Redishred Capital Corp (Pre-Merger)

XTSX:KUT

Earnings Call Transcript 2021-Q1

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the Redishred Capital Corp. First Quarter 2021 Financial Results and Business Update Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions]I would now like to turn the conference over to Jeffrey Hasham, Chief Executive Officer. Please go ahead, sir.

[Jeffrey I. Hasham, CEO, President & Director]

Thank you very much. Good morning, everyone. Good to have everyone here today.Our first quarter results are in, and we released those yesterday. A number of you also joined us at our AGM, and I thank you for joining us there. We had a record quarter, EBITDA over CAD 2 million, and that's a 51% growth over 2020's first quarter. And if you'll recall the first quarter of 2020, in many ways, it's similar to the first quarter of 2021, except in reverse, where the first couple of months of 2020 were rock solid, and March was a bit of a mix for us in 2021. January and February were still a little soft. And then March was, lack of a better word, we crushed it. And it was a good feeling, and the team worked very, very hard. And the result was a record $2 million quarter. Overall, from a revenue perspective, and I want to bring the revenue and the EBITDA together here, $7.3 million in consolidated revenue. Out of that, 93% came from our corporate locations and 7% from royalties and franchise activities. And then when we sort of look at the same location corporate store revenue, which Kasia will go into much more detail, we were down $0.5 million. But our EBITDA was actually up $125,000. So I'll leave the good stuff for Kasia in a moment when she talks about the corporate locations. But just from a high-level perspective, those statistics, with the inclusion of the Springfield acquisition that we started the year with, all came together and brought EBITDA margins on a consolidated basis to 28%. And that's a 700 basis point improvement over the prior year's first quarter. So all in all, this is a really strong first quarter on a consolidated basis.We knew that once the U.S. economy started to kick into the high gear that we would go along for that ride as well. And on top of that, the team really did a good job last year and in the first couple of months of this year solidifying the base. And that allowed us to really take advantage of the market reopening. So as we looked at routing a year ago and through the year, we looked at geo-targeting our marketing, spending our marketing in the right areas and all of that culminated into this first quarter, and in particular, in the March, where we could really be honed in on taking advantage of the opening of the market.And in the U.S., of course, the vaccines rolled out very rapidly through February and into March. And then restrictions were eased rapidly in March as the vaccine rollout happened, and then the economy started to kick into overdrive. And again, probably more than we thought, people started to come back to their offices. And I think the fact that we target small-, medium-sized enterprise also assisted in that uptick in business for us.So as I said, overall, the foundation was laid over the last year. The team did an amazing job at managing costs, managing routes, geo-targeting sales and marketing efforts into those routes. Our new bookings were extremely strong in March from the new business and client acquisition perspective. And the result was a record quarter on EBITDA. Note that EBITDA for us, we do not include government subsidies -- wage subsidies in any of our highlight numbers. So there was an additional $1.3 million in government assistance in the first quarter, both through the Canadian program, to a lesser degree; and through the Paycheck Protection Program in the United States, to a larger degree. And so that equated to $1.3 million. Again, not in our headline number. That headline number is 51% growth with I'll, call it, organic or base numbers. So that's, I think, even more impressive given the impact that COVID has had on the business. And I think it talks to the recovery, and it talks to the efficiencies that we have found over the past year. So with that all in mind, I'm going to ask Kasia to jump on and dig into the corporate stores, a little bit more detail. She'll talk about the balance sheet. And then I'll jump in too at the end, the Richmond acquisition that we just did as well as some general discussion on our pipeline, and then we can open it up to Q&A. So Kasia, it's all yours.

