Zedcor (ZDC) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 revenue of CAD 9.2 million, up 42% year over year and 24% sequentially, with recurring revenue over 80% of total revenue.

• Adjusted EBITDA reached a record CAD 3.4 million, up 49% year over year, with margins above 37%.

• U.S. revenues exceeded 10% of total, with strong growth and near 100% utilization in the U.S. fleet; Canadian operations saw record daily revenues and nearly 100% fleet utilization.

• Fleet size grew to over 1,150 security towers at quarter end, a 52% increase year over year, with 148 new units in Q3 and 326 year-to-date.

• Expansion continues in both Canada and the U.S., with significant growth in Texas and new markets like Phoenix, Denver, Atlanta, and Colorado.

Financial highlights

• Q3 gross margin was CAD 5.4 million, or 59% of revenue, driven by operational efficiencies and high utilization.

• Year-to-date revenue reached CAD 22.7 million, up 28% year over year, with adjusted EBITDA over CAD 8.0 million and EBITDA margins above 35%.

• Net income for Q3 was CAD 310,000, with nine-month net income at CAD 1.25 million.

• Adjusted operating cash flow for Q3 increased 54% year over year to CAD 3.1 million; free cash flow for Q3 was just over CAD 3.3 million.

• Working capital at September 30, 2024, was CAD 1.7 million, with current assets of CAD 14.4 million and current liabilities of CAD 12.7 million.

Outlook and guidance

• Management anticipates strong results in Q4 2024, with continued expansion in retail and residential construction verticals and prioritizing U.S. expansion.

• Targeting 15-20 towers produced per week by year-end, with plans to increase to 20-25 and potentially up to 50-60 as capacity expands.

• Ongoing negotiations to expand credit facilities and focus on supply chain control and new product development.