Greetings. And welcome to the Clean Energy Fuels First Quarter 2020 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]. Please note, this conference is being recorded.I would now like to turn the conference over to your host, Robert Vreeland. Thank you. You may begin.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the first quarter ending March 31, 2020. 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 Clean Energy's Form 10-Q filed today.These forward-looking statements speak only as 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 Generally Accepted Accounting Principles 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.With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair.

Good afternoon, everyone. And thank you for joining us. It would be an understatement to say this is a unique quarter for all companies reporting their results during this unprecedented and challenging time presented by the COVID-19 pandemic. And Clean Energy would be no exception.Let me take a few minutes to report on how we've been operating over this period. Like most companies during this crisis, we have and continue to act aggressively to protect our employees and allow them to support their families.But as a recognized essential company, we have also kept our operations running, serving our customers and particularly those sectors that are critically important in keeping the country operational during a lockdown.The majority of our employees began working from home in mid-March, while our operations group, which includes our service technicians, were provided additional measures to ensure their safety and continue to work in the field.I'm proud to say that this dedicated group of men and women have, from the beginning of the lockdown, kept all our 550 stations around North America open. This has allowed the trucking industry to deliver essential products to grocery stores, pharmacies, health care facilities and other key businesses which have remained open.We have continued to fuel tens of thousands of refuse trucks every day that have had to deal with the shift to more residential waste collections without skipping a beat. And we have fueled city buses around the country that are transporting essential workers who continue to need public transportation.I want to express my deep appreciation to all of our employees who have faced these challenges without flinching and a special shoutout to our customers who are performing some of the most heroic tasks under the most difficult of circumstances.We began to successfully bring back our employees last week to…

Thank you, Andrew. My thoughts go out as well to everyone during this pandemic. I feel fortunate we are an essential business. And while not immune to this economic slowdown, we are fully operational and have not had any need for layoffs or work reductions.We are taking a cautious and, I believe, prudent view on keeping cash top of mind and protecting our healthy balance sheet in the event of a prolonged pandemic.As Andrew mentioned, we started seeing the effects of a slowdown in transportation in certain market segments in the second half of March, and have continued to see lower volumes in April. We have planned for lower volumes to continue through June before there is any rebound. We estimate March was reduced by 3 million gallons due to the pandemic.As you will recall, we gave an initial caution on our volume growth for 2020 back on March 10 during our year-end earnings call when the news of this pandemic was just beginning to take hold and oil had dropped to $30 a barrel.As the impact of the pandemic has worsened since March 10, with the country going into lockdown, we are revising our estimate of volume growth to be essentially flat year-over-year with a significant decline in the second quarter and a small rebound to year-over-year volume growth beginning in the third quarter and improving further into the fourth quarter.What this means financially is an approximate $11 million reduction in our adjusted EBITDA from our prior outlook of approximately $56 million to approximately $45 million.We do not expect to see much change in our estimated excess of cash flow from operations over purchases of property and equipment as we anticipate lowering our purchase of property and equipment down to $16 million from $30 million as a precaution.Regarding our…

[Operator Instructions]. Our first question comes from Eric Stine with Craig-Hallum. Please proceed with your question.

Hi, Andrew. Hi, Bob.

Hi.

Hey, Eric.

Hey. So, just wondering on the volume side and certainly understand bringing down the volume expectations, and maybe this is really difficult, but just thoughts on maybe breaking that down between low oil and COVID-19. I guess, from your commentary and also from the release, it would seem to indicate that it really is COVID and that, if it were just this low oil environment, you would still be expecting growth year-over-year.

Right, Eric. I think most of the adjustment down is COVID related, right? Now, future adoption rate, we still are seeing new business coming along, right? But I think it's safe to say the low oil will affect adoption rate. And it doesn't eliminate it. It just slows it down. And we've seen that before. And as people begin to look at the price of oil and the price of diesel at the pump, it tends to slow down adoption. And so, I think you see some of that in our expectation in the slower volume forecast, but principally it's due to the COVID.

