CEMATRIX. We're going to get into it very quickly here. With us today, Randy Boomhour, who's the CEO of CEMATRIX, and Marie-Josée Cantin, who is the Chief Financial Officer, and potentially Jordan Wolfe, President of Mix OnSite out of Chicago, might be joining us later in case there's any questions about what's happening in and around Chicago. With that, Randy and MJ, I'm going to turn it over to you. Thank you.
Great. Thank you very much, Grant. Really appreciate that introduction. Welcome, everyone, to our Q1 earnings call. Appreciate everybody attending. We're going to first kind of do a quick overview of CEMATRIX and the company, just in case we've got some new investors or new potential shareholders on the call. For many of you, this will be a repeat, so I'll do it pretty quick, and then I'll hand it over to MJ, who will go through our Q1 financials. Key investor highlights, this is really sort of an executive summary. 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. Financial strength and overall growth trend is an important part of our story.
Our 2024 revenue was CAD 35 million, with a positive Adjusted EBITDA of CAD 3.3 million. We had cash flow from operations of almost CAD 5 million. At the end of the first quarter, we had CAD 8.5 million in cash and no long-term debt. We did have some equipment financing that is in the long-term section. We are forecasting a record year in 2025. That will not show up as every quarter is better than the quarter of last year or better than the record year in 2023. In construction, when major projects start and stop, it has a major impact on how our revenue looks like in the accounting periods that accountants track things in. Overall, for CEMATRIX, there is a really significant market opportunity. We are an industry leader.
The global cellular concrete market is very large, and there's tailwinds that are helping us in terms of increased infrastructure spending in Canada and the U.S. Team and corporate timeline, the 3 executive officers of the company are myself as CEO, Jordan Wolfe, as Grant mentioned, the President of Mix OnSite, our largest business in the U.S., and MJ, who is our CFO. We've got a strong independent board with Menaz, Rick, Steve, Anna, and John. When we look at the overall share ownership of the company, there's 151 million shares issued and outstanding, fully diluted. We're at about 167.7 million. Insiders own about 15.4 million of those shares, or roughly 10%. Jordan Wolfe is the largest insider, and I would be the second largest insider. You can see our company was founded in 1999.
We survived a lot of ups and downs, and we've really hit an inflection point in the last couple of years where revenue growth has been matched with positive EBITDA and positive cash flow from operations. For those of you who don't know anything about the product, cellular concrete is made by mixing cement, water, and foaming agent together. The foaming agent creates bubbles in the mixture, which results in a cellular structure when the concrete sets. As a result of the properties, a cellular concrete that's very cost-effective compared to other comparable replacement products has a low density and is lightweight, has a high bearing capacity. It's extremely pumpable, highly flowable, and self-leveling, self-compacting. The bubbles give it some thermal insulating properties. It's very durable, and it's also excavatable. If you're covering shallow utilities, you can get back at those utilities if you need to.
There's a lot of applications for cellular concrete because of its properties. The main ones that we focus in on are lightweight engineered fill, MSE retaining wall fill, lightweight insulating road subbases, especially over weak or unstable soils, flowable and self-compacting fill, pipe and culvert abandonments, tunnel and annular grout, and shallow utility and foundation insulation. Customers and competitive advantage. CEMATRIX is almost always a subcontractor or a general contractor. We will, on occasion, especially for smaller scopes of work, work directly with an owner. We've worked with almost all of the largest general contractors in North America. We've shown you a snapshot of some of those down there below. From a competitive advantage point of view, really our number one competitive advantages are reputation. We've been successfully delivering cellular concrete solutions on time and on budget for over 25 years.
Our team has a lot of expertise. We have over 200 years of in-the-field experience. We have a large fleet of mobile, technically advanced equipment for producing cellular concrete with capacity to grow. Our size and scale is a competitive advantage. We have multiple locations from coast to coast. We successfully completed projects across Canada and the U.S. We are greener and more sustainable generally than the legacy products that we replace. There is a lot of words in here, but essentially the summation of it is the market is quite large. It is very hard to estimate what the size of this market is, but it has been estimated as low as $4 billion worldwide to as high as $27 billion worldwide.
