[10-Q] Montauk Renewables, Inc. Quarterly Earnings Report
Montauk Renewables (MNTK) reported Q3 results. For the quarter ended September 30, 2025, total operating revenues were $45.3 million versus $65.9 million a year ago. Operating income was $4.4 million, and net income was $5.2 million (basic and diluted EPS $0.04). RNG accounted for $40.9 million and Renewable Electricity Generation contributed $4.4 million.
Year-to-date, revenues were $133.0 million versus $148.0 million in 2024, with operating income of $2.5 million and a net loss of $0.7 million. Cash and cash equivalents were $6.8 million as of September 30, 2025, with total debt of $66.7 million, including $20.0 million outstanding on the revolver. Operating cash flow was $30.0 million year-to-date; capital expenditures were $75.1 million. Property, plant and equipment, net, increased to $315.7 million.
The company recorded $2.5 million of impairment for the nine months, including $2.0 million tied to an RNG interconnection where a local utility is no longer accepting RNG. Montauk formed the GreenWave joint venture and contributed $4.2 million. Shares outstanding were 143.2 million as of September 30, 2025.
- None.
- None.
Insights
Q3 revenue fell; cash reinvested in growth and JV buildout.
Montauk Renewables posted Q3 revenue of
Liquidity shows a shift toward deployment: cash was
Impairments of
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(IRS Employer Identification No.) |
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
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Name of each exchange on which registered
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of outstanding shares of the registrant’s common stock on October 31, 2025 was
Table of Contents
TABLE OF CONTENTS
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PART I FINANCIAL INFORMATION |
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ITEM 1. |
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FINANCIAL STATEMENTS (UNAUDITED) |
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ITEM 2. |
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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ITEM 4. |
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CONTROLS AND PROCEDURES |
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PART II OTHER INFORMATION |
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ITEM 1. |
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LEGAL PROCEEDINGS |
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RISK FACTORS |
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
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DEFAULTS UPON SENIOR SECURITIES |
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MINE SAFETY DISCLOSURES |
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OTHER INFORMATION |
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ITEM 6. |
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EXHIBITS |
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SIGNATURES |
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Table of Contents
Glossary of Key Terms
This Quarterly Report on Form 10-Q uses several terms of art that are specific to our industry and business. For the convenience of the reader, a glossary of such terms is provided here. Unless we otherwise indicate, or unless the context requires otherwise, any references in this Quarterly Report on Form 10-Q to:
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Table of Contents
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q 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. Forward-looking 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 our future results of operations, financial condition, expectations and plans, including those related to the Montauk Ag project in North Carolina, the Second Apex RNG Facility, the Blue Granite RNG Facility, the Bowerman RNG Facility, the delivery of biogenic carbon dioxide volumes to European Energy, the Emvolon collaboration and pilot project, the Tulsa facility project, the resolution of gas collection issues at the McCarty facility, the delays and cancellations of landfill host wellfield expansion projects, the mitigation of wellfield extraction environmental factors at the Rumpke and Apex facilities, how we may monetize RNG production, the GreenWave joint venture, the impacts of the One Big Beautiful Bill Act, impacts from the US Federal government shutdown, and weather-related anomalies 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:
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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 other Securities and Exchange Commission (“SEC”) filings and public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties. See the “Risk Factors” section in our latest Annual Report on Form 10-K and our other filings with the SEC.
We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to you. Furthermore, the forward-looking statements included in this report are made only as of the date hereof. We undertake 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.
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Table of Contents
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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Montauk Renewables, Inc. |
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Unaudited condensed consolidated financial statements |
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Unaudited consolidated balance sheets |
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Unaudited consolidated statements of operations |
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Unaudited consolidated statements of stockholders’ equity |
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Unaudited consolidated statements of cash flows |
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Condensed notes to unaudited consolidated financial statements |
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MONTAUK RENEWABLES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data):
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as of September 30, |
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as of December 31, |
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ASSETS |
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2025 |
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2024 |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts and other receivables |
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Current restricted cash |
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Income tax receivable |
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Current portion of derivative instruments |
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Prepaid insurance and other current assets |
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Total current assets |
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$ |
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$ |
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Non-current restricted cash |
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$ |
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$ |
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Property, plant and equipment, net |
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Goodwill and intangible assets, net |
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Deferred tax assets |
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Non-current portion of derivative instruments |
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Operating lease right-of-use assets |
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Finance lease right-of-use assets |
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Investments |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Related party payable |
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Current portion of operating lease liability |
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Current portion of finance lease liability |
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Current portion of long-term debt |
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Total current liabilities |
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$ |
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$ |
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Long-term debt, less current portion |
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$ |
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$ |
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Non-current portion of operating lease liability |
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Non-current portion of finance lease liability |
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Asset retirement obligations |
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Other liabilities |
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Total liabilities |
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$ |
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$ |
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Commitments and contingencies (Note 21) |
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STOCKHOLDERS’ EQUITY |
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Common stock, $ |
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$ |
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$ |
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Treasury stock, at cost, |
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( |
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Additional paid-in capital |
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Retained earnings |
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Total stockholders' equity |
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$ |
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$ |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.
7
Table of Contents
MONTAUK RENEWABLES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for share and per share data):
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Total operating revenues |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Operating and maintenance expenses |
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General and administrative expenses |
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Royalties, transportation, gathering and production fuel |
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Depreciation, depletion and amortization |
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Impairment loss |
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Transaction costs |
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Total operating expenses |
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$ |
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$ |
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$ |
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$ |
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Operating income |
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$ |
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$ |
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$ |
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$ |
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Other expenses (income): |
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Interest expense |
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$ |
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$ |
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$ |
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$ |
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Other expense (income) |
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( |
) |
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( |
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Total other expenses |
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$ |
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$ |
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$ |
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$ |
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Income (loss) before income taxes |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Income tax (benefit) expense |
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( |
) |
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( |
) |
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Net income (loss) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Income (loss) per share: |
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Basic |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Diluted |
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$ |
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$ |
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$ |
( |
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$ |
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Weighted-average common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.
8
Table of Contents
MONTAUK RENEWABLES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share data):
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Common stock |
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Treasury stock |
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Shares |
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Amount |
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Shares |
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Amount |
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Additional paid-in capital |
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Retained earnings |
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Total equity |
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Balance at June 30, 2025 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Consolidation of VIE |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance at September 30, 2025 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Balance at June 30, 2024 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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Treasury stock |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Balance at September 30, 2024 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Balance at December 31, 2024 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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Treasury stock |
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— |
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— |
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( |
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— |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Consolidation of VIE |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance at September 30, 2025 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Balance at December 31, 2023 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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Treasury stock |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Net income |
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— |
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— |
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— |
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— |
|
|
|
— |
|
|
|
|
|
|
|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.
9
Table of Contents
MONTAUK RENEWABLES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands):
|
|
|
|
|
|
|
||
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
Adjustments to reconcile net income to net cash provided by operating |
|
|
|
|
|
|
||
Depreciation, depletion and amortization |
|
|
|
|
|
|
||
(Benefit) provision for deferred income taxes |
|
|
( |
) |
|
|
|
|
Stock-based compensation |
|
|
|
|
|
|
||
Derivative mark-to-market adjustments and settlements |
|
|
|
|
|
|
||
Net loss on sale of assets |
|
|
|
|
|
|
||
Increase (decrease) in earn-out liability |
|
|
|
|
|
( |
) |
|
Accretion of asset retirement obligations |
|
|
|
|
|
|
||
Liabilities associated with properties sold |
|
|
|
|
|
( |
) |
|
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Impairment loss |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
( |
) |
|
Royalty offset long term receivable |
|
|
( |
) |
|
|
( |
) |
Critical spare inventory |
|
|
( |
) |
|
|
|
|
Prepaid Insurance and expenses |
|
|
( |
) |
|
|
( |
) |
Income tax receivable |
|
|
( |
) |
|
|
|
|
Accounts payable and Accrued liabilities |
|
|
|
|
|
|
||
Other |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
$ |
|
|
$ |
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
$ |
( |
) |
|
$ |
( |
) |
Asset acquisition |
|
|
|
|
|
( |
) |
|
Capital contributions to equity method investments |
|
|
( |
) |
|
|
|
|
Cash collateral deposits |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
$ |
( |
) |
|
$ |
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Repayments of long term debt |
|
$ |
( |
) |
|
$ |
( |
) |
Borrowings on revolver |
|
|
|
|
|
|||
Repayments on revolver |
|
|
( |
) |
|
|
||
Contingent consideration payment |
|
|
( |
) |
|
|
||
Common stock issuance |
|
|
|
|
|
|
||
Treasury stock purchase |
|
|
( |
) |
|
|
( |
) |
Finance lease payments |
|
|
( |
) |
|
|
( |
) |
Net cash provided (used) in financing activities |
|
$ |
|
|
$ |
( |
) |
|
Net decrease in cash and cash equivalents and restricted cash |
|
$ |
( |
) |
|
$ |
( |
) |
Cash and cash equivalents and restricted cash at beginning of period |
|
$ |
|
|
$ |
|
||
Cash and cash equivalents and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
Reconciliation of cash, cash equivalents, and restricted cash at end of period: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash and cash equivalents - current |
|
|
|
|
|
|
||
Restricted cash and cash equivalents - non-current |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
10
Table of Contents
The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest, net of $ |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
|
|
|
|
|
||
Accrual for purchase of property, plant and equipment included in accounts payable and accrued liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
11
Table of Contents
MONTAUK RENEWABLES, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per-share amounts)
NOTE 1 – DESCRIPTION OF BUSINESS
Operations and organization
Montauk Renewables’ Business
Montauk Renewables, Inc. (the “Company” or “Montauk Renewables”) is a renewable energy company specializing in the management, recovery and conversion of biogas into Renewable Natural Gas (“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
Two of the Company’s key revenue drivers are sales of captured gas and sales of Renewable Identification Numbers (“RINs”) to fuel blenders. The Renewable Fuel Standard (“RFS”) is an Environmental Protection Agency (“EPA”) administered federal law that requires transportation fuel to contain a minimum volume of renewable fuel. RNG derived from landfill methane, agricultural digesters and wastewater treatment facilities used as a vehicle fuel qualifies as a D3 (cellulosic biofuel with a
An additional program utilized by the Company is the Low Carbon Fuel Standard (“LCFS”). This is state specific and is designed to stimulate the use of low-carbon fuels. To the extent that RNG from the Company’s facilities is used as a transportation fuel in states that have adopted an LCFS program, it is eligible to receive an Environmental Attribute additional to the RIN value under the federal RFS.
Another key revenue driver is the sale of captured electricity and the associated environmental premiums related to renewable sales. The Company’s electric facilities are designed to conform to and monetize various state renewable portfolio standards requiring a percentage of the electricity produced in that state to come from a renewable resource. Such premiums are in the form of Renewable Energy Credits (“RECs”). The Company’s largest electric facility, located in California, receives revenue for the monetization of RECs as a part of a purchase power agreement.
Collectively, the Company benefits from federal and state government incentives in the United States, provided in the form of RINs, RECs, LCFS credits, tax credits and other incentives to end users, distributors, system integrators and manufacturers of renewable energy projects, that promote the use of renewable energy, as Environmental Attributes.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
12
Table of Contents
Principles of Consolidation
The historical consolidated financial information included reflects the historical results of operations and financial position of Montauk USA through January 4, 2021 when MNK sold the membership interest of Montauk USA. The consolidated financial statements of Montauk USA became the Company’s historical financial statements following the IPO. Certain historical financial information included relates to periods prior to the Reorganization Transactions. On December 31, 2024, the Company re-assessed its determination of the primary beneficiary of the Variable Interest Entity ("VIE") MNK under the guidance in ASC 810, Consolidation. Refer to Note 17 – Related Parties for further information. All intercompany balances and transactions have been eliminated in consolidation.
The Company utilizes the equity method of accounting for companies where its ownership is greater than 50% and significant but controlling interest does not exist.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with maturity dates of three months or less from the date of purchase and are recorded at cost. The Company may hold cash in excess of federally insured limits. Restricted cash is classified as current or non-current based on the terms of the underlying agreements and represents cash held as deposits, cash held in escrow and cash collateral for financial letters of credit.
Segment Reporting
The Company reports segment information in
The RNG segment represents the sale of gas sold at fixed-price contracts, counterparty share RNG volumes and applicable Environmental Attributes. This business unit represents the majority of the revenues generated by the Company. The Renewable Electricity Generation segment represents the sale of captured electricity and applicable Environmental Attributes. Corporate & Other relates to additional discrete financial information for the corporate function. It is primarily used as a shared service center for maintaining functions such as executive, accounting, treasury, legal, human resources, tax, environmental, engineering and other operations functions not otherwise allocated to a segment. As such, the corporate entity is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation to the Company’s consolidated financial statements.
Use of Estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States (“GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recently Adopted Accounting Standards
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segments. The amendments in 2023-07 aim to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company has adopted the standard and the enhanced expense disclosures can be found in Note 18.
Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items. The ASU also requires disclosure of the total amount of selling expenses recognized in continuing operations on an annual and interim basis and disclosure of a public business entity’s definition of selling expenses on an annual basis (or in interim reporting periods if the definition is changed). Public business entities are required to apply the guidance prospectively but are permitted to apply it retrospectively. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years
13
Table of Contents
beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in 2023-09 aim to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for the Company's Annual Report on Form 10-K for the year ended December 31, 2025, with early adoption permitted. Other than enhanced disclosures, the Company does not expect a material impact from the adoption of this standard on its consolidated financial statements.
