Clean Energy Fuels Corp.

Greetings and welcome to the Clean Energy Fuels fourth 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Robert Vreeland. Please go ahead, sir.

Thank you, Operator. Earlier this afternoon, Clean Energy released financial results for the quarter and year ending December 31st, 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 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 factors 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. 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. Before I begin to report on our last quarter in the year, I would like to speak briefly about what is going on in the markets, and especially the global energy market. While all of energy is being hit hard, I'd like to remind everyone how clean energy is specifically positioned going forward. Diesel is a refined petroleum product, which may not necessarily reflect as dramatic a reduction in prices at the pump as we're seeing in the price of oil. Price of natural gas is low, which is good for our customers, and much of our growth is coming from Redeem, which is a renewable, sustainable transportation product. And I will discuss in a minute in more detail, we continue to be very bullish about Redeem's continued growth. and probably most importantly, the company has a healthy balance sheet with plenty of cash on hand to cover our debt payments. And with that, let me jump into the fourth quarter and the year-end results. We closed 2019 very positively with a 10% increase in our volumes over 2018, reporting over 400 million gallons of natural gas fuels sold for the year, the first time passing that mark in the company's history. For the fourth quarter, we sold 103 million gallons, close to a 5% increase over the same quarter last year. It was the second consecutive quarter that we exceeded the 100 million gallons mark. Growing our fuel volumes will continue to be our priority as the recently extended Federal Alternative Fuel Tax Credit, or AFTC, will be applied to fuel gallons through at least the remainder of this year. We reported $344 million in revenue for the year and over $119 million for the quarter that ended in December. Our overall financial position and balance sheet continues to strengthen. Even before the AFTC in the last quarter, our adjusted EBITDA has consistently improved quarter after quarter, but was two-row charged from the AFTC to $57 million for the fourth quarter. Our balance sheet strengthened to $106 million in cash. and investments which does not include the additional $47 million in AFTC cash that we will be receiving soon. I hope you had a chance to read the press release that we distributed at the end of January announcing the record amount of redeemed renewable natural gas that we delivered in 2019, 143 million gallons, a 30% increase over the previous year. We continue to sign additional contracts for the fuel through the end of 2019 and into this year, adding trucking companies, transit agencies, airport shuttles, and other fleets around the country to the roster that have opted to easily switch to the cleanest method of transportation. Redeem grew to 36% of our overall fuel mix in 2019, and as we announced earlier last year, We have an ambitious goal to offer carbon-free redeem at all of our fueling stations by 2025. Our aggressive move in converting more of our business to a renewable ultra-clean fuel coincides very nicely with the acceleration of companies looking to operate in a more sustainable way. It is no longer only politicians and NGOs which are demanding the shift. The investment community has dramatically stepped up their pressure on publicly traded companies to take a look at their entire supply chain to see how they can operate in a manner that reduces their contributions to the issues surrounding climate change that the world is grappling with. The letter written by BlackRock CEO Larry Fink about his firm's decision to score companies with an ESG rating was only the start. Since then, Goldman Sachs, State Street, JP Morgan, and other investment firms have made similar announcements. So the pressure is on. One of the easiest ways to dramatically reduce the carbon footprint for any company that is involved in moving goods, whether it is a logistics company, a consumer products company, or retailer, is to convert their trucking to RNG. With the backdrop of this new focus by the investment community on ESG, we are reaching out to those who manage companies' brands and shippers of goods to help them realize the environmental benefits of our Zero Now offering which enables their own fleets and for hire carriers to get into new ultra clean natural gas heavy duty easily and affordably. In fact, we have recently had logistics companies approach us about transitioning to RNG, citing the fact that BlackRock is one of their investors. Currently, there really is no cleaner alternative to move large vehicles than with renewable natural gas, even electric. The benefits of RNG are numerable. It's readily available. It's affordable compared to diesel. There's currently a nationwide fueling infrastructure work in flow, and it can be scored at a minimum of 70% and up to 300% less carbon producing than diesel, depending on the source. As you know, more interested parties, including the major energy companies, are investing in R&G, highlighted by our marketing agreement with BP. Chevron is currently running TV ads featuring their recently signed agreement to finance a number of R&G production facilities at California Dairies. There are also substantial investments in the construction of new production