Aemetis, Inc Q2 FY2024 Earnings Call

Greetings and welcome to the Aemetis Second Quarter 2024 Earnings Review Conference Call. At this time, all participants are in a listen-only mode. A 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 of Aemetis, Inc. Mr. Waltz you may begin.

Thank you, Ali. Welcome to the Aemetis' second quarter 2024 earnings review conference call. Joining us for the call today is Eric McAfee, Founder, Chairman, and CEO of Aemetis; and Andy Foster, President of North America. We suggest visiting our website at aemetis.com to review today's earnings press release, the Aemetis Corporate and Investor Presentation, filings with the Securities and Exchange Commission, recent press releases, and previous earnings conference calls. 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 respect to our future stock performance, plans, opportunities, and expectations with respect to financing activities and the execution of our business plan. 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 Securities and Exchange Commission filings, which are posted on the SEC EDGAR system and our own company website. Our discussion in the call will include a review of non-GAAP measures as a supplement to financial results based on GAAP, because we believe these non-GAAP measures serve as a proxy for our company source or use of cash. A reconciliation of the non-GAAP measure to the most directly comparable GAAP measures is included in our earnings release for the three and six months ended June 30, 2024, 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, income tax expense, intangible and other amortization expense, accretion expense, depreciation expense, and share-based compensation expense. Let's review financial results for the second quarter 2024. Revenue during the second quarter 2024 was $66.6 million compared to $45.1 million for the second quarter of 2023. Our keys plant operated during the entire quarter compared to its extended maintenance cycle during a portion of the second quarter of 2023. Our dairy natural gas segment produced 89,400 MMBtus from operating dairy digesters and reported $1.6 million of revenue, and our ninth digester began producing biogas at the end of the second quarter. Our India biodiesel business recognized $24.8 million of revenue, primarily from sales to the India oil marketing companies. Gross loss for the second quarter of 2024 was $1.8 million, compared to a $2 million profit during the second quarter of 2023. Selling, general and administrative expenses were $11.8 million during the second quarter of 2024 from $9.7 million during the same period in 2023, driven primarily by the recognition of a loss on asset disposal of $3.6 million. Operating loss was $13.6 million for the second quarter of 2024 compared to an operating loss of $8.7 million for the same period in 2023. Interest expense, including accretion of Series A preferred units in the Aemetis Biogas LLC subsidiary, increased to $11.7 million during the second quarter of 2024 compared to $9.6 million during the second quarter of 2023. Additionally, Aemetis Biogas recognized $3.5 million of accretion of Series A preferred units during the second quarter 2024, compared to $6.9 million during the second quarter of 2023. Net loss was $29.2 million for the second quarter of 2024, compared to $25.3 million for the second quarter of 2023. Cash at the end of the second quarter of 2024 was $234,000, compared to $2.7 million at the close of the fourth quarter of 2023. We recorded investments in capital projects related to the reduction of carbon intensity of Aemetis ethanol and construction of dairy digesters of $5.4 million for the second quarter of 2024. Now, I'd like to introduce the Founder, Chairman, and Chief Executive Officer of Aemetis, Eric McAfee for a business update. Eric?

