Title

Presentation

OPAL Fuels Inc. misses on earnings expectations. Reported EPS is $-0.09 EPS, expectations were $0.07.

Operator: Good morning, and welcome to the OPAL Fuels First Quarter 2026 Earnings Call and Webcast. [Operator Instructions] 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: Thank you, and good morning, everyone. Welcome to the OPAL Fuels First Quarter 2026 Earnings Conference Call. With me today are Co-CEOs, Adam Comora and Jonathan Maurer; as well as Kazi Hasan, OPAL’s Chief Financial Officer. OPAL Fuels released financial and operating results for the first quarter of 2026 this morning, and those results are available on the Investor Relations section of our website at opalfuels.com. The presentation and access to the webcast of this call are also available on our website. After completion of today’s call, a replay will be available for 90 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 2 and 3 of our presentation. These forward-looking statements reflect our views as of the date of this call, and OPAL 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 these 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.

Jon will give a commercial and business development update, after which Kazi will review financial results. We’ll then open the call for questions. And now I’ll turn the call over to Adam Comora, Co-CEO of OPAL Fuels.

Adam Comora: Thank you, Todd, and good morning, everyone, and thank you for participating in OPAL Fuels’ First Quarter 2026 Earnings Call. Despite a challenging operating environment in the seasonally soft first quarter, we remain on track to meet our full year guidance. Production is improving in line with our expectations, and we are encouraged by the firming of environmental credit pricing. In addition to the performance and growth in our operating platform, we are energized by the engagement we are seeing from our business development activities for new CNG, RNG fleet deployments in heavy-duty trucking. A variety of factors are leading to the logjam finally breaking for new CNG and RNG fleet deployments. High and volatile diesel pricing, regulatory clarity regarding combustion engines and the successful test of the Cummins X15N are moving fleets into decision-making mode for what we believe is a great product.

CNG is a winning economic proposition for fleets. It supports their operations with minimal change in disruption and the fact we deliver low carbon intensity RNG and its ancillary benefits make it that much more compelling. We spent much of last week at ACT Expo, our industry’s flagship conference, and the excitement around RNG and CNG is real. In addition to the financial benefits, fleets also recognize the value of the sustainability benefits, whether it be achieving their ESG goals, building their brand equity or the strategic value to win new business or more importantly, remaining competitive and not losing business to other fleets that are deploying RNG. Natural gas in North America is abundant and is expected to remain cheaper to oil on an energy equivalency value for the foreseeable future.

Many heavy-duty industries in the U.S., such as steel, chemicals and manufacturing have already shifted from oil and coal to natural gas to capitalize on this lower cost energy. We believe heavy-duty trucking can be the next on that list. Diesel became the dominant fuel choice of heavy-duty trucking in the 1970s when the engine technology advanced with better fuel and cost efficiencies versus gasoline. The 9- and 12-liter natural gas engine has been in the market for about 10 years and has seen strong adoption in the refuse and transit sectors after proving its cost effectiveness versus diesel. The largest refuse company in the U.S. reports it is closing in on 100% natural gas deployment for their fleet, and we estimate the broader refuse industry is approximately 30% natural gas deployment and growing.

Now that the 15-liter natural gas engine has tested well for heavy-duty transportation, we anticipate accelerating adoption in this large and untapped market. CNG and RNG currently supply about 1 billion gallons of the 45 billion gallon diesel market, representing only a 2% market share at present. The industry and OPAL Fuels are ready to scale and begin capitalizing on this opportunity. As equipment suppliers and vendors continue to scale, they will take costs out, reducing the upfront premium on the tractors and expanding the market opportunity beyond the heaviest volume trucks. As we are energized by what we are seeing and hearing from our fleet partners, keep in mind, however, that as we mentioned on our March call, this business development activity will not get reflected in our 2026 financial results as it takes us about 12 months to build the station after signing and these initial deployments will likely begin in smaller percentages within very large fleets.

Before turning it over to Jon, I would like to close by talking once again about the strength of our vertically integrated model and how we see its benefits on both the upstream side of new project development opportunities and on the downstream side when working with fleets. Our upstream partners like OPAL’s large and growing dispensing network. On the downstream side, our fleet partners not only appreciate our operational execution and low-cost fuel stations, but also our reliable, tangible and growing RNG supply. OPAL Fuels is well positioned with a proven track record both on the upstream and the downstream side of our business to be a leader in the production of RNG and capitalize on what we believe is an extraordinary growth opportunity for its use as a transportation fuel in heavy-duty trucking.

