

Speaker Change: Inventory of LCFS credits is 32 million that Manav was talking about. It's basically 32 million reasons not to be in a in a hurry to buy credits.

Eric McAfee: But if it looks like there's a strong step down in 2025, the credit price will react to that. And so I think it's mostly the projection of what's going to happen in 2025 and 2026 and the major oil company response to that that's going to affect the price.

Matthew Blair: But if it looks like there's a strong step down in 2025, immediately the credits will react; credit price will react to that. And so I think it's mostly the projection of what's going to happen in 2025 and 2026, and the major oil company response to that is going to affect the price. Great, thanks for your comments, Eric. Thank you; appreciate it. Thank you.

Speaker Change: But if it looks like there's a strong step down in 2025, immediately the credit price will react to that. And so I think it's mostly the projection of what's going to happen in 2025 and 2026 and the major oil company response to that that's going to affect the price.

Matthew Blair: Great, thanks for your comments, Eric.

Speaker Change: Great. Thanks for your comments, Eric.

Operator: Thank you. Our next question is coming from Amit Dayal, with HC Wainwright. Your line is live.

Eric McAfee: Thank you, appreciate it.

Amit Dayal: Our next question is coming from Amit Dayal with HCWainwright; your line is live. A graph in the room. Thank you for taking my questions. So you said 50 million in potential annual positive cash flow starting next year. Could you give us sort of a breakdown of how we get to that 50 million from the three operating segments? The biogas business alone could do the entire 50 million. If we get the calculations that were expecting, quite frankly, I mean, $100 or $99 plus $35 plus LCFS credits times an average of 500 against us, actually $1500 right there.

Speaker Change: Thank you. Our next question is coming from Amit Dayal with HC Wainwright. Your line is live.

Amit Dayal: Thank you for taking my questions. So Eric, you said $50 million in potential annual positive cash flow starting next year. Could you give us sort of a breakdown of how we get to that $50 million from the three operating segments? The biogas business alone.

Amit Dayal: Thank you for taking my questions. So Eric, you said $50 million in potential annual positive cash flow starting next year. Could you give us sort of a breakdown of how we get to that $50 million from the three operating segments?

Eric McAfee: The biogas business alone could do the entire $50 million, if we get the calculations that we're expecting, quite frankly. I mean, $100, or $99 plus $35 plus LCFS credits times an average of $500, it gets us actually $50 million right there, so actually in excess of $50 million. So you add it all up, and you're actually significantly in excess of $50 million of positive cash flows, so the 50 was us taking some of the unknowns and putting them into the calculation.

Eric McAfee: The biogas business alone could do the entire $50 million.

Eric McAfee: if we get the calculations that we're...

Eric McAfee: expecting quite frankly I mean $100 or $99 plus $35 plus LCFS credits.

Speaker Change: times an average of 500.

Amit Dayal: So actually, an excess of 50 million. But our ethanol business will have at least one quarter, maybe even two quarters of the benefits of the NDR, which is 15 million to $29 million spending on LCFS values. Our India business should be expanding its contract. And because of some things going on in the winter time, we're looking to have expanded margins in the winter time. So you add it all up and you're actually significantly in access to 15 million dollars of positive cash flow. So the 50 was us taking some of the unknowns and putting it into the calculation.

Eric McAfee: I guess it's actually $50 million right there. So, actually in excess of $50 million.

Eric McAfee: But our ethanol business will have at least one quarter, maybe even two quarters of the benefits of NDR, which is $15 million to $29 million, depending on LCFS values.

Speaker Change: Our India business should be expanding its contract.

Speaker Change: and because of some things going on in the wintertime, we're looking to have expanded margins in the wintertime.

Speaker Change: So you add it all up and you're actually significantly in excess of $50 million of positive cash flow. So the 50 was us taking some of the unknowns and putting it into the calculation.

Eric McAfee: Amen.

Speaker Change: Amen.

Amit Dayal: Yeah, I think we lost your argument. Yeah, try it again. I was asking about the renewal in India. The renewal coming up. Last time it was for $150 million; you know, one year contract. Do you think this time it could be similar or a bigger amount for even a longer term duration contract? For reasons of conservatism, because this was one of the first large contracts, we previously had a $40 million contract. This one was 150. We only used 60% of plant capacity in fulfilling this. So we have increased the capacity of the plant, as you may know.

