By M. Marin
NASDAQ:EZFL
Advancing strategy to be a leading on-demand mobile fueling company…
EzFill Holdings (NASDAQ:EZFL) provides a mobile fuel delivery service that offers convenience to owners of commercial fleets and consumer vehicles. Its target market ranges from individual automobile owners to business fleets. The company brings refueling to the vehicles at their primary location, thereby eliminating the need for owners to drive their vehicles to a gas station. Once a delivery order has been placed through the EzFill app, EZFL brings the gas to the vehicle. EZFL’s tagline is that it provides the “gas station that comes to you … at the click of an app.”
The company continues to advance its strategy to be a leading on-demand mobile fueling company and energy supplier to multiple microgrids organically and via strategic M&A. EZFL’s mobile fueling operation delivers diesel or gasoline fuel directly to customers’ fleets, enabling customers to avoid the need to visit traditional gas stations. EZFL estimates that this service not only provides convenience, but also offers savings of more than $3k per vehicle per annum. As the company continues to expand its own delivery fleet and grow the number of accounts it services, the volume of fuel gallons it delivers and revenue it generates is expected to climb.
For example, in 2021 when the EZFL fleet was comprised of 13 trucks, the company delivered 2.3 million gallons of fuel and generated $7.2 million in revenue. Over the course of 2022, it more than tripled its internal fleet size, added 100+ new fleet accounts and more than doubled revenue to $15.0 million. Although its internal delivery fleet remained unchanged in 2023, servicing its growing customer base contributed to 81.3% year-over-year revenue growth.
Recent M&A more than triples EZFL’s fleet…
Recent initiatives EZFL completed in 4Q24 are aimed at strengthening its position in the mobile fueling space and enhancing its ability to provide convenience and efficiency to consumer and business customers and grow its total customer base. Through strategic M&A, the company has expanded its fleet size, delivery capacity and geographic reach and believes it has diversified risk away from any one particular market. Specifically, to expand its U.S presence and delivery capabilities, last month EZFL closed on the purchase of the mobile fueling division of Yoshi Mobility, Inc. and also acquired 78 trucks from Shell. These actions increased the size of EzFill’s fleet, added new customer accounts and expanded the company’s existing business into multiple new geographic markets. EzFill’s delivery fleet now consists of 144 trucks, up from 40 in 2022 and 2023.
EZFL recently acquired Yoshi Mobility assets
The company’s acquisition of the Yoshi Mobility assets closed in early December 2024. Yoshi Mobility has been in operation for about a decade and has recently stated its goal to pivot its focus to offering electric vehicle (EV) solutions. While EzFill is also focused on developing its EV capabilities over time – particularly wireless EV charging for which it believes it has a competitive advantage through the ability to offer integrated bidirectional-capable chargers so that available energy and power capacity stored in the batteries of aggregated EV fleets can be resold back to the local electric grid when the fleets are not being used – the company expects traditional fuel sources to remain critical to the nation’s fleet needs in the near- to medium-term. Thus, the company’s strategy is to offer multiple fueling options at this stage.
For example, within the automotive space, EV sales continue to grow, albeit at a slower pace than initially expected. EV sales also comprise a relatively small percentage of the automotive industry’s total sales and installed base, but are gaining share versus traditional ICE (internal combustion engine) vehicles, according to industry 2024 data.
Over time, as regulators in the U.S. and worldwide likely define more stringent emissions targets, the EV installed base and related charging infrastructure are expected to expand, although charging infrastructure potentially might lag the expected growth of the EV installed base. In fact, management believes that a substantial gap between the availability of public charging stations and demand for EV charging will persist for the foreseeable future. According to S&P Global Mobility forecasts, domestic installations of charging technology will need to quadruple over the 2022 -2025 period “and grow more than eight-fold by 2030,” in order to meet demand. Consistent with its long-term strategy, EZFL is developing wireless charging technology that, over time, is designed to help accelerate the availability of EV charging and also offer a more convenient option that eliminates the need for physical connectors or cords, according to management.
In the medium-term, as traditional fuel remains important for the mobility space, EZFL expects to capitalize on the need for efficient fuel delivery options to the nation’s commercial fleets for the foreseeable future. Through the Yoshi Mobility transaction, EZFL expanded its fleet size, customer base and domestic footprint. With the addition of 26 new trucks, the acquisition increased EZFL’s delivery fleet size to 66 vehicles, up from 40. This expansion in its delivery capacity is expected to enable EzFill to handle a higher volume of commercial accounts and also expanded its operating footprint into new markets within existing states, as well as into four new states. Once the transaction closed, EzFill began operations in four new states: California, Michigan, Tennessee and Texas. Prior to the Yoshi Mobility transaction, the company’s operations had been concentrated in Florida. Therefore, the acquisition supports the company’s goal to achieve nationwide coverage over time.
Within these new states, key recently added markets for EZFL include Los Angeles, San Francisco, Detroit, Houston, and Nashville. The company believes that this expanded geographical coverage also helps it diversify market risk. Moreover, the Yoshi Mobility transaction also added more than 50 new commercial fleet accounts. The company expects this expansion to contribute to significant revenue growth and its ability to attain economies of scale.
