Clean Energy Fuels Corp

Previous wording

This MD&A and the other disclosures in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements other than historical facts. These statements relate to future events or circumstances or our future performance, and they are based on our current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “if,” “may,” “might,” “shall,” “will,” “can,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “goal,” “objective,” “initiative,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “forecast,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements we make in this discussion include statements about, among other things, our future financial and operating performance, our growth strategies, including expectations regarding our delivery and sales of RNG (defined below) and Environmental Credits (each as defined below), and anticipated trends in our industry and our business.

Current wording

This MD&A and the other disclosures in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements other than historical facts. These statements relate to future events or circumstances or our future performance, and they are based on our current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “if,” “may,” “might,” “shall,” “will,” “can,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “goal,” “objective,” “initiative,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “forecast,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements we make in this discussion include statements about, among other things, our future financial and operating performance, our growth strategies and operational plans, including expectations regarding our delivery and sales of RNG and Environmental Credits (each as defined below), and anticipated trends in our industry and our business.

Previous wording

produced by the breakdown of organic waste, we help thousands of vehicles, from airport shuttles to city buses to waste and heavy-duty trucks, reduce their amount of climate-harming greenhouse gases (“GHG”) from 60% to over 400% based on determinations by the California Air Resources Board (“CARB”), depending on the source of the RNG, while also reducing criteria pollutants such as Nitrogen Oxides, or NOx. RNG is either delivered as compressed natural gas (“CNG”) or liquefied natural gas (“LNG”).

Current wording

We are North America’s leading provider of the cleanest fuel for the transportation market, based on the number of stations operated and the amount of gasoline gallon equivalents (“GGEs”) of renewable natural gas (“RNG”) and conventional natural gas sold. We calculate one GGE to equal 125,000 British Thermal Units (“BTUs”) and, as such, one million BTUs (“MMBTU”) equals eight GGEs. Through our sales of RNG, which is derived from biogenic methane produced by the breakdown of organic waste, we help thousands of vehicles, from airport shuttles to city buses to waste and heavy-duty trucks, reduce their amount of climate-harming greenhouse gases (“GHG”) from 60% to over 400% based on determinations by the California Air Resources Board (“CARB”), depending on the source of the RNG, while also reducing criteria pollutants such as Nitrogen Oxides, or NOx. RNG is either delivered as compressed natural gas (“CNG”) or liquefied natural gas (“LNG”).

Previous wording

At present, we see the best use of RNG as a replacement for fossil-based fuel in the transportation sector. We believe the most attractive market for RNG is U.S. heavy-duty Class 8 trucking and, based on information from the American Trucking Association and our own internal estimates, we believe there are approximately 4.1 million Class 8 heavy-duty trucks operating in the U.S. that use over 40 billion gallons of fuel per year. As of June 30, 2024, we deliver RNG to the transportation market through 584 fueling stations we own, operate or supply in 43 states and the District of Columbia in the U.S., including over 200 stations in California. We also own, operate, or supply 24 fueling stations in Canada as of June 30, 2024.

Current wording

At present, we see the best use of RNG as a replacement for fossil-based fuel in the transportation sector. We believe the most attractive market for RNG is U.S. heavy-duty Class 8 trucking and, based on information from the American Trucking Association and our own internal estimates, we believe there are approximately 4.1 million Class 8 heavy-duty trucks operating in the U.S. that use over 40 billion gallons of fuel per year. As of September 30, 2024, we deliver RNG to the transportation market through 583 fueling stations we own, operate or supply in 43 states and the District of Columbia in the U.S., including over 200 stations in California. We also own, operate, or supply 24 fueling stations in Canada as of September 30, 2024.

Previous wording

In evaluating our operating performance, we focus primarily on: (1) the amount of total fuel volume we sell to our customers with particular focus on RNG volume as a subset of total fuel volume, (2) O&M services volume dispensed at facilities we do not own but where we provide O&M services on a per-gallon or fixed fee basis, (3) our station construction cost of sales, and (4) net income (loss) attributable to us. The following tables present our key operating data for the years ended December 31, 2021, 2022 and 2023 and for the three and six months ended June 30, 2023 and 2024. Certain gallons are included in both fuel and service volumes when the Company sells fuel (product revenue) to a customer and provides maintenance services (service revenue) to the same customer.

Current wording

In evaluating our operating performance, we focus primarily on: (1) the amount of total fuel volume we sell to our customers with particular focus on RNG volume as a subset of total fuel volume, (2) O&M services volume dispensed at facilities we do not own but where we provide O&M services on a per-gallon or fixed fee basis, (3) our station construction cost of sales, and (4) net income (loss) attributable to us. The following tables present our key operating data for the years ended December 31, 2021, 2022 and 2023 and for the three and nine months ended September 30, 2023 and 2024. Certain gallons are included in both fuel and service volumes when the Company sells fuel (product revenue) to a customer and provides maintenance services (service revenue) to the same customer.

