Earnings call transcript: Zedcor Energy Q4 2024 sees record revenue growth

Published 10/04/2025, 16:10
 Earnings call transcript: Zedcor Energy Q4 2024 sees record revenue growth

Zedcor Energy reported impressive financial results for the fourth quarter of 2024, with record revenues of $10.3 million, marking a 78% year-over-year increase. The company's stock responded positively, rising 5.59% to $3.02, reflecting investor confidence in Zedcor's robust growth and strategic initiatives. According to InvestingPro data, the stock has delivered an exceptional 191.84% return over the past year, though current analysis suggests the stock is trading above its Fair Value. Despite challenges in the broader market, Zedcor's performance underscores its competitive positioning and operational efficiency.

Key Takeaways

  • Record Q4 revenue of $10.3 million, up 78% year-over-year.
  • Stock price increased by 5.59% following the earnings announcement.
  • Recurring revenue accounted for over 85% of total revenue.
  • Expansion plans include new branches in the U.S. and Canada.

Company Performance

Zedcor Energy's performance in Q4 2024 highlights its strong market position and effective growth strategies. The company achieved significant revenue growth, driven by its expanding fleet of security towers and operational efficiencies. Zedcor's focus on recurring revenue streams and geographic expansion has bolstered its financial results, setting a positive trajectory for future growth.

Financial Highlights

  • Revenue: $10.3 million, a 78% increase from Q4 2023.
  • Adjusted EBITDA: $4 million, up 85% year-over-year.
  • EBITDA Margin: 38% in Q4.
  • Cash Balance: $5.8 million.
  • Net Debt: $14.4 million, with a net debt to EBITDA ratio of 1.19x.

Outlook & Guidance

Zedcor Energy aims to produce between 1,100 and 1,400 towers in 2025, with the potential to reach 1,600 towers contingent on acquiring enterprise customers. The company plans to continue its geographic expansion, targeting new markets in Quebec, California, and Florida, while maintaining operational margins.

Executive Commentary

CEO Todd Zinniak expressed optimism about the company's future, stating, "The business and the opportunities heading forward are endless." He emphasized the importance of client relationships, saying, "We're all about our clients. When you have your clients on your side, it puts everything else in place."

Risks and Challenges

  • Supply Chain Issues: Potential disruptions could impact production schedules.
  • Market Saturation: Increased competition in key markets may affect growth.
  • Economic Pressures: Broader economic challenges could influence customer spending.
  • Tariffs: Possible pricing adjustments in response to tariffs may affect margins.
  • Technological Advancements: Rapid changes in technology could require continuous innovation.

Q&A

During the earnings call, analysts inquired about the margin differences between the U.S. (21%) and Canada (58%), the enterprise customer acquisition strategy, and potential pricing strategies in response to tariffs. Executives highlighted their focus on technology and service differentiation as key competitive advantages.

Full transcript - Zedcor Energy (ZDC) Q4 2024:

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 SECRE Incorporated Fourth Quarter of twenty twenty four 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 Amin Lara, our Chief Financial Officer. Please go ahead. Thank you, Joe.

Amin Lara, Chief Financial Officer, Zedcor: Good morning, everyone. Thank you all for joining us today. Also joining me on our call today, have our president and CEO, Todd Zinniak. Earlier this morning, before markets opened, Zedcor issued a news release announcing our financial results for the fourth quarter of twenty twenty four. 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 performance includes statements of forward looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Forward looking statements 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 Zedcor's reports filed on SEDAR plus for various factors that could cause actual results to differ materially from projections.

We use terms such as gross profit, gross margin and adjusted EBITDA on this call, which are non IFRS and non GAAP measures. For more information on how we define these terms, please refer to the definitions set out in our MD and A. In addition, reconciliations between any adjusted EBITDA and net income is included in the MD and A as well. 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 initiative, and service future interest and principal debt repayments.

Adjusted EBITDA should not be construed as an alternative to the net income determined in accordance with IFRS. Please note that all financial information is provided in Canadian dollars unless noted otherwise. Following prepared remarks by Todd and I, we will conduct a q and a session during which questions will be taken from our analysts. Moving on to the company's financial performance for the quarter. Some highlights for the fourth quarter and the year include record revenues of 10,300,000.0 in q four.

