OPAL Fuels Inc. (“OPAL Fuels” or the “Company”) (Nasdaq: OPAL),
a leading vertically integrated producer and distributor of
renewable natural gas (RNG), today announced financial and
operating results for the three and twelve months ended December
31, 2022.
“OPAL Fuels has continued to execute on its strategic and
operational goals,” said Co-CEO Adam Comora. “After bringing three
RNG projects online in 2022, we now have seven in operation, six
under construction and a growing Advanced Development Pipeline.
“RNG production in 2022 grew 38% compared to 2021, and we are
forecasting production growth to accelerate to over 50% in 2023. We
also expect accelerated production growth in 2024 as our projects
in construction become operational. In addition, as projects
continue to move into and through our Advanced Development Pipeline
(ADP) and into construction, we are setting the foundation for
meaningful production growth over the coming years.
“The RNG industry continues to benefit from tailwinds as the
potential benefits of the Inflation Reduction Act (IRA) become
clearer. Additionally, new pathways under the Renewable Fuel
Standard (RFS) such as eRINs are being considered and new offtake
markets are developing.
“More importantly, the flexibility of OPAL Fuels’ vertically
integrated business platform continues to maximize value for
stakeholders, reduces volatility from environmental credit pricing
and provides optionality as public policy and markets continue to
evolve. We expect that in the second half of 2023 we will begin to
see the benefits of the IRA’s Investment Tax Credits (ITC)
provisions. Additionally, guidance on the 45Z production tax
credits, and clarification on the proposed eRIN pathway under the
RFS program should be available. This should add to the industry
tailwinds, providing meaningful benefits to our vertically
integrated business.”
“We anticipate putting at least 2.0 million MMBtu of RNG
projects into construction this calendar year,” said Co-CEO
Jonathan Maurer. “We also continue to expand our Advanced
Development Pipeline1. Recently we added 0.8 million MMBtu of
anticipated nameplate capacity to ADP, and now have a total of
approximately 8.3 million MMBtu, across 19 projects.
“In addition, as we continue to evaluate projects across the
sector, we expect our pipeline of opportunities to grow. We are
pleased that some of the development headwinds we experienced in
2022 have begun to subside.”
Financial Highlights
- Revenue for the three and twelve months ended December 31,
2022, was $66.7 million and $235.5 million, respectively, up 9% and
42%, compared to prior-year periods.
- Net income for the three and twelve months ended December 31,
2022, was $32.0 million and $32.6 million, respectively, compared
to $21.8 million and $40.8 million, in the same period last
year.
- Adjusted EBITDA2 for the three and twelve months ended December
31, 2022, was $20.2 million and $60.7 million, respectively, up 13%
and 50%, compared to prior-year periods.
Operational Highlights
- Produced 0.6 million and 2.2 million MMBtu of RNG, for the
three and twelve months ended December 31, 2022, up 49% and 38%,
compared to prior-year periods.
- Fuel Station Services segment sold, dispensed, and serviced an
aggregate of 33.3 million and 115.9 million GGEs of transportation
fuel for the three and twelve months ended December 31, 2022, up
21% and 20%, compared to prior-year periods. This volume includes
8.9 million and 29.4 million GGEs of RNG dispensing for the three
and twelve months ended December 31, 2022, up 33% and 41%, compared
to prior-year periods.
- Recently renewed agreement with UPS to provide operations and
maintenance services for 51 fueling stations for an additional ten
years.
- During 2022, signed long-term agreements for sales of 10.6
million annual GGE for 17 new OPAL Fuels stations, which are now
under construction.
____________________________
1 The Company's Advanced Development Pipeline ("ADP") comprises
projects that have been qualified and are reasonably expected to be
in construction within the next twelve to eighteen months. The
MMBtu associated with these projects is presented as anticipated
nameplate capacity. Anticipated nameplate capacity is the Company’s
currently anticipated annual design output for each facility and
may not reflect actual production from the projects, which depends
on many variables including, but not limited to, quantity and
quality of the biogas, operational up-time of the facility, and
actual productivity of the facility.
2 Adjusted EBITDA is a non-GAAP measure. A reconciliation of
GAAP Net Income to Adjusted EBITDA has been provided in the
financial tables included in this press release. An explanation of
this measure and how it is calculated is also included below under
the heading “Non-GAAP Financial Measures."
- As of December 31, 2022, the Company had 137 fueling stations
in its dispensing network, of which 26 are under construction. As
part of its dispensing network, OPAL Fuels owns 46 fueling stations
including 20 sites under construction.
Construction Update
- BioTown dairy RNG project commenced commercial operations in
February 2023.