Previous wording

*Joint Development Agreement with Maas Energy Works, LLC.*In May 2024, we entered into a joint development agreement (the “Maas JDA”) with Maas Energy Works, LLC (“Maas”) that granted us exclusive rights to acquire, fund and participate in the development of certain ADG RNG production projects at dairy farms. Pursuant to the Maas JDA, we have the option to exercise our exclusive development rights with respect to these projects subject to our due diligence. Any RNG produced from the ADG RNG project(s) will be available to us for sale as vehicle fuel.

Current wording

*Joint Development Agreement with Maas Energy Works, LLC.*In May 2024, we entered into a joint development agreement (the “Maas JDA”) with Maas Energy Works, LLC (“Maas”) that granted us exclusive rights to acquire, fund and participate in the development of certain ADG RNG production projects at dairy farms. Pursuant to the Maas JDA, we have the option to exercise our exclusive development rights with respect to these projects subject to our due diligence. We will record all the associated income/loss in earnings until a certain rate of return is achieved and then receive 49% of the income/loss in earnings with Maas receiving 51%. We contemplate investing up to $132.0 million of equity capital in production projects in connection with the Maas joint development. RNG produced from the ADG RNG project(s) will be available to us for sale as vehicle fuel. As of September 30, 2024, the Company has invested $4.1 million to the Project LLC. Subsequent to September 30, 2024, the Project LLC issued a Capital Call in the amount of $29.6 million, which was contributed by the Company in October 2024.

Previous wording

North American Inc. (the “bpJV”) filed for Chapter 11 bankruptcy protection in the Bankruptcy Court for the District of Idaho. The bpJV is party to contracts with the dairy farm partner to lease land and to receive manure feedstock for the ADG RNG production facility currently in construction. The Company is gathering facts, closely monitoring the bankruptcy proceedings, and assessing possible future developments and alternatives. At present, substantial uncertainty exists and a wide range of potential outcomes are possible, from continuing to construct and operate the project as contemplated prior to the bankruptcy proceedings to taking a loss of a substantial part of our investment due to the outcome of the proceedings. In light of this situation, the bpJV has taken steps to vigorously protect its interests in connection with the bankruptcy proceedings and is considering adjusting its capital expenditure schedule for the project, delaying certain expenditures to the extent permitted by the applicable contracts, until more clarity develops.

Current wording

East Valley Dairy Farm Bankruptcy. In April 2024, the dairy farm partner to an ADG RNG production project located in East Valley, Idaho that is currently under construction by the 50-50 joint venture between us and BP Products North America Inc. (the “bpJV”) filed for Chapter 11 bankruptcy protection in the Bankruptcy Court for the District of Idaho (the “Bankruptcy Court”). The bpJV is party to contracts with the dairy farm partner to lease land and to receive manure feedstock for the ADG RNG production facility currently in construction. The Company is gathering facts, closely monitoring the bankruptcy proceedings, and assessing possible future developments and alternatives.

Previous wording

The market for our vehicle fuels is a relatively new and developing market, and has experienced slow, volatile or unpredictable growth in many sectors. For example, to date, adoption and deployment of natural gas vehicles, both in general and in certain of our key customer markets, including heavy-duty trucking, have been slower than we anticipated. Slower growth may occur due to unfavorable macroeconomic events such as inflationary pressures, lingering or reoccurring pandemic effects, supply chain challenges, government regulations related to other alternative fuels or products, or other events.

Current wording

general and in certain of our key customer markets, including heavy-duty trucking, have been slower than we anticipated. Slower growth may occur due to unfavorable macroeconomic events such as inflationary pressures, lingering or reoccurring pandemic effects, supply chain challenges, government regulations related to other alternative fuels or products, or other events.

Previous wording

Our risk management activities are discussed in the MD&A contained in our 2023 Form 10-K. During the six months ended June 30, 2024, there were no material changes to these activities.

Current wording

Our risk management activities are discussed in the MD&A contained in our 2023 Form 10-K. During the nine months ended September 30, 2024, there were no material changes to these activities.

Previous wording

The qualitative goodwill assessment includes the potential effect on a reporting unit’s fair value of certain events and circumstances, including its enterprise value, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity-specific events. If it is determined, based upon the qualitative assessment, that it is more likely than not that the reporting unit’s fair value is less than its carrying amount, then a quantitative impairment test is performed. Alternatively, we may bypass the qualitative assessment for a reporting unit and directly perform the quantitative goodwill impairment test.

