Stonegate Capital Partners has updated its coverage on Aemetis Inc. (NASDAQ: AMTX) following the company's second-quarter 2026 results, which highlighted a visible operating inflection. Despite revenue falling short of consensus, the underlying performance demonstrated significant improvements in profitability and environmental credit generation, underscoring the company's strategic progress.
Revenue for the quarter increased 20% year-over-year and 15% sequentially to $62.7 million, below the $68.6 million consensus estimate. However, gross profit improved dramatically to $13.5 million from a $3.4 million loss in the prior-year period, and adjusted EBITDA reached $9.7 million, a substantial turnaround from negative $5.8 million. The positive results were driven by quarterly 45Z credit recognition, higher renewable natural gas (RNG) production, and improved ethanol economics, which more than offset weaker India revenue due to the timing of OMC tenders.
The dairy RNG segment remains the clearest growth driver, with sales volume increasing 38% year-over-year to 146,900 MMBtu. Segment gross profit rose to $4.0 million from $0.9 million, reflecting the impact of seven approved LCFS pathways with an average negative carbon intensity of 380. These pathways are already improving credit economics, and with six additional pathways nearing approval and two digesters expected to be commissioned in the third quarter of 2026, the company has additional runway for higher production, profitability, and cash flow.
The Keyes earnings bridge continues to advance, with the mechanical vapor recompression (MVR) system targeted for operation by year-end 2026. Management estimates that the MVR will generate approximately $32 million in annual value from lower natural-gas usage and incremental LCFS and 45Z benefits. These operational improvements could materially strengthen the earnings profile beginning in 2027, but the balance sheet remains the primary constraint. As of the end of the quarter, Aemetis had $1.0 million in unrestricted cash and $415.9 million in total debt. Refinancing progress is crucial to translating operating improvements into durable free cash flow.
Investors should note that while the revenue variance from India was due to tender timing, the underlying California businesses delivered higher volumes, stronger gross profit, and increased environmental-credit contribution. The company's normalized EPS estimate of negative $0.11 exceeded the consensus estimate of negative $0.24, indicating better-than-expected operational performance.
For more details, the full announcement is available at Stonegate Capital Partners. The company's progress in RNG and environmental credits, along with the expected benefits from the Keyes MVR, positions it for potential growth, but financial leverage and successful refinancing remain key factors to watch.
