Clean Energy Fuels Corp. Q4 FY2025 earnings call

• Completed fourth quarter and year with strong results. Q4 had solid execution, upstream RNG production platform had progress. Repaid $65 million of debt in Q4. South Fork Dairy project in Texas completed and brought online, largest in portfolio. East Valley Dairy project in Idaho began injecting gas, part of JV with BP. - Policy outlook positive with encouraging signals across regulatory programs. California Air Resources Board LCFS data showed constructive development. EPA expected to recognize RNG's role. Rescinding of endangerment finding under Clean Air Act is good. - Downstream operations: fuel distribution business had solid quarter with volume growth from transit, refuse, trucking customers. Signed agreements with WM and various cities. Heavy-duty truck adoption of Cummins X15N engine had slower 2025 but fundamentals improving. - 2026 outlook: expected continued growth in RNG volumes, overall results expected to improve, adjusted EBITDA range $70 - $75 million, SG&A expenses expected to come down by about 10%, capital expenditures steady for fuel distribution and RNG upstream

For full year 2025, adjusted EBITDA was $67.6 million, exceeding the top end of guidance. RNG delivered in 2025 was 237.4 million gallons, about 97% of target. In Q4 2025, 64.1 million gallons of RNG were delivered, 5% increase over Q3 and 3% higher than year ago. RNG upstream business expected to produce 7 - 9 million gallons from eight operating dairies in 2026. Fuel distribution business had solid quarter with volume growth. Revenues for 2026 expected to range from $420 million to $440 million with adjusted EBITDA of $70 - $75 million

• 2026 expected to deliver 250 million gallons of RNG with total fuel volumes around 324 million gallons. RNG upstream business expected to produce 7 - 9 million gallons from eight operating dairies. Revenues range $420 - $440 million, GAAP net loss $71 - $66 million, adjusted EBITDA $70 - $75 million. - SG&A expenses expected to come down by about 10% or over $10 million in 2026. Capital expenditures for fuel distribution business steady at ~$25 million, for RNG upstream ~$40 million. Expect to generate around $50 million in operating cash flow in 2026. - Constructive view on RIN and LCFS credit prices for 2026, include 45Z credit values in results

• Forward-looking statements involve risks, uncertainties, and assumptions difficult to predict. Factors causing differences described in Risk Factors section of Form 10-Ks. - Weather challenges could impact RNG production, although not to extent of 2025. - Competition in RNG market could impact contract renewals and margins. - Geopolitical and natural gas to oil spread changes could impact fuel margins and payback periods for fleet customers

Q: Good to see the upstream business starting to get to EBITDA positive. Just a sense of the ramp trajectory of the eight facilities you have now open and operating and generating fuel.

A: There will be a bit of a ramp. It is not a dramatic ramp, but certainly, mostly the second half of the year is a little better. You are not right out of the gate in Q1, but certainly much better than what it has been in Q1, and then it kind of ramps up each quarter. It is a significant improvement. We have a range of $3 million to $5 million of adjusted EBITDA, so you are going to ramp that over four quarters.

Q: And then on the 15-liter engine and the truck market, I know it is a tough year. You said some signs of maybe spilling there. What are you hearing from customers in terms of the interest in buying trucks and interest in the 15-liter over this year?

A: I think, you are seeing some of the macro issues that plagued the trucking industry clearing up. That is a healthier backdrop. We are engaged with a lot of the largest fleets. I continue to be encouraged that customers, even with rolling back of various mandates and different policies, are showing a great deal of interest in fleets wanting to be clean, environmental, and have lower-carbon, sustainable trucks. We are seeing and hearing from their customers, the shippers, that this is still of interest. We are working hard to come up with a total cost of ownership, which we can do in our business because we can price very aggressively to give them a good economic return on that natural gas investment, and then they have dramatic savings going forward. I am optimistic. We have demo trucks; not just Clean Energy Fuels Corp., others in the industry have stepped forward. We have the largest fleets in America demoing trucks. We are beginning to see some orders—still small but very instructive—coming. The final thing is the engine seems to be working really well. As I mentioned in my remarks, the torque and horsepower, drivability, even the mileage, is really improved from what we have seen before in the 12-liter. We have to work it hard, and there is a lot of policy turmoil that people are beginning to understand, but I feel better in 2026 than I did in 2025.

Q: Maybe just on the upstream side, I know you touched on the prepared remarks about 45Z. Could you advise how you are accounting for it in your guidance, both on volumes and average CI?

