Q4 2020 Clean Energy Fuels Corp Earnings Call
Greetings and welcome to clean energy fuels fourth quarter 'twenty 'twenty earnings Conference call. At this time all participants are in 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.
Please note. This conference is being recorded I will now turn the conference over to Robert Vreeland, Chief Financial Officer. Thank you you may begin.
Thank you operator earlier this afternoon clean energy released financial results for the quarter and year ending December 31 2020.
If you 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.
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 words of expressions, reflecting optimism satisfaction with current prospects as well as words, such as believe intend expect plan should.
Anticipate and similar variations identify 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 factors section of clean Energy's form 10-K filed today.
These forward looking statements speak only as of 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 Little Fair.
Bob Good afternoon, everyone and thank you for joining us on last quarter's call I spoke in some detail about clean energy future and the expansion of our renewables business.
I am pleased to say that since that time. The pace has continued to accelerate on both the upstream production side as well as the downstream demand side for renewable natural gas.
This should keep us in a great position for Merck, maintaining our lead in providing RMG to the transportation industry.
I will speak more about that in a moment.
In the fourth quarter of last year, we delivered 96 million gallons of fuel, which was slightly down from 103 million gallons delivered in the same quarter a year ago.
Due to Covid, we experienced softness in airport fleets in transit.
But we're pleased that other sectors performed very well like refuse in heavy duty trucking.
Volume for the full year 2020 was 382 million gallons down for 0.6% from 2019, which was 400 million gas. This was quite an accomplishment considering the significant challenges in the transportation industry brought on by Covid.
I want to congratulate the clean energy team for making this happen and overcoming the obstacles of operating in the tough environment that we've been in.
We kept all of our stations opened in all of our customer service Rep.
Refuse and trucking actually grew their volumes in 'twenty, 'twenty, which is encouraging as the country sees the light at the end of the Covid tunnel.
Our revenues for the fourth quarter of 2020 came in at $75 million compared to 119 million from a year ago. The big difference was a $47 million.
Retroactive revenue gain in Q4, 2019, which represented two years retroactive gained from the alternative fuel tax credit this.
This was only 5 million in Q4 2020.
It was good to see Congress passed the extension of the alternative fuel tax credit at the end of 2020 Importantly, this was the first extension and several that was coming for a year and was not for retroactive gallons, which we hope is a good sign for bipartisan support for the F. T C for the future.
The companys balance sheet continued to improve ending the quarter in the year was $138 million in cash and investments our adjusted EBITDA was $45 $1 million for the year, which is what we guided to last may when COVID-19 kicked in.
As I mentioned at the top of my remarks since first introducing our renewable natural gas fuel in 2013 clean energy has gone through a significant transformation from selling exclusively fossil fuel natural gas to the transportation industry.
Sales of R&D have steadily risen and it has become a larger and larger percentage of our overall fuel mix now over 70%.
But we believe that that with the pressure on reducing greenhouse gases and carbon by everyone from investors to consumers along with the increasing understanding of carbon negative RMG. We are only at the beginning of what will be a game changing revolution and fueling.
RMG has gone for being a niche product to one where the demand is outpacing the current supply.
Fortunately, we have add a continued focus on ensuring a consistent supply and have been able to offer more and more R&D to more and more customers.
We now have an expansive portfolio of over 30 supply sources, which allows us the flexibility to move our LNG supply depending on customers' needs.
That is why the announcements. We recently made are so critical to have the world's largest energy companies both of which have made significant pledges to decarbonize. Their portfolios have agreed to individually partner with clean energy to develop more carbon negative RMG.
The two JV with total and BP that we announced at the end of last year and recently final finalize represent a potential half a billion dollars of equity that can be substantially levered.
To develop R&D projects to produce negative carbon fuel that will eventually flow through our infrastructure and onto our customers.
We would like to believe that total on BP, which often compete with each other signed on with clean energy because of our good looks.
When in reality, we are the perfect partner.
No other company has more experience in monetizing and trading federal and state environmental credits and more importantly, with the largest fueling infrastructure. We provide an orangey pathway that is the most valuable which is at the nozzle dip.
We have already signed up dairies for the new RMG production facilities, which can be funded by these jv's increasingly dairy farmers around the country are realizing the environmental and economic benefits of adding RMG production to their facilities.
And R&D digester to added agricultural site.
