NextNRG, Inc. ($NXXT)

Good morning, and welcome to the NextNRG Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this call is being recorded. Before we begin, I'll turn it over to Sharon Cohen for the required forward-looking statements disclosure. Sharon, please go ahead.

Thank you. I'd like to begin by reminding everyone that today's discussion will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks and uncertainties that could cause actual results to differ materially. Please refer to our most recent SEC filings for a full discussion of relevant risk factors. Today's call will also reference adjusted EBITDA, a non-GAAP financial measure. A full reconciliation of this measure to net loss, the most comparable GAAP measure is available in our earnings release located in the Investors tab of our website. Non-GAAP financial measures should not be considered a substitute for GAAP results. On the call today is Michael D. Farkas, our Chief Financial -- our Chief Executive Officer and Founder; as well as Joel Kleiner, our Chief Financial Officer. With that, I'll now turn the call over to Michael.

Thank you, Sharon, and good morning, everyone. Our first quarter results reflect continued progress in building a more disciplined operationally focused company. During the quarter, revenue increased 29% year-over-year to approximately $21.1 million. Gross profit more than tripled. Gross margin expanded to 8.1% and adjusted EBITDA improved materially versus the prior year period. We believe these results demonstrate that the operational improvements we have been implementing across the business are beginning to gain traction. Importantly, this quarter was not driven by a single event or a temporary factor. What I would point out is the gross profit number. It more than tripled year-over-year. That kind of improvement does not happen by accident, and it does not happen in just one quarter. It is the result of work that has been compounding across the platform over several quarters. As we continue scaling the fueling business, our focus remains on disciplined growth. We are prioritizing operational efficiency and margin improvement alongside revenue expansion. We believe that approach creates a stronger long-term foundation for the business. At the same time, we continue advancing our energy infrastructure initiatives, including our smart microgrid pipeline. These are longer cycle opportunities, and we are developing them accordingly, focused on converting pipeline into structured, contracted arrangements without getting ahead of what the business can execute well. We are intentionally taking a pragmatic approach across the organization. Our objective is no longer growth at any cost. Our objective is to improve execution, strengthen unit economics, manage capital responsibility and position the business for long-term value creation. We also made meaningful progress in simplifying and improving our financial structure during the quarter. While Joel will discuss this in more detail, we believe the work completed over the past year has materially improved the overall financial profile of the company. Overall, we are encouraged by the direction of the business and believe the first quarter reflects continued operational progress across both segments. With that, I will turn the call over to Joel.

Thank you, Michael. Revenue for the first quarter of 2026 was approximately $21.1 million compared to $16.3 million in the first quarter of 2025, representing year-over-year growth of 29%. The increase was primarily driven by continued expansion of our mobile fueling operations, including increased fuel volumes delivered across existing markets. During the quarter, we also navigated meaningful headwinds as oil prices rose amid geopolitical conflict in the Middle East. This had a mixed effect on our business. While our vendors pass higher fuel costs through to us, the elevated pricing environment also lifted our top line revenue. Importantly, despite this volatility, we expanded our gross profit during the quarter. Our result, we view as a strong validation of our pricing discipline and the operating leverage in our delivery model. Gross profit increased to approximately $1.7 million compared to $518,000 in the prior year period. Gross margin expanded to 8.1% compared to 3.2% in the first quarter of 2025. The improvement reflects continued operational efficiencies across the fueling platforms, including route optimization, improved fleet utilization and overall cost management initiatives. Loss from operations for the quarter was approximately $10.1 million compared to $5.8 million in the prior year period. The increase is primarily attributed to approximately $7.9 million in noncash stock-based compensation expense associated with shares issued for services during the first quarter. Excluding this noncash item, we believe the underlying operating trends of the business improved meaningfully year-over-year. Net loss for the quarter was approximately $10.8 million compared to approximately $8.9 million in the first quarter of 2025. Adjusted EBITDA improved to approximately -- negative $1.2 million compared to approximately negative $3.4 million in the prior year period. This improvement was primarily driven by stronger gross profit performance. Interest expense for the quarter was approximately $681,000 compared to approximately $3.3 million in the prior year. The year-over-year reduction reflects lower financing-related charges and reduced amortization of debt discounts following refinancing activities during 2025. Turning briefly to the balance sheet. As of March 31, 2026, the company had cash and cash equivalents of approximately $208,000. Total assets were approximately $12.3 million compared to $11.1 million at December 31, 2025. Accounts receivable were approximately $2.9 million. As disclosed in our filings, we continue to evaluate financing and strategic initiatives intended to support working capital requirements, operational growth and expansion of our energy infrastructure platform. We remain focused on managing business with financial discipline while continuing to support operational execution and strategic growth initiatives. With that, I'll turn the call back over to Michael.

