Opal Fuels Inc. · NASDAQ:OPAL
Opal Fuels — SPAC Merger (December 2021)
49 slides from Opal Fuels's SPAC merger presentation, Dec 2, 2021
Slide 1: Investor Presentation December 2021: Net-Zero Now
Investor Presentation DECEMBER 2021 Net-Zero Now Exhibit 99.2
Slide 2: Disclaimer
104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 For the purposes of this notice, the “presentation” that follows shall mean and include the slides that follow, the oral presentation of the slides by members of management of ArcLight Clean Transition Corp. II (“SPAC” or “ArcLight”) or OPAL Fuels
Slide 3: Disclaimer (Cont'd)
Disclaimer (Cont’d) 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 These forward-looking statements also involve significant risks and uncertainties, many of which are beyond control of the Company or SPAC, that could cause the actual results to differ materially from the expected results. Fac
Slide 4: OPAL and ArcLight Combination Creates Publicly Listed RNG Leader
OPAL and ArcLight Combination Creates Publicly Listed RNG Leader Adam Comora Co-CEO Jon Maurer Co-CEO Ann Anthony CFO Jake Erhard President, Chief Executive Officer and Director Marco Gatti Chief Financial Officer OPAL to combine with ArcLight Clean Transition Corp. II (“ArcLight”), a publicly liste
Slide 5: Fortistar and ArcLight are Well Positioned to Support OPAL as Sponsors
Fortistar and ArcLight are Well Positioned to Support OPAL as Sponsors Domain Expertise Long History of Value Creation Committed to the Transaction 20-years track record $25BN in energy investments(1) $4BN in renewables investments(1) 28-years track record 11 portfolio companies 40+ operating & inve
Slide 6: OPAL: Leading End-to-End RNG Provider to the Transportation Market
OPAL: Leading End-to-End RNG Provider to the Transportation Market Vertically-Integrated, Focused on Transportation RNG Development Plant Construction Operations RNG Offtake Electricity Sales Capture & Conversion Customer Contracting Station Construction RNG Supply Hydrogen Fueling Credits Monetizat
Slide 7: OPAL: Executing in the RNG Value Chain for Over 20 Years
OPAL: Executing in the RNG Value Chain for Over 20 Years 41 Biomethane Projects Acquired 350+ Fuel Stations Built 225+ Employees 42 States with OPAL Operations 34 Biomethane Projects Developed Constructed 14 LFG to energy projects 1998 Constructed 12 LFG to energy projects between 2009-2012 2010 Acq
Slide 8: OPAL: Investment Highlights
Fully-Funded Growth Plan: $125MM from PIPE + Preferred Equity, sufficient capital to fund the plan Transaction ensures that pro-forma OPAL will have $604MM(3) of cash on its balance sheet Operating cash flow positive today, and free cash flow positive in 2024E World-Class Partners: OPAL: Investment
Slide 9: RNG Market Fundamentals
RNG Market Fundamentals 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 126-133-151
Slide 10: RNG Value Chain Overview
RNG Value Chain Overview RNG is used as a transportation fuel, distributed to end users, or converted to green hydrogen Electricity is sold into the grid or to utilities Biomethane can be converted to create pipeline quality RNG Can also be used to generate electricity Anaerobic Digester Multiple ac
Slide 11: The Value of RNG is Underpinned by a Well-Established Regulatory Framework
LCFS Price ($ / MT) $205(3) $205(3) Carbon Intensity (gCO2 e/MJ) 40(4) ~(300)(4) Implied LCFS Value $8.52 per MMBtu $1.10 per GGE(2) $74.93 per MMBtu $9.68 per GGE(2) The Value of RNG is Underpinned by a Well-Established Regulatory Framework Federal mandate to incorporate renewable content into tran
Slide 12: Transportation Demand for RNG and D3 RINs is Multiples of Available Supply
