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OPAL Fuels Inc. (OPAL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $80.5M (+13% y/y, -4% q/q), net income $7.6M (EPS $0.03), and Adjusted EBITDA $16.5M; results were impacted by lower RIN prices, loss of ISCC credits in renewable power, and one-time G&A, while RNG production grew 33% y/y to 1.2M MMBtu .
  • Versus S&P Global consensus, OPAL missed on revenue ($80.5M vs $85.2M*) and Adjusted EBITDA ($16.5M vs $18.7M*), and EPS ($0.03 vs $0.09*); management maintained full-year 2025 guidance (*Values retrieved from S&P Global).
  • Policy tailwinds: the “One Big Beautiful Bill Act” extended the 45Z production tax credit through 2029; management expects landfill RNG could receive at least ~$2/MMBtu of saleable tax credits (not yet recognized), supporting future EBITDA .
  • Operational catalysts: Atlantic RNG commissioning now, expected commercial operations shortly with 0.33M MMBtu annual capacity; 45+ fueling stations under construction and strong FSS momentum (segment EBITDA +30% y/y) .

What Went Well and What Went Wrong

What Went Well

  • RNG production rose 33% y/y to 1.2M MMBtu, driven by ramp-ups at Sapphire/Polk and improved uptime; management noted “scalable results” from vertical integration of RNG production and distribution .
  • Fuel Station Services EBITDA increased ~30% y/y to ~$11.2M; management sees supportive policy/macro and growing fleet engagement with CNG/RNG amid challenges for hydrogen/EV heavy-duty options .
  • Policy visibility improved: “45Z” extended to 2029; “Landfill RNG could receive at least $2 per MMBtu of saleable tax credits,” with expected material ITC monetization as new projects come online .

What Went Wrong

  • Adjusted EBITDA fell to $16.5M (vs $21.1M y/y and $20.1M in Q1), primarily due to lower realized D3 RIN prices ($2.50 vs $3.13 last year), loss of ISCC carbon credits in renewable power, and non-recurring G&A .
  • Renewable Power segment EBITDA contracted (Q2: $3.3M vs $6.4M y/y) reflecting the end of European certification for U.S. biogas programs; this headwind is expected to persist through 2025 .
  • One-time non-cash $2.0M G&A expense from contract restructuring (added back in Adjusted EBITDA) and other one-off costs weighed on reported results; RNG Adjusted EBITDA also reflects temporary virtual pipeline costs .

Financial Results

Consolidated Results vs Prior Periods

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$70.95 $85.41 $80.46
Net Income ($USD Millions)$1.91 $1.28 $7.56
Diluted EPS ($USD)$(0.01) $(0.01) $0.03
Adjusted EBITDA ($USD Millions)$21.08 $20.06 $16.51
Adjusted EBITDA Margin % (calc)29.7% 23.5% 20.5%
Net Income Margin % (calc)2.7% 1.5% 9.4%

Note: Margins calculated from reported revenue and net income/Adjusted EBITDA.

Performance vs S&P Global Consensus (Q2 2025)

MetricActualConsensusSurprise
Revenue ($USD Millions)$80.46 $85.20*Miss
EPS ($USD)$0.03 $0.09*Miss
Adjusted EBITDA ($USD Millions)$16.51 $18.73*Miss

*Values retrieved from S&P Global.

Segment Revenues

Segment ($USD Millions)Q2 2024Q1 2025Q2 2025
RNG Fuel$19.45 $27.60 $25.13
Fuel Station Services$39.26 $50.68 $47.03
Renewable Power$12.25 $7.13 $8.30
Total Revenue$70.95 $85.41 $80.46

KPIs

KPIQ2 2024Q1 2025Q2 2025
RNG Produced (Million MMBtu)0.9 1.1 1.2
RNG Dispensed (Million GGEs)18.7 19.5 20.6
Total GGEs Sold/Dispensed/Serviced (MM)36.6 40.6 40.8
Avg Realized RIN Price ($/RIN)—$2.71 $2.50
Avg Realized LCFS Price ($/credit)—$100.00 $100.00
Liquidity ($USD Millions)—$239.9 $203.2
Cash & Equivalents ($USD Millions)—$40.1 $29.3
Capex (reported period)—$11.6 (Q1) $33.4 (H1)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY 2025$90M–$110M Maintained Maintained
RNG ProductionFY 20255.0–5.4M MMBtu Maintained Maintained
D3 RIN Price AssumptionFY 2025$2.60/RIN Maintained (basis for guidance) Maintained
Fuel Station Services Adj. EBITDA GrowthFY 2025 vs FY 2024+30%–50% Maintained Maintained
ITC Monetization (gross)FY 2025~$50M (excluded from Adj. EBITDA) Still expects ~$50M Maintained
45Z Production Tax Credit2025–2029N/AExtended through 2029; visibility to contribute to EBITDA (not yet recognized) Raised policy visibility

