Aemetis Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: Second-quarter revenues rose to $52.2 million, up $9.3 million from Q1, driven primarily by resumed biodiesel shipments to oil marketing companies in India.
  • Positive Sentiment: The dairy renewable natural gas segment added a new digester that boosts output by 30% and secured CARB approval for seven pathways at a –384 carbon intensity score, unlocking roughly 120% more LCFS credit revenue.
  • Positive Sentiment: New federal Section 45Z production tax credits (estimated at ~$82/MMBtu) combined with LCFS credits rising from ~$42 to ~$60 are expected to drive strong positive cash flow in H2 2025 and beyond.
  • Negative Sentiment: Aemetis reported a net loss of $23.4 million and closed Q2 with just $1.6 million in cash, highlighting near-term liquidity and profitability pressures.
  • Positive Sentiment: The India subsidiary shipped $11.9 million of biodiesel and co-products in Q2 and is preparing for an early 2026 IPO, while also pursuing local ethanol production opportunities.
AI Generated. May Contain Errors.
Earnings Conference Call
Aemetis Q2 2025
00:00 / 00:00

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Operator

Welcome to the Aemetis Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Joining us on today's call is Eric McAfee, the Chairman and CEO of Aemetis Andy Foster, the President of Aemetis Advanced Fuels and Todd Waltz, the Chief Financial Officer of Aemetis.

Operator

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

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Thank you, Matthew, and welcome, everyone. Before we begin, I'd like to remind everyone that during this call, we'll be making forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, but are not limited to, those factors discussed in our earnings release issued today and in our most recent Form 10 ks and Form 10 Q filings with the Securities and Exchange Commission under the caption Risk Factors and Management Discussion and Analysis of Financial Condition and results of operations, as well as in our other filings with the SEC. We undertake no obligation to publicly update any forward looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Please refer to our earnings release and our SEC filings for a more detailed discussion of these risks and uncertainties. Full financial details can be found in our second quarter twenty twenty five earnings release and Form 10 Q available on the Aemetis website and EDGAR. I'll briefly highlight the key items. Revenues were 52,200,000.0 up by $9,300,000 from the first quarter revenue, primarily due to the fulfillment of biodiesel orders with oil marketing companies in India. California ethanol saw a slightly lower production rate of 13,800,000 gallons to maximize margins during the quarter.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

