Archaea Energy Inc. (“Archaea” or “the Company”) (NYSE: LFG), an
industry-leading renewable natural gas (“RNG”) company, today
announced financial and operating results for the third quarter
2021.
THIRD QUARTER AND RECENT HIGHLIGHTS
- Closed the previously announced business combinations with
Archaea Energy LLC and Aria Energy LLC (“Aria”) on September 15,
2021 (the “Closing Date”) and our Class A common stock began
trading on the NYSE under the symbol “LFG” on September 16,
2021.
- Produced a combined1 1.43 million and 4.19 million MMBtu of RNG
for the three and nine months ended September 30, 2021,
respectively, and 175 thousand and 703 thousand2 MWh of electricity
for the three and nine months ended September 30, 2021,
respectively.
- Generated a combined1 net loss3 of $21.9 million and net
income3 of $52.7 million for the three and nine months ended
September 30, 2021, respectively. Generated combined Adjusted
EBITDA4 of $22.3 million and $59.8 million for the three and nine
months ended September 30, 2021, respectively.
- Announced full year 2021 combined RNG production guidance of
approximately 5.4 million MMBtu and full year 2021 combined
Adjusted EBITDA guidance5 of $72.5–77.5 million, and expect to
announce full year 2022 guidance in the first quarter 2022.
- Construction at Project Assai, which is expected to be the
largest RNG facility in the world when completed, is progressing on
schedule and within budget; late-stage commissioning activities are
underway and the facility is expected to become operational in the
first quarter 2022.
- Entered into a 21-year, fixed-fee RNG purchase and sale
agreement with NW Natural Gas Company (“NW Natural”), a subsidiary
of NW Natural Holdings (NYSE: NWN), for the sale of Environmental
Attributes6 related to up to one million MMBtu of RNG annually,
beginning in 2022 and ramping up to the full annual quantity in
2025.
- Added five new landfill sites to our extensive backlog of
high-quality RNG development projects, comprised of one greenfield
RNG project and four landfill gas to electric conversion projects,
bringing our total portfolio of development opportunities to
approximately 35, inclusive of new builds, electric conversions,
and optimization opportunities.
CEO COMMENTARY
“I am pleased to report Archaea’s inaugural quarterly results as
a public company today,” said Nick Stork, Archaea’s Chief Executive
Officer and co-founder of Archaea Energy LLC. “In the short period
of time since the closing of our business combinations, we have
made great strides integrating the teams and assets, identifying
opportunities for optimizing existing assets beyond our initial
expectations, and advancing our long-term strategic
objectives.”
"On project development, the excellent progress on Project Assai
reinforces our confidence in developing our backlog of RNG projects
on time and on budget. We recently added five new projects to our
extensive backlog and we’re in active discussions with leading
landfill owners and operators about doing more. On the commercial
front, we continue to see great opportunities to add blue-chip
customers that share our commitment to the environment and the
unique role that Archaea’s RNG serves in the low carbon future, and
we’re pleased to welcome NW Natural as one of our newest key
customers with a 21-year, fixed-fee RNG purchase agreement
beginning in 2022 and ramping up to one million MMBtu per year in
2025.”
“On the technology side, we’ve made excellent progress
finalizing the Archaea V1 plant design, which will meaningfully
improve upon our leading cost and development timelines by
vertically integrating key components and standardizing design
specifications for different RNG plant sizes. We’ve already begun
procuring the key parts, materials, and infrastructure for the V1
modules and we expect to begin installing these RNG units at our
new sites beginning in the second half of 2022. The V1 design is
expected to unlock the development potential for lower flow sites
and, when paired with our development success at large-flow sites
like Assai, firmly positions Archaea as the landfill developer of
choice for landfills of all sizes. We’re off to a great start as a
public company, and we’re going to use this momentum to our
advantage.”
2021 FULL YEAR GUIDANCE
We have provided the following financial and operational
guidance for full year 2021 on a combined basis. All guidance is
current as of the published date and is subject to change.
Full Year 2021
Combined RNG Production (million
MMBtu)
5.4
Combined Adjusted EBITDA5 ($ millions)
$
72.5
–
$
77.5
We expect to provide guidance with respect to fiscal year 2022
in the first quarter of 2022.
SUMMARY AND REVIEW OF FINANCIAL RESULTS
The following results are presented on a combined1 basis. Please
see the “Notes Regarding Financial Statement Presentation” and
“Reconciliation of Non-GAAP Measures” sections of this release and
the Archaea Energy Inc. Form 10-Q for the quarter ended September
30, 2021 filed with the Securities and Exchange Commission for
additional details.
