Q1 2022 EzFill Holdings Inc Earnings Call
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Good afternoon.
Noon everyone.
Welcome to today's conference call to review the first quarter ending March 31, 2022 for easy sell Holdings, Inc. At this time all participants are in a listen only mode. A brief question and answer session will follow management's remarks, I will provide instructions at that time as a reminder, this conference call is being recorded I would now.
Like to turn the conference call over to your host Kathleen Heaney from K CSA Strategic Communications. Please go ahead.
Good afternoon, everyone and thank you for joining us today for easy sales first quarter 2022 financial results conference call presenting today is Mike Mcconnell CEO at Arthur Levine CFO . After management's prepared remarks, we will open the call for questions.
Before we begin listeners are reminded that certain matters discussed during today's conference call or answers that may be provided given to the questions may constitute forward looking statements from easy self management.
Made within the meaning of section 27 of the Securities Act of 1933 as amended and section 21 E of the Securities and Exchange Act of 934 as amended.
Words, such as May should projects expects intends plans believes anticipates hopes estimates and variations of such words and similar expressions are intended to identify forward looking statements. These statements are subject to numerous conditions many of which are beyond the control of the company.
<unk> those set forth in the risk factors section of the company's annual report on Form 10-K filed with the SEC.
Copies of these documents are available on the SEC's website as well as on the Companys website actual results may differ materially from those expressed or implied by such forward looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call except as required by law I'd now.
I'd like to introduce Mike Mcconnell CEO . Please go ahead Mike.
Thank you Kathleen and good afternoon, everyone. Thank you for joining us today to review our first quarter 2022 results.
We began the year well positioned to advance our growth strategy to build upon our position as one of the fastest growing on demand mobile fuel providers.
Our service offering is rapidly being adopted and recognized by many of South Florida as large fleet businesses. Additionally, we are beginning to see a key shift in the way the general public fuel their vehicles as they increasingly recognize the safety efficiency and convenience of mobile fueling which gives us confidence to expand into new target markets over time.
Arthur reviews, our financial results for the quarter I'd like to highlight a few key developments that have elevated our position and open the door for easy failed to achieve increasing revenue as the year progresses.
First we have locked in several new commercial fleet fueling agreements with existing customers our ability to be further integrated and support our long standing customers businesses is a testament to the value of customers place on our unique service platform company.
Companies that we have established partnerships with such as serve pro cleanup restoration and construction franchise company and ETE scripts of retail pharmacy with home delivery service throughout Miami Dade, Broward and Palm Beach counties rapidly enter new markets and have come to rely on our mobile fueling services to support their expansion.
For example, we first started working with serve North Miami in November of 2021.
The success of this partnership opened the door for additional opportunities to serve the franchise in March 2022, we expanded our relationship or entering into an agreement with serve pro a brick wall to serve another one of the company's fleets with.
With easy scripts, we began servicing their fleet and in Miami Dade County, and now support their fleets in Broward County.
Other existing customers that are expanding in the other markets, which will allow us to increase the number of fleets. We service of them include national franchise, or one 800 junk and Alto <unk> a leader in ride hailing and private transportation that operation, increasing number of small and medium sized fleets.
We've also signed on a number of new accounts that present, similar strong growth opportunities they operate with multiple locations throughout Florida.
We are now planning our expansion across Florida, and these new accounts present opportunities for us to strategically enter these new markets.
We began partnering with cool air USA in the Miami area, which fed losses specializes in air conditioning repair and installation and services customers across Florida, most notably in the Palm Beach County, where our near term growth is focused on.
We also find new fleet fueling agreement this quarter with 911 restoration of Miami, which is part of a nationwide franchise, providing water and fire damage restoration and other services.
And Jeff Nissin catering and active participant in the summer break spot program, which provides free meals to kids and teen trough, Florida.
These business partnerships and not only complementary to our growth as we gained greater opportunities to fuel larger commercial fleets and enter new markets alongside our business customers, but are also supplementing the growth of these businesses by streamlining their operations as they expand.
