Morning, ladies and gentlemen, and welcome to the EZPhil Holdings Third Quarter 2022 Earnings Call. It is now my pleasure to turn the floor over to your host, John McNamara. Sir, the floor is yours.
Thank you. Good morning, everyone, and welcome to today's conference call to discuss E. Z. Phil's 2022 Third Quarter Financial Results. With us today from management are Mike McConnell, 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. Estimates and variations of such words and similar expressions are intended to identify forward looking statements. These statements are subject to numerous conditions, participants are under control of the company, including those set forth in the Risk Factors section of the company's annual report on Form 10 ks are filed with the SEC. Copies of these documents are available on the SEC's website as well as on 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 will be conducting a call to discuss the financial results and results of the financial results. 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 Q3 2022 results. A little more than 1 year ago, we became a public company. When we reported our Q3 results for the 2021 fiscal year, we reported revenue of $1,900,000 $5,200,000 for the 1st 9 months of the year.
60% of that revenue came from a single customer. We had 13 trucks and all of our customers were in the South Florida region. Today, we're essentially the same company, but we have significantly grown to meet the demand of what we see as enormous market potential. Our results for the Q3 of 2022 bear that out. We reported revenues of $4,100,000 a 120% increase from the $1,900,000 we reported a year ago for our Q1 reporting as a public company.
On a 9 month basis, revenues grew to $10,200,000 from $5,200,000 in a 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 $0.06 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. In fact, we've added more than 75 new fleet customers in 2022 with over 25 new fleet customers in the 3rd quarter alone. We've also expanded to new locations with some of our existing customers.
Have grown our fleet of trucks from the 13 we began with when we completed our IPO to 38 today. We've expanded our operations are participating in the same period in 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. And we're pleased to see tremendous opportunities for further expansion throughout Florida, while at same time, we'll be looking to grow to other states.
We continue to focus primarily on growing our commercial business, which currently makes up over 80% of our revenue. Participants are participating in the market. The opportunity to expand our on demand 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.
Participants are in the range of 1st responder vehicles as well as delivering fuel to residents in affected areas. We're very proud to have been recognized by the Governor's office one of the private sector companies providing needed emergency efforts. We've come a long way since our IPO in September of last year. Are proud of what we've accomplished in terms of growing the business in a challenging market. We're looking forward to continue to exit our business plan and expand the company's footprint and breadth of products will be conducting a thorough review of our financial results.
With that, I'll turn the call over to Arthur, who will walk you through the financial results. Participants.
Thank you, Mike. As Mike noted earlier, revenue for the Q3 of 2022 increased 120 percent to $4,100,000 from $1,900,000 in the prior year period. The increase was driven primarily by a 71% increase in total gallons delivered, 180,000 are in the Q3 of 2022. Our margin per gallon in the period increased by 0.16 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.
In the range of $4,200,000 compared to $1,800,000 in the prior year period. 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 $480,000 in the Q3 of 2022 from $240,000 in the prior year period, primarily the result of the increase in the fleet of delivery vehicles. Operating expenses excluding depreciation and amortization were $3,500,000 in Q2 of 2022 compared to $1,800,000 a net increase of 1,700,000 the major increases were in payroll, sales and marketing, insurance and public company expenses. Participants are also included in advertising campaign directed to residential and marine customers.
Interest expense was lower in 2022 than the prior year period due to the early repayment in September 2021 pre IPO debt as well as lower cost financing post IPO. On a GAAP basis, we reported a net loss in the 3rd quarter in the range of $4,000,000 compared to $2,400,000 in the prior year period. Adjusted EBITDA loss in the Q3 of 2022 was $3,300,000 as compared to a loss of $1,200,000 in the Q3 of 2021. The increased loss in the Q3 of 2022 reflect increased spending on infrastructure to grow and expand the business in the operating expense areas previously noted. We used approximately $3,000,000 in cash in operations during the Q3.
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 in continuing to increase our sales volume and improve 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 participants are participating in the process of executing 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, will evaluate before the end of the year our need for additional orders for delivery during 2023.
Financial statements. Finally, our cash position at quarter end was $16,900,000 at year end 2021. We have no long term debt and outstanding borrowings under our line of credit are were $1,000,000 at the end of the quarter. With that, we'd be happy to take questions.
Thank you. Ladies and gentlemen,
Thank you. A couple for me. Arthur, starting with your last comment on the truck target for the end of the year. Do you still have scheduled to take delivery of 5 trucks by the end of the current quarter? Are you staying at are ready to take any additional trucks, please?
Well, we're currently at 38 and we plan to take delivery of will bring our count to 42 at the end of the year.
Okay. Thank you. And then as you take delivery participants are looking for the future. I mean, let's say, in a new city that you enter in Florida, I mean, can it be in the range of $1,000,000,000,000,000,000,000,000, and what are the variables for when a truck, a new a freshly delivered truck can start delivering profits for you, please?
Participants are in the line with what
we call an anchor tenant, so that we're not starting with 0 business. But our model is that we need a truck to be approximately 60% to 70% utilized in order for it to start generating positive cash flow. And that assumes that the truck is doing 2 8 hour shifts per day.
