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Operator: Good day, everyone, and thank you for participating in today’s conference call. I’d 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.

John Ciroli: Thank you, and good day, everyone. Welcome to Montauk Renewables Earnings Conference Call to review the First Quarter 2025 Financial and Operating Results and Development. I’m John Ciroli, Chief Legal Officer and Secretary at Montauk. Joining me today are Sean McClain, Montauk’s President and Chief Executive Officer, to discuss business development; and Kevin Van Asdalan, Chief Financial Officer, to discuss our first quarter 2025 financial and operating results. At this time, I would like to direct your attention to our forward-looking disclosure statement. During this call, certain comments we make constitute forward-looking statements and, as such, involve a number of assumptions, risks and uncertainties that could cause the company’s actual results or performance to differ materially from those expressed in or implied by such forward-looking statements.

These risk factors and uncertainties are detailed in Montauk Renewables’ SEC filings. Our remarks today may also include non-GAAP financial measures. We present EBITDA and adjusted EBITDA metrics because we believe the measures assist investors in analyzing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, can be found in our slide presentation and our first quarter 2025 earnings press release and Forms 10-Q issued and filed on May 8, 2025.

These are available on our website at ir.montaukrenewables.com. After our remarks, we will open the call to questions. We do ask that you please keep the one question to accommodate as many questions as possible. And with that, I will turn the call over to Sean.

Sean McClain: Thank you, John. Good day, everyone, and thank you for joining our call. On March 7, 2025, the Environmental Protection Agency announced its delay of the 2024 Renewable Fuel Standard compliance deadline for all categories. 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. As we have sold all of our D3 RINs associated with our 2024 RNG production, we have zero exposure to the timing and resolution of this 2024 proposed compliance waiver. We have entered into commitments to transfer the majority of our RINs in inventory related to 2025 RNG production at prices approximating the D3 RIN Index.

The EPA Biogas Regulatory Reform Rule became effective in 2025, requiring the separation of RINs after dispensing, which has delayed approximately by one additional month, the ability to have RINs available for sale from current year production. Additionally, we believe the EPA extending the compliance period for 2024 has further delayed the timing of obligated party purchases of RINs from 2025 RNG production. The regulatory uncertainty continues to impact the renewable natural gas industry in a variety of ways. We believe our overall financial position, our prudent operational and commercial practices and our capacity under our existing $200 million credit facility provides us the ability to maintain stability through this period of economic ambiguity.

Our development efforts in North Carolina continue in full force with an expectation to commence significant production and revenue generation activities in 2026. As previously noted, the favorable change in Swine Renewable Energy Credit Generation enacted by the state of North Carolina in 2024 has us engaged in various stages of negotiations with obligated utilities to provide RECs from our expected 2026 production. Correspondingly, we continue to negotiate with utilities to purchase the power we intend to generate from the conversion of swine waste to energy starting in 2026. Our collection and transportation of feedstock swine waste continues to be refined to maximize feedstock solids and cohort [ph] value, to minimize the transportation of low-energy liquid wastes and to pelletize a stable, odorless fuel supply for our patented reactor process.

We are in the final commissioning stages of our second facility at our Apex sites and expect completion in the second quarter of 2025. As previously discussed throughout 2024, we continue to expect a period of excess production capacity while the landfill host increases their waste handling. We continue to work with the landfill host as well as alternative gas transportation, offtake and equipment providing partners to evaluate alternatives to develop our Blue Granite project. As previously discussed, we have received a notice from the utility in February 2025 that it will no longer accept RNG from any producer into its distribution system, a statement in direct opposition to the letter of intents they issued when we were awarded the gas rights to that site.

We have prioritized our Atascocita location as the first of our biogenic CO2 projects to be developed related to our previously announced agreement with European Energy. As previously announced, we are also progressing with our design and construction plans to incorporate food-grade CO2 processing at our Rumpke RNG project location, with an expected commissioning of Q3 2027 and expected volumes of approximately 50,000 metric tons per year of food-grade CO2 to be monetized independently from our agreement with European Energy. In October 2024, we announced a collaboration with Emvolon to transform methane emissions from waste stream biogas into high-value carbon-negative fuel. Leveraging Emvolon’s patented technology the initial pilot is a small-scale demonstration of recovering and converting biogas into green methanol.

