Redishred Capital Corp.

Thank you for standing by. This is the conference operator. Welcome to the Ready Shred Capital Corp fourth 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 one 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 call over to Jeffrey Hashim, Chief Executive Officer. Please go ahead.

Thank you very much. Good morning, everyone. Welcome to Ready Shreds Q4 and year-end 2022 conference call. I want to thank everyone for attending on this Monday morning. Today I'm joined by Harjit Bharar, our Chief Financial Officer, and together we'll be reviewing the the fourth quarter and year-end 2022 results and provide some color on those and a company update. And of course, we'll finish the session off with some Q&A. Did want to let everyone know that the year-end audit financial statements, including Q4 and 2022 MD&A press release were disseminated on Friday. and obviously on CDAR. And of course, please, at your convenience, take a look and read through them. So for the Q4 2022 and full year 2022, this is a good growth year for us. Sales were strong. EBITDA grew by double digits. In fact, Harjeet will go through the exact numbers But it was our strongest year-over-year dollar growth that we've seen in the history of ReadyShred on an EBITDA basis. So if we look at the fourth quarter, both revenue and EBITDA were significantly up. Revenue was up 48%, and EBITDA was up 85%, respectively, when you compare that to the fourth quarter of 2021. For the year ended 2022, so this fiscal year 22 versus 21, revenue was up 58%, EBITDA up 67%. So how did this growth continue for us? And many of you know us very well. We're following our game plan. Number one, organic growth, what we own, we build, and we're driving strong growth. same location, service, revenue growth, shredding, scanning, and e-waste. So you take that into the mix. Of course, we had strong paper revenues that came from there. And then, of course, we had a good year for acquisitions. And towards the tail end of 2022, November 1st to be exact, we purchased the ProShred Philadelphia franchise. That completed really the northeast end for us in terms of acquisitions and a very good acquisition for us. So as much as we've been acquiring and we've been acquiring, we've been acquiring it smart. We've been pragmatic about the deals we do. And I think this is paying off for us in terms of translation to the results that you've seen. So noted that Zillia franchise is a good one for us. for many reasons, well-operated in the Northeast. We look at our organic results and core shredding business, and if you look at our same corporate location revenue, Shredding revenue, again, that grew by 21%. So when you strip out the paper, the service revenue growth was 21%. And our secure recycling business, secure recycle and ProScan, both for the year, were up. And we're very pleased about that. And, of course, I already mentioned recycling being up. Combination of really three things. Number one, strong paper prices. Number two, increased tonnage. Number three, We're now bailing in five locations. ProScan business, I do want to note that in the fourth quarter it was softer than I think any of us might have anticipated. The ProScan business is more what I would call chunky, to use not such a nice word, but I don't know any other way to say it. We have a lot of larger clients and government clients, so you wind up playing with when the government releases their budget money. There's a lot of repeat clients that are large and their timing can be off sometimes three, four, five months. If you can get these peaks and then get these valleys in that business, very different than the shredding business. We have a lot of small recurring clients. 2023, our usual stable of clients are there and the business is performing so far so good in 2023. So Q4 is a little bit of a timing challenge more than anything. When we look back at 22, It was a tough year in terms of a number of factors. It was a tight labor market, and that triggered not only was there inflation, macroeconomic inflation, but that driver labor market was quite profound. Many of you know about the supply chain issues that impacted new truck supply, as well as parts for older trucks. So that caused inflation. increased downtime or reduced uptime, but increased downtime for four-hour trucks. And the good news is we're able to sort of use our backup trucks and our spare trucks. But again, those required higher repair maintenance fees, which Archie will talk about. Higher fuel prices were certainly well known, and that drove the cost. So this whole inflationary environment certainly did us no favors on the cost side and they did impact our margins more than we would have liked. Given all of that, we finished 2022 quite well and we're really well positioned. When Harjeet reviews the balance sheet, you'll see why we're very well positioned because we can continue to do deals and as these macroeconomic factors wear down the independents, I think that will give us opportunities to buy independents. Our pipeline is quite good. We've got a number of folks in the pipeline. Independents, of course, are always in the pipeline. Acquisitions, Philadelphia is mentioned. That was a $7 million deal up front, plus earnouts. The earnouts are tied to service revenue and to paper price. So we've got downside protection on both, which is good. And since we bought it, it's performing to plan, so we're pleased about that. So when we sort of look at all of this, I also want to make note, and I mentioned this earlier, we're bailing paper now in five of our corporate locations. So we have 15 as of today. We have five that are bailing. These are our five largest locations. So when we look at December, when we started November 30th of 2021, we had two locations, Chicago and Kansas bailing. And now with the acquisitions that we've done, we've got five and a lot of our volume is going through there. So probably about 50% of our tonnage corporately is being bailed at a higher price. And those of course have a higher cost because the bailing has a cost. Those costs include rent for the warehouse, labor, utilities, and those types of things. Just to give everyone some color on that, the paper revenue for us, we're doing work and processing it to make sure that we're getting as high a dollar as we can for that paper. As noted, Philly brought the bailing facilities up to five. With that, Harjeet, I want to turn that over to you and you can get into a little bit more of the details there.

