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OPAL Fuels Inc - Ordinary Shares (OPAL) 8 Aug 24 2024 Q2 Earnings call transcript

AInvestSaturday, Aug 10, 2024 3:12 pm ET
2min read

OPAL Fuels, a leading company in the biomethane production and distribution sector, reported solid financial results for the second quarter of 2024. The company highlighted a strong end market, strategic initiatives, and continued growth in its fuel station services segment.

Key Highlights

- OPAL Fuels reported adjusted EBITDA of approximately $19 million for the second quarter, a sequential increase from the first quarter, driven by higher RNG production, increased throughput of RNG in its dispensing network, and improved margins in fuel station services.- The company's strategic growth initiatives include the successful certification of the Prince William project, which is expected to begin selling RINs in the third quarter. Additionally, the Sapphire and Polk County projects are on track for completion in the third and fourth quarters, respectively.- OPAL Fuels is executing on its growth objectives, with the commencement of construction on the 16th RNG project in New Jersey, representing 0.46 million MMBtu of annual design capacity. This project, in partnership with South Jersey Industries, is part of the company's goal to place at least 2 million MMBtu of new RNG production into construction for 2024.- The fuel station service segment continues to perform well, supporting upstream RNG projects with dispensing in the high-value transportation fuel offtake market.

Strategic Priorities and Growth Outlook

- OPAL Fuels is maintaining its 2024 adjusted EBITDA guidance of $90 million to $100 million, with continued sequential growth expected for the remainder of the year. The company is focusing on its strategic initiatives, including the expansion of its RNG production capacity and the development of its fuel station services segment.- The company is also exploring opportunities to expand into non-transportation markets, such as marine fuel and chemical applications, to monetize RNG beyond the transportation fuel market.- The company is maintaining its guidance for a full-year RNG production outlook of 4.0 million to 4.4 million MMBtu, reflecting the ramp-up of recent facilities.

Financial and Operational Performance

- OPAL Fuels' second-quarter production results were in line with expectations, with RNG production up 50% year-over-year to 0.9 million MMBtus. The company's financial performance was also solid, with revenue of $71 million and net income of approximately $1.9 million.- The company's capital expenditures for the quarter were approximately $28.5 million, with approximately $13.7 million utilized for letters of credit and $275 million of liquidity available under its credit facility.

Market Opportunities and Challenges

- OPAL Fuels is well-positioned to capitalize on the growing demand for RNG as a low-carbon fuel alternative. The company is executing on its growth strategy, with a focus on expanding its RNG production capacity and developing its fuel station services segment.- The company is also navigating challenges, including regulatory changes and the impact of the COVID-19 pandemic on its operations. However, OPAL Fuels remains optimistic about its future prospects, with a strong focus on innovation, operational efficiency, and strategic partnerships.

Conclusion

OPAL Fuels' second-quarter performance highlights its strategic growth initiatives and operational execution, positioning the company for continued growth in the RNG production and distribution sector. The company is focused on expanding its capacity, exploring new markets, and maintaining its financial health, despite challenges in the current market environment. With a strong focus on innovation and strategic partnerships, OPAL Fuels is well-positioned to capitalize on the growing demand for low-carbon fuels and contribute to the transition to a more sustainable energy future.

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