This exceeded our previous high set just last quarter by 1,100,000.0 and is an increase of 78% year over year. Our reoccurring revenue for q four remained steady at over 85% of total revenue. We also had record adjusted EBITDA of 4,000,000 for q four, and this was a 85% increase year over year, and the EBITDA margin remained strong at over 38% 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 q four, our weekly tower production count grew by a hundred and eight or sorry. Total tower total tower production grew by a 86 towers, which was over 15 per week despite some holiday weeks for Christmas and US Thanksgiving. Our goal remains unchanged, 20 to 25 towers produced per week with the ability to ramp up based on customer demand. Some highlights for the year to date numbers include twelve month revenues of 33,000,000, reoccurring revenue of over 80% of total revenues, adjusted EBITDA of 12,000,000, which is up 57% year over year, and a 36% EBITDA margin. Our fleet size at December 31 was just over 1,330 secondurity towers, and this represents a 62% year over year and utilization for the fleet continued to be over 90% for the quarter.

Diving a little bit deeper, our q four shows that the strong growth continues. Revenues increased 12% quarter over quarter, and this was driven by an expansion of the fleet and strong utilization. Gross margins increased to 6,800,000.0 or 66% of revenues. This was driven by operational efficiencies and higher utilization rates. The operational efficiencies we've talked about previously, and they continue to pay dividends while allowing us to maintain service levels.

We anticipate gross margins to continue in this range going forward. Adjusted EBITDA increased to $4,000,000 or 38.7% of revenues versus 37.2% of revenues in q three twenty twenty four and twenty four point one percent of revenues for q four twenty twenty three. Just wanted to point out that q four twenty twenty three is a bit of a lower quarter as we had two of our large pipeline construction projects ends, which resulted in lower utilization and lower EBITDA margins. So not the best comparative, but still impressive growth. Once these projects ended, we were able to diversify our revenues, and they remain diversified throughout the year.

Adjusted EBITDA worked out to 4¢ per share, again, driven by higher revenues margins, offset by a higher share count. The fleet was 1,337 at the quarter end, an increase of 86% quarter over quarter or sorry, a 86 total towers and 512 towers year over year. Utilization continued to exceed 90% in the quarter. In terms of the future outlook, we completed an equity raise in q one twenty twenty five and have started to expedite our growth. We are aggressively expanding across the Southern US and ramped up our sales team.

While this will result in slightly lower margins as we expedite US growth, The US the revenues continue to grow, and we are already starting to see the spending pay dividends as we gain traction in areas like Austin, Texas, Denver, Colorado, and Phoenix in Nevada. We continue to expand our revenues in the retail segment and residential construction segments. These are two verticals where we are seeing large potential, and we will continue to allocate resources in those areas in order to grow. However, we're seeing opportunities in all verticals in The US, which is great. And while we have areas of focus, this is a truly customer agnostic industry, and we won't be picky.

We continue to grow our revenues with key customers as we expand our footprint. Current customers are requesting service at more and more locations, and we're trying to service that to the best of our abilities. During the year, we successfully onboarded over a 90 new clients to the platform throughout Canada and The US. Customers are requesting services Canadian customers are requesting services in The US and vice versa. The financing that we completed allows us to exploit some of these opportunities.

As you can see from the chart, our customer base is fully diversified by industry verticals, and despite recent tariff and potential economic threats, we aren't seeing a slowdown in demand or opportunity. In fact, some of our customers such as the in the homebuilder segment are even taking more security to protect fully built homes. Moving on to a discussion on the balance sheet. It's really been set up to support our growth trajectory. We exited q four with a cash balance of 5,800,000.0.

We have 10,000,000 of available borrowing room on our current banking facilities. Our net debt at the end of q four was 14,400,000.0, and our debt net debt to EBITDA increased slightly to 1.19 times. This will increase over time as we deploy capital, but it will be offset by growing EBITDA. 1,200,000.0 of the debt is expected to come due in the next quarter, which will be retired from free cash flow. Property and equipment increased almost 6,000,000 to 32 point 42.7.

Sorry. And we 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 long lead components in order to ramp up production growth and meet our targets. We try to keep this around one month production and actively manage assets under construction so that unnecessary capital isn't tied up. A review of our cash flow statements for q four.

Adjusted operating cash flow increased 585% year over year to 3,300,000, demonstrating the growing cash flow generation capacity in the business. Capital expenditures ramped up in q four as our manufacturing capability goes streamlined, and we have staffed up our team and established our processes. Maintenance CapEx continues to represent a small percentage of the total. In 2024, it was less than half a million dollars, which is all for older cameras or older technology equipment that broke and we replaced. Free cash flow for q four twenty twenty four was just over 3,300,000, reflecting continued investments in fleet expansion and working capital supported by our expanded capital facilities.

I'll hand over the call to Todd who'll provide us with an operations update and some insights into our go forward strategy.

