Q2 2026 OPAL Fuels Inc Earnings Call

August 10, 2026

Operator: Ladies and gentlemen, thank you for standing by. Welcome to OPAL Fuels Second Quarter 2026 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Todd Firestone, Vice President of Investor Relations. Please go ahead.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to OPAL Fuels Second Quarter 2026 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Todd Firestone, Vice President of Investor Relations. Please go ahead.

Speaker #1: Ladies and gentlemen, thank you for standing by. Welcome to OPAL Fuels Q2 2026 earnings results conference call. At this time, all participants are in a listen-only mode.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To answer questions during the session, you will need to press star 11 on your telephone you will then hear an automated message advising your hand is raised.

Speaker #1: And to withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Todd Firestone, Vice President of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you. And good morning, everyone. Welcome to the OPAL Fuels Q2 2026 earnings conference call. With me today are Co-CEOs Adam Comora and Jonathan Maurer.

Todd Firestone: Thank you, and good morning, everyone. Welcome to the OPAL Fuels Second Quarter 2026 Earnings Conference Call. With me today are co-CEOs Adam Comora and Jonathan Maurer, as well as Kazi Hasan, OPAL's Chief Financial Officer. OPAL Fuels released financial and operating results for the second quarter of 2026 this morning, 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 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.

Speaker #2: As well as Kazi Hasan, OPAL's Chief Financial Officer. OPAL Fuels released financial and operating results for the Q2 2026 this morning. And those results are available on the Investor Relations section of our website at opalfuels.com.

Speaker #2: The presentation access to the webcast for this call is also available on our website. After completion of today's call, a replay will be available for 90 days.

Speaker #2: 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.

Speaker #2: Several factors that could cause or contribute to such differences are described on slides 2 and 3 of our presentation. These forward-looking statements reflect our views of the data of this call and OPAL Fuels does not undertake any obligation to up to date forward-looking statements to reflect events or circumstances after the date of this call.

Todd Firestone: Several factors that could cause or contribute to such differences are described on slides 2 and 3 of our presentation. These forward-looking statements reflect our views 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, this call will contain discussion of certain non-GAAP measures, 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 quarter's results and recent highlights. Jon will then give a commercial and business development update. Afterwards, Kazi will review financial results. We'll then open the call for questions. Now I'll turn the call over to Adam Comora, co-CEO of OPAL Fuels.

Todd Firestone: 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 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, this call will contain discussion of certain non-GAAP measures, 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 quarter's results and recent highlights. Jon will then give a commercial and business development update. Afterwards, Kazi will review financial results. We'll then open the call for questions. Now I'll turn the call over to Adam Comora, co-CEO of OPAL Fuels.

Speaker #2: Additionally, this call will contain discussion of certain non-GAAP measures, a definition of non-GAAP measures, use, and a reconciliation of these measures, to the nearest GAAP measure is included in the appendix of the release and presentation.

Speaker #2: Adam will begin today's call by providing an overview of the quarter's results and recent highlights. Jon will then give a commercial and business development update, after which Kazi will review financial results.

Speaker #2: We'll then open the call for questions. And now, I'll turn the call over to Adam Comora, Co-CEO of OPAL Fuels.

Speaker #3: Thank you, Todd. Good morning, everyone. And thank you for participating in OPAL Fuels Q2 2026 earnings call. We delivered solid Q2 financial results with adjusted EBITDA of 23.1 million increasing 40% from the Q2 of 2025.

Adam Comora: Thank you, Todd. Good morning, everyone, and thank you for participating in OPAL Fuels' second quarter 2026 earnings call. We delivered solid second quarter financial results with adjusted EBITDA of $23.1 million, increasing 40% from the second quarter of 2025. With flat RIN pricing in the second quarter versus last year, growth was driven by 45Z production tax credits, our Fuel Station Services segment, and G&A cost savings. We are maintaining our annual guidance. Second quarter RNG production was 1.3 million MMBtus, approximately 8% higher from last year. While production performance was modestly below our expectations this quarter, we continue to see meaningful opportunities to grow volumes through our existing facilities and drive our H2 results. It is important to note how powerful these plant improvement initiatives can be, and they are not capital intensive.

Speaker #3: With flat RIN pricing in the Q2 versus last year, growth was driven by 45Z production tax credits, our fuel station services segment, and G&A cost savings.

Speaker #3: We are maintaining our annual guidance. Q2 R&G production was 1.3 million MMBTUs approximately 8% higher from last year. While production performance was modestly below our expectations this quarter, we continue to see meaningful opportunities to grow volumes through our existing facilities and drive our second-half results.

Speaker #3: It is important to note how powerful these plant improvement initiatives can be and they are not capital intensive. Operating leverage on our existing facilities is high, with almost all of the incremental production and revenues flowing down to EBITDA.

Adam Comora: Operating leverage on our existing facilities is high, with almost all of the incremental production and revenues flowing down to EBITDA. Our primary variable cost is the royalty shared with our feedstock hosts. We are focused on capturing these opportunities as they would result in incremental production and EBITDA without having to invest significant capital. One example of these initiatives is using technology to improve gas collection and tuning of the wellfields. These improvements can take some time to install and to coordinate with the landfill owners. I want to shift gears and discuss what gives us confidence in the stability of our cash flows and the macros driving the long-term growth for OPAL Fuels. Over its 20-year history, the Renewable Fuel Standard has become a fixture in the country's regulatory backdrop, much like the Clean Air Act and the Clean Water Act.

Speaker #3: Our primary variable cost is the royalty shared with our feedstock costs. We are focused on capturing these opportunities as they would result in incremental production and EBITDA without having to invest significant capital.

Speaker #3: One example of these initiatives is using technology to improve gas collection and tuning of the well fields. These improvements can take some time to install and to coordinate with the landfill owners.

