Earnings Transcript for CTXXF - Q3 Fiscal Year 2023

Grant Howard: Good morning or good afternoon, everyone depending on where you are, and thank you very much for attending. We're still looking at any people around here. Gentlemen, a heck of a quarter, record all the way around, the multiple outcome in the particular junior market environment. I'm going to turn it over immediately to Jeff Kendrick, President and CEO of CEMATRIX; and Randy Boomhour, the CFO. With that, Jeff, I'm sure you have some opening remarks, barring definitely a moment to celebrate.

Jeff Kendrick: Well, thank you, Grant. And yes, Randy and I want to welcome all of you as a good morning or good afternoon, and thank you for attending our Third Quarter Earnings Webcast Presentation. Of course, you all know it's been a record year and to-date, a record quarter. If we sound giddy, we are. We're excited about how things are going at CEMATRIX and we want to share that with you. So, I plan to start off the presentation and cover some topics I want to highlight for you, then I'm going to pass it over to Randy, who is our CFO. But I also wanted to mention that he's also managing our Canadian operation as well. So, he's really not only in tune with the financial side, but also the operations, particularly on the Canadian side and -- but also learning a lot about the US operation as well. So, let's get started. Table of content, we'll just go over that quickly. We're going to go over the third quarter highlights, our record-breaking sales, of course, a strong fourth quarter expected as well, talking about safety and equipment, and it's a priority for us. We'll update you on the backlog and sales pipeline growth. Talk about the million-dollar projects that we introduced at the beginning of the year and where they stand and how that is going, talk about million-dollar project locations. We're also going to talk about 2024, how excited we are about that. And then we're going to pass it over to Randy, who will go over the quarterly and year-to-date financial statements in detail with you. Then at the end, of course, Grant will come back on and monitor the question session and look forward to answering any questions that you may have. So, first, the third quarter highlights, record sales, quarter and year-to-date and of course, we're already over last year's annual sales, which was a record year as well. Margins continue to improve. They're not all the way up where they could be yet, as still some lingering effects of the supply issues from last year. Return to quarterly profitability, which is very exciting. No significant safety issues even in this time where we've been extremely busy. Balance of the year looks strong. We've landed $30.2 million of new contracts since the end of the last quarter, and of course, we continue with a strong backlog in pipeline. There's many other highlights, but those are some of the strong ones for the quarter.

Operator: Jeff, you're still on the trends [ph] slide.

Jeff Kendrick: Sorry about that, everybody. Let me move it forward. Thanks Joe. So, move on to the next slide. Of course, record-breaking sales continue, all-time quarterly record sales of $20.3 million, all-time nine-month sales of $33.7 million, and we've landed $51.9 million sales contracts since the beginning of the year. Strong fourth quarter expected as well. Fourth quarter is not usually as strong as the third because we're heading into the end of the construction season, but we're going to have probably a record quarter for the fourth quarter as well. Those contracts are already in place. Of note, nine of the $15 million projects that are still going this year are either being core during the year-end completed or during the quarter inflated or started previous to the quarter and will be completed or will be starting in the quarter and completed next year. So, it's going to be a big quarter for us as well. And the balance of the quarterly sales will be made up of projects under $1 million. There's many of those projects as well. With this busy time, we're incredibly stretched as a company. When you go from little sales to a significant amount of sales in a very quick point -- amount of time, it always puts a strain on your people and your equipment. Fortunately, we have a great staff with us and we have a great maintenance program. Our staff are well cross-trained and they are always looking out for themselves and the safety of others. And of course, these maintenance programs that we have in place that we basically run all year round, but mostly during the winter time, keeps our equipment running a full time. Hence, there have been no significant safety issues and no significant equipment time out. So, that keeps us operating at full capacity. Our backlog, you would expect that this backlog after putting $20.3 million in sales in the ground during the quarter would have actually gone down. And it's actually stayed fairly consistent and strong as we continue to land more projects. Sales pipeline is also still up at $425 million. It usually goes down near the end of the year as a lot of the projects for the year that have come out have been contracted and are no longer in that list. But again, it's been added to all year and it stays very strong, over $400 million. Million-dollar project changes. There were a couple of projects that, of course, got pushed into next year, which is kind of amazing with what we've been doing without them. One of them happens to be the North Carolina project that was partly scheduled to be done this year. What's really interesting is that we actually in our original budget, $13 million related to that project. Those sales have been all pushed to 2024, but we've replaced that entire delay with other projects, and it's the great year that we're having. What's very also interesting is that entire project has to be completed next year or they start to run into penalties. So, this means that we'll have a very busy 2024 with respect to that project alone. We always like to show you where these million-dollar projects are. Now, I got 20 million-dollar projects locations because we have five new ones that have been announced to relate completely to next year in addition to the ones that are either being late this year or started this year and will be completed next year. So, you can see that these projects are all over North America and they pertain from projects to tunnel grouting to MSC and overpass panel backfill to road construction to commercial and industrial construction. So, it's been a very, very busy year for us right across North America. Then the other thing to keep in mind is, besides the fact that we're having a great 2023, we've already got a strong 2024 already in place. I've announced in previous webcast and news releases that $49 million of the $75 million or the $70 million related to those larger projects that have been landed relate to next year. So, we've already got a great start for 2024 in place. The other thing to keep in mind, too, is that if we're doing $40 million plus and $30 million relates in 2023, that is -- and $30 million relates to low larger projects, that means 25% or $10 million plus relates to these small to midsized projects. So, when you add to that and continue to see the growth in that category to the projects that we already landed on from a large project perspective, we're looking at a good 2024 and beyond as well. That's really how my section is summarized up. I will come back again at the end to answer any questions you may have. I'll now I'll pass it on to our CFO and General Manager of our Canadian division, Randy Boomhour.

