Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the OPAL Fuels First Quarter 2023 Earnings Call. At this time, participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today’s conference is being recorded.

to Firestone. conference like speaker to now Todd today would hand over the your I ahead. go Please

Todd Firestone

Thank you, With morning, and quarter Co-CEOs, and good Comora Ann XXXX Fuels the Adam Financial earnings first Anthony, OPAL OPAL’s conference Officer. Jonathan call. and me Chief are everyone. today Maurer; Welcome to

the our results and OPAL are Investor the replay available operating first for XX website opalfuels.com. for XXXX presentation for webcast of The at Fuels days. to are be will completion released on financial yesterday call quarter access on website. Relations the available our a and of also afternoon, results this section those call, today’s available After

statements, Before to remarks you we answers our I’d uncertainties that remind like and assumptions. involve which risks, contain to begin, forward-looking including your questions

a Forward-looking such contained is of statements from actual performance in materially differ results not guarantee are could what statements. and

presentation. on undertake our reflect of are and this circumstances Several to X to or such date not the OPAL factors differences call forward-looking statements our update date forward-looking obligation events or after contribute of and that this Fuels Slide X could the as of These does described any call. statements cause of to views reflect

nearest and will the discussion measure non-GAAP of call the EBITDA. A these is certain measures of appendix including non-GAAP definition included the release used measures, GAAP not this Additionally, contain to measures of limited of in but to adjusted presentation. and reconciliation

a for business for then of update. update quarter’s our priorities. will open on the Ann John then will operational call Adam results an commercial the development we’ll financial recent results, strategic begin today’s and and call highlights quarter, which providing give questions. the After review by and overview will

the turn now, Comora, And Fuels. call over of Adam OPAL Co-CEO to I’ll

Adam Comora

like thank quarter’s you for points highlight earnings quarter first XXXX and OPAL call. everyone, this results. here being Fuels to for I’d several morning, Good from

strategic execute First, and on to operational our we priorities. continue

consistent facilities. our were on our keeps production with from us our meet expectations RNG year track quarter operating volumes to production first Our full of and forecast

to OPAL operations, rights critical Fuels which landfill owners RNG these that and want lead gas share end, award our in with partner market absolutely grow projects feedstock and is choose and evaluate, disclosed with capital. to pipeline are details facilities to other and to to as invest to the mature they recently continues if companies on development To continues we of two advanced best-in-class X-K they pleased some filings. which and

electric projects, with announced executed recently in RNG WM We one include are Fuels projects agreements and gas to rights existing greenfield wins or RNG landfill with conversion another secured gas gas landfill projects projects where newly of new and located OPAL landfill where business two OPAL not in Florida. on which an Fuels Illinois municipality gas rights for these rights had existing Both of project. a

will to of The XXX% project expect Fuels to capacity by owned XXX,XXX OPAL we XXX,XXX MMBtu. be the range have WM annual nameplate in and it

agreement. third the to advanced the design construction during in pipeline, advanced typically pipeline and from a finalized pipeline in gas uncertain our This is work quarter. moving into interconnect and most the We timing from project are had note it completing to is included are the into development it hopeful put been important project the previously including but construction development development rights

about WM. excited project new are We this with

and continue partnership segments this longstanding a our good with to across WM hope have expand business relationship. We to

development This commercial project month in with excited the executed MMBtus gas talk Fuels the municipality schedule rights towards XXXX. XXX% about operations project end annual an construction has million X anticipated and the over starting start this of most we slightly agreement We’re be with production. also accelerated our to expect of of will capacity next OPAL Florida. own recently and to nameplate

attractive This great These a continuing our example construction find not of placing OPAL at MMBtus least in very confidence two advanced project Fuels projects is XXXX. to million previously disclosed and pipeline opportunities. meet guidance of greenfield into X was development we’ll during us our included give

recognized finalized. we and and have projects look addition, other the in giving moving to color we forward In multiple as more anticipate with that coming landfill those nationally owners forward months partners we you are

slower March, As XXXX we contrast discussed when during credit unfold as our see environmental starts to would’ve a new but XXXX a construction favorable we liked, and to pricing were environment. our were we call than in we plant experiencing continuing commodity

making lead these to we the growth beyond, we creation shareholders. long-term strong underpin in believe projects progress XXXX Fuels on and for value In XXXX, new contrast should are to which OPAL

