Good afternoon, ladies and gentlemen, and welcome to the Clean Energy Fuels Third Quarter 2023 Earnings Conference Call. At this time, all lines are in listen-only mode, and following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 9, 2023. I would now like to turn the conference call over to Mr. Robert Vreeland, CFO. Please go ahead. Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the third quarter ending September 30, 2023. 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 risks, uncertainties, and assumptions that are difficult to predict. 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 the Clean Energy's Form 10-Q filed today. These forward-looking statements speak only as of 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. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results. The directly comparable GAAP information and reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA, and a reconciliation between these 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. With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair. Thank you, Bob. Good afternoon, everyone, and thank you for joining us. I'll let Bob go into the financial details on the quarter, as this quarter has its share of factors impacting the comparison to a year ago, as well as factors impacting our results for the third quarter of 2023. But at a high level, while our results for the quarter didn't quite reach our expectations, there was also nothing occurring within our business of any significant consequence impacting our prospects. Key strategic milestones are being executed, and we do not see any obstacles in the near term. Frankly, in a slightly off quarter, we still produced Adjusted EBITDA of $14.2 million, which equates to $57 million on an annual run rate basis. So with that, I'd like to focus my comments on the progress we're making across many fronts of our business as we put hundreds of millions dollars to work with plans to deploy well above that. I want to emphasize here that we remain as bullish about the future as we were when we rolled out our comprehensive RNG strategy in early 2022. You know, RNG is moving in the right direction. It's becoming recognized as the most realistic fuel to decarbonize heavy-duty trucking. In our opinion, the way the entire alternative fuel market has been moving has only confirmed that we set out on the right plan. We are making investments in the production of our own steady supply of low-carbon RNG, while at the same time growing the demand with new customers like Amazon and others that will leverage our national fueling infrastructure. Along the way, we've been able to secure the best-in-class financial and operational partners through the joint ventures with BP and TotalEnergies, and sustainable capital providers like Riverstone Credit Partners. The confirmation of our strategy by such storied names, along with significant investments by other energy majors, pipeline companies, utilities, and large private equity firms in the RNG space, is notable as we move forward. I mean, think about it. It is really impressive to me that companies like BP, Chevron, Total, Shell, Enbridge, BlackRock, UPS, WM, Republic, Amazon, are all involved in the RNG space. We made good progress on the low-carbon RNG production project at dairies over the last 18 months, and I hope you saw the press release a few weeks ago announcing that we began injecting RNG into the pipeline in June at our first project, Del Rio Dairy in Texas. We actually began producing RNG in February and stored it until all the regulatory approvals were obtained. But most importantly, we recently began generating both federal and state environmental credits. We made the decision to flow this first RNG from Del Rio to Oregon, where we have stations and demand, and the price of Oregon's LCFS credits is stronger. So this is a great example of why it's important to have a national fueling infrastructure, which allows us to optimize RNG deliveries for our production projects. We've also begun producing RNG at three other dairies, and there are another two projects that are nearing completion and will be producing RNG by the end of the year or early 2024. We will be formally announcing the details of these in the coming weeks. S ome of these dates might have slipped a little from our original plan, but nothing significant. It's important to note that these are large-scale projects, which in this case represent about $184 million of gross deployed capital by us and our partners. You know, these projects are large, and they can be a little disruptive at first at the dairies and their normal dairy operations. And they need approvals by several regulatory agencies, so there will be unforeseen delays. But with every project, we have gained important insight and knowledge that is being applied to new projects, and we remain on track to meet our overall RNG supply timeline through our own constructed projects and potential acquisitions. The investments we are putting into RNG supply now will have tremendous value and position us very well for the future. The enthusiasm I have for our RNG supply business is only matched, if not surpassed, by the demand side. Our base business of fueling tens of thousands of large fleet vehicles every day with RNG continues to grow, providing us with recurring revenue, keeping our balance sheet strong, and allowing us to make the investments for what we believe to be sustainable growth. Much of my optimism is based on one of the most significant advancements that has ever taken place in the RNG technology space. Most of you probably know what I'm talking about, which is the introduction of Cummins' new X15-liter natural gas engine that is currently being tested by a handful of some of the country's largest heavy-duty truck fleets. The phrase game changer is probably overused, even by me, but there's not a better way to describe this larger engine that Cummins is introducing to the heavy-duty market. In my 20 years of working very closely with this world-class engine manufacturer, I've never heard Cummins speak about another product quite the way they are about this 15-liter engine. Cummins executives are actively promoting the attributes of the engine to investors, their dealers, industry partners, and potential customers with the message that this engine has it all: superior power, torque, fuel efficiency, and most importantly, the ability to decarbonize heavy-duty trucks with RNG on a scale that no other technology is coming close to achieving. It would be one thing if it was only Cummins bragging about a new engine, but they are building on a very successful launch and adoption of it in China, where tens of thousands have already been sold. Now we are hearing very positive early