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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to Vecima Networks' Fourth Quarter Fiscal 2022 Earnings Conference Call and Webcast. [Operator Instructions] Presenting today on behalf of Vecima Networks are Sumit Kumar, President and CEO; and Dale Booth, Chief Financial Officer. Today's call will begin with executive commentary on Vecima's financial and operational performance for the fourth quarter and year-end fiscal 2022 results.
Lastly, the call will finish with a question-and-answer period for analysts and institutional investors. The press release announcing the company's fourth quarter and year-end fiscal 2022 results as well as detailed supplemental investor information are posted on Vecima's website at www.vecima.com under the Investor Relations heading. The highlights provided in this call should be understood in conjunction with the company's audited annual consolidated financial statements and the company notes for the year ended June 30th, 2022 and 2021. Certain statements in this conference call and webcast may constitute forward-looking statements within the meaning of applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These statements include, but are not limited to, statements regarding management's intentions, belief or current expectations with respect to market and general economic conditions, future sales and revenue expectations, future costs and operating performance. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict or are beyond our control.
A number of important factors could cause actual outcomes and results to differ materially from these expressed in these forward-looking statements. These factors include, but are not limited to, the current significant general economic uncertainty and credit and financial market volatility, including the impact of COVID-19 and the distinctive characteristics of Vecima's operations and industry and customer demand that may have a material impact on or constitute risk factors in respect of Vecima's future financial performance as set forth under the heading Risk Factors in the company's annual information form dated September 22nd, 2022, a copy of which is available at www.sedar.com.
In addition, although the forward-looking statements in this earnings call are based on what management believes are reasonable assumptions, such assumptions may prove to be incorrect. Consequently, attendees should not place undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Vecima disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law.
At this time, I would like to turn the conference over to Mr. Kumar to proceed with his remarks. Please go ahead.
Thank you. Good morning, and welcome, everyone. Thank you for joining us. Fiscal 2022 was a year of outstanding momentum for Vecima, as we capture the first wave of the global industry transition to distributed access architecture. I'll start today with a review of some of the financial and operational highlights of a remarkable year. Dale will provide more detail on our financial results, and then I'll return to talk about what lies ahead for Vecima. I'm very proud to report that fiscal '22 brought another year of record-breaking top-line performance as we achieved the best quarterly and full-year sales results in our 34-year history. Fourth quarter sales climbed 70% to $60 million year-over-year, while full-year sales grew by an exciting 50.4% to a record $186.8 million. Importantly, we leveraged this growth on the bottom line with profitability momentum outpacing what we achieved even on the top line.
On a full-year basis, gross profit climbed by 59%. Adjusted EBITDA rose significantly to $31 million, up a remarkable 152% or 2.5x higher than a year ago, and adjusted net earnings ramped to $0.41 per share. That's a year-over-year increase of $0.51 per share. These are simply excellent results and even more so, while in the presence of ongoing global supply chain challenges. The distinctive success of our strategies and tactics for managing supply chain constraints is evident not just in our very strong top-line growth, but also in a gross margin that buck sector company trends and strengthened 2.6% to 48.2% in fiscal 2022. Our record results were led by our Video and Broadband Solutions segment, and more specifically, of course, by the dramatic growth in our Entra DAA sales.
As you know, Entra momentum was building coming into the year, and it continue extensively as operators worldwide increase their capital investment into DAA. Our total customer engagements for Entra climbed to 91 during fiscal 2022, up from 71 at the start of the year. And quarter-by-quarter, interest sales grew from $16.6 million in Q4 last year to $40 million in Q4 this year. We ended fiscal '22 with full-year interest sales of $107.3 million, that was 2.5x interest sales last year. I want to comment on Entra's broader growth trajectory, which tells the story of not only our sales tempo but also highlights how compelling the product family has become to Vecima.