Dairy solves their own methane emission issue as well as contribute to tackling climate change overall.
It also helps with our other environmental issues like groundwater and it gives the dairy farmers in additional significant revenue stream.
R&D as a fuel is not a niche and the potential for additional supply in the U S is significant well into the billions of gallons a year that have yet to be developed.
The RMG supply from these dairies that comes on line over the next several years will help to ensure a steady supply of R&D that goes directly into the tanks of our growing number of natural gas fleet customers, but and this is a very important point to understand the RMG that we generate can be the green feedstock for other alternatives.
Fuels, including hydrogen and electric batteries.
When using RMG as the feedstock for hydrogen and electricity fueling we will still generate environmental credits.
The RMG feedstock is critical because alternatives like hydrogen and electric are only as green as the fuel that makes them possible.
As our customers explore different alternatives when they become available we can move with them using a feedstock that is rated many times cleaner than most alternatives. In fact, we have experienced building and operating hydrogen stations and we can retrofit our current natural gas stations to add hydrogen.
The production facilities that we will be constructing and operating with financing from the JV with total on BP will be critical for our future R&D fuel supply.
We've also been active in securing contracts for our current demand just since last December we have signed new contracts to enhance our portfolio representing over 30 million additional gallons of Orangey No. Other company is better positioned to continue to meet the current demand of fleets for this ultra clean fuel.
And on the demand side, we continue to sign new agreements highlighted by L. A metro are the second largest transit agency in the country. It announced the deal to purchase approximately 47 million gallons of RMG from us over the next five years not only is this an impressive amount of fuel. It is a great example of the ease in which a large fleet can switch.
The R&D realized a big reduction in the amount of carbon produced by their 2004 hundred buses immediately.
La Metro Ed already transitioned from diesel buses to natural gas buses. So the switch from fossil fuels <unk> R&D was seamless and literally happened overnight.
As Metro's Chief Sustainability Officer said at the signing of our agreement quote.
Our use of RMG provides the most cost effective equitable clean air strategy end quote.
I Couldnt have said it better la Metro joins other transit authorities, making the switched <unk>, including New York City.
The country's largest agency. We also recently extended our LNG fueling agreement with Santa Monica's Big Blue bus and signed a contract with New Jersey Transit to fuel 190, additional buses with an expected $1 9 million gallons.
<unk> a year.
The ready mixed concrete sector continues to expand with RMG, our longtime customer Cal Portland added 28, new trucks to their fleet of 125 and extended their fueling agreement with us on the revenue side, we signed new fuel agreements with Garden City sanitation Atlas Refuel mission Trail.
<unk> waste systems, and others, representing over $3 7 million, new gallons or extension of current agreements.
We expanded our heavy duty trucking business by signing new deals with Biagi brothers pack anchor STS logistics Green fleet systems in Kenan advantage, which is expanding their fleet of natural gas trucks.
These new deals are result of our zero now and Chevron adopt report financing programs as you know the Chevron partnership specifically targets fleets operating in the ports of L. A and long beach and has been so well received that the first round of financing for new trucks has been completed.
We are now in advanced talks with Chevron to significantly increase the funding and R&D available for the program.
So despite the challenges presented by Covid the transportation industry continues to evolve and seek to do its part in addressing climate issues. There's a lot of pressure on it to do so because 29% of the carbon dioxide produced comes from the commercial transportation sector.
Which is why we're so bullish on the solution that <unk> can provide.
We've gone from selling 13 million gallons of R&D in 2013 to over $153 million last year our.
Our network of stations and customer relationships allow us to deliver substantially more R&D to fleet operators than any other company in the market. In fact, we calculate that we have access to more fueling stations in vehicle fleets than all of our competitors combined.
And we believe this is only the beginning the experience we have gained by being first to market. The knowledge, we have accumulated over the years and dealing with customers needs and our expanded relationships with partners like total BP and Chevron.
Give us reasons for optimism.
And with that I will turn the call over to Bob.
Thank you Andrew.
Today Im going to focus my comments, mainly on our outlook for 2021 with some highlights of 2020.
I am pleased to say, we finished 2020 as expected.
We achieved $45 1 million in adjusted EBITDA versus our guidance of $45 million.
As Andrew noted, our cash and investments at the end of 2020 amounted to $138 5 million, which included $49 5 million in net proceeds remaining from our $50 million loan related to our R&D joint venture activity with BP.
