Xtract One Technologies Inc. (XTRA) Earnings Call Transcript & Summary

Okay, well, my clock says 10:00, Vancouver time, so we'll get started. First item of the business is calling the meeting to order. The meeting will now come to order. My name is Peter van der Gracht. I'm a member of the Board of Directors of the company, and I will act as Chair of the meeting. We are conducting a virtual meeting to provide all shareholders an equal opportunity to observe the meeting regardless of their geographic location. As this is a hybrid meeting, it is necessary to set up a few rules for the orderly conduct of the meeting. One, only registered shareholders and duly appointed proxy holders who have previously made voting arrangements with Xtract One are entitled to participate and securely vote at the meeting in real time. There will be a vote for all motions at which time the appropriate or applicable proxy holder or proxy holders will be asked to vote for, against or withhold as applicable. To the extent any proxy holder is a proxy holder for both for and against withhold votes, he or she will raise his or her hand for both of the indications. And votes tallied by the company in respect of such matters will correspond to the proxies received by such proxy holder. Two, following the formal part of the meeting, there will be a short update, questions that do not pertain to the formal part of this meeting will be addressed at that time. Scrutineer. The first item of business is the appointment of the scrutineer for this meeting. Deanna Guilfoyle of TSX Trust Company is hereby appointed as a scrutineer for the meeting. Recording Secretary. The next item of business is the appointment of the recording secretary for this meeting. Karen Hersh, the company's Chief Financial Officer and Corporate Secretary, has consented to act as Recording Secretary and is hereby appointed as Recording Secretary for the meeting. Adoption of the agenda. The next item of business is the adoption of the agenda for the meeting. The agenda for today's meeting is: a, administrative matters relating to the calling of the meeting, voting at the meeting and materials from the company's last meeting of shareholders; b, proceeding the company's audited consolidated financial statements for the financial years ended July 31, 2023 and 2022 and the auditor's report thereon; c, setting the number of directors at 5; d, electing directors for the ensuing year; and e, appointing Davidson & Company LLP chartered professional accountants as the company's auditor for the ensuing year and authorizing the directors to set the auditor's remuneration. Notice of meeting and mailing. The notice calling this meeting and all proxy-related material were mailed to the shareholders in accordance with the requirements of the company's articles and the Business Corporations Act of British Columbia. I have a declaration as to such mailing, which is available for inspection by any shareholders. In view of this, I will dispense with calling for a reading of the notice, and I will attend to filing a declaration of mailing with the minutes of this meeting. Advanced Notice of the meeting was filed on SEDAR on September 1, 2023. Voting. Voting at this meeting will be conducted by a show of hands by the registered shareholders or duly appointed proxy holder or proxy holders in advance. Quorum. The articles of the company dictate that Quorum is one or more persons present at the meeting and being or represented by proxy, 2 or more shareholders entitled to vote at the meeting. The report of the scrutineer indicates that the issued and outstanding capital to the company as at the record date of the meeting was 198,348,575 common shares. The total number of shares to be voted at the meeting is, 48,975,912 shares comprised of 40,850 shares present, representing 2 shareholders in person and 48,935,062 shares representing 212 shareholders by proxy. I declare that a quorum is present. Declaration of valid meeting. The notice of meeting haven't been given as required by the articles and by the Business Corporations Act of British Columbia and the quorum being present, I declare this meeting to be duly called and constituted for the transaction of business. Minutes of the last Annual General Meeting. The minutes of the last Annual General Meeting held on November 17, 2022, are filed in the minute book and available for inspection. I will entertain a motion that the reading of the minutes of the last Annual General Meeting of the company be dispensed with and the minutes be taken as read, approved and adopted as tabled. I move that the minutes be taken as read, approved, adopted and tabled. Any discussion? If not, I now ask for a vote on the motion by a show of hands. Will all registered shareholders or duly appointed proxy holders in favor, raise their right hand. [Voting]

Will all registered shareholders or duly appointed proxy holders opposed raise their right hand. [Voting]

I declare the motion carried. Financial statements. The next item of business is the financial statements I now ask the recording secretary to table the audited consolidated financial statements of the company for the financial years ended July 31, 2023 and 2022 and the reported the auditor thereon. So that shareholders may review the same and note that a full copy of the financial statements is available under the company's profile at www.sedarplus.com. I move that the reading of the financial statements be dispensed with. I now ask for a vote -- a motion by show of hands. Will all registered shareholders or duly appointed proxy holders in favor, raise their right hand. [Voting]

Will all registered shareholders or duly appointed proxy holders opposed raise their right hand. [Voting]

I declare the motion carried. Setting the number of directors. The next item of business is to set the number of directors at 5 for the ensuing year. I now ask for a vote on the matter by a show of hands. Will all registered shareholders or duly appointed proxy holders in favor, raise their right hand. [Voting]

