OPAL Fuels Inc. (“OPAL Fuels” or the “Company”) (Nasdaq: OPAL),
a leading vertically integrated producer and distributor of
renewable natural gas (RNG) for use as a transportation fuel and
renewable electricity, today announced financial and operating
results for the three and nine months ended September 30, 2023.
“During the third quarter OPAL Fuels continued to make strong
progress on our long-term strategic growth plans while delivering
solid operating and financial results,” said co-CEO Adam Comora.
“Production from RNG projects in operation continues to be on
target. Many of the headwinds that we were experiencing for
projects in construction are now behind us. Additionally, we closed
on a $500 million credit facility that provides a clear funding
pathway for our RNG production projects and growing number of
company-owned fueling stations. OPAL Fuels remains well positioned
to capitalize on strengthening end markets – both upstream and
downstream – as a leading vertically integrated RNG company.”
Other significant third quarter developments include signing of
a joint venture with South Jersey Industries (SJI) to develop two
RNG projects (the first of which is Atlantic County Landfill which
recently entered construction), and commencement of operations of
the Emerald RNG Project, a joint venture with GFL where our
ownership share represents approximately 1.3 million MMBtu of
annual design capacity. The Company now has 5.2 million MMBtu of
annual design capacity online across 8 projects, more than tripling
our design capacity over the last two years, and an additional 4.4
million MMBtu of design capacity from projects currently in
construction.
“We are pleased with this quarter’s performance and remain
confident our recent achievements position us well to continue
executing on our growth plans. We have also enhanced our
disclosures with additional information regarding RNG production
and monetization. The additional disclosures should help investors
in thinking about both the near and longer-term earnings power of
the business,” said co-CEO Jonathan Maurer.
Financial Highlights
- Revenues for the three and nine months ended September 30,
2023, were $71.1 million and $169.1 million, up 7% and 0.2%
compared to same periods last year.
- Net income for the three and nine months ended September 30,
2023, was $0.2 million and $106.9 million compared to $5.4 million
and $0.6 million in the comparable periods last year.
- Basic net earnings per share attributable to Class A common
shareholders for the three and nine months ended September 30,
2023, was $(0.01) and $0.59, respectively compared to $(0.04) and
$(0.04) in the comparable periods last year.
- Based on the change in presentation described below, Adjusted
EBITDA1 for the three and nine months ended September 30, 2023, was
$16.5 million and $19.9 million compared to $17.7 million and $33.0
million in the comparable periods last year.
- After corresponding with the SEC staff, the Company has decided
to no longer include the value of stored RNG and unsold
environmental credits held for sale (“RNG Pending Monetization”) in
its presentation of Adjusted EBITDA. The Company previously
presented Adjusted EBITDA in this way to match the value of RNG
produced during the reporting period with its associated costs of
production in the same reporting period and including the value of
unsold environmental credits. The Company now presents this RNG
Pending Monetization and environmental credit sales activity in the
period with a new summary table.
_____________________________ 1 This is a non-GAAP measure. A
reconciliation of non-GAAP financial measure to comparable GAAP
measure has been provided in the financial tables included in this
press release. An explanation of this measure and how it is
calculated is also included below under the heading “Non-GAAP
Financial Measures."
- At September 30, 2023, RNG Pending Monetization totaled $33.5
million.
Operational Highlights
- The portfolio of RNG operating projects is performing well with
an average utilization of inlet gas rate of 84%, which is in line
with management’s expectations.
- The Emerald RNG project came on-line during the third quarter.
This project represents approximately 1.3 million MMBtu of annual
design capacity and brings the aggregate annual design capacity of
our portfolio of operating projects to 5.2 million MMBtu.2,3
- RNG produced was 0.7 million and 2.0 million MMBtu, for the
three and nine months ended September 30, 2023, an increase of 21%
and 26% compared to the prior-year periods.
- RNG sold as transportation fuel was 10.9 million and 30.3
million GGEs, respectively, for the three and nine months ended
September 30, 2023, an increase of 65% and 52% compared to the
prior-year periods.
