Clean Energy(US:CLNE)2019-03-12 20:10Fuel Sales and Pricing - CNG vehicle fuel sales are primarily made through contracts with customers, with pricing determined on an index-plus basis, leading to revenue fluctuations based on natural gas costs[41]. - Natural gas costs represented $94.9 million of the company's cost of sales in 2018, an increase from $83.3 million in 2017 and $72.8 million in 2016[358]. - The company entered into two commodity swap contracts for a total of five million diesel gallons annually from April 1, 2019, to June 30, 2024, to manage risks related to the diesel-to-natural gas price spread[360]. - If the diesel-to-natural gas price spread fluctuates by 10%, the fair value of the company's commodity swap contracts would expect to fluctuate by approximately $6.3 million[361]. Production and Capacity - The Boron Plant can produce 60.0 million gallons of LNG per year, while the Pickens Plant can produce 35.0 million gallons per year, with 24.8% of LNG sourced from third-party suppliers in 2018[45]. - The company has built a network of natural gas truck-friendly fueling stations, referred to as "America's Natural Gas Highway," in key locations nationwide[62]. Vehicle Adoption and Market Trends - As of December 31, 2018, the company fuels over 3,000 heavy-duty trucks, with a focus on increasing the adoption of natural gas trucks among major shippers and fleet operators[57]. - Approximately 55% of new refuse trucks in 2018 operated on natural gas, up from 3% in 2008, with the company fueling over 12,000 refuse vehicles[65][66]. - Over 25% of existing transit buses and over 35% of new transit buses operate on natural gas, with the company fueling close to 9,000 transit vehicles[67][68]. - The company anticipates increased competition in the vehicle fuels market as demand for natural gas vehicle fuel rises[77]. Regulatory Environment - California's emissions laws require a reduction of greenhouse gas emissions to 1990 levels by 2020, 40% below 1990 levels by 2030, and 80% below by 2050, impacting the company's operations[88]. - The company is subject to various federal, state, and local regulations that could result in significant additional expenses or enforcement measures if not complied with[78]. Customer Contracts and Relationships - Contracts with government entities accounted for approximately 16%, 19%, and 22% of revenue in 2016, 2017, and 2018, respectively[70]. - The company serves customers at 39 airports, with a significant focus on reducing emissions and addressing regulatory challenges in airport operations[64]. Employee Relations and Operations - The company has not experienced any work stoppages and maintains good employee relations with 401 employees as of December 31, 2018[92]. Strategic Transactions and Marketing - The company has completed significant transactions, including the BP Transaction and the CEC Combination, to enhance its market position and competitive advantages[95]. - The company markets its products primarily through a direct sales force and participation in industry events, focusing on educating government agencies about natural gas as a vehicle fuel[90]. Competition - The company faces competition from approximately 20 competitors in the natural gas vehicle fuels market in the U.S. and Canada, including major players like Love's Trillium and Gain Clean Fuels[74]. - The company anticipates needing to purchase or lease additional trailers and equipment for its NG Advantage subsidiary to support operations and customer contracts[44].