Q2 2020 Clean Energy Fuels Corp Earnings Call
Question answer session will follow the formal presentation, if anyone should require upgrade or assistance. During the conference. Please press star zero on your telephone Keypad. As reminder, this conference is being recorded I would now like to turn the conference over to your host Mr., Robert really Chief Financial Officer. Thank you you may begin.
Thank you operator.
Earlier this afternoon clean energy released financial results for the second quarter ending June 30 2020.
He did not receive the release it is available on the Investor Relations section of the company's website at Www Dot clean energy fuels Dot com.
For the call is also being webcast.
It will be a replay available on the website for 30 days.
Before we begin we'd like to remind you that somebody information contained in the news release going on this conference call contains forward looking statements that involve risks uncertainties and assumptions that are difficult to predict.
Words of expression, reflecting optimism satisfaction with current prospects as well as words, such as believe intended.
Correct plan should anticipate and similar variations identify forward looking statements, but they're 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 and the risk factor section of the clean Energys form 10-Q filed today.
These forward looking statements speak only as the date of this release.
Any undertakes no obligation to publicly update any forward looking statements or supply new information regarding the circumstances. After the date of this release.
Companies non-GAAP, yes, and adjusted EBITDA will be reviewed on this call and excludes 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 gap and should not be considered as a substitute for or superior to GAAP results.
You 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 FCC 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 Good afternoon, and thank you for joining us.
As the World continues to adjust to a pandemic that stubbornly held on longer than we had hope clean energys business, a feeling thousands of buses trucks. Another fleet vehicles everyday has remained healthy.
Also we have not slowed down our pursuit of new customers, adding additional gallons an expanding the use of our redeem renewable natural gas during these uncertain times, which I'll expand on in a moment.
Well not unexpectedly our volumes of approximately 90 million gallons in the second quarter of this year were 10% lower compared to the same quarter last year due to the overall economic slowdown caused by the pandemic.
We are seeing lower volumes, and primarily two sectors public transit and especially airports, which have been significantly impacted by the lack of aircraft.
The slowdown impacted our revenues in the quarter, which were approximately $60 million down 17% from 2019.
Well, we continue to retain a healthy balance sheet with an adjusted EBITDA of 9.2 million for the quarter, an improvement over last year's second quarter, leaving us with $96 million in cash and investments and only $37 million of debt.
For those of you have been following us for a while you know that we substantially lowered our overhead the last few years and we now have a disciplined low cost expense structure.
Because of that we're able to maintain healthy positive adjusted EBITDA, even with the drop in the transit an airport fleet businesses.
And at some point people will start flying again, and public transit will resume to more normal levels, whether it be in a specific region of the country or nationwide.
Until they do and while our nation recovers, we have a strong underlying recurring business and a healthy balance sheet.
We have not taken nor do we need do any government assistance due to the Krajina kroner buyers.
Frankly, I'm optimistic about our business. He is GE investing has continued to be a priority.
Not increase in perhaps the pandemic is forcing.
The company's the question why they continue certain business practices, such as always running diesel trucks, what other better alternatives are available.
And during this time, we all recognize enjoying the clean air and absence of smoke so it and smog.
Not to mention we know there's been a reduction in greenhouse gases.
Regardless of the reason, we're seeing a renewed interest in natural gas fueling and adding new customers and growing with existing ones. Despite our salesforce operating via zoom and phone calls rather than in person meetings. In fact, we have signed contracts representing 6 million gallons over the last quarter.
And we're currently in the process responding to a record number of RF piece for new or expanded natural gas fleets from municipalities transit authorities and companies.
We believe this is a sign of a pent up demand and a stronger natural gas fuel market in the months to come. In addition customers have ordered new station builds adding to our overall construction pipeline.
In the solid waste sector cities from the east coast or west, including Lexington, Denver, Scottsdale, Sacramento, Muncie, Redlands, California, and Philadelphia have signed contracts over the last several months to begin or extend feeling for refuse trucks, representing approximately 2.2 million gas.
Once a year.
Waste connections signed a contract add fueling outside Fort worth for additional would trucks and noble environmental or adding 20, new trucks and Pennsylvania, the fuel into existing station.
