• Adjusted EBITDA: Approximately $19 million for Q2 2024, up from $5.1 million in Q2 2023.
• Revenue: $71 million for Q2 2024, compared to $55 million in Q2 2023.
• Net Income: Approximately $1.9 million for Q2 2024, compared to $114.1 million in Q2 2023.
• RNG Production: 0.9 million MMBTUs for Q2 2024, up from 0.6 million MMBTUs in Q2 2023.
• Fuel Station Services Revenue: $39.3 million for Q2 2024, compared to $30.0 million in Q2 2023.
• Renewable Power Revenue: $12.2 million for Q2 2024, down from $14.5 million in Q2 2023.
• Capital Expenditures: Approximately $28.5 million for Q2 2024.
• Liquidity: Approximately $302 million as of June 30, 2024.
• RNG Production Guidance: Revised to 4.0 million to 4.4 million MMBTUs for 2024.

• Warning! GuruFocus has detected 8 Warning Signs with OPAL.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• OPAL Fuels Inc (NASDAQ:OPAL) reported solid second-quarter results, with adjusted EBITDA of approximately $19 million, showing sequential growth.
• The company is on track with its strategic growth objectives, including the construction of new RNG projects like Burlington County and Cottonwood.
• OPAL Fuels Inc (NASDAQ:OPAL) has received EPA certification for its Prince William project, allowing RIN sales to begin in the third quarter.
• The fuel station services segment is performing well, with expected adjusted EBITDA growth of 75% to 90% in 2024 compared to 2023.
• The company maintains a strong liquidity position with approximately $302 million available, supporting its growth and operational needs.

Negative Points

• RNG production guidance for 2024 has been lowered to 4.0 million to 4.4 million MMBTUs from the previous range of 4.4 million to 4.8 million MMBTUs.
• Net income for the second quarter was significantly lower at $1.9 million compared to $114.1 million in the same quarter of 2023, primarily due to a one-time gain last year.
• Renewable power revenues decreased to $12.2 million from $14.5 million in the second quarter of 2023, due to the use of gas in RNG facilities.
• The company faces potential regulatory uncertainties, such as the impact of EPA's Phase 3 truck regulations on RNG adoption in heavy-duty trucking.
• There are challenges in ramping up production at new facilities, such as the Prince William project, which may affect short-term production targets.

Q & A Highlights

Q: You maintained the full-year EBITDA guidance, but the RNG fuel production number is coming down. Could you talk about the moving parts and what's the offset? A: Adam Comora, Co-CEO: The original guidance was based on 4.4 to 4.8 million MMBTUs of production with a $3 RIN price. The adjusted EBITDA guidance of $90 million to $100 million remains because the RIN price is stronger than expected, offsetting the production shortfall. We've sold forward the majority of our RIN production for this year.

Q: Are there any incremental opportunities for selling RNG into non-transportation markets? A: Adam Comora, Co-CEO: There are increasing opportunities in new end markets like marine fuel and potential export markets to Europe. However, the discount to the transportation fuel market is still too great, so we haven't engaged in those markets yet. We continue to focus on the transportation fuel offtake market.

Q: As you grow your RNG upstream production, will you grow your service station business in tandem? A: Adam Comora, Co-CEO: We are excited about both upstream RNG assets and downstream fuel station business. The fuel station business is attractive on its own, with good returns on capital. We will continue to grow this business even if we find other offtake markets for RNG.

Q: Can you remind us of the maintenance CapEx for your current RNG portfolio? A: Scott Contino, Interim CFO: Maintenance CapEx for renewable power is around $10 million a year. For RNG projects, it's much less, as most projects are new. The discretionary free cash flow conversion from EBITDA is high, and we plan to illustrate this better to investors.

Q: Do you have an update on the ITC and any potential risks with a change in administration? A: Adam Comora, Co-CEO: We expect a final rule soon that will likely include our RNG projects for the saleable ITC credit. There's bipartisan support for this tax credit, so we don't see significant risk from a change in administration.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.