Aemetis, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparison is Q1 2022. Financial figures below are in U.S. dollars. The company develops renewable fuels and renewable natural gas, with reportable segments in California ethanol, California dairy RNG, and India biodiesel.
Financial results
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $2.2 million | $52.0 million |
| Gross loss | $1.3 million | $3.1 million |
| Operating loss | $12.1 million | $10.4 million |
| Net loss | $26.4 million | $18.3 million |
| Net loss per share, basic and diluted | $0.73 | $0.54 |
| Net cash used in operating activities | $11.3 million | $8.2 million |
Revenue fell about 96% year over year. The Keyes ethanol plant was in an extended maintenance and upgrade shutdown, with first-quarter sales limited mainly to stored inventory. India biodiesel revenue rose to $1.5 million from $8 thousand, while dairy RNG generated $206 thousand of external revenue. Consolidated gross margin was approximately negative 60% in Q1 2023, versus approximately negative 6% in Q1 2022.
SG&A was about $10.8 million, up from $7.3 million. Interest expense was $7.1 million, up from $4.4 million; Series A preferred-unit accretion and related expense was $5.6 million, versus $1.6 million. These financing and preferred-unit costs contributed materially to the larger net loss.
Balance sheet, cash flow and financing
- At March 31, cash and cash equivalents were $4.1 million; cash, cash equivalents and restricted cash totaled $6.2 million. Current assets were $21.2 million and current liabilities $103.6 million, implying a working-capital deficit of about $82.4 million; the reported current ratio was 0.20.
- Total debt, net of debt issuance costs, was $261.9 million, up from $246.2 million at year-end 2022. The filing lists $62.7 million of scheduled debt repayments in the twelve months ending March 31, 2024. Senior debt carries high interest rates, and the company reported $7.4 million of accrued interest added to debt during the quarter.
- Operating cash use was $11.3 million. Investing cash use was $0.9 million, including $7.6 million of capital expenditures offset by $6.8 million in grant proceeds and reimbursements. Financing provided $11.4 million, including $11.6 million of borrowings and $2.6 million from a common-stock offering.
- Stockholders’ deficit was $222.4 million. Series A preferred-unit liabilities were $122.5 million, up from $116.0 million at year-end, and are subject to redemption and potential conversion provisions.
Material changes, outlook and risks
- Keyes plant: The company said the extended maintenance cycle and upgrades were complete and expected to restart the plant in Q2 2023. It had waived the minimum quarterly production covenant for Q1; a May 2023 lender amendment also waived the Q2 production requirement and allowed certain fees to be added to debt.
- India: The company reported that an April 2023 tender award covered approximately $34 million of biodiesel. Elsewhere, it described a Q2 tender for 31,697 kiloliters (approximately 27,418 metric tons) that it was working to fulfill. Results depend on feedstock economics, customer demand, and the ability to obtain approvals for exports and repatriation of funds.
- RNG and projects: Six dairy digesters were operating and five were under construction; 31,000 MMBtu of RNG was in storage pending carbon-credit pathway verification. Further construction depends on government-backed financing and grants. Riverbank renewable-fuel and carbon-capture projects also require substantial funding, permits and execution.
- Going concern: Management stated that negative working capital, operating losses, the Keyes shutdown and collateralization of substantially all company assets create substantial doubt about the company’s ability to continue as a going concern. Meeting obligations over the next 12 months depends on refinancing debt or continued senior-lender cooperation, alongside potential operating cash flows and new financing.
- Other material risks: The company is exposed to volatile input and product prices, high debt and refinancing needs, covenant compliance, grant conditions, and reliance on a small number of customers. It disclosed that disclosure controls and internal controls over financial reporting were not effective, with remediation underway for previously identified IT-related material weaknesses. Management said ordinary-course legal matters were not expected to have a material adverse effect; no off-balance-sheet arrangements were reported.
Important facts for investors to verify
- Whether Keyes restarted in Q2 as expected and whether production and margins improved after the upgrades.
- Current cash availability, restricted cash, near-term maturities, lender waivers and covenant status, and the company’s ability to refinance or obtain additional capital.
- Progress, customer acceptance and cash proceeds from the India tender; confirm the reported award amount and volume against subsequent filings.
- Timing and value of RNG credit-pathway approvals, sales of stored RNG and funding for digesters, Riverbank and carbon-capture projects.
- How the Series A preferred-unit redemption or conversion terms affect future liabilities and potential dilution, and whether internal-control weaknesses have been remediated.