OPAL Fuels (OPAL) - 2024 Q4 - Annual Report

Part I Part I covers the company's business operations, strategic initiatives, project portfolio, competitive landscape, regulatory environment, and associated risk factors Business OPAL Fuels Inc. is a vertically integrated company specializing in converting biogas from landfills and dairy farms into Renewable Natural Gas (RNG) and Renewable Power, also designing, building, and operating fueling stations for heavy-duty trucks Company Overview and Strategy OPAL Fuels is a leader in converting biogas into RNG and Renewable Power, with over 20 years of experience, focusing on methane reduction and market expansion - The company's multi-pronged strategy includes promoting methane reduction, expanding its industry position through strategic transactions, diversifying feedstock sources beyond landfills and dairies, and empowering customers to achieve their carbon reduction goals[22][23][24] - OPAL Fuels has over two decades of experience in the biogas-to-energy industry and over a decade in the alternative vehicle fuels industry[19][21] Business Model and Expertise The company's vertical integration across Biogas Conversion Projects and Fueling Stations is a key differentiator, enabling value capture and reducing reliance on third parties - Vertical integration across the RNG value chain allows the company to avoid value leakage and offer better terms to transportation customers[27][28] - The management team has decades of combined experience and is technology-agnostic, selecting the most suitable technology for each specific project[30][31] - New development opportunities are typically sourced from existing relationships with landfill owners and dairy developers, leveraging the company's long operating history and reputation[34] Operations and Revenue Generation OPAL's business operates in Capture and Conversion, and Dispensing and Monetization segments, with revenue primarily from Environmental Attributes and Renewable Power sales - Revenues are principally driven by the sale of Environmental Attributes (RINs, LCFS credits, ISCC Carbon Credits, RECs) generated from dispensing RNG as transportation fuel[46][47] - Other revenue sources include long-term Power Purchase Agreements (PPAs) for Renewable Power, construction and maintenance services for fueling stations, and sales of RNG as a commodity[48][49] - In 2024, the company dispensed 74 million gasoline gallon equivalents (GGEs) of RNG to the transportation market[44] Biogas Conversion Projects and Market Opportunity Biogas conversion involves collecting and purifying gas from landfills and dairy farms into RNG or Renewable Power, supported by significant market opportunities and a robust regulatory framework - The biogas conversion process typically involves two phases: biogas collection and then processing/purifying the gas into either Renewable Power or pipeline-quality RNG[50][54] - Landfill gas (LFG) offers a predictable, long-term production profile, with long-term gas rights agreements typically lasting at least 20 years[59][60] - The regulatory framework is a key market driver, with the federal RFS program creating high-value D3 RINs and state LCFS programs in California and Oregon providing additional, stackable credits[67][69][70] - According to the EPA, as of July 2023, there were 470 candidate landfills with the potential to collect a combined 343 million standard cubic feet of LFG per day, representing a significant growth opportunity[66] Project Portfolio As of December 31, 2024, OPAL Fuels operates 26 projects, including 11 RNG projects with 8.8 million MMBtus/year capacity and 15 Renewable Power projects with 105.8 MW/hour capacity RNG Projects Portfolio (as of Dec 31, 2024) | Status | Project Count | OPAL's Share of Design Capacity (MMBtus/year) | | :--- | :--- | :--- | | In Operation | 11 | 8,804,931 | | In Construction | 6 | 2,631,139 | Renewable Power Projects Portfolio (as of Dec 31, 2024) | Status | Project Count | Nameplate Capacity (MW per hour) | | :--- | :--- | :--- | | In Operation | 15 | 105.8 | | In Construction | 1 | 2.4 | - Six of the company's operating Renewable Power projects are considered candidates for future conversion to RNG projects, based on factors like LFG quantity/quality and proximity to pipeline interconnects[74][77][78] Competition and Regulation OPAL Fuels competes in a fragmented biogas market, leveraging its scale and vertical integration, while navigating extensive federal, state, and local environmental and energy regulations - The biogas market is highly fragmented, creating opportunities for consolidation by experienced and well-capitalized participants like OPAL[80][65] - The company is subject to extensive regulation, including federal RFS program rules, state LCFS programs, EPA Clean Air Act permits (NSR, Title V), and FERC regulations for wholesale electricity sales[81][82][83] - The Inflation Reduction Act (IRA) is seen as favorable for the renewable energy industry by extending and expanding incentives like the Investment Tax Credit (ITC) and Production Tax Credit (PTC), but uncertainty remains regarding its application and potential future changes[103] Facilities and Human Capital OPAL Fuels maintains corporate headquarters in White Plains, New York, with additional facilities in Minnesota and California, employing 341 full-time staff focused on safety and excellence - The company's