Combined Basis
($ in thousands)
Three Months Ended September
30, 2021
Nine Months Ended September
30, 2021
Revenue
$
46,974
$
136,357
Equity Investment Income, Net
$
7,330
$
20,656
Net Income (Loss)3
$
(21,875)
$
52,750
Adjusted EBITDA4
$
22,291
$
59,804
RNG Produced (MMBtu)
1,425,080
4,189,550
Electricity Produced (MWh)2
175,230
703,278
Combined RNG production for the three and nine months ended
September 30, 2021 was positively impacted by production from our
Boyd County facility, which became operational in April 2021.
Combined electricity production for the three and nine months ended
September 30, 2021 was positively impacted by the acquisition of
PEI Power LLC (“PEI”) in April 2021.
Combined revenues and equity investment income for the three and
nine months ended September 30, 2021 were positively impacted by
strong market pricing of Environmental Attributes, natural gas, and
power.
Combined net loss for the three months ended September 30, 2021
was primarily driven by non-recurring costs, loss from change in
fair value of derivatives, and increased general and administrative
expenses related to scaling headcount for the future growth of our
business and as a result of operating as a public company,
partially offset by strong market pricing. Combined net income for
the nine months ended September 30, 2021 was positively impacted by
non-recurring gains related to the sale of LES Project Holdings LLC
(“LESPH”), including a gain on the extinguishment of debt in the
amount of $61.4 million and a gain on the disposal of assets in the
amount of $1.3 million, as well as strong market pricing, partially
offset by non-recurring costs, loss from change in fair value of
derivatives, and increased general and administrative expenses.
Combined non-recurring costs, which primarily consisted of
transaction costs related to our business combinations, totaled
approximately $19.2 and $22.4 million for the three and nine months
ended September 30, 2021, respectively.
Adjusted EBITDA for the three and nine months ended September
30, 2021 was positively impacted by strong market pricing and
negatively impacted by increased general and administrative
expenses as described above. Adjusted EBITDA for the three and nine
months ended September 30, 2021 was in line with management
expectations.
Capital Investments
Cash used in investing activities, excluding the acquisition of
Aria, totaled $134.8 million on a combined basis for the nine
months ended September 30, 2021. We had combined purchases of
property, plant and equipment of $90.5 million, primarily related
to the development of Project Assai and our Boyd County RNG
facility. We acquired PEI Power LLC for $31.5 million and
contributed $12.5 million into our equity method investments on a
combined basis.
BUSINESS COMBINATIONS
We closed our previously announced business combinations with
Archaea Energy LLC and Aria Energy LLC on September 15, 2021, with
more than 99% of the votes cast on the business combination
proposals at a special meeting of stockholders (the “Special
Meeting”) in favor of approving the business combinations.
Stockholders also voted to approve all other proposals presented at
the Special Meeting and elected to redeem less than 0.2% of
outstanding shares of Class A common stock at the time of the
Special Meeting. Concurrent with the completion of the business
combinations, the Company changed its name from Rice Acquisition
Corp. (“RAC”) to Archaea Energy Inc., and our Class A common stock
began trading on the NYSE under the symbol “LFG” on September 16,
2021.
CAPITAL STRUCTURE AND LIQUIDITY
On the Closing Date, we received $236.9 million in gross cash
proceeds from RAC.
On the Closing Date, we issued approximately 29.2 million shares
of Class A common stock and 250,000 warrants (each warrant
exercisable for one share of Class A common stock at a price of
$11.50) for gross consideration of $300 million under a PIPE
financing. We also entered into a $470 million Revolving Credit and
Term Loan Agreement with a syndicate of lenders, providing for a
senior secured revolving credit facility with an initial commitment
of $250 million and a senior secured term loan credit facility with
an initial commitment of $220 million. As of September 30, 2021,
there were outstanding borrowings of $220 million under the term
loan credit facility, and letters of credit totaling $14.7 million
issued and no outstanding borrowings under the revolving credit
facility.
On the Closing Date, we repaid certain Archaea Energy LLC and
all Aria debt, including (i) a syndicated senior secured term loan
and revolving credit facility, (ii) a line of credit with Comerica
Bank, (iii) promissory notes with certain lenders, including
related parties to the Company, (iv) loans related to the Boyd
County credit agreement with Comerica Bank, (v) a promissory note
payable to Noble Environmental, Inc. in connection with Noble’s
guaranty of the Boyd County debt, and (vi) an equipment financing
loan.