In addition, the company believes that the capability to offer and deliver diesel fuel is critical to its growth strategy, as the majority of truck fleets (some 76% of commercial vehicles, according to the Engine Technology Forum) rely on diesel fuel. EzFill intends to use its expanded delivery capabilities to further expand existing fleet customer relationships by servicing current national accounts in its original Florida market and new states.
EZFL also acquired 78 trucks from Shell’s fleet…
Separately, EZFL also acquired delivery trucks from Shell Retail and Convenience Operations LLC, which is a wholly owned subsidiary of Shell Oil Products US. Through this transaction, EzFill added 78 trucks from Shell’s fleet. This expansion will enable EzFill to begin delivering fuel in the Phoenix, San Antonio, Austin, Dallas and Houston markets. The company expects this to further its ability to attain economies of scale and boost its operating efficiency. In addition, the company also expanded its geographic reach within its original state of operation, Florida, in key markets such as Miami, Orlando, Jacksonville and Tampa and strengthened its operating footprint in Los Angeles, San Francisco, Detroit, Nashville, Austin, Dallas, Houston, San Antonio, and Phoenix.
Company optimistic about new mobile fueling agreement with Amazon…
With an expanded fleet and larger geographic footprint, EZFL has entered into a mobile fueling agreement with Amazon Logistics, Inc. to provide mobile fueling products and services to Amazon, including on-site fueling services for certain Amazon vehicles. As it strengthens and grows its presence in this sector, the company is optimistic about this and potentially other new agreements with additional global and nationwide customers.
Positive tailwind as the number of U.S. gas stations is declining…
Offering delivery of fuel to the vehicle’s location provides convenience to fleet owners, but also is expected to become even more needed as the number of U.S. gas stations continues to decline. The number of gas stations has been falling sharply over the past three decades, according to CNBC, with that trend expected to continue. Boston Consulting Group (BCG) estimates that at least a quarter of service stations globally are at risk of closure by 2035 unless they make substantial changes to their business models. EZFL sees this trend as a positive tailwind to its mobile fuel delivery business, as multinational corporations that operate sizable delivery fleets shift to on-demand mobile fueling. The company believes it is well positioned to capitalize on the growing demand for convenient and cost-efficient mobile fueling options.
EZFL also focusing on expanding AI/ML Smart Microgrid technology business
Through its pending merger with NextNRG Corporation, EzFill will also focus on delivering emerging greener energy solutions, including supplying energy to and maximizing the benefits of microgrids through artificial intelligence and machine learning. Microgrids are small-scale power grids that can operate independently or together with other small power grids, battery storage and charging electric vehicles (EVs) wirelessly, among other initiatives. EZFL/NextNRG intends to use AI (artificial intelligence) and ML (machine learning) to maximize efficiencies in energy supply, storage and delivery, with plans to develop, deploy and own AI/ML powered smart microgrid solar energy, and battery storage solutions. The company’s near-term focus likely will be on deploying energy solutions on tribal and other lands.
In the U.S., the federal government has incentivized the deployment of more efficient greener energy solutions on tribal lands. For example, the U.S. Inflation Reduction Act (IRA) and other government initiatives include funding specifically earmarked for Tribal Nations and Native communities. This includes $32 billion in the American Rescue Plan, $13 billion in the Bipartisan Infrastructure Law and more than $720 million in the IRA. In addition, the U.S. Department of Energy’s Clean Energy for Low Income Communities Accelerator partnered with state and local leaders, with an aggregate $335 million committed to help some 155,000 low-income households access renewable energy and efficiency and lower their energy bills.
NextNRG has filed an application for a grant with the DOE for a deployment on tribal land in Louisiana. The company’s subsequent planned deployments are in underserved communities in Newton, Texas and Havana, Florida. In addition, the company has filed applications with the DOE for $49.5 million in grant funding for those deployments.
In the aggregate, EZFL, with NextNRG, has almost $750 million in smart microgrid deployments planned, according to management, which are in various phases of development. For example, EZFL is in early discussions with seven Native American Tribes to deploy five mWh Smart Microgrids. The company’s planned projects range from deployments on municipal property, tribal land, commercial facilities, office space, multifamily residential properties, and other properties.
Management has history in developing new companies
Management has extensive experience. Michael Farkas, currently the CEO of NextNRG, will become the CEO of the combined EZFL/NextNRG. He has a successful track record as a principal investor across a variety of industries. He was also the founder and former Executive Chairman and CEO of Blink Charging, as well as the founder and managing director of privately-held investment group The Farkas Group. Another organization that Mr. Farkas founded and led, the Atlas Group, raised capital for numerous public and private clients. He is also the company’s largest shareholder.
Risks
Risks the company faces include that EZFL might not gain share in new markets as quickly as the company expects, the company could incur unanticipated costs associated with its growth initiatives, competition could increase and the company might need to raise capital to support its strategy earlier than anticipated, among other risks.
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