Q4 2024 Montauk Renewables Inc Earnings Call
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Operator: Good day everyone and thank you for participating in today's conference call.
Speaker Change: Good day, everyone and thank you for participating in today's conference call.
John Ciroli: I would like to turn the call over to Mr. John Ciroli as he provides some important cautions regarding forward-looking statements and non-GAAP financial measures contained in the earnings materials or made on this call. John, please go ahead. Thank you and good day everyone.
Speaker Change: I'd like to turn the call over to Mr. Johnston Raleigh as he'd provide some important cautions regarding forward looking statements and non-GAAP financial measures contained in the earnings materials or made on this call. John. Please go ahead.
Speaker Change: Thank you and good day, everyone welcome to Montauk Renewables earnings Conference call to review the full year 2024 financial and operating results and developments I'm Johnson, Raleigh, Chief Legal officer and Secretary at Montauk.
John Ciroli: Welcome to Montauk Renewables earnings conference call to review the full year 2024 financial and operating results and development. I'm John Ciroli, Chief Legal Officer and Secretary at Montauk.
John Ciroli: We are changing the cadence of our SEC filings and earnings calls, beginning with our full year 2024 earnings, to better align our primary NASDAQ and secondary JSC markets.
Speaker Change: We are changing the cadence of our SEC filings and earnings calls beginning with our full year 'twenty 'twenty four earnings to better align our primary NASDAQ and secondary KFC markets. Joining me today are Shawn Mcclain montage, President and Chief Executive Officer, who will discuss market and business development and Kevin Vann our chief.
John Ciroli: Joining me today are Sean McClain, Montauk's president and chief executive officer to discuss market and business developments, and Kevin Van Aslan, chief financial officer, to discuss our full year 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 further detailed in Montauk Renewables SEC filing.
Kevin Vann: Financial officer to discuss our full year 2024 financial and operating results.
At this time I would like to direct your attention to our forward looking disclosure statement.
Kevin Vann: 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 further detailed.
Kevin Vann: In Montauk renewables SEC filings.
John Ciroli: Our remarks today might 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.
Kevin Vann: Our remarks today May also include non-GAAP financial measures, we present, EBITDA and adjusted EBITDA metrics, because we believe the majors 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.
Kevin Vann: non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.
John Ciroli: 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 in our full year 2024 earnings press release issued and followed March 13, 2025, which is also available on our website at https://www.https.gov. irmontaukrenewables.com.
Kevin Vann: All 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 our full year 2024 earnings press release issued and filed March 13, 2025, which is also available on our website at.
Kevin Vann: H T T E S.
John Ciroli: After our remarks, we will open the call to questions. We ask that you please keep one question to accommodate as many questions as possible.
Kevin Vann: Our Montauk renewables Dot com that's.
Sean: After our remarks, we'll open the call up to questions. We ask that you. Please keep to one question to accommodate as many questions as possible with that I will turn the call over to Sean.
Sean McClain: With that, I will turn the call over to Sean. Thank you, John. Good day, everyone. And thank you for joining our call.
Thank you John and good day, everyone and thank you for joining our call.
Sean McClain: On March 7, 2025, the EPA announced its delay of the 2024 RIN compliance deadline for all categories.
Sean: On March seven 2025, the EPA announced its the way of the 2020 for RIN compliance deadline for all categories.
Sean McClain: The EPA has yet to decide on a proposed partial waiver of the 2024 cellulosic biofuel volume requirements or the timing of its decision on this matter since its origination in their December 5, 2024 EPA announcement. Montauk has sold 100% of its 2024 D3 RINs and it has zero exposure to the timing and resolution of this issue. We entered 2024 with approximately 6.8 million 2024 vintage RINs unsold. During the fourth quarter of 2024, the D3 rent market exhibited measurable price volatility with indices ranging from a high of $3.50 to a low of $2.08 and significantly muted purchasing activity by obligated parties.
Sean: The EPA has yet to decide on a proposed partial waiver of the 'twenty 'twenty four cellulosic biofuel volume requirements or the timing of its decision on this matter since its origination and their December 5th 2024 EPA announcement.
Speaker Change: Most of our cat sold 100% of its 2000 2043 rigs.
Speaker Change: And it has zero exposure to the timing and resolution of this issue.
Speaker Change: We entered 2024 with approximately $6 8 million 2024 vintage rent unsold.
Speaker Change: During the fourth quarter of 2024, the <unk> RIN market exhibited measurable price volatility with indices ranging from a high of $3 50 to a low of $2.08 and significantly muted purchasing activity by obligated parties.
Sean McClain: So these market conditions contributed to our decision to hold a higher balance of D3 RINs at the end of the year. All 2024 vintage D3 RINs have been subsequently sold as obligated parties reentered the market during the first quarter of 2025.
Speaker Change: So these market conditions contributed to our decision to hold a higher balance of D. Three runs at the end of the year, all 2024 basis D. Three rates had been subsequently sold as obligated parties reentered the market during the first quarter of 40 to 45.
Sean McClain: The volatility continues to impact the renewable natural gas industry in a variety of ways.
Speaker Change: Okay.
Speaker Change: The volatility continues to impact the renewable natural gas industry in a variety of ways more talk strategy remains steady the seat.
Sean McClain: Montauk's strategy remains steady to seek out and invest in projects with quality host businesses that exhibit feedstock growth potential, to diversify our sources of feedstock, our product offerings, and our monetization structures, and to ensure the long-term economic viability of our projects in a wide range of production and pricing scenarios. In 2018, Montauk took its first significant stride towards feedstock diversification through our PECO acquisition. We continue to leverage that diversification through our PECO digestion capacity increase and feedstock amendment with a high quality, high volume dairy agriculture host. Our feedstock diversification strategy is poised to further expand in 2026 with the commissioning of our swine waste energy project in Turkey, North Carolina.
Speaker Change: [noise] out and invest in projects with quality host businesses that exhibit feedstock growth potential to diversify our sources of feedstock our product offerings and our monetization structures and to ensure the long term economic viability of our projects in a wide range of production and pricing scenarios.
Speaker Change: In 2018 marked its first significant strides towards feedstock diversification through our <unk> acquisition.
Speaker Change: We continue to leverage that diversification through our Pico digestion capacity increase in feedstock amendment with a high quality high volume dairy Agriculture OS.
Speaker Change: Our feedstock diversification strategy is poised to further expand in 2046 with the commissioning of our swine waste to energy project in Turkey, and North Carolina.
Sean McClain: Our North Carolina Development Initiative not only demonstrates our commitment to feedstock diversification, but also our commitment to product diversification. The majority of our production revenue from this project will be derived from renewable power generation, which, when combined with state-based renewable electricity credits, will meaningfully increase our existing REG business. In addition to a rebalancing of power generation in our portfolio, our North Carolina development project increases our revenue from commodity-based products whose market value is not directly influenced by traditional federal or state attribute programs. The biochar commodity produced by our patented reactor process will help insulate the company from volatility experienced in markets underpinned by federal and state programs, such as renewable fuel standard in California's low carbon.
Speaker Change: Our North Carolina development initiatives, not only demonstrates our commitment to feedstock diversification, but also our commitments to product diversification.
Speaker Change: The majority of our production revenue from this project will be derived from renewable power generation, which when combined with state based renewable electricity credits will meaningfully increase our existing our EG business segment.
Speaker Change: In addition to a rebalancing of power generation in our portfolio, our North Carolina development project increases our revenue from commodity based products, whose market value is not directly influenced by traditional federal or state atrophy programs.
Speaker Change: The bio char commodity produced by our patented reactor process will help insulate the company from volatility experienced in markets underpinned by federal and state programs, such as the renewable fuel standard and California's low carbon fuel standard.
