Clean Energy Fuels Corp. Price & Performance (CLNE)

Earlier this afternoon, Clean Energy released financial results for the fourth quarter and year ending December 31, 2024 If you did not receive the release, it is available on the InvestorRelationssectionofthecompany'sWeb@www.cleanenergyfuels.com Clean. Where the call is also being webcast. There will be a replay available on the website for thirty days. We begin, we'd like to remind you that some of the information contained in the news release and 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 section of the Clean Energy's Form 10 ks that we are filing today. 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 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 [indiscernible] to GAAP results. The directly comparable GAAP information, reasons why management uses non GAAP information the 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 eight ks today. 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 closed the fourth quarter and the year with strong results. In the fourth quarter, we sold 62,000,000 gallons of renewable natural gas a 9% increase from a year ago. And generated $109,000,000 in revenue and $24,000,000 of adjusted EBITDA. For the full year 2024, we sold two thirty seven million gallons of RNG an increase of almost 5% over 2023. And reported $77,000,000 of adjusted EBITDA. 2024 marked a decade since the first full year of RNG sales after Clean Energy first introduced RNG as a transportation fuel when we sold 20,000,000 gallons 2014. We, the entire RNG industry, have come a long way in the commercialization of clean, affordable and readily available fuel for the large vehicle market.

Amidst the volatile political and regulatory backdrop, our business has continued to perform well. This performance is anchored by our consistent recurring revenue fuel distribution business. For our network of over 600 stations, we supply reliable affordable, clean fuel or services to our customers. Our downstream RNG fueling business performed very well in 2024 bringing in almost $89,000,000 of EBITDA. And this was before one truck equipped with the new X-fifteen hit the road. I would note that the new administration's focus on a domestically produced and diversified energy supply RNG checks all the boxes by being a biofuel made from capturing harmful waste emissions and converting them into productive transportation fuel. And RNG just makes common sense, which is what the administration is looking for as they move forward with all their policy initiatives. Rural areas are benefiting from the investment of hundreds of millions of dollars in new RNG projects at dairy farms and landfills across the country. And all of us are benefiting from cleaner air and fewer emissions coming from buses, shuttles and trucks operating in RNG. On our last call, I told you about our customer the large transit agency in Long Island. New York, nice bus.

And how we converted their existing fleet of buses from traditional compressed natural gas or CNG to RNG, allowing them to benefit from a significant reduction in the greenhouse gas emissions. That trend of our transit agency customers converting to a lower emissions fuel continued over the last quarter. City buses in Fort Worth El Paso and Laredo, Texas and Grand Rapids, Michigan, which previously operated on CNG are now operating on RNG. Experience and deep customer relationships are important in this business. Operators of large fleets that move passengers or goods must have confidence in their fueling capability for those buses and trucks. And they want to be able to operate with the lowest emissions fuel that makes economic sense. Clean energy prides itself on the support we provide customer whether it's converting them to lower emission fuels when they want to test a different fuel like hydrogen. We have now won contracts to build hydrogen stations for three different transit agencies that have decided to test fuel cell bus We're seeing this type of confidence in us in the heavy duty trucking space. As you've heard me say before, adoption of our RNG by heavy duty trucking sector using the Cummins X-fifteen engine is our most exciting growth opportunity.

You might have heard Cummins CEO, Jennifer Rumsey make a bullish statement about the X-fifteen X15N on their recent earnings call. But I want to remind you that the early adoption of the X15N in 2025 will be with a lot of singles versus home runs. Right out of the gate. Those coming to bat with some of the first orders of trucks equipped with the new engine are a combination of existing natural gas truck operators, as well as new fleets to natural gas fueling. Some of these are leading names in the business. Continue to hear positive feedback from the Clean that have been testing the X-fifteen. And now some are beginning to purchase them. For example, our longtime customer Food Express, which tested a truck last year equipped with a beta engine, has now begun to order trucks equipped with the full production X-15N. The world's largest construction materials company, CEMEX, has placed an order for trucks equipped with the X-15N that will initially fuel in our existing Southern California network before their designated station is built. Mullen one of Canada's largest trucking companies has begun to deploy their first truck with the X-fifteen. [indiscernible] will soon be receiving trucks with the X-15N that will fuel at a station in Oklahoma City operated by Clean Energy since we build it almost ten years ago.

Many carriers have expressed a desire to move forward with ordering trucks with the X-15N once Freightliner rolls out their offering later this year. The wider the breadth of the adoption of the X-15N, the better for the market. And certainly, we have the fueling infrastructure to accommodate many truck operations across The U. S. And Canada. In recent years, as trucking companies and their shipper customers have evaluated cleaner alternatives to diesel, their decision making process has been impacted by Policy volatility and uncertainty. The previous administration's myopic focus on battery electric vehicles forced fleets to consider a technology That is not ready for most heavy duty trucking applications. In most cases, fleets found insurmountable challenges with battery electric and its infrastructure. And continue to operate on diesel. And to make matters worse, California pushed its advanced clean trucks and advanced clean fleet rules that mandated the manufacturing and purchasing of zero emission vehicles, The result confusion, uncertainty and inaction. As of last summer, heavy duty truck sales in California were down 50% compared to 2023. This means older, higher emission trucks staying on the road longer. That is not progress. And recently, California reversed its advanced clean fleet mandate.

