Q3 2022 EzFill Holdings Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the easy failed holdings third quarter 2022 earnings call.
At this time, all participants have been placed in a listen only mode.
Floor will be opened for questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host John Mcnamara, Sir the floor is yours.
Oh, Thank you good morning, everyone.
Welcome to today's <unk>.
This call to discuss Ete's bills 2022 third quarter financial results.
With us today from management are Michael Mccall, Chief Executive Officer, and Arthur Levine, Chief Financial Officer.
Before we begin as usual, we would remind everyone that certain matters discussed during today's call or answers.
That may be provided to questions may constitute forward looking statements as defined under federal Securities laws words, such as May should projects expects intends plans believes.
<unk> 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, including 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 company's website.
With that I'd like to turn the call over to Mike Mcconnell go ahead, Mike.
Thanks, John Good morning, everyone. Thank you for joining us today to review our third quarter 2022 results.
A little more than one year ago, we became a public company.
When we reported our third quarter results for the 2021 fiscal year, we reported revenue of $1 9 million and $5. Two mine $5 2 million for the first nine months of the year.
60% of that revenue came from a single customer we had 13 trucks in all of our customers were in the South Florida region.
Today were essentially the same company, but we have significantly grown to meet the demand. That's what we see is enormous market potential.
Our results for the third quarter of 2020 to bear that out.
We reported revenues of $4 1 million or 120% increase from the $1 9 million, we reported a year ago for our first quarter reporting as a public company.
On a nine months basis revenues grew to $10 2 million from $5 2 million and 95% increase.
While we don't control the price of fuel and as you all know the price has been very volatile. This year, we've improved our margin per gallon by six cents or 16% since we became public.
No one customer accounts for more than 30% of Q3 revenue a significant improvement from where we were when we first became a public company and.
In fact, we've added more than 75, new fleet customers in 2022 with over 25, New fleet customers in the third quarter alone.
We've also expanded to new locations with some of our existing customers. We have grown our fleet of trucks from the 13, we began with when we completed our IPO to 38 today, we would.
We expanded our operations from a small footprint in south Florida to today.
And West Palm Beach, Tampa, Orlando, and most recently Jacksonville.
As we said in our September announcement, Jacksonville is one of the largest cities by area in the U S.
You see tremendous opportunities for further expansion throughout Florida, while at the same time, we'll be looking to grow to other states.
We continue to focus primarily on growing our commercial business with currently makes up over 80% of our revenue.
The opportunity to expand our on demand in consumer and specialty markets, including Marine is still part of our strategy and we'll be opportunistic about these as they present themselves.
We're also planning to partner with other companies to introduce other products and services in the coming quarters to leverage our technology and improve our overall margin.
As everyone knows hurricane Ian barreled into Florida into October and Florida residents are still assessing the damage easy Phil was there at the forefront of our efforts to provide assistance where needed.
We had our trucks on site delivering fuel to firefighters and first responder vehicles as well as delivering fueled a residence in affected areas. We're very proud to have been recognized by the Governor's office as one of the private sector companies providing needed emergency efforts.
We've come a long way since our IPO in September of last year, we're proud of what we've accomplished in terms of growing the business in a challenging market. We are looking forward to continue to exit our business plan and expand the companys footprint and breadth of products and services in a manner that is consistent with the ultimate goal of consistently generating shareholder value.
With that I'll turn the call over to Arthur who will walk you through the financial results go ahead officer.
Thank you Mike.
As Mike noted earlier revenue for the third quarter of 2022 increased 120% to $4 1 million from $1 9 million in the prior year period.
The increase was driven primarily by a 71% increase in total gallons delivered.
180000 to 994000 gallons in the third quarter of 2022.
Our margin per gallon in the period increased by 16.
Okay.
Since 243 per gallon.
In this year's third quarter.
We've been successful at increasing our overall margin per gallon as we add new fleet customers at higher margins. We expect that we will maintain a healthy margin as we continue to add commercial fleet accounts and more consumers, including marine.
Cost of sales was four two.
Compared to $1 8 million in the prior year period the.
The increase in the prior from the prior year reflects the increase in sales as well as the hiring of additional drivers to support the growing business primarily in new markets.
Depreciation and amortization increased to four 8 million in the third quarter of 2022 from two 4 million in the prior year period, primarily the result of the increase in the fleet of delivery vehicles.
Operating expenses, excluding depreciation and amortization were $3 5 million in the second quarter of 2022 compared to $1 8 million.
And net increase of $1 7 million.
The major increases were in payroll sales and marketing insurance and public company expenses.
The Q3 marketing expenses.
Also included in advertising campaign, directed to residential and marine customers.
