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spk03: Good afternoon and welcome to the EasyPhil Holdings Incorporated third quarter 2021 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Kathleen Heaney. Please go ahead.
spk04: Thank you, Operator. Good afternoon, everyone, and thank you for joining us today for EZFIL's third quarter 2021 financial results conference call. Joining me today on the call is Michael McConnell, CEO, and Arthur Levine, CFO. After management's prepared remarks, we will open up the call for your questions. Before we begin, listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked, they constitute forward-looking statements from EZPIL's management made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, including with respect to the company's recent IPO and the anticipated use of the net privacy as well as concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipate, 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 may be beyond the control of the company, including those set forth in the risk factors section of the company's registration statement and final perspectives for the company's initial public offering filed with the SEC. Copies of these documents are available on the SEC's website, as well as the company's 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 would now like to turn the call over to Mike McConnell, CEO of Easyville. Please go ahead, Mike.
spk05: Thank you, Kathleen, and good evening, everyone. Thank you for joining us today to review our results for the third quarter ending September 30th, 2021, and to share the progress we've made since completing our IPO in September and listing on the NASDAQ. I'm excited to be here with you today on our inaugural earnings call to formally introduce you to EasyFill Holdings, share with you our history, our achievements to date, and our growth strategy. Afterwards, Arthur will discuss our financial results, and then we'll open up the line for questions. As this is our first call, I want to spend some time talking about the company, the market opportunity, and our plans to grow the business. Formed in March 2019, EasyFill was developed with the intention of capitalizing on the movement towards on-demand delivery of products and services to the home and place of employment. Very quickly, EasyFill has become the most innovative technology and service platform for the delivery of fuel to consumers, commercial, and fleet customers in South Florida. Through our unique B2B and B2C model, we have disrupted the gas fueling routine by providing consumers and businesses with the convenience of this integral service brought directly to their desired locations. We've leveraged today's most advanced digital technology and the GPS-based on-demand service platform that has transformed so many other industries to advance the fuel industry and alleviate the many issues of the legacy gas station model. In effect, we are leading the transformation of the fuel service industry, beginning at South Florida as the only mobile fueling company to combine on-demand fills and subscription services to fill vehicles on scheduled intervals for fleet, consumer, marine, and other customers. Given our initial success in this market, we are rapidly growing our fleet of fueling trucks to further penetrate strategic markets in Florida, as well as expand into additional markets across the United States. Switching gears, let me describe the market opportunity that exists for Easy-Fill. According to PwC research, it is estimated that the on-demand economy will soar to a whopping $335 billion by 2025. Today, approximately 22.4 million consumers in the U.S. spend $57.6 billion annually for on-demand products and services. We believe that mobile fuel delivery is primed to be the next hit service in the on-demand economy. While the headlines may scream electric vehicle, the fact remains that approximately 95% of motor vehicles sold in 2020 in the U.S. are gasoline powered and almost 300 million internal combustion engine vehicles are currently on the road. This means the replacement of gasoline engine vehicles with electric vehicles will be a slow evolution. According to the U.S. Energy Information Administration, Americans used about 123 billion gallons of motor gasoline, or an average of 338 million gallons per day in 2020. So yes, while there is a lot of exciting news about the growth of electric vehicles, there is a tremendous runway ahead of us. Coupled with gas stations dwindling in numbers, as the real estate they sit on is more viable for other uses, it is inevitable that mobile fuel delivery is the next big on-demand market. Our strategic entrance into the high-growth, on-demand industry was timely and has been well-received in Florida, as demand for products and services that are convenient, safe, and touch-free have never been greater due to the COVID pandemic, which elevated an already strong trend towards on-demand purchasing. The on-demand mobile fuel delivery market is primed for growth as more and more segments of the world turn to on-demand services. Our consumer business was impacted significantly in 2020 by the COVID-19 pandemic, but has largely returned in 2021 