Aemetis Q3 2025: Contradictions on 45Z Tax Credit Monetization, India Expansion, and RVO Policy Delays

Date of Call: None provided

Financials Results

• Revenue: $59.2M, up approximately $7.0M sequentially vs Q2 2025 (driven by biodiesel fulfillment in India and higher ethanol production/pricing)
• Operating Margin: Operating loss improved sequentially (no percentage provided)

Guidance:

• Multiple income streams (molecule sales, LCFS, D3 RINs and 45Z PTCs) expected to ramp in Q4 2025 driving strong positive cash flow and expanding in 2026.
• Dairy RNG capacity to exceed 500,000 MMBtu by year-end 2025 and target ~1,000,000 MMBtu annual run rate by end-2026.
• MBR system construction starts Q4 2025, completes Q2 2026, expected to cut natural gas use ~80% and add ~$32M annual cash flow mid-2026.
• Riverbank SAF/renewable diesel has construction permits; financing discussions ongoing and awaiting 45Z clarity.
• India Biofuels IPO targeted early 2026 (plan to sell 20–25% and retain >75%).
• Expect continued ITC and 45Z tax credit sales in Q4 2025–Q1 2026.

Business Commentary:

• Revenue Growth and Segment Performance:
• Aemetis reported revenue of $59.2 million for Q3 2025, up by approximately $7 million from the second quarter of 2025.

• The growth was primarily due to increased sales of biodiesels in India and stronger performance from ethanol production and sales.

• Ethanol Segment and Production:

• Ethanol production at Aemetis increased during Q3, with a production rate of 14.7 million gallons, and margins allowed higher grind rates.

• 
  The increase in ethanol production was attributed to lower corn costs and improved margins from ethanol sales, although corn basis challenges slightly offset these benefits.

• Dairy RNG Capacity Expansion:

• Aemetis significantly increased biogas production capacity by more than 30% with a new multi-dairy digester coming online in September.

• This expansion was driven by a new USDA guaranteed financing with attractive terms, enabling an increased capacity to more than 500,000 MMBtus of RNG production by the end of the year.

• Profitability and Cash Position:

• Aemetis's operating loss improved sequentially on higher volumes and lower SG&A, with cash at quarter-end being $5.6 million.
• The improvement was due to increased volumes and lower operating expenses, although interest expenses remained steady at around $13 million during the quarter.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management: "positioned for significant growth in revenues and improved cash flow through year-end and throughout 2026." Revenues rose to $59.2M Q3 and projects (RNG capacity, MBR, SAF permits, India IPO) are expected to drive strong cash flow in Q4 2025 and 2026.

Q&A:

• Question from Matthew Blair (TPH): Great. I had 2 questions on the ethanol segment in the quarter. The first is it does look like your corn costs came down quarter-over-quarter, but they're a little bit higher than our modeling. So could you talk about any sort of issues with basis? And overall, what kind of ethanol EBITDA did you generate in the third quarter. And then second, regarding the opportunities around California E15 — will retailers adopt E15 and what are the mechanics there?
  Response: Core takeaway: Despite higher local corn and power costs in California, Aemetis expects a sustainable ethanol margin advantage driven by lower-cost electricity (MBR, onsite solar, dairy RNG connectivity) and anticipates rapid E15 retail adoption due to a ~$0.20/gal competitive benefit.

• Question from Derek Whitfield (Texas Capital): As you think about the impact, the inflection in the credit markets will have on your U.S. RNG and ethanol business, and the IPO of our India Biofuels business, could you paint the picture for your EBITDA profile net to Aemetis in 2026? And how this could lead to improved access to lower cost capital and allow you to pay off some of your Third Eye credit facilities and notes?
  Response: Core takeaway: Management expects predictable quarterly 45Z and ITC sales to materially improve cash flow and enable refinancing of expensive debt, targeting completion in H1 2026 as 45Z monetization becomes established.

• Question from Derek Whitfield (Texas Capital): Follow-up on timing — any thoughts on when we'll get final RVO and 45Z policy and whether administration is receptive to increasing D3/D7 RVO given recent reports?
  Response: Core takeaway: Timing is uncertain; DOE 45Z calculation is delayed and political/regulatory factors may push substantive clarity into 2026, though industry expects upside once finalized.

• Question from Amit Dayal (H.C. Wainwright): There were expectations some 45Z tax credits would be monetized in Q3. Was there any push out? And what steps are being taken to make monetization more consistent going forward?
  Response: Core takeaway: Monetization was delayed by project in-service timing and the government shutdown; management is prioritizing selling full correct 45Z amounts (targeting larger, less-frequent sales) and expects Q4 sales with continued quarterly monetization thereafter.

• Question from Amit Dayal (H.C. Wainwright): On the India IPO, what valuation range might investors expect and how much will you retain versus sell?
  Response: Core takeaway: Plan to sell roughly 20–25% of India Biofuels, retain >75%; preliminary valuation range being targeted is $100M–$200M (up to $300M possible if market supports growth).