Thank you Todd. Aemetis is executing on a five-year plan that includes expanded positive cash flow from operations, combined with long-term lower interest rate debt financing guaranteed by the U.S. Department of Agriculture to finance growth. We see solid progress across each of our five business units as we will review today, and are currently positive cash flow from operations in all three of our operating businesses. However, before discussing our operations and projects, let's review regulatory events that are expected to have a significant positive impact on our businesses. In addition to hearings and meetings with the California Air Resources Board, we recently hosted a representative of the USDA Office of the Chief Economist for a biogas ethanol plant and SAF plant site tour in California. I also visited Washington DC for a week in May and again last week for meetings with top USDA officials, EPA Secretary, Michael Regan, and various staff of senators and Senate committees that directly impact the Inflation Reduction Act incentives for renewable fuels and for ethanol E15 blending approval. From these meetings and discussions, I can highlight three important external regulatory events that are scheduled to occur over the next two quarters that strongly support the Aemetis business plan. The California Air Resources Board vote on November 8 that is slated to approve the next 20 years of increased demand for renewable fuels and other low-carbon energy sources for transportation, the IRS guidance showing the calculation of the Inflation Reduction Act Section 45Z production tax credit that begins in January 2025. And the permanent approval of the 15% ethanol blend by the Federal EPA, which has been scheduled for early next year as part of a legal settlement with eight Midwestern states. Combined, these three regulatory events significantly increase the value of our products and are expected to generate more than $50 million per year of increased positive cash flow starting in January 2025. Positive cash flow is expected to continue to grow strongly as the value of LCFS credits increase and as additional biogas digesters are built. I should note that in the current quarter, the third quarter of 2024, we are already showing positive cash flow from each of our three operating businesses, including ethanol production, dairy renewable natural gas, and India biodiesel. We have five additional digesters under construction, but the regulatory events on November 8 for LCFS, by January 2025 for the 45Z production tax credit, and the EPA adoption of E15 are the key elements of strong cash flow and future profitability. In the Aemetis Biogas business over the past year or so, we have closed $50 million in USDA guaranteed 20-year loans to build dairy biogas digesters and to convert construction loans to term loans for digesters that have already completed construction. We recently received the USDA conditional commitment approval for the next $25 million renewable energy per America loan and expect to close the funding later this month. An additional $50 million of USDA guaranteed funding is in process for closing later this year for a total of $75 million of new long-term financing for biogas digester and pipeline construction this year. We stored a significant amount of our Q2 2024 renewable natural gas production until Q3 in order to generate almost 80% more LCFS credits under the provisional pathway approval that we expect later this year. In July, we dispensed a portion of the RNG production, and we'll continue to spend storage inventory throughout Q3. Cashing in later on the expected higher price of LCFS credits and more than an 80% increase in the number of credits earned at the provisional pathway rate instead of the negative 150 default carbon intensity. The California Resources Board has stated that renewable natural gas is an important feedstock for the production of renewable hydrogen for future truck engines, allowing the trucks to be zero emissions using a carbon-negative fuel. We believe that Aemetis is well positioned to supply renewable natural gas, renewable hydrogen, and negative carbon intensity electricity to power future trucks and cars in California, enabling the transition to zero emissions and below zero carbon intensity heavy-duty and light-duty vehicles. In the development of Aemetis sustainable and renewable diesel business, during the first quarter, we received authority to construct air permits for our planned 90 million-gallon per year sustainable aviation fuel and renewable diesel plant to be built in Riverbank, California. When operated to produce only sustainable aviation fuel, the design capacity of the plant is about 78 million gallons per year of SAF. The need for sustainable aviation fuel is expected to increase rapidly for the foreseeable future, as the $90 billion per year global aviation fuel industry seeks to reduce carbon emissions using renewable fuel to replace petroleum jet fuel. With the strong demand for SAF and with limited supply, we are now discussing the use of innovative pricing structures with our airline customers to accelerate the financing construction and operation of the SAF plant. As one of the very few companies with all of the key permits needed to construct a large-scale SAF production facility in the United States, Aemetis is building production facilities to supply renewable aviation fuel to an airline market that is currently not expected to meet its ambitious goals of transitioning to lower carbon intensity operations. In the India biofuels business, in late 2023, we announced that we received a $150 million one-year allocation for biodiesel sales to the three India oil marketing companies under a cost-plus contract structure. We began deliveries under this contract in October 2023, and we have achieved excellent production and delivery performance. The positive impact of cost-plus pricing that is now being used by the OMCs to purchase biodiesel is expected to continue for the foreseeable future. The India business has positive EBITDA and funds its own operations and capacity growth. This July, our new Managing Director of the India business joined the company after serving as the Chief Executive Officer of the GE joint venture in India to build renewable power plants. We are busy with the IPO process and work on the next annual contract for biodiesel sales to India government-owned oil marketing companies. For the Aemetis ethanol business, the temporary approval of a 15% blend of ethanol in 49 states for this summer and the EPA's recent statement that a permanent E15 approval will be adopted effective next year is expected to have a positive impact on ethanol industry margins as retailers seek to provide lower-cost fuel to consumers. A recent study by UC Berkeley and Naval Academy economists showed that the adoption of a 15% ethanol blend in California would provide a $2.7 billion per year savings on fuel costs for consumers, equal to about $7 million per day or $0.20 per gallon in California. In Q2, we commissioned an on-site solar energy facility with battery storage to improve cash flow through the reduction of our energy costs and decrease the carbon intensity of the ethanol produced by our Keys plant, which generates more low carbon fuel standard revenue per gallon using solar energy. The next major step in improving our cash flow and energy efficiency at the Keys plant is the installation of a mechanical vapor recompression system or MVR. We have completed process design and detailed engineering and are now moving forward with the procurement of equipment. The MVR system is designed to reduce fossil natural gas usage by 80% and increase cash flow by $15 million to $29 million annually at the Keys plant, depending on the value of LCFS credits. The MVR energy efficiency project is budgeted for a direct cost of about $21 million and has been rewarded $20 million in grants and tax credits from the California Energy Commission, Pacific Gas & Electric Energy Incentive Program, and the Department of Energy and U.S. Treasury Department. Our Aemetis carbon capture subsidiary has received California state approval to drill the characterization well. The first phase of drilling and installation of the conductor pipe is expected to occur in the next two months. In summary, all five Aemetis business segments are synergistic and create what we refer to as a circular bioeconomy. Our company's values include a long-term commitment to building value for stockholders, the empowerment of and respect for our employees and business partners, and making significant and positive contributions to the communities we serve. Now let's take some questions from our call participants. Ali.

