May 9, 2024 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

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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, 2024

☐ 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 Stock 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 May 2, 2024, there were 223,263,055 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.

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CLEAN ENERGY FUELS CORP. AND SUBSIDIARIES

INDEX

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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	31
Item 3.—Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.—Controls and Procedures	42

PART II.—OTHER INFORMATION	44
Item 1.—Legal Proceedings	44
Item 1A.—Risk Factors	44
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 rights to Clean Energy™. 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,		March 31,
	2023		2024
Assets
Current assets:
Cash, cash equivalents and current portion of restricted cash	$	106,963	$	91,412
Short-term investments		158,186		159,486
Accounts receivable, net of allowance of $1,475 and $1,536 as of December 31, 2023 and March 31, 2024, respectively		98,426		85,478
Other receivables		19,770		21,817
Inventory		45,335		48,977
Prepaid expenses and other current assets		41,495		41,736
Total current assets		470,175		448,906
Operating lease right-of-use assets		92,324		90,408
Land, property and equipment, net		331,758		335,772
Notes receivable and other long-term assets, net		35,735		36,405
Investments in other entities		258,773		253,953
Goodwill		64,328		64,328
Intangible assets, net		6,365		6,365
Total assets	$	1,259,458	$	1,236,137
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of debt	$	38	$	42
Current portion of finance lease obligations		1,758		1,948
Current portion of operating lease obligations		6,687		6,923
Accounts payable		56,995		41,833
Accrued liabilities		91,534		83,672
Deferred revenue		4,936		7,787
Derivative liabilities, related party		1,875		877
Total current liabilities		163,823		143,082
Long-term portion of debt		261,123		261,926
Long-term portion of finance lease obligations		1,839		1,368
Long-term portion of operating lease obligations		89,065		87,498
Other long-term liabilities		9,961		12,654
Total liabilities		525,811		506,528
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. 454,000,000 shares authorized; 223,026,966 shares and 223,263,055 shares issued and outstanding as of December 31, 2023 and March 31, 2024, respectively		22		22
Additional paid-in capital		1,658,339		1,673,792
Accumulated deficit		(929,472)		(947,915)
Accumulated other comprehensive loss		(2,119)		(2,994)
Total Clean Energy Fuels Corp. stockholders’ equity		726,770		722,905
Noncontrolling interest in subsidiary		6,877		6,704
Total stockholders’ equity		733,647		729,609
Total liabilities and stockholders’ equity	$	1,259,458	$	1,236,137

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,
	2023		2024
Revenue:
Product revenue	$	119,727	$	89,414
Service revenue		12,456		14,295
Total revenue		132,183		103,709
Operating expenses:
Cost of sales (exclusive of depreciation and amortization shown separately below):
Product cost of sales		119,658		66,425
Service cost of sales		7,610		9,176
Selling, general and administrative		29,649		26,237
Depreciation and amortization		10,678		11,182
Total operating expenses		167,595		113,020
Operating loss		(35,412)		(9,311)
Interest expense		(4,354)		(7,762)
Interest income		2,717		3,579
Other income, net		43		98
Loss from equity method investments		(1,890)		(5,398)
Loss before income taxes		(38,896)		(18,794)
Income tax benefit		64		178
Net loss		(38,832)		(18,616)
Loss attributable to noncontrolling interest		135		173
Net loss attributable to Clean Energy Fuels Corp.	$	(38,697)	$	(18,443)
Net loss attributable to Clean Energy Fuels Corp. per share:
Basic and diluted	$	(0.17)	$	(0.08)
Weighted-average common shares outstanding:
Basic and diluted		222,717,113		223,210,309

See accompanying notes to condensed consolidated financial statements.

