Thank you very much. [Foreign Language] Good morning, everyone, and thank you for joining us for Stingray's conference call for the fourth quarter ending March 31, 2022.

Today, Jean-Pierre Trahan, CFO; and myself will be on this call. We have Eric with us this morning, but he will be skipping the initial remark portion as he's losing his voice.

It's allergies and -- so I'll keep my voice for Q&A. Sorry about this.

So we'll keep him for Q&A. All right.

Our press release reporting Stingray's fourth quarter and annual results for fiscal '22 was issued yesterday after the market closed. Our press release, MD&A and financial statements for the quarter are available on our investor website at stingray.com and also on SEDAR.

I will now give you the customary caution that today's discussion of the corporation's performance and its future prospects may include forward-looking statements. The corporation's future operations and performance are subject to risks and uncertainties, and actual results may differ materially.

These risks and uncertainties include, but are not limited to, the risk factors identified in Stingray's annual information form dated June 7, 2022, which is available on SEDAR. The corporation specifically disclaims any intention or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law.

Accordingly, you're advised not to place undue reliance on such forward-looking statements. Also, please be reminded that some of the financial measures discussed over the course of this conference call are non-IFRS.

Please refer to Stingray's MD&A for a complete definition and reconciliation of such measures to IFRS financial measures. Finally, let me remind you that all amounts on this call are expressed in Canadian dollars, unless otherwise indicated.

And now on to our fourth quarter and year-end fiscal 2022 results. We are generally pleased with our financial results, considering the investment we made in strategic growth areas and obviously the significant decrease in contribution year-over-year for -- from the Canadian Emergency Wage Subsidy Program.

Indeed, excluding benefits from the wage subsidy program, our adjusted EBITDA increased by 5.3% in 2022. For the full year, revenues grew by 14% to $282.6 million.

The increase reflects the return to normal business activities and the acquisition of InStore Audio Network. In the fourth quarter of 2022, revenues improved 21.6% to $72.6 million.

Jean-Pierre will provide further details with his financial review. Turning to our Broadcasting and Commercial Music business, revenues rose 6% in 2022, driven by the Calm Radio and InStore Audio Network acquisitions.

This latter segment holds much promise for fiscal 2023 based on growing demand for highly customizable audio ads within Retail Media and recent partnerships completed with Walmart Canada and Metro. Last week, we announced that InStore Audio Network is now fully integrated with Stingray to create a unique digital audio, out-of-home network with more than 20,000 locations under one name, Stingray Advertising.

In addition to Walmart Canada, Metro and Jean Coutu, our customer list now includes CVS, Rite Aid, Dollarama, Albertsons, Brookshires and Safeway. Many campaigns are underway across our network, and early results show promising returns for advertisers.

Brands and agencies are excited by this new network and are adding InStore Audio as part of their media mix. To put things in perspective, Stingray now boasts the largest in-store audio advertising network in North America, reaching 140 million shoppers every week.

Combined with Chatter's AI-driven customer insights tool, we're extremely excited about the growth opportunities for Stingray Business. FAST channels represent another key growth vector for Stingray.

During the fourth quarter, we extended our partnership with LG Worldwide with a number of FAST channel launches. Working with our global partners, we continue to tailor our FAST offering to increase viewership, overall reach and total revenues.

Following the quarter end, we also announced a FAST channel distribution agreement with TCL Electronics in Australia, Brazil, India, Mexico and the U.S. As experienced by the cable TV industry, we all recognize that viewing habits are rapidly evolving, so we continue to be well positioned for strong revenue opportunities in FAST channels.

At this time, we believe our partnership with Tesla for Stingray Karaoke has been well documented. We're also working on exciting partnerships with several other car manufacturers, but these deals take time to materialize because they often require technology that's built into new cars.

Global supply chain issues in recent months have also delayed the availability of technology components for new cars. But gradually, these partnerships will provide Stingray with an enhanced presence in the automotive entertainment marketplace and deliver attractive growth and margins.