We are becoming an essential component of these companies growth strategies as demonstrated by our ability to eliminate driver downtime and reduce operating cost for them.
Once again I want to emphasize that we believe we will continue to build on these relationships for long term commercial partnerships to drive increased revenue for easy fill and expand our geographic footprint into other key Florida markets. Additionally.
Additionally, we signed a number of new commercial fleet customers in the first quarter that have expanded our reach to new number of new industries and have begun to have a positive impact on our revenues.
We're excited about these opportunities are we seeing increased demand for our services amongst a diverse group of businesses. For example in the past quarter, we entered the health care sector, specifically, the medical and research industry.
Signed agreement with Floridian clinical research in Miami Lakes to regularly service their fleets fleet of delivery and transport vehicles. We also began serving educational facilities through an agreement with Monseigneur Edward pace High School in Miami Gardens to regularly service their school buses and other fueling for teachers and administrators during school.
Ours are.
Our new fleet business drives our growth as it allows us to achieve higher utilization of our trucks and delivers a recurring revenue stream for our business. We are successfully scaling this business, bringing on new commercial fleet accounts at record pace. We're now serving over 40 fleets are beginning to see the positive effect of this increased business. It is not driving not only revenue.
Higher overall fuel margins.
We're excited to leverage the successful relationships and growing demand for mobile fueling to support our entry into other high growth markets.
Our on demand consumer and specialty business combined currently contribute approximately 20% of our revenue.
We're addressing the opportunity to serve consumers through our on demand App and Additionally, an attractive method for growth in our consumer business segment has been and continues to be supplying fuel to employees at large corporations corporations as an employee benefit.
These types of organizations include office parks schools hospitals, and other permanent job locations.
Another key growth Avenue for building, our consumer business segment is by servicing market specific personnel and commercial vehicles, such as boat owners either at their home or as they docket busy marinas in February we announced exclusive agreement with Brookfield place Marina in Miami to regularly service the marine has more than 200 customers through the easy Phil.
Yeah.
On March 14th we closed our first acquisition since our IPO.
As we have previously discussed we acquired the assets of the mobile fuel company service full service fueling and affiliate of Palmdale oil company located in West Palm Beach are.
A key component of this acquisition was the operating and supply agreement with Palmdale, one of the largest wholesale fuel providers in Florida, whereby palmdale will serve as one of the main fuel suppliers for easy filled throughout Florida.
<unk> is also providing easy to fill with access to the vehicle parking at locations throughout the state.
While this acquisition was relatively small we now have the resources and infrastructure in place to enter our previously stated target markets effectively and efficiently throughout Florida.
Today, we have a fleet of almost 30, fueling trucks and enhanced logistical capability to drive our expansion.
In the fourth quarter, we announced our commitment to purchase 33, new fuel trucks more than tripling the size of our delivery fleet.
These new trucks have been arriving on a rolling basis, and we expect to complete delivery of all 33 trucks before the end of the year. Each new truck has the capacity to carry 200 gallons of fuel, which collectively will add over 350000 gallons of delivery capacity per week. When all 33 trucks are operating at full capacity utilization.
With these trucks as well as the trucks, we acquired from Palmdale and other sources. Our fleet is expected to be almost 50 trucks by year end.
Summing up our presentation. During Q1, we secured 11, new fleet accounts and completed our first acquisition that will support our ability to scale and deliver fueled Florida's largest cities.
As I just mentioned we are more than tripling the size of our fueling truck fleet to service our customers to meet demand.
The demand the demand for our services is there in fact, we have seen an acceleration in new fleet customers in April and May as well as larger fleet sizes with these customers as compared with earlier contracts. We now have the capability to serve a much more expansive network of commercial customers as well as demonstrate the value of our on demand fueling service to a more extensive consumer.
Our audience to where a substantial opportunity exists for our growth.
I would like to turn the call over to Arthur Levine to review our financial results author. Please go ahead.
Thank you Mike. Thank you all for joining us today.
