Archaea Energy Inc. Reports Second Quarter and First Half 2022 Results and Provides 2022 Guidance Update
Archaea Energy reported strong financial results for Q2 and the first half of 2022, with revenues of $77.2 million and net income of $32.6 million for Q2. For the six months, revenues reached $134.1 million but net income was slightly negative at $0.5 million. The company increased its full-year Adjusted EBITDA guidance to $132.5 million - $147.5 million and capital expenditures to $325 million - $365 million. Recent strategic moves include the acquisition of INGENCO and the formation of a joint venture with Republic Services, aiming to boost their renewable natural gas production.
- Increased full-year 2022 Adjusted EBITDA guidance from $132.5 million to $147.5 million.
- Closed acquisition of INGENCO, enhancing project backlog with high-quality RNG facilities.
- Successful joint venture with Republic Services for 39 RNG facilities, boosting growth potential.
- Achieved 2.04 million MMBtu of RNG sold in Q2, reflecting strong operational performance.
- Experienced a net loss of $0.5 million for the first half of 2022.
- Downtime at certain facilities affected RNG production due to winter weather.
- RNG production sold guidance revised down to 10.4 million - 11.4 million MMBtu due to unexpected delays.
Increasing Full Year 2022 Adjusted EBITDA Guidance
FINANCIAL HIGHLIGHTS
-
Revenue of
and net equity investment income of$77.2 million for the three months ended$2.7 million June 30, 2022 and revenue of and net equity investment income of$134.1 million for the six months ended$4.1 million June 30, 2022 . -
Net income1 of
for the three months ended$32.6 million June 30, 2022 and a net loss of for the six months ended$0.5 million June 30, 2022 . -
Net income per Class A Common Share of
for the three months ended$0.27 June 30, 2022 and for the six months ended$0.05 June 30, 2022 . -
Adjusted EBITDA2 of
for the three months ended$30.1 million June 30, 2022 and for the six months ended$50.7 million June 30, 2022 . -
Produced and sold 2.04 million MMBtu of RNG for the three months ended
June 30, 2022 and 3.58 million MMBtu of RNG for the six months endedJune 30, 2022 .3 -
Produced and sold 159 thousand MWh of electricity for the three months ended
June 30, 2022 and 324 thousand MWh of electricity for the six months endedJune 30, 2022 .3 -
Increased full year 2022 Adjusted EBITDA guidance4 range to
–$132.5 million .$147.5 million -
Increased full year 2022 capital expenditures (excluding acquisition costs) guidance range to
–$325 million , from$365 million –$255 million previously, to begin development on recent additions to the Company’s development backlog.$285 million - Reaffirmed full year 2022 electricity production sold guidance of 850 thousand – 950 thousand MWh.3
- Updated full year 2022 RNG production sold guidance range to 10.4 million – 11.4 million MMBtu.3
-
Successfully closed an amendment to the Company’s5 Revolving Credit and Term Loan Agreement, resulting in total aggregate commitments of
, an increase of approximately$1.1 billion as compared to the original facilities. The amendment also includes an uncommitted$630 million accordion feature.$200 million
RECENT STRATEGIC ACCOMPLISHMENTS
-
Added 54 high-quality RNG development projects to the Company’s peer-leading development backlog year to date:
-
INGENCO Acquisition – In
July 2022 , closed the previously announced acquisition ofNextGen Power Holdings LLC (together with its subsidiaries, “INGENCO”). The acquisition includes 14 landfill gas to electric (LFGTE) plants and related gas rights at high-quality landfill sites with strong growth potential and permitted waste acceptance for over 40 years on average. The Company expects to build Archaea V1 RNG facilities on 11 INGENCO sites that do not currently have RNG plants. -
Lightning Renewables Joint Venture with Republic – In
May 2022 , announced the formation of a landmark joint venture (“JV”),Lightning Renewables, LLC (“Lightning Renewables”), withRepublic Services, Inc. (“Republic”) (NYSE: RSG), one of the largest providers of environmental services inthe United States , to jointly invest approximately to develop 39 RNG facilities at landfill locations owned or operated by Republic across$1.1 billion the United States . Archaea holds a60% ownership interest in Lightning Renewables. Archaea will develop, engineer, construct, and operate the RNG facilities within the JV. Additionally, Archaea will receive fees for engineering, procurement, and construction management (“EPC”) during development and construction and fees for operation and maintenance services after completion.-
Initial Capital Funding of Lightning Renewables: In
July 2022 , the Company funded its initial capital contribution of to Lightning Renewables, which included the Company’s net contribution to the JV for the acquisition of$222.5 million Fort Wayne . - Launched Upfront Permitting, Zoning and Engineering Initiative on Lightning Renewables Projects: Archaea and the JV entered into a new service agreement under their existing EPC contract allowing for upfront permitting, zoning, and engineering work across all 40 Lightning Renewables RNG development projects. Archaea believes this systematic and expedited approach to pre-construction activities will reduce execution and timing risk on project development.
