Aemetis, Inc. Q4 FY2025 earnings call

First, our dairy renewable natural gas platform reached an important milestone in 2025, achieving positive segment net income and EBITDA, with production increasing 61% year over year in the fourth quarter. We had net income of $12.2 million in our biogas segment in the fourth quarter of 2025 and expect strong annual growth in cash flow and profitability from the biogas segment for the next four years. Second, we continued to advance mechanical vapor recompression upgrade at our Keys ethanol plant in 2025, expected to increase plant cash flow by approximately $32 million per year when completed in 2026. Third, revenue is generated by renewable fuel sales and environmental credit monetization. The dairy RNG platform produced approximately 405,000 MMBTUs of renewable natural gas in 2025 and expanded to 12 operating digesters. We expect RNG production to grow in 2026 as additional dairy digesters come online. The California ethanol plant had $10.3 million revenue in 2025 and expects to install mechanical vapor recompression system in 2026, which will reduce natural gas consumption by 80% and increase annual cash flow. The India biodiesel facility had $29.7 million revenue in 2025 and is expanding into biogas production and sustainable aviation fuel. We plan to complete the India IPO in 2026 and focus on scaling production and monetizing environmental credit values in 2026.

For the fourth quarter of 2025, revenue plus tax credits totaled $53.7 million compared to $47 million in the fourth quarter of 2024. Quarterly gross profit improved to $7.7 million compared to a gross loss of $2 million in the prior year period. Operating loss improved to $2.5 million compared to $13.5 million in the fourth quarter of 2024. The net loss improved to $5.3 million compared to $16.2 million last year. For the full year 2025, revenue plus tax credits totaled $208 million compared to $268 million in 2024. Operating loss improved to $37.2 million and net loss improved to $77 million compared to $87.5 million in the prior year. During the fourth quarter, ethanol and RNG operations generated $10.3 million of production tax credits. Our biogas segment had net income of $12.2 million in the fourth quarter of 2025. The dairy renewable natural gas platform achieved positive segment net income and EBITDA in 2025, with production increasing 61% year over year in the fourth quarter. The dairy RNG business produced approximately 405,000 MMBTUs of renewable natural gas in 2025 and expanded to 12 operating digesters. The California ethanol plant had $10.3 million revenue in 2025 and about 65 million gallons of annual production capacity. The India biodiesel facility had $29.7 million revenue in 2025 and significant production capacity.

We expect strong annual growth in cash flow and profitability from the biogas segment for the next four years. RNG production is expected to grow in 2026 as additional dairy digesters come online. The mechanical vapor recompression upgrade at the Keys ethanol plant is expected to increase plant cash flow by approximately $32 million per year when completed in 2026. We expect the price of low-carbon fuel standard credits to continue to rise and the 45Z production tax credit to be a significant generator of cash flow. We plan to complete the India IPO in 2026.

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Uncertainty exists in waiting for the DOE to issue the GREET model and the calculated emissions value letter process. The India biodiesel market is affected by policy and international crude oil supply uncertainties.

Q: Could you give us your expectations for capital investment for 2026 between your R&G and your ethanol business?

A: We'll be wrapping up our MBR system. Total investment there is going to be roughly in the $40 million range. will be also continue to expand. We have 15 contracted H2S units for the next 15 digesters we're building. That's about a $27 million contract that we have with MPL. And then separately, the build out of those 15, which will overlap into 2027, is roughly going to be another $70 million on top of that. Ethanol, for us, is a story of two worlds, pre-MDR and post-MDR. This quarter, next quarter, we're going to be benefiting from removal of indirect land use change penalty for our corn on top of our existing carbon intensity. We're currently at roughly $12 million a year. Post-MBR, we get rid of 80% of our natural gas costs, but also 80% of the penalty that we have for natural gas use. And so post-MBR, 45Z and LCFS values go up and generate roughly another almost $3 million a month of cash flow.

Q: How much of it has already been made, or is the $40 million going to take place in 2026?

A: Much of it's already been made. We're well past half of that right now, and the reining of balance happens over the next four months or so. A contribution should hit us in third quarter, be in full place in the fourth quarter.

Q: Will the product coming out of this post-MVR need to be qualified, et cetera?

A: It's, for the MVR, we're monetizing it, quote, right away, unquote. There's not a long year or two-year delay required.

Q: Can we expect you to perform in line with sort of the cash flows we saw materialize in 2025?

A: We should be significantly in excess of 2025, which represented virtually no 45 Z for their ethanol plant from a cashflow perspective and minimal from our RNG. Our business is highly leveraged towards performance of the California low carbon fuel standard credit, which credit prices were $40 eight months ago. They're 70 today and should be continued to rise.

Q: Will investors just have to learn to live with this start-stop situation over there?

A: Historically, the ethanol market operated that way until the government committed themselves to growth, and then they went from 1 percent blend to 20 percent straight line in about 48 months. The biodiesel market is in a similar spot. We believe that biodiesel will have the similar kind of rise. Our IPO is not based upon solely being a biodiesel producer. It's also about the future energy in India, which includes compressed biogas, which we would call in the U.S. renewable natural gas. In India, it's known as CBG. as well as sustainable aviation fuel.

Q: How comfortable are you with the current run rate of the Keys plan? And is there any potential plans to expand it once you are through the MVR project?

A: We have an industry that, with the adoption of E15 in California, already had about 600 million gallons of new market open up from an approval perspective. And nationally, I think there will be an E15 adoption, certainly with the Iranian war. It's a top of mind as a affordability move. So I do expect nationally that ethanol plants will be looking at expansion as a strategic goal. We might talk about it later on this year. But frankly, the margin improvement and sustainable positive cash flow from our existing asset is what we're focusing on right now.

Q: How do you see the logistics in the near term for the continued implementation of those, those tailwinds and, you know, maybe any more color you could give us there?

A: There, uh, the big lift was July 4th, 2025. And the, uh, senate house in the in the white house when they negotiated a doubling of the number of years and a significant expansion in the amount of 45 production value that biofuels would obtain specifically removing indirect land use change penalty which had depressed the amount that had been available that was completely removed we're now in the implementation phase of that political decision by the President, frankly, and also both the House and the Senate. And the first step of that adoption is the Treasury's announcement on February 4th of 2026 of 176 pages of tax guidance. We are now just awaiting the spreadsheet known as the GREET model from the Department of Energy, which will allow us to calculate the amount of 45Z revenue that we generate from every MMBQ or every ethanol gallon.

Q: Have you considered expanding to other international markets? And also, what is your expansion opportunities in India?

A: Let's take India first because that's what we're actually implementing right now. We are definitely planning to locate plants near feedstock sources, and we have a special relationship with the leading feedstock supplier in the tallow business, for example. And so we do expect to have multiple plants located near feedstock sources. Our India business is diversifying into biogas and then into taking one of our facilities making into sustainable aviation fuel and renewable diesel plant. Our IPO in India is driving the adoption of new markets, quite frankly, the Indians are not currently involved with, including sustainable aviation fuel.