Earnings call transcript: Opal Fuels Q2 2025 misses EPS forecast, stock dips

Opal Fuels Inc. reported its financial results for the second quarter of 2025, revealing a notable miss on earnings per share (EPS) and revenue forecasts. The company’s EPS came in at $0.03, significantly below the anticipated $0.10, marking a 70% negative surprise. Revenue was also below expectations, at $80.5 million compared to the forecasted $86.27 million. Following the earnings release, Opal Fuels’ stock experienced a decline, with premarket trading showing a 3.54% drop to $2.18 per share. According to InvestingPro analysis, the company currently appears undervalued, with a "Fair" overall financial health score of 1.95 out of 5. Subscribers to InvestingPro can access 10 additional key insights about OPAL’s financial position and future prospects.

Key Takeaways

• Opal Fuels’ Q2 2025 EPS missed expectations by 70%.
• Revenue grew year-over-year but fell short of forecasts.
• Stock price dropped 3.54% in premarket trading following the earnings release.
• RNG production saw a 33% increase, with significant project developments underway.
• The company maintains its full-year guidance despite current challenges.

Company Performance

Opal Fuels demonstrated mixed performance in Q2 2025. While revenue increased to $80.5 million from $71 million in the same quarter last year, maintaining a solid revenue growth rate of 15.2% over the last twelve months, the company faced challenges that impacted its earnings. The adjusted EBITDA fell to $16.5 million from $21.1 million a year ago, primarily due to lower Renewable Identification Number (RIN) prices and the loss of International Sustainability and Carbon Certification (ISCC) carbon credits. The company’s gross profit margin stands at 27%, while its current ratio of 1.15 indicates adequate short-term liquidity despite InvestingPro data showing rapid cash burn.

Financial Highlights

• Revenue: $80.5 million, up from $71 million in Q2 2024
• EPS: $0.03, down from expectations of $0.10
• Adjusted EBITDA: $16.5 million, down from $21.1 million in Q2 2024
• Net Income: $7.6 million, up from $1.9 million in Q2 2024

Earnings vs. Forecast

Opal Fuels reported a significant miss in its Q2 2025 earnings, with EPS at $0.03 against a forecast of $0.10, resulting in a 70% negative surprise. Revenue also fell short, coming in at $80.5 million compared to the expected $86.27 million. This underperformance contrasts with the company’s historical trend of meeting or exceeding forecasts in previous quarters.

Market Reaction

Following the earnings announcement, Opal Fuels’ stock saw a decline in premarket trading, dropping 3.54% to $2.18 per share. This movement reflects investor concerns over the earnings miss and revenue shortfall, despite the company’s overall positive revenue growth year-over-year. The stock remains within its 52-week range, with a high of $4.11 and a low of $1.26. Trading at a P/E ratio of 98.28 and an EV/EBITDA multiple of 21.98, the stock appears richly valued according to traditional metrics. Get comprehensive valuation analysis and access to detailed Pro Research Reports covering 1,400+ US stocks with an InvestingPro subscription.

Outlook & Guidance

Despite the challenges faced in Q2, Opal Fuels is maintaining its full-year guidance. The company is targeting the construction of 2 million MMBtu of RNG capacity in 2025 and expects to monetize $50 million in investment tax credits. Future projects, such as the Atlantic RNG project, are nearing commercial operations, with additional developments planned through 2027. With analysts forecasting EPS of $0.96 for FY2025 and revenue growth of 14%, InvestingPro data suggests the company is expected to remain profitable this year despite current headwinds.

Executive Commentary

Co-CEO Adam Kamura stated, "We are making solid progress on building our operating platform," emphasizing the company’s focus on growth and development. John Kamura, Co-CEO, added, "We remain well positioned for continued disciplined execution," highlighting confidence in the company’s strategic direction. Adam Kamura also reiterated the commitment to maximizing shareholder value.

Risks and Challenges

• Lower RIN prices continue to impact financial performance.
• Loss of ISCC carbon credits presents a challenge to revenue streams.
• Non-recurring project operating expenses contributed to the decline in adjusted EBITDA.
• The company faces potential risks from regulatory changes affecting RNG production incentives.
• Market volatility and economic uncertainties could further impact stock performance.

Q&A

During the earnings call, analysts raised questions about the potential for fleet conversions to RNG, Opal Fuels’ capital allocation strategy, and ongoing project development. The company addressed these concerns, emphasizing its focus on strategic growth and exploring M&A opportunities to enhance its market position.

