Yahoo Finance OPAL Fuels Inc (OPAL) (Q1 2024) Earnings Call Transcript Highlights: A Strong Start with Robust ...
Revenue: Q1 2024 revenue was $65 million, up from $43 million in Q1 2023.
Net Income: Q1 2024 net income was $0.7 million, compared to a net loss of $7.3 million in Q1 2023.
Adjusted EBITDA: $15.2 million in Q1 2024, a significant improvement from a negative $1.6 million in Q1 2023.
RNG Fuel Segment Revenue: $17.7 million in Q1 2024, up from $6.7 million in Q1 2023.
Fuel Station Services Segment Revenue: $37.1 million in Q1 2024, increased from $20.8 million in Q1 2023.
Renewable Power Revenue: Decreased to $10.1 million in Q1 2024 from $15.4 million in Q1 2023.
Capital Expenditures: Approximately $37.7 million in Q1 2024.
Liquidity: As of March 31, 2024, liquidity was approximately $334 million.
Release Date: May 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
OPAL Fuels Inc (NASDAQ:OPAL) reported a solid start to 2024 with first quarter results aligning with expectations and the company remains on track to meet full-year guidance.
Adjusted EBITDA for the quarter was approximately $15 million, consistent with the previous quarter's performance when accounting for environmental credit sales.
The company announced the commencement of operations at its ninth RNG facility, Prince William, and the start of construction on its 15th RNG project at the Cottonwood landfill.
Revenue for the first quarter increased to $65 million, up from $43 million in the same period in 2023, driven by higher environmental credit sales and increased production.
Net income for the first quarter was approximately $0.7 million, a significant improvement from a $7.3 million net loss in the first quarter of 2023.
Negative Points
The company is still awaiting IRS clarification on ITC eligibility for landfill gas to RNG projects, which has not been factored into the guidance issued in March.
There are ongoing disputes with the EPC contractor for the California dairy projects, which are currently in arbitration.
While new projects like Prince William are coming online, the initial ramp-up phase could temporarily impact overall inlet capacity utilization metrics.
The company noted a decrease in renewable power revenues to $10.1 million for the quarter, down from $15.4 million in the first quarter of 2023, due to the Emerald RNG project using gas previously available for renewable power.
Despite the positive financial results, the company's utilization of inlet gas decreased year over year from 86% to 81%, primarily due to the ramp-up of the Emerald project.
Q & A Highlights
Q: Good morning all and thanks for your time this morning. Derik, I'd like to start with your adjusted EBITDA guidance for the year. Is it safe to assume you remain comfortable with the 2024 guidance based on your line of sight to production growth and your decision to sell forward rents, which in combination derisks the one the revenue line. A: (Jonathan Maurer - Co-CEO) Yes, our Opal Fuels continues on track to meet its guidance. We forecast a progression of increasing output and EBITDA as Prince William ramps up. Prince William is really going to be a major contributor during the course of the year, while pulp and Sapphire will come on in the fourth and third quarters respectively, contributing towards the end of the year. We've sold a majority of the wins that we expect to produce this coming year, which significantly de-risks our EBITDA and cash flows for the year.
Q: And just to clarify one point on the sell forward of your rent exposure, are you guys doing that out of an abundance of caution? Or are you concerned that the EPA could affect the CWC. to address the likely shortfall in remuneration like? A: (Adam Comora - Co-CEO) We are not concerned about a cellulosic waiver credit in 2024. Selling forward is a way for us to de-risk and get better visibility over our EBITDA and cash flows for the year.
Q: Thank you and good morning. You have some big projects coming online later this year with Sapphire and coal. Could you talk about what you've learned from previous startups that you can apply to make sure these projects are successful and up on time. A: (Jonathan Maurer - Co-CEO) We take lessons from each project that we put into construction and then into operation. The basic design that we use is a proven design and one that we've utilized from our start. Each time our team of our project managers gets more experience, we apply it to the next set of projects, which gives us greater confidence in terms of those projects coming online and working as projected.
Q: Sounds good. And then one thing that investors ask about is your build multiples on on your upcoming projects. Are you willing to share the cost for projects for some of these upcoming startups, I think at one point and you had listed Quintillion at $53 million, is that still a good number and then are you willing to share the costs for sapphire Polk in Cottonwood? A: (Adam Comora - Co-CEO) We're not going to get into specific cap cost per project. What I can tell you is that despite some cost inflation over the last couple of years, we're still finding very attractive return on capital projects.
Q: Hey, good morning, guys, and thanks for taking my questions. How are you guys thinking about M&A today? And maybe what are you seeing in that market? And now those valuations might compare to those other publicly traded companies? A: (Jonathan Maurer - Co-CEO) We continue to believe our organic growth model. Vertical integration continues to be our core growth model. However, we see a great set of opportunities on the development side with growing relationships and there's a great amount of growth right in front of our noses just on executing on the opportunities we have in front of us.
Q: Good morning. I have to apologize that there's a little bit of detail modeling when in the in the pins up in Swindon because before you get the certification, I assume that the gas is being stored in disparate style. When you report in the second quarter, the ING. one and fourth sales, how it produced at will the production actually. So what there or that you would essentially not showing it. And then we have a big jump in the third quarter. A: (Jonathan Maurer - Co-CEO) When we produce gas at our projects in a given month, we'll dispense that gas essentially matching the gas production with our dispensing capacity on the downstream side to create those green credits. Those rent credits will be available for sale after maintain the following month. So production in May April will be minted in May and those credits available for sale in the May period.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
