Earnings Call Transcript - MNTK Q4 2024

Operator, Operator

Good afternoon everyone, and thank you for participating in today's conference call. I would like to turn the call over to Mr. John Ciroli as he provides some important cautions regarding forward-looking statements and non-GAAP financial measures contained in the earnings material or made on this call. John, please go ahead.

John Ciroli, Chief Legal Officer and Secretary

Thank you and good day everyone. Welcome to Montauk Renewables Earnings Conference Call to review the Full Year 2024 Financial and Operating results and developments. I'm John Ciroli, Chief Legal Officer and Secretary at Montauk. We are changing the cadence of our SEC filings and earnings calls beginning with our full year 2024 earnings to better align our primary NASDAQ and secondary JSC markets. Joining me today are Sean McClain, Montauk's President and Chief Executive Officer, to discuss market and business developments, and Kevin Van Asdalan, Chief Financial Officer, to discuss our full year 2024 financial and operating results. At this time, I would like to direct your attention to our forward-looking disclosure statement. During this call, certain comments we make constitute forward-looking statements and as such involve a number of assumptions, risks, and uncertainties that could cause the company's actual results or performance to differ materially from those expressed in or implied by such forward-looking statements. These risk factors and uncertainties are further detailed in Montauk Renewables SEC filings. Our remarks today might also include non-GAAP financial measures. We present EBITDA and adjusted EBITDA metrics because we believe the measures assist investors in analyzing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Additional details regarding these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP financial measures can be found in our slide presentation in our full year 2024 earnings press release issued and filed March 13, 2025, which is also available on our website at https://ir.montaukrenewables.com. After our remarks, we will open the call to questions. We ask that you please keep one question to accommodate as many questions as possible. With that, I will turn the call over to Sean.