Yeah. Okay. And then, just in terms of the…

Eric, And I think we're being – I'd like to think – I'm sitting here with Bob, and so he looks at me. But I like to think we're being conservative here, right? We're preparing for our board meeting and this COVID came upon the world and all of us fairly fast, and so we're still trying to get our arms around what it's meant, how long it's going to stay into effect, how quickly it is the country come back, and so it's a bit fluid here. And we're trying to be very forthcoming on what we see and we think we're being prudent, but it's a little hard to tell.For instance, we are seeing new business. And we'll continue. Look, just in the last four weeks, right smack down in the middle of the lockdown, we signed a contract and delivered 1.6 million new gallons to a stationary customer, which is new business. We never had them before. and so we continue to see adoption of customers and we'll continue to see our pipeline flow and the adoption increase. But it's hard to tell when transit snaps back all together and those kinds of things.

Right. Well, I guess for all of us, let's hope the COVID is something that's temporary. That's great color. I guess, you mentioned it a little bit, but up until – within the last month and a half, I think you'd agree that smaller fleets were starting to come back to the table. I would assume, as you mentioned, that maybe there's a little bit of a slowdown on the adoption side there. But fair to say that the big players of UPSs of the world that there's no change there, that this is their plan and that's not going to change.

That's right. As I mentioned in my remarks, Republic and Waste and some of these large – and frankly, some of them that are in our pipeline that I think I would have been announcing today, they've slowed some on the announcements, but we haven't seen any just drop out.

Yeah. Okay.

And they're trying to get a handle on their businesses, right? And so, I can understand why they're not marching off on announcing new projects in the middle of trying to – some of them are very busy and some aren't.

And the environmental piece remains strong, Eric. Even in all of this. And in fact, as Andrew mentioned, as we're seeing kind of cleaner skies and that sort of thing, frankly, the message is not lost that that's what it could look like if there was a lot of near zero trucks running around as well.

Yeah. That's actually what I was just going to ask you, given the unforeseen benefit here reduced emissions. And especially, for you out in California, I know it's been a challenge over time to get – it always is for natural gas and RNG versus some of the other technologies that might be years out. Is there any potential that this gives an added benefit to something that can be deployed right now?

Well, we've said it over time. And over the last several quarters, we've talked about the port, for instance. Now, here's an example of where you can make impact today using a renewable fuel. And over time, I've talked about the first trucks, the first 20 in the test and you that have been on the call remember that.Well, today, we have 186 of the new 11.9 natural gas trucks operating in the port. We have 40 more that are taking delivery right now. We have 450, 185 of which have been funded with grant applications and then another – the remainder of that 450, almost like a mount, 200 that are awaiting the funding. So, I think by the end of the year, if people can get all the trucks and the delivery of the trucks resumes in the next couple months, you're going to see that that you'll have 400 or 500 trucks, 600 trucks in the port versus maybe one electric truck, right?So, I think you're beginning to see that people recognize what's economic and what's available today versus what sounds good. And we're seeing it right here in the port of LA. And it's interesting, as Los Angeles is beginning to loosen up a little bit, we've seen – and we have the heat coming back, guess what, yesterday, we had ozone problem. And people recognize in California and these other non-attainment cities that NOx is the problem and we have that answer.So, I don't think – as the world comes back and it begins to operate, this doesn't go away. This is understood. And we have – I think on the carbon answers, we've long discussed, and also on the NOx side, we have it answered today that's economic and it's available.

Okay. Great update. Thanks a lot.

You bet. Thanks, Eric.

The next question comes from Rob Brown with Lake Street Capital Markets. Please proceed with your question.

Good afternoon.

Hey, Rob.

Hi, Rob.

Just wanted to clarify on your kind of outlook on the volume. You're sort of assuming normalization in Q3. Are you assuming a normalization in the airport business as well or just the transit side?

We see that segment come back a little slower. We see it – we're kind of assuming in the fourth quarter it comes back closer to where it was. We see it ramping in the third quarter. But, look, I don't have to tell anybody, just think about what's happened to these airports. So, it's down.

Yeah. So, there's the rebounding and then there is some anticipated growth. But when you start looking at year-over-year, it's slightly – we're looking maybe slightly above what it was last year. So, it's a whole mix of rebounding and growth in there because we are adding gallons, as we speak, deals that Andrew talked about today. So, same kind of mixture.

Yeah. Okay, great. And then, in terms of fleet reduction, with oil down, what's sort of the latest you're hearing? Or has it really just been on hold for all the virus disruptions? But do you see fleets still continuing to kind of evaluate things or where does that sort of stand?

