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Clean Energy Fuels Corp (NASDAQ:CLNE)
Q2 2021 Earnings Call
Aug 5, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Clean Energy Fuels Second Quarter 2021 Earnings Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation.[Operator Instructions]

It is now my pleasure to introduce your host, Mr. Robert Vreeland, Chief Financial Officer. Thank you, sir. You may begin.

Robert Vreeland -- Chief Financial Officer

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 2021. 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-Q filed today.

These forward-looking statements speak only as of the date of this release. The 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. This was a great quarter for us. In Q2, we signed the most important commercial agreement in the history of our company with Amazon. Our business is growing again and surpassing pre-COVID levels. We raised $200 million in growth capital. Our earnings were better than expected, and there continues to be an increased understanding of the role our renewable fuel can play in addressing climate change today. Notably, our fuel volume surpassed 100 million gallons a quarter again, a healthy 13% increase over the second quarter of 2020 when the pandemic had begun to take hold. We saw volumes bounce back in all sectors. And the good news, in particular, is that airport fleet volumes increased 36% and transit increased 24% compared to a year ago, which surpassed our own internal projections.

Our renewable natural gas or RNG volumes grew 19% over the same quarter a year ago and continues to become a larger share of our overall fuel mix. Our efforts to accelerate the demand for this ultra-clean fuel is only matched by our focus on bringing on additional RNG supply to meet the growing demand, which I will elaborate on in a minute. As you know, we are focused on providing more and more RNG, a fuel that can be rated to have a negative carbon intensity, allowing our customers to meet their transportation sustainability goals easily, immediately, and affordably.

I'm going to let Bob go into more detail about our strange revenue number this quarter, but it's not hard to see. There were accounting-related non-cash charges that highly impacted it, most notably the Amazon warrant charge. Excluding the non-cash charges, our revenues would have been $79 million, a 29% increase in apples-to-apples comparison to the second quarter of 2020, which was $61 million. Our balance sheet has significantly improved, placing us on solid footing.

During the second quarter of the year, we added $200 million of cash through an at-the-market equity offering managed by Goldman Sachs. In fact, the demand was so high, we raised $100 million in one day during the second round of the offering. We finished the quarter with $254 million in cash and investments after contributing $50 million into our negative carbon intensity RNG development JV with BP. Our debt at the end of the quarter was $42 million. This places us in a strong financial position as we expand our fueling infrastructure for our new large anchor customer, Amazon, and make investments in RNG production to ensure a growing supply of RNG fuel in future years. Our adjusted EBITDA for the second quarter was $14 million, a 51% increase over the adjusted EBITDA in the second quarter of last year.

Overall, it was a strong quarter financially and operationally. Regarding the supply of RNG, let me just quickly report that our efforts to make agreements with dairies is moving along very well. No other company has as compelling an offer as we do, with a strong balance sheet supported by our JVs with TotalEnergies and BP and the largest vehicle fueling infrastructure in the country, which provides the mechanism to generate the valuable environmental fuel credits, dozens of dairies from California to Texas to the upper Midwest are in discussions with us. We have already signed our first partners and have a robust development pipeline. But before the RNG from these new partnerships comes online, we are also aggressively and continuously signing RNG supply contracts with third parties to meet today's growing demand.

Since the beginning of the year, we have secured an additional 53 million gallons of RNG with a healthy pipeline of additional supply agreements. As I mentioned, our base of existing customers is back to previous levels, and we were adding new businesses as well. The Adopt-a-Port program with Chevron, which makes replacing old dirty truck -- diesel trucks with Clean RNG trucks affordable for smaller operators in the ports of L.A. and Long Beach continues to expand. Financing for over 485 heavy-duty trucks is either closed or is in the contracting phase. These trucks will fuel in the ports at our surrounding network of RNG stations in Southern California. We're working our way through the additional $20 million of financing that Chevron recently committed to the program, and I believe it will accelerate as the state of California soon distributes another round of its grants for Clean trucks, making the switch to RNG all that more appealing.

On the East Coast, our existing customer, Manhattan Beer Distributors, recently announced that they would be expanding their natural gas fleet to 29 trucks, which will fuel our stations in the New York City area. And in the middle part of the country, we signed a new customer, KALM Energy, a large regional fuel provider in Nebraska. We will be taking over the operation of three stations that sell an approximate 900,000 gallons of CNG a year, and we forecast that to grow as KALM adds medium and heavy-duty trucks to their fleet. Another new customer, the city of Fort Smith, Arkansas will begin to fuel a new fleet of natural gas refuse trucks and has plans to convert their entire fleet to natural gas. These are a sampling of recent agreements, but of course, the biggest deal signed during the second quarter of this year well, in fact, the biggest deal we have signed since the company began was the agreement with Amazon. I spent quite a bit of time discussing on the last call, so I won't go into much more detail today.

