Clean Energy Fuels Corp (CLNE) 2010 Q2 法說會逐字稿

Greetings and welcome to the Clean Energy Fuels second quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ina McGuinness of ICR. Thank you Ms. McGuinness, you may begin.

Thank you operator. Earlier this afternoon, Clean Energy released financial results for the second quarter ended June 30, 2010. If you did not receive the press release, it's available on the "Investor Relations" section of the Company's website at www.cleanenergyfuels.com. This call is being webcast and a replay will be available on the website for 30 days. Before we begin, we'd like to remind you some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict.

Words of expression reflecting optimism, satisfaction with current prospects as well as words such as believe, intend, expect, plan, anticipate and similar variations identify forward-looking statements but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance and the Company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the "Risk Factors" section of Clean Energy's Form 10-K filed on March 10, 2010, and it's 10-Q filed earlier today.

These forward-looking statements speak only as of the date of this release and the Company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding circumstances after the date of this release. The Company's non-GAAP EPS and adjusted EBITDA will be reviewed on this call excludes certain expenses of the Company's management does not believe are indicative of the Company's core business operating results. Non-GAAP financial measures should be considered an addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results.

The direct comparable GAAP information, reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA and a reconciliation between the non-GAAP and GAAP figures is provided in the Company's press release which has been furnished to the SEC on Form 8-K today. Participating on today's call from the Company, our President and Chief Executive Officer Andrew Littlefair, and Chief Financial Officer Rick Wheeler. And with that, I'll turn the call over to Andrew. Andrew?

Thank you Ina and welcome to everyone joining us this afternoon. Today, we reported another good growth quarter and made some very substantial progress in advancing our core business and expanding our global reach. Revenues were $44 million, up 58% from a year ago and volume increased 31% to 31.1 million GGEs and we delivered positive adjusted EBITDA of $1.4 million without any VTAC revenue. We also extended the number of our construction projects -- excuse me, as of today, we have 74 station construction projects under way. These are projects either under contract or that we will have committed to build that are in design, permitting or the construction phase.

Year-to-date, we've completed 13 projects and we are gaining momentum as we completed twice as many stations in the second quarter as we did in the first. We remain on track to complete somewhere between 50 and 55 projects this year, which will be nearly double of what we accomplished last year. Importantly, we count 173 projects in our pipeline. Our biggest news came just a few weeks ago with the announcement of our intent to acquire of what we believe to be the best-in-class compressor manufacturer IMW. IMW has more than 1,000 installations in 20 countries and they're active in 27 countries. Teaming up with IMW gives us just the opportunity we were looking to get into the international market. As you know, we have been looking at ways to capitalize on the growth in the international market for several years but we were having a hard time finding places where our business model worked.

Since we primarily offer long term fuel supply contracts we needed places where there were stable and reliable sources of natural gas and the ability to control our pricing. With many countries controlling or owning their natural gas supply, this was challenging for us. Now with IMW, we can participate in the international market growth as IMW primary sells compressors and other equipments to their international customers and gets paid up front, which reduces the (inaudible) and business risks that were challenging for our business model. IMW's biggest near term growth opportunities is an exclusive arrangement it has with China Gas Holdings to build stations in approximately 132 cities in China. Already IMW has received orders to supply equipment for 120 stations to be built within the next 18 months. We also see additional opportunities in South America, and Asia for the Company.

Domestically, the acquisition rounds out our turnkey offerings in the refuse and airports markets and makes us more competitive in terms of integration and station design. We'll also be able to offer alternative packages for fleet that sometimes don't want our turnkey comprehensive fueling solution and just want to buy their equipment. When this transaction is completed, which we are hoping to be in late August, we will own, operate or maintain more than 400 stations globally that extends over 250 million gallons annually.

I just got back from China Friday night. I toured IMW's Shanghai factory and spoke to their employees. It's a final assembly and packaging facility. Having this facility gives us an advantage in the eyes of our Chinese customers. By the way, it was about 104 degrees in Shanghai. The opportunity in China is enormous. Currently, 362 city gas concessions have been awarded. Remember, we're working with China Gas so it accounts for just 132 of these. Each of these concessionaires is required to build natural gas stations in these cities for buses and taxis first. At a minimum, the government plan calls for 4,000 stations in the next three to five years which we believe may be conservative. The number will likely be higher. As a comparison there are about 1,400 stations in the US today.

