OPAL Fuels Inc.

Good morning and welcome to Opal Fuel's second quarter 2023 earnings call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 1-1 again. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Todd. Firestone, Vice President of Investor Relations, to begin. Please go ahead.

Thank you, and good morning, everyone. Welcome to the Opal Fuel second quarter 2023 earnings conference call. With me today are co-CEOs Adam Kimora and Jonathan Moore, and Anne Anthony, Opal's Chief Financial Officer. Opal Fuel's released financial and operating results for the second quarter 2023 yesterday afternoon, and those results are available on the investor relations section of our website at opalfuels.com. The presentation access to the webcast for this call are also available on our website. After completion of today's call, a replay will be available for 90 days. Before we begin, I'd like to remind you that our remarks, including answers to your questions, contain forward-looking statements. They involve risks, uncertainties, and assumptions. Forward-looking statements are not a guarantee of performance, and actual results could differ materially from what is contained in such statements. Several factors that could cause or contribute to such differences are described in our investor presentation, which is posted to our investor relations section of our website. These forward-looking statements reflect our views as of the date of this call. Opal Fuels does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this call. Additionally, this call will contain discussion of certain non-GAAP measures, including but not limited to adjusted net loss, adjusted net loss per basic share, adjusted net loss per diluted share, and adjusted EBITDA. A definition of non-GAAP measures used and a reconciliation of these measures to the nearest GAAP measure is included in the appendix of the release and presentation. Adam will begin today's call by providing an overview of the court's results, recent highlights, and updates on our strategic and operational priorities. John will give a commercial business development update, after which Adam will review financial results. We'll then open the call for questions. And now I'll turn the call over to Adam Camaro, co-CEO of Opal Fuels.

Thank you, Todd. Good morning, everyone, and thank you for being here for Opal Fuels' second quarter 2023 earnings call. I'd like to highlight several points from this quarter's results. First, operational performance at our in-service RNG facilities continued to meet our expectations in the second quarter, which we expect to continue for the balance of the year. We also saw an improvement in our fuel station service segment, which we also expect to continue. John and Ann will go into further detail on the quarterly results and some of the puts and takes we see playing out in our full year results. One key development in the quarter which we were very pleased with was the final set rule published by the EPA in June. This final rule strongly supported cellulosic biofuels and the use of renewable natural gas as a transportation fuel. For Opal Fuels, this gives us confidence in strong and less volatile D3 RIN pricing for at least the next three years and further validates our vertically integrated business model, which is best positioned economically and strategically to deliver our growing RNG production base into the highest value and growing end market. Specifically, the final rule resulted in higher compliance targets of D3 RIN volume that must be purchased by obligated parties and extended these targets through 2025. These higher three-year targets, which provide multi-year visibility of D3 RIN demand, not only give the industry a strong investment signal, but also provide the potential to sell production forward for multiple years. Post the final set rule, D3 RIN prices have risen from under $2 per RIN early in the year to recently trading just above $3. With the improvement in RIN prices, we sold some credits from our existing inventory, which we had previously elected to hold leading up to the EPA's ruling in June. In the second quarter, we sold approximately 5.7 million RINs at an average price of roughly $2.80. We continue to sell RIN credits from our unsold inventory in the third quarter at prices in excess of $3. A more detailed table was posted in our earnings press release last night and is also disclosed in our investor presentation available on our website this morning. The value of OPL's unsold environmental credits and environmental attributes awaiting certification this quarter increased by more than $16 million to $34 million. Note we include this increase in value in adjusted EBITDA, similar to prior quarters, in order to match the associated expenses in our GAAP financials recorded in the quarter the RNG is produced. However, we don't book revenues for GAAP purposes until the environmental credits are actually sold. While eRINs fail to make it into the EPA's final set rule, they are still being considered, and we believe there's a reasonable chance they will be implemented, perhaps with some modifications to the original proposal. We're highly supportive of the eRIN pathway. It is the right environmental public policy to incentivize more methane capture projects which may be too small to justify a full RNG plant and therefore remain undeveloped. For Opal Fuels, it enables us to leverage our existing renewable power portfolio and increase the value of those assets with little incremental capital and opens up numerous smaller renewable electricity development opportunities, which would further accelerate our growth. We're also excited to announce that we've moved our Polk County, Florida RNG project into construction. This project represents a successful and fast transition through our business development funnel into construction. Polk represents 1.1 million MMBTU of additional nameplate capacity of which we own 100%. Second quarter results saw improvement in adjusted EBITDA margins in our fuel station service segment to what we think is trending to more normalized operating environment. This improvement was driven by not only higher RIN prices but moving forward on completing construction projects and cycling through inflationary cost pressures on some of our fixed-price third-party station construction contracts. We expect this to continue in the second half of the year. We think it's a great time to be Opal Fuels. We have built and continue to add to what we believe is the best team and best business model in the industry to capitalize on strong and growing tailwinds from both public policy and corporate initiatives to decarbonize. The end result should be a powerful platform of nice return on capital projects, which, when operational, require minimal capital expenditures, resulting in sustainable, long-term, free cash flow. With that, I'll turn it over to John.