EMERGE Commerce Ltd. (ECOM) Earnings Call Transcript & Summary

Okay. So good morning, everyone. Your host today are Ghassan Halazon, Founder and CEO of EMERGE Commerce, and Maurice Finn, CEO of EMERGE Golf. Before we begin, I'm required to provide the following statements with respect to the forward-looking information, which is made on behalf of EMERGE and all of its representatives on this call. Certain statements made on this call will contain forward-looking information, which is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are reasonable in the circumstances. Actual results could differ materially from a conclusion, forecast or expectation in the forward-looking information. We caution investors not to rely on the forward-looking information, and during today's call, all figures are in Canadian dollars unless otherwise stated. And with that, I'll pass microphone to Ghassan Halazon.

Thank you so much, Dasha. Good morning, everyone, and hello from wherever you're tuning in. I am Ghassan for those of you who don't know me, I'm the founder CEO of EMERGE. I'm joined by Maurice Finn, the CEO of EMERGE Golf. He'll spend a bit of time talking through our latest acquisition and our Golf portfolio shortly. But we're happy to be here. We're happy to be back. We haven't done this sort of thing in some time. As many of you know, we've been heads down in recent years, really zoning in on cleaning up the balance sheet, doubling down where we're winning and really zoning in on fewer, bigger, more compelling opportunities. We're excited to share our progress and our plans. So let's jump right in. Let me sort of lay the foundation here sort of where the portfolio sits today. This is inclusive of the latest Tee 2 Green acquisition, which we'll talk about shortly in the presentation. EMERGE, as many of you know by now, is a Canadian e-commerce brand portfolio across grocery and golf verticals. We count about $25 million or so in pro forma revenue, inclusive of T2G and excluding any of the businesses that we had sold in prior years, of course. We're fortunate to say that we've seen 3 consecutive quarters of organic revenue growth. That was a big theme last year following the multiyear decline from the peak pandemic highs, which we viewed as an artificial level. We've been able to reignite that growth at an accelerating clip I might add. Of course, Q1 has not yet been reported, but we have shared positive signs along the way. If Q1 were to be another positive quarter, that would make it our fourth consecutive quarter. Of course, as we've recently announced as well, profitability has continued to improve and move in the right direction. We gave some preliminary guidance on Q4. And as you can see, with the addition of Tee 2 Green, which brings about $1 million or so in EBITDA, that is most certainly going to put us in a position of adjusted EBITDA positive moving forward. We count 4 brands across our 2 verticals in the portfolio. And they're a mix of grocery, which we'll go into shortly with our flagship brand through local as well as now 3 golf brands on the discounted experiences, apparel and equipment side. Our primary focus is Canada. We think there's a tremendous opportunity to build and brand ourselves as a Canadian market leader across these verticals, and we are heading in that direction. So let's start with a quick update on truLocal, our flagship meat and seafood subscription brand for consumers. It's a direct-to-consumer business. We are the market leader in Canada for what we do. We deliver, on average, a monthly meat subscription box filled with your grass-fed beef, your organic chicken, your wild hot salmon in a box, refrigerated with dry ice straight to your doorsteps. This is a model that has a lot of good tailwinds right now. And frankly, we've seen this progress in earlier years, and we believe this is an outsized brand opportunity. It's a strategic play for us. We're obviously based in Ontario, we have BC and Alberta hubs and -- with service across Canada. So we're a national presence. It is EMERGE's largest brand by revenue. There's a lot we like about the metrics. If you -- once you deep dive into our ability to acquire customers and bring them on for, call it, $100 and some $150. We're seeing these customers go on to spend $1,700 or more in customer lifetime value at very reasonable gross profit margins as well with solid pricing power, a high propensity on the loyalty side. They have a really good community, and we encourage folks to spend some time, see how this brand is reviewed and how it's loved online. So we think there's still continued tremendous opportunity here. As I've shared a few times, ButcherBox is the market leader in the category in the U.S. They are a bootstrapped $500 million revenue business. TruLocal is sub-$15 million right now, obviously growing -- obviously, growing both top line and profitability. But we think this is -- these are still very early days. This is a chance for us to really, really supercharge the TruLocal business and ultimately build around it in the food tech space. Speaking of tailwinds, as you're all probably familiar with and aware of, TruLocal is really at the forefront of this support local or buy Canadian movement sweeping the country. And importantly, we really don't view this as a moment in time only. We don't think this is a passing thought with the pandemic, for example, TruLocal grew from $8 million in revenue, shot up to $20 million in revenue in a single year on the back of everyone being locked up, the world was going to end, everyone was shopping online, but that was because they were forced to shop online. Once