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Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
Commission File Number: 001-33480
CLEAN ENERGY FUELS CORP.
(Exact name of registrant as specified in its charter)
Title of each class
 
Name each exchange on which registered
 
Ticker symbol
Common stock, $0.0001 par value per share
 
Nasdaq Global Select Market
 
CLNE
4675 MacArthur Court, Suite 800, Newport Beach, CA 92660
(Address of principal executive offices, including zip code)
(949) 437-1000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232,405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer o
 
Accelerated filer x
 
 
 
Non-accelerated filer o

 
Smaller reporting company o
 
 
 
 
 
Emerging growth company o
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes o No x
As of May 2, 2019, there were 204,654,228 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.
 


Table of Contents

CLEAN ENERGY FUELS CORP. AND SUBSIDIARIES
INDEX
Table of Contents
 
 
 
 
Unless the context indicates otherwise, all references to “Clean Energy,” the “Company,” “we,” “us,” or “our” in this report refer to Clean Energy Fuels Corp. together with its consolidated subsidiaries.

This report contains forward-looking statements. See the cautionary note regarding these statements in Part I, Item 2.-Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report.

We own registered or unregistered trademark or service mark rights to Redeem™, NGV Easy Bay™, Clean Energy™, Clean Energy Renewables™, and Clean Energy Cryogenics™. Although we do not use the “®” or “™” symbol in each instance in which one of our trademarks appears in this report, this should not be construed as any indication that we will not assert our rights thereto to the fullest extent under applicable law. Any other service marks, trademarks and trade names appearing in this report are the property of their respective owners.



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PART I.—FINANCIAL INFORMATION
Item 1.—Financial Statements (Unaudited)
Clean Energy Fuels Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data, Unaudited)
 
December 31,
2018
 
March 31,
2019
Assets
 
 
 
Current assets:
 
 
 
Cash, cash equivalents and current portion of restricted cash
$
30,624

 
$
28,763

Short-term investments
65,646

 
66,164

Accounts receivable, net of allowance for doubtful accounts of $1,919 and $1,984 as of December 31, 2018 and March 31, 2019, respectively
68,865

 
70,341

Other receivables
15,544

 
9,198

Derivative assets, related party
1,508

 
728

Inventory
34,975

 
32,653

Prepaid expenses and other current assets
8,444

 
8,769

Total current assets
225,606

 
216,616

Operating lease right-of-use assets

 
23,801

Land, property and equipment, net
350,568

 
338,192

Long-term portion of restricted cash
4,000

 
4,848

Notes receivable and other long-term assets, net
17,470

 
16,948

Long-term portion of derivative assets, related party
8,824

 
4,634

Investments in other entities
26,079

 
25,842

Goodwill
64,328

 
64,328

Intangible assets, net
2,207

 
1,951

Total assets
$
699,082

 
$
697,160

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Current portion of debt
$
4,712

 
$
5,344

Current portion of finance lease obligations
693

 
695

Current portion of operating lease obligations

 
3,545

Accounts payable
19,024

 
15,413

Accrued liabilities
48,469

 
36,754

Deferred revenue
7,361

 
6,858

Total current liabilities
80,259

 
68,609

Long-term portion of debt
75,003

 
76,501

Long-term portion of finance lease obligations
3,776

 
3,718

Long-term portion of operating lease obligations

 
21,621

Other long-term liabilities
15,035

 
12,732

Total liabilities
174,073

 
183,181

Commitments and contingencies (Note 17)


 


Stockholders’ equity:
 
 
 
Preferred stock, $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding no shares

 

Common stock, $0.0001 par value. Authorized 304,000,000 shares as of December 31, 2018 and March 31, 2019, respectively; issued and outstanding 203,599,892 shares and 204,651,932 shares as of December 31, 2018 and March 31, 2019, respectively
20

 
20

Additional paid-in capital
1,198,769

 
1,200,418

Accumulated deficit
(688,653
)
 
(699,599
)
Accumulated other comprehensive loss
(2,138
)
 
(1,764
)
Total Clean Energy Fuels Corp. stockholders’ equity
507,998

 
499,075

Noncontrolling interest in subsidiary
17,011

 
14,904

Total stockholders’ equity
525,009

 
513,979

Total liabilities and stockholders’ equity
$
699,082

 
$
697,160

See accompanying notes to condensed consolidated financial statements.

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Clean Energy Fuels Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data, Unaudited)
 
Three Months Ended
March 31,
 
 
2018
 
2019
 
Revenue:
 
 
 
 
Product revenue
$
92,251

 
$
68,448

 
Service revenue
10,152

 
9,250

 
Total revenue
102,403

 
77,698

 
Operating expenses:
 
 
 
 
Cost of sales (exclusive of depreciation and amortization shown separately below):
 
 
 
 
Product cost of sales
50,199

 
54,430

 
Service cost of sales
4,597

 
4,398

 
Change in fair value of derivative warrants
(21
)
 
1,614

 
Selling, general and administrative
18,858

 
18,434

 
Depreciation and amortization
12,801

 
12,479

 
Total operating expenses
86,434

 
91,355

 
Operating income (loss)
15,969

 
(13,657
)
 
Interest expense
(4,503
)
 
(1,891
)
 
Interest income
575

 
580

 
Other income (expense), net
(12
)
 
2,670

 
Loss from equity method investments
(1,468
)
 
(467
)
 
Income (loss) before income taxes
10,561

 
(12,765
)
 
Income tax expense
(88
)
 
(60
)
 
Net income (loss)
10,473

 
(12,825
)
 
Loss attributable to noncontrolling interest
1,749

 
1,879

 
Net income (loss) attributable to Clean Energy Fuels Corp.
$
12,222

 
$
(10,946
)
 
Income (loss) per share:
 
 
 
 
Basic
$
0.08

 
$
(0.05
)
 
Diluted
$
0.08

 
$
(0.05
)
 
Weighted-average common shares outstanding:
 
 
 
 
Basic
152,194,695

 
204,196,669

 
Diluted
156,643,092

 
204,196,669

 
See accompanying notes to condensed consolidated financial statements.

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Clean Energy Fuels Corp. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands, Unaudited)
 
Clean Energy Fuels Corp.
 
Noncontrolling Interest
 
Total
 
Three Months Ended
March 31,
 
Three Months Ended
March 31,
 
Three Months Ended
March 31,
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
Net income (loss)
$
12,222

 
$
(10,946
)
 
$
(1,749
)
 
$
(1,879
)
 
$
10,473

 
$
(12,825
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income, net of tax:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of $0 tax in 2018 and 2019
(78
)
 
308

 

 

 
(78
)
 
308

Unrealized gains on available-for-sale securities, net of $0 tax in 2018 and 2019
53

 
66

 

 

 
53

 
66

Total other comprehensive income (loss)
(25
)
 
374

 

 

 
(25
)
 
374

Comprehensive income (loss)
$
12,197

 
$
(10,572
)
 
$
(1,749
)
 
$
(1,879
)
 
$
10,448

 
$
(12,451
)
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.

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Clean Energy Fuels Corp. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interest in
Subsidiary
 
Total
Stockholders

Equity
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
 
 
 
 
 
Balance, December 31, 2017
151,650,969

 
$
15

 
$
1,111,432

 
$
(683,570
)
 
$
(887
)
 
$
22,668

 
$
449,658

 
Cumulative effect of adopting ASU 2014-09

 

 

 
(1,293
)
 

 

 
(1,293
)
 
Balance, January 1, 2018
151,650,969

 
15

 
1,111,432

 
(684,863
)
 
(887
)
 
22,668

 
448,365

 
Issuance of common stock, net of offering costs
863,581

 

 
110

 

 

 

 
110

 
Stock-based compensation

 

 
1,898

 

 

 

 
1,898

 
Net income (loss)

 

 

 
12,222

 

 
(1,749
)
 
10,473

 
Other comprehensive loss

 

 

 

 
(25
)
 

 
(25
)
 
Balance, March 31, 2018
152,514,550

 
$
15

 
$
1,113,440

 
$
(672,641
)
 
$
(912
)
 
$
20,919

 
$
460,821

 

 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interest in
Subsidiary
 
Total
Stockholders

Equity
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
 
 
 
 
 
Balance, December 31, 2018
203,599,892

 
$
20

 
$
1,198,769

 
$
(688,653
)
 
$
(2,138
)
 
$
17,011

 
$
525,009

 
Issuance of common stock, net of offering costs
1,052,040

 

 
175

 

 

 

 
175

 
Stock-based compensation

 

 
1,246

 

 

 

 
1,246

 
Net loss

 

 

 
(10,946
)
 

 
(1,879
)
 
(12,825
)
 
Other comprehensive income

 

 

 

 
374

 

 
374

 
Increase in ownership in subsidiary

 

 
228

 

 

 
(228
)
 

 
Balance, March 31, 2019
204,651,932

 
$
20

 
$
1,200,418

 
$
(699,599
)
 
$
(1,764
)
 
$
14,904

 
$
513,979

 
See accompanying notes to condensed consolidated financial statements.

