Aemetis, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual filing; the supplied filing text does not provide standalone fourth-quarter results. Comparisons below are with FY2019. Aemetis operates renewable fuels and related businesses in North America and India.
Financial performance
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | $165.6 million | $202.0 million |
| Gross profit / gross margin | $11.0 million / 6.7% | $12.7 million / 6.3% |
| Operating loss | $6.1 million | $4.9 million |
| Net loss | $36.7 million | $39.5 million consolidated |
| Net loss attributable to Aemetis | $36.7 million | $35.7 million |
| Net cash from operations | $2.5 million | $(2.0) million |
| Capital expenditures, net of grant proceeds | $17.3 million | $8.6 million |
| Cash and cash equivalents at year-end | $0.6 million | $0.7 million |
| Total debt | $229.6 million | $202.4 million |
Interest-rate expense was $22.9 million, debt-related fees and amortization were $3.4 million, and accretion of Series A preferred units was $4.7 million in 2020. Cash interest paid was $1.3 million. Operating cash flow included a $21.7 million increase in accrued interest, so the positive operating cash flow should not be read as evidence that ongoing cash generation covers the company’s financing burden.
Liquidity remained very tight: current assets were $8.7 million against current liabilities of $102.2 million, and the reported current ratio was 0.08. Total liabilities were $309.9 million, total assets were $125.1 million, and stockholders’ deficit was $184.7 million.
Material changes versus FY2019
- Revenue declined 18%, largely because India revenue fell 67% to $15.8 million. Delayed government biodiesel tenders and COVID-related slow sales contributed; biodiesel sales volume fell 66% to 16,000 metric tons.
- North America revenue decreased 3% to $149.8 million. Ethanol and high-grade alcohol sales volume totaled 60.3 million gallons, down 6.8%; WDG volume declined 8% to 393,000 tons. The average reported price for ethanol and high-grade alcohol was $1.84 per gallon, while the filing’s product discussion separately reports an ethanol-only average of $1.57 per gallon.
- North America gross profit increased to $9.4 million from $4.0 million, reflecting higher-priced sanitizer alcohol sales and lower corn costs. India gross profit decreased to $1.6 million from $8.7 million.
- Consolidated net loss was $36.7 million versus $39.5 million in 2019; however, 2019 net loss attributable to Aemetis was $35.7 million after a $3.8 million loss attributable to noncontrolling interests. Compare like-for-like measures when assessing the trend.
- Cash from operations improved to $2.5 million from cash used of $2.0 million, while capital spending rose to $19.3 million before grant proceeds, principally for U.S. projects.
- Debt rose by $27.2 million to $229.6 million. The company issued $5.1 million of common stock through its ATM program during 2020 and reported 1.5 million shares issued under that offering.
Outlook, risks and unusual items
- Going concern and financing: The filing states that substantial doubt exists about the company’s ability to continue as a going concern, citing losses, negative capital, asset liens and reliance on its senior secured lender. Management says lender amendments and a reserve liquidity facility mitigate the doubt. After year-end, Third Eye Capital made a $70 million facility available through April 1, 2022; borrowings carry 30% annual interest (40% after default), and the facility is secured. The filing also reports $18.5 million of net ATM proceeds raised after year-end. These arrangements do not eliminate refinancing, repayment or liquidity risk.
- Debt terms and maturities: Third Eye Capital debt was extended to April 1, 2022 under a March 2021 amendment, subject to fees and covenant waivers. GAFI debt had a July 2021 maturity, and the filing describes plans to repay it through property-sale proceeds and subsidiary financing. The company’s debt is highly secured, and the filing reports no remaining availability on the existing revolving credit facility.
- Operations and projects: The company began operating its first two dairy digesters and pipeline in Q3 2020 and began CO2 sales to Messer in Q2. It plans further digester construction and Riverbank/Carbon Zero development, but these projects require financing, permits and successful execution. COVID-related restrictions delayed installation of the Mitsubishi ethanol dehydration system; completion was then expected in Q2 2021. No quantified earnings or revenue guidance is provided.
- COVID-19 and markets: Lower gasoline demand pressured conventional ethanol demand and prices, while sanitizer alcohol provided a new, higher-priced market. India’s government tender delays sharply reduced biodiesel volumes. Results remain exposed to volatile product and feedstock prices, commodity spreads, and customer and supplier concentration.
- Controls: Management identified a material weakness in controls over supervision and review of complex transactions, linked to insufficient technical accounting resources, and concluded internal control over financial reporting was not effective at year-end. Remediation was ongoing.
- Contingencies: A $6.2 million EdenIQ litigation fee award remained accrued; Aemetis planned to appeal. Accrued property taxes were $5.7 million after defaulting on a county payment plan; the company said it was discussing a new plan. No environmental amounts were accrued, and management reported no known material contamination or related third-party claims.
- Audit: The auditor issued an unqualified opinion on the financial statements and identified liquidity and management’s plan as a critical audit matter. The auditor did not audit or opine on internal control effectiveness.
Most important facts for investors to verify
- Whether the $70 million reserve facility is available on the stated terms, how much is drawn, and whether its high interest, standby fees and repayment triggers are manageable.
- Actual debt maturities, covenant compliance and refinancing or repayment plans, particularly for GAFI and other secured obligations.
- Cash generation after excluding the substantial benefit from accrued rather than paid interest, and the company’s ability to meet near-term obligations given its 0.08 current ratio.
- Whether India biodiesel tenders and plant utilization recover, and whether North American margins withstand changes in ethanol, corn, gasoline and sanitizer markets.
- Progress, remaining funding needs and commercial performance of the dairy RNG, Riverbank/Carbon Zero and Keyes efficiency projects.
- Remediation and independent validation of the material weakness, and the status of the EdenIQ appeal and county property-tax discussions.