In fiscal 2020, when we first commenced sales of our new DAA products, Entra generates sales of about $5.3 million, and that represented about 6% of our total sales that year. One year later, Entra’s sales have climbed to $42.6 million, lifting Vecima’s full year FY '21 sales to $124 million. And now at the end of fiscal '22, Entra’s sales of $107.3 million have propelled full-year consolidated sales to $187 million, driving our top-line growth to a striking 50% plus.
And this is just the beginning of what we see ahead for Entra. The industry is still in the early innings of DAA adoption. DAA is expected to become a multibillion-dollar market as operators worldwide undertake this transformational evolution of broadband access networks, networks that we believe are the very foundation of global progress. And the industry is heading into this journey with Vecima widely recognized as a leading global DAA technology partner. All of this strongly cements our multiyear strategy to provide not just the industry's most interoperable and technically differentiated offering of DAA technology but also the most complete breadth of fiber and cable access solutions. And I'm pleased to report that we continue to build on our portfolio with multiple new DAA achievements in fiscal '22. Just to provide a few examples, we announced the world's first generic access platform or GAAP node, which sets the industry standard for unified access with a modular platform. We also introduced a new generation remote [ MAC ] cable access module, the most flexible and highest-capacity cable access platform on the market. And in partnership with Charter Communications, we demonstrated the reality of 10G DOCSIS 4.0 over hybrid fiber cable access networks, clocking blistering symmetrical downstream and upstream speeds in the process.
And then we went on to beat our own record. So even as we've been capturing the first wave of industry DAA adoption, we've been preparing to lead the next so this is truly an extraordinary moment in time for Entra and of course, for Vecima. Looking now at other contributors to our fiscal 2022 performance. Within the Video and Broadband Solutions segment, FY '22 is another excellent year for our TerraceQAM, commercial video hospitality platform. We saw a significant continued uptake during the year as our lead Tier 1 customer continued to expand its hospitality footprint, while preparing again for a migration to the next-generation Terrace IQ platform.
In our Content Delivery and Storage segment, we maintained strong annual sales performance of $43.5 million, in line with FY '21 results. This is achieved despite supply chain and material shortages and pandemic-related project delays that slowed some industry-wide transitions to IPTV. The year also brought some important achievements for that segment, including winning and executing the largest IPTV deals in our history. On the innovation front, we continue to advance our media scale family with multiple product enhancements.
And another highlight of the year was demonstrating our standards-compliant Open Caching solutions. As I mentioned last quarter, Open Caching is a significant new development for our service provider and streaming customers because it delivers video that looks and performs better on consumer viewing screens, while at the same time offering compelling business advantages to both streaming providers and operators. We believe Open Caching is an important component of the future of video streaming, and we're continuing to lay the groundwork for it in partnership with leading global content and service providers.
In Telematics, we continue to build on the segment's profitable recurring revenue contribution as we broaden deployments to municipal government customers. We also expanded our presence in the movable asset tracking market. We added 39 new asset tracking customers in fiscal '22 and more than doubled the total number of movable assets we monitor in the year to over 23,000 asset tanks. In all aspects, fiscal 2022 was a pivotal year for Vecima, and we ended in a very strong financial position. Even after investing heavily in R&D and organic growth and returning cash to our investors in the form of regular dividends of $0.22 per share, we ended the year with $12.9 million in cash and a very strong $58.6 million in working capital. This positions us well to support the significant new growth we see ahead. I'll tell you more about that in just a few minutes. First, though, I'll turn the call over to Dale to provide our financial overview. Dale?
Thank you, Sumit. For the purposes of this call, we assume that everyone has seen the fourth quarter and fiscal year 2022 results, news release, MD&A, and our financial statements posted on Vecima's website. I will present the relevant numbers and discussions around overall results, market segments, operational expenses, and the balance sheet.
Starting with consolidated sales. For the 3 months ended June 30th, 2022, we generated sales of $60 million. This was an increase of 70% over the $35.3 million in Q4 last year and an increase of 18% from $50.9 million in Q3 fiscal '22. The year-over-year increase reflects a sharp increase in product sales from the Video and Broadband Solutions segment, driven by our new Entra family of products, partially offset by lower sales in the Content Delivery and Storage segment.