Todd Zinniak, President and CEO, Zedcor: Thank you, Amin. As you saw, the numbers, we had a strong and great quarter. The business and the opportunities heading forward are endless. At year end, we were operating in The US cities that we're all operating in was Houston, Dallas, San Antonio, Austin, Midland, Texas, Denver, Colorado, Las Vegas, Nevada, Phoenix, Arizona, and Atlanta, Georgia. In Canada, we are operating in Vancouver, Calgary, Edmonton, Winnipeg, Ottawa, and Toronto.

We're seeing great growth in all branches. Opportunities are endless. All of our especially in Canada as well as we mature our relationships and partnerships with our clients, you know, a lot of internal growth in our customer list, which is quite exciting as a company. We're not seeing turnover with our clients, which tells me as a the CEO of the company that we've got great service for our clients and things are moving forward. We see some projects in, but the clients we have that end that project end end up taking towers to new projects.

So it's it's been exciting. We're seeing lots of opportunity in Vegas and Phoenix right now. I'll move into some update operational updates across the company and sales cup updates as well. You know, while everybody's excited about The US, we're seeing huge growth as well in Canada. Obviously, the margins in Canada, we've got our platform built.

So, you know, our contribution rate's quite a bit higher because we're not adding a whole bunch of s g and a and j g and a in Canada. And we're starting to see that in our platform as well in Texas. We've got our branches built out, buildings in place, people, salespeople, managers in place, all of our field techs. It's probably gonna be the next part of the puzzle that shows good margins due to the fact it's maturing, and the customers are list just keeps growing. We're seeing a lot of, like Yamin said, lower r and m on our equipment.

We've got a lot of things streamlined. The AI portion that's in our cameras is helping our growth or I'm sorry, to keep costs down in the monitoring center. As the platform grows, we're gonna keep get continuing to get stronger with the AI side of the business as well. And, you know, the maturing side of the customers is a big part of it. Our customer list now is probably north of 500 customers.

You know? And a lot of these clients, they come on in an early stage, maybe that represents five to 10 towers, but we have the ability to grow some of these clients upwards of 50 to a hundred towers as some of them are across Canada, some of them are across borders, Canada, US, and multiple states as well. We're moving into different regions just due to the fact that clients are taking us there. We're seeing great opportunities for growth that way. Strategically, you know, hiring once we have the opportunities to get in there, we go in behind that.

We get our facility set up. For example, right now, we've just hired people in Las Vegas. We've got 38 towers deployed, and we have no people on the ground there. We've been servicing that from Phoenix. So the opportunity is a large I was just in Phoenix in Las Vegas last week, you know, doing the interviews, bringing people on board with myself and, James Leganchuk, our president of operations United States.

And, you know, we spent two days in each city and traveled around and looked at the opportunities, and they're just endless. You know, something that's Edcor is doing is we've we're all about our clients, and that's how we operate our company. We're not designing apps or different things to give to clients and put it on them. We remove all that from the client, we put it on us as a as a company to maintain service levels for clients. Clients that are running these projects or building homes, they've all got multiple things on their mind.

They don't have to worry about is the security being looked after and referring to an app and turning, you know, monitoring off and on. We do that, and we see big value in it. We're seeing that in every city that we go to that the clients are very happy with the service levels. You know, the great thing that Zevcor has is we run high levels of service, but we also got a great product. And when you run those two together, all of a sudden, your client base, they act as salespeople for you, and we're seeing that referrals.

And, you know, it makes it quite easy to grow. And you have a guy in a construction, and he's telling his friends in the same line of business at a different company that these guys, you know, they do what they say they're gonna do. And and that's our culture at Zedcor. So we've seen big value from that. The demand's not stopping.

Like I said, you know, we're moving into, you know, moving forward here for the growth in the next, quarter here. We're moving into Tennessee. We've just hired a fellow there. He'll give us the ability to reach out to Knoxville, Knoxville, Tennis in Tennessee, Nashville, Atlanta, cover down into Florida, Jacksonville. We have clients that want us to go into Jacksonville.

We'll be q three, q four moving into Florida and California. We have some towers deployed right now in the Northern Region of California. So the growth isn't stopping. We're seeing a big demand on that side. As Amin was talking about the manufacturing to dive a little deeper into that.

We're producing right now 25 towers a week. We've got 35 packages as of the beginning of this week coming into our facility. So what I wanna see happen there is we'll build up about 30 to 40 packages, and then we'll start doing 35 towers a week. That way we never stop production. You're pulling them, you know, onto the floor instead of waiting for more packages to show up.

We've done a great job of securing all of our procurement stuff, cameras. We're not heavily affected actually at all with the tariffs. You know, our steel component of our tower, for example, I'll give you an idea of it. It's about 95¢ a pound prior to tariffs. Our towers weigh the steel components weigh about 2,300 pounds.

So, you know, 10% on that's $230. Right? And the rest of the steel components come in are made up of of the labor portion as well. We're like Amin said, we we exited at 1,330 towers today. We're actually sitting right at about 1,600 in the fleet.

