Thank you for standing by. This is the conference operator. Welcome to the RediShred Capital Corp.'s 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 Hasham, Chief Executive Officer. Please go ahead. Thank you very much. Appreciate it. So first of all, welcome everyone this morning to RediShred's Q1 2024 investor call. I wanna thank everyone for joining us this morning. I'm joined by Harjit Brar, 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 Harjit and I make a few remarks. Wanna note, of course, that as usual, our Q1 financial statements, MD&A, and press release were disseminated yesterday. They're available on SEDAR as usual. If you're looking for those documents, they are there and have been filed. Wanna first note that 2024 started off well operationally. We've continued to grow our service lines of revenue. Wanna 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. Harjit 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 of. And again, wanna thank our teams out there that do this every single day. They work hard and don't often get the credit they deserve. Paper pricing was closer to the 10-year average in the first quarter. 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 CAD 2 million in the first quarter. When you compare that back to the first quarter of 2023, that was CAD 3.3 million. So that's a CAD 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, and 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 those actions and do those things. So when we look at EBITDA, and you back out that recycling revenue, Q1 2024 was CAD 2.3 million versus CAD 1.8 million in Q1 2023. So CAD 500,000 improvement, which we're very happy about. So, again, just coming back to paper for a moment. Again, the strategy here is if paper prices are gonna 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 we expect to get that Type 1 very, very shortly. That's gonna positively impact the scanning business for sure, and we are excited about that. So stay tuned there, because that's been a year-long journey now coming to the first stage of conclusion. Obviously, a year from now, we'll get the, we'll get the Type 2 once we go through a full year in the new SOC environment. And then, of course, MDK, we completed that in January. So here's the good news: we're in Michigan. After absorbing that business, like any other business, 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 Harjit, 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, you know, gave a bit of a, sort of a, a feel for them. If we look at sort of the overall top-line results, so we did grow from CAD 17 million in Q4 2022 to CAD 17.2 million. So there's an uptick. That uptick was driven by shredding revenue. So the shredding revenue is up 12% or CAD 1.5 million. That is sort of being partially offset, though, with the 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 you look at sort of the top line, you know, we're seeing growth there. Bottom line results, EBITDA, we landed at CAD 4 million. That works out to about CAD 0.22 per share on a fully diluted share basis. You know, so again, good margins, especially when you take a look at EBITDA less net recycling, considerable improvement. That does show us that we're continuing to sort of improve the bottom line. And then when we combine that with the fact that, hey, you know, we're also, you know, executing on things like price increases, you know, focusing on sort of density scaling, that's really helped contribute to a very good bottom line, and margins. From a cash flow perspective, free cash flow was CAD 0.9 million, or about CAD 0.05 per share. That's driven by CAD 3.1 million in cash that we generated from operations, but that was offset obviously by CapEx. So we had CAD 2.2 million in CapEx in Q1 2024. You know, obviously, we spend on trucks, we wanna 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 of the 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, you know, we're excited about the, sort of the, the coming quarters and, and how we can sort of grow this business. And now I'll turn it over to Jeff for any sort of last remarks or comments. Yeah, thanks. Thanks, Harjit. Yeah, no, appreciate. I know our audience will appreciate a little bit more color, and of course, we'll get this opened up to Q&A in a moment. But again, wanna thank operations, marketing, sales, finance, technology, compliance, the entire team that does this every single day. It was good execution on the operations side. Everyone's looking to improve and how to get better. And of course, Q2 and Q3 are traditionally good, strong sales and revenue quarters for us. And Q2 is not done yet. And so, we're gonna be pushing forward to make Q2 as successful as we possibly can. So, I think on that note, I'm sure there are questions from the audience, so we'll open it up. Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then one 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 two. 