Overall, our refuse business has actually grown during the pet pandemic, we continue to see new interest by companies and municipalities to switch their diesel fuel refuse trucks. The ones equipped with natural gas engines that are proven unreliable and dependable over many years well operating out of fuel the burns over 90% cleaner and Rick.
Just carbon by over 250%.
And speaking of reducing all harmful greenhill greenhouse gases I am excited to let you know that we formally we will be formally announcing in a few days, That's New York City Metropolitan Transit Agency.
Already has signed a multi year contract operate their 800 buses with clean Energys redeem renewable natural gas.
This is a significant move by the country's largest transit system, which will mean that conversion of over 8.3 million gallons from regular CNG renewable CNG, which will one lemonade over 25000 metric tons of harmful carbon emissions from going on the atmosphere every year.
New York Mth should be highly commended for this decision which comes even before the state of New York adopts the low carbon fuel standard program.
As part of the AMD. This ambitious package on the climate and El CFS is currently working its way through the legislature and have made into law could accelerate the adoption of Orange in New York.
All other companies have begun to offer our NGL transportation fuel almost all that has been delivered in California.
Clean energy stands out with an extended geographical footprint of supplying 45 million an annual gallons of Orange you to customers and almost 30 say states outside of California.
We picked up another new transit agency was sold trends in Sorrento County, California, which is purchasing 16, new transit buses to run on redeem.
In addition, we renewed significant contracts during the second quarter with Tucson, Arizona, Santa Monica Norwalk, Southland, an omnitrans, all in California, and a B M large shuttle service supporting L.A. acts.
We continue to see movement on the heavy duty truck in front as well despite a significant drop an overall truck sales due to the pandemic.
Thanks to our zero now financing program, we have recently added the trucking firs firms Kona.
On the Stoga logistics burn and transportation when in bulk transportation and others door heavy duty truck roster of customers.
Also during last quarter, you PS increase just orangeade purchase from us for its heavy duty truck fleet by 3 million gallons per year, bringing the current totaled 23 meal million annual gallons.
Clean energy has facilitated over 300 of 580 applications for grants for new natural gas heavy duty trucks in California over the last six months.
Representing approximately $35 million of brands for trucks that should be hitting the road throughout the remainder of the year.
But that into perspective, we submitted a total of 110 for the entire year are pointing 90.
Most of these will be fueling at our stations in and around the ports of delay in long Beach.
Recently trucks equipped with the new Cummins near Zero 6.7 leader natural gas engine will be made available for these grants we have seen a lot of interest in this engine and there has been certified be as clean as the comes 12 liter and will be hitting the market. Later this year. These midsize truck such as box trucks will be able to easily fuels.
Our existing station network.
In Canada Clean energy was recently awarded 6.5 billion dollar grant from the Alberta government underwrite the cost of 100 heavy duty trucks.
And several fueling stations support some of Canada's largest trucking companies, including west can ammonia.
Part of a 30 million dollar investment in natural gas vehicle technology in the region.
Alberta government is targeting to reduce nox emissions by 20% in the province and sees the conversion of heavy duty truck market to natural gas is a good start to that goal.
As I mentioned, our zero now program, which allows firms to get into natural gas trucks at the cost of diesel trucks will while saving on redeem renewable fuel continues to show results.
We were excited to add a dimension to the program with the new partner Chevron.
As you might have read in their announcement Chevron has begun to make investments into the production of orangeade derived from methane from dairies wishes some of the highest levels of Atms atmosphere harming emissions.
Well, one captured and burn as a transportation fuel it a races. Those emissions turning something that could have been very damaging to the planet into transportation fuel for heavy duty trucks that normally run on dirty diesel.
The fuel is calculated as carbon negative and produces 200% the 250% less greenhouse gas and diesel.
And this new partnership called a doctor for Chevron is providing funding for truck operators. The subsides the cost of buying new RMG powered trucks, while at the same time, providing a commercial market for their R&D.
Clean energy is already making this carbon negative fuel and truck purchase incentives available the hundreds of trucking firms that operate in the ports of L.A. in long Beach.
This is now the third major global Energy company that clean energy has partnered with to expand the use of our Angie.