We're like I said, we're going to 25 to 35 as the we're moving towards 35. You know, the highs the upside here is about 1,400 towers to build this year, 1,100 to 14. We're right on track for that, the demand. We've done a great job of balancing how fast we're building our towers and how fast we're bringing on salespeople, moving into new regions. You know, by the end of this month, we're gonna have eight operational branches across The United States.

Obviously, we got our six in Canada. We're looking at probably before the end of the year expanding into Quebec as well. So, you know, it's not it's you start feeding these branches 10 towers every couple weeks or every week. That's a lot of demand. It's gonna keep going, and we'll just keep growing with our growth.

You know, the 1,100 to 1,400 towers, that's not that's what we're doing regardless. Now if we land a large enterprise customer, let's say another two to 300 towers on the outside, somebody in the retail space, you know, that'll be built on the outside. We'll, schedule that, how we're gonna get them deployed to all the different locations. And, you know, nobody expects us to drop off 300 towers in thirty days. It would be over a six month period, maybe eight month, and we'll work with the client.

We've seen it with working with Home Depot across Canada. They have a bunch of logistics items to do on their end as well before we can start dropping the towers off. So, you know, I already covered the fact that we're gonna be focusing on California and Florida. We think it's a big opportunity there as well. You know, to speak a little more about the culture of Zedcor, I'll say it again.

We're all about our clients. And when you have your clients on your side, it it puts everything else in place. Right? You know, they it looks after our investors. If you have happy clients, it looks after everything, and we're we're doing a great job of that.

I'm a big component and a believer that they're number one, just behind safety, and it's exciting times. I I think we can open the floor up, Amin, to any cost, questions from the analysts. Thank you very much.

Amin Lara, Chief Financial Officer, Zedcor: Excellent. I'll hand it over to Joe.

Joe Diaz, Conference Call Operator: Thank you, Amin. We will now take questions from analysts only. Please unmute yourself when you are prompted. The first question comes from, Kyle McPhee from Cormark Securities. Good morning, Kyle.

Kyle McPhee, Analyst, Cormark Securities: Hi, everyone. Hey, guys. So first one for me. So as you mentioned, you started disclosing your detailed financials by country, Canada and The U. S.

Operating margin in is much higher in Canada. The 2024 is 58% versus 21% in The U. S. So is that just that difference just highlighting the benefit of regional density and cost absorption that you have in the relatively mature Canadian region? And U.

S. Should be able to catch all the way up to that? Or is there something structurally different about the margins in The U. S. That may keep it lower long term?

And maybe as part of that, I'm curious where you're accounting for the power assembly operations, all the costs related to that that are in The U. S. But benefit both Canada and The U. S? Or is that in the corporate segment?

Amin Lara, Chief Financial Officer, Zedcor: So Kyle, I'll answer the second question first, it's easier. All those costs related to manufacturing for the people, like if they're directly involved in the manufacturing of the equipment, those get capitalized to the piece of equipment themselves. So the cost like, the pricing we kind of quote to you guys includes the cost of labor, our cost of assembly. We don't put a ton of overhead into it, but it's more direct cost for that. So those all get capitalized, then they get included in the depreciation over time.

With respect to the operating cost, it's not necessarily a scale thing. The scale more impacts the s g and a side and the EBITDA margin. The operating cost last year, we had a bunch of the towers come back from those two pipeline jobs. So r and m was high as we were cleaning them up and getting ready to put them back into work. And the other thing is partly as the fleet diversifies before, it was more kind of solar hybrid based where it was engine based, and we had to have mechanics on staff.

We had to have engines, parts. It was a complicated piece of equipment. And as the fleet has grown towards the more simplified solar electric and the electric tower, the cost of maintaining those high solar hybrids becomes less and less kind of as the fleet on a whole. And we've also done a bunch of upgrades to those solar hybrids. We've upgraded generators, upgraded engines, and that they're starting to pay dividends in terms of the lower r and m and the lower wages related to maintaining that.

So that's kind of what's driving the operational efficiencies as well as the AI in the cameras.

Kyle McPhee, Analyst, Cormark Securities: Got it. Okay. And and just going back to the first part of your answer on, you know, labor for the assembly functions capitalized, but what about all the, you know, OpEx for the assembly facilities, that type of stuff? Is that going into corporate, or is that going into US?

Amin Lara, Chief Financial Officer, Zedcor: Those are leases. So that would just go into, like, the right of use depreciation. We don't capitalize that. It's just in and out of one line of depreciation to another. Okay.