for residual fueling, residential fueling, but is still in the process of recovering to pre-pandemic levels at office parks as employees gradually return to the office. Now, let me turn to Easy-Fill's business model and talk about our strategy. Easy-Fill is headquartered in Miami and currently operates a fleet of 13 and growing mobile fueling trucks. Our key target markets include consumer, commercial, and specialty vehicle markets. We are successfully building our position in these markets by leveraging our proprietary back-end software to efficiently meet their fueling needs. As I mentioned at the start of my presentation, we have both a B2B and B2C strategy. As part of our B2B strategy, we partner with national and local businesses who operate fleets to offer an alternative solution for vehicle fueling in order to reduce operational costs, improve fleet efficiency, and reduce fraud. Through this strategy, we have scheduled customers which offer key growth opportunities for expansion into other markets throughout the United States. Our fleet customers pay only for the fuel they consume with no delivery fees tacked on. Our service resonates well with fleet customers looking to avoid the hidden costs related to filling up the tank, including driver downtime, additional wear and tear on vehicles being driven to and from the gas station, and potential fraud. Through Easy-Fill, commercial customers are relieved of their concerns because our fueling trucks come to their desired location to refuel their fleet. To support our B2C strategy, customers sign up for Easy-Fill services individually or as part of a discount of Easy-Fill services offered as an employee benefit for those working in office parks, hospitals, or other permanent job locations. Fuel deliveries are completed at optimal times during the day for at-work customers. in the evening for residential deliveries and at night for fleets. Our friendly user app allows customers to schedule fueling both on-demand as well as recurring fuel deliveries at prices comparable to their local gas station. Our residential customers currently pay a delivery fee of $4.99, or they have the option to pay $9.99 per month for unlimited deliveries. Finally, our specialty vertical drives our entry into market-specific personal and commercial vehicles such as boats, equipment rental companies, construction job sites, agricultural operations, and recreational ground vehicles. This is a valuable segment for our business as we are strategically located near many marinas in South Florida where customers are specifically seeking lower fuel pricing and greater convenience. We have strategically captured this market by offering pre-scheduled fueling at their location so that these customers can get affordable fuel whenever they need it. Our continued expansion in the specialty market is driven by targeting similar market-specific vehicles, such as those used for construction or agricultural purposes and personal or recreational vehicles. We have the ability to readily adapt to each specific specialty market based on the type of vehicle that can benefit from at-location fuel delivery. Currently, fleet customers comprise the largest percentage of our revenue at approximately 80%. We recently hired a marketing firm and plan to use a portion of the proceeds from the IPO to strengthen our marketing and brand awareness among consumers, while the focus of the salespeople recently hired will be to increase the number of fleet accounts. I'm going to wrap up my presentation with a discussion of our growth strategy. Our first mover status in Florida's high-growth, on-demand fueling market provides us with a unique competitive advantage to expand in Florida and then enter additional markets along the eastern coast of the U.S. We are leveraging established business partnerships along with our proven technology, scalable operation platform, and established brand recognition to readily enter these targeted markets and acquire competitive territories. While focusing on further developing our business relationships to build our base of fleet customers, we are driving more and more consumers to our app-based interface to transition them to the ease and convenience of on-demand fueling. Our near-term objective is to ensure that we are well positioned to meet the growing market demand for on-demand fueling in 2022. To that end, we recently purchased an additional 33 fuel trucks, which will triple the size of our delivery fleet and support our efforts to expand our service offering in cities across Florida, including Fort Lauderdale, Tampa, and Orlando, as well as select other U.S. cities. We expect to take delivery of these vehicles during the next six months, during which time we will also hire a significant number of new full-time drivers, and other experienced personnel. Since completing our oversubscribed IPO in September, we have seen a continued drive towards on-demand purchasing and believe we are well-positioned to lead the growth in the on-demand fueling market as we continue to expand our geographical footprint across the U.S. I'd like to turn the call over to Arthur Levine to review our financial results. Arthur, please go ahead.
