[Zomedica Announces Second Quarter 2025 Financial Results](index=1&type=section&id=Zomedica%20Announces%20Second%20Quarter%202025%20Financial%20Results) [Executive Summary & Key Highlights](index=1&type=section&id=1.1.%20Executive%20Summary%20%26%20Key%20Highlights) Zomedica reported strong Q2 2025 results with record revenue growth for the 18th consecutive quarter, driven by therapeutic and diagnostic product adoption - Zomedica achieved its **18th consecutive quarter** of record year-over-year revenue growth[1](index=1&type=chunk)[2](index=2&type=chunk) Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Change YoY | Source | | :----- | :------ | :--------- | :----- | | Revenue | $7.0 million | +14% | [1, 9] | | Gross Margin | 67% | N/A | [1, 6] | | Operating Expenses Reduction | $0.7 million | -5% (adjusted) | [7, 14] | | Liquidity (Cash, Equivalents, Securities) | $59.1 million | N/A | [1, 20] | [Strategic Initiatives and Product Enhancements](index=1&type=section&id=1.2.%20Strategic%20Initiatives%20and%20Product%20Enhancements) The company advanced its product portfolio and market presence through international expansion, a new Equine Asthma registry, and platform enhancements - International sales grew by **13%** compared to Q2 2024, driven by organic growth and new distributor partnerships[4](index=4&type=chunk) - Launched a national Equine Asthma registry which provides a low-cost way to accumulate data to support expanded usage of the PulseVet system[4](index=4&type=chunk) - Introduced an enhanced **TRUFORMA® T4 assay** and a **VetGuardian® onboarding app**, with additional enhancements planned for VetGuardian and TRUVIEW® platforms in the upcoming quarter[5](index=5&type=chunk) [2025 Second Quarter Financial Performance](index=1&type=section&id=2025%20Second%20Quarter%20Financial%20Performance) [Revenue Overview](index=1&type=section&id=2.1.%20Revenue%20Overview) Total revenue increased 14% year-over-year to $7.0 million, propelled by strong growth in the Diagnostics segment and consumable sales Q2 2025 Revenue Performance | Metric | Q2 2025 Revenue | Q2 2024 Revenue | YoY Change | Source | | :----- | :-------------- | :-------------- | :--------- | :----- | | Total Revenue | $7.0 million | $6.1 million | +14% | [9, 13] | [Revenue by Product Segment](index=1&type=section&id=2.1.1.%20Revenue%20by%20Product%20Segment) The Diagnostics segment grew 86% year-over-year, driven by TRUFORMA platform adoption, while the Therapeutic Device segment grew 8% Q2 2025 Revenue by Product Segment | Segment | Q2 2025 Revenue | YoY Change | Primary Driver | Source | | :-------- | :-------------- | :--------- | :------------- | :----- | | Diagnostics | $0.8 million | +86% | TRUFORMA point-of-care diagnostic platform, expanded menu of assays | [3, 9, 10] | | Therapeutic Device | $6.2 million | +8% | PulseVet® and Assisi® products | [10, 11] | [Revenue by Product Category](index=1&type=section&id=2.1.2.%20Revenue%20by%20Product%20Category) Consumable revenues grew 21% year-over-year, led by TRUFORMA and PulseVet products, while capital revenues remained flat Q2 2025 Revenue by Product Category | Category | Q2 2025 Revenue | YoY Change | Primary Driver | Source | | :------- | :-------------- | :--------- | :------------- | :----- | | Consumables | $5.3 million | +21% | TRUFORMA products, PulseVet® trodes | [3, 21] | | Capital | $1.7 million | Flat | N/A | [21] | [Gross Margin](index=1&type=section&id=2.2.%20Gross%20Margin) Zomedica maintained a strong gross margin of 67% for the second quarter of 2025 Q2 2025 Gross Margin | Metric | Q2 2025 | | :----- | :------ | | Gross Margin | 67% | [Operating Expenses](index=2&type=section&id=2.3.%20Operating%20Expenses) Total operating expenses decreased significantly due to the non-recurrence of a prior-year impairment charge, with a 5% adjusted reduction Q2 2025 Operating Expenses | Metric | Q2 2025 | Q2 2024 | YoY Change | Source | | :----- | :------ | :------ | :--------- | :----- | | Total Operating Expenses | $12.7 million | $29.4 million | -56.8% | [14] | | Total Operating Expenses (Excl. Impairment) | $12.7 million | $13.4 million (adjusted) | -5% | [14] | | Impairment Charge (Q2 2024) | N/A | $16.0 million | N/A | [14] | [Research and Development (R&D) Expenses](index=2&type=section&id=2.3.1.