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Clean Energy Fuels Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 7, 2012 09:34PM
Clean Energy Fuels Corp. (CLNE) filed Quarterly Report for the period ended 2012-03-31. Clean Egy Fuels has a market cap of $1.56 billion; its shares were traded at around $17.94 with and P/S ratio of 5.3.
Highlight of Business Operations:During 2011 and the first three months of 2012, prices for oil, gasoline, and diesel fuel generally increased, while the price for natural gas generally decreased. Oil hit a high of $107.07 in February 2012 and settled at $103.02 per barrel on March 31, 2012. In California, average retail prices for gasoline have increased from $3.68 per gallon in January 2012 to $4.41 per gallon at March 31, 2012, and average retail prices for diesel fuel have increased from $4.05 per diesel gallon in January 2012 to $4.48 per diesel gallon at March 31, 2012. Higher gasoline and diesel prices typically improve our margins on fuel sales to the extent we price fuel at a discount to gasoline or diesel. During this time period, the price for natural gas declined. The NYMEX price for natural gas fluctuated from $3.08 per MMbtu in January 2012 to $2.41 per MMbtu at March 31, 2012. The average retail sales price of our CNG fuel sold in the Los Angeles metropolitan area ranged from $2.60 for the month of January 2011 to $2.90 for the month of March 2012. The average retail sales price of our LNG fuel sold in the Los Angeles metropolitan area ranged from $2.50 for the month of January 2011 to $2.90 at the end of March 31, 2012.
In August 2008, we acquired 70% of the outstanding membership interests of DCE for a purchase price of $19.6 million including transaction costs. DCE owns a facility that collects, processes and sells RNG from the McCommas Bluff landfill located in Dallas, Texas. For the three months ended March 31, 2011 and 2012, DCE generated approximately $2.8 million and $3.6 million, respectively, in revenue from sales of RNG, all of which is included in our condensed consolidated statements of operations.
Revenue. Revenue increased by $8.3 million to $73.6 million in the three months ended March 31, 2012, from $65.3 million in the three months ended March 31, 2011. A portion of this increase was the result of an increase in the number of gallons delivered between periods from 35.5 million gasoline gallon equivalents to 43.7 million gasoline gallon equivalents. The increase in volume was primarily from an increase in CNG sales of 6.3 million gallons. Our net increase in CNG volume was primarily from eight new refuse customers, two new stations from an existing transit customer, two new trucking customers, and one new airport customer, which together accounted for 3.5 million gallons of the CNG volume increase. We also experienced an increase of 2.8 gallons in CNG volume between periods from our existing refuse, airport, and transit customers, combined with the volume growth from our share of our joint venture in Peru. We also experienced a net increase of 1.3 million gallons in LNG volume between periods, which was primarily due to 1.3 million gallons from Northstar O&M services. We experienced an increase in our RNG sales (our 70% share of the RNG sales at DCE) of 0.6 million gallons due to increased RNG production at DCEs facility. We experienced a $7.0 million increase, excluding Northstar, in station construction revenues between periods, primarily due to the completion of two new CNG stations for new trucking customers, one new CNG station for an existing trucking customer, two new CNG stations for new refuse customers, one CNG station upgrade for an existing refuse customer, one new CNG station for a transit customer, one CNG station upgrade for an existing transit customer, and one new CNG station for a new airport customer. Revenue also increased by $4.7 million between periods due to increased sales of natural gas vehicle equipment by BAF. These increases were offset by a slight decrease in our effective price per gallon that we charged to our customers between periods. Our effective price per gallon was $0.83 in the three months ended March 31, 2012, which represents a $0.03 per gallon decrease from $0.86 in the three months ended March 31, 2011. The decrease was primarily due to lower natural gas prices in the first quarter of 2012, upon which we base a portion of our pricing to our customers. IMW and Northstar contributed $3.2 million and $1.5 million, respectively, to our decreased revenue between periods. Revenue attributable to VETC also decreased between periods as we did not record any revenue related to fuel tax credits in the first quarter of 2012 as the fuel tax credits expired on December 31, 2011, and we recorded $4.2 million of revenue related to fuel tax credits during the first quarter of 2011.
Cost of sales. Cost of sales increased by $8.9 million to $55.9 million in the three months ended March 31, 2012, from $47.0 million in the three months ended March 31, 2011. Our cost of sales primarily increased between periods as a result of delivering more volume to our customers. We experienced a $7.7 million increase, excluding Northstar, in station construction costs between periods. We also experienced a $3.1 million increase in costs related to BAFs vehicle equipment sales between periods as BAFs sales of natural gas vehicle equipment increased. These increases were offset by the decrease in our effective cost per gallon of $0.07 per gallon, to $0.55 per gallon, in the three months ended March 31, 2012. This decrease was primarily the result of lower natural gas prices in the first quarter of 2012. IMW and Northstar contributed $3.5 million and $0.8 million, respectively, to our decreased cost of sales between periods.
Selling, general and administrative. Selling, general and administrative expenses increased by $6.8 million to $24.8 million in the three months ended March 31, 2012, from $18.0 million in the three months ended March 31, 2011. The most significant increase was our salaries and benefits amount increasing by $3.5 million between periods as we increased our employee headcount from 747 at March 31, 2011 to 1,038 at March 31, 2012. We also experienced a $3.0 million increase in consulting, marketing, employee recruiting, business insurance, rent and occupancy, software/hardware maintenance, research and development, and office supplies expense related to our continued business growth. Stock option expense also increased between periods by $1.3 million. Our travel and entertainment expenses increased $1.0 million between periods, primarily due to the increased travel of our sales team. These increases were offset by a $2.6 million gain related to a decrease in the estimated fair value of the IMW contingent consideration liabilities between periods.
Stocks Discussed: CLNE,