Redishred Capital Corp.

Thank you for standing by. This is the conference operator. Welcome to the Ready Shred Capital Corp second 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 very much. Good morning, everyone. Welcome to our second quarter of 2023 investor call. First, I want to thank everyone for attending on this Friday morning. For those of you in Toronto, another gray, gloomy day. Hopefully that'll change before the weekend hits. i'm joined with i'm joined by harjeet barrar who's our cfo and together we'll be reviewing the q2 2023 results and as always we'll conclude with our q a session i do want to remind everyone that all of our information financials mdna and press release were disseminated yesterday and of course they're available on cedar so they can get that information as needed when needed. I want to start off with saying overall, the second quarter results, we were pleased with them. I think when we sort of look at the fundamentals of the business, you know, let's start with the top line. We were able to grow our top line revenue by 15% compared to the second quarter of last year. I think everyone and anyone who's spoken with us over the last little while and has been following us knows that paper prices have started to come down. We'll talk about that in a moment. Our core shredding revenue, so we look at the service side of the business, that was up 28%. So obviously that 15% is being tempered by the paper markets, which have started to soften and grow. So when we look at that softening, our consolidated EBITDA remained flat with last year at around $4.5 million. So we compare the two quarters. If we exclude EBITDA less net recycling revenue, and that's a KPI. We've always had a KPI called operating income less net recycling revenue. We've added EBITDA just to make it a little bit easier for everyone. and we take out that net recycling revenue. The net recycling revenues take out the paper revenue and of course the related bailing costs. We actually grew EBITDA by 28% so that EBITDA growth is very much in line with our shredding revenue growth and that's what we're pleased about. The core operations were very solid. Look, paper markets we know can go up and go down. In my 18 and a half years, I've seen everything from $50 a ton to things close to $300 a ton. Of course, we have a long-run average in the mid, and for us now, mid to high 100s because we bail so much paper. So what have we been doing in response to this volatility? And we've been doing this not just for this year, but for many years, and we're going to really be continue to be laser focused on this is um drive shredding and service revenue growth that that's really what this comes down to uh and again if you look at our corporate locations same corporate location shredding revenue is up 14 uh compared to last year uh and that obviously uh offset the lower cycling revenue at the same time um we're able to grow our margins when you strip out that that revenue from paper uh on the corporate income uh less net recycling margin grew 100 basis points so again we're we're improving the the margins and how are we doing that uh we're in the routing business uh and so we've continued to improve our routing efficiencies that has absolutely helped margin and of course the the pricing of input costs uh have come down um driver wages have not necessarily come down, but stabilized and fuel prices have come down. And I guess the correlation between fuel and paper has continued, which is a very good thing for us. So between good performance on the routing and getting better efficiency, between stabilization of driver wages And of course, fuel prices coming down. We've been able to mitigate quite a bit of the paper fall. One other thing that I think is very important is starting towards the end of May and now more or less finished as we've been rolling out our annual price increases. So we look to see that impact Q3 and Q4 in a positive way. On the acquisition front, We did not complete any deals in the first half of the year. Having said that, the pipeline is strong. We've got a three-pronged approach to growth and, of course, organic driving leverage and, of course, growth through our acquisition program. So all of those three things are there, and the acquisition program is certainly something There the pipeline is strong and I'm sure we'll have some questions on that a little later. What I'd like to be able to do is have you get a little more of the details. So let me turn this over to Harjeet and he can walk you through those.

Thank you, Jeff. And thank you again to everyone who is joining us on this call. In terms of our financial results, our consolidated revenue for Q2 grew to $16.8 million. compared to $14.6 million for the second quarter of 2022, representing an increase of 15%. EBITDA finished at $4.5 million for the quarter, and on a per share basis, that's $0.25 per share, which was unchanged from the second quarter of 2022. If we strip out the effects of paper, EBITDA's net recycling revenue grew to $2.2 million compared to $1.7 million in the second quarter of 2022. From a cash flow perspective, our free cash flow was negative $0.1 million for the quarter. That was driven by $2.7 million in cash generated from operations, which was offset by $2.8 million in CapEx. The CapEx was primarily for shredding truck purchases, and part of it was, again, due to timing. There is some fluctuation quarter to quarter, but the truck purchases, they will help us add service capacity and support the growth of a business. If you look at the free cash flow on a year-to-date basis, that was $2.3 million. Year-to-date revenue, we finished at $33.8 million compared to $27.1 million for the comparative period in 2022, with EBITDA year-to-date of $9.2 million compared to $8.6 million for the same period in 2022. Cash on hand right now, we have $5.4 million as of June 30, 2023. And as Jeff alluded to the strong M&A pipeline, we do have that ability to utilize this cash and our available credit facility or the available space or credit facility to help support some of those M&A. And all in all, we were, again, pleased with our results. We look forward to executing on our plan for the remainder of the year. And on that note, I will turn it to Jeff for some closing comments before we open it up to Q&A.