Full transcript - Opal Fuels Inc (OPAL) Q2 2025:

Conference Operator: Good morning, and welcome to the Opel Fuels Second Quarter twenty twenty five Earnings Call and Webcast. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised.

As a reminder, this event is being recorded. I would now like to turn the call over to Todd Firestone, Vice President of Investor Relations to begin. Please go ahead.

Todd Firestone, Vice President of Investor Relations, Opal Fuels: Thank you, and good morning, everyone. Welcome to the Opal Fuel’s second quarter twenty twenty five earnings conference call. With me today are Co CEOs, Adam Kamura and John Kamura as well as Kavya San, Opal’s Chief Financial Officer. Opal Fuels released financial and operating results for the 2025 yesterday afternoon, and those results are available on the Investor Relations section of our website at upalfuels.com. The presentation and access to the webcast for this call are also available on our website.

After completion of today’s call, a replay will be available for ninety days. Before we begin, I’d like to remind you that our remarks, including answers to your questions contain forward looking statements, which involve risks, uncertainties and assumptions. Forward looking statements are not a guarantee of performance and actual results could differ materially from what is contained in such statements. Several factors that could cause or contribute to such differences are described on Slides two and three of our presentation. These forward looking statements reflect our views as of the date of this call.

NOPLE Fuels does not undertake any obligation to update forward looking statements to reflect events or circumstances after the date of this call. Additionally, this call will contain a discussion of certain non GAAP measures. A definition of non GAAP measures used and a reconciliation of those measures to the nearest GAAP measure is included in the appendix of the release and presentation. Adam will begin today’s call by providing an overview of the quarter’s results and recent highlights and an update on our strategic and operational priorities. John will then give a commercial and business development update, after which Tazi will review financial results.

We’ll then open the call for questions. And now I’ll turn the call over to Adam Kamura, Co CEO of Opal Fuel.

Adam Kamura, Co-CEO, Opal Fuels: Good morning, everyone, and thank you for participating in Opal Fuel’s second quarter twenty twenty five earnings call. Second quarter results were in line with our expectations, and we are maintaining our guidance for the year. We are making solid progress on building our operating platform that will support continued growth of our RNG production assets and expanding network of fueling stations. Our business continues to show solid performance, giving us confidence we will continue to see operational improvements throughout the balance of 2025. Second quarter adjusted EBITDA was $16,500,000 $4,600,000 lower compared to the same period last year, with this quarter’s results impacted by a lower RIN price environment, a reduction in renewable power earnings and some non recurring expenses that Qazi will discuss later.

Key highlights from this quarter include production in our RNG fuel segment of 1,200,000.0 MMBtus, which is 33% higher versus the same period last year and in line with our expectations. Our second quarter Fuel Station Services segment EBITDA was approximately $11,200,000 30% higher versus the 2024. We completed the sale of $16,700,000 of Inflation Reduction Act investment tax credits generated by the Prince William RNG facility, which contributed to cash flow and earnings. These tax credits are not included in our adjusted EBITDA. In addition to our operating results, Opal Fuels was added to the Russell two thousand, Russell two thousand Value and Russell two thousand Growth Indices.

It is worth noting that according to Bloomberg, less than 20% of the Russell two thousand companies are included in both the Growth and Value Indices, a testament to the platform and the growth we are delivering. Second quarter earnings also turned the corner for Opal producing positive earnings per share. I want to shift topics and discuss the positive movement we’ve seen in the policy environment during the second quarter with long awaited clarity and bipartisan alignment supporting RNG through constructive tax policy. The passage of the One Big Beautiful Bill Act marks a pivotal moment for our sector with policymakers on both sides of the aisle recognizing the extensive benefits from biomethane capture and its productive use, including economic growth and energy security, while also providing improvements to local air quality and methane abatement. Chief among its provisions is the definitive extension of the 45Z production tax credit through 2029, an improvement implemented by the current Congress compared with the provisions of the earlier Inflation Reduction Act.

Although the new legislation still awaits final treasury guidance and we have not yet recognized these tax benefits in our results, we now have visibility that these production tax benefits will contribute to EBITDA for at least the next four years. Landfill RNG could receive at least $2 per MMBtu of saleable tax credits. In addition, the investment tax credit program was left largely intact and we continue to expect material ITC monetization over the next few years as new RNG projects come online. We do not yet have full clarity from the EPA with regard to its administration of the cellulosic D3 category within the renewable fuel standard or the agency’s treatment of small refinery exemptions. On the positive side, it is constructive that the EPA is now engaged on finalizing these rules and that they are showing general support of American biofuels.