On the Closing Date, cash of $377.1 million was paid to Aria
holders, and Aria holders received 23.0 million Opco Class A units
and 23.0 million shares of Class B common stock7. Archaea Energy
LLC holders received 33.4 million newly issued Opco Class A units
and 33.4 million shares of newly issued Class B common stock7.
As of September 30, 2021, our consolidated liquidity position
was over $400 million, consisting of cash and cash equivalents of
$153.6 million, restricted cash of $17.2 million, and, after taking
into consideration our outstanding letters of credit, $235.3
million of available borrowing capacity under our revolving credit
facility.
In November 2021, we issued a notice to warrant holders to
redeem the approximately 11.9 million outstanding public warrants
and 250 thousand warrants that were issued in a private placement
simultaneously with the consummation of the business combinations.
Holders may exercise their warrants to purchase shares of our Class
A common stock on a cash or cashless basis through December 6,
2021. To minimize dilution to our existing stockholders as a result
of warrant exercises, we also entered into an agreement to use any
cash proceeds received from exercises of our warrants to repurchase
shares of Class A common stock from Aria Renewable Energy Systems
LLC, which received shares on the Closing Date related to its
ownership interest in Aria, at a price of $17.65 per share.
Additional details are available in the Form 8-K filed by the
Company with the SEC on November 4, 2021.
THIRD QUARTER 2021 CONFERENCE CALL AND WEBCAST
We will host a conference call to discuss our financial and
operating results for third quarter 2021 on Tuesday, November 16,
2021 at 11 a.m. Eastern time / 10 a.m. Central time. A listen-only
webcast of the call and an accompanying slide presentation may be
accessed through our website at www.archaeaenergy.com. After
completion of the webcast, a replay will be available for 12 months
on our website.
1. The Company’s results included
elsewhere in this release include only the results of Archaea
Energy LLC prior to the business combinations closing on September
15, 2021 and the results of the combined Company for the period
from September 15 to September 30, 2021, which includes the
operations of Archaea Energy LLC and Aria Energy LLC (“Aria”).
Company results prior to the business combination date do not
include Aria’s results. Aria’s financial information through
September 14, 2021 is also presented elsewhere in this release. The
Company has presented certain specified financial results on a
“combined basis” as it believes it provides more meaningful
information to investors. Financial information presented on a
“combined basis” is the sum of the historical financial results of
the Company for the full period shown and Aria for periods prior to
the business combinations closing date, but only includes the
impact of purchase accounting as of September 15, 2021. Please see
the “Notes Regarding Financial Statement Presentation” and
“Reconciliation of Non-GAAP Measures” sections of this release and
the Archaea Energy Inc. Form 10-Q for the quarter ended September
30, 2021 filed with the Securities and Exchange Commission for
additional details.
2. Electricity production for the nine
months ended September 30, 2021 includes production of 203,276 MWh
from LES Project Holdings, LLC (“LESPH”) assets, which were sold by
Aria on June 10, 2021.
3. Combined net income (loss) as shown
herein is before net income (loss) attributable to noncontrolling
interest. For information regarding net income (loss) attributable
to Class A common stock, please see the Condensed Consolidated
Statement of Operations included in this release.
4. Non-GAAP financial measure. See
“Reconciliation of Non-GAAP Measures” for further details.
5. A reconciliation of expected full year
2021 combined Adjusted EBITDA to net income (loss), the closest
U.S. GAAP financial measure, cannot be provided without
unreasonable efforts due to the inherent difficulty in quantifying
certain amounts, including changes in fair value of warrant
derivatives, due to a variety of factors including the
unpredictability of underlying price movements, which may be
significant.
6. Environmental Attributes refer to
federal, state, and local government incentives in the United
States, provided in the form of Renewable Identification Numbers,
Renewable Energy Credits, Lower Carbon Fuel Standard credits,
rebates, tax credits, and other incentives to end users,
distributors, system integrators and manufacturers of renewable
energy projects, that promote the use of renewable energy.
