Earnings call transcript: Zecher Q2 2025 revenue growth boosts outlook

Zecher Incorporated reported record revenues for Q2 2025, reaching $13.5 million, marking an 84% increase year-over-year. Despite missing the EPS forecast of $0.0067, the company achieved a revenue surprise of 1.12% above expectations. The stock experienced a decline, closing at $4.23, down 2.76% from the previous day. According to InvestingPro data, the company maintains impressive gross profit margins of 61.9% and has delivered a remarkable 168.52% return over the past year.

Key Takeaways

• Record revenue of $13.5 million, an 84% YoY increase.
• Adjusted EBITDA rose to $4.9 million, an 83% YoY increase.
• Stock price fell by 2.76% post-earnings announcement.
• EPS missed expectations, impacting investor sentiment.

Company Performance

Zecher’s Q2 2025 performance showcased significant growth, particularly in revenue and EBITDA, reflecting strong market demand and operational efficiency. The company reported a year-to-date revenue of $25 million, up 85% from the previous year. Zecher’s strategic expansion and product innovation have contributed to its robust performance, positioning it as a leading player in its industry.

Financial Highlights

• Revenue: $13.5 million (84% YoY increase)
• Adjusted EBITDA: $4.9 million (83% YoY increase)
• EBITDA Margin: 36%
• Cash Balance: $6.4 million
• Net Debt: $12.1 million

Earnings vs. Forecast

Zecher’s Q2 2025 earnings per share (EPS) were reported at $0, missing the forecast of $0.0067, resulting in a negative surprise of 100%. This miss contrasts with the positive revenue surprise of 1.12%, as actual revenue exceeded the forecast of $13.35 million.

Market Reaction

Following the earnings release, Zecher’s stock decreased by 2.76%, closing at $4.23. This decline reflects investor concerns over the EPS miss, despite the strong revenue performance. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with a market capitalization of $322.87 million and a P/E ratio of 145.36. The stock’s movement was notable, considering its position within the 52-week range of $1.57 to $4.49. InvestingPro subscribers have access to 15+ additional exclusive insights about Zecher’s valuation and growth prospects.

Outlook & Guidance

Zecher’s future guidance remains optimistic, with projections for continued revenue growth and strategic expansion. The company aims to double its U.S. branch presence by 2026 and increase manufacturing capacity significantly. InvestingPro data shows the company maintains a healthy current ratio of 1.92 and operates with a moderate level of debt, supporting its expansion plans. EPS forecasts for the upcoming quarters remain steady, with anticipated improvements in margins as market density increases. For detailed analysis and comprehensive valuation metrics, investors can access Zecher’s Pro Research Report, part of InvestingPro’s coverage of 1,400+ US equities.

Executive Commentary

CEO Todd Zinniak emphasized the importance of service quality, stating, "You can have a great product, but if you don’t have service, you got nothing." He highlighted the company’s focus on service over price competition, reinforcing Zecher’s strategic positioning in the market.

Risks and Challenges

• Market saturation in key regions could impact growth.
• Supply chain disruptions may affect manufacturing efficiency.
• Economic fluctuations could influence customer demand.

Q&A

During the earnings call, analysts inquired about margin improvements and expansion plans. Zecher’s leadership reiterated their commitment to enhancing operational efficiency and maintaining low maintenance capital expenditures, supported by positive lender discussions for facility expansion.

Zecher’s Q2 2025 results underscore the company’s growth trajectory, driven by strategic initiatives and market expansion, despite challenges in meeting EPS expectations.

Full transcript - Zedcor Energy (ZDC) Q2 2025:

Joe Diaz, Conference Call Operator: Thank you for standing by. My name is Joe Diaz, and I will be the conference call operator. Welcome to the Zecher Incorporated Second Quarter twenty twenty five Financial Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. We will be having a question and answer session at the end of the call and questions will be limited to analysts only.

I would now like to turn the conference over to Amil Lara, Chief Financial Officer. Please go ahead.

