New Location Expands Reach in LA Market with Ideal Location; Growth Plan on Track



KEY POINTS
  • EVmo announced the opening of a new RideShare Rental facility located on the outskirts of Los Angeles International Airport. The new facility, which was previously a car rental location, is also close to the dispatch centers of the two major ride-hailing companies and should make it easier for more renters to reach the location. The company’s press release can be accessed here.
  • New facility supports the growing fleet of rental vehicles and represents another milestone in the company’s growth plans. EVmo now has more than 1,000 cars in its fleet and this new facility, the company’s largest, is set up to handle the increased volume of both new rentals and vehicle services. On the 2Q22 earnings call, management stated that it expects to be able to add 400 vehicles per quarter in 2H22.
  • Location expands reach in the large and growing Los Angeles market. In addition to the proximity to LAX, this location (compared with the existing location in Beverly Hills) is near the Long Beach Airport, the Ports of Los Angeles/Long Beach, and gives better access to the more populated southern area of Los Angeles, including Anaheim and Orange County. The new location is also closer to a larger pool of potential renters.
  • EBITDA break-even expected in 2H22. EVmo now has more than the 900 cars it stated that it needs to be EBITDA break-even. 3Q22 and more so 4Q22 results should prove the company is well on its way to profitability and solid cash flow generation.
COMPANY OVERVIEW

The Opportunities

EVmo is at an inflection point in its substantial growth curve as a leading player in the rideshare industry. Last year and early 2022 have seen the pieces put in place to enable and support this ramp going forward, including a new management team with extensive experience in the logistics and transportation sector, a strengthened balance sheet, improved vehicle financing partnerships, and OEM supply agreements that will enable the company to reach 2,000 vehicles in its fleet by YE22, up from 600 at YE21.

The Obstacles

The company’s growth was limited in 2H21 due to tightness in the US light-duty vehicle market as well as the need for management to put in place financial and operational improvements. EVmo needs to show continued fleet growth throughout 2022 as well as improving gross margins as it expands in both existing and new markets.

Please read our prior research reports on EVmo here or at www.watertowerresearch.com.

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