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Clean Energy Fuels Corp. and Subsidiaries

Condensed Consolidated Statements of Comprehensive 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,
	2023		2024		2023		2024		2023		2024
Net loss	$	(38,697)	$	(18,443)	$	(135)	$	(173)	$	(38,832)	$	(18,616)

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of $0 tax in 2023 and 2024		461		(809)		—		—		461		(809)
Unrealized gains (losses) on available-for-sale securities, net of $0 tax in 2023 and 2024		244		(66)		—		—		244		(66)
Total other comprehensive income (loss)		705		(875)		—		—		705		(875)
Comprehensive loss	$	(37,992)	$	(19,318)	$	(135)	$	(173)	$	(38,127)	$	(19,491)

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; Unaudited)


								Accumulated
				Additional				Other		Noncontrolling		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Interest in		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Subsidiary		Equity
Balance, December 31, 2022	222,437,429	$	22	$	1,553,668	$	(829,975)	$	(3,722)	$	7,478	$	727,471
Issuance of common stock	470,351		—		332		—		—		—		332
Shares withheld related to net share settlement	—		—		(175)		—		—		—		(175)
Stock-based compensation	—		—		6,096		—		—		—		6,096
Stock-based sales incentive charges	—		—		8,172		—		—		—		8,172
Net loss	—		—		—		(38,697)		—		(135)		(38,832)
Other comprehensive income	—		—		—		—		705		—		705
Balance, March 31, 2023	222,907,780	$	22	$	1,568,093	$	(868,672)	$	(3,017)	$	7,343	$	703,769


								Accumulated
				Additional				Other		Noncontrolling		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Interest in		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Subsidiary		Equity
Balance, December 31, 2023	223,026,966	$	22	$	1,658,339	$	(929,472)	$	(2,119)	$	6,877	$	733,647
Issuance of common stock	236,089		—		231		—		—		—		231
Shares withheld related to net share settlement	—		—		(304)		—		—		—		(304)
Stock-based compensation	—		—		2,629		—		—		—		2,629
Stock-based sales incentive charges	—		—		12,897		—		—		—		12,897
Net loss	—		—		—		(18,443)		—		(173)		(18,616)
Other comprehensive income (loss)	—		—		—		—		(875)		—		(875)
Balance, March 31, 2024	223,263,055	$	22	$	1,673,792	$	(947,915)	$	(2,994)	$	6,704	$	729,609

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,
	2023		2024
Cash flows from operating activities:
Net loss	$	(38,832)	$	(18,616)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		10,678		11,182
Provision for credit losses and inventory		502		274
Stock-based compensation expense		6,096		2,629
Stock-based sales incentive charges		13,730		12,897
Change in fair value of derivative instruments		2,532		(1,622)
Amortization of discount and debt issuance cost		(1,213)		(948)
Loss (gain) on disposal of property and equipment		(49)		64
Asset impairments and other charges		333		—
Loss from equity method investments		1,890		5,398
Non-cash lease expense		1,402		2,178
Deferred income taxes		(86)		(201)
Accretion of ARO liabilities		76		81
Changes in operating assets and liabilities:
Accounts and other receivables		(19,704)		12,574
Inventory		(2,626)		(3,965)
Prepaid expenses and other assets		1,040		(735)
Operating lease liabilities		(1,105)		(1,593)
Accounts payable		(606)		(11,744)
Deferred revenue		129		2,832
Accrued liabilities and other		6,809		(8,095)
Net cash provided by (used in) operating activities		(19,004)		2,590
Cash flows from investing activities:
Purchases of short-term investments		(49,393)		(158,306)
Maturities and sales of short-term investments		135,500		159,072
Payment and deposits on equipment and manure rights for ADG RNG production projects		(10,147)		(808)
Purchases of and deposits on property and equipment		(17,777)		(18,208)
Grant proceeds for capital projects		1,947		652
Proceeds received for joint development and construction of station projects		—		663
Disbursements for loans receivable		(1,140)		(3,500)
Proceeds from paydowns, maturities, and sales of loans receivable		1,483		253
Proceeds from settlement of insurance claims		—		314
Proceeds from disposal of property and equipment		49		18
Net cash provided by (used in) investing activities		60,522		(19,850)
Cash flows from financing activities:
Issuance of common stock		332		36
Payment of tax withholdings on net settlement of equity awards		(175)		(304)
Fees paid for lender and debt issuance costs		(369)		(575)
Proceeds for Adopt-A-Port program		100		3,390
Repayment of proceeds for Adopt-A-Port program		(343)		(381)
Repayments of debt instruments and finance lease obligations		(317)		(334)
Net cash provided by (used in) financing activities		(772)		1,832
Effect of exchange rates on cash, cash equivalents and restricted cash		111		(123)
Net increase (decrease) in cash, cash equivalents and restricted cash		40,857		(15,551)
Cash, cash equivalents and restricted cash, beginning of period		125,950		106,963
Cash, cash equivalents and restricted cash, end of period	$	166,807	$	91,412
Supplemental disclosure of cash flow information:
Income taxes paid	$	26	$	13
Interest paid, net of $138 and $661 capitalized, respectively	$	4,106	$	6,472