With that, I’ll turn it over to Jon. Jon?

Jonathan Maurer: Thank you, Adam, and good morning, everyone. We continue to see positive prospects for 2026 and beyond. Despite the extraordinarily cold winter in the first quarter, our upstream facilities performed well, producing more RNG compared with the comparable period in 2025. We generate yearly growth in the biogas resource. In addition, our team continues to make improvements to the performance of these facilities to better utilize that biogas. Together, these improvements give us confidence in our RNG production growth expectations. We continue to advance our in-construction portfolio, and we expect to bring online more than 2 million MMBtu of annual design capacity over the next year or so. We are also continuing to advance opportunities in our upstream development portfolio and anticipate announcing the allocation of capital in 2026 to new RNG projects as well as to fueling station growth.

We are also making meaningful investments across our overall operating platform. These improvements include investments in personnel, technology and introducing the adoption of artificial intelligence. These investments will support and augment future performance across our existing operating assets and give us confidence in improving results from executing on our business plan. We’re seeing a strengthening RIN environment. Since our March call, the EPA released its final Set Rule with updated 2026 and 2027 RVO targets, which were generally in line with industry expectations. The D4, D5 and D6 prices have moved up dramatically, rising to over $2. We are now beginning to see the D3 RIN participate with the broader biofuel market with current pricing above $2.50 per RIN, and that may continue increasing over the balance of the year.

The work we are doing today is positioning OPAL for meaningful growth over the coming years. While large-scale deployments will take time to fully translate into financial results, we expect growth in 2027 and beyond to be driven by the increasing recognition by fleet operators of crude oil and diesel’s sustained price volatility and the benefits of CNG and RNG. I’ll now turn the call over to Kazi to discuss the quarter’s financial performance. Kazi?

Kazi Hasan: Thank you, Jon, and good morning, everyone. Before walking through the details, I want to frame our Q1 performance around 3 themes. First, the platform investments we have been making is beginning to show up in our operational and financial results. Second, our financing transactions have created the runway to allocate capital. And third, our earnings profile is broadening to reduce sensitivity to commodity pricing over time. This morning, we issued our earnings press release and posted an updated investor presentation on our website and filed our Form 10-Q. Adjusted EBITDA was $16.7 million in the quarter compared to $20.1 million in Q1 of 2025. The $3.4 million decline is primarily due to lower RIN prices. D3 realized prices declined $0.30 to $2.41 in Q1 2026 versus Q1 of 2025, resulting in approximately $4 million of EBITDA impact.

Operationally, the business performed as expected. First quarter revenue was $73.3 million compared to $85.4 million in the prior year period. RNG production was 1.2 million MMBtu, up 9% year-over-year. The production improvement reflects enhanced execution by our operating team, which we expect to continue driving incremental production and efficiency gains. In our Fuel Station Services segment, first quarter EBITDA was $9.2 million compared to $10.9 million in the prior year period. The $1.7 million variance reflects a combination of lower construction revenues, lower RIN price and timing of maintenance expenses in servicing the stations. As we continue to grow OPAL-owned stations, we are seeing increasing contributions from the associated tolling activity, which is contracted and volume-based and therefore, relatively lower exposure to RIN pricing.

In these stations, the variable costs of gas, power and taxes are passed through to our customers. We expect the increasing growth of OPAL-owned stations to strengthen downstream earnings stability. We completed several financing transactions this quarter totaling $288 million, which included $180 million of preferred stock facility. In addition, we drew the remainder of our term loan facility with a net amount of $109 million. We ended the quarter with approximately $233 million of liquidity. This amount includes approximately $133 million of cash and short-term investments, $60 million of undrawn preferred stock facility commitments and approximately $39 million of revolver availability. In the quarter, we sold $11.5 million of ITC credits from Atlantic.

We also completed a $100 million of multiyear agreement to monetize OPAL’s Section 45Z production tax credits. We maintain full year 2026 guidance. Stepping back, our financial strategy is clear: grow operating and free cash flow, broaden the earnings base to reduce commodity exposure and allocate capital to the highest return opportunities in our pipeline. With $233 million of liquidity and internal cash generation, OPAL Fuels is well positioned to execute on our strategy. With that, I’ll now turn the call back over to Jon for closing remarks. Jon?

