AirBoss of America Corp.

Welcome to the Airbus of America third quarter conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Grand Schock, Chief Executive Officer. Please go ahead, sir.

Thank you, operator. Good morning, everybody, and thank you for joining us for the Airbus Q3 2021 results conference call. I'm Grand Schock. I'm the Chairman and CEO of Airbus. Here with me today are Chris Fitzsikakis, our President and COO, Frankie Antilli, our CFO, and Chris Figuel, our Executive VP and General Counsel. In terms of an agenda, we will take a few minutes to review some of the operational highlights for the quarter, and then briefly review our financial results before opening the call to questions. Before we begin, I'd like to remind you that today's remarks include non-IFRS measures. Reconciliations between our IFRS and non-IFRS results can be found in our MD&A. Additionally, management's outlook for 21 and beyond, anticipated financial and operating results, plans and objectives, and our answers to your questions may contain forward-looking information within the meaning of the applicable securities laws. In particular, expectations around the impact of the COVID-19 pandemic, potential acquisitions, results of operations and financial condition, and that of our customers and partners are uncertain and subject to change. The forward-looking information represents our expectations as of today and accordingly is subject to change. Such information is based on current assumptions that may not materialize, and it is subject to a number of important risks and uncertainties. Actual results may differ materially, and listeners are cautioned not to place undue reliance on this forward-looking information. A description of the risk that may affect future results is contained in AIRBOS's AIF and MD&A, available on our corporate website and in our filings with the Canadian Securities Administers on CDAR at www.cdar.com. With that, I will now turn this call over to Chris Bitsakakis for our operational review.

Thank you, Grant, and good morning, everyone. I'm happy to report another strong quarter in Q3 2021, including the production and final commencement of shipments of nitrile patient examination gloves for the U.S. Strategic National Stockpile for HHS. This order worth up to $288 million was an enormous undertaking to produce and deliver 18 million boxes of critically important nitrile gloves. West Coast port backlogs resulted in the shifting of $116 million of sales from this order into the fourth quarter. However, despite this delay, we are reiterating our 2021 outlook and expect record results in the fourth quarter. In the process of ramping up this order, working capital requirements increased significantly to fund short-term acquisition costs related to gloves. However, Completion of the delivery of the HHS glove contract and resulting payments will result in the deleveraging of the company in the near term. We therefore expect to enter 2020-2022 in an extremely strong position, just as we entered 2021, with the financial flexibility and expertise to execute on more large-scale contracts and to pursue further M&A to accelerate our growth strategy. In 2021, we have utilized our financial flexibility to accomplish multiple strategic growth initiatives, We completed delivery of our powered air purifying respirators and related peripherals to HHS and then executed on even larger HHS order for nitrile gloves. We completed payments related to the acquisition of full control of the Airbus Defense Group. We acquired B3, giving us full control and protection of its blast gauge technology prior to anticipated sourcing of major government contracts for overpressure protection for soldiers. We invested in the design and development of our Airbus 100 half-mask respirator a more portable alternative to our successful flexor-powered air purifying respirator at a lower price point, having just recently received NIOSH approval for this exciting new product. In Q3, we successfully completed the acquisition of 100% ownership of ACE Elastomer for U.S. $42.5 million, which has propelled Airbus rubber solutions into a market-leading position in color and specialty rubber compounding and expanded our geographic penetration in the U.S., And at Airbus Engineered Products, we have completed our modernization program, having now invested in and installed new technology to improve automation and efficiency. We also were able to increase our quarterly dividends by 43%. Our strategic and careful use of our financial flexibility in 2021 has put us in a position to continue to grow organically and inorganically. And despite the significant investments this year, we will find ourselves with a similarly strong balance sheet position with growth momentum going into 2022. The company's ability to generate cash and utilize that cash to continue to grow is a derivative of the solid operational and tactical execution of detailed growth plans driven by a focus on innovation and diversification as the main driving forces behind both top and bottom line growth. Notably, we introduced the combination of domestic sourcing and advanced buying tactics along with the development of alternative sources to help mitigate the impact of numerous global challenges on our businesses. Despite headwinds such as ongoing global freight, labour and logistics challenges, raw material price escalations and constraints, and the continued impact of the COVID-19 pandemic, we continued to perform well and effectively managed our operations throughout the third quarter. We expect our positive momentum to continue as we round out 2021 and prepare to enter 2022. While we expect the industry headwinds to continue through the remainder of 2021, We