Clean Energy Fuels Corp.

Greetings and welcome to Clean Energy Fuels' fourth quarter 2020 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 this conference is being recorded. I will now turn the conference over to Robert Vreeland, Chief Financial Officer. Thank you. You may begin.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the quarter and year ending December 31st, 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 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. It 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 8K 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. On last quarter's call, I spoke in some detail about clean energy's future and the expansion of our renewables business. I'm pleased to say that since that time, the pace has continued to accelerate on both the upstream production side as well as the downstream demand side for renewable natural gas. This should keep us in a great position for maintaining our lead in providing R&G to the transportation industry. And I'll speak more about that in a moment. In the fourth quarter of last year, we delivered 96 million gallons of fuel, which was slightly down from 103 million gallons delivered in the same quarter a year ago. Due to COVID, we experienced softness in airport fleets and transit, but we were pleased that other sectors performed very well, like refuse and heavy-duty trucking. Volume for the full year of 2020 was 382 million gallons, down 4.6% from 2019, which was 400 million gallons. This was quite an accomplishment considering the significant challenges in the transportation industry brought on by COVID. I want to congratulate the Clean Energy team for making this happen and overcoming the obstacles of operating in the tough environment that we've been in. We kept all of our stations open and all of our customers served. Refuse and trucking actually grew their volumes in 2020, which is encouraging as the country sees the light at the end of the COVID tunnel. Our revenues for the fourth quarter of 2020 came in at $75 million compared to $119 million from a year ago. The big difference was a $47 million retroactive revenue gain in Q4 2019, which represented two years retroactive gain from the alternative fuel tax credit. This was only $5 million in Q4 2020. It was good to see Congress pass the extension of the Alternative Fuel Tax Credit at the end of 2020. Importantly, this was the first extension in several that was coming for a year and was not for retroactive gallons, which we hope is a good sign for bipartisan support for the AFTC for the future. The company's balance sheet continued to improve, ending the quarter and the year with $138 million in cash and investments. Our adjusted EBITDA was $45.1 million for the year, which is what we guided to last May when COVID kicked in. As I mentioned at the top of my remarks, since first introducing our renewable natural gas fuel in 2013, Clean Energy has gone through a significant transformation from selling exclusively fossil fuel natural gas to the transportation industry. Sales of R&G have steadily risen, and it has become a larger and larger percentage of our overall fuel mix, now over 70%. But we believe that with the pressure on reducing greenhouse gases and carbon by everyone from investors to consumers, along with the increasing understanding of carbon-negative R&G, we are only at the beginning of what will be a game-changing revolution in fueling. R&G has gone from being a niche product to one where the demand is outpacing the current supply. Fortunately, we have had a continued focus on ensuring a consistent supply and have been able to offer more and more R&G to more and more customers. We now have an expansive portfolio of over 30 supply sources, which allows us the flexibility to move our R&G supply depending on customers' needs. That is why the announcements we recently made are so critical. Two of the world's largest energy companies, both of which have made significant pledges to decarbonize their portfolios, have agreed to individually partner with Clean Energy to develop more carbon negative RNG. The two JVs with Total and BP that we announced at the end of last year and recently finalized represent a potential half a billion dollars of equity that can be substantially leveraged To develop R&G projects to produce negative carbon fuel that will eventually flow through our infrastructure and onto our customers. We would like to believe that Total and BP, which often compete with each other, signed on with Clean Energy because of our good looks. But in reality, we are the perfect partner. No other company has more experience in monetizing and trading federal and state environmental credits. And more importantly, with the largest fueling infrastructure, we provide an RNG pathway that is the most valuable, which is at the nozzle tip. We have already signed up dairies for the new RNG production facilities, which can be funded by these JVs. Increasingly, dairy farmers around the country are realizing the environmental and economic benefits of adding RNG production to their facilities. An RNG digester at an agricultural site, like a dairy, solves their own methane emission issue, as well as contributes to tackling the climate change overall. It also helps with our other environmental issues, like groundwater, and it gives the dairy farmers an additional significant revenue stream. RNG as a fuel is not a niche, and the potential for additional supply in the U.S. is significant, well into the billions of gallons a year that have yet to be developed. The RNG supply from these dairies that comes online over the next several years will help to ensure a steady supply of RNG that goes directly into the tanks of our growing number of natural gas fleet customers. But, and this is a very important point to understand, the RNG that we generate can be the green feedstock for other alternative fuels, including hydrogen and electric batteries. When using RNG as the feedstock for hydrogen and electricity fueling, We will still generate environmental credits. The RNG feedstock is critical because alternatives like hydrogen and electric are only as green as the fuel that makes them possible. As our customers explore different alternatives when they become available, we can move with them using a feedstock that is rated many times cleaner than most alternatives. In fact, we have experience building and operating hydrogen stations and we can retrofit our current natural gas stations to add hydrogen. The production facilities that we will be constructing and operating with financing from the JVs with Total and BP will be critical for our future RNG fuel supply. We've also been active in securing contracts for our current demand. Just since last December, we have signed new contracts to enhance our portfolio representing over 30 million additional gallons of RNG. No other company is better positioned to continue to meet the current demand of fleets for this ultra-clean fuel. And on the demand side, we continue to sign new agreements highlighted by LA Metro, the second largest transit agency in the country. It announced a deal to purchase approximately 47 million gallons of RNG from us over the next five years. Not only is this an impressive amount of fuel, it is a great example of the ease in which a large fleet can switch to RNG and realize a big reduction in the amount of carbon produced by their 2,400 buses immediately. LA Metro had already transitioned from diesel buses to natural gas buses. So the switch from fossil fuel CNG to RNG was seamless and literally happened overnight. As Metro's Chief Sustainability Officer said at the signing of our agreement, quote, our use of RNG provides the most cost-effective, equitable, clean air strategy, end quote. I couldn't have said it better. LA Metro joins other transit authorities in making the switch to RNG, including New York City, the country's largest agency. We also recently extended our RNG fueling agreement with Santa Monica's Big Blue Bus and signed a contract with New Jersey Transit to fuel 190 additional buses with an expected 1.9 million gallons of CNG a year. The ready mixed concrete sector continues to expand with RNG. Our longtime customer, Cal Portland, added 28 new trucks to their fleet of 125 and extended their fueling agreement with us. On the refuse side, we signed new fuel agreements with Garden City Sanitation, Atlas Refuel, Mission Trails, Waste Systems, and others, representing over 3.7 million new gallons or extension of current agreements. We expanded our heavy-duty trucking business by signing new deals with Biagi Brothers, Pack Anchor, STS Logistics, Green Fleet Systems, and Kenan Advantage, which is expanding their fleet of natural gas trucks. These new deals are a result of our Zero Now and Chevron Adopt-a-Port financing programs. As you know, the Chevron partnership specifically targets fleets operating in the ports of L.A. and Long Beach, and has been so well received that the first round of financing for new trucks has been completed. We are now in advanced talks with Chevron to significantly increase the funding and R&G available for the program. So despite the challenges presented by COVID, the transportation industry continues to evolve and seek to do its part in addressing climate issues. There's a lot of pressure on it to do so because 29% of the carbon dioxide We've gone from selling 13 million gallons of RNG in 2013 to over 153 million last year. Our network of stations and customer relationships allow us to deliver substantially more RNG to fleet operators than any other company in the market. In fact, we calculate that we have access to more fueling stations and vehicle fleets Thank you, Andrew.