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. Good morning, David. So you guys have talked about the price increases that you guys are implementing in June. But I'm curious, do you expect most of this to fall down to the bottom line or will it be offset by some inflationary pressures on the cost side, whether it's driver wages, et cetera? Harjit, you wanna take that one or you want me to take that one? Sure. So when we take a look at the price increases, obviously, we're looking at sort of at a clip that's a little bit higher than we've typically done them. So we definitely think that, you know, that is an opportunity. So obviously we've already started executing on them. So come May first, we started sort of rolling out the price increases. The residual will carry over into June, and so again, you're gonna start getting that full benefit in Q3. When we sort of look at it from a costing perspective, obviously, I think some of the headwinds with inflation and sort of the inflationary increases that we were seeing sort of in, especially post-COVID, you know, those have dissipated quite a bit. So we kind of look at that sort of run rate going forward from a sort of a cost increase perspective. It's not gonna be as significant, so we do expect a good chunk of that to definitely fall to the bottom line. Gotcha. And then when I look at the volume of paper processed, it was down 2% year-over-year, but your scheduled and unscheduled sales were up pretty nicely in the quarter. Just curious, what are the factors driving that? Or potentially some of the bins that you guys are collecting from customers containing fewer paper in them, or are you guys potentially sitting on processed paper facilities? I can, I can answer that. Look, usually, usually it's driven by just the, the type of purges. Are they lots of small purges? Are they larger purges? So, so the purge will tend to drive your tonnage. A little. The scheduled tonnage tends to be pretty steady. So, so you, you tend to get that. So it's just really driven by those types, what types of purges are there. You know, you also will get sometimes quarters where your existing scheduled clients will call in for a purge, and maybe they do, maybe they don't. But generally, you know, we've seen this in the past, where you'll see a little bit of a reduction in tonnage on a quarter-over-quarter basis, just because of the nature and the type of purges, typically. Again, scheduled, you know, was up and, you know, we're not seeing much variance in the service methodology or what we're servicing or the like. Okay, that makes a lot of sense. And then just one last one for modeling purposes. I mean, you guys are forecasting free cash flow of CAD 9 million, so it's a pretty big yield against the current stock price. And Harjit, I'm just curious what you guys are assuming for total CapEx for the year. I know you said sequentially down off the Q1, but a full number would be helpful for us. Yeah. So when you kind of take a look at it, I think, one thing to sort of look at is you can take a look at sort of our CapEx spend as a percentage of revenue, sort of historically. So it'll probably fall there or a little bit lower than that. It's probably gonna be a little bit lower than that, but that's kind of where we're gonna land. So it is front loaded. You know, obviously, each truck is a significant investment for us, but again, a great revenue generating asset. So, when we kind of look at that, I would kind of use that as sort of a gauge of sort of the ongoing, CapEx. Again, just look at that historical percentage of revenue. It's gonna sort of continue to sort of come down from that. Okay. That's it. That's all the questions I have for you guys. Yeah. Thank you so much. Thanks, David. Our next question comes from David Marsh of Singular Research. Please go ahead. Hey, good morning, guys. Thanks for taking the call. Good morning. Good morning, David. Hey, good, good. So hey, if I could just follow up on that prior question about CapEx. So last year, it looks like you did about CAD 6.2 million, you know, on about CAD 65 million in revenue. So, you know, if we were to extrapolate, I mean, if we were thinking something in the CAD 70 million-CAD 75 million in revenue range, we would it be good to assume like a CAD 7 million-ish number for CapEx? Is that in the ballpark? I think with that one, so it is gonna, as a percentage of revenue, it is gonna continue to drop, especially sort of when we continue to sort of scale and identify. So you're probably gonna look at something in the sixes. In the sixes. Okay. Yeah. Thank you very much. Appreciate that. And then my next question, just, you know, a little bit of a housekeeping item, but I, you know, think it's probably important to address. You know, a pretty significant portion of the debt went current on the balance sheet at the end of the fiscal year, last year. You know, obviously that indicates that the debt matures, you know, a big portion of the debt matures here in the next 12 months. So can you just talk about, you know, refinancing activities around that to extend that out so that that's not a concern for investors? Sure. I can actually talk about that. So I think the way the presentation is done, for accounting purposes, we do have to disclose it as current, just based on some of the features of the debt. The reality is that amortization sort of schedule for that is actually a lot longer. So in the notes to our financials, we do have a note section where it talks about in sort of the long-term debt note, where you can see the actual true amortization schedule. You'll notice the actual true amortization schedule, it does extend out a number of years. So there's no requirement to actually do any refinancing. It's more just of an accounting exercise under our sort of our accounting rules, where we have to classify it as, as current, but the actual sort of repayment schedule and amort schedule, it would more mirror, the sort of the, the long-term debt schedule that you see in the notes to the financials. You know, assuming obviously that, you know, there's no, no feature that's exercised, which would force us to draw or prepaid early, which is not, what we anticipate happening. So I would look at that amort schedule, in the long-term debt note. I think it's note 10 or 11, of the financials. Yeah. Let me take a look at... Let me take a closer look at that and, get