Edited transcript of the conference call or presentation on the CLNE result from November 12 to 7:30 p.m. (GMT)

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Q3 2019 Call for Clean Energy Fuels Corp.

SEAL BEACH January 3, 2020 (Thomson StreetEvents) – Edited transcript of the conference call or presentation on the outcome of Clean Energy Fuels Corp. Tuesday, November 12, 2019 at 1:30 p.m. GMT

TEXT version of Transcript

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Corporate participants

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* Andrew J. Littlefair

Clean Energy Fuels Corp. – Co-founder, president, CEO and director

* Robert M. Vreeland

Clean Energy Fuels Corp. – CFO

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Conference call participants

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* Aaron Michael Spychalla

Craig-Hallum Capital Group LLC, Research Department – Research Analyst

* Muhammed Kassim Ghulam

Raymond James & Associates, Inc., Research Department – Senior Research Associate

* Robert Duncan Brown

Lake Street Capital Markets, LLC, Research Department – Senior Research Analyst

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presentation

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operator [1]

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Best regards. Welcome to the conference call on the results of Clean Energy Fuels for the third quarter of 2019. (Operating Instructions) Please note that this conference is being recorded.

I am now handing the conference over to your host, Robert Vreeland, Chief Financial Officer. Please continue.

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Robert M. Vreeland, CFO of Clean Energy Fuels Corp. [2]

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Thank you, operator. Clean Energy released third quarter financial results through September 30, 2019 this morning. If you have not received the publication, you can also view it as a webcast on the company's website in the Investor Relations section at www.cleanenergyfuels.com. A repeat for 30 days is available on the website.

Before we begin, we would like to remind you that some of the information contained in the press release and this conference call contains forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Expressions that reflect optimism, satisfaction with current prospects, and words such as believe, intend, expect, plan, anticipate, and similar variations identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. search.

Such forward-looking statements are not a guarantee of performance and the company's actual results may differ materially from the results contained in such statements. Various factors that could, or could contribute to, such differences are described in detail in the Risk Factors section of Clean Energy’s Form 10-Q today. These forward-looking statements are only valid as of the date of this publication. The company is under no obligation to publicly update any forward-looking statements or to provide new information about the circumstances after the date of this release.

The company's non-GAAP earnings per share and adjusted EBITDA are reviewed at this request and exclude certain expenses that the management deems not to be an indicator of the operating results of the company's core business. Non-GAAP financial measures should be considered in addition to GAAP results and should not be considered a replacement for GAAP results or superior. 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 are included in the company's press release The SEC was submitted to the company on Form 8-K today.

I now hand over the call to our President and Chief Executive Officer Andrew Littlefair.

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Co-founder, president, CEO and director [3]

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Thank you so much, Bob. Good morning everyone and thank you for coming to us.

The introduction of natural gas as a clean fuel for transportation continued in the third quarter of this year. Our volume grew a remarkable 11% quarter on quarter to 102.7 million gallons. This is the first quarter in the company's history in which we have provided more than 100 million gallons of natural gas to our customers in the United States and Canada. In the core waste and transit markets, we saw growth and a very positive development in the truck sector due to the agreement to redeem renewable natural gas that we signed with UPS earlier this year.

Our financial operating performance continued to improve in the third quarter – we delivered more gallons at a lower cost. Revenue of $ 74.4 million decreased slightly compared to the prior year quarter, primarily due to lower revenue from our station construction business, which is very seasonal. Adjusted EBITDA for the third quarter was $ 8.5 million with just under $ 100 million in cash. We believe that our overall financial position is strong and continues to improve.