Although we do not participate in the D4 and D5 liquid biofuels markets, we benefit from higher RVO mandates in these categories as they help support D3 prices. Industry is submitting their comment letters today regarding the proposed Set Rule two, and we look forward to further engagement with the EPA and discussing how RNG can promote both the EPA and the administration’s broader policy objectives. One final note on public policy is the positive impact we expect to see for our Fuel Station Services segment from the EPA’s rollback of Phase III truck regulations, which no longer force zero emission vehicles for heavy duty trucking. There has been growing consensus that alternatives to CNG and RNG, such as hydrogen and electric solutions for heavy duty transport, remain operationally and economically challenged. These developments mean more fleets are looking at CNG and RNG given it is a proven and cost effective alternative to diesel.

Opel is allocating more capital to grow our Fuel Station Services segment, which produces strong, predictable cash flow with low correlation to environmental credit prices. With policy clarity, Opel, as one of the largest owners and fastest growing operators of CNG and RNG fueling stations in The United States is well positioned to lead in this market. Despite a lower RIN price environment compared to last year, we expect to deliver operating and financial results in line with our guidance. We have momentum and we will continue executing on our growth plan with financial discipline. With that, I’ll turn it over to John.

John?

John Kamura, Co-CEO, Opal Fuels: Thank you, Adam, and good morning, everyone. This was another quarter of disciplined execution for us at Opel. Our team made operational progress and we are seeing consistent and more importantly, scalable results from the platform that we are building. It is confirming that our business model that integrates RNG production with marketing and distribution through fueling stations is paying off. As Adam mentioned, we produced over 1,200,000.0 MMBtu of RNG in second quarter, a 33% increase year over year.

These gains were driven by the continued ramp up of our Sapphire And Pulp facilities, which came online in late twenty twenty four and improved uptime across the base portfolio. As we discussed on our last call, we are seeing improvement in operating performance. Recent months have shown upward momentum and that performance is giving us confidence in achieving full year production results within the lower end of our guidance range. The Atlantic RNG project, which represents 330,000.00 MMBtu of annual design capacity has begun commissioning and is expected to enter full commercial operations shortly. We are pleased with the execution on this project and expect production contribution in the fourth quarter.

The next wave of in construction projects, Burlington and Cottonwood are expected to come online in 2026 and Kirby thereafter in 2027, together adding an additional 1,800,000.0 MMBtu of annual design capacity. In addition to our in construction projects, our development pipeline has numerous near term opportunities with secured gas rights and we are maintaining our guidance to place 2,000,000 MMBtu into construction in 2025. We follow a rigorous capital allocation framework that includes managing our capital resources, liquidity and financing arrangements. Within this framework, we are developing a number of investment opportunities that meet these criteria. On the downstream side, our fuel station services business continues to perform well.

In the second quarter, segment EBITDA increased 30% compared to last year. Although the first half of this year presented some macro headwinds for new CNG and RNG adoption by logistics and transportation firms from tariffs, from equipment availability and pricing, and from EPA policy uncertainty. We are now seeing all three moving in a positive direction. We are on track to meet our guidance for this segment. We have 45 stations under construction today, 20 of which infrastructure allows us to not only participate in long term recurring dispensing economics, but also to earn a solid rate of return on the infrastructure that is uncorrelated to environmental credit prices.

To facilitate and accommodate our growing operating platform, we continue to invest responsibly in our people, systems, and advocacy efforts. We believe these investments and expenses will enhance long term earnings power and create shareholder value. I’ll now turn the call over to Qazi to discuss the quarter’s financial performance. Qazi?

Kavya San, Chief Financial Officer, Opal Fuels: Thank you, John, and good morning to everyone joining today’s call. Last night, we issued our earnings press release outlining our results for the second quarter ended 06/30/2025. We also concurrently filed our Form 10 Q and posted an updated investor presentation on our website. Revenue and adjusted EBITDA for the quarter were $80,500,000 and $16,500,000 respectively, compared to $71,000,000 and 21,100,000.0 in the same period last year. Net income was $7,600,000 up from $1,900,000 in Q2 twenty twenty four.