Earnings Call Themes & Trends

TopicQ-2 (Q4 2024)Q-1 (Q1 2025)Current (Q2 2025)Trend
RIN Pricing & GuidanceFY25 guide assumes $2.60; each $0.10 ≈ $5–$6M EBITDA impact In-line with guidance; production ramp continues Realized $2.50 RIN; guidance maintained; hedging/forward sales help Stabilizing; cautious
Renewable Power CreditsEurope certification ended; ~-$10M 2025 headwind Persistent headwind acknowledged Lower segment EBITDA; credits expired Nov-2024 Ongoing headwind
Upstream Project ExecutionAtlantic online Q3; Burlington/Cottonwood/Kirby in 2026 Two Q4’24 projects ramping; production +38% y/y Atlantic commissioning; production +33% y/y Execution improving
Downstream FSS MomentumTight dispensing market; margin improvement Backlog: ~47 stations; OPAL-owned 20 Segment EBITDA +30% y/y; 45+ stations under construction Strong growth
Policy/RegulatoryEPA set rule timing; partial waiver discussions Expect 45Z clarity; some included in low-end guide 45Z extended; EPA rollback of Phase III truck regs supportive Positive visibility

Management Commentary

  • “Second quarter results were in line with our expectations, and we are maintaining our guidance for the year.”
  • “Landfill RNG could receive at least $2 per MMBtu of saleable tax credits… we now have visibility that these production tax benefits will contribute to EBITDA for at least the next four years.”
  • “Market fundamentals for RNG used as a transportation fuel by heavy-duty fleets are strengthening… RNG and CNG are a commercially viable alternative to diesel today.”
  • “Our second quarter results are also lower sequentially due to increased non recurring new project operating expense and non recurring G&A… realized RIN price of $2.50 versus $3.13 last year.”

Q&A Highlights

  • Downstream competitive landscape and demand: Large fleets increasingly engaging on CNG/RNG amid equipment/pricing improvements and supportive EPA truck policy; OPAL’s vertical model and execution seen as differentiators .
  • Guidance maintenance drivers: Forward RIN sales, production trending to lower end of range, normalization of one-time G&A, and lumpiness in FSS construction recovering in H2 .
  • Capital allocation and returns: Balanced risk-adjusted investment across upstream and downstream; strong optionality to return capital or pursue M&A; Investor Day planned to detail discretionary FCF .
  • Voluntary markets/ex-Europe: Voluntary fixed-price markets quiet; export pathways to Europe still challenged; transportation market remains most valuable offtake .
  • Project pipeline: Atlantic commissioning; Burlington/Cottonwood 2026; Kirby later given permitting complexity; target to place 2.0M MMBtu into construction in 2025 .

Estimates Context

  • Q2 2025 results missed S&P Global consensus on revenue ($80.5M vs $85.2M*) and EPS ($0.03 vs $0.09*), with Adjusted EBITDA below consensus ($16.5M vs $18.7M*). The shortfall was driven by lower realized D3 RIN pricing, expiration of ISCC power credits, and non-recurring G&A, partially offset by strong FSS execution (*Values retrieved from S&P Global).
  • FY 2025 consensus implies revenue ~$346.2M* and EBITDA ~$81.7M*, broadly aligned with the company’s maintained guidance range given policy tailwinds (45Z) and project ramp; near-term estimate revisions may reflect lower realized RIN pricing and the timing of Atlantic contributions (*Values retrieved from S&P Global).

Key Takeaways for Investors

  • Near-term: Q2 miss versus consensus on revenue/EPS/Adj. EBITDA amid lower RIN pricing and non-recurring costs; stock likely reacts to confirmation of Atlantic commissioning, H2 FSS ramp, and any EPA RFS clarity .
  • Policy: 45Z extension to 2029 and EPA truck regulation rollback are meaningful structural supports for EBITDA and FSS growth; timing of Treasury guidance is a key catalyst .
  • Operations: Production growth (+33% y/y) and station build-out (45+ under construction) underpin H2 trajectory; guidance held, with drivers detailed by CFO .
  • Mix/Resilience: Increasing downstream contribution provides more predictable cash flow with lower correlation to environmental credits; strategic focus on owning infrastructure .
  • Capital & Liquidity: $203.2M liquidity at Q2, ~$50M 2025 ITC monetization expected; management reiterates discipline and optionality for M&A or returning capital .
  • Watch RINs: Realized D3 price at $2.50 in Q2; consensus and guidance assume $2.60—estimate sensitivity remains high to RIN volatility .
  • Upcoming catalysts: Atlantic commercial operations, Investor Day (discretionary FCF details), EPA set rule outcomes, and FSS station completions driving H2 results .