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Clean Energy Fuels Corp. (NASDAQ:CLNE)

Q3 2013 Earnings Conference Call

November 7, 2013 4:30 PM ET

Executives

Tony Kritzer – Director-Investor Communications

Andrew Littlefair – President and Chief Executive Officer

Rick Wheeler – Chief Financial Officer

Analysts

Rob Brown – Lake Street Capital Markets

Steve L. Dyer – Craig-Hallum Capital Group LLC

Andrea James – Dougherty & Company

Carter Driscoll – Ascendiant Capital Markets LLC

Caleb M. J. Dorfman – Simmons & Co. International

Jeff Schnell – Jefferies & Co.

Matthew Blair – Macquarie Capital (NYSE:USA), Inc.

Operator

Greetings, and welcome to the Clean Energy Fuels Third Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Tony Kritzer. Thank you, Mr. Kritzer. You may begin.

Tony Kritzer

Thank you, operator. Good afternoon, everyone. Earlier this afternoon, Clean Energy released financial results for the third quarter ended September 30, 2013. If you did not receive the release, it’s available on the Investor Relations section of the company’s website at www.cleanenergyfuels.com, where the call is also being webcast. There will be a replay available on the website for 30 days.

Before we begin, we’d like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects, as well as words such as believe, intend, expect, plan, anticipate, and similar variations identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance, and the company’s actual results could differ materially from those contained in such statements.

Several factors that could cause or contribute to such differences are described in detail in the Risk Factors section of Clean Energy’s Form 10-Q filed November 7, 2013. These forward-looking statements speak only as of the date of this release, and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release.

The company’s non-GAAP EPS and adjusted EBITDA will be reviewed on this call and exclude certain expenses that the company’s management does not believe are indicative of the company’s core business operating results. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. The directly comparable GAAP information, reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA, and a reconciliation between these non-GAAP and GAAP figures is provided in the company’s press release, which has been furnished to the SEC on Form 8-K today.

Participating on today’s call from the company is President and Chief Executive Officer, Andrew Littlefair; and Chief Financial Officer, Rick Wheeler.

And with that, I’ll turn the call over to Andrew.

Andrew J. Littlefair

Thank you, Tony. Good afternoon and thank you for joining us. I’m pleased to review our third quarter 2013 operating results. During the quarter, we generated $86.3 million of revenue, compared to $91.5 million of revenue from a year ago. If you back out the one-time non-recurring [indiscernible] construction project we completed in the third quarter of last year and you take out our BAF revenues, which were in the 2012 number as we sold BAF in 2013 – June of 2013, our revenues actually increased 23% between periods. We delivered 56.4 million gallons during the quarter, which is up 11% from 50.9 million gallons a year ago. And again, if you back out the gallons of our Peruvian joint venture that we sold in March of this year, our volumes are up 17% between periods.

Before I get into our highlights from the quarter, I’d like to take a moment to address some of the unfortunate market confusion that had stemmed from erroneous research report that was published last month. As a reminder, Clean Energy is the largest provider of both CNG and LNG transportation fueling solutions in North America. Over the last 16 years, we have designed, built, owned and operated close to 450 natural gas fueling stations across the country, which is more than all of our other competitors combined. We own IMW, our world-class CNG compressor subsidiary, which has built and sold over 1,400 compressor units into the global marketplace and supplies virtually all the CNG equipment for waste management and republic industries.

We fuel 7,000 CNG trains and busses everyday; about 6,000 CNG refuse trucks and have built 43 CNG stations at 37 airports across the country where we fuel several thousand vehicles each day from a wide variety of industries. We also currently fuel dozens of CNG trucking customers at our public access stations as well as some of the largest CNG truck fleets in the country through our trucking relationships with Frito-Lay, 99¢ Only Stores, Saddle Creek Corporation, Ruan Transportation and Central Freight. These five fleets combined purchase approximately 370,000 gallons from us in the month of October.

So we believe we have earned the right to call ourselves experts in the CNG fueling industry. This notion that we are only developing stations to serve the LNG truck market is just plain wrong, as is the notion that LNG won't be used for heavy duty truck fueling. Let me give you an example of how misleading this report was. The research report stated that a recent visit by the analyst to a truck industry’s manufacturing facility revealed no LNG tanks in process for on-highway applications in North America. Well, here is why, he was at the wrong plant.

We immediately heard from our friends over a chart that they did in fact have LNG station tanks and inventory and were in full production of on-vehicle LNG tanks in their Georgia facility, but analyst only visited the Minnesota facility. And just last week, only three weeks removed from that analyst statement chart analyses that they were contracted to build 20 LNG stations across country. Additionally, last week, Westport announced an order for 900 of their LNG tanks, so there is a lot of developments taking place in the LNG fueling side of the industry.

So let me reiterate, we are in the business of selling natural gas fuel for transportation and we will provide whatever the customer wants. Based on our years of experience building out the largest network of stations in the United States, we feel very strongly that there will be applications for both CNG and LNG fuel, and the put out reports suggesting that Clean Energy is relying on one fuel is just wrong. As I previously mentioned, many of the early 12-liter engine orders starting in April were CNG. This is because until the beginning of August the early 12 liters were 350 horsepower and not necessarily the right size engine to meet the demand of heavy-duty long-haul trucks. So many of these early adopters were shorter haul trucks for own CNG perfectly suitable application.

Just to reemphasize, we think each fuel has particular advantages. CNG is certainly the only application for light-duty vehicles and the best application for trash trucks and transit buses as well as truck fleets with shorter range requirements that haul freight locally. Saddle Creek, for example, who operates one of the largest CNG fleets in the country and fuels with Clean Energy, hauls fleet throughout their distribution network. Due to their duty cycle and weight characteristics, CNG is the perfect solution for them. Tens of thousands of trucks will fit this profile, which will be billions of gallons per year. However, with the launch of Cummins Westport 12-liter 400 horsepower engine in August, the market now has an engine that meets the duty retirements of long-haul heavy-duty trucks.

Additionally, we expect to see new engine technology for heavy-duty trucks from other OEMs come online over the next two years and we believe there will be significant demand for LNG for the long-haul market over the next 12 to 18 months. Many fleets that consistently haul 80,000 pounds and travel at least 100,000 miles per year will probably be better suited using LNG fueling for their applications. About 100,000 trucks sold each year fit this profile, roughly 50% of the annual production. Again, this is billions of gallons per year. Those of you familiar with long-haul trucking business know that these trucks will benefit from the faster fueling time, lower weight and extended range that comes with LNG.

