Rithm Acquisition Corp. · NYSE:RAC
Rithm Acquisition — Rice Acquisition — SPAC Merger (April 2021)
45 slides from Rithm Acquisition's SPAC merger presentation, Apr 8, 2021
Slide 1: Investor Presentation April 2021
INVEST O R PR E SEN T A TION APRIL 2021 A R C H A E A ENERGY Renewable Energy. Redefined.
Slide 2: Disclaimer
1 Disclaimer This investor presentation (the “Investor Presentation”) is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of Rice Acquisition Corp . (the “SPAC”
Slide 3: Disclaimer (cont'd)
2 Disclaimer (cont’d) Any financial projections in this Investor Presentation are forward - looking statements that are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond the SPAC’s and the Companies’ control . While all projecti
Slide 4: Transaction Summary and Today's Presenters
T ransact i on Su m mary and T oday ’ s Presen t ers Dan ny Ri c e CEO, Director Kyle Derham President, CFO, Director Su m m a ry of Proposed Transaction A R C H A E A E N E R G Y • T h e p r o p o sed t r a nsa c ti o n w o u ld involve the simult a n e o us a c q u isiti o n of Aria Ene r gy a n d
Slide 5: Sources & Uses and Illustrative Pro Forma Ownership
Ill u strative Pro F o rma Ow n ershi p (6) Indicative Transaction Overview Sources ($ millions) RAC SPAC Cash in Trust (1) $238 New Cor p o r a t e De b t (2) $220 Assai Project Financing (3) $133 PIPE $300 Arch a ea Equity Rollover $332 Aria Equity Rollover $230 TOTAL SOURCES $1,453 Uses ($ millio
Slide 6: What We Like About the Company
What W e Like About the Com p any Rice Acquisition Corp’s strategic combination with Aria Energy and Archaea Energy creates the industry - leading developer of renewable natural gas (RNG) 3 1. Please see Appendix A (slide 42) for additional information. 3. Emissions estimates per EPA. Calculation pe
Slide 7: Archaea Energy At A Glance
Arc h aea Ene r gy At A Glance One of the Largest and Fastest Growing RNG Producers in the World Operating RNG Projects 9 13 Operating Electric Projects 16 Near - Term RNG Projects in Development 25+ 4 LFG $40 $327 OR WA MT ID WY UT NV CA AZ NM CO ND SD NE KS OK TX LA AR MO IA MN WI IL MI IN OH KY T
Slide 8: RNG Overview
RNG Overview Favorable Macro for Long - Term Success RNG Overview Co m pany Highlights Premiere RNG Producer with Deep Inventory of High - Return Growth Financial Summary Cash Flow + Growth + Value Ben c hm a rking & V aluation
Slide 9: The Basics of RNG
The Basics of RNG Where Does RNG Come From? • When organic material decomposes in anaerobic conditions a gas is produced often referred to as biogas • Landfill biogas is composed of approximately: – 50% CH 4 (Methane) – 35% CO 2 – 15% O 2 , N 2 and VOCs • Landfil l s pr o du ce predi c t a ble ga s
Slide 10: Proven assets with immediate access to all customers
Proven assets with immediate access to all customers via existing natural gas infrastructure • RNG production for transportation fuel has increased 10x since 2013 (2) • RN G leve r ages exis t i ng natural gas in f ras tr ucture (pipelines, industrial facilities, etc.) allowing RNG to be a drop - in
Slide 11: Why RNG Has Massive Sustainability Impacts
Potential sources of organics used to produce RNG include: Trillion pounds of food is squandered globally each year Using 100% RNG in vehicles can reduce GHG emissions by more than 80% Using 20 % RNG - blend Provides a GHG reduction of between 26 - 30% RNG from some sources are carbon negative, mean
Slide 12: RNG is the Lowest-Emission Transportation Fuel
- 1 50 - 1 00 - 5 0 0 50 100 150 CARBOB Diesel CA Grid Landfil l CNG (RNG) Gasoline Diesel Hydrogen RenewableRenewable Archaea RNG Target Digester CNG (RNG) RNG is the Lowes t - Emission T ranspo r tation Fuel What is a Carbon Int ensi t y (CI ) scor e? • CI Score measures the life cycle GHG emissio
