OPAL Fuels Inc. Q3 FY2024 earnings call

• Commissioned and brought into operation Sapphire and Polk RNG projects, increasing nameplate design capacity in operation to 8.8 million MMBtus.
• Adjusted EBITDA for the quarter was approximately $31 million, driven by contributions from Prince William, environmental credit sales, and strong fuel station services results.
• First monetization of ITC credits in Q3 for net cash proceeds of $8.6 million.
• 6 projects in construction, representing 2.6 million MMBtu of OPAL's share of annual design capacity.
• RNG production in Q3 2024 was 1 million MMBtus, a over 40% increase year-over-year.

RNG fuel segment revenue was $25.9 million in Q3 2024 compared to $20.1 million in Q3 2023, primarily due to the addition of the Prince William RNG facility. Fuel station services segment revenue was $45.4 million in Q3 2024 versus $37.3 million in Q3 2023, driven by increased RNG marketing fees and construction/service revenue. Renewable power revenue was $12.8 million in the quarter compared to $13.7 million in Q3 2023. Adjusted EBITDA was $31.1 million in Q3 2024, up from $16.5 million in Q3 2023, partially due to timing of environmental credit sales. RNG production increased to 1 million MMBtus in Q3 2024 from 0.7 million MMBtus in Q3 2023, largely due to contributions from Emerald and Prince William projects.

Management is maintaining current guidance for 2024. Expect continued investment tax credits from projects that have recently entered operation and from projects in construction. Adjusted EBITDA for the quarter included a $3.8 million add-back of certain project development and startup costs related to the Prince William virtual pipeline, temporary in nature and expected to be incurred until mid-2025.

• Uncertainty regarding the impact of election results on areas like the D3 RVO and ITC, but believe industry is bipartisan supported.
• Regulatory uncertainties around U.S. RNG exports into Europe.
• Market volatility for RINs and LCFS pricing affecting credit revenues.

Q: Have developments like Cummins starting full production of natural gas engine and UPS buying nat gas powered trucks accelerated customer discussions?

A: Adam Comora said excited about fuel station service segment, 15 liter natural gas engine rollout has potential, fleets are interested, but still early innings of broader thematic programs.

Q: To what extent are there similar 100% equity projects teed up?

A: Jonathan Maurer said entered gas rights agreements with WM, Kirby project is second 100% ownership project, partners have different goals, mix of 100% ownership and joint ventures based on partner relationships.