Earnings call transcript: Montauk Renewables Q2 2025 Misses EPS Forecast, Stock Drops

Montauk Renewables Inc. (MNTK) reported its second-quarter 2025 earnings, revealing a net loss per share of $0.04, missing the forecasted gain of $0.02. Despite revenue slightly surpassing expectations at $45.4 million, the earnings miss led to a significant after-hours stock decline of 13.6%, with shares trading at $1.68, nearing a 52-week low. According to InvestingPro data, the stock has fallen over 60% in the past year, with particularly high price volatility. The company’s challenges include increased net losses and a decrease in adjusted EBITDA. Analysis from InvestingPro suggests the stock is currently trading below its Fair Value.

Key Takeaways

• Montauk Renewables reported a net loss, missing EPS forecasts by $0.06.
• Revenue exceeded expectations, reaching $45.4 million.
• Stock fell 13.6% in after-hours trading, reflecting investor concerns.
• The company is expanding its renewable natural gas (RNG) production capacity.
• Guidance for 2025 remains unchanged despite market challenges.

Company Performance

Montauk Renewables faced a challenging second quarter with increased net losses and a decline in adjusted EBITDA. The company’s revenue rose by 4.1% compared to the same period in 2024, demonstrating some growth in its core operations. However, the consistent losses and decreased profitability metrics have raised concerns among investors. The renewable energy sector’s volatility, particularly in RNG and electricity production, has impacted Montauk’s performance.

Financial Highlights

• Revenue: $45.4 million, up 4.1% from Q2 2024.
• Net loss: $5.5 million, compared to a $700,000 loss in Q2 2024.
• Adjusted EBITDA: $5.0 million, a 28.6% decrease from Q2 2024.
• Cash from operations: $17.3 million, a 19.3% increase.
• Capital expenditures: $45.3 million for the first half of 2025.

Earnings vs. Forecast

Montauk Renewables reported an earnings per share (EPS) of -$0.04, failing to meet the forecasted $0.02 per share, resulting in a negative surprise of 300%. The revenue of $45.4 million slightly exceeded the forecast of $44.67 million, marking a 1.63% positive surprise. The stark contrast between revenue and EPS performance highlights operational challenges impacting profitability.

Market Reaction

Following the earnings announcement, Montauk Renewables’ stock price dropped by 13.6% in after-hours trading. The decline reflects investor disappointment over the earnings miss and increased net loss. The stock is trading near its 52-week low of $1.68, emphasizing market concerns about the company’s future profitability amid industry headwinds.

Outlook & Guidance

Despite the earnings miss, Montauk Renewables maintains its full-year 2025 guidance, expecting RNG production volumes of 5.86 million MMBtu and revenues between $150 million and $170 million. The company is also forecasting renewable electricity production between 178,000 and 186,000 MWh, with revenues of $17 million to $18 million. With a market capitalization of $255 million and a gross profit margin of 43%, InvestingPro data shows the company maintains profitability despite current challenges. Get access to MNTK’s detailed Pro Research Report, along with 1,400+ other comprehensive company analyses, exclusively on InvestingPro.

Executive Commentary

CEO Sean McLean stated, "We continue to expect our full-year 2025 outlook provided in May 2025," indicating confidence in the company’s long-term strategy despite short-term challenges. He also highlighted opportunities in RNG transportation and biogenic CO2 production as potential growth areas.

Risks and Challenges

• Regulatory changes: Proposed lower D3 RIN volume requirements could impact revenue.
• Market volatility: Fluctuations in RNG and electricity prices add financial uncertainty.
• Capital investment: Significant expenditures on projects like the North Carolina swine waste initiative may strain resources.
• Operational efficiency: Maintaining profitability amid rising costs and competitive pressures remains a challenge.

Q&A

During the earnings call, analysts questioned the impact of EPA RVO uncertainty on future operations and sought clarity on the company’s capital investment strategy in North Carolina. Executives addressed one-time maintenance expenses and discussed joint venture strategies to mitigate potential market risks.