Amit Dayal: Yeah, I think we've lost you, Amet.

Speaker Change: Yeah, I think we lost you on that.

Amit Dayal: Yes, I was asking about the renewal in India. The contract renewal coming up, last time it was for $150 million, you know, a one-year contract. Do you think this time it could be similar or a bigger amount for even a longer-term duration contract?

Speaker Change: [inaudible]

Speaker Change: Yeah, try it again.

Speaker Change: Yes, I was asking about the renewal in India.

Speaker Change: The new contract renewal coming up? Last time it was for $150 million, you know, one-year contract. Do you think this time it could be similar or a bigger amount for even a longer term duration contract?

Eric McAfee: For reasons of conservatism, because this was one of the first large contracts, we previously had a $40 million contract. This one was $150 million.

Speaker Change: For reasons of conservatism, because this was one of the first large contracts, we previously had a $40 million contract. This one was $150 million. We only used 60% of plant capacity.

Speaker Change: in fulfilling this.

Eric McAfee: We only used 60% of plant capacity in fulfilling this, so we have increased the capacity of the plant. As you may know, we are planning also to do another expansion of capacity, frankly, in the fourth quarter of this year. So we would expect it to be a much larger contract, utilizing more of our existing capacity, and we'll continue to expand in order to take on larger demand. Just as a reminder, 5% blend is about 1.25 billion gallons per year. They're currently running at a little over 250 million gallons per year, so the market is a billion gallons short, and the oil marketing companies continue to try to fill that billion-gallon gap.

Amit Dayal: We're planning also to continue to do another expansion of capacity, frankly, in the fourth quarter of this year. So we would expect it to be a much larger contract, utilizing more of our existing capacity, and work continue to expand in order to take on larger demand. Just as a reminder, 5% blend is about 1.25 billion gallons per year. They're currently running at a little over 250 million gallons per year. So the market is a billion gallons short, and the oil marketing companies continue to try to seek to fulfill that billion gallon gap.

Speaker Change: So, we have increased the capacity of the plant. As you may know, we are planning also to continue to do another expansion of capacity.

Speaker Change: frankly, in the fourth quarter of this year.

Speaker Change: So, we would expect it to be a much larger contract, utilizing more of our existing capacity and continue to expand in order to take on larger demand.

Speaker Change: Just as a reminder, 5% blend is about 1.25 billion gallons per year. They're currently running at a little over 250 million gallons per year. So the market is a billion gallons short.

Speaker Change: and the oil marketing companies continue to try to seek to fulfill that billion-gallon gap.

Amit Dayal: Just last one on the IPO process there. I mean, have you actually started any formal work to, you know, get this going, or are you still in sort of the plan? We have already contacted investment banking firms. We have our leaders in place inside the company, and the financial results of the past years have trended the way that the investment makers gave us guidance. And so we're actively in the process. I would give guidance over the course of this quarter. We'll be working closely with narrowing the investment bank down to the lead bank and specifically determining timing. The India Sensex market continues to do just brilliantly.

Amit Dayal: Just last one, on the IPO process there, I mean, have you actually started any formal work to, you know, get this going, or are you still in sort of the plan?

Speaker Change: understood. Just last one on the IPO process there, I mean have you actually started any formal work to you know get this going or are you still in sort of the

Eric McAfee: We have already contacted investment banking firms, we have our leaders in place inside the company, and the financial results of the past years have trended the way that the investment makers gave us guidance. And so we're actively involved in the process. I would give guidance that over the course of this quarter, we'll be working closely with narrowing the investment bank down to the lead bank and specifically determining timing. The Indian Sensex market continues to do just brilliantly.

Speaker Change: We have already contacted investment banking firms. We have.

Speaker Change: are leaders in place inside the company and the financial results of the past years have trended the way that the investment makers gave us guidance and so we're actively in the process.

Speaker Change: I would give guidance that over the course of this quarter, we'll be working closely with narrowing the investment bank down to the lead bank.

Speaker Change: and specifically determining timing. The India Sensex market continues to do just brilliantly. And so I think that the timing will be earlier or at least that's what we expect the advice to be but we're going through that process right now.