Randy Boomhour: Thank you, Jeff. If you can go to the next slide for me, that would be great and then maybe one more. So, these are just our financial statements. I won't go through these in detail, they are obviously, public, releases on our website and on SEDAR. We've already talked about the quarter. If we go to the next slide, we'll pick out some highlights, some of the metrics that are important to us that we track and pay attention to. So, obviously, from a revenue perspective, $20 million in the quarter versus $11 million last year, 76% increase, almost $34 million year-to-date versus $21 million last year, a 63% increase. Gross margins are up, $4.6 million in gross margin, 23% this quarter versus $2.2 million or $2.4 million improvement. Year-to-date, we're at $6.5 million, 19% versus $2 million last year, so a $4.5 million improvement. So, really significant improvement in gross margins. Operating income also up in very similar numbers, which makes sense because operating income really is just gross margins, less SG&A. Adjusted EBITDA, which is very important to us, up significantly as well. $3.2 million in this quarter versus $0.9 million last year, $2.3 million improvement. And on a year-to-date basis, which we're especially proud of, we're now positive $2.1 million year-to-date versus negative $1.9 million last year, so a $4 million improvement. Cash flow from operations, and this is cash flow from operations before working capital changes, again, positive in the quarter, $2.2 million improvement versus last year and year-to-date, $2 million versus $1.9 million last year, so again, $3.9 million improvement. So, very significant. Cash on hand as of the end of September is $1.9 million. With our positive EBITDA and positive gross margins, we do expect to be generating cash, which should start showing up in our bank account here as we get paid for our work in Q3 and Q4 in early Q1 would be our guess. So, overall, just a great quarter, as you all know. So, this slide we like to show basically because we are a specialty construction contractor. As a result, we are subject to the seasonality of the construction business and industry, especially when we work in the northern climates where much of our work is, especially in Canada and Northern states. So, Q1, Q2, on average tends to be about 35% of our revenue. Q3 on average tends to be about 35% to 40% of our revenue and Q4 is generally 25%. You can see that trend in these lines from the previous four years. The other thing we're especially happy about is how we delevered and simplified the balance sheet, really increasing the long-term survivability and sustainability of the company. The chart on the left shows our borrowings. And as you can see back in 2020, our borrowings of all types was quite high, over $20 million at one point, and now we're down under almost $3 million. Capital structure has also been dramatically simplified and really, we just have the shares outstanding of around $134 million and then we've got some options in RSUs outstanding associated with the equity program. So, great income statement, profitable cash flow positive, simplified balance sheet, strong balance sheet, and also simplified capital structure. So, we really feel like the company is poised for dramatic growth and we set the company up to basically have the flexibility to be able to realize on that growth potential. I think that's it from my section, Jeff.

