Montauk Renewables, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call. I would like to turn the call over to Mr. John Cerulli as he provides some important cautions regarding forward-looking statements and non-GAAP financial measures contained in the earning materials or made on this call. John, please go ahead.

Thank you, and good afternoon, everyone. Welcome to Montauk Renewables Earnings Conference Call to review the first quarter 2024 financial and operating results and developments. I'm John Cirolli, Chief Legal Officer and Secretary at Montauk. Joining me today are Sean McClain, Montauk's President and Chief Executive Officer, to discuss business development, and Kevin Van Aslen, Chief Financial Officer, to discuss our first quarter 2024 financial and operating results. At this time, I would like to direct your attention to our forward-looking disclosure statement. During this call, certain comments we make constitute forward-looking statements, and as such, involve a number of assumptions, risks, and uncertainties that could cause the company's actual results or performance to differ materially from those expressed in or implied by such forward-looking statements. These risk factors and uncertainties are detailed in Montauk Renewables SEC filings. Our remarks today may also include non-GAAP financial measures. We present EBITDA and adjusted EBITDA metrics because we believe the measures assist investors in analyzing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, can be found in our slide presentation and in our first quarter 2024 earnings press release, informed 10Q issued and filed this afternoon, which are available on our website at ir.montaukrenovals.com. After our remarks, we will open the call to questions. We ask that you please keep to one question to accommodate as many questions as possible. And with that, I'll turn the call over to Sean.

Thank you, John. Good day, everyone, and thank you for joining our call. To begin with development, my comments will be focused on updates regarding our PECO dairy digestion capacity increase and our Turkey, North Carolina Montauk Ag Renewables Swine Waste Energy Project, both of which were also discussed during our 2023 year-end call a short two months ago. As we ended 2023, we had commissioned the first of our two new digesters in our new expanded reception pit in our PECO dairy cluster project. During the first quarter of 2024, we completed the commissioning of the second and final digester. With the digestion expansion project now fully commissioned, we expect to continue to ramp up in production through the second quarter of 2024. The PICO expansion project increased digestion capacity by approximately 60% to better match the unchanged processing capacity of the project's RNG facility. The new digestion capacity is expected to be fully utilized once the dairy provides our contractual third and final increase in feedstock volumes in 2025. In the first quarter of 2024, our RNG production at the PECO facility increased approximately 39% compared to the first quarter of 2023. I will now provide an update regarding our North Carolina swine to waste energy development, Montauk Ag Renewables. We have substantially completed the engineering and are preparing to initiate the commissioning activities of our first reactor processing line at our Turkey, North Carolina location. We expect commissioning to continue through the end of June 2024. Our development progress has positioned us to be able to enter into a full engineering, procurement, and construction contract related to the first phase full build-out to satisfy our Duke REC agreement. We have also placed orders for various significant components, many of which have long lead times, related to the construction of the additional reactors. we expect this new EPC contract to assist us in meeting our rolling commissioning schedule through late 2025. To support the first phase rolling commissioning schedule and ultimately our due record agreements, we continue to pursue feedstock agreements. During the first quarter of 2024, we have contracted with a farming group in our late stage discussions with multiple others. We continue to thoughtfully bring partners under agreement targeting approximately 120,000 hog spaces to ultimately satisfy our due correct agreements. A critical part of our development progress in North Carolina includes the continued optimization of our feedstock collection equipment and methodologies. Our collection process includes installing equipment on our feedstock supplier farms, which are under long-term agreements, as well as processes and equipment for processing waste through multiple phases of solids concentration on both the farm site as well as our centralized processing facility at Turkey, North Carolina. We continue to progress with an amendment to the new renewable energy facility, the NREF designation. Our project received late 2023. It can optimize the generation of RECs. We expect a decision on this amendment in 2024, which is a critical path item in the timing of the utility infrastructure design and other balance of plant componentry at our Turkey, North Carolina facility. As discussed in our 2023 year-end results call on March 2024, we reached an agreement with one of our landfill hosts to exit our gas rights in advance of their expiration, impacting one of our smaller renewable electric generation operating facilities. The strategic decision to exit this facility was influenced by mid-2024 expiration of an above-market power purchase agreement, the elimination of decommissioning, asset removal, or site restoration obligations, the agreed consideration of proceeds of $1 million being well in excess of the carrying value of the project, and the offer to extend our gas rights at two of our existing RNG operating facilities, Atascosita and Coastal Plains, for an additional five years each. Through the contractual effective date of this agreement, though it is October 1, 2024, in March 2024, we elected to cease operations at this facility as the electrical utility provider is performing upgrades which would require us to invest additional capital. This decision is expected to have a positive effect on 2024 results due to a projected monthly loss on operations following the expiration of the project's power purchase agreement. Finally, I'd like to highlight and outline what we view to be the strong underlying fundamentals of Montauk, particularly in light of the share price volatility experience during 2024. I will not, however, comment on the stock price or its trading volumes. Nearly all of Montauk's portfolio of 14 operating projects nationwide are hosted by large and growing host businesses. Our integrated relationship approach with these host businesses helps us strategically to continue to secure recurring renewals of our gas rights at these facilities. The company is winning new competitive project opportunities and is invited to participate in a diverse selection of new opportunities. We are focused on diversifying our comprehensive business model, including the feedstocks we process, the commodities we produce, the federal and state attributes we generate, the method by which we monetize our commodities and attributes, and the way in which we acquire our project feedstock requirements. We have a demonstrated history of successful project execution and remain intently focused on attractive growth opportunities. Specifically, we have announced a series of committed development projects that are expected to increase our production capacity by 6,900 MMBTUs a day, 2.5 million MMBTUs annually. and additional development projects that are expected to advance the benefit of our existing facilities through the monetization of biogenic carbon dioxide and further diversify our feedstock processing to include waste from industrialized swine agriculture. On an annual basis, we have been net income and operating cash flow positive since 2022. We maintain the financial discipline that provides us the opportunity to patiently enhance our profit from the sale of our rent attributes by placing them directly with large RFS obligated parties and synchronizing those transactions to the purchasing cadence of those large obligated parties. We ended the first quarter of 2024 with more than $60 million in cash on our balance sheet, an undrawn revolving credit facility with $117.5 million of availability, and a credit syndication to which we can approach the utilization of accordion finance options and which has separately project financed developments. We remain fully integrated, operate and maintain examples of multiple commercially viable biomethane processing technologies, and continue to build upon four decades of experience in optimizing the collection and beneficial use of processing of feedstocks through nationwide variability of host business practices, climate impacts, and feedstock constituents. Montauk's focus has been and continues to be on maximizing long-term shareholder value. We continue to believe our development strategy best supports that focus. Lastly, regarding the RFS, the EPA has set the RVO at 1,090 D3 RINs for 2024, implying a monthly D3 generation run rate higher than what the industry has achieved to date through 2024. We also note that the EPA has announced that it will not use waiver authority for the 2024 RVO. We believe those factors can support strong 2024 price levels for RINs. And with that, I will turn the call over to Kevin.