OPAL Fuels Inc. (“OPAL Fuels” or the “Company”) (Nasdaq: OPAL),
a leading vertically integrated producer and distributor of
renewable natural gas (RNG) and renewable electricity, today
announced financial and operating results for the three and six
months ended June 30, 2023.
“We continue to execute on our strategic and operational goals,”
said Co-CEO Adam Comora. “In our RNG Fuel segment, production was
in-line with our forecasted volumes. We continue to progress on our
growth plans - completing construction, and now finalizing the
commissioning of, our Emerald project, beginning construction of
our newest RNG facility in Polk County, Florida and advancing our
development pipeline.”
Comora continued, “Of note in the second quarter, the EPA
released the final Set Rule of the Renewable Fuel Standard,
strongly supporting cellulosic biofuels and validating our
vertically integrated business model which delivers renewable
natural gas as a transportation fuel. This support resulted in
higher compliance targets of D3 RINs that must be purchased by
obligated parties and extended the targets through 2025. These
three-year targets give the industry a strong investment signal by
providing market visibility of D3 RIN demand that should lead to
less volatile pricing as well as the ability to sell production
forward for multiple years.”
“There is continued policy alignment for the development,
production, and distribution of renewable natural gas that is
produced by collecting and processing harmful methane gas and using
it to displace fossil fuels. The EPA’s finalized Set Rule, last
year’s Inflation Reduction Act and the potential for an eRIN
pathway provide continued tailwinds for the industry and especially
for OPAL Fuels,” said Co-CEO Jonathan Maurer.
“Our second quarter results benefited from higher RIN prices and
improved Adjusted EBITDA margins in our Fuel Station Services
segment. As a result, we believe we are well positioned heading
into the second half of 2023,” said Maurer.
Financial Highlights
- Revenues for the three and six months ended June 30, 2023, were
$55.0 million and $98.0 million, up 3% and down 4%, in the first
half of the year compared to the same periods last year. As
disclosed in previous reporting, revenue was affected by our
decision to defer environmental credit sales until after the EPA’s
Set Rule was finalized. We anticipate greater revenue recognition
during the second half of the year based on improved RIN prices as
we begin to monetize these deferred volumes of RINs.
- Net income for the three and six months ended June 30, 2023,
was $114.1 million and $106.7 million compared to net loss of $0.3
million and $4.8 million in the same period last year. Excluding
the one-time gain on deconsolidation of Emerald and Sapphire, our
Adjusted Net loss1 for the three and six months ended June 30, 2023
was $7.8 million and $15.1 million, respectively.
- Basic net income per share attributable to Class A common
shareholders for the three and six months ended June 30, 2023, was
$0.66 and $0.60, respectively. Excluding the one-time gain on the
deconsolidation of our Emerald and Sapphire projects, Adjusted
basic and diluted net loss1 attributable to Class A common
shareholders was $0.06 and $0.12 per share, respectively.
- Adjusted EBITDA1 for the three and six months ended June 30,
2023, was $21.4 million and $30.1 million, up 92% and 97% compared
to the same periods last year.
- At June 30, 2023, we had 11.0 million RINs and 0.2 million LCFS
credits unsold and pending certification valued at $34.4 million
compared to 8.1 million RINs and 0.1 million LCFS credits valued at
$17.7 million on March 31, 2023. The increase this quarter of $16.4
million is included in Adjusted EBITDA for the three months ended
June 30, 2023.
- We expect our full year 2023 Adjusted EBITDA guidance to be
within our prior $85.0 to $95.0 million range assuming current RIN
pricing levels. We anticipate that production will be at or
modestly below the low end of prior guidance given the delays at
Emerald and Prince William.
Consistent with previous disclosures, to better align current
period costs of RNG production with the value of unsold
environmental credits and environmental attributes associated with
RNG pending certification, we include in Adjusted EBITDA our RNG
pending certification and unsold credit inventory for the current
period marked at quarter-end index prices.
Operational Highlights
- RNG produced was 0.6 million and 1.2 million MMBtu, for the
three and six months ended June 30, 2023, an increase of 20% and
34% compared to the prior-year periods.
- RNG sold as transportation fuel was 11.0 million and 19.3
million GGEs, respectively, for the three and six months ended June
30, 2023, an increase of 53% and 45% compared to the prior-year
periods.
