Clean Energy Fuels Corp.

Greetings and welcome to Clean Energy Fuels' second quarter 2019 earnings conference call. At this time, all participants are in a 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, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Bob Vreeland, Chief Financial Officer. Thank you. You may begin. Thank you, Operator Earl.

Earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 2019. 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 this 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 factors section of Clean Energy's Form 10-Q 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 and should not be considered as a substitute for or superior to GAAP results. The directly comparable GAAP information, reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA and a reconciliation between these non-GAAP and GAAP figures is provided in the company's press release which has been furnished to the SEC on Form 8-K today. With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair.

Thank you, Bob. Good afternoon, everyone, and thank you for joining us. The second quarter of this year demonstrated that our continued focus on increasing our fuel volume proved to be fruitful with an 11% increase over the same quarter in 2018. We delivered just shy of 100 million gallons in the second quarter, which equates to 1.1 million gallons of natural gas fuel being delivered to our customers across the country every day of the quarter. To put the growth and acceptance of natural gas fueling in perspective, we delivered 700,000 gallons of fuel in our first full year of business and almost entirely in one state. Our financial performance continued to improve through the second quarter as well with 72.3 million in revenue, which is slightly up over a year ago. But what I would point out is that our operating results continue to improve as we add volumes on lower operating interest costs, which in the second quarter resulted in positive operating cash flow. What is propelling our fuel volume growth is that more and more customers are realizing the incredible benefits of renewable natural gas. You've heard me report multiple times that our Redeem branded RNG is an easy way for fleets to capture tremendous environmental benefits, both long-term carbon reduction and short-term pollution, at our existing natural gas fueling infrastructure while remaining highly competitive with fleets operating on diesel. One of the most significant advancements in the acceptance of RNG is the announcement that UPS made in the second quarter that they would be purchasing 170 million gallons of Radime from us through making it the largest R&G vehicle fuel purchase ever. The significance of this move by UPS, one of the largest logistics companies in the world and a company that has been at the forefront in aggressively finding ways to operate in a more environmentally sustainable way cannot be overstated. By expanding their use of the world's cleanest fuel to 18 existing UPS natural gas stations in 12 different states around the country, UPS should realize a reduction of 1,074,000 metric tons of greenhouse gases over the life of the agreement. This is the equivalent to planting 17 million trees or removing 228,000 cars off the road. It is important to note that all of this additional RNG volume is in states outside of California, where UPS has already used 28 million gallons to operate their California fleets since switching to RNG in 2014. These significant environmental savings by UPS, including major reductions in greenhouse gases, are being achieved today, not years in the future, like other alternatives such as electric are promising. With this broad expansion of the use of R&G, UPS is demonstrating that a company can easily switch to a fuel to operate thousands of heavy-duty trucks around the country, while staying highly competitive in ensuring quality and timely service for their customers. Most recent UPS deal is a great example of Redeem being used in a heavy-duty truck application, but all our transportation segments are embracing the fuel. During the last quarter, we also signed a significant agreement with Santa Monica's Big Blue Bus to continue to supply the transit agency's 200 buses with Redeem in one of the most environmentally conscious cities in the country. The deal represents over 2.3 million gallons of Redeem a year. We recently expanded the availability of Redeem to the New York City area by opening the city's first R&G publicly accessible station in the South Bronx. Redeem is now being used by a variety of vehicles including heavy duty trucks, beverage delivery trucks, and service vehicles. Los Angeles County Metropolitan Transportation Authority is recommitting to its use of Redeem by replacing older CNG buses with 100 new CNG buses and upgrading another 125 with the new Cummins near-zero engines. These new buses will be in operation for up to 12 years, demonstrating that the transit agency likes their experience with RNG and the environmental benefits it brings. LA Metro has also announced that they will increase their usage of RNG for their CNG buses from 50% to 100% by next year. ABM Aviation, one of the country's largest aviation services companies, expanded their fleet of natural gas vehicles to help move passengers around LAX while the airport undergoes a massive remodel. Clean Energy is expected to provide ABM with 180,000 gallons of redeem for these new vehicles. Other transit agencies and solid waste companies continue to expand their use of redeem or sign up for its signed up for it for the first time during the second quarter, allowing Redeem to get close to the 50% mark of Clean Energy's overall vehicle transportation fuel mix. This puts us on track to achieve our goal of providing 100% of our vehicle fleet customers with Redeem, which will translate into a tremendous amount of reduction in greenhouse gases, all at a competitive price to diesel and no disruption in operations. I will also note that this impressive growth in our RNG product was done at a time when the prices of RINs, the environmental credits generated under the Federal Renewable Fuel Standard, by dispensing our RNG product into vehicles was very low, over 70% lower than a year ago. We believe that RIN pricing will begin to strengthen later this year and into next year as the EPA sets the upcoming Renewable Volume Obligations, or RVO. and if so, the upside should be substantial. A segment that is expected to fuel the growth of our overall volume and redeem in particular is the heavy duty truck market. As I reported last quarter, our new Zero Now financing program has begun to show results. Orders for heavy duty trucks began earlier this year and continue at a nice pace. We are in discussions with dozens of the country's largest trucking companies about how they can take advantage of this offer to expand their fleets with the new trucks equipped with the latest generation of the Cummins 12-liter engine, which reduces NOx by over 90%. I'm also pleased to announce that some of the companies have begun to take delivery of the first 100 trucks equipped with the new engine and will fuel at clean energy stations with Redeem. Many of these firms took part in a pilot program run at the Port of Los Angeles and Long Beach to test an early version of the new Cummins 12-liter near-zero engine. I'm pleased to say that the year-long test program was a success, demonstrated by the fact that the companies that participated had the confidence in the performance of the engines to order more trucks. Another bit of information from the ports that I would like to pass along is that Clean Energy recently completed a station within the Port of Los Angeles To fuel terminal tractors equipped with the new Cummins engine. This is part of a program sponsored by the Port of LA and the California Energy Commission in their ongoing effort to clean up the dirtiest air in the country. A grant was given for the purchase of 20 new natural gas terminal trucks and for the fueling station. And by the way, a grant of the same amount was given to a Chinese manufacturer of large electric vehicles for trucks and a charging station. And it's worth noting that that with the same amount of money, only three EV trucks will eventually be delivered once the charging station is operational versus 20 natural gas trucks that have begun to fuel at our station. This is a great anecdote and helps to explain why there was a headline in a trucking trade publication earlier this week that said, quote, natural gas truck sales surge even as electric trucks get the hype, end quote. With driver shortages, tariffs, and other obstacles facing trucks and logistics firms, there is only one alternative they can choose that won't give them added costs and additional headache as they look for ways to meet stricter emission standards, and that is natural gas. All in all, the second quarter was very productive, and the momentum continues in our business across the board as we improve our financial position. We are keeping our SG&A expense and capital levels Spending at levels that will allow us to exploit our volume growth with higher margins. Our interest expense is down 60% from a year ago, and our cash position is strong. And with that, I will turn the call over to Bob for more details.