Redishred Capital Corp (Pre-Merger)
XTSX:KUT
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
2.63
4.87
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Redishred Capital Corp (Pre-Merger)
You don't have any saved screeners yet
Thank you for standing by. This is the conference operator. Welcome to the Redishred Capital Corp. Fourth Quarter 2020 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.
Thank you very much. Appreciate that. Good morning, everyone. Welcome to our fourth quarter and annual call to discuss the results for the fiscal year 2020 and the fourth quarter. What a year it has been a year ago today, we really didn't know where we were going to go or where we were going to land. There was -- we weren't even -- we didn't know we would get government assistance. We didn't know if this was going to get worse or get better. I'm happy and pleased to report that the PROSHRED, Redishred platform and business proved to be an extremely resilient and durable model over the last year. More so than I could ever imagine, and I've got to give 100% credit to the operations and sales and finance team for finding great clients that were essential and continue to work through the worst of the pandemic, those small and medium-sized enterprise clients that came on board that were with us all the way and return to work quickly. And the team's efforts at routing and rerouting, selling during this period of time and doing a great job at that and collecting our funds that -- through the service. So overall, I would characterize the year as a good one, given all that we went through. I think when you look at our headline numbers, first and foremost, our revenue, $25.4 million. It grew 14%. This was driven by acquisitions, primarily Chicago and Connecticut.Obviously, same location revenues were impacted downwards. I'll talk a little bit about the fourth quarter hit that we took. It wasn't anywhere near as bad as I thought it would be. It was pretty much in line with what we thought.The Northeast was hit the hardest during the pandemic. There were moments where New York, New Jersey and markets in that area, both, even franchise markets were down about 50% to 60%, where other markets and other jurisdictions were down much less. I'm happy to report that both the New York and New Jersey markets are recovering well now. They're not all the way back. But they're recovering well. And that's very important. They're both well run, well operated markets. And it's nice to see that market come back to life, as the restrictions ease. EBITDA for 2020 also grew to just under $6 million. It grew 18% versus 2019, again, driven by our acquisitions, also driven by better routing, cost containment. All of these things came into play to help us maintain our EBITDA for the year. And while if COVID hadn't happened like for many companies, it was sort of in a rock and roll year, I think just at $6 million, that was a solid number given all that we've been through. The margin for the year was 23%, and that's consistent with the prior year. So -- and that doesn't include government assistance. As you know, we're reporting our EBITDA without the government assistance, and that's 23%. So 23% without government assistance, given all that we went through, is an extremely good number to attain.And so we're very pleased about that. When you add the government assistance and we received $1.9 million of that, our EBITDA would have been $7.8 million. And that would have been 56% growth over the prior year. So that $1.9 million is not -- does not equate to the total loss of revenue that we had during the year. We lost just about $3 million. We need to take same locations, new locations and royalties, it would have been just about CAD 3 million. So that would have been a really good number at $1.9 million. When you add that to the EBITDA that excludes the government assistance, when you include it, it's $7.8 million. So again, I would characterize the year as good, all things considered and the quarter, also good, all things considered. In the quarter, we generated $6.1 million. So we were down about 2% versus the prior year. Chicago wound up moving into the same-store category in that fourth quarter because we conducted that acquisition on October 1, 2019. Connecticut performed extremely well. They were in the new location category. They put up some excellent numbers as they recovered. And they hadn't fully recovered, but the team there did a very good job at routing and managing the business. Consolidated EBITDA grew 90% over 2019, and we hit $1.1 million. You'll note that the fourth quarter is always our softest quarter, lots of holidays in the U.S. You do get a little bit of weather challenge as well. So overall, the fourth quarter was an okay quarter from our perspective. And again, one thing that I think we should note is the third wave in the U.S. hit in the fourth quarter. And in the Northeast, they clamped down on some further restrictions, and that caused a little bit of softness.Overall same location shredding sales were down 11% in the fourth quarter. In December, though, we started to see some recovery, we were down only 3%. So that was the good news there.As we moved into the new year, just to give a little color on COVID restrictions and what we're seeing in the United States, the restrictions that were in place in December continued