Montauk Renewables (MNTK) 12 Nov 242024 Q3 Earnings call transcript

Good afternoon, everyone, and thank you for participating in today's conference call. I would 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 the earnings material or made on this call. John, please go ahead.

Thank you, and good afternoon, everyone. 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

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

Additional details to financial most our available our XX-Q Form reconciliations this can which measures, regarding filed financial afternoon, GAAP quarter in in website comparable are slide on press non-GAAP be found and our release and including measures presentation at directly third the earnings these XXXX issued htps://ir.montaukrenewables.com. and

questions. the to call open we [Operator And Sean. our After turn will I call the with Instructions] remarks, over to that, will

the XX, XXXX X and both commending our the call. months quarter thank production for for our with like everyone, for ended I'd to and day, Good staff achieved third begin September during levels we John. XXXX. you you, Thank the operations joining

our multi-day power For Houston, weather resulting challenged events, facilities in severe outages. utility Texas X were by quarters, consecutive

Houston, Texas-based production. our for facilities over account of half RNG Our

and the approximately first all the of MMBtus, our losses production XXXX throughout. were safety totaled preserved events, X employee XXX,XXX to facility these equipment While weather we months operability estimate during due of

RNG continue Our with development activities the Apex of our facility. second construction

the As periodically rights the primary requirement has landfill RNG intake availability feedstock of of our that the previously for capacity gas gas increasing trigger processing a waste facility turn, by exceeded catalyst and construction contractual the in current Apex discussed, facility. second was

of informed to XXXX continue to of Granite continues from expect from utility excess gas be feedstock capacity its at RNG will prioritization on period the by utility Hurricane prioritization Helene necessary commissioning on our to efforts there the interconnection facility is of the expectation commissioning. have remediation into processing The the our to our of XXXX. We to subject landfill near-term RNG a be Related Blue facility remain our remediation interconnection, been delay shifting for project, for and impacts Hurricane these activities. which a increases schedule availability upgrades We that rate we Helene. efforts

of on capital deployment significant the of through XXXX. has delay this the slowed pace incur and project the due Our utility, do capital to project we of not expect expenditures for remainder this to

its committed our and develop to schedule. facility could flare which its wellfield Frank landfill permitting Recycling corresponding its we R. obligations, RNG upon the California, in commissioning and facility, in at to facility requirements. RNG to County result the company As Orange Related its to and remain existing in wellfield facility host continues the flare Waste landfill to of and has management changes landfill agreed the its proposed impacts support Bowerman

the the of XXXX. construction on changes related landfill those potential the what, permits into regulatory required the delayed any, these impact with proposed work and to impact and assess to if have changes of could continue We additionally receipt commissioning regional

all vendors, experience have we COX continuation with previously from our processing. received a development opportunity Energy, multiple COX European capture with prior of equipment having liquid and announced As proposals

and million. We $XX in the investment to continue range and million capital between XXXX expect anticipate to $XX commissioning

with Utilities a We received Renewables. of project October swine to for and a engage Commission sale North Carolina, regulatory in Turkey, also notice to public necessity related renewables registration Montauk convenience our public continue that waste-to-energy was and our in we for swine of for application approved In electricity to agencies new North the from XXXX, related various facility Ag notice. North energy the Carolina generate development initiative Carolina certificate to rec

Gas Piedmont regulatory the interconnection approval. submitted design for Natural of our has Additionally, gas

be favorable expect in commissioning renewable us to registration standard. such continue line gas the our regulatory the fuel programs completed low processes This as construction interconnection line. We interconnection with the will and approval in fuel standard and carbon to time California in and enable engage XXXX begin to under to

We majority process continue agreements feedstock and of which have collection of our installation farms completed on methods. collection X the the have we equipment for optimize to

for securing phase necessary the project Ag We our Turkey, supply also Carolina. bring in additional first contract in for feedstock farms continue Montauk North Renewables to under

of therefore, New to projections to inlet delay at during practice to our fuel of critically of our hosts begun of production. have landfill their third of collection updated gas installation been common have quarter infrastructure in our the a expectations. projects shaping identified several Several trends waste XXXX, impacting ability our supply our critical XXXX production historically and, active or placement feedstock wellfield install delay areas, and