As mentioned earlier, much of our growth continues to be driven by demand for our renewable natural gas product Redeem. In addition to the UPS agreement to purchase 170 million gallons of redemption for their stations across the country over a seven-year period, we have added additional customers who seek the superior performance and environmental qualities of a renewable, non-fossil fuel at a competitive price ,

The city of Ontario, California signed a 5-year supply contract to redeem approximately 3 million gallons to achieve its sustainability goals. Ontario operates a fleet of 88 CNG vehicles, including the first powered asphalt patch truck. One of the country's largest street sweeping companies, Nationwide Environmental Services, based in Norwalk, California, signed a 5-year supply contract for approximately 1 million gallons for its 70 street sweepers. The cities of Redondo Beach and Sacramento, California also signed contracts to fuel their fleets with an estimated 1.2 million gallon redemption between the two.

We recently signed a 10-year contract to fuel the fleet of 50 GFL Environmental CNG garbage trucks in Denver. This number is expected to increase to 70 by the end of next year as the company continues to work for sustainability. Roane Transportation, a national freight forwarder, signed a 3-year 450,000-gallon redemption contract for the operation of 20 new CNG heavy-duty trucks. Omnitrans, which offers bus and rail connections in San Bernardino, California, signed a 5-year operating and maintenance contract for its two stations, which is now expected to redeem 4 million gallons per year.

We sold 110 million gallons of redemption in 2018 and expect the number to increase by about 30% in 2019. We achieved this through the agreement we signed with BP, one of the world's largest energy companies, at the end of last year. This co-marketing agreement with BP has allowed us to access BP's expanded network of RNG manufacturers as more fleets ask for the fuel that produces at least 70% less carbon than diesel. Clean Energy has the nation's largest natural gas supply infrastructure and, fortunately, has an important relationship with North America's largest RNG supplier.

I want to keep you up to date on the signing of truck fleets. I hope you heard in our press release a few weeks ago that over 100 new natural gas vehicles have been delivered to companies operating in the ports of Los Angeles and Long Beach. As we discussed in the past, ports are in the process of implementing a new clean air program that will remove the old, dirty diesel trucks that drive there.

Delivery of these new 100 trucks is important as these companies confirm that natural gas is the best alternative to meet the stricter emissions standards while ensuring the high performance they need.

Most companies participated in a pilot program late last year and earlier this year that tested the new Cummins Westport 12-liter engines with almost zero displacement. After a successful year of truck testing, they have now started adding new trucks to their fleets. I think that's a strong sign of the new 12-liter engine and of confidence in natural gas.

California policymakers continue to understand that natural gas is a good solution to address the government's ongoing emissions problems. Last week, the South Coast Air Quality Management District proposed a $ 0.005 sales tax bill to help finance clean, burning heavy-duty trucks. They found that most of the money should go to trucks with a near-zero face value if the bill was approved and that natural gas met this definition.

The AQMD recognizes that the results of more widespread use of natural gas vehicles on the road have a greater and more immediate impact on air quality and would reduce NOx emissions instead of waiting for other technologies such as electricity to commercialize.

We continue to be successful with our Zero Now program, which allows fleets to get into new natural gas trucks at the same price as diesel trucks and save fuel at the same time. We have just signed a contract with one of the largest freight forwarders in the country and I look forward to providing more details if I can in the near future. The company is currently ordering 200 new heavy-duty trucks with new 12-liter natural gas engines from Cummins Westport.

The 200 truck order is added to 20 more natural gas trucks that the company ordered earlier this year. These trucks are now being delivered and demonstrate their commitment to natural gas. In addition to this large single order, our Zero Now program recently showed other results. Ecology Auto Parts ordered 46 trucks to be fueled at our Irvine, California station. Trademark Transport, a transportation company operating from Long Beach Harbor, has now ordered 20 trucks through the Zero Now program. KeHE Distributors, a leading forwarder in the food industry, has just signed a Zero Now contract and is buying its first natural gas trucks to be fueled at our existing gas station in Fontana, California.