California Dairy Renewable Natural Gas recognized $3,100,000 of revenue from 11 operating digesters during Q2, using the CARB approved LCFS pathway for seven of the digesters. As we'll discuss later, Section 45C tax credit revenue from the production of dairy renewable natural gas were not included in the second quarter since we recognize revenue when credits are sold. Operating loss improved by $4,900,000 from the 2025, reflecting reduced SG and A in the 2025. Interest expense, excluding the Series A preferred unit accretion, rose to $12,300,000 in line with our capital structure and investment phase. We reported a net loss of $23,400,000 roughly flat versus Q2 last year after adjusting for the nonrecurring charge during the prior quarter of last year.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Cash at year end was $1,600,000 following $3,600,000 of investment in carbon intensity reduction and dairy renewable natural gas production expansion. As Eric will describe shortly, we expect multiple revenue streams from India, LCFS credits and federal tax incentives to ramp up as the year progresses, positioning us for a stronger 2025. Further, we remain focused on improving our capital structure. With cash flow expected to increase in the second half of this year, we anticipate further progress on debt reduction and are actively pursuing low cost financing and refinancing alternatives. Now, Eric McPhee, our Chairman and CEO, will review our businesses.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Thanks, Todd. I'll start with a business segment update, followed by updates on future projects and supportive regulations. In our dairy r RNG business, we are steadily scaling up gas production with a new multi dairy digester coming online this month that is expected to increase RNG production by 30%. As planned, we expect to reach 550,000 of renewable natural gas production capacity this year and grow to a 1,000,000 MMBtu annual run rate by the 2026. We are now operating or building digesters at 18 dairies, funded by equity and $50,000,000 of USDA guaranteed financing with twenty year repayment terms and attractive interest rates.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Seven of our dairy pathways were approved by CARB during the second quarter at a blended negative three eighty four carbon intensity score, unlocking about 120% more LCFS credit revenue for those dairies starting this quarter, compared to digesters with a negative 150 default pathway score. Four more pathways are currently under review with CARB and are expected to be approved under the faster Tier one pathway process that was adopted by CARB last month. Additionally, these dairy RNG facilities qualify for federal Section 48 investment tax credits. To date, we have sold 83,000,000 in investment tax credits related to our RNG facilities and received approximately $70,000,000 in cash. We monetize the production of dairy RNG in multiple ways.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Until this year, we have generated revenues primarily through the sale of the gas molecule, the sale of California Low Carbon Fuel Standard credits, and the sale of federal D3 renewable identification numbers. Since 01/01/2025, we've been generating transferable Section 45Z production tax credits, which we are working to sell and generate additional income this quarter. In July 1, or I should say on 07/01/2025, the California Air Resources Board amendments to the LCFS program that will apply for the next twenty years became effective, resulting in an increase in LCFS credit prices from about $42 to about $60 in the past month or so. The current cap on the price of LCFS credits is $268 for the year 2025. The LCFS program is expected to incur deficits this year that would reduce the inventory of available LCFS credits and be expected to continue to increase credit prices.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Collectively, molecule revenues, LCFS credit sales, D3 RIN sales and the sale of 45Z production tax credits are expected to generate strong positive cash flow from operations this year and expanding operating cash flow in 2026 as new production comes online. At our ethanol plant, our key vendors are fabricating equipment for the 30,000,000 mechanical vapor recompression system. The MVR project is expected to reduce natural gas use by 80% and add an estimated $32,000,000 in annual cash flow starting in 2026. We have been awarded $20,000,000 in grants and tax credits to help fund the MDR system. Ethanol pricing has improved since earlier this year and the recent EPA approval of summer E15 blending and lower corn prices have improved margins.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

We decreased production during the spring in order to optimize margins, but recently increased ethanol production to support market demand and participate in the higher margin environment. California legislation to approve E15 year round passed the assembly with a unanimous vote and now is advancing through the state senate for approval that is expected later this year. In India, we resumed biodiesel deliveries to government oil marketing companies in April, following a six month pause in OMC purchasing, shipping $11,900,000 of biodiesel and co products in the second quarter. We are targeting an IPO of our India subsidiary in early twenty twenty six, and recently appointed a new Chief Financial Officer at our India subsidiary to lead the process. We are also actively seeking to expand into ethanol production in India, which is strongly supported by government policies and pricing.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Let's look at our future projects. For our sustainable aviation fuel and renewable diesel project, we have received the authority to construct air permits and conditional use permit for our 90,000,000 gallon per year SAF and renewable diesel facility at the Riverbank site in California. When operated solely for sustainable aviation fuel, capacity will be approximately 78,000,000 gallons per year. We are in active discussions on financing structures and are awaiting further clarity on the 45Z production tax credit and biofuel mandates to support project financing. For our carbon capture project at the Riverbank site, we have completed initial site work and conductor installation for our geologic characterization well.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

The data we obtained from the next phase of drilling will support our Class six CO2 sequestration permit application with EPA. Once permitted, the site is expected to sequester up to 1,400,000 tons of CO2 annually. Let's review some regulatory events that support a strong growth outlook for Aemetis and the biofuels and biogas industries. Aemetis is positioned to benefit from a range of federal and state policies that directly enhance the value of its low carbon biofuel and biogas operations. The California Low Carbon Fuel Standard.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Amendments adopted by CARB to establish a twenty year framework for reducing transportation fuel emissions became effective on July 1. In response, LCFS credit prices rose by nearly 50% and are expected to continue to increase as credit supply tightens and credit demand increases. We expect further strengthening during the 2025 and for the foreseeable future. The Federal Renewable Fuel Standard. The sale of renewable natural gas qualifies for D3 RINs, currently adding $19 per MMBtu in value at today's prices.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Section 45Z production tax credits. Effective 01/01/2025, the new federal Section 45Z transferable tax credits support low emission ethanol and RNG production. Aemetis is currently applying treasury guidance to calculate and market these credits for both our Keyes plant ethanol production and our RNG sales, with additional clarification expected later this year. In addition to any further clarification in 2025, the Section 45Z credits will increase in 2026 under the recent One Big Beautiful Bill, which removes indirect land use from the ethanol plant calculation and requires dairy specific CI scores for renewable natural gas. We estimate this will double the 45Z credits in 2026 for each business, even with no further changes to the current treasury guidance.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Section 48, investment tax credits. Aemetis received $19,000,000 in cash proceeds in Q1 twenty twenty five from the sale of solar and biogas related investment tax credits. We expect additional sales of both investment and production tax credits in Q3 twenty twenty five and in Q1 twenty twenty six for the balance of 2025 production tax credits, plus additional sales of both PTCs and ITCs later in 2026. E15 ethanol blend expansion. The US EPA has approved temporary summer use of 15% ethanol in 49 states, and new legislation is advancing to allow year round use, including in California.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

