Clean Energy Fuels (NASDAQ:CLNE) Q4 2018 Earnings Call

0:01 Greetings. Welcome to Clean Energy Fuels' fourth quarter 2018 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I'll now turn the conference over to Robert Vreeland. Mr. Vreeland, you may begin.

0:27 Thank you, Operator. Earlier this afternoon, Clean Energy released financial results for the quarter and year ending December 31st, 2018. If you did not receive the release, it is available on the investor relations section of the company's website at www.cleanenergyfuels.com, where the call is also being webcast. There will be a replay available on the website for 30 days. Before we begin, we'd 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 risk, 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, should, anticipate, and similar variations identify forward-looking statements.

1:20 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 factor section of Clean Energy's Form 10-K filed today. These forward-looking statements speak only as the date of this release. The company undertakes no obligation to publicly update any forward looking statements or supply new information regarding the circumstances after the date of this release. The company's non-GAAP EPS and adjusted EBITDA will be reviewed on this call and exclude certain expenses that the company's management does not believe are indicative of the company's core business operating results.

2:10 Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP Thank you very much.

2:47 Thank you, Bob. Good afternoon, everyone, and thank you for joining us. I'm pleased to report that with the close of 2018, results of multiple strategic operational and financial initiatives that we put in place have begun to pay off with positive results. We believe this momentum will continue through 2019, and I will explain why. In the fourth quarter of 2018, we delivered 98.7 million gallons, a 14% increase over the 86.4 million gallons in the same quarter in 2017, and we believe this trend will continue into 2019. For the entire year, we delivered 365 million gallons, a 4% increase over 2017. Our revenues were $96 million in the fourth quarter versus $89 million in the fourth quarter of 2017.

3:39 Our fuel volume revenue in the fourth quarter increased 21% to $78 million versus $65 million in 2017. Again, we see this as very positive for our core business exiting 2018. Where we saw a decline compared to last year, although not out of the ordinary, was in the station construction sales business, which tend to go in cycles on a yearly basis. We did complete 49 station projects in 2018, and we're still actively building and selling station projects for our customers as they continue to invest in natural gas. But admittedly, our focus continues to be on fuel volume growth at our existing infrastructure first and foremost.

4:24 The initiatives that are helping drive much of these solid returns are expanding our leadership position in the rapidly growing renewable natural gas market, Barclay Corbus, Robert Vreeland But more impressively, it can have a tremendous effect on long-term carbon emissions that are at the center of the discussion surrounding climate change. When calculating the entire energy supply chain, including the source of electrons put on the grid, operating a vehicle in Redeem is cleaner than even an electric battery in most cases.

5:19 And as clean as Redeem is scored, it's also important to note that the cost to customers is significantly less than What they would pay for diesel, which is under attack for the harmful impact it has on air quality. Many refuse companies around the country see the benefits of turning the waste they deliver to landfills into the cleanest fuel available to power their fleets. No other company personifies this more than Republic Services. Republic has been a leader for years in converting their landfill sites into clean fuel production facilities. The company recently extended a fuel agreement for clean energy to provide redeem at Republic fueling stations across 21 states around the country for five additional years.

6:05 This means thousands of Republic service trucks will operate on the fuel that is expected to reduce their CO2 emissions by 1.3 million metric tons over the period of the contract, which is equal to taking 283,000 cars off the road or planting 22 million trees. Many other refuse companies have recently signed redeemed fueling agreements with Clean Energy. Municipalities are also realizing the benefits of redeemed with recent fuel agreements by the cities of Long Beach, Montebello in Fresno, California, Spokane, Washington, and Riverside County, California. Trucking companies are exploring the need to switch to cleaner alternative fuels and are realizing the easiest and most cost-efficient way to achieve the changes Regulators are demanding is with Redeem.

6:57 Overseas Freight, MDB Transportation, TTSI, and other trucking companies have recently deployed trucks equipped with the new Cummins Westport engine and being powered with Redeem in the ports of LA and Long Beach. The new zero emissions natural gas engine is getting great reviews by these first adopters. The new Redeem have allowed us to grow our volume from 20 million gallons in 2014, pardon me, the first full year we offered the renewable fuel, to 110 million gallons of redeemed in 2018. The increase in redeemed volume for 2017 to 2018 alone was 40%. As you probably know, other companies are getting into the R&G fueling business, which frankly we see as a positive endorsement for the potential of this market.

