Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39919 MONTAUK RENEWABLES, INC. (Exact name of registrant as specified in its charter) Delaware 85-3189583 (Sta ...

Please register for the conference call and webcast using the above link in advance of the call start time. The webcast platform will register your name and organization as well as provide dial-in numbers and a unique access pin. Please contact Gateway Group at (949) 574-3860 if you experience technical difficulties. About Montauk Renewables, Inc. Investor Relations Contact: | --- | --- | |---------------------|------------------------------------------------------------------------------------| | Date: | S ...

Montauk Renewables, Inc. (NASDAQ:MNTK) Q1 2024 Earnings Conference Call May 9, 2024 5:00 PM ET Company Participants John Ciroli - Chief Legal Officer & Secretary Sean McClain - Chief Executive Officer & President Kevin Van Asdalan - Chief Financial Officer Conference Call Participants Paul Cheng - Scotiabank Saumya - from UBS Matthew Blair - Tudor, Pickering, Holt & Company Operator Good afternoon, everyone, and thank you for participating in today's conference call. I would like to turn the call over to Mr ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 For the transition period from to Commission File Number: 001-39919 MONTAUK RENEWABLES, INC. (Exact name of registrant as specified in its charter) Delaware 85-3189583 (IRS Employer Identification No.) (State or Other Jurisdiction of Incorporation or Organization) ...

Total revenues in the first quarter of 2024 were $38.8 million, an increase of $19.6 million (102.5%) compared to $19.2 million in the first quarter of 2023. The increase is primarily related to an increase in self-monetized RINs in the first quarter of 2024 as a result of our strategic decision in the first quarter of 2023 to not self-market a significant amount of RINs from 2023 RNG production due to 2023 D3 RIN index price volatility. Additionally, an increase in realized RIN pricing of 61.7% during the ...

PITTSBURGH, April 25, 2024 (GLOBE NEWSWIRE) -- Montauk Renewables, Inc. ("Montauk” or “the Company") (NASDAQ: MNTK), a renewable energy company specializing in the management, recovery and conversion of biogas into renewable natural gas (“RNG”), will host a conference call and webcast on Thursday, May 9, 2024, at 5:00 p.m. Eastern time to discuss its financial results for the first quarter ended March 31, 2024. The Company will issue a press release reporting the financial results after the close of regular ...

MONTAUK RENEWABLES, INC. Incorporated in the United States of America Company number: 85-3189583 NASDAQ share code: MNTK JSE share code: MKR ISIN: US61218C1036 ("Montauk Renewables" or the "Company") AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 December 2023 Dollar amounts presented herein are in United States Dollars | SALIENT FEATURES | | 2023 | 2022 | Percentage Change | | --- | --- | --- | --- | --- | | Revenue | ($'000) | 174 904 | 205 559 | (15%) | | EBITDA | ($'000) | 45 277 | 65 734 | (31%) | ...