Now let me provide an update on the legislative front. On July 27, Senate Majority Leader Harry Reid introduced legislation that would provide, among other things, rebates to purchase natural gas vehicles. House Ways and Means Chairman Sander Levin also introduced legislation that contains tax credits to support the purchase of NGVs. We are very encouraged by the fact that natural gas vehicle incentives continue to be key pieces of energy policy legislation as energy policy debate continues. Due to the timing and other issues that do not relate to natural gas vehicles, Senator Reid has delayed consideration of his bill until September. So while we are sorry the bills has been delayed we continue to be optimistic that NGVs will be part of our country's energy policy going forward once we issue re-services after the break. With that said, I want to emphasize that regardless of what happens in Washington, our business is growing. We have a lot of positive momentum on several fronts and while we certainly stand to benefit from legislation, we are not dependent on it by any means.

Now turning to trucking at the ports, we have seen very encouraging growth in the past several months. There are about 950 trucks in operation and we anticipate 200 more will be delivered in the near term -- this summer. LNG volumes have picked up nicely at the port. We sold 525,000 GGEs in the port trucks for June, which is up from 300,000 in January. Let me spend a moment speaking of heavy duty trucking outside of the ports. Today, we are in various levels of discussion with more than 50 heavy duty fleets across the US. Some are already deploying trucks, others are in the early stages. These fleets represent food service, beverages, packaged delivery and in the LTL segments of the business.

It's a very positive sign because one only needs to look back about one year when we virtually no heavy duty fleets outside of the ports. Refuse companies throughout America are adopting natural gas fuel for the environment -- for environmental and economic reasons. In particular, Republic has recently made a significant commitment in this direction by dedicating 20% of their 2010 new truck orders to NGVs. For this year, we now have eight signed contracts to build stations with Republic and we expect more to come. We also recently signed an LNG fuel requirement to support Republic in 55 southern California cities with more than 3.5 million LNG gallons annually. An interesting note, from 1997 to 2009, we built 15 refuse stations and right now for 2010, we have 15 refuse stations under construction with more to come.

Another of the noteworthy contracts we won this quarter was a ten-year contract from Los Angeles County Metropolitan Transit Authority to upgrade, operate and maintain CNG bus fueling facilities, supporting two Metro operating divisions. Metro currently operates North America's largest CNG-powered transit bus fleet. And we estimate this fuel requirement for this contract will exceed nine million gallons per year. If there's any sign of a change in the understanding of natural gas as part of this country's energy and environmental solution, it was the GM announcement in May that they will offer natural gas-powered fleet vehicles.

And in June, Chrysler announced it would bring its Fiat NGV technology to the US. Several weeks ago, we met with CEO of GM Ed Whitacre and the CEO of Ford Alan Mulally, and they spent quite some time discussing the Pickens Plant in efforts to reduce foreign oil. We left that meeting feeling more confident than ever that they were well apprised of the benefits of natural gas and they indicated to (inaudible) they will continue to closely monitor the consumer's appetite for NGVs so that they can meet the demand. We do not think it's lost in these auto executives that the Civic GX NGV was named the "Greenest Vehicle" by the American Council for Energy Efficiency and Economy beating out the Toyota Prius due to its near zero tailpipe emissions and 100% displacement of foreign oil. Now with that, let me turn the call over to Rick.

Thanks Andrew. Before I review our financial results, I would like to point out that all my references for our results will be comparing the second quarter of 2010 to the second quarter of 2009 unless otherwise specified. Volumes during the quarter rose 31% from a year ago, to 31.1 million gallons. The increase in volume was in large part due to our increased volumes for the four transit properties that we acquired from Exterran during the mid and latter portion of the second quarter of 2009, our increased sales at our landfill gas project in Dallas and our increased port volumes. We also saw increased volume in the quarter from the additional piece of the Phoenix LNG supply contract that commenced on July 1, 2009. We lost $0.06 per share on a non-GAAP basis in the second quarter of 2010. This compares with a non-GAAP loss of $0.01 per share for the second quarter of last year.