a better understanding there. Sure. I'll, you know, hit you up with any follow-up questions. Yeah, it looks like most of that's pretty low rate, so I would hate to see you guys be forced to refinance. Yeah, no, we don't want to pay that off. Today's rates. Okay. And then, just, you know, the acquisition front, so, you know, obviously a small one in the first quarter. Just could you talk about the landscape and, you know, kind of what your desire, you know, your desires are for the balance of the fiscal year with regards to acquisition? Yeah, I can jump in on that. So our M&A pipeline is pretty good. You know, we're always working in M&A pipeline. We've got deals in the pipeline. We've got deals of various sizes, large, medium, and small. I guess the good news when you have a good pipeline is we can cherry-pick the deals. And that's exactly what we're doing. We're gonna cherry-pick, so we sort of look at the prioritization of deals. Number one, deals that are in market, where we can get the maximum amount of cost extraction, the maximum amount of route density, those are our top priority deals. Whether they're small, medium, or large, those are our top priority deals, because those are the most accretive to cash flow. They have the best return on invested capital, so that's priority number one. Priority number one B, of course, is when franchisees are looking to exit, we'll buy them. Those are part of our plan, and so that's something that's always in the background, and there's always franchisees that are, you know, getting ready to exit. And so we always have those. So those are sort of when you look at the shredding business, you know, those are sort of our top two priorities. If something's in a market where we isn't a PROSHRED franchisee or isn't a tuck-in into an existing market, it has to be attractive. Like MDK was attractive, it had some scanning, it brought us into Detroit, we could manage it from, from Chicago. So there was some special features to that, which was good, and the valuation, frankly, was very good, right? So, so valuation's playing a role. So we wanna cherry-pick the best possible deals that are out there, that provide the best return on invested capital, that we possibly can. That's the goal of all of our deals that we're looking to do. That's really helpful. Let me, let me step back and let some others have a shot here. Yeah. Well, thanks, David. Good to hear from you. Once again, if you have a question, please press star then one. Our next question comes from Devin Schilling of Ventum Financial. Please go ahead. Hi, guys. Good morning. Good morning, Devin. Good morning, Devin. Just on the SOC 2 certification, can you just remind me what customer set the certification opens up for RediShred? You know, is it on the scanning side, is it on the shredding side? And also, I guess, just that timeline on that audit, like, are we weeks away, months away? Any color would be great. Yeah, no problem. So number one, certainly, from a scanning perspective, because look, when we're processing the information, we're housing client data, right? So, like, temporarily, and in some cases longer than that. So you're housing their data, you know, your clients want you to know that you have the right technology, processes, controls, procedures, all of those types of things. And in fact, we have some clients go to us, like we, or potential clients, "We love... We, we've done the testing, we love you guys, but, you know, my, our compliance wants a vendor that's a SOC 2 certified vendor." So that, you know, we're eagerly anticipating that certification. I'll talk about timeline in a second, Devin. The second part of this is, I don't know if everyone's familiar, but in the United States, if you do work, any type of work with the government of the United States, you need to be NIST 800 certified or NIST 800 compliant. It's actually not a certification. Compliant. It's an IT protocol again, and so by having our SOC 2 certification, you know, we check the vast majority of the boxes on NIST, the NIST 800 compliance. And again, that puts us a leg up on a lot of the independents in particular, when it comes to shredding services. So, you know, or ITAD services or whatever the other services that we provide to the federal government. And so, you know, there's a multiple opportunity here. So the timeline to get Type 1 is imminent. You know, I would be disappointed if we don't have it by June thirtieth. So that is imminent. Again, we're in the last throes of the audit, and if the auditor is AOK, then we're gonna get it, and if they're not, then we're not. But we've put in a lot of time and effort and energy and, you know, so far passed all the tests that we're supposed to pass. So, and then the SOC 2 Type 2, you need to go through one year before you can get that, so that'll be about a year afterwards. Okay, yeah, no, that's great color. So obviously it'll open up a new customer set for you guys that might have been, you know, not reachable prior to this. That's right. Secondly here, just on the expected free cash flow growth, obviously it looks quite healthy here. Maybe you can just touch a bit on the key drivers and I guess how much is from just projected lower CapEx this year? Yeah. Harjit, I might tag you in this one. Look, I think, operationally, which you've seen, you know, the company continues to perform operationally. The operational margins are continuing to improve, which is great, and that will bring cash flow in. You know, other things, I mean, sort of think about cash flow from operations, right? It's how do you also better your working capital cycles, right? And so, you know, we've got... We're introducing this