Business Context and Reporting Period
Clean Energy Fuels Corp. filed this Form 10-K for the fiscal year ended December 31, 2021; the filing is annual rather than a standalone 2021 fourth-quarter report. The company supplies renewable natural gas (RNG), compressed natural gas (CNG), and liquefied natural gas (LNG) for commercial transportation, operates and maintains fueling stations, constructs stations, sells environmental credits, and develops RNG production projects.
As of year-end, Clean Energy owned, operated, or supplied 548 U.S. fueling stations and 25 Canadian stations, served more than 1,000 fleet customers and over 48,000 vehicles, and delivered 402.6 million gasoline gallon equivalents (GGEs). RNG represented 78% of vehicle fuel sales, with a goal of reaching 100% by 2025.
Key Financial Metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | $255.6 million | $291.7 million | Down $36.1 million |
| Volume-related revenue | $218.5 million | $245.3 million | Includes $83.6 million Amazon warrant contra-revenue in 2021 |
| Station construction revenue | $16.4 million | $26.6 million | Down $10.2 million |
| AFTC revenue | $20.7 million | $19.8 million | Credit applied through December 31, 2021 |
| Gross margin | $40.0 million | $106.3 million | Margin declined to approximately 15.6% from 36.5% |
| Operating income (loss) | $(95.0) million | $(9.8) million | Material deterioration |
| Net income (loss) attributable to Clean Energy | $(93.1) million | $(9.9) million | Loss per share: $(0.44) versus $(0.05) |
| Cash provided by operating activities | $41.3 million | $61.0 million | Down $19.7 million |
| Cash used in investing activities | $(207.7) million | $24.2 million provided | Driven by investments and short-term securities purchases |
| Cash provided by financing activities | $152.8 million | $(18.7) million | Primarily ATM equity proceeds |
Fuel volumes delivered increased 5.3% to 402.6 million GGEs, while RNG delivered increased 8.9% to 167.0 million GGEs. CNG volumes rose to 347.4 million GGEs, partially offset by LNG volume declining to 55.2 million GGEs.
Year-end cash and cash equivalents were $99.4 million and short-term investments were $129.7 million, for combined liquidity of $229.2 million. Total debt principal was $36.1 million, including $12.9 million due in 2022; total indebtedness including finance leases was approximately $39.4 million. The company reported compliance with its debt covenants.
Material Changes Versus the Prior Comparable Period
- Revenue declined despite higher fuel volumes, primarily because of the $83.6 million non-cash Amazon warrant charge, an unfavorable change in derivative fair values, and lower station construction revenue.
- Cost of sales increased to $215.6 million from $185.4 million. Effective cost per gallon rose to $0.50 from $0.42, largely due to higher commodity prices and transportation costs.
- Selling, general and administrative expense increased to $89.9 million from $68.5 million, including higher stock compensation, salaries and benefits, and legal and consulting costs.
- Clean Energy raised $200.0 million of gross proceeds through two at-the-market equity offerings, issuing 22.8 million shares and incurring $6.5 million of transaction costs.
- The company repurchased 452,700 shares for $2.9 million during 2021. The repurchase authorization was increased to $50.0 million, with approximately $32.6 million remaining at year-end.
- Clean Energy formed 50/50 RNG development joint ventures with TotalEnergies and bp. It contributed $70.2 million to the bp joint venture and $4.8 million to the TotalEnergies dairy RNG joint venture in 2021.
- The bp joint venture called for an additional $143.2 million of funding; Clean Energy’s remaining contribution commitment was $51.6 million, payable by June 30, 2022.
Guidance, Outlook, Risks and Unusual Items
- Management expected AFTC to be reinstated during 2022 and estimated approximately $21.2 million of 2022 AFTC revenue, while acknowledging that reinstatement was not assured.
- Planned 2022 capital expenditures were approximately $70.9 million. Management also anticipated deploying up to approximately $195.0 million to develop anaerobic digester gas RNG facilities.
- Management stated that available liquidity and expected operating and financing cash flows should satisfy requirements for at least the following 12 months, but noted that additional capital could be required for projects, debt repayments, investments, repurchases, or unexpected expenditures.
- The Amazon transaction created a warrant for up to 58.8 million shares, subject to vesting and other conditions, at an exercise price of $13.49 per share. The warrant generated $83.6 million of 2021 contra-revenue, including a $76.6 million immediate charge. Approximately 44.1 million warrant shares remained unvested at year-end.
- Key risks include volatility or repeal of RIN, LCFS, AFTC and other incentives; delays or underperformance in RNG projects; competition from electric, hydrogen, renewable diesel and other fuels; slower fleet adoption; commodity price volatility; COVID-19 impacts; regulatory requirements targeting zero-emission vehicles; and potential additional capital needs.
- Thirty nearly completed stations had a carrying amount of $54.2 million but were not open for fueling operations at year-end. Their opening timing and profitability remain uncertain.
- Contractual cash requirements totaled approximately $193.4 million, including $101.5 million due within one year, primarily debt, leases, construction obligations and the bp joint venture contribution.
- The company reported no material pending legal proceedings and received unqualified audit opinions on its consolidated financial statements and internal controls.
Most Important Facts for Investors to Verify
- Whether AFTC was reinstated and the extent to which 2022 revenue benefited from it.
- Progress, timing, funding requirements and expected returns for the bp and TotalEnergies RNG projects.
- RNG volume growth, fleet adoption and station utilization relative to the company’s 2025 100% RNG objective.
- Actual cash conversion after excluding non-cash Amazon warrant charges and other fair-value adjustments.
- Availability of cash after the $51.6 million bp joint venture commitment, planned capital expenditures and anticipated RNG development spending.
- Changes in RIN and LCFS credit prices, regulatory eligibility and compliance requirements.
- Potential dilution from the Amazon warrant, stock options and future equity financing.
- Whether unopened stations, NG Advantage financing needs and government contract exposure create additional impairment or liquidity risk.