-
Fort Wayne Acquisition Adds 40th Project to Lightning Renewables: In
July 2022 , the JV successfully acquired an additional site (“Fort Wayne”) located inFort Wayne, Indiana for . The acquisition includes a medium-BTU facility and landfill gas rights. The Company plans to build a new RNG plant on site that will have an initial capacity of 6,400 scfm at the date of commercial operation (“COD”) and will be expandable to 9,600 scfm as flows continue to grow. With the addition of$38 million Fort Wayne , Lightning Renewables now has the rights to develop a total of 40 RNG facilities at landfills owned or operated by Republic acrossthe United States .
-
Initial Capital Funding of Lightning Renewables: In
-
INGENCO Acquisition – In
- In the second quarter, the Company won three competitive Request for Proposal (RFP) processes to develop new RNG facilities at government-owned landfills. Once corresponding gas rights agreements are signed, these projects will increase the Company’s current backlog from 88 to 91 RNG development projects.
-
Continued commercial success in executing RNG sales agreements with creditworthy partners, in alignment with the Company’s goal of securing
70% of expected RNG production sold under long-term, fixed-price contracts:-
Expanded Commercial Partnership with Énergir – InAugust 2022 , announced a new long-term RNG purchase and sale agreement with Énergir L.P. (“Énergir”). Under the agreement, which is subject toQuébec regulatory approval, Énergir expects to purchase 2.15 million gigajoules (approximately 2.04 million MMBtu) of RNG and the associated Environmental Attributes6 generated by Archaea annually from certain RNG production facilities in its portfolio for a fixed price for a period of 20 years. The agreement is expected to commence inOctober 2023 . -
New Commercial Partnership with UGI – InJuly 2022 , announced a medium-term RNG purchase and sale agreement withUGI Utilities, Inc. (“UGI Utilities”), a wholly-owned subsidiary ofUGI Corporation (NYSE: UGI). Under the agreement,UGI Utilities will purchase 331,785 MMBtu of RNG and the associated Environmental Attributes generated by Archaea annually from its Assai RNG facility for a fixed price for a period of 5 years. Deliveries under the agreement commenced onJuly 1, 2022 . This is the Company’s first contract with a regulated utility inPennsylvania and demarcates the opening of a new market for potential long-term contracts.
-
-
Achieved development and operational milestones at key RNG facilities, in alignment with the Company’s 2022 guidance and development plan:
-
Executing on 2022 Optimizations with Encouraging Results Year to Date – Completed initial optimization work at five legacy Aria facilities, with a focus on CO2 separation systems and nitrogen rejection unit (NRU) upgrades, which are essential components of the Archaea V1 plant design, translating into improved operational performance at these existing RNG facilities. On average, methane recovery increased almost
10% upon completion of the initial optimization projects and is expected to further increase after completing the remaining optimization work at these and other legacy sites within the Company’s portfolio. -
Advancing 2022 New-builds with Recent and Upcoming Completions – Progress made on new build projects as the Company nears the unveiling of its first Archaea V1 plant:
-
Costa View Dairy Digester Facility: Produced first pipeline-quality RNG and achieved commercial operations at the Costa View dairy digester facility in
May 2022 , successfully completing the second of four dairy projects within the Company’s50% -ownedMavrix, LLC joint venture withBP Products North America Inc. - Deploying Archaea V1 Plants: The first Archaea V1 plants are expected to come online beginning this fall.
-
Costa View Dairy Digester Facility: Produced first pipeline-quality RNG and achieved commercial operations at the Costa View dairy digester facility in
- Mitigating Exposure to Supply Chain and Inflation Risks – The Company continues to benefit from previously announced supply chain initiatives, particularly advanced bulk-ordering for major equipment and subcomponents, to minimize the risks of rising costs and delivery lead times.