This year over year quarterly growth in revenue reflects the continued ramp up of RNG production at facilities commissioned in 2024 and continuing growth in our fuel station services segment. Included in these results is Opel’s share of adjusted EBITDA from equity method investments, which was $6,100,000 for the quarter versus $6,700,000 in Q2 twenty twenty four. While we continue to see growth in most financial parameters, our adjusted EBITDA is lower year over year. Primary drivers are lower RIN prices this year, with a realized price of $2.5 versus $3.13 last year, and the loss of ISCC carbon credits in our renewable power segment. As a reminder, this credit expired in November 2024, and as such, the year over year impact will continue through end of this year.

Our second quarter results are also lower sequentially due to increased non recurring new project operating expense and non recurring G and A supporting our investments in advocacy and technology for our operating platform. Our income statement also includes a non recurring G and A expense of $2,000,000 related to a contract restructuring, which is added back in adjusted EBITDA. The other increase in G and A this quarter reflects targeted upfront investments and expenses in strong advocacy efforts, in addition to strengthening our operational and financial foundation. A key part of strengthening our operational and financial foundation is the improvement in our internal control environment to meet all SOX criteria by 2026. It requires an upfront and non recurring end to end redesign of our financial processes, implementation of a robust control environment, and the deployment of tools that can scale with our business.

These investments will not only enable a sustainable governance structure to support our today’s complexity, it will also allow for greater scale and long term cost savings. Now let’s turn to our capital expenditure for the quarter, which totaled $16,400,000 including $7,300,000 related to our equity investments. As of June 30, our total liquidity was $203,200,000 which includes $29,300,000 of cash, cash equivalents and short term investments, 138,400,000.0 of undrawn availability under our term credit facility and $35,500,000 of remaining capacity under our revolver. In June, we monetized approximately $17,000,000 in investment tax credits and still expect roughly $50,000,000 in gross ITC sales in 2025, which bolsters our operating cash flow. We believe our current liquidity position combined with operating cash flows is sufficient to fund our existing construction projects and anticipated funding needs.

As Adam mentioned, in spite of lower RIN prices, we continue to expect adjusted EBITDA to be within the range of our guidance. We are planning an Investor Day and engage with the investor community later this year. We will discuss our long term business outlook and our ability to generate sustainable discretionary free cash flow during that meeting. With that, I’ll turn the call back over to John for closing remarks.

John Kamura, Co-CEO, Opal Fuels: In closing, we remain well positioned for continued disciplined execution of our strategic growth objectives and the expansion of Opel’s vertically integrated platform. And with that, I’ll turn the call over to the operator for Q and A. Thank you all for your interest in Opel Fuels.

Conference Operator: Our first question comes from Derrick Whitfield with Texas Capital. Your line is open.

Derek Whitfield, Analyst, Texas Capital: Good morning, guys, and thanks for your time this morning. Good morning, Derek. Good morning. One of our biggest takeaways from your and clean releases yesterday was really the strength of your dispensing business. Perhaps for Adam, could you speak to how the competitive landscape has changed in recent quarters on the downstream side and the demand you’re seeing from customers for conversions from fossil to RNG now that EV and hydrogen options are seemingly being pushed to the right?

Adam Kamura, Co-CEO, Opal Fuels: Yeah, thanks for the question, Derek. I would say that given some of those recent policy changes and what we’re seeing from equipment pricing and equipment availability, there has been a market shift where really a lot of the large major national fleets are really engaging on CNG and RNG. And I think when those large fleets are looking around to who can really support a successful deployment and really rely on dependable supply of RNG. There aren’t too many that have really executed on it. And I think Opel Fuels is in a really good position given our success and track record that we’ve had in this space working with these major national fleets.

So I would say, there have been earlier in the year some macro headwinds around whether it be where tariffs were playing out and where freight rates have been and that sort of thing, which may have slowed a little bit people’s thinking on deploying RNG and CNG. We are seeing some of that abate, and we’re really front and center for national fleet deployments. So we’re really enthusiastic about what the prospects look to be for this as a good cost effective and proven technology versus diesel. And although you have also seen some folks on the margin that maybe are no longer being forced to focus as much on sustainability, There are still a number of significant fleets that still have sustainability targets and we feel good about where we sit and where the industry is headed from that perspective.

Derek Whitfield, Analyst, Texas Capital: Great, Adam. And just to clarify, I mean, this point, you guys really haven’t seen any pull through on the X15 inside. Is that fair?