7:51 When we first began selling Redeem, we were in the R&G production side of the business as well, owning operating production facilities. In March 2017, we sold those facilities to BP for $155 million, which could reach $180 million with some earnouts, in order to focus on our core strength of marketing and selling natural gas as a vehicle fuel. We then entered into a long-term supply grant with BP. Over the next year and a half, both companies realized the benefits of this arrangement, so much so that we broadened the relationship in the fourth quarter last year by increasing the RNG fuel supply amount, allowing clean energy to accelerate and expand the distribution of redeem.

8:37 Redeem volumes increased 13.8 million gallons in the fourth quarter alone compared to 2017. We are now able to confidently market Redeem across the entire country to municipalities and private fleets, and it is becoming clear that owning a downstream fueling infrastructure will be a big advantage in this expanding market. We are so bullish on the acceptance and growth of Redeem that a few weeks ago we announced our own long-range sustainability goals that included a commitment to flow carbon-free Redeem to all our stations by 2025. This is especially interesting to note because Clean Energy will be fueling its customers with 100% renewable non-fossil energy 20 years ahead of California's goal of transitioning the state's power supply to 100% renewable energy. This will allow all of our customers to easily and inexpensively achieve aggressive low-carbon goals well before our EV counterparts.

9:40 In the second half of last year, we announced a new and exciting approach to attract the heavy-duty trucking market to expand their fleets with natural gas. This could not have happened without the financial backing of our new partner and largest shareholder, Total. The biggest obstacle to trucking fleets making the switch has been the incremental cost of the natural gas engine and fuel system. This new program we call Zero Now. Barclay Corbus, Robert Vreeland in partnership with Union Gas along Canada's busiest trucking corridor in Ontario.

10:44 Our sales team is currently in conversations with most of the largest trucking companies in the country about this offer. We have already signed several deals for new natural gas trucks and have many more in various stages of execution for truck and fuel purchase agreements. I know some have expected announced deals right out of the gate. But the discussions that we are having with these fleets are about deals that take delivery of real, road-tested, reliable, zero-emission trucks, which will fuel at our existing network of stations, providing a clean, renewable fuel. And all of that takes time, as each fleet has specific tractor specifications, as well as lanes to identify for their operations. This process realistically has eight steps, from initial contract to final delivery, and decisions representing hundreds of thousands of dollars, if not many millions.

11:37 We are dealing with very smart operators who understand what is proven technology and what is hopeful. And almost without exception, virtually everyone has expressed strong interest in our Zero Now offering as it mitigates their company's risk to enter into a green solution that is reliable, tested, and has the range needed for heavy-duty trucks. It's very different than putting down a refundable positive of a few thousand dollars on a concept heavy-duty truck that may or may not come to market any time in the near future and having access to an appropriate fueling infrastructure that may or may not be built at a price that won't bust any budget. Another initiative that we began several years ago was to strengthen our balance sheet and turn the company towards sustained profitability.

12:22 While we have consistently increased our revenues, We have dramatically streamlined our CapEx and SG&A, allowing us to reduce our convertible debt from a high of $545 million to $50 million, which is not due until July of 2020. At the same time, we ended the quarter with $95 million in cash and investments. Our operating results continue to trend positively, considering 2018 GAAP operating income of $4 million, compared to an average operating loss of $65 million per year on a gap basis over the last three years. Below the operating line, the other item I'd like to highlight is our significantly reduced interest costs. We're exiting 2018 at a $6 to $7 million run rate of annual net interest expense compared to net interest expense of $13 to $16 million for 2018 and 2017 and down from a high of $44 million in 2014.

13:23 This is all contributing to our goal of exiting 2019 on the path to net income. Looking forward specifically to 2019, we've provided guidance on net loss and adjusted EBITDA, and I know Bob will cover that in more detail in his remarks in a moment. Let me close by saying, as proud as we are about our performance in 2018, we are excited about what we are already accomplishing this year and plan to continue that momentum. We heartily embrace the discussions which are taking place at all levels of government and in business about what needs to be done to tackle serious environmental issues. Natural gas has already played a significant role in putting us on the right track. But powering more vehicles with it, especially renewable natural gas, will only accelerate the progress.

14:12 As I've said before, no other company is better positioned to take advantage of this shift than clean energy, and that is truer today than ever. We've worked hard to put all the right pieces into place for customers to easily make the switch to the cleanest fuel in the world. And with that, I'll hand it over to Bob.

