Q2 2026 Aemetis Inc Earnings Call

August 6, 2026

Speaker #1: Hello, and welcome to the Aemetis second quarter 2026 earnings conference call. Joining us today are Eric McAfee, Chairman and Chief Executive Officer; Todd Waltz, Chief Financial Officer; and Andy Foster, President of Aemetis Advanced Fuels.

Speaker #1: I will now turn the call over to Mr. Todd Waltz.

Speaker #2: Thank you, and welcome, everyone. Before we begin, I'd like to remind you that during the call, we'll make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Todd Waltz: Thank you, welcome everyone. Before we begin, I'd like to remind you that during the call, we'll make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risk and uncertainty that could cause actual results to differ materially from those expressed or implied. Please refer to our earnings release and SEC filings for a discussion of these risks. For the Q2 2026, revenue grew 20% to $62.7 million, compared to $52.2 million in the Q2 2025, with growth in both the California ethanol and dairy renewable natural gas operating segments. biodiesel revenue relied upon sales from private customers. The three India Oil Marketing Companies customers issued about $17 million of allocations to our India subsidiary in late July, allowing us to begin biodiesel shipments under this new tender.

Speaker #2: These statements involve risk and uncertainty that could cause actual results to differ materially from those expressed or implied. Please refer to our earnings release and SEC filings for a discussion of these risks.

Speaker #2: For the second quarter of 2026, revenue grew 20% to $62.7 million, compared to $52.2 million in the second quarter of 2025. With growth in both the California ethanol and dairy renewable natural gas operating segments, biodiesel revenue relied upon sales from private customers.

Speaker #2: The three India oil marketing company customers issued about $17 million of allocations to our India subsidiary in late July, allowing us to begin biodiesel shipments under this new tender.

Speaker #2: Operating income improved by $16.4 million to $5.8 million in Q2 2026, compared to an operating loss of $10.7 million for the second quarter of 2025.

Todd Waltz: Operating income improved by $16.4 million to $5.8 million in Q2 2026, compared with an operating loss of $10.7 million for the Q2 2025. Net loss improved by $14 million to $9.4 million, compared to $23.4 million in the Q2 2025. Adjusted EBITDA increased by $15.5 million to $9.7 million in the Q2 2026, compared with a -$5.8 million in the Q2 2025. The reconciliation of adjusted EBITDA to net loss is described in our earnings release issued today. An important new revenue component should be noted. Section 45Z credits contributed $8.6 million, $2.2 million in dairy renewable natural gas, and $6.4 million in California ethanol.

Speaker #2: Net loss improved by $14 million to $9.4 million, compared to $23.4 million in the second quarter of 2025. Adjusted EBITDA increased by $15.5 million to $9.7 million in the second quarter of 2026, compared with a negative $5.8 million in the second quarter of 2025.

Speaker #2: The reconciliation of adjusted EBITDA to net loss is described in our earnings release issued today. An important new revenue component should be noted: Section 45(c) credits contributed $8.6 million—$2.2 million in dairy renewable natural gas, and $6.4 million in California ethanol.

Speaker #2: Excluding 45(c) credits entirely, Q2 gross profit of $13.8 million still improved by more than $8 million year-over-year, driven by lower-priced corn at $6.07 a bushel versus $6.42 a bushel; a 12% increase in ethanol volume; ethanol pricing up 9%; and a significant 38% increase in RNG volume.

Todd Waltz: Excluding 45Z credits entirely, Q2 gross profit of $13.8 million still improved by more than $8 million year-over-year, driven by lower price corn, $6.07 a bushel versus $6.42 a bushel, a 12% increase in ethanol volume, ethanol pricing up 9%, and a significant 38% increase in RNG volume. Cash at the end of the quarter was $1 million. On 9 July, we announced that we received $17.6 million in net cash proceeds from the sale of Section 45Z credits. Capital investments supporting our energy efficiency projects and investments in biogas production were $8.6 million in the quarter and $15.1 million for the H1. With that overview, I'll turn the call over to Eric.

Speaker #2: Cash at the end of the quarter was $1 million. On July 9, we announced that we received $17.6 million in net cash proceeds from the sale of Section 45(c) credits.

Speaker #2: Capital investments supporting our energy efficiency projects and investments in biogas production were $8.6 million in the quarter and $15.1 million for the first half.

Speaker #2: With that overview, I'll turn the call over to Eric.

Speaker #3: Thank you, Todd. Let's highlight three key takeaways from the second quarter. First, Q2 continues the financial inflection points we noted during the last earnings call.

Eric McAfee: Thank you, Todd. Let's highlight three key takeaways from the Q2. First, Q2 continues the financial inflection points we noted during the last earnings call. We grew consolidated revenue 20% year-over-year, posted an improvement in operating income of $16.4 million, and increased adjusted EBITDA by $15.5 million compared to the Q2 2025. Second, we benefited from the California Air Resources Board approval a year ago of seven new Low-Carbon Fuel Standard pathways for our renewable natural gas business at an average carbon intensity score of -380, compared with the -150 default carbon intensity score for these digesters shown in Q2 2025 revenue. The approval of seven biogas digesters has been providing additional revenue at the higher LCFS value each quarter since Q3 2025, and six additional biogas digester pathways are nearing approval.