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Clean Energy Fuels Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, Unaudited)
 
Three Months Ended
March 31,
 
2018
 
2019
Cash flows from operating activities:
 
 
 
Net income (loss)
$
10,473

 
$
(12,825
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization expense
12,801

 
12,479

Provision for doubtful accounts, notes and inventory
227

 
300

Stock-based compensation expense
1,898

 
1,246

Change in fair value of derivative instruments
(21
)
 
6,584

Amortization of discount and debt issuance cost
198

 
(150
)
Loss (gain) on disposal of property and equipment
866

 
(2,680
)
Loss from equity method investments
1,468

 
467

Changes in operating assets and liabilities:
 
 
 
Accounts and other receivables
(36,796
)
 
(5
)
Inventory
(2,704
)
 
2,023

Prepaid expenses and other assets
(1,525
)
 
558

Accounts payable
3,970

 
(1,208
)
Deferred revenue
3,914

 
(3,485
)
Accrued expenses and other
2,882

 
(11,533
)
Net cash used in operating activities
(2,349
)
 
(8,229
)
Cash flows from investing activities:
 
 
 
Purchases of short-term investments
(41,723
)
 
(26,659
)
Maturities and sales of short-term investments
55,181

 
26,396

Purchases of and deposits on property and equipment
(7,131
)
 
(4,316
)
Payments on and proceeds from sales of loans receivable
84

 
141

Cash received from sale of certain assets of subsidiary, net
871

 
5,114

Proceeds from disposal of property and equipment

 
4,388

Net cash provided by investing activities
7,282

 
5,064

Cash flows from financing activities:
 
 
 
Issuances of common stock

 
175

Fees paid for issuances of common stock and debt issuance costs

 
(15
)
Proceeds from debt instruments
6,261

 
3,394

Repayment of finance lease obligations and debt instruments
(1,234
)
 
(1,475
)
Net cash provided by financing activities
5,027

 
2,079

Effect of exchange rates on cash, cash equivalents and restricted cash
(72
)
 
73

Net increase (decrease) in cash, cash equivalents and restricted cash
9,888

 
(1,013
)
Cash, cash equivalents and restricted cash, beginning of period
37,208

 
34,624

Cash, cash equivalents and restricted cash, end of period
$
47,096

 
$
33,611

Supplemental disclosure of cash flow information:
 
 
 
Income taxes paid
$
24

 
$

Interest paid, net of approximately $33 and $80 capitalized, respectively
$
2,856

 
$
1,756

            
See accompanying notes to condensed consolidated financial statements.

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Clean Energy Fuels Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data, Unaudited)
Note 1—General
Nature of Business 
Clean Energy Fuels Corp., together with its majority and wholly owned subsidiaries (hereinafter collectively referred to as the “Company,” unless the context or the use of the term indicates or requires otherwise) is engaged in the business of selling natural gas as an alternative fuel for vehicle fleets and related natural gas fueling solutions to its customers, primarily in the United States and Canada.
The Company’s principal business is supplying renewable natural gas (“RNG”), compressed natural gas (“CNG”) and liquefied natural gas (“LNG”) (RNG can be delivered in the form of CNG or LNG) for light, medium and heavy-duty vehicles and providing operation and maintenance (“O&M”) services for public and private vehicle fleet customer stations. As a comprehensive solution provider, the Company also designs, builds, operates and maintains fueling stations; sells and services natural gas fueling compressors and other equipment used in CNG stations and LNG stations; offers assessment, design and modification solutions to provide operators with code-compliant service and maintenance facilities for natural gas vehicle fleets; transports and sells CNG and LNG via “virtual” natural gas pipelines and interconnects; procures and sells RNG; sells tradable credits it generates by selling RNG and conventional natural gas as a vehicle fuel, including Renewable Identification Numbers (“RIN Credits” or “RINs”) under the federal Renewable Fuel Standard Phase 2 and credits under the California and the Oregon Low Carbon Fuel Standards (collectively, “LCFS Credits”); helps its customers acquire and finance natural gas vehicles; and obtains federal, state and local credits, grants and incentives.
Basis of Presentation 
The accompanying interim unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries, and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s consolidated financial position as of March 31, 2019, and results of operations, comprehensive income (loss) and cash flows for the three months ended March 31, 2018 and 2019. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three month periods ended March 31, 2018 and 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other interim period or for any future year.
Certain information and disclosures normally included in the notes to consolidated financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), but the resultant disclosures contained herein are in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) as they apply to interim reporting. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2018 that are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2019.
Reclassifications
Certain prior period amounts have been reclassified in the condensed consolidated balance sheets and condensed consolidated statements of operations and cash flows to conform to the current period presentation. These reclassifications had no material impact on the Company’s consolidated financial position, results of operations, or cash flows as previously reported.
Use of Estimates 
The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying condensed consolidated financial statements and these notes. Actual results could differ from those estimates and may result in material effects on the Company’s operating results and financial position. Significant estimates made in preparing the accompanying condensed consolidated financial statements include (but are not limited to) those related to revenue recognition, fair value measurements, goodwill and long-lived asset valuations and impairment assessments, income tax valuations and stock-based compensation expense.




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Note 2—Revenue from Contracts with Customers
Revenue Recognition Overview
The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration to which it expects to be entitled in exchange for the goods or services. To achieve that core principle, a five-step approach is applied: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue allocated to each performance obligation when the Company satisfies the performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue recognition.
The table below presents the Company’s revenue disaggregated by revenue source. The Company is generally the principal in its customer contracts because it has control over the goods and services prior to them being transferred to the customer, and as such, revenue is recognized on a gross basis. Sales and usage-based taxes are excluded from revenues. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
 
Three Months Ended
March 31,
 
 
2018
 
2019
 
Volume -related (1)
$
67,219

 
$
74,528

 
Station construction sales
5,798

 
3,170

 
Alternative fuels excise tax credit (“AFTC”)
25,481

 

 
Other
3,905

 

 
Total revenue
$
102,403

 
$
77,698

 
(1) Includes changes in fair value of derivative instruments related to the Company’s commodity swap and customer fueling contracts. The amounts are classified as revenue because the Company’s commodity swap contracts are used to economically offset the risk associated with the diesel -to -natural gas price spread resulting from anticipated customer fueling contracts under the Company’s Zero Now truck financing program. See Note 6 for more information about these derivative instruments. For the three months ended March 31, 2018 and 2019, changes in the fair value of commodity swaps amounted to a loss of $0 and $4,970, respectively.
Remaining Performance Obligations
Remaining performance obligations represent the transaction price of customer orders for which the work has not been performed. As of March 31, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $10,494, which related to the Company’s station construction sale contracts. The Company expects to recognize revenue on the remaining performance obligations under these contracts over the next 12 to 24 months.
For volume -related revenue, the Company has elected to apply an optional exemption, which waives the requirement to disclose the remaining performance obligation for revenue recognized through the right to invoice’ practical expedient.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) in the accompanying condensed consolidated balance sheets. Changes in the contract asset and liability balances during the three months ended March 31, 2019, were not materially impacted by any factors outside the normal course of business.








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As of December 31, 2018 and March 31, 2019, the Company’s contract balances were as follows:
 
December 31, 2018
 
March 31, 2019
Receivables, net
$
68,865


$
70,341

 
 
 
 
Contract Assets - Current
$
656

 
$
843

Contract Assets - Noncurrent
3,825

 
3,740

Contract Assets - Total
$
4,481

 
$
4,583

 
 
 
 
Contract Liabilities - Current
$
5,513

 
$
5,015

Contract Liabilities - Noncurrent
9,844

 
6,861

Contract Liabilities - Total
$
15,357

 
$
11,876

Receivables, Net
“Receivables, net” in the accompanying condensed consolidated balance sheets include amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, and the age of outstanding receivables.
Contract Assets
Contract assets include unbilled amounts typically resulting from the Company’s station construction sale contracts, when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Contract assets are classified as current or noncurrent based on the timing of billings. The current portion is included in “Prepaid expenses and other current assets” and the noncurrent portion is included in “Notes receivable and other long-term assets, net” in the accompanying condensed consolidated balance sheets.
Contract Liabilities
Contract liabilities consist of billings in excess of revenue recognized from the Company’s station construction sale contracts and payments received primarily from a customer of NG Advantage, LLC (“NG Advantage”) in advance of the performance obligations. Deferred revenue is classified as current or noncurrent based on when the revenue is expected to be recognized. The current portion and noncurrent portion of deferred revenue are included in “Deferred revenue” and “Other long -term liabilities,” respectively, in the accompanying condensed consolidated balance sheets.
Revenue recognized during the three months ended March 31, 2018 related to the Company’s contract liability balances as of December 31, 2017 was $1,842. The decrease in the contract liabilities balance for the three months ended March 31, 2019 is primarily driven by billings in excess of revenue recognized, offset by $3,317 of revenue recognized related to the Company’s contract liability balances as of December 31, 2018.

