Clean Energy Fuels Corp. 2022 Form 10-K Summary
Business context and reporting period
Clean Energy Fuels Corp. supplies renewable natural gas (RNG) and conventional natural gas as compressed natural gas and liquefied natural gas for medium- and heavy-duty transportation fleets in the United States and Canada. It also provides fueling-station construction, operations and maintenance, equipment, virtual pipeline, and environmental-credit services. The filing covers the fiscal year ended December 31, 2022; it is an annual report, not a standalone fourth-quarter filing.
- 569 U.S. fueling stations and 25 Canadian stations owned, operated, or supplied at year-end.
- More than 1,000 fleet customers and over 50,000 vehicles served.
- RNG represented 84% of vehicle-fuel sales in 2022, up from 68% in 2021 based on reported volumes.
- Management’s stated goal is to deliver 100% RNG across its fueling infrastructure by 2025.
Financial and operating metrics
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Total revenue | $420.2 million | $255.6 million | 64.4% increase |
| Product revenue | $373.0 million | $213.1 million | 74.9% increase |
| Service revenue | $47.2 million | $42.5 million | 11.0% increase |
| Operating loss | $51.7 million | $95.0 million | Improved by $43.3 million |
| Net loss attributable to Clean Energy | $58.7 million | $93.1 million | Improved by $34.4 million |
| Loss per share | $0.26 | $0.44 | Improved |
| Cash flow from operations | $66.7 million | $41.3 million | 61.7% increase |
- Fuel volume sold increased 8.9% to 267.8 million GGEs, including 198.2 million RNG GGEs, up 18.7%, and 69.6 million conventional-natural-gas GGEs, down from 78.8 million.
- O&M services volume increased to 240.4 million GGEs from 229.8 million.
- Approximate gross profit was $112.4 million, or 26.8% of revenue, compared with approximately $40.0 million, or 15.7%, in 2021.
- Operating margin improved to approximately negative 12.3% from negative 37.2%; net margin improved to approximately negative 14.0% from negative 36.4%.
- RIN revenue increased to $34.7 million from $31.7 million, while LCFS revenue declined to $12.6 million from $16.8 million.
- Alternative Fuel Excise Tax Credit revenue was $21.8 million. The Inflation Reduction Act reinstated and extended the credit retroactively from January 1, 2022 through December 31, 2024.
- Capital expenditures were $44.5 million, and investing cash outflows were $148.5 million, including an $89.7 million contribution to the bp joint venture.
- Cash, cash equivalents and short-term investments totaled $263.5 million, excluding current restricted cash, at year-end.
- Principal debt was $150.1 million at year-end, primarily a new $150.0 million Riverstone senior secured term loan due December 2026. The company reported compliance with applicable debt covenants.
Material changes versus the prior comparable period
- Revenue growth was driven primarily by higher fuel prices and volumes, increased RNG sales, higher RIN revenue, reinstated AFTC revenue, and lower Amazon warrant contra-revenue charges.
- Amazon warrant contra-revenue charges declined to $24.3 million from $83.6 million in 2021; the 2022 charge was non-cash and related to customer fuel purchases.
- Product cost of sales increased to $279.7 million from $189.6 million, reflecting higher fuel volumes, natural-gas prices, and station-construction activity.
- SG&A increased to $109.5 million from $89.9 million, primarily due to higher stock-based compensation, salaries and benefits, and professional fees.
- Depreciation and amortization increased to $54.7 million from $45.2 million, including $10.6 million of accelerated depreciation and $2.5 million of incremental asset-retirement obligations related to decommissioning selected Pilot stations.
- Loss from equity-method investments increased to $4.8 million from $0.4 million, principally reflecting the TotalEnergies and bp joint ventures.
- The company entered into the Riverstone term loan, repaid the SG facility and NG Advantage’s Berkshire debt, and terminated the Plains revolving facility.
- The company contributed $89.7 million to the bp joint venture in 2022 and had contributed $178.0 million to RNG production projects cumulatively at year-end.
- The company repurchased 1.2 million shares for $6.1 million during 2022, leaving $26.5 million available under its $50.0 million authorization.
Guidance, outlook, commentary, risks and unusual items
- Management planned approximately $90.0 million of 2023 capital expenditures and anticipated deploying up to approximately $40.0 million in 2023 to develop ADG RNG production facilities. The filing does not provide revenue or earnings guidance.
- The TotalEnergies joint venture had one project under construction, expected to produce up to 1.1 million GGEs annually. The bp joint venture had six projects under construction, expected to produce up to 11.2 million GGEs annually when completed. Two wholly owned projects under development were expected to produce 3.4 million GGEs annually.
- Management stated that cash resources and expected operating and financing cash flows should satisfy business requirements for at least the 12 months following the filing date, but additional capital could be required for project development, capital expenditures, debt repayment, investments, or unexpected costs.
- Key risks include volatility in RIN and LCFS prices, dependence on government credits and incentives, RNG supply and project-development delays, competition from electric, hydrogen, renewable-diesel and other fuels, slow fleet adoption, inflation and supply-chain constraints, and variable-rate debt exposure.
- California and federal zero-emission vehicle policies could reduce long-term demand for internal-combustion natural-gas vehicles, even though RNG may provide substantially lower or negative lifecycle emissions.
- Outstanding material commitments included approximately $400.8 million of contractual obligations, including debt, leases, take-or-pay contracts, construction contracts and RNG-project capital commitments.
- Off-balance-sheet items included $50.2 million of surety bonds, a commitment for up to $5.5 million of delayed-draw loans to an equity-method investee, take-or-pay gas contracts, and a commitment to supply UPS with 170.0 million GGEs of RNG through March 2026.
- KPMG issued an unqualified audit opinion on the financial statements and internal controls. The critical audit matter concerned Level 3 valuation of embedded derivatives and commodity swaps.
Important facts investors should verify
- Whether RNG volumes, environmental-credit prices, and the AFTC extension can support improving margins and eventual profitability.
- The timing, capital requirements, permitting, production volumes, and credit qualification of the TotalEnergies, bp, and wholly owned RNG projects.
- Debt-service capacity and covenant headroom under the $150.0 million variable-rate Riverstone term loan, including the $150.0 million balloon maturity in 2026.
- The economic effect and potential dilution of the Amazon warrant, with 42.3 million shares unvested at December 31, 2022 and additional shares potentially vesting based on fuel purchases.
- The financial and operational impact of Pilot station decommissioning and the 26 nearly completed but unopened stations carrying $47.5 million of assets.
- Exposure to changes in federal and state environmental-credit programs, including potential compliance reviews, credit invalidation, or required credit purchases.
- Whether management’s stated 2025 100% RNG target and 2023 spending plans remain consistent with available liquidity and project execution capacity.