Montauk Renewables, Inc. (NASDAQ:MNTK) Q4 2021 Earnings Conference Call March 16, 2022 5:00 PM ET Company Participants John Ciroli - VP, General Counsel & Secretary Sean McClain - President, CEO & Director Kevin Van Asdalan - CFO & Treasurer Conference Call Participants Matthew Blair - Tudor, Pickering, Holt Craig Irwin - ROTH Capital Partners Craig Shere - Tuohy Brothers Investment Research Operator Good afternoon, everyone, and thank you for participating in today's conference call. I would like to turn t ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021; 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 No. 001-39919 MONTAUK RENEWABLES, INC. (Exact name of registrant as specified in its charter) Delaware 85-3189583 (State or o ...

Montauk Renewables, Inc. (NASDAQ:MNTK) Q3 2021 Earnings Conference Call November 15, 2021 5:00 PM ET Company Participants John Ciroli - VP, General Counsel & Secretary Sean McClain - President, CEO & Director Kevin Van Asdalan - CFO & Treasurer Conference Call Participants Craig Irwin - ROTH Capital Partners Operator Good afternoon, everyone, and thank you for participating in today's conference call. I would like to turn the call over to Mr. John Ciroli as he provides some important cautions regarding forw ...

Business Operations - Montauk Renewables operates 15 projects across multiple states, focusing on converting biogas into Renewable Natural Gas (RNG) and Renewable Electricity [120]. - The company completed the Montauk Ag Renewables Acquisition for a total of $3,797 in cash and $12,500 in restricted stock awards, enhancing its technology for renewable natural gas production [123]. - The company expects to increase production at the Pico facility from approximately 150 MMBtu/day after completing significant improvements, with full operations anticipated in Q1 2022 [128]. - The company has amended its Pico feedstock agreement to increase feedstock supply over a one to three-year period, with an initial cash payment of $1,000 [126]. Market Demand and Regulatory Environment - Montauk Renewables is experiencing rising demand for RNG due to public support for renewable energy and regulatory initiatives, which are expected to drive long-term growth [130]. - The company is subject to regulatory changes that could impact the profitability of its projects, particularly regarding RIN pricing and CI score assessments [132]. - The company expects to submit a CI pathway model for approval in Q4 2021, which could significantly impact its ability to generate LCFS credit revenues in 2022 [129]. Financial Performance - Total operating revenues for Q3 2021 were $39,749 million, an increase of $11,499 million (40.7%) compared to Q3 2020 [152]. - Renewable Natural Gas (RNG) revenues in Q3 2021 were $35,002 million, an increase of $11,008 million (45.9%) compared to $23,994 million in Q3 2020 [154]. - Renewable Electricity Generation total revenues decreased by 9.0% to $3,872,000 from $4,256,000 year-over-year [149]. - Total revenues for the first nine months of 2021 were $102,872, an increase of $28,309 (38.0%) compared to $74,563 in the first nine months of 2020 [176]. - Renewable Natural Gas segment revenues increased to $90,707, up $29,908 (49.2%) from $60,799 in the same period of 2020, driven by a 43.4% increase in average realized RIN pricing [179]. Production and Operating Metrics - RNG production volumes for the current year (CY) were 1,510 MMBtu, a slight decrease of 0.7% from 1,520 MMBtu in the previous year [149]. - The company produced 1,510 MMBtus of RNG in Q3 2021, a decrease of 10 MMBtus (0.7%) from Q3 2020 [153]. - Renewable Electricity production volumes were approximately 137 MWh, a decrease of 15 MWh (9.9%) from 152 MWh in the first nine months of 2020 [181]. Expenses and Profitability - Operating expenses for Renewable Natural Gas increased by 8.7% to $14,916,000 compared to $13,717,000 in the same quarter last year [149]. - Operating profit for Q3 2021 was $6,729 million, an increase of $1,895 million (39.2%) compared to Q3 2020 [172]. - General and administrative expenses for Q3 2021 were $7,520 million, an increase of $3,389 million (82.0%) compared to Q3 2020 [159]. - Operating loss in the first nine months of 2021 was $6,010, a decrease of $11,625 (207.0%) compared to an operating profit of $5,615 in the first nine months of 2020 [198]. Cash Flow and Capital Expenditures - Net cash flows provided by operating activities for the first nine months of 2021 were $21,298, a 5.9% decrease from $22,636 in the first nine months of 2020 [209]. - Capital expenditures for the first nine months of 2021 were $7,702, significantly lower than $14,911 in the first nine months of 2020 [210]. - The company expects 2021 capital expenditures to range between $8,000 and $9,000, with additional spending anticipated for optimization projects and development capital expenditures [208]. Tax and Impairment - The effective tax rate for Q3 2021 was (64.3%), significantly lower than the 149.8% effective tax rate for Q3 2020 [170]. - The company recorded an impairment loss of $626 in the first nine months of 2021, an increase of $348 (125.2%) compared to $278 in the same period of 2020 [193]. Other Financial Information - The company continues to implement remediation initiatives for a previously identified material weakness in internal control over financial reporting [212]. - The company is classified as an emerging growth company, allowing it to delay the adoption of new accounting standards [232]. - There were no material changes to significant contractual obligations during the third quarter of 2021 compared to previous reports [231].

