OPAL Fuels Inc. (“OPAL Fuels” or the “Company”) (Nasdaq: OPAL),
a vertically integrated leader in the capture and conversion of
biogas into low carbon intensity renewable natural gas (RNG) and
renewable electricity, today announced financial and operating
results for the three and twelve months ended December 31,
2023.
“OPAL Fuels continues to progress on its strategic and
operational goals,” said Co-CEO Jonathan Maurer. “Over the last two
years, we have more than doubled RNG production and significantly
expanded our fueling station network while continuing to
organically grow our project pipeline with industry leading
partners. We are pleased with our results as we leverage the
benefits of our vertically integrated platform.”
“Fourth quarter and full year 2023 financial and operational
results were in-line with our most recent guidance,” said Maurer.
“These results, coupled with achieving strategic initiatives such
as closing on our $500 million credit facility and advancing
industry partnerships, put us in a position to capitalize on
favorable industry fundamentals in 2024.”
“We now have 5.2 million MMBtu of annual design capacity online
at eight RNG facilities. We anticipate ending the year with 8.8
million MMBtu of RNG capacity online, adding 3.6 million MMBtu in
2024 as Prince William, Sapphire and Polk County (Florida) projects
begin operations. We also anticipate bringing online 2.4 MW of
renewable power nameplate capacity (0.2 million MMBtu of biomethane
equivalent per year) as our Fall River project commences operations
in the fourth quarter. Further, we expect several additional RNG
projects to enter construction this year and see increasing
momentum in Fuel Station Services, supporting growth beyond
2024.”
“The tailwinds from the capture and conversion of biogas into
low carbon intensity energy products that replace fossil fuels
continue to be strong. Constructive domestic and international
policy support continues to broaden, and demand for RNG is
increasing as positive feedback continues from heavy duty fleets
testing RNG,” said Co-CEO Adam Comora. “Our business model is
designed to position us to take advantage of these tailwinds and
drive growth.”
Financial Highlights
- Revenue for the three and twelve months ended December 31,
2023, was $87.0 million and $256.1 million, respectively, up 30%
and 9%, compared to same periods last year.
- Net income for the three and twelve months ended December 31,
2023, was $20.1 million and $127.0 million, respectively, compared
to $32.0 million and $32.6 million, in the comparable periods last
year.
- Basic net earnings per share attributable to Class A common
shareholders for the three and twelve months ended December 31,
2023, was $0.11 and $0.70, respectively compared to $0.18 and $0.13
in the comparable periods last year.
- Adjusted EBITDA1 for the three and twelve months ended December
31, 2023, was $32.0 million and $52.0 million, respectively,
compared to $20.4 million and $53.4 million in comparable periods
last year.
- At December 31, 2023, RNG Pending Monetization totaled $18.5
million.
Operational Highlights
- We exited 2023 with an aggregate annual design capacity of our
operating RNG projects of 5.2 million MMBtu.2,3
- RNG produced was 0.8 million and 2.7 million MMBtu, for the
three and twelve months ended December 31, 2023, an increase of 33%
and 23% compared to the prior-year periods.
- RNG sold as transportation fuel was 13.5 million and 43.8
million GGEs, respectively, for the three and twelve months ended
December 31, 2023, an increase of 44% and 49% compared to the
prior-year periods.
- The Fuel Station Services segment sold, dispensed, and serviced
an aggregate of 35.3 million and 133.2 million GGEs of
transportation fuel for the three and twelve months ended December
31, 2023, an increase of 8% and 15% compared to the prior-year
periods.
____________________________ 1 This is a non-GAAP measure. A
reconciliation of non-GAAP financial measure to comparable GAAP
measure has been provided in the financial tables included in this
press release. An explanation of this measure and how it is
calculated is also included below under the heading “Non-GAAP
Financial Measures." 2 Design 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.
Construction Update
- The Prince William RNG project is mechanically complete and in
commissioning. The project will commence commercial operations in
the coming weeks. This project, owned 100% by OPAL Fuels,
represents approximately 1.7 million MMBtu of annual design
capacity.