[Katherina M. Pawluk, CFO & Secretary]

Great. Thanks, Jeff. Good morning, everyone. So in terms of the corporate locations, during the quarter, we did see the U.S. dollar weaken relative to the Canadian dollar. And so we saw the average rate decline from 1.32 in the prior year to 1.27 in this quarter. And we do report in Canadian dollars. So we have included in our MD&A the constant currency growth rates in U.S. dollar to eliminate the foreign exchange fluctuations. And so I'll speak to the results using the constant currency growth. So to start, our same-location shredding sales declined by 6% in Q1 2020, 1 over Q1 2020. And that was an improvement over Q4 2020 versus Q4 2019, where we were down 11%. But we did continue to see the impacts of COVID-19 in January and February. And we also experienced some weather challenges in February. However, as Jeff mentioned, March rebounded significantly, and we finished the quarter strong.And with the accelerated rollout of the COVID vaccine in the U.S., as Jeff mentioned, the economy opened up, and we've seen our remaining clients start returning to their offices.In terms of same-location recycling sales, those grew by 8% in Q1 2021 over the prior year. And paper prices increased 18%, and that was partially offset by lower tonnage with the reduced level of the shredding sales.We have also started to separately disclose the e-waste and scanning sales for our corporate locations in our MD&A. And so you could see our scanning sales during the first quarter were strong as we were seeing an uptick in scanning projects. And then on the e-waste sales, we saw a decline of 16% during the first quarter as the services are primarily targeted at larger clients, and they have been temporarily put on hold, the recycling of equipment, due to COVID.So in total, our same-location sales declined by 5% this quarter over last year. However, we continue to keep costs minimized wherever possible, continued to improve routing as well as share resources among locations as we move towards a regional management model. And as a result, our same-location costs were reduced by 12% year-over-year.And this then led to an improvement in the EBITDA margin of 500 basis points to 35%, which we are very pleased with. And same-location EBITDA, therefore, grew 11% this quarter over last year Q1 2020 to $1.9 million.And in terms of the results from our acquisitions or what we call non-same locations, that included the Connecticut results for January and February and the Massachusetts results as these were not in the comparative prior year. And so the EBITDA from these acquisitions was $500,000 in the quarter with an EBITDA margin of 37%, which was strong.And so when looking at total corporate location results for the quarter, total sales grew by 18% year-over-year as a result of the acquisitions, and total operating costs increased by 9%. And then this led to a total EBITDA growth of 41% in the quarter.As a result of the cost management, total EBITDA margin improved by 500 basis points to 35%. So overall, we are very pleased with the corporate location performance in the first quarter even despite the COVID-19 impact on the sales.And now I'll just touch briefly on the capital management and turn it back over to Jeff. So in -- during the quarter, we increased our cash balance by $641,000 over December 31. We did receive $1.3 million in government subsidies during the quarter. And as Jeff mentioned, that was primarily from the second round of the U.S. Paycheck Protection Program. And we continued to pay down our debts without advancing any further funds from our lenders during the quarter. So our total debt to total assets improved 400 basis points from December 31 to 46%. And we were onside with our banking covenants even when excluding the government subsidies from the ratio calculations. And the bank continues to be supportive of the company and to provide funding for acquisitions as we go forward. And we do still have also a CAD 1 million line of credit available to us at March 31.And I'll pass it back over to Jeff to touch base on the acquisitions.

[Jeffrey I. Hasham, CEO, President & Director]