NOTE 3 – ASSET IMPAIRMENT
The Company recorded an impairment loss of $
NOTE 4 – REVENUES FROM CONTRACTS WITH CUSTOMERS
The majority of the Company’s revenues are comprised of renewable energy and related Environmental Attribute sales provided under short, medium and long term contracts with its customers. All revenue is recognized when (or as) the Company satisfies its performance obligation(s) under the contract (either implicit or explicit) by transferring the promised product or service to its customer either when (or as) its customer obtains control of the product or service. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. The Company allocates the contract’s transaction price to each performance obligation using the product’s observable market standalone selling price for each distinct product in the contract. The Company's typical invoicing terms are payment due within 30 days.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products or services. As such, revenue is recorded net of allowances and customer discounts as well as net of transportation and gathering costs incurred by the customer following the transfer of control of the commodities sold. To the extent applicable, sales, value add and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.
The Company’s performance obligations related to the sale of renewable energy (i.e. RNG and Renewable Electricity) are generally satisfied over time. Revenue related to the sale of renewable energy is generally recognized over time using an output based upon the product quantity delivered to the customer. This measure is used to best depict the Company’s performance to date under the terms of the contract. Revenue from products transferred to customers over time accounted for
The nature of the Company’s long-term contracts may give rise to several types of variable consideration, such as periodic price increases. This variable consideration is outside of the Company’s influence as the variable consideration is dictated by the market. Therefore, the variable consideration associated with the long-term contracts is considered fully constrained.
The Company’s performance obligations related to the sale of Environmental Attributes are generally satisfied at a point in time and were approximately
14
Table of Contents
The following tables display the Company’s disaggregated revenue by major source based on product type and timing of transfer of goods and services for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, 2025 |
|
|||||||||
|
|
Goods transferred at a point in time |
|
|
Goods transferred over time |
|
|
Total |
|
|||
Major goods/Service line: |
|
|
|
|
|
|
|
|
|
|||
Natural gas commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Natural gas environmental attributes |
|
|
|
|
|
— |
|
|
|
|
||
Electric commodity |
|
|
— |
|
|
|
|
|
|
|
||
Electric environmental attributes |
|
|
|
|
|
— |
|
|
|
|
||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating segment: |
|
|
|
|
|
|
|
|
|
|||
RNG |
|
$ |
|
|
$ |
|
|
$ |
|
|||
REG |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Three Months Ended September 30, 2024 |
|
|||||||||
|
|
Goods transferred at a point in time |
|
|
Goods transferred over time |
|
|
Total |
|
|||
Major goods/Service line: |
|
|
|
|
|
|
|
|
|
|||
Natural gas commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Natural gas environmental attributes |
|
|
|
|
|
— |
|
|
|
|
||
Electric commodity |
|
|
— |
|
|
|
|
|
|
|
||
Electric environmental attributes |
|
|
|
|
|
— |
|
|
|
|
||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating segment: |
|
|
|
|
|
|
|
|
|
|||
RNG |
|
$ |
|
|
$ |
|
|
$ |
|
|||
REG |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Nine Months Ended September 30, 2025 |
|
|||||||||
|
|
Goods transferred at a point in time |
|
|
Goods transferred over time |
|
|
Total |
|
|||
Major goods/Service line: |
|
|
|
|
|
|
|
|
|
|||
Natural gas commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Natural gas environmental attributes |
|
|
|
|
|
— |
|
|
|
|
||
Electric commodity |
|
|
— |
|
|
|
|
|
|
|
||
Electric environmental attributes |
|
|
|
|
|
— |
|
|
|
|
||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating segment: |
|
|
|
|
|
|
|
|
|
|||
RNG |
|
$ |
|
|
$ |
|
|
$ |
|
|||
REG |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Nine Months Ended September 30, 2024 |
|
|||||||||
|
|
Goods transferred at a point in time |
|
|
Goods transferred over time |
|
|
Total |
|
|||
Electric commodity |
|
|
|
|
|
|
|
|
|
|||
Natural gas commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Natural gas environmental attributes |
|
|
|
|
|
— |
|
|
|
|
||
Electric commodity |
|
|
— |
|
|
|
|
|
|
|
||
Electric environmental attributes |
|
|
|
|
|
— |
|
|
|
|
||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating segment: |
|
|
|
|
|
|
|
|
|
|||
RNG |
|
$ |
|
|
$ |
|
|
$ |
|
|||
REG |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
15
Table of Contents
Practical expedients and remaining performance obligations
The Company recognizes the sale of natural gas and electric commodities using the right to invoice practical expedient. The Company determined that the revenues recognized as of period end correspond directly with the value transferred to customers and the Company's satisfaction of the performance obligations to date. Furthermore, with the application of the right to invoice practical expedient and in consideration that contracts related to future environmental attributes sales do not exceed one year, there are no remaining unsatisfied or partially satisfied performance obligations as of September 30, 2025.
NOTE 5 – INVESTMENTS
In March 2025, the Company entered into a joint venture, GreenWave Energy Partners, LLC, ("GreenWave"). The investees in the joint venture are Pesta Energy, LLC, a wholly owned subsidiary of the Company, with an ownership percentage of
NOTE 6 – ACCOUNTS AND OTHER RECEIVABLES
The Company extends credit based upon an evaluation of the customer’s financial condition and, while collateral is not required, the Company periodically receives surety bonds that guarantee payment. Credit terms are consistent with industry standards and practices. Reserves for uncollectible accounts, if any, are recorded as part of general and administrative expenses in the consolidated statements of operations.
Accounts and other receivables consist of the following as of September 30, 2025, December 31, 2024 and 2023:
|
September 30, 2025 |
|
December 31, 2024 |
|
December 31, 2023 |
|
|||
Accounts receivables |
$ |
|
$ |
|
$ |
|
|||
Other receivables |
|
|
|
|
|
|
|||
Reimbursable expenses |
|
|
|
|
|
||||
Accounts and other receivables, net |
$ |
|
$ |
|
$ |
|
|||
NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consist of the following as of September 30, 2025 and December 31, 2024:
|
September 30, 2025 |
|
December 31, 2024 |
|
||
Land |
$ |
|
$ |
|
||
Buildings and improvements |
|
|
|
|
||
Machinery and equipment |
|
|
|
|
||
Gas mineral rights |
|
|
|
|
||
Construction work in progress |
|
|
|
|
||
Total |
$ |
|
$ |
|
||
Less: Accumulated depreciation and amortization |
|
( |
) |
|
( |
) |
Property, plant & equipment, net |
$ |
|
$ |
|
||
Depreciation expense for Property, plant and equipment was $
16
Table of Contents
Construction work in progress consists of RNG and REG capital expenditures on developmental projects and improvements to existing sites. Projects, on average, last between
NOTE 8 – GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill and intangible assets consist of the following as of September 30, 2025 and December 31, 2024:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Goodwill |
|
$ |
|
|
$ |
|
||
Intangible assets with indefinite lives: |
|
|
|
|
|
|
||
Land use rights |
|
|
|
|
|
|
||
Total intangible assets with indefinite lives: |
|
$ |
|
|
$ |
|
||
Intangible assets with finite lives: |
|
|
|
|
|
|
||
Interconnection, net of accumulated amortization |
|
$ |
|
|
$ |
|
||
Customer contracts, net of accumulated |
|
|
|
|
|
|
||
Total intangible assets with finite lives: |
|
$ |
|
|
$ |
|
||
Total Goodwill and Intangible assets |
|
$ |
|
|
$ |
|
||
NOTE 9 – ASSET RETIREMENT OBLIGATIONS
The Company accounts for asset retirement obligations by recording the fair value of the liability in the period in which it is incurred. The Company estimates the fair value of asset retirement obligations by calculating the estimated present value of the cost to retire the asset. Factors that are considered when determining the present value of the cost to retire the asset include future inflation and discount rates, along with estimates date(s) of retiring the asset. Additionally, changes in legal, regulatory, environmental, and political environments can affect the fair value of the obligations. As such, asset retirement obligations are considered a level 3 financial instrument.
The $
The following table summarizes the activity associated with asset retirement obligations of the Company as of September 30, 2025 and December 31, 2024:
|
Nine Months Ended September 30, |
|
|
Year Ended December 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Asset retirement obligations—beginning of period |
$ |
|
|
$ |
|
||
Accretion expense |
|
|
|
|
|
||
New asset retirement obligation |
|
|
|
|
|||
Changes in estimate |
|
|
|
|
|||
Liabilities associated with properties sold |
|
|
|
( |
) |
||
Asset retirement obligations—end of period |
$ |
|
|
$ |
|
||
NOTE 10 – DERIVATIVE INSTRUMENTS
To mitigate market risk associated with fluctuations in interest rates, the Company utilizes swap contracts under a board-approved program. The Company does not apply hedge accounting to any of its derivative instruments, and all realized and unrealized gains and losses from changes in derivative values are recognized in earnings each period.
17
Table of Contents
strategies employed, the Company had the following cash gains/losses and non-cash gains/losses in the Consolidated Statements of Operations the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
||||
Derivative Instrument |
Location |
2025 |
|
2024 |
|
||
Interest rate swaps |
Interest expense |
|
( |
) |
|
( |
) |
Net loss |
|
$ |
( |
) |
$ |
( |
) |
|
|
Nine Months Ended September 30, |
|
||||
Derivative Instrument |
Location |
2025 |
|
2024 |
|
||
Interest rate swaps |
Interest expense |
$ |
( |
) |
$ |
( |
) |
Net loss |
|
$ |
( |
) |
$ |
( |
) |
NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s assets and liabilities that are measured at fair value on a recurring basis include the following as of September 30, 2025 and December 31, 2024, set forth by level, within the fair value hierarchy:
|
September 30, 2025 |
|
||||||||||
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
||||
Interest rate swap derivative asset |
$ |
|
$ |
|
$ |
|
$ |
|
||||
Asset retirement obligations |
|
|
|
|
|
( |
) |
|
( |
) |
||
Pico earn-out liability |
|
|
|
|
|
( |
) |
|
( |
) |
||
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
||
|
December 31, 2024 |
|
||||||||||
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
||||
Interest rate swap derivative asset |
$ |
|
$ |
|
$ |
|
$ |
|
||||
Asset retirement obligations |
|
|
|
|
|
( |
) |
|
( |
) |
||
Pico earn-out liability |
|
|
|
|
|
( |
) |
|
( |
) |
||
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
||
The three levels of the fair value hierarchy under authoritative guidance are described as follows:
Level 1: Observable inputs that reflect unadjusted quoted market prices in active markets for identical assets or liabilities.
Level 2: Inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices for similar assets or liabilities in inactive markets and other observable information that can be corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data, but significant to the fair value measurement.
A summary of changes in the fair value of the Company’s Level 3 instrument, attributable to asset retirement obligations, for the nine months ended September 30, 2025 and the year ended December 31, 2024 is included in Note 9. The Company’s earn-out fair value liability at its Idaho agricultural digester site is determined by calculating the estimated present value of the future obligation. The present value is assessed quarterly and is based on macro-economic factors such as inflation and risk free US Treasury rates. Company specific estimates utilized include current and future interest rates, digester inlet gas flow and projected EBITDA. The undiscounted maximum payout of the earn-out ranges between
18
Table of Contents
Royalties, transportation, gathering and production fuel within the Consolidated Statements of Operations.
|
Nine Months Ended September 30, |
|
Year Ended December 31, |
|
||
|
2025 |
|
2024 |
|
||
Pico earn-out liability—beginning of period |
$ |
|
$ |
|
||
Changes in fair value |
|
|
|
( |
) |
|
Payments made |
|
( |
) |
|
||
Pico earn-out liability—end of period |
$ |
|
$ |
|
||
Interest rate swap derivatives are classified as Level 2 financial instruments and are valued utilizing Secured Overnight Financing Rates. In addition, certain assets are measured at fair value on a non-recurring basis when an indicator of impairment is identified and the assets’ fair values are determined to be less than its carrying value. See Note 3 for additional information.
There were
NOTE 12 – ACCRUED LIABILITIES
The Company’s accrued liabilities consist of the following as of September 30, 2025 and December 31, 2024:
|
September 30, 2025 |
|
December 31, 2024 |
|
||
Accrued expenses |
$ |
|
$ |
|
||
Payroll and related benefits |
|
|
|
|
||
Royalty |
|
|
|
|
||
Utility |
|
|
|
|
||
Accrued interest |
|
|
|
|
||
Other |
|
|
|
|
||
Accrued liabilities |
$ |
|
$ |
|
||
NOTE 13 – DEBT
The Company’s debt consists of the following as of September 30, 2025 and December 31, 2024:
|
September 30, 2025 |
|
December 31, 2024 |
|
||
Term loan |
$ |
|
$ |
|
||
Revolver |
|
|
|
|||
Less: current principal maturities |
|
( |
) |
|
( |
) |
Less: debt issuance costs (on long-term debt) |
|
( |
) |
|
( |
) |
Long-term debt |
$ |
|
$ |
|
||
Current portion of long-term debt |
|
|
|
|
||
Total debt |
$ |
|
$ |
|
||
Amended Credit Agreement
On December 12, 2018, Montauk Energy Holdings LLC (“MEH”) entered into the Second Amended and Restated Revolving Credit and Term Loan Agreement (as amended, “Credit Agreement”), by and among MEH, the financial institutions from time to time party thereto as lenders and Comerica Bank, as the administrative agent, sole lead arranger and sole bookrunner (“Comerica”). The Credit Agreement (i) amended and restated in its entirety MEH’s prior revolving credit and term loan facility, dated as of August 4, 2017, as amended, with Comerica and certain other financial institutions and (ii) replaced in its entirety the prior credit agreement, dated as of August 4, 2017, as amended, between Comerica and Bowerman Power LFG, LLC, a wholly-owned subsidiary of MEH.
On March 21, 2019, MEH entered into the first amendment to the Credit Agreement (the “First Amendment”), which clarified a variety of terms, definitions and calculations in the Credit Agreement. The Credit Agreement requires the Company to maintain customary affirmative and negative covenants, including certain financial covenants, which are measured at the end of each fiscal quarter.