One thing to keep in mind, when assessing our results for the quarter, is that we do not have any Volumetric Excise Tax Credit or VTAC revenue in our numbers as VTAC expired on December 31, 2009. This impacted all of our financials number in 2010. For purposes of comparison, VTAC revenue for the second quarter of 2009 was $4 million. The House has passed the bill that would extend VTAC for 2010 and make it retroactive to January 1. We are hopeful the Senate will do the same after their break.

Our net income on a GAAP basis for the second quarter was $9.9 million or $0.14 per share. This compares to a net loss of $6.4 million or $0.13 per share. The increase in the net income on a GAAP basis is primarily related to the non-cash gain of $16.6 million we recorded in the second quarter of 2010 related to valuing our Series I warrants which is required under certain accounting requirements. We recorded a non-cash charge of $200,000 in the second quarter of 2009 for the warrants.

Before I move on, I would like to emphasize that the Series I warrants adjustment is not a cash liability of the company, but rather a required exercise we must do under the accounting rules to mark-to-market the warrants each period due to certain anti-dilution protection features in the warrants. The non-cash charge increases or decreases each period based primarily on the increase or decrease in our stock price during the period which is why the second quarter gains are large as our stock price decreased significantly during the period. We will need to continue to value the warrants each period and record a non-cash gain or loss until they are exercised or they expire which is in May 2016.

Adjusted EBITDA in the second quarter of 2010 is $1.4 million which compares to $3.6 million in the second quarter of 2009. Again, please keep in mind there's no VTAC revenue in the 2010 number and was $4 million last year. Adjusted EBITDA is the financial measure we developed to highlight our operating results excluding certain large non-cash or non-recurring charges that are not core to our business including the amounts we are incurring for the Series I Warrant valuation and our stock-based compensation charges for all our options. Adjusted EBITDA is described in more detail on the press release we issued earlier today.

Our gross margin this quarter without VTAC this quarter increased $1.7 million from the prior year. The increase was generated by BAF which we acquired on October 1, 2009, an increase in fuel sales between periods. Our margin per gallon on our fuel sales of $0.32 for the quarter which compares with $0.31 in the first quarter of 2010. For the quarter, our revenues were $44 million, up from $27.9 million. At June 30, 2010, we had $55.7 million in cash and $20 million available under our line of credit with PlainsCapital Bank. We also recently filed a shelf registration statement for the purpose of registering the shares we will be required to provide as part of the proposed IMW acquisition until we have the flexibility to access the capital markets in the future as needed to meet our capital means. The shelf we filed allows us to offer both debt and equity securities to fund our future capital requirements. With that operator, please open the call to questions.

Thank you, ladies and gentlemen at this time we will be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Rob Brown with Craig Hallum. Please proceed with your question.

Good afternoon. I think you mentioned 173 projects in your pipeline. Could you just give a sense of what areas that is comprised of and is there those of bills -- or how many of those are waiting for legislation? Do you have any visibility on that?

Rob, good afternoon. The -- not surprisingly, the 173 track, or the segments that we focus on -- so several of them are airport, they're obviously all fleets. We have a big slug of them that are refuse projects that are out there that will be coming in. There's, I would say, just kind of a round number, don't pin me to this, but it's probably 20 or 25 that are heavy duty trucking type fleets that we see right now. I would say yes, there are several customers and I'm not going to name them today but some big ones that -- a couple of them have been actually announced that are watching the legislation and the tax credit pretty closely.

They understand that if the energy legislation goes through then they'd to have provisions written happen and they would see an increased offsetting credit or grant and so, they're watching it and they're talking to us about it. We've also had some suggest that if several were to go haywire and the legislation doesn't get passed and that vehicle credit goes away at the end of this year that some of them would -- a couple of the big sophisticated fleets would go ahead and actually purchase all the vehicles. Right now they're planning to do and even the warehouse, some trucks if that's what they -- so as not to miss that tax credit.

Okay. Okay, great. And then I think you mentioned IMW, the pipeline there was 170 stations and that -- could you just remind us what that is and how that's been building?