Current RNG production of ~400MM GGE per year represents less than 1% of the U.S. heavy duty fuel market Current projections see RNG volumes triple to ~1BN GGE by 2027E At this level, RNG still represents less than 3% of the U.S. heavy duty fuel market As a result, there is ample scope to continue p
Slide 13: Potential 60-fold increase in alternative fueled vehicles by 2040E
…enabling a potential 60-fold increase in alternative fueled vehicles by 2040E 23.4% RNG fueled vehicles deliver substantial savings today… Diesel RNG Hydrogen Battery Electric ’20-’40E CAGR 30.7% 24% 55.4% 1% (1.8%) Alternative Fuel Hydrogen ß % Alternative Fuel Vehicles à Electric Diesel & Gasolin
Slide 14: RNG Has an Immediate Positive Impact on Climate Change
RNG Has an Immediate Positive Impact on Climate Change Methane has 28x the impact of CO2 on global warming over a 100-year timescale RNG feedstock accounts for more than a quarter of all methane emissions in the United States Dairy RNG has negative carbon intensity “RNG is a very important part of U
Slide 15: Vertically-Integrated Scaled RNG Platform
Vertically-Integrated Scaled RNG Platform
Slide 16: OPAL: Led by an Experienced Team with a History of Value Creation
Anthony Falbo COO 29 Managed operation of all projects in portfolio since 1998 OPAL: Led by an Experienced Team with a History of Value Creation OPAL has an experienced management team in the RNG and renewable fueling infrastructure space C-suite is complemented by deep bench of talent with industry
Slide 17: OPAL: Vertically Integrated RNG Leader with Top-Tier Customers
OPAL: Vertically Integrated RNG Leader with Top-Tier Customers Capture & Conversion Dispensing & Monetization RNG Fuel Dispensing Supplying RNG in the highest value markets through strategic partnerships with leading national brands looking to decarbonize their fleets Construction & Services Market
Slide 18: Vertically Integrated Model Enables High Margins and Diversified Revenue
OPAL: Vertically Integrated Model Enables High Margins and Diversified Revenue $ / GGE OPAL Unit Economics (1) Other Dispensing & monetization revenue represent dispensing station service and construction; Other Capture & Conversion revenue represent renewable power operations. These revenue are rep
Slide 19: OPAL has decades of experience managing biomethane capture & conversion
OPAL has decades of experience managing biomethane capture & conversion OPAL owns and operates 20 biomethane projects, with two in RNG service and 18 in renewable power service OPAL’s existing biomethane to RNG sites inform the company’s decisions on technology and operations for sites under develop
Slide 20: Visible, Near-Term EBITDA Uplift from Multiple Projects Under Construction
Visible, Near-Term EBITDA Uplift from Multiple Projects Under Construction Note: Refer to disclaimer on pages 2 and 3 regarding forward-looking statements and use of projections. Projects are shown on a 100% ownership basis. No G&A allocated to individual project EBITDA. Reflects 2024E EBITDA on a n
Slide 21: OPAL's Growth to 2024E is Underpinned by Projects Under Control
OPAL’s Growth to 2024E is Underpinned by Projects Under Control Note: Refer to disclaimer on pages 2 and 3 regarding forward-looking statements and use of projections. Reflects 2024E EBITDA on a net basis of ~$208MM less 2024E G&A of ~$6MM. Calculated as Total Capex divided by 2024E EBITDA on a 100%
Slide 22: Capture & Conversion Assets Poised to Deliver Predictable Growth
Note: EBITDA metrics shown reflect capture and convert business. Refer to disclaimer on pages 2 and 3 regarding forward-looking statements and use of projections. 2024E includes slightly increased production from Imperial and Greentree relative to 2021 production. $34MM represents the 2021E Capture
Slide 23: OPAL is One of the Largest RNG Fuel Station Operators in the U.S.