Will all registered shareholders or duly appointed proxy holders opposed raise their right hand. [Voting]

I declare the matter approved. Election of directors. The next item of business is the election of directors for the ensuing year. There are 5 director positions to be filled. Management has nominated the following persons for election as directors for the ensuing year. Peter Evans, John Gillies, Bill Maginas, Lea Ray and myself, Peter van der Gracht. All 5 directors are management's nominees for election, as was stated in the company's confirmation circular dated September 28, 2023, sets the company's shareholders. I will now ask for a vote to elect the 5 nominees directors together by a single resolution by a show of hands. Depending on the outcome of this resolution, the vote will be taken accordingly. Will all registered shareholders or duly appointed proxy holders in favor, raise their right hand. [Voting]

Will all registered shareholders and duly appointed proxy holders opposed raise their right hand. [Voting]

I declare the matter approved. I will now ask for a vote to elect those 5 persons nominated to be directors of the company to hold office until the next Annual General Meeting or until their successors are elected or appointed, subject to the provision of the company's articles by a show of hands. Will all registered shareholders or duly appointed proxy holders in favor, raise their right hand. [Voting]

All registered shareholders or duly appointed proxy holders opposed raise their right hand. [Voting]

I declare the matter approved. Appointment of auditor. The next item of business is to appoint Davidson & Company LLP chartered professional accountants as the auditor for the company to hold office until the next Annual General Meeting of the company and to authorize the directors fixed remuneration to be paid to the auditor for the company, and I ask for a vote on the matter by a show of hands. Will all registered shareholders or duly appointed proxy holders in favor, raise their right hand. [Voting]

Will all the registered shareholders or duly appointed proxy holders opposed, raise their right hand. [Voting]

I declare the matter approved. Other business, the regular business of the meeting has been completed. Before closing the formal part of the meeting, is there any other business which may properly come before the meeting and which does not require notice. Now noted termination. There being no further business, I now ask for a vote to terminate the meeting by a show of hands. Will all registered shareholders or duly appointed proxy holders in favor, raise their right hand. [Voting]

Will all registered shareholders or duly appointed proxy holders opposed raise their right hand. [Voting]

I declare the meeting terminated. Well, thank you, everybody, for listening in. I'm going to turn the floor over to our CEO, Peter Evans for a short business update. Over to you, Peter.

