Eric McAfee: Yes, the $120 million of investment tax credits is actually over the course of the build out of the project. The updated plan which we’ll put out in Q1, we’ll show you what than actual impact of that is on a quarterly basis. The average number of MMBTUs per dairy is about 25,000 per dairy. What’s happening is we’re getting much bigger dairies and we’re actually getting dairies that are consolidating with Dairies Next Door. And we’re finding that the language of one dairy equals 25,000 MMBtus is not reflecting accurately what’s going on in the field. So, we’re going to be transitioning this language to talking about how many cows we’re going to be processing, the waste from. That will much more accurately reflect what is for people’s calculation purposes.
So when we say, we’re adding another 10,000 cows, you’ll be able to then say, oh, by the way, that means X number of MMBtu. So between this call and the next call and certainly in the five-year plan, you’re going to see a transition to what’s called wet cow equivalents. So different kinds of cows, you get to in the industry all calculated by one simple number, the WCE and then the number of MMBTUs per year and then it’s very easy math for everybody. And, so the answer is in 2024, we have some very, very large digesters. I think some of the industry’s largest digesters are being built by Aemetis right now, which takes multiple dairies of waste. And in a very efficient process, we have one that’s four dairies. We’re building one large digester, but we’re bringing four dairies online all at the same time.
So the pace of dairy development is very rapid in 2024. Digester development is larger digesters in several cases. And so, I think the language we’re going to start changing to is just how many cows and that will make it much, much easier for everybody to think about and calculate it. So we’ll be coming out with those numbers, certainly in the first quarter in our updated plan. You’ll be seeing it in press releases. We’ll probably do a year-end wrap up press release on some of the achievements of the year in Aemetis and talk about, using these wet cal equivalent calculations. So, let me hold back until we put those things on paper, because we’re rapidly accelerating the program. And as we are expected to close the third, $25 million funding from the USDA and have 4th, 5th, 6th and 7th all in process, those are all feeding into the pace of 2024.
Amit Dayal: We’ll keep an eye out for it and then in relation to the monetization from the IRA for the biogas credits. Is this going to be lumpy in the future, Eric? Or going forward, will this be a more sort of quarterly number that will show up in the financials?
Eric McAfee: It’s a very good question. It’s actually, I would say, core question about the valuation of the Company today. Our particular customer in this situation is a company that really would prefer $50 million or more for a transaction. They have a very large tax liability on a monthly basis. And so we transacted this in a very efficient way of which we aggregated them all together and did one transaction for 63 million of tax credits. We do not expect to be transacting quarterly until 2025, roughly a year from now. The reason why is because these investment tax credits are spread out over a longer period of time are not 50 million a quarter of numbers. So, I would expect over the next year to probably see two transactions, my projection would be first one probably in the second quarter and the next one probably in the fourth quarter.
We’ve largely are going to time those transactions based upon just the aggregate volume. So we’ll not be every quarter for the four quarters of 2024. But when we get to 2025, every single quarter, we will want to monetize. And I think I talked about the volumes, you’re talking about in excess of $15 million per quarter from the production tax credits and the investment tax credits together, in our various businesses in the first quarter and thereafter in 2025. So, we have stated publicly, it’s a total of about $800 million coming into the Company. And so other than 2024, it does end up being a bit of a quarterly after tax benefit and cash benefit to the Company, and just it’s going to be lumpy in 2024.
Amit Dayal: Okay. Thank you for that.
Eric McAfee: Amit, let me mention to you, the way that the production tax credits are represented is, they’re another source of revenue. Just like low carbon fuel standard credits are revenue and the federal D3 RINs revenue and the molecules revenue, the production tax credits will not be shown on our income statement the way that our investment tax credits are. They will show up just like revenue. So, every quarter revenue is higher, they’re an after tax benefit, so earnings is higher, EBITDA is higher. It will just be like an LCFS, RFS or even a molecule sale, it’s a source of revenue. The investment tax credits show up as a, it’s another income, it’s a tax benefit is what it shows up as. And though we get in cash, most people don’t think about taxes as being cash that comes to you.
Its cash on our balance sheet, but it shows up in our P&L, below of operating income. It does of course as we know show up as after tax income, so our earnings per share goes up, but it doesn’t come into EBITDA as investment tax credit does not come into EBITDA. It comes into cash and it goes into earnings. And that’s confusing to many investors I know, but that’s what it is. It’s like EBITDA plus cash because most people don’t think of tax as actually creating any cash, in this case, it does.
Amit Dayal: Yes, I guess, folks will have to start looking at the cash flow profile from a valuation standpoint going forward on this?
Eric McAfee: Yes. Well, I think when we get the production tax credits, it’s going to be very easy, because they won’t have to do much calculating, it’ll just be in revenue, it’ll be in earnings. It will be in operating income. It’s going to be very easy. It’s primarily this $120 million of future investment tax credits. And we do have some other things we’re doing that we expect to generate investment tax credits. I think that’s where people are going to be confused. We got the cash, but it’s not revenue, right? We got the cash, but it’s not an EBITDA. So what is it? Well, it’s people are going to be confused about that part of the business. It’s just something that, we’re going to have to deal with. You know what it really is, it’s this reduction of high interest trade debt. That’s $120 million more of reduction higher interest rate debt, that’s one clean way to think about it is that your earnings go up because your debt goes down.