Speaker #3: We grew consolidated revenue 20% year-over-year, posted an improvement in operating income of $16.4 million, and increased adjusted EBITDA by $15.5 million compared to the second quarter of 2025.

Speaker #3: Second, we benefited from the California Air Resources Board approval a year ago of seven new Low Carbon Fuel Standard pathways for our renewable natural gas business, at an average carbon intensity score of -380, compared with the -150 default carbon intensity score for these digesters, shown in Q2 2025 revenue.

Speaker #3: The approval of seven biogas digesters has been providing additional revenue at the higher LCFS value each quarter since Q3 2025, and six additional biogas digester pathways are nearing approval.

Speaker #3: These LCFS pathway approvals substantially expand the LCFS credit generation per MMBTU of RNG produced and will continue to drive meaningful revenue increases as we scale production.

Eric McAfee: These LCFS pathway approvals substantially expand the LCFS credit generation per MMBtu of RNG produced and will continue to drive meaningful revenue increases as we scale production. Third, our capital projects are advancing. Let's review these projects and how we continue to create value as federal and state laws are being implemented. In our dairy renewable natural gas business, every MMBtu of dairy RNG generates four revenue streams: the natural gas molecule, a California Low-Carbon Fuel Standard credit that is sold to oil companies, a federal D3 RIN that is sold to oil companies, and a Section 45Z production tax credit. The LCFS credit and the 45Z tax credit are calculated using the carbon intensity of our biofuel. Credits are generated in proportion to how far below the standard a biofuel is scored.

Speaker #3: And third, our capital projects are advancing. Let's review these projects and how we continue to create value as federal and state laws are being implemented.

Speaker #3: In our dairy renewable natural gas business, every MMBtu of dairy RNG generates four revenue streams: the natural gas molecule; a California Low Carbon Fuel Standard credit that is sold to oil companies; a federal D3 RIN that is sold to oil companies; and a Section 45(c) production tax credit.

Speaker #3: The LCFS credit and the 45(c) tax credit are calculated using the carbon intensity of our biofuel, so credits are generated in proportion to how far below the standard a biofuel is scored.

Speaker #3: An LCFS pathway at minus 380 generates substantially more credit per MMBtu than the minus 150 default score. We have seven approved LCFS pathways, averaging minus 380, with six more in the CARB process.

Eric McAfee: An LCFS pathway at -380 generates substantially more credit per MMBtu than the -150 default score. We have seven approved LCFS pathways averaging -380, with six more in the CARB process. For the 45Z production tax credit, the credits we sold in July were valued at $15.20 per MMBtu at a -42 emissions rate, an emissions rate which generates significantly less revenue than required under the one big beautiful bill. We anticipate that the Department of Energy will correct this oversight with an updated emissions rate that more accurately reflects the carbon reductions created by the renewable natural gas that we produce. As dairy renewable natural gas volume grows, all four revenue streams grow.

Speaker #3: For the 45(c) production tax credit, the credits we sold in July were valued at $15.20 per MMBTU at a minus 42 emissions rate. That emissions rate generates significantly less revenue than required under the One Big Beautiful Bill.

Speaker #3: We anticipate that the Department of Energy will correct this oversight with an updated emissions rate that more accurately reflects the carbon reductions created by the renewable natural gas that we produce.

Speaker #3: As dairy renewable natural gas volume grows, all four revenue streams grow. But the approval of LCFS pathways in California, and a correct emissions rate issued by the Department of Energy, are expected to create significant increases in revenues from the same level of renewable natural gas production.

Eric McAfee: The approval of LCFS pathways in California and a correct emissions rate issued by the Department of Energy are expected to create significant increases in revenues from the same level of renewable natural gas production. We are waiting for the six pending digesters to be approved under the California LCFS and the corrected 45Z emissions rate to be implemented by the Department of Energy so we can generate renewable natural gas revenues that are consistent with existing laws in California and at the federal level. Congress and the California legislature already passed the underlying laws that allow for these improvements. We now need the carbon pathways and the 45Z calculations to be implemented to generate the full amount of revenues from our RNG production.

Speaker #3: We are waiting for the six pending digesters to be approved under the California LCFS, and for the corrected 45(c) emissions rate to be implemented by the Department of Energy, so we can generate renewable natural gas revenues that are consistent with existing laws in California and at the federal level.

Speaker #3: Congress and the California legislature already passed the underlying laws that allow for these improvements. We now need the CARB pathways and the LCFS 45(c) calculations to be implemented to generate the full amount of revenues from our RNG production.

Speaker #3: We operate 12 biogas digesters today, taking waste from 15 dairies and transporting biogas through a 36-mile pipeline to our RNG production facility that is connected to the utility gas pipeline.

Eric McAfee: We operate 12 biogas digesters today, taking waste from 15 dairies and transporting biogas through a 36-mile pipeline to our RNG production facility that is connected to utility gas pipeline. We have more than 50 dairies under contract. Two more methane capture digesters are scheduled to be completed within a month, and we have received 10 of the 15 cleanup and compression units that will be located at the next 15 digesters to come online. Regarding our California ethanol business, we had a good quarter and have two projects that are slated to significantly improve our financial performance, in addition to the expected reduction in corn emission rates that will increase Section 45Z revenues. Our Mechanical Vapor Recompression system installation is an energy efficiency project that is expected to add approximately $32 million in annual cash flow from three positive impacts on our operations.