A: We are accounting for it. We are accruing for it as we produce volume. We anticipate that where that would get recorded will be a reduction of cost of sales. In our plan, we are more optimistic than what is currently in the legislation for us to reflect CIs with dairy manure. I will not get into the specifics of exact scores because that varies at every dairy, and, frankly, the legislation is still forthcoming on that. But we are generally a bit more optimistic than what is currently in legislation, and we will record that as we go along in the year according to what is out there in legislation, but we anticipate that it will improve when the final rules come out.

Q: Maybe to put a button on that, if legislation were in the negative 50 territory, that is kind of where you would be today even though you believe that negative 200 might be the ultimate reading on average. Am I saying that correctly?

A: I do not know that we told you it would be minus 200, but we agree that when this finally shakes out, when a 45Z GREET model finally gets adopted, and when we look at the legislation and from the engagement that we have had, we think that it should improve from that minus 50.

Q: While I realize LCFS credits are not back to the levels where most of these projects were underwritten, we are seeing progress as you highlighted in LCFS and also potential through 45Z to further enhance economics. Outside of what you are doing with Moss at present, are the prices and 45Z getting back to a level where it might make sense to revisit some of the growth opportunities in your backlog?

A: Not yet, Derrick. We are optimistic and constructive on where we see, and our partners as well, the LCFS trending over time. Just to remind the audience, we underwrote some of these projects when it was $150 or $180, so we have some room to grow there. I do not think you will see us underwriting any projects right now. We are very focused on bringing these on, having them contribute. We are pleased with that. We have to watch how some of the markets break before we invest more. We have three more projects we are very excited about. We will end the year with 10, breaking over early 2027 for our 11 projects, and we feel pretty good about that. We now have dry powder in case we see one that we have to have. But right now, consider that we are going to take a breather and make sure that what we have under construction and what we have operating get optimized.

Q: For 2026, in fuel distribution, you mentioned the impacts of some significant contract renewals. I think you also mentioned it sounds like you are retaining fewer of the credits in these renewals. Could you talk about the drivers here? Is this just a function of more competition in the market, or what is really causing this?

A: It is twofold. Absolutely, there is competition in the RNG world, and that is what it is. We are in a good place for that, but you cannot deny that there are a lot of folks wanting to put RNG places, and we have a lot of those places to put RNG, but we have to maintain our market share, and it comes at a price. On the contract renewals, that is a reality, but it is a very positive aspect of our model. It is a recurring revenue model, and we have a lot of renewals. We have had some major ones come up where we are reflecting where we are at with current market conditions, prices, other competitors, as well as what we have spent on CapEx in prior years versus where we are headed going forward. That will be reflected. This is very positive because we are talking about renewals, in my view, and the resulting margins are still very adequate for us. They are very good. We are coming off a robust 2025, I will say. We are not necessarily repeating that, but we are accommodating these renewals, and that is part of it.

Q: Are there any weather challenges so far this quarter that we should be thinking about?

A: A little bit. Not to the extent that we saw last year. There have been some freezes, but we are going to go mostly normal course on that. I am not anticipating coming out with some of our facilities saw minus 40 degrees. You have some operating challenges during that, but nothing like last year. We dodged that in terms of a perfect storm of production that came offline from our third parties. We did not see that this year, so that is good.

Q: Could you give us an update on your JVs with BP and TotalEnergies? Is there appetite for growth from your partners? And if I heard correctly, it seems your upstream investments this year are solely related to the Moss Energy Works projects, so just wondering how those JVs are looking.

A: That is right. The CapEx on the RNG is for those Moss projects, the completion of the three. We have that money, and that will get spent throughout the remainder of this year. Two of those projects will be finished, one in the spring, one a little later than that, and then the third project in 2027. That is all we have anticipated with our partners right now, Betty. Our partners—BP has a lot of landfill gas they bring on with their other investments. I think all of us are very interested in bringing East Valley, which is really a significant investment, a very large dairy, on and have it operate correctly. We have our hands full, and I think all of us feel good about where we are. We are always looking at opportunities, as I said on the last question, but right now, we do not have any hard plans or any other investments that we are ready to pull the trigger on. That would be the case with all of our partners.

Q: Would you be able to give us some color on 2026 RNG volumes as well as your own upstream production volumes?