No, we do. And our sales force is still in conversation and we made some deals here recently. We've moved some along. We've had some go into the negotiating phase. So, I think it slowed down. And a couple of the larger fleets that we were on the go line of making that announcement, they've asked to delay 30 days during this period. So, we haven't seen a pullback to say, 'well, gosh, this low oil price, I'm going to go back to diesel.' That hasn't been part of the discussion. It's been more about how does COVID affect my business and give us a minute here to get our arms around that.

Okay. Great. Thank you.

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

Hey, guys. Thank you for taking the question. This is Muhammad Ghulam on behalf of Pavel Molchanov. So, we've seen, especially in the recent weeks, traffic data showing upticks in various US cities as economic re-openings are underway. Can you tell us if that's [indiscernible] what you guys are seeing over the past two or three weeks?

Well, we're based out here in California and I wouldn't say that we've seen a significant increase. We've seen a little bit at some of our public stations. We haven't seen the transit volume uptick yet in most places. We've seen a little bit in the last week or so. But it's all pretty new, Muhammad, in Texas and a couple of those markets where we operate. But I would say it's hard for us to measure – see a significant increase over the last couple of weeks.

Yeah. The thing that we have noticed some is at least a leveling off. Okay? So, we were seeing some fairly kind of steep declines that second half of March and going into April, and then those declines have at least leveled off, but they're not necessarily already rebounding and going back up. But we anticipate that that will, as the rest of everyone can hear, the news of things opening and that sort of thing. So, we're anticipating that, but gradual.

Okay. Understood. And can you guys talk about how the decline in traffic has been different at stations located – you guys have stations located near airports versus other stations?

Well, I went through that on my remarks. So, we have four distinct markets. Transit was I spoke to – most transit properties have seen this kind of interest. And maybe interesting to those on the call. Have seen something like a 75% ridership decline. The rolling stocks declined about – and then, as it affects us volume, so it's called a fuel volume. It's declined about 30%. It seems like generally, not always, but kind of generally in transit.Airports have been worse than that, right? Air traffic is – at least at Los Angeles and a lot of the places, down 94%, 95%. And so, we've seen not a 95% reduction, but we've seen more than transit, closer to 50%, 45% to 50% reduction in some of our airport locations.Now, some of those have other vehicles operating. So, it's not all just solely on airport, but that's the significant reduction of our public stations in and around airports. So, we've seen that.Refuse, on the other hand, most of our – we fuel about 13,000 trash trucks, 14,000 trash trucks every day at – oh, gosh, I don't know – 130-some-odd fueling locations. Refuse has really shifted. Most companies have seen a big decline, larger decline, 20-percent-ish, 25% in their industrial/commercial waste. Well, it turns out that that's not the major portion of our business, right? That truck going to pick up a dumpster at a restaurant. We can see why that's down substantially. It's residential, most of our business turns out. And that is down 20%. So, we've seen something closer to a 10% decline in our Refuse.And then, trucking has been a little less than that. Most of our trucking companies have stayed pretty active. And I'd say there's been a decline, but it's something closer to 5% to 7%. Did that touch on what you're looking for?

Yeah. That's all from me. Thank you.

Muhammad, let me just say, it's interesting to see how this comes back. And I'll just use one example. I was talking about the characteristics of transit fleet. Well, LA Metro has a new policy that's going forward. So, I guess, here in the next week or so, we'll begin to see LA Metro – and it's the largest transit fleet in the country and we fuel all those buses, about 2,400, I think, transit buses. They are off in terms of volume [indiscernible] about 30-percent-ish. Their new policy is that they'll have 15 people on board a 40 foot transit bus. So, it appears to us, if that holds and if that's the case, that you may see – even while the lockdown comes off maybe slowly, it may require a disproportionate amount of buses to go back in service to haul fewer people per bus. So, we may see – I hate that for everybody, but we may see a quicker return to some of our transit volume. So, these kinds of things will be interesting to see how they develop.Any other questions, operator?

Okay. We've reached the end of the question-and-answer session. At this time, I'd like to turn the call back over to Andrew Littlefair for closing comments.

Good. Well, thank you, operator. And thank you, everybody, for joining us. We want to hope that all of you remain safe and are able to return to your businesses in a safe manner and look forward to talking to you on our next call. Thank you.

This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.