For its part, our radio segment continued to recover during the past year despite softness in some end markets that have not fully returned to normal advertising spend levels, thinking of automotive. From a market share perspective, our radio network performed well in local markets, while growth in digital ad sales from our radio group provided upsell -- upside from our -- for our revenues.

Radio revenues grew by a healthy 26.3% in 2022 and 12.9% in the fourth quarter. Overall, we're pleased with the performance of our radio business, particularly the strong cash flow it generates.

During the past year, our capital allocation strategy rewarded shareholders by returning more than $36 million to them in the form of shares repurchased and dividends paid. Following what we would describe as a transition year, we look forward to fiscal 2023 as we make additional targeted investment in key high-growth areas such as our advertising network, Chatter research for Stingray Business and SVOD FAST channel and in-car entertainment in our consumer segment.

Going forward, our capital allocation strategy will strike the right balance between strategic and opportunistic M&A and reducing our debt level. I will now turn the call over to Jean-Pierre for his financial overview.

[Foreign Language] Thank you. For the fourth quarter, revenues increased 21.6% year-over-year to $72.6 million, up from $59.7 million.

The increase was mainly due to the acquisition of InStore Audio Network; the gradual easing of COVID-19 restrictions, which led to a return to normal commercial operation; and an increase in equipment and installation sales. Canadian revenue rose 13.7% to $40.5 million, representing 55.7% of total revenues, down from 59.6% last year as we continue our territorial expansion.

The growth reflects the gradual easing of COVID-19 restrictions and a return to normal commercial operations. In the U.S., revenues grew 84.7% to $19.1 million or 26.4% of total revenues due to the acquisition of InStore Audio Network and an increase in subscription revenues.

Lastly, revenues in other countries decreased 5.3% to $13 million or 18% of total revenues, mainly due to a negative FX rate impact. Looking at our performance by segment -- business segment.

Broadcasting and Commercial Music revenues increased 27.4% in the fourth quarter to reach $45.6 million. The increase reflects the positive impact of all factors previously mentioned.

Radio revenues rose 12.9% to $27.1 million, mainly because of the gradual easing of COVID-19 and a return to normal commercial operations. In terms of profitability, consolidated EBITDA for the fourth quarter declined 11.1% to $21 million versus $23.6 million a year ago.

The decrease mostly reflects lower government subsidies, investment made in strategic growth areas and higher operating costs for -- from returning to normal commercial operations. These elements were partially offset by the acquisition of InStore Audio Network and higher radio revenues.

By business segment, Broadcasting and Commercial Music adjusted EBITDA decreased 10.9% to $14.5 million. In addition to the aforementioned factors, the decline was also due to a lower gross margin and product mix.

These factors were partially offset by the acquisition of InStore Audio Network. Also reflecting the aforementioned factors, adjusted EBITDA in the radio sector decreased by 8.9% to $7.9 million.

Stingray reported a net income of $4.5 million or $0.06 per diluted share compared to $12.1 million or $0.17 per diluted share in the fourth quarter of last year, which include higher gains on derivative financial instruments and FX. Adjusted net income stood at $11.8 million or $0.17 per diluted share, down from $12 million or $0.16 per diluted share -- $0.16.

Turning to liquidity and capital resources. Cash flow generated from operating activities amounted to $22.1 million in the fourth quarter of fiscal 2022 compared to $24.5 million a year earlier.

The decline reflects higher restructuring and other expenses, lower FX gains and lower operating results. These factors were partially offset by a positive variation in noncash operating items.

Adjusted free cash flow reached $11.8 million versus $13.8 million a year ago. The decrease is mainly related to lower operating results and lower interest paid.

Turning to our balance sheet. We conclude fiscal 2022 with cash and cash equivalents of $14.6 million, a sub debt of $25.4 million and credit facilities of $358.2 million, of which $78.7 million was available.

Total debt at the end of the quarter stood at $369.1 million or 3.16x pro forma adjusted EBITDA. We believe our balance sheet provides the flexibility to continue to execute our strategy of becoming a fast-growing, digital-intensive provider of audio and video music brand.

