Q1 2024 Clean Energy Fuels Corp Earnings Call

Operator: Good day, everyone, and welcome to today's Clean Energy Fuels first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star and one on your touchtone phone. You may withdraw yourself from the queue by pressing star two. Please note this call may be recorded. I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Mr. Robert Vreeland, Chief Financial Officer. Please go ahead.

Robert M. Vreeland: Earlier this afternoon, Clean Energy released financial results for the first quarter ending March 31st, 2024. 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.

Good day, everyone and welcome to today's clean energy fuels first quarter 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. Later, you will have the opportunity to ask questions. During the question and answer session. You may registered to ask a question at any time by pressing star and one on your Touchtone phone, you may which all yourself.

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Music: In the queue by pressing star two please note. This call may be recorded and will be see anybody should you need any assistance. It is now my pleasure to turn the conference over to Mr. Robert Vreeland, Chief Financial Officer. Please go ahead.

Speaker Change: Thank you operator.

Music: Earlier this afternoon clean energy released financial results for the first quarter ended March 31st two.

Music: 2024.

Music: 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 or the call is also being webcast.

Music: There will be a replay available on the website for 30 days.

Robert M. Vreeland: 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 risk, uncertainties, and assumptions that are difficult to predict. Such forward-looking statements are not guarantees 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-Q filed today.

Music: 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.

Robert M. Vreeland: 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.

Robert M. Vreeland: Factors that could cause or contribute to such differences are described in detail in the risk factors section of the <unk>.

Robert M. Vreeland: Clean Energy's Form 10-Q filed today.

Robert M. Vreeland: These forward-looking statements speak only as of the date of this release, and 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.

Robert M. Vreeland: These forward looking statements speak only as the date of this release company undertakes no obligation to publicly update any forward looking statements or supply new information regarding the circumstances. After the date of this release.

Robert M. Vreeland: 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.

Robert M. Vreeland: <unk> 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.

Robert M. Vreeland: 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.

Andrew J. Littlefair: The Asian 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.

Andrew J. Littlefair: With that I will turn the call over to our President and Chief Executive Officer, Andrew Little Fair.

Andrew J. Littlefair: Thank you, Bob. It pleases me to say that we kicked off 2024 with a strong first quarter. Our base business of fueling fleets, constructing and maintaining stations for those fleets, and providing other services that keep trucks, shuttles, and buses operating on clean fuel performed well. We also made good progress in our business of developing renewable natural gas dairy projects. I'll expand with a few more details on both in a moment.

Andrew J. Littlefair: Thank you Bob.

Andrew J. Littlefair: Please me to say that we kicked off 2024 with a strong first quarter.

Andrew J. Littlefair: Our base business of stealing fleets constructing and maintaining stations for those fleets and providing other services that keeps trucks shuttles and buses operating on a clean fuel performed well.

Andrew J. Littlefair: We also made good progress in our business of developing renewable natural gas dairy projects I'll expand with a few more details on both in a moment.

Andrew J. Littlefair: The 8.6% year-over-year growth in R&G fuel volumes is a testament to the stability and growth in our base business. In addition, it reflects the significant R&G volume that is now flowing through the new, state-of-the-art fueling station that we have built and opened over the last two years, where we have an anchor customer in Amazon. We are also seeing other vehicles begin to fuel at these stations, which helps our fuel market. As always, Bob will give you more details about our financial results, but I would be remiss in not calling out the $12.8 million in adjusted EBITDA for Q1, compared to minus $ 4 million in Q1 of last year.

Andrew J. Littlefair: The eight 6% year over year growth in R&D fuel volumes is a testament to the stability and growth in our base business.

Andrew J. Littlefair: In addition, it reflects the significant R&D volume that is now flowing through the new state of the art fueling stations that we have built and opened over the last two years, where we have an anchor customer or an Amazon. We are also seeing other vehicles begin to fuel at these stations, which helps our fuel margins.

Andrew J. Littlefair: As always Bob will give you more details about our financial results, but I would be remiss in not calling out the $12 $8 million and adjusted EBITDA for Q1 comps.

Andrew J. Littlefair: Compared to minus $4 million of Q1 of last year.

Andrew J. Littlefair: A significant upswing is attributed to the growth in our core business that I just mentioned, as well as the circumstance in which we found ourselves during the beginning of last year with historically high natural gas prices in California that impacted our bottom line. However, our balance sheet remains strong with almost $250 million of cash and investments on hand.

Andrew J. Littlefair: Significant upswing is attributed to the growth in our core business that I, just mentioned as well as circumstance, which we found ourselves during the beginning of last year.

Andrew J. Littlefair: With historically high natural gas prices in California that impacted our bottom line.

Andrew J. Littlefair: Our balance sheet remains strong with almost $250 million of cash and investments on hand.

Andrew J. Littlefair: And you should see continued improved adjusted EBITDA results through this year. I'd like to take a moment to address the environmental credit situation because I think some might tie the ups and downs of those prices a little too tightly to our overall. Of course, we're not pleased with where the California LCFS prices have been trading as of late. During the first quarter of 2024, the federal D3 wind prices remained strong and positively impacted our results. However, we have witnessed a volatile LCFS credit price for quite some time. So we went into 2024 planning for that.

Andrew J. Littlefair: And you should see continued improved adjusted EBITDA results through this year.

Andrew J. Littlefair: I'd like to take a moment to address the environmental credit situation, because I think some might tie the ups and downs of those prices a little too tightly to our overall business of course, we're not pleased with where the California L. CFS prices had been trading as of late.

Andrew J. Littlefair: During the first quarter of 2020 for the Federal D. Three wind prices remained strong and positively impacted our results.

Andrew J. Littlefair: We have witnessed a volatile L CFS credit price for quite some time. So we went into 'twenty 'twenty four planning for that to continue.

Andrew J. Littlefair: And it's our strong view that a higher LCFS credit price is needed over time to support the robust pace of low carbon energy investment necessary to achieve California's emissions target. And we believe that members of the California Air Resources Board and staff understand this and are working with all stakeholders on a solution. But like most policy matters, it requires time and process. Ultimately, we believe the compliance curve will be strengthened and will help. Let me drill down a little further.

Andrew J. Littlefair: And as to our strong view that a higher Lcs, that's credit prices needed over time to support the robot robust pace of low carbon energy invest investment necessary to achieve California's ambitious targets.

Andrew J. Littlefair: And we believe that members of the California Air Resources Board and staff understand this and are working with all stakeholders on a solution.

Andrew J. Littlefair: But like most policy matters. It requires time and process ultimately we believe the compliance curve will be strengthened and will help.

Andrew J. Littlefair: Let me drill down a little further.

Andrew J. Littlefair: Our fueling station and R&G distribution business generates margin from D3 RIM credit and LCFS credits. California, and Oregon Volume

Andrew J. Littlefair: Our fueling station in R&D distribution business generates margin from deep three RIN credits.

Andrew J. Littlefair: L CFS credits, California, and Oregon volumes.

Andrew J. Littlefair: Federal Alternative Fuel Tax Credit, and margin on the fuel cell itself. Using R&G instead of diesel results in lowering fueling costs and lower emissions for our customers. It also contributes to a solid base margin for us. The credits are additive to the. On the R&G production side, our dairy projects generate revenue from RIN credits. LCFS credits, and R&G sales. The financial return of these projects is further enhanced by credits that will be generated under the Inflation Reduction Act through the Investment Tax Credit and, beginning in 2025, the 45Z Production Tax Credit.

Andrew J. Littlefair: Federal alternative fuel tax credits and margin on the fuel cell itself.

Andrew J. Littlefair: Using <unk> instead of diesel results in lowering fueling costs and lower emissions for our customers.

Andrew J. Littlefair: It also contributes to a solid base margin for us.

Andrew J. Littlefair: The credits are additive to this base margin.

Andrew J. Littlefair: On the LNG production side, our dairy projects generate revenues from our RIN credits L.

Andrew J. Littlefair: CFS credits and R&D sales.

Andrew J. Littlefair: The financial return of these projects is further enhanced by credits that will be generated under the inflation reduction act through the investment tax credit and beginning in 2025, the 45 Z production tax credits.

Andrew J. Littlefair: These projects produce ultra-low carbon intensity fuel for customers while also providing a solution for our partners in the agriculture section. Let me return to the growth in our core business for a moment, which is providing fuel and reliable services to our fleet customers. Over the last few months, we have signed agreements with municipalities across the country, demonstrating the continued confidence in the reliability and emission benefits of operating with R&G. These agreements included everything from Long Beach Transit for about a million and a half gallons of R&G a year to operate their fleet of city buses, to the vehicles at the Port of Seattle, and to Atlantic County Utilities Authority in New Jersey, which is expected to use a half a million gallons of RNG for their waste collection.

Andrew J. Littlefair: These projects produce ultra low carbon intensity fuel for customers, while also providing a solution for our partners and the agriculture section.

Andrew J. Littlefair: Chuck.

Andrew J. Littlefair: Let me return to the growth in our core business for a moment, which is providing fuel and reliable services to our fleet customers.

Andrew J. Littlefair: Over the last few months, we have signed agreements with municipalities across the country.

Andrew J. Littlefair: Demonstrates the continued confidence in the reliability and emission benefits of operating the Darren Gee.

Andrew J. Littlefair: These agreements included everything from long Beach transit for about a million and half gallons of R&D a year to operate their fleet of city buses.

Andrew J. Littlefair: The vehicles at the Port of Seattle and to Atlantic County Utilities Authority in New Jersey that is expected to use a half a million gallons of orange G for their waste collection vehicles.

Andrew J. Littlefair: Another deal that we just recently signed is one that I know our sales team and myself are particularly proud of, and that is Harris County Metro, which services the greater Houston area. Houston Metro is one of the largest transit agencies in the country that operates their fleet of buses primarily on diesel.

Andrew J. Littlefair: Another deal that we just recently signed is one that I know our sales team and myself.

Andrew J. Littlefair: Particularly proud of and that is Harris County, Metro, which services the greater Houston area.

Andrew J. Littlefair: Houston Metro is one of the largest transit agencies in the country that operates their fleet of buses primarily on diesel.

Andrew J. Littlefair: Well, that's about to change, and they're making the switch to clean energy. We will be building a new, state-of-the-art station for up to 120 of the first buses to operate on natural gas. All told, the close-to-$15 million contract to construct a new station and to modify their facilities for natural gas fueling represents one of the largest transit Agreements we've made in many years. These municipalities are on the hook with their constituents to keep the buses running on time and the trash picked up.

Andrew J. Littlefair: That's about to change and they're making the switch with clean energy.