7. The Company has retained its “Up-C”
structure, whereby all of the equity interests in Aria and Archaea
Energy LLC (together with its subsidiaries, “Legacy Archaea”) are
indirectly held by LFG Acquisition Holdings LLC (“Opco”) and the
Company’s only assets are its equity interests in Opco. The Up-C
structure allows the Legacy Archaea holders, the Aria holders, and
Rice Acquisition Sponsor LLC to retain their equity ownership
through Opco, an entity that is classified as a partnership for
U.S. federal income tax purposes, in the form of Opco Class A
Units, and provides potential future tax benefits for the Company
when those holders of Class A Opco Units ultimately exchange their
Class A Opco Units and shares of the Company’s Class B Common Stock
for shares of Class A Common Stock in the Company. Opco is
considered a variable interest entity for accounting purposes, and
the Company, as the sole managing member of Opco, is considered the
primary beneficiary. As such, the Company consolidates Opco, and
the unitholders that hold economic interest directly at Opco are
presented as noncontrolling interests in the Company’s financial
statements.
ABOUT ARCHAEA
Archaea Energy Inc. is one of the largest RNG producers in the
U.S., with an industry-leading platform and expertise in
developing, constructing, and operating RNG facilities to capture
waste emissions and convert them into low carbon fuel. Archaea’s
innovative, technology-driven approach is backed by significant gas
processing expertise, enabling Archaea to deliver RNG projects that
are expected to have higher uptime and efficiency, faster project
timelines, and lower development costs. Archaea partners with
landfill and farm owners to help them transform potential sources
of emissions into RNG, transforming their facilities into renewable
energy centers. Archaea’s differentiated commercial strategy is
focused on long-term contracts that provide commercial partners a
reliable, non-intermittent, sustainable decarbonizing solution to
displace fossil fuels.
Additional information is available at
www.archaeaenergy.com.
USE OF NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial statements in accordance
with U.S. GAAP, this press release contains non-GAAP financial
measures. Adjusted EBITDA is a non-GAAP financial measure that we
use to facilitate comparisons of operating performance across
periods. Non-GAAP measures should be viewed as a supplement to and
not a substitute for our U.S. GAAP measures of performance and the
financial results calculated in accordance with U.S. GAAP and
reconciliations from these results should be carefully
evaluated.
Non-GAAP measures have limitations as an analytical tool and
should not be considered in isolation or in lieu of an analysis of
our results as reported under U.S. GAAP and should be evaluated
only on a supplementary basis.
FORWARD-LOOKING STATEMENTS
This press release contains certain statements that may include
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Statements that do not relate strictly to
historical or current facts are forward-looking and usually
identified by the use of words such as “anticipate,” “estimate,”
“could,” “would,” “should,” “will,” “may,” “forecast,”
“approximate,” “expect,” “project,” “intend,” “plan,” “believe” and
other similar words. Forward-looking statements may relate to
expectations for future financial performance, business strategies
or expectations for Archaea’s business. Specifically,
forward-looking statements may include statements concerning market
conditions and trends, earnings, performance, strategies, prospects
and other aspects of Archaea’s business. Forward looking statements
are based on current expectations, estimates, projections, targets,
opinions and/or beliefs of Archaea, and such statements involve
known and unknown risks, uncertainties and other factors.
The risks and uncertainties that could cause those actual
results to differ materially from those expressed or implied by
these forward looking statements include, but are not limited to:
(a) the ability to recognize the anticipated benefits of the
business combinations and any transactions contemplated thereby,
which may be affected by, among other things, competition, the
ability of Archaea to grow and manage growth profitably and retain
its management and key employees; (b) the possibility that Archaea
may be adversely affected by other economic, business and/or
competitive factors; (c) Archaea’s ability to develop and operate
new projects; (d) the reduction or elimination of government
economic incentives to the renewable energy market; (e) delays in
acquisition, financing, construction and development of new
projects; (f) the length of development cycles for new projects,
including the design and construction processes for Archaea’s
projects; (g) Archaea’s ability to identify suitable locations for
new projects; (h) Archaea’s dependence on landfill operators; (i)
existing regulations and changes to regulations and policies that
affect Archaea’s operations; (j) decline in public acceptance and
support of renewable energy development and projects; (k) demand
for renewable energy not being sustained; (l) impacts of climate
change, changing weather patterns and conditions, and natural
disasters; (m) the ability to secure necessary governmental and
regulatory approvals; (n) the Company’s expansion into new business
lines; and (o) other risks and uncertainties indicated in the
Registration Statement on Form S-1 (File No. 333-260094),
originally filed by Archaea with the SEC on October 6, 2021, as
subsequently amended on October 18, 2021 and declared effective by
the SEC on October 21, 2021, including those under “Risk Factors”
therein, and other documents filed or to be filed with the SEC by
Archaea.
