clne_Current_Folio_10Q

Table of Contents

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

Commission File Number: 001‑33480

CLEAN ENERGY FUELS CORP.

(Exact name of registrant as specified in its charter)

 

Delaware

33‑0968580

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

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)

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value per share

CLNE

The Nasdaq Select Market LLC

(Nasdaq Global Select Market)

 

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 ☒ No 

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 ☒ No 

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 

Accelerated filer ☒

 

 

Non-accelerated filer 

Smaller reporting company 

 

 

 

Emerging growth company 

 

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. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes  No ☒

As of April 30, 2020, there were 200,925,834 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

PART I.—FINANCIAL INFORMATION

3

Item 1.—Financial Statements (Unaudited) 

3

Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations 

27

Item 3.—Quantitative and Qualitative Disclosures about Market Risk 

38

Item 4.—Controls and Procedures 

39

 

 

PART II.—OTHER INFORMATION 

41

Item 1.—Legal Proceedings 

41

Item 1A.—Risk Factors 

41

Item 2.—Unregistered Sales of Equity Securities and Use of Proceeds 

57

Item 3.—Defaults upon Senior Securities 

57

Item 4.—Mine Safety Disclosures 

57

Item 5.—Other Information 

57

Item 6.—Exhibits 

57

 

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.

2

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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, 

 

March 31, 

 

 

2019

 

2020

Assets

 

 

 

 

 

 

Current assets:

 

 

  

 

 

  

Cash, cash equivalents and current portion of restricted cash

 

$

49,222

 

$

69,526

Short-term investments

 

 

56,929

 

 

29,830

Accounts receivable, net of allowance of $2,412 and $2,566 as of December 31, 2019 and March 31, 2020, respectively

 

 

61,760

 

 

58,685

Other receivables

 

 

84,898

 

 

81,722

Inventory

 

 

29,874

 

 

29,725

Prepaid expenses and other current assets

 

 

11,109

 

 

10,950

Derivative assets, related party

 

 

 —

 

 

3,783

Total current assets

 

 

293,792

 

 

284,221

Operating lease right-of-use assets

 

 

28,627

 

 

27,951

Land, property and equipment, net

 

 

323,912

 

 

315,892

Long-term portion of restricted cash

 

 

4,000

 

 

4,000

Notes receivable and other long-term assets, net

 

 

31,622

 

 

33,393

Long-term portion of derivative assets, related party

 

 

3,270

 

 

8,762

Investments in other entities

 

 

26,305

 

 

24,896

Goodwill

 

 

64,328

 

 

64,328

Intangible assets, net

 

 

1,229

 

 

1,002

Total assets

 

$

777,085

 

$

764,445

Liabilities and Stockholders' Equity

 

 

  

 

 

  

Current liabilities:

 

 

  

 

 

  

Current portion of debt

 

$

56,013

 

$

56,030

Current portion of finance lease obligations

 

 

615

 

 

696

Current portion of operating lease obligations

 

 

3,359

 

 

3,530

Accounts payable

 

 

27,376

 

 

21,351

Accrued liabilities

 

 

67,697

 

 

66,531

Deferred revenue

 

 

7,338

 

 

7,839

Derivative liabilities, related party

 

 

164

 

 

 —

Total current liabilities

 

 

162,562

 

 

155,977

Long-term portion of debt

 

 

32,872

 

 

31,558

Long-term portion of finance lease obligations

 

 

2,715

 

 

2,909

Long-term portion of operating lease obligations

 

 

26,206

 

 

25,184

Other long-term liabilities

 

 

9,701

 

 

9,800

Total liabilities

 

 

234,056

 

 

225,428

Commitments and contingencies (Note 17)

 

 

  

 

 

  

Stockholders’ equity:

 

 

  

 

 

  

Preferred stock, $0.0001 par value. 1,000,000 shares authorized; no shares issued and outstanding

 

 

 —

 

 

 —

Common stock, $0.0001 par value. 304,000,000 shares authorized; 204,723,055 shares and 202,783,616 shares issued and outstanding as of December 31, 2019 and March 31, 2020, respectively

 

 

20

 

 

20

Additional paid-in capital

 

 

1,203,186

 

 

1,198,802

Accumulated deficit

 

 

(668,232)

 

 

(666,528)

Accumulated other comprehensive loss

 

 

(1,566)

 

 

(3,481)

Total Clean Energy Fuels Corp. stockholders’ equity

 

 

533,408

 

 

528,813

Noncontrolling interest in subsidiary

 

 

9,621

 

 

10,204

Total stockholders’ equity

 

 

543,029

 

 

539,017

Total liabilities and stockholders’ equity

 

$

777,085

 

$

764,445

 

See accompanying notes to condensed consolidated financial statements.