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 renewable and conventional natural gas as alternative fuels for vehicle fleets and related fueling solutions to its customers, primarily in the United States and Canada. The Company’s principal business is supplying renewable natural gas (“RNG”) and conventional natural gas, in the form of compressed natural gas (“CNG”) and liquefied natural gas (“LNG”), for medium and heavy-duty vehicles and providing operation and maintenance (“O&M”) services to public and private vehicle fleet customer stations. The Company is also focused on developing, owning, and operating dairy and other livestock waste RNG projects and supplying RNG (procured from third party sources and from the Company’s jointly owned RNG production facilities (see Note 3)) to its customers in the heavy and medium-duty commercial transportation sector.

As a comprehensive clean energy solution provider, the Company also designs and builds, as well as operates and maintains, public and private vehicle fueling stations in the United States and Canada; sells and services compressors and other equipment used in RNG production and at fueling stations; transports and sells RNG and conventional natural gas, in the form of CNG and LNG, via “virtual” natural gas pipelines and interconnects; sells U.S. federal, state and local government credits it generates by selling RNG in the form of CNG and LNG 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, Oregon, and Washington Low Carbon Fuel Standards (collectively, “LCFS Credits”); and obtains federal, state and local tax 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, 2024, results of operations, comprehensive loss, and stockholders’ equity for the three months ended March 31, 2023 and 2024, and cash flows for the three months ended March 31, 2023 and 2024. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three months ended March 31, 2023 and 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other interim period or 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 (“U.S. 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, 2023 that are included in the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2024.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. 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

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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, stock-based compensation expense and stock-based sales incentive charges.

Amazon Warrant

The Amazon Warrant (defined in Note 14) is accounted for as an equity instrument and measured in accordance with Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation. This instrument is classified in the condensed consolidated statements of operations in accordance with ASC 606, Revenue from Contracts with Customers, which states that for awards granted to a customer that are not in exchange for distinct goods or services, the fair value of the awards earned based on service or performance conditions is recorded as a reduction of the transaction price. To determine the fair value of the Amazon Warrant in accordance with ASC 718, the Company used the Black-Scholes option pricing model, which is based in part on assumptions that require management to use judgment. Based on the fair value of the award, the Company determines the amount of non-cash stock-based sales incentive charges on the customer’s pro-rata achievement of vesting conditions, which is recorded as a reduction of revenue in the condensed consolidated statements of operations. See Note 14 for additional information.