Accordingly, forward-looking statements should not be relied
upon as representing Archaea’s views as of any subsequent date.
Archaea does not undertake any obligation to update forward-looking
statements to reflect events or circumstances after the date they
were made, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities
laws.
(Financial Tables and Supplementary
Information Follow)
Notes Regarding Presentation of Financial
Information
Basis of Presentation
The Archaea Energy LLC merger with RAC was accounted for as a
reverse recapitalization with Archaea Energy LLC and its
subsidiaries (“Legacy Archaea”) deemed the accounting acquirer, and
therefore, there was no step-up to fair value of any RAC assets or
liabilities and no goodwill or other intangible assets were
recorded. Legacy Archaea is considered the accounting acquirer of
the business combinations because the members of Legacy Archaea
immediately prior to the closing of the business combination
(“Legacy Archaea Holders”) have the largest portion of the voting
power of the Company and Legacy Archaea’s senior management
comprise the majority of the executive management of the Company.
Additionally, Legacy Archaea Holders appointed the majority of
board members exclusive of the independent board members.
The Aria merger with RAC was accounted for as a reverse
capitalization with Legacy Archaea deemed the accounting acquirer,
and therefore, there was no step-up to fair value of any RAC assets
or liabilities and no goodwill or other intangible assets were
recorded. The Aria merger was accounted for using the acquisition
method of accounting with Aria deemed to be the acquiree for
accounting purposes. The Company also determined that Aria is the
Company's predecessor and therefore has included the historical
financial statements of Aria as predecessor. The Company recorded
the fair value of the net assets acquired and liabilities assumed
from Aria as of September 15, 2021, the Closing Date, and goodwill
was recorded. Certain data to complete the purchase price
allocation is not yet available, including but not limited to final
appraisals of certain assets acquired and liabilities assumed. The
Company will finalize the purchase price allocation during the
12-month period following the Closing Date, during which time the
estimated fair value of the assets and liabilities may be revised
as appropriate.
Principles of Consolidation
The consolidated condensed financial statements of Archaea
include the assets, liabilities and results of operations of the
Company and its consolidated subsidiaries beginning on September
15, 2021. The consolidated assets, liabilities and results of
operations prior to the September 15, 2021 reverse recapitalization
are those of Legacy Archaea, the accounting acquirer.
Predecessor Financial Statements
Since Aria is the predecessor to the Company, its consolidated
statements of operations for the periods from July 1 to September
14, 2021, January 1 to September 14, 2021, and the three months and
nine months ended September 30, 2020, and the consolidated balance
sheet as of December 31, 2020 have been included for comparative
purposes.
ARCHAEA ENERGY INC.
Consolidated Condensed Statements of Operations(1)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended
September 30,
(in thousands, except shares and per share
data)
2021
2020
2021
2020
Revenues and Other Income
Energy revenue
$
10,916
$
—
$
13,975
$
—
Other revenue
865
1,904
4,588
4,496
Amortization of intangibles and
below-market contracts
205
—
205
—
Total Revenue and Other Income
$
11,986
$
1,904
$
18,768
$
4,496
Equity Investment Income, Net
879
—
879
—
Cost of Operations
Cost of energy
9,478
52
12,625
87
Cost of other revenues
615
1,202
2,976
2,490
Depreciation, amortization and
accretion
3,142
34
4,077
101
Total Cost of Operations
13,235
1,288
19,678
2,678
General and administrative expenses
9,053
1,205
20,097
3,652
Operating Income (Loss)
$
(9,423)
$
(589)
$
(20,128)
$
(1,834)
Other Income (Expense)
Interest expense, net
(1,586)
—
(1,606)
—
Gain (loss) on derivative contracts
(10,413)
—
(10,413)
—
Other income (expense)
81
(13)
377
15
Total Other Income (Expense)
(11,918)
(13)
(11,642)
15
Income (Loss) Before Income
Taxes
(21,341)
(602)
(31,770)
(1,819)
Income tax benefit
—
—
—
—
Net Income (Loss)
(21,341)
(602)
(31,770)
(1,819)
Net income (loss) attributable to
nonredeemable noncontrolling interests
(335)
258
(589)
386
Net income (loss) attributable to Legacy
Archaea
(5,733)
(860)
(15,908)
(2,205)
Net income (loss) attributable to
redeemable noncontrolling interests
(8,262)
—
(8,262)
—
Net Income (Loss) Attributable to Class
A Common Stock
$
(7,011)
$
—
$
(7,011)
$
—
Net income (loss) per Class A common
share:
Net income (loss) – basic (2)
$
(0.13)
$
—
$
(0.13)
$
—
Net income (loss) – diluted (2)
$
(0.13)
$
—
$
(0.13)
$
—
Weighted average shares of Class A Common
Stock outstanding:
Basic (2)
52,847,195
—
52,847,195
—
Diluted (2)
52,847,195
—
52,847,195
—
(1) Please refer to the Archaea Energy
Inc. Quarterly Report on Form 10-Q for the quarter ended September
30, 2021, filed with the Securities and Exchange Commission, for
the accompanying notes to the financial statements. The
accompanying notes are an integral part of these consolidated
financial statements.
