Opal Fuels Inc. · NASDAQ:OPAL
Opal Fuels — SPAC Merger (December 2021)
49 slides from Opal Fuels's SPAC merger presentation, December 2021
Slide 1: Net-Zero Now Investor Presentation
Net-Zero Now Investor Presentation DECEMBER 2021
Slide 2: Disclaimer
Disclaimer 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 LLC (the “Company” or “OPAL”) or any pers
Slide 3: Disclaimer (Cont'd)
Disclaimer (Cont’d) 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. Factors that may cause such differences include, but are
Slide 4: OPAL and ArcLight Combination Creates Publicly Listed RNG Leader
OPAL and ArcLight Combination Creates Publicly Listed RNG Leader OPAL Team Transaction Overview • OPAL to combine with ArcLight Clean Transition Corp. II (“ArcLight”), a publicly listed special Adam Comora Co-CEO purpose acquisition company with ~$311MM of cash currently held in trust • OPAL’s strat
Slide 5: Fortistar and ArcLight are Well Positioned to Support OPAL as Sponsors
Fortistar and ArcLight are Well Positioned to Support OPAL as Sponsors Long History of 20-years track record 28-years track record Value Creation $25BN in energy investments(1) 11 portfolio companies $4BN in renewables investments(1) 40+ operating & investment professionals Domain Expertise Transpor
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 Currently at Scale, with Substantial Embedded Growth Capture & Conversion + Dispensing & Monetization 2021E 2024E Projected EBITDA $41MM $446MM Underpinned by projects under OPAL’s con
Slide 7: OPAL: Executing in the RNG Value Chain for Over 20 Years
OPAL: Executing in the RNG Value Chain for Over 20 Years 34 41 350+ 225+ 42 Biomethane Projects Developed Biomethane Projects Acquired Fuel Stations Built Employees States with OPAL Operations Construction of 5 RNG projects Constructed 14 LFG Acquired 9 LFG Constructed 12 LFG Agrees first project St
Slide 8: OPAL: Investment Highlights
OPAL: Investment Highlights Vertically Integrated Across RNG Value Chain At Scale Today, with Substantial Embedded Growth ✓ Maximize margin capture in RNG value chain through the cycle OPAL has Substantial Scale Today: ✓ Competitive advantages in securing new opportunities: ✓ Existing operations exp
Slide 9: RNG Market Fundamentals
RNG Market Fundamentals
Slide 10: RNG Value Chain Overview
RNG Value Chain Overview “Naturally Occurring Methane” – Long Life, Stable Resource Requiring No Additional Capex to Develop Capture & Conversion Dispensing & Monetization • Multiple activities generate fugitive, • Biomethane can be converted • RNG is used as a transportation fuel, distributed • RNG
Slide 11: The Value of RNG is Underpinned by a Well-Established Regulatory Framework
The Value of RNG is Underpinned by a Well-Established Regulatory Framework • Federal mandate to incorporate renewable content into transportation fuels • Long-standing program that was implemented in 2005 and expanded in 2007 D3 RIN Price $2.68(1) ($ / gal) • Dispensing renewable fuels generates RIN
Slide 12: Transportation Demand for RNG and D3 RINs is Multiples of Available Supply
Transportation Demand for RNG and D3 RINs is Multiples of Available Supply RNG covers less than 1% of the U.S. heavy duty market D3 RIN statutory requirement is multiples of RNG production BN GGE U.S. Heavy Duty Diesel / Gasoline and NG Commercial Fleet BN GGE U.S. RNG Volumes – D3 RINs 50.0 50.0 14
Slide 13: Economic Benefits Incentivize Switching to RNG
Economic Benefits Incentivize Switching to RNG RNG fueled vehicles deliver substantial savings today… …enabling a potential 60-fold increase in alternative fueled vehicles by 2040E Heavy Commercial Vehicles: 7-Year Cost of Ownership ($ ‘000s) Annual sales of Class 8 vehicles (MM) Upfront Vehicle Cos