On their earnings call last week, Westport management reiterated our view on the market breakdown. In response to a question, they stated that they see the dividing line between CNG and LNG at distances of about 200 miles a day and that CNG above that point really starts to have some challenges, and they expect a great majority of fleets that have higher mileage than that will go to LNG. That is a very strong validation from the company who produces the engine technology and has a neutral view on how this market will develop.

We believe that both CNG and LNG fueling applications will each be multibillion gallon market opportunities, and this is why we design our stations on America’s Natural Gas Highway to have the capacity to provide both fuels. Many of our distribution center and the intermodal fueling stations will have both CNG and LNG as well. This recap leads nicely to a discussion on heavy-duty truck deployment. Our national trucking team has been working closely with Cummins Westport, the OEMs, shippers, dealers and carriers, and they have been encouraged by all the positive feedback we are receiving from customer fleets that are deploying the new 12-liter engines.

Since its August launch, demand for the 12-liter 400 horsepower has surged with sales already exceeding the internal projections of Cummins, which we believe will reach 2,400 units in 2013. These engine sales are expected to grow fourfold next year surpassing 10,000 units. Today, 46 of our trucking fleet customers have ordered 549 trucks representing up to approximately 10 million gallons annually. 60% are for CNG and 40% of those are orders for LNG.

Additionally, we are in the final stages of negotiation and validation with 107 other fleets, who have plans to deploy over 1,250 additional LNG and CNG trucks representing up to approximately 20 million gallons. We’ve already begun to see some of the largest companies in the U.S. make commitments to running natural gas fleets.

Leading the way is UPS, who announced it will be ordering 985 LNG trucks, which will fuel at a combination of public access stations and their own fueling terminals at the regional distribution centers. We have just entered a multiyear LNG fuel supply agreement to provide a minimum of 5 million gallons per year to support UPS LNG trucks.

Additional announcements we made during the third quarter include a multiyear fueling agreement to support 36 new LNG trucks for Raven Transport, who hauls good for some of the largest and well known consumer companies in the country. These Raven Trucks will be fueling at our Natural Gas Highway stations in Jacksonville, Florida; and Franklin, Ohio, and are forecasted to consume approximately 1 million diesel gallon equivalents of LNG per year.

We are also pleased to be supporting Lowe's home improvement centers and the air carrier NFI in their transition to natural gas. Lowe's recently announced the launch of a dedicated fleet of LNG trucks to serve their regional distribution centers in Melbourne and Texas. At this point, we will be fueling at our Sulphur Springs, Texas station. As part of their announcement, Lowe's is making the commitment to transition all regional distribution center dedicated fleets to natural gas by 2017, and we look forward to supporting them in this effort.

I’d also like to highlight our agreement with Central Freight Lines, who will be fueling 114 CNG tractors at our stations in Dallas-Fort Worth and San Antonio to serve their customers in the Texas Triangle. Last month, we sold them 38,000 gallons and just a few days ago, we sold them 2,500 gallons in a day. So we’re pleased to see the ramp in their daily consumption.

In addition, we know several other Fortune 100 companies, who have recently sent out RFPs to their contracted carriers to begin transitioning to natural gas. We believe these examples demonstrate the major shift that is taking place with the largest consumer goods companies, and we believe the transition is going to accelerate. To support this transition to the fullest extent possible and to continue our efforts of removing any and all barriers to switching natural gas, we recently entered into a strategic alliance with GE Capital to help potential customers to offset the upfront cost of transition into natural gas.

It works like this, truck fleet operators will first work with Clean Energy, develop natural gas fueling contracts and will then apply for loans and leases from GE Capital to acquire trucks from the OEMs. The customer will commit to buy a significant volume of fuel from us and we will then help to offset the monthly cost of the newly acquired natural gas trucks and make them at same leased cost as a diesel truck. All the customer has to do is use the fuel.

We believe this is the first time in the natural gas trucking market that a lessor like GE Capital will establish a known value at the end of the lease. At the end of the term, our customers will be allowed to purchase the trucks or turn them back them in. Truck owners will no longer wonder what the residual value maybe at the end of a four, five, or six year period. Since we made this announcement only a few weeks ago, several customers are working few deals with us and completing applications with GE Capital. We are excited about this new offering and look forward to sharing our successes in the coming quarters.

Let’s move on now to our core market stations. In our transit market last year, we finished $40 million contract to build four CNG stations on behalf of Dallas Area Rapid Transit. And we have just been awarded the contract to operate and maintain those four CNG stations. The stations are starting to fuel over 500 buses and those vehicles are expected to use approximately 4 million gallons per year. We are already beginning to account these volumes.

Out here in Southern California we were awarded an O&M agreement from the Long Beach Transit, which starts at 1.5 million gallons annually and is anticipated to grow to 2.5 million gallons as more of the CNG buses are delivered in the coming year. In our Taxi Airport & Shuttle market, we continue to expand our station network to keep up with the growing demand of our fleet customers, as evidenced by our new stations at Dallas and JFK Airports. In Kansas City, we will build, own, and operate a Public Access Station to service the city’s fleet of more than 265 light, medium, and heavy-duty NGVs with the expectation that this fleet will grow to more than 400.

The station is projected to supply over 1 million gallons of CNG per year within the first three years of operation. In addition, the local public transit agency in Kansas City awarded us a contract to design, build and operate a large station. Their plan is to start with 25 CNG buses and then gradually replace virtually their entire fleet of 256 vehicles over the next few years, which they estimate will displace nearly 2.5 million gallons of diesel each year.

In Atlanta, 18 additional buses were ordered by Park N' Ride, which will fuel at our College Park, Georgia Station. In Hartford, 18 city fleet vehicles are now fueling at the USA hauling station. In Las Vegas, Bell Transportation is rolling out 92 CNG taxis and 10 large shuttle buses with an additional 80 on order for next year.

In our Solid Waste market, we were recently awarded a contract by Lancaster, Pennsylvania’s Solid Waste Authority for a time filled Public Access Station to service transfer and collection trucks. In Bedford, Massachusetts, we opened the first public access, time-fill, CNG station for ABC Disposal to serve their 40 trucks.

In Long Island, New York which has been a model region of how to successfully implement natural gas for rough use please. We were awarded a joint development station contract at the Islip Cabana facility. This will be our second Cabana facility where we will build the high volume station and sales team G to rough use fleets coming to the plan. In the town of Babylon, Long Island one of our new rough use contractors is ordering 10 CNG rough use trucks to serve a 20-year contract.

