OPAL Fuels Inc.
11/09/2026 | Press release | Distributed by Public on 11/09/2026 16:31
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
In this Management's Discussion and Analysis of Financial Condition and Results of Operations section, references to "OPAL," "we," "us," "our," and the "Company" refer to OPAL Fuels Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements as of September 30, 2026 and for the three and nine months ended September 30, 2026 and 2025, and the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC on March 16, 2026. In addition to historical information, this discussion and analysis includes certain forward-looking statements which reflect our current expectations. The Company's actual results may materially differ from these forward-looking statements.
Overview
Opal Fuels Inc. (the "Company", "Opal", "we", "our" and "us") is a vertically integrated leader in the capture and conversion of biogas into low carbon intensity Renewable Power and RNG. We are also a leader in the marketing and distribution of RNG to heavy duty trucking and other hard to de-carbonize industrial sectors. RNG is chemically identical to the natural gas used for cooking, heating homes and fueling natural gas engines, with one significant difference: RNG is produced by recycling methane emissions created by decaying organic waste as opposed to natural gas which is a fossil fuel pumped from the ground. We have participated in the biogas-to-energy industry for over 20 years.
Biogas is generated by microbes as they break down organic matter in the absence of oxygen, and comprised of non-fossil waste gas, with high concentrations of methane, which is the primary component of RNG and the source for combustion utilized by Renewable Power plants to generate electricity. Biogas can not only be collected and processed to remove impurities for use as RNG (a form of high-Btu fuel) and injected into existing natural gas pipelines as it is fully interchangeable with fossil natural gas, but partially treated biogas can be used directly in heating applications (as a form of medium-Btu fuel) or in the production of Renewable Power. Our principal sources of biogas are (i) LFG, which is produced by the decomposition of organic waste at landfills, and (ii) dairy manure, which is processed through anaerobic digesters to produce the biogas.
We also design, develop, construct, operate and service Fueling Stations for trucking fleets across the country that use natural gas to displace diesel as their transportation fuel. We have participated in the alternative vehicle fuels industry for over a decade and have established an expanding network of Fueling Stations for dispensing RNG. In addition, we have recently begun implementing design, development, and construction services for hydrogen Fueling Stations, and we are pursuing opportunities to diversify our sources of biogas to other waste streams.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based upon our interim unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and the rules and regulations of the SEC, which apply to interim financial statements. The preparation of those financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues, costs and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.
Critical accounting policies involve significant judgments and uncertainties and may result in materially different reported results under different assumptions and conditions. For a detailed description of our accounting policies, see Note 1. Summary of Significant Accounting Policies, to our condensed consolidated financial statements included herein and the section titled "Critical Accounting Policies and Estimates" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to our critical accounting policies since that Annual Report, except as follows.
During the quarter ended September 30, 2026, we early adopted ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, and concurrently changed our accounting principle for transferable Section 48 investment tax credits ("ITCs") and Section 45Z clean fuel production tax credits ("45Z credits"). We now account for these credits as government grants by analogy to ASU 2025-10, rather than under ASC 740, Income Taxes, and have applied the change retrospectively; see Note 1. Summary of Significant Accounting Policies, to our condensed consolidated financial statements for further information. Applying this policy requires judgment, including whether it is probable that we will comply with the credits' qualification requirements, such as prevailing wage
requirements, and sell the credits, the expected sale proceeds net of transaction costs, and whether any obligation to return proceeds to buyers is probable.
Key Factors and Trends Influencing our Results of Operations
The principal factors affecting our results of operations and financial condition are the markets for RNG, Renewable Power, and associated Environmental Attributes, access to suitable biogas production resources, the regulatory environment of our industry, and the seasonality of demand and pricing for our products. Additional factors and trends affecting our business are discussed in "Risk Factors" within our Annual Report on Form 10-K for the year ended December 31, 2025.
Market Demand for RNG
Demand for our converted biogas and associated Environmental Attributes, including RINs and LCFS credits, is heavily influenced by United States federal and state energy regulations together with commercial interest in renewable energy products. Markets for RINs and LCFS credits arise from regulatory mandates that require refiners and blenders to incorporate renewable content into transportation fuels. The EPA annually sets proposed renewable volume obligations ("RVOs") for D3 RINs in accordance with the mandates established by the Energy Independence and Security Act of 2007. In March 2026, the EPA set RVOs for 2026 through 2027. On the state level, the economics of RNG are enhanced by low-carbon fuel initiatives, particularly well-established programs in California, Washington and Oregon (with several other states also actively considering LCFS initiatives similar to those in California, Washington and Oregon). Federal and state regulatory developments could result in significant future changes to market demand for the RINs and LCFS credits we produce. This would have a corresponding impact to our revenue, net income, and cash flow.
Transportation, including heavy-duty trucking, generates approximately 30% of overall carbon dioxide and other climate-harming GHG emissions in the United States, and transitioning this sector to low and negative carbon fuels is a critical step towards reducing overall global GHG emissions. The adoption rate of RNG-powered vehicles by commercial transportation fleets will significantly impact demand for our products.
We are also exposed to the commodity prices of natural gas and diesel, which serve as alternative fuel for RNG and therefore impact the demand for RNG.
Renewable Power Markets
We also generate revenues from sales of Renewable Power generated by our biogas-to-Renewable Power projects, and associated RECs. RECs exist because of legal and governmental regulatory requirements in Europe and the United States, and a change in law or in governmental policies concerning Renewable Power, LFG, or RECs could affect the market for, and the pricing of, such power and credits.
We periodically evaluate opportunities to convert existing Renewable Power projects to RNG production. We have been negotiating with several of our landfill and Renewable Power counterparties to enter into arrangements that would enable the LFG resource to produce RNG. Changes in the price we receive for Renewable Power and associated RECs, together with the revenue opportunities and conversion costs associated with converting our LFG sites to RNG production, could have a significant impact on our future profitability.
Regulatory landscape
We operate in an industry that is subject to and currently benefits from environmental regulations. Government policies can increase demand for our products by providing incentives to purchase RNG and Environmental Attributes. These government policies are modified and in flux constantly and any adverse changes to these policies could have a material effect on the demand for our products. For more information, see our risk factor titled "The financial performance of our business depends upon tax and other government incentives for the generation of RNG and Renewable Power, any of which could change at any time and such changes may negatively impact our growth strategy." within our Annual Report on Form 10-K for the year ended December 31, 2025. Government regulations have become increasingly stringent and complying with changes in regulations may result in significant additional operating expenses.