But there still needs to be some more clarifying steps [indiscernible] Carriers and shippers alike have goals to continue to reduce emissions no matter what administration is in place and that has not and will not change. The examples of fleets that are moving forward with an RNG solution I just mentioned are signs that low emission objectives can be balanced with the practical realities of commerce, and available technology. We are optimistic that the federal state policies going forward will support more of a technology neutral path to lower transportation sector emissions. RNG is very well positioned to provide this common sense solution to fleets. And with the right engine and an ultra clean fuel available at a nationwide infrastructure, we believe that all the pieces have finally fallen into place for significant adoption. The alternative fuel tax credit has been an important for the natural gas transportation sector since the credit began in '20 It has helped support adoption of cleaner natural gas vehicles and fueling Credit expired at the end of last year However, it has been retroactively approved several times in the past. We along with our industry partners will continue to push for this important credit.

It offers key support to our customers and industry. I will touch on this more later, but we did not include AFTC revenue in our 2025 outlook because it is currently not In effect, Turning to our upstream dairy RNG production projects, we have six projects operating that are well underway in construction and four that began construction at the end of twenty twenty four as part of our development arrangement with our partner MOS Energy. Our six operating projects are expected to produce 4,000,000 to 6,000,000 gallons of RNG in 2025. Two projects further along at construction are expected to be in service by the end of this year and could contribute an additional additional RNG production in 2025 depending on the timing of completion. Four projects with Moss Energy more likely will come online in 2026. As you know, the Section 45 Z Clean Fuel Production Credit established under the Inflation Reduction Act is still pending finalization. It is designed to incent the production of transportation fuels with low lifecycle emissions. Aerium g has a deeply negative life cycle emission score because of the methane emissions that it captures This credit will play a role in supporting continued growth of low carbon fuels production.

We in the RNG industry have already been active in educating the new domestically produced RNG has as they move forward to finalize and even improve this credit. And like the AFTC, we have not included 45Z in our 2025 outlook because the rules have not yet been finalized. Bob will go into more detail on the financials soon, but I would like to comment on our 2025 outlook. First off, you'll notice on our GAAP outlook, our potential exit from 55 Pilot Flying J locations where we lease space from Pilot, which almost exclusively houses LNG fueling equipment. When we signed this deal fifteen years ago, LNG was the best solution for long haul natural gas trucking. Since then, CNG tanks and range have improved substantially And now there really isn't a market for LNG trucks. We will likely remove this equipment and save some money on leases and operations, although we will take a non cash hit. We'll probably spend some money to remove the equipment. Importantly, we have a good relationship with Pilot and we plan to continue that relationship. I also want to make note of our 2025 adjusted EBITDA outlook of $50,000,000 to $55,000,000 compared to our 2024 adjusted EBITDA of $77,000,000 and remind everyone of the of why there is a decrease for 2025.

Our 2025 outlook does not include AFTC which contributed nearly $24,000,000 to our results last year. As well RIN prices are currently 30% lower than some of the higher values we saw in 2024. Those two factors account for a reduction of approximately $34,000,000 year over year to our adjusted EBITDA. And we will see, AFTC may well be extended in one of the tax bills that will be moving through Congress later this year. So I hope we are being a tad conservative not adding in AFTC and the 45Z as well as planning for lower RIN pricing. And modest growth in this calendar year coming from the X15N adoption. But I do want to strongly remind you that as we begin 2025, we have a strong balance sheet And as I have just gave you a few example, examples earlier in my remarks, we have a robust recurring business positioning us in both fuel distribution and RNG production. And with that, I'll turn the call over to Bob. Thank you, Andrew, and good afternoon to everyone. For the fourth quarter of twenty twenty four, we reported a GAAP net loss of $29,800,000 on revenues of $109,300,000 On an adjusted non GAAP basis, we reported net income of $3,600,000 for the fourth quarter of twenty twenty four.

For the year 2024, we reported a GAAP net loss of $83,100,000 which is at the low end GAAP guidance range for 2024 of $81,000,000 and this is despite having a non cash write down of a couple equity security investments for $8,000,000 in the fourth quarter of twenty twenty four. Also keep in mind that the 2024 results are non cash stock based Amazon warrant charges were approximately $61,000,000 of that $83,000,000 loss. Our adjusted EBITDA of $76,600,000 for the year 2024 exceeded the top end of our 2024 guidance range of $72,000,000 which was a nice upside finish to the year. In the fourth quarter, we continued to experience strong results from our fueling operations plus we saw an increase in fuel volumes in the fourth quarter so we got the double effect of continued good margins on higher volume. The results of our RNG Upstream business for 2024 came in as expected right in the middle of our guidance range from a GAAP and a non GAAP EBITDA standpoint. From a cash standpoint, we finished 2024 with $217,000,000 in unrestricted cash and investments, with $100,000,000 available to draw on our debt facility plus there's $129,000,000 of cash off balance sheet in our RNG JVs with BP and Moss Energy.

And our long term debt was $3.00 $3,000,000 at the end of twenty twenty four. Our capital expenditures for 2024 were $57,000,000 that's net of grant money received and net of contributions that we received from our joint development partner Tourmaline for the build out of CNG stations in Western Canada. In 2025, we expect CapEx spend to be about $30,000,000 reflecting mainly the completion of Capital expenditures for RNG Upstream projects that we own plus contributions that we made into RNG joint ventures was approximately $48,000,000 for 2024 This is a little shy of previous estimates purely due to the timing of when the projects needed funding. In 2025, we estimate RNG F upstream capital expenditures to be $104,000,000 We present our 2025 earnings outlook in our press release that was filed on Form eight ks today, so you can see the GAAP guidance and the non GAAP adjusted EBITDA guidance were the reconciliation between the two amounts. We also break our guidance down further That RNG upstream business includes both our share of equity method investments in RNG production and clean energy owned RNG production projects. I'd like to make some important points [indiscernible] number one and to repeat ourselves, our twenty twenty five guidance does not include the alternative fuel tax credit, which in 2024 was approximately $24,000,000 of AFTC revenue Both GAAP and non GAAP included the $24,000,000 of alternative fuel tax credit revenue in 2024 So to be comparative, excluding the AFTC from 2024 would take the GAAP loss to $107,000,000 and adjusted EBITDA to $53,000,000 as starting points when comparing to our outlook for 2025, And then second, Andrew alluded to this that we're seeing about a 20% decline in in average rent prices for 2025 that results in approximate $10,000,000 reduction in RIN revenue for 2025 versus 2024, RIN price volatility, of course, is certainly part of our environment.

