Clean Energy Fuels Is on Fire

Clean Energy Fuels (CLNE), by every measure, produced very likely the best quarter in its history, which is a welcome sign for the investors who have followed the company for a very long time. Its revenue for the quarter came in at $95.8 million, up 12% as compared to the revenue of $85.8 in the same quarter last year. At the same time, the company shifted gears to positive from regular losses, as its earnings for the quarter grew to $0.03 per share from a negative $0.34 per share in the first quarter of 2015.

This boost in the earnings per share of Clean Energy is due to its efforts of growing fuel gallon margins and reduction in the operating costs.

For instance, its fuel gallon margin for the quarter rose 24% to $0.36 per gallon as compared to a gallon fuel margin of $0.28 per gallon in the first quarter of 2015. A primary growth driver behind this strong margin is the acceleration of volumes from Redeem, its renewable green gas that goes into vehicles. In fact, its redeem gallons, which is included in its CNG and LNG fuel gallons, rose 70% year-over-year to 15.2 million.

Meanwhile, Clean Energy costs and expenses continue to fall. For instance, its SG&A expenses for the quarter dropped 15% to $25.59 million from $30.23 million in the first quarter of 2015. At the same time, its product and service costs of sales fell by 4% and 38% respectively for the quarter on a year-over-year basis. As a result of this decline in the cost and expenses, its total operating expenses for the quarter came down by 7% to $99.8 million as against total operating expenses of $106.96 million in the same quarter a year earlier.

Looking ahead, Clean Energy anticipates its costs to decline further in the remainder of the year. For instance, its SG&A expenses are expected to be in the bracket of 16 million to 20 million, while its capital expenditure is projected to fall by 50% to more than $25 million for the year. Thus, these operational results indicate that the company is making progress in all the department of its business that should drive its financial performance going forward.

Expanding infrastructure to drive its growth

Apart from this, Clean Energy is signing new supply deals that should increase its LNG volumes going forward. As such, Clean Energy has recently entered into an agreement with Hawaii Gas to supply nearly 14 million LNG gallons over the next five years. Thus, Clean Energy remains active in the bulk LNG marketplace that should drive its growth in the coming years.

Conclusion

Despite growth slowing for the natural gas vehicles due to continued weakness in the oil and gas prices, Clean Energy was able to improve its operating and financial performance significantly. However, these prices are gradually rising, indicating a better time for the natural gas vehicles that should allow Clean Energy to improve the top line performance additionally. At the same time, Clean Energy is reducing costs and improving gallon margins through the accelerated sale of Redeem that should enhance the bottom line results for the company going forward. Therefore, Clean Energy remains a good stock to hold for a long-term.

Published on May 19, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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