Montauk Renewables has become a merchant credit seller that is using landfill-gas cash flow to finish a farm-waste power plant. The second-quarter rebound is real on the income statement, but it is not a production story. Gas output rose only modestly while the company harvested environmental credits after fixed pathway contracts expired. That mix shift is the entire investment debate.
Credit volumes and a GreenWave distribution lifted quarterly revenue to $54 million. Adjusted earnings before interest, taxes, depreciation, and amortization more than doubled. Underlying renewable natural gas receipts barely budged because commodity gas prices fell and floor contracts rolled off. Pathway dispensing costs absorbed most of the new credit line, so the company was still roughly breakeven at the operating line. The farm project kept consuming cash even as the credit desk printed a thin profit.
Turkey, North Carolina, started selling power in July after missing the original spring start. Management cut the full-year electricity outlook because switchgear programming still limited throughput. A refinancing with a Hannon Armstrong affiliate bought time at a double-digit coupon. Whether swine credits and cellulosic fuel credits fund that coupon, and whether the plant actually ramps, is the question the next several quarters settle.