Clean Energy Fuels Corp (CLNE) Q4 2020 Earnings Call Transcript

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Clean Energy Fuels Corp (CLNE 4.53%)
Q4 2020 Earnings Call
Mar 9, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to Clean Energy Fuels' Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to Robert Vreeland, Chief Financial Officer. Thank you. You may begin.

Robert Vreeland -- Chief Financial Officer

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the quarter and year ending December 31st, 2020. If you did not receive the release, it is available on the Investor Relations section of the company's website at www.cleanenergyfuels.com where the call is also being webcast. There will be a replay available on the website for 30 days.

Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects, as well as words such as believe, intend, expect, plan, should, anticipate, and similar variations identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the risk factors section of Clean Energy's Form 10-K filed today. These forward-looking statements speak only as of the date of this release and company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release.

The company's non-GAAP EPS and adjusted EBITDA will be reviewed on this call and exclude certain expenses that the company's management does not believe are indicative of the company's core business operating results. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results. The directly comparable GAAP information reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA, and a reconciliation between these non-GAAP and GAAP figures is provided in the company's press release which has been furnished to the SEC on Form 8-K today.

With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair.

Andrew J. Littlefair -- President and Chief Executive Officer

Thank you, Bob. Good afternoon everyone and thank you for joining us. On last quarter's call, I spoke in some detail about Clean Energy's future and the expansion of our renewables business. I'm pleased to say that since that time, the pace has continued to accelerate on both the upstream production side as well as the downstream demand side for renewable natural gas. This should keep us in a great position for maintaining our lead in providing RNG to the transportation industry. And I will speak more about that in a moment.

In the fourth quarter of last year, we delivered 96 million gallons of fuel which was slightly down from 103 million gallons delivered in the same quarter a year ago. Due to COVID, we experienced softness in airport fleets in transit, but we were pleased that other sectors performed very well like refuse and heavy-duty trucking. Volume for the full year of 2020 was 382 million gallons, down 4.6% from 2019, which is 400 million gallons. This was quite an accomplishment considering the significant challenges in the transportation industry brought on by COVID. I want to congratulate the Clean Energy team for making this happen and overcoming the obstacles of operating in the tough environment that we've been in. We kept all of our stations open and all of our customers served. Refuse and trucking actually grew their volumes in 2020, which is encouraging as the country sees the light at the end of the COVID tunnel.

Our revenues for the fourth quarter of 2020 came in at $75 million compared to $119 million from a year ago. The big difference was a $47 million retroactive revenue gain in Q4 2019, which represented two years retroactive gain from the alternative fuel tax credit. This was only $5 million in Q4 2020. It was good to see Congress pass the extension of the alternative fuel tax credit at the end of 2020. Importantly, this was the first extension in several that was coming for a year and was not for retroactive gallons, which we hope is a good sign for bipartisan support for the AFTC for the future. The company's balance sheet continue to improve ending the quarter and the year with $138 million in cash and investments. Our adjusted EBITDA was $45.1 million for the year, which is what we guided to last May when COVID kicked in.

As I mentioned at the top of my remarks, since first introducing our renewable natural gas fuel in 2013, Clean Energy has gone through a significant transformation from selling exclusively fossil fuel natural gas to the transportation industry. Sales of RNG have steadily risen and it has become a larger and larger percentage of our overall fuel mix, now over 70%. But we believe that, that with the pressure on reducing greenhouse gases and carbon by everyone from investors to consumers, along with the increasing understanding of carbon-negative RNG, we are only at the beginning of what will be a game changing revolution in fueling. RNG has gone from being a niche product to one where the demand is outpacing the current supply. Fortunately, we have had a continued focus on ensuring a consistent supply and have been able to offer more and more RNG to more and more customers. We now have an expansive portfolio of over 30 supply sources, which allows us the flexibility to move our RNG supply depending on customers' needs.

That is why the announcements we recently made are so critical. Two of the world's largest energy companies, both of which have made significant pledges to de-carbonize their portfolios, have agreed to individually partner with Clean Energy to develop more carbon-negative RNG. The two JVs with Total and BP that we announced at the end of last year and recently finalized, represent a potential $0.5 billion of equity that can be substantially levered to develop RNG projects to produce negative carbon fuel that will eventually flow through our infrastructure and on to our customers. We would like to believe that Total and BP, which often compete with each other, signed on with Clean Energy because of our good looks. But in reality, we are the perfect partner. No other company has more experience in monetizing and trading federal and state environmental credits. And more importantly, with the largest fueling infrastructure, we provide an RNG pathway that is the most valuable, which is at the nozzle tip.