Adam Kamura, Co-CEO, Opal Fuels: I would say this. In general, trucking and logistics firms are a little bit slower moving than we would all like. And in terms of pull through, are we seeing those trucks being deployed on the road today? Not as quickly as we would like. And at the same time, the funnel of business development activity, we’re really pleased with.

So we think there’s a bright outlook for it. And again, you still had it’s relatively not that long ago that we had that Phase three EPA truck clarity. And it wasn’t that long ago that we had additional equipment being provided into the marketplace. So, no, it’s not in our results yet today. And at the same time, we’re feeling better about all those engagements and where it’s going to shake out for 2026 and beyond.

Derek Whitfield, Analyst, Texas Capital: That’s great. And perhaps for John, my other big takeaway from your release was the reiterated guidance despite R and G production being a little weaker than consensus had expected for the quarter. Could you perhaps speak to exit rates for the quarter or just maybe qualify or give some character to how much of your construction projects today or how they’re progressing and like what percent of completion they are?

John Kamura, Co-CEO, Opal Fuels: Sure. Thanks, Derek. We remain really optimistic about our portfolio of projects in construction. The Atlantic project is in advanced stages commissioning right now, and we expect that to come online shortly. And that will add to our overall nameplate capacity and operation during the year and meaningfully contribute to the fourth quarter.

We have the Burlington and Cottonwood projects on track for next year and they’re advanced enough into construction that we have good confidence on the timing of those projects as well. I mentioned that the Kirby project is in 2027. That project was originally scheduled for the 2026. The project is located in Northern California where permitting is a little bit difficult. And when a project is on the front end of the construction timeframe, sometimes that permitting timeline can affect the overall project timeframe.

In addition, the project is a little longer timeframe of construction than our other projects because of both being in California and being a bit more complicated than some of our other projects. So, generally speaking, when we look at our total portfolio of projects in operation and construction, we’re seeing that 9,100,000.0 MMBtu in operation at the end of this year, 10.2 at the end of next year, and then with Kirby and others coming online, more than 10.9 in the following year. So really on track on the execution of that growth and looking forward to putting additional projects into construction as well during the course of the year. We’re on track with our guidance in line with our guidance of $2,000,000 and we expect based on projects that we’ve announced before that are in development with signed gas rights that we should meet that and proceed with those growth plans that we expect.

Derek Whitfield, Analyst, Texas Capital: Thanks, John. It’s great color. I’ll turn it back to the operator.

Conference Operator: Thank you. Our next question comes from Ryan Pfingst with B. Riley. Your line is open.

Derek Whitfield, Analyst, Texas Capital: Hey, guys. Thanks for taking my questions.

Kavya San, Chief Financial Officer, Opal Fuels: So as mentioned,

Derek Whitfield, Analyst, Texas Capital: you’ve been able to maintain your guidance despite the weaker RIN price environment. Could you just give some more detail around what the main drivers are that have allowed you to keep guidance unchanged?

Kavya San, Chief Financial Officer, Opal Fuels: Hi, Ryan. Thanks for the question. There are a couple of areas that we see we would be able to continue to maintain our guidance. Part of the issue part of the drivers are, if you remember, we do have some for purchases of the RINs for sales of the RINs that allows us to have a little bit of confidence in terms of our achievement of revenue. The second area that I see is our production, the way the production is trending.

If we can keep it towards the lower end of our guidance, I think we will be able to hit that. The third major area is, even if you see the quarter has a one time non recurring G and A expenses and investments, those will normalize for the rest of the year. In addition to them, so these are generally and including our RNG project. The other major contributor would be our downstream business, our constructions and both in our self FBA stations as well as construction for third parties, it has got lumpiness. And those lumpiness has shown up hardly in the lack of it during Q2, which are picking up pretty strongly in Q3 and Q4.

So these are the few areas that gives us enough confidence that we will be within that range.

Derek Whitfield, Analyst, Texas Capital: Thanks, guys. I appreciate that color. And then for my second question, can you just talk about the landscape for M and A and how you’re thinking about potential acquisition opportunities today?

Adam Kamura, Co-CEO, Opal Fuels: Yeah, this is Adam here. We’re still in a fragmented industry and it’s clear that we’re building a scalable operating platform, both in our people and technological platform, and our vertical integration also allows for really interesting opportunities on both upstream and downstream. So we do see that there is opportunities for consolidation in the sector. And we always look at what’s going to maximize shareholder value. Some of that comes down to what are the best allocation for those resources in order to do it.