Finally, during the fourth quarter, we repurchased 80,000 shares under our normal course issuer bid program. For the whole fiscal year, we bought back 2.1 million shares for a cash consideration of $15 million under the current and previous NCIB.

The current program allowed us to repurchase 3.2 million shares until September 26, 2022. This ends my presentation.

I will turn back the call to Eric.

Let's start the Q&A.

Yes. I was able to hear the call just fine, so that's not a problem.

I think the one question that we have is regarding margins for the next year. Can you help us understand what you're expecting in terms of an EBITDA margin and maybe cash flow margin for next year?

A very good question. And this quarter, there was $4 million of extra OpEx.

$2 million is an investment. $2 million was a bit nonrecurring capitalization of R&D and different stuff, so I expect our EBITDA margin to be between 33% and 35%.

So we should be back to normal, the same EBITDA margin we had. For the year, we had 35%, and we expect to stay in the same range.

No, that's great. And then maybe you can kind of talk about the opportunity you're seeing out of home advertising and kind of the revenue you're expecting that to contribute this year.

Yes. So roughly, the inventory right now we have in Canada is about $60 million of inventory that we can sell.

And that's at 4 minutes an hour, so very excited, lots of potential. Our inventory in the U.S.

is closer to CAD 100 million, so we have a lot of inventory left to sell in the U.S. So our #1 mandate is to sell that inventory.

Like in the radio business, if you don't sell it, you lose it. So it's ramping up.

And I think this year, this quarter, as you saw, our advertising this quarter was close to $7.6 million. That's what we did.

So it gives you a good -- I think with the ramp-up, Stingray Advertising should be close to $35 million to $40 million based on our current numbers.

Great. And then maybe digging down, what type of margin does that advertising revenue come with?

For sure, the gross profit on that one is smaller because of the accounting. We -- the revenues are taking growth, but we share a large percentage with our partners, and then we pay commission.

So you should expect gross profit closer to the 40% to 45% range, but 80% when we work on net. So it's just because of the revenue share with our partners.

Just a follow-up or 2 on the last couple of questions. I thought the margin range was being targeted to sort of 35% to maybe 40%.

So now we're talking, I think, you're at 33%, 35% total net consolidated.

Yes. Because if you take the Retail Media, which has a gross profit of 45% instead of 80%, and this year, we expect to do close to $30 million to $40 million in that new product line, it affects your EBITDA margin.

So it's not that it's not profitable. It's just that it's -- we have the revenue share that we give to Metro and Walmart and CVS.

Okay. So if we think about F 2022, as Mathieu alluded to in the opening remarks, as a transitionary year and certainly a catch-up year in the context of COVID and easy comps, this year is about evolving recovery.

Can you speak at all to the opportunity here in terms of the top line when we think about $35 million, $40 million of advertising revenue when we think about some ongoing traction of late in the traditional radio business? I see the prospect of, let's call it, double-digit revenue growth to say the least, so looking around the level maybe of $325 million.

And then I guess to that, we need to then think about 33%, 35% type margin. Is that a reasonable way to look at fiscal 2023?

I think so. I think you're in the right range for Q1 because these results are late, and we're in June.

Q1, we should have a very similar quarter in terms of growth that we had in Q4. So again, double digit.

Q1 is looking good. Difficult to promise if something is going to happen in October, November, December.

But so far at the start of the year, the organic growth is double digit, and radio is also pacing well with the same type of growth. And I think the EBITDA range, for sure, were coming back.

There's a lot of OpEx that were one-off, so I think we're confident about those numbers also. But again, depending on there's no big surprise coming in the fall.

Right. Just in terms of semantics, you're still having a reporting segment called Broadcasting and Commercial Music.

But when we think about the nature of how Stingray business specifically is evolving, maybe you could just elaborate on what exactly the overall umbrella product is that's being pushed to the Stingray business clients. Because we've got Stingray business as we originally know it in terms of the in-store music and the digital signage.

To that, you add the Chatter, right, in terms of the AI insights. And then of course, this new construct being the Stingray Advertising, right, which sort of replaces the Stingray Retail Media Advertising Network.

