Clean Energy Fuels Corp.

Greetings and welcome to Clean Energy Fuels' second quarter 2020 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, Chief Financial Officer. Thank you. You may begin.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 2020. 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 the 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, and thank you for joining us. As the world continues to adjust to a pandemic that has stubbornly held on longer than we had hoped, clean energy's business of fueling thousands of buses, trucks, and other fleet vehicles every day has remained healthy. Also, we have not slowed down our pursuit of new customers, adding additional gallons and expanding the use of our redeem renewable natural gas during these uncertain times, which I'll expand on in a moment. But not unexpectedly, our volumes of approximately 90 million gallons in the second quarter of this year were 10% lower compared to the same quarter last year due to the overall economic slowdown caused by the pandemic. We are seeing lower volumes in primarily two sectors, public transit and especially airports, which have been significantly impacted by the lack of air traffic. The slowdown impacted our revenues in the quarter, which were approximately $60 million, down 17% from 2019. But we continue to retain a healthy balance sheet with an adjusted EBITDA of $9.2 million for the quarter, an improvement over last year's second quarter, leaving us with $96 million in cash and investments and only $37 million of debt. For those of you who have been following us for a while, you know that we substantially lowered our overhead the last few years. And we now have a disciplined, low-cost expense structure. Because of that, we are able to maintain healthy, positive, adjusted EBITDA, even with the drop in the transit and airport fleet businesses. And at some point, people will start flying again, and public transit will resume to more normal levels, whether it be in a specific region of the country or nationwide. Until they do, and while our nation recovers, we have a strong underlying recurring business and a healthy balance sheet. We have not taken, nor do we need to, any government assistance due to the coronavirus. Frankly, I'm optimistic about our business. ESG investing has continued to be a priority, if not increased, and perhaps the pandemic is forcing companies to question why they continue certain business practices such as always running diesel trucks when other better alternatives are available. And during this time, we all recognize and enjoy the clean air and absence of soot and smog. Not to mention, we know there has been a reduction in greenhouse gases. Regardless of the reason, we are seeing a renewed interest in natural gas fueling and adding new customers and growing with existing ones despite our sales force operating via Zoom and phone calls rather than in-person meetings. In fact, we have signed contracts representing 6 million gallons over the last quarter. And we are currently in the process of responding to a record number of RFPs for new or expanded natural gas fleets from municipalities, transit authorities, and companies. We believe this is a sign of a pent-up demand and a stronger natural gas fuel market in the months to come. In addition, customers have ordered new station builds, adding to our overall construction pipelines. In the solid waste sector, cities from the East Coast to West, including Lexington, Denver, Scottsdale, Sacramento, Muncie, Redlands, California, and Philadelphia have signed contracts over the last several months to begin or extend fueling for refuse trucks representing approximately 2.2 million gallons a year. Waste Connections signed a contract to add fueling outside Fort Worth for additional trucks, and Noble Environmental are adding 20 new trucks in Pennsylvania to fuel an existing station. Overall, our refuse business has actually grown during the pandemic. We continue to see new interest by companies and municipalities to switch their diesel fuel products. refuse trucks to ones equipped with natural gas engines that have proven reliable and dependable over many years while operating on a fuel that burns over 90% cleaner and can reduce carbon by over 250%. And speaking of reducing harmful greenhouse gases, I am excited to let you know that we will be formally announcing in a few days that the New York City Metropolitan Transit Agency has signed a multi-year contract to operate their 800 buses with clean energy's redeemed renewable natural gas. This is a significant move by the country's largest transit system, which will mean the conversion of over 8.3 million gallons from regular CNG to renewable CNG, which will eliminate over 25,000 metric tons of harmful carbon emissions from going in the atmosphere every year. New York MTA should be highly commended for this decision, which comes even before the state of New York adopts a low-carbon fuel