Amil Lara, Chief Financial Officer, Zecher Incorporated: You. Good morning, everyone. Thank you all for joining us today. Joining me on our call today, we have our President and CEO, Todd Zinniak. Last night, after markets closed, we issued a news release announcing our financial results for the three and six months ended June 2025.

This news release will be available on our website under the Investor Relations tab and is filed on our SEDAR profile. Please note a portion of today’s call other than historical financial performance includes statements of forward looking information within the meaning of applicable securities laws. These statements are made under the Safe Harbor provision of those laws. Forward looking statements that are based on management’s current views and assumptions. This discussion is qualified in its entirety by the cautionary note regarding forward looking statements that is appended to our news release.

Please review our press release and our reports filed on SEDAR plus for various factors that could cause actual results to differ materially from the projections. We use terms such as gross profit, gross margin and adjusted EBITDA on this conference call, which are all non IFRS non GAAP measures. For more information on how we define these terms, please refer to the definitions set out in our management discussion and analysis. In addition, reconciliations between any adjusted EBITDA and net income is included in the MD and A. An important non GAAP measure that we use is adjusted EBITDA.

The company believes that adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations, which the company can use to fund working capital requirements, fund future growth initiatives and service future interest and principal debt repayments. Adjusted EBITDA should not be construed as an alternative to net income determined in accordance with IFRS. Please note that all financial information is provided in Canadian dollars unless otherwise stated. Following the prepared remarks by Todd and I, we will conduct a Q and A session during which questions will be taken from our analysts. And now moving on to a review of our financial performance for the 2025.

Some highlights for the second quarter include record revenues of $13,500,000 in Q2. This exceeded our previous high set just last quarter by $2,100,000 and is an increase of 84% year over year. Our recurring revenue for Q2 twenty twenty five remains steady and our revenue streams are becoming more and more predictable as we expand in The U. S. And Canada away from project work.

We also had record adjusted EBITDA of $4,900,000 for Q2 twenty twenty five. This was an 83% increase year over year and the EBITDA margin remained strong at 36% for the quarter. Our tower count and customer base continues to grow. More importantly, our weekly tower production, which is a key metric for us, continues to increase. During Q2 twenty twenty five, our tower production count grew by three sixteen towers, which is over 24 towers per week, and we have met our previous goals of 20 to 25 towers produced per week, and we have the optionality to increase that based on demand.

For our year to date highlights, revenue for the six month period ended 06/30/2025 was $25,000,000 This compares to $13,500,000 for the six months ended 06/30/2024. This was an increase of 85%. Adjusted EBITDA increased to $9,000,000 or 34% of revenues versus 4,600,000 and 34% of revenues in Q2 twenty twenty four. The revenues and EBITDA have increased, but we have also had some other major accomplishments, including significant U. S.

Expansion, both within Texas and the Southern U. S. Our tower fleet was eighteen eighty two towers at the quarter end. This was an increase of eight seventy nine towers year over year. Diving into the income statement a bit more for the three and six months ended June 30, revenues increased 84% year over year and 18% quarter over quarter.

The U. S. Revenues continue to grow, but we are also seeing strong demand and growth in Canada, and we will continue to allocate capital there as necessary. Gross margins increased to $8,500,000 or 63% of revenues. This continues to be steady, but there might be some slight reductions in the upcoming quarters as we ramp up hiring and training for expanding The U.

S. Monitoring center. Adjusted EBITDA increased to $4,900,000 which was 36% of revenues. We continue to invest in the sales team and expanding our geographical footprint in The U. S.

This was steady quarter over quarter, but it could fluctuate as we will pursue growth over time. We continue to see strong demand for our Wall Mountain Z Box as well. This isn’t contributing significant revenues yet, but we are seeing strong demand for this unit and we’ll continue to increase production as we expand and see the demand continue. We have significant customer wins in The U. S.