(2) Class A Common Stock is outstanding
beginning September 15, 2021 due to the reverse recapitalization
transaction as described in Note 4 to the financial statements
included in the Archaea Energy Inc. Quarterly Report on Form 10-Q
for the quarter ended September 30, 2021, filed with the Securities
and Exchange Commission.
ARCHAEA ENERGY INC.
Consolidated Condensed Balance Sheets(1) (Unaudited)
(in thousands, except shares and per share
data)
September 30,
2021
December 31,
2020
ASSETS
Current Assets
Cash and cash equivalents
$
153,644
$
1,496
Restricted cash
17,156
—
Accounts receivable, net
30,244
1,780
Inventory
9,285
—
Prepaid expenses and other
current assets
29,311
4,730
Total Current Assets
$
239,640
$
8,006
Property, plant and equipment,
net
281,610
52,368
Intangible assets, net
592,123
8,693
Goodwill
27,011
2,754
Equity method investments
237,265
—
Other non-current assets
9,596
2,460
Total Assets
$
1,387,245
$
74,281
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable - trade
$
3,630
$
14,845
Current portion of long-term
debt, net
8,546
1,302
Accrued and other current
liabilities
21,587
8,270
Total Current
Liabilities
33,763
24,417
Long-term debt, net
329,254
14,773
Derivative liabilities
160,630
—
Below-market contracts
108,392
—
Asset retirement
obligations
3,904
306
Other long-term liabilities
8,009
3,294
Total Liabilities
$
643,952
$
42,790
Commitments and Contingencies
Redeemable Noncontrolling
Interests
1,179,616
—
Equity
Members' Equity
—
34,930
Members' Accumulated Deficit
—
(4,156
)
Stockholders' Equity
Preferred stock, $0.0001 par
value; 10,000,000 authorized; none issued and outstanding
—
—
Class A common stock, $0.0001
par value; 900,000,000 shares authorized; 52,847,195 shares and no
shares issued and outstanding as of September 30, 2021 and December
31, 2020, respectively
5
—
Class B common stock, $0.0001
par value; 190,000,000 shares authorized; 62,281,735 shares and no
shares issued and outstanding as of September 30, 2021 and December
31, 2020, respectively
6
—
Additional paid in capital
—
—
Accumulated deficit
(436,461
)
—
Total Stockholders'
Equity
(436,450
)
—
Nonredeemable noncontrolling
interests
127
717
Total Equity
(436,323
)
31,491
Total Liabilities, Redeemable
Noncontrolling Interests and Equity
$
1,387,245
$
74,281
(1) Please refer to the Archaea Energy
Inc. Quarterly Report on Form 10-Q for the quarter ended September
30, 2021, filed with the Securities and Exchange Commission for the
accompanying notes to the financial statements. The accompanying
notes are an integral part of these consolidated financial
statements.
