Amaero Ltd

Good morning, and thank you for joining us for the Amero Limited Q3 FY26 Investor Webinar. I'm Jane Morgan, Investor and Media Relations Manager, and today I am joined by Chairman and CEO, Hank Holland, who will be running through the Q3 results and the presentation which was lodged with the ASX this morning. As always, we will be taking questions from attendees following the presentations. So to ask a question throughout today's webinar, please use the Q&A function, which can be found at the bottom of your screen. Thanks. I'll hand over to you.

Thank you, Jane. Good morning, and thank you for everyone else for joining us. I'm Hank Holland, Chairman and CEO of Amero. We're pleased to report Q3 FY2026 results that came in line with our expectations and to share an update of the continued momentum we're seeing across our business heading into a very strong fourth quarter. I'll take you through our financial performance, the state of our revenue pipeline, and several strategic initiatives that we've advanced this quarter, including our redomiciliation of the United States and progress towards a potential U.S. IPO. We'll then open the line for questions. Let me start with reaffirming our FY26 revenue guidance of $18 to $20 million. And as of today, over $18 million of that guidance is fully contracted. In Q3, we recognized $2.6 million in revenue, a 301% increase year over year. That figure breaks down as $1.8 million from powder sales and $0.7 million from our PM hip business. It came in right on top of the $2.5 million in contracted revenues we disclosed back in January. Looking ahead to Q4, we have $8.4 million in contracted revenue, up from $7.2 million in contracted revenue disclosed in January. We expect a significant inflection point in the fourth quarter, with contracted revenue in the quarter contributing approximately 45% of total FY26 realized and contracted revenue. On the cost side, trailing 12-month G&A expense grew 18% year-over-year, even as trailing 12-month revenue expanded by more than 300%. I'll come back to that contrast in a moment. It's an important part of the financial discipline and the operating leverage story. We ended the quarter with $38.3 million cash balance, which included $4.9 million in restricted cash. During Q3, we submitted a draw request in the amount of $5.8 million to XM Bank for incurred capital expenses, and we expect to receive the disbursement in April. Perform a cash balance adjusted for the receipt of XM disbursement equals $44.1 million, including restricted cash. On strategic milestones, Tim Johnson has been nominated to join our board. Our redomiciliation of the U.S. is on track to be completed by the end of June. Our PCA OB audit with BDO USA is advancing in parallel, and we continue to work towards a potential U.S. listing in late calendar 2026 or early 2027. I'll cover each of these in more detail shortly. Trading 12-month revenue reached $11.8 million in Q3 2020. an increase of 347% year-over-year. Both business segments are contributing to growth. Outer revenue driven by exclusive supplier agreements and contracted shipments contribute approximately 80% of total revenue, and PMHIP manufacturing contribute approximately 20% of total revenue. PMHIP manufacturing contracts have longer sales cycles and require customer qualification, but those processes are well underway, and we expect PMHIP growth to outpace Our overall growth rate increased its share of revenue mix as we move into FY28. We currently have atomization contracts for 14 refractory alloys that include niobium, moly, tantalum, tungsten, and rhenium. And we have 14 active PMHIP contracts. The FY26 revenue bridge is straightforward. We recognize 10.3 million year-to-date across the first three quarters. We have 8.4 million contracted for FY quarter four. That gives us line of sight to $18 to $20 million guidance range with over 18 million contracted. Next slide, please. On the investment side, tangible assets, gross PP&E plus inventory. have grown from approximately 41 million in Q3 FY25 to 72 million today. That capital is going directly into production capacity and inventory. It supports the revenue ramp, enables us to fulfill contracted demand, and mitigates tariff and supply chain risk. Every dollar we've deployed is aimed at scaling the business and create a differentiated and defensible market position. As other companies are beginning a multi-year capital investment plan, We are concluding a three-year, $72 million investment plan, and we're positioned to take immediate advantage with production scale of the favorable thematic tailwinds for defense industrial base, for critical mineral supply chain, and for sovereign manufacturing. Our core principle has been to invest early to attract an experienced team that spans technical, operational, and financial leadership, then grow the team in GA expenses in a disciplined manner. As the chairman and CEO and as the largest shareholder, this is yet another example of alignment of interest with management and shareholders. The data supports the case. Trailing 12-month revenue is up 347% year-over-year, while trailing 12-month G&A expenses are up 18% year-over-year. That divergence, revenue growth at nearly 20 times the rate of G&A, is operating leverage, it's our ethos, and it's a discipline that we will maintain. Let me walk through the cash bridge for Q3. We started the quarter with a cash position of $52.6 million, including restricted cash. From there, net cash used in operations was $7.1 million. Inventory purchases, $0.6 million. CapEx was $5.4 million. FX exchange impact of $1.2 million brought us to our March 31 closing balance of $38.3, which included $4.9 million of restricted cash. During Q3, we submitted a draw request in the amount of $5.8 million to Ex-Im Bank for incurred capital expenses, and we expect to receive the disbursement in April. Pro forma cash balance adjusted for the receipt of the Ex-Im reimbursement equals $44.1 million, including restricted cash. We are on schedule and on budget to complete the three-year $72 million capital investment plan this quarter. Let me spend a moment on a re-domiciliation because we believe it's a strategically important step, not just a structural formality. In February, we announced our intention to re-domicile from Australia to the United States, establishing a new Delaware parent entity. Our ASX listing will be maintained, the 3DA ticker will be unchanged, and shareholders will retain equivalent economic ownership through CDIs. Our operations, strategy, and management remain entirely unchanged. What changes is our corporate home. On the commercial side, redomiciliation positions us to