- The Fuel Station Services segment sold, dispensed, and serviced
an aggregate of 35.5 million and 67.9 million GGEs of
transportation fuel for the three and six months ended June 30,
2023, an increase of 32% and 29% compared to the prior-year
periods, respectively.
Construction Update
- The Polk County landfill RNG project, owned 100% by OPAL Fuels,
started construction in June 2023 and we anticipate commercial
operations beginning in the fourth quarter of 2024. This project
represents approximately 1.1 million MMBtu of annual nameplate
capacity.2
- The Emerald RNG project completed construction and will be
added to our in-operation portfolio in the third quarter as
commissioning is completed. This project represents approximately
1.3 million MMBtu of OPAL Fuels' 50% ownership share of annual
nameplate capacity.3
- The Prince William RNG project is expected to commence
commercial operations in the first quarter of 2024. This project
represents approximately 1.7 million MMBtu of annual nameplate
capacity which is owned 100% by OPAL Fuels.3
____________________________
1 These are non-GAAP measures. A reconciliation of non-GAAP
financial measures to comparable GAAP measures has been provided in
the financial tables included in this press release. An explanation
of these measures and how they are calculated are also included
below under the heading “Non-GAAP Financial Measures."
2 Nameplate 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.
- The Sapphire RNG project is expected to commence commercial
operations in the first half of 2024. This project represents
approximately 800,000 MMBtu for OPAL Fuels’ 50% ownership share of
annual nameplate capacity.3
- We have moved our Northeast landfill RNG conversion project
back to our Advanced Development Pipeline.4 It is being considered
as a landfill gas to electric project. This project represents
approximately 0.3 million MMBtu of annual nameplate capacity.
- OPAL Fuels’ updated share of annual nameplate capacity for our
six projects in construction is approximately 5.4 million
MMBtu.
Development Update
- We remain on track to place at least 2.0 million MMBtu of RNG
projects (representing OPAL Fuels’ proportional ownership) into
construction in 2023.
- Our Advanced Development Pipeline comprises of 8.1 million
MMBtu of feedstock biogas per year, adjusted for Polk moving to our
In-Construction portfolio and our Northeast landfill project moving
to our Advanced Development Pipeline.
____________________________
4 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
nameplate capacity. Anticipated nameplate 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.
RIN and LCFS Inventory Summary
Environmental Attributes for this table include unsold credits
and associated credits for gas produced pending certification. The
unaudited table below shows the impact to Adjusted EBITDA net of
royalties, dispensing fees, and other associated costs assuming the
unsold credits and environmental attributes associated with gas
produced pending certification had been sold during the respective
periods. The ultimate value realized will depend on the price at
the time of sale which may be lower or higher than the quarter end
price.
(in thousands of units)
March 31, 2023
June 30, 2023
Environmental Attributes
RINs
LCFSs
RINs
LCFSs
Beginning balance
3,428
111
8,074
126
Add: produced during the period
8,038
21
8,669
36
Less: sold during the period
(3,392
)
(6
)
(5,719
)
(8
)
Net change in the period
4,646
15
2,950
28
Ending balance
8,074
126
11,024
154
Market price at the end of quarter
$
1.95
$
70.00
$
2.80
$
76.00
Total Value (RINs and LCFSs)
$
17,690
$
—
$
34,053
$
—
Adjusted EBITDA impact
$
10,263
$
—
$
16,363
$
—
Results of Operations
($ thousands of dollars)
Three Months Ended June 30,
Six Months Ended June 30,
(Unaudited)
(Unaudited)
2023
2022
2023
2022
Revenue
RNG Fuel
$
16,431
$
16,459
$
28,625
$
31,508
Fuel Station Services
29,956
26,730
50,784
51,604
Renewable Power
8,655
10,028
18,590
19,152
Total Revenue
$
55,042
$
53,217
$
97,999
$
102,264
Net income (loss)
$
114,050
$
(342
)
$
106,704
$
(4,809
)
Adjusted EBITDA
RNG Fuel
$
23,124
$
16,377
$
37,764
$
18,867
Fuel Station Services
7,707
(2,960
)
10,580
2,267
Renewable Power
2,905
4,722
4,972
7,129
Corporate
(12,292
)
(6,989
)
(23,215
)
(12,955
)
Consolidated Adjusted EBITDA
$
21,444
$
11,150
$
30,101
$
15,308
RNG Fuel volume produced (Million
MMBtus)
0.6
0.5
1.2
0.9
RNG Fuel volume sold (Million GGEs)
11.0
7.2
19.3
13.3
Total volume delivered (Million GGEs)
35.5
26.9
67.9
52.5
Revenues for the three and six months ended June 30, 2023, were
$55.0 million and $98.0 million, respectively, up 3% compared to
the prior year quarter and down 4% compared to the six months ended
June 30, 2022. Revenues were impacted by the Company’s decision to
defer RIN sales at lower market prices prior to the release of
EPA's Set Rule and updated RVO.
