Timing Impacted Clean Energy Fuels Corp.'s Q4 Results

Clean Energy Fuels (CLNE 8.17%) went up against a very tough comparable quarter, which made its fourth-quarter results appear worse than they were. One of the issues related to the timing of when it recognized a tax credit. It was one of several differences between the two periods, which masked the continued improvement in the company's volumes and the progress of its streamlining plan.

Clean Energy Fuels Corp. results: The raw numbers

Data source: Clean Energy Fuels Corp.

Image source: Getty Images.

What happened with Clean Energy Fuels Corp. this quarter? 

It was a messy quarter, to say the least.

• Revenue dropped by double digits versus the year-ago period due to two factors. First, the company didn't recognize revenue from the federal advanced fuel tax credit (AFTC), which it won't record until this year. In addition, it realized a lower effective price per gallon. That's mainly because the company sold certain assets of its renewable natural gas business to BP earlier in the year, which resulted in less money earned from the sale of tradable credits for renewable fuels. 
• Full-year revenue, meanwhile, declined 15.2% to $341.6 million due to those two factors as well as lower construction and compressor revenue.
• Gallons delivered, on the other hand, continued growing even though it closed several underperforming stations this year. For the year, the company delivered 351.4 million gallons, up 6.8% from 2016.
• While net loss deepened, the drop in revenue only told part of the story. In the year-ago quarter, the company benefited from a $9 million gain from the repurchase of debt, $7 million in revenue from the AFTC credit, and $9.8 million more revenue from the sales of tradable renewable credits. It also recorded another loss of $6.5 million last quarter after combining its compressor business with Landi Renzo's SAFE subsidiary, leaving Clean Energy Fuels with a 49% stake in the combined entity. On top of that, it recorded a $7 million charge after having some credits invalidated.
• For the full year, its net loss totaled $79.2 million, an increase from $12.2 million in 2016 due to many of those same factors. 

What management had to say 

CEO Andrew Littlefair, commenting on the company's results, said:

We had a very productive fourth quarter as we completed a variety of actions addressing underperforming stations and putting in place further cost reductions as well as completing the combination of our compressor business with Landi Renzo's SAFE.

Last quarter was an important one from a strategic standpoint for Clean Energy Fuels. It quickly moved forward with the plan it outlined in the third quarter to streamline operations. This strategy, which included closing 42 underperforming and unprofitable stores as well as making progress on its aim to reduce selling, general, and administrative expenses by $15 million, managed to cut that number by $5 million last quarter. Furthermore, the company found a partner to take over its compressor business and drive it to the next level.

Looking forward 

Littlefair also pointed to what lies ahead.

We believe we are well positioned for 2018 with these actions in place, as well as AFTC revenue for 2017 fuel sales, all of which we will recognize this year. We also see continued volume growth, driven by increased acceptance of our environmentally friendly, cost-effective and proven alternative fuel solutions.

As the CEO noted, last year's headwinds should shift into tailwinds in 2018. Not only will the company be able to recognize all its AFTC revenue this year, but it should benefit from the streamlining plan it put into action last quarter. That said, Clean Energy Fuels still expects to lose $20 million to $25 million this year, though that would be an improvement of more than $50 million from 2017.