Great. Thank you, Kasia. Yes -- no, I would like to reiterate, the bank has been excellent over the last year, continued to fund the acquisitions. We did them and has indicated that they'll continue to fund the acquisitions as we go forward. And so again, we're very pleased with that. I think the bank has seen the very positive results and knowing we want to be there for the company. So I'd like to reiterate that fact because it is very important as we go forward, especially from an acquisition perspective.So it speaks to the acquisition, and specifically the Richmond acquisition. Not our largest acquisition, but sometimes smaller is more beautiful. And this is, I think, one of those cases. This location in Richmond is 1.5 hours away from our North Virginia location, 4-hour drive away from Charlotte. We have one gentleman managing the Southeast region now for us. He's based in Charlotte. And so this falls under his area. So Kasia mentioned the regional management model. That's certainly there. We're able to share fleets. We're able to share resources in terms of people. And so that's, again, the nice thing about having locations close to each other in similar geographies.This acquisition has very good recurring revenue. The current run rate for that location, it's 60% recurring. So it's extremely strong. It's a very well-run operation. The company -- that location is now back above the pre-COVID sales levels. So they're already back there. So they, like everyone, took a dip down in 2020, and now they've more than recovered. And again, I think that synergy with North Virginia is very important. There was actually some routes in the Southern end of North Virginia that really belong in Richmond. And so we'll get cost efficiencies out there.So overall, the deal was $1.1 million cash, $1.68 million in total opportunity for payment, depending on the earnouts and the earnouts are tied to client retention and performance. So overall, this is a really nice deal. This is well over 30% in EBITDA margin. So we're feeling good about that as well, not including any synergies, of course.Overall, the acquisition pipeline is strong. It continues to build, which is great. It continues to build in both the shredding and scanning areas. So we're starting to drive growth of the pipeline in multiple areas. And I think the reality is that the pipeline was very good in late '19 or early 2020. We had the funds to deploy a year ago. We paused then we did Springer. We've done Richmond. We still have funds on hand and the capability to obtain debt financing to continue to execute on the acquisition platform, which we will. So we're not done yet to -- and so we're continuing to develop and work our pipeline. And I can say that it's one of our stronger pipelines to date. So I'm very pleased about that.And we've got a great management team, very importantly, to not only deal with the deals side, but most importantly, the integration side. I was personally in Richmond, Virginia, for the integration. We had 2 other folks with me to make sure that, that integration went smoothly and properly. And it's so far, so good. And so we're really pleased about how that integration has gone so far. So it's been great. And hopefully, these borders open up soon at the appropriate time so we can make those integrations even better. And it was already pretty good.So overall, we're very pleased with this quarter. It was a quarter that was -- it was one of the grinding hockey game quarters. We grounded out, and we were awarded in the third period with lots of goals in the net. And so we're pleased about that. And so we sort of stayed even in the first 2 periods and then really pulled on in the third, and the reward was there for the team. And so appreciate everyone's support. And now I'll open it up to the Q&A.

[Operator]

[Operator Instructions] Our first question is from Amr Ezzat with Echelon Partners.

[Amr Ezzat, Analyst]

Congrats on crushing it, as you said.

[Jeffrey I. Hasham, CEO, President & Director]

Thanks, Amr. Appreciate it.

[Amr Ezzat, Analyst]

I've got a few questions. First on EBITDA. I'm just looking at your year-on-year bridge. Obviously, like lots of good work on cost execution. Lots of the growth comes from SG&A and same-location costs being down. I'm just wondering if you could give us like a bit more color on what you feel is temporary cost reductions, where you guys are squeezing the belt maybe a little bit versus like permanent ones. And the big-picture question here is, I'm trying to get a sense of the sustainability of your margins from these levels.

[Jeffrey I. Hasham, CEO, President & Director]

Yes. Good question, Amr. Look, the first quarter, we still continue to play it conservatively just because they're still unknown, right? We didn't know how the new variants would impact the United States. The vaccine rollout in January was still in its infancy. So we had a number of hires that -- for example, technology manager as an example. We basically -- look, I just pulled off on some of these important hires because as we grow, technology is an important part of integration. Technology is an important part of making it easy for our customers. We will find more cost savings by having that person.But we just said, look, time-out for now. Obviously, no traveling. Everything is being done by Zoom other than when we've got to do a deal. That's the only time we've been traveling. So we tried to keep it really lean and mean during these periods.There are certain things that will continue. I mean, I think the reality is that there will be travel, but there's -- I think we've demonstrated that we can manage this company with less travel. There's always moments that we want to go, for example.Technology is helping as well, and we're going to continue to roll out technology. So again, that's going to help in the long run. But there is some, let's call it, onetime cost savings just because we've held off on hiring until we knew that the business was back to pre-COVID levels. I can tell you right now that we're feeling very good about being at pre-COVID levels and/or better. And there's some key positions that we're going to hire. They're not C level or VP level, but important positions that need to be there.So I hope that answers your question that there is a little bit of one-time miss in there. But there's also some stuff that will sustain through going forward because you just -- you learn from these moments that you can do things differently.