Jonathan Maurer: In closing, we remain well positioned for continued disciplined execution of our strategic growth objectives and the expansion of OPAL’s vertically integrated platform. I’ll now turn the call over to the operator for Q&A. Thank you all for your interest in OPAL Fuels.

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Operator: [Operator Instructions] And our first question comes from [ John Anders ] of Texas Capital.

Unknown Analyst: For my first one, it seems like there’s real momentum on fleet conversions. Can you provide color on some of the factors driving this? And then over what period do you see this converting into higher dispensing volumes?

Adam Comora: Yes. This is Adam here, and I appreciate the question. It’s a variety of factors that we think are going to start to translate into the beginnings of fleet deployments here. I think clearly, diesel pricing, not only the high price of diesel, but the volatility of diesel is what may be one of the key catalysts to force fleets into looking at other alternatives. I think the regulatory clarity that combustion engines are going to be something that moves forward for heavy-duty trucking. And it was really successful testing of the X15N engine. So all 3 of those things have lined up for what we believe are going to be some initial deployments here in very large fleets. And we think we will start to see some contributions in 2027.

And there aren’t going to be extraordinarily large numbers for what the initial set of stations and trucks may be. But we believe it’s paving the way for a multiyear, really long-term conversion set for this industry in this sector. So we’re excited that we’ve been talking about how the math makes sense and how the logic makes sense. And we think it’s finally going to translate into some actions on that side of things here in ’26.

Unknown Analyst: I appreciate that color. Maybe for my follow-up, you highlighted difficult weather conditions in Q1. Can you help frame how much of an impact weather had during the quarter and your thoughts on the progression of the production ramp over the next 3 quarters to meet your ’26 guide?

Jonathan Maurer: Yes. This is Jon. I’ll jump in on this one. The — clearly, the winter across the — certainly, east of the Rockies was extraordinary from a cold and from an amount of snow standpoint. Despite that, we were able to increase our production compared to the comparable period in the prior year. When we get cold like this, it affects us in 3 ways. The first is that it causes issues in the collection system at the landfill itself, where water and the gas will freeze within the collection system. The second area that affects us is in our RNG projects directly, where we get some freezing there. And then the third is that we have things outside of our control, such as power outages. All 3 of those affected us this year, but we were able to be resilient in our operations and rise to some of those challenges.

We take actions whenever we see these things to try to add, for example, additional heat tracing or insulation or other things for our projects to add to that resilience, but it will continue to pop up upon us, particularly when it’s an extraordinary winter as it was. Now we’re turning into the spring time, and we’re seeing the timing when oilfield expansion projects take place so that we start to see annual gas growth occur in Q2 and Q3 in terms of our — the gas at the inlet. All of our projects are on open and growing landfills. So we — they continue to take in amounts of waste that result in our inlay gas amounts increasing, and that causes our resource to grow year-over-year. So there continues to be, in summary, good resiliency to these seasonal issues that we have and that we continue to see — we’ll see growth quarter-over-quarter during the year as we put some of these additional amounts into the collection.

Adam?

Adam Comora: Yes. The only thing I would also add there is not only on the production side, that extraordinarily cold weather did result in some higher OpEx as well associated with that cold weather. So really almost a double whammy there with what we saw in the first quarter. And although we don’t give production and earnings guidance by quarter, we do expect accelerating production growth starting in second quarter and moving through the year.

Operator: And our next question comes from Ryan Pfingst of B. Riley Securities.

Ryan Pfingst: Maybe just a follow-up on that last one, thinking about expected revenue or earnings cadence through the rest of this year, is there anything else to highlight or to look out for in terms of potential lumpiness? Or are we expecting growth on a quarterly basis through 2026?

Adam Comora: Yes. I would say — this is Adam here. Certainly, it feels like the comps are getting easier for us as we move through the year, where we’re crossing over where the RIN price was Q2 from last year into this year. So we’re sort of through the tough quarter from a RIN price perspective and see those comps getting easier, particularly in Q3. I would also say we had in the first quarter of 2025, I would say, a higher LCFS credit sale in the first quarter of last year, which also impacted the comp when you’re looking year-over-year. And some of our 45Z benefits were masked in the first quarter of this year versus an RNG sale from the first quarter of last year. So certainly, it feels like the comps are going to get much easier as we move through the year.

All of this was baked into our guidance. And then we have a couple of knits on the fuel station service side where construction revenues can be lumpy based on the timing of when that project work is done and a little bit of timing in terms of when we had some maintenance costs. So we really feel like the first quarter was sort of the worst of all worlds, and a lot of those things are going to ease as we move through the year.

