Aemetis, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Unless otherwise noted, financial amounts below are in U.S. dollars. Aemetis develops and operates renewable fuel and renewable natural gas businesses, with operations in California and India and additional projects under development.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $72.6 million | $2.2 million |
| Gross profit (loss) | $(0.6) million | $(1.3) million |
| Operating loss | $(9.5) million | $(12.1) million |
| Net loss | $(24.2) million | $(26.4) million |
| Basic and diluted loss per share | $(0.58) | $(0.73) |
| Net cash used in operating activities | $(10.3) million | $(11.3) million |
- Q1 2024 gross margin was approximately negative 0.8%; operating margin was approximately negative 13.0%.
- Cash used in investing activities was $1.7 million, net of $1.9 million of grant proceeds and reimbursements. Financing activities provided $10.6 million, including $5.5 million from common stock sales and $6.2 million in borrowings. Cash, cash equivalents and restricted cash ended the quarter at $4.9 million, including $1.6 million of unrestricted cash and equivalents.
- Total debt was $307.2 million, net of debt issuance costs. Current assets were $33.0 million and current liabilities were $117.9 million; the current ratio was 0.28. Stockholders’ deficit was $232.1 million. Series A preferred unit liabilities were $116.9 million.
Material changes versus Q1 2023
- Revenue rose sharply, but the comparison is unusually favorable: the Keyes ethanol plant was in extended maintenance during Q1 2023 and restarted in May 2023. Q1 2024 revenue included $36.1 million from California Ethanol, $32.8 million from India Biodiesel, and $3.8 million from California Dairy RNG.
- California Ethanol recorded a $5.7 million gross loss, attributed mainly to low ethanol prices and high corn prices. India Biodiesel and Dairy RNG recorded gross profits of $2.8 million and $2.2 million, respectively, versus gross losses in the prior-year quarter.
- SG&A fell 18% to $8.9 million. Interest-rate expense increased 29% to $9.1 million, reflecting higher debt balances and rates; preferred-unit accretion expense declined to $3.3 million from $5.6 million.
- Debt increased $12.5 million during the quarter, with accrued interest and fees contributing to the increase. The current portion of debt increased materially, and $72.8 million of debt repayments were scheduled for the twelve months ending March 31, 2025.
Outlook, liquidity and principal risks
- Going concern: Management states that negative capital, operating losses, and reliance on senior-lender extensions raise substantial doubt about the Company’s ability to continue as a going concern. Meeting obligations over the next 12 months depends on refinancing or continued cooperation from its senior lender.
- Third Eye Capital financing arrangements have significant near-term maturities, including approximately $127.4 million due April 1, 2025 and $35.1 million due March 1, 2025. The company reported $85 million of additional capacity under a reserve liquidity facility, maturing April 1, 2025; any drawn amount bears 30% interest (40% during a continuing default), and an advance request carries a $0.5 million fee.
- Aemetis says it expects India Biodiesel and California RNG operations to generate positive operating cash flow in 2024, and expects RNG revenue to increase as digesters are added and LCFS pathway applications are processed. These are expectations, not guaranteed results. The filing provides no formal earnings or revenue guidance.
- ABGL had a right under a February 2024 amendment to redeem its Series A preferred units for $111 million by April 30, 2024. If not redeemed, a credit agreement was contemplated; as of the filing, the agreement had not been executed and the company was seeking an extension. The preferred liability stood at $116.9 million at quarter-end.
- Projects under development include additional dairy digesters and pipeline, a planned 90-million-gallon-per-year SAF/RD facility, and carbon capture and sequestration projects. Funding, permitting, construction, and commissioning remain material execution risks. The SAF/RD project received Authority to Construct air permits in March 2024.
- Market risks include volatile commodity prices and variable-rate debt. A 1% increase in prime rate would increase annual interest cost by about $1.7 million, according to the filing. California Ethanol revenue was highly concentrated: one customer accounted for 99.7% of segment revenue. The filing also reports that disclosure controls and internal controls were not effective, citing an unresolved material weakness related to IT general controls and systems.
- The company reported no material change to its previously disclosed risk factors, no unresolved senior-security defaults for the quarter, and no off-balance-sheet arrangements during the period.
Key facts for investors to verify
- Whether Aemetis refinanced or extended the substantial debt and preferred-unit obligations due in 2025, and on what terms.
- Whether operating cash flow and available liquidity improve enough to address the stated going-concern uncertainty and working-capital deficit.
- Whether the ethanol plant achieves better margins amid corn, energy, and ethanol price volatility, and whether RNG and India Biodiesel cash-flow expectations are realized.
- Progress, financing, permits, costs, and timelines for the RNG expansion, SAF/RD facility, and carbon capture projects; also track LCFS pathway approvals and grant conditions.
- Equity issuance and potential dilution: the company sold $5.5 million of common stock in Q1 and had 44,397,833 shares outstanding on April 30, 2024.
- Remediation of the disclosed control weaknesses and the status and terms of the related-party guarantee fee approved after quarter-end.