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Note 3— Investments in Other Entities and Noncontrolling Interest in a Subsidiary
SAFE&CEC S.r.l.
On November 26, 2017, the Company, through its former subsidiary IMW Industries Ltd. (formerly known as Clean Energy Compression Corp.) (“CEC”), entered into an investment agreement with Landi Renzo S.p.A. (“LR”), an alternative fuels company based in Italy. Pursuant to the investment agreement, the Company and LR agreed to combine their respective natural gas compressor subsidiaries, CEC and SAFE S.p.A, in a new company known as “SAFE&CEC S.r.l.” (such combination transaction is referred to as the “CEC Combination”). SAFE&CEC S.r.l. is focused on manufacturing, selling and servicing natural gas fueling compressors and related equipment for the global natural gas fueling market. Upon the closing of the CEC Combination on December 29, 2017, the Company owns 49% of SAFE&CEC S.r.l. and LR owns 51% of SAFE&CEC S.r.l.
The Company accounts for its interest in SAFE&CEC S.r.l. using the equity method of accounting because the Company does not control but has the ability to exercise significant influence over SAFE&CEC S.r.l.’s operations. The Company recorded a loss from this investment of $1,441 and $440 for the three months ended March 31, 2018 and 2019, respectively. The Company has an investment balance in SAFE&CEC S.r.l. of $23,372 and $23,161 as of December 31, 2018 and March 31, 2019, respectively.
NG Advantage
On October 14, 2014, the Company entered into a Common Unit Purchase Agreement (“UPA”) with NG Advantage for a 53.3% controlling interest in NG Advantage. NG Advantage is engaged in the business of transporting CNG in high-capacity trailers to industrial and institutional energy users, such as hospitals, food processors, manufacturers and paper mills that do not have direct access to natural gas pipelines.
NG Advantage has entered into an arrangement with BP Products North America (“BP”) for the supply, sale and reservation of a specified volume of CNG transportation capacity until March 2022. On February 28, 2018, the Company entered into a guaranty agreement with NG Advantage and BP pursuant to which the Company guarantees NG Advantage’s payment obligations to BP in the event of default by NG Advantage under the supply arrangement, in an amount up to an aggregate of $30,000 plus related fees. This guaranty is in effect until thirty days following the Company’s notice to BP of its termination. As initial consideration for the guaranty agreement, NG Advantage issued to the Company 19,660 common units, which increased the Company’s controlling interest in NG Advantage from 53.3% to 53.5%.
On October 1, 2018, the Company purchased 1,000,001 common units from NG Advantage for an aggregate cash purchase price of $5,000. This purchase increased Clean Energy’s controlling interest in NG Advantage from 53.3% to 61.7%.
In each month from November 2018 through February 2019, the Company was issued 100,000 additional common units of NG Advantage, for a total of 400,000 common units, pursuant to the guaranty agreement entered in February 2018. The issuance of 400,000 additional common units increased the Company’s controlling interest in NG Advantage to 64.6% as of March 31, 2019.
On February 15, 2019, NG Advantage and the Company entered into a transaction pursuant to which the Company agreed to lend to NG Advantage up to $5,000 in accordance with the terms of a delayed draw convertible promissory note (the “2019 Note”). NG Advantage simultaneously drew $2,500 under the 2019 Note, and on April 15, 2019, NG Advantage drew the remaining $2,500 under the 2019 Note. All unpaid principal and accrued interest under the 2019 Note is due and payable on the earlier of February 15, 2023 or in the event of default. The Company may convert the outstanding principal and accrued interest under the 2019 Note at any time prior to payment in full into common units of NG Advantage.
The Company recorded a loss attributable to the noncontrolling interest in NG Advantage of $1,749 and $1,879 for the three months ended March 31, 2018 and 2019, respectively. The value of the noncontrolling interest was $17,011 and $14,904 as of December 31, 2018 and March 31, 2019, respectively.

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Note 4—Cash, Cash Equivalents, and Restricted Cash
Cash, cash equivalents and restricted cash as of December 31, 2018 and March 31, 2019 consisted of the following:
 
December 31,
2018
 
March 31,
2019
Current assets:
 
 
 
Cash and cash equivalents
$
29,844

 
$
27,983

Restricted cash - standby letter of credit
30

 
30

Restricted cash - held in escrow
750

 
750

Total cash, cash equivalents and current portion of restricted cash
$
30,624

 
$
28,763

 
 
 
 
Long-term assets:
 
 
 
Restricted cash - standby letter of credit
$
4,000

 
$
4,000

Restricted cash - held in escrow

 
848

Total long-term portion of restricted cash
$
4,000

 
$
4,848

 
 
 
 
Total cash, cash equivalents and restricted cash
$
34,624

 
$
33,611

The Company considers all highly liquid investments with maturities of three months or less on the date of acquisition to be cash equivalents.
The Company places its cash and cash equivalents with high credit quality financial institutions. At times, such investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) and Canadian Deposit Insurance Corporation (“CDIC”). Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. The amounts in excess of FDIC and CDIC limits were approximately $28,524 and $26,658 as of December 31, 2018 and March 31, 2019, respectively.
The Company classifies restricted cash as short-term and a current asset if the cash is expected to be used in operations within a year or to acquire a current asset. Otherwise, the restricted cash is classified as long-term.
Note 5—Short-term Investments
Short-term investments include available-for-sale debt securities and certificates of deposit. Available-for-sale debt securities are carried at fair value, inclusive of unrealized gains and losses. Unrealized gains and losses for debt securities are recognized in other comprehensive income, net of applicable income taxes. Gains or losses on sales of available-for-sale debt securities are recognized on the specific identification basis.
The Company reviews available-for-sale debt securities for other-than-temporary declines in fair value below their cost basis each quarter and whenever events or changes in circumstances indicate that the cost basis of an asset may not be recoverable. This evaluation is based on a number of factors, including the length of time and the extent to which the fair value has been below its cost basis and adverse conditions related specifically to the security, including any changes to the credit rating of the security. As of March 31, 2019, the Company believes its carrying values for its available-for-sale debt securities are properly recorded.
Short-term investments as of December 31, 2018 consisted of the following:
 
Amortized Cost
 
Gross Unrealized
Losses
 
Estimated Fair
Value
Municipal bonds and notes
$
9,210

 
$
(19
)
 
$
9,191

Zero coupon bonds
29,823

 
(28
)
 
29,795

Corporate bonds
26,175

 
(22
)
 
26,153

Certificates of deposit
507

 

 
507

Total short-term investments
$
65,715

 
$
(69
)
 
$
65,646




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Short-term investments as of March 31, 2019 consisted of the following:
 
Amortized Cost
 
Gross Unrealized
Gains (Losses)
 
Estimated Fair
Value
Municipal bonds and notes
$
20,458

 
$
2

 
$
20,460

Zero coupon bonds
23,466

 
(3
)
 
23,463

Corporate bonds
21,736

 
(2
)
 
21,734

Certificates of deposit
507

 

 
507

Total short-term investments
$
66,167

 
$
(3
)
 
$
66,164


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Note 6 - Derivative Instruments and Hedging Activities
In October 2018, the Company executed two commodity swap contracts with Total Gas & Power North America, an affiliate of TOTAL and THUSA (as defined in Notes 15 and 12, respectively), for a total of five million diesel gallons annually from April 1, 2019 to June 30, 2024. These commodity swap contracts are used to manage diesel price fluctuation risks related to the natural gas fuel supply commitments the Company makes in its fueling agreements with fleet operators that participate in the Zero Now truck financing program. These contracts are not designated as accounting hedges and as a result, changes in the fair value of derivative instruments are recognized as earnings in “Product revenue” in the accompanying condensed consolidated statements of operations.
Commodity derivatives as of December 31, 2018 consisted of the following:
 
Gross Amounts Recognized
 
Gross Amounts Offset
 
Net Amount Presented
 
Assets:
 

 
 

 
 

 
Current portion of derivative assets, related party
$
1,508

 
$

 
$
1,508

 
Long-term portion of derivative assets, related party
8,824

 

 
8,824

 
Total derivative assets
$
10,332

 
$

 
$
10,332

 
Commodity derivatives as of March 31, 2019 consisted of the following:
 
Gross Amounts Recognized
 
Gross Amounts Offset
 
Net Amount Presented
 
Assets:
 

 
 

 
 

 
Current portion of derivative assets, related party
$
728

 
$

 
$
728

 
Long-term portion of derivative assets, related party
4,634

 

 
4,634

 
Total derivative assets
$
5,362

 
$

 
$
5,362

 
As of December 31, 2018 and March 31, 2019, the Company had a total volume on open commodity swap contracts of 25 million diesel gallons at a weighted -average price of approximately $3.18 per gallon, respectively.
The following table reflects the weighted -average price of open commodity swap contracts as of December 31, 2018 and March 31, 2019, by year with associated volumes, respectively:
 
 
December 31, 2018
 
March 31, 2019
Year
 
 Volumes (Diesel Gallons)
 
Weighted -Average Price per Diesel Gallon
 
 Volumes (Diesel Gallons)
 
Weighted -Average Price per Diesel Gallon
2019
 
3,125,000

 
$
3.18

 
3,125,000

 
$
3.18

2020
 
5,000,000

 
$
3.18

 
5,000,000

 
$
3.18

2021
 
5,000,000

 
$
3.18

 
5,000,000

 
$
3.18

2022
 
5,000,000

 
$
3.18

 
5,000,000

 
$
3.18

2023
 
5,000,000

 
$
3.18

 
5,000,000

 
$
3.18

2024
 
1,875,000

 
$
3.18

 
1,875,000

 
$
3.18


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Note 7—Fair Value Measurements
The Company follows the authoritative guidance for fair value measurements with respect to assets and liabilities that are measured at fair value on a recurring basis and non-recurring basis. Under the standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy consists of the following three levels: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly; Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company’s available-for-sale debt securities and certificate of deposits are classified within Level 2 because they are valued using the most recent quoted prices for identical assets in markets that are not active and quoted prices for similar assets in active markets.
The Company used the income approach to value its outstanding commodity swap contracts (see Note 6). Under the income approach, the Company used a discounted cash flow (“DCF”) model in which cash flows anticipated over the term of the contracts are discounted to their present value using an expected discount rate. The discount rate used for cash flows reflects the specific risks in spot and forward rates and credit valuation adjustments. This valuation approach is considered a Level 3 fair value measurement. The significant unobservable inputs used in the fair value measurement of the Company’s derivative instruments are Ultra-Low Sulfur Diesel (“ULSD”) forward prices and differentials from ULSD to Petroleum Administration for Defense District (“PADD”) regions. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement.  Generally, a change in the ULSD forward prices is accompanied by a directionally opposite but less extreme change in the ULSD-PADD differential.
The Company estimated the fair value of its outstanding commodity swap contracts based on the following inputs as of December 31, 2018 and March 31, 2019, respectively:
 