- The Fuel Station Services segment sold, dispensed, and serviced
an aggregate of 33.1 million and 98.0 million GGEs of
transportation fuel for the three and nine months ended September
30, 2023, an increase of 8% and 18% compared to the prior-year
periods.
Construction Update
- OPAL Fuels’ share of annual design capacity for our six
projects in construction is approximately 4.4 million MMBtu.
- We expect the Prince William RNG project to commence commercial
operations in the first quarter of 2024. This project, owned 100%
by OPAL Fuels, represents approximately 1.7 million MMBtu of annual
design capacity.
- Regulatory permits have been granted for the Sapphire RNG
project, which is now proceeding with the physical construction
phase. We anticipate commencing commercial operations in the third
quarter of 2024. This project represents approximately 800,000
MMBtu for OPAL Fuels’ 50% ownership share of annual design
capacity.
_____________________________ 2 Design capacity is the annual
design output for each facility and may not reflect actual
production from the projects, which depends on many variables
including, but not limited to, quantity and quality of the biogas,
operational up-time of the facility, and actual productivity of the
facility. 3 Represents OPAL Fuels' proportional share with respect
to RNG projects owned with joint venture partners.
- Construction of our Polk County RNG project, owned 100% by OPAL
Fuels, continues on schedule. Regulatory permits have been granted
and we anticipate commercial operations to begin in the fourth
quarter of 2024. This project represents approximately 1.1 million
MMBtu of annual design capacity.
- Our two dairy projects in California are expected to be
commissioned in the third quarter (Hilltop) and fourth quarter
(Vander Schaaf) of 2024, respectively.4
- We announced the start of construction at the Atlantic RNG
project, the first project under our 50/50 joint venture with South
Jersey Industries (SJI), located in Egg Harbor Township, New
Jersey. This project represents approximately 0.3 million MMBtu of
annual design capacity. This project is expected to commence
commercial operations in mid-2025.
Development Update
- We continue to target placing 2.0 million MMBtu of RNG projects
(representing OPAL Fuels’ proportional ownership) into construction
by the end of 2023.
- Our Advanced Development Pipeline5 comprises 7.9 million MMBtu
of feedstock biogas per year.
_______________________________ 4 Achievement of these
commissioning dates is subject to receipt of certain permits and
successful resolution of a series of change order requests from the
Engineering, Procurement and Construction contractor responsible
for the design and construction of the projects’ facilities, which
the Company has disputed. For more information, please see the
Company’s Quarterly Report on Form 10-Q for the three months ended
September 30, 2023. 5 The Company's Advanced Development Pipeline
("ADP") comprises projects that have been qualified and are
reasonably expected to be in construction within the next twelve to
eighteen months. The MMBtu associated with these projects is
presented as anticipated design capacity. Anticipated design
capacity is the Company’s currently anticipated annual design
output for each facility and may not reflect actual production from
the projects, which depends on many variables including, but not
limited to, quantity and quality of the biogas, operational up-time
of the facility, and actual productivity of the facility.
2023 Guidance Update
As mentioned above, we no longer include the value of RNG
Pending Monetization in our presentation of Adjusted EBITDA.
- Based on the updated reporting presentation, the Company
currently estimates that Adjusted EBITDA for the full year 2023
will range between $60 and $63 million.
- At December 31, 2023, RNG Pending Monetization is expected to
range between $20-22 million.
- We expect to monetize approximately $8.5 million in ITC
credits, which is our share of the ITC credits generated by the
Emerald RNG project, in the fourth quarter, which is included in
our Adjusted EBITDA guidance.
- We expect full year 2023 capital expenditures, excluding
investments in unconsolidated entities, to total approximately $135
million. Additionally, our share of the capital expenditures for
2023 in Emerald and Sapphire for the period after deconsolidation
is expected to be approximately $25.0 million.
