Q4 2023 Quarterhill Inc Earnings Call
Operator: Good morning, and welcome to Quarterhill's Q4 and Fiscal 2020 Free Financial Results. On this morning's call, we have Chuck Myers, CEO, and Kyle Chriest. At this time, all participants are in listen-only mode.
Good morning, and welcome to quarter Hills, Q4, and fiscal 'twenty 'twenty free financial results conference call on this morning's call, we have Chuck Myers, CEO and call increased Chief Financial Officer.
At this time all participants are in listen only mode. Following managements presentation, we will conduct a question and answer session during which analysts are invited to ask questions. So I'll ask a question. Please press star one on your touch can find that's a register should you require assistance during the call. Please press star.
Operator: Following management's presentation, we will conduct a question-and-answer session, during which analysts are invited to ask questions. To ask a question, please press star 1 on your touch-tone phone to register. If you require assistance during the call, please press star zero.
Alright.
Operator: Earlier this morning, Quarterhill issued a news release announcing its financial results for the quarter and year ahead. The release, along with the company's MD&A and financial statements, are available on Quarterhill's website and on CDAR Plus, a set of matters discussed during today's conference. All answers that may be given to questions could... actual results could differ materially from those.
This morning, Coatesville issued a news release announcing its financial results for the quarter and year end ended December 31st 2020 free This news release, along with the company's MD&A and financial statements.
Oh on Cortez Hills website and on SEDAR plus certain matters discussed during today's conference call or answers that maybe given to questions could constitute forward looking statements actual results could differ materially from those anticipated risk factors that could affect results all detailed in the company's annual information form.
Operator: Factors That Could Affect Results are detailed in and other public filings that are available. During this conference call, Quarterhill will refer to Adjusted EBITDA, any standard by please refer to the DNA for full cautionary notes regarding and non-ISD. And finally, please note that all financial information provided is in Canadian dollars, unless otherwise. I will now turn the meeting over to... Good morning, everyone.
<unk> and other public filings that are available on SEDAR. During this conference call quarter Hill will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by I F. O S. Please refer to the company's fiscal 2020 free M. D N a full cautionary notes regarding.
The use of forward looking statements and non I S. I'll ask smashes finally, please dates that all financial information provided is in Canadian dollars unless otherwise specified I'll now suddenly Tonight. Mr. Mayer. Please go ahead Sir.
Great. Thank you.
Good morning, everyone and thanks for joining us on today's calls in terms of the.
Charles Myers: And thanks for joining us on today's calls. In terms of the agenda today, I'll discuss the results for the quarter and the year, as well as our acquisition announcement today of Red Fox ID, after which Kyle will take a look at key financial results. And then, after Kyle, we'll open it up for questions.
The agenda today I'll discuss our results for the quarter and the year as well as our acquisition announcement today of Red Fox I D. After which Kyle will take a look at key financial results and after Tayo, we'll open it up for questions. So.
Charles Myers: So thanks, we'll get started. 2023 was a year of transition for Quarterhill, as most of us know, with important changes made to the board and management. And that really set the stage for a greater focus on operational excellence throughout the company. 2023 wasn't without its challenges, but we finished strong in Q4.
Thanks, I will get started.
Our 2023 was a year of transition for quarter Hill as most of US know with important changes made to the board and management and that really set the stage for a greater focus on the operational excellence throughout the company in 2023 wasn't without its challenges, but we finished strong in Q4 and we believe we've entered 2024 with a stronger.
Charles Myers: And we believe we've entered 2024 with a stronger foundation in place to drive top-line growth and margin expansion. I joined the board in May of last year and became CEO in September. Kyle was named interim CFO in May and is noted in our earnings release today.
Foundation in place to drive topline growth and margin expansion I joined the board in May of last year and became CEO in September.
Kyle was named interim CFO in May and as noted in our earnings release today, Kyle I'd like to congratulate is now our permanent CFO. He's done a fantastic job in helping me clean up and fine tune operations and getting us positioned for our next growth phase at the board level in 'twenty, two 'twenty three rescue Louis' named chair and Delmarva.
Charles Myers: Kyle, I'd like to congratulate him on becoming our permanent CFO. He's done a fantastic job in helping me clean up and fine-tune operations and get in this position for our next growth phase. At the board level, in 2023, Rusty Lewis was named chair, and Bill Morris and I were both appointed as directors. The board currently stands at six members, four of whom have been added in the past two years.
And I were both appointed as directors. The board currently stands at six members form who had been added in the past two years.
Charles Myers: A number of these changes naturally coincided with the sale of Yland, the patent licensing firm. With that transaction completed, we are now a pure play ITS business, and Titan has a strategic focus and simplified profile on the street. The transaction laid the groundwork for my joining as CEO and added our cash balance sheet in support of organic growth as well as tuck-in acquisitions. As I discussed on our Q3 call, my focus since becoming CEO has been to visit our facilities, customers, and teams with an eye on finding efficiencies, optimizing operations, and continuing the integration of our ITS business units. I've been impressed with the depth and the collaboration amongst the team and with the assets and opportunities we have to capitalize on. As expected, this has led to a few other changes within the organization here in 24 as we fine-tune the leadership team.
A number of these changes to naturally coincided with the sale of wildland the patent licensing firm.
That transaction completed we are now a pure play Ikea business and tightened strategic focus and simplified profile to the street.
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As I discussed on our Q3 call my focus since becoming CEO has been to visit our facilities customers and teams with and I am finding efficiencies.
Optimizing operations and continuing the integration of our Ikea business units.
<unk> been impressed with the depth and the collaboration amongst the team and with the assets and opportunities we have to capitalize on.
As expected. This has led to a few other changes within the organization here in 'twenty four as we fine tune the leadership team.
Earlier this week, David Sparks joint quarter Hill, as executive Vice President of strategy and Rich Malhotra, who led our enforcement units part of this part of the company.
Charles Myers: Earlier this week, David Sparks joined Quarterhill as Executive Vice President of Strategy, and Rish Malhotra, who led our enforcement units, joined the company. These changes were made with an eye to further integrating the company, streamlining our structure, and executing on our growth. With the enforcement unit, we won't be naming a new CEO per se, and for the time being, the unit is being co-led by a couple of veterans on the team. Dave Sparks is a great addition.
These changes were made on an eye to further integrating the company streamlining our structure and executing on our growth plan with the enforcement unit, we won't be naming a new CEO per say and for the time being a unit is being co led by a couple of veterans on the team Dave Sparks is a great addition, he is a recognized thought leader in the <unk>.
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His experience in I T S tolling and RFT transit more.
Most recently he was senior Vice President of WSB, one of the world's top engineering professional services firms.
She has deep I T S.
Routes and early in his career, Dave worked with Rusty Louis C&I. It transports, Dave has experience managing large projects identifying executing client opportunities and developing strategies to expand business into new markets in the near term. He is focused on advancing some of our large tolling projects will ultimately shipped the majority of its focus to strap.