Andrew J. Littlefair: We will be building a new state of the art station for up to a 120 of the first buses operate on natural gas all told that close to $15 million contract to construct a new station and modify their facilities for natural gas fueling represents one of the largest trains as agreements we've made in many years.

Andrew J. Littlefair: These municipalities are on the hook by their constituents to keep the buses running on time in the trash picked up.

Andrew J. Littlefair: It must depend on vehicles that operate not only sustainably but reliably as well. R&G is the cleanest fuel available and is the most reliable performer of any other alternative. And no other company in the country keeps those stations, which provide that fuel, operating better than Clean Energy. Another unique advantage that Clean Energy holds over virtually every other fuel provider is that we now produce our own ultra-low carbon R&G at Dairy. This is in addition to the approximately 78 different offtake agreements we have with R&G suppliers, which provide the largest natural gas fueling infrastructure in North America.

Andrew J. Littlefair: It must depend on vehicles that operate not only sustainable but reliably as well.

Andrew J. Littlefair: <unk> is the cleanest fuel available and as the most reliable performer of any other alternatives.

Andrew J. Littlefair: And no other company in the country keeps those stations, which provides that fuel operating better than clean energy.

Andrew J. Littlefair: Another unique advantage that clean energy holds over virtually every other fuel provider is that we now produce our own ultra low carbon R&D of dairies.

Andrew J. Littlefair: This is in addition to the approximately 78 different offtake agreements, we have with R&D suppliers.

Andrew J. Littlefair: Provide the largest natural gas fueling infrastructure in North America.

Andrew J. Littlefair: We deliver R&G to 454 different stations daily, and R&G now represents 88% of the transportation fuel we sell. This allows us to give R&G customers the greatest level of assurance that they will receive this clean fuel without interruption. Others try to match one R&G production project with one contract fleet customer. But customers, especially national fleets, want to know that providers and operators of their stations have a portfolio of supply in case there's an interruption in any one supplier.

Andrew J. Littlefair: We deliver RMG to 454 different stations daily and R&D now represents 88% of the transportation fuel we sell.

Andrew J. Littlefair: This allows us to give R&D customers the greatest level of assurance that they will receive this clean fuel without interruption.

Andrew J. Littlefair: Others try to match one R&D production project with one contract fleet customer.

Andrew J. Littlefair: Our customers, especially national fleets want to know that providers and operators of their stations have a portfolio of supply in case, there's interruption in any one supplier.

Andrew J. Littlefair: No other company provides that confidence the way Clean Energy does. In fact, we recently won the deal to service Fort Collins Transit by beating out 12 other competitors, including two global energy majors, because of the agency's confidence in our ability to keep the R&G flowing 24-7. And we apply this strength across all transportation sectors, whether it's for municipalities or the world's largest logistics operators like UPS, for which we provide R&G in over 25 states, and Amazon, for which we have constructed 19 state-of-the-art R&G stations over the last several years that provide fast-fill and time-fill options for thousands of heavy-duty trucks.

Andrew J. Littlefair: No other company provides that confidence the way clean energy does in fact, we recently won the deal the service Fort Collins transit by beating out 12, other competitors, including two global energy majors because of the agency's confidence in our ability to keep the R&D flowing 24 seven.

Andrew J. Littlefair: And we apply the strength across all transportation sectors, whether its for municipalities or the world's largest logistics operators like UBS for which we provide RMG in over 25 states.

Andrew J. Littlefair: Amazon for which we have constructed 19 state of the art R&D stations over the last several years that provide SaaS spill and time, Phil offer options for thousands of heavy duty trucks.

Andrew J. Littlefair: On a daily basis, Amazon trucks are fueling at clean energy stations in 26 different states. We feel good in our positioning at this critical time as the Cummins X-15N engine hits the heavy-duty truck market. Reviews of the new engine by those fleets that have been testing it have been stellar.

Andrew J. Littlefair: On a daily basis, Amazon trucks are fueling at clean energy stations in 26 different states.

Andrew J. Littlefair: We feel good in our positioning at this critical time as the Cummins X 15 and engine hits the heavy duty truck market.

Andrew J. Littlefair: The reviews of the new engine by those fleets that have been testing it have remained stellar.

Andrew J. Littlefair: Moving to our R&G production business, we've had a busy first part of the year, completing a series of digester projects at dairies across the Midwest with our partner BP. These projects began injecting R&G into the pipeline a few months later than we had originally hoped, but we remain pleased with the overall outcome and continue to learn with every project. 2023 was one of the worst markets in decades for our friends in U.S. dairy. The combination of low milk prices and high feed costs created very challenging financial conditions for dairy producers, including some of the farms we partner with for our R&G projects.

Andrew J. Littlefair: Pivoting to our RMG production business, we've had a busy first part of the year completing a series of Digest your projects are dairies across the Midwest with our partner BP.

Andrew J. Littlefair: These projects began injecting R&D into the pipeline a few months later than what we had originally hoped but we remain pleased with the overall outcome and continue to learn with every project.

Andrew J. Littlefair: 2023 was one of the worst markets in decades for our friends in the U S dairy business.

Andrew J. Littlefair: The nation of low milk prices and high feed costs created very challenging financial conditions for dairy farms.

Andrew J. Littlefair: <unk> some of the farms, we partner with for R&D projects.

Andrew J. Littlefair: To that point, a dairy in Idaho that hosts one of our 50-50 joint venture projects with BP filed for Chapter 11 bankruptcy protection in April. The proceedings are at an early stage, so we're not able to comment on the details of the process.

Andrew J. Littlefair: To that point of dairy in Idaho that hosts one of our 50 50 joint venture projects.

Andrew J. Littlefair: BP filed for chapter 11 bankruptcy protection in April.

Andrew J. Littlefair: The proceedings are at an early stage. So we're not able to comment on the details of the process.

Andrew J. Littlefair: So we are, of course, monitoring this situation very closely. Importantly, the dairy is still operating while the reorganization proceeds. And our R&G project creates an important operational, environmental, and financial solution for the farm once the project is completed. Despite some challenges, our view on dairy R&D remains intact. These long-term projects produce the lowest carbon fuel for the customer, and they provide an important solution for our farm partners, all while capturing methane from animal waste and removing it from the atmosphere.

Andrew J. Littlefair: We are of course monitoring the situation very closely.

Andrew J. Littlefair: Fortunately the dairy is still operating while the reorganization proceeds.

Andrew J. Littlefair: Our R&D project creates an important operational environmental and financial solution for the farm once the project is completed.

Andrew J. Littlefair: Despite some challenges our view on dairy R&D remains intact.

Andrew J. Littlefair: These long term projects produced the lowest carbon fuel for the customers.

Andrew J. Littlefair: And they provide an important solution for our pharma partners, all while capturing methane from animal waste and removing it from the atmosphere.

Andrew J. Littlefair: As an example of our commitment to adding to our low-carbon R&D supply, I'm pleased to say that we are expanding our current relationship with MOS Energy, with whom we have R&G off-take contracts, by signing a new development partnership to construct R&G Digest at a handful of dairies across the country. Daryl Moss and his team are some of the best developers in the business, and we're excited about this development agreement But we just signed it yesterday, so we will be formally announcing it with a press release early next week with more detail. The other recent partnership that we have formalized is with Frank Brand, owner of South Fork Dairy in Dimatex. You might remember, it was Frank Stehry that experienced a tragic fire last year.

Andrew J. Littlefair: As an example of our commitment to adding to our low carbon RMG supply I'm pleased to say that we are expanding our current relationship with mass energy works with whom we have RMG offtake contracts by <unk>.

Andrew J. Littlefair: Signing a new development partnership to construct RMG digesters at a handful of areas across the country.

Andrew J. Littlefair: Darryl <unk> and his team are some of the best developers in the business and we're excited about this development agreement.

Andrew J. Littlefair: But we just signed yesterday. So we will we will be formally announcing it with the press release early next week with more details.

Andrew J. Littlefair: Frank lived up to his reputation as one of the best in the business by overcoming this horrible situation, rebuilding his barn, and replacing his large herd in less than a year. He is also committed to working with Clean Energy and building an R&G digester for all the business and environmental reasons it allows. We couldn't be prouder to call Frank our partner. I hope I've left you with the impression that we remain optimistic about our future.

Andrew J. Littlefair: The other recent partnership that we have formalized as with Frank brand owner of South for Gary in <unk>, Texas.

Andrew J. Littlefair: Remember, it's Frank's dairy that experienced a tragic fire last year.

Andrew J. Littlefair: <unk> lived up to his reputation as one of the best in the business by overcoming this horrible situation.

Andrew J. Littlefair: Rebuilding as barn, and replacing as large herd in less than a year.

Andrew J. Littlefair: He is also committed to working with clean energy and building an R&D digester for all of the business and environmental reasons. It allows we couldnt be prouder to call Frank our partner.

Andrew J. Littlefair: I Hope I've left you with the impression that we remain optimistic about our future funding.

Andrew J. Littlefair: The fundamentals of our business of producing and selling R&G to the transportation industry are strong and growing, despite some external forces that might not always seem to go our way. We believe we put the best team in place to execute our strategy, and they prove that every day. And with that, I'll turn the call over to Bob.

Andrew J. Littlefair: The fundamentals of our business of producing and selling RMG to the transportation industry is strong and growing despite some external forces that might not always seem to go our way.

Andrew J. Littlefair: We believe we put the best team in place to execute our strategy and they prove that every day and with that I'll turn the call over to Bob.

Robert M. Vreeland: Thank you, Andrew. Good afternoon to everyone.

Bob: Thank you Andrew and good afternoon to everyone. We.

Robert M. Vreeland: We had a solid first quarter of 2024 with revenue of $103.7 million, a gap loss of $0.08 per share, a non-gap loss of a penny a share, and adjusted EBITDA of $12.8 million. All the earnings metrics are much improved from a year ago and were better than our expectations for the first quarter of 2024. Recall that the first quarter of 2023 was significantly impacted by the historically high natural gas prices in California, which ultimately was a drag on earnings but was a big positive on revenue since much of that increase in gas costs was reflected in our pricing to customers. That's actually the main reason you see a year-over-year decline in our revenues, because of that run-up in the natural gas costs in California last year.

Bob: We had a solid first quarter of 2024 with revenue of $103 7 million a GAAP loss of eight cents per share non-GAAP loss of a penny a share and adjusted EBITDA of $12 8 million.

Robert M. Vreeland: All of the earnings metrics are much improved from a year ago and were better than our expectations for the first quarter of 2024.

Robert M. Vreeland: Call that the first quarter of 2023 was significantly impacted by the historically high natural gas prices in California.

Robert M. Vreeland: Ultimately was a drag on earnings but was a big positive on revenue since much of that increase in gas costs was reflected in our pricing to customers.