Amit Dayal: And so I think that the timing will be earlier, or at least that will, that's what we expect the advice to be, but we're going through that process right now. So is this potentially 2024 end of year type of catalyst, or is it a 2025 you think if everything falls into line with how are you planning things? I would be surprised if it was 2024, the certainly if the investment banking firms came back with a strong notion, we can move the paperwork that fast because we're already an audited public company. So much of the work that delays things does not need to be done by us.

Eric McAfee: And so I think that the timing will be earlier, or at least that's what we expect the advice to be. But we're going through that process right now.

Amit Dayal: So, is this potentially a 2024 end-of-year type of catalyst, or is it 2025? I think so, if everything falls into line with how you are planning things.

Speaker Change: So is this a potentially 2024 end-of-year type of catalyst or is it a 2025?

Speaker Change: If everything falls into line with how you are planning things.

Eric McAfee: I would be surprised if it was 2024, though, certainly if the investment banking firms came back with a strong notion that we can move the paperwork that fast because we're already an audited public company. So much of the work that delays things does not need to be done by us. And the India process is a very quick process. It's basically the investment bank that does the due diligence. So, yes, it's possible we could do the fourth quarter, but I don't I don't put that as an expectation. My expectation is the first half of next year.

Speaker Change: I would be surprised if it was 2024, though certainly if the investment banking firms came back with a strong notion, we can move the paperwork that fast because we're already an audited public company, so much of the work that delays things does not need to be done by us.

Amit Dayal: And the India process is a very quick process. It's basically the investment bank does the due diligence. So yes, it's possible we could do the fourth quarter, but I don't put that as an expectation. My expectations first half of next year.

Speaker Change: And the India process is a very quick process. It's basically the investment bank does the due diligence. So yes, it's possible we could do the fourth quarter, but I don't put that as an expectation. My expectation is first half of next year.

Amit Dayal: Thank you very much. That's a lot. Yeah, absolutely. Thank you.

Amit Dayal: Understood. Thank you, Eric. That's all I have. Yeah, absolutely.

Speaker Change: Understood. Thank you, Eric. That's all I have.

Operator: Thank you. Our next question is coming from Dave Storms with Stonegate. Your line is live.

David Storms: Our next question is coming from Dave Storms with Stone Gaze. Your line is life. Good morning. Dave.

Speaker Change: Yeah, absolutely.

Speaker Change: Thank you. Our next question is coming from Dave Storms with Stonegate. Your line is live.

Dave Storms: Good morning.

David Storms: First of all, congratulations on inclusion in the R3. I'm very excited about that. My first question is just about the asset disposal taken in the quarter and the loss on that. Is there any more color you can give us on that? Did you say asset disposal? Yes, loss on asset disposal. Yeah, we launched the mechanical vapor compression. It's called equipment fabrication phase and made the executive decision that the zebra unit, which we had put in place and operated a month. The commissioning phase of that should not move forward because we could expand the mechanical vapor compression and do exactly the energy savings and other goals we had and do it in one integrated unit rather than running two units.

Dave Storms: How's it going? First of all, congratulations on being included in R3. I'm very excited about that. My first question is just about the asset disposal taken in the quarter and the loss on that. Is there any more color you can give us on that?

Dave Storms: Hey Dave.

Dave Storms: How's it going? First of all, congratulations on inclusion in the R3. Very excited about that. My first question is just about the asset disposal taken in the quarter and the loss on that. Is there any more color you can give us on that?

Eric McAfee: Did you say asset?

Speaker Change: Did you say asset disposal?

Eric McAfee: Yes, we'll also ask. Yeah, we, we, yeah, we launched the mechanical vapor compression, it's called the equipment fabrication phase, and made the executive decision that the ZBREX unit, which we had put in place and operated for a month, that the commissioning phase of that should not move forward, because we could expand the mechanical vapor compression and do exactly the energy savings and other goals we had and do it in one integrated unit rather than running two units.

Speaker Change: Yes, loss on asset disposal.

Speaker Change: Yeah, we launched the mechanical vapor compression, it's called the equipment fabrication phase, and made the executive decision that the ZBREX unit, which we had put in place in the operating

Speaker Change: a month, that the commissioning phase of that should not move forward because we could expand the mechanical vapor compression and do exactly the energy savings and other goals we had and do it in one integrated unit rather than running two units.

