Montauk Renewables (MNTK) 9 Nov 232023 Q3 Earnings call transcript

Good afternoon, everyone, and thank you for participating in today's conference call. I would now like to turn the call over to Mr. John Ciroli, as he provides some important cautions regarding forward-looking statements and non-GAAP financial measures contained in earnings materials or made on this call. John, please go ahead.

Thank you, and good afternoon. earnings and to operating Renewables quarter the Montauk financial XXXX results to conference review call third Welcome and development. Chief Ciroli, John Legal Secretary and I'm at Officer Montauk.

Officer, Montauk's today Asdalan, Van and Officer, third and Sean operating me our Financial business McClain, discuss XXXX Joining Chief and are Chief Executive quarter to to Kevin results. discuss developments President financial

At disclosure statement. forward-looking attention to this our time, I would like to direct your

and number from uncertainties to forward-looking During could this statements, constitute risk of uncertainties detailed call, assumptions, by involve such, differ in factors make company's risks certain the are These implied and in a that performance cause forward-looking filings. actual those comments as or Renewables' statements. Montauk such and or we results expressed materially SEC

we financial our non-GAAP not measures. These we believe excluding performance include by not also are We do basis accordance metrics in prepared financial of EBITDA across a indicative adjusted in accepted may today these reporting non-GAAP the remarks with believe items analyzing and because accounting consistent assist EBITDA generally measures principles. investors our performance. on present periods operating measures that core are Our

found and comparable earnings these questions. the turn Sean website Additional to the on our will this open directly including can and over financial ir.montaukrenewables.com. to And Form GAAP Instructions]. at that, filed call our also McClain. after release press in presentation remarks, in Those be our are call will financial and afternoon. prepared we And the available I reconciliations [Operator non-GAAP most with slide our third measures XXXX to measures, details regarding quarter issued XX-Q

our thank and call. Thank you, John. Good everyone, you for day, joining

generation EPA. quarter comparing industry-wide to compares approximately X% U.S. to third as approximately the decreased reported RIN generation DX This the increase RIN July XXXX, XXXX September XXXX an X.X% when by of drought in July in September weather believe RIN generation XXXX RIN XXXX. XXXX include reduction contributing could average in lower-than-average higher temperatures. rainfall DX the and to to QX from than We anomalies industry-wide of generation During factors

production will weather facilities million trains was our of quarter phase the approved energy development our in North first approximately As the Kevin total of experienced initiative of some first production and Carolina, to half of as In Board phase our of anomalies expect for between expenditures our million. impacted. the Directors more, QX of quarter these expect third similarly currently investment first range of first including $XXX currently waste operational to to funding XXXX, during the the XXXX third XXXX. during cumulative explain $XX We have through of million the processing XXXX. reactor capital and We X $XXX the renewable

schedule are and XXXX. the of currently planning through the remaining second processing rolling for continuing for We the XXXX in half a beginning of half second lines commissioning

to XXX,XXX capacity, hog generation phase patented through per Upon to revenue waste per equating tons to this of project, ability feedstock XXXX. capacity over contract the deployment to spaces expect commence rep in anticipate satisfy we the process At expect completion have our Duke Energy We of of the up X to XXX of first full processing of the day, from over phase sufficient reactors. to first day. we collection

and combination megawatt expected of XX,XXX to megawatt of XX,XXX hours. first a equivalents this hour XX,XXX XX,XXX The through to is to XXX,XXX phase project produce approximately MMBtus to XXX,XXX

produce phase enhancement project of first XX,XXX will of approximately XX,XXX the the expect tons also We annually. to

XXXX, additional our of Pico digestion we increase the Related capacity pit. and quarter capacity during to new reception third digestion commissioned our dairy project

the increase pit additional gas capacity. We availability have have begun been reception digestion to utilizing the and capacity through increased working

tranche increase our of of process that XXXX will of to expansion last during the commission the final be necessary quarter to expect digestion the We capacity increased fourth feedstock.

to that, expected final deliver will And they at with host feedstock dairy payments dairy. turn make which contractual will increase that the the in us in I to time to final Our XXXX, the we volumes informed over Kevin. call

