Import supply chain, transporting waste materials like paper, scrap metal, and wood products across the United States. Leo has served as CEO since 2022, and John joined Toppoint in 2024 as the CFO and secretary. Welcome, Toppoint. They've got 18 million shares outstanding, trades around $1.70 for a $30 million market cap, and $500 million of net cash. These gentlemen will go through a brief slide presentation, and then we'll sit down for a fireside chat. Welcome, Leo and John.
Hi. First, I want to thank Tony for inviting us over for a first-time Gabelli Symposium. I want to do a little introduction about myself. Good morning, everyone. Thank you for joining us today as we share the story of Toppoint and our visions for the future. My name is Leo Chan, and I'm the founder and CEO of this company that is transforming the trucking industry with data-driven insights. A little background of myself: at 25, I started my first business, a recycling facility, that grew 4X in five years through strategic partnerships and was successfully sold to a private equity-backed firm. This experience showed me the value of using data and strategy to drive growth, a principle at the core of Toppoint. Toppoint is revolutionizing the trucking and logistics industry by acting as an enabler for our customers' success.
Through our data-driven insights, we empower businesses to identify growth opportunities, streamline operations, and achieve measurable results. Our commitments to driving customers' growth are reflected in our own achievements: a 99% increase in gross profit from 2020 to 2021, and a 130% growth from 2021 and 2022. We have remained consistently profitable since our inception, showcasing the effectiveness of our solutions. With your support, we are ready to go even more. Let's dive in and see why Toppoint is the right investment right now. It's my privilege to introduce the next speaker of ours, my CFO. He's going to present some of our deck. Let's give it a welcome to John. Thank you.
This is my clicker. You got it. Thank you. Hey, good morning, everyone. It is an honor to be here today. Thanks to Tony, everyone, for having us, our awesome IR, Crescendo, as well, for coordinating this. I have known Leo, just quick background, for about 15 years. We are really good friends, aside from our professional synergies together. Before joining Toppoint, I had an opportunity to lead financial and operational strategies at his Inc. 5000 All-Star company. What that means is we grew 30%-50% year over year right here in New York City. We were a rental company. There, I focused on driving sales impact directly to EBITDA and culminated in a successful, approximately $87 million exit to the private equity firm, Clairvest, out of Toronto.
My experience in supply chain management, warehousing, material handling, and building supply have laid the foundation for the work that I do for the company today. Since joining Toppoint, I've worked to blend innovative and in-house analytics with my multi-industry expertise to fuel our triple-digit growth. It's been incredibly rewarding to see how our vision, hard work, and transforming this very fragmented logistics landscape is really empowering us along the East Coast. I'm excited to share more about our growth journey. Feel free, as we're going through this deck, as I know we're limited on some time here, to throw in some Q&A. If we're running through and you have a question, just kindly raise your hand, and we'll be happy to answer that. We'll send this out as well so you can look at the risk factors and the summary. Toppoint at a glance.
We service around 280 recycling centers and commodity traders. In 2023, we moved over 500,000 tons of just recycled waste paper. We maintain about a 15% gross profit per load. Based on an FEU report, we had moved approximately 34% of all the waste paper that had gone through the Port of Newark, which is the third-largest port in the United States in terms of volume. Since the company was founded by Leo in 2015, we've had a CAGR of around 53% in client growth. We have a fleet of approximately 86 trucks that are fully dedicated to the recycling industry. It's funny because typically, I've run through our deck, and I haven't had an audience who really knows the industry, but I assume everyone here is here for recycling.
There's the opportunity of a rising market, as Tony had presented, within waste paper, as well as even metal recycling and non-ferrous metals, as you see infrastructure change and enhancements. These products or these commodities need to go somewhere. They either stay domestic, depending on the domestic mill capacities. They also then will go for export because the ships come in through drayage, and they have to go out with something. We're seeing continued CAGR on waste paper. Also from the metal side as well, we've seen metal actually uptick a little bit more. In an overview, we're a Pennsylvania-based trucking company. We service Port of New Jersey, Philadelphia, Baltimore, and also the three major ports in Florida. We do do some work also in Savannah.
We do offer a solution to our customers that we actually broker work also to the rails, Texas, and also California. It's funny. Again, these are some names you'll recognize in this room here. Our client base is made up of around 280 recycling centers and traders, as I said earlier. Some of these names you'll recognize, like Waste Management, which we service, Georgia-Pacific, Recycling Management Resources, Wilmington Paper, Pioneer Solutions, Alpha Shredding, CellMark is the third-largest exporter of recycled paper in the world. Also Sims from the metal side. Also, we probably go to Iron Mountain multiple times a day to move out their material. In terms of how we've serviced the industry, in 2022, we had moved around 563,000 tons of waste paper with 4,400 orders. In 2023, we had moved around 505,000 tons. We're pacing about the same.