Current wording

The qualitative goodwill assessment includes the potential effect on a reporting unit’s fair value of certain events and circumstances, including its enterprise value, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity-specific events. If it is determined, based upon the qualitative assessment, that it is more likely than not that the reporting unit’s fair value is less than its carrying amount, then a quantitative impairment test is

Previous wording

Due to a decline in the market price of our common stock subsequent to December 31, 2023, we performed an interim quantitative goodwill impairment test as of June 30, 2024 for our single reporting unit as described above, which resulted in a fair value, based on its market value of invested capital plus a market participant acquisition premium, that exceeded carrying value by 6% or $59.4 million. Although, subsequent to June 30, 2024, there have been further declines in the market price of our common stock and in our market capitalization, we have not deemed that such declines will be sustained nor have we identified other events or circumstances that would more likely than not reduce the fair value of our reporting unit to below its carrying value on a sustained basis. As such, we believe the reporting unit’s goodwill as of June 30, 2024 was not impaired. It is possible that our goodwill could become impaired if we determine in a subsequent period that the fair value of our reporting unit was less than its carrying amount on a sustained basis, which could result in a material charge and adversely affect our results of operations.

Current wording

Due to a decline in the market price of our common stock subsequent to December 31, 2023, we performed an interim quantitative goodwill impairment test as of September 30, 2024 for our single reporting unit as described above, which resulted in a fair value, based on its market value of invested capital plus a market participant acquisition premium, that exceeded carrying value by 17% or $179.8 million. Although, subsequent to September 30, 2024, there have been further declines in the market price of our common stock and in our market capitalization, we have not deemed that such declines will be sustained nor have we identified other events or circumstances that would more likely than not reduce the fair value of our reporting unit to below its carrying value on a sustained basis. As such, we believe the reporting unit’s goodwill as of September 30, 2024 was not impaired. It is possible that our goodwill could become impaired if we determine in a subsequent period that the fair value of our reporting unit was less than its carrying amount on a sustained basis, which could result in a material charge and adversely affect our results of operations.

Previous wording

We review the carrying value of our long-lived assets, including property and equipment and intangible assets with finite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Events that could result in an impairment review include, among others, a significant decrease in the operating performance of a long-lived asset or asset group or the decision to close a fueling station. Impairment testing involves a comparison of the sum of the undiscounted future cash flows of the asset or asset group to its carrying amount. If the sum of the undiscounted future cash flows exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the sum of the undiscounted future cash flows, then a second step is performed to determine the amount of impairment, if any, to be recognized. An impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. The fair value of the asset or asset group is based on estimated discounted future cash flows of the asset or asset group using a discount rate commensurate with the related risk. The estimate of future cash flows requires management to make assumptions and to apply judgment, including forecasting future sales and expenses and estimating useful lives of the assets. These estimates can be affected by a number

Current wording

We review the carrying value of our long-lived assets, including property and equipment and intangible assets with finite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Events that could result in an impairment review include, among others, a significant decrease in the operating performance of a long-lived asset or asset group or the decision to close a fueling station. Impairment testing involves a comparison of the sum of the undiscounted future cash flows of the asset or asset group to its carrying amount. If the sum of the undiscounted future cash flows exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the sum of the undiscounted future cash flows, then a second step is performed to determine the amount of impairment, if any, to be recognized. An impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. The fair value of the asset or asset group is based on estimated discounted future cash flows of the asset or asset group using a discount rate commensurate with the related risk. The estimate of future cash flows requires management to make assumptions and to apply judgment, including forecasting future sales and expenses and estimating useful lives of the assets. These estimates can be affected by a number of factors, including, among others, future results, demand and economic conditions, many of which can be difficult to predict.

Previous wording

Product revenue. Product revenue for the three months ended June 30, 2024 increased by $7.4 million to $83.0 million, representing 84.7% of total revenue, compared to $75.6 million, representing 83.5% of total revenue, for the three months ended June 30, 2023. The increase was primarily due to (1) increased volumes of vehicle fueling at our stations and increased bulk fuel sales into the marine sector, with partial offsets due to lower underlying natural gas commodity costs, lower volumes of RNG fuel sold outside our station network in the second quarter of 2024, and an increase of $0.2 million in non-cash stock-based sales incentive contra-revenue charges relating to the Amazon Warrant driven by higher customer fuel purchases, resulting in a $4.1 million net increase in fuel sales from the prior year period. Additionally, (2) an increase in RIN revenue of $4.1 million principally attributable to higher average RIN prices, (3) an increase in LCFS revenue of $2.0 million primarily due to greater number of LCFS credits being transacted in the second quarter of 2024 combined with a greater mix of low carbon intensity RNG from dairies, partially offset by lower LCFS credit prices in the second quarter of 2024, and (4) an increase in AFTC revenue of $0.9 million in part due to higher bulk fuel sales into the