Federal and state environmental and tax incentive programs, including the Clean Fuel Production Credit under Section 45Z and ITCs, are important components of the economics of certain of our projects. The amount of benefits we may generate under these programs depends on, among other factors, qualifying production or investment levels, satisfaction of applicable eligibility requirements, emissions intensity in the case of Section 45Z credits, and our ability to transfer or
otherwise monetize the credits. The cash proceeds ultimately realized from transferable credits may also be affected by prevailing market conditions and transfer discounts.
During the third quarter of 2026, we changed our accounting policy for transferable Section 45Z credits and ITCs from accounting for such credits under income tax accounting guidance to accounting for them as government grants. Under the new policy, Section 45Z credits are accounted for as income-related grants and recognized as a reduction of cost of sales when the qualifying fuel is produced and sold. ITCs are accounted for as asset-related grants and reduce the carrying amount of the related property, plant and equipment or investment in an equity method investee, as applicable, with the resulting benefit recognized over the useful life of the underlying asset through lower depreciation expense or through income from equity method investments. The change in accounting policy affects the classification and timing of recognition of these benefits in our financial statements but does not change the underlying economics of the credits or the cash proceeds ultimately realized from their transfer.
Changes in applicable laws, regulations or administrative guidance, eligibility requirements, credit rates, emissions factors, transferability provisions or market pricing for transferable credits could affect the amount, timing and ultimate realization of these benefits and could materially affect the economics of our projects and our results of operations.
Seasonality
We experience seasonality in our results of operations. Sale of RNG may be impacted by higher consumption by some of our customers during summer months. Additionally, the price of RNG is higher during the fall and winter months due to increase in overall demand for natural gas during the winter months. Revenues generated from our renewable electricity projects in the northeast U.S., all of which sell electricity at market prices, are affected by warmer and colder weather, and therefore a portion of our quarterly operating results and cash flows are affected by pricing changes due to regional temperatures. These seasonal variances are managed in part by certain off-take agreements at fixed prices.
Key Components of Our Results of Operations
We generate revenues from the sale of RNG Fuel, Renewable Power, and associated Environmental Attributes, as well as from the construction, fuel supply, and servicing of Fueling Stations for commercial transportation vehicles using natural gas to power their fleets. These revenue sources are presented in our consolidated statements of operations under the following captions:
•RNG Fuel. The RNG Fuel segment includes RNG supply as well as the associated generation and sale of commodity natural gas and environmental credits, and consists of:
◦RNG Production Facilities - the design, development, construction, maintenance and operation of facilities that convert raw biogas into pipeline quality natural gas; and
◦Our interests in both operating and construction projects.
•Fuel Station Services. Through the Fuel Station Services segment, we provide construction and maintenance services to third-party owners of vehicle Fueling Stations and perform fuel dispensing activities including generation and minting of environmental credits. This segment includes:
◦Manufacturing division that builds compact fueling systems and defueling systems;
◦Design/Build contracts where the Company serves as general contractor for construction of Fueling Stations, typically structured as Guarantee Maximum Price or fixed priced contracts for customers, generally lasting less than one year;
◦Service and maintenance contracts for RNG/CNG Fueling Stations; and
◦RNG and CNG Fuel Dispensing Stations - This includes both the dispensing (or sale) of RNG, CNG, and environmental credit generation and monetization. We operate Fueling Stations that dispense both CNG and RNG fuel for vehicles.
•Renewable Power Portfolio. The Renewable Power segment generates Renewable Power and associated Environmental Attributes through combustion of biogas from landfills which is then sold to public utilities throughout the United States. Please see Note 7. Reportable Segments and Geographic Information to our condensed consolidated financial statements for additional information.
Our costs of sales associated with each revenue category are as follows:
•RNG Fuel. Includes royalty payments to biogas site owners for the biogas we use; service provider costs; salaries and other indirect expenses related to the production process, utilities, transportation, storage, and insurance; and depreciation of production facilities.
•Fuel Station Services. Includes equipment supplier costs; service provider costs; and salaries and other indirect expenses.
•Renewable Power. Includes land usage costs; service provider costs; salaries and other indirect expenses related to the production process; utilities; and depreciation of production facilities.
Project development and startup costs includes certain development costs such as legal fees, consulting fees for joint venture structuring, royalties to the landfill owner, fines, settlements, site lease expenses and certification costs on our RNG projects under construction. Additionally, we also incur certain expenses on new RNG projects during the first two years that such projects are operational, such as virtual pipeline costs (incurred until a physical interconnect pipeline is built) and ramp up costs incurred during the certification period.
Selling, general, and administrative expense consists of costs involving corporate overhead functions, including the cost of services provided to us by an affiliate, and marketing costs.
Depreciation and amortization primarily relate to depreciation associated with property, plant, and equipment and amortization of acquired intangibles arising from PPAs and interconnection contracts. We are in the process of expanding our RNG and Renewable Power production capacity and expect depreciation costs to increase as new projects are placed into service.
Concentration of customers and associated credit risk
The following table summarizes the percentage of consolidated accounts receivable, net by customers that equal or exceed 10% of the consolidated accounts receivable, net as of September 30, 2026 and December 31, 2025. No other single customer accounted for 10% or greater of our consolidated accounts receivables in these periods:
| September 30, 2026 | December 31, 2025 | |||||||
|
Customer A (1)
|
21 | % | 21 | % | ||||
| Customer B | 16 | % | 11 | % | ||||
| Customer C | * | 12 | % | |||||
| Customer D | * | 19 | % | |||||
(1) Relates to sales of Environmental Attributes under Purchase and Sale agreements and Renewable Power sale agreements.
*Less than 10%
The following table summarizes the percentage of consolidated revenues from customers that equal 10% or greater of the consolidated revenues in the period. No other single customer accounted for more than 10% of consolidated revenues in these periods:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
|
Customer A
|
42 | % | 34 | % | 42 | % | 38 | % | ||||||
Results of operations for the three and nine months ended September 30, 2026 and 2025:
Operational data
The following table summarizes the operational data achieved for the three and nine months ended September 30, 2026 and 2025:
Landfill RNG Facility Capacity and Utilization Summary
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
|
Design Capacity (Million MMBtus) (1)
|
2.25 | 2.2 | 6.67 | 6.4 | ||||||||||
|
Volume of Inlet Gas (Million MMBtus) (2)
|
1.71 | 1.6 | 4.85 | 4.6 | ||||||||||
|
Inlet Design Capacity Utilization % (2)
|
76.0 | % | 79.5 | % | 73.0 | % | 72.6 | % | ||||||
|
RNG Fuel volume produced (Million MMBtus) (3)
|
1.2 | 1.2 | 3.7 | 3.4 | ||||||||||
|
Utilization of Inlet Gas % (4)
|
75.0 | % | 77.1 | % | 74.0 | % | 75.8 | % | ||||||
(1) Design Capacity for RNG facilities is measured as the volume of feedstock biogas that the facility is designed to accept at the inlet and processing during the associated period. Design Capacity is presented as our ownership share (i.e., net of joint venture partners' ownership) of the facility and is calculated based on the number of days in the period. New facilities that come online during a quarter are pro-rated for the number of days in commercial operation. Excludes Sunoma and Biotown.
