Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Montauk Renewables Inc (NASDAQ:MNTK) reported a significant increase in total revenues for Q3 2024, reaching $65.9 million, an 18.4% increase compared to Q3 2023.
• The company achieved a 9.5% increase in realized RIN pricing during Q3 2024 compared to the same period in 2023.
• Operating income for Q3 2024 increased by 35.3% to $22.7 million compared to Q3 2023.
• Adjusted EBITDA for Q3 2024 was $29.4 million, marking a 31.3% increase from Q3 2023.
• Montauk Renewables Inc (NASDAQ:MNTK) successfully self-marketed 15.8 million RINs in Q3 2024, a 14.5% increase from Q3 2023.

Negative Points

• Severe weather events in Houston, Texas, led to multi-day utility power outages, impacting over half of Montauk Renewables Inc (NASDAQ:MNTK)'s RNG production.
• The Blue Granite RNG project faced delays due to Hurricane Helene, pushing the commissioning expectation to 2027.
• General and administrative expenses increased by 27.9% in Q3 2024 compared to Q3 2023, primarily due to employee-related costs.
• The company experienced a decrease in renewable electricity production by 14.6% in Q3 2024 compared to Q3 2023.
• Landfill-driven delays in wellfield collection infrastructure installations are expected to impact production increases through 2025.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with MNTK.

Q: Can you provide more details on the impact of severe weather events on your Houston facilities and how it affected production? A: Sean McClain, President and CEO, explained that the Houston facilities, which account for over half of Montauk's RNG production, faced multi-day utility power outages due to severe weather. This resulted in an estimated production loss of approximately 100,000 MMBTUs during the first nine months of 2024. However, employee safety and equipment operability were maintained throughout these events.

Q: What is the status of the Blue Granite RNG project, and how has Hurricane Helene affected it? A: Sean McClain noted that the Blue Granite RNG project's commissioning has been delayed to 2027 due to the Interconnection Utility prioritizing remediation efforts from Hurricane Helene. This has slowed capital deployment for the project, and significant expenditures are not expected through the remainder of 2024.

Q: How are the trends in landfill-driven delays impacting your production expectations for 2024? A: Sean McClain highlighted that several landfill hosts have delayed the installation of wellfield collection infrastructure, impacting feedstock gas projections and production timing. These trends are expected to continue through 2025, affecting Montauk's updated 2024 production expectations.

Q: Could you elaborate on the financial performance and key metrics for the third quarter of 2024? A: Kevin Van Asdalan, CFO, reported that total revenues for Q3 2024 were $65.9 million, an 18.4% increase from Q3 2023. This was driven by a higher number of RINs self-marketed and increased RIN pricing. Operating income rose by 35.3% to $22.7 million, and adjusted EBITDA increased by 31.3% to $29.4 million compared to the same period last year.

Q: What are the company's expectations for RNG production and revenues for the full year 2024? A: Sean McClain provided an outlook indicating that full-year RNG production volumes are expected to range between 5.5 and 5.7 million MMBTUs, with corresponding RNG revenues between $175 million and $185 million. Renewable electricity production is projected to be between 180,000 and 185,000 megawatt hours, with revenues ranging from $17 million to $18 million.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.