Transcript • May. 7, 2026 12:30 PM • Montauk Renewables, Inc. Common Stock (MNTK)
Transcript
May. 7, 2026 12:30 PM
Montauk Renewables, Inc. Common Stock (MNTK)
Kevin: Our Galveston facility produced 41,000 MMBTU fewer in the first quarter of 2026 compared to the first quarter of 2025 as a result of the landfill host assuming responsibility of well-filled operations and maintenance beginning in the first quarter of 2026. Our Atascosita facility produced 43,000 MMBTU more in the first quarter of 2026 compared to the first quarter of 2025 as a result of landfill host well-filled operational collection system enhancement. Our APEX facility produced 37,000 MMBTU more in the first quarter of 2026 as compared to the first quarter of 2025 as a result of the June 2025 commissioning of our second APEX facility and increased feedstock gas from improvements we are making to the landfill collection system. Our McCarty facility produced 88,000 MMBTU fewer in the first quarter of 2026 compared to the first quarter of 2025 as a result of landfill host wellfield bifurcation and changes to the wellfield collection system. Revenues from the renewable natural gas segment during the first quarter of 2026 were 38.1 million, a decrease of 0.4 million, or 1%, compared to 38.5 million during the first quarter of 2025. Average commodity pricing for natural gas for the first quarter of 2026 was 38.1% higher than the first quarter of 2025, In the first quarter of 2026, we self-marketed 12.4 million RINs, representing a 2.5 million increase, or 25.5%, compared to 9.9 million RINs self-marketed during the first quarter of 2025. Average pricing realized on RIN sales during the first quarter of 2026 was $2.42, compared to $2.46 during the first quarter of 2025, a decrease of 1.6%. This compares to the average D3 RIN index price for the first quarter of 2026 of $2.41, being approximately 0.6% lower than the average D3 RIN index price for the first quarter of 2025 of $2.43. On March 31, 2026, we had approximately 0.4 million MMBTU available for RIN generation, 0.2 million RINs generated but unseparated, and 79,000 RINs separated and unsold. At March 31, 2025, we had approximately 0.3 million MMVTU available for RIN generation, 1.5 million RINs generated but unseparated, and 3.9 million RINs separated and unsold. Our operating and maintenance expenses for our RNG facilities during the first quarter of 2026 were 14.4 million, an increase of 0.3 million, or 1.8%, compared to 14.1 million during the first quarter of 2025. Our Rumpke facility operating and maintenance expenses increased approximately $0.4 million, primarily related to preventative maintenance media changes. Our Apex facility operating and maintenance expenses increased approximately $0.3 million, primarily related to increased utility expense, which was partially offset by decreased preventative maintenance media changes. Our Atascosita facility operating and maintenance expenses increased approximately $0.2 million, primarily related to well-filled operational enhancements. Our Gowerson facility operating and maintenance expenses decreased approximately $0.6 million, which was primarily related to the timing of maintenance of gas processing equipment and preventative maintenance media changes. We produced approximately 43,000 megawatt hours in renewable electricity during the first quarter of 2026, a decrease of approximately 3,000 megawatt hours or 6.5% compared to 46,000 megawatt hours during the first quarter of 2025. Our PICO facility produced approximately 2,000 megawatt hours fewer in the first quarter of 2026 compared to the first quarter of 2025. The decrease is primarily related to the decommissioning of one of our engines in the second quarter of 2025 due to the shift towards boiler heat for digestion process. Our Bowerman facility produced approximately 1,000 megawatt hours fewer in the first quarter of 2026 compared to the first quarter of 2025. The decrease is primarily related to original equipment manufacturer required lifecycle maintenance on our engines beginning in the first quarter of 2026. Revenues from renewable electricity facilities during the first quarter of 2026 were $4.1 million, a decrease of $0.1 million or 0.8% compared to $4.2 million in the first quarter of 2025. The decrease is primarily driven by the decrease in production volumes. Our renewable electricity generation operating and maintenance expenses during the first quarter of 2026 were $4.5 million, an increase of $1.1 million or 33.8% compared to $3.4 million during the first quarter of 2025. The increase is primarily driven by an increase in non-capitalizable costs of $0.8 million at our Montauk Ag Renewables project. Our Bowerman facility operating and maintenance expenses increased approximately $0.4 million, which was related to the timing of gas processing preventative maintenance. We recorded approximately $4.2 million in the first quarter of 2026 related to the cost of rinse distributed from Green Wave when sold and the cost related to pathway dispensing associated with the dispensing of R&D. There were no such expenses incurred during the first quarter of 2025. During the first quarter of 2026, we recorded impairments of $0.4 million, a decrease of $1.6 million compared to $2.0 million in the first quarter of 2025. The decrease primarily relates to the first quarter of 2025 impairment of an RNG development project for which the local utility no longer accepted RNG into its distribution system. We did not record any impairments related to our assessment of future cash flows. Operating loss for the first quarter of 2026 was $1.6 million compared to operating income of $0.4 million in the first quarter of 2025. R&G operating income for the first quarter of 2026 was $8.7 million, a decrease of $1.7 million or 15.7% compared to $10.4 million for the first quarter of 2025. Renewable electricity generation operating loss for the first quarter of 2026 was $2.2 million, an increase of $1.2 million compared to $1 million for the first quarter of 2025. Other income in the first quarter of 2026 was 1.3 million, an increase of 2.5 million compared to other expenses of 1.2 million in the first quarter of 2025. In the first quarter of 2026, we recorded approximately 3.3 million in income related to our joint venture investment in GreenWave. There was no such income reported during the first quarter of 2025. We received approximately 1.4 million in RINs distributed from GreenWave in the first quarter of 2026. of which approximately $0.4 million remain unsold. We sold approximately 1 million RINs and recorded revenues from those RINs sold of approximately $2.4 million. Additional information on Green Wave can be found in the supplemental slides that have been posted to our website. On March 9, 2026, we entered into a five-year new security credit facility with a wholly-owned