Current wording

Product revenue. Product revenue for the three months ended September 30, 2024 increased by $8.6 million to $89.9 million, representing 85.7% of total revenue, compared to $81.3 million, representing 85.0% of total revenue, for the three months ended September 30, 2023. The increase was primarily due to (1) increased bulk fuel sales into the marine sector, increased volumes of vehicle fueling at our stations, and a decrease of $1.0 million in non-cash stock-based sales incentive contra-revenue charges relating to the Amazon Warrant Asset that was fully amortized by the end of 2023, resulting in a $4.1 million net increase in fuel sales from the prior year period. In addition, (2) an increase in RIN revenue of $4.3 million principally attributable to higher share of RIN values in the third quarter of 2024 when compared to that in the same period of 2023, (3) an increase in AFTC revenue of $1.0 million in part due to higher bulk fuel sales into the marine sector, and (4) an increase in station construction sales of $0.1 million due to increased construction activities , all contributed to the increase in product revenue in the third quarter of 2024 when compared to the same period in 2023. The increase in product revenue between periods was partially offset by (1) a decrease in LCFS revenue of $0.9 million primarily due to lower LCFS credit prices in the third quarter of 2024.

Previous wording

Service revenue. Service revenue for the six months ended June 30, 2024 increased $2.0 million to $29.3 million, representing 14.5% of total revenue, compared to $27.3 million, representing 12.3% of total revenue, for the six months ended June 30, 2023. The increase was primarily due to an increase in GGEs serviced.

Current wording

Service revenue. Service revenue for the three months ended September 30, 2024 increased $0.7 million to $15.0 million, representing 14.3% of total revenue, compared to $14.3 million, representing 15.0% of total revenue, for the three months ended September 30, 2023. The increase was primarily due to additional work performed at private stations.

Previous wording

Product cost of sales. Product cost of sales for the three months ended June 30, 2024 decreased by $1.7 million to $53.9 million, representing 55.0% of total revenue, from $55.6 million, representing 61.4% of total revenue, in the three months ended June 30, 2023. The decrease was primarily due to lower GGEs of fuel sold and a $0.1 million decrease in station construction costs.

Current wording

Product cost of sales. Product cost of sales for the three months ended September 30, 2024 decreased by $1.5 million to $63.9 million, representing 60.9% of total revenue, from $65.4 million, representing 68.5% of total revenue, in

Previous wording

Service cost of sales. Service cost of sales for the six months ended June 30, 2024 increased by $3.0 million to $19.2 million, representing 9.5% of total revenue, compared with $16.2 million or 7.3% of total revenue in the six months ended June 30, 2023. The increase was primarily due to an increase in GGEs serviced.

Current wording

Service cost of sales. Service cost of sales for the three months ended September 30, 2024 increased by $0.3 million to $9.3 million, representing 8.9% of total revenue, compared with $9.0 million or 9.4% of total revenue in the three months ended September 30, 2023. The increase was primarily due to the additional work performed at private stations.

Previous wording

Selling, general and administrative. Selling, general and administrative expenses decreased by $0.2 million to $28.3 million in the three months ended June 30, 2024, from $28.5 million in the three months ended June 30, 2023. The decrease was primarily driven by a $3.2 million decrease in stock-based compensation expense due to vesting of equity awards granted in prior years, partially offset by a $1.4 million increase in salaries and benefits due to higher headcount and a $1.6 million increase in general business, selling and administrative expenses.

Current wording

Selling, general and administrative. Selling, general and administrative expenses decreased by $0.2 million to $28.9 million in the three months ended September 30, 2024, from $29.1 million in the three months ended September 30, 2023. The decrease was primarily driven by a $3.2 million decrease in stock-based compensation expense due to vesting of equity awards granted in prior years, partially offset by a $3.0 million increase in general business, selling and administrative expenses.

Previous wording

Depreciation and amortization. Depreciation and amortization increased by $0.4 million to $11.3 million in the three months ended June 30, 2024, from $10.9 million in the three months ended June 30, 2023. The increase was primarily due to higher amount of depreciable assets.

Current wording

Depreciation and amortization. Depreciation and amortization decreased by $2.0 million to $11.4 million in the three months ended September 30, 2024, from $13.4 million in the three months ended September 30, 2023. The decrease was primarily due to more assets being fully depreciated partially offset by higher amount of depreciable assets.

Previous wording

Interest expense. Interest expense increased by $3.5 million to $7.9 million in the three months ended June 30, 2024, from $4.4 million in the three months ended June 30, 2023, primarily due to (1) higher outstanding indebtedness and (2) higher amortization of debt discount and issuance costs.

Current wording

Interest expense. Interest expense increased by $4.5 million to $8.4 million in the three months ended September 30, 2024, from $3.9 million in the three months ended September 30, 2023, primarily due to (1) a $3.7 increase due to higher outstanding indebtedness and (2) a 0.8 increase due to higher amortization of debt discount and issuance costs.

Previous wording

Interest income. Interest income increased by $0.8 million to $3.6 million in the three months ended June 30, 2024, from $2.8 million in the three months ended June 30, 2023, primarily due to higher average interest rates of the Company’s short-term investments and loan receivables.