- We anticipate commencing commercial operations at our Sapphire
RNG project in the third quarter of 2024. This project represents
approximately 0.8 million MMBtu for OPAL Fuels’ 50% ownership share
of annual design capacity.
- We expect the Polk County (Florida) RNG project to commence
commercial operations in the fourth quarter of 2024. This project,
owned 100% by OPAL Fuels, represents approximately 1.1 million
MMBtu of annual design capacity.
- Completion of construction at two dairy projects in California
(Hilltop and Vander Schaaf) has been delayed due to a dispute with
the Engineering, Procurement and Construction contractor over a
series of change order requests.4
- The Atlantic RNG project is expected to commence commercial
operations in mid-2025. This project represents approximately 0.3
million MMBtu for OPAL Fuels’ 50% ownership share of annual design
capacity.
- The Fall River project is a renewable power project that is
expected to commence operations at the end of 2024. This project
represents 2.4 MW of renewable power nameplate capacity (0.2
million MMBtus of biomethane equivalent per year) and is 100% owned
by OPAL Fuels.
____________________________________________ 4 For more
information, please see the Company’s Annual Report on Form 10-K
for the twelve months ended December 31, 2023.
2024 Guidance
- The Company currently estimates that Adjusted EBITDA for the
full year 2024 will range between $90 million and $100 million.
Adjusted EBITDA does not include:
- Approximately $40 million of potential ITC cash proceeds from
Emerald and the three landfill RNG projects coming online this
year, which would be included in net income in 2024;
- An increase of approximately $15 million from RNG pending
monetization in 2024, which represents the time lag between the
recognition of RNG production costs compared with the associated
revenues; and
- An adjustment for development and project start up expenses5 of
approximately $12 million in 2024, which is predominantly the
Prince William virtual pipeline expense.
- We anticipate Adjusted EBITDA from our Fuel Station Services
segment to grow by 75%-90% compared to 2023.
- We expect 2024 RNG production to range from 4.4 to 4.8 million
MMBtu.
- We expect full year 2024 capital expenditures at wholly-owned
and joint venture projects to total approximately $230 million.
This total includes approximately $28 million for Fuel Station
Services and $41 million relating to equity method investments in
RNG projects.
- We anticipate putting into construction at least 2.0 million
annual MMBtu of RNG design capacity in 2024 which is included in
our 2024 capital expenditure guidance.
- 2024 guidance assumes a weighted average annual price for D3
RINs of approximately $3.0/gallon, natural gas price of
$2.00/MMBtu, and an LCFS credit price of $65.0/metric ton.
___________________ 5Project development and start up expenses
will be presented as a separate line item on the Income Statement
in 2024.
Results of Operations
($ thousands of dollars)
Three Months Ended December
31,
Twelve Months Ended December
31,
(Unaudited)
(Unaudited)
2023
2022
2023
2022
Revenue
RNG Fuel
$
28,824
$
24,343
$
66,292
$
73,158
Fuel Station Services
46,923
30,039
135,012
117,415
Renewable Power
11,261
12,335
54,804
44,958
Total Revenue
$
87,008
$
66,717
$
256,108
$
235,531
Net income
$
20,093
$
32,019
$
127,024
$
32,579
Adjusted EBITDA (1)
RNG Fuel
23,280
14,791
48,703
43,374
Fuel Station Services
12,034
7,235
22,847
21,603
Renewable Power
3,865
8,155
26,132
22,221
Corporate
(7,160
)
(9,803
)
(45,732
)
(33,797
)
Consolidated Adjusted EBITDA (1)
$
32,019
$
20,378
$
51,950
$
53,401
RNG Fuel volume produced (Million
MMBtus)
0.8
0.6
2.7
2.2
RNG Fuel volume sold (Million GGEs)
13.5
9.4
43.8
29.4
Total volume delivered (Million GGEs)
35.3
32.8
133.2
115.9
(1) This is a non-GAAP measure. A
reconciliation of non-GAAP financial measure to comparable GAAP
measure has been provided in the financial tables included in this
press release. An explanation of this measure and how it is
calculated is also included below under the heading “Non-GAAP
Financial Measures."