Jeff Kendrick: Thank you, Randy. We'll pass it back to Grant and get into the question-and-answer session.

A - Grant Howard: Thanks Jeff and Randy. Again, congratulations on the numbers. They are outstanding. Jeff, maybe kill the presentation and then we can see both of your steaming [ph] faces full on here. [Operator Instructions] We have one, so I'm going to start with that and give some time to submit some questions. In regards to Glavel, if you can provide an update on that investment, please?

Jeff Kendrick: I'll handle that, Grant. So, Glavel is, again, a private company. And like us in the past few years, they've been affected by the COVID and the supply chain issues in developing their business. Right now, their sales are grown. They're struggling in growing their sales as we are and partly because they only have one kiln in place, again, because of the COVID delays that caused that second kiln to be delayed. And because of the delays in the process of working those things out, getting the funding in place for the second kiln. And of course, when they do that, then they'll be able to bid into the strong growing infrastructure market that we are actually into as well. And so that is hopefully going to happen within the next six months to a year. And in the meantime, again, because they're private, can't say much more about it at this point in time because we're a 20% shareholder, and I'll leave it at that.

Grant Howard: Great. We got one hear from Andrew as the former research analyst. It's a long question. So, I'm going to break this up in different parts. Firstly, congratulating you and he's -- the company. First part of this question is on gross margins in the bidding process. And he says since you're the leader in cellular concrete for the most part, you must be competing against the alternative to cellular concrete, which are more expensive slower, harder to use, et cetera. So, shouldn't there be room for pricing power? Could you capture higher gross margins on pricing. So, let's start with that part of the question.

Jeff Kendrick: Okay. I think we are already. So, yes, the answer immediately would be yes. But there are competition out there, right? He had mentioned one was other competitive products, so not other cellular concrete suppliers, and that's really critical. And really the big part of our market, which is MSC Panel backfill, which is replacing EPS block and the prices that they charge in doing so, that really sets really the price limit that we can go in from a market. We are still early stage. Remember, it is growing like crazy, but it is still early stage, and many projects are still done with the old legacy products. And hence, we are still, again, developing markets. And you can really see that this year. Our backlog, before discounting sales, has actually grown by over 64%. And we see this continuing to grow, maybe not as strong as 64%. Last year, it was 36%. So, -- but what it is -- it's -- we continue to replace these legacy products in these projects that are going forward. It doesn't mean we don't still compete with them on a price basis. What also was happening in the marketplace on the cellular concrete side is there's a few more competitors coming into the marketplace. They don't have the technology that we have or the capability that we do. But they're still out there bidding against us on these projects. Some of them bid on them even though they can't do the project. So, pricing is always an issue. We are improving our margins and our margins will continue to improve over time, but there will be a leveling off process where there's a maximum that we can charge in a particular field. And it all depends on the individual market and the products that we're competing against in that market.

Grant Howard: [Indiscernible] as in regards to material cost change, how much that has been impacting your price that you have to charge the customer and the last part in regards to the relationship with Lafarge, if there's been any changes there?

Jeff Kendrick: Well, there's no doubt that the material price increase by as much as 30% last year when we had the supply chain issues. Have they reduced the price from that because there isn't a supply chain issue there? No. So, -- but what we've done, everyone, is that we charge our percentage or the same margin on top of that cost. So, our margins actually from a dollar perspective, should increase because we're charging the same percentage on those same projects. Thus, the dollar part of that margin percentage should be higher because the project dollars value will be higher. But we don't expect to see significant price increases on the cement side over the next year, but you will see inflationary pressures in other areas, including wages and things like that. The inflation is very strong out there still. And the governments and banks are doing their best to try to minimize the effect of inflation, but it still is affecting the marketplace out there. And our relationship with Lafarge continues to grow, it's strong. But one thing that we recognized during the supply chain issues last year is that we need to develop relationships with other cement companies as well. So, 2023 was not only spent growing our sales base, but also in growing our alliances with various cement companies that work in different markets that Lafarge was not as strong in, but also in the markets that Lafarge as well because last year, as you can remember, Lafarge wasn’t able to supply many of our projects due to the issues they had with their plants and their supply themselves.

