Cematrix Corporation

Good morning, good afternoon to those who are participating in this webinar. Thank you for that. With us this morning is Jeff Kendrick, who is the president and CEO of Sumatrix, and Randy Bumauer, who is the chief financial officer. We're going through the second quarter results today, and I'm sure there'll be a number of questions as well after the formal presentation. And just in regards to that, at the bottom of your screen is a little feature Q&A. please submit any questions through that feature. And with that, I'm going to turn it over to Jeff and Randy.

Thanks, Grant. As always, it's a pleasure to participate in these webcasts with you. Randy and I wanted to thank you for participating in the second quarter webcast. We're going to start it off with a short overview of the past quarter and how the company is going. And then I'll pass it off to Randy to go over the financial results for the second quarter ended June 30th, 2023. So just the areas that I wanna cover today, we're gonna look at an update of the 2023 highlights, mainly based on that management perspectives. We're gonna talk about our confidence, how that is continuing to grow and why. We're gonna talk about unique position that we announced through that management perspectives back in March. We've grown from 11 projects over a million dollars to 14 projects over a million dollars now. We're gonna continue to talk about our 2023 record-breaking sales and where we're heading. Then we'll talk a bit more about the backlog and the sales pipeline. We'll go over the one single project in that million-dollar club that started this past quarter. Again, just to remind everybody that we are a seasonal business and that most of our work does occur in the third and fourth quarters, but we've had a very good first two quarters as well. Then we'll talk a little bit about the three new project additions through that million dollars. So again, we've gone from 11 to 14. And I think one thing that we shouldn't lose is side F2 as well. We've already got a strong 2004 already secured and in place and growing every day. And then, as mentioned earlier, I will pass it on to Randy and he will briefly go over the QT financials. And then, of course, we'll end the webcast with a question and answer session that Grant will manage for us. So first, let's talk about the 2023 highlights. I mentioned the confidence in 2023 continues to grow, the unique position that we're in with the 14 large projects over a million dollars. We're going to talk about record sales, a margin rebound continues. We're forecasting a return to profitability this year, continue to have a strong backlog, even though we keep drawing projects out of that backlog. And one of the big things I think that's important for some matrix that we've had no supply issues to date, and we don't expect any for the balance of the year as well. So why is their confidence growing? Well, we've been confident all year long, but as mentioned in our last news release, we already have scheduled for 2023, 39.9 million in contracts. And 90% of that backlog at that time was already contracted. The rest were contracts and process. Sales for the first two quarters are already 47% ahead of last year, and they were record sales last year. So you can imagine where we're heading. Again, not that we will achieve 47% on the $29 million that we achieved last year, but it's going to be a very strong year. And even if some of the $39.9 million does get delayed, which always happens, we should be replacing that with other projects as we go through the balance of the year. Sales opportunities across North America in 2020 continue to grow. We're working on many projects, not only for the current year, but future years as well. And then as mentioned in the last slide, no cement supply issues, which is what killed us last year from both the supplies perspective and a margin perspective. So this unique position, again, a reminder, now 14 projects over a million dollars as a minimum. 27.6 million of the sales that are focused on that 39.9 million relate to these projects. That's versus seven projects last year for a total of 15.5 million. So again, not only have we grown in numbers, but also in size and volume. We have 39.9 million scheduled for placement in 2023, and that's 36.2% ahead of 2022. And then, of course, we expect to land more projects through the year. It's still only mid-August, and there's a lot of projects that are in the process of being contracted at this point. Million dollar project locations, they're essentially right across North America and some into Canada as well. There's 14 projects or anything from tunnel grouting, runway bases, backfill of overpass abutments and embassy panels, to basement backfill, protecting geothermal installations, walking paths, pipe bedding, anything. There's just so many numerous applications for cellular concrete and that market continues to grow every day. Record breaking sales continue. So we had a record 13.2 million on the first two quarters. We have a record 33.2 million sales if we look at the last four quarters by themselves. We've already contracted $27.2 million in sales since the end of the year and $64.2 million since August 3rd, 2022. And that's important because most of those contracts have not been completed yet. They will be completed in 2023 and some in 2024 as well. Record backlog in sales pipeline. Backlog is up to 99.4 million. And it doesn't matter how many sales we continue to draw out of it, it continues to grow. Now, it's going to be hard-pressed to continue to be up in the $99 million range for the next two quarters because we're going to be doing a significant amount of sales in Q3 and Q4. But what's important to know is the sales pipeline, which is essentially the market itself and where we draw these projects out of, is now up over $460 million. So it doesn't matter how many projects we ourselves and our competitors may be drawing out of that pipeline, it still continues to grow as well. I just want to talk a little bit about the one project that we started in the second quarter that was in that million-dollar range. This is a tunnel in the central US. It's a 1,100-yard tunnel, and it's for to carry a sewer line, a new sewer line in the Midwest. Now, our job here is to manage the grouting of the project, and this project itself has 62,000 cubic yards of cellular concrete. And it started in June and is expected to be completed before the end of the year. John Gierkemaier, As mentioned, we've also added three new million dollar projects to come to a total of 14 ones, the $3.9 million. John Gierkemaier, msc panel backfill project in the central Midwest project to as a $1.2 million msc panel backfill. John Gierkemaier, And project three is a 1.5 million in pipe bedding project again various applications throughout North America and again the number of projects just continues to grow for some matrix. What's important as well is that we talk about how good 2023 is going to be based on what we have in place to date and what is scheduled to go on the ground, but we also have a strong 2024 already in place. So $72.8 million of that $99.9 million backlog relates to 2024. It's also important to note that the 14 projects that a million-dollar project is starting this year, They total 51.8 million. So 25.6 million of the amount actually relates to 2024 and beyond. The company also has a further three projects in that million-dollar club over that actually are completely scheduled to go into 2024 and beyond. So the total of the million-dollar projects is actually 17. And then we expect to continue to secure more projects, not only for this year, but for next year and years beyond as well as the year continues. So essentially that's the matrix update for you. I'll now pass it on to Randy to go over the financial results for the quarter ended and the six months ended June 30th, 2023. Thank you, Jeff.

Appreciate that. If you could flip to the next slide for me, that would be great. So this slide basically is just a quick snapshots of our financial statements from our publicly disclosed financials. I won't review these in details because they're available, but Essentially, the main themes are revenue continues to grow, gross margin is improving, and we've dramatically simplified and delevered the balance sheet. Next slide, please, Jeff. When we look at our key financial metrics that we follow from the business, every one of these metrics is improving. So if we look at revenue on a quarter and year-to-date basis, both of them are up almost 50% or over 50%. Gross margins showing significant improvement in the quarter and on a year-to-date basis. As a result of the improved gross margins, our SG&A costs are pretty close to flat. Our operating losses have narrowed, and we are much closer to profitability with significant improvement again in the quarter and year-to-date. As a result of increased revenue and gross margin, adjusted EBITDA is also significantly improved, and we are getting much closer to positive EBITDA. Because of the improvements in revenue gross margin, cash flow from operations also showing significant improvement. And our expectation is with the strong Q3 and Q4 that we have forecasted, both adjusted EBITDA and cash flow from operations will become positive. Cash on hand at the end of June 30th is $3.5 million. So our balance sheet is strong and we're in a good position to fund operations and ensure our survivability for the foreseeable future. Next slide please Jeff. One of the things that we like to highlight is the seasonality of the business and then the growth that's occurring in revenue, so in this first chart here in the upper left, you can see our revenue by quarter. And you can see, through the illustration it's very clear that the revenue is highest in the third and fourth quarter and we're expecting both this third quarter and this fourth quarter to be records compared to the previous. The next chart that really relates to our balance sheet there on the top right is just showing how we've reduced the borrowings and the debt in the company from what was quite a high level as we were finishing two significant acquisitions. We have over time delevered the balance sheet and de-risked the company, increasing third-party interest costs and also setting up the company for a future acquisition should we find one that makes sense. And lastly, at the bottom chart there just goes again to show how we've simplified the capital structure from where it was at the end of 2022 to where it is now in terms of many of the dilutive instruments that used to be outstanding have now either been paid, converted, or expired. And so our capital structure is now quite simply just the shares outstanding plus equity incentives that relate to stock options or issues that are outstanding. And I believe, Jeff, that was the final slide in the financial section covering the kind of key things that we wanted to talk about. So I think we'll hand it over to Grant for the Q&A. Thanks, Randy.