CLNE: Hold; 1Q15 Update

CLNE reported its first quarter 2015 results on May 11, 2015.  The results indicated that fuel sales are  continuing to increase by 20%+ year-over-year; however, overall revenue decreased relative to 1Q14.  The decrease was attributed to underperformance and deferred (not yet recognized) revenues related to the business segments outside of fuel sales.

The major concern with CLNE is when/if it will achieve profitability.  The main driver of profitability is likely fuel sales, as this aspect is the sustainable and predictable portion of CLNE's revenues.  CLNE has several opportunities to increase fuel sales: freight trucking, the virtual pipeline obtained through investing in NGAdvantage, rail, and marine.  Rail and marine may both be huge opportunities for growth; however, the development of these markets are not yet on the short-term horizon.  Freight trucking has been slow-growing and has not likely accelerated recently.  NGAdvantage's virtual pipeline, however, will likely have a significant impact on the next quarter's results.

CLNE inked a deal with International Paper (IP) to supply a significant amount of natgas to IP's mill in New York.  The deal should increase gallons delivered by nearly 3 million during the next quarter (relative to the first quarter).  The additional 23 accounts signed with NGAdvantage represent a minimum of 5 million gallons per a quarter, of which CLNE claims 51%.  Some or all of the gallons delivered to the remaining accounts may have been included in the previous quarter's gallons and, therefore, may not represent an increase.  There is much potential for increase in gallons delivered related solely to NGAdvantage; this next quarter may provide some clarification.

Common Cents Take: CLNE is developing multiple "shots on goal."  The stock is highly volatile on little news, but the pace seems to be continuing steadily (albeit slowly) with potential for acceleration.  "Adjusted" profitability may be achieved within a year, which will entirely change the game for investors.  Based on the uncertainties, Common Cents does not intend to add to this position in the near future.