wanted for the GAAP and our headwinds on RIN about current monetizing approach speak has XXXX, an to which our I market impact reported RINs, results. current in the As our on

our credits placed to calculation in the minted or GAAP value that investors of will what but quarter those are Ann us credits and As more on expenses sold and the are but a recorded record under the actually RNG in adjusted it important believe the allow and sold into matches a reminder, transferred. from the to stored are revenues in is for not it GAAP better produce we not highlight does go little detail minted EBITDA in LCFS do until quarter. as gas call, and dispense we RINs

language renewable a growth continues and January of for Dropping anticipated to of proposed DX around in set December fuel the rule created cellulosic production announced this proposed last XXXX of the mid-$X encourage year. much throughout to market in $X.XX the rule reiterate guiding the to of believed low the year. this biofuels had December range and in this low standard principle, was hitting the of goal Despite volumes suffered. from the too EPA were prices versus The RIN

revise with issue of the optimistic for production rule numbers has EPA affectively RINs, growth still yet will the the when obligations June. the in finalized side RINs, volume expected they they which rule, line final set DX in includes are Given RNG of not we demand higher the DX cautiously anticipated

reported clarity XXXX first Given they be in and given RIN taken a when of the of is effect slower metric the sold. inventory believe until in there GAAP to our results a finalization. credit would produced our adjusted period earnings We reduce has of we EBITDA dampening the this from results volatility view, some sales. to have in current understand quarterly our better period Holding inflating selling approach rule actual timing helpful of half better RINs is and the

projects RVO gas to the a existing be to addition new electric final on numbers, In we pathway, the material and which landfill await projects. eRIN could to rule our portfolio making finalizing final also tailwind

potential multi-year the it and smoothing await also in RVOs volatility We prices. opportunities multi-year could contracting effects RIN year-to-year of as lead to out

they and to encourage signals in to which has targets direction is to pricing, its program per on trading move stronger CARB lows pricing RIN would in and market that be gallon. Current clear heading supporting for we will remain have LCFS, pricing off compliance LCFS for per and include recently investment XXXX credit. proposed by higher the the changes now mid-$XX DX creating at CARB credit we’re On the optimistic XXXX. prices sit come begun finalized $X.XX likely to more giving LCFS demand like credits. on is incremental

multiple add new the and by strong fleets engine. how markets end Finally, I about particularly RNG continues XX talking many to want Cummins where for to testing are demand that encouraged be across liter very

transportation Although RNG adoption move market. fleets in starts the within market material to great heavy-duty this year think traction we later has the through for for potential as product the testing, expand

and heavy-duty the everyone for demand remind per priced RNG such over fuel year, the pricing uses a transportation gallons of X% would future We with billion approximately steep trucking and discounted sustainability just U.S. market zero in implications zero currently We Scope market Scope emissions. great to currently share. has RNG has XX outpace at of X see diesel in is which supplies, the positive X benefits on given diesel potential

innings the still products continues future OPAL produce sell, market a new from which and in of for a be and for is evidencing pricing to new for Separately, interest power well growing bodes OPAL be regulatory partner customer mandates to generation. Fuels time we early interest projects. RNG in to is There think Fuels. increased We The great the used authorities it’s economics. industry and is voluntary with and the in growth of be choice demand growing

level on investment our supporting federal there policies knowledge industry and in opportunity. are helping across There increased and us capital from the balance state providers this exciting is and strong participation sheet capitalize

Jon. I’ll over With turn to that, it

Jonathan Maurer

to adding operating to projects, good perspective development on and I business Adam, saying from that moving you, construction, morning, plan, well output as our projects want on advanced are projects, including executing into funnel. very opportunities out start commissioning focused we everyone. maximizing Thank as our construction other our by our

Our well. operating projects performing are

Pine MMBtu representing more as projects have of Gas three At Road, nameplate RNG River projects million increase the seven operation capacity. We RNG to and of production recent increases. Noble Bend, trash online. to landfill come in continues our X approximately New

As output projections. meeting Adam said, are we our

last forward are several we projects is X.X to construction the and track. and have on online quarter. months Emerald the largely representing MMBtu are said be William moving in Consistent construction currently what projects capacity. quarter, of expected with RNG million Prince next Our fourth We in another six nameplate in