I think everyone would agree the market for cellular concrete is growing as more people understand the properties of the product and it's successfully implemented in more projects across the world by CEMATRIX and other providers. Infrastructure spending is increasing. Infrastructure in Canada and the U.S. is aging and needs to be repaired and replaced. Populations continue to grow. New infrastructure is required, which places additional loads on existing infrastructure. Spending is just expected to increase. I think, MJ, is this where I turn it over to you?
Yes, please. Thank you, Randy. Let's go over some key financial highlights to understand our business at CEMATRIX. Despite a step back in 2024, our overall revenue trend line is growing. I'll show that to you on the next slide on the graph. For instance, revenue in 2021 was CAD 22.6 million and in 2024, CAD 35.6 million. As Randy mentioned, we're forecasting 2025 to be a record year. We have a positive bottom line, and we are generating cash. In 2024, as an instance, we had Adjusted EBITDA of CAD 3.3 million and positive cash flow of about CAD 5 million as well. We do have a healthy balance sheet with low leverage. At the end of Q1 2025, we had CAD 8.5 million in cash. We had no long-term debt, as Randy mentioned. Some keys to understanding our business: revenue growth will be lumpy. It will not be a staircase.
Financial results will be variable based on the timing of when large projects start and stop. Construction is a seasonal business, as a reminder, with higher revenues in warmer months. On average, revenue over the last 5 years were 18% for Q1 and Q2, 36% for Q3, and 28% for Q4. We are a specialty construction contractor. Margins tend to be higher than general contractors, but we do have more idle time and more fixed cost. Project size impacts margins. Larger projects have more competition and, as a result, lower margin. We do have excess capacity, which enables us to do significantly more revenue with existing equipment and staffing levels. Let's start to talk about Q1 financial results and highlights. As we just mentioned, Q1 is traditionally our slowest quarter. Having said that, our revenue was solid in Q1 at CAD 6.6 million.
That compares to CAD 8.4 million in 2024. Gross margins solid again at 22%. You're going to see the trend on the graph on the next slide in Q1, and we compare that to 30% in 2024, which was a large month for us. Operating income, we had a loss of CAD 0.7 million in Q1 compared to income of CAD 0.3 million in 2024. Adjusted EBITDA, a small loss of CAD 0.1 million in Q1 compared to CAD 1 million in 2024. Cash flow from operations before non-cash working capital changes was negative CAD 0.1 million in Q1 compared to CAD 0.9 million in 2024. Cash on hand, as we talked about, was CAD 8.5 million. If you're curious, the same period of last year, it was CAD 7.9 million. Let's look at the graphs here. If you look at the upper left-hand side, you can see our trend line is growing.
When you look at the progress we made from eight years ago, our compounded annual growth rate is about 24%. Just be aware that in orange, the 6.6 is just representing one quarter, but it kind of shows you that in 2017, we almost did the same volume, which is good. Our trend line is growing, as I mentioned. If you look on the right-hand side, our gross margins, the dip that you see is when we had some COVID and supply chain issues and cement shortages. For Q1, it was at 22%. Pretty solid overall. Looking down on the left-hand side, you see our debt and interest. We've come a long way, and we have significantly reduced our debt and interest cost in the last eight years. As Randy mentioned, and I mentioned, we've paid our long-term debt.
Right now, we do have an equipment financing loan for 2 dry mix units that we just signed up for. On the right-hand side, we have our share structure. At the end of the quarter, we had CAD 150.5 million of shares outstanding. We do have CAD 6.1 million of options, CAD 2.9 million of restricted share units, and CAD 8.2 million warrants for a total of CAD 167.7 million. Let's talk about our backlog now. At the end of the quarter, we had CAD 79.7 million. It grew from the end of December, which was at CAD 69.6 million, which we're pretty happy about. We've had lots of success securing work since the beginning of the year. We secured CAD 20.9 million. We're pretty happy about it. These projects are for various applications. Our sales team is doing a tremendous job at securing work.
I think I'm going to pass it to you, Randy, to talk about some closing remarks. You're on mute, Randy.