We're filing our 10-K right now, so we're going over nine months here. We're paced about the same as we did in 2023. As we saw, you kind of saw those spikes in the chart that Tony had. The recovery of the market really showed that Toppoint can now remain steady. You went up the peak, now you went back down, and now we're pretty steady and now kind of coming out of a bull on our way up. These are kind of our major verticals that we focus on. I mentioned a lot about waste paper recycling, also in metal, and the commitment that we have to exporting out metal. We also do forestry. Any logs or deforestation that we have, those logs get loaded in a container and then get shipped overseas. We'll get repurposed as furniture. It may stay domestic.
It may also come back to the U.S. as imports. We also move imports, and we're starting to increase a bit on the import side. What that allows us to do is be double efficient. What we did in the beginning was we get an order, we pick up an empty container from our order flow, go to a customer, get loaded, and then go back to the port. Now we're upticking with direct contacts on import to double utilize and add efficiency to the container. The container now gets picked up, loaded, goes to a customer, gets unloaded, and then gets loaded again with an export, and then gets dropped off back to the port. That's essentially allowing us to double our efficiency, respectively doubling our revenue without adding any more operational cost to the company. With our drivers, we're made up of LLCs.
We're made up of owner-operators today. We offer basically a farm system because we can get business and continue to grow. If your operation's limited or you're seeing any churn on the operation side, the company can go unbalanced very quickly. With the drivers and the actual guys that are driving trucks right now on the road locally here, there's a lot of investment that's getting put into them. A, they'll grow from drivers to owner-operators within the company, which allows them to be a lot more sticky. We also have a really strong company culture, Christmas party, summer party. A lot of the recruitment side, you'll get calls from families saying, "We want to call to see if we can hire somebody on behalf of my husband." We really get sticky with our drivers. We teach them budget management. We have spreadsheets.
We teach them how to calculate their own profits, grow on their own, and also their own type of retention. We have a very, very, very, very low turnover on the truck drivers themselves, which gives us the ability to scale. We have a competitive advantage in the fact that our fleet is solely dedicated to a vertical and enables our customers, as Leo said, to grow. This industry is very fragmented. Trucking is very fragmented. Around 5% of all the major strategics, you can put your XPO, your Saia, your C.H. Robinson, those represent 5% of the entire trucking industry. The rest of the 95% is mom-and-pops. It is a completely fragmented industry. Same with the freight forwarding.
When you take a fleet of our size and strategically put it to focus on a particular vertical, now we're able to enable a company like Waste Management to say, "Oh, we can utilize them. We can really, really grow and know that they can get our loads done." Because of the commodity price, especially on export, if you miss the ship, the next ship that comes, that commodity can drop, and you can put their whole order in the red. Hundreds of containers, even thousands of containers can go in the red. We have enabled our customers to not miss. We do not miss the deadlines, and we're solely focused on the vertical that allows them to continue to process orders through us at a massive fleet size. We also offer competitive pricing.
Because of our size and our commitment, we have different types of insurances that will cut costs that allow us to stay competitive, plus the right type of insurances to service large customers. Additionally, we have our own proprietary app. We study the jobs to be done of our clients as well. Because there's such a high throughput, we also want to make sure that they're completely efficient. When they order through us, they're able to see live tracking of where their shipment is. They can see the paperwork as it gets uploaded live, and it really stops the inefficient back and forth of communication. We custom design those load portals for each customer that we have so they can get the view that they really need to be successful and build their customers.
We're created, as I said, of independent contractors, which are our drivers, but we also have our employees that are in-house and overseas. The overseas front allows two things. We're competitive on our pay and salaries, but also it enables us to provide like 24-hour response because we have customers on the East Coast and the West Coast, and even customers that are overseas that will email us. We're able to have everyone sound nice and awake because they're working in their current time zone. We also have our performance tracking and our KPIs. Internally, we track everything down to the day. The hour is a little too complex, but we can close everything from the day to the week to the month.
Every department and to the quarter, every department has accountability and metrics from how many loads our dispatcher needs to do, our response time to emails, are our customers logged into their portals, how many phone calls have we gotten. We track everything. Our top clients, and if there's any drop-off, any warning, any prospective attrition risk, we really set the company to grow by design, not by default. In order to truck here anywhere in the U.S., you need to maintain a safety rating. We have a satisfactory score, which is the highest rating that you can award from DOT. Safety is our focus. I mean, you have trucks on the road. They're hauling. They're heavy. We have cameras in every truck. We have those trackers that give you live five-second pings on the API to communicate where we are.
