Working Thoughts

Hi Norm. Thanks for agreeing to do an interview with Working Thoughts. I hope you don’t mind some follow ups.

How would you summarize 4Refuel’s offerings?

4Refuel is a fuel management company that synergizes logistics and information to focus on the productivity, efficiency, and control aspects of our client’s fuel. By controlling fuel costs, we help them be more productive and more efficient. We leverage industry-leading and proprietary technologies combined with a dedicated client focus service element that helps our clients manage their fuel and treat it as an investment rather than a cost. For our clients, Fuel Management is about “maximizing the cost of refueling and maximizing fuel and time efficiency”.

Our core focus is on on-site delivery from our tanker truck to clients’ equipment during idle hours, primarily with standard low sulfur diesel fuel.

We have 6,000 clients across Canada and the U.S. that we’ve been servicing for over 13 years. Those range from major Fortune 100 companies such as Coca Cola, Federal Express, large rail and marine companies, and major airport ground services to smaller construction and fleet organizations with three or four pieces of equipment. If it is a standard or bio-diesel consuming asset, we service it.

There’s another important aspect to our service. While we help our clients control fuel costs, they are greener just by using our services. We have metrics in place so clients can track their greenhouse gas emissions’ savings because we are bringing one to many instead of many to one. You are burning that much less fuel even to get fuel.

Is 4Refuel a public or private company and why?

4Refuel is a privately held company and has funded its rapid growth through profitability. The model, which involves franchising, is such that there is no need for capital to fund growth even on an international level.

How does a company like yours forecast growth, especially with the way oil fluctuates?

Our annual growth rate in our core businesses of transportation and construction continues to grow organically in excess of 20% per year and when you get into growth rates in rail, marine, airport ground services and the resource (e.g. mining) industries, our growth rates will be even greater. The reason is that with such uncertainty in the oil markets, clients are now focusing attention on what to most of them is their highest operating cost, fuel. With that greater awareness comes the sobering reality that not enough is being done by businesses to manage their fuel investments. That is where 4Refuel comes in.

What are your growth projections?

Our growth strategy is two-fold:

Our organic growth is client focused on our core businesses (transportation and construction) is targeted at 20+% year-over-year. We expect even greater annual growth in the rail, marine, airport ground services and the resource (e.g. mining) industries.

Secondly, we are actively expanding our geographic coverage both in the US and internationally via franchising. We are seeking the right partners with the business acumen to fulfill the need for Fuel Management by establishing 4Refuel in their city, state, region and even country.

Who and what is your competition and how do you separate yourself?

Please explain the type of efficiencies you see with the customers of your products and services?

We focus on the PRODUCTIVITY, EFFICIENCY AND CONTROL of our client’s fuel. Our “competition” is focused on general delivery and supply rather than information and reporting. Reporting is critical because you can’t manage what you can’t measure. We provide detailed reporting of what piece of equipment got what fuel at what time; that is done almost real time from when they are fueled. All of that information, including pricing, volume and even a duplicate invoice is available online.

We can then supplement that information for clients who wish to focus on very specific points of their fuel consumption and engine performance data. The engine performance data is where U-Con — short for “you control” — comes in. The costs are minimal and installation is simply plugging into the diagnostic port of the vehicle’s diagnostic system. From there, we measure a whole host of key fuel consuming aspects. Typical factors are everything from aggressive driving or hard acceleration, excessive idling or excessive speeding. You can even get into hard braking or power take-off measurements.

Many clients look for quick wins and are not trying to analyze right down to every last drop of fuel. Our analyses spot trends; suppose you’ve got ten drivers and the same two guys are always well outside the parameters you’ve set? There’s a way to strategically approach this and change driver behavior.

Take a further example from a fleet perspective. The industry average is 20 minutes to fill a piece of equipment per day. Let’s just use a fleet of 30, for example. You’ve got 20 minutes and you’re fueling 30 vehicles per day. Those 600 minutes translate into 10 hours. You are spending 10 hours a day in your fleet just dedicated to fueling. What can you do differently? You didn’t buy this asset to fuel it. If it is sitting idle it is not being used. That is where the reporting comes in and the understanding of the true cost of your fuel comes in.

Control is something that is the 800-pound gorilla in the room that no one wants to speak about. Annual theft can range of 5 – 10 % or more of annual volume. The statistics on fuel theft are difficult to put together because until 4Refuel offered it, it has been very difficult to get a complete picture of where your fuel is going. We have many clients that started off with monthly volumes — let’s say 10 thousand gallons — and their fuel use actually went down when they began to use our service.

Let’s get back to your question on whether we can save clients’ money. We analyze their fuel costs and if we can’t show the client in black and white using their numbers that we can save them money either in productivity or labor gains, then our service is not for them. But we find in an overwhelming majority of cases that when we analyze their true cost of fuel, we can save that client money.

What does your company look for in regards to territories? For instance, my home is Charlotte, NC. It has two interstates, a rail line, and a connection with the shipping port in Charleston, SC. Is this a premium territory or does it not matter?

Our focus is on servicing the major urban markets and the infrastructure that is needed to keep them operating and productive on a daily basis. It takes a lot more than most people realize to keep business and industry moving and without fuel, none of that can happen. Just take a look in your office or living room and you will be hard pressed to find anything in it that hasn’t been touched by a diesel consuming asset at some point of the supply chain.

The territory you described sounds like an ideal one for our business as it is a logistical hub serviced by a number of industries. The huge market advantage of Fuel Management is that it is needed by so many industries so naturally, the more industries in a given area, the greater the opportunity is in the territory. We’ve even witnessed great success in markets under 100,000 people due to their location and industry mix. As you can see, there is no shortage of market potential for 4Refuel.

Is 4Refuel considering offering its services for regular gasoline or is it not quite your customer base?

Our focus is on the business-to-business market where the greatest amount of fuel is consumed (over 80% of diesel is consumed by businesses in transportation and construction), fuel is the highest operating cost and the need for Fuel Management is the greatest. However, as a wise person once said “never say never” and with our growth in industries such as marine, rail, natural resources and providing major airport ground services with Fuel Management solutions, nothing is off the table.

What is your company’s opinion of the state of energy, be it tried and true oil or alternative plans such as T. Boone Pickens (natural gas and wind)?

Our focus is on preserving a non-renewable resource through the effective management of its use. Fuel Management means using less of it by identifying inefficient use and that is a significant first step. As Canada’s largest distributor of biodiesel we are also committed to helping clients seek alternative options when it makes sense and providing them with the technology to measure Greenhouse Gas emissions savings.

For the near future, the reality is that we must combine the responsible use of traditional fuels with the alternatives wherever possible in order to extend existing reserves. Until alternatives catch up and the existing infrastructure can be adapted 4Refuel will focus on doing what it can to reduce the fuel consumed by industry’s greatest consumers.