OPAL Q3 2026 earnings call transcript, November 9, 2026

Vice President of Investor Relations to begin. Please go ahead.

Post-set rule 2, 2026. D3 RINs have traded close to the D4 RIN price floor, albeit with a consistent slight premium. In a tight or potentially undersupplied D3 RIN market, the EPA has historically created a price cap for D3 RINs by issuing a cellulosic waiver credit, which can be purchased with a D4 RIN to satisfy a D3 RIN obligation. D3 RINs do not trade below the D4 RIN price or above a price cap. potential price cap, which would be between $3.50 and $4 for 2027 and 2028. We believe there may be dynamics in 2027 which could tighten the supply of D3 RINs and move the market into a more balanced view between the price floor and a potential price cap. Looking a little closer at the volatility in D4 RIN prices throughout 2026, and for now, the driver of D3 RIN is the volatility of the D4 RIN prices. We began the year with an extremely strong and rapid price increase in response to very aggressive volumes in Set Rule 2 for the D4 category. The market believed it would be difficult for the market to supply enough D4 RINs, which still appears to be the case today, that physical supply of D4 RINs could be short or tight to the 2026 and 2027 RVOs. Despite these fundamentals persisting, since the run-up in crude and diesel, we have seen pricing of D4 RINs weaken quite a bit and bring down the D3 RIN. It seems that the trading of D4 RINs are taking their pricing cues from the spread between diesel and bean oil, the feedstock for renewable diesel. If that spread widens, financial modeling suggests that the price or the value of the D4 should be lower, or we would have additional D4 RINs enter the market given the profitability of converting bean oil

feedstock into diesel. That works in a market with excess capacity to bring supply online from the marginal cost of production. But it will be interesting to see whether this will be the case as we come into compliance period deadlines. We believe these trading dynamics for D3 RINs will continue for the balance of 2026 and have incorporated current RIN pricing into our adjusted EBITDA guidance for the full year. It's interesting to note that although volatile and higher diesel pricing may be pressuring and creating volatility in D3 RIN prices, it is having a strong positive effect on our fleet conversion business development efforts. For our fuel station services segment, we expect a strong acceleration of growth. $6 diesel is not required for the financials to make sense for fleets. However, it has helped raise the visibility of our lower cost fuel in the C-suites and open their eyes to the sustainable and long-term economic advantage of natural gas and renewable natural gas versus diesel. The economics of fuel switching are very strong, even at $4 diesel, and at $6 diesel, payback periods for natural gas tractors is measured in months. We already have a strong operating platform today generating $100 million in adjusted EBITDA over the last 12 months. Our platform is positioned to grow by capital-efficient production gains at our existing RNG plants, the completion of 2.0 million MMBTUs of new annual design capacity coming online throughout 2027, and the growth opportunity of fuel-switching economics from diesel to natural and renewable natural gas.

Before I wrap up, I'd like to address the leadership transition we recently announced. John Moore has informed the board of his plans to retire as Co-Chief Executive Officer effective March 31st, 2027. And given this will likely be John's last public earnings call, I wanted to spend a minute telling him and all of you how much I have appreciated and enjoyed his partnership, leadership, and friendship over the years. The good news for me is a lot of those things aren't going away after March 31st. John has played an instrumental role in building OPAL from its early days, leading the origination and development of the Fortistar Methane Group, which formed the backbone of our RNG fuel segment. Subsequently, we shared the responsibility of building our OPAL team and helped shape the company to where we are today. I sometimes get asked what it's like or why co-CEOs. And the truth is, it has been a wonderful experience. And I think that is really because of John and I sharing the same visions and values. So although John will be missed in his day-to-day management responsibilities, he is not going anywhere too far. This is a well-planned transition, and John will remain involved as a senior advisor following his retirement to help ensure continuity and a seamless handoff. With that, I'll turn it over to John. John?

Good morning, everyone. First, I want to say that it's been an absolute privilege to help build Opal Fuels from its earliest days into the company it is today. From Fortistar's early investments and landfill gas energy projects nearly three decades ago to the leading renewable fuels platform we operate today, our team has consistently transformed vision into reality. I'm proud of what we have accomplished together and even more excited about the opportunity ahead for the company under Adam's leadership. With that, let's talk more about RNG production in the quarter and some of our opportunities to continue to drive production growth from our projects and operations. In our last call, we discussed some improvements we were implementing across gas collection and plant performance to drive those very valuable incremental MMBTUs of production. These production improvements translate directly to the bottom line with minimal associated costs. Some of the projected gains did not materialize as quickly as we would have liked. However, fourth quarter production rates are now reflecting the benefits of these improvements. As Adam had mentioned, we believe we have good opportunities to drive, sorry, to drive continued production growth through our existing assets in 2027. And we remain focused with the team to drive more value from our facilities. We're also excited about the three new projects, Cottonwood, Burlington, and CMS, totaling 2 million of incremental annual design capacity that are slated to come online through 2027. As we think about future capital allocation, you should expect us to continue to invest in our fuel station services segment. Not only is it good diversification for our earnings and cash flow, it's

an open-ended growth opportunity, with natural gas representing now only a 2% share of heavy-duty trucking market, and in that market where there's long-term energy price differential relative to diesel that can underpin additional growth. So I'll now turn the call over to Kazi to discuss the quarter's financial performance. Kazi?

On the operating side, RNG production grew 5% from 1.27 million MMBTU in third quarter of 2025 to 1.3 million MMBTU this quarter. Sequentially, our last quarter production grew 7%. For the first nine-month production increased 8.5% to 3.8 million MMBTU compared with 3.5 million MMBTU. in 2025. Our fuel station services segment also delivered higher earnings. Third quarter adjusted EBITDA was 13 million compared with 11 million last year, an increase of approximately 18%. This quarter's growth was driven primarily by volumes and margin improvement. For the first nine months adjusted EBITDA was 34.7 million. Compa- compared with 32.5 million in 2025, an increase of approximately 7%. Total fuel volumes delivered increased 3% in the quarter to 40 million GGEs compared with 38.9 million GGEs last year. For the first nine months, volumes were 117.9 million GGEs compared with 120.4 million GGEs in- 2025. RNG volumes dispense increased 7% in the quarter compared with last year. As we add more Opel-owned stations, we are seeing a growing contribution from higher margins, contracted volume-based tolling revenues. Under these arrangements, costs such as gas, power, taxes are generally passed through to customers. We expect this part of the business to become increasingly important as we grow our downstream operations. Together with our efforts to improve production at existing R&G facilities, it should help us build a stronger and more stable earnings base over time.

On the balance sheet, we ended September with approximately $122 million of liquidity, including $86 million of cash and... short-term investments, $25.2 million of undrawn preferred stock commitments, and approximately $10.8 million of revolver availability. As Adam mentioned, we now expect full-year R&G production to come in modestly below our previous guidance range. Despite the lower production outlook and rent price volatility, we are maintaining our full-year adjusted EBITDA guidance. Within the low end of the range. Our priorities are to continue to improve our production and cash flow at our existing facilities, grow contracted downstream business, and remain disciplined in capital allocation. In closing, we remain well positioned to expand our vertically integrated platform. I'll now turn the call over to the operator for Q&A.

And our first question comes from Derek Whitfield of Texas Capital. Your line is open.