And while overall volumes declined in 2020, our renewable natural gas volumes grew 7% to $153 3 million gallons delivered in 2020 versus $143 3 million gallons delivered in 2019.
All in all we fared very well under the circumstances of 2020.
Looking at 2021. The good news is we are expecting more recovery from the impacts of COVID-19, as the economy continues to pick up particularly in the second half of 2021.
It's also an exciting year as we will expand our renewable natural gas deliveries and particularly increase the mix of carbon negative R&D coming off of dairies.
As well we are moving into 2021 with two exciting joint ventures with two of the top energy companies in the World. We are building on this exciting momentum and look forward to executing on our 2021 plan.
Having said that our GAAP net results will be around breakeven for 2021, which I will point out includes an incremental $7 million and noncash stock compensation compared to 2020.
This $7 million year over year increase in stock compensation reflects our higher stock price.
Also I am not including any estimate of unrealized gains or losses from the change in fair value of our zero now fuel hedge and our expected GAAP net results for 2021.
Neither of these two noncash items, the stock compensation and the fair value adjustments to our fuel hedge impact our adjusted EBITDA.
Our outlook for adjusted EBITDA for 2021 is in the range of 60 million to $62 million, which is an increase of approximately 35% above 2020.
This improvement reflects our assumption of continued economic recovery from COVID-19, and positive contributions from our R&D volume growth as well as the greater mix of carbon negative RMG.
Volumes are expected to return to more normal levels in the back half of this year exiting 2021, where the fourth quarter year over year run rate increase of approximately 12% to 15%.
For the year 2021 volume is expected to grow 6% to 9% over 2020 again, reflecting a continued impact of COVID-19 in the first half of 2021.
Still an improvement from our 5% decline in overall volumes that we saw in 2020 compared to 2019.
R&D volumes are expected to grow around 10% as a subset of our overall volume growth with the volume of our ultra clean negative carbon R&D growing tenfold over 2020.
Total revenue is expected to range from $320 million to $335 million with this range mid to accommodate fluctuations in natural gas costs that impact our retail and certain contracted prices we charge customers.
It does not include any noncash fuel hedge changes that likely will.
Arise during 2021, but that have no impact on our adjusted EBITDA.
Within our total revenue, we are assuming approximately $20 million of alternative fuel tax credit in 2021.
And our station construction sales.
To be slightly higher by 5% to 8% over 2020, as we have a steady slate of construction projects and solid backlog moving into 2021.
Our effective margin per gallon for 2021 is expected to be within a range of 22 to 26.
Noting that the effective margin per gallon for 2020 came in at 22.
With assumed economic recovery in the back half of 2021, a relatively stronger RIN credit price over what we saw throughout 2020 and lower carbon R&D in the mix, we would expect to see our effective margin per gallon in 2021 move up from where it was for.
2020.
Our overall gross margin on all revenues for 2021 will be around 38%.
Our 2021 SG&A is expected to range from $77 million to $84 million keeping in mind. This includes approximately $10 million of stock compensation compared to $3 million in 2020.
We will also see some increases associated with the growth in our R&D business activities.
We are expecting positive cash flow from operations for 2021, and a range of $45 million to $55 million.
Our purchases of property and equipment are expected in a range of $25 million to $31 million, which.
Which is relatively consistent with recent run rates and primarily represents known station builds and upgrades associated with assured volume.
Now specifically on the joint ventures, with total and BP those investments will be accounted for as equity method investments so not consolidated with.
With us putting up up to $50 million and each joint venture representing our 50% interest in each joint venture.
Also as we had announced in December total has agreed to make $45 million available to us to build fueling stations to support long term contracted RMG fueling volumes with this separate capital expenditure, possibly reaching $75 million in 2021.
We are actively addressing our capital needs associated with these exciting growth opportunities.
With that operator, please open the call to questions.
Thank you.
To ask a question. Please press star one on your telephone keypad a call for.
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Our first question is from Eric Stine with Craig Hallum. Please proceed with your question.
Hi, Andrew Hey, Bob.
Alright fair.
Hey, so I don't know if share.
It seems like Youre breaking some news here today, and then I don't believe you announced that you had finalized the JV with BP.
At this point, so I guess, maybe confirm that.
Hopefully that's not something that I missed here.
