Montauk Renewables Announces Full Year 2022 Results

Montauk Renewables, Inc., a renewable energy company specializing in the management, recovery and conversion of biogas into renewable natural gas (“RNG”), today announced financial results for the year ended December 31, 2022.

Full Year Highlights: Revenues of $205.6 million, increased 38.8% year-over-year Net Income of $35.2 million, increased 877.3% year-over-year Non-GAAP Adjusted EBITDA of $70.5 million, increased 152.4% year-over-year RNG production of 5.5 million MMBtu, decreased 2.9% year-over-year

Montauk’s full year revenue reflects an increase in pricing of both gas commodity and the average realized price of D3 Renewable Identification Numbers (“RINs”) sold. The increase in price offset a decrease in RNG volumes produced and the prior period expiration of counter party sharing agreement revenues. Under the terms of our Pico Feedstock Amendment, during 2022 we made payments of $2.5 million for the receipt of two of three tranches in increased feedstock deliveries. While we expect the digestion capacity expansion to be operational during the third quarter of 2023, improved efficiencies in the existing digestion and water management allowed us to process the increased feedstock volumes. We started incurring capital expenditures for a second RNG facility at our Apex location which we expect to be operational in 2024. During 2022, we consolidated our Montauk Ag Renewables location to the Turkey, North Carolina property we purchased in 2021. The consolidation decision was made, in part, to this site being approved to participate in a RNG pilot program in North Carolina. Finally, our capital program to upgrade our Raeger facility is ongoing with an expected completion date in the third quarter of 2023.

Full Year Financial Results Total revenues in 2022 were $205.6 million, an increase of $57.4 million (38.8%) compared to $148.1 million in 2021. Increased realized RIN pricing during 2022 of $3.25 compared to $1.91 in 2021 was the primary driver for the increase in total revenues. Additionally, an increase in natural gas index prices of 72.9% in 2022 of $6.64 compared to $3.84 in 2021 also contributed to the increase. Offsetting these increases were $13.2 million of lower revenues recognized under counterparty sharing arrangements in 2022 compared to 2021 due to these arrangements ending. Operating and maintenance expenses for our RNG facilities were $43.7 million, an increase of $5.6 million (14.7%) compared to $38.1 million in 2021. The primary driver of this increase is related to increased utilities expense of $6.1 million (61.2%) in 2022 compared to 2021. Our Renewable Electricity Generation operating and maintenance expenses in 2022 were $13.1 million, an increase of $2.7 million (25.5%) compared to $10.4 million in 2021 due to the timing of scheduled preventative maintenance intervals at our Bowerman facility. Total general and administrative expenses were $34.1 million in 2022, a decrease of $8.4 million (19.8%) compared to $42.5 million in 2021. The decrease is primarily related to our accounting for the cancellation of MNK options and January 2021 grants of restricted stock, non-qualified stock options, and restricted stock units to the Company’s employees. Offsetting this decrease is an increase in general and administrative expenses of approximately $3.7 million (337.5%) in 2022 as compared to 2021 associated with the Montauk Ag Renewables Acquisition. Operating profit in 2022 was $44.5 million, an increase of $41.2 million (1236.3%) compared to an operating profit of $3.3 million in 2021. Net income in 2022 was $35.2 million, an increase of $39.7 million (877.3%) compared to a net loss of $4.5 million in 2021.

Full Year Operational Results We produced 5.5 million Metric Million British Thermal Units (“MMBtu”) of RNG during 2022, a decrease of 0.2 million (compared to 5.7 million MMBtu produced in 2021. Our Atascocita facility produced 0.2 million fewer MMBtu in 2022 compared to 2021 due to a process equipment failure. Our Rumpke facility produced 0.1 million fewer MMBtu in 2022 compared to 2021 as a result of lower inlet flow coming off the wellfield. Our Apex facility producing 0.1 million fewer MMBtu in 2022 compared to 2021 due to landfill filling pattern changes resulting in lower production. Offsetting the decrease are production volume increases at our Pico and Galveston facilities. Our Pico facility produced 0.1 million MMBtu more in 2022 compared to 2021 as a result of improvements related to the existing digestion process. Our Galveston facility produced 0.1 million MMBtu more in 2022 compared to 2021 as a result of higher inlet gas due to wellfield changes and plant efficiency optimization of process equipment. We produced approximately 190 megawatt hours (“MWh”) in Renewable Electricity in 2022, an increase of 7 MWh compared to 183 MWh produced in 2021. Our Security facility produced approximately 10 MWh in 2022 compared to no production in 2021 as a result of the prior period engine restoration project. Our Tulsa facility produced approximately 3 MWh less in 2022 compared to 2021 due to reduced feedstock availability at the landfill.

2023 Full Year Outlook: RNG revenues expected to range between $137.0 and $145.0 million RNG production volumes expected to range between 5.7 and 6.1 million MMBtu Renewable Electricity revenues expected to range between $18.0 and $19.0 million Renewable Electricity production volumes expected to range between 195 and 205 thousand MWh