I also want to highlight something that I'm sure most of you saw last month. UPS's announcement that it will spend $ 450 million over the next few years on thousands of additional high-performance natural gas trucks and infrastructures is important in many ways. According to UPS, one of the world's largest and leading logistics companies, the use of CNG is "no longer in the test or experiment phase, but in the middle mainstream". This means that they are so satisfied with the performance and cost of operating their current large CNG fleet that they have decided to expand it significantly. They also pointed out that CNG's price stability versus diesel plays a big role in why they continue to buy CNG trucks.

The company said this large expansion of its CNG truck fleet can be used in the United States and Canada without any problems. And although the UPS announcement was not part of our Zero Now program, we will be providing a majority of the fuel. As I emphasized in the past, other alternatives in the heavy-duty truck market currently make up the lion's share of media attention, particularly electrical ones, but none could come close to the claims UPS made regarding its very large expansion of its offering CNG fleet.

Nowadays, natural gas is the only fuel that meets stricter emissions standards, helps to solve long-term problems of climate change with RNG, costs less than the current diesel and, above all, offers the demanding fleet operators the performance they are used to.

We believe that the natural gas dynamic in the heavy goods vehicle market is on the brink of rapid acceleration. We don't just see it in response to our Zero Now offer, but another example took place last week in Indianapolis, where Cummins hosted a natural gas engine technology forum. 200 people, representing over 50 fleets, informed themselves on the operation of a natural gas heavy-duty truck fleet. Cummins was so pleased with the participation and reception of this first event that they scheduled a similar meeting early next year, aimed at both the shipper community and public decision-makers.

The third quarter of this year was a good one with solid volume growth supported by all markets. We have continued to effectively manage our balance sheet by keeping our spending and investments at a level that allows us to continue to sell more and more fuel, but is also in line with our goal of achieving profitability on net income.

And with that, I transfer the call to Bob.

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Robert M. Vreeland, CFO of Clean Energy Fuels Corp. [4]

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Thanks Andrew. It was another good quarter with an improvement in our operating margins and net income compared to the previous year. This is due to continued volume growth due to lower spending, which has also allowed us to maintain a good cash position, and we remain on the path we have taken to achieve low double-digit volume growth for 2019 as a whole.

I will also point out that despite lower RIN prices, our results have improved throughout the third quarter. When I last viewed earnings, I found that RIN prices have dropped significantly since June, which did not have a significant impact on our second quarter results. However, without a significant recovery in RIN prices in the third quarter, our gross product margins were down about $ 2 million.

On the other hand, LCFS prices have remained at a higher level in 2019 so far, and we expect this to be the case for the foreseeable future. The higher LCFS prices also have a positive impact on our BP earn-out set at the end of the year. While we expect RIN prices to rise in due course, RIN prices are likely to remain low in the near future, which will roughly impact fourth quarter operating income.

What has helped offset the impact of lower RIN prices is our volume growth. Our volume growth of 11% in the third quarter compared to the previous year resulted mainly from CNG, while LNG volumes were slightly below the previous year's level. We continue to benefit from our growth in delivery delivery, particularly as part of our new UPS contract and the many other customers that are generating increasing demand for our renewable transport fuel, even in a market with low RIN prices. Redemption volume increased 32% to 37.4 million gallons in the third quarter from 28.3 million gallons in the previous year.

Our revenue of $ 74.4 million in the second quarter of 2019 included a non-cash gain of $ 1.1 million from our Zero Now hedge. Last year sales in the second quarter were $ 77.3 million. This included $ 9.4 million in station building revenue compared to $ 6.4 million in station building revenue in 2019, which was in line with our expectations.

Our volume-related sales, excluding the fuel hedging profit, were essentially at the previous year's level. The incremental revenue from our volume growth was offset by a lower effective price per gallon due to falling natural gas prices, falling RIN prices and changes in the fuel sales mix due to the different types of fuel sold in the regions where we sell fuel.