Contributing million quarter revenues related I to in gains Similarly, of the $X.XX of XXXX of third to quarter and since quarter release million expired. refer pricing been third were RIN earnings commodity that Please the compared of Total XXXX. and is primarily X.X% The as in results. XXXX. in decrease you, third are quarter decreased additional website during or of hedge compared the the third third a quarter the to supplemental XXXX the third $X.XX of for to have prices the of $XX.X XXXX revenue realized financial indices decrease will million gas commodity discussing recognized to information. related to has third program of the our to million, of in third quarter to compared XXXX. XX.X% a decrease XXXX quarter $X.X quarter XXXX which of the that our operating Thank Sean. slides decreased press be our decrease gas $X.X the $XX.X of in to a posted in XX.X%

and decreases third costs, $X.X Offsetting million third primarily $X.X was XXXX the of employee-related were increase X.X% sold million, expenses of decrease in an million compared in a XXXX. of XX.X% third or RINs quarter the to $X.X including for compared million the quarter related of the stock-based compensation. XXXX. $X.X The Total as in of of XX.X% was these decrease third administrative to decrease quarter general quarter XXXX or a to of of revenue

produced X.X Gas during reviewing of of XXXX, renewable third natural quarter third our million $X.X million our gas compared begin Natural segment. to less a of XXXX. than decrease of Turning segment to in the produced operating I'll MMBtu the metrics. We X.X million MMBtus by quarter Renewable

July of have We the of factors approximately XXXX this and These XXXX. in compares XXXX gas July As availability between previously in were weather production impacted contributing the September reported XXXX impacting generation third increase Sean and RIN mentioned, at quarter XXXX. to higher RIN anomalies X.X% quarter quarter of facilities industry in RIN could Also drought our since of generation X% repaired. third anomalies discussed when to reduction equipment by average DX been RIN EPA. decreased include process to the comparing generation XXXX which DX failures lower-than-expected but of certain our as September generation impacted This quarter approximately of during second than RNG third rainfall XXXX weather temperatures. XXXX, believe has

of XXXX. Renewable quarter for commodity quarter gas the the pricing Average in XXXX third from the MMBtu, compared to natural in the Natural the a $X.XX million X.X% XXXX. for quarter XXXX third $XX.X was lower or million million, segment quarter of Revenues of $X.X were decrease $XX.X of of XX.X% Gas per third third than

quarter unsold. MMBtus Average generation quarter XX, index This to than RIN for quarter XXXX, the compares approximately of for XXXX, to the million X.X% representing price quarter $X.XX quarter XXXX million of At had approximately realized September the approximately $X.XX million During increase RINs when of of DX XXXX, decrease average XXXX. average RINs, the a of and third DX rent third to higher X.X of in available $X.X we XX.X had we the X.X XXXX in pricing million price third RIN quarter a or generated the XXXX. of as XX.X% self-monetized sales the and index third being million the third in $XX.X third of XX.X%. compared during compared $X.XX was

ownership million generated the MMBtus Of by XX, not the of the and in as XX, completed At million will during customer XXXX, after had for September XXXX approximately the approximately available in generation was unsold RINs unsold. XX, until million quarter approximately generated and September of X.X transfer had September X.X RINs be XXXX. we of and XXXX, $X.X as recognized revenues fourth

may highly index the the market to forward due not for monetized of attributes, environmental in of is attributes RINs. on the profitability Realized Our correspond dependent to directly commitments. the of environmental price prices price selling prices market including period

have XXXX. We fourth entered into sale the commitments not of forward quarter significant beyond

fourth into price during RINs of to all XXXX have be at expected monetize commitments generated to average We $X.XX. of entered an the quarter

X.X% facilities the were our million, the expenses third third for of maintenance or in quarter and quarter decrease XXXX. to million operating a RNG million compared of Our $XX.X of $X.X in XXXX $XX.X