- Anticipate three landfill gas projects to commence operations
in 2023 - Emerald RNG in mid-2023, as well as Prince William RNG
and Sapphire RNG in the fourth quarter of 2023.
- OPAL Fuels’ share of annual nameplate capacity3 for Emerald,
Prince William, and Sapphire projects is approximately 3.8 million
MMBtu.
Development Update
- Anticipate placing at least 2.0 million MMBtu of RNG projects
(representing OPAL Fuels’ proportional ownership) into construction
in 2023.
- Added 0.8 million MMBtu of anticipated nameplate capacity to
the Company’s Advanced Development Pipeline4, bringing it to
approximately 8.3 million MMBtu across 19 projects, which are
primarily landfill gas projects.
- The Advanced Development Pipeline includes four landfill
gas-to-electric projects that are candidates for conversion to
RNG.
- The Advanced Development Pipeline excludes 12 landfill
gas-to-electric projects in our portfolio, which may be available
to generate eRINs from a potential new RFS pathway proposed by the
EPA in their proposed set rule.
____________________________________________
3 Nameplate capacity is the annual design output for each
facility and may not reflect actual production from the projects,
which depends on many variables including, but not limited to,
quantity and quality of the biogas, operational up-time of the
facility, and actual productivity of the facility.
4 The Company's Advanced Development Pipeline comprises projects
that have been qualified and are reasonably expected to be in
construction within the next twelve to eighteen months. The MMBtu
associated with these projects is presented as anticipated
nameplate capacity. Anticipated nameplate capacity is the Company’s
currently anticipated annual design output for each facility and
may not reflect actual production from the projects, which depends
on many variables including, but not limited to, quantity and
quality of the biogas, operational up-time of the facility, and
actual productivity of the facility.
2023 Guidance Expectations
- The Company currently estimates that Adjusted EBITDA9 for the
full year 2023 will range between $85 and $95 million. This
guidance assumes an average annual price of $2.25/gallon for a D3
RIN, $3.00/MMBtu brown gas, and $90/MT LCFS credit pricing and is
based off the midpoint of the expected range of expected RNG
production. 5
- RNG produced for the full year 2023 is anticipated to range
between 3.2 million MMBtu and 3.6 million MMBtu compared with 2.2
million MMBtu in 2022.6
- RNG dispensing volume is anticipated to range between 53
million GGEs and 57 million GGEs, compared with 29.4 million GGEs
in 2022, an increase ranging from 80% to 94%.7
All guidance is current as of the date of this release and is
subject to change.
($ millions, except production data)
Estimated Full Year 2023
Ranges
RNG Production (million MMBtu) 8
3.2
—
3.6
RNG Fuel sold as transport fuel (million
GGE)
53
—
57
Estimated Adjusted EBITDA 9
$
85
—
$
95
Capex
$
220
—
$
240
___________________
5 Estimated 2023 annualized commodity and environmental
attribute sensitivities to 2023 Estimated Adjusted EBITDA are as
follows: approximately $8 million change for every $0.25/gallon
change in D3 RIN price, a $1.4 million change for every $0.50/MMBtu
change in natural gas price, and a $0.4 million change for every
$10/MT change in LCFS credit price.
6 Reflects OPAL Fuels proportional ownership with respect to RNG
projects owned with joint venture partners.
7 Includes volumes sold in OPAL Fuel's proprietary dispensing
network as well as third party stations that are serviced and
maintained by OPAL Fuels.
8 RNG Production reflects OPAL Fuels' proportional share with
respect to RNG projects owned with joint venture partners.
9 Estimated Adjusted EBITDA is a non-GAAP financial measure. A
reconciliation of the full year estimated Adjusted EBITDA to net
income, the closest GAAP measure, cannot be provided due to the
inherent difficulty in quantifying certain amounts including but
not limited to changes in fair value of the derivative instruments
and other items, due to a number of factors including the
unpredictability of underlying price movements, which may be
significant.
Results of Operations
($ thousands of dollars)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Revenue
RNG Fuel
$
43,634
$
33,294
$
126,830
$
70,360
Fuel Station Services
13,716
14,880
69,240
50,440
Renewable Power
9,367
12,982
39,461
45,324
Total Revenue
$
66,717
$
61,156
$
235,531
$
166,124
Net income
$
32,019
$
21,819
$
32,579
$
40,769
Adjusted EBITDA
$
20,154
$
17,824
$
60,744
$
40,609
RNG Fuel volume produced (Million
MMBtus)
0.6
0.4
2.2
1.6
RNG Fuel volume sold (Million GGEs)
8.9
6.7
29.4
20.8
Total volume delivered (Million GGEs)
33.3
27.6
115.9
96.4
Revenue for the three months ended December 31, 2022, was $66.7
million, an increase of 9%, or $5.6 million, compared to $61.2
million in the prior year. While two of our three business segments
experienced growth during the year, the increase was primarily
driven by the RNG Fuel segment. Total revenue for the twelve months
ended December 31, 2022, was $235.5 million compared to $166.1
million in the prior-year period.