Overall, our financial results for the quarter continued to reflect the investment in infrastructure, we're putting in place to support demand as our revenue ramps and new fleet and other customers continued to onboard in existing and new markets.
Revenue for the first quarter of 2022 increased 54% year over year to $2 3 million.
The increase is due to a 9% increase in gallons delivered as well as an increase in the average price per gallon total.
Total gallons delivered in the first quarter of 2022 was 591505.
Cost of sales was $2 3 million for the first quarter compared to $1 2 million in the prior year period.
The 67% increase is due to the increase in sales as well as the hiring of additional drivers in the quarter in order to support our growth.
We incurred operating expenses of $2 9 million during the first quarter of 2022 as compared to $1 2 million during the prior year.
The increase was primarily due to increases in payroll marketing insurance technology and public company expenses.
A key metric that bodes well for reducing our cash burn is our average fuel margin per gallon in the first quarter of 2022, we realized a 31% increase in average margin per gallon to <unk> 47.
Compared to 36 in the first quarter of 2021.
Which was primarily due to the addition of new fleet customers at significantly higher margins.
We expect as we continue to sign on and an increasing number of commercial fleet accounts and add more consumers are average fuel margin per gallon will continue to remain strong.
Our higher depreciation and amortization expense reflects the acquisition of a technology license and the purchase of vehicles to support the growing business.
Adjusted EBITDA loss for the first quarter of 2022 was $2 5 million compared to an adjusted EBITDA loss of $7 million in the first quarter of 2021.
The increased loss in the first quarter of 2020 to reflect significant spending on infrastructure to grow our business.
Interest expense decreased year over year in the quarter due to decreased year over year due to the early repayment in September 2021, a pre IPO debt. While other income reflects interest income on fixed income investments.
Our cash position at quarter end was $13 9 million, including investments.
Compared with $16 9 million at year end 2021.
We have no long term debt other than truck loans of $1 3 million at March 31.
We had been financing substantially all of the new trucks with low interest rate loans.
As of March 31, we had 153000 in outstanding borrowings under our line of credit, which was primarily used to fund new truck purchases that were not eligible for manufacturer of financing.
The demand remains strong in our home market of Miami and is rapidly increasing and our recently entered in targeted markets throughout Florida.
Over the coming quarters, we expect to see strong top line growth, reflecting the new fleet contracts, we signed throughout Florida in Q1, and which has accelerated in April and May.
As we continue to service more and more businesses and consumers in each market and effectively scale. Our business, we will increase utilization of our truck fleet that as Mike mentioned, we expect will be close to 50 by the end of the year based on current commitments.
As the year progresses, we will monitor developments and truck availability and evaluate when it will be necessary to make commitments to invest in more trucks in the meantime, we have more than enough capacity to grow our business as planned.
Going forward, we will continue to spend as needed to support our expansion into new markets with a focus on hiring additional drivers and sales reps as well as marketing to support our consumer business.
We will be careful about other spending as we have already built out our core infrastructure to support our growth.
This ends our prepared remarks, I will now ask the operator to open the lines to questions.
Thank you at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants 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.
Your first question comes from Tate Sullivan with Maxim Group. Please proceed with your question.
Hi, Thank you good afternoon, I thought I'd start with the fleet customers and you Didnt, releasing and you gave details on additional fleet agreements, but Mike can you talk about what what it is.
Is the alternative for many of these fleet customers to your service or they are using a competitor before signing a contract with you is this the first time they are using on demand fueling what are the fundamental drivers of signing up new fleet customers. Please sure. Good question Tate, It's got probably a combination of all three.
That youre talking about typically if they use fleet cards or fuel cards.
We can convert those pretty easily because the business cases, just so strong.
Converting to easy field services in some cases, they may have a previous provider and they are dissatisfied with the service or are they.
Want to make a change I think also some of our features of feedback we're getting utilizing.
Utilizing our fleet portal and the technology that we use as it is.
A significant change than what they've had with some of their previous providers.
Which gives them a lot more insight to their fueling activity and how their businesses run.
So it's probably a combination of all.
