Montauk Renewables, Inc. (NASDAQ:MNTK) Q3 2023 Earnings Call Transcript November 9, 2023 5:00 PM ET

Company Participants

John Ciroli - Chief Legal Officer & Secretary

Sean McClain - Chief Executive Officer & President

Kevin Van Asdalan - Chief Financial Officer

Conference Call Participants

Ryan Pfingst - B. Riley

Craig Shere - Tuohy Brothers

Matthew Blair - Tudor, Pickering, Holt

Operator

Good afternoon, everyone, and thank you for participating in today’s conference call. 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 earnings materials or made on this call. John, please go ahead.

John Ciroli

Thank you, John. Good day, everyone, and thank you for joining our call. During the third quarter of 2023, industry-wide D3 RIN generation decreased approximately 8% when comparing RIN generation in July 2023 to September 2023 as reported by the US EPA. This compares to an approximately 6.6% increase in industry-wide RIN generation from July 2022 to September 2022. We believe contributing factors to the Q3 2023 reduction in D3 RIN generation could include drought weather anomalies of lower-than-average rainfall and higher than average temperatures. As some of our production facilities experienced these weather anomalies and, as Kevin will explain more, our production during the third quarter of 2023 was similarly impacted.

In the third quarter of 2023, our Board of Directors approved funding for the first phase of our swine waste to renewable energy development initiative in North Carolina. Including the approximately $24 million of cumulative expenditures through Q3 2023, we currently expect the first phase total capital investment to range between $140 million and $160 million. We currently expect to have the first of eight processing reactor trains operational during the first half of 2024. We are currently planning for a rolling commissioning schedule for the remaining processing lines beginning in the second half of 2024 and continuing through the second half of 2025. We expect revenue generation to commence in 2025.

Upon completion of this first phase of the project, we expect to have sufficient capacity to satisfy the Duke Energy REC contract through the deployment of up to eight of our patented reactors. At first full phase processing capacity, we anticipate the ability to process feedstock from over 120,000 hog spaces per day, equating to over 200 tons of waste collection per day. The first phase of this project is expected to produce approximately 45,000 to 50,000 megawatt hour equivalents through a combination of 190,000 to 200,000 MMBtus and 25,000 to 30,000 megawatt hours. We also expect the first phase of the project will produce approximately 17,000 to 20,000 tons of charged soil enhancement annually.