This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk00: Good morning and welcome to Quarter Hill's Q4 and Fiscal 2023 Financial Results Conference Call. On this morning's call, we have Chuck Myers, CEO, and Karl Kreist, Chief Financial Officer. At this time, all participants are in listen-only mode. Following management's presentation, we will conduct a question and answer session during which analysts are invited to ask questions. To ask a question, please press star 1 on your touch-tone phone to register. Should you require assistance during the call, please press star zero. Earlier this morning, Quarter Hill issued a news release announcing its financial results for the quarter and year ended December 31st, 2023. This news release, along with the company's MD&A and financial statements, are available on Quarter Hill's website and on CDAR+. Certain matters discussed during today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's annual information form and other public filings that are available on CDAR. During this conference call, Court Hill will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. please refer to the company's fiscal 2023 MD&A for full cautionary notes regarding the use of forward-looking statements and non-IFRS measures. Finally, please note that all financial information provided is in Canadian dollars unless otherwise specified. I will now turn the meeting over to Mr. Myers. Please go ahead, sir.
spk02: Great. Thank you. Good morning, everyone, and thanks for joining us on today's calls. In terms of the agenda today, I'll discuss the results for the quarter and the year, as well as our acquisition announcement today of Red Fox ID, after which Kyle will take a look at key financial results. And after Kyle, we'll open it up for questions. So thanks. We'll get started. 2023 was a year of transition for Quarter Hill, as most of us know, with important changes made to the board and management. And that really set the stage for a greater focus on the operational excellence of throughout the company. 2023 wasn't without its challenges, but we finished strong in Q4 and we believe we've entered 2024 with a stronger foundation in place to kind of drive top line growth and margin expansion. I joined the board in May of last year and became CEO in September. Kyle was named interim CFO in May and is noted in our earnings release today. Kyle, I'd like to congratulate, is now our permanent CFO. He's done a fantastic job. and helping me clean up and fine-tune operations and get in this position for our next growth phase. At the board level in 2023, Rusty Lewis was named chair, and Bill Morris and I were both appointed as directors. The board currently stands at six members, four of whom have been added in the past two years. A number of these changes naturally coincided with the sale of YLAN, the patent licensing firm. With that transaction completed, we are now at pure play ITS business and Titan strategic focus and simplified profile to the street. The transaction laid the groundwork for my joining as CEO and added our cash balance sheet in support of organic growth as well as tuck-in acquisitions. As I discussed on our Q3 call, my focus since becoming CEO has been to visit our facilities, customers, and teams with an eye on finding efficiencies, optimizing operations, and continuing the integration of our ITS business units. I've been impressed with the depth and the collaboration amongst the team and with the assets and opportunities we have to capitalize on. As expected, this has led to a few other changes within the organization here in 24 as we fine-tune the leadership team. Earlier this week, David Sparks joined Quarter Hill as Executive Vice President of Strategy and Rish Malhotra, who led our enforcement units, departed the company. These changes were made on an eye to further integrating the company, streamlining our structure, and executing on our growth plan. With the enforcement unit, we won't be naming a new CEO per se, and for the time being, the unit is being co-led by a couple of veterans on the team. Dave Sparks is a great addition. He is a recognized thought leader in the transportation industry, and his experience in ITS tolling and RFD transit more. Most recently, he was Senior Vice President at WSP, one of the world's top engineering professional services firms. His deep ITS roots and early in his career, Dave worked with Rusty Lewis and I at Transcorps. Dave has experience managing large projects, identifying and executing client opportunities, and developing strategies to expand business into new markets. In the near term, he is focused on advancing some of our large tooling projects and will ultimately shift the majority of his focus to strategy and growth. Integration was a big theme in 2023 and our efforts continue into 2024. We are near completion of our one company initiative where we will be shedding IRD and ETC banners in favor of one name, which is Quarter Hill. This means a more streamlined, simplified organizational structure with one public facing presence, one website. This will roll out shortly. IRD and ETC are respected brands in the industry. But there's a continuity of key relationships between teams, customers, and industry contracts, and we don't anticipate any disruption at all. There's a logical evolution of the integration that began last year, and frankly, one that's long overdue. While a core operations in North America, Quarter Hill is a number of smaller businesses worldwide, predominantly in a business. As part of our integration, I've done a deep dive on these operations to identify those that aren't really strategically important and don't make us have much money and consume a lot of management time. The goal is to exit businesses that check those boxes. ...transaction in our PAT traffic operations in Chile and Mexico in the fourth quarter. This is a relatively small transaction valued in the low single-digit millions that generated some cash Over the course of this year, there could be more that we look at doing something similar with. In our 2023 financial review, we'll touch on our strategy and outlook more in a moment. But first, a quick review of the 23 financials.
spk01: I'm very pleased with how we did. Fifty-eight and a half. Two million. $1.5 million in Q4 last year.
spk02: So a year revenue was $194.3 million of 22% adjusted EBITDA. It's solid progress.
spk01: growth margin improvement.
spk02: This was due to steady performance for our enforcement business, improved execution in our trolling implementation, and keeping a close eye on expenses. Looking more closely at our business units at the start of 2023, we had seven major trolling projects in the implementation phase, which helped generate that significant backlog I just mentioned. While we spoke previously of the challenges on a few projects in 2023, We nonetheless made important progress advancing each of these through implementation and towards the operations phase. Several have moved into the operations phase, while others, such as Orange County and Alameda, have one or two roads go live with us.
spk01: Good progress. You're consistent in the past five years. Expanded our
spk02: On the first six months, just to clean up, stabilizing operation, and getting the business to grow, including opportunities such as Red Fox. From this point forward, I'll be pivoting to spend most of my time driving growth in the business. Quarter Hill is very well positioned to be elite in ITS, but simply we want to be number one through our markets. As I mentioned on our last call, not to expect any major shifts in strategy, and then we're focused on growing our workforce calling enforcement units. In this case, I want to talk about three areas where we continue to strengthen our existing operations and expanding our capability.
spk01: In your opportunity we're looking at, for a global business today, our enforcement unit operates in more than 80 countries around the world, and we look to leverage a steep revenue center.
spk00: I apologize for the interruption, Chuck. We're having some audio issues on your line. Is it possible that you can try reconnecting? Because your line's breaking up quite badly. I'll redial in. Okay, apologies for that. And apologies to the attendees. We'll restart as soon as we have Mr. Myers back on the line.
Disclaimer