Investor Presentation 2Q 2021 AUGUST 16, 2021 Disclaimers and Confidentiality This presentation contains "forward-looking statements" within the meaning of U.S. federal securities laws that involve substantial risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to our financial condition, results of operations, plans, objectives ...

Financial Data and Key Metrics Changes - Total revenues for Q2 2021 were $31.7 million, an increase of $3.8 million or 13.5% compared to $27.9 million in Q2 2020, primarily driven by higher revenues recognized under counterparty sharing agreements [15] - Total general and administrative expenses were $7.3 million for Q2 2021, an increase of $3.6 million or 95% compared to $3.8 million in Q2 2020, with $2.2 million related to stock-based compensation costs [17] - Adjusted EBITDA for Q2 2021 was $5.2 million, a decrease of $3.7 million or 41.5% from $8.8 million in Q2 2020, primarily due to a $3.1 million increase in net loss [34] Business Line Data and Key Metrics Changes - Renewable natural gas (RNG) production was approximately 1.4 million MMBtu in Q2 2021, a decrease of 0.1 million MMBtu or 8.2% from 1.5 million MMBtu in Q2 2020 [19] - Revenues from the RNG segment in Q2 2021 were $27.6 million, an increase of $3.7 million or 15.6% compared to $23.9 million in Q2 2020 [21] - Revenues from renewable electricity in Q2 2021 were $4.1 million, a decrease of $0.4 million or 9.6% compared to $4.5 million in Q2 2020 [27] Market Data and Key Metrics Changes - Average pricing realized on RIN sales during Q2 2021 was $1.78, compared to $1.37 in Q2 2020, an increase of 29.9% [23] - The average D3 RIN index price for Q2 2021 was $3.06, more than double the average D3 RIN index price in Q2 2020 [23] Company Strategy and Development Direction - The company is focusing on optimizing and growing within its existing portfolio, including the Pico feedstock amendments to increase capacity and efficiency at its dairy digester cluster project [8] - The recent acquisition of business assets in North Carolina aims to address challenges in swine farming while deploying near-zero emissions technology [12] - The strategy to monetize RNG production abroad is expected to stabilize domestic attribute pricing for renewable natural gas production [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth strategy, supported by federal, state, and international incentive programs for renewable natural gas [7] - The company acknowledged the challenges faced due to equipment failures but emphasized that corrective actions have been taken to minimize recurrence [39] - Management did not provide specific forward-looking guidance on production volumes but indicated that the expectation is to recapture lost production due to non-recurring equipment failures [44] Other Important Information - The company generated $11.2 million of cash from operating activities in the first six months of 2021, a 28.8% increase from $8.7 million in the same period of 2020 [32] - As of June 30, 2021, $25.0 million was outstanding under the term loan and $36.7 million under the revolving credit facility, with $37.5 million available for borrowing [31] Q&A Session Summary Question: Clarification on production performance at McCarty - Management clarified that the equipment failures at McCarty were separate incidents, and corrective actions have been taken to prevent recurrence [39][40] Question: Expectations for normalized production rates - Management indicated that while they cannot provide specific production statistics, they expect to recapture lost production due to previous equipment failures [44] Question: Concerns about over-investment in capacity - Management stated that they have not over-invested in facilities and that there are opportunities to optimize production closer to capacity [56][57] Question: Pricing and hedging commitments - Management confirmed that approximately 50% of production for 2021 has been hedged, and they will benefit from spot prices in the latter half of the year [61][64] Question: Need for more detailed production guidance - Management acknowledged the need for transparency but emphasized that they provide historical run rates and explanations for deviations [116]