We have already signed up dairies for the new RNG production facilities, which can be funded by these JVs. Increasingly dairy farmers around the country are realizing the environmental and economic benefits of adding RNG production to their facilities. An RNG digester at an agricultural site, like a dairy, solves their own methane emission issue as well as contributes to tackling the climate change overall. It also helps with our other environmental issues like groundwater and it gives the dairy farmers an additional significant revenue stream.

RNG as a fuel is not a niche and the potential for additional supply in the US is significant, well into the billions of gallons a year that are yet to be developed. The RNG supply from these dairies that comes online over the next several years will help to ensure a steady supply of RNG that goes directly into the tanks of our growing number of natural gas fleet customers. And this is a very important point to understand; the RNG that we generate can be the green feedstock for other alternative fuels, including hydrogen and electric batteries. When using RNG as the feedstock for hydrogen and electricity fueling, we will still generate environmental credits. The RNG feedstock is critical, because alternatives like hydrogen and electric are only as green as the fuel that makes them possible. As our customers explore different alternatives when they become available, we can move with them using a feedstock that is rated many times cleaner than most alternatives. In fact, we have experienced building and operating hydrogen stations, and we can retrofit our current natural gas stations to add hydrogen. The production facilities that we will be constructing and operating with financing from the JVs with Total and BP will be critical for our future RNG fuel supply.

We've also been active in securing contracts for our current demand. Just since last December, we have signed new contracts to enhance our portfolio, representing over 30 million additional gallons of RNG. No other company is better positioned to continue to meet the current demand of fleets for this ultra clean fuel.

And on the demand side, we continue to sign new agreements, highlighted by LA Metro, the second largest transit agency in the country. It announced the deal to purchase approximately 47 million gallons of RNG from us over the next five years. Not only is this an impressive amount of fuel, it is a great example of the ease in which a large fleet can switch to RNG and realize a big reduction in the amount of carbon produced by their 2,400 buses immediately. LA Metro had already transitioned from diesel buses to natural gas buses. So the switch from fossil fuel CNG to RNG was seamless and literally happened overnight. As Metro's Chief Sustainability Officer said at the signing of our agreement, our use of RNG provides the most cost effective equitable clean air strategy. I couldn't have said it better. LA Metro joins other transit authorities in making the switched RNG including New York City, country's largest agency. We also recently extended our RNG fueling agreement with Santa Monica's Big Blue Bus and signed a contract with New Jersey Transit to fuel 190 additional buses with an expected 1.9 million gallons of CNG a year. The ready-mix concrete sector continues to expand with RNG. Our longtime customer CalPortland added 28 new trucks to their fleet of 125 and extended their fueling agreement with us.

On the refuse side, we signed new fuel agreements with Garden City Sanitation, Atlas ReFuel, Mission Trail, Waste Systems and others, representing over 3.7 million new gallons or extension of current agreements. We expanded our heavy-duty trucking business by signing new deals with Biagi Brothers, Pac Anchor, STS Logistics, Green Fleet Systems, and Kenan Advantage, which is expanding their fleet of natural gas trucks. These new deals are a result of our Zero Now and Chevron Adopt-a-Port financing programs. As you know, the Chevron partnership specifically targets fleets operating in the ports of LA and Long Beach and has been so well received that the first round of financing for new trucks has been completed. We are now in advanced talks with Chevron to significantly increase the funding in RNG available for the program.

So despite the challenges presented by COVID, the transportation industry continues to evolve and seek to do its part in addressing climate issues. There's a lot of pressure on it to do so, because 29% of the carbon dioxide produced comes from the commercial transportation sector which is why we are so bullish on the solution that RNG can provide. We've gone from selling 13 million gallons of RNG in 2013 to over 153 million last year. Our network of stations and customer relationships allow us to deliver substantially more RNG to fleet operators than any other company in the market. In fact, we calculate that we have access to more fueling stations and vehicle fleets than all of our competitors combined.