All of those things as far as what's driving business to us and I think also.
With the higher gas prices and everything else businesses are looking for any way they can be more efficient.
Having a fleet fuel delivery driving a company like us as well as providing the technologies from the billing and the utilization of their fleet.
It is seen as a real value add and what they were currently using.
You mentioned.
Mike.
What was that what does that sorry fuel cards <unk> cards do you have a gas or fuel cards, I misspoke fuel cards <unk> carcinoma, so they would be going out on their own.
Correct, Okay. Thanks, and then.
On the marketing and Arthur I think you mentioned it to future marketing efforts is most of the future marketing youll do to consumers, whereas the sales reps will be directly to fleet customers. There's the marketing for both consumers and sweep accounts.
We're going to do some marketing related to fleets, but the vast majority of the spending will be consumer related.
Okay, and primary primarily social media and related types of marketing.
Okay.
And then on the Marinas, you mentioned specialty and you previously were lease signing up there and are you in a deal.
Marinas that do not currently use your service to date have onsite gasoline supply or are these getting phased out or how meaningful is the marina opportunity.
Yes, we think the Marina opportunities significant we've just hired some more people is what we consider to be inside sales as far as working directly on some more opportunities Marina is one of those.
The Marina business that they can use different methods from us one or tanks, where they can do the service themselves, which we have those existing relationships and individual orders for consumers.
But we're going to get more dedicated more specific as far as the marina opportunities, especially here in South Florida.
And also Tampa.
Looks like a very robust opportunity for us as well.
Yeah.
Okay, great. Thank you for that additional detail okay.
Thanks, Mike.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.
Your next question comes from Sean <unk> with private Investor. Please proceed with your question.
Hi, just reverting back to the question that you previously had a regarding marketing.
In terms of consumer marketing or even for fleet marketing as well the only thing I have seen so far in print marketing is <unk>.
<unk> trucks, driving around golf cart wrapping and easy Phil do you have any plans for any alternative plans for marketing, but even our Billboard on 95, and the reason I ask is.
Most people don't even know of the service.
On a random Street, you should have every house getting filled up with EV Phil.
Just one housekeeping one out there I think if more people were aware of it. It's obviously more people would use the service in such a great service.
So we agree we think the awareness it used to be.
Enhanced and we're investing in that we've got a campaign that we're in the process.
Launching on the consumer side, it's going to be very robust.
It's not just going to be the one vehicle driving around town. So we're looking at outdoor automated there Arthur touched on social media.
We recently saw the announcement where the.
Brandon with Victor all of depot that we're doing from the social media side. There. He is also an early investor and shareholder of the company and a customer.
So we will continue to use people that have.
Our large influencers in the Miami area.
In the areas that we're expanding in.
But we will be this this it will show up in the second quarter of course, but significantly enhancing our consumer presence, you'll see a noticeable difference.
Thank you.
Okay.
Your next question is a follow up from Tate Sullivan with Maxim Group. Please proceed with your question.
Thank you for taking my call.
You previously mentioned in some of your book.
But the prior earnings call. Some comments on New York I believe is there.
Or are you still waiting for regulatory approval for your tank.
Fueling tanks or are you still planning on that.
Entering New York potentially by the end of this year can you give an update there yes, we're still planning on it there are some unknowns from a specific point of view take but the situation that we're in now.
What are fueled by our teammates are telling US right now there is an interim fire Commissioner that's been I think started in about mid February .
With the new mayor there are supposed to appoint a permanent fire commissioner. So we're pausing until that transaction happened in the name.
More permanent commissioner, which is supposed to be any day.
A lengthier process than was originally thought to be so.
Until that happens, which I can't tell you exactly when that's going to happen.
We intend to aggressively pick up right, where we left off and feel confident.
Still with the opportunity in the project that we have with the New York pilot.
Thank you and one more for me on can you review your comments about if it is the right term onboarding additional trucks with the 33 that you've previously announced is there before they are out in the field is there is certain.
Retrofit process.