[Amr Ezzat, Analyst]

Okay. Yes, that's pretty clear. And like pre-pandemic, you had like quarters in 2019 where you guys were above like 30%. So you feel that's still attainable?

[Jeffrey I. Hasham, CEO, President & Director]

30%? You mean 30% direct EBITDA or EBITDA revenue?

[Amr Ezzat, Analyst]

Yes.

[Jeffrey I. Hasham, CEO, President & Director]

Yes. Look, I mean, we're doing it now. So I think -- Q4 is always a tough one, right, because Q4 is always off, right? But we're now moving into Q2 and Q3, and those are pretty good quarters for us. So we -- I think overall direct EBITDA, we did 35% on direct and 28% on consolidated. Those are solid numbers. My guidance has always been 30% to 35% on direct and sort of we're targeting to get into that 25% consolidated EBITDA on a much more consistent basis. We were 23% last year and 23% the year before with all kinds of headwinds. So hopefully, now with some tailwinds, the economy opening up -- again, paper, we're not really relying on. I think we're in a better position to obtain some slightly stronger margins.

[Amr Ezzat, Analyst]

Great, great, great. Just looking at your balance sheet, like your contingent consideration didn't really change from last quarter. Like on Massachusetts, safe to assume they're performing, I guess, like at least on track with your expectations. Any upside like relative to your expectation like when you guys purchased it thus far? Would you [ finally be ] reopening?

[Jeffrey I. Hasham, CEO, President & Director]

Yes. Well, you're right. They are performing to expectation. So that's the good news. That was a tougher acquisition, right, because you're -- you've got -- it's a larger shredding business plus scanning. And the integration was done a lot more remote with some support from some of our U.S. resources.And they're performing well. I think the key there is we've got some good folks in that branch. Kasia and Ron have done a great job at really holding their hand remotely as we've integrated the phone systems. And why do we want to integrate their phone systems? So we can centralize inside sales. Integrating our technology platforms, why? So we can centralize the accounting. And I'd say that's all gone more or less to plan, which is good. And they performed on both the sales side and the recovery side as well. So no, it's been good, all things considered. So yes, again, the team did a good job there.

[Amr Ezzat, Analyst]

Okay. I appreciate the new segmentation on sales. But maybe you could give us a flavor on how large like e-waste and scanning sales can be in a normalized environment. I think for the quarter, you guys were $200,000 for each of these streams. How do we think about like these 2 businesses in a normalized environment?

[Jeffrey I. Hasham, CEO, President & Director]

Yes. So for scanning, I'll start with scanning, it's interesting because Q2 and Q3 tend to be bigger quarters in that business, particularly in Massachusetts. We're pretty strong in the government world, and the government starts to release money in Q2 and Q3. So that's a good opportunity to -- I think we can improve that number as we move in the year. Q4, again, is always tough, even in that business. E-waste is a little bit different. E-waste is that -- we have an opportunity there to continue -- so in both businesses now, we've expanded our marketing coverage.So let me finish the thought on scanning. In scanning, we're marketing scanning in all corporate locations at this moment in time. And we're actually getting some wins in other markets. And the nice thing about that is, a, boxes can be brought to either Charlotte or Springfield, Massachusetts, where we have our scanning centers; or we can ship scanners out and train locally if it's a big enough job and they don't want, for example, let's use Kansas, they don't want the paper to leave the state of Kansas. And we have the room to do it. So that's the positive with that. So we're marketing in many, many more markets. So I think we're going to start to see that blossom over the next 12, 18 months.And we're going to continue to -- and all of our sales teams in all markets have now been cross-trained and enabled on the scanning opportunity. And then what we do is we leverage our technical folks to be the sales consultant on these opportunities. On the e-waste side, that's more right now a regional play. It's in Kansas. We've expanded the region from Chicago down to Oklahoma City. We now do get shipments from all of those areas because those economies, they're getting large loads of computers from any of those places. Bring them to Kansas where we have a couple of technicians, and they do their magic and we get to resolve them.So that's going to be more of a regional play right now. Once we know we've got that one down, we'll replicate it in another market. But right now, we're -- well, why not just use the existing warehouses and the existing infrastructure, drive a better return on invested capital by just expanding the reach? So that's the direction we're going there. With PROSCAN it's much easier to send a scanner, hire a technician and train them or send boxes to a centralized depot.