Safety is a top priority for us. On our app, you can actually download it on Google Play or in the App Store. It's proprietary. The customer can go through their sequence. The customer can place the order. The dispatcher will take that order, assign it to a driver. We start our ride. The goods get loaded. We have a regional short-distance haul. We service the ports within a 100 mi radius. We will go a little bit over, but the majority of the core is servicing all the imports or exports that are going closely around the port, not so much over the road. We go to our port. We get unloaded, and then we get offloaded, and then the paperwork gets loaded. This is the process. It's streamlined. Everything we try to do is make it easy for the customer and for our drivers.
Here's our historical financial performance. I will say 2021 was a massive year of growth as well, but it's not audited, so we can't have it on here. However, you'll see a bit of a decline between 2022 and 2023. In there, there's a couple of things. Administration change. Fuel skyrocketed. We saw this increase and then this decrease. We actually produced more in 2023. However, to stay competitive and market-correct, we had to offset our pricing to our customers, which allowed us to obtain more market share. We also expanded in 2023 to other ports. Because we have analytics and forecasts and models that we can view ahead of time, we were able to determine, "You know what? In this market, we're going to grow.
We're not just going to sit and let the market pull back on us. Allowing us to grow actually decreased the amount of decline we had in 2022 and 2023. I will say in 2024, we're very steady, and we're closing out Q1, which is looking okay. With our use of proceeds and just kind of our strategy here, we're looking at, from a client side, increasing wallet share. Again, studying the jobs to be done with a client. Is there any other service that we could offer? Is there freight forwarding to offer? Do we need to connect into a possible trader overseas or domestically or in LATAM or in Canada? We really want to ensure that we are kind of a one-stop shop for our clients.
They don't have to go exploring somewhere else and go back to that turbulent, fragmented market where you might be growing in the Northeast with us or even down the East Coast, but then you go to the rail and now it's fragmented. Where do you go? We want to offer those consultant services and broker out those loads as well. Really, you just call Toppoint when you need any of your commodity transported. We're looking at building storage and warehouse capacity. As the ports go up and down or as now, if these tariffs push things domestically, we're forecasting that the mills won't be able to handle 100% of domestic. You're going to have to do something with the overage. If that were the case, then we could actually store containers on our properties, but also in warehousing as well. Continue to improve our IT infrastructure.
We have our app. There's other APIs, other connections. We want to even streamline right into our clients if we can push right into their databases and even save them having to log into a portal. Again, just really, really reducing the cycle time. We're exploring opportunities for strategic alliance and investments. We have a couple of acquisition conversations currently and also enhancing the ability to attract and incentivize and retain an incredible workforce. We don't know everything, and there's others out there that can absolutely add value to Toppoint. We've got global growth strategies as well. We achieved growing down to Florida.
We're currently in talks with Mexico and quoting in Ensenada to connect Baja California, and give us a competitive advantage of having a dual-country DOT, which will allow us to then also service some of those trucks in that fleet in Mexico at a Mexican rate. You can actually send the tow truck from Mexico to tow your truck down, further cutting the operating costs. We're also looking at Toronto as well just to connect North America between the ports. We have some ambitious goals of going overseas. Wherever you have humans creating waste that has recycling in a port, Toppoint can grow into. At a high level, we've grown double and triple-digit. We successfully listed on January 22, 2024, in New York Stock Exchange American. It kind of proves a little bit more that we have a track record and happy to be in this room.
We have sustainability with the commodity. Housing market goes up, population growth. The commodity is not going anywhere. It's just kind of where it pivots to that we have to adapt. We've shown growth over the years. We've got dominant market share in what we've really proven to do and focused on doing and being successful in by design. We have a scalable business model with our owner-operators and reducing churn from the operation. And we've also got the insight and deeply committed to our company and its growth and future growth. This is our board. We'll send the deck out so you can actually view it. We got about 11 minutes left if we could open up for some Q&A.
Yeah, that's great, John. Please feel free to take a seat, and we can sit down and have a nice chat.
That was a great overview, John, and a great intro, Leo. Thank you for that, and congratulations on your recent IPO and all your success. Maybe we could just, I mean, there is a lot to talk about, especially what happened last night, and we can maybe shelve that maybe to the end or a little later. Let's start talking about initially. You have grown quite a bit, right? How are you ensuring service quality, efficiency, scale with this expansion, with this sort of monstrous growth you have had?