Charles Myers: He's a recognized thought leader in the transportation industry, and his experience in ITS tolling and RFD transit is more. Most recently, he was Senior Vice President at WSP, one of the world's top engineering and professional services firms. Because of his deep ITS roots and early in his career, Dave worked with Rusty Lewis and I at TransCore.
Geo growth.
Integration was a big theme in 2023, and our efforts continue into 2024.
We are near completion of our one company initiative, where we are be shedding ire D and E. T C banners in favor of one name, which is quarter Hill. This means a more streamlined simplified organizational structure with one public facing presence one website. This whole rollout shortly I R D and E T here expect respect.
Charles Myers: Dave has experience managing large projects, identifying and executing client opportunities, and developing strategies to expand business into new markets. In the near term, he is focused on advancing some of our large tooling projects and will ultimately shift the majority of his focus to strategy and growth. Integration was a big theme in 2023, and our efforts continue into 2024. We are near completion of our one company initiative where we will be shedding the IRD and ETC banners in favor of one name, which is Quarterhill. This means a more streamlined, simplified organizational structure with one public-facing presence, one website.
Good brands in the industry, but there's a continuity of key relationships between teams customers an industry contracts and we don't anticipate any disruption at all.
Theres a logical evolution of the integration that began last year and frankly, one that is long overdue.
While our core operations in North America quarter Hill has a number of smaller businesses worldwide predominantly in the <unk> business as part of our integration I've done a deep dive on these operations to identify those sets.
Strictly was important.
And don't make us that much money and consume a lot of management time goal is to exit businesses that check those boxes.
And the action or Pat traffic operations in Chile, and Mexico in the fourth quarter. This is a relatively small transaction valued in the low single digit millions to generate some cash.
Charles Myers: This will roll out shortly. IRD and ETC are respected brands in the industry, but there's a continuity of key relationships between teams, customers, and industry contracts, and we don't anticipate any disruption at all. There's a logical evolution of the integration that began last year and, frankly, one that's long overdue. While a core operation in North America, Quarterhill is a number of smaller businesses worldwide, predominantly in the retail
Over the course of this year there could be more that we look at doing something similar with.
And our 2023 financial review.
John our strategy and our outlook more in a moment, but first a quick review of the twenty-three finance.
Finance.
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190.
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Charles Myers: As part of our integration, I've done a deep dive on these operations to identify those that are strategically important and don't make us have much money and consume a lot of management time. The goal is to exit businesses to check those boxes. Transaction, and our PAT traffic operations in Chile and Mexico in the fourth quarter. This is a relatively small transaction valued in the low single-digit millions that generated some cash.
And 'twenty two.
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Yes.
Peter.
A solid product.
Gross margin improvement this was due to steady performance from our forsman business improved execution in our tolling politicians and keeping a close eye on expenses looking more closely at our business units started 23, we had some major drilling projects in the implementation phase, which helped generate that cigna.
Backlog I just mentioned.
We spoke previously of the challenges at a few projects in 'twenty three we nonetheless made important progress advancing each of these through implementation and towards the operation space. Several have moved into the operation space, while others, such as Orange County, Alameda have one or two roads go live with us.
Charles Myers: Over the course of this year, there could be more that we look at doing something similar in our 2023 financial review, and I'll look at that in a moment. But first, a quick review of the 23 financials. I'm very pleased with how we, 58 and a half. Unknown Speaker Welcome back.
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First six months, just a cleanup stabilizing operation depending on the business to grow including Paypal.
Charles Myers: We will be talking about the research that's been done on the the the the the the the the the the the the the the the the the the the the the the the the the, Tumor, 1.5 million in Q4 last year. So a year revenue was $194.3 million, up 22%, adjusted EBITDA $3.4 million. 22.
Questions opportunities such as white box.
Going forward I'll be pivoting just most of my time driving growth in the business.
Quarter Hill is very well positioned to be a week or I guess put simply we want to be.
Charles Myers: Take care, a solid product with a growth Margin. This was due to steady performance from our enforcement business, improved execution in our tolling implementations, and keeping a close eye on expenses. Looking more closely at our business units at the start of 2023, we had seven major tolling projects in the implementation phase, which helped generate that significant backlog I just mentioned. While we spoke previously of the challenges on a few projects in 23, we nonetheless made important progress advancing each of these through implementation and towards operations. Several have moved into the operations phase, while others, such as Orange County and Alameda, have one or two roads go live with those. Great. Good, of Europe, from the past five. Undescribable.
Markets well.
As I mentioned on our last call not to expect any major shifts in strategy in the near term focused on growing our.
Calling unfortunately.
The case I want to talk about three areas, where we continue to strengthen our existing operations and expanding capabilities.
In Europe.
Okay.
We're looking at we're a global business today Arent Forcemeat unit operates in more than 80 countries around the world and we look to leverage Steve.
Revenue Center.
I apologize for interruption, Chuck we're having some audio issues on your line.
Is it possible that you can try and reconnection because your line is breaking up yodlee.
I'll I'll redial out.
Charles Myers: The first six months, just a clean-up, stabilizing operation is going to need the business to grow, including opportunities such as Red Fox. Just looking forward, I'll be pivoting to spend most of my time driving growth. Quarterhill is very well positioned to be a leader in ITS, but we simply want to be one of the markets. As I mentioned on our last call, not to expect any major shifts in strategy in the near term. Instead, we focused on growing our polling enforcement units.
Okay I apologize for that.
And apologies.
So the attendees will restart since we had that Mr bonds back on the line.
Hello, Bob.
We joined the conference.
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Operator: Okay, so I want to talk about three areas where we continue to strengthen our existing operations and expand capability. Unknown Speaker, of the opportunity we're looking at. For a global business today, our enforcement unit operates in more than 80 countries around the world, and we look to leverage the... Revenue Center. I apologize for the interruption Chuck, we're, Is it possible that you can try and recalibrate... The line is breaking up a lot of times.
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If you wouldn't mind, if you can start at the integration section up that's where you start to break up.
Page six subject to top of page six jump in sooner if I start to breakup. Thank you.
I'm going to start with integration and folks like that integration was the bidding.
Charles Myers: I'll redial in. Hello, I've rejoined the conference. Hopefully, you guys can hear me okay. Is that, can the moderator please give me clearance on that? Your line is sounded, would you mind it, is page six, Chuck, top of page six. Jump in sooner if I start to break up, thank you. I'm going to start with integration again, folks. Sorry about that.
Brianna.
We're near completion of our one company initiative, where we'll be shedding the I R D and E. T C banners in favor of one name, which is going to be quarter Hill.
It means a more streamlined simplified Oregon.
Charles Myers: Integration was the big... We're near completion of our one-company initiative where we'll be shedding the IRD and ETC banners in favor of one name, which is going to be Quarterhill. This means a more streamlined and simplified organization, structure with one public base, on website, and we'll roll out the beginning of the spring. IRD and ETC are respective brands in the industry, but there is continuity of relationship, by contrast, and we don't anticipate. I'm sorry, Mr. Myers, it's the operator again. Your line is starting to break today. And bear with me, folks. I'm not quite sure what to tell you, but I'll try it with Wi-Fi.
