Clean Energy Fuels Corp.

Greetings. Welcome to Clean Energy Fuels' fourth quarter 2018 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I'll now turn the conference over to Robert Vreeland. Mr. Vreeland, you may begin.

Thank you, Operator. Earlier this afternoon, Clean Energy released financial results for the quarter and year ending December 31st, 2018. If you did not receive the release, it is available on the investor relations section of the company's website at www.cleanenergyfuels.com, where the call is also being webcast. There will be a replay available on the website for 30 days. Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risk, uncertainties, and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects, as well as words such as believe, intend, expect, plan, should, anticipate, and similar variations identify forward-looking statements. but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the risk factor section of Clean Energy's Form 10-K filed today. These forward-looking statements speak only as the date of this release. The company undertakes no obligation to publicly update any forward looking statements or supply new information regarding the circumstances after the date of this release. The company's non-GAAP EPS and adjusted EBITDA will be reviewed on this call and exclude certain expenses that the company's management does not believe are indicative of the company's core business operating results. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP Thank you very much.

Thank you, Bob. Good afternoon, everyone, and thank you for joining us. I'm pleased to report that with the close of 2018, results of multiple strategic operational and financial initiatives that we put in place have begun to pay off with positive results. We believe this momentum will continue through 2019, and I will explain why. In the fourth quarter of 2018, we delivered 98.7 million gallons, a 14% increase over the 86.4 million gallons in the same quarter in 2017, and we believe this trend will continue into 2019. For the entire year, we delivered 365 million gallons, a 4% increase over 2017. Our revenues were $96 million in the fourth quarter versus $89 million in the fourth quarter of 2017. Our fuel volume revenue in the fourth quarter increased 21% to $78 million versus $65 million in 2017. Again, we see this as very positive for our core business exiting 2018. Where we saw a decline compared to last year, although not out of the ordinary, was in the station construction sales business, which tend to go in cycles on a yearly basis. We did complete 49 station projects in 2018, and we're still actively building and selling station projects for our customers as they continue to invest in natural gas. But admittedly, our focus continues to be on fuel volume growth at our existing infrastructure first and foremost. The initiatives that are helping drive much of these solid returns are expanding our leadership position in the rapidly growing renewable natural gas market, Barclay Corbus, Robert Vreeland But more impressively, it can have a tremendous effect on long-term carbon emissions that are at the center of the discussion surrounding climate change. When calculating the entire energy supply chain, including the source of electrons put on the grid, operating a vehicle in Redeem is cleaner than even an electric battery in most cases. And as clean as Redeem is scored, it's also important to note that the cost to customers is significantly less than What they would pay for diesel, which is under attack for the harmful impact it has on air quality. Many refuse companies around the country see the benefits of turning the waste they deliver to landfills into the cleanest fuel available to power their fleets. No other company personifies this more than Republic Services. Republic has been a leader for years in converting their landfill sites into clean fuel production facilities. The company recently extended a fuel agreement for clean energy to provide redeem at Republic fueling stations across 21 states around the country for five additional years. This means thousands of Republic service trucks will operate on the fuel that is expected to reduce their CO2 emissions by 1.3 million metric tons over the period of the contract, which is equal to taking 283,000 cars off the road or planting 22 million trees. Many other refuse companies have recently signed redeemed fueling agreements with Clean Energy. Municipalities are also realizing the benefits of redeemed with recent fuel agreements by the cities of Long Beach, Montebello in Fresno, California, Spokane, Washington, and Riverside County, California. Trucking companies are exploring the need to switch to cleaner alternative fuels and are realizing the easiest and most cost-efficient way to achieve the changes Regulators are demanding is with Redeem. Overseas Freight, MDB Transportation, TTSI, and other trucking companies have recently deployed trucks equipped with the new Cummins Westport engine and being powered with Redeem in the ports of LA and Long Beach. The new zero emissions natural gas engine is getting great reviews by these first adopters. The new Redeem have allowed us to grow our volume from 20 million gallons in 2014, pardon me, the first full year we offered the renewable fuel, to 110 million gallons of redeemed in 2018. The increase in redeemed volume for 2017 to 2018 alone was 40%. As you probably know, other companies are getting into the R&G fueling business, which frankly we see as a positive endorsement for the potential of this market. When we first began selling Redeem, we were in the R&G