Aemetis, Inc. — FY2022 Form 10-K
Business context and reporting period. This annual report covers the year ended December 31, 2022; it does not provide a standalone 2022 fourth-quarter income statement. Aemetis operates California ethanol, California dairy renewable natural gas (RNG), and India biodiesel businesses, alongside earlier-stage renewable diesel, sustainable aviation fuel (SAF), and carbon capture projects. Financial statements received an unqualified audit opinion; the auditor separately concluded internal control over financial reporting was ineffective.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $256.5 million | $211.9 million |
| Gross profit (loss) | $(5.5) million | $7.9 million |
| Gross margin | (2.2)% | 3.7% |
| Operating loss | $(34.4) million | $(15.8) million |
| Net loss | $(107.8) million | $(47.1) million |
| Cash used in operating activities | $(22.9) million | $(20.6) million |
| Cash used in investing activities | $(31.3) million | $(22.9) million |
| Cash provided by financing activities | $53.6 million | $50.7 million |
- Revenue increased 21%. India biodiesel revenue rose to $28.1 million from $0.7 million as the plant fulfilled government tenders. California ethanol revenue grew 8% to $228.2 million, while RNG segment revenue declined 16% to $1.2 million, most of which was intercompany.
- California ethanol gross profit turned to a $13.0 million loss from $9.6 million profit. Corn cost rose 28% to $9.65 per bushel; natural gas and transportation costs also increased. India biodiesel generated $8.3 million gross profit versus a small loss in 2021.
- Net loss widened substantially, including a $49.4 million debt-extinguishment loss tied to an amendment of the Series A preferred unit agreement. The company also recorded $21.4 million of interest expense, $7.4 million of debt-related fees and amortization, and $9.9 million of Series A preferred-unit accretion and other expense. A $14.2 million USDA biofuel producer grant offset other expense.
- Cash and cash equivalents were $4.3 million at year-end, versus $7.8 million a year earlier; current ratio was 0.21 versus 0.32. Cash included $2.7 million held in India, which may not be readily available to fund U.S. needs. Capital expenditures were $39.2 million, partly offset by $7.9 million in grant proceeds.
- Total debt reported in the debt note was $246.2 million, up from $188.8 million; $49.2 million was classified as current. Separately, the balance sheet reported a $116.0 million long-term Series A preferred-unit liability. Stockholders’ deficit was $201.9 million, and accumulated deficit was $429.0 million.
Material changes and operating developments
- Keyes ethanol sales volume was 59.0 million gallons versus 59.8 million; average selling price rose to $2.81 per gallon from $2.72. Corn ground declined to 20.2 million bushels from 20.9 million.
- India biodiesel sales increased to 17,700 metric tons from 500 metric tons, with average selling price rising to $1,526 per ton from $1,024. The plant operated at 12% of nameplate capacity.
- The company completed and began commissioning the ZEBREX ethanol dehydration system at Keyes. Four dairy digesters were operating, five were under construction, and about 30 dairies had signed participation agreements. RNG interconnection to the PG&E pipeline was completed; some gas was sold externally and some stored pending pathway verification.
- Keyes entered maintenance mode on December 22, 2022. The filing said operations were being restarted in March 2023.
Outlook, risks, and unusual items
- Management’s plans depend on improved plant margins, expanded RNG sales and digesters, and financing construction of the Riverbank Carbon Zero facility and carbon-sequestration projects. Riverbank is planned for 90 million gallons per year of SAF, renewable diesel, and byproducts; this is a development target, not current production.
- Liquidity is a central risk. The company says it relies on its senior secured lender, must remit substantially all excess operating cash to that lender, and needs refinancing or continued lender cooperation to meet obligations over the next 12 months. A $50 million reserve liquidity facility was available but undrawn at year-end. On March 6, 2023, the lender extended it to April 1, 2024; advances bear 30% annual interest, are secured, and may become due upon specified financing or sale events.
- Third Eye Capital notes had significant near-term maturities, with certain notes due April 2023 and an option to extend to April 2024. The company disclosed repeated covenant waivers. In March 2023, the lender also waived a Keyes minimum-production violation for the quarter ending March 31, 2023, when the plant was expected to miss its 10-million-gallon requirement.
- The Series A preferred units were subject to a $116 million redemption obligation at December 31, 2022. A January 2023 amendment extended the redemption option to May 31, 2023 at $125 million; failure to redeem would require a credit agreement with the investors and lender.
- Other significant risks include volatile feedstock, fuel and energy prices; dependence on key suppliers and customers; project construction, permitting and financing uncertainty; government incentive and regulatory changes; India currency and policy exposure; and potential dilution from equity issuance and convertible securities.
- A material weakness remained in IT general controls and segregation of duties over financial reporting systems. Management was implementing a replacement ERP system, with implementation expected during 2023. The auditor’s financial-statement opinion was unqualified, but its separate internal-control opinion was adverse.
- The EdenIQ litigation settled in May 2022 for $4.8 million, resulting in a $1.4 million gain compared with the previously accrued amount.
Investor verification priorities
- Confirm available liquidity, lender cooperation, facility draws and the company’s ability to meet debt maturities and covenants.
- Track the Series A redemption or refinancing outcome and its cash-flow consequences.
- Verify Keyes restart, production levels, unit margins and whether energy-efficiency upgrades deliver expected savings.
- Check RNG pathway approvals, stored-gas monetization, external sales and digesters brought online.
- Assess Riverbank project funding, permits, construction progress and the assumptions supporting projected tax credits and revenues.
- Monitor remediation and auditor testing of the internal-control material weakness, and reconcile any subsequent share issuance or dilution.