19
Table of Contents
On September 12, 2019, the Company entered into the second amendment to the Credit Agreement (the "Second Amendment"). Among other matters, the Second Amendment redefined the Fixed Charge Coverage Ratio (as defined in the Credit Agreement), reduced the commitments under the revolving credit facility to $
On January 4, 2021, the Company, Montauk Holdings Limited (“MNK”) and Montauk Holdings USA, LLC (a direct wholly-owned subsidiary of MNK at the time, “Montauk USA”) entered into a series of transactions, including an equity exchange and a distribution collectively referred to as the “Reorganization Transactions”, that resulted in the Company owning all of the assets and entities (other than Montauk USA) previously owned by Montauk USA. In connection with the completion of the Reorganization Transactions and the IPO, the Company entered into the third amendment to the Credit Agreement (the “Third Amendment”). This amendment permitted the change of control provisions, as defined in the underlying agreement, to permit the Reorganization Transactions and the IPO to be completed.
On December 21, 2021, MEH entered into the Fourth Amendment to the Second Amended and Restated Revolving Credit and Term Loan Agreement. The current credit agreement, which is secured by a lien on substantially all assets of the Company and certain of its subsidiaries, provides for a $
The Company accounted for the Fourth amendment as both a debt modification and debt extinguishment in accordance with ASC 470, Debt (“ASC 470”). In connection with the Credit Agreement, the Company paid $
As of September 30, 2025, $
As of September 30, 2025, the Company was in compliance with all applicable financial covenants under the Credit Agreement.
NOTE 14 – INCOME TAXES
The Company’s provision for income taxes in interim periods is computed by applying the estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. For the nine months ended September 2025, the Company utilized an estimated effective tax rate.
|
|
Three Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
(Benefit) expense provision for income taxes |
|
$ |
( |
) |
|
$ |
|
|
Effective tax rate |
|
|
( |
%) |
|
|
% |
|
|
|
|
|
|
|
|
||
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
(Benefit) expense provision for income taxes |
|
$ |
( |
) |
|
$ |
|
|
Effective tax rate |
|
|
% |
|
|
% |
||
The effective tax rate of (
The effective tax rate of
20
Table of Contents
Income tax expense for the nine months ended September 30, 2025 was calculated using an estimated effective tax rate which differs from the U.S. federal statutory rate of
On July 4, 2025, the H.R. 1, the “One Big Beautiful Bill Act” (the “Tax Reconciliation Act”) was signed into law. The Company has adopted the applicable impacts of the Tax Reconciliation Act in the period enacted beginning in the 2025 third quarter. As part of the Company’s ongoing review, the Company notes that the Tax Reconciliation Act extends code section 45 related to the Production Tax Credit which was scheduled to sunset after 2027. The Company recorded as part of its 2024 tax provision $
NOTE 15 – SHARE-BASED COMPENSATION
The board of directors of Montauk Renewables adopted the Montauk Renewables, Inc. Equity and Incentive Compensation Plan (“MRI EICP”) in January 2021. Following the closing of the IPO, the board of directors of Montauk Renewables approved the grant of non-qualified stock options, restricted stock units and restricted share awards to the employees of Montauk Renewables and its subsidiaries in January 2021. In connection with the restricted share awards, the officers of the Company made elections under Section 83(b) of the Code. Pursuant to such elections, the Company withheld
In connection with a May 2021 asset acquisition,
In 2023, the board of directors of the Company approved the grant of non-qualified stock options to the executive officers of the Company, which vest ratably over a period of three to five years. Stock compensation expense related to these awards was $
The restricted shares, restricted stock units and option awards are subject to vesting schedules and are subject to the terms and conditions of the MRI EICP and related award agreements including, in the case of the restricted share awards, each officer having made an election under Section 83(b) of the Code.
Options granted under the MRI EICP allow the recipient to receive the Company’s common stock equal to the appreciation in the fair market value of the Company’s common stock between the grant date and the exercise and settlement of options into shares as of the exercise dates.
21
Table of Contents
blocks of options have been awarded since inception of the plan with the following weighted-average assumptions (no dividends were expected):
|
|
September 2023 Awards |
|
|
Options awarded |
|
|
|
|
Risk-free interest rate |
|
|
||
Expected volatility |
|
|
||
Expected option life (in years) |
|
|
||
Grant-date fair value |
|
$ |
|
|
|
|
|
|
|
|
|
April 2023 Awards |
|
|
Options awarded |
|
|
|
|
Risk-free interest rate |
|
|
||
Expected volatility |
|
|
||
Expected option life (in years) |
|
|
||
Grant-date fair value |
|
$ |
|
|
|
|
|
|
|
|
|
January 2021 Awards |
|
|
Options awarded |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected volatility |
|
|
% |
|
Expected option life (in years) |
|
|
|
|
Grant-date fair value |
|
$ |
|
|
The following table summarizes the restricted shares, restricted stock units and options outstanding under the MRI EICP as of September 30, 2025 and 2024, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Restricted Shares |
|
|
Restricted Stock Units |
|
|
Options |
|
|||||||||||||||
|
|
Number of |
|
|
Weighted |
|
|
Number of |
|
|
Weighted |
|
|
Number of |
|
|
Weighted |
|
||||||
End of period - December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Beginning of period - January 1, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Vested |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
End of period - Balance at September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
End of period - December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Beginning of period - January 1, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Vested |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
End of period - September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
|
|
|||||||||||||||||||||||
As of September 30, 2025 no vested options have been exercised. Unrecognized MRI EICP compensation expense for awards the Company expects to vest as of September 30, 2025 was $
NOTE 16 – DEFINED CONTRIBUTION PLAN
The Company maintains a 401(k) defined contribution plan for eligible employees. The Company matches
22
Table of Contents
NOTE 17 – RELATED PARTY TRANSACTIONS
Related Party Loan
On January 26, 2021, The Company entered into a Loan Agreement and Secured Promissory Note (the “Initial Promissory Note”) with Montauk Holdings Limited (“MNK”). MNK is our affiliate and certain of our directors are also directors of MNK. Pursuant to the Initial Promissory Note, the Company advanced a cash loan of $
In December 2021, Rivetprops 47 Proprietary Limited (“RP47”) entered into an agreement to loan MNK up to
Variable Interest Entity
Under ASC 810-10-25-38A and 38B, a reporting entity is deemed to have a controlling financial interest in a VIE if it possesses both of the following characteristics: the power to direct the activities of the VIE that most significantly impact its economic performance, and the obligation to absorb losses of the VIE that could potentially be significant or the right to receive benefits from the VIE that could potentially be significant.
Under ASC 810, the Company determined that MNK is a variable interest entity. The Company does not hold any equity interest in MNK but has entered into the Fifth Amended and Restated Loan Agreement and Secured Promissory Note between the Company and MNK.
Prior to the RP47 Loan repayment, we concluded that RP47, a related party of us through RP47’s ownership of MNK, was the primary beneficiary of MNK under the variable interest entity model. In connection with the modification under the TIA, RP47 retained its power over MNK but no longer held significant benefits in MNK. Substantially all of MNK’s activities are conducted on our behalf as MNK’s only asset is the
As of September 30, 2025, we consolidated MNK’s current assets ($
Employment Transactions
The Company signed a long-term immaterial lease in December 2023 with a landowner in North Carolina. This lease enabled the Company to construct a feedstock collection system on the property which is owned by the Company. In September 2024, the Company hired the landowner as an employee to assist in the procuring of additional long-term leases on farms for additional collection system installations related to feedstock in North Carolina.
NOTE 18 – SEGMENT INFORMATION
The Company’s reportable operating segments for the three and nine months September 30, 2025 and 2024 are Renewable Natural Gas and Renewable Electricity Generation. Renewable Natural Gas includes the production of RNG. Renewable Electricity Generation includes generation of electricity at biogas-to-electricity plants. The Corporate entity is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation of the Company’s consolidated financial statements, and though not denoted as an operating segment, significant expenses are noted within the segment. The following tables are consistent with the manner in which the Chief Executive Officer, who is the Company's chief operating decision maker ("CODM"), evaluates the performance of each segment and allocates the Company's resources. The CODM evaluates the performance of the segments based on
23
Table of Contents
segment operating income (loss). The Company maintains discrete financial information for its operating sites, which meet the definition of an operating segment, but are aggregated into reportable segments based on the type of commodity produced.
|
|
Three Months Ended September 30, 2025 |
|
|||||||||||||
|
|
RNG |
|
|
REG |
|
|
Corporate |
|
|
Total |
|
||||
Total operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payroll and related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wellfield operating and maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Plant expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Waste disposal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preventative maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Breakdown expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional and IT fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Royalties, transportation, gathering and production fuel |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operating expenses (2), (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense (income) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1)
(2)
(3)
24
Table of Contents
|
|
Three Months Ended September 30, 2024 |
|
|||||||||||||
|
|
RNG |
|
|
REG |
|
|
Corporate |
|
|
Total |
|
||||
Total operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payroll and related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wellfield operating and maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Plant expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Waste disposal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preventative maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Breakdown expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional and IT fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Royalties, transportation, gathering and production fuel |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operating expenses (2), (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense (income) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Income (loss) before income taxes |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1)
(2)
(3)
25
Table of Contents
|
|
Nine Months Ended September 30, 2025 |
|
|||||||||||||
|
|
RNG |
|
|
REG |
|
|
Corporate |
|
|
Total |
|
||||
Total operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payroll and related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wellfield operating and maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Plant expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Waste disposal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preventative maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Breakdown expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional and IT fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Royalties, transportation, gathering and production fuel |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operating expenses (2), (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense (income) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Income (loss) before income taxes |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1)
(2)
(3)
26
Table of Contents
|
|
Nine Months Ended September 30, 2024 |
|
|||||||||||||
|
|
RNG |
|
|
REG |
|
|
Corporate |
|
|
Total |
|
||||
Total operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payroll and related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wellfield operating and maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Plant expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Waste disposal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preventative maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Breakdown expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional and IT fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Royalties, transportation, gathering and production fuel |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operating expenses (2), (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense (income) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Income (loss) before income taxes |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1)
(2)
(3)
For the three months ended September 30, 2025 and 2024, three and two customers, respectively, made up greater than 10% of total revenues.
|
|
Three Months Ended September 30, 2025 |
|
|||||||||||||
|
|
RNG |
|
|
REG |
|
|
Corporate |
|
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer A |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
Customer B |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
Customer C |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended September 30, 2024 |
|
|||||||||||||
|
|
RNG |
|
|
REG |
|
|
Corporate |
|
|
Total |
|
||||
Customer A |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
Customer B |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
For the nine months ended September 30, 2025 and 2024, two and four customers, respectively, made up greater than 10% of total revenues.
27
Table of Contents
|
|
Nine Months Ended September 30, 2025 |
|
|||||||||||||
|
|
RNG |
|
|
REG |
|
|
Corporate |
|
|
Total |
|
||||
Customer A |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
Customer B |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Nine Months Ended September 30, 2024 |
|
|||||||||||||
|
|
RNG |
|
|
REG |
|
|
Corporate |
|
|
Total |
|
||||
Customer A |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
Customer B |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
Customer C |
|
|
% |
|
|
— |
|
|
|
— |
|
|
|
% |
||
Customer D |
|
|
% |
|
|
|
|
|
— |
|
|
|
% |
|||
NOTE 19 – LEASES
The Company leases office space and other office equipment under operating lease arrangements (with initial terms greater than twelve months), expiring in various years through 2033. These leases have been entered into to better enable the Company to conduct business operations. Office space is leased to provide adequate workspace for all employees in Pittsburgh, Pennsylvania and Houston, Texas. Landfill site operating leases include gas monitoring devices that serve to improve production efficiencies and alert technicians to issues and safety concerns occurring at the well head. Office space, office equipment and gas monitoring equipment agreements that exceed 12 months are accounted for as operating leases in accordance with ASC 842, Leases.
The Company also leases safety equipment for the various operational sites in the United States. The term of certain equipment exceeds twelve months and is accordingly classified as a finance lease under ASC 842. The finance leases expire in 2026 and were entered into in order to provide a safe work environment for operational employees.
The Company determines if an arrangement is, or contains, a lease at inception based on whether that contract conveys the right to control the use of an identified asset in exchange for consideration for a period of time. For all operating and finance lease arrangements, the Company presents at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
The Company has elected, as a practical expedient, not to separate non-lease components from lease components, and instead account for each separate component as a single lease component for all lease arrangements, as lessee. In addition, the Company has elected, as a practical expedient, not to apply lease recognition requirements to short-term lease arrangements, generally those with a lease term of less than twelve months for all classes of underlying assets. In determination of the lease term, the Company considers the likelihood of lease renewal options and lease termination provisions.
The Company uses its incremental borrowing rate, as the basis to calculate the present value of future lease payments, at lease commencement. The incremental borrowing rate represents the rate of interest a lessee would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a similar term in a similar economic environment.
