Clean Energy Fuels Corp (CLNE) 2010 Q3 法說會逐字稿

Greetings and welcome to the Clean Energy Fuels third-quarter 2010 earnings conference call. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ina McGuinness. Thank you, Ms. McGuinness. You may begin.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the third quarter ended September 30, 2010. If you did not receive the release, it is available on the Investor Relations section of the Company's website at www.cleanenergyfuels.com. And this call is being webcast, and the replay will be available on the website for 30 days.

Before we begin, we would like to remind you that 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 its 10-Q filed later -- that will be filed later today or tomorrow.

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, and it excludes certain expenses that 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 is President and Chief Executive Officer Andrew Littlefair and Chief Financial Officer Rick Wheeler. And with that, I will turn the call over to Andrew.

Thank you, Ina. Thank you and good afternoon, everyone. Today, we reported another good growth quarter, making substantial progress in advancing our leadership position in the industry.

Revenues were $45.7 million, up 46% from $31.2 million a year ago. And volume increased to 31.3 million gallons during the quarter. Our business is doing well, and we've added some important components to our operations.

Let me kick off our call by discussing a very big win for us. Recently, in Los Angeles, we were awarded overall responsibility to operate and maintain all 10 of LA County Metropolitan Transportation Authority, or Metro, CNG bus fueling facilities. It is very significant that we will soon be the sole station operator for Metro's entire fleet of 2500 CNG buses.

This is the largest CNG fleet and the largest consumer of CNG fuel in the United States. Last quarter, we had the honor of being awarded an additional 9 million gallons, which brought us to 25 million gallons. And with this new contract, we've added another 15 million gallons for a total of about 40 million gallons annually.

You know, transit agencies have to roll out their fleet every day with a great degree of precision. And at the scale at which LA MTA operates, this is an impressive operation. We're very proud to be rewarded for doing a good job and that upholds their high standards. So besides adding a tremendous amount of volume for us, we view this award as a testament to the high quality and efficiency of our operations.

One of the most significant accomplishments of this period was our agreement with Pilot Flying J. Pilot is the largest truck fueling station operator in the country. They have more than 550 travel centers and have the highest fuel sales volumes in North America.

This exclusive arrangement provides us with a clear roadmap for deploying corridors of LNG stations for heavy-duty trucks. As national fleets consider adoption of LNG, they will be able to continue to fuel at the same truck stops they are already using.

With this agreement, we have made it much easier for fleet managers to say yes to LNG. Our Pilot Flying J relationship answers the question that many people have been asking us as our business has ramped up, and that is, how are you going to build out the infrastructure for fueling and major goods movement corridors across the nation? The answer is here -- where trucking goes, Pilot and Flying J is, and so will be Clean Energy.

Just a few minutes ago, we announced a very important agreement with Republic Services, Inc., which is the second-largest refuse operator in the country. Under this 30-year agreement, we plan to build a high-BTU gas processing plant at Republic's 160-acre Sauk Trail Hills landfill in Canton, Michigan.

We will purchase, process and sell the renewable natural gas collected from the landfill. Republic will have the option to receive credits for their natural gas vehicle fuel use or an allocation of the renewable natural gas we produce. We expect this landfill gas energy processing facility to be fully operational in 2012.

This development solidifies our position in the renewable fuel marketplace and gives breadth and depth to our business. We hope this is just the first of many.

Also mentioned in the release, our relationship with Republic continues to expand. Since our last call, we've been given the go-ahead to build, operate and maintain 10 more stations. The majority of these will be built in 2011 for a total of 14 stations for Republic today.

In addition to this, we provide their LNG fleets with more than 3 million gallons of LNG vehicle fuel per year. Finally, our portfolio of sites with Republic has truly become bicoastal, as we open their newest CNG station in Florida next week.