14:29 Thank you, Andrew. Our financial results for the fourth quarter and full year 2018 were in line with our expectations. We ended 2018 within the range of our guidance on adjusted EBITDA, SG&A, and margin per gallon, and we were better than our guidance on our gap net loss, Even if you adjust for the unrealized gain on our zero now fuel hedge of $10.3 million recorded in the fourth quarter. I'll discuss our 2019 outlook at the end of my remarks. Our volume growth in the fourth quarter of 14% above last year came from C&G and L&G, both benefiting from incremental redeemed gallons related to our expanded BP relationships.

15:15 CNG volume also increased as a result of growth at NG Advantage and from our refuse sector. In addition, we saw growth in bulk LNG deliveries compared to a year ago. Redeemed volume grew 55% in the fourth quarter to 38.8 million gallons versus 25 million gallons a year ago. Our revenue for the fourth quarter of 2018 was $96.2 million compared to $89.3 million in the fourth quarter of 2017. The 2018 fourth quarter revenue included $10.3 million in unrealized gain on our Zero Now fuel hedge, while last year included $5.9 million of revenue from our previously consolidated compressor subsidiary that is now an equity investment and no longer reported in revenue.

16:04 Volume growth and, to a lesser degree, higher effective prices per gallon on the fourth quarter contributed to the 21% increase for a $13.7 million increase in volume-related revenue over last year, noted by Andrew in his comments today. Our overall gross profit margin in the fourth quarter of 2018 was $36.6 million compared to $25 million last year. 2018 includes the $10.3 million of unrealized gains on ZeroNow fuel hedge, While 2017 includes $1.1 million of margin from our formerly consolidated compressor subsidiary. Otherwise, our 2018 gross profit margin increased due to increased volumes.

16:51 We delivered 12.4 million incremental gallons in the fourth quarter of 2018 versus 2017 at an effective margin per gallon of 26.4 cents versus 26 cents last year. This incremental volume at a consistent margin per gallon drove an additional $3.3 million in gross profit margin for the fourth quarter of 2018 versus 2017. The fourth quarter of 2018 benefited from higher redeemed renewable natural gas sales and increased LCFS credit revenue compared to 2017. Our SG&A of $20 million in the fourth quarter of 2018 was $3.8 million We also recognized $4.8 million in earn-out income associated with our sale of biomethane assets to BP in the first quarter of 2017.

17:40 This was the second year of a five-year earn-out. Our gap net income for the fourth quarter of 2018 was $6.9 million, compared to a gap net loss of $28.3 million a year ago, or an improvement of $35.2 million. The unrealized gain on our zero-now hedge favorably impacted 2018 by $10.3 million, while last year included $6.5 million in charges related to the deconsolidation of our compressor subsidiary, and an impairment charge of $7.3 million associated with our LCFS credits. Still a significant improvement in 2018 despite these notable items.

18:39 Our adjusted EBITDA for the fourth quarter of 2018 was $12.7 million compared to a negative $9.7 million in 2017 for an improvement of $22.6 million. We ended 2018 with more cash and investments than debt, and this after paying down $185 million in convertible debt. As Andrew mentioned, we ended 2018 with $95 million in cash and investments, with $50 million in convertible debt due in July of 2020. The only other debt we have is equipment and facility financing of $34 million, primarily at Engie Advantage.

19:25 As expected, we generated positive operating cash flow in 2018. I'll point out also that our operating cash in 2018 exceeded our purchases of property and equipment. We continue to be diligent in our focus on generating cash as we move forward. Looking forward to 2019, We will see continued improvement in our financial results as we grow volumes on top of our existing infrastructure. One important point to note is that our guidance here does not include alternative fuels tax credit revenue. Our results for 2018, of course, included the alternative fuel tax credit related to 2017. And while we believe the alternative fuel tax credit will be enacted in some form, we're not including it in our 2019 guidance.

20:15 Having said that, we still see improvement in our financial results and if the Alternative Fuel Tax Credit is enacted during 2019, those revenues and margin would be incremental to this guidance. In 2018, the Alternative Fuel Tax Credit related to 2017 was about $26 million. Our volumes are anticipated to grow in the low double digits and our effective margin per gallon for 2019 is expected to be within a range of 24 cents to 28 cents, which is a similar effective margin we are seeing today, but for 2019 on much higher volumes. Our volume growth will drive incremental gross profit margin.

