Good afternoon, 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 earning materials or made on this call. John, please go ahead.

Thank you and good afternoon, everyone. Welcome to Montauk Renewables earnings conference call to review the first quarter 2024 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 development; and Kevin Van Asdalan, Chief Financial Officer, to discuss our first quarter 2024 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 first quarter 2024 earnings press release and Form 10-Q issued and filed this afternoon, which are available on our website at ir.montaukrenewables.com. After our remarks, we will open the call to questions. We ask that you please keep to 1 question to accommodate as many questions as possible. And with that, I'll turn the call over to Sean.

Thank you, John. Good day, everyone, and thank you for joining our call. To begin with development, my comments will be focused on updates regarding our Pico dairy digestion capacity increase and our Turkey, North Carolina Montauk Ag Renewables swine waste energy project, both of which were also discussed during our 2023 year-end call a short 2 months ago. As we ended 2023, we had commissioned the first of our 2 new digesters in our new expanded reception pit at our Pico dairy cluster project. During the first quarter of 2024, we completed the commissioning of the second and final digester. With the digestion expansion project now fully commissioned, we expect a continued ramp up in production through the second quarter of 2024. The Pico expansion project increased digestion capacity by approximately 50% to better match the unchanged processing capacity of the project's RNG facility. The new digestion capacity is expected to be fully utilized once the dairy provides our contractual third and final increase in feedstock volumes in 2025. In the first quarter of 2024, our RNG production at the Pico facility increased approximately 39% compared to the first quarter of 2023. I will now provide an update regarding our North Carolina swine to waste energy development, Montauk Ag Renewables. We have substantially completed the engineering and are preparing to initiate the commissioning activities of our first reactor processing line at our Turkey, North Carolina location. We expect commissioning to continue through the end of June 2024. Our development progress has positioned us to be able to enter into a full engineering procurement and construction contract related to the first phase full build-out to satisfy our Duke REC agreement. We have also placed orders for various significant components, many of which have long lead times, related to the construction…

Thank you, Sean. I will be discussing our first quarter 2024 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. We strategically determined not to transfer all available D3 RINs generated and available for transfer during the first quarter of 2024 based on our internal expectations related to the price of D3 RINs. As a result, we have approximately 3.4 million RINs remaining in inventory from 2024 first quarter gas production. We did sell approximately 3.9 million RINs representing all RINs from our 2023 gas production. We have not entered into commitments to transfer RINs in inventory or RINs expected to be generated from forecasted future production. The average second quarter through the first few days of May, D3 RIN price was approximately $3.28. Total revenues in the first quarter of 2024 were $38.8 million, an increase of $19.6 million or 102.5% compared to $19.2 million in the first quarter of 2023. The primary driver for this increase relates to an increase of 4.9 million RINs sold in the first quarter of 2024 compared to the first quarter of 2023 due to our decision to not sell RINs in the first quarter of 2023 due to our belief that the first quarter of 2023 D3 RIN index volatility was temporary. Of the 7.9 million RINs sold in the first quarter of 2024, 4.0 million related to 2024 RNG production. Also contributing to the increase is an increase…

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 2024 outlook provided in March 2024. For 2024, we expect our RNG production volumes to range between 5.8 million and 6.1 million MMBtu with corresponding RNG revenues to range between $195 million and $215 million. We expect our 2024 renewable electricity production volumes to range between 190,000 and 200,000 megawatt hours with corresponding renewable electricity revenue to range between $18 million and $19 million. And with that, we will pause for any questions.

[Operator Instructions] And our first question comes from Paul Cheng from Scotiabank.

Maybe this is for John. I understand that from time-to-time you would make decisions whether you want to sell all of the available RIN or not in the quarter. But from the outside, is there any indicator -- we're trying to understand the process how you're going to come about making how much of the RIN you will decide to sell in a particular quarter? Is there any indicator from the outside that we should track and based on that, we'll be able to have some kind of rule of thumb, we can guess that what that volume may look like?

Good question. How we determine the volume of RINs that we sell is as closely as we can tie it to the purchasing cadence of the obligated parties. So rather than timing the market -- and obviously all sales are subjected to as much analysis as we can place into publicly available information regarding the RFS, regarding waiver credits, regarding the possibility of any adjustments to the plan in general. We focus on the obligated parties as opposed to selling to any midstream intermediaries on a month-to-month or quarter-to-quarter basis. So invariably it's an annual program so it ends up being heavier weighted from the midpoint of the year to the back half of the year. Volumes are typically purchased more thinly particularly in the first quarter. But that's about all the guidance I can really provide in terms of really what drives those decisions. We try to play very meaningfully into the RFS program and the best way to do that is to get the RINs into hands seamlessly into the obligated parties and have them retired as such.

And our next question comes from Saumya Jain from UBS.

I noticed last quarter you had mentioned that the Second Apex RNG facility was supposed to get started in fourth quarter 2024. So I guess what caused you guys to push that back to 2025?