feedback from the fleets that are testing it here in the U.S. The fleets that are doing the testing of this 15-liter engine include some of the country's most demanding, such as Walmart, Werner, UPS, and Knight-Swift. I would not be overstating this, it would not be overstating to say the reviews have been very impressive. A Cummins executive put up a slide at a recent presentation with quotes from the fleets like this, quote, "The drivers love the truck. The engine has a nice pull. It's very quiet, plenty of torque." And quote, "The more they drive it, the better it's getting all the way around." And quote, "It feels and drives like a diesel, which is a good thing." I could go on, but the feedback like this is what is producing the optimism by Cummins and many within the industry, like the OEMs, that will place it in their trucks. So much so, that for the first time, Cummins is making public their assessment of potential market penetration for the new 15-liter natural gas engine. On the low side, Cummins believes there could be an increase of penetration of the heavy-duty natural gas market share by fourfold, from 2% today to over 8% by 2027. Their realistic high case is 12%. Approximately 250,000 heavy-duty Class 8 trucks are sold every year in the U.S. If one takes the medium between Cummins' low and high cases of 10%, that means 25,000 new heavy-duty natural gas trucks could be sold in 2027. Using an average annual fuel usage of 15,000 gallons a year per truck would mean 375 million additional gallons of RNG used incrementally each year. There is no other alternative that could come close to those numbers in the heavy-duty space. Many of the fleets testing the 15-liter do not currently operate many, if any, natural gas trucks, so much of the 25,000 will be coming from new customers. I could go on about the importance of this new engine, but let me close with saying it couldn't come at a more opportune time. The desire for fleets to decarbonize is only increasing, yet the technology that some had placed much hope to get them there is starting to come under increased scrutiny by the entire transportation industry. And of course, I'm talking about electric. Just in the last few weeks, headline after headline has announced the issues that electric is having in the passenger vehicle market. Many within the heavy-duty space are quietly expressing, and some not so quietly, their concerns about the practicality and cost of operating a fleet with much larger batteries and the need for even more powerful charging infrastructure. RNG continues to be recognized by hundreds of the country's largest transit agencies and refuse companies as an ultra-easy, low-carbon solution that is here today. Soon, with the addition of the 15-liter, the Cummins suite of natural gas offerings, heavy-duty truck fleets that operate under the most extreme conditions, will be able to participate in the RNG low-carbon solution. I will reiterate, we strongly believe that the future could not be better for Clean Energy. Our strategy to increase the supply of low-carbon RNG is being well executed, and the almost universal optimism in the new engine technology should be reason for everyone's confidence. It certainly is for me. With that, I'll turn the call over to Bob. Thank you, Andrew, and good afternoon to everyone. As Andrew mentioned, our financial results came in a little short of our expectations. I want to put that into perspective here. We don't normally guide to quarters, but I want to tell you where we kind of came in at. For the third quarter, we had forecasted a GAAP net loss of $24 million, and we're reporting a GAAP net loss of $26 million. And then we were forecasting an adjusted EBITDA of around $18.6 million, and we're reporting $14.2 million of adjusted EBITDA. Now, most of this miss was the result of two factors: a much lower LCFS price than what we had forecasted and a shortage of RNG from third parties, as well as our own production. On the positive side, the RIN pricing has exceeded our expectations and remains high today in Q4. Our base fuel sales margin, exclusive of the Amazon warrant charges and environmental credits, is contributing incrementally to our earnings as we expected. Our Amazon volumes are ramping up as we open more stations, and we also had positive operating cash flow for the third quarter as well. So a lot of positive factors in the third quarter, even though the results didn't quite meet the expectations. Regarding our updated guidance, we felt, given the circumstances where the LCFS is at, so principally looking at likely a lower expectation on the LCFS pricing and considering the impact of the third quarter RNG deficit, we've taken our guidance range down slightly. Looking at our results and starting with volumes. I'll point out that the RNG volume of 56.7 million gallons delivered for the third quarter of 2023 was up 5% compared to the third quarter last year. Sequentially, however, we were down 3% from the second quarter of 2023 due to the shortage in RNG that I mentioned. And then, also kind of a side note here, looking at our total fuel volumes for 2023, and particularly the conventional natural gas, this is where you'll see the impact from our Texas LNG plant that's not been operating, and we've talked about some of the drag that that's caused. Last year, that plant had sold approximately 6 million gasoline gallon equivalents through September, so about 2 million gasoline gallon equivalent to quarter. And that, so that is impacting kind of the overall story there. Looking at our comparison of revenue, this one always gets kind of interesting, and it certainly is this quarter. We reported $95.6 million of revenue for the third quarter of 2023, versus $125.7 million in the third quarter of 2022. So that's a $30 million decline. First, the most notable item is that the third quarter of last year included three-quarters of the alternative fuel tax credit, which was reinstated as part of the Inflation Reduction Act. So there's $11 million of retroactive alternative fuel tax credit that's in the prior year number. And then the Amazon non-cash sales incentive warrant charge, which reduces revenue, is approximately $10 million higher in the third quarter of 2023, and that's from increased volumes that we've had in 2023. And then the, kind of the third item there, finally, for the third quarter revenue of 2022 was higher by about $13 million due to the natural gas costs being higher, which then also translates to a higher sales pricing back in 2022. And that's a phenomenon that we deal with, relative to the natural gas and how that impacts our pricing. But for some context here, though, even though the gas cost and sales pricing was higher in 2022, our base fuel sales margin per gallon, exclusive of