Montauk Renewables Announces Second Quarter 2023 Results
08/09/2023 - 04:15 PM
PITTSBURGH, Aug. 09, 2023 (GLOBE NEWSWIRE) -- Montauk Renewables, Inc. (“Montauk” or “the Company”) (NASDAQ: MNTK), a renewable energy company specializing in the management, recovery, and conversion of biogas into renewable natural gas (“RNG”), today announced financial results for the second quarter ended June 30, 2023.
Second Quarter Financial Highlights:
Revenues of $53.3 million , decreased 21.5% as compared to the second quarter of 2022 Net Income of $1.0 million , decreased 94.8% as compared to the second quarter of 2022 Non-GAAP Adjusted EBITDA of $19.2 million , decreased 30.4% as compared to the second quarter of 2022 RNG production of 1.4 million MMBtu, decreased 2.6% as compared to the second quarter of 2022 On June 21, 2023, the Environmental Protection Agency announced final rules for the Renewable Fuel Standard for the period 2023 through 2025. The final rules did not finalize the eRIN program but did set final volumes for cellulosic biofuel at 838, 1,090, and 1,376 million RINs for the years 2023, 2024 and 2025, respectively. We sold a significant amount of RINs as a result of the rise in the index price of D3 RINs following the announcement of the final rules.
In the second quarter of 2023, we announced a planned development of a renewable natural gas landfill project in Irvine, CA at the Frank R. Bowerman Landfill. The project is anticipated to process the large and growing volumes of biogas in excess of the existing capacity of the REG facility. With a targeted commissioning date in 2026, we currently expect the capital investment to range between $85 - $95 million , which is anticipated to have production nameplate capacity of approximately 3,600 MMBtu per day.
Second Quarter Financial Results
Total revenues in the second quarter of 2023 were $53.3 million , a decrease of $14.6 million (21.5% ) compared to $67.9 million in the second quarter of 2022. The decrease is primarily related to a decrease in pricing of gas commodity indices and average realized RIN pricing during the second quarter of 2023 compared to the second quarter of 2022. Gas commodity indices decreased 70.7% during the second quarter of 2023 compared to the second quarter of 2022. Realized RIN pricing of $2.16 in the second quarter of 2023 decreased 36.1% when compared to $3.38 in the second quarter of 2022. Operating and maintenance expenses for our RNG facilities were $11.7 million , an increase of $0.7 million (6.5% ) compared to $11.0 million in the second quarter of 2022. The primary driver of this increase is related to timing of preventative maintenance expenses during the second quarter 2023 at our Apex, Atascocita, and Coastal facilities as compared to the second quarter of 2022. Our Renewable Electricity Generation operating and maintenance expenses in the second quarter of 2023 were $3.4 million , a decrease of $0.4 million (10.0% ) compared to $3.8 million in the second quarter of 2022, due to the timing of scheduled preventative maintenance intervals at our Bowerman facility. Total general and administrative expenses were $8.7 million in the second quarter of 2023, a decrease of less than $0.1 million (0.1% ) compared to $8.7 million in the second quarter of 2022. The change was primarily related to accounting for stock-based compensation expenses. Stock-based compensation increased due to stock option grants to executive officers in the second quarter of 2023 but was offset by a decrease in stock-based compensation expense of approximately $0.7 million due to the forfeiture of stock awards in the second quarter of 2023. Operating income in the second quarter of 2023 was $13.6 million , a decrease of $10.4 million (43.4% ) compared to operating income of $24.0 million in the second quarter of 2022. Net income for the second quarter of 2023 was $1.0 million , a decrease of $18.2 million (94.8% ) compared to net income of $19.2 million in the second quarter of 2022.
Second Quarter Operational Results
We produced approximately 1.4 million Metric Million British Thermal Units (“MMBtu”) of RNG during the second quarter of 2023, a decrease of less than 0.1 million compared to 1.4 million MMBtu produced in the second quarter of 2022. Our Rumpke facility produced less than 0.1 million fewer MMBtu in the second quarter of 2023 compared to the second quarter of 2022 as a result of process equipment failure in the second quarter of 2023 which temporarily impacted production. Our Pico facility produced less than 0.1 million fewer MMBtu in the second quarter of 2023 compared to the second quarter of 2022 as a result of feedstock processing challenges in the second quarter of 2023. Our Galveston facility produced less than 0.1 million more MMBtu in the second quarter of 2023 compared to the second quarter of 2022 as a result of process equipment modification. We produced approximately 49 thousand megawatt hours (“MWh”) in Renewable Electricity in the second quarter of 2023, an increase of 2 thousand MWh compared to 47 thousand MWh produced in the second quarter of 2022. Our Security facility produced approximately 1 thousand MWh more in the second quarter of 2023 compared to the second quarter of 2022 due to engine maintenance completed in the second quarter of 2022.