But since our last call, Amazon issued their latest sustainability report. And in it, they confirmed for the first time that they plan to initially deploy 2,700 heavy-duty natural gas trucks by the end of the year. And all the fuel we will provide for Amazon will be RNG. We are making good progress on the additional stations that we plan to construct for Amazon, and Amazon continues to deploy its heavy-duty truck fleet. In addition to the fueling infrastructure expansion, we are facilitating training classes with the natural gas vehicle institute for dozens of maintenance technicians who will be keeping the Amazon trucks on the road. Our excitement about our new relationship with Amazon has only increased since our last call. This significant fueling agreement and their right to buy clean energy shares, provided they purchase hundreds of millions of gallons of RNG, demonstrates the overall commitment and strategic alignment that one of the world's largest companies, which moves more goods than anyone else has made to renewable natural gas. We are seeing that message open doors with other fleets, which have been a little hesitant in the past to think about leaving diesel. And fleets are feeling other pressure points as well. I don't have to tell this audience that companies are under increased scrutiny to find ways to reduce their carbon footprint.

Investors, regulators, and the public are asking to see specific plans to meeting their emission reduction goals. I'm going a little bit off the farm here, but it's my belief that our RNG fuel solution has the momentum versus other alternatives. It's almost becoming a weekly occurrence when we -- where we see stories about transit agencies turning back electric buses because of serious issues, including thermal events. And by the way, where I come from, we call those fires. Or delays in rollouts of electric heavy-duty trucks and other promises and claims not kept by start-up OEMs or the lack of charging and fueling infrastructure for large vehicles. The expense of charging and fueling infrastructure and a growing realization that there is no perfect clean solution. Highlighted by a recent in-depth story by the Los Angeles Times about the environmental impacts and problems associated with the mining of minerals for large batteries.

Now don't get me wrong. I think electric and fuel cells will be fine in the light-duty space. And as I've said before, our experience in station construction, along with our access to RNG fuel supply, which can be used as a clean feedstock, and time will allow us to expand in other alternatives as our customers do. In fact, we have recently submitted bids to build hydrogen stations for transit agencies that will be testing a handful of hydrogen buses. But for fleets of large vehicles, which are looking for immediate and significant carbon reduction solutions, we think there's nothing comparable to RNG. It's becoming easier to make our sales pitch, a fuel produced from capturing naturally occurring methane at dairies, which number in the tens of thousands. And then turning it into a transportation fuel, displacing a harmful incumbent fuel is an easy story. This two-pronged missions mitigation is why RNG fuel can receive a negative carbon intensity rating and why more fleets like Amazon are realizing it's the easiest and most cost-effective way to meet their aggressive sustainability goals.

We are already having -- we already have a nationwide fueling infrastructure in place that is expanding. Cummins provides a natural gas engine that performs as well as its diesel counterpart, albeit with 90% fewer tailpipe emissions. And a carbon-negative fleet can be deployed in short order at much less cost than other untested alternatives. We've recently begun an exercise to dive deep into large heavy-duty truck fleets with specific data that demonstrates the companies how they can reduce their greenhouse gas emissions.

As an example, at their request, in July, we provided one of the country's largest fleets, which operates thousands of heavy-duty diesel tractors with specific data about how they could achieve their long-term carbon emissions reduction goal by replacing only 1,200, that's 1,200 trucks over three years with RNG. Using the same California Air Resources Board carbon intensity scoring, this company would have to purchase over 6,400 electric heavy-duty trucks or 13,000 fuel cell trucks to achieve the same carbon reduction has only 1,200 trucks running on negative carbon RNG.

As I mentioned at the top of my remarks, the second quarter was a great one for Clean Energy. Our recurring business is returning to normal levels, and we're beginning to see real growth in our fuel volumes driven by new customers in no small part by one, in particular, Amazon. And we are on solid financial ground as we continue to make additional investments for future growth.

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

Robert Vreeland -- Chief Financial Officer

Thank you, Andrew, and good afternoon, everyone. And I'll reiterate what Andrew said. The second quarter was a good financial quarter for us. We started to see the anticipated rebound in volumes, along with good fuel margins and a continued favorable environmental credit market for D3 RINs and LCFS. Of course, our GAAP results, as reported, were significantly impacted by the non-cash contra revenue charges of $78.1 million from the Amazon warrants. But looking at our non-GAAP earnings, we earn $0.01 a share with adjusted EBITDA of $14 million. These contra revenue charges related to the Amazon warrants is why we are reporting a revenue number of $0.5 million for the second quarter. Without those warrant charges and changes in fair value of our Zero Now hedge, our revenue was $79 million or 29% above 2020 second quarter revenue of $61.3 million on a comparable basis.

The Amazon warrant non-cash contra revenue charges for the second quarter included $76.6 million related to the immediate vesting of approximately 25% of the warrant shares and $1.5 million related to ongoing fuel delivery to Amazon under our fueling agreement. We will continue to record non-cash contra revenue charges each quarter that could be in the range of $3 million to $4 million per quarter related to the ongoing spending on fuel by Amazon. As also note, the contra revenue charge related to the immediate vesting in the second quarter was higher than our initial estimate of $68 million due to additional warrants being issued in connection with our share issuance from our at-the-market stock offering program.

