Clean Energy Fuels Corp. (CLNE) Q4 2017 Earnings Report, Transcript and Summary

Greetings, and welcome to Clean Energy Fuels' Fourth Quarter 2017 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tony Kritzer, Director of Investor Relations. Thank you, you may begin.

Thank you, operator. Earlier this afternoon Clean Energy released financial results for the fourth quarter and full year ending December 31, 2017. If you did 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 the Clean Energy's Form 10-K filed March 13, 2018. 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 excludes 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. On our last call I told you about several important strategic actions that we were undertaking, which we believe will enhance our competitive position and drive improved financial performance in 2018. I’m pleased to report that we completed those initiatives and we are already seeing positive results. The first action we took was to rationalize some of our low volume legacy stations. This has produced the intended result that contributed to our margin per gallon improving by 13% or $0.03 over last quarter. Additionally, even with shuttering these unprofitable stations we increased our volumes by 7% annually. The second action we took was to identify and initiate SG&A reductions which will result in approximately $20 million of savings annually or close to 21% compared to 2017. The last significant action we took was announcing and completing the combination of our compressor manufacturing business with Landi Renzo's European compressor subsidiary, SAFE to establish a new global power house in the natural gas compressor business. Clean Energy compression is well established in North American and South American and SAFE has a strong presence in Europe and Asia. The combined companies have complementary product lines with limited geographic overlap and will benefit for manufacturing economies of scale. We will maintain a 49% ownership, but it will no longer be consolidated on our balance sheet and it is now properly capitalized for success in the future. This move also allows Clean Energy to better focus on our core strength delivering more natural gas fuel to our customers. Now on to results: In the fourth quarter the company delivered 86.3 million gallons, a 3% increase over the fourth quarter of 2016. For the full year we delivered, 351 million gallons, a 7% increase over 2016. Our revenue for the fourth quarter was $89 million and for the full year 2017 revenue was $342 million. The difference from 2016 was almost entirely due to the sale of our upstream biomethane assets to BP for $155 million and no alternative fuel tax in 2017. Speaking of the alternative fuel tax credit, last month congress passed a one year extension, retroactive for 2017. We look forward to receiving the tax credit payments next quarter which net to us should be approximately $25 million. When added to our existing cash position of $178 million, we will have over $200 million of cash and investments on our balance sheet. Our core markets continue to experience healthy growth. The refuse sector added new customers and expanded capacity with existing customs with refuse volume increasing 18% in 2017. Overall, the refuse industry continues to adopt CNG as their fuel choice. Leading the way are our long time customers Waste Management and Republic Services. In fact, Waste Management recently opened their 104th refuse station to fuel their growing fleet of over 6,000 CNG refuse trucks and have said they will continue to aggressively increase their CNG fleet. Today we own and operator over 280 Refuse stations and fuel over 13,000 Refuse trucks daily, all across the U.S. and in Canada. In our transit market we increased volumes 7% in 2017 over 2016 and since our last report we have signed new or extended customer contracts for close to 12 million gallons with fleets such as Phoenix Public Transit, and The City of Santa Fe. On our construction carpet, in 2017 we completed 39 station projects. For customer construction projects revenue was $52 million. Looking out to 2018 we believe we will complete a similar amount of station projects for the year, both for our own network and for our customers. Our Redeem branded Renewable Natural Gas or RNG offering continued to accelerate in 2017. We delivered 78.5 million gallons of Redeem, a 33% increase year-over-year which represents 22% of our total fuel mix and a 100% of our fuel delivery in California. As part of California Statewide Green House Gas reduction initiatives, Clean Energy is well position to benefit from the ultra low carbon intensity RNG production in the state, some of which we have recently contracted from dairy digester projects. Remember that in order to monetize the RNG fuel gallons, the fuel must be delivered through a downstream station network and ours is unmatched. As an example, the fourth quarter is one of our strongest Redeem volume quarters. This is because our robust station infrastructure was the only downstream distribution network with the capacity to flow with the excess amount of RNG inventory that it had built up industry wide. We currently flow close to half of all the RNG delivered to vehicles in the United States. We announced a deal with Dallas, Fort Worth’s International airport to supply the DFW vehicle fleets with Redeem. This makes DFW the first airport outside of California to operate their fleet with Redeem RNG. DFW is the only airport in the United States to be certified as carbon neutral and is the largest airport it in the world with that distinction. We applaud our long time DFW partners for their commitment to lowering their fuel emissions. I’d like to highlight our