Exclusive update

Clean Energy Fuels released earnings for the second quarter of 2012. The company beat expectations by a penny on earnings with a non-GAAP loss of $0.16 per share and missed expectations on revenue of $69.8 million. It's also worth noting that last year's quarter had close to $5 million in tax credits that were not available this year.

Gallons delivered is trending the right way, with 48.6 million this quarter up 24% from 39.2 million in the same quarter last year. Revenue from BAF Technologies (the company's vehicle conversion business) was a bit softer because of expired tax incentives.

As mentioned before, Clean Energy's success very much depends on the success of America's Natural Gas Highway and converting trucking fleets to the technology. It's expected that Cummins, Westport Innovations, Navistar, and Volvo engines will be coming on line by the first quarter of next year and into 2014. This is very important to note, as management sees these as the major catalyst for the heavy-duty Class 8 truck market to start making the switch. This switch should be somewhat comparable to what the refuse industry went through, which was a very fast adoption.

In regard to progress on ANGH construction, it has been completed on 22 stations, there are 24 currently under construction, 32 more are in various stages, and management is still targeting 70 completed by end of year. Beyond this, the bigger story, according to management, is the 100 stations it will build next year. It appears that management has not lost any confidence in the completion of the build-out. The relationship with Pilot-Flying J is very important as it presents a unique competitive position. There are 550 Pilot locations in the country today, making it more than twice as large as the next nearest truck station competitor. It's understandable why management sees this relationship as crucial and why it will continue to nurture it.

Outside of the ANGH project, the core markets in transit, refuse, and airports continue to grow, with new contracts and renewals across the board. They are now at 35 airports – soon to be 37 – around the U.S., and have between 600 and 700 fleet customers, many of which are in longer term (read: 3-year) contracts. In addition, Clean Energy signed agreements to fuel five additional fleets that haul for companies including Office Depot, Ocean Spray, Publix, Sam's Club, and Quaker.

As mentioned before, this is a very capital intensive business, and as the build-out continues more capital will be needed. This was addressed in the earnings call by CEO Andrew Littlefair:

"As you know, that if you start totaling up the stations that I'm talking about, you'll see that in late 2013 to 2014, we believe – just because of the way the business is growing – you're going to need more capital. We are trying to be very mindful of the fact that we don't want to dilute all of our shareholders. We're trying to look at other ways to have the capital that we need, so we're trying to do it in a friendly matter. We're looking at different debt ideas. We're actually looking at a couple MLP ideas with some of our existing assets, so we're trying to explore all our options."

Management doesn't make it a practice to provide guidance. An analyst even asked about this on the call and if it would be changing this going forward, and management clearly stated the intention is not to. I like this, as it shows concern for the business itself as opposed to spoon-feeding analysts on the call about what numbers they should be counting on. The expectations game is useless for most investors; however, it can provide for some potentially great buying opportunities for those with a longer-term perspective.

All in all, this was another good quarter. I remain confident that ANGH will be completed, and assuming it is, Clean Energy Fuels will maintain a very enviable competitive position.

At the time of publication, Jason Moser didn’t own shares of the companies mentioned. At the time of publication The Motley Fool owned shares of Waste Management, Ford Motors, and Westport Innovations. Motley Fool newsletter services have recommended buying shares of General Motors Company, Waste Management, Ford Motor, Republic Services, Clean Energy Fuels, Cummins, and Westport Innovations. Motley Fool newsletters have recommended writing a covered strangle position in Waste Management and creating a synthetic long position in Ford Motors.