Landfill RNG Facility Capacity and Utilization
Summary
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Landfill RNG Facility Capacity and
Utilization(1)(2)(3)(4)
Design Capacity (Million MMBtus)
1.3
0.9
4.1
3.2
Volume of Inlet Gas (Million MMBtus)
1.0
0.7
3.2
2.4
Inlet Design Capacity Utilization %
80
%
75
%
78
%
75
%
RNG Fuel volume produced (Million
MMBtus)
0.7
0.6
2.6
2.0
Utilization of Inlet Gas %
79
%
84
%
83
%
86
%
(1) Design Capacity for RNG facilities is
measured as the volume of feedstock biogas that the facility is
capable of accepting at the inlet and processing during the
associated period. Design Capacity is presented as OPAL’s ownership
share (i.e., net of joint venture partners’ ownership) of the
facility and is calculated based on the number of days in the
period. New facilities that come online during a quarter are
pro-rated for the number of days in commercial operation.
(2) Inlet Design Capacity Utilization is
measured as the Volume of Inlet Gas for a period, divided by the
total Design Capacity for such period. The Volume of Inlet Gas
varies over time depending on, among other factors, (i) the
quantity and quality of waste deposited at the landfill, (ii) waste
management practices by the landfill, and (iii) the construction,
operations and maintenance of the landfill gas collection system
used to recover the landfill gas. The Design Capacity for each
facility will typically be correlated to the amount of landfill gas
expected to be generated by the landfill during the term of the
related gas rights agreement. The Company expects Inlet Design
Capacity Utilization to be in the range of 75-85% on an aggregate
basis over the next several years. Typically, newer facilities
perform at the lower end of this range and demonstrate increasing
utilization as they mature and the biogas resource increases at
open landfills.
(3) Utilization of Inlet Gas is measured
as RNG Fuel Volume Produced divided by the Volume of Inlet Gas.
Utilization of Inlet Gas varies over time depending on availability
and efficiency of the facility and the quality of landfill gas
(i.e., concentrations of methane, oxygen, nitrogen, and other
gases). The Company generally expects Utilization of Inlet Gas to
be in the range of 80% to 90%.
(4) Data not available for the Company's
dairy projects, i.e., Sunoma and Biotown. Total RNG fuel design
capacity for the three and twelve months ended December 31, 2023 is
1.3 million MMBtu and 4.3 million MMBtu, respectively. Including
Sunoma and Biotown, RNG fuel volume produced is 0.8 and 2.7 million
MMBtu for the three and twelve months ended December 31, 2023,
respectively.
RNG Pending Monetization Summary
Three Months Ended
(In 000's)
December 31, 2023
RNG Fuel
Fuel Station Services
Total
Stored Gas Metrics (1)
Beginning balance Stored RNG as of
September 30, 2023
264
54
318
Add: RNG production (MMBtus)
776
57
833
Less: Current period RNG volumes
dispensed
(804
)
(53
)
(857
)
Ending Balance Stored RNG (MMBtus) as of
December 31, 2023
236
58
294
Value of ending balance Stored RNG
using quarter end price (1) (2)
$
12,127
$
6,101
$
18,228
RIN Metrics
Beginning balance as of September 30,
2023
3,854
1,132
4,986
Add: Generated in current period
8,343
2,134
10,477
Less: Sales
(12,197
)
(3,244
)
(15,441
)
Ending RIN credit balance (Available for
sale) as of December 31, 2023
—
22
22
D3 price per RIN at quarter end
$
3.18
$
3.18
$
3.18
Value of RINs using quarter end price
(2)
$
—
$
70
$
70
LCFS Metrics
Beginning balance (net share) as of
September 30, 2023
—
73
73
Add: Generated in current period
5
30
35
Less: Sales
(5
)
(102
)
(107
)
Ending LCFS credit balance (Available for
sale) as of December 31, 2023
—
1
1
LCFS credit price at quarter end
$
—
$
103.40
$
103.40
Value of LCFSs using quarter end price
(2)
$
—
$
103
$
103
Value of RECs using quarter end
price
—
—
$
57
Other Metrics
Average realized sales price - RIN
—
—
$
2.83
Average realized sales price - LCFS
—
—
$
72.30
Total Value of RNG Pending Monetization
at quarter end
$
12,127
$
6,274
$
18,458
(1) Reflects OPAL’s ownership share of
Stored RNG (i.e., net of joint venture partners’ ownership)
including equity method investments
(2) Reflects OPAL’s ownership share of RIN
and LCFS credits (i.e., net of joint venture partners’ ownership)
including equity method investments and presented net of discounts
and any direct transaction costs such as dispensing fees,
third-party royalties and transaction costs as applicable.