[Amr Ezzat, Analyst]

Then just on the scanning, I mean, like $220,000 during the quarter. Like -- and you mentioned that Q2 and 3 are usually bigger. Like what's the order of magnitude there? Is it like double bigger, 15% bigger? How do I think about that?

[Jeffrey I. Hasham, CEO, President & Director]

Yes. No, it will be -- it will -- again, so I think what we'll probably see is 25%, 30% bigger. But then the fourth quarter tends to be very quiet, right?

[Amr Ezzat, Analyst]

No, no, no. I understand the quarter-to-quarter.

[Jeffrey I. Hasham, CEO, President & Director]

Yes, yes, yes. Of course, yes. So look, I think you sort of look at that, that was USD 220,000, CAD 245,000 or $287 million for total. So look, getting over $1 million -- getting to $1 million is very, very feasible at this point for the year.

[Amr Ezzat, Analyst]

Maybe one last one, same question that I asked you like last conference call. When I'm thinking about the second half of the year since the last conference call, like how do we think about it? Like on a same-store basis, do you think you'd be like at, below or above pre-pandemic levels?

[Jeffrey I. Hasham, CEO, President & Director]

Yes. I'm thinking in the second half of the year, all things being equal, being very similar to -- put paper to the side, just on the service side being very similar to the last half of 2019. We're actually hoping to see a bit of growth over that. So we're hoping to be at pre-pandemic levels, if not a little better, where right now, the first half of the year, we're still -- well, the first quarter looked a lot like the fourth quarter, though maybe not on the EBITDA line. But from a performance perspective and a comparative perspective, it looked like the last half of 2020, Q3, Q4.I'm actually thinking, just based on March being so good, that we have an opportunity now in the second quarter right now to continue to lay it on. And it's like lots of pucks in the net throughout the quarter, not just in the last period. So it does look like the second quarter is performing a little bit better than I thought it was when we had our conference call 1 month or 1.5 months ago, Amr, just based on what we saw in March and how things are looking at the moment.

[Amr Ezzat, Analyst]

Okay. That's great to hear. Congrats again.

[Jeffrey I. Hasham, CEO, President & Director]

Wonderful. Thanks, Amr.

[Operator]

Our next question is from Nick Corcoran with Acumen Capital.

[Nick Corcoran, Equity Research Analyst]

Congrats on the strong quarter.

[Jeffrey I. Hasham, CEO, President & Director]

Thanks, Nick.

[Nick Corcoran, Equity Research Analyst]

Just my first question has to do with the build in shredding revenue month by month from January to February. Can you give any more color on that?

[Jeffrey I. Hasham, CEO, President & Director]

Yes. Kasia, do you have sort of that build on January, February and March? Because January and February were pretty soft. I know March was like up 26%. That I do know. I like that number. But Kasia, we were down in those first couple of months. I don't know if you have that handy or we can provide that later. But...

[Katherina M. Pawluk, CFO & Secretary]

Yes. I don't have the exact percentages. I can certainly send them to you after. I mean January was an okay month. February, we were hit pretty hard with weather, especially in the Northeast. And then March was -- it certainly made up for all of February and then even over January. So let me get you some percentages there, and I can send them over to you afterwards.

[Nick Corcoran, Equity Research Analyst]

Yes. That would be great. And then the other question I have is just what you've seen in April and potentially into May, depending on what you have.