The pilot project at our Atascocita facility in Houston, Texas continues with Emvolon having installed their patented containerized processing technology. We do not expect short-term financial benefits from this demonstration nor a disruption to our operations. And with that, I will turn the call over to Kevin.

Kevin Van Asdalan: Thank you, Sean. I will be discussing our first quarter 2025 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 and environmental attributes, including the market price of RINs. As we self-market a significant portion of our RINs, a strategic decision not to commit to transfer available RINs during a period will impact our revenue and operating profit. We sold approximately 9.9 million RINs, representing all RINs from 2024 gas production. Additionally, the impact of EPA rulemaking associated with the implementation of BRRR K2 separation and the extension of the 2024 RINs compliance period has temporarily impacted our entrance into RIN commitment for 2025 RNG production.

As a result, we had approximately 3.9 million RINs in inventory from 2025 RNG production. Also related to the new EPA BRRR rules, we have approximately 1.5 million RINs generated, but not yet separated to be available for sale. We have subsequently entered into commitments to transfer the majority of our RINs in inventory as of March 31, 2025 at prices approximating the D3 RIN Index. The average second quarter to date D3 RIN Index price was approximately $2.47. Total revenues in the first quarter of 2025 were $42.6 million, an increase of $3.8 million, or 9.8%, compared to $38.8 million in the first quarter of 2024. The primary driver for this increase relates to an increase of 2.0 million RINs sold in the first quarter of 2025 compared to the first quarter of 2024 due to the monetization of prior period RINs of approximately 6.8 million that were carried into 2025.

All 9.9 million RINs sold within first quarter of 2025 related to 2024 RNG production. Partially offsetting this impact was a decrease in realized RIN pricing during the first quarter of 2025 to $2.46 compared to $3.25 in the first quarter of 2024. Total general and administrative expenses were $8.8 million for the first quarter of 2025, a decrease of $0.7 million, or 7.1%, compared to $9.4 million in the first quarter of 2024. Employee-related costs, including stock-based compensation, were $5.0 million for the first quarter of 2025, a decrease of $0.7 million, or 12.5%, compared to $5.7 million in the first quarter of 2024. Turning to our segment operating metrics. I’ll begin by reviewing our renewable natural gas segment. We produced approximately 1.4 million MMBtu of RNG during the first quarter of 2025, flat as compared to the approximate 1.4 million during the first quarter of 2024.

Rumpke facility produced 39,000 MMBtu more in the first quarter of 2025 compared to the first quarter of 2024 as a result of previously disclosed plant processing equipment failure that occurred in the first quarter of 2024. Offsetting this increase was our Apex facility that produced 57,000 fewer MMBtu in the first quarter of 2025 compared to the first quarter of 2024 as a result of cold weather conditions impacting gas feedstock availability, well-field extraction environmental factors and bioprocessing equipment failures. Revenues from the Renewable Natural Gas segment during the first quarter of 2025 were $38.5 million, an increase of $4.5 million or 13.1% compared to $34.0 million during the first quarter of 2024. Average commodity pricing for natural gas for the first quarter of 2025 was 63.9% higher than the prior year period.

During the first quarter of 2025, we self-marketed 9.9 million RINs, representing a 2.0 million increase 25.3% compared to 7.9 million RINs self-marketed during the first quarter of 2024. Average pricing realized in RIN sales during the first quarter of 2025 was $2.46 as compared to $3.25 during the first quarter of 2024, a decrease of 24.3%. This compares to the average D3 RIN Index price for the first quarter of 2025 of approximately $2.43 being approximately 22.1% lower than the average D3 RIN Index price for the first quarter of 2024 of $3.12. At March 31, 2025, we had approximately 0.4 million MMBtu available for RIN generation, 1.5 million RINs generated but unseparated, and 3.9 million RINs separated and unsold. At March 31, 2024, we had approximately 0.4 million MMBtu available for RIN generation and 3.4 million RINs generated and unsold.

