Q3 2023 SuperCom Ltd Earnings Call
Ladies and gentlemen, good morning, and welcome to the Super Coms third quarter of 2023 financial results and corporate update conference call.
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With me on the call today is Don Trabelsi Super Com's, President and Chief Executive Officer.
I'd like to remind you that during this call Super comps management, maybe making forward looking statements, including statements that address your <unk> expectations for future performance or operational results.
Forward looking statements involve risks uncertainties and other factors that may cause <unk> actual results to differ materially from those statements.
For more information about the risks uncertainties and factors. Please refer to the risk factors described in <unk>. Most recently filed periodic reports on form 20-F, and form 6K, and soup becomes press release that accompanies this call, particularly the cautionary statements in it.
Today's conference call includes EBITDA, a non-GAAP financial measure that Supercomm believes can be useful in evaluating its performance.
You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
For a reconciliation of this non-GAAP financial measure to net loss of comparable GAAP financial measure. Please see the reconciliation table located in Super comps earnings press release that accompanies this call.
Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well.
The content of this call contains time sensitive information that is accurate only as of today November 14th 2023.
Except as required by law Supercomm disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
It is now my pleasure to turn the call over to Super Com's, President and CEO or Don Trabelsi.
Thank you operator.
Good morning, everyone and thanks for joining us today.
Earlier. This morning, we issued a press release with our financial results for the third quarter of 2023.
Could find in Investor Relations section of our website at <unk> com.
On this call, we'll briefly discuss our business highlights our growth strategy and the results for the quarter before moving into Q&A session.
Today I'm excited to share with you that the Supercomm outstanding performance for Q3, which reflects the tremendous strides we've made in our operations and financial position.
The third quarter of tomato and so there was a landmark period for us where we achieved an incredible.
550% growth in EBITDA.
The Ginnie $2 7 million for the quarter and a five year record net profit.
We're proud to report non-GAAP EPS of positive 24 seven.
Third quarter of 2023 as well.
I wanted to take a moment to remind everyone that.
Not too long ago, and the year of 2020 after.
After years of continuous declines in the business, we reached a low of annual revenues of less than $12 million and net losses of nearly $8 million.
Since then we worked very hard to turn things around and.
And annualize it or excuse me 2023 numbers, you'll reach a current annualized run rate of $27 million in revenues and EBITDA.
$10 $8 million.
Our annualized EBITDA today is close to our annual revenues for 2020.
These are of course are meaningful achievements that we're proud of them and I'd like to thank our wonderful global dealer recalled for their hard work and dedication for making this all possible.
These financial metrics not only underlying our strong execution, but also the increasing efficiency and scalability of our operations.
During the past year, we won several important contracts in the U S and Europe.
And we're excited about the opportunities we see ahead.
I'll go into more details in a few moments, but for those who are new to Super hub.
Our mission is to revolutionize public safety sector across the globe with a proprietary electronic monitoring technology data intelligence and suite of complementary services with over 35 years of experience since our founding in 1988, we'd been a trusted partner to dozens of national governments worldwide, providing cutting edge electronics.
And digital security solution.
Our decision to ours.
Blueprint.
Forward yet powerful.
Leading with innovative technology.
Helping superior solution, expanding our global presence and deliver them.
Outstanding service.
The strategy is backed by our proprietary electronic module technology, which scored highly in competitive government tenders that support various programs such as house dress GPS monitoring rehabilitation services domestic violence prevention and more than 2018 should become a secured over 50, new multiyear government projects projects one is valued over.
$40 million in 2020 do Hello.
Our strong growing reputation as a premium provider of electronic monitoring solutions and services.
New customer win in hand, and our market position.
And lastly, our strategic focus on the Iot tracking business in developed markets, where the opportunity is greatest without trying to monitor market projected to reach 251 billion in 2026, the U S and Europe concert about 95% of these markets.
These successes and opportunities have resulted in growing business pipeline with strong recurring revenues at 11 of over 70% of total revenues in 2022 for example.
In Q3 of 'twenty three.
We've continued to amplify.
Our technological leadership with significant R&D investment.