(2) Inlet Design Capacity Utilization is measured as the Volume of Inlet Gas for a period, divided by the total Design Capacity for such period. The Volume of Inlet Gas varies over time depending on, among other factors, (i) the quantity and quality of waste deposited at the landfill, (ii) waste management practices by the landfill, and (iii) the construction, operations and maintenance of the LFG collection system used to recover the LFG. The Design Capacity for each facility will typically be correlated to the amount of LFG expected to be generated by the landfill during the term of the related gas rights agreement. We expect Inlet Design Capacity Utilization to be in the range of 75-85% on an aggregate basis over the next several years. Typically, newer facilities perform at the lower end of this range and demonstrate increasing utilization as they mature and the biogas resource increases at open landfills. Excludes Sunoma and Biotown. Lower design Utilization due to LFG flow constraints at New River, Sapphire and Polk
(3) Excludes Sunoma and Biotown
(4) Utilization of Inlet Gas is measured as RNG Fuel Volume Produced divided by the Volume of Inlet Gas. Utilization of Inlet Gas varies over time depending on availability and efficiency of the facility and the quality of LFG (i.e., concentrations of methane, oxygen, nitrogen, and other gases). We generally expect Utilization of Inlet Gas to be in the range of 80% to 90%. Excludes Sunoma and Biotown. Utilization was impacted by various equipment-related operational issues at Imperial, Emerald, Sapphire, Pine Bend and Polk. Certain corrective measures have been implemented that are designed to address these issues and improve utilization toward the target range.
Renewable Power Capacity and Utilization Summary
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
|
Nameplate Capacity (MW per hour)(1)
|
95.2 | 105.8 | 102.3 | 105.8 | ||||||||||
|
Nameplate Capacity for the period (Millions MWh) (1)
|
0.21 | 0.23 | 0.67 | 0.69 | ||||||||||
|
Renewable Power produced (Millions MWh)
|
0.08 | 0.09 | 0.25 | 0.26 | ||||||||||
|
Design Capacity Utilization (%) (2)
|
38 | % | 39 | % | 38 | % | 38 | % | ||||||
(1) Nameplate Capacity for Renewable Power facilities is the manufacturer's expected capacity at International Organization for Standardization conditions for each facility and may not reflect actual production from the projects, which depends on many variables including, but not limited to, (i) quantity and quality of the biogas, (ii) operational up-time of the facility, including dispatch and maintenance downtime and (iii) actual efficiency of the facility.
(2) Nameplate Capacity Utilization for Renewable Power facilities is measured as Renewable Power Produced divided by Design Capacity for the period. Given (i) built-in un-utilized capacity from historical designs, (ii) availability (a function of higher maintenance requirements compared to RNG facilities) and (iii) commencement of operations of the Emerald RNG facility, which will result in low levels of dispatch for the Arbor Hills facility (which will operate on a standby basis but remain in the operating portfolio), our Design Capacity Utilization is expected to remain below 50%.
RNG Projects
Below is a table setting forth the RNG projects in operation and construction in our portfolio as of September 30, 2026:
|
OPAL's Share of Design Capacity (MMbtus per year) (1)
|
Source of Biogas | Ownership | |||||||||
| RNG Projects in Operation: | |||||||||||
| Greentree | 1,061,712 | LFG | 100% | ||||||||
| Imperial | 1,061,712 | LFG | 100% | ||||||||
|
Emerald (2)
|
1,327,140 | LFG | 50% | ||||||||
|
Sapphire (2)
|
796,284 | LFG | 50% | ||||||||
| New River | 663,570 | LFG | 100% | ||||||||
|
Noble Road (2)
|
464,499 | LFG | 50% | ||||||||
|
Pine Bend (2)
|
424,685 | LFG | 50% | ||||||||
|
Biotown (2)
|
41,274 | Dairy | 10% | ||||||||
|
Sunoma (3)
|
176,297 | Dairy | 90% | ||||||||
| Prince William | 1,725,282 | LFG | 100% | ||||||||
|
Polk County
|
1,061,712 | LFG | 100% | ||||||||
|
Atlantic (2)
|
331,785 | LFG | 50% | ||||||||
| Total | 9,135,952 | ||||||||||
|
RNG Projects in Construction(5):
|
|||||||||||
|
Hilltop (4)
|
255,500 | Dairy | 100% | ||||||||
|
Vander Schaaf (4)
|
255,500 | Dairy | 100% | ||||||||
|
Burlington (2)
|
459,900 | LFG | 50% | ||||||||
| Cottonwood | 664,884 | LFG | 100% | ||||||||
| Kirby Canyon | 663,570 | LFG | 100% | ||||||||
| Grady Road | 530,000 | LFG | 100% | ||||||||
| Stones Throw | 390,000 | LFG | 100% | ||||||||
| CMS | 1,010,000 | LFG | 70% | ||||||||
| Total | 4,229,354 | ||||||||||
(1) Reflects the Company's ownership share of design capacity for projects that are not 100% owned by the Company (i.e., net of joint venture partners' ownership). Design capacity is measured as the volume of feedstock biogas that the plant is capable of accepting at the inlet and processing and may not reflect actual production of RNG from the projects, which will depend on many variables including, but not limited to, (i) quantity and quality of the biogas, (ii) operational up-time of the facility and (iii) actual efficiency of the facility.
(2) We record our ownership interests in these projects as equity method investments in our consolidated financial statements.
(3) This project has provisions that will adjust or "flip" the percentage of distributions to be made to us over time, typically triggered by achievement of hurdle rates that are calculated as internal rates of return on capital invested in the project.
(4) Please see Part II, Item 1: Legal Proceedings and Note 12. Commitments and Contingencies.
(5) The construction of the Cottonwood, Burlington and Kirby Canyon projects began in the second, third and fourth quarters of 2024, respectively.