Kyle McPhee, Analyst, Cormark Securities: Second one for me. Just so you mentioned in your filings that you're considering moving into the manufacturing part of your supply chain. I assume that's for the steel towers, correct me if that's wrong. Is this supply change is this supply chain change versus your current outsourcing of that manufacturing function? Is that something that would require a big lead time and CapEx investment to get up and running?

And is this change more about reducing supply chain risk? Or do you also think there's a big benefit when it comes to internalizing margin in your supply

Amin Lara, Chief Financial Officer, Zedcor: chain? Right. It's like you said, it's kind of taking the metal components in house. Right now, that's outsourced where we outsource the welding, the cutting, the painting of the metal. We're looking at taking it in the house.

We're not saying we're going to, and it's a kind of a mix of, like you said, being more in control of our supply chain where we're not in kind of reliance on vendors where they could increase prices and shift demand to other customers. Obviously, we're one of their many customers, but, it's partly that, and partly there's cost savings as well, which would reduce the cost of the towers. So, again, it's a mix of both. I don't wanna attach a percentage, but we're definitely looking at it, and those are kind of the driving factors, like you said.

Todd Zinniak, President and CEO, Zedcor: Yeah. And in the short term, know, right now, Kyle, to stop you at that, we're we got multiple builders in place. We can step it up with the ones we have. But, you know, if you to explain it, even the control box at the bottom, we had that outsourced. We brought that in house.

For example, it used to cost us about 17 to 1,800 USD. Our cost to do it now in house is about right around that $9.50. So, you know, it just saves the cost. And right from day one when I got down there, we we knew we were gonna do this in stages. That was one of the last box.

That last box is one of the last components to bring in house on the tower. And, yeah, the last piece would be the metal side of it. To answer your question even a little deeper, it'd probably be about a $4,000,000 spend if we were to go down that route. And then getting key people to run it. We'd obviously, you know, ease into it, start building it.

And, if we were to go down that road, you know, start out by, let's produce 10 a week, get to 25 a week, and get it to where we could be fully in house. You know, that would be obviously the end goal on this. And you probably, you know, I think where the business is going to be quite honest, we might always need another builder. We might just become one of the builders and you'd end up let's just say, for example, we're paying 7,200 for metal components now coming in that are painted. And if we could do them for about 4,500 to 5, you're gonna end up with a blended price depending on how much we're doing compared to our builders of around maybe that 5,500.

You know? And it's all just about I'll be quite honest, Kyle. I don't see the growth stopping at all. I as we're building this platform, it's gonna it's gonna ramp up. We know that.

We're seeing it. We're getting very, very good salespeople coming on board. You know, on our call one thing about our culture too, just to dive into that is it's all referrals. We haven't ran an ad in our shop yet for the manufacturing side. Now we're starting to see that in our sales side, manager side.

These guys worked at other machines. For example, our fellow in Phoenix, he's brought a whole bunch of referrals in that we hired for Vegas and Phoenix. And, you know, he explained to the people that we interviewed that this is what we always thought it was where we worked before, and these guys are they do what they say, and it's great to hear that. It's great to have a culture that these people that work for us are reaching out to friends and telling them, hey. You know what?

You wanna get over here. This is an up and coming company. And so we know the growth there. Obviously, I think a lot of the people know on the call, I mean, and I are all about holding margins and keeping guardrail on the growth, and we'll stick to that plan. But, you know, us being able to do that raise post, year end, it gave us the ability to step on the growth pattern, and we are, you know, the platform.

We're probably, I'd say, a mean, what ahead six months on the pro program compared to where we thought we'd be or at least a good quarter, quarter and a half.

Amin Lara, Chief Financial Officer, Zedcor: Especially with the kind of the locations we're operating. A %. Yeah. We're not gonna be picky like you said earlier, but, yeah, some of these kind of opportunities pop up and that money gave us the flexibility to take advantage of it.

Kyle McPhee, Analyst, Cormark Securities: And okay. Thanks for the detailed answers. I'll hop to the line.

Joe Diaz, Conference Call Operator: Thanks, Kyle. Thank you, Kyle. The second question comes from Sean Jack from Raymond James. Please unmute yourselves, Sean. Good morning, Sean.

Sean Jack, Analyst, Raymond James: Good morning, guys. Just quickly wanted to touch, on enterprise customers and see if, you guys had any more details, any updates, to share on how that's progressing.

Amin Lara, Chief Financial Officer, Zedcor: The enterprise customers take time. Like, we've started work we started an end putting an NDA in place with Walmart. They're doing a trial. Those guys are so big, they get distracted. They have multiple priorities on the go.

Kroger's doing an RFP that we know about, so we're gonna be on the list for that. Again, they just take time. Some of the other big retailers that we're working for, we're just completing the security audit with them. So we're continuing to invest in that x section and chase that down. It just takes time.

