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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or |
(IRS Employer Identification No.) | |
Organization) |
||
(Address of Principal Executive Offices) |
(Zip Code) | |
Title of each class |
Trading symbol(s) |
Name of each exchange on which registered | ||
The |
| Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Page |
||||||
| 6 | ||||||
ITEM 1. |
6 | |||||
ITEM 2. |
32 | |||||
ITEM 3. |
53 | |||||
ITEM 4. |
53 | |||||
| 54 | ||||||
ITEM 1. |
54 | |||||
ITEM 1A. |
54 | |||||
ITEM 2. |
54 | |||||
ITEM 3. |
55 | |||||
ITEM 4. |
55 | |||||
ITEM 5. |
55 | |||||
ITEM 6. |
55 | |||||
| 56 | ||||||
| • | “ ADG |
| • | “ CARB |
| • | “ CNG |
| • | “ CI |
| • | “ D3 |
| • | “ EPA |
| • | “ Environmental Attributes |
| • | “ FERC |
| • | “ GHG |
| • | “ JSE |
| • | “ LCFS |
| • | “ LFG |
| • | “MMBtu” refers to Metric Million British Thermal Unit. |
| • | “ PPAs |
| • | “ RECs |
| • | “ Renewable Electricity |
| • | “ RFS |
| • | “ RINs |
| • | “ RNG |
| • | “ RVOs |
| • | the impact of the ongoing COVID-19 pandemic on our business, financial condition and results of operations; |
| • | our ability to develop and operate new renewable energy projects, including with livestock farms; |
| • | reduction or elimination of government economic incentives to the renewable energy market; |
| • | delays in acquisition, financing, construction and development of new projects, including expansion plans into new areas such as agricultural waste; |
| • | the inability to complete strategic development opportunities; |
| • | general economic conditions outside our control including the impacts of supply chain disruptions, inflationary cost increases, and other macroeconomic factors; |
| • | the length of development and optimization cycles for new projects, including the design and construction processes for our renewable energy projects; |
| • | dependence on third parties for the manufacture of products and services; |
| • | the quantity, quality and consistency of our feedstock volumes from both landfill and livestock farm operations; |
| • | identifying suitable locations for new projects; |
| • | reliance on interconnections to distribution and transmission products for our Renewable Natural Gas and Renewable Electricity Generation segments; |
| • | our projects not producing expected levels of output; |
| • | the anticipated benefits of the Raeger capital improvement project, Pico feedstock amendment and the Montauk Ag project in North Carolina and the anticipated completion of engine repairs at the Security facility; |
| • | potential benefits associated with the combustion-based oxygen removal condensate neutralization technology; |
| • | resolution of gas collection issues at the McCarty facility; |
| • | concentration of revenues from a small number of customers and projects; |
| • | dependence on our landfill operators; |
| • | our outstanding indebtedness and restrictions under our credit facility; |
| • | our ability to extend our fuel supply agreements prior to expiration; |
| • | our ability to meet milestone requirements under our PPAs; |
| • | existing regulations and changes to regulations and policies that effect our operations; |
| • | decline in public acceptance and support of renewable energy development and projects; |
| • | our expectations regarding Environmental Attributes; |
| • | our expectations regarding Environmental Attribute and commodity prices; |
| • | our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act (“JOBS Act”); |
| • | our expectations regarding future capital expenditures, including for the maintenance of facilities; |
| • | our expectations regarding the use of net operating losses before expiration; |
| • | our expectations regarding more attractive CI scores by regulatory agencies for our livestock farm projects; |
| • | market volatility and fluctuations in commodity prices and the market prices of Environmental Attributes and the impact of any related hedging activity; |
| • | regulatory changes in federal, state and international environmental attribute programs; |
| • | profitability of our planned livestock farm projects; |
| • | sustained demand for renewable energy; |
| • | security threats, including cyber-security attacks; |
| • | the need to obtain and maintain regulatory permits, approvals and consents; |
| • | potential liabilities from contamination and environmental conditions; |
| • | potential exposure to costs and liabilities due to extensive environmental, health and safety laws; |
| • | impacts of climate change, changing weather patterns and conditions, and natural disasters; |
| • | failure of our information technology and data security systems; |
| • | increased competition in our markets; |
| • | continuing to keep up with technology innovations; |
| • | concentrated stock ownership by a few stockholders and related control over the outcome of all matters subject to a stockholder vote; and |
| • | other risks and uncertainties detailed in the section titled “Risk Factors” in our latest Annual Report on Form 10-K. |
ITEM 1. |
FINANCIAL STATEMENTS |
Page |
||||
| Montauk Renewables, Inc |
||||
| Unaudited condensed consolidated financial statements |
||||
| 7 | ||||
| 8 | ||||
| 9 | ||||
| 10 | ||||
| 11 | ||||
As of June 30, 2022 |
As of December 31, 2021 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts and other receivables |
||||||||
Related party receivable |
||||||||
Current portion of derivative instrument |
||||||||
Prepaid expenses and other current assets |
||||||||
Assets held for sale |
||||||||
Total current assets |
$ | $ | ||||||
Restricted cash—non-current |
$ | $ | ||||||
