Financial Performance - Total operating revenues for the three months ended June 30, 2025 were $45127 thousand, compared to $43338 thousand in 2024[7] - Net loss for the three months ended June 30, 2025 was $5487 thousand, compared to a net loss of $712 thousand in 2024[7] - Total operating expenses for the three months ended June 30, 2025 were $47482 thousand, compared to $42470 thousand in 2024[7] - For the six months ended June 30, 2025, the company's Adjusted EBITDA was $13820 thousand, compared to $16434 thousand in 2024[34] Operational Results - Renewable Natural Gas (RNG) production volumes increased by 31 MMBtu for the quarter ended June 30, 2025[8, 10] - Renewable Electricity Generation (REG) production decreased by 3 MWh for the quarter ended June 30, 2025[8] - The average realized price per RIN decreased by $070 for the quarter ended June 30, 2025[9, 10] - RINs available for sale decreased by 3549 thousand in the second quarter of 2025 compared to the second quarter of 2024[10, 15] Business Development - The Second Apex RNG Facility was commissioned in June 2025[20] - Capital investment for Montauk Ag Renewables project increased to a range of $180000 to $220000 thousand, with commercial operations expected in 2026[25] - A contract was signed to deliver 140 tons of biogenic carbon dioxide from Texas facilities under a 15-year contract with European Energy North America, with total revenues ranging from $170000 to $201000 thousand and commissioning expected in 2027[28]

Montauk Renewables Q2 2025 Earnings Report [Second Quarter Highlights](index=1&type=section&id=Second%20Quarter%20Highlights) The company advanced strategic projects but faced profitability headwinds from regulatory delays and lower RIN prices - Key operational and strategic developments in Q2 2025 include the completion of the **second Apex RNG facility**, a **10-year power purchase agreement** for the Montauk Ag project, and the formation of the **GreenWave Energy Partners JV**[3](index=3&type=chunk) - Regulatory actions by the EPA temporarily impacted RIN timing, leaving approximately **3.0 million RINs unseparated** and unavailable for sale as of June 30, 2025[4](index=4&type=chunk)[6](index=6&type=chunk) - The EPA proposed new RFS Standards and a partial waiver for 2025 Cellulosic Biofuel Volume, citing limitations in RNG transportation usage[4](index=4&type=chunk) [Second Quarter Financial Results](index=1&type=section&id=Second%20Quarter%20Financial%20Results) Revenues grew slightly due to contract timing, but higher operating expenses led to a net loss and a decline in Adjusted EBITDA Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $45.1M | $43.3M | +4.1% | | Operating (Loss) Income | ($2.4M) | $0.8M | - | | Net Loss | ($5.5M) | ($0.7M) | Increased Loss | | Non-GAAP Adjusted EBITDA | $5.0M | $6.96M | -27.7% | | Average Realized RIN Price | $2.42 | $3.12 | -22.4% | - The increase in total revenues was primarily related to the timing of revenues recognized under a short-term fixed-price contract, which offset the negative impact of lower RIN prices[5](index=5&type=chunk) - Operating expenses increased due to a **$3.1 million (22.0%) rise in RNG O&M** from maintenance programs and a **$0.3 million (3.5%) increase in General & Administrative costs** from stock-based compensation[5](index=5&type=chunk) [Second Quarter Operational Results](index=2&type=section&id=Second%20Quarter%20Operational%20Results) RNG production was flat year-over-year while Renewable Electricity generation saw a slight decrease due to preventative maintenance timing Q2 2025 Production Volumes (vs. Q2 2024) | Product | Q2 2025 Production | Q2 2024 Production | Change | | :--- | :--- | :--- | :--- | | RNG | 1.4 million MMBtu | 1.4 million MMBtu | Flat | | Renewable Electricity | 42 thousand MWh | 45 thousand MWh | -3 thousand MWh | - The flatness in RNG production was a result of a **67 MMBtu increase at the Rumpke facility**, offset by the absence of production from the Southern facility which was sold in Q4 2024[7](index=7&type=chunk) [Reaffirmed 2025 Full Year Outlook](index=2&type=section&id=Reaffirmed%202025%20Full%20Year%20Outlook) The company reaffirmed its full-year 2025 guidance for revenues and production volumes across both its RNG and REG segments Full Year 2025 Guidance (Unchanged) | Category | Metric | Expected Range | | :--- | :--- | :--- | | **RNG** | Revenues | $150 - $170 million | | | Production Volumes | 5.8 - 6.0 million MMBtu | | **REG** | Revenues | $17 - $18 million | | | Production Volumes | 178 - 186 thousand MWh | Financial Statements [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets and liabilities increased, driven by capital investments and higher debt, while cash and cash equivalents decreased Balance Sheet Summary (as of June 30, 2025 vs. Dec 31, 2024) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $29.1 million | $45.6 million | | Total current assets | $42.6 million | $57.2 million | | Property, plant and equipment, net | $294.6 million | $252.3 million | | **Total assets** | **$382.5 million** | **$349.0 million** | | Total current liabilities | $55.5 million | $33.5 million | | Long-term debt | $57.8 million | $43.8 million | | **Total liabilities** | **$127.8 million** | **$91.6 million** | | **Total stockholders' equity** | **$254.7 million** | **$257.4 million** | [Consolidated Statements of Operations](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The company reported a wider net loss for the quarter as growth in operating expenses outpaced the increase in revenues Q2 2025 Income Statement Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total operating revenues | $45,127 | $43,338 | | Total operating expenses | $47,482 | $42,470 | | Operating (loss) income | $(2,355) | $868 | | Net (loss) income | $(5,487) | $(712) | | Diluted (loss) per share | $(0.04) | $(0.01) | YTD 2025 Income Statement Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total operating revenues | $87,730 | $82,125 | | Total operating expenses | $89,676 | $78,889 | | Operating (loss) income | $(1,946) | $3,236 | | Net (loss) income | $(5,951) | $1,138 | | Diluted (loss) per share | $(0.04) | $0.01 | [Consolidated Statements of Cash Flows](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash from operations increased slightly, while significant capital expenditures were funded by new debt and cash on hand Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $17,346 | $14,485 | | Net cash used in investing activities | $(47,446) | $(41,555) | | Net cash provided (used) in financing activities | $13,614 | $(4,427) | | **Net decrease in cash** | **$(16,486)** | **$(31,497)** | | Cash at end of period | $29,518 | $42,745 | - Capital expenditures were the primary use of cash, totaling **$45.3 million** for the six-month period, an increase from $40.8 million in the prior year[21](index=21&type=chunk) Supplementary Information [Reconciliation of Non-GAAP Financial Measures](index=8&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) Adjusted EBITDA decreased in Q2 2025 compared to the prior year, reflecting the period's operating loss Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | $(5,487) | $(712) | | Depreciation, depletion and amortization | $7,029 | $5,823 | | Interest expense | $1,216 | $1,286 | | Income tax expense | $1,876 | $344 | | **Consolidated EBITDA** | **$4,634** | **$6,741** | | Adjustments (Impairment, etc.) | $398 | $220 | | **Adjusted EBITDA** | **$5,032** | **$6,961** | [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) The company will host a conference call on August 7, 2025, to discuss its second quarter financial and operational results - A conference call to discuss Q2 2025 results is scheduled for **August 7, 2025, at 8:30 a.m. ET**[10](index=10&type=chunk) [About Montauk Renewables, Inc.](index=3&type=section&id=About%20Montauk%20Renewables%2C%20Inc.) The company is an experienced renewable energy firm specializing in converting biogas into valuable energy products - The company specializes in managing, recovering, and converting biogas into **RNG and Renewable Electricity**[13](index=13&type=chunk) [Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) This report contains forward-looking statements that are subject to substantial risks and uncertainties affecting future results - The report includes forward-looking statements concerning future performance, which are subject to **significant risks and uncertainties** detailed in the company's SEC filings[14](index=14&type=chunk)[15](index=15&type=chunk)

Core Insights - Montauk Renewables reported Q2 2025 financial results with revenue of $45.1 million, exceeding analyst expectations, but faced profitability challenges with an EPS of $(0.04) due to higher operating expenses and lower RIN prices [1][5][7] Financial Performance - Revenue (GAAP) increased by 4.1% year-over-year from $43.3 million in Q2 2024 to $45.1 million in Q2 2025, surpassing the estimate of $44.4 million [2][5] - Adjusted EBITDA declined by 27.7% to $5.0 million from $7.0 million in Q2 2024 [7] - The company sold 11.1 million RINs, an increase of 10.5% from 10.0 million in Q2 2024, but the average realized price per RIN fell by 22.4% to $2.42 from $3.12 in Q2 2024 [5][6] Operational Highlights - RNG production remained stable at 1.4 million MMBtu, showing no growth compared to the previous year [6] - Operating and maintenance costs for RNG facilities rose by 22.0% to $17.0 million, attributed to scheduled maintenance and operational improvements [6] - Total operating expenses increased by 11.8%, leading to an operating loss of $(2.4) million and a net loss of $(5.5) million compared to $(0.7) million in Q2 2024 [7] Regulatory and Market Challenges - Revenue recognition delays occurred due to the EPA's new Biogas Regulatory Reform Rule, affecting the sale of approximately 3.0 million RINs [8] - The Renewable Electricity Generation segment produced 42,000 megawatt hours, down from 45,000 in Q2 2024, with operating costs nearly flat year-over-year [8] Strategic Developments - Montauk completed construction of a second RNG processing facility at its Apex site, enhancing future capacity [9] - A 10-year power purchase agreement was signed for the North Carolina agricultural RNG project, securing an average price of $48 per megawatt hour [9] - A new joint venture, GreenWave Energy Partners, LLC, was established to facilitate future RNG transportation and utilization [9] Future Guidance - The company reaffirmed its full-year 2025 guidance, expecting RNG revenue between $150 million and $170 million and RNG production between 5.8 million and 6.0 million MMBtu [10]