A review of our sales information shows that we now have more than 250 projects in the pipeline compared to 180 last quarter. Equally impressive is the fact that so far this year, we have inked 82 new agreements. This means our sales team is signing almost two contracts a week.

Our engineering carpet stands at 80 projects, and we believe we will likely finish 45 projects this year. We were shooting for completing about 50 to 55 projects this year, but based on our latest update on permitting, about 10 of these will end up getting completed shortly after the new year.

Now let me highlight some key developments of our subsidiaries. As you know, we closed on the IMW acquisition on September 7, and the integration is underway. As we work together on various aspects of platform and station design, we will be able to offer increasingly more competitive fueling solutions for our customers.

Reflecting the diversified global nature of IMW's business, IMW is operating in 23 countries. And we see activity picking up in China, Indonesia, Vietnam, Malaysia and Thailand.

As we look at ways to increase our opportunities in these regions, we see the shift from government-sponsored to private-sector-sponsored projects, with a heightened focus on reducing costs, which is working in our favor.

One of our goals is to continue to win the increasingly larger-scale strategic contracts. Just to give you a sense of the pace of growth in the global market, according to a report by NGV Global, which is an international association for natural gas vehicles, an average of eight stations are opened and 4000 new natural gas vehicles are put on the road every day around the world. And now that we have the best solution with our IMW subsidiary, we look forward to getting our share of this expansion.

Turning to our McCommas subsidiary, we continue to work on its upgrade and expansion to increase production. We will have Phase I completed this month, which involved replacing a primary compressor, which was dated, with new electric drive compression. This upgrade will increase reliability and production levels.

The next phase of the expansion will increase our production capacity by roughly 50% and is scheduled to be completed next year. When we are done with this work, we will have an efficient and reliable landfill gas processing plant among the largest in the US. This facility will be capable of producing up to 7500 MMBTUs, or 60,000 gasoline gallon equivalents of the renewable pipeline quality natural gas every day.

Our vehicle conversion business, which is provided through our BAF subsidiary, continued to perform well during the quarter. BAF remains on target to convert 1850 AT&T vans this year, as planned. We will also complete 500 Verizon vans before the end of the year.

And along these lines, several other telecom and major commercial fleet operators have expressed interest in NGVs to reduce their operating costs and assist in meeting with their sustainability goals. This trend will continue to benefit BAF. We have instituted an aggressive national fleet sales program in which we're calling on major fleets to place orders in 2011.

Last week's election provided us with some positive developments for California and on the national front. In California, Prop 23, which was an effort to set back our state's clean air initiatives, was defeated. And on the national front, we understand there's still talk of bringing before Congress in the lame-duck session the tax extender bill that includes VETC.

The most significant one, I think, I hope you heard the President's post-Election-Day press conference in which he specifically cited a common interest between both parties to work together to advance energy independence through the use of natural gas.

In the US Senate, we understand the Senate majority leader, Harry Reid, plans to bring the Nat Gas Act up for a vote on November 17. You know, whether or not this is the date, we believe this legislation makes too much sense and has too much support for it not to happen.

I think most of us agree this would be a nice accelerator and that it is important for the government to get involved in advancing the use of cleaner domestic natural gas as a vehicle fuel. However, it is also important to remember we have a good business without such legislation. Our customer growth has proved that a good payback does exist.

Whether or not they believe that the diesel prices are going through the roof or increasing moderately over time, the list of fleet operators that can see this is the right direction for them economically is growing all the time.

Now let me turn the call over to Rick.

Thanks, Andrew. Before I review our financial results, I would like to point out that all of my references to our results will be comparing the third quarter of 2010 to the third quarter of 2009 or the nine months ended September 30, 2010, to the nine months ended September 30, 2009, unless otherwise specified.

For the quarter, our revenue was $45.7 million, up from $31.2 million. For the nine months, revenue totaled $128.7 million, which is up from $89.3 million a year ago. BAF contributed $9.3 million of the third-quarter increase, and IMW contributed another $3.3 million for the three weeks we owned them during the quarter. IMW also sold Clean Energy $1.2 million of product during the quarter, which gets eliminated in our consolidated financial statements.