Slide 14: RNG Has an Immediate Positive Impact on Climate Change
RNG Has an Immediate Positive Impact on Climate Change RNG starts with methane capture… …and ends with fossil fuel replacement U.S. Methane Emissions(1) Annual CO2 Emissions for a 100 Truck Fleet(2) 17,097 17% RNG can help eliminate 28% of U.S. methane emissions 8,259 9% Landfills Dairy RNG 2% Dairy
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
16 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 experience in RNG and alternative fuels for class 8 trucks • Support fr
Slide 17: OPAL: Vertically Integrated RNG Leader with Top-Tier Customers
17 OPAL: Vertically Integrated RNG Leader with Top-Tier Customers Capture & Conversion Dispensing & Monetization Landfill RNG RNG Fuel Dispensing Generation of RNG through capture of landfill Supplying RNG in the highest value markets through emissions. Executed by repurposing of its existing strate
Slide 18: OPAL: Vertically Integrated Model Enables High Margins and Diversified Revenue
OPAL: Vertically Integrated Model Enables High Margins and Diversified Revenue ✓ Vertical integration allows OPAL to capture margin through the cycle, as value shifts between RNG production and distribution ✓ Diverse revenue streams underpin well-rounded business model ✓ High margin business, with l
Slide 19: At Scale Today, with 20 RNG and Renewable Power Plants Online
Capture & Conversion Segment At Scale Today, with 20 RNG and Renewable Power Plants Online 20 $34MM 13MM 107 Operating Assets 2021E Operating EBITDA(1) GGE in 2021E Production MW Production Assets Location Type Counterparty / Offtake Contract Term Imperial PA RNG Dispensing customers Perpetual(2) Gr
Slide 20: Visible, Near-Term EBITDA Uplift from Multiple Projects Under Construction
Capture & Conversion Segment Visible, Near-Term EBITDA Uplift from Multiple Projects Under Construction 8 EOY ’21 ~$102MM 2.4x Construction Projects On-Line Dates Starting 2024E Construction EBITDA(1) Build Multiple(2) Landfill: Noble Road Dairy: Sunoma Landfill: Pine Bend Landfill: New River Locati
Slide 21: OPAL's Growth to 2024E is Underpinned by Projects Under Control
Capture & Conversion Segment OPAL’s Growth to 2024E is Underpinned by Projects Under Control 16 EOY ’22 ~$202MM 2.5x Controlled Projects On-Line Dates Starting 2024E Controlled EBITDA(1) Build Multiple(2) Codename Type COD OPAL LFG Gas Rights […] Existing OPAL Operations Massachusetts Landfill '22 ✔
Slide 22: OPAL Capture & Conversion Assets Poised to Deliver Predictable Growth
22 Capture & Conversion Segment OPAL Capture & Conversion Assets Poised to Deliver Predictable Growth OPAL’s portfolio of operating, construction and controlled assets provide clear line of sight into and drive robust volume and EBITDA growth Capture & Conversion EBITDA ($MM) 20 Projects 8 Projects
Slide 23: OPAL is One of the Largest RNG Fuel Station Operators in the U.S.
Dispensing & Monetization Segment OPAL is One of the Largest RNG Fuel Station Operators in the U.S. OPAL’s Fuel Stations Provide a Direct Pathway to Qualify for RINs and LCFS Credits OPAL is the #2 Operator of RNG Stations in the U.S. Million GGEs Platform Stations as of YE 2020 Delivered in 2020 Cl
Slide 24: OPAL's Dispensing and Monetization Integrated Solutions Represent a Distinct Competitive Advantage
Dispensing & Monetization Segment OPAL’s Dispensing and Monetization Integrated Solutions Represent a Distinct Competitive Advantage Vertical Integration + Complete Offering = Security of Offtake Building Stations… ...Operating and Servicing Stations… …and Supplying Top-Tier Customers(1) ✓ One stop
Slide 25: OPAL Dispensing & Monetization Assets Poised to Deliver Predictable Growth