Grant Howard: Here's a questions and they are lot of them already. I will try to aggregate one with around the same topic, I was still on margins, a great job given the size -- sorry, are the margins a lot higher on the bigger projects? Will there be a point in time that you would have minimum project size?

Jeff Kendrick: I'll let Randy handle this one. Maybe he's knowledgeable on this side, too, so.

Randy Boomhour: Yes. Thanks Jeff. So, definitely, as the projects get larger, more and more of our competitors are interested in them and have visibility, so there's a lot of competitive pressure. So, often, the larger the project, the smaller the margin has to be in order to win that work. So, there's definitely a balancing act there. And sorry, Graham, what was the second part of that question?

Grant Howard: [Indiscernible] will you have a minimum project? I believe, what been asked here is you will get so busy that [Indiscernible] we won't bid on anything under $1 million?

Randy Boomhour: Yes. So, I would say that is possible in the future, but I don't see that in the near future. Right now, those small jobs help to keep our equipment and crew busy and keep the lights on while we wait for the bigger jobs to start. So, I think those are still a very important part of our business model.

Grant Howard: There are several questions all asking about 2024. You've already said you're set up for a great 2024, people are asking what you anticipate in revenue and potential margin for the coming year?

Jeff Kendrick: 2024 is going to be a good year. But let's remember that 2023 was a remarkable year. We've never seen this in the past, but projects actually moved up. Usually they get delayed by six months to a year, but we have actually had some projects move from next year into this year. So, we're going to have a good year. And -- but we're not going to give any guidance right now. This is a very fickle early-stage growth market. And because we're in the construction business, you see variability in the projects. Next year, we do have that $22 million North Carolina project to really put in place, early expectations as they would like to complete it all next year. Do we have confidence that will all be placed next year? No, to be quite honest. So, again, we have to be realistic. Let's look at this as two parts. 2023 is a great year better than expected. And 2024 will be a good year, but it will be hard to judge where exactly how much better or similar it will be to 2023.

Grant Howard: Given the size of the backlog is mainly due to the unavailable project or to cellular concrete being accepted -- or even more accepted as a viable solution?

Jeff Kendrick: It's both. There are certain markets that are already developed and growing and then we're entering new markets in areas where we -- cellular concrete has never been used before. So, it's starting to be accepted more and more in other places and other types of applications to as well. One of the big projects we've done this year is a geothermal insulation project, something that we've never done in the past. And it's a very large project that's being worked on right now. So, we expect that the sales pipeline or the backlog will continue to remain strong, but it should slowly come down to 1 to 1.5 times sales in the future. This is unusual that it's this high, partly in part as people should know is that we have two large projects in there that were awarded in the past few years that the one -- both of them are not underway yet, but both of them are expected to be underway in 2024. So, that will -- as those start to go under around, assuming that we don't replace them with other larger projects, we may see the backlog come down.

Grant Howard: Starting with the repeat [Indiscernible] you work with different contractors?

Jeff Kendrick: Absolutely. Without getting into detail, there are a number of occasions where we get called back regardless and it doesn't go into tender for the second part of the project or it does go into the tender and we may be high and we still get the project because of the skill and the capability and the results that we've had with previous work with them. So, lots of repeat business.

Grant Howard: Congratulations on an excellent quarter and year-to-date, you talk about macrotrends [Indiscernible], so how do you see infrastructure -- in 2024 and beyond?

Jeff Kendrick: Grant, I'm sorry, and I don't know if Randy heard you, but you came in very garbled on that.

Grant Howard: I'll -- hopefully without breaking up. Congratulations on the quarter and the year-to-date. Can you talk about macrotrends in your business, how do you see infrastructure spending in 2024 and beyond?

Jeff Kendrick: Randy, do you feel like taking this one on or do you want me to?