recent partnership announcement with the LA and Long Beach Harbor Trucking Association. We are now the exclusive clean transportation fuel provider to more than 100 member companies represented by HTA. These member companies’ operator more than 8,000 trucks across the West Coast ports in the United States. As part of this partnership, we’ll provide specialized clean fuel programs to HTA members in preparation for the implementation of the Clean Air action plan in the ports of Los Angeles and Long Beach. As a reminder, the Clean Air action plan adopts far reaching strategies to further reduce air emission and support California’s vision for more sustainable fright movement. The plan calls for the introduction of near zero engines in 2020 and also places a fee on diesel that same year. This should dramatically change the makeup of the 16,000 heavy duty trucks that move in and out of the ports every day. Commercial production of the new Cummins Westport heavy duty near zero 12 liter engines began last month. Kenworth and Peterbilt expect to begin shipments in 2Q and Freightliner in Q3. Trucks with these new engines will be delivered to the port next month. The realization by trucking companies that they need to do something to meet stricter emission requirements in California is beginning to settle in. For instance, PAC9 Transportation recently purchased 24 Natural Gas Trucks for their port operation. While broadly the U.S. postal service continues to implement aggressive mandatory carbon reduction programs with a dozens of its contract haulers. We recently signed contracts with Sheehy Mail Contractors based in Kansas City and Thunder Ridge Transport, which is now operating 20 heavy duty CNG trucks on behalf of the USPS. This brings the total number of heavy duty CNG trucks operating on behalf of the postal service to over 300. Moving on to our capital structure, as I previously mentioned, we have a $178 million of cash and investments on the balance sheet at the end of the fourth quarter and expect an additional $25 million revenue contribution from the alternative fuel tax credit in the upcoming quarter. Looking out to our debt maturities of $135 million in the back half of the year, we will have more than enough cash to comfortably pay down our debt. CapEx for our core business was $18.4 million in 2017, with an additional $18 million for NG Advantages, virtual pipeline business. However most of NG Advantage CapEx is financed. For 2018 we anticipate our CapEx for the core business to be approximately $15 million. We remain on track to achieve positive operating cash flow in 2018 and we believe we’ll be close to $55 million to $60 million of adjusted EBITDA for the year. We are expecting to increase our volumes in the high single digits and continue to reduce SG&A where we can. Before I turn the call over to Bob, I would like to take a moment to review some of our accomplishments for 2017. While it has been a disappointing year for our stock price, we had a good year strategically and significantly improved the financial wealth of the company. Specifically these accomplishments include the sale of our upstream biomethane production and supply contracts to BP for $155 million, plus the assumption of $10 million of debt, plus a $25 million earn-out. We added 22 million new gallons. We strengthened our relationship with BP to secure long term biomethane supplies for us and our customers. We increased our renewal Redeem biomethane sales by 33%. We strengthened our balance sheet by reducing our convertible debt from high in 2016 of $545 million down to $235 million today. We also improved our cash position, so that we will have ample resources to repay the $135 million debt due in the second half of 2018. And by the end of the year our convertible debt, will be down to a $100 million. We secured the alternative fuel tax credit for 2017. We shuttered unprofitable stations. We reduced our SG&A by $20 million and we combined our compressor subsidiary. Finally I’d like to take a moment to address our stock price. It’s been a rough time for our stock price and our shareholders. Our friends on Wall Street tell us there are three principal reasons which I want to address. The first is the fervor around the perceived potential mass adoption of heavy duty electric trucks. Electric may work for passenger light duty vehicles, however as the dust begins to settle on the hype around the electric heavy duty trucks, we are starting to see industry experts that are highly skeptical of the feasibility of the battery range and the weight, the cost of charging stations and the ability to scale commercially to meet the demands of heavy duty truck market. Our Natural Gas offering meets the demanding duty cycle of heavy duty trucking. It is green or greener than electric and is available today for significantly less. The second concern is about how we might handle our debt. As I stated several times, we have adequate resources to pay-off our upcoming maturities. Our debt is manageable, and will be not an issue for this company. The third and last concern is Boone Pickens. There has been some misinformation stemming from Boone’s recent retirement announcement. Some have questions Boone’s envelopment in ownership position in the company. Boone remains our largest shareholder, a Director on our Broad and is deeply committed to the continued growth of our company and the advancement of the Natural Gas Fueling Industry. In fact, we just got back from a two day Board Meeting with Boone in his Dallas office. In summary, while our stock price has been under severe pressure, our underline business is strong and improving and I’m optimistic about the future. And with that, I will turn the call over to Bob.