We will ultimately realize the benefit of these sales through lower property balances on our books that will result in lower depreciation expense for stations we built for ourselves, or higher gross margins on stations we sell to others.

Had these amounts not been eliminated, IMW would have had positive net income for the period even after the increased amortization on the intangible assets we acquired. For the first nine months of 2010, BAF contributed $29.3 million to our revenue total.

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 VETC, revenue in our numbers as VETC expired on December 31, 2009. This impacted all of our financial numbers in 2010.

For purposes of comparison, VETC revenue for the third quarter of 2009 was $3.7 million and was $11.8 million for the first nine months of 2009. We had a loss of $0.10 per share on a non-GAAP basis in the third quarter of 2010, which compares with non-GAAP earnings of $0.01 per share for the third quarter of last year. The biggest items impacting the decrease between periods are the loss of VETC revenue in 2010, the loss of the San Diego O&M contract in July, increased selling and benefit expense related to our increased number of employees, and $600,000 of one-time legal and accounting expenses we incurred to close the IMW acquisition.

Year to date, non-GAAP loss per share was $0.23 versus $0.06 per share for the first nine months of 2009. The gross margin this quarter was $12.1 million and was $12.4 million in the prior year. Again, please keep in mind there are no VETC revenues in 2010.

BAF contributed $2.6 million towards the 2010 amount and IMW contributed $900,000 for the three weeks it was included in our numbers after the September 7 acquisition date. For the first nine months of 2010, our margin was $37 million, and was $32.7 million in 2009. Our margin per gallon on our fuel sales was $0.30 for the quarter, which compares with $0.30 in the third quarter of 2009, excluding VETC.

Our net loss on a GAAP basis for the third quarter was $1.8 million or $0.03 per share. This compares to a net loss of $18.5 million or $0.31 per share. The decrease in the net loss on a GAAP basis is primarily related to the change in the amounts we recorded for valuing the Series I warrants between periods. We recorded a noncash gain of $7.9 million in the third quarter of 2010 and a noncash charge of $15.7 million in the third quarter of 2009 for the warrants.

Year to date, net loss for the period was $16.3 million or $0.27 per share and included the noncash gain of $5.9 million relating to the Series I warrants, noncash stock-based compensation charges of $9.2 million, and an AMT refund of $1.3 million recorded in the first quarter of 2010.

This compares with a net loss for the first nine months of 2009 of $31.3 million or $0.59 per share, which included $17.8 million of noncash Series I warrant charges and $10.6 million of noncash stock-based compensation charges.

Before I move on, I would like to emphasize that the Series I warrant 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 antidilution protection features in the warrant.

The noncash charge increases or decreases each period based on [barreling out] the increase or decrease in our stock price and the change in our stock's volatility during the period. We will need to continue to value the warrant each period and record a noncash gain or loss until they are exercised or they expire, which is in May 2016.

Adjusted EBITDA in the third quarter of 2010 is minus $600,000, which compares to $5.4 million in the third quarter of 2009. Year-to-date adjusted EBITDA was $1.8 million compared with $9.9 million last year.

Adjusted EBITDA is a financial measure we developed to highlight our operating results excluding certain large noncash or nonrecurring 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 our option. Adjusted EBITDA is described in more detail in the press release we issued earlier today.

Volumes during the quarter rose to 31.3 million gallons, up from 29.5 million gallons. This volume increase was achieved in spite of a 1.1 million-gallon decrease during the period related to the San Diego O&M deal I mentioned earlier.

With the LA Metro new deals Andrew mentioned earlier, we should make this volume up and then some once the projects are completed and come online. Year to date, we delivered 91 million gallons, up from 71.5 million gallons in the first nine months of 2009.