Sure. Thank you, Jeff. And thank you again, everyone, for joining on this call today. So in terms of financial results, our consolidated revenue for Q4 2022 was $15.4 million. We compare that to $10.4 million in the fourth quarter of 2021. So that's, again, a 48% increase. From a bottom line perspective, EBITDA in Q4 was $3.1 million. compared to 1.7 million in Q4 2021. And even with the growth here, the margins were stronger than the comparative period in Q4 2021. So we were 400 basis points higher. If we look at the full year results, again, strong growth, as Jeff alluded to, revenue was 57 million. EBITDA was 15.3 million for the year. And if you compare that to 2021, we had revenue of 36 million. and EBIT of 9.2 million. And then if you look at the margins, you know, we definitely had our cost challenges, but saying that, you know, even comparing it to 2021, you know, we were ahead 200 basis points. You know, obviously that's partially driven by sort of strong recycling prices, which helped. But again, it was the cost, which I'll sort of maybe dive into a little bit more deeper shortly that, you know, have had some impact on the margins. And, you know, if you look at our growth overall, like, you know, Jeff again mentioned it as well, but, you know, we've had strong organic growth and we've been very pragmatic from an acquisition front and that's translated to the bottom line. So in terms of the cost that we spoke about, you know, we've had to incur incremental costs. For example, like we've had to rent trucks, you know, due to some of the parts supply issues. And, you know, that, you know, that's, you know, driven up in part costs, you know, we've had wage inflation for our drivers, um, you know, higher fuel prices. And if you sort of aggregate them all together, you're looking at about a 1.3 million negative impact, uh, for the 2020 year on our corporate location operating costs and hence our bottom line. Um, so definitely some headwinds from a, from a cost perspective. Um, so in terms of the, the truck supplies, um, You know, truck supply has improved, you know, as have parts supplies for older trucks. You know, but there are still some remaining challenges, you know, as we start in 2023, but definitely a bit more positive than what it was in 2022. The, you know, I'm talking about the results, but even if you translate them down on a per share basis, so EBITDA was 17 cents in Q4 2022. That compares to 10 cents in Q4 2021. And then for a full year, EBITDA was 84 cents per share in 2022 compared to 58 cents per share in 2021. From a net income perspective, full year 2022 net income per share was 84 cents compared to 58 cents in 2021. And, you know, we've talked about sort of the income side, but, you know, from a cash flow perspective, you know, we did have, you know, strong cash provided by operating companies. activities you know 2.9 million in q4 2022 and 11.6 million if you look at 2022 as a whole you know so cash flows have been strong we still have a good liquidity on our balance sheet um you know we're sitting on cash to seven million dollars and we also have uh capacity under existing banking uh facilities to help facilitate uh growth you know as we sort of look into 2023 And all in all, again, we're pleased with the results for 2022, and we look forward to executing our plan in 2023. And so on that note, I will turn it over to Jeff for some closing comments.

