CLNE 10-Q

Clean Energy Fuels Corp. (CLNE)

10-Q 2023-08-09 For: 2023-06-30

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Delaware	33-0968580
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


Large accelerated filer ☒	Accelerated filer ☐

Non-accelerated filer ☐	Smaller reporting company ☐

	Emerging growth company ☐

PART I.—FINANCIAL INFORMATION	3
Item 1.—Financial Statements (Unaudited)	3
Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.—Quantitative and Qualitative Disclosures about Market Risk	42
Item 4.—Controls and Procedures	43

PART II.—OTHER INFORMATION	44
Item 1.—Legal Proceedings	44
Item 1A.—Risk Factors	44
Item 2.—Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.—Defaults Upon Senior Securities	58
Item 4.—Mine Safety Disclosures	58
Item 5.—Other Information	58
Item 6.—Exhibits	58


	December 31,		June 30,
	2022		2023
Assets
Current assets:
Cash, cash equivalents and current portion of restricted cash	$	125,950	$	55,162
Short-term investments		139,569		138,569
Accounts receivable, net of allowance of $1,375 and $1,501 as of December 31, 2022 and June 30, 2023, respectively		91,430		74,746
Other receivables		17,026		27,088
Inventory		37,144		38,517
Prepaid expenses and other current assets		60,601		58,279
Total current assets		471,720		392,361
Operating lease right-of-use assets		52,586		63,093
Land, property and equipment, net		264,068		292,463
Notes receivable and other long-term assets, net		30,467		31,004
Investments in other entities		193,273		196,770
Goodwill		64,328		64,328
Intangible assets, net		5,915		6,365
Total assets	$	1,082,357	$	1,046,384
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of debt	$	93	$	38
Current portion of finance lease obligations		948		961
Current portion of operating lease obligations		4,206		5,075
Accounts payable		44,435		37,943
Accrued liabilities		90,079		76,609
Deferred revenue		5,970		4,920
Derivative liabilities, related party		2,415		2,779
Total current liabilities		148,146		128,325
Long-term portion of debt		145,471		144,837
Long-term portion of finance lease obligations		2,134		2,024
Long-term portion of operating lease obligations		48,911		59,393
Long-term portion of derivative liabilities, related party		1,430		—
Other long-term liabilities		8,794		8,908
Total liabilities		354,886		343,487
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $0.0001 par value. 1,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock, $0.0001 par value. 454,000,000 shares authorized; 222,437,429 shares and 222,910,057 shares issued and outstanding as of December 31, 2022 and June 30, 2023, respectively		22		22
Additional paid-in capital		1,553,668		1,582,009
Accumulated deficit		(829,975)		(884,973)
Accumulated other comprehensive loss		(3,722)		(1,319)
Total Clean Energy Fuels Corp. stockholders’ equity		719,993		695,739
Noncontrolling interest in subsidiary		7,478		7,158
Total stockholders’ equity		727,471		702,897
Total liabilities and stockholders’ equity	$	1,082,357	$	1,046,384


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2023		2022		2023
Revenue:
Product revenue	$	85,853	$	75,629	$	158,360	$	195,356
Service revenue		11,371		14,919		22,361		27,375
Total revenue		97,224		90,548		180,721		222,731
Operating expenses:
Cost of sales (exclusive of depreciation and amortization shown separately below):
Product cost of sales		65,933		55,570		123,548		175,228
Service cost of sales		6,127		8,592		12,749		16,202
Selling, general and administrative		26,481		28,548		54,408		58,197
Depreciation and amortization		10,556		10,893		21,946		21,571
Total operating expenses		109,097		103,603		212,651		271,198
Operating loss		(11,873)		(13,055)		(31,930)		(48,467)
Interest expense		(732)		(4,365)		(3,809)		(8,719)
Interest income		490		2,766		754		5,483
Other income, net		14		28		34		71
Loss from equity method investments		(1,193)		(1,915)		(2,870)		(3,805)
Loss before income taxes		(13,294)		(16,541)		(37,821)		(55,437)
Income tax (expense) benefit		(68)		55		(117)		119
Net loss		(13,362)		(16,486)		(37,938)		(55,318)
Loss attributable to noncontrolling interest		127		185		512		320
Net loss attributable to Clean Energy Fuels Corp.	$	(13,235)	$	(16,301)	$	(37,426)	$	(54,998)
Net loss attributable to Clean Energy Fuels Corp. per share:
Basic and diluted	$	(0.06)	$	(0.07)	$	(0.17)	$	(0.25)
Weighted-average common shares outstanding:
Basic and diluted		222,433,900		222,908,402		222,496,426		222,813,286