And we believe this is only the beginning. The experience we have gained by being first-to-market, the knowledge we have accumulated over the years in dealing with customers' needs and our expanded relationships with partners like Total, BP and Chevron give us reasons for optimism.

And with that, I will turn the call over to Bob.

Robert Vreeland -- Chief Financial Officer

Thank you, Andrew. Today, I'm going to focus my comments mainly on our outlook for 2021 with some highlights of 2020. I'm pleased to say we finished 2020 as expected. We achieved $45.1 million in adjusted EBITDA versus our guidance of $45 million. As Andrew noted, our cash and investments at the end of 2020 amounted to $138.5 million, which included $49.5 million in net proceeds remaining from our $50 million loan related to our RNG joint venture activity with BP. And while overall volumes declined in 2020, our renewable natural gas volumes grew 7% to 153.3 million gallons delivered in 2020 versus 143.3 million gallons delivered in 2019. All-in-all, we fared very well under the circumstances of 2020.

Looking at 2021, the good news is, we are expecting more recovery from the impacts of COVID-19 as the economy continues to pick-up, particularly in the second half of 2021. It's also an exciting year as we will expand our renewable natural gas deliveries and particularly increase the mix of carbon-negative RNG coming off of dairies as well we are moving into 2021 with two exciting joint ventures with two of the top energy companies in the world. We are building on this exciting momentum and look forward to executing on our 2021 plan.

Having said that, our GAAP net results will be around breakeven for 2021, which I will point out includes an incremental $7 million in non-cash stock compensation compared to 2020. This $7 million year-over-year increase in stock compensation reflects our higher stock price. Also, I am not including any estimate of unrealized gains or losses from the change in fair value of our Zero Now fuel hedge in our expected GAAP net results for 2021. Neither of these two non-cash items, the stock compensation and the fair value adjustments to our fuel hedge impact our adjusted EBITDA.

Our outlook for adjusted EBITDA for 2021 is in the range of $60 million to $62 million, which is an increase of approximately 35% above 2020. This improvement reflects our assumption of continued economic recovery from COVID-19 and positive contributions from our RNG volume growth as well as the greater mix of carbon-negative RNG.

Volumes are expected to return to more normal levels in the back half of this year, exiting 2021 where the fourth quarter year-over-year run rate increase of approximately 12% to 15%. For the year 2021, volume is expected to grow 6% to 9% over 2020, again reflecting a continued impact of COVID-19 in the first half of 2021, still an improvement from our 5% decline in overall volumes that we saw in 2020 compared to 2019. RNG volumes are expected to grow around 10% as a subset of our overall volume growth with the volume of our ultra clean negative carbon RNG growing ten-fold over 2020.

Total revenue is expected to range from $320 million to $335 million with this range meant to accommodate fluctuations in natural gas costs that impact our retail and certain contracted prices we charge customers. It does not include any non-cash fuel hedge changes that likely will arise during 2021, but that have no impact on our adjusted EBITDA. Within our total revenue, we are assuming approximately $20 million of alternative fuel tax credit in 2021 and our station construction sales to be slightly higher by 5% to 8% over 2020 as we have a steady slate of construction projects and solid backlog moving into 2021. Our effective margin per gallon for 2021 is expected to be within a range of $0.22 to $0.26, noting that the effective margin per gallon for 2020 came in at $0.22.

With assumed economic recovery in the back half of 2021, a relatively stronger RIN Credit price over what we saw throughout 2020 and lower carbon RNG in the mix, we would expect to see our effective margin per gallon in 2021 move up from where it was from 2020. Our overall gross margin on all revenues for 2021 will be around 38%. Our 2021 SG&A is expected to range from $77 million to $84 million. Keeping in mind, this includes approximately $10 million of stock compensation compared to $3 million in 2020. We will also see some increases associated with the growth in our RNG business activities.

We are expecting positive cash flow from operations for 2021 in a range of $45 million to $55 million. Our purchases of property and equipment are expected in a range of $25 million to $31 million, which is relatively consistent with recent run rates and primarily represents known station builds and upgrades associated with assured volume.

