Q2 2024 Clean Energy Fuels Corp Earnings Call

Speaker Change: Good day and welcome to the Clean Energy Fuels second quarter 2024 earnings conference call.

Operator: Welcome to the Clean Energy Fuels second quarter 2024 earnings conference call. All participants will be in listen-only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your telephone keypad.

Speaker Change: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2.

Operator: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Bob Vreeland, Chief Financial Officer. Please go ahead.

Speaker Change: Please note this event is being recorded. I would now like to turn the conference over to Bob Vreeland, Chief Financial Officer. Please go ahead.

Operator: Operator, earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 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. A replay will be available on the website for 30 days.

Bob Vreeland: Operator, earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 2024.

Speaker Change: 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.

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

Operator: Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Such forward-looking statements are not 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 factor section of Clean Energy's Form 10-Q filed today.

Speaker Change: Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict.

Speaker Change: 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.

Speaker Change: Several factors that could cause or contribute to such differences are described in detail in the risk factor section of Clean Energy's Form 10-Q filed today.

Operator: These forward-looking statements speak only as of the date of this release. The company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release. The company's non-GAAP EPS and adjusted EBITDA will be reviewed on this call and exclude certain expenses that the company's management does not believe are indicative of the company's core business operating results. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results.

Speaker Change: These forward-looking statements speak only as the date of this release. The company undertakes the obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release.

Speaker Change: 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 EBITDA.

Bill Becker: and Bill Becker.

Operator: The directly comparable gap information, reasons why management uses non-gap information, a definition of non-gap EPS and adjusted EBITDA, and a reconciliation between these non-gap and gap 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.

Bill Becker: The directly comparable GAP information, reasons why management uses non-GAP information, the definition of non-GAP EPS and adjusted EBITDA, and a reconciliation between these non-GAP and GAP figures is provided in the company's press release, which has been furnished to the SEC on Form 8K today.

Andrew Littlefair: With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair. Thank you, Bob. I'm pleased to report that we reached the midpoint of 2024 in a strong financial position driven by a very solid second quarter following an equally good first quarter.

Andrew Littlefair: I'm pleased to report that we reached the midpoint of 2024 in a strong financial position driven by a very solid second quarter following an equally good first quarter. We reported $18.9 million in adjusted EBITDA for the quarter versus $12 million in Q2 of 2023, sold 57 million gallons of R&G during the second quarter, and revenue was $98 million versus $90 million for the same quarter in 2023. We ended the quarter with just shy of $250 million in cash and investments.

Andrew Littlefair: We reported $18.9 million in adjusted EBITDA for the quarter versus $12 million in Q2 of 2023.

Speaker Change: We sold 57 million gallons of R&G during the second quarter, and revenue was $98 million versus $90 million for the same quarter in 2023. We ended the quarter with just shy of $250 million in cash and in investments.

Andrew Littlefair: I'm going to keep my remarks relatively short today, but I do want to highlight some of our accomplishments during the quarter, which helped explain the good results. The achievements in Q2 are a great microcosm of Clean Energy's overall business and what sets us apart from virtually any other company in the low carbon energy sector. This begins with the completion of the expansion to our Boron facility, the only natural gas liquefaction plant in California, increasing its output and capacity by 50%.

Speaker Change: I'm going to keep my remarks relatively short today, but I do want to highlight some of our accomplishments during the quarter, which helped explain the good results.

Speaker Change: The achievements in Q2 are a great microcosm of Clean Energy's overall business and what sets us apart from virtually any other company in the low-carbon energy sector.

Speaker Change: This begins with the completion of the expansion to our Boron facility, the only natural gas liquefaction plant in California, increasing its output.

Andrew Littlefair: Much of the new demand for LNG has been driven by the commercial maritime industry overall, and Asia-Hawaii in particular. Haysha is now operating three large container ships on clean burning energy between the ports of Long Beach, Oakland, and Honolulu. Fuel volume from these ships has grown from a little over half a million gallons a month in August of 2022 to over 2.1 million gallons of LNG in May of this year. By doing so, these ships have obtained a 90% reduction in NOx and a 25% reduction in carbon dioxide compared to ships operating on traditional fuels.

Speaker Change: capacity by 50%. Much of the new demand for LNG has been driven by the commercial maritime industry overall and Asia-Hawaii in particular.

Haysha: Haysha is now operating three large container ships on clean burning LNG between the ports of Long Beach, Oakland, and Honolulu.

Speaker Change: Fuel volume from these ships has grown from a little over half a million gallons a month in August of 2022 to over 2.1 million gallons of LNG in May of this year.

Speaker Change: By doing so, patient ships have obtained a 90% reduction in NOx and a 25% reduction in carbon dioxide compared to ships operating on traditional fuels.

Andrew Littlefair: After years of hard work by our team members, we have constructed an extensive fueling infrastructure across North America that is second to none in the business. The owner operates over 600 fueling stations throughout the U.S. and Canada. While many of these are private, meaning they were built for a single fleet customer, like a transit Agency or a sanitation company, over 200 of them are accessible to the growing number of fleets that are testing natural gas trucks or adding trucks to their existing fleet because the networks have grown geographically and the environmental benefits of R&G are becoming better known. We've strategically located many of these fast-fill stations along interstates in highly-trafficked locations where fleet vehicles operate, such as distribution centers.

Speaker Change: After years of hard work by our team members, we have constructed an extensive fueling infrastructure across North America that is second to none in the business.

Speaker Change: The owner operate over 600 fueling stations throughout the U.S. and Canada.

Speaker Change: Well, many of these are private, meaning they were built for a single fleet customer like a transit agency or sanitation company.

Speaker Change: Over 200 of them are accessible to the growing number of fleets that are testing a natural gas truck or adding trucks to their existing fleets.

Speaker Change: because the networks have grown geographically and the environmental benefits of R&G are becoming better known.

Speaker Change: We've strategically located many of these fast-fill stations along interstates in the highly-trafficked locations where fleet vehicles operate, such as distribution centers.

Andrew Littlefair: Increased recurring fueling at our existing stations is one of the driving factors of our revenue growth at a healthier margin. As you know, we have built 19 of these publicly accessible stations with Amazon as our anchor customer. We're now beginning to see more trucks from other fleets fueling at them as well. We're in the process of executing a similar infrastructure strategy in Canada with our partner Tourmaline, the largest independent gas producer in Canada.

Speaker Change: Increased recurring fueling at our existing stations is one of the driving factors of our revenue growth at healthier margins.

Speaker Change: As you know, we have built 19 of these publicly accessible stations with Amazon as our anchor customer.

Speaker Change: We are now beginning to see more trucks from other fleets fueling at them as well.

Speaker Change: We're in the process of executing a similar infrastructure strategy in Canada with our partner Tourmaline, the largest independent gas producer in Canada.

Andrew Littlefair: Together, we are building a series of service stations in Western Canada that will be anchored by existing customers but available for additional new fleets. Because of its range, power, and torque, the new Cummins X15N engine is seen as an excellent fit for the terrain and logistics of Canadian trucking.

Speaker Change: Together, we are building a series of stations in Western Canada that will be anchored by existing customers.

Speaker Change: but available for additional new fleets.

Speaker Change: Because of its range, power, and torque, the new Cummins X-15N engine is seen as an excellent fit for the terrain and logistics of Canadian trucking.

Andrew Littlefair: Second and third stations under our Tourmaline partnership are scheduled to open this fall. Here in the U.S., the fueling agreement that we signed in the second quarter with CMEX, one of the largest cement companies in the world, is a great example of a fleet that is expanding with natural gas trucks in Southern California and taking advantage of our growing network of R&G stations throughout the region. As I have said on these calls many times, we are convinced that the heavy-duty transportation industry, which is looking for ways to decarbonize, can't find a better, more immediate, and affordable solution than renewable natural gas.

Speaker Change: Second and third stations under our Tourmaline partnership are scheduled to open this fall.

Speaker Change: Here in the U.S., the fueling agreement that we signed in the second quarter with CMEX, one of the largest cement companies in the world, is a great example of a fleet that is expanding with natural gas trucks in Southern California and taking advantage of our growing network of R&G stations throughout the region.

Speaker Change: I have said on these calls many times we are convinced that the heavy-duty transportation industry, which is looking for ways to decarbonize, can't find a better, more immediate, and affordable solution than renewable natural gas.

Andrew Littlefair: There's also a growing realization that other new shiny penny alternatives are years away from being deployed in any meaningful way and could be out of the reach for many fleets in the foreseeable future. We've all read the numerous stories in the financial media and especially in trucking publications chronicling the footfalls of electric vehicles and the lack of charging infrastructure. On the flip side, after the media spent years writing about the other alternatives that are now having trouble getting traction, we're seeing more coverage of the Cummins X-15N engine, including a recent piece in the Commercial Carrier Journal by Jason Cannon, a well-respected veteran trucking reporter.

Speaker Change: There's also a growing realization that other new shiny penny alternatives are years away from being deployed in any meaningful way and could be out of the reach for many fleets in the foreseeable future.

Speaker Change: We've all read the numerous stories in the financial media, and especially in trucking publications, chronicling the footfalls of electric vehicles and the lack of charging infrastructure.

Speaker Change: On the flip side, after the media spent years writing about the other alternatives that are now having trouble getting traction, we're seeing more coverage of the Cummins X-15N engine, including a recent piece in the Commercial Carrier Journal by Jason Cannon, a well-respected veteran trucking reporter.

Andrew Littlefair: Indulge me while I read how Jason ended his very thorough review after test driving a Peterbilt truck equipped with the X-15N. Quote, natural gas lost its seat at the head of the fuel of the future table when the potential of battery, electric, and hydrogen started turning heads. But natural gas right now checks a lot of boxes for fleets looking to reduce emissions without sacrificing payload, build time, and range. Peterbilt's Ultra-Loft 12-speed makes the strongest case for driver comfort that natural gas has ever had."

Speaker Change: Indulge me while I read how Jason ended his very thorough review after test driving a Peterbilt truck equipped with the X-15N.

Jason Cannon: Quote, natural gas lost its seat at the head of the fuel of the future table when the potential of battery, electric, and hydrogen started turning heads.

Speaker Change: The natural gas right now checks a lot of boxes for fleets looking to reduce emissions without sacrificing payload, build time, and range.

Speaker Change: Peterbilt's Ultra-Loft 12-speed makes the strongest case for driver comfort that natural gas has ever had."

Andrew Littlefair: Jason chronicles in his review the bumpy ride that natural gas has had in the heavy-duty trucking space over the last 10 or 12 years. Those of you that have followed Clean Energy and heard me on these calls have lived through it as well. But with the introduction of R&G, a fuel that scores better than any other in reducing carbon emissions, and a new engine that finally checks all the boxes operationally for the industry, we, along with a growing number of experts, believe the time is right for heavy-duty natural gas trucking. To ensure our network of stations has the RNG to put in the tanks of those trucks.

Speaker Change: Jason chronicles in his review the bumpy ride that natural gas has had in the heavy-duty trucking space over the last 10 or 12 years.

Speaker Change: in those of you that have followed clean energy and urt me on these calls have lived through it as well on with the introduction of r ng of fuel the scores better than any other and reducing carbon emissions and new engine that finally checks all the boxes operationally for the industry

Speaker Change: We, along with a growing number of experts, believe the time is right for heavy-duty natural gas trucking.

Speaker Change: To ensure our network of stations has the R&G to put in the tanks of those trucks, we continue to have great success in partnering with a growing number of R&G suppliers around the country for their offtake.

Andrew Littlefair: We continue to have great success in partnering with a growing number of R&G suppliers around the country for their updates. And, as you hopefully saw in a series of announcements over the last few months, we continue to make nice progress in our own production of low carbon R&G from dairies, with six projects now producing R&G. Daryl Moss is one of the most well-respected developers in the R&D industry.

Speaker Change: And as you hopefully saw in a series of announcements over the last few months, we continue to make nice progress in our own production of low-carbon R&G from dairies, with six projects now producing R&G.

Daryl Moss: Daryl Moss is one of the most well-respected developers in the R&D industry, so we were pleased to sign an agreement with his company to build a series of projects utilizing the covered lagoon method that Moss Energy has refined over the years.

Andrew Littlefair: So, we were pleased to sign an agreement with this company to build a series of projects utilizing the covered lagoon method that MOS Energy has refined over the years. We have approved a cluster of dairies in Georgia and Florida and other single dairy projects in New Mexico, Nebraska, and South Dakota. Engineering has begun on these projects with completion scheduled in 2025 and 2026. We also recently broke ground for an RNG digester at South Fork Dairy in Texas. The owner, Frank Brand, has rebuilt the 16,000-cow dairy, and we couldn't be prouder to call him our partner in the project.

Daryl Moss: They've approved a cluster of dairies in Georgia and Florida, and other single dairy projects in New Mexico, Nebraska, and South Dakota.

Speaker Change: Engineering has begun on these projects with completion scheduled in 2025 and 2026.

Speaker Change: We also recently broke ground for an RNG digester at South Fork Dairy in Texas.

Speaker Change: The owner, Frank Brand, has rebuilt the 16,000 cow dairy, and we couldn't be prouder to call him our partner in the project.

Andrew Littlefair: Injection of RNG into the pipeline recently began on our Ash Grove Dairy project in Minnesota, one of the projects we developed with our partner BP. And last month, we successfully monetized the investment tax credit generated by our first dairy R&G project, Del Rio. The sale of the credit generated approximately $9 million in net proceeds to the project.

Daryl Moss: Injection of RNG into the pipeline recently began on our Ash Grove Dairy project in Minnesota, one of the projects we developed with our partner BP.

Daryl Moss: And last month we successfully monetized the investment tax credit generated by our first dairy R&G project Del Rio.