the warrant charges, is higher in 2023. So we've optimized our retail pricing and gas cost in 2023, and a large part of that's been the favorable spread that we've talked about between the price of oil and therefore, the retail price of diesel and natural gas. So that is helping us. It continues to help us, but on a revenue front, it's lower when the gas costs are lower. Looking at our GAAP operating results, a loss of $21.4 million for the third quarter of 2023. That compares to a GAAP operating loss of $8.6 million a year ago, for a $12.8 million decrease. But of course, that is being influenced by $21 million of a decrease that relates to the alternative fuel tax credit, retroactive credit of $11 million, and then also the Amazon warrant charge that's up by $10 million. So that's basically more than takes care of all that decrease. So really, the other notable item in our GAAP is that our depreciation and amortization was lower in 2023 by approximately $7.2 million, primarily because 2022 included some incremental depreciation on certain station assets. Our adjusted EBITDA of $14.2 million in the third quarter of 2023 compares to adjusted EBITDA of $23.9 million for the third quarter of 2022, or a decrease of $9.7 million. Again, the $11 million of the retroactive alternative fuel tax credit is included in that prior year number. If you were to exclude that, the 2022 third quarter adjusted EBITDA would be $12.9 million compared to the $14.2 million in 2023. And that improvement there is really our fuel volume growth and the underlying base fuel sales margins continue to add incrementally to our results, which has helped to offset the effect of a lower LCFS credit pricing and a lower net take on the RIN and also some higher operating and equity investment costs in our dairy joint venture. So, frankly, the fuel volume and that base fuel margin is working well for us and it always does. The adjusted EBITDA of $14.2 million is comprised of $15.5 million from the distribution business and -$1.3 million coming from our dairy RNG production business. On the capital front, we remain on plan with our CapEx spending in the distribution business of approximately $90 million, as well as $40 million in our dairy RNG investment business. And noting, though, on that with the dairy RNG investments, there is $84 million in cash at our dairy JVs. I think with that, operator, we'll turn the call over to questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You'll hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order that they are received. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. And your first question comes from Eric Stine from Craig-Hallum. Please go ahead. Hi, Andrew. Hi, Bob. Hi. Hey, can we just dig into the RNG for a second? So, you know, just wondering if you could expand a little bit on the RNG shortages. I mean, I would assume it's all from third parties, given that you've just started bringing on your own volumes. So maybe some of the things you saw in the quarter, and have you seen that more normalized here in Q4? Yeah. Maybe I'll start, but, Eric, yeah, it was actually, you know, from what we were forecasting, there was both supply as well as our own production we thought we'd have a little bit more of. But on the supply side, I'm going to say it's kind of a little bit of normal of the landscape, but there were some low CI projects that were, you know, just had some startup delays and then some CARB certification delays. And so that took down a pretty good number of expected low CI gas. Now, we also though had some landfill gas that produced more, and so there's a bit of an ebb and flow there. The net of it is, is that we were kind of net, you know, we were net down, call it maybe a couple million gallons. So this is not huge, but we're talking about four here and three there and, you know, netted to two. But what it does do is it does have an impact on the, on the mix, right? On kind of the economic mix when you talk about being short on low CI and making it up on landfill. But, projects that, you know, is, just started a little later, so nothing, you know, real fundamental about things aren't working or shutting down. So, you know, and I mean, just as there's more and more of it, you know, we'll get past some of these, you know, when 2 million or 3 million gallons makes a difference, but, you know, we're not dealing with huge numbers here. But that, that did impact, say, our net take on the RIN, the LCFS, as well as the, the values on the LCFS. And then on our production side, you know, we were anticipating that we could have more than just the Del Rio that would be contributing and maybe monetizing some biogas in the quarter. Now, maybe not a lot, but enough to defray some of the cost, and those are, as Andrew said, they're kind of producing gas now, but we didn't monetize it, so, you know, we put it together, and there was a bit of a impact, but I call it kind of timing, you know? Okay. Nothing for us fundamentally to worry about. It's a little bit of the nature of the beast, but, you know. Okay, and so then when you talk about in the release, you just a lower share of RIN values, so that also refers then to, you know, you just had values that did not reflect some, you know, a greater mix of low CI, and therefore, you had a lower share of it? I mean, just to confirm, I mean, nothing's changed in terms of your share as the downstream, you know, avenue to the fuel tank or anything. It simply is that mix issue. It is. It is because, you know, each supply deal kind of has its own negotiated take, and as that starts to move around or it's short, you know, it could be short where our take is higher or not, you know, and so, that's ultimately kind of how it shows up. You know, I mean, it looks like a lower take, but, you know, it's, it's really kind of a, you know, how much we ultimately earn based on the mix of all the gas and the suppliers that we're flowing through our network. Yep. Okay. Maybe a good segue, just in terms of the upstream progress. So it sounds like, you know, you're basically, I mean, maybe a little bit delayed, but on track for the 6 to be producing gas here by the end of 2023. Just curious, I think in the past, you've talked about, gosh, I don't know if it's eight in 2024 and a pipeline of 15+. Just curious, you know, if anything's changed there, details would be great. Yeah. You know, Eric, I'd say it's generally the same. And you're right, we still see that we'll be on track by the end of the year. Now, I did, y ou'll notice I did slip into early 2024 with one of those, right? So, but it's going to go almost exactly as we've discussed, that those six will be finished and one may slide in there a few weeks. But those will be on production, and we'll have something