Clean Energy Fuels Corp.

Good afternoon, ladies and gentlemen, and welcome to the Clean Energy Fuels for Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, February 27, 2024. I would now like to turn the conference over to Robert Vreeland, Chief Financial Officer. Please go ahead.

Thank you, Operator. Earlier this afternoon, Clean Energy released financial results for the fourth quarter and year ending December 31, 2023. 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 risks, uncertainties, and assumptions that are difficult to predict. 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-Q and also Form 10-K. I will note here for 2023's 10-K, which is due by Thursday, the 29th, we are waiting for the finalization of our internal review and external audit procedures for a SOC 1 report. from one of our outside service providers. We just received the SOC 1 report from the service provider this morning. Once we finish these procedures around the SOC 1 report, we will file our 10-K. Now back to the forward-looking statements that we'll hear on this conference call. 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. I know the people on this call are aware that the overall renewable energy sector has experienced market volatility in recent months. This is not new to us. We have been in business for over 26 years and a public company for over 17. Despite these external factors, the fundamentals of our business remain strong, and so does our conviction in our strategy. I think 2024 and 2025 will be very exciting years at Clean Energy and set the stage for many good years thereafter. As we start out a new year, I would like to take a moment to reiterate the pillars of our business and the strategy we've put in place to grow our business. The first pillar is our belief that RNG is the most effective solution to decarbonize heavy-duty transportation in North America. R&G is affordable, available today, and has the greatest positive impact of any form of renewable energy. The pipeline infrastructure to move the R&G from its source to customers is robust and in place. Natural gas engine technology is currently available for regional trucks, and a larger 15-liter engine for Class A trucks that operate longer routes, the heavier loads, is being added as we speak. The 15-liter engine also happens to be the largest segment within the trucking industry. Our industry's fuel, infrastructure, and vehicles are available today and have been proven over multiple decades. The emissions benefits of RNG, both carbon and NOx, are clear and they're supported by science. And dairy RNG is the only commercially available fuel with a negative life cycle emissions factor. The second pillar, and the one that sets us apart from virtually any other company, is that Clean Energy has the leading network of R&G distribution stations in North America, which enable our customers to achieve their low-carbon goals by supplying R&G to their fleets. Many of our stations are strategically located on important trucking corridors with public fueling access for existing and future customers. And that number is growing with the opening of stations where Amazon operates as our anchor customer. Some of our stations are customer-owned, where we provide services and supply RNG. The third pillar of our business is how we work with our customers in many ways beyond just the sale of fuel. This includes education on the benefits of RNG and achieving emission goals, truck procurement, operational support, station construction and servicing, facility modification, and navigating the complex world of sustainability, reporting, public policy, and grant applications. Clean Energy is also the largest distributor of third-party R&G production to the transportation industry. We supply our customers with R&G from over 100 different production sources. We are the largest off-taker in the business. We could not be more pleased to extend our network and our service offerings to a vast group of fleets that will soon be able to adopt RNG vehicles thanks to Cummins' new X15N engine, which is a catalyst for our growth. The feedback from the fleets operating the test units of this engine has been very positive. PACCAR has recently opened the order book for trucks equipped with the X15N. and commercial deliveries are expected in the early part of the second half of the year. OEMs have said they will follow soon by offering the new engine in their models. The largest segment of the trucking market will soon have access to an RNG solution, and this could not come at a better time for our industry and customers. RNG as a transportation fuel is becoming more mainstream. During the last quarter, our customer base and volumes grew with fleets that operate in the ports of L.A. and Long Beach, like Lincoln Transportation Services, Ecology Auto Parts, and Cross Border Express, with transit agencies such as Nice Bus in Long Island and multiple refuse operators. And hot off the press, we recently signed an agreement with Cemex, one of the largest concrete companies in the world, to fuel 40 of their cement trucks. The RNG industry recently notched its significant victory with New Mexico, passing legislation to establish a low-carbon fuel program. We believe this demonstrates the acceptance of these programs as a good way to address emissions issues that continue to expand. There are positive signs that other important states in the Midwest and Northeast could soon follow. Three years ago, we established our fourth pillar, with the formation of joint ventures with BP and Total Energies to invest directly in RNG production facilities at dairies in the U.S. We did this because we believe in RNG as a long-term solution, and our industry needs more RNG to meet growing demand. We saw an opportunity to invest our capital in attractive returns in these projects, while augmenting the third-party RNG supply I just mentioned. And we are doing just that. Today, Clean Energy has invested $238 million of our capital into these joint ventures and another $35 million of our own funds in future R&G dairy projects. Six projects have completed construction and are operating or are in final commissioning. Two projects are in or near construction, and we continue to evaluate others in our pipelines. Bringing these projects online is no small feat. It requires complex engineering, construction, operations, and regulatory approvals. The world needs this ultra-low carbon fuel, and our industry needs to produce it more efficiently. We have the right platform and the right partners to take on this challenge, and we are on the path to achieving improvements in project costs and timelines. Bob will go into more detail, but when these projects come online, they have a ramp up period of about nine to 12 months where the project is producing gas, but not yet monetizing federal and state environmental credits. With five projects coming online at the beginning of this year, this ramp up period will have a negative drag on our financials in 2024 until we can monetize the RNG produced with environmental credits. used to virtually store our RNG until the regulatory pathways are certified to maximize revenue from environmental credits. This will create a lag in revenue recognition while operating costs are being recognized at the time we produce the renewable gas. This is an accounting and regulatory feature of our industry that we want investors to understand and should not detract from our successful completion of dairy RNG projects. all producing ultra-low emissions fuel that we supply to our customers. This is also more amplified as we are starting from zero in the upstream production of RNG. As we bring more projects online, the glaring financial startup impact should be muted by projects operating at full financial capabilities. And the fifth pillar of our business strategy is the fact that we have a strong balance sheet to fund our continued growth in both stations and RNG projects. In December, we announced a $400 million term loan facility with Stone Peak. $300 million was funded to close, and an additional $100 million can be drawn by us for the two-year commitment period. We have secured the capital needed for our next phase of growth, and we are pleased to be partnered with a well-respected infrastructure investment firm like Stone Peak. Our existing station footprint is well-positioned to support additional volumes from new customers. We also expect opportunities to expand our network with new stations strategically positioned for our customers, like our stations we have built to benefit Amazon. Over the last three to four months, we've opened two stations for heavy-duty trucks in Texas, two in California, a second one in Ohio, and others around the country, bringing the total in 2023 to 18 purpose-built stations. Amazon continues also utilize over 75 other clean energy stations on any given day. Let me just close by repeating we are very optimistic that over the next 12 to 24 months, you will see much of the strategy that we laid out several years ago fall into place, with the investments beginning to show the fruits of our labor. At a time when more uncertainties continue to surround other alternatives, the customer interest of R&G is increasing, especially with the introduction of the Cummins X15N. In 2024, we will remain focused on the adoption of RNG fuel along with growing RNG production. Thank you for your time today, and now I'll hand the call over to Bob.