OPAL Fuels Inc. (“OPAL Fuels” or the “Company”) (Nasdaq: OPAL), a vertically integrated leader in the capture and conversion of biogas into low carbon intensity RNG and Renewable Power, today announced results for the three and six months ended June 30, 2024.

“Second quarter results were solid and we remain on target to achieve our 2024 financial objectives,” said Adam Comora, Co-Chief Executive Officer. “We achieved Adjusted EBITDA of $18.9 million, driven by growing RNG production, supportive RIN prices and improved margins in our Fuel Stations Services segment. A substantial majority of our expected RIN sales for this year are now contracted at favorable pricing and we remain on schedule for completing construction of our RNG projects coming online this year,” continued Comora.

“We are executing on our growth initiatives and are pleased to announce the addition of the Burlington RNG facility to our in-construction portfolio, bringing the combined number of RNG projects in construction and operation to 16. This is the second project with our joint venture partner South Jersey Industries,” said co-CEO Jonathan Maurer. “OPAL's share of Burlington represents an additional 0.46 million MMBtu of annual design capacity bringing our total operating and in-construction RNG portfolio annual design capacity to 10.8 million MMBtu. Burlington and our previously announced Cottonwood project together total 1.1 million MMBtu of new annual RNG production design capacity placed in construction against our 2.0 million MMBtu target for 2024.”

“Market fundamentals continue to be strong for the capture and productive use of biogenic methane emissions,” continued Comora. “We believe our team and our vertically integrated business model position us well to capitalize on these opportunities.”

Financial Highlights

• Revenue for the three and six months ended June 30, 2024, was $71.0 million and $135.9 million, an increase of $15.9 million or 29% and $37.9 million or 39%, compared to the same periods last year.
  • Our share of revenues from equity method investments, not included above for three and six months ended June 30, 2024, were $11.2 million and $22.0 million, compared to $2.1 million and $5.8 million, in the same periods prior year.
• Net income for the three and six months ended June 30, 2024, was $1.9 million and $2.6 million, compared to $114.1 million and $106.7 million in the same periods last year.¹
• Basic net loss per share attributable to Class A common shareholders for the three and six months ended June 30, 2024 was $(0.01) and $(0.02), compared to basic net income per share of $0.66 and $0.60, for the three and six months ended June 30, 2023
• Adjusted EBITDA² for the three and six months ended June 30, 2024, was $18.9 million and $34.1 million, an increase of $13.8 million and $30.6 million compared to the same periods last year.
• At June 30, 2024, RNG Pending Monetization totaled $20.7 million.

Operational Highlights

• RNG produced was 0.9 million and 1.7 million MMBtu for the three and six months ended June 30, 2024, an increase of 50% and 42%, compared to the prior-year periods.
• RNG sold as transportation fuel was 18.7 million and 35.1 million GGEs for the three and six months ended June 30, 2024, an increase of 70% and 82% compared to the prior-year periods.
• The Fuel Station Services segment sold, dispensed, and serviced an aggregate of 36.6 million and 71.6 million GGEs of transportation fuel for the three and six months ended June 30, 2024, an increase of 3% and 5% compared to the prior year periods.

Guidance

• Maintaining 2024 Adjusted EBITDA between $90 million and $100 million.
• RNG production is expected to range between 4.0 and 4.4 million MMBtu, compared with our previous guidance of 4.4-4.8 million MMBtu, primarily driven by slower than anticipated ramp up of our most recent facilities.
• RNG projects placed into construction in 2024 is maintained to be at least 2.0 million MMBtu of annual design capacity³.
• Capex is maintained at $230.0 million for 2024.
• Growth in Fuel Station Services Adjusted EBITDA is maintained between 75-90% in 2024

Construction Update

• The Sapphire RNG project is mechanically complete. Commissioning has begun and Commercial operations are expected to begin in the third quarter. This project represents approximately 0.8 million MMBtu for OPAL Fuels’ 50% ownership share of annual design capacity.
• The Polk County (Florida) RNG project continues to be on track to commence commercial operations in the fourth quarter of 2024. This project, owned 100% by OPAL Fuels, represents approximately 1.1 million MMBtu of annual design capacity.
• The Atlantic RNG project is on schedule and is expected to commence commercial operations in the third quarter of 2025. This project represents approximately 0.3 million MMBtu for OPAL Fuels’ 50% ownership share of annual design capacity.
• The Cottonwood RNG project entered construction in May. This project, owned 100% by OPAL Fuels, represents approximately 0.7 million MMBtu of annual design capacity.
• The Burlington RNG project has begun construction. This project, 50% owned by OPAL is the second RNG project with joint venture partner South Jersey Industries, represents approximately 0.46 million MMBtu for OPAL Fuels’ share of annual design capacity.

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¹ Net income for the three and six months ended June 30, 2023 included a $122.9 million non-cash gain on deconsolidation of variable interest entities ("VIEs").

² This is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to a comparable GAAP financial measure has been provided in the financial tables included in this press release. An explanation of this measure and how it is calculated is also included below under the heading “Non-GAAP Financial Measures.”

³ Reflects OPAL Fuels’ proportional share with respect to RNG projects owned with joint venture partners.

Results of Operations

Results of Operations from equity method investments

Landfill RNG Facility Capacity and Utilization Summary

RNG Pending Monetization Summary

Liquidity

As of June 30, 2024, we have drawn approximately $211.6 million, and utilized $13.7 million of our revolver availability for letters of credit, under the $500 million senior secured credit facility we entered into in September 2023.