21:01 Our station construction sales are expected to range from $25 million to $30 million in 2019, As we see similar patterns of steady, smaller value projects in 2019 as we saw in 2018. Our 2019 SG&A is expected to range from $73 to $79 million, consistent with 2018, but this will also be supporting higher volumes and allow the incremental gross profit margin to drop to our bottom line. Gap net loss for 2019 is expected to range from $12 million to $18 million. 2018's gap net loss was $3.8 million, but included $26.7 million of alternative fuel tax credit, which is not considered in my 2019 estimates.

21:54 Also, I'm not including any estimate of unrealized gains or losses related to our zero now fuel hedge in our expected gap net loss for 2019. Adjusted EBITDA for 2019 will be in the $50 million to $55 million range, again, without the alternative fuel tax credit. On a comparable basis to 2018 without the alternative fuel tax credit, This is around a 60% improvement in adjusted EBITDA. We are expecting positive cash flow from operations for 2019 as well, and depending on the financing put in place with Energy Advantage for its capital projects, we expect operating cash flow to exceed our purchases of property and equipment for 2019. All in all, we see 2019 Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad.

23:14 And a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question today comes from the line of Rob Brown with Lake Street Capital Markets. Please proceed with your questions.

23:41 Good afternoon. Congratulations on nice growth in the quarter. Thanks, Rob. Thank you. Just wanted to get a little clarity. Is that growth driven much by the Zero Now program, or is that growth from that program still yet to come?

23:56 That growth would still be yet to come. Because remember, those are new contracts with new truck builds and trucks to be delivered. And so it's mostly from our core business and from our redeem.

24:13 Okay, great. And then on zero now, what's sort of the size of the truck fleets that are looking at this and size of the rollouts that are being contemplated?

24:21 Well, in terms of the size of the fleets that we're calling on, you could, you know, as you know, Rob, as you could imagine, they're big fleets, right? So, I mean, we're calling on fleets. I think you're asking about the other part of this question, but we're calling on large fleets, you know, that have thousands of vehicles, right? But we also find interests in fleets that aren't the largest of fleets but are very aggressive, right? We often find that those trucking fleets that are trying to gain business from some of the largest fleets are those truck fleets that are between 500 and 1,000 units. So we call them those as well. But we're out talking to, you know, I think we would all consider to be very large fleets.

25:10 I think that as you're looking at what is the size of the deals that we're talking about, which is probably your real question, is it's between 20 trucks and 100 trucks, 100 units. You know, let's face it, this is a new product. It's a new engine product. Some trucks buy, you know, some fleets may be purchasing trucks. Upwards of what I mentioned, it could be upwards of 1,000 units in a year. But it's unlikely that they're going to take a bite that big at first. And so, you know, most of the deals we're working on are, I would say they're not tech. You know, we've moved beyond the tech stage.

25:59 This is commercial, right? And so they're looking at 20 trucks to 50 trucks, and that sort of size. And some that we're working on are as large as 100 units.

26:11 Okay, that's great clarity. Thank you. And then on your margin per gallon, does that include this one-time gain or the gain on the – or was that the gain?

26:26 No, it doesn't.

26:28 Okay, good. Thank you. I'll turn it over. The next question is coming from the line of Eric Stein with Craig Helm. Pleasure to hear your questions.

26:38 Hi, Andrew and Bob. Hi, Eric. Hey, just sticking with the Zero Now program, and I know that this maybe plays it out a little bit longer term, but I think if my math's right, this specific program that Total is backing is 2,500 trucks. Given the value proposition there, the interest you've got, you know, Can you just talk about their desire or potential to expand that or maybe other financing vehicles that you may use to expand that given that there might be significant uptake?

27:15 Well, let's fill it up first, right? We've always talked about the... And I talked with some, you know, some well-known financial advisors to the company and that would be kind of household names that basically said, listen, this is really commercial. That this is good paper. That you're doing a commercial truck lease with very large, well-heeled fleets. And that as you begin to fill up this and roll out this paper, that there will be interest in this kind of financing. And so... I have talked to my partners at Total and tried to keep them interested. And once I fill up the first $100 million, I'll be back at their door for another. But let's see how we do on the first.

28:10 But I like to think that this isn't really rocket science here. I mean, what is new financing of the trucks? There's a lot of room in here between the price of natural gas and diesel. And so it enables, it makes this economic. And what is unique and what is very appealing to these fleets is what we have put in place with our friends at Stel as well, which is this fuel hedge. Never really before has anybody put in place a bi-pad fuel hedge, fuel hedging diesel by area in the United States and natural gas at delivery points. and locking in this kind of discount for an extended period of time of up to five years.