Property, plant and equipment, net |
||||||||
Goodwill and intangible assets, net |
||||||||
Deferred tax assets |
||||||||
Non-current portion of derivative instrument |
||||||||
Operating lease right-of-use |
||||||||
Finance lease right-of-use |
||||||||
Other assets |
||||||||
Total assets |
$ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities |
||||||||
Income tax payable |
||||||||
Current portion of operating lease liability |
||||||||
Current portion of finance lease liability |
||||||||
Current portion of derivative instrument |
||||||||
Current portion of long-term debt |
||||||||
Total current liabilities |
$ | $ | ||||||
Long-term debt, less current portion |
$ | $ | ||||||
Non-current portion of operating lease liability |
||||||||
Non-current portion of finance lease liability |
||||||||
Non-current portion of derivative instrument |
||||||||
Asset retirement obligation |
||||||||
Other liabilities |
||||||||
Total liabilities |
$ | $ | ||||||
STOCKHOLDERS’ EQUITY |
||||||||
Common stock, $ |
$ | $ | ||||||
Treasury stock, at cost, |
( |
) | ( |
) | ||||
Additional paid-in capital |
||||||||
Retained earnings (deficit) |
( |
) | ||||||
Total stockholders’ equity |
$ | $ | ||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Total operating revenues |
$ | $ | $ | $ | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Operating and maintenance expenses |
$ | $ | $ | $ | ||||||||||||
| General and administrative expenses |
||||||||||||||||
| Royalties, transportation, gathering and production fuel |
||||||||||||||||
| Depreciation, depletion and amortization |
||||||||||||||||
| Gain on insurance proceeds |
( |
) | ( |
) | ||||||||||||
| Impairment loss |
||||||||||||||||
| Transaction costs |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
$ | $ | $ | $ | ||||||||||||
| Operating income (loss) |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Other expenses (income): |
||||||||||||||||
| Interest expense |
$ | $ | $ | $ | ||||||||||||
| Net loss (gain) on sale of fixed assets |
( |
) | ||||||||||||||
| Other (income) expense |
( |
) | ( |
) | ( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total other expenses (income) |
$ | $ | $ | ( |
) | $ | ||||||||||
| Income (loss) before income taxes |
$ | ( |
) | $ | $ | ( |
) | |||||||||
| Income tax expense |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Earnings (loss) per share: |
||||||||||||||||
| Basic |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Diluted |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Weighted-average common shares outstanding: |
||||||||||||||||
| Basic |
||||||||||||||||
| Diluted |
||||||||||||||||
Common Stock |
Treasury Stock |
Members’ Equity |
Additional Paid-in Capital |
Retained Earnings (Deficit) |
Total Equity |
|||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||||
Vesting of stock awards |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Balance at June 30, 2022 |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Common Stock |
Treasury Stock |
Members’ Equity |
Additional Paid-in Capital |
Retained Earnings (Deficit) |
Total Equity |
|||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
Balance at March 31, 2021 |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Balance at June 30, 2021 |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||||||||
Common Stock |
Treasury Stock |
Members’ Equity |
Additional Paid-in Capital |
Retained Earnings (Deficit) |
Total Equity |
|||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
Balance at December 31, 2021 |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||||||||
Vesting of stock awards |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||
Treasury stock |
— |
— |
( |
) |
— |
— |
— |
( |
) | |||||||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Balance at June 30, 2022 |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Common Stock |
Treasury Stock |
Members’ Equity |
Additional Paid-in Capital |
Retained Earnings (Deficit) |
Total Equity |
|||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
Balance at December 31, 2020 |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||||
Effect of reorganization transactions |
— |
— |
( |
) |
— |
|||||||||||||||||||||||||||
IPO common stock |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Treasury stock |
— |
— |
$ |
( |
) |
— |
— |
— |
( |
) | ||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Balance at June 30, 2021 |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||||||||||||||||||
Six Months Ended June 30, |
||||||||
2022 |
2021 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | $ | ( |
) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation, depletion and amortization |
||||||||
| Provision for deferred income taxes |
||||||||
| Stock-based compensation |
||||||||
| Derivative mark-to-market |
( |
) | ||||||
| Gain on property insurance proceeds |
( |
) | ( |
) | ||||
| E arn out increase |
||||||||
| Net (gain) loss on sale of assets |
( |
) | ||||||
| Accretion of asset retirement obligations |
||||||||
| Amortization of debt issuance costs |
||||||||
| Impairment loss |
||||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts and other receivables and other current assets |
( |
) | ( |
) | ||||
| Accounts payable and other accrued expenses |
||||||||
| |
|
|
|
|||||
| Net cash provided by operating activities |
$ | $ | ||||||
| Cash flows from investing activities |
||||||||
| Capital expenditures |
$ | ( |
) | $ | ( |
) | ||
| Asset acquisition |
( |
) | ||||||
| Proceeds from sale of assets |
||||||||
| Proceeds from insurance recovery |
||||||||
| |
|
|
|
|||||
| Net cash used in investing activities |
$ | ( |
) | $ | ( |