Leading into the launch of advanced solutions like pure protects the tier one these offerings are already making headway into various markets, including the U S and our pivotal and Supercars market expansion.
Pure protect.
It's a life saving domestic violence monitoring solution.
This solution offers strong protection families suffering from the record.
This innovative solution addresses domestic violence issues and further enhances the company's portfolio of products and services.
<unk> done a rigorous testing that has been successfully implemented in multiple projects, including <unk>.
Romania is $33 million E. M project, the first I'll try and monitoring project in the nation.
In Romania, the police place.
Our braces on those who heads.
Your family members and if they come in close proximity of that alert in terms of the police immediately enter the Bakersfield. This offers a new layer of protection that has not existed before.
Another product, we launched recently the tier one it's an all in one GPS tracking ankle monitoring solution that integrates a comprehensive monitoring capabilities into a single device.
Like many of our products. It offers top notch features we've seen it above the competition on both metrics. This product also expands the company's addressable market. We've been very pleased with the early reception of the truck and traction with our newest solution and expect that to help facilitate a rapid expansion of supercuts end use market.
We fortified our operational infrastructure to support our growth we have revamped our sales strategy with a proactive outreach approach our sales team with deep industry experience.
Your mental achieving these new wins driving growth.
Throughout the past month, we announced many new project wins in the us and Europe Supercomm continuously displaced incumbent vendors in the cheese and over 65% win rate in European competitive tests.
Despite macroeconomic uncertainty Supercomm solutions are becoming increasingly relevant factors like high recidivism rates and the escalating cost of incarceration make our solutions not only cost effective but also essential for government looking to enhance public safety and reduce cost.
The company's peer security technology solutions have been designed to justice tried offering an effective way for institution to enforce home confinement east prison overcrowding and lower cost significantly for example.
Total daily calls for monitoring and offender on home confinement or GPS monitoring is approximately $10 a $35 compared to the much higher cost of $100 to $140 per day at a correctional facility. Most importantly open environment has been shown to reduce recidivism highlighting its effectiveness in helping offenders improve their lives.
And communities.
On top of these growth drivers, we have witnessed a surge in adoption of victim protection solution worldwide with align.
Perfect deal with our strategic plan and the launch of our new product sugar tax.
And the European market Supercomm expanded.
Over 10 countries and secured significant new contracts, which are typically awarded through a competitive tender process separately were launched at $3 $6 million national projects in Finland. The National government in Q1 of 'twenty three and by May 2023, the pure security even see it was fully deployed in Philips covering all young offender programs House arrest G. P. S.
And they make monitoring for the country.
Excuse me 2023, we've secured a new national program with the Finnish government to deploy our domestic violence monitoring solution.
The deployment of our improved security suite, consisting of pure protect your track your tag and peer monitor demonstrates the versatility and effectiveness of our solutions underscores our leadership in the electronic monitoring space. Our collaboration of Finland is a prime example to the confidence our clients habits supercuts and those would experience our services often choose to vote on.
Their engagement with our diverse array of solutions.
Notably.
The company one of the largest industry award of the year for Nash of electronic monitoring project in Romania by the $33 million, which includes up to 15000 monitored offenders per month for up to six years and that's just one project in one country.
So imagine the breath and spread of our solutions around the world.
Looking beyond Q3 recently announced a third order valued at over.
Over $3 $4 million for the Romanian Ministry of interior further extending our engagement of the country's national project.
I think what order reinforces the strength of our peer security suite and cement our position as a trusted partner for governments worldwide.
We've also launched a domestic violence solutions at other European regions and are planning to launch them in the USA very soon in Israel. There is a high potential partners domestic violence projects that the government has passed a law.
Requiring domestic violence offenders to be monitored with technology such as ours.
Although supercomm already does business in multiple U S. States. We are actively focused on further expanding our presence in the U S. The company instituted stopped prioritizes expansion of tier one and to new markets and geographies.
Yeah.
Hold on for a second our apologies, there's an alarm here or out of Tel Aviv, Israel, I'm just going to.
Contingent as from the shelter if you can give.
In a minute.
Apologies for that everyone.
