- Total Revenue: $43.3 million, a decrease of $10 million or 18.6% compared to $53.3 million in Q2 2023.
- General and Administrative Expenses: $8.7 million, flat compared to Q2 2023.
- Employee-Related Costs: $5.4 million, an increase of $0.2 million or 3.5% compared to $5.2 million in Q2 2023.
- RNG Production: 1.4 million MMBtu, flat compared to Q2 2023.
- RNG Segment Revenue: $38.8 million, a decrease of $9.8 million or 20.1% compared to $48.6 million in Q2 2023.
- RNG Operating and Maintenance Expenses: $13.9 million, an increase of $2.2 million or 18.9% compared to $11.7 million in Q2 2023.
- Renewable Electricity Production: 45,000 megawatt hours, a decrease of 4,000 megawatt hours or 8.2% compared to 49,000 megawatt hours in Q2 2023.
- Renewable Electricity Revenue: $4.5 million, a decrease of $0.1 million or 3.2% compared to $4.6 million in Q2 2023.
- Renewable Electricity Operating and Maintenance Expenses: $4.7 million, an increase of $1.3 million or 37.3% compared to $3.4 million in Q2 2023.
- Operating Income: $0.9 million, a decrease of $12.7 million or 93.6% compared to $13.6 million in Q2 2023.
- Net Loss: $0.7 million compared to a net income of $1 million in Q2 2023.
- Adjusted EBITDA: $7 million, a decrease of $12.2 million compared to $19.2 million in Q2 2023.
- Cash from Operating Activities: $14.5 million, an increase of 138.4% compared to $6.1 million in Q2 2023.
- Capital Expenditures: $40.8 million for the first six months of 2024.
- Cash and Cash Equivalents: $42.3 million as of June 30, 2024.
- Term Loan Outstanding: $60 million as of June 30, 2024.
- Revolving Credit Facility Capacity: $117.5 million as of June 30, 2024.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Montauk Renewables Inc (JSE:MKR, Financial) commissioned a digestion capacity increase at the Pico facility, resulting in a 39% increase in MMBtu production over 2023.
- The company successfully commissioned its first reactor for the swine waste to energy development project in North Carolina.
- Montauk Renewables Inc (JSE:MKR) received approval from the North Carolina Utilities Commission for an amendment to the new renewable energy facility designation, which is crucial for REC generation.
- The company has managed to sell 4.7 million RINs at a higher average realized price of $3.32 in the third quarter, compared to $3.20 in the second quarter.
- Despite weather-related challenges, Montauk Renewables Inc (JSE:MKR) reaffirmed its full-year 2024 outlook for RNG production volumes and revenues.
Negative Points
- Total revenues for the second quarter of 2024 decreased by $10 million or 18.6% compared to the same period in 2023.
- Operating income for the second quarter of 2024 was $0.9 million, a significant decrease of 93.6% compared to $13.6 million in the second quarter of 2023.
- The company experienced severe weather impacts in Texas, causing widespread, multi-day power outages and a reduction in MMBtu production.
- Operating and maintenance expenses for RNG facilities increased by $2.2 million or 18.9% compared to the second quarter of 2023.
- Adjusted EBITDA for the second quarter of 2024 was $7 million, a decrease of $12.2 million compared to $19.2 million for the second quarter of 2023.
Q & A Highlights
Q&A Highlights from Montauk Renewables Inc (JSE:MKR) Q2 2024 Earnings Call
Q: You kept your full-year production guidance for RNG the same despite some of the challenges in the second quarter with the power outages in Texas. Could you talk about how are you able to do that? And what are the bright spots in terms of areas that might be producing a little bit more than you expected? And then can I also ask for the third quarter, you mentioned that you already monetized the 4.7 million of RINs and inventory. But do you expect to monetize all of the RINs that you produce in the third quarter? Or is there a chance that you might hold back some of the Q3 production from sale as well? Thank you.
A: (Kevin Van Asdalan, CFO) We set our budgetary expectations with where we think the year is going to go in regards to production impacts. We expect wellfield investment to drive production increases. Though we have had those two quarters of weather impacts, we go through various sensitivities and historical look back in regards to at the beginning of the year, what landfill hosts tell us, their landfill expansion plans are going to be. We still have enough runway left in the rest of this year and we believe we'll get some meaningful uplift from the capital that we anticipate investing into our wellfield at certain of our sites as well as some of the ongoing and known optimization enhancements that we're doing either through wellfield collection or within our plants.
(Sean McClain, CEO) The decision as to whether or not we'll monetize is a function of our prioritization to have those attributes to be placed directly into the hands of the obligated parties rather than tying it to ebbs and flows and pricing. The leading driver is the purchasing cadence of the obligated parties. The way in which we manage our cash flows and our available cash and our borrowing facilities affords us the opportunity to take those attributes and place them where they belong, which is in the hands of the obligated parties not to intermediaries.
Q: How are you guys looking at any potential changes in LCFS credit prices given upcoming elections, and how do you factor in both potential outlooks?
A: (Kevin Van Asdalan, CFO) We generally don't provide guidance in regards to our internal expectations for the price of environmental attributes. We are all very aware that CARB is going through various rule making. We expect some building and rulemaking to impact, I believe, 2025 in the overall programs, emission reduction targets. We're bullish that those rulemaking will be beneficial and have an appreciable increase in LCFS pricing. But as with other regulatory outcomes, the details matter, and we believe that when that LCFS credit pricing increases, certain of our sites, notably Pico, will be primed to benefit from an eventual uplift in LCFS credit pricing.
Q: What is the second quarter weather impact on the production? And also, in your full-year guidance, have you built in any expectation for the hurricane season?
A: (Kevin Van Asdalan, CFO) We estimate that the approximate impact across the Houston facilities in the second quarter was around 47,000 MMBtu. In the third quarter, we are probably seeing a similar expectation of struggles on production out of Houston. Generally, in the second quarter, those power outages were approximately five to eight days. The approximation of widespread power outages from the hurricane in July was again about five or eight days depending upon the region of Houston.
(Sean McClain, CEO) The process by which we would incorporate future weather impacts is initially rooted in our historical outages or unplanned outages associated with utility outages or direct impact from weather events. Although there may be speculations that suggest this will be the most active hurricane season, there has been an increasing trend in those weather phenomena. The projections we put in place take into consideration these impacts.
Q: Your 2024 CapEx range is down to $84 million to $106 million from the $149 million to $167 million previously. But looking at the table of projects, the start dates for your four major growth projects are all unchanged. Could you talk about what's changing on the CapEx side? Are you pushing anything out?
A: (Kevin Van Asdalan, CFO) That's specifically in regards to the Bowerman RNG project and primarily related to one significant component associated with that. We expected a large outlay for one component to come in the third or fourth quarter of 2024. We have now anticipated that outlay to be pushed into 2025. It's a timing issue with the vendor expected timing for that particular project.
Q: What is the biggest risk for you not to hit your full-year target?
A: (Sean McClain, CEO) The process by which we incorporate future weather impacts is rooted in our historical outages or unplanned outages associated with utility outages or direct impact from weather events. Although there may be speculations that suggest this will be the most active hurricane season, there has been an increasing trend in those weather phenomena. The projections we put in place take into consideration these impacts. The biggest risk would be unforeseen severe weather events that exceed our historical trends and projections.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
