Montauk energy(US:MNTK)2021-08-17 04:02Financial Data and Key Metrics Changes - Total revenues for Q2 2021 were $31.7 million, an increase of $3.8 million or 13.5% compared to $27.9 million in Q2 2020, primarily driven by higher revenues recognized under counterparty sharing agreements [15] - Total general and administrative expenses were $7.3 million for Q2 2021, an increase of $3.6 million or 95% compared to $3.8 million in Q2 2020, with $2.2 million related to stock-based compensation costs [17] - Adjusted EBITDA for Q2 2021 was $5.2 million, a decrease of $3.7 million or 41.5% from $8.8 million in Q2 2020, primarily due to a $3.1 million increase in net loss [34] Business Line Data and Key Metrics Changes - Renewable natural gas (RNG) production was approximately 1.4 million MMBtu in Q2 2021, a decrease of 0.1 million MMBtu or 8.2% from 1.5 million MMBtu in Q2 2020 [19] - Revenues from the RNG segment in Q2 2021 were $27.6 million, an increase of $3.7 million or 15.6% compared to $23.9 million in Q2 2020 [21] - Revenues from renewable electricity in Q2 2021 were $4.1 million, a decrease of $0.4 million or 9.6% compared to $4.5 million in Q2 2020 [27] Market Data and Key Metrics Changes - Average pricing realized on RIN sales during Q2 2021 was $1.78, compared to $1.37 in Q2 2020, an increase of 29.9% [23] - The average D3 RIN index price for Q2 2021 was $3.06, more than double the average D3 RIN index price in Q2 2020 [23] Company Strategy and Development Direction - The company is focusing on optimizing and growing within its existing portfolio, including the Pico feedstock amendments to increase capacity and efficiency at its dairy digester cluster project [8] - The recent acquisition of business assets in North Carolina aims to address challenges in swine farming while deploying near-zero emissions technology [12] - The strategy to monetize RNG production abroad is expected to stabilize domestic attribute pricing for renewable natural gas production [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth strategy, supported by federal, state, and international incentive programs for renewable natural gas [7] - The company acknowledged the challenges faced due to equipment failures but emphasized that corrective actions have been taken to minimize recurrence [39] - Management did not provide specific forward-looking guidance on production volumes but indicated that the expectation is to recapture lost production due to non-recurring equipment failures [44] Other Important Information - The company generated $11.2 million of cash from operating activities in the first six months of 2021, a 28.8% increase from $8.7 million in the same period of 2020 [32] - As of June 30, 2021, $25.0 million was outstanding under the term loan and $36.7 million under the revolving credit facility, with $37.5 million available for borrowing [31] Q&A Session Summary Question: Clarification on production performance at McCarty - Management clarified that the equipment failures at McCarty were separate incidents, and corrective actions have been taken to prevent recurrence [39][40] Question: Expectations for normalized production rates - Management indicated that while they cannot provide specific production statistics, they expect to recapture lost production due to previous equipment failures [44] Question: Concerns about over-investment in capacity - Management stated that they have not over-invested in facilities and that there are opportunities to optimize production closer to capacity [56][57] Question: Pricing and hedging commitments - Management confirmed that approximately 50% of production for 2021 has been hedged, and they will benefit from spot prices in the latter half of the year [61][64] Question: Need for more detailed production guidance - Management acknowledged the need for transparency but emphasized that they provide historical run rates and explanations for deviations [116]