Structure with one public basi.
On website ethical rollout beginning spring.
I R D N a T C. Our respected brands in the industry, but there's continuity of relationships.
Good contracts and we don't.
And just.
I'm, sorry, I missed the lines at seal fried chicken your line is starting to break off again.
And bear with me folks I am not quite sure to tell you but.
I'll try without Wifi houses sell right.
Operator: How does this sound right now? Can you, yeah? How do I sound now?
It's still breaking up.
Operator: That sounded good. Can you hear me now? Yeah, you're sounding good. OK. Back to T.C.
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Here in Europe alignment.
Operator: Please jump in if you hear me well, to your respective brands, anticipating this corruption at all. It's logical. You're still breaking up.
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How do I sell now.
Operator: I'm not quite sure what to do here. I'll be retelling that. Oh, OK. Apologies.
That sounds good.
Can you hear me now.
Yeah, you sound good.
Charles Myers: Hello. Yep, we can hear you. Okay, great. Sorry about that, guys.
Okay.
Yes.
Back to.
Charles Myers: Three different networks now, so hopefully this one's going to work. I'm going to start with our 23 financial review. I'll touch on our strategy and outlook more in a moment, but first, quickly, a review of our 2023 financial and operational results. At a high level, I'm pleased with how we finished the year. Revenue for the quarter was $58.5 million, up 46 percent, while adjusted EBITDA was $3.2 million, up from a negative $1.5 million in Q4 last year.
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To your respective brands.
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Charles Myers: For the year, revenue was $194.3 million, up 22%, adjusted EBITDA was $3.8 million, up significantly from a negative $10.5 million in 2022, and our revenue backlog stood at more than $520 million U.S. at year end. Kyle will discuss our numbers in more detail in his section. The bottom line is that we made solid progress in 2023 with top line growth and margin improvement. Looking more closely at our business units at the start of 2023, we had seven major tolling projects in the implementation phase, which helped generate that significant backlog I just mentioned. While we spoke previously of the challenges of the two projects in 2023, we nonetheless made important progress advancing each of these through the implementation phase toward the operations phase. Several have moved into the operations phase, while others, such as Orange County, Alameda, and CTRMA, have had one or two roads go live, with others in progress, and are on deck for transitions later this year.
I'll be retailing Becky.
Okay sure.
Okay.
Okay, I apologies for the delay to the audience, we'd now have dropped back on the line.
Hello.
Blue.
Yep, we can hear you.
Okay, great sorry about that guys.
Three different networks now so hopefully it was clear enough.
I've got to start with our with our 23 financial review.
I'll touch on our strategy and outlook more at the moment, but first quickly. It will review of our 2023 financial and operational results at a high level I'm pleased with how we finished the year revenue for the quarter was $58 5 million up 46%.
While adjusted EBITDA was $3 2 million up from a negative $1.5 million in Q4 last year for the year revenue was 194.3 million up 22% adjusted EBITDA was $3 8 million up significantly from a negative 10.5 million in 2022, and our revenue backlog stood at more than 520.
Charles Myers: Our enforcement business had a good year in 2023 and has largely been a measure of consistency and steady, modest growth over the past five or six years. Among other things, we expanded our footprint by closing offices in two states in 2023, New Hampshire and Rhode Island. And in the first part of 2024, we completed a $5.3 million contract in Tennessee, which is also a new state.
And U S should the year and Kyle will discuss our numbers in more detail in his section.
The bottom line is that we made solid progress in 2023 with topline growth and margin improvement due to steady performance from our enforcement business improved execution on our tolling and obligations and keeping a close eye on expenses looking more closely at our business units at the start of 2023, we had seven major tolling projects in the implementation phase which helped generate.
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That's a significant backlog I just mentioned, while we spoke previously of the challenges ought to chew projects in 'twenty two 'twenty three we nonetheless made important progress advancing each of these through the implementation towards the operation space.
Charles Myers: So strategy, I spent the first six months focused on cleanup, stabilizing operations, and positioning the business to grow, including M&A opportunities such as Red Fox. From this point forward, I'll be pivoting to spend most of my time driving growth in the business. Quarterhill is very well positioned to be a leader in the ITS industry.
Several have moved into the operations phase, while others, such as Orange County, Alameda C. T. RMA have had one or two roads go live with others in progress in our adapt for transitions later this year.
Our enforcement business had a good year in 2023 and has largely been a measure of consistency and steady modest growth over the past five or six years. Among other things we expanded our footprint by closing businesses in two states in 2023.
Charles Myers: Simply put, we want to be number one or number two in our markets, and we think we have the foundation in place to achieve that. As I mentioned on our last call, not to expect any major shifts in strategy in the near term, as we remain focused on growing world-class tolling enforcement. While this largely remains the case, I want to talk about the three areas where we'll work to strengthen our existing operations and expand our capabilities in the addressable market, but hopefully, folks are hearing me okay. So the first is to pursue tolling opportunities in Europe, where we're a global business today. The enforcement unit operates in more than 80 countries around the world.
New Hampshire, Rhode Island, and the first part of 'twenty 'twenty four we completed a $5.3 million contract in Tennessee, Chaucer, a new state for us.
So strategy I've spent the first six months focused on cleanup stabilizing operation and positioning the business to grow including M&A opportunities such as Red Fox.
From this point forward I'll be pivoting to spend most of my time driving growth in the business.
Hill is very well positioned to be a leader in the I T. S. Simply put we want to be number one or number two in our markets and we think we have the foundation in place to achieve that.
As I mentioned on our last call not to expect any major shifts in strategy in the near term as we remained focused in on growing the world class stalling a portion of units.
While this largely remains a case I want to talk about the three areas, where we will work to strengthen our existing operations and expand our capabilities in the addressable market.
But hopefully folks you hear me, okay still the first just pursue tolling opportunities in Europe, where we're a global business today and enforcement unit operates in more than 80 countries around the world and we look to leverage its deeper presence in Europe to see tolling business. Here. This is an area of integration revenue synergy for the business has potential to be.
Charles Myers: And we look to leverage its deeper presence in Europe to seek tolling business there. This is an area of integration and revenue synergy for the business and has the potential to be a new growth driver. It involves drawing on the expertise and servicing capabilities of both tolling enforcement.
A new growth driver involves drawing on the expertise and servicing capabilities of both pulling enforcement.
Charles Myers: We'll do it at a reasonable pace. We're looking to make a bid or two in 2024, with an eye on putting, you know, shovels in the ground in 2025. We're going to focus on software. A second area of focus is R&D. I'm driving the focus on software development to support both the tolling and enforcement businesses and our penetration into other verticals. This is keeping with my background; as many of you know, I have technology all my life and recently ran an AI company that's building out its computer vision platform for the transportation sectors of automotive, railway, and logistics.