It's a longer lead space. It's not like the construction world where the some of the field guys take care of that and the paperwork falls in afterward. The kind of the enterprise world is the other way around where the paperwork, and they need to check their boxes before they could bring us on board. And it we're we wanna be flexible and easy to work with. Like, Home Depot Canada, it started off being a few stores and a group kinda year over year.

We're happy to do it that way, but we're happy to do it the other way too, where if somebody wants to place a big order, we'll figure it out, make it happen, like Todd said, on the manufacturing side.

Todd Zinniak, President and CEO, Zedcor: And also too, Sean, to touch on that, you know, it's the other part of our business we're growing out is our national sales team. Right? And that's you know, the national sales team is focused on a, you know, a few different things, building out the customer list. You know, we might be working for a client in Texas, but they're actually in 22 different states. They you know, I look at them as a fairly large enterprise customer.

You know, they might have 20 towers in Texas, but we have the ability to grow that account to two to 300 towers. And then it goes from there into different verticals, the REITs, retail. It just goes on and on and on the list. And, you know, sometimes it's not in a bad way, but it gets to be a little overwhelming because everybody's a client. It's a % customer agnostic schools.

We're seeing, you know, different areas of that. It's all kinds of things. So, you know, that's where we're we're very confident the 1,200 this year is, you know, the 1,100 on the minimal growth side. That's just day to day sales. Right?

And then without any big enterprise changes. So, you know, that's where we put you know, you can see on the chart here or the bar chart, 1,414 could lead to 1,600. We're preparing the back end of the business for that, for the ability to step on it. I talk to my manufacturers of the steel components all the time. They're aware of it.

You know, they need about a thirty day lead time to start adding to it too. And over, you know, the span of a month to three months, they could be ramped up quite heavy as well. And, yeah. So it's exciting that side of it.

Sean Jack, Analyst, Raymond James: That's great. Also, just one more from me. Thinking about the growth that's expected, coming up here and also these new territories that you guys are gonna be expanding into, wanted to see, how we should think about margins moving through 2025. They were quite strong in this past period, but are we gonna see any sort of movements with, you know, increase or decrease in spending?

Todd Zinniak, President and CEO, Zedcor: I'll speak a little bit to the margins. And, you know, I think this business, we've seen a a bit of a trend. It it it hockey sticks, and, you know, the hockey stick doesn't stop so much. But for example, in q one, we've hired a lot of people. It's gonna be a strong quarter.

But, you kinda, you know, plateaus there for a minute while you get everybody in place, and then, you know, the platform's that much bigger. You start getting that many more towers out, and and the revenue keeps growing. I think we're gonna be able to maintain margins. I think, Amina, I'll pass it over to you. You'd agree with that.

Amin Lara, Chief Financial Officer, Zedcor: Yeah. Operating margins, we could definitely maintain. The EBITDA margins will probably drop a bit in q one just because of all the hiring we've done, but it's not gonna drop substantially. We always think we can hire more people than actually happens. So, it's like Todd said, it's kind of growth, plateau, growth again.

Sean Jack, Analyst, Raymond James: K. Perfect. Thanks, guys. Appreciate it.

Todd Zinniak, President and CEO, Zedcor: Thanks, Sean. Thanks, Sean.

Joe Diaz, Conference Call Operator: Thank you, Sean. The sec the third question comes from Doug Taylor from Canaccord.

Doug Taylor, Analyst, Canaccord: Yes. Thank you. Good morning. I'm curious to dig in on something you said earlier regarding the demand profile. I think you've said seeing no signs of waning demand and but also some pockets of strength in response to the current political or geopolitical environment.

I think you said homebuilders specifically. So the question is, I mean, would you would you say that response is to perceived increased security risk, or is there a function of the labor shortages given some of the know, recent, you know, changes in, this administration's put through? Or is there some other factor we should be thinking about there?

Amin Lara, Chief Financial Officer, Zedcor: Specifically on the home builder side, it's a mix of they keep building and the sales and that sometimes slow down in certain regions. So they have an in like, unsold inventory that we're watching that they probably hadn't anticipated us to be watching, but that's probably the most important stuff for them where the house is done. They need to be able to move it quick, and they don't want appliances getting stolen or somebody coming and vandalizing or stripping copper from the walls. So it kind of unfortunately, for the customer, the double edged sword where things slow down, you need more security. We've kinda saw this in COVID.

We just expanded into the space, but we saw the Trans Mountain when stuff shut down. It's not like they could assume that security like, people weren't gonna steal stuff just because they were forced to stay in place. So it's kind of, like I said, a double edged sword. Some verticals might slow down, and some verticals might need more, and we're kinda balanced in that sense. So we're excited, kind of in a bad way to see what happens, but, we don't see the growth slowing down because of tariffs.