Tourmaline Joint Development

In April 2023, the Company and Tourmaline Oil Corp. (“Tourmaline”) announced a CAD $70 million Joint Development Agreement to build and operate a network of CNG stations along key highway corridors across Western Canada. Under a 50-50 shared investment, the Company and Tourmaline expect to construct and commission up to 20 CNG fueling stations over the next five years, allowing heavy-duty trucks and other commercial transportation fleets that operate in the area to transition to the use of CNG, a lower carbon alternative to gasoline and diesel. Costs associated with station construction and profit and loss arising from station operation are shared 50-50 between the Company and Tourmaline. This arrangement between the Company and Tourmaline to jointly develop, build and operate CNG fueling stations is accounted for in accordance with ASC 808, Collaborative Arrangements, which states that (1) costs incurred and revenue generated from transactions with third parties be separately recorded by each participant in its own financial statements, (2) the participant who is deemed to be the principal for a given transaction under ASC 606, Revenue from Contracts with Customers, will record the transaction on a gross basis in its financial statements, and (3) payments between participants that are within the scope of other authoritative accounting literature on income statement classification shall be accounted for using the relevant provisions of that literature. If the payments are not within the scope of other authoritative accounting literature, then the income statement classification for the payments shall be based on an analogy to authoritative accounting literature or if there is no appropriate analogy, a reasonable, rational, and consistently applied accounting policy election.

The Company determined that it is the principal for the revenue generated from third parties under this collaborative arrangement with Tourmaline in accordance with ASC 606; as such, the associated revenue and cost of sales generated and incurred are recognized on a gross basis in the condensed consolidated statements of operations. Net participation of profit and loss owed to or from Tourmaline is recorded as an increase or decrease to cost of sales, respectively, as the transaction is not deemed to be with a customer within the scope of ASC 606. Capitalized station costs are presented at half of the total development and construction costs in the condensed consolidated balance sheets, corresponding to the Company’s 50% ownership in the shared assets.

Impairment of Goodwill and Long-Lived Assets

Due to a decline in the market price of the Company's common stock subsequent to December 31, 2023, the Company performed an interim quantitative goodwill impairment test as of March 31, 2024 for its single reporting unit. For the quantitative goodwill impairment test, the Company estimated the fair value of its reporting unit based on its market value of invested capital plus a market participant acquisition premium. The results of the quantitative goodwill impairment test performed as of March 31, 2024 indicated that the fair value of the Company’s reporting unit exceeded its carrying value by 7% or $70.0 million; as such, no impairment charges relating to goodwill were recorded in the three months ended March 31, 2024.

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In addition, due to a decline in share price of the Company's common stock, the Company assessed whether such triggering event or any other events or changes in circumstances indicated that the carrying value of the Company’s long-lived assets may not be recoverable. Based on the assessment performed, the Company determined that there was no impairment to the recoverability of the Company’s long-lived assets as of March 31, 2024.

Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-01, Leases (Topic 842): Common Control Arrangements. This ASU permits private entities with common control arrangements that may contain or be leases to use any written terms and conditions between the parties, without regard to their legal enforceability, to identify, classify and account for common control leases. In addition, all lessees (public or private), in general, amortize leasehold improvements related to a common control lease over their useful life to the common control group, regardless of the ASC 842 lease term, as long as they continue to control the use of the underlying leased asset. The ASU is effective for fiscal years, including interim periods within those years, beginning after December 15, 2023, with early adoption allowed. The Company adopted this new ASU in the first quarter of 2024. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves financial reporting by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included with each reported measure of significant profit or loss on an annual and interim basis. This ASU also requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU is required to be applied retrospectively for all prior periods presented in the financial statements and will likely result in additional disclosures when adopted. The Company is evaluating the adoption impact of this ASU on the Company’s consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures. This ASU enhances annual income tax disclosures by requiring entities to disclose specific categories and greater disaggregation of information in the rate reconciliation table and income taxes paid disaggregated by jurisdiction. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the adoption impact of this ASU on the Company’s consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU No. 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. This ASU improves U.S. GAAP by adding an illustrative example to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards should be accounted for in accordance with Topic 718, Compensation-Stock Compensation. The ASU is effective for annual periods, including interim periods within those years, beginning after December 15, 2024, with early adoption allowed. The Company is evaluating the adoption impact of this ASU on the Company’s consolidated financial statements and related disclosures.

