OPAL Fuels Inc.

Good morning and welcome to the Opal Fuels fourth 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, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. As a reminder, this event is being recorded. I would now like to turn the call over to Todd Firestone, Vice President of Investor Relations, to begin. Please go ahead.

Thank you, and good morning, everyone. Welcome to the Opal Fuels fourth quarter and full year 2023 earnings conference call. With me today are co-CEOs Adam Kimora and Jonathan Moore, and Scott Cantino, Opal's interim chief financial officer. Opal Fuels released financial and operating results for the fourth quarter and full year 2023 yesterday afternoon, and those results are available on the investor relations section of our website at opalfuels.com. Presentation and 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, which 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 on slides two and three of our presentation. These forward-looking statements reflect our views as of the date of this call, and Opal Fuels does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this call. Additionally, the call will contain discussion of certain non-GAAP measures, a definition of non-GAAP measures used, and then reconciliation of these measures to the nearest GAAP measures included in the appendix of the release and presentation. Adam will begin today's call by providing an overview of the course results and recent highlights and update on our strategic and operational priorities. John will then give a commercial and business development update, after which Scott will review financial results. We will then open the call for questions. And now I'll turn the call over to Adam Camora. Co-CEO of Opal Fuel.

Thank you, Todd. Good morning, everyone, and thank you for participating in Opal Fuel's fourth quarter and full year 2023 earnings call. Opal Fuel continues to execute on its business plan and is well-positioned to grow in our industry, which is experiencing strong market fundamentals and expanding tailwinds. I'd like to highlight several points from this quarter's results and recent developments. First, as expected, fourth quarter results benefited from stronger RIN prices, Adjusted EBITDA for the quarter was $32 million, an increase of 57% from 2022 and the strongest quarter in Opal's history, and $52 million for the full year 2023 meeting our most recent guidance. The positive results in the fourth quarter were driven by continued improvement in our fuel station service segment and the monetization of all environmental credits held for sale, including a portion from the third quarter. Second, Emerald, our 50-50 joint venture project with GFL and one of the largest RNG projects in North America, is showing production growth in line with expectations. We began generating and selling RINs from the project in December. Third, we continue to make good progress on our projects that are in construction, expecting to end the year with 8.8 million MMBTUs of RNG design capacity in operation. At the end of 2023, we began construction of a new 2.4 megawatt renewable electricity facility at the Fall River landfill that will utilize approximately 0.2 million annual MMBTU of biomethane equivalent. Fourth, we are encouraged by recent Treasury commentary on the ITC, which although not finalized, we believe that the ITC will include biogas conditioning and cleaning equipment as eligible for saleable tax credits in the final rule. It should be noted the support for this inclusion came not only from industry through comment letters, but also from a letter authored by IRA bill sponsor, Senator Brown, which was co-signed by numerous senators and members of the House, stating clearly the intent of including this property in the Section 48 ITC provision. We expect final rules to be published sometime after March 25th, which will hopefully clean up a couple of remaining technical structural issues. Although not included in our adjusted EBITDA guidance for 2024, we have outlined our current thinking of how successful resolution of these rules would impact cash flows and resulting net income, approximately $40 million in 2024. I'd also like to add that our downstream fuel station service segment is set to have strong adjusted EBITDA growth in 2024, and we are encouraged by the increasing interest from major fleets testing the new Cummins 15-liter natural gas engine, which should lead to continue this upward trajectory over the next several years. John and Scott will go into greater detail regarding our outlook for 2024, but needless to say, we're very excited about our opportunities. R&G production is expected to grow between 60 to 80 percent. Adjusted EBITDOT is forecasted to range from 90 to 100 million, up from 52 million in 2023. And we see continued growth in 2025 and beyond from annualizing the plants coming online this year, continued growth in fuel station services, and our significant opportunity set of new potential projects to put into construction. 2024 also has the potential to be a powerful year in education and advocacy, which can broaden bipartisan support for our industry. Capturing and converting biomethane emissions into low-carbon intensity usable energy products has numerous societal and strategic benefits for all Americans, including fighting climate change, improving air quality in socioeconomically challenged communities, supporting the agricultural sector, driving investment and providing economic value for countless municipalities that own landfills and wastewater treatment facilities, while also providing greater energy security for all Americans. With that, I'll turn it over to John. John?