) | ||
| Cash flows from financing activities: |
||||||||
| Repayments of long-term debt |
$ | ( |
) | $ | ( |
) | ||
| Proceeds from initial public offering |
||||||||
| Treasury stock purchase |
( |
) | ( |
) | ||||
| Loan to Montauk Holdings Limited |
( |
) | ||||||
| Finance lease payments |
( |
) | ||||||
| |
|
|
|
|||||
| Net cash used in financing activities |
$ | ( |
) | $ | ( |
) | ||
| Net increase (decrease) in cash and cash equivalents and restricted cash |
$ | $ | ( |
) | ||||
| Cash and cash equivalents and restricted cash at beginning of period |
$ | $ | ||||||
| |
|
|
|
|||||
| Cash and cash equivalents and restricted cash at end of period |
$ | $ | ||||||
| |
|
|
|
|||||
| Reconciliation of cash, cash equivalents, and restricted cash at end of period: |
||||||||
| Cash and cash equivalents |
$ | $ | ||||||
| Restricted cash and cash equivalents - current |
||||||||
| Restricted cash and cash equivalents - non-current |
||||||||
| |
|
|
|
|||||
$ |
$ |
|||||||
| |
|
|
|
|||||
Three Months Ended June 30, 2022 |
||||||||||||
Goods transferred at a point in time |
Goods transferred over time |
Total |
||||||||||
| Major Goods/Service Line: |
||||||||||||
| Natural Gas Commodity |
$ | $ | $ | |||||||||
| Natural Gas Environmental Attributes |
— | |||||||||||
| Electric Commodity |
— | |||||||||||
| Electric Environmental Attributes |
— | |||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
| Operating Segment: |
||||||||||||
| RNG |
$ | $ | $ | |||||||||
| REG |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
Three Months Ended June 30, 2021 |
||||||||||||
Goods transferred at a point in time |
Goods transferred over time |
Total |
||||||||||
| Major Goods/Service Line: |
||||||||||||
| Natural Gas Commodity |
$ | $ | $ | |||||||||
| Natural Gas Environmental Attributes |
— | |||||||||||
| Electric Commodity |
— | |||||||||||
| Electric Environmental Attributes |
— | |||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
| Operating Segment: |
||||||||||||
| RNG |
$ | $ | $ | |||||||||
| REG |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
Six Months Ended June 30, 2022 |
||||||||||||
Goods transferred at a point in time |
Goods transferred over time |
Total |
||||||||||
| Major Goods/Service Line: |
||||||||||||
| Natural Gas Commodity |
$ | $ | $ | |||||||||
| Natural Gas Environmental Attributes |
— | |||||||||||
| Electric Commodity |
— | |||||||||||
| Electric Environmental Attributes |
— | |||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
| Operating Segment: |
||||||||||||
| RNG |
$ | $ | $ | |||||||||
| REG |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
Six Months Ended June 30, 2021 |
||||||||||||
Goods transferred at a point in time |
Goods transferred over time |
Total |
||||||||||
| Major Goods/Service Line: |
||||||||||||
| Natural Gas Commodity |
$ | $ | $ | |||||||||
| Natural Gas Environmental Attributes |
— | |||||||||||
| Electric Commodity |
— | |||||||||||
| Electric Environmental Attributes |
— | |||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
| Operating Segment: |
||||||||||||
| RNG |
$ | $ | $ | |||||||||
| REG |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
June 30, 2022 |
December, 31 2021 |
|||||||
| Accounts receivables |
$ | $ | ||||||
| Other receivables |
||||||||
| Reimbursable expenses |
||||||||
| |
|
|
|
|||||
| Accounts and other receivables |
$ | $ | ||||||
| |
|
|
|
|||||
June 30, 2022 |
December 31, 2021 |
|||||||
| Land |
$ | $ | ||||||
| Buildings and improvements |
||||||||
| Machinery and equipment |
||||||||
| Gas mineral rights |
||||||||
| Construction work in progress |
||||||||
| |
|
|
|
|||||
| Total |
||||||||
| Less: Accumulated depreciation and amortization |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Property, plant & equipment, net |
$ | $ | ||||||
| |
|
|
|
|||||
June 30, 2022 |
December 31, 2021 |
|||||||
| Goodwill |
$ | $ | ||||||
| Intangible assets with indefinite lives: |
||||||||
| Land use rights |
||||||||
| Intangible assets with finite lives: |
||||||||
| Interconnections, net of accumulated amortization of $ |
$ | $ | ||||||
| Customer contracts, net of accumulated amortization of $ |
$ | $ | ||||||
| |
|
|
|
|||||
| Total intangible assets with finite lives: |
$ | $ | ||||||
| |
|
|
|
|||||
| Total Goodwill and Intangible assets |
$ |
$ |
||||||
| |
|
|
|
|||||
Six Months Ended June 30, 2022 |
Year Ended December 31, 2021 |
|||||||
| Asset retirement obligations - beginning of period |
$ | $ | ||||||
| Accretion expense |
( |
) | ||||||
| Decommissioning |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Asset retirement obligations - end of period |
$ | $ | ||||||
| |
|
|
|
|||||
Three Months Ended |
||||||||
Derivative Instrument |
June 30, 2022 |
June 30, 2021 |
||||||
Commodity contracts: |
||||||||
Realized natural gas |
$ | ( |
) | $ | ||||
Unrealized natural gas |
||||||||
Interest rate swaps |
||||||||
Net gain (loss) |
$ | ( |
) | $ | ||||
Six Months Ended |
||||||||
Derivative Instrument |
June 30, 2022 |
June 30, 2021 |
||||||
Commodity contracts: |
||||||||
Realized natural gas |
$ | ( |
) | $ | ||||
Unrealized natural gas |
( |
) | ||||||
Interest rate swaps |
||||||||
Net gain (loss) |
$ | ( |
) | $ | ||||
June 30, 2022 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Commodity derivative liability |
$ | ( |
) | $ | ( |
) | ||||||||||
Interest rate swap derivative asset |
||||||||||||||||
Asset retirement obligations |
( |
) | ( |
) | ||||||||||||
Earn-out liability |
( |
) | ( |
) | ||||||||||||
| $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | |||||||
December 31, 2021 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Interest rate swap derivative liability |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Asset retirement obligations |