XXXX dairy XXXX. landfill we projects expect Northeast of in and to in first commissioned two half be The the later the

delayed delays into a experienced first have associated We permitting. the delays half result is of permitting Sapphire of as COD by some authorities. XXXX with

qualified is Our XX be ones in reasonably projects expect the XX advanced construction have development and are within months. These we next can we months to growing. pipeline that

more projects biogas Polk our which Florida. recently have municipal development of County, in project includes We than MMBtu our million XX across pipeline, now advanced now announced X.X our in

construction place to expect into month. next We Polk

construction electric is for projects of recently are positioned finalized. Our ADP pathway announced includes being take are advantage well. the advancing eRIN as that opportunities that towards well Other projects to ADP

MMBtu our expect this putting at to of construction X.X continue projects We year. least to into million goal meet of

opportunities forward list additional Our this past County ADP continue was the qualify. until projects ADP. jumped month include prospective it our does Polk on to evaluate to we recently not and our

prospective as well. other added opportunities have our We to lists project

the of as speak more as as the integrated in experienced operators our to in one us aid discussions operating projects. new and we space our out are platform well projects larger We successful and continue

significant foregoing earnings provides the OPAL’s XXXX. growth to beyond visibility represent of production for continued and All growth and momentum

are there of Services a our Station segment, highlights In out. call couple Fuel

be as equipment timing lumpiness can quarter can delivery vary. there in revenues, completion percentage in activity revenues a fuel construction station on third-party are First, recorded and of construction

healthy expect realized next months. very the we remains approximately backlog which over contracted $XX and Our completed XX million, at to be

back stations holding also that through stored move we the completed XXXX. to approximately this more sales of are tail marketing projects be normalizing $XX.X effects sales million RNG the noted, the our and affects to pressures and seeing RIN dispensing we million are see detail Services should received Of attributable segment by this in reclass from segment. It EBITDA, earlier now XXXX credits adjusted dispensing described on to back stations and now And be the we’ll as this segment, being margins effects we fuel the of the segment. gas inventory we little own RNG. also Fuel We stored and from from in add would gas inflationary a fees describe includes in also $X Station

fuel the perspective, liter new From excited of all market transportation the we engine. an overall are instruction about XX

is expect to fleets engine fuel being construction together order station and slow their in engines. books new order pause happens, slight putting activity, new we with a down do are or out phased as XX this the As liter see

segment to XX similar Right another for segment. track that Fuel providers, experiences commence with which third challenges construction approximately stretched and authorities zone are permitting and timing stations XX on utility XX fueling project Service working Station on now, parties. out stations year, Fuel this we construction in Our have OPAL

RNG gallons to overall XXXX. million volumes this year XX nearly million to dispensing grow from are Our fuel gallons XX in expected approximately

six to RNG representing while gas our XXX In as to capacity. projects, pathway about projects, approximately We landfill these stemming segment, from electric continue to the Renewable to see nameplate remain our majority the opportunities Power conversion for of projects. still the megawatts expected candidates on for of focus XX we projects electric are eRIN potential proposed

the arrangements RIN increase and As mentioned landfill substantially gas electric sharing depending of projects, last eRIN to eRIN our we quarter, the prices. stands and pathway ultimately, on value

are EPA guidance our we this said, updated the expect on meet opportunity. We topic month. facilities market of That to this next accelerating preparation from

to over call our I will discuss turn quarter now first the results. Ann to financial

Ann Anthony

full anticipate period and for good days. morning XXXX. the filing the results we Last which been RINs selling which lower as is you, of Thank our on for ending next filed to the attribute decision first to today’s the XXXX, pricing, and year-to-date results quarter’s the quarterly some biggest all to resulting Jon, earnings our detailed our XX-Q environmental our inventory press few in XX, compared defer night, results well GAAP lower quarter first participants year the as We of March release, has quarter The in driver XXXX. call. in

peers about Fuel note our now we results, results segment revenues tolling segment Including Before change we marketing and it provide talk revenues how our about differentiates quarter, Services previously. our an CNG RNG better with I’d XXXX. comparison recast presenting business in as quarter we easier in to them results first to associated portions segments that we reported comparisons our as this to opposed expenses to apples-to-apples downstream are business, where we XXXX segment, Station along in between will Station aligns Each the and Fuel like the the RNG business Services Fuel upstream and think and facilitates space. the dispensing with of dispensing to