Robert M. Vreeland: Actually the main reason you see a year over year decline in our revenues because of that run up in natural gas costs in California last year.

Robert M. Vreeland: Having said that, our net results for the first quarter of 2024 certainly got off to a better start than a year ago, which puts us in a good position to remain confident in maintaining our annual guidance for 2024. The first quarter results for 2024 can be summed up by saying we had continued growth in R&G volumes. RIN revenues exceeded our expectations, which helped to offset certain LCFS credit sales that moved into the second quarter.

Robert M. Vreeland: Having said that our net results for the first quarter of 2024, certainly got off to a better start than a year ago.

Robert M. Vreeland: Which puts us in a good position to remain confident in maintaining our annual guidance for 2024.

Robert M. Vreeland: First quarter results for 2024 can be summed up by saying we had continued growth in R&D volumes.

Robert M. Vreeland: RIN revenues exceeded our expectations, which helped to offset certain L. CFS credit sales that moved into the second quarter we.

Robert M. Vreeland: We experienced lower net losses than expected from our R&G equity method investments, while the rest of the business, including our underlying fuel margins, formed in line with expectations. To shed some light on this, in the first quarter of 2024, the upside in RIN revenue was principally due to an average RIN price realized of $3.12. Plus, we saw better net economics for us from our R&G supply offtake.

Robert M. Vreeland: We experienced lower net losses than expected from our R&D equity method investments, while the rest of the business, including our underlying fuel margins.

Robert M. Vreeland: Formed in line with expectations.

Robert M. Vreeland: Shed some light on this in the first quarter of 2020 for the upside in rent revenue was principally due to an average RIN price realized of $3.12.

Robert M. Vreeland: Plus we saw better net economics to us from our R&D supply optics.

Robert M. Vreeland: Our LCFS revenues were slightly negative for the first quarter of 2024 because we sold $2.25 million of LCFS credits in the first week of April that we ordinarily would have sold within the first quarter. Those LCFS revenues of $2.25 million will show up in our second quarter results. We would expect to get back into a normal LCFS credit sale timing cadence for the end of the second quarter, with a plan to transact all of our LCFS sales in the second quarter.

Robert M. Vreeland: Our L. CFS revenues were slightly negative for the first quarter of 2024, because we sold $2.25 million of L. L. CFS credits in the first week of April that we ordinarily would have sold within the first quarter.

Robert M. Vreeland: Those L. CFS revenues of 2.25 million will show up in our second quarter results, we would expect to get back into a normal L. CFS credit sale timing cadence for the end of the second quarter with a plan to transact all of our <unk> sales in the second quarter.

Robert M. Vreeland: And finally, the lower net loss than expected from our R&G equity method investments is principally related to the timing of finalizing construction and placing the dairy projects into service and the ramp-up of operations. We ended the first quarter with approximately $249 million in unrestricted cash and investments. We maintain our capital expenditure guidance of $60 million for our distribution business. We are raising our forecast for our dairy R&G investments to $120 million, up from $100 million, principally due to the MOS Energy R&G deal that Andrew mentioned. With that, Operator, please open the call to questions. Thank you.

Robert M. Vreeland: And finally, the lower net loss than expected from our R&D equity method investments.

Robert M. Vreeland: This principally related to the timing of finalizing construction and placing the dairy projects into service and the ramp up of operations.

Robert M. Vreeland: We ended the first quarter with approximately 249 $250 million in unrestricted cash and investments, we maintain our capital expenditure guidance of $60 million for our distribution business.

Robert M. Vreeland: We are raising our forecast for our dairy R&D investments to a $120 million up from $100 million.

Robert M. Vreeland: Due to the mass energy RMG deal that Andrew mentioned.

Operator: Thank you. At this time, if you'd like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Again, that is star 1 if you'd like to ask a question. And our first question will come from Eric Stine with Craig Hallam.

Robert M. Vreeland: With that operator, please open the call to questions.

Eric Andrew Stine: Thank you at this time, if you'd like to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star two.

Eric Andrew Stine: That is star one if you'd like to ask a question.

Operator: And our first question will come from Eric Stine with Craig Hallum.

Eric Andrew Stine: Andrew Hi, Bob.

Eric Andrew Stine: Hi, there.

Eric Andrew Stine: Hey, so just starting with the 15 liter. I know that Cummins has had some pretty nice targets out there for adoption here in 24, 25, and 26. And I know we're getting closer. OEMs are starting to talk about production dates and that sort of thing. Just curious what your thoughts are, what you're hearing, and kind of what your expectation is throughout the remainder of 24 and then 25, 26.

Eric Andrew Stine: So just starting with the 15 liter I know the Cummins has had some pretty.

Eric Andrew Stine: Pretty nice targets out there for adoption here in 'twenty four 'twenty five 'twenty six.

Eric Andrew Stine: And I know, we're getting closer Oems starting to talk about.

Eric Andrew Stine: Reduction dates and that sort of thing just curious what your thoughts are what you're hearing and kind of what your expectation is throughout the remainder of 2004, and then 'twenty five 'twenty six.

Andrew J. Littlefair: Yeah, you know, Eric, I don't have any fuel right at this point with the numbers, and I'm guessing you'll have to get those, you know, from Cummins. I have been to Cummins recently, and one of the things that impressed me is that back in Indiana, one of the things they're really pleased and excited about. They really feel like the technology and what they've been able to bring to this engine is really impressive, so they're excited. So that makes me excited.

Speaker Change: Yes, Eric I don't have any feel right at this point with the numbers and I'm guessing you'll have to get those from some comments I have.

Andrew J. Littlefair: Then recently to Cummins and one of the things that impressed me is back in Indiana and one of the things as they are very pleased and excited about this engine.

Andrew J. Littlefair: It really feel like the technology.

Andrew J. Littlefair: What they've been able to bring this engine is really impressive and so theyre excited so that makes it makes me excited.

Andrew J. Littlefair: I do know that as we keep up with customers that are testing the engines, the feedback continues to be very strong, and the excitement is high. So the expectation is that it is going to be very well received as those orders begin to come in. One update is some of the validation units are kind of a term of art in the engine businesses. The next batch of trucks has been built and is coming down the line.

Andrew J. Littlefair: I do know as we keep up with customers that are testing engines. The feedback continues to be very strong and the excitement high so.

Andrew J. Littlefair: The expectation is that that that is going to be very well received as those orders begin to come in.

Andrew J. Littlefair: One update as some of the data.

Andrew J. Littlefair: Nation units, it's kind of a term of art in the in the.

Andrew J. Littlefair: Engine business is the next batch of trucks has been built coming down the line.

Andrew J. Littlefair: And those engines are now making their way to customers. In fact, we'll get one here shortly that we'll be using for our customers. And our customers, if it's any indication, Eric, we book that truck out for one week and two week tests for real loads, real deliveries of a product for our customers in those trucks for the next several months. So the excitement, I think, is good for this product. And I'm just hoping that we'll know more here in the early part of the summer about these things.

Andrew J. Littlefair: And those engines are now making their way to customers in fact, we will get one here.

Andrew J. Littlefair: Shortly that will be using to for our customers and our customers if it's any indication Eric.

Andrew J. Littlefair: We booked that truck out in one week to week.

Andrew J. Littlefair: Test for real loads will deliveries for.

Andrew J. Littlefair: Product for our customers in those trucks for.

Andrew J. Littlefair: For the next several months so the.

Andrew J. Littlefair: The the.

Andrew J. Littlefair: The excitement I think is good for this this product and I'm, just hoping that we'll know more here in the early part of the summer of how these orders are going.

Andrew J. Littlefair: Got it. And I won't ask you, which I haven't in the past, about maybe future plans with Amazon, but maybe you could talk about, you mentioned some of the volumes you're starting to see at those Amazon stations from other fleets. I'm curious, again, coming back to the 15-liter, how did that play into those conversations? Obviously, those stations have been built with time fill, as you're familiar with, for the Amazon trucks. And of course, Amazon avails itself to the fast fill as well.

Speaker Change: Got it.

Speaker Change: I won't ask you what kind of happened in the past about maybe future plans with Amazon, but maybe you can talk about.

Andrew J. Littlefair: You mentioned some of the volumes you are starting to see at those Amazon Amazon stations from other fleets.

Andrew J. Littlefair: Just curious again coming back to the 15 liter.

Andrew J. Littlefair: Or the other into those conversations.

Andrew J. Littlefair: Thats, obviously those stations have been built with time village you're familiar with four four the Amazon trucks and of course Amazon of bills himself to the fast fill as well, but each of those stations as pumps kind of on the front part of the of those facilities that can fuel.

Andrew J. Littlefair: But each of those stations has pumps kind of on the front part of those facilities that can fuel outside fleets. And it's been nice to see, for instance, the other day. I have a picture that one of our salesmen sent me from San Bernardino, which is a large station that has, I think, almost 200 Amazon trucks at it out in the Inland Empire. And there were four different unrelated heavy-duty vehicles from other fleets.

Andrew J. Littlefair: Fuel outside fleets and it's been nice to be see for instance, the other day a picture that one of our salesman set based on San Bernardino, which large station.

Andrew J. Littlefair: I think almost 200 Amazon trucks at it.

Andrew J. Littlefair: Out in the inland Empire, and there were four different unrelated heavy duty vehicles.

Andrew J. Littlefair: So, we're beginning to see that happen. And of course, the X15N will be important to this, right? Because as those other 15-liter trucks become available to other fleets, these locations are all in the perfect place. That's why they've been put there by Amazon.

Andrew J. Littlefair: From other fleets. So we're beginning to see that happen and of course the.

Andrew J. Littlefair: <unk> X 15, and will be important to this right because as those other 15 leader.

Andrew J. Littlefair: Trucks become available to other to other fleets. These locations are all on the perfect. Eric that's why they're they've been put there by Amazon they're in warehouse districts and.

Andrew J. Littlefair: And so it should be very well suited as these engines come to market. So we're glad to see that. We're beginning to see those volumes ramp up. It's just as we hope.

Andrew J. Littlefair: And so it should be very well suited as these engines come come to market. So we're glad to see that we are beginning to see those volumes ramp up and it's.

Andrew J. Littlefair: As we hoped.

Speaker Change: Alright, Thank you very much.

Andrew J. Littlefair: Okay.

Operator: Thank you. The next question will come from Manav Gupta with UBS.

Andrew J. Littlefair: Thank you. Our next question will come from Manav Gupta with UBS.

Manav Gupta: Morning guys, congrats on the start of the year. My first question is policy-related. If 45Z is implemented in its current form, then you with negative CIRNG could be a major beneficiary of it. I'm just trying to understand, I think 40E guidance is out, 40V guidance is out, but anything we have heard on 45Z, if the plan is still that it goes into effect early 2025, so if you could help us understand the impact on you and what you are hearing in terms of when the government could be out.