3

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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, 

 

    

2019

    

2020

Revenue:

 

 

  

 

 

  

Product revenue

 

$

68,448

 

$

75,702

Service revenue

 

 

9,250

 

 

10,304

Total revenue

 

 

77,698

 

 

86,006

Operating expenses:

 

 

  

 

 

  

Cost of sales (exclusive of depreciation and amortization shown separately below):

 

 

  

 

 

  

Product cost of sales

 

 

54,430

 

 

46,673

Service cost of sales

 

 

4,398

 

 

6,259

Change in fair value of derivative warrants

 

 

1,614

 

 

405

Selling, general and administrative

 

 

18,434

 

 

18,259

Depreciation and amortization

 

 

12,479

 

 

11,924

Total operating expenses

 

 

91,355

 

 

83,520

Operating income (loss)

 

 

(13,657)

 

 

2,486

Interest expense

 

 

(1,891)

 

 

(2,210)

Interest income

 

 

580

 

 

381

Other income, net

 

 

2,670

 

 

175

Income (loss) from equity method investments

 

 

(467)

 

 

145

Income (loss) before income taxes

 

 

(12,765)

 

 

977

Income tax expense

 

 

(60)

 

 

(78)

Net income (loss)

 

 

(12,825)

 

 

899

Loss attributable to noncontrolling interest

 

 

1,879

 

 

805

Net income (loss) attributable to Clean Energy Fuels Corp. 

 

$

(10,946)

 

$

1,704

Income (loss) per share:

 

 

  

 

 

  

Basic

 

$

(0.05)

 

$

0.01

Diluted

 

$

(0.05)

 

$

0.01

Weighted-average common shares outstanding:

 

 

  

 

 

  

Basic

 

 

204,196,669

 

 

204,992,555

Diluted

 

 

204,196,669

 

 

206,040,099

 

See accompanying notes to condensed consolidated financial statements.

4

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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

 

Three Months Ended

 

Three Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2019

    

2020

    

2019

    

2020

    

2019

    

2020

Net income (loss)

 

$

(10,946)

 

$

1,704

 

$

(1,879)

 

$

(805)

 

$

(12,825)

 

$

899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax:

 

 

  

 

 

 

 

 

  

 

 

 

 

 

  

 

 

 

Foreign currency translation adjustments, net of $0 tax in 2019 and 2020

 

 

308

 

 

(1,921)

 

 

 —

 

 

 —

 

 

308

 

 

(1,921)

Unrealized gains on available-for-sale securities, net of $0 tax in 2019 and 2020

 

 

66

 

 

 6

 

 

 —

 

 

 —

 

 

66

 

 

 6

Total other comprehensive income (loss)

 

 

374

 

 

(1,915)

 

 

 —

 

 

 —

 

 

374

 

 

(1,915)

Comprehensive income (loss)

 

$

(10,572)

 

$

(211)

 

$

(1,879)

 

$

(805)

 

$

(12,451)

 

$

(1,016)

 

See accompanying notes to condensed consolidated financial statements.

5

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Clean Energy Fuels Corp. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands; except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Noncontrolling

 

Total

 

 

Common Stock

 

Paid-In

 

Accumulated

 

Comprehensive

 

Interest in

 

Stockholders

 

    

Shares

    

Amount

    

Capital

    

Deficit

    

Income (Loss)

    

Subsidiary

    

Equity

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Noncontrolling

 

Total

 

 

Common Stock

 

Paid-In

 

Accumulated

 

Comprehensive

 

Interest in

 

Stockholders

 

    

Shares

    

Amount

    

Capital

    

Deficit

    

Income (Loss)

    

Subsidiary

    

Equity

Balance, December 31, 2019

 

204,723,055

 

$

20

 

$

1,203,186

 

$

(668,232)

 