And Canada. This has been across a few different verticals, including residential construction and the logistics industries. For a discussion of the balance sheet, we exited Q2 with a cash balance of $6,400,000 We have $10,000,000 of borrowing room in our current banking facility. We also talked with our lending partners on getting that increased as our business and financial metrics are changed significantly since we expanded the facility just eight months ago. We had net debt of just over $12,100,000 after factoring in $18,600,000 of total debt.

Our net debt and trailing twelve month EBITDA is 0.74. This will increase over time as we deploy capital, but will be offset by growing EBITDA. 1,000,000 of the debt is expected to come due in the next quarter and that will be retired from free cash flow. PP and E increased to 62,000,000 due to continued investments in growing the company’s fleet of security towers. A portion of that increase is sitting under assets under construction as we purchased a number of longer lead components in order to ramp up growth and meet our production targets.

We try to keep this around four to six weeks of production, but are managing AUC actively so that we don’t have unnecessary capital tied up. A review of our cash flow statement for Q2 twenty twenty five. Adjusted operating cash flow increased 103% year over year to $4,400,000 demonstrating growing cash flow generation capacity of the business. Capital expenditures in Q2 twenty twenty five increased quarter over quarter as our manufacturing capabilities are streamlined. We staffed up our team and established our processes.

Maintenance CapEx continues to represent a small percentage of total CapEx. And during the quarter, we repaid $1,600,000 of debt and finance leases. I will now hand over the call to Todd, our CEO, who will provide you with an operations update and some insights into our go forward strategy.

Todd Zinniak, President and CEO, Zecher Incorporated: Thank you, Amin. Good morning, everyone. As you see from the numbers, we had another great quarter, strong quarter. Despite the growth in Canada and U. S.

That we can continue to see, we managed to maintain a 35% EBITDA level, which we take a lot of time on cost and keep the guardrails on the growth to the right pace to make sure that we can maintain these EBITDA levels. The biggest thing that makes Zedcor a lot different than anybody else is obviously we’ve got a great product. But one thing really driving our success is the fact of our service and our whole platform that we’ve built out to be able to service our clients. It’s one thing to have a great product. But if you don’t have the service in the area where the equipment is working, that’s where you can possibly fail.

And we’ve done a great job with our coverage, strategically putting our branches where our towers are. That obviously continues to grow. Obviously, one of the biggest things that we replace, like we’ve talked about before as well as the guards on sites. As everybody knows, it’s harder and harder to find people nowadays. So the quality of people, some of the guards that are out there aren’t the greatest as well.

And it’s a cost savings for our clients. It’s a large cost savings compared to a boots on the ground or a garden sitting in a vehicle on the job site. So very cost effective. Clients are seeing that more and more. They’re starting to see a lot of our competitors in the space, they don’t have monitoring.

Now that they see what the monitoring, what Zegcor can do with the LiveVerify monitoring and the fact that it’s all in house, the clients, once they get a taste of that, it really starts to grow internally and inside of every customer we have. So we’re seeing huge success with that. Growth updates, Canada and U. S, both continue to grow. In Canada, we’re actually seeing quite a bit of growth across the whole country, a lot in Ontario.

We’re starting to slowly move into Montreal as well, or Quebec, sorry. We’re seeing growth there. We’ve hired a salesperson in Quebec, which is working out quite well. On The U. S.

Side, we’ve total branches right now, we’re running 13 between Canada, six are Canada. We’ll probably be opening up another one in London, Ontario, probably Q1. And then we’ve got the seven in The U. S. We’ll be looking to actually double that through 2026.

We’re going to be looking at strategically where our branches are going to be placed from now to the end of the year. We have plans of opening a couple more before the end of the year. A lot of this is customer driven. We’ve got quite a few towers working in areas that where branches aren’t set up. So obviously, that’s going to drive some of our decisions.

Also, the demand is still there. We don’t have big inventory sitting in any of these branches. It’s very strategic as the towers are built. They’re built, we decide where they send them, we can send them in truckloads of 20, truckloads of 10. Whoever needs the next is that’s kind of what we’re doing between the platform of the 13 branches.

