By Siraj Sarwar
Clean Energy Fuels (NASDAQ:CLNE) is the major provider of natural gas fuel for vehicles in North America. The company is a global leader in natural gas vehicle fueling market. CLNE generates a significant amount of revenues from selling compressed natural gas [CNG] and Liquid Natural Gas [LNG]. Clean Energy also generates revenue from advanced natural gas fueling compressors and maintenance services through its subsidiary, IMW. A significant portion of revenue is also earned by converting vehicles to CNG or LNG through its wholly owned subsidiary, BAF. Clean Energy also provides fueling station operations and maintenance services to its customers.
The number of fueling stations Clean Energy served grew from 196 at December 31, 2009 to 313 at June 30, 2012. Clean Energy fueling stations increased by 59.7%. These numbers include all CNG and LNG fueling stations Clean Energy own, maintain or with which company has a fueling supply contract.
delivered (in millions)
Net income (loss)
(Chart is sourced from company website)
Total gallons delivered amounted to 48.6 million for the second quarter of 2012, up 24% from 39.2 million delivered in the Q2 of 2011. Clean Energy generated revenue of 92.3 million in the first half of 2012 gasoline gallon equivalents, up 17.6 million from 2011. Total revenue for the second quarter ended June 30, 2012 was $69.8 million, which is up from $69.1 million in the Q2 of 2011.
Adjusted EBITDA for the second quarter of 2012 was negative $1.6 million. Non-GAAP loss per share for the Q2 of 2012 was $0.16. Clean Energy loss has increased by $0.06 per share. The loss has increased mainly due to the company's aggressive expansion plan. The loss is expected to increase in next few quarters.
Margins % of Sales
Financial Leverage (Average)
(Table is sourced from Morningstar)
Revenue is on the rise while the growth rate has retarded. The corporation topped earnings predictions in three of its last four earnings releases. Clean energy is consistently showing an upward trend in its revenue. The volume of natural gas provided by the corporation this quarter rose by 24 percent year over a year. Sales are expected to grow by 30% and 50% in the next two years.
Clean Energy supported a gross margin of 33.02% in 2010 and 25.97% in 2011. Gross margins are expected to expand to 36% by 2014. The company has net margins of negative -25.01 in trailing twelve months. Net margin is decreasing, because Clean Energy is spending a lot of money on its expansion plans. Clean Energy has an average financial leverage of 1.41 in 2010 and 1.74 in 2011. Debt is not an issue, as the corporation enjoys financial support from giants like Chesapeake (NYSE:CHK) and individuals like Boone Pickens. Also, the corporation's current cash levels are nearly equal to its debt.
Clean Energy's primary goal is to set up fueling stations all around America. Clean Energy is well going ahead; building a project it named America's Natural Gas Highway. The first stage of this project seeks to create a network of 150 liquefied natural gas filling stations all over the U.S. by the end of next year. The company is perfectly on its way to achieve its target of setting up 70 stations this year, and 22 have been completed. Remaining 24 stations are under development, and 32 are in the planning and permitting levels.
Virginia Governor Robert McDonnell finalized an agreement with Clean Energy to purchase Compressed Natural Gas for the vehicle fleets. CLNE also plans to make CNG fueling stations and offer CNG vehicle alterations for Virginia authorities.
According to the Energy Information Administration, the need for natural gas fuels in the U.S. elevated by approximately 26 percent from 2009 to 2011. I believe this growth in demand is attributable mainly to the growing prices of gasoline and diesel compared to CNG and LNG. I think natural gas is an important component to the U.S. well being, and CLNE is taking full benefit from it. CLNE looks to be headed in the right direction.
Clean Energy has a solid support of T. Boone Pickens, who is a strong man to have on your side. Clean Energy prospects look bright to me. It is expanding at a strong pace. Clean Energy has an impressive, current ratio of 3.68. Revenue growth rate is appealing, and the company looks to grow its revenue by 30% to 50% in next two years. Natural Gas is not only good for the authorities and the environment, but finally it will be good for customers and the economy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: EfsInvestment is a team of analysts. This article was written by Siraj Sarwar, one of our equity researchers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.