$

(1,566)

 

$

9,621

 

$

543,029

Issuance of common stock, net of offering costs

 

871,010

 

 

 —

 

 

194

 

 

 —

 

 

 —

 

 

 —

 

 

194

Repurchase of common stock

 

(2,810,449)

 

 

 —

 

 

(4,244)

 

 

 —

 

 

 —

 

 

 —

 

 

(4,244)

Stock-based compensation

 

 —

 

 

 —

 

 

1,054

 

 

 —

 

 

 —

 

 

 —

 

 

1,054

Net income (loss)

 

 —

 

 

 —

 

 

 —

 

 

1,704

 

 

 —

 

 

(805)

 

 

899

Other comprehensive loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,915)

 

 

 —

 

 

(1,915)

Increase in ownership in subsidiary

 

 —

 

 

 —

 

 

(1,388)

 

 

 —

 

 

 —

 

 

1,388

 

 

 —

Balance, March 31, 2020

 

202,783,616

 

$

20

 

$

1,198,802

 

$

(666,528)

 

$

(3,481)

 

$

10,204

 

$

539,017

 

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, 

 

    

2019

    

2020

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

(12,825)

 

$

899

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

12,479

 

 

11,924

Provision for doubtful accounts, notes and inventory

 

 

300

 

 

166

Stock-based compensation expense

 

 

1,246

 

 

1,054

Change in fair value of derivative instruments

 

 

6,584

 

 

(5,227)

Amortization of discount and debt issuance cost

 

 

(150)

 

 

(85)

Gain on disposal of property and equipment

 

 

(2,680)

 

 

(14)

Gain from sale of certain assets of subsidiary

 

 

 —

 

 

(176)

Loss (income) from equity method investments

 

 

467

 

 

(145)

Right-of-use asset amortization

 

 

652

 

 

676

Deferred income taxes

 

 

 —

 

 

30

Changes in operating assets and liabilities:

 

 

  

 

 

 

Accounts and other receivables

 

 

(5)

 

 

(180)

Inventory

 

 

2,023

 

 

51

Prepaid expenses and other assets

 

 

(94)

 

 

(2,682)

Operating lease liabilities

 

 

(777)

 

 

(851)

Accounts payable

 

 

(1,208)

 

 

(5,594)

Deferred revenue

 

 

(3,485)

 

 

(2,437)

Accrued expenses and other

 

 

(10,756)

 

 

(1,667)

Net cash used in operating activities

 

 

(8,229)

 

 

(4,258)

Cash flows from investing activities:

 

 

  

 

 

  

Purchases of short-term investments

 

 

(26,659)

 

 

(29,284)

Maturities and sales of short-term investments

 

 

26,396

 

 

56,500

Purchases of and deposits on property and equipment

 

 

(4,316)

 

 

(3,658)

Loans made to customers

 

 

 —

 

 

(40)

Payments on and proceeds from sales of loans receivable

 

 

141

 

 

609

Cash received from sale of certain assets of subsidiary, net

 

 

5,114

 

 

5,628

Proceeds from disposal of property and equipment

 

 

4,388

 

 

685

Net cash provided by investing activities

 

 

5,064

 

 

30,440

Cash flows from financing activities:

 

 

  

 

 

  

Issuances of common stock

 

 

175

 

 

194

Repurchase of common stock

 

 

 —

 

 

(4,244)

Fees paid for issuances of common stock and debt issuance costs

 

 

(15)

 

 

 —

Proceeds from debt instruments

 

 

3,394

 

 

200

Repayments of debt instruments and finance lease obligations

 

 

(1,475)

 

 

(1,700)

Net cash provided by (used in) financing activities

 

 

2,079

 

 

(5,550)

Effect of exchange rates on cash, cash equivalents and restricted cash

 

 

73

 

 

(328)

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

 

 

(1,013)

 

 

20,304

Cash, cash equivalents and restricted cash, beginning of period

 

 

34,624

 

 

53,222

Cash, cash equivalents and restricted cash, end of period

 

$

33,611

 

$

73,526

Supplemental disclosure of cash flow information:

 

 

  

 

 

  

Income taxes paid

 

$

 —

 

$

29

Interest paid, net of $80 and $98 capitalized, respectively

 

$

1,756

 

$

2,104

 

See accompanying notes to condensed consolidated financial statements.