But just curious what that looks like versus the JV that you announced earlier this week with total.
Does that one was upsized, a little bit and add some language about what that could be long term.
Increased versus when it was originally announced as an Mou in December.
Sure Eric.
You did pickup on that we signed that finalize that agreement with BP. This afternoon. So you are first.
<unk>.
We're excited about both of these joint ventures, I mean, as we as I said in my remarks, I mean, it really puts to work about.
Potentially.
$500 million of.
Of equity.
As you're right. The total JV has actually been kind of Upsized, there, where we can each contribute up to $200 million of equity. So when you put the leverage on top of these when you could have north of.
$1 billion $1 $2 billion for these projects so.
It's it's exciting for us.
The BP <unk>.
<unk> venture already has two projects that are in process up and running.
We're not running but being underway and we've we've <unk>.
<unk> sort of the initial agreements for the first project.
In the total joint venture so we're.
We're going to try to be as expeditious as we as we.
Possible can bringing these projects.
Online.
These are all dairy projects and and Super low negative carbon.
Dairy.
Projects and they're coming in we don't have the exact pathways on this but some of the most recent dairies, we've seen you know or.
Our negative carbon in the 350 range. So these are dramatically lower carbon than than the other fuels out there and so there.
They're powerful.
Got it and just.
Just to confirm on timing, obviously youre going to as you said expeditious.
This is something that we still should think about as more of a.
Where do you start to get the initial benefit below the line.
Very late in 2022, and just curious if youre, if youre able to or willing yet or something we need to wait for to just talk about kind of income contribution per project. Yes, you are right. Eric These projects take a year to 18 months.
Really so.
Youre right. That's when you could expect those to be able to contribute to the projects themselves don't take.
Along but by the time you get the pathway charted and certified.
It's safe to say that it's between a year and 18 months before you could really have those.
Contributing now the projects that we.
Signed in December and it's several of them as I mentioned.
<unk> 30 million gallons <unk> low Ci dairy projects and that those are further along right in that.
Those are coming on now so youll begin to see that contribution.
In 2000, and 2021 and there'll be more I mean, we're working on it I mean look this is fun.
Right now and an exciting time as I mentioned in my remarks, there's billion gallons. There is billions of gallons of potential of of low dairy and when you look at all the sources. There are studies that show that it's approaching 25% to 30 billion gallons. So lots of money will go into developing this we like our position.
<unk>, because we have those nozzle tips, which.
You know I always talk about that but that is a key differentiator between us and others, because we get a chance to then bring a lot of that too.
Two are fueling network into our customers but.
This is this when you look at the economics and the low carbon nature of R&D versus the other alternatives that people are talking about.
This is here today it operates and vehicles that are on the road today it can be dropped into the fleets and it's.
It's unique and so I think as fleets look at there are other alternatives are going to turn to RMG.
Until those other alternatives are ready for the market.
Right got it and maybe a good segue I know you've got a goal to have 100% of your own station volumes to be Orange by 2025, now that you've got BP total Chevron all committed into the low <unk>.
Any thoughts on what type of percentage you might think about out in 2025, when you reach your goal what percentage could be low Ci.
Okay.
Oh Boy I haven't.
No.
I'd be making it up I mean, it's.
Got it out.
Bob You had we'll work on it you heard Bob say that this year, we're going to increase our low Ci tenfold, okay, but we're starting out at a very low base on low Ci.
We are well positioned because we are taking the lion's share of OCI that was already developed and so we're growing we're growing it substantially.
We will begin I think over time to be showing the carbon of our portfolio of fuel and soon that will go negative.
Which is kind of interesting isn't it that we could be selling hundreds of millions of gallons and it actually is negative carbon all of it.
When you blend it all in.
But I don't know wed have to get back to you Rob.
<unk>, Eric I don't know.
The contribution on low Ci versus other.
No that's fair I thought I would just give it a shot.
To be continued in line for you.
And it will increase.
And for year, that's going to go up so.
But it may be a stretch to say, we'd get all the way to 100 or 100% of all low C. A high but.
And obviously, we're going to want to use low Ci if we can right.
Will be meaningful, particularly because of the value of that is ex.
I mean.
Yes, yes, no fair enough for it.
Yes.
Fair enough, maybe maybe just last one for me and I do appreciate all the details because you certainly gave more on the outlook than you ever have in the past, but when you think about the volume dynamic.