 
December 31, 2018
 
March 31, 2019
Significant Unobservable Inputs
 
Input Range
 
Weighted Average
 
Input Range
 
Weighted Average
ULSD Gulf Coast Forward Curve
 
$1.71 - $1.79
 
$
1.75

 
$1.90 - $1.96
 
$
1.93

Historical Differential to PADD 3 Diesel
 
$0.76 - $1.16
 
$
0.89

 
$0.76 - $1.16
 
$
0.89

Historical Differential to PADD 5 Diesel
 
$1.22 - $2.12
 
$
1.55

 
$1.25 - $2.14
 
$
1.59

The Company’s liability-classified warrants (which were all issued by NG Advantage) are classified within Level 3 because the Company uses the Black-Scholes option pricing model to estimate the fair value based on inputs that are not observable in any market.
There were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 of the fair value hierarchy as of December 31, 2018 or March 31, 2019.







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The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2018 and March 31, 2019, respectively:
 
 
December 31, 2018
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Available-for-sale securities (1):
 
 
 
 
 
 
 
 
Municipal bonds and notes
 
$
9,191

 
$

 
$
9,191

 
$

Zero coupon bonds
 
29,795

 

 
29,795

 

Corporate bonds
 
26,153

 

 
26,153

 

Certificates of deposit (1)
 
507

 

 
507

 

Commodity swap contracts (2)
 
10,332

 

 

 
10,332

Liabilities:
 
 
 
 
 
 
 
 
Warrants (3)
 
$
1,079

 
$

 
$

 
$
1,079

 
 
March 31, 2019
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Available-for-sale debt securities (1):
 
 
 
 
 
 
 
 
Municipal bonds and notes
 
$
20,460

 
$

 
$
20,460

 
$

Zero coupon bonds
 
23,463

 

 
23,463

 

Corporate bonds
 
21,734

 

 
21,734

 

Certificates of deposit (1)
 
507

 

 
507

 

Commodity swap contracts (2)
 
5,362

 

 

 
5,362

Liabilities:
 
 
 
 
 
 
 
 
Warrants (3)
 
$
2,693

 
$

 
$

 
$
2,693

(1) Included in “Short-term investments” in the accompanying condensed consolidated balance sheets. See Note 5 for more information.
(2) Included in “Derivative assets, related party” and “Long-term portion of derivative assets, related party” in the accompanying condensed consolidated balance sheets. See Note 6 for more information.
(3) Included in “Accrued liabilities” and “Other long-term liabilities” in the accompanying condensed consolidated balance sheets.
The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis as shown in the tables above that used significant unobservable inputs (Level 3):
 
Assets: Commodity Swap Contracts
 
Liabilities: Warrants
 
Balance as of December 31, 2017
$

 
$
(536
)
 
Gain (loss) included in earnings

 
21

 
Balance as of March 31, 2018
$

 
$
(515
)
 
 
 
 
 
 
Balance as of December 31, 2018
$
10,332

 
$
(1,079
)
 
Gain (loss) included in earnings
(4,970
)
 
(1,614
)
 
Balance as of March 31, 2019
$
5,362

 
$
(2,693
)
 
Other Financial Assets and Liabilities
The carrying amounts of the Company’s cash, cash equivalents and restricted cash, receivables and payables approximate fair value due to the short-term nature of those instruments. The carrying amounts of the Company’s debt instruments approximated their respective fair values as of December 31, 2018 and March 31, 2019. The fair values of these debt instruments were estimated using a discounted cash flow analysis based on interest rates offered on loans with similar terms to borrowers of similar credit quality, which are Level 3 inputs. See Note 12 for more information about the Company’s debt instruments.

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Note 8—Other Receivables
Other receivables as of December 31, 2018 and March 31, 2019 consisted of the following:
 
December 31,
2018
 
March 31,
2019
Loans to customers to finance vehicle purchases
$
276

 
$
1,887

Accrued customer billings
6,261

 
5,382

Fuel tax credits
434

 
434

Other
8,573

 
1,495

Total other receivables
$
15,544

 
$
9,198

Note 9—Inventory
Inventory consists of raw materials and spare parts, work in process and finished goods and is stated at the lower of cost (first-in, first-out) or net realizable value. The Company evaluates inventory balances for excess quantities and obsolescence by analyzing estimated demand, inventory on hand, sales levels and other information, and reduces inventory balances to net realizable value for excess and obsolete inventory based on this analysis.
Inventory as of December 31, 2018 and March 31, 2019 consisted of the following:
 
December 31,
2018
 
March 31,
2019
Raw materials and spare parts
$
34,890

 
$
32,565

Finished goods
85

 
88

Total inventory
$
34,975

 
$
32,653

Note 10—Land, Property and Equipment
Land, property and equipment as of December 31, 2018 and March 31, 2019 consisted of the following:
 
December 31,
2018
 
March 31,
2019
Land
$
3,681

 
$
3,681

LNG liquefaction plants
94,633

 
94,633

Station equipment
319,119

 
315,694

Trailers
75,901

 
75,221

Other equipment
97,268

 
97,793

Construction in progress
73,485

 
74,346

 
664,087

 
661,368

Less: accumulated depreciation
(313,519
)
 
(323,176
)
Total land, property and equipment, net
$
350,568

 
$
338,192

Included in “Land, property and equipment, net” are capitalized software costs of $29,344 and $29,573 as of December 31, 2018 and March 31, 2019, respectively. Accumulated amortization of the capitalized software costs is $22,472 and $23,504 as of December 31, 2018 and March 31, 2019, respectively.
The Company recorded amortization expense related to the capitalized software costs of $718 and $1,035 for the three months ended March 31, 2018 and 2019, respectively.
As of March 31, 2018 and 2019, $939 and $2,163, respectively, are included in “Accounts payable” and “Accrued liabilities,” which amounts are related to purchases of property and equipment. These amounts are excluded from the accompanying condensed consolidated statements of cash flows as they are non-cash investing activities.



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Table of Contents

Note 11—Accrued Liabilities
Accrued liabilities as of December 31, 2018 and March 31, 2019 consisted of the following:
 
December 31,
2018
 
March 31,
2019
Accrued alternative fuels incentives
$
6,923

 
$
5,969

Accrued employee benefits
2,248

 
2,673

Accrued interest
78

 
1,135

Accrued gas and equipment purchases
12,833

 
8,577

Accrued property and other taxes
3,397

 
3,001

Accrued salaries and wages
8,609

 
4,159

Other
14,381

 
11,240

Total accrued liabilities
$
48,469

 
$
36,754

Note 12—Debt
Debt obligations as of December 31, 2018 and March 31, 2019 consisted of the following and are further discussed below:
 
December 31, 2018
 
Principal Balances
 
Unamortized Debt Financing Costs
 
Balance, Net of Financing Costs
7.5% Notes
$
50,000

 
$
58

 
$
49,942

NG Advantage debt
28,904

 
155

 
28,749

Other debt
1,024

 

 
1,024

Total debt
79,928

 
213

 
79,715

Less amounts due within one year
(4,811
)
 
(99
)
 
(4,712
)
Total long-term debt
$
75,117

 
$
114

 
$
75,003

 
March 31, 2019
 
Principal Balances
 
Unamortized Debt Financing Costs
 
Balance Net of Financing Costs
7.5% Notes
$
50,000

 
$
48

 
$
49,952

NG Advantage debt
31,065

 
141

 
30,924

Other debt
969

 

 
969

Total debt
82,034

 
189

 
81,845

Less amounts due within one year
(5,402
)
 
(58
)
 
(5,344
)
Total long-term debt
$
76,632


$
131

 
$
76,501

7.5% Notes
In June 2013, the Company issued notes (the “7.5% Notes”) to T. Boone Pickens and Green Energy Investment Holdings, LLC (“GEIH”) in the amount of $150,000. The 7.5% Notes bear interest at the rate of 7.5% per annum and are convertible at the option of the holder into shares of the Company’s common stock at a conversion price of $15.80 per share (the “7.5% Notes Conversion Price”). Upon written notice to the Company, each holder of a 7.5% Note has the right to exchange all or any portion of the principal and accrued and unpaid interest under its 7.5% Notes for shares of the Company’s common stock at the 7.5% Notes Conversion Price. Additionally, subject to certain restrictions, the Company can force conversion of each 7.5% Note into shares of its common stock if, following the second anniversary of the issuance of a 7.5% Note, such shares trade at a 40% premium to the 7.5% Notes Conversion Price for at least 20 trading days in any consecutive 30 trading day period.
The entire principal balance of each 7.5% Note is due and payable seven years following its original issuance and the Company may repay each 7.5% Note at maturity in shares of its common stock (provided that the Company may not issue more than 13,993,630 shares of its common stock to holders of 7.5% Notes) or cash. All of the shares issuable upon conversion of the