talk let’s results. about Now our

XXXX, For at ownership adjusting million X.X compared approximately quarter were for RNG for the the MMBtus, as Compared the $XX a our which fourth OPAL decrease across of production to same quarter, XXXX. the first remained Revenues of Fuels to net volume coming XX% equity the projects. quarter was quarter quarter first to XXXX, first after of the production in represents million, XX%. up RNG

hold primarily are RINs lower with in production. XXXX, inventory an year-over-year of RINs In the by our primary for along the offset seen The of drivers we we’ve higher to price quarter first price the sold here decision RINs in $X.XX. average

environmental trade. which forward portion into of final told And these entered price last last we at of well the sale as a a quarter, as first we at price you average $X.XX, As transacted levels. are net spot month, a selling we only we year, included credits contract during at

was held lower assume price for $X.X credits, of constant quarter quarter Net available if prices, that sell $X for equates impacts was achieved on of that based of was not production of million before preferred $X.X differential. to year-over-year impact first all million considering The the the and the to million the first dividends approximately we XXXX. loss revenue we compared

our to compared that a low see to flow In addition strategic discussed. Services just decision Fuel continued we sales and Station credits our we to inflationary backlog segment, the limit our experienced and through In pressures quarter construction. to of revenue stations

is also We expect that these to OPAL trends will reverse over the some balance to of natural note the like Fuels are. year. peers our of the heavily as of exposed I’d not volatility that gas

commodity downstream a benefits do along and when of which revenues, volatility are costs We customer as our cost expenses we not in the rises, such exposed as higher business see significant our with through to taxes. in offsets to our upstream the utilities fueling operating is other gas commodity but natural cost pass

to $X.X million $X.X was EBITDA million compared last adjusted quarter First year.

$XX.X environmental ultimate for when period. market performance business at both as unsold the of production to price price match attributes may the value We quarter than illustrate these have sale used and in we better adjustment different the March EBITDA. the stored the same gas in actual million environmental adjusted occurring expenses of credits and of the of XX, included be price The and a

renewable outstanding million we borrowings. project XX, repaid to In March $XX.X had $XXX.X of power we million related As our March, financing.

a in loan, undrawn. projects of we August, are last that which second construction RNG remains which we’ll or be Our shortly term will and closed finance portion

million $XXX million of liquidity million equivalents, of short-term and $XX.X position our cash undrawn under $X.X million $XXX.X of cash, loans. term and of million, restricted of our investments, $XX capacity cash March was As XX, including

January, settlement second in our term and cash due to investment Restricted the contribute occurred of where the construction the construction as Meteora we loan. projects put principally declined to last the under well equity capacity to it as condition spend as continued as unlock upfront had

existing to sufficient these expect the to XX the We and months. construction capital be needs next for development company’s of fund sources liquidity

I’ll As Jon and reiterate what have wrap already said. we up, Adam

along the and with timelines prior our expectations. substantially quarter construction in pleased progress our the Development in the with in development remain with project first line of Pipeline very that production Advanced We’re results in

continue over to coming and We conditions growth environmental on and financial will to will weeks. focus to execution continued and continue market improve anticipate This in XXXX translate the results beyond.

With that, Jon to concluding I’ll remarks. turn back Adam it and for

Adam Comora

to renewable RNG Thank facilities. build you, and facilities to cost climate Ann. integrated committed In change. mission reliable vertically and best-in-class renewable displace remain closing, to and mitigate furthering power fossil deliver That and effective industry solutions leading fuels OPAL’s operate we

for the you your turn over interest in with I’ll that, And operator for call OPAL Thank all Fuels. the to Q&A.

Operator

this first from you. [Operator will we time, question Stifel. Our question-and-answer comes Thank session. At Whitfield Instructions] conduct Derrick from the

Derrick Whitfield

some Good on nice congrats pipeline. additions development morning and to all your

Adam Comora

morning, Good Thank you. Derrick.