Thank you, Andrew and good afternoon to everyone. I’ll direct my comments first towards the actions we previous announced, then our results for the fourth quarter and lastly I’ll comment our outlook for our 2018. As Andrew mentioned, we completed the actions we discussed during our third quarter earnings call and I don’t expect any significant costs in 2018 related to those actions. This includes the station closers, reductions in personnel and the Clean Energy compression combination where we formed a new comp by combining our compressor subsidiary with Landi Renzo's compressor subsidiary. Most of the cost of these actions were recorded in the third quarter, although we recorded $6.5 million in the fourth quarter in non-operating losses associated with the clean energy compression combination. While we saw improvements in the fourth quarter, the full effect of these positive changes began in January 2018 which you will see in the first quarter. Before I get into the details of the fourth quarter, I want to emphasize the positive aspects of our fourth quarter results. We continue to see volume growth on an ever-growing base of volume, our gross margin per gallon improved $0.30 in the fourth quarter to $0.26 on 86.4 million gallons, reflecting our station optimization efforts, as well as the risk in retail pump prices. Our station revenue of $17.8 million was the strongest quarter in 2017 and we saw reductions in SG&A expense from a year ago and from the third quarter with further significant SG&A reductions coming in 2018. So all in all, our core business performed well in the fourth quarter with future improvement slated for 2018. Regarding the fourth quarter results, our volume increased 3% over last year due to growth in CNG and LNG, while non-vehicle RNG gallons declined as a result of us no longer operating the biomethane plants we sold to BP. For CNG we saw most of our growth in Refuse, while the LNG growth is related to bulk deliveries. Fourth quarter Redeem volume delivered was 25 million gallons compared to 14.9 million gallons a year ago or a 68% increase. For the year we delivered 78.5 million gallons of redeem versus 59 million gallons last year or a 33% increase. As I mentioned on our last two calls, our quarterly results after the first quarter were expected to be impacted as a result of our sale of our upstream biomethane assets to BP for $155 million. As a result of the BP transaction we expected a reduction in revenue of $8 million to $10 million per quarter and reduction in SG&A expenses of $500,000 per quarter when compared to our first quarter results. Our revenue for the fourth quarter of 2017 was $89.3 million versus $101.8 million in 2016. Revenue in 2017 was lower due to lower environmental credit revenue of $9.8 million as a result of our BP transaction, and 2017 doesn't include alternative fuel tax revenue, while 2016 had $7 million of alternative fuel tax credit revenue. Our construction revenues of $17.8 million were ahead of last year by $900,000 and our compression revenues of $6 million were ahead of last year by $1 million; two good indicators of continued investment by our customers in natural gas fueling infrastructure. Our gross profit margin was also impacted by the lower environmental credits due to the BP sale transaction and 2017 not having any alternative fuel tax credit. Our margin per gallon increase of $0.03 represented approximately $2.3 million in additional gross margin in the quarter. Our SG&A for the fourth quarter of 2017 was $23.8 million compared to $28.7 million in 2016 and even after considering 2016 included $3 million of incremental charges, this is still a 7% year-over-year decline in SG&A. Overall for the year 2017 SG&A declined 9.3% or $9.8 million compared to 2016. As we pointed out in our last quarter, we have an administrative matter in process with the California Area Resources Board or CARB and this matter has not been resolved, which caused us to record a $7 million charge during the fourth quarter for environmental credits invalidated by CARB. We are contesting the invalidation. We have resumed generating and trading LCFS credits in the first quarter of 2018. Our GAAP net loss for the fourth quarter of 2017 was $28.3 million versus a net loss of $3.9 million in 2016. Our net loss for 2017 was negatively impacted by the LCFS charge of $7 million and the $6.5 million in non-operating losses from the clean energy compression combination, while 2016 was favorably impacted by $25.8 million from the combination of alternative fuel tax credits, gains from debt repurchases and incremental environmental credits. Our adjusted EBITDA of negative $9.8 million for the fourth quarter of 2017 was also negatively impacted by the LCSF charge and the non-operating loss related to the clean energy compression combination. While our 2016 adjusted EBITDA of $17.9 million was favorably impacted by the alternative fuel tax credits, the gains from debt repurchases and the higher environmental credits. Now regarding 2018, as a result of the clean energy compression combination, we will no longer consolidate our compressor company and instead will account for our 49% ownership of the new combined company as an equity method investment and record our 49% share of the results of operations in singe line item in the non-operating section of our income statement. There will be a reduction in revenue averaging approximately $6 million per quarter. There will be a minimal impact to our overall gross margin; however we will see a favorable impact to SG&A as I will point out in a moment. In addition to the improvements from our third and fourth quarter actions, 2018 will benefit from the alternative fuel tax credit related to 2017 volume, which is estimated to be $25 million. The full $25 million will be recognized as revenue and earnings in the first quarter of 2018. We would expect to receive the cash by the end of the second quarter, although the timing of collection is subject to IRS processing. Our margin per gallon is expected to be within a range of $0.24 to $0.28 for 2018, keeping in mind our range in 2017 was $0.23 to $0.26 and that opinion creates in our effective margin per gallon represents over $3.5 million in additional operating profit. Our 2018 SG&A, including removing the SG&A for our former compressor subsidiary is expected to range from $73 million to $79 million which is down from $96 million in 2017 and $105 million in 2016. GAAP net loss for 2018 is expected to range from $20 million to $25 million, which is an improvement of $54 million to $59 million over 2017. Adjusted EBITDA will be in the $55 million to $60 million range, which will result in positive cash flow from operations. With that operator, we’ll open the call to questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Eric Stine from Craig-Hallum. Please proceed with your question.

