Redishred Capital Corp.

Thank you for standing by. This is the conference operator. Welcome to the Ready Shred Capital Court first quarter 2023 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 will 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 conference over to Jeffrey Hashim, Chief Executive Officer. Please go ahead.

Thank you, Arielle. Appreciate it. Good morning, everyone. On this Monday, late Monday in May, for those of you in Toronto probably enjoying some great weather finally, I wanted to welcome everyone to our Q1 2023 investor call. I'm joined by Harjeet Bharar, who's our CFO, and we'll be reviewing the results. And of course, as always, we'll have the Q&A sessions at the end. Also note, our financials and B&A press release were issued last week on Thursday, and if you haven't done so, we encourage everyone to take a good read through them. Always interesting stuff in there for sure. Q1 2023. So I would say we were pleased with the results for a number of reasons. First of all, both sales and EBITDA dollars grew double digits. When we look back to the first quarter of last year, consolidated revenue grew 36% and EBITDA 17%. We'll talk a little bit about margins in a moment. The growth was driven a lot from organic, so a lot from our same corporate locations performed well. And of course, we had two acquisitions on the books that were non-same, including our Pro Shred Philadelphia franchise in November of 2022. And then last year, we also, at this time, conducted the SDD acquisition as well. On pipeline, we didn't do any deals in the first quarter of 2023. I'm sure my team is all going, uh-oh, we're going to be at the last half of the year, we're going to have more deals, hopefully, and the pipeline is good and remains strong, and we've got a good mix of small, medium, and large-size acquisitions. So while we didn't conclude any deals in the first quarter, we were quite busy. And we'll continue to work on our three-pronged approach to growth. And, of course, two of those prongs are organic, same location, and, of course, through acquisition. So we'll get to work that through. And, you know, we have the balance sheet. I won't steal Harjeet's thunder. We have the balance sheet to continue to execute on our game plan there. If we look at organic and that sort of core shredding revenue results, You know, 25%. So, again, we were happy with seeing that growth on the Shred side. And, of course, the EUA side was with solid growth as well. On our ProScan business, we were down versus last year. And this is more dependent on large contracts. And these large contracts can initiate at varying times. And I will make a note that our pipeline is good, and we anticipate a rebound in that business, a little more of a chunky business. And so our view is that that's moving along well, and we're going to be seeing better things from that business line. On the recycling sales, again, we had a good quarter there. And, of course, that's two things. That's the price side, the P, and the tonnage, which is the Q. We're seeing a little bit of erosion on the paper prices coming down a little bit. Haven't seen the dramatic ups and downs that we saw for those of you that were with us in 17, 18, really 18, 19, 20 and 21 and even 22. That four year period was very volatile up and down. We're seeing a more gradual reduction in paper prices. And that's good. We planned it. We planned on that. And so far, knock on wood, we're good to our plans. On the EBITDA side, corporate location margins, 37%. So that's a strong number. Especially if you look at sequentially, when you look at the latter half of 2022. Uh, we know that ladder half 2022 is a challenge, uh, on a number of fronts, probably the biggest front was truck supply and the impact that had to repair and maintenance, uh, efficiency, uh, the impact of labor and driving those labor costs. Um, you know, those were, those were all, um, uh, you know, negative to that. And, um, Look, we still face some of those headwinds. I mean, fuel costs are still high when we look at historical levels. And again, I guess the good news right now is if we look sequentially, they have come down. That's good. Wage inflation is still there. Again, when we look sequentially, more moderate. When we look at truck supply and part supply, still some truck supply challenges. In the marketplace, obtaining trucks on schedule has become a little more difficult over the last year and a half, and we continue to see that. We don't see it as acute as we did, again, if we look sequentially in Q2-3 and even into Q4 a little bit last year. We don't see it as acute. as tough but it is certainly not like it was in 1920 and even into 21 where we could get trucks readily available and also the parts for those trucks that were looking to get repaired were easier to obtain. That's still playing a bit of a role here. Having said that, not as acute as the prior quarters, which we're pleased about. So you look at those types of things. And then, you know, we did two acquisitions last year. The SDD one, we're finalizing a number of route optimization activities right now, which is great. And then, of course, the Philadelphia location, is a location that bails. So yes, we're getting a higher paper revenue there. Obviously, there's costs associated with that, and that has a bit of impact on the margins as well. Overall, good, solid, strong quarter, also room to improve, always room to improve, and the team is working on that improvement. So how are we going to improve? Number one, price increases, we do them annually. We're going to be doing them again here in the next couple months. So we're looking at those price increases. Route optimization, we continue to look at routes. All of our corporate locations now have a, except for one, have the new workflow software. So that has more real-time routing data and we'll be able to optimize routes better. And, of course, when you optimize routes, that really means we're densifying those routes, getting depth in marketplaces. That's critical for us. We view that as job number one operationally is depth. And even when we look at geo-targeting from a marketing and sales perspective, That's job number one. How do we get more on our routes, get depth and depth leads to stronger margins. And so that's what we're working on. Uh, with that all being said, uh, I'm going to turn it over to our CFO who's watching our margins like a hawk and, uh, his team and others are doing the same. So RG, uh, I'll turn that over to you.

Thank you, Jeff. And, uh, thank you again to everyone who is joining, uh, us on this call. So in terms of the results, um, Revenue, again, Jeff kind of touched upon it very strong, finished at $17 million for Q1, compared to $12.5 million in Q1 2022. That's a 36% increase. From a bottom line EBITDA perspective, we were at $4.7 million for Q1 2023, and that compared to $4.1 million in Q1 2022. So if you kind of put that on a per share basis, EBITDA per share was 26 cents for the quarter compared to 22 cents in Q1 2022. So in terms of the results and how they translated from a cash flow perspective, our free cash flow for the quarter was 2.4 million. That compares to 1.6 million in Q1 2022. On a per share basis, free cash flow was 13 cents compared to 9 cents in the comparative quarter of Q1 2022. And, you know, again, the free cash flow was really driven by our EBITDA growth and some favorable changes in non-cash operating working capital. And, you know, so that's the cash flow. And then, you know, from a liquidity perspective, I know Jeff mentioned, you know, the pipeline is strong. And right now we are, you know, we do have cash that we're sitting on of approximately $6.3 million as of March 31st. We also have some capacity available under our existing banking facilities as well. And, you know, again, we're also generating positive cash flow from operations. So, you know, from that, from a balance sheet perspective, we're fairly well positioned. And, you know, one of the other things that, you know, Jeff kind of alluded to is, you know, we're continuously looking to sort of, you know, improve our margins, drive efficiencies. And one of the projects on the goal that we do have is sort of our routing system. you know, automating some of the workflows around that, you know, to create density in the routes, you know, that should help drive up margins. And this is one of, you know, several other projects that we're looking at to try to continuously, you know, see how can we improve operations, streamline things, and just make things simpler and less cumbersome. And, you know, so on that note, I'm just going to, you know, turn it over to Jeff for some closing comments.