Okay. Can you hear me okay? Okay. With scaling, as we did, it is a great question too, because when you grow double-digit, like 99%, and then you grow again the next year, 130, you break things. There is just no way to have the infrastructure to keep up at that point in time.
2023 was definitely a year of looking at what had possibly broken or failed within our processes. We learned a tremendous amount. We invested a lot more in our technology. This is all pre-IPO. We had really shored up what we needed as far as kind of our growth metric, gross profit for truck, when we can actually see when we do need to grow the fleet, when the fleet needs to pull back, what the operating costs were that we could prospectively cut to not interrupt anything from the customer side. Every customer is priceless to us. We do not want to churn any customers.
On the actual trucking side, knowing exactly when we have a safe driver and putting in more deep KPIs and also tracking metrics like our response times to customers help us really see, are we growing effectively and efficiently, or are we prospectively creating brand damage by growing? We have it right right now. That has really helped us in 2024 to level off and even know which clients you really need to service and prevent churn on. I think that is when you adjust the company to say, "I know my client base, and we really want to go after them and overly service them beyond their own base needs and take any requests that they have." That gives us the vision to scale correctly.
It sounds like the age-old customer's king, which sounds like you are doing a very, very good job implementing.
Given your significant market share in the New Jersey, Philadelphia area, what competitive advantages help you retain growth in that market and then share in that market? Geographically, where do you see the greatest opportunities going forward?
The dominant market share piece, what's good about that is the size. You mentioned in your slides, Tony, barrier of entry. You need a certain insurance policy. We're overservicing the clients. The fragmented mom-and-pop industry, this isn't appealing. They're very transactional, A, B, A, B, A, B. We're looking more strategic and market share growth that exists and looking at the client's wallet share as well. That dominant piece, I think, tends to be a little bit more secure for us. There's also the diminishment. If you go too much, you're now servicing to a point where profits and revenue don't fit.
Focusing on the clients that you know have growth potential is really helping. The second part of the question? Just going forward, I mean, you actually noted a little bit, but maybe you could talk a little bit more about where geographically you see the growth going forward. Wherever, as I said in the slides, wherever there's population and there's recycling, there's an opportunity. However, while growing down the East Coast, we learned a tremendous amount. We learned that FEUs, 40-foot equivalent units, which are the containers, that throughput really matters. What you do in Newark, it's almost as if you make a cheeseburger as McDonald's in New Jersey, it has to taste the same in Florida, right? You then have to have the right processes to grow.
Once we grew to Florida and jumped all these other states, it was our customers told us to go there, top customers. It wasn't a guess. We looked at the FEUs going, "Okay, this is a slower port. We could still service, optimize service, but the ship volume actually affected it." As we grow, we're looking at ship volume, how busy the ports are, the stability of the port, because at the end of the day, that ship volume really does drive the dependency for how much volume we can produce at that point. We're also looking on the Los Angeles ports are huge, and they're really busy, but it's also saturated with that fragmented market. As we explore acquisitions, it's looking at who's maybe the larger that we can implement our kind of satisfaction processes on to go into.
Sounds like a lot of opportunities. You, again, touched on this in your introduction, but what does your, and maybe you can go in a little more color here, but your proprietary analytics and telematics systems play in cost reduction performance of your tracking your customers? Maybe you can go a little more detail on how your model works.
Yeah, sure. We're able to see ahead, which really helps, right? We have multiple forecasting models that average out. We're also able to track KPIs of efficiency. We offer route optimization internally, making sure that trucks are running as efficient as possible. We look at how many loads each truck can run per day. We look at traffic. We look at what basically our CapEx costs are and seeing what we can reduce every year.
In our strategic planning, it's essentially looking at, are we overpaying for anything that we're seeing, but also the fact of how much efficiency can we add to the business as well that would allow us to then scale without always needing to double in size. Like if we can, with 86 trucks, if in this room we said we can double revenue with 86 trucks, we don't have to go to 170 just because of the ability to add efficiency, let's say, of double moving a container when we had looked at the containers and said, "Wait, we have a dead part to this." Leo had added, he goes, "I can fill that with tremendous BD skills." It was like, "Oh, we fill that. We can double revenue without adding any other cost." That's just what the KPIs allow us to make decisions on.
Sounds like a good model. Maybe you can speak to the potential upside you mentioned of entry into Ensenada, Mexico, which, by the way, has the best lobster tacos in the whole world, and how that fits into your broader international strategy.
Sure. Do you want to talk about Ensenada?
Yeah, Ensenada, the reason why we look into it in 2023 is because we feel like there's a gap between the U.S. and South America. By going over there and partnering up with the local logistics company, it was able to let us chuck the import and export out of there and from there to the U.S. It created the extra volumes and the values to Toppoint. It was able to, we do a lot of scrap metals out of Mexico coming into the country.