Eric McAfee: So we decided to reserve against our investment in Zebrex. We will be able to use that equipment in other places and in that operation as well as potentially in our jet fuel plant. But we took a conservative view, which is we wrote off the entire amount. If we happen to rely utilize some of the equipment, that's just a benefit.

Eric McAfee: So we decided to reserve against our investment in ZBREX. We will be able to use that equipment in other places in that operation, as well as potentially in our jet fuel plant. But we took a conservative view, which is we wrote off the entire amount, and if we happen to utilize some of the equipment, then that's just a benefit and all. Is there any scheduled downtime we should be aware of in the back? or was most of that...

Speaker Change: So we decided to reserve against our investment in Zebrax.

Speaker Change: We will be able to use that equipment in other places in that operation, as well as potentially in our jet fuel plant. But we took a conservative view, which is we wrote off the entire amount, and if we happen to utilize some of the equipment, then that's just a benefit.

David Storms: Understood. That's very clear.

David Storms: Thank you.

Andrew Foster: And then just sticking with ethanol. Is there any scheduled downtime? I think we should be aware of in the back half of 2024, or was most of that handled when you did all the upgrades in the first half of the year. And we continue to try to do some of the integration work as we move along. We did a significant amount of that when we had our downtime last spring. It is likely that we will have some. Probably I would say days of downtime. It won't be anything like we're going to turn the plan off for a month.

Speaker Change: Understood. That's very clear. Thank you. And then just sticking with ethanol, is there any scheduled downtime we should be aware of in the back half of 2024, or was most of that handled when you did all the upgrades in the first half of the year?

Andrew Foster: Andy, do you want to talk? We continue to try to do some of the integration work as we move along. We did a significant amount of that when we had our downtime last spring. It is likely that we will have some, I would say, days of downtime. It won't be anything like we're going to turn the plant off for a month. It won't be anything dramatic like that, but when you're cutting over systems and things like that, there's likely to be two to three days of outage here and there, but it won't be anything that would be months long or anything like that.

Speaker Change: Andy, do you want to talk? We continue to try to do some of the integration work as we as we move along. We did a significant amount of that when we had our downtime last spring.

Speaker Change: It is likely that we will have.

Speaker Change: Some

Andy Foster: probably I would say days of downtime. It won't be anything like we're going to turn the plant off for a month. It won't be anything dramatic like that.

Andrew Foster: It won't be anything dramatic like that. But when you're cutting over systems and things like that, there's likely to be, you know, two to three days of outage here and there, but it won't be it won't be anything that would be, you know, a month longer and like that.

Andy Foster: When you're when you're cutting over systems and things like that. There's likely to be You know two to three days of outage here and there but it won't be it won't be anything that would be you know Months long or anything like that

David Storms: Understood.

Dave Storms: Thank you for taking my questions and good luck in the third quarter. Thanks, Dave. Thank you. Our next question is coming from Ed Woo.

Unknown Executive: Thank you for taking my questions, and good luck on the third quarter. Thanks, Dave.

Speaker Change: Understood. Thank you for taking my questions and good luck in the third quarter.

Unknown Executive: Thank you.

Operator: Thank you. Our next question is coming from Ed Woo with Ascendian Capital. Your line is live.

Ed Woo: I think for the near term, as I said, I think August, I'm going to suggest that we'll see some softening in the ethanol margin environment just because of the large production numbers that we posted over the last few weeks. The export program was dented a little bit by the big storms in the Gulf and Texas, particularly. We expect to see that start to recover as we move into September. I think they're playing catch up right now.

Dave Storms: Thanks, Dave.

Edward Woo: Our next question is coming from Ed Wu with Sendient Capital. Your line is life. Yeah, congratulations on all the progress. Can you talk about just your outlook for ethanol pricing at margin and the impact of oil prices, the relatively stable oil prices have on it? Thank you. I think for the near term, as I said, I think August, I'm going to I'm going to suggest that we'll see some softening in the ethanol margin environment just because of the large production numbers that we posted over the last few weeks. The export program was dented a little bit by the big storms and the Gulf in Texas, particularly.