Okay.
Okay.
Yeah.
Yeah.
Okay.
Okay contingent from the shelter.
Are you guys. So we also launch a domestic violence loosens some other European region.
Oh, the plant's Austin U S. Doing you said, there's a high potential for domestic violence projects that the government has just passed a law requiring domestic violence offenders with monitored with technologies such as ours.
Okay expansion in the U S market, that's been marketed by another significant milestone with the securing of a 3 million dollar cost in California through our subsidiary <unk>.
Conscious for alcohol monitoring technologies reaffirms, our commitment to delivering high quality services and is a testament to our robust reputation and electronic monitoring as well as contract. We anticipate a steady stream of recurring revenue over the initial three year term with a potential for future expansion.
And as we've mentioned before we believe there's also an opportunity to enhance our U S growth through strategic acquisitions of local electronic monitoring service providers with a strong reputation and customer base in their respective local markets.
We're constantly monitoring the market for potential acquisition that could generate significant value by immediately expanding market presence, providing vertical integration strategy.
Our acquisition of LCA in 2016 for example for $30 million.
Great example of that this successful acquisition has proven to be a great strategic value to the upper $30 million of new project wins that generated.
Since then in California alone.
In the third quarter, we completed a successful.
Close to a 2.7.
Seven $5 million public offering to support the company's continued innovation and growth initiatives, a testament to the investment community as trust in our vision.
I'll now turn to financials.
During our previous conference call I mentioned that we anticipate contributing to our financial result in the last quarters as our ongoing projects mature.
I'm delighted to share that we have seen a remarkable operating improvements.
As evidenced by the increase in AR.
Margins to 59, 4%.
Our gross margin improved to 59, 4% from 34%.
Last year and in many of the previous quarters that was a level. We've also achieved a five year record GAAP net income positive for the first time in seven years.
This is driven by our projects moving into later stages of their lifecycle, where higher margins typically achieve.
Just trying to continue on project timelines and align nicely.
I also like to note that for the nine month year over year revenue increased by 67% $29 million with our Iot Division being the primary growth engine in perspective, while the global electronic monitoring market grows at approximately 11% per year Super kind of Iot revenues outpaced global market growth.
Multiples.
Growth is a testament to the fact that the market prefers our solution over the alternative time and time again.
Furthermore, we are proud to have sustained positive EBITDA in each of the last three years 'twenty to 'twenty to 'twenty to 'twenty two.
EBITDA increased by 550%.
The $2 $7 million in third quarter of FY2023.
The level of EBITDA of $3 9 million.
But that's why I try to resolve this operating leverage targeted about spending and high year over year increases in revenue.
The following.
The comparison between the financial results of the third quarter.
'twenty three in third quarter of 2022 I.
We'll do this brief comparison and then open up for Q&A.
Alright so.
Gross profit increased by 89% to $4 billion compared to $1 million, which is a direct outcome of the progress you've maintained across our projects.
Typically in hand as projects mature, which is a $580000 decrease in total operating expenses. Excluding one time other expenses through a corporate operational optimization plan that was implemented gradually in last six months, we decreased our R&D expenses by $180000. While we continued to develop and launch new products and improve existing ones keeping us at the edge of it.
Innovation and technology leadership in our space.
In addition, our sales and marketing expenses decreased by $120000 and general and administrative expenses increased by $280000. The company had an operating profit of $840000 versus an operating loss.
$50000, resulting from the significant increase in our gross margin and profit decrease of operating expenses.
The company's EBITDA improved by $2 $3 million or two quite timely and compare it to.
Zero point $4 million.
Reflecting the benefits of operating leverage associated with higher revenues, the Kuwait, New Iot projects and continued progress in the phase the Brooklyn project. This achievement underscores our focus on <unk>.
<unk> growth and profitability.
Our net income improved by 107%.
Two zero quiet.
One $5 billion profit compared to $2 $2 million loss.
And our non-GAAP net income improved by $2.6 million to $1 $6 billion profit compared to a $1 million loss.
Positive non-GAAP EPS improved to positive <unk> $24 compared to negative non-GAAP EPS of two cents.