We'll do it at a reasonable pace, we're looking to make a bidder to in 2024 with an eye on putting shovels in the ground in 2025, we're going to focus on software a second area of focus is R&D and driving the focus on software development to support both the tolling and enforcement businesses and our penetration into other.
Verticals. This is a keeping with my background as many of newer technology. Most of my life and Ah recently ran an AI company that is building out his computer vision platform for transportation sectors.
Heads of automotive railway and logistics this is an area where.
Charles Myers: This is an area where we'd like to make a push. My goal for Quarterhill is to drive a greater percent of revenue and act a little bit more like a software company. It's not necessarily radical thinking.
I would like to make a push my goal for quarter he'll drive a greater percentage of revenue.
And act a little bit more of a software company, it's not necessary radical thinking or toy unit has invested more than $50 million in back office software both units offer some mild.
Charles Myers: Our toll unit has invested more than $50 million in its back office software. Both units offer some mild machine learning solutions within their product portfolio. So software is already a big part of what we do, and you can see that with the Red Fox acquisition as well. But we're doing a more focused strategy in place to expand our capability. We have an excellent CTO in Mike Childress, and an established platform to work with. But with some modest investment in the team and technology, I think we could do a lot more for our customers and earn a lot more from them. AI and machine learning will play a big role in our development and the development of the transportation industry.
Mild machine learning solutions within the product portfolio. So software is already a big part of what we do.
And you can see that with the Red Fox acquisition as well, but we're doing bore focused strategy in place to expand our capabilities.
We had excellent CTO and my children and established platform to work with both some modest investment in the team and technology I think we could do a lot more for our customers and earn a lot more from them.
AI and machine learning will play a big role in our development and really the development of transportation injures industry, and we really want to focus on these areas around visual technology vehicle I D and classification as well as data mining analytics is two areas could have a positive impact on app or a positive.
Charles Myers: And we really want to focus on these areas around visual technology, vehicle ID, and classification, as well as data mining analytics. These two areas could have a positive impact or positive applications for both of our business units, and the demand from customers is there. Since joining Quarterhill, I've met most of our tolling customers, and they kind of crave new technology, and they have expressed a willingness to pay for it. The announcement of our acquisition of Red Fox falls into this category. Red Fox is a profitable and growing provider of automatic Vehicle Detection and Classification System software, ABDC, to the tolling industry. ABDC is responsible for the detection, classification, and tracking of a vehicle as it enters and exits a tolling facility. ABDC is at the front end of any tolling transaction where accuracy and flexibility are essential. The Red Fox quantum software platform has a detection accuracy of up to 99.96%, and the ability to process captured data from both LiDAR and in the payment loop makes it unique in the market at the forefront of advanced ABDC solutions.
<unk> for both of our business units and the demand from the customers is there.
Since joining quarter Hill I've met most of our tolling customers and they kind of crave, new technologies and they have expressed a willingness to pay for it.
The announcement of our acquisition of Red box falls into this category red boxes profitable growing provider of automatic vehicle detection and classification.
System software a D D C to the tolling injures the industry a b D. C is responsible for the detection classification and tracking of the vehicle as it enters and exits a tolling facility a b D. C is at the front end of any tolling transaction, where accuracy and flexibility or ascension with central Red Fox the quantum.
Software platform is a detection accuracy of up to 99.96% and the ability to.
Process captured data for both live our lidar in a pay in and in the payment loop makes it unique.
And the market at the forefront of advanced Davies D C solutions.
Charles Myers: Our tolling unit is a customer of Red Fox, and we are a customer of Red Fox Quantum Software. So we have firsthand experience with the quantity, the performance, and the potential of the product and its quality. Quantum is a type of solution we have on our technology roadmap. And with Red Fox, we're presented with a compelling buy versus build opportunity with attractive financial terms, a reoccurring revenue model, and strong opportunities for growth. We think Red Fox is an excellent fit for Quarter Hill, and we want to welcome Steve and Andy and their team to the Quarter Hill family.
Our tolling unit is a customer of Red Fox is a customer of redbox quantum software. So we have firsthand experience with the quantity the performance and the untapped potential of the product and the quality quantum is a type of solution. We have on our technology roadmap and with Red box, we were presented a compelling.
Buy versus build opportunities with attractive financial terms of reoccurring revenue model and strong opportunities for growth, we think red Fox and is an excellent fit for quarter Hill, and we want to welcome Steve and Andy and their team to the quarter Hill family.
Charles Myers: The next area we're going to be looking at in the future, with no specific ideas at this point, is to penetrate verticals and the transportation ITS space, such as logistics. Our increased focus on technology will be a key step in helping us penetrate this market. And it's really been, but it's been, you know, largely the foundational technology to do it today.
The next area, we're going to be looking at in the future with the no specific.
Ids at this point this is to penetrate verticals in transportation I T. S space inches logistics, our increased focus on technology will be a key step in helping us penetrate this market.
And it's really been but its been.
Largely the foundational technology to do it today will.
Charles Myers: We'll be looking at intermodal terminals, ports, borders, asset management, and it's a logical, logical extension of our tolling enforcement business today. We're in the early stages of our go-to-market strategy and logistics, but we believe the addressable market is here, and it's probably larger than enforcement and tolling combined. And developing these solutions is complementary to our existing vertical.
We will be looking at intermodal terminals ports borders asset management, and it's a logical glue, it's a logical extension of our tolling and portion of business today.
We're in the early stages of our go to market strategy and logistics, but we believe the addressable market is.
Here and is probably larger than enforcement and tolling combined in the developing these solutions is complementary to our existing verticals.
Charles Myers: In terms of our outlook in 2023, we settled things down, grew our top line, and generated a positive EBITDA for the year versus a big loss in 22. In 24, we look to build on this progress by harvesting our contracts, winning strategic opportunities, and growing both revenue and adjusted EBITDA. We plan to achieve this by remaining focused on growing our world-class ITS franchises and tolling enforcement while investing in our higher-margin software applications and seeking expansion opportunities in the European tolling market and the logistics vertical. Our goal is to achieve growth while generating reliable cash flow in order to build a healthy, sustainable balance sheet capable of supporting both our organic and acquisitive growth strategies. To sum things up, I'm really excited about our potential here at Quarterhill.
In our outlook in terms of our outlets in 2023, we settle things down grew our topline and generated positive EBITDA for.
For the year versus a big loss in 'twenty, two and 24, where we look to build on this progress by harvesting our contracts winning strategic opportunities in growing both revenue and adjusted EBITDA. We plan to achieve this by remaining focused on growing our world class ideas franchises and tolling enforcement, while investing in our higher margin software app.
Obligations.
Seeking expansion opportunities in European tolling market and the logistics vertical.
Goal is to achieve growth, while generating reliable cash flow in order to build a healthy and sustainable balance sheet capable of supporting both our organic and acquisitive growth strategies.
To sum things up I'm really excited with our potential here quarter Hill, we have a great team deep industry experience growth ambitions and strong customer commitment we have excellent I T. S assets with good organic growth potential and opportunities through M&A to accelerate the growth or elevate our technology.