Net income for the three months ended December 31, 2022, was
$32.0 million, compared to $21.8 million in the prior year. The
fourth quarter includes $33.1 million of change in derivative
instruments primarily attributable to our earnout liabilities
assumed after the closing of the business combination.
Net income for the twelve months ended December 31, 2022, was
$32.6 million compared to $40.8 million for the prior year. Full
year 2022 net income was impacted by lower margins reducing our
operating income year-over-year and higher transaction costs
associated with becoming a public company, offset by change in fair
value of derivative instruments.
Adjusted EBITDA2 for the three months ended December 31, 2022,
was $20.2 million, reflecting an increase of 13%, compared to $17.8
million for the prior-year period. Adjusted EBITDA for the twelve
months ended December 31, 2022, was $60.7 million compared to $40.6
million in the prior-year period.
Timing of Sales of RINs for Gas in Storage
Under generally accepted accounting principles (“GAAP”), the
timing of revenue recognition for stand-alone RIN sales contracts
is tied to the delivery of the RIN to our counterparties and not
the production of the RIN. To better align timing of when costs are
recognized for the production of RNG in a current period, in
Adjusted EBITDA, we include the value of that RNG, and
environmental credits held in inventory.
At December 31, 2022, the Company had biogas in storage from
fourth quarter production that was pending certification for
generation of environmental credits for the Sunoma dairy RNG
project and other third-party supply. Upon completion of
certification, RINs and LCFS credits associated with this stored
biogas will be monetized under a blend of forward and merchant
sales contracts.
Adjusted EBITDA as of December 31, 2022, includes adjustments
for $7.4 million of environmental credits that are anticipated to
be generated from this stored RNG and other environmental credits
held in inventory. Conversely, $7.5 million related to stored gas
and environmental credits that was included in third quarter
Adjusted EBITDA has been subtracted from fourth quarter Adjusted
EBITDA for consistency of presentation.
Segment Revenues
RNG Fuel
Revenue from RNG Fuel was $43.6 million, an increase of $10.3
million, or 31%, for the three months ended December 31, 2022,
compared to the three months ended December 31, 2021. This change
was attributable primarily due to an increase in environmental
credits and brown gas sales driven by additional volumes and higher
prices.
For the twelve months ended December 31, 2022, revenue from RNG
Fuel increased by $56.5 million, or 80%, compared to the year ended
December 31, 2021. This increase was attributable primarily to the
impact of a full year of Beacon revenue in 2022 versus only eight
months in 2021, an increase from brown gas sales and the sale of
environmental credits.
Fuel Station Services
Revenue from Fuel Station Services was $13.7 million, a decrease
of $1.2 million, or 8%, for the fourth quarter of 2022, compared to
the three months ended December 31, 2021. Revenues from fuel
station construction for third parties are recognized on a
percentage of completion basis and can fluctuate based on equipment
deliveries and the incurrence of the construction expenses.
For the year ended December 31, 2022, revenue from Fuel Station
Services increased by $18.8 million, or 37%, compared to the year
ended December 31, 2021. This was primarily attributable to an
increase from fuel station construction projects which were
completed into 2022, coupled with an increase in volumes at
existing and new service sites and from the sale of portable
fueling stations. We also signed $61 million in third-party fuel
station construction contracts during 2022. Third-party
construction revenue backlog was approximately $65.7 million at
December 31, 2022.
Renewable Power
Revenue from Renewable Power was $9.4 million, a decrease of
$3.6 million, or 28%, for the quarter ended December 31, 2022,
compared to the fourth quarter of 2021. This is primarily due to
the shutdown of one of our electricity generation facilities as our
gas rights agreement concluded.
For the twelve months ended December 31, 2022, revenue from
Renewable Power decreased by $5.9 million, or 13%, compared to the
prior year. In addition to the shut down at the end of the third
quarter of one of our electricity generation facilities as our gas
rights agreement concluded, this change was attributable to a
decrease from the conversion of one of our electricity generation
facilities into an RNG facility.
Liquidity
As of December 31, 2022, our liquidity is $257.2 million
consisting of cash and cash equivalents of $40.4 million,
restricted cash of $36.8 million, plus an additional $65.0 million
in short-term investments maturing within 90 days. Our liquidity
includes aggregate availability of $105 million senior secured
credit facilities after a drawdown of $10.0 million in March
2023.
