Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

Equity Research Firm

Equity Bottom-Up

<h3>KEY POINTS</h3>
<div></div>
<ul>
<li>EVmo announced the opening of a new RideShare Rental facility located on the outskirts of Los Angeles International Airport.&nbsp;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&nbsp;here.</li>
<li>New facility supports the growing fleet of rental vehicles and represents another milestone in the company’s growth plans.&nbsp;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.</li>
<li>Location expands reach in the large and growing Los Angeles market.&nbsp;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.</li>
<li>EBITDA break-even expected in 2H22.&nbsp;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.</li>
</ul>
<h3>COMPANY OVERVIEW</h3>
<h2>The Opportunities</h2>
<p>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.</p>
<h2>The Obstacles</h2>
<p>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.</p>
<p>Please read our prior research reports on EVmo here or at&nbsp;www.watertowerresearch.com.</p>
<h3>DISCLOSURES</h3>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>Graham Mattison, who is the writer of this report, covers the Industrial Technology and ClimateTech &amp; Sustainable Investing sectors for WTR. Mr. Mattison and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.<br><br>WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY POINTS


EVmo announced the opening of a new RideShare Rental facility located on the outskirts of Los Angeles International Airport.&nbsp;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&nbsp;here.
New facility supports the growing fleet of rental vehicles and represents another milestone in the company’s growth plans.&nbsp;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.&nbsp;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.&nbsp;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&nbsp;www.watertowerresearch.com.
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Graham Mattison, who is the writer of this report, covers the Industrial Technology and ClimateTech &amp; Sustainable Investing sectors for WTR. Mr. Mattison and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.  WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.  The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

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