Full transcript - Montauk Renewables Inc (MNTK) Q2 2025:

Conference Call Moderator: Good day, everyone, and thank you for participating in today’s conference call. I would like to turn the call over to John Cirolli as he provides some important cautions regarding forward looking statements and non GAAP financial measures contained in the earnings material or made on this call. John, please go ahead.

John Cirolli, Chief Legal Officer and Secretary, Montauk Renewables: Thank you, and good day, everyone. Welcome to Montauk Renewables earnings conference call to review the second quarter twenty twenty five financial and operating results and developments. I’m John Sirole, Chief Legal Officer and Secretary at Montauk. Joining me today are Sean McLean, Montauk’s President and Chief Executive Officer to discuss business developments and Kevin Van Aslin, Chief Financial Officer to discuss our second quarter twenty twenty five 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 in our second quarter twenty twenty five earnings press release and Form 10 Q issued and filed on 08/06/2025. These are available on our website at ir.montaukrenewables.com. After our remarks, we will open the call to analyst questions. We ask that you please keep to one question to accommodate as many questions as possible. And with that, I will turn the call over to Sean.

Sean McLean, President and Chief Executive Officer, Montauk Renewables: Thank you, John. Good day, everyone, and thank you for joining our call. On 06/13/2025, the EPA released the partial waiver of the twenty twenty four cellulosic biofuel volume requirement, the RFS standards for 2026 and 2027, the partial waiver of the 2025 cellulosic biofuel volume requirement, and other changes in their proposed rule. The final twenty twenty four cellulosic biofuel volume requirement was reduced from 1,090,000,000 to 1,010,000,000 d three This reduction was based on actual volumes of d three RINs generated in 2024. In addition, the EPA is making cellulosic waiver credits available for 2024 as an additional compliance flexibility measure for obligated parties.

This final rule has limited direct impact to Montauk as we have sold all of our 2024 RINs. For 2025, the EPA has proposed cellulosic biofuel volumes for 2025 to be reduced from 1,376,000,000 to 1,190,000,000 RINs and to make cellulosic waiver credits available for 2025. These proposals, coupled with the EPA’s biogas regulatory reform rule of matching the production of RNG with the dispensing of RNG to transportation, appear to have limited the pricing level at which the D3 RIM currently trades. The proposed cellulosic biofuel volume requirements for 2026 and 2027 are one billion three hundred million and one billion three hundred and sixty million D3 RINs, respectively. In justification of these lower than expected volumes and the suggestion that small refinery exemptions be potentially revisited, the EPA has expressed their view that cellulosic Rin generation from biogas CNGLNG during 2026 to 2030 will be constrained by the total usage capacity of CNGLNG as transportation fuel.

In the 2025, we entered into an agreement with Pioneer Renewables Energy Marketing to form a joint venture, GreenWave Energy Partners. The primary goal of the joint venture is to help address this limited capacity of RNG utilization for transportation by offering third party all in RNG volume producers access to exclusive, unique, and proprietary transportation pathways. We expect to be the RIN separator for the joint venture and expect to receive separated RINs as our distributions. While we have yet to realize material benefits from the joint venture through the second quarter, we have begun successfully contracting, dispensing and separating RINs through these proprietary transportation pathways. We continue our development efforts in North Carolina with an expectation to commence production and revenue generation activities in early twenty twenty six.

As previously noted, the favorable change in swine renewable energy credit generation legislation enacted by the state of North Carolina in 2024 has us engaged on various stages of negotiations with obligated utilities to provide recs from our expected 2026 production. We have executed a power purchase agreement for the expected power to be produced from the first phase of electric production. The term of this PPA begins once we commission the facility and covers 100% of the electricity produced for ten years. The PPA price is based on set tariffs and considers various impacts, including, but not limited to, demand, season and time of day, and we believe the average price considering these factors of $48 per megawatt hour is in line with various Southeastern United States power markets ranging from 40 to 60 megawatt hours. This favorable change in swine renewable energy credit generation legislation has compelled us to refine development efforts in North Carolina to focus on feedstock exclusively from swine waste, no longer inclusive of an agricultural component.