Supplemental information related to operating lease arrangements was as follows:
|
|
Three Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash paid for amounts included in the measurement of |
|
$ |
|
|
$ |
|
||
Weighted average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted average discount rate |
|
|
|
|
% |
|||
|
|
|
|
|
|
|
||
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash paid for amounts included in the measurement of |
|
$ |
|
|
$ |
|
||
Weighted average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted average discount rate |
|
|
|
|
% |
|||
Future minimum operating lease payments are as follows:
28
Table of Contents
Year Ending |
|
|
|
|
2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
Imputed interest |
|
|
( |
) |
Total |
|
$ |
|
|
Supplemental information related to finance lease arrangements was as follows:
|
|
Three Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash paid for amounts included in the measurement of |
|
$ |
|
|
$ |
|
||
Weighted average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted average discount rate |
|
|
|
|
% |
|||
|
|
|
|
|
|
|
||
|
|
|
|
|||||
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash paid for amounts included in the measurement of |
|
$ |
|
|
$ |
|
||
Weighted average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted average discount rate |
|
|
|
|
% |
|||
Future minimum finance lease payments are as follows:
Year Ending |
|
|
|
|
2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
Imputed interest |
|
|
( |
) |
Total |
|
$ |
|
|
29
Table of Contents
NOTE 20 – INCOME (LOSS) PER SHARE
Basic and diluted income (loss) per share was computed using the following common share data for the three and nine months ended September 30, 2025 and 2024, respectively:
|
|
Three Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net income |
|
$ |
|
|
$ |
|
||
Basic weighted-average shares outstanding |
|
|
|
|
|
|
||
Dilutive effect of share-based awards |
|
|
|
|
|
|
||
Diluted weighted-average shares outstanding |
|
|
|
|
|
|
||
Basic income per share |
|
$ |
|
|
$ |
|
||
Diluted income per share |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
Basic weighted-average shares outstanding |
|
|
|
|
|
|
||
Dilutive effect of share-based awards |
|
|
|
|
|
|||
Diluted weighted-average shares outstanding |
|
|
|
|
|
|
||
Basic (loss) income per share |
|
$ |
( |
) |
|
$ |
|
|
Diluted (loss) income per share |
|
$ |
( |
) |
|
$ |
|
|
As a result of incurring a net loss for the nine months ended September 30, 2025, potential common shares of
NOTE 21 – COMMITMENTS AND CONTINGENCIES
Environmental
The Company is subject to a variety of environmental laws and regulations governing discharges to the air and water, as well as the handling, storage and disposing of hazardous or waste materials. The Company believes its operations currently comply in all material respects with all environmental laws and regulations applicable to its business. However, there can be no assurance that environmental requirements will not change in the future or that the Company will not incur significant costs to comply with such requirements.
Litigation Contingencies
The Company, from time to time, may be involved in litigation. At September 30, 2025, Management does not believe there are any matters outstanding that would have a material adverse effect on the Company’s financial position or results of operations.
NOTE 22 – SUBSEQUENT EVENTS
The Company evaluated its September 30, 2025 condensed consolidated financial statements through the date the financial statements were issued. The Company is not aware of any subsequent events which would require recognition or disclosure in the consolidated financial statements.
30
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. Throughout this section, dollar amounts and production volumes are expressed in thousands, except for per share amounts and RIN pricing amounts and unless otherwise indicated.
In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A.–Risk Factors” of our 2024 Annual Report, and elsewhere in this report.
Overview
Montauk Renewables is a renewable energy company specializing in the recovery and processing of biogas from landfills and other non-fossil fuel sources for beneficial use as a replacement to fossil fuels. We develop, own, and operate RNG projects, using proven technologies that supply RNG into the transportation industry and use RNG to produce Renewable Electricity. We are one of the largest U.S. producers of RNG, having participated in the industry for over 30 years. We established our operating portfolio of 11 RNG and two Renewable Electricity projects through self-development, partnerships, and acquisitions that span seven states.
Biogas is produced by microbes as they break down organic matter in the absence of oxygen (during a process called anaerobic digestion). Our two current sources of commercial scale biogas are LFG or ADG. We typically secure our biogas feedstock through long-term fuel supply agreements and property lease agreements with biogas site hosts. Once we secure long-term fuel supply rights, we design, build, own, and operate facilities that convert the biogas into RNG or use the processed biogas to produce Renewable Electricity. We sell the RNG and Renewable Electricity through a variety of term length agreements. Because we are capturing waste methane and making use of a renewable source of energy, our RNG and Renewable Electricity generate valuable Environmental Attributes, which we are able to monetize under federal and state renewable initiatives.
Our current operating projects produce either RNG or Renewable Electricity by processing biogas from landfill sites or agricultural waste from livestock farms. We view agricultural waste from livestock farms as a significant opportunity for us to expand our RNG business, and we continue to evaluate other agricultural feedstock opportunities. We believe that our business model and technology are highly scalable given availability of biogas from agriculturally derived sources, which will allow us to continue to grow through prudent development and complimentary acquisitions.
Recent Developments
RINs Generated but Unsold
Our profitability is highly dependent on the market price of Environmental Attributes, including the market price for RINs. As we self-market a significant portion of our RINs, a decision not to commit to transfer available RINs during a period will impact our revenue and operating profit. The impact of EPA actions associated with implementation of BRRR K2 separation and the extension of the 2024 RIN compliance period has temporarily impacted the commitment timing of the Company. We had approximately 749 RINs generated but unseparated at September 30, 2025 which reduced the amount of RINs available for sale as of September 30, 2025. We expect this timing between RINs generated but unseparated and RINs available for sale to only impact 2025 which is the year BRRR became effective. We had approximately 10 RINs in inventory from 2025 RNG production as of September 30, 2025. The average D3 RIN index price for the third quarter of 2025 was approximately $2.19. The following table summarizes select historical data related to RINs generated, RINs sold, and RINs generated but unsold. As we self-market a significant portion of our RINs and as the RFS is based on annual compliance, any strategic decision to not monetize available RINs in a quarter could impact the timing of operating revenues recognized during a fiscal year. Realized prices for Environmental Attributes monetized in a year may not correspond directly to index prices due to the forward selling of commitments. The timing of RIN transfers can vary year over year and by period within a year and is contingent on various factors including, but not limited to: (a) the Company’s expectations on RIN index price, (b) operational needs of the Company, (c) obligated parties purchase needs, or (d) the type of customer among other matters.
31
Table of Contents
Calendar Quarter |
RINs Available for Sale |
RINs Sold |
RINs sold as % of RINs Available |
RINs Available but Unsold |
RINs Unsold as % of RINs Available |
2023 Fourth Quarter |
10,904 |
10,796 |
99.0% |
108 |
1.0% |
2024 First Quarter |
11,240 |
7,889 |
70.2% |
3,351 |
29.8% |
2024 Second Quarter |
14,707 |
10,000 |
68.0% |
4,707 |
32.0% |
2024 Third Quarter |
15,895 |
15,750 |
99.1% |
145 |
0.9% |
2024 Fourth Quarter |
9,822 |
3,000 |
30.5% |
6,822 |
69.5% |
2025 First Quarter |
13,801 |
9,885 |
71.6% |
3,916 |
28.4% |
2025 Second Quarter |
11,158 |
11,050 |
99.0% |
108 |
1.0% |
2025 Third Quarter |
12,420 |
12,410 |
100.0% |
10 |
0.0% |
Capital Development Summary
The following summarizes our ongoing development growth plans expected capacity contribution, anticipated commencement of operations, and capital expenditure estimate, respectively excluding the Montauk Ag Renewables Development Project:
Development Opportunity |
Estimated Capacity Contribution (MMBtu/day) |
Anticipated Commencement Date |
Estimated Capital Expenditure |
Blue Granite RNG Facility |
900 |
Delayed |
TBD |
Bowerman RNG Facility |
3,600 |
2027 |
$85,000-$95,000 |
European Energy Facilities |
N/A |
2027 |
$65,000-$75,000 |
Tulsa RNG Facility |
1,500 |
2027 |
$25,000-$35,000 |
Bowerman RNG Project
In 2023, we announced a planned development of a renewable natural gas landfill project in Irvine, CA at the Frank R. Bowerman Landfill to process the large and growing volumes of biogas in excess of the existing capacity of the REG facility. We expect facility commissioning in 2027 and expect the capital investment to range between $85,000 - $95,000. As part of the agreement to develop the RNG plant, we agreed to work with the landfill host on the landfill's management of its wellfield and flare facility permit requirements and this work remains ongoing. The project is anticipated to have production nameplate capacity of approximately 3,600 MMBtu per day, assuming currently forecasted biogas feedstock volumes projected to be available from the host landfill at the time of commissioning. We continue to incur capital expenditures for this project.
Carbon Dioxide Beneficial Use Opportunity
In 2024, we signed a contract for the delivery of 140 tons per year of biogenic carbon dioxide (“CO2”). We intend to capture, clean and liquefy CO2 at select Texas facilities, at which point it will be transported to EE North America (“EENA”), a Texas-based e-methanol facility. The delivery term is expected to last at least 15 years with first delivery expected to begin in 2027. During the period prior to commissioning, we have been recognizing an exclusivity fee related to the minimum tons of CO2. The annual price per ton under the contract is adjusted annually by the U.S. consumer price index. The agreement with EENA includes a 50% sharing component of any available tax attributes generated by us under code section 45Q, Carbon dioxide sequestration credit, in the Inflation Reduction Act, as applicable. The Tax Reconciliation Act signed into law on July 4, 2025 has potentially impacted the manner in which EENA will use offtake associated with its business development. We continue to expect to develop CO2 at select Texas facilities and are in discussions with EENA regarding our agreement. We have completed the initial site surveys related to location of the CO2 processing equipment, evaluated equipment suppliers, and started engineering design. We continue to target a commissioning start in 2027 and continue incurring capital expenditures for long lead items and design engineering.
Tulsa REG Conversion to RNG
In 2025, we announced the conversion of our Tulsa, Oklahoma Renewable Electric Generation facility to RNG project. The project will offer a variable inlet capacity providing production capacity of approximately 1,500 MMBtu per day and designed to beneficially process all of the available inlet gas feedstock from its landfill host. We expect to target a commissioning start in 2027 and continue incurring capital expenditures for long lead items.
32
Table of Contents
Montauk Ag Renewables Acquisition
In 2021, through a wholly-owned subsidiary Montauk Ag Renewables, we completed an asset purchase related to developing technology and a centralized processing location to recover residual natural resources from the waste streams of modern agriculture and to refine and recycle such waste products through proprietary and other processes in order to produce high quality renewable natural gas and recapture nitrogen, and micronutrient organic fertilizer alternatives (the “Montauk Ag Renewables Acquisition”).
With the change in REC generation passed by the state of North Carolina in 2024, we are in negotiations with other utility users to provide swine RECs from our expected first phase production of MWh. We expect our annual REC capacity to be approximately 120 RECs, of which the Duke REC agreement is for 47 RECs. In September 2025, a joint motion was filed with the North Carolina Utility Commission (“NCUC”) by various entities seeking to modify and delay the 2025 requirements of certain aspects of the North Carolina Clean Energy and Portfolio Standard, specifically, the portfolio standards relating to swine RECs. We note this filing is not dissimilar to historical annual filings in response to the historically limited swine REC market in North Carolina. In October 2025, we filed response comments to the joint motion with the NCUC requesting they grant modifications or delays only to individual power supplies that have demonstrated need, require power suppliers that have not achieved 100% compliance in 2025 to apply any cumulatively acquired swine RECs to the suppliers unsatisfied 2025 pro rata obligation, and modify the swine REC set-aside for 2026 and beyond to match the requirement originally set by North Carolina in 2018.
With the limited swine REC market in North Carolina, we have been negotiating our REC agreements individually. Many of these agreements contain competitive details and, while there remains a limited active swine REC market in North Carolina, we believe the prices we are negotiating will be market based. While we believe these prices will not be based on solar REC prices seen in other US markets, those indices are more illustrative of our expectations of North Carolina swine REC prices than US market wind REC prices. Depending on a variety of factors, we believe our negotiated swine REC prices could fall into the ranges experienced by solar REC indices at $200 to $450 per REC.
We continue our development efforts in North Carolina and continue to expect our production and revenue generation activities to commence in the first quarter of 2026. Alongside our construction efforts for the first phase, for which total investment continues to be projected between $180 million and $220 million, we continue to progress our negotiations with obligated utilities to monetize all remaining uncontracted Renewable Energy Credits (or RECs) from our projected first phase production volumes.
We continue to develop the opportunities with Montauk Ag Renewables and can give no assurances that our plans related to this acquisition will meet our expectations. Utility interconnection, both inbound to and outbound from our centralized Turkey, NC processing facility is dependent on factors outside of our control. Regulatory developments and offtake negotiations could delay our ability to fully optimize or meet the timing expectations related to revenue producing activities. Our current construction timeline and costs are subject to delays or costs increases, respectively. We continue to design and plan for the development of the Turkey, NC facility to be used for commercial production. We expect the Magnolia, NC location to be used for various feedstock processing needs. Based on our current development timeline, we expect to commence significant revenue generating activities in 2026. We intend to contract with additional farms to secure feedstock sources for future production processes. We expect the Montauk Ag Renewables project to generate tax attributes once placed into service consisting of a mix of investment tax, production tax, or accelerated depreciation. We are reviewing the Tax Reconciliation Act passed in July 2025 to determine what, if any, impacts there are to these expectations.
Waste-stream Biogas Recovery
In 2024, we announced a collaboration with Emvolon to transform methane emissions from waste stream biogas into high-value carbon negative fuel. The initial pilot project at our Atascocita facility in Houston, TX has exceeded its anticipated results. Following a successful field demonstration project, together with Emvolon, we plan to deploy a portfolio of biogas-based sites with an aggregate annual production capacity of up to 50 metric tons of green methanol by 2030. We do not expect short term financial benefits from this joint development venture nor a disruption to our operations.
GreenWave Joint Venture
In the first quarter of 2025, we, through our wholly-owned subsidiary Pesta Energy, LLC, entered into an agreement with Pioneer Renewables Energy Marketing, LLC to form a joint venture, GreenWave Energy Partners, LLC (“Greenwave”). The primary goal of the joint venture is to help address the limited capacity of RNG utilization for transportation by offering third party RNG volumes access to exclusive unique and proprietary transportation pathways. In the third quarter of 2025, Greenwave began matching available RNG capacity to dispensing opportunities through Greenwaves's transportation pathways. The venture has matched capacity and has separated RINs for a limited amount of volumes. We expect increased benefits from Greenwave in the fourth quarter of 2025 and have not directly recognized any significant share of profits. Our capital investment in the joint venture is estimated to be up to approximately $4,500 subject to various and certain requirements as defined in the underlying agreements.