Randy Boomhour: I think maybe you take a first shot at it, Jeff and if I have something to add, I'll tag on.

Jeff Kendrick: So, just to go back to where we were and what people were talking about a couple of years ago was all of the infrastructure spending that has been planned across North America. And last year, Biden had approved a $6 billion infrastructure spending on infrastructure. And that was just a small part of what is required to bring the infrastructure in the US up to grade and so it just keeps getting worse. The fine part of that is we've never seen any of those projects go into the ground, even our cement supplier, Lafarge hasn't seen any of those projects. So, we're not sure what is happening with them. But what it does tell us still is that there's a huge market out there that has of many different types of bridge and road and stuff projects to replace aging infrastructure that we will be part of and we're not even seeing that yet. So, all we're seeing is the growth in the just the normal markets. The normal annual replacement of bridges or new bridges, I should say, mostly, and the repairs and maintenance of roads and highways and building of new highways. So, once this infrastructure spending starts to take off in the US, which we expect because it has to happen, it's certainly going to affect our markets and the overall conditions in the marketplace. I don't know if you want to add to that, Randy. But in other words, it's still a very strong growth market.

Randy Boomhour: Yes, I agree, Jeff. I just -- I would say just the aging infrastructure and the headwinds associated with that will drive it, less so about political announcements. And the -- I would say the cycle between a political announcement and an actual project being thought about and then a project actually be delivered, that lead-time could be years, maybe even decades. So, often the work that we're working on now is stuff that was thought about 10 years ago and planned five years ago. So, I think you nailed it.

Grant Howard: Buybacks, given that you are now cash flow positive, is there a desire to buyback stores, management believes that the stock is undervalued?

Jeff Kendrick: There's certainly -- we've talked about it, but one of the things that's important to do here is to make sure that we have the cash in the bank to do that, right? So, not only the cash and bank to do that, but also the cash in the bank to manage our operations moving forward. As Randy mentioned earlier, we expect to generate strong cash flow this year because we're looking at a strong 2024. We'll continue to generate strong cash flow next year. So, we'll continue with our current focus. What is again to pay back debt put us in a strong position moving forward, so that we can have decisions like potentially buying back shares to be part of our discussion in the future.

Grant Howard: How much growth are you seeing [Technical Difficulty]?

Jeff Kendrick: That one was again garbled, Grant, sorry. I think you asked about the Ontario market?

Grant Howard: Yes. Much growth to be seen in road construction, am I coming through okay?

Jeff Kendrick: Yes.

Grant Howard: And has Ontario adopted the technology?

Jeff Kendrick: I would say we're getting there. It's been many years since we first got approval, and then we started to put the product in the ground. So, we're expecting good things for Ontario, but it's still early stage. And we hope -- we are very hopeful that within the next year or two that the Ministry of Transportation of Ontario, will start specifying our product into more and more projects in Ontario.

Grant Howard: Probably don't want to move too fast, right? Because of the seasonality, do you think you can maintain profitability every quarter, -- demand and offsetting seasonality for 2024?

Jeff Kendrick: I'll let Randy answer this one.

Randy Boomhour: Yes. So, it's a really good question. It's one that we think about quite a bit, actually, and we're working hard to develop markets and applications where we have a lower seasonality impact. For example, if we do work on the West Coast, the winter really doesn't apply out there. If you do a large tunnel growth project often it's underground. So again, the winter is not a factor. So, we're looking at ways to mitigate seasonality. But I would say, realistically speaking, unless we have a large project that goes in the first quarter or second quarter, we're likely not going to be cash flow positive or EBITDA positive in the first quarter. And then hopefully, second, third, and fourth, we should be going forward depending on -- again, it all depends on the projects, but that's our plan. So, we're looking for ways to mitigate that impact. But realistically speaking, the first quarter is going to be tough for us.

Grant Howard: You've got the [Technical Difficulty]

Randy Boomhour: I'm sorry, I missed that again, Grant. I'm -- you're coming through garbled.

Grant Howard: Brick walls, a question about what was the number in terms of earnings per share this quarter?