So as of right now, we’re right on track with our goals for twenty twenty five to 1,200 to 1,400 towers. I think we’re going be on the higher side of that closer to 1,400. We’ve secured a new building as well. As far as our manufacturing goes, right now we operate out of about 20,000 square feet, we’re going be into 27,000 square feet of shop space, 17,000 square feet of an attached office to the exact build or same building, sorry, which is going to be good. We’re going have the whole team under one roof.

I think that’s going to help a lot of efficiencies as well. As of right now, we’re building anywhere from 42 to 45 towers a week. The plan is to get to 50 by September, so we’re right on track with that. We’ve reached quite a few different goals as far as our manufacturing sides went. Early on, a lot of people heard me talk about where we would complete all of our packages, everything would be built by Friday and waiting for more packages to come Monday.

We’ve got it now where we have about 60 to 70 unbuilt towers. So we have one week of cycle always ahead, which gives us the ability if we had to step it up and build more, we have that ability to do that. And we’re quite excited where the manufacturing side has gone. The tower prices when we first got into this were close to 34,000. We’ve got them closer to about CAD 28,500 per tower.

So we’ve seen a lot of efficiencies, haven’t been affected at all by any tariffs, which is a good thing. Even on our steel prices, our steel provider, now that we’re PO ing quite a few more towers at a time, it’s he’s actually come down in prices, the steel and painting component side of it. So we’re excited about that and he continues to grow and we have the ability, a lot of people ask, you can build 50 towers in that facility, we could probably actually get closer to if we had to build 100 to 150 a week. It’s just a matter of getting everything in place, adding people and continuing on with that. I don’t have a whole bunch more to add.

I think we can open it up for questions. Yes, absolutely. Go ahead.

Joe Diaz, Conference Call Operator: Thank you, Todd. We will now take questions from analysts only. The first question comes from Kyle McPhee from Cormark Securities. Great

Kyle McPhee, Analyst, Cormark Securities: performance here, pushing this business forward like clockwork. First question for me on margins. So your EBITDA margin in Canada benefits from density already in place relative to The U. S. Your Canada EBITDA margin was 66% in Q2.

So that’s much higher than 26% down in The U. S. I assume U. S. Margins will catch up to the Canada level over time as you get that U.

S. Density. My question is, do you foresee any kind of structural reasons or competitive reasons or client type reasons why your U. S. Margins won’t eventually be able to catch up to the levels we’re seeing in Canada?

Amil Lara, Chief Financial Officer, Zecher Incorporated: There could maybe be some competitive reasons, but honestly, like they should get there and it will be sooner rather than later. Like you said, once you get that density, adding two, three locations won’t significantly deteriorate that margin. It’s just a matter of getting that scale and density. It took about three years in Canada to build that up, and it’s probably going to happen a bit faster in The U. S.

Todd Zinniak, President and CEO, Zecher Incorporated: And I think we’ll see it first in Texas, obviously. Yes. Like now, Kyle, all of our branches are all staffed up. We’re not adding any more people right now to the branches. For example, we’ve got a great study on how the branches have been being built.

We’ve got a great strategic plan. For example, you get up to about 200 towers in a branch, that’s when you probably add a second service tech or delivery fellow, right. And so we’re seeing that in Texas. And then these other regions will be the same. I think it’s it’ll catch up probably quicker than three years.

I think Texas will mature, right? It’s already maturing, right? Yes. And we

Amil Lara, Chief Financial Officer, Zecher Incorporated: will present it that way just for competitive reasons that we don’t have to. But yes, like Texas, like if you look at Phoenix and Las Vegas, they’re fully staffed up, but they only have less than 50 towers at those locations. So they don’t have the scale yet, but most of the branches in Texas, Denver is getting that scale too. So that’ll absolutely catch up. Kyle, you’re right.

Kyle McPhee, Analyst, Cormark Securities: Got it. Great to hear. Okay. And again, you’re relatively more mature region, but it looks like it’s still delivering impressive growth. Your Canada revenue was up 13% quarter over quarter in Q2.

