Montauk Renewables Full Year 2025 Earnings Call - $200M Refinance Funds Turkey NC Launch, But RIN Weakness Squeezes EBITDA

Operator: Good day, 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 the earnings materials or made on this call. John, please go ahead.

John Ciroli, Chief Legal Officer and Secretary, Montauk Renewables: Thank you, and good day, everyone. Welcome to Montauk Renewables Earnings Conference Call to review the full year 2025 financial and operating results and developments. 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 developments, and Kevin Van Asdalan, Chief Financial Officer, to discuss our full year 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 further 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 the generally accepted accounting principles. Additional details regarding these non-GAAP financial measures, including reconciliations to the most direct comparable GAAP financial measures, can be found in our slide presentation and in our full year 2025 earnings press release issued and filed March 11, 2026, which is available on our website at ir.montaukrenewables.com. After our remarks, we will open the call to questions from analysts. We ask that you please keep to one question to accommodate as many questions as possible. With that, I will turn the call over to Sean.

Sean McClain, President and Chief Executive Officer, Montauk Renewables: Thank you, John. Good day, everyone, and thank you for joining our call. I am pleased to report that despite the sale of one of our RNG facilities in 2024, we achieved growth in our 2025 RNG production. During 2025, our Pico project received its final tranche of increased contractual feedstock. Processed through our expanded digestion capacity, inlet feedstock averaged approximately 458,000 gallons per day, 17% in excess of our contractual minimum. Given these higher inlet averages, we are currently evaluating additional development expansion opportunities to ensure the beneficial processing of all available feedstock volumes. 2025 RNG production from our expanded redesigned facility was approximately 31.8% higher when compared to the previous year.

To maximize the economic benefit from our increased production and from future development opportunities, we have negotiated the termination of the earn-out obligation related to the acquisition of the Pico facility. During 2025, we successfully completed the construction and commissioning of our second RNG processing facility at the Apex landfill. Though we continue to have excess available capacity with the second facility commissioned as the landfill host increases its waste intake, we produced approximately 7.8% more RNG in 2025 as compared to the previous year. Our GreenWave Energy Partners joint venture continues to address the limited capacity of RNG utilization for transportation by offering third-party RNG volumes access to exclusive, unique, and proprietary transportation pathways. During 2025, GreenWave matched available dispensing capacity with available third-party RNG volumes, separated RINs, and distributed RINs to the partners of GreenWave.

Through our ownership percentage of GreenWave, we received 706,000 RINs and recorded income of $1.5 million during 2025. In September 2025, a joint motion was filed with the North Carolina Utilities Commission by various entities seeking to modify and delay certain aspects of the clean energy and energy portfolio standards, specifically the portfolio standards relating to swine RECs. In October 2025, Montauk filed response comments to the joint motion with the NCUC, requesting that they grant modifications or delays only to individual power suppliers that have demonstrated need, require power suppliers that have not achieved 100% compliance in 2025 to apply any cumulatively acquired swine RECs to the supplier’s unsatisfied 2025 pro rata obligation, and modify the swine REC set aside for 2026 and beyond to match the requirement originally set by North Carolina in 2018.

In January 2026, the NCUC denied the request for waivers and determined that the parties must use bank RECs to meet 2025 compliance targets with the ability to use solar RECs to fill any of their compliance shortage. Additionally, the compliance obligations for those utilities filing the September 2025 joint motion continue to increase through 2029. We are pleased to report that we have begun the commissioning of our Turkey, North Carolina facility. At first phase capacity, we anticipate the ability to process feedstock from approximately 400-450,000 hog spaces, which equates to approximately 35,000 tons of annual waste collection. We have entered into long-term agreements with over 40 separate farming locations to provide access to waste in support of our expected processing needs of our first phase of the project.

We continue to install collection equipment at these separate farms to access the waste and intend to contract with additional farms to secure feedstock sources for future expansion. We currently expect the first phase capital investment to be approximately $200 million and expect our production and revenue generation activities to commence in April 2026. In advance of our commercial operations, feedstock collection has begun with transportation to our facility for pelletization and storage. We are also pleased to announce that during March 2026, we completed a $200 million senior credit facility with HASI. This new facility restructures our existing debt, enables the completion of the first phase of our Turkey, North Carolina project, and provides for future growth initiatives. Also, during March 2026, we successfully negotiated a 5-year gas rights extension for our Raeger RNG facility.

