Stonegate Capital Partners has updated its coverage on Aemetis Inc. (NASDAQ: AMTX) following the company's second-quarter 2026 results, which showed a visible operating inflection despite headwinds in the India segment. The quarter marked a turning point as Aemetis reported its first positive operating income and adjusted EBITDA, driven by quarterly 45Z credit recognition, higher renewable natural gas (RNG) production, and improved ethanol margins.
Revenue for the quarter increased 20% year-over-year and 15% sequentially to $62.7 million, falling short of the $68.6 million consensus estimate. However, the miss was largely attributed to timing delays in India's OMC tender process, masking stronger underlying performance in the company's California-based businesses. Gross profit improved significantly to $13.5 million from a $3.4 million loss in the prior-year period, while adjusted EBITDA swung to $9.7 million from negative $5.8 million.
The dairy RNG segment remains the clearest growth driver, with sales volumes surging 38% year-over-year to 146,900 MMBtu. Segment gross profit rose to $4.0 million from $0.9 million, buoyed by seven approved LCFS pathways with an average negative carbon intensity of 380, which are already enhancing credit economics. The company expects six additional pathways to receive approval and two digesters to be commissioned in the third quarter of 2026, providing further momentum for production, profitability, and cash flow generation.
At the Keyes ethanol plant, the earnings bridge continues to advance, with the mechanical vapor recompression (MVR) system targeted for operation by year-end 2026. Management estimates this will deliver approximately $32 million in annual value from reduced 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 on the investment thesis. Aemetis ended the quarter with only $1.0 million in unrestricted cash and $415.9 million in total debt, making refinancing progress critical to translating operational improvements into durable free cash flow.
Stonegate's update highlights that while the revenue variance might raise concerns, the underlying results demonstrate that Aemetis's strategic initiatives are gaining traction. The company's focus on high-margin RNG production and environmental credits is beginning to pay off, even as it navigates the complexities of its capital structure. Investors will be watching closely for continued operational execution and any progress on the refinancing front, which could unlock significant value in the coming quarters.