Hi everyone.

Hey Eric.

Hey, I was wondering if we’re going to start at the ports with the cap in place, the fees on diesel trucks starting 2020. I’m just curious what you’re seeing on the funding side; you know whether that did in fact start to flow in December. What you see now and when do you think you will start to see these trucks on the road that you can start to fuel?

Eric, there are some of the new – as I mentioned, some of the new 12 liter trucks. Low NOx, 12 liters are being sold into the port now. There’s been some orders taken. Next month we’ll have 25 new trucks going into a couple of fleets down there. All of the OEMs will have trucks that will be moving into the ports in the second and third quarter. On the grant funding, there is as you know, as you followed it over time there is lots of different parts of money in the state, Prop B money and others are actually right now 140 trucks that are in the queue to receive Prop B money. Many of these trucks will go into the port. There’s been some recent efforts underway by the port of Long beach and port Los Angeles and the air quality management district to come up with another. They are a highly focused upon the grant money to assist in trucks that perhaps might not have a truck to retire. Some of the new asset base trucking fleets that are in the port and so we like that. So I guess I’m pretty – it’s just now starting. We just now have the near zero product. Some of the grants and I think for the larger deployment of grant money we’ve got more time. It’s going to be needed to craft that money correctly. There seems to be a good attitude at the port. There seems to be a better general awareness of what is coming down the road. You know they are busy down there and they’ve got some time, but we can tell by talking to our customers at the reserve, a recognition that something is changing down there. And there are two other important things happening in the port Eric. That is the ports jointly are commissioning some studies on just what the right fee will be and the economic impact of how that will be designed. There’s been a couple of companion city council measures to encourage the port to deploy money faster. So I think there’s a lot of the right things in motion, but there is – I think it really will be the remainder of 2018. Trucks will arrive in the port, but there is kind of more work to be done to get I would say more aggressive full scale deployment.

