AirBoss of America Corp.

Welcome to the Airbus of America second quarter conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Gren Schock, Chairman and CEO. Please go ahead.

Thank you, operator. Good morning, everybody, and thank you for joining us for the Airbus second quarter 22 results conference call. I'm Gren Schoch, and I'm the chairman and CEO of Airbus. With me here today are Chris Bitsakakis, our president and COO, Frankie Antilli, our CFO, and Chris Fegel, our EVP and general counsel. Our agenda today will start with the highlights from our operations for Q2, followed by a brief review of our financial results. We will then open the call to questions. Before we begin, I would like to remind listeners that our remarks today contain forward-looking statements, including our estimates of future developments. We invite listeners to review risk factors related to our business in our annual information forum and our MD&A, both of which are available on CDAR, and on our corporate website. Also, we will discuss certain non-GAAP measures, including EBITDA. Reconciliations of these matters are available in our MD&A. And finally, please note that our reporting currency is US dollars. With that, I'll now turn the call over to Chris Bitsakakis for the operational review.

Thank you, Grant, and good morning, everyone. I'll start today by covering off our Q2 results, and I'll provide an outlook of what we are seeing throughout our various business segments as we advance into the second half of 2022. In aggregate, our three business segments continue to operate in a very challenging environment fueled by hyperinflation, supply chain disruptions, and labor constraints. Our focus on operational effectiveness and driving cost efficiencies remain strong in Q2. As we continue to do this, we've become much more resilient and able to adapt as effectively as possible to the market challenges we continue to face. Many of our customers and supply chain partners, including the automakers and others, are actively dealing with significant supply chain issues, chip shortages, freight delays and logistics challenges, raw material shortages, and cost inflation for both goods and the personnel needed to get the job done. Our consolidated decline in profitability, as compared to the corresponding quarter in 2021, was driven mainly by a reduction in revenues within our Airbus Defence Group due to the delayed timing of new contracts, as well as the impacts of continued cost pressures that were felt across our engineered products business segment. Underlying the Q2 results, I want to highlight the continued successes within our rubber solutions business. Our team within ARS delivered excellent contributions to revenue and gross margins in Q2 on the back of new product offerings and advancements in our compounding capabilities. Focusing in on ABG's results in Q2, revenues compared to Q2 of 2021 declined as our work to deliver power air purifying respirators to the U.S. Department of Health and Human Services, or HHS, ended in April of last year. Despite this variability in contract activity, driven by sourcing delays with our largest customers, we believe our track record of successfully fulfilling large-scale supply agreements continues to position us to reach into new clients in the healthcare space and to secure new sales agreements that we're actively pursuing in our sales pipeline, which on an aggregate basis within Airbus currently stands at approximately 1.5 billion USD. At Airbus Defence Group, we are focused on continuing to build up the breadth of our survivability platform, targeting both military and healthcare end markets as the main driver of more consistent revenues. AVG's current proprietary product portfolio is being organically supplemented with new products, including its blast gauge system, which is a lightweight, wearable blast overpressure sensor designed to detect and protect soldiers from traumatic brain injury. Last Gauge, along with other new products in development, have the potential to drive significant and new recurring revenue streams as they begin to gain traction. In addition to the development of new products, we retain our demonstrated ability to execute against large long-term framework agreements. We have proven our ability to supply large government health and safety related contracts on time, on budget, and from domestic production facilities. Given the mission critical nature of the products we supply, these are valuable skills that enhance our ability to compete for and win new business. Moving next to Airbus Rubber Solutions, or ARS. We continue to reap the benefits of our investments in this business, which have been focused on upgrading equipment, increasing our compounding capabilities, and extracting maximum value of our acquisitions, which includes our purchase of ACE elastomers, which we completed in mid 2021. Within Q2 of 2022, ARS saw strong year-over-year increases in volumes as we capitalized on our expanded scale and global supply chain management expertise to bring on new customers. We see strong potential for the R&D investments we're making within ARS to support new product development collaborations with our customers and create new sales opportunities. Looking longer term, our strategy for ARS remains intact. We plan to grow this segment of our business by leveraging our large-scale efficiencies in support of our new position as a supplier of choice in higher margin specialty and color compounding. In our engineered product segment, or AEP, we have continued to focus on our operational improvement plan while making every effort to secure price concessions on existing automotive contracts. These contracts have been adversely affected by the extreme hyperinflation environment, coupled with significant labor issues and turnover, in addition to the sales challenges related to customer slowdowns due to the chip shortage and other supply chain constraints. Management is addressing these challenges head-on through margin improvement strategies which target cost management, enhancing our product pricing with new raw material indexing, and investing in our manufacturing to lower our long-run production costs. The segment also continued its focus on diversifying its product lines to support expansion to sectors adjacent to the automotive space. As an additional element, we're working closely with a top tier advisory services firm to optimize pricing strategies with our key customers with the goal to regain our ability to profitably run this business. Across each of our three segments, as we pursue strategies to deliver organic growth, we continue to assess possible M&A opportunities which can offer new ways to strengthen our supply chain positioning, bring additional diversity to our product portfolio and customer base, and expand our businesses into new sectors. Looking ahead, we believe we're well positioned to continue leveraging our investments as we work to convert our pipeline, even as conditions in our main markets remain challenged. For AVG, we believe market conditions favor our expanded product portfolio and manufacturing capabilities. Our priorities are to secure new contracts to deliver PPE consumables and protective military equipment to our customer base and to continue innovating to develop new survivability solutions for defense and first responder applications. We will continue to seek out strategic acquisitions that strengthen the value of our ADG platform. For ARS, we're focused on building on our current sales momentum, deepening our product lineup, and improving our margins. Our expanded compounding capabilities have supported strong performance for ARS to date in 2022 and position us well to keep growing this business. As well, we'll continue to opportunistically assess acquisitions as a possible source of new incremental revenue streams. For AEP, we are focused on regaining profitability through new product innovations, prioritization of higher margin products, capturing operating efficiencies, and most importantly, working with our customers to reestablish mutually beneficial relationships. As well, we know that exposure to new industries has the potential to bring us important diversification benefits and will offset the supply chain risks being faced by many users of our products. In summary, Throughout our business, our opportunity pipeline remains at record levels, and we're looking forward to successfully securing and executing on new sales agreements in 2022 and beyond. With that, I'll now pass the call over to Frank for the financial review.