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spk06: The call will begin in just a few minutes. Please remain on the line.
spk00: Thank you. Thank you. Thank you.
spk06: Good afternoon, everyone. Welcome to today's conference call to review the financial results for fourth quarter and full year ending December 31st, 2021 for Easy Fill Holdings, Inc. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation and management remarks. If anyone should require operator assistance during the conference call, please press the star and zero keys on your telephone keypad. 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 KCSA Strategic Communications. Please go ahead.
spk02: Thank you, Paul. Good afternoon, everyone, and thank you for joining us today for EasyFill's earnings conference call. Joining me today on the call is Mike McConnell, CEO, and Arthur Levine, CFO. After management's prepared remarks, we will open the call for your questions. Before we begin, listeners are reminded that certain matters discussed in today's conference call are answers that may be given to questions asked, may constitute forward-looking statements from EasyFill'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 proceeds as well as concerning future events. 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, including those set forth in the risk section of the company's registration statement, the company's initial public offering filed with the SEC back in September. Copies of these documents are available on the SEC's website at www.sec.gov, 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 introduce Mike McConnell, CEO of EasyFill. Please go ahead, Mike.
spk05: Thank you, Kathleen, and good evening, everyone. Thank you for joining us today to review our 2021 fourth quarter year-end results. Before Arthur reviews our financial results, I'd like to take the opportunity to discuss the progress we have made over the past year in building Easy-Fill's position as the premier mobile and on-demand fuel delivery company in South Florida. Not only have we generated more customers in our key operating markets, we solidified our expansion plans with greater capabilities to now serve additional markets across Florida and throughout the U.S. We're very excited about the growth opportunities that we believe exist for Easy-Fill in 2022 and beyond. and we are prepared to successfully enter those target markets. 2021, and most notably the fourth quarter of 2021, was a transformational period for EasyFill. We evolved from a small company that served approximately 20 commercial accounts pre-IPO to a NASDAQ-listed leader in the mobile fueling market, now serving approximately 35 fleet accounts, including 15 new accounts that will start to make a meaningful contribution to revenue in the first half of 2022. Some of these new accounts were previously announced. As I've shared in the past, our commercial fleet business drives our growth as it allows us to achieve high utilization of our trucks and delivers a recurring revenue stream for our business. By building upon our portfolio of scheduled fueling contracts, we're consistently serving a large number of vehicles at one location. Our customers increasingly seek our service to eliminate the burden of additional costs, time, and potential fraud. and we are quickly becoming an integral part of these commercial customers' business. As we've expanded our sales force, we're accelerating new contract wins. In the fourth quarter, we announced several new fleet fueling agreements in the Miami area, which will support our growth with the revenue beginning to flow during the coming months. The first new commercial customer was announced in November when we signed a fleet agreement with Servpro of North Miami, which was then followed by fleet contracts with national franchisor 1-800-GOT-JUNK, and Alto, a leader in ride hailing and private transportation. As part of the agreement with Alto, we are supplying regularly scheduled fueling to 28 of the Dallas-based rideshare company's fleet of five-star SUVs in Miami, with plans to fuel an additional 100 Alto vehicles by the first quarter of 2022. These fleet fueling contracts drive a key growth opportunity for our business as we can increase sales, and expand our geographical footprint by servicing their growing vehicle fleet and supporting their entry into new markets. Our commercial business accounts for approximately 80% of our revenue, and as we continue to scale with new fleet accounts of all sizes, it should contribute to higher overall fuel margins. Moving next to a discussion of our on-demand consumer and specialty business, our on-demand consumer and specialty business combines currently contribute about 20% of our revenue. We are addressing the opportunity to serve customers through our on-demand platform. With the number of individual consumer vehicles on the road approaching 300 million and a continuing migration towards on-demand services as evidenced with what we saw with food delivery and grocery sales, we believe we are in the right place at the right time to capitalize on changing consumer behaviors. The on-demand economy is estimated to soar to 335 billion by 2025, according to PwC research We have secured our position to lead the inevitable transition to on-demand fueling. As a reminder, our user-friendly app allows customers to schedule fueling both on-demand as well as recurring fuel deliveries at prices comparable to the local gas station, but with convenience and time saving. Our residential customers currently pay a delivery fee of $4.99, or they have the option to pay $9.99 per month for their limited deliveries. We have recently launched an enhanced branding and marketing campaign with the goal of elevating our brand awareness as we build our position as a national leader in the mobile fuel delivery industry. A prime avenue for growth in our consumer business segment has been and continues to be supplying fuel to employees of large corporations as an employee benefit. By delivering fuel to office parks, hospitals, and other permanent job locations, we can service a large number of vehicles in one area. maximizing truck utilization, and driving greater operational efficiencies. An example of this was our recent announcement of the signing of a new fleet and employee agreement with Monsignor Edward Pace High School in Miami Gardens, Florida, where we will offer gas fueling for teachers and administrators while they are working at the school at the same time we are refueling the fleet of school buses. 