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OPAL Fuels Inc. (OPAL)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue fell 8% YoY to $80.0M while the quarter posted a net loss of $5.4M; Adjusted EBITDA was $22.6M as lower environmental credit timing/pricing and renewable power softness offset strong Fuel Station Services; 2024 Adjusted EBITDA finished $90.0M, in line with guidance .
  • 2025 guidance introduced: Adjusted EBITDA $90–$110M on RNG production of 5.0–5.4M MMBtu assuming $2.60/D3 RIN; guidance excludes ~$50M of ITC sale proceeds that will benefit GAAP earnings and operating cash flow, not Adjusted EBITDA .
  • Operational scaling continued: 2024 RNG produced up 41% YoY to 3.8M MMBtu; three large landfill RNG projects (Prince William, Sapphire, Polk) entered service; 11 RNG projects operating with 8.8M MMBtu annual design capacity at year-end .
  • Key 2025 narrative drivers: ramp-up of new RNG plants, Fuel Station Services EBITDA growth of 30–50%, and regulatory outcomes (RFS/45Z). Every $0.10 move in D3 RIN price shifts 2025 Adjusted EBITDA by ~$5–6M; renewable power EBITDA expected to decline by ~$10M in 2025 due to Europe not certifying U.S. biogas .

What Went Well and What Went Wrong

What Went Well

  • Brought three major landfill RNG projects online in 2024 (Prince William, Sapphire, Polk), expanding operating RNG project count to 11 and aggregate annual design capacity to 8.8M MMBtu; RNG production rose 41% YoY to 3.8M MMBtu .
  • Fuel Station Services delivered strong growth: segment Adjusted EBITDA reached $40.3M for 2024 (up ~76% YoY), with management guiding a further 30–50% increase in 2025 on improved margins and station buildout .
  • Liquidity position remains solid at $223.6M with a 12-month extension of the draw period; expected ~$50M of 2025 ITC sales bolster earnings and operating cash flow (but excluded from Adjusted EBITDA) .

What Went Wrong

  • RNG production slightly missed prior 2024 guidance (3.8M vs 4.0–4.4M MMBtu) due to slower ramp-up at newly commissioned facilities; Q4 revenue declined 8% YoY to $80.0M and the quarter posted a net loss of $5.4M .
  • Renewable power headwinds: management expects ~$(10)M) Adjusted EBITDA impact in 2025 as Europe stopped certifying U.S. biogas for its regulatory programs .
  • Ongoing cost drag from temporary “virtual pipeline” transport at Prince William until the permanent interconnection is completed (anticipated mid-2025) .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($MM)$87.0 $71.0 $84.0 $80.0
Net Income ($MM)$20.1 $1.9 $17.1 $(5.4)
Basic EPS ($)$0.11 $(0.01) $0.09 $(0.05)
Adjusted EBITDA ($MM)$32.0 $18.9 $31.1 $22.6
Adjusted EBITDA Margin (%)36.8% (calc) 26.6% (calc) 37.0% (calc) 28.2% (calc)

Note: Adjusted EBITDA margin is calculated from reported Adjusted EBITDA divided by reported revenue in each period.

Segment revenue ($MM)

Segment RevenueQ4 2023Q2 2024Q3 2024Q4 2024
RNG Fuel$28.8 $19.4 $25.9 $25.4
Fuel Station Services$46.9 $39.3 $45.4 $45.1
Renewable Power$11.3 $12.2 $12.8 $9.6
Total$87.0 $71.0 $84.0 $80.0

Segment Adjusted EBITDA ($MM)

Segment Adj. EBITDAQ4 2023Q2 2024Q3 2024Q4 2024
RNG Fuel$23.3 $15.7 $22.7 $18.0
Fuel Station Services$12.0 $8.6 $12.0 $12.7
Renewable Power$3.9 $6.4 $7.0 $4.2
Corporate$(7.2) $(11.9) $(10.5) $(12.3)
Consolidated$32.0 $18.9 $31.1 $22.6