	Clean Energy Fuels Corp.				Noncontrolling Interest				Total
	Three Months Ended				Three Months Ended				Three Months Ended
	June 30,				June 30,				June 30,
	2022		2023		2022		2023		2022		2023
Net loss	$	(13,235)	$	(16,301)	$	(127)	$	(185)	$	(13,362)	$	(16,486)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of $0 tax in 2022 and 2023		(1,297)		585		—		—		(1,297)		585
Unrealized gain (loss) on available-for-sale securities, net of $0 tax in 2022 and 2023		(119)		1,113		—		—		(119)		1,113
Total other comprehensive income (loss)		(1,416)		1,698		—		—		(1,416)		1,698
Comprehensive loss	$	(14,651)	$	(14,603)	$	(127)	$	(185)	$	(14,778)	$	(14,788)


								Accumulated
				Additional				Other		Noncontrolling		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Interest in		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Subsidiary		Equity
Balance, December 31, 2021	222,684,923	$	22	$	1,519,918	$	(771,242)	$	(1,622)	$	8,335	$	755,411
Issuance of common stock	585,775		—		273		—		—		—		273
Repurchase of common stock	(511,010)				(3,001)		—		—		—		(3,001)
Stock-based compensation	—		—		8,253		—		—		—		8,253
Stock-based sales incentive charges	—		—		1,721		—		—		—		1,721
Net loss	—		—		—		(24,191)		—		(385)		(24,576)
Other comprehensive income	—		—		—		—		249		—		249
Balance, March 31, 2022	222,759,688		22		1,527,164		(795,433)		(1,373)		7,950		738,330
Issuance of common stock	96,728		—		300		—		—		—		300
Repurchase of common stock	(679,244)		—		(3,121)		—		—		—		(3,121)
Stock-based compensation	—		—		6,468		—		—		—		6,468
Stock-based sales incentive charges	—		—		2,307		—		—		—		2,307
Net loss	—		—		—		(13,235)		—		(127)		(13,362)
Other comprehensive loss	—		—		—		—		(1,416)		—		(1,416)
Balance, June 30, 2022	222,177,172	$	22	$	1,533,118	$	(808,668)	$	(2,789)	$	7,823	$	729,506


		Six Months Ended June 30,
	2022		2023
Cash flows from operating activities:
Net loss	$	(37,938)	$	(55,318)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		21,946		21,571
Provision for credit losses and inventory		1,006		1,006
Stock-based compensation expense		14,721		12,189
Stock-based sales incentive charges		8,533		27,652
Change in fair value of derivative instruments		2,114		(1,068)
Amortization of discount and debt issuance cost		(306)		(2,190)
Gain on disposal of property and equipment		(66)		(101)
Loss on extinguishment of debt		2,268		—
Asset impairments and other charges		—		482
Loss from equity method investments		2,870		3,805
Non-cash lease expense		1,687		2,919
Deferred income taxes		62		(165)
Changes in operating assets and liabilities:
Accounts and other receivables		19,024		16,518
Inventory		(4,487)		(3,489)
Prepaid expenses and other assets		(2,002)		(6,956)
Operating lease liabilities		(1,747)		(2,075)
Accounts payable		6,912		(6,351)
Deferred revenue		(1,034)		(1,050)
Accrued liabilities and other		(1,325)		(14,341)
Net cash provided by (used in) operating activities		32,238		(6,962)
Cash flows from investing activities:
Purchases of short-term investments		(194,353)		(186,273)
Maturities and sales of short-term investments		194,250		190,500
Purchases of and deposits on property and equipment		(17,447)		(42,754)
Grant proceeds for capital projects		—		1,947
Disbursements for loans receivable		(516)		(2,340)
Proceeds from paydowns, maturities, and sales of loans receivables		218		1,612
Cash received from sale of certain assets of subsidiary, net		3,885		—
Investments in other entities		(51,600)		(5,500)
Payment and deposits on equipment and manure rights for RNG production projects		(4,915)		(15,080)
Proceeds received for joint development and construction of station projects		—		1,172
Advance to DR JV		—		(5,500)
Proceeds from disposal of property and equipment		80		198
Net cash (used in) investing activities		(70,398)		(62,018)
Cash flows from financing activities:
Issuance of common stock		573		335
Repurchase of common stock		(6,122)		—
Payments of tax withholdings on net settlement of equity awards		—		(175)
Fees paid for lender and debt issuance costs		(50)		(1,440)
Proceeds for Adopt-a-Port program		890		150
Repayment of proceeds for Adopt-a-Port program		(525)		(705)
Proceeds from debt instruments		14,000		255
Repayments of debt instruments and finance lease obligations		(17,315)		(612)
Payments of debt extinguishment costs		(2,186)		—
Net cash (used in) financing activities		(10,735)		(2,192)
Effect of exchange rates on cash, cash equivalents and restricted cash		(66)		384
Net (decrease) in cash, cash equivalents and restricted cash		(48,961)		(70,788)
Cash, cash equivalents and restricted cash, beginning of period		106,456		125,950
Cash, cash equivalents and restricted cash, end of period	$	57,495	$	55,162
Supplemental disclosure of cash flow information:
Income taxes paid	$	50	$	57
Interest paid, net of $0 and $581 capitalized, respectively	$	923	$	8,279


