Table of Contents

Capital Development Summary

The company plans to expand operations over the next few years. This includes building new renewable natural gas facilities, increasing capacity at existing facilities, and entering the carbon capture business. The total investment is estimated to be $190-$200 million.

Pico Digestion Capacity Increase

The Pico dairy renewable natural gas facility expanded its capacity in early 2024. This allows it to process more dairy waste and produce 39% more renewable natural gas compared to last year. Further increases in feedstock deliveries are expected in 2025.

Second Apex RNG Facility

Construction has started on a second renewable natural gas facility at the Apex landfill. This will process excess gas currently being collected at the landfill. The additional capacity of 2,100 MMBtu per day will come online in the first quarter of 2025 at a cost of $25-$35 million.

Blue Granite and Bowerman RNG Projects

Two new landfill renewable natural gas projects are under development in South Carolina and California. Blue Granite and Bowerman will add 900 MMBtu per day and 3,600 MMBtu per day of capacity respectively when completed in 2026. The total investment will be $110-$130 million.

Montauk Ag Renewables Development

An existing facility is being expanded to process hog waste from farms in North Carolina into renewable natural gas. The full investment of $140-$160 million will allow the company to meet a contract to supply renewable energy credits to Duke Energy. Completion is targeted for late 2025.

Carbon Dioxide Capture Project

The company signed an agreement to supply captured carbon dioxide from its Texas renewable natural gas facilities to an e-methanol plant. This will require $15 million of investment per facility starting in 2024 to enable deliveries of 140,000 tons per year beginning in 2027.

Financial Performance

The company reported a first quarter 2024 profit compared to a loss last year. Revenues more than doubled to $38.8 million due to significantly higher renewable natural gas production and prices. The renewable natural gas business accounted for most of the improvement.

Operating expenses increased only 9.3% year-over-year despite higher revenues. This demonstrates the ability of the business to scale efficiently. Net income was $1.9 million compared to a $3.8 million loss last year.

Cash Flow

The company generated $14.3 million in cash from operations during the first quarter. This funded $22.8 million of capital investments, primarily related to facility expansions and development projects. Cash balances declined only slightly and liquidity remains strong.

Outlook

Management is focused on developing new projects and expanding capacity to drive growth over the next several years. The company believes existing cash balances, operating cash flow, and borrowing capacity provide adequate funding for identified investments. Execution risk exists, but the increasing demand for renewable natural gas is a positive driver overall.