Clean Energy Fuels (CLNE) Q2 2026 earnings call transcript

Thank you, Operator. Earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 2026. If you did not receive the release, it is available on the investor relations section of the company's website, website where the call is also being webcast. There will be a replay available on the website for 30 days. Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the risk factor section of Clean Energy's Form 10Q filed today.

These forward-looking statements speak only as the date of this release. The company undertakes 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 the call and exclude certain expenses that the company's management does not believe are indicative of the company's core business operating results. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results. 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 8K today.

With that, I will turn the call over to our President and Chief Executive Officer, Clay Corbis.

Thank you, Tom. Good afternoon, everyone. Today, we reported solid results for the second quarter, $106 million in revenue, $63 million of RNG sold, and $16 million of adjusted EBITDA. These results were in line with our expectations and keep us on track for our annual financial outlook, which we are maintaining. We kept our balance sheet strong and finished the quarter with $138 million in cash and short-term investments. Our upstream RNG production business saw improvement in the second quarter, helped by better weather compared to the first quarter, and continued ramp-up at our two largest projects, South Fork in Texas and East Valley in Idaho. There is still more work to be done as we ramp production and improve operations across our portfolio, and we expect continued improvement in the second half of the year.

In addition to our eight operating RNG projects, we have three projects under construction through our joint venture with Moss Energy Works. We continue to make good progress and expect two projects to come online later this year, with the final project finishing up next year. The Section 45Z Clean Fuel Production Credit is an important value driver for our RNG projects. We continue to await Treasury's finalization of the 45Z rules and credit values, which is now expected in the fourth quarter.

We believe the finalized rule and updated GREET model once released will positively impact our up-to results in 2026 and the years ahead. Our RNG fuel volume from heavy-duty trucking held steady during the quarter. We are seeing a handful of fleets add small numbers of trucks equipped to the X15N, but with the uncertainty surrounding the final 2027 emission standards recently released by the EPA, there has been a large pre-buy of legacy diesel trucks. At the same time, we and others remain deeply engaged with many fleets that continue to show strong interest in RNG, particularly with higher diesel prices. Over the past four to five months, we increased our advertising to target the trucking industry, emphasizing RNG's low, stable price compared to diesel.

That effort has generated measurable interest and leads with potential new customers. I also hope you saw the press release we distributed earlier this week about the growing natural gas heavy-duty truck market in Canada. We recently completed two additional stations, including a critical node in British Columbia just outside Vancouver, that completes a Western Canadian natural gas fueling network.

Canada has extremely high taxes on diesel and high truck mileage, which makes the cost comparison with natural gas all that much more attractive. And with the Cummins X15N arriving in the Canadian market, fleets that use a lot of fuel are responding very positively. As I mentioned on our last call, our legacy markets in transit and refuse continue to provide a solid foundation for us. 25 years after the first CNG buses rolled into cities, the transit market continues to be strong with new opportunities and new wins. In fact, just last week, the Federal Transit Administration announced that their funding will prioritize low-emission solutions like CNG over zero-emission buses.

Our fueling expertise also creates opportunities beyond RNG. Clean Energy has been awarded more contracts than any other company to build hydrogen fueling stations for transit agencies that are expanding with fuel cell buses, reinforcing our leadership in alternative fuel infrastructure. Last week, we announced the latest and largest hydrogen project to date, a $27 million contract at the Orange County Transportation Authority to design and build a new private station. This station will support OCTA's existing fleet of 10 fuel cell buses, plus the 40 buses the agency plans to add, demonstrating both the strength of our customer relationships and scalability and flexibility of our platform. With nearly 30 years operating in the natural gas sector, our in-house capabilities also extend beyond vehicle fueling and RNG production.

As we all know, the country is experiencing a rapidly evolving energy market, and power grids are overtaxed. Because of this, we see emerging opportunities for clean energy and our ability to serve independent power solutions. Today, no one has nationwide compression capabilities that we do. And that CNG doesn't have to go into a vehicle tank. Large volumes can be put into tube trailers and transported to facilities that need power, but may have issues hooking up with a local grid or are not proximate to a natural gas pipeline. We can solve that problem.

