Redishred Capital Corp.

Thank you for standing by. This is the conference operator. Welcome to the ReadyShred Capital Corp fourth 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 will press star then one on your telephone keypad. If you need assistance during the conference calls, You may signal an operator by pressing star, then zero. I would now like to turn the conference over to Jeffrey Hesham, Chief Executive Officer. Please go ahead.

Thank you very much. Good morning, everyone. Welcome to Ray Shred's fourth quarter and year-end 2023 call. I want to thank everyone for attending today, this morning. And, of course, as usual, I'm joined by Harjeet Brar, our Chief Financial Officer. Together, we'll be reviewing the results for the fourth quarter and for the year. And, of course, as always, we'll have some time at the end for a Q&A. One thing just to remember, our financial statements, MD&A, and press release are all also located on CDAR. So for further details, please visit CDAR for those reports. I want to first start Q4 2023 was a good quarter for us. We all know that the fourth quarter seasonally is a top quarter with U.S. Thanksgiving, Christmas, holidays, and the like. However, both from a top line perspective and also from a bottom line perspective, it was a good quarter. The operations made very good strides, and everyone put their head down to do so. If you look at our organic same-store shredding revenue, it grew 10% versus the prior year same quarter. And consolidated EBITDA, excluding the paper, grew $1.3 million this where last year our EBITDA was $200, so $1.5 million in EBITDA excluding paper, and the prior year was $200,000. So a very significant uptick in the performance of the business when excluding paper. And of course, we all know, unfortunately, in 2023, paper prices came down much more than anyone would have anticipated. We are fairly close to our uh long-term average um long-term averages in around 140 to 150 dollars per ton uh and and harjeet will go through a little bit of this in more detail but you know we're sort of in that area so obviously um when we sort of look at the fourth quarter uh that significant drop in uh recycling revenue um driven by the price of paper was more than offset by the operational improvements that we saw. And so on a consolidated basis, we're still able to grow our consolidated EBITDA by 2% in the fourth quarter of 24 versus the fourth quarter of 2023. Again, despite that paper dropping in a significant way. So we were fairly pleased about that operational result and what the entire team accomplished together in the fourth quarter in particular. In 2023 and, of course, in the fourth quarter, we made serious investments in our business, and those investments are going to tee us up for the years ahead, for the many years ahead. It did impact our EBITDA, and, of course, most of those costs would have been seen in the G&A line. These investments, to name a few, would include our transferring to Microsoft Azure and implementing the first and most important components of Salesforce and the marketing automation platform that's embedded within Salesforce. We started in a very serious way working towards having a SOC 2 Type 1 report, which will then be followed up with a Type 2, so that's certification. That certification is very important. Not only will it help us secure many of our governmental shredding accounts, but it will also allow us to be a very serious player in the scanning business, as a lot of larger companies are looking for that SOC 2 certification, and most of our competitors in the digital imaging space have that certification. So that's going to put us in a positive way. So we made some very good investments. These investments will have positive effects on sales, route economics, long-term G&A costs as we scale this business. And this is what we're trying to do is make sure that when we scale this business, we can continue to deliver operating leverage in the business. And we needed to take these steps this year and into early 24 to ensure that we drive a business that can scale as we grow and reduce manual input, make it easy for our customers both inside and outside of the organization. That's what we're looking to do with these investments, and they will drive positive economic results. On the M&A side, if we look at our most recent two deals or three deals, you know, first, Prosha Baltimore, longstanding franchisee there, great, great franchisee. We were able to buy his business as he was looking to retire, him and his wife, and we thanked them for that. That allowed us to finish the job in the D.C.-Virginia-Baltimore corridor. So far to date, it's going to plan, so we're pleased about that. Simultaneously, we did an acquisition called Security Shredding in the New Jersey market. It was a tuck-in, and again, the team in New Jersey and the technology team and the DD team, due diligence team, did a great job integrating that, and that was a nice win for us. If we look at the 24, we bought MDK on January 1st. In the Michigan market, they had Shred and Scan. We had no presence in Michigan. We're now at a point where we can start to be more aggressive on marketing and sales. as we look to penetrate that whole Detroit, Lansing, Flint market, Toledo as well. We're well positioned to do that. We're going to drive that business forward for the latter part of this year. We're pleased about that. Overall, a lot was accomplished. A lot of people worked hard and the hard work led to some positive results. Speaking of positive results, I'll let Harjeet provide the good color on the quarter and on the year.

Thank you, Jeff, and thank you again for everyone who is joining on this call today. So if we sort of look at our financial results, start from the top line, you know, revenue, we grew to $16.8 million compared to $15.4 million in the fourth quarter of 2022. So that's up 9%. You look at the other lines of business, you know, uh, specifically for example, like scanning, you know, scanning sales, you know, those also did, uh, you know, go up by half a million. That is again, a smaller line of business, but, um, has done well, uh, e-waste was comparable. And, um, and if you look at, you know, the shredding revenue side, uh, shredding revenue, again, uh, total growth rate, 20% or 2.2 million, um, you know, for the quarter, if you compare it back to the prior quarter and, um, As Jeff sort of mentioned earlier, this is even in the face of softer paper prices. So very good top line growth. You look at the bottom line, that's also translated well. EBITDA, $3.1 million. That sort of translates to 17 cents per share, fully diluted basis. Cash flow side, free cash flow, $2 million for the quarter, 11 cents per share. Again, that's driven by our positive you know, strong cash flows from operations, which was both 3 million in Q4, and that's offset by 1 million in CapEx. As many of you already know, our CapEx is primarily driven by our shredding trucks. And I think with our spend, you know, we will add, you know, additional service capacity. And, you know, this will allow us to continue to support the growth of the business. If you sort of look at the full year results now, those were also positive. Free cash flow, $7 million. That compares to $6.3 million in 2022. Revenue at $65.9 million, comparing that to $57.2 in 2022. And then EBITDA slightly up at $15.4 million compared to $15.3 million in 2022. And again, that was impacted by paper, but we were able to have you know, more than offset the operational improvements, um, you know, to the business, you know, uh, with that sort of downward impact on the paper prices. So again, overall, um, you know, pleased with the results for Q4, Q4, 2023 and the full year 2023. Um, and, um, you know, I think we're well positioned, uh, to, um, sort of execute on our plan for 2024. Uh, we are definitely very excited about it and, um, With that, I will turn it over to Jeff for some closing comments.