Looks like everyone's coming in. First, thank you, everybody, for joining us today. I'm Jeff Walker, Vice President at The Howard Group. We're speaking with Randy Boomhour, CEO and President, and M.J. Cantin, who is CFO of CEMATRIX. We'll go through the presentation discussing last year's numbers for 2024, as well as Q4. There'll be an opportunity at the end of the presentation to ask questions. There's a little box at the bottom of your screen in order to do so. On that, I will turn it over to the team.
Thank you, Jeff. Appreciate that introduction. Welcome, everybody, to our Q4 2024 Earnings Call. We're excited to share the results with you guys and share a little bit about the company. My sense is most of the people on the call are familiar with CEMATRIX. Nonetheless, we'll do a quick corporate overview here to help you guys get acquainted with the company, and then we'll get into some of the numbers.
As Jeff said, we'll go into a Q&A. Key investor highlights for the company: CEMATRIX is an innovative cellular concrete solutions company. We're a leading provider of lightweight, cost-effective, durable cellular concrete for infrastructure projects. We have a strong competitive advantage, and we work primarily as a subcontractor for major North American general contractors. We have a very strong financial strength position, and we have an overall growth trend. 2024 revenue was CAD 35.4 million.
Adjusted EBITDA was CAD 3.3 million. Cash flow from operations was CAD 4.9 million. We have CAD 10.3 million in cash and only CAD 1.1 million in long-term debt at the end of the year, and we're forecasting a record year in 2025. We've got a significant market opportunity in front of us. We're an industry leader. The size of the global cellular concrete market is very large, with estimates ranging from CAD 4 billion-CAD 27 billion, and pretty much all of those estimates forecasting steady growth.
We've got lots of tailwinds providing further benefits to us, mostly around increased infrastructure and spending in Canada and the U.S. The management team is myself and M.J., Jordan Wolfe, who's the President of MixOnSite USA for us, which is our largest U.S. operation. We have about 150 million shares outstanding, fully diluted to 165 million.
Insider ownership is about 15 million shares, or roughly 10%. Of those largest insiders, the two biggest are Jordan at 12 million shares and myself at 1.4 million shares. cellular concrete is made by mixing cement, water, and a foaming agent together. The foaming agent creates bubbles in the mixture, resulting in the cellular structure that, when it sets, when the concrete sets. Really, what differentiates or makes cellular concrete useful are the key properties. Those are that it's cost-effective, has a low density, is lightweight, has a high bearing capacity. It's extremely pumpable, highly flowable, and self-leveling. It's also self-compacting. Because of the bubble structure, there's some thermal insulating properties, and it's durable and excavatable. Lots of applications.
The primary ones that we service in the market are lightweight engineered fill, MSE retaining wall fills, insulating road subbases, flowable self-compacting fill, pipe and culvert abandonments, tunnel and annular grout, and shallow utility and foundation insulation. As we stated earlier, kind of our customers and competitive advantages. Our key customers are always—we're always a subcontractor to a general contractor. Occasionally, we will contract directly with an owner, usually on smaller scopes of work. We've worked with many, if not all, of the largest general contractors in North America. There is a snapshot of some of them down below to the left. Competitive advantage is really our reputation. We've been successfully delivering cellular concrete solutions on time and on budget for over 25 years. We have a fantastic team with lots of expertise, over 200 years of in-the-field experience.
Our equipment—we have the largest fleet of mobile, technologically advanced equipment for producing cellular concrete, with lots of capacity in that equipment fleet to grow. Our size and scale—we have got multiple locations from coast to coast in Canada and the U.S. We are generally more environmentally friendly than the legacy products that we replace. The market size and customers and opportunity. The third-party data on the size of the market is the estimates range from as low as CAD 4 billion from Market Research Future to as high as CAD 27 billion from Allied Market Research. All agree that the market for cellular concrete is growing. The market for lightweight fills, which includes competitive products, is a multiple of size larger. Infrastructure spending is increasing. It is aging in Canada and the U.S. It needs to be repaired and replaced.