ARIA ENERGY LLC AND
SUBSIDIARIES (Predecessor) Consolidated Condensed Statement of
Operations(1) (Unaudited)
(in thousands)
July 1 to September 14,
2021
July 1 to September 30,
2020
January 1 to September 14,
2021
January 1 to September 30,
2020
Revenue and Other Income
Energy revenue
$
35,765
$
33,376
$
120,250
$
96,025
Construction revenue
8
2,705
32
9,950
Amortization of intangibles and
below-market contracts
(785
)
(917
)
(2,693
)
(2,752
)
Total Revenue and Other
Income
34,988
35,164
117,589
103,223
Equity Investment Income, Net
6,451
2,558
19,777
6,005
Cost of Operations
Cost of energy
15,175
17,006
56,291
53,020
Cost of other revenues
8
2,576
30
9,476
Depreciation, amortization and
accretion
4,634
7,801
15,948
23,381
Total Cost of Operations
19,817
27,383
72,269
85,877
Gain on disposal of assets
—
—
(1,347
)
—
General and administrative expenses
20,678
5,303
33,737
14,934
Operating Income
(Loss)
944
5,036
32,707
8,417
Other Income (Expense)
Interest expense, net
(2,053
)
(4,765
)
(10,729
)
(14,429
)
Gain (loss) on derivative
contracts
574
261
1,129
(61
)
Gain on extinguishment of
debt
—
—
61,411
—
Other income
1
—
2
2
Total Other Income
(Expenses)
(1,478
)
(4,504
)
51,813
(14,488
)
Net Income (Loss)
(534
)
532
84,520
(6,071
)
Net income attributable to noncontrolling
interest
—
22
289
61
Net Income (Loss) Attributable to
Controlling Interest
$
(534
)
$
510
$
84,231
$
(6,132
)
(1) Please refer to the Archaea Energy
Inc. Quarterly Report on Form 10-Q for the quarter ended September
30, 2021, filed with the Securities and Exchange Commission for the
accompanying notes to the financial statements. The accompanying
notes are an integral part of these consolidated financial
statements.
ARIA ENERGY LLC AND
SUBSIDIARIES (Predecessor) Consolidated Condensed Balance
Sheets(1)
(in thousands)
December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents
$
14,257
Accounts receivable
20,727
Inventory
7,770
Prepaid expenses and other
current assets
3,768
Assets held for sale
70,034
Total Current Assets
116,556
Property and equipment, net
70,759
Intangible assets, net
126,922
Equity method investments
77,993
Other noncurrent assets
689
Total Assets
$
392,919
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable - trade
$
1,570
Current portion of long-term
debt, net
102,831
Accrued and other current
liabilities
25,736
Liabilities held for sale
12,534
Total Current
Liabilities
142,671
Long-term debt, net
136,593
Derivative liabilities
1,268
Below-market contracts
5,769
Asset retirement
obligations
3,408
Other long-term liabilities
5,150
Total Liabilities
294,859
Commitments and Contingencies
Equity
Controlling interest
Class A units
299,327
Class B units
19,327
Class C units
1
Retained loss
(218,957
)
Accumulated other comprehensive
loss
(1,349
)
Total Controlling
Interest
98,349
Noncontrolling interest
(289
)
Total Equity
98,060
Total Liabilities and Equity
$
392,919
(1) Please refer to the Archaea Energy
Inc. Quarterly Report on Form 10-Q for the quarter ended September
30, 2021, filed with the Securities and Exchange Commission for the
accompanying notes to the financial statements. The accompanying
notes are an integral part of these consolidated financial
statements.
Reconciliation of Non-GAAP Measures
Combined Financial Measures
The following table calculates selected financial results
presented on a combined basis for the three months ended September
30, 2021:
Three Months Ended September
30, 2021
(in thousands)
Archaea Energy Inc.
Aria Energy LLC
(Predecessor)
Combined
Revenue
$
11,986
$
34,988
$
46,974
Equity Investment Income, Net
$
879
$
6,451
$
7,330
Net Income (Loss)
$
(21,341)
$
(534)
$
(21,875)
The following table calculates selected financial results
presented on a combined basis for the nine months ended September
30, 2021:
Nine Months Ended September
30, 2021
(in thousands)
Archaea Energy Inc.
Aria Energy LLC
(Predecessor)
Combined
Revenue
$
18,768
$
117,589
$
136,357
Equity Investment Income, Net
$
879
$
19,777
$
20,656
Net Income (Loss)
$
(31,770)
$
84,520
$
52,750
The Company’s results included elsewhere in this release include
only the results of Archaea Energy LLC prior to the business
combinations closing on September 15, 2021 and the results of the
combined Company for the period from September 15 to September 30,
2021, which includes the operations of Archaea Energy LLC and Aria.
Company results prior to the business combination date do not
include Aria’s results. Aria’s financial information through
September 14, 2021 is also presented elsewhere in this release. The
Company has presented certain specified financial results on a
“combined basis” as it believes it provides more meaningful
information to investors. Financial information presented on a
“combined basis” is the sum of the historical financial results of
the Company for the full period shown and Aria for periods prior to
the business combinations closing date, but only includes the
impact of purchase accounting as of September 15, 2021. Please see
the “Notes Regarding Financial Statement Presentation” section of
this release and the Company’s Form 10-Q for the quarter ended
September 30, 2021 filed with the Securities and Exchange
Commission for additional details.