Sean McClain, President and CEO

Thank you, John. Good day everyone and thank you for joining our call. On March 7, 2025, the EPA announced its delay of the 2024 RIN compliance deadline for all categories. The EPA has yet to decide on a proposed partial waiver of the 2024 cellulosic biofuel volume requirements or the timing of its decision on this matter since its origination in their December 5, 2024 EPA announcement. Montauk has sold 100% of its 2024 D3 RINs and it has zero exposure to the timing and resolution of this issue. We entered 2024 with approximately 6.8 million 2024 vintage RINs unsold. During the fourth quarter of 2024, the D3 RIN market exhibited measurable price volatility with indices ranging from a high of $3.50 to a low of $2.08 and significantly muted purchasing activity by obligated parties. These market conditions contributed to our decision to hold a higher balance of D3 RINs at the end of the year. All 2024 vintage D3 RINs have been subsequently sold as obligated parties re-entered the market during the first quarter of 2025. The volatility continues to impact the renewable natural gas industry in a variety of ways. Montauk’s strategy remains steady to seek out and invest in projects with quality host businesses that exhibit feedstock growth potential, to diversify our sources of feedstock, our product offerings, and our monetization structures, and to ensure the long-term economic viability of our projects in a wide range of production and pricing scenarios. In 2018, Montauk took its first significant stride towards feedstock diversification through our Pico acquisition. We continue to leverage that diversification through our Pico digestion capacity increase and feedstock amendment with a high quality, high volume dairy agriculture host. Our feedstock diversification strategy is poised to further expand in 2026 with the commissioning of our swine waste energy project in Turkey, North Carolina. Our North Carolina development initiative not only demonstrates our commitment to feedstock diversification, but also our commitment to product diversification. The majority of our production revenue from this project will be derived from renewable power generation, which when combined with state-based renewable electricity credits, will meaningfully increase our existing REG business segment. In addition to a rebalancing of power generation in our portfolio, our North Carolina development project increases our revenue from commodity-based products whose market value is not directly influenced by traditional federal or state attribute programs. The biochar commodity produced by our patented reactor process will help insulate the company from volatility experienced in markets underpinned by federal and state programs such as the renewable fuel standard and California's low carbon fuel standard. Montauk's commitment to diversification through its product offerings is further illustrated in its previously announced agreement with European Energy North America for sales of biogenic carbon dioxide. This initiative is being prioritized across our portfolio as the company seeks to extract increased value from its existing projects along the rising demand for and the market price of industrial and food-grade CO2. We believe our historical discipline of seeking out and investing in projects with quality host businesses combined with these diversification initiatives will position Montauk to successfully navigate the continually changing landscape of the renewable natural gas industry. With its commissioning in 2024, this will be one of our last updates regarding our Pico Digestion capacity increase. In 2025, we will receive the third and final increase in feedstock under the amendment to our feedstock agreement, and we expect to make that final payment related to this amendment during 2025. We are pleased to report that the production from our Pico facility during 2024 delivered an increase of over 70% versus 2023. We anticipate commissioning our second facility at our Apex site during the second quarter of 2025. Throughout 2024, we continue to expect a period where we have excess production capacity while the landfill host increases available feedstock. With our previously announced Blue Granite project during February 2025, we received notice from the interconnection utility of their intention to not accept RNG into their distribution system from any project. As a result, we have indefinitely delayed COD and corresponding capital spend as we both work with the host landfill and prospective stakeholders to evaluate alternative RNG interconnection strategies, both physical and virtual, as well as alternative commodity production opportunities from traditional RNG production. We are pleased to announce our initiative to convert our Tulsa, Oklahoma Renewable Electric Generation facility project through the design and construction of a renewable natural gas facility. With a variable inlet capacity design and a corresponding average nameplate capacity of approximately 1,500 MMBtu a day, this new facility will be designed to beneficially process all of the available and growing inlet gas feedstock from its host landfill. We expect that project capital investment to range between $25 million and $35 million and a targeted commissioning date in the first quarter of 2027. We have prioritized the first of our biogenic CO2 projects related to our previously announced agreement with European Energy and expect to commission a facility at our Atascocita project during the second quarter of 2027. We expect to begin monetization of approximately 60,000 metric tons per year of food-grade CO2 in advance of the commencement of our off-take agreement at commodity prices. We continue to progress with our design and equipment selection and construction plans in our other Houston facilities to meet our requirements with European Energy North America to supply their biogenic CO2. Additionally, we are progressing with our design and construction plans to incorporate food-grade CO2 processing into our Rumpke RNG project with an expected commissioning of Q3 2027 and expected volumes of approximately 50,000 metric tons per year of food-grade CO2. In December 2024, the state of North Carolina approved a change in laws governing the generation of RECs from swine waste under its renewable energy portfolio standards. For qualifying projects meeting specific eligibility criteria, swine REC regeneration is enhanced by awarding an additional 2 enhanced swine credit RECs for each swine REC generated, a ratio of 3:1 for a period of 8 years, followed by a ratio of 2:1 for a subsequent 6-year period. The company is in various stages of negotiations with other obligated parties to expand REC sales beyond our previously announced agreement with Duke Energy. We now have over 40 separate farming locations secured under long-term agreements to provide access to waste from no less than 200,000 hog spaces in support of our expected processing needs for the first phase of our Turkey, North Carolina facility commissioning in early 2026. With that, I will turn the call over to Kevin.