Populations continue to grow, requiring new infrastructure and placing additional loads on existing infrastructure. As I said, spending is expected to increase in the future. That is a significant tailwind for cellular concrete and lightweight products for many years to come. I will hand it over here to M.J. to kind of go over our key financials.
Thanks, Randy. Our top-line growth trend is going—even if we had to step back in 2024, our overall revenue trend line is growing. I'm going to show you a graph portraying that. If you look at 2021, for instance, revenue was CAD 22.6 million, and last year in 2024 was at CAD 35.6 million. We are forecasting 2025 to be a record year. Our bottom line is positive, and we are generating cash.
We had positive adjusted EBITDA of CAD 3.3 million in 2024 and positive cash flow from operations, as Randy said, of CAD 4.9 million in 2024. We do have a healthy balance sheet with low leverage. At the end of the year last year, we had CAD 10.3 million in cash and CAD 1.1 million in long-term debt again at the end of the year. Some concept to understand our business: revenue growth will be lumpy.
It will not be a perfect staircase. Financial results will be variable based on the timing of when large projects start and stop. As a reminder, construction is a seasonal business with higher revenues in warmer months and the opposite in colder months. On average, over the last five years, we produced in Q1 about 18% of our revenue, Q2 similar, Q3 around 36%, and Q4 28%.
We are a specialty construction contractor. Margins tend to be higher than general contractors, but we have more idle time and more fixed cost. Project size impacts margins. Larger projects have more competition and, as a result, lower margins. We have excess capacity, which enables us to do significantly more revenue with existing equipment and existing staffing levels. To reiterate, it was our second best year in the history of the company in 2024.
During the quarter, we had a revenue of CAD 10.4 million compared to CAD 19.6 million in 2023. That was a record year. For the year, we had CAD 35.4 million versus CAD 53.3 million in 2023. When you look at gross margin % as a % of revenue, we did 29% in Q4 compared to 27% in 2023. That is a 2% gross margin increase. For the year, 27% and 22% in 2023, that is a 5% gross margin increase.
We had operating income of CAD 0.6 million in Q4 versus CAD 2.4 million in 2023, and CAD 0.5 million for the year versus CAD 2.7 million in 2023. Adjusted EBITDA was positive for both the quarter and the year: CAD 1.4 million in Q4 versus CAD 2.9 million in 2023, CAD 3.3 million in 2024 versus CAD 4.9 million in 2023.
Positive cash flow from operations for both the quarter and the year as well: CAD 2.6 million during the quarter versus CAD 2.8 million last year, and CAD 4.9 million in 2024 versus CAD 0.5 million in 2023. Cash on hand, as Randy mentioned, was CAD 10.3 million. It is CAD 7 million higher than what we had on hand in 2023 at CAD 3.3 million. Looking at revenue, you can see our trend line is growing.
If I had to add 2025, the trend line would continue to grow. If you were to look at our annual growth rate since 2019, it is about 9%. You can also see it is a bit lumpy, as we discussed. Looking at gross margin, it is improving. We have good momentum over the last few years. You see a dip there. That is due to COVID and some supply chain issues that we had and some cement shortages.
Looking down at the bottom, the picture is worth a thousand words. You look at debt in 2020, we had roughly above CAD 20 million, and then our finance costs were higher than CAD 1.2 million. We came a long way since 2019. When you look at today, CAD 1 million in long-term debt on the balance sheet and less than CAD 200,000 in finance costs.
When you look at the right-hand corner, this is our share structure. At the end of the quarter last year, 2024, we had 150 million shares and three instruments outstanding. We had 6.2 million units of options, 2.1 million RSUs, and 8.2 million units of warrants. If you'd like to have more information, you're more than welcome to navigate on our website. Our documents are there and also on SEDAR+ . I'll turn it back to Randy.