We currently serve customers across a range of natural gas solutions. And as demand for reliable, cleaner energy grows, customers are increasingly looking to us for these solutions. So let me share a few examples. As many of you know we deliver LNG marine bunker fuel to Patia at the port of Long Beach and have been doing this for the past three years We produced the LNG at our plant in Boron California transported to the port using our fleet of LNG cryogenic tanker trucks and provide fueling services that enable patients container ships to continually operate on cleaner burning LNG Our LNG team has experience that includes designing and building LNG systems for gas-to-power applications. As an example, we were recently awarded contracts for two projects in Puerto Rico.

We have a new model that will provide energy security and resiliency for a pharmaceutical manufacturing facility owned by a global healthcare provider and another one for a 6-megawatt power plant. For customers that would rather operate facilities with cleaner, less expensive natural gas versus fuel oil or cannot get enough electric power, we deliver compressed natural gas for a fleet of CNG tube trailers to commercial and industrial customers that do not have five-line access. We have longstanding relationships with large volume customers, but we are also discovering new customers and new markets.

Just recently, we signed a contract to supply CNG to a large fulfillment center in California that needs a bridge fuel solution for its power generation while it indefinitely awaits a utility connection. Clean Energy is uniquely positioned to provide natural gas solutions to customers across multiple fuel types, multiple applications, and multiple regions in the United States and Canada. We have room to grow here, and we are excited about it.

Finally, I want to recognize Bart Fogoda, who we recently appointed as our Chief Operating Officer. Improving execution and operational performance and driving technology throughout the company is a top priority for us. Bart is the right leader for that work. Over his 15 years of clean energy, he has been central to building and running our company. I look forward to what his leadership will help us accomplish. Now with that, it's Bob's turn. Okay.

Thank you, Clay. Good afternoon to everyone. Overall, our second quarter performance was in line with our expectations from both the financial performance and fuel volume standpoint. Maintaining our full-year guidance assumes improved financial performance in the second half of 2026, which is consistent with our original expectations. Thus far, in 2026, fuel pricing, including RIN and LCFS credit values, has been favorable, operating expenses remain on plan, and fuel volumes are meeting expectations. Our outlook for 2026 also assumes that final guidance on the GREET model for the 45Z production tax credit will be issued before year end, and that could provide up to $5 million of incremental adjusted EBITDA. Now, if the guidance is delayed or provides minimal benefit over the current production tax credit values, adjusted EBITDA would come in below our $70 to $75 million range.

Turning to volumes, second quarter fuel volumes increased by 7% year-over-year to 81.8 million gallons. Approximately two-thirds of the growth came from conventional natural gas, driven by additional fueling locations for large fleet customers, for which we also provide maintenance services. The R&G volumes increased 3% year-over-year to 63.2 million gallons, reflecting normal variations across customer sectors. As noted on our first quarter earnings call, RNG volumes declined sequentially because the first quarter included incremental deliveries to customers outside our station network. Through June, RNG volumes remained ahead of our plan. RNG production volume from our dairy projects was 2.1 million gallons for the second quarter of 2026, well above the prior year period as our RNG upstream portfolio continues to ramp.

Consequently, we saw a notable improvement in the operating results of our R&G upstream business in the second quarter compared to the first quarter. This improvement was contemplated in our plan and guidance. Second quarter revenue was $106.4 million, up from $102.6 million in the prior year period. Higher station construction revenue and increased RIN and LCFS credit values more than offset lower commodity prices and customer pricing. As expected, revenue declined sequentially from the first quarter, primarily due to lower natural gas prices and reduced gas trading volatility, consistent with normal seasonal patterns. Fuel margins, including RIN and LCFS credits, were largely in line with our plan for the second quarter of 2026. Fuel and customer mix variations modestly reduced margins during the We have a quarter, which is normal, and factored into our outlook for 2026.

Our cash-in investments of $138 million at the end of June were up from $126 million at the end of March. Through June, we contributed $24 million to our Moss Energy Works Dairy Joint Venture, followed by an additional $12 million in July. Less than $5 million remains to be contributed before the projects are placed in service. And that operator, please open the call to questions.