Primarily it was related around the timing of when we can get that site up and operational. And just in the fourth quarter, we noted that there were just some permits or components that were taking longer to get on site and operational to be commissioned than we were anticipating. We still do believe to have that commissioned in the first quarter of 2025. I do want to point out that it was a gas rights agreement trigger that was triggered requiring the second facility to meet the capacity needs as the landfill host is bringing waste into the site. Even after we expect that site to be commissioned, we're anticipating some excess capacity as the landfill continues to bring in new waste to the site for us to be able to utilize that full capacity. But mainly it was a combination of permitting and various other componentry related to the actual construction of that second facility that delayed us commissioning into the first quarter of 2025. We don't anticipate that to materially impact our production volumes for 2024.

[Operator Instructions] And our next question comes from Matthew Blair with Tudor, Pickering, Holt & Company.

I was hoping you could share a little bit more about the I think it was a process equipment failure at Rumpke in the first quarter. Has that been fixed and if not, when would you expect that to be fixed? And what kind of impact might that have had on Q1 and potentially into the Q2 production?

Obviously we're aware of the environmental collection matters that we had discussed in our fourth quarter at Rumpke as well. We're continuing to work through that. The unexpected process equipment failure was associated with efficiency at certain of our processing equipment either in compression or some media that we identified as we were going through the facility in the first quarter. Of those 2 matters, substantively both of them we expect to be resolved in the second quarter. And as I noted, that was a drag on our first quarter result at Rumpke pulling the overall production period-over-period down 55,000 or so when compared back to the first quarter of 2023. But again we expect to have those failures remediated during the second quarter of 2024.

And our follow-up question comes from Paul Cheng from Scotiabank.

John, do you have any kind of guidance for the full-year OpEx for the RNG and the REG?

We generally, Paul, leave our guidance announcements to production and revenues. Historically, we haven't given guidance towards operating expenses for either segment or our G&A. So I'll leave our commentary at that level at this point.

And our follow-up question comes from Matthew Blair from Tudor, Pickering, Holt & Company.

So I think that roughly 1/4 of your current portfolio is on fixed offtake getting like a fixed price rather than selling into the transportation market and getting a D3 RIN. You mentioned that your growth projects, I think it was 1.25 million MMBtu in the hopper. So as you continue to grow, do you anticipate keeping that roughly like 1/4 fixed ratio or do you think that you'll move more into the spot market? And then could you also talk about any sort of trends you're seeing on the fixed pricing? Are utilities paying a higher amount for RNG given the strength of the D3 RIN market?

For sure, we're continuing to evaluate how we are going to contract the volumes that are coming through our development pipeline as these things are coming online. We have a fairly robust RFP process and we entertain, as we have previously, multiple forms of monetization. We're looking at fixed price opportunities. We're looking at those opportunities in the voluntary market. We have deployed in the past more margin share type agreements where we take a base fixed price if we don't want to lock a higher percentage of our portfolio and lose the opportunity that the RFS provides. As you're selling those RINs directly to the obligated parties, you'll put a sharing mechanism in place beyond that fixed price floor as a component of upside. All of these things have been in play. We continue to look at opportunities in the European market under the REG-2 directive for some of the volumes and we're continuing to expand what it is that we are monetizing to allow for that flexibility. So with our development in North Carolina and the ability to take those volumes initially for this first phase under a fixed price long-term agreement with Duke that will have power and the RECs, you are able to allow for, call it, the financial patience that is required to make sure that these RINs can be sold under existing structure that allows you to self-market and to do so directly to those obligated parties.

And then just to tag on there, Matthew. Through our RFP process, especially over the last handful of months, we've seen some movement in the voluntary market and that's 1 of the tougher price points for us to nail down. But some movement, but still generally in that $18, $20, $23 or so range plus or minus is what we continue to see. So if it was $18 or $20 6 months ago and maybe we've seen some movement up to $20 or $22 within the last 6 months. But again it's still basically been around that type of range. We haven't seen anything that is really driving a value from a plus $3 RIN at this point.

And our follow-up question comes from Paul Cheng from Scotiabank.

Kevin or Sean, do you have a guidance that you provide about the cadence of the Pico volume increase over the next several quarters until you reach the full capacity by 2025?

I think your question is in regards to the deployment of our Montauk Ag Renewables facility. So we will have right now to complete the first phase, first phase defined as the Duke REC agreement. We will look to target the collection of waste from 120,000 hog spaces and we will have 7 reactor processing lines, the first of which is imminently starting commissioning and will be commissioning through the end of June. And then the cadence of those will be, I'd say, fairly linear between that point all the way through late 2025.

And thank you. And I'm showing no further questions. I would now like to turn the call back over to Sean for closing remarks.

Thank you. Thank you all for taking the time to join us on our conference call today. We look forward to speaking with you when we present our second quarter 2024 results.

This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you.