have solidified our position this year as a leading supplier of personal protective equipment to the healthcare and survivability sectors, while making investments to position Airbus Defense Group, Airbus Rubber Solutions, and Airbus Engineered Products for strong performance coming out of the pandemic as the economy stabilizes. As it relates to ADG, the segment continued to execute on its growth strategy, including the continued evolution of a full survivability platform, increased penetration of the healthcare sector, increasing defense sales, and reducing cyclicality of orders by expanding our proprietary products. With completion of the HHS nitrile glove order anticipated in Q4, we will have executed successfully on more than half a billion dollars of orders from the U.S. government in 2020 and 2021, cementing our status as a trusted, large-scale supplier of protective equipment for frontline healthcare, defense, and law enforcement personnel, able to deliver high-quality products during the most challenging of supply chain dynamics. We will also have been one of the largest importers of nitrile gloves in the U.S. for several months running. We pursue more large-scale government healthcare PPE contracts and other survivability equipment contracts, as well as domestic and international contracts for supply of CBRN wearables and potential orders for new Husky 2G vehicles and related vehicle sensors and equipment in our record $1 billion-plus sales pipeline over the next 24 months. We remain confident we will win a portion of these. We are also preparing to market our recently approved Airbus 100 half-mask respirator, a product designed to fulfill a gap in PPE for key government agencies. Designed and developed by Airbus in consultation with first responders and healthcare professionals, this new reusable respirator expands our range of certified respiratory protection products for medical, defense, and law enforcement personnel operating high-risk environments. It is designed to provide filtered particulate protection from chem bio-agents and contaminants at a 99.97% level and builds on the success within the healthcare sector of our existing NIOSH approved FlexAir powered air purifying respirator systems. The AirBoss 100 is designed to provide the same level of respiratory protection as the FlexAir PAPR, but a lower price point as a result of a more portable design, not requiring a battery operated blower. This innovative new product will open the aperture of available high level protection for first responders and healthcare workers far beyond what is available to them today. As I noted previously, our sales pipeline only includes active or imminent sales opportunities and excludes the potential completion for the supply of gas masks to the U.S. military, which we are hopeful to compete for and win, as our industry-leading low-burden mask did in recent years in Canada and Australia. Such a contract would be worth upwards of a billion dollars of sales over an extended timeframe. It also excludes large-scale rollout of our blast gauges, which are currently in field testing with the U.S. Army and in competition for the U.S. Special Operations Command. The magnitude and continued increase in sales opportunities compared to previous years gives us optimism for continued growth at ADG in the coming years. Our longer-term priorities include capitalizing on ADG's enhanced scale and capabilities to pursue an array of growth and value creation opportunities in the broader survivability solution segment, serving both defense and first responder and healthcare markets. We're also building a more global approach to sales of our survivability products, including a new team focused on Europe and Asia, most notably India. While in the short to midterm, ADG is anticipated to continue to be our primary driver of profits. We are also expecting improvements in our rubber solutions and engineered product segments, though there's still potential for COVID-19 related weakness, including ongoing supply chain challenges for the remainder of the year. At Airbus Rubber Solutions, we have seen increased top-line growth momentum through margins, though margins were compressed, by the rapid escalation of pandemic-related raw material, freight, and labor challenges, while realizing a marked reduction of government subsidies. We are seeing continued benefits of the sizable capital investments that we made in Airbus rubber solutions, notably in upgraded equipment and growth initiatives, including increasing our compounding capacity in the southeastern U.S. and adding dedicated color and specialty compounding lines along with a new R&D lab at our flagship facility in Kitchener, Ontario. ARS continues to focus on optimizing its equipment capacity, specifically in Scotland Neck, North Carolina, while continuing to optimize the use of the automated small ingredient weighment system in Kitchener, which is running at steady capacity. Despite adding 15% capacity from our organic investments, excluding ACE, we are now running at over 70% of the upsized capacity versus 60% in 2017, before we began the transformation of ARS. This includes approximately two-thirds utilization of our new color line and one-third utilization of our specialty plant hunting line. We also maintain significant capacity for organic growth, including through further automation. The addition of ACE elastomer has significantly accelerated ARS's strategy to expand from traditional black, high-volume product lines into lower-volume, higher-margin color and specialty markets. In addition, the acquisition has expanded ARS's reach into the U.S. South and Midwest with minimal overlap in customer base and presents opportunities for further revenue