Now, specifically on the joint ventures with Total and BP. Those investments will be accounted for as equity method investments, so not consolidated, with us putting up, up to $50 million in each joint venture, representing our 50% interest in each joint venture. Also as we had announced in December, Total has agreed to make $45 million available to us to build fueling stations to support long-term contracted RNG fueling volumes with this separate capital expenditure possibly reaching $75 million in 2021. We are actively addressing our capital needs associated with these exciting growth opportunities.

With that operator, please open the call to questions.

Questions and Answers:

Operator

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

Eric Stine -- Craig-Hallum Capital Group LLC -- Analyst

Hi, Andrew. Hi, Bob.

Robert Vreeland -- Chief Financial Officer

Hi.

Andrew J. Littlefair -- President and Chief Executive Officer

Hey, Eric.

Eric Stine -- Craig-Hallum Capital Group LLC -- Analyst

Hey. So I don't know if you're -- it seems like you're breaking some news here today and that I don't believe you announced that you had finalized the JV with BP to this point. So I guess maybe confirm that. Hopefully that's not something that I've missed here. But just curious what that looks like versus the JV that you announced earlier this week with Total because that one was upsized a little bit and had some languaged [Phonetic] about what that could be long term that was increased versus when it was originally announced as an MoU in December?

Andrew J. Littlefair -- President and Chief Executive Officer

Sure. Eric, you did pick up on that. We signed that, finalized that agreement with BP this afternoon. So you're hearing here first. And we're excited about both of these joint ventures, I mean as I said in my remarks, I mean it really puts to work about potentially $500 million of equity. As you're right, the Total JV has actually been kind of upsized there where we can each contribute up to $200 million of equity. So when you put the leverage on top of these, I mean you could have north of $1 billion, $1.2 billion for these projects. So it's exciting for us.

The BP joint venture already has two projects that are in process, up and running, not running but been under way and we've signed sort of the initial agreements for the first project in the Total joint venture. So we're going to try to be as expeditious as we possibly can bringing these projects online. These are all dairy projects and super low negative carbon dairy projects and they're coming in. We don't have the exact pathways on this, but some of the most recent dairies we've seen are negative carbon in the 350 range. So these are dramatically lower carbon than the other fuels out there and so they're powerful.

Eric Stine -- Craig-Hallum Capital Group LLC -- Analyst

Got it. And just to confirm on timing, obviously you're going to -- as you said expeditious, I mean is this something that we still should think about as more of a where you'd start to get the initial benefit below the line very late in 2022. And just curious if you're able to or willing again or something we need to wait for to just talk about kind of income contribution per project?

Andrew J. Littlefair -- President and Chief Executive Officer

Yeah. You're right, Eric. These projects take a year to 18 months to really -- so you're right, that's when you could expect those to be able to contribute. The projects themselves don't take long. But by the time you get the pathway charted and certified, I think it's safe to say that it's between a year and 18 months before you could really have those contributing.

Now the projects that we signed in December and it's several of them as I mentioned, 30 million gallons there's low CI dairy projects and those are further along, right? And those are coming on now. So you'll begin to see that contribution in 2021. And there will be more. I mean we're working on it. I mean look this is fun right now and exciting time. I mean as I mentioned in my remarks there's billion gallons -- there's billions of gallons of potential of low dairy. And when you look at all the sources there are studies that show that it's approaching 25 million to 30 billion gallons. So lots of money will go into developing this. We like our position because we have those nozzle tips which you know I always talk about that, but that is a key differentiator between us and others because we get a chance to then bring a lot of that to our fueling network and to our customers. But this when you look at the economics and the low carbon nature of RNG versus the other alternatives that people are talking about, this is here today, it operates in vehicles that are on the road today, it can be dropped into the fleets and it's unique. And so I think as fleets look at their other alternatives they're going to turn to RNG, until those other alternatives are ready for the market.

Eric Stine -- Craig-Hallum Capital Group LLC -- Analyst

Right. Got it. And maybe a good segue. I know you've got a goal to have 100% of your owned station volumes to be RNG by 2025. Now that you've got BP, Total, Chevron, all committed to the low CI RNG. Any thoughts on what type of percentage you might think about out in 2025, when you reach your goal, what percentage could be low CI?

