Thank you for standing by. This is the conference operator. Welcome to the RediShred Capital Corp Q1 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 1 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 Hasham, CEO. Please go ahead. Thank you, I 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 want to welcome everyone to our Q1 2023 investor call. I'm joined by Harjit Brar, who's our CFO, and we'll be reviewing the results. Of course, as always, we'll have the Q&A session at the end. Also note, our financials and MD&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. 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 Q1 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, a lot from our same corporate locations performed well. Of course, we had two acquisitions on the books, including that were non-same, including our ProShred Philadelphia franchise in November of 2022. Then last year, we also, at this time, conducted the SDD acquisition as well. On pipeline, we didn't do any deals in the Q1 of 2023. I'm sure my team is all going, "Uh-oh, I mean, they're going to be at the last half of the year. We're going to have more deals hopefully." The pipeline is good and remains strong. We've got a good mix of small, medium, and large-size acquisitions. While we didn't conclude any deals in the Q1, we were quite busy, and we'll continue to work on our three-pronged approach to growth. Of course, two of those prongs are organic, same location, and of course, through acquisition. We'll continue to work that through and, you know, we have the balance sheet. I won't steal Harjit's thunder. We have the balance sheet to continue to execute on our game plan there. As we look at organic and that sort of core shredding, you know, revenue results, 25%. Again, we were happy with seeing that growth on the shred side. Of course, the UA side was with solid growth as well. On our PROSCAN business, we were down versus last year, this is more dependent on large contracts. These large contracts can initiate at varying times. I will make a note that our pipeline is good, we anticipate a rebound in that business. More of a chunky business, and 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. Of course, that's 2 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 2017, 2018, really 2018, 2019, 2020 and 2021, and even 2022. That 4-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, so far, knock on wood, we're good to our plans. On the EBITDA side, corporate location margins, 37%. That's a strong number, especially when you look at sequentially, when you look at the latter half of 2022. We know that the latter half of 2022 is a challenge on a number of fronts. Probably the biggest front was truck supply and the impact that had to repair and maintenance, efficiency, the impact to labor and driving those labor costs. You know, those were, those were all, you know, negative to that. Look, we still face some of those headwinds. I mean, fuel costs are still high. You know, when we look at historical levels. Again, t he 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 2023 and even into Q4 a little bit last year. Don't see it as tough, but it is certainly not like it was in 2019, 2020 and even into 2021, where we could get trucks readily available. Also the parts for those trucks that we're 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. You look at those types of things. Then, you know, we did two acquisitions last year. The FDB one, we're finalizing a number of route optimization activities right now, which is great. Then, of course, the Philadelphia location is a location that bails. 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. 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. We're looking at those price increases. Route optimization, we continue to look at routes. All of our corporate locations now have, except one, have the new workflow software. 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. 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? Depth leads to stronger margins. That's what we're working on. With that all being said, I'm going to turn it over to our CFO, who's watching our margins like a hawk, and his team and others are doing the same. Harjit, I'll turn that over to you. Thank you, Jeff, and thank you again to everyone who is joining us on this call. In terms of the results, revenue, again, Jeff kind of touched upon it, very strong, finished at $17 million for Q1, compared to $12.5 million in Q12022. That's a 36% increase. From a bottom line EBITDA perspective, we were at $4.7 million for Q12023, and that compared to $4.1 million in Q12022. If you kind of put that on a per-share EBITDA, on a per-share basis, EBITDA per share was $0.26 for the quarter, compared to $0.22 in Q12022. In terms of the results and how they translated from a cash flow perspective, free, our free cash flow for the quarter was Can$ 2.4 million. That compares to Can$ 1.6 million in Q1 2022. On a per share basis, free cash flow was Can$ 0.13, compared to Can$ 0.09 in the comparative quarter of Q1 2022. T he free cash flow was really driven by our EBITDA growth and some favorable changes in non-cash operating working capital. T hat's the cash flow. Then, f rom a liquidity perspective, I know Jeff mentioned the pipeline is strong, and right now, we do have cash that we're sitting on of approximately Can$ 6.3 million as at March 31st. We also have some capacity available under our existing banking facilities