Despite the emergence and popularity of electric vehicles, there is little doubt that the internal combustion engine in vehicles is not going anywhere for the coming decades. Fueling of these ICE-based vehicles continues to be a necessity and it is interesting to see how some emerging companies have brought innovation to such a mundane activity. This new concept of on-demand mobile fueling is becoming increasingly desirable for customers as they have the ability to choose the time and location of their fueling needs. Our small-cap pick for the day is one of the fastest growing on-demand mobile fuel delivery providers that caters to consumers as well as commercial, and specialty (including marine) fueling needs – EzFill Holdings Inc. (NASDAQ: EZFL).
EzFill is one of the fast-growing incumbents in the rapidly expanding mobile fuel sector. The company is the market leader in its home state of Florida. By bringing on-demand fueling services to customers’ and companies’ locations, the company aims to upend the traditional fueling model at gas stations. For commercial and specialty buyers, on-site delivery of fuel enables operators to start their regular operations with fully fueled vehicles and this is a market that EzFill is targeting. The fact remains that corporate behemoths like Shell, Exxon, GM, Enterprise, Bridgestone, and Mitsubishi have realized the growing shift in commercial and consumer behaviour. Thus, they are investing in the quickly expanding on-demand mobile fueling sector as the number of gas stations in the United States continues to decline. EzFill is well-positioned to benefit from the rising demand for convenient and affordable mobile fueling options because it is the only business that offers fuel supply in three vertical markets, including consumer, commercial, and specialty markets like marine. The company was founded in 2019 and is headquartered in Aventura, Florida.
Business Model & Macro Trends For On-Demand Mobile Fuel
EzFill operates a rapidly expanding fleet of fuel tanker trucks that are dispatched to the relevant location based on the orders that it receives for fueling. Its on-demand mobile fuel delivery allows people to fill up their cars without leaving the convenience and security of their home or place of employment. Customers simply need to open the EzFill app on their mobile device, provide their location, and schedule a delivery time for fueling their vehicle. Mobile fuel delivery also offers a safer option for everyone in light of the rising crime, a problem at some gas stations, including credit card fraud and skimming. Based on the research of the company, the market for automotive fuel delivery systems was estimated to be worth $3.77 billion in 2021 and is anticipated to grow to $ 5.29 billion by 2027, registering a CAGR of more than 5.8% over the forecast period of 2022-2027. While EzFill is dominating the Florida market, the overall mobile fuel delivery market is majorly dominated by some key industry players like Robert Bosch, Magna International, Denso Corporation, Magneti Marelli SPA, and so on. Even oil majors like Shell are entering this domain and a classic example of this is the Shell TapUp. Thus, it is easy to deduce that EzFill is operating in a highly lucrative and fast-growing market.
Acquisition-Led Growth & Fuel Supply Agreement With Palmdale
EzFill Holdings has been enhancing its top-line growth trajectory through relevant acquisitions. The company looks to acquire the assets of relevant players in this space particularly trucking assets and customers so that they can expand their reach. The company was recently in the news for acquiring the assets of Full Service Fueling Inc., a mobile fuel delivery company and an affiliate of Palmdale Oil Company based in West Palm Beach, Florida. The fueling trucks and customers of the target are the acquired assets in the deal. In connection with the transaction, EzFill has signed an operating and supply agreement with Palmdale, one of the biggest wholesale fuel suppliers in the State of Florida. With over 35 years of experience serving the needs of various industries for fuel, lubricants, and chemicals, Palmdale Oil Company is a family-owned petroleum wholesale and distribution company. According to the agreement, Palmdale will be one of the primary fuel suppliers for EzFill in Florida, with preferred pricing. EzFill will have access to parking at Palmdale locations across the state. The operating and supply agreement with Palmdale will help EzFill with its short-term growth prospects and further solidify its position as the market leader in Florida’s mobile fuel sector. These resources, along with the expanding number of fleet customers on their client list, will allow them to scale more quickly and effectively.
Fleet Fueling Services
EzFill’s largest target market is commercial operators running fleets of trucks that require regular fueling. Fleet Fueling Agreements in this B2B domain can quickly scale the revenues of the company. In Fact, EzFill has already seen its revenues grow from $1.22 million in 2019 to $8.05 million in the trailing 12-month period, a staggering 700% growth. The company offers a number of benefits of mobile fuel delivery for commercial fleets and specialty operators, including reduction of travel to and from nearby gas stations. Additionally, by doing away with the need for fuel cards, mobile fuel delivery contributes to a reduction in employee fraud. As more fleet owners are using EzFill to fuel their service vehicles, their drivers can work more effectively because the downtime associated with refueling is eliminated.
Fleet Fueling Expansion
EzFill Holdings has signed over 40 new fleet customers since the beginning of 2022. Two of those are with Servpro of North Miami and nexAir. The ServPro fleet in North Miami will receive daily scheduled fueling from EzFill, with plans to grow and service fleets in additional markets in the near future. EzFill will provide regular mobile fuel service for nexAir’s Miami location, which also serves as its Florida centralized warehouse. EzFill currently provides services to over 50 fleets and the management is looking to rapidly expand their fleet customers. This will be a critical growth driver in the long term.
As we can see in the above chart, the EzFill stock has taken a beating along with broader markets, particularly like other high-growth companies. While the company may not have direct competitors who are listed peers, it is disrupting a transportation domain just like larger listed players like Uber and Lyft for cabs, Grubhub and Doordash for food, and Instacart and Shipt for groceries. This implies that the company could easily command a double-digit revenue multiple but it is trading at an enterprise-value-to-revenue multiple of barely 1.16. It is important to highlight that the company has a solid subscription product where consumer customers can pay $9.99 per month for unlimited deliveries. This could become a huge prospective recurring revenue stream and its upside has not been accounted for in its current share price. Overall, we believe that despite being a pioneer in its domain, EzFill is valued very cheaply by the market and it is an excellent investment proposition at current levels.