Randy Boomhour: I don't have that off the top of my head. I know it's in our financial statements. I can look it up and get back. We can circle back to it Grant.

Grant Howard: Okay. How do your current staffing levels match to your future workload? Do you have the people to deliver what you're bidding on? Or would you need to increase staffing?

Jeff Kendrick: As we grow, Grant, we'll have to add some people. Right now, again, we're going to be able to do $40-plus million in sales with the staff level we have. In order to do that, we hired two or three seasonal employees during the summer. Our key employees are trained well and cross-trained to break down to do different teams for different projects. And we've done that this year and we'll continue to do that in the future. So, we will have to add staff, but not significant. Each one of our large pieces of equipment can operate between three and five staff, depending on the type of project. And the smaller projects are usually two to three staff at the max. So, again, one of our big pieces of equipment can produce up to 250 cubic yards an hour. So, we don't need a lot of staff to produce a lot of material. So, it won't require a significant increase in operating staff, but it will require some increase as our sales grow.

Grant Howard: [Technical Difficulty]

Jeff Kendrick: Grant, sorry, you're not coming through again.

Grant Howard: Okay. Obviously, I've got a mic problem here.

Jeff Kendrick: I can hear you now.

Grant Howard: Okay. Are you expecting to conduct further acquisition in fiscal 2024 and with a low cash balance currently, do you plan any further fundraising next year?

Jeff Kendrick: No, we're not planning any acquisitions in the short-term. I think we've explained to our shareholder base and the audience that we put a hold on that for now. What we're focused on is achieving and when we achieve, we're going to generate cash flow, put the company in a better position not only to grow, but also to be able to do different things to look at potentially acquisitions in the future. Because we're generating significant cash, we will not be going back to the market rates ones in the short-term. So, we're in a good position moving forward. As Randy explained earlier, we've delevered our balance sheet. We have very little debt. We're generating cash. Our sales are growing dramatically. Our margins are increasing, and we're making money. So, we're pretty happy and excited about that. And for now, we'll focus on those things.

Grant Howard: [Technical Difficulty] someone was asking about is there any concern about CEMATRIX being a supplier because the stock is [Technical Difficulty] and then potentially could be a risk of hostile takeover to loss bid offer? And what, if anything, has management done to prepare for that debt come to pass?

Jeff Kendrick: We are concerned about it. It always is a possibility and we have discussed and [Indiscernible], but it's very difficult to protect us from that particular situation other than we have a strong base of key shareholders, right? If you put them all together, we're probably at 50% plus. So, again, maybe not that high, maybe is a little bit lower than that now with the $23 million raise we did in the past couple of years. But we're in pretty good shape moving forward, but we can't stop something that may happen in the marketplace. We can only do the best we can to protect ourselves and just move forward with the operation of the company.

Grant Howard: Can you talk a bit about any additional traction in using cellular concrete road base? I know you have both studies going on with the University of Waterloo. I think at the option of the product is the road base to be one of the bigger growth areas for you. How many projects have happened in this application and are you seeing -- activity?

Jeff Kendrick: Yes, I mentioned that we look at the Ministry of Transportation in Ontario starting to approve our project -- product for more and more projects in Ontario over the next few years, that will include road bases. As part of the University of Waterloo Research project, which is complete now. There were a number of road bases that were done and tested. They all came in. The results were very good. And now engineers are starting to use that knowledge to design roads and projects for the future. As Randy mentioned, you start designing them. They may take two or three or four years to start rolling into place. And that's a reality of getting approved finally and getting specified, it doesn't happen overnight because a lot of these are very large projects. But it is moving forward, that Waterloo project -- our University of Waterloo Research project was extremely successful and engineers are now using that knowledge in order to design future roads

Grant Howard: Well, congratulations on a great quarter. Two-part, part one, please comment how working capital requirements are expected to change with the financial growth in revenue?

Jeff Kendrick: Randy, do you want to answer that one?