[Cover Page](index=1&type=section&id=Cover%20Page) This document is the quarterly report on Form 10-Q for MONTAUK RENEWABLES, INC, for the period ending June 30, 2025 - MONTAUK RENEWABLES, INC submitted its 10-Q quarterly report for the period ended June 30, 2025[2](index=2&type=chunk) - The company is identified as an "accelerated filer" and an "emerging growth company"[5](index=5&type=chunk) Company Basic Information | Metric | Information | | :--- | :--- | | Registrant Name | MONTAUK RENEWABLES, INC | | State of Incorporation | Delaware | | Employer Identification No | 85-3189583 | | Principal Executive Offices | 5313 Campbells Run Road, Suite 200, Pittsburgh, Pennsylvania 15205 | | Telephone Number | (412) 747-8700 | | Trading Symbol | MNTK | | Exchange | The Nasdaq Capital Market | | Shares Outstanding as of August 1, 2025 | 142,256,617 shares | [TABLE OF CONTENTS](index=3&type=section&id=TABLE%20OF%20CONTENTS) This section provides an index of the report's contents [Glossary of Key Terms](index=4&type=section&id=Glossary%20of%20Key%20Terms) The report defines key industry and business-specific terminology used throughout the document - The report provides a glossary of industry and business-specific terms, including ADG, CARB, CNG, CI, D3, EPA, Environmental Attributes, FERC, GHG, JSE, LCFS, LFG, MMBtu, PPAs, RECs, RFS, RINs, and RNG[9](index=9&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements that involve significant risks and uncertainties - This report contains numerous forward-looking statements involving significant risks and uncertainties that could cause actual results to differ materially from expectations[11](index=11&type=chunk) - Key risk factors include the ability to develop and operate new renewable energy projects, reduction or elimination of government incentives, failure to complete strategic opportunities, natural disasters, increased operational costs from taxes and tariffs, rising interest rates, failure to attract talent, long development cycles, reliance on third-party manufacturers, feedstock gas quantity and quality, dependence on grids and pipelines, projects not meeting expected output, revenue concentration, debt limitations, ability to renew fuel supply agreements, PPA milestone requirements, regulatory changes, declining public acceptance of renewable energy, price volatility of environmental attributes, climate change impacts, IT system failures, increased competition, and concentrated ownership by a few stockholders[11](index=11&type=chunk)[15](index=15&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[14](index=14&type=chunk) PART I FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=8&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the company's unaudited condensed consolidated financial statements and related notes [Unaudited consolidated balance sheets](index=9&type=section&id=Unaudited%20consolidated%20balance%20sheets) The balance sheet shows an increase in total assets driven by property, plant, and equipment - As of June 30, 2025, the company's **total assets increased to $382.5 million**, primarily due to growth in net property, plant, and equipment, while cash and cash equivalents decreased and total liabilities significantly increased[19](index=19&type=chunk) Consolidated Balance Sheets (Summary, in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $29,133 | $45,621 | | Total current assets | $42,601 | $57,224 | | Property, plant and equipment, net | $294,638 | $252,288 | | Goodwill and intangible assets, net | $20,147 | $18,113 | | Total assets | $382,492 | $349,015 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $55,481 | $33,528 | | Long-term debt, less current portion | $57,834 | $43,763 | | Total liabilities | $127,783 | $91,598 | | Total stockholders' equity | $254,709 | $257,417 | | Total liabilities and stockholders' equity | $382,492 | $349,015 | [Unaudited consolidated statements of operations](index=11&type=section&id=Unaudited%20consolidated%20statements%20of%20operations) The company reported net losses for both the second quarter and first half of 2025 - The company recorded a **net loss in both the second quarter and first half of 2025**, with operating income also turning to a loss, primarily due to increased operating expenses and a decline in average RINs prices[24](index=24&type=chunk) Consolidated Statements of Operations (Summary, in thousands of U.S. dollars, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $45,127 | $43,338 | $87,730 | $82,125 | | Total operating expenses | $47,482 | $42,470 | $89,676 | $78,889 | | Operating (loss) income | $(2,355) | $868 | $(1,946) | $3,236 | | Net (loss) income | $(5,487) | $(712) | $(5,951) | $1,138 | | Basic (loss) income per share | $(0.04) | $(0.01) | $(0.04) | $0.01 | | Diluted (loss) income per share | $(0.04) | $(0.01) | $(0.04) | $0.01 | [Unaudited consolidated statements of stockholders' equity](index=12&type=section&id=Unaudited%20consolidated%20statements%20of%20stockholders'%20equity) Total stockholders' equity decreased slightly due to net loss offsetting share-based compensation - As of June 30, 2025, total stockholders' equity was **$254.7 million**, a slight decrease from March 31, 2025, as the net loss offset the increase from share-based compensation[27](index=27&type=chunk) Stockholders' Equity Changes (Summary, in thousands of U.S. dollars, except share data) | Metric | Balance at March 31, 2025 | Balance at June 30, 2025 | | :--- | :--- | :--- | | Common stock amount | $1,426 | $1,430 | | Treasury stock amount | $(21,262) | $(21,616) | | Additional paid-in capital | $223,139 | $225,498 | | Retained earnings | $54,884 | $49,397 | | **Total equity** | **$258,187** | **$254,709** | | **Key Changes** | | | | Net loss | — | $(5,487) | | Share-based compensation | — | $2,365 | | Treasury stock purchases | — | $(354) | [Unaudited consolidated statements of cash flows](index=13&type=section&id=Unaudited%20consolidated%20statements%20of%20cash%20flows) Operating cash flow increased, but a significant rise in investing outflows led to a net cash decrease - In the first half of 2025, **operating cash flow increased**, but investing cash outflows rose sharply due to capital expenditures and equity investments, while financing activities shifted from an outflow to an inflow from long-term debt borrowings[30](index=30&type=chunk) Consolidated Statements of Cash Flows (Summary, in thousands of U.S. dollars) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $17,346 | $14,485 | | Net cash used in investing activities | $(47,446) | $(41,555) | | Net cash provided by (used in) financing activities | $13,614 | $(4,427) | | Net decrease in cash and cash equivalents | $(16,486) | $(31,497) | | Cash and cash equivalents at end of period | $29,133 | $42,285 | [Condensed notes to unaudited consolidated financial statements](index=15&type=section&id=Condensed%20notes%20to%20unaudited%20consolidated%20financial%20statements) These notes provide detailed explanations of the company's accounting policies and financial statement line items [NOTE 1 – DESCRIPTION OF BUSINESS](index=15&type=section&id=NOTE%201%20%E2%80%93%20DESCRIPTION%20OF%20BUSINESS) The company specializes in converting biogas into renewable natural gas or renewable electricity - Montauk Renewables is a renewable energy company focused on the management, recovery, and conversion of biogas (including landfill gas and anaerobic digester gas) into renewable natural gas (RNG) or renewable electricity[34](index=34&type=chunk) - The company's primary revenue drivers include the sale of captured gas, Renewable Identification Numbers (RINs), Low Carbon Fuel Standard (LCFS) credits, and Renewable Energy Credits (RECs), all of which benefit from federal and state incentive policies[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - The company currently operates 13 projects across seven states and has over 30 years of experience in developing, operating, and managing landfill methane-fueled renewable energy projects[34](index=34&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=15&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Financial statements are prepared under U.S. GAAP, and the company reports across three business segments - The company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and SEC regulations, incorporating all necessary normal and recurring adjustments[39](index=39&type=chunk) - The company reports three business segments: RNG (Renewable Natural Gas), Renewable Electricity Generation, and Corporate, with **RNG being the primary source of revenue**[42](index=42&type=chunk)[43](index=43&type=chunk) - The company has retrospectively adopted ASU No 2023-07 to improve reportable segment disclosures and is evaluating the impact of ASU 2024-03 and ASU No 2023-09 on future financial statements[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [NOTE 3 – ASSET IMPAIRMENT](index=18&type=section&id=NOTE%203%20%E2%80%93%20ASSET%20IMPAIRMENT) The company recorded asset impairment losses related to a development project and obsolete assets - In the first half of 2025, the company recorded an **impairment loss of $2.4 million**, primarily due to a development project's RNG interconnect being impaired after a local utility ceased accepting RNG ($2.0 million) and obsolete assets in the RNG and REG segments ($0.4 million)[48](index=48&type=chunk) Asset Impairment Losses (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Impairment loss | $377 | $171 | $2,424 | $699 | [NOTE 4 – REVENUES FROM CONTRACTS WITH CUSTOMERS](index=18&type=section&id=NOTE%204%20%E2%80%93%20REVENUES%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Revenue is primarily generated from the sale of renewable energy and related environmental attributes - The majority of the company's revenue comes from the sale of renewable energy and related environmental attributes, recognized when control of the products or services is transferred to the customer[49](index=49&type=chunk) - Revenue from renewable energy sales (like RNG and renewable electricity) is typically recognized over time, while revenue from environmental attributes (like RINs) is generally recognized at a point in time[51](index=51&type=chunk)[53](index=53&type=chunk) Revenue by Major Product/Service Line and Operating Segment (in thousands of U.S. dollars) | Period | Product/Service Line | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Product/Service