Andrew J. Littlefair -- President and Chief Executive Officer

Oh boy, I haven't -- I'd be making it up. I mean it's -- we've sorted out. You heard Bob, you heard -- we'll work on it. You heard Bob say that this year we're going to increase our low CI about ten-fold, OK? But we're starting out at a very low base on low CI. And we're well positioned because we are taking the lion share of low CI that was already developed. And so we're growing it substantially. We will begin I think over-time to be showing the carbon of our portfolio fuel and soon that will go negative which is kind of interesting, isn't it that we could be selling hundreds of millions of gallons and it actually is negative carbon all of it when you blend it all in. But I don't know we'd have to get back to you Rob, I mean, Eric. I don't know the contribution on low CI versus other.

Eric Stine -- Craig-Hallum Capital Group LLC -- Analyst

No. That's fair. Thought I would give it a shot, but to be continued.

Robert Vreeland -- Chief Financial Officer

It will increase. Kind of -- each year that's going to go up. So -- but it may be a stretch to say we'd get all the way to 100% of all low CI, but --

Andrew J. Littlefair -- President and Chief Executive Officer

Obviously, we're going to want to use low CI if we can, right? It will be meaningful particularly because of the value of that as well.

Eric Stine -- Craig-Hallum Capital Group LLC -- Analyst

Yeah. Fair enough. Maybe just last one from me and I do appreciate all the details because you certainly gave more on the outlook than you ever have in the past. But when you think about the volume dynamic, just maybe some thoughts by segment knowing that it's all likely back-half loaded, but maybe volume improvement year-over-year expected by segment would be great.

Robert Vreeland -- Chief Financial Officer

Okay. Yeah. Well, I mean from the -- I'll call it kind of the core markets, refuse, transit, fleet, trucking, those are all -- they'll see good volume increases that mean the fleets and trucking are going to be in the teens percentage-wise over -- because they were fairly significantly impacted this year. So we see them --

Andrew J. Littlefair -- President and Chief Executive Officer

Fleets and transits.

Robert Vreeland -- Chief Financial Officer

Yeah, fleets and transits. Trucking as well we see that improving in the same kind of bucket and that's just because that market is really evolving. So you have transit and fleet that are kind of coming off of tough years, you have trucking that is really gaining momentum. And then refuse is kind of steady-eddie.

Andrew J. Littlefair -- President and Chief Executive Officer

Last year refuse grew at eight, right?

Robert Vreeland -- Chief Financial Officer

Yeah. And so exactly. So it was even a little uptick on its growth rate, but then it would be kind of close to that. So we -- and then kind of the rest of it you get into kind of some bulk, you get into NG Advantage and others. So you end up kind of in that overall 6% to 9%, but frankly looking at more at the fourth quarter is really what we were -- where we see kind of a 12% to 15% year-over-year, which should start to equate to more of an annual rate on that. So 2021 still got a little bit -- as we know we're seeing good signs, but we're not quite out of the woods on the COVID-19.

Eric Stine -- Craig-Hallum Capital Group LLC -- Analyst

Got it. Okay, thanks.

Operator

Our next question is from Manav Gupta with Credit Suisse. Please proceed.

Manav Gupta -- Credit Suisse -- Analyst

Hey guys. So you talked about BP and Total. You mentioned Chevron, but I want to highlight something. Chevron today morning at its Analyst Day event indicated that they are looking to grow their RNG by 10 times by 2025. Now, one of the questions I did ask Mark Nelson, their Head of Downstream was how do you plan to distribute it? And they said, look, we can look to distribute it, but there are partners. And you are a key partner. So I'm just trying to understand like BP and Total [Indecipherable], but one of your partners Chevron is going to grow its volume ten-folds and how do you fit into that? How does Adopt-a-Port program fit into that? If you could talk a little bit more about Chevron and its ambitions to grow RNG? And how you could fit into that?

Andrew J. Littlefair -- President and Chief Executive Officer

Right. Well, Chevron is a very valued partner of ours, right. And we take a significant portion of all the dairy gas that they're producing today. So it comes to us under contract. We've increased that over the last year and then of course, we have I think what's a really innovative program with them and I mentioned Manav that we're expanding it. We proved it out in the last six months. That's at the port of Los Angeles, we call it Adopt-a-Port where Chevron is providing incentive funding to our customers truck owners in the port of Los Angeles as they look at. They're being forced or faced with over the next couple years moving toward either electric or natural gas RNG trucks at the port that's kind of their choice. And/or pay a fee to operate a diesel truck and it's going to be a newer truck on top of that -- newer diesel truck if they're able to operate it. And so we're actually able to use -- Chevron has worked out a program with us where we're able to provide incentive funding to help defray the cost of that new natural gas truck, which will use RNG from Chevron through our stations.