With that, I will turn the call over to Kevin.

Kevin Van Asdalan, Chief Financial Officer, Montauk Renewables: Thank you, Sean. I will be discussing our full year 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 of environmental attributes, including the market price for RINs. As we self-market a significant portion of our RINs, a decision not to commit to transfer available RINs during a period will impact our revenue and operating profit. We have entered into commitments to transfer all RINs from 2025 RNG production, which generated RINs that were separated in 2026. In 2026, we have transferred approximately 3.9 million RINs from the 2025 compliance year at an average realized price of approximately $2.41.

Additionally, we have entered into commitments to transfer approximately 2.5 million RINs generated and available for sale from our 2026 RNG production at an average realized price of approximately $2.42. Total revenues in 2025 were $176.4 million, flat compared to $175.7 million in 2024. There was an increase in the number of RINs we self-marketed during 2025 due to a decision not to commit 6.8 million RINs in the fourth quarter of 2024. The 2025 average realized RIN price of $2.33 decreased approximately 29% compared to $3.28 in 2024.

The natural gas index price increased approximately 51.1% during 2025, moving from $2.27 in 2024 to $3.43 in 2025. Total general and administrative expenses were $31.7 million for 2025, a decrease of $4.6 million, 12.5% compared to $36.3 million in 2024. Employee-related costs, including stock-based compensation, were $18.4 million in 2025, a decrease of $4.7 million or 20.5% compared to $23.1 million in 2024. The decrease is primarily related to the accelerated vesting of certain restricted share awards as a result of the termination of employees in 2024 and other stock vesting timelines.

Also, our corporate insurance fees decreased approximately $0.8 million or 15.4% in 2025 compared to 2024. Related to our investment in our joint venture, Green Wave, we have contributed $4 million in 2025. With our ownership of 51%, we account for this joint venture as an equity method investment. Related to the RIN separation services provided to third-party RNG producers, Green Wave records non-cash related revenues from these separation activities. During 2025, Green Wave distributed approximately 706,000 RINs to us as a result of these activities. We sold these RINs and included approximately $1.6 million in our revenues in 2025. Additionally, when distributed, we recorded the fair value of these RINs as RIN inventory were approximately $1.7 million.

Finally, from our ownership of GreenWave, we recorded $1.5 million as non-cash income from our share of the results of GreenWave. We do not include within our operating highlights table the RINs, revenue from distributed RINs or the cost of the RIN inventory as we present in our operating highlights table various business metrics for the results of our core operations. Turning to our segment operating metrics, I’ll begin by reviewing our renewable natural gas segment. We reported growth in production in 2025 even after considering our 2024 fourth quarter sale of our Southern facility, which produced 85,000 MMBtu in 2024. We produced approximately 5.6 million MMBtu of RNG during 2025 compared to 5.6 million in 2024.

Our Rumpke facility produced 218,000 MMBtu more in 2025 compared to 2024 as a result of increased volumes of feedstock gas. Our McCarty facility produced 76,000 MMBtu less in 2025 compared to 2024, decreases related to the landfill host well field bifurcation and changes to the well field collection system. Revenues from the renewable natural gas segment in 2025 were $155.7 million, a decrease of $2.3 million or 1.4% compared to $158 million in 2024. Average commodity pricing for natural gas for 2025 was 51.1% higher than the prior year.

During 2025, we self-marketed approximately 44.1 million RINs, representing a 7.5 million increase or 20.5% compared to 36.6 million in 2024. The increase was primarily related to market conditions and a decision to not self-market 6.8 million RINs generated and available for sale in the fourth quarter of 2024. Average realized pricing on RIN sales during 2025 was $2.33 as compared to $3.28 in 2024, a decrease of approximately 29%. This compares to the average D3 RIN index price for 2025 of $2.34 being approximately 24.9% lower than the average D3 RIN index price in 2024 of $3.12.

At December 31, 2025, we had approximately 354,000 MMBtu available for RIN generation, 190,000 RINs generated and unseparated, and no RINs generated and unsold. At December 31, 2024, we had approximately 291,000 MMBtu available for RIN generation and had approximately 6.8 million RINs generated and unsold. We have entered into commitments and transferred all of our RINs related to our 2025 RNG production. Operating and maintenance expenses for our RNG facilities in 2025 were $59.1 million, an increase of $5.7 million or 10.7% compared to $53.4 million in 2024.