Liquidity
As of December 31, 2023, we have drawn approximately $186.6
million, and utilized $13.8 million of our revolver availability to
issue letters of credit, under the $500 million senior secured
credit facility we entered into in September 2023.
As of December 31, 2023, our liquidity was $347.8 million,
consisting of $299.6 million of availability under the above
referenced credit facility, and $48.2 million of cash, cash
equivalents, and short-term investments.
We believe our liquidity and anticipated cash flows from
operations are sufficient to meet our existing funding needs.
Capital Expenditures
During the twelve months ended December 31, 2023, OPAL Fuels
invested $113.8 million across RNG projects in construction and
OPAL Fuels proprietary fueling stations in construction as compared
to $131.4 million in the prior year.
In addition, for the twelve months ended December 31, 2023, the
Company's portion of capital expenditures in unconsolidated
entities was $20.6 million. This represents our share of capital
expenditures incurred by Paragon for the Emerald and Sapphire
projects post deconsolidation.
Earnings Call
A webcast to review OPAL Fuels’ Fourth Quarter and Full Year
2023 results is being held tomorrow, March 14, 2024 at 11:00AM
EDT.
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/igoxez25. 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 leader in the capture and
conversion of biogas into low carbon intensity renewable
electricity and renewable natural gas (RNG). OPAL Fuels is also a
leader in the marketing and distribution of RNG to heavy duty
trucking and other hard to de-carbonize industrial sectors. RNG is
chemically identical to the natural gas Americans use to cook with,
heat homes, and fuel natural gas engines, with one significant
difference: RNG is produced by recycling harmful methane emissions
created by decaying organic waste as opposed to fossil natural gas
which is pumped from the ground. For additional information 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.
CONSOLIDATED BALANCE
SHEETS
(In thousands of U.S. dollars,
except per share data)
December 31,
2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents (includes $166
and $12,506 at December 31, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
$
38,348
$
40,394
Accounts receivable, net (includes $33 and
$966 at December 31, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
27,623
31,083
Accounts receivable, related party
18,696
12,421
Restricted cash - current (includes $4,395
and $6,971 at December 31, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
4,395
32,402
Short term investments
9,875
64,976
Fuel tax credits receivable
5,345
4,144
Contract assets
6,790
9,771
Parts inventory (includes $29 and $— at
December 31, 2023 and December 31, 2022, respectively, related to
consolidated VIEs)
10,191
7,311
Environmental credits held for sale
172
1,674
Prepaid expense and other current assets
(includes $107 and $415 at December 31, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
6,005
7,625
Derivative financial assets, current
portion
633
182
Total current assets
128,073
211,983
Capital spares
3,468
3,443
Property, plant, and equipment, net
(includes $26,626 and $73,140 at December 31, 2023 and December 31,
2022, respectively, related to consolidated VIEs)
339,493
297,323
Operating right-of use assets
12,301
11,744
Investment in other entities
207,099
51,765
Note receivable - variable fee
component
2,302
1,942
Derivative financial assets, non-current
portion
—
954
Deferred financing costs
—
3,013
Other long-term assets
1,162
1,489
Intangible assets, net
1,604
2,167
Restricted cash - non-current (includes