Our joint marketing agreement with BP to sourcing supply more orangeade continues to be strong and the company's largest shareholder Odell was instrumental in in the creation of zero now program, Bob by providing a $100 million in a line of credit for truck financing.
It is now hard to ignore that more and more of the world's leading energy experts see R&D as a realistic ultra clean transportation fuel, especially when it comes to moving large vehicles and it is clean energy that they are looking to to lead the way in the us.
As I mentioned, despite all the obstacles presented by the pandemic clean energy as remain steadfast and maintaining great customer service and expanding our business I want to thank the hundreds of clean energy employees, who have kept our stations operational our books in order and all the other functions. They continue to perform without a hiccup.
And with that I will hand, the call over to Bob.
Thank you Andrew.
We ended the second quarter in solid financial shape, having generated 54 million in operating cash flow during the quarter with only 2.7 million in capital expenditures.
Our operating cash flow was helped by the receipt of the alternative fuel tax credit approximately 47 million related to 2018 in 2019 as well as cash flow from ongoing operations and we ended the quarter with 96 million in cash and debt of 37 million excluding leases.
As we addressed on our last call, we anticipated lower volumes and lower earnings as a result of the cobot 19 pandemic.
We also anticipated some economic recovery exiting the second quarter with a gradual ramp up in the third and fourth quarters.
Given the current prolonged in nature of covert 19, and slower economic recovery, we believe our volume growth going into the third and fourth quarter, all will be at a slower pace than we anticipated back in may.
However on the positive side, we have seen higher rent pricing as well as lower operating expenses.
We expect this trend of lower operating expenses to continue until there is a return to a normal business climate, which along with sustained RIN pricing helped mitigate any reduction in gross profit margins associated with slower volume growth.
As such we are maintaining our 2020 annual guidance of a GAAP net loss of approximately $11 million and adjusted EBITDA of approximately $45 million, assuming no unrealized gains or losses on our zeroed out fuel hedge and related customer contracts.
Our cash position is also expected to remain unchanged from our prior guidance with operating cash flows exceeding capital expenditures by at least $40 million for 2020.
Hi, Andrew gave some highlights around our volume for the second quarter overall decline in volume of 10% was principally in CNG in our transit and airport fleet services sectors, which experienced year over year declines between 25% and 45%, while our refuse and trucking sector.
His experience gains of 2% to 7% on a year over year basis.
Redeem volumes for the second quarter were 36 million gallons compared to 38.9 million gallons in the second quarter of 2019 with the decline primarily due to lower volumes in California, where 100% of the fuel at our stations is renewable redeem.
Our revenue for the second quarter of 2020 was 59.9 million or a decline of 12.4 million compared to 72.3 million a year ago.
Approximately half of the decline or $6 million can be attributed to the lower volumes and another 8 million attributed to lower prices due to lower natural gas cost and the mix of gallons delivered.
We had a non cash negative effect of $2 million from the year over year change in the fair value of the zero now fuel hedge and related customer contracts and a 600000 dollar decline in construction revenue.
Partially offsetting these declines was our alternative fuel tax credit revenue of 4.4 million.
Our effective price per gallon on volumes delivered was 58 cents per gallon in the second quarter of 40.8 compared to 66 cents per gallon in the second quarter of 2019.
The eight cents per gallon decrease was principally driven by lower natural gas costs impacting our prices by about five cents a gallon with the remaining three cents decline coming from the mix of gallons delivered.
Our overall gross profit margin in the second quarter of 2020 was 21.3 million compared to 24.7 million in 2019.
The decline is attributed to the lower volumes and a lower effective margin per gallon.
Our effective margin per gallon was 20 cents per gallon for the second quarter 2020, compared to 25 cents per gallon in 2019 with the difference primarily driven by the decline in the gallons in our airport fleet services sector.
The alternative fuel tax credit benefited the second quarter gross margin along with a better station construction margin, while the change in the fair value of the zero now fuel hedge and related contracts was a drag on the gross margin.
Our SGN a in the second quarter of 2020 was 16.9 million, which was down 1 million or 6% from year ago, now 1.4 million or 7% from the first quarter of 20 point.