Within the Video and Broadband Solutions segment, for the fourth quarter of fiscal '22, we generated sales of $49.4 million. This was up 111% from the $23.5 million in Q4 of last year and 34% higher than the $37 million in sales last quarter. Further deployments of our next-generation DAA products contributed fourth quarter Entra revenue of $40 million, up 141% from $16.6 million in Q4 fiscal '21 and up 30% from $30.8 million in Q3 fiscal '22. In all, Entra DAA platforms are now being sold to 45 operators across 6 continents. Commercial video product sales grew to $8.8 million, an increase of 31% from $6.7 million in Q4 fiscal '21 and 43% from $6.2 million in Q3 fiscal '22.
The increase in commercial video sales reflects continued strong demand for our Terrace QAM platform as operators continued their commercial rollout for the current generation. This was partially offset by the anticipated tapering of demand for Terrace family products, including the TC600E. Content Delivery and Storage segment sales were $9.2 million in Q4, down 12% from the $10.4 million in the fourth quarter of fiscal '21 and 26% lower than the $12.5 million in Q3 of this year. This lumpiness reflects the timing of large orders, and these quarterly sales variances are typical for the CDS segment. Sales for fiscal '22 were additionally impacted by pandemic-related project delays as well as supply chain and material shortages. The total CDS segment sales included $4.5 million in product revenue and $4.7 million in services revenue.
Turning to the Telematics segment. Sales in the fourth quarter were at $1.3 million, slightly lower than the $1.4 million in the same period last year and in Q3 of this year. Gross margin for the fourth quarter was at 48% with a gross profit of $28.5 million, an increase of 90% from the $15 million in Q4 of fiscal '21 and up 19% from last quarter's $24 million. Gross margin was within our targeted range of 48% to 52%. Gross margin was up from the 42% achieved in Q4 fiscal '21 and from the 47% last quarter.
The improvement in gross margin reflects a higher margin product mix, foreign exchange improvements, and higher sales in the VBS segment. These gains were slightly offset by lower CDS sales and supply chain issues during the period. Video and Broadband Solutions segment gross profit grew 147% to $23 million from the $9.3 million in the same period last year and 42% with the $16.2 million in gross profit last quarter. Gross profit margin of 47% was significantly higher as compared to 40% in Q4 fiscal '21 and slightly higher from Q3 fiscal '22 gross profit margin of 44%. The year-over-year increase in gross margin reflects significantly higher sales, together with a higher margin product mix. Gross profit in the Content Delivery and Storage segment for Q4 decreased slightly by 2% to $4.6 million with a gross margin of 50% from the $4.7 million and 45% in Q4 fiscal '21.
On a sequential quarterly basis, CDS gross profit was 33% lower than the $6.9 million generated last quarter. The year-over-year changes in gross profit and gross margin reflect a lower percentage of high-margin software sales in the product mix and a decrease in sales in the current quarter as compared to the prior-year quarter. In the Telematics segment, gross profit in the fourth quarter was $0.9 million with a gross margin of 66%, similar to the $1 million in gross profit and 68% gross margin in Q4 fiscal '21 and the gross profit of $0.9 million and 63% gross margin last quarter.
The year-over-year decrease in gross margin reflects higher product costs in the current quarter. Turning to fourth-quarter operating expenses. The notable changes year-over-year were as follows: R&D expenses increased to $11.4 million from $5.4 million in Q4 fiscal '21, primarily reflecting the hiring of additional R&D employees, the amortization of deferred development costs, higher licensing and subcontracting costs as well as decreased capitalization costs. We continue to invest in research and development to support the launch of new products. Until these new products are commercialized, development costs are deferred to future periods.
