Greetings and welcome to the Clean Energy Fuels Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Tony Kritzer, Director of Investor Relations. Thank you. You may begin.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the third quarter ending September 30, 2016. If you do not receive the release, it is 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, should, 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 3, 2016. These forward-looking statements speak only as of the date of this release. 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, Bob Vreeland. And with that, I will turn the call over to Andrew.

Thank you, Tony. Good afternoon everyone and thank you for joining us. The third quarter of this year is once again a very good one, showing continued growth in volume and revenue and more importantly was the fifth consecutive quarter in which we reported positive adjusted EBITDA. Our growth stems from several factors and the most fundamentals of municipalities, states or profit companies and other organizations continue to seek an alternative fuel that comes at a stable low price and most importantly is cleaner. Governments continue to strive for ways to clean up the air for their constituents and companies want to meet their own sustainability goals through the use of alternative fuels. More often than not that fuels natural gas because these organizations understand that natural gas fueling is the cleanest, most economical and scalable solution for fleet vehicles available today. And no other company provides them the quality and variety of fuels and services than Clean Energy. If there's any doubt that the moves natural gas is not contained to gain momentum then one only has to look at the number of fueling stations that we have built or expands in the first three quarters of this year. We have completed 44 station projects thus far and are on pace to complete 19 more by the end of the year. Allow me to highlight a few of the stations that we opened in the third quarter. In October, I had the honor in participating the grand opening of the state-of-the-art CNG fueling station we built for FedEx in Oklahoma City. Station is currently fueling 100 of their Class-8 CNG trucks and FedEx has said that they plan to add at least another 75 heavy duty trucks as they grow their fleet at that location. This impressive station has…

Thank you Andrew and good afternoon to everyone. Our financial results and volume growth continued on positive trends in the third quarter. And we improved our capital structure. Our financial results continue to trend positively due to the gross margin contributions from our volume related revenue, our increased Station Construction projects sales and the alternative fuel tax credit revenue, which we refer to as VTEC. Our volume in the third quarter of 84.5 million gallons was an increase of 5% over last year. And resulted from growth in CNG gallons offset partially by lower LNG. and RNG gallons. For CNG was saw a 9% volume growth led by our refuse and transit sectors. The LNG gallon decline of a million gallons was bulk supply related. Our RNG gallons decline as we continued to sell more RNG gallons as redeemed into our vehicle-fueling network and the redeemed gallons are included in our CNG and LNG gallons. Redeem volume for the quarter was 13.5 million gallons. The increase in third quarter revenue over a year ago was driven by higher volumes increased construction sales and VTEC, offset partially by a decline in compressor sales. Our overall gross profit margin improved from a year ago due to a higher effective margin per gallon on higher volumes as well as the benefit of increased construction sales and the addition of the VTEC in 2016. Our effective margin per gallon was $0.33 per gallon compared to $0.29 for the third quarter of 2015. Both quarters included the state federal environmental credit LCFS and the rents, which continue to favorably impact our effective margin per gallon. Our SG&A of $25.9 million in the third quarter was 7% lower than a year ago as we have discussed on prior calls, we don't expect significant changes in our…

At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Eric Stine with Craig-Hallum. Please state your question.

Hi everyone.

Hi Eric

Hi Eric

I’m wondering if we can just take into the Redeem volumes there and just the outlook. How high do you think that that ultimately can go in terms of volumes and are there limiting factors? I mean is it needing more third-party supply, or how should we think about that going forward?