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Blue Granite RNG Project
In the first quarter of 2025, we received notice from the utility that it will no longer accept RNG into its distribution system, which was in opposition of the letter of intent that was issued when we were awarded the gas rights to the site. As a result, we impaired the capital associated with the early design of RNG equipment. We continue to review various alternatives related to interconnection opportunities as part of our considerations for offtake options with the understanding those alternatives may differ from initial development project assumptions, including physical and virtual and fixed interconnections. We are also reviewing alternatives for this site around producing energy other than RNG. We have paused further capital expenditures related to this site while we consider all alternatives and continue discussions with the landfill host.
Key Trends
Market Trends Affecting the Renewable Fuel Market
We believe rising demand for RNG is attributable to a variety of factors, including growing public support for renewable energy, U.S. governmental actions to increase energy independence, environmental concerns increasing demand for natural gas-powered vehicles, job creation, and increasing investment in the renewable energy sector.
Key drivers for the long-term growth of RNG include the following factors:
Factors Affecting Our Future Operating Results:
Acquisition and Development Pipeline
The timing and extent of our development pipeline affects our operating results due to:
Regulatory, Environmental and Social Trends
Regulatory, environmental and social factors are key drivers that incentivize the development of RNG and Renewable Electricity projects and influence the economics of these projects. We are subject to the possibility of legislative and regulatory changes to certain incentives, such as RINs, RECs and GHG initiatives. On July 12, 2023, the EPA issued final rules in the Federal Register for the RFS volume requirements for 2023-2025. Final volumes for cellulosic biofuel were set at 838, 1,090 and 1,376 RINs for the three years 2023, 2024 and 2025, respectively. The final rule also included significant changes to the existing RFS program,
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referred to as BRRR, that required the RNG industry to modify how all RINs are generated as of January 1, 2025. We have registered all of our facilities under the BRRR provisions and have obtained Q-RIN status for RIN generation starting January 1, 2025. Under the BRRR provisions, the EPA finalized a limitation that biogas from one facility has a single use under the RFS as proposed (i.e., biointermediate, RNG or CNG/LNG via biogas closed distribution system). The EPA clarified that this does not preclude non-RFS uses at same facility.
On June 13, 2025, the EPA released both the Partial Waiver of the 2024 Cellulosic Biofuel Volume Requirement (Final Rule) and RFS Standards for 2026 and 2027, Partial Waiver of 2025 Cellulosic Biofuel Volume Requirement, and Other Changes (Proposed Rule). The final 2024 cellulosic biofuel volume requirement was reduced from 1,090 to 1,010 million D3 RINs. This reduction was based on actual volumes of D3 RINs generated in 2024. In addition, the EPA is making Cellulosic Waiver Credits ("CWCs") available for 2024 as an additional compliance flexibility for obligated parties.
In the EPA’s proposed rule released on June 13, 2025, the cellulosic biofuel volumes for 2025 were proposed to be reduced from 1,376 to 1,190 RINs and make CWCs available for 2025. The proposed cellulosic biofuel volume requirements for 2026 and 2027 are 1,300 and 1,360 D3 RINs, respectively. These volumes are less than the EPA had previously finalized for 2025 and are based on their belief that cellulosic RIN generation from biogas-derived CNG/LNG during 2026-2030 will be constrained by the total usage capacity of CNG/LNG as transportation fuel. These proposed rules are subject to comment periods prior to finalization.
On August 22, 2025, EPA issued decisions on 175 Small Refinery Exemption (SRE) petitions. EPA granted full exemption (100%) to 63 petitions and partial exemptions (50%) to 77 petitions. The SRE decisions exempted corresponding volumes of gasoline and diesel for the 2023 and 2024 compliance years, and increased the number of RINs available for obligated parties to use for compliance with their RFS obligations. Taking into consideration the expected impacts of the SRE decisions on the RFS market, on September 16, 2025, EPA co-proposed a Supplemental Rule that provides additional volumes in 2026 and 2027 RVOs that will represent complete (100%) reallocation or partial (50%) reallocation for SREs granted in full or in part, respectively, for 2023 and 2024, as well as those projected to be granted for 2025.
EPA has indicated an intention to finalize the Supplemental Rule & the RVOs for 2025, 2026 and 2027 by the end of 2025, however, the duration of the US federal government shut down and any residual impacts on EPA staffing after the shutdown concludes may extend finalization of these items into 2026.
In December 2023, CARB released the formal proposal for new LCFS rules. The proposed rules will increase the stringency of CI reduction targets from 20% to 30% in 2030 and 90% by 2045. This reduction would have the potential impact of reducing the number of net credits in the program. On July 1, 2025, CARB’s amended LCFS rules officially took effect setting the aggressive carbon intensity reduction targets listed above. The industry may see gradual increases in LCFS credit prices over the next year. The rules also phase out avoided methane crediting for dairy and swine manure pathways by 2040 for CNG usage and through 2045 for RNG used to produce hydrogen. The RNG deliverability/book and claim provisions for out-of-region projects are eliminated for all projects that break ground after 2030. These projects will be required to demonstrate physical deliverability requirements beginning in 2041. Changes to the LCFS program require annual verification of the CI score assigned to a project. Annual verification could significantly affect the profitability of a project, particularly in the case of a livestock farm project. In June 2025, California lawmakers introduced California Senate Bill SB-237, which includes a potential cap on LCFS credit prices of approximately $75/ton.
On March 15, 2025, the Full-Year Continuing Appropriations and Extensions Act, 2025 was signed into law. In May 2025, we were informed that the law eliminated the United States Department of Agriculture Advanced Biofuel Payment Program. We received approximately $200 annually since 2021 under this program.
Factors Affecting Revenue
Our total operating revenues include renewable energy and related sales of Environmental Attributes. Renewable energy sales primarily consist of the sale of biogas, including LFG and ADG, which is either sold or converted to Renewable Electricity. Environmental Attributes are generated and monetized from the renewable energy.
The BRRR requires that all unseparated K3 RINs generated by the RNG producer on RNG volumes injected into the commercial pipeline distribution system only become valid for sale once they are separated with the support of dispensing statements by a registered dispenser or RIN separator. This process could result in delays to the RNG producer's receipt of the separated K2 RINs from the dispenser. This rule change could also result in a RNG producer's failure to generate K3 RINs for a given gas flow month if the registered biogas producer negligently fails to generate the necessary biogas tokens before the end of the subsequent gas flow month. We expect this initial year impact of the EPA BRRR rule will increase our RINs unsold at the end of 2025.
We report revenues from two operating segments: Renewable Natural Gas and Renewable Electricity Generation. Corporate relates to additional discrete financial information for the corporate function; primarily used as a shared service center for maintaining functions such as executive, accounting, treasury, legal, human resources, tax, environmental, engineering, and other operations
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functions not otherwise allocated to a segment. As such, the Corporate segment is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation to the Company’s consolidated financial statements.
Our operating revenues are priced based on published index prices which can be influenced by factors outside our control, such as market impacts on commodity pricing and regulatory developments. With our royalty payments structured as a percentage of revenue, royalty payments fluctuate with changes in revenues. We place a primary focus on managing production volumes and operating and maintenance expenses as these factors are more controllable by us.
RNG Production
Our RNG production levels are subject to fluctuations based on numerous factors, including:
Disruptions to Production: Disruptions to waste placement operations at our active landfill sites, severe weather events, or failure or degradation of our or a landfill operator’s equipment or interconnection or transmission problems could result in a reduction of our RNG production. We strive to proactively address any issues that may arise through preventative maintenance, process improvement and flexible redeployment of equipment to maximize production and useful life.
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Pricing
Our Renewable Natural Gas and Renewable Electricity Generation segments’ revenues are primarily driven by the prices under our off-take agreements and PPAs and the amount of RNG and Renewable Electricity that we produce. We sell the RNG produced from our projects under a variety of short-term and medium-term agreements to counterparties, with contract terms varying from three years to five years. Our contracts with counterparties are typically structured to be based on varying natural gas price indices for the RNG produced. All of the Renewable Electricity produced at our biogas-to-electricity projects is sold under long-term contracts to creditworthy counterparties, typically under a fixed price arrangement with escalators.
The pricing of Environmental Attributes, which accounts for a substantial portion of our revenues, is subject to volatility based on a variety of factors, including regulatory and administrative actions and commodity pricing.
The sale of RINs, which is subject to market price fluctuations, accounts for a substantial portion of our revenues. We manage against the risk of these fluctuations through forward sales of RINs, although typically we sell RINs in the calendar year they are separated. We believe the impacts of the EPA BRRR reform and the 2024 proposed partial waiver of the 2024 RVO have temporarily impacted 2025 RIN purchase activity of RFS obligated parties. Realized prices for Environmental Attributes monetized in a year may not correspond directly to index prices due to the forward selling of commitments.
Factors Affecting Operating Expenses
Our operating expenses include royalties, transportation, gathering and production fuel expenses, project operating and maintenance expenses, general and administrative expenses, depreciation and amortization, net loss (gain) on sale of assets, impairment loss and transaction costs. Our operating expenses can be subject to inflationary cost increases that are largely out of our control.
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Table of Contents
Key Operating Metrics
Total operating revenues reflect both sales of renewable energy and sales of related Environmental Attributes. As a result, our revenues are primarily affected by unit production of RNG and Renewable Electricity, production of Environmental Attributes, and the prices at which we monetize such production. Set forth below is an overview of these key metrics:
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Comparison of Three Months Ended September 30, 2025 and 2024
The following table summarizes the key operating metrics described above, which are metrics we use to measure performance.
|
|
For the three months ended |
|
|
|
|
|
Change |
|
|||||||
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|
% |
|
||||
(in thousands, unless otherwise indicated) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Renewable Natural Gas Total Revenues |
|
$ |
39,883 |
|
|
$ |
61,750 |
|
|
$ |
(21,867 |
) |
|
|
(35.4 |
%) |
Renewable Electricity Generation Total Revenues |
|
$ |
4,246 |
|
|
$ |
4,167 |
|
|
$ |
79 |
|
|
|
1.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
RNG Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CY RNG production volumes (MMBtu) |
|
|
1,445 |
|
|
|
1,392 |
|
|
|
53 |
|
|
|
3.8 |
% |
Less: Current period RNG volumes under fixed/floor- |
|
|
(463 |
) |
|
|
(389 |
) |
|
|
(74 |
) |
|
|
19.0 |
% |
Plus: Prior period RNG volumes dispensed in current |
|
|
309 |
|
|
|
360 |
|
|
|
(51 |
) |
|
|
(14.2 |
%) |
Less: Current period RNG production volumes not |
|
|
(331 |
) |
|
|
(308 |
) |
|
|
(23 |
) |
|
|
7.5 |
% |
Total RNG volumes available for RIN generation (1) |
|
|
960 |
|
|
|
1,055 |
|
|
|
(95 |
) |
|
|
(9.0 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
RIN Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current RIN generation ( x 11.6935) (2) |
|
|
11,228 |
|
|
|
12,374 |
|
|
|
(1,146 |
) |
|
|
(9.3 |
%) |
Less: Counterparty share (RINs) |
|
|
(1,178 |
) |
|
|
(1,185 |
) |
|
|
7 |
|
|
|
(0.6 |
%) |
Plus: Prior period RINs carried into current period |
|
|
3,119 |
|
|
|
4,707 |
|
|
|
(1,588 |
) |
|
|
(33.7 |
%) |
Less: RINs generated but unseparated |
|
|
(749 |
) |
|
|
— |
|
|
|
(749 |
) |
|
|
0.0 |
% |
Less: CY RINs carried into next CY |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.0 |
% |
Total RINs available for sale (3) |
|
|
12,420 |
|
|
|
15,896 |
|
|
|
(3,476 |
) |
|
|
(21.9 |
%) |
Less: RINs sold |
|
|
(12,410 |
) |
|
|
(15,750 |
) |
|
|
3,340 |
|
|
|
(21.2 |
%) |
RIN Inventory |
|
|
10 |
|
|
|
146 |
|
|
|
(136 |
) |
|
|
(93.2 |
%) |
RNG Inventory (volumes not dispensed for RINs) (4) |
|
|
331 |
|
|
|
308 |
|
|
|
23 |
|
|
|
7.5 |
% |
Average Realized RIN price |
|
$ |
2.29 |
|
|
$ |
3.34 |
|
|
$ |
(1.05 |
) |
|
|
(31.4 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Renewable Natural Gas Operating Expenses |
|
$ |
21,899 |
|
|
$ |
23,226 |
|
|
$ |
(1,327 |
) |
|
|
(5.7 |
%) |
Operating Expenses per MMBtu (actual) |
|
$ |
15.16 |
|
|
$ |
16.69 |
|
|
$ |
(1.53 |
) |
|
|
(9.2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
REG Operating Expenses |
|
$ |
3,046 |
|
|
$ |
3,170 |
|
|
$ |
(124 |
) |
|
|
(3.9 |
%) |
$/MWh (actual) |
|
$ |
69.23 |
|
|
$ |
77.32 |
|
|
$ |
(8.09 |
) |
|
|
(10.5 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Renewable Electricity Generation Volumes Produced |
|
|
44 |
|
|
|
41 |
|
|
|
3 |
|
|
|
7.3 |
% |
Average Realized Price $/MWh (actual) |
|
$ |
96.50 |
|
|
$ |
101.63 |
|
|
$ |
(5.13 |
) |
|
|
(5.1 |
%) |
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The following table summarizes our revenues, expenses and net income for the periods set forth below:
|
|
For the three months ended |
|
|
|
|
|
Change |
|
|||||||
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|
% |
|
||||
Total operating revenues |
|
$ |
45,258 |
|
|
$ |
65,917 |
|
|
$ |
(20,659 |
) |
|
|
(31.3 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating and maintenance expenses |
|
|
17,477 |
|
|
|
15,484 |
|
|
|
1,993 |
|
|
|
12.9 |
% |
General and administrative expenses |
|
|
6,511 |
|
|
|
10,037 |
|
|
|
(3,526 |
) |
|
|
(35.1 |
)% |
Royalties, transportation, gathering and production fuel |
|
|
8,433 |
|
|
|
11,107 |
|
|
|
(2,674 |
) |
|
|
(24.1 |
)% |
Depreciation, depletion and amortization |
|
|
8,341 |
|
|
|
6,048 |
|
|
|
2,293 |
|
|
|
37.9 |
% |
Impairment loss |
|
|
48 |
|
|
|
533 |
|
|
|
(485 |
) |
|
|
(91.0 |
)% |
Total operating expenses |
|
|
40,810 |
|
|
|
43,209 |
|
|
|
(2,399 |
) |
|
|
(5.6 |
)% |
Operating income |
|
$ |
4,448 |
|
|
$ |
22,708 |
|
|
$ |
(18,260 |
) |
|
|
(80.4 |
)% |
Other expenses: |
|
|
1,088 |
|
|
|
1,695 |
|
|
|
(607 |
) |
|
|
(35.8 |
)% |
Income before income taxes |
|
|
3,360 |
|
|
|
21,013 |
|
|
|
(17,653 |
) |
|
|
(84.0 |
)% |
Income tax (benefit) expense |
|
|
(1,845 |
) |
|
|
3,965 |
|
|
|
(5,810 |
) |
|
|
(146.5 |
)% |
Net Income |
|
$ |
5,205 |
|
|
$ |
17,048 |
|
|
$ |
(11,843 |
) |
|
|
(69.5 |
)% |
Revenues for the Three Months Ended September 30, 2025 and 2024
Total revenues in the third quarter of 2025 were $45,258, a decrease of $20,659 (31.3%) compared to $65,917 in the third quarter of 2024. The decrease is related to a decrease in the number of RINs we self-marketed from 2025 RNG production in the third quarter of 2025. In addition, realized RIN pricing decreased approximately 31.4% during the third quarter of 2025 compared to the third quarter of 2024.