main facilities include its headquarters in White Plains, NY, an owned facility in Oronoco, MN, and a leased facility in Rancho Cucamonga, CA[106][107][108] - As of December 31, 2024, the company had 341 full-time employees, none of whom are subject to a collective bargaining agreement[110] - Core company values are Safety, Integrity, Relationships, and Excellence[114] - OPAL Fuels is a vertically integrated leader in converting biogas into RNG and Renewable Power, and also markets and distributes RNG to heavy-duty trucking sectors[19] - The company's primary sources of biogas are landfill gas (LFG) and dairy manure[20] - OPAL's vertical integration, from production to dispensing, allows it to capture more value and offer competitive terms to transportation customers[27][28] Project Portfolio Overview (as of Dec 31, 2024) | Project Type | Status | Count | Capacity | | :--- | :--- | :--- | :--- | | RNG Projects | In Operation | 11 | 8.8 million MMBtus/year | | | In Construction | 6 | 2.6 million MMBtus/year | | Renewable Power | In Operation | 15 | 105.8 MW/hour | | | In Construction | 1 | 2.4 MW/hour | Risk Factors The company faces a wide range of risks across its business, including operational, market, financial, regulatory, and ownership-related challenges Risks Related to Business and Operations Operational success is highly dependent on biogas supply contracts, third-party infrastructure, and managing long, complex project development cycles with inherent construction and permitting risks - The company is dependent on contractual arrangements with biogas site owners and has no guarantee of the quantity or quality of biogas produced[139][142] - Reliance on third-party interconnection, transmission, and pipeline facilities creates risks of inadequate capacity or unplanned disruptions that could restrict delivery of Renewable Power and RNG[153][155] - Project development involves a long cycle (20-48 months) with significant resource commitment and risks such as construction delays, cost overruns, and permitting issues[181][183][204] - The business is exposed to operational hazards such as fire, explosion, and machinery failure, as well as cybersecurity threats and natural disasters[190][191][192] Risks Related to Market and Commercial Success Revenue is significantly exposed to volatility in Environmental Attribute and commodity prices, increasing competition for biogas rights, and the slow adoption of natural gas vehicles by commercial fleets - A reduction in the prices of Environmental Attributes (RINs, LCFS credits) could have a material adverse effect on business prospects and financial results[166] - Volatility in the prices of oil, gasoline, diesel, and natural gas can adversely affect the economic attractiveness of RNG as a vehicle fuel[167] - The company faces significant upward pricing pressure and increased competition when securing biogas rights for new projects or renewing rights for existing ones[169][171] - Success is highly dependent on the adoption of natural gas vehicles by commercial fleets, which has been slower and more limited than anticipated[218] Risks Related to Financial Performance and Corporate Structure The company faces risks from a history of losses, reliance on subsidiary distributions, potential cybersecurity incidents, and significant indebtedness, compounded by macroeconomic conditions - The company has a history of net losses and may incur additional losses in the future[236] - As a holding company, OPAL Fuels Inc.'s only material asset is its interest in OPAL Fuels LLC, making it dependent on distributions from the subsidiary to pay taxes and other expenses[245] - Cybersecurity incidents pose a significant risk, with potential for data theft, system disruption, and material costs for remediation[255][257][260] - Payments under the Tax Receivable Agreement could be accelerated in a change of control, potentially exceeding the actual tax benefits realized[249][250] Risks Related to Regulations or Governmental Actions The business is highly dependent on federal and state renewable fuel regulations and tax incentives, which are subject to frequent changes and uncertainties, potentially impacting financial performance - Operations are subject to numerous stringent EHS laws and regulations, which may expose the company to significant costs, liabilities, and potential sanctions for non-compliance[264][265] - The market for RNG and Environmental Attributes is heavily influenced by government regulations like the federal RFS and state LCFS programs, which are subject to frequent modification[271] - Uncertainty in the EPA's administration of the RFS program, including the setting of annual Renewable Volume Obligations (RVOs), can create price volatility in the RIN market[272][273] - Financial performance depends on government incentives like the Investment Tax Credit (ITC), which could be impacted by changes in tax laws, such as the interpretation or potential repeal of provisions in the Inflation Reduction Act (IRA)[287][289] Risks Related to Our Indebtedness The company's substantial indebtedness of $307.5 million and redeemable preferred non-controlling interests of $130.0 million as of December 31, 2024, limits financial flexibility and exposes it to interest rate risks and restrictive covenants Indebtedness Overview (as of Dec 31, 2024) | Category | Amount (in millions) | | :--- | :--- | | Total Indebtedness | $307.5 | | Redeemable preferred non-controlling interests | $130.0 | - Substantial debt obligations could limit financial flexibility, require dedication of significant cash flow to service debt, and make the company vulnerable to adverse economic conditions[303] - Credit facilities contain restrictive covenants that limit distributions and other activities; non-compliance could lead to default and acceleration of debt[305] Risks Related to Ownership of Our Class A Common Stock Shareholders face risks from potential dilution, stock price volatility, concentrated voting control by the majority stockholder, and reduced corporate governance disclosures as a "controlled company" and "emerging growth company" - Future sales of Class A common stock to raise capital could result in significant dilution to existing shareholders[309] - The company's majority stockholder, Mr. Mark Comora, controls 93.9% of the voting power through a dual-class stock structure, limiting the ability of other stockholders to influence corporate matters[317][318] - As a "controlled company" under Nasdaq rules, OPAL is exempt from certain corporate governance requirements, such as having a majority of independent directors[323] - The company's certificate of incorporation includes anti-takeover provisions and designates the Court of Chancery of the State of Delaware as the exclusive forum for most stockholder disputes, which could limit shareholder rights[327][337] Unresolved Staff Comments The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[341] Cybersecurity OPAL Fuels has implemented information security processes to manage cybersecurity risks, involving threat monitoring, vulnerability assessments, and third-party risk management, with oversight from the Audit Committee Risk Management and Strategy The company maintains processes to identify, assess, and manage material cybersecurity threats through monitoring, vulnerability assessments, and collaboration with third-party providers - The company has implemented an information technology security policy and risk assessment processes to identify and manage cybersecurity threats[342] - OPAL engages with third-party cybersecurity software and service providers to help identify risks and conduct penetration testing[344] Governance Cybersecurity risk management is implemented by a third-party service provider reporting to company management, with oversight from the Audit Committee of the board of directors - A third-party service provider, reporting to company management, implements and maintains cybersecurity processes[345] - The Audit Committee of the board of directors is responsible for overseeing cybersecurity risk management[346] Properties The company does not own any real property, operating from leased facilities and shared office space, with its material properties consisting of interests in RNG and Renewable Power projects - The company does not own real property; its corporate headquarters are in shared office space in White Plains, NY, and it leases facilities in Minnesota and California[348] - The company's interests in its RNG and Renewable Power projects are its only material properties[348] Legal Proceedings The company is involved in various legal proceedings, including a significant arbitration dispute with contractor CEI Builders over the Central Valley RNG projects and a lawsuit against a former development partner Central Valley Project The company is in a legal dispute with VEC Partners, Inc. (CEI), the contractor for two Central Valley RNG facilities, involving disputed change order requests and a termination for default, now in arbitration - A dispute with contractor CEI over two Central Valley RNG projects involves disputed change order requests of ~$14 million per project[350][351] - The company terminated CEI for default, and the matter is now in arbitration, with a hearing scheduled for May 2026; the performance bond surety has denied the claims[352][353][354] Former Development Partner/Construction Manager In March 2024, the company filed a lawsuit against its former development partner and construction manager, Sierra Renewable Organics Management, LLC, alleging Breach of Contract and Misrepresentation related to the Central Valley projects - The company filed a lawsuit against a former development partner for claims including Breach of Contract and Misrepresentation related to the Central Valley projects[360] Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[361] Part II Part II details the company's stock market information, management's discussion and analysis of financial performance, market risks, and internal controls Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's Class A common stock trades on Nasdaq under "OPAL", with no cash dividends paid or intended in the near term, and no unregistered sales or issuer purchases reported - Class A common stock is traded on Nasdaq under the symbol "OPAL"[363] - The company has never declared or paid cash dividends and does not intend to in the near term[366] Reserved This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations OPAL Fuels reported total revenues of $300.0 million for FY2024, a 17% increase, driven by RNG Fuel and Fuel Station Services growth, though net income attributable to Class A stockholders fell due to a non-recurring gain in 2023 Overview and Recent Developments OPAL Fuels is expanding its RNG