Yes, Eric I think that you’re just kind of seeing the beginning of this fuel. I mean you know in my remarks I talked about California in the – in that ship plan that I mention it calls for 50% of the fuel which just kind of doing the math there, loosely, I mean you're talking about a few billion gallons of fuel just for that one segment a year. And so there's got to be a lot of this fuel created and developed overtime and we're seeing that, we're seeing sources of renewable natural gas being developed all over the country, in digesters, and wastewater treatment and other way. So this is a hot new industry and you'll see a lot more of it. We think we're well-positioned because we have that infrastructure nationwide infrastructure of our customer stations and our stations. You know what, almost 600 stations. So we have that pathway to take this fuel and get it into that valuable market. And so today as you know about doing the math, we're going to sell somewhere around 60 million gallons or so of Redeem. I think I said in the last call that over the next couple years we should at least double that, I think. And so we're working hard to do that, we’ll have some other announcements coming on how we expect to move forward on developing that business. We're seeing a lot of interest in it from our customers. And so I don't have a number for you Eric, I’ll just let you know how big, many billions of gallons ultimately this is over time, but it’s going to be a very large market. Remember it's not just going to be natural gas, right you're going to renewable diesel, as well in the future. And we know there's rules coming up with new standards in 2023 by EPA. And you'll see engine standards and fuel standards that will require increasing levels of renewable fuel. Nice thing is that we’re well-positioned, we have a business that does that, we're creating, I think about 50% of the credits today in our space. And we have the pathway to monetize those. So we're pretty focused on this business.

Yes that’s sort of again – I mean this is something where you're just starting.

Right.

I mean, I'm wondering is the Re-Op [ph] of LCFS, I mean is that something that I would assume that means more investment in the market gives people certainty that they can move forward on this? And then as you said, you are the transportation pathway for people to monetize those credits.

That's right. And so to answer your question and I went on a long-time but yes there will be more third-party supplies. And we compete for some of those supplies, but yes we have a little bit of a lag up because we have the pathway, right. We have the downstream delivery system. Yes, the AB 32, I think was really key. The part or portion of that law was going to be done in a couple years. Now you have another decade. So yes, you’ll see more and more, there are some deep bottlenecking done for bio methane and landfills in California, as well, so money put in place for that. You’re going to see more and more supply come in California and other states. But I think you're just beginning to see, I’ve talked, you and I have talked before, I think this is going to be a big business.

Yes, okay. May be just turn into the cleaner action plan, this current version. Maybe just talk about some of the lessons learned in the first going around in 2008, 2009 and maybe as a result how this one looks different? And what that could mean in terms of timing of rollout? You did mention a couple thousand trucks, but just maybe how does this one look different than the past going around, given lessons learned.

Yes, and it's interesting. Let me give you a little update and some of this is – first off this is complicated, right. You have the largest port complex in the country, Los Angeles and the Port of Long Beach. They compete. The city of LA is a large city of course. And of course, Port of Long Beach is a large city, they own those ports. And those are commercial ports and they compete with each other. But they join together on this Clean Air Action Plan and they did it once before. Clean Air Action Plan involves shipping, and dockside power, and goods movement, and locomotives. But a big part of it is the trucks. And yes we learned a lot from it once before. You’ll remember we went from a situation where you had really kind of somewhat unregulated old trucks kind of vintage trucks in the port, mostly owner-operator, more tucks than what needed, we’re kind of back to that point again. Most of which were pre-2007. Clean Air Action Plan really got put in place last time in 2008, I think. And so the goal that time around was to make the new trucks, because 2007 you remember was new to emissions standard, it was to get rid of these old 2000, and 1999 trucks and get them to be the latest technology. Well, so here you are today with 16,000 trucks in the port, most of them are 10 years old they’re coming up on 10 years. In fact, even some of our early natural gas trucks are being retired, right as they are eight years old, nine years old. And the goal is – and we think today is there’s going to be kind of a draft plan put out. And I don’t…

Okay.

But I think it's a – I think it's pretty big and you multiply that 10,000, right.

Yes.

So you’re talking about a lot of fuel right here in our backyard and I think probably one of the most important things is it’s a precursor to what the policy that you are going to see adopted later this year and early in January of the state implementation plan, which is where we are talking about hundreds of thousands of trucks. And that plan is calling for low NOx and renewable. And we are well positioned for that. So I see this is really important to get it right, and its potentially over the next few years, it’s 100 million gallons I would say over three years. It’s a 100 million gallons worth of natural gas volume. If it goes away we think it probably will.