the world opened up as we were proven wrong, frankly, we were making the bet that the online way of living would lead. It turned out to be a more balanced approach where 20% came down to a low of 13% or 13.5%, as I say, we're pushing closer to 15% now as we start growing again, and we expect that this new sentiment shift is here to stay. That's very important. And as you look at all the surveys, there's one yesterday that we saw was BMO estimating $10 billion annually being spent in Canada by Canadians supporting local. We believe with a name and brand and community like TruLocal, there isn't a better business in Canada, better business position than we are in terms of this opportunity. And we think we are not only going to participate in this movement, but we want to be one of the faces of the support local movement. And that is the direction we're heading in. But that's not just talk. As we've indicated through some of our updates along the way, we've seen a tremendous surge in net new subscriptions to the platform, i.e., new subscribers joining versus those leaving. That equation is our net new subscriber account. We saw a triple-digit 193% increase in February. Obviously, that warranted us going stronger on marketing, doubling down on our creative, doubling down on our Canadian messaging and positioning. You can see on the right-hand side of the slide, some of the examples of media coverage we've received, an ad that we've pushed out a bit of a provocative ad, if you will, saying that TruLocal is retaliating with a 25% of Canadian meat and seafood, obviously, [tug-in sheet] campaign with what's going on in the tariff -- with the tariff situation and the 25% tariff at the time in the headlines. So we're very excited about this progress. We're building around it, and we are really zoning in on this idea of us being a nationally loved, locally sourced business and community straight from local farmers, and we're seeing some great, great early signs. I won't spend too much time on the industry, but needless to say, meat and seafood and food tech at large, it's a massive, massive industry. It's growing fast, and it's really at the intersection of multiple huge trends, whether that's convenience, whether that's transparency, getting understanding where your food source comes from, your health and wellness, doing it ethically, customizing your needs and obviously, kind of delivering it straight to your door and building that habit. So we love a lot of things about this model. Let me zone in here before Maurice jumps in on a deep dive into the Golf vertical, including our latest acquisition. Let me just highlight from a transactional perspective, what we've accomplished here and what we've announced recently. As many of you have gathered, we closed the Tee 2 Green acquisition, which is a profitable bolt-on golf products business, i.e., apparel and equipment business. We've done so and what we believe are very favorable flexible terms, and it's coming with immediate synergies. To highlight, Tee 2 Green from a financial perspective, last year, the revenue exceeded $6 million plus. Adjusted EBITDA was around $1 million and net income of $700,000 in 2024. And I think this brand has stood the test of time, safe to say, and it's been around for a long time. We are not buying this business for growth. We are buying this business for its consistency, for its EBITDA, for its cash flow and for what it does for the overall portfolio. This business is expected to bring EMERGE overall to cash flow positive in 2025 moving forward. We paid $2.2 million for it, including $1.1 million in cash, $900,000 over 5 years in deferred consideration, and $200,000 in EMERGE shares, which is just north of 3 million plus shares at $0.065 per share, which is a premium to market in support of our big picture plan around golf and around building this leading portfolio of brands. We were able to do this acquisition with no additional proceeds. So there's no dilution here, obviously, other than the shares as part of the consideration, but we didn't have to raise any capital. And the reason we were able to do it, as we got scrappy, we rolled our sleeves up. We were able to sell our shop domains to Shopify. As some of you may have heard earlier this year, we announced that as well as the noncore sale -- asset sale of Carnivore Club, which was a small and declining business for us and didn't really fit the bill. We wanted to double down where we're winning, where we're growing, where we have big brand appeal like TruLocal and obviously, the golf businesses. So essentially, what we've done here is we've replaced 2 nonperforming nonproductive assets with 0 EBITDA or thereabouts between the shop domains, which we were sitting on idly, as well as Carnivore Club. We've replaced those 2 idle businesses or nonproductive businesses with a flexible creative deal that brings us $1 million or so in EBITDA from Tee 2 Green at these -- the flexible arrangement that we've set up. So this is very exciting for us. But for a deeper dive on what our golf business looks like today, I'd like to introduce or reintroduce Maurice Finn, who I've come to know and work with for almost 14 or 15 years now through various ventures. He joined EMERGE earlier in around 2018 on heading up our sales and partnerships and he's done phenomenally well, specifically with JustGolfstuff, which is really where he shined and that business shined, and now Tee 2 Green is the perfect bolt-on acquisition for the Golf portfolio. Maurice now is COO of Golf. He heads up the full division. Without further ado, Maurice, can you please jump in and give us the intro on Golf.