Speaker #3: I want to shift gears and discuss what gives us confidence in the stability of our cash flows, as well as the macro factors driving long-term growth for OPAL Fuels.

Speaker #3: Over its 20-year history, the renewable fuel standard has become a fixture in the country's regulatory backdrop. Much like the Clean Air Act and the Clean Water Act.

Speaker #3: Many industries are built around supporting these key laws, such as water treatment and other environmental services. Similar to those examples, the biofuels industry is expected to continue to play a vital role in satisfying the goals of the renewable fuel standard mandated by law.

Adam Comora: Many industries are built around supporting these key laws, such as water treatment and other environmental services. Similar to those examples, the biofuels industry is expected to continue to play a vital role in satisfying the goals of the Renewable Fuel Standard mandated by law. Our industry is further supported by programs like the Production Tax Credit and Investment Tax Credit. These programs reflect increasing bipartisan support and seek to accelerate the growth and myriad benefits of capturing biogas or waste in place energy and using it productively. OPAL Fuels generate significant annual discretionary free cash flow today, approximately $0.30 per share for the last 12 months, which we are choosing to reinvest to lift the value of OPAL. Kazi will discuss a bit later about our capital expenditures and capital allocation plans for new RNG facilities and fueling station projects.

Speaker #3: Our industry is further supported by programs like the Production Tax Credit and Investment Tax Credit. These programs reflect increasing bipartisan support and seek to accelerate the growth and myriad benefits of capturing biogas, or waste-in-place energy, and using it productively.

Speaker #3: OPAL Fuels generates significant annual discretionary free cash flow today—approximately $0.30 per share for the last 12 months—which we are choosing to reinvest to lift the value of OPAL.

Speaker #3: Kazi will discuss a bit later our capital expenditures and capital allocation plans for new R&G facilities and fueling station projects. As a reminder, all of our maintenance capital expenditures on our existing assets are expensed.

Adam Comora: As a reminder, all of our maintenance capital expenditures on our existing assets are expensed. Our upstream segment growth over the next 12 to 24 months is anticipated to be driven by incremental volumes from our existing assets and the completion of our projects in construction. These initiatives show a pathway to increasing our discretionary free cash flow over the coming years. Future growth of our downstream segment will be driven by the economics of fuel switching between diesel and natural gas. These economics are underpinned by the structural advantages of low-cost natural gas versus diesel in North America. We have seen numerous industries take advantage of lower cost natural gas as the technology becomes available. We've seen it in chemicals, steel, power generation, and in heavy duty transportation's case, the natural gas engine.

Speaker #3: Our upstream segment growth over the next 12 to 24 months is anticipated to be driven by incremental volumes from our existing assets and the completion of our projects in construction.

Speaker #3: These initiatives show a pathway to increasing our discretionary free cash flow over the coming years. Future growth of our downstream segment will be driven by the economics of fuel switching between diesel and natural gas.

Speaker #3: These economics are underpinned by the structural advantages of low-cost natural gas versus diesel in North America. We have seen numerous industries take advantage of lower-cost natural gas as the technology becomes available.

Speaker #3: We've seen it in chemicals, steel, power generation, and, in heavy-duty transportation's case, the natural gas engine. Notably, the refuse sector, which has had the appropriate 9- and 12-liter engines, saw the last adoption rate of CNG trucks ordered versus diesel.

Adam Comora: Notably, the refuse sector, which has had the appropriate 9 and 12-liter engines for the last decade, is now at a 50% adoption rate of CNG trucks ordered versus diesel. The 15-liter engine is now poised to address the largest segment of the 44 billion gallon diesel market in the United States. For OPAL, we have the strategic advantage of selling RNG with the same compelling natural gas economics, plus the added sustainability benefits to accelerate adoption. OPAL is positioned to be at the forefront of what is anticipated to be a long and large energy arbitrage opportunity. With that, I will turn it over to John for some additional comments before Kazi reviews the financial performance.

Speaker #3: The 15-liter engine is now poised to address the largest segment of the 44 billion-gallon diesel market in the United States. For OPAL, we have the strategic advantage of selling RNG with the same compelling natural gas economics plus the added sustainability benefits to accelerate adoption.

Speaker #3: OPAL is positioned to be at the forefront of what is anticipated to be a long and large energy arbitrage opportunity. With that, I will turn it over to Jon for some additional comments before Kazi reviews the financial performance.

Speaker #2: Thank you, Adam. And good morning, everyone. Execution remains our highest priority. On the upstream side, Adam mentioned our improvement initiatives that are expected to drive production growth at our existing facilities.

Jonathan Maurer: Thank you, Adam, and good morning, everyone. Execution remains our highest priority. On the upstream side, Adam mentioned our improvement initiatives that are expected to drive production growth at our existing facilities. In addition, we continue to advance construction across our RNG project portfolio. With over 2 million MMBtu of annual design capacity expected to come online over the next 12 months, Cottonwood, followed by Burlington, and then our CMS RNG Project, we have visibility into near term production growth. As we look beyond the next 12 months, during the quarter, we announced the release of our general contractor for another 1 million of annual design capacity at the Stone's Throw and Grady Road projects. These GFL joint venture projects are slated to contribute to 2028 production and financial results.

Speaker #2: In addition, we continue to advance construction across our RNG project portfolio. With over 2 million MMBTU of annual design capacity expected to come online over the next 12 months, Cottonwood, followed by Burlington, and then our CMS RNG project, we have visibility into near-term production growth.

Speaker #2: As we look beyond the next 12 months, during the quarter, we announced the release of our general contractor for another 1 million of annual design capacity at the Stones Throw and Grady Road projects.

Speaker #2: These GFL joint venture projects are slated to contribute to 2028 production and financial results. Together, all of these projects, upon completion, will increase our production by approximately 3 million MMBtu of annual design capacity coming online over the next 24 months.