Renewable Natural Gas Revenues
We produced 1,445 MMBtu of RNG during the third quarter of 2025, an increase of 53 MMBtu (3.8%) compared to 1,392 MMBtu produced in the third quarter of 2024. Our Rumpke facility produced 50 MMBtu more in the third quarter of 2025 compared to the third quarter of 2024 as a result of higher feedstock gas. Our Apex facility produced 25 MMBtu more in the third quarter of 2025 as a result of the June 2025 commissioning of the second Apex RNG facility. Offsetting the increase was the fourth quarter of 2024 sale of our Southern facility which produced 69 MMBtu in the first nine months of 2024.
Revenues from the Renewable Natural Gas segment in the third quarter of 2025 were $39,883, a decrease of $21,867 (35.4%) compared to $61,750 in the third quarter of 2024. Average commodity pricing for natural gas for the third quarter of 2025 was $3.07 per MMBtu, 42.1% higher than the third quarter of 2024. During the third quarter of 2025, we self-marketed 12,410 RINs, representing a 3,340 decrease (21.2%) compared to 15,750 in the third quarter of 2024. Average pricing realized on RIN sales during the third quarter of 2025 was $2.29 as compared to $3.34 in the third quarter of 2024, a decrease of 31.4%. Average D3 RIN index price for the third quarter of 2025 was $2.19 compared to $3.36 in the third quarter of 2024, a decrease of approximately 34.8%. At September 30, 2025, we had approximately 331 MMBtu available for RIN generation, 749 RINs generated and unseparated, and 10 RINs generated and unsold. At September 30, 2024, we had approximately 308 MMBtu available for RIN generation and 146 RINs generated and unsold. There were no RINS generated and unseparated at September 30, 2024.
Renewable Electricity Generation Revenues
We produced approximately 44 MWh in Renewable Electricity in the third quarter of 2025, an increase of 3 MWh (7.3%) from 41 MWh in the third quarter of 2024. Our Bowerman facility produced approximately 2 MWh more in the third quarter of 2025 compared to the third quarter of 2024. The increase is primarily related to the timing of processing equipment maintenance in the third quarter of 2024.
Revenues from Renewable Electricity facilities in the third quarter of 2025 were $4,246, an increase of $79 (1.9%) compared to $4,167 in the third quarter of 2024. The increase was primarily driven by the increase in our Bowerman facility production volumes.
In the third quarter of 2025, 100.0% of Renewable Electricity Generation segment revenues were derived from the monetization of Renewable Electricity at fixed prices associated with underlying PPAs, as compared to 100.0% in the third quarter of 2024. This provides us with certainty of price resulting from our Renewable Electricity sites.
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Expenses for the Three Months Ended September 30, 2025 and 2024
General and Administrative Expenses
Total general and administrative expenses in the third quarter of 2025 were $6,511, a decrease of $3,526 (35.1%) compared to $10,037 for the third quarter of 2024. The decrease is primarily related to the accelerated vesting of certain restricted share awards as a result of the termination of an employee in the third quarter of 2024.
Renewable Natural Gas Expenses
Operating and maintenance expenses for our RNG facilities in the third quarter of 2025 were $13,924, an increase of $1,338 (10.6%) as compared to $12,586 in the third quarter of 2024. Our Rumpke facility operating and maintenance expenses increased approximately $538 primarily related to preventative maintenance media changes and wellfield operational enhancements. Our Atascocita facility operating and maintenance expenses increased approximately $422 primarily related to the timing of maintenance related to gas processing equipment and increased utility expense. Our Apex facility operating and maintenance expenses increased approximately $275 primarily related to increased utility expense.
Royalties, transportation, gathering and production fuel expenses for our RNG facilities for the third quarter of 2025 were $7,975, a decrease of $2,665 (25.0%) compared to $10,640 in the third quarter of 2024. We recorded an increase to our Pico facility earnout of approximately 7.6% during the third quarter of 2025. Royalties, transportation, gathering and production fuel expenses increased as a percentage of RNG revenues to 20.0% for the third quarter of 2025 from 17.2% in the third quarter of 2024.
Renewable Electricity Expenses
Operating and maintenance expenses for our Renewable Electricity facilities in the third quarter of 2025 were $2,588, a decrease of $115 (4.3%) compared to $2,703 in the third quarter of 2024. The decrease is primarily driven by our Tulsa facility operating and maintenance expenses which decreased approximately $106 primarily related to timing of annual engine maintenance.
Royalties, transportation, gathering and production fuel expenses for our Renewable Electricity facilities for the third quarter of 2025 were $458, a decrease of $9 (1.9%) compared to $467 in the third quarter of 2024. Royalties, transportation, gathering and production fuel expenses decreased as a percentage of Renewable Electricity revenues to 10.8% for the third quarter of 2025 from 11.2% in the third quarter of 2024.
Royalty Payments
Royalties, transportation, gathering, and production fuel expenses in the third quarter of 2025 were $8,433, a decrease of $2,674 (24.1%) compared to $11,107 in the third quarter of 2024. We make royalty payments to our fuel supply site partners on the commodities we produce and the associated Environmental Attributes. These royalty payments are typically structured as a percentage of revenue subject to a cap, with fixed minimum payments when Environmental Attribute prices fall below a defined threshold. To the extent commodity and Environmental Attributes’ prices fluctuate, our royalty payments may fluctuate upon renewal or extension of a fuel supply agreement or in connection with new projects. Our fuel supply agreements are typically structured as 20-year contracts, providing long-term visibility into the margin impact of future royalty payments.
Depreciation
Depreciation and amortization in the third quarter of 2025 was $8,341, an increase of $2,293 (37.9%) compared to $6,048 in the third quarter of 2024. The increase was primarily driven by the timing of wellfield and maintenance capital investments placed into service and our Second Apex RNG Facility project being placed into service.
Impairment loss
We calculated and recorded impairment losses of $48 in the third quarter of 2025, a decrease of $485 (91.0%) compared to $533 in the third quarter of 2024. The decrease primarily relates to specifically identified assets deemed obsolete or non-operable in third quarter of 2024 compared to the third quarter of 2025.
Other Expenses
Other expenses in the third quarter of 2025 was $1,088, a decrease of $607 (35.8%) compared to $1,695 the third quarter of 2024. The decrease is related to a reduction in interest expense in the third quarter of 2025 compared to the third quarter of 2024.
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Table of Contents
Income Tax Expense
Income tax expense for the three months ended September 30, 2025 was calculated using an estimated effective tax rate which differs from the U.S. federal statutory rate of 21.0% primarily related to the adjustment of Production Tax Credits, Investment Tax Credits as well as stock based compensation vesting.
The effective tax rate of (54.9)% for the three months ended September 30, 2025 was lower than the rate for the three months ended September 30, 2024 of 18.9% primarily due to the change in our pre-tax income (loss) for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.
Operating Income for the Three Months Ended September 30, 2025 and 2024
Operating income in the third quarter of 2025 was $4,448, a decrease of $18,260 (80.4%) compared to $22,708 in the third quarter of 2024. RNG operating income for the third quarter of 2025 was $11,036, a decrease of $22,580 (67.2%) compared to $33,616 in the third quarter of 2024. Renewable Electricity Generation operating loss for the third quarter of 2025 was $166, a decrease of $452 (73.1%) compared to $618 for the third quarter of 2024.
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Table of Contents
Comparison of Nine Months Ended September 30, 2025 and 2024
The following table summarizes the key operating metrics described above, which are metrics we use to measure performance.
|
|
For the nine months ended |
|
|
|
|
|
Change |
|
|||||||
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|
% |
|
||||
(in thousands, unless otherwise indicated) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Renewable Natural Gas Total Revenues |
|
$ |
119,162 |
|
|
$ |
134,575 |
|
|
$ |
(15,413 |
) |
|
|
(11.5 |
%) |
Renewable Electricity Generation Total Revenues |
|
$ |
12,697 |
|
|
$ |
13,467 |
|
|
$ |
(770 |
) |
|
|
(5.7 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
RNG Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CY RNG production volumes (MMBtu) |
|
|
4,247 |
|
|
|
4,188 |
|
|
|
59 |
|
|
|
1.4 |
% |
Less: Current period RNG volumes under fixed/floor-price contracts |
|
|
(1,508 |
) |
|
|
(1,049 |
) |
|
|
(459 |
) |
|
|
43.8 |
% |
Plus: Prior period RNG volumes dispensed in current period |
|
|
291 |
|
|
|
358 |
|
|
|
(67 |
) |
|
|
(18.7 |
%) |
Less: Current period RNG production volumes not dispensed |
|
|
(331 |
) |
|
|
(308 |
) |
|
|
(23 |
) |
|
|
7.5 |
% |
Total RNG volumes available for RIN generation (1) |
|
|
2,699 |
|
|
|
3,189 |
|
|
|
(490 |
) |
|
|
(15.4 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
RIN Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current RIN generation ( x 11.6935) (2) |
|
|
31,570 |
|
|
|
37,403 |
|
|
|
(5,833 |
) |
|
|
(15.6 |
%) |
Less: Counterparty share (RINs) |
|
|
(4,288 |
) |
|
|
(3,726 |
) |
|
|
(562 |
) |
|
|
15.1 |
% |
Plus: Prior period RINs carried into current period |
|
|
6,822 |
|
|
|
108 |
|
|
|
6,714 |
|
|
|
6216.7 |
% |
Less: RINs generated but unseparated |
|
|
(749 |
) |
|
|
— |
|
|
|
(749 |
) |
|
|
0.0 |
% |
Less: CY RINs carried into next CY |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.0 |
% |
Total RINs available for sale (3) |
|
|
33,355 |
|
|
|
33,785 |
|
|
|
(430 |
) |
|
|
(1.3 |
%) |
Less: RINs sold |
|
|
(33,345 |
) |
|
|
(33,639 |
) |
|
|
294 |
|
|
|
(0.9 |
%) |
RIN Inventory |
|
|
10 |
|
|
|
146 |
|
|
|
(136 |
) |
|
|
(93.2 |
%) |
RNG Inventory (volumes not dispensed for RINs) (4) |
|
|
331 |
|
|
|
308 |
|
|
|
23 |
|
|
|
7.5 |
% |
Average Realized RIN price |
|
$ |
2.34 |
|
|
$ |
3.25 |
|
|
$ |
(0.91 |
) |
|
|
(28.0 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Renewable Natural Gas Operating Expenses |
|
$ |
68,727 |
|
|
$ |
63,835 |
|
|
$ |
4,892 |
|
|
|
7.7 |
% |
Operating Expenses per MMBtu (actual) |
|
$ |
16.18 |
|
|
$ |
15.24 |
|
|
$ |
0.94 |
|
|
|
6.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
REG Operating Expenses |
|
$ |
12,162 |
|
|
$ |
11,208 |
|
|
$ |
954 |
|
|
|
8.5 |
% |
$/MWh (actual) |
|
$ |
92.14 |
|
|
$ |
80.06 |
|
|
$ |
12.08 |
|
|
|
15.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Renewable Electricity Generation Volumes Produced (MWh) |
|
|
132 |
|
|
|
140 |
|
|
|
(8 |
) |
|
|
(5.7 |
%) |
Average Realized Price $/MWh (actual) |
|
$ |
96.19 |
|
|
$ |
96.19 |
|
|
$ |
(0.00 |
) |
|
|
(0.0 |
%) |
43
Table of Contents
The following table summarizes our revenues, expenses and net (loss) income for the periods set forth below:
|
|
For the nine months ended |
|
|
|
|
|
Change |
|
|||||||
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|
% |
|
||||
Total operating revenues |
|
$ |
132,988 |
|
|
$ |
148,042 |
|
|
$ |
(15,054 |
) |
|
|
(10.2 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating and maintenance expenses |
|
|
56,899 |
|
|
|
48,596 |
|
|
|
8,303 |
|
|
|
17.1 |
% |
General and administrative expenses |
|
|
24,310 |
|
|
|
28,202 |
|
|
|
(3,892 |
) |
|
|
(13.8 |
)% |
Royalties, transportation, gathering and production fuel |
|
|
25,172 |
|
|
|
26,702 |
|
|
|
(1,530 |
) |
|
|
(5.7 |
)% |
Depreciation, depletion and amortization |
|
|
21,634 |
|
|
|
17,305 |
|
|
|
4,329 |
|
|
|
25.0 |
% |
Impairment loss |
|
|
2,472 |
|
|
|
1,232 |
|
|
|
1,240 |
|
|
|
100.6 |
% |
Transaction costs |
|
|
- |
|
|
|
61 |
|
|
|
(61 |
) |
|
|
(100.0 |
)% |
Total operating expenses |
|
|
130,487 |
|
|
|
122,098 |
|
|
|
8,389 |
|
|
|
6.9 |
% |
Operating income |
|
$ |
2,501 |
|
|
$ |
25,944 |
|
|
$ |
(23,443 |
) |
|
|
(90.4 |
)% |
Other expenses: |
|
|
3,533 |
|
|
|
3,036 |
|
|
|
497 |
|
|
|
16.4 |
% |
(Loss) income before income taxes |
|
|
(1,032 |
) |
|
|
22,908 |
|
|
|
(23,940 |
) |
|
|
(104.5 |
)% |
Income tax (benefit) expense |
|
|
(286 |
) |
|
|
4,722 |
|
|
|
(5,008 |
) |
|
|
(106.1 |
)% |
Net (loss) income |
|
$ |
(746 |
) |
|
$ |
18,186 |
|
|
$ |
(18,932 |
) |
|
|
(104.1 |
)% |
Revenues for the Nine Months Ended September 30, 2025 and 2024
Total revenues in the first nine months of 2025 were $132,988, a decrease of $15,054 (10.2%) compared to $148,042 in the first nine months of 2024. Our total RNG attribute revenues decreased approximately $30,169 in the first nine months of 2025 as compared to the first nine months of 2024. Our realized RIN pricing decreased approximately 28.0% during the first nine months of 2025 compared to the first nine months of 2024. Total RNG commodity revenues increased $13,395 in the first nine months of 2025 as compared to the first nine months of 2024. Our counterparty margin share revenues also increased $1,460 in the first nine months of 2025 as compared to the first nine months of 2024.
