NEXTNRG, INC. Q2 FY2022 earnings call

• Growth Strategy: Executing growth strategy as a fast-growing on-demand mobile fuel provider, with revenue up over 100% Y/Y. Added ~30 new fleet customers in Q2, total since start of year ~40. Landed a large grocery store chain as new customer. Expanded operations to West Palm Beach, Tampa, Orlando. - Fleet: Fleet size at end of Q2 was 30, grew to 36 and planned to reach 40 by end of Q3, approach 50 by year-end. - Marketing: Launched comprehensive marketing campaign including billboards, radio, social media. - Emergency Services: Launched Emergency Fuel Services Program for hurricane season support.

In the second quarter of 2022, EzFill Holdings reported revenue of $3.75 million, a 103% increase from $1.85 million in the prior year period. The increase was driven by a 30% rise in total gallons delivered, from 607,765 to 789,970 gallons. Cost of sales for the quarter was $3.8 million compared to $1.8 million in the prior year. Operating expenses (excluding depreciation and amortization) were $3.4 million in Q2 2022 versus $1.7 million in Q2 2021. The margin per gallon improved 32% from $0.37 per gallon in 2021 to $0.49 per gallon in Q2 2022. The on-demand consumer and specialty business combined contribute approximately 20% of revenue.

• Expect fleet size to reach 40 before end of Q3 and approach 50 by year-end under current commitments. - Will continue to spend as needed to support new markets, focusing on hiring additional drivers and sales reps, and completing the ongoing advertising campaign.

• Political environment: Certain California cities banning new gas stations, though not a national trend. - Market conditions: Fuel price fluctuations and broader market conditions could impact margins. - Customer dependence: Previously dependent on few large customers, though working to diversify.

Q: Starting where you ended out Arthur with planning to have the fleet at 40 before the end of this current quarter and then could approach 50. Do you already – and related to your expansion plans, too, do you already have locations planned for where those trucks will go? Or does that depend on various factors?

A: Well, we're – yes, I mean, as of today, we have 36 trucks. And we're going to take – so those trucks are already deployed. If we enter a new market in the next quarter, then we're going to – we'll probably deploy two trucks in that market and then the other two where they're most needed.

Q: And then, Mike, related to that, the logistics about planning to start in another – or go to another city or area. I mean does it start with having the existing fleet customers already operate there? Does it have to start with getting new fleet customers but for the infrastructure, the parking, refueling, employees? Can you talk about how it works for the logistics of expansion, please?

A: Yes, sorry about that. Good question. Yes. We'll continue to leverage our current relationships with ones that are in Miami that have multiple locations throughout the state regionally and even nationally and having discussions with them about growing our business along with theirs to expand. New York will continue to be a market that we're growing and looking at and planning on entering into, hopefully, sometime this calendar year. So certainly, we'll continue to expand, leveraging our current relationships.

Q: I mean 30 customers in the quarter. I think I heard you correctly, I mean, up from – if I counted correctly, I mean – and you're at 40 now. So I mean 10 in the prior two quarters, 4Q 2021 and – maybe that's not exactly right. But nonetheless, 30 in this quarter. What created that momentum? Is it seasonal potentially, signing up to customers? Or is it smaller customers than you were signing up before perhaps?

A: No, I think it's – part of it is our sales fleet. We've added some with that, and we get really an instant response. So we've got four people, five now in some of those markets and some of the new markets that we've entered into. So I think also, we've got some time in those markets. So as we're continuing to grow and promote and our salespeople continue to leverage the relationships that we currently have, we are extremely optimistic about our fleet business continuing to grow.

Q: And then I'll see if there's other questions and maybe to come back after if there's not a – I mean the momentum and the average margin per gallon is impressive, I mean, the last three, four quarters. And Arthur, on your comments, it sounds like that can continue. Are there – I mean – so it seems like once you have those momentum, you sign up higher contracts, I mean, quite predictable in what you can price to the fleet customers. Are there any downside risks to where you are now, to that average margin per gallon, as you see the current discussion?

A: Yes, I'll answer that, Tate. So the average has been going up because the very large fleets that had been a drag on the margin were more or less flat the existing large fleet business, except for one new – we did have one new very large fleet this quarter. But there was – there were a lot of new small to medium-sized fleets that were signed up at healthy margins that increased the overall average. And I'll add to that, that a very significant portion of the new business was in the new markets, all right. So that really helped as well. I mean there was a significant new business in the existing market but also in all of the new markets.

Q: The consumer effort, are you currently – you're out there marketing. Are you signing up consumer – customers already? Or is that to come? Or how is that initiative?

A: Yes. No, it's kind of in process. So we went on a very robust campaign, I would say, starting in the May, June time period. So we're just beginning to get a lot of the results back. But the initial results as far as downloads, receptivity, understanding which of the – really which of the tactics are most effective. We're gathering a lot of information and learning a lot. But the response has been received pretty well. What we've got to do now is track it through the entire process to understand the order process and then evaluate the cost and the return and which channel is most effective for us. So we'll definitely probably be reporting more detail on that in Q3 as we learn more.