OPAL is One of the Largest RNG Fuel Station Operators in the U.S. 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 OPAL is the #2 Operator of RNG Stations in the U.S. OPAL’s Stations Footprint Set to Grow Rapidly… Source: Public filings. Note: Refer to disclaimer on pages 2 and 3 regarding forwa
Slide 24: Dispensing and Monetization Integrated Solutions Represent a Distinct Competitive Advantage
OPAL’s Dispensing and Monetization Integrated Solutions Represent a Distinct Competitive Advantage Vertical Integration + Complete Offering = Security of Offtake One stop shop for clients resulting in convenience and faster execution Design Project management Construction In house team to ensure qua
Slide 25: Dispensing & Monetization Assets Poised to Deliver Predictable Growth
OPAL Dispensing & Monetization Assets Poised to Deliver Predictable Growth 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 104-27-224 150-96-233 195-164-243 (1) OPAL’s portfolio of dispensing and monetization assets provide clear line of sight into and drive robust volume and EBITDA growth Disp
Slide 26: Embedded and Actionable Hydrogen Fueling and CCS Upside
Embedded and Actionable Hydrogen Fueling and CCS(1) Upside Existing partnership between OPAL and BayoTech, a developer of on-site hydrogen generators and “gas-as-a-service” offerings Using BayoTech’s technology paired with RNG, OPAL can offer the most cost-effective green hydrogen available today Hy
Slide 27: Financial Summary
Financial Summary 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 126-133-151
Slide 28: Profitable Today with Robust Financial Profile
50% of 3rd Party Hydrogen Stations are expected to be managed directly by OPAL. Profitable Today with Robust Financial Profile Revenue ($MM) Adjusted EBITDA(1) ($MM) Profitable today $41MM of adjusted EBITDA in 2021E Visible near-term growth 122% EBITDA 2021E–2024E CAGR Robust EBITDA margins 46% in
Slide 29: Vertical Integration and Diversification Create Robust Recurring Cash Flow
PIPE + preferred equity + TLA + operating cash flow are sufficient to fund the business plan. Cash from trust offers additional optionality Ratable capex plan, with ability to prioritize highest returning projects Strong operating / discretionary cash flow from 2023E Close to FCF break-even in 2023E
Slide 30: Industry Metrics and Valuation Framework
Industry Metrics and Valuation Framework 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 126-133-151
Slide 31: OPAL's Valuation in Context
50% of 3rd Party Hydrogen Stations are expected to be managed directly by OPAL. Biofuels RNG Hydrogen Disruptors Most comparable business peers Varying degrees of vertical integration RIN and LCFS exposure Energy transition of existing infrastructure through low carbon fuels Feedstock supply and pro
Slide 32: RNG Benchmarking
û û û 167% 22% 8.9x RNG Benchmarking Vertically Integrated Business Strategy Long-Term Control of Landfill and Livestock Fuel Source Visible Hydrogen And Carbon Capture Deployment Identified Growth(2) High Margins(3) FV / ’24 EBITDA ü ü ü 122% 46% 3.9x ü ü ü 25% 30% 14.3x û ü û 51% 54% 15.1x û ü ü 7
Slide 33: Operational Benchmarking: Exceptional Growth and Margins Relative to Peers
50% of 3rd Party Hydrogen Stations are expected to be managed directly by OPAL. Source: Company filings, FactSet. Market data as of 10/1/2021. Note: Refer to disclaimer on pages 2 and 3 regarding forward-looking statements and use of projections. EBITDA CAGR (%) EBITDA Margin (%) Operational Benchma
Slide 34: Valuation Benchmarking: Transaction Value Represents Significant Discount to Peer Group
50% of 3rd Party Hydrogen Stations are expected to be managed directly by OPAL. 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 Source: Company filings, FactSet. Market data as of 10/1/2021. Note: Refer to disclaimer on pages 2 and 3 regarding forward-looking statements and use of projections.