Our effective price per gallon in the third quarter of 2019 for all quantities shipped was $ 0.65 per gallon, compared to an effective price of $ 0.73 per gallon in the third quarter of 2018, which was nearly $ 8 million negative on sales of the Impacted last year. Year. But, as I've said in the past, to the extent that our sales are impacted by the impact of lower natural gas prices, we also see an advantage in lower raw material costs of the goods sold, and therefore we do not experience an equal effect on our margin per gallon from a decrease in our effective retail price per gallon.

Given our assessment that RIN prices will remain low in the short term, we see an effective fourth quarter price per gallon for all quantities shipped, in the range of $ 0.62 to $ 0.65 per gallon, provided there are no others significant price movements in the RIN and LCFS credits. Under these circumstances, fourth quarter 2019 total revenue, including construction sales, should be in the low to mid $ 70 million range.

Our gross profit margin totaled $ 24.5 million in the third quarter of 2019 and benefited from the non-cash Zero Now profit of $ 1.1 million. The gross margin in the third quarter of 2018 was $ 24.5 million. Our effective margin per gallon was $ 0.22 in the third quarter of 2019, compared to $ 0.26 in the previous year. The lower RIN prices were $ 0.02 per gallon, the difference in our margin per gallon compared to the previous year.

As I said, our volume growth is helping offset the impact of lower RIN prices, so our gross margin in US dollars remained constant year on year despite the lower RIN prices. Given our current expectations that RIN prices will remain low in the short term, we will end 2019 with an effective gross profit margin of around $ 0.24 per gallon for the full year, which is within our expected range.

Our SG&A expenses were $ 17.6 million in the third quarter of 2019, compared to $ 18.4 million in the previous year. We continue to tend to bottom out in our range of $ 73-79 million for the year.

Our net GAAP loss for the third quarter of 2019 was $ 4.3 million, compared to a net GAAP loss of $ 10.9 million a year ago. This improvement in our net income was mainly due to better operating margins and lower interest expenses.

Our interest expense decreased $ 2.4 million in the third quarter from a year ago, so interest expense has decreased to $ 7.7 million since the beginning of the year. Our adjusted net loss for the third quarter of 2019 was $ 5 million compared to an adjusted net loss of $ 9.2 million in 2018 and our adjusted EBITDA for the third quarter of 2019 was $ 8.5 million compared to 7.3 million USD in 2018.

We ended the quarter – the third quarter with $ 99 million in cash and investments and $ 83 million in debt. We continue to expect both investment and debt to grow in the short term to support our volume growth initiatives.

And with that, operator, we are now opening the call to questions.

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questions and answers

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operator [1]

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(Instruction manual) The first question comes from Eric Stine from Craig-Hallum.

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Aaron Michael Spychalla, Craig-Hallum Capital Group LLC, Research Department – Research Analyst [2]

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It's Aaron Spychalla for Eric. Maybe you gave us some good details first, Andrew, about testing and funding in the ports. Could you perhaps give us a little more details there and assess the opportunity for us in the next few years if we encounter critical mass there?

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Co-founder, president, CEO and director [3]

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Right. As I mentioned earlier, the port has between 12,000 and 15,000 trucks. And this clean air action plan is gradually being introduced. They go through the final stages of politics to decide how much the container fee will come into force next year. And they're doing these studies now. You have done some feasibility studies on natural gas and electricity. And as you can imagine, both natural gas and electricity have a certain qualification.

They are trying to determine and they are working – both ports are working with employees to find out how much the container fee is. This is a fee if you continue to operate a diesel truck instead of a natural gas or electric truck, which is charged for each container. And it can range anywhere from $ 30 to $ 35 per container, most trucks carry 2 containers. So it's $ 70 a train.

It is important to note that this – the fee is often – only selects Walmart on it. You don't want to pay this fee. They want – they assume that the trucker will take care of it. For example, when we first revised this clean air action plan 10 years ago, we saw that the older and at that time much older diesel fleet had been replaced.

The fee required that these truckers really had to get rid of the dirty diesel trucks and either have to add something – at that time natural gas or a newer diesel. And at that time, about 1,500 natural gas trucks – almost 10 or 11 years ago – came into the port, as did about 8,000 to 10,000 new diesel trucks.