%20Research%20and%20Development%20%28R%26D%29%20Expenses) R&D expenses increased by 25% year-over-year, reflecting continued investment in internal product development capabilities Q2 2025 R&D Expenses | Metric | Q2 2025 | Q2 2024 | YoY Change | Source | | :----- | :------ | :------ | :--------- | :----- | | R&D Expenses | $1.9 million | $1.5 million | +25% | [15] | - The increase was driven by costs related to building internal capabilities for developing next-generation therapeutic and diagnostic products[15](index=15&type=chunk) [Selling and Marketing (S&M) Expenses](index=2&type=section&id=2.3.2.%20Selling%20and%20Marketing%20%28S%26M%29%20Expenses) S&M expenses rose by 19% year-over-year due to increased sales headcount and higher commissions from sales growth Q2 2025 S&M Expenses | Metric | Q2 2025 | Q2 2024 | YoY Change | Source | | :----- | :------ | :------ | :--------- | :----- | | S&M Expenses | $4.6 million | $3.9 million | +19% | [16] | - The increase was primarily driven by a larger sales department headcount and higher commissions associated with sales growth[16](index=16&type=chunk) [General and Administrative (G&A) Expenses](index=2&type=section&id=2.3.3.%20General%20and%20Administrative%20%28G%26A%29%20Expenses) G&A expenses decreased by 23% year-over-year, mainly due to non-recurring prior-year fees and reduced salary costs Q2 2025 G&A Expenses | Metric | Q2 2025 | Q2 2024 | YoY Change | Source | | :----- | :------ | :------ | :--------- | :----- | | G&A Expenses | $6.2 million | $8.0 million | -23% | [17] | - The decrease was primarily driven by the non-recurrence of prior-year special meeting and impairment-related accounting fees, as well as lower salary and severance expenses[17](index=17&type=chunk) [Net Loss and Profitability](index=2&type=section&id=2.4.%20Net%20Loss%20and%20Profitability) The company significantly reduced its net loss to $7.4 million from $23.9 million in the prior-year quarter Q2 2025 Net Loss | Metric | Q2 2025 | Q2 2024 | YoY Change | Source | | :----- | :------ | :------ | :--------- | :----- | | Net Loss | $7.4 million | $23.9 million | -69.1% | [18] | - The Q2 2024 net loss included a **non-cash impairment charge of $16.0 million**[14](index=14&type=chunk)[18](index=18&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=2.5.%20Non-GAAP%20Financial%20Measures) The Non-GAAP EBITDA loss improved significantly, while the Adjusted Non-GAAP EBITDA loss remained relatively stable year-over-year Q2 2025 Non-GAAP EBITDA Loss | Metric | Q2 2025 | Q2 2024 | YoY Change | Source | | :----- | :------ | :------ | :--------- | :----- | | Non-GAAP EBITDA Loss | $5.8 million | $22.3 million (adjusted) | -74.0% | [18] | | Adjusted Non-GAAP EBITDA Loss | $5.5 million | $5.2 million | +5.8% | [19] | [Liquidity and Capital Structure](index=2&type=section&id=Liquidity%20and%20Capital%20Structure) [Cash and Securities](index=2&type=section&id=3.1.%20Cash%20and%20Securities) Zomedica maintained a strong liquidity position with $59.1 million in cash, cash equivalents, and available-for-sale securities Liquidity as of June 30, 2025 | Metric | Amount | | :----- | :----- | | Cash, Cash Equivalents, and Available-for-Sale Securities | $59.1 million | [Outstanding Share Capital](index=2&type=section&id=3.2.%20Outstanding%20Share%20Capital) As of June 30, 2025, the company had approximately 980 million common shares issued and outstanding Outstanding Common Shares as of June 30, 2025 | Metric | Amount | | :----- | :----- | | Common Shares Issued and Outstanding | 979,949,668 | [Company Profile and Additional Information](index=3&type=section&id=Company%20Profile%20and%20Additional%20Information) [About Zomedica](index=3&type=section&id=4.1.%20About%20Zomedica) Zomedica is a veterinary health company providing innovative solutions for animals, targeting a U.S. market exceeding $2 billion - Zomedica is a leading equine and companion animal healthcare company dedicated to improving animal health by providing veterinarians innovative therapeutic and diagnostic solutions[25](index=25&type=chunk) - Key products include **PulseVet®** shock wave system, **Assisi® Loop**, **TRUFORMA®** diagnostic platform, **TRUVIEW®** digital cytology system, **VETGuardian®** no-touch monitoring system, and **VETIGEL®** hemostatic gel[25](index=25&type=chunk) - The total addressable market in the U.S. for Zomedica's products **exceeds $2 billion**[25](index=25&type=chunk) - Strategic focus areas include advancing product offerings, leveraging strategic acquisitions, and expanding internationally[25](index=25&type=chunk) [Investor Relations & Communications](index=3&type=section&id=4.2.