- RNG produced in 2023 is anticipated to range between 2.7
million MMBtu and 2.9 million MMBtu.6 RNG sold as transportation
fuel is anticipated to range between 45 million GGEs and 50 million
GGEs.7
_______________________________ 6 Reflects OPAL Fuels
proportional ownership with respect to RNG projects owned with
joint venture partners. 7 Includes volumes sold in OPAL Fuel's
proprietary dispensing network as well as third party stations that
are serviced and maintained by OPAL Fuels.
Results of Operations
($ thousands of dollars)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(Unaudited)
(Unaudited)
2023
2022
2023
2022
Revenue
RNG Fuel
$
20,088
$
18,293
$
37,468
$
48,815
Fuel Station Services
37,305
35,771
88,089
87,376
Renewable Power
13,708
12,486
43,543
32,623
Total Revenue
$
71,101
$
66,550
$
169,100
$
168,814
Net income
$
227
$
5,369
$
106,931
$
560
Adjusted EBITDA (1)
RNG Fuel
$
19,359
$
8,618
$
21,503
$
28,583
Fuel Station Services
6,420
13,199
10,813
14,368
Renewable Power
6,039
6,937
22,267
14,066
Corporate
(15,357
)
(11,039
)
(34,652
)
(23,994
)
Consolidated Adjusted EBITDA (1)
$
16,461
$
17,715
$
19,931
$
33,023
RNG Fuel volume produced (Million
MMBtus)
0.7
0.6
2.0
1.5
RNG Fuel volume sold (Million GGEs)
10.9
6.6
30.3
19.9
Total volume delivered (Million GGEs)
33.1
30.6
98.0
83.1
(1) This is a non-GAAP measure. A
reconciliation of non-GAAP financial measure to comparable GAAP
measure has been provided in the financial tables included in this
press release. An explanation of this measure and how it is
calculated is also included below under the heading “Non-GAAP
Financial Measures."
RNG Facility Capacity and Utilization Summary
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
RNG Fuel Capacity and
Utilization
Design Capacity (Million MMBtus)(1)
1.3
1.0
3.9
2.9
Volume of Inlet Gas (Million MMBtus)
0.8
0.7
2.2
1.7
Inlet Design Capacity Utilization (2)
(3)
79
%
78
%
77
%
72
%
RNG Fuel volume produced (Million
MMBtus)
0.7
0.6
2.0
1.5
Utilization of Inlet Gas % (3) (4)
84
%
85
%
85
%
87
%
(1) Design Capacity for RNG facilities is
measured as the volume of feedstock biogas that the facility is
capable of accepting at the inlet and processing during the
associated period. Design Capacity is presented as OPAL’s ownership
share (i.e., net of joint venture partners’ ownership) of the
facility and is calculated based on the number of days in the
period. New facilities that come online during a quarter are
pro-rated for the number of days in commercial operation.
(2) Inlet Design Capacity Utilization is
measured as the weighted average of Volume of Inlet Gas, divided by
the total Design Capacity. The Volume of Inlet Gas varies over time
depending on, among other factors, (i) the quantity and quality of
waste deposited at the landfill, (ii) waste management practices by
the landfill, and (iii) the construction, operations and
maintenance of the landfill gas collection system used to recover
the landfill gas. The Design Capacity for each facility will
typically be correlated to the amount of landfill gas expected to
be generated by the landfill during the term of the related gas
rights agreement. The Company expects Inlet Design Capacity
Utilization to be in the range of 75-85% on an aggregate basis over
the next several years. Typically, newer facilities perform at the
lower end of this range and demonstrate increasing utilization as
they mature.
(3) Data not available for the Company's
dairy projects, i.e., Sunoma and Biotown.
(4) Utilization of Inlet Gas is measured
as weighted average of RNG Fuel Produced divided by Volume of Inlet
Gas. Utilization of Inlet Gas varies over time depending on
availability and efficiency of the facility and the quality of
landfill gas (i.e., concentrations of methane, oxygen, nitrogen,
and other gases). The Company generally expects Utilization of
Inlet Gas to be in the range of 80% - 90%.