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

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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 transfer to the customer, and as such, revenue is recognized on a gross basis. Sales and usage-based taxes are excluded from revenue. 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,
	2023		2024
Product revenue:
Volume-related
Fuel sales⁽¹⁾	$	106,895	$	68,203
Change in fair value of derivative instruments⁽²⁾		(2,532)		1,622
RIN Credits		4,503		8,812
LCFS Credits		2,298		(164)
AFTC ⁽³⁾		4,496		5,357
Total volume-related product revenue		115,660		83,830
Station construction sales		4,067		5,584
Total product revenue		119,727		89,414
Service revenue:
Volume-related, O&M services		12,044		13,735
Other services		412		560
Total service revenue		12,456		14,295
Total revenue	$	132,183	$	103,709

(1)

Includes non-cash stock-based sales incentive contra-revenue charges associated with the Amazon Warrant. For the three months ended March 31, 2023, contra-revenue charges recognized in fuel revenue were $13.7 million. For the three months ended March 31, 2024, contra-revenue charges recognized in fuel revenue were $12.9 million. See Note 14 for more information.

(2)

Represents 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.

(3)	Represents the federal alternative fuel excise tax credit (“AFTC”). 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, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $24.3 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.

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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.

As of December 31, 2023 and March 31, 2024, the Company’s contract balances were as follows (in thousands):


	December 31,		March 31,
	2023		2024
Accounts receivable, net	$	98,426	$	85,478

Contract assets - current	$	7,823	$	8,501
Contract assets - non-current		2,433		2,304
Contract assets - total	$	10,256	$	10,805

Contract liabilities - current	$	4,936	$	7,787
Contract liabilities - non-current		151		132
Contract liabilities - total	$	5,087	$	7,919

Accounts Receivable, Net

“Accounts receivable, net” in the accompanying condensed consolidated balance sheets includes billed and accrued amounts that are 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 on 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 “Other receivables” and 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 from customers in advance of the satisfaction of performance obligations and are classified as current or noncurrent based on when the revenue is expected to be recognized. The current portion and noncurrent portion of contract liabilities are included in “Deferred revenue” and in “Other long-term liabilities,” respectively, in the accompanying condensed consolidated balance sheets.

Revenue recognized in the three months ended March 31, 2023 relating to the Company’s contract liability balances as of December 31, 2022 was $1.3 million. The increase in the contract liability balance in the three months ended March 31, 2024 is mainly driven by billings in excess of revenue recognized and customer advances in the three months ended March 31, 2024, partially offset by $0.5 million of revenue recognized relating to the Company’s contract liability balances as of December 31, 2023.

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Note 3— Investments in Other Entities and Noncontrolling Interest in a Subsidiary

TotalEnergies Joint Venture

On March 3, 2021, the Company entered into an agreement (the “TotalEnergies JV Agreement”) with TotalEnergies S.E. (“TotalEnergies”) to create 50-50 joint ventures to develop anaerobic digester gas (“ADG”) RNG production facilities in the United States. Pursuant to the TotalEnergies JV Agreement, each ADG RNG production facility project will be formed as a separate limited liability company (“LLC”) that is owned 50-50 by the Company and TotalEnergies, and contributions to such LLCs count toward the TotalEnergies JV Equity Obligations (as defined below). The TotalEnergies JV Agreement contemplates investing up to $400.0 million of equity in production projects, and TotalEnergies and the Company each committed to initially provide $50.0 million (the “TotalEnergies JV Equity Obligations”). In October 2021, TotalEnergies and the Company executed a LLC agreement (the “DR Development Agreement”) for an ADG RNG production facility project (the “DR JV”). Under the DR Development Agreement, TotalEnergies and the Company have each committed to contribute $7.0 million to the DR JV, and in November 2021, TotalEnergies and the Company each contributed an initial $4.8 million to the DR JV. On June 27, 2023, the DR JV issued a capital call for $11.0 million in additional funding, requiring TotalEnergies and the Company each to contribute $5.5 million. Funds from the capital call will be used to fund required loan reserves and to paydown outstanding liabilities of the DR JV. On June 28, 2023, the Company contributed $5.5 million and advanced $5.5 million to the DR JV. In December 2023, the $5.5 million advance was refunded to the Company by the DR JV.