Thank you, Ghassan, and good morning, everyone. Thanks for joining. I'm going to give everyone a quick overview of our EMERGE Golf brands and talk a little bit more about our latest acquisition, Tee 2 Green. So as Ghassan has mentioned, Tee 2 Green has a 38-year track record of profitability, mainly focused on the discounted golf apparel and equipment space here in Canada. They have 2 retail stores, one in Barrie, Ontario. The other is in Orillia, Ontario, which serves as their headquarters. It's where their warehouse is based as well. And those retail stores make up about 20% of their overall revenue. Another 40% of the revenue comes from 3-day roadshow events they have across Ontario during the golf season. They tend to focus on more rural locations, which are underserved in a retail capacity, and these are very lucrative weekends for the business. And the other 40% comes from a mix of their own Shopify store, which is t2green.net. They do custom fittings at their stores. They have simulators in their stores and also they are a retailer on the JustGolfStuff marketplace. Being in the industry for so long, they've got significant relationships in place and licensing agreements with all the major manufacturers in golf, like TaylorMade, Callaway, Cobra, Adidas and many others. And as part of those agreements, they also have significant lines of credit with all these brands, which do allow us to receive goods today that we order and pay for them maybe 150 days down the line, which gives us that cash flow advantage. And as Ghassan had mentioned in the previous slide, as part of this transaction, we are receiving $2.4 million in, I would say, excellent inventory that vast majority is less than 12 months old. And the great thing with that inventory is we're paying it down over 8 years. We do expect a sell-through rate of about 75% in year 1 on that existing inventory. And the expectation is about an 80% markup on that inventory. So that also is giving us a significant cash flow advantage in year 1. They also have their own private label brand, Northern Spirit, which leans in to get to that Canadian movement right now. That's primarily focused on golf bags and accessories. It's actually a significant part of their business. It contributes up to about 10% of the revenue, the really, really high-margin brand and something we want to lean more into going forward. As Ghassan said, JustGolfStuff something that's a part of the business that's growing extremely fast for EMERGE. It's got 10x GMS growth over the last 5 years, and that's basically a Shopify marketplace for retailers across Canada to post different golf apparel, equipment offerings. And we're, of course, offering nationwide delivery throughout that brand. Tee 2 Green has actually been on that marketplace since 2020 as well. And then on the other side, we have our UnderPar business, which is focused on discounted green fees across North America. Our 2 biggest markets being Ontario here in Canada and California in the U.S. This is a business that's really enjoyed a lot of success over the last 12 months. We saw double-digit organic revenue growth in 2024. We're actually seeing similar trends in 2025. And this business was something that was impacted by COVID. Obviously, as the demand for golf really boomed during COVID, of courses had less desire to offer discounts on their green fees, and that did impact UnderPar. But we are seeing in the last 12 months a lot of courses, you haven't ran in 3, 4 years there to come back on the platform. We're really seeing a significant interest in our stay-in play as well as international travel and curated travel golf experiences, which is something quite new for us. We're really seeing some good numbers there. We're excited for that. And recently, two of the biggest names in golf worldwide, Pebble Beach and Torrey Pines also joined the platform and did significant numbers. So really excited to kind of lean into that space and grow that in 2025 and beyond. Another thing to note, obviously, with a bit of a weakening economic climate, a bit of volatility out there with the tariff situation and the stock market situation, it's important to note that people are always going to play golf. We think, UnderPar is well placed as a place that offers discounted green fees for people to go to if