E15 approval in all 50 states would expand the potential US ethanol market by more than 5,000,000,000 gallons per year from the current 14,000,000,000 gallons per year, while lowering fuel prices for consumers. In California, E15 should decrease fuel prices at the pump by $2,700,000,000 per year, according to a recent UC Berkeley study, while increasing the ethanol market by an estimated 600,000,000 gallons per year. In California, Governor Newsom has directed CARB to expedite the process for allowing the sale of E15 gasoline in the state.

Eric McAfee
Eric McAfee
CEO & Chairman of The Board at Aemetis

And as previously mentioned, the state house unanimously approved legislation that would allow for E15. California is currently the only US state that does not allow the sale of gasoline with higher than a 10% ethanol blend. These aligned policy developments in The US are expected to significantly strengthen Aemetis' revenue, cash flow, and project economics across its RNG, ethanol, carbon capture, and SAF RD businesses. Our India business is expected to grow with support from the India government for the benefits of biodiesel, ethanol and other biofuels to farmers, consumers and the environment. With aligned regulatory support and milestone execution underway, Aemetis is positioned for growth and improved cash flow through year end and throughout 2026. Now let's take some questions from our call participants.

Operator

Thank you, Mr. McAfee. We will now be conducting a question and answer session. You may press 2 if you'd like to remove your question from the queue. One moment while we poll for questions.

Operator

Your first question is coming from Matthew Blair from TPH. Your line is live.

Matthew Blair
MD - Refiners, Chemicals & Renewable Fuels Research at TPH&Co

Thank you and good morning, Eric. You know, congrats on getting the CARB approval for the the seven dairies at the end of the second quarter. I think you mentioned that that did not flow into your financial results. Could you talk about current LCFS prices around $60 what kind of EBITDA impact that might have for Aemetis? And are you currently waiting any other LCFS pathway approvals? Thank you.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Sure. Thanks, Matt. We have seven dairies already effective. We have four more pending right now. And then have additional ones that will be filing in the fourth quarter that are currently in the ninety day testing period.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So we would be expected to exit the year with a total of seven plus another five minuteimum. So at least 12 dairies either granted or soon to be granted. The new process, by the way, Tier one is significantly shorter than the two year process we went with Tier two. So the financial impact, I think I'm going get back to you on that one because it's highly correlated with the price of the credits. So when we were 42, it was one third less revenue than it is at 60.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

I think we cited it's roughly $19 per MMBtu, if recall correctly. But let's get back to you with a memo on this. The formula is well known, but the price is moving quickly. So we're trying to give investors a range of values per MMBtu for the LCFS. So we'll also endeavor to see if we can include that some press releases so people can see the impact as those prices change.

Matthew Blair
MD - Refiners, Chemicals & Renewable Fuels Research at TPH&Co

Sounds good. And then can I get your view on the D3 RINs by demand outlook? You know, this year, I think we're tracking for around like 1,600,000,000 D3 RINs generated. You know, you're looking at RVO for 2025 around 1.1 for '26 and '27. I think the proposal is around like thirteen, fourteen.