We believe that our available cash, anticipated cash flows from
operations, available lines of credit under existing debt
facilities, and access to expected sources of capital will be
sufficient to meet our existing commitments and funding needs.
Capital Expenditures
During the year ended 2022, OPAL Fuels invested $108.3 million10
across six RNG projects and 21 owned fueling stations in
construction as compared to $30.2 million in 2021.
Earnings Call
A webcast to review OPAL Fuels’ Fourth Quarter and Full Year
2022 results is being held tomorrow, March 28, 2023 at 11:00AM
Eastern Time.
Materials to be discussed in the webcast will be available
before the call on the Company's website.
Participants may access the call at
https://edge.media-server.com/mmc/p/wi45x8o3, and a live webcast
will also be available at
https://investors.opalfuels.com/news-events/events-presentations.
_____________________
10 Capital Expenditures reflect net investment in RNG projects
net of proceeds received from our non-redeemable non-controlling
interests. We received $23.1 million and $59.4 million from such
parties for the year ended December 31, 2022 and 2021,
respectively. These amounts have been excluded to reflect only
capital expenditures attributable to OPAL Fuels.
Glossary of terms
“Environmental Attributes” refer to federal, state, and local
government incentives in the United States, provided in the form of
Renewable Identification Numbers, Renewable Energy Credits, Low
Carbon Fuel Standard credits, rebates, tax credits and other
incentives to end users, distributors, system integrators and
manufacturers of renewable energy projects that promote the use of
renewable energy.
“GGE” refers to Gasoline gallon equivalent. It is used to
measure the total volume of RNG production that OPAL Fuels expects
to dispense each year. The conversion ratio is 1MMBtu equal to 7.74
GGE.
“LFG” refers to landfill gas.
“MMBtu” refers to British thermal units.
“Renewable Power” refers to electricity generated from renewable
sources.
“RNG” refers to renewable natural gas.
“D3” refers to cellulosic biofuel with a 60% GHG reduction
requirement.
“RIN” refers to Renewal Identification Numbers.
“EPA” refers to Environmental Protection Agency.
About OPAL Fuels Inc.
OPAL Fuels Inc. (Nasdaq: OPAL) is a leading vertically
integrated renewable fuels platform involved in the production and
distribution of renewable natural gas (RNG) for the heavy-duty
truck market. RNG is a proven low-carbon fuel that is rapidly
decarbonizing the transportation industry now while also
significantly reducing fuel costs for fleet owners. OPAL Fuels
captures harmful methane emissions at the source and recycles the
trapped energy into a commercially viable, lower-cost alternative
to diesel fuel. The company also develops, constructs, and services
RNG and hydrogen fueling stations. As a producer and distributor of
carbon-reducing fuel for heavy-duty truck fleets for more than a
decade, OPAL Fuels delivers complete renewable solutions to
customers and production partners. To learn more about OPAL Fuels
and how it is leading the effort to capture North America’s harmful
methane emissions and decarbonize the transportation industry,
please visit https://opalfuels.com/ and follow the company on
LinkedIn and Twitter at @OPALFuels.
Forward-Looking Statements
Certain statements in this communication may be considered
forward-looking statements within the meaning of the “safe harbor”
provisions of the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements are statements that
are not historical facts and generally relate to future events or
OPAL Fuels’ (the “Company”) future financial or other performance
metrics. In some cases, you can identify forward-looking statements
by terminology such as “believe,” “may,” “will,” “potentially,”
“estimate,” “continue,” “anticipate,” “intend,” “could,” “would,”
“project,” “target,” “plan,” “expect,” or the negatives of these
terms or variations of them or similar terminology. Such
forward-looking statements are subject to risks and uncertainties,
which could cause actual results to differ materially from those
expressed or implied by such forward looking statements. New risks
and uncertainties may emerge from time to time, and it is not
possible to predict all risks and uncertainties. These
forward-looking statements are based upon estimates and assumptions
that, while considered reasonable by the Company and its
management, as the case may be, are inherently uncertain and
subject to material change. Factors that may cause actual results
to differ materially from current expectations include various
factors beyond management’s control, including but not limited to
general economic conditions and other risks, uncertainties and
factors set forth in the sections entitled “Risk Factors” and
“Cautionary Statement Regarding Forward-Looking Statements” in the
Company's quarterly report on Form 10Q filed on November 14, 2022,
and other filings the Company makes with the Securities and
Exchange Commission. Nothing in this communication should be
regarded as a representation by any person that the forward-looking
statements set forth herein will be achieved or that any of the
contemplated results of such forward-looking statements will be
achieved. You should not place undue reliance on forward-looking
statements in this communication, which speak only as of the date
they are made and are qualified in their entirety by reference to
the cautionary statements herein. The Company expressly disclaims
any obligations or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Company’s expectations with respect
thereto or any change in events, conditions or circumstances on
which any statement is based.