RNG Pending Monetization Summary
Three Months Ended
September 30, 2023
September 30, 2022
RNG
Fuel
Fuel
Station
Services
Total
RNG
Fuel
Fuel
Station
Services
Total
Stored Gas Metrics (1)
Beginning balance Stored RNG
232,434
38,861
271,295
91,681
35,386
127,067
Add: RNG production (MMBtus)
688,039
63,371
751,410
622,394
28,016
650,410
Less: Current period RNG volumes
dispensed
(656,235
)
(48,284
)
(704,519
)
(615,960
)
(15,034
)
(630,994
)
Ending Balance Stored RNG (MMBtus)
264,238
53,948
318,186
98,115
48,368
146,483
Value of ending balance Stored RNG
using quarter end price (1) (2)
$
11,846
$
6,140
$
17,986
$
4,156
$
439
$
4,595
RIN Metrics
Beginning balance
5,472
1,571
7,043
38
—
38
Add: Generated in current period
6,786
1,960
8,746
4,766
1,284
6,050
Less: Sales
(8,404
)
(2,399
)
(10,803
)
(4,804
)
(1,284
)
(6,088
)
Ending RIN credit balance (Available for
sale)
3,854
1,132
4,986
—
—
—
D3 RIN price at quarter end
$
3.02
$
3.02
3.02
$
2.77
$
2.77
$
2.77
Value of RINS using quarter end price
(2)
$
9,956
$
3,107
$
13,063
—
—
—
LCFS Metrics
Beginning balance (net share)
—
60
60
—
8
8
Add: Generated in current period
5
15
20
—
14
14
Less: Sales
(5
)
(2
)
(7
)
—
—
—
Ending LCFS credit balance (Available for
sale)
—
73
73
—
22
22
LCFS credit price at quarter end
$
74.50
$
74.50
$
74.50
$
63.75
$
63.75
$
63.75
Value of LCFSs using quarter end price
(2)
$
—
$
1,718
$
1,718
$
—
$
167
$
167
Value of RECs using quarter end
price
$
744
Other Metrics
Average realized sales price - RIN
$
2.83
$
3.23
Average realized sales price - LCFS
$
100.00
$
100.00
Total Value of RNG Pending Monetization
at quarter end
$
21,802
$
10,965
$
33,511
$
4,156
$
606
$
4,762
(1) Reflects OPAL’s ownership share of
Stored RNG (i.e., net of joint venture partners’ ownership)
including equity method investments
(2) Reflects OPAL’s ownership share of RIN
and LCFS credits (i.e., net of joint venture partners’ ownership)
including equity method investments and presented net of discounts
and any direct transaction costs such as dispensing fees,
third-party royalties and transaction costs as applicable.
Liquidity
In September we entered into a $500 million senior secured
credit facility, which provides for up to $450 million of initial
and delayed draw term loans and $50 million of revolving credit. As
of September 30, 2023, we have drawn approximately $164.1 million
under the facility.
As of September 30, 2023, our liquidity was $359.9 million,
consisting of $326.9 million of availability under the credit
facility, and $33.0 million of cash, cash equivalents, and
short-term investments.
We believe our liquidity and anticipated cash flows from
operations will be sufficient to meet our existing funding
needs.
Capital Expenditures and Investments by Unconsolidated
Entities
During the nine months ended September 30, 2023, OPAL Fuels
invested $92.3 million across RNG projects in construction and OPAL
Fuels owned fueling stations in construction as compared to $85.2
million as of the comparable period in 2022.
For the nine months ended September 30, 2023, the Company's
portion of capital expenditures in unconsolidated entities was
$14.3 million. This represents our share of capital expenditures
incurred by Paragon for the Emerald and Sapphire projects post
deconsolidation.
Earnings Call
A webcast to review OPAL Fuels’ Third Quarter 2023 results is
being held tomorrow, November 14, 2023 at 11:00AM Eastern 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/hj3yrjwj/. 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
“Environmental Attributes” refer to federal, state, and local
government incentives in the United States, provided in the form of
Renewable Identification Numbers, Renewable Energy Credits, Low
Carbon Fuel Standard credits, rebates, tax credits and other
incentives to end users, distributors, system integrators and
manufacturers of renewable energy projects that promote the use of
renewable energy.