Well, you know, I think as we think about the incremental cost, one thing that has, you know, once again, you know, I think confused the market is that the delay on the certification for the 2027 engines and what that's meant for the diesel boys, because to a certain extent, you know, they had already, you know, Cummins and all the other OEMs had already invested all the money into the technology, which was going to increase the price of the diesel engines, And with that sort of in disarray it sort of unclear then what going to happen there I think you know what we hear from what I think you know is public that we got from the Cummins earnings call is that they just going to sort of roll it out during the rest of 2027 So that you know they still going to roll it out but it not all going to happen in January It going to happen over the you know ultimately you still are going to have that incremental cost or the incremental cost decrease because diesels are getting more expensive I think when you subtract that away, we still work with our other partners in the industry, whether it's with the fuel tank providers, whether it's with the dealers, whether it's with the OEMs or the OEM manufacturers as well, to see what we can do to try to get that price down.

I don't think we've seen real movement in the actual price. It's just movement around how each one of the different participants can chip in a little bit to help bring that price down so that the incremental payback period can get down to a reasonable level. I would say, though, that what's important about that is it's not just the incremental price, it's how much they're saving on fuel. And that's where, you know, the high price of diesel, and I think the, you know, everything you read is that the price of diesel is going to stay high for a while. And even if it doesn't stay high, that volatility does help us. And that's why, you know, we poured a lot more money into advertising to highlight that in the, you know, in the trades this past quarter, which, you know, impacted our results.

But we think it was an absolutely good investment in the long term because it has resulted in a lot more appointments, a lot more discussions. You know, it's the type of investment that we want to make in order to drive future growth.

Got it. That's helpful commentary.

Yeah, I mean, when we issued our guidance at the beginning of the year, we were and still believe that when the guidance comes out on the 45G, the GREAT model, it will have an improved value for the production tax credits. So we factored up to about $5 million in our guidance, and we were also expecting that that guidance would come out sooner than it has. And so as that has slipped, it's like, okay, well, now we're getting to moving that closer to year end, and if something happens there, then let's have some transparency on what that could mean to our number. Now, we think that it will be positive, so we're not saying it's not going to be at all.

And I guess the binary choice would be if they moved the approval across into 27, well, then you wouldn't get that. It wouldn't happen for us in 26. Other than that, then maybe the value could be different, but we think it will be positive to us.

Exactly.

Thanks, Eric.

Well, I don't think it's changed. You know, I think we're still – we're ever optimistic. I think it's because we do see, you know, as you get – as the engine gets more – you know, to be frank, you know, when the engine first came out, those alpha, you know, and some of the testing didn't go as anybody had hoped. And it just took a little while to work out the kinks. And so I think as you get more use cases out there and the improvement increases, you get better, you know, you adjust the engine more for the use type, so you get the right transmission in there, you get your mileage penalty reduced a little bit.

But you continue to see improvement in the performance of the engines with the fleets need. And when you combine that with the price of diesel, it makes a pretty compelling case. But again, when you have all this uncertainty that's going on, you know, with the regulatory environment, that just, you know, the market just says, huh, okay, yeah, we like this. We'll keep talking about it, but we're just going to, you know, sort of wait to see how things settle out here before we make a big commitment. I think what we do see and what we like is, you know, people are, you know, we sell 10 here. I mean, if you look, like, for instance, that Canadian release, you look at that.

We've got 35, you know, F-15 ends up there. It's not one fleet. It's a spread out among seven or eight fleets, and that's exactly what you'd like to see. You know, it means that people are out there testing it. They're running it hard. They're putting the miles on it, and, you know, from there, we just anticipate and hope they have good experiences and that, you know, the adoption starts to pick up.

Well, you know, we see a lot of opportunity for those to improve. You know, there's always a story with every plant, you know, whether you have too much heat or too much cold, how the cows are producing everything. But we see the trend line absolutely going in the right direction. You know, we have enough manure at a number of the facilities.