Right, right. Okay. All right, thanks for all that detail.

I’m sorry.

Our next question comes from Rob Brown with Lake Street Capital. Please state your question.

Good afternoon.

Hey, Rob.

Hey, Rob.

Feel free to provide us as much detail as you want on this. On FedEx the expansion you’ve got station going now what – I guess could you layout what your thoughts on FedEx’s expansion or what their plans might be in expanding with natural gas?

Well, I’ve been kind of limited. Rob, what I can really say is let me just say that. We're encouraged. We're encouraged the way with this rollout went, we are encouraged that we are having more meetings with FedEx to look at other locations. I was encouraged that we had the senior leadership of FedEx in many different and I've learned a lot of this over time because we worked with them about the last four years launch this project but you know there's FedEx Express, there's FedEx Freight, there is Ground. We are working with really all other companies in different ways. FedEx rates that are big heavy-duty outfit that is about I think 16,000 trucks so that’s one that I’m really talking about in heavy-duty. So we are working with them and its really all I can say right now, we're working with them to kind of roll this out. I was encouraged that we had of course Fred there and also Mr. Mike Ducker, who’s President of FedEx Freight. And really senior management in terms of fuel, procurement and trucks and facilities that we are all there that day. And –those conversations continue. And that’s really all I can say right now. These are big outfits. I’m so impressed with the FedEx there 460,000 employees, so they are big. And in the course when you have a big company like that you have some processes that you got to go through to keep all the trains running on time. So we are working with them, we are working with Freight, we are working with Express and we are working with Ground. And we have natural gas product for each of those right now. In fact we had a meeting going now today with FedEx and we are optimistic but that’s really all can I say right now, Rob.

Okay, good. Thanks for the overview. And then I think you said you have stations still gong for the end of the year is that over Q4 kind of booked in Q4 is that right?

Yes, I think I always give a little wiggle room here, the case when you have sum that out flop into the first week of January but it looks like we just had a meeting on this day or day two or ago. It looks like we should complete 63 stations, chance we may even slip one end. What I always look at this time a year and is how many we have in the queue for next year and I’m not going to give you number right now but it is tracking to kind of what we did year in terms of the backlog or those that we all have under contract moving forward. One of the things we talked about in these calls before is in a challenging oil environment of time these are checkpoints for us we are still able to look at how our customers dealing, are they wanting more stations or we needing to build more stations for them and that’s holding up. So it’s a very good barometer for us as we look forward.

Yes.

Yes, the 63 other than the year when we add a big spike. When we build out our highway is about as many as we’ve ever built within a couple here and there. So its still tracking kind of to about as many as we built. And that’s about more than what is that that’s little over one week so we are busy.

Thank you, I’ll turn it over.

Our next question comes from Pavel Molchanov with Raymond James. Please state your question.

Hey, guys. A week ahead of the election I want to ask you about the topic that always comes up right before the end of the congressional session which is what’s going to happen with the VTEC, you guys have pretty DC sources, is there some sort of omnibus or consensus bill that we might get an extension bastion?

Yes, hi, Pavel. We have a fellow that runs that effort for us up there and we've been working on hard on this. We have reason to believe, and of course, this has been pretty a wild political season. We think that the tax – you remember that there was always – there has been a stated interest in tax reform, big time tax reform. And so that always had us wonder whether or not these tax things like the VTEC is a part of which would get somehow redone and put in, and that would morph into tax reform. Well, as we know there hasn’t been a tax reform this year. It looks like the coalition of tax businesses that have these different tax credits and tax bills that we've always kind of called the tax extenders, it looks like. That group of tax credits and such are still in play. And those looks to us like that is likely to be acted on the lame-duck session. There’s a chance that it might not be, where we sort of think is an industry that our VTEC is in place. And there will be some things, Pavel, maybe you've seen where there's been some people saying that certain renewable tax deal shouldn't be acted upon. Well, we're not in that category. So there's some others that were in that category. We're kind of in that overall tax extenders package and it looks to us like if there's a good chance that will be addressed in the lame-duck; and if not, in the next Congress, but I'm still kind of thinking it'll be dealt within the lame-duck session.