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Table of Contents

7.5% Notes have been registered for resale by their holders pursuant to a registration statement that has been filed with and declared effective by the SEC.
The 7.5% Notes include customary events of default which, if any of them occurs, would permit or require the principal of, and accrued interest on, the 7.5% Notes to become, or to be declared, due and payable. No events of default under the 7.5% Notes had occurred as of March 31, 2019.
Prior to January 1, 2018, (i) the Company purchased $25,000 of the 7.5% Notes from Mr. Pickens, (ii) Mr. Pickens transferred all remaining balance of his 7.5% Notes to third parties, and (iii) GEIH transferred $16,800 in principal amount of its 7.5% Notes to third parties.
On June 29, 2018, and pursuant to the consent of the holders of the 7.5% Notes to the Company’s payments of amounts owed thereunder before maturity, the Company paid to the holders, in cash, an aggregate of $25,000 in principal amount and $505 in accrued and unpaid interest owed under all outstanding 7.5% Notes due July 2018. Upon such payment, the purchased 7.5% Notes were canceled in full.
On December 4, 2018, the Company purchased from the holders thereof all outstanding 7.5% Notes due July 2019, having an aggregate outstanding principal amount of $50,000, for a cash purchase price of $50,500. Upon such purchase, the purchased 7.5% Notes were canceled in full.
As a result of the foregoing transactions, as of March 31, 2019, (i) GEIH held 7.5% Notes in an aggregate principal amount of $32,906, and (ii) other third parties held 7.5% Notes in an aggregate principal amount of $17,094, all of which are due June 2020.
Plains Credit Facility
On February 29, 2016, the Company entered into a Loan and Security Agreement (the “Plains LSA”) with PlainsCapital Bank (“Plains”), which, as amended on December 6, 2017, has a maturity date of September 30, 2019. Pursuant to the Plains LSA, Plains agreed to lend the Company up to $50,000 on a revolving basis from time to time (the “Credit Facility”). The Company had no amounts outstanding under the Credit Facility as of March 31, 2019.
Interest on the Plains Note is payable monthly and accrues at a rate equal to the greater of (i) the then-current LIBOR rate plus 2.30% or (ii) 2.70%. As collateral security for the prompt payment in full when due of the Company’s obligations to Plains under the Plains LSA and the Plains Note, the Company pledged to and granted Plains a security interest in all of its right, title and interest in the cash and corporate and municipal bonds that the Company holds in an account at Plains. There are certain covenants and events of default associated with the Plains LSA. No events of default under the Plains LSA had occurred as of March 31, 2019.
Société Générale Term Loan Facility
On January 2, 2019, the Company entered into a term credit agreement (the “Credit Agreement”) with Société Générale, a company incorporated as a société anonyme under the laws of France (“SG”). The Credit Agreement provides for a term loan facility (the “SG Facility”) pursuant to which the Company may obtain, subject to certain conditions, up to $100,000 of loans (“Loans”) in support of its Zero Now truck financing program. Under the Credit Agreement, the Company is permitted to use the proceeds from the Loans solely to fund the incremental cost of trucks purchased or financed under the Zero Now truck financing program and related fees and expenses incurred by the Company in connection therewith. Interest on outstanding Loans accrues at a rate equal to LIBOR plus 1.30% per annum, and a commitment fee on any unused portion of the SG Facility accrues at a rate equal to 0.39% per annum. Interest and commitment fees are payable quarterly.
The Credit Agreement does not include financial covenants, and the Company has not provided SG with any security for its obligations under the Credit Agreement. As described below, THUSA has entered into the Guaranty to guarantee the Company’s payment obligations to SG under the Credit Agreement. The Company has not drawn down on the SG Facility and no events of defaults had occurred as of March 31, 2019.
TOTAL Credit Support Agreement
On January 2, 2019, the Company entered a credit support agreement (“CSA”) with Total Holdings USA Inc. (“THUSA”), a wholly owned subsidiary of TOTAL (as defined in Note 15). Under the CSA, THUSA agreed to enter into a guaranty agreement (“Guaranty”) pursuant to which it has guaranteed the Company’s obligation to repay to SG up to $100,000 in Loans and interest thereon in accordance with the Credit Agreement. In consideration for the commitments of THUSA under the CSA, the Company is required to pay THUSA a quarterly guaranty fee at a rate per quarter equal to 2.5% of the average aggregate Loan amount for the preceding calendar quarter.

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Table of Contents

As security for the Company’s obligations under the CSA, on January 2, 2019, the Company entered into a pledge and security agreement with THUSA and delivered a collateral assignment of contracts to THUSA, pursuant to which the Company collaterally assigned to THUSA all fueling agreements it enters into with participants in the Zero Now truck financing program. In addition, on January 2, 2019, the Company entered into a lockbox agreement with THUSA and Plains, under which the Company granted THUSA a security interest in the cash flow generated by the fueling agreements the Company enters into with participants in the Zero Now truck financing program.
The CSA will terminate following the later of: the payment in full of all of the Company’s obligations under the CSA; and the termination or expiration of the Guaranty following the maturity date of the last outstanding Loan or December 31, 2023, whichever is earlier.
NG Advantage Debt
On May 12, 2016 and January 24, 2017, respectively, NG Advantage entered into a Loan and Security Agreement (the “Commerce LSA”) with Commerce Bank & Trust Company (“Commerce”), pursuant to which Commerce agreed to lend NG Advantage $6,300 and $6,150, respectively. The proceeds were primarily used to fund the purchases of CNG trailers and equipment. Interest and principal for both loans are payable monthly in 84 equal monthly installments at an annual rate of 4.41% and 5.0%, respectively. As collateral security for the prompt payment in full when due of NG Advantage’s obligations to Commerce under the Commerce LSA, NG Advantage pledged to and granted Commerce a security interest in all of its right, title and interest in the CNG trailers and equipment purchased with the proceeds received under the Commerce LSA.
On November 30, 2016, NG Advantage entered into a Loan and Security Agreement (the “Wintrust LSA”) with Wintrust Commercial Finance (“Wintrust”), pursuant to which Wintrust agreed to lend NG Advantage $4,695. The proceeds were primarily used to fund the purchases of CNG trailers and equipment. Interest and principal is payable monthly in 72 equal monthly installments at an annual rate of 5.17%. As collateral security for the prompt payment in full when due of NG Advantage’s obligations to Wintrust under the Wintrust LSA, NG Advantage pledged to and granted Wintrust a security interest in all of its right, title and interest in the CNG trailers and equipment purchased with the proceeds received under the Wintrust LSA.
Financing Obligations
NG Advantage has entered into sale and leaseback transactions with various lessors as described below. In each instance, the sale and leaseback transaction does not qualify for sale-leaseback accounting because of NG Advantage’s continuing involvement with the buyer-lessor due to a fixed price repurchase option. As a result, the transactions are recorded under the financing method, in which the assets remain on the accompanying condensed consolidated balance sheets and the proceeds from the transactions are recorded as financing liabilities.
On December 18, 2017, NG Advantage entered into a sale-leaseback arrangement through a Master Lease Agreement (the “BoA MLA”) with Bank of America Leasing & Capital, LLC (“BoA”). Pursuant to the BoA MLA, NG Advantage received $2,117 in cash for CNG trailers and simultaneously leased them back from BoA for five years commencing January 1, 2018 with interest and principal payable in 60 equal monthly installments.
On March 1, 2018, NG Advantage entered into a sale-leaseback arrangement through a Master Lease Agreement (the “First National MLA”) with First National Capital, LLC (“First National”). Pursuant to the First National MLA, NG Advantage received $6,261 in cash, net of fees and the first month’s lease payment for CNG trailers and simultaneously leased them back from First National for six years commencing March 1, 2018 with interest and principal payable in 72 equal monthly installments.
On December 20, 2018 (the “Closing Date”), NG Advantage entered into a purchase agreement to sell a compression station for a purchase price of $7,000 to an entity whose member owners are noncontrolling interest member owners of NG Advantage. On the Closing Date and immediately following the consummation of the sale of the compression station, NG Advantage entered into a lease agreement with the buyer of the station (the “Lease”) pursuant to which the station was leased back to NG Advantage for a term of five years with monthly rent payments equal to $70. Of the purchase price, NG Advantage received $4,730 in cash, net of fees, the first month’s lease payment, and the repayment of a $2,000 promissory note from one of the member owners of the buyer, which was issued on November 19, 2018.
On January 17, 2019, NG Advantage entered into a sale-leaseback arrangement through a Master Lease Agreement (the “Nations MLA”) with Nations Fund I, LLC (“Nations”). Pursuant to the Nations MLA, NG Advantage received $3,358 in cash, net of the first month’s lease payment, for CNG trailers and simultaneously leased them back from Nations for four years commencing February 1, 2019 with interest and principal payable in 48 equal monthly installments.
Other Debt
The Company has other debt due at various dates through 2023 bearing interest at rates up to 5.02%, with weighted -average interest rates of 4.78% and 4.78% as of December 31, 2018 and March 31, 2019, respectively.