as well. W e're also generating positive cash flow from operations. F rom a balance sheet perspective, we're fairly well positioned. O ne of the other things that, Jeff kind of alluded to it we're continuously looking to sort of, mprove our margins, drive efficiencies. One of the projects on the go that we do have is sort of our routing project, automating the, automating some of the workflows around that, to create density in the routes. T hat should help drive up margins. This is one the several other projects that we're looking at to try to continuously, see how can we improve operations, streamline things, and just make things simpler and less cumbersome. On that note, I'm just going to, turn it over to Jeff for some closing comments. Sure. I think, Jeff. I'll walk you now. Yeah, there you go. Yeah. Some people might like it better that way, so it's okay. Look, thanks, Harjit, appreciate that. I'll elaborate a little bit more. First of all, 23, good start. We know we have room to do better, and that's always a good thing. I know the team, many of them on this phone call, will continue to put their head down and work on these things. W e've done a lot of acquisitions over the years. We've integrated a number of them. O ne of the nice things about having that is we have lots of clients and lots of prospects in our pipeline. One of the things we just did complete phase one of is Salesforce, added Salesforce CRM. Why did we do that? So we can more, even more proactively and aggressively market to our client database. As we think about the value of our client lists on our balance sheet, they're big. For top priority for us is marketing to our, the clients that we bought, and letting them know about all the services that we have, not just shredding. Obviously, shredding being a big component of that, but there's another opportunity that we have with such a strong database of clients. The CRM and sales automation is one part. We've got the workflow on the other part. Then as we start to link these in and tie these in, that's where you get scale, that's where you get cost improvement and operating leverage improvement. Then we wanna be able to input things into our systems once, and let the system do the rest from cradle, which is order origination, to grave, which is cash collection and everything in between. By having Salesforce, by having our new workflow software, tying that out into our client portals and collections automation platform, all of that's going to tie together. This technology piece is going to be important to us, and we've got a number of smart people on our team working on it, and I appreciate everything they're doing to move those things forward, we can hit on those priority items. All these things together will allow us to be, have a standard playbook, allow us to scale, allow us to obtain operating leverage, and allow us to deliver the strong return on that invested capital and a strong return on equity that we all are looking for. We're laser focused on continuing to improve our metrics. We're going to put our head down, as we always do, after this phone call, and work on the business and work on those top priorities. I'm going to pause there. I'm sure that there might be a few questions out there. Ariel, I'll turn it back to you for a moment. Thank you. We will now begin the question and answer session. To join the question queue, please press star then 1 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 2. We will pause for a moment as callers join the queue. Our first question comes from David Ocampo of Cormark Securities. Please go ahead. Thanks. Good morning, everyone. Good morning, David. Good morning. Not too bad. Jeff, I guess quick one for you before I go on to a bigger picture question. When do you guys typically put forward the price increases? Do you expect, at least for this year, for that to flow directly down to the bottom line? Since it does seem like driver inflation is, has taken a backseat here. Certainly hoping for that. W e're just prepping the databases now. We typically do these price increases in the summer. We're going to try to do them sooner if we can. Again, with the new software, there's some user functionality there. For us, yeah, we're the thesis for us is certainly more of that's going to drop to the bottom line, giving a little bit of more stability in our cost structure. Got it. Got it. That makes a lot of sense. If I take a look at the profitability for your franchise stores, it's almost been in decline, I guess more or less in tandem with the drop in your location count. Just curious if franchisees are still part of your go-forward plan, and if not, when do you expect to roll all 15 of those stores into your platform? Yeah, that is a big, big question and a good one. F rom a franchising perspective, and I guess, y ou're sort of looking at our segmented note, certainly it's becoming a smaller component of our business, logically. T he franchisees, I just want to speak to this because I think it is important to make a note that the franchisees get the benefit of everything we do in our corporate locations, right? Salesforce, that once that's all, phase one is done, they'll have access to it, they'll be trained on it, they can buy into it, which is great. The workflow software, we're rolling out franchisees even now as we speak. Our safety everything we do, the franchisees get to leverage, and that's a great thing, right? That's a great thing for them because that