Sales and marketing expenses for the fourth quarter increased to $6 million from $3.6 million in the same period last year. This increase was due to higher staffing costs as well as increased travel, entertainment, and trade show costs as travel and business restrictions related to COVID-19 were eased. G&A expenses increased to $6.5 million in Q4 '22 from $4.3 million in Q4 of fiscal '21, primarily reflecting the additional staffing, ERP implementation, software licensing, and subcontracting costs. Other expense was $0.8 million in Q4 fiscal '22, a decrease from other income of $1.5 million in Q4 fiscal '21.
Due to U.S. federal grand credits received in fiscal '21 compared to an impairment of deferred development costs in the current period in our CDS segment. Total OpEx in Q4 increased to $24.7 million from $11.6 million during the same period last year. This increase primarily reflects higher operating expenses in the Video and Broadband Solutions and the Content Delivery and Storage segments. Video and Broadband Solutions operating expenses increased to $15.8 million from $6.1 million in Q4 fiscal '21. The $9.7 million year-over-year increase primarily reflects additional expenses for research and development, sales and marketing, and general and administrative activities, all related to sales growth. Content Delivery and Storage operating expenses were higher at $8 million in Q4 fiscal '22 as compared to $4.9 million in Q4 fiscal '21.
Increases reflect year-over-year higher expenditure on research and development, sales and marketing, and general and administrative activities related to planned sales growth. I note that reported R&D expense in a period is typically different than the actual expenditure. That's because certain R&D expenditures are deferred until product commercialization. Adjusting for deferrals, amortization of deferred development costs, and income tax credits, actual R&D investment for the quarter increased to $12.7 million or 21% of sales from $8.9 million or 25% of sales in the same period last year.
The increase reflects higher staffing costs and higher costs for software licensing, subcontracting and prototyping as our next-generation product families move closer to full-scale commercial deployment. In our bottom line results, we reported an operating income of $3.8 million in Q4 fiscal '22 as compared to $3.4 million in Q4 fiscal '21. The $0.4 million increase was mainly due to an increase in contribution from the Video and Broadband Solutions segment from next-generation Entra DAA products, partially offset by an increased operating costs from the CDS segment. Adjusted EBITDA grew to $11.1 million from $5.7 million in the prior year quarter and up from $8.1 million last quarter. The fourth quarter foreign exchange gain was $1.4 million compared to a foreign exchange loss of $0.7 million in the prior year period. Net income from continuing operations for the quarter was $3.5 million or $0.16 per share from a net income of $1.4 million or $0.06 per share in Q4 of fiscal '21. Overall, a very strong quarter. Turning to the balance sheet. We ended the fourth quarter with $12.9 million in cash, up from $10.6 million in the third quarter. Working capital increased to $58.6 million from $54.9 million in Q3 fiscal '22 and $44.8 million in Q4 last year. We note that working capital balances can also be subject to significant swings from quarter to quarter.
Our product shipments are lumpy, reflecting the requirements of our major customers. Other timing issues like contracts with greater than 30-day payment terms also affect working capital, particularly if shipments are back and weighted for a quarter. Finally, cash flow provided by operations for the fourth quarter was $10.4 million as compared to cash flow provided by operations of $12.9 million during the same period last year. The $2.5 million decrease reflects a $7.6 million decrease in cash flow from non-cash working capital, driven primarily by the building of inventory to support growth and minimize supply chain constraints, partially offset by a $5.1 million increase in operating cash flow. So just to summarize, another strong quarter with continued sales growth and solid gross margin and adjusted EBITDA in the midst of challenges due to the global supply chain.
Now back to Sumit.
Thank you, Dale. Looking at what lies ahead for Vecima, we see multiple growth engines driving the future. In our Video and Broadband Solutions segment, of course, our Entra products have captured a clear edge in the vast EA and fiber broadband market, and we are very well positioned to leverage and build on this lead. We have the world's most comprehensive DAA portfolio, covering both fiber and cable access, and we've built some of the industry's best technology. We've also been selected as a technology partner to a growing list of global MSOs, including a number of the world's largest cable operators. These operators are increasingly expanding scale deployment. We expect market demand and sales of our Entra DAA products to continue to ramp up in fiscal 2023. This outlook is supported by a very broad order book that provides excellent visibility into customer expectations and growth for the year ahead.
