Stonegate Capital Partners Updates Coverage On Aemetis, Inc. (Nasdaq: AMTX) Q3 2022

DALLAS, TX -- December 9th, 2022 -- Aemetis, Inc. (Nasdaq:AMTX): Stonegate Capital Partners updates coverage on Aemetis, Inc. (Nasdaq:AMTX). The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/AMTX_22Q3.pdf

COMPANY DESCRIPTION

Aemetis, Inc. is a rapidly expanding renewable natural gas company and operates ethanol and biodiesel refineries. Aemetis is currently building a dairy biogas system that will capture methane from nearby dairy farms in California and then transport the methane by pipeline to its Keyes facility. At the Keyes facility the methane can be compressed and cleaned to produce Renewable Natural Gas. Aemetis expects to build 5 new biogas dairies each two quarters for the next five years for a total of 66 dairies. Importantly, each dairy has 35-year contracts, should produce $2.5M average revenue per dairy per year. Aemetis ethanol plant in Keyes, CA produces 65M gallons of ethanol per year in addition to animal feed. It also operates a biodiesel plant on the East Coast of India that can produce 50M gallons per year of distilled biodiesel and refined glycerin. The Company was founded in 2006 by biofuels veteran, Eric McAfee, and is headquartered in Cupertino, CA.

COMPANY SUMMARY

• 5-year plan show lots of growth – Aemetis outlined a 5-year plan to reach $1.5B in revenue and $461M in adjusted EBITDA by 2026 vs F21 revenue and adjusted EBITDA of $211.9M and $(6.4)M. respectively. This plan is expected to be updated in 1Q23.
• Dairy biogas pipeline project expected to generate substantial cash flows – Aemetis expects to build new dairies biogas over the next five years for a total of 66 dairies. Assuming proper execution, the economics for these projects are compelling. For each dairy, the feedstock is low cost, has 25-year contracts, should produce $2.5M average revenue per dairy per year. In F26, Aemetis is expecting revenue of $216.8M and adjusted EBITDA of $147.2M.
• Jet/diesel plant is source of upside – Aemetis announced in January 2021 that it is planning to build a 90M gallon renewable jet and diesel plant using below zero carbon intensity cellulosic hydrogen produced from waste almond orchard wood. The plant is expected to supply the aviation and truck markets with ultra-low carbon renewable fuels to reduce greenhouse gas emissions. Aemetis’ expects revenue of $623.1M and adjusted EBITDA of $147.2M by FY26.
• Aviation fuel offtake agreements signed – In September 2021, Aemetis hit a major milestone by announcing a 250M gallon sustainable aviation fuel offtake agreement with Delta Airlines. The agreement for 250M gallons of blended fuel containing sustainable aviation fuel is to be delivered over a 10-year term. Since then, Aemetis has signed additional offtake agreements with America Airlines, Quantas, and Japan Airlines for an aggregate estimated value of more than $2.5B.
• Ethanol plants are strategic to RNG business - AMTX currently operates a 65M gallon ethanol plant in Keyes, California that is strategic to the Aemetis dairy biogas project because Aemetis supplies animal feed to 80 dairies that are potential biogas suppliers. Furthermore, Aemetis can use the RNG in its plants immediately without having to wait for a utility connection to generate revenue.
• India plant is debt free and adds additional upside – AMTX operates a 50M gallon biodiesel plant in India. Through recent upgrades, AMTX expects to generate $160M in revenue at this facility once it is at full capacity. Importantly, the India government oil marketing compares are a primary purchaser of AMTX’s biodiesel. Recently, deliveries have started under a tender agreement.
• Valuation – We are using a SOTP analysis. We are applying various EV/EBITDA multiples to Aemetis’ F25 projections and use a discount range of 20% to 30% to discount the value to today. As a result, we arrive at a valuation range of $24.38 to $36.38 with a midpoint of $29.66; see pages 7 and 8 for further details.