Line** | Gas commodities | $13,429 | $7,079 | $26,676 | $14,614 | | | Gas environmental attributes | $27,288 | $31,743 | $52,279 | $58,075 | | | Electricity commodities | $2,495 | $2,550 | $5,152 | $5,581 | | | Electricity environmental attributes | $1,915 | $1,966 | $3,623 | $3,855 | | | **Total** | **$45,127** | **$43,338** | **$87,730** | **$82,125** | | **Operating Segment** | RNG | $40,717 | $38,822 | $78,955 | $72,689 | | | REG | $4,410 | $4,516 | $8,775 | $9,436 | | | **Total** | **$45,127** | **$43,338** | **$87,730** | **$82,125** | [NOTE 5 – INVESTMENTS](index=21&type=section&id=NOTE%205%20%E2%80%93%20INVESTMENTS) The company formed a joint venture to expand the use of RNG in the transportation sector - In March 2025, the company formed a joint venture, GreenWave Energy Partners, LLC, with Pioneer Renewable Energy Marketing, LLC to address limited RNG offtake capacity by expanding its use in transportation[56](index=56&type=chunk) - As of June 30, 2025, the company has contributed **$2.15 million** to the joint venture and may be required to contribute up to an additional $2.35 million, expecting to act as the RINs separator and receive an allocation of separated RINs[56](index=56&type=chunk) [NOTE 6 – ACCOUNTS AND OTHER RECEIVABLES](index=21&type=section&id=NOTE%206%20%E2%80%93%20ACCOUNTS%20AND%20OTHER%20RECEIVABLES) Net accounts and other receivables decreased compared to the end of the previous fiscal year - As of June 30, 2025, net accounts and other receivables were **$7.5 million**, a decrease from December 31, 2024; no allowance for doubtful accounts was recorded during the period[58](index=58&type=chunk)[59](index=59&type=chunk) Accounts and Other Receivables (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | :--- | | Accounts receivable | $7,083 | $7,869 | $12,557 | | Other receivables | $459 | $294 | $148 | | Reimbursable expenses | $1 | $9 | $47 | | **Net accounts and other receivables** | **$7,543** | **$8,172** | **$12,752** | [NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET](index=21&type=section&id=NOTE%207%20%E2%80%93%20PROPERTY,%20PLANT%20AND%20EQUIPMENT,%20NET) Net property, plant, and equipment increased due to investments in machinery and construction in progress - As of June 30, 2025, net property, plant, and equipment increased to **$294.6 million**, primarily due to additions in machinery, equipment, and construction in progress, with depreciation expense also rising in Q2 and H1 2025[60](index=60&type=chunk) Property, Plant and Equipment, Net (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Land | $1,568 | $1,568 | | Buildings and improvements | $38,599 | $36,434 | | Machinery and equipment | $313,700 | $275,692 | | Gas rights | $35,526 | $35,526 | | Construction in progress | $109,869 | $95,551 | | **Total** | **$499,262** | **$444,771** | | Less: Accumulated depreciation and amortization | $(204,624) | $(192,483) | | **Property, plant and equipment, net** | **$294,638** | **$252,288** | [NOTE 8 – GOODWILL AND INTANGIBLE ASSETS, NET](index=23&type=section&id=NOTE%208%20%E2%80%93%20GOODWILL%20AND%20INTANGIBLE%20ASSETS,%20NET) Net goodwill and intangible assets increased, driven by a rise in the net value of customer contracts - As of June 30, 2025, net goodwill and intangible assets increased to **$20.1 million**, primarily driven by an increase in the net value of customer contracts; the weighted-average remaining useful life for both interconnects and customer contracts is 13 years[61](index=61&type=chunk) Goodwill and Intangible Assets, Net (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Goodwill | $60 | $60 | | Land use rights (indefinite-lived) | $230 | $230 | | Interconnects (finite-lived, net) | $14,301 | $14,614 | | Customer contracts (finite-lived, net) | $5,556 | $3,209 | | **Total goodwill and intangible assets** | **$20,147** | **$18,113** | [NOTE 9 – ASSET RETIREMENT OBLIGATIONS](index=23&type=section&id=NOTE%209%20%E2%80%93%20ASSET%20RETIREMENT%20OBLIGATIONS) Asset retirement obligations increased due to accretion expense and new obligations incurred - As of June 30, 2025, asset retirement obligations increased to **$6.7 million**, primarily due to accretion expense and new obligations; these obligations are measured at the present value of estimated retirement costs and are considered Level 3 financial instruments[62](index=62&type=chunk)[63](index=63&type=chunk) Changes in Asset Retirement Obligations (in thousands of U.S. dollars) | Metric | H1 2025 | Full Year 2024 | | :--- | :--- | :--- | | Beginning asset retirement obligations | $6,338 | $5,900 | | Accretion expense | $239 | $445 | | New asset retirement obligations | $137 | — | | Changes in estimates | — | $218 | | Liabilities related to assets sold | — | $(225) | | **Ending asset retirement obligations** | **$6,714** | **$6,338** | [NOTE 10 – DERIVATIVE INSTRUMENTS](index=23&type=section&id=NOTE%2010%20%E2%80%93%20DERIVATIVE%20INSTRUMENTS) The company uses interest rate swaps to hedge against interest rate volatility without applying hedge accounting - The company utilizes interest rate swap contracts to hedge market risk from interest rate fluctuations but does not apply hedge accounting to any derivative instruments, with all realized and unrealized gains and losses recognized in current earnings[64](index=64&type=chunk) Net Gain (Loss) on Derivative Instruments (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net gain (loss) on interest rate swaps | $(126) | $(64) | $(341) | $26 | [NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS](index=24&type=section&id=NOTE%2011%20%E2%80%93%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) The company's financial instruments are measured at fair value using a three-level hierarchy - The fair value of the company's financial instruments primarily includes interest rate swap derivative assets (Level 2) and asset retirement obligations and Pico earn-out liabilities (Level 3), with Level 3 values determined by estimating the present value of future obligations based on macroeconomic factors and company-specific estimates[66](index=66&type=chunk)[68](index=68&type=chunk) Financial Instruments by Fair Value Hierarchy (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Interest rate swap derivative assets (Level 2) | $428 | $769 | | Asset retirement obligations (Level 3) | $(6,714) | $(6,338) | | Pico earn-out liability (Level 3) | $(3,766) | $(3,406) | | **Total** | **$(10,052)** | **$(8,975)** | [NOTE 12 – ACCRUED LIABILITIES](index=26&type=section&id=NOTE%2012%20%E2%80%93%20ACCRUED%20LIABILITIES) Total accrued liabilities increased significantly, driven by higher accrued expenses and royalties - As of June 30, 2025, the company's total accrued liabilities were **$13.9 million**, a significant increase from December 31, 2024, primarily due to growth in accrued expenses and royalties[70](index=70&type=chunk) Composition of Accrued Liabilities (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued expenses | $5,401 | $2,701 | | Payroll and related benefits | $3,465 | $3,401 | | Royalties | $3,096 | $1,266 | | Utilities | $1,480 | $1,655 | | Accrued interest | $327 | $962 | | Other | $109 | $84 | | **Total accrued liabilities** | **$13,878** | **$10,069** | [NOTE 13 – DEBT](index=26&type=section&id=NOTE%2013%20%E2%80%93%20DEBT) Total debt increased due to a drawdown on the revolving credit facility - As of June 30, 2025, the company's total debt increased to **$69.7 million**, primarily due to a $20.0 million draw on its revolving credit facility; the term loan balance was $50.0 million, with $97.4 million remaining available for borrowing under the revolver[71](index=71&type=chunk)[78](index=78&type=chunk) - The company was in compliance with all applicable financial covenants under its amended credit agreement as of June 30, 2025, including the total leverage ratio and fixed charge coverage ratio[79](index=79&type=chunk) Composition of Debt (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Term loan | $50,000 | $56,000 | | Revolving credit facility | $20,000 | — | | Less: Current principal maturities | $(12,000) | $(12,000) | | Less: Debt issuance costs | $(166) | $(237) | | **Long-term debt** | **$57,834** | **$43,763** | | Current portion of long-term debt | $11,857 | $11,853 | | **Total debt** | **$69,691** | **$55,616** | [NOTE 14 – INCOME TAXES](index=28&type=section&id=NOTE%2014%20%E2%80%93%20INCOME%20TAXES) The company's effective tax rate was significantly impacted by discrete items like tax credits and equity awards - The effective tax rates for the second quarter and first half of 2025 were **(52%) and (35%)**, respectively, primarily influenced by discrete events such as the vesting of restricted stock awards and Section 48 investment tax credits[81](index=81&type=chunk)[82](index=82&type=chunk) - The Tax Reconciliation Act, signed on July 4, 2025, extended Section 45 production tax credits and amended accelerated depreciation rules, and the company is currently evaluating its impact on future tax expectations[84](index=84&type=chunk) Income Tax Expense and Effective Tax Rate | Period | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $1,876 | $344 | $1,559 | $757 | | Effective tax rate | (52%) | (93%) | (35%) | 40% | [NOTE 15 – SHARE-BASED COMPENSATION](index=29&type=section&id=NOTE%2015%20%E2%80%93%20SHARE-BASED%20COMPENSATION) Share-based compensation expense included a one-time acceleration charge due to employee terminations - In Q2 2025, the company recognized a **$1.6 million non-cash accelerated charge** for share-based compensation due to employee terminations, which is not expected to recur; as of June 30, 2025, unrecognized compensation expense was $4.9 million, to be recognized over approximately 3.25 years[87](index=87&type=chunk)[91](index=91&type=chunk) Share-Based Compensation Expense (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Restricted stock/units and options | $270 | $345 | $467 | $702 | | 2021 asset acquisition related restricted stock | $1,442 | $1,097 | $1,863 | $2,324 | | 2023 executive options | $656 | $656 | $1,313 | $1,313 | | **Total** | **$2,368** | **$2,098** | **$3,643** | **$4,339** | [NOTE 16 – DEFINED CONTRIBUTION PLAN](index=31&type=section&id=NOTE%2016%20%E2%80%93%20DEFINED%20CONTRIBUTION%20PLAN) The company maintains a 401(k) plan with matching and safe harbor contributions for eligible employees - The company maintains a 401(k) defined contribution plan, offering eligible employees a 50% match on deferrals up to 4% and a 3% safe harbor contribution, with