Montauk Renewables, Inc. Q4 FY2024 earnings call

• EPA Delay: The EPA delayed the 2024 RIN compliance deadline for all categories, and Montauk had sold all 2024 D3 RINs with zero exposure to timing/resolution of related issues.
• Diversification Strategy: Montauk aims to diversify feedstock, product offerings, and monetization structures. Examples include the Pico acquisition, feedstock diversification, North Carolina development project for power and biochar production, and biogenic CO2 initiative.
• Project Developments: Commissioning of swine waste energy project in 2026, Pico digestion capacity increase, feedstock payment expected in 2025, and progress on biogenic CO2 projects at various facilities

Renewable Natural Gas Segment

• Production: Produced approximately 5.6 million MMBtu of RNG in 2024, an increase from 5.5 million MMBtu in 2023. Well field optimization and plant processing equipment improvements contributed to the increase, but unrelated well field quality issues and weather anomalies lowered production at some facilities.
• Revenues: $158 million in 2024, up from $156.5 million in 2023. Average commodity pricing for natural gas was 17.2% lower than the prior year.
• Operating and Maintenance Expenses: $53.4 million in 2024, an increase of $5.5 million from 2023, driven by increased maintenance costs at various facilities.
• Operating Profit: $56.0 million in 2024, down from $59.3 million in 2023.

Renewable Electricity Generation Segment

• Production: 186,000 megawatt hours in 2024, a decrease from 194,000 megawatt hours in 2023, due to ceasing operations at the security facility.
• Revenues: $17.8 million in 2024, down from $18.4 million in 2023, primarily due to decreased production volumes at the security facility.
• Operating and Maintenance Expenses: $12.8 million in 2024, an increase of $1.1 million from 2023, driven by non-capitalizable costs related to the Montauk Ag Renewables development project.
• Operating Loss: $2.8 million in 2024, up from $0.6 million in 2023

• RNG Production: Expected to range between 5.8 million and 6 million MMBtus in 2025, with corresponding revenues between $150 million and $170 million.
• Renewable Electricity Production: Expected to range between 178,000 and 186,000 megawatt hours in 2025, with corresponding revenues between $17 million and $18 million

• Market Volatility: Volatility in RIN markets, including price fluctuations and muted purchasing activity by obligated parties.
• Regulatory Uncertainty: EPA delays and decisions affecting 2024 RIN compliance deadlines and potential impacts on 2025/2026 rulemakings.
• Voluntary Market Challenges: Unreliability of data and pricing in the voluntary market, and uncertainties in off-take volumes and creditworthiness of off-takers
• Landfill Delays: Hesitation from landfill operators affecting capacity increases and project timelines

Q: With your RNG facilities, how are you guys looking at things from the data center side of things, any opportunities you're seeing on [indiscernible] A: Discussed development with data centers and cold storage facilities, noting synergies with renewable electric credits but highlighting complexities of creditworthiness and business structure Q: 2025 RNG revenue guidance, RIN monetization?

A: Expected RNG production volumes between 5.8-6 million MMBtus and revenues $150-170 million; discussed RIN timing, regulatory impact on sales, and historical trends of RIN premium realization Q: Landfill operators delay, RIN pricing?

A: Discussed landfill operators' hesitation affecting capacity increases, and RIN pricing challenges including EPA's lack of recent RIN price posting and focus on selling to obligated parties rather than interim buyers Q: Voluntary market demand and pricing?

A: Challenges in getting reliable voluntary market data; mentioned fixed price/margin share arrangements in transportation space and evaluation of diverting to voluntary market under regulatory uncertainty Q: Impact of 45Z production tax credit?

A: Mentioned evaluating applicability of 45Z and other tax credits, currently reviewing with continued evaluation of tax credit availability under IRA Act