Montauk Renewables, Inc. (“Montauk”) (NASDAQ: MNTK), a renewable energy company specializing in the management, recovery, and conversion of biogas into renewable natural gas (“RNG”), announced financial results for the year ended December 31, 2023.
Full Year Highlights:
- Revenues of $174.9 million, decreased 14.9% year over year
- Net Income of $14.9 million, decreased 57.5% year over year
- Non-GAAP Adjusted EBITDA of $46.5 million, decreased 34.1% year over year
- RNG production of 5.5 million MMBtu, flat year over year
While we had flat production volumes in 2023 as compared to 2022, our sales of RINs from RNG increased approximately 2.5% to 44.9 million RINs sold in 2023. However, lower prices of both the average realized price of RINs sold and natural gas resulted in lower revenues in 2023. These 2023 price driven reductions to revenues of approximately $30.7 million were offset through our tiered royalty structure reducing royalty expense in 2023 by approximately $9.3 million, which led to our $20.9 million reduction in 2023 operating income. Our average pricing realized on RIN sales during 2023 of $2.71 exceeded the average D3 RIN index price of $2.63 during 2023. Our Montauk Ag Renewables development in Turkey, NC was notified by the NC Utilities Commission that it received approval for our New Renewable Energy Facility designation and Certificate of Public Convenience and Necessity. In March 2024, we submitted an amendment to our New Renewable Energy Facility application. At our Pico site, we began using our new reception pit and additional digester capacity in 2023 and expect the digestion capacity project to be fully commissioned during the second quarter of 2024. Our dairy host informed us that the third and final feedstock volumes are to be expected in 2025. We now expect our second facility at our Apex site to be commissioned during the fourth quarter of 2024 at which time we will have the capacity to process available feedstock as the landfill host increases its waste intake. Finally, distribution upgrades required by our interconnection partner for our Blue Granite project have delayed our expected commissioning of that facility until 2026.
We are excited by our recent announcement with a North American subsidiary of European Energy to capture, clean and liquify biogenic carbon dioxide from our four Texas facilities. We expect to begin capital expenditures later in the second half of 2024 with the goal of delivering 140 thousand tons per year in 2027. We also recently reached two separate five year extensions at two of our facilities located on Waste Management landfills. These extensions were reached in connection with our sale of the gas rights agreement at our Security Renewable Electricity facility for $1.0 million effective October 2024. These proceeds are in excess of the sites carrying value and the sale comes as the power purchase agreement at the Security site was set to expire in late 2024.
Full Year Financial Results
Total revenues in 2023 were $174.9 million, a decrease of $30.7 million (14.9%) compared to $205.6 million in 2022. The decrease is primarily related to a decrease in realized RIN prices of 16.6% to $2.71 in 2023 compared to $3.25 in 2022. Additionally, natural gas index pricing decreased 58.7% during 2023 compared to 2022. Operating and maintenance expenses for our RNG facilities were $47.9 million, an increase of $4.2 million (9.5%) compared to $43.7 million in 2022. Our total RNG facilities reported reduced utility expenses of approximately $2.1 million in 2023 as compared to 2022. Other RNG operating and maintenance expenses increased approximately $6.3 million in 2023 compared to 2022 as a result of facility preventative maintenance, repairs, wellfield operational enhancements, and non capitalizable costs. Our Renewable Electricity Generation operating and maintenance expenses in 2023 were $11.7 million, a decrease of $1.3 million (10.2%) compared to $13.1 million in 2022, primarily due to timing of scheduled preventative maintenance intervals at our Bowerman facility. Total general and administrative expenses were $34.4 million in 2023, an increase of $0.3 million (0.8%) compared to $34.1 million in 2022. The increase was primarily related to employee related costs, including stock based compensation. Operating income in 2023 was $23.6 million, a decrease of $20.9 million (47.0%) compared to $44.5 million in 2022. Net income in 2023 was $14.9 million, a decrease of $20.3 million (57.5%) compared to $35.2 million in 2022.
Full Year Operational Results
We produced approximately 5.5 million Metric Million British Thermal Units (“MMBtu”) of RNG in 2023, flat compared to 5.5 million MMBtu produced in 2022. We produced approximately 194 thousand megawatt hours (“MWh”) in Renewable Electricity in 2023, an increase of 4 thousand MWh compared to 190 thousand MWh produced in 2022. Our Security facility produced approximately 5 thousand MWh more in 2023 compared to 2022 as a result of prior period engine maintenance.
2024 Full Year Outlook
- RNG revenues are expected to range between $195 and $215 million
- RNG production volumes are expected to range between 5.8 and 6.1 million MMBtu
- Renewable Electricity revenues are expected to range between $18.0 and $19.0 million
- Renewable Electricity production volumes are expected to range between 190 and 200 thousand MWh