into January and then started to alleviate themselves, in particular, in March. And by March 2021, most restrictions had started to ease, even including the Northeast United States, and the vaccine rollout has been what has done that. The vaccine rollout has been moving very quickly in the U.S., as you know. Our drivers and U.S. teams are eligible for the vaccine, and the majority have received their vaccine. Our drivers are Class 1B in -- under the CDC, that's an essential service. So vaccinations are delivered state by state. But for the most part, we're seeing good adoption of the vaccine. And I would imagine by the end of this month, we'll -- we should be pretty much 100% vaccinated amongst our employees in the U.S., which is excellent news as we go and service clients. And again, we service healthcare clients and many like that. So overall, this was a good year, all things considered. A year ago, we were not knowing where we're going to be. And I think for us to have a durable, resilient business like this is only going to bode well for us going into 2021. We're seeing it, and we feel that we will be able to have a strong second half in particular of 2021. I'm going to turn the conference call over to Kasia, who will talk more in detail about our corporate locations as well as our balance sheet. Kasia, all yours.
Great. Thanks, Jeff. Good morning, everyone. Happy Friday. I'll start by speaking to the fourth quarter corporate location results, and then I'll speak to the fiscal 2020 results for the corporate locations.So as Jeff mentioned, our same location shredding sales declined by 11% in Q4 2020 over Q4 2019, and that was similar to the decline we saw in Q3 of 10%. We are pleased to see that we were able to achieve 90% of our 2019 sales levels during these challenging times with COVID and the large nonessential clients have really continued to work from home. And several of our locations are located in the Northeast region, which Jeff mentioned, have had stricter economic restrictions as a result of the pandemic.However, both our inside and outside sales teams continue to put up good sales numbers and continue to bring in new accounts. In terms of our same location recycling revenue that declined by 25% in the quarter over last year, and that was as a result of lower tonnage with the reduced level of shredding revenue and lower paper prices seen in the corporate locations year-over-year.So in total, our same location revenue declined by 12% in Q4 over Q4 2019. However, we continue to keep our costs minimized wherever possible, and we continue to curtail all our discretionary expenses, and that resulted in a 14% reduction in same location costs in Q4 over last year.And this led to an improvement in the EBITDA margin of 100 basis points to 25%, which we are pleased with, given the daily challenges around COVID.We were able to recover a substantial amount of the decline in revenue with the cost reductions, $604,000, which was 86% of the revenue decline. So our same corporate location EBITDA was down 7% in Q4 2020 over Q4 2019 to $1.3 million.And our results for acquisitions, which we call the non-same locations in the MD&A, included the Connecticut results as these results were not in the comparative prior year.And the EBITDA for the acquisition was $254,000 in Q4 with an EBITDA margin strong at 47%. And when looking at total corporate location results for the quarter, our total sales declined by 3%, and that was stemming primarily from the decline in the recycling sales. We were, however, able to mitigate against the revenue decline by reducing costs, which led to the overall EBITDA growth of 11% in Q4 over last year. And our EBITDA margin improved as well by 300 basis points over this period to 27%. And now I'll speak to the overall fiscal 2020 results for the corporate locations. So in 2020, same location shredding sales declined 10% due to COVID, with the biggest impact being in the second quarter during the shelter-at-home orders. However, given the strong sales we had in January to mid-March prior to COVID and the recovery of sales in Q3 and Q4, we were definitely pleased with attaining the 90% of our 2019 shredding sales.Our recycling sales for the year declined by 35% for same locations, and that was with paper prices declining $22 per ton year-over-year. And our tonnage was down 14% because of the decline in the shredding revenue. And of course, we reduced costs and curtailed dollar discretionary expenses, and that led to our corporate location costs declining by 10% year-over-year, and this certainly helped close the gap on sales, however, not entirely. So our same location EBITDA declined 20%, and we had an EBITDA margin of 29%.We also qualified, as Jeff mentioned, for the government assistance in the U.S., the Paycheck Protection Program and received $1.6 million, which was used to cover the wages and other expenses during the year.So looking at same location EBITDA, including the subsidies, that was at $6.1 million and declining 1% year-over-year. And looking at non-same locations or acquisition results, that included 9 months of our Chicago results, 10 months of our Connecticut results and 1 month of our Kansas results. And the acquisition EBITDA for...[Technical Difficulty]
We have an interruption. It appears that Kasia's line is disconnected. Just wait one second while we reconnect with Kasia.