Sean McClain: Montauk's commitment to diversification through its product offerings is further illustrated in its previously announced agreement with European Energy North America for sales of biogenic carbon dioxide. This initiative is being prioritized across our portfolio as the company seeks to extract increased value from its existing projects along the rising demand for and the market price of industrial and food grade CO2. We believe our historical discipline of seeking out and investing in projects with quality host businesses combined with these diversification initiatives will position Montauk to successfully navigate the continually changing landscape of the renewable natural gas industry.
Speaker Change: <unk> commitment to diversification through its product offerings. It is further illustrated in its previously announced agreement with European Energy North America for sales of biogenic carbon dioxide. This.
Speaker Change: This initiative is being prioritized across our portfolio as the company seats to extract increased value from existing projects, along the rising demand for and the market price of industrial and food grade C O two.
Speaker Change: We believe our historical discipline of seeking out and investing in projects with quality host businesses combined with these diversification initiatives will position Mark talked to successfully navigate the continually changing landscape of the renewable natural gas industry.
Sean McClain: With its commissioning in 2024, this will be one of our last updates regarding our PECO digestion capacity. In 2025, we will receive the third and final increase in feedstock under the amendment to our feedstock agreement, and we expect to make that final payment related to this amendment during 2025. We are pleased to report that the production from our PECO facility during 2024 delivered an increase of over 70% versus 2023.
With its commissioning in 2024 this would be one of our last updates regarding our Pico adjusting capacity increase in 2025, we will receive the third and final increase in feedstock under the amendment to our feedstock agreement and we expect to make that final payment related to this amendment during 2025.
Speaker Change: We are pleased to report that the production from our Peco facility. During 2024 delivered an increase of over 70% versus 2023.
Sean McClain: We anticipate commissioning our second facility at our APEC site during the second quarter of 2020.
We anticipate commissioning of our second facility at our apex site during the second quarter of 2025 as previously discussed throughout 2024, we continue to expect to periods, where we have excess production capacity, while the landfill host increases available feedstock.
Sean McClain: As previously discussed, throughout 2024, we continue to expect a period where we have excess production capacity while the landfill host increases available feedstock.
Sean McClain: With our previously announced Blue Granite project, during February 2025, we received notice from the interconnection utility of their intention to not accept R&G into their distribution system from any project. As a result, we have indefinitely delayed COD and corresponding capital spend as we both work with the host landfill and prospective stakeholders to evaluate alternative R&G interconnection strategies, both physical and virtual, as well as alternative commodity production opportunities from traditional R&G production.
Speaker Change: With our previously announced Blue granted projects. During February 2025, we received notice from the interconnection utility of their intention to not accept RG. It to their distribution system from any project as a result, we have indefinitely delayed CRD and corresponding capital.
Speaker Change: As we both work with the host landfill and prospective stakeholders to evaluate alternatives R&D interconnection strategies, both physical and virtual as well as alternative commodity production opportunities from traditional R&D production.
Sean McClain: We are pleased to announce our initiative to convert our Tulsa, Oklahoma, Renewable Electric Generation Facility project through the design and construction of a renewable natural gas facility. With a variable inlet capacity design and a corresponding average nameplate capacity of approximately 1,500 MMETUs a day, this new facility will be designed to beneficially process all of the available and growing inlet gas feedstock from its host landfill. We expect that project capital investment to range between $25 and $35 million and a targeted commissioning date in the first quarter of 2027.
Speaker Change: We are pleased to announce our initiative to convert our Tulsa, Oklahoma renewable electric generation facility projects through the design and construction of a renewable natural gas facility with a variable inlet capacity design and a corresponding average nameplate capacity of approximately 500 <unk> user day this new facility.
Speaker Change: <unk> will be designed to beneficially process all of the available in growing inlet gas feedstock from it. So it's landfill, we expect that project capital investment to range between 25% to $35 million and a targeted commissioning date in the first quarter of 2020.
Sean McClain: We have prioritized the first of our biogenic CO2 projects related to our previously announced agreement with European Energy, and expect to commission a facility at our Atascasita project during the second quarter of 2027. We expect to begin monetization of approximately 60,000 metric tons per year of food-grade CO2 in advance of the commencement of our off-take agreements at commodity prices. We continue to progress with our design and equipment selection and construction plans at our other Houston facilities to meet our requirements with European Energy North America to supply their biogenic CO2. Additionally, we are progressing with our design and construction plans to incorporate food-grade CO2 processing into our Rumpke R&G project with an expected commissioning of Q3 2027 and expected volumes of approximately 50,000 metric tons per year of food-grade CO2.
Speaker Change: We have prioritized the first of our biogenic Z O two projects related to our previously announced agreement with European Energy and expect to Commission a facility at our task of Cedar project during the second quarter of 2027.
Speaker Change: We expect to begin monetization of approximately 60000 metric tons per year, a food grade <unk>.
Speaker Change: Fans of the commencement of our offtake agreements at commodity prices.
Speaker Change: We continue to progress with our design and equipment selection and construction plans at our other Houston facilities to meet our requirements with European Energy North America to supply their biogenic Sidoti.
Speaker Change: Additionally, we are progressing with our design and construction plans to incorporate food grade C. O two processing into our Rocky R&D project with an expected commissioning of Q3 2027 and expected volumes of approximately 50000 metric tons per year of food grade Sidoti.
Sean McClain: In December 2024, the state of North Carolina approved a change in laws governing the generation of recs from swine waste under its renewable energy portfolio. For qualifying projects meeting specific eligibility criteria, swine wreck generation is enhanced by awarding an additional two enhanced swine credit wrecks for each swine wreck generated, a ratio of three to one for a period of eight years, followed by a ratio of two to one for a subsequent six year period. The company is in various stages of negotiations with other obligated parties to expand rec sales beyond our previously announced agreement with Duke Energy.
Speaker Change: In December 2020 for the state of North Carolina approved a change in laws governing the generation of Rex from swine waste under its renewable energy portfolio standards.
Speaker Change: For qualifying projects meeting specific eligibility criteria swine rack generation is enhanced by awarding additional two enhanced swine credits Rex for each swine Rick generated a ratio of three to one for a period of eight years, followed by a ratio of two to one for subsequent six year period.
Speaker Change: The company is in various stages of negotiations with other obligated parties to expand rec sales beyond our previously announced agreement with Duke energy.
Sean McClain: We now have over 40 separate farming locations secured under long-term agreements to provide access to waste from no less than 200,000 hog spaces in support of our expected processing needs for the first phase of our Turkey, North Carolina facility commissioning in early 2026.
Speaker Change: We now have over 40 separate farming locations secured under long term agreements to provide access to waste from no less than 200000 hogs spaces in support of our expected processing needs for the first phase of our Turkey, North Carolina facility commissioning in early 2026.
Kevin Van Asdalan: And with that, I will turn the call over to Kevin. Thank you, Sean. I will be discussing our full year 2024 financial and operating results. Please refer to our earnings press release and the supplemental slides that have been posted to our website for additional information. Our profitability is highly dependent on the market price of environmental attributes, including the market price of rent. As we self-market a significant portion of our RINs, a decision not to commit to transfer available RINs during a period will impact our revenue and operating profits.
Kevin Vann: With that I will turn the call over to Kevin.
Kevin Vann: Thank you, Sean I will be discussing our full year 2024 financial and operating results. Please refer to our earnings press release and the supplemental slides that have been posted to our website for additional information.
Kevin Vann: Our profitability is highly dependent on the market price of environmental attributes, including the market price of Rins as.
Kevin Vann: As we self market a significant portion of Rins decision not to commit the transfer of medical rents during a period will impact our revenue and operating profit.
Kevin Van Asdalan: December 31st, 2024. We had 6.8 million RINs available but unsold. We have since entered into commitments to transfer all of these rents. Additionally, we have entered into commitments to transfer all RINs from 2024 R&G production, which generated RINs in 2025. In total, in 2025, we have transferred approximately 9.9 million RINs from the 2024 compliance year at an average realized price of approximately $2.45. We have no additional 2024 compliance year RINs remaining to be transferred.