Our cash position has been stable, we have credit facilities and reduce our need for cash as we continue to win.
Thank you.
Large projects. In addition, the company had one time expenses of $800000, mainly pertaining to legacy business that'll make an allowance of doubtful debt at closing.
We're excited about the growth we're experiencing in about the growing demand for our product after.
After five years, which we transition from our legacy business.
Densification the Iot tracking of offenders business, we're happy to show the shift to rapid growth in revenue and profit margins, but we believe that we're well positioned for continued growth by capitalizing on the many new opportunities that lay before us.
These are being driven by multiple factors, including a strong presence reputation in the U S and European markets, the countercyclical nature of the trial.
Monitoring industry, the growing public policy shifts monitoring instead of incarceration and the growing adoption of domestic violence prevention solution.
We anticipate sustained growth by further expanding our market share in the U S and Europe, our commitment to preserving our technological advantages.
Our robust robust growth foundation remains steadfast as we continue to invest in these areas.
That I will now turn the call over the operator for <unk>.
Questions.
Operator.
Ladies and gentlemen, if you wish to ask a question on today's call you will need to press Star then the number one on your telephone.
You're using a speakerphone please pick up your handset before entering your request and speaking on the call.
If your question has been answered and you wish to withdraw your request you may do so by pressing star two.
One moment please for the first question.
Your first question is coming from Matthew <unk> from Maxim Group. Your line is live.
Hey, Thanks for taking my question and hard on hope you're staying safe.
Also a factor.
Sorry about that.
Recall that this.
Also congrats on a really nice quarter and year to date.
A very very nice to see.
Can you maybe touch on the.
Just the.
I know you referenced recurring revenue and.
You have a sense of what the baseline is.
You know if if you don't get a kind of big project shipment out in a quarter.
Where do you kind of go down to if if you don't get a big shipment.
That's what I'm going to make sure that in this quarter.
And any future quarter. So beginning Q4, if you don't get a big shipment to Romania, or you know a big toll road in Russia.
Our our revenues in Romania, mainly through.
Continued progress in this project is supposed to continue for years. So we expect at least for now.
The next few quarters for things to continue.
And they might even grow and we also expect these projects to come in so we're at a pretty good level as you can see each of the last I think it was four or five quarters revenues were about $6 million.
So we continue to deploy.
The projects in Romania, and what's very interesting in this quarter as you noticed we had a huge jump in gross margins, which is.
Something that we have been forecasting for a long time, we mention that once the projects move into later stages, there's not as much costs, you're just providing equipment because you have all the infrastructure ready here to train that we wanted the system works very nicely now many of you have very good relationship and things are working well in the order of more and more and that's when we see other projects around the world as well so it won't be a big new projects.
The margins are not as high but overtime they shift up but that's what we're starting to see here in the first quarter it.
It could be just the beginning of this potential for.
For like Romania to happen multiple times over.
Gotcha, and I think you announced a a $3 4 million dollar order from Romania, that's supposed to ship in the fourth quarter, if I understood that right. It can't can we kind of expect that since that project pretty far down the track that.
The margin profile should be kind of similar to what we saw in Q3 or at least kind of higher than it was in the early stages.
Yeah, we expect the margins to be continue continued continue to be higher than what they were originally.
As you're aware sometimes of the fluctuation between quarters.
So it might be a little higher a little lower but we certainly expect to be in this higher level of margin rather than how it was before when we were just <unk>.
Shipping tons of hardware and installation and training or passenger pigeon, Romania now.
Based on what happens to new projects that could shift a zero wherever it work.
Our revenues are a mix of many different projects around the world something massive.
100 million dollar projects comes in and those are out there that would be getting that would shift margin, but it would only be temporary because they are at the end of the deploy their margins would shoot up again.
Margins in this industry you have capacity to be very high between 50.
55% and even more if you continue to deploy more units in existing regions.
Strength has been as you can see as we just announced in Finland as well as other countries. Once you deploy one technology, we keep on deploying more technologies or you need some more abilities and work there some deployments or.
You have the infrastructure and now you're just generating high margin revenues are high margin products and offering great ability for the customer our LOE costs.