Thank you. If you can hear me. it's Jeffrey Hasham and we'll give Kasia a moment to come back.Okay. I'm going to continue on. We'll get Kasia back in a moment. She was pretty much close to the end of the discussion on corporate locations. I think the key here is, again, with government assistance, including all locations, both new and -- new and existing would have been about $8.7 million in EBITDA. Again, that $1.6 million doesn't recover all of the lost revenue. However, I think it is a good thought to put it into the EBITDA because, again, there were costs that we did absorb as part of the Paycheck Protection Program. Also, I think when we look at this, maintaining a portion of our sales team and maintaining our drivers has allowed us to come out of the downturn of the shelter at home much stronger and has allowed us to continue on into this year. So I think keeping that core and that infrastructure, that program did work. So I think we're in good shape there. So that's the corporate location highlights. I think Kasia will join us in a moment. And we'll let her talk about the balance sheet, and we'll also let her talk a little bit about anything I didn't cover on the corporate locations.I know she's dialing in at the moment. So I'm going to talk a little bit about acquisitions. The company completed $16 million in acquisitions. Obviously, we purchased the Connecticut business March 1, it's performed well, as you can see in the fourth quarter of results. And then on the last day of the year, we purchased PROSHREDÂ and ProScan in Massachusetts. We were to pro forma Springfield. Springfield was supposed to be done a month after the Connecticut deal and unfortunately, COVID halted that. However, there's well over CAD 4 million in revenue to be delivered in 2021 from that business. That business has a large percentage of essential services, which is great and it is recovering. Like all Northeast locations, the downtown quarters are a little bit hard, but they're coming back extremely strong now as well. People usually ask me about my pipeline. The pipeline remains solid and combination of franchise, large independents, small independents, anything and everywhere in between.So we have a good pipeline, I think what the Paycheck Protection Program did save a lot of smaller businesses. Those funds are going to start to run out. There was a second round of Paycheck Protection Program money that came in the first quarter of 2021. We, as a company, received USD 1 million as well. So what I'm anticipating is a lot of that will start running out, and we are seeing some growth now in the independent pipeline. So that's the good news there. I think Kasia is now back on.
Hi, Jeff. Sorry.
Go ahead. Yes, no worries.
So I'm on a landline and somehow I still got disconnected.
No worries. Why don't you finish your thoughts, Kasia, on the -- I tried to do my best on the corporate locations. I think you were about to say something about the new corporate location results. And then if you want to jump into the balance sheet, I've done the acquisitions.
Okay. Great. Yes, I wasn't really looking at the phone, so I don't know exactly when I dropped off, but I'll try to pick up where I think you're saying I left off, so around the acquisition EBITDA.
Around the new store acquired EBITDA, correct.
