Montauk Renewables, Inc. [MNTK] Filings

10-Q 1 mntk-20240630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39919

MONTAUK RENEWABLES, INC.

(Exact name of registrant as specified in its charter)


Delaware	85-3189583
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

5313 Campbells Run Road, Suite 200 Pittsburgh, Pennsylvania	15205
(Address of Principal Executive Offices)	(Zip Code)

(412) 747-8700

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class
 
    Trading symbol(s)
 
    Name of each exchange on which registered

    Common Stock, par value $0.01 per share

    MNTK

    The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock on August 2, 2024 was 143,613,398 shares.

TABLE OF CONTENTS


		Page

PART I FINANCIAL INFORMATION		6

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	50

ITEM 4.	CONTROLS AND PROCEDURES	50

PART II OTHER INFORMATION		51

ITEM 1.	LEGAL PROCEEDINGS	51

ITEM 1A.	RISK FACTORS	51

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	51

ITEM 4.	MINE SAFETY DISCLOSURES	51

ITEM 5.	OTHER INFORMATION	51

ITEM 6.	EXHIBITS	52

SIGNATURES		53

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Glossary of Key Terms

This Quarterly Report on Form 10-Q uses several terms of art that are specific to our industry and business. For the convenience of the reader, a glossary of such terms is provided here. Unless we otherwise indicate, or unless the context requires otherwise, any references in this Quarterly Report on Form 10-Q to:

•

“ADG” refers to anaerobic digested gas.

•

“CARB” refers to the California Air Resource Board.

•

“CNG” refers to compressed natural gas.

•

“CI” refers to carbon intensity.

•

“D3” refers to cellulosic biofuel with a 60% GHG reduction requirement.

•

“EPA” refers to the U.S. Environmental Protection Agency.

•

“Environmental Attributes” refer to federal, state and local government incentives in the United States, provided in the form of RINs, RECs, LCFS credits, rebates, tax credits and other incentives to end users, distributors, system integrators and manufacturers of renewable energy projects, that promote the use of renewable energy.

•

“FERC” refers to the U.S. Federal Energy Regulatory Commission.

•

“GHG” refers to greenhouse gases.

•

“JSE” refers to the Johannesburg Stock Exchange.

•

“LCFS” refers to Low Carbon Fuel Standard.

•

“LFG” refers to landfill gas.

•

“MMBtu” refers to Metric Million British Thermal Unit.

•

“PPAs” refers to power purchase agreements.

•

“RECs” refers to Renewable Energy Credits.

•

“Renewable Electricity” or "REG" refers to electricity generated from renewable sources.

•

“RFS” refers to the EPA’s Renewable Fuel Standard.

•

“RINs” refers to Renewable Identification Numbers.

•

“RNG” refers to renewable natural gas.

•

“RVOs” refers to renewable volume obligations.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of U.S. federal securities laws that involve substantial risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to our financial condition, results of operations, plans, objectives, strategies, future performance, and business. Forward-looking statements may include words such as “anticipate,” “assume,” “believe,” “can have,” “contemplate,” “continue,” “strive,” “aim,” “could,” “design,” “due,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events. For example, all statements we make relating to our future results of operations, financial condition, expectations and plans, including expected benefits of the Pico digestion capacity increase, the Montauk Ag project in North Carolina, the Second Apex RNG Facility, the Blue Granite RNG Facility, the Bowerman RNG Facility, the delivery of biogenic carbon dioxide volumes to European Energy, the resolution of gas collection issues at the McCarty facility, the mitigation of wellfield extraction environmental factors at the Rumpke facility, and weather-related anomalies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expect and, therefore, you should not unduly rely on such statements. The risks and uncertainties that could cause those actual results to differ materially from those expressed or implied by these forward-looking statements include but are not limited to:

•

our ability to develop and operate new renewable energy projects, including with livestock farms, and related challenges associated with new projects, such as identifying suitable locations and potential delays in acquisition financing, construction, and development;

•

reduction or elimination of government economic incentives to the renewable energy market;

•

the inability to complete strategic development opportunities;