			Gross
	Amortized		Unrealized		Estimated
	Cost		Gain (Loss)		Fair Value
Zero coupon bonds	$	74,524	$	(365)	$	74,159
U.S. government securities		64,861		19		64,880
Certificates of deposit		530		—		530
Total short-term investments	$	139,915	$	(346)	$	139,569


	Gross Amounts		Gross Amounts		Net Amount
	Recognized		Offset		Presented
Assets:
Fueling agreements:
Prepaid expenses and other current assets	$	1,640	$	—	$	1,640
Notes receivable and other long-term assets, net		5,115		—		5,115
Total derivative assets	$	6,755	$	—	$	6,755
Liabilities:
Commodity swaps:
Current portion of derivative liabilities, related party	$	2,415	$	—	$	2,415
Long-term portion of derivative liabilities, related party		1,430		—		1,430
Total derivative liabilities	$	3,845	$	—	$	3,845


	December 31, 2022			June 30, 2023
	Volumes	Weighted-Average Price per		Volumes	Weighted-Average Price per
Year	(Diesel Gallons)	Diesel Gallon		(Diesel Gallons)	Diesel Gallon
2023	5,000,000	$	3.18	2,500,000	$	3.18
2024	1,875,000	$	3.18	1,875,000	$	3.18


	December 31, 2022			June 30, 2023
Significant Unobservable Inputs	Input Range	Weighted Average		Input Range	Weighted Average
ULSD Gulf Coast Forward Curve	$2.35 - $2.59	$	2.48	$1.98 - $2.23	$	2.13
Historical Differential to PADD 3 Diesel	$0.88 - $1.62	$	1.13	$0.92 - $1.62	$	1.14
Historical Differential to PADD 5 Diesel	$1.89 - $3.00	$	2.30	$1.89 - $3.02	$	2.36


	December 31, 2022		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities:
U.S. government securities ⁽¹⁾	$	64,880	$	64,880	$	—	$	—
Zero coupon bonds ⁽¹⁾		74,159		—		74,159		—
Convertible promissory note ⁽⁴⁾		1,880		—		—		1,880
Certificates of deposit ⁽¹⁾		530		—		530		—
Embedded derivatives ⁽³⁾		6,755		—		—		6,755
Liabilities:
Commodity swap contracts ⁽²⁾	$	3,845	$	—	$	—	$	3,845


	Assets:		Assets:		Assets:		Liabilities:		Liabilities:
	Commodity		Embedded		Convertible		Commodity		Embedded
	Swap Contracts		Derivatives		Promissory Note		Swap Contracts		Derivatives
Balance as of March 31, 2022	$	—	$	9,923	$	—	$	(8,566)	$	—
Settlements, net		—		—		—		2,622		—
Total gain (loss)		—		1,422		—		(5,090)		(32)
Balance as of June 30, 2022	$	—	$	11,345	$	—	$	(11,034)	$	(32)

Balance as of March 31, 2023	$	—	$	4,949	$	3,048	$	(3,875)	$	(696)
Settlements, net		—		—		—		1,441		—
Total gain (loss)		—		1,888		889		(345)		616
Purchases		—		—		1,268		—		—
Equity method investment loss		—		—		(910)		—		—
Balance as of June 30, 2023	$	—	$	6,837	$	4,295	$	(2,779)	$	(80)