Ryan Pfingst: I appreciate that. And then secondly, curious if you could give us an update on time lines for projects in construction or perhaps more high-level commentary on any particular challenges or positives to highlight around project development more broadly?

Jonathan Maurer: Sure. I’ll take that one. We’re progressing full bore on our Cottonwood, Burlington and CMS projects. We see these projects coming online towards the end of this year and into the first half of next year. So we are seeing that construction time line advance towards completion. The Cottonwood and Burlington projects are in the field right now with the construction — contractors pouring cement at Cottonwood, and we’re getting ready to do so at the Burlington project. CMS remains on track as well. On the development side of our business, we’re progressing multiple opportunities on a disciplined basis. We take into account our risk-adjusted capital as well as our dispensing availability, which Adam mentioned, we see some log jam breaking there and some positive potential growth.

And certainly, on the downstream side of our business, we have 16 OPAL-owned stations that are in construction and progressing along. And that’s kind of where our construction business stands today.

Adam Comora: And sorry, just to go back to one of those other quarterly questions on cadence. Our toughest comp is coming in the fourth quarter, where we had a very low SG&A quarter in the fourth quarter of last year. So I would just highlight that our toughest quarter will be in the fourth coming up this year.

Operator: And our next question comes from Martin Malloy of Johnson Rice & Company.

Martin Malloy: My first question, I just wanted to ask about some of the new engine introductions that Cummins has, the X15 and the X — new X15 — I’m sorry, new X15 and X10 for 2027. Could you maybe talk about the potential impact you see on the demand for CNG resulting from those?

Adam Comora: Are you talking about the diesel engine that they’re introducing? Are you talking about the natural gas engines? Thank you for your question.

Martin Malloy: The natural gas engines.

Adam Comora: Yes. I think the 15-liter has performed extraordinarily well and really stood up to the duty cycles and the operating requirements of the fleets. And so we think it’s done extraordinarily well. And now you were asking about the X10?

Martin Malloy: I’m sorry, I misspoke there. It was the X15. And then I was just kind of curious if we could get your thoughts as you look out regarding potential return of capital to shareholders through a dividend?

Adam Comora: Yes. We are still seeing very strong opportunities to deploy capital and reinvest in our — in the projects, both on the upstream and the downstream side. So we still think that is the right place to be investing and growing our business given those risk-adjusted returns. And if those opportunities no longer appear in front of us, then we will start to looking at other ways to enhance shareholder value through that — a potential dividend policy or something else. Right now, though, we’re really excited about some new upstream projects that we think we’re going to be greenlighting soon and also the potential for OPAL-owned fuels stations in these fleet deployments.

Operator: And our next question comes from Adam Bubes of Goldman Sachs.

Adam Bubes: I know you talked about 2026 fuel station services is going to be a year where biz dev activity sets the stage for future growth. But are we thinking about 2026 EBITDA down versus 2025? Or should we still expect growth this year? And then based on dialogue with customers and pipeline of projects, how much visibility do you have on how 2027 could shape up?

Adam Comora: Yes. So this is Adam again. No, we’re not expecting fuel station services necessarily to be down in ’26 to ’25. And there were — it was a noisy quarter for fuel station services. And particularly on the GGE volumes, which I know get called out and are not necessarily significantly impactful to how the profitability of that unit will do for the entire year. I think we called out on a previous conference call that we did have one short-term contract, which is about 2.5 million gallons per quarter that we cycled through at the end of June here. So there is a little bit of GGE noise in there. And to give you a flavor for that, we’re always opportunistic in our dispensing network and have the ability to flex up or flex down.

And we did have one large contract with a refuse customer that was looking for RNG supply from OPAL Fuels and some of our third-party suppliers as they were waiting for their projects to ramp and fill in their own dispensing capacity that we cycle through now in this second quarter. So we do expect the business unit to perform well this year. I think we also said in our guidance that it wasn’t necessarily an outsized year in terms of what the growth would be in that segment. And for 2027, it’s a little early for us to really earmark how quick deployments are going to be and how many stations it means and what it means for gallons that flow through in ’27. But we do expect some impact from some of these newer opportunities.