( |
) | ( |
) | ||||||||||||
Earn-out liability |
( |
) | ( |
) | ||||||||||||
| $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||
June 30, 2022 |
December 31, 2021 |
|||||||
Accrued expenses |
$ | $ | ||||||
Payroll and related benefits |
||||||||
Royalty |
||||||||
Utility |
||||||||
Other |
||||||||
Accrued liabilities |
$ | $ | ||||||
June 30, 2022 |
December 31, 2021 |
|||||||
Term loans |
$ | $ | ||||||
Less: current principal maturities |
( |
) | ( |
) | ||||
Less: debt issuance costs (on long-term debt) |
( |
) | ( |
) | ||||
Long-term debt |
$ | $ | ||||||
Current portion of long- term debt |
||||||||
$ |
$ |
|||||||
Three Months Ended |
||||||||
June 30, 2022 |
June 30, 2021 |
|||||||
| Provision for income taxes |
$ | $ | ||||||
| Effective tax rate |
% | ( |
)% | |||||
Six Months Ended |
||||||||
June 30, 2022 |
June 30, 2021 |
|||||||
| Provision (benefit) for income taxes |
$ | $ | ||||||
| Effective tax rate |
% | ( |
)% | |||||
Grant Date |
||||
| Risk-free interest rate |
% | |||
| Expected volatility |
% | |||
| Expected option life (in years) |
||||
| Grant-date fair value |
$ | |||
Restricted Shares |
Restricted Stock Units |
Options |
||||||||||||||||||||||
Number of Shares |
Weighted Average Grant Date Fair Value |
Number of Shares |
Weighted Average Grant Date Fair Value |
Number of Shares |
Weighted Average Exercise Price |
|||||||||||||||||||
| End of period - December 31, 2021 |
$ |
$ |
$ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Beginning of period - January 1, 2022 |
$ | $ | $ | |||||||||||||||||||||
| Granted |
||||||||||||||||||||||||
| Vested |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Forfeited |
( |
) | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| End of period – June 30, 2022 |
$ |
$ |
$ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Restricted Shares |
Restricted Stock Units |
Options |
||||||||||||||||||||||
Number of Shares |
Weighted Average Grant Date Fair Value |
Number of Shares |
Weighted Average Grant Date Fair Value |
Number of Shares |
Weighted Average Exercise Price |
|||||||||||||||||||
| End of period - December 31, 2020 |
$ |
$ |
$ |
— |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Beginning of period-January 1, 2021 |
$ | $ | $ | |||||||||||||||||||||
| Granted |
||||||||||||||||||||||||
| Vested |
( |
) | — | — | ||||||||||||||||||||
| Forfeited |
— | — | ( |
) | ||||||||||||||||||||
| Exercised |
— |
— |
— |
— |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| End of period – June 30, 2021 |
$ |
$ |
$ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Three Months Ended June 30, 2022 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Total r evenue |
$ | $ | $ | ( |
) | $ | ||||||||||
| Net income (loss) |
( |
) | ( |
) | ||||||||||||
| EBITDA (1) |
( |
) | ( |
) | ||||||||||||
| Adjusted EBITDA (1) |
( |
) | ||||||||||||||
| Total a ssets |
||||||||||||||||
| Capital expenditure s |
( |
) | ||||||||||||||
Three Months Ended June 30, 2022 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Net income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| Depreciation and amortization |
||||||||||||||||
| Interest expense |
— | — | ||||||||||||||
| Income tax expense |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EBITDA |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Impairment loss |
— | |||||||||||||||
| Transaction costs |
— | — | ||||||||||||||
| Unrealized gains on hedging activities |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | $ | $ | ( |
) | $ | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Three Months Ended June 30, 2021 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Total r evenue |
$ | $ | $ | — | $ | |||||||||||
| Net i ncome (l oss) |
( |
) | ( |
) | ( |
) | ||||||||||
| EBITDA (1) |
( |
) | ||||||||||||||
| Adjusted EBITDA (1) |
( |
) | ||||||||||||||
| Total a ssets |
||||||||||||||||
| Capital expenditure s |
— | |||||||||||||||
Three Months Ended June 30, 2021 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Net income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| Depreciation and amortization |
||||||||||||||||
| Interest expense |
— | — | ||||||||||||||
| Income tax expense |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EBITDA |
$ | $ | $ | ( |
) | $ | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Impairment loss |
— | — | — | — | ||||||||||||
| Transaction costs |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | $ | $ | ( |
) | $ | ||||||||||
Three Months Ended June 30, 2022 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Customer A |
% | — | — | % | ||||||||||||
| Customer B |
% | — | — | % | ||||||||||||
| Customer C |
% | — | — | % | ||||||||||||
| Customer D |
% | — | — | % | ||||||||||||
Three Months Ended June 30, 2021 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Customer A |
% | — | — | % | ||||||||||||
| Customer B |
% | — | — | % | ||||||||||||
| Customer C |
% | — | — | % | ||||||||||||
| Customer D |
— | % | — | % | ||||||||||||
| Customer E |
% | — | — | % | ||||||||||||
| Customer F |
% | — | — | % | ||||||||||||
Six Months Ended June 30, 2022 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Total r evenue |
$ | $ | $ | ( |
) | $ | ||||||||||
| Net i ncome (l oss) |
( |
) | ( |
) | ||||||||||||
| EBITDA (1) |
( |
) | ||||||||||||||
| Adjusted EBITDA (1) |
( |
) | ( |
) | ||||||||||||
| Total a ssets |
||||||||||||||||
| Capital e xpenditures |
||||||||||||||||
Six Months Ended June 30, 2022 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Net Income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| Depreciation and amortization |