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Note 13—Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing the net income (loss) attributable to Clean Energy Fuels Corp. by the weighted-average number of common shares outstanding and common shares issuable for little or no cash consideration during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to Clean Energy Fuels Corp. by the weighted-average number of common shares outstanding and common shares issuable for little or no cash consideration during the period and potentially dilutive securities outstanding during the period, and therefore reflects the dilution from common shares that may be issued upon exercise or conversion of these potentially dilutive securities, such as stock options, warrants, convertible notes and restricted stock units. The dilutive effect of stock awards and warrants is computed under the treasury stock method. The dilutive effect of convertible notes and restricted stock units is computed under the if-converted method. Potentially dilutive securities are excluded from the computations of diluted net income (loss) per share if their effect would be antidilutive.
The information required to compute basic and diluted net income (loss) per share is as follows:
 
Three Months Ended
March 31,
 
 
2018
 
2019
 
Weighted-average common shares outstanding
152,194,695

 
204,196,669

 
Dilutive effect of potential common shares from restricted stock units and stock options
4,448,397

 

 
Weighted-average common shares outstanding -diluted
156,643,092

 
204,196,669

 
The following potentially dilutive securities have been excluded from the diluted net income (loss) per share calculations because their effect would have been antidilutive. Although these securities were antidilutive for these periods, they could be dilutive in future periods.
 
Three Months Ended
March 31,
 
 
2018
 
2019
 
Stock options
8,573,749

 
10,300,404

 
Convertible notes
14,991,521

 
3,164,557

 
Restricted stock units

 
1,305,672

 
Total
23,565,270

 
14,770,633

 
Note 14—Stock-Based Compensation
The following table summarizes the compensation expense and related income tax benefit related to the Company’s stock-based compensation arrangements recognized in the accompanying condensed consolidated statements of operations during the periods:
 
Three Months Ended
March 31,
 
 
2018
 
2019
 
Stock-based compensation expense, net of $0 tax in 2018 and 2019
$
1,898

 
$
1,246

 
As of March 31, 2019, there was $5,650 of total unrecognized compensation costs related to unvested shares subject to outstanding stock options and restricted stock units, which is expected to be expensed over a weighted-average period of approximately 1.97 years.




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Note 15—Stockholders Equity
Issuance of Common Stock
On May 9, 2018, the Company entered into a stock purchase agreement (the “Purchase Agreement”) with Total Marketing Services, S.A., a wholly owned subsidiary of Total S.A. (“Total”). Pursuant to the Purchase Agreement, the Company agreed to sell and issue, and Total agreed to purchase, up to 50,856,296 shares of the Company’s common stock at a purchase price of $1.64 per share, in a private placement (the “Total Private Placement”). The purchase price per share was the volume-weighted average price for the Company’s common stock between March 23, 2018 (the day on which discussions began between the Company and Total) and May 3, 2018 (the day on which the Company agreed in principle with Total regarding the structure and basic terms of its investment). As of the date of the Purchase Agreement, Total did not hold or otherwise beneficially own any shares of the Company’s common stock, and Total has agreed, until the later of May 9, 2020 or such date when it ceases to hold more than 5.0% of the Company’s common stock then outstanding, among other similar undertakings and subject to customary conditions and exceptions, to not purchase shares of the Company’s common stock or otherwise pursue transactions that would result in Total beneficially owning more than 30.0% of the Company’s equity securities without the approval of the Company’s board of directors.
On June 13, 2018, the Company and Total closed the Total Private Placement, in which: (1) the Company issued to Total all of the 50,856,296 shares of its common stock issuable under the Purchase Agreement, resulting in Total holding approximately 25.0% of the outstanding shares of the Company’s common stock and the largest ownership position of the Company as of March 31, 2019; (2) Total paid to the Company an aggregate of $83,404 in gross proceeds, which the Company has used and expects to continue to use for working capital and general corporate purposes, which may include executing its business plans, pursuing opportunities for further growth, and retiring a portion of its outstanding indebtedness; and (3) the Company and Total entered into a registration rights agreement, described below. In connection with the issuance of common stock, the Company incurred transaction fees of $1,909.
Pursuant to the Purchase Agreement, the Company and Total also entered into a registration rights agreement on June 13, 2018, upon the closing under the Purchase Agreement. Pursuant to the registration rights agreement, the Company filed a registration statement with the SEC to cover the resale of the shares issued and sold under the Purchase Agreement, which was declared effective on August 16, 2018, and is obligated to use its commercially reasonable efforts to maintain the effectiveness of such registration statement until all such shares are sold or may be sold without restriction under Rule 144 under the Securities Act of 1933, as amended. As of March 31, 2019, the Company was in compliance with all of its registration covenants set forth in the registration rights agreement.

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Note 16—Income Taxes
The provision for income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is recorded.  
The Company’s income tax expense was $88 and $60 for the three months ended March 31, 2018 and 2019, respectively. Tax expense for all periods was comprised of taxes due on the Company’s U.S. and foreign operations. The decrease in the Company’s income tax expense for the three months ended March 31, 2019 as compared to the three months ended March 31, 2018 was primarily due to a reduction in the Company’s expected state tax expense. The effective tax rates for the three months ended March 31, 2018 and 2019 are different from the federal statutory tax rate primarily due to losses for which no tax benefit has been recognized.
The Company increased its liability for unrecognized tax benefits in the three months ended March 31, 2018 by $2,689, which was primarily attributable to the portion of AFTC revenue recognized in the period. This was offset by the fuel tax the Company collected from its customers as an unrecognized tax benefit during the year ended December 31, 2017. The net interest incurred was immaterial for both the three months ended March 31, 2018 and 2019, respectively.
Note 17—Commitments and Contingencies
Environmental Matters    
The Company is subject to federal, state, local and foreign environmental laws and regulations. The Company does not anticipate any expenditures to comply with such laws and regulations that would have a material impact on the Company’s consolidated financial position, results of operations or liquidity. The Company believes that its operations comply, in all material respects, with applicable federal, state, local and foreign environmental laws and regulations.
Litigation, Claims and Contingencies
The Company may become party to various legal actions that arise in the ordinary course of its business. The Company is also subject to audit by tax and other authorities for varying periods in various federal, state, local and foreign jurisdictions, and disputes may arise during the course of these audits. It is impossible to determine the ultimate liabilities that the Company may incur resulting from any of these lawsuits, claims, proceedings, audits, commitments, contingencies and related matters or the timing of these liabilities, if any. If these matters were to ultimately be resolved unfavorably, it is possible that such an outcome could have a material adverse effect upon the Company’s consolidated financial position, results of operations, or liquidity. The Company does not, however, anticipate such an outcome and it believes the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

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Note 18—Leases
Leases (Topic 842)
On January 1, 2019, the Company adopted the new lease accounting standard (see Note 20 for more information on the standard and the impact of the adoption) where leases are now classified as either operating leases or finance leases. The Company’s operating leases are comprised of real estate for fueling stations, office spaces, warehouses, a LNG liquefaction plant, and office equipment, and its finance leases are comprised of vehicles.
At the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether it obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The commencement date of the contract is when the lessor makes the underlying asset available for use by the lessee.
Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent obligations to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the net present value of fixed lease payments over the lease term. ROU assets also include any initial direct costs and advance lease payments made, and exclude lease incentives. Lease liabilities also include terminal purchase options when deemed reasonably certain to exercise. The Company’s lease term includes options to extend when it is reasonably certain that it will exercise that option. The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of 12 months or less.
As most of the Company’s operating leases do not have an implicit rate that can be readily determined, the Company uses its secured incremental borrowing rate for the same term as the underlying lease based on information available at lease commencement. For finance leases, the Company uses the rate implicit in the lease.
The lease classification affects the expense recognition on the condensed consolidated statement of operations. Operating lease charges are recorded in “Cost of sales, exclusive of depreciation and amortization,” and “Selling, general and administrative” expense. Finance lease charges are split, where depreciation on assets under finance leases is recorded in “Depreciation and amortization” expense and an implied interest component is recorded in “Interest expense.” The expense recognition for operating leases and finance leases is substantially consistent with legacy accounting.
The Company leases an office space from T. Boone Pickens in Dallas, TX. The lease, which expires in October 2019, calls for monthly rental payments of $12.
NG Advantage has provided residual value guarantees on leases of certain vehicles aggregating $1,381 to the lessors. NG Advantage expects to owe these amounts in full and therefore they have been included in the measurement of the lease liabilities and ROU assets.
Certain of the Company’s real estate leases contain variable lease payments, including payments based on a change in the index or gasoline gallon equivalents of natural gas dispensed at fueling stations. These variable lease payments cannot be determined at the commencement of the lease, are not included in the ROU assets and liabilities and are recorded as a period expense when incurred.