Kevin Van Asdalan, Chief Financial Officer

Thank you, Sean. I will be discussing our full year 2024 financial and operating results. Please refer to our earnings press release in the supplemental slides posted on our website for additional information. Our profitability is significantly influenced by the market price of environmental attributes, including RINs. Since we self-market a large portion of our RINs, choosing not to transfer available RINs during a specific period will affect our revenue and operating profit. As of December 31, 2024, we had 6.8 million RINs that were available but unsold. We have since committed to transfer these RINs. Additionally, we have commitments to transfer all RINs generated from our 2024 RNG production for 2025. Overall, in 2025, we transferred about 9.9 million RINs from the 2024 compliance year at an average realized price of around $2.45. We have no remaining 2024 compliance year RINs left to transfer and have not made significant commitments to transfer RINs from 2025 RNG production. Total revenues in 2024 reached $175.7 million, slightly up compared to $174.9 million in 2023. We saw a decrease in the number of RINs self-marketed in 2024 due to the decision not to transfer unsold RINs in the fourth quarter. The average realized RIN price for 2024 was $3.28, a 21% increase from $2.71 in 2023. The price of natural gas dropped about 17.2% in 2024, falling from $2.74 in 2023 to $2.27 in 2024. General and administrative expenses totaled $36.3 million for 2024, which is up $1.9 million or 5.5% from $34.4 million in 2023. Employee-related costs, including stock-based compensation, were $23.1 million in 2024, an increase of $3.4 million or 17.1% from $19.7 million in 2023. This rise was mainly due to the accelerated vesting of some restricted share awards following an employee’s termination. Professional fees decreased by about $1.6 million or 35.3% in 2024 compared to 2023. Looking at our renewable natural gas segment, we produced around 5.6 million MMBtu of RNG in 2024, an increase from 5.5 million in 2023. Improvements in well field optimization and processing equipment, especially at our coastal facility, contributed to this growth, yielding 111,000 MMBtu more in 2024 compared to the previous year. Our Pico facility produced 76,000 MMBtu more as a result of commissioning a digestion expansion project. However, we faced unrelated well field quality issues and weather anomalies that reduced output at our Rumpke facility, which produced 159,000 fewer MMBtu in 2024 compared to 2023. Revenues from the renewable natural gas segment in 2024 were $158 million, up by $1.5 million or 1% compared to $156.5 million in 2023. The average commodity price for natural gas in 2024 was 17.2% lower than the previous year. During this period, we self-marketed about 36.6 million RINs, which is an 8.3 million decrease or 18.5% from 44.9 million in 2023. This reduction was mainly due to market conditions and the decision not to market 6.8 million RINs generated and available for sale in the fourth quarter of 2024. The average pricing realized on RIN sales was $3.28 for 2024 compared to $2.71 in 2023, marking a 21% increase. By contrast, the average D3 RIN index price for 2024 was $3.12, approximately 18.6% higher than the 2023 average of $2.63. By December 31, 2024, we had around 291,000 MMBtu available for RIN generation and about 6.8 million RINs generated but unsold. In comparison, at the end of 2023, we had about 358,000 MMBtu available for RIN generation and approximately 108,000 unsold RINs. We have committed to transferring all of our RINs and inventory associated with our 2024 RNG production. Operating and maintenance expenses for RNG facilities in 2024 totaled $53.4 million, reflecting an increase of $5.5 million or 11.5% compared to $47.9 million in 2023. The Rumpke facility's operating and maintenance expenses went up by approximately $1.8 million due to escalated media change-out and gas processing equipment maintenance costs. The McCarty facility's expenses rose about $1.2 million owing to a well field operational enhancement program and increased maintenance costs for the gas compression system. Operating and maintenance expenses for the Pico facility increased roughly $0.9 million as a consequence of non-capitalizable costs linked to the digestion capacity increase project and associated efficiency improvements. For the Atascocita facility, costs rose by approximately $0.6 million mainly due to higher utility expenses, while the Apex facility had a $0.3 million increase related to maintenance costs for gas processing equipment. We produced 186,000 megawatt hours of renewable electricity in 2024, down by around 8,000 megawatt hours or 4.1% from 194,000 in 2023. The reduction in our security facility production was due to ceasing operations in connection with the sale of gas rights back to the landfill host in the first quarter of 2024. Revenues from renewable electricity facilities in 2024 were $17.8 million, a decrease of $0.6 million or 3.8% compared to $18.4 million in 2023, primarily driven by reduced production volumes at the security facility. Operating and maintenance expenses for our renewable electricity facilities in 2024 were $12.8 million, up $1.1 million or 8.6% from $11.7 million in 2023. The increase was mainly due to operating and maintenance expenses tied to the Montauk Ag Renewables development project, which rose by about $1.1 million due to non-capitalizable costs. We recognized impairment losses totaling $1.6 million for 2024, which is an increase of $0.7 million or 75.8% compared to $0.9 million for 2023. The 2024 impairment losses are