Clean Energy Fuels: Still Not Much To Get Excited About

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The situation for Clean Energy Fuels (NASDAQ:CLNE) isn't concerning request for RNG, but successful figuring retired a measurement to proviso request while moving person to profitability, thing I don't deliberation is going to hap anytime soon.

The last clip I wrote about CLNE stock, I mentioned nan awesome challenges nan institution faces, which I spot arsenic still being successful place. Among them were:

the clip it'll return to build retired infrastructure, nan increasing request to summation nan diversification of its partners, incurring important losses moreover pinch nan replacement substance taxation credit, and nan deficiency of superior needed for Clean Energy Fuels to standard astatine a faster pace.

Since that clip it has secured a humble $150.00 cardinal indebtedness from Riverstone Credit Partners, arsenic good arsenic adding a fewer much partners and customers to its base. While that's thing nan institution must proceed to do, it's still doing truthful astatine a reasonably incremental gait erstwhile measured against existent demand.

While gross has continued to climb, it hasn't been capable to return advantage of that standard because of rising operating expenses which has resulted successful expanding nett losses, which arsenic of the past net report was projected to beryllium $58.00 cardinal for afloat twelvemonth 2022. Operating expenses successful nan past 4th came successful astatine $134.00 million, compared to $89.2 cardinal successful nan aforesaid 4th of 2021. I expect that to continue.

In this article we'll look astatine immoderate of nan caller wins nan institution has had, nan indebtedness it secured, and why I still spot it taking a agelong clip earlier nan institution turns a profit. And pinch nan rate pain its going through, nan $23.1 cardinal successful rate and rate equivalents astatine nan extremity of nan past 4th is looking very small.

Its superior issue

In my past article connected CLNE my awesome thesis was that nan awesome rumor facing nan institution wasn't request for RNG aliases its expertise to pull partners, but instead, having capable superior to return advantage of nan quickly increasing market. I support that this remains nan cardinal situation for nan company.

A awesome interest isn't only getting operating capital, but besides doing truthful earlier larger companies pinch bigger pockets commencement to salary much attraction to nan imaginable successful this power space.

In its past net study nan institution mentioned it was moving connected securing a $150.00 cardinal loan, and successful nan second portion of December 2022, it announced it had entered into a four-year statement pinch Riverstone Credit Partners L.P., for a $150.00 cardinal indebtedness linked to sustainable projects.

Among nan projects CLNE is targeting to usage nan superior connected are boosting building astatine dairies astir nan U.S. The institution sees nan added superior helping to accelerate nan gait of improvement of those projects; thing it decidedly needs to successfully execute connected to return advantage of nan existent request and expanding competition.

Even though nan dairies will lend to nan occurrence of CLNE complete nan agelong term, I want to spot really overmuch superior nan institution will allocate to expanding nan number of RNG fueling stations astir nan country. That would person an contiguous and affirmative semipermanent effect connected nan capacity of CLNE.

Latest wins

Amazon (AMZN) was a bully triumph for nan institution a while back, but it does expose CLNE to consequence if nan ecommerce elephantine ever decides to spell pinch a competitor. For that reason, expanding nan number of customers it useful pinch is important to spreading nan consequence around.

With that successful mind, the institution announced connected January 24, 2022, that it had won a bully spot of business pinch San Diego Metropolitan Transit System (MTS), representing 86 cardinal gallons of RNG to run its autobus fleet.

MTS has a full fleet of 764 buses, pinch 595 of them being tally connected RNG. This will of people springiness its gross a boost, but since location were competitory bids for nan business, nan truth that CLNE was nan winner, suggests it could person a antagonistic effect connected nan bottommost statement of nan company. We'll person to hold to spot what guidance has to opportunity astir it, but it is thing to watch intimately pinch that galore gallons of substance being sold.

The institution besides continues to activity pinch partner TotalEnergies successful nan improvement of RNG from dairy waste. It expects its task astatine Del Rio Dairy successful Texas to beryllium operational successful nan first 4th of 2023, which is expected to nutrient complete 1.00 cardinal gallons of RNG annually. It's besides continuing to build astatine South Fork Dairy successful Texas, which is expected to beryllium operational successful nan adjacent future, and is projected to person a capacity to nutrient complete 2.6 cardinal gallons of RNG annually.

CLNE has entered into a number of smaller deals to waste RNG to, including Filamar Energy Services for astir 4.2 cardinal gallons of compressed earthy gas; an upgrade astatine Denver International Airport that represents astir 5 cardinal gallons of RNG; Jacksonville Transit, pinch request for astir 2.1 cardinal gallons; Stark Area Regional Transit successful Canton, OH, which represents request of astir 2.5 cardinal gallons; among immoderate different deals that were extensions of existent business, arsenic good arsenic a number of smaller deals.

From nan constituent of position of diversifying its business, these are each positives for nan company, but again, input costs are rising significantly, and we'll person to hold and spot really expanding gross will effect nan bottommost line. So acold nan company's standard hasn't travel adjacent to generating a profit. How overmuch business it'll person to triumph earlier standard starts taking effect connected nan bottommost statement is what needs to beryllium known and determined.


It's my sentiment that CLNE, while operating successful a marketplace that has beardown demand, will proceed to struggle because of nan tremendous costs that will beryllium required to build retired nan infrastructure needed to service nan RNG market.

As I've mentioned successful nan past, it's going to return an tremendous magnitude of superior to do this, and moreover though nan institution landed nan $150.00 cardinal loan, it's successful reality a very mini magnitude erstwhile considering existent marketplace demand.

I deliberation it's still going to return a sizeable magnitude of clip earlier CLNE turns profitable, and pinch only a mini magnitude of superior astatine its disposal, it's going to person to proceed to scramble to raise superior to summation marketplace share.

My conclusion is it's astir apt mounting itself up to beryllium acquired, alternatively than engaging successful a semipermanent maturation scheme arsenic a standalone company. It simply doesn't person nan superior to compete successful nan RNG marketplace successful a measurement that has a visible way to profitability.

This article was written by

Gary Bourgeault floor plan picture

I americium a erstwhile finance advisor and proprietor of respective businesses. These days I put only for myself while continuing to constitute connected a assortment of financial and economical topics.

Disclosure: I/we person nary stock, action aliases akin derivative position successful immoderate of nan companies mentioned, and nary plans to initiate immoderate specified positions wrong nan adjacent 72 hours. I wrote this article myself, and it expresses my ain opinions. I americium not receiving compensation for it (other than from Seeking Alpha). I person nary business narration pinch immoderate institution whose banal is mentioned successful this article.

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