out soon on the on three of them. All right? Now, for 2024, you'll have, i t's essentially, the same numbers as we've discussed. It's actually a little larger. So it's, you know, you could slice these, as we've discussed before, a couple different ways, but you'll essentially have, you have one that's in construction, as we speak, that'll be continued to be in construction in 2024. You'll have four more that'll come on in construction. And then right now, we have 7/8 that are in the final throes of design and engineering, and a few of those, a couple of those will be on production. Not on production, but in construction. So it's tracking exactly where we saw it, that, you know, you'll have a few come on toward the latter part of the year. And then our pipeline continues to be similar. You know, it's in the double digits, and those ebb and flow, but you know, don't be surprised if somewhere in the year, some of those will come on and kind of change our numbers. So you know, I would say, you know, Eric, it's about as many as we can handle right now. And it's going as expected. So we're feeling really good about that. You know, we're beginning to do even more of the work ourselves, and we're beginning to bring more of the operations of that as we contemplate these projects in-house. So we're really getting more and more comfortable as we cut our teeth on these early projects on how the future or how we develop these projects. Okay, thank you. Thank you. And your next question comes from Rob Brown from Lake Street Capital Markets. Please go ahead. Hi, good afternoon. Hi, Rob. Hi, Rob. Hi. The run rate on the RNG production facilities, when you get those six kind of up and running, what's the run rate in terms of gallons, and how does that, I'm sure it does help the shortages, but just a sense of what that does in terms of volume? Well, you're looking, I don't know, 7 million to 10 million for maybe the ones that we're talking about that go into production or that go into that, you know, come online by the end of the year. And then others that we've talked about that will go into construction and as they, produce, you know, I don't know, they all vary, but I mean, you know, our, s o we're looking i n kind of, you know, 10 million to 20 million gallon range, as we've talked about. And, you know, these things will take a little time getting up, so, you know, I think they'll produce more as we move through, so you could be on a, you know, kind of an exit rate that's, you know, a higher number even as we go through 2024. Okay, great. Thank you. And then on the 15-liter, very good to hear the bullish kind of commentary there. How do you see that ramp rate from these test rollouts to kind of production rollouts? And I think you quoted the Cummins percentage numbers, but how do you see the ramp rate more in the early years here? The ramp on the 15-liter? Sorry, Rob, we're having a hard time hearing you, Rob. Yeah, sorry about that, the ramp on the 15-liter. Thank you. Oh, well, you know, I always want to be a little careful here, but, you know, I take it as a very good sign that there's been recent Cummins presentations where they've been fairly candid about it. In fact, some public statements that they thought that they could sell as many in 2023, 2024, pardon me, 3,500 units. That 2025 could be 7,000 units, and then it would ramp up by 2027. This is where they get to the 8% to 12% number. You know, that doesn't surprise me. Rob, you remember back with me when we first started out in the 9-liter in the refuse market, it was, you know, 300 units, and then it went to 8%, then it was 15%. It went up pretty fast. It went to 50% in that market. Cummins has assured us that the number of engines is not a problem, and that once they get more of the OEMs in, they can really hit those larger numbers. So, you know, I'm feeling good about that ramp. I think they are, too. And, so I think you'll see it move up, you know, over those next, three years to where, you know, you might be pleasantly surprised to be in that 10%, range, which would be 25,000 units a year, which, you know, would be a big move up from where we are today. Okay, thank you. I'll turn it over. Thank you. Your next question comes from Derrick Whitfield from Stifel. Please go ahead. Hi. Good afternoon, all, and congrats on your announcements today. Thanks, Derrick. Regarding your Del Rio announcement specifically, congrats on getting LCFS through Oregon, as that's a huge win given the backlog that exists in California. Could you comment on the CI assigned by Oregon or your expectations there? I know there's some differences between California and Oregon. Well, I'm having a little hard time hearing some of the questions, but you're saying the differences between Oregon and California. On the CI. Well, I don't know. I do know this, Derrick, is the reason we sent it there. It's we're getting more for it right now, and I don't know all of what's all in it, why, why the CI score. I'm just not sure, Derek. We'd have to get back to you on that. I don't know. Now, look. Maybe. Let's not get all I do, I do know this on the market, because I do understand the market side of this thing. I mean, look, Oregon is not as big as California, right? So, the LCFS to Oregon was 180. We started injecting it there, and it came down some. So, you know, it just isn't as a huge market, so it's not unlimited there. We can put more there, but, you know, it's not going to replace California, let's put it that way. Just an extension on that question, do you guys see Oregon as a likely pathway for your first few projects? It will continue for a while. Look, I have great expectations, and I remind our friends in California, as they've been kind of fooling around with the Low Carbon Fuel Standard, I said, "You know what? Be careful. You're not the only state in the United States," right? So you've got Washington, you've got Oregon, we've got the legislature in Illinois looking at it, with the New Jersey. New York's tried to pass it a couple times, New Mexico. You're going to have other Low Carbon Fuel states. And it'll be a discipline. It'll give a little discipline to some who want to continue to muck around with these things, because you have other markets that will. Now, it's going to be clear to everybody that RNG is one of the best ways to decarbonize, certainly for transportation fleets, and so other states are going to adopt it. Now, this doesn't happen overnight, but it will. So you'll see these other states. We're working in those other states now, and we have good support in some of those places. So, and what I tried to get at, Derek, in my comments is, what sets us apart a little bit, one, we're in touch with the demand side of the equation in transportation. You know, we're in 42 