KPIs and operating metrics

KPIQ2 2024Q3 2024Q4 2024
RNG Produced (Million MMBtus)0.9 1.0 1.1
RNG Dispensed (Million GGEs)18.7 19.6 19.3
Total Volumes Sold/Dispensed/Serviced (Million GGEs)36.6 38.7 41.9
RNG Pending Monetization ($MM)$20.7 $23.1 $20.3
Inlet Design Capacity Utilization (%)74% 72% 67%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY2025—$90–$110M (assumes $2.60/D3 RIN) New
RNG ProductionFY2025—5.0–5.4M MMBtu New
Fuel Station Services Adjusted EBITDA GrowthFY2025—+30% to +50% vs 2024 New
RNG Design Capacity to Put in ConstructionFY2025—~2.0M MMBtu New
ITC Proceeds (cash/GAAP, not in Adj. EBITDA)FY2025—~+$50M excluded from Adj. EBITDA New (disclosure)
Adjusted EBITDAFY2024$90–$100M (Q2) Maintained in Q3 Maintained (Q3)
RNG ProductionFY20244.4–4.8M → cut to 4.0–4.4M (Q2) Maintained in Q3 Lowered (Q2), then maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2, Q2 2024)Previous Mentions (Q-1, Q3 2024)Current Period (Q4 2024)Trend
RNG production rampLowered 2024 prod. guide to 4.0–4.4M on slower ramp Production up 43% YoY; ramp underway 3.8M FY production; ramp slower at Polk/Sapphire; expecting sequential upticks in 2025 Improving through 2025
Fuel Station ServicesSolid growth; margin improvement; 2024 growth plan Continued growth; 38.7M GGEs in Q3 Tight dispensing market; margin improving; 15L engine adoption should help Strengthening; tailwinds from 15L engine
Regulatory (RFS/45Z)——45Z included modestly in guidance; awaiting final rule (post-Apr 10 comments); D3 RIN sensitivity ~$5–6M per $0.10 Key 2025 swing factor
Renewable Power——~$(10)M 2025 Adj. EBITDA headwind from EU certification change Headwind in 2025
Capex/cost inflation/tariffs——Limited tariff exposure; domestic content; inflation tamed; costs locked at construction start Managed/stable
M&A/Competitive landscape——Evaluating portfolios; access to capital; focus on organic pipeline; cited Enbridge/Morrow comp Opportunistic

Management Commentary

  • “2024 was a strong year… 2024 adjusted EBITDA of $90 million, in line with our guidance… RNG fuel production for 2024 was 3.8 million MMBtus, up 41%… [but] slightly behind guidance” .
  • “Adjusted EBITDA [2025] is expected to range from $90 million to $110 million… assumes a $2.60 per RIN… Every $0.10 shift in D3 RIN price equates to an approximate $5 million to $6 million impact” .
  • “We entered the year with a solid backlog… 47 [fuel] stations in construction, of which 20 are OPAL-owned” .
  • “As of December 31, 2024, our liquidity was $223.6 million… We expect approximately $50 million of cash proceeds from ITC sales [in 2025]… agreed to a 12-month extension of the draw period” .
  • On capital allocation: “We’ve built a free cash flow machine… we do have that flexibility… to turn off the growth engine and… create significant… free cash flow” .

Q&A Highlights

  • Production trajectory: 2025 guide viewed as conservative; ramp uncertainty from new plants (Polk, Sapphire) should ease with sequential upticks; design capacity has headroom as landfill gas grows .
  • Market/competition: Management evaluating industry portfolios; highlighted Enbridge’s $1.2B Morrow Renewables deal; primary focus remains organic growth; access to capital remains strong .
  • Policy credits: 45Z is included modestly in the guidance range; awaiting rule finalization; cautious optimism on methodology improvements post-Apr 10 comment period .
  • Dispensing tightness: Supply growth outpaced offtake amid 12L→15L engine changeover and regulatory noise; easing expected as EPA removes combustion restrictions and OEM availability improves .
  • Costs/tariffs: Projects qualify for domestic content; minimal aluminum use; some structural steel exposure; inflation notably tamer; costs fixed upon construction start .
  • Corporate opex: G&A expected higher in 2025 vs 2024 to support platform scale; specific 2025 CapEx dollar guide not provided (company guided via “design capacity to be put in construction”) .

Estimates Context

  • S&P Global consensus (revenue, EPS, EBITDA, target price) for Q4 2024 was not retrievable at time of query due to an S&P Global API limit. As a result, we cannot present vs-consensus comparisons here; we will update when data access is restored.

Key Takeaways for Investors

  • FY24 met EBITDA guidance at $90.0M but Q4 missed YoY on revenue and swung to a net loss; RNG production ramp timing was the key operational shortfall in 2024 .
  • 2025 setup hinges on plant ramp and policy: at $2.60/D3 RIN, EBITDA guide is $90–$110M, but RIN sensitivity is high (~$5–6M per $0.10) and 45Z finalization could add upside within the range .
  • Fuel Station Services remains a core growth and margin engine (30–50% 2025 EBITDA growth guide) and provides diversification, with 47 stations in construction entering the year .
  • Renewable power is a deliberate 2025 headwind (~$(10)M) due to EU certification changes; focus remains on RNG projects and downstream expansion .
  • Temporary transport costs at Prince William persist until mid-2025, keeping some pressure on RNG segment EBITDA near-term; permanent interconnect should relieve costs thereafter .
  • Liquidity ($223.6M) and expected ~$50M ITC sales (excluded from Adj. EBITDA) support growth investments and bolster GAAP earnings/operating cash; management emphasizes optionality to prioritize FCF if conditions warrant .
  • Regulatory clarity (RFS set, partial waiver, 45Z) and 15L engine adoption pace are near-term stock catalysts alongside execution on facility ramp and station backlog .

Appendix: Additional Data

RNG capacity/utilization snapshot (Q4 2024)

  • Design capacity (Million MMBtu): 2.1; Inlet design capacity utilization: 67%; RNG produced: 1.1; Utilization of inlet gas: 78% .

RNG Pending Monetization (Q4 2024)

  • Ending un-monetized environmental attributes: 352k MMBtu; value at quarter-end prices: $16.7M; Ending LCFS credits: 103; D3 price per RIN at quarter-end: $2.45 .