%20Investor%20Relations%20%26%20Communications) The company will host a webinar to discuss its Q2 financial performance and has provided contact details for investor inquiries - Zomedica will host its 'Fourth Friday at Four Webinar' on **Friday, August 22, 2025, at 4:00 PM ET**, to review and discuss its second-quarter financial performance[23](index=23&type=chunk) - Investor Relations contact: investors@zomedica.com, 1-734-369-2555[33](index=33&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=4.3.%20Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section disclaims that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially - Forward-looking information is frequently characterized by words such as 'plan', 'expect', 'project', 'intend', 'believe', 'anticipate', 'estimate' and other similar words, or statements that certain events or conditions 'may' or 'will' occur[27](index=27&type=chunk) - Forward-looking information is based on the opinions and estimates of management at the date the statements are made, including assumptions with respect to economic growth, demand for products, and the company's ability to produce and sell its products[28](index=28&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking information, as actual events or results could differ materially due to various risks and uncertainties[29](index=29&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) [Non-GAAP Measures Definitions and Reconciliations](index=4&type=section&id=4.4.%20Non-GAAP%20Measures%20Definitions%20and%20Reconciliations) This section defines Non-GAAP EBITDA and Adjusted Non-GAAP EBITDA and provides detailed reconciliations to their closest U.S. GAAP equivalents - Non-GAAP EBITDA and Adjusted Non-GAAP EBITDA are not recognized terms under U.S. GAAP and are used by management to evaluate operating performance and assist investors in evaluating Zomedica's on-going operations[34](index=34&type=chunk) - **Non-GAAP EBITDA** is defined as net loss and comprehensive loss excluding amortization, depreciation, non-cash stock compensation, and taxes while reversing out the benefits derived from net interest income[35](index=35&type=chunk) - **Adjusted Non-GAAP EBITDA** is defined as Non-GAAP EBITDA, excluding impairment charges and non-recurring items such as specialized accounting, tax, and audit services, new facility integration/start-up costs, and other one-time items[35](index=35&type=chunk) Reconciliation of Non-GAAP Financial Measures (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net loss and comprehensive loss | $(7,353) | $(23,980) | | Amortization expense | 1,412 | 1,626 | | Depreciation expense | 509 | 351 | | Stock-compensation expense | 260 | 858 | | Interest income | (629) | (1,038) | | Income tax benefit | 12 | (143) | | **Non-GAAP EBITDA loss** | **$(5,789)** | **$(22,326)** | | Impairment expense | - | 16,024 | | Proforma adjustments (1) | 279 | 1,083 | | **Adjusted Non-GAAP EBITDA loss** | **$(5,510)** | **$(5,219)** | (1) Proforma adjustments for the three months ended June 30, 2025 included $263 of one-time general and administrative expenses and $16 of one-time selling and marketing expenses. Reconciliation of Non-GAAP Financial Measures (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net loss and comprehensive loss | $(71,118) | $(33,203) | | Amortization expense | 3,105 | 3,223 | | Depreciation expense | 1,030 | 685 | | Stock-compensation expense | 878 | 1,959 | | Interest income | (1,359) | (2,131) | | Income tax benefit | (45) | (309) | | **Non-GAAP EBITDA loss** | **$(67,509)** | **$(29,776)** | | Impairment expense | 55,833 | 16,024 | | (1) Proforma adjustments | 422 | 3,276 | | **Adjusted Non-GAAP EBITDA loss** | **$(11,254)** | **$(10,476)** | (1) Proforma adjustments for the six months ended June 30, 2025 included $417 of one-time general and administrative expenses and $5 of one-time selling and marketing expenses.