Kevin Vann: At December 31, 2024, we had $6 8 million rins available, but unsold.
Kevin Vann: <unk> entered into commitments to transfer all of these rents.
Kevin Vann: Additionally, we have entered into commitments to transfer all ran from 2024, R&D production, which generated rent in 2025.
In total in 2025, we have transferred approximately $9 9 million Rins for the 2020 for compliance year at an average realized price of approximately $2 45.
Kevin Vann: We have no additional 2020 for compliance year rens remaining to be transferred.
Kevin Van Asdalan: We have not entered into commitments to transfer a significant portion of RINs from 2025 R&D production.
Kevin Vann: We have not entered into commitments to transfer a significant portion of brands from 2025 R&D production.
Kevin Van Asdalan: Total revenues in 2024 were $175.7 million, flat compared to $174.9 million in 2023. There was a decrease in the number of RINs we self-marketed during 2024 due to a decision to not commit $6,822,000 in the fourth quarter of 2024. The 2024 average realized RIN price of $3.28 increased approximately 21% compared to $2.71 in 2023. The natural gas price decreased approximately 17.2% during 2024, moving from $2.74 in 2023 to $2.27 in 2024.
Kevin Vann: Total revenues in 2024 were $175 7 million flat compared to $174 9 million in 2023.
Kevin Vann: The decrease in a number of brands, we self marketed during 2024 due to a decision to not commit.
Kevin Vann: $6 million 822000 rooms in the fourth quarter of 2020 for the.
The 2024 average realized price of $3 average realized RIN price of $3 28 increased approximately 21% compared to $2 71 in 2023.
Kevin Vann: The natural gas price decreased approximately 17, 2% during 2020 for moving from $2 74 in 2023 to $2 27 and 2024.
Kevin Van Asdalan: Total general and administrative expenses were $36.3 million for 2024, an increase of $1.9 million or 5.5% compared to $34.4 million in 2023. Employee-related costs, including stock-based compensation, were $23.1 million in 2024, an increase of $3.4 million, or 17.1%, compared to $19.7 million in 2023. The increase was primarily related to the accelerated vesting of certain restricted share awards as a result of the termination of an employee.
Kevin Vann: Total general and administrative expenses were $36 3 million for 2024, an increase of $1 9 million or five 5% compared to $34 4 million in 2023.
Kevin Vann: Hawaii related cost, including stock based compensation were $23 1 million in 2024, an increase of $3 4 million or 17, 1% compared to $19 7 million in 2023.
Kevin Vann: The increase was primarily related to the accelerated vesting of certain restricted share awards as a result of the termination of an employee.
Kevin Van Asdalan: Our professional fees decreased approximately $1.6 million, or 35.3% in 2024 compared to 2023.
Kevin Vann: Our professional fees decreased approximately $1 6 million or 35, 3% in 2024 compared to 2023.
Kevin Van Asdalan: Turning to our segment operating metrics, I'll begin by reviewing our Renewable Natural Gas segment. We produced approximately 5.6 million MMBTU of RNG during 2024, an increase of 0.1 million as compared to 5.5 million in 2020. Wellfield Optimization Operational Enhancements, as well as Plant Processing Equipment Improvements contributed to the increase. notably at our postal facility which produced 111,000 MMBTU more in 2024 compared to 2023. Our PICO facility produced 76,000 mmBtu more in 2024 compared to 2023 as a result of commissioning our dairy digestion expansion project. Our Galveston facility produced 59,000 MMBTU more in 2024 compared to 2023 as a result of previously disclosed 2023 dry weather conditions impacting gas feedstock availability.
Turning to our segment operating metrics I'll begin by reviewing our renewable natural gas segment.
Kevin Vann: We produced approximately $5 6 million and then Btu of R&D. During 2024, an increase of <unk> 1 million as compared to $5 5 million in 2023.
Kevin Vann: Well field optimization operational enhancements as well as plant processing equipment improvements contributed to the increase notably at our coastal facility, which produced 111000 btu more in 2024 compared to 2023.
Kevin Vann: Our CECO facility produced 76000 nanometre, you're more in 2024 compared to 2023 as a result of commissioning our dairy digestion expansion project our.
Kevin Vann: Our Galveston facility produced 59000, and then Btu more in 2024 compared to 2023 as a result of previously disclosed 2023 dry weather conditions impacting gas feedstock availability.
Kevin Van Asdalan: Offsetting these improvements were unrelated well-field quality issues and weather anomalies, which lowered production at our Rumpke facility, producing 159,000 fewer MMBTU in 2024 compared to 2023. Revenues from the Renewable Natural Gas segment in 2024 were $158 million, an increase of $1.5 million or 1% compared to $156.5 million in 2023. Average commodity pricing for natural gas for 2024 was 17.2% lower than the prior year. During 2024, we self-marketed approximately 36.6 million RINs, representing an 8.3 million decrease, or 18.5%, compared to 44.9 million in 2023. Decrease was primarily related to market conditions and a decision to not market 6.8 million RINs generated and available for sale in the fourth quarter of 2020.
Kevin Vann: Offsetting these improvements were unrelated welfare quality issues and weather anomalies, which lowered production at our <unk> facility, producing 159000 fewer <unk> in 2024 compared to 2023.
Kevin Vann: Revenues from the renewable natural gas segment in 2020 for $158 million, an increase of $1 $5 million or 1% compared to a $156 5 million in 2023.
Average commodity pricing for natural gas for 2024 was 17, 2% lower than the prior year. During 2024, we self marketed approximately $36 6 million rins, representing an $8 $3 million decrease or 18, 5% compared to $44 9 million in 2023.
Kevin Vann: The decrease was primarily related to market conditions, and a decision to not market $6 8 million rins generated and available for sale in the fourth quarter of 2024 <unk>.
Kevin Van Asdalan: Average pricing realized on RIN sales during 2024 was $3.28, as compared to $2.71 in 2023, an increase of 21%. This compares to the average D3 RIN index price for 2024 of $3.12, being approximately 18.6% higher than the average D3 RIN index price in 2023 of $2.63. December 31, 2024, we had approximately 291,000 MMBTUs available for RIN generation and had approximately 6.8 million RINs generated and unsold. We had approximately 358,000 MMBTUs available for RIN generation and approximately 108,000 RINs generated and unsold at December 31, 2023. We have entered into commitments and transferred all of our RINs and inventory related to our 2024 R&G production.
Kevin Vann: Average pricing realized when Rins sales during 2024 was $3 28 as.
Kevin Vann: As compared to $2 71 in 2023, an increase of 21% this.
Kevin Vann: This compares to the average <unk> III Brent index price for 2024 of $3 12, being approximately 18, 6% higher than the average <unk> index price in 2023 or $2 63.
Kevin Vann: At December 31, 2024, we had approximately 291000 and then b to use available foreign generation and had approximately $6 8 million Rins generated an unsold we had approximately 358000 <unk> available for RIN generation and approximately 108000 rins generated an unsold.
Kevin Vann: At December 31, 2023, we.
Kevin Vann: We have entered into commitments and transferred all of our wins in inventory related to our 2024 R&D production.
Kevin Van Asdalan: Operating and maintenance expenses for R&D facilities in 2024 were $53.4 million, an increase of $5.5 million or 11.5% compared to $47.9 million in 2023. Our Rumpke facility operating and maintenance expenses increased approximately $1.8 million as a result of increased media change out and gas processing equipment maintenance costs. Our McCarty facility operating and maintenance expenses increased approximately $1.2 million as a result of a well-filled operational enhancement program and increased gas compression system maintenance costs. Our PECO facility operating and maintenance expenses increased approximately $0.9 million as a result of non-capitalizable costs associated with the Digestion Capacity Increase Project as well as expenses associated with efficiency improvements with the existing digesting capacity.
