Greetings and welcome to Clean Energy Fuels' Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to Robert Vreeland, Chief Financial Officer. Thank you. You may begin.

Thank you, operator. Earlier this afternoon Clean Energy released financial results for the quarter and year ending December 31st, 2020. If you did not receive the release, it is available on the Investor Relations section of the company's website. The call is also being webcast. There will be a replay available on the website for 30 days.

Thank you, Bob. Good afternoon everyone and thank you for joining us. On last quarter's call, I spoke in some detail about Clean Energy's future and the expansion of our renewables business. I'm pleased to say that since that time, the pace has continued to accelerate on both the upstream production side as well as the downstream demand side for renewable natural gas. This should keep us in a great position for maintaining our lead in providing RNG to the transportation industry. In the fourth quarter of last year, we delivered 96 million gallons of fuel which was slightly down from 103 million gallons delivered in the same quarter a year ago. Due to COVID, we experienced a softness in airport fleets in transit, but we were pleased that other sectors performed very well like refuse and heavy-duty trucking.

Thank you, Andrew. Today, I'm going to focus my comments mainly on our outlook for 2021 with some highlights of 2020. I'm pleased to say we finished 2020 as expected. We achieved $45.1 million in adjusted EBITDA versus our guidance of $45 million. As Andrew noted, our cash and investments at the end of 2020 amounted to $138.5 million, which included $49.5 million in net proceeds remaining from our $50 million loan related to our RNG joint venture activity with BP. And while overall volumes declined in 2020, our renewable natural gas volumes grew by 7% to 153.3 million gallons delivered in 2020 versus 143.3 million gallons delivered in 2019. All in all, we fared very well under the circumstances of 2020. Looking at 2021, the good news is we are expecting more recovery from the impacts of COVID-19 as the economy continues to pick up particularly in the second half of 2021. It's also an exciting year as we will expand our renewable natural gas deliveries and particularly increase the mix of carbon-negative RNG coming off of dairies. We are moving into 2021 with two exciting joint ventures with two of the top energy companies in the world. We are building on this exciting momentum and look forward to executing our 2021 plan. Having said that, our GAAP net results will be around breakeven for 2021, which I will point out includes an incremental $7 million in non-cash stock compensation compared to 2020. This $7 million year-over-year increase in stock compensation reflects our higher stock price. Also, I am not including any estimate of unrealized gains or losses from the change in fair value of our Zero Now fuel hedge in our expected GAAP net results for 2021. Neither of these two non-cash items, the stock compensation and the fair value adjustments to our fuel hedge impact our adjusted EBITDA. Our outlook for adjusted EBITDA for 2021 is in the range of $60 million to $62 million, which is an increase of approximately 35% above 2020. This improvement reflects our assumption of continued economic recovery from COVID-19 and positive contributions from our RNG volume growth as well as the greater mix of carbon-negative RNG.

Thank you. Our first question is from Eric Stine with Craig-Hallum. Please proceed with your question.

Hi Andrew, hi Bob. It seems like you're breaking some news here today. I don't believe you announced that you had finalized the JV with BP to this point. Can you confirm that? Hopefully that's not something that I've missed here. But just curious what that looks like versus the JV that you announced earlier this week with Total because that one was upsized a little bit and had some language about what that could be long term that was increased versus when it was originally announced as an MoU in December?

Sure. Eric, you did pick up on that. We finalized the agreement with BP this afternoon. So you're hearing it here first. We are excited about both of these joint ventures. As I said in my remarks, it really puts to work about potentially $500 million of equity. As you're right, the Total JV has been upsized where we can each contribute up to $200 million of equity. So when you put the leverage on top of these, you could have north of $1 billion to $1.2 billion for these projects. So it's exciting for us. The BP joint venture already has two projects that are underway. We have signed the initial agreements for the first project in the Total joint venture. We aim to be as expedient as possible bringing these projects online. These are all dairy projects and super low negative carbon dairy projects. We don't have the exact pathways on this, but some of the most recent dairies we've seen are negative carbon in the 350 range. So these are dramatically lower carbon than the other fuels out there.

Got it. Just to confirm on timing, I mean, is this something that we should still think about as where you'd start to get the initial benefit below the line very late in 2022? Also, if you're able to or willing yet, can you talk about kind of income contribution per project?