We assume there will be a fee in this area. There is much controversy about this, depending on those who don't want a fee and those who don't want a high fee and would rather have a lower fee and make sure the port doesn't leave itself behind in terms of trade. But I – we expect this fee to be published in the second half of this year – that there will be more discussion about it and that it will be phased in next year.

I think you should expect the lion's share of the fleet in the port to switch to either natural gas or electricity over the next few years. And these are really the 2 options in front of them. And I don't know exactly how that works. I imagine that everything will come into force by summer 2021. I'm sorry, it will come into force by 2020, next year, by summer.

I can imagine a few thousand trucks changing in 2021 and a few more in the summer of 2022. So I think 10,000 to 12,000 trucks will change, and I'm optimistic that natural gas will allow one – since it's really the only game in town, in my opinion the only engines that are proven and economical will be the ones Lion share received. So we are very optimistic. As you know, we have gas stations there. I feel good that we have successfully tested 20 units earlier this year before these regulations came into force.

As I mentioned in my remarks, people are now assuming – now those who took the test are believed that it went so well that they start buying trucks. We saw about 300 trucks, or it could be a little bit more than used to finance more natural gas trucks. I like the fact that we will have a lot of experience in the second half of this year or early next year, 400, 500 trucks that are already running on natural gas. And I think that’s really good for the stage, since we’re starting to compete against electrics, or what do you have when the port starts to change.

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Aaron Michael Spychalla, Craig-Hallum Capital Group LLC, Research Department – Research Analyst [4]

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Good Good. We stay tuned. Second, if we see more clean fuel programs and LCFS programs outside of California, can you talk about the prospects of extending redemption to other markets?

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Co-founder, president, CEO and director [5]

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Well, we are in other markets. And I would look at Bob here if he knows it from above. I'm a bit – I think I'm right. I think we're actually in 20 states right now.

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Robert M. Vreeland, CFO of Clean Energy Fuels Corp. [6]

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Yes.

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Co-founder, president, CEO and director [7]

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And that's how we moved it. Now look, we're still a little bit limited on supplies. There is a lot of replenishment. Now, this drop in RIN price hasn't helped some of the new projects we've seen, but I think industry thought that around the country was doing about $ 2 billion in renewable gas projects That was a kind of preparation for the start.

This pricing for the RIN, which has dropped from $ 1.50 to $ 0.70, has resulted in some of them being put on hold. We think that these RIN prices, which have had a little impact on us, I don't mean devastating, but they have had an impact, like the RVO, that the standard quantity commitments for renewable fuels will be and will eventually be fixed Adjustments made.

We expect RIN prices to rise again. And many of these projects will start from a yellow light. But there are many projects across the country. And so there is even more supply and above all there is this – we are starting to see the first one – there is a lot of talk about dairy farms. Everyone is talking about renewable natural gas from dairy farms. And that's really important because it's so powerful, it's so clean, it's so low in carbon. Today we have 70% less carbon, my goodness, if you use milk fuel – dairy fuel, my goodness, it's like 200%, 250% less.

So it's very powerful. We only see how these dairy projects go online and it will really be the future. And it's very exciting because it really makes our fuel very clean. I mean dramatically cleaner than electric. And if you combine this with the low NOx emissions of the 12-liter engine, which contains 90% less NOx, and then with milk fuel or a renewable fuel that is not fossil, then it is strong. And – so we see a lot of it. Finally, a few billion gallons of RNG will be launched. Und dann werden die 20 Staaten wachsen. Ich meine, wir verlagern RNG bereits in die Republik und viele andere Teile des Landes – von Republic Industries, dem zweitgrößten Abfallunternehmen in den USA, in viele Staaten.