largely linked to the remaining net value of the asset at the security facility and various RNG equipment considered obsolete for our operations, along with REG assets affected during initial start-up testing at one of our construction work-in-progress sites. The impairment losses for 2023 specifically related to RNG machinery and feedstock processing equipment that were no longer operational. None of these impairment losses were connected to our expectations for generating future cash flows from operations. Other expenses in 2024 were $3.9 million, a drop of $1.4 million or 25.2% from $5.3 million in 2023, primarily due to proceeds of $1.0 million from the sale of gas rights ahead of the expiration of the fuel supply agreement at our security facility and a decrease of $0.5 million in interest expenses. Operating profit for 2024 was $16.1 million, down $7.5 million or 31.8% from $23.6 million in 2023. RNG operating profit for 2024 stood at $56.0 million, a decline of $3.3 million or 5.5% from $59.3 million in 2023. The renewable electricity generation operating loss for 2024 was $2.8 million, an increase of $2.2 million from $0.6 million in 2023. Looking at the balance sheet, as of December 31, 2024, $56.0 million was outstanding under our term loan. The borrowing capacity available under our revolving credit facility was $117.8 million as of the same date. We generated $43.8 million from operating activities, which is a 6.7% increase compared to $41.1 million as of December 31, 2023. Based on our estimate of the present value of our Pico earnout obligation, we recorded a decrease of $1.7 million to the liability as of December 31, 2024, recorded under our RNG segment royalty expense. During 2024, we incurred around $62.3 million in capital expenditures; $27.8 million for Montauk Ag Renewables, $12.6 million for the second Apex facility, and $8.8 million for the Bowerman RNG project. Our capital expenditures in 2023 totaled $63.1 million, which included $18.6 million for Montauk Ag Renewables, $13.7 million for the Pico facility digestion capacity increase, and $13.1 million for the second Apex RNG facility. In 2025, we anticipate our non-development capital expenditures to be between $14 million and $17 million, and we also expect our existing development capital expenditures for 2025 to range from $100 million to $150 million. By December 31, 2024, we had approximately $45.6 million in cash and cash equivalents, and around $8.2 million in accounts and other receivables, with no significant collectability issues anticipated with our receivables. Adjusted EBITDA for 2024 amounted to $42.6 million, down $3.9 million or 8.3% from $46.5 million for 2023. EBITDA for 2024 was $41 million, a decrease of $4.3 million or 9.5% compared to $45.3 million in 2023. Our net income for 2024 was $9.7 million, compared to $14.9 million in 2023, representing a decrease of $5.2 million or 34.9%. In January 2021, we entered into a loan agreement with Montauk Holdings Limited, our affiliate, securing a promissory note. We advanced a cash loan of $5 million to MNK to address its dividend tax liability from reorganization transactions under the South African Income Tax Act. The principal balance of the loan currently stands at $10.7 million. The due date is set for December 31, 2033, and the security interest is 976,000 shares of our common stock held by MNK. In December 2021, another entity loaned MNK up to 10 million South African rand, with the current principal and accrued interest totaling 11.7 million rand or about $0.7 million. There is no collateral for this loan, which became due on December 31, 2024, without an extension. Per our transaction agreement with MNK, we are obligated to repay the loan on MNK's behalf if it confirms that the maturity was not extended and it lacks sufficient funds to repay. As of December 31, 2024, we accrued a contingent liability for this loan repayment. On February 2, 2025, following our 2024 fiscal year, but before issuing our 2024 financial statements, our Board approved the loan repayment, which was executed on March 5, 2025. This amount is included in the principal balance of the consolidated promissory note. Before the loan repayment, we assessed that the other entity was the primary beneficiary of MNK under the variable interest entity model. After the agreement modification and subsequent loan repayment, the other entity retained control over MNK but no longer holds significant benefits. Following accounting guidelines, we concluded that most of MNK's activities were conducted on our behalf, as MNK's only asset is the 976,000 shares of our common stock held as collateral for the promissory note. We consolidated MNK as of December 31, 2024, and the loan repayment before our financial statements were issued is considered a subsequent event. As of that date, we included MNK's current assets of approximately $52,000, non-current assets of about $0.6 million, current liabilities of roughly $0.6 million, and long-term liabilities of around $16,000. The fifth amended promissory note became an intercompany loan and was eliminated in consolidation. MNK's investment of about $10.2 million in the company is also eliminated. There was no gain or loss on consolidating MNK since this transaction is classified as a common control transaction. We recorded a non-cash acquisition of treasury stock of approximately $8.3 million related to consolidating these shares. MNK remains a separate legal entity with ownership of these shares and may sell them under market conditions and our insider trading policy to repay the loan to us. With that, I'll now turn the call back over to Sean.