These of landfill-driven collection impact delays system increases. and of will our the timing production enhancement the resulting installations timing

such derived from to XXXX. RNG continue and through from RINs of these its sale the expect and and We revenues The production RNG, credits. environmental generation and of sale records as company trends LCFS its attributes

environmental attributes RNG counterparties themselves using of revenues shared the for of a their either recorded net Our as with fuel. R&D for environmental attributes such of for transportation offtake portion as counterparties a portion a are consideration revenues the

pathway We sharing certain agreements XXXX. end the at of have provider expiring

renewals in experienced contracted. have higher related XXXX, current than in our environmental revenues our the renewals increase at have percentages shared or current related we not providers pathway While pathway historically a to attributes with significant been the

current its fixed under significantly seeing our excess renewals a price agreements. for commodity provide percentages agreements, those under which also historical in production are portion proposed The RNG of than pathway floor indices. monetizes prices company higher We of

received monetizing fixed RNG of have of these consider offers pathway increases. through RNG volumes We we impact have these our of portion price contracts our aforementioned the Historically, price less could XX% percentage a to fixed mitigate that than monetized under agreements. larger

our potentially offtakes. to fixed to We these XXXX, short-term arrangements under evaluate are considering increasing throughout monetized time entry navigate percentage volumes contracts of into provide pathway trends multiple to additional price related and some market recent historical

the to I that, with over call will And turn Kevin.

discussing financial Please refer be supplemental for posted earnings to XXXX have operating and and Thank been you, to press Sean. quarter third I results. additional our will release the website that our our information. slides

XXXX primarily increase $XX.X million, million XX.X% in number third of RINs quarter related of quarter compared third an XXXX the the RNG XXXX. to in of or third an The of to $XX.X to self-marketed million increase revenues of compared $XX.X the quarter were increase in XXXX. third was production in Total quarter we the XXXX the from of

RIN the quarter realized the increased third third to of XXXX compared quarter Additionally, during XXXX. of pricing X.X% approximately

XXXX. quarter third XXXX. $X.X in XXXX, million increase increase XX.X% related compared quarter a compared million of the and or of of general vesting was an an to were accelerated share to administrative $X.X employee. of XXXX, The of third or the quarter of were costs, $XX to $X.X for certain Employee-related in stock-based Total XX.X% the of awards including of third increase termination quarter million million, restricted of in third as the primarily the compensation, million $X.X the result $X.X an expenses million

$X.X million, approximately to quarter XX.X% insurance of Our quarter or the third XXXX. decreased corporate the XXXX third fees compared in of

gas segment Turning renewable metrics. our reviewing operating our begin to by I'll natural segment.

flat of third impacted Beryl, by our outages. utility produced RNG were third sites Houston, during certain of quarter during XXXX. Texas of Hurricane X.X the causing quarter approximately compared to the mentioned, million Sean of multi-day X.X million MMBtu We XXXX, As

Our project. approximately quarter commissioning the as of quarter to Pico of expansion in XXXX our facility third compared MMBtu digestion to XX,XXX XXXX due of third the produced more the

disclosed more the quarter conditions feedstock MMBtu quarter XXXX in produced prior Our Galveston third of third coastal previously availability XXXX XX,XXX dry quarter XXXX weather period. and to compared impacting the third facilities that approximately in the to of due of combined

produced MMBtu to quarter facility extraction of environmental factors. third XXXX third as XXXX the XX,XXX Rumpke the compared quarter in ongoing wellfield Our approximately to fewer of due

facility of produced XX,XXX as XXXX the fewer Athascacita MMBtu as XXXX weather-driven third utility Our quarter of quarter of impacted third production. in to our result the outages, which a compared

XXXX the of was gas compared XXXX. of quarter XX.X% or natural during gas than natural increase during Average renewable the million, quarter third $XX.X lower $XX.X quarter of from for segment quarter Revenues XXXX of were the for third third of third in the an million XXXX. third the -- $XX.X approximately pricing to XX.X% commodity million the

higher XX.X% to XXXX, quarter XXXX, of to $X.XX the [ approximately of RINs, compared compares realized $X.XX XXXX index we XXXX RIN as third quarter during the for was $X.XX. representing for the average X.X%. XXXX the index DX the quarter XX.X increase a third pricing the during ] $X.XX self-marketed quarter X on or Average million compared the during million self-marketed XXXX. of During third sales RINs of of increase of price XX.X% average quarter than third This third third of being quarter an to XX.X rent of DX of the rent price million

had we had approximately approximately X.X RIN We MMBtus million and million unsold had XXXX, At approximately had X.X and X.X RINs September XXXX. generation RINs generated MMBtus X.X September generated and approximately at unsold. in-generation XX, available million for available for and XX, million

market profitability attributes, Our market environmental of including price dependent the the is highly for on price RINs.

our available impact a a self-market operating significant the we As period commit not profit. transfer and a revenue RINs, our during will to portion decision RINs of

a an transfer $X.XX. generate XXXX have entered price portion commitments production fourth average RINs into the to quarter from at We expect of of to we approximately