Speaker #3: We have more than 50 dairies under contract. Two more methane capture digesters are scheduled to be completed within a month, and we have received 10 of the 15 cleanup and compression units that will be located at the next 15 digesters to come online.

Speaker #3: Regarding our California ethanol business, we had a good quarter and have two projects that are slated to significantly improve our financial performance. In addition to the expected reduction in corn emission rates, that will increase 45(c) revenues.

Speaker #3: Our mechanical vapor recompression system installation is an energy efficiency project that is expected to add approximately $32 million in annual cash flow from three positive impacts on our operations.

Speaker #3: We will reduce about 80% of the natural gas needed for our operations at the Keyes Ethanol Plant, which is a direct cost reduction that begins at commissioning.

Eric McAfee: We will reduce about 80% of the natural gas needed for our operations at the Keyes Ethanol plant, which is a direct cost reduction that begins at commissioning. Removing fossil gas lowers the carbon intensity of our ethanol, which raises the value of the Section 45Z credit and LCFS credits generated by every gallon of ethanol. The MVR project is making excellent progress. The key equipment arrived in June, including six 3,500-horsepower turbo fans, and the final large component arrived on-site this week. Foundation concrete was poured in the past week, and the system is expected to be operational by the end of 2026. The MVR project has received approximately $19.7 million in grants and Section 48C tax credits from the California Energy Commission, Pacific Gas and Electric Company, and the IRS. Second, we are installing upgraded corn oil separation units.

Speaker #3: Removing fossil gas lowers the carbon intensity of our ethanol, which raises the value of the 45(c) credit and the LCFS credits generated by every gallon of ethanol.

Speaker #3: The MVR project is making excellent progress. The key equipment arrived in June, including six 3,500-horsepower turbofans, and the final large component arrived on site this week.

Speaker #3: Foundation concrete was poured in the past week, and the system is expected to be operational by the end of 2026. The MVR project has received approximately $19.7 million in grants and Section 48(c) tax credits from the California Energy Commission, Pacific Gas and Electric Company, and the IRS.

Speaker #3: Second, we are installing upgraded corn oil separation units. Distillers corn oil is recovered from the ethanol process and sold as a low-carbon feedstock into the renewable diesel and sustainable aviation fuel markets.

Eric McAfee: Distillers corn oil is recovered from the ethanol process and sold as a low-carbon feedstock into the renewable diesel and sustainable aviation fuel markets, where demand has strengthened this year with higher federal renewable volume obligations. We have two of the three corn oil extraction units in operation, with a third scheduled for later this fall. Combined, the units are expected to approximately double corn oil production compared to our Q1 production rate. Our India biofuels business is shipping biodiesel to Oil Marketing Companies and to private customers. Biodiesel revenue was $2.5 million in the quarter, down sequentially, as the Oil Marketing Companies worked through their tender process that concluded in late July. On 4 August, we announced allocations to supply more than 18 million liters to India's three government-owned Oil Marketing Companies over a three-month period, which is expected to generate approximately $17 million in revenue.

Speaker #3: Demand has strengthened this year with higher federal Renewable Volume Obligations. We have two of the three corn oil extraction units in operation, with the third scheduled for later this fall.

Speaker #3: Combined, the units are expected to approximately double corn oil production compared to our first quarter production rate. Our India biofuels business is shipping biodiesel to oil marketing companies and to private customers.

Speaker #3: Biodiesel revenue was $2.5 million in the quarter, down sequentially, as the oil marketing companies worked through their tender process that concluded in late July.

Speaker #3: On August 4th, we announced allocations to supply more than 18 million liters to India's three government-owned oil marketing companies over a three-month period, which is expected to generate approximately $17 million in revenue.

Speaker #3: Deliveries under the tender allocation are underway. We are also expecting to increase supply to private commercial customers due to increases in the price of Indian petroleum diesel this year.

Eric McAfee: Deliveries under the tender allocation are underway. We are also expecting to increase supply to private commercial customers due to increases in the price of India petroleum diesel this year. India's stated goal is to raise biodiesel blending from 1% today to 5% by 2030, which would create about 1.2 billion gallons of annual biodiesel consumption. We continue to prepare documentation for a potential public offering of a minority stake in Universal Biofuels, subject to market conditions.

Speaker #3: India's stated goal is to raise biodiesel blending from 1% today to 5% by 2030, which would create about 1.2 billion gallons of annual biodiesel consumption.

Speaker #3: We continue to prepare documentation for a potential public offering of a minority stake in Universal Biofuels, subject to market conditions. Our outlook on milestones and timing includes two dairy digesters completing within a month, the third corn oil unit operational later this fall, doubling corn oil production over Q1 2026, MVR operational at the ethanol plant by the end of 2026, and six additional low-carbon fuel standard pathways moving through CARB with the customary look back on approval. Dairy RNG and corn ethanol feedstock 45(c) CF GREET updates from the Department of Energy are generating significant increases in renewable natural gas and ethanol revenues.