RNG Fuel Production, Sales, and Delivery
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
|
RNG Fuel volume produced (Million MMBtus)
|
1.3 | 1.3 | 3.8 | 3.5 | ||||||||||
|
RNG Fuel volume sold (Million GGEs)
|
21.8 | 20.4 | 60.5 | 60.5 | ||||||||||
|
Total volume delivered (Million GGEs)
|
40.0 | 38.9 | 117.9 | 120.4 | ||||||||||
Comparison of the three and nine months ended September 30, 2026 and 2025
The following table presents the period-over-period change for each line item in our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025.
| Three Months Ended September 30, |
$ Change |
% Change |
Nine Months Ended September 30, |
$ Change |
% Change |
|||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| RNG fuel | $ | 22,489 | $ | 22,921 | $ | (432) | (2) | % | $ | 67,948 | $ | 75,650 | $ | (7,702) | (10) | % | ||||||||||
| Fuel Station Services | 49,740 | 51,722 | (1,982) | (4) | % | 147,370 | 149,426 | (2,056) | (1) | % | ||||||||||||||||
| Renewable Power | 7,262 | 8,714 | (1,452) | (17) | % | 20,947 | 24,144 | (3,197) | (13) | % | ||||||||||||||||
| Total revenues | 79,491 | 83,357 | (3,866) | (5) | % | 236,265 | 249,220 | (12,955) | (5) | % | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Cost of sales - RNG fuel | 9,138 | 13,466 | (4,328) | (32) | % | 27,496 | 41,216 | (13,720) | (33) | % | ||||||||||||||||
| Cost of sales - Fuel station services | 35,289 | 40,230 | (4,941) | (12) | % | 111,041 | 118,683 | (7,642) | (6) | % | ||||||||||||||||
| Cost of sales - Renewable power | 7,296 | 6,562 | 734 | 11 | % | 20,551 | 22,157 | (1,606) | (7) | % | ||||||||||||||||
| Project development and startup costs | 2,744 | 2,543 | 201 | 8 | % | 7,860 | 12,101 | (4,241) | (35) | % | ||||||||||||||||
| Selling, general and administrative | 12,432 | 11,316 | 1,116 | 10 | % | 36,524 | 38,197 | (1,673) | (4) | % | ||||||||||||||||
| Depreciation, amortization, and accretion | 5,040 | 5,223 | (183) | (3) | % | 15,133 | 16,258 | (1,125) | (7) | % | ||||||||||||||||
| Impairment loss | 14 | - | 14 | 100 | % | 4,156 | - | 4,156 | 100 | % | ||||||||||||||||
| (Income) loss from equity method investments | (1,293) | (839) | (454) | (54) | % | 423 | (2,483) | 2,906 | 117 | % | ||||||||||||||||
| Total operating expenses | 70,660 | 78,501 | (7,841) | (10) | % | 223,184 | 246,129 | (22,945) | (9) | % | ||||||||||||||||
| Operating income | 8,831 | 4,856 | 3,975 | 82 | % | 13,081 | 3,091 | 9,990 | 323 | % | ||||||||||||||||
| Other expense | ||||||||||||||||||||||||||
| Interest and financing expense | (8,927) | (7,185) | (1,742) | (24) | % | (24,218) | (20,272) | (3,946) | (19) | % | ||||||||||||||||
| Interest income | 742 | 287 | 455 | 159 | % | 3,603 | 942 | 2,661 | 282 | % | ||||||||||||||||
| Other income, net | 1,014 | 129 | 885 | 686 | % | 1,111 | 2,450 | (1,339) | (55) | % | ||||||||||||||||
| Net income (loss) before provision for income taxes | 1,660 | (1,913) | 3,573 | 187 | % | (6,423) | (13,789) | 7,366 | 53 | % | ||||||||||||||||
|
Provision for income taxes
|
- | - | - | - | % | (183) | - | (183) | - | % | ||||||||||||||||
| Net income (loss) | 1,660 | (1,913) | 3,573 | 187 | % | (6,606) | (13,789) | 7,183 | 52 | % | ||||||||||||||||
| Net loss attributable to redeemable non-controlling interest | (4,501) | (3,847) | (654) | (17) | % | (22,984) | (18,295) | (4,689) | (26) | % | ||||||||||||||||
| Net income attributable to non-redeemable non-controlling interest | 575 | 93 | 482 | 518 | % | 794 | 329 | 465 | 141 | % | ||||||||||||||||
| Accretion of the redeemable preferred non-controlling interest to its redemption amount | 6,528 | 2,617 | 3,911 | 149 | % | 20,416 | 7,851 | 12,565 | 160 | % | ||||||||||||||||
| Net loss attributable to Class A common stockholders | $ | (942) | $ | (776) | $ | (166) | (21) | % | $ | (4,832) | $ | (3,674) | $ | (1,158) | (32) | % | ||||||||||
Revenues - Disaggregated
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| (in thousands) | 2026 | 2025 | $ Change | 2026 | 2025 | $ Change | ||||||||||||||
| RNG Fuel | ||||||||||||||||||||
| Environmental attributes | $ | 18,868 | $ | 19,061 | $ | (193) | $ | 57,522 | $ | 64,832 | $ | (7,310) | ||||||||
| Brown gas sales and other | 3,621 | 3,860 | (239) | 10,426 | 10,818 | (392) | ||||||||||||||
| Total RNG Fuel | 22,489 | 22,921 | (432) | 67,948 | 75,650 | (7,702) | ||||||||||||||
| Fuel Station Services | ||||||||||||||||||||
| OPAL owned stations | 7,790 | 4,778 | 3,012 | 18,843 | 15,600 | 3,243 | ||||||||||||||
|
Environmental attributes and RNG marketing (1)
|
24,152 | 20,379 | 3,773 | 76,335 | 71,679 | 4,656 | ||||||||||||||
| Third party station service and maintenance | 7,334 | 7,122 | 212 | 21,259 | 20,726 | 533 | ||||||||||||||
| Construction | 4,412 | 14,203 | (9,791) | 15,640 | 31,377 | (15,737) | ||||||||||||||
|
Lease revenues (2)
|
6,052 | 5,240 | 812 | 15,293 | 10,044 | 5,249 | ||||||||||||||
| Total Fuel Station Services | 49,740 | 51,722 | (1,982) | 147,370 | 149,426 | (2,056) | ||||||||||||||
| Renewable Power | ||||||||||||||||||||
| Electricity sales | 5,419 | 5,137 | 282 | 16,126 | 14,716 | 1,410 | ||||||||||||||
| Environmental attributes | 791 | 2,416 | (1,625) | 2,662 | 6,004 | (3,342) | ||||||||||||||
|
Lease revenues (3)
|
268 | 228 | 40 | 690 | 875 | (185) | ||||||||||||||
|
Other (4)
|
784 | 933 | (149) | 1,469 | 2,549 | (1,080) | ||||||||||||||
| Total Renewable Power | 7,262 | 8,714 | (1,452) | 20,947 | 24,144 | (3,197) | ||||||||||||||
| Total revenues | $ | 79,491 | $ | 83,357 | $ | (3,866) | $ | 236,265 | $ | 249,220 | $ | (12,955) | ||||||||
| Revenue from contracts with customers | $ | 73,171 | $ | 77,889 | $ | (4,718) | $ | 220,282 | $ | 238,301 | $ | (18,019) | ||||||||
| Revenue from lease arrangements | $ | 6,320 | $ | 5,468 | $ | 852 | $ | 15,983 | $ | 10,919 | $ | 5,064 | ||||||||
(1) Revenues from RNG marketing in the Fuel Station Services segment relate to revenues earned from Environmental Attribute generation and monetization services.