Derrick Whitfield

focus for that of EBITDA first you current environmental For on and be my question, what I pricing, to this morning. which both on calculation is considerations adjusted accounting Could an elaborate focus perhaps the discussions would and investor wanted to on this comment and attribute LCFS? DX has at add-back the noticeably been area for higher the add-backs

Jonathan Maurer

projects that question. Sure, that Derrick, that a we allow rent of deliver for until production it some from all absurd to don’t a bit do thanks in us this for our sell gas the respects account to auditors little we and our counterparty. It’s physically RNG

inventory, as a than the exist. of would it it’s the see a the auditors up issues. the more If gas current it our we we conditions doesn’t show So as for are out us – when these on play RINs if opportunity choice slow based market go we to lot into to almost price price as allowed market make to now down, as solve

opposed is. our as position in EBITDA of to report the gas our trying revenue production through of what income So we’re the effects adjusted and net to really this in

EBITDA, our gas a So you credits yet for. for $XX.X for can that that been million to add-back. – not sorry, gas not It’s our that we yet have That that relates credits, gas minted calculation adjusted adjusted relates have with gas certified. – and have to credits projects to we see in is I’m associated

try the match held quarter off the in timing production relates So the being the value just have and expenses, that possible, And minted our credits to the not that have to do this credits, really we with are gas, you the been minted for it as produce to we first inventory. which of in as so best but differential.

You this, can didn’t revenue imagine quarter high one, make then these one sell lumpy. have very and next we of if could do would low in and as net we this, income, we a which quarter, say, such it extraordinarily all very

So to we’re really do. that’s what trying

That that which was to of million issue we’ll in want our in the I pending we in that about that to section, continue some make we now, $X.X correct. that results correction right and in numbers talking just putting RNG $X.X pending certification million. be credits, release point right. really fat an a reported credits which update we’re $X.X out $X.X in The press what we RINs be number to million, exactly it here, It million unsold is credits is and of $X.X incorrect, certification. operations million sure should the was get fingers unsold to had environmental that

certification are get unsold being we credits that to to that quarter the move that to our – at end or pending So of that current held, EBITDA either just really RINs theses value price. kind from are

royalty what going extent that correct. that our of next sort that exactly pieces credit what result is report, to sure come for certification that the unsold some clearer add adjustment that quarters a into It’s I’ll likely to for these producing million show market it’s those type calculation a for are little we have $XX.X numbers? will pending not make and to not example, and put everybody so it’s able do competitors and we’re we Montauk not we adjustment. very of credits valuable does What accounting do quarter, others what financial just these RNG, to exactly from is of similar our the sold a to next are. partners So which or our – but from different as oddity table, have, quarter then it that some the is and well, mark amounts just But OPAL the anywhere really this of and to to of statements. aren’t attributable and in this amounts attributable deduct being

Derrick Whitfield

Thanks. Terrific. the to progression sense. perhaps both remarks of for makes on wanted prepared I And into your that and follow-up, your lean near backlog my medium-term. And

position be laid minimal on For expected to and reaffirmed progressing think a the being perhaps pushed basis out of a XXXX, QX safe Emerald to it on appears the in offer benefit more to And guidance, Illinois minus a schedule your behind. QX, assume Sapphire fulsome a Sapphire modestly and we With and for discussion, projects in in being how have about is added commentary? XXXX. if on William would versus plus and are right you XXXX impact Prince County slate, the Polk smidge Sapphire could to your the was for glimpse you it

Adam Comora

touch our looked landfills or talk Sapphire interesting looking And of for that’s at project, delayed just environmental the on and months, at why PFAS how by in lot that now these the to to them. levels industry. Adam agencies of the pretty could looking are I a we’re and PFAS permitting how A got be where about Yes. at measure starting to several service how regulations lot permit test Sapphire. of and at landfill quickly PFAS This WasteExpo. Derrick. Thanks and It’s is a companies, for the just want down question, here. to lot it’s

of that comes management that out is looked liquids at is that being the landfills. of PFAS most the And from

on be different the delay. except month figure measure of try think for starting their slight these RNG projects, don’t couple agencies permitting which and of And are to we and tremendously it some will and out how impactful ones test they

they’ve agency it, to of engaged good with that arms that to made. how progress and and tracking sort flares our their certain sort they’re feel of permit And we’ve being around from – it And be they’re is it getting got measuring it. that been measure

pertains it of project, that coming we’re the in from really and to about which at Polk year. online coming in As end next obviously the see our County excited – do

We’re going guidance hold some off month you’re given XXXX. to project on between accelerating Sapphire. of the right on now for are and and positives there right, volume couple delay that negatives certainly But

Derrick Whitfield

time comments. Perfect. Thanks for your and

Operator

next Our question comes from Matthew Blair from TPH.

