Clean Energy (CLNE)

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A spot on article about CLNE

Jason Hall: It's hard to make the case that a company which is losing money has been "unfairly" beaten down, but I think that's happened with Clean Energy Fuels (NASDAQ:CLNE).

Clean Energy's business is:

Selling natural gas for transportation, and operating/maintaining the stations.
Building stations for its customers.
Manufacturing compression equipment for natural gas.
While the second two parts of its business are important, they are secondary to selling fuel, which is a recurring revenue business (most of the vehicles it services operate for five to 10 years or longer) while the station building and compressor manufacturing business, are cyclical and "lumpy", and exist to facilitate growth in fuel sales.

To the point: Clean Energy Fuels' stock price has done this since oil prices started falling in June 2014:

CLNE Chart

CLNE DATA BY YCHARTS

In a vacuum, this makes sense, since cheap diesel and gasoline reduces the "spread" between natural gas and those fuels, making it less financially compelling for fleet operators to invest in natural gas vehicles. And for a company like Clean Energy, which is burning cash after taking on a lot of debt to fund capital expansion, that's not a good thing to have happen.

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IMAGE SOURCE: CLEAN ENERGY FUELS CORPORATE WEBSITE

But in reality, the business keeps growing. Clean Energy has consistently reported double-digit growth in fuel deliveries as key industries like refuse hauling and transit continue to replace diesel with natural gas. Heavy trucking -- which is a massive 40 billion gallon per-year market -- continues to show life, with sales to this segment up 13% last quarter.

At the same time, the company has cut sales, general, & administrative expense about 15% since the start of 2014, and also maintained its fuel margins. Last quarter, the company reported $0.26 per gallon, versus $0.28 per gallon a year ago. Capital expenditures are also down by half, as the company slows its pace of expansion and simply gets the benefit of increased utilization to drive growth.

Between reduced operating and capital expense, growing fuel volumes, and steady margins, today's Clean Energy is a better business than it was when oil was $100 per barrel. But a market that's fearful of all things oil and gas isn't seeing that.