OPAL Fuels Reports Third Quarter 2024 Results

OPAL Fuels Inc. ("OPAL Fuels" or the "Company") (NASDAQ:OPAL), a vertically integrated leader in the capture and conversion of biogas into low carbon intensity renewable natural gas (RNG) and renewable power, today announced results for the three and nine months ended September 30, 2024.

"Our third quarter results were strong and provide momentum for this year and next," said Adam Comora, Co-CEO. "We're executing on our strategic objectives - bringing RNG projects online, putting additional projects into construction, and growing and leveraging our vertically integrated downstream business. Over the course of this year, we have successfully brought online three landfill RNG facilities, begun construction on three new landfill RNG projects, and grown our downstream business significantly," continued Comora.

"We remain in a strong position to meet our current 2024 guidance. We now have 11 RNG facilities in operation, with our share of annual design capacity of 8.8 million MMBtu – more than doubling organically over the past two years. We also have six projects in construction with an additional 2.6 million MMBtu of our share of annual design capacity. The strength of our vertically integrated business model and the use of RNG as a transportation fuel continues to yield results across the business segments. Market fundamentals and industry tailwinds remain strong for the capture of biogas and its productive use," said Jonathan Maurer, Co-CEO.

Financial Highlights

• Revenue for the three and nine months ended September 30, 2024, was $84.0 million and $219.9 million, an increase of $12.9 million, or 18%, and $50.8 million, or 30%, compared to the same periods last year.
  • Not included above, our share of revenues from equity method investments for the three and nine months ended September 30, 2024, was $11.7 million and $33.7 million, compared to $4.7 million and $10.6 million in the same periods in the prior year.
• Net income for the three and nine months ended September 30, 2024 was $17.1 million and $19.7 million, compared to $0.2 million and $106.9 million in the same periods last year.¹
• Basic and diluted net income per share attributable to Class A common shareholders for the three and nine months ended September 30, 2024 was $0.09 and $0.07, compared to basic net (loss) income per share of $(0.01) and $0.59 for the three and nine months ended September 30, 2023.¹
• Adjusted EBITDA² for the three and nine months ended September 30, 2024, was $31.1 million and $67.4 million, an increase of $14.6 million and $47.5 million compared to the same periods last year.
  • Not included above, $11.1 million of investment tax credits were sold by the Company during the third quarter resulting in net proceeds of $8.6 million.
• At September 30, 2024, RNG Pending Monetization totaled $23.1 million.

Operational Highlights

• The Sapphire RNG project, a 50/50 joint venture with GFL representing 0.8 million MMBtu of annual design capacity to OPAL Fuels, commenced commercial operations in September.
• The Polk County (Florida) RNG project, 100% owned by OPAL Fuels, commenced commercial operations in October, representing approximately 1.1 million MMBtu of annual design capacity.
• RNG produced was 1.0 million and 2.8 million MMBtu for the three and nine months ended September 30, 2024, an increase of 43% and 40% compared to the prior-year periods.
• RNG sold as transportation fuel was 19.6 million and 54.7 million GGEs for the three and nine months ended September 30, 2024, an increase of 80% and 81% compared to the prior-year periods.
• The Fuel Station Services segment sold, dispensed, and serviced an aggregate of 38.7 million and 110.3 million GGEs of transportation fuel for the three and nine months ended September 30, 2024, an increase of 15% and 13% compared to the prior year periods.

Guidance

We are maintaining our current guidance.

Construction Update

• The construction of the Atlantic RNG project is on schedule. This project represents approximately 0.33 million MMBtu for OPAL Fuels' 50% ownership share of annual design capacity.
• The construction of the Cottonwood RNG project is on schedule. This project, owned 100% by OPAL Fuels, represents approximately 0.66 million MMBtu of annual design capacity.
• The construction of the Burlington RNG project is on schedule. This project represents approximately 0.46 million MMBtu for OPAL Fuels' 50% ownership share of annual design capacity.
• The Kirby RNG project began construction in November. This project, 100% owned by OPAL represents approximately 0.66 million MMBtu of annual design capacity.

Results of Operations

Results of Operations from equity method investments

Landfill RNG Facility Capacity and Utilization Summary

RNG Pending Monetization Summary

Liquidity

As of September 30, 2024, our liquidity was $285.3 million, consisting of $254.3 million of availability under the above referenced credit facility, and $31.0 million of cash, cash equivalents, and short-term investments.

As of September 30, 2024, we have drawn approximately $231.6 million, and utilized $14.1 million of our revolver availability for letters of credit, under the $500 million senior secured credit facility we entered into in September 2023.

We believe our liquidity and anticipated cash flows from operations are sufficient to meet our existing funding needs.

Capital Expenditures

During the nine months of 2024, OPAL Fuels invested $72.8 million across RNG projects in construction and OPAL Fuels proprietary fueling stations in construction as compared to $92.3 million in the prior year.

In addition, for the nine months ended September 30, 2024, our portion of capital expenditures in unconsolidated entities was $22.8 million. This represents our share of capital expenditures incurred for the Atlantic, Burlington and Sapphire projects.