-
Executing on 2022 Optimizations with Encouraging Results Year to Date – Completed initial optimization work at five legacy Aria facilities, with a focus on CO2 separation systems and nitrogen rejection unit (NRU) upgrades, which are essential components of the Archaea V1 plant design, translating into improved operational performance at these existing RNG facilities. On average, methane recovery increased almost
-
Brian McCarthy , Archaea’s Co-Founder, Interim Chief Financial Officer, and Chief Investment Officer, was named Chief Financial Officer inAugust 2022 .
CEO COMMENTARY
“Today we released operating and financial results for the second quarter and first half of 2022 that collectively reflect the hard work and dedication of the Archaea team over our short tenure as a public company,” said
We continue to see meaningful benefits from our optimization program, which has not only improved the operational performance of our existing RNG asset base, but has also substantiated key subsystems included within our Archaea V1 plant design. We have also made progress on our new-build projects, with an additional dairy digester RNG facility recently coming online. We are also seeing the increasing value of our differentiated commercial strategy amidst continued price volatility in the short-term transportation markets, as we have continued to sign additional long-term, fixed-price contracts. Our recently announced contracts with Énergir and UGI underscore the demand for sizable volumes of RNG that are structured in a way that caters to the specific energy needs and environmental goals of customers. Archaea remains one of the few RNG producers that can meet these demands.
I cannot overstate the transformative nature of the two strategic transactions we announced in the second quarter of this year. In July, we funded our first capital contribution to the Lightning Renewables JV, expanded the Lightning Renewables JV to a total of 40 projects with the
As I’ve mentioned already, our efforts during the second half of this year are focused on execution. We are ready to demonstrate our unmatched gas processing, project development, and operational expertise with the imminent unveiling and commissioning of our inaugural Archaea V1 plants, while also completing our near-term optimization projects. We are increasingly confident that Archaea V1’s standardized and modularized design will prove itself to be the cornerstone of our success by reducing project development costs and timelines and enabling more efficient operating performance. It is the collective responsibility of the Archaea team to execute on our mission to construct, commission, and operate these facilities.
Our team is proud of what we have achieved to date, and we are prepared to achieve the next important phase of our development program.”
SUMMARY AND REVIEW OF FINANCIAL RESULTS
The following results for the three months and six months ended
($ in thousands) |
Three Months Ended
|
Six Months Ended
|
|||||
Revenue |
$ |
77,219 |
$ |
134,116 |
|
||
Equity Investment Income, Net |
|
2,693 |
|
4,122 |
|
||
Net Income (loss)1 |
|
32,624 |
|
(548 |
) |
||
Adjusted EBITDA2 |
|
30,095 |
|
50,672 |
|
||
|
|
|
|||||
RNG Production Sold3 (MMBtu) |
|
2,037,765 |
|
3,577,797 |
|
||
Electricity Production Sold3 (MWh) |
|
158,803 |
|
324,383 |
|
RNG production sold for the three months and six months ended
Electricity production sold for the three months and six months ended
Revenues for the three months and six months ended
Net income for the three months and six months ended
Adjusted EBITDA for the three months and six months ended
Timing Adjustment for a Settled RIN Transaction
Under generally accepted accounting principles (“GAAP”), the timing of revenue recognition for stand-alone Renewable Identification Numbers (“RINs”) sales contracts is tied to the delivery of the RIN to our counterparties and not the production of the RIN. The Company had approximately 3.0 million RINs generated by
COMPLETION OF AMENDMENT AND UPSIZE OF TERM LOAN AND REVOLVING CREDIT FACILITY
On
Available capacity under the Amended Facilities, along with available cash, were used to fund the Company’s acquisition of INGENCO and initial capital contribution to Lightning Renewables. Available capacity under the Amended Facilities is also expected to be used to fund capital expenditures related to the Company’s development plan and other permitted investments, to provide working capital, and for other general corporate purposes.
CAPITAL STRUCTURE AND LIQUIDITY
As of
The Amended Facilities described above, along with the Company’s other existing sources of liquidity, are expected to be sufficient to fund the Company’s development capital needs for the foreseeable future, including capital expenditures related to Lightning Renewables, projects related to INGENCO, and core development projects, thereby eliminating the need for additional external capital in the near-term based on the Company’s current development plans and backlog.