spk06: Thank you, Mike. Thank you all for joining us today. Before reviewing the quarter, allow me to provide additional details regarding a recently completed IPO. In September, the company issued 7.2 million shares at a price of $4 per share for gross proceeds of $28.8 million and net proceeds of approximately $25.3 million after deducting underwriting discounts and commissions of $2.4 million and expenses of 1.1 million. Immediately prior to the IPO, all shares of stock then outstanding converted into an aggregate of 18.7 million shares of common stock following a 143.76 reverse stock split. Total shares outstanding following the IPO were approximately 25.9 million. I am pleased with the momentum we are seeing in the business as we report our first quarter as a public company. During the quarter, revenue increased 66% over the same period of the prior year to $1.9 million. This increase was primarily due to a 21% increase in gallons delivered, as well as an increase in the average price per gallon. For the nine months ended September 30, 2021, revenue was $5.2 million. more than double the comparable period in 2021 than 2020 for the same reasons I just described. Total gallons delivered in a nine-month period increased 68% year over year. Cost of sales in the quarter was $1.8 million compared to $1.1 million for the same period of the prior year. This increase was driven primarily by the higher sales level. Average fuel margin per gallon was 37 cents overall for the three and nine month periods. This will be a key metric for us going forward. As we continue to expand and diversify our customer base with new fleets and consumers, we expect our average fuel margin per gallon to increase. Total operating costs in the third quarter were 3.9 million compared to 1.8 million in the same quarter of 2020. This increase was primarily due to increases in payroll, technology spending, and truck insurance. The third quarter of 2021 included two weeks of public company costs that will be included for a full quarter starting in Q4. Operating expenses that will significantly increase starting in Q4 include marketing, technology, sales payroll, and public DNO insurance. Interest expense increased in 2021 due to warrants and shares issued in connection with new debt, as well as the early repayment of debt and the resulting write-off of unamortized debt discounts. The net loss in the third quarter was 2.4 million compared to 0.7 million in the same period of the prior year. The net loss was 5.7 million for the nine months compared to a net loss of 3.1 million in the prior year period. Adjusted EBITDA loss in the third quarter was 1.2 million compared to an adjusted EBITDA loss of 0.3 million in the third quarter of 2020. For the nine months, the adjusted EBITDA loss was 3.2 million compared with an adjusted EBITDA loss of 1.2 million in the first nine months of 2020. Adjusted EBITDA more closely reflects the operating cash flow of the company than net loss which includes various non-cash items. The increase in the EBITDA loss in both periods reflects significant spending on our operating infrastructure in support of growing the business. As you think about the P&L in the coming quarters, keep in mind that there is a lag between purchasing new trucks and hiring drivers and generating revenue from them as we enter new markets. As Mike mentioned, we expect to take delivery of 33 new trucks over the next two quarters. There will be a ramp-up period for each vehicle, so the increase in revenue contribution from the new trucks will occur over a few quarters. However, we are increasing our marketing spend starting immediately, which we expect will have an impact starting in Q4 on our existing markets. Our financial position is solid with a cash position of $20.7 million at quarter end, up from $0.8 million at the end of 2020. The ending third quarter cash balance reflects the net proceeds from our IPO, less repayment of approximately $4.2 million of high interest debt, and approximately $900,000 in deposits made on the recently announced purchase of 33 trucks. Total debt after the repayments was less than $200,000. We believe the repayment of the existing debt has created capacity to finance truck purchases and we will therefore focus our use of the remaining IPO proceeds on marketing, technology, and the hiring of drivers and certain other personnel as we expand our operations. I would now like to open up the call for questions.
spk03: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Your first question comes from Ashok Kumar from Think Equity. Please go ahead.
spk01: Good afternoon, Mike and Arthur. Thank you very much. A multi-part question. In terms of the mix of revenues, it indicated 80% was fleet. As you look out for the next year and beyond, where do you see the mix? How do you see the split between the three segments, commercial, consumer, and specialty? And where does the 20% split stand right now between consumer and specialty? The other question is, in terms of growth, how do you see the mix in terms of volume growth versus ASP growth as you look over to 22? And also you talked about lag between capital acquisition or the truck acquisition and revenue generation, and typically what is the quarterly lag? And I guess in terms of the 33 new trucks you've acquired or committed to acquire, Are there any gating factors in terms of delivery and so on? Thank you.
spk06: Okay. This is Arthur. I'll start by answering the first one about the revenue mix. So the 80-20 mix has been fairly constant because over the last year, really all sides of the business have grown significantly. We had some new fleet accounts and significant fleet accounts in 2020 that grew significantly. significantly since then. We also had a downturn in the consumer side of the business with the pandemic during 2020, but that has rebounded very nicely. As Mike mentioned, one part of the consumer business that has not fully rebounded yet is the office park business, but we've been fairly constant in the 80-20 mix over the last year, and it's at least for the foreseeable future, it's probably going to stay somewhere in that range. It may change a bit, but at least in the immediate future, that's where we're going to be. The second question, can you clarify again about the volume?