Eric McAfee: Our outlook on milestones and timing includes two dairy digesters completing within a month, the third corn oil unit operational later this fall, doubling corn oil production over Q1 2026, MVR operational at the ethanol plant by the end of 2026, six additional Low-Carbon Fuel Standard pathways moving through CARB with the customary look back on approval, dairy RNG and corn ethanol feedstock 45ZCF-GREET updates from the Department of Energy, generating significant increases in renewable natural gas and ethanol revenues. Lastly, India deliveries across the current allocation period with additional orders anticipated before year-end. Thank you to our shareholders, analysts, and partners for your continued support. Operators, let's take some questions.

Speaker #3: And lastly, India deliveries are occurring across the current allocation period, with additional orders anticipated before year-end. Thank you to our shareholders, analysts, and partners for your continued support.

Speaker #3: Operators, let's take some questions.

Speaker #2: Thank you. Ladies and gentlemen, at this time we will be conducting our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, at this time we'll be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypads. A confirmation tone will indicate your line is in the question queue, and you may press star two if you wish to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question today is coming from Derrick Whitfield with Texas Capital. Your line is live.

Speaker #2: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you wish to remove your question from the queue.

Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Speaker #2: Thank you. Our first question today is coming from Derek Whitfield with Texas Capital. Your line is live.

Speaker #4: Good morning, Eric and team. Hello, Derek. I wanted to start on 45(c) given the likely positive revision you'll receive in your CI score when the PER is finalized in November policy.

Derrick Whitfield: Good morning, Eric and team.

Eric McAfee: Hello, Derek.

Derrick Whitfield: Wanted to start on 45Z. Given the likely positive revision you'll receive in your CI score when the PER is finalized in November policy, do you have a sense of the amount of uplift you'll receive and the potential catch-up value for past molecules that have been processed under existing policy?

Speaker #4: Give a sense of the amount of uplift you'll receive, and the potential catch-up value for past molecules that have been processed under existing policies.

Speaker #3: We have three different 45(c) updates we're expecting—two of which we have high confidence in, and the third of which we have moderate-level confidence in.

Eric McAfee: We have three different 45Z updates we're expecting, two of which we have high confidence in, the third of which we have moderate level confidence in. The first is the dairy renewable natural gas calculation. A month ago, it was determined it was yet to be determined. That number in California, converted into kilograms, would be about a -420 under the federal 45Z calculator. We're currently at -42. We do not have good clarity on where we're going to land between -42 and -420, can't give a whole lot of guidance on that. Unfortunately, the Department of Energy has not been really open about their process either. The calculator is currently generating about $15.20. We have posted on our presentation showing that we could earn over $75 per MMBtu at a -375.

Speaker #3: The first is the renewable dairy renewable natural gas calculation. A month ago, it was determined it was yet to be determined. So that number in California, converted into kilograms, would be about negative $420 under the federal 45(c) calculator.

Speaker #3: We're currently at negative $42. We do not have good clarity on where we're going to land between negative $42 and negative $420, so I can't give a whole lot of guidance on that.

Speaker #3: And unfortunately, the Department of Energy has not been really open about their process either. But the calculator is currently generating about $15.20. We have posted on our presentation showing that we could earn over $75 per MMBtu at a negative $3.75.

Speaker #3: So the range is rather wide—about what we should see per MMBTU. In ethanol, the corn emission rate improvement would be anywhere from $6 million to $24 million of actual net cash improvement.

Eric McAfee: The range is rather wide about what we should see per MMBtu. In ethanol, the corn emission rate improvement would be anywhere from $6 million to $24 million of actual net cash improvement. That range is more defined because of the USDA calculator. What is not defined yet is exactly what periods it'll apply to. Treasury guidance has shown it would start 1 January 2025. If it does, we'll have about an 18-month look back at a one-time recapture of that year and a half, then we share a portion of that with other parties involved with calculating the emissions rate and the farmers, of course. The annual impact will be probably in the $6 to $12 million per year, but with a one-time catch-up in the emissions rate. The last and third 45Z update is CO2 reuse.

Speaker #3: And that range is more defined because of the USDA calculator. What is not defined yet is exactly what periods it will apply to. Treasury guidance has shown it would start January 1, 2025.

Speaker #3: And so, if it does, then we'll have about an 18-month look-back and a one-time recapture of that year and a half. Then we share a portion of that with other parties involved with calculating the emissions rate, and the farmers, of course.

Speaker #3: So, the annual impact will probably be in the $6 to $12 million per year range, but with a one-time catch-up in the emissions rate.

Speaker #3: The last and third 45(c) update is CO2 reuse. We currently reuse all of our CO2. We produce roughly 150,000-plus tons a year of CO2.

Eric McAfee: We currently reuse all of our CO2. We produce roughly 150,000+ tons a year of CO2. We have a facility that's operated by the Messer Group of Germany, we currently do not get any 45Z calculation value for that. Under 45Q, the reuse of CO2 generates value, under 45Z, currently it does not, we're working to fix that. The economic value of that would be somewhere probably in the $12 to $15 million a year range as we optimize CO2. Lastly, I'll just mention this, the MVR will generate a significant amount of additional 45Z revenue by decreasing our natural gas use by 80%.