And we do quite well on RIN revenues, but just wanted to point out this dynamic for 2025. We are estimating RINs in the $2.4 range for 2025 versus the average that we saw in 2024 of around $3.1 For the California LCFS, we see a little upside we hope, when we look at 2025 where we are estimating California prices in the low $70 for 2025 versus in 2024 where we saw an average of around $61 This could be a $2,000,000 upside in LCFS revenue over 2024. Important to understand that we are not anticipating significant incremental volumes from the launch of the X15 N Cummins engine for 2025 Most important milestones to observe will be the initial adopt of fleets indicating the adoption is taking hold which should have significant implications down the road. For 2025, we are anticipating three to 5,000,000 fuel gallons being attributed to the X-15N. Importantly, we see this coming from over 25 fleets This is a key indicator toward the future and we believe is very exciting and frankly something that was non existent up until this year. RNG volumes are projected to be around two forty six million gallons versus twenty twenty four of two thirty seven million gallons And like we talked about last year, in our estimate for the 2025, the two forty six We do not include an estimate for RNG gallons that we will fuel to customers outside our network.

And on occasion, that does happen. In 2024, for example, we had about 9,000,000 gallons of what I'll call kind of wholesale RNG gallons, but we're not budgeting that in 2025. So from a comparability standpoint, excluding the 9,000,000 gallons from 2024, that would bring the growth rate for 2025 closer to 7.5%. And we may get some of those gallons and we'll serve the market well that way because we're a big mover of RNG. We just We don't forecast it. So it can look not comparable sometimes. And then as we mentioned previously on our RNG up stream expectations for 2025, Our volume expectations is that we would produce $4,000,000 to 6,000,000 gallons in 2025. That's the gross gallons being produced at principally the six operating projects And as a reminder, we take all of those gallons into our fueling network. We're not estimating any revenues from at our dairy projects for the production DAC credit as Andrew indicated. And we will see how that how the guidance or the rules come down on that and as to whether we get to put any in in 2025. And then lastly on the RNG Upstream, approximately 50% of the earnings and our guidance outlook for the upstream.

Is coming from our large dairy in Idaho where we are providing operating services while we construct that's a little bit of a drag on the GAAP and adjusted EBITDA amounts. Now that project is expected to come online at the end of twenty twenty five, and then we will begin the monetization process in 2026. And of course expect curtail and exceed those operating costs that were experiencing to date and in '25. Our consolidated revenues we're looking at to be around $400,000,000 for 2025, our revenues, of course, are also impacted by not having any alternative fuel tax credit in the 2025 guidance and also somewhat on the kind of net lower environmental credit revenue that has an impact on those on that revenue. So we're expecting around $400,000,000 for 2025 And then lastly, you will note a large larger depreciation expense that's S possible exit from the pilot stations that Andrew mentioned. And the accelerated depreciation that would occur for the sites that we exit. And with that operator, let's turn the call over to questions.

And we'll move first to [indiscernible] UBS your line is open. Hi. How are you guys looking at the clarifications under 45 Z, how much credit if you think you'll be eligible for and how are you considering the OAL pause?

The OAL piece from [indiscernible] [indiscernible] Yes. Yes. So for those that don't know on the call, so we just we spent the last eighteen months everybody did working on the new rules for CARB and then the office of I guess, it's administration legal or some at a legal office called into question sort of the process. We tend to think that's really technical. We've been working, we've been talking to leadership in Sacramento and at CARB and other off And we feel like this is really a technical thing that everybody seems to be acknowledging that they want to try to get resolve your quickly. So we tend to think that in the next few weeks or so that that will get resolved. It always moves a little slower than I think, but we are [indiscernible] ensured that there was nothing nefarious, This is really highly technical in nature. And so let's hope that they get that set. And so therefore, we believe that the pricing will come back and we'll be back into the 70s, lower 70s like we've seen right after the OAL came out. A couple of days ago, stock the credit touched 55 and it's come back down that we'll be back in the 70s.

And then we think that the remainder of this year will work off those credits and we'll see a higher price and wouldn't surprise me that we'll touch something closer to 80 towards the the latter part of the year. And the first part of the question was on the was on the PTC. And just where kind of what value we're Well, right now, I Clean, the Biden administration rushed that out at very end. And frankly, just let's just be real candid about it. They picked a brand new Greek model that didn't fully appreciate the methane capture, like we do with the Greek model that's used by carb and they kind of used a methane, a manure, more like a [indiscernible] which we don't use in the RG business. And so it really limits the value of the credit because we don't get as low carbon as we should. So So right now that would range between $1 and $2 with our projects probably closer to $1 We tend to believe that if that was done correctly that it should be higher than that, something closer to $3 or $4 fine Based on the carbon intensity, the negative nature of our carbon intensity.

So we'll see how that shakes out. But that's one of these things that new administration is trying to get their their footing on just how do they feel about certain biofuels and certain mandates and certain credits and we generally feel that the administration wants to be constructive for these kind of programs that encourage fuel from the farm states and that are renewable in nature and that that are from these kinds of programs. And we'll see how that goes.