matching contributions vesting over four years and safe harbor contributions vesting immediately[92](index=92&type=chunk) 401(k) Plan Expense (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | 401(k) plan expense | $249 | $191 | $494 | $412 | [NOTE 17 – RELATED PARTY TRANSACTIONS](index=31&type=section&id=NOTE%2017%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) The company has a loan agreement with its related party, Montauk Holdings Limited (MNK) - The company has a loan agreement with related party Montauk Holdings Limited (MNK), with a principal balance of **$10.7 million** as of December 31, 2024[93](index=93&type=chunk) - The company repaid the RP47 loan on behalf of MNK on March 5, 2025, and consolidated MNK as a variable interest entity (VIE) on December 31, 2024, after becoming its primary beneficiary[94](index=94&type=chunk)[97](index=97&type=chunk) [NOTE 18 – SEGMENT INFORMATION](index=33&type=section&id=NOTE%2018%20%E2%80%93%20SEGMENT%20INFORMATION) The RNG segment remains the primary driver of revenue and profit, though its operating income has declined - The **RNG segment is the company's main source of revenue and profit**, but its operating income decreased in both the second quarter and first half of 2025, while the REG segment continues to report operating losses and the Corporate segment incurs unallocated corporate expenses[102](index=102&type=chunk)[105](index=105&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk) Operating Revenues and (Loss) Income by Segment (in thousands of U.S. dollars) | Period | Segment | Operating Revenues | Operating (Loss) Income | | :--- | :--- | :--- | :--- | | **Q2 2025** | RNG | $40,829 | $9,228 | | | REG | $4,298 | $(2,348) | | | Corporate | $0 | $(9,235) | | **Q2 2024** | RNG | $38,838 | $11,714 | | | REG | $4,500 | $(1,969) | | | Corporate | $0 | $(8,877) | | **H1 2025** | RNG | $79,280 | $19,597 | | | REG | $8,450 | $(3,369) | | | Corporate | $0 | $(18,174) | | **H1 2024** | RNG | $72,825 | $23,295 | | | REG | $9,300 | $(1,592) | | | Corporate | $0 | $(18,467) | Major Customer Revenue Concentration | Period | Customer | RNG | REG | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Q2 2025** | Customer A | 20.2% | — | — | 20.2% | | | Customer B | 10.7% | — | — | 10.7% | | | Customer C | 10.3% | — | — | 10.3% | | **Q2 2024** | Customer A | 28.9% | — | — | 28.9% | | | Customer B | 25.1% | — | — | 25.1% | | **H1 2025** | Customer A | 11.8% | — | — | 11.8% | | | Customer B | 11.8% | — | — | 11.8% | | | Customer C | 11.3% | — | — | 11.3% | | | Customer D | 10.1% | — | — | 10.1% | | **H1 2024** | Customer A | 23.0% | — | — | 23.0% | | | Customer B | 19.3% | — | — | 19.3% | | | Customer C | 15.2% | — | — | 15.2% | | | Customer D | — | 10.2% | — | 10.2% | [NOTE 19 – LEASES](index=38&type=section&id=NOTE%2019%20%E2%80%93%20LEASES) The company leases various assets, which are classified as either operating or finance leases - The company leases office space, office equipment, and landfill gas monitoring equipment, classified as operating leases, and also leases security equipment, portions of which are classified as finance leases[115](index=115&type=chunk)[116](index=116&type=chunk) Supplemental Operating Lease Information | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Cash paid for operating lease liabilities | $646 | $178 | $1,328 | $331 | | Weighted-average remaining lease term (years) | 3.72 | 5.45 | 3.72 | 5.45 | | Weighted-average discount rate | 5.00%-6.00% | 5.00% | 5.00%-6.00% | 5.00% | Supplemental Finance Lease Information | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Cash paid for finance lease liabilities | $21 | $13 | $42 | $32 | | Weighted-average remaining lease term (years) | 2.50 | 2.54 | 2.50 | 2.54 | | Weighted-average discount rate | 5.00%-6.00% | 5.00% | 5.00%-6.00% | 5.00% | [NOTE 20 – (LOSS) INCOME PER SHARE](index=41&type=section&id=NOTE%2020%20%E2%80%93%20(LOSS)%20INCOME%20PER%20SHARE) Potential common shares were excluded from diluted EPS calculations due to the company's net loss position - Due to the net loss in the second quarter and first half of 2025, potential common shares were excluded from the calculation of diluted loss per share as their effect would be anti-dilutive[121](index=121&type=chunk) (Loss) Income Per Share (in thousands of U.S. dollars, except share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(5,487) | $(712) | $(5,951) | $1,138 | | Basic weighted-average shares outstanding | 143,035,626 | 142,069,697 | 142,874,606 | 142,027,943 | | Diluted weighted-average shares outstanding | 143,035,626 | 142,069,697 | 142,874,606 | 142,252,085 | | Basic loss per share | $(0.04) | $(0.01) | $(0.04) | $0.01 | | Diluted loss per share | $(0.04) | $(0.01) | $(0.04) | $0.01 | [NOTE 21 – COMMITMENTS AND CONTINGENCIES](index=41&type=section&id=NOTE%2021%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company believes it is in compliance with environmental regulations and faces no material litigation - The company complies with various environmental laws and regulations and believes its operations are in material compliance; management does not believe any pending litigation will have a material adverse effect on its financial condition or results of operations[122](index=122&type=chunk)[123](index=123&type=chunk) [NOTE 22 – SUBSEQUENT EVENTS](index=41&type=section&id=NOTE%2022%20%E2%80%93%20SUBSEQUENT%20EVENTS) No subsequent events requiring recognition or disclosure were identified after the reporting period - The company evaluated subsequent events through the filing date of its condensed consolidated financial statements and identified no events requiring recognition or disclosure, other than its review of the income tax impact of the Tax Reconciliation Act passed on July 4, 2025[124](index=124&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=42&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial condition and operating results, highlighting performance in the RNG and REG segments [Overview](index=42&type=section&id=Overview) The company is a leading U.S. producer of RNG from biogas sources - Montauk Renewables is a renewable energy company specializing in recovering and processing biogas from landfills and other non-fossil fuel sources into RNG or renewable electricity[127](index=127&type=chunk) - The company is one of the largest RNG producers in the U.S, with over 30 years of industry experience, currently operating 11 RNG projects and 2 renewable electricity projects across seven states[127](index=127&type=chunk) - The company secures biogas feedstock through long-term fuel supply and land lease agreements and monetizes the environmental attributes (such as RINs and RECs) generated from its RNG and renewable electricity production[128](index=128&type=chunk) [Recent Developments](index=42&type=section&id=Recent%20Developments) The company's profitability is highly dependent on RINs market prices and capital development projects [RINs Generated but Unsold](index=42&type=section&id=RINs%20Generated%20but%20Unsold) The timing of RINs sales has been temporarily affected by a backlog of unseparated and unsold RINs - The company's profitability is highly dependent on RINs market prices; as of June 30, 2025, the company had approximately **3,009 generated but unseparated RINs** and 108 generated but unsold RINs, which temporarily impacted the timing of RINs sales[130](index=130&type=chunk)[131](index=131&type=chunk) - In Q2 2025, the company sold 11,050 RINs at an average realized price of **$2.42**, a **22.4% decrease** from $3.12 in Q2 2024[178](index=178&type=chunk) [Capital Development Summary](index=43&type=section&id=Capital%20Development%20Summary) The company is advancing several key RNG and renewable energy development projects Development Project Overview | Development Opportunity | Est. Capacity Contribution (MMBtu/day) | Est. Commissioning Date | Est. Capital Expenditures (in thousands of U.S. dollars) | | :--- | :--- | :--- | :--- | | Second Apex RNG Facility | 2,100 | June 2025 | $30,000-$40,000 | | Blue Granite RNG Facility | 900 | Delayed | TBD | | Bowerman RNG Facility | 3,600 | 2027 | $85,000-$95,000 | | European Energy Facility | N/A | 2027 | $65,000-$75,000 | | Tulsa RNG Facility | 1,500 | 2027 | $25,000-$35,000 | [Second Apex RNG Facility](index=43&type=section&id=Second%20Apex%20RNG%20Facility) The second Apex RNG facility was completed, adding significant new production capacity - In June 2025, the company successfully completed the construction and commissioning of its second Apex RNG processing facility, adding **2,100 MMBtu/day** of capacity to accommodate growing landfill feedstock gas volumes[133](index=133&type=chunk) [Blue Granite RNG Project](index=43&type=section&id=Blue%20Granite%20RNG%20Project) The Blue Granite RNG project has been impaired and paused due to interconnection issues - In Q1 2025, the company impaired capital related to the early design of the Blue Granite RNG project and paused further capital expenditures after the utility ceased accepting RNG into its distribution system; alternative interconnection and energy production options are being evaluated[134](index=134&type=chunk) [Bowerman RNG Project](index=43&type=section&id=Bowerman%20RNG%20Project) A new RNG project is planned for development at the Bowerman landfill in California - The company plans to develop a Bowerman RNG landfill project in Irvine, California, with an expected commissioning in 2027, a capacity of approximately **3,600 MMBtu/day**, and an estimated capital investment between **$85 million and $95 million**[135](index=135&type=chunk) [Carbon Dioxide Beneficial Use Opportunity](index=45&type=section&id=Carbon%20Dioxide%20Beneficial%20Use%20Opportunity) The company has secured a long-term contract for the delivery of biogenic carbon dioxide - In 2024, the company signed a contract to deliver **140 metric tons of biogenic carbon dioxide annually** to EENA, with deliveries expected to begin in 2027 for a minimum 15-year term and total expected revenues between **$170 million and $201 million**[136](index=136&type=chunk) - The agreement includes a 50% sharing mechanism for Section 45Q carbon capture tax credits under the Inflation Reduction Act, and the company has begun incurring capital expenditures for this project[136](index=136&type=chunk) [Tulsa REG Conversion to RNG](index=45&type=section&id=Tulsa%20REG%20Conversion%20to%20RNG) The Tulsa renewable electricity facility will be converted into an RNG production project - In 2025, the company announced