Overview of company's operations
Clean Energy Fuels is seeing an inflection point in the use of natural gas as a transportation fuel. Because of disparity between the prices of oil and diesel fuel versus natural gas, an awareness of natural gas has increased. It is triggering a manufacturing renaissance, of which Clean Energy is an integral part. Every major OEM, including Navistar, Cummins, Freightliner, Kenworth, Peterbilt and Volvo, strongly featured natural gas offerings at the Mid-American truck show in March.
The company's goal is to build out America's Natural Gas Highway. It is strategically co-locating most of the LNG fueling stations at Pilot Flying J truck stops. Its goal at the beginning of 2011 was to build 150 new natural gas fueling stations and to open 70 of them by the end of 2012. The company is on track to meet that goal.
Because 85 percent of truck is regional in nature, Clean Energy is opening stations in regional corridors. The first corridor, the Texas triangle with stations in Dallas, San Antonio and Houston, should be completed by the end of May. Corridors in Los Angeles-Dallas-Atlanta corridor, the Chicago-Dallas corridor and the Chicago-Atlanta corridor should be open by the end of the third quarter. By the end of the year, the network should be completed that would allow the movement of goods throughout the United States.
Clean Energy announced a strategic fueling and marketing agreement with Navistar, which is important because Navistar hold the number 1 or 2 positions in key truck market segments and will provide 8 different natural gas truck models by the end of 2013.
In the compressed natural gas area, the markets are working well. The company is working with 71 different refuse customers and has opened 50 new stations this year. The number of different refuse trucks using CNG is increasing. The company is also fueling additional public transit fleets, airport shuttle buses, taxis, and private vehicles. The breadth of its customer base has grown. It anticipates adding 4000 to 5000 conversions this year.
In addition to the Natural Gas Highway, the company has 545 deals, in various stages. It is on track to double construction volume from last year with 21 other station projects in construction and 58 projects in design and permitting in its other core markets.
Pricing issues
Every dollar in which the MCF (thousand cubic feet) of natural gas increases is the equivalent of $.12 per gallon of gasoline. Even if the price of natural gas tripled, there would still be a couple of dollars difference between gasoline and natural gas at the pump. Right now, the spread between natural gas and gasoline is about 40 to 1.
The costs to liquify natural gas can range from $0.25 to $0.35 or $0.40 to liquify the gas. The cost to transport natural gas be anywhere from $0.07 a gallon up to $0.10, $0.12, $0.14, $0.15 a gallon depending upon how close you are to your customer or to your station. Typically, you don't want to haul LNG more than 205 miles.
Financials
Clean Energy reported first quarter gallons of 43.7 million, up 23% from 35.5 million in the first quarter of 2011. Its revenue was $73.6 million during the first quarter, up from $65.3 million a year ago. Its gross margin per gallon is $.28 per gallon versus $.26 per gallon last quarter.
Adjusted EBITDA was ($2 million) versus $3.9 million in the first quarter of 2011. Its selling, general and adminitrative (SG&A) expense increased, primarily as a result of hiring more as it ramp ups to support its anticipated growth on Phase 1 of America's Natural Gas Highway. Its expense is also up due to the interest charges it is incurring on the $200 million of convertible notes it issued in the last part of 2011.
Gross margin was $17.7 million versus $18.3 million in the prior period.
It had a loss of $0.16 per share on a non-GAAP basis in the first quarter of 2012, compared to non-GAAP loss of $0.05 per share in the first quarter of last year.
Although the balance sheet reflects $190 million in cash, the short-term investments on its balance sheet is also really cash. Additionally, there is restricted cash. When all is added up, there is $250 million of cash on hand to fund $180 million in capital spending this year. In addition, it will receive another $50 million from the Chesapeake bonds in June and another $50 million in the following June next year. The company believes it has capital spending covered through 2013.
Legislation.
Clean Energy is continuing to try to get favorable legislation in Washington.
The full transcript of the conference call can be found on Seeking Alpha at the following link:
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