Manav Gupta: Good morning, guys congrats stock to the year.

Manav Gupta: First question policy related.

Manav Gupta: Yes.

Manav Gupta: It's implemented.

Manav Gupta: Then you have the negative.

Manav Gupta: Could be immediate but just trying to understand that the.

Manav Gupta: Guidance is valid for PV.

Manav Gupta: But any yes.

Manav Gupta: You have heard on party.

Manav Gupta: Is the plan still that it goes into 'twenty.

Manav Gupta: 25, so if you could help us understand the impact on you and what Youre hearing in terms of when the government could be outbid.

Andrew J. Littlefair: You know, you're breaking up a little bit, Manav, but if I understand your question correctly, you're at 45 Z. Yeah, it's all about Z, nothing about 40 UIV. Okay, so Z is, you know, we've In fact, I was at a conference earlier this week where John Podesta, who is, you know, responsible at the White House for kind of shepherding all of the IRA, actually talked about, you know, that they're moving through these different things at Treasury. And so it's our understanding that 45Z should come out here sometime later this year. I'm hoping earlier is better, sometime maybe later this summer. But we haven't really heard anything definitive so far, Manav.

Manav Gupta: You're breaking up a little bit, but if I understood. Your question on U S.

Andrew J. Littlefair: 45.

Andrew J. Littlefair: Yes, what we're all about Z nothing about 40 IV.

Andrew J. Littlefair: Okay.

Andrew J. Littlefair: As you know.

Andrew J. Littlefair: We've in fact I was I was at a conference earlier, this week, where Jonathan <unk>, who.

Andrew J. Littlefair: Who is <unk>.

Andrew J. Littlefair: As possible at the White house for.

Andrew J. Littlefair: Shepherding all of the <unk> actually talked about.

Andrew J. Littlefair: That they are moving through these different things that treasury and so it's our understanding that 45.

Andrew J. Littlefair: Z should come out here. Some time later this year I'm, hoping earlier is better sometime maybe later this summer, but we haven't really heard anything definitive manav so far.

Andrew J. Littlefair: Perfect, quick follow-up. Yeah, go ahead, Manav. So a quick follow-up there would be, can you update us on the number of dairies you already have online? And how should we think about modeling the number of dairies online by year end 2024?

Andrew J. Littlefair: Perfect.

Manav Gupta: Well, yes.

Speaker Change: Yes go ahead, Matt.

Manav Gupta: So a quick follow up there would be can you update us on the number of Daddy's you already have.

Andrew J. Littlefair: And how should we think about modeling the number of babies online by year end 2024.

Andrew J. Littlefair: We have five dairies that are injecting gas right now, and the sixth one is completed, but we're just going through kind of a punch list with the farmers that would make six, so by the end of the year, those first five should be all, you know, producing and injecting and creating credits. 6-1 could slip into 2020, you know. And that's really, for no other reason, Manav, other than just the length of time that it takes to get through the certification process, and otherwise, those first five are storing gas.

Speaker Change: We have five dairies that are injecting gas right now and the six one is completed but we're just going through kind of a punch list list with the farmers that would make six so.

Andrew J. Littlefair: By the end of the year those first five should be all.

Andrew J. Littlefair: Producing and injecting in creating.

Andrew J. Littlefair: Credits six one could slip into 2025.

Andrew J. Littlefair: And that's really yes, or no. Other reason manav other than just the length of time that it takes to get through the certification process.

Andrew J. Littlefair: Otherwise those first fiber store in gas as we speak.

Operator: Thank you. I'll turn it over to you. Thank you. Thank you. Our next question comes from Rob Brown with Lake Street Capital Markets. Good afternoon.

Speaker Change: Thank you Anthony.

Operator: Yes.

Operator: Thank you. The next question comes from Rob Brown with Lake Street Capital Markets.

Operator: Thank you. Our next question comes from Rob Brown with Lake Street capital markets.

Robert Duncan Brown: Hi, good afternoon.

Robert Duncan Brown: Hey, Rob I was wondering if you can.

Robert Duncan Brown: On the on the mass energy partnership.

Robert Duncan Brown: On development, I guess and LNG are they focused on different areas or different geographies or or what what sort of the piece that that partnership Ed.

Andrew J. Littlefair: You know, Moss is really one of the biggest and best developers. He's got 60 projects. And so we're very excited. We work closely with Daryl and have for a long time.

Robert Duncan Brown: Mass is really one of the.

Andrew J. Littlefair: Biggest and best.

Andrew J. Littlefair: Developer.

Andrew J. Littlefair: Got 60 projects and so we're very excited we work closely with Daryl and have for a long time as I mentioned in my remarks, we were taking gas RMG from him.

Andrew J. Littlefair: As I mentioned in my remarks, we're taking gas R&G from him now. These projects will be scattered out in seven different states. There are actually six projects, but the way that the dairies align themselves will actually be in seven states. I'd say, for the most part, it's Midwest and Incel.

Andrew J. Littlefair: Now.

Andrew J. Littlefair: These projects will be scattered out as seven different states, it's actually six projects, but the way the dairies aligned themselves will actually be at seven states.

Andrew J. Littlefair: I'd say for the most part it's Midwest.

Andrew J. Littlefair: And in the South.

Andrew J. Littlefair: And so, you know, we're excited about that. I'm going to try to hold off getting into all the details on that because we're going to talk a lot more about that. But it's an exciting development, and it should, you know, kind of goose our development program. Okay, thank you.

Andrew J. Littlefair: And so we're excited about that I'm going to I'm going to try to hold off getting into all the detail on that because we're going to talk a lot more about that next week.

Andrew J. Littlefair: But it's an exciting development in and it should.

Andrew J. Littlefair: Goes R R. Our development program.

Speaker Change: Okay. Thank you and then on the.

Andrew J. Littlefair: The Amazon rollout, how many more stations are sort of set to go there or in the original, I guess, first wave? There's two more to go, and one is real close, and the other is waiting on, I won't bore you with it, Rob, but it's, We're waiting on a Northern California city to approve stormwater.

Andrew J. Littlefair: Mmm rollout how many more stations are sort of set to go there or or in the original I guess first wave.

Andrew J. Littlefair: There is.

Andrew J. Littlefair: There's two more to go.

Andrew J. Littlefair: And there one is real.

Andrew J. Littlefair: We will close and the others waiting on I won't bore you with it Rob but it's.

Andrew J. Littlefair: It's we are waiting on northern California city to approve.

Andrew J. Littlefair: Storm water.

Andrew J. Littlefair: And as soon as we get that done, then that one will be ready to roll. So we've made good progress on that. We've completed 17 of 19. Actually, we've completed more than were, but of the original 19, we've got 17 completed.

Andrew J. Littlefair: And as soon as we get that done and that one will be ready to roll. So we've made good progress on that we've completed 17 of nights actually we've completed more of that work.

Andrew J. Littlefair: But of the original 19, we've got 17th complete.

Andrew J. Littlefair: Completed.

Speaker Change: Okay. Thank you I'll turn it over.

Operator: Thank you. Our next question comes from Derrick Whitfield with Stiefel.

Andrew J. Littlefair: Thank you. Our next question comes from Derrick Whitfield with Stifel.

Derrick Lee Whitfield: Hey, good afternoon, all, and thanks for your time.

Derrick Lee Whitfield: Hey, good afternoon, all and thanks for your time.

Operator: Good afternoon,

Derrick Lee Whitfield: Good afternoon.

Andrew J. Littlefair: Regarding the MAS partnership, and I understand you guys want to hold off on the details at some level, first congrats on that because, as you mentioned, he's one of the more active developers in the industry, but maybe specific to Clean, how should we think about the partnership's implications on your development approach and cost? the application and how it could potentially change your cost structure.

Derrick Lee Whitfield: Regarding the mosque partnership.

Andrew J. Littlefair: You guys want to hold off on the details.

Andrew J. Littlefair: At some level first congrats on that because as you mentioned he is one of the more active developers in the industry, but maybe specific to clean.

Andrew J. Littlefair: Should we think about the partnerships implications to your development approach and cost like are you guys going to do more of the covered lagoon versus complete mix and again just trying to understand.

Andrew J. Littlefair: The application and how it can potentially change your cost structure.

Andrew J. Littlefair: You know, well, one thing I think Daryl's a proven, cost-effective developer, and we've seen that over time. He's a no-nonsense, tight-fisted operator, so we like that.

Andrew J. Littlefair: Well, one I think barrels are a proven cost effective developer and.

Andrew J. Littlefair: We've seen that over time as these no nonsense tight fisted operators, so we like that.

Andrew J. Littlefair: These dairies will be smaller, and many of them will be covered lagoons. And so, you know, I think it'll be a little bit different than some of the ones that we've recently completed. Darrell has, you know, an awful lot of experience with that, and we're looking forward to working with him on that.

Andrew J. Littlefair: These dairies will be smaller.

Andrew J. Littlefair: And many of them will be covered lagoons.

Andrew J. Littlefair: And so it'll be a little bit different than some of the ones that we've recently completed.

Andrew J. Littlefair: Daryl is that.

Andrew J. Littlefair: Awful lot of experience on that in and we're looking forward to working with them on it.

Andrew J. Littlefair: And as my follow-up, could you perhaps update us on the project pipeline? I know that it's been fairly steady, and you guys are working to convert that, but any color that you can provide just on the depth of... the advanced type developments that you guys have right now would be greatly appreciated.

Speaker Change: And as my follow up could you, perhaps update us on the project pipeline I know that it's been fairly steady and you guys are working to convert that any.

Andrew J. Littlefair: Any color that you can provide just on the depth of.

Andrew J. Littlefair: Of advance type developments you guys have right now that would be greatly appreciated.

Andrew J. Littlefair: Well, obviously, like this Moss thing factors into that. And, you know, these these projects ebb and flow, but I'd say one of the things that the pipeline is robust in a lot of the projects that we've had over the last year, year-and-a-half continue to be looked at, kind of continue to wrestle with. But, you know, look, as we look at the pricing of the low-carbon fuel credit and other sort of uncertainties that have been worked into it, some of these projects don't look as attractive as they once did. So, you know, we have to think that will all come around.

Andrew J. Littlefair: Well, obviously lag this masting factors into that and you know these these projects ebb and flow, but I would say you know.

Andrew J. Littlefair: One of the things that the.

Andrew J. Littlefair: The pipeline is robust and there are a lot of the projects that.

Andrew J. Littlefair: That we've had over the last year.

Andrew J. Littlefair: Year and a half are.