||||||||||||||||
| Interest expense |
— | — | ||||||||||||||
| Income tax expense |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EBITDA |
$ | $ | $ | ( |
) | $ | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Impairment loss |
||||||||||||||||
| Transaction costs |
— | — | ||||||||||||||
| Net loss (gain) on sale of assets |
( |
) |
— | ( |
) | |||||||||||
| Unrealized losses on hedging activities |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
Six Months Ended June 30, 2021 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Total r evenue |
$ | $ | $ | — | $ | |||||||||||
| Net i ncome (l oss) |
( |
) | ( |
) | ( |
) | ||||||||||
| EBITDA (1) |
( |
) | ( |
) | ||||||||||||
| Adjusted EBITDA (1) |
( |
) | ( |
) | ||||||||||||
| Total a ssets |
||||||||||||||||
| Capital e xpenditures |
— | |||||||||||||||
Six Months Ended June 30, 2021 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Net i ncome (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| Depreciation and amortization |
||||||||||||||||
| Interest expense |
— | — | ||||||||||||||
| Income tax expense |
— | |||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EBITDA |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Impairment loss |
— | — | ||||||||||||||
| Transaction costs |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||
Six Months Ended June 30, 2022 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Customer A |
% | — | — | % | ||||||||||||
| Customer B |
% | — | — | % | ||||||||||||
| Customer C |
% | — | — | % | ||||||||||||
Six Months Ended June 30, 2021 |
||||||||||||||||
RNG |
REG |
Corporate |
Total |
|||||||||||||
| Customer A |
% | — | — | % | ||||||||||||
| Customer B |
% | — | — | % | ||||||||||||
| Customer C |
% | — | — | % | ||||||||||||
| Customer D |
% | — | — | % | ||||||||||||
| Customer E |
% | — | — | % | ||||||||||||
| Customer F |
— | % | — | % | ||||||||||||
Three Months Ended June 30, |
||||||||
2022 |
2021 |
|||||||
| Cash paid for amounts included in the measurement of operating lease liabilities |
$ | $ | ||||||
| Weighted average remaining lease term (in years) |
||||||||
| Weighted average discount rate |
% | % | ||||||
Six Months Ended June 30, |
||||||||
2022 |
2021 |
|||||||
| Cash paid for amounts included in the measurement of operating lease liabilities |
$ | $ | ||||||
| Weighted average remaining lease term (in years) |
||||||||
| Weighted average discount rate |
% | % | ||||||
| Year Ending |
||||
| Remainder of 2022 |
$ | |||
| 2023 |
||||
| 2024 |
||||
| 2025 |
||||
| 2026 |
||||
| 2027 |
||||
| Interest |
( |
) | ||
| |
|
|||
| Total |
$ |
Three and Six Months Ended June 30, |
||||||||
2022 |
2021 |
|||||||
| Cash paid for amounts included in the measurement of financing lease liabilities |
$ | $ | ||||||
| Weighted average remaining lease term (in years) |
— | |||||||
| Weighted average discount rate |
% | |||||||
| Year Ending |
||||
| Remainder of 2022 |
$ | |||
| 2023 |
||||
| 2024 |
||||
| Interest |
( |
) | ||
| |
|
|||
| Total |
$ |
Three Months Ended June 30, 2022 |
Three Months Ended June 30, 2021 |
|||||||
| Net income (loss) |
$ | $ | ( |
) | ||||
| Basic weighted-average shares outstanding |
||||||||
| Dilutive effect of share-based awards |
||||||||
| |
|
|
|
|||||
| Diluted weighted-average shares outstanding |
||||||||
| |
|
|
|
|||||
| Basic income (loss) per share |
$ | $ | ( |
) | ||||
| Diluted income (loss) per share |
$ | $ | ( |
) | ||||
Six Months Ended June 30, 2022 |
Six Months Ended June 30, 2021 |
|||||||
| Net income (loss) |
$ | $ | ( |
) | ||||
| Basic weighted-average shares outstanding |
||||||||
| Dilutive effect of share-based awards |
||||||||
| |
|
|
|
|||||
| Diluted weighted-average shares outstanding |
||||||||
| |
|
|
|
|||||
| Basic income (loss) per share |
$ | $ | ( |
) | ||||
| Diluted income (loss) per share |
$ | $ | ( |
) | ||||
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
| • | Regulatory or policy initiatives, including the federal RFS program and state-level low-carbon fuel programs in states such as California and Oregon, that drive demand for RNG and its derivative Environmental Attributes (as further described below). |
| • | Efficiency, mobility and capital cost flexibility in RNG operations enable them to compete successfully in multiple markets. Our operating model is nimble, as we commonly use modular equipment; our RNG processing equipment is more efficient than its fossil-fuel counterparts. |
| • | Demand for compressed natural gas (“CNG”) from natural gas-fueled vehicles. The RNG we create is pipeline quality and can be used for transportation fuel when converted to CNG. CNG is commonly used by medium-duty fleets that are close to fueling stations, such as city fleets, local delivery trucks and waste haulers. |
| • | Regulatory requirements, market pressure and public relations challenges increase the time, cost and difficulty of permitting new fossil fuel-fired facilities. |
| • | Impact of Higher Selling, General and Administrative Expenses Prior to the Commencement of a Project’s Operation: We incur significant expenses in the development of new RNG projects. Further, the receipt of RINs is delayed, and typically does not commence for a period of four to six months after the commencement of injecting RNG into a pipeline, pending final registration approval of the project by the EPA and then the subsequent completion of a third-party quality assurance plan certification. During such time, the RNG is either physically or theoretically stored and later withdrawn from storage to allow for the generation of RINs. |