[Jeffrey I. Hasham, CEO, President & Director]

Yes. April and May are following similar suit to -- March, we have the benefit of no weather challenges and way more number of days in the month, right? So the days in the month play a factor in that. But the general trend was similar. We're booking more new business, more customers are coming back online, not a lot of service disruption due to weather. And so it's starting to follow more of our Q2 pattern, which is great, not last year's Q2 pattern because that was bad, but the previous year's Q2 patterns. It's sort of following that, where Q2 tends to be a stronger month -- a stronger quarter. May is a little bit always interesting because you lose 1 day to Memorial Day. But again, it's following a good pattern so far, April and May.

[Nick Corcoran, Equity Research Analyst]

Great. And then CapEx looked like it was a little bit lower in the quarter. Can you give an indication of what you're expecting for the year?

[Jeffrey I. Hasham, CEO, President & Director]

Yes. We -- again, that first quarter, we played it pretty conservative. We are now -- we have taken possession of the -- Kasia, how many trucks have we taken possession of so far in the second quarter? And just before you answer, there's really -- there's some replacing old equipment that we should have replaced in 2020, but we sort of let limp along. And then some of it is [ growth ] trucks as well because a number of markets are now going back to pre-pandemic levels.Kasia, what have we taken so far in the second quarter? Do you know or ballpark?

[Katherina M. Pawluk, CFO & Secretary]

Yes. We've purchased 5 trucks so far in the second quarter.

[Nick Corcoran, Equity Research Analyst]

And how many of those were replacement versus new trucks?

[Jeffrey I. Hasham, CEO, President & Director]

I think 2 would have been replacement. And 3 would have been net new.

[Katherina M. Pawluk, CFO & Secretary]

Yes. There's definitely a mixture of the 2, some in terms of growth and then a few to replace old trucks.

[Operator]

Our next question is from David Ocampo with Cormark Securities.

[David Ocampo, Analyst of Institutional Equity Research]

I just want to circle back on the electronic waste and scanning opportunity. Appreciate the color on the revenue side of things. But just digging into the margin side of the business, should we think about the scanning as similar to your shredding business in terms of margins in the waste side similar to your recycling business, where it's closer to that 90% or 100% margin-type [ sales reductions ]?

[Jeffrey I. Hasham, CEO, President & Director]

So scanning would probably be slightly lower EBITDA margins. So we've been sort of, let's call it, 30% to 35% in the shred. We're probably 25% to 30% on the scan. Having said that, though, the CapEx requirement on the scan is really higher, right? I mean we're -- I mean we're not buying $0.25 million trucks, right? So that's a very -- so you wind up getting a similar cash flow profile. But the margins are a little bit less on the scanning, not by much, but a little bit less.On the e-waste side, the e-waste side is not like -- so there's really 2 components to it. So there's the -- when we take something in, we often charge the client a service fee for taking stuff in. Often, we share in some of the revenue when we do a refurb, not a lot, like it's very small. So that when we -- so -- but there is cost to refurbishment, right, technician and things like that.So our margin profile over -- and then, of course, there is some stuff that we just can't resell, and you recycle it. Now that's a really strange market, reselling metals and plastics and all of that. It's not lucrative by any means, and we don't make a ton of money there. Where we make our money -- where you want to make your money is on the value add, which is the refurb.So that -- it's interesting because that margin profile is in and around 30% as well, give or take. And again, the CapEx requirement there is also not -- it's more than scanning but way less than shredding. Right there, you need a warehouse, you need a forklift, you need a box truck or 2. So again, it's not as capital-intensive as a shredding business.

[David Ocampo, Analyst of Institutional Equity Research]

No. That's very helpful. And then a clarification here. Your guidance for, I think, $38 million in same-store shredding. Is that inclusive of the e-waste and scanning business now that you've broken it out? Or...

[Jeffrey I. Hasham, CEO, President & Director]

Yes. So our -- the guidance, I'm not sure -- go ahead, Kasia.

[Katherina M. Pawluk, CFO & Secretary]

Sorry. Yes, that would include -- I can make that clearer in the next quarter. But yes, that would include the security cycle and the scanning as well.

