Montauk energy(US:MNTK)2023-05-12 19:47Financial Data and Key Metrics Changes - Total revenues in Q1 2023 were $19.2 million, a decrease of $13 million or 40.5% compared to $32.2 million in Q1 2022, primarily due to the strategic decision not to self-market RINs from 2023 RNG production [53] - EBITDA for Q1 2023 was a loss of $9 million, a decrease of $12.8 million from EBITDA of $3.8 million in Q1 2022 [36] - Net loss for Q1 2023 increased by $2.7 million compared to the previous year, primarily due to reduced revenues from the decision not to sell RINs [36] Business Line Data and Key Metrics Changes - Renewable Natural Gas (RNG) segment revenues in Q1 2023 were $14.8 million, a decrease of $17.9 million or 54.7% compared to $32.7 million in Q1 2022 [56] - RNG production was 1.4 million MMBtu in Q1 2023, unchanged from Q1 2022 [26] - Revenues from renewable electricity facilities in Q1 2023 were approximately $4.4 million, an increase of $0.4 million or 10% compared to $4 million in Q1 2022 [32] Market Data and Key Metrics Changes - Average realized RIN price in Q1 2023 was $2.01, down 41.9% from $3.46 in Q1 2022 [57] - Average commodity pricing for natural gas in Q1 2023 was $3.42 per MMBtu, 30.9% lower than in Q1 2022 [56] - The average D3 RIN index price for Q1 2023 was $2.03, approximately 37.5% lower than the average in Q1 2022 [57] Company Strategy and Development Direction - The company made a strategic decision to delay the transfer of D3 RINs from 2023 RNG production until Q2 2023 due to expected volatility in pricing [48] - The company is focused on expanding its capacity, including the development of a new landfill gas-to-RNG facility in South Carolina expected to be operational in 2025 [19] - The company is also in late-stage negotiations to develop an RNG facility alongside its existing renewable electric generation facility in Irvine, California [52] Management's Comments on Operating Environment and Future Outlook - Management believes the reduction in RIN prices is temporary and has strategically chosen not to transfer any D3 RINs generated from 2023 production during Q1 2023 [31] - The company expects RNG production volumes for 2023 to range between 5.7 million and 6.1 million MMBTUs, with corresponding revenues between $137 million and $145 million [66] - Management expressed excitement about the potential of carbon utilization and developments in the transportation space [5] Other Important Information - The company incurred capital expenditures of approximately $13.3 million in Q1 2023, with significant investments in ongoing projects [35] - General and administrative expenses for Q1 2023 were $9.5 million, an increase of 12.6% compared to the previous year, primarily due to stock-based compensation [54] - The company reported an impairment loss of approximately $0.5 million in Q1 2023 related to a feedstock processing machine component [33] Q&A Session Summary Question: Impact of holding back RINs on EBITDA - Management confirmed that holding back RINs had an estimated impact of approximately $3 million on EBITDA for the quarter [40] Question: Confidence in future RIN prices - Management stated they do not provide guidance on future attribute prices but acknowledged the volatility impacts revenue and EBITDA expectations [41] Question: Views on developments in RNG space, particularly regarding Cummins - Management expressed excitement about the potential of eRINs and the developments in natural gas engines for transportation [70]