At March 31, 2024, there were no RINs generated but unseparated. Operating and maintenance expenses for our RNG facilities during the first quarter of 2025 were $14.1 million, an increase of $1.9 million, or 16.1%, compared to $12.1 million during the first quarter of 2024. The primary drivers of this increase were timing of preventative maintenance, media changeout maintenance and well-field operational enhancement programs at our Apex, McCarty, Rumpke and Coastal facilities, respectively. We produced approximately 46,000 megawatt hours in renewable electricity during the first quarter of 2025, a decrease of approximately 8,000 megawatt hours, or 14.8%, compared to 54,000 megawatt hours during the first quarter of 2024. Approximately 6,000 of this decrease in the first quarter of 2025 compared to the first quarter of 2024 resulted from our ceasing operations at our security facility in the first quarter of 2024 resulting from the sale of the gas rights back to the landfill host.

Revenues from renewable electricity facilities during the first quarter of 2025 were $4.2 million, a decrease of $0.6 million, or 13.5%, compared to $4.8 million during the first quarter of 2024. The decrease was primarily driven by the aforementioned cessation of operations at our security facility. Our renewable electricity generation operating and maintenance expenses during the first quarter of 2025 were $3.4 million, an increase of $1.1 million. or 46.2%, compared to $2.3 million during the first quarter of 2024. The increase was primarily driven by an increase in non-capitalizable costs at our Montauk Ag Renewables projects in Turkey, North Carolina. Our Tulsa facility operating and maintenance expenses increased approximately $0.3 million, primarily related to plant process equipment maintenance.

During the first quarter of 2025, we reported impairment of $2.0 million, an increase of $1.5 million, compared to $0.5 million in the first quarter of 2024. The increase primarily relates to the specifically identified impairment of RNG equipment design at our Blue Granite RNG project. The local gas utility informed us that they would no longer be accepting RNG into their distribution system, which is a change from the letter of intent we received from the utility when we were awarded the gas rights for the site. We did not report any impairments related to our assessment of future cash flows. Operating income for the first quarter of 2025 was $0.4 million, a decrease of $2.0 million compared to operating income of $2.4 million in the first quarter of 2024.

RNG operating income for the first quarter of 2025 was $10.4 million, a decrease of $1.2 million, or 10.5%, compared to operating income of $11.6 million for the first quarter of 2024. Renewable electricity generation operating loss for the first quarter of 2025 was $1.0 million, a decrease of $1.4 million, compared to an operating income of $0.4 million for the first quarter of 2024. Turning to our balance sheet. At March 31, 2025, $53 million was outstanding under our term loan. As of March 31, 2025, the company’s capacity available for borrowing under our existing revolving credit facility remains at $117.8 million. During the first quarter of 2025, we generated $9.1 million of cash from operating activities, a 36% decrease from the prior year fiscal period ended March 31, 2024 of cash provided by operating activities of $14.3 million.

Based on our estimate of the present value of our Pico earn out obligation, we reported a decrease of $0.4 million to the liability at March 31, 2025. This decrease was recorded through our RNG segment royalty expense. In the first quarter of 2025, capital expenditures were approximately $11.6 million, of which approximately $6.1 million and $5.9 million were related to our ongoing development of Montauk Ag Renewables and our second Apex facility, respectively. As of March 31, 2025, we had cash and cash equivalents net of restricted cash of approximately $40.1 million. We had accounts and other receivables of approximately $8.5 million. We don’t believe we have any collectibility issues within our receivable status. Adjusted EBITDA for the first fiscal quarter of 2025 was $8.8 million, a decrease of $0.7 million, or 7.2%, compared to adjusted EBITDA of $9.5 million for the first quarter of 2024.

EBITDA for the first quarter of 2025 was approximately $6.7 million, a decrease of $2.1 million, or 24.1%, compared to EBITDA of $8.9 million for the first quarter of 2024. Net loss for the first quarter of 2025 was $0.5 million, a decrease of $2.3 million as compared to net income of $1.9 million for the first quarter Of 2024. Our income tax expense decreased approximately $0.6 million for the first quarter of 2025 as compared to the first quarter of 2024. The difference in effective tax rates between the 2025 first quarter and the 2024 first quarter primarily relates to the decrease in pre-tax income for the first quarter of 2025 as compared to the first quarter of 2024. And with that, I’ll now turn the call back over to Sean.

