OPAL Fuels Reports Second Quarter 2023 Results
- Revenue increased by 3% compared to the same periods last year.
- Net income improved significantly, reaching $114.1 million and $106.7 million for the three and six months ended June 30, 2023.
- Adjusted EBITDA showed remarkable growth, reaching $21.4 million and $30.1 million for the three and six months ended June 30, 2023.
- RNG produced and sold increased by 20% and 34%, respectively, compared to the prior-year periods.
- Revenue was down 4% for the six months ended June 30, 2023, compared to the same period last year.
- Adjusted net loss was $7.8 million and $15.1 million for the three and six months ended June 30, 2023.
- Liquidity decreased to $44.1 million as of June 30, 2023, from $181 million at March 31, 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
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 $98.0 million 3% and down4% , 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 $106.7 million $0.3 million $4.8 million $7.8 million $15.1 million
-
Basic net income per share attributable to Class A common shareholders for the three and six months ended June 30, 2023, was
$0.66 $0.60 $0.06 $0.12
-
Adjusted EBITDA1 for the three and six months ended June 30, 2023, was
$21.4 million $30.1 million 92% and97% 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 $17.7 million $16.4 million
-
We expect our full year 2023 Adjusted EBITDA guidance to be within our prior
$85.0 $95.0 million
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% and34% 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% and45% 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% and29% compared to the prior-year periods, respectively.
Construction Update
-
The
Polk County landfill RNG project, owned100% 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
Net income for the three and six months ended June 30, 2023, was
Adjusted EBITDA for the three and six months ended June 30, 2023, was
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
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
____________________________
5 Using quarter end pricing of
Segment Revenues
RNG Fuel
Revenue from RNG Fuel was
Revenue from RNG Fuel was
Fuel Station Services
Revenue from Fuel Station Services was
Revenue from Fuel Station Services was
Renewable Power
Revenue from Renewable Power was
Revenue from Renewable Power was
Liquidity
As of June 30, 2023, liquidity was
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
_________________________
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
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
“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
“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.
|
|||||||
|
June 30,
|
|
December 31,
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents (includes |
$ |
21,595 |
|
|
$ |
40,394 |
|
Accounts receivable, net (includes |
|
26,821 |
|
|
|
31,083 |
|
Accounts receivable, related party |
|
— |
|
|
|
12,421 |
|
Restricted cash - current (includes |
|
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 |
|
4,184 |
|
|
|
1,674 |
|
Prepaid expense and other current assets (includes |
|
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 |
|
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 |
|
5,303 |
|
|
|
4,425 |
|
Goodwill |
|
54,608 |
|
|
|
54,608 |
|
Total assets |
$ |
671,945 |
|
|
$ |
644,856 |
|
Liabilities and Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable (includes |
|
16,411 |
|
|
|
22,679 |
|
Accounts payable, related party (includes |
|
790 |
|
|
|
1,346 |
|
Fuel tax credits payable |
|
2,624 |
|
|
|
3,320 |
|
Accrued payroll |
|
7,107 |
|
|
|
8,979 |
|
Accrued capital expenses (includes |
|
8,864 |
|
|
|
11,922 |
|
Accrued expenses and other current liabilities (includes |
|
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 |
|
|
|
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 |
|
|
|
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, |
|
3 |
|
|
|
3 |
|
Class B common stock, |
|
— |
|
|
|
— |
|
Class C common stock, |
|
— |
|
|
|
— |
|
Class D common stock, |
|
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.
|
||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
|
|
|
|
|
||||||||
RNG fuel (includes revenues from related party of |
|
$ |
16,431 |
|
|
$ |
16,459 |
|
|
$ |
28,625 |
|
|
$ |
31,508 |
|
Fuel station services (includes revenues from related party of |
|
|
29,956 |
|
|
|
26,730 |
|
|
|
50,784 |
|
|
|
51,604 |
|
Renewable Power (includes revenues from related party of |
|
|
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.
|
||||||||
|
|
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
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
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
|
||||||||||||||||||||||||||||||||||||||
|
|
Three Months Ended June 30, 2023 |
|
Six Months Ended June 30, 2023 |
||||||||||||||||||||||||||||||||||
|
|
RNG Fuel |
|
Fuel
|
|
Renewable
|
|
Corporate |
|
Total |
|
RNG Fuel |
|
Fuel
|
|
Renewable
|
|
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
|
|
Renewable
|
|
Corporate |
|
Total |
|
RNG Fuel |
|
Fuel
|
|
Renewable
|
|
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
Source: OPAL Fuels, Inc.
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