Okay. Great. Sorry for that. So yes, the non-same locations or acquisition results for 2020, so those included 9 months of the Chicago results, 10 months of Connecticut results and 1 month of Kansas. So our acquisition EBITDA for the year was $2.1 million with 36% EBITDA margin. And when including the government assistance, the acquisition EBITDA was $2.6 million.And in total, our corporate locations shredding sales grew 21% in 2020 over 2019 with recycling sales down 2%. And with the cost mitigation programs executed throughout the year, we were able to reduce costs by 19% and grow EBITDA 15% to $7.2 million.So given all the COVID challenges throughout the year and the operating restrictions we faced as a result of the pandemic, we're certainly pleased with the results for the year.And then lastly, looking at total corporate location EBITDA including the government assistance, we grew 40% year-over-year to $8.7 million. And now I'll speak to the capital management. Sorry, if I repeat anything that Jeff may have gone over as well. I was disconnected.
No. It's all -- capital management's all yours Kasia. Go ahead.
Perfect. Okay. So during the year, we used cash reserves of $12 million to fund the 2 acquisitions in Connecticut and Massachusetts. We also advanced $5 million on our senior credit facility for the acquisitions. The term loans were at low interest rates of 2.99% and 3.33% over an 84-month term.So our net cash used on acquisitions during the year was $7 million. We also repaid $1 million on one of our term loans, retiring our most costly debt instrument before its due date. And then during the fourth quarter, we resumed debt payments on our term loans after the 6-month deferral we received from April to September of 2020.And so we finished the year with a cash balance of $2.8 million, and we have $1 million available on our operating line of credit.And then I think Jeff mentioned, subsequent to year-end, we did qualify for the second round of funds on the Paycheck Protection Program, and we received USD 1 million.I'll pass it back over to you, Jeff. Sorry for the hiccup there.
No. No, these things happen with technology. It's happened to me before on one of these calls as well.I would like to thank everyone for joining us on this call. I know we'll have some Q&A now. The team, as you can tell, has worked extremely hard to be agile, nimble, mitigate against things that we didn't know. And I think, overall, the team took the right decisions through the year, and we were able to deliver a year that I didn't imagine we could when we were sitting here a year ago. And I think the good planning, the varying scenario plans that we put together and the fact that everybody really stepped up and contributed over and above their normal duties from every driver to every salesperson, to all the management team, to the executive management team, to our Board and our franchisees, everyone did a tremendous job. And we're really humbled by that. So I think the year that we had, glad 2020 is over. 2021 is looking strong, and we're focused on '21, delivering organic growth again, particularly in the last half of the year, maybe even in the second quarter were -- second quarter should be easy. I think about last year. So that one is not going to be a challenge, but we want to continue to grow beyond pre-COVID levels. That's our goal, to get there this year to get to those pre-COVID levels and then keep going from there. We've improved so many things in the business. We didn't waste the moment. We improved a lot of things in the business. And we have a good acquisition pipeline. So we're really in a good position to tee up a really solid 2021 for everybody. So I'll open it up to Q&A. Thank you.
[Operator Instructions] The first question comes from Amr Ezzat from Echelon Wealth Partners.
First, like on your last point, I guess, Jeff, on 2021. In your MD&A as well you spoke to same location corporate shredding revenues for the month of December, specifically, being down 3% year-on-year, which is pretty impressive. But I'm trying to assess sort of get a picture of the current level of activity with a lot of geographies, obviously, reopening. If I'm thinking about the month of March and maybe April to date, how does that sort of compare to Jan and Feb last year, which were pretty strong, like are you at, below or above prepandemic levels? Maybe it's too specific a question, but some color would be helpful.
Yes. We're not quite at prepandemic levels. I mean, March -- this year's March, it was a good March. Finally, we saw very good momentum from every location, which was great news. We're not quite at prepandemic level. So how I would characterize the year is the first half of 2020 -- sorry, 2021 will look like the last half of 2020, hopefully, a little better. And I think we're starting to see some -- the vaccine rollout has come so fast, so furious, so I think we might do a little better than that. But I would -- we're going to be reasonable because we don't know what variants and things like that might take place.Let's sort of look at the first half of '21 like the last half of '20. And if we can do better, that would be great. As I said, March was solid. The last half of 2021, I would characterize like the last half of 2019. And last half 2019 put paper to the side, it was a good last half. The growth was there organically. So that -- and that's, of course, prepandemic. So we're going to get to prepandemic levels, and then we'll get beyond that. And I think there is a little bit of pent-up demand in the U.S. economy. People are going back to work, they're ordering stuff. They're calling us for event-based purges.So the signals and the signs are all positive. April continues similar to March, April is always a little bit of a softer month, but not -- it's doing just fine. I'm pleased with how April is progressing so far as well.