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 dock at busy marinas. Our specialty vertical business segment supports these type of vehicle owners that are increasingly looking for greater convenience. As we are strategically located by many marinas in the South Florida area, we see an attractive growth opportunity to support the fueling needs of these customers. Fueling our optimism about this growth opportunity was our recently announced exclusive agreement with Brickell Place Marina in Miami who regularly service the Ramp Marina's more than 200 customers through the Easy Fill app. As we continue to market to boat owners as well as other specialty vehicle owners in specific markets, such as equipment rental companies, construction job sites, agricultural operations, and recreational ground vehicles, we are increasingly demonstrating the breadth and value of our mobile and on-demand service platforms. As the only company to provide fuel delivery in three vertical segments, consumer, commercial, and specialty, Easy-Fill is well positioned to capitalize on the growing demand for convenient and cost-efficient mobile fueling options. Next, let me provide an update on our market expansion plan, starting first with Florida. While we continue to focus on increasing our business in our core South Florida market, we're also planning our entry into additional targeted cities across Florida, including Tampa and Orlando, over the coming months. To accelerate our expansion, we announced today the signing of an agreement to acquire the mobile fueling assets of Full Service Fueling, Inc., an affiliate of Palmdale Oil Company, one of the largest wholesale fuel suppliers in the state of Florida. The acquisition price is $375,000, consisting of $325,000 in cash and $50,000 in stock. These assets to be acquired upon closing of the transaction include trucks, customers, and intangibles of the business. Importantly, we are also executing an operating and supply agreement with Palmdale, which will be integral to our strategy to expand throughout Florida. Palmdale will serve as one of the main fuel suppliers for Easy-Fill throughout Florida with preferred pricing on all fuel purchases. Additionally, Palmdale will provide Easy-Fill with access to vehicle parking at locations throughout the state significantly jump-starting the infrastructure component of our entrance into new markets, as well as reducing our cost to enter each targeted market. This is our first acquisition since completing our IPO, and although the size of the full acquisition is relatively small, we expect the logistical support to be provided by its affiliate, Palmdale, will greatly accelerate our expansion in Florida and demonstrate our abilities to strategically build our operations and geographical footprint. Moving next to an update on our planned expansion into other U.S. targeted markets. In the coming months, Easyfield will focus on growing sales and, more specifically, expanding our brand and service offering in new markets as part of our geographic expansion strategy. We're in the process of completing all the required steps and documentation needed in order to launch a pilot program in New York. As the mobile fleet fueling industry evolves, safety regulations have grown increasingly more stringent to help mitigate risk. EasyFill is contracting with an engineering team to design new classes of cargo tank trucks that not only meet but exceed the current fire regulations, which will enable us to expand into densely populated markets. Having designed a compliant fleet to mitigate risk will enable us to expand into these coveted market segments with the proper approvals. This is a significant opportunity for EasyFuel to potentially become the first mobile fueling company to operate in some of the largest cities in the U.S. Further supporting our expansion, we announced in October our commitment to purchase 33 new fuel trucks and triple the size of our delivery fleet. We've already taken delivery of approximately a third of these trucks and expect to complete delivery of all 33 trucks by Q3. Each truck has the capacity to carry 1,200 gallons of fuel, which collectively will add over 350,000 gallons of delivery capacity per week when all trucks are operating at full capacity utilization. Summing up my presentation, since going public, we've made progress on our near-term goals. We secured a position as a first mover in Florida's high-growth market. We secured 15 new fleet accounts and signed our first acquisition that will support our ability to scale and deliver fuel to Florida's largest cities. We're tripling the size of our fueling truck fleet and preparing for our entry into New York and other markets up the East Coast. While building our business relationships and steadily increasing the number of our fleet customers, we're introducing more consumers to our app-based interface through our enhanced marketing efforts to transition them to the ease and convenience of on-demand fueling. I'd like to turn the call over to Arthur Levine to review our financial results. Arthur, please go ahead.