The -- what I mentioned I think was that IMW has a contract with China Natural Gas Holdings to -- for 120 stations. And you know I sort of use compressors and stations interchange and in the China Gas case, it really is an integrated system where it's the dryer, the dispenser, it's the skid, it's the compressor. So it really is all the guts, if you will, to a station. So it's 120 just on the China Gas, now, of course they have an existing booking business in addition to that. We're a large customer of theirs and Waste Management is a customer of theirs and so I didn't give a full number of stations. I did -- I was up in Vancouver not long ago to their Chilliwack facilities, very impressive, about 120 employees there, state of the art. They've expanded that dramatically in the last year-and-a-half or so. They have the capability to move those through compressor stations, if you will, about four to five a week so that's -- you can turn out some equipment at that rate.

Okay. Great, thank you. I'll turn it over.

Our next question come from the line of Graham Mattison with Lazard Capital Markets. Please proceed with your question.

Hi. Good afternoon guys.

Hi Graham.

I was wondering if you could break down the gallons sold in the quarter? How much of that came from acquisitions made in the first half the year? Particularly the National Grid stuff (multiple speakers).

In this year?

You're asking from an acquisition perspective how much of the [gallon] growth is in there?

Right. I'm just trying to get a sense of what's the organic growth versus what came in from the National Grid and the other stations you acquired earlier in the year.

I don't think we have a real detailed break out of that. I know the Exterran stuff --

He's saying this year.

Right.

That we acquired this year.

Are you wondering about Exterran brand?

Well also Exterran but also -- I know you acquired or you took over management of some of National Grid stations and then made another acquisition, I think in March. Just trying to get a sense of how much -- what those were contributing in the quarter.

To be honest, we don't really break that out or I don't know that answer.

I know the National Grid is just -- it was negligible and those things really didn't get transferred over until the beginning of June, so --

(inaudible) it was roughly two million gallons a month but some of that was starting to trickle in the second quarter of 2009 because I think one of the contracts came in May, one of them came in June, so there was some volume so it's not as dramatic as that (inaudible) so that should give you some magnitude on that. So those were the two big ones, I think.

Okay, got it. And then on the VTAC, there's been a lot of discussion about it coming back in and being extended. If not, how long that will be. How do you think with VTAC going forward in your conversations with customers? Is the $0.40 a gallon gross margin still the right number to think about? Or is more of your work shifts an O&M type of model where you're not investing as much capital, similar to the Exterran ones? Should we see that gross margin per gallon trending down?

No, I don't think so. I think our margins on GAAP deal with or without VTAC are in the higher margin segment of our business. They're north of where our average is in theory because we know we have some in there that's in the transit world that's less than our average. So I would say that regardless of VTAC, the numbers are higher than that average $0.32 we did during the quarter.

And I would say, Graham. If you just look at the station construction I talked about, the growth of the business though it's really in our business model, we're building a lot of stations. We're not shipping to an O&M business. We're -- you look at the growth of the heavy duty business and the regional trucking model, that's not O&M model, that's a commercial retail model.

So in those cases where you're talking with some of the major fleets out there where you'd be building the station, putting your capital in and then charging them quarterly as opposed to coming in, building the station and just doing an O&M on it?

Absolutely.

Absolutely.

Okay, great. Helpful, thank you very much. I'll jump back in queue.

Our next question come from the line of Brian Gamble with Simmons & Company International. Please proceed with your question.

Good afternoon, guys.

Hey Brian.

The 74 stations under way, I apologize, did you mention how many of those you expect to complete by the end of the year?

I did. I gave a range of between 50 and 55.

That's what I thought you said. And then Andrew, is that a good steady state annual rate for how quickly you expect to work through the 173 in the pipeline?

Yeah. We -- I've used this kind of a measure where it seemed like and of course, this thing can change some but it seemed like over the year that our pipeline or whatever it was, if it a year ago or so it was 80. And it seemed like that in a given year if you had a number of stations in the pipeline you built about half of them in the next year. So, some of that 173 will end up being on what we call engineering [carpet] and get added to the 74 before the end of the year is out. Now they won't get built this year but they will be built next year.

