OPAL Fuels (US:OPAL)2023-11-14 20:25Financial Data and Key Metrics Changes - Revenue in Q3 2023 was $71 million, up from $55 million in Q2 2023, driven by the sale of 8.4 million RINs at an average price of $2.83 per gallon [45][46] - Adjusted EBITDA for Q3 2023 was $16.5 million, impacted by $1.6 million in project ramp-up expenses and other non-capitalized fees [22][24] - Net income for Q3 2023 was $0.2 million compared to $114.1 million in Q2 2023, with the previous quarter's figure including a one-time gain [45] Business Line Data and Key Metrics Changes - RNG production for the nine months ended September 30, 2023, was 2.0 million MMBtus, a one-third increase from the same period last year [15] - Renewable Power revenues decreased to $13.7 million in Q3 from $14.5 million in Q2, primarily due to reduced revenues from Arbor Hills as Emerald came online [23] - The Fuel Station Services segment dispensed 33.1 million GGEs in Q3, with revenues increasing to $37.3 million from $30 million in Q2, driven by increased RIN sales [46] Market Data and Key Metrics Changes - The company closed a $500 million credit facility in September 2023, enhancing liquidity to support growth plans [6][47] - RIN prices have strengthened to around $3.50 per gallon, with expectations for continued support from supply-demand dynamics [33][64] - As of September 30, 2023, liquidity was $360 million, consisting of $327 million available under the credit facility and $33 million in cash [24] Company Strategy and Development Direction - The company aims to build and operate best-in-class RNG facilities to provide reliable and cost-effective RNG solutions, contributing to the displacement of fossil fuels and climate change mitigation [49] - A joint venture with South Jersey Industries was announced to construct and operate RNG facilities, with the first project expected to commence operations in mid-2025 [32] - The company is focusing on enhancing disclosures regarding production capacity metrics to provide clarity on growth potential [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational progress of projects like Emerald and Atlantic, with expectations for continued growth in RNG production [36][74] - The company noted that construction delays have been addressed with the acquisition of major permits, increasing certainty in project completion timelines [17] - Management remains optimistic about the future of the RNG market, citing strong demand and supportive regulatory frameworks [64][89] Other Important Information - The company has separated the reporting of RNG pending monetization from adjusted EBITDA to provide clearer financial insights [34][21] - The company anticipates full-year 2023 adjusted EBITDA guidance in the range of $60 million to $63 million, including expected ITC sale proceeds [25] Q&A Session Summary Question: Can you discuss the drivers for the implied EBITDA ramp to $42 million in Q4? - Management indicated that the ramp includes ITC proceeds from the Emerald project and continued monetization of RINs generated [60][61] Question: How does the company plan to manage the monetization of its RIN bank? - The company plans to normalize RIN monetization strategies, focusing on forward sales as RINs are produced, with expectations for stable pricing [63][64] Question: What are the expectations for CapEx and ITC in 2024? - Specific guidance for CapEx will be provided with the full-year 2024 guidance, but the company expects to receive ITC proceeds shortly after project commissioning [93][98] Question: What impact do you foresee from the Cummins 15-liter engine on future business? - While the engine's rollout is expected to begin in late 2024, significant business development activity is anticipated over the next 12 months, with potential impacts in 2025 and beyond [78][96] Question: Can you clarify the impact of accounting changes on the 2023 EBITDA guidance? - The separation of RNG pending monetization from adjusted EBITDA is the primary driver for the new guidance, with price performance also contributing positively [101]