Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clean Energy Fuels Corp (CLNE, Financial) reported $18.9 million in adjusted EBITDA for Q2 2024, up from $12 million in Q2 2023.
- Revenue increased to $98 million in Q2 2024 from $90 million in Q2 2023.
- The company ended the quarter with nearly $250 million in cash and investments.
- Expansion of the Boron facility increased output capacity by 50%, driven by demand from the commercial maritime industry.
- Clean Energy Fuels Corp (CLNE) has constructed an extensive fueling infrastructure with over 600 fueling stations across North America.
Negative Points
- Clean Energy Fuels Corp (CLNE) reported a GAAP net loss of $16.3 million for Q2 2024, the same as Q2 2023.
- RNG volumes sold decreased slightly to 57.1 million gallons in Q2 2024 from 58.6 million gallons in Q2 2023.
- Lower trending LCFS credit prices impacted revenues, despite a recovery in LCFS revenues.
- The company anticipates challenges in reaching its 2024 RNG volume target of 245 million gallons.
- Natural gas price reductions led to a 5% decline in revenue from Q1 to Q2 2024.
Q & A Highlights
Q: You mentioned in the release 7% volume growth at your stations. Can you break down this growth by key end markets, specifically trucking and refuse? Also, could you provide updated thoughts on the timing of the X15N engine launch?
A: Most of the volume growth comes from trucking. Regarding the Cummins X15N engine, early introductory engines have been put out to some of the nation's largest fleets, accumulating a million miles with positive feedback. Pre-production units have been delivered, and the order book opened in March or April. Cummins still believes they will sell 3,000 units, with significant volumes expected in late 2024 and more in 2025.
Q: Could you give us more color on non-Amazon fueling at Amazon stations? How is that ramping up?
A: Large fleets like WM, Ecology, and DHL are beginning to fuel at the public side of Amazon locations. These stations are strategically located in warehouse and logistics areas, making them accessible to various fleets. We expect more fleets to use these stations as the Cummins X15N engine gains traction.
Q: Can you provide an update on the six RNG projects that are currently producing? Are they on track to contribute to EBITDA in late 2024 and fully in 2025?
A: Yes, the projects are on track. We expect them to be close to full capacity by the end of this year, contributing significantly to EBITDA in 2025. Other projects under construction are scheduled to come online in late 2025.
Q: Any updates on the 45Z tax credit guidance from the Treasury and the CARB step-down decision?
A: We expect CARB to release their 15-day notice in the next two to three weeks, with a hearing scheduled for November 8. For the 45Z tax credit, we anticipate initial guidance from the Treasury by the end of the summer, likely in September.
Q: Could you talk about your EBITDA cadence for the second half of 2024? Is it fair to say there's a chance to hit the higher end of the guidance?
A: Historically, we've seen a ramp-up in EBITDA in the second half of the year, and we expect a similar trend this year. While there's always a possibility of hitting the higher end of the guidance, it largely depends on volume trends.
Q: Can you explain the rising unit margins in your downstream refueling segment? Did lower California natural gas prices help?
A: Lower gas costs did help, as we continue to enjoy a healthy spread between NYMEX and WTI crude. The mix improvement refers to more vehicle fueling at stations, particularly in trucking, which is a high-margin area for us.
Q: With the Supreme Court reversing the Chevron decision, do you expect any impact on the RFS program and RIN prices?
A: We believe the RFS is on solid footing and not immediately impacted by the Chevron decision. The RFS has bipartisan support and has been well-established over the years.
Q: How do you feel about capital funding into 2025 and 2026, especially with the $9 million ITC recovery from your first upstream JV project?
A: The $9 million is for the total project. Other projects are expected to generate similar ITC amounts. We have the capital committed for the projects we've discussed, and we feel confident about our funding into 2025 and 2026.
Q: What are your thoughts on the supply and demand for RNG, especially with the potential increase in demand from 15-liter trucks?
A: Currently, supply and demand are in good balance. We anticipate that most RNG will continue to go into transportation, where it is most economically rewarded. We are confident in the future of RNG, given its low carbon footprint and various applications.
Q: Can you explain the rationale behind selling 5 million gallons of RNG outside your station network?
A: Our primary focus is always our stations for the highest economics. Occasionally, we take opportunities to sell RNG outside our network to meet specific customer needs. This is more of a short-term strategy to optimize supply and demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