Current wording

Interest income. Interest income increased by $1.0 million to $3.6 million in the three months ended September 30, 2024, from $2.6 million in the three months ended September 30, 2023, primarily due to higher average interest rates of the Company’s short-term investments and loan receivables.

Previous wording

Loss from equity method investments. Loss from equity method investments increased by $3.9 million to $5.8 million in the three months ended June 30, 2024, from $1.9 million in the three months ended June 30, 2023, due to the operating results of SAFE&CEC S.r.l., Rimere, and our joint venture(s) with TotalEnergies and bp.

Current wording

Loss from equity method investments. Loss from equity method investments increased by $1.7 million to $5.0 million in the three months ended September 30, 2024, from $3.3 million in the three months ended September 30, 2023, due to the operating results of SAFE&CEC S.r.l., Rimere, and our joint venture(s) with TotalEnergies and bp.

Previous wording

Income tax (expense) benefit. Income tax benefit was $0.1 million for the three months ended June 30, 2023. We recognized an income tax expense of $0.8 million for the three months ended June 30, 2024. Income tax expense and/or benefit is primarily related to deferred taxes associated with goodwill and the Company’s expected state tax expense.

Current wording

*Income tax (expense) benefit.*Income tax benefit was $0.1 million for the three months ended September 30, 2023. We recognized an income tax expense of $0.1 million for the three months ended September 30, 2024. Income tax expense and/or benefit is primarily related to deferred taxes associated with goodwill and the Company’s expected state tax expense.

Previous wording

*Loss attributable to noncontrolling interest.*During each of the three months ended June 30, 2023 and 2024, we recorded a gain of $0.2 million for the noncontrolling interest in the net loss of NG Advantage, LLC (“NG Advantage”). The noncontrolling interest in NG Advantage represents a 6.7% minority interest that was held by third parties during both the 2023 and 2024 periods.

Current wording

*Loss attributable to noncontrolling interest.*During the three months ended September 30, 2023 and 2024, we recorded a gain of $0.1 million and $0.1 million, respectively, for the noncontrolling interest in the net loss of NG Advantage, LLC (“NG Advantage”). The noncontrolling interest in NG Advantage represents a 6.7% minority interest that was held by third parties during both the 2023 and 2024 periods.

Previous wording

*Product revenue.*Product revenue for the six months ended June 30, 2024 decreased by $23.0 million to $172.4 million, representing 85.5% of total revenue, compared to $195.4 million, representing 87.7% of total revenue, for the six months ended June 30, 2023. The decrease was primarily due to (1) lower average prices on fuel sold driven by a decrease in the prices of natural gas, partially offset by an increase in total GGEs of fuel sold and a decrease of $0.7 million in non-cash stock-based sales incentive contra-revenue charges relating to the Amazon Warrant due to zero amortization relating to customer incentive asset in the six months ended June 30, 2024 partially offset by higher customer fuel purchases, resulting in a $34.6 million net decrease in fuel sales from the prior year period. In addition, (2) a decrease in LCFS revenue of $0.5 million primarily resulting from lower average LCFS prices also contributed to the decrease in product revenue for the six months ended June 30, 2024 when compared to the same period in 2023. The decrease in product revenue between periods was partially offset by (1) an increase in RIN revenue of $8.4 million principally attributable to higher average RIN prices, (2) an increase in AFTC revenue of $1.8 million primarily due to higher fuel volumes in the six months ended June 30, 2024 when compared to the same period in the prior year, (3) a change in fair value of our commodity swap and customer contracts entered into in connection with our truck financing program, as we recognized an unrealized gain of $1.7 million in the six months ended June 30, 2024 compared to an unrealized gain of $1.1 million in the same period of 2023, and (4) an increase in station construction sales of $1.3 million due to increased construction activities.

Current wording

*Product revenue.*Product revenue for the nine months ended September 30, 2024 decreased by $14.4 million to $262.3 million, representing 85.6% of total revenue, compared to $276.7 million, representing 86.9% of total revenue, for the nine months ended September 30, 2023. The decrease was primarily due to lower average prices on fuel sold driven by a decrease in the prices of natural gas, partially offset by an increase in total GGEs of fuel sold and a decrease of $1.8 million in non-cash stock-based sales incentive contra-revenue charges relating to the Amazon Warrant due to zero amortization relating to customer incentive asset in the nine months ended September 30, 2024 partially offset by higher customer fuel purchases, resulting in a $30.5 million net decrease in fuel sales from the prior year period. In addition, a decrease in LCFS revenue of $1.5 million primarily resulting from lower average LCFS prices also contributed to the decrease in product revenue for the nine months ended September 30, 2024 when compared to the same period in 2023. The decrease in product revenue between periods was partially offset by (1) an increase in RIN revenue of $12.7 million principally attributable to higher share and average RIN prices, (2) an increase in AFTC revenue of $2.8 million primarily due to higher fuel volumes in the nine months ended September 30, 2024 when compared to the same period in the prior year, (3) a change in fair value of our commodity swap and customer contracts entered into in connection with our truck financing program, as we recognized an unrealized gain of $0.3 million in the nine months ended September 30, 2024 compared to an unrealized loss of $0.3 million in the same period of 2023, and (4) an increase in station construction sales of $1.5 million due to increased construction activities.