Interest expense was lower in 2022 than the prior year periods due to the early repayment in September 2021, a pre IPO debt as well as lower cost financing post IPO.
On a GAAP basis, we reported a net loss in the third quarter of.
Four 4 million compared to $2 4 million in the prior year period.
Adjusted EBITDA loss in the third quarter of 2022 was $3 3 million as compared to a loss of $1 2 million in the third quarter of 2021, the increased loss in the third quarter of 2022 reflects increased spending on infrastructure to grow and expand the business and the operating expense areas previously noted.
We used approximately 3 million cat in cash in operations during the third quarter.
Like many fast growing companies, we are working diligently to get to the point, we reach where we reach breakeven cash flow.
The key to significantly reducing our cash burn lies and continuing to increase our sales volume and improved customer margins. While also improving the efficiency of the drivers that have been hired as we ramp up sales in the new markets that we opened in 2022.
We also plan to exercise very strict control over our operating expenses as we continue to scale now that we have completed building out our core infrastructure.
We expect our delivery truck fleet will be 42 at year end.
We have more than enough truck capacity for now, but we will evaluate before the end of the year our need for additional orders for delivery during 2023.
Finally, our cash position at quarter end was.
Excluding investments compared with $16 9 million at year end 2021.
We have no long term debt and outstanding borrowings under our line of credit were $1 million at the end of the quarter.
With that we'd be happy to take questions.
Thank you ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time.
We ask that while posing your question you. Please pick up your handset if listening on speaker phone to provide optimum sound quality. Please hold while we poll for questions.
Thank you.
Our first question is coming from Tate Sullivan with Maxim Group. Please go ahead.
Thank you couple of Arthur starting with your last comment on the truck target for the end of the year.
Still have scheduled to take delivery of five trucks by the end of the current quarter or are you are you staying at 40 or do you have any capital commitments to take any additional trucks.
While we're currently at 38, and we plan to take delivery of four <unk>.
Which will bring our count to 42 at the end of the year.
Okay. Thank.
Thank you and then as you take delivery of the trucks with I mean with the lower.
And the additional cost of drivers.
How quickly to set expectations, how quickly for those trucks to start to generate profit.
Let's say in a new city that you enter in Florida, I mean can it be six months can it be shorter than what are the variables on for when a truck.
New a freshly delivered truck can start delivering profits for you. Please.
Yes.
What we call an anchor tenant so that we're not starting with zero business.
But.
Our model is that we need we need a truck to be approximately 60% to 70% utilized in order for it to start generating positive cash flow.
And that's that and that assumes that the truck is.
Doing two a two eight hour shifts per day.
Okay.
And to get to that level. I mean have you have you seen trucks do you already have trucks in your fleet at that level of utilization.
C pace have been operating for more than six months to a year.
Yes, some but not all in Miami are operating at that level. The trucks that are in the new markets are still still below that level. So to my to my previous comment we still have.
A way to go.
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To reach that level of utilization with the existing fleet.
So we we do plan to take delivery of some trucks in 2023, and we're in the process of evaluating that.
And it will it will clear it will depend on how many new markets, we open and how quickly we do that.
Next year.
Thank you and then you mentioned cost control too with the and then I mean with your operating expenses have been increasing slightly quarter actually three four to $3 76 slightly quarter over quarter do you plan to curtail. Some previously expected marketing expenses should we ramp up your operating expenses, meaning.
Please for future marketing.
Or is it on hold or maybe just flat for the time being.
Yes, I think the marketing are you can assume that it'll be flat, we're not planning any increases in marketing.
Going forward.
And then Mike you mentioned I believe you mentioned, some evaluating some new products and technologies and I don't know if you can with partners I don't know if you can't comment on it but can you comment on what are the suite of products technologies, and maybe competitors and the other will not competitors, but other on demand fueling company than other.
States provider or any additional that.
That you can yeah.
Look attunity is besides just petroleum so mobile carwash anything related automotive as far as maintenance related to those things because we have the consumer we have there.
Auto information and we have their credit card on file so theres some natural <unk>.
Synergies there that we are talking with some of those partners some of the things we're looking at as.
As far as rolling that out as also on the technology side, we just introduced.
An upgrade on our fleet portal, which has a lot of information for our fleet customers.
That will be continuing to add enhancements to that on the tech side and be able to monetize that.
To give our fleet customers a lot more information and knowledge about their fleet, how they're operating in fuel consumption and those kinds of things providing.
Providing them information that from what we have seen and the feedback we've gotten from our fleet customers that they haven't seen from other fuel providers the level of tech and the level of information that we've been providing so that'll be an emphasis for us.