So it's kind of a win-win-win. It's a win for the air quality down in the port, the carbon and the tail pipe emissions in the port of Los Angeles are among the dirtiest in the United States. So it's good for the people to live there. It's good for the truck owner because it gives them an economic way to operate for the future as compared to their other alternatives. It's good for -- we're moving a significant portion of all the fuel that Chevron is beginning to produce out of their dairy projects. And of course, we're a partner because we're participating at the nozzle tip and participating in that way.

So far, we are not in the upstream relationship with Chevron. We're really on the downstream and in the marketing side. So we'll continue to work with them. I was on with the President of Chevron today talking about that as they look at different ways in their infrastructure, we're here to help in any way we can. Because after all we've built 1,718 station -- 718 station projects over the years, more than anybody else really in the world. And so we understand this. And so we're excited about that relationship with them. And I saw as you did that was a bold statement that this is going to be a significant way for them to work on their decarbonization effort.

Manav Gupta -- Credit Suisse -- Analyst

Perfect. A quick question here was, we saw Amazon order 100 CNG RNG trucks given they're trying to hit their carbon neutrality, most likely they will try and go for negative RNG, I mean CNG will not really get them to negative carbon neutrality by 2040. So, again, you haven't signed a contract, but you have contracts with UPS and FedEx. So help us understand what's the unique proposition of Clean Fuels? Why would somebody like an Amazon or anybody else who's ordering 1,000 RNG CNG trucks and trying to move them from long-haul would actually like to sign up with CLNE versus anybody else?

Andrew J. Littlefair -- President and Chief Executive Officer

Well, we have the largest network right in the United States. And so I think that as fleets like that -- we've seen this over the years that national players want to be able to have the optionality to move their vehicles where they operate. And so that's why often that we're able to participate with these large fleets. That's why we have that I think still remaining six years 150 million gallon RNG contract with UPS. And so you know that we have the advantage that we have the most RNG. We have the most flexible RNG portfolio. That's another reason why a large fleet would want to work with us. We don't have the dilemma for them where we have one source that if something happen to that --- look, these are like anything else, occasionally these projects will go down. And then all of a sudden that fleet is not able to get the RNG. We have the ability to move our RNG around. And so we give flexibility to the fleet. So it's our network. It's our know-how in terms of developing stations for these kinds of large players and it's the RNG supply that we have. And so I haven't -- I didn't specifically say that we have a deal with that fleet that you're talking about. But that's why fleets like them would look to Clean Energy I think because we have those capabilities.

Manav Gupta -- Credit Suisse -- Analyst

And the last question from me was, how much of like -- with your existing infrastructure without spending any more capital, forget the maintenance capital, but with your existing infrastructure how much more volumes can this existing infrastructure handle across United States without spending capital into it?

Andrew J. Littlefair -- President and Chief Executive Officer

Yeah. I know it's a good question Manav is, we'd like to think that our available capacity at the stations that we've already built and paid for is in and around 500 million gallons to 600 million gallons. So without spending any significant capital, we can accommodate that much volume. So that's another advantage is that we have stations that have unutilized capacity that's available today that are there, installed and ready to go.

Manav Gupta -- Credit Suisse -- Analyst

So if I get it right, you're doing 100 to 120 per quarter, but you're telling us you can literally double the volumes through the same infrastructure without spending a dime?

Andrew J. Littlefair -- President and Chief Executive Officer

That's right. Maybe a little more than double.

Manav Gupta -- Credit Suisse -- Analyst

Okay. Thank you for taking my question.

Andrew J. Littlefair -- President and Chief Executive Officer

Thank you.

Operator

Our next question is from Rob Brown with Lake Street Capital Markets. Please proceed.

Robert Brown -- Lake Street Capital Markets LLC -- Analyst

Good afternoon.

Andrew J. Littlefair -- President and Chief Executive Officer

Hi, Rob.

Robert Brown -- Lake Street Capital Markets LLC -- Analyst

Just following back up on Chevron and the port program. You said that first phase was completed, how many trucks went through that phase? And what's the potential size of kind of a phase 2?

