Glad to be here with the rest of you TA. I really, really love this one, I did a lot of DD on this. Truly these prices won't last here far too long. Just needs more eyes and the rest will be history. This is just too beautiful. I strong believe this is the next ALP*P in the making.
Scott M. Boruff, CEO of Blue Earth, commented "As a start-up just completing our first full year of operations, we are happy, but not content, with our accomplishments. Increasing sales growth, in both dollars and gallons, in a very challenging credit environment is a testament to our leadership team in those areas. Our primary goal the first year has always been to expand our customer base and increase our credit limits with quality suppliers. I feel like we have accomplished that goal. Obviously, we aren't satisfied with our net margin, and that will be emphasized more going forward. Our goal is to beat industry averages."
In general, the retail sales of refined fuels is heavily based on high volume, low margin transactions. Blue Earth had a net profit margin of approximately $0.022/gallon for the year, as compared to the industry average of approximately $0.024/gallon. Obtaining credit on favorable terms from the most advantageous suppliers has been challenging, which has forced us to purchase from suppliers with less favorable pricing on the majority of our transactions. Other than continuing to obtain, move or increase our credit limits with more favorable suppliers, we identified and implemented certain transactional controls to increase the net margin on individual transactions.
"Beginning March 1, 2022, we obtained a substantial credit limit increase from one of our most favorable suppliers, and it really impacted our margins for that month. Unfortunately, that supplier ran into credit issues of their own in April and are currently trying to get all of that sorted out. The rising fuel prices are impacting credit for everyone in the industry. All of our net margins are on a per gallon basis, whereas all of our credit limits are based on dollars. Obviously, as fuel prices increase, we can sell fewer gallons within the confines of a static credit limit. We've done a great job working with our suppliers to not only maintain our sales volumes, but to grow them in this environment," said Billy Ford, COO of Blue Earth.
One of the more common issues that impact our net margins is underbilling freight charges. Due to rising fuel prices, specifically diesel, rates charged by carriers that deliver our fuel are changing daily. The constant changing of rates have caused the underbilling of freight on many transactions. Due to the small net margins inherent in the industry, underbilling a freight charge could eliminate part or all of the net profit margin of a transaction. Charles Lobetti, CFO of Blue Earth, commented "Effective May 1, 2022, we have fully implemented a transaction monitoring system that allows us to identify billing issues with individual transactions on a real-timebasis, and timely correct any issues that could impact our net margin. This is especially relevant to making sure we do not lose money on freight. We expect to see improvement in our net margins when we report our financial results for our first quarter ending May 31, 2022."
During 2022 we significantly expanded our customer base. We are now a licensed motor fuel distributor in 7 states, including Tennessee, Kentucky, North Carolina, South Carolina, Georgia, Alabama,and Arkansas. In addition, we are currently brokering transactions in Virginia, Utah,and Idaho. We now have 41 active customers representing approximately 650 sites.
"Our primary goal entering into our first full fiscal year was to increase our customer base and sales volumes," said Billy Phipps, CMO of Blue Earth. "We have certainly achieved that goal, which is especially pleasing considering the current credit crunch in this industry. Other than continuing the growth trend, I will be working closely with our COO and CFO to improve net margins."
In summary, Mr. Boruff stated, "I really like the Blue Earth plan and where we are headed. And I love our management team. It has been a crazy year with the rising fuel prices, resulting supplier credit issues, and implementing the systems to manage our growth. Our team has always responded and I'm confident they will continue to do so. Increasing sales volumes in this environment, our new BP Branded Jobber Contract, the development of our new Blue Petro brand - these are all things we are proud to have accomplished in 2022. The team and I are happy with the results of 2022, but even more excited about the future of Blue Earth in 2023 and beyond."
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