there is a downturn in the economy. We also see that simulating on the JustGolfStuff and Tee 2 Green side, as they're, of course, focused primarily on discounts, whether it's equipment or apparel. UnderPar itself was actually born out of the recession in 2008. So it's something we think we're well positioned for if there is a downturn moving forward. Next slide, Ghassan, thank you. I think one thing I think it's important to state, I myself have had a management contract in place for Tee 2 Green for about 12 months or so. I've been pretty much operating the business day-to-day, doing the majority of the procurement, build key relationships with all their staff. So we are really derisked in this acquisition, the fact that we know this business inside out. And there really are some instant synergies we can avail of from day 1. I think a big thing for us right off the bat is EMERGE Golf has access to over 400,000 golfers. And we're going to use those to drive traffic to Tee 2 Green's roadshows across Ontario as well as Tee 2 Green's retail stores. And on the inverse, Tee 2 Green, they have a smaller e-mail list, but it's a highly engaged email list that they get at their golf road shows that they do. And we can use that list, obviously drive traffic to our Ontario golf deals, UnderPar. We're going to use the same model we use for JustGolfStuff, which again is hosted on Shopify, which is very similar to T2Geen.net, which is hosted on Shopify as well to scale that business, that involves cleaning up the site, using the e-mail program we use for JustGolfStuff and using our in-house digital marketing team to provide that same scalability to Tee 2 Green's own online platform. We are expecting some significant savings for the business as well. One of the first things we're going to do is fold in Tee 2 Green's shipping volume into JustGolfStuff's account, which will avail us at some discounts right off the bat. We've also secured discounts under shipping earlier this year. And with the elimination of the carbon tax, we expect to save about 10% to 20% per package shipped in 2025. We're also going to use the existing EMERGE resources to help power some of Tee 2 Green. So there will be some further OpEx savings as well. I think one other thing to note is, as part of the Tee 2 Green transaction, as I mentioned, Tee 2 Green has all these licensing agreements in place with all these major brands. Some of these brands like TaylorMade are yet to beyond the JustGolfStuff marketplace, part of this transaction allows us to, in time, get these bigger brands like TaylorMade and others onto the platform, which is going to give us another GMS boost for JustGolfStuff. And last thing to mention, that JustGolfStuff case study, as we mentioned, it's the EMERGE's fastest-growing business. We acquired this as part of the UnderPar transaction in 2019. It was basically a $500,000 GMS business, not something we are really focused on as we're really zoning in on UnderPar, when COVID hit in 2020 and the supply on the UnderPar side diminished. What I did was basically utilize that UnderPar e-mail list to drive traffic to JustGolfStuff. After some initial success, we were able to onboard a lot more retailers across Canada. And all of this was done by using existing in-house EMERGE resources using that UnderPar team. We didn't need any outside investment to scale this 10x. And we've been very smart in terms of different partnerships we've put in place with the likes of American Express, which is a big partner of ours, Bnegoa and many others. I think the last thing to note is what we see with Google trends as people are continuing to search for golf equipment, golf apparel, the demand is high. And given the climate right now, we're well positioned as a discounted golf apparel, golf equipment provider to really scale further during this time. We're really excited about the Tee 2 Green transaction. It's something that's close to my heart. And as I said, I've been working with them for many years. They've been on JustGolfStuff for many years. So, we're excited to use, obviously, those relationships that they've built to help scale their business and in turn, obviously drive further growth for the JustGolfStuff business. So with that being said, thanks, everyone, for the time, and Ghassan, I'll pass it back to you.