We expected to see declines in SGN, a and remain diligent and controlling our discretionary spending, albeit with certain increases in costs related to keeping our employees healthy and our work environments safe.
We expect to see similar levels of SGN, a going forward until more normal business operations return.
Regarding our net results, we have fared well when compared to a year ago, given the circumstances of 20 Twond.
Our GAAP net loss for the second quarter of 2020 was 6.7 million compared to a GAAP net loss of 5.4 million a year ago or a loss of three cents a share in both periods.
On an adjusted basis for the second quarter, our net loss was 4.5 million compared to a net loss of 5 million year ago or a loss of two cents a share in both periods.
And our adjusted EBITDA for the second quarter, 2020 was 9.2 million compared to $8.9 million a year ago.
So all in all we performed well during the quarter with sufficient liquidity going forward.
And with that operator, we will now open the call two questions.
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Our first question comes from the line of Eric sign with Craig Hallum. We proceed with your question.
Hi, Andrew Bob.
Hi, there.
Hey, so.
Encouraged to see the growth in refuse and trucking.
Our year over year, and maybe just specific to trucking I'd love your thoughts on kind of how it breaks down there between current fleets driving more miles related good movement.
Versus just more adoption from fleet.
And then I would also love to hear thoughts on just what you're seeing from the small to medium sized slates, because obviously the big guys are.
They're they're continuing to do what they've done for many years.
Well Eric.
On kind of trying to break it down for you. Obviously, you PS continues to be a very good customer right and so they've ramped up their usage. So we saw that in the quarter. We've received an extra.
Contract for 3 million more gallons for the year. So you know so some of the trucking growth is obviously, yes.
That at another segment segment.
We're seeing a pick up with zero now.
Not not super large numbers yet but.
Increasing breadth of those that are beginning to take of trucks and order trucks in participating the zero No program, that's mainly in the western United States.
And in California.
And then the third segment would be we've seen kind of a nice pickup.
On a new truck orders and trucks hitting the road and volume pickup in the in the let's call. It the ports right the southern Southern Los Angeles, and the ports of La so.
Target focuses.
Continues the pipeline in the trucking is.
Frankly, it was bit surprised it's we've as I tried to mention in or in my remarks, we've seen kind of an increase.
And we've seen an increase in our backlog we have so of stations we've seen an increase in our piece, which is the most we've seen.
I think a quarter or so ago I talked about kind of a record. The RFP number. This is 50% larger than that so that's people investing in these new stations or a new gallons and so that's that's a good sign and we've seen.
We've seen more interest in the Chevron program in the Port and also in zero now so I.
I don't know if it's because you know people are coming back or if he was this prolonged period of.
People, reflecting on their business and trying to do things, a little bit differently or whether or not you know.
Looking at clean Air began to got get people thinking, but we're seeing the the sustainability theme seems to be pretty powerful right now.
Got it I mean for whatever reason it is hilla you'll take it.
May be less that's true.
Sure Yes.
Okay, well, so just on Chevron and I know, it's still early days and good to hear there's I mean, obviously, there's interest at the courts and maybe it's a little bit of time before that starts to have an impact but.
Just curious on on the potential to expand that I mean is this something that we should think about.
Say, if you've got a fleet.
For instance that says we're going to run the west coast from the ports to Seattle I mean is this is this something where you think chevron given their interest and.
Yeah ill focus on this area that this is something that could be expanded beyond the ports.
Yeah, I don't want to say too much and get outside my.
Bye bye kind of approved area here with Chevron Chevron has been very clear that they see this is an important new area for them.
We're making a big investment in the bio methane space, especially low carbon fuel and in a serious they're investing serious capital there and they see it is an important part of their business in California.
This is this makes economic sense for them as well and so they have.
This initial program that we announced as there was a little while in the making piggy backs.
Upon the rules that we've seen in the port that's pushing for cleaner trucks.
It adds to grant it is additive grant program. So when I talk about these hundreds of trucks on the port This chevron help could actually add in kind of juice. These.
Trucks that are awaiting the sign these.
These applications that I talked about in my remarks are not theoretical right. So you've got to trucking company that has asked for natural gas trucks.