So, it might even ramp up.

Doug Taylor, Analyst, Canaccord: Well, maybe I'll double back then on the the the labor shortage part of the profile because it's been a long a a demand driver for you for, you know, years now. Has that have you noticed any change in behavior as a result of that where security guards are just harder to find or things like that?

Todd Zinniak, President and CEO, Zedcor: I I think, Doug, the biggest thing in that component is people are starting to realize these towers, you know, I'm not saying nothing bad about security guards, but they're way more effective. And we're kinda on that you know, right on that bubble right now where it's people are moving into it. They're like, these guards cost more money. They're not doing their job. They're looking at their phones in their car.

They're sleeping. They're maybe not even at site. They're at the coffee shop. And and, you know, the beautiful thing is, you know, the name of the company is, you know, Sedgore Security Solutions, but these clients get a lot more out of the tower than just security. You know, they all have portals.

They can watch their job sites. You can't do that with a You know, you can have, let's say, four towers for 10,000, but you have a guard at night or a couple guards. It's 20,000. You can't go on a portal and watch your job sites. Pay you know, they're saving a lot of money.

Secondly, something happens on your job site or cameras are recording twenty four seven. And then the clients are seeing big value in that. Safety stuff happens on the site. For example, in the home building, a common thing is they pour a driveway, a vehicle pulls into it, backs out. Now they can see who did it.

They you know, let's stay at a company like D. R. Horton, they're not stuck paying for that. They can bill it back to the contractor that drove into the driveway. The uses of the cameras are unbelievable.

Time lapse videos, it goes on and on. So there's a lot more value add. And, you know, Doug, to even answer that a little deeper, that that's a big thing with our sales team that, they're really well versed in is educating the client. This is what this tower can do. It's not just your typical tower that you're used to.

Some of these regions had camera towers or cameras before, but all they were doing was recording. And then you get the guy that come along, and now he's gonna start monitoring it. Now it's done overseas. Or like I said earlier in the call, it's an app that the client watches. You know?

And I've said this multiple times. And when it comes down to client success, you can't have the heartbeat of your business being ran overseas. You gotta keep it in house. They need to be employees of your company. It's they're the heartbeat of our business is that monitoring center.

If that monitoring center is missing stuff every night and you have no control over it, man, you don't have a business, and you you're actually not giving your clients the success that they want. These people need to go home from their job sites at night, know that you're protecting their facilities, and we do a great job of that. And partly it is, you know what? We have challenges in our room, but we're on them every day, and we're evolving. Even the layout of our rooms, how we're changing it, the different things we're doing.

You know, we don't think, oh, we're just monitoring. This works great. You know, we look at bringing AI in. AI works great in the cameras. The AI portion that you can overlay on your servers, they're not dependable yet.

You know, we actually just had our auditors in yesterday, and they run AI, but they still double check everything. So it kinda shows you where AI can be. It's evolving. But we really you know, we wanna make sure that when we put the proper AI in, we know the stuff that we have in our access cameras works, and we know the abilities of it. And before we overlay any other AI into our servers or into our system, we're gonna double check that that works properly.

And, I think it's going to get to the point that your frontline alarms, AI is gonna help with that. We're investigating a whole bunch of that right now. And that helps cut costs. Right? And it helps bring margins up and it helps the room stay the size as the growth carries on.

And, you know, those are all efficiencies, but when you have that sent overseas, it it it doesn't it doesn't work. And I don't mean to go off on a different direction on you, Doug. I just wanted to explain that in detail. And that's you know, it's a big part of it, but the clients out there are really starting to move towards camera towers and cameras in general. It's interrupting the security world.

You're never gonna get away from a security guard required at the front desk of a, you know, a skyscraper or the, you know, the guys roaming the malls or the airport security guards. They're always there's gonna be a place for them. They're not fully replaced. But a lot of this remote stuff, you know, deterrent wise, it works You see the blue lights on the tower.

You know, if that helps, Doug, I could go on for a long time on that.

Doug Taylor, Analyst, Canaccord: No. That I mean, it's great color, but, you know, maybe I'll press on some some other questions here. In a release, and I want to say, it might not have been today's, but an earlier release, alluded to the potential. And it seems like you've got your cost of your towers as it relates to tariffs or any other inflation seemingly very much under control. But you did allude to the potential to use pricing to protect your return on investment.

And so I guess my question here is, you know, have you has the discussion progressed anywhere on using that step at this point? And maybe can you talk to the market willingness to to take price here in in this environment?