Wir denken, es ist die Zukunft, wir sind gut positioniert. Es gibt Erdgas einen Schritt nach oben, weil es zu einem erneuerbaren Kraftstoff wird und Sie es mischen oder alles zusammen verwenden können. Sie wissen, alle unsere Stationen in Kalifornien verwenden erneuerbares Erdgas.

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Operator [8]

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Die nächste Frage kommt von Rob Brown von Lake Street Capital Markets.

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Robert Duncan Brown, Lake Street Capital Markets, LLC, Forschungsabteilung – Senior Research Analyst [9]

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Können Sie uns an Ihrer Einlöserampe mit UPS noch einmal daran erinnern, wo sich das befindet? Wie weit ist es noch?

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Mitbegründer, Präsident, CEO und Direktor [10]

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Nun, es fing ziemlich stark an. Und ich denke, wir haben in diesem Jahr ungefähr 18 Millionen Gallonen, aber dann zieht es von dort an, stimmt's?

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Robert M. Vreeland, CFO von Clean Energy Fuels Corp. [11]

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Yes Yes Yes. Also war es – wir haben angefangen – ja, die Rampe in diesem Viertel war fast voll.

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Mitbegründer, Präsident, CEO und Direktor [12]

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Ja ja.

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Robert M. Vreeland, CFO von Clean Energy Fuels Corp. [13]

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Auf diesem. Also haben wir sozusagen im April angefangen. Und so sind wir in diesem dritten Quartal ein bisschen voll da, ein bisschen Ebbe und Flut, aber ehrlich gesagt, es fließt.

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Robert Duncan Brown, Lake Street Capital Markets, LLC, Forschungsabteilung – Senior Research Analyst [14]

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OK großartig. Ausgezeichnet. Und dann haben Sie im Zero Now-Programm eine Reihe von Lastwagen aufgelistet, von denen ich glaube, dass über 300 bestellt werden. Was ist das Neueste daran, diese Aufträge in Kraft zu setzen und in das Jahr 2020 zu starten?

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Mitbegründer, Präsident, CEO und Direktor [15]

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Nun, diese Befehle – ich meine, du weißt, es sei denn, hier passiert etwas, diese Befehle gehen gerade ein. Also, ich denke, Sie können die auf die Bank legen, Rob. Wir sehen also einen Aufschwung. Das sind also – außerdem sind diese neu, da wir darüber gesprochen haben, und wir haben diese nicht angekündigt, wir werden mehr Farbe geben. Einige unserer Flotten möchten nicht, dass wir diese Dinge ankündigen, bis sie gut und bereit sind. Und ich verstehe es, sie sehen es als Wettbewerbsvorteil.

Aber wir fangen an, Abholung zu sehen. Ich würde sagen, dass Sie wissen, worauf es ankommt, wie ich das sehe. Dies – das ganze Zero Now hat etwas länger gedauert, als ich es mir gewünscht hätte. Es gab ein bisschen mehr Bildung. When we kind of rolled back a couple of years ago when we had the decline in oil price, people stopped looking at natural gas for a little while because the economics got a little bit more challenging.

We had to then come back and make sure they understood now this new engine. This new engine has performed really well. It's lower NOx, and we had some work to do make sure everybody understood that it was the second generation engine and that it had a increased testing and that it was very reliable. And we feel good about that.

Rob, what I think is important for people on the call to understand is, we kind of went from a period of getting people to try 5 trucks. Now this 200 truck order, that's a big order. And as I mentioned in my remarks, the UPS announcement didn't participate in our financing of the Zero Now, but we are, of course, selling them an awful lot of their fuel.

Look, that's significant. I don't know that we know the exact number of heavy-duty versus some of the package delivery in that press release that they made. But I'm thinking it's very close to something over the next few years of 5,000 trucks.

I mean — so what we saw in the refuse sector is this very phenomenon, where we go from a testing cycle to a something that's more like a normal purchase cycle. And then you begin to get into a period like we have now with Waste Management, where 90% of their annual purchases are natural gas. And I don't know exactly where we'll be because I'm not an expert on that and it's not for me to know exactly, but UPS is approaching somewhere in their kind of more normal purchase cycles year-over-year buying natural gas.

