Aemetis, Inc

Welcome to the AMETIS Second Quarter 2021 Earnings Review Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Todd Waltz, Executive Vice President and Chief Financial Officer for AMETIS, Inc. Mr. Waltz, you may begin.

Thank you, Taryn. Welcome to the AMETIS Second Quarter 2021 Earnings Review Conference Call. Joining us today for the call is Eric McAfee, Founder, Chairman, and CEO of AMETIS, and Andy Foster, President of AMETIS Advanced Fuels. We suggest visiting our website at ametis.com to review today's earnings press release, corporate presentation, filing with the Security and Exchange Commission, recent press releases, and previous earnings conference calls. The presentation for today's call is available for review or download on the investor section of the ametis.com website. Before we begin our discussion today, I'd like to read the following disclaimer statement. During today's call, we'll be making forward-looking statements, including, without limitation, statements with regard to our future stock performance, plans, opportunities, and expectations with respect to financing activities and execution of our business plans. These statements must be considered in conjunction with the disclosures and cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements made on this call involve risks and uncertainties, and that future events may differ materially from the statements made. For additional information, please refer to the company's Security and Exchange Commission filings, which are posted on our website and are available from the company without charge. Our discussion on this call will include a review of non-GAAP measures as a supplement to financial results based on GAAP. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release for the quarter, ended on June 30, 2021, which is available on our website. Adjusted EBITDA is defined as net income or loss plus, to the extent deducted in calculating such net income, interest expense, gain on extinguishment, income tax expense, intangible and other amortization expense, accretion and other expense of Series A preferred units, depreciation expense, and share-based compensation expense. Now I'd like to review the financial results for the second quarter of 2021. Revenues during the second quarter of 2021 were $54.9 million compared to $47.8 million for the second quarter of 2020. Our North American operation in the second quarter of 2021, as compared to the second quarter of 2020, experienced steady growth volume with an increase in the selling price of ethanol from $2.63 per gallon to $2.78 per gallon, and an increase in the delivered corn price from an average of $4.55 per bushel to $8.04 per bushel. increased COVID-19 infection rates, and high steering costs negatively impacted sales in India. Gross profit for the second quarter of 2021 was $3.6 million compared to $14.1 million during the second quarter of 2020. Our North America segment accounted for substantially all of the reported consolidated gross profit in both periods. Selling, general, and administrative expenses were $5.8 million during the second quarter of 2021, compared to $4 million during the second quarter of 2020 as a result of period expenses incurred as part of the development of our ultra-low carbon initiatives. Operating loss was $2.1 million for the second quarter of 2021 compared to an operating income of $10 million for the second quarter of 2020, resulting from a combination of lower demand for the higher profitability industrial alcohol products and rising corn prices. Interest expense during the second quarter of 2021 was $5.2 million, excluding accretion and other expenses in connection with Series A preferred units in our AMETIS biogas LLC subsidiary, compared to $6.2 million during the second quarter of 2020. Additionally, our AMETIS biogas LLC subsidiary recognized $3.8 million of accretion and other expense in connection with preference payments on its preferred stock during the second quarter of 2021 compared to $1.4 million during the second quarter of 2020. Net loss was $10.6 million for the second quarter of 2021 compared to net income of $2.2 million during the second quarter of 2020. Cash at the end of the second quarter of 2021 increased to $7.2 million compared to $600,000 at the end of 2020. Capital expenditures increased property plant equipment by $12.9 million, driven by investments in our ultra-low carbon initiatives. Company debt decreased by $48.7 million compared to December 31, 2020. That completes our financial review for the second quarter of 2021. Now I'd like to introduce the founder Chairman and Chief Executive Officer of AMETIS, Eric McAfee, for a business update.

Eric? Thank you, Todd. As we discuss the results from Q2 2021, I encourage you to consider viewing the AMETIS corporate presentation, which can be found on the homepage of the ametis.com website. AMETIS is focused on producing below zero carbon intensity products, including the production of negative carbon intensity renewable natural gas and renewable fuels. Our projects maximize the value of carbon credits under the California Low Carbon Fuel Standard, the Federal Renewable Fuel Standard, and IRS 45Q tax credits, while reducing operating costs by using waste materials as feedstock. We own and operate production facilities with more than 110 million gallons per year of production capacity in the U.S. and India. Included in our production portfolio is the largest ethanol plant in California, a 65 million gallon per year fuel ethanol plant located in Keys, California, near Modesto. that we leased in 2009, retrofitted for 18 months, started operations in mid-2011, and have owned since 2012, when the original shareholders converted their ethanol plant ownership into about 10% of the common stock of Emetis. We also built, own, and operate a 50 million gallon per year capacity distilled biodiesel and refined glycerin biorefinery on the east coast of India, near the port city of Kakanata. This plant was designed to use vegetable oils and animal tallow feedstock, and AMETIS has unique access to low carbon intensity, low cost, renewable waste oil feedstocks in India for use domestically or for export to use in our future California production plants. We work to improve our communities in which we operate by reducing air pollution and offsetting the carbon emissions that contribute to global climate change. Our capital investments and the ongoing operations of our biofuels, digester, and production plants create thousands of direct and indirect jobs, feeding and housing hundreds of families that depend on us to sustain and expand our business. Despite the extraordinary circumstances of the past year, we have maintained 100% employment at all of our facilities. We seek to build a strong, sustainable, valuable company by supporting a resilient, supportive corporate culture among our teams who work together to build and operate our projects. Financing the past 15 years of growth at Emetis has placed us on a path to become a $1 billion revenues business without heavily diluting shareholders, and that was not easy. It took hard work and sacrifice and extreme commitment to our shareholders by our management team and our board of directors. Our entire top management team has more than 12 years of tenure at the company, with our president, Andy Foster, joining the company during the founding in 2006, and our head of Ametis International, Sanjeev Gupta, joining in 2007. We have one Ametis board of directors member that has served for 14 years. formerly serving as the secretary of the U.S. Department of Agriculture. And two of our board members were formerly long-term executives at Chevron Corporation. Our audit committee chairman and lead independent director has served as the chief financial officer of five public companies, each of which had more than $1 billion of revenues, and the largest had $16 billion of revenues. We have a deeply committed and experienced team that has been working for many years to execute a long-term vision and to build value for shareholders. Fortunately, the positive regulatory trends for renewable fuels and the leading role of biofuels in decreasing carbon emissions have provided government policy support for Ametis' businesses. Long-term, low-interest rate, 20-year guaranteed loans from the U.S. Department of Agriculture, the Department of Energy, and California tax-free municipal private activity project financing opportunities are now being pursued as financing tools by Ametis instead of highly dilutive equity financing. We have executed on a financing strategy of funding rapid growth, utilizing short-term high interest rate borrowings, which are then refinanced using long-term low interest rate debt. During the second quarter of 2021, AMETIS achieved important milestones toward revenue growth and the sustained profitability of each of our four lines of business. Now, Andy Foster, president of the AMETIS North America business, will review highlights of our renewable natural gas and ethanol businesses. Andy?