Randy Boomhour: Sure. Yes. I think like any business, when you experience growth in revenue like we have, there's going to be a draw on working capital, and we definitely saw that in the third quarter. So, despite being cash flow positive from operations, we were cash flow negative from working capital. But as those revenues get collected over time, that will turn into cash in the bank, especially as -- when we hit our slower period in Q1. So, Q1 is really when we expect to accumulate the cash that we've earned in Q3 and Q4. And then if we can be profitable overall, that cash stays in the bank and helps us fund the working capital requirements in the future. And we also have the CIBC credit facility in place, which was put in place for the specific purpose of helping to manage working capital and we haven't had to use it yet. So, I would say, Grant, it's kind of the working capital increase to summarize as its expected. And if we were profitable overall, that will turn into cash in Q1, which will help us manage our business going forward.

Grant Howard: Okay. The second part of the question is, do you expect the bidding process become less competitive that cellular concrete becomes better known as an efficient freeing alternatives?

Jeff Kendrick: Are you saying -- the bidding process would become the less competitive

Grant Howard: I think what is being asked here is as cellular concrete becomes more accepted and it's more viable in its green or let's put that way than some of the competitive materials such as the block, the Styrofoam block [Technical Difficulty], we anticipate that less of that material would be used and on the other side, there'll be more and more demand cellular concrete.

Jeff Kendrick: Yes, there definitely will be more demand. As people get used to using our product and the benefits not only from environmental, but from a price, from a placement, from strength, from longer-lasting, all of these benefits that become part of the cellular concrete story will mean that we will displace more and more of these legacy products. And you can see that in the US already where the market is about 10 years ahead of the Canadian market and even in Western Canada, where we started to develop in the market, and we're seeing significant growth in our markets out here in Western Canada, and we're seeing strong growth continuing across the US. And all of that growth is really replacing legacy products, products in the projects they used to use them, right? So, yes, the answer to that question is yes.

Grant Howard: $40 million in contract with you thought for next year, does that include all of the $22 million North Carolina job?

Jeff Kendrick: It does.

Grant Howard: Okay. Direct to the point. Congratulations on the great quarter. Can you speak about what specifically is being done in the market CEMATRIX as an investment, so question in and around how we're going to get the stock price up? And I would just note that last time I looked, which was about half an hour before, you started at webinar that we were pulling out of 900,000 shares. It was a lot of very good turn over the volumes have come up, the combination of results and people just know that you now have grown register lift for CEMATRIX to over 3,000 people and that's tripled in the past year. So, there's a lot of eyes on the story, but I'll turn it over to you, both now.

Jeff Kendrick: Well, I think the main thing is to really succeed. So, we're putting the product into place, making the sales, generating the profits, generating the EBITDA, that's, first and foremost, it has to be done. Hard to tell a story when you're not achieving. So, not only we have achieved, but as Randy mentioned earlier, and we've talked about before, so we've delevered the balance sheet. Like we're in a really good spot going forward. We're generating our own cash. We're growing in sales. We're growing in business. And now we've got something to tell. So, the past few years, it hasn't been a lot to tell. We've been talking about COVID, and we've been talking about supply chain issues. Forget about all those things now. We'll talk about success, putting the product in the ground and we can start to tell that story. And the story doesn't end with 2023. We're going to see it continue to grow through 2024 in the future. So, that sets the basis for the future. The other thing that has to happen, and I think that's really hurt all of the microcap stocks in this world is that the microcap market has to turn around. And it doesn't matter what we say out there or what we do, if the microcap -- people don't start investing again in this microcap, it's going to take a while for it to turn around. Now, we all know that this goes in cycles, and we expect that this market will turn around. But until then, it's going to be up to us to continue to succeed, continue to tell the story, continue to get to our story in front of the new eyes. And again, prove it out by making money and generating cash for all of us.

Grant Howard: With that, that just so people know we're not just sitting around here. There's a number of initiatives that are starting one that will start soon is the focus that's targeting new investor reach, utilizing the online version of the financial. So, strategic advertising and placements and a number of other things because you have to build a large audience because at any one time, only a small percentage of those people will know enough to go ahead into the market and buy, you need to grow that audience. And certainly, it makes a huge difference with the spectacular results that you folks have delivered and you're set up great into 2024. So, that will continue to build on itself. Back to the question, does CEMATRIX have any complication for cellular concrete in Canada?