Matthew Blair
MD - Refiners, Chemicals & Renewable Fuels Research at TPH&Co

Do you have any hope that the EPA may revise up those initial twenty twenty six and twenty twenty seven D3 RVOs?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

As you know, we're in a comment period that ends tomorrow. And there is a universal opinion in biofuels that the D3 RIN is being understated. There was a mistake by the EPA and it was filed in the Federal Register, so it was printed for everybody to read that through no fault of their own, the oil industry is being forced to buy D3 RINs. As I think everybody knows, that's exactly opposite of what the renewable fuel standard was written to do. As George Bush, the president who signed the renewable fuel standard said, if you left it up to the oil companies, we would all just be buying oil from The Middle East.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So the point of the entire renewable fuel standard is to cause the adoption and to be focused on the availability of production, not on the amount of consumption. So those comments which you can read as public filings, you'll see ours as well, are focusing on what the actual renewable fuel standard regulation requires. Andy, you want to make a comment on that?

Andy Foster
Andy Foster
EVP - North America at Aemetis

No, I think that's you hit it exactly right, Eric. I think the it's a maybe not quite a mistake by some forces within the industry to skew in that direction. But the law is the law and we're going to emphasize that in our comments as well as many other biofuel producers around the country.

Matthew Blair
MD - Refiners, Chemicals & Renewable Fuels Research at TPH&Co

Great. Thanks for your comments.

Eric McAfee
Eric McAfee
CEO & Chairman of The Board at Aemetis

Excellent.

Operator

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

Derrick Whitfield
Derrick Whitfield
Managing Director at Texas Capital

Good morning, Eric and team, and thanks for taking my questions as well.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Good morning, Derek.

Derrick Whitfield
Derrick Whitfield
Managing Director at Texas Capital

Eric, could you update us on the progress of 45 of these you understand it with respect to timing of final rules from treasury and the GREET model that will be used for the provisional emission rate calculations?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

We are in the thick of it right now. And there is a update to the GREET model that has been presented to the DOE, and if accepted and adopted, it could be a matter of a few weeks at most, maybe even a one week span that they could update the GREED model. They've already updated it twice this year after the initial filing in January. So this would be a third update. That update would allow us to then generate 45Z credits in the month of August and sell them in August or September.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So the quick and easy way forward is for industry is for the Department of Energy to simply add a few cells, I think it's six or seven cells to the foreground of the GREED model. The 45Z final rules, there's proposed guidance and then final guidance. We currently have guidance. It's a January 2025 guidance. It's called intention to propose guidance, but it says on its face, this guidance can be used for transactions.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So we do have guidance. And frankly, that guidance is sufficient for us to transact 45Zs if the GREET model is updated and we're happy with the calculations. The reason why industry has to do this effort is that they were in a hurry, they admit they were in a hurry, and so they took all of the methane emissions and divided by, from all the animals in The United States and divided by all the estimated animals and said, okay, if you're going to make RNG, this is your average number and whether your project is better or worse doesn't matter, here's your number. And they acknowledged that's not correct, we are working to fix that. And the OBBB signed on July 4, helped clarify for the regulators exactly how the 45Z is going to work starting 01/01/2026, which helped clarify them for them what 2025 should look like.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So we're working to get that implemented. I would tell you that it's it's it's largely down to one or two people at this point in time. And our company has been very proactive in getting those formulas in front of DOE so we don't have to delay in terms of what kind of work needs to be done on the GREET model itself.

Derrick Whitfield
Derrick Whitfield
Managing Director at Texas Capital

And not to belabor the point, Eric, and we've had conversations on it because they could be material number for you guys for your dairy business. But as you kind of think about where you stand on the meta stand today as it relates to attending the registrations and tax ID numbers, and whether you would expect the credits to be retroactive for first half sales. I'd love your perspective on that. And again, we're still thinking about this as potentially a 60 to 80 per MMBTU type metric that we could see. Is that a reasonable range as well?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

The current calculation should be about $82 per MMBtu. And what we're missing is the DOE grid model that allows the foreground cells to be input to site to put in what state you're in, etc, it's through an anaerobic digester in order to put out the emissions rate that would generate that number. So we expect that the DOE will put out a model for 2025. That is not their current process. Currently, they're focusing on January 2026.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Industry in general is having to motivate them to see the value of putting out an amended model for 2025. But the values when we're done with it between a combination of the model plus the provisional emissions rate process, which is a opportunity for us to say, we're not happy with the total numbers come out of model, let's go ahead and get some project specific information from them. Between the two of them, we should end up at roughly $82 That goes up by the way, by the rate of inflation. So next year will be actually larger in the year after that larger, but current target is in the $82 per MMBT range.