Andrew J. Littlefair -- President and Chief Executive Officer

I don't know that we've said that Rob, making news here today. It's about 185 to 200 trucks in that first phase. And they're not all -- they're all contracted, they're not all on the road yet, but the incentive dollars have been obligated and contracts for the most part of those 200 are all done. And now we're working on kind of the next phases, which should be significantly more than that. So I can envision that -- and by the way, there was just another round of grant funding, which goes kind of hand in glove with this Chevron incentive money for another 350 to 400 trucks which will round out, that will happen in the next three months. So you'll have about 700 trucks funded. There's about 250 trucks already operating in the port and there's about let's call it 200 in the Chevron program and then about another 700 trucks. They haven't all signed on to our program yet, but I'd like to think that they probably will because it's very attractive.

So you get to over 1,000 trucks -- 1,200 trucks out of kind of a daily operating there's 16,000 trucks in the port but there's really 10,000 that operate daily. So you're beginning to make significant penetration at the port. It's really a very interesting test-bed for something that's actually operating today and has really great emissions, kind of goes under the radar a little bit. I mean, I think at the same time there's a handful of test electric trucks down there, a couple and I don't know if there's any fuel cell trucks. There may be a couple of Toyota trucks down there that are testing as well. So there's a lot of experience being gained, doing the duty cycle that needs to be done that's very difficult at the port of LA and Long Beach.

Robert Brown -- Lake Street Capital Markets LLC -- Analyst

Okay. Great. That's excellent color. Thank you. And then, I think, you mentioned a potential capex addition of about $75 million. What is that dependent on and how many stations would that fund?

Andrew J. Littlefair -- President and Chief Executive Officer

Well, that's dependent on growth in the fleet sector, right, in the trucking sector for kind of this RNG growth that we see coming. And that would get you about another 25 kind of large fleet heavy-duty truck stations. Those will be under customer contract though. They're not spec. We're out of the spec business.

Robert Brown -- Lake Street Capital Markets LLC -- Analyst

Okay, good. And then a less detailed question, Bob, what was the margin per gallon in the quarter?

Robert Vreeland -- Chief Financial Officer

It was about 23.

Robert Brown -- Lake Street Capital Markets LLC -- Analyst

[Indecipherable]

Robert Vreeland -- Chief Financial Officer

Yeah.

Andrew J. Littlefair -- President and Chief Executive Officer

Any other questions, operator, I think that might do it. Oh, we have Pavel. Pavel?

Operator

Yes, we do. Pavel Molchanov with Raymond James. Please proceed.

Pavel Molchanov -- Raymond James & Associates -- Analyst

Hey, thanks for taking the questions. In the 2021 guidance for $60 million to $62 million of adjusted EBITDA, what's the implied value of the federal tax credit AFTC revenue?

Robert Vreeland -- Chief Financial Officer

$20 million?

Pavel Molchanov -- Raymond James & Associates -- Analyst

Two-zero?

Andrew J. Littlefair -- President and Chief Executive Officer

Two-zero.

Pavel Molchanov -- Raymond James & Associates -- Analyst

Two-zero? Okay. So that's pretty similar to this past year's level, correct?

Robert Vreeland -- Chief Financial Officer

It is, yeah. And yeah, we're -- because we still do have some kind of AFTC gallons if you will being impacted by COVID for the first half of the year. So if that goes up, maybe that number could go up.

Pavel Molchanov -- Raymond James & Associates -- Analyst

Okay, got it. And also when we think about the cost of crude, which is now pushing $70 Brent, safe to say higher on the front end of the curve than just about anybody would have guessed 100, 120 days ago. Is there any relevance of that for your economics in 2021? In other words, are you making any call on where diesel goes?

Andrew J. Littlefair -- President and Chief Executive Officer

Well, I don't know that the numbers that Bob just gave you would -- Pavel, I'll let him speak to -- he may look at me funny here. I mean, I don't know that we've -- as we've given that guidance here we've tried to adjust our -- adjust for -- let's say if the year finishes out on an average of $65 a barrel or something like that. But clearly the $65 oil here has made a marked improvement in increase in diesel prices, right? I mean, at the depths of forget the negative print Pavel, right, but at the depths of COVID back in April, May of last year, we saw diesel prices $1.60 in certain of our markets in the southeast and those -- in that pad. Today the average diesel price in the United States is $3. Out here this morning at the port of Los Angeles I got the reports $3.89. So our prices have moved up. Our feedstock, the natural gas is stable in comparison. And so you know it's significant for us.