So 2019, 2020 is when you would expect to start to see anything.

Yeah, I mean I’m guessing here. I’m guessing you’re going to have a few 100 trucks to 2018 probably, but the bigger numbers are going to be 2019 and 2020 and certainly you know history would tell us that last time around when several thousand trucks went into the port, the fee worked. At least for those that aren’t as familiar, the fee is something on order of $70 per container. So that’s $35 and most have two containers. So $70 is one that gets the attention and the last time around the switch could be to brand new diesel or natural gas. This time it’s got to be near zero natural gas or electric and you know we like our odds on that play and $70 Eric you know doesn’t work well down at the port.

Right, right and that’s what last time happened pretty quickly when it started to happen?

It was very quickly.

Okay, maybe just turning to redeem, good to hear that 25 million gallons in the quarter. I mean is it fair to kind of take that as a potential run rate as we look at 2018 or maybe just what are your expectations for 2018 and how is that pipeline shaping up?

Yeah, well we still obviously like the redeem fuel and its gaining a lot of attraction. You know Redeem, the renewable natural gas, it’s really the cleanest fuel out there and when you look at how it’s made versus the manufacturing electricity, it really is renewable and its clean, which is something that people – it takes a while for people to completely understand that, but it is a loss on a lot of our fleets that are concerned about sustainability. Don’t get carried away as you model this Eric on $25 million is a run rate. We did see that as a quarter. It is because we have the downstream capability to take a lot of this, we are seeing new renewable natural gas coming to the market, so I am not saying that this kind of bulge or bump up won’t happen from time to time. I am not sure I am prepared to tell you that just assume that that’s where the business is right this second in the first quarter or so.

Got it, okay. Maybe last one for me. Just a little color on the LCFS charge. I mean is that something that covers past volumes and you know going forward we should kind of expect the same situation as you’ve had or is that something that potentially impacts going forward as well.

No Eric, hi it’s Bob. So that will not impact us going forward. That really is kind of a unique situation, but it really relates to credits that we otherwise would have been transferring to other obligated parties that we had available to, so they weren’t past revenue, those credits, but they were available in our account and they were invalidated, and so in order to meet our obligations, we in effect had to spend $7 million to take care of that. It’s over and we’re back in trading. We’re contesting that, but going forward we’re back into our normal LCFS given the transaction we’re doing with BP and the sharing and that sort of thing, so yeah.

Right, right. Okay, thanks for that.

We have to be a little careful, because we’re talking to our friends there and we can’t say too much, but we were hoping that we were going to get some sort of resolution to that issue. Okay.

Our next question comes from the line of Rob Brown from Lake Street Capital Markets. Please proceed with your question.

Good afternoon.

Hey Rob.

Hi.

I just wanted to follow-up on the organic growth rate in the quarter. I think you closed some stations. Your organic growth rate or was the 3% growth sort of an organic number.

That was mostly organic, yeah. I know the stations that we closed obviously were lower volume right, that’s why we closed them, they were legacy stations. But yeah, I would say that the 3% growth rate was you know mostly organic, yeah.

Good, and then you talked about a high single digit growth rate kind of going into ’18 and from the drivers place I want to clarify. Is the refuse growth mostly driving that or you know some of the sports that have come on are just sort of…

Yeah, I think there should be some trucking, which you know is good margin for us. Trucking the port stuff would obviously fit in that category. We had continued good growth rate in refuse and in transit, but see a little bit of an up-tick. Our internal budget calls for an up-tick in the trucking volume.

We are seeing, it’s kind of across the board, even our airport stations. We are seeing – we got some new products at the airports. We’ve got – we’ve done some good here recently here on transit. So all of our markets now are – our NG Advantage business is – you know look $60 oil is means today you’ve got diesel in California at $3.75 and so we’ve seen the pump price move up, we’ve seen our interest move up for the fuel frankly and so we see growth in all of our sectors.