Adam Bubes: Got it. And then just putting the pieces together for the reiterated guide, I think guidance at the midpoint embeds EBITDA up around $12 million year-over-year. 45Z is expected to contribute $15 million to $20 million, and I think RNG fuel production is also rising. If Fuel Station Services is up year-over-year, I’m just having trouble bridging the moving pieces, what’s the delta there? Is that corporate expense inflation? Or anything I might be missing?

Adam Comora: Yes. I mean our corporate expense will be up year-over-year. And so that could be one area, and that’s in the mid-single-digit million range.

Kazi Hasan: Let me also add, I think, Adam, this is Kazi. The RIN price variation is also on a year-over-year basis, going to be one of the major impacts.

Adam Bubes: Got it. Got it. Understood. And then last one for me. it sounds like, Adam, you alluded to maybe some upstream — new upstream projects in the pipeline. In the past, you’ve talked about a target to place 2 million MMBtu of landfill gas projects into construction annually. How are you thinking about the range of outcomes this year?

Adam Comora: Yes. No, we will have some new RNG project growth in 2026. And really, what we’ve been telling folks is that we’re flexible in our thinking, and we’re seeing a large opportunity in our downstream Fuel Station Service segment. So we’re going to be disciplined in our capital allocation. And we’re not going to give a specific target for how many new RNG projects from an MMBtu basis, but you should expect growth on both sides of our — both sides of our business.

Operator: And our next question comes from Richard DeDios of UBS.

Richard DeDios: You guys have increased your cash pile in last earnings call, you mentioned that you see opportunistic M&A opportunities. Can you walk us through how you’re thinking about capital allocation, like what you’re seeing in the M&A market and how it competes with potential projects?

Adam Comora: Yes. This is Adam again here. It’s pretty interesting. This quarter, we saw the first transaction in our sector in quite some time with Ameresco’s transaction with HASI. And I’m not sure if people have looked through those numbers yet, but it was pretty intriguing to us in terms of valuations and that sort of thing on the upstream part of our business. So we think it’s an interesting sector with a lot of opportunities on the M&A side, particularly as a lot of RNG developers may be struggling with executing on their pipeline. But — so we’re always evaluating and looking at other opportunities and do think our vertical integration puts us in a pretty unique position on that upstream M&A side of things.

Kazi Hasan: Yes. Can I take a sort of follow-up to that? So there are 2 things that we will — I would want to highlight. We are also continuing to invest in our existing operating asset base and our operating platform to continue to improve the production as well as the overall results. The second thing that I want to highlight is we are very disciplined when it comes to capital allocation. We do have dry powder. Some of that amount is committed — not committed, I think we are going to invest in our existing construction projects. And on top of that, whatever is left, we are going to look at our opportunities in both RNG projects as well as the downstream dispensing station platforms. So we will look at where we should invest to think about portfolio stability over the long term and diversify having too much exposure in one area versus other.

So yes, we do have cash that we have ways to put in. Also, we want to make sure that we are being disciplined in capital allocation.

Richard DeDios: Thanks for the color. And switching to the operational side point of view, given that this year’s guide is largely driven by operational improvements and as you look to scale RNG production over time, what has been the biggest operational learnings from your existing facilities? And how are those learnings being implemented for the development and execution of future projects?

Jonathan Maurer: Well, we now have 10 landfill gas RNG projects. And as we’ve grown quite a bit over the last several years and put more into operation, we really take lessons across the fleet in terms of what works at various projects and bringing that across to our other comparable projects. In addition, we’ve mentioned in the past how we’ve upgraded the personnel across our organization and both in terms of the — leading the RNG sector and the Fuel Station Services sector as well as the employees within those groups. Lastly, some of the improvements that we’re making are in the well field itself, putting in technology that helps to improve gas collection and both gas quality and gas quantity need to — can be improved through that effort. That will also serve to improve the availability of projects. And so in summary, what you’re seeing is better people, better efficiencies and availabilities and better gas collection, I think, in summary.

Adam Comora: Yes. And just to finish off on Jon’s thought, like we believe that, that’s going to show up both in terms of our inlet design capacity utilization and our utilization of inlet gas, and it really goes all the way from the well field to operational availability and uptime to debottlenecking. So we’ve — and really, it’s leveraging where you’re benchmarking your best facilities and bringing those best practices across the fleet.

Operator: I’m showing no further questions at this time. I’d like to turn it back to Adam Comora for closing remarks.

Adam Comora: Thank you all for your interest in OPAL Fuels and joining us today, and we look forward to chatting with you again soon.

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

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