“GGE” refers to Gasoline gallon equivalent. The conversion ratio
is 1MMBtu of natural gas equal to 7.74 GGE.
“LFG” refers to landfill gas.
“MMBtu” refers to British thermal units.
“Renewable Power” refers to electricity generated from renewable
sources.
“RNG” refers to renewable natural gas.
“D3” refers to cellulosic biofuel with a 60% GHG reduction
requirement.
“RIN” refers to Renewal Identification Numbers.
“EPA” refers to Environmental Protection Agency.
About OPAL Fuels Inc.
OPAL Fuels Inc. (Nasdaq: OPAL) is a leading vertically
integrated producer and distributor of renewable electricity and
renewable natural gas (RNG), a proven low-carbon energy source that
is rapidly decarbonizing multiple sectors including the
transportation and utility industries. OPAL Fuels delivers complete
renewable solutions to customers and production partners. With a
portfolio of 24 operating renewable fuel and renewable power
projects, OPAL Fuels is positioned to advance the clean energy
transition in support of renewable fuel for transportation, for
utilities, for powering EV charging infrastructure, and by offering
hydrogen fuel solutions. To learn more about OPAL Fuels and how it
is leading the effort to capture North America’s harmful methane
emissions and decarbonize the economy, please visit
https://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
OPAL Fuels’ (the “Company”) 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 10K filed on March 29, 2023, 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.
OPAL FUELS INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands of U.S. dollars,
except per share data)
(Unaudited)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents (includes $1,302
and $12,506 at September 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
$
15,000
$
40,394
Accounts receivable, net (includes $79 and
$966 at September 30, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
31,000
31,083
Accounts receivable, related party
—
12,421
Restricted cash - current (includes $1,232
and $6,971 at September 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
1,232
32,402
Short term investments
18,028
64,976
Fuel tax credits receivable
4,386
4,144
Contract assets
14,404
9,771
Parts inventory
11,897
7,311
Environmental credits held for sale
(includes $29 and $0 at September 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
4,339
1,674
Prepaid expense and other current assets
(includes $193 and $415 at September 30, 2023 and December 31,
2022, respectively, related to consolidated VIEs)
5,013
7,625
Derivative financial assets, current
portion
486
182
Total current assets
105,785
211,983
Capital spares
3,079
3,443
Property, plant, and equipment, net
(includes $26,684 and $73,140 at September 30, 2023 and December
31, 2022, respectively, related to consolidated VIEs)
303,690
297,323
Operating right-of-use assets
12,368
11,744
Investment in other entities
199,466
51,765
Note receivable - variable fee
component
2,178
1,942
Derivative financial assets, non-current
portion
117
954
Deferred financing costs
—
3,013
Other long-term assets
2,108
1,489
Intangible assets, net
1,700
2,167
Restricted cash - non-current (includes
$2,843 and $2,923 at September 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
5,356
4,425
Goodwill
54,608
54,608
Total assets
$
690,455
$
644,856
Liabilities and Equity
Current liabilities:
Accounts payable (includes $603 and $4,896
at September 30, 2023 and December 31, 2022, respectively, related
to consolidated VIEs)
11,309
22,679
Accounts payable, related party (includes
$1,188 and $433 at September 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
1,365
1,346
Fuel tax credits payable
3,720
3,320
Accrued payroll
8,313
8,979
Accrued capital expenses (includes $0 and