Company Operations - Montauk Renewables operates 15 projects across multiple states, focusing on converting biogas into Renewable Natural Gas (RNG) and Renewable Electricity [108]. - The company expects increased production from existing projects as landfills take in more waste, although delays in new projects could impact production timelines [117]. - Key drivers for long-term growth in RNG include the potential for sustained growth in biogas conversion from waste sources and the company's established relationships with landfill owners [175]. Financial Performance - Total revenues for Q2 2021 were $31,674, an increase of $3,766 (13.5%) compared to $27,908 in Q2 2020, primarily driven by higher revenues under counterparty sharing agreements [129]. - Renewable Natural Gas (RNG) total revenues increased to $27,581, up $4,203 (18.0%) from $23,378 in Q2 2020, despite a decrease in RNG production volumes to 1,416 MMBtu, down 126 MMBtu (8.2%) from 1,542 MMBtu [126][131]. - Total operating revenues for the first six months of 2021 were $63,121, an increase of $16,809 (36.3%) compared to $46,312 in the first six months of 2020 [153]. - Renewable Natural Gas revenues in the first six months of 2021 were $55,704, an increase of $18,900 (51.4%) compared to $36,804 in the first six months of 2020 [155]. Production and Pricing - The company reported a 29.1% increase in RNG production volumes in Q1 2021 compared to Q1 2020, attributed to the commissioning of a new engine [117]. - Average realized price for RINs increased to $1.78, a rise of $0.41 (29.9%) compared to $1.37 in Q2 2020, while the average D3 RIN index price was $3.06, more than double the previous year's average [131]. - Average realized RIN pricing during the first six months of 2021 was $1.77, a 66.6% increase compared to $1.06 in the first six months of 2020 [153]. Operating Expenses - Operating expenses for Q2 2021 totaled $32,211, an increase of $7,865 (32.3%) compared to $24,346 in Q2 2020, with general and administrative expenses rising by $3,576 (95.0%) to $7,341 [128][136]. - Operating and maintenance expenses for RNG facilities increased to $10,159, up $3,056 (43.0%) compared to $7,103 in Q2 2020, primarily due to costs associated with development sites commissioned in 2020 [137]. - Total operating expenses for the first six months of 2021 were $75,860, an increase of $30,328 (66.6%) compared to $45,532 in the first six months of 2020 [152]. Net Loss and Adjusted EBITDA - Net loss for Q2 2021 was $4,652, compared to a net loss of $1,583 in Q2 2020, representing an increase in loss of $3,069 (193.9%) year-over-year [128]. - Adjusted EBITDA for the six months ended June 30, 2021 was $(637,000), a significant decrease from $12,062,000 in the same period of 2020 [181]. - Operating loss in Q2 2021 was $537, a decrease of $4,099 (115.0%) compared to an operating profit of $3,562 in Q2 2020 [148]. Cash Flow and Capital Expenditures - The company generated $11,245,000 in net cash flows from operating activities for the first six months of 2021, representing a 34.3% increase from $8,370,000 in the first six months of 2020 [190]. - Capital expenditures for the first six months of 2021 were $4,469,000, down from $10,454,000 in the same period of 2020 [191]. - The company expects 2021 capital expenditures to range between $8,500,000 and $9,500,000, including $5,000,000 for optimization projects [189]. Debt and Financial Obligations - The company had total debt of $61,698,000 as of June 30, 2021, a decrease from $66,697,000 at December 31, 2020 [183]. - The company is required to maintain a Fixed Charge Coverage Ratio of not less than 1.2 to 1.0 under its Amended Credit Agreement [189]. - As of the first six months of 2021, the company had approximately $5,765 million of off-balance sheet arrangements in outstanding letters of credit, which reduced the borrowing capacity of its revolving credit facility [210]. Impairment and Tax Rate - The company recorded an impairment loss of $626,000 during the six months ended June 30, 2021 related to a landfill facility decommissioning [181]. - The effective tax rate for Q2 2021 was (267%), lower than the 160% rate for Q2 2020, primarily due to disallowance of officers' compensation [147]. - The effective tax rate for the first six months of 2021 was (34%), significantly lower than the 282% rate for the same period in 2020 [172]. Market and Regulatory Environment - Revenues are influenced by market pricing and regulatory developments, with a focus on managing production volumes and operating expenses [116]. - Environmental Attributes, including RINs and LCFS credits, significantly contribute to revenues, with realized average RIN prices in the first half of 2021 at approximately $1.77, below the D3 RIN index of $2.80 [120]. - The dairy farm project is anticipated to generate LCFS credits at a multiple of those from landfill projects, with more information expected in 2022 [119]. Miscellaneous - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay the adoption of new accounting standards [212]. - There have been no material changes in market risk disclosures since the 2020 Annual Report [214].