Daryl Moss: Credit sale generated approximately $9 million in net proceeds to the project.

Andrew Littlefair: Our plan is to monetize the investment tax credits on our other five currently operational projects over the next 12 months. That is a good segue into how I'd like to close my remarks and address an area that I know we're all watching closely, which is the election in November. I know many of you are attempting to calculate the different outcomes and if or how they will impact the overall energy transition space in companies like Clean Energy.

Daryl Moss: The plan is to monetize the investment tax credits on our other five currently operational projects over the next 12 months.

Speaker Change: That is a good segue on how I'd like to close my remarks and address an area that I know we're all watching closely, which is the election in November .

Daryl Moss: I know many of you are attempting to calculate the different outcomes and if or how they will impact the overall energy transition space in companies like Clean Energy.

Andrew Littlefair: Like most companies in the low-carbon energy sector, we fielded many questions from investors. And while I won't speculate on any particular outcome, I will say this. We partner with landfills and dairy farms to deliver low-carbon, domestically produced biofuel to commercial transportation customers, producing and delivering sustainable fuel, which generates environmental and financial benefits for the agriculture, Municipal Waste, and Transportation industries. We strongly believe that this will continue to be embraced as a win-win solution by any administration or leadership in Congress.

Speaker Change: Like most companies in the low-carbon energy sector, we fielded many questions by investors.

Daryl Moss: And while I won't speculate on any particular outcome, I will say this, we partner with landfills and dairy farms to deliver low-carbon, domestically produced biofuel to commercial transportation customers.

Speaker Change: produce and deliver sustainable fuel, which generates environmental and financial benefits for the agriculture,

Daryl Moss: Municipal Waste and Transportation Industries.

Daryl Moss: We strongly believe that this will continue to be embraced as a win-win solution by any administration or leadership in Congress.

Speaker Change: As an example, we will be hosting next week the Chairman of the House Ways and Means Committee, Jason Smith, with several other members of Congress, including Representative Brian Fitzpatrick, who is the Republican co-sponsor of the R&D tax credit legislation.

Andrew Littlefair: These members are coming to our headquarters, where we and executives from UPS and WM will show off the latest technology in natural gas trucks and brief them on the benefits of R&G production and fueling for rural America, municipalities, and industries. We were very pleased that the R&G tax credit bill introduced by Representatives Fitzpatrick and Democrat Linda Sanchez in the House earlier this year was recently mirrored in the U.S. Senate with a bipartisan companion bill co-sponsored by Senators Mark Warner and Tom Tillis. It started my career in politics, so I know just enough to be dangerous.

Speaker Change: These members are coming to our headquarters where we and executives from UPS and WM will show off the latest technology in natural gas trucks and brief them on the benefits of R&G production and fueling to rural America, municipalities, and industries.

Speaker Change: We were very pleased that the R&G tax credit bill introduced by Representatives Fitzpatrick and Democrat Linda Sanchez in the House earlier this year was recently mirrored in the U.S. Senate.

Speaker Change: with a bipartisan companion bill co-sponsored by Senators Mark Warner and Tom Tillis.

Speaker Change: I started my career in politics, so I know just enough to be dangerous, but as I said, we feel comfortable that no matter the outcome in November , there is widespread and cross-the-aisle support to produce a fuel that tremendously helps the U.S. agricultural industry.

Andrew Littlefair: But as I said, we feel comfortable that no matter the outcome in November, there is widespread and cross-the-aisle support to produce a fuel that tremendously helps the U.S. agricultural industry, both environmentally and financially, including creating jobs in rural America, and decarbonizes heavy-duty vehicles in a way that no other alternative has been able to seriously address. Now I'll hand the call back to Bob, who will go into more detail about our strong quarter. Thank you.

Speaker Change: both environmentally and financially, including creating jobs in rural America, and decarbonizes heavy-duty vehicles in a way that no other alternative has been able to seriously address.

Speaker Change: Now I'll hand the call back to Bob who will go into more detail about our Strong Corp. Thank you.

Bob Vreeland: Thank you, Andrew, and good afternoon to everyone. We had a good second quarter for 2024. We continued to see good results from our fuel distribution business, including good volumes and margins at our station network, plus strong RIN pricing, and our LCFS revenues were back on track, albeit at a lower trending LCFS credit price during the quarter, which is the same as last year's gap net loss and per share amount, although we got there in different ways. On an adjusted non-GAAP basis, we reported net income of $2.7 million, or $0.01 per share, in the second quarter of 2024 versus break-even non-GAAP results last year for the second quarter.

Bob Vreeland: Thank you, Andrew, and good afternoon to everyone.

Bob Vreeland: We had a good second quarter for 2024. We continue to see good results from our fuel distribution business, including good volumes and margins at our station network.

Bob Vreeland: plus strong RIN pricing, and our LCFS revenues were back on track, albeit at a lower trending LCFS credit price during the quarter.

Speaker Change: On a gap basis, we reported a net loss for the second quarter of 2024 of $16.3 million, or $0.07 per share.

Speaker Change: which is the same as last year's gap net loss and per share amount, although we got there in different ways.

Speaker Change: On an adjusted non-GAAP basis, we reported net income of $2.7 million or one cent per share in the second quarter of 2024 versus break-even non-GAAP results last year for the second quarter.

Bob Vreeland: And as Andrew mentioned, our adjusted EBITDA was $18.9 million for the second quarter of 2024, compared to $12.1 million for the same period in 2023. And just to clarify up front here, our LCFS revenue of $4.4 million for the second quarter of 2024 includes $2.2 million of LCFS credit revenue that we discussed on our last earnings call, where we mentioned that we had transacted our first quarter 2024 LCFS credit sales in April of 2024 due to the Easter holiday.

Speaker Change: And as Andrew mentioned, our adjusted EBITDA was $18.9 million for the second quarter of 2024 compared to $12.1 million the same period in 2023.

Speaker Change: And just to clarify up front here, our LCFS revenue of $4.4 million for the second quarter of 2024 includes

Speaker Change: $2.2 million of LCFS credit revenue that we discussed on our last earnings call where we mentioned that we had transacted our first quarter

Speaker Change: 2024 LCFS credit sales in April of 2024 due to the Easter holiday.

Bob Vreeland: Then, for the second quarter, we transacted our second quarter LCFS credit sales in June, so we got back on track there. That was also for about $2.2 million, thus taking our total LCFS to $4.4 million for the quarter.

Speaker Change: Then, for the second quarter, we transacted our second quarter LCFS credit sales in June , so we got back on track there. That was also for about $2.2 million, thus taking our total LCFS to $4.4 million for the quarter.

Bob Vreeland: While the added LCFS revenue from the April sales boosted our second quarter results, we still saw incremental gains in our fueling business in the second quarter of 2024 compared to last year, principally due to a better mix of higher-margin fuel sales and higher RIN prices that helped to offset some of the lower LCFS pricing that we saw. On a year-to-date basis, our financial results are well above last year, with a gap net loss of $34.7 million for the first six months of 2024, compared to a gap net loss of $55 million for the six months into June of 2023, and Adjusted Evita for the six months ended June 24 was $31.8 million versus $8.2 million for the same six-month period in 2023. Last year was negatively impacted by the extraordinarily high gas costs in California in the first quarter of 2023, which cost us about $10 million last year.

Speaker Change: While the added LCFS revenue from the April sales boosted our second quarter results, we still saw incremental gains in our fueling business in the second quarter of 2024 compared to last year, principally due to a better mix of higher margin fuel sales and higher RIN pricing.

Speaker Change: that helped to offset some of the lower LCFS pricing that we saw.

Speaker Change: on a year-to-date basis.

Speaker Change: Our financial results are well above last year, with a gap net loss of $34.7 million for the first six months of 2024, compared to a gap net loss of $55 million

Speaker Change: for the six months into June 23.

Speaker Change: and adjusted EBITDA for the six months ended June 24 was $31.8 million versus $8.2 million for the same six-month period in 2023.

Speaker Change: Last year was negatively impacted by the extraordinary high gas costs in California in the first quarter of 2023, which did cost us about $10 million last year.

Bob Vreeland: But with an improvement in our adjusted EBITDA year-to-date of $24 million, it means that we are seeing marked incremental improvements here in 2024 for the first two quarters beyond the recovery from last year's gas cost anomaly. In fact, on a GAAP earnings basis, our GAAP net loss of $34.7 million year-to-date is running better than planned. As such, we're updating our GAAP net loss guidance to be in a range of $91 million to $81 million for 2024, versus our previous guidance of a range of $111 million to $101 million.

Speaker Change: But with an improvement in our adjusted EBITDA year-to-date of $24 million, it means that we are seeing marked incremental improvements here in 2024 for the first two quarters beyond the recovery from last year's gas cost anomaly.

Speaker Change: In fact, on a GAAP earnings basis, our GAAP net loss of $34.7 million year-to-date is running better than planned.

Speaker Change: as such.

Speaker Change: We're updating our GAAP net loss guidance to be in a range of $91 million to $81 million for 2024 versus our previous guidance of a range of a GAAP net loss of $111 million to $101 million.

Bob Vreeland: Basically, an estimated $20 million improvement to our GAAP net loss. We're not changing our 2024 adjusted EBITDA guidance of $62 million to $72 million because the improvement in our GAAP guidance is due to higher interest income, lower depreciation expense, lower stock compensation expense, and lower Amazon warrant charges, none of which impact our adjusted EBITDA. With adjusted EBITDA of $31.8 million for the six months ending June 30, 2024, we feel confident in maintaining our annual outlook for adjusted EBITDA of $62 million to $72 million.

Speaker Change: Basically, an estimated $20 million improvement to our gap net loss.

Speaker Change: We're not changing our 2024 adjusted EBITDA guidance of $62 million to $72 million because the improvement in our GAAP guidance is due to higher interest income, lower depreciation expense, lower stock compensation expense, and lower Amazon warrant charges.

Speaker Change: None of which impact our adjusted EBITDA. With adjusted EBITDA of $31.8 million for the six months into June 30, 2024, we feel confident in maintaining our annual outlook for adjusted EBITDA of $62 million to $72 million.

Bob Vreeland: And finally, I wanted to make a few comments on our R&G volumes and our total revenues for the second quarter of 2024 to provide some more insight on the trends that we saw there. On the R&G volume front, we reported 57.1 million gallons of R&G sold for the second quarter of 2024, versus last year's second quarter of 58.6 million R&G gallons, and in the first quarter of 2024, it was 58 million R&G gallons.

Speaker Change: And finally, I wanted to make a few comments around our R&G volumes and our total revenues for the second quarter of 2024 to provide some more insight on the trends that we saw there.

Speaker Change: On the R&G volume front, we reported 57.1 million gallons of R&G sold for the second quarter of 2024.

Speaker Change: versus last year's second quarter was 58.6 million R&G gallons, and the first quarter of 2024 it was 58 million R&G gallons.

Bob Vreeland: The slight decline in the second quarter of 2024 compared to last year and the first quarter of 24, is the result of about 5 million R&G gallons that we sold outside of our station network a year ago and in the first quarter of 24, that didn't repeat in the second quarter. We had anticipated much of this reduction in R&G volumes when we set out when we set our 2024 outlook, where back in February, we had identified certain R&G volumes that we had distributed outside of our station network in 2023 that we didn't expect to repeat in 2024, and that's really kind of what we saw in this second quarter.

Speaker Change: The slight decline in the second quarter of 2024.

Speaker Change: compared to last year and the first quarter of 2024 is the result of about 5 million R&G gallons that we sold

Speaker Change: outside of our station network a year ago and in the first quarter of 24 that didn't repeat in the second quarter.

Speaker Change: We anticipated much of this reduction in the R&G volumes when we set our 2024 outlook, where, back in February , we had identified

Speaker Change: certain R&G volumes that were that we had distributed outside of our station network in 2023 that we didn't expect to repeat in 24 and that's really kind of what we saw in this second quarter so frankly we were able to make up a lot of that

Bob Vreeland: So, frankly, we were able to make up a lot of that to get to the 57 by distributing R&G across our network. And in fact, that change to do that in R&G gallons was part of the reason why our overall fuel margin improved in the second quarter of 24, as we were also then able to pick up the margin on our underlying commodity of fuel sale in addition to the REN and the LCFS web site. Thanks for watching! And we hope you will install it yourself. Have a great day!

Speaker Change: to get to the 57 by distributing R&G into our network.

Speaker Change: And, in fact, that change, by doing that in R&G gallons, was part of the reason why our overall fuel margin improved in the second quarter of 2004, as we were also then able to pick up the margin on our underlying commodity of fuel sale, in addition to the REN and the LCFS.

Bob Vreeland: And remember to subscribe and ring that bell. On a year-to-day basis, through June of 2024, we've delivered 115 million gallons of R&G. Our target that we estimated back in February of 24 for R&G gallons for 2024 was 245 million gallons.

Speaker Change: On a year-to-date basis, the...

Speaker Change: through June of 2024, we've delivered 115 million gallons of R&G.

Speaker Change: Now our target that we estimated back in February of 2024 for R&G gallons for 2024 was 245 million gallons.

Bob Vreeland: Reaching 245 million gallons will be a bit of a challenge at this point in the year. But what we do see, though, is that we really can deliver somewhere between 95 percent and maybe 100 percent of that 245 million gallon target for 2024. And I'll just point out that as we're seeing in our financial results, that ultimately, that mix of R&G delivered is also an important part of contributing to our bottom line results. On the revenue front, Andrew noted our revenues for the second quarter of $98 million compared to $90.5 million a year ago.

Speaker Change: are reaching reaching 245 million gallons will be

Speaker Change: A bit of a challenge at this point in the year, so what we do see though is that we really can deliver somewhere between 95% and maybe 100% of that 245 million gallon target for 2024.