Previous wording

Service revenue. Service revenue for the three months ended June 30, 2024 increased $0.1 million to $15.0 million, representing 15.3% of total revenue, compared to $14.9 million, representing 16.5% of total revenue, for the three months ended June 30, 2023. The increase was primarily due to an increase in GGEs serviced.

Current wording

Service revenue. Service revenue for the nine months ended September 30, 2024 increased $2.6 million to $44.2 million, representing 14.4% of total revenue, compared to $41.6 million, representing 13.1% of total revenue, for the nine months ended September 30, 2023. The increase was primarily due to an increase in GGEs serviced.

Previous wording

Product cost of sales. Product cost of sales for the six months ended June 30, 2024 decreased by $54.9 million to $120.3 million, representing 59.7% of total revenue, from $175.2 million, representing 78.7% of total revenue, in the six months ended June 30, 2023. The decrease was primarily due to lower average prices of natural gas in the six months ended June 30, 2024 when compared to those in the same period in the prior year. In 2023, there was a significant rise in the cost of natural gas in California during January and February. The effects of lower natural gas prices in the six months

Current wording

Product cost of sales. Product cost of sales for the nine months ended September 30, 2024 decreased by $56.5 million to $184.2 million, representing 60.1% of total revenue, from $240.7 million, representing 75.6% of total revenue, in the nine months ended September 30, 2023. The decrease was primarily due to lower average prices of natural gas in the nine months ended September 30, 2024 when compared to those in the same period in the prior year. In 2023, there was a significant rise in the cost of natural gas in California during January and February. The effects of lower natural gas

Previous wording

ended June 30, 2024 were partially offset by an increase in GGEs of fuel sold and a $1.6 million increase in station construction costs.

Current wording

prices in the nine months ended September 30, 2024 were partially offset by an increase in GGEs of fuel sold and a $2.4 million increase in station construction costs.

Previous wording

Service cost of sales. Service cost of sales for the three months ended June 30, 2024 increased by $1.4 million to $10.0 million, representing 10.2% of total revenue, compared with $8.6 million or 9.5% of total revenue in the three months ended June 30, 2023. The increase was primarily due to an increase in GGEs serviced.

Current wording

Service cost of sales. Service cost of sales for the nine months ended September 30, 2024 increased by $3.3 million to $28.5 million, representing 9.3% of total revenue, compared with $25.2 million or 7.9% of total revenue in the nine months ended September 30, 2023. The increase was primarily due to an increase in GGEs serviced.

Previous wording

Selling, general and administrative. Selling, general and administrative expenses decreased by $3.6 million to $54.6 million in the six months ended June 30, 2024, from $58.2 million in the six months ended June 30, 2023. The decrease was primarily driven by a $6.7 million decrease in stock-based compensation expense due to vesting of equity awards granted in prior years, partially offset by a $2.0 million increase in salaries and benefits due to higher headcount and a $1.1 million increase in general business, selling and administrative expenses.

Current wording

Selling, general and administrative. Selling, general and administrative expenses decreased by $3.9 million to $83.4 million in the nine months ended September 30, 2024, from $87.3 million in the nine months ended September 30, 2023. The decrease was primarily driven by a $9.9 million decrease in stock-based compensation expense due to vesting of equity awards granted in prior years, partially offset by a $6.0 million increase in general business, selling and administrative expenses.

Previous wording

Depreciation and amortization. Depreciation and amortization increased by $0.8 million to $22.4 million in the six months ended June 30, 2024, from $21.6 million in the six months ended June 30, 2023. The increase was primarily due to higher amount of depreciable assets.

Current wording

Depreciation and amortization. Depreciation and amortization decreased by $1.2 million to $33.8 million in the nine months ended September 30, 2024, from $35.0 million in the nine months ended September 30, 2023. The decrease was primarily due to more assets being fully depreciated partially offset by higher amount of depreciable assets.

Previous wording

Interest expense. Interest expense increased by $7.0 million to $15.7 million in the six months ended June 30, 2024, from $8.7 million in the six months ended June 30, 2023, primarily due to (1) higher outstanding indebtedness and (2) higher amortization of debt discount and issuance costs.

Current wording

Interest expense. Interest expense increased by $11.4 million to $24.0 million in the nine months ended September 30, 2024, from $12.6 million in the nine months ended September 30, 2023, primarily due to (1) a $8.9 increase due to higher outstanding indebtedness and (2) a $2.5 increase due to higher amortization of debt discount and issuance costs.

Previous wording

Interest income. Interest income increased by $1.7 million to $7.2 million in the six months ended June 30, 2024, from $5.5 million in the six months ended June 30, 2023, primarily due to higher average interest rates of the Company’s short-term investments and loan receivables.