should enhance their profitability, number one, and number two, it's a great thing for them at the exit because we're buying a platform that we already operate the same. Number one, I think that's an important comment, that our franchisee support has been very good. We're very pleased with it. It's very bespoke, but, you know, I think the proof is that the financial leads continue to grow at very good rates, so we're very, that, so that's excellent. They get to leverage what we do. Bigger picture, look, our, you know, I guess it's capital allocators, right? We have to allocate two things. We have to allocate time, and we have to allocate money. Best use of our, both our time and money, is to acquire. Let me just talk about that in a little bit more depth. Number one, franchising, when you set up a new franchisee in a new market, you know, they're greenfielding, right? That greenfielding takes time. So, you know, we put in a lot of effort training them, getting them on the systems and all of that, and we have zero revenue, right? 6.5% of nothing is still nothing, right? You know, yes, they get there after 10 years, but that's 10 years or five years, or whatever the number is, takes a long time. You know, when I look at then of our acquisition strategy, you know, our acquisition strategy is really, number one, continue to buy our franchisees, right? Why? They're hubs. We buy something that can, you know, we can make money at it right out of the gate, number one. Number two is, you know, do the tuck-in acquisitions. Why? Because that helps with the redundancy. We can knock out more costs. The return on investment capital is very strong, so good use of our capital. Number three, buying a larger franchisee-like acquisitions in markets that we're not in. That's absolutely part of the footprint growth that we can get. If I'm going to prioritize the three, franchisees and tuck-ins in markets that we're in, those are really the top priorities, because that's the ultimate in return on investment capital. That's you look at a risk profile, you look at all that's the, those, that's. And great use of our people's time, too, right? Because, you know, we're not having to bring on something and re-convert it in totality. That doesn't mean, though, and I wanna come back that there aren't great opportunities in Ohio or Kentucky or Alabama or Texas or wherever we're not. That doesn't mean there aren't large acquisition targets that we can go after. Similar to, you know, I go back to Safe Shredding in New Jersey, similar to that, we bought it. We weren't there, we bought it, and off we went with it, and it was a great acquisition. There are targets like that. I wanted to give you a full answer on that, just because, it is important that everyone understands how we're allocating time, capital, and money capital. Yeah, that was a very thorough discussion there, Jeff. Just a last one, just out of curiosity, I took a look at paper pricing, at least for Maine. It did check back a little bit. Just curious what's driving that, and if you expect prices to continue to fall towards that longer term average? Yeah, look, you know, there is more paper in supply out there. You're probably not alone, but more and more people are back in the offices, generating more of this type of paper. You've got a bit more supply. Obviously, more supply does put some pressure on prices the wrong way. We knew this was coming. We had a feeling this was coming. That's why we planned and budgeted for all of that. Again, to my other comment earlier, you know, we're not seeing the volatility, though. We're seeing a much more slow migration, probably that 10-year average. That 10-year average for us might be a bit higher going forward. The reason why is because we're bailing in five of our locations. You know, when you, when you sort of look at that, you know, that means we're going to have a higher paper price. We also have a higher cost related to that incremental revenue because there's, you know, warehouse and the people associated with that. We probably will see a slightly higher 10-year average for us. I suspect that's going to happen just because there is more volume going through. People are back at work. You know, we, China still isn't buying a lot, that, you know, you don't have that valve back in 2018, when paper prices took off like a rocket. You know, China was buying a lot of it. That's gone. We've adjusted, right? That's also good that we've adjusted to the missing demand piece. Okay, that's perfect. I'll hop back in the queue. Thanks, everyone. Thank you. Take care, David. Arielle, I see Devin in the mix. Hi, Keith, are you there? Yeah, I'm here. Okay, I think we lost Arielle. I'll just shoot her an email. Yeah. I think Devin's waiting to ask a question. Sorry, everyone, just give our operator a few moments. The next question comes from Devin Schilling from PI Financial. Please go ahead. There we go. Good morning, guys. Good morning, Devin. Obviously very strong quarter here. Just looking at your same location, shredding revenue growth during the quarter. Was there any large one-time purge shredding events, or is this really just a mix of new client wins and the recently implemented price increases? Harjit, did you want to answer that one? Sure. There was, I think in terms of, I guess the question comes down to run rate. Yeah. This is, you know, this is there's no special sort of one-time jobs or anything like that. It's sort of more reflective of sort of the price