Thank you, Maurice. It is indeed really exciting and remarkable what you've been able to do over the last 4 or 5 years with JGS, and with our partnership with Tee 2 Green, so I, for one, I'm really excited to see how you scale up the vertical and leverage EMERGE resources and marketing and data. So this is coming at exactly the right time for the overall business. Moving on. So I just wanted to recap a little bit what this 2.0 strategy entails. As many of you know, EMERGE has come from a world of being super decentralized with middle management, a larger HQ team and staff to support all of our various verticals at the time. We were sitting on 5 different verticals, 9 or 10 brands at the peak, and the idea at that time was relatively minimal synergy between these verticals as these businesses would be run in a certain way, and we wouldn't be as hands on at the time. Obviously, we were hit with very unfavorable macro, both from declining revenue from the peak pandemic highs at the same time, rising interest rates and just a weakening e-commerce environment post pandemic. We see ourselves where we find ourselves in what we call the EMERGE 2.0 era, which is all about a streamlined focused strategy and approach. It means us being centralized, hands-on roll our sleeves up, run our brands. So I view myself and Maurice as operators pretty much parachuting from the EMERGE HQ team into both the grocery and golf verticals with Maurice focused on the golf side, I'm focused on the grocery side. And of course, in addition to sort of our investor and public capacity. So big picture, we are more centralized. We've streamlined these businesses. We're focused on these 2 compelling opportunities. Obviously, everything we're doing now is synergy driven. So for example, Maurice just laid out, very specific synergies that wouldn't have necessarily been available had you owned, for example, a meat and seafood company in Canada and a pet business in Virginia that was B2B, for example, right? So we didn't have that type of synergy over here, that's much clearer. We've obviously done a big job on cleaning up the debt. And fortunately, between our reigniting our organic revenue and the improved interest rate climate with all the rate cuts, we feel like this is all starting to shape up really nicely. So let's look at our preliminary report card for 2024. We kind of came up with our preliminary Q4. We'll be announcing our official full year audited statements in late April as usual. But safe to say, high level, the key headlines here for the year are: we have managed to go ahead and reignite organic revenue growth. We've talked about that 3 consecutive quarters of growth. That is both grocery and golf growing again. We've reduced our debt, as we've spoken about. We've improved our profitability and streamlined our business. We're now expected to be adjusted EBITDA positive, inclusive of Tee 2 Green's sub $1 million or so in EBITDA. And of course, we were able to grow our cash position year-over-year without a capital raise. Obviously, creatively in part due to being able to sell some of our assets to Shopify, as I mentioned, but also that the business itself has grown and generated better cash. And so that left us with about $3 million in cash at year-end, which subsequently, obviously, we've used some of that cash to pay down -- to pay for the upfront Tee 2 Green portion. But we feel that we hit on all cylinders from an operational perspective to align ourselves up in 2025 to go out with strength here. And we certainly have done some really good things in Q1 that I've shared with you guys, but more to do once we announce Q1 later in May. In terms of this pure-play big picture, savings and growth opportunities for the business, we're wrapping up -- we talked about these, I guess, theoretically in the past, but a number of these projects are well underway, and a lot of these unlocks are live or about to be live. We've put -- basically most of our brands are now on a payment processor that gives us shared savings or bulk savings, if you will. We've managed to secure e-mail service provider savings. So we -- all of our brands send e-mails. We have about 0.5 million members on our e-mail list, and we've struck really, really compelling deals versus what's out there in the market. And of course, I'm not going to go through -- through each of these one by one, but needless to say, you got the idea. A number of these different areas are ones where we have actively rolled our sleeves up, created tenders, created competitive pressure and landed deals that gave us some savings. And of course, one of our biggest areas of savings has been tightening up the HQ team overall, as I've mentioned, tightening up any nonfocused brand presence and staff members, and we've been able to do so aggressively without impacting revenue and of course, with improving profit. To go into growth in a bit more detail. There are a couple of opportunities I just wanted to highlight. You may have heard in Q4, we announced that we secured close to $0.5 million in corporate orders for truLocal, i.e., sending meat and seafood subscription boxes to employees and clients during the holidays with this idea that enough with the chocolates, enough with the wine, let's gift healthy, let's support local. And we had quite a bit of success last year, and we expect with the environment we're in with the support local mindset that, again, we believe is here to stay, we think it's going to be a really amazing corporate order year, specifically holiday season. And of course, beyond that, potentially built on the corporate vertical, both for grocery and golf over time. There's other opportunities in terms of partnerships, Maurice mentioned, Amex, UnderPar is now on TravelZoo, which is a popular travel website. We are pretty much there -- I wouldn't say exclusive, but we are definitely their largest golf provider of golf course experiences. And we're doing -- we're striking partnerships with work organizations, PERC organizations. We really are excited about getting our great offering out there to as many Canadians as possible as well as the U.S. market for experiences, as Maurice mentioned. We've done a couple of acquisitions in the past, but this one with Tee 2 Green is really kind of an