capacity, with recent developments including an option to acquire an interest in the Wasatch food waste-to-RNG facility and an amendment to its term loan to facilitate growth - The company entered into an option agreement to purchase an interest in the Wasatch Resource Recovery facility, which converts food waste to RNG, signaling a potential diversification of feedstock[375][376][379] - On March 3, 2025, the company amended its OPAL Term Loan to ease certain financial covenants, facilitate ITC sales, and extend the delayed draw term loan availability period to March 5, 2026[380][381][382] Critical Accounting Policies and Estimates The company's financial statements rely on significant estimates for revenue recognition across diverse streams, impairment testing of goodwill and long-lived assets, fair value measurements, and income tax accounting - Revenue from Environmental Attributes (RECs, RINs, LCFS credits) is recognized at the point in time when the credits are transferred to and accepted by the buyer[389] - Revenue from fixed-price construction contracts is recognized over time based on the percentage of cost incurred to date relative to the estimated total cost[391] - Goodwill is tested for impairment annually in the fourth quarter or when triggering events occur; the 2024 quantitative assessment for the RNG Fuel segment found no impairment[395][398] - Long-lived assets are reviewed for impairment when events indicate the carrying value may not be recoverable; an impairment loss of $2.0 million was recorded on Plant, Property and Equipment for the year ended December 31, 2024[399][400] Key Factors and Trends The company's results are heavily influenced by market demand for RNG and Environmental Attributes, driven by evolving federal and state regulations, commodity price fluctuations, and seasonal factors - Demand for RNG and Environmental Attributes is heavily influenced by U.S. federal (RFS) and state (LCFS) energy regulations[410] - The EPA's 3-year RVO set in June 2023 is expected to reduce volatility in RIN pricing for the associated period[410] - The business experiences seasonality, with higher natural gas demand and prices in fall and winter months, and weather-dependent revenues from renewable electricity projects[417] Results of Operations For FY2024, total revenues increased 17% to $300.0 million, driven by RNG Fuel and Fuel Station Services, while operating income surged 201% to $21.2 million, but net income fell 89% due to a large one-time gain in 2023 Revenue by Segment (FY2024 vs. FY2023, in thousands) | Segment | 2024 | 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | RNG Fuel | $88,420 | $66,292 | $22,128 | 33% | | Fuel Station Services | $166,875 | $135,012 | $31,863 | 24% | | Renewable Power | $44,677 | $54,804 | ($10,127) | (18)% | | Total Revenues | $299,972 | $256,108 | $43,864 | 17% | - The increase in RNG Fuel revenue was primarily due to a $21.1 million increase in Environmental Attributes sales, driven by both higher prices ($9.1 million) and increased volume ($12.0 million) from new facilities[439] - Project development and start-up costs increased by $14.2 million (293%), mainly due to virtual pipeline costs for the Prince William facility and ITC transaction expenses[446] - Income from equity method investments increased by $7.7 million (140%), primarily attributable to the first full year of operations at the Emerald facility[451] Liquidity and Capital Resources As of December 31, 2024, OPAL Fuels had total liquidity of $223.6 million, comprising cash and unused credit facility capacity, which is expected to cover $194 million in anticipated capital expenditures for projects under construction Liquidity Position (as of Dec 31, 2024) | Component | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $24.3 | | Unused capacity under credit facility | $178.4 | | Unused capacity under revolver | $20.9 | | Total Liquidity | $223.6 | - The company anticipates spending approximately $194 million in capital expenditures over the next 12 months for projects under construction[482] Cash Flow Summary (FY2024 vs. FY2023, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from Operating | $33,033 | $38,269 | | Net cash used in Investing | ($134,551) | ($74,147) | | Net cash from Financing | $83,504 | $5,899 | FY2024 vs. FY2023 Financial Highlights (in thousands) | Metric | 2024 | 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $299,972 | $256,108 | $43,864 | 17% | | Operating Income | $21,222 | $7,040 | $14,182 | 201% | | Net Income | $14,325 | $127,024 | ($112,699) | (89)% | | Net Income Attributable to Class A Stockholders | $561 | $18,936 | ($18,375) | (97)% | - The 17% revenue growth was driven by a 33% increase in RNG Fuel revenue and a 24% increase in Fuel Station Services revenue, partially offset by an 18% decrease in Renewable Power revenue[437][439][440] - The significant decrease in net income was primarily due to a one-time gain of $122.9 million on the deconsolidation of VIEs (Emerald and Sapphire) in 2023[454] Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," OPAL Fuels is not required to provide detailed market risk disclosures but acknowledges exposure to Environmental Attribute and commodity pricing, interest rate, and credit risks - The company is a "smaller reporting company" and is not required to provide detailed market risk disclosures[485] - Key market risks include pricing for