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Lessee Accounting
As of March 31, 2019, the Company’s finance and operating lease asset and liability balances were as follows:
 
March 31, 2019
 
Finance leases:
 
 
Land, property and equipment, gross
$
5,299

 
Accumulated depreciation
(1,803
)
 
Land, property and equipment, net
$
3,496

 
 
 
 
Current portion of finance lease obligations
$
695

 
Long-term portion of finance lease obligations
3,718

 
Total finance lease liabilities
$
4,413

 
 
 
 
Operating leases:
 
 
Operating lease right-of-use assets (1)
$
23,801

 
 
 
 
Current portion of operating lease obligations
$
3,545

 
Long-term portion of operating lease obligations
21,621

 
Total operating lease liabilities
$
25,166

 
(1) The Company’s operating lease ROU assets are comprised of the following:
 
March 31, 2019
 
Assets
 
Liabilities
Real estate for fueling stations
$
17,370

 
$
17,370

LNG plant, office spaces and warehouses
6,419

 
7,784

Office equipment
12

 
12

Total operating lease right-of-use assets
$
23,801

 
$
25,166

The components of lease expense for finance and operating leases for three months ended March 31, 2019 consisted of the following:
 
March 31, 2019
 
Finance leases:
 
 
Depreciation on assets under finance leases
$
259

 
Interest on lease liabilities
49

 
Total finance leases expense
$
308

 
 
 
 
Operating leases:
 
 
Lease expense
$
1,239

 
Lease expense on short-term leases
1,090

 
Variable lease expense
631

 
Sublease income
(52
)
 
Total operating leases expense
$
2,908

 




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Supplemental information on finance and operating leases are as follows:
 
March 31, 2019
 
Operating cash outflows from finance leases
$
(49
)
 
Operating cash outflows from operating leases
$
(1,224
)
 
Financing cash outflows from finance leases
$
(184
)
 
 


 
Assets obtained in exchange for new finance lease liabilities (1)
$
129

 
 
 
 
Weighted-average remaining lease term - finance leases
5.2 years

 
Weighted-average remaining lease term - operating leases
11.5 years

 
 
 
 
Weighted-average discount rate - finance leases
4.43
%
 
Weighted-average discount rate - operating leases
8.16
%
 
(1) These amounts are excluded from the accompanying condensed consolidated statements of cash flows as they are non-cash investing activities.
The following schedule represents the Company’s maturities of finance and operating lease liabilities as of March 31, 2019:
 
Finance Leases
 
Operating Leases
Fiscal year:
 
 
 
2019
$
686

 
$
3,839

2020
789

 
4,526

2021
686

 
3,594

2022
549

 
2,641

2023
529

 
2,629

Thereafter
1,875

 
22,919

Total minimum lease payments
5,114

 
40,148

Less amount representing interest
(701
)
 
(14,982
)
Present value of lease liabilities
$
4,413

 
$
25,166

Lessor Accounting
The Company leases fueling station equipment to customers that contain an option to extend and an end-of-term purchase option. Receivables from these leases are accounted for as finance leases, specifically sales-type leases, and are included in “Other receivables” and “Notes receivable and other long-term assets, net” in the condensed consolidated balance sheets.
The Company recognizes the net investment in the lease as the sum of the lease receivable and the unguaranteed residual value, both of which are measured at the present value using the interest rate implicit in the lease.
During the three months ended March 31, 2019, the Company recognized $37 in “Interest income” on its lease receivables.









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The following schedule represents the Company’s maturities of lease receivables as of March 31, 2019:
Fiscal year:
 
 
2019
$
140

 
2020
186

 
2021
186

 
2022
186

 
2023
186

 
Thereafter
1,240

 
Total minimum lease payments
2,124

 
Less amount representing interest
(1,043
)
 
Present value of lease receivables
$
1,081

 
Leases (Topic 840)
As required by the new lease accounting standard, legacy disclosures are provided for periods prior to adoption.
Operating Lease Commitments
The Company leases facilities, including the land for its LNG production plant in Boron, California and certain equipment under noncancelable operating leases expiring at various dates through 2038. If a lease has a fixed and determinable escalation clause, or periods of rent holidays, the difference between rental expense and rent paid is included in “Accrued liabilities” and “Other long-term liabilities” in the accompanying consolidated balance sheets.
The following schedule represents the Company’s future minimum lease obligations under all noncancelable operating leases as of December 31, 2018:
Fiscal year:
 

 
2019
$
6,340

 
2020
4,332

 
2021
3,311

 
2022
2,409

 
2023
2,300

 
Thereafter
13,214

 
Total future minimum lease payments
$
31,906

 
Rent expense, including variable rent, totaled $1,698 for the three months ended March 31, 2018.












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Capital Lease Obligations and Receivables
The Company leases equipment under capital leases with a weighted-average interest rate of 4.48%. As of December 31, 2018, future payments under these capital leases are as follows:
Fiscal year:
 
 
2019
$
883

 
2020
742

 
2021
656

 
2022
540

 
2023
529

 
Thereafter
1,868

 
Total minimum lease payments
5,218

 
Less amount representing interest
(749
)
 
Capital lease obligations
4,469

 
Less current portion
(693
)
 
Capital lease obligations, less current portion
$
3,776

 
The value of the equipment under capital leases as of December 31, 2018 was $6,143, with related accumulated amortization of $1,832, respectively.
The Company also leases fueling station equipment to customers under sales-type leases with a weighted-average interest rate of 13.5%.
As of December 31, 2018, future receipts under this lease are as follows:
Fiscal year:
 
 
2019
$
186

 
2020
186

 
2021
186

 
2022
186

 
2023
186

 
Thereafter
1,240

 
Capital lease receivables
2,170

 
Less amount representing interest
(1,080
)
 
Capital lease receivables, less current portion
$
1,090

 
Note 19—Alternative Fuels Excise Tax Credit
Under separate pieces of U.S. federal legislation, the Company has been eligible to receive the AFTC tax credit for its natural gas vehicle fuel sales made between October 1, 2006 and December 31, 2017. The AFTC, which had previously expired on December 31, 2016, was reinstated on February 9, 2018 to apply to vehicle fuel sales made from January 1, 2017 through December 31, 2017. The AFTC credit is equal to $0.50 per gasoline gallon equivalent of CNG that the Company sold as vehicle fuel and $0.50 per diesel gallon of LNG that the Company sold as vehicle fuel in 2016 and 2017.
Based on the service relationship with its customers, either the Company or its customers claims the credit. The Company records its AFTC credits, if any, as revenue in its consolidated statements of operations because the credits are fully payable to the Company and do not offset income tax liabilities. As such, the credits are not deemed income tax credits under the accounting guidance applicable to income taxes.
As a result of the most recent legislation authorizing AFTC being signed into law on February 9, 2018, all AFTC revenue for vehicle fuel the Company sold in the 2017 calendar year, totaling $25,481, has been recognized during the three months ended March 31, 2018 and was collected subsequent to that date. AFTC is not currently available, and may not be reinstated, for vehicle fuel sales made after December 31, 2017.

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Table of Contents

Note 20—Recently Adopted Accounting Changes
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASC 842”), which amends the guidance in former Accounting Standards Codification Topic 840, Leases (“ASC 840”). The new standard requires most leases to be recognized on the balance sheet which will increase reported assets and liabilities. Accounting for lessors and capital leases (now known as finance leases) is substantially similar to ASC 840. The new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2018, which for the Company is the first quarter of 2019.
The Company adopted this standard using the modified retrospective method and recognized the cumulative effect of initially applying ASC 842 as an adjustment to accumulated deficit in the consolidated balance sheet as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted. This adoption had a material impact to the Company’s condensed consolidated balance sheets and did not have a material impact to the Company’s condensed consolidated statements of operations or its condensed consolidated statements of cash flows. The primary impact was to record ROU assets and lease liabilities for existing operating leases on the condensed consolidated balance sheets.
As permitted under ASC 842, the Company elected the package of practical expedients that permit it to not reassess (1) whether an existing contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The Company also elected the practical expedient allowing it to use hindsight in determining the lease term and in assessing the likelihood a purchase option will be exercised.
The ASC 842 adoption adjustments are as follows:
 
Balance as of December 31, 2018
 
Adjustments Due to ASC 842
 
Balance as of January 1, 2019
Operating lease right-of-use assets
$

 
$
24,453

 
$
24,453

Operating lease obligations
$

 
$
25,943

 
$
25,943

Accrued liabilities
$
48,469

 
$
(496
)
 
$
47,973

Other long-term liabilities
$
15,035

 
$
(994
)
 
$
14,041

The ASC 842 adoption adjustments on the accompanying condensed consolidated balance sheet as of March 31, 2019 are as follows:
 
March 31, 2019
 
Balance before ASC 842 Adoption
 
Effect of Change
 
As Reported
Operating lease right-of-use assets
$

 
$
23,801

 
$
23,801

Current portion of operating lease obligations
$

 
$
3,545

 
$
3,545

Long-term portion of operating lease obligations
$

 
$
21,621

 
$
21,621

Accrued liabilities
$
37,269

 
$
(515
)
 
$
36,754

Other long-term liabilities
$
13,582

 
$
(850
)
 
$
12,732


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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (this discussion, as well as discussions under the same heading in our other periodic reports, are referred to as the “MD&A”) should be read together with our unaudited condensed consolidated financial statements and the related notes included in this report, and all cross references to notes included in this MD&A refer to the identified note in such consolidated financial statements. For additional context with which to understand our financial condition and results of operations, refer to the MD&A included in our Annual Report on Form 10-K for our fiscal year ended December 31, 2018, which was filed with the Securities and Exchange Commission (“SEC”) on March 12, 2019, as well as the audited consolidated financial statements and notes included therein (collectively, our “2018 Form 10-K”). Pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K promulgated by the SEC, in preparing this MD&A, we have presumed that readers have access to and have read the MD&A contained in our 2018 Form 10-K. Unless the context indicates otherwise, all references to “Clean Energy,” the “Company,” “we,” “us,” or “our” in this MD&A refer to Clean Energy Fuels Corp. together with its consolidated subsidiaries.