Combined net income (loss) as shown above is before net income
(loss) attributable to noncontrolling interest. For information
regarding net income (loss) attributable to Class A common stock,
please see the Condensed Consolidated Statement of Operations
included in this release.
Adjusted EBITDA
The following table reconciles Adjusted EBITDA to net income
(loss) for the three months ended September 30, 2021:
Three Months Ended September
30, 2021
(in thousands)
Archaea Energy Inc.
Aria Energy LLC
(Predecessor)
Combined
Net Income (Loss)
$
(21,341
)
$
(534
)
$
(21,875
)
Adjustments:
Interest expense
$
1,586
$
2,053
$
3,639
Depreciation, amortization and
accretion
$
3,142
$
4,634
$
7,776
EBITDA
$
(16,613
)
$
6,153
$
(10,460
)
Amortization of intangibles and
below-market contracts
$
(205
)
$
785
$
580
Amortization of equity method
investments basis difference
$
428
$
—
$
428
Net (gains) losses from changes
in fair value of derivatives
$
10,413
$
(574
)
$
9,839
Share-based compensation
$
2,708
$
—
$
2,708
Gain on disposal of assets
$
—
$
—
$
—
Gain on extinguishment of
debt
$
—
$
—
$
—
Acquisition transaction
costs
$
2,748
$
16,449
$
19,197
Adjusted EBITDA
$
(521
)
$
22,813
$
22,291
Note: Totals may not sum due to
rounding.
The following table reconciles Adjusted EBITDA to net income
(loss) for the nine months ended September 30, 2021:
Nine Months Ended September
30, 2021
(in thousands)
Archaea Energy Inc.
Aria Energy LLC
(Predecessor)
Combined
Net Income (Loss)
$
(31,770
)
$
84,520
$
52,750
Adjustments:
Interest expense
$
1,606
$
10,729
$
12,335
Depreciation, amortization and
accretion
$
4,077
$
15,948
$
20,025
EBITDA
$
(26,088
)
$
111,197
$
85,109
Amortization of intangibles and
below-market contracts
$
(205
)
$
2,693
$
2,488
Amortization of equity method
investments basis difference
$
428
$
—
$
428
Net (gains) losses from changes
in fair value of derivatives
$
10,413
$
(1,129
)
$
9,284
Share-based compensation
$
2,886
$
—
$
2,886
Gain on disposal of assets
$
—
$
(1,347
)
$
(1,347
)
Gain on extinguishment of
debt
$
—
$
(61,411
)
$
(61,411
)
Acquisition transaction
costs
$
2,748
$
19,619
$
22,367
Adjusted EBITDA
$
(9,818
)
$
69,622
$
59,804
Note: Totals may not sum due to
rounding.
Adjusted EBITDA is commonly used as a supplemental financial
measure by our management and external users of our consolidated
financial statements to assess the financial performance of our
assets without regard to financing methods, capital structures, or
historical cost basis. Adjusted EBITDA is not intended to represent
cash flows from operations or net income (loss) as defined by U.S.
GAAP and is not necessarily comparable to similarly titled measures
reported by other companies.
We believe Adjusted EBITDA provides relevant and useful
information to management, investors, and other users of our
financial information in evaluating the effectiveness of our
operating performance in a manner that is consistent with
management’s evaluation of financial and operating performance.
Adjusted EBITDA is calculated by taking net income (loss),
before taxes, interest expense, and depreciation, amortization and
accretion, and adjusting for the effects of certain non-cash items,
other non-operating income or expense items, and other items not
otherwise predictive or indicative of ongoing operating
performance, including gains and losses on disposal of assets,
impairment charges, debt forbearance costs, changes in the fair
value of derivatives, non-cash compensation expense, and
non-recurring costs related to our business combinations. We
believe the exclusion of these items enables investors and other
users of our financial information to assess our sequential and
year-over-year performance and operating trends on a more
comparable basis and is consistent with management’s own evaluation
of performance.
A reconciliation of expected full year 2021 combined Adjusted
EBITDA to net income (loss), the closest U.S. GAAP financial
measure, cannot be provided without unreasonable efforts due to the
inherent difficulty in quantifying certain amounts, including
changes in fair value of warrant derivatives, due to a variety of
factors including the unpredictability of underlying price
movements, which may be significant.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211115006321/en/
ARCHAEA Investors and Media
Megan Light mlight@archaea.energy 346-439-7589
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