Thanks, M.J. To just kind of wrap up why invest in CEMATRIX. We're an industry leader. We're well-positioned to capitalize on the large opportunity in the growing infrastructure segment. We are a growth company. We give the most conservative calculation of our growth rate there. If you were to go back to 2017 and calculate the growth rate, our growth rate's over 20% on an annual basis.
We have positive EBITDA, positive cash flow from operations, and a very strong balance sheet. We believe that we're currently undervalued based on traditional valuation metrics. If you take a forward multiple of revenue or forward multiple of EBITDA, you come up with a much higher share price or valuation. We don't need to raise any more capital to fund a burn rate. Only new capital should be in support of an accretive acquisition. We also have existing capital to deploy.
We're looking for opportunities to deploy that, whether it be via acquisition or other organic uses of that capital. We've got two investor relations contacts, The Howard Group and Bristol Capital. Their contact information here. We have one analyst covering the company, which is Beacon Securities, and the analyst's contact information is there as well. Thank you for joining us. We appreciate the opportunity to share with you the results, and we'll open it up to questions and answers.
Thank you both. I've got some questions from Russell Stanley, who is the analyst on file for Beacon Securities. Somebody had asked what Beacon's target is for CEMATRIX now. The last update I've seen, they're calling for CAD 0.55 a share as a buy for CEMATRIX. To Russell's questions, there's a few, and I'll just read them in pieces, and I'll let you answer accordingly. Can you provide an update on the major projects, specifically the North Carolina job and the tunnel grouting project in the Midwest?
Yeah. The North Carolina job is expected to start this year. We're hopeful that that will start in Q2. The general contractor is on site currently working on that project. We know our scope of work is coming up quickly. The communication with that general contractor hasn't been ideal, but we continue to kind of work through that issue with them. We expect to be able to press release when we start our scope of work there in the second quarter. With respect to the tunnel grouting project, that project's proceeding along very well. The latest estimate has us mobilizing to site there in mid to late April. We're very confident that that one's going to start very soon.
You brought up the impact of tariffs and the potential of that. What are customers, whether it's contracts or project owners, saying about how they intend to respond to tariffs?
Yeah, that's interesting. I'm not sure we've had a lot of conversation with customers, per se, about the impact of tariffs. I can say the impact of tariffs for us personally should be very limited. There's very little that we do that crosses the border. We procure cement and ready-mix locally in the jurisdictions that we work, and we manufacture our product on the sites that our customers are working on.
Very little of what we do crosses the border. There's some concern about the overall macroeconomic impact of tariffs and what that's going to mean for Canada and the U.S. economies, in both cases kind of predicting potential recessions. The good news is the markets we tend to focus on, being infrastructure markets, tend to be a bit recession-proof. In fact, often in times of recession, governments will actually spend more money in those areas.
We're pretty confident overall that the impact of tariffs will be pretty minimal on CEMATRIX. As I said, we're worried about the greater macroeconomic impacts that we really can't forecast or say what they will be at this time.
Can you talk about the appetite for acquisitions given where the stock is?
As I stated in the presentation, we really feel like the share price is undervalued given the year that we have in front of us and the balance sheet that we have. We want to do, when we do an acquisition, we want to have a portion of that acquisition that's based in equity. Right now, I'd say our appetite is pretty low. Our focus really is on executing the backlog and the work that we have in front of us and hope that the market starts to recognize the results and the progress and the overall growth trend. Once that happens and the share price recovers, then I think we'll be a little bit more active on the acquisition side. I'd say any acquisition would be very late this year, early next year.
We will not do an acquisition just to do an acquisition. It has to make sense, and it has to be accretive.
Regarding gross margins, understanding that larger projects are typically more competitive and are lower margin, how do you expect your revenue mix between fiscal 2025 and fiscal 2024? I guess large and smaller.
Yeah. In order for us to do a record year, that means there has to be some significant revenue from large projects. 2025 is going to have some significant revenue from large projects. In the larger projects, those margins are always lower because there's more competition chasing that work. I would expect you might see some slight margin compression in 2025, but still very strong.
