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 material or made on this call. John, please go ahead.

Thank you. Good afternoon, everyone. Welcome to Montauk Renewables Earnings Conference Call to review the Second 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 developments; and Kevin Van Asdalan, Chief Financial Officer to discuss our second 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 second quarter 2024 earnings press release in 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 the one 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. I’ll begin with updates regarding our ongoing development projects. As previously announced, we commissioned our digestion capacity increase at our Pico facility during the first quarter of 2024. Through the second quarter of 2024, our Pico facility has produced approximately 39% more MMBtu over 2023 as a result of this capacity expansion. While LCFS credit pricing remains at low levels, pending the ongoing rulemaking by the California Air Resource Board, we believe our facility is well-positioned to benefit should future credit prices rise. Also, as previously discussed, we continue to expect the dairy host to deliver the third and final tranche of increased feedstock during 2025. During the second quarter of 2024, we commissioned our first reactor for our swine waste to energy development project in North Carolina. We expect to operate this and additional reactors in 2025 once the electric utility interconnection is complete. In the interim, this first reactor will be operated to provide for various data collection and testing activities: test and refined feedstock conveyance, product gas composition, and material composition related to the micronutrient organic fertilizer solid fractionation. Also during the second quarter of 2024, we continued the process related to both the outbound electric utility interconnection and related power purchase agreements. These processes are interrelated, and we expect to successfully complete any interconnection construction activity to support our project timeline. During the second quarter of 2024, we have installed the majority of the required feedstock collection process equipment on two of the farms with which we have feedstock agreements. We continue to thoughtfully bring additional farms under agreement, targeting approximately up to 200,000 hog spaces to support our REC agreement with Duke. In August 2024, we received approval from the North Carolina…

Thank you, Sean. I will be discussing our second 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. As Sean just noted, subsequent to quarter end, we have sold the 4.7 million RINs, which are generated but unsold as of June 30, 2024. The actual realized price for those RINs was $3.32, which compared to our D3 average realized price for the second quarter of 2024 of $3.12. The average index price of D3 RINs in the third quarter of 2024 is approximately $3.31. We have approximately 55.9% for the RINs we expect to generate from third quarter 2024 RNG production available for commitment. Total revenues in the second quarter of 2024 were $43.3 million, a decrease of $10 million or 18.6%, compared to $53.3 million in the second quarter of 2023. The decrease is primarily related to a strategic decision in the second quarter of 2024 to not self-market a significant amount of RINs from 2024 RNG production due to the volatility in the second quarter of 2024 D3 RIN index price. The decrease is partially offset by an increase in realized RIN pricing of approximately 44.4% during the second quarter of 2024 compared to the second quarter of 2023. Total general and administrative expenses were $8.7 million for the second quarter of 2024, flat compared to the second quarter of 2023. Our professional fees decreased approximately $0.3 million or 26.9% in the second quarter of 2024 compared to the second quarter of 2023. Employee-related costs, including stock-based compensation were $5.4 million in the second quarter of 2024, an increase of $0.2 million or 3.5% compared to $5.2 million in the second quarter of 2023. The increase is primarily related to…

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 May 2024. For 2024, we continue to expect our RNG production volumes to range between 5.8 million and 6.1 million MMBtu, with corresponding R&D revenues to range between $195 million and $215 million. This range, though unchanged, accounts for impacts resulting from the hurricane which impacted the Houston, Texas region with widespread utility outages in July 2024. We expect our 2024 renewable electricity production volumes to range between 190,000 and 200,000 megawatt hours with corresponding Renewable Electricity revenues to range between $18 million and $19 million, also unchanged from our previous earnings call. And with that, we will pause for any questions.

[Operator Instructions] Our first question will be coming from Matthew Blair of TPH. Matthew, your line is open.

Thank you and good afternoon. You kept your full year production guidance for RNG the same despite some of the challenges in the second quarter with the power outages in Texas. Could you talk about how you are able to do that? And what are the bright spots in terms of areas that might be producing a little bit more than you expected? And then can I also ask, for the third quarter, you mentioned that you already monetized the 4.7 million of RINs in inventory. But do you expect to monetize all of the RINs that you produce in the third quarter? Or is there a chance that you might hold back some of the Q3 production from sale as well? Thank you.

Thanks, Matthew. Yes, we are anticipating this question in regards to our holding guidance though we’ve had two consecutive quarters with weather impacts predominantly impacting our Houston region, which generates, give or take, about 50%. So what we do, we set our budgetary expectations with where we think the year is going to go in regards to production impacts. We expect wellfield investment to drive production increases. Though we have had those two quarters of weather impacts, we go through various sensitivities and historical look back in regards to at the beginning of the year what landfill hosts tell us their landfill expansion plans are going to be. And then we try to go through various sort of discounting, if you will, or delay impacts for what that expansion may look like at various sites. And then in regards to why we believe the second half of the year is still going to develop in appreciable volumes holding that guidance is we’ll take a look at our budgeted expected capital expenditures into our wellfield as compared to what we’ve actually incurred. We still have enough runway left in the rest of this year that we believe we’ll get some meaningful uplift from the capital that we anticipate investing into our wellfield at certain of our sites, as well as some of the ongoing and known optimization enhancements that we’re doing either through wellfield collection or within our plants that will not necessarily be solely related on our landfill host expansion activities in regards to the guidance ranges. While we know that our Houston region has been impacted by weather events in the previous two quarters, we believe that our existing guidance from an R&D production standpoint takes into account those impacts in the second and third quarter.