Additionally, we’ve refined our production focus for this first phase to be exclusively electricity generation. Correspondingly, we continue to optimize the collection and transportation of swine feedstock from the collection farms to the centralized processing location, including the removal of low energy content liquid waste. Such efforts include the pelletization of collected waste and the incorporation of additional upstream processes using screw press and centrifuge technologies. Our feedstock collection and transportation optimization efforts are expected to have an impact on both the number of farms serviced as well as the associated equipment and operating costs. Given the opportunity set afforded by the change in legislation and our refined focus on both the feedstock optimization and increased electricity generation, we are increasing the range of capital investment expected for this first phase to $180,000,000 to $220,000,000 The revised estimate of the total project to the extent impacting 2025 is included in our 2025 development capital expenditures range.

We have successfully completed the construction and commissioning of a second RNG processing facility at the Apex Landfill. As previously noted, the construction of this second facility was triggered by the landfill host projections of biogas feedstock volumes in excess of the original facility’s production capacity, driven by the landfill host waste intake projections. The second facility provides us with an additional 2,100 MMBtu per day of production capacity. We continue to expect a period of excess production capacity as the landfill host continues to increase their waste intake. In 2024, we signed a contract for the annual delivery of 140,000 tons per year of biogenic carbon dioxide.

We intend to capture, clean, and liquefy CO two at select Texas facilities, at which point EE North America will transport it to a Texas based e methanol facility. The delivery term is expected to last fifteen years with the first delivery expected to begin in late twenty twenty seven. During the period prior to commissioning, we have been recognizing an exclusivity fee related to the minimum tons of CO2. The annual price per ton under the contract is adjusted by The US consumer price index. The agreement with EEANA also includes a 50% sharing of any available tax attributes generated by us under code section 45 q, carbon dioxide sequestration credit, in the inflation reduction act as applicable.

There are other revenue sharing components under the agreement to the extent we’re able to produce c o two prior to ENA accepting delivery. Excluding any estimate of tax attributes and including a US consumer price index range of two and a half to 3% annually, we estimate the total revenues under this 15 term to provide an annual minimum of a 140,000 tons of c o two will range between a 170,000,000 to 201,000,000 in total. We have completed the initial site surveys related to the location of the c o two processing equipment, have evaluated equipment suppliers, and started engineering design. We continue to target a commissioning start in 2027 and began incurring capital expenditures for long lead items and design engineering in the 2025. Also in 2024, we announced a collaboration with Embolon to transform methane emissions from waste stream biogas into high value carbon negative fuel.

Leveraging Embolon’s patented technology, the initial pilot was a small scale demonstration of recovering and converting biogas into green methanol. The initial pilot project at our Atascocita facility in Houston, Texas exceeded its anticipated results. Following a successful field demonstration project, together with Embolon, we plan to deploy a portfolio of biogas sites with an aggregate annual production capacity of up to 50,000 metric tons of green methanol by 02/1930. We do not expect short term financial benefits from this joint development venture nor a disruption to our operations. And with that, I will turn the call over to Kevin.

Kevin Van Aslin, Chief Financial Officer, Montauk Renewables: Thank you, Sean. I will be discussing our second quarter twenty twenty five 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 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.

The impact of the EPA rulemaking associated with the implementation BRRR K2 separation and the extension of the 2024 RIN compliance period has temporarily impacted our commitment timing of our 2025 RNG production. At 06/30/2025, we had approximately 3,000,000 RINs generated and unseparated. We expect this timing between RINs generated but unseparated and RINs available for sale to only impact 2025, which is the year DRRR became effective. We had approximately 108,000 RINs in inventory from 2025 RNG production as of 06/30/2025. These RINs were transferred in July under a commitment entered into in June 2025 at a price of $2.42 The average D3 RIN index price for the 2025 was approximately $2.36 Total revenues in the 2025 were $45,100,000 an increase of $1,800,000 or 4.1%, compared to $43,300,000 in the 2024.