Yes. You're right, Eric. These projects take about a year to 18 months to really contribute. The projects themselves don't take long. But by the time you get the pathway charted and certified, it’s safe to say it will take between a year and 18 months before you could really have those contributing. The projects that we signed in December, those are further along, and we will begin to see that contribution in 2021. We're working on it and it's exciting right now as we've seen potential in low dairy. There are studies showing that it's approaching 25 million to 30 billion gallons. So a lot of money will go into developing this. We like our position because we have those nozzle tips which is a key differentiator between us and others.

I know you've got a goal to have 100% of your owned station volumes to be RNG by 2025. Now that you've got BP, Total, and Chevron committed to the low CI RNG, do you have any thoughts on what type of percentage you might think about out in 2025?

Oh boy, I haven't made any projections on that. We're starting out low. You heard Bob say that this year, we are going to increase our low CI by about tenfold. We're well-positioned because we are taking the lion's share of low CI that was already developed. We will begin over time to show the carbon of our fuel portfolio, and soon that could go negative, which is interesting to consider.

It will increase. Each year that's going to go up. It may be a stretch to say we'd get all the way to 100% of all low CI, but obviously, we're going to want to use low CI if we can.

Fair enough. Maybe just one last question from me, I appreciate all the details you've provided.

From the core markets, refuse, transit fleet, trucking, all of those should see good volume increases due to recovery from this year.

Yes, fleets and transit fleets are coming off tough years, and trucking is really gaining momentum, while refuse is steady.

Our next question is from Manav Gupta with Credit Suisse. Please proceed.

You talked about BP and Total. You mentioned Chevron, but today Chevron indicated they are looking to grow their RNG by 10 times by 2025. How does Clean Energy fit into that?

Chevron is a valued partner of ours, and we take a significant portion of all the dairy gas that they're producing today under contract. We've increased that over the last year. We have developed a really innovative program with Chevron at the Port of Los Angeles, called Adopt-A-Port, where they provide incentive funding to our customers, the truck owners, as they transition towards either electric or natural gas RNG trucks. It's a win-win for air quality, the truck owner, and us as we move a significant portion of the fuel from Chevron's dairy projects.

You mentioned Amazon ordered 100 CNG RNG trucks. What is the unique proposition of Clean Energy for potential clients like Amazon?

We have the largest network in the United States, and national players usually want the flexibility to move their vehicles where they operate. We have proven partnerships with fleets like UPS, which is still a partner for the next six years with a 150 million gallon RNG contract. We offer the most flexible RNG portfolio and the most RNG supply, giving large fleets the security they need.

With your existing infrastructure, how much more volume can you handle across the United States without spending capital?

We believe our available capacity at the stations we've built is around 500 million to 600 million gallons.

So you're doing 100 to 120 per quarter, but you can literally double the volumes through the same infrastructure without spending any money?

That's right, possibly a little more than double.

Our next question is from Rob Brown with Lake Street Capital Markets. Please proceed.

How many trucks went through the first phase of the Chevron program, and what is the potential size of phase 2?

The first phase included 185 to 200 trucks. We expect the next phases to be significantly more than that as we are working on additional funding for 350 to 400 trucks for the program, which would allow a significant penetration at the port.

What is the potential CapEx addition dependent on, and how many stations would that fund?

That is dependent on growth in the fleet sector regarding RNG growth that we see coming. That would allow for the addition of about 25 large fleet heavy-duty truck stations under customer contracts.

What was the margin per gallon in the quarter?

It was about 23.

Any other questions, operator? I think that may do it.

In the 2021 guidance for $60 million to $62 million of adjusted EBITDA, what's the implied value of the federal tax credit AFTC revenue?

$20 million.

At the depths of COVID, back in April, we saw diesel prices at $1.60 in certain markets. Today, the average diesel price in the United States is $3. It's significant for us.

Is there something structural going on in that heavy-duty long-haul market that's caused volumes to decline?

The majority of heavy-duty trucks are moving towards CNG, not LNG. The market has made tremendous strides with CNG, providing more range and flexibility for fleets. CNG is a tough competitor to LNG due to its rising popularity and competitive pricing.

This concludes our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Thank you, operator. We want to thank everyone for listening on the call this afternoon and look forward to updating you on our progress in the next quarter. Good afternoon.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.