The Company accounts for its interest in the LLC using the equity method of accounting because the Company does not control but has the ability to exercise significant influence over the LLC’s operations. The Company recorded a loss of $0.4 million and $0.4 million from the LLC’s operations in the three months ended March 31, 2023 and 2024, respectively. The Company had an investment balance of $7.5 million and $7.1 million as of December 31, 2023 and March 31, 2024, respectively.

bp Joint Venture

On April 13, 2021, the Company entered into an agreement (the “bp JV Agreement”) with BP Products North America, Inc. (“bp”) that created a 50-50 joint venture (the “bpJV”) to develop, own and operate new ADG RNG production facilities in the U.S. Pursuant to the bp JV Agreement, bp and the Company committed to provide $50.0 million and $30.0 million, respectively, with bp and the Company each receiving 30.0 million of Class A Units in the bpJV and bp also receiving 20.0 million of Class B Units in the bpJV. bp’s initial $50.0 million contribution was made on April 13, 2021 and consisted of all unpaid principal outstanding under the loan agreement dated December 18, 2020, pursuant to which bp advanced $50.0 million to the Company to fund capital costs and expenses incurred prior to formation of the bpJV, including capital costs and expenses for permitting, engineering, equipment, leases and feed stock rights. Pursuant to the bp JV Agreement, the Company had the option, exercisable prior to August 31, 2021 (the “bp Option”), to commit an additional $20.0 million to the bpJV upon which bp’s Class B Units would convert into Class A Units. On June 21, 2021, the Company contributed $50.2 million to the bpJV, which consisted of (i) its initial contribution commitment of $30.0 million, (ii) the $20.0 million additional contribution to effect the conversion of bp’s Class B Units into Class A Units pursuant to the Company’s exercise of the bp Option, and (iii) $0.2 million for interest in accordance with the bp JV Agreement to effect the conversion of bp’s Class B Units into Class A Units.

On December 20, 2023, the bpJV issued a capital call in the amount of $135.9 million. As a result, bp and the Company each contributed $67.95 million to the bpJV by December 31, 2023. Proceeds of this capital call will be used to develop ADG RNG projects and to fund bpJV’s working capital needs.

As of March 31, 2024, the Company and bp each own 50% of the bpJV, and all of the RNG produced from projects developed and owned by the bpJV will be available to the Company for sale as vehicle fuel pursuant to the Company’s marketing agreement with bp. The Company accounts for its interest in the bpJV using the equity method of accounting because the Company does not control but has the ability to exercise significant influence over the bpJV’s operations. The Company recorded a loss of $0.4 million and $2.8 million from this investment in the three months ended March 31, 2023 and 2024, respectively. The Company had an investment balance in the bpJV of $220.3 million and $217.5 million as of December 31, 2023 and March 31, 2024, respectively.

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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 fueling systems manufacturing subsidiaries, CEC and SAFE S.p.A, into 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. At the closing of the CEC Combination on December 29, 2017, the Company owned 49% of SAFE&CEC S.r.l., and LR owned 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 $1.0 million in the three months ended March 31, 2023 and 2024, respectively. The Company had an investment balance in SAFE&CEC S.r.l. of $21.2 million and $19.5 million as of December 31, 2023 and March 31, 2024, respectively.

NG Advantage

On October 14, 2014, the Company entered into a Common Unit Purchase Agreement (“UPA”) with NG Advantage, LLC (“NG Advantage”) for a 53.3% controlling interest in NG Advantage. Subsequently, the Company’s controlling interest increased in connection with various equity and financing arrangements with NG Advantage. As of March 31, 2024, the Company’s controlling interest in NG Advantage was 93.3%. 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.

The Company recorded a loss attributable to the noncontrolling interest in NG Advantage of $0.1 million and $0.2 million in three months ended March 31, 2023 and 2024, respectively. The carrying value of the noncontrolling interest was $6.9 million and $6.7 million as of December 31, 2023 and March 31, 2024, respectively.

