It's another up-and-down day in the alternative energy sector today, with shares of Clean Energy Fuels (NASDAQ:CLNE) and Plug Power (NASDAQ:PLUG) notching strong early gains of 9.5% and 10.2%, while Plug rival Bloom Energy (NYSE:BE) took a bit of a nosedive, falling 4.3% through 1:45 p.m. EDT.
Those divergent courses didn't happen by accident.
Last night after close of trading on the Nasdaq, natural gas fuel provider Clean Energy Fuels reported earnings largely in line with analyst expectations.
Sales, expected to come in at $59.8 million, edged out those expectations at $59.9 million. And Clean Energy's loss, which analysts had predicted would be $0.03 per share, hit that number on the nose.
Clean Energy CEO Andrew Littlefair noted that the results actually surprised Clean Energy itself, coming in "better than expected given the COVID-19 circumstances." With fewer people on the road in the second quarter, fuel deliveries sank 10% year over year, and revenue declined 17%. Luckily, however, product cost also declined -- 18% -- and Clean Energy's service cost tumbled 27%, helping the company to avoid a higher loss, which held steady year over year at $0.03 per diluted share. That helped to lift Clean Energy's stock price in today's trading -- still up a solid 4.4% at 1:45 p.m.
Now let's turn to the fuel cell companies, Plug Power and Bloom Energy, and see why their fates are diverging. On the one hand we have Plug, still coasting higher (up 3.2% at last report) on the back of a bullish earnings report yesterday morning, which showed Plug cutting its losses and promising 55% billings growth in the third quarter of 2020.
On the other hand we have Bloom Energy. The day's big alternative-energy stock laggard, Bloom announced last night that it is going to take out $200 million in new debt in the form of 2.50% green convertible senior notes due 2025.
This is good news for Bloom because, suffice it to say, 2.5% is not a lot of interest to be paying for a loan of this size. But the fact that Bloom felt compelled to add to its debt load highlights the fact that, after generating strong free cash flow in early 2019, Bloom has since turned around to produce three straight quarters of negative free cash flow (according to data from S&P Global Market Intelligence).
Companies that can't generate cash on their own are of course compelled to find that cash elsewhere. While it's good to see that Bloom succeeded in doing that when it needed to, the fact that it needed to pile on more debt because its cash-generating machine froze up doesn't seem like good news at all.