Jonathan Maurer: Together, all of these projects, upon completion, will increase our production by approximately 3 million MMBtu of annual design capacity coming online over the next 24 months. These upstream opportunities are supported by OPAL's vertical integration and fleet offtake generated by our downstream business development opportunities. Beyond these projects, OPAL continues to pursue development opportunities, several of which are conversion candidates from our renewable power portfolio. We are disciplined in allocating capital between our upstream and downstream investment opportunities to achieve targeted risk-adjusted returns and portfolio balance. Overall, as Adam mentioned, we are pleased with the progress we made in Q2 and our ability to deliver financial results, which kept us on track for the year. I will now turn the call over to Kazi to discuss the quarter's financial performance. Kazi?

Speaker #2: These upstream opportunities are supported by OPAL's vertical integration and fleet offtake generated by our downstream business development opportunities. Beyond these projects, OPAL continues to pursue development opportunities.

Speaker #2: Several of which are conversion candidates from our renewable power portfolio. We are disciplined in allocating capital between our upstream and downstream investment opportunities to achieve targeted risk-adjusted returns and portfolio balance.

Speaker #2: Overall, as Adam mentioned, we're pleased with the progress we made in the second quarter and our ability to deliver financial results, which kept us on track for the year.

Speaker #2: I'll now turn the call over to Kazi to discuss the quarter's financial performance. Kazi?

Speaker #3: Thank you, Jon. And good morning, everyone. We delivered solid financial performance in the second quarter, with adjusted EBITDA increasing 40% year over year to $23.1 million.

Kazi Hasan: Thank you, John, and good morning, everyone. We delivered solid financial performance in Q2, with adjusted EBITDA increasing 40% year over year to $23.1 million. This was driven by contributions from 45Z Production Tax Credits, growth in our Fuel Station Services business, and G&A cost savings. Q2 consolidated revenue increased 4% to $83.4 million, driven primarily by growth in our FSS segment compared with Q2 2025. Within RNG Fuel segment, EBITDA increased to $18.6 million from $13.3 million last year, reflecting 45Z tax credits and production growth amidst flat realized RIN prices. Fuel Station Services also delivered improved performance, with segment EBITDA increasing to $12.5 million from $10.9 million last year. As we anticipated, renewable power segment performed lower compared to the prior year period, driven by lower production and pricing. Adjusted EBITDA was $0.3 million for Q2, compared to $2.2 million prior year.

Speaker #3: Driven by contributions from 45Z production tax credits, growth in our fuel station services business, and G&A cost savings. Second quarter consolidated revenue increased 4% to 83.4 million, driven primarily by growth in our FSS segment compared with second quarter of 2025.

Speaker #3: Within the RNG fuel segment, EBITDA increased to $18.6 million from $13.3 million last year, reflecting 45Z tax credits and production growth amidst flat realized RIN prices.

Speaker #3: Fuel station services also delivered improved performance, with segment EBITDA increasing to $12.5 million from $10.9 million last year. As we anticipated, the renewable power segment performed lower compared to the prior year period, driven by lower production and pricing.

Speaker #3: Adjusted EBITDA was $0.3 million for the second quarter, compared to $2.2 million in the prior year. We expect to see lower contributions from this segment as we are converting renewable power assets into RNG plants.

Kazi Hasan: We expect to see lower contributions from this segment as we are converting renewable power assets into RNG plants. In addition, we had a non-cash impairment this quarter from a renewable power project decommissioning in connection with our CMS RNG Project. We continue to actively manage discretionary spending with G&A at $3.2 million lower versus Q2 2025. As we move into Q3, we expect G&A to increase from Q2 as certain professional services, organizational investments, and transformation initiatives normalize. These costs are anticipated and remain fully incorporated within our full-year plan. We ended the quarter with $162.2 million of liquidity, including $91.4 million of cash, $19.3 million of available revolver capacity, and $51.6 million of undrawn preferred capital commitments.

Speaker #3: In addition, we had a non-cash impairment this quarter from a renewable power project decommissioning in connection with our CMS RNG project. We continue to actively manage discretionary spending with G&A at 3.2 million lower versus second quarter of 2025, as we move into third quarter, we expect SG&A to increase from the second quarter as certain professional services organizational investments and transformation initiatives normalize.

Speaker #3: These costs are anticipated and remain fully incorporated within our full year plan. We ended the quarter with 162.2 million of liquidity, including 91.4 million of cash, 19.3 million of available revolver capacity, and 51.6 million of unwrapped commitments.

Speaker #3: During the first six months of the year, we invested more than $52 million in RNG projects under construction. OPAL owned fuel stations and financed transformation initiatives while maintaining significant financial flexibility.

Kazi Hasan: During the first 6 months of the year, we invested more than $52 million in RNG projects under construction, OPAL-owned fuel stations, and finance transformation initiatives while maintaining significant financial flexibility. We expect that our available cash generated from operations, and availability under existing debt and preferred stock facilities are sufficient to fund our projects that have entered construction. Finally, as Adam mentioned, the business is generating significant and growing discretionary free cash flow. We continue to be disciplined in our capital allocation strategy between new RNG project development and growing opportunity to invest in fueling infrastructure. These investments are expected to increase the current earnings and cash flow, improve returns on invested capital, and further differentiate OPAL's integrated business model. We are encouraged by our Q2 results and are maintaining our full-year guidance. With that, I'll turn the call back to John.

Speaker #3: We expect that our available cash, cash generated from operations, and availability under existing debt and preferred stock facilities are sufficient to fund our projects that have entered construction.

Speaker #3: Finally, as Adam mentioned, the business is generating significant and growing discretionary free cash flow. We continue to be disciplined in our capital allocation strategy between new RNG project development and the growing opportunity to invest in fueling infrastructure.

Speaker #3: These investments are expected to increase recurring earnings and cash flow improved returns on invested capital and further differentiate OPAL's integrated business model. We are encouraged by our second quarter results on our maintaining our full year guidance.