[David Ocampo, Analyst of Institutional Equity Research]

Okay. And the last one for me here, Jeff. With the reopening down in the U.S., when your customers are calling you to restart their scheduled services, is that something that they're calling you a week or 2 in advance? Or are they calling it for sometime in the summer? I'm just trying to see how much visibility you guys have into the future.

[Jeffrey I. Hasham, CEO, President & Director]

Well, it's a little bit of a mix. So the thing that we've done, I think -- and our sales group has done a very good job at it. We stayed in touch with our customers throughout. We said, hey, okay, you're on -- we're going to reach out to them and find out what's going on.And in some cases, what we've done is we've taken some of our -- particularly the larger clients, think law firms, firms like yours, investment firms. We said, okay, you've got some people coming back. Why don't we turn some of the service on, right? And then let's turn on some more of the service and then some more. And then all of a sudden, the accordion is squished back in and we get them all back.But there are customers that will all of a sudden call up and say, "I just need a one-timer." Great. We'll do it. And then some are going, "Yes, you know what, we're not coming back until September." So you got a bit of a mixture.I think the good news for us is the majority of our customers, not all, are back to some degree. They may not be -- if they were a weekly customer, maybe they're right now every 2 weeks or once a month. So they're certainly coming back to us.And I think we did the right thing through the pandemic. We said, "Hey, we'll work with you." So we'll expand the accordion. And our idea there was, look, we're there. Even if you have a few people in the office, we'll just change the frequency until you get more people in the office. And that's starting to happen, which is good news.

[Operator]

[Operator Instructions] Our next question is from Devin Schilling with PI Financial.

[Devin Schilling, Special Situations Analyst]

Congrats on a great quarter here.

[Jeffrey I. Hasham, CEO, President & Director]

Thanks, Devin.

[Devin Schilling, Special Situations Analyst]

Just to follow on, on the scanning business here. Can you just remind me how many locations are offering the service right now? And I guess is there any immediate plans to [ roll out into ] new markets?

[Jeffrey I. Hasham, CEO, President & Director]

Yes. So right now, corporately, we have a smaller location but starting to get there in Charlotte, North Carolina. We actually replicated it after the Massachusetts business about 1.5 years or 2 years ago. There, in Charlotte, we've been actually going after existing clients. And now we're starting to tackle more government-type clients as well. So we sort of cut our teeth for a little bit.Obviously, Massachusetts is our hub. And then we have 1 franchisee in California who are also offering the service as well to, again, existing PROSHRED clients. We are -- the first step in our expansion plan for PROSCAN is, number one, market in all of our corporate locations, which we are. There's 13 -- there's 11 other corporate locations that we can market into. And so we -- that started literally, I think, about 60 days after we bought PROSCAN in Massachusetts.We did enablement of our sales team, and we do continued enablement. And again, we're actually winning -- we're actually getting lead and getting our proposals, and soon enough, we're going to have some wins coming in from these other markets. And then we have a decision to make, depending on the client. You bring it back to the depot in Charlotte or in Springfield or do you leave it in the local market.So let me use that Kansas example. Let's say we get something in Kansas and it's big enough where we say, "Okay, let's ship a scanner out there, try and attack." So here's the beautiful thing about that. We can do the physical scanning there. But the indexing, which is very important to our clients because that helps with search capabilities, can be done in Springfield or Charlotte. So we can determine where we have our technicians and where we have labor and the seats and things available.One of the things that we are also doing is we're right now pretty booked in Springfield, as I said, moving into Q2, Q3. Well, we can do indexing in Charlotte because we have the same setup there. So there's some nice advantages here to leverage between the various markets.So yes, we're expanding this in all of our markets. As noted as well, I'm looking at opportunities to buy scanning companies now. It's very similar to the shredding business. Access and Iron Mountain are the 2 larger scanning companies in the country. And then there's a bunch of independents. And so we've been now reaching out to independents as well, which is great.So I think there's a nice opportunity there because the last piece of it is we've got this massive database of shredding customers, and they're all B2B and they're all SME clients. And they were late adopters of shredding. Well, they're late adopters of digitizing. So here we go, right? And then the beauty of that is -- and I've walked around through this model before the case. So then, let's -- we'll bundle in a scheduled service, and we'll do all your purges. And when the paper is finished being digitized, we shred all of that. You get this cycle of digitize, shred, digitize, shred, which is really, really good. So it's pretty exciting to have that as a service offering.