Updated 2023 Full Year Outlook:
RNG revenues expected to range between $160.0 and $175.0 million RNG production volumes expected to range between 5.7 and 6.1 million MMBtu Renewable Electricity revenues expected to range between $18.0 and $19.0 million Renewable Electricity production volumes expected to range between 195 and 200 thousand MWh Conference Call Information
The Company will host a conference call today at 5:00 p.m. ET to discuss results. The register for the conference call will be available via the following link:
Please register for the conference call and webcast using the above link in advance of the call start time. The webcast platform will register your name and organization as well as provide dial-ins numbers and a unique access pin. The conference call will be broadcast live and be available for replay at edge.media-server.com/mmc/p/55xst8sx https://ir.montaukrenewables.com
Use of Non-GAAP Financial Measures
This press release and the accompanying tables include references to EBITDA and Adjusted EBITDA, which are Non-GAAP financial measures. We present EBITDA and Adjusted EBITDA because we believe the measures assist investors in analyzing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
In addition, EBITDA and Adjusted EBITDA are financial measurements of performance that management and the board of directors use in their financial and operational decision-making and in the determination of certain compensation programs. EBITDA and Adjusted EBITDA are supplemental performance measures that are not required by or presented in accordance with GAAP. EBITDA and Adjusted EBITDA should not be considered alternatives to net (loss) income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities or a measure of our liquidity or profitability.
About Montauk Renewables, Inc.
Montauk Renewables, Inc. (NASDAQ: MNTK) is a renewable energy company specializing in the management, recovery and conversion of biogas into RNG. The Company captures methane, preventing it from being released into the atmosphere, and converts it into either RNG or electrical power for the electrical grid (“Renewable Electricity”). The Company, headquartered in Pittsburgh, Pennsylvania, has more than 30 years of experience in the development, operation and management of landfill methane-fueled renewable energy projects. The Company has current operations at 15 operating projects located in California, Idaho, Ohio, Oklahoma, Pennsylvania, North Carolina, South Carolina, and Texas. The Company sells RNG and Renewable Electricity, taking advantage of Environmental Attribute premiums available under federal and state policies that incentivize their use. For more information, visit https://ir.montaukrenewables.com
Company Contact: investor@montaukrenewables.com
Investor Relations Contact: MNTK@gateway-grp.com
Safe Harbor Statement
This release contains “forward-looking statements” within the meaning of U.S. federal securities laws that involve substantial risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to our financial condition, results of operations, plans, objectives, strategies, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “assume,” “believe,” “can have,” “contemplate,” “continue,” “strive,” “aim,” “could,” “design,” “due,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events. For example, all statements we make relating to future results of operations, financial condition, estimated and projected costs, and plans and objectives for future operations, growth, strategies or initiatives, including the Pico feedstock amendment, the Montauk Ag project in North Carolina, the Raeger capital improvement project, the Second Apex RNG Facility project, the Blue Granite RNG project, the Bowerman RNG project, the delivery of biogenic carbon dioxide volumes to European Energy, and the resolution of gas collection issues at the McCarty facility, are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expect and, therefore, you should not unduly rely on such statements. 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:
We make many of our forward-looking statements based on our operating budgets and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in our Securities and Exchange Commission filings and public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties. The forward-looking statements included herein are made only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.
MONTAUK RENEWABLES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except per share data) As of June 30, As of December 31, ASSETS 2023 2022 Current assets: Cash and cash equivalents $ 77,630 $ 105,177 Accounts and other receivables 13,215 7,222 Related party receivable 10,117 9,000 Income tax receivable 483 — Current portion of derivative instruments 1,004 879 Prepaid expenses and other current assets 5,833 2,590 Total current assets $ 108,282 $ 124,868 Non-current restricted cash $ 408 $ 407 Property, plant and equipment, net 194,846 175,946 Goodwill and intangible assets, net 15,269 15,755 Deferred tax assets 3,865 3,952 Non-current portion of derivative instruments 930 936 Operating lease right-of-use assets 4,528 4,742 Finance lease right-of-use assets 62 96 Other assets 8,150 5,614 Total assets $ 336,340 $ 332,316 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,027 $ 4,559 Accrued liabilities 21,606 15,090 Income tax payable — 402 Current portion of operating lease liability 