Is it investing in new projects? Is it looking at some of those M and A opportunities? It wouldn’t surprise us if there is further consolidation in the industry. And I’ll leave it at that for now.

Ryan Pfingst, Analyst, B. Riley: Yes, fair enough. Thanks, Adam. I’ll turn it back.

Conference Operator: Thank you. Our next question comes from Martin Malloy with Johnson Rice and Company. Your line is open.

Martin Malloy, Analyst, Johnson Rice and Company: Good morning. Thank you for taking my question. I want to kind of follow on the last question and ask about returning capital to shareholders. And I realize you just talked about having an Investor Day towards the end of the year. So if you want to tell me, just hold on that I get it.

But any thoughts on timing of returning capital to shareholders? Would it ever make sense to ratchet back maybe on CapEx spending and institute a dividend?

Adam Kamura, Co-CEO, Opal Fuels: Yeah, Marty, this is Adam here again. And I want to impress upon everybody that we are here to maximize shareholder value. And we are really disciplined in looking at how to allocate what is liquidity and discretionary free cash flow available. We do have a robust set of project opportunities, which even given where RIN prices are today and still affording attractive spreads between our cost of capital and investing that capital. But we’re always flexible in our thinking on what we think is going to drive and maximize shareholder value.

So I would say let’s hold off a little bit until Investor Day and we give a little bit more thought and share our thoughts around discretionary free cash flow and what to do it and what the optionality is. The nice thing about our business and our business platform is we’re going to have that optionality. And we always think that we are going to be creative and proactive in how we use that discretionary free cash flow to maximize shareholder value. So the nice thing about our business again is that when you’re doing that when you built that platform, do not require CapEx to produce our fuel in the future, we are going to have options on what to do with that discretionary free cash flow, whether it be M and A opportunities, returning cash to shareholders or investing in new greenfield projects.

Martin Malloy, Analyst, Johnson Rice and Company: Thank you. I’ll turn it back.

Conference Operator: Thank you. Our next question comes from Adam Kubes with Goldman Sachs. Your line is open.

Ryan Pfingst, Analyst, B. Riley: Hi, good morning. Nice to see the 30 EBITDA growth in Fuel Station Services. On one hand, I think the comps get a little bit harder from here. On the other hand, it sounds like underlying policy and macro environment is becoming more supportive. Just how are you thinking about what growth can look like for that business on a more normalized basis in the medium term?

Adam Kamura, Co-CEO, Opal Fuels: Yes. So I’m going to this is Adam again. I’m going to sort of reiterate some of the comments that Qazi said. So 2Q, a little bit light in terms of finishing out construction, and that’s just the timing of when stations are set to come online or finish out construction. So we do see a pickup in the back half from and even in Q3 from some of those activities and remain comfortable with our the guidance we provided for fuel station services for the year.

And as we get into the so that’s what I’m going to consider the medium term outlook, the next two quarters, given how investors think of things. But in reality, we’ll talk a little bit more about 2026 and beyond sort of later in the year and as we provide guidance for 2026 and beyond.

Ryan Pfingst, Analyst, B. Riley: Great. And then I think in May, you announced JV landfill gas project with RSG in North Carolina. I may have missed it, but I don’t think I heard or saw an update. How should we be thinking about timing and your share of MMBtu on that project?

Adam Kamura, Co-CEO, Opal Fuels: Yeah. No, I appreciate you raising that one. We’re really excited about that project with Republic at the CMS Landfill in North Carolina. We are just finalizing and finishing our development around that, where it’s going lay out on the site and that sort of thing. So you are correct, you didn’t miss anything yet in terms of announcing formal construction start.

But that one as well as some other gas rights we secured earlier in the year with our partner GFL for four sites. We have a number of projects that are we’re currently in the final stages of development and that sort of thing. And it’s those and a couple of other projects that give us confidence that we do have a number of projects that can meet our 2,000,000 MMBtu target of construction starts for the year.

Ryan Pfingst, Analyst, B. Riley: Terrific. And then last one for me. Can you just update us on returns on perspective landfill gas projects marking to market for the current D3 RIN pricing? And you spoke to this a little bit earlier, but just how you’re thinking about balancing potential to invest in new projects versus sort of letting the strong underlying free cash flow conversion machine of these projects start to flow through the financials?