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and results of operations [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Red Violet, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and notes, for Q2 and H1 2025 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20consolidated%20balance%20sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $38,848 | $36,504 | | Total current assets | $50,796 | $46,192 | | Total assets | $104,834 | $98,531 | | **Liabilities & Equity** | | | | Total current liabilities | $5,569 | $10,307 | | Total liabilities | $8,628 | $11,899 | | Total shareholders' equity | $96,206 | $86,632 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20consolidated%20statements%20of%20operations) This section outlines the company's financial performance, including revenue, income from operations, net income, and diluted EPS for Q2 and H1 2025 and 2024 Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $21,774 | $19,056 | $43,777 | $36,567 | | Income from operations | $2,751 | $3,068 | $6,962 | $5,051 | | Net income | $2,686 | $2,637 | $6,126 | $4,421 | | Diluted EPS | $0.18 | $0.19 | $0.42 | $0.31 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20consolidated%20statements%20of%20cash%20flows) This section details the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $12,488 | $10,022 | | Net cash used in investing activities | ($5,236) | ($4,855) | | Net cash used in financing activities | ($4,908) | ($6,256) | | **Net increase (decrease) in cash** | **$2,344** | **($1,089)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20condensed%20consolidated%20financial%20statements) This section provides detailed explanations of significant accounting policies, revenue recognition, income taxes, and other material financial disclosures - For Q2 2025, **77% of total revenue** was from customers with pricing contracts, compared to 74% in Q2 2024. The remaining revenue was from transactional customers[37](index=37&type=chunk) - As of June 30, 2025, the company expects to recognize **$19.9 million in future revenue** from unsatisfied performance obligations related to long-term pricing contracts[39](index=39&type=chunk) - The effective income tax rate was **13% for Q2 2025** and **19% for H1 2025**, compared to 22% and 23% for the same periods in 2024, respectively. The decrease in 2025 is primarily due to the benefit of R&D tax credits[42](index=42&type=chunk)[43](index=43&type=chunk) - A special cash dividend of **$0.30 per share**, totaling approximately **$4.2 million**, was paid on February 14, 2025[48](index=48&type=chunk) - As of June 30, 2025, the company has material capital commitments of **$44.0 million** under data licensing and cloud service agreements[65](index=65&type=chunk)[131](index=131&type=chunk) - The company is a defendant in a lawsuit filed by Atlas Data Privacy Corporation concerning compliance with New Jersey's "Daniel's Law." The company is vigorously defending itself and anticipates its insurer will cover defense costs and potential liability, subject to policy limits[67](index=67&type=chunk)[68](index=68&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the company's financial condition and results of operations for Q2 and H1 2025, covering performance drivers, liquidity, and non-GAAP reconciliations [Overview](index=18&type=section&id=Overview) This section provides an overview of the company's business model, identity intelligence solutions, and key operational metrics including customer and user growth - The company delivers identity intelligence solutions through its AI/ML-driven platform, CORE™, marketed primarily under two brands: IDI™ for various industries and FOREWARN® for the real estate industry[72](index=72&type=chunk)[74](index=74&type=chunk) Customer and User Growth (Year-over-Year) | Brand | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | IDI | Billable Customers | 9,549 | 8,477 | | FOREWARN | Users | 346,671 | 263,876 | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section details the company's financial performance, including revenue, expenses, and net income, for Q2 and H1 2025 compared to the prior year Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $21.8 | $19.1 | +14% | | Cost of Revenue | $3.5 | $3.5 | 0% | | Sales & Marketing Exp. | $5.6 | $4.4 | +28% | | General & Admin Exp. | $7.3 | $5.8 | +26% | | Net Income | $2.7 | $2.6 | +2% | - The **14% revenue growth in Q2 2025** was driven by an **18% increase in revenue from existing customers**, which offset a 19% decrease from new customers. Q2 2024 revenue included **$1.0 million in one-time transactional revenue** not present in Q2 2025[91](index=91&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk) H1 2025 vs H1 2024 Performance (in millions) | Metric | H1 2025 (in millions) | H1 2024 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $43.8 | $36.6 | +20% | | Cost of Revenue | $7.2 | $7.2 | 0% | | Sales & Marketing Exp. | $11.0 | $8.1 | +36% | | General & Admin Exp. | $13.4 | $11.5 | +16% | | Net Income | $6.1 | $4.4 | +39% | - The **20% revenue growth in H1 2025** was driven by a **28% increase from new customers** and a **19% increase from existing customers**[107](index=107&type=chunk)[111](index=111&type=chunk) [Use and Reconciliation of Non-GAAP Financial Measures](index=22&type=section&id=Use%20and%20Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP financial measures like Adjusted EBITDA and provides their reconciliation to GAAP equivalents - Management uses non-GAAP metrics such as **adjusted EBITDA**, **adjusted net income**, and **free cash flow** to evaluate financial performance, believing they provide useful information by eliminating the impact of certain non-cash or non-recurring items[82](index=82&type=chunk)[88](index=88&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net income | $2,686 | $2,637 | $6,126 | $4,421 | | Adjustments | $4,914 | $4,174 | $9,842 | $8,079 | | **Adjusted EBITDA** | **$7,600** | **$6,811** | **$15,968** | **$12,500** | | Adjusted EBITDA margin | 35% | 36% | 36% | 34% | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, operating cash flows, and capital commitments, outlining its ability to fund future operations - As of June 30, 2025, the company had **$38.8 million in cash and cash equivalents** and **$96.2 million in total shareholders' equity**[132](index=132&type=chunk) - Net cash provided by operating activities was **$12.5 million for the first six months of 2025**, an increase from $10.0 million in the same period of 2024[127](index=127&type=chunk)[129](index=129&type=chunk) - Management believes that existing cash and projected cash flows from operations will be sufficient to fund operations and capital expenditures for at least the next twelve months[133](index=133&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Red Violet, Inc. is not required to provide the information for this item - The company is exempt from this disclosure requirement due to its status as a smaller reporting company[138](index=138&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[140](index=140&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[141](index=141&type=chunk) PART II - OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other corporate disclosures [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 of the financial statements for details on legal proceedings, specifically a lawsuit regarding New Jersey's "Daniel's Law" - Information regarding legal proceedings is detailed in Note 11 of the financial statements[143](index=143&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[144](index=144&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common stock was repurchased in Q2 2025 under the Stock Repurchase Program, with $4.6 million remaining for future repurchases - No common stock was repurchased in Q2 2025 under the authorized Stock Repurchase Program[146](index=146&type=chunk) - The approximate dollar value of shares that may yet be purchased under the program is **$4.6 million**[146](index=146&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) James P. Reilly was appointed Principal Operating Officer effective August 1, 2025, and no officers or directors had Rule 10b5-1 trading plans - Effective August 1, 2025, James P. Reilly was appointed as the company's Principal Operating Officer[150](index=150&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL data files - The report includes exhibits such as the Amended and Restated 2018 Stock Incentive Plan, CEO/CFO certifications, and XBRL data[153](index=153&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q WASHINGTON, D.C. 20549 (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, 2025 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 1-9924 Citigroup Inc. (Exact name of registrant as specified in its charter) Delaware 52-1568099 (State or other jurisdiction of inco ...