Speaker #3: With that, I'll turn the call back to Jon.

Speaker #2: In closing, we remain well-positioned for continued disciplined execution of our strategic growth objectives and the expansion of OPAL's vertically integrated platform. I'll now turn the call over to the operator for Q&A.

Jonathan Maurer: In closing, we remain well-positioned for continued disciplined execution of our strategic growth objectives and the expansion of OPAL's vertically integrated platform. I'll now turn the call over to the operator for Q&A. Thank you all for your interest in OPAL Fuels.

Speaker #2: Thank you all for your interest in OPAL Fuels.

Speaker #4: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Operator: 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 call, please press star 1 1 again. Our first question will come from Derrick Whitfield with Texas Capital. Your line is open.

Speaker #4: And our first question will come from Derek Whitfield with Texas Capital. Your line is open.

Speaker #5: Good morning, and thank you for your time.

Derrick Whitfield: Good morning, and thanks for your time.

Speaker #6: Morning, Derek.

Jonathan Maurer: Morning, Derrick.

Speaker #5: One of the start on the plant improvement initiatives you highlighted in your opening comments, could you elaborate on a couple of the more impactful initiatives you're pursuing and help frame the upside you could achieve in production uplift or EBITDA expansion?

Derrick Whitfield: Wanted to start on the plant improvement initiatives you highlighted in your opening comments. Could you elaborate on a couple of the more impactful initiatives you're pursuing and help frame the upside you could achieve in production uplift or EBITDA expansion?

Speaker #2: Sure. Hi, Derek. So a couple of things. First off, I want to point out that we do have some seasonality in our production. Principally, colder weather in the first quarter followed by drilling in the well fields during the second quarter.

Jonathan Maurer: Sure. Hi, Derrick. So a couple things. First off, I want to point out that we do have some seasonality in our production. Principally, colder weather in the Q1, followed by drilling in the well fields during the Q2, usually results in improvements in the Q3 and Q4. In terms of ongoing improvements, we have the operations group who has continued their training and improvements within the operations of the existing projects. That's resulting in improved efficiency, improved availability. Combined with the inlet design capacity utilization improvements that we'll see coming out, we'll see increases in those areas as well. A lot of that is just the team getting better at operating the projects and improving their capabilities.

Speaker #2: Usually results in improvements in the third and fourth quarter. In terms of ongoing improvements, we have the operations group who has continued their training and improvements within the operations of the existing projects.

Speaker #2: That's resulting in improved efficiency and improved availability, and so, combined with the inlet design capacity utilization improvements that we'll see coming out, we'll see increases in those areas as well.

Speaker #2: So a lot of that is just the team getting better at operating the projects and improving their capabilities. But importantly, working with the landfills to improve collection is one area that we've been focusing on significantly.

Jonathan Maurer: Importantly, working with the landfills to improve collection is one area that we've been focusing on significantly, putting in place technology that can improve gas collection, not just quantity of gas collected, but quality as well. Both the quantity and the quality is what we're starting to see some of the improvements coming out. We've put some of this improvement in place at two of our projects. We expect to see this roll out across more of our fleet during the remainder of the year and into next year. All of that.

Speaker #2: Putting in place technology that can improve gas collection, not just quantity of gas collected, but quality as well. And both the quantity and the quality is what we're starting to see some of the improvements coming out.

Speaker #2: We've put some of this improvement in place at two of our projects. And we expect to see this roll out across more of our fleet during the remainder of the year and into next year.

Speaker #2: So all of that when it comes to some of the improvements, when you think about the overall capacity that we have of 9 million MMBTU of nameplate and you add 5 or 10 percent improvement on those combined with the from the collection of the gas to the improved availability and efficiency, you can understand how that can really have a significant impact on future results.

Jonathan Maurer: When it comes to some of the improvements, when you think about the overall capacity that we have of 9 million MMBtu of nameplate, you add 5% or 10% improvement on those combined from the collection of the gas to the improved availability and efficiency, you can understand how that can really have a significant impact on future results. As Adam mentioned, that operating leverage that we have, most of that improvement will fall to the bottom line. So we're very excited about the opportunity and working really hard and diligently to bring it across the line.

Speaker #2: And as Adam mentioned, that operating leverage that we have most of that improvement will fall to the bottom line. So we're very excited about the opportunity and working really hard and diligently to bring it across the line.

Speaker #5: Very helpful. Thanks, Jon. And as my follow-up—and this is perhaps for you, Adam—I wanted to focus on the regulatory environment. Throughout earnings, we've heard some commentary from the larger refiners and ag companies on set three, and while we're clearly far from legislation, I would appreciate your views on what the RNG community would like to see in policy and what's achievable in terms of growth of the RVO mandate and the potential for the EPA to revisit eRINs.

Derrick Whitfield: Very helpful. Thanks, Jon. As my follow-up, and this is perhaps for you, Adam, I wanted to focus on the regulatory environment. Throughout earnings, we've heard some commentary from the larger refineries and ag companies on SET3. While we're clearly far from legislation, I would appreciate your views on what the RNG community would like to see in policy and what's achievable in growth of the RVO mandate and potential for the EPA to revisit eRINs.

Speaker #6: Yeah, thanks, Derek. You're right. Set three is what people will be focused on over the balance of the year. It's a little unclear on timing for when that proposed rule may come out.

Adam Comora: Yeah. Thanks, Derrick. You're right. SET3 is what people will be focused on over the balance of the year. A little unclear on timing for when that proposed rule may come out. What we'd like to see is the EPA to acknowledge the potential for the use of RNG as a transportation fuel. Listen to some of the industry estimates out there in terms of the potential for the adoption curve. Incentivize growth in the cellulosic category, as is the law and mentioned in the statute. We've been having discussions with the EPA, and the interesting thing is, I think there's a recognition amongst policymakers about how powerful a transition to natural gas for heavy-duty transportation could be to support not only this administration's goals, but really bipartisan goals to drive energy dominance and help keep inflation in check.