We have, you know, we have the process improvements that we put in place. You see the, you know, we see the, you know, two of the moss projects coming in line this fall, and as we mentioned, the third coming in line early next year. So I think we see that trend line, you know, absolutely continuing. It will be the second half of the year will be much better than the first half of the year. So we're optimistic. And then, I mean, if you layer on top of that, what could happen if you get 45Z across it, then financially, you start to see a much better impact as well. You know it for us it great because you you know it I mean it like much of our business The more volume you get across it the more easier you cover your overhead and the more that drops to the bottom line And that what we seeing with our plants as well So I say overall we are optimistic Excellent Thank you I turn it over Great Thanks Thank you.

Hi, Nate. How are you doing?

Well, you know, Nate, we've had a subsidiary for a number of years called NG Advantage that's based in the Northeast that really has been working with off-pipeline customers for a long time. And, you know, they've had an established good business. And it's been really interesting for us. You know, we've got 102 trailers. We've got, you know, some large compression capacity up there. And it's been really interesting for us that as you have, you know, these sort of messy middle with getting power to a lot of facilities, you know, everything from EV charging to fulfillment to centers, you know, data centers is a pretty large load. But we find that we are starting to get a lot of phone calls asking us if we can sort of service this.

Can we do, you know, sometimes it's a short-term opportunity. Others are looking for much longer-term opportunities. And as we think about it, you know, we do have compression capacity across the entire United States. You know, we have it reserved, and it's typically used for trucking, but it is underutilized. And then we also have the, you know, we have excess tube trailers. So in order to test this market, we don't have to spend anything. We can just use existing assets and existing infrastructure we have. And so I think that's where we stand. This would be a use case if, you know, as we, I mean, we are doing it, you know, and as we see more of these come along, you know, depending on the, you know, on the returns profile will determine whether it ends up taking up any investment.

But it's not – this is not like, you know, a $200 million dairy project in Idaho. This is small, incremental, justified by contracts that we would have in place. But we do think – we do see there's a lot of growth potential here. And again, it's enabled by the fact that we've got, you know, 600 fueling stations across the country that have excess compression capacity.

And then if I may – It is.

Yeah, you know, the way that we've gone about hydrogen is not to use our own capital. We use it, you know, our model in the transit agencies world, which is where, you know, a transit agency puts out an RFP. You know, you win the RFP based on your experience and your cost, and then you get the contract, and it's usually a cost-plus contract.

And then in this case, we also have an operation and maintenance agreement to go along with it, as well as a hydrogen fuel supply to go along with it. So in all these cases, it's something where it's not putting our capital at risk or we're taking commodity risk on anything here. It's really a service that we provide. And I think we see that – well, I know we see that as the model going forward. We're happy to see OCTA go after this. We think that hydrogen is a tough commercial. To do hydrogen independently is pretty tough commercially. But I think when it's going through a transit agency and it's supported by the state or by the locality or by the feds to help promote the industry and get it to a point where it can grow, we're there to be a service provider for that, but not to take risk with our own capital to see where that market is going to unfold.

You're welcome.

And Matthew, when you said Del Rio, that is a provisional pathway.

We have temporary pathways on the seven others.

We expect probably on our, you know, early next- well, next year we expect on our, you know, in our joint venture with BP, the five of them, we expect to get the provisional next year. And then I think on our big one, you know, up in Idaho, you know, both South Fork and East Valley, you know, it's probably 20, yeah, probably 20, 28. I mean, it's really hard. This is one where it's really, you know, it's entirely dependent on carb. You know, we've been, whenever we gave a date out on Del Rio, we were ultimately frustrated every quarter and saying, well, we thought it was going to be this quarter, but it's next quarter. So, you know, right now, we'd hope the end of 2027 and 2028, but, you know, we're not putting anything in our forecast to move from temporary to provisional.

We're monetizing at the temporary, right, level.

No, I mean, it should be – I don't think it will be lower. It will – It should be relatively consistent, maybe some improvement on the further distribution.

Well, thank you, everybody, for being on the call. Thanks for being on the call. I know late on a Thursday afternoon in the beginning of August, there's probably things you'd rather be doing, so we appreciate your time and interesting clean energy. Thanks very much.