And they're waiting for the contract the come from the granting authority to get signed and they have to deploy these trucks. This year. So those numbers are beginning I've talked about him for a long time and various programs those numbers that I quoted earlier. This 550 applications, that's 550 natural gas.
Trucks that will be required to use our energy in the port and take those vehicles. This year those chevron dollars can be additive to that so it makes it very compelling for the fleet owner.
And it makes a compelling for us for Chevron and of course to us because we share with chevron in the benefits the environmental attributes benefits coming from the R&D dispensing from our from our stations. So it's kind of a win win win for everybody and it's a win for the ports win for the trucking fleets. It's a win.
For Chevron at Us and so we've already seen some fleets.
At the end of the program.
They don't have those trucks are not on the road, yet, but we've already.
We've we've already rolled this out because we know those customers are we've already have one fleet thats already signed up for 39.
Alex opting into the so this has been an literally a couple of weeks. So we like the aspect to that now growing it we've been told by Chevron, let's start here several hundred trucks and.
We can they said there's a lot more room to grow this program.
Because we have a lot more appetite to generate credits, which were required to offset in California. So yeah. I think the program can be substantially larger than as we originally envisioned.
Okay. Good.
Maybe last one from me and this is very high level, but.
Lately hydrogen is getting a lot of attention as a possible transportation fuel despite that it's it's likely many many years away, but if if there does come a time, where hydrogen has placed in the market I'd just love your thoughts on.
Whether its natural gas or renewable natural gas how that plays into it and then also how you might play into it with your station network.
Sure well you know Eric look I want everybody in the alternative fuel space to be.
Successful because let's let's remember for a second I don't know 98.5% of the universe is being supplied by diesel today. So there's a lot of room.
Our CFO Bob your reminds me.
And price remind people, it's not all going to go to one fuel price. So there's plenty of room here for for office Alright.
And let's also remember just for a second that there's 30. This is it the least at a minimum of 35 billion gallon market. Okay. So there's room for a lot of us that have different technologies to be successful.
We have now have the natural gas and renewable natural gas happens to be the one that's really on deck today right thats in the marketplace. That's available at a nationwide network today.
Hydrogen we know something about hydrogen and we've operated a hydrogen fueling station for of probably the better part a 10 or 12 years, we've built that station.
Years ago in conjunction with General Motors.
Is it's operates today.
Was about 2.3 million dollar station and it produces 68 gallons of hydrogen that day.
So hydrogen fueling is very expensive.
It's under 10000 PSR by the Reformation of hydrogen to at the station is through electrolysis requires it'll or this it requires about 20 gallons of water for every gallon hydrogen you produce.
So.
March that out on a nationwide scale and the idea that we're going to do it with renewable sources at a station is going to be very daunting. Okay. I think that as you look at commercial truck stops with hydrogen you're probably looking at something on the order 15 $20 million or more per station. So this very extensive.
Question.
And because you're basically creating a whole new network and.
And your and and really the most successful stations around the world and there's only a handful of hydrogen is that your your reforming natural gas.
So to answer your question is what I thinks is where we're positioning ourselves is our LNG is really key here and we see today and we're working with certain technology providers of Reformation of natural gas on board either to produce hybrid electricity.
Sure so using a natural gas engine to produce through a generator to boost electric powertrain or eventually and I think this pretty far out inovio while is.
The same thing reform natural gas renewable natural gas onboard.
From a station through an existing station network and produce hydrogen onboard. This is the this'll be that most elegant solution. This long ways out as all of this technology.
That makes sense.
Oh for sure I know for sure I am.
Yes.
Overall, our renewable feedstock has the advantage.
It is that it had some scale.
And it has a delivery system that's already in place around the country that you don't have to create so you can do right RMG to.
Anywhere in the United States, the real Trex going to be is the Reformation of it and I think eventually it will be on board not at a new new nationwide hydrogen network, which compares comes with just and absorbing costs.
Yeah, no very helpful.
So the Parliament the department of energy, Eric years ago said listen when you get the large scale.
Hydrogen this was back during the day, we've been on this long time and one of our my Chief operating officers actually sat on the Governor Schwarzenegger hydrogen highway was back in those as we've been talking about this along time.