And finally, Smithtown, Long Island where we build our first CNG rough use station seven years ago for that region. We executed a new CNG contract that begins on January 1, and runs through 2020. In aggregate, during the third quarter in our core markets of transit airports and rough use, 1,508 natural gas vehicles were delivered representing approximately 8.4 million gallons annually, an additional 1,800 and 34 natural gas vehicles are ordered representing approximately 10.4 million gallons, which is our new quarterly record for us. These core CNG markets continue to show robust growth for year-over-year and served approve that we continue to be the leader in the CNG fueling market.

Supporting the growth of our CNG network, our compressor subsidiary IMW has made tremendous progress of ramping up their production capabilities. In addition to supplying the compressors for all of our stations, IMW has recently been awarded several supply contracts all over the world.

And some highlights include $35 million contract awarded IMW by Clear Edge Power to supply them 105 units in 2014 that will be deploy all over the world. A $4 million contract awarded IMW by the largest industrial gas company in Mexico to supply two projects for an industrial site they are building a Northern Mexico. A large gas delivery company basis Sydney, Australia recently awarded IMW with $7 million purchase order for an industrial gas project in Western Australia.

And lastly, China Gas Holding has awarded IMW with a master purchase contract to supply 416 compressors for the construction of up to 310 public access CNG stations in China. This three year agreement has a potential value of $167 million, and today we have supplied 42 compressors for China Gas and planned to supply 23 more by year end.

Under construction carpet, our year-to-date station count consists of 52 completed station projects. These include eight Americas natural gas highway projects, 16 Clean Energy owned stations, 16 stations we built for customers, and 12 stations that we are partnership with Mansfield. Keep in mind that our America Natural Gas Highway Station built-our plan is being time to keep phase with the recent launch of the 12-liter 400 horsepower engines in order to maximize returns on our deployment of capital, because we see the heavy-duty truck market beginning to accelerate going into next year. We currently have 31 more truck stop station projects in various stages of engineering, permitting, and construction.

In total, we expect to complete 18 Highway station projects this year. We believe we are on track to complete about 80 station projects for the company in 2013. In our renewable fuel business, we have had some very exciting recent developments. In October, we launched our branded renewable natural gas vehicle fuel redeem. This represents the first commercial scale distribution of renewable natural gas as a vehicle fuel North America. We anticipate that we will sell 15 million gasoline gallons of redeem this year at our CNG and LNG stations across California.

This is the only commercially available fuel in the world that can offer 90% greenhouse gas reduction, meet 100% of their fueling requirements of an 18-wheeler and be profitably sold at a discount petroleum fuel prices based on current market conditions. We believe that this is a significant moment for alternative fuels, and we are excited about offering this product to our customers in growing volumes in the coming years.

We also set new production records at our Texas and Michigan biomethane processing facilities in September as we are moving fast our recent production and construction issues at these facilities. Our third facility outside Memphis, Tennessee is on track from March 2014 startup, and we are looking at numerous additional projects across the United States that we anticipated we will increase our redeem production capacity in the coming years. And finally, as you probably know, we completed a $250 million convertible debt deal in September. We now have cash on hand of over $400 million.

And with that, I’ll turn the call over to Rick.

Richard R. Wheeler

Thanks, Andrew. Before I review our financial results, I would like to point out that all of my references to our results will be comparing to third quarter of 2013 with the third quarter of 2012 and the first nine months of 2013 with the first nine months of 2012 unless otherwise noted.

Volumes rose to $56.4 million gallons during the quarter, $50.9 million gallon a year ago. For the first nine months of 2013, volumes increased to $158.9 million gallons from $143.2 million gallons. Please remember in the third quarter of 2012 and the nine-month period ended September 30, 2012, include an incremental $2.5 million and $4.3 million gallons respectively related to Peruvian joint venture that we sold in March 2013.

For the quarter, our CNG volumes were $37.2 million gallons, our RNG volumes were $2.5 million gallons, and our LNG volumes were $16.7 million gallons. For the quarter, revenue was $86.3 million, compared to $91.5 million. The third quarter of 2012 included $17.6 million in construction revenue from the sale of too large CNG stations to an existing transit customer, that did not reoccur in the third quarter of 2013 and $3.5 million of revenue related to BAF, which result in June of 2013.

For the first nine months of 2013, revenue increased to $267.5 million, up from $234.9 million a year ago. Once comparing our numbers between periods, please note that the third quarter of 2013 includes $6 million of Volumetric Excise Tax Credit or VTEC revenue in the first nine months of 2013 includes $38.1 million of VTEC revenue of which $20.8 million related to the full-year of 2012 that we recorded in the first quarter of 2013.

We did not record any VTEC revenue in 2012 as the law not in effect during the year and was reinstated in January 2013, and made retroactive to 2012 at that time. And just as a heads up for the fourth quarter, we recognized approximately $24 million of station construction revenues in the fourth quarter of 2012, related to the existing transit customer I spoke of earlier that will not reoccur in the fourth quarter of this year.

On a non-GAAP basis for the third quarter, we reported a loss of $0.16 per share. This compares with the non-GAAP loss of $0.19 per share in the third quarter of 2012. For the first nine months of 2013, our non-GAAP loss per share was $0.19 and was a loss of $0.52 per share in the prior period.

Adjusted EBITDA in the third quarter of 2013 was $4.2 million, which compares to an adjusted EBITDA of minus $3.1 million in 2012. For the first nine months of 2013, adjusted EBITDA was $35.4 million, compared to minus $6.7 million last year. Again, please remember the third quarter and first nine months of 2013 includes $6 million and $38.1 million respectively of VETC revenue.

In addition the first nine months of 2013 also includes a $15.5 million gain on the sale of our vehicle conversion subsidiary BAF. Adjusted EBITDA and non-GAAP EPS financial measure we developed to highlight our operating results excluding certain large con-cash or nonrecurring charges or gains which are not core to our business. Adjusted EBITDA, non-GAAP EPS are described in more details in the press release we issued earlier today.

Our net loss on a GAAP basis for the third quarter was $18.8 million or $0.20 per share, which included a non-cash gain of $1.4 million related to valuing our Series I warrants. Non-cash stock-based compensation charges of $5.7 million, and a $0.2 million foreign currency gain related to our IMW purchase notes. This compares with a net loss of $16.3 million or $0.19 per share in 2012, which included a non-cash gain of $5.7 million related to valuing our Series I warrants, non-cash stock-based compensation charges of $6 million, and foreign currency gains of $0.7 million on our IMW purchase notes.