(2) Fuel Station Services lease revenue relates to revenue from fuel purchasing agreements under which we determined that we transferred the right to control the use of the station to the purchaser. This includes sales-type lease revenues of $1,915, $-, $4,161, and $- for the three months ended September 30, 2026 and 2025, and the nine months ended September 30, 2026 and 2025, respectively, from customers domiciled outside of the United States. All remaining lease revenue relates to operating leases.
(3) Renewable Power operating lease revenue relates to revenue from power purchase agreements where we determined that we transferred the right to control the use of the power plant to the purchaser.
(4) Includes management fee revenues earned from management of operations of equity method entities.
RNG Fuel
Revenue from RNG Fuel decreased by $0.4 million or 2% for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease primarily reflected a reduction in unrealized mark-to-market gains associated with brown gas marketing and trading activities of $0.2 million, and decrease in environmental attributes of $0.2 million. Environmental attributes decrease was driven by higher marketing fees of $1.7 million and lower green gas net volumes $0.7 million offset by higher RIN pricing impact of $1.8 million and higher volumes $0.4 million.
Revenue from RNG Fuel decreased by $7.7 million, or 10%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This decrease was primarily due to a reduction in unrealized mark-to-market gains associated with brown gas marketing and trading activities of $0.4 million, and decrease in environmental attributes of $7.3 million. The environmental attributes was primarily related to one additional green gas sale in 2025 of $5.1 million, higher marketing fees of $2.6 million, Sunoma reserve release $0.5 million and lower RIN price of $0.2 million offset by higher production volume of $1.1 million.
Fuel Station Services
Revenue from Fuel Station Services decreased by $2.0 million or 4%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This decrease was primarily attributable to $9.8 million due to cancellations and delays in construction projects offset by increase of $1.7 million higher marketing fees, $0.9 million increase in LCFS credit sales, a $0.6 million higher RIN volumes, a $0.5 million higher RIN prices, $3.8 million increase from FPA tolling is driven by higher tolling GGEs and pass-through costs partially offset by loss of lease type revenues, and a $0.2 million increase in third-party service revenue due to higher service rates.
Revenue from Fuel Station Services decreased by $2.1 million, or 1%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This decrease was primarily attributable to $15.7 million due to cancellations and delay in construction projects offset by increase of $2.6 million due to higher marketing fees, $2.0 million increase in LCFS credit sales and pricing, $8.5 million increase from FPA tolling is driven by higher tolling GGEs and increased pass-through costs and a $0.5 million increase in third-party service revenue due to higher service rates.
Renewable Power
Revenue from Renewable Power decreased by $1.5 million, or 17%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily driven by a $1.6 million decline in environmental attribute revenue, primarily at the West Covina facility.
Revenue from Renewable Power decreased by $3.2 million, or 13%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily attributable to a $3.3 million decline in environmental attribute revenue, primarily at the West Covina and Santa Cruz facilities and Other revenues of $1.1 million offset by $1.4 million increase in electricity sales, primarily in Old Dominion.
Cost of sales
RNG Fuel
Cost of sales from RNG Fuel decreased by $4.3 million, or 32%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily attributable to $7.9 million 45z (net of RECs and transaction costs), lower royalties due to YTD adjustment, lower Gas $0.3 million and lower SG&A $0.3 million offset by ($4.8) O&M non-labor including maintenance at Imperial, Polk, Greentree and Prince William.
Cost of sales from RNG Fuel decreased by $13.7 million, or 33%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily attributable to $18 million of 45z offset by higher major maintenance of $1.6 million due to equipment issues which have been rectified driving consistent sequential production growth primarily at Imperial and Prince William and higher O&M expenses of $2.0 million driven by media and H2S.
Fuel Station Services
Cost of sales from Fuel Station Services decreased by $4.9 million, or 12%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily attributable to $5.0 million decrease in construction equipment, parts and oil expenses due to delays in project activity, and $1.5 million decrease in service-related maintenance, labor and compensation costs, partially offset by $1.2 million in FPA tolling due to higher tolling expenses due to timing and $0.3 million higher dispensing fees.
Cost of sales from Fuel Station Services decreased by $7.6 million, or 6%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily attributable to $11.5 million decrease in construction equipment, parts and oil expenses due to delays in project activity, offset by $1.3 million of higher dispensing fees from higher dispensing volumes $10.7 million net of lower NRV writedown $9.4, $0.5 million higher FPA tolling due to higher volumes and $2.1 million higher service due to higher service GGEs and timing of maintenance, labor and compensation costs
Renewable Power
Cost of sales from Renewable Power increased by $0.7 million, or 11%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily attributable to a $1.3 million increase in major maintenance, royalties and well field expenses in Old Dominion and a $0.4 million increase in major
maintenance expenses in Pioneer and Miramar offset by lower expenses in SD Miramar, Taunton and Albany due to the timing of expenditures and closure of sites.
Cost of sales from Renewable Power decreased by $1.6 million, or 7% for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily attributable to lower O&M and major maintenance expense of $2.4 million, primarily at Sycamore, Arbor Hills, FM3 and Taunton/ Albany due to closure of sites offset by higher major maintenance of $0.9 million at old Dominion.
Project development and startup costs
Project development and startup costs increased by $0.2 million, or 8%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily attributable to higher project development and startup activities.
Project development and startup costs decreased by $4.2 million, or 35%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily attributable to lower virtual pipeline costs.