Our Apex facility operating and maintenance expenses increased approximately $2.3 million, primarily driven by increased utility expense, the timing of maintenance related to gas processing equipment, increased media change outs and disposal costs, and as well as a well field operational enhancement program. Our Atascocita facility operating and maintenance expenses increased approximately $1.5 million, primarily driven by gas processing equipment maintenance, a well field operational enhancement program, media change outs, and utility expense. Our Rumpke facility operating and maintenance expenses increased approximately $1.3 million as a result of a well field operational enhancement program and increased utility expense. Our Raeger facility operating and maintenance expenses increased approximately $0.9 million as a result of a well field operational enhancement program and increased media change outs and disposal costs.

We also recorded approximately $3.4 million in environmental attribute expense related to the cost of RINs distributed from GreenWave and the cost related to dispensing associated with our RNG being dispensed through exclusive, unique, and proprietary transportation pathways, which are not included within our operating metrics table. There were no such environmental attribute expenses incurred during 2024 included with our operating and maintenance expenses for our RNG facilities. We produced 177,000 MWh in renewable electricity in 2025, a decrease of approximately 9,000 MWh or 4.8% compared to 186,000 MWh in 2024.

Our Security facility produced 6,000 MWh less in 2025 compared to 2024 as a result of us ceasing operations in connection with the first quarter of 2024 sale of the gas rights back to the landfill host. Our Bowerman facility produced approximately 2,000 fewer MWh in 2025 compared to 2024, primarily related to the planned preventative engine maintenance that was completed in 2025. Revenues from renewable electricity facilities in 2025 were $17.2 million, a decrease of $0.6 million or 2.9% compared to $17.8 million in 2024. The decrease was primarily driven by the decrease in our Security facility production volumes.

Operating and maintenance expenses for our renewable electricity facilities in 2025 were $14.7 million, an increase of $1.9 million or 15.3% compared to $12.8 million in 2024. The primary driver of the increase were operating and maintenance expenses related to the Montauk Ag Renewables development project, which increased approximately $1.7 million as a result of non-capitalizable costs. We calculated and recorded impairment losses of $3.2 million for 2025, an increase of $1.6 million compared to $1.6 million for 2024. The impairment losses in 2025 primarily relate to our Blue Granite development project, for which the local utility is no longer accepting RNG into its distribution system.

We continue to have a payment for the gas rights agreement award recorded for this RNG site, but we have paused development activities while we review alternatives for the site. The impairment losses in 2024 primarily related to the remaining book value of assets at the Security facility, various RNG equipment that was deemed obsolete for current operations, and RNG assets that were impacted under initial startup testing for one of our RNG construction work in process sites. We did not record any impairments related to our assessment of future cash flows. Other expenses in 2025 were $3.3 million, a decrease of $0.6 million or 15.4% compared to $3.9 million in 2024. The primary driver of the decrease was decreased interest expense of $0.5 million.

In 2025, we recorded $1.5 million in income related to our joint venture investment in GreenWave. In 2024, we recorded proceeds of $1 million from the sale of our gas rights ahead of the fuel supply agreement expiration of our Security facility. Operating profit in 2025 was $0.9 million, a decrease of $15.2 million compared to $16.1 million in 2024. RNG operating profit for 2025 was $38.2 million, a decrease of $17.8 million or 31.9% compared to $56 million in 2024. Renewable electricity generation operating loss for 2025 was $4.8 million, an increase of $2 million or 72.5% compared to $2.8 million in 2024.

Turning to the balance sheet, at December 31, 2025, $44 million was outstanding under our term loan, and $85 million was outstanding under our revolving credit facility. As we reported in our 2025 10-K, we completed a refinancing of our existing debt with a new lender on March 9, 2026. Under applicable accounting guidance, as we had the ability and intent to refinance our debt, we have classified $2.7 million as current debt and $126 million as non-current debt as of December 31, 2025. Our new senior credit facility consists of up to $200 million in senior indebtedness, of which $155 million is outstanding as of March 11, 2026. These proceeds were used to repay all outstanding debt of the company at the date of closing.

Subject to various requirements as defined in the underlying agreement, the company expects to have an additional $25 million in proceeds drawn upon the conclusion of an engineering review over its Montauk Ag Renewables acquisition, our Turkey, North Carolina project. Also subject to various requirements as defined in the underlying agreement, the company expects the final proceeds to be dispensed at the commissioning and operation of its Montauk Ag Renewables acquisition. Our new senior credit facility includes similar covenants as our old syndication, but our total net leverage ratio has increased to 4-to-1 from 3-to-1. This affords us the flexibility to continue our growth, and we expect our new lender to assist us with securing additional project-based financing for our in-progress development projects or new projects.

