Clean Energy Fuels Corp.

Greetings and welcome to Clean Energy Fuels' fourth quarter 2022 earnings conference call. At this time, all participants are on 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 Freeland. Thank you. You may begin.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the quarter and year-ending December 31, 2022. 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 identifying 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 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 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. We continue to make excellent progress on the execution of our RNG business strategy over the last quarter. With our investments in renewable natural gas facilities and new stations, we expanded our leadership position. Clean Energy remains the largest supplier of RNG used as a transportation fuel in North America. In the important California market, more than half the RNG used to fuel natural gas vehicles is from Clean Energy. In 2022, our California RNG portfolio had a weighted average carbon intensity of minus 51, which demonstrates the success of our RNG strategy to develop and secure the lowest carbon RNG available in the market. We expect the carbon intensity of our product to continue to decline as our dairy investments begin producing gas this year. We funded our joint ventures for the projects underway while strengthening our balance sheet, leaving us well positioned for the future. The fourth quarter of last year, we sold over 54 million gallons of RNG, which was an increase of 21% compared to the same quarter in 2021. The expansion of our relationship with Amazon is having a positive impact on this growth. And we're also seeing increased demand for the clean fuel from other heavy duty trucking firms, as well as transit, refuse and other sectors. Our revenue for the quarter came in at $114 million, which was 22 million more than Q4 2021. We generated $13 million of adjusted EBITDA for the quarter. Bob will get into more details about our financial performance momentarily, but let me just say we acknowledge that our 2022 adjusted EBITDA number ended up lower than we expected it to be at the beginning of the year. We experienced a few sustained headwinds in the latter part of the year that impacted our results. The biggest contributor to this was the lower prices of the environmental credits of California's Low Carbon Fuel Standard Program, or LCFS, the federal RINS program. The LCFS credit prices declined almost 60% over the course of the year, and it was just too much to overcome in the fourth quarter. Also, the rollout of the new stations that we are building for Amazon around the country has been slower than we projected. Competition for prime real estate near distribution centers, entitlements, and permitting approvals put several stations behind our initial timeline for completion. We believe we've turned the corner on several of the issues that have hindered us and slowed our station construction. Also, we believe we are at the lows of the environmental credit and regulatory situation, and credit prices should improve over the medium term. And as I previously mentioned, we continue to be pleased with the way we are performing on our plans that we laid out to you over a year ago to expand our business, particularly having more control over the supply of low-carbon RNG flowing to our fueling infrastructure, with 13 dairy projects underway. We remain confident that the investments we're making today will generate attractive returns in the future. But for 2023, we believe we will continue to see pressure on the environmental credit prices. And another step to position us for future growth, we secured a $150 million sustainability-linked loan with Riverstone Credit Partners last quarter. This should keep our balance sheet healthy as we continue to build fueling stations and additional RNG facilities with our partners, Total Energies and BP. At the end of 2022, we had over $263 million in cash and investments. This is after contributing nearly $178 million into our RNG production joint ventures since their inception and expanding our fueling infrastructure by funding 23 additional station projects during 2022. Speaking of new RNG production, it doesn't seem that long ago I participated in a groundbreaking at Del Rio Dairy in the Texas Panhandle, which is Clean Energy's first biogas digester to be built from the ground up. I'm pleased to announce today that as a few weeks ago, the methane captured from the manure produced by Del Rio's 8,000 dairy cows is now being injected as renewable natural gas into the pipeline. That capacity will flow at a rate of 140,000 mm BTUs, ultimately translating into 1.1 million gallons of ultra-low carbon fuel at clean energy stations annually. We've also made a good progress at other dairies with construction underway on projects in Iowa, Minnesota, Idaho, and three in South Dakota. Engineering has begun at another five sites. Overall, we are pleased with the progress of our new RNG supply facilities. Remember that when these dairy digesters begin to produce RNG over the next two years, This fuel will receive some of the lowest carbon intensity scores available for our customers and generate the greatest number of credits. No other alternative fueling solution comes close to the negative CI scores that R&G produced at agricultural facilities receive. And the beauty is that R&G drops right into the existing pipelines and then into our existing fueling infrastructure. On the RNG demand side, as I previously mentioned, we opened new stations as part of our announced agreement with Amazon. In addition to the 80-odd existing clean energy stations that had been supporting the Amazon fleet of heavy duty trucks, new stations in four states have been added to our fueling network. All these stations are purpose-built for Amazon, but also have public access and are strategically located in and around distribution centers allowing for fleets from a variety of companies to fuel with RNG. One station that has been only open for a few months has already become our largest by monthly volume. There are another handful of stations that will be opening in the next few months with a robust schedule through the rest of this year. We are particularly excited that these stations will be open and accessible for truck fleets when the new Cummins 15-liter natural gas engine hits the market next year. As the commercial introduction of heavy duty electric trucks and the required charging infrastructure continues to get pushed out, this next generation of Cummins natural gas engines, combined with our already installed RNG fueling infrastructure, will accelerate fleet's ability to reach their emissions reduction goals a lot quicker. Before I close, I wanted to mention that we added One of the largest transit agencies in the country is our customer in the fourth quarter, San Diego MTS, which signed a contract for 86 million gallons of RNG fuel for its fleet of 764 buses. We also renewed an RNG contract with the largest transit agency in the country, LA Metro, during Q4, and we'll be supplying them 20 million gallons of RNG annually for their bus fleet. Our relationship with refuse customers continues to expand during the quarter with new contracts with Athens Services, Burtec Waste, and additional stations for Republic Services. We remain as optimistic as ever about the future of renewable natural gas, both as a direct transportation fuel, as well as for an ultra clean feedstock for other alternatives. If quickly be one of the largest developers and owners of dairy RNG production, and are growing our leadership position in the distribution of RNG. Thank you for your time today, and now I'll hand the call over to Bob.