Participants are ready to take it to that level. I mean, have you seen trucks? Do you already have trucks in your fleet At that level of utilization that I mean you received that you have been operating for more than 6 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 below that level. Participants are in the range of $1,000,000 So to my previous comment, we still have a way to go are ready to take delivery of some trucks in 2023 are in the process of evaluating that. And it will clearly will depend on how many new markets we open and how quickly we do that will be available 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 3.4 to 3.476 slightly quarter over quarter. Do you plan to curtail some previously participants are expected to ramp up your operating expenses meaningfully for future marketing or is it on hold or maybe just flat for the time being?
Yes. I think the marketing, you can assume that it will be flat. We're not planning any increases in marketing going forward.
Participants are ready to take questions. And Mike, you mentioned I believe you mentioned some evaluating some new products and technologies. And I don't know if you can participants are participating with partners. I don't know if you can comment on it, but can you comment on what are the suite of products and technologies and maybe competitors and other well, not competitors, but other on demand fueling companies in other states provide or any additional detail that you can. Yes.
We're
opportunities besides just petroleum, so mobile car wash, anything related, automotive as far as are in the range of $1,000,000,000 related to those things because we have the consumer, we have their auto information and we have their credit cards on file. So there's some natural synergies there that we are talking with some of those partners, some of the things we're looking at, as far as rolling that out. As also on the technology side, we just introduced have an upgrade on our fleet portal, which has a lot of information for our fleet customers, that we'll 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 and how they're operating in fuel consumption and those kind of things, 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, are participating in the level of information that we've been providing. So that will be an emphasis for us continuing to invest in the tech side of things and then rolling out some of these other revenue sources as well.
Okay. Thank you. And can you is Florida will you be ahead of other states in terms of or are you already ahead of other states in terms of the on demand fueling market or Have other states grown their market for on demand fueling faster, introduce more technologies? Can you talk a bit about national landscape participants are more developed compared to let's say Kansas
or California? I think it's still very scattered. Participants are not a lot of companies to really compare to a benchmark out there. From what we've been told from our customers who've been using, are in the fleet side. From the technology space, we're definitely probably ahead of where most people are at, that we are at least the ones that we're aware of as far as participants are in the growth as far as mobile fueling.
Haven't seen or heard a lot as far as expansion from competitors or other are in the early stages of this, but it's getting a lot of attention are ramping up quickly as far as a way to fuel going forward for consumers and fleets.
Are ready to take questions. Okay.
Thank you. And then just last for me, on your previous guide, you had about 1,000,000 gallons delivered in 3Q, but with the timing of the hurricane in Florida and maybe some halting to boat refueling. Should there be was there more, I mean, 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 delivered might have delivered in normal situation in 3Q 2022 slipped to 4Q 2022.
Yes, there's no question. I mean, some of our fleet customers closed. Participants With that, obviously, we weren't feeling them at that particular point in time. But I think, we were able to help a lot with the relief efforts participants are doing some things there. So that was definitely a replacement as far as gallons go.
But I think we will see participants have been showing quarter over quarter in gallons, percentage wise and those kind of things, participants are 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 had some spillover and a fast start to Q4, with a little bit of pent up demand with some of the businesses that closed and then reopened right after.
Thank you, Arthur. Thank you, Mike.
Thank you, Tate. Yes, thanks.
Are. 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 about service is, Is there any discussion maybe with the state of Florida and with other states to kind of have this service ready in advance for the next emergency or maybe the next hurricane, which seems like it's coming pretty soon.
Yes, yes, yes. No, definitely there are some discussions. I think as we called out, we got a mention from the Governor's office. So we've got a relationship and rapport established there. Participants typically a lot of the fuel providers are these big tankers that try to come in and get gas stations up and running.
But what we've discovered with our fleet, participants are in the
range of 10% to 15% to 15% to 20.5% to 20.5% to 20.5% to 20.5% to 20.5% to 20.5% to 20.5% to 20.5% to
20.5% to 20.5% to 20.5% to 20.5% to 20.5% to 20.5% to 20.5% to 20.5% to have 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're much more attentive to a lot of the other markets that we're in with Tampa, West Palm Beach, Orlando and now Jacksonville. Participants are in the range of $1,000,000 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, at a rate, but at what point is it the ability to hire drivers? Is it capital constraints? Participants are looking at in order to or the hurdles to overcome in order to continue to support this high growth rate.
Yes, Jason, I'd say the biggest hurdle is capital ready to start with at least 2 trucks and higher drivers. And on day 1, even if we go with an anchor tenant, both 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 we have a significant growth. So Yes, I would say capital is probably the number one factor that limits our ability to expand to new states, which require even more capital and more effort than expansion within Florida.
And I guess this is a little bit of a loaded question, but with the midterms coming down today, there could be a shift in participants are 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 have an ability to raise capital.
We certainly hope so.
Yes, we do too.
Thank you so much. Appreciate it.
Thank you. As there appear to be no further questions in queue, I will hand it back to management for any closing comments. Okay. Thank you. Participants Yes, I
want to say thank you all for joining us, and we look forward to reporting back to you in the Q4. Have a great day, everyone.
Have a wonderful day, and we thank you for your participation.
Thank you.