Great. So that's good color. Question on the impairment charge. Was there anything specific to North New Jersey? I know you guys bought that location in '18. But you do have other Northeast locations that were disproportionately hit harder by the pandemic and didn't get impaired. So any sort of like thoughts you could give us?
Yes, absolutely. So the North New Jersey location -- so it's interesting because North New Jersey, the 3 locations that are hit the hardest due to COVID were New York City, North New Jersey and Philadelphia. We don't own Philadelphia. Those are the 3 hardest hit locations.And you can think -- North New Jersey is really just a big suburb of New York, right? So everybody sort of sat at home and that one got hit very hard in April and March of last year. Let me go back. 2018, we bought that business in North Jersey, paid about a 6 multiple of EBITDA for it. Even when we did that, we always normalized our paper. So at the time, we normalized our paper from -- it's pretty high through the tenure average.And as we know, and then -- and that's how we came up with the valuation and the multiple and we got our deal done.Fast forward a year to the end of 2019, paper prices crashed to -- I mean, I think New Jersey might have been sitting at $50 a ton. So we're talking about a major drop in paper. We did not have an impairment. We had enough cushion in our valuation. We know how to do these deals that we did not have an impairment at that time.Then you fast forward 3, 4 months, and the core business, right, drops 50%. And yes, New Jersey is now recovering, but that is just a huge decline in both paper and the core business that no one ever anticipated. This is once -- it's once in 100 years, right? Look, if you ask my opinion, the company shouldn't be knocked down for impairments during this period of time because, especially if you look at the core of the business, the business is coming back.The customers didn't go anywhere. So I think you have to evaluate where the -- I think there's a judgment call there. But IFRS is not about judgment call, right? IFRS is a mathematical equation.And everyone knows I'm an accountant. It's a mathematical equation. And the math was paper came down, we weathered that, no impairment last year. COVID hits us and the tonnage comes down, that was too much for the impairment model.We had to take some impairment. And so while I don't agree with it because I think, logically, this business is coming back, it's going to come back. It's already coming back. And it's going to come back. But it affected the cash flows of the business, of course, and impairments about the cash flow of the business.Amr, does that answer your question? Or do you have a follow-up or any thoughts...
No, that's very clear. I'm just thinking maybe if you had like a March 31 year-end, you wouldn't have taken an impairment. It's funny.
I'm telling you. Yes. You might very well be right. So that's a good point.
Okay. Maybe one last one, and I'll pass the line. I mean, you touched on the M&A pipeline in your prepared remarks. I appreciate that. But like with a lot of geographies reopening, are your franchisees that are up for renewal, more inclined to renew for another period? Or do you feel that a lot of these guys like are still up for sale? And how is that picture as well for the independents?
Yes. For the franchisees, you're going to have always a mixture. There have been some franchisees that have been -- there are some franchisees that had enough, right, especially when you look at the demographics, they're 60-plus years old. And do they want to do this for another 5 years. So again, you're going to get a mixture, but I think we are going to see some of our franchisees, say, you know what, we're hanging it up, and that's fine, number one. Number two, independents, I am starting to see some smaller deals in the pipeline. Those folks, it's hard for them to survive paper and all of this. And again, even the independents demographics are older as well.And I'm seeing both small independents and even larger independents. So this has changed the landscape. I mentioned in my comments, the PPP money. That money is going to run out. And look, I mean, the government did the right thing to support business, I get it. We were teeing up because the paper prices to go in there and it was coming along. The one telltale sign that I can tell and give you is that I'm seeing more broker activity. So the brokers are out there now going, I've got a deal, I got a deal. So that's a positive sign that I think probably the latter part of this quarter and the second quarter going into Q3, Q4, we should see more deals come across my table, which will be great.