Kevin Vann: Operating and maintenance expenses for our R&D facilities in 2024 were $53 4 million, an increase of $5 5 million or 11, 5% compared to $47 9 million in 2023.
Kevin Vann: Our <unk> facility operating and maintenance expenses increased approximately $1 8 million as a result of increased media change out in gas processing equipment maintenance costs.
Kevin Vann: Our mccarty facility operating and maintenance expenses increased approximately $1 2 million as a result of a wealth good operational enhancement program and increased gas compression system maintenance costs.
Kevin Vann: Our Pico facility operating and maintenance expenses increased approximately <unk> 9 million as a result of non capitalized non capitalized costs associated with the digestion capacity increase project as well as expenses associated with efficiency improvements with the existing digesting capacity.
Kevin Van Asdalan: Our TASCASEDA facility operating and maintenance expenses increased approximately $0.6 million, primarily driven by increased utility expenses. Our APEX facility operating and maintenance expenses increased approximately $0.3 million, primarily related to increased gas processing equipment maintenance costs.
Kevin Vann: Our task is see the facility operating and maintenance expenses increased approximately <unk> 6 million, primarily driven by increased utility expense.
Kevin Vann: Our apex facility operating and maintenance expenses increased approximately <unk> 3 million, primarily related to increased gas processing equipment maintenance costs.
Kevin Van Asdalan: We produced 186,000 megawatt hours in related in renewable electricity in 2024, a decrease of approximately 8,000 megawatt hours or 4.1% compared to 194,000 megawatt hours in 2023. Our security facility produced 9,000 megawatt hours less in 2024 compared to 2023 as a result of us ceasing operations in connection with the first quarter of 2024 sale of the gas rights back to the land. Revenues from renewable electricity facilities in 2024 were $17.8 million, a decrease of $0.6 million or 3.8% compared to $18.4 million in 2023. The decrease is primarily driven by the decrease in our security facility production.
Kevin Vann: We produced 186000 megawatt hours and related and renewable electricity in 2024, a decrease of approximately 8000 megawatt hours or four 1% compared to 194000 megawatt hours in 2023.
Kevin Vann: Our security facility produced 9000 megawatt hours less in 2024 compared to 2023.
Kevin Vann: As a result of ceasing operations in connection with the first quarter of 2020 forced sale of the gas rights back to the landfill host.
Kevin Vann: Revenues from renewable electricity facilities in 2020 for $17 8 million, a decrease of <unk> 6 million or three 8% compared to $18 4 million in 2023.
The decrease was primarily driven by the decrease in our security facility production volumes.
Kevin Van Asdalan: Operating and maintenance expenses for our renewable electricity facilities in 2024 were $12.8 million, an increase of $1.1 million, or 8.6%, compared to $11.7 million in 2023. The primary driver of the increase were operating and maintenance expenses related to the Montauk Ag Renewables Development Project, which increased approximately $1.1 million as a result of non-capitalizable costs. We calculated and recorded impairment losses of $1.6 million for 2024, an increase of $0.7 million, or 75.8% compared to $0.9 million for 2023. The impairment losses in 2024 are primarily related to the remaining net value of asset that the security. Various R&G equipment that was deemed obsolete for current operations, and REG assets that were impacted under initial start-up testing for one of our REG construction work-in-progress sites.
Operating and maintenance expenses for our renewable electricity facilities in 2024 were $12 8 million, an increase of $1 1 million or eight 6% compared to $11 7 million in 2023.
Kevin Vann: The primary driver of the increase were operating and maintenance expenses related to demand <unk> development project, which increased approximately $1 1 million as a result of non capitalized costs.
Kevin Vann: We calculated and recorded impairment losses of $1 6 million for 2024, an increase of <unk> 7 million or 75, 8% compared to <unk> 9 million for 2023 the.
The impairment losses in 2024, primarily related to the remaining net book value of assets at the security facility.
Kevin Vann: Various R&D equipment that was deemed obsolete for current operations and our.
Kevin Vann: Our EG assets that were impacted under initial startup testing for one of our RG construction work in progress sites.
Kevin Van Asdalan: The 2023 impairment losses relate to specifically identified R&G machinery and feedstock processing equipment that were no longer in operational use. None of the 2024 or 2023 impairments were associated with our expectations for our operations to generate future cash flows from operations. Other expenses in 2024 were $3.9 million, a decrease of $1.4 million, or 25.2%, compared to $5.3 million in 2023. The decrease was primarily related to proceeds of $1.0 million received from the sale of gas rates ahead of fuel supply agreement expiration at our security facility and decreased interest expense of $0.5 million. Operating profit in 2024 was $16.1 million, a decrease of $7.5 million, or 31.8%, compared to $23.6 million in 2023.
Kevin Vann: 23 impairment losses relate to specifically identified R&D machinery, and feedstock processing equipment that were no longer an operational use.
Kevin Vann: None of the 24, none of the 2024 or 2023 impairments were associated with our expectations for our operations to generate future cash flows from operations.
Kevin Vann: Other expenses in 2024 were $3 9 million, a decrease of $1 4 million or 25, 2% compared to $5 3 million in 2023.
Kevin Vann: The decrease was primarily related to proceeds of 1.0 million received from the sale of gas rates ahead of the fuel supply agreement exploration at our security facility and decreased interest expense of <unk> 5 million.
Kevin Vann: Operating profit in 2024 was $16 1 million a decrease of $7 5 million or 31, 8% compared to $23 6 million in 2023.
Kevin Van Asdalan: RNG operating profit for 2024 was $56.0 million, a decrease of $3.3 million or 5.5% compared to $59.3 million in 2023. Renewable Electricity Generation Operating Loss for 2024 was $2.8 million, an increase of $2.2 million. compared to $0.6 million in 2023.
Kevin Vann: R&D operating profit for 2024 was 56 zero million, a decrease of $3 3 million or five 5% compared to $59 3 million in 2023 renewed.
Kevin Vann: Renewable electricity generation operating loss for 2024 was $2 8 million, an increase of $2 2 million.
Kevin Vann: Compared to zero point $6 million in 2023.
Kevin Van Asdalan: Turning to the balance sheet, at December 31st, 2024, $56.0 million was outstanding under our term loan. As of December 31st, 2024, the company's capacity available for borrowing under the revolving credit facility remained at $117.8 million. As of December 31st, 2024, we generated $43.8 million of cash from operating activities, an increase of 6.7% compared to $41.1 million as of December 31st, 2023. Based on our estimate of the present value of our PECA earn out obligation, we recorded a decrease of 1.7 million to the liability as of December 31st, 2024. This decrease was recorded through our R&G segment royalty.
Kevin Vann: Turning to the balance sheet at December 31, 2024, 56.0 million was outstanding under our term loan as of December 31, 2024, the company's capacity available for borrowing under the revolving credit facility remain at $117 8 million.
Kevin Vann: As of December 31, 2024, we generated $43 8 million of cash from operating activities, an increase of six 7% compared to $41 1 million as of December 31, 2023.
Kevin Vann: Based on our estimate of the present value of our Pico earn out obligation. We recorded a decrease of $1 7 million to the liability as of December 31, 2020 for this decrease was recorded through our R&D segment royalty expense.
Kevin Van Asdalan: During 2024, we incurred approximately $62.3 million in capital expenditures, of which $27.8 million was for Montauk Ag Renewables, $12.6 million was for the second Apex facility, and $8.8 million was for the Bowerman R&G project. For 2023, our capital expenditures were $63.1 million, of which $18.6 million was for Montauk Ag Renewables, $13.7 million was for the Pico Facility Digestion Capacity Increase. And $13.1 million was for the second Apex R&G facility.