Speaker #6: What we'd like to see is the EPA acknowledge the potential for the use of RNG as a transportation fuel. Listen to some of the industry estimates out there in terms of the potential for the adoption curve.

Speaker #6: And incentivize growth in the cellulosic category, as is the law and mentioned in the statute. And we've been having discussions with the EPA. The interesting thing is, I think there's a recognition among policymakers about how powerful a transition to natural gas for heavy-duty transportation could be to support not only this administration's goals, but really bipartisan goals to drive energy dominance and help keep inflation in check.

Speaker #6: And I think there's an acknowledgment that renewable natural gas can play a catalyst to help accelerate that use of economical natural gas at home, and perhaps export more of the expensive oil that we're producing.

Adam Comora: I think there's an acknowledgment that renewable natural gas can play a catalyst to help accelerate that use of economical nat gas at home, and perhaps export more of the expensive oil that we're producing. Then you've got all those other investment and jobs and cleaner air benefits as well. So, we're focused on educating the EPA on how to support additional RNG investment and acknowledging the adoption curve for natural gas vehicles.

Speaker #6: And then you've got all those other investment and jobs and cleaner air benefits as well. So we're focused on educating the EPA on how to support additional RNG investment, and acknowledging the adoption curve for natural gas vehicles.

Speaker #5: And Adam, do you think we could revisit EWINs with this next legislation?

Derrick Whitfield: Adam, do you think we could revisit eRINs with this next legislation?

Adam Comora: I feel like eRIN pathways might be a little tougher. I do feel like in our discussions, people are getting educated and understand the benefits of natural gas and renewable natural gas as a transportation fuel. eRINs, I am not sure about. I am not sure that we are going to get a lot of pathway discussions in SET Rule 3. I think there is more of a focus on what to do about imported feedstocks. Again, everything we produce is domestically produced. We do not really have a horse in that race in what happens on the import side of things. I do feel like that is going to be a key focus to support domestically produced agricultural biofuels. I have not heard a lot of talk about expanded pathways and new pathways just yet.

Speaker #6: I feel like EWIN pathways might be a little tougher. I do feel like, in our discussions, people are getting educated and understand the benefits of natural gas and renewable natural gas.

Speaker #6: As a transportation fuel, EWINs I'm not sure about. I'm not sure that we're going to get a lot of pathway discussions and set rule three.

Speaker #6: I think there's more of a focus on what to do about imported feedstocks. Again, everything we produce is domestically produced. We don't really have a horse in that race in what happens on the import side of things.

Speaker #6: I do feel like that's going to be a key focus—to support domestically produced agricultural biofuels. And I have not heard a lot of talk about expanded pathways and new pathways just yet.

Speaker #5: Terrific. Great update. Thanks, guys.

Derrick Whitfield: Terrific. Great update. Thanks, guys.

Speaker #1: Thank you. And our next question is going to come from Matthew Blair with TPH. Your line is open.

Operator: Thank you. Our next question is going to come from Matthew Blair with TPH. Your line is open.

Speaker #7: Thanks, and good morning. So you maintained your 2026 guidance, which I think implies about $55 to $70 million of EBITDA in the back half of the year, versus the $40 million in the first half of the year.

Matthew Blair: Thanks, and good morning. So you maintained your 2026 guidance, which I think implies about $55 to $70 million of EBITDA in the back H2 of the year versus the $40 million in the H1 of the year. Is it fair to say this guide implies both higher production as well as higher unit profitability? If so, could you talk about the drivers and your overall level of confidence in each of those variables? Thank you.

Speaker #7: Is it fair to say this guide implies both higher production as well as higher unit profitability? And if so, could you talk about the drivers and your overall level of confidence in each of those variables?

Speaker #7: Thank you.

Speaker #6: Yeah, no, appreciate that. I’d say a couple of things there—there’s still some puts and takes on where we land in our EBITDA range.

Adam Comora: Yeah, no, appreciate that. I would say a couple of things there, where there is still some puts and takes on where we land in our EBITDA range between a couple of things that we are doing on the commercial side and where RIN pricing ends the end of the year and that sort of thing. I will say that our confidence comes from when you look at the H2 versus the H1, we do anticipate our production growth to continue to ramp as we move through the year. RIN pricing has been a little stronger in the H2 versus the H1, and we have been participating along in the markets.

Speaker #6: Between a couple of things that we're doing on the commercial side and where we are in pricing at the end of the year, and that sort of thing.

Speaker #6: I will say that our confidence comes from when you look at the second half versus the first half. We do anticipate our production growth to continue to ramp as we move through the year.

Speaker #6: RIN pricing has been a little stronger in the second half versus the first half, and we've been participating along in the markets. Production may trend towards the lower end of our original production guide.

Adam Comora: Production may trend towards the lower end of our original production guide, and feel confident that given our financial discipline and what we are doing around some of those other items that we will be in the guidance range that we provided in the beginning of the year.

Speaker #6: And feel confident that, given our financial discipline and what we're doing around some of those other items, we'll be in the guidance range that we provided at the beginning of the year.

Speaker #7: Sounds good. And then we noticed that your operating expenses and RNG fuel improved a little bit quarter over quarter in Q2. Was there anything notable to call out there?

Matthew Blair: Sounds good. We noticed that your operating expenses in RNG Fuel improved a little bit quarter over quarter in Q2. Is there anything notable to call out there? Could you also provide an update on the Prince William virtual pipeline? Is that set to roll off either in Q3 or Q4 this year?

Speaker #7: And could you also provide an update on the Prince Williams virtual pipeline? Is that set to roll off either in Q3 or Q4 this year?