Derrick Whitfield
Derrick Whitfield
Managing Director at Texas Capital

And Eric, just one part of that question I wanted to have you comment on to is just where you are a meta stands in attaining the registrations and tax ID numbers.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

We're fully registered. Andy, do you have any comment on this ethanol plants fully registered our RNG production facility. I would disclose to people that you don't have to register each one of the digesters because they're not producers of renewable natural gas, they produce biogas. So it's just our RNG production facility that's requires to be registered. So we're fully registered and have acknowledgments from IRS of that registration.

Derrick Whitfield
Derrick Whitfield
Managing Director at Texas Capital

That's great.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Now it's done on time. That's also done on a timely basis. So we don't have any issues there.

Derrick Whitfield
Derrick Whitfield
Managing Director at Texas Capital

Very good. Thanks,

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Eric. Thank you.

Operator

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

Eric McAfee
Eric McAfee
CEO & Chairman of The Board at Aemetis

Thank you. Good afternoon, Eric. Just a question on the monetization strategy for your production tax rates going forward. It's been a little lumpy in the past, but going forward, with this regulatory backdrop, do you think we can see a little bit more consistent monetization going forward?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Yes, Section 48 Investment Tax Credits, as we, I think, commented probably a year ago, We're expected to be lumpy as we do investments and then we go through a several quarter cycle of putting them all together and then selling them. And we are in the process of doing another Section 48 tax credit sale, which we would hope to close this quarter. But 45Z is more akin to revenue. And so we've already done a transaction in which a single customer signed up to multiple closings of tax credit purchases, we would anticipate that that's a format we're going to use for 45Z, with the expectation of the worst case scenario of one sale every quarter. Probably the most optimistic scenario would be a sale every forty five days, but certainly every quarter.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So 45Z should become a recurring quarterly revenue item. Somewhat harkening back to what Derek Whitfield just said, We've been generating 45Z since January. We have not reflected any of the revenue, because our revenue recognition policy is that upon the sale and receipt of cash, then we recognize the revenue. So if you look at our Q1 and Q2 revenues, you're not actually seeing any 45Z revenues, and frankly not seeing any LCFS revenues in those quarters. Both those types of credits, we recognize when they're sold.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

And so our dairy pathways approved in the second quarter are actually credits received literally in the last few days of the second quarter, and then are sold in the third quarter. So third quarter is going to be one of those quarters which we would expect would have some of the catch up on the LCFS, certainly catch up for the first half of the year on the 45Z if the Department of Energy files are amended agreed model. And so that you'll see this one time lumpiness on on quite a lot of cash and a lot of profit showing up, and then it'll become more of a quarterly, correlated with production.

Eric McAfee
Eric McAfee
CEO & Chairman of The Board at Aemetis

Understood. Thank you for that. With respect to the India IPO, is the I'm just trying to see if there's an official process that has already begun or is this just preparation on your end, that you will soon sort of get into sort of a formal mode of going public for that business over there?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

We have our new CFO on-site. He joined us in July. So we're not even, I think, a month into having him on board. Think it was about July 15. And so we're well into the process.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

There's not a public filing early in the process. Public filing comes after some review of documentation by the investment making firm and some other parties. So, we would expect to see sometime this fall that there would be public filing documents that people would be able to read. I don't think we're gonna press release that, but it will certainly become known. We'll mention it on our earnings calls, etcetera.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

But it'll be an administrative process with SEBI, which is the regulator in India.