And so we've left the test phase, and it's, as they said, is more the mainstream now. And this announcement that I made this morning of the 200, that fleet buys more than 200, but that's a large purchase. You're looking at 200x $150,000 right, on those trucks. So it's a large purchase for them. And that, I take is a very good sign, as we're seeing 20s and 46 and this 200. We're beginning to — fleets are beginning to gain confidence. And that's new with this new engine here this year. And I think the Zero Now is helping that, by the way.

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Robert Duncan Brown, Lake Street Capital Markets, LLC, Research Division – Senior Research Analyst [16]

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Okay. Okay. Great, great. And then how do you see volume growth shaping up into 2020? I think you said double digits this year. How is next year kind of looking?

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Co-Founder, President, CEO & Director [17]

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Well, I'm not going to say that right now, Rob, but I would like to think that the benefit that we're seeing now from Zero Now would grow in 2020. I mean we would like to think that this market is off and running. And so I would hope that we're going to see an improvement next year on the trucking side.

I mean a lot of our business is growing well, right? Our refuse and our transit, but there's sort of limitations in that business, but it has been growing at about double digits. Trucking has an ability, if we get the acceptance and the adoption like we would hope, and we think we're seeing, it can come up way above that and get into more significant volume growth. And that's what we're hoping for. And we — at some point in the next quarter or so, we'll give some — a little bit more color about what we see. I would think, though, it should be stronger, unless something happens to the economy or something else, it should be stronger than it is this year.

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Operator [18]

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The next question is from Pavel Molchanov of Raymond James.

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Muhammed Kassim Ghulam, Raymond James & Associates, Inc., Research Division – Senior Research Associate [19]

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This is Muhammed Ghulam on behalf of Pavel Molchanov.

So let me start by asking a thematic question about Canada. Now that Trudeau has been reelected, we know that the carbon tax is going to remain in place. I'm curious, in that context, do you guys see any upside for demand from the Canadian market?

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Co-Founder, President, CEO & Director [20]

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We do. We finished a few stations up there on that important corridor that one of those stations outside of Ontario is loading now. They have a couple of programs that are beginning to be put in place that are grant programs that I think could move to some — move significant volume. And so we feel good about Canada. Canada took an early lead in the natural gas vehicle program years ago, and then it kind of went into about a 10-year sort of hiatus, and it's back, and we've added some stations along that corridor. And so yes, we're feeling pretty good about what's going on in Canada.

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Muhammed Kassim Ghulam, Raymond James & Associates, Inc., Research Division – Senior Research Associate [21]

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Okay. A similar question about Oregon and their low carbon fuel standard. Obviously, a much newer program than California. I'm curious, do you see any demand based on that?

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Co-Founder, President, CEO & Director [22]

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It's starting, and it's smaller. We are selling some fuel up there. I don't know off the top of my head exactly what percentage of it is, but it's small. I think Washington is coming on board as well. So there's been talk about this in New York State. I don't know exactly where that stands right now.

We're a little limited on some RNG supply right now. And a lot of it wants to find its way to California because of the advantageous low carbon fuel standard. The low carbon fuel standard's worked, and it's created a lot of supply that's moving to — right now to California, but I think these other states, as you mentioned, Oregon and others will — the state is not as big. And the fleets aren't — there's not as much up there. But that — it has a way of stimulating the growth of RNG, no doubt.

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Operator [23]

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We have reached the end of the question-and-answer session, and I will now turn the call back over to Mr. Littlefair, President and Chief Executive Officer, for closing remarks.

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Andrew J. Littlefair, Clean Energy Fuels Corp. – Co-Founder, President, CEO & Director [24]

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Thank you, operator. Well, we want to thank everyone for listening in the call this morning and look forward to updating you on our progress next quarter. Have a good day.

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Operator [25]

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This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.