Kavya San, Chief Financial Officer, Opal Fuels: Thanks a lot. That’s a good question. And I would put it this way. The risk adjusted return is very important for us. So far, as Adam said, in terms of the potential capital allocations, whether we are thinking about the CMS project or the other gas rights we secured in the past, including other opportunities set with us, we have in front of us, we are evaluating on the basis of risk adjusted RIN price outlook.

We are not looking at on a rearview mirror with a very high RIN price and our evaluation and final investment decision will be on the basis of the practically pragmatically expected RIN price over the horizon of the project. So we will rest assured that we are not going to give our green light or build any of our assets with a optimistic forecast. So it’s very important. That’s why we are looking at the capital allocation between both RNG projects as well as the downstream business where we’re looking at potential opportunities in owning infrastructures, where I can we can earn risk adjusted return, which are not tied to the environmental credits market. So managing and deriving some level of portfolio stability on the long term for the entirety of the portfolio.

So in both cases, we are looking at risk adjusted return and uncorrelated revenue and bottom line pattern.

Ryan Pfingst, Analyst, B. Riley: Great. Thanks so much.

Conference Operator: Thank you. Our next question comes from Betty Zhang with Scotiabank. Your line is open.

Adam Kubes, Analyst, Goldman Sachs: Good morning. Thank you for taking my questions. I wanted to go back to the previous question, maybe a similar in in a similar vein, how are you thinking about balancing, investment and growth between the upstream RNG production and the downstream fuel distribution? Are you looking to grow RNG supply or is it more about building out more RNG distribution?

Kavya San, Chief Financial Officer, Opal Fuels: Another very good question. So we are actually looking at it in two different perspective. One, the opportunity sets in both upstream and downstream, how each of those opportunity in of itself give us what kind of risk adjusted return. The second criteria we’re looking at is, when I’m combining these two, to what extent each one of those are enhancing the value for the others, as well as bringing the stability to the portfolio in the longer term. So these are the criteria we’re going to have to maintain as we green light, whether they invest in new RNG facilities or and investing in the downstream.

So both has to be fulfilled both criteria has to be fulfilled for us to move forward in investing in this area. As Adam mentioned, that is where ultimately we’ll decide if we have the opportunity set for us to be able to continue to invest, to improve the shareholder value or we’ll give the money back to the shareholders in some other form.

Adam Kamura, Co-CEO, Opal Fuels: Yes. And I just yes, this is Adam. I just want to follow-up on that. We believe we’ve got a number of larger projects within our development pipeline, which will meet the investment criteria on a standalone basis. And at the same time, we really like the Fuel Station Services business and continue to allocate more capital to it.

And quite frankly, even if we were to invest more in the downstream development excuse me, in the downstream fuel station network, you’ve always got the ability to also participate in RNG dispensing economics. So we’re looking at both a little bit independently, find that we’ve got really good opportunities on both sides and recognize the synergies when you’re doing them both at the same time.

Adam Kubes, Analyst, Goldman Sachs: That makes sense. For my follow-up, I wanted to ask about voluntary markets. Just curious what you’re seeing there. If you could provide an update, that would be helpful.

Adam Kamura, Co-CEO, Opal Fuels: Yeah, it’s been a little quiet on voluntary markets is how I would describe it. There are a couple of state level programs that are thinking about pushing it through. I know New York is thinking about one. And again, we’re trying to maximize the value of the molecules that we produce. And that continues to be in the transportation fuel market.

It really drove what our business strategy has been in terms of integrating the upstream and the downstream to be able to have off take into that most valuable market. That being said, we are agnostic to whether or not the fixed price voluntary markets will be at a level enough to what we think makes sense for us to contract in those markets. We’ve said time and time again, we thought it was a little bit of mispriced regulatory risk between the discount and the fixed price voluntary markets and what we’re able to achieve in transportation fuel that may change over time. The other voluntary market that we’re waiting to open up would be export markets over to Europe and that sort of thing, which is still challenged with Pathways. So for now, it’s been a little quiet on voluntary fixed price market from our perspective, but we are, as we always like to say, flexible in our thinking, and should that make sense, we’ll evaluate those as they materialize.

Adam Kubes, Analyst, Goldman Sachs: Very helpful. Thank you.

Conference Operator: Thank you. I’m showing no further questions at this time. I would now like to turn it back to Adam Kamura for closing remarks.

Adam Kamura, Co-CEO, Opal Fuels: All right. We appreciate everybody’s interest in Opal Fuels and hope everybody has a great rest of the day and great rest of their summer.

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

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