Speaker #6: Yeah. The virtual pipeline won't roll off in Q3 or Q4 this year. We are still rolling through the engineering of the permanent pipeline. We do feel like there's some opportunities to improve what we're doing on the virtual pipeline.

Adam Comora: Yeah. The virtual pipeline won't roll off in Q3 or Q4 this year. We are still rolling through the engineering of the permanent pipeline. We do feel like there's some opportunities to improve what we're doing on the virtual pipeline. The operating expenses, I think we called out after our first quarter that the weather impacts did have not only some unplanned outages and some higher operating expenses associated with it, but that was what was driving a little bit of the second quarter versus the first quarter. I would highlight again, just what John was mentioning, is the operating leverage in our business as well, where there is a meaningful contribution from additional MMBtus that we're able to process through our existing facilities. Operating leverage works the other way as well, where the vast majority of the costs are relatively fixed.

Speaker #6: And the operating expenses—I think we called out after our first quarter that the weather impacts did have not only some unplanned outages and some higher operating expenses associated with it, but that was what was driving a little bit of the second quarter versus the first quarter.

Speaker #6: And I would highlight again just what John was mentioning, which is the operating leverage in our business as well, where there is a meaningful contribution from additional MMBTUs that we're able to process through our existing facilities.

Speaker #6: And operating leverage works the other way as well, where the vast majority of the costs are relatively fixed. So if you're looking at our operating costs on a per MMBtu basis, that's where there will be some impact as well based on that operating leverage.

Adam Comora: So if you're looking at our operating costs on a per MMBtu basis, that's where there'll be some impact as well based on that operating leverage.

Speaker #7: Sounds good. Thank you.

Matthew Blair: Sounds good. Thank you.

Speaker #1: Thank you. And our next question is going to come from Ryan Finks with B. Riley. Your line is open.

Operator: Thank you. Our next question is going to come from Ryan Pfingst with B. Riley. Your line is open.

Ryan Pfingst: Hey, good morning, guys. Thanks for taking the questions. On renewable power plant conversions, can you just talk about the size of the candidate pipeline today? Can you remind us of any potential CapEx savings for a conversion project compared to something more greenfield?

Speaker #5: Hey, good morning, guys. Thanks for taking the questions. On renewable power plant conversions, can you just talk about the size of the candidate pipeline today?

Speaker #5: And can you remind us of any potential capex savings for a conversion project compared to something more greenfield?

Speaker #2: Yeah, I'll jump in. Hi, Ryan. So, in terms of magnitude, as we look at our current portfolio, obviously, the CMS RNG project was a conversion from RNG from a renewable power project.

Jonathan Maurer: Yeah. I'll jump in. Hi, Ryan. So in terms of magnitude, as we look at our current portfolio, obviously, the CMS RNG Project was a conversion from a renewable power project. As part of our Q2 earnings, we did shut down one of the two power projects located there to make room for the construction. As we go about converting additional projects, there's not any particular capital cost savings that are available to us through that conversion. Instead, by being on the site and knowing the gas collection and the trash in place and being put in place gives us insight into what gas capability is possible from these projects as we look further towards converting. We have probably three, four, five additional projects in our portfolio that we're looking at converting.

Speaker #2: And as part of our Q2 earnings, we did shut down one of the two power projects located there to make room for the construction.

Speaker #2: As we go about converting additional projects, there’s not any particular capital cost savings that are available to us through that conversion. Instead, by being on the site and knowing the gas collection and the trash in place, and being put in place, gives us insight into what gas capability is possible from these projects as we look further towards converting.

Speaker #2: We have probably three, four, or five additional projects in our portfolio that we're looking at converting. I would say the next three or so that are top candidates would be over 4 million MMBtu of design capacity.

Jonathan Maurer: I would say the next three or so that are top candidates with the over 4 million MMBtu of design capacity, then some additional opportunities that we continue to advance could be another 1 million or 2 on top of that. So those are the opportunities that we see right now from that conversion. Of course, in addition to converting renewable power projects, there's continued opportunities with some of our landfill partners and other municipal entities to build out additional projects. We're pretty encouraged by what we see in terms of our pipeline of growth going forward. I think that will cover us for the next couple of years.

Speaker #2: And then some additional opportunities that we continue to advance could be another $1 million or $2 million on top of that. So those are the opportunities that we see right now from that conversion.

Speaker #2: Of course, in addition to converting renewable power projects, there continue to be opportunities with some of our landfill partners and other municipal entities to build out additional projects.

Speaker #2: So we're pretty encouraged by what we see in terms of our pipeline of growth going forward, and I think that will cover us for the next couple of years.

Speaker #5: Appreciate that. And then, just given the recent commentary from VP and Arkea, can you talk about what the market looks like from an M&A perspective?

Ryan Pfingst: Appreciate that. Given the recent commentary from BP and Archaea, can you talk about what the market looks like from an M&A perspective and opportunities that you see for consolidation?

Speaker #5: And opportunities that you see for consolidation?

Speaker #6: Yeah, no, I did notice that news. I think they're really early in their process, from what I can understand or from what I've read so far.

Adam Comora: Yeah. I did notice that news. I think they are really early in their process from what I can understand or from what I have read so far. I think this industry still has a lot of room for consolidation and a lot of renewable electricity projects that have not been developed or converted over into RNG facilities. I think as we have said in the past, we really like what we are doing here at OPAL. We have a really good opportunity for organic growth within our own pipeline, driving new fleet demand. Really what we are laser focused on is improving the asset utilization that we have on our existing plants, which when you do the math on your operating leverage and what opportunities we see there with minimal capital investments, that is really exciting for us and that is what we are really also laser focused on.

Speaker #6: And I think this industry still has a lot of room for consolidation, and a lot of renewable electricity projects that haven't been developed or converted over into RNG facilities.

Speaker #6: And I think, as we’ve said in the past, we really like what we’re doing here at OPAL. We have a really good opportunity for organic growth within our own pipeline.