The increase is primarily related to timing of revenues recognized under a short term fixed price contract in the twenty twenty five second quarter when compared to the amount of rent available but unsold at 06/30/2024. Partially offsetting this impact was a decrease in realized RIN pricing during the 2025 to $2.42 compared to $3.12 in the 2024, and a reduction in RINs available for sale as a result of the EPA DRRR reform. Total general and administrative expenses were $9,000,000 for the 2025, an increase of $300,000 or 3.5% compared to $8,700,000 in the 2024. Employee related costs, including stock based compensation, were $6,100,000 in the 2025, an increase of $700,000 or 13.7% compared to $5,400,000 in the 2024. The increase in non cash stock based compensation costs relate to a one time acceleration of approximately $1,600,000 in the 2025 due to the termination of an employee, which we do not expect to recur in the 2025.

This compares to unrecognized stock compensation costs of $4,900,000 that will be recognized over approximately the following three and one quarter years. Before turning to our operating segment metrics, I want to address the recent tax law changes occurring with the passage of the One Big Beautiful Bill Act. On 07/04/2025, this bill was signed into law. Tax changes are enacted in the period past, and as such, we will adopt applicable changes beginning in the 2025. This legislation includes significant tax and spending policies, extends or enhances various components of the Tax Cuts and Jobs Act, and made various changes to the tax credits included in the Inflation Reduction Act.

Please refer to our twenty twenty five second quarter Form 10 Q filed on 08/06/2025 for various aspects of the tax law changes we are reviewing. Included in our 2025 tax provision is approximately $800,000 in tax benefits from investment tax credits for certain qualifying property resulting from our 2024 PICO Digestion Expansion Project. Based on our PICO project study, we are better positioned to understand the Inflation Reduction Act investment tax credits for qualifying projects and assets. For other qualifying projects, we now believe that approximately 50% to 75% of the project capital will qualify for investment tax credits, and depending upon a wide variety of factors for projects started within safe harbor guidelines, the tax benefits could range up to 30%. Related to our second APEC RNG facility, placed into service this quarter, we expect to generate tax attribute benefits in our 2025 tax year and to include these benefits in our annual tax provision as of 12/31/2025.

For estimation purposes, we believe that based on approximately 50% of the project capital qualifying and with safe harbor guidelines not being met, investment tax credits could range between $1,000,000 and $2,100,000 for this project. For similar other qualifying projects, we continue to believe that 50% to 75% of the capital will qualify at a 6% to 12% investment tax credit subject to various safe harbor applicability. Turning to our segment operating metrics, I’ll begin by reviewing our Renewable Natural Gas segment. We produced 1,400,000.0 MMBtu of RNG during the 2025, flat as compared to 1,400,000.0 during the 2024. Our Rumpke facility produced 67,000 more in the 2025 compared to the 2024, as a result of a previously disclosed reduction in feedstock inlet and process equipment failures, which occurred in the 2024.

Offsetting this increase was the fourth quarter twenty twenty four sale of our Southern facility, which produced 22,000 MMBtu in the 2024. Revenues from the Renewable Natural Gas segment during the 2025 were $40,800,000 an increase of $2,000,000 or 5.1% compared to $38,800,000 during the 2024. Average commodity pricing for natural gas for the 2025 was 82% higher than the prior year period. During the 2025, we self marketed 11,100,000 RINs, representing a $1,100,000 increase or 10.5% compared to 10,000,000 RINs self marketed during the 2024. Average pricing realized on RIN sales during the 2025 was 2.42 as compared to $3.12 during the 2024, a decrease of approximately 22.4%.

This compares to the average D3 RIN index price for the 2025 of $2.36 being approximately 26.1% lower than the average D3 RIN index price for the 2024 of $3.2 At 06/30/2025, we had approximately 300,000.0 MMBtu available for RIN generation, 3,000,000 RINs generated but unseparated, and 100,000 RINs separated and unsold. At 06/30/2024, we had approximately 400,000 MMBtu available for RIN generation and 4,700,000 RINs generated unsold. At 06/30/2024, there were no RINs generated but unseparated. Our operating and maintenance expenses for our RNG facilities during the 2025 were $17,000,000 an increase of $3,100,000 or 22%, compared to $13,900,000 during the second quarter of twenty twenty four. We do not anticipate approximately $1,800,000 of nonlinear discrete expenses to recur in the 2025, as they relate primarily to annual preventative maintenance and gas processing equipment preventative maintenance.