Matthew Blair

Thanks million and million you Hey, potential. $XX I the questions. from could What’s framework talk to taking for think was also auto bit EBITDA. right are I in discussions believe OEMs RIN the could potential And anywhere with hoping little how good agreements? the about you about morning. is about my upside? sharing eRIN a along to far $XX of could material Adam on talk think Jon, it very you our Adam, rough mentioned I estimate more provide eRIN upside. you

Adam Comora

being again. Yes. It’s fuel landfill projects. interesting. our very tailwind both and – eRINs as do This of for do very in electric development of and it and are think the to much Thanks existing We Adam, we supportive the a And pretty renewable material very standard. portfolio see question. to included we gas the is that new

also believes industry and their from created that eRINs RINs for of flip coming been the been DX from low downdraft EPA the side the in online. we think may that’s are low estimated have in RIN projects a Because reason too XXXX, the RNG that there’s in why volumes their forecast On pricing. current

believe supportive So business. we constructive sense do that eRINs the for and our remain be and very make will

plays eRINs still some whether finalize it the that likely June. several approved effect rule been may for I the we’ll a prices. month. been And that next or aligning piece coming ourselves participate EPA in to and the where be more eRIN concern Because get raising far lot as we whether have That uncertain, in not the And the finalized OEMs see take the And RIN here progress, market, the have of think has the with how again, that’s approved engaged There of able making. as June. was would in get in is noise our from. or try oversupply and various should not out to to where and months will

pretty So would those and if does in far fact participate discussions along it we’re get finalized. in to we expect

Jonathan Maurer

just add the help calculation kilowatt $XXX eRIN that is thing one the megawatt $XXX I think under shared calculate is And RINs can think how $XXX the the discussion really people of about think me is the hour value at let It’s that implementing I how really eRINs. Matthew, kilowatt what’s not they’re they has price, be RIN OEM. a that program, a rough obviously but about hour. a that And a with worth hour, – megawatt sorry, a conversion. to

electric more you’re market amount competing XX-XX, with electricity, will biogas the a the at dispensing, go get to where hour, much about renewable XX-XX expect over RIN this XX-XX. based that as of up in megawatt if sharing you now might sharing for time sharing perhaps or a we as vehicles as is which is at be out you’re what So limited $XXX

we And can as you throw that get additional once at value see get that value. point, encouraged electric lot biogas value.So start is we very a you you so agree to those of a other and sources electric to project numbers, onto we’re by very landfill look sense portfolio that or of this or – from an to an

Matthew Blair

net would expectations. above our per The to Yes. good. OPAL megawatt hour be Sounds $XXX

QX my was less the held of prices That – fueling Was profitability than million back the mentioned $X.X in affected segment? our then what’s and If Fuel it in from talk gas your quarter come But profitability expectations, Okay. doesn’t about pass follow-up in on in through. due And you natural volumes line bit fueling Station by your little RINs. and bit add-back this or was a a segment. I more your think I like with the it Did then Services downstream gross $X margin forward? sound you the is to look outlook going the expectations? and little that high muted the at overall it million about could profitability a

Ann Anthony

Sure.

So your question, for – Matt. and you thank

about tail still I call think of And it, talked a We talked before inflationary pressures. we’ve bit you we’ve replying through the end if business. about will, in seen little that QX. the effects that,

– completion, right? whether the think whether construction a remember, permitting terms piece we mention to had think up, delays, we of delays, think through so it’s again, be can improve originally ultimately we did of This margins chunky. show regardless pace the other can And, on a that it is piece if it’s P&L pressures together in I [indiscernible] [ph] a revenues impact throughout revenue this to anticipated, of a equipment how we we ripples do continue business and of show little will what saw I thousand and whether utility bit than percentage we’re that slower cylinders, doesn’t is year-over-year, inflationary even we that how firing it’s the because

Matthew Blair

your comments. Thanks for

Operator

from question Martin from comes Malloy Johnson Rice Company. next Our

Martin Malloy

the million has the last the full or just provided to for I to $XXX year million. you changed? $XX guidance guidance still about $XX XXXX call. adjusted Is morning. Is wanted to been intact EBITDA that ask million, and Good $XXX CapEx million guidance the on that the

Adam Comora

Yes. Comora Thank you, is Adam This Martin. here.