Apologies for that. I don't know where that music was coming from. Thank you, Mr. McAfee. We will now be conducting our question-and-answer session. Thank you. Our first question is coming from Manav Gupta with UBS. Your line is live.

So Eric and team, I mean the credit bank is building. We saw the building in last night and 26 million metric tons. We are optimistic that something will happen in November. But do you think like what rate a 7% or 9% rate is probably now needed to bring this in check and move the credit prices higher? But like if we look at it by the time we end 2024, the credit bank could be at 32 million, 33 million metric tons. So, won't it take significant amount of time even if we go with a 7% or 9% rate to actually get the carbon prices to move? That's what I'm trying to understand.

We think that's going to be necessary for the kind of price response that the California Resources Board is seeking because as you know this funds hydrogen and electrification zero emission goals so a continued low credit price basically postpones those projects. I think as they increasingly see the $30 million to $32 million credit bank number, they're going to realize that 9% basically is the minimum required not the maximum, but the minimum required to move major oil companies forward on buying more credits now. And so their range is 5%, 7%, or 9% in the most recent number that came out. But in discussions directly with CARB executives, it's pretty clear that they had no idea that we'd be looking at $32 million in credit. So that was not even in the realm of possibility in the discussions I've had with them. So I think it's good that we have a November date because it gives them almost the entire year to see the buildup in inventory. And if we had had a March 2024 decision, I don't think they would have had that clarity. So it's actually, in hindsight, a good thing for us that those numbers will have built up by the time this decision is made on November 8.

Perfect. And my follow-up quickly is on the ethanol business that US ethanol margins are looking much stronger in 3Q and so hopefully my answer is like you're not hedged and you should be able to participate in this uptick in ethanol margins?

Andy, you want to take that?

We've definitely seen an uptick in margin certainly for the month of July. So, yes, I think August is going to be a little softer. As you probably noted yesterday, Manav, the EIA numbers showed record production, with everybody trying to take advantage of the margin environment too much, which typically happens within our industry. But no, right now, with the price of corn showing just being flat to down for most of the summer, we expect a larger crop than maybe what the USDA anticipated. Growing conditions in the Midwest have been very good, except for the Upper Midwest. But I think if you look at the corn belt of Nebraska, Iowa, Illinois, we are expecting pretty significant crops. So, I think given that we'll probably see some softening in the ethanol price just because inventories are going to build over the next month. But as we get into the fall, and there's been a pretty robust export program in ethanol this year, I think for the foreseeable future we're expecting the margin environment to be much more favorable than it was in Q1.

Okay. My last one and quick one is, Eric how many dairy digesters should we expect to be online by year-end? I understand the volumes will take time because there is a certification process. But how many digesters do you think you can complete by year-end 2024?

Because we have some multiple dairy digesters, we're giving guidance that it will be approximately 16 dairies. We have nine operating now. We have six under construction. So, we have about 15 total completed for sure, but we have two more that are on the cusp. So, definitely expecting though that the number of dairies we're operating will be in the 16 dairy range. The nine that we have currently operating cover 10 dairies, and we're adding six more. So, about 16%. One of the guidance is that we're looking to increasingly focus people on is what our annual run rate of MMBtu production is because you can directly multiply that times the value per MMBtu to get our revenues. And so we issued a press release a few weeks ago about hitting a $300,000 per year run rate, and then we'll probably update that either late in the fourth quarter or early first quarter with our new run rate. We did project that we'd be at $800,000 approximately 12 months from now. So, we're scaling from a $300,000 run rate for the year to $800,000. And then by giving guidance later on this year about exactly what the revenue is per MMBtu when we have 45Z and LCFS in place, I think it will be rather easy to calculate what our annual revenues are at the company from the RNG business.