Renewable Natural Gas Revenues
We produced 4,247 MMBtu of RNG during the first nine months of 2025, an increase of 59 MMBtu (1.4%) compared to the 4,188 MMBtu produced in the first nine months of 2024. Our Rumpke facility produced 156 MMBtu more in the first nine months of 2025 compared to the first nine months of 2024 as a result of previously disclosed plant processing equipment failures that occurred in the first nine months of 2024. Our Apex facility produced 36 MMBtu fewer in the first nine months of 2025 compared to the first nine months of 2024 as a result of cold weather conditions impacting gas feedstock availability, wellfield extraction environmental factors, as well as plant processing equipment failures. Also offsetting the increase was the fourth quarter of 2024 sale of our Southern facility which produced 69 MMBtu in the first nine months of 2024.
Revenues from the Renewable Natural Gas segment in the first nine months of 2025 were $119,162, a decrease of $15,413 (11.5%) compared to $134,575 in the first nine months of 2024. Average commodity pricing for natural gas for the first nine months of 2025 was $3.39 per MMBtu, 61.4% higher than the first nine months of 2024. During the first nine months of 2025, we self-monetized 33,345 RINs, representing a 294 RIN decrease (0.9%) compared to 33,639 RINs in the first nine months of 2024. Average pricing realized on RIN sales during the first nine months of 2025 was $2.34 as compared to $3.25 in the first nine months of 2024, a decrease of 28.0%. This compares to the average D3 RIN index price for the first nine months of 2025 of $2.32 as compared to $3.22 in the first nine months of 2024, a decrease of approximately 28.0%. At September 30, 2025, we had approximately 331 MMBtu available for RIN generation, 749 RINs generated and unseparated, and 10 RINs generated and unsold. At September 30, 2024, we had approximately 308 MMBtu available for RIN generation and 146 RINs generated and unsold. There were no RINS generated and unseparated at September 30, 2024.
Renewable Electricity Generation Revenues
We produced approximately 132 MWh in Renewable Electricity in the first nine months of 2025, a decrease of 8 MWh (5.7%) from 140 MWh in the first nine months of 2024. Our Security facility produced approximately 6 fewer MWh in the first nine months of 2025 compared to the first nine months of 2024 as a result of ceasing operations in connection with the first quarter of 2024 sale. Our Bowerman facility produced approximately 2 fewer MWh in the first nine months of 2025 compared to the first nine months of 2024 primarily related to the planned preventative engine maintenance that was completed in the first nine months of 2025.
44
Table of Contents
Revenues from Renewable Electricity facilities in the first nine months of 2025 were $12,697, a decrease of $770 (5.7%) compared to $13,467 in the first nine months of 2024. The decrease is primarily driven by the decrease in our Bowerman facility production volumes and the cessation of operation at our Security facility.
In the first nine months of 2025, 100.0% of Renewable Electricity Generation segment revenues were derived from the monetization of Renewable Electricity at fixed prices associated with underlying PPAs, as compared to 100.0% in the first nine months of 2024. This provides us with certainty of price resulting from our Renewable Electricity sites.
Expenses for the Nine Months Ended September 30, 2025 and 2024
General and Administrative Expenses
Total general and administrative expenses were $24,310 for the first nine months of 2025, a decrease of $3,892 (13.8%) compared to $28,202 for the first nine months of 2024. The decrease was primarily related to the accelerated vesting of certain restricted share awards as a result of the termination of an employee in the first nine months of 2024.
Renewable Natural Gas Expenses
Operating and maintenance expenses for our RNG facilities in the first nine months of 2025 were $44,970, an increase of $6,341 (16.4%) as compared to $38,629 in the first nine months of 2024. Our Apex facility operating maintenance expenses increased approximately $1,724 primarily related to increased utility expense, the timing of maintenance related to gas processing equipment, increased media change outs, as well as a wellfield operational enhancement program. Our Rumpke facility operating maintenance expenses increased approximately $1,518 primarily related to a wellfield operational enhancement program, increased media change outs, and increased utility expense. Our Atascocita facility operating maintenance expenses increased approximately $1,168 primarily due to gas processing equipment maintenance, timing of media change outs, a wellfield operational enhancement program, and increased utility expense. Our McCarty facility operating maintenance expenses increased approximately $776 primarily related to increased media change outs, timing of maintenance related to gas processing equipment as well as a wellfield operational enhancement program. Our Coastal facility operating maintenance expenses increased approximately $498 primarily related to media change outs. Our Monroeville facility operating maintenance expenses increased approximately $224 primarily related to a process equipment failure.
Royalties, transportation, gathering and production fuel expenses for our RNG facilities for the first nine months of 2025 were $23,757, a decrease of $1,449 (5.7%) compared to $25,206 in the first nine months of 2024. We recorded an increase to our Pico facility earnout of approximately 13.4% during the first nine months of 2025. Royalties, transportation, gathering and production fuel expenses increased as a percentage of RNG revenues to 19.9% for the first nine months of 2025 from 18.7% in the first nine months of 2024.
Renewable Electricity Expenses
Operating and maintenance expenses for our Renewable Electricity facilities in the first nine months of 2025 were $10,748, an increase of $1,036 (10.7%) compared to $9,712 in the first nine months of 2024. The increase was primarily driven by an increase in non-capitalizable costs at our Montauk Ag Renewables projects.
Royalties, transportation, gathering and production fuel expenses for our Renewable Electricity facilities for the first nine months of 2025 were $1,414, a decrease of $82 (5.5%) compared to $1,496 in the first nine months of 2024. As a percentage of Renewable Electricity Generation segment revenues, royalties, transportation, gathering and production fuel expenses remained unchanged at 11.1%.
Royalty Payments
Royalties, transportation, gathering, and production fuel expenses in the first nine months of 2025 were $25,172, a decrease of $1,530 (5.7%) compared to $26,702 in the first nine months of 2024.
Depreciation
Depreciation and amortization in the first nine months of 2025 was $21,634, an increase of $4,329 (25.0%) compared to $17,305 in the first nine months of 2024. The increase was primarily driven by the timing of wellfield and maintenance capital investments placed into service and our Second Apex RNG Facility project being placed into service.
45
Table of Contents
Impairment loss
We calculated and recorded impairment losses of $2,472 in the first nine months of 2025, an increase of $1,240 (100.6%) compared to $1,232 in the first nine months of 2024. The impairment losses in the first nine months of 2025 primarily relate to a development project RNG interconnection for which the local utility is no longer accepting RNG into its distribution system. All associated costs related to the interconnection were impaired and specifically identified assets deemed obsolete or non-operable. The impairment losses in the first nine months of 2024 primarily relate to the remaining book value of assets at the Security facility and various RNG equipment that was deemed obsolete for current operations.
Other Expenses
Other expenses in the first nine months of 2025 was $3,533, an increase of $497 (16.4%) compared to $3,036 in the first nine months of 2024. The increase is primarily related to proceeds received from the sale of gas rights ahead of the fuel supply agreement expiration of our Security facility in the first nine months of 2024 which is offset by decreased interest expense of $752.
Income Tax Expense
Income tax expense for the nine months ended September 30, 2025 was calculated using an estimated effective tax rate which differs from the U.S. federal statutory rate of 21.0% primarily due to the benefit from production tax credits.
The effective tax rate of 27.7% for the nine months ended September 30, 2025 was lower than the rate for the nine months ended September 30, 2024 of 20.6% primarily due to due to discrete events related to the vesting of restricted grants on stock compensation offset by tax benefits related to production and investment tax credit as compared to year-to-date pre-tax book loss.
Operating (Loss) Income for the Nine Months Ended September 30, 2025 and 2024
Operating income in the first nine months of 2025 was $2,501, a decrease of $23,443 (90.4%) compared to $25,944 in the first nine months of 2024. RNG operating income for the first nine months of 2025 was $30,630, a decrease of $26,281 (46.2%) compared to $56,911 in the first nine months of 2024. Renewable Electricity Generation operating loss for the first nine months of 2025 was $3,534, an increase of $1,324 (59.9%) compared to $2,210 for the first nine months of 2024.
Non-GAAP Financial Measures:
The following table presents EBITDA and Adjusted EBITDA, non-GAAP financial measures, for each of the periods presented below. 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.
The following table provides our EBITDA and Adjusted EBITDA for the periods presented, as well as a reconciliation to net income, which is the most directly comparable GAAP measure, for the three months ended September 30, 2025 and 2024:
|
|
For the three months ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net Income |
|
$ |
5,205 |
|
|
$ |
17,048 |
|
Depreciation, depletion and amortization |
|
|
8,341 |
|
|
|
6,048 |
|
Interest expense |
|
|
1,074 |
|
|
|
1,835 |
|
Income tax (benefit) expense |
|
|
(1,845 |
) |
|
|
3,965 |
|
Consolidated EBITDA |
|
|
12,775 |
|
|
|
28,896 |
|
|
|
|
|
|
|
|
||
Impairment loss (1) |
|
|
48 |
|
|
|
533 |
|
Net loss on sale of assets |
|
|
— |
|
|
|
1 |
|
Adjusted EBITDA |
|
$ |
12,823 |
|
|
$ |
29,430 |
|
46
Table of Contents
The following table provides our EBITDA and Adjusted EBITDA for the periods presented, as well as a reconciliation to net (loss) income, which is the most directly comparable GAAP measure, for the nine months ended September 30, 2025 and 2024:
|
|
For the nine months ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net (loss) income |
|
$ |
(746 |
) |
|
$ |
18,186 |
|
Depreciation, depletion and amortization |
|
|
21,634 |
|
|
|
17,305 |
|
Interest expense |
|
|
3,533 |
|
|
|
4,285 |
|
Income tax (benefit) expense |
|
|
(286 |
) |
|
|
4,722 |
|
Consolidated EBITDA |
|
|
24,135 |
|
|
|
44,498 |
|
|
|
|
|
|
|
|
||
Impairment loss (1) |
|
|
2,472 |
|
|
|
1,232 |
|
Net loss of sale of assets |
|
|
36 |
|
|
|
72 |
|
Transaction costs |
|
|
— |
|
|
|
61 |
|
Adjusted EBITDA |
|
$ |
26,643 |
|
|
$ |
45,863 |
|
Liquidity and Capital Resources
Sources of Liquidity
At September 30, 2025 and September 30, 2024, our cash and cash equivalents, net of restricted cash, was $6,766 and $54,973, respectively. We intend to fund development projects using cash flows from operations and borrowings under our revolving credit facility. We believe that we will have sufficient cash flows from operations and borrowing availability under our credit facility to meet our debt service obligations and anticipated required capital expenditures (including for projects under development) for the next 12 to 24 months. However, we are subject to business and operational risks that could adversely affect our cash flows and liquidity.
At September 30, 2025, we had debt before debt issuance costs of $67,000, compared to debt before debt issuance costs of $56,000 at December 31, 2024.
Our debt before issuance costs (in thousands) are as follows:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Term loan |
|
$ |
47,000 |
|
|
$ |
56,000 |
|
Revolving credit facility |
|
|
20,000 |
|
|
— |
|
|
Debt before debt issuance costs |
|
$ |
67,000 |
|
|
$ |
56,000 |
|
Amended Credit Agreement
On December 21, 2021, the Company entered into the Fourth Amendment with Comerica and certain other financial institutions. The current credit agreement, which is secured by a lien on substantially all of our assets and assets of certain of our subsidiaries, provides for a five-year $80,000 term loan, a five-year $120,000 revolving credit facility, and a $75,000 accordion feature.