Kyle Chriest: We have a great team, deep industry experience, growth, ambitions, and strong customer commitment. We have excellent ITS assets with good organic growth potential and opportunities through M&A to accelerate growth or elevate our technology. We have a significant revenue backlog that provides good revenue visibility, and with the integration changes we've made, we have a good line of sight to becoming a positive cash flowing major player in the ITS. Finally, as we execute our plan, we think we bring a compelling investment in the opportunity to the street. And I look forward to being more active this year, telling our story and evangelizing the Quarterhill name. In fact, next week, Kyle and I will be at the 36th Annual Roth Conference in California, participating in a one-on-one meeting with investors, which will be Quarterhill's first time at that conference. We expect and continue to be active on the conference front and keep you posted as those opportunities materialize. And with that, I'll pass it over to Kyle. Thank you, Chuck, and good morning, everyone.
We have a significant revenue backlog that provides good revenue visibility.
And.
Oh with can provides good visibility with integration changes we've made and.
And we have a good line of sight to becoming a positive cash flowing major player in the I T. S industry. Finally, as we execute our plan, we think we bring a compelling investment and the opportunity to the street and I look forward to be more active this year, telling our story and evangelizing the quarter Hill name in fact next week, Kyle and I will be at the 36 annual Roth Conference in California.
Warn you participating a one on one meeting with investors, which will be quarter Hills first time at that conference. We expect to continue to be active at the conference front in 'twenty four and keep you posted as those opportunities materialize and with that I'll pass it over to Kyle.
I'll.
Thank you Chuck and good morning, everyone.
Kyle Chriest: Before we get into the financials, I want to let everyone know that our Q1, Canadian dollars, reflects the fact that the majority of our revenue is contracts, as well as their desire to add a senior that all discussion on quarterly and year, Islands, Financial Resources & Co. revenue is $194.3 million.
Before we get into the financials I want to let everyone know that with our Q1 'twenty 'twenty four results, we will switch our reporting from the Canadian dollars to U S dollars.
This reflects the fact that the majority of our revenue is contracted and paid for in U S dollars as well as their desire to add a senior U S exchange listing at the appropriate time.
Secondly, please note that all discussion on quarterly and year to date financial numbers reflects only the results of our ITM business.
Wildlands financial results in 2023, and 2022 are reflected in the discontinued operations line items in our P&L and cash flow statement as that business was sold in June 2023.
Kyle Chriest: We're very pleased. Revenue Generator. Progress, and at Partial Goal Light. Visibility and, A large portion of the backlog is higher market, and Ryan, Unknown. General and, ahead. Monitoring. Lower Period.
With that I'll start with a look at revenue in the quarter.
Q4 revenue was $58 5 million up 46% year over year for.
For the year revenue was $194 3 million up 22%.
We're very pleased with the strong finish to the year the increases for the quarter and year were due to growth from both tolling and enforcement units with some revenue pickup from Q3 as discussed on our last call.
Kyle Chriest: However... Thank you. If you wish to ask a question, please dial star 1 on your telephone keypad now. Once your name has been announced, you can ask your question.
This was revenue generated by timing of materials and subcontractor deliveries honor tooling implementation projects and the tolling business. We did make good progress and had partial go lives from Ctr may in Orange County that helped boost revenue in the fourth quarter.
As Chuck touched on in his section at the end of the year, we had significant backlog of more than U S $520 million, providing good visibility into revenue for the next several years.
Operator: If it's answered, before it's your turn to speak, you can dial star 2 to count. Our first question comes from the line of Gavin Fairweather of Cormark. Please go ahead. Oh, hey, good morning.
Of note a large portion of the backlog is higher margin contracted maintenance revenue versus implementation revenue.
With that said for those tolling projects that have recently moved into the operation phase margins tend to start out lower at the launch date, and then rise over a period of a few quarters before stabilizing.
Gross margin percentage in Q4 was 20% and 21% for the year compared to 25% and 24% in the comparative period last year.
The decrease in gross margin for two periods is primarily due to tolling implementation expense overruns that we've discussed throughout the year.
Of note the decrease in gross profit margin was partially offset by continuing steady performance in our enforcement operations.
Sales general and administrative expenses or SG&A were down significantly in Q4 and for the fiscal year SG&A was $9 2 million in Q4 compared to $11 9 million in Q4 2022.
Charles Myers: Maybe to start with Chuck, now that you've had kind of six months to assess the end markets, the products, and the competitive landscape, I'm curious if you have any kind of updated guideposts for organic growth, keggers, for ITFs kind of over the long haul. Can you guys hear me? There we go. Sorry about that. I had it on mute after all the shenanigans we had a few minutes
For the year SG&A was $35 million compared to $48 6 million in 2022.
SG&A as a percentage of revenue in Q4 was 16% compared to 30% in Q4 last year.
The decrease in SG&A largely reflects savings from our restructuring and integration activity in 2023, along with our ongoing focus on driving efficiencies and controlling costs.
Looking ahead, we anticipate that our SG&A expenses will increase year over year as we strategically invest in key areas of our business to drive long term growth and innovation.
Specifically, we plan to allocate additional resources towards research and development initiatives and support some one time initiatives aimed at fostering sustainable growth.
With that said, we have proven successful in eliminating costs from the business and driving efficiencies and we will be monitoring our R&D spend going forward very closely and I expect we will hold SG&A cost increases to under 10%.
Charles Myers: We expect the margins and the growth to continue, you know, somewhat as they've been. We continue, we still have some, as I mentioned before, I use the term dust bunnies that we're working on, but we feel much, much stronger where we are today than we did a few months ago. Does that answer your question, or do you want to take it?
Q4, adjusted EBITDA was positive for the third quarter in a row with $3 2 million or five 5% of revenue up from negative $1.5 million in Q4 of last year.
For the year adjusted EBITDA was $3 8 million a $14.3 million improvement from 2022.
Quarterly and fiscal 2023, adjusted EBITDA were up over their respective 2022 period due to topline growth from both the tolling and enforcement units and from the integration and cost control initiatives completed over the last four to five quarters.
For the outlook, we expect adjusted EBIT to grow this year and to trend upward as we move throughout the year. As you know Q1 is typically a seasonally slower period, primarily due to a later scheduling of projects in the winter and to weather related delays.
This generally results in a sequential dip in margin from Q4.
Further I had mentioned the tolling projects that have recently moved into the operation fees for which margins tend to start out lower and then rise over a period of a few years before stabilizing.
Turning now to the balance sheet, we ended the year with cash and cash equivalents of $56 6 million compared to $66 4 million at the end of 2020 two.
At December 31, 2023, we had working capital of $104 6 million, which is up from 71.5 million at the end of 2020 two.
Cash used in continuing operations in Q4 was $1 6 million compared to cash generated from continuing operations in Q4 last year $7.7 million.