For the first six months of 2013, our net loss on a GAAP basis was $34.7 million, or $0.37 per share, included a non-cash charge gain related to valuing the Series I warrants, of $0.9 million, non-cash stock-based compensation charges of $17.3 million, and a $0.3 million foreign currency loss on our IMW purchase notes.

For the first nine months of 2012, our net loss on a GAAP basis was $59.5 million or $0.69 per share and included a non-cash gain of $1.1 million related to valuing the Series I warrants non-cash stock-based compensation charges of $16.5 million, and a foreign currency gain of $0.7 million on our IMW purchase notes.

Our SG&A charges are higher between periods, primarily as a result of continued business growth and costs incurred to support our construction and sales efforts to develop and launch America’s Natural Gas highway. Our interest expense is also up between periods primarily due to the interest charges we are incurring on our convertible notes we issued in June 2012 and 2013 coupled with the fact to capitalize less interest in the first nine months of 2013 related to our construction activities.

Our interest expense will continue to increase in future periods with the interest we will incur on the $250 million of convertible notes we issued in September of 2013. Our gross margin this quarter was $31.5 million which compares to $20.2 million in 2012. For the nine months of 2013 our gross margin was $100 million compared to $59.3 million. The gross margin for the third quarter and first nine months of 2013 includes $6 million and $38.1 million of VETC revenues respectively.

Our margin per gallon on our fuel sales this quarter was up $0.05 from last quarter to $0.35 per gallon. The increase was primarily from the additional credits we realized when we began selling redeem to our California public access fueling stations. Included in the margin number this quarter, some excess volumes we have to sell from our third party supplier and the credits were at extremely high level during the period.

Based on our anticipated available volumes in the fourth quarter and the reduced credit value that we are seeing today our margin per gallon this quarter will likely come down $0.02 to $0.03 per gallon.

As I mentioned we concluded the $250 million convertible note offering during the quarter. We planned to use the next proceeds of approximately $242 million to continue the expansion of our CNG, LNG, and RNG infrastructure and for general corporate purposes.

A cash balance, plus our restrictive cash, plus short-term investments totaled approximately $418 million at September 30, 2013. And with that operator, please open the call to questions.

Question-and-Answer Session

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question comes from Rob Brown with the Lake Street Capital Markets. Please proceed with your question.

Rob Brown – Lake Street Capital Markets

Good afternoon. You talked about 10,000 trucks potentially next year for 12-litre engine. Could you give us a sense of how those rollout and maybe your view on the mix of LNG and CNG in that group?

Andrew J. Littlefair

Rob, thanks. Rob, it’s not crystal clear and the 10,000 to 11,000 number, I know you’ve heard as well, comes from sources where we keep getting that number kind of reconfirmed. We’re under the impression the understanding right now is we do our checks. The production rate is somewhere around – right now around 600 engines – 550 to 600 engines a month. So on gasoline that’s going to build, Rob, into 2014 and so you’re going to see these things go out being produced to somewhere above that number to get to that 10,000 or 11,000 or perhaps even more for the year.

We’re talking about ways almost four or five times what you do this year. That’s actually ahead of what forecast to this year and so we feel really good about that. But we’re guessing it will be somewhat smooth throughout year. It will build, imagine like builders doing now start out 200 engines the month of August and now you are at 600 and so I’m assuming there will be some sort of building of it as you go in the year and then the experience continues to be good. We have validated, I guess and are in works with kind of our arms around if you will, about 3,300 of those, we expect to be those 10,000 orders and so we have some visibility already into the substantial mode than what we have this year. And right now it looks like 65% of those 3,300, I know breaking this thing down for you will be confusing, but it’s coming out about 65% LNG and 25% CNG what’s kind of the reminder in the balance.

And so it’s kind of what many of us suspected is you’ll see breakdown somewhere around 50/50, 60/40 in that range between these fuels and this depends on which fleets come early, how of them are regional and how many of them are little bit longer range. And so, the best what we are seeing right now is we’ve looked at those. That’s only a third of those 10,000 is breaking over half of those were breaking on the LNG.

I mean, Rob as you know that these trucks, certainly in the early adapters we’ll use anywhere 20,000 gallons and above and of course you multiply the 20,000 tons, 10,000 significant value, volume increase for the industry and of course for us. Just to kind of remind you, it takes about four months or so between the time somebody orders one of these engines and it gets produced and it goes in the OEM and then it gets updated. Tank [ph] it gets put on. So it will be back end loaded, so I would imagine if you do hit those 10,000 to 12,000 type number.

Rob Brown – Lake Street Capital Markets

Okay. That feeds in my next question. How many of your [indiscernible] are sort of up and running right now and how do you see that opening over the next years as these structural out?

Andrew J. Littlefair

Well, let me speak about how many we kind of see opening. Of course it almost view how these trucks begin to roll out and we only have just a handful where we sort do the total of how many stations are currently up on the highway. We are opening about four to six years is next several weeks of the year. So, you’ll end up having about 15 of 18 of the stations opened herein the short run.

Rob Brown – Lake Street Capital Markets

That’s right.

Unidentified Company Representative

And then – but I just had a meeting on this today with our Chief Marketing Officer. We’re beginning to see things take shape. And so I think by the end of the first quarter, you’ll end up opening an additional 20 some odds of stations adding to that count. And so that’s kind of I would see. So you’ll have about half of – I mean of course we’re building some two as we go along the year, but you will have half of them or so open. And then of course over the remaining part of the year, we’ll see – we’ll make substantial progress.

Rob Brown – Lake Street Capital Markets

Great, thank you. And congratulations on the nice EBITDA in the quarter. I’ll turn it over.

Unidentified Company Representative

Okay. Thanks Rob.

Operator

Our next question comes from Steve Dyer with Craig-Hallum. Please proceed with your question.

Steve L. Dyer – Craig-Hallum Capital Group LLC

Thanks, good afternoon guys. Nice quarter.

Unidentified Company Representative

Hi, thanks Steve.

Steve L. Dyer – Craig-Hallum Capital Group LLC

Just if you could expand a little bit more on the GE partnership, I know it’s early, but sort of what’s initially are you hearing in terms of feedback? And are you expecting that’s going to be small fleets medium sized fleets or are all the above or how do sort of see that playing out?