Net income for the three and six months ended June 30, 2023, was
$114.1 million and $106.7 million compared to net loss of $0.3
million and $4.8 million in the prior-year periods. Net income for
the second quarter of 2023 was impacted by the one-time gain of
$122.9 million recorded on the deconsolidation of the Emerald and
Sapphire RNG projects.
Adjusted EBITDA for the three and six months ended June 30,
2023, was $21.4 million and $30.1 million compared to $11.2 million
and $15.3 million in the prior-year periods. The primary driver for
the increase in Adjusted EBITDA is the improved performance in RNG
Fuels and Fuel Station Services segments, which was offset by lower
Renewable Power segment performance and higher general and
administrative costs in the Corporate segment.
RNG Pending Certification and Unsold Environmental Credits
At June 30, 2023, the Company had unsold environmental credits
and had produced RNG that was pending certification which, together
represent approximately 11.0 million RINs and 0.2 million LCFS
credits. Using quarter end prices of $2.80/gallon for D3 RINs and
$76.00 for LCFS, the combined value of these Environmental
Attributes is approximately $34 million.
Under generally accepted accounting principles (“GAAP”), the
timing of revenue recognition for stand-alone RIN and LCFS sales
contracts is tied to the delivery of the RIN and LCFS credits to
our counterparties and not the production of the RIN and LCFS. To
better align timing of revenues to when costs are recognized for
the production of RNG in a current period, we also illustrate the
value of that RNG and environmental credits held in inventory and
pending certification as an adjustment to EBITDA in that period.
For the second quarter of 2023, based on market prices as of June
30, 20235, Adjusted EBITDA includes an aggregate of $16.4 million
that is anticipated to be generated from sales of RNG pending
certification and unsold environmental credits.
____________________________
5 Using quarter end pricing of $2.80/gallon for D3 RINs and
$76.0 per LCFS credits.
Segment Revenues
RNG Fuel
Revenue from RNG Fuel was $16.4 million, for the three months
ended June 30, 2023, flat compared to the three months ended June
30, 2022.
Revenue from RNG Fuel was $28.6 million, a decrease of $2.9
million, or 9%, for the six months ended June 30, 2023, compared to
the six months ended June 30, 2022. The decrease is primarily due
to lower sales volume as the Company elected to defer sales of
credits in the period along with lower pricing attained for
environmental credits actually sold. Additionally, there was a
decrease in brown gas revenues due to lower market pricing.
Fuel Station Services
Revenue from Fuel Station Services was $30.0 million an increase
of $3.2 million, or 12%, for the second quarter of 2023 compared to
the three months ended June 30, 2022. This is primarily due to an
increase in construction revenues, RINs, LCFS and brown gas
sales.
Revenue from Fuel Station Services was $50.8 million, a decrease
of $0.8 million, or 2%, for the six months ended June 30, 2023,
compared to the six months ended June 30, 2022. This decrease was
primarily attributable to the timing of work completed on fuel
station construction projects and the effect of OPAL Fuels’
decision to hold back environmental credit sales. At June 30, 2023,
the Company had a backlog of third-party construction contracts
with related revenue of $43.1 million, which is anticipated to be
recognized over the next 12 months as construction is
completed.
Renewable Power
Revenue from Renewable Power was $8.7 million, $1.4 million
lower for the three months ended June 30, 2023, compared to the
second quarter 2022. This was primarily due to the end of life
shutdown of one of our Renewable Power facilities in September
2022.