the conversion of its Tulsa, Oklahoma renewable electricity facility into an RNG project, expected to be commissioned in 2027 with a capacity of approximately **1,500 MMBtu/day**, and has started incurring capital expenditures for long-lead items[137](index=137&type=chunk) [Montauk Ag Renewables Acquisition](index=45&type=section&id=Montauk%20Ag%20Renewables%20Acquisition) The company is optimizing its Montauk Ag Renewables project with an increased capital investment - The company is optimizing feedstock collection and transportation for the Montauk Ag Renewables project and has increased the capital investment scope for the first phase to **$180 million to $220 million**[140](index=140&type=chunk)[141](index=141&type=chunk) - The project is expected to begin generating significant revenue in 2026 and is anticipated to generate tax attributes such as investment tax credits, production tax credits, or accelerated depreciation[142](index=142&type=chunk) - The company has a REC agreement with Duke and signed a 10-year Power Purchase Agreement (PPA) in July 2025, covering 100% of the first phase's electricity production at an average price of **$48/MWh**[139](index=139&type=chunk) [GreenWave Joint Venture](index=47&type=section&id=GreenWave%20Joint%20Venture) A new joint venture aims to provide exclusive transportation pathways for third-party RNG - The company, through its subsidiary Pesta Energy, LLC, formed the GreenWave Energy Partners, LLC joint venture with Pioneer Renewables Energy Marketing, LLC to provide exclusive transportation pathways for third-party RNG[144](index=144&type=chunk) - The company expects to act as the RINs separator for the joint venture, receive an allocation of separated RINs, and anticipates a capital investment of up to **$4.5 million**[144](index=144&type=chunk) [Income Tax and Tax Attributes](index=47&type=section&id=Income%20Tax%20and%20Tax%20Attributes) The company is leveraging investment tax credits from the Inflation Reduction Act for its projects - The company recorded a tax benefit of approximately **$0.8 million** in its Q2 2025 tax provision from Section 48 investment tax credits under the Inflation Reduction Act, related to the 2024 Pico digester expansion project[146](index=146&type=chunk) - The company anticipates generating **$1.1 million to $2.1 million** in Section 48 investment tax credits for the second Apex RNG facility and **$4.5 million to $9.0 million** for the Montauk Ag Renewables project[147](index=147&type=chunk)[148](index=148&type=chunk) [Key Trends](index=47&type=section&id=Key%20Trends) Market growth is driven by regulatory incentives, while regulatory changes present ongoing risks [Market Trends Af ecting the Renewable Fuel Market](index=47&type=section&id=Market%20Trends%20Af%20ecting%20the%20Renewable%20Fuel%20Market) RNG demand is driven by public support for renewables and government energy independence initiatives - RNG demand growth is driven by public support for renewable energy, U.S government actions for energy independence, environmental concerns regarding natural gas-powered vehicles, job creation, and increased investment in renewable energy[150](index=150&type=chunk) - Key long-term growth drivers for RNG include regulatory or policy initiatives like the federal RFS program and state-level low-carbon fuel programs, as well as the operational advantages of RNG in efficiency, mobility, and capital cost flexibility[151](index=151&type=chunk) [Factors Af ecting Our Future Operating Results:](index=49&type=section&id=Factors%20Af%20ecting%20Our%20Future%20Operating%20Results:) Project conversions and expansions will impact production and revenue composition - Converting existing electricity projects to RNG projects may cause production disruptions, but the expected revenue growth from RNG production is anticipated to offset the loss of renewable electricity generation[152](index=152&type=chunk) - The company incurs significant expenses when developing new RNG projects, and as it expands into livestock farm projects, the revenue mix from environmental attributes will change, with LCFS credits from livestock projects having higher value[156](index=156&type=chunk) [Regulatory, Environmental and Social Trends](index=49&type=section&id=Regulatory,%20Environmental%20and%20Social%20Trends) Recent regulatory changes have lowered biofuel volume requirements and tightened LCFS rules - On June 13, 2025, the EPA issued a final waiver rule for 2024 cellulosic biofuel volume requirements and a proposal for 2026 and 2027 RFS standards, lowering the cellulosic biofuel volume requirements for 2024 and 2025[154](index=154&type=chunk)[157](index=157&type=chunk) - The California Air Resources Board (CARB) implemented amended LCFS rules effective July 1, 2025, setting more stringent carbon intensity (CI) reduction targets and phasing out methane avoidance credits for dairy and swine manure pathways[158](index=158&type=chunk) - In May 2025, the company was informed that the USDA's Advanced Biofuel Payment Program, which had provided approximately **$0.2 million** in annual revenue since 2021, has been discontinued[159](index=159&type=chunk) [Factors Af ecting Revenue](index=51&type=section&id=Factors%20Af%20ecting%20Revenue) Revenue is influenced by production volumes, environmental attribute generation, and market prices - Total operating revenues, comprising sales of renewable energy and related environmental attributes, are primarily influenced by the unit production of RNG and renewable electricity, the generation of environmental attributes, and their monetized prices[160](index=160&type=chunk)[163](index=163&type=chunk) - The BRRR rule requires that unseparated K3 RINs generated by RNG producers can only be sold with the support of a registered distributor or RINs separator, which may delay the recognition of RINs revenue[161](index=161&type=chunk) - RNG revenue is primarily derived from the production and sale of RNG and the generation and sale of environmental attributes like RINs and LCFS credits, while renewable electricity revenue comes from electricity production and attributes like RECs[162](index=162&type=chunk) [RNG Production](index=53&type=section&id=RNG%20Production) RNG production levels are subject to operational and environmental challenges at landfill sites - RNG production levels are affected by various factors, including disruptions in waste disposal at landfills, severe weather events, equipment failures, or interconnection issues[164](index=164&type=chunk) - Delays by landfill hosts in installing or permitting the company to install wellfield collection infrastructure, along with environmental factors at the Rumpke and Apex facilities, continue to impact gas extraction and production volumes[164](index=164&type=chunk) - Changes to the wellfield collection system at the McCarty facility have resulted in higher nitrogen content and reduced feedstock gas volumes; the company also plans to relocate the Rumpke RNG facility in 2028, with an estimated capital expenditure of **$70 million to $90 million**[164](index=164&type=chunk) [Pricing](index=55&type=section&id=Pricing) Revenue is determined by offtake agreements and volatile environmental attribute prices - Revenue from RNG and renewable electricity production is primarily determined by prices under offtake and power purchase agreements (PPAs) and the production volumes of RNG and renewable electricity[166](index=166&type=chunk) - The pricing of environmental attributes, which constitutes a significant portion of revenue, is highly volatile and influenced by regulatory actions, administrative decisions, and commodity pricing[167](index=167&type=chunk) - The company manages price volatility risk through forward sales of RINs, but the BRRR reforms and the proposed partial waiver of the 2024 RVO have temporarily impacted RINs purchasing activity by obligated parties in 2025[168](index=168&type=chunk) [Factors Af ecting Operating Expenses](index=55&type=section&id=Factors%20Af%20ecting%20Operating%20Expenses) Operating expenses are varied and may be impacted by inflationary pressures - Operating expenses include royalties, transportation, fuel costs, project operation and maintenance, general and administrative costs, depreciation, amortization, asset sale gains/losses, impairment losses, and transaction costs, all of which may be affected by inflationary cost increases[169](index=169&type=chunk) - Project operation and maintenance expenses primarily consist of biogas collection and processing costs, labor, and overhead; general and administrative expenses include corporate and unallocated support function costs, which are expected to increase in 2025 due to the ongoing development of Montauk Ag Renewables[169](index=169&type=chunk) - In April 2025, the company recognized a **one-time, non-cash accelerated charge of $1.6 million** for share-based compensation due to employee terminations, which is not expected to recur in the second half of the year[170](index=170&type=chunk) [Key Operating Metrics](index=57&type=section&id=Key%20Operating%20Metrics) Performance is measured by production volumes and the realized prices of energy and environmental attributes - Total operating revenues reflect sales of renewable energy and related environmental attributes, primarily influenced by the unit production of RNG and renewable electricity, the generation of environmental attributes, and their monetized prices[171](index=171&type=chunk) - Key metrics include RNG and renewable electricity production volumes (MMBtu and MWh), environmental attribute generation, and the average realized price per unit of output[171](index=171&type=chunk) - The realized price of RINs may not directly correspond to index prices due to forward sale commitments and carry-over across years[171](index=171&type=chunk) [Comparison of Three Months Ended June 30, 2025 and 2024](index=58&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) The company's Q2 2025 performance saw revenue growth but a shift to an operating loss [Revenues for the Three Months Ended June 30, 2025 and 2024](index=59&type=section&id=Revenues%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) Total revenue increased despite lower realized RINs prices - Total revenues in Q2 2025 **increased by 4.1%**, primarily due to the timing of revenue recognition from short-term fixed-price contracts, which was offset by a **22.4% decrease in realized RINs prices** and reduced RINs availability due to EPA BRRR reforms[176](index=176&type=chunk) Total