Thank you. And you see any volumes in the transportation sector maybe going towards power generation data centers or Clean you start again at the top? I'm having a hard time I said, do you guys see any volumes for the trans [indiscernible] for data centers? Or how are you guys looking at the data center side of things?

You're talking about on RNG now. Right? So [indiscernible] transportation still accounts for somewhere between 7580% of the R and D And I have wondered if Some of these big power uses for data centers might not be really elegantly satisfied with R and but it's at a significantly lower price. So we'll see how much of it gets siphoned off [indiscernible] But I'm sure some will over time because when you start talking about nuclear plants and other kinds of production facilities that are required bringing in a low carbon fuel like RNG just might be a really elegant answer. So we'll see how that goes. But there really isn't a better use than transportation for RNG. I Clean, transportation is a hard to decarbonize sector You can't use wind, you can't use solar. We've seen the situation around batteries. And so RNG into heavy duty diesel transportation is really a very good use for RNG. And therefore, that's why you're rewarded handsomely for it. It.

Got it. Thank you.

We'll move next to Eric Stein with Craig Hallum. Your line is open. [indiscernible] Hi. Hey. So maybe just starting with volumes, I'm wondering if for fourth quarter, if you can just talk about from a high level volume growth in your key sectors? And then also for 2025, where you're kind of thinking about from a volume perspective? I know that that's tempered a bit just because of the 15 liter and that coming on later in the year. Yes, Eric. For the fourth quarter, it was in our fueling area and so sector you're going to be kind of mainly in the fleet category. As well as some of the RNG that we flow to our transit [indiscernible] That's what was driving some of that growth. And And then for '25 For '25, we see [indiscernible] growth kind of throughout. I would say the as normal then kind of the adder from the X-fifteen N, it's it's not a lot, but it's all incremental. So So it is meaningful, but We're seeing for the most part growth throughout maybe the refuse is a little bit A little bit muted, but that's a very mature market. Yes, understood. And then maybe just sticking on the volume topic, it sounds like what you are if not done very close to being done with this at least initial Amazon station build out.

Curious what you're seeing from non Amazon fleets that still utilize those stations, what What type of growth have you been able to kind of separate that out and track how that's [indiscernible] We're seeing some, let's again look, I think it's important to note at this point in the call, Eric, and you know this you follow it closely. You're really coming off of 2024, which was a difficult year in terms of sort of the chill that was felt Maybe it's the economy in general, maybe it was the political season that we were in. It certainly in the heavy duty truck space and in some of what we see is the policy environment got really [indiscernible] I Clean, as I mentioned in my remarks, I mean, can you imagine in California, one of the biggest markets for truck sales, down 50%. So you know The policies that were being talked about that were reported in the paper and all, it was suggesting that you had to buy an electric truck. And if you didn't have to buy one right this second, You sure needed to consider it in a year or two years or three years. And so it really had a dampening effect [indiscernible] movement toward natural gas or RNG, Well, why do you want to buy a brand new tractor on RNG if two or three years from now, you're really not in California is supposed to be able to use it.

So it we're coming off and thank God we're I think that sort of common sense maybe is prevailing in some of this. Some of these rules just weren't they were well intended perhaps, but they're just not well thought out. And so we're seeing carve trying to get their arms around how do they reset These rules to achieve air quality, achieve climate discipline, but yet within the realms of economics, and something that works with commercial. And so I really think that as you go through this kind of difficult last half, it's a 24 and into 25, RNG natural gas heavy duty trucking, we're rising to the to the top, right? I don't have to convince anyone that hydrogen fuel cell trucks that's not going to happen. And the electric is I think it's clear that it's if it ever happens, it's weighed out So we're going to be one of the last fuel standing here And thank goodness we've arrived with a new engine product. The X-fifteen. Now in talking with the gentleman in charge of sales for Cummins, he really wants see 2025 not get ahead of ourselves, but see breadth over a 1,000 truck order by a big fleet.

He wants to see dozens of fleets take twenty and ten and 35. So that's how we really build to significant [indiscernible] And as I mentioned in my remarks, I Clean, I had to be impressed with the CEO of Cummins talking about the percentage penetration in the future. Now you're talking. So it's really 25% we begin to build the base and we'll begin to see volume toward the exit exit period of 2025. 2025 and then I think you really start seeing significant volume in 2026 and 2027. So in particular, we're seeing some pickups at different customers at some of the purpose built stations for Amazon, I'm forgetting the name of the Clean, Eric, just 12 units showed up the other day in Ohio. So that was a really nice adder for us, significant it And if you didn't have those locations in San Bernardino, seeing a nice mix of new volume showing up there in California. So we're being the it. Those are beautiful stations that have Clean access public fleets and they're well positioned So in the future, they'll grow, continue. To grow. Okay. Thank you.

We'll take our next question from Rob Brown with Lake Street Capital Markets. Your line is open.

Hi, good afternoon. Rob. On the 15 liter rollout, how do you see that population using your existing fleet footprint or sorry, station footprint Is that going to be using what you've got out there? Or do you see a a big growth in new stations? How do you sort of see that happening?

I really do, Rob.

I think it's a really good question. I really do believe that certainly when you're talking about kind of 10 and 20s and 30s and that kind of thing, it'll use the existing network. And all of these big national fleets and thank goodness that the nice thing rolling out Cummins rolling this out with PACCAR and soon Freightliner, they're working with the large fleets and they all have lanes all over where we have our existing network. And so we'll see a nice pickup before we have we're starting to have to build Now don't get me wrong, I'd love to have JV Hunt eventually after they do a few hundred trucks and say, okay, now put in stations at X, Y and Z terminals for us and we'd love that business when it happens. But it will start with our existing 120 semi truck stops.

Okay, great.

