Clean Energy Fuels Corp. Q3 FY2024 earnings call

• Strong financial performance: Adjusted EBITDA improved to $21.3 million in Q3 2024 vs. $14.2 million in Q3 2023, revenue increased to $105 million vs. $96 million in Q3 2023, and ended the quarter with over $243 million in cash and investments. • Station openings: Opened a state-of-the-art station in Bordentown, New Jersey with Amazon, expanding the fueling network by almost 15% for heavy-duty truck fleets. • Demo truck program: Launched X15N demo truck program, with J.B. Hunt and Ruan testing the trucks and providing positive feedback on fuel mileage, power, and torque. • Canada expansion: Celebrated opening of stations in Calgary and Grand Prairie, Alberta with Tourmaline, establishing a natural gas fueling corridor for heavy-duty trucks in Western Canada, with plans to build more stations. • Transit market: Secured contracts for private fueling stations with Harris County MTA and Riverside Transit Agency, and completed a hydrogen station for Foothill Transit. • RNG production: Progress on projects at dairy farms, with 6 operating projects, 2 under construction, and new partnerships with Maas Energy identifying locations for additional RNG projects.

For the third quarter of 2024, Clean Energy Fuels reported revenue of $105 million, with adjusted EBITDA of $21.3 million. They sold 60 million gallons of RNG during the quarter. The fueling segment contributed significantly to the revenue, with higher station fueling gallons, RIN credits, alternative fuel tax credit revenues, and service revenues driving growth. The RNG production segment had 6 operating projects, 2 under construction, and other projects in advanced development through the partnership with Maas Energy.

• 2024 outlook remains unchanged regarding net GAAP earnings and adjusted EBITDA. • Uncertainty around the alternative fuel tax credit (AFTC) expiring at the end of 2024, which could impact 2025 earnings. • Anticipate X15N volumes at stations in the second half of 2025. • RNG production from equity investment joint ventures expected to be in the range of 4 million to 6 million gallons for 2025, with economics still being evaluated due to uncertainty around the 45Z production tax credit.

• Regulatory uncertainties: Uncertainty around the California Air Resources Board's (CARB) LCFS program vote, AFTC expiration, and guidance on the 45Z production tax credit. • Political impacts: Uncertainty from the new administration and Congress regarding support for emissions reductions and related policies, which could affect the market for RNG and related credits.

Q: What was the upstream JV production run rate in the quarter versus the 2025 guide?

A: The upstream JV production run rate in the quarter was about 87,000 Ms, which is about 2.8 million gallons annually, with the 2025 guide ranging from 4 million to 6 million gallons as projects ramp up.

Q: With the election outcome, any thoughts on California's LCFS program vote?

A: Anticipate the LCFS program to sort itself out, with an increase in the compliance curve, avoided methane qualifying, and the program largely in effect for several more years, supportive to credit prices and working off oversupply.

Q: When could guidance on the 45Z production tax credit come and how does the political outcome impact it?

A: Uncertainty remains, but the current administration is expected to promulgate draft rules soon, with Congress potentially trimming some elements of the IRA but still supporting elements like the 45Z with bipartisan support.

Q: Explain the difference in Houston Metro's first private station vs. previous work with them.

A: Houston Metro was a holdout in transitioning to natural gas, but they recently awarded a contract for a large private fueling station, which is a significant new business opportunity for Clean Energy.

Q: Have you pulled down all the $300 million financing from last year and will additional capital be needed?

A: $100 million of the $300 million financing is still available, and there is no immediate need for additional capital for current growth plans.

Q: Elaborate on the Idaho project's operating costs during construction.

A: The Idaho project's operating costs during construction are unique due to handling manure, which is built into the overall project returns, and will continue until RNG production begins in the fourth quarter of 2025.

Q: Can you quantify the increased share of RINs and if the trend continues?

A: The share of RINs has improved, with the net-net take on RINs trending past 5%, but market dynamics and competition mean the trend won't go to the moon overnight.

Q: Compare profitability in Canada vs. the U.S. and station build-out plans.

A: Economics in Canada are strong with cheap natural gas, and the plan is to build a natural gas fueling corridor in Western Canada with 7 stations initially, expanding to 20 stations, using the same business model as in the U.S.