Revenue from Renewable Power was $18.6 million, $0.6 million
lower for the six months ended June 30, 2023, compared to the prior
year period. This was primarily due to the end of life shutdown of
one of our Renewable Power facilities in September 2022.
Liquidity
As of June 30, 2023, liquidity was $44.1 million, consisting of
Cash and cash equivalents of $27.1 million including Restricted
cash of $5.5 million and $17.0 million in short-term investments
maturing within 90 days. This compares to $181 million at March 31,
2023, consisting of $39.8 million of Cash and cash equivalents,
including restricted cash of $6.6 million, $37 million in
short-term investments, and availability of $105 million under a
senior secured term loan facility. The primary driver of this
reduction is attributed to the assignment of the term loan facility
to Paragon as part of the deconsolidation6 of the Emerald and
Sapphire projects. This also reflects a reduction of $11.9 million
of cash that is now excluded from consolidated Cash and cash
equivalents as a result of the deconsolidation.
Note, both the cash that was deconsolidated and the available
funds under the facility remain available for these projects.
Paragon was assigned the existing senior credit facility related to
these projects with a two-year delayed term and maximum principal
amount of $85.0 million and a debt reserve facility up to $10.0
million. There was no debt outstanding at the date of the
assignment.
_________________________
6 In June, we disclosed the formation of Paragon RNG LLC, a
company owned 50/50 between OPAL Fuels and GFL Environmental, which
resulted in the deconsolidation of our Emerald and Sapphire RNG
projects.
We believe that our liquidity, anticipated cash flows from
operations, including the value of our unsold environmental
credits, the value of environmental attributes associated with RNG
pending certification, and our access to expected sources of
capital will be sufficient to meet our existing funding needs. We
continue to pursue additional funding for our Advanced Development
Pipeline and streamlining our capital structure to include
financing higher up in the capital structure and less financing on
an individual project basis.
Capital Expenditures
During the six months ended June 30, 2023, OPAL Fuels invested
$72.0 million across RNG projects in construction and OPAL Fuels
owned fueling stations in construction as compared to $54.5 million
as of the comparable period in 2022.
Earnings Call
A webcast to review OPAL Fuels’ Second Quarter 2023 results is
being held tomorrow, August 10, 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/n7t8g8zs. 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
www.opalfuels.com.
Forward-Looking Statements
Certain statements in this communication may be considered
forward-looking statements within the meaning of the “safe harbor”
provisions of the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements are statements that
are not historical facts and generally relate to future events or
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) (Unaudited)
June 30, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents (includes $906
and $12,506 at June 30, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
$
21,595
$
40,394
Accounts receivable, net (includes $846
and $966 at June 30, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
26,821
31,083
Accounts receivable, related party
—
12,421
Restricted cash - current (includes $228
and $6,971 at June 30, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
228
32,402
Short term investments
16,955
64,976
Fuel tax credits receivable
3,213
4,144
Contract assets
12,513
9,771
Parts inventory
10,631
7,311
Environmental credits held for sale
(includes $29 and $0 at June 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
4,184
1,674
Prepaid expense and other current assets
(includes $186 and $415 at June 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
4,485
7,625
Derivative financial assets, current
portion
365
182
Total current assets
100,990
211,983
Capital spares
3,056
3,443
Property, plant, and equipment, net
(includes $27,043 and $73,140 at June 30, 2023 and December 31,
2022, respectively, related to consolidated VIEs)
288,427
297,323
Operating right-of-use assets
11,441
11,744
Investment in other entities
202,409
51,765
Note receivable - variable fee
component
2,101
1,942
Derivative financial assets, non-current
portion
267
954
Deferred financing costs
—
3,013
Other long-term assets
1,489
1,489
Intangible assets, net
1,854
2,167
Restricted cash - non-current (includes
$2,790 and $2,923 at June 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
5,303
4,425
Goodwill
54,608
54,608
Total assets
$
671,945
$
644,856
Liabilities and Equity
Current liabilities:
Accounts payable (includes $384 and $4,896
at June 30, 2023 and December 31, 2022, respectively, related to
consolidated VIEs)
16,411
22,679
Accounts payable, related party (includes
$1,108 and $433 at June 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
790
1,346
Fuel tax credits payable
2,624
3,320
Accrued payroll
7,107
8,979
Accrued capital expenses (includes $0 and
$7,821 at June 30, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
8,864
11,922
Accrued expenses and other current
liabilities (includes $272 and $646 at June 30, 2023 and December
31, 2022, respectively, related to consolidated VIEs)
12,698
9,573
Contract liabilities
6,220
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
27,732
Sunoma Loan, current portion (includes
$1,169 and $380 at June 30, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
1,169
380
Convertible Note Payable
29,671
28,528
Municipality Loan
—
76
Derivative financial liability, current
portion
—
4,596
Operating lease liabilities - current
portion
681
630
Other current liabilities
—
1,085
Asset retirement obligation, current
portion
1,296
1,296
Total current liabilities
115,263
152,905
Asset retirement obligation, non-current
portion
5,165
4,960
OPAL Term Loan
63,210
66,600
Sunoma Loan, net of debt issuance costs
(includes $20,948 and $21,712 at June 30, 2023 and December 31,
2022, respectively, related to consolidated VIEs)
20,948
21,712
Operating lease liabilities - non-current
portion
10,924
11,245
Earn out liabilities
4,153
8,790
Other long-term liabilities
856
825
Total liabilities
220,519
267,037
Commitments and contingencies
Redeemable preferred non-controlling
interests
143,754
138,142
Redeemable non-controlling interests
1,068,274
1,013,833
Stockholders' deficit
Class A common stock, $0.0001 par value,
340,000,000 shares authorized as of June 30, 2023; 29,330,115 and
29,477,766 shares, issued and outstanding at June 30, 2023 and
December 31, 2022, respectively
3
3
Class B common stock, $0.0001 par value,
160,000,000 shares authorized as of June 30, 2023; None issued and
outstanding as of June 30, 2023 and December 31, 2022
—
—
Class C common stock, $0.0001 par value,
160,000,000 shares authorized as of June 30, 2023; None issued and
outstanding as of June 30, 2023 and December 31, 2022
—
—
Class D common stock, $0.0001 par value,
160,000,000 shares authorized as of June 30, 2023; 144,399,037 and
144,399,037 shares issued and outstanding at June 30, 2023 and
December 31, 2022
14
14
Additional paid-in capital
—
—
Accumulated deficit
(749,912
)
(800,813
)
Accumulated other comprehensive income
4
195
Class A common stock in treasury, at cost;
1,635,783 and 0 shares at June 30, 2023 and December 31, 2022,
respectively
(11,614
)
—
Total Stockholders' deficit attributable
to the Company
(761,505
)
(800,601
)
Non-redeemable non-controlling
interests
903
26,445
Total Stockholders' deficit
(760,602
)
(774,156
)
Total liabilities, Redeemable preferred
non-controlling interests, Redeemable non-controlling interests and
Stockholders' deficit
$
671,945
$
644,856
OPAL FUELS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands of U.S. dollars, except per unit data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues:
RNG fuel (includes revenues from related
party of $9,412 and $12,765 for the three months ended June 30,
2023 and 2022, respectively; $14,127 and $20,845 for the six months
ended June 30, 2023 and 2022, respectively)
$
16,431
$
16,459
$
28,625
$
31,508
Fuel station services (includes revenues
from related party of $2,440 and $4,027 for the three months ended
June 30, 2023 and 2022, respectively; $3,933 and $8,843 for the six