Investments in Equity Securities

For investments in equity securities of privately held entities without readily determinable fair values, the Company measures such investments at cost, adjusted for impairment, if any, and observable price changes in orderly transactions for the identical or similar investment of the same issuer. As of December 31, 2023 and March 31, 2024, the Company had an investment balance recorded at cost of $8.0 million. The Company did not recognize any adjustments to the recorded cost basis in the three months ended March 31, 2023 and 2024.

Note 4—Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash as of December 31, 2023 and March 31, 2024 consisted of the following (in thousands):


	December 31,		March 31,
	2023		2024
Current assets:
Cash and cash equivalents	$	104,944	$	89,393
Restricted cash - standby letter of credit		2,019		2,019
Total cash, cash equivalents and current portion of restricted cash	$	106,963	$	91,412

Total cash, cash equivalents and restricted cash	$	106,963	$	91,412

The Company considers all highly liquid investments with maturities of three months or less on the date of acquisition to be cash equivalents.

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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 $105.6 million and $90.1 million as of December 31, 2023 and March 31, 2024, 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. The Company deposited $2.0 million, in the form of a certificate of deposit, at PlainsCapital Bank as collateral for the standby letter of credit issued to Chevron Products Company, a division of Chevron U.S.A. Inc., in connection with the Company’s Adopt-A-Port program. The $2.0 million certificate of deposit is classified as short-term restricted cash and a current asset and is included in “Cash, cash equivalents and current portion of restricted cash” in the accompanying condensed consolidated balance sheets as of December 31, 2023 and March 31, 2024.

Note 5—Short-Term Investments

Short-term investments include available-for-sale debt securities, excluded from cash equivalents, that have maturities of one year or less on the date of acquisition 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 (loss), 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, 2024, the Company has not recorded a credit loss related to available-for-sale debt securities and believes the carrying values of its available-for-sale debt securities are properly recorded.

Short-term investments as of December 31, 2023 consisted of the following (in thousands):


			Gross
	Amortized		Unrealized		Estimated
	Cost		Gain (Loss)		Fair Value
U.S. government securities	$	157,628	$	28	$	157,656
Certificates of deposit		530		—		530
Total short-term investments	$	158,158	$	28	$	158,186

Short-term investments as of March 31, 2024 consisted of the following (in thousands):


			Gross
	Amortized		Unrealized		Estimated
	Cost		Gain (Loss)		Fair Value
U.S. government securities	$	158,942	$	14	$	158,956
Certificates of deposit		530		—		530
Total short-term investments	$	159,472	$	14	$	159,486

Note 6—Derivative Instruments and Hedging Activities

In October 2018, the Company executed two commodity swap contracts with TotalEnergies Gas & Power North America, an affiliate of TotalEnergies, 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 who 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

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of these derivative instruments are recognized in “Product revenue” in the accompanying condensed consolidated statements of operations.

The Company has entered into fueling agreements with fleet operators under the Zero Now truck financing program. Certain of these fueling agreements contain a pricing feature indexed to diesel, which the Company determined to be an embedded derivative and is recorded at fair value at the time of execution, with the changes in fair value of the embedded derivative recognized in “Product revenue” in the accompanying condensed consolidated statements of operations.

Commodity swaps and embedded derivatives as of December 31, 2023 consisted of the following (in thousands):


	Gross Amounts		Gross Amounts		Net Amount
	Recognized		Offset		Presented
Assets:
Fueling agreements:
Prepaid expenses and other current assets	$	2,593	$	—	$	2,593
Notes receivable and other long-term assets, net		2,035		—		2,035
Total derivative assets	$	4,628	$	—	$	4,628
Liabilities:
Commodity swaps:
Current portion of derivative liabilities, related party	$	1,875	$	—	$	1,875
Total derivative liabilities	$	1,875	$	—	$	1,875

Commodity swaps and embedded derivatives as of March 31, 2024 consisted of the following (in thousands):


		Gross Amounts

Form: 10-Q

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