Slide 13: Landfill Growth Provides 40Y+ of Feedstock Security
Landfill Growth Provides 40Y+ of Feedstock Security for LFG Development The growth in U.S. landfill waste for the next 20 - 30 years, followed by a very predictable methanogenesis profile for the subsequent 20 - 30 years, gives us 4 0 - 60 years of unpre c ed e nted fee d stock vis i bil i ty for RN
Slide 14: RNG Utilizes Existing Gas Infrastructure to Reach Customers Nationwide
RNG Utilizes Existing Gas Infrastructure to Reach Customers Nationwide University of California (“UC”) launched its Carbon Neutrality Initiative in 2013 with a commitment to cutting greenhouse gas emissions from its buildings and vehicle fleet to net zero by 2025. UC is partnering with Archaea to de
Slide 15: Corporate Support for RNG Across Industries
Cor p or a te Su p p o rt for RNG A c ross Ind u stries Strong Regulatory Environment and Corporate Support Driving RNG Growth 4 “NW Natural is partnering with BioCarbN, a developer and operator of sustainable infrastructure projects, to convert methane from some of Tyson Foods facilities into RNG t
Slide 16: RNG Demand Is Expected to Exceed Supply
Curr e ntly Buying Fixed Price RNG (Regulatory Mandates or Volunteer Programs) RNG Demand Is Expected to Exceed Supply For the Foreseeable Future • Arc h a e a a lr e a d y h a s mo r e i n di c a t ed d e ma n d in the form of long - term fixed price contracts than its 2 0 2 5 E RNG volu me p r o j
Slide 17: LFG Creates Seven Potential Revenue Sources
LFG Crea t es Seven Pote n tial Revenue S ources Direct - Use $ CO 2 (C a rb on D i oxide ) Green Hyd rogen $$$$ On - Site Elect r i city $$ RNG $$$ Enhanced Oil Recovery $ Direct - Use ( W ast e Heat Recovery) $ Flare/Vent $0 Flare/Vent $0 Anaerobi c Dairy Digesters 99% Methane Landfill Gas ~50% CH
Slide 18: Company Highlights
RNG Overview Favorable Macro for Long - Term Success Company H i g h li g h t s Co m pany Highlights Premiere RNG Producer with Deep Inventory of High - Return Growth Financial Summary Cash Flow + Growth + Value Ben c hm a rking & V aluation
Slide 19: The Industry-Leading RNG Platform
The Industry - Leading RNG Platform Assets / Growth • Industry - leading RNG platform today ($40mm of 2020E EBITDA) (1) • Deep backlog of highly economic and organic development projects u n de rpin e c o n o mic gr o wth to $395 m m of 2025E EBITDA • Expect to have 60 - 70% of reve n ue s lo c k e
Slide 20: Best-In-Class Management Team Aligned to Create Shareholder Value
Best - In - Class Management Team Aligned to Create Shareholder Value • Entrepreneurial management team disrupting the RNG spa c e • Best LF G ga s pr o c es s ing minds in the indu st r y l e d by C h a r l i e A nd e r s o n (inventor of multiple critical industry patents) and other technical expe
Slide 21: Project Backlog Generates Unmatched Risk-Adjusted Economic Returns
Project Backlog Generates Unmatched Risk - Adjusted Economic Returns RNG Upg ra d e / Co n version Proj e cts • $250 mm CapEx • $110 mm EBITDA (1) • 2.3 x Build Multiple RNG Upgrade / Conversion Projects 13 16 Organic RNG Develo pm e nt 25+ High Probability RNG Development Organic RNG Development •
Slide 22: RNG Development Spotlight: Project Assai
RNG Development Spotlight: Project Assai Will Be the World’s Largest LFG to R NG Plant • Archaea is currently constructing a high - BTU RNG facility (“Project Assai”) in Dunmore, PA at the Keystone Sanitary Landfill capable of producing ~4.0 - 5.5 million MMBtus/year of RNG • Secured evergreen LFG s
Slide 23: Commercial Strategy: Long-Term Fixed Price Contracts
