Is Clean Energy Fuels Worth the Money?

Clean Energy Fuels (CLNE) had announced third quarter ended September 30, 2015 total revenue of $92.3 million, down 11% or $11.1 million compared to $103.4 million of revenue during the same period last year.

Clean Energy declared third quarter of 2015 net loss of $23.1 million or $0.23 of adjusted loss per share, compared to a net loss of $30.1 million or $0.27 of adjusted loss per share in the third quarter of 2014.

The energy exploration company reported continued year-over-year decline in its top line primarily due to the ongoing weaker global commodity demand and pricing environment, eating into the margins of the company.

Growing despite problems

Clean Energy is consistently delivering significant year-over-year top line growth with sustainable gross margins even in the existing weaker global commodity demand and pricing environment through strategic cost-control initiatives targeted towards minimizing non-core expenditures while investing into future growth projects.

The previous oil and gas pricing relationships for the US shale have reversed with West Texas Intermediate (WTI) Crude Oil Price index performing notably better than the natural gas Henry Hub spot pricing index.

The energy exploration company depicted continued year-over-year top line growth despite depressed global commodity demand and pricing scenario mainly due to successful growth in production over the years.
However, the company’s margins deteriorated proportionately. The global commodity demand and pricing situation is expected to continue to remain weak amid excess fuel supply.

Clean Energy has compelling economics and is delivering fuels at attractive rates with gasoline and diesel offered at rates of $0.32 per GGE and $0.36 per DGE respectively.

The continued betterment in gasoline and diesel prices is a result of the ongoing slow but steady recovery in global commodity demand and pricing environment, encouraging the company to plan for future growth investments.

More positives

Clean Energy has strategically announced "at-the-market" stock offering program through which it intends to sell common stock shares at net sales price of approximately $75 million and utilize net proceeds from the transaction to repay all or some of its remaining 7.5% Convertible Notes payable 2016.

The gallons delivered by Clean Energy for third quarter of 2015 grew 17% to 80.6 million gallons as against 68.6 million gallons offered during the third quarter of 2014. The adoption of refuse trucks remained constant at 8k since 2011 with a consistent increase in adoption of CNG fueled trucks. LNG powered heavy duty trucks are observed to be having consistent growth potential over a longer term and thus, deliver impressive company’s top line growth.

Clean Energy’s plan to sell a majority of its common stock shares in the market is targeted towards generating enough cash flows to fund the company’s key growth plans while delivering attractive shareholder returns. Further, the expanding adoption of LNG powered refuse trucks and heavy duty trucks is forecasted to notably push the demand for clean fuels, benefiting the company.


Overall, the investors are advised to “Hold” their position in Clean Energy Fuels Corp. considering its unstable financial position with significant total debt of $574.22 million against weaker total cash position of $165.98 million only, restricting the company to continue with its daily operations profitably. The profit margin of -20.88% indicate no profit but loss. The PEG ratio of -0.14 signifies no growth but decline compared to solid industry’s growth average of 3.00.
Published on Dec 28, 2015
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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