Operating Revenues (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $45,127 | $43,338 | $1,789 | 4.1% | [Renewable Natural Gas Revenues](index=59&type=section&id=Renewable%20Natural%20Gas%20Revenues) RNG revenue grew due to higher production, but was tempered by falling RINs prices - RNG revenues in Q2 2025 **increased by 5.1%**, with RNG production up by 2.2%; although RINs sales volume increased by 10.5%, the average realized RINs price **decreased by 22.4%**, and the average D3 RINs index price fell by 26.1%[177](index=177&type=chunk)[178](index=178&type=chunk) RNG Revenues and Metrics (in thousands of U.S. dollars, except MMBtu) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total RNG revenues | $40,829 | $38,838 | $1,991 | 5.1% | | RNG production (MMBtu) | 1,413 | 1,382 | 31 | 2.2% | | RINs sold | 11,050 | 10,000 | 1,050 | 10.5% | | Average realized RINs price | $2.42 | $3.12 | $(0.70) | (22.4%) | | Average D3 RINs index price | $2.36 | $3.20 | $(0.84) | (26.1%) | [Renewable Electricity Generation Revenues](index=59&type=section&id=Renewable%20Electricity%20Generation%20Revenues) Renewable electricity revenue declined due to lower production at the Bowerman facility - Renewable electricity revenues in Q2 2025 **decreased by 4.5%**, primarily due to a **6.7% reduction in production** at the Bowerman facility related to the timing of preventative engine maintenance[179](index=179&type=chunk)[180](index=180&type=chunk) REG Revenues and Metrics (in thousands of U.S. dollars, except MWh) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total REG revenues | $4,298 | $4,500 | $(202) | (4.5%) | | REG production (MWh) | 42 | 45 | (3) | (6.7%) | | Average realized price $/MWh | $102.33 | $100.00 | $2.33 | 2.3% | [Expenses for the Three Months Ended June 30, 2025 and 2024](index=61&type=section&id=Expenses%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) Operating expenses rose due to higher maintenance, depreciation, and impairment costs - Total operating expenses in Q2 2025 **increased by 11.8%**, primarily driven by higher operation and maintenance expenses, depreciation and amortization, and impairment losses[175](index=175&type=chunk) Total Operating Expenses (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total operating expenses | $47,482 | $42,470 | $5,012 | 11.8% | [General and Administrative Expenses](index=61&type=section&id=General%20and%20Administrative%20Expenses) G&A expenses increased due to higher employee-related costs, including a one-time charge - General and administrative expenses in Q2 2025 **increased by 3.5%**, primarily due to a **13.7% rise in employee-related costs** (including share-based compensation), which included a $1.6 million non-cash accelerated charge not expected to recur[182](index=182&type=chunk) General and Administrative Expenses (in thousands of U.S. dollars) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total general and administrative expenses | $9,044 | $8,737 | $307 | 3.5% | | Employee-related costs (incl. share-based comp) | $6,099 | $5,366 | $733 | 13.7% | [Renewable Natural Gas Expenses](index=61&type=section&id=Renewable%20Natural%20Gas%20Expenses) RNG operating expenses increased significantly due to non-linear maintenance costs - RNG operation and maintenance expenses in Q2 2025 **increased by 22.0%**, primarily due to non-linear, discrete costs for preventative maintenance and gas processing equipment at the Apex, McCarty, Rumpke, and Atascocita facilities, with approximately **$1.8 million** not expected to recur[183](index=183&type=chunk) RNG Operation and Maintenance Expenses (in thousands of U.S. dollars) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | RNG operation and maintenance expenses | $16,955 | $13,903 | $3,052 | 22.0% | RNG Royalties, Transportation, Collection and Production Fuel Expenses (in thousands of U.S. dollars) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | RNG royalties and other fees | $8,669 | $8,568 | $101 | 1.2% | | Percent of RNG revenues | 21.2% | 22.1% | (0.9%) | - | [Renewable Electricity Expenses](index=61&type=section&id=Renewable%20Electricity%20Expenses) REG operating expenses rose due to non-capitalized costs at the Montauk Ag Renewables project - REG operation and maintenance expenses in Q2 2025 **increased by 2.0%**, primarily due to higher non-capitalized costs at the Montauk Ag Renewables project, with approximately **$1.4 million** in discrete costs not expected to recur[185](index=185&type=chunk) REG Operation and Maintenance Expenses (in thousands of U.S. dollars) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | REG operation and maintenance expenses | $4,809 | $4,717 | $92 | 2.0% | REG Royalties, Transportation, Collection and Production Fuel Expenses (in thousands of U.S. dollars) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | REG royalties and other fees | $499 | $508 | $(9) | (1.8%) | | Percent of REG revenues | 11.6% | 11.3% | 0.3% | - | [Royalty Payments](index=61&type=section&id=Royalty%20Payments) Royalty and related fuel costs remained relatively stable compared to the prior year - Royalty, transportation, collection, and production fuel expenses in Q2 2025 **increased by 1.0%**; these costs are typically structured as a percentage of revenue paid to fuel supply partners and are subject to commodity and environmental attribute price fluctuations[187](index=187&type=chunk) Royalties, Transportation, Collection and Production Fuel Expenses (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Royalties and other fees | $9,168 | $9,077 | $91 | 1.0% | [Depreciation](index=62&type=section&id=Depreciation) Depreciation and amortization expenses increased due to new capital investments - Depreciation and amortization expenses in Q2 2025 **increased by 20.7%**, primarily due to wellfield and maintenance capital investments and the commissioning of the second Apex RNG facility[188](index=188&type=chunk) Depreciation and Amortization (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Depreciation and amortization | $7,029 | $5,823 | $1,206 | 20.7% | [Impairment loss](index=62&type=section&id=Impairment%20loss) Impairment losses increased significantly due to write-offs of specific obsolete assets - Impairment losses in Q2 2025 **increased by 120.5%**, primarily related to specific assets identified as obsolete or inoperable[189](index=189&type=chunk) Impairment Loss (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Impairment loss | $377 | $171 | $206 | 120.5% | [Other Expenses](index=62&type=section&id=Other%20Expenses) Other expenses remained consistent with the prior-year period - Other expenses in Q2 2025 were essentially flat compared to the same period in 2024[190](index=190&type=chunk) Other Expenses (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Other expenses | $1,256 | $1,236 | $20 | 1.6% | [Income Tax Expense](index=62&type=section&id=Income%20Tax%20Expense) The effective tax rate was influenced by tax credits and adjustments for equity-based compensation - The income tax expense for Q2 2025 was calculated based on an estimated effective tax rate that differs from the U.S federal statutory rate of 21.0%, primarily due to production tax credits, investment tax credits, and adjustments for the vesting of share-based compensation[191](index=191&type=chunk) - The Q2 2025 effective tax rate of **(-52%)** was lower than the **(-93.5%)** in the same period of 2024, mainly due to discrete events related to the vesting of restricted stock awards[192](index=192&type=chunk) [Operating (Loss) Income for the Three Months Ended June 30, 2025 and 2024](index=62&type=section&id=Operating%20(Loss)%20Income%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) The company swung to an operating loss due to declining RNG income and rising REG losses - The company reported an **operating loss of $2.4 million** in Q2 2025, a significant decline from the $0.9 million operating income in Q2 2024, driven by a **21.2% decrease in RNG operating income** and a 19.2% increase in the REG operating loss[193](index=193&type=chunk) Operating (Loss) Income (in thousands of U.S. dollars) | Period | Q2 2025 | Q2 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Operating (loss) income | $(2,355) | $868 | $(3,223) | (371.3%) | | RNG operating income | $9,228 | $11,715 | $(2,487) | (21.2%) | | REG operating loss | $(2,348) | $(1,969) | $379 | 19.2% | [Comparison of Six Months Ended June 30, 2025 and 2024](index=63&type=section&id=Comparison%20of%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) The first half of 2025 saw revenue growth but a significant shift from operating income to an operating loss [Revenues for the Six Months Ended June 30, 2025 and 2024](index=64&type=section&id=Revenues%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) Revenue growth was driven by RNG commodity sales, offsetting a decline in RINs revenue - Total revenues for the first half of 2025 **increased by 6.8%**, primarily driven by a **$10.8 million increase in RNG commodity revenues**, which was partially offset by an $9.0 million decrease in RINs revenues and a 23.9% decline in the average realized RINs price[199](index=199&type=chunk) Total Operating Revenues (in thousands of U.S. dollars) | Period | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $87,730 | $82,125 | $5,605 | 6.8% | [Renewable Natural Gas Revenues](index=64&type=section&id=Renewable%20Natural%20Gas%20Revenues) RNG revenue increased on higher sales volume, despite a significant drop in RINs prices - RNG revenues for the first half of 2025 **increased by 8.9%**, with RNG production remaining nearly flat; RINs sales volume **increased by 17.0%**, but the average realized RINs price **decreased by 23.9%**, and the average D3 RINs index price fell by 24.4%[200](index=200&type=chunk)[201](index=201&type=chunk) RNG Revenues and Metrics (in thousands of U.S. dollars, except MMBtu) | Metric | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total RNG revenues | $79,280 | $72,825 | $6,455 | 8.9% | | RNG production (MMBtu) | 2,802 | 2,794 | 8 | 0.3% | | RINs sold | 20,935 | 17,889 | 3,046 | 17.0% | | Average realized RINs price | $2.42 | $3.18 | $(0.76) | (23.9%) | | Average D3 RINs index price | $2.39 | $3.16 | $(0.77) | (24.4%) | [Renewable Electricity Generation Revenues](index=64&type=section&id=Renewable%20Electricity%20Generation%20Revenues) Renewable electricity revenue decreased due to a facility closure and lower production - Renewable electricity revenues for the first half of 2025 **decreased by 