Environmental Attributes and commodities, interest rate changes, and counterparty credit risk[485][486] Financial Statements and Supplementary Data This section refers to the consolidated financial statements and related notes, which are included in Item 15(a) of the Annual Report - The required financial statements are contained in Item 15(a) of the report[488] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[489] Controls and Procedures Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2024, with no material changes reported in Q4 2024 Disclosure Controls and Procedures Based on an evaluation as of December 31, 2024, the company's Co-Chief Executive Officers and Chief Financial Officer concluded that the disclosure controls and procedures were effective - Management concluded that disclosure controls and procedures were effective as of December 31, 2024[491] Management's Annual Report on Internal Control over Financial Reporting Management conducted an evaluation of the effectiveness of the company's internal control over financial reporting using the COSO framework and concluded that it was effective as of December 31, 2024 - Management concluded that internal control over financial reporting was effective as of December 31, 2024[492] Other Information During the fourth quarter of 2024, no directors or executive officers adopted or terminated Rule 10b5-1 trading plans, and this section reiterates previously disclosed subsequent events - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans in Q4 2024[495] - This section repeats information on two subsequent events: the Wasatch Resource Recovery Facility option agreement and the OPAL Term Loan amendment[495][499] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[502] Part III Part III provides information on directors, executive compensation, security ownership, related party transactions, and principal accountant fees, all incorporated by reference Directors, Executive Officers and Corporate Governance Information regarding the company's directors, executive officers, and corporate governance will be incorporated by reference from the proxy statement for the 2025 annual meeting of shareholders - Information for this item is incorporated by reference from the upcoming 2025 proxy statement[504] Executive Compensation Information regarding executive compensation will be incorporated by reference from the proxy statement for the 2025 annual meeting of shareholders - Information for this item is incorporated by reference from the upcoming 2025 proxy statement[505] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership and equity compensation plans will be incorporated by reference from the proxy statement for the 2025 annual meeting of shareholders - Information for this item is incorporated by reference from the upcoming 2025 proxy statement[506] Certain Relationships and Related Transactions and Director Independence Information regarding related party transactions and director independence will be incorporated by reference from the proxy statement for the 2025 annual meeting of shareholders - Information for this item is incorporated by reference from the upcoming 2025 proxy statement[507] Principal Accountant Fees and Services Information regarding principal accountant fees and services will be incorporated by reference from the proxy statement for the 2025 annual meeting of shareholders - Information for this item is incorporated by reference from the upcoming 2025 proxy statement[508] Part IV Part IV lists the exhibits and financial statement schedules included in the Annual Report on Form 10-K Exhibits and Financial Statement Schedules This section lists the documents filed as part of the Annual Report on Form 10-K, including consolidated financial statements and an index of all exhibits - This item provides an index of all exhibits filed with the Form 10-K, including material contracts and governance documents[509] - Financial statement schedules have been omitted because they are either not applicable or the required information is already in the notes to the consolidated financial statements[510] Financial Statements and Notes This section presents the audited consolidated financial statements, including the balance sheets, statements of operations, and comprehensive notes detailing accounting policies and financial disclosures Report of Independent Registered Public Accounting Firm BDO USA, P.C. issued an unqualified audit opinion on OPAL Fuels Inc.'s consolidated financial statements for 2024 and 2023, affirming fair presentation in conformity with U.S. GAAP - The independent auditor, BDO USA, P.C., issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2024 and 2023[526] - The audit was conducted in accordance with PCAOB standards; as the company is not required to have an audit of its internal control over financial reporting, no opinion was expressed on its effectiveness[529] Consolidated Financial Statements The consolidated financial statements present OPAL Fuels Inc.'s financial position and results for FY2024 and FY2023, showing total assets grew to $881.1 million in 2024, with net income of $14.3 million Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $117,188 | $128,073 | | Property, plant, and equipment, net | $458,258 | $339,493 | | Total Assets | $881,077 | $754,609 | | Total Current Liabilities | $103,596 | $74,343 | | Total Liabilities | $416,045 | $297,124 | | Total Stockholders' (Deficit) Equity | ($147,831) | ($477,852) | Consolidated Statement of Operations Highlights (in thousands) | Account | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Total Revenues | $299,972 | $256,108 | | Operating Income | $21,222 | $7,040 | | Net Income | $14,325 | $127,024 | | Net Income Attributable to Class A Stockholders | $561 | $18,936 | | Diluted EPS | $0.02 | $0.69 | Notes to Consolidated Financial Statements The notes provide detailed information supplementing the consolidated financial statements, covering significant accounting policies, investments, debt, leases, derivatives, related party transactions, segment reporting, and legal contingencies Note 2: Summary of Significant Accounting Policies This note details the company's significant accounting policies, including revenue recognition for various streams, annual goodwill impairment testing, long-lived asset reviews, and accounting for investment tax credits - The company recognizes revenue from Environmental Attributes (RINs, LCFS) when the credits are transferred to the buyer; revenue from construction contracts is recognized over time based on percentage of completion[595][607] - Project development and startup costs, such as virtual pipeline and certification costs for new RNG projects, are expensed and presented as a separate line item in operating expenses[583] - The company accounts for investment tax credits (ITCs) using the flow-through method, recognizing them as a reduction of income tax expense in the period the credit is generated[651] Note 7: Borrowings As of December 31, 2024, total borrowings were $307.5 million, primarily from the OPAL Term Loan, a senior secured credit facility, which was amended in March 2025 to extend availability and ease covenants Outstanding Debt (as of Dec 31, 2024, in thousands) | Facility | Outstanding Principal | | :--- | :--- | | OPAL Term Loan and Revolver | $286,617 | | Sunoma Loan | $20,846 | | Total | $307,463 | - The OPAL Term Loan was restructured on September 1, 2023, into a new senior secured credit facility of up to $500 million ($450 million term loan, $50 million revolver)[683] - On March 3, 2025, the OPAL Term Loan was amended to extend the availability period for delayed draw term loans through March 5, 2026, and extend the commencement of repayment to March 31, 2026[687][689] Note 10: Related Parties The company has significant transactions with related parties, including an Administrative Services Agreement with Fortistar and a purchase and sale agreement with NextEra for Environmental Attributes, generating $107.3 million in revenue in 2024 - The company has a purchase and sale agreement with NextEra for at least 90% of its Environmental Attributes, generating $107.3 million in revenue in 2024 ($68.4 million from RNG Fuel, $38.8 million from Fuel Station Services)[762][764] - NextEra and Hillman (a Fortistar affiliate) hold redeemable preferred units in OPAL Fuels LLC with an 8% annual dividend; the redemption option for these units becomes exercisable after November 29, 2025[759][761] - The company incurred $5.9 million in fees in 2024 under service agreements with Fortistar and its affiliate for management, IT, and other administrative services[772][775] Note 11: Reportable Segments and Geographic Information OPAL Fuels operates across three segments: RNG Fuel, Fuel Station Services, and Renewable Power, with Fuel Station Services being the largest by revenue in FY2024 at $166.9 million, and all operations are U.S.-based Segment Financial Data (FY 2024, in thousands) | Segment | External Revenue | Segment Income (Loss) | Segment Assets | | :--- | :--- | :--- | :--- | | RNG Fuel | $88,420 | $17,686 | $635,927 | | Fuel Station Services | $166,875 | $33,513 | $179,304 | | Renewable Power | $44,677 | $7,065 | $30,517 | | Corporate | $— | ($52,845) | $35,329 | - The company's Co-CEOs, Adam Comora and Jon Maurer, jointly act as the Chief Operating Decision Maker (CODM) and evaluate performance based on segment net income[779] Note 15: Income Taxes For FY2024, the company recognized an income tax benefit of $8.9 million, primarily from the sale of Investment Tax Credits, but recorded a full valuation allowance of $27.0 million against net deferred tax assets - The company recorded an income tax benefit of $8.9 million in 2024, primarily from the sale of Investment Tax Credits (ITCs)[819][651] - A full valuation allowance of $27.0 million was recorded against the company's net deferred tax assets as of December 31, 2024, as realization is not considered more likely than not[821] Note 17: Commitments and Contingencies The company has various commitments and contingencies, including $15.1 million in standby letters of credit, purchase options on fueling stations, a $16.6 million tax credit guarantee, and ongoing legal proceedings related to the Central Valley RNG projects - As of December 31, 2024, the company had $15.1 million in standby letters of credit outstanding[843] - The company has guaranteed up to $16.6 million related to an $11.1 million sale of Investment Tax Credits, covering potential disallowance or recapture; this guaranteed amount decreases by 20% annually over five years[846][847] - A material legal proceeding involves a dispute with the contractor for the Central Valley RNG projects, which has been terminated for default and is now in arbitration[849][852][853]