414 410 Current portion of finance lease liability 62 71 Current portion of long-term debt 7,880 7,870 Total current liabilities $ 34,989 $ 28,402 Long-term debt, less current portion $ 59,560 $ 63,505 Non-current portion of operating lease liability 4,282 4,341 Non-current portion of finance lease liability — 25 Asset retirement obligations 5,695 5,493 Other liabilities 4,013 3,459 Total liabilities $ 108,539 $ 105,225 STOCKHOLDERS’ EQUITY Common stock, $0.01 par value, authorized 690,000,000 shares; 143,682,811 shares issued at June 30, 2023 and December 31, 2022, respectively; 141,633,417 shares outstanding at June 30, 2023 and December 31, 2022, respectively 1,416 1,416 Treasury stock, at cost, 971,306 shares June 30, 2023 and December 31, 2022, respectively (11,051 ) (11,051 ) Additional paid-in capital 209,555 206,060 Retained earnings 27,881 30,666 Total stockholders' equity 227,801 227,091 Total liabilities and stockholders' equity $ 336,340 $ 332,316
MONTAUK RENEWABLES, INC CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (in thousands, except per share data) For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Total operating revenues $ 53,256 $ 67,884 $ 72,409 $ 100,055 Operating expenses: Operating and maintenance expenses 15,221 14,870 29,402 28,072 General and administrative expenses 8,745 8,753 18,220 17,248 Royalties, transportation, gathering and production fuel 10,205 15,090 14,138 22,296 Depreciation, depletion and amortization 5,251 5,134 10,447 10,286 Gain on insurance proceeds — — — (313 ) Impairment loss 274 69 726 120 Transaction costs 3 5 86 32 Total operating expenses $ 39,699 $ 43,921 $ 73,019 $ 77,741 Operating income (loss) $ 13,557 $ 23,963 $ (610 ) $ 22,314 Other expenses (income): Interest expense $ 711 $ 271 $ 2,386 $ 303 Other (income) (90 ) (25 ) (84 ) (333 ) Total other expense (income) $ 621 $ 246 $ 2,302 $ (30 ) Income (loss) before income taxes $ 12,936 $ 23,717 $ (2,912 ) $ 22,344 Income tax expense (benefit) 11,933 4,565 (127 ) 4,307 Net income (loss) $ 1,003 $ 19,152 $ (2,785 ) $ 18,037 Income (loss) per share: Basic $ 0.01 $ 0.14 $ (0.02 ) $ 0.13 Diluted $ 0.01 $ 0.13 $ (0.02 ) $ 0.13 Weighted-average common shares outstanding: Basic 141,633,417 141,129,457 141,633,417 141,087,699 Diluted 142,045,498 142,462,069 141,633,417 142,220,274
MONTAUK RENEWABLES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands): Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net (loss) income $ (2,785 ) $ 18,037 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation, depletion and amortization 10,447 10,286 Provision for deferred income taxes 87 3,791 Stock-based compensation 3,495 4,631 Derivative mark-to-market adjustments and settlements (119 ) 156 Gain on property insurance proceeds — (313 ) Increase in earn-out liability 350 1,403 Net loss (gain) on sale of assets 37 (293 ) Accretion of asset retirement obligations 202 127 Amortization of debt issuance costs 184 212 Impairment loss 726 120 Changes in operating assets and liabilities: Accounts and other receivables and other current assets (13,246 ) (17,989 ) Accounts payable and other accrued expenses 6,699 6,604 Net cash provided by operating activities $ 6,077 $ 26,772 Cash flows from investing activities: Capital expenditures $ (29,588 ) $ (5,148 ) Proceeds from insurance recovery — 313 Proceeds from sale of assets — 1,088 Cash collateral deposits, net 1 — Net cash used in investing activities $ (29,587 ) $ (3,747 ) Cash flows from financing activities: Repayments of long-term debt $ (4,000 ) $ (4,000 ) Treasury stock purchase — (91 ) Finance lease payments (36 ) (4 ) Net cash used in financing activities $ (4,036 ) $ (4,095 ) Net (decrease) increase in cash and cash equivalents and restricted cash $ (27,546 ) $ 18,930 Cash and cash equivalents and restricted cash at beginning of period $ 105,606 $ 53,612 Cash and cash equivalents and restricted cash at end of period $ 78,060 $ 72,542 Reconciliation of cash, cash equivalents, and restricted cash at end of period: Cash and cash equivalents $ 77,630 $ 72,195 Restricted cash and cash equivalents - current 22 19 Restricted cash and cash equivalents - non-current 408 328 $ 78,060 $ 72,542 Supplemental cash flow information: Cash paid for interest $ 2,460 $ 1,673 Cash paid for income taxes 865 50 Accrual for purchase of property, plant and equipment included in accounts payable and accrued liabilities 6,565 1,367
MONTAUK RENEWABLES, INC. NON-GAAP FINANCIAL MEASURES (Unaudited) (in thousands): The following table provides our EBITDA and Adjusted EBITDA, as well as a reconciliation to net income (loss) which is the most directly comparable GAAP measure, for the three and six months ended June 30, 2023 and 2022: Three Months Ended June 30, 2023 2022 Net income $ 1,003 $ 19,152 Depreciation, depletion and amortization 5,251 5,134 Interest expense 711 271 Income tax expense 11,933 4,565 Consolidated EBITDA 18,898 29,122 Impairment loss 274 69 Transaction costs 3 5 Non-cash hedging charges — (1,644 ) Adjusted EBITDA $ 19,175 $ 27,552 Six Months Ended June 30, 2023 2022 Net (loss) income $ (2,785 ) $ 18,037 Depreciation, depletion and amortization 10,447 10,286 Interest expense 2,386 303 Income tax (benefit) expense (127 ) 4,307 Consolidated EBITDA 9,921 32,933 Impairment loss 726 120 Net loss (gain) of sale of assets 37 (293 ) Transaction costs 86 32 Non-cash hedging charges — 1,807 Adjusted EBITDA $ 10,770 $ 34,599