Production and Revenue - Montauk Renewables operates 12 RNG and three Renewable Electricity projects across six states, making it one of the largest U.S. producers of RNG[107]. - The company reported a 29.1% increase in RNG production volumes in Q1 2021 compared to Q1 2020, primarily due to the commissioning of a new engine[114]. - Montauk Renewables anticipates increased production from existing projects as landfills continue to accept more waste, enhancing gas collection[114]. - The company expects to generate LCFS credits at a multiple from its dairy farm project compared to landfill projects, with more attractive CI expected to be awarded in 2022[116]. - Montauk Renewables' revenues are primarily driven by the production of RNG and Renewable Electricity, along with the sale of Environmental Attributes[120]. - Total revenues for Q1 2021 were $31,447, an increase of $13,044 (70.9%) compared to $18,403 in Q1 2020[123]. - Renewable Natural Gas segment revenues increased to $28,123, up $14,234 (102.5%) from $13,889 in Q1 2020[125]. - Renewable Electricity Generation revenues decreased to $3,324, down $1,137 (25.5%) from $4,461 in Q1 2020[128]. Operating Expenses - Total operating expenses for Q1 2021 were $43,651, an increase of $22,465 (106.0%) from $21,186 in Q1 2020[122]. - General and administrative expenses surged to $20,452, an increase of $17,013 (494.7%) compared to $3,439 in Q1 2020[131]. - Royalties, transportation, gathering, and production fuel expenses increased to $5,532, up $3,050 (122.9%) compared to $2,482 in Q1 2020[133]. - Renewable Electricity operating and maintenance expenses increased by $461 (18.4%) to $2,965 in Q1 2021 compared to Q1 2020[134]. - Royalties, transportation, gathering, and production fuel expenses rose by $3,277 (111.4%) to $6,218 in Q1 2021 compared to Q1 2020[135]. - Depreciation and amortization increased by $389 (7.3%) to $5,737 in Q1 2021 compared to Q1 2020[136]. - Impairment loss in Q1 2021 was $626, an increase of $348 (125.2%) compared to $278 in Q1 2020[137]. Profitability and Loss - Operating loss for Q1 2021 was $(12,204), a decline of $9,421 (338.5%) from $(2,783) in Q1 2020[122]. - Operating loss in Q1 2021 was $12,204, an increase of $9,421 (338.5%) compared to an operating loss of $2,783 in Q1 2020[141]. - Consolidated EBITDA for Q1 2021 was $(6,500), compared to $2,591 in Q1 2020[149]. Cash Flow and Capital Expenditures - For Q1 2021, the company generated $7,769 in cash from operating activities, a 565.1% increase from $1,168 in Q1 2020[160]. - The company incurred $1,355 in capital expenditures in Q1 2021, with approximately $917 related to optimization projects[161]. - The company expects 2021 capital expenditures to range between $8,500 and $9,500, including $2,000 to $4,000 for optimization projects at recently commissioned facilities[158]. - The company anticipates up to $3,000 in initial capital expenditures in 2021 related to acquisitions[158]. Debt and Financial Position - Cash and cash equivalents as of March 31, 2021, were $22,643, up from $20,992 at December 31, 2020[150]. - Debt before issuance costs decreased to $64,198 as of March 31, 2021, from $66,697 at December 31, 2020[151]. - The Amended Credit Agreement provides an $80,000 revolving credit facility with a $75,000 accordion option for additional capital access[158]. - The company aims to maintain a Total Leverage Ratio of not more than 3.0 to 1.0 as per the Amended Credit Agreement[159]. Tax and Compliance - The effective tax rate for Q1 2021 was (10.7)%, significantly lower than 217.0% in Q1 2020 due to an income tax benefit[140]. - The company continues to implement remediation initiatives in response to a previously identified material weakness in internal control over financial reporting[163]. Inventory and Production Metrics - Total RNG production volumes were 1,348 MMBtu, a decrease of 41 MMBtu (3.0%) from 1,389 MMBtu in Q1 2020[124]. - RIN inventory at the end of Q1 2021 was 622, a decrease of 490 (44.1%) from 1,112 in Q1 2020[122]. - Average realized RIN price rose to $1.91, a significant increase of $1.15 (151.3%) compared to $0.76 in Q1 2020[125]. - The average realized price for RINs in Q1 2021 was approximately $1.91, below the D3 RIN index price of approximately $2.54[117].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020; 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 No. 001-39919 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securit ...