Disclaimer
This communication is for informational purposes only and is
neither an offer to purchase, nor a solicitation of an offer to
sell, subscribe for or buy, any securities, nor shall there be any
sale, issuance or transfer or securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.
OPAL FUELS INC.
CONSOLIDATED BALANCE SHEETS (In thousands of U.S.
dollars, except per share data)
December 31,
2022
December 31, 2021 (1)
Assets
Current assets:
Cash and cash equivalents (includes
$12,506 and $1,991 at December 31, 2022 and December 31, 2021,
respectively, related to consolidated VIEs)
$
40,394
$
39,314
Accounts receivable, net (includes $966
and $40 at December 31, 2022 and December 31, 2021, respectively,
related to consolidated VIEs)
31,083
25,391
Accounts receivable, related party
12,421
—
Restricted cash - current (includes $6,971
and $— at December 31, 2022 and December 31, 2021, respectively,
related to consolidated VIEs)
32,402
—
Short term investments
64,976
—
Fuel tax credits receivable
4,144
2,393
Contract assets
9,771
8,484
Parts inventory
7,311
5,143
Environmental credits held for sale
1,674
386
Prepaid expense and other current assets
(includes $415 and $113 at December 31, 2022 and December 31, 2021,
respectively, related to consolidated VIEs)
7,625
5,482
Derivative financial assets, current
portion
182
382
Total current assets
211,983
86,975
Capital spares
3,443
3,025
Property, plant, and equipment, net
(includes $73,140 and $27,794 at December 31, 2022 and December 31,
2021, respectively, related to consolidated VIEs)
297,323
169,770
Operating right-of use assets
11,744
—
Investment in other entities
51,765
47,150
Note receivable
—
9,200
Note receivable - variable fee
component
1,942
1,656
Derivative financial assets, non-current
portion
954
—
Deferred financing costs
3,013
2,370
Other long-term assets
1,489
489
Intangible assets, net
2,167
2,861
Restricted cash - non-current (includes
$2,923 and $1,163 at December 31, 2022 and December 31, 2021,
respectively, related to consolidated VIEs)
4,425
2,740
Goodwill
54,608
54,608
Total assets
$
644,856
$
380,844
Liabilities and Equity
Current liabilities:
Accounts payable (includes $4,896 and $544
at December 31, 2022 and December 31, 2021, respectively, related
to consolidated VIEs)
22,679
12,581
Accounts payable, related party
1,346
166
Fuel tax credits payable
3,320
1,978
Accrued payroll
7,779
7,652
Accrued capital expenses (includes $7,821
and $1,722 at December 31, 2022 and December 31, 2021,
respectively, related to consolidated VIEs)
11,922
5,517
Accrued expenses and other current
liabilities (includes $646 and $— at December 31, 2022 and December
31, 2021, respectively, related to consolidated VIEs)
10,773
7,220
Contract liabilities
8,013
9,785
Senior Secured Credit Facility - term
loan, current portion, net of debt issuance costs
15,250
73,145
Senior Secured Credit Facility - working
capital facility, current portion
7,500
7,500
OPAL Term Loan, current portion
27,732
13,425
Sunoma loan, current portion (includes
$380 and $756 at December 31, 2022 and December 31, 2021,
respectively, related to consolidated VIEs)
380
756
Convertible Note Payable
28,528
—
Municipality loan
76
194
Derivative financial liability, current
portion
4,596
992
Operating lease liabilities - current
portion
630
—
Other current liabilities
1,085
374
Asset retirement obligation, current
portion
1,296
831
Total current liabilities
152,905
142,116
Asset retirement obligation, non-current
portion
4,960
4,907
OPAL Term Loan
66,600
59,090
Convertible Note Payable
—
58,710
Sunoma loan, net of debt issuance costs
(includes $21,712 and $16,199 at December 31, 2022 and December 31,
2021, respectively, related to consolidated VIEs)
21,712
16,199
Municipality loan
—
84
Operating lease liabilities - non-current
portion
11,245
—
Earn out liabilities
8,790
—
Other long-term liabilities
825
4,781
Total liabilities
267,037
285,887
Commitments and contingencies
Redeemable preferred non-controlling
interests
138,142
30,210
Redeemable non-controlling interests
1,013,833
63,545
Stockholders' (deficit) equity
Class A common stock, $0.0001 par value,
337,852,251 shares authorized as of December 31, 2022; 29,477,766
and 0 shares, issued and outstanding at December 31, 2022 and
December 31, 2021, respectively
3
—
Class B common stock, $0.0001 par value,
157,498,947 shares authorized as of December 31, 2022; None issued
and outstanding as of December 31, 2022 and December 31, 2021
—
—
Class C common stock, $0.0001 par value,
154,309,729 shares authorized as of December 31, 2022; None issued
and outstanding as of December 31, 2022 and December 31, 2021
—
—
Class D common stock, $0.0001 par value,
154,309,729 shares authorized as of December 31, 2022; 144,399,037
issued and outstanding at December 31, 2022 and December 31,
2021
14
14
Additional paid-in capital
—
—
Accumulated deficit
(800,813
)
—
Accumulated other comprehensive income
195
—
Total Stockholders' (deficit) equity
attributable to the Company
(800,601
)
14
Non-redeemable non-controlling
interests
26,445
1,188
Total Stockholders' (deficit) equity
(774,156
)
1,202
Total liabilities, Redeemable preferred,
Redeemable non-controlling interests and Stockholders' (deficit)
equity
$
644,856
$
380,844
(1) Retroactively restated for the reverse capitalization upon
completion of Business Combination.