Capital Investments
Total cash used in investing activities was
Total cash used in investing activities was
Well-Positioned to Support Recent Increase in Debt Funding and Near-Term Leverage
The Company believes it is capable of supporting the near-term increase in its leverage profile as a result of its Amended Facilities. The Company’s long-term debt profile is supported by long-term, fixed-price contracts in place today, which have a weighted average remaining contract term of 18.7 years and cumulative fixed-price value of up to
2022 FULL YEAR GUIDANCE
Archaea is increasing its Adjusted EBITDA and capital expenditures guidance for full year 2022. In addition, the Company is reaffirming its electricity production sold volumes guidance and reducing its RNG production sold volumes guidance for full year 2022. All guidance is current as of the published date and is subject to change.
($ millions, except production data) |
Full Year 2022 |
||||||
RNG Production Sold3 (million MMBtu) |
10.4 |
– |
11.4 |
||||
Electricity Production Sold3 (thousand MWh) |
850 |
– |
950 |
||||
Adjusted EBITDA4 |
|
– |
|
||||
Capital Expenditures7 |
|
– |
|
Within the 2022 Adjusted EBITDA guidance range, the Company estimates that approximately 3.0 million MMBtu at the midpoint of its expected 2022 RNG production sold will be subject to market pricing in the second half of 2022. For the second half of 2022, the Company assumes D3 RIN prices of
Within its 2022 Adjusted EBITDA guidance range, the Company is also reaffirming its expected general and administrative expenses of approximately
The Company is revising its expected 2022 RNG production sold guidance to 10.4 million to 11.4 million MMBtu due to winter weather and maintenance activities in the first half of 2022 and unanticipated delays in zoning at optimization sites with significant landfill gas being flared or combusted. These delays are expected to be mitigated in the near-term. Annualized production as of
The Company’s 2022 capital expenditures projection increased by
At the midpoint of its guidance range, the Company continues to expect capital investments of approximately
BRIAN MCCARTHY NAMED CHIEF FINANCIAL OFFICER
The Company recently named
SECOND QUARTER 2022 CONFERENCE CALL AND WEBCAST
Archaea will host a conference call to discuss financial and operating results for second quarter and first half of 2022 and to provide an update on strategic priorities on
1. Unless otherwise specified, net income (loss) as shown herein is before net income (loss) attributable to redeemable noncontrolling interest. For information regarding net income (loss) attributable to Class A Common Stock, please see the Consolidated Statements of Operations included in this release. |
2. Non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Measures” for further details. |
3. Volumes produced and sold include production from the Company’s wholly-owned facilities and its proportionate share of production from its equity method investment facilities. |
4. A reconciliation of expected full year 2022 Adjusted EBITDA to net income (loss), the closest GAAP financial measure, cannot be provided without unreasonable efforts due to the inherent difficulty in quantifying certain amounts, including share-based compensation expense, which is affected by factors including future personnel needs and the future price of our Class A Common Stock, and changes in fair value of warrant derivatives, due to a variety of factors including the unpredictability of underlying price movements, which may be significant. |
5. Through |
6. Environmental Attributes refer to federal, state, and local government incentives in |
7. Excluding acquisition costs. |
8. Conversion factor of 11.727 RINs per MMBtu. |
ABOUT ARCHAEA
Additional information is available at www.archaeaenergy.com.
USE OF NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial statements in accordance with GAAP, this release contains non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure that Archaea uses to facilitate comparisons of operating performance across periods. Non-GAAP measures should be viewed as a supplement to and not a substitute for the Company’s GAAP measures of performance and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.
Non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or in lieu of an analysis of the Company’s results as reported under GAAP and should be evaluated only on a supplementary basis.
FORWARD-LOOKING STATEMENTS
This release contains certain statements that may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as “anticipate,” “estimate,” “could,” “would,” “should,” “will,” “may,” “forecast,” “approximate,” “expect,” “project,” “intend,” “plan,” “believe” and other similar words. Forward-looking statements may relate to expectations for future financial performance, business strategies or expectations for Archaea’s business. Specifically, forward-looking statements may include statements concerning market conditions and trends, earnings, performance, strategies, prospects and other aspects of Archaea’s business. Forward looking statements are based on current expectations, estimates, projections, targets, opinions and/or beliefs of Archaea, and such statements involve known and unknown risks, uncertainties and other factors.