$1,850 and $2,923 at December 31, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
4,499
4,425
Goodwill
54,608
54,608
Total assets
$
754,609
$
644,856
Liabilities and Equity
Current liabilities:
Accounts payable (includes $744 and $4,896
at December 31, 2023 and December 31, 2022, respectively, related
to consolidated VIEs)
13,401
17,649
Accounts payable, related party (includes
$1,046 and $433 at December 31, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
7,024
6,376
Fuel tax credits payable
4,558
3,320
Accrued payroll
9,023
8,979
Accrued capital expenses (includes $0 and
$7,821 at December 31, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
15,128
11,922
Accrued expenses and other current
liabilities (includes $647 and $646 at December 31, 2023 and
December 31, 2022, respectively, related to consolidated VIEs)
14,745
9,573
Contract liabilities
6,314
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
Sunoma loan, current portion (includes
$1,608 and $380 at December 31, 2023 and December 31, 2022,
respectively, related to consolidated VIEs)
1,608
380
Convertible Note Payable
—
28,528
Municipality Loan
—
76
Derivative financial liability, current
portion
—
4,596
Operating lease liabilities - current
portion
638
630
Other current liabilities (includes $92
and $— at December 31, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
92
1,085
Asset retirement obligation, current
portion
3,860
1,296
Total current liabilities
76,391
152,905
Asset retirement obligation, non-current
portion
2,868
4,960
OPAL Term Loan, net of debt issuance
costs
176,532
66,600
Sunoma loan, net of debt issuance costs
(includes $20,010 and $21,712 at December 31, 2023 and December 31,
2022, respectively, related to consolidated VIEs)
20,010
21,712
Operating lease liabilities - non-current
portion
11,824
11,245
Earn out liabilities
1,900
8,790
Other long-term liabilities (includes $211
and $— at December 31, 2023 and December 31, 2022, respectively,
related to consolidated VIEs)
7,599
825
Total liabilities
297,124
267,037
Commitments and contingencies
Redeemable preferred non-controlling
interests
132,617
138,142
Redeemable non-controlling interests
802,720
1,013,833
Stockholders' (deficit) equity
Class A common stock, $0.0001 par value,
340,000,000 shares authorized as of December 31, 2023; 29,701,146
and 29,477,766 shares, issued and outstanding at December 31, 2023
and December 31, 2022, respectively
3
3
Class B common stock, $0.0001 par value,
160,000,000 shares authorized as of December 31, 2023; None issued
and outstanding as of December 31, 2023 and December 31, 2022
—
—
Class C common stock, $0.0001 par value,
160,000,000 shares authorized as of December 31, 2023; None issued
and outstanding as of December 31, 2023 and December 31, 2022
—
—
Class D common stock, $0.0001 par value,
160,000,000 shares authorized as of December 31, 2023; 144,399,037
issued and outstanding at December 31, 2023 and December 31,
2022
14
14
Additional paid-in capital
—
—
Accumulated deficit
(467,195
)
(800,813
)
Accumulated other comprehensive (loss)
income
(15
)
195
Class A common stock in treasury, at cost;
1,635,783 and — shares at December 31, 2023 and December 31, 2022,
respectively
(11,614
)
—
Total Stockholders' (deficit) equity
attributable to the Company
(478,807
)
(800,601
)
Non-redeemable non-controlling
interests
955
26,445
Total Stockholders' (deficit) equity
(477,852
)
(774,156
)
Total liabilities, Redeemable preferred,
Redeemable non-controlling interests and Stockholders' (deficit)
equity
$
754,609
$
644,856
OPAL FUELS INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands of U.S. dollars,
except per unit data)
Twelve Months Ended
December 31,
2023
2022