spk04: Thank you, Mike. Thank you all for joining us today. Before getting into a discussion of the quarter and full year's financial results, I want to expand a bit on a key milestone for the company that Mike mentioned, as well as our solid financial position. In September, we completed our initial public offering, netting proceeds of approximately $25 million. We used a portion of these proceeds for repayment of approximately $4.2 million of high interest debt. We've taken delivery of 11 new trucks and made deposits on another 22 trucks. Trucks which we have taken delivery have been financed primarily through the dealers. In December, we announced that we had secured a revolving credit facility under which the company may borrow up to approximately $16 million, a number that may decrease over time. The credit line can be used for general corporate purposes. As a result of what I just mentioned, at year end, we had a cash position of $16.9 million, up from just under $1 million at year end 2020. We had no long-term debt and no outstanding borrowings under our line of credit as of year end. Now for discussion of our financial results. We're in the early stages of delivering on our growth potential and continue to report year-over-year top-line growth. Revenue in the fourth quarter was up 77%, 2 million compared to 1.1 million in Q4 of 20. This reflects both higher average fuel prices per gallon and a 21% increase in gallons delivered. Total gallons delivered in the fourth quarter of 2021 were approximately 577,000. Revenue for the full year was 7.2 million, more than double the same period of the previous year, driven by a 53% increase in gallons delivered as well as higher average prices. Cost of sales was higher both in the quarter and for the full year, reflecting the increase in sales. Our operating costs were approximately $400,000 or 11% lower in the fourth quarter of 2021 as compared to the same period of the prior year, reflecting a reduction in stock compensation expense of about $2.5 million, offset by a $2.1 million increase in other expenses. The major increases in other expenses were in payroll, sales and marketing, insurance, and public company expenses. Operating expenses on a full year basis were up 1.6 million or 24% for the same reasons as the quarter, as well as increased spending on technology. This is net of a decrease in stock compensation expense. Going forward, we will spend as needed to support the expansion to new markets, but we will also be careful with additions to infrastructure and other operating expenses, and we will leverage the logistical support from the acquisition that Mike just discussed. A key metric, average fuel margin per gallon was 40 cents for the fourth quarter. Flat year-over-year for the quarter, but down on a full-year basis due to a higher percentage of sales in the current year attributable to a large fleet customer with a lower margin that started to contribute to revenue during 2020. However, this was the key driver of our overall increase in revenue. As we continue to expand and diversify our fleet customer base and add more consumers, we expect that our average fuel margin per gallon will increase. As I mentioned at the start of my presentation, We used a portion of the IPO proceeds to repay high interest debt in September. As a result, interest expense decreased in the fourth quarter. For the full year, interest expense increased over 2020 due to warrants and shares issued during 2021 in connection with new debt, as well as the repayment of debt and the resulting write-off in Q3 of unamortized debt discounts. The amount of interest expense is expected to increase in 2022 as a result of loans and use of the line of credit for the purchase of trucks. Adjusted EBITDA loss was $2.7 million in the quarter and $5.8 million for the year. The increased loss in both periods when compared with the prior year reflects significant spending on infrastructure in the current year in order to grow the business. As you think about our current coming quarters, We expect to see the revenue begin to flow in from the new fleet contracts that we have recently been awarded. Equally important to keep in mind is that there is a lag between purchasing new trucks, hiring drivers, and generating revenue from them as their utilization increases. There will be a ramp up period for each vehicle, and we are not expecting a significant revenue contribution from the new trucks until we move into the second half of 2022. In conclusion, the team is making progress toward our growth initiatives, and I'm excited about the opportunities that are ahead of us. I would now like to turn the call back to Mike for closing remarks. Thank you, Arthur.
