Is Clean Energy Fuels Here to Stay?

Clean Energy Fuels (CLNE) announced fourth quarter ended December 31, 2015 total revenue of $119.3 million, down 10 percent year-over-year from $132.1 million during the same period last year.

Clean Energy declared fourth quarter of 2015 adjusted net income of $7.7 million or $0.08 per share, down 26 percent year-over-year from $10.4 million or $0.11 per share in the fourth quarter of 2014.

The key energy production and distribution company reported continued decline in both its top and bottom lines primarily due to the ongoing weaker global commodity demand and pricing environment.

Despite, increase in global reach of Clean Energy the company suffered continued year-over-year decline in its top line mainly due to weaker natural gas costs, ongoing weakness in Clean Energy’s international compressor business owing to the strengthening US dollar, weak oil prices and smaller construction revenue owing to the unfavorable timing and type of concluded projects.

Increasing demand is a good thing

There’s increasing global adoption of refuse trucks powered by natural gas which is believed to deliver sustainable long-term growth for Clean Energy as the international energy demand and pricing conditions improve slowly but steadily.
Moreover, there are several well-recognized fleets that are increasingly fueling with natural gas including, Honda, Frito-Lay, FedEx and many more.

The accelerated global adoption of cleaner fuels including, LNG, CNG and RNG which provide several customer benefits such as clean fuel, extensive domestic usage, cheap, safe, competitive edge and minimal maintenance are believed to deliver sustainable long-term company growth while offering attractive shareholder returns.

The sales of Clean Energy’s Redeem™ which is the company’s renewable natural gas (RNG) vehicle fuel product that grew over double during 2015 to nearly 50 million gasoline gallon equivalents (GGEs) from 20 million GGEs during the fiscal year 2014 and primarily driven by selected customer’s fuel choice such as the University of California San Diego, the City of Santa Monica's Big Blue Bus, Republic Services, UPS and others.

The worldwide growing drive to use cleaner fuels compared to fossil fuels which is in line with international continued commitment to minimize emissions and protect environment is believed to be further supported by expanding number of shale plays in the US and rapid transition of heavy-duty trucks to use NG as their fuel.

Importantly, after December 31, 2015, Clean Energy paid $16.8 million all in cash to buyback $32.5 million of the $250.0 million 5.25% Notes payable 2018 along with accrued interest. Further, Clean Energy rewarded $61.8 million in cash as an advance of $60.0 million of the total $145.0 million remaining major amount of convertible notes payable August 2016, along with accrued interest.

The advanced Cummins-Westport Low NOx 9-litre engine is expected to cut NOx emissions by about 90% and thus, believed to be a key technological enhancement and growing the company’s key market share by achieving superior environment-friendliness.

The rapid global acceptance of cleaner fuel vehicles has particularly grown the company’s year-over-year sales being further driven by recent introduction of newer and cleaner fuel trucks with much lower emissions and specifically encouraging the company to deliver attractive shareholder returns through planned share repurchases and solid dividends.


Overall, the investors are advised to “Hold” their position in Clean Energy Fuels Corp. considering the company’s solid long-term growth prospects and currently, debt-burdened balance sheet with notable total debt of $574.22 million against weaker total cash position of $165.98 million only, restricting the company to continue its daily operations profitably. The profit margin of -20.88% seems disappointing and indicates no profit but loss. The PEG ratio of -0.21 signifies no near-term growth but decline compared to solid industry’s growth average of 3.55.
Published on Apr 13, 2016
By Subhen Mittra

Copyrighted 2016. Content published with author's permission.

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