Thank you, MJ. Yeah, just to sum up, why invest in CEMATRIX? Number one is we're an industry leader. We're really well positioned to capitalize on the large opportunity in the large and growing infrastructure construction segment. We're a growth company. We have growing revenue, positive Adjusted EBITDA, positive cash flow from operations, and a strong balance sheet. Being a growth company doesn't mean that every quarter is going to be higher than the previous years. It just means overall the trend is growing, and we expect 2025 to be a record year for us. We believe that we're currently undervalued based on traditional valuation metrics. However you want to look at it, whether it's a multiple of forward revenue or a multiple of Adjusted EBITDA, we feel like we're currently undervalued. We don't have to raise any capital to fund a burn rate.
Being cash flow positive means that if we're raising capital, it should only be in support of an accretive acquisition, which is not most microcap companies can't say that. Lastly, we have capital to deploy. We have capital on the balance sheet that we're looking to put into an acquisition to continue to grow the company via acquisition. We're also continuing to invest in our sales resources so we can expand geographically and grow our company organically. We've got our investor relations contacts on the right-hand side, and our analyst that covers us, his information is also on the right-hand side there. Lastly, I just want to say thank you and kind of recognize the legacy of our founder, Jeff Kendrick. Jeff Kendrick sort of epitomizes a successful entrepreneur. He founded CEMATRIX in 1999.
He basically built the company from an idea that was in his mind to a company that's public with over 60 people employed and performs over CAD 50 million in revenue. The idea started out in his garage, funded by CAD 15,000 from his RSP and some money from his partner. Jeff was a true pioneer in the industry. Everybody in the cellular concrete industry knows Jeff and has benefited from Jeff's efforts to grow awareness about cellular concrete. Jeff successfully completed 2 acquisitions in 2018 and 2019 that really transformed CEMATRIX into the company that it is today. Jeff had all the essential characteristics of a successful entrepreneur: optimism, work ethic, belief, willingness to roll up his sleeves. We just wanted to take a moment to thank Jeff for his leadership and wish him all the best in retirement.
With that, we'll turn it back over to Grant to help us navigate any questions that the audience might have.
Thanks, MJ and Randy. I see that Jordan has joined us out of Chicago. Just a reminder, folks, that at the bottom of your screen is the area where you can submit your questions. Jordan, welcome.
Thank you. Thank you for having me.
We're going to start with Russell Stanley, who is the analyst with Beacon Securities that has written research on CEMATRIX. He's got several questions. With that, can you update us on the expected start dates for the major projects in North Carolina and the Midwest?
Yeah. As Russell knows, I generally do not like to talk about projects before they start. I like to kind of keep that information to ourselves. But these 2 projects that Russell is referring to, we have been public about those and the names of them. The one tunnel grouting project, we actually started grouting that tunnel this week. We should see revenues for that in the second quarter. The other project, which is the major highway project in North Carolina, we are expecting to start that in June or July. We should just also caution investors that those projects will not be done in the span of 30 months or 30 days. They will take multiple months, maybe even multiple quarters to finish. That revenue will be spread out through Q2, Q3, and Q4 potentially.
Russell's next question, accounts receivable climb sequentially despite the seasonal quarter-over-quarter decline in revenue. Can you provide some color on that?
Yeah. I mean, that just really relates to the timing of when the work happened. If you go back and look at our Q1 revenue, most of that revenue occurred later in the quarter. As a result, accounts receivable climbed compared to not last year's volume, but compared to the end of this year, or, sorry, end of 2024. It is really just about the timing of receivables. We have no concerns about our customers' ability or willingness to pay us.
Russell's next one, understanding CEMATRIX has little or no direct tariff exposure. Are you seeing any customer caution owing to the current uncertainty in the market?
A little bit, I would say. I think everybody's a little bit nervous and uncertain about the overall macroeconomic impact of tariffs and how quickly they change, right? One of the things that you need to run a business properly is you need certainty around government policy. With the way that the tariffs are going, that's doing the exact opposite, which is creating lots of uncertainty. I would say our direct experience is if a project is already committed and ongoing, tariffs have very little impact on that. I think where you'll see impacts is if somebody's thinking about making an investment in the future, that they might choose to delay that decision until there's more certainty around tariffs and what's going to happen there.
Next question is about margins. Can you provide some color on future gross margins? Is 20-25% the range that is reasonable? And would you expect that to hold for the remainder of the year?