Cautionary Note Regarding Forward Looking Statements
This MD&A and the other disclosures in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements other than historical facts. These statements relate to future events or circumstances or our future performance, and they are based on our current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “if,” “may,” “might,” “shall,” “will,” “can,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “goal,” “objective,” “initiative,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “forecast,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements we make in this discussion include statements about, among other things, our future financial and operating performance, our growth strategies and anticipated trends in our industry and our business. Although the forward-looking statements in this discussion reflect our good faith judgment based on available information, they are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that might cause or contribute to such differences include, among others, those discussed under “Risk Factors” in this report and in our 2018 Form 10-K. In addition, we operate in a competitive and rapidly evolving industry in which new risks emerge from time to time, and it is not possible for us to predict all of the risks we may face, nor can we assess the effect of all factors on our business or the extent to which any factor or combination of factors could cause actual results to differ from our expectations. As a result of these and other potential risks and uncertainties, our forward-looking statements should not be relied on or viewed as predictions of future events. All forward-looking statements in this discussion are made only as of the date of this document and, except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, including to conform these statements to actual results or to changes in our expectations.
Overview
We are the leading provider of natural gas as an alternative fuel for vehicle fleets in the United States and Canada, based on the number of stations operated and the amount of GGEs of RNG, CNG and LNG delivered.
Our principal business is supplying RNG, CNG and LNG (RNG can be delivered in the form of CNG or LNG) for light, medium and heavy-duty vehicles and providing O&M services for public and private vehicle fleet customer stations. As a comprehensive solution provider, we also design, build, operate and maintain fueling stations; sell and service natural gas fueling compressors and other equipment used in CNG stations and LNG stations; offer assessment, design and modification solutions to provide operators with code-compliant service and maintenance facilities for natural gas vehicle fleets; transport and sell CNG and LNG via “virtual” natural gas pipelines and interconnects; procure and sell RNG; sell tradable credits we generate by selling RNG and conventional natural gas as a vehicle fuel, including RIN Credits and LCFS Credits; help our customers acquire and finance natural gas vehicles; and obtain federal, state and local tax credits, grants and incentives. In addition, before March 31, 2017, we produced RNG at our own production facilities (which we sold, along with certain of our other RNG production assets, in the BP Transaction), and before December 29, 2017, we manufactured natural gas fueling compressors and other equipment used in CNG stations (which we combined with another company’s natural gas fueling compressor manufacturing business in a newly formed company, in the CEC Combination).
We serve fleet vehicle operators in a variety of markets, including heavy-duty trucking, airports, refuse, public transit, industrial and institutional energy users, and government fleets. We believe these fleet markets will continue to present a growth opportunity for natural gas vehicle fuel for the foreseeable future. As of March 31, 2019, we served over 1,000 fleet customers

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operating over 47,000 natural gas vehicles, and we currently own, operate or supply approximately 530 natural gas fueling stations in 41 states in the United States and four provinces in Canada.
Performance Overview
This performance overview discusses matters on which our management focuses in evaluating our financial condition and our operating results.
Sources of Revenue
The following table represents our sources of revenue:
 
 
Three Months Ended March 31,
 
Revenue (in millions)
 
2018
 
2019
 
Volume -related (1)
 
$
67.2

 
$
74.5

 
Station construction sales
 
5.8

 
3.2

 
AFTC (2)
 
25.5

 

 
Other
 
3.9

 

 
Total revenue
 
$
102.4

 
$
77.7

 
(1)
Our volume-related revenue primarily consists of sales of RNG, CNG and LNG fuel, performance of O&M services, and sales of RINs and LCFS Credits in addition to changes in fair value of our derivative instruments. More information about our volume of fuel and O&M services delivered in the periods is included below under “Key Operating Data,” and our derivative instruments consist of commodity swap contracts (see Note 6). The following table summarizes our volume-related revenue in the periods:
    
 
 
Three Months Ended March 31,
 
Revenue (in millions)
 
2018
 
2019
 
Fuel sales and performance of O&M services
 
$
61.6

 
$
69.5

 
Change in fair value of derivative instruments
 

 
(5.0
)
 
RIN Credits
 
3.4

 
6.1

 
LCFS Credits
 
2.2

 
3.9

 
Total volume -related revenue
 
$
67.2

 
$
74.5

 
(2)
Represents a federal alternative fuels tax credit that we refer to as “AFTC,” which On February 9, 2018, was retroactively reinstated for vehicle fuel sales made in 2017. AFTC is not currently available, and may not be reinstated, for vehicle fuel sales made after December 31, 2017.
Key Operating Data
In evaluating our operating performance, our management focuses primarily on: (1) the amount of RNG, CNG and LNG gasoline gallon equivalents delivered (which we define as (i) the volume of gasoline gallon equivalents we sell to our customers as fuel, plus (ii) the volume of gasoline gallon equivalents dispensed at facilities we do not own but where we provide O&M services on a per-gallon or fixed fee basis, plus (iii) our proportionate share of the gasoline gallon equivalents sold as CNG by our joint venture with Mansfield Ventures, LLC called Mansfield Clean Energy Partners, LLC (“MCEP”), plus (iv) for periods before completion of the BP Transaction, our proportionate share (as applicable) of the gasoline gallon equivalents of RNG produced and sold as pipeline quality natural gas by our former RNG production facilities, which we sold in the BP Transaction), (2) our station construction cost of sales, (3) our gross margin (which we define as revenue minus cost of sales), and (4) net loss attributable to us. The following tables present our key operating data for the years ended December 31, 2016, 2017, and 2018 and for the three months ended March 31, 2018 and 2019:
Gasoline gallon equivalents
delivered (in millions)
 
Year Ended
December 31,
2016
 
Year Ended
December 31,
2017
 
Year Ended
December 31,
2018
 
Three Months
Ended
March 31,
2018
 
Three Months
Ended
March 31,
2019
 
CNG (1)
 
259.2

 
283.4

 
299.5

 
70.8

 
78.5

 
LNG
 
66.8

 
66.1

 
66.0

 
14.3

 
16.7

 
RNG (2)
 
3.0

 
1.9

 

 

 

 
Total
 
329.0


351.4


365.5


85.1

 
95.2

 

31

Table of Contents

Gasoline gallon equivalents
delivered (in millions)
 
Year Ended
December 31,
2016
 
Year Ended
December 31,
2017
 
Year Ended
December 31,
2018
 
Three Months
Ended
March 31,
2018
 
Three Months
Ended
March 31,
2019
 
O&M services
 
176.6

 
199.5

 
206.1

 
48.8

 
49.7

 
Fuel (1)
 
128.5

 
127.3

 
133.6

 
30.1

 
39.3

 
Fuel and O&M services (3)
 
23.9

 
24.6

 
25.8

 
6.2

 
6.2

 
Total
 
329.0

 
351.4

 
365.5

 
85.1

 
95.2

 
Other operating data (in millions)
 
Year Ended
December 31,
2016
 
Year Ended
December 31,
2017
 
Year Ended
December 31,
2018
 
Three Months
Ended
March 31,
2018
 
Three Months
Ended
March 31,
2019
 
Station construction cost of sales
 
$
57.0

 
$
47.0

 
$
25.1

 
$
5.9

 
$
3.8

 
Gross margin (4)
 
$
147.1

 
$
85.8

 
$
133.5

 
$
47.6

 
$
17.3

 
Net loss attributable to Clean Energy Fuels. Corp (4)
 
$
(12.2
)
 
$
(79.2
)
 
$
(3.8
)
 
$
12.2

 
$
(10.9
)
 
 
(1) As noted above, amounts include our proportionate share of the GGEs sold as CNG by our joint venture MCEP. GGEs sold by this joint venture were 0.5 million, 0.5 million, and 0.5 million, for the years ended December 31, 2016, 2017, and 2018, respectively, and 0.1 million and 0.1 million for the three months ended March 31, 2018 and 2019, respectively.
(2) Represents RNG sold as non-vehicle fuel. RNG, sold as vehicle fuel, is sold under the brand name Redeem™ and is included in this table in the CNG or LNG amounts as applicable based on the form in which it was sold. GGEs of Redeem sold were 58.6 million, 78.5 million, and 110.1 million for the years ended December 31, 2016, 2017, and 2018, respectively, and 18.5 million and 34.6 million for the three months ended March 31, 2018 and 2019, respectively.
(3)
Represents gasoline gallon equivalents at stations where we provide both fuel and O&M services.
(4)
Includes the following amounts of AFTC revenue: $26.6 million, $0.0 million, and $26.7 million for the years ended December 31, 2016, 2017, and 2018, respectively, and $25.5 million and $0.0 million for the three months ended March 31, 2018 and 2019, respectively.
Recent Developments
Business Risks and Uncertainties and Other Trends
Our business and prospects are exposed to numerous risks and uncertainties. For more information, see “Risk Factors” in Part II, Item 1A of this report. In addition, our performance in any period may be affected by various trends in our business and our industry, including certain seasonality trends. See the description of the key trends in our past performance