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Clean Energy Fuels Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(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 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, 2020, results of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three months ended March 31, 2019 and 2020. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three month periods ended March 31, 2019 and 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 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, 2019 that are included in the Company’s Annual Report on Form 10‑K filed with the SEC on March 10, 2020.

Reclassifications

Certain prior period amounts have been reclassified in the condensed consolidated statements of cash flows to conform to the current period presentation. These reclassifications had no material effect 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

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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.

 

Recently Adopted Accounting Pronouncements

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2016‑13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard amends the impairment model to utilize an expected loss methodology in place of the existing incurred loss methodology. The Company adopted this standard in the first quarter of 2020. Adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

 

Recently Issued Accounting Pronouncements Pending Adoption

 

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This new standard clarifies and simplifies the accounting for income taxes, including guidance related to intraperiod tax allocation, the recognition of deferred tax liabilities for outside basis differences, the methodology for calculating income taxes in an interim period, and the application of income tax guidance to franchise taxes that are partially based on income. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company is currently evaluating the impact adoption of this ASU will have on its consolidated financial statements.

 

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 Company is generally the principal in its customer contracts because it has control over the goods and services prior to their 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. The table below presents the Company’s revenue disaggregated by revenue source (in thousands):

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2020

Volume-related (1)

 

$

74,528

 

$

75,060

Station construction sales

 

 

3,170

 

 

5,522

AFTC (2)

 

 

 —

 

 

5,424

Total revenue

 

$

77,698

 

$

86,006


(1)

Includes changes in fair value of derivative instruments related to the Company’s commodity swap and customer fueling contracts associated with the Company’s Zero Now truck financing program. 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 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, 2019, changes in the fair value of commodity swaps amounted to a loss of $5.0 million. For the three months ended March 31, 2020,

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changes in the fair value of commodity swaps and customer fueling contracts amounted to a gain of $9.4 million and a loss of $3.8 million, respectively.

(2)

Represents a federal alternative fuels excise tax credit that we refer to as “AFTC,” which had previously expired but on December 20, 2019 was retroactively extended for vehicle fuel sales made beginning January 1, 2018 through December 31, 2020.  See Note 19 for more information.

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, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was $12.8 million, 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, 2020, were not materially affected by any factors outside the normal course of business.

As of December 31, 2019 and March 31, 2020, the Company’s contract balances were as follows (in thousands):

 

 

 

 

 

 

 

 

    

December 31, 

    

March 31, 

 

 

2019

 

2020

Accounts receivable, net

 

$

61,760

 

$

58,685

 

  

 

 

  

 

 

Contract assets - current

 

$

455

 

$

927

Contract assets - non-current

 

 

3,777

 

 

3,840

Contract assets - total

 

$

4,232

 

$

4,767

 

  

 

 

  

 

 

Contract liabilities - current

 

$

5,329

 

$

5,781

Contract liabilities - non-current

 

 

6,339

 

 

3,401

Contract liabilities - total

 

$

11,668

 

$

9,182

 

Accounts Receivable, Net

"Accounts receivable, 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 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, the age of outstanding receivables, and economic conditions that may affect a customer’s ability to pay.

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.

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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, 2019 related to the Company’s contract liability balances as of December 31, 2018 was $3.3 million. The decrease in the contract liability balances for the three months ended March 31, 2020 is primarily driven by billings in excess of revenue recognized, offset by $3.9 million of revenue recognized related to the Company’s contract liability balances as of December 31, 2019.

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 fueling compressor manufacturing subsidiaries, CEC and SAFE S.p.A, in a new company, 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. As of 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 of $0.4 million and income of $0.0 million from this investment for the three months ended March 31, 2019 and 2020, respectively. The Company has an investment balance in SAFE&CEC S.r.l. of $23.7 million and $22.2 million as of December 31, 2019 and March 31, 2020, 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 $30.0 million 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 $5.0 million. This purchase increased Clean Energy’s controlling interest in NG Advantage from 53.5% 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

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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 $5.0 million in accordance with the terms of a delayed draw convertible promissory note (the “2019 Note”). NG Advantage simultaneously drew $2.5 million under the 2019 Note, and on April 15, 2019, NG Advantage drew the remaining $2.5 million under the 2019 Note. As discussed below, on June 28, 2019, all unpaid principal and accrued interest under the 2019 Note was subsumed within the June 2019 Convertible Note (as defined below).