Yeah. There are 2 components to margins. There are the margins that we make when we are working, which we would call direct margin or project margin. The second component is the indirect costs, which are the costs related to either keeping the equipment working or bench time when we do not have employees working. When our revenue volume is lower, then the project margins are not necessarily enough or are less compared to the indirect costs that they have to cover. The gross margin can look smaller. When revenue is higher, there is more project margin, but a similar amount of indirect costs it has to cover. The gross margin grows. Long story short, I would expect that gross margins would improve as our revenue goes up here in the second and third quarter.
Question here on contracts, and you've addressed it in part discussing 2 of the projects that were moved from last year that were expected to have started in 2024 and now are starting in 2025. The question relates to 4 contracts that got moved last year. Will all of them start this year?
Yeah. That's an impossible question for me to answer because I don't know which questions or which contracts they're talking about, Grant. All I'd say is contracts start and stop dates, those move in construction. Depending on what happens on the site or with the general contractor, the owner, the one thing I can tell you about for sure in construction is things almost never start when they are expected to. I think that's just part of the business. I think commenting on it's really not that helpful.
A general question about the construction market. What are you seeing in the construction market that makes you optimistic about 2025?
Yeah. Our optimism about 2025 does not really come from sort of macroeconomic trends or what we see in the construction market. Our optimism comes from looking at our backlog and understanding how much of that backlog is going to go into the ground this year. That is where optimism comes from. Our overall optimism about the future of the company really comes from looking at, as we talked about earlier in the presentation, the increased infrastructure spending because of, A, growing populations, and, B, aging infrastructure. That coupled with more and more successful applications of cellular concrete, both by us and by other participants in the market, just says there are so many tailwinds that are helping us and the industry overall that we feel very confident about our future.
Question about tariffs, but you've already addressed that. Of the 17 million options and warrants, how many are in the money? And do you know the expiry dates offhand?
Yeah. The warrants that are outstanding, of which I think there's about just over 8 million, those come from the financing that we did last summer. There's a portion of those warrants that are at $0.45, so they're out of the money. The majority of them are at $0.61, and so they're also out of the money. If you look at the options that have been issued because of the impact on our share price, almost all of our options are currently out of the money. Some might have some small in-the-money value, but as a result of where the share price is, they're all out of the money as well.
Somebody who missed the beginning of the webinar was asking about the current backlog. I can answer that very quickly. At the end of 2024, the backlog was a hair under CAD 70 million. As of the end of the first quarter, we are at CAD 79.7 million. It grew about CAD 13 million.
I'd also just say in that, Grant, we've gone away from disclosing backlog in news releases around contract awards. We provide a very detailed reconciliation of backlog inside our MD&A. That's the backlog.
Question here about the normal course issuer bid. Can you provide a status update on that?
Yeah. The normal course issuer bid is fully approved and ready to go. We were not allowed to start purchasing while we are in blackout. It is possible to purchase during blackout, but that has to be under a plan that is made while you are not in blackout. Long story short, we have not started making any purchases. I reiterate that we as a company and as leaders of the company feel the company is undervalued. When we are out of blackout on Monday next week, we expect to start buying in the market.
Which is great because the next question was also about the normal course and how much stock you've already bought, but you just answered that. You haven't bought any yet, but soon. Very, very soon.
Yeah. I'm sorry, Grant. The only thing I should add to that is there's some perception out there that we're going to buy the maximum that we're allowed. I would just caution investors against that. There's no plan currently to buy the maximum that's allowed, but we're going to buy some portion of that maximum.
Question about the relationship with Lafarge. Where you've both done road studies using cellular concrete with great results, don't you think that it would be better to talk to construction giants to convince them to use your cellular cement or concrete as base for roads and highways rather than the engineering companies?
You have to talk to all the participants in the process. You can't just focus on one or the other. They all have a role to play, and they're all a stakeholder to play. Cellular concrete absolutely helps for road construction, especially over weak or unstable soils. If you're building a road over stable soils, then you can get by without using cellular concrete. It's just not required. The road could be cheaper as a result. You may get a longer life by using cellular concrete, but there's a bit of a cost-benefit analysis that the owner has to do. Over weak or unstable soils, that cost-benefit analysis becomes more pointed and makes more sense. Those are the situations where we're focusing on. I don't think you'll see a situation where every road base is made using cellular concrete.
I think you will see a situation where over weak and unstable soils, of which there are many and many places where that's the case, you'll see more and more the use of cellular concrete.