That's good. And Clean you talked a little bit about the drag from your Idaho project. What does that kind of look like in 2025? And I guess how does that flip around or time might be flipping around? [indiscernible] close to 50% of that of the outlook for the adjusted EBITDA? In that range And then that really is because we are performing kind of an operating whatever operating activity up there for for the farm. It was all part of the deal because this there is one of the largest around. So So that will continue in 2025, but there's no revenue on that at all because we're still constructing. So we'll finish that by the end of twenty twenty five, and then we'll start capturing all that manure and and then creating the gas and then we'll be on our way the RIN, the LCFS monetization. And so then it will be a fully functioning project. In 2026. It.

Got it. Okay, great. Thank you.

Rob, it's impressive. The when we get that done, we'll have people out to look at that facility. I mean think about it, 37,000 milking cows, you've essentially built and this is what the cost is right now. You're operating sanitation district, if you will.

Or if you put it on a human basis, probably be 100,000 people.

And you're operating that now You haven't yet been able to we haven't finished the election part and the digester part that comes at the very end. But that's what the drag is from and that was part of it. That was always figured into the deal. Because the farmer needs that. But it's very impressive project that we're going to be very proud of. It's going to generate a lot of RNG.

Move next to Dushyant Ailani with Jefferies. Your line is open.

Hey, guys. Thanks for taking my question. And also, thank you for sharing your RIN and LTF assumptions in your guidance. Helpful.

Just going back to your prior question on the OAL. So said that in the next few weeks it will be resolved. Then is it possible to see that the LCFS, the new amendments come into effect in that original time mine in April? Or yes, how do you think about that? Well, I don't know that I'm the exact expert on this. My impression was that it should get resolved shortly My words were the last few weeks I was kind of under the impression, Dushyant, that sometime in April, we should we should those should get reinstated. Now I may be ahead of myself by a few weeks here and there, but I mean it looks to me like what we're being told is technical in nature and that it will get resolved It wasn't something that there wasn't some nefarious situation going on here that is really was something that needed to be clarified in terms of having the appropriate process that's going to get resolved. Everybody sort of understands that. So I was under the impression that sometime in April or so that it will be back on track.

That's That's helpful. And then the second was just wanted think a little bit more on the 15 liter engine. Just the incremental demand that we could potentially see from it? I Clean, I know that you guys talked about, I think some of the examples you gave was there's like It's the fifteen year offsetting some of the legacy engines, right? So how do you think about that incremental demand from the 15 liter engine?

Well, first off, remember that let's just think of the scale, right? So the Class H spaces ranges depending on the year somewhere between $220,000 to 240,000 units. And without putting a lot of words in Cummins now, though I'm always willing to do it a little bit. But they they and they have said to me in meetings at their headquarters before that they saw no reason why We shouldn't that if this product was like they think it could be that it that it should be able to eventually reach 10% penetration. And And I think what you're remembering Dushyant, before is that we kind of talked away this thing would phase out and I think we're about maybe a half year behind that were going to start out between 505,000 units. We thought we were told in 2024.

And then kind of move once we got Freightliner in and you'd add another 1,500 units, so you'd be at sort of $5,000 and you would slide over kind of a two point five, three year period to about 8% between 810% penetration. Now CEO Rumsey the other day, she used 8% So let's just use that. I think that's a great number. So that's eight percent twenty thousand units. So that's within striking range of those numbers that I've heard over the last two, three years talking to my manufacturer friends, Ed Cummins, of years gone by. That would be significant. So when you then multiply that times 15,000 gallons, that's 300,000,000 gallons. So then we're then we're way off to the races, even at 5%.

For our company, it's very significant. So that's why I think this building of the base is really important.

So that fleets that buy look, nice with buys 5,600 units a year just to keep pace. Just to replace. So would I love to have them take 1,000 units? Sure. But is it more important just to make sure that they get comfortable and take 50 and what it's something this year? We need that breadth. We need a lot of those kinds of fleets that have the buying power eventually to get into this. It's not crazy, Deshaun, because when you think about it, it took about three or four years The introduction of the nine liter refuse engine Now I'm going back a ways, 02/2008, But by the time you got to 2011, you were at 5050% of the new purchases were natural gas and it's kind of hung around that. Now it's a much smaller market 4,000 units, 3,500 units a year in the refuse space You know what, the refuse space, they don't travel as many miles. They don't They don't use as much fuel and there's not as many trucks and there's not as many trucks purchased.

So I think for the same reasons we saw the transit and and the refuse space, we'll eventually see it here Look, we're providing really a great engine product with a low carbon fuel that's cheaper than diesel fuel. And we're we've been working with this rollout this year, an attractive fuel pricing. That allows our fleet customers to get about a two year payback. On the equipment. So we think it's compelling and I think some of let's keep our fingers crossed. We we think doing the right thing to see building a good base for 2025.

Understood. Thank you.

We'll move next to Derek Whitfield with Texas Capital. Your line is open.

Good afternoon, guys, and thanks for taking my questions. Hi, Derek.

Bigger picture question for you. Given the turbulence in the regulatory Z and AFTC, how are you thinking about project development beyond Moss for projects that aren't already meaningfully under construction? It's a very good question.

Derek.

You know what, I think what we've been saying Bob and I have when we've been talking to out and about is, we have a good set of projects in house. We've got them funded. Some of them are fairly big.

Couple more are one of them is for our 100% We like having the six projects now working to optimize those. Bringing these other two large projects on.