Unidentified Company Representative

Yes. I guess we had a offsite meeting just last week with our senior team and Jim Harger, our Chief Marketing Officer, was reviewing. We’re very excited about what we’ve seen already. There has been dozens of calls. I mean what’s exciting for us is GE is really committed on this program. They’ve done all the training. Their team have a 150 guys who do nothing but go call on trucking, pleased to offer this kind of program. So that’s very important for us. And so it’s just starting but the early news is very good. I mean see we never in this industry really have this until now. And so we’ve already had several fleet come in and begin to work through the process with us. We’re already in touch with GE. I wish I have more color to tell you how big and how small. I know currently they work with all sizes of fleets. These will be the class 8 trucks right and that we are talking about that those kinds of vehicles not, not smaller ones right now. But we’re very excited about it and we’re – our sales team and the trucking what we call national trucking team with about almost 40 guys are working now with their 115 guys. So we’re excited about it and Steve I hope to add more color as this – it’s only been a few weeks in process. But we think it’s – kind of an next important piece to help this thing really move on.

Steve L. Dyer – Craig-Hallum Capital Group LLC

Yes. Okay. That’s helpful. Just – you announced several station openings with anchor fleets this quarter any – it feels like that it’s starting to accelerate a little bit which makes sense as you go along here. Would expect kind of more this quarter any color you can give on maybe how close you are with other et cetera?

Unidentified Company Representative

Well, yes. Remember I used to talk about our pipeline right? And that was a hard to get your arms around because we threw in there qualified customers and we – it had to do with vehicles and station and all that but what’s interesting to me and we’ll answer your question I promise is today almost when you look at qualified prospects and validation and those are kind of getting ready to negotiate with and in the negotiation process and closed deals right now you have 16,000 deals kind of in the work, so that’s almost from a year ago almost double.

So as I said in remarks and I know there is a lot of number in there we got about 107 fleet that we are working with right now we are negotiating how they are going to roll out these trucks. And there is a lot more behind that. So there is a – yeah, you’re right. I mean, it took a while to kind of get these trucks into the next, took those four months to have them going and they don’t take as many as you would like on day one, but we’re really beginning to see the traction. And so I feel good, these guys are serious and so we have just dozens and dozens of fleets that are beginning to order trucks. And therefore that translates into working with us on we’re going to fuel them and where and if they need a station or if there is a station, we can open. And so as I said, those 100 customers have already ordered 1,250 trucks, they got to – there going to be field in four months and so that’s kind of the way the thing is rolling out.

Steve L. Dyer – Craig-Hallum Capital Group LLC

Great. And then last question just the compressor business obviously doesn’t get the headlines, but China Gas Holdings deal was tremendous, any color on the cadence of that rollout into next year, and then perhaps any other meaningful deals like that and that’s obviously a big one, but anything else of good size in the pipeline.

Andrew Littlefair

Overall, first of all, I can’t tell you about one of them. We – but there are about two or three companies like China Gas and we work with on/off in years actually sold the equipment to them that were working on in China. It’s all like I really say about that. And then there is another major move in another major country and we are working very hard right now and trying to land that deal and I feel confident that we will, that will be significant from a country with significant volume and natural gas and wants to begin to build out a national network and were close to landing that.

I would say in IMW that, we went through kind of a period over the last couple years of right-sizing that company and improving the availabilities, we struggled there a little bit as we told you. Now we like where we are, we made good strives, we’ve made just recently to those four or five announcement, we have an announcement, I announced today but four, five significant contracts and that business is up substantially from where it was. So we feel good about it, worldwide they’re selling stuff believe it or not into Egypt and Vietnam now and really all over the world. So, I think we went through the toughest part of it and we feel pretty good about where it is. I – specifically on China, sometime you say it never go quite as fast as you believe, I’m kind of glad that we’ll put away almost 70 of the compressors this year since when we announced that deal. My guess is will be another 100 of them 150 done next year in the remainder will be in that – in 2015.

Steve L. Dyer – Craig-Hallum Capital Group LLC

Great. Thanks again.

Andrew Littlefair

Yep.

Operator

Our next question comes from Andrea James with Dougherty & Company. Please proceed with your question.

Andrea James – Dougherty & Company

Thank you for taking my questions.

Andrew Littlefair

Sure.

Andrea James – Dougherty & Company

So it seems like the market seem to be gelling a bit, we’ve been able to announce even a number of new contracts since the last quarterly call. And I guess my question is when do you think you will be at a place when you feel comfortable giving guidance?

Andrew Littlefair

Never [indiscernible] and that’s a great question. I think once the heavy-duty truck market matures, it’s such a significant market number and once we get into there and we start to see normalized numbers, I think it will be a lot easier and we feel lot more comfortable predicting or projecting out our numbers in our results. I mean, right now obviously, we’re still just too early with starts and stops, pickups and all those types of things. But something we think about it, but it we talked a lot about it and I know I would help you. I would guess that you’re probably going to want to take a look at how this rolls out and matures a little bit in 2014. We have 10,000 to 12,000 of these trucks with the expectation that there will be 20,000 in the next year, then there will be, you have a much more predictable way of forecasting what’s going to happen here. If you just think back with us, because this involves it, I mean those trucks were delayed for good reason, but they were delayed about a year and we would have missed it by a year.

Unidentified Company Representative

There are so many things right now that are outside our control that we’re just really hesitant to do it now and once obviously those get kind of smoothed out or we get more comfortable with them then.

Unidentified Company Representative

We certainly like to be…

Unidentified Company Representative

Robust on that…

Unidentified Company Representative

We certainly like what we’re seeing in the truck adoption, we’ve heard that number earlier in the year, it looks it exceeding it, remember I told you that if we would watch really carefully the truck orders in October, November, December, it’s really hitting above where we said, boy if we 600 to 700 out in the end of this year, we would feel really good about next year and that’s what’s happening. So we’re optimistic and got our fingers crossed, this is kind of, well, rolling out like we thought it would

Unidentified Company Representative

Yeah.

Unidentified Company Representative

Yeah.

Andrea James – Dougherty & Company

Okay. And then just to hop over on another type of question entirely, can you talk about the cost to develop a CNG station versus the cost of developing LNG station and how those costs vary according to, I guess, the distance from a high pressure gas line?

Unidentified Company Representative

Yes, and it’s a good question you know, this is all kind of goes into the first part of my remarks. So there’s a lot to this. So it’s hard to do it on this call, because there’s lot of different factors here, you’re certainly right, one of the things in fact, I was just with my Chairman earlier today, he was Chairman of the Southern California Gas Company and very familiar with us and every time you go to site for a fleet and try to cite a station depending on what they want and what you can do most economically, you take into consideration many different factors, is there electricity, how far away the pipeline is.