[Devin Schilling, Special Situations Analyst]

That's great. I guess my last question here. If we look at the month of March, obviously, it was much stronger than January and February here. But was there any, I guess, unusual split between purge revenue and scheduled revenue for the month of March?

[Jeffrey I. Hasham, CEO, President & Director]

I don't think -- I mean March -- I mean, look, when you -- March was a strong purge. I don't have the exact stat in front of me, but it was a very strong purge month. But when I sort of look at that quarter, the mix didn't surprise me. And I think you can see here, so what happened a year ago is the purge started to fall off pretty rapidly in March, where this year, obviously, it didn't. And March has always been a good purge month.So we did see a pickup on the purge side, which is great. Recycling wasn't -- was really a nonevent. But scheduled started to come back as well. Now scheduled is about 52% of the business. Well, last year, in the quarter, it was 54%. But purge shrunk, right? The other -- we didn't have much in the way of scanning.So the pie is changing a little bit, but it's been -- it was a very good purge month, and it was also a very good bring back our customers. And I think that's probably one of the key messages here is the vaccine rollout and the economy starting to go into overdrive in the U.S. And I mean, I think if you looked at bottled water service and coffee service and all those other services, they are probably following a similar trend. Like cleaning services, if you're in the cleaning -- all of those services are starting to come back online, and we're one of them, right?And I think the good news for us is that we hung in there through COVID on those. And now we're just -- we're getting that uptick and we're booking new business all at the same time. And March was sort of the first month of all of those good things in the macro environment showed themselves in our environment. And I think they'll continue to do that based on -- I was there in April and May -- I mean, early May. It's that things are opening. It's very different than Canada. It's a completely different psyche down there.

[Katherina M. Pawluk, CFO & Secretary]

Just to add some color to that. Essentially, the growth in scheduled and unscheduled in March was pretty even from a dollar perspective over 2020. So it wasn't that the purge grew at a much higher level than the scheduled revenue. So we have seen that the scheduled revenue is coming back stronger, if anything, than the purge. And then on the year-to-date for the same -- sorry, for the total corporate locations, we've actually seen higher scheduled revenue growth on a dollar basis than the purge revenue.

[Jeffrey I. Hasham, CEO, President & Director]

Even better because that's the recurring stuff, right? So that's great. Thanks, Kasia, for providing that color.

[Operator]

This concludes the question-and-answer session. I would like to turn the conference back over to Jeffrey Hasham for any closing remarks.

[Jeffrey I. Hasham, CEO, President & Director]

Yes. Thank you. First of all, everyone, thank you for joining the call this morning and for the questions. Look, it was a great quarter. The team has already put their head back down. We're working on making sure that Q2 is a solid quarter and the rest of the year's other quarter. I think it's an appropriate time to thank all of our employees for the amazing work they've done over the last year. It has not been easy. They've built a great foundation in the last year. They didn't take days off. They worked on the business, and now it's starting to show. The acquisitions, we kept them going, and that's starting to show and hopefully will continue to show. I want to thank our franchisees for their work, our Board for their work throughout this. You have more Board meetings when you're dealing with a crisis, and they were amazing. I want to thank all of our shareholders here as well for supporting us through this and believing in us and all of you for joining this call.Now as I said, we'll go put our head back down, keep working on the business. And -- but if any of you have any questions, do not hesitate to reach out to us. We're happy to answer. So thank you and have a great weekend.

[Katherina M. Pawluk, CFO & Secretary]

Thank you. Bye-bye.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.