Just maybe some thoughts by segment.
Knowing that it's all likely back half loaded but.
Maybe volume improvement year over year expected by segment would be great.
Okay.
Yes, well.
From the I'll call it kind of the core markets.
Refuse transit fleet trucking those those are all.
They'll see good <unk>.
Volume increases that means.
The fleet fleets in trucking are going to be.
In the teens percentage wise over because they are they were fairly significantly impacted this year. So we see them fleets in transit fleets.
Fleets fleets in transits.
Trucking as well we see that.
And improving and in the same kind of bucket and Thats, just because that market is.
It's really evolving.
So you have transit and fleet that are kind of coming off of a tough.
<unk> years, you have trucking that is really gaining momentum and then.
Refuse has kind of steady Eddie last year revenues grew at eight and so exactly so it was a.
It was even a little uptick on its growth rate, but then it.
And I would be kind of close to that so.
And then kind of the rest of it you get into kind of some bulk youll get into energy advantage and.
And other so <unk>.
You end up kind of in that overall.
Six to nine but frankly looking net more at the fourth quarter is really what we were.
Where we see kind of a 12% to 15% year over year, which should.
Start to equate to more of an annual.
Right on that.
So 2021 is still got a little bit as we know for sure.
We're seeing good signs, but we're not quite out of out of the woods on the COVID-19.
Got it okay. Thanks.
Our next question is from Manav Gupta with credit Suisse. Please proceed.
Hey, guys. So you talked about BP and total you mentioned chevron, but I want to highlight something Chevron to day morning at its analyst day event and indicated that they are looking to grow that R&D by 10 times by 2025 non one other question I did ask Mark Nelson head off.
Downstream was how do you plan to distribute it and they said look we can look for distributed but that our partners and you are a key partner. So I'm just trying to understand like VPN for Telus fine, but one of your partner Chevron is going to grow its volume and <unk>.
And how do you fit into that how does adopt a fourth pillar program fit into that if you could talk a little bit from what about Chevron Venice ambitions to grow R&D and how you could quickly for that.
Right, well chevron's, a very valued partner of ours right and we take.
A significant portion of all of the dairy gas that they are producing today. So it comes to us under contract with.
We've increased that over the last year and then of course, you know we have I think whats really innovative program with them and as I mentioned manav that we're expanding it.
We proved it out.
The last six months, that's at the Port of Los Angeles, We call adopt report.
Where chevron's, providing incentive funding to our customers truck owners in the port of Los Angeles as they look at.
They are being forced are faced with over the next couple of years.
Moving toward either electric or.
Or.
Natural gas or LNG trucks at the port that's kind of their choice and or pay a.
A fee to operate a diesel truck and it's got to be a newer truck on top of that newer diesel truck, if theyre able to operate it and so.
We are actually able to use Chevron has worked out a program with us where we're able to provide incentive funding to help defray the cost of that new natural gas trucks.
Which will use RMG from Chevron.
Through our station so it's kind of a win win win win for the air quality down in the port.
The.
Carbon and the tailpipe emissions in the Port of Los Angeles are among the dirtiest in the United States. So it's good for the people that live there is good for the truck owner because it gives them a economic way to to operate for the future.
As compared to their other alternatives, it's good for <unk>.
Moving a significant portion of all of the fuel that chevron's beginning to produce out of their dairy projects and of course.
We're a partner because we're participating at the nozzle tip in participating that way.
So far we are not in.
In the upstream relationship with Chevron, we're really on the downstream and in the marketing side. So we will continue to work with them I was on with the <unk>.
President of Chevron today talking about that as they look at different ways in their infrastructure, where we're here to help in any way we can because after all we've built 1700 18 station 718 station projects over the years more than anybody else really in the world. So we understand this and.
So we're excited about that relationship with them and I saw as you did that was bold statement that this is going to be a significant way for them to work on their de carbonization effort.
Perfect.
Quick question here for us.
Amazon Order 100, PNG LNG trucks, given they're trying to hit that carbon neutrality, most likely David try and go for negative R&D I mean, <unk> will not really get them to negative carbon neutrality by 2040. So again, you haven't signed the contract, but <unk> has contracts with UBS non Fedex so help.