•

widespread manmade, natural and other disasters (including severe weather events), health emergencies, dislocations, geopolitical instabilities or events, terrorist activities, international hostilities, government shutdowns, political elections, security breaches, cyberattacks or other extraordinary events that impact general economic conditions, financial markets and/or our business and operating results;

•

continued inflation could raise our operating costs or increase the construction costs of our existing or new projects;

•

rising interest rates could increase the borrowing costs of future indebtedness;

•

the potential failure to attract and retain qualified personnel of the Company or a possible increased reliance on third-party contractors as a result, and the potential unenforceability of non-compete clauses with our employees;

•

the length of development and optimization cycles for new projects, including the design and construction processes for our renewable energy projects;

•

dependence on third parties for the manufacture of products and services and our landfill operations;

•

the quantity, quality and consistency of our feedstock volumes from both landfill and livestock farm operations;

•

reliance on interconnections with and access to electric utility distribution and transmission facilities and gas transportation pipelines for our Renewable Natural Gas and Renewable Electricity Generation segments;

•

our ability to renew pathway provider sharing arrangements at historical counterparty share percentages;

•

our projects not producing expected levels of output;

•

potential benefits associated with the combustion-based oxygen removal condensate neutralization technology;

•

concentration of revenues from a small number of customers and projects;

•

our outstanding indebtedness and restrictions under our credit facility;

•

our ability to extend our fuel supply agreements prior to expiration;

•

our ability to meet milestone requirements under our PPAs;

•

existing regulations and changes to regulations and policies that effect our operations;

•

expected benefits from the extension of the Production Tax Credit and other tax credit benefits under the Inflation Reduction Act of 2022;

•

decline in public acceptance and support of renewable energy development and projects, or our inability to appropriately address environmental, social and governance targets, goals, commitments or concerns, including climate-related disclosures;

•

our expectations regarding Environmental Attribute volume requirements and prices and commodity prices;

•

our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act (“JOBS Act”);

•

our expectations regarding future capital expenditures, including for the maintenance of facilities;

•

our expectations regarding the use of net operating losses before expiration;

•

our expectations regarding more attractive CI scores by regulatory agencies for our livestock farm projects;

•

market volatility and fluctuations in commodity prices and the market prices of Environmental Attributes and the impact of any related hedging activity;

•

regulatory changes in federal, state and international environmental attribute programs and the need to obtain and maintain regulatory permits, approvals, and consents;

•

profitability of our planned livestock farm projects;

•

sustained demand for renewable energy;

•

potential liabilities from contamination and environmental conditions;

•

potential exposure to costs and liabilities due to extensive environmental, health and safety laws;

•

impacts of climate change, changing weather patterns and conditions, and natural disasters;

•

failure of our information technology and data security systems;

•

increased competition in our markets;

•

continuing to keep up with technology innovations;

•

concentrated stock ownership by a few stockholders and related control over the outcome of all matters subject to a stockholder vote; and

•

other risks and uncertainties detailed in the section titled “Risk Factors” in our latest Annual Report on Form 10-K and as otherwise disclosed in our filings with the SEC.

We make many of our forward-looking statements based on our operating budgets and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.

All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in our other Securities and Exchange Commission (“SEC”) filings and public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties. See the “Risk Factors” section in our latest Annual Report on Form 10-K and our other filings with the SEC.

We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to you. Furthermore, the forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


	Page
Montauk Renewables, Inc.
Unaudited condensed consolidated financial statements
Unaudited consolidated balance sheets	7
Unaudited consolidated statements of operations	8
Unaudited consolidated statements of stockholders’ equity	9
Unaudited consolidated statements of cash flows	10
Condensed notes to unaudited consolidated financial statements	11

MONTAUK RENEWABLES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data):


	as of June 30,			as of December 31,
ASSETS	2024			2023
Current assets:
Cash and cash equivalents	$	42,285		$	73,811
Accounts and other receivables		21,984			12,752
Current restricted cash		8			8
Income tax receivable		506		—
Current portion of derivative instruments		766			785
Prepaid expenses and other current assets		5,598			2,819
Total current assets	$	71,147		$	90,175
Non-current restricted cash	$	452		$	423
Property, plant and equipment, net		244,367			214,289
Goodwill and intangible assets, net		17,932			18,421
Deferred tax assets		1,908			2,076
Non-current portion of derivative instruments		515			470
Operating lease right-of-use assets		4,165			4,313
Finance lease right-of-use assets		147			36
Related party receivable		10,158			10,138
Other assets		11,181			9,897
Total assets	$	361,972		$	350,238