$7,821 at September 30, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
7,355
11,922
Accrued expenses and other current
liabilities (includes $602 and $646 at September 30, 2023 and
December 31, 2022, respectively, related to consolidated VIEs)
13,779
9,573
Contract liabilities
7,429
8,013
Senior Secured Credit Facility - term
loan, current portion, net of debt issuance costs
—
15,250
Senior Secured Credit Facility - working
capital facility, current portion
—
7,500
OPAL Term Loan, current portion
—
27,732
Sunoma Loan, current portion (includes
$1,739 and $380 at September 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
1,739
380
Convertible Note Payable
—
28,528
Municipality Loan
—
76
Derivative financial liability, current
portion
—
4,596
Operating lease liabilities - current
portion
625
630
Other current liabilities
—
1,085
Asset retirement obligation, current
portion
1,296
1,296
Total current liabilities
56,930
152,905
Asset retirement obligation, non-current
portion
5,267
4,960
OPAL Term Loan, net of debt issuance
costs
153,626
66,600
Sunoma Loan, net of debt issuance costs
(includes $20,402 and $21,712 at September 30, 2023 and December
31, 2022, respectively, related to consolidated VIEs)
20,402
21,712
Operating lease liabilities - non-current
portion
11,899
11,245
Earn out liabilities
4,291
8,790
Other long-term liabilities
1,163
825
Total liabilities
253,578
267,037
Commitments and contingencies
Redeemable preferred non-controlling
interests
130,000
138,142
Redeemable non-controlling interests
1,158,937
1,013,833
Stockholders' deficit
Class A common stock, $0.0001 par value,
340,000,000 shares authorized as of September 30, 2023; 29,332,333
and 29,477,766 shares, issued and outstanding at September 30, 2023
and December 31, 2022, respectively
3
3
Class B common stock, $0.0001 par value,
160,000,000 shares authorized as of September 30, 2023; None issued
and outstanding as of September 30, 2023 and December 31, 2022
—
—
Class C common stock, $0.0001 par value,
160,000,000 shares authorized as of September 30, 2023; None issued
and outstanding as of September 30, 2023 and December 31, 2022
—
—
Class D common stock, $0.0001 par value,
160,000,000 shares authorized as of September 30, 2023; 144,399,037
and 144,399,037 shares issued and outstanding at September 30, 2023
and December 31, 2022
14
14
Additional paid-in capital
—
—
Accumulated deficit
(841,417
)
(800,813
)
Accumulated other comprehensive income
70
195
Class A common stock in treasury, at cost;
1,635,783 and 0 shares at September 30, 2023 and December 31, 2022,
respectively
(11,614
)
—
Total Stockholders' deficit attributable
to the Company
(852,944
)
(800,601
)
Non-redeemable non-controlling
interests
884
26,445
Total Stockholders' deficit
(852,060
)
(774,156
)
Total liabilities, Redeemable preferred
non-controlling interests, Redeemable non-controlling interests and
Stockholders' deficit
$
690,455
$
644,856
OPAL FUELS INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars,
except per unit data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues:
RNG fuel (includes revenues from related
party of $18,782 and $15,481 for the three months ended September
30, 2023 and 2022, respectively; $32,909 and $36,326 for the nine
months ended September 30, 2023 and 2022, respectively)
$
20,088
$
18,293
$
37,468
$
48,815
Fuel station services (includes revenues
from related party of $6,942 and $3,855 for the three months ended
September 30, 2023 and 2022, respectively; $10,875 and $12,698 for
the nine months ended September 30, 2023 and 2022,
respectively)
37,305
35,771
88,089
87,376
Renewable Power (includes revenues from
related party of $1,732 and $927 for the three months ended
September 30, 2023 and 2022, respectively; $5,006 and $3,196, for
the nine months ended September 30, 2023 and 2022,
respectively)