The risks and uncertainties that could cause those actual results to differ materially from those expressed or implied by these forward looking statements include, but are not limited to: (a) Archaea’s ability to successfully integrate INGENCO and other future acquisitions; (b) the ability to recognize the anticipated financial, strategic, and operational benefits of the business combinations, the INGENCO acquisition, the Lightning Renewables JV, and other future acquisitions or strategic transactions, which may be affected by, among other things, competition, the ability of Archaea to grow and manage growth profitably and retain its management and key employees; (c) the possibility that Archaea may be adversely affected by other economic, business and/or competitive factors, including rising inflation and interest rates; (d) Archaea’s ability to develop and operate new projects, including the projects contemplated from the INGENCO assets and Lightning Renewables; (e) the reduction or elimination of government economic incentives to the renewable energy market; (f) delays in acquisition, financing, construction and development of new or planned projects; (g) the length of development cycles for new projects, including the design and construction processes for Archaea’s projects; (h) Archaea’s ability to identify suitable locations for new projects; (i) Archaea’s dependence on landfill operators; (j) existing regulations and changes to regulations and policies that affect Archaea’s operations; (k) decline in public acceptance and support of renewable energy development and projects; (l) demand for renewable energy not being sustained; (m) impacts of climate change, changing weather patterns and conditions, and natural disasters; (n) the ability to secure necessary governmental and regulatory approvals; (o) Archaea’s expansion into new business lines; and (p) other risks and uncertainties described in Archaea’s Annual Report on Form 10-K for the year ended
Accordingly, forward-looking statements should not be relied upon as representing Archaea’s views as of any subsequent date. Archaea does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.
(Financial Tables and Supplementary Information Follow)
|
||||||||||||||||
Consolidated Statements of Operations (Unaudited) |
||||||||||||||||
|
Three Months Ended |
Six months ended |
||||||||||||||
(in thousands, except shares and per share |
2022 |
2021 |
2022 |
2021 |
||||||||||||
Revenues and Other Income |
|
|
|
|
||||||||||||
Energy revenue |
$ |
71,235 |
|
$ |
3,059 |
|
$ |
124,151 |
|
$ |
3,059 |
|
||||
Other revenue |
|
3,215 |
|
|
2,068 |
|
|
4,428 |
|
|
3,722 |
|
||||
Amortization of intangibles and below-market contracts |
|
2,769 |
|
|
— |
|
|
5,537 |
|
|
— |
|
||||
Total Revenues and Other |
$ |
77,219 |
|
$ |
5,127 |
|
$ |
134,116 |
|
$ |
6,781 |
|
||||
Equity Investment Income, Net |
|
2,693 |
|
|
— |
|
|
4,122 |
|
|
— |
|
||||
Cost of Sales |
|
|
|
|
||||||||||||
Cost of energy |
|
46,699 |
|
|
3,148 |
|
|
75,278 |
|
|
3,148 |
|
||||
Cost of other revenues |
|
2,317 |
|
|
1,199 |
|
|
3,940 |
|
|
2,360 |
|
||||
Depreciation, amortization and accretion |
|
13,730 |
|
|
886 |
|
|
26,219 |
|
|
935 |
|
||||
Total Cost of Sales |
|
62,746 |
|
|
5,233 |
|
|
105,437 |
|
|
6,443 |
|
||||
General and administrative expenses |
|
18,883 |
|
|
7,884 |
|
|
45,236 |
|
|
11,042 |
|
||||
Operating Income (Loss) |
|
(1,717 |
) |
|
(7,990 |
) |
|
(12,435 |
) |
|
(10,704 |
) |
||||
Other Income (Expense) |
|
|
|
|
||||||||||||
Interest expense, net |
|
(3,712 |
) |
|
(13 |
) |
|
(6,366 |
) |
|
(19 |
) |
||||
Gain (loss) on warrants and derivative contracts |
|
38,095 |
|
|
— |
|
|
18,180 |
|
|
— |
|
||||
Other income (expense) |
|
87 |
|
|
73 |
|
|
202 |
|
|
294 |
|
||||
Total Other Income (Expense) |
|
34,470 |
|
|
60 |
|
|
12,016 |
|
|
275 |
|
||||
Income (Loss) Before Income |
|
32,753 |
|
|
(7,930 |
) |
|
(419 |
) |
|
(10,429 |
) |
||||
Income tax expense |
|
129 |
|
|
— |
|
|
129 |
|