Andrew J. Littlefair: Continued to be looked at kind of continue to wrestle with but.

Andrew J. Littlefair: Look.

Andrew J. Littlefair: Absolutely as we look at the pricing of the low carbon fuel credit and other sort of uncertainties.

Andrew J. Littlefair: Worked into some of these projects don't look as attractive as they once did so we have to think that'll all come around.

Andrew J. Littlefair: The cost of some of these projects, as we all know, and the time to market have been, you know, somewhat challenging for certain of these projects. And so, you know, we have to look at that. These projects haven't gone away, it's just whether or not those are where we want to deploy our precious capital, you know, right now. And so when we get an opportunity to do like a program with the structure you'll see next week.

Andrew J. Littlefair: The cost of some of these projects as we all know and the time to market has been somewhat challenging for certain of these projects and so.

Andrew J. Littlefair: These projects haven't gone away, it's just whether or not those are it is where we wanted to deploy our precious capital right now and so when we get an opportunity to do like a boss.

Andrew J. Littlefair: Program.

Andrew J. Littlefair: With the structure, you'll see next week.

Andrew J. Littlefair: We think that kind of moves to the top of our pipeline list. And so, you know, we continue to know that we need more R&G; the industry needs more R&G. We want to be good stewards of capital, though, as we launch these projects. And, you know, of course, the one that I mentioned in my remarks is Frank Brand. Now, that one, it's sort of talked about, but that's getting ready to go into production. And so, you know; we're busy. Terrific. Thanks for your time. Well, I should say production with Frank Brown is going into construction. Thank you.

Andrew J. Littlefair: We think that's a.

Andrew J. Littlefair: It kind of moves to the top of our pipeline list.

Andrew J. Littlefair: And so we continue to know that we need for RMG the industry needs more R&D.

Andrew J. Littlefair: We want to be good stewards of capital, though as we as we launch these projects.

Andrew J. Littlefair: And of course, the one that I mentioned in my remarks, the strength brand now that one.

Andrew J. Littlefair: Sort of talked about but that's getting ready to go into production and so.

Andrew J. Littlefair: We're busy.

Speaker Change: Terrific. Thanks for your time.

Andrew J. Littlefair: I should say production, but Frank Brown, it's going into construction.

Andrew J. Littlefair: Especially with production.

Andrew J. Littlefair: Okay.

Operator: Thank you. The next question comes from Matthew Blair with TPH.

Andrew J. Littlefair: Thank you. Our next question comes from Matthew Blair with Tpa.

Matthew Robert Lovseth Blair: Thank you and good afternoon. You mentioned the first quarter was better than your expectations, which we thought was pretty impressive considering the LCFS credits that slipped into the second quarter. Was anything from the second quarter or back half of the year pulled into the first quarter? No. Okay, no. And you reiterated your guidance. So I guess, all things equal, this would make you feel more confident about hitting the 2024 guidance. Is that the...

Matthew Robert Lovseth Blair: Thank you and good afternoon.

Matthew Robert Lovseth Blair: Mentioned.

Speaker Change: My first quarter.

Matthew Robert Lovseth Blair: You mentioned in the first quarter was better than your expectations.

Matthew Robert Lovseth Blair: Which we thought was pretty impressive considering the Lcs that's credits that slipped into the second quarter with anything from the second quarter or back half of the year pulled in to the first quarter.

Speaker Change: Then no.

Matthew Robert Lovseth Blair: Okay, now and you've reiterated your guidance I guess all things equal.

Matthew Robert Lovseth Blair: Thank you feel more confident about hitting the 2024 guidance does that is that the right read through.

Speaker Change: Yes, yes.

Andrew J. Littlefair: Yeah, we have volatility there, right? What I think it points to a little bit, especially with the LCS going into the second quarter, is that it shows the underlying business, which is fueling business strong and healthy.

Speaker Change: Yes, that's helpful.

Matthew Robert Lovseth Blair: Volatility there right.

Andrew J. Littlefair: Think it points to a little bit, especially with the Lcs, that's going into the second quarter as it shows the underlying business.

Andrew J. Littlefair: Fueling business strong healthy.

Andrew J. Littlefair: Indeed. And then do you have an update on the Total JV? I believe that your six current dairy RNG projects are all with BP, is that correct? And could you provide an update on how things are going for Total JV? We saw that they're working with another counterparty as well. So where do things stand with Total? Yeah. So, you know, we do.

Andrew J. Littlefair: Indeed, and then do you have an update on the total JV.

Andrew J. Littlefair: I believe that your six current dairy LNG projects.

Andrew J. Littlefair: I think they are all with BP is that correct.

Andrew J. Littlefair: You provided an update on how things are going the hotel JV, we saw that theyre working with another counterparty as well, so where do things stand with total yes. So we have one project that was our first project with total in fact, our board of directors going to out to inspect that next week its in the Texas Panhandle.

Andrew J. Littlefair: So, you know, we have one project that was our first project with Total. In fact, our board of directors is going out to inspect it next week. It's in the Texas Panhandle.

Andrew J. Littlefair: We're pleased with that, our partner there, our dairyman, Rocky. So that one's producing well. You know, we continue to, as we just discussed earlier a couple questions ago, we have pipelines, so we work, we show different deals to our partners. And of course, we do that with Total. And so I'm sure that here, in the near future, there'll be some that'll kind of go into the Total column.

Andrew J. Littlefair: We're pleased with that our partner there.

Andrew J. Littlefair: Dairy been rocky.

Andrew J. Littlefair: Great, thanks for your comments.

Andrew J. Littlefair: So that was producing well.

Andrew J. Littlefair: We continue to as we just discussed earlier a couple of questions ago. We have pipelines. So we work we show different deals too to our partners and of course, we do.

Andrew J. Littlefair: Do that with total and so I'm sure that here in the near future there'll be some that will kind of go into the hotel column.

Speaker Change: Great. Thanks for your comments.

Speaker Change: Okay. Thank you.

Operator: Thank you. The next question will come from Betty Zhang with Scotiabank.

Andrew J. Littlefair: Thank you. Our next question will come from Betty Zhang with Scotiabank.

Betty Zhang: Thanks. Hey Andrew. Hey Bob. First question on LCFS. I'm just curious what you guys are seeing there. Is the expectation still that we'll be getting the updated program starting in 2025?

Betty Zhang: Thanks, Hey, Andrew Hey, Bob.

Betty Zhang: Yes.

Betty Zhang: First question on Lcs, that's just curious what you guys are seeing there.

Betty Zhang: Expectations still that we'll be getting the updated program starting in 2025.

Andrew J. Littlefair: Yeah, Betty, you know, look, uh... This has been a difficult one to pin down in terms of timeline, but, you know, our view is, and we're working very closely with CARB staff, CARB board members, and the industry, we tend to believe that the program that we got a preview of at the last meeting should come before the board probably in July, and if all goes well, then it would be adopted for implementation in 2025.

Betty Zhang: Yes, Betty look.

Andrew J. Littlefair: This has been a difficult one to pin down in terms of timeline, but our view is and we're working very closely with Carb staff car board members in the industry is.

Andrew J. Littlefair: We tend to believe we believe that.

Andrew J. Littlefair: That the program that we've got a preview of the last meeting should come before the board probably July.

Andrew J. Littlefair: And.

Andrew J. Littlefair: If all goes well then it would be adopted for implementation in 2025.

Andrew J. Littlefair: And we believe that that'll include a kind of 9% step down. The accelerator in terms of rationing down the compliance curve, depending on market conditions, and some of the other more constructive, you know, points that we've talked about before in terms of constructive interpretations of avoids methane and book and claim and some of those things that you know used to be a little up in the air earlier in this process, but we need to get this done. I think that's the view of staff as well.

Andrew J. Littlefair: And we believe that that will include kind of the 9% step down.

Andrew J. Littlefair: The accelerator in terms of rationing down the compliance curve depending on market conditions.

Andrew J. Littlefair: And some of the other more constructive.

Andrew J. Littlefair: Points that we've talked about before in terms of the Av.

Andrew J. Littlefair: Constructive interpretations on the voids methane and book and claim and some of those things that were a little up in the air earlier in this process, but we need to get this done I think thats the view staff as well.

Andrew J. Littlefair: Okay, great. Thank you. And then, in terms of what you mentioned about the dairy farms and how there are some challenges financially, do you think that could have any impact on your R&G volumes?

Speaker Change: Okay, great. Thank you.

Andrew J. Littlefair: <unk>.

Andrew J. Littlefair: In terms of what you mentioned about the dairy farms and how there are some challenges.

Andrew J. Littlefair: Financially.

Andrew J. Littlefair: Do you think that could have any impact on your orange in volumes.

Andrew J. Littlefair: Well, the, I mean, the, the, um, the Idaho situation. That, I mean, that could have some timing delay pushed out. The rest of it, no. I mean, we're proceeding, we're injecting gas, we're kind of in that early ramp-up stage on all those. No, you know, in fact. You know, really, as these things get going on, you're providing a revenue stream to the farmers. So, I mean, these are really actually a good thing for the dairy industry. So, there may be some delay there for the one project.

Speaker Change: Well I mean.

Andrew J. Littlefair: The Idaho situation.

Andrew J. Littlefair: That I mean that could have some timing delay or push out.

Andrew J. Littlefair: The rest the rest the rest of it no I mean, we're proceeding we're producing we're injecting gas where.

Andrew J. Littlefair: In that.

Andrew J. Littlefair: Early ramp up stage on all those so.

Andrew J. Littlefair: No in fact.

Andrew J. Littlefair: You know really as these things get going on you're providing you're providing a revenue stream to the farmers. So these are really actually.

Andrew J. Littlefair: A good thing for the for the dairies.

Andrew J. Littlefair: So there.

Andrew J. Littlefair: There may be some delay there for the one project.

Speaker Change: Got it thank you.

Operator: Thank you. Our next question will come from Pavel Molchanov with Raymond James.

Andrew J. Littlefair: Thank you. Our next question will come from Pavel <unk> with Raymond James.

Pavel S. Molchanov: Thanks for taking the question. I remember a year ago, you provided this map that for every 3,000 class A trucks running on R&G, your fuel sales would go up by 10% or something like that. Is that sensitivity still? Accurate, given everything that's happened since then?

Pavel S. Molchanov: Thanks for.

Pavel S. Molchanov: The question.

Pavel S. Molchanov: I remember a year ago.

Pavel S. Molchanov: Provided this math.

Pavel S. Molchanov: That for every.

Pavel S. Molchanov: I think it was 3000 trucks class a trucks running on an R&D. Your fuel sales would go up by 10% or something like that is that sensitivity still.

Pavel S. Molchanov: Accurate given everything that's happened since then.