Thank you so much Eric.

No, thank you. Appreciate your work.

Thank you. Our next question is coming from Jordan Levy with Truist. Your line is live.

Afternoon all. I appreciate all the commentary. Eric, maybe just to start on the MVR side of things, the project has been in the works for a while now. Can you just give us some thoughts around the confidence level in getting that project up and running for I guess next year maybe?

Very high level of confidence. The fabrication of the equipment already has our first $1 million deposits that's been paid. Engineering design has been completed, and permitting at this phase is completed for what we need to do right now. So, we're in a fabrication cycle. And we would expect that within 12 months, we would be completed with the project. So, this is a third quarter 2025 target. I would always suggest we have to hold that a little bit loosely. If it slips by a quarter, we shouldn't be surprised. But certainly, we're operating toward a third quarter 2025 implementation.

Great. And then sorry if you talked about this already in the opening remarks; my phone was cutting out. But could you just talk to some of the importance and thinking around 45z guidance, especially on the biogas segment and some of the impacts that could have in the range of outcomes?

45z is a production tax credit based on the amount of fuel produced. There are two main issues in the biogas calculation, which is straightforward. You take one gallon of fuel, multiply it by its carbon intensity, and you get a number of tax credits. There are some methods to derive this, but those are the two key variables. The first question is about the energy density of a gallon of ethanol. This has been a focus of my meetings in Washington D.C. last week and during the tour in May. It's clear to us that the energy density of a gallon of renewable natural gas should align with the 20 years of policy established by the renewable fuel standard, which designated one Renewable Identification Number for a gallon of ethanol as the reference gallon energy density when the standard was introduced in 2005. Changing that reference would mean reconsidering what other fuel could replace it. I've made a joke about potentially using one gallon of whale oil or melted butter as alternatives. Rejecting 20 years of federal law by not using ethanol is a significant issue. This argument has resonated in every meeting I've had with senators and the USDA and EPA administrator, Michael Regan, last week. We are engaging with the committee members advising the Treasury department, and so far, everyone I've met with has concurred that it should remain consistent with previous policy, which is based on ethanol. Ethanol has an energy density of approximately 76,000 BTUs per gallon. Natural gas is defined in terms of one million British Thermal Units. The math is quite simple: divide one million by 76,000, which results in about 13 gallons representing the energy density of one MMBtu. While this may seem complex to investors, it is straightforward since you are multiplying two numbers together, with the first number being about 13.15. Can you hear me over the music in the background?

Hello?

Jordan, do you hear us?

Yeah.

Jordan, okay. Yeah. So the second calculation is rather simple. It's just carbon intensity in California. We've been doing this for 15 years. It's using the GREET model. And so twice the guidance has come from Treasury most recently on June 18th of this year saying that you just calculate your GREET model carbon intensity. We know what that is, because we do LCFS pathways for all of our biogas. So it ranges from negative 320 to negative 370. So when you multiply 13.15 times our carbon intensity with that calculation, we end up with about $99 per MMBtu of value at a negative 350 carbon intensity. And again our includes carbon intensity, which is negative 370 or even more. So we are waiting for IRS guidance that confirms that ethanol will be consistent with prior federal law. And simply that the GREET model will be the GREET model, which I have twice said that that’s what it's going to be. But there's a table to be issued that will describe different fuels and what the carbon intensity is. Now, because we're talking to investors a lot, I always describe that there's a range of values and that the range of values is between $99 for a negative 350 carbon intensity down to $7.20. So it's a very wide range that the IRS could determine. $7.20 is the carbon intensity of diesel 720 and a cap on $1 per gallon that they do not allow negative carbon intensity, even though the legislation itself has negative in it. What we consider to be a worst-case scenario of $7.20. And I personally think there would be some discussion to change that. So that's one of the reasons we spend so much time with the decision-makers is that we are expecting that everybody will have the consensus that it should be the ethanol molecule and it should be the GREET model. And that's just implementation of what's already in legislation. And if that's the case it will be $9 per MMBtu. Remember, this is only the 45z value. In addition to that, you have the D3 RIN which is 11.727 RINs per MMBtu times the current price of $3.40, which is roughly $35 for the D3 Federal RIN that would be on top of the $99. And then we add the low carbon fuel standard value which at our carbon intensity runs roughly in the $25 range, but would quadruple by the provisional approval and the credit price doubling. So the certainty that we will have in the fourth quarter with IRS guidance plus LCFS mandates and increased credit prices, I think will put us in a position to give investors a solid number that they can then calculate against the MMBtus per year number we have. Is that clear, Jordan?