Got it thanks and last one for me and then I'll jump back in the queue.
It sounds like you've moved.
It moved through the Romania contract relatively quickly I don't know if you're comfortable talking about how close you are to that 15000 number but is there potential to expand the scope of of what youre doing with Romania beyond kind of the initial baseline.
That can sort of maybe add more seats or you know units.
Yeah, I'll leave it there of course.
Of course, if first of all there's always the potential in these kind of projects to grow our Romania is a very interesting case. They didn't they didn't have electronic monitoring before this is brand new for them and they're flying they're moving very fast to the project with orders and deployment I don't have the exact number for you, but there's definitely potential for that number to grow with us.
So for additional capabilities.
With every project.
Sweden, if you look back in time, we started with the projects instead of a billion dollars sorry, we start with a budget of $1 billion in Sweden, which was for the police and then we did a $7 million and Ministry of Justice in Sweden, and that was just a juvenile in Sweden, and we have all the all the projects currently out there and they might do more projects, Romania, just it just started.
Great opportunities there and in many other countries.
But our reputation with every new problems, we get with every new region that we expand into the reputation.
And used to grow continues to spread and are now in a new customers like Romania, Croatia, which is brand new as well and now we're also getting requests from other places in the world even outside of Europe and outside the U S. All over the world people are hearing the name and they're coming to us.
Either they have colleagues in different countries at different somewhere roles and.
They see what we're doing and of course, it's much easier to pick someone that everyone's already picked originally we had the hard times. This was 567 years ago, but now.
Thank you very much.
Most of them are consistent and much easier that we're focused on just continuing to operate effectively and maintain what we're doing.
Alright, I'll jump back in the queue.
Sure.
Thank you once again, everyone that if you have any questions or comments. Please press star then one on your phone.
Please hold while we poll for questions.
Your next question is coming from Matthew <unk> from Maxim Group. Your line is live.
Alright, I guess I'll continue.
Can you talk about [laughter], Hey, again.
What is.
What does the pipeline opportunity I guess.
You see it now for pure one in the U S market is the pipeline pretty well built today or you know where are we at in that kind of engaging with the potential.
Potential customers and getting evaluations into their hands.
So great question.
We talked a lot about pure protect which is domestic violence and just so to clarify the difference because we've talked about both in the script.
The violence, that's something that's been.
It's very well addressed in the market.
It's mostly a bid ask spreads achieved this monitoring.
At home you need a different technologies when it someone you need something.
To put on top of it it's very light and they don't charge every day, that's why our solution comes in very nicely as a director.
Violence, but also our attack communicates with smartphone so that the.
Why you get to based on leg in Romania as he comes close to the wife.
Our alerts and also the police that are pure protect pier, one with delta or myself a call somewhat different it's also brand new.
But it did cause the GTA is monitoring its.
The right.
Right and the breadth and the.
But the major part of the industry.
Which is GPS tracking also weighed in Europe, a lot in the U S. We've been expanding our special smartphone solution and this is all in one solution doesn't require smartphone it's called Pier one and that's just to help some of the judges and customers in the U S or.
Still a little weary of the smartphone solution, they're not exactly understanding how it works well with the with the attack and now we have both options. So on the same software the same.
Solution on the cloud on the same exact.
Cisco you also have the tier one which are which works very well.
Life is longer than those in the industry, it's more lightweight how's the rechargeable battery, which is mobile internet connected led to the wall.
It sounds funny, but that's what they do in most of the product and industry people cannot go to like because the wall every day it doesn't sounds like that's what they do give you a mobile chargers probably leg breaker being very comfortable we started deploying it also already in California, and we're giving it a very various the resellers and customers in the U S. So far we're getting amazing feedback we can love it it works very well.
Cited to continue spreading it out to the U S. Our pipeline in the U S is more fragmented it's only in Europe, but it will be wasn't reached a state level or the federal level right now we're still at the county level and the retailers level, we ever had a lot of different places and we want it we want it that way because this is how you get good feedback before potentially making the wrong move with a customer like California.