As such, we've updated our guidance for estimated -- for our estimated GAAP loss to $86 million for 2021 to reflect the increased contra revenue charges in the second quarter, which has no impact on our cash flows or adjusted EBITDA. We are maintaining our adjusted EBITDA guidance for 2021 of $60 million to $62 million. Now continuing on with the second quarter, total volumes were 101.4 million gallons compared to 89.5 million gallons a year ago.

Andrew noted, the big increase is coming from airport fleets and transit sectors, which have been the most impacted by the pandemic. Trucking and refuse also saw year-over-year volume gains. And our RNG volume grew 19% to 42.9 million gallons in the quarter, up from 36 million RNG gallons in the second quarter last year. Our effective price per gallon in the second quarter of 2021 was $0.67 per gallon compared to $0.58 a gallon a year ago. This reflects generally higher natural gas prices and related prices at the pump as well as significant gains in our D3 RIN revenue.

Both station construction sales and the alternative fuel tax credit revenues were better than a year ago by 15% and 20%, respectively. Collectively, an improvement of $1.7 million for the second quarter compared to last year. Our overall gross profit margin improved in the second quarter of 2021 compared to 2020, exclusive of the non-cash contra revenue and non-cash fair value changes in our Zero Now hedge. Exclusive of these non-cash items, our gross margin was $32.1 million in the second quarter of 2021 compared to $22.8 million in the second quarter of 2020, or a 41% improvement. Increased volumes together with a rise in our margin per gallon from a year ago were the primary drivers of this year-over-year improvement in margin. Our effective margin per gallon for the second quarter of 2021 was $0.26 per gallon compared to $0.20 a gallon a year ago, also reflecting the greater fuel volumes and higher RIN pricing. We believe our margin per gallon will remain within our expected range of $0.22 to $0.26 for the year. But as we've seen, we've been at the high end of that range in our first two quarters. Our SG&A was $21.6 million in the second quarter of 2021 compared to $16.9 million a year ago, an increase of $4.7 million, of which 57% or $2.7 million of that increase relates to an increase in stock compensation as expected.

Our GAAP net loss for the second quarter of 2021 was $79.7 million, which includes the effects of the non-cash warrant contra revenue charges and the Zero Now hedge changes. Our non-GAAP net income for the second quarter was $1.8 million or $0.01 per share, which we believe is more indicative of our operating results. Our adjusted EBITDA of $14 million for the second quarter of 2021 compares to $9.2 million a year ago, which again highlighted the benefit of increased volumes and improved margins, principally associated with our RNG deliveries. Our cash flow provided from operations amounted to $9.7 million for the second quarter of 2021 compared to $54 million in the second quarter of 2020, which that figure included two years of alternative fuel tax credit collections in the second quarter of 2020. Exclusive of changes in operating assets and liabilities, cash flow from operations was $14.3 million in the second quarter of 2021 versus $6.6 million in the second quarter of 2020, capex spending was $4.6 million for the second quarter of 2021.

Of course, we see that amount increasing as our station building continues and ramps up as we accommodate principally Amazon. And Andrew mentioned our cash and investments of $254 million, with debt of $42 million at the end of June 2021. We contributed $50 million in June into our RNG investment with -- or JV with BP, and we anticipate funding our RNG JV with TotalEnergies on a project-by-project basis as specific projects are approved for funding. Our share of the net results of these JVs is and will continue to be reflected in our adjusted EBITDA as we progress forward in bringing projects up and producing RNG.

With that operator, we can open the call to questions.

Questions and Answers:

Operator

We will now be conducting a question-and-answer session.

[Operator Instructions] Our first question comes from the line of Eric Stein with Craig-Hallum. Please proceed with your question.

Eric Stine -- Craig-Hallum -- Analyst

Hi, Andrew and hi, Bob.

Andrew J. Littlefair -- President and Chief Executive Officer

Hi, Eric.

Eric Stine -- Craig-Hallum -- Analyst

So I know you mentioned that Amazon is not a surprise that it's helping more broadly in discussions with customers. But maybe could you talk about specifically Amazon suppliers, maybe some specific data points as much as you can share, traction you're making there, and kind of how you see that overall volume opportunity?

Andrew J. Littlefair -- President and Chief Executive Officer

Our stations that we're building for Amazon are going to be open to the public. And of course, knowing our business, Eric, you know when I -- open to the public, that means they're open to other truck companies, right? And in that case, I think it's likely to be other vendors and suppliers as well as other fleets that operate for Amazon. We have seen a few companies that haul for Amazon begin to bring natural gas trucks into their fleet. And I think you'll see more of that in the future, and that's really all I can talk about right now. But I know that as I believe that Amazon looks at their emissions and their goals and their reductions in the future, they're going to try to encourage many of the people they work with to bring on cleaner and cleaner vehicles over time. And we'd hope to be right in the middle of that and kind of stay tuned.