months ended June 30, 2023 and 2022, respectively)
29,956
26,730
50,784
51,604
Renewable Power (includes revenues from
related party of $1,747 and $1,243 for the three months ended June
30, 2023 and 2022, respectively; $3,274 and $2,269, for the six
months ended June 30, 2023 and 2022, respectively)
8,655
10,028
18,590
19,152
Total revenues
55,042
53,217
97,999
102,264
Operating expenses:
Cost of sales - RNG fuel
7,884
8,457
15,407
16,171
Cost of sales - Fuel station services
27,476
23,630
47,768
43,293
Cost of sales - Renewable Power
8,761
7,540
17,139
15,948
Selling, general, and administrative
13,663
7,955
28,135
18,810
Depreciation, amortization, and
accretion
3,628
3,325
7,195
6,721
Total expenses
61,412
50,907
115,644
100,943
Operating (loss) income
(6,370
)
2,310
(17,645
)
1,321
Other (expense) income:
Interest and financing expense, net
(956
)
(3,365
)
(1,597
)
(6,422
)
Loss on debt extinguishment
(1,895
)
—
(1,895
)
—
Change in fair value of derivative
instruments, net
1,160
92
5,093
328
Other income
123,109
—
123,041
—
(Loss) income from equity method
investments
(998
)
621
(293
)
(36
)
Income (loss) before provision for income
taxes
114,050
(342
)
106,704
(4,809
)
Provision for income taxes
—
—
—
—
Net income (loss)
114,050
(342
)
106,704
(4,809
)
Net income (loss) attributable to
redeemable non-controlling interests
93,460
(1,803
)
85,227
(6,745
)
Net loss attributable to non-redeemable
non-controlling interests
(183
)
(257
)
(480
)
(499
)
Paid-in-kind preferred dividends
2,849
1,718
5,612
2,435
Net income attributable to Class A common
stockholders
$
17,924
$
—
$
16,345
$
—
Weighted average shares outstanding of
Class A common stock:
Basic
26,977,682
—
27,179,488
—
Diluted
27,248,639
—
27,556,700
—
Per share amounts:
Basic
$
0.66
$
—
$
0.60
$
—
Diluted
$
0.66
$
—
$
0.59
$
—
OPAL FUELS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands of U.S. dollars) (Unaudited)
Six Months Ended
June 30,
(in thousands)
2023
2022
Net cash provided by (used in) from
operating activities
$
7,786
$
(9,275
)
Net cash used in from investing
activities
(28,180
)
(54,461
)
Net cash (used in) provided by from
financing activities
(29,701
)
121,961
Net (decrease) increase in cash,
restricted cash, and cash equivalents
$
(50,095
)
$
58,225
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 net loss and Basic and Diluted adjusted net income
(loss) per share
Adjusted net income and Basic and diluted adjusted net loss per
share, respectively, represent Net income as adjusted to exclude
one-time non-cash gain on deconsolidation of variable interest
entities ("VIEs") and amortization of basis differences in equity
method investments. The Company believes that the gain on
deconsolidation of VIEs is not representative of our normal
business operations and we believe that Adjusted net income and
Adjusted net loss per share are more useful to the analysts and
investors in comparing the results of operations and operational
trends between periods. Our Adjusted net income (loss) and Adjusted
net income (loss) per share should not be considered alternative to
net income (loss), operating income (loss), cash flows provided
(used in) operating activities or any other measure of financial
performance or liquidity presented in accordance with U.S. GAAP.
Our Adjusted net income (loss) and Adjusted net income (loss) per
share may not be comparable to similarly titled measures of other
companies.
The following table presents the reconciliation of our Net
income to Adjusted net income:
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income (loss)
$
114,050
$
(342
)
$
106,704
$
(4,809
)
Adjustments to reconcile net income to
Adjusted net income:
Gain on deconsolidation of VIEs
(122,873
)
—
(122,873
)
—
Amortization of basis difference in equity
method investments
1,058
—
1,058
—
Adjusted net loss
(7,765
)
(342
)
(15,111
)
(4,809
)
Adjusted net loss attributable to
redeemable non-controlling interests
(8,752
)
(1,803
)
(16,985
)
(6,745
)
Net loss attributable to non-redeemable
non-controlling interests
(183
)
(257
)
(480
)
(499
)
Paid-in-kind preferred dividends
2,849
1,718
5,612
2,435
Adjusted net loss attributable to Class A
common stockholders
$
(1,679
)
$