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,864		$	7,916
Accrued liabilities		20,671			12,789
Income tax payable	—				313
Current portion of operating lease liability		452			420
Current portion of finance lease liability		67			26
Current portion of long-term debt		9,874			7,886
Total current liabilities	$	42,928		$	29,350
Long-term debt, less current portion	$	49,685		$	55,614
Non-current portion of operating lease liability		3,953			4,133
Non-current portion of finance lease liability		79			10
Asset retirement obligations		6,113			5,900
Other liabilities		3,893			4,992

Total liabilities	$	106,651		$	99,999

Commitments and contingencies (Note 20)

STOCKHOLDERS’ EQUITY

Common stock, $0.01 par value, authorized 690,000,000 shares; 143,732,811 shares issued at June 30, 2024 and December 31, 2023; 142,186,722 and 141,986,189 shares outstanding at June 30, 2024 and December 31, 2023, respectively		1,422			1,420
Treasury stock, at cost, 1,069,627 and 984,762 shares June 30, 2024 and December 31, 2023, respectively		(11,570	)		(11,173	)
Additional paid-in capital		218,717			214,378
Retained earnings		46,752			45,614
Total stockholders' equity		255,321			250,239
Total liabilities and stockholders' equity	$	361,972		$	350,238

The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.

MONTAUK RENEWABLES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except for share and per share data):


	For the three months ended June 30,						For the six months ended June 30,
	2024			2023			2024			2023
Total operating revenues	$	43,338		$	53,256		$	82,125		$	72,409

Operating expenses:
Operating and maintenance expenses		18,662			15,221			33,113			29,402
General and administrative expenses		8,737			8,745			18,166			18,220
Royalties, transportation, gathering and production fuel		9,077			10,205			15,593			14,138
Depreciation, depletion and amortization		5,823			5,251			11,257			10,447
Impairment loss		171			274			699			726
Transaction costs		—			3			61			86
Total operating expenses	$	42,470		$	39,699		$	78,889		$	73,019
Operating income (loss)	$	868		$	13,557		$	3,236		$	(610	)

Other expenses (income):
Interest expense	$	1,286		$	711		$	2,451		$	2,386
Other income		(50	)		(90	)		(1,110	)		(84	)
Total other expenses (income)	$	1,236		$	621		$	1,341		$	2,302
(Loss) income before income taxes	$	(368	)	$	12,936		$	1,895		$	(2,912	)

Income tax expense (benefit)		344			11,933			757			(127	)
Net (loss) income	$	(712	)	$	1,003		$	1,138		$	(2,785	)

(Loss) income per share:
Basic	$	(0.01	)	$	0.01		$	0.01		$	(0.02	)
Diluted	$	(0.01	)	$	0.01		$	0.01		$	(0.02	)

Weighted-average common shares outstanding:
Basic		142,069,697			141,633,417			142,027,943			141,633,417
Diluted		142,069,697			142,045,498			142,252,085			141,633,417

The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.

MONTAUK RENEWABLES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share data):


	Common stock				Treasury stock
	Shares		Amount		Shares		Amount			Additional paid-in capital		Retained earnings			Total equity
Balance at March 31, 2024		141,986,189	$	1,420		984,762	$	(11,173	)	$	216,619	$	47,464		$	254,330
Issuance of common stock		200,533		2		—		—			—		—			2
Treasury stock		—		—		84,865		(397	)		—		—			(397	)
Net loss		—		—		—		—			—		(712	)		(712	)
Stock-based compensation		—		—		—		—			2,098		—			2,098
Balance at June 30, 2024		142,186,722	$	1,422		1,069,627	$	(11,570	)	$	218,717	$	46,752		$	255,321

Balance at March 31, 2023		141,633,417	$	1,416		971,306	$	(11,051	)	$	207,830	$	26,878		$	225,073
Net income		—		—		—		—			—		1,003			1,003
Stock-based compensation		—		—		—		—			1,725		—			1,725
Balance at June 30, 2023		141,633,417	$	1,416		971,306	$	(11,051	)	$	209,555	$	27,881		$	227,801