Question in and around Beacon's last research. I presume this is correct where the individual says Beacon estimated CAD 55 million as target revenue for 2025. Is that the correct number? The question is, is that doable?
Yeah. I apologize because I should have said this at the end of their presentation, right, is we do not provide guidance. The only guidance we have provided is that we are going to have the best year we have ever had. The only person you are going to speak to about how Beacon's numbers are calculated is Beacon themselves.
Been pretty clear that, as you just said, you're anticipating a record year. You don't have any long-term debt. You're throwing off cash. Lots of companies would like to be in that position. Another one just came in. Have you made any progress on expanding your reach into warmer regions to increase work for the remaining quarters?
Yes. I mean, there's of 2 factors that you have to consider, right? If it's a very large project, it's easy for us to bid those projects basically in any jurisdiction. We've worked in almost all of the states and all the provinces in the US and Canada. We're effectively already doing that. The trick is, as the projects get smaller, then the mobilization costs become a bigger component of the overall cost to the general contractor or the owner. That's where being local or having a more local presence can have a bigger advantage on those opportunities. We're still assessing the marketplace to figure out where we become more local. That may be through an acquisition or it may be through the placement of a salesperson somewhere local. We're still working on that plan.
Any large-sized projects that are in those types of markets, we're actively bidding those.
At this moment, oh, another one just came in. In terms of new orders, how has the order intake trend been year to date versus the last 2 years?
I don't know that information off the top of my head, Grant. What I would say is we feel like we've had a really successful first quarter around securing work for this year and next. So we're really happy with our sales team's performance and feel like we are growing and on track for a record year and continue our success in the future.
Follow-up in relation to Beacon's target, just asking, is it Canadian or US? I believe the answer is Canadian.
It's Canadian. We're a reporting issuer in Canada, so all the numbers we report are Canadian.
At the moment, that is it for the questions. Oh, sorry. One more just came in. In terms of cost inflation, are you seeing pressure on your SG&A?
Inflation is definitely an everyday part of business. Everyone's looking to increase prices every year. We're seeing some mild cost inflation. We're seeing some inflation around wages as people try to have their wages keep up with inflation because wages can be somewhat of a lagger. We're also working to manage our SG&A costs. We've taken steps to ensure that the things we're doing to manage costs are greater than any inflationary pressures that we'll see. You'll actually notice if you look at our SG&A costs, they're actually down this quarter versus last year.
Question for Jordan. Someone has asked if he would provide his perspective on the market and the opportunities.
I think that we're in a good spot, and we're continuing to build off the success that we've had. I'm speaking specifically for Mix OnSite, but I'd only like to talk about what we've done in the past. Mix OnSite's been pretty successful in recent years. What I can tell you is that the trends that I'm seeing in the market seem to be looking very stout, and we're continuing to build off of and improve and handle more volume than we have in the past.
To the border, do you expect to break into Quebec and Ontario in the next 2 to 3 years? I know you've done projects there, but I think probably the question relates to a bigger presence in those provinces.
We already have a pretty significant presence in Ontario. That's a place where we have a base of operations. We have a crew base there. A significant portion of our Canadian revenue comes out of the Ontario market. We have a salesperson also dedicated to the Quebec market. We've recently got MTQ approval to be a lightweight fill and a grouting material there. We are actively bidding work in the province of Quebec. Both those markets are key components of our success in Canada.
Inflation-type related, do you have price escalation baked into your contracts so that you can pass on any increases to your customers?
We do often include escalators in the contracts. It really is a bit contract-specific, but we feel like we're adequately covered around inflation in our contracts.
Great. That appears to be it unless anything comes in in the next few seconds. With that, closing comments?
Yeah. I just wanted to thank our current shareholders who have kind of stuck with us. I know the overall return on the investment has not been great compared to where we started out kind of last year. I'm extremely confident in our year, despite the first quarter being lower than last year's first quarter. I'd just ask you to stick with us. I think if you do, you'll be very happy with your investment. We're on track for a record year. I've never been more confident about where we are as a company and the successes that we have lying in front of us.
Randy, MJ, Jordan, thank you very much. To all the attendees, we very much appreciate your time. We'll see you in the next quarterly report. Thank you.
Thank you.
Thank you, everybody.