Clean Energy Fuels (CLNE)

Q2 2012 Earnings Call

August 6, 2012 04:30 PM ET


Tony Kritzer - Director, IR

Andrew Littlefair - President & CEO

Rich Wheeler - CFO


Rob Brown - Lake Street

Steve Dyer - Craig Hallum

Graham Madison - Lazard Capital

Brian Gamble - Simmons & Company

Shawn Severson - JMP

Matthew Blair - Macquarie

Pavel Molchanov - Raymond James



Greetings and welcome to the Clean Energy Fuels Second Quarter 2012 Earnings Conference Call. (Operator Instructions). It is now my pleasure to introduce your host Mr. Tony Kritzer, Director of Investor Relations. Thank you Mr. Kritzer. You may begin.

Tony Kritzer

Thank you operator. Earlier this afternoon, Clean Energy released financial results for the second quarter and the June 30, 2012. If you did not receive the release it was available on the investor relation section of the company’s website at where the call also been webcast. There will be replay available on the website for 30 days. Before we begin, we would like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict.

Words of expression reflecting optimism, satisfaction and current prospects as well as words such as believe, intend, expect, plan, anticipate and similar variations identified forward-looking statements but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are non-guarantee of performance and the company, the actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described with detail and the risk factors section of Clean Energy Form 10Q filed today. These forward-looking statements speak only as of the date of this release and the company undertakes no obligation to publically update any forward-looking statements or supply new information regarding the circumstances as to 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 measure should be considered in addition to result prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results.

The directly comparable GAAP information this is 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 10Q today.

Participating on today’s call from the company is President and Chief Executive Officer, Andrew Littlefair and Chief Financial Officer, Rick Wheeler and with that I will turn the call over to Andrew.

Andrew Littlefair

Thanks Tony and good afternoon everyone and thank you for joining us. Today we reported revenue of $69.8 million for the second quarter compared to $69.1 million for the second quarter a year ago. Please note that the second quarter of 2011 included $4.7 million VTEC revenues that is not in the 2012 amount.

In addition, revenues from our vehicle conversion business, BAF were little softer than we projected largely due to the exploration of the vehicle incentive credit. We delivered 48.6 million gallons up 24% from 39.2 million in the second quarter of 2011 which I am pleased with.

During the second quarter, we remained focused in executing the roll-out of our Americas natural gas high-way stations in growing our traditional core market segments which I will highlight in a moment. Those of you who have been following Clear Energy in the natural gas vehicle sector as a whole, know that one of our major focus is building the infrastructure that will enable natural gas become a viable transportation fuel for Americas long haul and regional truck market.

As we were solving the station infrastructure issue, we are also working closely with several engine manufacturers to deliver the desired engines for the heavy duty truck market which are really the 12 and 13 liter engine.

The 11.9 liter Cummins Westport engine is expected to become available in the first quarter of next year and the 13 liter Navistar and Volvo engines are expected to follow in late 2013 and early 2014.

Once these engines are widely available and initial phase of the highway is complete we believe the heavy duty Class 8 truck market will begin to make the situation. This adoption should be similar to what we have seen in the refuse market over the last five years, once that market had the right end. In 2008, when the 8.9 liter Cummins Westport engine first became available, the adopted rate of natural gas engines in the refuse market went from 3% that year to close to 50% of new purchases this year.

As aside we see that the adoption rate continually increase because of the enormous fuel savings refuse top rates we were experiencing compared to these. Today we have completed construction of 22 of our highway stations and an additional 24 are under construction and 32 more are in various stages of entitlement, design and permit. We are still targeting to complete construction of about 70 natural gas truck stop stations by year end and many of the station completions will occur at the very end of the year. The opening of these stations coincides nicely with the market availability of the 12 and 13 liter truck engines which I mentioned earlier. Most of the stations are located at truck stops with our partner Pilot Flying J. As we anticipated, the competitive landscape of the natural gas vehicle fueling market has begun to evolve. We believe the emergence of others in this space is a positive validation of our efforts.

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