Balance at December 31, 2023		141,986,189	$	1,420		984,762	$	(11,173	)	$	214,378	$	45,614		$	250,239
Issuance of common stock		200,533		2		—		—			—		—			2
Treasury stock		—		—		84,865		(397	)		—		—			(397	)
Net income		—		—		—		—			—		1,138			1,138
Stock-based compensation		—		—		—		—			4,339		—			4,339
Balance at June 30, 2024		142,186,722	$	1,422		1,069,627	$	(11,570	)	$	218,717	$	46,752		$	255,321

Balance at December 31, 2022		141,633,417	$	1,416		971,306	$	(11,051	)	$	206,060	$	30,666		$	227,091
Net loss		—		—		—		—			—		(2,785	)		(2,785	)
Stock-based compensation		—		—		—		—			3,495		—			3,495
Balance at June 30, 2023		141,633,417	$	1,416		971,306	$	(11,051	)	$	209,555	$	27,881		$	227,801

The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.

MONTAUK RENEWABLES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands):


	for the six months ended June 30,
	2024			2023
Cash flows from operating activities:
Net income (loss)	$	1,138		$	(2,785	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization		11,257			10,447
Provision (benefit) for deferred income taxes		168			87
Stock-based compensation		4,339			3,495
Derivative mark-to-market adjustments and settlements		(26	)		(119	)
Net loss on sale of assets		71			37
(Decrease) increase in earn-out liability		(465	)		350
Accretion of asset retirement obligations		220			202
Liabilities associated with properties sold		(225	)		—
Amortization of debt issuance costs		180			184
Impairment loss		699			726
Changes in operating assets and liabilities:
Accounts and other receivables and other current assets		(13,934	)		(13,246	)
Accounts payable and other accrued expenses		11,063			6,699
Net cash provided by operating activities	$	14,485		$	6,077
Cash flows from investing activities:
Capital expenditures	$	(40,764	)	$	(29,588	)
Asset acquisition		(820	)		—
Cash collateral deposits		29			1
Net cash used in investing activities	$	(41,555	)	$	(29,587	)
Cash flows from financing activities:
Repayments of long-term debt	$	(4,000	)	$	(4,000	)
Common stock issuance		2			-
Treasury stock purchase		(397	)		-
Finance lease payments		(32	)		(36	)
Net cash used in financing activities	$	(4,427	)	$	(4,036	)
Net decrease in cash and cash equivalents and restricted cash	$	(31,497	)	$	(27,546	)
Cash and cash equivalents and restricted cash at beginning of period	$	74,242		$	105,606
Cash and cash equivalents and restricted cash at end of period	$	42,745		$	78,060
Reconciliation of cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents	$	42,285		$	77,630
Restricted cash and cash equivalents - current		8			22
Restricted cash and cash equivalents - non-current		452			408
	$	42,745		$	78,060

Supplemental cash flow information:
Cash paid for interest	$	2,366		$	2,460
Cash paid for income taxes		1,407			865
Accrual for purchase of property, plant and equipment included in accounts payable and accrued liabilities		7,697			6,565

The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.

MONTAUK RENEWABLES, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per-share amounts)

NOTE 1 – DESCRIPTION OF BUSINESS

Operations and organization

Montauk Renewables’ Business

Montauk Renewables, Inc. (the “Company” or “Montauk Renewables”) is a renewable energy company specializing in the management, recovery and conversion of biogas into Renewable Natural Gas (“RNG”). The Company captures methane, preventing it from being released into the atmosphere, and converts it into either RNG or electrical power for the electrical grid (“Renewable Electricity Generation” or "REG"). The Company, headquartered in Pittsburgh, Pennsylvania, has more than 30 years of experience in the development, operation and management of landfill methane-fueled renewable energy projects. The Company has current operations at 14 operating projects located in California, Idaho, Ohio, Oklahoma, Pennsylvania, North Carolina, South Carolina and Texas. The Company sells RNG and Renewable Electricity, taking advantage of Environmental Attribute premiums available under federal and state policies that incentivize their use.