Kevin Vann: During 2024, we incurred approximately $62 3 million and capital expenditures of which $27 8 million was for Manta <unk> $4 6 million for the second apex facility and $8 8 million was for the <unk> R&D project.
Kevin Vann: For 2023, our capital expenditures were $63 1 million of which $18 6 million was for <unk> $13 7 million was for the peak facility adjusting capacity increase of $13 1 million was for the second apex R&D facility.
Kevin Van Asdalan: 2025 we expect our non development capital our non development 2025 capital expenditures to range between 14 and 17 million Additionally, we currently expect that our existing 2025 development capital expenditures will range between $100 and $150 million. As of December 31st, 2024, we had cash and cash equivalents of approximately $45.6 million and accounts and other receivables of approximately $8.2 million. We don't believe we have any collectability issues with our receivables. Adjusted EBITDA for 2024 was $42.6 million, a decrease of $3.9 million, or 8.3%, compared to $46.5 million for 2023. EBITDA for 2024 was $41 million, a decrease of $4.3 million, or 9.5%, compared to EBITDA of $45.3 million for 2023.
Kevin Vann: For 2025, we expect our non development capital are nine development 2025 capital expenditures to range between 14 and $17 million.
Kevin Vann: Additionally, we currently expect that our existing 2025 development capital expenditures will range between 101 hundred $50 million.
Kevin Vann: As of December 31, 2024, we had cash and cash equivalents of approximately $45 6 million and accounts and other receivables of approximately $8 2 million.
Kevin Vann: Believe we had any collectability issues with our receivables balance.
Kevin Vann: Adjusted EBIT for 2024 was $42 6 million, a decrease of $3 9 million or eight 3% compared to $46 5 million for 2023 EBITDA.
Kevin Vann: EBITDA for 2024 was $41 million, a decrease of $4 3 million or nine 5% compared to EBITDA of $45 3 million for 2023.
Kevin Van Asdalan: Net income in 2024 was $9.7 million, compared to net income of $14.9 million in 2023, a decrease of $5.2 million, or 34.9%.
Kevin Vann: Net income in 2024 was $9 7 million compared to net income of $14 9 million in 2023, a decrease of $5 2 million or 34, 9%.
Kevin Van Asdalan: On January 26, 2021, we entered into a loan agreement and secured promissory note, the initial promissory note, with Montauk Holdings Limited and NK. MNK is our affiliate and certain of our directors are also directors of MNK. Pursuant to the initial promissory note, we advance a cash loan of $5 million to MNK for MNK to pay its dividends tax liability arising from the reorganization transactions under the South African Income Tax Act of 1962, as amended. As a result of several amendments, the current principal balance of the loan was $10.7 million. The due date is December 31, 2033, and the security interest is 976,000 shares of our common stock held by MNK.
Speaker Change: On January 26, 2021, we entered into a loan agreement in secured promissory note. The initial promissory note with my talk Holdings limited and NK.
Speaker Change: Mmk as our affiliate and certain of our directors are also directors of an NK cell.
Speaker Change: So I went to the initial promissory note, we advanced a cash loan of $5 million MNK for MNK to pay its dividends tax liability arising from the reorganization transactions under the South African income tax act of $19 62.
As a result of several amendments the current principal balance of the loan was $10 $7 million. Due date is December 31, 2033, and a security interest is 976000 shares of our common stock held by MNK as amended the fifth amended promissory note.
Kevin Van Asdalan: I have amended the fifth amended promissory.
Kevin Van Asdalan: December 2021, Riverprops 47 Proprietary Limited, RP47, entered into an agreement to loan MNK up to 10 million South African Rand, the RP47 loan. The current principal balance in accrued interest is 11.7 million Rand or approximately 0.7 million U.S. dollars. There is no collateral pledge for this loan. This loan became due on December 31st, 2024, the maturity date, when MNK and RP47 did not extend the maturity of the loan agreement. Based on the transaction implementation agreement between us and MNK, we are obligated to repay the RP-47 loan on MNK's behalf, subject to MNK confirming that RP-47 loan maturity was not extended and that MNK did not have sufficient funds to repay the loan.
Speaker Change: In December 2021 River prop 47 proprietary limited or.
<unk> 47 and entered into an agreement to loan MNK up to 10 million in South African Rand the RP 47 loan.
Speaker Change: Current principal balance and accrued interest.
Speaker Change: At $11 7 million Rand or approximately <unk> 7 million U S dollars.
Speaker Change: There is no collateral pledged for this loan.
Speaker Change: Loans became due on December 31, 2024, and maturity date, when MNK and RP 47 did not extend the maturity of the loan agreement.
Speaker Change: Just on the transaction implementation agreement between US and then K, we are obligated to repay the RP 47 loan on Mnk's behalf subject to Nnk confirming that RP 47 loan maturity was not extended that mek did not have sufficient funds to repay the loan.
Kevin Van Asdalan: As of December 31st, 2024, we recruit a contingent liability for the repayment of the RP-47 loan under the TIA. On February 2, 2025, after the end of our 2024 fiscal year, but before our 2024 financial statements were issued, our Board of Directors approved the repayment of the RP-47 loan under the TIA, and on March 5, 2025, we repaid the RP-47 loan as required under the TIA. The amount repaid is included in the principal balance of the fifth amended promissory note described above. Prior to the RP-47 loan repayment, we concluded that RP-47, a related party of us, through RP-47's ownership of MNK, was the primary beneficiary of MNK under the Variable Interest Entity Model.
Speaker Change: As of December 31, 2024, we accrued a contingent liability for the repayment of the ERP 47 loan under the TIAA.
Speaker Change: <unk> 2025 after the end of our 2020 for fiscal year, but before our 2024 financial statements were issued our board of directors approved the repayment of the <unk> 47 loan under the TIAA and on March 5th 2025, we repaid the RP 47 loan as required under the CIA.
Speaker Change: The amount repaid is included in the principal balance of the fifth amended promissory note described above.
Speaker Change: Prior to the <unk> 47 loan repayment, we concluded that our <unk> 47, a related party of us through our P. 47% ownership of an NK.
Speaker Change: Primary beneficiary of MNK under the variable interest entity model.
Kevin Van Asdalan: With modification under the TIA, in the subsequent repayment of RP-47 loan, RP-47 retained its power over MNK, but no longer held significant benefit to them. Following accounting guidance, we determined that with the amendment under the TIA, substantially all of MNK's activities were conducted on our behalf, as MNK's only asset is the 976,000 shares of our common stock held as security for the Fifth Amended Promissory. MNK's only obligation is its loan to us, and thus, we are the primary beneficiary of MNK. We consolidated MNK as of December 31, 2024, and the repayment of the RP-47 loan prior to the issuance of our 2024 fiscal year financial statements was determined to be a subsequent event.
Speaker Change: With modification under the TIAA and subsequent repayment of RP 47 alone RP 47 retained its power around the K, but no longer held significant benefits and mek.
Speaker Change: Following the accounting guidance, we determined that with the amendment under the TIAA substantially all of them in case activities were conducted on our behalf as Mnk's only asset to the 976000 shares of our common stock held as security for the amended promissory note.
Speaker Change: And then K is only obligation is its loan to us and thus we are the primary beneficiary of Nnk, we consolidated MNK as of December 31, 2024, and the repayment of the RP 47 loan prior to the issuance of our 2020 for finance fiscal year financial statements was determined to be a subsequent event.
Kevin Van Asdalan: As of December 31, 2024, we consolidated MNK's current assets approximately $52,000, non-current assets approximately $0.6 million, current liabilities approximately $0.6 million, and long-term liabilities approximately $16,000. The fifth amended promissory note became an intercompany loan and was eliminated in consolidation. MNK's investment of approximately $10.2 million in the company is also eliminated in consolidation. There is no gain or loss on the initial consolidation of MNK, as the transaction is a common control transaction. We recorded a non-cast acquisition of treasury stock of approximately 8.3 million related to the consolidation of these 976,000 shares of our common stock, collateralizing the fifth amended promissory note.