OPAL FUELS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of
U.S. dollars, except per unit data)
Twelve Months Ended
December 31,
2022
2021
Revenues:
RNG fuel (includes revenues from related
party of $76,920 and $0 for the years ended December 31, 2022 and
2021, respectively)
$
126,830
$
70,360
Fuel station services
69,240
50,440
Renewable Power (includes revenues from
related party of $5,495 and $3,008 for the years ended December 31,
2022 and 2021, respectively)
39,461
45,324
Total revenues
235,531
166,124
Operating expenses:
Cost of sales - RNG fuel
78,953
41,075
Cost of sales - Fuel station services
61,514
42,838
Cost of sales - Renewable Power
31,580
31,152
Selling, general, and administrative
48,569
29,380
Depreciation, amortization, and
accretion
13,136
10,653
Total expenses
233,752
155,098
Operating income
1,779
11,026
Interest and financing expense, net
(6,640
)
(7,467
)
Change in fair value of derivative
instruments, net
33,081
99
Other income
1,943
—
Loss on warrant exchange
(3,368
)
—
Gain on acquisition of equity method
investment
—
19,818
Gain on deconsolidation of VIEs
—
15,025
Income from equity method investments
5,784
2,268
Income before provision for income
taxes
32,579
40,769
Provision for income taxes
—
—
Net income
32,579
40,769
Net income attributable to redeemable
non-controlling interests
22,409
41,363
Net loss attributable to non-redeemable
non-controlling interests
(1,153
)
(804
)
Paid-in-kind preferred dividends (1)
7,932
210
Net income attributable to Class A common
stockholders (2)
$
3,391
$
—
Weighted average shares outstanding of
Class A common stock :
Basic
25,774,312
—
Diluted
26,062,398
—
Per share amounts:
Basic (2)
$
0.13
$
—
Diluted (2)
$
0.12
$
—
(1) Paid-in-kind preferred dividend is allocated between
redeemable non-controlling interests and Class A common
stockholders basis their weighted average percentage of
ownership.
(2) Income per share information has not been presented for the
year ended December 31, 2021 as it would not be meaningful to the
users of these consolidated financial statements.