Speaker #3: And we have a facility that's operated by the Messer Company of Germany, so we currently do not get any 45(c) calculation value for that.

Speaker #3: Under 45Q, the reuse of CO2 generates value, but under 45C, currently it is not. And we're working to fix that. So, the economic value of that would be somewhere probably in the $12 to $15 million a year range, as we optimize CO2.

Speaker #3: And then lastly, I'll just mention this: the MVR will generate a significant amount of additional 45(c) revenue by decreasing our natural gas use by 80%.

Speaker #4: Great update and very detailed. I wanted to shift over to California LCFS with my follow-up. I wanted to get your thoughts on the recovery of Low Carbon Fuel Standard credits, just based on what we saw last week in one key CARB report, and also the proliferation of LCFS markets that we're seeing. We're increasingly seeing some of your competitors sell into the CFR market as well.

Derrick Whitfield: Great update and great detail. Wanted to shift over to California LCFS with my follow-up. Wanted to get your thoughts on the recovery of Low-Carbon Fuel Standard credits, just based on what we saw last week in the Q1 CARB report and also the proliferation of LCFS markets that we're seeing, and we're increasingly seeing some of your competitors sell into the CFR market as well. Would love your thoughts on how to expect the recovery of LCFS credit prices.

Speaker #4: So, we'd love your thoughts on how to expect the recovery of LCFS credit prices.

Speaker #3: Andy, do you want to talk about CFR?

Eric McAfee: Andy, do you want to talk about CFR?

Speaker #4: Yeah, just briefly, we're going through the process of qualifying for CFR. As you know, Derek, it's about a nine-month process to get registered and all the rest.

Andy Foster: Just briefly, that we're going through the process of qualifying for CFR. As you know, Derrick, it's about a 9-month process to get registered and all the rest. We're seeing significantly better values for the gas sold to Canada. Obviously, that's an appealing market, and as more companies start to do that, obviously, that'll probably normalize some of the values that we're seeing. We are actively underway and going through the registration process in Canada.

Speaker #4: We're seeing significantly better values for the gas sold to Canada, so obviously that's an appealing market. And as you know, as more companies start to do that, that'll probably normalize some of the values that we're seeing.

Speaker #4: But we are actively underway and going through the registration process in Canada.

Speaker #3: And the California LCFS, predictably, is in deficit. What I think the market is learning is that as renewable diesel capacity increases, you have two constraints on generating more LCFS credits.

Eric McAfee: The California LCFS predictably is in deficit. What I think the market is learning is that as renewable diesel capacity increases, you have two constraints on generating more LCFS credits. First constraint is that there's only a certain amount of low-carbon feedstock in the market. Tallow, UCO, distillers corn oil is very limited, you can double your renewable diesel capacity, you're not doubling the number of LCFS credits when more soybeans and canola is used as the number of gallons increased. The second very real constraint is that over 80% of the diesel in California, about a 4 billion-gallon market, is already renewable diesel. If you look back over the last 36 months and say, "Wow, we're going to double the amount of renewable diesel used in California," you run out of trucks.

Speaker #3: The first constraint is that there's only a certain amount of low-carbon feedstock in the market—tallow, UCO, distillers corn oil—all are very limited. And so, you can double your renewable diesel capacity, but you're not doubling the number of LCFS credits.

Speaker #3: When more soybeans and canola are used as the number of gallons increases, the second very real constraint is that over 80% of the diesel in California—about a 4 billion gallon market—is already renewable diesel.

Speaker #3: So if you look back over the last 36 months and say, "Wow, we're going to double the amount of renewable diesel used in California," you run out of trucks.

Speaker #3: So, those two very significant constraints mean that you're not seeing this growth rate of LCFS credits. Technically, you see a decrease over the last two quarters in LCFS credits produced by renewable diesel.

Eric McAfee: Those two very significant constraints means that you are not seeing this growth rate of LCFS credits. Technically, you see a decrease over the last 2 quarters in LCFS credits produced by renewable diesel. Electricity was down, renewable diesel was down. You are seeing declines in the production of LCFS credits at the same time as you know every single year, the number of LCFS credits that have to be delivered is increased. This is resulting in a larger deficit every quarter. We expect this will go on for approximately the next 15 years. If you just read the data, that is sort of the way it is going to work. At some point in time, traders will realize it is cheaper to buy $100 or $200 LCFS credit than to run out of the LCFS bank and have to pay the max, which is today over $250 per credit.

Speaker #3: Also, electricity was down; renewable diesel was down. You're seeing declines in the production of LCFS credits at the same time as, you know, every single year the number of LCFS credits that have to be delivered has increased.

Speaker #3: So this is resulting in a larger deficit every quarter. We expect this will go on for approximately the next 15 years. If you just read the data, that's sort of the way it's going to work.

Speaker #3: And at some point in time, traders will realize it's cheaper to buy $100 or $200 LCFS credits than to run out of the LCFS bank and have to pay the max, which is, today, over $270 per credit.