Current wording

Interest income. Interest income increased by $2.8 million to $10.8 million in the nine months ended September 30, 2024, from $8.0 million in the nine months ended September 30, 2023, primarily due to higher average interest rates of the Company’s short-term investments and loan receivables.

Previous wording

Loss from equity method investments. Loss from equity method investments increased by $7.4 million to $11.2 million in the six months ended June 30, 2024, from $3.8 million in the six months ended June 30, 2023, due to the operating results of SAFE&CEC S.r.l., Rimere, and our joint venture(s) with TotalEnergies and bp.

Current wording

Loss from equity method investments. Loss from equity method investments increased by $9.1 million to $16.2 million in the nine months ended September 30, 2024, from $7.1 million in the nine months ended September 30, 2023, due to the operating results of SAFE&CEC S.r.l., Rimere, and our joint venture(s) with TotalEnergies and bp.

Previous wording

Income tax (expense) benefit. Income tax benefit was $0.1 million for the six months ended June 30, 2023. We recognized an income tax expense of $0.6 million for the six months ended June 30, 2024. Income tax expense and/or benefit is primarily related to deferred taxes associated with goodwill and the Company’s expected state tax expense.

Current wording

*Income tax (expense) benefit.*Income tax benefit was $0.2 million for the nine months ended September 30, 2023. We recognized an income tax expense of $0.6 million for the nine months ended September 30, 2024. Income tax expense and/or benefit is primarily related to deferred taxes associated with goodwill and the Company’s expected state tax expense.

Previous wording

*Loss attributable to noncontrolling interest.*During each of the six months ended June 30, 2023 and 2024, we recorded a gain of $0.3 million for the noncontrolling interest in the net loss of NG Advantage. The noncontrolling interest in NG Advantage represents a 6.7% minority interest that was held by third parties during both the 2023 and 2024 periods.

Current wording

*Loss attributable to noncontrolling interest.*During the nine months ended September 30, 2023 and 2024, we recorded a gain of $0.5 million and $0.5 million, respectively, for the noncontrolling interest in the net loss of NG Advantage. The noncontrolling interest in NG Advantage represents a 6.7% minority interest that was held by third parties during both the 2023 and 2024 periods.

Previous wording

Liquidity is the ability to meet present and future financial obligations through operating cash flows, the sale or maturity of investments or the acquisition of additional funds through capital management. Our financial position and liquidity are, and will continue to be, influenced by a variety of factors, including the level of our outstanding indebtedness and the principal and interest we are obligated to pay on our indebtedness; the amount and timing of any capital calls related to the joint venture(s) with TotalEnergies and/or bp, or any other joint venture we may enter into in the future; the amount and timing of any additional debt or equity financing we may pursue; our capital expenditure requirements; any merger, divestiture or acquisition activity; and our ability to generate cash flows from our operations. We expect cash provided by our operating activities to fluctuate as a result of a number of factors, including our operating results and the factors that affect these results, including the amount and timing of our vehicle fuel sales, station construction sales, sales of RINs and LCFS Credits and recognition of government credits, grants and incentives, if any; fluctuations in commodity, station construction and labor costs; supply chain issues and unfavorable macroeconomic events, including inflationary pressures; environmental credit prices; variations in the fair value of certain of our derivative instruments that are recorded in revenue; and the amount and timing of our billing, collections and liability payments.

Current wording

Liquidity is the ability to meet present and future financial obligations through operating cash flows, the sale or maturity of investments or the acquisition of additional funds through capital management. Our financial position and liquidity are, and will continue to be, influenced by a variety of factors, including the level of our outstanding indebtedness and the principal and interest we are obligated to pay on our indebtedness; the amount and timing of any capital calls related to the joint venture(s) with TotalEnergies and/or bp, or any other joint venture we may enter into in the future; the amount and timing of any additional debt or equity financing we may pursue; our capital expenditure requirements; any merger, divestiture or acquisition activity; and our ability to generate cash flows from our operations. We expect cash provided by our operating activities to fluctuate as a result of a number of factors, including our operating results and the factors that affect these results, including the amount and timing of our vehicle fuel sales, station construction sales, sales of RINs and LCFS Credits and recognition of government credits, grants and incentives, if any; fluctuations in commodity, station construction and labor costs; supply chain issues and unfavorable macroeconomic events, including inflationary

Previous wording

Operating Activities. Cash provided by operating activities was $21.4 million in the six months ended June 30, 2024, compared to cash used in operating activities of $7.0 million in the comparable 2023 period. The increase in cash provided by operating activities was primarily attributable to higher contributions relating to the procurement and sales of natural gas in the six months ended June 30, 2024 when compared to the same period in 2023. Additionally, changes in working capital resulting from the timing of cash receipts, accruals, billings and payments of cash contributed to the increase in cash provided by operating activities in the six months ended June 30, 2024 when compared to the same period in 2023.