spk01: The top line growth, Arthur, in terms of volume growth versus ASP inflation, right? I was wondering, given that's been one of the pain points, right? in terms of operating costs and so on. So I was wondering how you see those splits.
spk06: The splits in the, you're saying?
spk01: The revenue, the top line growth, right, in terms of volume growth versus ASP growth.
spk06: Okay. So the, you know, it can go both ways. I think in the last year you can see that the revenue has increased by a somewhat higher percentage than the gallons, but You know, the opposite happened in the previous year as the price per gallon was going down. So that's why we're reporting gallons, which is a more meaningful measure in the change of our activity. And I expect that, you know, going forward, we will be tracking the average margin per gallon, which is really a key metric for us.
spk01: And do you see in terms of, you know, the – In major pain points going forward, are they going to be any different than what you've experienced in the past, whether it's the operating costs or the fleet driver expense and so on? I was wondering, do you see any major pain points that are different than what you've experienced in the recent past?
spk06: In the operating expenses?
spk01: Just across the key vectors, do you see any pain points that are different than what as you look ahead versus looking back.
spk06: Did you say pain points?
spk01: Yes, uh-huh.
spk06: Okay. Mike, you want to handle that one?
spk05: No, I was going to say, I don't think we've seen a whole lot different. It's been widely reported, of course, the supply chain and management of that is affecting everyone in the industries today. We've continued to embrace that, and we've been able to get trucks, and we'll continue to order trucks, and we've been successful at that. And we have more things coming in the future as far as that's concerned. So as far as any other pain points besides that that are new or different, don't anticipate anything new that we haven't faced in the past. And then a couple comments too about the mix as far as 80% fleet and consumer. We expect that to go down a little bit as people do return to the offices, which Arthur touched on. So as people come back to work, as the pandemic relaxes somewhat, we should see an increase on the consumer side as well.
spk01: Oh, great. And one last question in terms of your software and IT systems that have been a key comparative advantage. Just wondering, could you just lay out your roadmap, you know, looking ahead, right, any improvements or evolution that you see that will further this comparative advantage? Thank you.
spk05: Sure. I think on the IT side, we've significantly staffed up recently with some of the proceeds from the IPO and added additional staff and services on the proprietary side as far as the fleet dashboard and the logistics side. So anticipate some pretty big improvements as far as our efficiencies on logistics and delivery. And also the consumer app is proprietary, so we'll continue to invest in that. Also on the consumer side, as we continue with our marketing plan as far as increasing downloads from consumers with the app as well.
spk01: Got it. And then in terms of the growth strategy, I think, you know, the past is also the future, right, in terms of expanding your geographic footprint and strategic partnerships with businesses as well as with oil companies, right? Those would be the primary vectors of top-line growth.
spk05: Yeah, we'll continue as far as the customers or the businesses that we have, the fleet businesses that have a regional and national footprint that we service in Miami. We'll continue to leverage those as we grow. We continue to have discussions with Big Oil, and we'll continue to do that as far as going forward. That is a key part of our strategic growth, so we'll continue to have those discussions and look for those synergies and partnerships as well.
spk01: Right. And in terms of government, one last question, government regulations, public policy, you don't see any changes in the near term, right, that are different than what's in place?
spk05: Don't anticipate any near term, no.
spk01: Okay, great. Mike and Arthur, thank you very much. Thank you.
spk03: Once again if you wish to ask a question please press star 1 on your telephone and wait for your name to be announced.
spk02: We'll now pause momentarily if anyone else wishes to enter the queue. Once again if you wish to ask a question please press star 1 on your keypad and wait for your name to be announced. There are no further questions at this time.
spk03: I'll now hand back to Mr. McConnell for closing remarks.
spk05: Thank you. Our top priority is to invest and grow our business, and we plan to accelerate our geographic expansion efforts. We're very optimistic about the growth opportunities for us and look forward to updating our shareholders with our progress on the next earning call. Thank you.
spk02: That does conclude our conference for today. Thank you for participating. You may now disconnect.
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