Is there any sort of quarter over quarter seasonal lift or onetime lift in that Canadian revenue performance in Q2 that I should be aware of? Or is this growth in Canada just indicative of having lots of growth runway left in the country? I mean, do you think that medium term path looks like for growth in Canada? Because this is all helping inform us on how much growth may be left in The U. S.

Amil Lara, Chief Financial Officer, Zecher Incorporated: It’s lots of growth. You’re absolutely right. It’s probably 10% to 15% kind of quarter over quarter. We do see some like seasonality in some regions and kind of that December, January time, it seems like a lot of municipalities don’t want to issue permits and construction do a lot of work, go to work, there’s some weather stuff in construction. A lot of that would be more minimal.

That’s more of

Todd Zinniak, President and CEO, Zecher Incorporated: the road building and stuff.

Amil Lara, Chief Financial Officer, Zecher Incorporated: Yeah. It’s minimal at this point. Ben, we don’t see that a lot of the demand from Canada is coming from existing customers. So the 10% to 15% is definitely doable.

Kyle McPhee, Analyst, Cormark Securities: Got it. Okay. I’ll pass the line for now. Thanks, guys.

Todd Zinniak, President and CEO, Zecher Incorporated: Thanks, Kyle.

Joe Diaz, Conference Call Operator: Thanks, Kyle. Our second question comes from John Chao from National Bank. Go ahead, John.

John Chao, Analyst, National Bank: Hey, good morning, guys. Thanks for taking my questions. Todd, could you give us an update on your negotiations with some of the large retailers as well as maybe an update on your SOC two audit?

Todd Zinniak, President and CEO, Zecher Incorporated: Sure. We’ve completed our audit for one of our large our cyber audit from one of our large retailers. It’ll be moving forward. We don’t have numbers on it yet. We’re just in the middle of an RFP with another quite large well, very large grocery chain in The United States.

And we’re also going to be doing an online presentation with one of the largest home improvement companies in S. As well. So that side of the business, John, it’s a long runway. But something that we’re excited about, we’re starting to see outside of the retail side, some of these companies that we’re starting to work for are taking like thirty, forty towers at a time and they have the runway to probably get to 200, 300, if not more.

And having that platform, John, that I always talk about, that’s an advantage for us because we can service our clients. And one of our goals right now, I’ll say it again, is to get down to, we’re going be within eight hours of one of our towers in North America. We want to have that completed by the 2026. And it doesn’t take a whole bunch more branches in The U. S.

To make that happen and we even want to shrink that further. The cyber audit towards SOC two, a lot of the stuff that we’ve done for this one retailer has gone as probably 65% of the way for the SOC two, I mean, we’re probably about another six to seven months away to be, you know, get the SOC two compliant. And what SOC two does for us is it opens up the doors to, not so much opens the doors, but it slows, a lot of this stuff gets slowed down when you’re with these retailers or big companies. Once you’re SOC two compliant, can go into their office and just show them that you’ve already got the compliance going and it just speeds everything up, right, instead of having to go through all these audits. Oddly enough, we run our own internet and like via a cell or satellite, we’re not even on their systems, but a lot of this cyber stuff comes down to if somebody gets killed in their parking lot, something happens, they want to know that their video is secured, it’s not going to end up on Facebook or end up on social media.

And then we’re not on their internet, so they don’t have to be worried about us getting credit card information or people being able to get into that part of their business. But that’s it’s I think it’s something that’s going to make Zedcor a lot better. I don’t think there’s a whole bunch of people in the space doing it either. I mean, if you have anything

Amil Lara, Chief Financial Officer, Zecher Incorporated: to add Yes, going to make us industry leading for sure. But on the kind of national accounts, the larger accounts, I think one important thing to highlight here is it’s not just the retail space, especially in The U. S. Like I know everybody gets excited about the big retailers, you see them in a parking lot, they’re a big name. But there’s companies, there’s multibillion dollar market cap companies in the logistics space of home buildings and they have divisions.