Eric McAfee
Eric McAfee
CEO & Chairman of The Board at Aemetis

Understood. And then the use of proceeds, if this comes through within that timeline, what are you thinking, Eric? Is it to pay down debt or any other strategic initiatives?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

We definitely have the ability to transfer money to the parent company. The exact amount will be determined largely at our market conditions. But we are in a scenario in which some amount of money would be transferred to the parent. I do expect that probably would be invested in debt repayment. But as Todd mentioned at the end of his conversation, we are working on significant refinancing.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So it's possible we won't actually have any obligations for current pay, because we're re amortizing our senior debt in these refinancings over quite a long period of time, twenty and thirty years. So, and if that were to be the case, it would just be basically strengthening the cash position of the parent company and make giving us a little more flexibility for developments of these projects. But I would not anticipate that we're talking about the majority of the funds, I would anticipate probably 25% of the IPO proceeds would be for the parent company, and the balance would be for development. The India assets, I should mention, because we did talk about it a bit. The ethanol industry in India is very rapidly growing.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

It's increasing by another 50% over the next sixty months. And we're in the middle of what the India government is looking to implement to strengthen their agricultural sector, while at the same time lowering costs at the pump and having environmental benefits. So the ethanol industry in India is just very strongly supported. They set the price of the ethanol, they set the price of the corn, it is a very attractive business. And so we are very actively involved with the development of two sites for ethanol production.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

And a core part of our IPO in India is that we have a base biodiesel business that's expanding, but frankly, we are aggressively moving into ethanol. Even the recent news about heavy tariffs on India is being interpreted by Bloomberg and others as a negotiating tool to bring India to the table. And one of the open doors India has talked about is India does not allow genetically modified corn, and therefore their yields are about 3.3 per acre, and American yields are in the 11 bushels per acre, So they're less than a third of the yield per acre, which means that US corn is frankly less expensive. And so we'll see how these trade negotiations go. It's a very uncertain environment for a lot of parties, But one of the outcomes very possibly could be that India becomes a market for US corn, but restricted to ethanol use.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

A very big issue was they do not want the population there eating general genetically modified corn. So restricting it just to ethanol use would be of great value to Aemetis. We would be uniquely positioned to have an excellent ethanol business supplied, by by US corn, but then providing distillers grain and and low cost fuel and environmental benefits to the Indian economy. So we'll we'll see how that plays out. But that was kind of an upside of the domestic environment for ethanol in India is very attractive.

Eric McAfee
Eric McAfee
CEO & Chairman of The Board at Aemetis

I really appreciate that additional color, Eric. Looks like you guys are positioned well on multiple fronts from this point. Thank you. That's all I have.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

All right. Thank you, Amit.

Operator

Thank you. Your next question is coming from Dave Stormers from Stonegate. Your line is live.

Dave Storms
Director - Equity Research at Stonegate Capital Partners

Good morning, and thank you for taking my questions. I just want to could you remind us, with your RNGs that are expected to get approval by the end of this year, are those approvals backwards looking? Will you be able to take advantage of those higher credits?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

No, we have seven that are already approved. These four that are pending would be expected to be approved next year intact back to best case scenario is probably the fourth Yeah, quarter this probably the fourth quarter this year. So we might have some impact this year. The way they do it is sort of a six month look back kind of a situation. So if we get approved by March, then it could be affected in the fourth quarter this year.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So currently though, I would say we'd take it a conservative view, which is probably first quarter next year is the first time we'd see those four additional pathways have an impact. We hope to see an upside, but I think that would be our projection right now.

Dave Storms
Director - Equity Research at Stonegate Capital Partners

Understood, thank you. And then maybe just a little more commentary about around the refinancing. How how far along in that process are you? Maybe if you're looking at any unique options, then maybe an anticipated timeline to getting that completed. Anything like that would be very helpful.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

We are very deep in a refinancing process with a counterparty. And I would say by the August, we'll be through most of the due diligence and documentation work. The dependence we have on that refinancing, and I would say almost all refinancings, will be for us to prove out our 45Z production tax credit revenue. Not that it won't happen, it's federal law. It's the calculation for our renewable natural gas and the calculation for ethanol plant.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

If the DOE model is done properly, then we're able to show the DOE model, we sell tax credits, we'll get frankly, tens of millions of dollars from that in the first transaction. And we'll be showing that to our lender and they would be able to plug it in to their formulas. Currently, the formulas work okay, but with that number included in revenues, it actually becomes a very, very attractive five year stream of after tax cash flow to the company. So we need to prove that out. And I say prove it out as in everybody knows what the math is, but do we have the cash?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Not yet. So let's get the cash in and then the conversation can lead to final documentation and closing.

