• Adjusted EBITDA: Approximately $31 million for Q3 2024, up from $16.5 million in Q3 2023.
• Revenue: $84 million for Q3 2024, compared to $71.1 million in Q3 2023.
• Net Income: $17.1 million for Q3 2024, compared to $0.2 million in Q3 2023.
• RNG Production: 1 million MMBtus for Q3 2024, a 40% increase year-over-year.
• RNG Fuel Segment Revenue: $25.9 million for Q3 2024, up from $20.1 million in Q3 2023.
• Fuel Station Services Segment Revenue: $45.4 million for Q3 2024, compared to $37.3 million in Q3 2023.
• Renewable Power Revenue: $12.8 million for Q3 2024, compared to $13.7 million in Q3 2023.
• Capital Expenditures: $95.6 million year-to-date, including $22.8 million for equity method investments.
• Liquidity: $285.3 million as of September 30, 2024, including $31 million in cash and equivalents.

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

Release Date: November 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 financial results for Q3 2024, with adjusted EBITDA reaching approximately $31 million, driven by contributions from new projects and strong environmental credit sales.
• The company successfully commissioned and brought into operation two new RNG projects, Sapphire and Polk, increasing their operational capacity to 8.8 million MMBtus.
• OPAL Fuels Inc (NASDAQ:OPAL) is on track to put at least 2 million MMBtus of initial design capacity into construction, with significant progress made on projects like Cottonwood, Burlington, and Kirby.
• The company achieved its first monetization of ITC credits, resulting in net cash proceeds of $8.6 million, and anticipates continued benefits from investment tax credits.
• OPAL Fuels Inc (NASDAQ:OPAL) maintains a strong liquidity position with $285.3 million available, ensuring sufficient funding for existing and future projects.

Negative Points

• The company faces regulatory challenges in exporting RNG to Europe due to ongoing changes in certification pathways, potentially impacting future market opportunities.
• Despite the positive outlook, OPAL Fuels Inc (NASDAQ:OPAL) acknowledges the complexities and uncertainties in the regulatory environment, particularly concerning the renewable fuel standard and potential impacts from election outcomes.
• The tightening of the dispensing market for RNG supply is causing increased marketing fees, which could impact profitability if not managed effectively.
• There is a noted challenge in achieving economies of scale for smaller projects, which may affect the financial viability of certain initiatives.
• The rollout of the 15-liter natural gas engine is slower than anticipated, which could delay potential growth in the heavy-duty trucking market.

Q & A Highlights

Q: How much risk do you see to areas like the D3 RVO and the ITC from the election results? Are there any silver linings, such as easier permitting? A: Adam Comora, Co-CEO, explained that there is bipartisan support for strong D3 RVO volumes and that the statutory objective of the renewable fuel standard supports continued growth. He emphasized that RNG is a bipartisan issue and that the election outcome could positively impact natural gas use in heavy-duty trucking.

Q: Can you share how much of your RIN production is sold forward for 2024 and 2025? When you sell RINs forward, is the price locked in at the point of sale? A: Adam Comora, Co-CEO, stated that all RINs for 2024 have been sold forward, meaning the price is locked in at the time of sale, and delivery occurs in the agreed period. This ensures price certainty despite spot market fluctuations.

Q: What are your views on the voluntary markets and opportunities for term deals with hyperscalers to decarbonize gas streams? A: Adam Comora, Co-CEO, noted that the transportation fuel market remains the highest value for RNG molecules, but there is interest in voluntary markets, especially in Europe. He highlighted the potential for renewable power from biogas to serve as baseload green electricity, which could be attractive to industrial users.

Q: Do you think M&A could pick up under the new administration, given potential regulatory changes? A: Jonathan Maurer, Co-CEO, indicated that the environment is favorable for M&A, with good transaction marks supporting private valuations. The industry is fragmented, and there is room for consolidation, with ongoing opportunities expected.

Q: Have developments like Cummins' natural gas engine production accelerated customer discussions? A: Adam Comora, Co-CEO, expressed excitement about the potential for natural gas in heavy-duty trucking. He noted that the 15-liter engine rollout could drive adoption, with fleets showing interest due to its cost-effectiveness and emission reductions compared to diesel.

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