different states. We're moving RNG today in about 40 states. But it gives us the opportunity, certainly with our big supply portfolio, a lot of that being, you know, landfill gas. It allows us to optimize and move gas around to the best markets, and we can do that very quickly. So that's unique to us because we have the downstream infrastructure. Agreed. And if I could just ask one question to kind of build on a previous topic. When you look at RNG volumes more broadly, and this is at the EPA level, RIN generation peaked in June of this year and has generally decreased over the last few months. In your view, is this due to project owners increasingly pursuing the voluntary market, or do you think generators are holding credits to monetize them at a higher price? That's a good question. I tend to think it's the latter. But, you know, the way I'm thinking about it right now, landfill gas going to voluntary markets, getting $25 an LCFS, and, in transportation, the RINs are valued more like $36. So, you know, the transportation is just a much better market. Years ago, one of the energy secretaries said, you know, washing your car, h e said, "Using natural gas to make electricity is like washing your car, with champagne." And that's the way I feel about it, is in a hard decarbonized market, which is transportation, that's where RNG ought to go. Agreed. It will. Thanks. You're rewarded for it. It's a little more complicated, but that's where the infrastructure comes in. Great. Thanks for your time. Thank you. Your next question comes from Paul Cheng from Scotiabank. Please go ahead. Hey, guys, good afternoon. Hi, Paul. Andrew and Bob, I think there's the latest drop in the LCFS revision is that they will require the physical presence of the RNG in California instead of just a pathway in order to claim the LCFS credit. If this indeed will be remain in the final final decision, is there any incremental cost for you guys? And if it is, any rough estimate that on a per gallon basis, that what is the incremental cost? Yeah, Book and Claim. Yeah, and whether that. Yeah. If it stays in, is that going to be an incremental? You know, well, because we'll probably have some questions, but let me go out on a limb and kind of talk about where I think that the Air Resources Board in California is headed. We believe, we haven't exactly right on this, but I think we're pretty close to it. But we believe that the ARB likely will hear some proposed rules before its board soon. It's been suggested it could be in the middle of November, could be next week. And, you know, there were three big issues, Paul, that kind of at stake, right, o r at least that had our attention? One was the avoided methane. Would the ARB, as it was suggested by some, get rid of the way we calculate or utilize the avoided methane in RNG, right? It looks to us like that suggestion has not been heeded, and that the ARB has understood that the Low Carbon Fuel Standard is working. They want to make it more aggressive, and they know they need dairy gas, and they know they need RNG. And so the avoided methane calculation looks to me like it'll be in place for a long time to come. And, you know, I don't know that it's clear if it's 2040 or 2045, but that's a significant issue, and that means that RNG will be in place for a long time to come. And certainly, you know, for these projects get good returns, and so it'll make a lot of sense. And then they may decide that after 2040, that maybe it shouldn't go into transportation, and it ought to go into other uses like trains and ships and other hard to decarbonize. But we'll see that. We'll see. There's a long ways to go before we get to that. The other is Book and Claim. The way that we currently account for it, you know, we put it in Iowa, and we take it out in California. And it looks to us like that is in place to 2035. Most of us believe that that's the way that's beginning to shake out. And then maybe there would be some refinements after some study. CARB, I think, has been very good about this. They've been listening to how the business really works, and that maybe after 2035, there would be some, looking at, y ou might have to justify that the pipes you're using to move it to California, that 15% of the time, they have to have flow rate to California. It's not clear whether or not even after 2035, you might have to pay for transportation. But you know, the way I look at it, as compared to Avoided Methane, the Book and Claim is kind of a cost of doing business. And if, in the worst case, after 2035, you needed to pay for the capacity charge, now you're talking about, let's call it a couple of bucks an Mcf. All right? Now, we're dealing with potential value of fuel around $80 Mcf. So to me, that is a little bit of a cost of doing business, but it's way out, and I think we're having good negotiations and good understanding with, CARB. Now finally, it is, well, what is the obligation curve going to be? And, you know, we all saw in the stuff that came out in SRIA not so long ago, that one of the suggestions was, you remember, there were three options. There was 20%, 25%, 30%, and 35%. Well, it looks like they're moving toward the aggressive side of that. So as I look at it, as a shareholder and as a, as a believer in the RNG business, looks to me like they're going toward, you know, the most aggressive end of the scale. So far, it appears that it's in the range of something around 34%, right? So that's a big move from 20% in 2030 to 34%. And so, now, I think the market, I'm going to give more here than your question. I think that the market is likely, for LCFS, to be a bit soft in 2024, because you don't really see the big pickup start on the obligation and on the compliance curve until in 2025. So you're going to, it's going to take a little time to work off, the oversupply of credits that are in the bank right now. On the other hand, it's likely that CARB is going to adopt this automatic, you know, ratchet mechanism that if there's a big oversupply, they can ratchet down and sop up some of the supply. That is going to, looks like it's going to be in this as well, so that's good news. So I think, you know, we may have to grin and bear it a little bit until some of the oversupply is worked off in 2024. I think it'll be much more constructive. You know, the CARB has said that they believe that the range for the LCFS should be between $120 and $180 after 2025. So that we think is very constructive. So anyway, I gave you a lot more than you asked for, but I just thought it would get out three items. No, thank you. So sure. Thank you. And, Andrew, I know, typically, you guys don't give guidance for next year that early, but anyway, that is already early November. Any soft guidance on adjusted EBITDA, and also the RNG or