| • | Shifts in Revenue Composition for Projects from New Fuel Sources: As we expand into livestock farm projects, our revenue composition from Environmental Attributes will change. We believe that livestock farms offer us a lucrative opportunity, as the value of LCFS credits for dairy farm projects, for example, are a multiple of those realized from landfill projects due to the significantly more attractive CI score of livestock farms. |
| • | Incurrence of Expenses Associated with Pursuing Prospective Projects That Do Not Come to Fruition: We incur expenses to pursue prospective projects with the goal of a site host accepting our proposal or being awarded a project in a competitive bidding process. Historically, we have evaluated opportunities which we decided not to pursue further due to the prospective project not meeting our internal investment thresholds or a lack of success in a competitive bidding process. To the extent we seek to pursue a greater number of projects or bidding for projects becomes more competitive, our expenses may increase. |
| • | Increased Construction Costs Related to Material Cost Inflation: Due to the variability of our development and construction cycle of approximately 12 to 24 months, we believe that we could incur increased raw material costs for development projects related to inflation or supply chain disruptions. Although these factors have not had a material impact on our business or results of operations to date for development projects, these price increases and disruptions in construction could lead to future material, design, or transportation delays, which could increase the costs of our development. |
| • | Renewable Natural Gas Revenues off-take counterparties as consideration for such counterparties using the RNG as a transportation fuel. We monetize a portion of our RNG production under fixed-price and counterparty sharing agreements, which provide floor prices in excess of commodity indices and sharing percentages of the monetization of Environmental Attributes. Under these sharing arrangements, we receive a portion of the profits derived from counterparty monetization of the Environmental Attributes in excess of the floor prices. We have entered into fixed-price agreements to replace the counter-party sharing arrangements expiring during 2022. |
| • | Renewable Electricity Generation Revenues: |
| • | Corporate Revenues: |
| • | A 2021 cold weather event impacted our Atascocita, Galveston, McCarty, and Coastal Plains facilities located in Texas. Production at these facilities was temporarily idled due to the loss of power from February 14 through February 20, 2021 and force majeure events were declared by certain of our counter-parties or by us for the period February 12 through February 22, 2021 related to these weather events. Operations at these facilities have subsequently resumed. |
| • | The landfill host at our McCarty facility recently changed its wellfield collection system which has contributed to elevated nitrogen in the feedstock received by our facility. Additionally, the landfill host modified the wellfield bifurcation approach which has impacted the quantity of feedstock received at the facility. We are working with the landfill host but have currently experienced lower volumes of feedstock available to be processed at the McCarty facility. We currently expect lower than historical volumes through the end of 2022. |
| • | Our Pico facility has resumed operations and ramp up activities related to the existing digester cleanout activities have been completed. Production volume performance continues to meet our expectations during the post cleanout period. Our improvement project has impacted the timeline related to modeling the CI Score pathway model. Our 2022 production will be stored until CARB completes its CI Score Pathway. We do not currently expect to receive LCFS credit revenue on 2022 production until 2023. |
| • | Quality of Biogas: |
| • | RNG Production from Our Growth Projects: |
| • | Project Operating and Maintenance Expenses |
| • | Royalties, Transportation, Gathering and Production Fuel Expenses: |
| • | General and Administrative Expenses: non-employee directors beginning in 2022. The Company accounts for share-based compensation related to grants made through its equity and incentive compensation plan under FASB ASC 718. |
| • | Depreciation and Amortization: |
| • | Impairment Loss: |
| • | Transaction Costs: |
| • | Production volumes: |
| • | Production of Environmental Attributes: |
| • | Average realized price per unit of production: |
(in thousands, unless otherwise indicated) |
Three Months Ended June 30, |
Change |
Change % |
|||||||||||||
2022 |
2021 |
|||||||||||||||
| Revenues |
||||||||||||||||
| Renewable Natural Gas Total Revenues |
$ | 64,566 | $ | 27,581 | $ | 36,985 | 134.1 | % | ||||||||
| Renewable Electricity Generation Total Revenues |
$ | 4,329 | $ | 4,093 | $ | 236 | 5.8 | % | ||||||||
| RNG Metrics |
||||||||||||||||
| CY RNG production volumes (MMBtu) |
1,469 | 1,416 | 53 | 3.7 | % | |||||||||||
| Less: Current period RNG volumes under fixed/floor-price contracts |
(328 | ) | (487 | ) | 159 | (32.6 | %) | |||||||||
| Plus: Prior period RNG volumes dispensed in current period |
372 | 342 | 30 | 8.8 | % | |||||||||||
| Less: Current period RNG production volumes not dispensed |
(447 | ) | (339 | ) | (108 | ) | 31.9 | % | ||||||||
| Total RNG volumes available for RIN generation (1) |
1,066 | 932 | 134 | 14.4 | % | |||||||||||
| RIN Metrics |
||||||||||||||||
| Current RIN generation ( x 11.727) (2) |
12,499 | 10,935 | 1,564 | 14.3 | % | |||||||||||
| Less: Counterparty share (RINs) |
(1,346 | ) | (1,248 | ) | (98 | ) | 7.9 | % | ||||||||
| Plus: Prior period RINs carried into CY |