Speaker #6: Driving new fleet demand—and really what we're laser focused on—is improving the asset utilization that we have on our existing plants. When you do the math on your operating leverage and the opportunities we see there, with minimal capital investments, that's really exciting for us.

Speaker #6: And that's what we're really also laser-focused on. But we do have an eye to see what else is going on in the market where one and one can equal three.

Adam Comora: We do have an eye to see what else is going on in the market where one and one can equal three, as our chairman likes to do that math. We will evaluate opportunities as they are out there in the marketplace. We do expect that there will continue to be consolidation and M&A activity.

Speaker #6: And as our Chairman likes to do, that math, and we will evaluate opportunities as they're out there in the marketplace. And we do expect that there will continue to be consolidation and M&A activity.

Speaker #5: Thanks, guys.

Ryan Pfingst: Thanks, guys.

Speaker #1: Thank you. And the next question will come from Adam Bubas with Goldman Sachs. Your line is open.

Operator: Thank you. The next question will come from Adam Bubes with Goldman Sachs. Your line is open.

Speaker #7: Hi, good morning. I think looking at your production in the quarter of around 1.3 million MMBTU, if I just divide that by your nameplate capacity, it's somewhere in the high 50% range.

Adam Bubes: Hi. Good morning. I think looking at your production in the quarter of around 1.3 million MMBtu, if I just divide that by your nameplate capacity, it is somewhere in the high 50% range. How are you just thinking about the timing of how utilization scales with these newer plants over time and particularly in light of some of the production initiatives you spoke to?

Speaker #7: How are you just thinking about the timing of how utilization scales with these newer plants over time? And particularly in light of some of the production initiatives you spoke to earlier?

Speaker #6: Yeah, Adam, this is Adam here. And let me just be clear, we are not satisfied with where we're at currently in terms of the production from our existing facilities.

Adam Comora: Yeah, Adam, this is Adam here. Let me just be clear, we are not satisfied with where we are at currently in terms of the production from our existing facilities. We have concrete plans to improve them at the facilities. As far as the cadence of how quickly you realize that and how quickly it flows through, as we were chatting through earlier, it takes a little time on the front end to install some technology and coordinate with the landfill owners. I think you get the most meaningful impact and largest impact from those gas collection and gas quantity, excuse me, quality improvement plans that you put in place. As you look across our entire portfolio, there may be a single or a couple of assets that drive it across the entire one, and you try and roll them out as quickly as you can.

Speaker #6: And we have concrete plans to improve them at the facilities. And as far as the cadence of how quickly you realize that and how quickly it flows through, as we were chatting through earlier, it takes a little time on the front end to install some technology and coordinate with the landfill owners and I think you get the most meaningful impact and largest impact from those gas collection and gas quantity excuse me, quality improvement plans that you put in place.

Speaker #6: And as you look across our entire portfolio, there may be a single asset or a couple of assets that drive it across the entire one.

Speaker #6: And you try and roll them out as quickly as you can. So, we anticipate that we're going to start seeing those improvements here in the back half.

Adam Comora: We anticipate that we are going to start seeing those improvements here in the back half. We are trying to accelerate them as quickly as we can. We will be reporting back out on how successful and how quickly they ramp.

Speaker #6: We're trying to accelerate them as quickly as we can, and we will be reporting back out on how successful and how quickly they ramp.

Speaker #7: Great. And then can you just update us on your forward contract arrangements? What percent of D3 RIN contracts are locked in for 2026? And how early would you be able to start entering forward contracts for 2027?

Adam Bubes: Great. Can you just update us on your forward contract arrangements? What percent of D3 RIN contracts are locked in for 2026? How early would you be able to start entering forward contracts for 2027? Just how do you think about puts and takes between locking in 2027 prices versus leaving some flexibility in the spot market?

Speaker #7: And just how do you think about the puts and takes between locking in 2027 prices versus leaving some flexibility in the spot market?

Speaker #6: Yeah. Historically, we've seen trading open up in any sort of material manner towards sometime in the fourth quarter. So, we haven't seen a lot of volume being traded yet in '27.

Adam Comora: Yeah. Historically, we have seen trading open up in any sort of material manner towards sometime in Q4. So we have not seen a lot of volumes being traded yet in 2027. I would say for our 2026 book, we never talk too granularly about how many we have sold and how many we have yet to sell. We are still one of the larger participants in the market. I would say we have been participating in the market, and we will continue to do so. I think 2027 in particular, that RIN price will also be impacted by what happens in the volumes in 2028 and 2029.

Speaker #6: And I would say for our '26 book, we never talk too granularly about how many we've sold and how many we have yet to sell.

Speaker #6: We're still one of the larger participants in the market. I would say we've been participating in the market, and we'll continue to do so.

Speaker #6: And I think ’27 in particular, that RNG price will also be impacted by what happens in the volumes in ’28 and ’29. And we think that what we’re saying is resonating in terms of the potential growth.

Adam Comora: We think that what we are saying is resonating in terms of the potential growth and with policymakers acknowledging not only what the statute says, but the benefits that come with CNG and RNG for the country that we are cautiously optimistic for 2028 and 2029 volumes when we start rolling through SET Rule 3.

Speaker #6: And with policymakers acknowledging not only what the statute says, but the benefits that come with CNG and RNG for the country, that we're cautiously optimistic for '28 and '29 volumes when we start rolling through set rule three.

Speaker #7: Great. Thanks so much.

Adam Bubes: Great. Thanks so much.

Speaker #1: Thank you. And as a reminder, to ask a question, please press *11 on your telephone. Our next question comes from Richard Detoys with UBS. Your line is open.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Richard DeDoys with UBS. Your line is open.

Speaker #8: Hi, thanks for taking our question. Now, focusing on the guide—this is kind of a follow-up—but can you rank the biggest factors that determine whether you land at the midpoint versus landing at the upper end of the range?