Charles Myers: Yeah, I think we've talked in the past about maybe a high single-digit organic growth tagger. Do you feel like that's reasonable to achieve given the demand that you're seeing and where you sit competitively? I would say, yeah, I would say we'll probably have a little more visibility into that in the middle of the year, but we continue to see good opportunities. You know, this past few months have really been about stabilizing the existing business. You know, not spending a lot of time bidding on new projects. But you know that going into the new year, where our aggressiveness level is going to go up in terms of how we pursue new opportunities.
At the time of our Q3 call. We had expected the Castro would be relatively fat flat from Q3 Q4.
However, due primarily to the timing on collections on certain contract milestone payments and foreign exchange adjustments on cash cash dipped at year end.
Our outlook for cash for 'twenty 'twenty four is that we expect to generate positive cash flow for the year and to begin doing so in Q2.
Due to the nature of our business operating cash flows may vary significantly between periods due to changes in timing and working capital balances, mainly with collections and payments and timing of milestone.
Regarding the Red Fox acquisition. The total purchase consideration is 10.2 million U S dollars for the all the issued and outstanding shares of the company.
As Chuck mentioned Red Foxx is growing and is profitable and we expected to generate approximately 1.4 million U S of adjusted EBITDA in 2024.
As such the acquisition is expected to be immediately accretive in both adjusted EBITDA and net income.
In closing on the heels of a strong Q4, our goal for 'twenty 'twenty four and beyond is to generate robust cash flows and to manage expenses to build a balance sheet that can support both our organic and acquisitive initiatives.
We believe we're making progress on this front, which we expect to continue during 2024.
This concludes my review of the financial results and I'll now turn the call over to the operator for Q&A.
Thank you if you wish to ask a question. Please dial star one on your telephone keypads now to enter the queue. Once your name has been announced you can ask you a question if he phonics answer for it so to speak you can dull stahl two to counsel.
Charles Myers: And then just on the tolling side, just curious about the initial margins after you kind of go live. Would it be fair to say that they're still kind of higher than what you were seeing in the implementation phase and then kind of move higher from there? Or are they, are they kind of starting out equivalent to the implementation phase?
Our first question comes from the line of Gavin said with a core market. Please go ahead. Your line is open.
Oh, Hey, good morning, maybe to start with <unk>.
Six months to the end markets the products and the competitive landscape curious if you have any kind of updated guidepost for organic growth CAGR for.
Or I, just kind of over the long term.
Can you guys hear me.
Okay.
I never would go <unk>, sorry about that.
Charles Myers: Um, you know, that's good we've had some, some reasonable success in renegotiating some contracts in the O&M phase with some higher margins. We even in the opportunities that we've got a few opportunities we've been looking at, we're definitely bidding things a little higher margin to take advantage of what we think is there. And maybe take advantage of what we think are some under appreciated benefits that we have inside the company.
I had it on mute after all the shenanigans, we had a few minutes ago.
We expect that the margins are and in the growth to continue somewhat what they've been we compete we still have some as I mentioned before I used the term dust bunnies that we're working on but but we feel much much stronger where we are today. Then obviously you did a few months ago.
Does that answer your question or you want to take.
I think we talked in the past that maybe like a high single digit organic growth CAGR or do you feel like that's reasonable to achieve given the demand that you're seeing and where you sit competitively.
Charles Myers: So we intend to see those continue to improve. You've mentioned a bit of an increased pace of bidding on ETCA cold times here. So I guess I'm just curious, like what the volume of kind of pre-RFP opportunities are that your sales guys are in discussions on and you know, whether you're seeing any kind of significant tenders have been marked? Yeah, it's two different things.
I would say yeah, I would say, we'll probably have a little more visibility into that in the middle of the year, but we but we continue to see good opportunities, which this past few months has really been about stabilizing the existing business.
You know not spending a lot of time on bidding new projects, but you know that going into the new year work.
Our aggressiveness level is going to go up.
In terms of how we pursue new opportunities.
Got it good to hear and then just one on the tolling side just curious around like the Mis saw margins. After you kind of go like would it be fair to say that they are still kind of higher than what you were seeing in the implementation phase and then kind of move higher from there or are they are they kind of starting out equivalent to the implementation pace.
Charles Myers: You know, we continue to see good movement in the enforcement business pretty consistently. We do in the tolling business, too. As people know, there's a pretty strong backlog of bids coming up here in the future for RFPs to be issued. I think the, I always want to be cautious about when they come out because a lot of these customers are state and local contractors or public-private roads or public-private partnerships that do tend to get a lot of, let's call it, dispersion when they issue things. You might think something's coming out in March, and it comes out in June.
You know that's a good we've had some some reasonable success on renegotiating some contracts in the O&M phase.
With some higher margins.
We even now and in the opportunities that we have few opportunities we've been looking at.
We're definitely a bidding things at a little higher margin.
To take advantage of of what we think is there and.
Charles Myers: That's a tough question for me to answer. It's almost an annual type question rather than... rather than a quarter. Okay, but you're still seeing, you know.
Maybe take advantage of what we think is some under appreciated benefits that we have inside the company. So we intend to see those continue to improve.
You've mentioned a bit of an increased pace of bidding on EQT a couple times here. So I guess I'm just curious like what's the volume of kind of pre RFP opportunities are that your sales guys are in discussions on and you know whether youre seeing any kind of significant tenders have been market as well.
Charles Myers: Oh yeah, we see good opportunity. Yeah, there's definitely good activity, and we see a reasonably big pipeline coming out over the next 24 to 36 months, for sure. Well, 36 months.
Yeah, It's a two different things you know we continue to see good movement in the enforcement business pretty consistent.
Charles Myers: And then, you know, you have some logistics in the script; maybe we can just walk through it a little bit more fully. Why do you think that it's kind of a natural extension of the capabilities that you have in tolling and enforcement? And I'm also kind of curious, you know, how far along the path are you? Are you still kind of mapping out here?
We do in the tolling business as people know there is a pretty strong backlog of bids coming up here in the future of Rfps to be issued I think the.
I I always want to be cautious about when they come out because a lot of these customers are state and local.
Charles Myers: Are you starting to maybe look for, you know? I would say a little bit of both. I think that the tolling business in our enforcement business is uniquely positioned. As you look at kind of how you do data plays in the logistics space and do, you know, tracking and monitoring of vehicles for various purposes in and out of ports, things like that, in and out of airports, you name it, shipping facilities. One of the hardest problems in those businesses is always getting the act, the, let's call it, the land space. You know, a lot of times if you're looking at things with cameras or with RF, the customers want them, they're willing to pay for them, but they don't own the land or the space that you want to deploy them on.
Contractors are public private roads or public private partnerships.
They do tend to get a lot of.
Let's call it dispersion.
And when they issue things you might think something's coming out in March and it comes out in June.
So that's a tough question for me to answer it's almost an annual type question, rather than a rather than a quarter to quarter question.
Okay, but you're still seeing you know.
Oh, Yes, we received good good opportunity, yes, there is definitely good activity and and we see a reasonably big pipeline.
Coming out over the next 24 to 36 months for sure.
And then after 36 months.
And then you know you have some logistics in the scrap maybe weakness flattened out a little bit more fully why you view that as kind of a natural extension of the capability is there.