4,394 | 234 | 4,160 | 1777.8 | % | |||||||||||
| Less: CY RINs carried into next CY |
— | — | — | — | ||||||||||||
| Total RINs available for sale (3) |
15,547 | 9,921 | 5,626 | 56.7 | % | |||||||||||
| Less: RINs sold |
(14,438 | ) | (8,750 | ) | (5,688 | ) | 65.0 | % | ||||||||
| RIN Inventory |
1,109 | 1,171 | (62 | ) | (5.3 | %) | ||||||||||
| RNG Inventory (volumes not dispensed for RINs) (4) |
447 | 339 | 108 | 31.9 | % | |||||||||||
| Average Realized RIN price |
$ | 3.38 | $ | 1.78 | $ | 1.60 | 89.9 | % | ||||||||
| Operating Expenses |
||||||||||||||||
| Renewable Natural Gas Operating Expenses |
$ | 25,605 | $ | 15,954 | $ | 9,651 | 60.5 | % | ||||||||
| Operating Expenses per MMBtu (actual) |
$ | 17.43 | $ | 11.27 | $ | 6.16 | 54.7 | % | ||||||||
| Renewable Electricity Generation Operating Expenses |
$ | 4,284 | $ | 2,776 | $ | 1,508 | 54.3 | % | ||||||||
| $/MWh (actual) |
$ | 91.15 | $ | 59.09 | $ | 32.06 | 54.3 | % | ||||||||
| Other Metrics |
||||||||||||||||
| Renewable Electricity Generation Volumes Produced (MWh) |
47 | 47 | — | — | ||||||||||||
| Average Realized Price $/MWh (actual) |
$ | 92.11 | $ | 87.12 | $ | 4.99 | 5.7 | % | ||||||||
| (1) | RINs are generated in the month that the gas is dispensed to generate RINs, which occurs the month after the gas is produced. Volumes under fixed/floor-price arrangements generate RINs which we do not self-market. |
| (2) | One MMBtu of RNG has the same energy content as 11.727 gallons of ethanol, and thus may generate 11.727 RINs under the RFS program. |
| (3) | Represents RINs available to be self-marketed by us during the reporting period. |
| (4) | Represents gas production which has not been dispensed to generate RINs. |
(in thousands, unless otherwise indicated) |
Three Months Ended June 30, |
Change % |
||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
Total operating revenues |
$ | 67,884 | $ | 31,674 | $ | 36,210 | 114.3 | % | ||||||||
Operating expenses: |
||||||||||||||||
Operating and maintenance expenses |
14,870 | 13,187 | 1,683 | 12.8 | % | |||||||||||
General and administrative expenses |
8,753 | 7,341 | 1,412 | 19.2 | % | |||||||||||
Royalties, transportation, gathering and production fuel |
15,090 | 5,986 | 9,104 | 152.1 | % | |||||||||||
Depreciation and amortization |
5,134 | 5,660 | (526 | ) | (9.3 | %) | ||||||||||
Impairment loss |
69 | — | 69 | |||||||||||||
Transaction costs |
5 | 37 | (32 | ) | (86.5 | %) | ||||||||||
Total operating expenses |
43,921 | 32,211 | 11,710 | 36.4 | % | |||||||||||
Operating income (loss) |
$ | 23,963 | $ | (537 | ) | $ | 24,500 | (4,562.4 | %) | |||||||
Other expenses: |
246 | 730 | (484 | ) | (66.3 | %) | ||||||||||
Income tax expense |
4,565 | 3,385 | 1,180 | 34.9 | % | |||||||||||
Net income (loss) |
$ | 19,152 | $ | (4,652 | ) | $ | 23,804 | 511.7 | % | |||||||
(in thousands, unless otherwise indicated) |
Six Months Ended June 30, |
|||||||||||||||
2022 |
2021 |
Change |
Change % |
|||||||||||||
Revenues |
||||||||||||||||
Renewable Natural Gas Total Revenues |
$ | 97,233 | $ | 55,704 | $ | 41,529 | 74.6 | % | ||||||||
Renewable Electricity Generation Total Revenues |
$ | 8,300 | $ | 7,417 | $ | 883 | 11.9 | % | ||||||||
RNG Metrics |
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CY RNG production volumes (MMBtu) |
2,838 | 2,764 | 74 | 2.7 | % | |||||||||||
Less: Current period RNG volumes under fixed/floor-price contracts |
(639 | ) | (939 | ) | 300 | (31.9 | %) | |||||||||
Plus: Prior period RNG volumes dispensed in current period |
372 | 353 | 19 | 5.4 | % | |||||||||||
Less: Current period RNG production volumes not dispensed |
(447 | ) | (339 | ) | (108 | ) | 31.9 | % | ||||||||
Total RNG volumes available for RIN generation (1) |
2,124 | 1,839 | 285 | 15.5 | % | |||||||||||
RIN Metrics |
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Current RIN generation ( x 11.727) (2) |
24,907 | 21,551 | 3,356 | 15.6 | % | |||||||||||
Less: Counterparty share (RINs) |
(2,562 | ) | (2,395 | ) | (167 | ) | 7.0 | % | ||||||||
Plus: Prior period RINs carried into CY |
140 | 110 | 30 | 27.3 | % | |||||||||||
Less: CY RINs carried into next CY |
— | — | — | — | ||||||||||||
Total RINs available for sale (3) |
22,485 | 19,266 | 3,219 | 16.7 | % | |||||||||||
Less: RINs sold |
(20,923 | ) | (17,625 | ) | (3,298 | ) | 18.7 | % | ||||||||
RIN Inventory |
1,562 | 1,641 | (79 | ) | (4.8 | %) | ||||||||||
RNG Inventory (volumes not dispensed for RINs) (4) |
447 | 339 | 108 | 31.9 | % | |||||||||||
Average Realized RIN price |
$ | 3.39 | $ | 1.77 | $ | 1.62 | 91.5 | % | ||||||||
Operating Expenses |
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Renewable Natural Gas Operating Expenses |
$ | 41,950 | $ | 29,088 | $ | 12,862 | 44.2 | % | ||||||||
Operating Expenses per MMBtu (actual) |
$ | 14.78 | $ | 10.53 | $ | 4.25 | 40.4 | % | ||||||||
Renewable Electricity Generation Operating Expenses |
$ | 8,021 | $ | 6,169 | $ | 1,852 | 30.0 | % | ||||||||
$/MWh (actual) |
$ | 87.18 | $ | 65.42 | $ | 21.76 | 33.3 | % | ||||||||
Other Metrics |
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Renewable Electricity Generation Volumes Produced (MWh) |
92 | 94 | (2 | ) | (2.1 | %) | ||||||||||
Average Realized Price $/MWh (actual) |
$ | 90.22 | $ | 78.65 | $ | 11.57 | 14.7 | % | ||||||||
| (1) | RINs are generated in the month that the gas is dispensed to generate RINs, which occurs the month after the gas is produced. Volumes under fixed/floor-price arrangements generate RINs which we do not self-market. |
| (2) | One MMBtu of RNG has the same energy content as 11.727 gallons of ethanol, and thus may generate 11.727 RINs under the RFS program. |