At September 30, 2010, we had $32.2 million in cash and $20 million available under our line of credit with Plains Capital Bank.

With that, operator, please open the call to questions.

(Operator Instructions). Rob Brown, Craig-Hallum.

On the Republic announcement and the gallon volume you gave us, was that for the total number of stations, or was that just the LNG volume?

Yes, that's the -- on the release, Rob?

Yes.

Well, the release that was released a few minutes ago had volume associated with landfill, but it didn't have any volume associated with the LNG that we currently do in the new stations.

Okay. And of those 14 stations, can you give us a sense of how much volume those would be?

It will depend on how they deploy their new vehicles. And we're working with them on that now. You know, you can figure that a trash truck is 10,000 gallons per trash truck. Typically, those stations will start maybe with 30 or 40 vehicles.

So you can kind of do the math on how that kind of rolls out. Some of them will be more than that, though, and we understand that Republic is reviewing their purchase requirements for next year. And we're working with them on it now to see how many trucks they'll actually purchase.

Okay. And could you remind us again, was it Republic that said they would have a certain percentage of their vehicles natural gas?

I think what we heard, or at least what I remember and I think you're referring to, is they had said this year that 20% of their new purchases would be natural gas. And we -- I think we've all seen that they've said it would be more than that in the coming year. I don't know that I've seen a percentage.

Okay, great. Thanks. And then maybe moving on to Pilot, could you just give us how that would roll out? Do you have stations that you've been working on that may be going to Pilot? And how quickly of those other stations will we see that roll out? And is it really in a response to a customer demand, or are there a certain number of stations that are predesigned to go forward?

Well, Rob, it's a little of each. And we're working with Pilot on that now. And of course, we're working with their customers now.

We have two stations that are already underway with Pilot, but we're working with dozens of fleets to ascertain what they want to do going forward and talking with Pilot and beginning to map out sort of the regional rollout.

I've tried to explain this to everybody; obviously, we're not going to go build 550 stations until there is a need. But we do know the Southeastern United States and some of the Northern Midwest are very likely to see some of their early corridors, and of course the Southwest, which we're already doing. And Pilot will be key to this.

So, I can't give you an exact number right now, but it's obviously front and center for us. And we're working with the fleets that already fuel Pilot, and we're working with Pilot.

Okay, great. Thank you.

Graham Mattison, Lazard Capital Markets.

A question on the landfill -- can you give a sense of how this will work with you and Republic? Will you own the landfill, will they own it, or are you just -- is it an O&M contract, or are you putting capital into it?

They own the landfill. We have an agreement to develop it and produce the biomethane. We'll split -- we'll obviously split the proceeds from the production there. And what I think is unique for us with this and what we think is somewhat interesting -- it certainly is for Republic -- is they will have the ability to take either their percentage of the production or they'll be able to apply it to their fuel use. It's really a gas purchase agreement, Graham.

So and then would you guys be paid for the upgrade work, like on a contract basis or like milestone levels?

Yes, we're going to -- it's our capital going into the development of the processing facility.

Got you. And then on McCommas, the increase there that you're talking about, that will bring you to about 12 million gallons out of that facility annually. Is that right?

I think -- let's see. Hold on. We're crunching that. [Any] more -- it's going to be more than that.

Was it closer to 18 million?

20-ish -- 20 million. So when we're all done --

(multiple speakers), and that is, yes, fully upgraded, expanded, all that done at the very end.

So there's two pieces of that, right? We've had to go in and redo the compression, and we've done that. And that gives us a gain. And we will start to see that here toward the end of the year. And then we move to the next piece, which is more the wellfield and some other things that we do. And then that gives the bigger increase.

Got you. And then the contract you have with Shell still runs out; that is not impacted by that, or can that contract with Shell be expanded?

It is where it is right now, but we can -- we have the ability to put some more there if we would like to.

