What happened

Shares of Clean Energy Fuels Corp (NASDAQ:CLNE) are up 9% just before market close on Nov. 8 after they cooled off a bit from earlier trading when they were up more than 10%. Today's big surge is due to the market's reaction to its third-quarter financial and operating results, which it reported after market close on Nov. 7. 

So what

On one hand, there's the company's "performance" against Wall Street analyst estimates. Wall Street guessed about right, with Clean Energy's $77.3 million in sales and adjusted loss of $0.05 per share matching estimates

On the other hand, at this stage of the story, revenue and GAAP earnings don't really tell the full story. It looks like, to some extent, Wall Street is starting to understand that -- at least for one quarter. More important metrics to follow? Volume and cash flows. 

Five fuel pump nozzles in different colors.

Image source: Getty Images.

First, let's look at volume. Clean Energy's main business is supplying natural gas for transportation customers at its refueling stations and at customer-owned stations it supplies and maintains. Last quarter, transportation-related volumes -- adjusted for volumes related to an asset sale last year -- increased 4%. That's not a big number, but it's a positive result that shows a continued interest in natural gas from commercial- and heavy-transit-vehicle users. 

Next up, cash flows. For a number of years, Clean Energy struggled under a massive amount of debt it took on in a poorly timed attempt to build a nationwide network of refueling stations. Over the past two years, the company has significantly cut its operating expenses and also paid down a substantial portion of its debt. The result to date is a company that now generates positive operating cash flows. 

In the third quarter, Clean Energy generated $6 million in operating cash flow, putting it at positive $29 million through three-quarters of the year. For context, the company had consumed $5 million in operating cash at the same point in 2017.

There's even more good news on the cash flow and operating cost front. After the end of the quarter, the company paid off $110 million in debt with cash, which will reduce its pre-tax cash interest expense by $5.8 million on a yearly basis. 

Now what

While plenty of investors aren't pleased with Clean Energy's slow volume growth in recent quarters, management's actions over the past couple of years to deleverage the balance sheet and improve the operating cost structure are paying off. The company now is able to operate from within its own cash flows, and as of October 1, it carried almost $150 million in cash and only $100 million in long-term debt (due in $50 million tranches in 2019 and 2020). 

There are some catalysts at play. The company recently expanded its partnership with BP as the exclusive supplier of renewable natural gas (RNG) that the company markets for transportation, increasing both the amount of supply and the length of the partnership, something Senior V.P of Strategic Development Clay Corbus said was important for many of its current and future RNG customers. 

The bigger news was the launch of the "Zero Now" financing program for heavy-duty trucks, funded by energy giant Total, which became Clean Energy's biggest shareholder earlier this year. The new program, which is expected to deliver 2,500 new heavy-duty natural gas trucks, was launched late in the third quarter and generated substantial interest and multiple orders. 

Unfortunately, the nature of heavy-duty truck orders -- which can easily take several months to move from order to delivery -- means that the company won't see meaningful results until the fourth quarter at the soonest, and non-disclosure agreements with customers prevented Clean Energy management from giving any details. 

The good news for Clean Energy investors today is the company is solidly cash flow positive and its debt-reduction actions will deliver even more positive cash flows. This leaves the company with far more freedom to invest in growth without the Sword of Damocles it previously faced that was its cash burn. 

With a strong balance sheet, continued operating improvements, and potential catalysts for growth, Clean Energy looks like it's finally headed in the right direction.

Jason Hall owns shares of Clean Energy Fuels. The Motley Fool owns shares of and recommends Clean Energy Fuels. The Motley Fool has a disclosure policy.