Selling, general, and administrative
Selling, general, and administrative expenses increased by $1.1 million, or 10%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily attributable to $1.4 million of Stock Compensation expense.
Selling, general, and administrative expenses decreased by $1.7 million, or 4%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease primarily $3.4 million of lower compensation costs, $1.0 million of lower legal expenses, and $0.6 million of lower directors and officers insurance expense. These decreases were partially offset by $1.5 million of higher stock based compensation expense, $1.1 million of higher segment general and administrative expenses, $0.4 million of higher other expenses and $0.3 million of higher information technology expenses.
Depreciation, amortization, and accretion
Depreciation, amortization, and accretion decreased by a total of $0.2 million, or 3%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This is primarily related to lower depreciation expense in Renewable Power.
Depreciation, amortization, and accretion decreased by a total of $1.1 million, or 7%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily attributable to lower depreciation expense resulting from the prior-year recognition of the remaining asset retirement obligation ("ARO") balance.
Impairment loss
Impairment loss was primarily attributable to impairment charges recorded in Q2 on of $3.6 million related to certain long-lived assets in its Renewable Power segment following strategic decisions to convert those facilities to RNG production operations and $0.6 million related to certain long-lived assets in its Fuel Station Services segment.
(Income) loss from equity method investments
Net income attributable to equity method investments increased by $0.5 million, or 54%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This is primarily related to a higher production primarily due to Atlantic reduced by lower production in Sapphire and Pine Bend offset by operating expenses primarily higher non-labor and maintenance expenses.
Net loss attributable to equity method investments increased by $2.9 million, or 117% for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 due to net income of $2.5 million to $0.4 million loss. This is primarily related to a higher operating expenses including non-Labor, major maintenance and Utilities offset by higher production in Atlantic reduced by lower production in Emerald, Sapphire and Pine Bend.
Interest and financing expense, net
Interest and financing expenses, net increased by $1.7 million, or 24%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This is primarily related to an increase in the average outstanding loan balance.
Interest and financing expenses, net increased by $3.9 million, or 19%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This is primarily related to an increase in the average outstanding loan balance.
Interest income
Interest income increased by $0.5 million or 159%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 primarily due to interest income from sales-type-leases.
Interest income increased by $2.7 million or 282%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 primarily due to interest income from sales-type-leases and money market accounts.
Other income
Other income increased by $0.9 million or 686% for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 primarily related to change in fair value of warrants.
Other income decreased by $1.3 million, or 55%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily attributable to a gain on a note receivable and a gain from the write-off of a lease liability recognized during the 2025 period, with no comparable gains recognized in 2026.
Provision for income taxes
Provision for income taxes remained flat for the periods presented.
Net loss attributable to redeemable non-controlling interest
Net loss attributable to redeemable non-controlling interest increased by $0.7 million, or 17%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The net loss for the three months ended September 30, 2026 and 2025 reflects the portion of earnings belonging to OPAL Fuels equity holders. The increase is primarily attributable to higher loss in the current period compared to the same prior-year period.
Net loss attributable to redeemable non-controlling interest for the nine months ended September 30, 2026 increased by $4.7 million, or 26%, compared to the nine months ended September 30, 2025. The increase is primarily attributable to higher loss on the portion of earnings belonging to OPAL Fuels equity holders in the current period compared to the same prior-year period.
Net income attributable to non-redeemable non-controlling interest
Net income attributable to non-redeemable non-controlling interest increased $0.5 million, or 518%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is primarily attributable to higher income in the current period compared to the same prior-year period.
Net income attributable to non-redeemable non-controlling interest increased $0.5 million, or 141%, for the nine months ended September 30, 2026, compared to nine months ended September 30, 2025. The increase is primarily attributable to higher income in the current period compared to the same prior-year period.
Accretion of the redeemable preferred non-controlling interest to its redemption amount
Accretion of the redeemable preferred non-controlling interest to its redemption amount increased by $3.9 million or 149% for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This is primarily driven by accretion to redemption value following the issuance of redeemable preferred non-controlling interests in March 2026.
Accretion of the redeemable preferred non-controlling interest to its redemption amount increased by $12.6 million or 160% for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This is
primarily driven by accretion to redemption value following the issuance of redeemable preferred non-controlling interests in March 2026.
Liquidity and Capital Resources
Liquidity
As of September 30, 2026, our liquidity was $122.0 million, consisting of $10.8 million of unused capacity under the revolver, $25.2 million of undrawn preferred stock facility commitments and $86.0 million of cash and cash equivalents. Refer to Note 3. Loans.
We expect that our available cash together with our other assets, expected cash flows from operations, and access to expected sources of capital will be sufficient to meet our existing commitments for a period of at least twelve months from the date of this quarterly report. Any reduction in demand for our products or our failure to efficiently manage our production facilities may result in lower cash flows from operations which may impact our ability to make investments and may require changes to our growth plan.
To fund future growth, we anticipate seeking additional capital through equity or debt financings. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our project development efforts. We may be unable to obtain any such additional financing on acceptable terms or at all. Our ability to access capital when needed is not assured and, if capital is not available when, and in the amounts needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition, and operating results.
As part of our operations, we have arrangements for office space for our corporate headquarters under the Administrative Services Agreement as well as operating leases for office space, warehouse space, and our vehicle fleet.
We intend to make payments under our various debt instruments when due and pursue opportunities for earlier repayment and/or refinancing if and when these opportunities arise. In the fourth quarter of 2025, NextEra exercised its redemption option to redeem the preferred units. The Units were redeemed in the first quarter of 2026. Refer to Note 8. Redeemable Non-controlling Interest, Redeemable Preferred Non-controlling Interest and Stockholders' Equity for additional details.
OPAL Term Loan
During the nine months ended September 30, 2026, the Company drew $128.4 million under its term loan facility pursuant to its existing credit agreement. A portion of the proceeds from the borrowing was used to repay $20.0 million outstanding under the revolving loan facility. As of September 30, 2026, the Company had utilized $39.2 million of availability under the revolver loan to provide for the issuance of letters of credit to support the operations of the Borrower and the Guarantors.
During the nine months ended September 30, 2026, the Company commenced principal payments under its credit agreement. In addition, beginning in the first quarter of 2026, the Company is subject to a quarterly cash sweep pursuant to which, within two business days after the required delivery of quarterly financial statements, a percentage of distributable cash is required to be applied to repay outstanding borrowings, with the applicable percentage determined based on the Company's consolidated debt to cash flow ratio. If the required financial statements are not delivered within the specified timeframe, 100% of distributable cash is required to be applied to the cash sweep.