Andrew J. Littlefair: Wow, Pavel.

Pavel S. Molchanov: Wow.

Speaker Change: All right.

Andrew J. Littlefair: 3,000 trucks is 45 million gallons. About 45 million gallons on the 250, 300 million gallons that we do.

Andrew J. Littlefair: 3000 trucks is 45 million gallons.

Andrew J. Littlefair: 45 million gallons on the 250 300 million gallons that we do so that's that's in that range I mean, that's the kind of saw that sorted.

Andrew J. Littlefair: So, you know, that's in that range. I mean, that's the kind of that sort of, backs up 3,000 trucks are important, right? We're doing, Not quite that many. Amazon.

Andrew J. Littlefair: Stacks up.

Andrew J. Littlefair: 3000 trucks are important right we're doing not.

Andrew J. Littlefair: Not quite that many Amazon.

Andrew J. Littlefair: That volume is sort of consistent with what I just mentioned. I think what we talked about is what Cummins has said is that they expect that it could be in the first year of orders that the X-15N could see something on the order of 3,000 orders. Probably what I shared with you, Pavel, or others is that we'll get a disproportionate share of that volume because of our network. And we hope that, you know, in subsequent years, the numbers go up.

Andrew J. Littlefair: <unk>.

Andrew J. Littlefair: That volume sort of consistent with what I just mentioned.

Andrew J. Littlefair: Uh huh.

Andrew J. Littlefair: I think what what we talked about is what Cummins has said.

Andrew J. Littlefair: Is that they expect that it could be in the first year of orders that the ex <unk> and could see something on the order of 3000 orders.

Andrew J. Littlefair: Probably what I shared with you Bob al or others is that we will get a.

Andrew J. Littlefair: A disproportionate share of that volume because of our network.

Andrew J. Littlefair: And we hope that in.

Andrew J. Littlefair: In subsequent years the numbers go up I mean.

Andrew J. Littlefair: I mean, the way to think about it is these heavy-duty trucks with these new engines, especially the 15-liter ones, will use 15,000 gallons per truck. So you get up to, you know, 10,000 trucks, which would be a very small penetration. Let's call that, in a couple of years from now, very small penetration on the quarter of a million class A trucks that are sold on an annual basis. That generates 150 million gallons.

Andrew J. Littlefair: The way to think about it is these heavy duty trucks with these new engines, especially with 15 liter who will use 15000 gallons per truck.

Andrew J. Littlefair: So you get you get up to.

Andrew J. Littlefair: 10000 trucks, which would be very small penetration.

Andrew J. Littlefair: It was called out in a couple years now very small penetration on the quarter of a million class eight trucks that are sold on an annual basis.

Andrew J. Littlefair: That's that generates 150 million gallons.

Andrew J. Littlefair: You know, we have a very high market share for that. So that's really meaningful for us. It's what keeps us very optimistic about our business and why we'll need more and more R&G. So, you know, we're just beginning to see these engines come to market. And so, you know, I'm very hopeful that we'll see the uptake like we hope.

Andrew J. Littlefair: And we have very high market share of that so that's really meaningful for us that's what keeps us we're very optimistic about.

Andrew J. Littlefair: Our business and why we will need more and more R&D.

Andrew J. Littlefair: So.

Andrew J. Littlefair: We're just beginning to see these engines come to market and so on.

Andrew J. Littlefair: Very hopeful that will we will see the uptake like we like we hope.

Andrew J. Littlefair: Okay, let me follow up with more of a kind of conceptual question, you know, with this AI data center euphoria, there is more and more talk about biogas going into the data center space as gas, right, you know, without being turned into R&G first.

Andrew J. Littlefair: Okay.

Speaker Change: Follow up with more of a kind of a conceptual question with this.

Andrew J. Littlefair: <unk> data center.

Andrew J. Littlefair: Before yeah.

Andrew J. Littlefair: There is more talk about <unk>.

Andrew J. Littlefair: Biogas going into the data center space.

Andrew J. Littlefair: As gas right without without being turning to R&D first.

Andrew J. Littlefair: What are your thoughts on that?

Speaker Change: What are your thoughts on that.

Andrew J. Littlefair: Well, the best use of RNG is certainly low carbon. Low CI energy is in transportation, which is a hard to decarbonize market. And I understand what everybody's striving for is they are obviously bringing on these power, you know, the power draw the power sink of this AI's breath is breathtaking.

Andrew J. Littlefair: Well the best use of our LNG is certainly low carbon.

Andrew J. Littlefair: Low Ci LNG is in transportation, which is hard to carve a nice market.

Andrew J. Littlefair: And I understand what everybody is striving for is they obviously, bringing on these power the power draw the power sink of Cai's breast is breathtaking.

Andrew J. Littlefair: And so they want to have us.

Andrew J. Littlefair: And so they want to have the most benign fuel as they can, as low carbon fuel as they can. But it's not necessarily the most economical and the wisest place to put your most coveted low-CI gas. It should go into transportation, where it generates the most amount of credit. So yes, some landfill gas, and a lot of landfill gas may end up operating in the stationary market. But, you know, we're talking to all the different producers now, and you'd be surprised by R&G.

Andrew J. Littlefair: As benign fuel as they can as lowest carbon fuel as they can.

Andrew J. Littlefair: Not necessarily the most economic and the wisest place to put your most coveted low Ci gas it should go and transportation's, where it generates the most amount of credits.

Andrew J. Littlefair: So yes, some landfill gas a lot of landfill gas may end up opting into the stationary market.

Andrew J. Littlefair: But we're talking to all the different producers now and you'd be surprised of RG <unk>.

Andrew J. Littlefair: Many of them that used to talk a lot about stationary sources want to bring it to transportation. And eventually, what I will bring to the transportation market for hydrogen, not only for RNG for vehicles. So, you know, there'll be a lot of pressure on RNG.

Andrew J. Littlefair: Many of them that used to talk a lot about stationary sources want to bring it to the to the transportation market and eventually wanted to bring into the transportation market for hydrogen not only.

Andrew J. Littlefair: Uh huh.

Andrew J. Littlefair: For.

Andrew J. Littlefair: RMG for vehicles so.

Andrew J. Littlefair: There'll be a lot of pressure on R&D. The good news is there's probably seven to 10 billion gallons of RMG. That's I think essentially over the next decade will come to the market.

Andrew J. Littlefair: The good news is there's probably 7 to 10 billion gallons of RNG that's, I think, eventually will come to the market. The lowest of that CI gas will come to the transportation market and won't be going into AI fix. But I thought where you were headed, Pavel, and I was thinking, wow, he's going to throw me a softball.

Andrew J. Littlefair: The lowest of that Ci gas will come to the transportation market won't be go into the AI fixed.

Andrew J. Littlefair: Power centers.

Andrew J. Littlefair: But I thought where you were ahead at Bob Al and I was thinking Wow. He's got throw me a softball. This just puts more pressure on the electric situations.

Andrew J. Littlefair: This just puts more pressure on the electric situation. We didn't already have enough power for the heavy-duty trucks to go to battery. I think the market is beginning to understand that. That's why I'm so excited about, you know, being in the position we are with R&G that can act today in a heavy-duty truck. Because when you all of a sudden increase the demand for electricity in the United States by 20 percent, you just use up what you need for heavy-duty trucks.

Andrew J. Littlefair: We didn't already have enough power for the heavy duty.

Andrew J. Littlefair: Trucks to go to battery I think the market is beginning to understand that.

Andrew J. Littlefair: I'm so excited about.

Andrew J. Littlefair: Being in the position we are with R&D that can act today in heavy duty truck.

Andrew J. Littlefair: Because when you all of a sudden increase the demand.

Andrew J. Littlefair: Electricity United States by 20% you just used up what you needed for heavy duty trucks.

Andrew J. Littlefair: And so it's just making the situation worse for power in America to be able to do all things, every light-duty vehicle, every heavy-duty vehicle, and now, oh, add on 20% for AI. You don't have the power. And that's, I mean, just read the Wall Street Journal. They had a pretty good story out of yesterday. So I like how we're positioned relative to using a battery in heavy duty.

Andrew J. Littlefair: And so it's just making the situation worse for power in America to be able to do all things every every light duty vehicle every heavy duty vehicle and now Oh add on 20% for AI you don't have the power.

Andrew J. Littlefair: And Thats just read the Wall Street Journal, they have pretty good story out yesterday.

Andrew J. Littlefair: So I like how we're positioned relative to using a battery in a heavy duty truck.

Operator: All right, thanks very much.

Speaker Change: Alright, thanks very much.

Operator: Okay.

Craig Kenneth Shere: Thank you. The next question comes from Craig Shere with Dewey Brothers.

Operator: Thank you. Our next question comes from Craig Shere with Tuohy Brothers.

Craig Kenneth Shere: Hi, good afternoon. Thanks for taking the time to ask the question. [inaudible] So, uh... You know, you point out that there are higher costs because it takes longer to complete a project. Obviously, for now at least, the LCFS cash flows are much lower than anticipated 12 to 24 months ago. I kind of, back of the envelope, estimated that we're looking at projects maybe in the seven times EBITDA when they're finally online now, and that doesn't count, you know, the cost of capital during construction. So you've acknowledged all this. I'm a little confused about a few things.

Craig Kenneth Shere: Hi, good afternoon, thanks for taking the question.

Craig Kenneth Shere: Correct.

Craig Kenneth Shere: So.

Craig Kenneth Shere: You point out.

Craig Kenneth Shere: There are higher costs it takes longer to complete projects, obviously for now at least the <unk> cash flows are much lower than anticipated 12 to 24 months ago.

Craig Kenneth Shere:

Craig Kenneth Shere: I've kind of back of the envelope guest.

Craig Kenneth Shere: Estimated that we're looking at projects maybe in the.

Craig Kenneth Shere: Seven times EBITDA when they are finally online now and that doesn't count.

Craig Kenneth Shere: Cost of capital during construction.

Craig Kenneth Shere: So so you've acknowledged all of this.

Craig Kenneth Shere: I'm a little confused about a few things though.

Andrew J. Littlefair: The first is, obviously, you're a strong hand, you have good relationships, and I don't think any of us expect LCFS to stay where they are. But is this new MOS relationship taking away your interest in direct acquisitions because it seems like in the market I just described that there are some weaker players that just have to fold, and they can't last another 12 to 24 months. I think you're right, I think you're right, but MOS doesn't take away from that. We'll get a crack at some of those, I think you're right, some of those will come to market.

Craig Kenneth Shere: The first is obviously your strong hand, you have good relationships and I don't think any of us expect CFS to stay where they are.

Andrew J. Littlefair: But is this new mass relationship taking.