|
— |
|
||||
Net Income (Loss) |
|
32,624 |
|
|
(7,930 |
) |
|
(548 |
) |
|
(10,429 |
) |
||||
Net income (loss) attributable to nonredeemable noncontrolling interests |
|
— |
|
|
(168 |
) |
|
— |
|
|
(254 |
) |
||||
Net income (loss) attributable to Legacy Archaea |
|
— |
|
|
(7,762 |
) |
|
— |
|
|
(10,175 |
) |
||||
Net income (loss) attributable to redeemable noncontrolling interests |
|
10,674 |
|
|
— |
|
|
(4,071 |
) |
|
— |
|
||||
Net Income (Loss) Attributable to Class A Common Stock |
$ |
21,950 |
|
$ |
— |
|
$ |
3,523 |
|
$ |
— |
|
||||
Net income (loss) per Class A common share: |
|
|
|
|
||||||||||||
Net income (loss) – basic (1) |
$ |
0.27 |
|
$ |
— |
|
$ |
0.05 |
|
$ |
— |
|
||||
Net income (loss) – diluted (1) |
$ |
(0.18 |
) |
$ |
— |
|
$ |
(0.12 |
) |
$ |
— |
|
||||
Weighted average shares of Class A Common Stock outstanding: |
|
|
|
|
||||||||||||
Basic (1) |
|
80,522,737 |
|
|
— |
|
|
73,488,555 |
|
|
— |
|
||||
Diluted (1) |
|
83,445,455 |
|
|
— |
|
|
76,203,753 |
|
|
— |
|
(1) Class A Common Stock is outstanding beginning |
|
||||||||
Consolidated Balance Sheets (Unaudited) |
||||||||
(in thousands, except shares and per share data) |
|
|
||||||
ASSETS |
|
|
||||||
Current Assets |
|
|
||||||
Cash and cash equivalents |
$ |
213,315 |
|
$ |
77,860 |
|
||
Restricted cash |
|
21,864 |
|
|
15,206 |
|
||
Accounts receivable, net |
|
29,841 |
|
|
37,010 |
|
||
Inventory |
|
11,050 |
|
|
9,164 |
|
||
Prepaid expenses and other current assets |
|
33,952 |
|
|
21,225 |
|
||
Total Current Assets |
|
310,022 |
|
|
160,465 |
|
||
Property, plant and equipment, net |
|
460,340 |
|
|
350,583 |
|
||
Intangible assets, net |
|
627,223 |
|
|
638,471 |
|
||
|
|
29,835 |
|
|
29,211 |
|
||
Equity method investments |
|
263,336 |
|
|
262,738 |
|
||
Operating lease right-of-use assets |
|
4,654 |
|
|
— |
|
||
Other non-current assets |
|
17,113 |
|
|
9,721 |
|
||
Total Assets |
$ |
1,712,523 |
|
$ |
1,451,189 |
|
||
LIABILITIES AND EQUITY |
|
|
||||||
Current Liabilities |
|
|
||||||
Accounts payable - trade |
$ |
38,272 |
|
$ |
11,096 |
|
||
Current portion of long-term debt, net |
|
21,568 |
|
|
11,378 |
|
||
Current portion of operating lease liabilities |
|
923 |
|
|
— |
|
||
Accrued and other current liabilities |
|
63,607 |
|
|
46,279 |
|
||
Total Current Liabilities |
|
124,370 |
|
|
68,753 |
|
||
Long-term debt, net |
|
548,900 |
|
|
331,396 |
|
||
Derivative liabilities |
|
52,730 |
|
|
67,424 |
|
||
Below-market contracts |
|
135,210 |
|
|
142,630 |
|
||
Asset retirement obligations |
|
4,830 |
|
|
4,677 |
|
||
Long-term operating lease liabilities |
|
3,952 |
|
|
— |
|
||
Other long-term liabilities |
|
2,590 |
|
|
5,316 |
|
||
Total Liabilities |
|
872,582 |
|
|
620,196 |
|
||
Commitments and Contingencies |
|
|
||||||
Redeemable Noncontrolling Interests |
|
606,608 |
|
|
993,301 |
|
||
Stockholders' Equity |
|
|
||||||
Preferred stock, |
|
— |
|
|
— |
|
||
Class A Common Stock, |
|
8 |
|
|
7 |
|
||
Class B Common Stock, |
|
4 |
|
|
5 |
|
||
Additional paid in capital |
|
392,118 |
|
|
— |
|
||
Accumulated deficit |
|
(158,797 |
) |
|
(162,320 |
) |
||
Total Stockholders' Equity |
|
233,333 |
|
|
(162,308 |
) |
||
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity |
$ |
1,712,523 |
|
$ |
1,451,189 |
|
Reconciliation of Non-GAAP Measures
Adjusted EBITDA
The following table reconciles Adjusted EBITDA to net income (loss) for the three and six months ended
(in thousands) |
Three Months
|
Six Months
|
||||||
Net Income (loss) |
$ |
32,624 |
|
$ |
(548 |
) |
||
Adjustments: |
|
|
||||||
Interest expense |
|
3,712 |
|
|
6,366 |
|
||
Depreciation, amortization and accretion |
|
13,730 |
|
|
26,219 |
|
||
Income tax expense |
|
129 |
|
|
129 |
|
||
EBITDA |
$ |
50,195 |
|
$ |
32,166 |
|
||
Net derivative activity |
|
(38,095 |
) |
|
(18,180 |
) |
||
Amortization of intangibles and below-market contracts |
|
(1,103 |
) |
|
(2,206 |
) |
||
Amortization of equity method investments basis difference |
|
2,571 |
|
|
5,141 |