So is there an overall umbrella for all of these products' go to market? Or is Stingray business the default catchall?

Yes. I think, for us, it's the same customer.

So example, Metro buys signage. Metro buys music.

We do advertising in Metro, and we also do Chatter AI in Metro. So that's the way we segment our business.

It's one contact. So all of these products, we put it under Stingray Business.

And for sure, Stingray Business, as a whole, because you're adding a lot of the Retail Media, will have a very large growth like we saw last quarter. So it's going to be a very big year for Stingray Business.

We -- I think you've been spending quite a bit of time talking about the nature, obviously, of the in-store advertising network and obviously the Retail Media traction in Canada. Can you speak at all to anything going on in regards to Stingray Business in other parts of the world where you have operations, like Mexico, Australia?

Yes. For us, Australia is still -- it's a nice business to get global deals because most of our -- like we just got Nespresso.

We got Tesla. So it helps us with global deals, but it's a small unit.

Mexico also helps us with global deals, but it's a small unit. Our #1 focus for Stingray Business is U.S., U.S., U.S.

So that's where our growth will be coming, not only for the music, but with -- also with the Stingray Advertising, we're looking to get more customers. We have 16,000 locations in the U.S.

that we can sell advertising. So good news is we're moving forward with a partner that will give us measurement, like we did in Canada.

So we are working with -- that should be coming in the next few weeks or next month, so we're excited about that. And we'll be able to start monetizing the network in the U.S., like we do in Canada with agencies at a much higher CPM.

The CPM we're getting in Canada is close -- for audio is close to $20. So great CPM in Canada and -- because of the measurement.

So if we could do the same CPM in the U.S., that will be a big win.

Yes. A couple of follow-ups just from Adam's questions or earlier questions.

Just on the radio recovery, you flagged automotive which obviously continues to be weak. But are there any other categories out there that you would kind of consider just not fully recovered?

Just trying to unpack what is left here to come into the picture, assuming there's a continued return to normal? And then second question on just the SVOD and OTT subscriptions, another uptick sequentially here off the seasonally strong quarter, just some granularity on how you're tracking with those subscriptions on.

And are you on the path to 1 million like you've previously indicated that was a target? And then I'll have one more after that.

Okay. Drew, so for the radio, again, Q1, April, May, June, again, strong growth, double-digit growth, so very happy with how we're recovering.

Stingray Radio, very strong with local sales. The only negative part again is we're not getting the same visibility with national sales.

We're not getting the same orders in advance that we used to have, so the business is more last minute. So I'm very happy for Q1 and Q2.

The car business is still not back. I agree with you.

There is a -- one of our Board members, as you know, is Rob Steele, who has many car dealership. And we were talking yesterday at the Board that we still see an auto problem.

There's still low inventory being given to car dealership. So we don't see that coming back within 6 to 12 next month.

On the good side is the radio team has started to sell in the Walmart and Metro. So we're getting some local sales in our Stingray Business network.

And there's always new products. As you know, in Ontario, Ontario opened up the lottery rules for gaming.

So as you can see on the radio, you're hearing a lot more gaming ads. So I think we're able to adapt and slowly but surely, we're -- because of the cost savings, our EBITDA will be close to what it was pre-pandemic, even if sales are lower.

So -- but it is quarter-by-quarter. I wish I could give you more visibility for the next 12 months.

For the SVOD, we're still on pace to hit our 1 million subscribers. I think another big growth is coming from Amazon.

Amazon is a great partner. We launched in Australia.

We'll be launching in India, Sweden, Germany. So the more countries they launch, the better it is for us.

And we also have some new partners in Mexico. And also, our friends at Google and YouTube are also looking to launch an SVOD service.

So a lot of big partners are getting into that game. So -- and by de facto Stingray Classica, DJAZZ, Karaoke and Qello is being picked as always in the top lineup when they launch their product, so very happy to be partners with these global players.

And the main advantage we have and the same reason we did a deal with Tesla -- or we just did a deal with LG, the reason LG chose us as their music partner is because Tesla, LG, Amazon, Google, they want partners with global rights. And that's one of the advantage of Stingray.