Speaker #4: Very helpful. Thanks for your time.

Derrick Whitfield: Very helpful. Thanks for your time.

Speaker #1: Thank you. Our next question will be coming from Ed Wu with Ascending Capital. Your line is live.

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

Eric McAfee: Ed.

Speaker #4: Yeah, congratulations on all the progress. Going back to the LCFS credit recovery, the pricing has gone from about $55 a ton to about $80 a ton recently.

Ed Woo: Yeah. Congratulations on all the progress. Going back to the LCFS credit recovery, the pricing has gone from about $55 a ton to about $80 a ton recently. Do you have any guidance on how high do you think it can go?

Speaker #4: Do you have any guidance on how high you think it can go?

Speaker #3: Excellent. Well, the cap is $270, so we know the regulators—it's $200 plus the cost of living index starting in 2016—as the calculator.

Eric McAfee: Well, the cap is $270. We know the regulators, it's $200 plus the cost of living index starting in 2016 is the calculator. We fully expect that the oil industry is doing what it can to try to convince California regulators not to enforce the rules. I think the reality is this is a 20-year program that was adopted in July of 2025, and there's a very limited amount of appetite for people to go back through what was a four-year process of putting this in place. We expect that the program itself will continue to generate deficits, and we're largely just measuring how long it will take for major purchasers and obligated parties to decide that they should load up and be well-positioned for the longer term. Right now, I think people are relying upon the large amount of credits in the bank.

Speaker #3: We fully expect that the oil industry is doing what it can to try to convince California regulators not to enforce the rules. I think the reality is this is a 20-year program that was adopted in July of 2025, and there's a very limited amount of appetite for people to go back through what was a four-year process of putting this in place.

Speaker #3: And so, we expect that the program itself will continue to generate deficits, and we're largely just measuring how long it will take for major purchasers and obligated parties to decide that they should load up and be well positioned for the longer term.

Speaker #3: Right now, I think people are relying upon the large amount of credits in the bank. But if that excess pile of credits gets rapidly depleted, I think more and more traders will look out three to four years and decide they don't want to pay $270 per credit.

Eric McAfee: As that excess pile of credits gets rapidly depleted, I think more and more traders will look out three to four years and decide they don't want to pay $270 per credit.

Speaker #4: Great, that sounds good. Thanks for answering my questions, and I wish you guys good luck. Thank you.

Ed Woo: Great. That sounds good. Thanks for answering my questions. I wish you guys good luck. Thank you.

Speaker #3: Thanks, Ed.

Eric McAfee: Thanks, Ed.

Speaker #1: Thank you. Our next question is coming from Amit Dayal with HC Wainwright. Your line is live.

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

Speaker #4: Thank you. Good afternoon, Eric and team. With respect to sort of the India IPO process, for the India biodiesel plant, I mean, the start and stop nature of operations over there, is that becoming a little bit of an overhang on the process, Eric, or how should we think about that item being checked off in 2026?

Amit Dayal: Thank you, Grafton, Eric, and team. With respect to sort of the India IPO process for the India biodiesel plant, the start-and-stop nature of operations over there, is that becoming a little bit of an overhang on the process, Eric? How should we think about that item being checked off in 2026? Does this get pushed out to 2027?

Speaker #4: Or does this get pushed out to 2027?

Speaker #3: The start-stop of our operations certainly has an impact—no question at all about that. But having an equal, if maybe even a stronger impact, is the global increase in the price of crude oil as a result of the Iranian war and the politics between the US and India, in which the US now kind of controls India's purchases from Russia of crude oil.

Eric McAfee: The start-stop of our operation certainly has an impact. No question at all about that. Having an equal, if maybe even a stronger impact is the global increase in the price of crude oil as a result of the Iranian war and the politics between the US and India, in which the US now kind of controls India's purchases from Russia of crude oil. That has caused the India domestic diesel price to be increased multiple times in the last few months. The external drivers in favor of biodiesel adoption are very positive. What's having a bigger impact on our business than whether OMCs this month or next month are ordering as much as they could is just the impact of the higher energy prices for both liquefied natural gas as well as for liquid fuels resulting from the Iranian war on the overall stock market.

Speaker #3: That has caused the India domestic diesel price to be increased multiple times in the last few months. And so, the external drivers in favor of biodiesel adoption are very positive.

Speaker #3: What's having a bigger impact on our business than what the OMCs do this month or next month, or ordering as much as they could, is just the impact of the higher energy prices for both liquefied natural gas as well as for liquid fuels.

Speaker #3: Resulting from the Iranian war, on the overall stock market, the overall stock market in India in the first three quarters of the year had some trouble.

Eric McAfee: The overall stock market in India in the first three quarters of the year had some trouble. People expected that higher energy prices would hit earnings. There's been a bit of a recovery in the last month or so, and we've seen some IPOs that have now gone through. There was a bottleneck in the IPO pipeline because of the overall market price decrease that happened in the first few months or first actually two quarters of 2026. That is what's directly impacting our timing. As we talk about the IPO in India, we talk about market conditions. That's really the IPO market conditions that we're talking about. They're getting IPOs done now, there was and is a pipeline of IPOs in process in India. We are very well-positioned for growth in India as well as diversification.