Those two projects together will be 50,000 milking cows. So together they're pretty big and then the Moss. I'm not sure that we're that interested as we sit here right at this moment with the lack of clarity on some of these things that we would be doing greenfield projects, We always we get to look at a lot of different deals We have seen some of our friends in the business wonder if they want to go forward. So if there is a good opportunities that come our way, we'll look at it. But we have the current projects funded. We bring in RNG from 80 different suppliers. So it's not like we have to do this. We've We've long believed that it gave us we have places to put this RNG, puts us in a little bit different position because we have millions of gallons where we can insert this low dairy RNG into California and move some of the other fuel out. So it makes a lot of sense for us. [indiscernible] But I don't know that we'll be I don't think you have to worry about a structuring the rubber band too tight here and doing more greenfield projects certainly until we see how RNG shakes out relative to kind of the movement of these advanced clean technologies.

Terrific. And then with respect to 45 gs guidance, the initial guidance from treasury understates the value of dairy RNG as you noted.

Based on the average CI assigned for animal manure, I guess based on your conversations that you're having with industry trade organizations and the government, how would you frame the likelihood of a positive provision?

Well, I think that not to be as you would expect, those in the industry believe that we are not receiving what we should have got. And that I think most of us that work with California and other places just believe that they missed the mark I mean, now can you imagine they decided to use methane calculation from manure that we don't use?

I mean, it's sort of like the gang that couldn't shoot straight. I mean, it's kind of strange. So [indiscernible] you have to wonder if they just wanted to limit RNG and limit the credit that came our way because they were trying to help other advanced technologies. That'd be my suspicion So I think our case is going to be fairly easily made that they they set the wrong greet model Now I guess the bigger question is do they want to encourage this kind of business? And what wiggle room do they have to to eliminate it altogether or now this was passed in law, so we'll kind of see how that shakes out. We do have congressional support for this. You kind of a lot of us forget with all the activity with the new administration in thirty days, there still is a Congress. And they still do have a view on this and they still it is bipartisan. Just today, I would say just while we're you could get kind of down in the mouth about this, Just today, the Trump administration promulgated a rule on ethanol upholding a Biden era 15% ethanol increase. So So increase in ethanol.

So So I do believe that the Trump administration supports these renewable fuels. They support the dairy farm farmers, Red States. They understand this. We had good relations with the first Trump administration. So we'll have good relationships here. And I think they'll listen to us And so I'm somewhat optimistic On 45Z getting resolved, Now the AFTC, I'm actually more optimistic that the AFTC will be resolved except I mean the big beautiful bill, there's just a of moving parts on how that's going to get sorted out with cuts and military spending and different energy things and government reductions It just we're in there competing for space And so in kind of normal time, I'd say, I think it was sort of a no brainer to get that extended. So we're on it. And the industry is on it. I think we've sent the industry sent a letter with four fifty signatories supporting AFTC readaptions. So I feel kind of like there's a lot of support and we'll just kind of see how it shakes out. Great. Thanks again for your updates and taking my questions.

We'll move next to Matthew Blair with TPH. Your line is open.

Thank you and good afternoon. Hopefully, you can hear me okay. I wanted to ask about the unit Okay, great.

I wanted to ask about the unit economics For the the X-fifteen engine from your perspective, what kind of premium are you seeing out there? And how many years would it take a user to pay back that premium on the engine?

When the engine was introduced, Matthew, in 2024, these low volumes, we saw incremental pricing from anywhere from let's put it this way, often was the incremental Now this would be with a lot of range, a lot of tank at John Board.

Remember, not just the engine, it also has the fuel system that some upwards of $100,000 sometimes hundred and 15,000 So that's a pretty stout incremental price. In our conversations with the OEMs, we were and with the fleets, we were clear that if we could get the pricing down to somewhere closer to $75,000 which we still believe is pretty full pricing. As compared to this is incremental pricing to diesel. And with our fuel pricing that we've that we've shown, can get them about a two year payback two years two years, two, three months payback That seems to be the Clean seem to want to listen to that. You get much higher than that and it [indiscernible] It's more difficult sell. At $120,000 I mean the police is kind of Like us is too much.

So we know now we also know that when this first started in the refuse business a long time ago, so inflation is different, economics were different.

We had a $55,000 to $60,000 incremental on a $200,000 trash truck back in the day. Today, you have about a $29,000 incremental for a nine liter with the fuel package on a modern day [indiscernible] on the $380,000 refuse truck, So it's come way in as a percent [indiscernible] Like a 9%. And it gets within a one year payback. [indiscernible] Six months.

So I don't know that there's any reason why we have to have a 75 a nine liter engine for the transit buses and for the trash trucks, they have no incremental cost The engine is cheaper than a diesel. So maybe this is why Cummins years ago in their headquarters a couple of times said that they saw no reason why you couldn't be at 25,000 units and they they said that you really needed to get to that to get to that probably because they understand the price of what happens when they manufacture that number of So I think we're sort of I think Matthew, we're sort of we kind of know what the we know where we need to be. We have some flexibility on the fuel price. We have buy in by some of the OEMs. We work we're working closely with the dealers making sure that nobody's trying to clip too much. And our friends at the fuel system. And I think we're all kind of trying to row the boat about the same right now. Cummins seems to understand it too.

Okay. Thanks for all the color. And then my follow-up for the six operating dairy RNG plants, And then just in regards to the negative EBITDA guide for 20 I understand there's going to be some costs in Idaho, but for those six dairy RNG plants, do they currently have LCFS pathways approved or is one of the the headwinds that you're still waiting for CARB to to grant those pathways? [indiscernible] Well, they do just on a temporary basis. So that That does inform your the value that you're going to get So we are waiting for the the provisional [indiscernible] On those.

Okay. And those might come in sometime during 2025 and [indiscernible] [indiscernible] Yes. Yes.