Sean McClain, President and CEO

Thank you, Kevin. In closing, while we don't provide guidance to our internal expectations on the market price of environmental attributes, including the market price of D3 RINs, we would like to provide our 2025 outlook. It is important to note that our guidance ranges include internal assumptions that may or may not align with current market trends. Our outlook is based on selling RINs up to the quarter after RINs are generated. We expect our RNG production volumes to range between 5.8 million and 6 million MMBtus and corresponding RNG revenues to range between $150 million and $170 million. We expect renewable electricity production volumes to range between 178,000 and 186,000 megawatt hours. Corresponding renewable electricity revenues are expected to range between $17 million and $18 million. And with that, we will pause for any questions.

Operator, Operator

And our first question will come from Saumya Jain with UBS. Your line is open.

Saumya Jain, Analyst

Hey, good morning. So with your RNG facilities, how are you guys looking at things from the data center side of things, any opportunities you're seeing on potential synergies there?

Sean McClain, President and CEO

I'm sorry, would it be possible for you to repeat that question? It was a little difficult to hear.

Saumya Jain, Analyst

Yeah, so with your RNG facilities, how are you guys looking at things from the data center side? Are you seeing any opportunities on that front that you could highlight?

Sean McClain, President and CEO

RNG sales from external businesses such as data centers, cold storage facilities, these opportunities are in constant development with conversations that we have with entities such as data centers, cold storage facilities, high volume users that are interested in co-locating. We've had conversations on a number of our REG facilities specifically just because of how quickly you can provide that electricity. The nuance in looking at those synergies is how you benefit from the renewable electric credits, whether or not that power is still put into the infrastructure of the local utility as opposed to sort of directly supplying those entities that would sort of co-locate geographically to your locations. But it's definitely an area, call it quasi-voluntary compliance. It is an interesting alternative to how we diversify the product sales that we have, especially in light of any pending or recent volatility that you see in the federal and state attribute markets.

Operator, Operator

Thank you. One moment for our next question. That will come from the line of Matthew Blair with TPH. Your line is open.

Matthew Blair, Analyst

Great, thanks for taking my question and good morning Sean and Kevin. I had a few questions on the 2025 RNG revenue guidance of $150 million to $170 million. I know you don't provide the underlying RIN assumption, but can you tell us, does that revenue guidance assume that all of your RINs will be monetized in 2025? And then also, would you expect to still receive a premium to benchmark RIN prices in 2025? The past couple of years, you have been able to monetize your RINs at higher than benchmark prices, and is that a trend that you think will continue?

Kevin Van Asdalan, Chief Financial Officer

Thanks, Matthew. Regarding our expectations for achieving premiums over the existing D3 index price, we anticipate continuing our historical success in selling RINs during favorable pricing opportunities. In relation to our guidance for 2025 and when we expect to recognize revenues from those RINs, we generally expect to commit to transferring available RINs up to the next quarter available for transfer. Over the last few quarters, we have shared information about the timing of RINs we hold in inventory that may or may not align with that quarter. As we progress through 2025, particularly in this first quarter, while we are navigating potential regulatory reforms, we believe that these reforms may also affect the timing of RIN sales.

Operator, Operator

Thank you. One moment for our next question. That will come from the line of Tim Moore with Clear Street. Your line is open.

Tim Moore, Analyst

Thanks, I have a 2-part question that are somewhat related. You had some commentary in November about the landfill operators' delay impact, there's some capacity slowness there. Can you maybe comment on that? And then I just want to check that I understood maybe your earlier comment and prepared remarks, I think you said $2.45 might have been the average RIN price transfer this year. I'm just wondering if that's indicative of the D3 RIN pricing, because the EPA website stopped posting that after inauguration day, I'm just kind of curious what you've seen on pricing in the last few weeks.

Sean McClain, President and CEO

Yeah, Tim, I can take both of those. With respect to landfills delays in projects, we've talked in the past, landfills historically have been a little more synergistic in their willingness to allow for you to sort of infiltrate their open face areas where they're placing waste that allows for you to accelerate the volume increases that you would expect from well field initiatives, horizontal vertical drillings, anything that would improve the volumetric size of your well field collection system. We do continue to see hesitation on the landfill side due to the challenges that they are communicating that they present with their staff. The intricacies of trying to place waste as their primary business, competing against the delicacy that they need to navigate around collection systems and the time that they then lose to have to remediate those damages as they're incurred has been something that has been more communicated from them over the last few quarters. It's not fatal in the sense that the collection infrastructures are committed to be increased not only from an environmental compliance standpoint but also from the standpoint that they want the additional gas, they want to see the additional royalties. The timing of it is still at times slowed, because they're trying to create a little bit of a better divide between when they are high activity in the open face waste placement and when the collection systems come in and start to pull off of that more recently placed waste. With respect to pricing, other than the standard disclaimers that we don't opine on what we expect pricing to be, it's difficult to say if that price is indicative of what we'll see in 2025. As we mentioned at the beginning of this call, the EPA has floated the idea of a postponement or an adjustment down of the volume obligations for 2024. They haven't indicated any change to 2025. The way that we look at pricing is more a function of who we sell to. The majority of our attributes we place directly in the hands of obligated parties. Our decision to hold those volumes at the end of 2024 is not a direct reflection of our view on pricing, but rather whether it is the right time to pull and monetize. It's the purchasing parties that are in the market. We saw a significant reduction in the obligated parties' purchasing activity in the marketplace, and as we see that picking up in the first quarter, that's when we monetize the remainder of those 2024 volumes. It's difficult at this time to say if $2.45 or something significantly higher or significantly lower is a good indicator to expect what RIN pricing is going to be for 2025 vintage.