Financial Data and Key Metrics Changes - Total revenues in 2023 were $174.9 million, a decrease of $30.7 million or 14.9% compared to $205.6 million in 2022, primarily driven by a decrease in realized RIN pricing and natural gas index pricing [79][80] - Adjusted EBITDA for 2023 was $46.5 million, a decrease of $24.0 million or 34.0% compared to adjusted EBITDA of $70.5 million for 2022 [15] - Net income for 2023 decreased $20.3 million or 57.7% compared to net income for 2022, primarily due to price-driven reductions in revenues [42] Business Line Data and Key Metrics Changes - Renewable Natural Gas (RNG) segment produced 5.5 million MMBtu in 2023, flat compared to 2022, with production increases at some facilities offset by quality issues at others [29] - Revenues from renewable electricity facilities in 2023 were $18.4 million, an increase of $1.2 million or 7.4% compared to 2022, driven by timing of generation and monetization of RECs [31] - Operating profit in 2023 for RNG was $59.3 million, a decrease of $35.1 million or 37.2% compared to 2022 [32] Market Data and Key Metrics Changes - Average realized pricing on RIN sales during 2023 was $2.71, a decrease of 16.6% compared to $3.25 in 2022 [11] - Average commodity pricing for natural gas for 2023 was 58.7% lower than the prior year [80] - The average price of D3 RINs through the end of February was approximately $3.06 [61] Company Strategy and Development Direction - The company continues to expect capital investment for development projects to range between $140 million and $160 million for the first phase in North Carolina [7] - The company announced plans for a landfill gas to RNG project in Irvine, California, expected to process large volumes of biogas [53] - The strategic decision to exit a facility was influenced by the expiration of an above-market power purchase agreement and the sale proceeds exceeding the carrying value [78] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing weather anomalies impacting production and expressed cautious optimism for recovery in Q1 [37][87] - The company expects RNG production volumes for 2024 to range between 5.8 million and 6.1 million MMBtu, with corresponding revenues between $195 million and $215 million [85] - Management noted that profitability is highly dependent on market prices for RINs and environmental attributes [81] Other Important Information - The company recorded impairments of $0.9 million in 2023, a decrease of 81.4% compared to 2022 [13] - Cash and cash equivalents as of December 31, 2023, were approximately $73.8 million [15] - The company entered into a loan agreement extending the maturity date to December 31, 2033, with a balance of approximately $10 million [14] Q&A Session Summary Question: Long-term outlook regarding D3 RIN pricing and LCFS pricing - Management did not provide specific guidance on forward prices for environmental attributes but noted a 30% increase in demand for those attributes as per EPA guidance [65] Question: Insights on Q4 production and outlook for Q1 - Management indicated that Q4 RNG production was impacted by weather issues and expressed hope for a bounce back in Q1 [44][87] Question: 2024 spending plans and drivers for increase year-over-year - Management confirmed capital expenditures for 2024 are expected to be approximately $150 million to $167 million, driven by larger projects [89]

Cautionary Statement Regarding Forward-Looking and non-GAAP Financial Information This presentation contains non-GAAP financial measures such as EBITDA and Adjusted EBITDA. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures may be found in this presentation (including the appendix) or our SEC filings. We present non-GAAP financial measures because we believe they assist investors in analyzing our performance across reporting periods on a consistent basis b ...