Two of the Company’s key revenue drivers are sales of produced gas and sales of Renewable Identification Numbers (“RINs”) to fuel blenders. The Renewable Fuel Standard (“RFS”) is an Environmental Protection Agency (“EPA”) administered federal law that requires transportation fuel to contain a minimum volume of renewable fuel. RNG derived from landfill methane, agricultural digesters and wastewater treatment facilities used as a vehicle fuel qualifies as a D3 (cellulosic biofuel with a 60% greenhouse gas reduction requirement) RIN. The RINs are compliance units for fuel blenders that were created by the RFS program in order to reduce greenhouse gases and imported petroleum into the United States.

An additional program utilized by the Company is the Low Carbon Fuel Standard (“LCFS”). This is state specific and is designed to stimulate the use of low-carbon fuels. To the extent that RNG from the Company’s facilities is used as a transportation fuel in states that have adopted an LCFS program, it is eligible to receive an Environmental Attribute additional to the RIN value under the federal RFS.

Another key revenue driver is the sale of generated electricity and the associated environmental premiums related to renewable sales. The Company’s electric facilities are designed to conform to and monetize various state renewable portfolio standards requiring a percentage of the electricity produced in that state to come from a renewable resource. Such premiums are in the form of Renewable Energy Credits (“RECs”). The Company’s largest electric facility, located in California, receives revenue for the monetization of RECs as a part of a purchase power agreement.

Collectively, the Company benefits from federal and state government incentives in the United States, provided in the form of RINs, RECs, LCFS credits, tax credits and other incentives to end users, distributors, system integrators and manufacturers of renewable energy projects, that promote the use of renewable energy, as Environmental Attributes.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions of the SEC on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2024 (the “2023 Annual Report”). The results of operations for the three and six months ended June 30, 2024 in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2023, has been derived from the audited financial statements as of that date. For further information, refer to the Company’s audited financial statements and notes thereto included for the year ended December 31, 2023 in the 2023 Annual Report.

Segment Reporting

The Company reports segment information in three segments: RNG, Renewable Electricity Generation and Corporate. This is consistent with the internal reporting provided to the chief operating decision maker who evaluates operating results and performance. The aforementioned business services and offerings described in Note 1 are grouped and defined by management as two distinct operating segments: RNG and Renewable Electricity Generation. The Corporate segment primarily consists of general and administrative expenses not allocated to RNG and Renewable Electricity Generation. Below is a description of the Company’s segments and other activities.

The RNG segment represents the sale of gas sold at fixed-price contracts and applicable Environmental Attributes. This business unit represents the majority of the revenues generated by the Company. The Renewable Electricity Generation segment represents the sale of generated electricity and applicable Environmental Attributes.

Corporate relates to additional discrete financial information for the corporate function. It is primarily used as a shared service center for maintaining functions such as executive, accounting, treasury, legal, human resources, tax, environmental, engineering and other operations functions not otherwise allocated to a segment. As such, the Corporate segment is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation to the Company’s consolidated financial statements.

Use of Estimates

The preparation of financial statements, in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The FASB included a sunset provision within Topic 848 based on expectations of when the LIBOR would cease being published. The sunset provision has been amended from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company’s current debt agreement bears interest at the Bloomberg Short-Term Bank Yield Index Rate, plus an applicable margin. LIBOR is no longer utilized as a reference rate.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segments. The amendments in 2023-07 aim to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in 2023-09 aim to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for the Company's Annual Report on Form 10-K for the year ended December 31, 2025, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

NOTE 3 – ASSET IMPAIRMENT

The Company recorded an impairment loss of $171 and $274 for the three months ended June 30, 2024 and 2023, respectively and $699 and $726 for the six months ended June 30, 2024 and 2023, respectively. On February 18, 2024, for one of its REG sites, the Company entered into a bill of sale, assignment and assumption agreement to sell its rights to the existing fuel supply agreement and property back to the site host in advance of the fuel supply agreement termination date and received $1,000 in proceeds. The effective date of the sale, assignment and assumption agreement is October 1, 2024. The Company elected to cease operations prior to the assignment date and consequently the remaining book value of long lived assets and intangibles were impaired for $312. The remaining $387 impairment was for various RNG equipment that was deemed obsolete or inoperable for current operations. The 2023

impairments were for specifically identified RNG machinery and feedstock processing equipment that were no longer in operational use and recorded in the Company's RNG segment.