Operator, Operator

Thank you. One moment for our next question. That will come from the line of Ryan Pfingst with B. Riley. Your line is open.

Ryan Pfingst, Analyst

Hey guys, thanks for taking my question. Can you talk a bit about what you're seeing in the voluntary market in terms of demand and pricing there?

Kevin Van Asdalan, Chief Financial Officer

Ryan, that is one of the more challenging markets that we're trying to get reliable or meaningful data from. We're working with our internal capacities. We're working through our external partners. The reliability of getting meaningful voluntary information from volumes that are coming out of the RFS to generate RINs into the voluntary market remains a challenge. That said, we ourselves have entered into what we refer to internally as fixed price or margin share arrangements that generally thus far have not been placed into the voluntary market. They've been placed into the RFS transportation space and that's what we've seen through 2024. We have the flexibility either through off-takes at our sites that are coming up for expiration during 2025, or we believe through those existing margin share arrangements that we have in place from 2024 to further divert away from, if necessary, the transportation space and into the voluntary space as the market dictates. Related to that is then your evaluation of what is that price associated with a RIN if you could get those volumes into the transportation space versus the fixed price and/or fixed price plus markup that you can share in as well as term. All of those items are challenged right now under the ongoing EPA deferral of the rulemaking in the 2024 obligation that was announced in December. The uncertainty, though currently unstated impacts any change in the already existing 2025 RVO; however, also the EPA missing the initial rulemaking periods for the 2026 RVO. Ultimately, as Sean said in his last question, that is a long way of answering your question of we're seeing activity in the voluntary market, but achieving readily reliable data similar to how we can get reliable historical data in the transportation space from a RIN generation continues to make this evaluation of when and for how long and at what price points to offer off-take volumes is something that we continue to evaluate as we move through 2025.

Sean McClain, President and CEO

Ryan, the only other thing that I would add to that is our diversification plays feedstock off-take arrangements. They're also done with a high degree of fiscal responsibility. The diversification that we focus on isn't voluntary versus obligated party. It's diversification of commodities versus attributes. When you're selling attribute-based products, the voluntary market does move up and down based on their projections of what they compete against, which is the attribute market. When you elect to proceed with the voluntary market, we view it as a nice backstop so that there is some sensibility in pricing because it's an alternative, but that alternative comes with a different risk profile associated with creditworthiness. Having an attribute going into the market that can appeal and apply to all refiners of petroleum is a much different credit consequence than selling directly to, say, a cold storage facility for voluntary compliance. There’s a lot more that needs to be understood about the survivability and the longevity of that business and how it is structured, and not to say that it can't be done. It is something that when you're being ultra-selective on projects, the natural consequence is you are conservative over some of the more financial aspects of what your off-take looks like and the creditworthiness of those off-takers.

Operator, Operator

Thank you. One moment for our next question. That will come from the line of Betty Zhang with Scotia Bank. Your line is open.

Unidentified Analyst, Analyst

Hi, good morning. Thanks for taking my question. I wanted to ask about 45Z. Would there be any impact to Montauk from this production tax credit?

Kevin Van Asdalan, Chief Financial Officer

Thank you, Betty. We currently receive production tax credits from our electric generation portfolio, particularly from our Bowerman facility. Regarding the new expanded 45Z production tax credit, we see potential benefits. We are actively investigating and reviewing this benefit alongside our ongoing assessment of the previously established ITC credit as well. We continue to evaluate the applicability and availability of these various enhanced or expanded tax credits under the IRA Act.

Operator, Operator

Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Sean McClain for any closing remarks.

Sean McClain, President and CEO

Well thank you and thank you all for taking the time to join us on the conference call today. We look forward to speaking with you throughout 2025.

Operator, Operator

This concludes today's program. Thank you all for participating. You may now disconnect.