facilities around the country. The good news is that all this additional R&G will need a fueling outlet, and there is no company better positioned to provide that than Clean Energy. With over 550 stations around North America that we either own, operate, or supply, we will be able to provide customers of every shape and size with this ultra-clean fuel. Our Zero Now initiative continues to progress with new contracts recently signed by TCI Transport for 50 CNG heavy-duty trucks, Crown Express Transport for 25, Pacifica Trucking for 11, and Lincoln Transportation Services for 29 trucks. all to fuel with Redeem and our current network of stations. Carriers which do business with the United States Postal Service continue to expand in natural gas heavy duty trucks. The Postal Service has directed that in order to get their business, carriers need to increasingly use cleaner trucks and the number one option for them is natural gas. Thus far, we have added over 250 heavy duty trucks to our fueling network by postal service carriers, including AGR, Matheson, and EVO, representing an anticipated 3 million gallons a year. We recently added a new feature to the Zero Noun offering called Touchpoint. It's a partnership with the respected Natural Gas Vehicle Institute, a leader in technical training on natural gas vehicles and fueling technologies. Touchpoint will give fleet operators the assurance of an easy transition to natural gas. Another expansion of the Zero Now program that we're particularly excited about is into the box truck market. With the recent EPA and CARB certification of the ultra clean 6.7 liter natural gas engine built by Cummins, fleets that utilize a slightly smaller truck are now eligible to bring down the price to be equivalent to a diesel or gasoline truck while saving on fuel and receiving the benefit of operating on clean natural gas. An average of 155,000 new box trucks are sold every year, and now have the option of operating with the latest clean technology and cleanest fuel. The engines won't be delivered into the OEMs until later this year, but it's a natural extension of ZeroNow, and we plan to aggressively market our offering at that time. And importantly, these trucks can use our existing public network stations. Our core business of refuse fleet services and Transit continue to add new customers and renew contracts with existing ones. Recently in the refuse sector, we signed contracts to extend our fueling with CR&R, Recology, Waste Connections, Advanced Disposal and the cities of San Antonio and Long Beach representing approximately 3 million gallons of fuel a year and expanded current relationships with Burtek Waste and Republic Services for additional stations and ultimately new gallons. We signed deals with new customers, Homewood Disposal in Illinois, Atlas Disposal in the cities of Philadelphia, Spokane, Chesapeake, Virginia, and Tucson. We signed transit deals with Stark Area Regional in Canton, Ohio, Long Beach, and Garden Grove, California, and Grand Canyon National Park, as well as Gillick Buses, a manufacturer of buses for their own manufacturing plant. On the fleet services front, New contracts were recently signed with LAZ Parking, Amado Industries, Fox Rent-A-Car, Western Eagle Shuttle in the San Francisco Bay Area, and the Port of Seattle. We continue to expand our presence in the Canadian market with recently signed contracts with BC Transit and TransLink Coast Mountain Bus. And the City of London, Ontario is transitioning a fleet of 37 refuse trucks to CNG that will fuel on our existing station there. I'm optimistic about the future. While there are many new entrants and speculation of where the future is going, we see confirmation every day from our existing customers that they are pleased with the way their natural gas fleets are performing, the savings they receive on the fuel, and the environmental benefits that come with it. While on the other hand, there are reports of delays and missed deadlines on large electric vehicles and serious performance issues Like what was reported a few weeks ago in Indianapolis where the local transit agency sent back their electric buses and canceled an order for additional buses. The transition to natural gas is picking up speed around the world in Europe and in countries like Egypt, India, and Mexico. The U.S. doesn't have the same government mandates, but the pressure is on and our domestic transportation market is the largest with the trucks driving the most miles and using the most fuel. The U.S. is also blessed with an abundant amount of inexpensive natural gas and a growing supply of renewable natural gas. And now, with a renewed focus on ESG, the future is bright. As I described earlier, our business continues to grow while we strengthen our balance sheet. We are positioned very well to go after the latest market to transition to natural gas, heavy-duty trucking, providing those fleets the same opportunity as other markets like refuse and transit, to easily make great strides in their own sustainability goals while pleasing policymakers, investors, and customers. As I hand the call over to Bob, I'd like to just reiterate that we're having to adjust to figure out the world's events, including trying to acclimate to the downward pressure on energy prices. But I'd also like to repeat that the company has never been in a better financial position. Just know that we have the flexibility in our planned CapEx spending, which has been primarily earmarked in 2020 for growth. And that can always be adjusted as this continues to develop. And with that, I'll give you Bob.