But I think that you -- knock on wood, if the business goes like we're seeing, the growth goes like it should -- that 74 number should get -- should grow and I'm really speculating here but I mean it should be more in the 100 range or greater for next year. And that's saying something because that means you're building a station about every three or four days, so I'm actually proud of our team to be able to build even the 55 this year. That's a lot of activity. But we've ramped up our construction and engineering operations to be able to -- what we're planning to grow the group so that we can build 100 to 120 stations in the next year or 18 months. So that's what we had in mind. I hope maybe that'll be too cautious but that's what we're thinking.

Are you still -- is the build cost for these stations still around $1 million per station or has it changed over the last couple of quarters?

It's about that. It still -- it depends what kind of station you're building but I would still say that's a relatively good rule of thumb. Some are more expensive, some are a little less.

Finally, just thinking about how you guys are going to fund that going forward. I think you're on the hook for $15 million on the close of the IMW deal and then if you're going fund the rest of 50 to 55 buildout for the rest of the year? Just how do you see the balance sheet flowing? What are the options going forward?

Brian, you're exactly right. Certainly something we look at and monitor and watch. We have $55 million in cash at the end of the quarter. We've got $20 million available under our Plains line of credit (inaudible). It's in our Q, we said we think we're going to spend $45 million over the rest of the year to build out those stations based on timing and when we want to get done and activity and all that good stuff. Plus your $15 million, so that gives you $60 million. So you can see that we're covered to the end of the year like we had talked. We've always said, hey, we're a growth business and there's opportunity out there. We're going to need to raise money at some point in order to capitalize on that opportunity. We still think we're going to have to do that. You see that we did file a shelf registration statement which will allow us to access the capital markets.

We are continuing to talk to banks and obviously our first desire is to do debt financing on the company's books either traditional or equipment financing arrangements or something along those lines. We're pursuing those avenues kind of in parallel with public options. At some point, we'll need some more money and we'll just have to manage that as best we can going forward. Trying to be optimistic when we can and just go on what - the fundraising options that are out there that's as friendly to shareholders as possible. Because obviously we'd like to stay away from the dilution for any future equity offering. But we also don't want to miss the opportunities that are in front of it, so we'll just have to balance out and go forward.

Understood. Appreciate the detail guys.

Our next question comes from the line of Eric Stine from Northland Capital Markets. Please proceed with your question.

Hi guys, this is Ryan Wright sitting in for Eric Stine. So first off here, have you started construction of the nine LNG stations which you intend to use as the backbone of the Southwestern LNG fueling corridor?

I think we've started construction of three of them. We have two built. We have three, I think that are under construction. We have about two or three more that aren't under construction but they're in permitting. So I think just off the top of my head right now, I think we've got about six of those on the engineering carpet and there's probably a couple of others. I know one was a piece of land that we needed to acquire which was a little unique for us in Las Vegas where we closed on that. So that will bring it up to seven, so we're making pretty good progress on those.

Okay. And what is the current capacity utilization at the [Baffon] LNG plant?

The Boron?

Yes.

I would say it depends on the day but it's -- it hangs in right now. It's been increasing some. It's about 50%.

Okay. Excellent.

On some days it's higher than that. We have days where we're at 70% and 75%. But on average, I'd say it's a little over 50%.

Okay. Finally, could you give an update on the expansion at the McCommas Bluff and how should we view volumes into 2011 here?

That's really a two pronged expansion, right? The first one was doing some electrification work. It's -- and that's going along nicely. That should be done sometime, I think in September. So we're well under way on that. We're also doing, as you know, some well work and some other things and the next big part of the compressor upgrade which will really give you the capacity. That won't be finished until in the first quarter.

And we need to go out and raise some money to do that as well. We're working on that in tandem to all the Clean Energy stuff. That will require some significant capital upgrades which again, we need to go out and raise some money and get that going, which we're in the process of doing.

We're in the process of that. We're pretty far down the trail on that. But that -- we need to get that done before we pull the trigger on the second phase. The first phase we needed to do -- you get some increased volume out of the first phase but it's the second phase that really is -- I think gives you -- increases your volume there 40% or 45% over time.

All right. Excellent. Thank you very much.

You're welcome.

Our next question comes from the line of Steve Milunovich with Merrill Lynch. Please proceed with your question.

Thank you. Did the diluted share count jump sequentially or am I mistaken?