The next question comes from Miguel Ladeira from Cormark Securities.
So let's start with the acquisition environment. Given everything that happened in 2020, it was a very good year for your team.That being said, how do you see 2021 shaping up relative to last year?
From an acquisition perspective, Miguel?
Yes.
Yes. Look, I -- here's the thing we thought -- over the last number of years, right, we've deployed $50 million on acquisitions than we bought in a lot of our bigger locations. There are still bigger locations out there, and there's also some medium-sized locations in terms of our franchisees. So we're going to continue to do franchise deals this year. That's the plan, all things being equal.Look, Springfield was supposed to be done in April a year ago, we waited until the end of the year. We got it done in a way that might be a blessing in disguise because we didn't have to deal with all of the other turmoil that came with it. But we're going to have acquisitions this year. We're also going to hopefully have some smaller -- I like the smaller deals. We're going to have some smaller deals, hopefully, this year because we're going to see some white flags go up. And I like those deals because they are highly accretive to our routes. Every time we do end up in those deals, it doesn't show up on the top line, but it certainly shows up on the bottom line.That's where I want it to show up, right? It's where we all want it to show up. So -- and there will be larger independents, too, that I think will put up their hands. So I am viewing the acquisition market as good. As I noted, there's more broker activity. So I think we're going to be into a good acquisition market, all things being equal. The U.S. economy is starting to go. But valuation, we're structuring these deals a bit differently, where -- more earn out, frankly, harder earn out. So that we're structuring them that way as well. So I think, again, we're in a good position.
That's great. And so I just wanted to clarify on your 6 acquisition goal by 2022. Is this a beginning or exit goal?
What do you mean by beginning or exit goal? Would that be...
Do you plan to complete 6 acquisitions by the start of 2022? Or...
No. I'm with you. Exit -- by the end of 2022. Yes, by the end of 2022. Yes.
So yes. Okay. So given that kind of strategy in place, is it reasonable to assume the entirety of the current franchisee base could be rolled up in, call it, the next 5 to 6 years?
Yes. Look, a lot of them are coming -- so 2 things. A lot of them are coming up for renewal. Again, they have the right to renew if they're in good standing. I can't force them out. The demographics play a role though. And so franchisees sometimes put up their hands early. And I suspect we're going to get a bit of a combination there. And I think over the next 4 to 5 years, the majority of the franchisees will become corporate, just the demographics are not in their favor. I mean they don't have succession plans with their kids. They don't have a business partner, they don't have the capital to buy the other partner out, that type of thing.So we are the logical, easy choice for them in that regard. So yes, I think there's going to be a very good opportunity to roll them up over the next 4 to 5 years.
Perfect. And okay. So have you had any ongoing discussions with lenders regarding additional access to capital? Should these larger potential suiters come available?
Yes. We are always in a -- great -- great question. We're always in conversation with our bank. We have a great relationship with them through COVID. We've provided them frequent updates and plans.We've always beat the plan, too, which is always helpful. We've been proactive. We paid down debt, as you know. And so the bank is there.I think as long as we keep doing what we're doing, the bank is there to participate in the larger deals. And that's the good news. Now we're going to be smart about it, though, right? We're going to layer in debt appropriately.So we're going to look at every deal on its own merits, run the numbers and layer on the appropriate amount of debt. Remember, the earn-out for me, an earn out is equity, but for the bank, an earn out is debt.And so that earn out plays a role. And again, I have larger, longer earn outs as well, that's to our advantage as well because that earn out allows us downside protection. I want them to earn it because that means they got the number that we wanted, but we have that vehicle as well that is working for us.