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

primarily enhancements. wellfield approximately Our operating maintenance related operational McCarty million, expenses facility to increased and $X.X

expenses approximately utility expense in related refund and increase facility tax received and a operating Athascacita maintenance an third Our prior million, quarter. primarily increased year the $X.X in property XXXX to

expenses facility as operating maintenance and increased maintenance. digester Pico timing preventative Our of $X.X million result a approximately of

expenses and million, Apex related $X.X operating waste decreased and costs. disposal expense reduced approximately Our utility facility primarily maintenance to

million, $X.X and maintenance expense coastal primarily approximately operational decreased related facility expenses and utility wellfield operating reduced enhancements. to Our

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

Our hours quarter back of quarter first the ceasing XXXX less as XXXX the of third XXXX operations right gas of of security with of result produced sale a in compared the the quarter X,XXX us to facility third connection approximately megawatt landfill in to host. the

the during facility primarily quarter of $X.X XXXX the of $X.X million decrease electricity $X.X of cessation of our operations security quarter renewable from were XX.X% third compared to third by million or Revenues at decrease XXXX. was a million, the during driven facility. The

renewable million compared to quarter XX.X% million, of quarter Our maintenance expenses the XXXX. of during generation third electricity the operating $X.X an XXXX increase $X.X or were million of and $X.X during third

Our of increased maintenance noncapitalizable Magnolia operating costs. million result and expenses a as $X.X facility approximately

process the During XXXX. generation quarter the of was quarter identified initial an less losses electricity to and third X $X.X million, for million of that $X.X the The $X.X construction startup of equipment quarter testing third increase work REG of related obsolete than in various XXXX, compared assets our to under were that impairments million in of we impacted of in RNG renewable specifically impairment third primarily sites. XXXX, recorded deemed

Renewable or third for compared $X.X for quarter million operating electricity quarter $X.X quarter income XXXX operating $XX.X quarter million compared $X.X $X.X increase XX.X% third was or of $XX.X an million of of million XXXX. for was of third quarter operating million loss XX.X% to $XX.X the million, quarter the an a RNG million, the income the of of XXXX income third of to XXXX. $XX.X compared increase of million, for of third for to decrease $X.X the third generation the million Operating XXXX. was for of XXXX

sheet. term as September million. loan September under available outstanding $XX our At XXXX, at our credit XX, $XXX.X Turning was capacity revolving under to XX, facility our balance million XXXX, our of remained borrowing

as estimate liability of As our the September $XX.X compared generated XX, earn-out XXXX. million a we on cash Based of royalty XXX.X% million from XXXX. to obligation, $X.X of activities, an at of $XX.X of XXXX, recorded our the recorded increase to of we September of XX, was This expense. RNG Pico present our segment through value decrease XX, September million decrease operating

of expenditures, was for XXXX, project; RNG XX, we ended $X.X for RNG million in $XX Montauk which Ag project. was million September Granite million for $XX.X second million increase $XX months capacity facility; the incurred the $X.X X $X.X for project; the the approximately Apex Renewables; million For capital the Blue Boerman for and was million was Pico-digestion

For expenditures to XXXX, we nondevelopment XXXX $XX our million range $XX million. expect and capital between

capital Additionally, $XX and we XXXX existing currently expenditures million. estimate will range development $XX that million our between

of other balance majority XXXX, we receivables and million. approximately As September and of sales, $XX the is quarter million, $X million compared an which our of equivalents of quarter for had collected accounts or for after September accounts increase $XX.X cash EBITDA RIN the and September The million XX, were cash receivable million third of approximately XXXX XXXX. third Adjusted of XXXX XXXX. $XX.X XX, to was XX.X% of the $XX.X

XX.X% was million or compared third of the the quarter third quarter XXXX XXXX. in an of was EBITDA XXXX. of Net $XX million the $XX.X for quarter XXXX EBITDA income compared million, for million third to $X.X income of net $XX.X third in of million to $XX.X increase of the quarter of

third expense of income approximately Our XXXX. quarter tax $X.X to as the for quarter the or of third XX.X% million XXXX compared increased

now to over turn I'll call back Sean. the

In provide aforementioned corresponding X.X of volumes wellfield between revenues landfill-driven as price MMBtus like areas guidance and we an to DX to and year market our on active and $XXX to our range would in expectations $XXX placement RNG year full the attributes, we the internal updated full result RINs, Kevin. range million provide waste including don't The closing, market trends in RNG XXXX price between of million of you, outlook. Thank while million million. delays and projects X.X production to environmental

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

guidance pathway market recent with RNG it and And will renewal offtake also pause It impacting we that, impact questions. note price our we XXXX agreements as important to potentially fixed relates strategies how to near-term sharing is trends for may provide any for revenues.

Instructions] [Operator

And McClain Sean Thank it comments. for you. back to I closing will turn

Thank you in call speaking on forward we for us to look taking the XXXX. join conference and time with the to you today,

conference. you in all participating for today's Thank

You may now disconnect.