Andrew J. Littlefair: Taking away your entrust indirect acquisitions, because it seems like in the market I just described.

Andrew J. Littlefair: Theres some weaker players that just have the fault and they can't last another 12 months to 24 months.

Andrew J. Littlefair: I think youre right, Mike I think Youre right.

Andrew J. Littlefair: But my boss doesn't take away from that we'll get a crack at some of those I think youre right. Some of those will come to market.

Andrew J. Littlefair: There needed to be some, I'm just being candid, Craig, there needed to be some market therapy, which I think is going on, and some of those projects will come forward, and we know all of them we've looked at, but we'll get a crack at those. Okay, and then the next part of the question, because it was interesting, because I, you know, it sounded like MOS was additive, but NIRS, I heard you say, I forget who asked the question, but saying that basically MOS is moving to the top of the list. And I'm wondering if, because of the economics... you're starting to slow walk what you had expected to be doing with BP for total 12 to 18 months.

Andrew J. Littlefair: There needed to be some just being candid correct there needed to be some market therapy, which I think is going on.

Andrew J. Littlefair: And some of those projects will come forward and we know we know all of that we've looked at them.

Andrew J. Littlefair: But we will get a crack at those two.

Andrew J. Littlefair: Okay.

Andrew J. Littlefair: Then the next part of the question because it was interesting just because.

Andrew J. Littlefair: It sounded like Moss was additive and Iris I heard you say.

Andrew J. Littlefair: Who asked the question, but saying that basically mass is moving to the top of the list.

Andrew J. Littlefair: And I'm wondering if if because of the economics.

Andrew J. Littlefair: Youre starting to slow walk what you had expected to be doing well.

Andrew J. Littlefair: With BP and total 12 to 18 months ago.

Andrew J. Littlefair: No.

Andrew J. Littlefair: No, that's that the... I mean, the activity within those JVs is constant and hasn't changed. You know, we're also able to do that. Some of these, you know, on our own, if that's the way it works. So I think, you know, all of it's kind of firing on all cylinders, you know, really to get, you know, more volume. It's just, I wouldn't read any more into it other than it's additive.

Andrew J. Littlefair: No.

Andrew J. Littlefair: The.

Andrew J. Littlefair: I mean, the activity within those J visas.

Andrew J. Littlefair: Is that constant and it hasnt changed.

Andrew J. Littlefair: We're just we're also able to do.

Andrew J. Littlefair: Some of these on our own if thats the way it works so I think.

Andrew J. Littlefair: All of it is kind of firing on all cylinders.

Andrew J. Littlefair: To get.

Andrew J. Littlefair: More more volume.

Andrew J. Littlefair: It's just I wouldnt read anymore into it other than it's additive. It's just a great opportunity that's working with the well known very good developer.

Andrew J. Littlefair: It's just a great opportunity to work with a well-known, very good developer. We talked to him for a long time about doing it. We finally were able to get this together, and we're excited.

Andrew J. Littlefair: We've talked to them for a long time about doing it and we finally were able to get this together and we're excited.

Andrew J. Littlefair: And your JV partners have a right but not an obligation to do the projects that you guys have kind of been circling around together, is that right? So to the degree that they say, no, I think we're going to take a pass for the next six months, you know, until the market settles out, you can pursue them on your own. Yeah, we are

Andrew J. Littlefair: And your JV partners.

Andrew J. Littlefair: Okay.

Andrew J. Littlefair: Okay.

Andrew J. Littlefair: Have a right but not obligation.

Andrew J. Littlefair: Do the projects that you guys have kind of been circling up together is that right. So to the degree they say no I think we've got to take a path for the next six months until the market settles out.

Andrew J. Littlefair: Pursue it on your own.

Andrew J. Littlefair: We're able to pursue them on our own.

Andrew J. Littlefair: We were able to pursue them on our own.

Andrew J. Littlefair: And.

Andrew J. Littlefair: Or the.

Andrew J. Littlefair: Recognizing there's a difference between where the ball is and where it's going, is roughly seven times EBITDA in current market conditions after, you know, a delayed completion process versus what was expected a couple of years ago. That's roughly where we are. And given your stable economic position, are you comfortable independently investing on that basis, thinking there's just no way CARB is going to leave LCFS at 50 to $60 18 months from now?

Andrew J. Littlefair: Recognizing theres a different sort of way to the ball is and where it's going.

Andrew J. Littlefair: But is is that roughly seven times EBITDA and current market conditions after.

Andrew J. Littlefair: Delayed completion process versus what was expected a couple of years ago is that roughly where we are.

Andrew J. Littlefair: And given your stable economic position are you comfortable independently investing on that basis thinking Theres just no way carb is going to leave L. CFS at $50 to $60 18 months from now.

Andrew J. Littlefair: Well, let me let me I guess I'm not going to use your EBITDA number. OK, but let me let me talk about the second part of the question.

Speaker Change: Well, let me, let me I guess I'm not going to use your your your.

Speaker Change: EBITDA number okay, but let me let me talk about the second the second part of the question first.

Andrew J. Littlefair: I think it would be safe to say that we believe that the LCFS price will normalize and will be higher in the future than it is currently. And we don't, we're not modeling these projects thinking that we're getting ready to have a 20-year, $50 LCF. We do believe that they're going to correct the obligation curves, which should begin to work off the overproduction, you know, the oversupply of credits, and we'll see those credits strengthened. So we've got that factored in, as have our partners that we're working with. And so we're optimistic about the way that's going to sort itself out.

Speaker Change: I think you would be safe to say that we believe that the.

Andrew J. Littlefair: L CFS price will normalize and will be higher in.

Andrew J. Littlefair: In the future than it is currently and we don't we're not modeling these projects thinking that we're getting ready to have a 20 year a $50 <unk> price.

Andrew J. Littlefair: But we do believe that.

Andrew J. Littlefair: They're gonna correct.

Andrew J. Littlefair: Obligation curves, which should begin to work off the overproduction. The oversupply of credits we will see those credits strengthened.

Andrew J. Littlefair: We've got that factored in as do our partners that we're working with.

Andrew J. Littlefair: So we're optimistic about the way that's going to sort out.

Andrew J. Littlefair: Okay.

Andrew J. Littlefair: I mean, all these deals are... They have their own unique aspects to all of the deals that are out there in the market.

Andrew J. Littlefair: I mean all of these deals are.

Andrew J. Littlefair: They are they.

Andrew J. Littlefair: They have their own unique aspects to them to all of the deals are out there in the market. So.

Andrew J. Littlefair:

Andrew J. Littlefair: It's not really prudent to... You know, Craig, I...

Andrew J. Littlefair: It's not really prudent.

Andrew J. Littlefair: You know, Craig, I think the way to look at it, and maybe I'd just do it simply, is, you know, while you started out your question by saying, you know, I said that the projects are a little bit more expensive, take a little longer, blah, blah, blah, you know, that kind of thing. We saw a little bit of inflation, and all that's true. On the other hand, we didn't have the IRA, we didn't have the IRA, and we didn't have the PTC, and we didn't have the ITC.

Andrew J. Littlefair: Craig I think the way to look at it and maybe just do it simply is.

Andrew J. Littlefair: While you started out your question by saying.

Andrew J. Littlefair: Said that the projects a little bit more expense it takes a little longer blah blah blah that kind of thing.

Andrew J. Littlefair: We saw a little bit of inflation and all of that's true on the other hand, we didn't have the IRA we didn't have the IRI and we didn't have the PTC, we didn't have the ITC. So.

Andrew J. Littlefair: So, you know, all things being equal, if you were to tell me that it was going to be $50 LCFS for, you know, over the long haul, then this wouldn't apply. But if you think that that's going to normalize at something higher than that, then all things kind of being equal, these projects are similar. The you know, the economics are similar to what they were when we started this, not quite to where they were when you had two hundred dollars at CFS, but you know, this is in the kind of a similar ballpark.

Andrew J. Littlefair: All things now look if you were to tell me that it was going to be $50 L. CFS for the for the over the long haul then this wouldn't apply.

Andrew J. Littlefair: But if you think that that's going to normalize at something higher than that then all things being equal these projects are similar.

Andrew J. Littlefair:

Andrew J. Littlefair: The economics are similar to what they were when we started and it's not quite to where they were when you had $200 CFS, but you know in this.

Andrew J. Littlefair: And the kind of the similar ballpark.

Andrew J. Littlefair: We have a threshold with our partners and with our board of how we deploy capital, and it has to meet that; otherwise, we wouldn't do it. So you should assume that these MOS projects meet that threshold, and that's why we're moving forward with them right now.

Andrew J. Littlefair: We havent threshold with our partners and with our board of how we deploy the capital and as that asset it has to meet that and otherwise we don't do it.

Andrew J. Littlefair: So you should assume that this smart these mass projects meet that threshold and so that's why we're moving forward with them right now.

Craig Kenneth Shere: Sounds good. Hopefully, it will be a quick one here.

Speaker Change: Sounds good hopefully a quick one here.

Craig Kenneth Shere: In terms of the.

Craig Kenneth Shere: The delayed coming online and actually getting cash flows because of you know when the carbon.

Craig Kenneth Shere: Carbon impact.

Craig Kenneth Shere: Is certified and you can sell CFS and whatnot.

Craig Kenneth Shere: In terms of the delayed coming online and actually getting cash flows because of when the carbon impact is certified, and you know, you can sell LCFS and whatnot. Is getting the timeline for major equipment procurement and availability of major equipment procurement of you know, accreditation, accreditation for the credits, connectivity of pipelines? In your view, say in the last six months, is this now stable? Is it starting to improve or still getting worse? Yeah,

Craig Kenneth Shere: But is is getting is the timeline for major equipment procurement and availability of major equipment procurement.

Craig Kenneth Shere: Yes.

Craig Kenneth Shere: Accurate <unk> accreditation for the credits connectivity to pipelines.

Craig Kenneth Shere: Is this.

Craig Kenneth Shere: In your view, we say in the last six months is now stable.

Craig Kenneth Shere: Starting to improve we're still getting worse.

Andrew J. Littlefair: I think the, well, what I was hearing you say, I mean, the long-lead items and some of the pressure that we saw because of the supply chain, that's normalized. We are working really, okay, so that's one.

Speaker Change: No I think the.

Andrew J. Littlefair: Well, what I was hearing you, saying I mean, the long lead items and some of the pressure that we saw because of the supply chain.

Andrew J. Littlefair: Thats normalized.

Andrew J. Littlefair: We are working really okay. So that's one.

Andrew J. Littlefair: The pathway is still too long, right? The certification process is still way too long. We are working hand in glove with the staff at CARB to get that short. And we've made, we've had meetings at the highest levels of government to talk about that. I don't think we have any pushback on that. I think we all want to shorten that, and it needs to come in dramatically. So I'm hopeful that here in the next few months, we'll.