And like Todd said, they get ramped up to two three hundred. We’ve landed a number of those kind of customers over the last three to six months. Don’t And

Todd Zinniak, President and CEO, Zecher Incorporated: I think, John, I’ll share a story with you about how Zedcor is servicing for everybody that’s on the call. And I’m not I don’t want to say too many clients’ names right now on the call. It is a competitive space. We had a company phone us and they said we’re not happy with the person we have, the provider. And James got talking to him and said, well, where do you need a tower?

He said, Oklahoma. How soon could you have one there? James is like, I’ll have it there tomorrow morning. You guys are are you serious? James is like, yes.

By the end of the call, it was a Wednesday morning. We deployed 17 towers in five different states by Sunday evening. The guy was blown away. These guys have about 90 other locations that they’re looking at us doing. So it just shows you the service side of the business.

Say it again, you can have a great product, but if you don’t have service, you got nothing. I don’t mean to go off on you, John, but if that answers your question.

Amil Lara, Chief Financial Officer, Zecher Incorporated: Yes, these are the kind of things that we’re not in a press release. Keep going.

Kyle McPhee, Analyst, Cormark Securities: Thanks

John Chao, Analyst, National Bank: again. That’s great colors. And my other question is, could you maybe give us update on the local hiring and whether you’re still comfortable finding high quality talents in the markets you’re targeting right now?

Todd Zinniak, President and CEO, Zecher Incorporated: As far as the sales side goes, actually in The U. S. Have people phoning us to come to work here. It’s been great. They’re been in the industry at one point, see what we’re doing or they are in the industry.

And some of them want to come and join. They see the product, how well it’s built. They’re starting to see the towers everywhere. Management’s been easy to find. Probably one of the toughest things to find is the accounting world for a means team.

It’s they’ve got we’ve got great people, but we need to build it out. But I would do you want to add

Amil Lara, Chief Financial Officer, Zecher Incorporated: to that? Mean Yes. Everybody seems to kind of want to work from home and lots, crazy lots of money. So we’re going have to navigate that accordingly. I think operationally and sales wise, we’ve been quite lucky.

Todd Zinniak, President and CEO, Zecher Incorporated: On the manufacturing side, we’ve had then we’ve got a lot of people in our culture too, John, that have been with us a long time. And it drives referrals, people that we know. It’s been good that way, right?

John Chao, Analyst, National Bank: Okay, perfect.

Joe Diaz, Conference Call Operator: You.

Todd Zinniak, President and CEO, Zecher Incorporated: Thank you, John.

Joe Diaz, Conference Call Operator: Thanks, John. The third question comes from Sean Jack from Raymond James. Go ahead, Sean.

Sean Jack, Analyst, Raymond James: Hey, good morning, guys. Just wondering if you’re seeing any increased attention from competitors in these new markets that you’re expanding to? And if you’re anticipating any stiffer competition coming up as you expand into some of these larger markets in The United States?

Todd Zinniak, President and CEO, Zecher Incorporated: I think there’s competition out there, Sean, but the market is so big. We replace some of these mom and pop companies. There’s, I think, two or three big players. I think we’re one of the three. We don’t we’ve all kind of got our own niche thing, what we’re into, different markets.

Think, I mean, you’d agree with that. Different regions might have, like Texas is a pretty competitive state. Everybody’s going to Texas. We’re still got great growth there. It’s educating clients.

I think we got to just stay on top of what we’re doing. Like, for example, we keep growing on the technology side of things. We moved to a camera now that every all of our cameras moving forward, they have LPR license, pretty much the capability built into them. And we keep evolving with that. And you know, I’ve always told my team, I said, competition is one thing, but I got told a long time ago that just keep an eye on your own backyard, don’t worry about looking over the fence and just keep doing what we do and make sure we do a very good job at it.