So we're still a little bit Clean in that ramp up mode. [indiscernible] Clean, which is going well. I mean, we have the one of those is a dairy we had in Del Rio, Texas and that We're encouraged by that because the performance on that one is is positive and we've seen it we've seen it improve, if you will, based on certain improvements that we've made as our engineering and our group that we have looking at these has has employed some some efficiencies there and it's happening. So we're very encouraged with that that The other five projects, that the same thing will happen because pretty much they they operate the same, just maybe the manure is a little different. But operationally they're doing it. So we're encouraged by that, but you do have to go through it didn't happen overnight. Great. Thank you very much.

We'll move next to Craig Scherer with the Tuohy Brothers.

Your line is open.

Hi.

Andrew has an answer, but Eric and Sean, you seem to suggest there should be good clarity around initial uptake on the Cummins 15 leader engines, at least in the breadth of [indiscernible] demand and then that would translating a lot of perspective, hard fuel demand growth in the '26, twenty seven and beyond.

I guess my question gets given that color is Obviously, well, obviously, Amazon plans years ahead they struck that agreement with me some years ago.

And these fleets, if they're going to do more than 10 or 20, they got to similarly plan ahead even if that's only for deliveries in 2027 and 2028. So I guess I'm trying to drive at your costs [indiscernible] the timeline that fleets are going to have to live by if they eventually want to have 100 or more units.

Well, I don't know, Craig, here's the way I think about it. Cummins tells us there is no trick For them, to satisfy the demand.

The Jamestown, the Jamestown, New York plant can turn out many, many thousands of units We have two rather large upfitting friends for the fuel system business. They'll require a little bit of time. I mean, you can't hit them next year and say we need 20,000 units in terms of tanks and all. But they'll have time to ramp up [indiscernible] bought and received now these were 12 liters, right? 2,500 units in, I don't know, better part of a year, year and a half.

Now it took us a while to build the stations and for them to get them in and get them organized and that takes some time. But No, I really think, Craig, what where I'm at it is that I think they've got to walk before they run. So I'm just using this as an example. I don't want them to get worried. But J. B. Hunt is very well likely to take 50 or 100 units before they buy And J. B. Hunt buys, I don't know, three, I think they just replace, they buy about 3,000 units a year.

So I kind of think that's the way it's going to go that you're going to see these these fleets take 100 or so ish fifty hundred and fifty whatever it is. This this year and hopefully the experience is good Then we'll start having some discussions about them. Using them on certain lanes where we have stations, but then there will be more discussions about, hey, we're going to want stations that are five terminals in [indiscernible] build those and bring those on. But I see it as sort of an orderly process to get up to kind of [indiscernible] That's what happened in the trash business. I mean, waste management numbers escape me now, but they started out ordering and 100 or 200 and then they kind of worked their way to buying as many as they would buy in a given year.

Because they knew it was a product that they wanted to put into the fleet.

So I don't know if I'm answering your question or if I'm being dense, but that's the way I see this working. That's why you need the breadth You need You need 50 fleets, 40 fleets bringing this into their normal purchase cycle. It sounds like it may be a stretch to presume that we're going to get [indiscernible] multiyear Amazon like very chunky fuel supply agreements this year. Maybe that's more sometime in next year?

Yes. Well, I think I what I was trying to say. You're not going to see big chunky 2,000 truck 20,000,000 gallon a year type orders this year. No, I was just thinking if they're planning three years ahead, they could start in the Amazon agreement with you involved years of building out stations. Well, look, yes, we will look, I'm not trying to your exact right. Look, we're talking to fleets about, okay, where would you do it, which planes, where do you want fueling, which one works, okay.

You can use our station that's currently in outside of Scottsdale, but you really want to you have a really big terminal there. So that would probably be place.

How many do you want now?

So we're doing all that. And yes, we've been doing that. And we have really retooled and refocused our our salespeople they each have a very set number of these people that these fleets that can buy and these numbers that have big fleets they're working it.

And yes, they are doing this sort of multiyear Clean. But we think it's going to kind of start out start out in the small we're just trying to set the expectation that you don't expect big chunky announcements this year. Now I'd love to be surprised by somebody. But let's but I think it's going to I think it'll be very important for the market and really important for our company if we see some of these very significant 50 and 50 truck orders pop out.

Got you. And we are putting volume in We're not We're not thinking it's not going to happen. I Clean, we've got in our goals and in our budget, we've got millions of gallons for the X-fifteen and even for this year. And of course, that's a run rate. It'll be better for next year, but we know we've got to get this breadth going this year. To then have a chance of it, have to have doubling up, tripling up for next year. Got you. And my last one, maybe or for Bob, as to 2025 guidance presumptions are on margin at the thoughts about conservativeness on presumed pricing power versus diesel And to the degree you do get some increased utilization at existing terminals with the initial drids and drabs on these 15 liter engine orders. How much could that really contribute in terms of operating leverage? [indiscernible] We don't We don't see significant changes in the environment that we've been kind of running relative to kind of diesel and nat gas and our pricing at the pumps and the cost of natural gas. I Clean, it's we see it being similar to what it is today, low natural gas prices, oil will probably stay a little bit high.

And so we're in an okay range when we're in the 20% to forty forty point spread between oil and net gas.

So we kind of see that continuing on.

Not going way up, not going necessarily down. And then on the on the 15 liter, No, I think there'll be some contribution there because those gallons will be kind of our sweet spot of public access fueling. We'll give them we'll have good pricing, but we flow RNG and so there's economics to us. In other ways as well. So that'll be they'll be good. But You're a little bit toward the back end of the year. You're kind of spread out. And so I'm not going to say it's going to move the needle hugely on the economic side, but it will. I Clean, look, it's good money. I look really more at this whole adoption thing, the breadth of adoption as I Clean, you're kind of starting from a from a market that we had zero access to.