The primary drivers of the twenty twenty five second quarter increase of $3,100,000 were timing of preventative maintenance, media change out maintenance and other well field operational enhancement programs at our Apex, McCarty, Rumke and Atascocita facilities. We produced approximately 42,000 megawatt hours in renewable electricity during the 2025, a decrease of approximately 3,000 megawatt hours or 6.7% compared to 45,000 megawatt hours during the 2024. Approximately 2,000 of this decrease relates primarily to the planned timing of preventative engine maintenance at our Bowerman facility. Revenues from the renewable electricity facilities during the 2025 were $4,300,000 a decrease of $200,000 or 4.5% compared to $4,500,000 during the 2024. The decrease was primarily driven by the aforementioned decrease in our Bowerman facility production volumes.

Our renewable electricity generation operating and maintenance expenses during the 2025 were $4,800,000 an increase of $100,000 or 2% compared to $4,700,000 during the 2025. We do not anticipate approximately $1,400,000 of discrete expenses primarily associated with our Byramund facility to recur in the 2025 as they relate to nonlinear annual preventative maintenance. The nominal resulting increase in the 2025 was primarily driven by an increase in noncapitalizable costs at our Montauk Ag Renewables projects in Turkey, North Carolina. Offsetting the increase, our Tulsa facility operating and maintenance expenses decreased approximately $200,000 primarily related to well field collection enhancements. During the 2025, we reported impairments of $400,000 an increase of $200,000 compared to 200,000.0 the 2024.

The increase primarily relates to specifically identified assets deemed obsolete or non offerable. We do not report any impairments related to our assessment of future cash flows. Operating loss for the 2025 was $2,400,000 a decrease of $3,300,000 compared to an operating income of 900,000 for the 2024. R and G operating income for the 2025 was $9,200,000 a decrease of $2,500,000 or 21.2% compared to an operating income of $11,700,000 for the 2024. Renewable electricity generation operating loss for the 2025 was $2,300,000 an increase of $300,000 or 19.2% compared to the 2,000,000 operating loss for the 2024.

Turning to our balance sheet. At 06/30/2025, dollars 50,000,000 was outstanding under our term loan, and we had approximately $20,000,000 of outstanding borrowings under our revolving credit facility. As of 06/30/2025, the company’s capacity available for borrowing under our revolving credit facility was $97,400,000 For the first six months of twenty twenty five, we generated $17,300,000 of cash from operating activities, an increase of 19.3% compared to $14,500,000 for the first six months of twenty twenty four. Based on our estimate of the present value of our PICO earn out obligation, we reported an increase of $800,000 to the liability at 06/30/2025. This increase was recorded through our RNG segment royalty expense.

For the first six months of twenty twenty five, our capital expenditures were approximately $45,300,000 of which $27,700,000 $8,400,000 and $7,300,000 were related to our ongoing development of Montauk Ag Renewables, our contractually obligated Rumpke RNG relocation and our second Apex facility, respectively. As of 06/30/2025, we had cash and cash equivalents, net of restricted cash, of approximately $29,100,000 We had accounts and other receivables of approximately $7,500,000 We do not believe we have any collectability issues within our receivables balance. Adjusted EBITDA for the 2025 was $5,000,000 a decrease of $2,000,000 or 28.6 percent compared to adjusted EBITDA of $7,000,000 for the 2024. As previously noted, for the 2025, we incurred the following discrete or nonlinear expenses: approximately $1,500,000 within general and administrative expenses for accelerated stock based compensation and approximately $1,800,000 and $1,400,000 respectively, within RNG and REG operating expenses relating to the timing of discrete preventative maintenance. We do not expect these discrete and nonlinear expenses to recur in the 2025.