Thank you, Harjeet. So as Harjeet noted, I think overall we're pleased with where we finished in 2022, given those factors. that we faced from a cost perspective, we're looking ahead. And yes, those factors came into play. So what are we doing about it to make sure we're more efficient and more effective? We have several work in technology initiatives on the go. We're rolling out our workflow software. We started that last year. most of the corporate stores are on it we're rolling that out not only to the rest of the corporate stores but also to our franchisees that software also has a collection automation platform um as you can imagine collecting all these hundred dollar bills uh clients uh you can have many many tens of thousands of those in any given month so so having an automation process um will help us um uh you know obtain more efficiency and allow us to scale as we grow and help us reduce our day sales outstanding. So I think those are things that I think will be very positive for us. We just launched this month the Salesforce CRM and that has sales automation and better pipeline tracking. We've grown so much on the sales side and with so many customers, you need to be able to track them and you'll be able to follow up with them. And you're able to market with them in an individualized but yet automated manner. And that's what that's doing for us. And then all of these things need to be integrated. And that's the next phase of this. And we actually have our integration folks working on that. So for us, that's going to allow us to grow and scale in a very standardized way. And we feel those investments have a strong return on invested capital because we're going to continue to do acquisitions. We're going to continue to grow organically. but we can't do the same things over and over again. We need to be smarter about how we do it. The team is really focused on these initiatives. They're focused on our offering metrics. They're focused on what may come, so having plans for what may come. Essentially, we're going to go back after this call, put our hard hats on, and continue to work on the nitty-gritty of the business and continue to improve our business. And with that all being said, I want to thank all of you, our shareholders, our financial partners, our board, our management team, our franchisees, and our employees for working so hard to make 2022 successful. I'll open it up to Q&A.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. Our first question comes from Amir Azad of Echelon Partners. Please go ahead.

Jeff Harjeet, good morning. Um, can you speak to the macro environments and how it may impact your business? Um, are you guys seeing any signs of weakness or maybe increased price competition?

Um, yeah, so Omer, I think, um, um, you know, if I talk competitive wise, um, um, with the consolidation we are finding, there's going to be fewer independents out there. Um, You've got your big guys out there, the Shredded Siren Mountains and a few others that are more in the record storage business. I think what we typically see here is on the recurring revenue side, we're winning. Our go-to-market pricing has been pretty good, which is great. On the event-based purge type business, we're very elastic in each market. We tend to be very mindful of the market and our capacity because that plays a role. The good news is when we have capacity, we can go fill it and we can fill it on routes and we can drop prices a little bit to fill it on routes. When we don't have capacity, better order a new truck to create capacity, but then we can be more selective and go for those higher margin accounts. We're always looking at that. You know, we're always, you know, price increases happen every year, and we'll be doing one this year as well. And we're trying to read the tea leaves on, you know, the rate of inflation and things like that. But this is still a good time to pass through a price increase. So I think those things are there. Overall, just, you know, what's our view in the U.S.? The U.S. is still hot, right? And so those are good things and that there's more or less full employment. I mean, if you look at the last two months, a month ago, it was the lowest unemployment rate since the 50s. So those are good, but that puts pressure. Of course, the opposite is that puts pressure on wage and inflation and things like that. So we've got to be mindful. And hence, I come back to the technology deployments. We need to continue to be improving and continuously improving our businesses. I hope that answered it. Do you have a follow-up on that, Amr, or did I get that for you?

No, that's great. U.S. market is hot is what I took from it. Can we go back to the operating costs? Just looking at operating income X recycling, the margins obviously got compressed from 13% to 8% in 2022. Just wondering how we should be thinking about 2023 in light of the different moving parts, including your price increases. Do you guys like have a target number? I know you guys like have a bunch of targets you release for growth and EBITDA and so on. But do you have like a target sort of operating income X recycling target that we should be thinking about?

Yeah, and that's a good question. And I think, you know, one of the things just to be careful when you pull out all the recycling revenue is, you know, we have costs now, some costs associated with that because we're bailing paper now, right? So the bailed paper will attract $50 or $60 more time. There's some costs associated with that, right? So So, yes, we've seen, you know, so when you take out the paper revenue, you're left with, you know, where we're at. And then, yes, the exposure of the fuel costs, for example, and the repair maintenance costs, you know, that $1.3 million that Harjeet showed up doesn't get offset by anything, right? And you're absolutely right. You know, we got that hurt us. And so the paper offset us. And then having failed paper, as well and that margin on the bill paper certainly helped us as well. Where these margins are right now in terms of our costs going into the new year, I see fuel obviously has been up and down but has subsided quite a bit. The truck supply situation There's still a challenge getting new trucks, so we're still incurring higher repair and maintenance costs in the new year, but not like 2022. And I do see that easing off over the year. So, you know, every time I thought it was going to ease off last year, you know, you get a call from the truck vendor going, yeah, we're waiting for one part, and then your truck can be released, right? I mean, literally, it's that minute. One part can knock out your truck supply immediately. Uh, and, and then, um, now you're spending money on, on the old truck and you're spending money on the overtime. And then, uh, those trucks are not fuel efficient here. So those are really, those really hurt us last year to your point. Um, and when you, when you pull up the recycling, you can see that as well. Um, having said that, I think, um, you know, we're already into the first part of this year, uh, in Q1. it's been better on the truck supply perspective. We haven't gotten all our trucks that we wanted, but it's better than last year. And we're getting parts to repair older trucks a little bit faster. So those things are certainly helping us going into the, into 23. So, um, and then, you know, we'll do another price increase and papers remained relatively strong. It's not quite, it's, it's come off its highs, but it's remained relatively strong. So that, that offset some of those costs, um, um, and, um, And last but not least, we're continuing to work on the routing and deploying the workflow technology that is going to help us just be better at that. Did I give you some color, Amr?

Yeah, so if I were to exclude paper out of the equation, and I understand that it's hard to do that given the cost of bailing, But that 8% margin X recycling, you guys are expecting it to expand in 2023 in light of the price increases and the other measures that you spoke to. Is that correct? Yes, that would be correct. Okay, maybe one last one and I'll pass the line. In terms of capital allocation and pace of spends in M&A in 2023, how should we be thinking about that? then in light of, you know, like still like great performance for 2022 and where the stock price is, are you guys like considering like buyback of stocks or anything like that?

Our stock's a great investment right now, given the price. And in my opinion, anyhow, look, we're fortunate. We have the, and I'll let Harjit talk to the CapEx side of it, but on the M&A side, The smaller deals we can do at a cash flow and the smaller deals we do at lower valuations. Larger deals, we're looking at the valuation and going, what should it be? Buying independents and or franchisees closer to home in markets where there's more efficiencies will help in that margin expansion as well because then you can lever existing locations Those tuck-ins in existing markets or buying franchisees along the East Coast, that helps with all of that margin expansion, which then allows us to do deals at reasonable valuations but get the big bang for your dollar. We have bank facilities. We have cash flow to do small deals. We have the banking facilities. That's where we're focusing right now. Will we buy back our stock? I don't see why we wouldn't. That's something that makes a lot of sense, just given where the stock is at. So we're looking at all the alternatives right now, Amr, because we perform. You perform, have a good year. Could it be better? Yes. Are there things we're doing to make it better? Absolutely. But it's a good year, and we're not getting recognized for that. You know, can't complain about that. You just got to go try to figure something else out.

Fantastic. Thanks for the cover. I'll pass the mic. Thanks, Summer.

Our next question comes from David Ocampo of Cormark Securities. Please go ahead.

Thanks. Good morning. Jeff, just wanted to circle back on the M&A question there. You guys called out a target of $5 to $6 million of revenue being acquired this year. How should we be thinking about that in terms of the split between existing franchise locations and independents, especially since you noted on the call that they may be struggling in this inflationary environment?

Yeah, I think there's going to be some, even like last year, we had more independents. I mean, Philly was a big deal, but it was one deal, right? So I think we're going to continue to see some of these smaller independents put up the white flag like they did last year. I think the ones that sold last year are probably a little more proactive than But we'll have more independents this year. There's always franchisees that are at a position to look to retire. And of course, if they are, then we're there to buy them. But I think you're going to continue to see some good independent acquisitions. And then we're going to see some franchise acquisitions as well. So I think this year will look a lot like last year, and if it does, then that's good because we will have accomplished our targets and we'll continue to be executing our strategic plan. And I think the key for me is we're really trying to keep the acquisitions focused on where we are to try to get that leverage that we're looking for.

Great. And then for your franchise acquisitions, how many –

franchises for 23 are up for renewal because i know that's uh usually the catalyst for any acquisition yeah nope there's uh there's there's a number there's about three of them that are up for renewal this year and uh you know we we're always talking to them and um you know walking them through their alternatives and uh one alternative is to accept an loi that i give to you right and uh so um and uh You know, I think those that took the LOI last year were, you know, I think the timing was good. I guess we know, you know, of course, the markets deteriorated over the last part of the year. And, you know, look, reality is the valuations are off. And so there's a few folks that are getting a little bit of heartburn around that. But that's okay. They'll come around. People still need to exit this business. And if they have a good business with the right things going on it, we'll still pay. We're just not going to pay maybe what we used to.

Got it. Then you guys have these 23 targets out there. Just curious what you guys are baking in in terms of paper pricing. Probably help us triangulate into a better margin profile for your shredding business.

Thank you for that. Harjeet, generally, do you want to just jump in on that one?

Sure. In terms of paper pricing, so you know, we have had very high paper prices, you know, during the past year. Paper prices, you know, the way we're sort of forecasting them is that they're going to remain strong, but, you know, there is going to be a bit of a softening in the pricing. So we do anticipate, you know, the price is leveling off, but still sitting at sort of historically high levels. And so we're very mindful of that, you know, when we're also sort of looking at our business, our core shredding business as well, Um, and, um, so all in all, I would say is like, you know, like any commodity, you don't know sort of which direction it's going, but, but that's sort of our, our forecast that we have right now. Um, as we sort of, as we already, as of right now, sort of in April, 2023.

Do you have a hard number that we can throw in our model?

Uh, yeah, I could definitely share something after the call for sure, in terms of, um, some of the, some of the things, but I would definitely put in some softening, maybe you know, as of right now, I would, I would say probably, you know, you can go with a number, you know, 10%, 10, 50% softening or something, something along those lines is sort of our, sort of our, uh, forecast at this point.

Okay. That's perfect. I'll hand the call. Thanks.

Our next question comes from Nick Corcoran of Acumen Capital. Please go ahead.

Good morning, Jeff and Harjeet. Uh, most of my questions have been answered. I guess just one follow-up is, uh, I think you mentioned the prepared remarks of the expense costs in 2022 or 1.3 million. Can you give a number for the fourth quarter?

Sure. So I think in terms of the, so in terms of the fourth quarter, if we sort of take a look at it from the full year, you look at some of the sort of the cost increases and things like that, they started hitting over the summer and fall and sort of continued into the fourth quarter. So if I was to sort of put a number into it, I would probably say that it's probably somewhere between one quarter to one third of that number, probably closer to one third that sort of sits as sort of a higher cost increase for Q4.

That's helpful. And can you maybe help us understand the buckets that the incremental costs were in between higher fuel prices, higher labor, and the repair maintenance?

Sure. So in terms of the structure, about half of it is in that fuel bucket in terms of the fuel cost increases. And then with the remaining two buckets, I would allocate the remaining 50%. It's about equal, roughly.

Great. That's all for me. Thanks, guys. Thanks, Nick.

Our next question comes from Mike Walter of Singular Research. Please go ahead.

Good morning, everybody. A couple questions, first on the ProScan and the fourth quarter challenges as far as timing. Do you envision any kind of shortfall there coming back sometime in 2023?

I think, you know, 23 is going to be – the business typically follows a cycle of first quarter, fourth quarter are typically softer, and it builds in the second quarter, third quarter, really in the scanning business due to government budget and spending and all of that. Last year we also had one large customer that was sort of a one-time help into the first quarter of 2022, so that helped a bit. I think the good news is we're getting more repeat customers We're getting more smaller recurring clients. We're also backlogging business. So just, you know, trying to, you know, anticipate the client's needs, grab the boxes and then, you know, hit, you know, get the scanning done. Sometimes on their schedule, sometimes they don't need it done right away, but the solution is I got boxes, I got to get rid of them, right? So we grabbed the boxes, we got them, And then, and then we get to, uh, bill for that, of course. And then we get to, uh, scan that, um, and, and help, uh, build the revenue into the fourth quarter. So that's really what we're working on right now. The second and third quarter are looking pretty good, uh, in that business, which it typically does. And, um, so, so we're still pretty, pretty high on, on, on that business and seeing some good growth out of it.

Okay, great. It's, uh, that's quite helpful. Um, second thing you mentioned on the, um, the Philadelphia acquisition, it really helped you, uh, round out the Northeast. Um, are there any kind of target geographies, uh, as far as potential M and a activity that will round out any additional geographies for you?

Yeah. Uh, we're always looking on the East coast. We're pretty strong on the East coast, top to bottom. Um, there's a couple of franchisees in there, actually three along the East coast that are left to buy. Um, There are many, many independents on the East Coast. So we're always honing in on that market. And then, of course, a pretty strong Midwest. You sort of go Milwaukee, Chicago, Kansas. Those areas are pretty strong. And there's some adjacent markets that are not far, like Ohio, Tennessee, places like that, that have a number of large cities that we can also go after. And again, you know, focusing on the East Coast at the moment, just focusing from a time perspective, a time zone perspective, a support perspective, um, it's going to be less expensive. Uh, and then as, as franchise and our younger franchisees are more on the West coast anyhow, so as they then, you know, come to renewal and, um, then, then that's when we may look to acquire them. Uh, so, um, yeah, right now it's, uh, certainly go, go after the markets that we're in.

Got it. Okay. And last question for me, you mentioned earlier about potential capital allocation back to shareholders. I guess the question is, if in fact that's something to consider down the road, any thoughts, repurchases versus dividends at this juncture?

Yeah, that's what we have to consider, right? I mean, you know, we are a growth company. So that's the chat, like, here's a good thing. We got good cash flow coming out of the business. So that's positive. And And we're always working on improving our efficiencies to drive more cash flow out of the shredding business. We have a couple of growth businesses that don't require a lot of capital, which is ProScan and Securicycle. So then what does require our capital? It's acquisitions, right? So then it's a matter of where do we want to deploy that capital, where do we want to allocate the capital? So acquisitions, yes. Share buybacks, yes. a good idea. Dividends are also a good idea, and I think we just have to decide what is the best place or what is the best avenue to deploy the capital. As Errol mentioned earlier, our stock is quite inexpensive at the moment, so that's viable. Shareholders have been with us a long time. I'm sure they'd appreciate dividends. Obviously, both take cash out of the ability to do M&A. You know, we're looking at our pipeline and evaluating, you know, the additional free cash flow that we have to determine, you know, the right strategy there. But we just can't sit here and do nothing, right? So, look, a bunch of acquisitions pop, right? If they don't, we have a couple other places we can spend our money.

Okay, great. Thanks for that, Jeff. That's all for me. Thanks.

Take care.

Once again, if you have a question, please press star, then 1. Our next question comes from Devin Schilling of PI Financial. Please go ahead.

Hey, guys. Thanks for taking my question here. Jeff, can you just please remind me what percent of your corporate costs are related to diesel prices?

Yeah, they are. You know what? Traditionally, as a percentage of service sales, pre-fuel price increases, they were like about 5%. And then they jacked up to like about 8%. Harjeet, correct me if I'm wrong, but I mean, they went up like 3% last year. So quite the uptick as a percentage.

So 5% to 8% of your total corporate costs.

Yeah.

Okay, okay. And then obviously paper- Sorry, sorry, sorry. So sorry, Devin, let me just clarify.

Okay. 5% to 8% of our service revenue. So that's sort of the percentage of our service revenue. If you look at as a mix of the costs, you look at the pie chart of costs, they're our second largest cost after driver labor. So I can get you that number later. I don't have it off the top of my head, but it is our second largest cost after driver labor.

Sure. Just to add in there. So I think as Jeff was noting, like it has gone up about 200, 300 basis points.

kind of looking at about seven to eight percent of our sort of our shred revenue is sort of right now uh being eaten up by fuel and oil costs okay yeah no that's helpful thanks guys and then also um obviously paper prices are still looking you know quite quite healthy here relative to the long-term average um diesel diesel prices are down year to date Just wondering if you guys could provide some color on your Q1 EBITDA margins. Are we looking in that low 30% range again, or do you guys see additional room for upside?

I would say right now, Q1 is always a stronger quarter. We've now baked in those price increases that are there, so they're kicking in. All those scheduled clients we want at the end of the year are kicking in. So I think we're going to see a good Q1. I would say it's going to be better than last year. There's, of course, some cost pressure there, but I would say, you know, if we look at Q3 and Q4 where we really, you know, took it hard, I think Q1 is going to prove to be a much better quarter when you look at versus those last two quarters.

Okay, yeah, no, that's great. That's everything for me. Thanks, guys.

Thank you. Sounds good.

This concludes the question and answer session. I would like to turn the conference back over to Jeffrey Hashem for any closing remarks.

Great. Yes, thank you, everyone, for the questions. They're always helpful for us as we see things from a different perspective and certainly appreciate those questions. As you can see, 2022, It's a good year. We wouldn't call it a great year. We'd call it a good year. We'd call it a year that we can build from. We are building from it, and we're deploying a lot of things that are going to improve the business. That's what you do when you look at the cash flow that we're producing. Let's improve the business. Let's improve how we do things, and that's what we're going to be doing. I want to thank everyone again for joining us this morning. And, of course, I'm sure we'll be talking to a number of you over the next week or so. So have a great day, and we'll talk to you soon.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.