RNG sales warning, for next year? Good t ry. I don't think soft guidance. Well, that's a little tricky. That's you know, could be too soft, it could be, you know, too hard. So, look, I mean, Andrew alluded to the LCFS and, you know, I mean, that could be potentially something if that price, you know, if it's going to be challenged by the kind of the supply and demand. But, you know, who knows? I think we'll, you know, we have a fair amount of some time to kind of get some more information, and we're really evaluating, you know, all of that as we speak. Also, it wouldn't be probably a good idea to try to do some soft guidance. You know, Paul. That's fine. All we know is that we know on the demand side, I mean, as I look out, I'm not going to give you any numbers, but on the, you know, I like we're constructive in that we love the fact that in the biggest market, in transportation, the heavy-duty, we've got now finally a product that's coming to market, and actually, those engines are going to be delivered in June. That's a good thing. So we haven't seen the cannibalization on the, on the 12-liter right now, so we see this as incremental volume that'll come into the system, which I think is a good thing. And of course, we know there's lots of RNG projects coming. So demand should be up, and RNG supply should be up. And so, you know, we'll be more specific later. I'm sorry, we can't do it today, but we'll be more specific with guidance coming, you know, in the next quarter. Sorry. Thank you. And your next question comes from Matthew Blair from TPH. Please go ahead. Hey, Andrew. Could you talk about the competitive landscape for dairy RNG? If you're looking to sign up a new dairy today, is that easier or tougher than it was a year ago? And are you seeing any cases where dairy is just simply, you know, they're not interested in RNG because of the low LCFS prices? And if that's the case, I mean, would a higher LCFS price just, just spark more, more sign-ups? A higher, n o doubt. A higher LCFS price helps the economics. Now, the economics aren't negative, right? The payouts get stretched, and what it does, Matthew, is it's why we're, and I'll talk here in a second, it's why we're embarking on an optimization program to try to get the cost of these projects down a little bit because it'll mean that you can move into smaller dairies, right? Because of the way the industry has been developing these dairies, a less modular approach, more field-directed approach, it's just costly. So it's made it so that you have probably 5,000 to 7,000. You know, look, we have a dairy that we're so excited about, that we're building on and will throughout next year, is 35,000 a head, but there's only a couple of those. There are many thousands of dairies that are in the 2,000 a head range. And right now, those are tougher the way, one, because of the cost, and a contributing factor would be because of a lower LCFS. So yes, as the LCFS price comes up, more comes into range. Now, I'd say in general, in the competition, the lowering of the low carbon fuel standard has made some of, y ou know, we were in a little bit of a land rush, you know, gun slinging environment about a year ago, a year and a half ago. A lot of folks got into the business that maybe really didn't have any business because they saw the opportunity, and then things got a little tighter and supply chain happened, and the cost went up a little bit. And then at that same time, the low carbon fuel credit collapsed. So it shook some out. So I want to say that, for those of us that need the RNG, you know, we're a bit unusual. We're not building a project on spec and then looking to where we put it. We need it all. So we're a bit unique in the business, and for those of us that are in it like that, this is a good moment. And so look, there are plenty of dairies if you know what you're doing, I think. And, w e are going to work hard in 2024 to see if we can't bring to market modular designs to bring the cost of these down, so that we can then lower the cost of development of these dairies, and therefore, enter into lower, smaller-sized dairies, which then you open yourself up to a lot more targets. Sounds good. Yeah. It looks like the updated. Hold on. Tom Scott. Hold on a second, Matt. Yeah, I'm sorry. I just, if the question had come up on the CI score, what that looked like with the Del Rio going to Oregon. And so we went on a temporary pathway, and it's similar to California, where that takes you to a negative 150, and that's where Oregon was. But of course, the pricing was much better, and the process of basically securing even the temporary pathway is faster. So, but that's where it's at. The, you know, the actual CI at Del Rio is anticipated to be much higher than that, or much lower, I guess. Anyway, let's just set that straight. Okay. And then, so it looks like the updated 2023 EBITDA guidance implies that Q4 should improve to, you know, call it $20 million to $25 million. So a nice step up from Q3 at $14 million. Could you talk about what is driving that improvement quarter-over-quarter? You know, it's mainly, Matt, you know, added fuel volumes of what we've said our ramp is going to continue to go. We have a little bit on the RIN, although we're also mindful of, you know, what the take has been, but the RIN is there. And we're being, frankly, I'm, you know, being, I won't say conservative, but I'm, you know, the LCFS is really kind of took that down to in the 60s. And so it is better, but it's generally volume-related, along with the RIN. Sounds good. Thank you very much. Your next question comes from the line of Pavel Molchanov from Raymond James. Your line is open. Yeah. Thanks for taking the question. I'll start with my usual Washington question. When are you guys expecting to get the Section 45Z transparency from the Treasury? Is that a 2023 event, or do we have to wait until the new year? Yeah. Well, if it is the new year, Pavel, it'd be shortly thereafter. I mean, we're hearing by the end of the year. I think we actually heard something finally, Pavel, that suggested it could be the end of the year, but then we heard a little something else that it could be just after. So, you know, s o let's put it there. Okay. Can we get an update on the Western Canadian JV? Yeah, w here we stand with that, and it's a joint development agreement, but we have, you know, we've secured most of the property that we've got kind of five stations in progress. One's built and four others being built, and we're kind of full speed ahead on that effort. And you know, they're just as excited up there about the 15-liter. It's frankly probably even more needed there, but, you know, we're just lockstep with our partner, Tourmaline, on that. And you know, it's you know, it's a good