Speaker Change: And I'll just point out that as we're seeing in our financial results that ultimately that mix of R&G delivered is also an important part of contributions to our bottom line results.

Speaker Change: On the revenue front, Andrew noted our revenues for the second quarter of $98 million compared to $90.5 million a year ago, second quarter.

Bob Vreeland: There was one item that certainly muted that year-over-year increase; it would have been higher, but last year we had $3.6 million in revenue related to the non-cash change and fair value of derivative instruments, and in 2024 that number was $100,000, so you got about a $3.5 million number in the prior year number change, and... Apart from that, then kind of all the categories, all the sources of our revenue were increased. Our fuel sales were greater.

Andrew Littlefair: There was one item that certainly muted that year-over-year increase.

Operator: Welcome to the Clean Energy Fuels 2nd Quarter 2024 earnings conference call. Our participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Andrew Littlefair: would have been higher, but last year we had $3.6 million in revenue related to the non-cash change and fair value of derivative instruments.

Speaker Change: And in 2024, that number was $100,000. So you got about a $3.5 million number in the prior year number change.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.

Speaker Change: and

Speaker Change: And apart from that, then kind of all the categories, all the sources of our revenue were increased. Our fuel sales were greater. This was from higher vehicle fuel sales on higher volumes.

Bob Vreeland: This was from higher vehicle fuel sales on higher volumes. We saw higher RIN revenue in the second quarter compared to a year ago, driven by REN pricing that was up 76% and higher LCFS revenue, although that was mainly due to the April sales that I mentioned previously. And then we also had an increase of nearly a million dollars in our alternative fuel tax credit revenue. So, kind of across the board increases there.

Operator: Please note this event is being recorded.

Robert Vreeland: I would now like to turn the conference over to Pavel Vreeland, Chase Financial Officer. Please go ahead. Operator, earlier this afternoon, Clean Energy released financial results for the 2nd quarter ending June 30, 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 broadcast. There will be a replay available on the website for 30 days.

Speaker Change: We saw higher RIN revenue.

Speaker Change: in the second quarter compared to a year ago driven by Bryn Tricyne that was up.

Speaker Change: 76%, and higher LCFS revenue, although that was mainly due to the April sales that I mentioned previously. And then we also had an increase of nearly a million dollars in our alternative fuel tax credit revenue.

Bob Vreeland: From a more recent standpoint, when we look at second quarter 2024 revenue compared to our first quarter, that's down approximately 5%. I will say about 30% of that decline relates also to the change in the non-cash fair value of derivative instruments. And then the other reason for the decline from Q1 was largely because of natural gas and that flow-through of the commodity cost that we talked about before that impacts revenue, and it impacts our costs.

Speaker Change: kind of across-the-board increases there.

Speaker Change: From a more recent standpoint, when we look at

Speaker Change: Our second quarter 2024 revenue compared to our first quarter, that's down approximately 5%.

Robert 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 risks, uncertainties, and assumptions that are difficult to predict. Such forward-looking statements are not a guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the risk factor section of Clean Energy's form 10Q filed today. These forward-looking statements speak only as the date of this release. The company undertakes an obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release.

Speaker Change: I will say about 30% of that decline relates also to the change in the non-cash fair value of derivative instruments. And then the other reason for the decline from Q1 was

Speaker Change: largely because of natural gas and that flow-through of the commodity costs that we've talked about before that impacts revenue and it impacts our costs. We saw dramatic reductions in natural gas from March actually through June .

Bob Vreeland: We saw dramatic reductions in natural gas from March actually through June on that. But the point, I guess the important part there in terms of that trend is these are normal contributors impacting our revenues that, largely, do not have a dollar-for-dollar impact on cash margins at our stations. And nothing that we see in that trend from the first quarter to this second quarter was pointing to any fundamental change or decline in our business.

Robert Vreeland: The company's non-GAPEPS and adjusted EBITDA will be reviewed on this call and excludes certain expenses at the company's management. This does not believe or indicative of the company's work business operating results. Non-GAP 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. Be directly comparable GAAP information, reasons why management uses non-GAP information, a definition of non-GAPEPS and adjusted EBITDA and a reconciliation between these non-GAP and GAAP figures is provided in the company's press release, which has been furnished to the SEC on form 8K today.

Speaker Change: on that. So, but the point, I guess the important part there in terms of that trend is these are normal contributors impacting our revenues that largely they do not have a dollar-for-dollar impact to cash margins at our stations.

Speaker Change: And nothing that we see in that trend from the first quarter to this second quarter was pointing to any fundamental change or decline in our business.

Operator: With that, operator, we can open the call to questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: With that, operator, we can open the call to questions.

Speaker Change: my won' will well began the question and-answer session to ask a question you may press star then one on your telephone ke head if you are using a speaker phone please pick up your handset before pressing the keys

Andrew Littlefair: With that, I will turn the call over to our president and chief executive officer Andrew Littlefair. Thank you, Bob. I'm pleased to report that we reached the bid point of 2024 in a strong financial position driven by a very solid second quarter following an equally good first quarter. We reported 18.9 million in adjusted EBITDA for the quarter versus 12 million in Q2 of 2023. So 57 million gallons of R&G during the second quarter and revenue was 98 million dollars versus 90 million for the same quarter in 2023. We ended the quarter with just shy of 250 million in cash and investments.

Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Eric Stine of Craig Hammond. Go ahead, please. Hi, Andrew. Hi, Bob. Hey, Larry.

Eric Stein: Our first question comes from Eric Stine of Craig Hammond. Go ahead, please. Hi, Andrew Hammond.

Eric Stine: Hey, so you mentioned in the release 7% volume growth at your stations. I'm just curious if you could break it down specifically or from a high level by your key end markets, I guess, specifically trucking and refuse. And then I would love your updated thoughts on the timing of the X15N. I know that, you know, it's certainly moving towards production and launch but really hasn't gotten going yet in a big way. So just updated thoughts would be great.

Speaker Change: number

Eric Stein: Hey, so you mentioned in the release 7% volume growth at your stations. I'm just curious if you could break down specifically or from a high level by your key end markets, I guess specifically trucking and refuse. And then would love your updated thoughts on timing of the X15N. I know that, you know, it's certainly moving towards, you know, production and launch, but really hasn't gotten going yet in a big way. So just updated thoughts would be great.

Andrew Littlefair: I'm going to keep my remarks relatively short today, but I do want to highlight some of our accomplishments during the quarter, which helps explain the good results. The achievements in Q2 are a great microcosm of clean energy's overall business and what sets us apart from virtually any other company in the low carbon energy sector. This begins with the completion of the expansion to our boron facility, the only natural gas liquid-faction plant in California, increasing its output capacity by 50%.

Andrew Littlefair: Most of that percentage increase comes from trucking, Eric, and if not almost all of it. And on the Cummins launch, I mean, let's just kind of review it for everybody. You know, earlier in the year, the early introductory engines were put out on some of the nation's largest fleets. It was interesting; Cummins a couple weeks ago mentioned that those test vehicles had accumulated a million miles. And the company feedback, driver feedback, has been, I think, just, you know, short of tremendous.

Speaker Change: most of that percentage increase comes from trucking eric

Speaker Change: and if not almost all of it. And on the Cummins launch, I mean, let's just kind of review for everybody.

Andrew Littlefair: Much of the new demand for energy has been driven by the commercial maritime industry overall and Pacia Hawaii in particular. Pacias now operating three large container ships on clean burning energy between the ports of Long Beach, Oakland, and Honolulu. The old volume from these ships has grown from a little over half a million gallons a month in August of 2022 to over 2.1 million gallons of energy in May of this year.

Speaker Change: earlier in the year of the early introductory engines were were put out some of the nation's largest slee it was interesting collins a couple weeks agoill mentioned that those test vehicles have accumulated a million miles

Andrew Littlefair: By doing so, Pacias ships have obtained a 90% reduction in NOx and a 25% reduction in carbon dioxide. Compared to ships operating on traditional fuels. After years of hard work by our team members, we have constructed an extensive fueling infrastructure across North America that is second to none in the business. The owner operate over 600 fueling stations throughout the U.S, and Canada. While many of these are private, meaning they were built for a single fleet customer like a transit agency or a sanitation company.

Speaker Change: and the company feedback.

Speaker Change: Driver feedback has been, I think, just, you know, short of tremendous.

Andrew Littlefair: The torque and fuel economy and ride have really been, have come to the surface is, you know, what we were hoping. The next phase has been the delivery now of kind of pre-production units. These are units that actually got built on the line but before the formal launch, so there's been another batch of trucks that have now been delivered. In fact, for instance, we got one. We're very excited about it. They'll go into our demo fleet here next week, beautiful trucks. And so that'll be the next batch that'll be operating. The order book has been opened, and I think that opened, you know, in March or April.

Speaker Change: The torque and fuel economy in Ride has really come to the surface, is what we were hoping.

Andrew Littlefair: Over 200 of them are accessible to the growing number of fleets that are testing a natural gas truck or adding trucks to their existing fleets. Because the networks have grown geographically and the environmental benefits of R&G are becoming better known. We've strategically located many of these fast-fill stations along interstates in the highly trafficked locations where fleet vehicles operate, such as distribution centers. Increased recurring fueling at our existing stations is one of the driving factors of our revenue growth at healthier margins.

Speaker Change: The next phase has been the delivery now of kind of pre-production units.

Speaker Change: These are units that actually got built on the line.

Speaker Change: But before the formal, so there's been another batch of trucks that have now been delivered. In fact, for instance, we got one.

Speaker Change: We're very excited about it. It'll go into our demo fleet here next week.

Andrew Littlefair: But now the orders and purchases are something now at this point, as you know, is between Cummins and their customers. We are working hard with Cummins to get these orders in. And now I have heard anecdotally that at some recent industry meetings, comments have stood by that they still believe that they'll sell 3000 units. Now, as we've talked about on these calls for the last six months, you know, we know that these engines are going to, these trucks will, you know, likely get into service in the latter part of 2024.

Speaker Change: Beautiful trucks.

Speaker Change: And so that'll be the next batch that'll be operating.

Speaker Change: The order book has been opened, and I think that opened, you know, March or April .

Speaker Change: But now the orders and purchases is something now, at this point, is between Cummins and their customers.

Speaker Change: We are working hard with Cummins.

Andrew Littlefair: As you know, we have built 19 of these publicly accessible stations with Amazon as our anchor customer. We are now beginning to see more trucks from other fleets fueling at them as well. We are in the process of executing a similar infrastructure, strategy, and Canada with our partner and Tourmaline, the largest independent gas producer in Canada. Together, we are building a series of stations in Western Canada that will be anchored by existing customers, but available for additional new fleets.

Speaker Change: PACCAR and the dealership owner groups as we're all kind of working and working with our channel partners to you know to

Speaker Change: Get these orders in.

Speaker Change: Now, I have heard anecdotally that at some recent industry meetings, comments have stood by that they still believe that they'll sell.

Speaker Change: 3,000 units. Now we've talked about on these calls for the last six months, you know, we know that these engines are going to, these trucks will...

Andrew Littlefair: Because of its range, power, and torque, the new Cummins X-15N engine seen as an excellent fit for the terrain and logistics of Canadian trucking. Second and third stations under our Tourmaline partnership are scheduled to open this fall. Here in the U.S., the fueling agreement that we signed in the second quarter with CMEX, one of the largest cement companies in the world, is a great example of a fleet that is expanding with natural gas trucks in Southern California.

Andrew Littlefair: So not a big volume thing for us, but we're all anticipating these orders because next year we pick up another OEM. So you'd have more, you know, more, you know, the engines could go into a greater number of vehicles.

Speaker Change: you know, likely get into service at the latter part of 2024. So not a big volume thing for us, but...

Speaker Change: We're all anticipating, you know, these orders because next year we pick up another OEM, so you'd have more, you know, more, you know, the engines could go into a greater number of vehicles, so we're very excited about it so far.

Andrew Littlefair: So we're very excited about it so far. I hope we'll begin to see some announcements for some of these fleets, but that's really up to the fleet incumbents at this point, but we're working hard on it. And, you know, we're optimistic. Yeah, I mean, I believe that Cummins recently talked about 8% being where they see adoption going out. A little open on the timing just because of the moving parts, but that was good to see.

Andrew Littlefair: And taking advantage of our growing network of R&G stations throughout the region. I have said on these calls many times, we are convinced that the heavy-duty transportation industry, which is looking for ways to decarbonize, can't find a better, more immediate, and affordable solution than renewable natural gas. There's also a growing realization that other new Shine Penny alternatives are years away from being deployed in any meaningful way and could be out of the reach for many fleets in the foreseeable future.

Speaker Change: I hope we'll begin to see some announcements for some of these fleets, but that's really up to the fleet incumbents at this point, but we're working hard on it.

Speaker Change: And, you know, we're optimistic.

Speaker Change: Yeah, I mean, I believe that Cummins recently talked about 8% is where they see adoption going out. A little open on the timing just because of moving parts, but that was good to see.

Andrew Littlefair: It can, you know, Eric, that's and yeah, I don't know the timing. You know, that was a quote unquote, I think over an extended period of time. So I don't know what that means. Three years, whatever I've always, sort of what I heard in those early Cummins discussions is that, you know, there would be a few thousand in 24 and maybe as many 7,000 in 25. And then they got started talking about percentages.

Speaker Change: And so, Eric, that's a, and yeah, I don't know the timing, you know, that was a quote unquote, I think, over an extended period of time, so I don't know what that means, three years, whatever. I've always...

Andrew Littlefair: We've all read the numerous stories in the financial media and especially in trucking publications, chronically the foot faults of electric vehicles and the lack of charging infrastructure. On the flip side, after the media spent years writing about the other alternatives that are now having trouble getting traction, we're seeing more coverage of the Cummins X-15N engine including a recent piece in the commercial carrier journal by Jason Cannon, a well respected veteran trucking reporter.

Eric Stein: sort of in what I heard in those early Cummins discussions is that, you know, there would be...

Speaker Change: Q1024 and maybe as many as 7,025 and then they got then they started talking about percentages so I'm not holding the CEO to it. I love of course hearing that the CEO thought enough about this product to talk about it in an earnings call.

Andrew Littlefair: So I'm not holding the CEO to it. I love, of course, hearing that the CEO thought enough about this product to talk about it in an earnings call. And not knowing the exact timing of it, 8% equates to something close to 20,000 units, right? 20,000 units translates into somewhere around 300 million gallons of fuel.

Speaker Change: And not knowing the exact timing of it, 8% equates to something close to 20,000 units, right? 20,000 units...

Andrew Littlefair: He indulged me while I read how Jason ended his very thorough review after test driving a Peter Bill truck equipped with the X-15N. Quote, natural gas lost its seat at the head of the fuel of the future table when the potential of battery, electric and hydrogen started turning heads. The natural gas right now checks a lot of boxes for fleets looking to reduce emissions without sacrificing payload, build time and range. Peter Bill's ultra-off 12 speed makes the strongest case for driver comfort that natural gases ever had.

Speaker Change: translates into somewhere around 300 million gallons of fuel. So for the industry, for the R&G industry, for those of us in the downstream part of the business, it's big.

Andrew Littlefair: So for the industry, for the R&D industry, for those of us in the downstream part of the business, it's big. And, you know, recall right now we're talking about somewhere around selling 240 million gallons of fuel this year. So we have the largest market share here by far.

Speaker Change: And, you know, recall right now, we're talking about somewhere around selling 240 million gallons of fuel this year. So we have the largest...

Andrew Littlefair: So this is very, this Cummins X-15N, as we've stressed, is really important for us and the environment. Yep, absolutely. Maybe for my last question, just on the upstream, or upstream for an update, you talked about the six projects that are operating that are producing RNG. I mean, still, still kind of the timeline that you start to see an EBIT pick up late in 24 and that those start to contribute, I guess, fully in 25. And then maybe, what are your plans here for the remainder of the year? Yeah, Eric.

Speaker Change: market share here by far. So this is very, this Cummins X-15N, as we've stressed, is really important for us and the industry.

Speaker Change: Yep.

Speaker Change: Absolutely.

Speaker Change: Maybe for my last question, just on the upstream.

Andrew Littlefair: Jason Chronicles in his review the puppy ride that natural gases had in the heavy duty trucking space over the last 10 or 12 years. Those of you that have followed clean energy and heard me on these calls have lived through it as well. But with the introduction of R&G, a fuel that scores better than any other in reducing carbon emissions and a new engine that finally checks all the boxes operationally for the industry.

Speaker Change: Upstream for an update, you talked about the six projects.

Speaker Change: that are operating, that are producing RNG. I mean, still kind of the timeline that you start to see an EBITDA pick up late in 2024 and that those start to contribute, I guess, fully in 2025. And then maybe, what are your plans here for the remainder of the year?

Andrew Littlefair: Generally, yes, that's correct. I mean, we're still going to be working with inside the guidance that we gave for the R&G JV investments, which was negative 10 to negative 14 million EBITDA. But yeah, just working within that, you know, contemplates monetizing gas that's being produced, but certainly not at, you know, kind of full capacity. Yeah, the goal would be to be as close to full capacity by the end of this year, for sure, going into 2025.

Andrew Littlefair: We along with the growing number of experts believe the time is right for heavy duty natural gas trucking. To ensure our network of stations has the R&G to put in the tanks of those trucks, continue to have great success in partnering with the growing number of R&G suppliers around the country for their offtake. And as you hopefully saw in a series of announcements over the last few months, we continue to make nice progress in our own production of low carbon R&G from derries with six projects now producing R&G.

Speaker Change: Yeah, Eric. Generally, yes, that's correct. I mean,

Eric Stein: We're still going to be working with inside our guidance that we gave for the R&G JV investments, which was negative 10 to negative 14 million EBITDA, but yeah, just working within there.

Speaker Change: contemplates monetizing gas that's being produced, but certainly not at kind of full capacity.

Andrew Littlefair: General Moss is one of the most well respected developers in the R&G industry. So we were pleased to sign an agreement with this company to build a series of projects utilizing the covered lagoon method that Moss energy has refined over the years. It approved the cluster of derries in Georgia and Florida and other single dairy projects in New Mexico, Nebraska and South Dakota. Engineering has begun on these projects with completion scheduled in 2025 and 2026.

Speaker Change: Yeah, the goal would be to, you know, be as close to full capacity by the end of this year for sure, going into 2025.

Andrew Littlefair: So, we're excited about it, you know, it's... Frankly, it's good stuff as we finally get to see the fruits of our labor with the pipeline quality gas going into the pipeline from these projects. So that's the main point.

Speaker Change: So, we're excited about it, you know, it's...

Speaker Change: Frankly, it's good stuff as we, you know, when you finally get to see the fruits of your labor.

Speaker Change: pipeline quality gas going into the pipeline from these projects so that's the main point of then in course you'll add the moss projects but all of the other projects that are under construction they'are all really

Andrew Littlefair: And then, of course, you'll have the MOS projects. But, you know, all of the other projects that are under construction, you know, they're all really late in the 25th century, right? And so they won't, they won't contribute a lot in the year 25.

Andrew Littlefair: We also recently broke ground for an R&G digester at South Fort Darry in Texas. The owner Frank Brand has rebuilt the 16,000 cow dairy and we couldn't be prouder to call him our partner in the project. Injection of R&G into the pipeline recently began on our ash grove dairy project in Minnesota, one of the projects we developed with our partner BP. In last month, we successfully monetized the investment tax credit generated by our first dairy R&G project, Del Rio. Credit Sale generated approximately $9 million a net proceeds to the project. Plan is to monetize the investment tax credits on our other five currently operational projects over the next 12 months.

Speaker Change: late 25, right, and so they don't contribute a lot in 25,

Andrew Littlefair: But they're big, We're all relatively large projects, so they'll be meaningful, but they won't come on and begin to really impact until later in 2025. Right, they'll follow the same timeline as the six that you've got this year, where they come on and it takes a bit. Okay, thanks a lot. You're welcome.

Speaker Change: They're all relatively large projects, so they'll be meaningful, but they won't come on and begin to really inject until later in 2025.

Speaker Change: Right, they'll follow the same timeline as the six that you've got this year where they come on and it takes a bit. Okay, thanks a lot.

Operator: The next question comes from Rob Brown of Lake Street Capital Markets. Go ahead, please. Good afternoon.

Speaker Change: she

Speaker Change: The next question comes from Rob Brown of Lake Street Capital Markets. Go ahead please.

Andrew Littlefair: That is a good segue on how I'd like to close my remarks and address an area that I know we're all watching closely, which is the election in November. I know many of you are attempting to calculate the different outcomes and if or how they will impact the overall energy transition space in companies like Clean Energy. Like most companies in the low-carbon energy sector, we feel that many questions by investors. And while I won't speculate on any particular outcome, I will say this.

Robert Brown: Hi. Hey, Rob. First question on the non-Amazon fueling. You talked a little bit about those stations or the Amazon stations fueling non-Amazon trucks. Could you give us a little color on how that's ramping up and what you're saying? What's the ramp on Amazon stations? No, the non-Amazon fuelers that are at those stations.

Rob Brown: Good afternoon.

Speaker Change: First question is on the non-Amazon fueling. You talked a little bit about those stations or the Amazon stations fueling non-Amazon trucks. Could you give us a little color on how that's ramping and what you're seeing there?

Speaker Change: You're saying, what's the ramp on Amazon stations? No, the non-Amazon fuelers that are at the

Andrew Littlefair: Yeah, well, obviously, once we have more fleets that begin to accept Cummins X-15, so that's really a 25 and then you'll see more of it. But like, for instance, we have some large fleets. NFI, WM, Ecology, DHL.

Speaker Change: Bob. Well, obviously once we have more fleets that begin to accept Cummins X-15, so that's really a 25 event you'll see more of it, but like for instance, we have some large fleets.

Andrew Littlefair: He partnered with landfills and dairy farms to deliver low-carbon, domestically produced biofuel, to commercial transportation customers, produce and deliver sustainable fuel which generates environmental and financial benefits for the agriculture, municipal waste and transportation industries. We strongly believe that this will continue to be embraced as a win-win solution by any administration or leadership in Congress. As an example, we will be hosting next week the Chairman of the House Ways and Means Committee, Jason Smith, with several other members of Congress, including Representative Brian Fitzpatrick, who is the Republican co-sponsor of the RNG tax credit legislation.

Andrew Littlefair: I mean, those are the kinds of fleets that are beginning to show up on the public side of these Amazon locations. So large fleets that have a lot of trucks, Keenan Group. And so, you know, that was as designed, right? We knew Amazon wanted to have public fueling at those locations. They're in perfectly, located, you know, a warehouse and logistic areas. And so they really lend themselves to a lot of fleets.

Speaker Change: NFI, WM, Ecology, DHL, I mean those are the kinds of fleets that are beginning to show up at these, at the public, let's call it the public side of these Amazon locations. So large fleets that have a lot of trucks, Keenan Group.

Speaker Change: And so, you know, that was as designed, right? We knew and Amazon wanted to have public fueling at those locations. They're in perfectly.

Speaker Change: located, you know, a warehouse and logistic areas, and so they really lend themselves to a lot of fleets, and I hope we're just seeing the beginning of that, Rob.

Andrew Littlefair: And I hope we're just seeing the beginning of that, Rob. Perfect, thank you. And then, kind of back to the R&D facilities that have opened and started running, I realize it's early, but how are you? What are the learnings there in terms of the operations?

Andrew Littlefair: These members are coming to our headquarters where we and executives from UPS and WM will show off the latest technology and natural gas trucks and brief them on the benefits of RNG production and fueling to rural America, municipalities and industries. We were very pleased that the RNG tax credit bill introduced by Representative Fitzpatrick and Democrat Linda Sanchez in the House early this year was recently mirrored in the U.S. Senate with a bipartisan companion bill co-sponsored by Senators Mark Warner and Tom Tillis.

Rob Brown: Okay, perfect. Thank you. And then on the, kind of back to the R&D facilities that have opened and started running, I realize it's early, but how are you, what are sort of the learnings there in terms of the operations? Are you seeing the flows that you want and the margins you want, and how's the operations looking there?

Andrew Littlefair: Are you seeing the flows that you want and the margins you want, and how's the, Well, I think we're learning a lot as we go here, and the commissioning seems to have taken, as we've talked about on these calls, a little longer than we've all wanted, but maybe that, you know, in retrospect, maybe that's to have been expected. After a 60 day, you know, kind of commissioning phase, we begin to inject, and then we tune, right?

Speaker Change: Well I think we're learning a lot as we go here and the commissioning seems to have taken as you know we've talked about on these calls a little longer than we we've all wanted but maybe that you know in retrospect maybe that's to have been expected.

Andrew Littlefair: I started my career in politics so I know just enough to be dangerous, but as I said, we feel comfortable that no matter the outcome in November, there is widespread and across the aisle support to produce a fuel that tremendously helps the U.S, agricultural industry, both environmentally and financially, including creating jobs in rural America and decarbonizes heavy duty vehicles in a way that no other alternative has been able to seriously address.

Andrew Littlefair: I mean, that's kind of what's happening is we begin to get all the pieces, the upgrading equipment, the compressors, we get the kicks out, and we see the uptime come up. And we're seeing that in Del Rio.

Speaker Change: We, after a 60-day, you know, kind of commissioning phase, we begin to inject, and then...

Speaker Change: We tune, right? I mean, that's kind of what's happening, is we begin to...

Speaker Change: get all the pieces, the upgrading equipment, the compressors. We get the kicks out and and we see the uptime come up and that we're seeing that in Del Rio. We've made some adjustments and some pipelines and some different things and we've had...

Robert Vreeland: Now I'll hand the call back to Bob, who will go into more detail about our strong quarter. Thank you, Andrew.

Andrew Littlefair: We've made some adjustments and some pipelines and some different things, and we had, I think it was in June, very nice increases in production. So I think that's the way all of these will go. And in one of our large projects where we're handling manure right now in Idaho, we're handling more manure than we thought was possible. You know, just when we think things are sometimes slower and a little more difficult, we're pleasantly surprised by the quality and how these things are working. I think, Rob, you know, generally, while slower, operation has been good.

Robert Brown: Good afternoon to everyone. We had a good second quarter for 2024. We continue to see good results from our fuel distribution business, including good volumes and margins at our station network, plus strong rent pricing and our LCFS revenues were back on track. I'll be at a lower trending LCFS credit price during the quarter. On a gap basis, we reported a net loss for the second quarter of 2024 of $16.3 million or $0.7 per share, which is the same as last year's gap net loss and per share amount, although we got there in different ways, on a adjusted non-gap basis.

Speaker Change: I think it was in June , very nice increases in production. So, I think that's where all of these will go.

Speaker Change: In one of our large projects where we're handling manure right now in Idaho, we're handling more manure than we thought was possible.

Andrew Littlefair: We'll continue to... in-house operations, you know, more. We know a lot about operating stuff, and we're going to continue that. We've now really fully integrated our engineering teams and some of our operation folks and some of our SCADA systems, and we're trying to bring some efficiencies that we've learned through operating, you know, several hundred fueling stations and some LNG plants to this, and I think we'll be pleased that we're doing that.

Speaker Change: Operating has been good. We'll continue to...

Robert Brown: We reported net income of $2.7 million or $1 cent per share in the second quarter of 2024 versus break even non-gap results last year for the second quarter. And as Andrew mentioned, our adjusted EBITDA was 18.9 million for the second quarter of 2024 compared to 12.1 million the same period in 2023. And just to clarify up front here, our LCFS revenue of 4.4 million for the second quarter of 2024 includes 2.2 million of LCFS credit revenue that we discussed on our last earnings call, where we mentioned that we had transacted our first quarter 2024 LCFS credit sales in April of 2024 due to the Easter holiday.

Speaker Change: in-house.

Speaker Change: operations, you know, more. We know a lot about operating stuff and

Speaker Change: And we're going to continue that.

Speaker Change: We've now really fully integrated our engineering teams and some of our operation folks and some of our SCADA systems.

Speaker Change: And we're trying to bring some efficiencies that we've learned through operating, you know, several hundred fueling stations and some LNG plants to this, and I think we'll be pleased that we're doing that.

Andrew Littlefair: And that's sort of new, and as these last five projects come on, we're beginning to kind of get our arms around it and staff up. Okay, thank you. The next question comes from Manav Gupta of UBS. Go ahead, please.

Speaker Change: And that's that's that's sort of new and as as these last five projects come on we're beginning to kind of get our arms around it and staffing up.

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

Speaker Change: The next question comes from Manav Gupta of UBS. Go ahead, please.

Robert Brown: Then for the second quarter, we transacted our second quarter LCFS credit sales in June, so we got back on track there. That was also for about $2.2 million, thus taking our total LCFS to 4.4 million for the quarter. While the added LCFS revenue from the April sales boosted our second quarter results, we still saw incremental gains in our fueling business in the second quarter of 2024 compared to last year, principally due to a better mix of higher margin fuel sales and higher rent pricing that helped to offset some of the lower LCFS pricing that we saw.

Operator: Two quick policy questions, and I'll ask them up front first. Any timeline we should think about on terms of 45Z, when can we get some kind of more guidance from Treasury? And on a similar line, when can we expect some kind of update from, you know, CARB on whether it's a 7% step down or 9% step down? And I'll turn it over to you. Yeah, Manav, on CARB, we believe that in the next two or three weeks... CARB should release—this is kind of funny—their 15-day notice, which, I don't know, the best we can all tell it's going to be about 30 days before the November 8th hearing.

Manav Gupta: Two quick policy questions and I'll ask them up front first.

Manav Gupta: Any timeline we should think about on terms of 45Z, when can we get some kind of more guidance from Treasury? And on a similar line, when can we expect some kind of update from CARB on whether it's a 7% step down or 9% step down? And I'll turn it over. Thank you.

Speaker Change: Yeah, Manav, on carb, we believe that in the next two or three weeks...

Manav Gupta: So, I mean, that seems to be on track. I think CARB is working on that now. So we should see the agenda and the items on it here in the next couple of, three weeks, is what I'm being told. And that's for November 8th.

Speaker Change: carb should release this is got a funny it release their fifteen day notice which

Robert Brown: On a year-to-date basis, our financial results are well above last year, with a gap net loss of 34.7 million for the first six months of 2024 compared to a gap net loss of 55 million for the six months in June, 23. And adjusted, even for the six months in June, 24 was 31.8 million versus 8.2 million for the same six-month period in 2023. The last year was negatively impacted by the extraordinary high gas costs in California in the first quarter of 2023, which did cost us about $10 million last year.

Speaker Change: I don't know, best we can all tell, it's going to be about 30 days before the November 8th hearing. So, I mean, that seems to be on track. I think CARB is working on that now. So we should see the, you know, agenda and the items on it here in the next...

Robert Brown: But with an improvement in our adjusted even a year-to-date of $24 million, it means that we are seeing mark in criminal improvements here in 2024 for the first two quarters beyond the recovery from last year's gas costs anomaly. In fact, on a gap earnings basis, our gap net loss of $34.7 million a year-to-date is running better than planned. As such, we're updating our gap net loss guidance to be in a range of 91 million to 81 million for 2024 versus our previous guidance of a range of a gap net loss of 111 million to 101 million.

Speaker Change: couple three weeks what i'm being told and that's for november eight and that's still there's always time for that to be changed i guess but that still seems to be on track

Andrew Littlefair: And that's still, you know, there's always time for that to be changed, I guess, but that still seems to be on track. FortyFiveD, that, you know, I think we're still kind of assuming what I was told from sort of a senior policy person that would know about this, that, you know, we should expect something out of Treasury, some initial rules sometime at the end of the summer. So, you know, like in September.

Speaker Change: Forty by V

Speaker Change: That, you know, I think we're still kind of assuming what I was told from sort of a senior policy person.

Speaker Change: that would know about this, that, you know, we should expect something out of Treasury, some initial rules sometime in, at the end of the summer. So, you know, like in September . And so I.

Andrew Littlefair: And so I kind of think that's the way that's going to go. But we've got some more time to wait on that. Thank you.

Speaker Change: Kind of thinking that's the way that's going to go.

Speaker Change: But we've got some more time to wait on that.

Operator: You bet. The next question comes from Dushyant Ailani of Jefferies. Go ahead, please. All right, thank you for taking my question. I just have one.

Speaker Change: Thank you.

Speaker Change: that

Speaker Change: The next question comes from Dushyant Ailani of Jefferies. Go ahead, please.

Dushyant Ailani: Maybe could you talk a little bit about your EBITDA cadence for the second half of 2024? Historically, we have seen it kind of ramp up quarter over quarter with 1Q being, you know, the lowest. So if you follow a similar cadence, then it would be...

Dushyant Ailani: Hi, thank you for taking my question. I just have one. Maybe could you talk a little bit about your EBITDA cadence for the second half of 24? Historically, we have seen it kind of ramp up quarter over quarter with one Q being, you know, the lowest.

Robert Brown: Basically, an estimated $20 million improvement to our gap net loss. We're not changing our 2024 adjusted EBITDA guidance of 62 million to 72 million because the improvement in our gap guidance is due to higher interest income, lower depreciation expense, lower stock compensation expense, and lower Amazon warrant charges, none of which impact our adjusted EBITDA. With adjusted EBITDA of 31.8 million for the six months into June 30, 2024, we feel confident in maintaining our annual outlook for adjusted EBITDA of 62 million to 72 million.

Speaker Change: so if you follow similar cadence and is fair to say that there's a chance to h the high end of the guide or are some puts and takes there

Bob Vreeland: It's not fair to say that there's a chance to hit the higher end of the guide. Yeah, Dushyant, you are correct that we have seen a bit of a kind of ramp up in that in that cadence. And, you know, generally speaking, we would expect to see some of that general same profile as we look at the second half of the year, but in terms of getting to the, you know, high end. Oh gosh, there's always a possibility.

Speaker Change: Yeah, Dushyant, you are correct that we have seen a bit of a kind of a ramp up in that in that cadence and, you know, generally speaking, we would expect to see

Speaker Change: You know, some of that general same profile as we look at the second half of the year.

Speaker Change: you know but in terms of getting to the

Robert Brown: And finally, I wanted to make a few comments around our R&G volumes and our total revenues for the second quarter of 2024 to provide some more insight on the trends that we saw there. On the R&G volume front, we reported 57.1 million gallons of R&G sold for the second quarter of 2024 versus last year's second quarter was 58.6 million R&G gallons and the first quarter of 2024 it was 58 million R&G gallons.

Speaker Change: you know, to the high end. Oh, gosh, there's always a possibility. That's why I have that range there. You know, we're feeling good about where we are.

Operator: That's why I have that range there. You know, we're feeling good about where we are, you know, right now within that, within that range. And as we've always said, it's, It's kind of all about volume, so... We do the best that we can to..., you know, predict that volume. And, and we're constantly looking at recent trends so you know where there's a chance. Our next question comes from Matthew Blair of Tudor Pickering Holt. Go ahead, please. Thank you and good morning, and congratulations on the solid results.

Speaker Change: You know, right now, within that range. And as we've always said, it's kind of all about volume.

Speaker Change: We do the best that we can to, you know, predict that volume, and we're constantly looking at recent trends. So...

Speaker Change: where there's a chance.

Speaker Change: thank you

Robert Brown: The slight decline in the second quarter of 2024 compared to last year and the first quarter of 2004 is the result of about 5 million R&G gallons that we sold outside of our station network a year ago and in the first quarter of 2004 that didn't repeat in the second quarter. We anticipated much of this reduction in the R&G volumes when we set out when we set our 2024 outlook where back in February we had identified certain R&G volumes that we had distributed outside of our station network in 2023 that we didn't expect to repeat in 24 and that's really kind of what we saw in this second quarter.

Speaker Change: that

Speaker Change: Our next question comes from Matthew Blair of Tudor Pickering Holt. Go ahead, please.

Matthew Blair: Thank you and good morning and congrats on the solid results. I think what stood out this quarter was just the rising unit margins in your downstream refueling segment. So I was hoping we could dig into that a little bit. Bob, you mentioned that...

Matthew Blair: I think what stood out this quarter was just the rising unit margins in your downstream refueling segment. So I was hoping we could dig into that a little bit. Bob, you mentioned that you were hoping that the mix improved. Does that just refer to the share of RNG versus non-RNG?

Matthew Blair: that the mix improved, does that just refer to the share of RNG versus non-RNG? Because it did look like that picked up a little bit. And then I was also hoping you could talk about

Bob Vreeland: Because it did look like that picked up a little bit. And then I was also hoping you could talk about... Did lower California natural gas prices also help out in terms of your unit margins? Okay, yeah. Matthew.

Speaker Change: Did lower California natural gas prices also help out in terms of your unit margins? Thanks.

Robert Brown: So, frankly, we were able to make up a lot of that to get to the 57 by distributing R&G into our network and in fact that changed by doing that and R&G gallons was part of the reason why our overall fuel margin improved in the second quarter of 2004 as we were also then able to pick up the margin on our underlying commodity of fuel sale in addition to the rent and the LCFS. On a year-to-day basis that through June of 2024 we've delivered 115 million gallons of R&G.

Bob Vreeland: I will say that the lower gas costs did help us because we continued to enjoy a pretty healthy spread. You know, as an indicator, we're always kind of comparing, say, NIMAX to WTI crude. And when that spread is large like it has been, it just means that we've got some pretty good pricing power, if you will, at the pump. So that helps us, and particularly with the amount of volumes we have in California when California moves like it did. That's helpful.

Speaker Change: Okay, yeah.

Speaker Change: Right Matthew, I will say that the lower gas costs

Speaker Change: did help us.

Speaker Change: because

Speaker Change: We we continue to enjoy a pretty healthy spread, you know as an indicator we're always kind of comparing the say NIMAX to your WTI crude and

Speaker Change: and when that's when that spread is large like it has been it just means that we've got some pretty good pricing

Speaker Change: Power, if you will, at the pump. So that helps us, and particularly with the amount of volumes we have in California when California moves like it did.

Robert Brown: Our target that we estimated back in February of 24 for R&G gallons for 2024 was 245 million gallons. A reaching 245 million gallons will be a bit of a challenge at this point in a year. So we're going to what we do see though is that we really can deliver somewhere between 95 percent and maybe 100 percent of that 245 million gallon target for 2024. And I'll just point out that as we're seeing in our financial results that ultimately that mix of R&G delivered is also an important part of contributions to our bottom line results.

Bob Vreeland: And then on the mix, I am referring to the fact that as we see more vehicle fueling kind of at the stations, it's not really RNG versus CNG or RNG versus not as much. It's, you know, it's the type of gallon and look as we're seeing some increases. That's why, you know, we indicated that part of that increase was in trucking, and that's an area where, you know, that's your kind of sweet spot for fuel margins. So as that goes, you'll see those improvements.

Speaker Change: That's helpful. And then on the...

Speaker Change: Yeah, on the mix, I am referring to the fact that as we see more vehicle fueling kind of at the stations, it's not really R&G versus C&G or R&G versus not.

Speaker Change: as much. It's the type of gallons.

Speaker Change: some increases that's why we know indicated that part of that increase was in trucking and that's an area where that's your kindof sweetspot of fuel margins

Speaker Change: So as that goes, you'll see those improvements.

Robert Brown: On the revenue front, Andrew noted our revenues for the second quarter of 98 million compared to 90.5 a year ago, second quarter, there was one item that certainly muted that year-over-year increase that would have been higher. But last year we had 3.6 million in revenue related to the non-cash change and fair value of derivative instruments. And in 2024 that number was 100,000. So you've got about a 3.5 million dollar number in the prior year number change.

Bob Vreeland: Okay, okay. And then, um... With the Supreme Court reversing the Chevron decision, are you expecting any impact on the RFS program and any sort of corresponding, you know, potential decline in RIN prices? You know, Matthew, I'm not a scholar on all that, but I followed some of this and, you know, a lot of the underpinnings on the, for instance, laws passed by the Congress. It's not that every law passed by Congress is insane, right, as what might be applicable to what happened at Chevron.

Speaker Change: Okay, okay, and then, um...

Speaker Change: With the Supreme Court reversing the Chevron decision, are you expecting any impact on the RFS program and any sort of corresponding potential decline in RIN prices?

Speaker Change: You know, Matthew, I'm not a scholar on all that, but I followed some of this and, you know, a lot of the underpinnings on the laws passed by the Congress, you know, it's not that every law passed by Congress.

Robert Brown: And apart from that, then all the categories, all the sources of our revenue were increased. Our fuel sales were greater. This was from higher vehicle fuel sales on higher volumes. We saw higher rent revenue in the second quarter compared to a year ago driven by rent pricing that was up 76 percent and higher LCFS revenue, although that was mainly due to the April sales that I mentioned previously. And then we also had an increase of nearly a million dollars in our alternative fuel tax credit revenue.

Speaker Change: is the same, right, as what might be applicable to what happened in the Chevron deal.

Bob Vreeland: And I think that the RFS, the way I've been kind of following the trades and some of the people that have been following it, I think the RFS is in pretty good footing. And so I don't know that it's, you know, in, let's call it, immediate jeopardy.

Speaker Change: And I think that the RFS, the way I've been kind of following the trades and some of the people that have been following it, I think the RFS is in pretty good footing.

Speaker Change: and so I don't know that that's you know in let's call it in immediate jeopardy.

Andrew Littlefair: I'm not sure about that. I'm sure there will be those that will, you know, try to, you know, that don't like the RFS, might, might try to, you know, work on that. But I think the RFS and the way that it came through Congress and the way it's been dealt with over time, I think it's on more sure footing. But, you know, there'll be a lot of tests on some of these things.

Speaker Change: Not sure about that.

Speaker Change: I'm sure there will be those that will, you know, try to, you know, that don't like the RFS, you know, might, might try to

Robert Brown: So, one of across the board increases there. From a more recent standpoint, when we look at our second quarter, 2024 revenue compared to our first quarter, that's down approximately 5 percent. I will say about 30 percent of that decline relates also to the change in the non-cash fair value of derivative instruments. And then the other reason for the decline from Q1 was largely because of natural gas and that flow through of the commodity costs that we talked about before, that impacts revenue.

Speaker Change: You know, work on that, but I'm thinking the RFS and the way that came through Congress and the way it's been dealt with over time, I'm thinking it's on more sure footing.

Andrew Littlefair: I mean, you know, for instance. There have been those that have thought that the Republican-controlled House might try to put a Congressional Review Act in to try to undo some of the IRA. And I'm sure there are those, though about an hour ago, I saw 18 Republican members of the House put a letter in to the speaker saying, hey, as you look at repealing the IRA, there's a lot of stuff in there that we like.

Speaker Change: But, you know, there'll be a lot of tests on some of these things, I mean, you know, for instance...

Speaker Change: There have been those that have thought that the Republican-controlled House might try to put a Congressional Review Act in to try to undo some of the IRA.

Speaker Change: and I'm sure there are those, though about an hour ago, I saw 18 Republican members of the House put a letter in to the Speaker saying, hey, as you look at repealing the IRA,

Robert Brown: And it impacts our costs. We saw dramatic reductions in natural gas from March, actually through June on that. So, but the point, I guess the important part there in terms of that trend is these are normal contributors impacting our revenues that largely they do not have a dollar per dollar impact to cash margins at our stations. And nothing that we see in that trend from that first quarter to this second quarter was pointing to any fundamental change or decline in our business.

Andrew Littlefair: So this isn't, you know, occasionally when people look at this, they think it's all going to, you know, get poured out. You know, this is all very simple, and it's not. It's a little more complicated than that. I would say that on, you know, for instance, the Congressional Review Act, things like that, you know, that takes to the Senate as well. So, you know, that means you'd have to clear 60 votes there. So that's why it's not used that often.

Speaker Change: There's a lot of stuff in there that we like.

Speaker Change: So, this isn't, you know...

Speaker Change: Occasionally, when people look at this, they think this is all going to get poured out. This is all very simple. It's not. It's a little more complicated than that. I would say that, for instance, on the Congressional Review Act, things like that, that takes to the Senate as well.

Operator: With that operator, we can open the call to questions. We will begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pass momentarily to assemble our roster.

Speaker Change: So you know that that's that means you'd have to clear the 60 votes there so that's why that's not used that often.

Andrew Littlefair: Now, a new administration could certainly impound certain funds that have been put in place and make it difficult to spend them, you know, in different categories. And so, you know, we'll see how it all goes. There's a lot of water that could come under the bridge before that happens. Great, thank you.

Speaker Change: Now, a new administration could certainly...

Speaker Change: impound certain funds that have been put through and make it difficult to spend them, you know, in different categories. And so, you know, we'll see how it all goes. There's a lot of water could come under the bridge before that all happens.

Speaker Change: Great, thank you.

Matthew Blair: Hey Matthew, well one of the things, that was Matthew wasn't it, one other thing is that since I've followed the RFS now, I don't know how long that's been in law, 12 years, a long time now, that particular law is really bipartisan. You know, you have the ethanol-producing states, and you have a lot of, ten years ago, there was talk that a Republican congressman might try to unwind the RFS, and I really do believe the RFS is on a lot more solid footing today than it's ever been before. We see, we see really bipartisan participation in supporting a renewable fuel standard. Go ahead, operator. Okay, thank you. Our next question comes from Craig Shere of Toohey Brothers. Go ahead, please. Good afternoon,

Speaker Change: Thank you.

Speaker Change: Hey Matthew, well one of the, that was Matthew wasn't it, one other thing is since I've followed the RFS now, I don't know how long that's been in law, 12 years, a long time now, that particular law is really bipartisan.

Eric Stein: Our first question comes from Eric Stein of Cray Karen. Go ahead, please. Hi, Andrew Habab. Hey, so you mentioned in the release 7% volume growth in your stations. I'm just curious if you could break down specifically or from a high level by your key end markets, I guess specifically trucking and refuse. And then would love your updated thoughts on timing of the X-15N. I know that it's certainly moving towards production and launch but really hasn't gotten going yet in a big way.

Speaker Change: You know, you have the ethanol-producing states, and you have a lot of, you know, ten years ago there was talk that a Republican Congress might try to unwind the RFS, and I really do believe the RFS is on a lot more solid footing today than it's ever been before.

Speaker Change: We see, we see really bipartisan.

Speaker Change: participation on supporting a renewable fuel standard.

Eric Stein: So just updated thoughts would be great. Like most of that percentage increase comes from trucking, Eric, yes. And if not almost all of it. And on the Cummins launch, I mean, it's just kind of a review for everybody. You know, earlier in the year of the early introductory engines were put out some of the nation's largest fleets. It was interesting. Cummins a couple weeks ago, mentioned that those test vehicles have accumulated a million miles.

Speaker Change: sar

Speaker Change: Go ahead, Operator.

Speaker Change: Okay, thank you. Our next question comes from Craig Shere of Tuhi Brothers. Go ahead, please.

Operator: Thanks for taking the question. Did I hear correctly that the first upstream JV project recovered $9 million for your portion of the ITC? And how much total do you expect from the other five projects?

Craig Shere: Good afternoon. Thanks for taking the questions.

Craig Shere: Did I hear correctly that the first upstream JV project recovered $9 million for your portion of the ITC? And how much total do you expect from the other five projects?

Craig Shere: And you know, using that as a backdrop, can you kind of opine more generally on how you feel about capital funding in 2025-2026? Well, the $9 million total project... And Bob, I don't know that I have a number on top of my head on what the issue is. The other five are, you know, generally speaking, in, you know, around the same size, if you will, so they probably will, they may have some of the same qualified assets in that ballpark. So it shouldn't be too much different than Matt and Ryan.

Eric Stein: And the company feedback, driver feedback has been a thing just, you know, short of tremendous. The torque and fuel economy and ride has really been as come to the surfaces, you know, is what we are hoping. The next phase was has been the delivery now of kind of pre production units. These are units that actually got built on the line. But before the formal, so there's been another batch of trucks that have now been delivered.

Speaker Change: And, you know, using that as a backdrop, can you kind of opine more generally on how you feel about capital funding in the 2025-2026?

Speaker Change: Well, the $9 million total project...

Eric Stein: In fact, for instance, we got one. We're very excited about it. It'll go into our demo fleet here next week. Beautiful trucks. And so that'll be the next batch that'll be operating the order book has been opened and I think that opened, you know, March or March or April. But now the orders and purchases is something now at this point, as you know, is between Cummins and their customers. We are working hard with Cummins, PACR and the dealership owner groups as we're all kind of working and working with our channel partners to, you know, to get these orders in.

Bob Vreeland: But you know, there's a number of things that can go wrong with pricing and the market and all that, but that's in the ballpark. You know, I mean, we'll use that capital at the project level, if you will, new projects, maybe right at the same project, I mean, you know, depending. And then our capital for the projects that we've talked about, MOS, and a couple of our other projects. We're covered right now.

Bob Vreeland: We either have the money in the JV, or we have the capital. So the projects that we've talked about on these calls, we've got the capital committed in the bag, and it's available to us. I mean, we have 100 million.

Eric Stein: And now I have heard and it go to lead that at some recent industry meetings Cummins has stood by that they still believe that they'll sell 3000 units. Now if we've talked about in these calls for the last six months, you know, we know that these engines are going to, these trucks will, you know, likely get into service at the latter part of 2024. So not a big volume thing for us, but we're all anticipating, you know, these orders because next year we pick up another OEM so you'd have more, you know, more, you know, the engines could go into greater number of vehicles.

Bob Vreeland: Additional. So we're good on that, Craig. And separately, a diversified pure company with landfill RNG exposure just announced their first discretionary institutional fixed price contract for the public utility. It was over five years, or I'm sorry it was just five years, but they expect future agreements along your tenor.

Andrew Littlefair: Now I know this is not, you know, the market for your ultra-low CI dairy gas, but as landfill gas is pulled out of the system, if this becomes a trend, especially if that happens, just as all these 15 liter trucks hit the market, demand for dairy is going to go up dramatically, right? So maybe you could comment on what you see as supply and demand for R&G these days.

Eric Stein: So we're very excited about it so far. I hope we'll begin to see some announcements for some of these fleets, but that's really up to the fleet in Cummins at this point, but we're working hard on it. And, you know, we're optimistic. Yeah, but I believe that Cummins recently talked about 8% is where they see adoption going out a little open on the timing just because of moving parts, but that was good to see.

Andrew Littlefair: Supply and demand are currently in pretty good balance. There are a lot of R&G projects coming on, a lot of landfill projects, and low-CI projects. I don't anticipate a real problem. Now, I hope we get into a real problem, right? I hope we start creating it. We hit that 8% number, and we need $300 million a year.

Eric Stein: Can you, Eric, that's, and yeah, I don't know the timing, you know, that's, that was a quote unquote. I think over an extended period of time. So I don't know what that means three years, whatever I've always, sort of in what I heard in those early Cummins discussions is that there would be a few thousand and twenty-four or maybe as many, seven thousand and twenty-five and then they started talking about percentages.

Andrew Littlefair: The industry has, you know, a tough time keeping up with that because that's every year, right? You need to create that. Let me remind you that there that Bob and I talk about it quite a bit. You've probably heard us talk about it. Right now, you're dispensing, as you are in California at our 140 or 150 stations, I think, somewhere around minus 140 to 150 on the CI index. And I don't know that you need to supply someone with fuel at minus 150.

Eric Stein: So I'm not holding the CEO to it. I love, of course, hearing that the CEO thought enough about this product, talk about an earnings call and not knowing you jack timing of it eight percent equates to something close to 20,000 units, right? 20,000 units translates into somewhere around 300 million gallons of fuel. So for the industry, for the RNG industry, for those of us in the downstream part of the business is big.

Andrew Littlefair: So my point is that as you blend that fuel, you can fuel more vehicles. Right, so we have a very significant fleet where their fuel, just by the way it works in the contract, I think they're getting minus 353. Well, that's unusual, and other fleets won't get that.

Eric Stein: And you know recall right now we're talking about somewhere around selling 240 million gallons of fuel this year. So we have the largest market share here by far. So this is very, this Cummins X-15 and as we've stressed is really important for us and the industry. Yep, absolutely. Maybe for my last question, just on the upstream for an update, are you talking about the six projects that are operating that are producing RNG?

Andrew Littlefair: So my point is, you're going to be able to have plenty of R&G to get customers at either just a negative fuel number or zero fuel number. So you'll have plenty of R&G, Craig, as you go forward here. Don't sweat that.

Andrew Littlefair: And I also happen to think that as the 15 liter comes out, the market's going to move, continue to move. Look, 80% of the R&D today in America goes into transportation because it's where you get rewarded for it best. So, yeah, you know, look, I'm all for it. If somebody wants to do whatever they want to do, it's okay by me.

Eric Stein: I mean, still kind of the timeline that you start to see an even pickup late in twenty-four and that those start to contribute, I guess fully in twenty-five and then maybe what are your plans here for the remainder of the year? Yeah, Eric. Generally, yes, that's correct. I mean, we're still going to be working with inside our guidance that we gave for the, you know, the RNG JV investments, you know, which was negative 10 to negative 14 million EBITDA.

Andrew Littlefair: But you watch, most of it will end up going to the hardest decarbonized place, which is transportation, where you make the most money. I also have, having said that, I happen to think that the large AI and data center people are going to start getting more comfortable with needing natural gas for their data. You'll see that as a trend. You know, it was all going to be wind and solar.

Eric Stein: But yeah, you know, just working within there, you know, contemplates monetizing gas that's being produced, but certainly not it, you know, kind of full capacity. And yeah, the goal would be to, you know, be as close as the full capacity by the end of this year, for sure, going into twenty-five. That's right. So we're excited about it, you know, it's, frankly, it's good stuff as we, you know, when you finally get to see the fruits of your labor, would the, you know, pipeline quality gas going into the pipeline, you know, from these projects.

Andrew Littlefair: And now you're going to start hearing that, well, maybe some natural gas would be OK. Well, I think that's a beautiful opportunity to blend in R&G and bring that fossil fuel down to zero. So there will be lots of opportunities for R&G. That's what gives us confidence in making these investments because if you use it in a vehicle, if you use it in a data center, or if you use it in other places to make hydrogen, I think there's a great future for R&G because it's the lowest carbon feedstock really out there. Thank you. But have no fear.

Eric Stein: Now, that's the main point. And then, of course, you'll have the MOS projects, but, you know, all of the other projects that are under construction, you know, they're all really late twenty-five, right? And so they won't, they don't contribute a lot in twenty-five, but they're big, they're all relatively large projects, so they'll be meaningful, but they won't come on and begin to really inject until later in the later in twenty-five. Right, they'll follow the same timeline. Timeline is the six that you've got this year, where they come on and it takes a bit. Okay, thanks a lot. You're welcome.

Andrew Littlefair: You know, I'll still stick with that over the next decade, you'll have a couple billion gallons of RNG from manure. And there are several million more billion gallons that will be brought on from landfills, wastewater, and food waste. So, you know, we're not trying to replace every gallon of diesel or, you know, all the natural gas that's making power today, but there will be several billion gallons of R&G, which is a long way from where you are today. Fair enough. Thank you. Our next question comes from Pavel Molchanov of Raymond James. Go ahead, please. Thanks for taking the question. Maybe some kind of macro questions first.

Operator: The next question comes from Rob Brown of Lake Street Capital Markets. Go ahead, please. Hi, good afternoon.

Andrew Littlefair: First questions on the now-the-amazon fueling. You talked a little bit about those stations, or the Amazon station fueling, now-the-amazon trucks. Could you give us a full of color on how that's ramping and what you're seeing there? You're saying, what's the ramp on Amazon stations? The non-amazon fuelers that are at those stations, yeah. Well, obviously, once we have more fleets that begin to accept Cummins X-15, so that's really a 25-and-then you'll see more of it.

Operator: You know, the price of oil is at the lowest level in about 24 months, and I think there's some fear in the market about, and recessionary pressures potentially impacting demand. Uh, and, you know, obviously, you have a useful kind of channel chat for certain use cases. So are you seeing demand softening in recent weeks and months on our transportation note? But, you know, I don't know that we are the best, you know, check on that, but while we have a pretty good feel for how our fleets operate, and we haven't seen any decline there, but, you know, we don't see people sidelining transit buses or refuse trucks or the delivery, you know, type fleets that we fuel.

Andrew Littlefair: For instance, we have some large fleets NFI, WM, ecology, DHL. I mean, those are the kinds of fleets that are beginning to show up at the public, what's called the public side of these Amazon locations. So large fleets, that have a lot of trucks, keen in group, and so, you know, that was as designed, right? We knew, and Amazon wanted to have public fueling at those locations. They're in perfectly located, you know, warehouse and logistic areas, and so they really lend themselves to a lot of fleets, and I hope we're just seeing the beginning of that problem.

Andrew Littlefair: Okay, perfect. Thank you.

Operator: I guess I was wondering where you were headed with this question: do we see a decline in oil, or are we concerned that, you know, you're going to have to wake up and it's going to cost a dollar for oil? And, you know, I guess I'd be curious about your thoughts on this. I'm kind of thinking that you're going to bounce along the lower part of the 65 to 75.

Andrew Littlefair: And then on the kind of back to the R&G facilities that have opened and started running, I realized it's early, but how are you, what are sort of learnings there in terms of the operations? Are you seeing the flows that you want and the margins you want, and how is the operation looking there? Well, I think we're learning a lot as we go here, and the commissioning seems to have taken, as you know, we've talked about on these calls a little longer than we've all wanted, but maybe that, you know, in retrospect, maybe that's to have been expected.

Pavel Molchanov: And if you are, you'll have three $3 gas versus 60, you know, $5 oil. And for us, that would be very, you know, that would be very constructive. Right now, your trade, you know, between natural gas today at 209 and oil at 75 bucks, I mean, you're 36 to one on a BTU equivalency. So you're really at the high end.

Andrew Littlefair: And of course, we like that, but we don't need that. We were happy for a long time at 15 to 16 to 1. So there's a lot of room, kind of, there, I think. You know, we talk a lot about the drivers of your product margin, not as much about the service line item. And when I look at your service business, revenue kind of has this very consistent growth, but it looks like the margin has come down maybe over the last couple of years from 40-ish percent down to closer to 30, 3-0. Any reason for that? You know, Pavel, you know, I'm going to put this out there and cause inflation.

Andrew Littlefair: We, after a 60 day, you know, kind of commissioning phase, we begin to inject, and then we tune, right? I mean, that's kind of what's happening is we begin to get all the pieces, the upgrading equipment, the compressors. We get to kicks out, and we see the uptime come up, and that we're seeing that in Del Rio. We've made some adjustments and some pipelines and some different things, and we've had, I think it was in June, very nice increases in production.

Andrew Littlefair: So I think that's where all of these will go. And in one of our large projects, where we're handling manure right now in Idaho, we're handling more manure than we thought was possible. So, you know, just when we think things sometimes are slower and a little more difficult, we're pleasantly surprised on the quality and how these things are working. I think, Rob, you know, generally while slower, operating has been good. We'll continue to enhance operations, you know, more.

Bob Vreeland: You know, it's just a bit more. Yeah, it's just a bit more costly for all of this. We're still okay with our margin.

Bob Vreeland: We're not okay with it kind of coming down, but we do know why it's come down. Sometimes it can ebb and flow a little bit because of the types of maintenance that are done, but I think fundamentally, You know, we see that, but it's still... You know, it's still good. Still good service, you know, recurring revenue on it, but it's, it's, I'm just going to say it's a little bit more on the cost front.

Andrew Littlefair: We know a lot about operating stuff, and we're going to continue that. We've now really fully integrated our engineering teams and some of our operation folks and some of our scatter systems in, and we're trying to bring some efficiencies that we've learned through operating, you know, several hundred fueling stations and some LNG plants to this. I think we'll be pleased that we're doing this. That's sort of new and as these last five projects come on, we're beginning to kind of get our arms around it and staffing it.

Operator: Okay, thank you, alternative.

Bob Vreeland: Now we're, you know, we're looking at, we're, you know, as we renew contracts and that sort of thing. I can tell you in this day and age that we are, were, you know, certainly getting our fair share as we, as things come up for renewal, address the pricing versus what it's costing, you know, all across the board with wages and and materials and that sort of thing to support it. So, you know; we're kind of addressing it as well. Okay. We haven't touched on this, maybe, yet. Yeah, a year or so now.

Manav Gupta: The next question comes from Manav Gupta of UBS. Go ahead, please. Two quick policy questions and I'll ask them upfront. First, any timeline we should think about on terms of 45 v, when can we get some kind of more guidance from Treasury? And on a similar line, when can we get some kind of updates from, you know, grab on the, whether it's a 7% step down or 9% step down.

Andrew Littlefair: Is there anything interesting happening with Long Beach? Do they adopt the port initiative that you guys had with Chevron a couple years ago? Well, um... You know, we just keep going, Pavel. We've actually expanded it, kind of like we, if you will, we feel we're re filling up the bucket of funds from Chevron to continue to do more trucks. Some of the regulation at the port, you know, the push for electric cars and some of the new, you know, fleet rules have made it.

Andrew Littlefair: And I'll turn it over. Thank you. Yeah. Manav, on CARB, we believe that in the next two or three weeks, CARB should release. This has got a funny release. They're 15 day notice, which I don't know, best week at all tell it's going to be about 30 days before the November 8th hearing. So, I mean, that seems to be on track. I think CARB is working on that now. So we should see the agenda and the items on it here in the next couple of three weeks is what I'm being told.

Andrew Littlefair: And that's for November 8th and that's still, you know, there's always time for that to be changed, I guess, but that still seems to be on track. 40 by V that, you know, I think we're still kind of assuming what I was told from sort of a senior policy person that would know about this that, you know, we should expect something out of Treasury. Some initial rules sometime in at the end of the summer. So, you know, like it September. And so I kind of think and that's the way that's going to go. So we got some more time to wait on that. Thank you. Do that.

Andrew Littlefair: You know, somewhat daunting for our small fleet operators down there to kind of shoot through the needle on what's required in order to to, you know, put in for grants timings. I mean, they made it, they made it kind of a mess down there in terms of regulation.

Andrew Littlefair: But Chevron and our sales team, we're still working. We have a whole bunch of trucks that are kind of in the process of buying new trucks with the, you know, Chevron grants and so, I don't know if there's been any change other than we've continued to... slowly but surely add trucks into the port and even in other areas around Southern California. Yeah, it's really doesn't have to be does it really? We called it Adopt-A-Port because we were very clever with the naming.

Jishant Early: The next question comes from Jishant, early on of Jeffree. Go ahead, please. All right. Thank you for taking my question. I just have one. Maybe could you talk a little bit about your EBITDA cadence for the second half of 24. Historically, we have seen it kind of ramp up, caught over, caught over the one keeping, you know, the lowest. So if you follow a similar cadence and is it fair to say that there's a chance to hit the higher end of the guide.

Andrew Littlefair: But it's really that that program could be anywhere in the state of California. And in fact, I think the other day we talked about a fleet up in the Central Valley that was a trucking fleet that's putting in for those grants right now. So it's, yeah, it's still in the..., is still in the offering. All right. Thanks very much.

Jishant Early: What are some puts and takes there? Yeah, you're correct that we have seen a bit of a ramp up in that cadence. And, you know, generally speaking, we would expect to see, you know, some of that general same profile as we look at the second half. You know, but in terms of getting to the, you know, to the high end, well, gosh, there's always a possibility. That's why I have that range there.

Operator: You're welcome. The next question comes from Betty Zhang of Scotiabank. Go ahead, please. Thanks. Hi Andrew. Hi Bob.

Betty Zhang: Thanks for the update. There is just one question for me. When you guys are talking about R&G volumes, it seems like in previous quarters, you talked about having sold 5 million gallons outside of your station network. So, I assume that would be into non-transportation markets, but you guys talked about how clearly the economics are better in transportation markets. So, I'm just wondering what the thought process was like there, and if there was an opportunity to do more, would you take it?

Jishant Early: You know, we're feeling good about where we are. You know, right now within that within that range. And as we've always said, it's, it's kind of all about volume. So, um. We do the best that we can to predict that volume and we're constantly looking at recent trends so we're there's a chance. Thank you.

Bob Vreeland: Yeah, Betty, it's all. You know, kind of factors into the whole supply and demand optimization of what goes on in a quarter. And so, you know, kind of our first area of delivery is always our stations and for the highest economics, and then, just on occasion, if we see an opportunity where, because we have so much supply, folks will, you know, maybe get into a predicament, if you will, where they need R&G, and so we take that opportunity to do it.

Betty: Yes, Betty it's al.

Speaker Change: Kind of factors into the whole supply demand optimization of what goes on in a.

Matthew Blair: Our next question comes from Matthew Blair of Tutor Pickering Holt.

Speaker Change: In a quarter and so.

Speaker Change: So kind of our first area of delivery is always our stations and for the highest economics.

Matthew Blair: Go ahead, please. I think what stood out this quarter was just the rising unit margins in your downstream refueling segment so it's hoping we could dig into that a little bit. Bob, you mentioned that the mix improved. Does that just refer to the share of the RNG versus non-RNG because it did look like that picked up a little bit. And then I was also hoping you could talk about did lower California natural gas prices also help out in terms of your your unit margins.

Speaker Change: And.

Speaker Change: And then.

Speaker Change: Just on occasion, if we see an opportunity where.

Speaker Change: Because we have so much supply folks will maybe get into a predictive manner. If you will where they need R&D and so we take that opportunity to do it.

Bob Vreeland: So that's kind of where that happens, and yeah, it's not over. It's just last year, we had done some that was fairly regular, and we and we were not clear on whether that was going to necessarily happen again, although a little bit of it did happen in the first quarter, which is why we still saw it. And then really, in the second quarter, it was not needed.

Speaker Change: So that's kind of where that happens in and.

Speaker Change: It's not over it's just.

Speaker Change: Last year, we had done some that was fairly regular and we and we.

Speaker Change: Werent clear on whether that was going to necessarily happen again.

Speaker Change: Although a little bit if it did happen in the first quarter, which is why we still saw it and then and then really you know in the second quarter that wasn't needed and so that's what we are.

Robert Brown: Thanks. Okay, yeah. Right, Matthew, I will say that the lower gas costs did help us because we we continued to enjoy a pretty healthy spread. You know, as an indicator, we're always kind of comparing the say nine acts to your WTI crude and when that's when that spread is large like it has been, it just means that we've got some pretty good pricing. Power, if you will, at the pump. So that helps us and particularly with the amount of volumes we have in California, when California moves like it did.

Bob Vreeland: And so that is what we'll continue. That'll always be potentially on the table. It always is. Yeah, it is. So, you know, first and foremost, we've got Clean Energy Stations and all throughout our network. It's probably, I don't know if this is the right way to categorize it, Betty, it's more short term.

Speaker Change: But we will continue that will always be potentially on the table. It always this yeah. Yeah. It is.

Speaker Change: No.

Speaker Change: First and foremost we gotta clean.

Speaker Change: Clean energy stations in all throughout our network and its probably I don't know if this is the right way to categorize that is more short term.

Andrew Littlefair: You know, then it is, you know, that we're making a long-term play of moving R&G into the, you know, the data center type thing that we talked about. This is where a particular, yeah, I would say. We have to satisfy, we're able to, to wholesale it over to. And so it could very well end up, you know, in transportation.

Speaker Change: You know.

Speaker Change: Then it is that were making a long term play moving R&D into this.

Speaker Change: The data center type thing that we talked about this is where a particular.

Robert Brown: That's helpful. And then on the on the mix, I am referring to the fact that as we see or vehicle fueling kind of at the stations, it's not really RNG versus CNG or RNG versus not as much. It's, you know, it's the type of gallons and look as we're, you know, we're seeing some increases. That's why, you know, we indicated it part of that increase was in trucking and that's an area where, you know, that's your kind of sweet spot of fuel margins.