Sean McClain: Thank you, Kevin. In closing and though 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 are reaffirming our full year 2025 outlook provided in March 2025. For 2025, we expect our RNG production volumes to range between 5.8 million MMBtu and 6 million MMBtu, with corresponding RNG revenues to range between $150 million and $170 million. We expect our 2025 renewable electricity production volumes to range between 178,000 megawatt hours and 186,000 megawatt hours, with corresponding renewable electricity revenues to range between $17 million and $18 million. And with that we will pause for any questions.

Operator: [Operator Instructions] Our first question comes from Saumya Jain with UBS.

Saumya Jain: Hi, good morning guys. Could you provide more color on the RNG project at American Environmental Landfill? Are there opportunities for expansion and how are you guys looking at that going forward?

Sean McClain: Yes. Earlier this year, we announced an exciting opportunity to convert – or actually to build and construct an RNG processing facility at the American Environmental Landfill in Tulsa, Oklahoma. Currently, that is the location of our smaller renewable electricity facility that will continue to be in operation as we are constructing that facility and will remain upon the completion of that facility. The decision to expand and to add the RNG facility is a product of a measurable amount of the increase in available gas feedstock associated with the collaboration with the landfill and some very targeted, well-field investment over the past six to nine months. So very excited to announce that project and to have another project in the portfolio that will have dual capacity for a different production of commodities [indiscernible].

Operator: Our next question comes from Matthew Blair with Tudor, Pickering, Holt.

Matthew Blair: Thank you. And good morning Kevin and Sean. Do you have any more details on why you’re having to relocate your Rumpke site? Is this something that the landowner is requiring? And if so, why? And then it sounds like the new site will be up in 2028, will the existing Rumpke RNG plant to be able to produce up until then, or should we expect a gap in production at some point?

Sean McClain: Thanks, Matthew. Those are all excellent questions. Working in reverse. No, you will not expect any hiccups or pauses in production as we are taking the technology that exists there right now, which is really scattered across three separate facilities and different bearing technologies and generations of it into a consolidated facility that will have the capacity to now add food-grade CO2 processing. It is borne out of a contractual requirement associated with the gas rights, but is a great opportunity, as we have discussed in previous earnings releases, some of the challenges that we have had at that facility. It is one of our older technology deployments in our portfolio. And to have the ability to target a refresh of that equipment, as well as add what is, hopefully, going to be a very exciting food-grade CO2 facility alongside of that is a great opportunity that’s come out of that required change.

Operator: Our next question comes from Betty Zhang with Scotiabank.

Betty Zhang: Thanks, good morning. Could I ask, in the first quarter, did you record any 45Z credits?

Kevin Van Asdalan: No, we have not as of yet.

Operator: [Operator Instructions] Our next question comes from Tim Moore with Clear Street.

Tim Moore: Yes, hi. During their conference call last week, Waste Management mentioned they’re advancing construction of eight additional RNG facilities, on track for completion this year. Are you seeing any slowdown in RNG at any landfills or any of your customers, or partners?

Sean McClain: We are seeing, Tim, a slowdown in some of the acquisition opportunities that have come into the market space. One can only speculate that that is due to some of the uncertainties, the EPA has delayed the compliance periods for the Renewable Fuel Standard. And new projects may or may not get delayed depending on how those projects are deployed by individual businesses. Where Montauk is focused on its current development projects and getting ahead of the curve on long lead time items, particularly those that are sourced external to the United States and trying to reposition as much of the equipment that is necessary for the development projects to be sourced domestically. I think a lot of folks are also taking some form of pause as they’re trying to evaluate the impacts that things like tariffs can have on their projects.

To say that it’s been a widespread delay or that it would be unusual for Waste Management to disclose that work or others in the space, we do have a significant amount of development going on internally today. And so I see it as cautiously optimistic.

Operator: We have a follow-up question from Matthew Blair with Tudor, Pickering, Holt.

Matthew Blair: Great, thank you. Your North Carolina swine project is a little unique in the space. We don’t see many swine projects. And so I was hoping you could just provide some rules of thumb and a little bit more clarity on the project, especially in regards to how it compares to your opportunities on the dairy side. It looks like the North Carolina swine project in terms of total size is going to be pretty comparable to a typical dairy project. But how does this stack up versus dairy on things like a CI score, operating costs and just overall capital efficiency?