standard program. As part of the ambitious package on the climate, LCFS is currently working its way through the legislature and, if made into law, could accelerate the adoption of RNG in New York. While other companies have begun to offer RNG as a transportation fuel, almost all of it has been delivered in California. Clean Energy stands out with an extended geographical footprint of supplying 45 million annual gallons of RNG to customers in almost 30 states outside of California. We picked up another new transit agency with Soltrans in Solano County, California, which is purchasing 16 new transit buses to run on Redeem. In addition, we renewed significant contracts during the second quarter with Tucson, Arizona, Santa Monica, Norwalk, Southland, and Omnitrans, all in California, and ABM, the large shuttle service supporting LAX. We continue to see movement on the heavy-duty trucking front as well, despite a significant drop in overall truck sales due to the pandemic. Thanks to our Zero Now financing program, we have recently added the trucking FERS firms Conestoga Logistics, Vernon Transportation, Linden Volk Transportation, and others to our heavy-duty truck roster of customers. Also during last quarter, UPS increased its R&G purchase from us for its heavy-duty truck fleet by 3 million gallons per year, bringing the current total to 23 million annual gallons. Clean Energy has facilitated over 300 of 580 applications for grants for new natural gas heavy-duty trucks in California over the last six months, representing approximately $35 million of grants for trucks that should be hitting the road throughout the remainder of the year. To put that into perspective, we submitted a total of 110 for the entire year of 2019. Most of these will be fueling at our stations in and around the ports of L.A. and Long Beach. Recently, trucks equipped with the new Cummins Near Zero 6.7-liter natural gas engine will be made available for these grants. We have seen a lot of interest in this engine and it has been certified to be as clean as the Cummins 12-liter and will be hitting the market later this year. These midsize trucks, such as box trucks, will be able to easily fuel at our existing station network. In Canada, Clean Energy was recently awarded a $6.5 million grant from the Alberta government to underwrite the cost of 100 heavy-duty trucks and several fueling stations to support some of Canada's largest trucking companies, including Wescan and Mullin. It's part of a $30 million investment in natural gas vehicle technology in the region. The Alberta government is targeting to reduce NOx emissions by 20% in the province and sees the conversion of heavy-duty truck market to natural gas is a good start to that goal. As I mentioned, our Zero Now program, which allows firms to get into natural gas trucks at the cost of diesel trucks while saving on redeemed renewable fuel, continues to show results. We were excited to add a dimension to the program with a new partner, Chevron. As you might have read in their announcement, Chevron has begun to make investments into the production of RNG derived from methane from dairies, which has some of the highest levels of atmosphere-harming emissions. But when captured and burned as a transportation fuel, it erases those emissions, turning something that could have been very damaging to the planet into a transportation fuel for heavy-duty trucks that normally run on dirty diesel. The fuel is calculated as carbon negative and produces 200% to 250% less greenhouse gas than diesel. In this new partnership called Adopt-A-Port, Chevron is providing funding for truck operators to subsidize the cost of buying new R&G-powered trucks while at the same time providing a commercial market for their R&G. Clean Energy is already making this carbon-negative fuel and truck purchase incentive available to hundreds of trucking firms that operate in the ports of L.A. and Long Beach. This is now the third major global energy company that Clean Energy has partnered with to expand the use of R&G. Our joint marketing agreement with BP to source and supply more R&G continues to be strong, and the company's largest shareholder, Total, was instrumental in the creation of Zero Now program by providing $100 million in the line of credit for truck financing. It is now hard to ignore that more and more of the world's leading energy experts see R&G as a realistic, ultra-clean transportation fuel, especially when it comes to moving large vehicles. And it is clean energy that they are looking to to lead the way in the U.S. As I mentioned, despite all the obstacles presented by the pandemic, clean energy has remained steadfast at maintaining great customer service and expanding our business. I want to thank the hundreds of clean energy employees who have kept our stations operational, our books in order, and all the other functions they continue to perform without a hiccup. And with that, I will hand the call over to Bob.