Clean Energy Fuels (NASDAQ: CLNE) Pushing Toward its First Profit?

Brian Hicks

Written By Brian Hicks

Posted January 29, 2014

Clean Energy Corp. LNG natural gas fueling station

When Texas oilman and billionaire T. Boone Pickens teamed up with Andrew Littlefair and founded Clean Energy Fuels (NASDAQ: CLNE) in 1997, their vision was to ignite North America’s natural gas revolution and give the people a cheaper, cleaner burning fuel.

Fast forward fourteen years, and by Pickens’ own admission, they were a bit overzealous about weaning consumers off gasoline and foreign oil. But by maintaining a steadfast approach, and getting in early, the men would tell you today that their time has finally come.

The time now, as both men stated in an interview last month, is for Clean Energy to take charge and aim to build “America’s natural gas highway.”

This year, with natural gas more popular than ever because of North America’s domestic production, Clean Energy is banking on customers to buy more clean-energy vehicles. As corporate fleet sales go up, Clean Energy is expected to see its first annual profit since its emergence in 1997.

The builder and operator of natural-gas filling stations reported a third-quarter loss in November of $14.7 million, according to The Los Angeles Times, but that was an improvement from a year earlier where a loss of $16.7 million was recorded.

Now as we kick off the new calendar year, Clean Energy is poised to have its best year yet.

The Company

Clean Energy Fuels Corp. of Newport Beach, California is seen largely as just a modern day chain of gas stations. They build ‘em and then they fill you up. Those who know that much probably wouldn’t put much stock in the name. After all, profit margins for gas stations (especially for natural gas) are relatively low, and the company has been reporting net losses every single year since 1997.

And while that may be true, the assumption that Clean Energy is just a gas station would be wrong. Clean Energy has actively been building its empire to include the manufacturing of compressed natural gas (CNG) and liquefied natural gas (LNG) equipment and technologies, as well as the development of renewable natural gas production facilities.

In Dallas, Texas, Clean Energy is a majority owner of a landfill that produces renewable natural gas, or biomethane, and it has a second facility of the same kind in Michigan. It also owns and operates LNG production plants in Texas and California, according to The Los Angeles Times.

No matter what, you have to admire Clean Energy’s ambition and fortitude to see their vision through. Sure, the company’s drive may have hurt its bottom line year after year, but that doesn’t matter when you’re there for the big pay off at the end.

While natural gas still has a long way to go in order to dethrone oil as the king of fuel, it’s certainly making its way.

Clean Energy now has agreements with some of the biggest players in the transportation industry including: Frito-Lay North America Inc., Procter & Gamble Co. (NYSE: PG), United Parcel Services Inc. (NYSE: UPS), Ryder System Inc. (NYSE: R), and Lowe’s (NYSE: LOW).


People love their gas and diesel engines, and while the transition to natural gas has been slow, it is in fact starting to take shape. The majority of taxis, buses and trucks that all rely on diesel fuel today, could just as easily make the switch to natural gas tomorrow.

And that is what Clean Energy is betting on. It’s hard for any kind of business to argue with an alternative that offers better fuel economy at up to a 75 percent discount to oil while being environmentally conscious at the same time.

It’s cheap. It’s clean. It’s vast. And it’s right here at home.

And the people are indeed taking notice. There was a 70 percent increase of natural gas vehicle orders taken from January through September of 2013 compared to the same nine month stretch in 2012, according to The Los Angeles Times.

Manufacturers like Cummins Inc. (NYSE: CMI) are supposed to quadruple their output of natural gas engines and fuel systems for 2014.

As for Clean Energy, with nearly 500 natural gas filling stations in the U.S., that’s already double the number they had just a couple years ago.

The Investment

The trend towards natural gas is upon us, and in the field of transportation, it has the potential to be a solid niche market. As demand for cleaner fuel improves, Clean Energy and others who have weathered the storm are set to profit in a big way.

Clean Energy is already the largest provider of natural gas fuel for transportation in North America and is setting the precedent for fueling infrastructure. In the last few weeks, it has opened a handful of new stations in Florida and California. In total, the company had 19 service stations across the country. It’s a small footprint, but it’s growing.

The emergence of other companies hoping to prosper off the natural gas boom could pose a threat, but Clean Energy has been waiting for this moment for fourteen years.

They’re not about to let anybody stand in their way now.

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