That's great color. So last one for me, and I'll pass it along. How is the unscheduled pipeline? Have you worked your way through most of those retail type opportunities and purges? Or is there more to go there?
Yes. The purge pipeline is like -- it's like the life of a fleet. They come in so fast, right? And so really, it's the marketing department. The marketing department does such a great job of looking at all the digital channels and putting up a marketing cocktail together, if you will, to get that inbound into inside sales. And then inside sales job is to close it. And then, as you know, and we've had these conversations, Miguel, where we then want to convert as many of those purges, especially B2B purges into recurring revenue. So the outside sales team, that's their job, convert and go and get their own pipeline as well. So they've got dual responsibility. So the pipeline on the inside -- so the marketing channel has done very well for us this year so far, particularly in March onwards. And the outside team has done a very good job also at converting and obtaining new business. So Kasia mentioned about that component, that component is going to -- that model and that formula works very, very well. We've got good professionals in marketing. We've got good professionals in sales.And I expect that to continue to grow. There's also some pent-up demand, I think, that we will see as -- companies are not all going to go back at once. So as companies go back, we'll continue to see some of that pent-up demand come back and those phone calls come in. And so yes, that's a good question.
The next question comes from Devin Schilling from PI Financial.
We continue to see some good EBITDA margin improvements here, I guess, despite a bit of a reduction in scheduled sales.This largely due to your routing efficiencies? And do you expect any further improvements available to be made in this area?
Yes. Routing efficiencies have played a role for sure. I mean, the hardest thing during COVID was you got a route that's falling apart early on and the team had to put it together.We're very fortunate. We've got one person on our team that is a routing guru. We've got the right technology tools that we have on the truck that tie into some of our systems. And so routing is a bit of an art. You have to always be looking at it, and we are. We've trained all of our teams to be looking at it. We've got dashboard daily looking at routes, margins on the route every day.We know what those are. And then you can have the conversation. And there's a certain route that's not producing the appropriate margin, now what do you do? Well, my marketing team, they'll go, okay, what's the ZIP code? Let's throw some marketing dollars there. And the sales team will go, okay, let me throw some sales efforts there. So that's the beauty of this business, you can always improve.You always improve every single route. And so I think that was part of it. The other part of it, of course, unfortunately, we had to cut and furlough people and we brought them back over time. Took us right into Q1 of this year to bring some of these folks back and then discretionary costs, of course, were not there. We obviously, the areas you want to spend money on are your people, those that are there. And then as they come back, technology to help us do the things that we're doing. Equipment, making sure the equipment is safe and functional and out there. We don't want it to go down. We want it to be available. So that's where we spend our money over COVID that's marketing and sales. We brought that back probably a little bit ahead of some of our competitors, which is a good decision. The marketing team sort of got back online in May and that's through June. And even there, we've got way better intelligence both in the marketing and sales department to attack the market. So a lot of improvement happened during COVID. The team didn't sit still, to quote Winston Churchill, "Don't waste a good crisis." And they did not.
Yes. No, that makes sense. I guess, has there been any real changes here in driver wages or has online shopping largely prevented this from occurring?
Yes. Look, I mean, drivers are in huge demand. I mean everybody is ordering online, right, especially here in Ontario right now.And even in the U.S. So there's been pressure there. I think we've got a good mix. We have less driver turnover this year.I think people wanted to wait and -- maybe I should stick with a company that's treating me right and giving me a fair wage and giving me 401(k) and some benefits and things. I think that's a lot of people.We're there and stuck it out, and we're very happy about that. And so we've seen less turnover in 2020 than we did in 2019 [indiscernible]. There's always some turnover. And there's always a gig that pays more. But there's not always a gig that -- where we're treated in a good way. But there's pressure. I think there will be pressure, and we'll always have to be mindful of that and do things. Comp is one thing, good work environment, safe, new trucks, all those kinds of things play a role in retention.