eye-opener in terms of what an accretive synergistic acquisition can look like, what type of flexibility we can get. So we feel very excited about future acquisitions along these lines that bring that cash flow enhancement, bring that EBITDA improvement, add synergies, add scale all at once. And of course, right now, for the time being on geography, Canada is our front and center primary market. We won't rule out international markets down the line, but that's just not the focus now. I think we're really happy with our presence and our positioning as of late. Just a quick update on the debt side, as you all might have seen as well when we announced the closing of Tee 2 Green, we also announced a refinanced debt facility with our existing lender for up to 24 months. This gives us until April 2027, inclusive of the extension option built in with lender approval. But we feel really good. We've been with this lender since 2019. We brought the debt down by 77%, from $25 million, the senior debt facility down to $5.85. We have an excellent relationship with our lender. They continue to support us. Obviously, that was a vote of confidence in the Tee 2 Green transaction in terms of reupping, giving us another couple of years of visibility. And of course, our note is variable. And so with the -- the recent as well as upcoming interest rate cuts, we expect continued meaningful interest savings, which are as good as cash. These are cash savings straight to our pocket. So just to kind of -- we still have a few slides left and then we'll take a few questions if any of you have them. Just to recap sort of -- we are on the track here. So we've talked about not only last year, we talked about reigniting organic growth, we now have organic growth. We want to accelerate it. right? We were talking about reactivating our accretive M&A program while we've taken action already here from the start of the year to now, we closed Tee 2 Green, practically got it in the best time of the year, by the way, Q2 is an amazing time for golf, amazing time for Tee 2 Green to be with us and include them. So Q2 will really be our first quarter inclusive of Tee 2 Green both revenue and profit expected. And then, of course, we'll continue to be opportunistic. We'll think through ways to improve cash flow, reduce interest. Those might include debt discussions -- right now, we're happy with what we've landed with our lenders. There's a couple of years of visibility. We're focused on the business, but we will always be opportunistic. You know us by now quite well. I wanted to point out in addition to Maurice and myself, Dasha is heading up as CFO and she joined as interim CFO earlier in the year. Things are flowing. We're going to be wrapping up our audit later this month. And so we've also seen that with this tighter management team, our focus has gone much deeper into the brand level with the golf side and the grocery side. But this is kind of the core management team at this point. On the Board side, no changes. We have 3 independent directors in addition to myself, Drew Green, the CEO of Indochino, Ian McKinnon, who was formerly a Board member at Constellation Software for, I think, 16 or 17 years; John Kim, who is -- continues to be a Director at Well Health, among other boards. This is our cap table today as it stands for reference, and we will keep you updated on any material changes, but this is sort of we're sitting at an $11.7 million enterprise value, share price at $0.45 and so a market cap at about $6.4 million with $142 million-plus shares outstanding. That includes the shares that the Tee 2 Green shareholders received. And just to recap everything at a very high level, there's a couple of takeaways from today. One of them has to be that we are performing -- right, that the operating metrics of the business are strong. They are improving. We've had the growth in top line. We've had the improved profitability. We are now talking about cash flow positive moving forward. And so we feel great about pure and old-school operational execution. We also are uniquely positioned. We have what we consider to be one of Canada's best portfolios and businesses, frankly, at this time from a tariff proof perspective as well as from a recession-proof perspective. And I think the word proof maybe undermines the fact that in some ways, some of this is actually strengthening us. TruLocal is actually not just tariff proof, it's actually blossoming further as a result. On the recession side, UnderPar was founded during last great recession in 2008. Those were the years this model was made. So we think this weakening climate, particularly in Canada, will be conducive to our golf business as well. We're really proud, and I think one of the reasons we made it through the storm is that we actually sit on amazing loved brands, right? A lot of companies jumped on the bandwagon, bought different businesses on Amazon, little stores that had no real brand, but just a bit of EBITDA or that sort of thing. We're really, really focused on brands. If you go look back. We've always talked about loyal communities, sticky behavior, amazing metrics, proper customer lifetime to [indiscernible] very favorable, as I mentioned earlier. These are the things that help these brands have durable win streaks, if you will. And we believe we're sitting on some of the best brands in digital and in golf and grocery overall in Canada. Our debt, we've talked about a bit already, but we've reduced it by 77%. We've done so by selling off mainly noncore businesses and doubling down where we think we can win, and where management at EMERGE has parachuted under our EMERGE 2.0 model, where we are running these businesses directly with discipline and we're seeing those results directly. And then just in terms of pipeline for acquisitions, and again, you've got to know me and Maurice on the management side, there are other great people around us. But on the acquisition side, we're really changing our philosophy. As I said, we're zoning in on that extreme synergy -- that day 1 synergy, if you will, we're really, really focused on amazing pricing, right? Really good businesses that are durable that have stood the test of time, that are maybe longer duration, have been around for 5, 10, 20 years rather than