Our quarter RNG million as in $X.X compared of XXXX. third utility reduced of the of XXXX to quarter the approximately third expenses facilities reported

the and maintenance operating Additionally, quarter of third result increased in of as repairs approximately third at XXXX quarter compared expenses to the million facility maintenance, $X.X operational and our as enhancements. RNG facilities a other wellfield preventative XXXX of

quarter of to XXXX. quarter electricity renewable in hours third approximately the of XXXX, megawatt during hours XX,XXX compared X,XXX a of produced third the megawatt hours decrease of We XX,XXX approximately megawatt

ambient higher compared XXXX. XXXX in Boerman temperatures third third quarter produced quarter third of X,XXX hours the of facility due Our less XXXX to the approximately to the in of megawatt quarter

XXXX generation the the $X.X our our megawatt completed XXXX produced is increase Our volumes third $X.X and of compared in to X.X% compared the and quarter in of Bowerman timing generation by quarter or from XXXX. million in of and third were the primarily security X,XXX at XXXX timing the to facility Revenues quarter increase of engine driven in million the monetization in REX million, of increase quarter of the and The to due $X.X facilities renewable XXXX. of electricity approximately an third maintenance more hours third production security an facility. facility

of million, in primarily expenses an quarter quarter of maintenance. facility of operating approximately $X.X generation $X.X X.X% electricity to result a expenses, million The were operating maintenance field renewable the compared which increase scheduled to million in well Our of $X.X XXXX operational $X.X increase is maintenance and as or engine preventative XXXX. increased third the third million our maintenance related and and

costs. Creek tax offset result expenses received of our quarter decrease The as facility of was $X.X XXXX. $X.X million at facility refund operating in maintenance of the a noncapitalizable approximately property result million of approximately third as our Turkey increased a Bowerman a increase and by Additionally,

to $XX.X quarter and an specifically of recorded machinery XXXX, million third income of million of no or quarter The than this operational flows. RNG quarter compared million of future third operating loss third in an $X.X $X.X of the Renewable quarter an record electricity third that $XX.X million decrease loss not we quarter operating was XXXX impairments the The equipment to than of the to XXXX. the million income of related of increase $XX.X cash in of less an third of the $XX.X XXX.X% of of XXXX million, was did Operating were XXXX in the XXXX. income event, XXXX. was identified $X.X third or third XX.X% $X.X XX.X% compared of to any use. quarter compared XXXX calculated $X.X $X.X million were the of million impairments quarter of a decrease for million, or third to in Other discrete We compared the a XXXX. longer XX.X% million generation and million, RNG quarter for in other for impairment million quarter the $X.X $X.X third in increase operating in or in

the to sheet. Turning balance

The $XX.X the under As borrowing for XXXX, of outstanding September revolving credit $XXX.X term million under company's million. XX, capacity available our was loan. was facility

of the compared cash to $XX.X When XX, million of generated months decrease XXXX. ownership October we XXXX, activities revenues activities, quarter was in third and was operating XXXX, capital million operating million XXXX, During XXXX. deferred by a ended million XX, cash approximately $XX.X of unsold generated of by not as as transfer X the XX.X% working of completed in at September $XX.X provided in of the customer of from or $X September XX, the until September included

million million September X approximately to $XX.X were the were facility, related to to ongoing Renewables our months the $XX.X million related second related $XX.X to digestion XX, the RNG Bowerman Pico project. For million Apex increase Montauk XXXX, project Blue were were were North expenditures Granite in and Carolina, related facility capacity $X.X facility Ag our capital $X.X RNG RNG which our million were related ended to of million, our

of As approximately cash had million. September XX, $XX.X of and cash equivalents XXXX, we

of for quarter an the XXXX. million quarter was XXXX of increase third $X.X an $X.X of $XX.X million, to Adjusted increase $X.X third of the for or over increased quarter quarter of third million approximately quarter EBITDA was for X.X% XXXX of the million, for of for or quarter the million XXXX. XXXX XX.X% or compared of to the Net million the million third income compared $XX.X $XX.X EBITDA third third XX.X% XXXX. $XX.X

to over that, I'll call with And turn back the Sean.