And I think everything like that takes care of itself. And we’re not a company that’s going go in and drop pricing. We don’t give competitive pricing. We have a little bit of room to move. But the service that we provide, we need to be paid for it.

The quality of the equipment we have, we got to be paid for And we’re going to stick to that. And there’s this market is large enough, Sean, that there’s no reason to go do that. And you see some guys that are literally dropping their pricing, like we shake our heads at it. And then all of a sudden, you know what, they have a whole bunch of misses and guess what, Zedcor goes out and we make the higher rate. We’ve seen that in Texas.

And it’s, James does a great job with the sales team and Tony telling those guys that, know what, don’t get hung up on this guy that only wants to pay $1,500 or $1,400 move on. There’s clients that will pay our rates and a lot of them. So I don’t think the competition thing right now, I I don’t know if you have anything to add. I think

Amil Lara, Chief Financial Officer, Zecher Incorporated: the competition is kind of working in a negative fashion for us, especially down The U. S. Like I don’t think there’s a lot of people offering the integrated service we are and kind of that North American platform. And like Todd said, they go with the cheaper option and then they come back or they need a trial for two weeks and then they love the solution and they adopt it pretty rapidly like 100%. Doctor Horton was that perfect example, they needed a short trial and the next thing you know, age, right, like so absolutely.

Sean Jack, Analyst, Raymond James: Perfect. Second one for me,

Joe Diaz, Conference Call Operator: just kind of going back

Sean Jack, Analyst, Raymond James: to Kyle’s earlier question. Wondering how you expect profitability trending in The United States over the remainder of the year and kind of into next year early, just with the intention to continue investing in the sales team and branches?

Amil Lara, Chief Financial Officer, Zecher Incorporated: There’ll be fluctuations. It just kind of depends on the opening of the locations and the timing of that. We front loaded the opening of the kind of the Phoenix and the Nevada locations in San Antonio and Austin. We split up in Q1, but that was kind of in later in Q1. So we’re kind of establishing those in Q2.

But as we continue to expand, as we hire people, it’ll just depend on timing. So there’ll be fluctuations, but it won’t be significantly. It won’t drop to zero or anything.

Joe Diaz, Conference Call Operator: Right. Perfect. Thanks, guys.

Amil Lara, Chief Financial Officer, Zecher Incorporated: Thanks. Our next

Joe Diaz, Conference Call Operator: question comes from Gabriel Lyon from Beacon Securities. Go ahead, Gabriel.

Gabriel Lyon, Analyst, Beacon Securities: Hi, good morning and thanks for taking my questions and congrats on all the progress. Just a couple of follow ups. I mean, you sort of alluded to it, but can you provide any commentary around how discussions are going right now with your lenders in terms of potentially increasing the facilities and sort of where your comfort level is in terms of where you wanted to your leverage ratios to get to?

Amil Lara, Chief Financial Officer, Zecher Incorporated: Conversation has been very positive. And I think they’re a little pretty quick kind of after Q2 here. Obviously, the numbers justify that. When we did the year or the facility in December, the expansion that we were working off of kind of Q3, late Q4 numbers and business changed, like I said, dramatically. There’s room to expand that.

And we’re just kind of working through the negotiations here. So that’ll happen in the near term for sure.

Kyle McPhee, Analyst, Cormark Securities: Our debt leverage, sorry, but

Amil Lara, Chief Financial Officer, Zecher Incorporated: we wouldn’t want to kind of expand that past that 2.5 times. So 2.5 times would be on the high side short term for sure. But with that being said, to give that market the visibility and kind of the growth profile, we’ll take as much availability as we can. We’re just going to manage that internally, so we’re not kind of going back every quarter and trying to increase it.

Gabriel Lyon, Analyst, Beacon Securities: Got you. That’s super helpful. And in terms of the some of the geographies you’re going into and plan to go into over the next calendar year, Todd, what’s driving the savings? Is it around existing customers sort of leading you to those states? Or how do I think about that?