Eric Stine -- Craig-Hallum -- Analyst

Yes. Okay. Well, maybe just sticking with that. I mean, is there anyway, obviously, as you've got the joint ventures now, you've brought on more supply. You've had the supply agreements in hand for some time, maybe the size of the pipeline for redeem, whether it's versus a year ago, three years ago? Anything along those lines would be helpful.

Andrew J. Littlefair -- President and Chief Executive Officer

Right. And I'm going to be a little cagey here, Eric, and it's just because I guess there's a lot of good news here, which is there's -- there are a lot of competitors that are out there trying to develop dairy projects. And in one way, that's really a good thing, right? Because that's just confirming for me that there's a lot of money, and there's some big players with deep pockets, recognizing that this is a really viable fuel that's economic, and that has a great role to play in reducing carbon emissions today. So that's good.

Remember that we're ahead, even while we are competing at, let's call it, at the dairy location. Often, we're -- I don't want to say the only game in town. We often get, though, the supply from our competitors as they look to put it in a vehicle tank, right? Because we have the infrastructure. So just because we're not developing a dairy farm and harnessing the dairy fuel for our own account that doesn't mean that we don't ultimately bring that alone carbon-negative fuel to our customer, our fueling station.

Now obviously, we'd like to get a lot of it on the upstream side because that makes economic sense for us as well. But just want to kind of keep that in mind. So if you go back and look three years, I mean, there was hardly anything going on in the dairy business. So when you look at the pipeline today, it's dramatically increased. And I've said on a previous call, I'm not going to dissect it today. I said in the previous call that we've got several projects that are either in -- that we've given the notice to proceed that are either in construction or in the -- or signed or in our pipeline, that's grown since our last call, but I'll just kind of leave it at that right now.

But yes, Eric, compared to where we were several years ago. I mean, remember, we were early in this business. We started -- I guess we were the first ones to put landfill gas in a truck 10 years ago, right? And so up until recently, it was all landfill gas. And it will continue -- like there's a lot of landfill gas in the United States, and it will continue to be a lot of landfill gas. But you'll also see more and more dairy and farmed hogs coming on board because of its low carbon nature.

So over time, for instance, let me give you one other little point, and I can't go back a few years, but our carbon intensity is coming down. And by the end of this year, our carbon intensity will beat -- in the fourth quarter is going to be approaching 0 for our fuel. And it wasn't too many years ago, as it just was -- it wasn't that way, and it's coming down fast because as you bring on this negative carbon fuel, it's so much lower carbon that it brings down the other. So that's a good thing.

Eric Stine -- Craig-Hallum -- Analyst

Yes. No, that's good. Maybe last one for me. Just -- I mean, great to hear a rebound in transit, airport. Have you seen any change or with variance and things along those lines? Or is that something that you kind of feel like those two are back on track and they should continue to grow going forward?

Andrew J. Littlefair -- President and Chief Executive Officer

Yes. We're seeing them all grow. I don't think airports aren't fully back. I mean, they've come back a long way, and I'd say they're back to about where we were before. But there's still --- they're still not -- I don't think they're operating on all cylinders yet, just based on what I know on the passenger load. But they're pretty -- they're essentially back to where we were before, but I think there's growth there.

Transit buses and I've said this from -- in the kind of the early days of the pandemic, they kind of flipped the switch, right? They went from 100% to 50%, and they drop it in big pieces. And it doesn't have as much to do necessarily with the passenger load on a given day as it does that they just turn on different routes. And we've seen the transit back to pre-pandemic levels. So the transit back, we have seen transit properties growing. We see transit buses taking delivery of new natural gas transit buses. So I think you'll see both those segments continue to grow. So that's good news that we're starting to finally see some growth back. Now refuse grew last year, right, I want to say 8%, and it's continuing this year along those lines.

Eric Stine -- Craig-Hallum -- Analyst

Okay, thanks a lot.

Operator

Our next question comes from the line of Rob Brown with Lake Street Capital Markets. Please proceed with your question.

Robert Vreeland -- Chief Financial Officer

Good afternoon.

Andrew J. Littlefair -- President and Chief Executive Officer

Hey, Rob.

Robert Vreeland -- Chief Financial Officer

Hey, Rob.

Robert Brown -- Lake Street Capital Markets -- Analyst

Just wanted to get a little more color on the Amazon build-out. Where are you at in terms of getting stations completed? And do you expect to have really all of them by the end of the year? Or what's sort of the timeline there?

Andrew J. Littlefair -- President and Chief Executive Officer

Right. Now, of course, we've told Amazon, we're going to bring those states down as quickly as we can. And of course, as you know, as we build those stations, the toughest part just begin it, and where we are with Amazon and others, our customers know this. The longest lead part of developing a station is the siting of the land and is the permitting and is the due diligence on the utility and the utilities and the acquisition of the land or the leasing of the land, that's the longest lead item. The construction is actually the shortest part. So we've made very good progress of the new locations.