Well, it's actually -- we did do a diluted calculation in the second quarter because our GAAP number was positive. But that's why you'll see when we do the Q or from looking at the press release, why you're seeing a $72 million number as opposed to [$50] million number in the share number.

Okay. That makes sense. So the CapEx plan this year then in total is was that, Rick?

$44 million for the rest of the year plus I think we're in for about $16-ish million already so $60 million. Somewhere in there. Grand total.

Okay. I think you previously suggested up to $85 million but that was, I think assuming the bill was passed this year.

(inaudible) getting pushed out a little bit, so -- you're right, that's why the number's been taken down a little bit.

Okay. What's your view on the trucking market generally in terms of truck sales based on the economy and how that impacts your business?

Well it obviously is a key factor. Steve, I don't have off the top of my head here, I don't know where the truck sales count is this year. I probably should know that. I know that our -- just talking with our manager of the truck heavy duty trucking segment for us now, we've never seen so much interest. They -- he did tell me and I think I mentioned that they are -- they do have an eye on this energy legislation because it's significant for them. I think the port traffic is up. Those trucks are busier.

I know the port of LA, traffic is up 30%. Those trucks are really working hard down there so that's good news. We knew -- we heard tell of some of the large fleets had a couple thousand units sidelined going back to year ago in the recession. I think that's improved. So obviously these guy were hard pressed to be out buying new equipment when they had stuff they weren't using. So I think that's better. But that's really all the color I can give you on that.

Okay. That's fine. The port sea set, I think you're within a couple of hundred trucks of hitting your 1,000, so what kind of growth do you see beyond the 1,000?

We're really at almost 1,000 right now. I don't know that anybody could give you -- we know for sure that it's 950 and it could be you're at a thousand right now. You have 200 more that are in the queue that have been awarded and granted and now they're just going through the process here. So you will get 1,200 by the end of the - just shy of 1,200 by probably the next couple of months. So those thing are coming along. Now there's talk of another solicitation out there for another 150 or so. We know there are 95 trucks that are sitting in the bullpen waiting that have shown an interest if there's more money. There's more money in the Prop 1B Program. So I don't know exactly when the next solicitation comes out for another 150, a couple of 150 trucks, but there will be one, probably later this fall.

All right. Finally, what do you see in terms of competition? I assume all this interest in natural gas and so forth must be bringing a few people out of the woodwork.

We've seen some as we've discussed on these calls before. We see it most often -- there's still not many people in the business that do what we do, right? That do-- build the station and do fuel contracts and analyze fleets. And do all the kinds of services that we have at LNG, LNG compatibility, for that matter. We see some competition for regional construction firms that go in and if there's a bid in a city they'll -- they know the local city players and they'll put in a bid to build the station. Now we see some of that. Now that -- and occasionally, they'll win one or two of those. We haven't seen and we've seen, as I think you know, there's been one LNG station open down in the port for instance.

We're still doing about 90% of the volume in the port. But there will be other stations as we see increased volume down there. I have no doubt. But we haven't seen a great deal -- we hear different things and as you follow this industry you know there's been some consolidation in the conversion business or some other players that are talking about getting in the LNG transportation business. -And so we see some stuff out on the horizon but we haven't really met it head on yet in a significant way.

Right, okay. Thank you.

Thank you.

(Operator Instructions) Our next question comes from the line of Rupert Merer with National Bank Financial. Please proceed with your question.

Good afternoon everyone.

Hey Rupert.

Quick question, someone had to ask this one. On your volumes, can you give us a breakdown between CNG and LNG and the McCommas volumes?

Sure. Biomethane or McCommas was 1.9 million these are millions, obviously. CNG was 20.6 million, LNG was 8.6 million and that will get you to your 31.1 million.

Great. Just point of clarification on your construction pipeline. Is it 50 to 55 stations remaining this year? Is that the target total number for the year?

That's the -- just to refresh that -- so we have 74 that are contracted or that we unilaterally decided to build so they're underway. So 74 total and I think of that, you'll get somewhere between 50 and 55 completed in 2010. The others just spill over, they'll almost be completed but we won't get them done this year.

Okay, great and of those stations how many will you be operating versus how many are you just constructing? Will you have O&M contracts for all 50 to 55?

