Stonegate Capital Partners has updated its coverage on Aemetis Inc. (NASDAQ: AMTX) following the company's second-quarter 2026 earnings, which showcased a clear operating inflection point. Despite revenue falling short of consensus estimates, the underlying performance indicates that Aemetis is making substantial progress in its core businesses. Revenue increased 20% year-over-year and 15% sequentially to $62.7 million, slightly below the $68.6 million consensus. However, the company's normalized EPS of negative $0.11 surpassed the consensus estimate of negative $0.24, reflecting stronger-than-expected operational results.
Gross profit improved dramatically to $13.5 million from a loss of $3.4 million in the prior-year period, while adjusted EBITDA reached $9.7 million, reversing from a negative $5.8 million. These improvements were driven by higher renewable natural gas (RNG) production, better ethanol economics, and the recognition of quarterly 45Z tax credits. The weaker revenue in India was attributed to timing of OMC tenders, which is not a reflection of underlying demand.
One of the most promising areas is dairy RNG, which remains the clearest growth driver for the company. Sales volume surged 38% year-over-year to 146,900 MMBtu, and segment gross profit rose to $4.0 million from $0.9 million. Aemetis has seven approved LCFS pathways with an average carbon intensity of negative 380, which are already enhancing credit economics. Additionally, six more pathways are nearing approval, and two digesters are expected to be commissioned in the third quarter of 2026, providing further runway for increased production, profitability, and cash flow.
The company's Keyes ethanol plant is also progressing on its earnings enhancement plan. The MVR (mechanical vapor recompression) system is targeted to be operational by the end of 2026, with management estimating approximately $32 million in annual value from reduced natural gas usage and incremental LCFS and 45Z benefits. If realized, these improvements could materially strengthen the earnings profile beginning in 2027.
However, the balance sheet remains the primary constraint on the investment thesis. As of the end of the quarter, Aemetis reported only $1.0 million in unrestricted cash and $415.9 million in total debt. The company's ability to refinance its obligations is critical to converting its operational improvements into durable free cash flow. While the operating trends are encouraging, the financial leverage presents significant risk that investors must monitor.
According to Stonegate Capital Partners, the second-quarter results make the operating inflection visible, but the path to sustained profitability hinges on successful balance sheet management. The company's progress in RNG and ethanol, combined with potential new revenue streams, positions it for future growth, but near-term financial stability remains a key watch item.