Jeff Kendrick: We have a couple of small competitors that really don't -- we don't even see them bidding against us in many spots, but there's a small player in Vancouver. There's another small player in Southern Ontario, a couple of small players, but they're focused on other businesses, and they really don't affect our market at all.

Grant Howard: Cash flow, now that you are cash flow positive for the future, could we expect possible uplifting to the CSX?

Jeff Kendrick: We certainly will consider that for the future as we've discussed. And our focus right now is having a strong year and the timing of that will be dependent on how things progress for not only this year, but also 2024.

Grant Howard: [Indiscernible] mean the cash balance is minimal bracket because of the increase in working capital with [Indiscernible]? My question is, what is the expected timeframe to collect your receivables? And are there any holdback, will any holdback in fixed project next year?

Jeff Kendrick: Randy, if you can take this one, that would be great.

Randy Boomhour: Yes. Mostly our credit terms we aim for a net $30 million, sometimes we get net $45, million, sometimes we're pushed into paid when paid. But essentially, on average, we're getting paid within 60 days. On any large construction job, there's always a holdback percentage, and so that will definitely apply for all the large jobs that Jeff talked about. Sometimes those holdbacks can be collected quite quickly. And sometimes, they're outstanding for years depending on what the final completion date is of the overall project. So, that's something that we manage quite closely. And I think if you look at -- in our notes in our financial statements, you can see the aging of our receivables. And I think that would give everybody a lot of comfort that we are on top of collecting receivables, and we're doing a good job of it.

Grant Howard: In the last one, you talked about your average [Technical Difficulty] individual getting that areas? What is the [Technical Difficulty] How much of the time is it sitting there and then how much you've seen an increase in the utilization of that equipment?

Jeff Kendrick: Well, there's different types of equipment that we have. And you all know that we've acquired Pacific International Grout a few years back, and they have equipment that's specific to the tunnel industry. And so we have four large dry mix units as part of that acquisition that we dedicate to the tunnel industry and at any one time, sometimes all four of them, it can be busy. But generally, the two or three of them we've got going and then one is kept in reserve basically. So, that's from the tunnel side. In the US, in our geotechnical business, which is really a mixed on site out of Chicago. They are busy, busy, busy almost constantly, right? So, their growing utilization is high and growing. In Canada, we're again in new markets here, it's taken time to develop those markets. Western Canada, right now, all of our equipment is outpouring projects. And we're getting busy in Ontario, too as well. So, utilization has some room to grow and that's why we talk about our capacity is very good. From a business perspective, we still got a lot of room in that equipment. But it's not utilized fully. Part of it is to have machines in backup just in case there are issues and part of it is dedicated towards regional growth in the Southern US to also help with seasonality of our business.

Grant Howard: Thank you for the questions. Thank you to all those people that submitted questions. They were good, very good questions. Jeff and Randy, any closing comments?

Jeff Kendrick: Randy, do you have any?

Randy Boomhour: No, I just -- the only thing I would say is we're shareholders, too, Jeff and I, we are aligned with you guys. We're working hard to increase the share price. We firmly believe that the best way to do that is to deliver on the business results and then that makes everybody's job just trying to get the share price up easier. And so that's what Jeff and I are focused on, and I mean laser-focused on it. So, we're with you guys, and we're working hard to get the job done for you.

Grant Howard: The shareholder, all here, I agree with it.

Jeff Kendrick: And just to add to that, I mean, one of the reasons that we're still here and able to do that and able to commit to you is that you as shareholders have kept us going. It's taken 20 years to make this a viable business and we've gone through a lot of hiccups and company-ending situations along the way, but we really believe in this product, and our shareholders did as well. And because of that, we're in a very good position moving forward, but we wouldn't be around today without you and we thank you for that, and thank you for your continued support. And we look forward to a great balance of 2023 and 2024, and we look forward to telling you about it in the new year.

Grant Howard: Thank you gentlemen. Thank you to everyone who attended and with that, we'll wrap. We'll ne releasing more for year-end. Thank you very much.

Jeff Kendrick: Thanks, Grant. Thanks, Randy.