Fuel sales, O&M, (inaudible) and I would say the majority of them are fuel sales side of the equation as opposed to the O&M side.

Great. Do you have ballpark number for the average volume per station that we should be using?

No, these ones are really all over the board. The National Grid ones, some big transit properties in LA, and some trash projects some of them are starting out, which x percent of their fleet and growing. It's really all over the board.

It's hard, Rupert. Those two LMTAs -- that would be an example of stations that are really construction and then O&M. Those are big stations. They do 4.5 million gallons a piece. A good refuse station is going to end up doing in year one anywhere between 250,000 and 450,000 gallons and then some of those, as Rick indicated, some of the ones we've acquired that fill out the New York area, Natural Grid, those are pretty low volume. We see them strategic, it gives us the 14, 15 nodes that fuel the taxis that will be coming. They're more like 50,000 gallons a year. So, that's about all we can do for you on that.

Okay well, that's great. Good to see increase in the pipeline.

I'm pleased with that too and that's something I watch really closely and we're seeing -- the refuse market is very, very intriguing to me because it's one that we started on. As I mentioned in my opening remarks, it is interesting to see that we built 15 stations. We're the largest doing it right. 15 stations in the first 13 years, and this year we're going to do 15 or more. So there's something happening in that market for sure.

Thanks a lot.

You're welcome.

Our next question comes from the line of Cory Garcia with Raymond James. Please proceed with your question.

Good afternoon fellows. Just as a follow-on to that. Do you have any idea, I'm assuming obviously the majority of these in your current station buildout are Southern California. Is there any other regions that you would highlight in terms of where you're seeing some pretty decent activity? And that also applies to your pipeline as well.

It's -- we now operate in 20 states and so yes, we still have biggest part of our business is in Southern California. But we're seeing -- we have buildings stations, about 3, or 4, or 5 in Texas, we're re-doing some in Dallas. We're building station two right now in Florida, about four in New Jersey -- just got briefed today and we're doing three in Connecticut so they're really all over. New stations going in in Northern California and in Seattle, couple more in Idaho, so we're seeing this -- here in Denver, so we're seeing this all over really the United States. Yes, the Southwestern United States has been in the lead but the Northeast now, the Long Island, the New York and New Jersey areas, I think we're building a station in Philadelphia, so -- are starting to see some good growth. They've always been a little bit behind in terms of this because it started in Southern California as a clean air movement. But now that it makes economic sense, we're seeing it spread as well to some of these other places.

Sure, that make sense. I guess switching spokes a little bit, how are you guys thinking about longer term LNG supply strategy and if you guys have any color in terms of inking deals on any of the larger nat gas producers out there yet?

I've probably, over the time of these calls, spilled the beans on that or talked to some of you privately. It seems to me that we have obviously just an amazing amount of natural gas and it resides with those big E&P companies, where they're producing that gas. I think the future there is to work with those E&P companies and we've had discussions with half a dozen of them already, that what makes sense is for them to liquefy the gas and augment some of their existing facilities. We plan to participate with them in that. But it's relatively inexpensive in the scheme of their CapEx requirements to augment their existing gathering or compressor facilities and add the LNG compatibility.

And then we'd enter into an agreement to take that supply and retail it. They really don't want to do that part of it. They want to be in the upstream business. It is interesting to note though that by, as I've been talking to them, that by liquefying -- making that investment to liquefy they do get a substantial upgrade on the price of their gas. About $2 Mcf, so instead of selling it today at $4.30 you can do a contract with them and pay them a substantial premium. So I think that's the future rather than us running around building greenfield-type plants.

Sure. Thanks for the time guys.

There are no further questions in the queue. I like to hand the call back over to Mr. Littlefair for closing comments.

Thank you operator. We're really pleased with the progress that we're making in building a national infrastructure for natural gas for transportation here in the US. Now we've embarked on a program to participate in natural gas vehicle expansion on an international scale. As of June 30, 2010 we had 218 stations in operations and the largest pipeline of stations in our history. I would like to think that we're just getting started and I would say we're gaining momentum. So, let me thank you for your interest in Clean Energy and I look forward to reporting to you again on our progress next time. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.