Okay good, and then the final question is I wanted to touch a little bit more on the near zero engine versus electric. Where are the customers at in terms of kind of working through that question and do you think that they would term that in ’18 or is this something that maybe causes a pause in the market or maybe just your color on the comparison there?

Rob, it’s a very good question and you know electric has captured people’s attention around the world, right. We all want to be green; we all want to be clean and so as we’ve all seen electric passenger cars have frankly limited success, but success and a lot of interest, certainly a lot of interest by the political crowd and also the environmental crowd. I think it’s been easy for people to kind of just assume that ‘oh well, Electric Light Duty Passenger Vehicles are gaining broad acceptance and so that’s easily transformed over to heavy duty,’ and of course we’ve seen a couple of announcements, but different engine manufactures that they all have different skunk works going on as it relates to electric. There is even hydrogen application, I think somebody has that and Tesla with some fanfare had their trucks. You really can’t buy one of those trucks today and I think that those deliveries are really slated for something in later part of 2019. I think people are intrigued, but yet I think that really our customers, we have lots of 1000 or more fleets that have a lot of experience running our natural gas and our product’s gotten better and our product now has gotten dramatically cleaner and now with the advent in the last years of the renewable, it’s even cleaner, its lower on NOx, price has come down. You know our friends in the transit or in the refuse industry, there is no incremental cost on their engine for natural gas and our friends in the refuse sector, it was a $300,000 trash truck, all in a natural gas truck cost about 7% or 8% more while that’s down a long way from when I started here many years ago. So it’s come in to where it’s very short payback for them. The experience I think it’s, UPS has run, I don’t know if it’s a 1 billion miles, but you know hundreds of millions of miles on natural gas and so a lot of our customers have a lot of experience and so there is no experience running electric duty. So I think people have an open mind. So far I think people have been willing to accept a lot of things that frankly we know in application that they are not willing to accept. You know electric trucks have reported to be five to 7,500 pounds heavier and that doesn’t work when you’re hauling goods, when you can only haul $40,000 pounds of goods. People used to do very critical of natural gas with that 800 pound weight penalty. So I think time is going to tell how these vehicles, how expensive these vehicles are, how this weight actually pans out, how they operate, the range is a huge issue. So let’s see, I don’t know that’s it’s going to put a pall over ordering, because fleets are under pressure to replace vehicles and under pressure to be green and sustainable, and I like to think that as people look at the electric when they get a chance to, we are going to compare very favorably.

Our next question comes from the line of Pavel Molchanov from Raymond James. Please proceed with your question.

Hello.

Hi, this is actually Shereen on behalf of Pavel.

Hello Shereen, you want to ask a question?

Yes. So my question is about the tax credit. I’m sure it’s how you are thinking about the odds of getting a longer term extension in the current legislative session and is this something that will ultimately tie to what happens with biodiesel?

So as you know Shereen there is a lot going on in Washington so it’s sort of hard, it’s kind of hard from morning to morning to figure out exactly what’s going to there. It appears that there is a budget reconciliation or another budget that might need to be passed to continue funding the government and that could be looked at again as early as March, I think 23rd. I think there is a good bipartisan support for looking at the tax extenders. Everybody that’s been on this call over the years knows that that’s a broader group than just the alternative fuel tax. None of those tax extenders got extended into 2018 or beyond. I’m told that there is – and our folks believe that there is a good support for making that extension and that it could happen as soon as this next budget is addressed. So we may know something here soon. So we’ll kind of see how that all plays out and how the – what goes on in Washington, its little hard to tell from time to time. I don’t have any intelligence right now that it’s going to be paired up or put with the diesel, biodiesel or what you are thinking of it maybe the issue on the ethanol right now. I don’t believe – it’s not the way it’s currently crafted and I’m not so sure that’s the way they’ll do it.

Okay, thank you.

Thank you.

Ladies and gentlemen, we have reached the end of the question-and-answer session and I would now like to turn the call back over to Andrew Littlefair for his closing remarks.

Yes, thank you operator and thank you all for joining us this afternoon. We look forward to updating you on our progress in the next quarter. Thank you, operator.

This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.