Speaker Change: Thank you. Our next question is coming from Ed Wu with Ascendian Capital. Your line is live.

Ed Wu: Yeah, congratulations on all the progress. Can you talk about just your outlook for ethanol pricing and margin and the impact that oil prices, the relatively stable oil prices have on it?

Speaker Change: Thank you.

Speaker Change: I think for the near term, as I said, I think August, I'm going to suggest that we'll see some softening in the ethanol margin environment just because of the large production numbers that we posted over the last few weeks.

Speaker Change: The export program was dented a little bit by the big storms in the Gulf and Texas particularly. We expect to see that start to recover as we move into September. I think they're playing catch up right now.

Andrew Foster: We expect to see that start to recover as we move into September. I think they're they're playing catch up right now. I think September and October look more favorable. And then as we get into the fourth quarter, typically, you know, around harvest, you'll see some disconnections in the market, depending on. Right now, it doesn't appear that there's a strong bean program. It looks like the crop for corn is going to be very strong. Those things can change. You know, typically when we get into December, that's when margins really start to soften just because of demand issues.

Andrew Foster: I think September and October look more favorable. And then as we get into the fourth quarter, typically, you know, around harvest, you'll see you'll see some disconnections in the market, depending on right now. It doesn't appear that there's a strong bean program. It looks like the crop for corn is going to be very strong, but those things can change. You know, typically, when we get into December, that's when margins really start to soften, just because of demand issues.

Speaker Change: I think September and October look more favorable.

Speaker Change: And then as we get into the fourth quarter, typically, you know, around harvest, you'll see you'll see some

Speaker Change: Disconnections in the market depending on right now. It doesn't appear that there's a strong bean program

Andrew Foster: So I would say that, you know, for August, we're going to see some softening. I would expect to see a little bit of a rebound in September and October, and then as we get into the end of the fourth quarter, we're going to see that typical seasonal softening again.

Andrew Foster: So I would say that, you know, for August, we're going to see some softening. I would expect to see a little bit of rebound in September and October. And then, as we get into the end of the fourth quarter, we're going to see that, you know, typical seasonal softening again.

Speaker Change: For August, we're going to see some softening. I would expect to see a little bit of rebound in September and October. And then as we get into the end of the fourth quarter, we're going to see that typical seasonal softening again.

Edward Woo: Great. Thanks for answering my questions. And I wish you guys good luck. Thank you.

Ed Woo: Great, thanks for answering my questions, and I wish you guys good luck. Thank you! Thank you. Thank you.

Operator: Thank you. We have reached the end of our questions at this time, so I would like to turn the floor back to management for closing.

Speaker Change: Thank you. Thank you.

Todd Waltz: We have reached the end of our questions at this time. So I'd like to turn the floor back to management for closing comments. Thank you to the amettis analysts, stockholders, and others for joining us today. Please review the Amettis company presentation that is posted on the homepage of the Amettis website. We look forward to talking with you about participating in the growth opportunities that Amettis. Thank you for attending today's Amettis earnings conference call. Please visit the investor section of the Amettis website where we'll post a written version and an audio version of this Amettis earnings review and business update.

Speaker Change: Thank you. We have reached the end of our questions at this time, so I'd like to turn the floor back to management for closing comments.

Eric McAfee: Thank you to the Ametis analysts, stockholders, and others for joining us today. Please review the Ametis company presentation that is posted on the homepage of the Ametis website. We look forward to talking with you about participating in the growth opportunities at Ametis.

Speaker Change: Thank you to the Ametis analysts, stockholders, and others for joining us today. Please review the Ametis company presentation that is posted on the homepage of the Ametis website. We look forward to talking with you about participating in the growth opportunities at Ametis.

Operator: Thank you for attending today's Ametis Earnings Conference call. Please visit the investor section of the Ametis website, where we'll post a written version and an audio version of this Ametis earnings review and business update.

Speaker Change: Thank you for attending today's AMETIS Earnings Conference call. Please visit the investor section of the AMETIS website where we'll post a written version and an audio version of this AMETIS earnings review and business update. Ollie?

Todd Waltz: Thank you.

Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.

Unknown Executive: This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your pertur-

Ollie: Thank you. This concludes today's teleconference. You may disconnect your lines at this time and we thank you for your participation.