On May 17, 2019, the Company agreed to lend to NG Advantage up to $0.5 million in accordance with the terms of a promissory note (the “2019 Bridge Loan”). On June 11, 2019, NG Advantage drew $0.1 million under the 2019 Bridge Loan. As discussed below, on June 28, 2019, all unpaid principal and accrued interest under the 2019 Bridge Loan was subsumed within the June 2019 Convertible Note.

On June 28, 2019, the Company agreed to lend to NG Advantage up to $15.2 million in accordance with the terms of a delayed draw convertible promissory note (the “June 2019 Convertible Note”). NG Advantage simultaneously drew $3.5 million under the June 2019 Convertible Note. The outstanding principal and accrued interest under the 2019 Note and 2019 Bridge Loan were incorporated into the June 2019 Convertible Note, which resulted in the cancellation of the 2019 Note and 2019 Bridge Loan. In connection with the June 2019 Convertible Note, NG Advantage issued to the Company a warrant to purchase 86,879 common units. During the period of July 1, 2019 through November 26, 2019, NG Advantage drew an additional $7.4 million under the June 2019 Convertible Note. As discussed below, on November 27, 2019, all unpaid principal and accrued interest under the June 2019 Convertible Note was subsumed within the November 2019 Convertible Note (as defined below).

On November 27, 2019, the Company agreed to lend to NG Advantage up to $26.7 million in accordance with the terms of a delayed draw convertible promissory note (the “November 2019 Convertible Note”). NG Advantage simultaneously drew $3.4 million under the November 2019 Convertible Note. The outstanding principal and accrued interest under the June 2019 Convertible Note were incorporated into the November 2019 Convertible Note, which resulted in the cancellation of the June 2019 Convertible Note. All outstanding principal under the November 2019 Convertible Note bore interest at a rate of 12.0% per annum, and all unpaid principal and accrued interest under the November 2019 Convertible Note was due on the earlier of December 31, 2019, subject to extension at the Company's discretion, or the occurrence of an event of default (subject to notice requirements and cure periods in certain circumstances). In connection with the November 2019 Convertible Note, NG Advantage issued to the Company a warrant to purchase 2,000,000 common units. In December 2019, the maturity date of the November 2019 Convertible Note was extended at the Company’s discretion and NG Advantage drew an additional $6.6 million under the November 2019 Convertible Note. As of December 31, 2019, NG Advantage had an outstanding balance of $26.7 million, plus accrued and unpaid interest, under the November 2019 Convertible Note. On February 6, 2020, the Company converted the outstanding principal and accrued interest under the November 2019 Convertible Note into common units of NG Advantage resulting in an increase in the Company’s controlling interest in NG Advantage to 93.2%.

On February 29, 2020, NG Advantage issued to the Company 283,019 common units pursuant to the guaranty agreement entered in February 2018, which increased the Company’s controlling interest in NG Advantage to 93.3% as of March 31, 2020.

The Company recorded a loss attributable to the noncontrolling interest in NG Advantage of $1.9 million and $0.8 million for the three months ended March 31, 2019 and 2020, respectively. The value of the noncontrolling interest was $9.6 million and $10.2 million as of December 31, 2019 and March 31, 2020, respectively.

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Note 4—Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash as of December 31, 2019 and March 31, 2020 consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

    

December 31, 

    

March 31, 

 

 

2019

 

2020

Current assets:

 

 

  

 

 

  

Cash and cash equivalents

 

$

49,207

 

$

69,511

Restricted cash - standby letters of credit

 

 

15

 

 

15

Total cash, cash equivalents and current portion of restricted cash

 

$

49,222

 

$

69,526

 

 

 

 

 

 

 

Long-term assets:

 

 

  

 

 

  

Restricted cash - standby letters of credit

 

$

4,000

 

$

4,000

Total long-term portion of restricted cash

 

$

4,000

 

$

4,000

 

 

 

 

 

 

 

Total cash, cash equivalents and restricted cash

 

$

53,222

 

$

73,526

 

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 balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) and Canadian Deposit Insurance Corporation (“CDIC”) limits. 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 $47.9 million and $68.2 million as of December 31, 2019 and March 31, 2020, 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 on available-for-sale 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 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, and evaluates the current expected credit loss. This evaluation is based on a number of factors, including historical experience, market data, issuer-specific factors, economic conditions, and any changes to the credit rating of the security. As of March 31, 2020, the Company has not recorded a credit loss related to available-for-sale debt securities and believes the carrying values for its available-for-sale debt securities are properly recorded.