Pavel Molchanov -- Raymond James & Associates -- Analyst

That's exactly what I was kind of looking at. And then lastly, this one is a little just broader point. Historically, LNG volumes have declined every year since 2014. And obviously, this past year there was COVID impact, but of course not before that. Is there something structural going on in that heavy-duty long-haul market that's caused volumes to go from 80 million gallons in 2014 to 60 million gallons currently?

Andrew J. Littlefair -- President and Chief Executive Officer

Well, Bob's got some numbers here to review. But, look, I think the majority of the heavy-duty truck space is moving toward CNG, not LNG. And I mean, that's it in a nutshell. I mean, you're seeing more as this market has developed so far, still think there may be some LNG, as it gets a little bit more mature, out of route-type deliveries, sleeper cabs could avail themselves to LNG. But the industry has made tremendous strides on the fuel package, on-board the vehicle, the range of CNG, the delivery of CNG in the urban areas, as more trucks over-time kind of the truck getting truck drivers at home at night has led to slip seating and has meant kind of more super regional trucks than out of route type, what we used to think of a truck driver or truck driving.

So I think CNG is a very super competitive fuel. And so more of it is going to CNG than LNG. And look, we've had to make adjustments. I mean, there's no secret here. I mean we built some LNG stations years ago, 10 years ago now, right? Probably, too many. And so we made adjustments to that. We've -- and good news is we can make LCNG, right? We can put in some vaporization equipment to have CNG at our stations. And in some cases, we've had large fleets. We have great locations, right? And so, we've made the additions where we needed to, based on customer demand to put CNG in.

Pavel Molchanov -- Raymond James & Associates -- Analyst

Right. Is the margin profile meaningfully different, between the two fuel categories, from the --

Andrew J. Littlefair -- President and Chief Executive Officer

CNG has better margins.

Pavel Molchanov -- Raymond James & Associates -- Analyst

Okay.

Andrew J. Littlefair -- President and Chief Executive Officer

So it's not a bad thing. It's probably a good thing.

Pavel Molchanov -- Raymond James & Associates -- Analyst

Yeah.

Andrew J. Littlefair -- President and Chief Executive Officer

I mean, there are a couple of things where LNG has more range. LNG tank package is cheaper. So the truck can be cheaper, but the fuel tends to be a little bit more expensive. And the handling of it is a little bit more complicated. So CNG is tough -- it's awfully tough to be.

Pavel Molchanov -- Raymond James & Associates -- Analyst

Understood. As long as guys are making money, either way, right?

Andrew J. Littlefair -- President and Chief Executive Officer

Exactly. I mean, look, if there's a mistake is we probably built more LNG stations that we should have back then. And because we really felt like, at the time, CNG you have to go back with me. Remember Pavel, we bought the first 100 trucks to prove out that this would work. And it was in a port application. So it was really a drayage application. We didn't know if over-the-road trucking would really work. And we didn't really have the range, for it to work. We were limited on range. But look, the industry responded beautifully in the tank packages today and the back of the cabs are sweet. And you have 650 miles range, which we didn't have in the beginning. And so CNG is a really tough competitor to LNG today.

Pavel Molchanov -- Raymond James & Associates -- Analyst

Appreciate it.

Andrew J. Littlefair -- President and Chief Executive Officer

You bet.

Operator

This does conclude our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Andrew J. Littlefair -- President and Chief Executive Officer

Well, thank you operator. We want to thank everyone for listening on the call this afternoon and look forward to updating you on our progress on the next quarter. Good afternoon.

Operator

[Operator Closing Remarks]

Duration: 49 minutes

Call participants:

Robert Vreeland -- Chief Financial Officer

Andrew J. Littlefair -- President and Chief Executive Officer

Eric Stine -- Craig-Hallum Capital Group LLC -- Analyst

Manav Gupta -- Credit Suisse -- Analyst

Robert Brown -- Lake Street Capital Markets LLC -- Analyst

Pavel Molchanov -- Raymond James & Associates -- Analyst

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