Do you care to comment on what you think the normal top-line growth rate will be for CEMATRIX past 2025?
Yeah, I don't. I don't want to comment on that. I truly don't know what it is. All I can tell you is the overall growth trend is one of growth and positive, and we're doing everything we can to build a profitable growing business.
You expect 2025 to be a record year. Do you expect that to be both on the top and bottom line, and what is the basis of that expectation?
Yes, we do expect it to be a record year, both in terms of revenue and EBITDA. The basis of that expectation is really just looking at backlog and when our current schedule of backlog is scheduled to go into the ground for our customers based on conditions on the ground. It is not an optimistic forecast. We think it is a very realistic forecast based on conditions on the sites.
With the cash you have on hand and the stock price being where it is, would you consider a stock buyback?
Yeah, that's a tricky question. It is definitely something that we're evaluating internally because we truly do believe the share price is not just a little bit undervalued, but significantly undervalued. There is also the flip side, if we have cash to deploy, we should be looking at opportunities to deploy that into the business. It is something we're evaluating and hope to be able to provide a more concrete answer in the future.
Do you want to comment on the backlog where it was a year ago versus today, and what's the pipeline of opportunity a year ago versus then or versus now?
Yeah. We have changed how we report and disclose backlog. We used to disclose that number as part of each new contract announcement, which created challenges because we had investors or shareholders trying to reverse engineer or do some fancy math to figure out what our revenue is. We found that it was just counterproductive because they would often get it wrong.
When we look at backlog this year versus last year, I think the numbers are fairly similar and might be down a little bit. We do expect backlog might drop in 2025 because we are going to have a record year and put a lot of the projects that are in backlog into revenue. We are working really hard to refill that backlog and win new work that is going to basically sustain the company for 2026 and the years going forward.
Someone's asked about the Ontario Stone Sand and Gravel Association and the Toronto and Area Road Builders Association. They've partnered to push recycled aggregate and road construction. Will this development be a headwind for competitors on winning contracts in Ontario?
Yeah. I'm not aware of that push, per se. I will say where cellular concrete makes sense for road bases is over weak or unstable soils. Using a recycled aggregate doesn't change our competitive position in those situations. I don't expect that to really have a material impact on our business.
All right. Just one here. Your plan is to be debt-free by the end of 2025. Is that correct?
At the end of 2025, we will have repaid all of the long-term debt associated with the BDC that is from the two acquisitions we did in 2018 and 2019. We will still technically have some debt in the terms of equipment financing, but we will not have any long-term debt that is not associated with a specific piece of equipment.
There are several questions just about guidance for 2025, earnings per share, EBITDA. Do you want to comment any further on any of that?
Yeah. I'll just say we don't provide formal guidance, right? The only guidance that we've provided is that 2025 is going to be a record year. Any questions asking for more specificity around that, we just can't answer.
Are you competing on any CAD 20 million-plus projects?
I'm not aware of any CAD 20 million-plus projects in our pipeline. I will say there's lots of larger projects, but none of that size.
What changes have been made, would you say, day-to-day with management of the company since the retirement of former CEO?
Not many changes have been made. I mean, before the retirement of Jeff, I was already the Chief Operating Officer of the company responsible for all of the operations. So we haven't really made a lot of changes. There's been some changes around communication and style. The overall strategy of the company remains the same. Jeff and I were highly aligned on how the company ran before his departure, and that hasn't really changed since his departure.
Someone's asking more, just a bit more detail on, are you observing challenges due to the change in the U.S. government with CEMATRIX being mostly a Canadian company?
Yeah, there's definitely been a lot of challenges and interesting developments just as a citizen of the world. If I just put my CEMATRIX hat on, we really are a Canadian company operating in Canada, and we have a U.S. subsidiary with U.S. employees and U.S. equipment operating in the U.S. As I say, we don't really expect a lot of challenges or adversity associated with tariffs or the change in government. You might even be able to argue that despite some of the noise around Trump, a lot of his policies are actually pro-business. If you could get past this kind of period of instability, it might actually be very good for the economies in both cases and spur further investments both in the U.S. and in Canada.
