EcoSynthetix Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Ecosynthetix 2026 First Results Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided for you at the time for questions. If anyone has any difficulty hearing the conference, you may press star zero for operator assistance at any time. Synthetix Inc. from those projected in the forward-looking statements. For more information on Ecosynthetix risk and uncertainties related to these forward-looking statements, please refer to the company's annual information form dated February 17, 2026, which is posted on CDAR. This morning's call is being recorded on Wednesday, May 6, 2026, at 8.30 a.m. Eastern Time. I would now like to turn the call over to Mr. Jeff McDonald, Chief Executive Officer of Ecosynthetix. Please go ahead, sir.

Thank you. Good morning, and thank you all for joining us today. Yesterday afternoon, we reported our 2026 first quarter results. Sales were $3.8 million in the quarter, a decline of 7% compared to the same period last year. Adjusted EBITDA was a loss of $340,000. an improvement of 32%. Those are disappointing figures to report, particularly after the momentum we built in the second half of 2025, including two record quarters and our first profitable year. The start to 2026 is a short-term step back. Based on current order patterns and feedback from key accounts, we expect the softness and top-line results to extend into the second quarter. With that context, Synthetix Inc. partnering with them to drive adoption within their customer base in pulp and within their supply chain in wood composites than not have them. From a long-term perspective, each one of these accounts remains committed to the use of our biopolymers. I met personally with each of our key accounts through the start of the year, and their commitment remains the same. They're actively investing in programs in the short term and the long term with us, and they continue to tell us how important we are to their strategic objectives. We've built a strong foundation for future growth with the right partners in large multibillion-dollar end markets where our solutions offer value. We have the manufacturing capacity to generate significantly more volumes, and we have the ability to scale further with a capital-light model when that becomes necessary. Over the course of the past five years, we have successfully diversified the business into strategic end markets like pulp, tissue, wood composites, and personal care, and away from the legacy graphic paper market. So with that, let's dive into each of the end markets individually, starting with pulp, tissue, and paperboard. The geopolitical events in the Middle East have created short-term challenges for many players in the industry. The sector is experiencing inflationary pricing pressure on many of the chemical inputs needed to run operations and some that we compete with. Just as critical, supply and logistics are becoming more difficult. As an example, during a recent customer visit with a major pulp player, the head of sourcing left right after our meeting to travel to secure certain chemicals on an emergency basis. Our biopolymers solve long-term problems, and sometimes it takes a short-term disruption to highlight the security and volatility of traditional chemicals in order to drive change. Our biopolymers are a strong solution to these challenges. The level of activity to test and adopt our strength aids has never been stronger. Our Global Pulp customer took maintenance downtime on the primary line that uses our surf lock strength aids during the quarter. They used the opportunity to temporarily move production equipment to a second larger mill to conduct an extensive industrial scale trial using surf lock. The trial was a qualified success and feeds into their planning for broader rollout of their enhanced pulp product. Their planning around these events resulted in a temporary slowdown in orders to start the year, which impacted our volumes. Based on their feedback, we expect a return to previous levels with a continued commitment to grow toward the fiber-to-fiber objectives that they remain firmly committed to. They believe their fiber-to-fiber agenda is one of their two core growth pillars for their overall business. On the broader introduction of Surflok into end paper applications like tissue and packaging, our distribution partners are generating a significant level of trial activity leading to the healthiest, most robust pipeline we've ever managed. Our partners are all established, successful, and practical businesses in their regional markets. The time and dollars they are investing in introducing Surflok are a testament to what we can deliver. Over the next few months, we're scheduled to have more trials than we've ever had. Our distribution partners are firing on all cylinders. They're highly engaged with our team, facilitating these trials, including late stage, long duration trials, as well as trials with some of the largest tissue brand manufacturers in the world. In addition to these tissue trials, the partners have also made progress in other end markets, including packaging board and conventional writing paper. Surflock is continuing to deliver strong proof of its value and opportunities continue to progress positively on all fronts. Turning to wood composites, the international retailer that is backward integrated into wood panel production is experiencing specific supply chain challenges at the primary mill that's commercial with our Durabind resin. The same mill is also undergoing a significant capital upgrade program. These changes and challenges are unrelated to the performance of our solution. However, we've been advised to expect a slowdown through the course of Q2 and the first part of Q3. Senior leadership has been very clear with us about the importance of their sustainability goals and our part in helping them achieve those goals. They've continued to invest in existing and new developments with us for the short and long term. Their expanding usage of Durabind at the second line albeit off a smaller base, and we started activity at a third line they own, with trials expected later this year. In addition, we have kicked off a separate longer-term development program with them. It speaks to the commitment they're making in driving change both in their own operations as well as their supply chain partners. The importance of our biobased resin and its role in their agenda is clear. In the near term, We're navigating operational challenges that are impacting volumes, but the long-term relationship and the strategic directions remain intact. In personal care, our development and marketing partner, Dow, helped drive a strong fourth quarter for us. They built new supply chain channels, which is an encouraging sign for future growth. Volumes were softer in the first quarter as they drew down inventory, which we noted as a possibility on our last call. Based on their reports to us, they expect 2026 will be another growth year, supported by new customers and new applications. They remain as bullish as ever on the prospects for MaizeCare. And consistent with our other end markets, Dow continues to invest in developments to broaden their reach over time. With that, I'll turn it over to Rob to review the financials. Rob?

Thanks, Jeff, and good morning. Net sales were $3.8 million in Q1 2026, down 7% or $270,000 compared to the same period in 2025. The change was primarily due to lower sales volume, which reduced sales by $710,000 or 18%, partially offset by a higher average selling price, which increased sales by $440,000 or 11%. Lower sales volumes were primarily attributable to customer inventory destocking because of challenging conditions in their end markets and the timing of orders. Average selling price improved due to the impact of foreign exchange rates and product mix compared to the same period last year. Net manufacturing depreciation, gross profit as a percentage of sales was 30.6% in the quarter compared to 27.2% in the same period in 2025. The improvement was primarily due to higher average selling price partially offset by higher manufacturing costs. Gross profit was $930,000 in the quarter, up 7% or $60,000. This improvement was primarily driven by a higher average selling price partially offset by lower volumes and higher manufacturing costs. SJ&A expenses were $1.6 million in the quarter compared to $1.5 million in the same period last year. The 9% or $140,000 change was primarily due to higher salaries and benefits and other miscellaneous costs offset by lower repairs and maintenance. R&D expenses were $190,000 in the quarter compared to $380,000 in the same period last year. The change primarily relates to a $200,000 refundable SR&ED tax credit recognized in the current period relating to SR&ED expenses for the current and prior fiscal year in accordance with Bill C-15, which became law in March 2026. The annual benefit from this tax policy change is estimated to be $200,000 per year. R&D expense as a percentage of sales was 5% for Q1 2026. Our R&D efforts continue to focus on further enhancing the value of our existing products and expanding our addressable opportunities. Adjusted EBITDA loss was $340,000 in the quarter compared to a loss of $500,000 in the same period last year. The $160,000 improvement in the quarter was primarily due to higher gross profit and lower operating costs adjusted for non-cash items. As of March 31st, we had $29.8 million of cash in term deposits compared to $29.6 million as of December 31st, 2025. During the quarter, we invested $590,000 in into the NCIB to purchase and retire 245,000 shares. We have demonstrated our ability to responsibly manage our cash reserves through multiple cycles while continuing to invest in our long-term growth strategy. With that, I'll turn it back to Jeff for closing comments.