spk05: 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 ahead for us and look forward to updating our shareholders with our progress on the next earnings call.
spk07: Thank you.
spk06: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would 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.
spk07: Thank you. Our first question is from Alejandro Nuno with Maxim Group. Please proceed with your question. One moment. It appears there are no questions in the queue at the moment.
spk06: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.
spk07: Thank you. There are no questions at this time. One moment, we have one question in our queue.
spk06: Our first question comes from Keith Gill with Carter, Terry & Co. Please proceed with your question.
spk03: Thank you and congratulations on a great quarter and a great year. What would be an expected quarterly burn rate for 2022? Arthur, you can take that one.
spk04: Yeah, hi, this is Arthur. You know, I'll back up a little on that question. So, you know, we were burning pre-IPO about $400,000 a quarter. And, you know, as we talked about on the last call, the burn rate has significantly increased since then because we were spending money on where we've done additional hiring of people. We spent money on marketing. Of course, we've got public company expenses. So our burn rate this quarter was over $900,000. And I would say going forward, we're looking to stabilize it at that amount. We're not looking to increase our burn rate any further. And at some point as we scale the business, we will be able to turn it around in the other direction.
spk03: Great, and congratulations on the recent acquisition.
spk05: Thank you. We're very excited about that. It's going to really be a turnkey benefit for our expansion strategy. Very much a very big positive as far as expansion into Florida.
spk03: And if I may, one follow-up question. With the new trucks coming on that will be fire-compliant, and you say major cities, would Miami be considered a major city?
spk05: Yeah, it could be. I think part of it is based upon the regulatory environment of which city you're in. The main thing with this new tank design that we're working with, it will actually exceed some of the strictest regulations that are out there. So depending on which city it is, Absolutely, positively be approved by the authority having jurisdiction as far as being compliant from a regulatory perspective. So any major city would fall in that category.
spk04: Thank you. Let me clarify the response that I just gave. I said around 900,000, that was the monthly burn rate. So the cash burn for the quarter was closer to about 2.8, 2.9 million.
spk03: Okay, and then that's what we could expect pretty much close to that for, you know, for 2020.
spk04: Just as a guideline, I think the, you know, the adjusted EBITDA is a reasonable approximation of our cash flow, and that's why we provide that measure, all right, just because, you know, stock compensation is probably the largest non-cash expense, but we also have depreciation and amortization that's added back. And if you look at the first page of our earnings release, we provide adjusted EBITDA, and it's, It's not exactly the operating cash flow, but it's a reasonable approximation when we add back the non-cash expenses. So the operating cash flow for the quarter is not too far from that number. Okay.
spk03: And then one other one I think you've answered, but maybe you can supply a little color. Of course, everybody's realizing the higher price of gas per gallon. Do you see that having any negative impact going forward?
spk05: Yeah, we have not. We've been asked that question quite a bit, and we have not seen an impact at all as far as the demand and the orders in any of our segments at this point. Of course, on the fleet side, that business is continuing to accelerate and remain robust for us, the marine side as well. So we haven't seen an impact that has impacted our volume at all.
spk07: Okay, great. Thank you. You're welcome.
spk06: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.
spk07: Thank you. There are no further questions at this time. This concludes today's conference.
spk06: You may disconnect your lines at this time. Thank you for your participation.
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