EBITDA for the 2025 was $4,600,000 a decrease of $2,100,000 or 31.3% compared to EBITDA of $6,700,000 for the 2024. Net loss for the 2025 was $5,500,000 an increased loss of $4,800,000 as compared to $700,000 for the 2024. Our income tax expense increased approximately $1,500,000 for the 2025 as compared to the 2024. The difference in effective tax rates between twenty twenty five second quarter and the twenty twenty four second quarter primarily relate to changes in pre tax loss for the 2025 as compared to the 2024 pre tax profit. Additionally impacting our second quarter twenty twenty five tax provision was the discrete impacts of the affirmation accelerated stock vesting and the Inflation Reduction Act investment tax.

Credits. I’ll now turn the call back over to Sean.

Sean McLean, President and Chief Executive Officer, Montauk Renewables: 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 May 2025. For 2025, we continue to expect our RNG production volumes to range between 5,860,000 MMBtus with corresponding RNG revenues to range between 150 and 170,000,000. We note that these ranges have not changed relative to our 2025 expectations as we continue to manage through regulatory uncertainty. We continue to expect our 2025 renewable electricity production volumes to range between one hundred and seventy eight and one hundred and eighty six thousand megawatt hours with corresponding renewable electricity volumes to range revenues to range between 17 and 18,000,000, again, unchanged from our previous guidance.

And with that, we will pause for any questions from our analysts.

Conference Call Moderator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Matthew Blair from TPH.

Your line is now open.

Matthew Blair, Analyst, TPH: Thank you, and good morning. I have a two parter here. The first is on the D3 RVO. Sean, thanks for your comments to start things off. But it looks like this year’s D3 ring generation is on pace, you know, not just to easily exceed the RVO for 2025, but also the proposed numbers for 2026 and 2027.

Are you hearing anything that the EPA may reconsider these proposed numbers and move them higher? Like, is there any hope for a better RVO for the RNG space? And then the second question is, highlighted that RNG OpEx moved up in the second quarter. It sounds like that was mostly one time preventative maintenance, media change outs, things like that. It looks like the royalty share also moved up to about 21% in Q2 versus 19% in Q1.

Would you expect that royalty share to stay around 21% for the third and fourth quarters or would that move down as well? Thank you.

Sean McLean, President and Chief Executive Officer, Montauk Renewables: Thank you, Matthew. I will take the, first part related to the RVO. As we’re all aware, the RVO is still within a common period. And obviously a data point that they are taking into consideration is that imbalance between the run rate of production and generation of d three RINs and what the RVO proposed to be set. And so that that continues to be evaluated by the EPA, with that potential change pending.

Kevin, perhaps you can comment on the OpEx.

Kevin Van Aslin, Chief Financial Officer, Montauk Renewables: Yes. Thank you, Matthew. And, yeah, we we expect to not have the approximate 1.8 within RNG and the 1.4 within our REG segments to recur in the second half of the year. These were planned expected, preventative maintenance, items that, you know, again, occurred generally once a year. So that’s why we wanted to highlight the fact that we had these preventative maintenance impacts incurring now primarily in the second half of this year, and we don’t expect to incur those levels of expense in the second half of this year.

Specifically in regards to that royalty calculation, that was a one time we address our PICO earn out quarterly as we’re reporting based upon our expectations of future results of our PICO location. However, the increase this quarter was related to a discrete impact of us receiving our final tranche increase of feedstock manure associated with the expansion of feedstock that led to our building and commissioning the CSTR increasing our digestion capacity. With us receiving that final increase and making a final payment to the dairy for that manure increase, we reduced our discount rate, I. E. We reduced the risk of us not receiving that.

So it was a formulaic calculation associated with a discount rate in our expectations as opposed to anything necessarily changing with the results or operations of PICO. So that one timer influenced our second quarter RNG royalty expense. And on a run rate standpoint, we would expect that production revenue notwithstanding on our tiered royalties to normalize back at that approximate 20% level.

Conference Call Moderator: Thank you. Our next question comes from the line of Tim Moore from Clear Street. Your line is now open.

Tim Moore, Analyst, Clear Street: Thanks. Just a couple of quick questions. Your operating and maintenance expense rose significantly since last October as percentage revenues. You discussed, which was nice to quantify the discrete 1,800,000.0 $1,400,000 expenses that won’t really be incurred at that level in the second half. Are there any other expenses you can think of as you look at your projects, whether it’s swine, anything else you’re doing that might drag down some of the profitability in the second half of this year or early next year?