The new senior credit facility has a 24-month availability period, during which we only have to make quarterly interest payments. After the availability period, we will be subject to quarterly principal payments equal to 1.25% of the total outstanding principal balance. The facility has a fixed interest rate of 10.25% and matures in 2031. As of March 11, 2026, we had approximately $155 million outstanding under the new senior credit facility. The new senior credit facility is subject to customary financial covenants and customary event of default as defined in the underlying agreement. Related to our Pico facility earn out, we settled the earn out obligation in December 2025, resulting in a payment of $4 million. We previously paid in July 2025, $0.2 million under this arrangement.

As Sean mentioned, the settlement and termination of this earn out will benefit us from continued improvement and growth at this facility. This is recorded through our RNG segment royalty expense. During 2025, our capital expenditures were approximately $116.5 million, of which $81 million was for Montauk Ag Renewables, $8.7 million was for the Rumpke RNG relocation project, and $7.7 million was for the second Apex facility. For 2024, our capital expenditures were approximately $62.3 million, of which $27.8 million was for Montauk Ag Renewables, $12.6 million was for the second Apex facility, and $8.8 million was for the Bowerman RNG project. For 2025, we expect our non-development 2026 capital expenditures to range between $20 million and $25 million.

The increase in our 2026 non-development capital expenditures relate to our original equipment manufacturer required lifecycle expenditures on our engines at our Bowerman Electric facility. We expect the original equipment manufacturer required lifecycle expenditures to continue through 2027. Additionally, we currently estimate that our existing 2026 development capital expenditures could range between $100 million and $150 million. As of December 31, 2025, we had cash and cash equivalents of approximately $23.8 million in accounts and other receivables of approximately $9.2 million. We do not believe we have any collectibility issues within our receivables balance. Adjusted EBITDA for 2025 was $35.6 million, a decrease of $7 million or 16.5% compared to $42.6 million for 2024.

EBITDA for 2025 was $32.3 million, a decrease of $8.7 million or 21.2% compared to EBITDA of $41 million in 2024. Net income for 2025 was $1.7 million, a decrease of $8 million or 84.5% compared to $9.7 million in 2024. Related to our old credit agreement, which was refinanced on March 9, 2026. On December 31, 2025, we entered into the sixth amendment to the agreement with Comerica Bank and certain other financial institutions. Under the old amended credit agreement, we were required to maintain a total net leverage ratio of not more than 3.5 to 1 as of December 31, 2025.

As of December 31, 2025, we were in compliance with all financial covenants related to the old credit agreement, which we refinanced on March 9, 2026. With that, I’ll now turn the call back over to Sean.

Sean McClain, President and Chief Executive Officer, Montauk Renewables: Thank you, Kevin. In closing, while we don’t provide guidance as to our internal expectations on the market price of environmental attributes, including the market price of D3 RINs, we would like to provide our 2026 outlook. It’s important to note that our guidance ranges include internal assumptions that may or may not align with current market trends. We expect our RNG production volumes to range between 5.8 and 6.1 million MMBtu, and corresponding RNG revenues to range between $175 million and $190 million. We expect renewable electricity production volumes to range between 195,000 and 207,000 megawatt hours, and corresponding renewable electricity revenues to range between $35 million and $41 million. Included within our renewable electricity segment are our expectations of production and revenues related to the Turkey, North Carolina development project.

With that, we will pause for any questions from analysts.

Operator: Certainly. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Betty Zhang of Scotiabank. Your line is open, Betty.

Betty Zhang, Analyst, Scotiabank: Thanks. Hi, good morning. Would you be able to discuss what’s built into your 2026 RNG production outlook? Specifically, where is the growth coming from? Are you expecting to see any additional volumes from the fifteen-liter engines?

Kevin Van Asdalan, Chief Financial Officer, Montauk Renewables: Thanks, Eddie, for the question. Generally, across our portfolio, we’re seeing increases across all of our RNG sites related to our expectations of landfill improvements in our existing well field automation initiatives. It’s a portfolio increase. It’s an increase across all the sites of our portfolio.