All right, great. And then just thinking on the VETC, you mentioned on the call that there is -- you know, it's being floated around that it might come back in. Are you hearing that the VETC would be retroactive for 2010?

Yes, that's --

And how to think about VETC going forward in 2011? Are there conversations underway to renew that or extend that out, and how should we think about that?

Yes, there are, and it's a good question. You know, I've gotten a little shy on this because it has been pretty hard to predict what the Congress is going to do. But here is what we believe to be the case, is that there seems to be an expectation that there will be an energy tax bill in the lame-duck session in the Senate. And it's kind of the same thing that we've been hearing, Graham, that many, if not all of the expiring tax credits will be added into that -- will be in that bill.

And, you know, I can't handicap what is going to happen, but we know that Chairman Baucus and Senator Grassley are working on that. And we've been told that, currently, that that would be retroactive. So you'd go back essentially and reclaim the credits that had expired at the end of last year.

Now, as part of that, there's been talk that it could be that there would be an extension. But I just don't know -- I don't know how to handicap that right now. We do know that the House Ways and Means and Senate Finance Committee have been talking about in the future extending and reviewing the VETC to perhaps change the way the ethanol is done and maybe put the tailpipe standard on it and perhaps lower it. And I'm just not so sure how that happens.

But there has been talk. We can be sure of this, right now, that they have been talking about doing an extension in the lame-duck, and there has been talk about extending it into the future as well. But I don't know for how long, and I don't know that anybody is that clear on how that is all going to shake out.

All right, great. That's very helpful. I'll jump back in queue. Thank you.

Eric Stine, Northland Capital Markets.

Thanks for taking the questions. I hate to stay with VETC, but -- so you're saying that your current expectation is that it would be kind of a catch-up just to make up 2010, and then beyond 2011, you know, uncertain if there will be an extension? Is that how I should understand it?

I think that's how you should understand what we understand.

Okay. And then, I mean, obviously everyone is focused on the mid-November vote. But if that, just given the environment in Washington, if that gets pushed out, any thoughts on what the impact to your business would be from the vehicle credits expiring at the end of this year?

Yes. Obviously, the vehicle credits have been important on certain of our segments. I think that we should expect that if the vehicle credits just go away -- and let me say, regardless of the November 17 date and the lame-duck, I think there is enough momentum that the Nat Gas Act in some form -- that is, the natural gas being promoted by the federal government in some sort of incentive, with some sort of incentive, is going to happen. And if it doesn't happen this November, you will see it back in the next Congress. That's how these things kind of work.

And we're not going to give up, and I don't think the industry is going to give up. In fact, I think there's more support now than there has been. But in the -- for the intervening few months, if all the credits were to disappear, I think it would impact and slow down some people's consideration on the heavy-duty -- on the biggest heavy-duty trucks. I don't think there's any doubt about that.

But on certain of our segments, certain that are high-mileage that operate at airports and that are higher-fuel use like trash trucks, it's a lot closer call. Yes, it takes it from within -- well within one-year payback to something closer to a year-and-a-half, two-year payback. But it may knock out some marginal fleets, but I don't think it's devastating for certain of our fleets. And others, it has more implication.

Okay. I guess I'm curious also -- I mean, does it -- the legislative uncertainty, does that have any impact, or have you heard any impact on AT&T's plans for their upfits?

No, we haven't heard that. We haven't heard that the tax credit has anything -- been in their consideration. They're trying to wrestle with deployment and station and infrastructure. But we haven't heard anything on the tax credit side. But I'm sure they'll have to review it.

Okay. Maybe turning to the pipeline, it was a pretty big jump; I think you said 250 stations in the pipeline. Can you just let us know -- I mean, are any of those stations Pilots? You know, I'm just trying to get a sense of what is Pilot and what isn't.