Just kind of curious about that as we kind of look at the second half of this year and into next year.

Kevin Van Aslin, Chief Financial Officer, Montauk Renewables: Thanks for the question, Tim. Generally, we do some planned outages at our facilities early in the year, specifically some outages at our McCarty location with a planned outage that drove an increase in power controls and equipment controls and things like that. But generally for the second half of this year, we don’t expect those large one timers to continue in the second half. If you look back at our first half of this year compared to first half of last year, you’ll see that generally for our existing locations, we generally incur higher expenses in the first half versus lower expenses in the second half. So presuming that our timing of outages continue, I would expect that run rate, if you will, in the future to continue.

However, occasionally our outages are impacted. If we receive word from our outbound utilities that there’s going to be some outages impacting us, we might change the timing of our planned outages, or if we are looking at other preventative maintenance that indicates that we need to do something else with the equipment at either an RNG or a power site, we might move that around. But a long winded way, Tim, of saying that, as of right now, as we’re entering into our detailed bottoms up budgeting for 2026, I don’t necessarily anticipate any change from our historical run rate of 2025 or our 2025 expectations being lower than the first half of this year, nor a robust change in, our timing or overall level of expenses, into 2026.

Matthew Blair, Analyst, TPH: So just summary of things that

Sean McLean, President and Chief Executive Officer, Montauk Renewables: could happen, not things that we have any anticipation of. One other comment that’s probably not material, but at least worth mentioning is if you’re looking at operating expenses on a percentage basis of production or revenue, there is a a a baseline of noncapitalizable costs associated with our build out at Turkey. And so where you will see those costs continue, they’re not currently paired with production or revenue and have a disproportionate impact. Is your onboarding staff and personnel and you’re you’re you’re doing certain things to run the facility equipment that we’ve already commissioned down their utility charges and whatnot. Those things will continue to ramp up, but what will be significant is when we get into the early ’26, it will be matched with, your revenue and your production coming from that new facility.

Conference Call Moderator: Thank you. Our next question comes from the line of Betty Zhang from Scotiabank. Your line is now open.

Betty Zhang, Analyst, Scotiabank: Thank you. Good morning. Thanks for taking my question. I wanted to ask about the JV that you announced. Could you please elaborate on perhaps what’s the nature of that JV and the contribution by the partners?

And maybe should we understand it as distribution of RNG? How how should we think about that? Thank you.

Sean McLean, President and Chief Executive Officer, Montauk Renewables: Thanks, Betty. I think the best way to explain or give a little more detail behind that JV is the comments that we made regarding the positioning that the EPA has been taking. As they’ve been adjusting the RVO, for the proposed RVO volumes for this year and the outward years, They’ve been explaining. They’ve been very, very verbal about that they have this concern that the growth in the usage of RNG into transportation is not growing at the pace of the potential production of RNG. Knowing that that’s your critical path, no pun intended, for the generation of the three RINs, they have slowed the growth percentages that they’ve applied to those RVOs.

And so rather than, fixing volumes at lower pricing or looking for alternative usage of the feedstock biomethane for something other than the production of RNG and the underlying RHIN, we have focused on trying to form, pathway opportunities that are new, unique, proprietary that qualify for these transportation usages. The ability to do that that has been acknowledged by the EPA, is an opportunity to offset those perceived, growth slowing of the usage of the RNG into transportation and allow for that to be more commensurate to the growth of the production of RNG, should go well to offset, the approach that the EPA is currently taking to try and and keep those growth volumes slower, but at a minimum opens up the opportunity, short term for a large amount of volumes that the industry is claiming that do not have a home for usage in the r and g transportation space.

Kevin Van Aslin, Chief Financial Officer, Montauk Renewables: And then also, Betty, to address your contribution question, we’ve contributed approximately 2,300,000.0 and subject to various triggers and requirements within the underlying agreement, excuse me, we can contribute potentially up to an additional 2,100,000.0. So our contribution in the form of capital will could approximate up to 4.5, as well as the technical understanding and know how, associated with transacting RIN. The other partners are bringing in what we would consider the IP, the relationships, and these new and unique pathways, to dispense third party volumes, and separate K three from K two RINs.

