What happened

Shares of Clean Energy Fuels (NASDAQ:CLNE), the largest provider of natural gas for transportation users in North America, are down 12.2% at 12:43 p.m. EDT on Aug. 9. The company reported second-quarter results yesterday after market close.

The company reported $72 million in revenue, up 3% from last year, and a GAAP (generally accepted accounting principles) net loss of $0.03 per share, an improvement from last year's $0.07-per-share loss.

Fuel dispensers at a Clean Energy Fuels station.

Image source: Clean Energy Fuels.

So what

On one hand, Clean Energy's top- and bottom-line results don't look impressive, and that's likely playing a big role in today's decline. But when we peel back the layers, the underlying results were actually pretty solid. On the revenue front, natural gas wholesale prices were significantly lower in the second quarter of 2019 (end of chart below) than in the second quarter of 2018 (beginning of chart below):

Henry Hub Natural Gas Spot Price Chart

Henry Hub Natural Gas Spot Price data by YCharts.

Why does that matter? In short, because lower natural gas prices mean less per-gallon revenue for Clean Energy but not lower profits. The company buys gas from producers and generally passes along that lower cost to its customers, while its margins, on a per-gallon basis, tend to stay relatively unchanged.

This is a key reason Clean Energy management highlights volume -- how many gallon-equivalents of natural gas it delivers -- as an important metric. And by that metric, last quarter looked a lot better, up 11.4% to 99.6 million gallon equivalents. This was also a 5% increase from Clean Energy's first quarter.

Now what

Despite delivering solid volume growth and cutting its GAAP losses, it looks as if Mr. Market continues to punish Clean Energy for its big-spending ways a few years back, when the company spent hundreds of millions of dollars to expand its public refueling stations. These big capital expenditures have saddled the company's income statement with big depreciation and amortization expense, and it's this line item that consistently keeps the company in the red. In the second quarter, the company took $12.6 million in depreciation and amortization expense.

The good news for investors is that this big expense is noncash, and those assets, management insists, will far outlive the depreciation schedule. Moreover, the company's cash flow statement continues to improve, and the second quarter's operations really provided a big boost. Halfway through 2019, the company has generated $8.8 million in positive operating cash, and its operations are now consistently in the black on a cash-flow basis.

Add it all up, and frankly, it looks as if the market's reaction today may not accurately reflect Clean Energy's solid operating results and double-digit volume growth. Moreover, there's a clear path to continue that growth, especially with sales of Redeem, the company's renewable natural gas brand, as more transportation fleet operators prioritize low-carbon fuel sources to reduce their environmental impact.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.