Revenue and Financial Performance - Total operating revenues for 2023 were $174.9 million, a decrease of approximately 15% from $205.6 million in 2022[419] - Operating income for 2023 was $23.6 million, down from $44.6 million in 2022, reflecting a decline of about 47%[419] - Net income for 2023 was $14.9 million, compared to $35.2 million in 2022, indicating a decrease of approximately 58%[419] - The company reported a total of $151.3 million in operating expenses for 2023, down from $161.0 million in 2022[419] - The company’s cash and cash equivalents decreased to $73.8 million in 2023 from $105.2 million in 2022, a decline of about 30%[416] - Total cash provided by operating activities for 2023 was $41,053,000, a decrease from $81,066,000 in 2022[425] - Capital expenditures for 2023 amounted to $(63,091,000), significantly higher than $(22,277,000) in 2022[425] - The company reported a net cash used in investing activities of $(63,087,000) for 2023, compared to $(20,794,000) in 2022[425] - Cash and cash equivalents at the end of 2023 were $74,242,000, down from $105,606,000 at the end of 2022[425] Project and Revenue Concentration - Approximately 68.4% of operating revenues in 2023 were derived from five project sites, down from 72.4% in 2022[144] - RNG production at McCarty, Rumpke, Atascocita, and Apex facilities accounted for approximately 16.2%, 18.8%, 21.0%, and 9.9% of RNG revenues in 2023, respectively[144] - Bowerman facility contributed approximately 89.7% of Renewable Electricity Generation revenues in 2023[144] - In 2023, projects located on Waste Management operated landfills represented 37.3% of the company's revenue, while projects on Republic Services operated landfills accounted for 22.2%[228] - Sales to Valero, GE Warren, and HF Sinclair represented approximately 22.0%, 11.7%, and 11.7% of operating revenue in 2023, indicating significant customer concentration[231] Operational Risks and Challenges - The company has experienced operational risks, including potential asset impairment charges due to lower than expected output from renewable energy projects[142] - The concentration of projects in Texas and the Northeast increases vulnerability to regional events affecting production and transmission[145] - The company faces intense competition in the renewable energy and waste-to-energy markets from various other companies[150] - The company faces significant competition from larger competitors with more resources, which may hinder its ability to maintain or expand its business[151] - The company may experience delays and cost overruns in converting existing facilities from Renewable Electricity to RNG production, adversely affecting financial performance[164] - The company may not be able to secure long-term contracts for power sales on favorable terms, impacting its ability to develop and finance projects[158] - The company may experience delays in obtaining necessary regulatory permits, which could hinder project construction and operation[195] - The company may face challenges in obtaining building permits if local populations mobilize against renewable energy projects, potentially leading to project cancellations[202] Regulatory and Compliance Risks - The company faces risks related to regulatory changes that could affect the demand for Environmental Attributes and the prices thereof[161] - The U.S. Supreme Court restricted the EPA's authority to regulate GHG emissions from existing power plants, impacting future regulations and potential demand for renewable energy[199] - The EPA is expected to publish a final rule in the first half of 2024 regarding GHG emissions, which may face legal challenges similar to previous regulations[199] - The market for renewable energy is influenced by continuously modified U.S. federal, state, and local government regulations, which could significantly reduce demand for renewable energy credits[206] - The Inflation Reduction Act of 2022 imposes a fee on GHG emissions from certain facilities and appropriates significant federal funding for renewable energy initiatives, potentially accelerating the transition away from fossil fuels[213] - The company is required to register RNG projects with the EPA, and delays in obtaining RIN qualification could adversely affect cash flow and project profitability[207] - Changes in regulatory requirements and unknown site conditions could negatively impact the financial success of renewable energy projects[203] Strategic Growth and Development - The company aims to expand its business by developing RNG recovery projects at landfills and livestock farms, but may struggle to identify suitable locations[171] - The company has identified 463 landfills as candidates for biogas projects, with only 38 producing sufficient quantities of LFG for commercial-scale projects[171] - The company plans to pursue future acquisitions as part of its growth strategy, but may encounter challenges in identifying suitable candidates and securing financing[176] - The company relies on technological innovation to maintain a competitive position in the renewable energy industry, but lacks exclusive rights to key technologies[153] Financial Structure and Capital Management - The senior credit facility consists of an $80.0 million term loan, with $64.0 million outstanding as of December 31, 2023, and a $120.0 million revolving credit line that is undrawn[232] - The company has a significant concentration of ownership, with stockholder affiliates controlling approximately 52.3% of common stock as of February 28, 2024[248] - The company may issue additional capital stock in the future, which could dilute existing stockholders' ownership interests[251] - The company has a fixed charge coverage ratio requirement of at least 1.20 to 1.00 and a total leverage ratio not exceeding 3.25 to 1.00 until June 30, 2024[235] - The company will transition to Term SOFR plus a SOFR Adjustment after the cessation of BSBY, which could increase interest expenses if Term SOFR rises[237] Customer and Market Dynamics - The company has experienced customer concentration, with five customers accounting for approximately 70.7% of accounts receivable as of December 31, 2023[231] - The company is exposed to risks associated with selling RNG at current market prices if off-take agreements are not renewed, potentially leading to lower revenues[180] - The company relies on Environmental Attributes, which are subject to regulatory changes, and any reduction or elimination of these incentives could adversely affect revenues[185] - The company faces credit risk from a limited number of significant customers who do not post collateral, which could adversely affect financial results[184] Human Resources and Management - The management team has extensive experience in business and financial management, with key executives having over 25 years of relevant experience[134] - The company may face challenges in attracting and retaining highly skilled personnel, which could adversely affect its business strategy[253] Miscellaneous - The company recorded impairment charges of $0.9 million in 2023, with $0.8 million related to non-operational RNG machinery and feedstock processing equipment[238] - The company recorded impairment charges of $2.1 million in 2022 related to a Renewable Electricity facility and ongoing development projects[238] - The company benefits from federal and state incentives, including Renewable Identification Numbers (RINs) and Renewable Energy Credits (RECs), to enhance revenue[432] - The company relies on third-party vendors for IT and data security, exposing it to risks related to cybersecurity threats and potential disruptions[218] - The company expects to incur significant additional costs related to the assessment and disclosure of climate-related matters due to the SEC's new rules[214] - The company is currently assessing the impact of the SEC's new rules, which may face legal challenges from state attorneys general[214] - The company may face increased litigation risks related to disclosures made pursuant to the SEC's new rules[214]