Earnings Call

A webcast to review OPAL Fuels' Third Quarter 2024 results will be held tomorrow, November 8, 2024 at 11:00 AM Eastern Daylight Time.

Materials to be discussed in the webcast will be available before the call on the Company's website.

Participants may access the call at https://edge.media-server.com/mmc/p/3tp9s5us. Investors can also listen to a webcast of the presentation on the Company's Investor Relations website at https://investors.opalfuels.com/news-events/events-presentations.

Glossary of terms

"D3" refers to cellulosic biofuel with a 60% greenhouse gas reduction requirement.

"GGE" refers to gasoline gallon equivalent. It is used to measure the total volume of RNG production that OPAL Fuels expects to dispense each year. The conversion ratio is 1MMBtu equal to 7.74 GGE.

"LCFS" refers to Low Carbon Fuel Standard or similar types of federal and state programs.

"LFG" refers to landfill gas.

"MMBtu" refers to million British thermal units.

"RECs" refers to renewable energy credits.

"Renewable Power" refers to electricity generated from renewable sources.

"RIN" refers to Renewable Identification Numbers.

"RNG" refers to renewable natural gas.

"VIEs" refers to variable interest entities.

About OPAL Fuels Inc.

OPAL Fuels Inc. (NASDAQ:OPAL) is a leader in the capture and conversion of biogas into low carbon intensity RNG and renewable electricity. OPAL Fuels is also a leader in the marketing and distribution of RNG to heavy duty trucking and other hard to de-carbonize industrial sectors. For additional information, and to learn more about OPAL Fuels and how it is leading the effort to capture North America's methane emissions and decarbonize the economy, please visit www.opalfuels.com.

Forward-Looking Statements

Certain statements in this communication may be considered forward-looking statements within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts and generally relate to future events or the Company's future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "intend," "could," "would," "project," "target," "plan," "expect," or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management's control, including but not limited to general economic conditions and other risks, uncertainties and factors set forth in the sections entitled "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in the Company's annual report on Form 10-K filed on March 15, 2024, and other filings the Company makes with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.

Disclaimer

This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy, any securities, nor shall there be any sale, issuance or transfer or securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Non-GAAP Financial Measures (Unaudited)

This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. We believe these measures provide important supplemental information to investors to use in evaluating ongoing operating results. We use these measures, together with accounting principles generally accepted in the United States ("GAAP" or "U.S. GAAP"), for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations, that when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide, give a more complete understanding of factors and trends affecting our business. We strongly encourage you to review all of our financial statements and publicly filed reports in their entirety and to not solely rely on any single non-GAAP financial measure.

Non-GAAP financial measures are limited as an analytical tool and should not be considered in isolation from, or as a substitute for, the Company's GAAP results. The Company expects to continue reporting non-GAAP financial measures, adjusting for the items described below (and/or other items that may arise in the future as the Company's management deems appropriate), and the Company expects to continue to incur expenses, charges or gains like the non-GAAP adjustments described below. Accordingly, unless expressly stated otherwise, the exclusion of these and other similar items in the presentation of non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent, or non-recurring. These Non-GAAP financial measures are not recognized terms under GAAP and do not purport to be alternatives to GAAP net income or any other GAAP measure as indicators of operating performance. Moreover, because not all companies use identical measures and calculations, the Company's presentation of Non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. We strongly encourage you to review all of our financial statements and publicly filed reports in their entirety and to not solely rely on any single non-GAAP financial measure.

Adjusted EBITDA

To supplement the Company's unaudited condensed consolidated financial statements presented in accordance with GAAP, the Company uses a non-GAAP financial measure that it calls adjusted EBITDA ("Adjusted EBITDA"). This non-GAAP financial measure adjusts net income for interest and financing expense, net, loss on debt extinguishment, net (income) loss attributable to non-redeemable non-controlling interests, depreciation, amortization and accretion expense, adjustments to reflect Adjusted EBITDA from equity method investments, loss on warrant exchange, unrealized (gain) loss on derivative instruments, non-cash charges, one-time non-recurring expenses, major maintenance on Renewable Power, gain on deconsolidation of VIEs, project development and startup costs, incremental virtual pipeline costs at Prince William RNG facility due to their temporary nature, and ITC proceeds, net of expenses.

Management believes this non-GAAP financial measure provides meaningful supplemental information about the Company's performance, for the following reasons: (1) it allows for greater transparency with respect to key metrics used by management to assess the Company's operating performance and make financial and operational decisions; (2) the measure excludes the effect of items that management believes are not directly attributable to the Company's core operating performance and may obscure trends in the business; (3) the measure better aligns revenues with expenses; and (4) the measure is used by institutional investors and the analyst community to help analyze the Company's business. In future quarters, the Company may adjust for other expenditures, charges or gains to present non-GAAP financial measures that the Company's management believes are indicative of the Company's core operating performance.

The following table presents the reconciliation of our Net loss to Adjusted EBITDA: