Q2 2025 Clean Energy Fuels Corp Earnings Call

Speaker #3: Good day, everyone, and welcome to today's Clean Energy Fuels second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #3: Later, you will have an portunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one keys on your telephone keypad.

Speaker #3: Please note this call is being recorded, and that I will be standing by should you need assistance. It is now my pleasure to turn today's program over to Robert Vreeland, CFO.

Speaker #4: Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 2025. If you did not receive the release, it is available on the Investor Relations section the company's website at www.cleanenergyfuels.com.

Speaker #4: For the call is also being webcast. There will be a replay available on the website for 30 days. Before we begin, we'd like remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risk, uncertainties, and assumptions that are difficult to predict.

Speaker #4: Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the risk factors section of the Clean Energy Form 10Q filed today.

Speaker #4: These forward-looking statements speak only as the date this release. Company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release.

Speaker #4: 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.

Speaker #4: 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 #4: The directly comparable GAAP information, reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA, and a reconciliation between these non-GAAP and GAAP figures is provided in the company's press release, which has been furnished to the SEC on Form 8K today.

Speaker #4: With that, I turn the call over to our president and chief executive officer, Andrew Littlefair.

Speaker #5: Thank you, Bob. I'm pleased to say that the second quarter of this year again demonstrated the underlying strength of our overall business. Despite the continued shifting regulatory atmosphere, uncertainty around tariffs, and other external distractions in the market, we posted a very solid performance with 102 million dollars in venue, over 61 million gallons of renewable natural gas sold, 17.5 million of adjusted EBITDA for the quarter.

Speaker #5: And with 241 million in cash and other investments, we remain on solid financial footing. I will keep my remarks on the short side today and let the results speak for themselves.

Speaker #5: But I do want to give a little color to emphasize my previous point about the strength of our fundamental business, which is allowing us to update our projections for our 2025 financials.

Speaker #5: Bob will be giving you the details, but suffice to say, we believe we will be exceeding even the high end of our original guidance.

Speaker #5: We distributed a press release last week that highlighted a number of deals that we have made over the last several months with transit agencies across the country.

Speaker #5: We signed our first transit agreement over 25 years ago and since that time, we have continued to steadily grow this business. Today, we fuel over 9,000 transit buses every day at 115 locations.

Speaker #5: This is due to several factors. Buses equipped with natural gas engines are not only reliable in tough conditions, but they are clean and quiet.

Speaker #5: Operators very much appreciate their dependability, cities like that the buses dramatically reduce harmful NOx pollutants and passengers appreciate they don't smell diesel fumes as they ride along.

Speaker #5: Also, more and more transit agencies are seeing the double benefit of carbon emissions reductions plus cost savings by converting their fleets from traditional CNG to RNG.

Speaker #5: With almost 100 different RNG supply contracts, no other company can ensure a steady flow of this clean fuel like Clean Energy. Which is why we are winning so many contracts.

Speaker #5: I'd like the transit market, our business with waste companies, is consistent and growing. As the recognized leader in the alternative fuel space, we can expand existing relationships with refuse companies and win new deals.

Speaker #5: Once more, by the assurance of a steady supply of RNG as these companies expand their natural gas fleets. We continue to be bullish on the heavy-duty truck market's adoption of RNG.

Speaker #5: While we, as well as Cummins, acknowledge that the sales of trucks equipped with their new X15N engine aren't where we had hoped they would be at this point, there are signs that continue to point in the right direction.

Speaker #5: Between the change in administrations in Washington and the evolving regulatory atmosphere in California, all truck sales have been hit hard while operators wait for more clarity.

Speaker #5: Fortunately, that clarity is beginning to emerge. There is an acknowledgment during our discussions with both carriers and shippers that they want to continue to look ways to reduce harmful Scope 1 and Scope 3 emissions.

Speaker #5: One of the most promising recent apology policy changes is that these fleets no longer are forced to consider only one technology. And one that is too costly and still unproven.

Speaker #5: That, along with other developments like market leader Freightliner recently offering the X15N option, is why we remain bullish. Trucking companies continue to engage with us as they evaluate the RNG solution.

Speaker #5: Price still wins the day in the highly competitive logistics business. Fortunately, it is easy to get the fleet's attention when they are presented with up to a $2 a gallon savings on fuel.

Speaker #5: I'll end my remarks with a ick report about the progress we have made on our RNG development business. In the relatively short time since launching our dairy RNG production business, we now have six dairy projects operating, with another large project in Texas in commissioning and our largest project in Idaho completing in an important pipeline extension and nearing mechanical completion.

Speaker #5: Both the Texas and Idaho projects are on schedule to begin producing RNG by the end of the year. Additionally, the dairy RNG projects that we are developing with Moss Energy have begun construction.

Speaker #5: Producing our own RNG allows us to capture a greater percentage of the overall value of the fuel not only at the pump with environmental credits, but also through the monetization of the investment tax credit.

Speaker #5: We recently announced 29 million dollar ITC sale in connection with four projects owned by our RNG joint venture with BP. Dairy RNG emission rates for the 45Z production tax credit are in the process of being finalized.

Speaker #5: We are pleased with the recognition of negative emission manure feedstock RNG in the one big beautiful bill act. This legislation allows the US Treasury to recognize the full benefit of dairy RNG, which involves capturing carbon emissions from dairy cow manure and converting them into productive use as a negative emissions highway transportation fuel.

Speaker #5: Let me close with saying that we continue to feel very good about the way our businesses are performing, both the upstream and downstream, to put it in old energy business vernacular.

Speaker #5: Fleets like transit agencies and waste companies that have been operating natural gas buses and trucks for decades are seeing a revitalization with the added environmental and financial benefits of migrating from CNG to RNG.

Speaker #5: And the relatively new market of heavy-duty trucking is slowly but surely starting to see the light. Clean Energy is well positioned to continue to lead the exciting RNG space with a growing portfolio of production facilities, the largest supply of RNG, the most expansive fueling network, and a talented group of people.

Speaker #5: And with that, I will hand the call back to Bob.

Speaker #4: Thank you, Andrew, and good afternoon to everyone. The second quarter of 2025 was another good quarter. We saw increases in revenues and RNG volumes compared to last year's second quarter.

Speaker #4: Also, keep in mind the revenues last year included $6 million of alternative fuel tax credit revenue, which expired for 2025. Our second quarter RNG volumes grew 21% compared to our first quarter of 2025, and now this bounce back was anticipated after the first quarter RNG production challenges due to unusually cold weather.

Speaker #4: Our operating cash generation in the second quarter of 2025 increased over last year, and over our first quarter of 2025. As Andrew noted, we ended June with 241 million in cash and investments which is up from 217 million that we had at the beginning of the year.

Speaker #4: That puts us in a very good place relative to our anticipated CapEx and other spend on our dairy projects. Looking at our net results, our GAAP net loss for the second quarter of 2025 was 20.2 million compared to 16.3 million a year ago.

Speaker #4: But the results of the 2024 benefited from the 6 million alternative fuel tax credit revenue, as well as the second quarter last year if you recall had two quarters of LCFS revenues which was an extra 2.2 million dollars that was in last year's second quarter.

Speaker #4: Adjusted EBITDA a year ago second quarter was 18.9 million, versus 17.5 million in 2025. But if you consider 2024 of course had this 8.2 million of non-comparable income, you can see that 2025 is significantly improved over 2024.

Speaker #4: The improvement is principally the result of higher fuel volumes. From both RNG and conventional natural gas. Together, with favorable pricing and cost mix in 2025 versus a year ago.

Speaker #4: In fact, the higher RNG volumes in 2025 compared to last year helped to mitigate much of the lower rent pricing in 2025 versus a year ago.

Speaker #4: Now, looking at our trend from the first quarter of 2025, where adjusted EBITDA was 17.1 million, versus our 17.5 in the second quarter, we did see very good benefits of the higher RNG volumes in the second quarter with a 77% increase in rent revenue.

Speaker #4: Our LCFS revenue, though, lower in the second quarter, mainly due to a 20% drop in LCFS prices since the first quarter. And we saw a drop in our base fuel margins on normal fluctuating fuel pricing mix and commodity cost mix.

Speaker #4: The net of all that basically resulted in a relatively flat volume-related product margin between Q1 and Q2 of 2025. We did see improvements in our construction and service margins in the second quarter of 2025, which helped to bring our second quarter results slightly above those of the first quarter.

Speaker #4: The RNG dairy front, the losses from our upstream dairy RNG projects were about the same in the second quarter compared to the first quarter.

Speaker #4: The losses at this stage reflect the fact that five of our six operating dairy projects are in ramp-up mode, plus we have operating expenses in Idaho that we've talked about before.

Speaker #4: Our dairy project in Del Rio, Texas, is producing positive EBITDA and steadily increasing its RNG production. We were anticipating producing more RNG revenue at this stage from the five projects in ramp-up mode, and we are taking corrective action to address those five projects as they ramp up.

Speaker #4: And we feel confident about being able to increase our RNG production volumes at those locations similar to what we did in Texas with Del Rio.

Speaker #4: Although we have tempered our 2025 outlook on the dairy projects based on where we are through June. Lastly, considering our results through June of 2025, we are raising our guidance for the full year 2025 for both our GAAP earnings and non-GAAP adjusted EBITDA. You can find details in our press release. At that high level, our GAAP guidance for 2025 is now for a net loss ranging from $217 million to $212 million.

Speaker #4: And our outlook for adjusted EBITDA for 2025 is now 60 million to 65 million. Our new guidance reflects the trends we've seen in our results thus far with anticipation that these trends will largely continue but with caution recognizing there are ongoing uncertainties still in play.

Speaker #4: Particularly for us around the timing adoption of the X15N rent and LCFS pricing, and the ongoing ramp-up in our dairy projects. That is my report.

Speaker #4: With that, operator, we can open the call to questions.

Speaker #3: Thank you. At this time, if you would like to ask a estion, please press star one on your telephone keypad. If you would like to remove yourself from the queue, please press star two.

Speaker #3: Once again, that is star one to ask a question. And our first question will come from Eric Stein with Craig Hallam. Please go ahead.

Speaker #6: Hi, Andrew. Hi, Bob.

Speaker #7: Hi, Eric.

Speaker #6: Hey. So I guess I'll start maybe with the 45Z. Obviously, great that it was included in the bill. And I know waiting on Treasury, you ow, just curious kind of what your updated thoughts are on what that potentially could mean for you, you know, I ess, in the near term if you apply it, well, I mean, per gallon, but if you ly it to where you're upstream is at now and, you ow, maybe where you think it is two to three years from now.

Speaker #7: You know, Eric, I'm not going to get into a, you know, kind of a guessing on how many dollars per gallon and all that kind of thing.

Speaker #7: But look, I think the bill was very strong, right? As you well know, it not only got included, it got strengthened and it got extended.

Speaker #7: And specifically, is enabled to recognize the negative carbon and instructs the Treasury Secretary to take into account the negative carbon. So, I mean, I feel very bullish about how that should impact.

Speaker #7: And think you should get, you ow, a very good carbon intensity score, which should end up being on, you ow, the higher end of the way people have looked at this.

Speaker #7: So, I think it should be meaningful for us going forward. But there's time, you know, there's still a lot to work through.

Speaker #7: But I feel like we're well positioned because the legislation itself enables it and recognizes it.

Speaker #6: Right. Well, I guess I'm going to ask you to potentially guess again, but the, I mean, timing, I know that when you're looking at Treasury guidance, it can be very tricky, to call that.

Speaker #6: But, I mean, is it, is it something that you have any insight into or anything you're aring?

Speaker #7: Well, you know, Eric, it esn't really kick into effect till January, till January so, you know.

Speaker #6: Right.

Speaker #7: You know, we're kind back in that where, you ow, there's a lot of things that Treasury, on Treasury's plate, I know they're working on this now, and I know other agencies and other departments that have input are engaged.

Speaker #7: So that's good. But I don't know that, you ow, they're under a dead rush to get this done, they know that it doesn't really get put into play until January.

Speaker #7: So, I'm guessing that in some time in the fall, you know, you'll see it in, and it'd just be a guess—October, November, something like that. It'd likely get sorted out.

Speaker #6: Right. Right. No, I appreciate that. All right. Maybe just turn into the the X15N, you know, obviously, as you said, I an, it's certainly not to where I think it had been envisioned.

Speaker #6: A couple of years ago, or when things started for Cummins. But, you know, the one thing I've heard is just incremental cost is being a big, deterrent, for what PACAR has had in the market for a year plus.

Speaker #6: Any thoughts or what ou're hearing? I know it's early for Freightliner, but, you ow, incremental cost having another OEM in the market, what type of impact, again, I know it's early, but just curious what you're hearing.

Speaker #7: No, it's it's good. And, you know, we continue our sales team continues to work with kind of what I've id on a couple of calls is that in for 2025, we wanted to see an increase in the breadth of, you know, the X15N orders across the heavy-duty space.

Speaker #7: And I believe we're seeing that. You know, what we've said Eric, we I think you and I have talked about is it Cummins felt strongly it's not about just some one big order with one fleet that you needed in order to build a market really needed to have acceptance across and I believe we're seeing that.

Speaker #7: And they're aller numbers, but it's it's more breadth. The orders are taking place quotes for pricing are is underway. You know, the Freightliner coming into the market has been very helpful.

Speaker #7: The incremental cost, I think, has been a little bit of a stumbling block in the early introduction, certainly at the end of last year and the first part of this year.

Speaker #7: But we've seen some of our channel partners and the industry really pull together. OEMs, Cummins, you know, ourselves and others have worked hard to bring the incremental price down.

Speaker #7: And that has happened. And so once upon a time when you'd see, you ow, incremental pricing in the in the 100,000 dollar or even greater range, you've now seen that come substantially down.

Speaker #7: Something closer to around 75,000. That's important, Eric, because it gets you to where with an hour advantageous fuel pricing, it can get you into that very important two-year type payback for the incremental cost.

Speaker #7: And that is that begins then to really sing for fleets. So it, you know, the engines have performed beautifully. The really, the test in the early adopters I mean, that has gone well.

Speaker #7: And now that we're able to get this incremental pricing down, I'm feeling much better about the way the introduction will go.

Speaker #6: Okay. Thanks a lot.

Speaker #7: You bet.

Speaker #3: Thank you. Our xt question will come from Rob Brown with Lake Street Capital Markets. Please go ahead.

Speaker #8: Hi, w. Bob.

Speaker #7: Hey, Rob.

Speaker #8: I wanted to in a little more on the ramp on the dairy projects that are ramping and the things you're ing. Could you give some more color on kind of what you're doing and how long you ink that can kind of take to ramp things up?

Speaker #7: I would say, and if you have some, I mean, I would say it's kind of normal. You know, after commissioning and placing these things into service, we are kind of taking care of kind of normal I would say normal type punch list items that, you know, are I mean, they're expensive, we know what's going on.

Speaker #7: And I mean, they're very operational, so you're looking at, you know, manure flow and all the different equipment that's out there. I mean, I think what the encouraging part for us is that there's nothing there that, you know, that we're seeing that indicates that there's a showstopper of any kind.

Speaker #7: I mean, we were able to get the Del Rio Texas dairy up. But it takes some time. So, you know, you never ow. Sometimes it's a quick fix and there you go.

Speaker #7: And or it can take a little time. But so I ink we'll be at it. You know, kind of going through this year on this ramp up and correcting them and but it shouldn't go much beyond I an, we should, you know, start hitting the ground running a bit more going into next year for sure.

Speaker #7: You know, Eric has kind of hard to all these different phases of Rob, I'm sorry. Rob, it's kind of hard, you know, with all these different phases on these things.

Speaker #7: But I would sort of say, ou know, when we when we often in business, or at least in our business, we used to think about commissioning as something that was very defined, right?

Speaker #7: It was like two weeks, to when we commission a fueling station, that's kind of how long it takes. And I would say here the commissioning is it's a little bit more varied.

Speaker #7: And it's it's it's more in the scheme of six months. You know, realistically, when by the time you bring them on and you start you really debug and improve and enhance, these these dairies.

Speaker #7: And it's it's more on that on that order. So I think Bob's exactly right. Toward the end of this this year, you'll be getting much, you ow, much improved run rates.

Speaker #7: That's something much closer to nameplate whereas right now, you know, you're you're just put there. Just to be clear, we are producing RNG volume and, you know, monetizing what we can.

Speaker #7: So these are operating and you just have to kind of deal with, some of the nuances of, you know, it's I mean, it's, it's biology.

Speaker #7: You know, so we we know what we're up against there. But, we have we have good team and good experience and, you know, so it'll it'll get there.

Speaker #7: it was just a little maybe a little slower than we anticipated.

Speaker #8: Okay. Great. Thank ou. and then on the the market demand, I think ou talked a little bit about some regulatory clarity starting, in the market.

Speaker #8: But could ou just kind of update, where that's at and and maybe the the the point at which customers get more more kind of clarity and comfort, that they can make a ision?

Speaker #7: Yeah. And, you know, in my remarks, it, it, I don't I don't want it to, you know, there there are some macro issues here.

Speaker #7: it's not all about all the introduction of, you ow, cleaner trucks. And, you ow, the the trucking industry, the sales of new trucks in America is is off significantly.

Speaker #7: And, you know, with tariffs and, and, you know, supply chain and, and, inflation and concerns at the ports, I mean, we've really seen the the trucking market has had a very tough year.

Speaker #7: And, the acquisition of new equipment has been something that's I 't know. It's been off 50%. Then you lay on top of it, what's happened in California because of the regulations, you ow, which were requiring, you know, an electric truck in order to buy other trucks.

Speaker #7: That all but shut down the acquisition of new trucks in California. I mean, I ink the new truck sales in California are off something on the order of 75%.

Speaker #7: And now, as you know, as I speak of this, there's you're ning to see more clarity. In California, the Trump administration, you ow, got rid of the waivers, or didn't approve the waivers on the ACT and the ACF.

Speaker #7: Fleet rule. And, that still, we haven't seen, you ow, total clarity yet on how that's all going to come to rest. And, and what what may be happened California.

Speaker #7: But that's beginning to take care of itself and carbs had a uple of hearings and it's expected that there's going to be some new, recommendations to the governor of just how to sort out the clean truck fuels, you know, program in California.

Speaker #7: And so I think or here over the next couple of ths, we should get a little bit more clarity there. And hopefully, truck sales will begin to and we also hope that LONOC trucks will get a nod in that in that program as well, which would be very important for RNG going forward.

Speaker #7: But through all of this, what is heartening is that a lot of our trucking customers and shippers are still wanting or still interested, still believe that they need to feel sustainable, equipment.

Speaker #7: And so that's good. And, and yet, I would say, you know, common sense and economics are are prevailing right now. And so it's got to make economic sense.

Speaker #7: And, and again, this is a little bit of good news for us, Rob, because we we can price our fuel and get them, savings on every, mile traveled.

Speaker #7: So, been a little slower on the adoption, but I think it has as much to do with sort of macro issues in the, in the in the industry as it does in specifically with the X15N.

Speaker #8: Okay. Great. Thanks. Congratulations on all the progress. I'll turn over.

Speaker #7: Thank you. Thank you, Rob.

Speaker #3: Thank ou. Our next question will come from Derek Whitfield with Texas Capital. Please go ahead.

Speaker #9: Good afternoon, guys. And thanks for taking my questions. Hi, Derek. I wanted to start on guidance. first, could you perhaps add some color around what's driving this re-rate and growth and success you're seeing in dispensing in your view?

Speaker #9: And then separately, to what degree has that been communicated in public comment in the public comment period for the set two rule? Because that clearly has demand implications and we know when generation was was quite strong in May and June.

Speaker #9: So again, we'd love your thoughts on those topics.

Speaker #7: Yeah. Derek, I'll I'll start on on the, on the, yeah, what we're seeing there. I mean, I, I, I ink we're definitely seeing, you know, continued strong volume.

Speaker #7: you know, that's it's been a little choppy because Q1 was a little off, but then we kind of came back and, you know, rebounded there in Q2.

Speaker #7: I think in general, we've also seen just a good mix of more vehicles, within the, you ow, kind of the our pool of customers and whatnot, just more vehicles at at our stations.

Speaker #7: And, you know, fueling volumes at our stations will drive economics so you're getting you're etting kind of a better margin per gallon, if you .

Speaker #7: Which is we were we were cautious on that. There's a lot that can go into it between rent and LCFS. As well as even kind of the spread on oil to nat gas.

Speaker #7: And, you know, so far, all of that put together, it hasn't all fired on all cylinders all the way. You know, for ample, this past quarter, LCFS was down, but but we had, you know, tremendous rent volume.

Speaker #7: And so that helped. But all of that has been collectively going in our favor. And while we still remain somewhat cautious, basically, we do see that some underlying trend on that will continue.

Speaker #7: We don't see that kind of dropping off, you know, just between kind of oil and and natural gas. Even within the rent, LCFS, we've already baked in.

Speaker #7: We kind of know that, you know, we've seen the trend there. So that's part of why we say this back half could be, you know, you could have a little headwind because the environmental credits are down.

Speaker #7: So I know you were going on the second part of the question was, well, this. I uldn't. This year. Well, this this you know kind of better than expected.

Speaker #7: And then demand. And then yet, you ow, on the you ow, on the EPA and I ink you're going down the RVO as I you know how is that not factored in you ow to you ow to RVO?

Speaker #7: And ause there's been comment out there that they didn't consider the. Well, I, you know, look, we we there's a common period right now in the RVO.

Speaker #7: I think it was generally a little the RVO is a little light. But let's not overemphasize this in the in a in our business.

Speaker #7: I mean, it's an important piece, but it's not the entire piece. And while I think they got it a bit light, you know, I've been at this a long time.

Speaker #7: We all have here. the EPA struggled to come up with a with the right methodology on RVOs over this question. So we're we're ing to we're going to give them some of our insight on demand growth.

Speaker #7: The X15 and growth. And the kinds of customers that we see that are interested and, ou know, some who knows how that will go.

Speaker #7: But, I I feel like, you ow, the RVO, you ow, it's it's somewhat constructive and it should keep the pricing in in about this range which it's it's fine for our business.

Speaker #9: Yeah. It makes complete sense. And then maybe just focusing in on downstream, I wanted to ask for your thoughts on some of the recent dispensing transactions that have been announced with Trillium and Apollo.

Speaker #9: Which are seemingly re-rating the value of downstream and also highlighting at the same time they're growing disconnect between your stock and the markets.

Speaker #7: Well, I don't know. You're going have to help me there on what you're seeing, on that. because I don't I don't know that I've have conclusions on on that.

Speaker #7: And on the pricing of that, what are you seeing there?

Speaker #9: Sure. We're seeing since COVID, potential 2X increase in value of downstream. Which could put those assets on a near 10X multiple basis based on our math.

Speaker #9: When we look kind of what's implied in today, very little your business value for or not that level of value recognition for downstream. So if that was kind of the comment and thought process behind that.

Speaker #9: Mm-hmm.

Speaker #7: Yeah. Well, that would imply that we were, you know, undervalued.

Speaker #9: Yeah. That's probably right.

Speaker #7: Yeah. I an, I I think absolutely. general, we're we like to see those kinds of transactions in the space that basically supports the valuation and a higher valuation for translate to us is, you know, look, I I still think, you know, actions speak louder than words.

Speaker #7: And you still want to see, you know, significant X15N adoption and growth and you see that in our numbers. So, you ow, we're kind of set up for prime time on that.

Speaker #7: we're also a bit larger, you know. Well, I an, I guess it's it's sort of validate, you ow, I've long believed. And in fact, we've talked to some significant players in the business.

