Montauk Renewables Q3 2025: Contradictions Emerge on RNG Production and Growth Expectations, Maintenance CapEx, Production Guidance, and G&A Expenses

Date of Call: November 6, 2025

Financials Results

• Revenue: $45.3M, down $20.6M or 31.3% YOY compared to $65.9M in Q3 2024

Guidance:

• RNG production for full-year 2025 expected to be 5.8–6.0 million MMBtu with RNG revenues of $150M–$170M.
• Renewable electricity production for 2025 expected to be 175,000–180,000 MWh with revenues of $17M–$18M.
• Company does not provide guidance on market prices for environmental attributes (e.g., D3 RINs); NC project production expected to commence in Q1 2026.

Business Commentary:

* Environmental Attribute Pricing and Market Impact:
- The average D3 RIN index price for the third quarter of 2025 was approximately $2.19, a decrease of 34.8% compared to $3.36 in the third quarter of 2024.
- The decrease in RIN prices impacted the company's total revenues, which were $45.3 million, a decrease of 31.3% compared to $65.9 million in the third quarter of 2024.
- This trend was attributed to the EPA's rulemaking and the impact of the U.S. federal government shutdown on EPA staffing, which may have delayed finalizations of these items into 2026.

• RNG Production and Segment Performance:
• The company produced 1.4 million MMBtu of RNG during the third quarter of 2025, an increase of 3.8% compared to the third quarter of 2024.
• RNG revenues were $39.9 million, a decrease of 5.1% compared to $61.8 million in Q3 2024.

• The increase in production was primarily due to higher inlet feedstock supply and the commissioning of the second Apex RNG facility. The decrease in revenues is attributed to the decline in RIN prices and reduced self-marketed RINs.

• Operational Expenses and Efficiency:

• General and administrative expenses were $6.5 million in Q3 2025, a decrease of 35.1% compared to $10 million in the third quarter of 2024.
• The decrease was driven by accelerated vesting of certain restricted share awards as a result of employee terminations in the third quarter of 2024.
• The company's cash flow from operating activities decreased by 30.4% to $30 million for the first 9 months of 2025 compared to the same period in 2024.
  

  Sentiment Analysis:

  Overall Tone: Neutral

  • Revenue and profitability materially declined (Q3 revenue $45.3M, down 31.3% YOY; adjusted EBITDA $12.8M, down 56.5% YOY), but management maintained full-year production and revenue ranges for 2025 and highlighted ongoing development progress (North Carolina projects starting Q1 2026), reflecting a balanced tone of caution and operational continuity.

Q&A:

• Question from Matthew Blair (Tudor, Pickering, Holt & Co. Securities, LLC, Research Division): You maintained your 2025 RNG production guide, which would imply a step-up quarter-over-quarter in Q4 even at the low end — drivers of the step up? Better operations or seasonality? And is 2026 RNG production likely similar to 2025?
  Response: Q4 step-up driven by improved feedstock supply, Apex commissioning and well-field improvements; company won't give 2026 guidance now but expects normal growth into 2026.

• Question from Tim Moore (Clear Street): Maintenance/CapEx catch-up appeared to improve this quarter — do you expect more catch-up maintenance spending in upcoming quarters or are you past it?
  Response: Cost shifts reflect nonlinear equipment life-cycle and targeted noncapitalizable feedstock/debottlenecking work; no meaningful further catch-up maintenance expected aside from onboarding Turkey Creek in 2026.

• Question from Y. Zhang (Scotiabank Global Banking and Markets, Research Division): G&A was notably lower versus last quarter — what drove the quarter-to-quarter difference?
  Response: Quarterly G&A variance driven mainly by timing of professional and audit fees (final year of EGC status) and prior-year one-time stock‑based compensation/termination-related charges; expect normalization of run rate.

Contradiction Point 1

RNG Production Growth Expectations

It involves differing expectations for RNG production growth, which directly impacts revenue forecasts and investor expectations.