We XXXX. are for guidance changing not our

well projects mentioned are year had to track prepared and full meet targets. our performing the Jon comments, our As on in operating

how guidance million value construction of our drivers happening is our We and is really of business MMBtus of we RNG construction. into we one piece critical projects place of and visibility projects good soon. advanced X our guidance what’s about long-term many additional really share really into what excited have strong the believe in hope Another able feel MMBtus our and be million pipeline are to the and some development to with about to X.XX on first its

I’d also program. the as implemented in say be optimistic there that changes to LCFS are in of terms LCFS EPA on the pricing industry credit we the and we’re volumes. environment listening cautiously remain we environmental is that they structural believe positive of set And to rent do where that’ll pricing terms pricing hopeful both the

that see some segment revenues improving our Station do the some was and trends Ann pickups there as Service course Fuel say over will the also the think do we mentioning, of I’d on timing year there. just be in

or at business of contracted look well. months, we’re signing million gets that so, about always our and typically recognized new over up XX realized you $XX backlog or as If

think So the at on some quarterly look business. be and segment perhaps in that you that of could run rate a can that timing pick there up

projects immaterial the when least outsized it’s XX-year intrinsic are pretty – long-term I would and And could have the coming we projects our business EBITDA new of of business impact value operational. in the recurring reality, a six, considering thing stages commissioning these an these is commissioning are given are of we if in these a life – typically we’re to are things flow and assets. you One and early at – in to growth potentially delay nature projects in the and be the online on free once especially caution this that eight-week love quarter four, are what one cash about that also looks our is have

we started currently the not and they’re good out So how about year changing guidance. we feel

Martin Malloy

you fuel maybe Okay. I to is of ask potential And to then that liter for for fleets? impact at could through your your customers and the their that of timing terms some what follow-up new the add customers question, – in how XX enters of stations all that key maybe for the as the wanted about you market, could the talk you for engine. And Cummins maybe my enters about

Adam Comora

Yes. It’s question. good a

say, about by I ultimately our also about technologically fleets. – get we’re We’re should introduction. adopted trucks what really agnostic to excited the that

fueling pathway make I that these hydrogen for exciting the for could some renewable and electricity potential guys also eRIN really stations aware think fleets. are building we’re you

liter what it logistics of at scale think trucking success our XX But enormous would it looking opens engine a of we’re large we’re segment so stations. the quite the to And lot has liter it population. take as why XX over been a it up is an we pertains excited the do about build the frankly, large to reason engine, road charging electric for the And customers. and

them lot that the to and adoption concerned for that a satisfaction fuel of that benefits sustainability the of testing those were driver as a trucking RNG out and there from running And road are those broader engine. benefits we some potential for companies both in liter trucks. of and see were XX lot expand. improved we over looking more And see we we diesel think upon a economy And the for the likely bring liter and happens, XX companies and operational more a firms seeking to about XX that, into the want didn’t think terms and liter engine

expand We out new think there continue enjoys that a quite discount good diesel. currently and infrastructure, potential pricing over RNG the power that build customers, frankly, financial new given fueling the to real for is into to opportunity

attraction opportunity a the through the comes that second for of in a testing think it. half we their year but lot see new people as of move So of lot

Martin Malloy

turn I’ll you. Thank Great. back. it

Jonathan Maurer

Martin. Thanks,

Operator

Ryan from Pfingst Our question Riley. next from B. comes

Ryan Pfingst

Hey, good guys. morning,

call, Just provide on the think we it’s WM good that the to Sapphire be bit this something the basically more of you about Would back pushout your the against for project. in projects color are last a any embedded way And year? net on and to Polk about construction ITC to to go it? the spoke around starting guidance out a able

Ann Anthony

it’s Ryan, Ann. Hey

So IRS again, we’re ITC. waiting for from guidance still around final

into it a deemed is guidance XXXX, in prefer though, I ITC facts XXXX. from actually some needed So additional what be would the project only once not can still to On you question finished color. we circumstances would we there’s the exactly into and And really provide construction perspective, on be I think but any think wouldn’t be your service. it given means putting second that in potentially that again, to claim

becomes this think So year. but in if won’t later we anything, see it benefit years, that I potentially additive