Speaker #7: I mean, in order to replicate our downstream, it would be $2 billion dollars, two and a half billion dollars to do it today. us.

Speaker #7: And a decade. So we are well positioned with a a network that would be and I happen to be, you know, I'm Why it doesn't optimist, but I mean, I happen to believe that over time, you know, the the experience one of the reasons we're doing well right now is we have our Amazon stations are doing well, right?

Speaker #7: We've proved out that large deployments of trucks it can work and that RNG can can can work well. And so we have a lot of unutilized capacity at our downstream.

Speaker #7: That's super well positioned. It's, you know, we we have these truck stops up and down every interstate, you ow, system in the in the nation.

Speaker #7: And so as this demand begins to develop, we're going to get we get a, you know, disproportionate amount of downstream, you know, today we're we're it's most markets we're about 50 or 60 percent of the market.

Speaker #7: Market share. So, you know, that's why we work so hard on the demand side of this equation. And now that we have the right product, the X15N, we've got the right kinds of fleets, you know, all the largest fleets in America are testing or buying some of these these X15s.

Speaker #7: Now, we need them to do it in greater numbers, of course. But I like to where we're headed.

Speaker #9: Great. Keller, thanks, guys.

Speaker #3: Thank ou. Our next question will come from Manav Gupta with UBS. Please go head.

Speaker #10: On that, guys, excellent result and a raise of the guide. I just wondered your outlook on the LCFS price. You didn't mention, you ow, RVO was a little light.

Speaker #10: I agree with a little light for your on the D3 side. But the LCFS developments are positive. And I'm just trying to understand how are you thinking about the LCFS prices?

Speaker #10: You know, exiting 2025?

Speaker #7: Yeah. Manav, I think it's good because we haven't talked that enough. I think that the new rules for the LCFS and the new, you know, the finally, that those got into place is that that should be constructive over time.

Speaker #7: We'll begin to work off of the we'll begin to work over the oversupply in the bank. And it'll it won't doesn't happen overnight, as you know.

Speaker #7: But it'll it'll be the case that it'll begin it's beginning already. And you'll have a firming price throughout the remainder of this year and into next year.

Speaker #7: And it'll continue to go up. So, I like where the LCFS is headed.

Speaker #10: Perfect. Thank ou. That's what we were hoping for. And then, you ow, the investment tax credits are a big benefit. You can monetize them.

Speaker #10: Given your CapEx spend and other things, how should we think about, you ow, the benefit of this into like next year? Like, what could be a good number?

Speaker #10: I know it's a little bit of a guess, but what could be a good number for investment tax credits so that you could monetize if you're thinking about next year or even the second half of this year?

Speaker #9: Well, let's see. Manav, ay. So we've we've, monetized the investment tax credit on on all of our projects that have been placed into operations.

Speaker #9: and really, that money is, being utilized in the JV. Right? So it's it's, so we've en that. So what we have really are, you know, a uple projects under construction.

Speaker #9: I mean, 's a big one in Idaho. one in South Forest, Texas. And then we have our, Moss Energy deals. And, you know, all of those, it's I don't want to speculate on what that would be.

Speaker #9: I mean, we're those are you know, the dollars involved are pretty are pretty large. particularly in Idaho and others. But I guess generally, how we're viewing that is that it, you know, it provides us a nice, inflow of capital to take down our, you ow, kind of net capital outlay on those.

Speaker #9: And, you know, so, you know, it ps the return. If ou will. anyway. We kind of use

Speaker #10: Thank you.

Speaker #9: it. Yeah.

Speaker #10: No, thank you. That's very clear. As long as you're basically clarifying that there are large investments, particularly associated with the Idaho project. Eventually, we'll be able to get it back in the cash stream.

Speaker #10: Thank you so much for the response.

Speaker #9: I guess the other thing is on one of those, we own 100% of them. Right? So that's.

Speaker #10: Yeah. They're they're in Texas. We own 100%.

Speaker #9: So we're not splitting the ITC with a partner on that one, right, to get all of that. But,

Speaker #3: All right. ank ou. Our next question will come from Matthew Blair with TPH. Please go ahead.