Okay. And remind me I know every quarter it's a function of your sales mix. But what’s kind of the average run rate of VETC? I know it’s been – I think $6.7 million for Q3. Is that fairly standard or was there anything unusual about that number?

No, that’s fairly – this is Bob. That’s fairly standard. It will move a little with as volume moves, but not all volume is VTEC eligible and that sort of thing, but that's fairly standard number.

Okay. Appreciate it guys.

Okay. Thanks.

Your next question comes from John Rosenberg with Loughlin Water Partners. Please state your question.

Hi. Good afternoon.

Hi, John.

Hi, John.

Thanks for taking my question. It’s a small housekeeping thing. Probably not much of anything, but I noticed that your LNG volumes dropped off, seems like a volatile number of quarterly but could you talk a little bit more about specifically the LNG market? Are there other players? Is it a matter of share? Is it – I mean I can't quite see a seasonal pattern either.

Well, I mean I can let Andrew to speak a little bit, maybe broadly about LNG, but specifically to the decline that was really kind of related to timing of bulk supply and our numbers can’t get a little lumpy if – between quarters because we will have some – as an example big utilities that may take bulk supply and we kind of blow that out, but maybe that doesn't happen again exact same time in the next year.

And that was the case…

That was. Yes. And so it was about 1 million gallons, it was different because we had a deal back last year for bulk. So we’re all – on the bulk stuff that can move a little bit, the rest of it staying pretty steady.

John, I would say the growth on as the oil market tightened and we've seen the heavy duty market come under some pressure just been really because of fuel prices and we’ve been – think we've been competing with pretty well as a company. We've seen the heavy duty market slow some because of the fuel pricing, and the LNG market has – we've always believed that sort of the longer haul, irregular route-type business, really favors LNG, and we have some big customers that like that new station up there that we just opened our fright, that's a big LNG station for a big West Coast LNG trucking fleet. But when the market sort of tightened down here, there's more CNG business and there’s LNG business right now. And so that's the LNG market is tougher for us.

I understand that you guys have had a lot more success in the CNG job adoption and that Class A trucks haven't come online. I just would have thought – and again, I'm not aware of the bulk stuff, so thank you very much for clarifying.

Yes.

Or I would have thought that even with a static with some kind of installed base and then some slight growth in that market which we would see that number entering out.

Yes. And I would think you're right, one of the other little factors in on the – specifically on the LNG side, and I mentioned it earlier in the comments here about the port of LA, we've seen some poor trucks LNG, one of our first biggest deployment of LNG trucks begin to retire LNG trucks in the port, and that's been significant. So those trucks are the ones that we bought in 2008, 2009 and some of those are coming off. So we've been adding LNG customers, but we've had some retire here in the port. And really right now we haven't seen any add back in because we’re kind of waiting to see what's going to happen in this clear action plan in the board.

If knocks, new standards coming down the line?

Yes. Well, they figure there's a bunch of money coming, right, instead of dollars and rules. And so they're not going to replace their LNG trucks right now.

Okay. Great.

And yet they've retired some, John.

So they’re running diesel right now?

Well, yes. I mean I guess in the port of LA only 15% of the trucks down there are natural gas, right now.

Okay. Great. Well, thank you very much for the clarification.

Okay.

That does conclude our Q&A session. At this time I will now turn it back to Mr. Littlefair for closing remarks.

Well, thank you everyone for listening on the call this afternoon, and we’ll look forward to updating you on our progress in the next quarter. Good day.