Well, you know, remember we sort of [played the semantic]. Remember we have a couple things here, right? We have the carpet, the engineering carpet, which are really stations that either we've committed to build on spec -- and there's not many of those -- or most of those are under contract. And that number stands at about 80, which is an increase since last time we talked. And as I said, 45-ish of those will be finished in this calendar year, and then the others -- then another slug very shortly after the new year, and then some will trickle out in the first quarter.

The pipeline, the 250, it has grown. And it has grown -- it's been pretty impressive the way that's added. Those, you will remember, are stations that we're either in negotiation with, we've done the evaluation and we've had lots of back and forth. And that number has gone up steadily. I expect many of those will obviously enter onto the carpet here in the latter part of this year and early in 2011.

Okay. But, I mean, there -- it sounds like there are a number of (multiple speakers) outside of Pilot.

Yes, most of these are outside of Pilot. On the corporate right now, there's only two Pilot stations. There will be more, but that number, we're just kind of shaking that out right now.

Okay. Just some -- I'll just go with some bookkeeping questions and then jump back into line. Can I get the CNG, LNG and biomethane volumes in the quarter and then also the approximate number of upfits in the quarter?

The bio, Eric, was 1.8 million. CNG was 20.2 million. And LNG was 9.3 million to get you to your 31.3 million. And the upfits was about 635.

About 635? Okay. One last, just an update -- I haven't looked at the Q yet -- just an update on the CapEx plan for the remainder of the year. Thanks a lot.

We're targeting I think somewhere in the $15 million to $17 million range over the rest of the year as we build out the stations. The nice thing is we spent a lot of money in the last couple months prebuying a lot of the equipment we're going to need for the stations that will be completed in the latter part of this year and the first part of next year.

So the good news is our spend should slow down a little bit as we basically just complete the construction, install the equipment and get it into place and up and running and all that good stuff. So, actually, the reason you haven't seen any Q is we haven't filed it yet. It will be filed either later tonight or tomorrow morning, just FYI.

Okay. Thank you.

(Operator Instructions). Vishal Shah, Barclays Capital.

This is Jake Greenblatt for Vishal. Thanks for taking my question. I had a couple quick questions for you, just in terms of the number of stations that you guys built out during the quarter. Could you provide us with that information, and then if you could, could you break it out between CNG and LNG?

Well, I think during the quarter, we probably added -- what do you think, a handful?

Yes, six.

Five or six stations.

Six.

I believe they're all CNG. And just real quick, I just got an update. Our Q is filed, Eric and others who are interested. Yes, I think it was five or six, and they were all CNG.

Great, thanks. And then, are there any metrics that maybe you could give us to help us think about both the BAF business and the IMW business, maybe in terms of backlog or something like that, that could help us model a little better?

IMW, we've kind of provided some information on our call awhile back, where we talked about the revenues that they were going to generate for this year, as well as some growth rates. You might want to go and look at that and take a look at those financials, as well as you'll see in our Q that we filed, there's some pro forma information in there that might be helpful for you.

On the BAF side, yes, we really, again, don't give guidance. A lot of that's just going to be predicated on the singular vehicle programs we've got now and just what they'll look like next year, and that is kind of unfolding as we go.

What percentage of BAF is going to come from AT&T?

Good question. It just kind it depends on obviously what AT&T's mix is relative to what other business they've got that they're chasing, be it buses or shuttles or Verizon or others. But it's a pretty high percentage certainly this year, and assuming things hold, should be relatively high again. But again, it's very subjective and just depends on what they do relative to what everybody else does next year.

If the mix changes a little bit, I think the expectation is you may see less vans, but more boom trucks, and those boom trucks are more expensive. And so it's just there's a lot of moving parts in that.

Rupert Merer, National Bank Financial.

Can you give us a sense of the timing for the phasing of the additional 15 million gallons at LA Metro?

Yes. You'll get -- Rupert, some of it started, some of that additional 15 million, if you look at it this way, started already last -- on November 1. And some more of it's phasing January 1, and then some more -- two or three more. So I think the way you should think about it is that you should have for 2011 something closer to 15 million additional gallons.