As of September 30, 2026 and December 31, 2025, the outstanding loan balance (current and non-current) excluding deferred financing costs and including revolving borrowings was $396.7 million and $341.6 million, respectively.
During the delayed draw availability period, which expired in March 2026, we had the ability, subject to the satisfaction of certain credit and project-related conditions precedent, to join other newly acquired subsidiaries with comparable renewable projects in development under the credit facility for comparable funding. This delayed draw feature was no longer available as a source of liquidity as of September 30, 2026 and is not included in the liquidtity sources described above. As of September 30, 2026, we are in compliance with the financial covenants under the OPAL Term Loan.
On May 30, 2026, OPAL Fuels Inc. exercised its right pursuant to that certain Credit and Guarantee Agreement dated as of September 1, 2023 among Opal Fuels Intermediate HoldCo LLC as borrower (the "Borrower"), direct and indirect
subsidiaries of the Borrower as guarantors, the lenders party thereto as lenders, and Bank of America, N.A., as administrative agent, to contribute approximately $8.0 million to the Borrower in order for the Borrower to maintain compliance with certain financial covenants under its credit facility.
Sunoma Loan
On August 27, 2020, Sunoma, an indirect subsidiary of ours entered into a debt agreement (the "Sunoma Loan Agreement") with Live Oak Banking Company for an aggregate principal amount of $20.0 million. Sunoma paid $0.6 million in financing fees. The amounts outstanding under the Sunoma Loan are secured by the assets of Sunoma. On July 19, 2022, Sunoma completed the conversion of the construction loan into a permanent loan and increased the commitment from $20.0 million to $23.0 million. The maturity date is July 19, 2033. The outstanding loans under the Sunoma Loan Agreement bear interest at annual fixed rates of 7.8% and 8.2% during the term.
The Sunoma Loan Agreement contains certain financial covenants which require Sunoma to maintain (i) a maximum debt to net worth ratio not to exceed 5:1, (ii) a minimum current ratio not less than 1.0 and (iii) a minimum debt service coverage ratio of trailing four quarters not less than 1.25. As of September 30, 2026, Sunoma is in compliance with the financial covenants under the Sunoma Loan Agreement.
As of September 30, 2026 and December 31, 2025, the outstanding loan balance (current and non-current) excluding deferred financing costs was $17.7 million and $19.1 million, respectively.
The significant assets of Sunoma and other consolidated VIEs, are presented in a separate table below the consolidated balance sheets as of September 30, 2026 and December 31, 2025. See Note 2. Investments in other entities and Variable Interest Entities for additional information.
Redeemable Series A Preferred Units of OPAL Fuels LLC
In November 2021, NextEra subscribed for an aggregate of $100.0 million of Series A preferred units issued by OPAL Fuels LLC, a consolidated subsidiary of OPAL Fuels, Inc.
On March 6, 2026, OPAL Fuels LLC ("Opal Fuels"), the Company's primary operating consolidated subsidiary, entered into a subscription agreement ("Subscription Agreement") with Preferred Fuels LLC, ("Preferred Fuels" or "Investor"), an entity under common control with the Company. Pursuant to the Subscription Agreement Preferred Fuels committed to purchase up to $180.0 million (the "Offering") of Series A preferred units of Opal Fuels in multiple closings. At the initial closing on March 6, 2026, Preferred Fuels purchased 1,200,000 preferred units for aggregate proceeds of $120.0 million. OPAL Fuels may, in its sole discretion, require Preferred Fuels to fund up to an additional $60.0 million (the "Undrawn Commitment") within one year of the initial closing (the "Availability Period"), subject to the terms of the Subscription Agreement. During the three and nine months ended September 30, 2026 the Company drew $26,400 and $34,800, respectively of additional funding from the Undrawn Commitment. Additionally, pursuant to the Subscription Agreement, the Investor has a right of first offer to purchase up to an additional 700,000 units for an aggregate purchase price of up to $70.0 million in the Offering if OPAL Fuels intends to sell any additional units prior to the second anniversary of the initial closing. Opal Fuels used the proceeds received from the issuance of the Series A preferred units on March 6, 2026 to redeem all of the previously issued and outstanding Series A preferred units held by NextEra.
In connection with the initial closing on March 6, 2026, OPAL Fuels Inc. issued to Preferred Fuels warrants ("Warrants") to purchase up to 2,160,000 shares of Class A common stock (the "Warrant Shares") at an exercise price per share of $2.67, subject to customary anti-dilution adjustments. The Warrants expire on March 6, 2034. A holder of the Warrants shall not have the right to exercise the Warrants without prior approval by the Company's Board of Directors to the extent that after giving effect to such exercise, such person would beneficially own in excess of 19.9% of the Company's outstanding common stock immediately after giving effect to such exercise. Up to 720,000 shares of the Warrant Shares are forfeitable if Preferred Fuels fails to fund issuance of the remaining Series A preferred units during the Availability Period provided Opal Fuels requested such funding.
Additionally, up to 840,000 shares issuable on a pro rata basis upon future purchases by Preferred Fuels of up to an additional 700,000 Series A preferred units (up to $70.0 million) within two years of the initial closing pursuant to its right of first offer. No subsequent Warrant Shares have been issued as of September 30, 2026.
The Company recorded Series A preferred units as redeemable noncontrolling interest in its condensed consolidated financial statements at the amount of proceeds received, less the fair value of the Warrants of $2.8 million and directly attributable issuance costs of $3.8 million. The Series A preferred units are subsequently remeasured to their redemption
value as of each reporting date as if such reporting date were the redemption date, with changes in carrying amount recorded as adjustments to additional paid-in capital to the extent available, with any excess recorded to accumulated deficit. The Company concluded that the Warrants are not indexed to the Company's equity. The Warrants are accounted for as liabilities in the Company's condensed consolidated financial statements with changes in fair value recognized in other income, net.
Terms of Redeemable Preferred Units
The Preferred Units held by Preferred Fuels, have substantially the same terms and features (unless specified otherwise) which are listed below:
Voting: The Series A-1 preferred units do not have any voting rights. The Series A preferred units carry no voting rights except as required by Delaware law or as provided under certain protective covenants in the Subscription Agreement.
Dividends: The Series A-1 preferred units are entitled to receive dividends at a rate of 12% per annum. The Series A preferred units are entitled to preferred quarterly distributions at a rate of 12% per annum ("Preferred Coupon"), compounding quarterly. Dividends on each series begin accruing from the issuance date, are mandatory and cumulative. OPAL Fuels may elect to pay up to 2% per annum of the 12% Series A Preferred Coupon in kind through the issuance of additional Series A preferred units.