But the real way to get hydrogen in large scale is through nuclear okay, well I don't think we're going to be below our new nuclear.
Plant.
But that's that's what secretary choose reports told us.
So this theres a lot to this end.
I wish everybody well on it.
It's going to be it's challenging.
Yes, okay. Thank you.
Alright.
Our next question comes from the line of Bob.
Capital markets. We proceed with your question.
Good afternoon.
Hey, Rob cut off.
I just I just wanted to follow up on the New York MTV deal you talked about about converting it to Orange is this is this existing CNG business you have that's going to be converted to RMG and then is there an opportunity I think thats right and then is there an opportunity.
For some of the diesel remaining decent volume to go RMG in that market.
Rob its new gallons us so right. So that's a that's an 8.3 to 10 million gallon pickup for us. So it's good new now spent that I'm, making.
This afternoon. So it's a good will enforce its by the waste starts.
Restarted four or five years ago, okay. So it's in process.
But those CNG gallons that those buses were using we're not our gallons are but now they are with the R&D.
Okay. Okay. Thanks, a quick clarifying that Thats great news.
Got it is.
And then.
Kind of back to the Chevron deal I know, it's early yet but.
How is the response spend how do you sort of see that growing in playing out and.
And do you.
Are you in the in the middle of that financing for is that directly from Chevron to the truck owner, Yes, The fund and I'm glad you mentioned that so the financing is different than our than the totalys sponsored.
[music].
Program that we have a zero now this is for this this finance is coming from Chevron right, it's not coming from us.
Now we're in the middle of it right, we're marketing it we're delivering it to the customers where the customer facing.
But its chevron's money its chevron's R&D through our infrastructure so.
And and we've just wielded out in the last couple of weeks.
But we've already brought it out and I don't know if you heard me, but we've already signed one customer to 39 trucks. So.
No worse, we're seeing some pickup because it makes a lot of sensed everybody right. It's.
So essentially atlas's, it's it's.
It's very advantageous capital.
To the customer and it's kind of a no brainer for for them. So I think we should see very good pickup on it.
Okay. Good so you know and and literally as seven days of sales in its harder to sell right now because we can't go knock on some of these door we had.
We've already shown this now to 15 or 20 fleets and with that one pick pickup on an already for.
For 39 trucks, which is pretty good.
So it's showing real promise.
Okay, great. Thank you for an hour.
Yep.
Our next question comes from the line of Hobble Welcome with Raymond James You May proceed with your question.
Thanks for taking the question I remember when we did our webinars.
Right After Memorial day.
We talked about.
The kind of disconnect between recovery in.
Municipal transit fleets versus.
Private sector trucking and the impact of.
Social distancing on the consumer.
Curious if.
Seeing any further recovery in transit.
In terms of customer kind of Receptiveness.
To getting on a box in the last 100 days or so.
You know above Elliot it's hard every every area is a little different and so we've seen some unique things happened I.
Just as we.
I think maybe was after we had our call with you.
We did see.
About a five or 6% uptick.
In transit volume and then we kind of locked down again, especially in Texas, where we have big transit property in certainly in California.
Theres still running their routes were still you know I measure it above they'll buy fuel right. So we're still at about 75%.
And there's still running the routes.
It's just that the isn't and I don't know it I don't know that on the expert to say that is because people don't want to get on the bus is just you have less people going to work right. So you just have less overall demand.
And.
Weve, but we've seen a little bit of we saw an uptick right from the Deps from when I was just a.
A few weeks before we talk to you and we saw about a 5% recovery in those markets and then we kind of locked down again, but we haven't seen it go tick back down we've seen a kind of come off 5%. So we've seen some.
You know.
Repair in that but I'd say, it's leveled off probably still down about 20%.
Mhm.
And then in terms of aviation I mean, I'm guessing that's the weekend.
Part of the rather weak us out correct, yes.
And as.
It's the weakest for us and if any of you have been traveling around you know that's it's still.
It's just still brutally comment these airports and.
So picture, we have our based customers are the airport shuttles the rental car shuttles the employee airport shuttles.
So those are down other running but they're running.
