Aemetis, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Aemetis is a renewable fuels and byproducts company with reportable California Ethanol, Dairy Renewable Natural Gas (RNG), and India Biodiesel segments.
Business context and performance
Aemetis operates a 65-million-gallon-per-year ethanol plant in Keyes, California, a dairy digester and pipeline network, and a biodiesel plant in Kakinada, India. It is also developing a 90-million-gallon-per-year renewable fuels facility in Riverbank, California, and carbon capture and sequestration projects.
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $211.9 million | $165.6 million |
| Gross profit | $7.9 million; 3.7% margin | $11.0 million; 6.7% margin |
| Operating loss | $15.8 million | $6.1 million |
| Net loss | $47.1 million | $36.7 million |
| Net loss per share, basic and diluted | $1.54 | $1.74 |
| Cash used in operating activities | $20.6 million | Cash provided: $2.5 million |
| Cash used in investing activities | $22.9 million | $17.3 million |
| Cash provided by financing activities | $50.7 million | $14.8 million |
| Cash and cash equivalents at year-end | $7.8 million | $0.6 million |
| Total debt at year-end | $188.8 million | $229.6 million |
| Current ratio | 0.32 | 0.08 |
California Ethanol revenue rose 41.5% to $211.3 million, largely on higher selling prices: average ethanol and high-grade alcohol price increased 47.8% to $2.72 per gallon, while volume slipped 0.8% to 59.8 million gallons. Corn cost rose 49.1% to $7.53 per bushel. The segment’s gross profit was nearly flat at $9.6 million.
India Biodiesel revenue fell 95.6% to $0.7 million. Biodiesel sales volume declined 97.2% to 455 metric tons; management cited COVID-19 effects and unfavorable feedstock economics, and did not bid in government tenders during 2021. India segment gross loss was $23,000. RNG revenue was intercompany and eliminated in consolidation; the segment recorded a $0.5 million gross loss.
Financial position and material changes
- Despite revenue growth, gross profit declined 28%, operating loss widened, and net loss increased year over year. SG&A rose 40% to $23.7 million, including higher compensation, insurance, professional fees and other costs.
- Interest rate expense was $20.1 million; debt fees and amortization were $3.9 million; Series A preferred unit accretion and related expense was $7.7 million. Total interest-rate expense and Series A accretion were $27.9 million, excluding debt-related fees and amortization.
- Cash from operations was negative, and capital expenditures were $26.7 million, partly offset by $3.8 million in grant proceeds. The company raised $103.6 million net from common-stock offerings, issuing 7.68 million shares through its at-the-market program.
- Debt declined year over year, partly reflecting repayment of GAFI loans and other borrowings. Third Eye Capital notes were approximately $121.5 million net of discounts at year-end; their maturity was subsequently extended to April 1, 2023. The company also reported $40 million of available reserve liquidity capacity, subject to facility terms.
- Year-end stockholders’ deficit was $120.2 million. Current assets were $20.7 million against current liabilities of $65.3 million. Cash held in India was $1.2 million and may be restricted or costly to repatriate.
Outlook, risks and unusual items
- Liquidity and going concern: The filing says the company relies on its senior secured lender and that this dependence raises substantial doubt about its ability to continue as a going concern. The liquidity note also describes management’s plan, including the lender’s reserve facility, as intended to meet obligations for at least a year after issuance. Subsequent lender amendments and extensions are described in the filing; access to funds and execution of the plan remain important uncertainties.
- Financing and debt: Third Eye Capital debt is secured by substantially all North American assets and includes covenants, cross-default provisions and high interest costs. A subsequent $40 million reserve facility carries 30% annual interest, or 40% following a continuing event of default. The company also depends on working-capital relationships with J.D. Heiskell in California and counterparties in India.
- Projects and outlook: Management plans to expand the dairy digester network, improve Keyes plant efficiency, develop Carbon Zero 1 and pursue carbon capture projects. These plans depend on financing, permits, construction, technology performance and expected credit values. The filing provides no consolidated numerical earnings or revenue guidance. A 10-year offtake agreement for 250 million gallons of blended fuel containing SAF and a 10-year, 450-million-gallon renewable diesel supply agreement were signed in 2021.
- Controls: Management identified material weaknesses in IT general controls, segregation of duties and review of complex transactions. The independent auditor issued an adverse opinion on internal control over financial reporting, while expressing an unqualified opinion on the financial statements.
- Unusual items and contingencies: The company recorded a $1.0 million inventory write-down and a $1.1 million gain from forgiveness of PPP loans. It accrued approximately $5.0 million for California carbon allowance obligations, including amounts relating to earlier periods. A $6.2 million EdenIQ litigation award remains recorded; an unsuccessful appeal could add approximately $1.8–$2.1 million. The company defaulted on a property-tax payment plan, then paid $6.1 million to the county in March 2022.
- Other principal risks: Commodity-price spreads, customer and supplier concentration, regulatory and credit-program changes, Indian currency and policy exposure, inflation, interest rates, project execution and potential dilution. The company reported one ethanol customer represented 52% of California Ethanol segment revenue and a second 24% in 2021.
Key facts for investors to verify
- Current cash, borrowing availability, lender covenant status and the maturity and effective cost of debt, including the subsequent reserve and revolving facilities.
- Whether operating cash flow improves and California Ethanol margins can withstand higher corn, energy and compliance costs.
- India plant utilization, feedstock economics, customer concentration and any resumption of government tender sales or exports.
- Funding, permits, construction schedules and commercial progress for the RNG, Riverbank Carbon Zero and carbon capture projects.
- Progress in remediating the material weaknesses and the status and potential cost of the EdenIQ litigation appeal.
- Share dilution from equity offerings, options, warrants and convertible securities; the filing reports 33.8 million common shares outstanding on February 28, 2022.