Because of our presence in all the cable industry, we were able to have global rights for all our products which makes us unique. Not many companies in our space have global rights.

So that's a big advantage.

Got it. Got it.

And then one final one, just back to the margin trajectory. So it sounds like there's a little bit of nonrecurring, obviously a little bit of mix but coming with a higher revenue growth profile.

In terms of the incremental investment that you talked to in fiscal 2022 that you're putting into the business, will we see incremental investment of any kind of materiality in fiscal 2023 as you kind of look to -- look at your strategic initiatives? Or is the step-up of investment somewhat behind you?

Just trying to size that one up.

No. We just -- right now, we're investing, let's say, $2 million a quarter for the U.S.

business in Retail Media or Stingray Advertising, for those products. That's $8 million a year.

But Retail Media in Canada had, in Q4, had 0 sales. So now for this quarter, we're getting our sales, and we have a good pipeline for this year.

But that's what I mean. So the investment will stay the same, but now we're going to have sales with it.

So I think officially, April, May, June is when we officially started selling ads and a lot of new customers, very exciting and huge growth. And the beauty about that, all that growth is organic.

So we'll be able to monetize our investments starting in Q1. So the answer is no incremental investment in 2023.

I want to go back to the margin discussion here. I mean, how did we go from 35% to 40% to 33% to 35%?

I don't understand that. Yes, mix is an issue, but is there an erosion in margin in all the other, let's call it, non-radio businesses?

The radio margin is fairly transferable, but what's going on in B&C there? Because this is not an immaterial change in your direction here, and I'm just confused as to what has happened here.

Tim, I agree with you. One of the big part with radio is, as you know, January, February, March is our lowest quarter of the year because of -- it's the lowest in sales, and the fixed costs are the same.

So the radio went from a 40%, 42% EBITDA margin in October, November, December down to 29%, just based on sales. So there is a bit of seasonality when you look at Q4, so we got to be careful there.

It's always our weakest quarter because of the impact on radio.

Yes. But, Eric, I'm not talking about the quarter.

I'm talking about the full year. You're directing us to 33% to 35%.

That's a long way from 35% to 40%, and I don't understand how -- what's happened here.

So again, the impact of Retail Media this year is significant. If you -- I'm happy to do a bridge with you after the call, just to -- with Stingray Media, you got a gross profit of 40% to 45%.

So it's not going to give you 40% EBITDA margin. So there was a big impact coming this year with that transition because of the gross or net.

So -- but I'm happy to do the bridge analysis with you, Tim, after.

Sure. Okay.

A couple more then. In terms of the direction you're giving us in terms of investment, I mean, are you putting M&A sort of on the back burner or setting it aside for right now when focusing on operations?

Or are you still looking to M&A as a strategic growth lever?

No. For this year, we discussed with the Board, M&A is more on the back burner.

ISAN was a strong acquisition of over CAD 60 million, and we have a lot of inventory to sell. So for us, our #1 focus is to sell the inventory in Canada, the CAD 60 million and to sell the $100 million of inventory that we have available right now in the U.S.

without any new customers -- I mean, without any new suppliers. So a lot of emphasis to hire people, meet more agencies and to show the advantage of Retail Media.

So -- and I think for us to deliver strong organic sales because all this is brand-new organic. So unless there's something very, very focused or niche that would complement this, I think we're more in, how do you say, transitioning our deal with Retail Media and focusing on that.

Right. Okay.

And then last one, what are you hearing from your regulatory contacts in terms of the radio file and ownership review. I mean, it seems like the industry is having trouble getting the CRTC's attention.

Like do you see this as a review that's going to happen in '23? Or what are your thoughts on timing and outcome there?

No. With the CRTC, everything seems to be delayed.

You saw it with the Bell-Roger -- with the Rogers-Shaw deal, and a lot of hearings are being delayed. So my expectation is the more we work with them, my expectations get lower.

So hopefully -- it was supposed to be in the spring. They were saying that it will be reviewed April, May.