Commercial Strategy: Meeting the Significant Growth of the Voluntary RNG Market with Long - T erm Fixed Price Cont r acts 20 V ol a tile D - 3 RIN Pri c ing vs. Re p rese n tative Arc h a e a Co n tra c t (2) Curr e nt Part n ers L a t e - Sta g e Disc u s s ion & F u ture Part n ers • Archaea’s com
Slide 24: Archaea's Commercial Strategy Generates Attractive Risk Adjusted Returns
$20.43 $13.35 $12.35 $4.09 $3.00 $1.00 $1.50 $2.97 $0.70 $6.16 $9.10 Fix e d Price Gre e n Bro w n Ga s RIN LC F S CO2 Gas Total Reven u e Roy a lty Op erating Expenses Net Operating Income CAPEX (30 - Year Amortization) FCF Margin Archaea’s Commercial Strategy Generates Attractive Risk Adjusted Ret
Slide 25: Pursuing Multiple Avenues to Expand & Capitalize on Growing TAM
Archaea is Pursuing Multiple Avenues to Expand & Capitalize on Growing TAM • Archaea’s version 1 (v1) RNG Plant (2022), will l o wer dev e l o pment c o sts 40% (not modeled) • Reductions are driven by decades of know - how, RNG plant experience, proprietary packaging and system designs • v1 design
Slide 26: Green Hydrogen: RNG-to-H2 Projects
2 RNG - to - H Projects Levelized Cost of Green H 2 Comparison (2) 2 (Total, Dispensed; $/kg H ) Uplift from Carbon Intensity Reduction (1) ($/mmbtu) Archaea is Pursuing Multiple Avenues to Expand & Capitalize on Growing TAM (cont’d) Green Hydrogen • Opportunity to achieve $40 per mmbtu+ effective p
Slide 27: Near-Term and Actionable Growth Opportunities in a Fragmented Market
Near - Term and Actionable Growth Opportunities in a Highly Fragmented Market 451 Landfills 1,325 MMcf/d 1,400 landfills have no LFG collection Significant opportunities for Archaea to apply its operational excellence, commercial scale, and technology to unlock valuable revenue and create meaningful
Slide 28: Financial Summary
RNG Overview Favorable Macro for Long - Term Success Fi n a n c i al Summary Co m pany Highlights Premiere RNG Producer with Deep Inventory of High - Return Growth Financial Summary Cash Flow + Growth + Value Ben c hm a rking & V aluation
Slide 29: Profitable Day-One Business With Significant Growth Potential
Prof i table Da y - One Business W ith Signif i cant Growth Pote n tial Rapid l y Scal i ng Near - Term Pos i tive Free Cash Flow Driving Profitabi l ity • Extensive portfolio of de - risked, organic growth projects • Rapidly scaling business with relatively low capital investment • Rapid project de
Slide 30: Revenue Evolution Over Time
Revenue E volution Over T ime • Revenue growth driven by development of Archaea project backlog under conservative commodity price assumptions • Archaea ideally positioned to scale operations to meet rapidly growing TAM via pull - through demand from energy producers / end - users seeking to secure
Slide 31: Margin Expansion Over Time
Margin Expa n sion Over T ime • Strong, resilient EBITDA margins today – Margins expected to improve through (i) conversion of Aria’s LFG to Electric projects to RNG and (ii) development of Archaea’s project backlog • Visible EBITDA growth from highly developed pipeline of organic growth projects an
Slide 32: Highly Developed RNG Project Pipeline Will Create Strong CF Profile
Highly Developed RNG Project Pipeline Will Create Strong, Resilient CF Profile Capex Prof i l e Up g r ad e / Conv e rsion Ope r a t ing Capitalized R&D Net Debt / RR EBITDA (2) 2.2x 1.3x 0.9x 0.2x NM • Capital expenditures expected to average ~$200mm per year from 2021 - 2023 through the developmen
Slide 33: Benchmarking & Valuation
RNG Overview Favorable Macro for Long - Term Success B e n c h m a r k i n g & Valuation Co m pany Highlights Premiere RNG Producer with Deep Inventory of High - Return Growth Financial Summary Cash Flow + Growth + Value Ben c hm a rking & V aluation
Slide 34: Considering a Framework for Archaea's Valuation