Todd Zinniak, President and CEO, Zecher Incorporated: Yeah, it’s a lot. You know, I’m probably 50% of the gate, but then we know which region is not busy. And like you take Florida for example, Florida is probably worth four to five branches, California five or six. We’ve got towers in the Carolinas now. We’ve got towers in Columbus, Ohio.

We’ve got towers in Wisconsin, Illinois, And some of these areas are starting to fall. I can see A lot of

Amil Lara, Chief Financial Officer, Zecher Incorporated: it is customer driven, and I

Todd Zinniak, President and CEO, Zecher Incorporated: think the rest of it is, as you just know, the whole product works and where do we want to open, and we know the market’s big. You get into Tampa, there’s a lot of things happening in that whole Tampa region, Jacksonville. You get down into Fort Lauderdale, Miami area, there’s a bunch going on there, Orlando, California, California is pretty heavily penetrated with ECAM secure and LBT, but it’s an awesome market. I think it’s we’re going to do some strategic stuff to make sure that we have coverage to where our towers are. We want that’s probably one of the most important things to me is our service levels, but we need to be able to maintain that.

So it is a blend of where we have quite a few towers already at now and we know that where markets are, you know, there for the taking, right.

Gabriel Lyon, Analyst, Beacon Securities: Got you. I appreciate that. And just one last question for me. I mean, of the CapEx that was reported in the quarter, can you sort of break down sort of CapEx for new towers versus certain maintenance CapEx? And just given your experience now, how should we think about sort of maintenance CapEx on a per tower basis annually?

I was curious if you got a more round figure there.

Amil Lara, Chief Financial Officer, Zecher Incorporated: Yes. So the maintenance CapEx kind of for the six months or the first half of the year, it was under $500,000 It’s not even significant kind of given the total CapEx. And that would only be for like replacing cameras or if we had a unit completely destroyed, we had to replace that. In terms of going forward, we don’t anticipate significant changes. We’re lucky in the sense that all the cameras are right now for the next three to five years are under warranty, all the electrical components under that.

So that kind of helps maintain the maintenance CapEx at a lower rate for the foreseeable future anyway.

Gabriel Lyon, Analyst, Beacon Securities: Got you. I appreciate all the feedback and congrats on all the progress.

Todd Zinniak, President and CEO, Zecher Incorporated: Thanks, David.

Amil Lara, Chief Financial Officer, Zecher Incorporated: Kyle, I don’t know if you had another question.

Kyle McPhee, Analyst, Cormark Securities: Yes. Thanks. So just on the rate of power output that you have. So I think you’re twenty, twenty five per week in Q2. Your comments suggesting you’re already higher than that with an ability to go even higher later this year.

Are you actually using all this capacity you have in place? It seems like if you are that you can push well through the high end of your guidance range. Are you referring to like

Amil Lara, Chief Financial Officer, Zecher Incorporated: the manufacturing capacity or like?

Kyle McPhee, Analyst, Cormark Securities: Yes.

Amil Lara, Chief Financial Officer, Zecher Incorporated: Yes. Right now, we’re not using the manufacturing capacity, like we’re but we’re trying to manage that with the number of staff we have as well. Like The goal is to get to 50. The goal is to get to 50, that’s within range. But we can increase that by adding more people.

Obviously, we’re going into the new facility in Q4. So that’ll have some kind of unused capacity as well. So capacity isn’t necessarily the concern at this point,

Todd Zinniak, President and CEO, Zecher Incorporated: I would say. And then also we’ve gone through Thanksgiving in The U. S. Yes. And then Christmas.

You got to lose all kind of a week there and through Christmas as well, Kyle as well. So a couple of weeks of build schedules gone, right?

Kyle McPhee, Analyst, Cormark Securities: Got it. Okay. Thanks for that clarification.

Amil Lara, Chief Financial Officer, Zecher Incorporated: Thanks. I think that wraps it up. I don’t think there’s any other questions. Thank you, everyone. Thank you, everyone for joining.

Todd Zinniak, President and CEO, Zecher Incorporated: Have a great day.

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