Dispensing & Monetization Segment OPAL Dispensing & Monetization Assets Poised to Deliver Predictable Growth OPAL’s portfolio of dispensing and monetization assets provide clear line of sight into and drive robust volume and EBITDA growth Dispensing & Monetization EBITDA ($MM) $10 $101 $15 $69 $7 20
Slide 26: Embedded and Actionable Hydrogen Fueling and CCS Upside
26 Embedded and Actionable Hydrogen Fueling and CCS(1) Upside Hydrogen Production Carbon Intensity by Source Hydrogen Fueling Based on California Air Resources Board Methodology Carbon Intensity (gCO2e/MJ) 164 151 129 118 110 92 46 11 • Existing partnership between OPAL and BayoTech, On-site Central
Slide 27: Financial Summary
Financial Summary
Slide 28: Profitable Today with Robust Financial Profile
28 Profitable Today with Robust Financial Profile Revenue ($MM) • Profitable today $1,241 $41MM of adjusted EBITDA in 2021E ’21 - ’24E CAGR: 79% $968 • Visible near-term growth $628 122% EBITDA 2021E–2024E CAGR $296 $169 • Robust EBITDA margins 2021E 2022E 2023E 2024E 2025E 46% in 2024E Adjusted EBI
Slide 29: Vertical Integration and Diversification Create Robust Recurring Cash Flow
29 Vertical Integration and Diversification Create Robust Recurring Cash Flow Capex ($MM) $310 $326 • PIPE + preferred equity + TLA + $270 operating cash flow are sufficient to fund the business plan. Cash from $179 trust offers additional optionality • Ratable capex plan, with ability to prioritize
Slide 30: Industry Metrics and Valuation Framework
Industry Metrics and Valuation Framework
Slide 31: OPAL's Valuation in Context
31 OPAL’s Valuation in Context Key Differentiators RNG Hydrogen Disruptors Biofuels ✓ Vertical integration Most comparable Hydrogen and Energy transition of ✓ Superior growth from controlled projects business peers decarbonization focus existing infrastructure through low carbon fuels Varying degree
Slide 32: RNG Benchmarking
32 RNG Benchmarking Vertically Integrated Business Strategy ✓ ✓ (1) ✓ ✓ ✓ ✓ ✓ Long-Term Control of Landfill and Livestock Fuel Source ✓ ✓ ✓ Visible Hydrogen And Carbon Capture Deployment Identified Growth(2) 122% 25% 51% 71% 11% 167% High Margins(3) 46% 30% 54% 53% 14% 22% FV / ’24 E
Slide 33: Operational Benchmarking: Exceptional Growth and Margins Relative to Peers
33 Operational Benchmarking: Exceptional Growth and Margins Relative to Peers RNG Hydrogen Disruptors Biofuels EBITDA CAGR (%) 167% ’21-24E 122% 71% 68% 68% 51% 25% 27% 18% 11% Opal CLNE MNTK RICE AMRC-US ANRG-CA BLDP-US BE-US PLUG-US NESTE-FI EBITDA Margin (%) ‘21E ‘24E 54% 53% 46% 30% 32% 27% 24%
Slide 34: Valuation Benchmarking: Transaction Value Represents Significant Discount to Peer Group
34 Valuation Benchmarking: Transaction Value Represents Significant Discount to Peer Group RNG Hydrogen Disruptors Biofuels FV / EBITDA (x) ‘23E ‘24E 89.9x 41.8x 21.0x RNG Median 19.1x 19.2x 18.5x ‘23E: 16.9x 16.9x 15.7x 15.1x ‘24E : 14.3x 14.3x 14.1x 14.1x 13.2x 9.9x 8.9x 7.4x 7.2x 3.9x NM NM Opal
Slide 35: Transaction Pricing vs. Implied Value
Transaction Pricing vs. Implied Value Transaction Value Value Implied by Trading Comps $9.9BN $7.1 • Apply a range of 12.0x to 16.0x to OPAL’s 2024E EBITDA based on RNG peer median midpoint of 14.3x • Multiples range reflects a discount to RNG public $7.1BN comparables underscoring upside to transac
Slide 36: OPAL: Solving Two Climate Crises with One Vertically Integrated Platform
OPAL: Solving Two Climate Crises with One Vertically Integrated Platform The Challenges ✓ ➢ Reducing methane emissions is the most immediate step to slow climate change ✓ ➢ The transportation sector is the number one greenhouse gases emitter in ➢ the U.S. OPAL’s Solution ✓ ➢ Capture methane emission