Richard DeDoys: Hi. Thanks for taking our question. Focusing on the guide, this is kind of a follow-up, but can you rank the biggest factors that determine whether you land at the midpoint versus landing at the upper end of the range? I know you mentioned the commercial side and RIN pricing to help you land within the guide, but can you dive deeper into what may help you in landing towards the upper end?

Richard DeDios: Hi. Thanks for taking our question. Focusing on the guide, this is kind of a follow-up, but can you rank the biggest factors that determine whether you land at the midpoint versus landing at the upper end of the range? I know you mentioned the commercial side and RIN pricing to help you land within the guide, but can you dive deeper into what may help you in landing towards the upper end?

Speaker #8: I know you mentioned the commercial side and pricing, to help you land within the guide, but can you dive deeper into what may help you in landing towards the upper end?

Speaker #6: Yeah, it would really be driven by production and RNG pricing. And I would say though, in terms of the upper end of the guide, we would probably need to see stronger production growth and stronger RNG pricing.

Adam Comora: Yeah. It would really be driven by production and RIN pricing. I would say, though, in terms of the upper end of the guide, we would probably need to see stronger production growth and stronger RIN pricing than is currently there in the market. I see Kazi's got some additional comments.

Speaker #6: That's currently in the market. I see Kazi’s got some additional comments.

Speaker #2: Yeah, I just want to make sure that you know there are multiple levers that we work with, as you know. We definitely are expecting higher production.

Kazi Hasan: Yeah. I just want to make sure that you. There are multiple levers that we work with, as you know. We do have, definitely, we expecting higher production, as well as we are also very keenly managing the production cost too, operating cost, and to some extent, SG&A's going forward. So there are a number of levers. In addition, too, we have the downstream, the construction portfolio, as well as the dispensing portfolio. So number of levers will contribute to that.

Speaker #2: We're also very keenly managing the production cost. Operating costs, and to some extent SG&A, are going forward. So there are a number of levers.

Speaker #2: In addition, we have the downstream, the construction portfolio, as well as the dispensing portfolio. So, a number of levers will contribute to that.

Speaker #8: All right. Yeah, thank you for the color on that. And focusing on the project front, within your projects, what would you say is the biggest execution risk today?

Richard DeDoys: All right. Yeah. Thank you for the color on that. Focusing on the project front, within your projects, what would you say is the biggest execution risk today? Is it permitting, equipment, et cetera? If you could share, that would be helpful.

Richard DeDios: All right. Yeah. Thank you for the color on that. Focusing on the project front, within your projects, what would you say is the biggest execution risk today? Is it permitting, equipment, et cetera? If you could share, that would be helpful.

Speaker #8: It's permitting, equipment, etc. If you could share that, it would be helpful.

Speaker #3: Well, this is John. On our existing, in-construction projects that we have, once we release a contractor—which we've done for all of our projects—the risks are substantially transferred over to those contractors.

Jonathan Maurer: Well, this is Jonathan. On our existing in-construction projects that we have, once we release a contractor, which we have done for all of our projects, the risks are substantially transferred over to those contractors. While there is no certainty in life, I think that the front-end risk of permitting and geotech and getting pipeline interconnections and electrical interconnections, et cetera, are substantially reduced. We still have pipeline interconnection risk on a couple of our projects, notably CMS, but we have backup virtual pipeline interconnections for that, so it will not affect the timing. That virtual pipeline interconnection will be temporary and time-constrained. So when we look at Cottonwood, Burlington, and CMS all coming online in the H1 or into the middle part for CMS of 2027, those construction timeframes are holding well.

Speaker #3: So, while there's no certainty in life, I think that the front-end risk of permitting, geotech, getting pipeline interconnections, electrical interconnections, etc., is substantially reduced.

Speaker #3: We still have pipeline interconnection risk on a couple of our projects—most notably CMS—but we have backup virtual pipeline interconnections for that. So it won't affect the timing, and that virtual pipeline interconnection will be temporary and time-constrained.

Speaker #3: So, when we look at Cottonwood, Burlington, and CMS, all coming online in the first half or, in the case of CMS, into the middle part of 2027, those construction timeframes are holding well. And having released the EPC contractor for Grady Road and Stones Throw on June 1, as we announced.

Jonathan Maurer: Having released the EPC contractor for Grady Road and Stone's Throw on 1 June, as we announced, we think that those timing factors are pretty well locked in as well. We see timing holding for the projects that we have in construction.

Speaker #3: We think that those timing factors are pretty well locked in as well. So, we see timing holding for the projects that we have in construction.

Speaker #6: Yeah. And this is Adam here. We've now gone through the first phase of construction and commissioning Opal 1.0, if we want to call it that.

Adam Comora: Yeah. This is Adam Comora here. We have now gone through a first phase of construction and commissioning Opal 1.0, if we want to call it that. So we have good visibility on the timing of the in-construction projects.

Speaker #6: So we have good visibility on the timing of the in-construction projects.

Speaker #8: Thank you. I'll turn it back.

Richard DeDoys: Thank you. I will turn it back.

Richard DeDios: Thank you. I will turn it back.

Operator: Thank you. I am showing no further questions at this time. I will now turn it back over to Adam for closing remarks.

Speaker #1: Thank you. I am showing no further questions at this time. I will now turn it back over to Adam for closing remarks.

Speaker #6: Yeah, we appreciate everybody logging in here today and appreciate your interest in OPAL Fuels. Hope everybody has a good rest of the day.

Adam Comora: We appreciate everybody logging in here today and appreciate your interest in OPAL Fuels and hope everybody has a good rest of the day.

Speaker #7: Thanks, everybody.

Jonathan Maurer: Thanks, everybody.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

Q2 2026 OPAL Fuels Inc Earnings Call

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