environment up here with what we're doing. So we're finding that you know, some of the permitting and just the ease of getting these things going has been favorable. So those will come on in here. Good economics. Yeah, good economics, Very expensive diesel in Canada, and so the economics are really, really good. Yeah. So we'll see, probably, you know, most of those come on by in the second half of next year. So not a, you know, huge volume, not a 12-month volume contribution, but they'll come on. And, you know, the, like with a lot of this, is just to see that in a sense that this is happening, and that's really what, you know, we look to, is like, the volume will come. If, you know, the trucks are being ordered and bought, then, you know, it's just a matter of time that t hey're filling up at the stations. You know, just on a market thing, Pavel, last week there was a meeting. It had 27 different fleets in a room with the largest dealer in the region, and Cummins reviewing the 15-liter. So, you know, I like that. There's a lot of interest. And so we have great, you know, there's work to be done there. And we've got a nice advantage. And of course, Tourmaline is an excellent partner in that in Canada. Last question from my end about comments. In fact, we're still hearing from a lot of manufacturers, automotive and otherwise, about supply chain complications that are impeding sort of scale-up of production. Maybe a better question for Cummins, but have you heard anything along these lines regarding the 15-liter specifically? We have not. They've been here. They've been pretty public here recently, where they've been kind of almost uncharacteristic, kind of talking about when they could be ordered, when they'll start to be delivered and ramped. They have been mentioning that, you know, but I don't know, maybe that's factored in, Pavel. We have certain of our customers, though, like for instance, our refuse customers, are behind on getting natural gas engines. And it's kind of funny, natural gas trash trucks, and it's interesting. It's often. It's not the natural gas tanks or stainless steel tubing or the engines. It's door handles and seats and supply chain issues that's bottlenecked some of that. So there is still some of that working through, but we haven't heard any. I haven't heard that, in these recent meetings and presentations by Cummins. All right. Thanks very much, guys. Thank you. Your next question comes from Manav Gupta from UBS. Please go ahead. Thanks for squeezing me in. I almost thought I won't get in today. As far as 45Z is concerned, can you help us understand how you benefit from the 45Z as it is in its current form, where a negative RNG kind of gives you a high dollar amount versus a landfill RNG? If you can talk through that. Sure. Bob, go ahead, Bob. Yeah. I mean, if the, you know, the scales that we look at and considering the low CI, when you get into the -250, which many of these farms are at that or lower, then, you know, you're looking at potentially, $5 to $7, maybe even $8 we've seen per gallon of a 45Z PTC credit. That would be on top of the economics that are already there, prior to that with, with just the actual sharing in the credits. So that, I mean, so that will be significant. That's 2025. That's why the clarity from the IRS coming, you know, couldn't come really, any sooner. I mean, Bob, you might just speak to it, though, the law says that it's on-highway suitable for on the highway, and then it's a base level is $1, and then depending on the, g o ahead. Yeah, right. Exactly. So the lower the, it's for on-highway transportation, depending on the CI score, you could be at $5-$6 a gallon credit off of the PTC. And that will relate to our production dairy investments that we have going on and the gallons that we project to produce there. It runs for three years, 2025, 2026, 2027. It will be, I think, when we get that clarity, we, you know, people can kind of start to do a little better math on this thing because it will be significant. Second question here is, we did get updated staff proposal from CARB, but we're still building a lot of credits. And when do you actually expect some improvement in LCFS prices? Because the way things are, it's not looking very good even for 2024, unless the LCFS price start to move up. So trying to understand, when can we start seeing some improvement in LCFS prices? You know, Manav, you might have missed it. I kind of touched on this. I mean, look, we don't have a crystal ball, but it looks to us like that you could have some continued softness in 2024 as you work off the credit bank. Now, what I mentioned is there is, and you know, now, look, there's a lot of ifs here, but the new rules will have a automatic ratchet. Well, not automatic, will have a ratchet, a ratchet, a mechanism to increase the compliance curve. Now, those don't go into effect right away. So I think, but they can go into effect fairly quickly. But I think that we might prepare ourselves for a little bit of, you know, tough sledding in 2024. That should come much better in balance in 2025. But, you know, it wouldn't surprise me if we bang around the lower end of the range, you know, in 2024. Now, on the other hand, you know, you might start getting some folks to be buying these credits and putting a little pressure on. I don't think that's happened yet either, and that can happen. It's not that liquid of a market. Thank you. Thank you. And your next question comes from Abhishek Sinha from Northland Capital. Please go ahead. Yeah. Hi, thanks for squeezing me in. Most of my questions have been answered. I just wanted to get the modeling part. So on the LCFS pricing and the RIN pricing, what did you factor in the earlier guidance? And versus what did you realize, versus what are you factoring in now for the new guidance? Yeah. We were looking at around $3 on the RIN, and then at that time, the LCFS was really had come up. It was kind of in the low $80s, with an expectation of possibly even some more bullishness on the LCFS with some of the news maybe coming out of CARB, with maybe a better, you know, strengthened compliance curve and that sort of thing. And there was a little bit of that, but then it, you know, then the market kind of quickly changed from that. So it came off of the $80s, and so I was in that range. I just mentioned here, I've kind of, we've moved the RIN up a bit, you know, probably closer to $3.25 or something in the LCFS. I think I've, you know, I don't know how low to go on it, but it's, you know, it seems like each day I put it out there, it comes up maybe a little lower. It's in the, you know, $68-$67, somewhere in there, is what I factored it into all that guidance. Sure. Thank you. And then the last one I have is, what's the expectation for CapEx for 