Speaker #3: People expected that higher energy prices would hit earnings. There's been a bit of a recovery in the last month or so, and we've seen some IPOs that have now gone through.

Speaker #3: But there was a bottleneck in the IPO pipeline because of the overall market price decrease that happened in the first few months, or actually two quarters, of 2026.

Speaker #3: That is what's directly impacting our timing. And as we talk about the IPO in India, we talk about market conditions—that's really the IPO market conditions that we're talking about.

Speaker #3: They're getting IPOs done now, but there was—and is—a pipeline of IPOs in process in India. We are very well positioned for growth in India, as well as diversification.

Speaker #3: We have talked about additional biodiesel sites, and that's actively in process. Our strategy is to place our biodiesel plants close to sources of supply. We are the largest biodiesel producer in the country.

Eric McAfee: We have talked about additional biodiesel sites that's actively in process. Our strategy is to place our biodiesel plants close to sources of supply. We are the largest biodiesel producer in the country. We intend to stay that way. We're working on diversification. Our diversification is into what they call compressed biogas, but we call it renewable natural gas, as well as into sustainable aviation fuel. We're executing on our plan. We have increasing confidence that the IPO market is showing some robustness. We have engaged outside lawyers, accountants, IPO managers. We have a new CFO that joined us last year. We have a new CEO that joined us a while ago. We have an IPO in process in India and subject to market conditions, it'll happen as soon as the market's available for us to be the next one in line.

Speaker #3: We tend to stay that way. And we're working on diversification. Our diversification is into what they call compressed biogas, but we call it renewable natural gas.

Speaker #3: As well as into sustainable aviation fuel. So we're executing on our plan. We have increasing confidence that the IPO market is showing some robustness.

Speaker #3: And we have engaged outside lawyers, accountants, and IPO managers. We have a new CFO that joined us last year. We have a new CEO that joined us a while ago.

Speaker #3: We have an IPO in process in India. And, subject to market conditions, it will happen as soon as the market is available for us to be the next one in line.

Speaker #4: Understood, Eric. Thank you for that. You also mentioned some of that capacity is going to private parties, not the oil marketing companies. Is this a new development, or have you always supplied some of that capacity to private players over there?

Amit Dayal: Understood, Eric. Thank you for that. You also mentioned some of that capacity is going to private parties, not the Oil Marketing Companies. Is this sort of a new development or have you already always been supplying some of that capacity to private players over there?

Speaker #3: Yeah, it's a very good question. It is a new development. It is a very large market. The price of diesel in India has been controlled by the government.

Eric McAfee: Yeah, it's a very good question. It is a new development. It is a very large market. The price of diesel in India has been controlled by the government. It's a part of their policy. With the inability for Russia to supply cheap crude oil into India, the India government's been forced to push up the price of diesel several times in the last few months. As a result, commercial customers can buy from us at attractive prices that are a discount of 3% to 5% below what they have to pay for diesel at the pump. They also get some other benefits like lower particulate emissions and some other indirect benefits. A savings of up to 5% on fuel is certainly material. We have large commercial customers that we are either already shipping or expanding our relationship with that could be very significant volumes for us.

Speaker #3: It's a part of their policy. And with the inability for Russia to supply cheap crude oil to India, the Indian government has been forced to increase the price of diesel several times.

Speaker #3: In the last few months, as a result, commercial customers can buy from us at attractive prices that are a discount of 3% to 5% below what they have to pay for diesel at the pump.

Speaker #3: They also get some other benefits, like lower particulate emissions and other indirect benefits. But a savings of up to 5% on fuel is certainly material.

Speaker #3: So, we have large commercial customers that we are either already shipping to or expanding our relationship with, and that could mean very significant volumes for us.

Speaker #4: Understood. Just one last question from me. Are you comfortable with your liquidity position right now? The balance sheet seems to have quite a bit of current debt.

Amit Dayal: Understood. Just last one from me. Are you comfortable with your liquidity position? Right now the balance sheet seems to have quite a bit of current debt. Just wondering, how you are planning to sort of address that part of the story.

Speaker #4: So, just wondering how you are planning to sort of address that part of the story?

Speaker #3: We have had a very positive and productive working relationship with our private credit provider, Third Eye Capital, since 2018. And just within the last couple of months, we had a visit by all the principals in the firm.

Eric McAfee: We have had a very positive and productive working relationship with our private credit provider, Third Eye Capital, since 2018. Just within the last couple of months, had a visit by all the principals in the firm and a very productive multi-day project tour and update, and we are looking forward to continued very successful relationship with Third Eye Capital. I should note that about $120 million of our funding with Third Eye is at an effective interest rate of about 5%, and we have some more expensive debt with them as well. Our goal is to continue paydowns as we do these catch-ups on 45Z and other events or very large cash events that should be happening later on this year. That we can refinance the balance of those amounts all to longer term and lower interest rates.

Speaker #3: And, very productive, multi-day project tour and update. And we are looking forward to a continued, very successful relationship with Third Eye Capital. I should note that about $120 million of our funding with Third Eye is at an effective interest rate of about five percent.