| (3) | Represents RINs available to be self-marketed by us during the reporting period. |
| (4) | Represents gas production which has not been dispensed to generate RINs. |
(in thousands, unless otherwise indicated) |
Six Months Ended June30, |
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2022 |
2021 |
Change |
Change % |
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| Total operating revenues |
$ | 100,055 | $ | 63,121 | $ | 36,934 | 58.5 | % | ||||||||
| Operating expenses: |
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| Operating and maintenance expenses |
28,072 | 23,830 | 4,242 | 17.8 | % | |||||||||||
| General and administrative expenses |
17,248 | 27,761 | (10,513 | ) | (37.9 | %) | ||||||||||
| Royalties, transportation, gathering and production fuel |
22,296 | 12,204 | 10,092 | 82.7 | % | |||||||||||
| Depreciation and amortization |
10,286 | 11,396 | (1,110 | ) | (9.7 | %) | ||||||||||
| Gain on insurance proceeds |
(313 | ) | (82 | ) | (231 | ) | 281.7 | % | ||||||||
| Impairment loss |
120 | 626 | (506 | ) | (80.8 | %) | ||||||||||
| Transaction costs |
32 | 125 | (93 | ) | (74.4 | %) | ||||||||||
| |
|
|
|
|
|
|
|
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| Total operating expenses |
77,741 | 75,860 | 1,881 | 2.5 | % | |||||||||||
| |
|
|
|
|
|
|
|
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| Operating income (loss) |
$ | 22,314 | $ | (12,739 | ) | $ | 35,053 | (275.2 | %) | |||||||
| Other (income) expenses: |
(30 | ) | 1,411 | (1,441 | ) | (102.1 | %) | |||||||||
| Income tax expense |
4,307 | 4,767 | (460 | ) | (9.6 | %) | ||||||||||
| |
|
|
|
|
|
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| Net income (loss) |
$ | 18,037 | $ | (18,917 | ) | $ | 36,954 | (195.3 | %) | |||||||
| |
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|
|
|
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| Three Months Ended June 30, |
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| 2022 | 2021 | |||||||
Net income (loss) |
$ | 19,152 | $ | (4,652 | ) | |||
Depreciation and amortization |
5,134 | 5,660 | ||||||
Interest expense |
271 | 720 | ||||||
Income tax expense |
4,565 | 3,385 | ||||||
Consolidated EBITDA |
29,122 | 5,113 | ||||||
Impairment loss (1) |
69 | — | ||||||
Transaction costs |
5 | 37 | ||||||
Unrealized gains on hedging activities |
(1,644 | ) | — | |||||
Adjusted EBITDA |
$ |
27,552 |
$ |
5,150 |
||||
| (1) | During the three months ended June 30, 2022, we recorded an impairment of $69 related to an amended customer contract and miscellaneous capital assets no longer in use under current operations. During the three months ended June 30, 2021, there was no impairment of assets recognized. |
| Six Months Ended June 30, |
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| 2022 | 2021 | |||||||
Net income (loss) |
$ | 18,037 | $ | (18,917 | ) | |||
Depreciation and amortization |
10,286 | 11,396 | ||||||
Interest expense |
303 | 1,366 | ||||||
Income tax expense |
4,307 | 4,767 | ||||||
Consolidated EBITDA |
32,933 | (1,388 | ) | |||||
Impairment loss (1) |
120 | 626 | ||||||
Transaction costs |
32 | 125 | ||||||
Net gain on sale of assets |
(293 | ) | — | |||||
Unrealized losses on hedging activities |
1,807 | — | ||||||
Adjusted EBITDA |
$ |
34,599 |
$ |
(637 |
) | |||
| (1) | During the six months ended June 30, 2022, we recorded an impairment of $120 related to the assessment that certain computer software and hardware that was no longer being utilized, an amended customer contract and miscellaneous capital assets no longer in use under current operations. During the six months ended June 30, 2021, $626 of impairment was recorded related to a landfill hosts request for us to decommission a facility previously converted to an RNG facility. |
June 30, 2022 |
December 31, 2021 |
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Term Loans |
$ | 76,000 | $ | 80,000 | ||||
Revolving Credit Facility |
— | — | ||||||
Debt before debt issuance costs |
$ |
76,000 |
$ |
80,000 |
||||
| • | a Total Leverage Ratio (as defined in the Amended Credit Agreement) of not more than 3.50 to 1.00 as of the end of any fiscal quarter from December 31, 2021 through June 29, 2023, 3.25 to 1.00 as of the end of any fiscal quarter from June 30, 2023 through June 29, 2024, and 3.00 to 1.00 as of the end of any fiscal quarter from June 30, 2024 and thereafter.; and |
| • | as of the end of each fiscal quarter, a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement) of not less than 1.2 to 1.0 |
Six Months Ended June 30, |
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2022 |
2021 |
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Net cash flows provided by operating activities |
26,772 | $ | 11,245 | |||||
Net cash flows used in investing activities |
(3,747 | ) | (8,521 | ) | ||||
Net cash flows used in financing activities |
(4,095 | ) | (7,360 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
18,930 | (4,636 | ) | |||||
Restricted cash, end of period |
347 | 573 | ||||||
Cash and cash equivalents and restricted, end of period |
72,542 | 16,923 | ||||||
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. |
CONTROLS AND PROCEDURES |
ITEM 1. |
LEGAL PROCEEDINGS |
ITEM 1A. |
RISK FACTORS |
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. |
MINE SAFETY DISCLOSURES |
ITEM 5. |
OTHER INFORMATION |
ITEM 6. |
EXHIBITS |
| August 9, 2022 | MONTAUK RENEWABLES, INC. | |||||
| By: | /s/ SEAN F. MCCLAIN | |||||
| Sean F. McClain | ||||||
President, Chief Executive Officer and Director (Principal Executive Officer) | ||||||
| By: | /s/ KEVIN A. VAN ASDALAN | |||||
| Kevin A. Van Asdalan | ||||||
Chief Financial Officer (Principal Financial and Accounting Officer) | ||||||