Slide 37: Appendix
Appendix
Slide 38: Transaction Overview
Transaction Overview Illustrative Pro-Forma Valuation(1)(2)(3) Illustrative Sources & Uses Pro-Forma Capitalization ($MM) Sources ($MM) Shares Outstanding(4) 198.1) ACTD Cash in Trust(1) $311) (x) Illustrative Share Price $10.00) PIPE Proceeds 125) Equity Value(4) $1,981) Existing Shareholder Equity
Slide 39: Summary of Forecast
39 Summary of Forecast (1) $ in mm, except where noted 2021E 2022E 2023E 2024E 2025E CAGR Gasoline Gallon Equivalent Sold 20,977 45,123 117,187 149,876 183,331 71.9% RIN Price $2.68 $2.72 $2.76 $2.80 $2.86 LCFS Price ($ / MT) $205 $212 $212 $214 $215 Revenue RNG Fuel $64 $174 $498 $813 $1,054 Fuel S
Slide 40: OPAL Assets Poised to Deliver Predictable Growth Across Segments
40 OPAL Assets Poised to Deliver Predictable Growth Across Segments OPAL EBITDA ($MM) $93 $446 $202 $102 $7 $41 $7 $34 2021E Capture & 2021E Dispensing 2021E EBITDA Other Capture & In-Construction In-Development Dispensing & 2024E EBITDA (2) Convert EBITDA(1) & Monetization Convert EBITDA Project EB
Slide 41: Volume Conversion from Dth or MMBtu to GGE
41 Volume Conversion from Dth or MMBtu to GGE RNG Supply by Source (Million Dth or MMBtu(1)) RNG Supply by Source (Million GGE) 23.7 183 3.4 26 19.4 150 1.7 13 3.2 25 15.1 117 1 MMBtu = 7.74 GGE 3.0 23 12.4 96 10.0 78 6.2 48 5.8 45 2.3 18 4.1 4.2 4.3 21 32 33 33 2.7 1.7 8 13 1.0 1.7 1.8 1.9 1.9 1.9
Slide 42: Growth Portfolio with Critical Milestones Met
Growth Portfolio with Critical Milestones Met Late-Stage Mid-Stage • LRG Analysis • LFG Curve / Volume Confirmation • Each LFG and Dairy project In process or In process or Critical Milestones • Plant Size has multiple milestones to pass • Gas Interconnection completed completed • Gas Rights Execute
Slide 43: Capturing the Value of Federal RIN Market
43 Capturing the Value of Federal RIN Market • The Renewable Fuel Standard (“RFS”) mandates the incorporation of renewable Renewable volume obligation (“RVO”) standards content into transportation fuels in the U.S. and has significantly changed the transportation fuel landscape since its passage in
Slide 44: State Level LCFS Markets Create Strong Value Proposition
44 State Level LCFS Markets Create Strong Value Proposition • Established in 2007, the California LCFS is a market-based program designed to 2 California LCFS historical and projected pricing vs carbon reduce transportation-driven greenhouse gas emissions in the state intensity targets • The program
Slide 45: LCFS Credits Formula
45 LCFS Credits Formula Formula for LCFS Calculation Lower Heating Value (LHV) i Number of LCFS Credits per MMBtu = EnergyDensityfuel × of Natural Gas × CIstandard × EERfuel − CIfuel × 10 −6 Higher Heating Value (HHV) Where: • EnergyDensityfuel: the energy density of the fuel of interest in units of
Slide 46: Pricing Scenarios: Attractive Valuation Relative to Peers Even in Downward Price Sensitivities
Pricing Scenarios: Attractive Valuation Relative to Peers Even in Downward Price Sensitivities Illustrative Enterprise Value ($BN) $1.75 $2.00 $2.50 $3.00 $3.50 $4.00 '24E EBITDA RIN ($) LCFS ($/MT) Implied EV / 2024E EBITDA Multiples (x) ($MM) $3.50 $250 $539 3.2x 3.7x 4.6x 5.6x 6.5x 7.4x $3.00 $22
Slide 47: Risk Factors
Risk Factors 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 operate our landfill gas and livestock waste projects
Slide 48: Risk Factors (Cont'd)
Risk Factors (Cont’d) • 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 large pieces of rotating equipment and delivering our ele
Slide 49: Risk Factors (Cont'd)
Risk Factors (Cont’d) 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 controls a substantial majority of ArcLight’s voting power