a couple of years and have a setup that allows us to get amazing terms. Because as important as execution is, it's so key to get these businesses at a reasonable price right, in Tee 2 Green's case, almost 2.2x EBITDA versus a historical average on our end of 4x to 5x to 6x EBITDA even in some cases at the peak of the market. So getting a great price, getting flexible terms, but also getting synergy. That is very exciting. We find ourselves in the fortunate position at this point where we have 2 multi-hundred million dollar vertical opportunities with truLocal and the meat and seafood business at the center of our FoodTech vision as well as the golf vertical and now encompasses, UnderPar, Tee 2 Green and JustGolfStuff, both on the experiences and product side, apparel and equipment, both online and offline, where we have great strength, 400,000-plus members, one of the biggest and most interesting golf portfolio is here in the country, of course, with a presence, a growing presence in the U.S., I might add. With that, we are done on the presentation, but we are happy to take any questions if you have them, and I'll give everyone a chance to draw questions in the box as well.

Okay. So the first question, can you comment on valuation. How do you see fair market value? Okay. So I mean it's obvious that this is a situation with EMERGE, where once upon a time, we were essentially valued at much higher levels with probably less meat on the bone, if you will. And we found ourselves essentially in a world where everything has come back down to earth. And as I said, we've seen our revenue come down a while back, and we saw interest rates go up, and that really took our equity value down low to depressed levels. And I think that as we've come out of that, as we are gaining health, as we're growing, as we're profitable, as our debt is going down, as interest rates are coming down, now we've got to start looking at what fair, fair is the right word. And I look at this and say, look, like we are a $25 million revenue business based on last year, excluding organic growth. We are now a profitable business on an EBITDA basis. We are a cash flow positive business from that perspective. When we look at businesses that command all 3 of those, it is not unusual to see valuations of 2x revenue or even 3x revenue at scale, at that scale, right? So let's call it $100 million plus. And what I think is that it's very hard to peg a strict valuation. The market's going to do what the market's going to do kind of thing. But we do believe that 1x revenue levels are realistic for a healthy, growing, profitable digital portfolio of assets. I would also say we're sitting at a $6 million or $7 million market cap right now is probably a function of the fact that not enough people have spent time educating themselves on the actual changes that we have implemented of the power of this acquisition, for example, of the power of our growth and profitability. So it's very hard for me to peg a number. We leave that to the market to do what it's going to do. But we certainly feel that in our category, if we're achieving the 3 pieces, the revenue growth, the EBITDA, the cash flow, then we are one of the premium businesses doing. So we don't have enough scale yet to come at 2x or 3x revenue, but I think 1x revenue is fair game. And let's not forget, a lot of digital and e-commerce companies don't even have EBITDA let alone cash flow. I see another question. How do you envision growing your grocery business? Are you actively pursuing opportunities to expand your TAM into adjacent fresh food and grocery verticals? It's an interesting question. Thank you, James. I think realistically, the grocery business, as I look at just the stand-alone truLocal opportunity, and vis-a-vis sort of the ButcherBox $500 million revenue opportunity, that is just in meat and seafood delivered to those customers. So if we're delivering to something like 6,000 customers and the AOV is $225. First thing is first, before we get excited about all these other opportunities, we're looking at this saying, how do we bring 6,000 to 10,000 to 14,000 to 22,000 members, right? And so -- we think there is a path, frankly, I'll call it, a 10x of what we're doing based on how we're doing it. But then we are actively looking at growing average order value, i.e., the checkout value people leave. And so we're doing that through adding things on the site, things like extra points, member offers. We have -- by the way, we have a newly minted site for those of you who haven't been on TruLocal.c, would definitely love for you to check out. And we are seeing AOV go up. But not only are we seeing AOV go up now, but we're also seeing the cost per acquisition go down, in part because of this by Canadian movement. So if you think of our levers, we got -- on the revenue side, we're improving AOV. On the gross margin side, we have pricing power. And if some of you remember, you may have received some of our e-mails around pricing. We are able to increase price. These are members who care deeply about the community. And unlike in many other services that I'm aware of, if you raise prices, customers are angry. In some cases, with truLocal, what I've seen the feedback is customers are saying, thank you for what you do. We are more than fine paying a bit of an extra price. And we do so, obviously, with mindful approach to give a great customer experience, support local, but also make our business viable and able to grow. So you got your growth at the top, growth at the gross margin level, the team and the approach is streamlined so that we are profitable and we can reapply that. Over time, there's multiple tuck-ins within the truLocal segment. There's over 8 to 9 pure-play, direct-to-consumer meat and subscription-type businesses that we can acquire. As I mentioned, we are the largest business to do so here. But so I think long story short, I think the 10x is in what we're doing with the focused approach we're doing. As you heard me say, we will also add corporate ordering, which we're seeing more promise in. We're getting structured around. So we think that, that is going to be a big move. Next question, is there any tariff impact expected on the golf products side. Maurice, would you like to take that one?