28:56 That is unique. That is very appealing to these customers. It's a little complicated because it's not exactly the way they buy stuff now, and it does require them as they look at, let's just say in my example that I was talking to Rob a minute ago, at 20 trucks or 50 trucks now, I am asking them to commit to fuel for 50 trucks for five years, right? Now, they're enjoying a potentially up to a dollar a gallon savings on every gallon for those 50 trucks for five years. So it's very appealing, but it is different and it is a little bit unique. But this is unique to us and it is unique to our deal with Total. And really, at this point, we haven't had any customers say that they don't like that.

29:48 So, we're, you know, it's taking a little longer than I'd like because, as I mentioned, we felt, that's why I mentioned it in my remarks, you know, we are asking people to commit to going out and buying trucks and spending, you know, millions of dollars on trucks and committing to fuel. So, you know, we're not asking people to buy cell phones here or put in a $2,500 deposit or something. This is real money. And so, it has to go through all the due diligence and you have to spec trucks and you have to work with the with the truck dealers and with the Indian manufacturers and, you know, it goes on and on, so it's complicated. But it's real, and it's really commercial, and it's kind of exciting.

30:28 Yep, absolutely. Thanks for that. And maybe just turning to the volumes, I think this is your highest volume level and maybe first double-digit volume of your increase in two years. Obviously, redeem a big part of that. And I may have missed it, but did you give a redeem – Target for 2019 as part of your goal to be 10% plus?

30:54 You know, we didn't, but I think, unless Bob corrects me here in the public call, I think it's safe to say, Rob, that we feel like we're going to enjoy good growth in 2019, and it'll probably be in line with what we saw in 2018. So I think if you use a 40% growth rate for Redeem, Yep. For 2019, I think we'd be able to make... Oh, Eric, I'm sorry.

31:22 Eric.

31:23 I think, you know, a 40% growth rate for our redeem in 2019 is probably a good number, and I hope we can do better than that, but I think that would get us going.

31:34 Okay. And then just last one, I mean, maybe longer term, you've got your goal now to be 100% RNG by 2025. I mean, are there any... Hurdles you see to that now that you've got BP backing that? I mean, is that something where that's just based on demand for your customers? I mean, where's your confidence that you will have the supply to handle that?

32:01 You know, we've talked about this before, I think, on these calls is that I see that that. As long as the regime and the credit regime stays in place, which we see in California as being locked in for a decade, and I don't see anything really changing at the federal level for quite a while, there's a lot of renewable natural gas coming to market. And I think California alone, over the next few years, will be able to produce up to a couple billion gallons of renewable natural gas. That'll take a few years to do. And of course, you know, we're We're talking about supplying an extra 400 some odd million nationwide for whatever that is if you do the math. So I think the country can get into the several billions of gallons of renewable natural gas as these dairy farms and wastewater treatment plants and landfills and renewable sources get tapped. It's very viable.

33:03 And when you start comparing it to what's necessary to do this other stuff that people talk about, There isn't anything that's as commercial and as environmentally friendly and available as this. I hope, you know, as we're beginning to see this down the port of LA, I'm kind of switching over to trucks, we're seeing more trucks being introduced into the port right now. They're all getting renewable natural gas. And when you look at that new, brand new, American-made 12-liter engine that's 90% less NOx and is using renewable fuel, which Right now, it's probably 75% less carbon, and when more low-CI gas comes into the port, it'll even be better than that. There isn't anything that can touch that for the economics.

33:49 And I think that as that happens, the light bulb's going to begin to go off, and people will say, wow, America's got a lot of renewable natural gas. Look, over time, I think we'll be ahead of the crowd, and it's our goal to be all renewable, but The country will benefit because you can use a lot of this and blend it, right? I mean, a lot of others will get to be 50% renewable, and it's still dramatically cleaner than anything else out there.

34:20 Okay, thanks a lot. Okay. The next question is from the line of Pavel Malakhov with Raymond James. Pleased to see your questions.

34:31 Thanks for taking the question. I know we've talked about this every quarter. Here we are, more than a year after the last time Congress extended the tax credit. I know it's not in your guidance, and rightly so. For 2019, obviously, we saw the Grassley-Wyden bill getting introduced a few weeks ago. I just thought I'd get your latest thoughts on the outlook for that passing and anything you're hearing from the Hill Commission.

