Opal Fuels Inc. ((OPAL)) has held its Q4 earnings call. Read on for the main highlights of the call.
Opal Fuels Inc. recently held its earnings call, revealing a mixed sentiment. The company showcased impressive growth in its fuel station service segment and RNG production, alongside a promising outlook for 2025. However, challenges such as unmet production guidance, decreased net income, and regulatory hurdles in renewable power were also highlighted.
Fuel Station Service Segment EBITDA Growth
The fuel station service segment of Opal Fuels saw a remarkable EBITDA growth in 2024, reaching $40.2 million. This figure represents a 76% increase compared to 2023 and aligns with the guidance provided earlier in the year. This growth underscores the company’s strong performance in this area.
RNG Fuel Production Increase
Opal Fuels reported a significant increase in RNG fuel production for 2024, achieving 3.8 million MMBtus, which is a 41% rise from the previous year. Although this was slightly below the guidance, it still marks a substantial growth in production capacity.
Expansion of RNG Projects
The company successfully brought online three large landfill RNG projects in 2024, with a total annual design capacity of 3.8 million MMBtus. This expansion increased their operational facilities from two in 2022 to eleven in 2024, demonstrating their commitment to growing their RNG footprint.
2025 Growth Projections
Looking ahead, Opal Fuels projects RNG production for 2025 to be between 5.0 and 5.4 million MMBtus, representing a 30% to 40% increase over 2024. Additionally, adjusted EBITDA is expected to range from $90 million to $110 million, indicating strong anticipated growth.
RNG Production Shortfall
Despite the growth, the 2024 RNG production fell short of the 4.0 million MMBtus guidance, primarily due to longer ramp-up times at newly commissioned facilities. This shortfall highlights the operational challenges the company faces.
Decreased Revenue and Net Income
Opal Fuels experienced a decrease in revenue and net income for 2024, reporting $299.9 million and $14.3 million, respectively. This decline is attributed to a significant gain recognized in 2023, impacting the year-over-year comparison.
Regulatory Challenges Impacting Renewable Power
The company is facing regulatory challenges, with a projected $10 million decline in Renewable Power adjusted EBITDA for 2025. This is due to Europe no longer certifying US biogas for its regulatory programs, affecting Opal Fuels’ operations.
Forward-Looking Guidance
For 2025, Opal Fuels provided guidance with expectations for adjusted EBITDA to range between $90 million and $110 million, based on RNG production guidance of 5.0 to 5.4 million MMBtus. The guidance considers a D3 RIN price of $2.60 per RIN, with potential impacts on EBITDA due to price shifts. The company also anticipates significant contributions from ITC sales and expects the fuel station services segment to grow its adjusted EBITDA by 30% to 50%.
In summary, Opal Fuels Inc.’s earnings call presented a mixed outlook. While the company is experiencing substantial growth in certain segments and has a positive forecast for 2025, it also faces challenges in production and regulatory compliance. Investors will be keenly watching how Opal Fuels navigates these hurdles and capitalizes on its growth opportunities.