Our Florida State, where you were where just like we've done many times over you've been doing this for many of the products on the security suite.
It out to smaller customers, we get feedback, we get attention and we update or we improve and we add more features more capabilities that we have just.
Things will streamline the whole solution.
Now as it gets more and more stable and more and more robust talking to the larger projects. The latter Europe. We started with a 100000 dollar project and Latvia, Lithuania, and it's totally moved out to two projects like a print and a $3 6 million in Denmark and Sweden.
And then Mark maybe a $33 million here in the U S over time the market in the U S. It's four to five times bigger than the European market. So everything you've seen up to now the nice growth because if you remember until 2020 until 2020, the company's decline in revenues for a few years now we shipped to that in Q2.
2021 we've just been growing.
And now we've reached.
Nice operating profitability and margins as well so that's a good to you several times over when you put the U S market into play.
The pure protect the pier one.
Together with the pure protect Oh, that'd be right in front of us there.
Yeah.
Got it that sounds pretty encouraging, especially you know.
U S market feedback.
Can you can you I know, it's still a little ways off and I think you probably have a lot of irons in the fire, but you know in the past we've talked about some of the large European.
Contract that might be coming up for bid.
In the next 18 months or so.
Can you can you talk a little bit about that pipeline of large European deal then.
And how that that's calling as far as engagement.
Can you repeat the last part of the question how far what goes in front of engagement.
I guess, how do you feel.
From Super calm on you know, you've obviously had a very strong win rate in Europe. In recent years. So you know are you confident that you're in a place where you can win the large.
Deal that would be coming up in Europe and.
Are any of them likely to be 'twenty 'twenty four events that they get decided on just any expectations around the large European deals.
Yeah, there's still a large European deals out there there is more there is no we haven't.
10 countries in Europe with their stomach.
Plenty of others and kind of other big ones and some of them reach out to us about talk about domestic violence, because they've got a it'll have our domestic violence, losing it.
The whole architecture. It doesn't mean, there's other players just reach out to that even though they have a different programs and so I'm not gonna have a bid for all the programs that are out there as you already know it.
It's a pleasure to select for a new product for an updated project than normal.
<unk> electronic monitoring.
Offenders and also domestic violence, the largest popped in Israel you can see in the connected in the Parliament in Israel.
Our presenters this demo centers.
Our holding bracelet.
Great.
And they were petitioning and yesterday that they want to metabolic physicians in Israel.
The right to do that because it's very important solution that doesn't exist right now.
So likes that you'd see other countries around the world, who are pushing for that and they're communicating with us. So there's there's new opportunities ive never really projects that never existed and as existing projects, which God forbid every five years and really misplaced.
Displays.
Almost most almost every one of our projects will displace the vendor that's been there for 10 15 and 25 four years due to the hard to do.
But when there's technology, that's significantly better than especially one that's what happened. So that's why we continue to invest in R&D to make sure. We're always the top of pathology at the cutting edge and with the project opportunities that are coming up but we do expect there to be continued win rates as it as a company.
Could you just grow in the company you know number of units.
Grows in the company breath and customer base grows at the geographic reach grows it makes it easier to do it.
So we had a really hard time at the beginning and then it started getting easier and easier and if all goes well then in the future things should be even easier.
In Europe and also in new markets.
What are they were entering it too and building our base such as some regions of the U S.
Thanks couple quick.
Additional ones for me one I think you in your press release, you talked about a secure I'd card.
Uh huh.
When in Iceland.
I know this.
Not your core business can put can you talk a little bit about.
You know what that is and when you expect that to impact results.
So what does a secure Oh I just wanted to get a secure country to anywhere.
Secure I D.
It would put the whole lot lesson, which projects you were talking about Iceland National I D.
It did have a.
So I was just one moment.
They get the sound quality here at school level.
Hey, sorry, do you hear me better now apologies for that.
Yeah, you're coming in clear can you hear me Okay. Yes. It was just on the shelter.
Sorry about that half of all each of the communications at all but it's okay.
Bob.
<unk>.
Yes, as I said, we have projects there for years.
Passports, where Iceland and can we expand the modules and the capabilities they want and.