Sean McClain: Matt, that is a very complicated but exciting question. The North Carolina project that we are developing is definitively one of the most exciting projects that we have designed and constructed to date. It does differ significantly, not only from our landfill projects, but also from projects that we have done previously in the agriculture space. The differences span just about every aspect of it. The approach that you are collaborating with the farming community is a much broader spoke-and-hub process, dozens of farms, potentially more than that. The number of hogs spaces that you’re servicing, the turnover factor associated with that animal counts. You are serving as a waste remover for the farming community as opposed to traditional landfill gas-to-energy projects where you’re getting sort of traditional structures for the rights to that gas.

You’re providing a service, which in turn provides you an opportunity to monetize on that feedstock. The centralization of that project has the capability of expanding to multiple sizes of a traditional, even a large dairy cluster project. This first phase, where we will have seven of our patented reactor trains, is legitimately the first phase. The ability to expand that multiple times just on the location that we’ve secured in Turkey, North Carolina is truly an exciting opportunity. The diversification of what you produce out of that project, everything from the notion as to how we are going to create the feedstock, you create a stable, odorless storable, palletized fuel source, and to be able to use that fuel source in our patented reactor process to be able to generate methane that can be converted to RNG, to be able to create a number of nonmethane gases, which inclusive of methane can be used for electric generation, the ability to take advantage of the renewable electric credit program that is in North Carolina, specifically for swine waste.

The ability to expand that ultimately to pipeline-quality RNG, to create char products that can serve either as an amendment to soil for rehabilitation or a meaningful component into mass production for fertilizer products. And the ability to attract a theoretical CI score, which is significantly lower than what the best agriculture projects are out there due to the fact that it is an entirely closed-loop system. All of those project features make this a very attractive hedge in a portfolio that allows you to diversify not only the commodities that you’re going to produce, but everything from how you approach your feedstock collection to the rights to it, to what you do with it in terms of commodity and attributes. It gives you an opportunity to be very patient in terms of how you deploy the capital, allow you to choose how and when you expand targeting the farming community specifically to maximize the efficiency of transportation and the, so called, the liquid management features of the waste.

And so hopefully, that gives you a little bit of a flavor for it. In 2026, we’ll be very excited to showcase this project and to be able to expand in the analyst community to be able to really come on site and can see whether it is sold out.

Operator: We have a follow-up question from Tim Moore with Clear Street.

Tim Moore: Thanks. My follow-up question is around the operating and maintenance expense as a percentage of revenue. I know it was a bit high in the December quarter and the March quarter, you mentioned the Apex and the ag facility and some one-off expenses. So, how should we think about that maybe as a percentage of revenues for the rest of the year? I mean, should we model closer to maybe 40% of revenue?

Kevin Van Asdalan: Tim, that’s always a challenge sort of whenever we’re focused on modeling our operating expenses as a percent of revenue, given our – especially in 2025’s first and second quarter, with this BRRR impact in and maybe a temporary pause in obligated properties [ph] sort of purchasing obligations from a RIN standpoint. So, we try not to focus our operating cost as a function of revenues. And I know that that’s not what an analyst likes to hear. We do a lot of work around focusing our operating cost as a unit of production. And to the extent that you’re able to do that from a modeling standpoint, you might be able to more, I don’t want to say accurately, but better sort of project where our [indiscernible] going to go.

And then that normal caveat with our, though a smaller portion, our operating costs in our electric side are obviously going to be – have some timing differences on length and age of engines. For example, our broader power plant has been in service now for a number of years. And as we get to sort of the upper end of those run times on those engines, that expense over the next year or so would generally start increasing as the overhaul and maintenance on the original equipment manufacturer is going to increase. On the RNG side, we are trying to manage our timing for preventative maintenance at areas we find them whenever we’re having a normal day or two outage. But as feedstock or environmental factors change, that could impact forward timing from preventative maintenance or a change in some more minor carbon media changeouts.

But it’s a long-winded way of saying we do all of our internal modeling on operating costs by segment from a basis of production as opposed to a percentage of revenue and again, I know that that’s not a good answer for you. We do all of our modeling from production to try to avoid the timing instances that we have from selling or not selling RINs in a given quarter.

Operator: That concludes today’s question-and-answer session. I’d like to turn the call back to Sean McClain for closing remarks.

Sean McClain: Thank you all for taking the time to join us on the conference call today. We look forward to speaking with you when we present our second quarter results for 2025.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.