Andrew J. Littlefair: The pathway is still too long right. The certification process is still way too long, we are working hand in glove.

Andrew J. Littlefair: With the staff at the.

Andrew J. Littlefair: Car.

Andrew J. Littlefair: Get that shortened.

Andrew J. Littlefair: And we've made.

Andrew J. Littlefair: We've had meetings at the highest levels of government to talk about that I don't think we have any pushback on that I think all want to shorten that up and it needs to come in dramatically.

Andrew J. Littlefair: And so I'm hopeful that here in the next few months will.

Andrew J. Littlefair: It will become clear that they've made some changes to the process, and we'll shorten that timeline, which will be helpful for everybody, because what we've got right now just isn't working. I mean, you don't do that in anything else. You don't build a skyscraper and then keep it vacant for a year and a half. It's crazy. So, I think that it's generally understood now is just kind of getting that backlog worked off and kind of changing the process to bring that in to something that makes a lot more sense.

Andrew J. Littlefair: It will become clear that they've made some change.

Andrew J. Littlefair: Changes to the process and we will shorten up that timeline, which would be helpful for everybody.

Andrew J. Littlefair: Because what we've got right now just.

Andrew J. Littlefair: Not.

Andrew J. Littlefair: It's not workable I mean, you don't do that and anything else you don't build skyscraper and then keep it vacant for a year and a half is crazy.

Andrew J. Littlefair: Right. So so I think though that's generally understood now is just kind of getting that.

Andrew J. Littlefair: Getting that backlog worked off and kind of changing the process to bring that in to something that makes a lot more sense.

Andrew J. Littlefair: and Physical Pipeline Connectivity. Oh, you know, that kind of depends on who and how far you go.

Andrew J. Littlefair: And physical pipeline connectivity.

Andrew J. Littlefair: Oh, you know, that kind of depends on who, how far you are, who you're working with, which utility, and which pipeline. You know, that's never as fast as you'd like, but that's... That shouldn't be a gating factor on these projects, but it can be, and you're not going to change that. I mean, look, I'm looking down the table at one of my fellows that's built 200 fueling stations. We run into that problem with utilities making meters, okay?

Andrew J. Littlefair: All that kind of depends on how far you are who you are working with which utility on which pipeline.

Andrew J. Littlefair: That's never as fast as you like but thats.

Andrew J. Littlefair: That should be could be a gating factor on these projects can be.

Andrew J. Littlefair: Youre not going to change that I mean look we I'm looking down the table one of my Fellows. This bill.

Andrew J. Littlefair: 200, fueling stations, we run into that problem with utilities, making meters, okay and thats just the way it is and so.

Andrew J. Littlefair: And that's just the way it is. And so I would say your pipeline connectivity is, you know, six months to a year, and that's never going to change. But that should be within the timeline of the construction project. And when it's way outside of that, then, you know, then you have to.

Andrew J. Littlefair: Say your pipeline connectivity accuse you know six months to a year.

Andrew J. Littlefair: That's never going to change.

Andrew J. Littlefair: But that should be within the timeline of the construction project.

Andrew J. Littlefair: And when its way outside of that then you got it.

Andrew J. Littlefair: <unk> case.

Speaker Change: That's helpful. Thank you.

Operator: Thank you. The next question comes from Jason Gabelman with TD Gallant.

Andrew J. Littlefair: Thank you. Our next question comes from Jason <unk> with you began with.

Jason Daniel Gabelman: Yeah, hey, thanks for taking my questions. The first one's just on the upstream EBITDA cadence. This quarter was a bit better than expected, but you didn't fully change your guidance. It sounds like it was related to, I couldn't really tell if it was project construction getting delayed or something else. So should we expect that EBITDA to move more negative in 2Q as you ramp up construction activities and other things going on in that segment? And then will this MOS joint venture have any impact?

Jason Daniel Gabelman: Yeah, Hey, thanks for taking my questions.

Jason Daniel Gabelman: The first one is just on upstream EBITDA cadence this quarter was a bit better than expected, but you didn't change full year guidance.

Jason Daniel Gabelman: It sounds like it was related to.

Jason Daniel Gabelman: I can't really tell if it was project construction getting into later something else. So should we expect that EBITDA to move more negative in <unk> as you ramp up construction activities and other things going on in that segment and then does the this this mass joint venture or have any impact to that.

Jason Daniel Gabelman: No, Jason, you will. We should see an increase kind of, you know, ramping throughout the year on that, on the distribution side of the business. Sorry, I wasn't, yeah, not the distribution side, the upstream side of the business. Okay, so what the...

Speaker Change: No Jason.

Jason Daniel Gabelman: JC will we should see.

Jason Daniel Gabelman: <unk>.

Jason Daniel Gabelman: The increase kind of.

Jason Daniel Gabelman: Ramping throughout the year on that on the distribution side of the business.

Speaker Change: So sorry, if I wasn't.

Jason Daniel Gabelman: Yeah.

Jason Daniel Gabelman: The distribution side, the upstream side of the business.

Speaker Change: Okay. So then lag.

Andrew J. Littlefair: Yeah, it will get worse. Yeah, well it will, we will see some of that.

Jason Daniel Gabelman: Try get worse.

Andrew J. Littlefair: Well it will we will see some of that.

Andrew J. Littlefair: Yes.

Andrew J. Littlefair: Yeah. So, as we talked about on our last call, a lot of that loss would be in the first part of the year. So it's going to move out a little bit, so you'll see some of it in the second quarter.

Andrew J. Littlefair: Yeah.

Andrew J. Littlefair: So as we talked about.

Andrew J. Littlefair: On our last call that a lot of that loss will be in the first part of the year. So it's going to it's going to move out a little bit so youll see some of it in the second quarter.

Jason Daniel Gabelman: Got it. And no change from the small strength joint venture to that guidance. Correct, no. Okay.

Andrew J. Littlefair: Got it and no change from the small strength joint venture to that guidance.

Jason Daniel Gabelman: Correct no.

Jason Daniel Gabelman: And then my second one is just the 15-liter engine order book. I mean, it sounds like the orders aren't going to come in until the middle of this year. I think on prior calls, you had suggested that sales could be around 3,400 in 2024. Maybe that was Cummins' commentary, not yours, but it sounds like the sales are being pushed out a little bit. So, can you just maybe talk about when you expect to see those volumes materialize on the road and in your distribution segment? Is that more of a 2020 thing? Yeah. Well, sure.

Speaker Change: Okay and then my second one is just the the 15 liter engine in the order book.

Jason Daniel Gabelman: I mean, it sounds like the the orders aren't going to comment really until the middle of this year.

Jason Daniel Gabelman: I think on prior calls you had suggested that sales could be.

Jason Daniel Gabelman: 3400 in 2024.

Jason Daniel Gabelman: Maybe that was comments commentary not yours, but it sounds like the sales are being pushed out a little bit. So can you just maybe talk about when you expect to see those volumes materialize I'm.

Jason Daniel Gabelman: On the road and in your distribution segment is that more of a 'twenty.

Andrew J. Littlefair: Yeah, those are Cummins numbers, not mine. I got browbeaten around here by not using numbers anymore.

Speaker Change: Yes, those are comments numbers not mine I got I got bra beat around here by not using numbers anymore. Those are comments numbers, but I would say this.

Andrew J. Littlefair: He was always contemplate the production never happen until June or July anyway.

Andrew J. Littlefair: Those are Cummins numbers. But, but I would say this, it was always contemplated. I mean, the production never happened until June or July anyway. So I don't know that I'm sitting here saying that it slipped or this and that, but it was always the second half, and we always figured by the time that made its way, you know, by the way, these get produced, they get sent to the dealer, they get sent to the customer, they get, and, you know, the vehicles take a while to hit the road.

Andrew J. Littlefair: So I don't know that I'm sitting here, saying that it slipped or this and that but it was always a second half and we always figured by the time that made its way by the way. These get produced they get sent to the dealer they get a sense of the customer they get.

Andrew J. Littlefair: Since sold in the vehicles take awhile to hit the road, we always figured that the volume for 2024 for us would be.

Andrew J. Littlefair: We always figured that the volume for 2024 for us would be, you know, relatively small, and it would be way back in the middle. I mean, that we really wouldn't see much volume until September, October, you know, November, way late in the year. So it is.

Andrew J. Littlefair: Relatively small.

Andrew J. Littlefair: And it would be way back end loaded I mean that if we really wouldn't see much volume to September October November way late in the year. So it's.

Andrew J. Littlefair: It'll really be a 20, you know; we'll get a stub. And even if they do the $3,500 or $3,000 that Cummins talked about, you know, we stand to gain a large part of that market share. I'd like to think that it'll be in the fourth quarter, and that'll really be, we'll see that volume in 2025. We've always thought that, but I still want to see those orders come through and those engines built.

Andrew J. Littlefair: It'll really be at 'twenty, we'll get a stub.

Jason Daniel Gabelman: Yep, understood. All right, great. Thanks for the clarification.

Andrew J. Littlefair: Even if they did the 3500 or 3000 comments talked about.

Jason Daniel Gabelman: We stand to gain a large part of that market share I'd like to think it'll be in the fourth quarter and that'll really be we'll see that volume.

Jason Daniel Gabelman: In 2025.

Jason Daniel Gabelman: We've always thought that.

Jason Daniel Gabelman: But I still want to see those orders come through and those those engines built.

Speaker Change: That's key.

Speaker Change: Yep understood alright, great. Thanks for the clarifications.

Jason Daniel Gabelman: Yes.

Jason Daniel Gabelman: Q.

Andrew J. Littlefair: Thank you. There are no additional questions at this time. I'd like to now turn the conference back to Mr. Andrew Littlefair for any closing remarks. Yes, thank you all.

Jason Daniel Gabelman: Thank you there are no additional questions at this time I'd like to now turn the conference back to Mr. Andrew <unk> for any closing remarks, yes.

Andrew J. Littlefair: Yes, thank you, operator. Thank you everyone for joining us today, and we look forward to filling you in on our progress next quarter. Have a good day.

Andrew J. Littlefair: Yes. Thank you operator, thank you everyone for joining today and we look forward to.

Andrew J. Littlefair: Filling you in on our progress next quarter.

Speaker Change: Good day.

Operator: Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.

Speaker Change: Thank you ladies and gentlemen. This concludes today's presentation you may now disconnect.

Operator: [music].

Operator: Okay.

Operator: Mhm.

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Operator: Hum.

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Operator: Okay.

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Operator: Okay.

Operator: Okay.

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Operator: Hello, Matt.

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Operator: Okay.

Operator: Okay.

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