35:04 Yeah, you know, Pavel, you follow it as close as anyone, and I do too. We're feeling, you know, as I always say, I mean, you know, it's sort of the Wild West out there in Washington. We feel pretty good that the extender package and the alternative fuel tax is in some of those different extender tax packages. We think it's going to happen. I think it was, as you note for those on the call, that Actually, Senator Grassley and Wyden, so bipartisan, put in on the Senate side, which is not exactly where it would necessarily start, but put in a tax package that had some extenders in it, and the alternative fuel tax was in there, so that's obviously a good sign.

35:49 We see this increasingly as a bipartisan issue, a recognition at those that we're talking about on the House Ways and Means, and also on the Senate side, that they need to get this resolved. I think, Pavel, I think it's going to happen in 2019. I'm not sure which vehicle, you know, it gets hooked to and when. But we are very confident, as best we can be, that it's going to happen this year. I think what we're probably seeing is that it would be retroactive, right? So it would take place for what, for 18th and 19th. I think there's a sense that, though, going forward, as Senator Grassley's talked about on the biofuel tax credit as well, this probably needs to be, over time, a phase-out of this tax credit, that we need to get some certainty for the industry to be able to help with these fuels, and that, my guess is, you're going to see that There's going to be a tax bill that will deal with retroactive a year and forward for this 2019.

37:03 And then there's probably going to be an effort later this year, I think, to look at some sort of five to seven year phase down. Where the alternative fuel tax and some of those other taxes will begin to phase down over time. And, you know, that'd be a good thing. And it would provide certainty for the industry and for our customers. And so... Answer your question. Yeah, I think we're going to see the alternative fuel tax soon, and then I think, you know, say soon later in the year, you may see how it gets addressed in the future.

37:38 Okay. On the service revenue line, you know, obviously there is quarter-to-quarter choppiness always, but, you know, it does seem like that's kind of struggled even as your product sales have, you know, have improved. So... Any sense of what that picture will look like in 2019? I didn't think you were giving any specific guidance for services, but any color on that would be helpful.

38:12 Okay, yeah. Well, so part of that choppiness is related to certainly year over year is related to the fact that our compressor subsidiary had service and a fair amount of service revenue that was in that number. And so that was in 17 and it's not in 18 because now it's down as an equity investment. And then, you know, as of late, you know, I would say that that service, that quarterly service revenue is, you know, fairly steady and we would see it, you know, being somewhat steady to slightly growing, if you will, you know, into 19. So there's nothing really Does he mean construction? No, service. Just, you know, O&M, our whole O&M.

38:59 It's growing. Yeah, it's growing. But we've noted in our comments a couple deals that were not renewed, and those were in-service related. But, frankly, that area is – we continue to see good growth because it really – involves a lot of the refuse and the transit, and that area is, from a volume standpoint, is all growing. So that should, you know, that'll come through in the top line as well.

39:39 Okay. Just a quick question. In the sources of revenue table, what is other that added $2.7 million this past quarter?

39:52 Yeah, most of that is we had some natural gas trucks that we had acquired and sold. Okay. Got it. If you recall, back in some filing, we had acquired about 140 natural gas vehicles, and we've put those out into our network. Okay.

40:15 You know, I want to talk about – I want to mention that, Pavel, because I think that's kind of interesting because it's something that comes up once in a while. There was an occasion where we saw about 145 trucks that had basically lost the contract that they were operating on. And we moved in and bought those trucks at about $65,000 apiece. They were a couple of years old, had a couple hundred thousand miles on them generally, well maintained by their very large fleet. We bought all those trucks. And we sold those to fleets. at our fueling network. And what I thought was interesting is that we were able to sell those trucks better than what the residual value would have been.

41:02 There's always a question of what the residual value is of these natural gas trucks. And people that are looking at it say, well, I just don't know if there's going to be a residual value after four or five years. Well, these beat, and we sold these trucks better. into our fueling network at the same price that we bought them. We weren't trying to make money. We were trying to get the gallons appropriately put back into our network, which we did, and those trucks brought a very good value. We don't have any more.

41:31 Yeah, we're out.

41:33 We're not expecting that. Yeah, but that's what that one was. Okay. Very helpful. Appreciate it. Thank you. We've reached the end of the question and answer session, and I'll now turn the call back over to Andrew Littlefair for his closing remarks.

41:51 Well, thank you, Operator. I want to thank everyone for participating in today's call, and I look forward to updating you on our progress next quarter. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.