Charles Myers: The advantage that this business has, and we have so much, quote, real estate around the country in the tolling and enforcement business, we already have access to and the ability to harvest that data, and that's why we see logistics as such a good side business. And so we do continue right now to look actively at some acquisition opportunities in the logistics space and also opportunities in the data area that could, you know, really be good corollaries and additives to our tolling and commercial vehicle business. Okay, and then just lastly, maybe for Kyle, congrats on the permanent role.
Tolling and enforcement and I'm also kind of curious to know how far along the path are you or your token to mapping out a theory, starting to maybe look for some acquisition targets.
I would say a little bit of both.
I think that.
The tolling business in our enforcement business is uniquely positioned as you look at kind of how you do data data plays and logistics space and do you know tracking and monitoring of vehicles for various persist purposes in and out of ports things like that in and out of airports you name it.
The shipping facilities.
One of the hardest problems in those businesses is always getting the act the the.
Kyle Chriest: Maybe one for you, you know, we have seen a decent working capital build in 2023. Do you think that that can kind of mostly reverse itself here in 2024, if you kind of open your mouth. Thank you very much, Gavin. Working capital is something we're keeping a close eye on. It has built up here. During the first quarter, we got enough visibility now, 15 days out, to know that we'll be..., be normalizing back to bring We're at the back end of several miles. Okay, thanks a lot.
Let's call it the land space.
And you know a lot of times. If you are looking at things with cameras or are with R. F.
You know the customers want it they're willing to pay for it but they don't own the land.
Or the the space that you want to deploy on the advantage that that this business has and we have so much quote real estate around the country in tolling and enforcement business, we already have the access and the ability to harvest said data and that's why we see logistics are such a good side.
Play for Us and so we do continue right now to look actively in in some acquisition opportunities in the logistics space and also opportunities in the data area that could.
You know really big good corollaries and additive.
Two our tolling and commercial vehicle business.
Okay, and then just lastly, maybe per call congrats on the permanent raw maybe one for you you know we have seen a decent working capital build in 2023.
Operator: Thank you. Just as a reminder, if you wish to ask a question, please dial star 1 now. Our next question comes from the line of Todd Coupland of CIBC. Please go ahead with your line, Yeah, good morning, everyone.
We think that that can't kind of mostly reverse here in 2024.
Got your milestone payments.
Thank you very much Kevin.
And good question, Yeah, we're working capital something we're keeping a close eye on it has built up here during the first quarter. We got enough visibility now 15, DSO to know that we'll be dipping a bit but certainly through Q2 Q3, we expect our working capital appears to be normalizing back to a reduced level and to be bringing down the unbilled revenues and receivables.
Todd Adair Coupland: I wanted to talk to you about the market and the TAM. Chuck, you've been in the role for a little bit. You've followed this sector for a while, as everyone knows. What's the right growth rate for this market? And then how does that fit with your plans for Quarterhill? I think that, you know, I, as you know, Todd, I like to be conservative on these things.
Sure.
We're at the back end of several milestones on an implementation contracts and some of these that were negotiated years ago had backend weighted milestones that that are to come on completion here.
Okay. Thanks for the pipeline.
Thank you just as a reminder, if you wish to ask a question. Please style small one now.
Our next question comes from the line of Paul Coupland of CIBC. Please go ahead. Your line is open.
Yeah, good morning, everyone.
I wanted to talk to you about the market and the town in.
Charles Myers: So I think that there's, the market has, you know, probably some pretty good growth rates. Obviously, the TAM of the toll business as a whole is pretty large or still just in the same size, just in the US market. There's definitely a couple billion dollars of pent-up demand right now. And I think that you're going to see a pretty consistent historical growth rate; the exact growth rate, I can't recall off the top of my head, but it's, it's, you know, a 20% kind of thing. I do think the logistics and some of the data plays that sit on top of those are significantly higher growth rates, as we move on. And there's a lot of demand for, you know, frankly, just information that comes off of our commercial vehicle systems, our tolling systems, and our logistics systems.
Chuck you've been in the role now a little bit you followed this sector for a while as everyone knows what's the right growth rate for this market and then how does that fit with your plans for quarter Hills topline.
I think that you know as I as you know Todd I like to be conservative on these things.
So I think that there's a the market has probably some pretty good growth rates, obviously, the tam of the.
Of the.
The.
Tall business as a whole is pretty large are still just in the Sam just in the even in the U S market. There's definitely a couple billion dollars of pent up demand right now.
And I think that youre going to see a pretty consistent historical growth rate the exact growth rate I can't recall off top my head, but you know, it's it's 20% kind of thing I do think the logistics and some of the data plays that sit on top of those are significantly higher growth rates.
As we move on and there is a lot of demand for you know frankly, just information that comes off of our commercial.
[laughter] vehicle systems, our tolling systems and logistics system. So I think there is an expansion of the wallet.
Charles Myers: So I think there's an expansion of the wallet in the customer's wallet that may be, you know, bigger than the actual growth rate of new toll projects per se. And, you know, when you think about logistics, ports, and borders and things like that, you know, you're in Texas, and you're going to use US dollars. Is it, you know, a U.S. buy requirement?
The customer's wallet that may be bigger than the actual growth rate of new coal projects per se.
And you know when you think about logistics ports and borders and things like that.
Year in Texas, and you go into U S dollars is it U S U S <unk>.
By requirements.
Todd Adair Coupland: I imagine you'll probably satisfy those. But what about the customer? Is it a crossover? Do you have to learn new skills?
I guess I imagine, you'll probably satisfy those.
What about the customer or is it a crossover or do you have to learn a new.
Todd Adair Coupland: Stand-up and go-to-market motion in terms of logistics. You mean moving from Canadian dollars to U.S. dollars? Well, I don't think that probably matters very much, but the Buy American point, I would imagine, would be fairly strong in border deals. Reports, is that? No, I don't.
Customer list or <unk>.
Stand up a new go to go to market motion in terms of logistics.
You mean.
You mean in moving from Canadian dollars to U S dollars, while I don't think that probably matters very much but you know it but but.
Gordon I have a maryland given up.
While the buy American point, I would imagine would be fairly strong in in in border deals and and ports.
Is it is that no I don't I don't suspect that's going to impose an issue.
Charles Myers: I don't suspect that's going to impose And what about look, is their knowledge of this market built into Quarterhill now, or is it a full, It's going to get you that. I think there's probably some tuck-ins. There are definitely some acquisitions that we've seen kind of get tossed over the transom. But we really wanted to get things settled down, and I think we've done that. We still have work to do, but I think you can see that we settled things out a bit. And now we're going to spend more time this year looking at those, but making sure, very similar to Red Fox, we're looking for accretive deals that we can afford, that the balance sheet can support, and those are the kind of deals that we're looking at.
Okay.
Okay.
And what about look is is their knowledge of this market built into quarter Hill now or is it a full acquisition.
That's going to get you there.
I think theres, probably some tuck ins.