Now it could be the fall again, and it's not only me. When we speak to all our other partners, Bell and Rogers and Corus, I think we all seem to be disappointed in the timing of these reviews.

So for now, I'd say it's on hold.

If and when it comes, what are your -- how are you thinking about how Stingray will approach the opportunity?

It's to be -- we're speaking to all the other partners, and everybody is in the hold pattern right now because nobody knows what's going to happen and the timing. So it's -- so I think we'll have to reevaluate when we get at least a guidance once the decision is coming.

So nobody is -- hopefully, everybody is confident that we'll go from 2 radio stations to 4. But again, you never know with the government and the CRTC, so difficult to plan something that is not based on what management can do.

I wanted to ask a couple of questions on the ISAN acquisition, now that you've had it in the fold for a quarter. So the first thing I wanted to ask is it looks like the revenue contribution was a little more than we might have expected, given the LTM performance when you said -- you're talking around $18.5 million when you bought it.

Have expectations changed around organic growth now that you've had it in the business for a quarter?

Yes. We've been -- I said the U.S.

network has been highly -- has done very well. We did almost USD 5.6 million last quarter.

So I don't want -- depending on the exchange rate, we did CAD 6.5 million to CAD 7 million. I'm just giving you overall numbers, so a very strong quarter.

And we expect the same results to come in Q1, Q2. So I think we're in a good track.

And again, we're only selling 15% to 20% of our inventory. So we still have 80% more to sell, but those sales will need to come with more advertisers, more salespeople.

So -- but I must say this, the U.S. network is a -- it's a large network of 16,000 stores, so very happy with it.

Okay. And then maybe on the margin side, I saw one of the main competitors raised some VC money.

I'm just wondering if you think that that's going to be an even further pressure on the margins there, just given the competitive environment. Obviously, they're looking to hire, and they're looking to increase sales as well.

So curious on what the margin thoughts are there.

Yes. And the reason why the margin -- you could debate, if we took the revenues on a net basis, then the gross profit will be 90% because the only cost that we have is the sales team, which is roughly 10%.

If you take it on a gross basis because -- and then you -- and depending on what revenue share you do with different partners, then that's what I mean when your gross profit goes down to 45%. So there's no really -- I think the margins will remain strong again.

And I don't think -- the fact that our competitor raised money is good news for us. There's more and more attention going for audio ads in stores.

It's a new market and very happy to be -- like Pepsi and Coca-Cola or Burger King and McDonald's, I think there's a big market coming and excited how we can show that, that space, which is -- again, most of the Retail Media is done online. And when you think about it, and they do video.

Not much audio happening in the U.S. and Canada.

So...

Okay. I'll just ask one more question.

Just on the synergies you were expecting with the deal, I mean, is that $16 million number still the target, still sort of what you think you can get out of it?

Are you talking, just to make sure, Canada or the U.S.?

Sorry, I'm talking about the ISAN deal again. So you mentioned that you saw $16 million of cost synergies -- synergies total.

But do you -- are you're talking -- the $16 million, is that EBITDA? Or what's the $16 million...

I think that's what you said last time, but just wondering, if basically, maybe zooming out, is the EBITDA margin -- sorry, is the synergy target sort of still in place? Do you think that you could still realize what you thought you did when you bought the business?

Yes. Our biggest synergies with ISAN is first to get a measurement.

In Canada, we have COMMB, and we're working to get a measurement in the U.S. Second is to get the boxes connected, and third is to work with our partner, Hivestack, to start selling ads from agencies at a much higher CPM.

So that's coming forward. So we're -- and in terms of the -- in terms of whatever -- with synergies, the EBITDA, that was in Canadian dollars, we are on track to what was given to the market.

I'm not sure if it's $16 million EBITDA or what the number is, but I'm happy to take that $16 million off-line.

Okay. Well, this concludes our call for today.

We understand that we did have technical issues. We'll validate that the webcast has been properly recorded for anyone else who wishes to listen to the call.

With that, I thank you very much, and talk to you later. Thank you.