subsidiary, Hannah Armstrong Capital LLC, HAZI, that consists of up to $200 million in senior indebtedness. These proceeds were used to repay all our outstanding debt. We expect to have an additional $45 million in proceeds drawn upon the conclusion of certain engineering review and operational requirements of our Montauk Ag Renewables project in North Carolina. As a result of this refinancing, in the first quarter of 2026, we recorded debt extinguishment costs of $1 million. We are only required to make interest payments during the first two years of the agreement, which matures in March 2031. We expect to work with HAZE in the future to secure additional project-based financing for our current and future development projects. Turning to the balance sheet, on March 31st, 2026, $155 million was outstanding on our new security credit facility with HAZE. For the first three months of 2026, our capital expenditures were $38.6 million, of which $33.1 million and $1.8 million, respectively, were related to the ongoing development of Montauk Ag Renewables in our Bowerman R&G facility. We had approximately $19.6 million in capital expenditures included within our accounts payable at March 31, 2026. As of March 31, 2026, we had cash and cash equivalents, net of restricted cash, of approximately $25.9 million. Our new senior credit facility with Hazy requires us to meet liquidity and have reportedly minimum cash balances as defined in the agreement. We had accounts and others receivables of approximately $5.2 million. We do not believe we have any collectability issues within our receivables balance. As of March 31, 2026, we held approximately $0.4 million RINs distributed from Green Wave and Inventory on our balance sheet. Adjusted EBITDA for the first quarter of 2026 was $10.8 million, an increase of $2 million or 22.8% compared to adjusted EBITDA of $8.8 million for the first quarter of 2025. EBITDA for the first quarter of 2026 was $9.4 million, an increase of $2.7 million or 40.3% compared to EBITDA of $6.7 million in the first quarter of 2025. Net income for the first quarter of 2026 was $5,000, an increase of $0.5 million as compared to a net loss of $0.5 million for the first quarter of 2025. The difference in effective tax rates between the first quarter of 2026 and the first quarter of 2025 primarily relate to the change in our free tax book loss for the first three months of 2026 as compared to the first three months of 2025. And I'll turn the call back over to Sean.
Sean: Thank you, Kevin. In closing, And though we don't provide guidance as to our internal expectations in the market price of environmental attributes, including the market price of D3 RINs, we would like to provide a full-year 2026 outlook. We are reaffirming our RNG production volumes to range between 5.8 and 6 million MMVTU, with corresponding RNG revenues to range between 175 and 190 million. we are reaffirming our renewable electricity production volumes to range between 195 and 207,000 megawatt hours, with updated corresponding renewable electricity revenues to range between 33 and 37 million. That reflects our current expectations of production at our Montauk Ag Renewables facility in Turkey, North Carolina. And with that, we will pause for any questions.
Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Matthew Blair at TPH.
Matthew Blair: Thank you, and good morning. I was hoping you could talk a little bit about this fixed price contract that appears to have rolled off. I think there was a mention of that in the release. And, you know, is there any prospect for renewing that contract? And can you say if that contract was above, you know, current market rates? Like, should we think of that roll off as being dilutive to your ongoing margins? Thank you.
Kevin: Thanks, Matthew. In short, I'm going to point you to our operating highlights table within our 10Q. The rolling off of the fixed price contract is consistent with our moving and our ability to find homes for our R&G volumes in the transportation markets. It's in concert with a quarter-over-quarter reduction in RINs that we're sharing with counterparties through our pathway. That has come down in the first quarter of 2026, yielding increases in RINs sold in 2026 over 2025. That's sort of a general understanding of a product mix moving away from fixed pricing into a more commodity and merchant availability of RINs generated from the production that we're getting as we are dispensing volumes in the transportation space and retaining more RINs and able to sell more RINs related to the roll-off of those fixed price contracts.
Operator: Our next question comes from Betty Zhang at Scotiabank.
Betty Zhang: Thanks. Good morning. Can you talk about the Montauk Ag Renewables? It looks like the revenue generation seems to be pushed out by about a month, and that's also factored into your annual guidance. Can you just speak to what may have contributed to that?
Sean: Yes, thanks, Betty. The adjustment to the revenue guidance is solely attributed to the timing of the commissioning that was completed at the end of April as opposed to the end of the first quarter with revenue commencement activities starting in May instead of April. So that's the month shift that's reflected in that updated guidance.
Operator: Our next question comes from Richard Adios at UBS.
Richard Adios: Hi, thanks for taking our question. With the North Carolina project coming online and production expected to begin this month, can you help us think about the ramp profile from here? I know you mentioned in your opening remarks and in the press release that you expect ramp up in production volumes throughout 2026, but can you give us additional color into that? Thank you.
Kevin: Thanks, Richard. As we've alluded, you know, we have a certain amount of hog spaces that we're targeting to support our production expectations under a first year. We had announced that there were some weather delays on our hog at the end of the year in March, that some weather delays have delayed some installation of their own farm collection equipment as well as delaying some of our ability to timely assemble our dewatering equipment. Related to those sort of weather delays and installment of our feedstock collection and dewatering equipment, our ramp throughout 2026 is contingent upon us getting caught up and meeting some of our internal expectations. associated with our on-farm installation related to feedstock collection and transportation to our production facility.
Operator: Okay. I'm showing no further questions at this time. I would now like to turn it back to Sean for closing remarks.
Sean: Thank you. And thank you for taking the time to join us on the conference call today. We look forward to speaking with you again when we present our second quarter 2026 results.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