As of September 30, 2025, $47,000 was outstanding under the term loan and we had $20,000 of outstanding borrowings under the revolving credit facility. The term loan amortizes in quarterly installments of $3,000 through 2026, with a final payment of $32,000 in late 2026 with an interest rate of 5.56% and 6.01% at September 30, 2025 and December 31, 2024, respectively.
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The Amended Credit Agreement contains customary covenants applicable to us and certain of our subsidiaries, including financial covenants. The Amended Credit Agreement is subject to customary events of default, and contemplates that we would be in default if, for any fiscal quarter (x) the average monthly D3 RIN price (as determined in accordance with the Amended Credit Agreement) is less than $0.80 per RIN and (y) the consolidated EBITDA for such quarter is less than $6,000. Consolidated EBITDA is defined under the Amended Credit Agreement as net income plus (a) income tax expense, (b) interest expense, (c) depreciation, depletion, and amortization expense, (d) non-cash unrealized derivative expense and (e) any other extraordinary, unusual, or non-recurring adjustments to certain components of net income, as agreed upon by Comerica in certain circumstances.
Under the Amended Credit Agreement, we are required to maintain the following ratios:
As of September 30, 2025, we were in compliance with all applicable financial covenants under the Amended Credit Agreement.
For additional information regarding the Amended Credit Agreement, see Note 13— Debt to our unaudited condensed consolidated financial statements.
Capital Expenditures
We have historically funded our growth and capital expenditures with our working capital, cash flow from operations and debt financing. We expect our non-development 2025 capital expenditures to range between $14,000 and $16,000. Our 2025 non-development capital plans include annual preventative maintenance expenditures, annual wellfield expansion projects, and other specific facility improvements. Additionally, we estimate that our existing 2025 development capital expenditures will range between $90,000 and $120,000. The majority of our ongoing 2025 development capital expenditures are related to our ongoing development of Montauk Ag Renewables, the Bowerman RNG project, and the EENA CO2 project. To a lesser extent in 2025, the Tulsa RNG project and our Rumpke RNG relocation project will incur development capital expenditures. Our Amended Credit Agreement provides us with a $120,000 revolving credit facility, with a $75,000 accordion option, providing us with access to additional capital to implement our acquisition and development strategy.
Cash Flow
The following table presents information regarding our cash flows and cash equivalents for the nine months ended September 30, 2025 and 2024:
|
|
For the nine months ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net cash provided by (used in): |
|
|
|
|
|
|
||
Operating activities |
|
$ |
29,997 |
|
|
$ |
43,071 |
|
Investing activities |
|
|
(79,219 |
) |
|
|
(54,129 |
) |
Financing activities |
|
|
10,421 |
|
|
|
(7,755 |
) |
Net decrease in cash and cash equivalents |
|
|
(38,801 |
) |
|
|
(18,813 |
) |
Restricted cash, end of the period |
|
|
437 |
|
|
|
456 |
|
Cash and cash equivalents, end of period |
|
|
7,203 |
|
|
|
55,429 |
|
For the first nine months of 2025, we generated $29,997 of cash provided by operating activities compared to $43,071 in the first nine months of 2024. For the first nine months of 2025, income and adjustments to income from operating activities provided $29,319 compared to income and adjustments to income provided $46,737 in first nine months of 2024. Working capital and other assets and liabilities provided $678 in the first nine months of 2025 compared to working capital and other assets and liabilities used $3,666 in the first nine months of 2024.
Our net cash flows used in investing activities has historically focused on project development and facility maintenance. Our capital expenditures for the first nine months of 2025 were $75,106, of which $51,895, $8,533, and $7,536 were related to the Montauk Ag Renewables in North Carolina, Rumpke RNG relocation project, and our second Apex RNG facility, respectively.
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Our net cash flows provided by financing activities of $10,421 for the first nine months of 2025 increased by $18,176 compared to cash used in financing activities in the first nine months of 2024 of $7,755 as a result of proceeds received from our revolving credit agreement.
Contractual Obligations and Commitments
Off-balance sheet arrangements comprise those arrangements that may potentially impact our liquidity, capital resources and results of operations, even though such arrangements are not recorded as liabilities under GAAP. Our off-balance sheet arrangements are limited to the outstanding letters of credit described below. Although these arrangements serve a variety of our business purposes, we are not dependent on them to maintain our liquidity and capital resources, and we are not aware of any circumstances that are reasonably likely to cause the off-balance sheet arrangements to have a material adverse effect on liquidity and capital resources.
We have contractual obligations involving asset retirement obligations. See Note 9 in the unaudited condensed consolidated financial statements for further information regarding the asset retirement obligations.
We have contractual obligations under our debt agreement, including interest payments and principal repayments. See Note 13 in the unaudited condensed consolidated financial statements for further discussion of the contractual commitments under our debt agreements, including the timing of principal repayments. During the first nine months of 2025, we had $3,321 of off-balance sheet arrangements of outstanding letters of credit. These letters of credit reduce the borrowing capacity of our revolving credit facility under our Amended Credit Agreement. Certain of our contracts require these letters of credit to be issued to provide additional performance assurances. There have been no draw downs on these outstanding letters of credit. During the first nine months of 2024, we did not have off-balance sheet arrangements other than outstanding letters of credit of $2,185.
We have contractual obligations involving operating leases. We lease office space and other office equipment under operating lease arrangements, expiring in various years through 2033. See Note 19 in the unaudited condensed consolidated financial statements for further information related to the lease obligations.
We have other contractual obligations associated with our fuel supply agreements. The expiration of these agreements range between 2-18 years. The minimum royalty and capital obligation associated with these agreements range from $8 to $1,695.
In April 2025, the Board of Directors of Montauk Renewables Inc. authorized a share repurchase program (the “Share Repurchase Program”), pursuant to which we may, from time to time, purchase currently outstanding shares of its common stock for an aggregate repurchase price not to exceed $5,000. The timing, number and purchase price of shares repurchased under the program, if any, will be determined by a Repurchase Committee, comprised of Board members and management. The Share Repurchase Program does not have an expiration date and there are no assurances that purchases will take place under the program.
Critical Accounting Policies and Estimates
Our unaudited condensed consolidated financial statements are prepared in conformity with GAAP and require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates, and such estimates may change if the underlying conditions or assumptions change.
Revenue Recognition
Our revenues are comprised of renewable energy and the related Environmental Attribute sales provided under a variety of short, medium and long term agreements with our customers. All revenue is recognized when we satisfy our performance obligation(s) under the contract (either implicit or explicit) by transferring the promised product to the customer either when (or as) the customer obtains control of the product. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. We allocate the contract’s transaction price to each performance obligation using the product’s observable market standalone selling price for each distinct product in the contract.
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring our products. As such, revenue is recorded net of allowances and customer discounts as well as net of transportation and gathering costs incurred. To the extent applicable, sales, value add, and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.
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The nature of the Company’s contracts may give rise to several types of variable consideration, such as periodic price increases. This variable consideration is outside of the Company’s influence as the variable consideration is dictated by the market. Therefore, the variable consideration associated with the long-term contracts is considered fully constrained.
RINs
We generate D3 RINs through our production and sale of RNG used for transportation purposes as prescribed under the RFS program. Our operating costs are associated with the production of RNG. The RINs are government incentives that are generated through our renewable operating projects and not a result of physical attributes of our RNG production. The RINs that we generate are able to be separated and sold as credits independently from the energy produced. Therefore, no cost is allocated to the RIN when it is generated. Revenue is recognized on these Environmental Attributes when there is an agreement in place to monetize the credits at an agreed upon price with a customer and transfer of control has occurred. We enter into forward commitments to transfer RINs. These forward commitments are based on D3 RIN index prices at the time of the commitment. Realized prices for RINs monetized in a year may not correspond directly to index prices due to the forward selling of commitments.
RECs
We generate RECs through our production and conversion of landfill methane into Renewable Electricity in various states, including California, Oklahoma, and Texas. These states have various laws requiring utilities to purchase a portion of their energy from renewable resources. Our operating costs are associated with the production of Renewable Electricity. The RECs are generated as an output of our renewable operating projects. The RECs that we generate are able to be separated and sold independently from the electricity produced. Therefore, no cost is allocated to the REC when it is generated. Revenue is recognized on these Environmental Attributes when there is an agreement in place to monetize the credits at an agreed upon price with a customer and transfer of control has occurred.
Income Taxes
We are subject to income taxes in the U.S. federal jurisdiction and various state and local jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply.
Our net deferred tax asset position is a result of fixed assets, intangibles, and tax credit carryforwards. The realization of deferred tax assets is dependent upon our ability to generate sufficient future taxable income during the periods in which those temporary differences become deductible, prior to the expiration of the tax attributes. The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns and forecasting future profitability by tax jurisdiction.
We evaluate our deferred tax assets at reporting periods on a jurisdictional basis to determine whether adjustments to the valuation allowance are appropriate considering changes in facts or circumstances. As of each reporting date, management considers new evidence, both positive and negative, when determining the future realization of our deferred tax assets. We account for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position.
Intangible Assets
Separately identifiable intangible assets are recorded at their fair values upon acquisition. We account for intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. Finite-lived intangible assets include interconnections, customer contracts, and trade names and trademarks. The interconnection intangible asset is the exclusive right to utilize an interconnection line between the operating project and a utility substation to transmit produced electricity. Included in that right is full maintenance provided on this line by the utility. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful life. We evaluate our finite-lived intangible assets for impairment as events or changes in circumstances indicate the carrying value of these assets may not be fully recoverable. Events that could result in an impairment include, among others, a significant decrease in the market price or the decision to close a site.
If finite-lived or indefinite-lived intangible assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The fair value is determined based on the present value of expected future cash flows. We use our best estimates in making these evaluations, however, actual future pricing,
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operating costs and discount rates could vary from the assumptions used in our estimates and the impact of such variations could be material.
Our assessment of the recoverability of finite-lived and indefinite-lived intangible assets is determined by performing monitoring assessment of the future cash flows associated with the underlying gas rights agreements. The cash flows estimates are performed at the operating unit level and based on the average remaining length of the gas rights agreements. Based on our analysis, we concluded the cash flows generated to be well in excess of the carrying amounts. Changes in market conditions related to the various price indexes used in estimating these cash flows could adversely affect these estimates.
Finite-Lived Asset Impairment
In accordance with FASB ASC Topic 360, Property, Plant and Equipment and intangible assets with finite useful lives are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to future undiscounted cash flows expected to be generated by the asset or asset group. Such estimates are based on certain assumptions, which are subject to uncertainty and may materially differ from actual results, including considering project specific assumptions for long-term credit prices, escalated future project operating costs and expected site operations. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value is generally determined by considering (i) internally developed discounted cash flows for the asset group, (ii) third-party valuations, and/or (iii) information available regarding the current market value for such assets. We use our best estimates in making these evaluations and consider various factors, including future pricing and operating costs. However, actual future market prices and project costs could vary from the assumptions used in our estimates and the impact of such variations could be material. We identified discrete events and recorded an impairment of $48 and $533 for the three months ended September 30, 2025 and 2024, respectively and $2,472 and $1,232 for the nine months ended September 30, 2025 and 2024, respectively. See Note 3 in the unaudited condensed consolidated financial statements for further information related to asset impairments.
Emerging Growth Company
We are an emerging growth company, as defined in the JOBS Act, which ends after 2025. The JOBS Act allows emerging growth companies to delay the adoption of new or revised accounting standards until such time as those standards apply to private companies. We intend to utilize these transition periods, which may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act.
Recent Accounting Pronouncements
For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2 of our unaudited condensed consolidated financial statements in this report.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes since our disclosure in Quantitative and Qualitative Disclosures About Market Risk included as Item 7A in our 2024 Annual Report.
ITEM 4. CONTROLS AND PROCEDURES
Management’s Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act, as of the end of the period covered by this quarterly report. Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, including our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, concluded that as of such date, our disclosure controls and procedures were effective at a reasonable level of assurance.
Changes in Internal Control Over Financial Reporting
In March 2025, we implemented a new Enterprise Resource Planning ("ERP") system. In conjunction with the ERP implementation, we updated the design of key internal controls over financial reporting.
Except as discussed above, there were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we and our subsidiaries may be parties to legal proceedings arising in the normal course of our business. We and our subsidiaries are currently not a party, nor is our property subject, to any material pending legal proceedings.
ITEM 1A. RISK FACTORS
We face a number of risks that could materially and adversely affect our business, results of operations, cash flow, liquidity, or financial condition. A discussion of our risk factors can be found in Part I, “Item 1A Risk Factors” in our 2024 Annual Report any of which could have a material effect on us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
Exhibit Number |
|
Description |
|
|
|
|
|
|
|
|
|
31.1 |
|
Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act |
|
|
|
31.2 |
|
Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act |
|
|
|
32.1 |
|
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.2 |
|
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
101.INS |
|
Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents |
|
|
|
104 |
|
Cover page formatted as Inline XBRL and contained in Exhibit 101 |
|
|
|
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
November 5, 2025 |
|
MONTAUK RENEWABLES, INC. |
|
|
|
|
|
|
|
By: |
/s/ SEAN F. MCCLAIN |
|
|
|
Sean F. McClain |
|
|
|
President and Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
|
|
By: |
/s/ KEVIN A. VAN ASDALAN |
|
|
|
Kevin A. Van Asdalan |
|
|
|
Chief Financial Officer (Principal Accounting Officer) |
55
FAQ
What were Montauk Renewables (MNTK) Q3 2025 revenues and earnings?
How did segment results break down for MNTK in Q3 2025?
What is MNTK’s cash and debt position as of September 30, 2025?
How much did MNTK invest in capital expenditures year-to-date?
Did MNTK record any impairments in 2025?
What is the GreenWave joint venture and MNTK’s contribution?
How many MNTK shares were outstanding at quarter-end?