PART I — FINANCIAL INFORMATION [Item 1. Condensed Financial Statements](index=7&type=section&id=Item%201.%20Condensed%20Financial%20Statements) This section presents the unaudited condensed balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes on accounting policies and key financial components [Condensed Balance Sheets](index=8&type=section&id=Condensed%20Balance%20Sheets) The balance sheet as of June 30, 2025, shows an increase in total assets to **$1.52 billion** from **$1.41 billion** at year-end 2024, primarily driven by growth in oil and natural gas properties, with total liabilities increasing to **$618.4 million** and total stockholders' equity growing to **$897.9 million** Condensed Balance Sheet Summary (in millions) | Balance Sheet Items | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Total Current Assets** | 62.4 | 50.4 | | **Net Properties and Equipment** | 1,435.2 | 1,342.1 | | **Total Assets** | **1,516.3** | **1,408.1** | | **Total Current Liabilities** | 98.3 | 105.0 | | **Revolving line of credit** | 448.0 | 385.0 | | **Total Liabilities** | **618.4** | **549.5** | | **Total Stockholders' Equity** | **897.9** | **858.6** | [Condensed Statements of Operations](index=9&type=section&id=Condensed%20Statements%20of%20Operations) For the three months ended June 30, 2025, revenues decreased to **$82.6 million** from **$99.1 million** year-over-year, while net income slightly declined to **$20.6 million** from **$22.4 million**, though for the six-month period, net income increased to **$29.7 million** from **$27.9 million** due to derivative gains Key Operational Results (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $82.6 | $99.1 | $161.7 | $193.6 | | **Income from Operations** | $23.5 | $41.8 | $45.8 | $79.4 | | **Net Income** | $20.6 | $22.4 | $29.7 | $27.9 | | **Diluted EPS** | $0.10 | $0.11 | $0.15 | $0.14 | [Condensed Statement of Stockholders' Equity](index=10&type=section&id=Condensed%20Statement%20of%20Stockholders%20Equity) Stockholders' equity increased from **$858.6 million** at the end of 2024 to **$897.9 million** as of June 30, 2025, primarily driven by net income of **$29.7 million** and a **$7.4 million** common stock issuance for the Lime Rock Acquisition Changes in Stockholders' Equity (For the Six Months Ended June 30, 2025) | Description | Amount ($) | | :--- | :--- | | **Balance, December 31, 2024** | 858,639,982 | | Common stock issuance for Lime Rock Acquisition | 7,420,811 | | Net income | 29,745,625 | | Share-based compensation | 1,690,958 | | Payments for tax withholdings, net | (953,446) | | **Balance, June 30, 2025** | **897,895,769** | [Condensed Statements of Cash Flows](index=11&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities decreased to **$61.7 million** from **$95.8 million** year-over-year, while net cash used in investing activities significantly increased to **$121.0 million** due to the Lime Rock Acquisition, leading to net cash provided by financing activities of **$57.4 million** Cash Flow Summary (For the Six Months Ended June 30) | Cash Flow Activity | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | 61,668,259 | 95,807,099 | | **Net Cash Used in Investing Activities** | (120,966,327) | (76,367,768) | | **Net Cash Provided by (Used in) Financing Activities** | 57,431,673 | (18,556,903) | | **Net (Decrease) Increase in Cash** | (1,866,395) | 882,428 | [Notes to the Condensed Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies and specific financial items, including the Lime Rock Acquisition, derivative instruments, the revolving line of credit, and the determination of a single reportable segment - The company completed the Lime Rock Acquisition on March 31, 2025, for a total consideration of **$87.7 million**, consisting of cash, common stock, and a deferred payment, with the transaction accounted for as an asset acquisition[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) - The company utilizes derivative instruments (swaps and collars) to manage commodity price risk, with the fair value of derivative assets at **$21.4 million** and liabilities at **$6.2 million** as of June 30, 2025, which are not designated as hedges for accounting purposes[103](index=103&type=chunk)[106](index=106&type=chunk)[120](index=120&type=chunk) - On June 18, 2025, the company amended its credit agreement, which has a borrowing base of **$585 million** and matures in June 2029, with **$448 million** outstanding as of June 30, 2025[122](index=122&type=chunk)[123](index=123&type=chunk)[127](index=127&type=chunk) - The company determined it has a single reportable segment, Exploration and Production, as its operations in the Permian Basin exhibit similar economic characteristics and are managed by a single chief operating decision maker group[144](index=144&type=chunk)[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The MD&A section details the company's operational and financial performance, strategic focus, and market conditions, including the Lime Rock Acquisition, ongoing drilling activities, and the impact of commodity prices on revenues and production costs [Overview and 2025 