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Short-term investments as of December 31, 2019 consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

 

 

 

 

Amortized

 

 Unrealized

 

Estimated

 

    

 Cost

    

 Losses

    

 Fair Value

Municipal bonds and notes

 

$

2,986

 

$

 —

 

$

2,986

Zero coupon bonds

 

 

33,919

 

 

 —

 

 

33,919

Corporate bonds

 

 

19,509

 

 

(3)

 

 

19,506

Certificates of deposit

 

 

518

 

 

 —

 

 

518

Total short-term investments

 

$

56,932

 

$

(3)

 

$

56,929

 

Short-term investments as of March 31, 2020 consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross 

 

 

 

 

 

Amortized

 

Unrealized

 

Estimated

 

    

 Cost

    

Gains (Losses)

    

 Fair Value

Zero coupon bonds

 

$

26,857

 

$

 6

 

$

26,863

Corporate bonds

 

 

2,451

 

 

(2)

 

 

2,449

Certificates of deposit

 

 

518

 

 

 —

 

 

518

Total short-term investments

 

$

29,826

 

$

 4

 

$

29,830

 

 

 

 

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 S.A. and THUSA (as defined in Note 12), for a total of 5.0 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 these derivative instruments are recognized in "Product revenue" in the accompanying condensed consolidated statements of operations.

During the three months ended March 31, 2020, the Company entered into fueling agreements with fleet operators under the Zero Now truck financing program. The fueling agreements contain a pricing feature indexed to diesel, which the Company determined to be embedded derivatives and recorded at fair value at the time of execution, with the changes in fair value of the embedded derivatives recognized as earnings in "Product revenue" in the accompanying condensed consolidated statements of operations.

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Derivatives and embedded derivatives as of December 31, 2019 consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross Amounts

 

  Gross Amounts

 

Net Amount

 

    

Recognized

    

Offset

    

Presented

Assets:

 

 

  

 

 

  

 

 

  

Commodity swaps:

 

 

 

 

 

 

 

 

 

Long-term portion of derivative assets, related party

 

$

3,270

 

$

 —

 

$

3,270

Fueling agreements:

 

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

232

 

 

 —

 

 

232

Notes receivable and other long-term assets, net

 

 

491

 

 

 —

 

 

491

Total derivative assets

 

$

3,993

 

$

 —

 

$

3,993

Liabilities:

 

 

  

 

 

  

 

 

  

Commodity swaps:

 

 

 

 

 

 

 

 

 

Current portion of derivative liabilities, related party

 

$

164

 

$

 —

 

$

164

Fueling agreements:

 

 

 

 

 

 

 

 

 

Accrued liabilities

 

 

42

 

 

 —

 

 

42

Other long-term liabilities

 

 

39

 

 

 —

 

 

39

Total derivative liabilities

 

$

245

 

$

 —

 

$

245

 

Derivatives and embedded derivatives as of March 31, 2020 consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross Amounts

 

  Gross Amounts

 

Net Amount

 

    

Recognized

    

Offset

    

Presented

Assets:

 

 

  

 

 

  

 

 

  

Commodity swaps:

 

 

 

 

 

 

 

 

 

Current portion of derivative assets, related party

 

$

3,783

 

$

 —

 

$

3,783

Long-term portion of derivative assets, related party

 

 

8,762

 

 

 —

 

 

8,762

Fueling agreements:

 

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

120

 

 

 —

 

 

120

Notes receivable and other long-term assets, net

 

 

23

 

 

 —

 

 

23

Total derivative assets

 

$

12,688

 

$

 —

 

$

12,688

Liabilities:

 

 

  

 

 

  

 

 

  

Fueling agreements:

 

 

 

 

 

 

 

 

 

Accrued liabilities

 

$

344

 

$

 —

 

$

344

Other long-term liabilities