Yeah. Absolutely. Thanks so much for the color.

Sure.

Thank you. Our next question is coming from Matthew Blair with TPH. Your line is live.

Thank you and good morning. The first question is about India biodiesel. Could you discuss the overall profitability in the second quarter and possibly provide an EBITDA figure for this segment? Were you able to transition away from PFAD feedstocks to sunflower oil during the quarter?

The winter oils are designed for colder temperatures, covering the months of November through February. Therefore, the second quarter did not incorporate any winter sunflower oil feedstock. Additionally, we do not disclose margins due to the competitive nature of the market in India. However, our disclosures provide various calculations indicating that it was a multimillion-dollar EBITDA quarter, and we anticipate continued revenue and EBITDA growth.

Sounds good. And then on the ethanol side, I wanted to clarify that the $10.5 million of IRA tax credits that came through for the MVR system were any of that $10.5 million either recognized in your EBITDA for the second quarter? And is any of that in your cash balance for the second quarter?

No. Unfortunately, the $10.5 million is a 48C credit, which is an investment tax credit. To qualify, we need to complete the construction of the facility and operate it for a 90-day period to demonstrate that it meets the designed energy efficiency targets. Only then will we receive the tax credit. Consequently, we will not report the $10.5 million minus about 15% for the total cost of selling the credits. We anticipate receiving approximately $9 million in cash, likely in the fourth quarter of next year, assuming everything proceeds as planned. This amount will be recorded in that quarter as other income related to the tax credit sale.

Okay. That's helpful. And then just to wrap it up, circling back to your LCFS comments, which I thought were pretty interesting. My question is if CARB holds the vote on November 8, would you expect implementation to start up on January 1, 2025? Or is this something that could flip into like Q2 2025, or even the back half of the year?

I believe it will extend beyond the first quarter. I wouldn’t be surprised if we see a July 1, 2025 date. What matters more to me is the extent of the reduction in 2025. There are many major oil company traders who see the excess inventory of LCFS credits at $32 million, which is essentially 32 million reasons to delay purchasing credits. However, if there appears to be a significant reduction in 2025, the credit prices will respond accordingly. Therefore, I think the market will primarily be influenced by the expectations for 2025 and 2026 and how major oil companies react to those predictions.

Great. Thanks for your comments, Eric.

Thank you. Appreciate it.

Thank you. Our next question is coming from Amit Dayal with H.C. Wainwright. Your line is live.

Good morning and thank you for taking my questions. So, Eric, you said $50 million in potential annual positive cash flow starting next year. Could you give us sort of a breakdown of how we get to that $50 million from the three operating segments?

The biogas business alone could do the entire $50 million if we get the calculations that we're expecting quite frankly. I mean, $100 or $99 plus $35 plus LCFS credits times an average of 500 gets us actually $50 million right there. So, actually in excess of $50 million. But our ethanol business will have at least one quarter maybe even two quarters of the benefits of MVR which is $15 million to $29 million, depending on LCFS values. Our India business should be expanding its contract, and because of some things going on in the wintertime, we're looking to have expanded margins in the wintertime. So you add it all up, and you're actually significantly in excess of $15 million of positive cash flow. So the $50 million was us taking some of the unknowns and putting it into the calculation. Amit? Yes, I think we lost you, Amit.

Hello.

Yes. Try it again.

Yes. I was asking about the renewal in India. New product renewal coming up. Last time it was for a $150 million one-year contract. Do you think this time it could be similar or a bigger amount for even a longer-term duration contract?

For reasons of conservatism because this is one of the first large contracts, we previously had a $40 million contract. This one was $150 million. We only used 60% of plant capacity in fulfilling this. So we have increased the capacity of the plant. As you may know, we are planning also to continue to do another expansion of capacity frankly in the fourth quarter this year. So we would expect it to be a much larger contract utilizing more of our existing capacity and we're continuing to expand in order to take on larger demand. Just as a reminder, a 5% blend is about 1.25 billion gallons per year. They're currently running at a little over 250 million gallons per year. So the market is one billion gallons short and the oil marketing companies continue to try to seek to fulfill that one billion-gallon gap.