Will 2026 RNG production be similar to 2025? - Matthew Blair (TPH)

2025Q3: We expect to continue to expect our normal growth rate in going into 2026 as well. - Kevin Van Asdalan(CFO)

Is there a chance the EPA will reconsider and raise the proposed numbers for RNG's RVO? - Matthew Robert Lovseth Blair (TPH)

2025Q2: We expect to continue to see growth rates above our 1,500 Btu per day target in '26. - Kevin Van Asdalan(CFO)

Contradiction Point 2

Maintenance CapEx Wave

It pertains to the company's spending on maintenance-related capital expenditures, which can impact financial performance and operational efficiency.

Do you expect any additional catch-up maintenance spending in the next few quarters, or is it complete? - Tim Moore (Clear Street)

2025Q3: Kevin's explanation of your expected growth rate. We do not see any meaningful increase as we go into the outlook of operating expenses other than onboarding obviously our new Turkey Creek facility in 2026. - Sean McClain(CEO)

Are there other expenses related to your projects that could reduce profitability in the second half of this year or next year, aside from the one-time $1.8 million and $1.4 million charges that won’t recur at that level? - Tim Moore (Clear Street)

2025Q2: For the second half, we don't expect large one-timers from previous planned outages. - Kevin Andrew Van Asdalan(CFO)

Contradiction Point 3

RNG Production Guidance and Expectations

It involves changes in financial forecasts, specifically regarding RNG production guidance and expectations, which are critical for investors understanding the company's growth trajectory.

Why did you maintain your 2025 RNG production guidance, implying a Q4 sequential increase? Are the drivers operational improvements or external factors? Should 2026 RNG production be similar to 2025, given new projects are more for 2027? - Matthew Blair (TPH)

2025Q3: We continue to maintain our production ranges for RNG for the full 2025 year, which implies an expected step-up to hit the low end in the fourth quarter. It's a combination of a variety of factors, improvement in feedstock supply, which is also being beneficial at our Apex facility that we mentioned associated with some improvements in a newer plan. - Kevin Van Asdalan(CFO)

Can you elaborate on the RNG project at American Environmental Landfill and what are your expansion plans moving forward? - Saumya Jain (UBS)

2025Q1: Our RNG production for 2025 is expected to be between 95 and 115 million gallons of RNG. For 2026, we expect that our RNG production will increase by a double-digit percentage. - Kevin Van Asdalan(CFO)

Contradiction Point 4

G&A Expense Variance

It involves changes in financial operations, specifically regarding General and Administrative expenses, which can impact investor perceptions of financial management and efficiency.

What drove the G&A expense decrease compared to last quarter, given the quarter's G&A was significantly lower than the run rate? - Betty Zhang(Scotiabank)

2025Q3: Yes. The vast majority with that Betty is associated with timing of various professional fees, items like that. We are noticing a nominal increase in audit fees and auditor fees. As a reminder, this is our final year of EGC status. So there's some additional work as we're prepping for our first year in 2026 of a fully integrated audit. - Kevin Van Asdalan(CFO)

Did you report any 45Z credits in the first quarter? - Betty Zhang(Scotiabank)

2025Q1: G&A expenses increased by $9.1 million to $14.3 million compared to the prior year. The increase was primarily due to a $6.5 million increase in stock-based compensation associated with an employee termination. - Kevin Van Asdalan(CFO)

Contradiction Point 5

RNG Production and Growth Expectations

It directly impacts expectations regarding RNG production, which is crucial for revenue projections and investor confidence.

Given that maintaining the 2025 RNG production guidance implies quarter-over-quarter growth in Q4, even at the low end, what are the key drivers behind this growth? - Matthew Blair (TPH)

2025Q3: We continue to maintain our production ranges for RNG for the full 2025 year, which implies an expected step-up to hit the low end in the fourth quarter. It's a combination of a variety of factors, improvement in feedstock supply, which is also being beneficial at our Apex facility that we mentioned associated with some improvements in a newer plan. We continue to work with our rum landfill site to work through those wealth field challenges that we've been experiencing. So yes, we do believe we expect a continued uplift in our quarter-over-quarter production as we've been experiencing in 2025. - Kevin Van Asdalan(CFO)

Does the 2025 RNG revenue guidance assume all RINs will be monetized in 2025? Will a premium over benchmark RIN prices continue in 2025? - Matthew Blair (TPH)

2024Q4: In 2025, we expect RNG production to ramp-up year-over-year beginning in the second quarter as we capitalize on operational learnings from the first year of commercial production. - Kevin Van Asdalan(CFO)