We expanded into.
New expansion recently didn't work at all.
And also we're developing the IV with the end customer and that's been growing that's been moving along.
And in 2024 would you expect that to be finished.
Customer has been with us for over 15 years.
Smoke more customer buys from us for a long time of.
Of course every customer is an important and especially ones that have been with you for a long time.
They have a lot of good things to pay off all of the year. So we.
We try to provide great service to all of them and when they want update for passport to IV I did to other things.
We do that even though it's part of our legacy business.
We still support our customers and once in a wildly projects come in also in identification.
All of our sales focus.
Is that when we lie but.
Colbert.
Got it.
Alright, well I have two.
One being.
It looks like your <unk> on your balance sheet receivables were up in the third quarter. So it looks like.
That would be a.
You know kind of investment in working capital.
And I guess.
Don't know if it's something you could talk about but.
It's probably a higher number because the revenue has been up but is there.
And we kind of expect that receivable number to come in in the fourth quarter or for that to come down into 2024 as a source of capital or just curious how you think about.
It could be you know.
Since we just sit there isn't legacy business with the new business.
Questions are actually been good.
Congrats even better the good great.
So with all of our citizens.
I think it might be a substitute of cyclicality from seven eight years ago.
That being said.
The working capital grows because of the payments of the projects.
Timelines are the revenue progression revenue progression is on delivery and upon the percentage of completion compilers and collections Irwin when certain milestones of acceptance are reached.
So.
It could be there could be a decline in Q4. It could also be in Q1. It depends you know windows milestones are concluded by the customers point of view, we're continuously working on them.
Any different customers at the same time.
Gotcha, and maybe just another way to frame the same question.
EBITDA very strong for the third quarter and positive year to date is that a good proxy to use for your operating cash flow. So $2 7 million of EBITDA is it reasonable to expect you'd be breakeven to positive operating cash flow basis.
Sometimes.
Sometimes there is the.
I think when we talk now sometimes you have revenue recognition.
Where we actually collect the cash.
And then that's going to cause that'd be and often in timing when the cash comes in.
Operating cash flows will be more dependent on the payments of the customers and with these projects that are complicated and having multiple stages. The payments are not always aligned with revenues.
So you'll see a little bit of offset but if you take many quarters into account and you average them, but yeah.
If you exclude the one time David.
The onetime gains we recorded an EBIT that do have some cash requirement like settlement.
All things on the old business or write offs.
They do come out of EBITDA, but they cost us a castle type.
But as things stabilize in the legacy business is it more of a.
Legacy and continuously.
Studying the new the new business.
The offsets.
With a different project collection through all merging two and averaged it fluctuate as very small between the quarters and that's where we start to see a more predictable business a more consistent revenue cash generating business and a more consistent.
Growth expanding business, which will be supported with our let's call. It most of the technology and a continuous pipeline of opportunities around the world.
Got it. Thank you and final question 'twenty 'twenty four realized again might not be ready to provide any forward commentary on that but after a very strong Q.
2023.
And can investors expect from 2024, it sounds like you have a lot in the pipeline but.
Is that a good year, if you kind of hold the level with 2023 or are you.
Booking to grow off that you know very strong base.
[laughter], we're always looking to grow and if you look at what we've done in the last few years.
New manager and myself and others than ordinary members came into the company.
And.
And in 'twenty, one or even pushing very hard as that which is reflective of the numbers.
That being said I was I was talk.
Very diligently to under promise over deliver on their promise now and hopefully over deliver and excite investors in the quarter Scott.
Alright terrific. Thank you for taking my question.
Thank you.
Thank you once again, everyone. If you have any questions or comments. Please press star then one on your phone please.
Please hold while we poll for questions.
Once again, everyone. If you have any questions or comments. Please press star then one on your phone.
Please hold while we poll for questions.
At this time, we'll be passing the call back to or Don for closing remarks.
Okay.
I want to thank all of you for participating in today's call and for your interest in Supercomm, Please contact or contact us directly if you have any additional question.
We look forward to sharing our progress with you on our next conference call filings and press releases. Thank you very much and have a good day.
Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.