Revenues:
RNG fuel (includes revenues from related
party of $56,069 and $58,185 for the years ended December 31, 2023
and 2022, respectively)
$
66,292
$
73,158
Fuel station services (includes revenues
from related party of $28,468 and $18,735 for the years ended
December 31, 2023 and 2022, respectively)
135,012
117,415
Renewable Power (includes revenues from
related party of $6,614 and $5,495 for the years ended December 31,
2023 and 2022, respectively)
54,804
44,958
Total revenues
256,108
235,531
Operating expenses:
Cost of sales - RNG fuel
32,028
32,367
Cost of sales - Fuel station services
115,322
98,845
Cost of sales - Renewable Power
36,550
31,580
Project development and start up costs
4,866
6,438
Selling, general, and administrative
51,262
51,386
Depreciation, amortization, and
accretion
14,565
13,136
Income from equity method investments
(5,525
)
(5,784
)
Total expenses
249,068
227,968
Operating income
7,040
7,563
Interest and financing expense, net
(9,306
)
(6,640
)
Change in fair value of derivative
instruments, net
7,346
33,081
Other income
124,472
1,943
Loss on debt extinguishment
(2,190
)
—
Loss on warrant exchange
(338
)
(3,368
)
Income before provision for income
taxes
127,024
32,579
Provision for income taxes
—
—
Net income
127,024
32,579
Net income attributable to redeemable
non-controlling interests
97,426
22,409
Net loss attributable to non-redeemable
non-controlling interests
(349
)
(1,153
)
Dividends on Redeemable preferred
non-controlling interests (1)
11,011
7,932
Net income attributable to Class A common
stockholders
$
18,936
$
3,391
Weighted average shares outstanding of
Class A common stock :
Basic
27,148,538
25,774,312
Diluted
27,494,016
26,062,398
Per share amounts:
Basic
$
0.70
$
0.13
Diluted
$
0.69
$
0.12
OPAL FUELS INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
In thousands of U.S.
dollars)
Twelve Months Ended
December 31,
2023
2022
Cash flows from operating
activities:
Net income
$
127,024
$
32,579
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Income from equity method investments
(5,525
)
(5,784
)
Distributions from equity method
investments
12,242
—
Loss on exchange of Warrants
338
3,368
Depreciation and amortization
14,043
13,015
Amortization of deferred financing
costs
1,720
1,943
Amortization of operating lease
right-of-use assets
643
770
Loss on debt extinguishment
2,190
—
Accretion expense related to asset
retirement obligation
521
121
Stock-based compensation
5,904
1,469
Provision for bad debts
518
499
Paid-in-kind interest income
(360
)
(286
)
Change in fair value of Convertible Note
Payable
1,579
413
Change in fair value of the earnout
liabilities
(6,890
)
(37,111
)
Unrealized gain on derivative financial
instruments
(270
)
3,867
Gain on repayment of Note receivable
—
(1,943
)
Gain on deconsolidation of VIEs
(122,873
)
—
Changes in operating assets and
liabilities:
Accounts receivable
2,942
(6,191
)
Accounts receivable, related party
(6,275
)
(12,421
)
Proceeds received on previously recorded
paid-in-kind interest income
—
288
Fuel tax credits receivable
(1,201
)
(1,751
)
Capital spares
(25
)
(418
)
Parts inventory
(2,880
)
(2,168
)
Environmental credits held for sale
1,502
(1,288
)
Prepaid expense and other current
assets
2,200
(3,108
)
Contract assets
2,981
(1,287
)
Accounts payable
6,184
10,143
Accounts payable, related party
1,228
1,180
Fuel tax credits payable
1,238
1,342
Accrued payroll
66
127
Accrued expenses
3,775
3,237
Operating lease liabilities - current and
non-current
(613
)
(640
)
Asset retirement obligations
(49
)
—
Other current and non-current
liabilities
(1,910
)
452
Contract liabilities
(1,699
)
(1,772
)
Net cash provided by (used in) operating
activities
38,268