All right. So that's been down as we said almost 45% we haven't seen much uptick there.
Just a little bit.
And.
You know they.
It'll come back, but I think that one slower in this difficult for US now it's interesting without without getting too much detail. So when we.
We're at we operated about.
40, or 35 to we have about 40 airport stations that maybe 35 of nations kind of largest airports.
Sure to think about it that the businesses. The base business is the airport and we still have about 50% of the business at those airports that private sector and that hasn't gone off by by the same level as the base business.
And and yet.
Those are really those locations are really important to us because they tend to be those with the higher fuel margin right and they tend to be ones that get alternative fuel tax credits and so other they're kind of our richest gallons and so it's it's.
No Thats why we think that given given that particular.
Segment being down.
And yet that we came through to where we did for the quarter. We've got we actually feel pretty good about it because those that that's that's been somewhat impactful.
Yeah.
Last thing I wanted to ask about if the.
Advanced truck roll in California, obviously big market for you.
It doesn't take effect for four years or so but youre your thoughts on that in terms of kind of electrification of roughly.
Right well, you know I I've I've been a little outspoken on this you know there's been a industry lawsuit now on that.
Well so the.
The natural gas industry, the natural gas vehicle industry is sued the air resources Board on this very rule. They don't believes that the air resources Board is take into account sort of the rules and the mission that they.
The legislation that they live under to actually provide for mitigating the air quality benefits in the short near term I mean, if you really look out the what theyre doing as they are turning a blind died air quality.
And to health and to the responsibilities that they have under the Sip.
About a decade, while they flow full around but this and then even when you get out a few years you still you still are allowing 85% of the of the.
Trucking world to use diesel.
So we think that they've been overstepped here and we think they've also have not.
Provided.
They basically provided an electric mandate rather than.
Setting and emission standard that would allow other cleaner cleaner fuels the to play ball. So I think it's somewhat misguided, but it's sort of fits there I think somewhat myopic kind of.
Political view that it's got to be electric and it's got to be solar and it's got to be when and if it's not that it doesn't fit and so there they really kind of pushing this.
Not sure that a little it'll end up being.
Going to go into effect quite the way they figure.
Now what does it say it says there's an awful lot of other fuels is going to be use other than electric for a long time and so we happened to think that as as you know the rules shake out that renewable natural gas, which is cleaner and electric here in California should have a place at the table, we think Thats way.
It will probably come down eventually.
But this doesn't surprise us that this is kind of fits the mantra here that we live and out here in California, and those electric vehicles aren't even avail.
And.
Starts out with.
With the mandates requiring certain things and.
Very difficult.
Well I think in you know I talked about this before you know look.
Mr MUSC and others are going to perhaps produce probably elegant electric vehicles and now have there are certain operating characteristics and costs associated with them. We don't have to go in that here I think the thing that's going to be very difficult.
And you've seen this little bit in transit is the the refueling or recharging infrastructure for heavy duty is altogether different game than than a light duty test linear garage.
Totally different.
One or one recharging facility in Los Angeles was going to be built for $5.5 million to recharge 20 for heavy duty trucks in a day's time into like a 20 hour time and that was the equivalent of the electricity needed for 44000 homes.
And southern California, Edison can provide even if they wanted to didnt have it so.
I, just think that Thats something that we haven't spoken about is kind of the unsung you know or the unspoken.
The problem and I think thats. The one that comes home to roost that makes the heavy duty electric vision very difficult very expensive.
No look if you are going to power America.
Goods movement, I don't think you're going to design a system in the final analysis thats going to be done by the the municipal and and.
Governmental government government.
Utilities.
In the country, that's not who is going to provide the electricity to move Americas goods.
That's not the way, it's going to go down so theres going to be a lot that's going to have to change before thats the way it half.
I appreciate your perspective, guys I knew you would have an opinion.
Thank you.
Never sort of if any of that give avail.
Ladies and gentlemen, we have reached the end of the question answer session I would like to turn this call back over to Mr. Littlefair for closing remarks.
Thank you operator, well, we want to thank everyone for listening to the call. This afternoon I look forward to updating you on our progress next quarter Stacey.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation have a great.