|
||
Depreciation and amortization adjustments for equity method investments |
|
1,579 |
|
|
3,173 |
|
||
Income tax expense for equity method investments |
|
151 |
|
|
1,693 |
|
||
Share-based compensation expense |
|
3,170 |
|
|
8,923 |
|
||
Acquisition and other transaction costs(1) and severance costs |
|
4,621 |
|
|
12,956 |
|
||
Settled RIN adjustment (2) |
|
7,006 |
|
|
7,006 |
|
||
Adjusted EBITDA |
$ |
30,095 |
|
$ |
50,672 |
|
(1) Other transaction costs include expenses related to certain joint ventures, R&D expenses and the Ares secondary offering. |
(2) Adjustment for gross profit on RINs generated from June gas production which will be recognized in the Company’s third quarter 2022 consolidated statement of operations. See “Summary and Review of Financial Results — Timing Adjustment for a Settled RIN Transaction” for more information. |
Adjusted EBITDA is commonly used as a supplemental financial measure by Archaea’s management and external users of its consolidated financial statements to assess the financial performance of its assets without regard to financing methods, capital structures, or historical cost basis. Adjusted EBITDA is not intended to represent cash flows from operations or net income (loss) as defined by GAAP and is not necessarily comparable to similarly titled measures reported by other companies.
Archaea believes Adjusted EBITDA provides relevant and useful information to management, investors, and other users of its financial information in evaluating the effectiveness of its operating performance in a manner that is consistent with management’s evaluation of financial and operating performance.
Adjusted EBITDA is calculated by taking net income (loss), before taxes, interest expense, and depreciation, amortization and accretion, and adjusting for the effects of certain non-cash items, other non-operating income or expense items, and other items not otherwise predictive or indicative of ongoing operating performance, including gains and losses on disposal of assets, impairment charges, debt forbearance costs, net derivative activity, non-cash share-based compensation expense, acquisition and other transaction costs, severance costs, and Settled RIN timing adjustment. Archaea believes the exclusion of these items enables investors and other users of its financial information to assess its sequential and year-over-year performance and operating trends on a more comparable basis and is consistent with management’s own evaluation of performance.
Adjusted EBITDA also includes adjustments for equity method investment basis difference amortization and the depreciation and amortization expense and income tax expense included in the Company’s equity earnings from its equity method investments. These adjustments should not be understood to imply that Archaea has control over the related operations and resulting revenues and expenses of its equity method investments. Archaea does not control its equity method investments; therefore, it does not control the earnings or cash flows of such equity method investments. The use of Adjusted EBITDA, including adjustments related to equity method investments, as an analytical tool should be limited accordingly.
A reconciliation of expected full year 2022 Adjusted EBITDA to net income (loss), the closest GAAP financial measure, cannot be provided without unreasonable efforts due to the inherent difficulty in quantifying certain amounts, including changes in share-based compensation expense, which is affected by factors including future personnel needs and the future price of our Class A Common Stock, and fair value of warrant derivatives, due to a variety of factors including the unpredictability of underlying price movements, which may be significant.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220815005715/en/
ARCHAEA
mlight@archaea.energy
346-439-7589
bschreiber@archaea.energy
346-440-1627
Source:
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