(1,355
)
Cash flows from investing
activities:
Purchase of property, plant, and
equipment
(113,826
)
(131,410
)
Deconsolidation of VIEs, net of cash
(11,947
)
—
Proceeds (purchase) of short term
investments
55,101
(64,976
)
Cash paid for investment in other
entities
(8,314
)
(597
)
Proceeds received from repayment of Note
receivable
—
10,855
Distributions received from equity method
investment
4,840
2,100
Net cash used in investing activities
(74,146
)
(184,028
)
Cash flows from financing
activities:
Proceeds from Sunoma loan
—
4,593
Proceeds from OPAL Term Loan
196,617
40,000
Proceeds received from Business
Combination
—
138,850
Financing costs paid to other third
parties
(10,264
)
(8,321
)
Repayment of Senior Secured Credit
Facility
(22,750
)
(58,603
)
Repayment of Convertible Note Payable
(30,107
)
—
Repayment of OPAL Term Loan
(106,090
)
(18,910
)
Repayment of Sunoma Loan
(546
)
—
Repayment of Municipality loan
(76
)
(202
)
Repayment of finance lease liabilities
(993
)
—
Proceeds from equipment loan
303
—
Proceeds from sale of non-redeemable
non-controlling interest, related party
12,753
23,143
Reimbursement of financing costs by joint
venture partner
842
—
Payment of paid-in-kind preferred
dividends
(16,536
)
—
Cash paid for taxes related to net share
settlement of equity awards
(896
)
—
Cash paid for purchase of shares upon
exercise of put option
(16,391
)
—
Distribution to non-redeemable
non-controlling interest
(333
)
—
Proceeds from issuance of shares of Class
A common stock under the ATM program, net
366
—
Proceeds from issuance of redeemable
preferred non-controlling interests, related party
—
100,000
Contributions from members
—
—
Net cash provided by financing
activities
5,899
220,550
Net (decrease) increase in cash,
restricted cash, and cash equivalents
(29,979
)
35,167
Cash, restricted cash, and cash
equivalents, beginning of period
77,221
42,054
Cash, restricted cash, and cash
equivalents, end of period
$
47,242
$
77,221
Supplemental disclosure of cash flow
information
Interest paid, net of $5,475 and $3,678
capitalized, respectively
$
6,929
$
7,013
Noncash investing and financing
activities:
Fair value of Class A common stock issued
for redemption of Convertible Note Payable
$
—
$
30,595
Fair value of Class A common stock issued
for redemption of Public and Private warrants
$
338
$
25,919
Fair value of Derivative warrant
liabilities assumed related to Business Combination
$
—
$
13,524
Fair value of Earnout liabilities related
to Business Combination
$
—
$
45,900
Fair value of put option on a forward
purchase agreement related to Business Combination
$
—
$
4,600
Paid-in-kind dividend on redeemable
preferred non-controlling interests
$
2,617
$
7,932
Right-of-use assets for finance leases
included in Property, Plant and equipment, net
$
9,048
$
801
Lease liabilities for finance leases
included in Accrued expenses and other current liabilities
$
1,398
$
316
Lease liabilities for finance leases
included in Other long-term liabilities
$
7,388
$
485
Accrual for purchase of Property, plant
and equipment included in Accounts payable and Accrued capital
expenses
$
15,570
$
11,922
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 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
interest and financing expense, net, loss on debt extinguishment,
net (income) loss attributable to non-controlling interests,
depreciation, amortization and accretion expense, adjustments to
reflect Adjusted EBITDA from equity method investments, loss on
warrant exchange, unrealized (gain) loss on derivative instruments,
non-cash charges, one-time non-recurring expenses, major
maintenance on renewable power and gain on deconsolidation of
VIEs.
