Clean Energy Fuels Corp. Q1 FY2025 earnings call

• Strong first quarter results with $104M revenue, though without the Alternative Fuel Tax Credit compared to 2024.
• RNG sales volumes lower due to seasonal issues with third-party producers, but demand from refuse, transit, and trucking fleets remained stable.
• Tariffs create uncertainty for heavy-duty trucking customers, but RNG's merits as a low-carbon fuel with lower cost per mile remain compelling.
• Completed new RNG stations for customers like Burrtec and expanded relationships with USA Hauling.
• Upstream dairy RNG projects: 6 operating projects, 2 in advanced construction, with 3 more expected in 2026.
• Resumed share repurchase program in late March, believing shares are undervalued.

In the first quarter, Clean Energy Fuels sold 51 million gallons of renewable natural gas (RNG), generating $104 million in revenue and $17 million of adjusted EBITDA. The RNG segment was the primary contributor, with sales volumes lower than the first quarter of 2024 due to reduced supply from third-party RNG producers, but demand from fueling customers remained steady.

• Maintained full year financial outlook and CapEx guidance provided on the last call.
• Confident of closing near the $246 million target for 2025, with financials likely to be in close range of the target.
• Non-cash items like accelerated depreciation and goodwill write-off affected GAAP earnings in Q1 2025, but positive cash flows support remaining assets.

• Tariffs creating uncertainty for heavy-duty trucking customers' business planning.
• CARB policy uncertainties affecting low carbon fuel credit pricing and compliance.
• Oil price fluctuations impacting the spread between oil and natural gas, which affects RNG revenue.
• Regulatory challenges with RFS programs and potential uncertainties in 45Z production tax credit finalization.

Q: Could you talk about what would take you to the lower end and then what could take you to the upside of hitting the 2025 guide?

A: Lower end could be due to tariff impact on trucking purchases; upside could come from clarity on tariffs, 45Z credit resolution, and supportive legislation like the RNG Incentive Act.

Q: How do we think about pricing for the remainder of the year?

A: Pricing should remain steady assuming no radical change in natural gas commodity, with a nice spread between oil and natural gas supporting revenue.

Q: Thoughts on the incremental cost of X15N trucks and trend going forward?

A: Initial incremental price was too high, but working with Cummins and others to reduce it, with competition from Freightliner helping lower prices towards a more feasible range.

Q: Update on RNG facilities timeline and CapEx plans?

A: RNG facilities have progress with some in production, others in advanced construction; CapEx on RNG side is cautious, with focus on completing current projects, and station CapEx possibly lighter due to permitting delays.

Q: Any update on partnerships with Total, BP, Chevron?

A: Robust relationships with BP (co-marketing agreement), ongoing work with Total and Chevron, with renewed interest from Chevron in their California RNG program.