$X.X XXXX. generation Thank would quarter that updated And to drought We expectations volumes during impact between Corresponding our X.X you, future expectations. year to outlook, like DX volatility by driven we provide index third currently of $XXX the of RNG the guidance range industry RNG on does and expected and full million of prices don't range Kevin. In revenue our XXXX between are are a weather closing, revenues attribute prices, expect environmental in to MMBtu. leading an production while likely cause in million million. anomalies reduction million provide we $XXX

volumes to and electricity renewable XXX,XXX million range We production hours. expect expected In and to XXX,XXX range million. renewable corresponding are $XX.X electricity revenues $XX.X megawatt between between

we that, with pause And will any questions. for

first Our Instructions] from of Riley. [Operator B. question line Pfingst with the Ryan comes

prices? you recent decision Could in RIN an X.XX%. just commitments generation do XXXX, And to at about XQ abundance seen to Was in of we've of into commitments index the the expected just caution? enter that for term near given talk strength out you the into enter for in your all of expect

the is from to those that intermediaries, obligated committed we've the tried timing is decision of sales we suggest the commitments our would that we those RINs abnormal what closer We to of the parties. And make the selling question, Ryan. extent see, to philosophy interest avoid The for RIN the have that abundance our contrary to any pricing the make the are to obligated or any on parties. a and at strength that's quarter. direct Good demand those commitments tied between on fourth or that monetized we cross to which news prices the which we absence and

don't we guidance commitments any made forward haven't nature terms have parties fuel and the acknowledgment in renewable interest the in to continue any price as this and in the commitments as combination standard. previous the commitments we those of point, the we strength, beyond than far the again, our year price provide upcoming relative As no of that of but to obligated years, quarters into a of demand evaluate previous in it strength differently under the of material

line next with of comes question the Tuohy from Our Instructions] [Operator Craig Brothers. Shere

my impacting earnings third year, provide primarily fourth of calls. relating the RNG implies might I'm but little in make jumping around a the to Is softer your for a quarter quarter? line, drought for quarter. So apologies, on you looks production. you're a which between what RNGRNG issue lowering like mostly It was more kind color this guidance softer Can

Craig, correct. that's And Yes.

quarter. experienced -- defer a our this from primary in while our the for Ohio But the then top these end significantly reason the facilities. quarter we approximately normally that QX to weather in the that guidance. we our Texas impacting lowering note third line, a our primary was quarter by for we Our impacted end anomalies of into of of our reason from $X.X I to facilities XXXX that did third that have and revenues a That's top have quarter in generally, would obtained. leading for period drought quarter And third reduced did QX being the want is prolonged range million last

Pickering, Our Blair from of Tudor, comes the with Holt. next question Matthew line

thoughts wondering any on appears down to was generation DX you if RIN I slowed why recently. have had

that strong. regard? which be is any I around that. pace recent why year-to-date if lower if your it's or think in slowing And in XX% the rate, But is you're on down been had might obviously you seeing growth system much in things that ideas months, than pretty

Matthew. Yes,

market We're do our that rainfall, to systems I glean review information as information, we weather, there quarter. higher continued aware it believe continue that think the that then we of believe as well. than growth the voluntary that and contributing third voluntary and is we try than disclosed to offtake. from in while some that's to -- temperatures, still the we we less believe And average average

leading portion the production We of last I that, it's seeing of we've that contributing fixed have quantify factors under We're a is our handful production X falling would the industry over believe to an sold pricing. RINs been be but months. to that as working those

a [Operator I Shere Tuohy Craig Brothers. with have line the follow-up of Instructions] from

about provide to wondering, when quarter. but the clarity to I sounded going quarter, good was third just Yes, in I trying the weakness the a summary were be was was there. what a of better get like little was it mostly before, a the fourth you drivers sense because asked could it more I And

working follow-up. impacts of appropriately this contemporaneous we're mindful currently, apologize issues are rebound, any the of We're had mindful it's field, anticipating our that. being various of but for as like the we we have we're Craig, we from Thanks, I back addressing. drought through don't resume vacuum summer. the We not and quarter volumes conditions. sites fourth being issues for but -- coming that field And a with these areas significant as impact anticipate previous in bring off

to [Operator Instructions] Sean hand now closing I McClain remarks. to for back over like the conference would Mr.

thank you. on time conference the you And today. look call forward in XXXX. to Thank with you the We all again speaking taking to for join us

today's for conference you participation. your Thank concludes call. This

wonderful now day. have disconnect. may You a Everyone,