increases and sort of new customer wins. More organic that's expected to be sort of more reoccurring in nature. Okay. Just maybe could you remind us what was the size of the recently implemented price increases? Sure. There was no price increases that we've implemented in 2023. Some of the effects you're seeing are actually some of the price increases that came into effect in 2022. It really varies by, you know, there is some sort of geographical and sort of, you know, considerations that we do. You know, but all in all, we're kind of looking at about a, you know, 4% to 5% increase on average. If you're looking at between the 2 quarters. Yeah. Yeah. Yeah. No, that's helpful. Thanks. You guys mentioned further route optimization initiatives coming down the pipe here. How much more upside on margins do you think exist from these initiatives? Sure. Go ahead, Harjit. Sure. In terms of the route densification, so there are opportunities in a few of our markets, a few of our larger markets. There's particular opportunity, especially in the newer acquisitions that we do. In the newer acquisitions, just, you know, integrating those rights, routes and sort of assimilating them onto some of our existing routes. So that sometimes that does take time. We're probably going to see more opportunity on the sort of the new acquisitions. There are a few markets right now that we're looking at very closely, which, you know, would help drive margins. You know, it really depends, but, you know, it would be meaningful. Definitely, you know, I could see it maybe being 1% or 2% impact on margins potentially. Maybe even more, depending on how things go. Yeah, Geoff, I'm not sure you want to add anything to that, but that's sort of my- Yeah. You- No, it's. Yeah, it's exactly it. I mean, you know, you know, we last, you know, you go back to end of 2021 with American, and then a few reasonable size tuck-ins. You know, probably the learning moment for us is the data side of it. Getting the data side of that integrated sooner and faster is way more important, and we've invested heavily in our technology team, and they're heavily involved in these integrations now. Philadelphia went much smoother. Yes, it was a franchisee, so it should. Even, even their data, when migrated much smoother. Then, we actually did tuck in some routes into there, not too long ago. You know, that's critical for us. That's the good news is, we've learned from a few bloody noses on how to do this better. I think to Harjit's point, that sort of continuous improvement, looking at all these different locations and looking at the routes and really honing in on, where can we do a little better, and using the technology that we've deployed to drive that's going to be critical. That's really the next stage for us, is we've got the technology, we've got the data. Now let's use it and be, scalpel out any fat or costs that we don't need, of course, and then use the sales and marketing weapon and the databases that we've bought and drive more accounts into the same routes. Oh, that's where you get the magic. I think there's more to come on both the integration side and on just the, sort of thinking through our business in a better way. I hope that helps. Devin, do you have a- Yeah, yeah. Follow-up question? Yeah. Yeah, no, that's great. I guess, yeah, last one for me, just a bit of a housekeeping item. I see your electronic waste segment is now listed as electronic waste and product shredding services. Maybe you guys can just touch base on what's changed there. sure- Not much. Go ahead, Harjit. Yeah, not much. I think it was, there's obviously a bit of a nomenclature change there. I think that was, more cosmetic. If you take a look at sort of our SEC business, it's essentially unchanged. When you're kind of looking at the results, I would kind of look at them from sort of that lens. Okay. No, that's everything for me. Thanks. Thanks so much. Yep. Once again, if you have a question, please press star then one. This concludes the question and answer session. I would like to turn the conference back over to Jeffrey Hasham for any closing remarks. Great. Thank you, everyone else. I wanna thank everyone again for joining the call. I know everyone's busy on a Monday morning. Thank you for doing that, number one. Number two, so many of you on this phone call been longtime supporters of RediShred. Of course, our shareholders, we appreciate all the support over the many, many years for many of you. As always, the team will go put their head down and keep working on the business. I also see a lot of members of the RediShred team on this call. I wanna thank them for everything they do. Without them, Harjit and I don't get to come on this phone call and give you the message of what we've been doing well, where we need to improve, of course, and overall, a good news message. That didn't happen by accident. That happened because a lot of people did a lot of good work, I wanna thank them. Long and short, thank you again. We have a bit of an investor relations night tonight, for those of you that are going to be there, I'll see you there tonight. For those of you who are not, or would like to come, not too late, just email Pamela Gray, pamela.gray@proshred.com, we'll get you on that list tonight. A nice way to thank you all again. Everyone, do well. Have a great Monday. Thanks, everyone. Bye. This concludes today's conference call. You may disconnect your line. Thanks for participating and have a pleasant day.