Well, those stations that we put in Dallas, they had millions of dollars, each station had almost $4 million, I believe, I’m right on this, the $3 million or $4 million of pipeline extensions involved with them. So this could be a very big number and we’re seeing some right now where customer wants, railroad tracks and over three way and all of that comes with a great cause. So certainly, the accessing high pressure pipeline gas is very important for them to the development of the CNG station.

Now, this generally, we’re thinking here on for a truck fleet, okay, because if we’re talking about taxi cabs, it could be totally different, but if you want to build a CNG or an LNG station that has a capability of fueling many trucks during a day, taking 50 to 100 gallons or 150 gallons of [indiscernible], it has totally different – it’s totally different than if you were building a light duty station and many of our stations and airports, they average 8 gallons. But we’re building stations and our competitors and others are building stations now for the heavy duty trucks that they need to get 100 gallons at a field.

Our rule of thumb is if you want to put gallons in between six to 10 minutes a gallon, I’m sorry six to 10 gallons a minute, its $1 million a hose per CNG, I’m talking CNG now. So if you want a robust station with redundancy that can fuel whole bunch of trucks, one after another, we’ll say 40, 50 trucks a day, taken 100 gallons a day, which would be a big station, but you’re doing with two hoses, you got an easy $2.5 million to $3 million station.

That will depend on if you want canopies or what sort of improvements you’re doing on the land. Can you build $1 million CNG station to fuel 10 to 15 trucks, you can’t, but it depends how quickly you want to do it and what sort of volume. Another rule of thumb is for an LNG station with two hoses and like the ones we build in our highway that can do 2.5 million gallons a year, so really with a more volume it’s about a million, $800,000 and then that station can probably do 5 million gallons for another call it total investment 2.5 million. So when you get into really large volumes, you begin to see the cost of the CNG station really escalate as compared to the LNG.

Unidentified Company Representative

So it’s complicated question and both of them can be done, but you’re right, it has a lot to do is there electricity available and is there a pipeline with good pressure available and how many trucks you want to really fill at once, so I thought it didn’t answer question, but there is a lot to conserve.

Andrea James – Dougherty & Company

No it’s thanks, that’s helpful. Thank you. I appreciate it.

Operator

Our next question comes from Carter Driscoll with Ascendiant Capital Group. Please proceed with your question.

Carter Driscoll – Ascendiant Capital Markets LLC

Hi good evening guys. We had question for you obviously its early on in the sales we are doing, but do you think is kind of normalized run rate margin predominant fact might be 2% to 3% range which you have highlighted.

Unidentified Company Representative

Yes, I think so net-net and then obviously we will look to add more as we go forward which will just be a function of how fast we need to build our plan with have excess capacity that is spoken for in some sort of power generation or other application as well as there is various third parties out there that have access to RNG that we’re trying to avail ourselves to.

So it will be a good combination to see within the short term I would think the net-net of whole things a couple of pennies per gallon.

Carter Driscoll – Ascendiant Capital Markets LLC

And nice most of the output is spoken for in Dallas I mean obviously [indiscernible] under construction and just ramping up in Michigan correct?

Unidentified Company Representative

Exactly there was ones that we have now which you just listed. The vast majority of those gallons are already spoken for.

But you know a guy just to give a more color on that though are – they worked because we have an advantage here right, where are the third party producers with the stuff. But we have only on the delivery systems for and so we are working hard together for the third party sources of SMB to – and get it in the vehicle fleets.

Unidentified Company Representative

The other thing I would add is – expanding which is you guys know, we have been expanding those excess volumes should be available for these types of applications as well.

Carter Driscoll – Ascendiant Capital Markets LLC

Did I hear correctly that did you said the facility would open in March of 2014?

Unidentified Company Representative

You say Tennessee?

Carter Driscoll – Ascendiant Capital Markets LLC

Memphis?

Unidentified Company Representative

Memphis yeah. It is hardly first quarter next year.

Carter Driscoll – Ascendiant Capital Markets LLC

Okay. Some of these might be done in the back half of 2014. Next question is I mean on the LNG sourcing issue as you obviously its early on and there is horsepower engine really getting to ramp, can you maybe outline your anticipation of your LNG sourcing needs, may be how you expect to roll out individual stations, how you get the third party to try and there versus what you are hoping to unveil in terms of the micro LNG with GE and 15 unfold trying to get a sense of exactly where you might need to increase the third party sourcing versus what you might be able to do after existing pipelines.

Unidentified Company Representative

It’s an excellent question it is one we don’t talk that much about where we work a lot on it. So we have gone as you know we’ve got couple of plans that we own and then we another plan where we pick all the production out there in the Arizona desert. But we have expanded our third parties to include now 13 different locations and so we’re taking fuel, we have a deal to take all the fuel out of Omaha, Nebraska down in Memphis and in Indiana and in the South Eastern United States.

And so we have I think our L&G supply folks have done a pretty good job lining up supply and organizing to where we need it, because as we’ve discussed before, you really don’t want to haul LNG much more than a couple of hundred miles, and closer the better. We’ve taken some steps to work on that, we’ve got big cryogenic fleet that we have now just first half in the United States be able to do, because we have customers taking in Ohio and in these other places.

So we have about 85 tankers now to do that. We lined up about 465 million gallons of supply, much of it from third I don’t know exact rate done a lot it would become for these third-party supply sources. And so we’ve, our job is to make sure that until we have those GE plans on and until we have scored the one down in Jacksonville to open up really the Florida and south-eastern market, we need to rely and work with our friends with some of these third-party sources. And we’re doing that and so I think we got ourselves pretty more taking care of for the next couple of years, kind of coincident with these other plans coming on online. And of course as you know we did that deal with GE and fairest, are equal partnership and that is also to making sure that we have supply in the right places.

Carter Driscoll – Ascendiant Capital Markets LLC

Thank you for that. My last question may be you can talk a little bit about the vision you have for opening up the facility plans open up the facility on new Jacksonville. And some of the high horsepower applications or heavy loads that make couple of years out in the future and then may be also layer in we’re your thoughts on potentially the right duty segment beginning to adopt CNG, and so obviously GM announcing the 2014 lounge just kind of top level thoughts?

Andrew J. Littlefair

Yes, I think it’s safe to say that high horsepower so really mining rail and marine. It – I think it’s for a lot of the reasons that you so much fuel, I think those markets are going to happen as well. I mean, as you know I believe the trucking, if it works for trucking I sure works for mining truck and that they use as a 5000 gallons in a day. And so as you know GEs are working on the locomotive so as cat [ph] through EMD. And so the big railroads, we’re already in helping two of the big rail roads on pilot fueling deals with rail.