US understand what's the unique proposition of clean fuels why would somebody like an Amazon or anybody else was auditing 1000, R&D CMG trucks and trying to move them from long haul would actually like to sign up with CA, Lenny listen to anybody else.
Well, we have the largest network right in the end.
United States, and so I think that as as fleets like that and we've seen this over the years that national players want to be able to have the optionality to move their vehicles, where they operate and so that's why often that we're able to participate with these these large fleets. That's why we have that.
It's still remaining six years of 150 million gallon.
R&D contract with EPS and so you know that that we have the advantage that we have the most RMG. We are the most flexible R&D portfolio. That's another reason why a large fleet would want to work with US we don't have the dilemma for them, where we have one source that if something.
Into that look these are like anything else occasionally these projects will go down and then all of a sudden that fleet is not able to get the <unk>, we have the ability to move our RMG around and so we give flexibility to the fleet. So it's our network. It's our know how in terms of developing station.
<unk> for these kinds of large players.
It's the R&D supply that we have and so I haven't I didn't specifically say that we have a deal with that fleet that youre talking about but that's why fleets like them wood.
<unk> looked at to clean energy I think because we have those capabilities.
And the last question for me was how much.
Good day existing infrastructure without spending any more capital for the day maintenance capital, but with your existing infrastructure, how much more volume scan this existing infrastructure handle across United States without spending capital into it.
Yes, no. It's a good question Manav.
We'd like to think that our.
Available capacity at the stations that we've already built and paid for is in and around five to 600 million gallons.
So without spending any significant capital.
We can accommodate that much volume. So that's another advantages that we have stations that have unutilized.
Capacity that's available today that are up there that are there and installed and ready to go.
So if I get it right you're doing 100 to 120 per quarter, what you're telling US you can literally double the volume through the same infrastructure without spending a day.
That's right.
Thank you for taking maybe a little more maybe a little more than double net.
Alright, Thank you for taking my question.
Sure.
Thank you our net our next question is from Rob Brown with Lake Street Capital markets. Please proceed.
Good afternoon.
Hey, Rob.
And just following back up on Chevron Chevron and the poor program. You said that first phase was completed how many trucks went through that phase and what's the potential size of kind of a phase III.
That I don't know that we've said that Rob making news here today, it's about 185 to 200 trucks in that first phase and now they're not all.
<unk> contracted.
They're not all on the road yet.
The incentive dollars have been.
Obligated and contracts for the most part of those 200 are all.
Done and now we're working on kind of.
The next.
Phase phases, which should be significantly more than that so.
I can envision that and by the way there was just another round of grant funding, which goes kind of hand in glove with this chevron incentive money.
For another 350 to 400 trucks, which will round out.
That'll happen in the next three months, so youll have about 700 trucks funded.
There's about 250 trucks already operating the port than theirs, but let's call. It 200, and the Chevron program and then about another 700 trucks. The avid all signed onto our program, yet, but I'd like to think that they probably will because it's very attractive.
So you get two or over 1000 trucks.
1200 trucks out of kind of a daily operating there are 16000 trucks in the port for there's really 10000 operate daily. So you are beginning to make significant penetration at the port.
It's really a very interesting testbed for.
Something that's actually operating today in is really great emissions.
Got it goes under the radar a little bit I mean, I think at the same time.
Theres a handful of test electric trucks down there a couple and I don't know if theres any fuel cell trucks. There may be a couple Toyota trucks down there that are testing as well so.
There's a lot of experience being gained.
Doing the duty cycle that needs to be done that's very difficult at the port of La and long Beach.
Okay, Great. That's excellent color. Thank you and then I think you mentioned a potential Capex addition of about $75 million.
That's what is that dependent on and how many stations with that fund.
Well that was that's dependent on growth in the fleet sector right in the trucking sector.
For kind of the.
This RMG growth that we see coming.
And that would get you about another 25.
Large.
For the heavy duty truck stations.
Those will be under customer contract, though theyre not spec we're out of that we're out of the spec business.
Okay.
Okay. Okay. Good and then unless detailed question public was the margin per gallon in the quarter.
It was about 23.
I will turn it over.
Yes.
Any other questions operator, I think that might do it.
Oh, we have Pavel <unk>, yes.
Yes, we do for the Al Martinez with Raymond James. Please proceed.
Hey, thanks for.
For taking the question.
Jim.