As of June 30, 2024, our liquidity was $302.3 million, consisting of $274.7 million of availability under the above referenced credit facility, and $27.6 million of cash, cash equivalents, and short-term investments.

We believe our liquidity and anticipated cash flows from operations are sufficient to meet our existing funding needs.

Capital Expenditures

During the first six months of 2024, OPAL Fuels invested $49.7 million across RNG projects in construction and OPAL Fuels proprietary fueling stations in construction as compared to $72.0 million in the prior year.

In addition, for the six months ended June 30, 2024, our portion of capital expenditures in unconsolidated entities was $16.5 million. This represents our share of capital expenditures incurred for the Atlantic and Sapphire projects.

Earnings Call

A webcast to review OPAL Fuels’ Second Quarter 2024 results will be held tomorrow, August 8, 2024 at 11:00 AM Eastern Daylight Time.

Materials to be discussed in the webcast will be available before the call on the Company’s website.

Participants may access the call at https://edge.media-server.com/mmc/p/haz262ph. Investors can also listen to a webcast of the presentation on the Company’s Investor Relations website at https://investors.opalfuels.com/news-events/events-presentations.

Glossary of terms

“D3” refers to cellulosic biofuel with a 60% greenhouse gas reduction requirement.

“GGE” refers to gasoline gallon equivalent. It is used to measure the total volume of RNG production that OPAL Fuels expects to dispense each year. The conversion ratio is 1MMBtu equal to 7.74 GGE.

“LCFS” refers to Low Carbon Fuel Standard or similar types of federal and state programs.

“LFG” refers to landfill gas.

“MMBtu” refers to million British thermal units.

“RECs” refers to renewable energy credits.

“Renewable Power” refers to electricity generated from renewable sources.

“RIN” refers to Renewable Identification Numbers.

“RNG” refers to renewable natural gas.

“VIEs” refers to variable interest entities.

About OPAL Fuels Inc.

OPAL Fuels Inc. (Nasdaq: OPAL) is a leader in the capture and conversion of biogas into low carbon intensity RNG and renewable electricity. OPAL Fuels is also a leader in the marketing and distribution of RNG to heavy duty trucking and other hard to de-carbonize industrial sectors. For additional information, and to learn more about OPAL Fuels and how it is leading the effort to capture North America’s harmful methane emissions and decarbonize the economy, please visit www.opalfuels.com.

Forward-Looking Statements

Certain statements in this communication may be considered forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts and generally relate to future events or the Company’s future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management’s control, including but not limited to general economic conditions and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s annual report on Form 10-K filed on March 15, 2024, and other filings the Company makes with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.

Disclaimer

This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy, any securities, nor shall there be any sale, issuance or transfer or securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Non-GAAP Financial Measures (Unaudited)

This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. We believe these measures provide important supplemental information to investors to use in evaluating ongoing operating results. We use these measures, together with accounting principles generally accepted in the United States (“GAAP” or “U.S. GAAP”), for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations, that when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide, give a more complete understanding of factors and trends affecting our business. We strongly encourage you to review all of our financial statements and publicly filed reports in their entirety and to not solely rely on any single non-GAAP financial measure.

Non-GAAP financial measures are limited as an analytical tool and should not be considered in isolation from, or as a substitute for, the Company’s GAAP results. The Company expects to continue reporting non-GAAP financial measures, adjusting for the items described below (and/or other items that may arise in the future as the Company’s management deems appropriate), and the Company expects to continue to incur expenses, charges or gains like the non-GAAP adjustments described below. Accordingly, unless expressly stated otherwise, the exclusion of these and other similar items in the presentation of non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent, or non-recurring. These Non-GAAP financial measures are not recognized terms under GAAP and do not purport to be alternatives to GAAP net income or any other GAAP measure as indicators of operating performance. Moreover, because not all companies use identical measures and calculations, the Company’s presentation of Non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. We strongly encourage you to review all of our financial statements and publicly filed reports in their entirety and to not solely rely on any single non-GAAP financial measure.

Adjusted EBITDA

To supplement the Company’s unaudited condensed consolidated financial statements presented in accordance with GAAP, the Company uses a non-GAAP financial measure that it calls adjusted EBITDA (“Adjusted EBITDA”). This non-GAAP financial measure adjusts net income for interest and financing expense, net, loss on debt extinguishment, net (income) loss attributable to non-redeemable non-controlling interests, depreciation, amortization and accretion expense, adjustments to reflect Adjusted EBITDA from equity method investments, loss on warrant exchange, unrealized (gain) loss on derivative instruments, non-cash charges, one-time non-recurring expenses, major maintenance on Renewable Power and gain on deconsolidation of VIEs.

Management believes this non-GAAP financial measure provides meaningful supplemental information about the Company’s performance, for the following reasons: (1) it allows for greater transparency with respect to key metrics used by management to assess the Company’s operating performance and make financial and operational decisions; (2) the measure excludes the effect of items that management believes are not directly attributable to the Company’s core operating performance and may obscure trends in the business; (3) the measure better aligns revenues with expenses; and (4) the measure is used by institutional investors and the analyst community to help analyze the Company’s business. In future quarters, the Company may adjust for other expenditures, charges or gains to present non-GAAP financial measures that the Company’s management believes are indicative of the Company’s core operating performance.

The following table presents the reconciliation of our Net loss to Adjusted EBITDA: