Redishred Capital Corp.

Thank you for standing by. This is the conference operator. Welcome to the ReadyShred Capital Corp first quarter 2024 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 then zero. I would now like to turn the conference over to Jeffrey Hashim, Chief Executive Officer. Please go ahead.

Thank you very much. Appreciate it. So first of all, welcome everyone this morning to ReadyShred's Q1 2024 investor call. I want to thank everyone for joining us this morning. I'm joined by Harjeet Bharar, our Chief Financial Officer, and together we'll be reviewing the first quarter results of 2024. As usual, we'll have a Q&A session once Harjeet and I make a few remarks. I want to note, of course, that as usual, our Q1 financial statements, MD&A, and press release were disseminated yesterday. They're available on CDAR as usual. So if you're looking for those documents, they are there and have been filed. I want to first note that 2024 started off well operationally. We've continued to grow our service lines of revenue. I want to congratulate the ProShred team, operations team, sales team, marketing team, technology team, ProShred, the shredding revenue was up 12% versus the same quarter of last year, and kudos to everyone involved in bringing that together. And then, of course, the ProScan business, our digital imaging business, was up 47%. That's a big number. And so altogether, on the service side, again, we saw very good growth. Harjeet will dive a little deeper into that growth profile, but to continue to see strong double-digit growth in our service end of the business, that's something we're appreciative and, again, want to thank our teams out there that do this every single day. They work hard and don't often get the credit they're deserved. Paper pricing was closer to the 10-year average in the first quarter. I always get asked about paper prices, and you'll recall a year ago in Q1 2023, we were still fairly close to the highest levels that we'd seen in a long time. And so, of course, our recycling revenue was about $2 million in the first quarter. When you compare that back to the first quarter of 2023, that was $3.3 million. So that's a $1.3 million decline when we look at that, the quarter versus the quarter. So, obviously, the key for us is to continue to be more dependent on the service revenue, less dependent on the paper revenue. And we've been doing that. We've been doing that very well. So, organic growth has been strong, which we just spoke about. Acquisitive growth has been there and will continue to be there. Obviously, adding new customers is critical, especially our subscription service. Scheduled customers are very important. Price increases are important to the mix. Those all will drive our route density, our bottom line, and we're continuing to do that. take those actions and do those things. Uh, so when we look at EBITDA and you back out that recycling revenue, uh, Q1 2024 was 2.3 million versus 1.8 million in Q1 2023. So a half a million dollar improvement, um, which, uh, which we're very happy about. So, um, again, um, just coming back to paper for a moment, um, Again, the strategy here is if paper prices are going to continue to be low, then we've got to increase our prices. We've started that process. That process will be completed by the end of June. So we'll get a little bit of a bump in June of 2024. And of course, in Q3 of 2024, all the price increases will have taken effect and will positively impact our results. The next piece of good news is, of course, one of the things we've endeavored to do is improve our technology platform. Security is critical. It's critical to protecting what we own and have, but it's also critical to gaining new business. And our SOC 2 Type 1 certification, we're in the audit report moment, so we're just finished the last ends of our audit report. Our audit with the firm and, of course, that audit will be completed very, very shortly. And that type, we expect to get that type one very, very shortly. That's going to positively impact the scanning business for sure. And we are excited about that. So stay tuned there because that's been exciting. a year-long journey uh now coming to the first stage of conclusion uh obviously a year from now we'll get the we'll get the type two uh once we go through a full year in the new um sock environment um and then of course mdk we completed that in january so here's the good news we're in michigan uh after absorbing that business uh like any other business uh although a smaller acquisition As of right now, we're in Detroit, and that's a great new market for us. And so to be able to service another new market is great. And, of course, we all know what we like to do once we're in a market. Let's see, are there other one, two, or three truck operators in the market? So overall, I'm happy with the operational performance of the business. And let me turn it over to Harjeet, who can get a little more granular with you.

Thank you, Jeff, and thank you again for everyone who is joining us on this call today. So I guess in terms of the financial results, Jeff sort of gave a bit of a feel for them. If we look at sort of the overall top line results, so we did grow from $17 million in Q4 2022 to $17.2 million. So there's an uptick. That uptick was driven by shredding revenue. So the shredding revenue is up 12% or $1.5 million. That is sort of being partially offset, though, with lower recycling revenue. But again, something that we did anticipate, and we are comparing a quarter in Q1 2023, where paper prices were more elevated than what sort of the normal sort of long-term average is. So if we look at sort of the top line, you know, we're seeing growth there. Bottom line results, EBITDA, we landed at $4 million. Um, that works out to about 22 cents, uh, per share, uh, on a fully diluted, uh, share basis. Um, you know, so again, good margins, especially when you, when you take a look at EBITDA less net recycling, uh, considerable improvement that does show us that we're continuing to sort of improve the bottom line. Um, and then when we combine that with the fact that, Hey, um, you know, we're also looking, we're also, you know, executing on things like price increases, um, you know, focusing on sort of density scaling, uh, that that's really helped contribute to a very good bottom line, uh, and margins. Um, from a cashflow perspective, uh, free cashflow was 0.9 million, um, or about 5 cents per share. Uh, that's driven by 3.1 million in cash that we generated from operations. Uh, but that was offset obviously by CapEx. So we had 2.2 million in CapEx in Q1, 2024. Um, obviously we spend on trucks, we want to add service capacity, grow the business. But if you look at Q1 2024, part of the CapEx spend, it was driven by timing of purchases. So when we kind of look at the coming quarters in 2024, we definitely anticipate spending less on trucks compared to what we spent in Q1 2024. So you're definitely getting a bit of a front loading on the CapEx side, which is impacting the free cash flow for Q1 2024. All in all, when we look at the year, a good start to the year, but obviously we, um, you know, we're excited about the sort of the coming quarters and how we can sort of grow this business. Um, and now I'll turn it over to Jeff for any sort of last remarks or comments.