Conference Call Moderator: Thank you. Our next question comes from the line of Tim Moore from Clear Street. Go ahead.

Tim Moore, Analyst, Clear Street: Thanks for allowing the follow-up. So Sean, for the North Carolina Ag Swine Project, when might you get a better understanding maybe of the expansion potential there? It seems like it would just be highly incremental margin as you build that out more and the demand ramps up. And just curious, investors are always asking me, besides that project, what else you’re the most excited and enthusiastic about as you look out the next twelve to eighteen months for the company?

Sean McLean, President and Chief Executive Officer, Montauk Renewables: That’s a great question, Tim. Obviously, we seek to do rapid expansion of that opportunity in North Carolina, it’s critical to the company that we commissioned the first phase of this, and, it’s done so with, predictable long term fixed price off take arrangements. The opportunity to do that and to take advantage of the enhanced legislation, has really caused a very refined focus and optimization as to what it is that we intend to do in North Carolina, predominantly address the the growing need for the farming community to remove this waste from their core business and to do so in a way that removes the most amount of noncaloric liquid and to have a a very optimized dry pelletized product, that is specifically now for the generation of just electricity and take full advantage of that legislation change that was passed at the end of the year. The expandability, you are correct. There is an economy of scale there that can be reached, quite enthusiastically with the optimization of the farm side collection, the optimization of the pelletization, and, the continued suite of combustible, fuel supply that comes out of our patented reactor process that allows for you to continue electric generation to, segue into gas generation and the continuation of a valuable biochar product that is used as fertilizer and soil amendments.

There’s a lot of directional flexibility that happens on a project that has the the way that we are building this. The opportunity for both the electric and the gas interconnections, the opportunity for pelletized waste, the opportunity that we have on this campus for rail transportation that could allow for us to reach beyond not only from a feedstock inlet, but also production outlet in the form of the pelletized waste that we’re creating. There’s a variety of different directions that that project can be, taken for future expansion. And and and notwithstanding the cost reductions that you can get from further horizontal or vertical integrations, particularly in the manufacturing and the securing of the raw materials that go into, the production of even our reactors. The space that we have taken in Turkey, North Carolina is sufficient for a lot of these additional expansion opportunities or optimization opportunities.

And we continue to work with local municipalities and government agencies to pursue any types of tax credit or incentive opportunities to expand what we believe is is is a very exciting project that we’ve taken on. I’m excited about all projects that we have in the company. It is a very fortunate position for a company that’s been in this business as long as it has to have everything from its traditional landfill, r and g conversion opportunities or additional electric gen opportunities, to be in, second and third phases of its shift to an increasing level of commodity based revenue streams. The opportunity to take on, the large scale production of biogenic carbon dioxide, in a commodity base that has the upside of potential tax credit revenue but doesn’t have the attribute risk associated with that commodity. And the ability to look at projects that may be limited in terms of size and scope or proximity to a pipeline for r and g injection and look at the opportunity to develop those with a very efficient technology in the form of methanol production, are the two areas that I think are are very nice balances to our continuation to materially and enthusiastically be in the generation of D3 RINs.

Those are the items that keep us the most excited, all the while we continue to evaluate and explore existing and future opportunities in sort of the legacy business that we have, landfill gas to, RNG and and and the subsequent generation of rents.

John Cirolli, Chief Legal Officer and Secretary, Montauk Renewables: And then we could also point you to the press release, yesterday, between Montauk Renewables and Embolon for the joint development joint venture between our companies that was mentioned in today’s call for the 50,000 gallons per year of green methanol looking to be produced.

Conference Call Moderator: Thank you, everyone. This concludes the question and answer session. I would now like to turn it to Sean for closing remarks.

Sean McLean, President and Chief Executive Officer, Montauk Renewables: Thank you, and thank you for taking the time to join us on the conference call today. We look forward to speaking with you when we present our third quarter twenty twenty five results.

Conference Call Moderator: Thank you for your participation in today’s conference call. This does conclude the program. You may now disconnect.

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