9.1%**, primarily due to the cessation of operations at the Security facility and a **11.1% reduction in production** at the Bowerman facility[202](index=202&type=chunk)[203](index=203&type=chunk) REG Revenues and Metrics (in thousands of U.S. dollars, except MWh) | Metric | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total REG revenues | $8,450 | $9,300 | $(850) | (9.1%) | | REG production (MWh) | 88 | 99 | (11) | (11.1%) | | Average realized price $/MWh | $96.02 | $93.94 | $2.08 | 2.2% | [Expenses for the Six Months Ended June 30, 2025 and 2024](index=66&type=section&id=Expenses%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) Operating expenses increased across several categories, led by maintenance and depreciation - Total operating expenses for the first half of 2025 **increased by 13.7%**, primarily driven by higher operation and maintenance expenses, royalties, transportation, collection and production fuel costs, and depreciation and amortization[198](index=198&type=chunk) Total Operating Expenses (in thousands of U.S. dollars) | Period | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total operating expenses | $89,676 | $78,889 | $10,787 | 13.7% | [General and Administrative Expenses](index=66&type=section&id=General%20and%20Administrative%20Expenses) G&A expenses decreased slightly due to lower corporate insurance costs - General and administrative expenses for the first half of 2025 **decreased by 2.0%**, primarily due to a reduction in corporate insurance expenses of approximately **$0.4 million**[205](index=205&type=chunk) General and Administrative Expenses (in thousands of U.S. dollars) | Metric | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Total general and administrative expenses | $17,798 | $18,166 | $(368) | (2.0%) | [Renewable Natural Gas Expenses](index=66&type=section&id=Renewable%20Natural%20Gas%20Expenses) RNG operating expenses rose due to maintenance and operational enhancement programs - RNG operation and maintenance expenses for the first half of 2025 **increased by 19.2%**, primarily due to maintenance and operational enhancement programs at the Apex, McCarty, Rumpke, Atascocita, and Raeger facilities[206](index=206&type=chunk) RNG Operation and Maintenance Expenses (in thousands of U.S. dollars) | Metric | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | RNG operation and maintenance expenses | $31,045 | $26,043 | $5,002 | 19.2% | RNG Royalties, Transportation, Collection and Production Fuel Expenses (in thousands of U.S. dollars) | Metric | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | RNG royalties and other fees | $15,783 | $14,565 | $1,218 | 8.4% | | Percent of RNG revenues | 19.9% | 20.0% | (0.1%) | - | [Renewable Electricity Expenses](index=66&type=section&id=Renewable%20Electricity%20Expenses) REG operating expenses increased due to non-capitalized costs for a new project - REG operation and maintenance expenses for the first half of 2025 **increased by 16.4%**, primarily due to higher non-capitalized costs at the Montauk Ag Renewables project[208](index=208&type=chunk) REG Operation and Maintenance Expenses (in thousands of U.S. dollars) | Metric | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | REG operation and maintenance expenses | $8,160 | $7,009 | $1,151 | 16.4% | REG Royalties, Transportation, Collection and Production Fuel Expenses (in thousands of U.S. dollars) | Metric | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | REG royalties and other fees | $956 | $1,030 | $(74) | (7.2%) | | Percent of REG revenues | 11.3% | 11.1% | 0.2% | - | [Royalty Payments](index=66&type=section&id=Royalty%20Payments) Royalty and related fuel costs increased in line with revenue trends - Royalty, transportation, collection, and production fuel expenses for the first half of 2025 **increased by 7.3%**; these costs are typically structured as a percentage of revenue paid to fuel supply partners and are subject to commodity and environmental attribute price fluctuations[210](index=210&type=chunk) Royalties, Transportation, Collection and Production Fuel Expenses (in thousands of U.S. dollars) | Period | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Royalties and other fees | $16,739 | $15,593 | $1,146 | 7.3% | [Depreciation](index=66&type=section&id=Depreciation) Depreciation and amortization expenses rose due to recent capital investments - Depreciation and amortization expenses for the first half of 2025 **increased by 18.1%**, primarily due to wellfield and maintenance capital investments and the commissioning of the second Apex RNG facility[211](index=211&type=chunk) Depreciation and Amortization (in thousands of U.S. dollars) | Period | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Depreciation and amortization | $13,293 | $11,257 | $2,036 | 18.1% | [Impairment loss](index=68&type=section&id=Impairment%20loss) Impairment losses surged due to an impaired development project and asset write-offs - Impairment losses for the first half of 2025 **increased by 246.8%**, primarily related to an impaired RNG interconnect at a development project after a local utility ceased accepting RNG, as well as specific assets identified as obsolete or inoperable[212](index=212&type=chunk) Impairment Loss (in thousands of U.S. dollars) | Period | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Impairment loss | $2,424 | $699 | $1,725 | 246.8% | [Other Expenses](index=68&type=section&id=Other%20Expenses) Other expenses increased due to the absence of a prior-year gain from asset sales - Other expenses for the first half of 2025 **increased by 82.4%**, primarily due to a gain recognized in the first half of 2024 from the sale of gas rights preceding the expiration of the Security facility's fuel supply agreement[213](index=213&type=chunk) Other Expenses (in thousands of U.S. dollars) | Period | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Other expenses | $2,446 | $1,341 | $1,105 | 82.4% | [Income Tax Expense](index=68&type=section&id=Income%20Tax%20Expense) The effective tax rate was primarily influenced by production tax credits and equity award vesting - The income tax expense for the first half of 2025 was calculated based on an estimated effective tax rate that differs from the U.S federal statutory rate of 21.0%, primarily due to the benefit of production tax credits[214](index=214&type=chunk) - The effective tax rate for the first half of 2025 of **(-35.5%)** was lower than the **39.9%** in the same period of 2024, mainly due to discrete events related to the vesting of restricted stock awards[215](index=215&type=chunk) [Operating (Loss) Income for the Six Months Ended June 30, 2025 and 2024](index=68&type=section&id=Operating%20(Loss)%20Income%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) The company shifted to an operating loss due to lower RNG income and higher REG losses - The company reported an **operating loss of $1.9 million** for the first half of 2025, a significant decline from the $3.2 million operating income in the same period of 2024, driven by a **15.9% decrease in RNG operating income** and a 111.6% increase in the REG operating loss[216](index=216&type=chunk) Operating (Loss) Income (in thousands of U.S. dollars) | Period | H1 2025 | H1 2024 | Change Amount | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Operating (loss) income | $(1,946) | $3,236 | $(5,182) | (160.1%) | | RNG operating income | $19,597 | $23,296 | $(3,699) | (15.9%) | | REG operating loss | $(3,369) | $(1,592) | $1,777 | 111.6% | [Non-GAAP Financial Measures:](index=68&type=section&id=Non-GAAP%20Financial%20Measures:) The company uses EBITDA and Adjusted EBITDA to supplement its GAAP financial results - The company provides EBITDA and Adjusted EBITDA as non-GAAP financial measures to assist investors in analyzing performance and for management's use in decision-making and compensation plans; **Adjusted EBITDA decreased** in both the second quarter and first half of 2025[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) EBITDA and Adjusted EBITDA (in thousands of U.S. dollars) | Metric | Q2 2025 | Q2 2024 | H1

Core Insights - Montauk Renewables, Inc. reported financial results for Q2 2025, highlighting a successful construction of a new RNG processing facility and a power purchase agreement for its project in North Carolina [1][3][4] Financial Performance - Total revenues for Q2 2025 were $45.1 million, a 4.1% increase from $43.3 million in Q2 2024 [3][4] - Average realized RIN price decreased by 22.4% to $2.42 from $3.12 in Q2 2024 [3][4] - Operating loss for Q2 2025 was $2.4 million, a decrease of $3.2 million compared to an operating income of $0.8 million in Q2 2024 [5][3] - Net loss for Q2 2025 was $5.5 million, an increase of $4.8 million from a loss of $0.7 million in Q2 2024 [5][3] Operational Highlights - RNG production remained flat at 1.4 million MMBtu compared to Q2 2024 [4][6] - RINs sold increased by 10.5% year-over-year to 11.1 million [4] - Renewable Electricity generation decreased to approximately 42 thousand MWh, down from 45 thousand MWh in Q2 2024 [6] Strategic Developments - The company formed a joint venture, GreenWave Energy Partners, LLC, aimed at enhancing RNG utilization for transportation [1] - A power purchase agreement was signed for the Montauk Ag Renewables project, covering 100% of the electricity produced for a term of 10 years at an average price of $48/MWh [1][3] Outlook - The company reaffirmed its full-year outlook for 2025, expecting RNG revenues between $150 million and $170 million and production volumes between 5.8 million and 6.0 million MMBtu [11]

Core Points - Montauk Renewables, Inc. will host a conference call and webcast on August 7, 2025, to discuss its financial results for Q2 2025 [1] - The financial results will be released after the close of regular stock market trading hours on the day prior to the conference call [1] - The conference call will include a live Q&A session and will be available for replay after 11:30 a.m. ET on the same day [3] Company Overview - Montauk Renewables, Inc. specializes in the management, recovery, and conversion of biogas into renewable natural gas (RNG) [4] - The company captures methane to prevent its release into the atmosphere and converts it into RNG or renewable electricity for the grid [4] - Headquartered in Pittsburgh, Pennsylvania, Montauk has over 30 years of experience in landfill methane-fueled renewable energy projects and operates 13 projects across several states [4] - The company benefits from Environmental Attribute premiums under federal and state policies that incentivize the use of RNG and renewable electricity [4]