OPAL FUELS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS In thousands of
U.S. dollars)
Twelve Months Ended
December 31,
2022
2021
Cash flows from operating
activities:
Net income
$
32,579
$
40,769
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Income from equity method investments
(5,784
)
(2,268
)
Loss on exchange of Warrants
3,368
—
Depreciation and amortization
13,015
10,078
Amortization of deferred financing
costs
1,943
1,085
Amortization of operating lease
right-of-use assets
770
—
Amortization of PPA liability
—
(260
)
Accretion expense related to asset
retirement obligation
121
575
Stock-based compensation
1,469
639
Provision for bad debts
499
—
Paid-in-kind interest income
(286
)
(406
)
Change in fair value of Convertible Note
Payable
413
3,300
Change in fair value of the earnout
liabilities
(37,111
)
—
Unrealized gain on derivative financial
instruments
3,867
(645
)
Gain on repayment of Note receivable
(1,943
)
—
Gain on acquisition of equity method
investment
—
(19,818
)
Gain on deconsolidation of VIEs
—
(15,025
)
Changes in operating assets and
liabilities, net of effects of businesses acquired:
Accounts receivable
(6,191
)
(2,944
)
Accounts receivable, related party
(12,421
)
—
Proceeds received on previously recorded
paid-in-kind interest income
288
—
Fuel tax credits receivable
(1,751
)
(117
)
Capital spares
(418
)
155
Parts inventory
(2,168
)
(899
)
Environmental credits held for sale
(1,288
)
159
Prepaid expense and other current
assets
(3,108
)
(2,928
)
Contract assets
(1,287
)
(2,960
)
Accounts payable
10,143
2,559
Accounts payable, related party
1,180
(1,413
)
Fuel tax credits payable
1,342
33
Accrued payroll
127
4,864
Accrued expenses
3,237
(1,483
)
Operating lease liabilities - current and
non-current
(640
)
—
Other current and non-current
liabilities
452
699
Contract liabilities
(1,772
)
5,107
Net cash (used in) provided by operating
activities
(1,355
)
18,856
Cash flows from investing
activities:
Purchase of property, plant, and
equipment
(131,410
)
(89,646
)
Cash acquired on acquisition of equity
method investment
—
1,975
Deconsolidation of VIEs, net of cash
—
(21,208
)
Cash paid for short term investments
(64,976
)
—
Capitalized interest attributable to
equity method investments
(597
)
(1,570
)
Purchase of Note receivable
—
(10,450
)
Proceeds received from repayment of Note
receivable
10,855
—
Distributions received from equity method
investment
2,100
3,695
Net cash used in investing activities
(184,028
)
(117,204
)
Cash flows from financing
activities:
Proceeds from Sunoma loan
4,593
15,679
Proceeds from OPAL Term Loan
40,000
75,000
Proceeds received from Business
Combination
138,850
—
Financing costs paid to other third
parties
(8,321
)
(3,607
)
Repayment of Senior Secured Credit
Facility
(58,603
)
(4,901
)
Repayment of Senior Secured Credit
Facility - working capital facility
—
(5,182
)
Repayment of OPAL Term Loan
(18,910
)
—
Repayment of Municipality loan
(202
)
(194
)
Repayment of Trustar Revolver Facility
—
(10,000
)
Proceeds from sale of non-redeemable
non-controlling interest, related party
23,143
38,218
Contributions from non-redeemable
non-controlling interests, related party
—
21,165
Acquisition of non-controlling
interest
—
(5,000
)
Proceeds from issuance of redeemable
preferred non-controlling interests, related party
100,000
—
Contributions from members
—
7,531
Distributions to members
—
(3,695
)
Net cash provided by financing
activities
220,550
125,014
Net increase in cash, restricted cash, and
cash equivalents
35,167
26,666
Cash, restricted cash, and cash
equivalents, beginning of period
42,054
15,388
Cash, restricted cash, and cash
equivalents, end of period
$
77,221
$
42,054
Supplemental disclosure of cash flow
information
Interest paid, net of $3,678 and $861
capitalized, respectively
$
7,013
$
4,339
Noncash investing and financing
activities:
Issuance of Convertible Note Payable
related to business acquisition, excluding paid-in-kind
interest
$
—
$
55,410
Fair value of Class A common stock issued
for redemption of Convertible Note Payable
$
30,595
$
—
Fair value of Class A common stock issued
for redemption of Public and Private warrants
$
25,919
$
—
Fair value of Derivative warrant
liabilities assumed related to Business Combination
$
13,524
$
—
Fair value of Earnout liabilities related
to Business Combination
$
45,900
$
—
Fair value of put option on a forward
purchase agreement related to Business Combination
$
4,600
$
—
Fair value of contingent consideration to
redeem the non-controlling interest included in other long-term
liabilities
$
183
$
4,456
Paid-in-kind dividend on redeemable
preferred non-controlling interests
$
7,932
$
210
Right-of-use assets for finance leases as
of January 1, 2022 included in Property, Plant and equipment,
net
$
801
$
—
Lease liabilities for finance leases as of
January 1, 2022 included in Accrued expenses and other current
liabilities
$
316
$
—
Lease liabilities for finance leases as of
January 1, 2022 included in Other long-term liabilities
$
485
$
—
Accrual for purchase of Property, plant
and equipment included in Accounts payable and Accrued capital
expenses
$
11,922
$
6,205
Accrual for deferred financing costs
included in Accrued expenses and other current liabilities
$
—
$
1,379
Non-GAAP Financial Measures (Unaudited)
To supplement the Company’s unaudited condensed consolidated
financial statements presented in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”), the Company uses a non-GAAP financial measure that it
calls adjusted EBITDA (“Adjusted EBITDA”). This non-GAAP Measure
adjusts net income for realized and unrealized gain on interest
rate swaps, net loss attributable to non-redeemable non-controlling
interests, transaction costs and one time non recurring charges,
non-cash charges, major maintenance for renewable power, unrealized
loss (gain) for derivative instruments, loss on warrant exchange,
non cash gain on reversal of a liability to non redeemable
non-controlling interests, gain on redemption of Note receivable,
environmental credits associated with renewable biogas that has
been produced and is in storage pending completion of certification
of the relevant environmental attribute pathway(s), such credits to
be monetized under a blend of forward and merchant sales contracts,
and gain on acquisition of equity method investment. Management
believes this non-GAAP measure provides meaningful supplemental
information about the Company’s performance, for the following
reasons: (1) it allows for greater transparency with respect to key
metrics used by management to assess the Company’s operating
performance and make financial and operational decisions; (2) the
measure excludes the effect of items that management believes are
not directly attributable to the Company’s core operating
performance and may obscure trends in the business; and (3) the
measure is used by institutional investors and the analyst
community to help analyze the Company’s business. In future
quarters, the Company may adjust for other expenditures, charges or
gains to present non-GAAP financial measures that the Company’s
management believes are indicative of the Company’s core operating
performance.