Speaker #9: Thank you. And good afternoon. are you seeing signs of incremental tightness in the downstream CNG refueling market and and if so, are there any examples you can share?

Speaker #9: You know, so for ample, when you recontract an existing, fleet, is that coming in at a higher rate due to incremental tightness? And, you know, I guess the reason I ask is because your baseline fueling margin excluding the rent and LCFS credit revenue really seems to have taken a p up here.

Speaker #9: And so we're just trying to trying to get a better, you know, understanding of why that is. Thank you.

Sounds good. And then congrats on raising the guy. Um, I think even at the top end of the guide, it would imply that the back half of the year would be a little bit softer than the first half. Um, could you help us understand the moving Parts? There is that, is that, just a function of trying to be a little cautious given, um, given lower rent prices, or is there some seasonality at play? You know what? What

Would determine that.

uh just uh just general caution like I said in my comments, you know, um,

Vehicle adoption of what's going out there of the vehicles, you know, in terms of what's being, you know, purchased all of that. And lcfs, there's volatility there. We've got, we're ramping up those so

you know, our our base underlying as we were just talking about kind of the base on your line and fueling and that where those those are the trends that we kind of largely uh said you know, you would see those continue um,

But there's other, you know, just caution there. Yeah.

Great. Thank you.

Thank you. Our next question, will come from Patty Zhang with Scotia Bank. Please go ahead.

Hello, thank you. Um,

I wanted to ask, uh,

Hi. Um uh, so in the updated guidance, I I noticed that the expected Amazon warrant charges for the year is higher.

um, this is reflect more fueling demand from Amazon and are you seeing similarly, more interest in demand from other Trucking customers

Betty, it does.

From what was uh, from what was in the previous guidance?

Um, that's correct.

now, are we seeing other, um,

Yes. As yes expand. Yeah, we are. But

You know, not the Silver Bullet. I mean, look, we're, you know, the X-15 in is is

Uh, still a bit of a question. So

From Trucking.

I'd like a lot more, you know, and we we hope that'll be the case but you know, I think that's kind of

Where we're being a little cautious, but yes, you're seeing the increase.

Got, it makes sense. Um, and then I was wondering if you could uh, just provide an update on um, your RNG projects under construction.

Well, as we said on our, you know, kind of went over pretty fast, but you know, six projects are completed, right? And they're in kind of the debugging stage we talked about. And, uh, Betty, I don't know if you were on that part of the call, but you know, they're in the ramp-up phase and that's that commissioning. I've sort of said that feels like that could take.

6 months rather than it's not, it's not all done in 2 weeks. Okay. So those are in play. We have expectation, that they'll be sort of on a, a similar track to what we saw with Del Rio, which is done, uh, very well.

The next 2, big projects that we have under construction were really feeling good about, uh, South Fork, uh, Texas dairy, you know, that's a 100% owned by us and that's really gone.

I think very well, uh, to this point, right? It's kind of an on time and on budget, we're in the commissioning, say, we've actually loaded manure into those tanks, you know, there's, there's a lot more to be done there, but that, that that 1's coming along nicely. And then our final, our large project, a really big project in Idaho. We've had some substantial, you know, Milestone completions there. We completed, the 11 Mile pipeline. Um, we are, uh, we're testing and filling up and uh, some of the big digest. It's a very impressive project there and so that will soon go into more formal, uh, commissioning. And we expect both those projects to be kind of, on the beginning of, you know, production.

The latter part of this year. So we feel good about that and then we have, uh, 3, maass, uh, uh, projects at 6 at 6 dairies, let's call it. That was 6, dares that have really 3 projects. Those are all under construction and it just just beginning, you know? But those are all underway.

Perfect, thank you.

Thank you.

And at this time, we have no further questions in the queue. So, I'd like to turn the call back over to Andrew Littlefair for any additional or closing remarks.

Thank you. Thank you, operator. And thank you everyone for being joining us today and we look forward to filling you in uh, next quarter.

Have a good day.

Thank you, ladies and gentlemen. This concludes today's presentation and we appreciate your participation. You may disconnect at any time.