Dave Storms
Director - Equity Research at Stonegate Capital Partners

Understood. Thank you for the color and good luck in Q3.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Thank you, Dave.

Operator

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

Edward Woo
Director of Research & Senior Analyst at Ascendiant Capital

Yeah. Congratulations on all your progress. Thanks for the update in terms of California possibly, you know, allowing usage of e 15 gasoline. If it gets passed, how quickly do you think it'll get implemented, and how quickly will you see the increase in demand for your ethanol?

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

The implementation will not be immediate at every one of the stations in California. But because we're selling a commodity, it's that last gallon that really prices everything. Those 600,000,000 gallons of additional demand is actually enough to push the entire country from oversupply to a sort of a more balanced environment. And then with E15 and 49 other states, there is certainly the expectation that we're just going to be short ethanol. We currently export almost 2,000,000,000 gallons of ethanol to foreign countries.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

And if E15 becomes adopted in California this year, which is a better than 75% chance that's going to happen. And if Congress picks it up and gets it approved this year, which is better than 50% chance, you're just going to be short. It's going to end up getting the value it should be getting, which is more on par with gasoline and since we're replacing aromatics in our bags, so typically 20¢ to 50¢ a gallon more expensive than gasoline, and we're doing 113 octane versus 84 octane, which is gasoline space octane. We have a very valuable molecule that's been undervalued because of this 10% limitation, too much supply, not enough demand. That is expected to move to the opposite, which would be excessive demand because of how valuable the molecule is.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

And that should generate additional value per gallon for us. I do think it's a gradual trend though, it's probably an eighteen month cycle before you're going to see significant need for additional construction of facilities. But that's certainly what's coming. If if we add 5,000,000,000 gallons of demand to The US ethanol industry, that's far in excess of capacity industry, the entire industry's production capacity today is about 17,000,000,000 gallons. And that's going to increase over 20,000,000,000 in rather short order with E15.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

So it's just a question of when. Does it happen earlier or later, but sometime over the next by the 2026, I think you're gonna see people proposing new facilities because of how profitable the industry is and a need for the more of the molecule. Andy, do you have any comments on that?

Andy Foster
Andy Foster
EVP - North America at Aemetis

No, I think, from an implementation perspective, it's really up to the blenders, how fast they, they want to go with this in terms of, terms of putting it out. There's no physical change that needs to take place. It's just a question of what they, how fast they want to implement it. And I believe that, the CEQA reform also allows for a expedited price process on building additional storage facilities, which has been a big issue in California. California does not have enough fuel storage facilities and so a lot of times it's the trade offs between things like ethanol and RD and sort of what's driving the demand for those things.

Andy Foster
Andy Foster
EVP - North America at Aemetis

But I believe that the CEQA reform that the governor just recently signed will help streamline the process of building some additional tankage in California, which is desperately needed. So that should help as well.

Edward Woo
Director of Research & Senior Analyst at Ascendiant Capital

Thank you.

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

Thank you, Ed.

Operator

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

Todd Waltz
Todd Waltz
Executive VP, CFO & Secretary at Aemetis

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. Thank you for attending today's Aemetis earnings conference call. Please visit the Investors section of the Aemetis website, where we'll post a written version and audio version of this Aemetis earnings review and business update. Matthew?

Operator

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Executives
    • Todd Waltz
      Todd Waltz
      Executive VP, CFO & Secretary
    • Eric McAfee
      Eric McAfee
      CEO & Chairman of The Board
    • Andy Foster
      Andy Foster
      EVP - North America
Analysts
    • Matthew Blair
      MD - Refiners, Chemicals & Renewable Fuels Research at TPH&Co
    • Derrick Whitfield
      Managing Director at Texas Capital
    • Dave Storms
      Director - Equity Research at Stonegate Capital Partners
    • Edward Woo
      Director of Research & Senior Analyst at Ascendiant Capital
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