Is there is definitely some acquisitions that that are that you know we've seen kind of get tossed over the transom and but you know we really wanted to get things settle down and I think we've done we still got we still got work to do but I think you can see that that we settled things out a bit and now we're going to spend more time in this year.
And looking at those and you know, but making sure very similar to the Red box you know, we're looking for accretive deals that we can afford.
The balance sheet can support and those are the kinds of deals that we're looking at and it's going to be it'll be a different thing. If we do a big acquisition in that area will well private E. Oh, we'll definitely take a pretty hard look at things and make sure it's going to fit with the business when I don't want to make many mistakes in that area.
Charles Myers: And it'll be a different thing if we do a big acquisition in that area. We'll definitely take a pretty hard look at things and make sure it's going to fit with the business. Don't want to make many mistakes in that area, and then. When you look at your backlog, how much of 2024 would you say is already booked, and how much do you have to go?
Okay.
And then.
When you look at your backlog how.
How much of the 2024 would you say is already booked and how much do you have to go.
Kyle Chriest: Maybe I'll let you. I know the number, but I don't want to steal Kyle's thunder. You want to talk about that, Kyle, in round numbers? Todd, we're expecting, I'd say about 70% of our 2024 is already cooked in our backlog, but we also, on top of that... A lot of contracts that have, and renewals here, where we've been on site for a number of years, and the renewals are relatively assured, and there's another, They're not backlogged until the date they're signed. The renewals, Sorry, sorry, that's within So you more or less have visibility on 2024. So what are the upside or downside levers beyond what you have visibility on now?
And maybe I'll, let I E.
I know the number but I don't want to steal Kyle's Thunder.
You want to talk about that Kyle in round numbers.
Hey, Thanks, It's my first day on the job here, so I can take that one.
Yeah.
Todd Todd were expected I would say about 70% of our 'twenty 'twenty four is already cooked in India in our our backlog, but we also on top of that there's a lot of contracts that have some significant renewals ear to ear, where we've been on site for a number of years and the renewals are relatively assured and theres. Another 15 to 20.
Percent of of those contracts as well.
So they're they're not backlog until the date, there signs, but the renewals that have been coming for for a number of years.
I see sorry, sorry, that's within the 70 or that's on top of the seven on top on top.
Okay.
So you more or less have visibility on 2024, so what are the upside or downside leavers beyond what you have visibility now how should we think about that.
Kyle Chriest: How should we think about that? Some of it is still customer timing; we have the contract signed, they have..., even Customer Demands and Delays. And then, you know, if you have, you know, 70 to 90%, more or less line of sight for the backlog, it what what's the target? You can answer this question, you know, the targety, but within that mix. Is it double digits? Is it high single digits? Can you give any color on that?
Some of it is still customer timing, we have look we have the contract signed they have some subcontract non labor components, and giving customer demands delays infrastructure being ready ahead of us that could slip things out between the quarters and we've seen that I think just in Q3 last year with the timing on some deliverables slipping into Q4 this year.
That's one of the main the main drivers.
Okay, and then you know if you have 70% to 90% more or less line of sight for the for the backlog.
What what's that.
If you can answer this question that you know the target EBITDA with it within that mix is it is it double digits is it high single digits can you give any color on that.
Charles Myers: You want me to take that, or do you want to take that, Kyle? No, I was just going to say, you know, it's the same thing we've kind of said before, you know, we want to get to, you know, double digits as quick as we can. And, you know, we kind of look at where our peers are. And if you look out, you know, our kind of target is to get up to 20%. You know, how fast we get there, you know, we're kind of looking over a horizon of a couple of years to get there. I don't really want to get much more than that because there are just so many sensitivities from where we are and what kind of acquisitions and things that we do.
You want me to take that or you want to take a cow no I'll go ahead Chuck.
No I was just going to say you know it's the same thing that we've kind of said before you know we want to get to <unk>.
Double digit as quick as we can.
And you know we kind of look at you know.
What where our peers are and if you. If you look out you know our kind of target is to get up to 20%.
How fast we get there you know we're kind of looking over a horizon of a couple of years.
To get there so.
But I don't really want to give much more than that because there's just so many there's so many sensitivities from where we are and what kind of acquisitions and things that we do.
Charles Myers: Very last question for me. So, you know, you obviously have a good-sized backlog. Maybe talk about the funnel. You're going to focus more aggressively on closing deals. Could we actually see the backlog, with that stance, grow faster than the revenue? A little bit about that. Thanks a lot. That's possible.
Great last question for me. So you know you obviously have been a good sized backlog.
Maybe talk about the funnel youre going to focus more aggressively on closing deals could we actually see the backlog with that stance grow faster than the revenue.
Just talk a little bit about that thanks a lot.
I I would make is it good.
That's possible I think if you've noticed that Ah I think Kyle Scott in there right now about 520 million in contracted backlog until notice.
Charles Myers: I think if you've noticed that, I think Kyle's got in there right now about 520 million in contracted backlog. And if you notice, that's up already. I think in the last quarter, I think we were at right around 500.
That's up already I think in the last quarter I think we were right around 500.
Charles Myers: So that has grown. You know, in all honesty, Todd, I haven't looked at the deltas on that. That might be something we have to get back to you. Appreciate it. Look forward to the year. Thanks a lot.
So that that has grown.
I you know in all honesty, Todd I haven't looked at the at the deltas on that that might be something we have to get back to you on.
Okay. Appreciate it look forward to the year. Thanks a lot.
Charles Myers: Thank you. Thank you, and there are currently no further questions in the queue, so I'll hand the floor back to Mr. Myers. Great.
Thank you.
Thank you and there are currently no further questions in the queue. So I'll hand, the floor back to Mr. Myers for closing comments.
Charles Myers: Hey, I wanted to, you know, welcome Kyle aboard. He's been working hard and has been working essentially as the CFO for the entire time I've been here as a regular CFO and done a terrific job. And I have to thank our team for just being spectacular.
Great Hey, I wanted to.
Welcome Kyle aboard he has been working hard and.
He has been working essentially as the CFO for for the entire time I've been here as regular CFO another terrific job and I have to thank our team has just been spectacular so one of the most enjoyable companies.
Operator: It's one of the most enjoyable companies I've ever worked at in my career in terms of, you know, the quality of people that are here. So, and I want to, obviously, thank our investors. We're here for the investors. We're really trying to put our best foot forward and do a great job for you and grow this company. And we're all super excited to be here. So thanks for taking your time. Thanks for putting up with our call-in services and technical difficulties, and we look forward to a long relationship with our investors. That concludes the conference, thank you all very much for attending; you may now go.
I've ever worked at my career in terms of the.
The quality of people that are here, so and I want to thank obviously, thank our investors where we're here for the investors.
We're really trying to put our best foot forward and do a great job for you and grow this company and we're all Super excited to be here. So thanks for taking your time, thanks for putting up with our call in services technical difficulties and we look forward to to a long relationship with our investors.
Thank you. This now concludes the conference. Thank you all very much for attending you may now disconnect your lines.