Sean McClain, President and Chief Executive Officer, Montauk Renewables: Eddie indicated in our spend for 2025, there were a number of projects that we took on regarding nonlinear maintenance activities, well field investments, commissioning of facilities, that when you look on a full year basis, the majority of the growth that you get year-over-year is the full year realization of those initiatives that are not only already complete and paid for, but are also already starting to show benefits as you get into the Q4 period of 2025.

Betty Zhang, Analyst, Scotiabank: Okay, thank you.

Operator: Our next question will be coming from the line of Tim Moore of Clear Street. Your line is open, Tim.

Tim Moore, Analyst, Clear Street: Thanks, I appreciate it, and great job closing out the fourth quarter. You know, I’m attempting to just triangulate your adjusted EBITDA potential growth. I know you don’t specifically guide on it, but, you know, do you think it could grow at twice the percentage rate of revenue growth? ’Cause you are lapping a lot of those CapEx, you know, operating maintenance, preventative maintenance, well, you know, well field enhancements, engines. You’re gonna have the RECs inflow from North Carolina, and then, you know, if D3 pricing hangs in there. Just kinda trying to triangulate, you know, maybe how much of that one-off operating, kinda preventative maintenance CapEx won’t be repeated at the same amount this year.

Kevin Van Asdalan, Chief Financial Officer, Montauk Renewables: Thanks, Tim. As obviously we provide guidance expectations around production and revenues for our two main operating segments. We don’t provide external guidance around EBITDA. With the commissioning of our North Carolina turkey project in the second quarter of this year, beginning next month, there will be a significant uplift in EBITDA coming from that location. While we do have well field enhancement initiatives that were started in 2025 at some of our sites that will continue through 2026, there’s always that timing and consistency of nonlinear spend that as items roll off in 2025 and aren’t replicated in 2026, there will be some new spend in 2026 that wasn’t in 2025.

However, I did wanna highlight that though, with the increase in our non-development capital expenditures, specifically at our Bowerman location, it’s an overhaul of all the engines and an entire capital expense, you know, as opposed to operating expenses related to normal original equipment manufacturer recommended expenses that won’t be incurred in 2026.

Sean McClain, President and Chief Executive Officer, Montauk Renewables: I think, Tim, if I understand the question, definitively you’ll see an uptick in cash flows, because a number of the initiatives that you’re hearing that are nonlinear are capitalized as opposed to embedded in your G&A and your operating expense. The areas that are expensed, both from OPEX and administrative costs, the areas that you would see things disproportionate as you head into this year, EBITDA was artificially suppressed in 2025 because you had a mismatch between non-capitalizable costs that were in your Turkey, North Carolina developments, but you didn’t have any corresponding production and revenue.

The other piece of it is there were a number that we called out throughout the year, a number of non-repeated, non-cash, primarily stock-based compensation adjustments that went through your administrative line associated with a number of employee matters that are not going to repeat themselves in 2026. Significant enough that you would see that disproportionate pickup in EBITDA.

Operator: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. Our next question will be coming from the line of Ryan Pfingst of B. Riley Securities. Your line is open, Ryan.

Ryan Pfingst, Analyst, B. Riley Securities: Hey, guys. Thanks for taking my question. I wanted to ask a follow-up on guidance. For RNG revenues, does the $15 million range primarily reflect potential RIN price outcomes, or are there other initiatives on the production side or elsewhere that could, you know, drive you towards the higher end of that range?

Kevin Van Asdalan, Chief Financial Officer, Montauk Renewables: Yep, thanks for the question. At the beginning of the year, we’re trying to cover off various expectations, not just from our production, but to your point, a potential range of RIN pricing. While we won’t have a 2025 RIN hangover, as we’ve already committed and transferred our vintage 2025 RINs and we’re moving into 2026 commitments, we would anticipate potentially an elongated 2026 period that there’s 2025 settlement of RINs from last year given the shutdown that occurred in the federal government last year.

We’re trying to manage, you know, outcomes of our production ranges as well as, you know, though the RIN price has held steady over the last handful of months for either 2025 vintage RINs or 2026 vintage RINs, we’re trying to accommodate a wide range of RIN pricing, sitting here with the vast majority of our 2026 RIN availability not yet committed at pricing.

Operator: I would now like to turn the call back to Sean for closing remarks.

Sean McClain, President and Chief Executive Officer, Montauk Renewables: Thank you all for the questions, and thank you all for taking the time to join us on the conference call today. We look forward to speaking with you throughout 2026.

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