Okay, great. And just returning to BAF, so the contracts with AT&T and Verizon that you've announced, those go out to the end of 2010, is that correct?

Yes, and it's purchase orders, just FYI.

Okay. So the discussions with the fleets really are for sales into 2011. So you haven't really given us any guidance for 2011 at this point, then?

That would be correct.

Okay, great. And I'm sure this is in the Q -- last question here. Can you give us a sense of how you feel about the sufficiency of capital at this point to meet your needs for growth and how soon you think you might have to go back to market?

Right. Well, I think -- that's a good question. We've tried to be clear on this fact. As we continue to see the pipeline increase and the carpet expanding, you can tell that we're going to need more capital. And we're in good shape to do what we need to do to finish out spaces this year, and the ones that I've spoke of that go back into the beginning of this -- after the new year.

But we are -- we do realize that we will need more capital. We have a debt facility that we haven't drawn down. And we're looking at increased debt, of course, we've said before. But also, we're looking at the most dilution-friendly equity that we can bring in. But I think you can expect that we will be needing more equity.

Okay. Thanks for the color.

(Operator Instructions). Cory Garcia, Raymond James.

Just wondered if you guys can provide a little color on what you guys see in the ports currently? Obviously a little pickup in activity, from what we see from the industry data points, but sort of how that is flowing through into your LNG volumes out there?

Well, we've seen some increase in volumes, but it's been a little slower than we would like. There's still -- it looks to us, Cory, and this thing is kind of hard to keep your arms around, but it looks like there is another tranche of trucks coming to the port that have been kind of held up in the contracting, but about another 135 that will sort of sprinkle in in the first quarter of 2011.

There will be a handful or a dozen or so more trucks in the latter part of this year, and then about another 135 that we know of right now. Now, they're working on some other solicitations, but that is what we see so far.

Okay. Do you guys happen to have an updated gallon number? I believe it was a little over 500 in June -- 500,000, rather, in June. Do you guys have that on hand, or -- you may not.

I think it's been pretty consistent.

Well, it's up from that, all right? You've got -- those port trucks, I kind of look at the LNG that we do at three of our stations that are related to the LNG to the port. And on any given day, you're at about 23,000 or 24,000 gallons a day, some days more. And Rick is going to fully go over the math.

All right. And just kind of, I guess, switching focus over to IMW, do you guys have any update with regard to the China gas? I believe it was 120 stations; last call, it was 45 to 50. Do you have any updated numbers at this point?

And kind of secondarily to that, are you guys going to be able to provide an updated order flow on an ongoing basis? Is it going to be sort of a steady growth in the backlog, or is it going to be sort of compartmentalized larger orders?

We're kind of working through all that right now. I mean, obviously, we just kind of brought IMW into the fold in the last three weeks. And that's one of the things we've been working on with them, is to try and figure out how we capitalize and take advantage of the opportunities they have internationally, as well as kind of work with our North American or domestic opportunities as we go out and pursue business here.

So that's evolving a little bit, kind of as we go. But, yes, we're going to -- as Andrew mentioned all those different countries that we think there's opportunities in for IMW. We will try and give you some flavor as we go forward as far as what that looks like, in particular China, because obviously that's the biggest opportunity that's out there. And we certainly have a nice position in the country now, and we're looking to expand that position. Obviously we'll want to keep you updated on that, because that is a big opportunity for us.

Great to hear it. Thank you, guys.

Ladies and gentlemen, there are no further questions at this time. I would now like to turn the floor back over to Mr. Littlefair for closing comments.

Thank you. Let me just close by saying that we've made some very good progress in laying the foundation for us to capitalize on the growth of natural gas vehicle fuel used in the US and internationally. So we've really come a long way this year. I want to thank you for your interest in Clean Energy, and I look forward to reporting to you again on our progress next time. Have a good day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.