Financial Data and Key Metrics Changes - Total revenues in Q1 2025 were $42.6 million, an increase of $3.8 million or 9.8% compared to $38.8 million in Q1 2024 [13] - Adjusted EBITDA for Q1 2025 was $8.8 million, a decrease of $700,000 or 7.2% compared to $9.5 million for Q1 2024 [24] - EBITDA for Q1 2025 was approximately $6.7 million, a decrease of $2.1 million or 24.1% compared to $8.9 million for Q1 2024 [24] - Net loss for Q1 2025 was $500,000, a decrease of $2.3 million compared to net income of $1.9 million for Q1 2024 [24] Business Line Data and Key Metrics Changes - Renewable Natural Gas (RNG) segment revenues in Q1 2025 were $38.5 million, an increase of $4.5 million or 13.1% compared to $34 million in Q1 2024 [16] - RNG production during Q1 2025 was approximately 1.4 million MMBtu, flat compared to Q1 2024 [15] - Revenues from renewable electricity facilities in Q1 2025 were $4.2 million, a decrease of $600,000 or 13.5% compared to $4.8 million in Q1 2024 [18] Market Data and Key Metrics Changes - Average realized RIN price in Q1 2025 was $2.46, a decrease of 24.3% compared to $3.25 in Q1 2024 [16] - Average commodity pricing for natural gas in Q1 2025 was 62.9% higher than the prior year period [16] Company Strategy and Development Direction - The company is focused on expanding its RNG production capabilities, particularly in North Carolina, with expectations to commence significant production and revenue generation activities in 2026 [7] - The company is negotiating with utilities for Renewable Energy Credits (RECs) from expected 2026 production [8] - The company is also developing a project to convert methane emissions from waste stream biogas into high-value carbon-negative fuel [10] Management's Comments on Operating Environment and Future Outlook - Management noted that regulatory uncertainty continues to impact the renewable natural gas industry, but the company believes its financial position and operational practices will maintain stability [7] - The company reaffirmed its full-year 2025 outlook, expecting RNG production volumes to range between 5.8 million and 6 million MMBtus, with corresponding RNG revenues between $150 million and $170 million [26] Other Important Information - The company reported impairments of $2 million in Q1 2025, an increase of $1.5 million compared to $500,000 in Q1 2024, primarily related to RNG equipment design at the Blue Granite project [20] - Operating and maintenance expenses for the RNG facility in Q1 2025 were $14.1 million, an increase of $1.9 million or 16.1% compared to $12.1 million in Q1 2024 [17] Q&A Session Summary Question: Could you provide more color on the RNG project at American Environmental Landfill? - Management confirmed the construction of an RNG processing facility at the American Environmental Landfill in Tulsa, Oklahoma, driven by increased gas feedstock availability [29] Question: Do you have any more details on why you're having to relocate your Rumpke site? - Management explained that the relocation is due to a contractual requirement associated with gas rights, but it will not disrupt production as the technology will be consolidated into a new facility [31] Question: Did you record any 45z credits in the first quarter? - Management confirmed that no 45z credits were recorded as of yet [33] Question: Are you seeing any slowdown in RNG at any landfills or customers? - Management noted a slowdown in some acquisition opportunities due to regulatory uncertainties, but they remain cautiously optimistic about ongoing development projects [36][37] Question: Can you provide clarity on the North Carolina swine project compared to dairy projects? - Management highlighted that the North Carolina project is unique, with a broader collaboration with the farming community and potential for significant expansion, making it an exciting opportunity [40][42]

Financial Data and Key Metrics Changes - Total revenues in Q1 2025 were $42.6 million, an increase of $3.8 million or 9.8% compared to $38.8 million in Q1 2024 [13] - Adjusted EBITDA for Q1 2025 was $8.8 million, a decrease of $700,000 or 7.2% compared to $9.5 million for Q1 2024 [26] - EBITDA for Q1 2025 was approximately $6.7 million, a decrease of $2.1 million or 24.1% compared to $8.9 million for Q1 2024 [26] - Net loss for Q1 2025 was $500,000, a decrease of $2.3 million compared to net income of $1.9 million for Q1 2024 [26] Business Line Data and Key Metrics Changes - Renewable Natural Gas (RNG) segment revenues in Q1 2025 were $38.5 million, an increase of $4.5 million or 13.1% compared to $34 million in Q1 2024 [16] - RNG production during Q1 2025 was approximately 1.4 million MMBtu, flat compared to Q1 2024 [14] - Revenues from renewable electricity facilities in Q1 2025 were $4.2 million, a decrease of $600,000 or 13.5% compared to $4.8 million in Q1 2024 [20] Market Data and Key Metrics Changes - Average realized RIN price in Q1 2025 was $2.46, a decrease of 24.3% compared to $3.25 in Q1 2024 [16] - Average commodity pricing for natural gas in Q1 2025 was 62.9% higher than the prior year period [16] Company Strategy and Development Direction - The company is focused on expanding its RNG production capabilities, particularly in North Carolina, with expectations to commence significant production and revenue generation activities in 2026 [6][7] - The company is also developing a project to convert methane emissions from waste stream biogas into high-value carbon-negative fuel [9] - The company is prioritizing the Atascocita location for biogenic CO2 projects and is progressing with plans to incorporate food-grade CO2 processing at the Rumke RNG project [9] Management's Comments on Operating Environment and Future Outlook - Management noted that regulatory uncertainty continues to impact the renewable natural gas industry, but the company believes its financial position and operational practices will maintain stability [6] - The company reaffirmed its full-year 2025 outlook, expecting RNG production volumes to range between 5.8 million and 6 million MMBtu, with corresponding revenues between $150 million and $170 million [29] Other Important Information - The company reported impairments of $2 million in Q1 2025, an increase compared to $500,000 in Q1 2024, primarily related to RNG equipment design at the Blue Granite project [22] - Operating and maintenance expenses for the RNG facility in Q1 2025 were $14.1 million, an increase of $1.9 million or 16.1% compared to $12.1 million in Q1 2024 [17] Q&A Session Summary Question: Could you provide more color on the RNG project at American Environmental Landfill? - Management confirmed the construction of an RNG processing facility at the American Environmental Landfill, which will have dual capacity for different production commodities [32] Question: Do you have any more details on why you're having to relocate your Rumpke site? - Management explained that the relocation is due to a contractual requirement associated with gas rights, and there will be no interruptions in production during the transition [34] Question: Did you record any 45z credits in the first quarter? - Management confirmed that no 45z credits were recorded as of yet [35] Question: Are you seeing any slowdown in RNG at any landfills or customers? - Management acknowledged a slowdown in some acquisition opportunities due to regulatory uncertainties but remains cautiously optimistic about ongoing development projects [37] Question: Could you provide clarity on the North Carolina swine project compared to dairy projects? - Management highlighted that the North Carolina swine project is unique and offers significant opportunities for expansion and diversification compared to traditional dairy projects [41]

Financial Performance - Total operating revenues increased to $42603 thousand in Q1 2025 from $38787 thousand in Q1 2024[7] - Net loss was $464 thousand in Q1 2025, compared to a net income of $1850 thousand in Q1 2024[7] - Basic and diluted loss per share was $000 in Q1 2025, compared to earnings per share of $001 in Q1 2024[7] - Adjusted EBITDA decreased to $8788 thousand in Q1 2025 from $9473 thousand in Q1 2024[32] Operational Results - RNG production volumes decreased by 22 MMBtu, a 16% decrease[8, 10] - Renewable Electricity Generation production decreased by 8 MWh, a 148% decrease[8, 10] - Renewable Natural Gas Total Revenues increased by $4463 thousand or 131%[10] - Renewable Electricity Generation Total Revenues decreased by $647 thousand or 135%[10] RIN Metrics - RINs available for sale increased by 2561 thousand, a 228% increase[10] - RINs sold increased by 1996 thousand, a 253% increase[9, 10] - Average realized price per RIN decreased by $079, a 243% decrease[9, 10] - RIN inventory increased by 565 thousand, a 169% increase[9, 10] Business Development - Second Apex RNG Facility commissioning is expected to be complete in the second quarter of 2025[20] - The Blue Granite RNG Facility project faces uncertainty as the utility will no longer accept RNG into its distribution system[21]

Core Insights - Montauk Renewables (MNTK) reported break-even quarterly earnings per share, matching the Zacks Consensus Estimate of $0.01, with a year-over-year comparison showing no change in earnings per share [1] - The company posted revenues of $42.6 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 5.14% and showing an increase from $38.79 million in the same quarter last year [2] - Montauk Renewables shares have declined approximately 43.7% year-to-date, contrasting with the S&P 500's decline of 4.3% [3] Earnings Outlook - The company's earnings outlook is uncertain, with current consensus EPS estimates at -$0.01 for the upcoming quarter and $0.06 for the current fiscal year, alongside projected revenues of $40.86 million and $181.79 million respectively [7] - The trend of estimate revisions for Montauk Renewables has been unfavorable, resulting in a Zacks Rank of 5 (Strong Sell), indicating expected underperformance in the near future [6] Industry Context - The Alternative Energy - Other industry, to which Montauk Renewables belongs, is currently ranked in the bottom 39% of over 250 Zacks industries, suggesting potential challenges for stocks within this sector [8] - Comparatively, ReNew Energy Global PLC (RNW), another company in the same industry, is expected to report quarterly earnings of $0.07 per share, reflecting a year-over-year increase of 250% [9]