A: Our RNG volumes are anticipated to be 250 million gallons, and the RNG production volumes from our RNG upstream JVs and South Fork are 7 million to 9 million gallons. I will add a little side note on that for everyone's information. That 7 million to 9 million gallons that will be produced at those dairies—all of that gas comes to us. That does also flow through our fuel distribution business. The economics on that can change. In everything except South Fork, it is kind of a 50/50 type share in the economics. When you are looking at that production volume, we get about 50% of the economics on seven of those, and the South Fork is fully consolidated, so we get all the economics there.

Q: Given the narrowing spreads between diesel and CNG, is it reasonable to think that the payback period for the fuel savings for the fleet customer is getting a little elongated here? I understand they are trying to cut costs for the additional upfront cost of the CNG trucks over time, but are we at risk of any elongated payback period and that creating a headwind to this growth outlook?

A: Of course, if the spreads narrowed significantly, you would see that payback period getting elongated. We do not see that yet. As Bob mentioned in his remarks, we are not necessarily optimistic about that spread widening, but we are constructive. We believe we may not quite see the spreads we saw in 2025, but we will have good spreads on natural gas versus oil price. Obviously, there is geopolitics at work here, but that is not an issue that has come up where we are seeing alarm. We can discount our fuel significantly and allow for about a two-year payback. We have to always work with our channel partners and with Cummins and with the dealers and with the OEMs to make sure that we are putting the best price of that package forward, because there is probably always work to be done on that, and the more of those we sell, the better that will get. We are working on that hard with all of those people. We have seen a little bit of tightening of the spread in the Central, South, and Eastern United States, but since January 1, that has widened a little bit. We are okay right now, Craig, but it is something that we keep our eye on constantly.

Q: Is 2025 an all-time record RNG volume through the downstream, and how do you anticipate opportunities to source third-party RNG to continue to grow that over the next two to three years?

A: We would mark it down as a record quarter. It is probably gold medal worthy. On the last part of your question, everybody wants into the transportation sector, and there is a lot of RNG available. We have very good relations with the industry. We source from 90 suppliers today. There is plenty of RNG. What all of us need in the business is more transportation volume, and we are on the tip of the spear there working hard every day to create it. There is a lot of RNG available. All of us could use a little bit more adoption and more volume in transportation because the alternative markets are tough right now. Everybody wants in, and we are in an enviable place because we have all those nozzle clips. There is no shortage of RNG at present, and, frankly, not for the next couple of years, I would imagine.

Q: Following up on that last question,我知道一些时间前你设定了目标，即你的清洁能源燃料公司拥有的加油站将全部使用RNG，而且我知道在加利福尼亚州100%的体积是RNG。我们在朝着那个目标进展如何？我知道你在2026年谈到预计约有2.5亿加仑的RNG。A: Maybe this, Eric: through our infrastructure, we are at 89%. To get to 100, as you said, you have really no limitations in terms of RNG supply. Some of that 89% is because we have seen some conventional fossil natural gas go up. We sort of work against ourselves once in a while on that. We have done a good job moving almost all of the fuel to dairy in California. A few years ago, we talked about someday we would like to see that go from 10% to 30%. It is almost at 100. Maybe in 2026, it will be. We are doing well on that goal, and it will continue to be high like this, I would think, from here on in.

Q: In terms of stations where you do O&M, there are cases where you are involved in the supply of the RNG as well. Is that correct?

A: That is something that we see as an advantage. We have long-term relationships where we have built that station. There could have been a time in the past where a transit property got their natural gas from the local utility. Because we know them, and because we are experts in RNG, we have been able to flip transit properties from buying CNG from a utility to where we are now supplying the RNG. That is what我在讲话中提到的。我们目前有一个很大的候选名单在2026年，我们希望开展那种关系，把他们从竞争对手的供应商——从公用事业公司购买CNG——转移到我们现在供应RNG的地方。我们有一个团队，一群人；那就是他们所做的。我们希望增加那部分。祝我们在那方面好运。Q: It sounds like that would probably be the bigger objective than getting through your stations where it is at 89% up to 95% to 100%. Is that fair?

A: That will help. If we land 4 million gallons or 5 million gallons as an adder where we were doing the maintenance but we were not supplying the gas, and we can flip that to RNG that we are supplying, that is one of the ways that number comes up.

Q: You talked a little bit about the 45Z and waiting on the guidance to be dialed in some, but what conversations are you having in terms of, at some point, monetizing those credits with a third party?

A: Our expectation is to get into routine monetization. We have already been in the market with the ITC monetizing that, and our team is well connected with third parties there as well. That is the plan. We also work with our partners on that. We are in a good spot, and there is definitely an appetite out there for the 45Z credits