Change in unrealized gain (loss) for the three months ended June 30, 2022 included in earnings	$	—	$	1,422	$	—	$	(2,468)	$	(32)
Change in unrealized gain (loss) for the three months ended June 30, 2023 included in earnings	$	—	$	1,888	$	—	$	1,096	$	616
Change in unrealized gain (loss) for the three months ended June 30, 2023 included in other comprehensive income (loss)	$	—	$	—	$	889	$	—	$	—


	December 31, 2022
			Unamortized Debt		Balance, Net of
	Principal Balance		Financing Costs		Financing Costs
Riverstone term loan	$	150,000	$	4,529	$	145,471
Other debt		93		—		93
Total debt		150,093		4,529		145,564
Less amounts due within one year		(93)		—		(93)
Total long-term debt	$	150,000	$	4,529	$	145,471


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2023		2022		2023
Product revenue:
Volume-related
Fuel sales⁽¹⁾	$	67,094	$	53,267	$	125,712	$	160,162
Change in fair value of derivative instruments⁽²⁾		(1,079)		3,600		(2,114)		1,068
RIN Credits		9,795		5,377		17,727		9,880
LCFS Credits		4,085		2,474		7,519		4,772
AFTC ⁽³⁾		(9)		5,059		222		9,555
Total volume-related product revenue		79,886		69,777		149,066		185,437
Station construction sales		5,967		5,852		9,294		9,919
Total product revenue		85,853		75,629		158,360		195,356
Service revenue:
Volume-related, O&M services		11,035		13,913		21,745		25,957
Other services		336		1,006		616		1,418
Total service revenue		11,371		14,919		22,361		27,375
Total revenue	$	97,224	$	90,548	$	180,721	$	222,731



Significant Unobservable Inputs	December 31, 2022	June 30, 2023
Risk-free interest rate	4.57%	5.42%
Credit adjustment	8.36%	6.80%
Credit adjusted discount rate	12.93%	12.22%


	December 31,		June 30,
	2022		2023
Loans to customers to finance vehicle purchases	$	523	$	422
Accrued customer billings		4,910		7,489
Fuel tax credits		9,462		7,376
Other		2,131		11,801
Total other receivables	$	17,026	$	27,088


	December 31,		June 30,
	2022		2023
Land	$	3,476	$	3,620
LNG liquefaction plants		94,790		96,607
Station equipment		353,104		379,272
Trailers		73,253		72,553
Other equipment		106,184		99,795
Construction in progress		91,105		117,921
		721,912		769,768
Less accumulated depreciation		(457,844)		(477,305)
Total land, property and equipment, net	$	264,068	$	292,463


		Warrant
		Shares
Outstanding and unvested as of December 31, 2022		42,314,667
Granted		—
Vested		(1,763,112)
Outstanding and unvested as of June 30, 2023		40,551,555


Fiscal year:
Remainder of 2023	$	481
2024		962
2025		962
2026		985
2027		1,105
Thereafter		1,218
Total minimum lease payments		5,713
Less amount representing interest		(1,260)
Present value of lease receivables	$	4,453


	Year Ended						Three Months Ended				Six Months Ended
Fuel volume, GGEs⁽²⁾ sold (in millions),	December 31,						June 30,				June 30,
correlating to total volume-related product revenue	2020		2021		2022		2022		2023		2022		2023
RNG⁽¹⁾		153.3		167.0		198.2		50.0		58.6		89.7		112.0
Conventional natural gas⁽¹⁾		82.1		78.8		69.6		16.0		14.1		34.6		29.5
Total fuel volume		235.4		245.8		267.8		66.0		72.7		124.3		141.5

Exhibit Number		Description
31.1*		Certification of Andrew J. Littlefair, President and Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Robert M. Vreeland, Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Andrew J. Littlefair, President and Chief Executive Officer, and Robert M. Vreeland, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language):
		(i) Condensed Consolidated Balance Sheets as of December 31, 2022 and June 30, 2023;
		(ii) Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2023;
		(iii) Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2023;
		(iv) Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2023;
		(v) Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2023; and
		(vi) Notes to Condensed Consolidated Financial Statements.
104*		Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).

	CLEAN ENERGY FUELS CORP.

Date: August 9, 2023	By:	/s/ ROBERT M. VREELAND
		Robert M. Vreeland
		Chief Financial Officer (Principal financial officer and duly authorized to sign on behalf of the registrant)