Speaker Change: Yeah, I would say.

Robert Brown: So as that goes, you'll see those improvements.

Speaker Change: Yeah satisfy a customer.

Speaker Change: April two.

Speaker Change: The wholesale of over two.

Speaker Change: Got it thanks, so it could very well end up in transportation.

Speaker Change: In fact, I think most of the debt.

Operator: Okay, thanks, Patty. Okay, this concludes our question and answer session. I would like to turn the conference back over to Andrew Littlefair, CEO, for any closing remarks. Thank you, operator. Thank you, everyone, for participating in the call, and we look forward to updating you in the next quarter. Have a good evening. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: Operator.

Speaker Change: Thanks Patty Okay. This concludes our question and answer session I would like to turn the conference back over to Andrew <unk> CEO for any closing remarks. Thank.

Andrew Littlefair: Thank you operator, thank you everyone for participating in the call and we look forward to updating you in the next quarter.

Robert Brown: Okay. And then with the Supreme Court reversing the Chevron decision, are you expecting any impact on the RFS program and any sort of corresponding, you know, potential decline in in prices? You know, Matthew, I'm not a scholar on all that, but I followed some of this. And, you know, a lot of the underpinnings on the, for instance, on the laws passed by the Congress, you know, it's not that every law passed by Congress is, is the same.

Speaker Change: Good evening.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Robert Brown: Right as what might be applicable to what happened in the Chevron deal. And I think that the RFS, the way I've been kind of following the trades and some of the people that have been following it, I think the RFS, RFS is in pretty good footing, and so I don't know that that's in, let's call it in immediate jeopardy. I'm sure about that. I'm sure there will be those that will try to, you know, don't like the RFS, might try to work on that.

Robert Brown: But I'm thinking the RFS and the way that came through Congress and the way it's been dealt with over time. I'm thinking it's on more sure footing. But, you know, there will be a lot of tests on some of these things. I mean, you know, for instance, there's been, there have been those that have thought that, you know, the Republican control house might try to put a, you know, congressional review act in to try to undo some of the IRA.

Robert Brown: And I'm sure there are those though, though about an hour ago, I saw 18 Republican members of the house put a letter into the speaker saying, hey, as you look at repealing the IRA, there's a lot of stuff in there that we like. So, this isn't, you know, occasionally when people look at this, they think it's, this is all going to, you know, get poured out. You know, this is all very simple and it's not.

Robert Brown: It's a little more complicated than that. I would say that on, you know, for instance on the congressional review act things like that, you know, that, that takes the sense as well. So, you know, that, that's, that means you'd have to clear the 60 votes there. So, that's why that's not used that often. Now, a new administration could certainly impound certain of funds that have been put through and make it difficult to spend them, you know, in different categories. And so, you know, we'll see how all goes.

Robert Brown: There's a lot of water could come that they're under the bridge before that alive.

Operator: Great.

Matthew Blair: Thank you. Hey, Matthew. Well, one of the, that was Matthew, wasn't it? One other thing is since I've followed the RFS now, I don't know how long that's been in law 12 years, the long time now, that particular law is really bipartisan. You know, you have the ethanol producing states and you, I mean, you have a lot of, you know, there were 10 years ago, there was talk that a Republican Congress might try to unwind the RFS. And I really do believe the RFS is on a lot or solid footing today than it's ever been before. We see, we see really bipartisan participation on supporting a renewable fuel state. Sorry.

Operator: Go ahead, operator.

Craig Shere: Okay, thank you.

Craig Shere: Our next question comes from Craig, Sherer of 2H Brothers. Go ahead, please. Good afternoon. Thanks for taking the question. Yes.

Andrew Littlefair: Did I hear correctly that the first upstream JD project, recovery 9 million for your portion of the ITC, and how much total do you expect from the other five projects, and using that as a backdrop, can you kind of opine more generally on how you feel about capital funding into 2025, 2026? Well, the 9 million total project, and Bob, I don't know that I have a number on top of my head on.

Andrew Littlefair: Well, I would say that the other five are generally speaking in around the same size, if you will, so they may have some of the same qualified assets in that ballpark. So it shouldn't be too much different than that, but, you know, there's a number of things that can go on there with pricing and the market and all that, but that's in the ballpark. And, you know, I mean, we'll use that capital at the project level, if you will, new projects, maybe right at the same project, I mean, you know, depending.

Andrew Littlefair: But then our capital for the projects that we talked about, Moss and a couple of our other projects are, you know, we're covered right now. We either have the money at the JV or we have the capital, so the projects that we talked about on these calls, we've got, we've got the capital committed in the back. In available to us, I mean, we have a hundred million, you know, additional, so we're good on that.

Andrew Littlefair: And separately, a diversified peer company with landfill RNG exposure just amounts to their first discretionary institutional pitch price contract of the public utility. It was over five years or I'm sorry, it's just five years, but, but they expect future agreements along the tenor. Now, I know this is not, you know, the market for your ultra low, you know, dairy gas, but as as landfill gas is pulled out of the system, if this becomes a trend, one, especially, you know, if that happens just as all these 15 liter trucks at the market, you know, demand for. There is going to go up dramatically, right?

Andrew Littlefair: So maybe you could opine about what you see as supply and demand for RNG these days. Flying demand currently is in pretty good balance. There's a lot of RNG projects coming on, a lot of landfill projects and low CI projects. I don't need to spend a real problem now. I hope we get into a real problem, right? I hope we start creating it. We hit that eight percent number and we need 300 million a year.

Andrew Littlefair: The industry has a, you know, a tough time keeping up with that because that's every year, right? You need to create that. But let me remind you that there, that, you know, Bob and I talk about it quite bad. You probably heard us talk about it. Right now, you're dispensing, you're in California at our 140 or 50 stations, I think, somewhere around a minus 140 to 150 on the CI index. And I don't know that you need to supply someone fuel at minus 150.

Andrew Littlefair: So my point is, as you blend that fuel, you can fuel more vehicles, right? So we have a very significant fleet where their fuel, just by the way it works in the contract, I think they're getting minus 353. Well, that's unusual and other fleets won't get that. So my point is, you're going to be able to have plenty of RNG to get customers at either just, you know, a negative fuel number or zero number. So you'll have plenty of RNG, Greg, as you go forward here. Don't sweat that.

Andrew Littlefair: And I also happen to think that as the 15 leader comes on, the market's going to move, continue to move. Look, 80% of the RNG today in America goes into transportation, because it's where you get rewarded for it the best. So yeah, you know, look, I'm all for it if somebody wants to do whatever they want to do, it's okay by me. But you watch, most of it will end up going to the hardest, decarbonized location of place, which is transportation where you make the most money on it.

Andrew Littlefair: I also have to, having said that, I happen to think that the large AI and data center people are going to start to getting more comfortable with needing natural gas for their data centers. You'll see that as a trend, you know, it was all going to be wind and solar. And now you're going to start hearing that, well, maybe some natural gas would be okay. Well, I think that's a beautiful opportunity to blend in RNG and bring that fossil down to zero.

Andrew Littlefair: So there'll be lots of opportunities for RNG that's what gives us confidence in making these investments, because in a vehicle, using the data center, if you use it in other places, use it to make hydrogen. I think there's a great future for the RNG because it's the lowest carbon feedstock, really, out there. Thank you, but have no fear. You know, I'll still stick that over the next decade. You'll have a couple of billion gallons of RNG from the newer, and there are several million more, billion more gallons that'll be brought on from the landfill waste water, food waste.

Andrew Littlefair: So, you know, we're not trying to replace every gallon of diesel, or, you know, all natural gas that's making a power today, but there'll be several billion gallons of RNG, which is a long way from where you are today.

Operator: Aaron, off. Thank you.

Pavel Malkinoff: Our next question comes from Pavel Malkinoff of Raymond James. Go ahead, please. Thanks for taking the question.

Andrew Littlefair: Maybe kind of macro question first. You know, price of oil is at the lowest level in about 24 months. And I think there's some fear in the market about kind of recessionary pressures of potentially impacting demand. And you know, obviously you have a, you know, useful kind of channel check on certain use cases. So are you seeing demand and softening in recent weeks and months? On our transportation, no. But you know, I don't know that we are the best, you know, check on that.

Andrew Littlefair: But while we have a pretty good feel for our fleets operate, then we haven't seen any decline there. But, you know, we don't see people sidelineing, you know, transit buses or refuse trucks or the delivery, you know, type fleets trucking that we that we fuel. I guess I thought where you were at it is, do we see a decline in oil or we concerned that, you know, you're going to have wake up it is going to fit dollar oil.

Andrew Littlefair: And, you know, I guess I'm the curious your thoughts on this. I'm kind of thinking that you're going to bounce along a lower part of the 65 to 75. And if you are, you know, you'll have three, three dollar gas versus 60, you know, five dollar oil. And for us, that would be very, you know, that would be very constructive. Right now, you're right, you know, right now that between natural gas today at 209 and oil at 75 bucks, I mean, you're 36 to one on a BTU equivalency.

Andrew Littlefair: So you're really at the high end. And of course, we like that, but we don't need that. We're happy, we were happy for a long time, at 15 to 16 to one. Right. So there's a lot of room, there's a lot of room, kind of there, I think.

Robert Brown: Okay, you know, we talk a lot about the drivers of your product margin, not as much about the service line item. And when I look at your service business, you know, revenue kind of has this very consistent growth, but it looks like the margin has come down maybe over the last couple of years from 40-ish percent down to closer to 30-30. Any review of that? You know, Pavella, you know, I'm going to put this out there and call the inflation.

Robert Brown: You know, it's just a bit more service. Yeah, it's just a bit more costly on all of this. We're still okay with our margin. We're not okay with it kind of coming down, but we do know why it's come down. Sometimes it can add and flow a little bit because just based on the types of maintenance that are done, but I think fundamentally, you know, we see that, but it's still You know, it's still good service, recurring revenue on it, but I'm just going to say it's a little bit more on the cost front.

Robert Brown: Now, we're looking at, as we renew contracts, and that sort of thing, I can tell you in this day we are, we're certainly getting our fair share as things come up for renewal to address the pricing versus what it's costing all across the board with wages and materials and that sort of thing to support it. So, you know, we're kind of addressing it as well.

Andrew Littlefair: Okay, we haven't touched on this, maybe a year or so now, is there anything interesting happening with the Long Beach adopt the port initiative that you guys had with Chevron a couple of years ago? Well, you know, it's kind of, we just keep at it, but now, we've actually expanded it. Kind of re, if you will, refill or we're refilling up the bucket of funds from Chevron to continue to do more trucks.

Andrew Littlefair: Some of the regulation at the port, you know, the electric, push for electric and some of the new, you know, fleet rules have made it, you know, somewhat daunting for those small fleet operators down there to kind of, you know, shoot through the needle on what's required is for her to, you know, put in for grants and timings. I mean, they made it, they made it kind of a mess down there in terms of regulations.

Andrew Littlefair: But Chevron and our sales team, we're still working. And we have a whole bunch of trucks that are kind of in the process to buy new trucks with the, you know, Chevron grants. And so, I don't know, there's been any change other than we've continued to slowly, but surely add trucks in the port. And even in other areas around Southern California. Yeah, that's really good. That has to be, doesn't really, we call the adoptive port because we were very clever on the naming, but it's really that, that program can be anywhere in the state of California.

Andrew Littlefair: And in fact, I think the other day we talked about a fleet up in the central valley that was trucking fleet that's putting in for those for those grants right now. Yeah, so it's, yeah, it's still in the, it's still in the offering.

Operator: All right, thank you very much. Welcome.

Betty Zang: The next question comes from Betty Zang of Scotiabank. Go ahead, please. Thanks. Hi, Andrew. Hi, Bob. Thanks for the update. Just one question from me.

Andrew Littlefair: When you guys are talking about RNG volumes, it seemed like in previous quarters, you, you talked about having sold five million gallons outside of your station network. So I assume that would be into non-transportation markets, but you guys talk about how clearly the economics are better in transportation markets. So I'm just wondering what the thought process was like there and if there's opportunity to do more, would you take it? Yeah, Betty, it's all, you know, kind of factors into the whole supply, demand, optimization of what goes on in a quarter.

Andrew Littlefair: And so, you know, kind of our first area of delivery is always our stations and for the highest economics. And then just on occasion, if we've seen opportunity where, because we have so much supply, folks will, you know, maybe get into a predicament, if you will, where they need RNG. And so, we take that opportunity to do it. So, that's kind of where that happens. And yeah, it's not over. It's just last year we had done some that was fairly regular.

Andrew Littlefair: And we weren't clear on whether that was going to necessarily happen again. Although, a little bit of it did happen in the first quarter, which is why we still saw it. And then, and then really it was, you know, in the second quarter, it wasn't needed. And so, that's what we will continue. That'll always be potentially on the table. It always is, yeah. It is. So, you know, first and foremost, we go to Clean Energy stations and all throughout our network.

Andrew Littlefair: And it's probably, I don't know if this is the right way to categorize it, Betty, it's more short term. You know, then it is, you know, that we're making a long-term play, move an RNG into the, you know, the data center type thing that we talked about. This is where a particular, yeah, I would say, yeah, to satisfy a customer and that we're able to, to wholesale it over to. Got it. Thanks. So, it could very well end up, you know, in transportation. In fact, I think a lot of most of it. Operator. Okay. Thanks, Betty.

Andrew Littlefair: This concludes our question and answer session. I would like to turn the conference back over to Andrew Littlefarer, CEO for any closing remarks. Thank you, operator. Thank you, everyone, for participating in the call and we look forward to updating you in the next quarter. Have a good evening.

Operator: The conference is now concluded.

Operator: Thank you for attending today's presentation.

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