`
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) |
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(Address of Principal Executive Offices) |
(Zip Code) |
(
(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
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Trading symbol(s)
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Name of each exchange on which registered
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The |
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.
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).
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 |
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Non-accelerated filer |
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Smaller reporting company |
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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 November 2, 2023 was
TABLE OF CONTENTS
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ITEM 1. |
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ITEM 2. |
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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ITEM 3. |
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ITEM 4. |
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ITEM 1. |
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ITEM 1A. |
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ITEM 2. |
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ITEM 3. |
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ITEM 4. |
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ITEM 5. |
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ITEM 6. |
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51 |
```
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:
3
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 future results of operations, financial condition, estimated and projected costs, and plans and objectives for future operations, growth, strategies or initiatives, including the Pico feedstock amendment, the Montauk Ag project in North Carolina, the Raeger capital improvement project, the Second Apex RNG Facility project, the Blue Granite RNG project, the Bowerman RNG project, the delivery of biogenic carbon dioxide volumes to European Energy, the resolution of gas collection issues at the McCarty facility, and the mitigation of wellfield extraction environmental factors at the Rumpke facility, 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:
4
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.
5
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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Montauk Renewables, Inc. |
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Unaudited condensed consolidated financial statements |
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7 |
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8 |
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Unaudited condensed consolidated statements of stockholders’ equity |
9 |
10 |
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Notes to unaudited condensed consolidated financial statements |
11 |
6
MONTAUK RENEWABLES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data):
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As of September 30, |
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As of December 31, |
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ASSETS |
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2023 |
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2022 |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts and other receivables |
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Current restricted cash |
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Related party receivable |
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Current portion of derivative instruments |
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Prepaid expenses and other current assets |
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Total current assets |
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$ |
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$ |
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Non-current restricted cash |
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$ |
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$ |
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Property, plant and equipment, net |
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Goodwill and intangible assets, net |
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Deferred tax assets |
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Non-current portion of derivative instruments |
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Operating lease right-of-use assets |
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Finance lease right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Income tax payable |
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Current portion of operating lease liability |
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Current portion of finance lease liability |
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Current portion of long-term debt |
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Total current liabilities |
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$ |
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$ |
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Long-term debt, less current portion |
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$ |
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$ |
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Non-current portion of operating lease liability |
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Non-current portion of finance lease liability |
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Asset retirement obligations |
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Other liabilities |
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Total liabilities |
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$ |
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$ |
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STOCKHOLDERS’ EQUITY |
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Common stock, $ |
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Treasury stock, at cost, |
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Additional paid-in capital |
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Retained earnings |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.
7
MONTAUK RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for share and per share data):
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For the Three Months Ended September 30, |
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For the Nine Months Ended September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Total operating revenues |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Operating and maintenance expenses |
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General and administrative expenses |
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Royalties, transportation, gathering and production fuel |
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Depreciation, depletion and amortization |
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Gain on insurance proceeds |
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Impairment loss |
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Transaction costs |
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Total operating expenses |
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$ |
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$ |
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$ |
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$ |
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Operating income |
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$ |
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$ |
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$ |
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$ |
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Other expenses (income): |
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Interest expense |
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$ |
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$ |
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$ |
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$ |
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Other (income) |
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( |
) |
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( |
) |
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Total other expense (income) |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Income before income taxes |
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$ |
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$ |
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$ |
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$ |
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Income tax expense |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Income per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted-average common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.
8
MONTAUK RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share data):
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Common Stock |
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Treasury Stock |
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Shares |
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Amount |
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Shares |
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Amount |
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Additional Paid-in Capital |
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Retained Earnings (Deficit) |
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Total Equity |
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Balance at June 30, 2023 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Vesting of stock awards |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Balance at September 30, 2023 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Balance at June 30, 2022 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Balance at September 30, 2022 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Balance at December 31, 2022 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Vesting of stock awards |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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|||
Balance at September 30, 2023 |
|
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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||||||
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|||||||
Balance at December 31, 2021 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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|||||
Vesting of stock awards |
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— |
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— |
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— |
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— |
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— |
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— |
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Treasury stock |
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— |
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— |
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|
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( |
) |
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— |
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— |
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( |
) |
||
Net income |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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|||
Balance at September 30, 2022 |
|
|
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$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.
9
MONTAUK RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands):
|
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Nine Months Ended |
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|||||
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September 30, |
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|||||
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2023 |
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2022 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation, depletion and amortization |
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Provision for deferred income taxes |
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Stock-based compensation |
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Derivative mark-to-market adjustments and settlements |
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( |
) |
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( |
) |
Gain on property insurance proceeds |
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( |
) |
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Increase in earn-out liability |
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Net loss (gain) on sale of assets |
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( |