Slide 35: Transaction Pricing vs. Implied Value
$1.75BN 12.0x – 16.0x EV / 2024E EBITDA Enterprise Value $7.1BN $5.4BN 12.0x – 16.0x EV / Run-Rate 2024E EBITDA of $618MM(1) Transaction Pricing vs. Implied Value Transaction Value Value Implied by Trading Comps $9.9BN $7.4BN Implied discount of 72% transaction value Implied discount of 80% transact
Slide 36: OPAL: Solving Two Climate Crises with One Vertically Integrated Platform
OPAL: Solving Two Climate Crises with One Vertically Integrated Platform 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 231-234-243 126-133-151 99-216-54 The Challenges Reducing methane emissions is the most immediate step to slow climate change The transportation sector is the number one gree
Slide 37: Appendix
Appendix 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 126-133-151
Slide 38: Pro-Forma Valuation and Ownership
Note: Excludes 10MM total earnout shares to existing shareholders that could vest in 2023 and 2024 based on EBITDA targets. Assumes no redemptions by ACTD public shareholders. Pro-forma valuation and pro-forma ownership at $10.00 per share. Excludes the dilutive impact of ACTD public warrants and Sp
Slide 39: Summary of Forecast
Note: RIN and LCFS price projections based on independent market study by ICF. Reflects 2021E – 2025E CAGR. Non-Cash Items includes Depreciation & Amortization, Asset Retirement Obligation, and Impairment costs. Beacon Accrued Royalty is recorded on an as-if paid basis; adjustment is made to reflect
Slide 40: OPAL Assets Poised to Deliver Predictable Growth Across Segments
OPAL Assets Poised to Deliver Predictable Growth Across Segments 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 104-27-224 150-96-233 195-164-243 OPAL EBITDA ($MM) (1) Note: EBITDA metrics shown reflect upstream business. Refer to disclaimer on pages 2 and 3 regarding forward-looking statement
Slide 41: Volume Conversion from Dth or MMBtu to GGE
Volume Conversion from Dth or MMBtu to GGE Note: Refer to disclaimer on pages 2 and 3 regarding forward-looking statements and use of projections. (1)1 MMBtu = 1 Dth. RNG Supply by Source (Million GGE) RNG Supply by Source (Million Dth or MMBtu(1)) Operating In-Construction Controlled Growth 3rd Par
Slide 42: Growth Portfolio with Critical Milestones Met
Growth Portfolio with Critical Milestones Met Each LFG and Dairy project has multiple milestones to pass before it can start construction Late-stage projects are those where all the milestone steps have been completed or initiated Mid-stage projects are those where certain milestone steps have been
Slide 43: Capturing the Value of Federal RIN Market
Capturing the Value of Federal RIN Market The Renewable Fuel Standard (“RFS”) mandates the incorporation of renewable content into transportation fuels in the U.S. and has significantly changed the transportation fuel landscape since its passage in 2005 A Congressional mandate underpins RFS; an act
Slide 44: State Level LCFS Markets Create Strong Value Proposition
State Level LCFS Markets Create Strong Value Proposition Established in 2007, the California LCFS is a market-based program designed to reduce transportation-driven greenhouse gas emissions in the state The program is administered by the California Air Resource Board (“CARB”), which sets annual CI s
Slide 45: LCFS Credits Formula
LCFS Credits Formula Formula for LCFS Calculation 1 MMbtu receives $205(1) x 0.3655 = $74.93 worth of LCFS LCFS per MMBtu LCFS per GGE Formula Sample Calculation 1 GGE created from RNG (dairy) receives $74.93 / 7.74 = $9.68 worth of LCFS 1 GGE = 1 / 7.74 MMbtu Formula Sample Calculation Source: ICF.
Slide 46: Pricing Scenarios: Attractive Valuation Relative to Peers
Pricing Scenarios: Attractive Valuation Relative to Peers Even in Downward Price Sensitivities Note: ICF Price assumptions. Excludes earnout shares. Refer to disclaimer on pages 2 and 3 regarding forward-looking statements and use of projections.
Slide 47: Risk Factors
Risk Factors 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 Risks Related to Government Regulation of Our Businesses and Our Third Party Relationships We are dependent on contractual arrangements with, and the cooperation of, landfill and livestock waste site owners and operators, on which we
Slide 48: Risk Factors (Cont'd)
Risk Factors (Cont’d) 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 · Construction, development and operation of our Renewable Projects involves significant risks and hazards customary to the energy and RNG industry, including among other things acquiring and transporting fuel, operating larg
Slide 49: Risk Factors (Cont'd): Risks Relating to ArcLight and the Business Combination
Risk Factors (Cont’d) 104-27-224 66-68-76 90-110-255 183-82-255 255-186-49 Risks Relating to ArcLight and the Business Combination · The Company’s current majority stockholder is expected, following the Business Combination, to have control over all stockholder decisions of ArcLight because it contr