Continuing to invest.
And the tech side of things and then rolling out some of these other.
Other revenue sources as well.
Okay. Thank you and can you is Florida will you be ahead of other states in terms of are you already ahead of other states in terms of the on demand fueling market or have other states growing their market ground demand fueling faster introduce more technologies can you talk a bit about the national landscape for your marketer or as Florida more developed compared to let's say.
Countless.
I think it's still very scattered.
And theres not a lot of companies to really compare it to a benchmark out there from what we've been told from our customers who have been using.
Especially on the fleet side.
From the technology space, we're definitely.
Probably ahead of where most people were at that were at least the ones that we're aware of as far as a national scale.
And the growth as far as mobile fueling havent.
I haven't seen or heard a lot as far as expansion from competitors or other people like that as far as other play.
Places around the country, So I think.
We're still in the in the early stages of this but it's.
Getting a lot of attention and ramping up quickly as far as.
A way to fuel.
Going forward for consumers and fleets.
Okay. Thank you and then just last for me in your previous guidance.
About 1 million gallons delivered in <unk>, but with the timing of the hurricane in Florida, and maybe some sub haul team to bulk refueling should there be with.
Was there more.
Refilling of tanks after the storm or how did the timing of the storm impacted number of gallons delivered and could some of what you've delivered might've delivered nor in normal situation in <unk> 'twenty two slipped to <unk> 2002.
Yeah, There's no question I mean, some of our fleet.
Customers closed and with that obviously, we werent fueling them at that particular point in time, but I think.
We were able to help a lot with the relief efforts as far as doing some things there. So that was definitely a replacement as far as gallons go but I think we will see.
This continued growth and true trajectory that we've been showing quarter over quarter and gallons.
Percentage wise and those kind of things we feel very very.
Very optimistic that we'll continue to be able to show that kind of growth going forward, but you'll probably have some definitely we have some spillover in a fast start to Q4.
There's a little bit of pent up demand with some of the businesses that closed and then reopened right after.
Okay. Thank you Arthur Thank you Mike.
Thank you yes. Thanks.
Thank you. Our next question is coming from Jason Kolbert with Dawson James. Please go ahead.
Hi, guys. Thank you for your service during the Hurricane we really appreciate it one question that comes out of that service is there any discussion maybe with the state of Florida and with other states to kind of pop that serve us ready in advance or the next the merchant's site or maybe the next hurricane which seems like it's coming pretty soon.
No.
Yes, yes, yes, no definitely there are some discussions I think as we called out.
We got we got to mention from the Governor's office. So we've got a relationship and rapport established there.
Typically a lot of the fuel providers of these big tankers that try to come in and get gas stations up and running but what we've discovered with our fleet, which is smaller and more nimble with 1200 gallon tanks as we can get areas, where some other fuel providers cant.
So we were able to provide a lot of our services to some of the businesses to hospitals to their employees. So they could help people.
During this time, but absolutely I think.
Formalizing more of this and seeing what we can do on a go forward basis is definitely part of our plans, especially now that we've grown outside of Miami.
We are much more attentive to a lot of the other markets that we're in with Tampa West Palm Beach, Orlando and now Jacksonville.
We've got a much farther reach and can make a bigger benefit in those kind of things, but the short answer is yes, we have some.
Initiatives to expand that relationship going forward.
And switching to the numbers.
What's the limiting factor in terms of growing the revenue numbers, which have been growing at a spectacular rate, but at what point.
Is it the ability to hire drivers is it capital constraints.
What are the factors that you are looking at.
In order to or the hurdles to overcome in order to continue to support this high growth rate.
Sure, Yes, Jason.
I'd say the biggest hurdle is is capital because.
To start with at least at least two trucks and hire drivers and.
On day, one even if we go with an anchor tenant.
The trucks and the drivers are going to be underutilized until we sell more business. So every new market. We go to has significant negative cash flow.
Before before we have significant growth. So yeah, I would say capital is probably the number one factor that that limits our ability to.
So expand to new states, which require even more capital and more effort than expansion within Florida.
Okay.
And I guess this is a little bit of a loaded question, but with the mid terms coming down today, there could be a shift in the energy policies in the U S and that could drive the market a little bit. So maybe that's an area that would alleviate some constraints in terms of market cap and ability to raise capital.
We certainly hope so.
Yes.
Thank you so much appreciate it.
Yes.
Thank you and as they repair to be no further questions in queue I will hand, it back to management for any closing comments.
Yes, so as I. Thank you all for joining us and we look forward to reporting back to you in the fourth quarter have a great day everyone.
Thank you, ladies and gentlemen, and this does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation.
Thank you.
Yeah.