Thank you, Joel. As we move through 2026, our priorities remain consistent. First, we intend to continue scaling and optimizing the mobile fueling business with a strong emphasis on operational discipline, efficiency and margin improvement. And it's being noticed by the outside. We've actually been approached by different PE firms for the potential of actually acquiring the EzFill business. Second, we remain focused on advancing our energy infrastructure opportunities, including our smart microgrid pipeline toward commercially structured opportunities and long-term recurring revenue potential. And third, we will continue managing the business with a disciplined approach to cost structure, capital allocation and operational execution. We believe the first quarter is evidence that the strategy is working. The numbers are moving in the right direction, and our job is to keep them moving that way. Thank you again for joining us today. I'll now hand it back to Sharon to take us through the Q&A.

Thanks, Michael. We will now move to questions that were submitted in advance. The first question is for Joel. Gross margin improved significantly year-over-year. What is driving that improvement? And is it sustainable?

Thanks, Sharon. The improvement from 3.2% to 8.1% reflects a combination of factors that we believe are structural rather than onetime. Route optimization has meaningfully reduced our cost per gallon delivered. Improved fleet utilization means we are getting more productive output from the same asset base and customer density in our more mature markets has reduced the per delivery cost structure. We believe these improvements are sustainable as the platform continues to mature, and we expect to continue working to drive further efficiencies going forward. I do want to mention the geopolitical situation in the Middle East and call out that we might be facing some headwinds in pricing. But as mentioned in my earlier section, we are strongly comfortable that our driving in our [indiscernible] stabilization will keep our gross profit not only down -- not only up but growing.

Thank you, Joel. The next question is for Michael. Michael, can you give investors a sense of where the microgrid pipeline stands and what progress looks like in the near-term?

Our microgrid pipeline spans commercial, healthcare, industrial, municipal and federal markets. We are focused on converting pipeline opportunities into structured contracted arrangements. These are longer cycle opportunities by nature, and we are approaching them with a discipline, and we are not going to commit to time lines right now that we can't unfortunately control. What I can tell you is that we are actively working to advance these opportunities and that we believe that they represent a meaningful long-term revenue opportunity for the company. As disclosed in our quarterly report, we've got roughly a $0.75 billion pipeline.

The next question is for Joel. Revenue has grown significantly over the past several quarters. What is driving that consistency? And how do you think about the durability of that growth?

The durability case is actually in the margin data more than in the revenue line. When gross profit triples, while revenue grows 29%, that tells you the platform is getting more efficient, not just bigger. We are earning more on each gallon delivered than we were a year ago, and that improvement is coming from operational changes that are now embedded in how we run the business. That is a different kind of durability than market expansion. It is a unit level improvement and it compounds as volume grows.

Very good. Thank you, Joel. The next question is again for Michael. How should investors think about the relationship between the 2 segments, fueling and energy infrastructure and how they fit together strategically?

Great question. They are complementary by design. The fueling business generates revenues today and gives us direct relationships with fleet operators and commercial customers who are increasingly thinking about their energy transition. The infrastructure business, the microgrids, the AI-driven energy management, the wireless charging is where we are building the next layer of the platform. A customer who uses us for fuel today is a natural candidate for on-site microgrid or an EV charging solution tomorrow. We are building towards a single integrated relationship with energy customers rather than a series of disconnected transactions.

Okay. Thank you. The next question is for Joel. How is the company thinking about its balance sheet and overall financial position as it moves through 2026?

Thanks, Sharon. We continue to evaluate a range of financing and strategic initiatives to support the growth of both segments of the business. Our focus is on strengthening the financial foundation of the company in a way that supports long-term operational execution. We have made meaningful progress in improving our overall capital structure over the past year, and that work is ongoing. We are not going to get ahead of ourselves on specifics, but I can say that we are actively engaged on multiple fronts and remain committed to managing the business responsibly.

Thank you. And the final question is for Michael. As you look at the full picture of what NextNRG is building, how do you want investors to think about the long-term opportunity here?

Let me answer that with what this quarterly report actually showed. Gross profit more than tripled. Adjusted EBITDA improved by $2.24 million year-over-year. Very importantly, interest expense dropped 80%. Those are not projections. Those are Q1 results. And they are happening while we are simultaneously advancing the infrastructure side of the business. That combination is the point. We are not asking investors to bet on a future that has not shown up yet. We are showing them a business that is improving its financial performance in the present while building towards something significantly larger. The platform we are assembling, fueling, microgrids, AI-driven energy management, wireless EV charging addresses markets that are large, underserved in the middle of a generational transition. The energy transition is one of the largest capital allocation events in modern history. We are building NextNRG to be a real participant in it, and Q1 is one more data point showing that we are doing it the right way.

Thank you, Michael, and Joel. That concludes our precommitted Q&A. On behalf of the entire NextNRG team, we want to thank everyone for joining us today. We appreciate your continued interest and support and look forward to speaking with you again when we report second quarter 2026 results. Have a great day.

Ladies and gentlemen, thank you so much. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.