2023? For 2023, we're on par to do about $90 million in the kind of the base distribution business. And we could spend up to $40 million of additional investment into the dairy RNG production side. All right. Perfect. Thank you very much. Thank you. And your last question comes from Jason Gabelman from TD Cowen. Please go ahead. Yeah, hey, good, good afternoon. Thanks for taking my questions. You talked about the ramp-up in the 15-liter Cummins engine, and I know in your kind of five-year plan, you have a ramp-up in your own distribution volumes. And I'm wondering: how much market share of that 15-liter engine business would you need to have in order to hit that guidance? And is that kind of the way you look at the market opportunity, the market share of those Cummins engines? Yeah, I think, Jason, it's a good question. It's interesting. I mean, I think what you're asking is on that when we laid out our RNG Day, you know, a couple of years, almost a couple of years ago, and we said, well, we need 545 million gallons. Boy, that didn't have this kind of robust. That didn't have sort of that 10%, 375 million gallon bogey in it at all. I mean, I think we never got above 3,000 incremental heavy-duty engines, so 3,500 maybe. So, you know, we just, at the time, we're trying to be conservative. And so, you know, you would need, s o I don't have a percentage of where the market. But you know, if it goes the way we think, by the time you get out there to what we have, where we thought we need 545, you need another 200 million gallons or more. Yeah. So I think on the, you know, easy, because by the time you get to 2027, you're creating almost all the gallons that we're doing right now every year. You know, the industry can provide that. We'll all have to, we'll all have to get busier. But, you know, we as a country can get there. And I think that if you look at all, if you look at the resource base for a landfill, for wastewater, for food waste, I mean, you can easily be in a 10 billion gallon dairy, a 10 billion gallon, you know, market. Now, lots of money will be spent. It'll be a good thing for a lot of people. A lot of money will be spent to get there, but over a 10-year period, you can get there. Got it. You know, my follow-up is kind of maybe a bit more philosophical, just about how you think about forecasting the business. You know, 2022, your final EBITDA came in below forecast. Your initial 2023 was below what you provided at the RNG Day and had it be revised lower. And a lot of the value or the potential value for the stock is in the future growth potential. And so we're obviously very reliant on the earnings forecast that you provide. And so as you think about laying out those forecasts moving forward, how do you think about it relative to how your results have come in relative to prior forecasts? Do you think you need to be a bit more conservative? Do you think there's a couple of things that have driven the kind of forecast misses the past few years? Just any thoughts about how you think about forecasting the business moving forward would be great. Thanks. Right. No, it's a good question, and obviously, we're, you know, we're trying to create a new market, so it's a little bit different, right? This isn't mature. There's a lot of moving pieces to it. But that notwithstanding, it's our job to try to do as best a job we can to forecast. I mean, this year, had you not had that first quarter, you would have been in on target. That's what I was trying to get at with this, y ou would have been right in, right in on guidance. All right? And we didn't revise our guidance last quarter because we just didn't have enough information, and we weren't sure about where that low-carbon fuel s o your credit prices was. So you were, you know, and I think what we're trying to do here, Jason, is exactly that, is be conservative, be responsible, and we reverse, you know, we revise it down. Now, albeit, you know, $3 million-$4 million, all right? What we're trying to lay out, though, for you is to show the potential size, right, of the market. And so it's kind of a balancing act between, you know, is the future of this business, us discussing, you know, 47 versus 50 in EBITDA or two years hence when you have the PTC worth $259. Right. Right. Understood. And so, you know, I think you're in that period here, right? Where there hasn't been, wasn't until recently, a lot of great clarity on the. You know, we were all going to have a RIN. Well, that changed. We're not having a RIN, right? We were going to have a June adoption of a rule at the Low Carbon, you know, in California. Whoops, here we are in November waiting around for it. And so, you know, there's been some things that have interceded here and haven't given as much clarity as I wish that we would have had and that we'd all would have had. You know, when I look at our budget planning and, you know, we're within 97% of budget on volume. That's not so bad, 98%. Now, I don't control Low Carbon Fuel Standard price, and we'll get better at it. But I, you know, we're trying our best to try to get this right, and it doesn't help us to miss targets. So today, you know, we've revised down a little bit. I don't think you can fall off a pancake at this point. I think we're about down to where, you know, where we're about as bad as it's going to get, and I think it's upside from here. So I appreciate the question, and, and, I don't think we're being overly rosy, but, you know, we're dealing with some kind of moving pieces. Will Cummins get those things all produced and start selling them in June? I don't know. They just said they would, but I hope they will. But when I look at the big picture and I look at what's happening with electric vehicles, I mean, go ask how many electric vehicle trucks that are supposed to be the future of heavy-duty transportation. None of those have sold. So I like the way we're positioned, and so I think the best thing for us to do is be prudent with our capital, is continue to develop on the RNG side and control our own destiny, and continue to work with our partners on third-party supply and work our customer base on the adoption. Because when you compare a heavy-duty truck operating on RNG versus the other alternatives that are out there, we're leagues ahead and more efficient and more cost-effective, and so that's what gives me optimism going forward. Great. I appreciate the detailed response. Thank you. There are no further questions at this time. Andrew, you may proceed. Thank you, operator. Thank you, everyone, for listening in today, and we look forward to updating you on our next quarter year-end. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you very much for participating and ask that you please disconnect your line. Have a great evening.