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 table presents the reconciliation of our Net
income to Adjusted EBITDA:
Reconciliation of GAAP Net
income to Adjusted EBITDA
For the Three and Twelve
Months Ended December 31, 2023 and 2022
(In thousands of
dollars)
Three Months Ended December
31, 2023
Twelve Months Ended December
31, 2023
RNG Fuel
Fuel Station Services
Renewable Power
Corporate
Total
RNG Fuel
Fuel Station Services
Renewable Power
Corporate
Total
Net income (loss) (1)
$
12,726
$
10,479
$
1,888
$
(5,000
)
$
20,093
$
22,203
$
17,908
$
12,472
$
74,441
$
127,024
Adjustments to reconcile net income (loss)
to Adjusted EBITDA
Interest and financing expense, net
4,352
(14
)
20
466
4,824
8,968
(134
)
280
192
9,306
Loss on debt extinguishment (2)
—
—
—
(658
)
(658
)
—
—
—
2,190
2,190
Net (income) loss attributable to
non-redeemable non-controlling interests
(182
)
—
—
—
(182
)
349
—
—
—
349
Depreciation, amortization and
accretion
1,314
1,175
1,178
(36
)
3,631
5,268
3,730
5,567
—
14,565
Adjustments to reflect Adjusted EBITDA
from equity method investments (3)
2,658
—
—
—
2,658
5,912
—
—
—
5,912
Loss on warrant exchange
—
—
—
—
—
—
—
—
338
338
Unrealized (gain) loss on derivative
instruments (4)
—
—
(30
)
(3134
)
(3,164
)
—
—
(763
)
(7140
)
(7,903
)
Non-cash charges (5)
—
174
—
1,123
1,297
—
174
—
6,003
6,177
One-time non-recurring charges (6)
2,412
220
45
79
2,756
6,003
1,169
1,336
1,117
9,625
Major maintenance for Renewable Power
—
—
764
—
764
—
—
7,240
—
7,240
Gain on deconsolidation of VIEs
—
—
—
—
—
—
—
—
(122,873
)
(122,873
)
Adjusted EBITDA
$
23,280
$
12,034
$
3,865
$
(7,160
)
$
32,019
$
48,703
$
22,847
$
26,132
$
(45,732
)
$
51,950
Three Months Ended December
31, 2022
Twelve Months Ended December
31, 2022
RNG Fuel
Fuel Station Services
Renewable Power
Corporate
Total
RNG Fuel
Fuel Station Services
Renewable Power
Corporate
Total
Net income (loss) (1)
$
7,831
$
4,521
$
3,367
$
16,300
$
32,019
$
32,114
$
18,245
$
4,681
$
(22,461
)
$
32,579
Adjustments to reconcile net income (loss)
to Adjusted EBITDA
Interest and financing expense, net
(240
)
871
1,702
(2,905
)
(572
)
—
899
5,261
480
6,640
Net loss attributable to non-redeemable
non-controlling interests
329
—
—
—
329
1,153
—
—
—
1,153
Depreciation, amortization and
accretion
1,362
230
1,413
30
3,035
6,469
846
5,696
125
13,136
Adjustments to reflect Adjusted EBITDA
from equity method investments (3)
1,095
—
—
—
1,095
2,073
—
—
—
2,073
Loss on warrant exchange
—
—
—
3,368
3,368
—
—
—
3368
3,368
Unrealized (gain) loss on derivative
instruments (4)
—
—
260
(30,822
)
(30,562
)
—
—
512
(28,719
)
(28,207
)
Non-cash charges (5)
844
207
—
515
1,566
844
207
—
2,109
3,160
One-time non-recurring charges (6)
3,570
1,406
1,370
3,711
10,057
6,481
1,406
1,370
11,301
20,558
Major maintenance for Renewable Power
—
—
43
—
43
—
—
4,701
—
4,701
Gain on repayment of Note Receivable and
reversal of liability to non-redeemable non-controlling
interest
—
—
—
—
—
(5,760
)
—
—
—
(5,760
)
Adjusted EBITDA
$
14,791
$
7,235
$
8,155
$
(9,803
)
$
20,378
$
43,374
$
21,603
$
22,221
$
(33,797
)
$
53,401
(1) Net income (loss) by segment is
included in our quarterly report on Form 10 K. Net loss for RNG
Fuel includes our portion of net income on our equity method
investments.
(2) Loss on debt extinguishment relates to
assignment of our senior secured credit facility to Paragon and
debt restructuring related to OPAL Term Loan.
(3) Includes interest, depreciation,
amortization and accretion on equity method investments.
(4) Unrealized (gain) 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
(i) certain expenses related to development expenses on our RNG
facilities such as lease expenses and virtual pipeline costs,
incurred during construction phase that could not be capitalized
per GAAP for the year ended December 31, 2023, and (ii) transaction
costs relating to the Business Combination for the year ended
December 31, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240313288921/en/
Investors Todd Firestone Vice President Investor
Relations & Corporate Development 914-705-4001
investors@opalfuels.com ICR, Inc. OPALFuelsPR@icrinc.com
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