ReposiTrak, Inc.

Greetings and welcome to the Reposit Track Fiscal Fourth Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A brief question and answer session will follow the formal presentation. As a reminder, this call is being recorded. I would now like to turn the call over to Rob Fink with Fink IR. Mr. Fink, you may begin.

Thank you, Operator. And good afternoon, everyone. Thank you for joining us today for the Repositrak Fiscal Fourth Quarter Earnings Call. Hosting the call today are Randy Fields, Repositrak's Chairman and CEO, and John Merrill, Repositrak's CFO. Before we begin, I would like to remind everyone that this call could contain forward-looking statements about Repositrak within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon current beliefs and expectations. Proposite tracks remarks are subject to risks and uncertainties, which actual results may differ materially. Such risks are fully discussed in the company's filings with the SEC. The information set forth herein should be considered in light of such risks. Repositrak does not assume any obligation to update information contained in this conference call. Shortly after the market closed today, the company issued a press release overviewing the financial results that will be discussed on today's call. Investors can visit the investor relations section of the company's website at Repositrak.com to access this press release. With all that said, I'd now like to turn the call over to John. John, the call is yours.

Thanks, Rob, and good afternoon, everyone. This was again a milestone year for Repositrak. As anticipated, we increased recurring revenue, delivered solid margins, grew net income, and our EPS even faster. We added more cash to our balance sheet, now the highest in the company's history. At the same time, we returned over $5.6 million in capital to shareholders through a growing common stock cash dividend, buyback and retirement of common shares, and the redemption of preferred shares. At the same time, we invested heavily in sales, marketing, cybersecurity, and bolstered our development platform and expanded our implementation resources to further accelerate our traceability solution. We have entered fiscal 2025 with significant tailwinds and an enviable competitive position. I believe we are and will continue to be the leader in traceability, doing it, not just talking about it. I believe traceability over the next three years will double our annual recurring revenue run rates at margins of 80-plus percent as we have historically delivered, yielding higher earnings per share and more operating cash flow, making us even more profitable than ever before. We eliminated $1.4 million of high-touch, low-opportunity revenue, which served as a drag on our actual competitive growth for the last 18 months. The decision may not have appeared logical or popular, but necessary, and we are moving to a period of better year-over-year comparisons just as the traceability revenue continues to accelerate. In fiscal 2024, revenue derived from our traceability solution represented 6% of total revenue, or $1.2 million. I believe the decision to free up resources was proper. Culling the herd will permit us to capitalize on and continue to accelerate, not just on the traceability opportunity, but our entire suite of solutions, generating higher levels of ARR, profitability, and EPS as we scale. I believe the numbers speak for themselves, so let's get right to it. Fourth quarter fiscal 2024 results are as follows. Total revenue was up 8% for the June quarter, $5.2 million versus $4.8 million. Recurring revenue was essentially 100% of total revenue. Operating expenses increased 6%, $3.9 million versus $3.6 million. Gap knit income increased 15%, $1.6 million versus $1.4 million. Gap net income to common shareholders increased 18% from $1.2 million to $1.5 million in fiscal 2024. Earnings per share was $0.08 per share compared to $0.07 per share last year. And we redeemed 81,000 shares of preferred stock at the $10.70 redemption price for just under $870,000. Turning to the full fiscal year 2024 numbers. During fiscal 2024, total revenue was up 7% and recurring revenue was 99% of total revenue. Operating expenses increased 10% reflecting investments in the Reposit Track Traceability Network or RTN, cybersecurity and investment in sales and marketing with more participation in trade shows and focus on other awareness campaigns. Gap net income increased 7%, $5.9 million versus $5.6 million. Gap net income to common shareholders increased 8%, $5.4 million versus $5 million. Earnings per share was 30 cent basic and 29 cents diluted. This is compared to 27 cents per share last year, both basic and diluted. During the fiscal year, we repurchased 177,000 common shares for a total of $1.5 million. We redeemed 220,000 preferred shares for the stated redemption price of $10.70 for a total of roughly $2.4 million. We continue to reiterate our goal to redeem all the preferred shares in the remaining two years. Again, we hold no treasury stock. Stock is repurchased or redeemed and subsequently canceled. It doesn't matter if it's common or preferred. We fully paid off our line of credit and have no bank debt. We increased the quarterly common stock dividend and paid $1.7 million in cash dividends to common shareholders in fiscal 2024. And we have over $25 million cash in the bank. Again, our financial performance of fiscal 2024 reflects a 6% revenue contribution from traceability, net of ongoing investments to bolster our position, and net of sunsetting non-core revenue streams. We expect the contribution from traceability will increase sequentially, quarter by quarter in fiscal 2025, and continue to accelerate as we move closer to the FDA deadline. It remains difficult to forecast the trajectory of enrollment, as the FDA mandate requires a complex, multi-step process for enrolling suppliers. There's a discovery period to establish FDA requirements of the supplier. We then have to explain the requirements and help suppliers identify what and where the required data lives. Data is collected in files and various emails written manually or live in one of the supplier's several systems and need to be extracted routinely and accurately. It is not a one-size-fits-all. It's complex. However, that's where we excel. Randy will add more color in his commentary. We continue to educate and automate everywhere we can to facilitate the enrollment process, making it faster and more efficient. That is a part of the increased expenses you are seeing. It's a learning process. I believe once suppliers and their parent hubs or retailers are enrolled and implemented, the financial requirements to maintain the network are more in line with our compliance and supply chain offering. I know we spent a lot of time talking about growth and traceability. Be clear, we are simultaneously laser focused on growth of the entire suite of solutions we provide. Compliance management, supply chain, discovery continue to deliver solid growth figures despite the elimination of high-touch, low-opportunity revenue. The same customers with a traceability problem also have a compliance and supply chain problem. The cross-sell opportunity is not lost on us. In summary, our strategy remains very simple. Take care of the customer, grow recurring revenue, balancing costs with opportunity, traceability, supply chain, and compliance offerings. Manage costs with long-term opportunity. Increase net income and EPS. Continue the buyback of common and preferred stock. Increase the common dividend and drive more cash. Turning now to cash flow and cash balances. Total cash at June 30, 2024 was $25.2 million compared to $24 million at the end of fiscal year 2023. This was a record cash year for us, even after paying off all bank debt and returning over $5.6 million in capital to shareholders on common stock buybacks, preferred stock redemption, and cash dividends. For the fiscal year, we generated cash from operations of nearly $7 million. The company has $8 million remaining on the $21 million total common stock buyback authorization. As I said earlier, we have repurchased 220,000 preferred shares at the stated redemption price of $10.70 per share. The remaining amount of the preferred stock redemption is about $6.2 million, and we anticipate redeeming all of the preferred stock issued in outstanding over the next two years. As we have said before, we will take at least half the annual cash generated from operations and return it to shareholders in the form of a dividend, buying back additional shares of common and preferred stock or increasing the dividend, whichever lever makes the most sense at that time. The other half goes in the bank and will be strategically used to fund initiatives, M&A, new products, or otherwise. The board continues to evaluate our capital allocation strategy and may adjust the different capital levers, whichever lever is more favorable to shareholders at that time. As you may have seen in our earnings release today, the board approved, yet again, another 10% increase in the quarterly common stock cash dividend, starting with shareholders of record on December 31, 2024. That's all I have today. Thanks, everyone, for your time. At this point, I'll pass the call over to Randy. Randy?