13,708
12,486
43,543
32,623
Total revenues
71,101
66,550
169,100
168,814
Operating expenses:
Cost of sales - RNG fuel
8,896
10,872
24,303
27,043
Cost of sales - Fuel station services
31,887
30,837
79,655
74,130
Cost of sales - Renewable Power
11,112
7,645
28,251
23,593
Selling, general, and administrative
13,594
15,751
41,729
34,561
Depreciation, amortization, and
accretion
3,739
3,380
10,934
10,101
Total expenses
69,228
68,485
184,872
169,428
Operating income (loss)
1,873
(1,935
)
(15,772
)
(614
)
Other (expense) income:
Interest and financing expense, net
(2,885
)
(790
)
(4,482
)
(7,212
)
Loss on debt extinguishment
(953
)
—
(2,848
)
—
Change in fair value of derivative
instruments, net
(138
)
(1,908
)
4,955
(1,580
)
Other income
604
6,308
123,645
6,308
Income from equity method investments
1,726
3,694
1,433
3,658
Income before provision for income
taxes
227
5,369
106,931
560
Provision for income taxes
—
—
—
—
Net income
227
5,369
106,931
560
Net (loss) income attributable to
redeemable non-controlling interests
(2,104
)
4,161
83,123
(2,584
)
Net loss attributable to non-redeemable
non-controlling interests
(51
)
(325
)
(531
)
(824
)
Dividends on Redeemable preferred
non-controlling interests (1)
2,782
2,658
8,394
5,093
Net (loss) income attributable to Class A
common stockholders
$
(400
)
$
(1,125
)
$
15,945
$
(1,125
)
Weighted average shares outstanding of
Class A common stock:
Basic
26,978,969
25,671,390
27,110,953
25,671,390
Diluted
26,978,969
25,823,772
27,683,855
25,823,772
Per share amounts:
Basic
$
(0.01
)
$
(0.04
)
$
0.59
$
(0.04
)
Diluted
$
(0.01
)
$
(0.06
)
$
0.58
$
(0.06
)
OPAL FUELS INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands of U.S.
dollars)
(Unaudited)
Nine Months Ended
September 30,
(in thousands)
2023
2022
Net cash provided by (used in) from
operating activities
$
4,827
$
(22,004
)
Net cash used in from investing
activities
(44,918
)
(219,215
)
Net cash (used in) provided by from
financing activities
(15,542
)
270,525
Net (decrease) increase in cash,
restricted cash, and cash equivalents
$
(55,633
)
$
29,306
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 measure adjusts net income for
realized and unrealized gain on interest rate swaps, net loss
attributable to non-redeemable non-controlling interests,
transaction costs and one-time non-recurring charges, non-cash
charges, gain on deconsolidation of VIEs, amortization of basis
differences in equity method investments, major maintenance for
Renewable Power and unrealized loss (gain) for derivative
instruments. Management believes this non-GAAP 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.
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. Adjusted EBITDA is not a recognized term under
GAAP and does not purport to be an alternative to GAAP net income
or any other GAAP measure as an indicator of operating performance.
Moreover, because not all companies use identical measures and
calculations, the Company’s presentation of Adjusted EBITDA may not
be comparable to other similarly titled measures used by other
companies.
The following tables presents the reconciliation of our Net
income (loss) to Adjusted EBITDA:
Reconciliation of GAAP Net
income to Adjusted EBITDA
For the Three and Nine Months
Ended September 30, 2023 and 2022
(In thousands of
dollars)
Three Months Ended September
30, 2023
Nine Months Ended September
30, 2023
RNG Fuel
Fuel
Station
Services
Renewable
Power
Corporate
Total
RNG Fuel
Fuel
Station
Services
Renewable
Power
Corporate
Total
Net income (loss) (1)
$
12,547
$
5,530
$
983
$
(18,833
)
$
227
$
9,477
$
7,429
$
10,584
$
79,441
$
106,931
Adjustments to reconcile net income (loss)
to Adjusted EBITDA
Interest and financing expense, net
3,243
(27
)
2
(333
)
2,885
696
(120
)
260
3,646
4,482
Loss on debt extinguishment (2)
—
—
—
953
953