Speaker #3: And we have some more expensive debt with them as well. But our goal is to continue paydowns as we do these catch-ups on 45Z and other events.

Speaker #3: So, very large cash events should be happening later on this year, and we can refinance the balance of those amounts all to longer-term and lower interest rates.

Speaker #4: Thank you, Eric. That's all I have. Appreciated.

Amit Dayal: Thank you, Eric. That's all I have. Appreciate it.

Speaker #3: Thanks, Ahmed.

Eric McAfee: Thanks, Amit.

Speaker #1: Thank you. Our next question is coming from Dave Storms with Stone Gaze. Your line is live.

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

Speaker #5: Hello, and thank you for taking my questions. I just wanted to start with the gross margin profile. I am expecting that you'll be entering 2027 with an even stronger profile following the MVR coming online.

Dave Storms: Hello, and thank you for taking my questions. Just maybe want to start with the gross margin profile, expecting that you'll be entering 2027 with an even stronger profile following the MVR coming online. As we're thinking through the impact of that, do you think there will be more leverage to the gross margin on the revenue gains from the MVR coming online or the cost takeouts that are also associated with that?

Speaker #5: As we're thinking through the impact of that, do you think there will be more leverage to the gross margin on the revenue gains from the MVR coming online, or the cost takeouts that are also associated with that?

Speaker #3: Very good question. About $8 million of the $32 million, so approximately one quarter, comes from the petroleum natural gas cost reduction every month that we currently have to endure.

Eric McAfee: Very good question. About $8 million of the $32 million, so approximately one quarter comes from the petroleum natural gas cost reduction every month that we have to currently endure. We're reducing fossil natural gas by about 80%. The 45Z and LCFS value adds up to about $24 million a year. As LCFS credits increase, the value of that $24 million increases. We do anticipate actually to have more than $32 million of ongoing value, especially as LCFS credits, which are currently in the $80 range up from a little over $50 earlier this year, as they are expected to exceed $100 and then eventually exceed $150. That'll increasingly reward us for this energy efficiency project at the ethanol plant.

Speaker #3: So we're reducing fossil natural gas by about 80%. The 45Z and LCFS value adds up to about $24 million a year. As LCFS credits increase, the value of that $24 million increases.

Speaker #3: And so, we do anticipate actually having more than $32 million of ongoing value, especially as LCFS credits, which are currently in the $80 range, up from a little over $50 earlier this year.

Speaker #3: As they are expected to exceed 100, and then eventually exceed 150, that will increasingly reward us for this energy efficiency project at the ethanol plant.

Speaker #5: That's a great call. I appreciate that. Turning to your MMBtus, back of the envelope, Matt, are your digesters running 40,000 to 50,000 MMBtus per year?

Dave Storms: That's great color. I appreciate that. Turning to your MMBtus, back of the envelope math has your digesters running 40,000 to 50,000 MMBtus per year. Obviously with variances based on the weather, when it gets colder, the digesters digest less. Is that maybe a fair run rate though for these two new digesters that are coming online, or are there other variables we should keep in mind?

Speaker #5: Obviously, with variances based on the weather, when it gets colder, the digesters digest less. Is that maybe a fair run rate, though, for these two new digesters that are coming online?

Speaker #5: Or are there other variables we should keep in mind?

Speaker #3: The size of the dairy is the number one criteria, and so we will be updating some of that information over the course of the next quarters.

Eric McAfee: The size of the dairy is the number one criteria, and so we will be updating some of that information over the course of the next quarters. Dairies in general are 25,000 to 30,000 MMBtus per year. That's what our average dairy generation is, and these dairies are approximately average dairy size.

Speaker #3: But dairies in general are 25,000 to 30,000 MMBTUs per year. That's what our average dairy generation is. And these dairies are approximately average dairy size.

Speaker #5: That's perfect. Thank you for taking my questions, and good luck in the next quarter.

Dave Storms: That's perfect. Thank you for taking my questions and good luck on the next quarter.

Speaker #3: Sure. Thank you, Dave.

Eric McAfee: Sure. Thank you, Dave.

Operator: Thank you. We have reached the end of our question and answer session, I'd like to turn the call back over to Mr. McAfee for any closing remarks.

Speaker #1: Thank you. We have reached the end of our question-and-answer session, so I'd like to turn the call back over to Mr. McAfee for any closing remarks.

Speaker #3: Thank you to Aemetis stockholders, analysts, and others for joining us today. We look forward to talking with you about participating in the growth opportunities at Aemetis' TOD.

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

Speaker #4: Thank you for attending today's Aemetis earnings conference call. A written and audio version of this earnings review will be posted to the investor section of the Aemetis website.

Todd Waltz: Thank you for attending today's Aemetis earnings conference call. A written and audio version of this earnings review will be posted to the investors section of the Aemetis website. Ollie?

Speaker #4: Ali?

Operator: Thank you. Thank you, ladies and gentlemen. This does conclude today's call. You may disconnect your lines at this time. We thank you for your participation.

Speaker #1: Thank you. Thank you, ladies and gentlemen. This does conclude today's call. And you may disconnect your lines at this time. And we thank you for your participation.

Q2 2026 Aemetis Inc Earnings Call

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