• Question from Amit Dayal (H.C. Wainwright): Regarding the $266M of debt outstanding, any update on timeline for negotiation and resolution?
  Response: Core takeaway: Refinancing is underway but delayed pending clear, repeatable 45Z cash flows; management expects refinancing once 45Z/ITC revenue visibility is established.

• Question from Dan Storms (Stonegate): You sold about 114,000 MMBtus in the quarter; on an annualized run rate that's shy of the 550,000 MMBtu year-end goal — what will it take to get the run rate up and are there seasonality or other considerations?
  Response: Core takeaway: A 30% capacity increase came online 11 days before quarter end so its impact will be felt in Q4; multiple additional digesters are under construction and will raise run rate into year-end.

• Question from Dan Storms (Stonegate): On India — you mentioned adding biogas and ethanol production; what are the logistics and timelines to get those up and running?
  Response: Core takeaway: An 80M gallon plant is operational and tender allocation could be announced imminently; legal/enforcement issues and house tenders could materially accelerate biodiesel volumes ahead of IPO.

• Question from Ed Woo ([indiscernible firm]): With the India IPO progressing, how will proceeds be used — repatriated for U.S. refinancing or stayed in India to develop new lines?
  Response: Core takeaway: Proceeds will be used for both U.S. refinancing (if needed) and to fund substantial growth in India; India currently has no debt.

Contradiction Point 1

Monetization of 45Z Tax Credits

It involves the timing and consistency of monetizing tax credits, which directly impacts the company's cash flow and debt repayment capabilities, affecting investor expectations.

Why weren't 45Z tax credits monetized in Q3? What steps are being taken to ensure consistent monetization going forward? - Amit Dayal (H.C. Wainwright)

20251107-2025 Q3: The 45Z tax credit monetization was delayed due to project completion timing. A consistent sales approach is being adopted for future sales. The government shutdown added to delays. - Eric McAfee(CEO)

Are there remaining 2025 investment tax credits available for sale, and how many might you generate for the remainder of 2025? - Dave Storms (Stonegate)

2025Q1: We expect additional ITC sales later this year as projects are completed. More importantly, the monetization of 45Z production tax credits will significantly contribute to our cash flow, likely quarterly. - Eric McAfee(CEO)

Contradiction Point 2

India Business Expansion

It involves the progress and strategy for expanding the India business, which affects the company's global growth plans and investment returns.

What steps are needed to launch biogas and ethanol production in India? - Dan Storms (Stonegate)

20251107-2025 Q3: An 80 million-gallon plant is fully operational but awaiting policy enforcement and contract resolutions for increased activity. - Eric McAfee(CEO)

Can you provide more details on the India business IPO and the potential for RNG and ethanol in that market? - Sameer Joshi (H.C. Wainwright)

2025Q1: Our India business is diversifying beyond biodiesel, with plans for RNG and ethanol opportunities due to government support and attractive pricing for renewable resources. The India IPO will help fund expansion into these areas, enhancing the company's value. - Eric McAfee(CEO)

Contradiction Point 3

India Biofuels IPO and Proceeds Use

It involves discrepancies in the company's plans and expectations regarding the India Biofuels IPO, which affects strategic growth and financial restructuring.

What are the steps to launch biogas and ethanol production in India? - Dan Storms (Stonegate)

20251107-2025 Q3: We intend to sell 20-25% of the India subsidiary, aiming for a valuation of $100 million to $300 million. Proceeds will be used for growth in India and refinancing in the U.S. - Eric McAfee(CEO)

Has the official India IPO process begun? How will the proceeds be allocated? - David Joseph Storms (Stonegate Capital Partners, Inc.)

2025Q2: The process has begun with the appointment of a new CFO. A significant portion of the IPO proceeds, likely 25%, will be transferred to the parent company for debt repayment or strategic initiatives. The remaining funds will support India asset development. - Eric McAfee(CEO)

Contradiction Point 4

RVO and 45Z Policy Expectations

It involves varying expectations and strategic responses to policy changes, which could impact the company's competitive positioning and regulatory compliance.

What is your outlook on the government shutdown and RVO/45Z policy? - Analyst (Texas Capital)

20251107-2025 Q3: RVO is a political issue affecting corn and soybean farmers. The recent Democratic wins could drive focus on RVO. 45Z policy is delayed, but an industry-wide effort is pushing for a 2025 calculation update. There's some optimism for 2026 adjustments. - Eric McAfee(CEO)

Can you provide an update on the timing for final Treasury rules and the GREET model's role in provisional emission rate calculations for 45Z? - Derrick Lee Whitfield (Texas Capital Securities)

2025Q2: The DOE GREET model update is expected in a few weeks, which would allow for the sale of 45Z credits in August-September. The 45Z final rules' proposed guidance is sufficient for transactions. Aemetis is proactive in providing formulas to the DOE, which could simplify the process. - Eric McAfee(CEO)