We have a lot shipping out from the U.S., going back to Ensenada and shipping it from Mexico, going to the South America port. Yeah, that's why we strategically planned in Ensenada instead, yeah, because of the double move that we were trying to do and trying to maximize profit on each load. Yeah.
Very interesting. Your model, you mentioned, heavily depends on the owner-operator or co-owner. How do you support the driver retention, mitigating risks associated with that structure? Obviously, there can be pitfalls in that structure as well.
Yeah, with that, I think, John talked about that on the deck a little bit. We recruit the owner-operator internally through their families, and we come up with training programs and funds for them to own their own trucks. And so they stay pretty loyal, very loyal to us.
We have people who have been working for me since my recycling time, back in 2016, 2017 years ago when I first started in the industry. Our driver is homegrown. I think one of the guys has almost 15 trucks on his own that is working for us at this moment. We created the American dream for them as well, not just all about Toppoint. It's like everybody, and we pay everybody very fair and make sure they're working every day and doing what they need. Yes, that's the big help.
It sounds like quite a bit of loyalty. That's great. Maybe I can open up the questions to the audience if anyone has one. If not, then I can continue. Maybe what do you see for this year? We sort of talked about what happened last night.
Maybe we can sort of touch on that. What do you see for this year, maybe going forward, how tariffs, how you guys will be impacted or maybe potentially benefit from this tariff environment?
It's something that we talked about last night at dinner anyway, so this morning. I think John can basically explain it to the audience. Yeah, it's early. It's very early, right? We're not seeing the, we now know that there's a leading indicator, right? What's the lagging indicator and where the output's going to be? There's a couple of different things. I think going domestic, the U.S. doesn't have the infrastructure for it to just turn on a switch and go 100% domestic tomorrow. There's also a record number of containers on the water right now. That means that these ships, the ship carriers want to go back with something.
If the domestic mills fill up, which we're forecasting, they're pretty close to capacity. I think you said one is going to close for four months right now and stop taking in material. Yeah. As the domestic mills kind of time out and start to overcapacity, the paper and the pulp has to go somewhere. We're not even creating a finished product in the U.S. It's still paper pulp. It has to go through some transition. Those ships need to go back with something. They're willing to take anything than going back empty. It's just like an empty leg. We're looking at the amount of import, the amount of containers on the water, that FEU is a key metric for us, and seeing what the impact is on that.
Because we're at the end of the life cycle, we're usually affected at the end of whatever the change is. It gives us about, I think we had about a nine-month view before everyone was saying recession and interest rates. We were nine months out before we go, "Oh, there it is." It gave us a lot of time to prepare because we're at the end of that life cycle.
Maybe switching to sort of capital allocation going forward, you talked about M&A, and you sort of broke the market down and how it is with the 5% versus 95%. Maybe you could talk a little bit more about your M&A strategy. What are the opportunities out there? It sounds like it's pretty ripe. There's a pretty ripe market out there for acquisitions.
Yeah, I'd agree.
In the fragmented side, that doesn't mean that a mom-and-pop doesn't have 50 or 100 trucks. We were that technically. However, we're noticing that in our vertical here, those founders don't have succession plans. We're speaking with a couple of owners right now that own some good size. They're actually in the walking floor to waste the landfill waste. A 100-truck company, and the owner owns the property, and his kids don't want the business. He's in his 70s. He said to us after multiple dinners, "I don't want to sell to private equity. I don't want them to just come in and fire my secretary, and I lose my identity." The lack of the soft skill, I think, and also the fact of not really knowing the industry is now shying them away. The person lives an incredible life. That's yielding opportunity.
Basically, it's a group. If we can consolidate that group, I wholeheartedly believe that when one person would allow us to acquire them and gets that free time, the other owners that he knows are going to start to call us. It looks like one has to go first before that trust becomes, "Oh, wow, we could sell our company to Toppoint, and they're going to do the right thing." We're also looking at acquisitions this year that are strictly based on stock. What we want to do is protect our cash. We're looking at also freight forwarders and also brokers as well. They could add that value that I had said earlier in the slide that becomes a one-stop shop to the business versus, "I've got to call this broker and this and this and this." It's, "Can you call Toppoint?
Toppoint can provide everything for you.
Gentlemen, that was a wonderful overview. Again, congratulations on your success. Hopefully, we'll get you guys back here bigger next year. Well done. Thanks.
Thank you. Thank you, Tony. Thank you, everyone.
Thank you. Thank you. Thank you, Jerry. Thank you. Hey, next slide. Appreciate you.