I remind you again that this is still just the opening act for DAA. There's more to come, not just from our existing Entra portfolio as we continue to capture this first wave of DAA adoption, but also from our new technologies and the subsequent waves that we expect to follow. In other parts of the BBS segment, like before, we see continued solid demand for our content -- current generation Terrace QAM, making way for the long-term migration to next-generation Terrace IQ as our portfolio of commercial video and hospitality solutions remain essential for operators in their enterprise service bundles.
In our Content Delivery and Storage business, we anticipate moderate growth in fiscal 2023 as the macroeconomic challenges ease and demand momentum builds. Over the longer term, we see higher growth potential in CDS. The IPTV and OTT streaming services markets are on pace to significantly grow in the next several years and will depend on reliable and scalable solutions like those provided by our media scale portfolio. We also see significant long-term growth potential for our newer Open Caching solutions to evolve into an important driver of CDS performance.
Finally, in our Telematics business, we anticipate consistent incremental growth from the fleet tracking market and increasing demand for our newer movable asset tracking services. Overall, we see a very exciting future for Vecima as our multiyear investment technology and growth strategy is realized. By one note of caution remains the ongoing challenges related to current global supply chain disruptions that could temper our near-term growth or margins. But again, we're managing these pressures exceptionally well to date. Overall, we're highly confident in our market position and Vecima's ability to capture the major opportunities that lie ahead of us as we evolve the world's networks to deliver on the promise of limitless broadband connectivity and entertainment.
That concludes our formal comments for today, and we will now be happy to take questions. Operator?
[Operator Instructions] Our first question is from Steven Li with Raymond James.
Sumit, can you give us an update on the supply chain? Is it improving? And also inflation impact on labor and components.
Yes. The supply chain is still in a constrained state, we see that on a global basis. We are seeing some signs of improvement for sure. I think one of the most important factors I've talked about is that 1.5 year to 2 years ago, we had this step function change in lead times from the 16, 20 weeks, the whole normal to the new normal 52-week plus lead times. But now, we've crossed over the change that, that represents in terms of having our pipeline of orders in place based on very excellent visibility from our customers that we're working with us as strong partners to manage this and provide us forecasting visibility out consistent with some of the lead time scenarios. So as we approach calendar '23 and start to get into those orders that we've had in place for a long time, that gives us a lot of momentum in the supply chain side.
And meanwhile, we are seeing, certainly, again, going through ‘23 signs of improvement, generally speaking from the supply chain. But of course, it remains in the short term, very important. We're spending a great amount of time managing it. We're being very agile about it, and that's been a big part of our capability to grow like we have. Inflation side, we've seen over the last year, significant cost increases in parts. We've been able to modify our designs, to make substitutions where necessary, and to partner with our customers to mitigate that. So we're comfortable. You see that represented and what the margin profile has been reminding everyone that I expected 2% to 3% headwinds relative to our target range. As we entered fiscal '22, we outperformed that by delivering right at our target range of getting in there. So I think we're doing really well to manage that.
Got it. And Sumit, when you said you're still in a constrained state. So does that mean you less revenues on the table in Q4 as well?
Certainly, of course, there's a backlog, and the backlog across time is very large. And yes, there were orders in Q4 that we had more material, we certainly would have been well placed and well positioned to increase the sales. All right.
Great. And then I know you've provided this metric before, but how much of your engagement today is [ MAC, PHY and EPON ]?
Yes. So just take a quick peek at that one more time. So our -- yes, our Remote-PHY is about 25%, our EPON funds is about 25%, our MAC fund is about 50% of the 91 engagements we have. So we have a very balanced distribution and that speaks to our capability to address the full spectrum of the distributed access ecosystem relative to where the operators want to go on that journey as they move to 10G services. And you're seeing the engagements well diversified there.
Our next question [ Jim Byrne ], Acumen Capital.
