Redishred Capital Corp.

Thank you for standing by. This is the conference operator. Welcome to the Ready Shred Capital Corp Second Quarter 2022 Financial Results and Business Update conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Jeffrey Hashim, Chief Executive Officer. Please go ahead.

Great. Thank you very much. Good morning, everyone. I want to welcome everybody to the second quarter 2022 analyst call and shareholder call. Really appreciate you joining us this morning. First and foremost, before I jump into the discussion of the results and what drove those results, I think everyone can see we had a pretty good quarter and that doesn't happen by accident. So first and foremost, I want to thank the team, our employees, our franchisees, our board members, our partners and our shareholders. It's a team effort. We do it together. And without all of their participation in this, we would not have had a good quarter as we did. And so thank you to them. We appreciate all their efforts. As you can imagine, this was an interesting quarter. And for us to have a good quarter the way we did is quite something. We were able to thrive in a very tough economic environment. As everyone is very aware from the news, there's strong inflation, supply chain issues. These things impacted us too. We had higher input costs, namely fuel, also driver wages. We also had truck supply challenges, getting new trucks. We seem to be getting some new trucks now, which is great, but the trucks that were supposed to be delivered in the second quarter, very few of them were delivered. But now we're getting some movement there. So I think there's some grease going into the system, which is great. And repairs on older trucks, that was tough too, because trying to get parts for those, that also caught up in a lot of the supply chain issues, thankfully. Uh, our strategy of having good depth and density, uh, in, in the Eastern seaboard in particular, where we have many corporate locations and particularly in the Northeast, uh, we're allowed to be able to share, uh, assets and, and one location was able to help the other location that helped mitigate. Uh, and, uh, so, uh, the long-term strategy of what we're doing in terms of, uh, driving route density, driving. density in regions driving that drives ability to share fleets. And you know, we certainly had to do that. We didn't trade in older trucks, but those trucks came in to help us achieve a good quarter. So in spite of all of these challenges, and why do I start with these challenges? Because they think they're well known, they're well documented. However, we had strong results and we're very pleased about that. So we sort of look at the second quarter here, same location EBITDA was up 47%, consolidated EBITDA 73% when we compared to 2021. These are, you know, these are great numbers. And we'll talk about why, how we achieved them from, you know, a top line perspective, we had record revenue of 14.6 million. in the second quarter and we're at 27.1 year to date. Many of you who were on the very first analyst calls probably remember when our numbers weren't even that for the year. And here we are in just the first half of the year putting up these types of revenue numbers and EBITDA numbers. How have we gotten there? Acquisitions, no doubt about it. We've been We've been acquiring a lot. We go back to even last year. We acquired some franchisees. We acquired American. And going into this year, we've done some tuck-ins, some small ones and some big ones or medium-sized ones. SDD we did on June 1st. So that one really hasn't impacted the results fully, but it will. Organic growth from shredding. We've had great organic growth on the shredding side. ProScan. and higher revenue from recycled paper. Let's not ignore that. Paper prices are significantly higher this year to last, no doubt about it. However, there's a bit of a difference in terms of this increase in paper prices for us. And that's when we go back to 2018, we didn't have any bailing facilities. 2019 really only had one. Here we are in 2022, we have four, and they're in our biggest markets. We already have one in Chicago, one in Kansas, and through the American acquisition, New York and New Jersey. And the increased tonnage is now from our facilities in New York and New Jersey are being diverted into those American purchased bailing facilities, and that helps us increase our paper revenue. And our paper prices, because when you bail paper, you get a paper price premium. And so that American acquisition, we knew that was one of the opportunities. And that opportunity came at the right time as paper prices were going up and the premiums were there. And so that is, of course, one of the reasons why we wanted to buy American, not the only. We wanted to densify our routes and solidify our market presence in the region. And we've done that, and we continue to do that. It was a big acquisition. We continue to do that. So that's having a positive impact. And so we're thrilled about that. What's happening is what we thought would happen. And so we're pleased about that. So, again, some tough times. macroeconomic environment. What can we do? All we can do is control what we can control, and the team really did do that. We mentioned safeguard document destruction end of the second quarter. Again, good base of customers in New Jersey and Florida. We're integrating that as we speak. So far, so good. We're glad about that. the other big thing that we did and, uh, just, just happened is that many of, you know, we did a five to one, uh, uh, reverse split or a consolidation, uh, and, uh, uh, you know, uh, just, just so you know, the MDNA and the financial statements for the second quarter are all stated, uh, with the new share basis. So, um, on a, on a post consolidation basis. So, uh, overall, And I'm going to turn it over to Harjeet in a moment. He'll provide more color and detail on the financial results. You know what? I think the team did very well to respond to the challenges. We've also just raised our prices here in the third quarter in July, August. And so that will have a positive impact. So our scheduled recurring clients. have seen a price increase due to these input costs. Other companies are doing that and of course we have followed suit. We have good relationships with our customers and so far we're happy to report that we haven't seen significant churn to date. And that's a good sign. And so I think that talks to the client service that we provide. It talks to, you know, how we go about doing it. We don't do fuel surcharges. We don't do delivery charges. We don't do any other charges. We keep it clean, but we do the price increase. And I think our clients appreciate that transparency in how we do it. So I'm going to turn it over to Harjeet. Harjeet, you get the fun part, so go ahead.

Thank you, Jeff. So hi, everyone. As Jeff noted, we had a very strong period of financial performance for the three and six months ended 2022. If we look at Q2 2022, we generated revenue of $14.6 million. Our EBITDA was 4.5 and operating income $3.2 million. And Even with the input cost increases that Jeff spoke about, our margins, they remain strong. Recycled paper, of course, had a contribution to that, and that helped. But even without that, very strong results for the quarter. And then if we look at the year-to-date results through June, again, Jeff spoke to it, $27.1 million in revenue. You know, record highs there, EBITDA 8.6 million, operating income of $5.9 million. And, you know, we sort of translate that on a per share basis. You know, we look at our operating income on a per share fully diluted basis. Year to date, we're at 32.4 cents. That's up almost 100% compared to the comparative period in 2021. And, of course, these figures are on a, you know, post-share consolidation basis. So, you know, quite impressive, you know, because we're looking at apples to apples here. And, you know, how did that translate to the cash flow? Well, we generated, you know, $3.3 million in cash flow from operations for Q2. Year to date, $5.4 million. And again, the strong EBITDA results, you know, translating to our cash, translating to strong cash flows as well. You know, looking at our balance sheet, Our liquidity position is pretty solid. We have $5.8 million in working capital. We do have $9.5 million in cash, and that's going to put us in a position to execute on our plans, our strategic objectives, and we do highlight those in the MD&A. So all in all, very good results. We are all pleased to report, and I will now turn it over to Jeff just for some final comments before we open it up to the Q&A.