Developments](index=43&type=section&id=Overview%20and%202025%20Developments) The company focuses on oil and natural gas development in the Permian Basin, balancing debt reduction and production growth, with a major development in 2025 being the Lime Rock Acquisition and continued drilling activities - The company's primary business strategy is to balance long-term debt reduction with the development of its oil and gas properties, aiming to operate within its generated cash flow[156](index=156&type=chunk) - On March 31, 2025, the company completed the Lime Rock Acquisition, acquiring oil and gas interests in Andrews County, Texas[158](index=158&type=chunk) Drilling and Completion Activity H1 2025 | Quarter | Area | Wells Drilled | Wells Completed | | :--- | :--- | :--- | :--- | | **1Q 2025** | Northwest Shelf (Horizontal) | 4 | 4 | | | Central Basin Platform (Vertical) | 3 | 3 | | **2Q 2025** | Central Basin Platform (Horizontal) | 1 | 1 | | | Central Basin Platform (Vertical) | 1 | 1 | | **Total** | | **9** | **9** | [Results of Operations](index=46&type=section&id=Results%20of%20Operations) This sub-section provides a detailed comparison of financial results for the three and six months ended June 30, 2025, and 2024, highlighting a **17%** decrease in Q2 2025 revenues to **$82.6 million** due to a **22%** drop in average realized oil price, despite an **8%** increase in total production volume Q2 2025 vs. Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Sales** | $82.6M | $99.1M | (17)% | | **Total Production (Boe)** | 1,937,850 | 1,800,570 | 8% | | **Average Oil Price (per Bbl)** | $62.69 | $80.09 | (22)% | | **Lease Operating Expenses (LOE)** | $20.2M | $19.3M | 5% | | **Average LOE per Boe** | $10.45 | $10.72 | (3)% | H1 2025 vs. H1 2024 Performance | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Sales** | $161.7M | $193.6M | (16)% | | **Total Production (Boe)** | 3,593,109 | 3,532,627 | 2% | | **Average Oil Price (per Bbl)** | $66.17 | $77.93 | (15)% | | **Lease Operating Expenses (LOE)** | $39.9M | $37.7M | 6% | | **Average LOE per Boe** | $11.11 | $10.66 | 4% | - For Q2 2025, the company recorded a gain on derivative contracts of **$14.6 million**, a significant reversal from the **$1.8 million** loss in Q2 2024, primarily due to changes in crude oil futures prices[197](index=197&type=chunk)[199](index=199&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had no cash on hand, with net cash from operations for H1 2025 at **$61.7 million**, down from **$95.8 million** YoY, and **$448 million** outstanding on its **$585 million** borrowing base credit facility, maintaining a strategic focus on maximizing cash flow and reducing debt - Net cash provided by operating activities for H1 2025 was **$61.7 million**, a decrease from **$95.8 million** in H1 2024, primarily due to lower revenues[209](index=209&type=chunk) - As of June 30, 2025, the company had **$448 million** outstanding on its credit facility, which has a borrowing base of **$585 million** and matures in June 2029[211](index=211&type=chunk) - The company maintains a portfolio of oil and gas hedges (swaps and collars) extending into Q2 2027 to manage price risk and increase cash flow predictability[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are commodity price volatility, customer credit risk, and interest rate fluctuations, with commodity price risk actively managed through hedging and interest rate risk on its variable-rate credit facility potentially impacting annual interest expense by an estimated **$4.5 million** for a **1%** rate change - The company's major market risk is commodity price volatility for its oil and natural gas production, which it mitigates by entering into hedging arrangements[223](index=223&type=chunk)[224](index=224&type=chunk) Customer Concentration (H1 2025) | Purchaser | % of Revenues | % of A/R | | :--- | :--- | :--- | | Phillips 66 Company | 66% | 73% | | Concord Energy LLC | 13% | 10% | | NGL Crude Partners | 9% | 7% | - The company is exposed to interest rate risk on its **$448 million** of variable-rate debt, where a **1%** change in interest rates would result in an estimated **$4.5 million** change in annual interest expense[227](index=227&type=chunk)[228](index=228&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[233](index=233&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[236](index=236&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) There were no material developments in legal proceedings during the quarter ended June 30, 2025 - No material developments occurred in the company's legal proceedings during the quarter ended June 30, 2025[238](index=238&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) This section refers the reader to the company's Annual Report on Form 10-K for the year ended December 31, 2024, for a detailed discussion of risk factors, stating that the company is subject to various risks and hazards inherent in its business - For a discussion of risk factors, the report directs readers to "Item 1A. Risk Factors" in the Annual Report on Form 10-K for the year ended December 31, 2024[239](index=239&type=chunk) [Other Items (Items 2, 3, 4, 5, 6)](index=61&type=section&id=Other%20Items%20(Items%202,%203,%204,%205,%206)) This section consolidates minor items, including the incorporation by reference of a Form 8-K regarding unregistered sales of equity securities, confirmation of no defaults on senior securities or mine safety issues, and a listing of exhibits filed with the report - Information regarding unregistered sales of equity securities was previously disclosed in a Form 8-K filed on April 4, 2025, and is incorporated by reference[240](index=240&type=chunk) - The company reports no defaults upon senior securities and has no mine safety disclosures to report[241](index=241&type=chunk)[242](index=242&type=chunk) - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter[243](index=243&type=chunk)

Exhibit 99.1 • Revenue of $185.4 million, a decrease of 2.3%, yet flat giving effect to the exclusion of voluntary Laboratory consolidations • Gross profit of $53.9 million, up 5.1% or $2.6 million from $51.3 million, primarily due to an improved business mix and operating efficiencies; Gross profit margin of 29.1% as compared to 27.1%, an expansion of 200 basis points • Selling, general, and administrative ("SG&A") expenses of $39.8 million, up 10.0% or $3.6 million from $36.2 million, primarily due to for ...

[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

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Tenaya Therapeutics' unaudited condensed financial statements for the three and six months ended June 30, 2025 Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $62,671 | $4,323 | | Total current assets | $75,875 | $67,375 | | Total assets | $122,151 | $119,940 | | **Liabilities & Equity** | | | | Total current liabilities | $12,654 | $15,975 | | Total liabilities | $22,323 | $27,086 | | Accumulated deficit | $(564,558) | $(514,411) | | Total stockholders' equity | $99,828 | $92,854 | Condensed Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $17,370 | $22,649 | $38,446 | $47,704 | | General and administrative | $6,712 | $8,174 | $13,174 | $16,881 | | **Loss from operations** | **$(24,082)** | **$(30,823)** | **$(51,620)** | **$(64,585)** | | **Net loss** | **$(23,283)** | **$(29,431)** | **$(50,147)** | **$(61,659)** | | Net loss per share | $(0.14) | $(0.34) | $(0.37) | $(0.74) | Condensed Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,725) | $(52,277) | | Net cash provided by investing activities | $47,290 | $17,126 | | Net cash provided by financing activities | $49,783 | $47,341 | | **Net change in cash** | **$58,348** | **$12,190** | [Notes to Unaudited Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) Detailed notes provide context for financial statements, covering business, liquidity, accounting policies, financing, and material events - The company is a clinical-stage biotechnology firm focused on therapies for heart disease, with lead candidates TN-201, TN-401, and TN-301[27](index=27&type=chunk) - In March 2025, the company completed an underwritten offering of common stock and warrants, receiving net proceeds of approximately **$48.8 million**[29](index=29&type=chunk)[71](index=71&type=chunk) - Management believes that existing cash, investments, and available funds under its loan agreement are sufficient to fund operations for at least the next twelve months, supported by recent cost containment measures including a workforce reduction[31](index=31&type=chunk) - In January 2025, the company repriced approximately **4.1 million** employee stock options to an exercise price of **$1.21**, resulting in an incremental stock-based compensation expense of **$1.3 million**[55](index=55&type=chunk)[57](index=57&type=chunk) - A workforce reduction was initiated in March 2025, with expected aggregate charges of **$1.6 million to $2.7 million**, primarily for severance, with **$1.1 million** recognized in the first six months of 2025[84](index=84&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses business overview, clinical development of lead gene therapy candidates, financial results, liquidity, and capital resources [Overview](index=21&type=section&id=Overview) Tenaya, a clinical-stage biotech, focuses on developing heart disease therapies, with TN-201 and TN-401 gene therapies in Phase 1b/2 trials - The company's primary focus is on the clinical development of its lead gene therapy candidates, TN-201 (for HCM) and TN-401 (for ARVC)[95](index=95&type=chunk) - For the TN-201 MyPEAK-1 trial, enrollment in both dose cohorts is complete, with initial data from the higher-dose Cohort 2 expected in **Q4 2025**[97](index=97&type=chunk) - For the TN-401 RIDGE-1 trial, the first patient in the higher-dose Cohort 2 was dosed in July 2025, with initial clinical data from Cohort 1 expected in **Q4 2025**[103](index=103&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Details financial performance for Q2 and H1 2025, showing decreased operating expenses and a lower net loss due to workforce reductions Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $17,370 | $22,649 | $38,446 | $47,704 | | General and administrative | $6,712 | $8,174 | $13,174 | $16,881 | | **Total operating expenses** | **$24,082** | **$30,823** | **$51,620** | **$64,585** | - The decrease in R&D expenses for Q2 2025 was primarily driven by a **$2.6 million** reduction in manufacturing costs and a **$1.1 million** decrease in clinical trial costs, reflecting the impact of workforce reductions[124](index=124&type=chunk) - The decrease in R&D expenses for H1 2025 was primarily due to a **$3.7 million** reduction in manufacturing costs and a **$3.0 million** decrease in clinical trial costs[131](index=131&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, Tenaya held $71.7 million in cash and investments, with management confirming sufficient funds for the next twelve months - As of June 30, 2025, the company had cash, cash equivalents, and investments in marketable securities of **$71.7 million** and an accumulated deficit of **$564.6 million**[129](index=129&type=chunk) - The company believes its existing cash and available funds from its Loan Agreement with SVB will be sufficient to meet working capital needs for at least the next twelve months[138](index=138&type=chunk) - Recent financing activities include a March 2025 follow-on offering (net proceeds of **~$48.8 million**) and sales under an "at-the-market" (ATM) offering in January 2025 (net proceeds of **$0.9 million**)[134](index=134&type=chunk)[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Tenaya is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and procedures as of June 30, 2025, with no material changes in internal control over financial reporting - Management concluded that as of the end of the period, the company's disclosure controls and procedures were effective[158](index=158&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[159](index=159&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material litigation or legal proceedings that would adversely affect its business - The company is not currently involved in any material legal proceedings[162](index=162&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Outlines significant risks: early development, net losses, capital dependence, clinical trial uncertainties, manufacturing, regulatory, competition, IP, and delisting risk - The company has a limited operating history, no products approved for sale, and has incurred a significant accumulated deficit of **$564.6 million** as of June 30, 2025[166](index=166&type=chunk)[170](index=170&type=chunk) - The company requires substantial additional capital to finance operations and may be forced to delay or eliminate programs if funding is not available on acceptable terms[178](index=178&type=chunk) - The company received a notice from Nasdaq on April 15, 2025, for failing to meet the minimum bid price requirement of **$1.00** per share, and its common stock could be delisted if compliance is not regained[403](index=403&type=chunk)[405](index=405&type=chunk) - The company faces potential patent infringement claims related to its TN-201 product candidate and the use of AAV vectors, which could result in liability for damages or require obtaining a license[340](index=340&type=chunk)[341](index=341&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No previously undisclosed unregistered equity security sales occurred during the reporting period - There were no sales of unregistered equity securities during the reporting period that were not previously reported[426](index=426&type=chunk) [Item 3. Defaults Upon Senior Securities](index=85&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company [Item 4. Mine Safety Disclosures](index=85&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=86&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[432](index=432&type=chunk) [Item 6. Exhibits](index=87&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including certifications by executive officers and XBRL data files

| METLIFE | | | --- | --- | | TABLE OF CONTENTS | | | GAAP CONSOLIDATED STATEMENTS OF OPERATIONS | 2 | | CORPORATE OVERVIEW | 3 | | KEY ADJUSTED EARNINGS STATEMENT LINE ITEMS | 5 | | EXPENSE DETAIL AND RATIOS | 7 | | GAAP CONSOLIDATED BALANCE SHEETS | 8 | | SUMMARY OF ADJUSTED EARNINGS AVAILABLE TO COMMON SHAREHOLDERS | 9 | | Group Benefits | | | Statements of Adjusted Earnings Available to Common Shareholders | 10 | | Other Expenses by Major Category; and Other Information | 11 | | RIS | | | Statements of ...

Note changes in performance are relative to second quarter 2024 North Andover, Mass., August 6, 2025 -- Watts Water Technologies, Inc. (NYSE: WTS) – through its subsidiaries, one of the world's leading manufacturers and providers of plumbing, heating and water quality products and solutions – today announced results for the second quarter of 2025. Chief Executive Officer Robert J. Pagano Jr. said, "We delivered another strong quarter that surpassed our expectations as we achieved record sales, operating inc ...

WASHINGTON, DC 20549 ________________________________________________ FORM 10-Q _____________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended June 30, 2025 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: 001-38678 _____________ ...