Speaker Change: As of December 31, 2024, we consolidated Mnk's current assets approximately 52000 U S dollars non current assets approximately zero point $6 million current liabilities, approximately 0.6 million U S dollars and long term liabilities approximately 16000 U S dollars.
Speaker Change: Fifth amended promissory note became an intercompany loan and it was and was eliminated in consolidation.
Speaker Change: <unk> investment of approximately $10 2 million in the company is also eliminated in consolidation.
Speaker Change: There is no gain or loss on the initial consolidation of MNK as the transaction is a common control transaction.
Speaker Change: We recorded a noncash acquisition of Treasury stock of approximately $8 3 million related to the consolidation of these 976000 shares of our common stock collateralized the fifth amended promissory note.
Kevin Van Asdalan: MNK remains a separate legal entity with ownership of the 976,000 shares of the company's common stock. Subject to market conditions and our insider trading policy, as MNK is an affiliate of the company, MNK can sell these shares to repay the loan to the company.
Speaker Change: And then K remains a separate legal entity with ownership of the 976000 shares of the company's common stock.
Speaker Change: Subject to market conditions, and our insider trading policy is MNK as an affiliate of the company and then take and sell the shares to repay the loan to the company.
Sean McClain: With that, I'll now turn the call back over to Sean. Thank you, Kevin. In closing, while we don't provide guidance as to our internal expectations on the market price of environmental attributes, including the market price of D3 RINs, we would like to provide our 2025 outlook. It is important to note that our guidance ranges include internal assumptions that may or may not align with current market trends. Also, our outlook is based on selling RINs up to the quarter after RINs are generated. We expect our R&D production volumes to range between 5.8 and 6 million MMBTUs and corresponding R&D revenues to range between $150 million and $107 million.
Sean: With that I'll now turn the call back over to Sean.
Speaker Change: Thank you Kevin <unk>.
Speaker Change: In closing, while we don't provide guidance as to our internal expectations on the market price of environmental attributes, including the market price of 53 rents we would like to provide our 2025 outlets.
Speaker Change: It is important to note that our guidance ranges include internal assumptions that may or may not align with current market trends.
Also our outlook is based on selling returns up to the quarter after earnings are generated.
Speaker Change: We expect our R&D production volumes to range between five eight and <unk>.
Speaker Change: $6 million to use and corresponding R&D revenues duration between $150 million and $170 million we.
Sean McClain: We expect renewable electricity production volumes to range between 178,000 and 186,000 megawatt hours. Corresponding renewable electricity revenues are expected to range between $17 million and $18 million.
Speaker Change: We expect renewable electricity production volumes to range between 178000, and 186000 megawatt hours corresponding renewable electricity revenues are expected to range between 17 million and $18 billion and with that we will pause for any questions.
Operator: And with that, we will pause for any questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1 1 again.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question Press Star One again, one moment for your first question.
Operator: One moment for our first question.
Saumya Jain: And our first question will come from the line of Saumya Jain with UBS, your line is open. Hey, good morning. So with your R&G facilities, how are you guys looking at going from the data center side of things? Any opportunities you're seeing on that cloud? Or if you'd like some color? I'm sorry, would it be possible for you to repeat that question? It was a little difficult to hear. Yeah, so with your R&G facilities, how are you guys looking at things from the data center side? Are you seeing any opportunities on that front that you could highlight?
Speaker Change: And our first question will come from the line of Selman Jain with UBS. Your line is open.
Selman Jain: Hey, good morning.
Speaker Change: Our R&D portfolio.
Speaker Change: Juan.
Speaker Change: Opportunities are similar.
Rod.
Speaker Change: Alright.
Speaker Change: Yes.
Speaker Change: I'm, sorry would it be possible for you to repeat that question. It was it was a little difficult to hear.
Speaker Change: Yeah.
Speaker Change: R&D facilities, how are you guys looking at the data center side are you seeing opportunities on that front.
Sean McClain: R&G sales from external businesses, such as like data centers, cold storage facilities, these opportunities are in constant development with conversations that we have with entities, such as data centers, cold storage facilities, high volume users that are interested in co-locating. We've had conversations on a number of our R&G facilities specifically, just because of how quickly you can provide that electricity. The nuance in looking at those synergies is how you benefit from the renewable electric credits, whether or not that power is still put into the infrastructure of the local utility, as opposed to sort of direct supplying those entities that would sort of co-locate geographically to your locations.
Speaker Change: R&D sales from external businesses, such as like Datacenters cold storage facilities.
Speaker Change: These opportunities are.
Speaker Change: In constant development with conversations that we have with entities such as data centers cold storage facilities high volume users.
Speaker Change: We are interested in co locating we've had conversations on a number of our EG facilities, specifically just because of how quickly you can provide that electricity.
Speaker Change: The nuance in looking at those synergies is how you benefit from the renewable electric credits, whether or not that power is still put into the infrastructure of the local utility as opposed to sort of direct supplying those entities that would sort of co locate gene.
Sean McClain: But it's definitively an area, call it quasi-voluntary compliance, that is an interesting alternative to how we diversify the product sales that we have, especially in light of any pending or recent volatility that you see in the federal and state attributes. Thank you.
Graphically dealer locations, but it's definitively in area.
Speaker Change: Call. It quasi voluntary compliance that is an interesting alternative to how we diversify the product sales that we have especially in light of any pending or recent volatility that you see in the federal and state atrophy markets.
Operator: One moment for our next question.
Speaker Change: Thank you one moment our next question.
Matthew Blair: And that will come from the line of Matthew Blair with TPH. Your line is open. Great, thanks for taking my question and good morning Sean and Kevin. I had a few questions on the 2025 RNG revenue guidance of $150 to $170 million. So, I know you don't provide the underlying RIN assumption, but can you tell us, does that revenue guidance assume that all of your RINs will be monetized in 2025? And then also, would you expect to still receive a premium to benchmark RIN prices in 2025? The past couple of years, you have been able to monetize your RINs at higher than benchmark prices, and is that a trend that you think will continue?
Speaker Change: And that will come from the line of Matthew Blair with Tpa. Your line is open.
Great. Thanks for taking my question and good morning, Sean and Kevin.
I had a few questions on the 2025 LNG revenue guidance of $150 million to $170 million. So I know you don't provide the underlying rent assumption, but can you tell us.
Speaker Change: Because that revenue guidance assume that all of your rooms will be monetize in.
Speaker Change: In 2025, and then also would you expect to still receive a premium to benchmark RIN prices.
Speaker Change: In 2025 of the past couple of years, you have been able to monetize your rems at higher than benchmark prices.
Speaker Change: Is that a trend that you think will continue.
Sean McClain: Thanks, Matthew.
Speaker Change: Okay.
Sean McClain: In regards to expectations on achieving premiums over the existing V3 index price, I believe we'll continue, we expect to continue our historical trends of success with selling RINs at advantageous, during advantageous RIN pricing opportunities. In regards to our forward guidance for 2025 and our expectation associated with when we will transfer and recognize revenues on those RINs. Associated, generally, as we commented, our expectations are that we will commit to transfer available RINs up to the next quarter available to be transferred. Associated with the last handful of quarters, we have provided evidence, we have provided information and will continue to provide information about the timing of those RINs that we keep in inventory that may or may not correspond to that quarter.
Speaker Change: Thanks, Matthew in regards to.
Expectations.
Speaker Change: Achieving premiums over the existing <unk> index price.
Speaker Change: Leave will continue we expect to continue our historical trends of success with selling brands and AD pages during advantageous RIN pricing opportunities.
Speaker Change: In regards to our forward guidance for 2025, and our expectation associated with when we will transfer and recognize revenues on those rents.
Associated generally as we commented our expectations are that we will commit to transfer available rands up to the next quarter available to be transferred.