Liquidation preference: In the event of a liquidation of OPAL Fuels, each holder of Series A and Series A-1 units is entitled to receive, on a pro rata basis, the original issue price of $100 per unit plus any accrued and unpaid dividends, out of assets available for distribution after payment of debt, liabilities, and liquidation expenses.
Redemption and Conversion: OPAL Fuels may redeem each series of Preferred Units at any time at the original issue price of $100 per unit plus accrued and unpaid dividends. Under the Series A preferred units, the Company was required to respond within 90 days from the date of the holder's redemption notice in accordance with the applicable terms.
Preferred Fuels may require redemption upon (i) a change of control, (ii) an uncured material debt default or breach of protective covenants continuing for 60 days, or (iii) at any time on or after the fifth anniversary of the initial closing (March 6, 2031). In the event OPAL Fuels fails to redeem the Series A preferred units when requested: (1) the Preferred Coupon rate increases by an additional 0.50% per quarter, subject to a maximum of 4.00% per annum above the then-applicable rate, with all accrued distributions compounding quarterly at the Preferred Coupon plus the penalty rate; and (2) any residual cash flow of OPAL Fuels and its subsidiaries after operating expenses and capital expenditures must be applied to redeem the Series A preferred units at the applicable Redemption Price until the failure is cured. The applicable Redemption Price is (i) a price equal to at least 1.15 times the original issue price (inclusive of all fees paid and accrued dividends) on or prior to the first anniversary of the initial closing, (ii) 102% of the original issue price (exclusive of fees) after the first but on or prior to the second anniversary, and (iii) the original issue price plus accrued and unpaid cash dividends thereafter. Preferred Fuels also has the right, but not the obligation, to appoint a single director to the Board of Directors of OPAL Fuels Inc. if the redemption failure is not cured within 90 days.
As described in a Current Report on Form 8-K filed with the SEC on May 20, 2026, on May 18, 2026, OPAL Fuels approved and adopted an Amended and Restated Certificate of Designations of Series A-1 Preferred Units (the "A&R COD"), which amended and restated in its entirety that certain Certificate of Designations of Series A-1 Preferred Units OPAL Fuels, dated November 29, 2021. The A&R COD conforms the terms and conditions of OPAL Fuels' Series A-1 Preferred Units to those of OPAL Fuels' Series A Preferred Units in accordance with the Amended and Restated Certificate of Designations of Series A Preferred Units, which was approved and adopted by OPAL Fuels on March 6, 2026. The amendment increased the annual dividend rate from 8% to 12%, with only up to 2% payable in kind and the remainder payable in cash, revised certain redemption rights to permit holder redemption upon specified events including a change of control, certain uncured trigger events, or beginning on the fifth anniversary of March 6, 2026, and added enhanced holder protective provisions and remedies upon the occurrence of certain trigger events. The amendment also eliminated the holders' prior conversion rights upon delayed redemption of the preferred units. The A&R COD does not provide holders of Series A-1 Preferred Units with any rights to appoint members to the board of directors of the Company, which rights are provided to holders of Series A Preferred Units under the Amended and Restated Certificate of Designations of Series A Preferred Units.
Cash Flows
The following table presents our cash flows for the nine months ended September 30, 2026 and 2025:
| Nine Months Ended September 30, | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Net cash provided by operating activities | $ | 30,590 | $ | 4,879 | ||||
| Net cash used in investing activities | (68,719) | (34,796) | ||||||
| Net cash provided by financing activities | 100,275 | 34,971 | ||||||
| Net increase in cash, restricted cash, and cash equivalents | $ | 62,146 | $ | 5,054 | ||||
Net Cash Provided by Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2026 was $30.6 million, an increase of $25.7 million compared to $4.9 million for the nine months ended September 30, 2025.
This was primarily attributable to favorable changes in working capital, net income, noncash expense and income from equity method investments. These increases were partially offset by decreases in distributions from equity method investments.
Net Cash Used in Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2026 was $68.7 million, an increase of $33.9 million compared to the $34.8 million used in investing activities for the nine months ended September 30, 2025.
This was primarily attributable to a decrease in proceeds from transfer of investment tax credits, net of transactions costs, an increase in payments made for the construction of various RNG generation and dispensing facilities in 2026 compared to 2025, and a decrease in cash received from notes receivable. These were partially offset by higher distributions from return of equity method investments, higher proceeds from the disposal of property, plant and equipment and a decrease in cash paid to equity method investments.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2026 was $100.3 million, an increase of $65.3 million compared to the net cash provided by financing activities of $35.0 million for the nine months ended September 30, 2025.
This was primarily attributable to an increase from the issuance of preferred stock, an increase in proceeds from long-term loans and an increase in capital contributions from non-redeemable non-controlling interests. These were partially offset by redemption of shares of preferred stock, an increase in repayment of loans, increase in payment of preferred dividends and an increase in cash paid for taxes of equity awards.
Capital expenditures and other cash commitments
We require cash to fund our capital expenditures, operating expenses and working capital and other requirements, including costs associated with fuel sales; outlays for the design and construction of new Fueling Stations and RNG production facilities; debt repayments and repurchases; maintenance of our electrification production facilities supporting our operations, including maintenance and improvements of our infrastructure; supporting our sales and marketing activities, including support of legislative and regulatory initiatives; any investments in other entities; any mergers or acquisitions, including acquisitions to expand our RNG production capacity; pursuing market expansion as opportunities arise, including geographically and to new customer markets; and to fund other activities or pursuits and for other general corporate purposes.
As of September 30, 2026, we anticipate spending of approximately $148.4 million in capital expenditures for the next 12 months for RNG projects, fuel stations and our share of contributions in our equity method investment projects. This includes projects which have not been fully committed. These expenditures do not include any expected contributions from our joint venture partners and primarily relate to our development and construction of new renewable energy facilities and the purchase of equipment used in our Fueling Station services and Renewable Power operations.
In addition to the above, we also have lease commitments on our vehicle fleets and office leases, certain guarantees and quarterly amortization payment obligations under various debt facilities. Please see Note 3. Loans and Note 12. Commitments and Contingencies to our condensed consolidated financial statements for additional information.
We plan to fund these expenditures primarily through cash on hand, cash generated from operations and availability under existing debt facilities.
OPAL Fuels Inc. published this content on November 09, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 09, 2026 at 22:31 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]