Okay. Great. My next question, just maybe you could provide a bit of color on the customer churn rate. Like has this changed much since we've passed the one year mark, I guess, on the COVID pandemic? Any color would be greatly appreciated.
Yes. It's going to be hard to say at the moment. It is really now hard to say because the customers that have come back have come back, which is great. They have come -- we -- there has been the odd customer that closed down, probably no more than normal. Having said that, there are customers that we don't know about. They're on hold. And we don't know when they're coming back.So our take on it is there's going to be, I think, this year, a little bit of churn that didn't show itself in 2020, but will show itself when they don't return back to service. So I think it's a bit of an unknown at the moment. I don't think it's a huge number. Look, our total revenue is down 10% versus the prior year. The majority of that is scheduled clients that have not come back to work.So as they come back, we're going to find out. But I don't think it's going to be a massive number, thank goodness. But we've been sort of 2%, 3% attrition rate in the past, it will be 5%, I don't know. We're going to -- we're keeping an eye on that, though, Devin. So it's a good question. I wish I had a more specific answer for you.
Yes. No, no, I definitely appreciate the color there.
[Operator Instructions] The next question comes from [ Dean Cartier ], private investor.
Most of what I was looking to get it -- most of what I had was answered -- has already been answered.I was just hoping you could maybe provide a little bit of color on SG&A as things sort of reopen, what -- did some of the discretionary expenses come back? What does that look like throughout the year? If you can provide any color on that, that would be great.
Yes. Yes. Let me go back and walk you through. I mean, obviously, what we did during COVID, people we needed to hire, we didn't hire. Some people got reassigned. So we had one of our key directors move back into a branch for the year.He'll be coming back out. He's in charge of supporting routing and franchise support and operations. And -- but we put him in a branch. And it was a good decision, right? I mean you have to do what you have to do. And so he'll be coming out, investing in technology, as I mentioned, the good news with that is a lot of that is SaaS-based, but you also need people to manage that and drive that.But that's going to be offset, right out of the gate, January 1, by the fact that we did an acquisition in Springfield. So that G&A as a percentage of sales, I think is an important number, we were 13% for the year. And I think we're going to -- we're targeting that 13%, 14%. We're targeting that, it's a reasonable number.We'd like to push it lower, of course, but there's some artificialness in that because we -- look, I didn't travel, right? And I didn't go anywhere. And lawsuits -- office wasn't fully opened, so you use less stock and all of that. So that does come down. It's going to pop back up in terms of dollars. I think in terms of percentage, I'm going to stay pretty close to that. Kasia, do you have any other color on that, on the SG&A side? I know you watch that like a hawk, which is wonderful.
No, yes, I think that's exactly what I was going to say as well. We're going to be trying to target around 13% of total revenue going forward. And as a dollar, yes, it will go up as we sort of have the travel come back online and rehire some of the folks that were in the branches and add some staffing, but with Springfield coming on certainly as a percentage of total revenue, we should be pretty much along the lines of last year's levels and maintaining that 13% level.
This concludes the question-and-answer session.I would like to turn the conference back over to Jeffrey Hasham for any closing remarks.
Thank you. Appreciate that. Look, again, thank you, everyone, for joining us on this call today.I'm going to probably have a number of calls with each -- some of you individually as we commence our roadshows next week, and the week after and the week after that. So we're spreading it out. I know we've got a number of dealers that we work with, and we will make sure that we get in front of all of your clients.So thank you. Some of you are almost, as I said -- appreciate the support. We are looking forward to an amazing 2021. Thank God 2020 is over. I'm sure you're feeling the same.But we did it. We were resilient. We were durable. The management team, Kasia, Ron and everyone under them, did an amazing job, and I can't thank them enough. So thank you very much. If you have any other questions, please reach out to us. We're always here to take those, and we'll put our head back down and keep running this business. Be well.
This concludes today's conference call. You may disconnect your lines.Thank you for participating, and have a pleasant day.