Speaker Change: Associated with the last handful of quarters. We have provided evidence that we have provided information and we will continue to provide information about the timing of those rents that we keep in inventory that may or may not correspond to that quarter. Additionally, as we continue to move through 2025.
Operator: Additionally, as we continue to move through 2025, here being the first quarter, though we are understanding and working through the EPA BRRR regulatory reform, we do anticipate that that regulatory reform may have an impact on the timing of those RIN sales as well. Thank you. One moment for our next question.
Speaker Change: <unk> here being the first quarter, though we are understanding and working through the EPA be triple our regulatory reform, we do anticipate that that regulatory reform may have an impact on the timing of those ran sales as well.
Speaker Change: Okay.
Speaker Change: Thank you one moment our next question.
Tim Moore: And that will come from the line of Tim Moore with Clear Street. Your line is open. Thanks.
Tim Lugo: And that will come from the line of Tim Lugo with clear Street. Your line is open.
Sean McClain: You know, I have a two-part question. They're somewhat related. You know, you had some commentary in November about the landfill operators' delay impact. You know, there's some capacity slowness there. Can you maybe comment on that? And then I just want to check that I understood maybe your earlier comment and prepared remarks. You know, I think you said $2.45 might have been the average RIM price transfer this year. You know, I'm just wondering if that's indicative. of the D3 RIM pricing because, you know, the EPA website stopped posting that after Inauguration Day. I'm just kind of curious what you've seen on pricing, you know, the last few weeks.
Tim Lugo: Thanks, I have a two part question they're somewhat related.
Tim Lugo: You had some commentary in November about the landfill operators delay impact.
Tim Lugo: There is some capacity slowness there can you maybe comment on that and then I just want to check did I understood. Maybe your earlier comment in the prepared remarks.
Tim Lugo: Thank you said $2 45, might've been the average RIN price transfer this year.
Tim Lugo: And I'm just wondering if that's indicative.
Tim Lugo: The <unk> III RIN pricing, because the EPA website stopped posting that after.
Tim Lugo: After inauguration day I'm, just kind of curious what you've seen on pricing the last few weeks.
Sean McClain: Yeah Tim, I can take both of those. With respect to landfills delays and projects, you know if we've talked in the past, landfills historically have been a little more synergistic in their willingness to allow for you to sort of infiltrate their open face areas where they're placing waste. that allows for you to accelerate the volume increases that you would expect from well-filled initiatives, horizontal vertical drillings, anything that would improve the volumetric size of your well-filled collection system. We do continue to see hesitation on the landfill side due to the challenges that they are communicating that they present with their staff.
Tim Lugo: Yes, Tim I can take both of those with respect to landfills delays in projects, we've talked in the past.
Tim Lugo: Landfills.
Tim Lugo: Historically have been a little more synergistic and their willingness to allow for you to sort of infiltrate their open face areas, where they're placing waste.
Tim Lugo: That allows for you to accelerate the volume increases that you would expect from Westfield initiatives horizontal vertical drillings anything that would improve the volumetric size. If you will to a collection system.
We do continue to see hesitation on the landfill side due to the challenges that they are communicating that they present with their staff. So the.
Sean McClain: So the intricacies of trying to place waste as their primary business, competing against the delicacy that they need to navigate around collection systems, and the time that they then lose to have to remediate those damages as they're incurred has been something that has been more communicated from them over the last few quarters. It's not fatal in the sense that the collection infrastructures are committed to be increased not only from an environmental NSPS compliance standpoint, but also from the standpoint that they want the additional gas, they want to see the additional royalties. The timing of it is still at times slowed because they're trying to create a little bit of a better divide between when they are high activity in the open face waste placement and when the collection systems come in and start to pull off of that more recently placed waste.
Tim Lugo: The intricacies of trying to place waste as their primary.
Tim Lugo: Business.
Tim Lugo: Competing against the delicacy that they need to navigate around collection systems and the time that they then lose two have to remediate those damages as they are incurred.
Tim Lugo: Been something that has been.
Tim Lugo: More communicated from them.
Tim Lugo: For the last few quarters.
Tim Lugo: It is not fatal in the sense that the collection infrastructures are committed to be increased not only from an environmental nsp's compliance standpoint, but also from the standpoint that they want the additional gas they want to see the additional royalties.
Tim Lugo: Timing of it is still at times.
Tim Lugo: Slowed because theyre trying to create a little bit of a better divide between when they are high activity in the open face waste placement and win the collection systems come in and start to pull off of that more recently placed waste.
Sean McClain: With respect to pricing, other than the standard disclaimers that we don't opine on what we expect pricing to be, it's difficult to say if that price is indicative of what we'll see in 2025. As we sort of mentioned at the beginning of this call, you know, the EPA has floated the idea of a postponement or an adjustment down of the volume obligations for 2024. They haven't indicated any change to 2025. The way that we look at pricing is more of a function of who we sell to. The majority of our attributes we place directly in the hands of obligated parties.
Tim Lugo: With respect to pricing other than the standard.
Tim Lugo: The disclaimers that we don't have power and on what we.
Tim Lugo: <unk> pricing to be.
It's difficult to say if that price is indicative of what we'll see in 2025.
Tim Lugo: As we sort of mentioned at the beginning of this call. The EPA has floated the idea of a postponement or.
An adjustment down of the volume obligations for 2024, David indicated any change to 2025.
Tim Lugo: The way that we look at pricing is more of a function of who we sell to the majority of our attributes we placed directly in the hands of obligated parties our decision to hold those volumes at the end of 2024.
Sean McClain: Our decision to hold those volumes at the end of 2024 are not a direct reflection of our view of pricing. Is it the right time to pull and monetize? It's the purchasing parties that are in the market. We saw a significant reduction in the obligated parties purchasing activity in the marketplace. As we see that picking up in the first quarter, that's when we monetize the remainder of those 24. So, that's a very roundabout way of explaining that we are more focused. on the health of the Renewable Fuel Standard Program, of selling our attributes into the hands of the parties that need to buy them and retire them, as opposed to sort of factoring them on an interim basis to folks that are willing to purchase them and ultimately sell them to obligated parties, which we believe creates the most disturbing price volatility that you can try to manage through.
Tim Lugo: It's not a direct reflection of our view of pricing is at the right time deploy and monetize.
Tim Lugo: The purchasing parties that are in the market, we saw a significant reduction in the obligated parties purchasing activity in the marketplace as we see that picking up in the first quarter. That's what we monetize the remainder of those 24, so that's a.
Tim Lugo: Very roundabout way of explaining that we are more focused.
Tim Lugo: The health of the renewable fuel standard program.
Tim Lugo: Selling our attributes into the hands of the parties that need to buy them and retire them as opposed to sort of factoring them on an interim basis to folks that are willing to purchase them and ultimately sell them to obligated parties, which we believe creates the most disturbing price volatility that you can.
Tim Lugo: Try to manage through.
Sean McClain: But it would be difficult at this time to say if $245 or something significantly higher, significantly lower, is a good indicator to expect what rent pricing is going to be for 2025. Thank you. One moment for our next question.
Tim Lugo: But it would be difficult at this time to say of $2 45, or something significantly higher significantly lower is a good indicator to expect what RIN pricing is going to be for 2025 vintage.
Tim Lugo: Thank you one moment our next question.
Ryan Fink: And that will come from the line of Ryan Fink with B Riley. Your line is open. Hey guys, thanks for taking my question. Can you talk a bit about what you're seeing in the voluntary market in terms of demand and pricing there? Thanks.
Speaker Change: And that will come from the line of Ryan <unk> with B Riley Your line is open.
Speaker Change: Hey, guys. Thanks for taking my question can.
Speaker Change: Can you talk a bit about what youre seeing in the voluntary market in terms of demand and pricing there.