The majority of them have been -- have we've gotten through the real estate piece of this, and you'll begin to see construction phase on most of these stations being developed in the latter part, third and fourth quarters of this year. Some of those will get probably finished next year as well early, though. But we're making good progress on all of them. And we're also making additional investments and adding to existing stations.

As I think I said maybe in the last call, we're currently fueling Amazon trucks. And we've seen them at our existing network where we've actually been fueling Amazon trucks at 37 of our different stations already. And some of those network locations are receiving some increases and additional investment to make sure that they can serve the Amazon characteristic fleet well, as well as we can. And so that's what's going on. So I feel pretty good. We monitor it very carefully. And look, real estate locations in the Northeast are not easy to come by. There's a lot going on up in certain states right now. But we've made pretty good progress on.

Robert Brown -- Lake Street Capital Markets -- Analyst

Okay. Great. And then in terms of the fuel volume or the accounting of the revenue, I think, Bob, you mentioned some offsets going forward. Could you just give some color on sort of is that volume-driven? Or is that kind of a fixed amount?

Robert Vreeland -- Chief Financial Officer

It's volume spend driven. So they -- Amazon Vest and the warrants as they spend. And there's thresholds and milestones, frankly. But from an accrual accounting standpoint, you assume they'll make the various thresholds. So it's kind of -- we're going to record those as the spend occurs. And that's how -- that's where those -- where those will come from.

Robert Brown -- Lake Street Capital Markets -- Analyst

Okay, thank you.

Robert Vreeland -- Chief Financial Officer

Thanks, Rob.

Operator

Our next question comes from the line of Pavel Molchanov with Raymond James. Please proceed with your question.

Pavel Molchanov -- Raymond James -- Analyst

Thank you so much for taking my question. So we're obviously waiting for the infrastructure built the past. And I noticed that one of the changes from the original March version to the -- what's actually going to be voted on is there is some provision for buses that are low emission, but not 0 emission. Have you guys looked at whether net gas can be included within that?

Andrew J. Littlefair -- President and Chief Executive Officer

Right. Pavel, we are heavily involved in that. So you go back about six or eight years when the no low program was put in place, and it always envisioned low NOx, which is natural gas, bus. It's just that the Obama administration decided not to ever fund any natural gas buses. And so the low -- No-Low program was always used as a slush fund for electric vehicle programs. And it was on the order of $100 million, $150 million. So in the scheme of transit, it didn't really amount to much, right, because that doesn't go very far in the electric world.

And so come this year, there were some United States senators on the Republican side with some Democrat colleagues, in fact, Chairman Brown that just felt like the low -- No-Low program should return to the original legislative tent, which is that if you could put help fund low NOx buses, especially using RNG on the road which have arguably a lower carbon content than electric, that, that should get put in place. And so when you look at the plus ups, so the low, No-Low program has gone from -- on the order of a couple of hundred million bucks a year to $5 billion, right, $5.25 billion. There's a 25% carve-out of that $5.25 billion for low NOx buses, which would be natural gas buses.

So it's a big -- for me, it's a big recognition, and it's a carve-out, right? It's solid. So you got $1 billion basically there that's going to be for natural gas buses. And so we're real pleased about that. And when you kind of compare that versus the other $3 billion that's going to go to electric, you're going to get on a bus on bus comparison, you'll have about as many natural gas buses funded as you will electric. So yes, we're on top of that one.

Pavel Molchanov -- Raymond James -- Analyst

Okay. Okay. No, I appreciate the detail. Going back to your comment in the intro about certain municipal bus fleets that are unhappy with their electric purchase. Do you know of any specific examples of a city fleet that data pilot or initial deployment of electric and then essentially gave up on it and said, we're going to go back to what we had before?

Andrew J. Littlefair -- President and Chief Executive Officer

You mean like foothill, you mean? You mean transit properties that tried it this setup. No, thank you.

Pavel Molchanov -- Raymond James -- Analyst

Exactly. And actually, walked away from electrification entirely?

Andrew J. Littlefair -- President and Chief Executive Officer

Well, I think -- and I know you follow this, so you may know, but I believe Alberici did, and I imagine they're still running some, but pretty sure foothill transit has decided that their -- in fact, foothill transit is going to now go with, I guess, they're going to take a swing at hydrogen. Indianapolis, that was a disaster and Dallas. So I don't know of any others, but those are the ones that come to mind. I'm sure there are others that just haven't had a good experience.

Pavel Molchanov -- Raymond James -- Analyst

Okay. That's helpful. I'm just trying to kind of visualize how common that kind of reversal?