Amin Lara, Chief Financial Officer, Zedcor: I think you hit the nail on the head, Doug. We try to push pricing whenever we can, but it's more market driven and more market willingness. I think the easier way to go about pricing is to get in with the customer, show them the value, show them the results, and then kind of up the pricing rather than push it on the back end and blame it on tariffs or some government policies. And, honestly, living in The US, like, nobody really mentions the tariffs kind of on a day to day basis, especially in b to b sales. Like, most people are unless you're, like, direct consumer of, say, for example, metal, you won't see a tariff impact.

Like, consumers might see it in a few months, but it's a rapidly evolving situation. But I think it's a little early to start pushing pricing on customers because of tariffs, especially every day they seem to change the policy. So we're definitely gonna try to push it any which angle we can, but I think the better approach is the one I talked about is more get in, show your worth, show the value, and then go to the customer to talk about pricing.

Doug Taylor, Analyst, Canaccord: Okay. I'll pass the line. Thank you.

Todd Zinniak, President and CEO, Zedcor: Thanks, Doug. Thank

Joe Diaz, Conference Call Operator: you, Doug. The next question comes from Gabriel Long from Beacon Securities.

Gabriel Long, Analyst, Beacon Securities: Morning, and thanks for taking my questions, and congrats on all the progress. I wanna touch on the the enterprise side of things again. You guys talked about, you know, doing some initial work with Walmart and Kroger. And I'm curious, you know, whether these are competitive displacement opportunities. And and if they are, you know, why the the client might be looking to an alternative provider?

Is it around pricing, and is it around service level agreements, etcetera?

Todd Zinniak, President and CEO, Zedcor: I think a lot of it's service level. Having the platform, you know, Gabriel, that's a big part of it. You know, the other thing is locked into contracts. I know contracts are great in the markets. People love contracts.

I have a different view on contracts, obviously. We'll get contracts wherever we can. I think a lot of people get a contract signed, and then they forget about their client. And I can't go on enough about the client. You know, I I well, we wanna make business easy for a client.

I think if we, go to work for a client, we're not doing our job. I asked them to get rid of us if we can't fix the problems. And, you know, I think that in the retail space right now, everybody wants to lock these guys down, and I've met with quite a few of them, and that's something they're tired of. They're really tired of being locked into contracts. And some of it's competitive space.

Some of it's new. Some of it goes back to what I just talked about, Gabriel. They've had guards. They've had nothing. They know the world's getting worse.

They needed to turn it in their parking lot or cameras on their buildings. Some of it's a shift that they're moving towards that type of security, and some of it, they wanna do a blend of it. Liability with the guard that's on-site. They need something to back them up, and that's a camera, the eye in the sky. Right?

So, you know, obviously, I think a lot of everybody on this call knows Walmart. They they've had a client that or A competitor for quite some time. That's how they started their business. And, you know, I the you know, the Walmart's grown a lot, obviously, and they they're gonna add to it. I don't know if they're running off a competitor or nothing.

They they just wanna add to different parts of their business, distribution, more stores, and we're seeing that it might be a blend of us and a competitor. You know, a lot of them now are going towards renting them. Some wanna buy them. It's all different, Gabriel. It's independent.

We're one at one right now that we're doing a large cyber audit. We're gonna be complete with that at the April. That's gonna open the doors for that one. And, you know, we don't know what to what size, but, you know, it's the cyber audit that moved forward on is great for Zedcor. It's great for everybody.

It it shows the, you know, the next level of where Zedcor is at, that we're obviously, cybersecurity is a big thing. And, you know, even to talk a little more on that, we make it easy on our clients. A lot of clients don't want you on their Internet. For example, like a Home Depot Canada, they don't want us on their Internet because, obviously, in their cyber world, they have a lot of people's personal information. That's the other thing that Zedcor does is we just supply our own SIM card and we go direct and we don't need to be on their systems.

And and they like that. And a lot of the competitors run on the Internet or that's how they operate their business. And we've made it standalone, which kinda cuts us apart. And I mean, do you have anything to add to that? No.

Amin Lara, Chief Financial Officer, Zedcor: I think you covered it. And some of the things we didn't talk about of why GNA is going up, we're also investing in the back end, in terms of upgrading our cybersecurity, upgrading some of our processes, etcetera. Absolutely. Yeah. Yeah.

Excellent.

Todd Zinniak, President and CEO, Zedcor: Anything else, Gabe?

Amin Lara, Chief Financial Officer, Zedcor: I think he's done. Great. That's all the questions, I think, for Alex and Well, thank you, everybody, for your time, and we look forward to speaking with everybody and getting more results out there.

Todd Zinniak, President and CEO, Zedcor: Thank you, everyone. Have a great day. Do we lose it? The recording has stopped.

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