OPAL Fuels Inc. Q3 FY2025 earnings call

• RNG production saw sequential growth, with October production the highest in OPAL's history. - Atlantic project was brought online, and CMS RNG project in North Carolina began construction. - Completed fourth investment tax credit monetization, with total gross proceeds of $43 million year-to-date. - Fuel Station Services segment has 47 operating stations and 41 under construction, expecting to meet lower end of segment EBITDA growth target despite challenges.

RNG production in the third quarter was 1.3 million MMBtus, representing a 30% year-over-year increase. Revenue for the quarter was $83 million, and adjusted EBITDA was $19.5 million. The Fuel Station Services segment has 47 operating fueling stations and 41 stations under construction. The RNG segment contributes through production and investment tax credit monetization, while the Fuel Station Services segment provides recurring cash flow and a balanced earnings mix.

• Maintained full year guidance. - Expect production to continue growing in 2026 and beyond, supported by increasing production, higher RIN prices, fuel station services seasonality, and 45Z credits. - Confident in delivering operating and financial results in line with full year guidance, including benefits from 45Z production tax credits in the fourth quarter.

• Regulatory uncertainties, such as government shutdown impact on RVO final rules and D3 RVO volumes. - Competition for RNG project development due to limited access to capital and offtake. - Macro factors affecting truck purchases and investment decisions in the Fuel Station Services segment, including seasonality and economic conditions.

Q: How is the RNG production trajectory pacing and what does it project into 2026?

A: Jonathan Maurer and Adam Comora noted sequential growth from operational improvements, expecting continued growth in 2026 with support from production growth and 45Z credits.

Q: What are the expectations for the final RVO and D3 RVO?

A: Adam Comora stated the government shutdown is affecting RVO final rules, with optimism for support of RNG and D3 volumes, expecting resolution soon.

Q: Talk about the balance between growth spending and free cash flow generation in landfill RNG assets?

A: Adam Comora explained maintenance CapEx is included in operating cash flow, and discretionary free cash flow will be highlighted for investors.

Q: Outlook on natural gas vehicle adoption and bottlenecks?

A: Adam Comora discussed optimism in natural gas deployment, addressing equipment pricing and fleet deployment lags, expecting growth in 2026 and beyond.

Q: Competition for RNG project development and focus on downstream fuel distribution?

A: Kazi Hasan and Adam Comora mentioned limited access to capital and offtake affecting competitors, and downstream focus for balanced earnings and open-ended growth opportunities.