I can take the piece regarding the timing of RIN monetization. How I would like to answer it is the decision as to whether or not we’ll monetize is a function of our prioritization to have those attributes to be placed directly into the hands of the obligated parties. Rather than tying it to ebbs and flows and pricing, although it is a consideration as we look at what is readily available in the marketplace, news from the EPA, recent pricing trends, but the leading driver is the purchasing cadence of the obligated parties. The way in which we manage our cash flows and our available cash and our borrowing facilities affords us the opportunity to take those attributes and place them where they belong, which is in the hands of the obligated parties, not to intermediaries that may hold those in the hopes that they’re able to extract the margin as they ultimately place those into the hands of the obligated parties. That will drive any decisions that we have as to what we hold coming in and out of any particular quarter and the volumes at which we would delay.

And then one other note, Matthew, is that obviously, we’ve had conversations and we take into consideration the feedback that we’re getting. And knowing that our 10-Q was just hit EDGAR right before the call, we have included a new table that is trying to help people like you to see the variability or volatility in regards to RIN that we may or may not have generated but unsold at any given quarter.

And our next question will come from Saumya Jain of UBS. Your line is now open.

Hey, how are you guys looking at any potential changes in LCFS and RIN prices? Just given upcoming elections, how do you factor in both potential activities or outlook?

I would – I guess I would first respond that we generally don’t provide guidance in regards to our internal expectations for the price of environmental attributes. We are all very aware that CARB is going through various rulemaking. I believe there’s a – the next meeting for CARB is in November, I want to say, where we expect some voting on rulemaking to impact, I believe, 2025 and the overall program’s emission reduction targets. We’re bullish that those – that, that rulemaking will be beneficial and have an appreciable increase in LCFS pricing. But as with other regulatory outcomes, the devil is in the details. And we believe that when that LCFS credit pricing increases, certain of our sites, notably Pico that will be primed to benefit from an eventual uplift in LCFS credit pricing.

And our next question will be coming from Paul Cheng of Scotiabank. Your line is open.

Hi, good afternoon. Hey Sean, can you tell us what is the second quarter weather impact on the production? And also that in your full year guidance or in prior third quarter, that have you built in any expectation for the hurricane season? Thank you.

Yes. Thanks, Paul. I know that you asked Sean, but I’ll answer that very quickly. We estimate that the approximate impact across the Houston facilities in the second quarter was around 47,000 direct impact in the second quarter. And in the third quarter, I would say that we’re probably seeing a similar expectation of struggles on production out of Houston. I want to say that generally, in the second quarter, those power outages were approximately five to eight days. And then I believe that, that sort of approximation of widespread power outages from the hurricane in July was, again, about five or eight days or so, depending upon the region of Houston.

Yes, because I mean, the national weather center is predicting this is going to be one of the perhaps the most happy hurricane season. So I’m just curious whether you guys built in some additional downtime in your forecast. And also that when you’re talking about your current full year, so what is the biggest risk for you not to hit that target?

The process by which we would incorporate future weather impacts is at least initially rooted in our historical outages or our unplanned outages associated with utility outages or direct impact from weather events, indirect or direct. That budgetary process has a natural component that you’re taking the total capacity that is available for production, and you are taking into consideration the sort of the average that you’re seeing or the trend, rather, that you’re seeing in those weather phenomenon. Now although there may be speculations that suggest that this will be the most active hurricane season, there has been an increasing trend that you see in those weather phenomenon. And so the projections that we put in place, albeit the optimistic side where you are placing investments, as Kevin mentioned, into the wellfield, the timing of landfill operations that you’ll see the positive lift that, in this case, has allowed for us to maintain with confidence our full year guidance, you do see that trend that will increase the impact of the weather events that we put into our projections for 2024.

And our next question will be coming from Matthew Blair of TPH. Your line is open.

Hey, it’s Matthew again. Thanks for taking the follow-up. Just looking through the Q, it looks like your 2024 CapEx range is down to $84 million to $106 million from the $149 million to $167 million previously. But looking at the table of projects, the start dates for your four major growth projects are all the same, all unchanged. So could you talk about what’s changing on the CapEx side? Are you pushing anything out or why is this year’s CapEx number coming down? Thanks.

Yes. Matthew, that’s specifically in regards to the Bowerman RNG project and primarily related to one significant component associated with that. It’s solely a – we expected a large outlay for one component to come in the third or fourth quarter of 2024. We have now anticipated that outlay to be pushed into 2025. It’s a timing issue with – out of a period this year into next year, which we do not anticipate to impact the overall commissioning of our Bowerman RNG project. So it’s solely a function of sort of vendor expected timing with that particular project.

[Operator Instructions] I would now like to hand the call back to Sean for closing remarks.

Thank you, and thank you, all 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 2024 results.

And this concludes today’s conference call. Thank you for your participation. You may now disconnect.