Andrew J. Littlefair -- President and Chief Executive Officer

No, look, I know it always comes across and I pick on them, and I do in a way. But you know what I sort of recognize that there may be a role for the public funding to sometimes push on these extravagant technologies. And we saw that 20 years ago with natural gas buses, right? Transit fleets funded natural gas when that wasn't the thing to do, right? And so occasionally, the public monies are being used here to push on the technology side. And that's one thing, OK?

Though, Pavel, what you and I talked a lot about over time is that when you have something that's being funded 93% by the Feds, OK, you don't really look at it as a dollar and cents cost-effective thing. You just don't. You don't have to. But when you start looking at a private sector fleet, and then it's fully different. When it's 100% your own money, then this really does come into play, and that's where I always try to let people know is don't think because somebody's funding or fielding some electric transit buses that, that necessarily translates to private sector trucking company doing the same thing because there's different economics at that point. And I think that's important for people to understand.

Pavel Molchanov -- Raymond James -- Analyst

Yes. No, I appreciate the perspective. Thank you guys.

Operator

Our next question comes from the line of Manav Gupta with Credit Suisse. Please proceed with your question.

Manav Gupta -- Credit Suisse -- Analyst

Bob, Andrew. I mean, I'm trying to understand this. You put in about $50 million with the BP JV, and then you are saying for Total, it's going to be more project-by-project based. And I know you can't get too specific, but let's say, we are looking out to year-end 2022 or you pick 2023, like how many dairies are you targeting would have contracted with you? And how many do you think would be online between BP and Total? Just some rough numbers, so we can model those JVs a little better.

Andrew J. Littlefair -- President and Chief Executive Officer

Yes. That's well, Manav, that's a good question, but there's -- all these dairy projects vary kind of so much with the size. And what we have said is, generally speaking, our -- we were talking about it in gallons, and you're going to spend on the negative carbon, the dairy, you're going to spend maybe $20 million to per million gallons, right? And so we start to do that math. I mean, our intent is to spend the full $100 million in the BP deal and the full $100 million in the TotalEnergy deal, and it could go bigger, but let's just say, we'll go through both $100 million. So that would be kind of $200 million at the JV level, $100 million each.

Robert Vreeland -- Chief Financial Officer

And that might be leveraged.

Andrew J. Littlefair -- President and Chief Executive Officer

So Manav, I don't know that we're going to -- you're going to get from us today, a dairy count and headcount on gallon count of low CI count that you can put in your model. But what we have said is by 2025, 100% of our fuel is going to be that way. And what we have said is that we're working with very large fleets that if you just -- I think you did it in one of your fine notes, if you kind of run out and use Amazon and do the multiplier on gallons, and all of that has to be RNG. You can see we need another 100 million gallons, 50 million to 100 million gallons just for them. So there's going to be a lot of money put to work here from us, our partners, and also for others that we're going to have to bring in because the future is going to be landfill and dairy projects over time. That's the future. It's not going to be the fossil. It's going to be this RNG coming to bear.

Robert Vreeland -- Chief Financial Officer

Yes. With significant flow from those investments more in 2023. So I mean, I think the point is, the intent is to spend the full amount of capital there, there can be leverage at the project level. So -- and there typically would be.

Andrew J. Littlefair -- President and Chief Executive Officer

Well, in Total, TotalEnergies has indicated their preference to upsize that JV, and they've said that they would like to see that go up to $400 million. So we're not ready to do that right at the second, but we know that that's their intent, and that's what they would like to do. So there will be a lot of money on our side put to work.

Manav Gupta -- Credit Suisse -- Analyst

Perfect. I had a policy question. On one hand, we obviously see the Biden administration about lowering carbon emissions and everything. And then all you see from most members of the administration talk about is EV. I think even today, it was all EV. There are one or two senators like Senator, Amy Klobuchar, or some other people who are talking biofuels, but most of the time, what we hear from media at least is just EV. And again, you guys are very close to all this, like on the ground, do you think the current administration is more supportive of biofuels? Or do you think it's just the support is just EV and nothing really has changed even from the Trump era?

Andrew J. Littlefair -- President and Chief Executive Officer

I think it's been easy. It's frankly easy for politicians to just, at this point, just kind of lump it all in. It's gotten to be very comfortable to sort of talk about an EV -- solar and EV future. I mean that's kind of what the environmental community likes here. That's kind of what they've adopted. Now if you press, and it's why you see that bill that Pavel and I just talked about, all of a sudden, there was a 25% carve-out for low NOx, which is natural gas. Which natural gas, there is a recognition that you should try to do whatever you can today to lower emissions and not wait because that -- and we don't really get any pushback from either side of the aisle is when you really address it.

As you know, there isn't a fuel cell truck today. There isn't hydro that you can buy. And frankly, there's not really an electric. So that is code for -- if you don't do something that's available today, you're just allowing that to go to diesel. And that's why you just saw this carve-out in this Low-No program. I would call your attention, Manav, and to others on the call, and it may be a little hard to find, but the executive officer of the South Coast Air Quality Management just wrote a really compelling, I guess, robust to the environmental justice community and some of the health communities that were kind of roughing the South Coast Air Quality Management District, who was responsible for the air quality in Southern California. And frankly, have been on the leading and bleeding edge of air quality issues for the last 50 years.