Well, thank you, Peter, and I'm going to be sharing my screen here with all the attending participants and all the investors. Hopefully, everyone can see the screen. I'm going to take about 5 minutes to 10 minutes here just to give a quick recap of where we are as a business, and our forecast as we look forward into 2024. As normal, we have our normal disclaimer statements that are present with any one of these investor calls. I invite all of our investors to make sure that they read these disclaimer statements about any and all of these investment updates that we provide. Our past year has been a very interesting year. As we are into the fourth month of our new fiscal year, it continues to be another exciting and accelerating year for us. I'm incredibly enthusiastic about the activities that we're engaged in. The customers we're talking to and the progression of the business. The key themes that we've talked about a lot on these calls previously and that we'll talk about a little bit today briefly is all around the areas of strong business momentum. Last year, we announced record bookings, record revenues and growth for the business, and we don't expect that to change as we look forward. We built a lot of our business upon setting out key milestones for ourselves and holding ourselves accountable to those milestones and making sure that we engage with the investment community with other shareholders and stakeholders in the company that we communicate those milestones and we deliver upon those. Our ability to complete delivering these milestones as we forecast is what I think has given us a lot of credibly in the marketplace and in the investment community. Last year, we talked a lot about the focus on scale and that's no different for this year for fiscal 2024. The acceleration around the business is causing us to do things like look at doubling our capacity to manufacture and then double it again as we work our way through fiscal 2024 to deal with the unprecedented demand and the pull that's on our business right now. We'll spend a little bit more talking about this on the last chart of this presentation as we talk about looking forward into fiscal 2024. So building a bit on the momentum. This is a chart that we talked about in our earnings call, our annual earnings call about a month or so ago. We talked in a bit about how fiscal 2022 grew about 240% over fiscal 2021 in terms of our overall business bookings. And then last year, fiscal 2023, it was almost a 400% growth over top of that. These are fantastic numbers of which I'm very, very proud of. I'm very proud of our team for having always focused in the industry and serving the customers with a highly qualified product and a product that delivers the business outcomes that our customers are looking for. But also the team's ability to then deliver the support and care for those customers, such that many of those customers have come back a second or third time and have expanded their business with us. That's the kind of validation that we're looking for in the industry, and it creates a very, very strong referenceability amongst those customers who are telling their peers about our business and creating a lot more momentum and pull for us. When we talk about business momentum also what I'm very pleased is that not only this top line financial results in terms of business growth and contractual backlog, but we've done that while keeping the operating cost flat and in fact, down by about 6% year-over-year showing great efficiencies in the business and our ability to deal with high-quality opportunities and stay very hyper focused on where we can deliver the best outcome for all of our shareholders. We translate this a little bit to kind of some of the momentum and the milestones we hold for ourselves. If I think back a year ago, is an old saying, what a difference a year makes. And it seems like we've lived 10 lifetimes in the past year where a year ago, we did not have strategic partnerships such as the one with OVG, but continue to deliver great value and dividend every single day as we continue to grow our footprint with the best OVG management needs. Similarly, the Madison Square Gardens, we after a rigorous testing over a 12-month period at over 24 different events selected our solution as the one that provides the best security solution required for the most iconic venue on the planet. We further monetize this relationship not only with delivering in Madison Square Gardens, but this week, we'll be launching with the Christmas shows that are occurring and holiday shows that are occurring on various music hall with 5 shows per day between now and New Year's. And with the opening of the sphere at the end of September, probably the most compelling, thrilling and enthralling environment on the planet. We continue to focus on those strategic partnerships because they are a testament to, again, the quality of the product that we're delivering and the outcomes that we're able to deliver to our customers. To us, this is more than just building a box and delivering a box, this is about delivering outcomes and fantastic customer experiences for our customers' customers. When we look at this growing adoption, a year ago, on this Annual General Meeting, I would have talked a little bit about being hyper focused on the place where we have the very best product market set and that was primarily targeting arenas, stadiums and live entertainment venues where we saw a fantastic fit for the product and where we had modified the product to deliver the smart gateway platform, purposely built for those kinds of venues. Fortunately or unfortunately, the market wasn't willing to wait for us and other segments like schools, hospitals, manufacturing, distribution, Federal and local governments put a pull on us that we did not expect as fast as we expected it. And they've drawn us into those segments much faster than we originally planned. This is a good thing because it's driven us to scale the business that much faster and that much quicker. And we could now count in any one of those segments, multiple customers that has created that reference ability where we've got advocates in the school industry, where we've got advocates in hospital locations, where we've got advocates in manufacturing and distribution who are driving other schools, other hospitals and other manufacturing and distribution companies to become Xtract One customers. Looking forward to this coming year, we're into the fourth month of fiscal 2024, and I'm very pleased and very excited to say that our accelerated growth that we experienced in the past year has not stopped. And in fact, it's only accelerating. And we're seeing this across all segments, particularly as we see -- as I mentioned earlier, the reference ability from key organizations who are within those different market segments. There's nothing better than have someone like Madison Square Gardens is your advocate across all of the major sports industries and sports leagues. Similarly with some of the schools that we've delivered and some of the manufacturing organizations. As I mentioned earlier, our focus is now is scaling the business operations and to monetize upon the momentum that we've got and to continue that momentum. We are focused on doubling our capacity in the next 6 months and then doubling once again in the next 6 months, they have manufacturing capacity to stay ahead of that demand curve and be able to convert bookings into revenues as quickly as possible. We're going to continue to invest in innovation. I'm very proud of the fact that where we lead in the marketplace and where we're getting recognized is for delivering the most effective security solution that has been tested by third parties and that win based on value and delivering business outcomes. Not based on buying markets and having to invest a lot of dollars into buying those markets. People are buying from us because they experience the outcomes that we want. To do that and to continue to do that, we're going to continue to invest in innovation that will allow us to announce new products and new solutions to drive more value and more innovation and more quality outcomes to those customers. Obviously, as we continue to focus on our financials, we want to continue to provide the effectiveness and maximum utilization of every investment dollar that we put into the company, as we drive towards a positive cash flow position. I would just sort of see the light at the end of the tunnel for that, and we will invest judiciously to accelerate the growth of the business while keeping positive cash flow in mind. Finally, while we've seen the impact of some very significant market defining strategic partnerships, we're not done. And we're going to continue to deliver on more and more of those kind of partnerships that can display entire industries and entire segments of the business in Xtract One's direction. So overall, I'm feeling incredibly positive about the foundation that we built as a business. I'm feeling even more positive about the momentum that we've got going into our fiscal 2024 and the experiences we've had year-to-date for this fiscal year. I want to take this moment now to thank every single person who's on this call as well as all of our investors and those folks who have put their faith in myself in the executive team, in the Board and in all of the employees of Xtract One. It's our intent to continue to deliver the value you expect out of us. And I thank you for all coming along the journey with us through this whole experience that we'll be delivering to our customers and to those customers' customers. Thank you very much. With that, I believe that we will close the meeting now. I thank everyone for dialing into this call. Thank you all for your continued support.