Understood. Just last one on the IPO process there. I mean have you actually started any formal work to get this going? Or are you still in sort of the planning phase?

We have already contacted investment banking firms. We have our leaders in place inside the company and the financial results over the past years have trended the way that the investment makers gave us guidance. And so we're actively in the process. I would give guidance on that over the course of this quarter. We'll be working closely with narrowing the Investment Bank down to the lead bank and specifically determining timing. The India Sensex market continues to do just brilliantly, and so I think that the timing will be earlier or at least that's what we expect the advice to be, but we're going through that process right now.

So is this potentially 2024 end of year type of catalyst? Or is it a 2025, if everything falls into line with how you're planning things?

I would be surprised if it was 2024; certainly, if the investment banking firms came back with a strong notion, we can move the paperwork that fast because we're already an audited public company. So much of the work that delays things does not need to be done by us. And the India process is a very quick process. It's basically the investment bank does the due diligence. So yes, it's possible we could do it in the fourth quarter, but I don't put that as an expectation. My expectation is first half of next year.

Understood. Thank you, Eric. That’s all I have.

Thank you. Our next question is coming from Dave Storms with Stonegate. Your line is live.

Good morning.

Hey, Dave.

First of all, congratulations on inclusion in the R3, very excited about that. My first question is just about the asset disposal taken in the quarter and the loss on that. Is there any more color you can give us on that?

Did you say asset disposal?

Yes. Loss on asset disposal.

Yes, we launched the Mechanical Vapor Recompression, it's called equipment fabrication phase and made the executive decision that the ZEBREX unit, which we had put in place and operated a month in the commissioning phase of that should not move forward because we could expand the Mechanical Vapor Compression and do exactly the energy savings and other goals we had and do it in one integrated unit rather than running two units. So we decided to reserve against our investment in ZEBREX. We will be able to use that equipment in other places in that operation as well as potentially in our jet fuel plant. But we took a conservative view, which is we wrote off the entire amount, and if we happen to utilize some of the equipment, then that's just a benefit.

Understood. That's right clear. Thank you. And then just sticking with ethanol. Is there any scheduled downtime we should be aware of in the back half of 2024? Or was most of that handled when you did all the upgrades in the first half of the year?

Andy, do you want to talk?

We continue to try to do some of the integration work as we move along. We did a significant amount of that when we had our downtime last spring. It is likely that we will have some probably I would say days of downtime. It won't be anything like we're going to turn the plant off for a month. It won't be anything dramatic like that. But when you're cutting over systems and things like that, there's likely to be two to three days of outage here and there, but it won't be anything that would be a month long or anything like that.

Understood. Thank you for taking my questions and good luck on the third quarter.

Thanks, Dave.

Thank you. Our next question is coming from Ed Woo with Ascendiant Capital. Your line is live.

Yes. Congratulations on all the progress. Can you talk about just your outlook for ethanol pricing and margin and the impact that oil prices, the relatively stable oil prices have on it? Thank you.

I think for the near term, as I said, I think August I'm going to suggest that we'll see some softening in the ethanol margin environment just because of the large production numbers that we posted over the last few weeks. The export program was dented a little bit by the big storms in the Gulf and Texas, particularly. We expect to see that start to recover as we move into September. I think they're playing catch up right now. I think September and October look more favorable. And then as we get into the fourth quarter, typically around harvest, you'll see some disconnections in the market. Depending on right now, it doesn't appear that there's a strong bean program. It looks like the crop for corn is going to be very strong. Those things can change. Typically when we get into December, that's when margins really start to soften just because of demand issues. So I would say that for August, we're going to see some softening; I would expect to see a little bit of rebound in September and October, and then as we get into the end of the fourth quarter, we're going to see that typical seasonal softening again.

Great. Thanks for taking my questions, and I wish you guys good luck. Thank you.

Thank you.

Thank you.

Thank you. We have reached the end of our questions at this time, so I would like to turn the floor back to management for closing comments.

Thank you to the Aemetis analysts, stockholders, and others for joining us today. Please review the Aemetis company presentation that is posted on the home page of the Aemetis website. We look forward to talking with you about participating in the growth opportunities at Aemetis.

Thank you for attending today's Aemetis earnings conference call. Please visit the Investors section of the Aemetis website, where we'll post a written version and an audio version of this Aemetis earnings review and business update. Ali?

Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.