Any training process or what's the timeline and how many can you take a month or through the end of the year can you go over the timing please.
Yeah.
Sure.
Yes, it would've been taking anywhere from about $3 three to five a month date and.
We're planning to.
As Mike said in his remarks, we're going to end up the year close to 50, so just.
To summarize for you.
We ended Q1 with 26 trucks and service.
Since then we've added four to service as of today, we have 30 and.
Between Q2, and the rest of Q2 to Q4, we're going to we're going to rollout.
Around another.
Close to 20, more which will bring us.
Almost a <unk> 50, so that's been the cadence.
It's not a very long process once the up fitter.
Finishes the new truck until we get it into service.
Checking checking that has to be done, but it doesn't take that long.
Yes.
Okay great.
Six did you get most of that was delivered at the end of the first quarter.
Towards the end of the first quarter, just trying to figure out the Bakken.
<unk> is here too it was really throughout the quarter.
That's the way we've been doing it we've been we've been doing about.
Four to eight a month.
Okay in that range anywhere from about four to eight a month is what we have been taking.
Since we started in the end of Q4.
Okay.
You all have a good rest of the day.
Yes.
Your next question is a follow up from Sean <unk> with private Investor. Please proceed with your question.
Yes.
Hi, sorry about that Hello.
Yes sure.
No problem actually had no follow up I appreciate it thank you.
Sure.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we pull for more questions.
Your next question comes from Gregg Rosen private Investor. Please proceed with your question.
Sure. Thank you very much appreciate it.
On the 10-Q and 10-K I see in 2020 stock based compensation was like $4 million 624000, and I see in 'twenty, one it was $1 million a 96.
As part of the coal costs.
David.
You may disconnect at my call I didn't quite hear you discussed that you could give me some.
Extrapolation of that number what it relates to.
The the reason why it was so much higher than in 2020 as the majority of that was a very large part of that was two two consultants and.
We're not we're not giving away that that level of stock to consultants anymore. In fact, it is very very.
We're getting almost no stock the consultants at this point, but pre IPO when the company had much less cash.
Renewable rating consultants.
A much larger extent in stock.
Okay. So that explains the most most of the stock compensation now is either two directors correct directors and officers and occasionally to consultants.
That seems like quite a large proportion to what you raised seems out of the ordinary from.
I don't know the justification, but I guess it is put it in so your stock has lost as an investor.
After the IPO when the prices are much higher not correlating to the market conditions today. The stock is dissipated about 80 to 98, 5%.
So a little bit concerning based upon.
The amount of.
Increase.
And the G&A. So I have a concern when do you think that you'll be cash flow positive here.
I mean, it's going to take a while keep in mind that we're a low margin business and this business model works well at scale and by scale, I mean, well over $100 million.
That's where our business model is really going to work well and Thats why were <unk>.
Expanding rapidly in buying the number of trucks that we're buying in.
Entering new markets all the time, so it's going to take us a little while to get to.
The breakeven and then to cash flow positive.
We are a high growth company model.
Right, but based upon your burn rate I see that you've increased the G&A dramatically.
And from what I'm reading it some accurate 95% of your revenue comes from like three customers is that accurate.
Is that an accurate statement.
No.
Less there's one customer that's over 50%, but that percentage is declining as we sign up many new fleets. So that number that percentage has been going down.
But you increased your junior garden and regarding the G&A. Most most of the increase in the G&A is because of public company expenses, which includes the D&O insurance and board of directors and <unk>.
Investor Relations, which are expenses that any public company is going to incur so it's not unusual at all the G&A increase was after a company goes public.
Yes.
Ladies and gentlemen, there are no further questions in the queue and I'd like to turn the call back to Mr. Mike Mcconnell for closing remarks. Thank you.
Thank you our top priority is to invest and grow our business and we plan to accelerate our geographic expansion efforts. We are optimistic about the growth opportunities ahead for us and we look forward to updating the investment community on the next earnings call.
<unk>.
This concludes today's conference you may disconnect your lines at this time. Thank you all for your participation.
Thank you.
Okay.
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