synergies. ARS recorded strong year-over-year increases in volumes as well as progressive traction this quarter with increases across the vast majority of sectors due to increased momentum at most customers' operations. However, continued significant raw material price increases coupled with international freight constraints proved challenging on the supply chain. This was further challenged by continued labor shortages primarily driven by the pandemic. The company continues to take advantage of its scale and global supply chain management expertise to onboard new customers seeking new suppliers in the current environment to drive volume and growth in its core markets, which will now be expanded into the U.S. South and Midwest by leveraging ACE's geographic footprint. ARS's focus going forward will be on operational excellence and the production of a broad array of compounded products, white and color, in Kitchener. Airbus continues to invest in its R&D expertise and lab capital to support enhanced collaboration with customers and better reflect the company's focus on innovative R&D and proprietary technical solutions. Our longer-term priority for ARS remains to grow the segment by positioning it as a specialty supplier of choice in the North American market, with a growing focus on building defensible leadership positions in selected compound categories. We are currently reviewing potential regional expansion to the West Coast, where we have customers interested in facilitating our entrance. Although still early in the planning phases, Our approach to enter that region may be through acquisition or greenfield or some combination thereof. At Engineered Products, we have continued to focus on our three-part strategy to reduce operating expenses, produce more innovative higher-margin products, and expand into non-automotive sectors. In Q3, we executed on our operational improvement plan, including managing variable costs and focusing on sustaining a stable workforce while weathering the volume volatility in the automotive sector and specifically on our products for SUV, light truck, and minivan platforms. We continue to drive efficiencies in best-in-class automation through the installation of a new molding platform to replace one that is more than 20 years old, which included installation of 22 new injection molding presses in a multi-year investment with the majority being installed in Q3. In Q4, we will be installing our second fully robotic automated work cell, which will help us continue to reduce labor costs in high-volume work cells, a critical requirement to increase our competitiveness with low-cost operations in Asia. By the end of 2021, we expect to have completed the modernization of AEP's asset base to the highest and most efficient standards, resulting in the ability to both increase our capability to produce more sophisticated higher margin products and lower our operating expenses. Leveraging our modernized equipment, our technical team continues to identify opportunities to utilize our new molding platform to produce higher quality, higher margin parts. An example is our new hydraulic bushings and mounts, for NVH products for non-automotive sectors. And our new team of engineers and commercial sales also continue to seek opportunities to develop new products for non-traditional sectors, including potential military use. In addition, the engineered product segment has also continued to sustain the production of certain molded defense products for ADG at its Auburn Hills, Michigan facility. Despite near-term supply chain challenges, our longer-term priority remains to drive improved performance from IEP through a combination of disciplined cost containment, client relationship expansion, new product development, sector diversification, and a much more aggressive stance on the renegotiation of low margin contracts and any contracts that do not allow for frequent raw material escalation clauses. As an organization, our continuing momentum has placed us in a strong financial position and has given us the ability to be aggressive with opportunities that present themselves. While we have a clear strategy to grow organically, historically, we have also undertaken strategic M&A in order to make critical acquisitions, diversify our products and customer base, and penetrate new sectors. We continue to seek ways to leverage our balance sheet strength and accelerate our growth strategy through M&A, as evidenced by a recent acquisition of ACE. Our M&A strategy focuses on targeting additional acquisition opportunities across the enterprise, with a focus on adding products or compounds, advanced technical capabilities, and geographic reach into selected North American and international markets. As it relates to our outlook, our growth is not dependent on M&A. It is difficult to predict the continued normalization of the economy in the near term due to the impact of COVID-19, including global supply chain issues. But as I have stated previously, the outlook remains healthy over the medium term with industry estimates for approximately 4% top line growth over the next five years. We have obviously outperformed the industry over the past number of years, and our aim remains to continue expanding our market share while increasing our margins through a combination of product mix and operational efficiencies, complemented with strategic and disciplined M&A. Our focus remains to cultivate strong internal processes that lead to organic growth and access of market growth, while assessing both tuck-in and transformational acquisitions as we look to leverage our strong balance sheet to accelerate our growth. With that, I will now pass the call over to Frank for the financial review. Frank.