Sean McClain: Ryan, that is one of the more challenging markets that we're trying to get. I don't know if I want to say reliable or meaningful data from. We're working with our internal capacities. We're working through our external partners. The reliability of getting meaningful, voluntary information from volumes that are coming out of the RFS to generate RANDs into the voluntary market remains a challenge. That said. We ourselves have entered into what we refer to internally as fixed price or margin share arrangements that generally thus far have not been placed into the voluntary market. They've been placed into the RFS transportation space, and that's what we've seen through 2024.
Speaker Change: Ryan that is one of the more challenging markets that we're trying to get.
Speaker Change: I don't know if I want to say reliable or meaningful data from we're working with our internal capacities were working through our external partners.
Speaker Change: The reliability of getting meaningful voluntary information from volumes that are coming out of the RFS to generate rins into the voluntary market remains a challenge.
Speaker Change: That said.
Speaker Change: We ourselves have entered into what we refer to internally as as fixed price or margin share arrangements that generally thus far have not been placed into the voluntary market they've been placed into the RFS transportation space and that's what we've seen through 2020.
Sean McClain: We have the flexibility either through offtakes at our sites that are coming up for expiration during 2025, or we believe through those existing margin share arrangements that we have in place from 2024 to further divert away from, if necessary, the transportation space and into the voluntary space as the market so dictates. Related to that is then your evaluation of what is that price associated to a rent if you could get those volumes into the transportation space versus the fixed price and or fixed price plus upper spread that you can share in as well as term.
Speaker Change: Four.
Speaker Change: We have the flexibility either through off takes at our sites that are coming up for expiration during 2025, where we believe through those existing margins share arrangement that we have in place from 2020 for two further divert away from if necessary the transportation space and into the voluntary.
Speaker Change: Space as it is.
Speaker Change: As the market. So <unk> dictate related to that is then your evaluation of what is that price associated to Iran. If you could get those volumes into the transportation space versus the fixed price and for fixed price plus upper.
Speaker Change: Spread that you can share in as well as term.
Sean McClain: All of those items are challenged right now under. The ongoing EPA deferral of the rulemaking in the 2024 obligation that was announced in December. The uncertainty, though yet currently unstated, impacts to any change in the already existing 2025 RVO. However, also the EPA missing the initial rulemaking periods for the 2026 RVO.
All of those items are challenged right now under.
Speaker Change: The ongoing EPA deferral of the rulemaking in the 2024 obligation that was announced in December.
The uncertainty yet currently unstated impacts to any change in the already existing 2025 RV RVO. However, also the EPA missing the initial rulemaking periods for the 2026th RVO.
Sean McClain: Ultimately, as Sean said on his last question, that is a long about way of answering your question of, we're seeing activity in the voluntary market. achieving readily reliable data similar to how we can get reliable historical data in the transportation space from a RIN generation continues to make this evaluation of when and for how long and at what price points to offer offtake volumes is something that we continue to evaluate as we move through 2025 noting all those sort of caveats and items that we're weighing as we progress through 2025.
Speaker Change: Ultimately as Sean said on his last question that is a long about way of answering your question.
Speaker Change: We're seeing activity in the voluntary market.
Achieving readily reliable data similar to how we can get reliable historical data in the transportation space from a RIN generation continues to make this.
Speaker Change: Valuation of win and for how long and at what price points to offer offtake volumes is something that we continue to evaluate as we move through 2025, noting all of those sort of Cabot.
Speaker Change: Caveat and items that were weighing as we progress through 2025.
Sean McClain: Ryan, the only other thing that I would add to that is our diversification plays feedstock offtake arrangements. They're also done with a high degree of fiscal responsibility. The diversification that we focus on isn't voluntary versus obligated party. It's diversification of commodities versus attributes. When you're selling attribute-based products, the voluntary market does move up and down based on their projections of what they compete against, which is the attribute market. And when you elect to proceed with the voluntary market, we view it as a nice backstop so that there is some sensibility in pricing because it's an alternative.
Speaker Change: Ryan the only other thing that I would add to that is our diversification plays feedstock offtake arrangements Theyre also done.
Speaker Change: With a high degree of fiscal responsibility the.
Speaker Change: The diversification that we focus on is it voluntary versus obligated party its diversification of commodities versus attributes when you're selling attribute based products. The voluntary market does move up and down based on their projections of what they compete against which is.
Speaker Change: The attribute market.
And when you elect to proceed with the voluntary market, we view it as a nice backstop. So that there is some sensibility in pricing because it is an alternative but that alternative comes with a different.
Sean McClain: But that alternative comes with a different risk profile associated with the creditworthiness. Having an attribute going into the market that can appeal and apply to all refiners of petroleum is a much different credit consequence than us going to, say, the previous question where we're selling directly to a solitary cold storage facility for voluntary compliance or a data center. There's a lot more that needs to be understood about the survivability and the longevity of that business, how it is structured. And not to say that it can't be done. It is something that when you're being ultra selective on projects, the natural consequence is you are conservative over some of the more financial aspects of what your offtake looks like and the creditworthiness of those.
Speaker Change: Risk profile associated with the credit worthiness, having an attribute going into the market.
Speaker Change: Up till when applied to all refiners of petroleum is a much different credit consequence, and us going to say the previous question, where we're selling directly to a solitary cold storage facility for a voluntary compliance or a data center.
Speaker Change: There is a lot more that needs to be understood about the survivability and the longevity of that business out as structure and not to say that it can't be done it is something that when youre being ultra selective on projects.
Speaker Change: Natural consequences you are conservative over some of the more.
Financial aspects of what your off take looks like at the creditworthiness of those off takers.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11. One moment for our next question.
Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press Star 111 moment, our next question.
Betty Zhang: And that will come from the line of Betty Zhang with Scotiabank. Your line is open. Hi, good morning. Thanks for taking my question. I wanted to ask about the 45Z. Would there be any impact to Montauk from this production tax credit? Eddie, thank you. We. already receive production tax credits from our electric generation portfolio, notably our Bowerman facility.
Speaker Change: And that will come from the line of <unk> Zhang with Scotiabank. Your line is open.
Zhang: Hi, good morning, Thanks for taking my question.
Speaker Change: Wanted to ask about 45.
Speaker Change: Any impact Montauk from from this production tax credit.
Speaker Change: Thank you.
Speaker Change: <unk>.
Speaker Change: <unk> already received production tax credits from our electric generation portfolio, notably our.
Sean McClain: In regards to the 45Z production tax credit, the new expanded enhanced one, to say that there's going to be benefit, to say that we're not investigating or reviewing that benefit, we currently are, in concert with our continued review and evaluation of the previously finalized ITC credit as well, but we continue to evaluate and look through applicability and availability under those various tax credits, enhanced or expanded under the IRA Act. Thank you. I'm showing no further questions in the queue at this time.
Speaker Change: Our <unk> facility in regards to the 45 day production tax credit the new expanded enhanced one to say that theres going to be benefit at to say that we're not investigating or reviewing that benefit and we currently are.
Speaker Change: Concert with our continued review and evaluation of the previously finalized ITC credit as well, but we continue to evaluate and look through applicability and availability under those various tax credits enhanced or expanded under the Iraq.
Speaker Change: Thank you.
Speaker Change: I'm showing no further questions in the queue at this time I would now like to turn the call back over to Shawn Mcclain for any closing remarks.
Sean McClain: I would now like to turn the call back over to Sean McClain for any closing remarks. Thank you. And thank you all for taking the time to join us on the conference call today. We look forward to speaking with you throughout 2025.
Thank you and thank you all for taking the time to join US on the conference call. Today, we look forward to speaking with you throughout 2025.
Operator: This concludes today's program. Thank you all for participating. You may now disconnect.
Speaker Change: This.
Speaker Change: Today's program. Thank you all for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Operator: Thank you for watching!
Speaker Change: [music].