—
—
—
2,848
2,848
Net loss attributable to non-redeemable
non-controlling interests
51
—
—
—
51
531
—
—
—
531
Depreciation, amortization and
accretion
1,325
917
1,488
9
3,739
3,954
2,555
4,389
36
10,934
Adjustments to reflect Adjusted EBITDA
from equity method investments (3)
1,346
—
—
—
1,346
3,254
—
—
—
3,254
Loss on warrant exchange
—
—
—
—
—
—
—
—
338
338
Unrealized (gain) loss on derivative
instruments (4)
—
—
29
138
167
—
—
(733
)
(4006
)
(4,739
)
Non-cash charges (5)
—
—
—
1,922
1,922
—
—
—
4,880
4,880
One-time non-recurring charges (6)
847
—
1,291
787
2,925
3,591
949
1,291
1,038
6,869
Major maintenance for Renewable Power
—
—
2,246
—
2,246
—
—
6,476
—
6,476
Gain on deconsolidation of VIEs
—
—
—
—
—
—
—
—
(122,873
)
(122,873
)
Adjusted EBITDA
$
19,359
$
6,420
$
6,039
$
(15,357
)
$
16,461
$
21,503
$
10,813
$
22,267
$
(34,652
)
$
19,931
Three Months Ended September
30, 2022
Nine Months Ended September
30, 2022
RNG Fuel
Fuel
Station
Services
Renewable
Power
Corporate
Total
RNG Fuel
Fuel
Station
Services
Renewable
Power
Corporate
Total
Net income (loss) (1)
$
8,213
$
12,774
$
3,483
$
(19,101
)
$
5,369
$
24,283
$
13,724
$
1,314
$
(38,761
)
$
560
Adjustments to reconcile net income (loss)
to Adjusted EBITDA
Interest and financing expense, net
189
14
1,440
(853
)
790
240
28
3,559
3,385
7,212
Net loss attributable to non-redeemable
non-controlling interests
325
—
—
—
325
824
—
—
—
824
Depreciation, amortization and
accretion
1,762
411
1,176
31
3,380
5,107
616
4,283
95
10,101
Adjustments to reflect Adjusted EBITDA
from equity method investments (3)
978
—
—
—
978
978
—
—
—
978
Unrealized (gain) loss on derivative
instruments (4)
—
—
(1,012
)
2,103
1,091
—
—
252
2,103
2,355
Non-cash charges (5)
—
—
—
867
867
—
—
—
1,594
1,594
One-time non-recurring charges (6)
2,911
—
5,914
8,825
2,911
—
—
7,590
10,501
Gain on repayment of Note Receivable and
reversal of liability to non-redeemable non-controlling
interest
(5,760
)
—
—
—
(5,760
)
(5,760
)
—
—
—
(5,760
)
Major maintenance for Renewable Power
—
—
1,850
—
1,850
—
—
4,658
—
4,658
Adjusted EBITDA
$
8,618
$
13,199
$
6,937
$
(11,039
)
$
17,715
$
28,583
$
14,368
$
14,066
$
(23,994
)
$
33,023
(1) Net income (loss) by segment is
included in our quarterly report on Form 10 Q. Net income for RNG
Fuel includes our portion of net loss on our equity method
investments.
(2) Loss on debt extinguishment relates to
assignment of our senior secured credit facility to Paragon and
debt restructuring related to OPAL Term Loan.
(3) Includes depreciation, amortization
and accretion on equity method investments.
(4) Unrealized loss on derivative
instruments includes change in fair value of interest rate swaps,
commodity swaps, earnout liabilities and put option on a forward
purchase agreement.
(5) Non-cash charges include stock-based
compensation expense, certain expenses included in selling, general
and administrative expenses relating to employee benefit accruals,
inventory write down charges included in cost of sales - RNG fuel
and loss on disposal of assets.
(6) One-time non-recurring charges include
certain expenses related to development expenses on our RNG
facilities such as lease expenses and virtual pipe line costs,
incurred during construction phase that could not be capitalized
per GAAP and fees paid in connection with warrant exchange for the
three and nine months ended September 30, 2023. One-time
non-recurring charges includes one time transaction costs relating
to the Business Combination for the three and nine months ended
September 30, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231113682088/en/
Investors Todd Firestone Vice President Investor
Relations & Corporate Development 914-705-4001
investors@opalfuels.com
Media ICR, Inc. OPALFuelsPR@icrinc.com
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