NOTE 4 – REVENUES FROM CONTRACTS WITH CUSTOMERS

The Company’s revenues are comprised of renewable energy and related Environmental attribute sales provided under short and medium term contracts with its customers. All revenue is recognized when (or as) the Company satisfies its performance obligation(s) under the contract (either implicit or explicit) by transferring the promised product or service to its customer either when (or as) its customer obtains control of the product or service. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. The Company allocates the contract’s transaction price to each performance obligation using the product’s observable market standalone selling price for each distinct product in the contract.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products or services. As such, revenue is recorded net of allowances and customer discounts as well as net of transportation and gathering costs incurred by the customer following the transfer of control of the commodities sold. To the extent applicable, sales, value add and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.

The Company’s performance obligations related to the sale of renewable energy (i.e. RNG and Renewable Electricity Generation) are generally satisfied over time. Revenue related to the sale of renewable energy is generally recognized over time using an output based upon the product quantity delivered to the customer. This measure is used to best depict the Company’s performance to date under the terms of the contract. Revenue from products transferred to customers over time accounted for approximately 21% and 18% of revenue for the three months ended June 30, 2024 and 2023, respectively, and 24% and 28% of revenue for the six months ended June 30, 2024 and 2023, respectively.

The nature of the Company’s contracts may give rise to several types of variable consideration, such as periodic price increases. This variable consideration is outside of the Company’s influence as the variable consideration is dictated by the market. Therefore, the variable consideration associated with the contracts is considered fully constrained.

The Company’s performance obligations related to the sale of Environmental Attributes are generally satisfied at a point in time and were approximately 79% and 82% of revenue for the three months ended June 30, 2024 and 2023, respectively, and 76% and 72% for the six months ended June 30, 2024 and 2023, respectively. The Company recognizes Environmental Attribute revenue at the point in time in which the customer obtains control of the Environmental Attributes, which is generally when the title of the Environmental Attribute passes to the customer upon delivery. In limited cases, title does not transfer to the customer and revenue is not recognized until the customer has accepted the Environmental Attributes.

The following tables display the Company’s disaggregated revenue by major source based on product type and timing of transfer of goods and services for the three and six months ended June 30, 2024 and 2023:


	Three months ended June 30, 2024
	Goods transferred at a point in time		Goods transferred over time		Total
Major goods/Service line:
Natural gas commodity	$	340	$	6,739	$	7,079
Natural gas environmental attributes		31,743		—		31,743
Electric commodity		—		2,550		2,550
Electric environmental attributes		1,966		—		1,966
	$	34,049	$	9,289	$	43,338
Operating segment:
RNG	$	32,083	$	6,739	$	38,822
REG		1,966		2,550		4,516
	$	34,049	$	9,289	$	43,338


	Three months ended June 30, 2023
	Goods transferred at a point in time		Goods transferred over time		Total
Major goods/Service line:
Natural gas commodity	$	202	$	6,995	$	7,197
Natural gas environmental attributes		41,375		—		41,375
Electric commodity		—		2,802		2,802
Electric environmental attributes		1,882		—		1,882
	$	43,459	$	9,797	$	53,256
Operating segment:
RNG	$	41,577	$	6,995	$	48,572
REG		1,882		2,802		4,684
	$	43,459	$	9,797	$	53,256


	Six months ended June 30, 2024
	Goods transferred at a point in time		Goods transferred over time		Total
Major goods/Service line:
Natural gas commodity	$	689	$	13,925	$	14,614
Natural gas environmental attributes		58,075		—		58,075
Electric commodity		—		5,581<

Montauk Renewables, Inc. [MNTK] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-09]
10-K	[2024-03-14]
10-Q	[2023-11-09]
10-Q	[2023-08-09]
10-Q	[2023-05-10]
10-K	[2023-03-16]
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
10-K	[2022-03-16]
10-Q	[2021-11-15]
10-Q	[2021-08-16]
10-Q	[2021-05-17]
10-K	[2021-03-31]
S-1	[2020-12-11]

Montauk Renewables, Inc. [MNTK] Filings

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