satisfy Department of War's Foreign Ownership Control and Influence, or FOCI, requirements. That's a prerequisite for eligibility on classified defense contracts, which represents a meaningful expansion of our addressable market. On timeline, our scheme is expected to be distributed to shareholders in early May, Re-domiciliation is expected to be completed by the end of July, subject to shareholder and regulatory approvals, with a PCAOB audit completed in parallel. Beyond the operating rationale, re-domiciliation supports three important objectives. First, U.S. market positioning. We gain greater visibility with U.S. customers and stakeholders. It helps address foreign ownership, control, and influence issues. It improves our comparability with U.S. listed defense and advanced manufacturing peers. Second, strategic flexibility. It simplifies our structure for potential M&A or partnerships and positions us for a potential U.S. IPO in late calendar 26, early 27. And third, capital access. A U.S. domicile and potential IPO give Amero access to a larger, deeper investor base and the potential for improved valuation and liquidity. along with enhanced access to lower-cost debt and equity capital. Tim Johnson's board nomination in March was in preparation of a potential U.S. listing. Taken together, this is about ensuring that as we grow, our corporate structure and market access reflects and supports the in-market customer while supporting the enterprise valuation and liquidity. On the financing, we are pleased to announce that XM Bank has increased its loan commitment to Amero from $22.8 million to $26.1 million U.S. dollars, a U.S. $3.3 million increase. This is non-dilutive capital that directly supports incremental CapEx deployment. The amendment reflects XM Bank's continued endorsement of our platform and further aligns us with our Make More in America initiative. Government-backed, non-dilutive financing of this kind is accretive to the capital stack, and it provides an important signal of support from the U.S. government. On the commercial front, two announcements deserve specific attention. First, we're also pleased to announce that we have entered into a three-year distribution agreement with United Performance Metals, or UPM, an affiliate of O'Neill Industries. which generated approximately 3.4 billion U.S. sales in calendar year 25. Amero has been appointed as UPM's exclusive supplier for titanium powder. We've already received an initial purchase order of 4,000 kgs, which has included an FY26 contracted revenue. And UPM is committed, obligated, to maintain a minimum inventory of 4,000 kgs with ongoing replenishment orders. creating a recurring volume dynamic that scales with the red market demand. This is a significant distribution channel addition, and it's generating revenue from day one. Second, next page, please. After the end of the period, we announced a one-year master purchasing agreement for FY27 titanium powder shipments with minimum contracted revenue of $7.8 million. To put that in context, it's roughly equivalent to our total FY26 titanium powder revenue in a single contract. Shipments are structured as equal quarterly deliveries from July 26th through June 27th with fixed pricing on committed volumes and upside from additional orders. The customer expects FY27 orders to exceed the minimum commitment. Combined with a planned 100% increase in titanium powder production capacity of FY27 over FY26, This agreement gives us strong early visibility into next year's revenue ramp. Stepping back to the broader commercial picture, we've taken a very deliberate approach to aligning with select strategic partners via long-term agreements. In each case, the partner is strategically positioned in a market vertical. In the case of admin, Dr. Dow and the organization have pioneering experience in printing C-103 and other refractory alloys. In the case of LO3D, Their differentiated position is the only made-in-USA OEM with large-format printing capability for defense and space applications. In the case of TITOMIC, they're the leading force in the U.S. defense industrial base for cold-spray manufacturing of qualified components. In the case of Kunitz-Godwin, they're a trusted partner for processing PMHIP-manufactured components, and they have a large expansion underway for 3D printing machines dedicated to titanium. and in the case of UPM, a leading distributor aerospace, defense, and medical industries with a large sales organization. Separately, we have numerous programs, plural, and numerous defense primes, plural, that are advancing first articles in qualification for production contracts. As is our practice, we will announce the commercial opportunities once we are awarded the production contract. Specifically, looking at Q4, we expect titanium revenue to increase 62% compared to Q3. I'm pleased to share that this will reflect full capacity utilization for the current quarter. We have orders for 14 refractory alloy powders in the backlog, and we have 14 active PMHIP contracts, only one of which has been announced. That's a strong commercial foundation entering the largest quarter in our company's history. To bring it together, Q3 delivered on plan. Q4 is fully contracted and represents a step change in quarterly revenue. FY26 guidance is reaffirmed at $18 to $20 million, 100% contracted. Our balance sheet is solid with pro forma cash position of $44 million post-XM reimbursement. We're advancing our U.S. re-domiciliation on schedule. We expect to enter FY27 with strong revenue visibility with long-term agreements and contracted shipments. We are executing. We are scaling. We are focused on where we need to be in a year and in three years to address critical needs for our partners in the U.S. government, Department of War, and the commercial sector. Amero is uniquely positioned as a leading advanced material business and a leading advanced manufacturing business. They acted boldly to commission the largest-scale and lowest-unit-cost U.S. production of refractory and titanium alloy powders, and Deposition Amero is the leading PM manufacturer of complex near-net-shaped parts. Thank you for your time this morning, and I'm happy to take your questions.

Wonderful. Thank you for that. Again, I encourage webinar attendees to use the Q&A function, which can be found at the bottom of your screen if you've got questions for Hank. There's been quite a few that have already come through, so let me jump into them. So, Hank, Q3 revenue came in at 2.60, which, of course, is a 301% lift on the prior corresponding period. Can you walk shareholders through how the team has converted the commercial pipeline into contracted revenue?