OPAL Fuels sells $11.1 million tax credits to Apollo unit By Investing.com

WHITE PLAINS, N.Y. – OPAL Fuels Inc. (NASDAQ: OPAL), a company specializing in renewable (RNG) and renewable power, has completed the sale of approximately $11.1 million in investment tax credits to a subsidiary of Apollo Global Management (NYSE:), Inc. These tax credits are a result of the Inflation Reduction Act (IRA), which was enacted in August 2022 and offers transferable federal income tax credits for certain renewable energy projects.

The transaction marks OPAL Fuels’ initial foray into IRA tax credit sales and represents the company’s share of the credits from the Emerald RNG facility. OPAL Fuels jointly owns this facility, which is one of North America’s largest landfill RNG operations, with a nameplate capacity of 10,000 standard cubic feet per minute (scfm).

Jonathan Maurer, Co-Chief Executive Officer of OPAL Fuels, stated that the sale of these tax credits provides the company with additional liquidity to advance its strategic growth initiatives. Maurer highlighted the IRA as beneficial for the renewable energy sector and a significant investment driver for OPAL Fuels’ project pipeline in the coming years.

The Emerald RNG facility’s role is to capture biogas and contribute to climate change mitigation by reducing carbon emissions associated with heavy-duty trucking fleets. The sale of the IRA tax credits is expected to further encourage investment in such renewable energy assets.

OPAL Fuels positions itself as a leader in the capture and conversion of biogas into low carbon intensity RNG and renewable electricity, as well as in the marketing and distribution of RNG to heavy-duty trucking and other industries that are challenging to decarbonize.

This news is based on a press release statement from OPAL Fuels Inc. and does not include any promotional language or claims from the company. The information provided is solely for the purpose of reporting factual content regarding OPAL Fuels’ recent business transaction.

In other recent news, OPAL Fuels demonstrated a robust Q2 performance, with results aligning with expectations. The company’s growth was propelled by a thriving end market and favorable sales of Renewable Identification Numbers (RINs). Despite adjusting its full-year Renewable Natural Gas (RNG) production outlook slightly downward due to recent facility ramp-up times, the company maintains its adjusted EBITDA guidance for 2024. OPAL Fuels also emphasized its strong liquidity position, with $275 million available under their credit facility and $27 million in cash and short-term investments, reinforcing its capacity to meet its funding needs through internal cash flows.

The company has commenced construction on its 16th RNG project and aims to have at least 2 million MMBtu of new RNG production in construction for 2024. The full-year RNG production outlook was revised to 4.0 million to 4.4 million MMBtu. OPAL Fuels also sees opportunities in non-transportation markets, with marine fuel mentioned as a potential area.

These are recent developments that demonstrate the company’s commitment to growth, despite revising its full-year RNG production outlook due to the ramp-up of recent facilities. The company remains optimistic about its growth prospects in 2025, particularly for the Sapphire and Polk RNG projects. In capturing and converting biogenic methane emissions, OPAL Fuels aligns with the EPA’s focus on methane regulation, further solidifying its strategic positioning in the renewable energy sector.

InvestingPro Insights

As OPAL Fuels Inc. (NASDAQ: OPAL) navigates the renewable energy landscape with strategic moves like the sale of investment tax credits, investors are closely monitoring the company’s financial metrics and market valuation. According to InvestingPro, OPAL Fuels is currently trading at a high earnings multiple, with a P/E ratio of 46.79, reflecting investor confidence in the company’s future profitability, which analysts predict will materialize this year. This optimism is also evident in the company’s revenue growth, which has been robust over the last twelve months as of Q2 2024, at 27.13%.

Despite the high earnings multiple, OPAL Fuels operates with a moderate level of debt, suggesting a balanced approach to leveraging and financial management. The company’s strategic initiatives, such as the sale of tax credits, could further strengthen its financial position by providing additional liquidity to fund growth. This is particularly relevant as the company does not pay dividends, choosing instead to reinvest earnings back into the business.

InvestingPro Data highlights that OPAL Fuels has experienced a significant EBITDA growth of 1099.8% over the last twelve months as of Q2 2024, indicating a strong operational performance. Additionally, the market has reacted to recent developments, with a 6.41% price total return over the past week. However, it’s important to consider the broader timeframes, which show a year-to-date price total return of -33.88%, emphasizing the volatility and long-term investment horizon often associated with the renewable energy sector.

For investors seeking deeper insights, there are additional InvestingPro Tips available that provide a comprehensive analysis of OPAL Fuels’ financial health and market standing. These tips can be accessed at InvestingPro’s dedicated OPAL page.

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