Consi d ering a Fra m ework for Archaea ’ s V alua t ion Renewable Nat u ral G as 13% 2020 - ’22E Revenue CAGR 18% 2022E EBITDA Margin 31.0x TEV / 2022E EBITDA • Most comparable business • Varied product mix and scale • Various levels of RIN or LCFS exposure Alt e rnati ve Fuels • Operational experi
Slide 35: Comparison to Recent ESG-Oriented SPACs
Com p arison to Recent ES G - Orien t ed S P ACs A R CHA E A ENERGY Business Focus Renewable Natural Gas Re n ewa b le Plas t ics Re n ewa b le Plas t ics 2020A (1 ) / 2 025E EBIT D A ($mm) $40mm / $395mm ~$2mm / $1 6 9mm NM / $139mm Proven T echnology + Producing at Scale Long - Term Fixed - Price
Slide 36: Comparison to Public Renewable Natural Gas Companies
EBITDA Margin 32% 43% 51% 53% 53% 12% 13% 14% 14% NA 19% 18% 24% 27% NA 33% 38% 51% 54% 57% Revenue Growth 60% 44% 32% 19% 10% 5% 12% NA 13% 7% 15% NA 19% 29% 19% 16% Comparison to Public Renewable Natural Gas Companies A R CH A E A ENERGY 33 A R CH A E A ENERGY $204 $326 $468 $619 $739 $1,125 $1,23
Slide 37: Operational Benchmarking and Relative Valuation
4 7 .4 x 2 0 .4 x 70 .9 x 6 4 .2 x 3.4x 2.8x 19.4x 16.6x 43.4x 42.7x 3 1 .0 x 17.2x 13.9x 10.1x 27.5x 23.5x 8. 2 x NM 5 3 .1 x 4 8 .4 x 5 5 .7 x 5 4 % 1 3 % 1 8 % 3 8 % 1 7 % 3 5 % 3 2 % (4 3 %) 2 0 % 1 1 % 1 0 % NA 3 4 % 9% 1 3 % 1 9 % 8% 4% 5 4 % NM 5 3 % 2 4 % 4 5 % NA Operational Benchmarking an
Slide 38: Implied Valuation Upside
Imp l ied V al u ati o n Upside Archaea Energy’s Significant Upside Potential Implied Future Discounted Value (2) (Discounted 2 Periods @ 20%) Post - Money Enterpr ise V alue ~83% Discount to Midpoint 28.0 x – 32.0x TE V / 2024E EBIT D A (1) Hydroge n Upside • Apply a range of 28.0x – 32.0x to Archa
Slide 39: Why Archaea Energy?
Why A r chaea Energy? 36 Strong Ali g nment Management + Rice Family + Saltonstall will own ~40% of company Compelling Valuation 2022E EBITDA: 8.2x vs. 31x for RNG peers; disruptors at ~80x in 2024E Moti v ated Leaders Proven landfill experts bringing new ideas to a fragmented industry Premiere Feed
Slide 40: Appendix
App e n d i x
Slide 41: Independent Directors Bring a Wealth of Experience
Independent Directors Bring a Wealth of Experience and Industry Knowledge KATE JACKSON • Independent director with operational, executive and board level experience for electricity generation, energy system operations and technology management • Former Chief Technology Officer (CTO) at RTI Internati
Slide 42: Indicative Detailed Transaction Overview
• 12/31/2020 valuation date • Aria Purchase Price: $680mm – $450mm cash – $230mm rollover equity to Aria shareholders • Archaea Purchase Price: $347mm – 100% rollover equity after $15mm net debt repayment • Illustrative transaction and financing fees: ~$62mm • Pro forma balance sheet cash of ~$364mm
Slide 43: Pro Forma Financial Projections
40 Pro Forma Financ i al Proj e ctio n s ($ in mm, except where noted) 2021E 2022E 2023E 2024E 2025E RNG Production (MMBtu) 5,405,123 12,269,232 20,989,282 28,513,326 34,981,825 Electric Generation (MWh) 323,782 247,893 157,434 102,975 92,500 Revenue RNG $102 $220 $378 $538 $658 Electric 42 39 24 13
Slide 44: Projected EBITDA Breakdown By Project Type
Proj e cted EBI T DA Breakdown By P roject T ype S o ur c e : RAC m a n a g e men t . Note: EBITDA Bre ak d own ($mm) $39 $40 $40 $25 $36 $74 $107 $120 $17 $27 $30 $37 $5 $48 $49 $50 $5 $7 $7 $35 $7 $79 $131 $65 $140 $9 7 $239 $327 $395 $25 $28 $19 $21 $21 $21 $20 ($8) 2021E ($2) 2022E ($2) 2023E ($
Slide 45: Pro Forma EBITDA Reconciliation
Pro Forma EBITDA Reconci l iation S o ur c e : RAC m a n a g e men t . Note: EBITDA is a Non - GAAP financial measure we use to measure performance. See the section titled “Use of Non — GAAP Measures” in this presentation for more information. The closest GAAP financial measure is net income (loss).