Non-GAAP financial measures are limited as an analytical tool
and should not be considered in isolation from, or as a substitute
for, the Company’s GAAP results. The Company expects to continue
reporting non-GAAP financial measures, adjusting for the items
described below (and/or other items that may arise in the future as
the Company’s management deems appropriate), and the Company
expects to continue to incur expenses, charges or gains like the
non-GAAP adjustments described below. Accordingly, unless expressly
stated otherwise, the exclusion of these and other similar items in
the presentation of non-GAAP financial measures should not be
construed as an inference that these costs are unusual, infrequent,
or non-recurring. Adjusted EBITDA is not a recognized term under
GAAP and does not purport to be an alternative to GAAP net income
or any other GAAP measure as an indicator of operating performance.
Moreover, because not all companies use identical measures and
calculations, the Company’s presentation of Adjusted EBITDA may not
be comparable to other similarly titled measures used by other
companies.
The following table presents the reconciliation of our Net
income to Adjusted EBITDA:
Reconciliation of GAAP Net
income to Adjusted EBITDA For the Three and Nine Months
Ended December 31, 2022 and 2021 (In thousands of
dollars)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Net income
$
32,019
$
21,819
$
32,579
$
40,769
Adjustments to reconcile net income to
Adjusted EBITDA
Interest and financing expense, net
(544
)
1,808
6,640
7,467
Net loss attributable to non-redeemable
non-controlling interests
329
390
1,153
804
Depreciation, amortization and accretion
(1)
4,046
3,981
15,125
11,713
Unrealized loss on derivative instruments
(2)
(30,559
)
89
(32,569
)
2,923
Loss on warrant exchange
3,368
—
3,368
—
Non-cash charges (3)
1,566
160
3,160
639
Transaction costs and one time
non-recurring charges (4)
10,057
3,412
20,558
5,191
Major maintenance for Renewable Power
43
1,190
4,701
5,946
Gain on repayment of Note receivable
(5)
—
—
(1,398
)
—
Gas in storage (6)
(171
)
—
7,427
—
Gain on deconsolidation of entities
—
(15,025
)
—
(15,025
)
Gain on acquisition of equity method
investments
—
—
—
(19,818
)
Adjusted EBITDA
$
20,154
$
17,824
$
60,744
$
40,609
(1) Includes depreciation, amortization and accretion on equity
method investments.
(2) Unrealized loss on derivative instruments includes change in
fair value of interest rate swaps, commodity swaps, earnout
liabilities, warrant liabilities, contingent liability to
non-controlling interest and put option on a forward purchase
agreement.
(3) Non-cash charges includes stock based compensation expense,
certain expenses included in selling, general and administrative
expenses relating to employee benefit accruals, inventory write
down charges included in cost of sales - RNG fuel and loss on
disposal of assets.
(4) Transaction costs relate to consulting and professional fees
incurred in connection with the Business Combination that could not
be capitalized per GAAP. One time non-recurring charges include
certain expenses related to development expenses on our RNG
facilities such as lease expenses incurred during construction
phase that could not be capitalized per GAAP and shutdown costs on
two of our Renewable Power facilities.
(5) Gain on repayment of Note receivable excludes $0.5 million
of prepayment penalty received in cash.
(6) Represents stored biogas anticipated to generate RINs and
LCFSs upon completion of certification. These RINs will be
monetized under a blend of forward and merchant sales
contracts.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230327005653/en/
Media Jason Stewart Senior Director Public Relations
& Marketing 914-421-5336 jstewart@opalfuels.com
ICR, Inc. OPALFuelsPR@icrinc.com
Investors Todd Firestone Vice President Investor
Relations & Corporate Development 914-705-4001
investors@opalfuels.com
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