Clean Energy Fuels Corp.

Good day and welcome to the Clean Energy Fuels second quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Bob Freeland, Chief Financial Officer. Please go ahead.

Bob Freeland, Chief Financial Officer. 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 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 filed today. These forward-looking statements speak only as the date of this release. The company undertakes an 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. I'm pleased to report that we reached the bid point of 2024 in a strong financial position driven by a very solid second quarter following an equally good first quarter. We reported 18.9 million in adjusted EBITDA for the quarter versus 12 million in Q2 of 2023. Sold 57 million gallons of RNG during the second quarter and revenue was $98 million versus 90 million for the same quarter in 2023. We ended the quarter with just shy of 250 million in cash and investments. I'm going to keep my remarks relatively short today, but I do want to highlight some of our accomplishments during the quarter which helped to explain the good results. The achievements in Q2 are a great microcosm of clean energy's overall business and what sets us apart from virtually any other company in the low-carbon energy sector. This begins with the completion of the expansion to our boron facility, the only natural gas liquefaction plant in California, increasing its output capacity by 50%. Much of the new demand for LNG has been driven by the commercial maritime industry overall and Peisha, Hawaii in particular. Peisha is now operating three large container ships on clean-burning LNG between the ports of Long Beach, Oakland, and Honolulu. Fuel volume from these ships has grown from a little over half a million gallons a month in August of 2022 to over 2.1 million gallons of LNG in May of this year. By doing so, Peisha's ships have been obtained a 90% reduction in NOx and a 25% reduction in carbon dioxide compared to ships operating on traditional fuels. After years of hard work by our team members, we have constructed an extensive fueling infrastructure across North America that is second to none in the business. We own or operate over 600 fueling stations throughout the US and Canada. While many of these are private, meaning they were built for a single fleet customer like a transit agency or a sanitation company. Over 200 of them are accessible to the growing number of fleets that are testing a natural gas truck or adding trucks to their existing fleets because the networks have grown geographically and the environmental benefits of R&G are becoming better known. We've strategically located many of these fast-fill stations along interstates in the highly trafficked locations where fleet vehicles operate, such as distribution centers. Increased recurring fueling at our existing stations is one of the driving factors of our revenue growth at healthier margins. As you know, we have built 19 of these publicly accessible stations with Amazon as our anchor customer. We are now beginning to see more trucks from other fleets fueling at them as well. We're in the process of executing a similar infrastructure strategy in Canada with our partner Tourmaline, the largest independent gas producer in Canada. Together, we are building a series of stations in western Canada that will be anchored by existing customers, but available for additional new fleets. Because of its range, power, and torque, the new Cummins X15N engine is seen as an excellent fit for the terrain and logistics of Canadian trucking. Second and third stations under our Tourmaline partnership are scheduled to open this fall. Here in the U.S., the fueling agreement that we signed in the second quarter with Cemex, one of the largest cement companies in the world, is a great example of a fleet that is expanding with natural gas trucks in Southern California and taking advantage of our growing network of RNG stations throughout the region. As I have said on these calls many times, we are convinced that the heavy-duty transportation industry, which is looking for ways to decarbonize, can't find a better, more immediate, and affordable solution than renewable natural gas. There's also a growing realization that other new shiny penny alternatives are years away from being deployed in any meaningful way and could be out of the reach for many fleets in the foreseeable future. We've all read the numerous stories in the financial media and especially in trucking publications chronicling the foot faults of electric vehicles and the lack of charging infrastructure. On the flip side, after the media spent years writing about the other alternatives that are now having trouble getting traction, We're seeing more coverage of the Cummins X15N engine, including a recent piece in the Commercial Carrier Journal by Jason Cannon, a well-respected veteran trucking reporter. Indulge me while I read how Jason ended his very thorough review after test driving a Peterbilt truck equipped with the X15N. Quote, natural gas lost its seat at the head of the fuel of the future table when the potential of battery electric, and hydrogen started turning heads. But natural gas right now checks a lot of boxes for fleets looking to reduce emissions without sacrificing payload, fill time, and range. Peterbilt's ultra-loft 12-speed makes the strongest case for driver comfort that natural gas has ever had." Jason chronicles in his review the bumpy ride that natural gas has had in the heavy-duty trucking space over the last 10 or 12 years. Those of you that have followed Clean Energy and heard me on these calls have lived through it as well. But with the introduction of R&G, a fuel that scores better than any other in reducing carbon emissions, and a new engine that finally checks all the boxes operationally for the industry, we, along with a growing number of experts, believe the time is right for heavy-duty natural gas trucking. To ensure our network of stations has the R&G to put in the tanks of those trucks, continue to have great success in partnering with a growing number of RNG suppliers around the country for their offtake. And as you hopefully saw in a series of announcements over the last few months, we continue to make nice progress in our own production of low carbon RNG from dairies with six projects now producing RNG. Darrell Moss is one of the most well-respected developers in the RNG industry. So we were pleased to sign an agreement with his company to build a series of projects utilizing the covered lagoon method that Moss Energy has refined over the years. They've approved a cluster of dairies in Georgia and Florida and other single dairy projects in New Mexico, Nebraska, and South Dakota. Engineering has begun on these projects with completion scheduled in 2025 and 2026. We also recently broke ground for an RNG digester at South Fork Dairy in Texas. The owner, Frank Brand, has rebuilt the 16,000 cow dairy, and we couldn't be prouder to call him our partner in the project. Injection of RNG into the pipeline recently began at our Ash Grove dairy project in Minnesota, one of the projects we developed with our partner BP. And last month, we successfully monetized the investment tax credit generated by our first dairy RNG project, Del Rio. Credit sale generated approximately $9 million of net proceeds to the project. The plan is to monetize the investment tax credits on our other five currently operational projects over the next 12 months. That is a good segue on how I'd like to close my remarks and address an area that I know we're all watching closely, which is the election in November. I know many of you are attempting to calculate the different outcomes, and if or how they will impact the overall energy transition space in companies like Clean Energy. Like most companies in the low-carbon energy sector, we fielded many questions by investors. And while I won't speculate on any particular outcome, I will say this. We partner with landfills and dairy farms to deliver low-carbon, domestically produced biofuel to commercial transportation customers. produce and deliver sustainable fuel, which generates environmental and financial benefits for the agriculture, municipal waste, and transportation industries. We strongly believe that this will continue to be embraced as a win-win solution by any administration or leadership in Congress. As an example, we will be hosting next week the Chairman of the House Waste and Means Committee, Jason Smith, with several other members of Congress, including Representative Brian Fitzpatrick, who is the Republican co-sponsor of the RNG tax credit legislation. These members are coming to our headquarters where we and executives from UPS and WM will show off the latest technology in natural gas trucks and brief them on the benefits of RNG production and fueling to rural America, municipalities, and industry. We were very pleased that the RNG tax credit bill introduced by representatives Fitzpatrick and Democrat Linda Sanchez in the house early this year was recently mirrored in the U S Senate with a bipartisan companion bill co-sponsored by senators, Mark Warner and Tom Tillis started my career in politics. So I know just enough to be dangerous, but as I said, we feel comfortable that no matter the outcome in November, there is wide spread. and cross-isle support to produce a fuel that tremendously helps the U.S. agricultural industry, both environmentally and financially, including creating jobs in rural America, and decarbonizes heavy-duty vehicles in a way that no other alternative has been able to seriously address. Now I'll hand the call back to Bob, who will go into more detail about our strong quarter. Thank you. Thank you, Andrew, and good afternoon to everyone.