And his name is Wayne Nastri, and I would encourage you N-A-S-T-R-I. And if you'd like, we'll send it to you if it's hard to find, but if you go online, he has out yesterday or the day before, a six page single-spaced written letter, where he calls out that low NOx natural gas has got to be part of the equation to do what you can do today for air quality because, frankly, when he look and when his as much as they've spent $350 million on electric technologies in the last few years, we've probably done more than any other local agency supporting electric, they are the first to admit that they have to do other things to continue to bring down and improve air quality and tailpipe emissions and carbon emissions.

And so what Wayne was arguing is that this idea that its natural gas or it's low NOx or it's RNG versus electric is a foolish thing to get engaged in and that you have to keep -- you have to employ all of these technologies otherwise, you get diesel. And that's -- and so this is a long-winded, so I would encourage everybody to look at that because here is a professional officer in charge of air quality that makes the case for why you need to be doing RNG and natural gas technologies right now. It doesn't mean that you're against electric, it just means that's what you have today and you need to do it. And that's the same thing that we'll see in the federal level when it all shakes out there -- for instance, natural gas is in the corridor program.

So all you're going to read about is electric charging stations in this new corridor program. Well, no, there's natural gas is funded in that, too. This is just not as environmentally politically correct to talk about that.

Manav Gupta -- Credit Suisse -- Analyst

Perfect. My last question is, you currently -- in the quarter, 42.9 million gallons of RNG was supplied. Help us understand how much of that was landfill and versus the dairy farm and how that has tracked over the last one year or so?

Andrew J. Littlefair -- President and Chief Executive Officer

Well, you're consistent, Manav. On that, I don't know that we're going to break that down for you either. But we are increasing our dairy farm. And if you kind of look back, last year, you were at 2% dairy and by the end of this year, you'll be up to 10% dairy. And so that's kind of the way to think about it. And of course, we'll continue to bring on dairy at a higher -- more and more as we go because of what it does for us. Bob, I don't know if you have another way to.

Robert Vreeland -- Chief Financial Officer

Well, we've delivered -- we have taken supply of more dairy through the first six months than we did all of last year. And we were probably almost up close to 100% from one quarter to the next. So that is -- so the dairy is growing as expected, but there's still plenty of room, its kind of good news, bad news thing because, frankly, the numbers that we see in front of us, that was a very good quarter, are not heavily weighted toward dairy RNG. There are some in there for sure. And we also had some very nice RIN pricing. So we just have -- we continue to have the upside in the replacement. And to your question, that those stats should tell you some, at least in terms of that pace is going with the growth rate of the dairy.

Manav Gupta -- Credit Suisse -- Analyst

Thank you so much for taking my questions.

Operator

Our next question comes from the line of Jason Gabelman with Cowen. Please proceed with your question.

Jason Gabelman -- Cowen -- Analyst

Hey, guys.

Andrew J. Littlefair -- President and Chief Executive Officer

Hey.

Robert Vreeland -- Chief Financial Officer

Hey.

Jason Gabelman -- Cowen -- Analyst

I want to ask first on, I guess, this margin range that you've provided. Can you just help us understand what's kind of driving the potential for it to come in at the high end versus low end? Is it just RIN volatility? Is that kind of the main factor? And if so, what's the sensitivity there?

Robert Vreeland -- Chief Financial Officer

It's some of that, Jason, but it's not all banked on that. So it's also just in anticipation of volume rebounding from the pandemic. So I think Eric had a question too on that. But we all know there's varying stuff's going on. But frankly, we're not seeing anything like that right now impacting our volumes. So we still are anticipating that we're going to gradually recover. And so as we put on more fuel volume and we grow volumes, that really also is a driver to our margin per gallon. Along with the RINs that's helpful. But the LCFS has been -- is lower than when we started the year, right? So that hasn't necessarily been off the charts. It's still strong, and by no means, not good, but that's kind of off the RINs picked up. So there's always a little bit of this and that goes on, but then the fuel --

Andrew J. Littlefair -- President and Chief Executive Officer

And there's a little mix in there, too.

Robert Vreeland -- Chief Financial Officer

Yes, the increase of fuel volume with greater mix and looking at the Amazon fuelings, those types of volumes help in that absolutely because those are our core fuel volumes. So we see that increasing.

Jason Gabelman -- Cowen -- Analyst

Okay. Great. And then, I guess, just more broadly on the volume outlook, now that they've kind of rebounded 2019 levels. I think you're 2Q was flat with where 2Q '19 was. Can you give us a sense of the volume trajectory moving forward into next year? And if you expect kind of -- and within that, I guess, the RNG volume growth as well?

