Financial Data and Key Metrics Changes - Net income for the quarter was $114.1 million, impacted by the deconsolidation of Emerald and Sapphire projects, with an adjusted net loss of $7.8 million for the three months ended June 30, 2023 [26] - Adjusted EBITDA for the second quarter was $21.4 million, up from $8.7 million in the first quarter, primarily due to unmonetized credits sold and higher RIN prices [26][29] - The value of unsold environmental credits increased by over $16 million to $34 million [19] Business Line Data and Key Metrics Changes - In the RNG Fuel segment, there are 7 projects in operation with approximately 3.9 million MMBtu of annual nameplate capacity [21] - The Fuel Station Services segment dispensed 35.5 million GGEs in the second quarter, showing improvement compared to the first quarter [27] - Adjusted EBITDA margins improved in the fuel station service segment due to higher RIN prices and completion of construction projects [20] Market Data and Key Metrics Changes - D3 RIN prices rose from under $2 per RIN earlier in the year to just above $3 following the EPA's final set rule [40] - The company expects full-year 2023 adjusted EBITDA guidance to remain within the $85 million to $95 million range, despite production being at the low end of guidance due to project delays [29] Company Strategy and Development Direction - The company is focused on building and operating best-in-class RNG facilities to displace fossil fuels and mitigate climate change [30] - The final EPA rule supports cellulosic biofuels and renewable natural gas, providing a strong investment signal for the industry [18] - The company is optimistic about the eRIN pathway, which could incentivize smaller methane capture projects [19][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the value of ongoing projects despite permitting delays, emphasizing that these delays are a matter of timing rather than feasibility [22] - The company anticipates that production volumes will be at or modestly below previous guidance due to delays at key projects [23] - Management believes that the D3 RIN market will become less volatile, providing a more stable revenue outlook [59] Other Important Information - The company has deconsolidated its Emerald and Sapphire projects, which will now be treated as equity affiliates, impacting how adjusted EBITDA is recognized [49][100] - The company has spent $72 million in CapEx year-to-date, with expectations for continued investment in RNG projects and fuel stations [50] Q&A Session All Questions and Answers Question: Regarding 2023 EBITDA guidance and RIN pricing - Management acknowledged that while there are factors affecting timing and production volumes, the stronger RIN pricing suggests potential upside to the guidance [31][54] Question: On capital spending and liquidity outlook - Management indicated that they expect to maintain a CapEx range of $30 million to $40 million for the next few quarters, with anticipated monetization of ITC associated with projects [78][79] Question: Timing of gas production and monetization from Emerald - Management explained that there is typically a delay between going online and recognizing significant revenue, but they expect to begin monetizing credits soon [82][85] Question: Impact of eRIN pathway on advanced development pipeline - Management expressed optimism that the eRIN pathway will support smaller projects and enhance the value of existing electric projects [90] Question: Deconsolidation of GFL assets and its impact on EBITDA - Management clarified that the deconsolidation does not change the economics of the partnership, and adjusted EBITDA will still be recognized through equity pickup [100][102]
OPAL Fuels (OPAL) - 2023 Q2 - Earnings Call Transcript