year, our client portals and some automated client, sorry, automated collection techniques, and some of that can even be run through Salesforce, which we've already installed. So those things are there. CapEx, I mean, last year, and Harjit can elaborate, but in 2023, we replaced a lot of older trucks from the American and Shred-X deals. That was by design. We had to do it. We, you know, we went one year with their crappy trucks, pardon the word, but they weren't great, but we knew we needed to get through it. And now, we replaced them. That's the benefits, the operational benefits that we see in New York. You know, trucks are part of it. Like, we've got strong people, good routes, good, a lot of good things happening there, but the trucks certainly were part of that equation. So, when we do get a new truck, you get an uplift in uptime, you get a downshift in repairs and maintenance, you get a downshift in fuel use. So those are all positive on the cash generation front. But, Harjit, did you wanna just speak a little bit more to the CapEx there on the truck side? Sure. So I think, so in terms of if we kind of look at free cash flow, we look at sort of the, the inputs. So I think from the, the cash flow operations are really gonna be driven, as Jeff pointed out, by sort of our EBITDA growth. Obviously, Q1, we did CAD 4 million in EBITDA. Q2 and Q3, as Jeff also pointed out, are historically stronger as well, in terms of sort of financial results. So when we kind of look at that, so it's, it's really gonna be EBITDA, 'cause at the end of the day, I think when we look at CapEx, CapEx is gonna be sort of more in line with what we... Or we're forecasting it to be more in line with what we had in 2023. So overall, the biggest driver is gonna be EBITDA, the EBITDA growth. So that's gonna require us to really focus and continue to focus in on the operations, continue to get good margins. So obviously, we're doing a number of things, you know, from a pricing perspective, focusing sort of on, sort of acquiring customers, growing the business organically. You know, obviously, we have the M&A pipeline we closed on, MDK, which will help, you know, and, you know, we're so it's there's a number of drivers to that, but, I think some of the, you know, the levers obviously is dependent on us just going out and executing on them. Yeah, that's great. Just, just on the price increases, I don't know, did you guys mention, were they, like, low double digit, high single digit? Is there any color around that? Sure. So in terms of price increases, what we're looking at is sort of in the 6% range, right now. So, with price increases, we haven't really sort of, you know, historically, we haven't really sort of capitalized on the opportunity to sort of push through those price increases, you know, in response, obviously, you know, cost increases and sort of what the market is sort of doing. So I think this year we got sort of 6% in. We consider that sort of a healthy rate, but, you know, definitely something at the same time that's gonna help us from a bottom line perspective. Okay. Just last one quickly here for me. You guys talked about on the acquisition front, you know, some franchisees may be targeted as well this year. I just wanted to know if any are up for renewal this year, if you guys have that top of mind? Yeah. We've got a couple that are, that are up for renewal. Of course, we're always chit-chatting with them about what they wanna do. You know, typically, if they don't renew, they sell to us. Typically, if they renew, and they, they renew, they don't, don't renew for a 10-year deal, they renew for a five-year deal. Typically, when they renew for that five-year deal, they usually don't make it to the end of five. What they're looking to do is use that, that little bit more time to improve certain things in their business that, that should help them improve their overall valuation. So that's typically what they would do in those instances. So, I guess the good news for us is we always have franchisees in the pipeline. We always have independents in the pipeline, and sometimes it shifts a little more franchisee-oriented, sometimes it shifts a little more independent-oriented. But, you know, the priorities do not change, right? The depth in a marketplace is the most accretive acquisition you can garner from a ROIC perspective. Franchisees are great because they're very low risk, they're generally very successful, and they create the foundation to further densify their business by doing other tuck-ins. So, both are great M&A pipelines to have, and we have representatives from both. Yeah. No, it's very good. Yeah, no, thanks for taking my questions here. I'll jump back in the queue. Thanks, David. This concludes the question and answer session. I would like to turn the conference back over to Jeffrey Hasham for any closing remarks. That's great. So again, thank you everyone for joining this morning and for the questions. And obviously, again, all the documentation has been filed. Should any of you have further questions, of course, reach out to Harjit and I. Many of you on this call are our shareholders and longtime shareholders and supporters. We thank you. We thank you for believing in the management team and supporting the management team. And you know, again, the hard hat goes on now, and we go work on the business and on the operations to make it better, and we will do that every single day. And so again, we don't do it-- none of this is on our own. We're a big team, and so we thank you for your support. Have a great day, everyone, and we look forward to talking with you soon. This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.