I assume that was me. I think my phone cut out there. This is Jim here with Acumen. Just a follow-on, I guess, the last question from Steven. I'm noticing your 3 largest customers now exceeding $100 million in revenue for the fiscal year, up significantly. Just want to get an idea of what drove that growth amongst those 3 customers. Was it just wider engagement, wider deployment or a shift in any of the product sales?
Yes. I think we are seeing wider engagement scale-up in some of those deployments. One of those particular leading customers, in particular, we have multiple Entra products in various categories of their services as they're ramping up in parallel. The fiber broadband has been really incredible that one of those lead Tier 1s and what they've been able to do to provide broadband equity by expanding their network to cover rural populations in North America.
That's been really material for us, and we're showing ourselves to be a very important fiber access vendor, which is great. That's a step journey for operators to go in that direction in the long term and as it's happening now with some of the funding that's in place Vecima is penetrating that very effectively. Another one of those customers is scaling their DAA deployments. They've got a Remote-PHY model today. They may evolve that in the DOCSIS and auto-generation towards MAC-PHY. We're continuing to Remote-PHY. Again, the flexibility is important to us. So we're seeing on the cable access, some real strength of that other leading customer that you see there any of those top ones for us.
Okay. That's great. I noticed Alberta added to their rural deployment fund. Just help us understand how that potentially works on your end and also, I guess, the rest of the government subsidies and programs, what you're seeing today or anything new in the last number of months.
Yes. You may have cut out just for the start of that. Can you repeat on the increase that you saw?
Yes. Sorry. The government of Alberta added to their rural funds, I think, another $50 million or something like that.
Yes, right. Yes. And we're seeing that quite widely. And it speaks to, of course, this wide global recognition that broadband is essential. It's a key element of how society functions today. So we need equity and access to broadband and many, many jurisdictions are focused on that. We are seeing, of course, that our capability to provide solutions there, our 10-gig remote LTE on for [ fiber ] home solution, for example, in the node form factor. That's very efficient for cable operators, in particular, to deploy to tap into some of those funding initiatives to grow and expand their networks to cover rural areas, in particular, where some of that funding is directed. And it relates to how as we've built the product strategy that we're allowing fiber deployments to embed almost natively in how we control and how we provision even the cable network. So it was a very nice evolution for a cable operator in particular, as they're looking to serve fiber to the home in the greenfields, for the business as usual, and for the funding program. So that's been a very good movement for Vecima.
And then lastly, I know the I don't recall the name of the expo was just ending. And just maybe any key takeaways or any product developments or initiatives that came out of that recent expo?
Yes. So I think one of the highlights, of course, is that Charter showed a DOCSIS 4.0 demonstration press release related to that in a private booth and we were one of the vendor partners that were involved there. And with our remote MAC now are showing with 6 amplifiers behind the node, which is very important to how practically deploying DOCSIS 4.0 will be in the future with the FTD or ESD extended spectrum taking speed frequencies up to 1.8, it gets a bit technical, but the ability to place DOCSIS 4.0, DAA known at the location where nodes are today and still have the cascade of amplifier behind it and provide symmetrical multi-gigabit speeds, 8.5% downstream, 5.5 upstream with 6 amplifiers.
It's a very powerful indication of how the industry can move towards 10G over the cable play. So that was very important for us. We also announced an expansion to our fiber access products with our 10-gig XGS-PON shelf that we announced at the show. We know that as important as the fiber broadband continues to grow. Some of the operators are looking that's effectively a different management standard for fiber-to-the-home that we've brought into the portfolio with that new product that we introduced and some increased density as well. So that are some of the highlights for the show for us.
[Operator Instructions] Our next question comes from Jesse Pytlak with Cormark Securities.
Just on the cable fiber access business, can you just give us a sense of how far along are your earliest customers with respect to their ultimate deployments?