Robert Vreeland -- Chief Financial Officer

Yes. I think we -- I said at the beginning of the year that we kind of -- we've come out of Q4 at around a 12% kind of -- 12% year-over-year, 12% to 15% in volume growth. So I think that we'll get there with our Q4, Q3 will be not at that level, but it will rise and then Q4 will kind of be it maybe 12% to 15% above what it was a year ago. And then assuming there's no real setback from what's going on out there. We'll -- we should be in a solid double-digit volume growth, but that's -- we still want to see how all the various deals shake out before we give too much guidance toward the 2022 volume. But it should be north of 10% as we go into the... ]]

Jason Gabelman -- Cowen -- Analyst

Great. And then the last one just on the equity raise you did in the quarter. Did you consider other channels of financing? Why was, I guess, the equity more attractive than whatever other options that you could have pursued?

Andrew J. Littlefair -- President and Chief Executive Officer

Sure. Jason, we are always looking at different things, right? And in our history, we've done -- we've had convertible notes. And so we're always looking for what we think is the best. And we're not -- because we did this latest couple of rounds of equity, I mean, I don't think one should assume that, that's the only thing we're going to do. There's probably a time when some other debt on these projects and would make some sense. But we felt like with what was happening in the market at the time and the need for growth capital that it was prudent for us to put some on the balance sheet when we had a chance.

Jason Gabelman -- Cowen -- Analyst

All right. Great. Thanks, a lot. I appreciate the answers.

Operator

Our final question comes from the line of Todd Firestone with Evercore ISI. Please proceed with your question.

Todd Firestone -- Evercore ISI -- Analyst

Good afternoon. Thank you so much for taking my question. I had a couple of questions. One was, maybe I could come out of a little different angle. Are you able to disclose or have maybe an internal estimate of what one of the Amazon trucks would use annually on a gallon basis?

Andrew J. Littlefair -- President and Chief Executive Officer

I don't know that we've ever really said exactly. But look, it wouldn't be -- I'm not divulging any Amazon secret. When you look at kind of normal over-the-road trucks that kind of operate like Amazon. I think -- and I've been saying this for years, right? It's somewhere between kind of depending if they're regional or a little more super regional, they tend anywhere between 12,500 and 20,000 gallon right? So I mean, I think if you were to use a number in the 14,000, 15,000 gallon, that's sort of a good placeholder for an over-the-road trip, J.B. Hunt type truck, those kind of big over-the-road trucks in that neighborhood.

Todd Firestone -- Evercore ISI -- Analyst

Great. I appreciate that. Second question is just on the number of stations and the just logistics around that, and I apologize if you disclosed it on a prior call, but is there may be a hard or soft cost contingency built into building out these stations. So what I'm really trying to get at is, are you seeing trouble getting workers and crews to build these stations? And is there any reason to be concerned about that?

Andrew J. Littlefair -- President and Chief Executive Officer

Well, we've seen, like everybody else, we've seen some cost increases. I don't know that it's been -- I don't know that we've been faced with horror stories on that. But the concrete is up a little bit. Some of the -- our steel cylinders we have seen. Now we were lucky in that we kind of preordered some, and we were able to get some supply that will take us through. I think almost all of our first initial build for Amazon. But we always put a contingency on the construction here somewhere between 10% and a little bit more. So we'll probably eat up some of that, I would guess. But we haven't seen anything that's been completely off scale, I wouldn't say.

Robert Vreeland -- Chief Financial Officer

And I think labor-wise, we're active and station builds have been. Right? So we've been keeping a lot of people employed. And so that kind of remains the case on that front. We've got good contracts.

Andrew J. Littlefair -- President and Chief Executive Officer

We have good subs that have been continuing. Then through kind of thick and thin, they worked with us last year and this year. So we're not seeing -- we're not having to go out and hire dozens and dozens of new construction guys, which I think could be a little daunting. We have some pretty well squared away firms that have a long history with us.

Todd Firestone -- Evercore ISI -- Analyst

Great. I appreciate that color. So yes, that's all I had.

Andrew J. Littlefair -- President and Chief Executive Officer

Thanks, Todd.

Robert Vreeland -- Chief Financial Officer

Thanks, Todd.

Operator

We have reached the end of our question-and-answer session. I'd like to turn the floor back over to Mr. Littlefair for any closing remarks.

Andrew J. Littlefair -- President and Chief Executive Officer

Good. Well, thank you, operator, and thank you, everybody, for participating and listening in today, and we'll keep you posted as we go forward on RNG and our station build-out and growth plans. Talk to you next time. Thank you.

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Robert Vreeland -- Chief Financial Officer

Andrew J. Littlefair -- President and Chief Executive Officer

Eric Stine -- Craig-Hallum -- Analyst

Robert Brown -- Lake Street Capital Markets -- Analyst

Pavel Molchanov -- Raymond James -- Analyst

Manav Gupta -- Credit Suisse -- Analyst

Jason Gabelman -- Cowen -- Analyst

Todd Firestone -- Evercore ISI -- Analyst

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