Yes, good question. We don't expect any impact in Canada in 2025, talking to the manufacturers. When the first discussion of tariffs came out in the news, they actually imported a lot more product into the Canadian market. In most cases, they imported 2 years' worth of product that's currently warehoused in Canada. And we actually think this could open up significant opportunities for us. When brands like Callaway and others have unsold inventory in Canada or stuff that's slow to move, generally, what they do is ship it back to the U.S. and sell it through their U.S. retailers or U.S. websites. In this case, the tariffs will make it very difficult for them to do that. So we anticipate actually a lot more deals being available in Canada later this year and much better terms on those deals. So actually, I think for our Canadian business, this is actually going to be a significant opportunity for us this year.

Thanks, Maurice. We'll have time for 2 more questions. We're aiming to end the 11:45, but we'll just go with these. So real quick. Next one is why was Tee 2 Green willing to sell for such flexible terms? I can give you a very quick context on this one because it is an incredible multiple flexible terms, and we hope they're more out of these structures we can land. The founder and shareholder, that's been around for 38 years, was retiring, moving to Florida. It was the right time for him. He knew with Maurice spending time with the business, with our teams integrated already through our partnership and relationship and management contract that we would be the right custodian for the business. There's a lot of intricacy and a lot of dependency between the brands. So we got a sweetheart deal, I won't lie. And I don't know that you can -- we can match that sort of structure many times over, but it was certainly one that we were very happy with, and we think it's going to be a big impact, both to our revenue as well as our profitability and ultimately, cash flow. One more. I'll take right here, and it says ButcherBox has announced today that it is now selling its products on the target plus marketplace. Is that something truLocal would consider in Canada? And are you looking at additional acquisitions this year? Yes, I think to your point about partnerships, it is something we're looking at. And loosely, as I said, we've been looking at all sorts of partnerships on the golf side, on the Travelzoo and the work perks, Amex over here on the corporate side, we are speaking to the targets of the world in Canada and the usual suspects. It is not easy to strike something like this. This stuff takes time, but there's more interest than ever, I will say, and more outreach to us than ever in the local opportunity in being the market leader in D2C. So we're excited. We're going to be looking at these different opportunities. There's nothing imminent on that side. we're just encouraged. We're really, really encouraged and emboldened by the fact that these tailwinds are all coming together at the same time. It's ironic a little bit because a few years ago, we couldn't get a good card. We couldn't -- everything was coming down, no matter what we bought, all of these e-commerce companies and the whole segment was coming down. Interest rates were going up. Our debt was high. And finally, we're seeing all of this excitement around our brands, our business, our BuyCanadian trends and the fact that even before the BuyCanadian trend, all of last year quality, we were growing organically. We were streamlining. We were improving, so that we can go back on the offensive now, and we feel like we are just about ready to do that. With that, ladies and gentlemen, I wanted to thank everyone here. All of our attendees. I think there have been -- I see about 27 now, but I think there is a total of about 40 or so tuned in today. So thank you very much. We really appreciate you continuing to support and learn more about EMERGE Commerce. We look forward to giving you more updates starting with our Q4 audited financial statements at the end of April and then our Q1s later in May. Thank you, everyone. Have a great day. We appreciate it.

Thank you.