So I think the rail happened it’s a little big companies has been around a long time, we have a huge investment of locomotives so it takes a while for them it’s going to be an outfit game. Because there have a lot of step up 30 year type locomotives, but I feel confident, when you talk to CEO BNSF, Matt Rose, he is confident that it's going to go this way.

And the same for marine, we had some meetings talking about this is now on the Jacksonville, we’ve got an option to buy the property down there. We’re working with two very large significantly very smart guys that owned ships that move product into the Caribbean and other places. And because of the new mission requirements, these guys are going to move to LNG for their ships.

One of the players involved has already ordered two ships $17 million investment for two ships. And so the nice thing is, is it base loads are reason for we like it so much we want new base load the plant in Jacksonville. And you will open up the Florida market LNG which right now you don’t really have, the fuel LNG is not that close, so that’s why the Jacksonville is nice that’s the whole basis behind this with GE Fernox partnership is because Fernox really wants to be involved in the high horsepower and the drilling. we think we understand the trucking and also maybe the rail, but building one of these plants for let’s say mining or the oil field opens up available fuel for us for the trucking, so that’s what happens on for Jacksonville. we base load it with those two companies’ relationships and we open a floor to LNG to have economic fuel for them.

Carter Driscoll – Ascendiant Capital Markets LLC

Thank you.

Andrew Littlefair

On light-duty, we – I personally think you are going to see more and more models and more selections where this isn’t anything that’s complicated. The GM makes 14 mix models, Ford all these guys they all make this stuff and they do it in Europe, there are 16 mix models. Infrastructures, the game here, we check – we follow competitors or those people that are in the JV business with 87 companies out there talking about building stations right now.

So I think you could see more and more light-duty product coming to the market, I’m really product of GM for coming over that and Paul, that will be a great product and we’re not totally focused on it, though we have the public access stations where they’ll to able to fuel at. But I think we might be surprised that over the next few years, you have more mix and models to choose from.

Carter Driscoll – Ascendiant Capital Markets LLC

Right. I appreciate for answering my questions guys. Thanks.

Operator

Our next question comes from Caleb Dorfman with Simmons & Company. Please proceed with your question.

Caleb M. J. Dorfman – Simmons & Co. International

Good afternoon.

Andrew Littlefair

Hi, Caleb.

Caleb M. J. Dorfman – Simmons & Co. International

So I guess, Andrew, some of the those America’s Natural Gas Highway stations have been open for few months or maybe like a year now. I guess of those initial maybe let’s say five or the stations, which have been open for a while, what type of utilization rate are you starting to see, what type of increase in utilization can you sort of point to?

Andrew Littlefair

Yes. I don’t have, Harger was going over my – the Chief Market Officer was going over with that – with me today. So for instance, I’m now looking at some high stations that were – I’m looking at five of them that he just gave me for October that I have handy. And one of them now is doing in October and this is an October number. They’ll end up with 60,000 gallons, eastern started 40,000 gallons or one at Phoenix, one customer did 40,000 gallons. UPS, which is the Phoenix Las Vegas stations obviously as other customers feeling there, but just kind of how we label it. those two stations combined are doing 80,000 gallons. So when they open and you begin to get those fleets come there – these guys use lot of fuel.

So I don’t know, I can’t give this ballpark, but you begin to see the volumes grew up to couple thousand gallons a day to 2.5 thousand gallons a day which really makes them – begin to be economic right away. So that’s why we kind of hold up. Caleb, until we have a critical mass of trucks to open these stations, because when you do get 15 or 20 trucks that are day one, you start seeing volumes that make the station act well and you money on them out of it.

Caleb M. J. Dorfman – Simmons & Co. International

And how did they target fact 40,000 or 50,000 gallon at a month figures here to where you thought you would be sort of when you opened the station?

Andrew Littlefair

Well. Here is way to think about it. This is just in general terms all right. So we think we are doing our job well. Those stations can do a 2.5 million gallons and you’d like to seem them do 2 million gallons. I’d like to see 5 million gallons in which case, we’ll double a moth but you’d feel really good as we’ve gone through that math before if they do couple million gallons, but we always figured we’d take a couple of years to get 2 million gallons. And so if you are doing 60,000 gallons you are out of million, you are halfway there. So you hope to sum up you’ve been operating in a year and you are doing 750,000 gallons you are halfway home on what would be really there are not many – let me tell you they are not that many natural gas filling stations out here in the United States are doing a couple million of gallons a year, certainly not public access stations. So I guess I would say those are on track to where we thought they would be and we need to make you know the once that are doing 40,000 and 50,000 gallons they need to come on up, but they only we’ve been operating now for six months that’s pretty good. We are targeting something that would more than that of course.

Caleb M. J. Dorfman – Simmons & Co. International

Right, so I guess big picture I know when you sort of rolled out the concept at the AMG HVAC back in 2011 you have been talking about may be a 150 certify than to 2013 obviously you needed to wait for the trucks, when do you think will sort of get to that number of station?

Unidentified Company Representative

Yes, and we slow down and I guess I like the fact that we could slow down right I mean we really the trucks were little delayed and I am not blaming at anybody, just from when we thought they are going to come out their about a year late. When you really shake it out and so we’re little ahead, so we are working with here with our management team, and our Board of Directors nobody wanted to have a 135 close stations. So we just slow down it some because think it up with the truck schedule. So that’s why this year we are going build 18 not another 50, we were at about – by the end of this year you are going to be when you kind of put them all together, you are going to be at about 105 next year right as we sit here right now but we see in our pipeline about 31, so you have kind of close next year to that kind of magic 150 its kind of the way I look at it.

Caleb M. J. Dorfman – Simmons & Co. International

That’s helpful. Thank you

Operator

Our next question comes from the line Laurence Alexander with Jefferies. Please proceed with your question.

Jeff Schnell – Jefferies & Co.

Hi this is Jeff Schnell for Laurence. Now that you are few years into the development phase and originally you had an idea of having a broad web of stations and then filling the gaps that way 200 miles radius. Do you think that now your strategy is shifting towards having higher density pockets throughout the map and then filling regionally that way are you staying with the same strategy?

Unidentified Company Representative

No I think your comment is probably is accurate kind of way with we really get feel like you needed to put in place a nationwide network. Now are there few of those knows on that network that are probably always be lower volume than others and more of an environment probably but you really didn’t have the way to have a nationwide network without connecting up the dots. And so that’s why we did it always knew that there would be corridors the Texas triangles are good example I mean if you look pound for pound how many stations we’re building in that area in those between San Antonio, Dallas and Houston compared to other places are LA, Phoenix and San Diego all that there are certain corridors was lot more traffic in South Eastern United States there will be a lot more stations.