With trucks that utilize a 15 liter and every single one of them that makes that decision to go into the X-fifteen in Is it is a huge telling sign in our view. So I'm more interested in twenty, twenty five fleets taken on those engines because it's like the money will come. [indiscernible] Great.

Craig, one other thing, it's maybe this got to the Matthew or Derek's question earlier, I kind of glossed over it, but we had PACCAR putting the Cummins engine in PACCAR. So that's Kenworth and Peterbilt Thank you, Bob. This year we get Freightliner. Well, Freightliner but not until about April and May, of the does the engine get put into there and they the order book opens. But what's important is freight liners 30, I don't know, 5% of the market We haven't had that. And so a lot of fleets are freightliner fleets. [indiscernible] my friends at Freightliner may kill me, but I mean in terms of pricing, the price point is a little lower.

I sort of describe it as a ozone fuel compared to a Cadillac a little bit.

So it's a little bit lower price point, That helps on the incremental sum.

And some of our fleets are waiting for that Freightliner. So that's an important we were told last year, hey, look, you can't get to these bigger numbers until you have the other OEM in your end, that's Freightliner. So That's just all I wanted to embellish a little bit because we kind of skipped over that.

Thanks.

Thank you. We'll move next to Betty Zeng. With Scotiabank.

Your line is open.

Hi, Andrew and Bob. Thanks for taking my questions. [indiscernible] Hello. For my first question, I wanted to ask in your prepared remarks, you talked about about 25 fleets that you're seeing for 2025 fueling with the 15 liter Engine. I'm curious if you're able to split that out [indiscernible] how much of that $25,000,000 is existing natural gas fleets versus fleets that are completely new to natural gas?

Betty, without doing a big analysis, which my guys could probably do, it's probably fifty-fifty.

It's Leets about half of them are fleets that we know well, talked to you for years, just haven't operated natural gas because they didn't think that the 12 liter is big enough, the and that. But we know them.

We talked to them. And then the other half are customers. That we've kind of worked with over the years.

Okay, that's helpful. Do you see it Do you see that fifty-fifty split kind of continuing or maybe we'll have more new new fleets adopting it?

I hope it's the latter, right? I hope it's new fleets, right?

I Clean, look, we're just scratching the surface, so it better be new. Right? There are thousands of fleets that have and used natural gas, right? So it ought to [indiscernible] what I am very excited about, there's a time when we were just trying to break into this business. You don't have to go back with about ten years ago. We thought that heavy duty trucking would only be for drayage. For trucks that operated in ports, we really didn't know if it would work across across the country.

Or super regional So we've come a long way though we it's taken a while.

And we were always sort of working with the smaller fleets, the 500 truck fleets.

Look, this last year, I Clean, it's it's America's largest fleets that are that have tested this and have taken X-15s into their fleet and test it. And that we're talking to now. So it's the largest fleets that buy a lot of trucks.

That buy thousands of trucks a year just to replace. [indiscernible] we're working with those that could really grow this market.

In a bigger way. So that's very exciting for us.

Okay, great. For my second question, I want us to ask about the quarter. Looking at the income tax, I think that came in a bit higher or a bit more of a charge than I was expecting? I was curious if there's anything specific there? I would say nothing specific other than good old fashioned tax accounting and taking care of various sections of the tax code, if you will. Some of one of the things that kind of came into play more as we've evolved is is the 163 considerations So stuff like that as kind of non cash, but in the course of that, you end up creating some some deferred tax liabilities that don't depending on what the item is that do not get covered by deferred tax asset. So you end up kind of creating a tax provision expense. And so that's it. It's not a cash payment, not I don't know that we would be paying any taxes anytime soon. Show off, Bob. Great. Thanks so much. I want to go further on that.

Want to go a little further. Anders, you and I talked about it.

Hey, Jay.

We've gone talk about it. So That's what it is.

Thank you. Thanks, Betty, and good catch, Betty.

On that. I appreciate someone looking at the tax provision. We'll move next to Jason Gabelman. With TD Cowen.

Your line is open.

Yes. Hey, thanks for taking my questions.

The first one I wanted to ask is on 2025 CapEx guidance for up development, dollars 104,000,000 is that all being funded within the JVs or is there a capital contribution coming from Clean energy itself towards that $104,000,000 Yes. We part of that would be about 60% would be a contribution into a JV. And the other piece would be for a project that we have 100% on our balance sheet.

Okay. $64,000,000 And 65,000,000 dollars $35,000,000 Yes.

Got it. Great. And then my one, I'm just calling to the 45Z, because it seems that most companies feel like there's enough guidance out there to give them safe harbor to book the credit as it's put forth in the pre draft regulation It sounds like Clean energy fuels is not in that camp. There's a bit more hesitance towards booking back credit. So is there some specific clarification that you want to see before you're comfortable accruing that credit on your income statement?

Well, we do want to see more Basically Clean along the lines of a kind of more of a finalization. We know there's a big comment process going through. So We feel like there's still uncertainty there.

Okay.

Jason, if They saw how it Look, who knows, look, we're watching that. And but just as of right now, [indiscernible] it denies that there's some more certainty to it. Maybe they finalize it and say, this is it, thanks for the comments, well then we'll react to that.

Okay. And then just on how the company the The 45 Z, most of that will be within the upstream portion of the business, but will you book anything within the downstream?

No, it will be in the upstream. [indiscernible] It's in the upstream.

Okay, great.

Thanks for the answers. [indiscernible] And this does conclude the Q and A session for today's call. I will now turn it back to Ann Andrew Littlefair for any additional or closing remarks.

Thank you, operator, and thank you everyone for joining us today. And we look forward to letting you know how we do in next court? Thank you.

This does conclude today's program.