Jonathan Maurer

see But Ryan, what offset answer timing to somewhat that pickup projects operations this question the relative said someone is in Sapphire of the of and Jon. is sooner. pure there period, by to I’ll We’ll them into putting top of of an what delay Derrick those into that a just add from some construction there offsetting view. construction thought we might putting point otherwise and have here similar at

Ryan Pfingst

Right.

benefit to you gained So wouldn’t equal in see then moving to Sapphire be XXXX XXXX? potential all the reduce things

Jonathan Maurer

Yes.

Ann Anthony

In theory, yes.

Ryan Pfingst

Okay. back. Great. it I’ll That’s me. all turn for

Jonathan Maurer

Thanks, Ryan.

Operator

UBS. from Our next question comes William from Grippin

William Grippin

Great. very much. Thanks

could the hit assumption would you remind need of First to DX question was and lower pricing RIN just embedded is to the going in us end? you guidance, back what the guidance, what kind EBITDA

Ann Anthony

$X.XX in Yes. the what embedded guidance. It’s is was

William Grippin

bit end kind forward delays, naturally just you either then underlying done on what issue a All permitting on you do the that of your see And over on or that. is going just the could to elaborate time? improving it little right. Got improve process And it. anything Appreciate be there there the is? can permitting

Adam Comora

impacted issue that are gas fit which was where timing issue relatively that wanted on our agencies these at one and landfill landfills depending on take this The new that a think PFAS, is and Yes. Sapphire’s are, projects process I permitting it. landfills of you given look experiencing to

coming it facilities. our to renewable of either PFAS off with to how gas just for test had really natural do And measure and

there this learning progress I agencies that like on being made. think bit little it and is going So a permitting it’s with specific curve a of was looks

that that’s So permit. what impacted that really

William Grippin

right. time. appreciate Thank you. All the I

Jonathan Maurer

Will. Thanks,

Operator

next from question Craig comes Shere Our Tuohy Brothers. from

Craig Shere

the taking Hi, questions. thanks for

on convert with of to projects share need the the to would landfill power broken opportunity? to eRINs then to be you are need the windfall opportunity, on any first So some there eRIN PPAs hosts? gas And would

Jonathan Maurer

this host – landfill set. for the about final with final The sharing question, Thanks is not Jon. the is Craig. really The ruling

of you PPA. requirement to credit existing break there’s for that eRINs to on your top and However, get existing PPA a no the have RIN stackable

way we’re coming So see to change with and that that. has the been written it don’t comfortable any we

Craig Shere

gas you downstream to effect any delta wide dislocation temporary the pricing for seeing And between margin Thanks Great. that. first what are opportunity extent in And given diesel? improving did market gas and this quarter? and California see you

Adam Comora

Yes. gas describing downstream I as from not natural fueling earlier, we impacts This is We here. have don’t diesel do volatility those to value natural think on Adam prices. have the a gas tied in Comora that from produce. to Yes, business we contracts Ann still commodities. between prices gas any was or benefited our two rising any commodity impact the Overall, generally is spread get we brown our fossil because

From that gas gas economic gas for an presentations then overall diesel alluding fuel are transportation CNG switch there’s priced natural because or RNG. incentive we the to conference been we’ve at fossil is natural renewable downstream benefit a from marketing in to when over lower customers. what is prices perspective, to natural and currently better for previous calls business, And basically

selling of over build power where feel these headroom equivalency, of molecules energy that’s that value RNG the them where a an excited, fuel. differential And and for is we like creating and these by on natural parties. we’re to as and credits and more sort oil gas from demand the bit transportation All really obligated get of we to continues between pricing there’s environmental little because that switch more and fleet as

Craig Shere

you. Great. Thank

Operator

I remarks. now Comora to like it back for closing would Adam to turn

Adam Comora

joining and a and to for call. forward continuing us day. earnings today dialogue, everybody XXXX first We We Fuels Okay. have engagement I quarter look in great wish the thank everybody your participation in OPAL to

Operator

This Thank conference. conclude your you for the participation program. in does today’s

You may now disconnect.

OPAL Fuels (OPAL) 11 May 232023 Q1 Earnings call transcript