Then I guess the only development or the kind of the next phase I think we are really liking is, we are going to link up that nationwide network with regional areas kind of you suggest regional areas that will be kind of the underpinning of which will be inter modal facilities and distribution centers. There are whole bunch of distribution centers in a warehouse districts last mile or the stuff either stuff comes to or gets distributed from with a lots of trucks and all those distribution centers are housed; the customers were already talking to. And so the next phase is sort of hook the national network up, I’m speaking kind of broadly here with these distribution centers. And many of these stations that we’re building right now, the 18 – next 8 that we’ll finish this year or 10 I guess that are underway right now, between now and Christmas. And 31 others that are in the pipeline right now, there really all distribution center models.

We’re going to have LNG and CNG and they tie into the network, and they’re also. They have more anchor tenants already available, sitting there in those distribution centers. And so it’s – let’s call it’s a little less speculative, it’s a little bit more of the anchor tenant model and yet it fits in nicely with our regional, our quarter approach and then it ties into the networks.

Jeff Schnell – Jefferies & Co.

Great, thank you.

Andrew J. Littlefair

Yes.

Operator

Our next question comes from Matthew Blair with Macquarie Capital. Please proceed with your question.

Matthew Blair – Macquarie Capital (USA), Inc.

Hi, good afternoon. Andrew, I was wondering if you could share some feedback from fleets, you have your LNG stations ready. You have these trucks with the 400 horsepower LNG engines run offline, you release partnership with GE, so for the fleets that are still in the fence, what are their concerns and how are you working to adjust these concerns? Thanks.

Andrew J. Littlefair

Yes. I mean these guys are trying to understand exactly the cost of the fuel, which fuel works better in a station. Where are the stations, where are the – what is their shipper people they work for, what do they want. And so kind of, all of kind of goes into the next but let me assure you that we don’t come to that meeting, with that fleet customer with the bias. Look at, someday I watched it by 1 million or 2 million gallons a year, also CNG, I don’t try to claim in some LNG network that that’s just not the way we operate, so we work with them for them to really understand.

And then so that we really understand what is the duty cycle, how far the trucks need to go, what is the end – what’s the fuel price, what’s the rate penalty if there is one, all of those things get factored in, get does like Andrew said earlier, can you really put at a new economic CNG station that can deliver the amount of fuel that they want after a location, because there’s no pipeline or there is a pipeline.

So all those things going to mix, the GE thing has helped, because it’s taking the financing piece of the table. So that’s been I think a very helpful thing. The experience, a lot of these guys around the fence, because they’re wanting toss they’re going to gulf in the trucking business, so they’re wanting to hear all those structure offerings. So there’s some of that going on here too. And the good news there is the reports of the 12-litre engines in the field right now but excellent. So in all of that, right now, Matthew’s going into the mix and we just work closely with the customer to get them what they need.

Matthew Blair – Macquarie Capital (USA), Inc.

Great. And then Rick, any thoughts for CapEx and SG&A for 2014?

Richard R. Wheeler

Well, we don’t have guidance. So we needed to watch the SG&A, a little bit, but I would say, I think we’ve seen the SG&A kind of level out a little bit, which we’ve kind of anticipated as you guys all recall, the last year we really built up our infrastructure and core competencies both operationally, sales wise, admin wise, finance wise et cetera to support the capabilities to be able to build the magnitude of the stations, we’re talking about well the service the level of customers and volumes that we think we hope we’ll comment. So we think we’ve done. So in theory, our increase in our SG&A should level off here and to the extent we continue to ramp up our revenues, which were certainly hoping we do then we feel that percentage will kind of stay where it’s at or start to decrease in the coming years, which again gets back to the leveraging concept we’ve talked about before. So that’s some thoughts on the SG&A line.

From a CapEx perspective, we have over $400 million of cash on our balance sheet, which we think is strong, as we go out and kind of wait for this market to go and then hopefully deploy that capital on a very timely and efficient manner. We certainly think we’re good for next year’s CapEx program, which in theory, should be somewhat similar or higher a little bit than this year’s program. And then after that, I think it’s just going to be dependent upon how fast the market is going and how fast we’ll build the stations, as far as how long the rest of that money will elapse those business, but we certainly feel good about where we’re sitting now and think we’ve got it certainly covered as an end to the next couple of years.

Matthew Blair – Macquarie Capital (USA), Inc.

Okay, great. And then I just want to clarify on the liquefaction capacity, are you guys confident that you could open all of these 80 to 90 Natural Gas Highway stations and load them up in 2014, and there is enough liquefaction capacity out there to meet your needs? Thanks.

Andrew Littlefair

Yeah, there is more than that, which we run out, but now there’s more than enough. If you added a couple of hundred million more gallons, let's just say all 10,000 trucks or 12,000 trucks whatever you want to use, come on and they will only use 20,000 gallons, they all come on in January, you need a quarter of a billion gallons and we have about 500 million to 600 million gallons available out there. So you got enough. Would there be a few places where you are calling it a little too far well maybe. But there is plenty of fuel, by the way, there’s been a bunch of projects announced too. So there’s going to be fuel in different places, they will all take a while 18 months to come online some of them. But you’ll have enough fuel. The markets responding on that we have at finger on 15 or 20 different greenfield projects that are out there right now.

Matthew Blair – Macquarie Capital (USA), Inc.

Okay, great. Thanks.

Andrew Littlefair

Okay.

Operator

At this time I would like to turn the call back over to management for closing comments.

Andrew Littlefair

Thank you operator. You know, significant progress has taken place over the first three quarters of the year, long haul trucking has transitioned in natural gas. And we believe we’re positioned very nicely to serve these trucking customers whether they choose CNG or LNG. Our national network of Public Access Stations in metropolitan areas, as well as America's Natural Gas Highway will be available to serve their fueling needs.

The new 12-liter natural gas engines are being delivered to the truck manufacturers, shippers are starting to request that their contract cares make them switch to natural gas, and some of the biggest companies of the business like Roche, Procter & Gamble, and UPS are announcing their commitment to natural gas trucks. With America’s Natural Gas Highway in place, significant cash resource is available, our fueling experience and established refuse and transit fueling markets and our superior capabilities and station construction operation. We really do believe, we’re well positioned to take advantage of this historical shift.

Thank you for your continued support and I look forward to reporting you on our progress next quarter.

Operator

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time, and thank you for your participation.

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