<unk> guidance for $60 million to $62 million of adjusted EBITDA.
What's the implied value of the.
Federal tax credit AFDC revenue.
$20 million.
Two zero.
200.
Okay, So that's pretty pretty similar to the.
This past year's level correct.
It is Eric.
No.
Yes.
Because we still do have some kind of a FTC gallons if you will.
Being impacted by Covid for the first half of the year or so.
If that goes up maybe that number could go up.
Okay got it.
And also when we.
When we think about.
The cost of crude.
She is now pushing $70, Brent and safe to say.
Higher on the front end of the curve than just about anybody would've GAAP 100, 120 days ago.
Sure.
Any relevant for that for your economics in 'twenty one afterwards.
Are you, making any call on.
For our diesel gas.
Well I don't know that the numbers that Bob.
<unk> gave you wood wood.
Well I'll, let him speak to it may look at me funny here I mean, I don't know that we've as we've given that guidance here.
Tried to adjust our.
Adjusted for let's say, if the if the year finishes out on an average of $65, a barrel or something like that but clearly.
$65 oil here has made a marked improvement and increase in.
And diesel prices right I mean at the depths of forget the negative print barbell right, but at the depths of AV Covid back in April may of last year.
We saw diesel prices dollars 60.
In certain of our markets in the southeast in those in that pad today. They average diesel price in the United States three Bucks out here. This morning at the Port of Los Angeles, I got to report $3 89.
So our prices have moved up.
Our feedstock natural gas is.
Stable in comparison, and so it's significant for us.
That's exactly what I was what I was kind of looking at.
Lastly, this one is a little broader point historically LNG volumes.
Have declined every year since 2014, and obviously this past year there was COVID-19 impact.
Of course, not before that if there is something structural going on in that heavy duty long haul market. That's caused volumes to go from 80 million gallons in 2014 to 60.
Currently.
Well.
Bob's got some numbers here to review, but look I think.
<unk>.
<unk>.
The majority of the.
Of the heavy duty truck space is moving towards CMG non LNG.
And I mean, that's it in a nutshell I mean youre seeing more as this market has developed so far.
Still think there may be some LNG.
As it gets a little bit more mature out of out of.
Route.
Deliveries sleeper cabs could avail themselves to LNG.
But the industry has made tremendous strides on the on the fuel package onboard the vehicle the range of CMG.
The delivery of CMG in the urban areas as more trucks over time.
Kind of the truck getting truck drivers at home at night has led to <unk>.
Slip seating and.
It is meant kind of more superregional trucks than out of route type what we used to think of a truck driver of truck driving.
So I think <unk> very super competitive fuel and so more of it's going to <unk> the analogy.
And look we've had to we've had to make adjustments I mean, there's no secret here I mean, we built some LNG stations of years ago 10 years ago, now right, probably too many and so we've made adjustments to that we have good news is we can make <unk> right. We can put in some day.
<unk> equipment.
For <unk> at our stations and in some cases, we've had large fleets.
We have great locations right and so we've made the additions where we've needed to based on customer demand to put <unk> in.
Right.
The margin profile meaningfully different between the two fuel category.
P&G is better margin CMG has better margins.
Okay.
So it's not a bad thing probably is probably a good thing.
Yes.
There are a couple of things where LNG LNG is more range.
LNG.
Tank package is cheaper so the truck can be.
Can be cheaper.
But the field tends to be a little bit more expensive and the handling of its a little bit more complicated.
So <unk> itself is awfully tough to beat.
Yes.
Understood.
Alongside Theyre, making money either way right.
Exactly I mean look if there is a mistake, we probably built more LNG stations, we should've picked them and because we really felt like at the time CMG.
You have to go back with me rich.
Remember that we bought the first 100 trucks to prove out that this would work and it was in a port application. So it was really a drayage application. We did no over the road trucking would really work and we didn't really have the range for it to work.
We were limited our range.
But look the industry responded beautifully in the tank packages today in the back of the cash.
Our suite and you have 650 miles range.
Which we didn't have in the beginning and so <unk> really.
Tough competitor.
<unk> today.
Okay.
Appreciate it.
You bet.
This does conclude our question and answer session I would like to turn the conference back over to management for closing remarks, well. Thank you operator, we want to thank everyone for listening on the call. This afternoon and look forward to updating you on our progress on the next quarter.
Good afternoon.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.