Yes. We think that are still very -- quite early. Sometimes we say it's not even the early innings in a warm-up. So there's been heightened activity. Of course, you see that in our results. But this is a multiyear, multibillion-dollar investment cycle that's going to take pace first, moving to DAA at scale, then starting an evolution to DOCSIS 4.0 continuing with the fiber build-outs and whatnot. So things are relatively early. And as, of course, we've talked about the supply chain has put somewhat of a ceiling on [ output ] even though we've been growing fantastically. Despite that, there's still more to be done there in terms of catching up with the native demand that is actually happening today from the operators. And we do feel like they're quite early in the long-term cycle, market cycle that's going to take place to evolve the networks for multi-gigabit.
Okay. And then just engagements are up to 91. Obviously, a very, very impressive number. But is there some level where we should expect for this to begin to naturally plateau? And then second to that, just on customer orders. Can you just confirm if you had any sales conversions following the quarter? Or would it still be at 45% today?
Yes, I'm not going to report on the conversions until last quarter, Jesse, but that's continuously happening. We've had to, of course, manage the supply chain side as well in terms of new customer adoption for deployment. So that's relatively important to align our availability of product and new customer adoption. So I'm not going to dwell that in a little -- much more right now. 91 engagements, that's continuously growing. It's up from, I think, 50 in a year or so. There are quite literally hundreds, maybe even thousands of cable operators globally. We look at that 91 as when we see the coverage of some of the Tier 1s, that's very important. Many of that already in there in terms of accounts. So that we see the potential for that engagement level to continue to rise for us, but we're very pleased with the makeup of the 91 today.
Okay. And then just last one for me. Obviously, you had a substantial build in working capital in fiscal '22. How should we be thinking about the working capital requirements and the evolution of it through fiscal '23?
Yes. So of course, growing at the 50% type rates as we are is one factor, managing 52-week lead times on supply chain is another factor that we very much with the visibility, the order commitments we have, and the forecast commitments we have from customers, we need to continue to fuel our working capital to fuel this growth and to fuel our ability to respond to customer needs. So we feel comfortable that we're well positioned. We've got lots of access to capital as we need. But it's working capital for us is really very strong money in the bank inventory there that we're building, and it's helping us to grow like we are and manage supply chain. So as we see the trend going forward, we do expect to have more inventory commitments. But again, the growth is consistent with the rates that we've been showing.
Our next question is from [ Oli Crosio of Private Investor ].
There is one thing that I noticed that Dale mentioned about $12 million in research and development that was [indiscernible] because of you only spent -- you use that when you're ready to sell the product, is that correct?
The $12.7 million is really the cash R&D spend that we had in fiscal '22 is the way to look at that, [ Oli ] -- the number on the -- on our income statement is before -- or has that capitalized amount going to our balance sheet. But what I was reporting on the $12.7 million was the actual cash spend. So I hope that helps in the quarter.
Okay. I understand. But does it mean that you're going to be spending that type of money on research and development going forward each quarter?
Yes. Yes, it does. That's investing in our clients.
Maybe I misunderstood what you were saying, that’s my fault.
No, that's fine.
Yes. So anyway you have this proposal that may be raising a lot of money, I think you filed a [ SEDAR ]. And do you see that taking place this year or perhaps next year?
I'm not going to be able to comment very specifically. Of course, we have the vehicle in place. The market situation is what it is. We're growing fantastically so it's important...
There's no imminent need for it.
There's no imminent need. And that's there, the valuation metrics make sense, and we want to put some liquidity out there.
Yes. Right. Now the Telematics, what revenue you're getting out the Telematics? And is that getting to the point where it might even be worth a spin-off or something? Or is that a possibility?
Yes. So Telematics sales of somewhere around $5.5 million recurring revenue, nice bottom line on that business as well on the EBITDA margin. And a strong asset, and we're committed to it. And as the opportunity arises, we would be open to different options on the business. I think we're happy to grow it as well. We're doing great on municipal government customers and asset tracking. So like the rest of our business, of course, it's at a much smaller scale, but our R&D investments are bearing fruit, and we like the metrics and the recurring revenue of the business.
As there appears to be no further questions. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.