Thank you. How are you able to improve profitability in 2024 despite the reduced revenue?
It is two things. It is, one, a concerted effort to basically do better on our margins. Either do better in the bidding and estimating process to basically correctly price it based on competitive factors. The second is to do better in terms of execution. There are sometimes opportunities to do better than your bid margins in execution. We have done a good job of both of those things in 2024. The second thing is just a mix. In 2024, we had less revenue from larger projects, more revenue from small to mid-sized projects as a sort of percentage of the overall total. That contributes to increasing the margin. When we have more revenue from larger projects, just the mix results in a lower margin.
Thank you. Someone's asked about your investment in Glavel and what your expectations are there going forward.
Yeah. Glavel has a really good product that has a very large niche market opportunity in the construction industry. We are big believers in foam glass aggregate. Glavel's been working on getting their capital structure right-sized and getting their own balance sheet cleaned up. We are very optimistic about Glavel. I think initially our plan was to have a path where we could end up being the majority owner of Glavel, incorporating into our financial results. Glavel's capital requirements basically outstripped our ability to finance them. I think the path to full ownership of Glavel has probably disappeared, at least for now. We are really just trying to support that business and get it to a point where there is some exit in the future where we can recognize value on our investment.
Thank you. A question regarding the seasonality of the business. Could you discuss what actions are being undertaken or explored to reduce it?
Yeah. There is a bit of a notion that seasonality is kind of inherently bad. I do not really view it that way. If we have an opportunity to do more revenue in the third or fourth quarter that is profitable and it makes seasonality kind of look worse, we are going to take that opportunity to make that revenue and to make that money.
In terms of things that we could do to reduce seasonality, it is things like expand our presence in some of the southern states where there is less impact from winter. In some cases, you might even get reverse seasonality because of how hot it gets in the summer where you do not really want to be working in July and August. Usually, on the West Coast, there is less impact from winter just because of the moderation of the ocean.
We are looking to grow our business on the West Coast. There are some scopes of work that are almost weather-independent. If you are routing a tunnel underground, the weather above often does not matter. There are a bunch of different things, but I do not want to leave investors or shareholders with the impression that seasonality is inherently bad. If we find opportunities to grow our revenue in the third quarter, we will do it.
Thank you. Someone's asked about a lot of the projects that were pushed last year into this year and into Q1 potentially. Did you lose any of that business, or do you still expect everything that was pushed to go forward in 2025?
Yeah. I mean, again, I think there's sometimes this sense that if it didn't happen in Q4, then it's got to happen in Q1. That's just not the nature of construction. Sometimes projects get delayed, and they get delayed from Q3 all the way to Q2. It's just the nature of construction. Often, once you get into the winter season, and we've been talking about this seasonality a little bit, it's often beneficial to delay the start until the spring. We haven't lost any work that we had scheduled for 2024 that got delayed. It's just some projects that we had hoped would start in Q1 optimistically did not. Those projects, for the most part, look to start in Q2, but could also start in Q3.
Thank you. That covered the questions. There was quite a few that you had answered along the way that we did not answer again specifically because they had been looked after. That concludes the Q&A at this point. Is there anything you want to say to wrap it up?
No. We just want to thank all of our shareholders and investors for being invested in the company. I know that the last six months have been kind of rough on the share price. I personally really believe the best thing for the share price is to run a company that focuses on customers, focuses on growing revenue, and focuses on making money. If we do those things correctly, I know the share price will recover, and shareholders will get the value and see the value that we see.
Excellent. This will be available. We're recording it. It'll be distributed again on Monday for anybody that missed it. In the meantime, I'm always available for questions. Easy to reach at The Howard Group. Other than that, thank you both, Randy and MJ, and everybody for attending today.
Thanks, Jeff.