—
$
(3,258
)
$
—
Weighted average shares outstanding of
Class A common stock:
Basic
26,977,682
—
27,179,488
—
Diluted
26,977,682
—
27,179,488
—
Per share amounts:
Basic
$
(0.06
)
—
$
(0.12
)
—
Diluted
$
(0.06
)
—
$
(0.12
)
—
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, unrealized loss (gain) for derivative instruments,
environmental credits associated with renewable biogas that has
been produced and is in storage pending completion of certification
of the relevant Environmental Attribute pathway(s) and
Environmental Credits at quarter end market prices attributable to
renewable biogas produced in the period but not yet sold or
delivered. 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 Six Months Ended
June 30, 2023 and 2022 (In thousands of dollars)
Three Months Ended June 30,
2023
Six Months Ended June 30,
2023
RNG Fuel
Fuel Station Services
Renewable Power
Corporate
Total
RNG Fuel
Fuel Station Services
Renewable Power
Corporate
Total
Net income (loss) (1)
$
6,293
$
1,858
$
(741
)
$
106,640
$
114,050
$
8,175
$
1,899
$
(1,644
)
$
98,274
$
106,704
Adjustments to reconcile net income (loss)
to Adjusted EBITDA
Interest and financing expense, net
718
(83
)
(6
)
327
956
1,373
(93
)
258
59
1,597
Loss on debt extinguishment (2)
—
—
—
1,895
1,895
—
—
—
1,895
1,895
Net loss attributable to non-redeemable
non-controlling interests
183
—
—
—
183
480
—
—
—
480
Depreciation, amortization and accretion
(3)
3,118
848
1,449
11
5,426
4,537
1,638
2,901
27
9,103
Loss on warrant exchange
—
—
—
—
—
—
—
—
338
338
Unrealized (gain) loss on derivative
instruments (4)
—
—
160
(211
)
(51
)
—
—
(762
)
(4144
)
(4,906
)
Non-cash charges (5)
—
—
—
1893
1,893
—
—
—
2958
2,958
One-time non-recurring charges (6)
959
457
—
26
1,442
2,744
949
—
251
3,944
Major maintenance for Renewable Power
—
—
2,154
—
2,154
—
—
4,230
—
4,230
Gain on deconsolidation of VIEs
—
—
—
(122,873
)
(122,873
)
—
—
—
(122,873
)
(122,873
)
RNG Pending Certification and Unsold
Environmental Credits (7)
11,853
4,627
(111
)
—
16,369
20,455
6,187
(11
)
—
26,631
Adjusted EBITDA
$
23,124
$
7,707
$
2,905
$
(12,292
)
$
21,444
$
37,764
$
10,580
$
4,972
$
(23,215
)
$
30,101
Three Months Ended June 30,
2022
Six Months Ended June 30,
2022
RNG Fuel
Fuel Station Services
Renewable Power
Corporate
Total
RNG Fuel
Fuel Station Services
Renewable Power
Corporate
Total
Net income (loss) (1)
$
14,809
$
(3,605
)
$
(91
)
$
(11,455
)
$
(342
)
$
16,070
$
950
$
(2,169
)
$
(19,660
)
$
(4,809
)
Adjustments to reconcile net income (loss)
to Adjusted EBITDA
Interest and financing expense, net
(37
)
8
1,202
2,192
3,365
51
14
2,119
4,238
6,422
Net loss attributable to non-redeemable
non-controlling interests
257
—
—
—
257
499
—
—
—
499
Depreciation, amortization and accretion
(3)
1,348
637
1,309
31
3,325
2,247
1,303
3,107
64
6,721
Unrealized (gain) loss on derivative
instruments (4)
—
—
1050
—
1,050
—
—
1264
—
1,264
Non-cash charges (5)
—
—
—
567
567
—
—
—
727
727
One-time non-recurring charges (6)
—
—
—
1,676
1,676
—
—
—
1,676
1,676
Major maintenance for Renewable Power
—
—
1,252
—
1,252
—
—
2,808
—
2,808
Adjusted EBITDA
$
16,377
$
(2,960
)
$
4,722
$
(6,989
)
$
11,150
$
18,867
$
2,267
$
7,129
$
(12,955
)
$
15,308
(1) Net income (loss) by segment is included in our quarterly
report on Form 10 Q. Net loss 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. There was no debt
outstanding on the date of assignment.
(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 six months ended
June 30, 2023. One-time non-recurring charges includes one-time
transaction costs relating to the Business Combination for the
three and six months ended June 30, 2022.
(7) Represents RNG pending certification and unsold
environmental credits for the three and six months ended June 30,
2023. Adjusted EBITDA for the three and six months ended June 30,
2022, did not include such adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809669778/en/
Investors Todd Firestone Vice President Investor
Relations & Corporate Development 914-705-4001
investors@opalfuels.com
Media Jason Stewart Senior Director Public Relations
& Marketing 914-421-5336 jstewart@opalfuels.com
ICR, Inc. OPALFuelsPR@icrinc.com
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