production side of the business as well, owning operating production facilities. In March 2017, we sold those facilities to BP for $155 million, which could reach $180 million with some earnouts, in order to focus on our core strength of marketing and selling natural gas as a vehicle fuel. We then entered into a long-term supply grant with BP. Over the next year and a half, both companies realized the benefits of this arrangement, so much so that we broadened the relationship in the fourth quarter last year by increasing the RNG fuel supply amount, allowing clean energy to accelerate and expand the distribution of redeem. Redeem volumes increased 13.8 million gallons in the fourth quarter alone compared to 2017. We are now able to confidently market Redeem across the entire country to municipalities and private fleets, and it is becoming clear that owning a downstream fueling infrastructure will be a big advantage in this expanding market. We are so bullish on the acceptance and growth of Redeem that a few weeks ago we announced our own long-range sustainability goals that included a commitment to flow carbon-free Redeem to all our stations by 2025. This is especially interesting to note because Clean Energy will be fueling its customers with 100% renewable non-fossil energy 20 years ahead of California's goal of transitioning the state's power supply to 100% renewable energy. This will allow all of our customers to easily and inexpensively achieve aggressive low-carbon goals well before our EV counterparts. In the second half of last year, we announced a new and exciting approach to attract the heavy-duty trucking market to expand their fleets with natural gas. This could not have happened without the financial backing of our new partner and largest shareholder, Total. The biggest obstacle to trucking fleets making the switch has been the incremental cost of the natural gas engine and fuel system. This new program we call Zero Now. Barclay Corbus, Robert Vreeland in partnership with Union Gas along Canada's busiest trucking corridor in Ontario. Our sales team is currently in conversations with most of the largest trucking companies in the country about this offer. We have already signed several deals for new natural gas trucks and have many more in various stages of execution for truck and fuel purchase agreements. I know some have expected announced deals right out of the gate. But the discussions that we are having with these fleets are about deals that take delivery of real, road-tested, reliable, zero-emission trucks, which will fuel at our existing network of stations, providing a clean, renewable fuel. And all of that takes time, as each fleet has specific tractor specifications, as well as lanes to identify for their operations. This process realistically has eight steps, from initial contract to final delivery, and decisions representing hundreds of thousands of dollars, if not many millions. We are dealing with very smart operators who understand what is proven technology and what is hopeful. And almost without exception, virtually everyone has expressed strong interest in our Zero Now offering as it mitigates their company's risk to enter into a green solution that is reliable, tested, and has the range needed for heavy-duty trucks. It's very different than putting down a refundable positive of a few thousand dollars on a concept heavy-duty truck that may or may not come to market any time in the near future and having access to an appropriate fueling infrastructure that may or may not be built at a price that won't bust any budget. Another initiative that we began several years ago was to strengthen our balance sheet and turn the company towards sustained profitability. While we have consistently increased our revenues, We have dramatically streamlined our CapEx and SG&A, allowing us to reduce our convertible debt from a high of $545 million to $50 million, which is not due until July of 2020. At the same time, we ended the quarter with $95 million in cash and investments. Our operating results continue to trend positively, considering 2018 GAAP operating income of $4 million, compared to an average operating loss of $65 million per year on a gap basis over the last three years. Below the operating line, the other item I'd like to highlight is our significantly reduced interest costs. We're exiting 2018 at a $6 to $7 million run rate of annual net interest expense compared to net interest expense of $13 to $16 million for 2018 and 2017 and down from a high of $44 million in 2014. This is all contributing to our goal of exiting 2019 on the path to net income. Looking forward specifically to 2019, we've provided guidance on net loss and adjusted EBITDA, and I know Bob will cover that in more detail in his remarks in a moment. Let me close by saying, as proud as we are about our performance in 2018, we are excited about what we are already accomplishing this year and plan to continue that momentum. We heartily embrace the discussions which are taking place at all levels of government and in business about what needs to be done to tackle serious environmental issues. Natural gas has already played a significant role in putting us on the right track. But powering more vehicles with it, especially renewable natural gas, will only accelerate the progress. As I've said before, no other company is better positioned to take advantage of this shift than clean energy, and that is truer today than ever. We've worked hard to put all the right pieces into place for customers to easily make the switch to the cleanest fuel in the world. And with that, I'll hand it over to Bob.