Current wording

Operating Activities. Cash provided by operating activities was $42.7 million in the nine months ended September 30, 2024, compared to cash provided by operating activities of $0.8 million in the comparable 2023 period. The increase in cash provided by operating activities was primarily attributable to higher contributions relating to the procurement and sales of natural gas in the nine months ended September 30, 2024 when compared to the same period in 2023. Additionally, changes in working capital resulting from the timing of cash receipts, accruals, billings and payments of cash contributed to the increase in cash provided by operating activities in the nine months ended September 30, 2024 when compared to the same period in 2023.

Previous wording

Investing Activities. Cash used in investing activities was $3.9 million in the six months ended June 30, 2024, compared to cash used in investing activities of $62.0 million in the comparable 2023 period. The decrease in cash used in investing activities was primarily attributable to a $31.3 million increase in net maturities of short-term investments in the six months ended June 30, 2024 when compared to the same period in 2023, a $20.1 million net decrease in capital expenditures on property and equipment and on RNG production projects, a $1.1 million decrease in net disbursements for loan receivables and advances, a $5.3 million decrease in investments in other entities, and a $0.3 million receipt from insurance claims.

Current wording

Investing Activities. Cash used in investing activities was $30.6 million in the nine months ended September 30, 2024, compared to cash used in investing activities of $96.7 million in the comparable 2023 period. The decrease in cash used in investing activities was primarily attributable to a $41.3 million increase in net maturities of short-term investments in the nine months ended September 30, 2024 when compared to the same period in 2023, a $22.7 million net decrease in capital expenditures on property and equipment and on RNG production projects, and a $2.2 million decrease in investments in other entities.

Previous wording

Financing Activities. Cash provided by financing activities was $0.9 million in the six months ended June 30, 2024, compared to $2.2 million used in financing activities in the comparable 2023 period. The increase in cash provided by financing activities was primarily attributable to higher cash receipts of incentive payments relating to our Adopt-a-Port program and lower cash payments of debt issuance fees relating to our debt instruments, partially offset by lower cash receipts from exercise of stock options.

Current wording

Financing Activities. Cash used in financing activities was $0.1 million in the nine months ended September 30, 2024, compared to cash used in financing activities of $3.0 million in the comparable 2023 period. The decrease in cash used in financing activities was primarily attributable to higher cash receipts of incentive payments relating to our Adopt-a-Port program and lower cash payments of debt issuance fees relating to our debt instruments, partially offset by lower cash receipts from exercise of stock options.

Previous wording

Our business plan calls for approximately $60.0 million in capital expenditures in 2024. These capital expenditures primarily relate to the construction of fueling stations, IT software and equipment and LNG plant costs, and we expect to fund these expenditures primarily through cash on hand and cash generated from operations. Further, in 2024, we anticipate deploying up to approximately $120.0 million to develop ADG RNG production facilities. As of June 30, 2024, we have invested $278.4 million in the development of ADG RNG production facilities, which includes $239.2 million contributed to our joint ventures.

Current wording

Our business plan calls for approximately $60.0 million in capital expenditures in 2024. These capital expenditures primarily relate to the construction of fueling stations, IT software and equipment and LNG plant costs, and we expect to fund these expenditures primarily through cash on hand and cash generated from operations. Further, in 2024, we anticipate deploying up to approximately $65.0 million to develop ADG RNG production facilities. As of September 30, 2024, we have invested $284.9 million in the development of ADG RNG production facilities, which includes $242.2 million contributed to our joint ventures.

Previous wording

We had total indebtedness, consisting of our debt and finance leases, of approximately $303.6 million in principal amount as of June 30, 2024, of which approximately $1.2 million, $1.1 million, $0.7 million, $0.5 million, $0.1 million and $300.0 million are expected to become due in 2024, 2025, 2026, 2027, 2028 and thereafter, respectively. Based on our outstanding indebtedness and applicable interest rates as of June 30, 2024, we expect our total interest payment obligations relating to our indebtedness to be approximately $29.2 million in 2024, $14.4 million of which had been paid when due as of June 30, 2024. We plan to and believe we are able to make all expected principal and interest payments in the next 12 months.

Current wording

We had total indebtedness, consisting of our debt and finance leases, of approximately $303.3 million in principal amount as of September 30, 2024, of which approximately $0.9 million, $1.1 million, $0.7 million, $0.5 million, $0.1 million and $300.0 million are expected to become due in 2024, 2025, 2026, 2027, 2028 and thereafter, respectively. Based on our outstanding indebtedness and applicable interest rates as of September 30, 2024, we expect our total interest payment obligations relating to our indebtedness to be approximately $29.3 million in 2024, $22.0 million of which had been paid when due as of September 30, 2024. We plan to and believe we are able to make all expected principal and interest payments in the next 12 months.