Volatus Aerospace Inc.

Welcome to the Volatus Aerospace earnings call. I am Danielle Gagne, head of global training strategy and business development for Volatus Aerospace, and the moderator for this call. Before we get started, just a reminder that we welcome your questions, and we'll be having a Q&A session at the end of the presentation. You're welcome to submit your questions at any time during the webinar by clicking on the Q&A box that's located at the bottom of the webinar screen and typing in your questions. If we are unable to answer your questions today, we'll be happy to connect with you after the program. This presentation will be recorded and made available on our investor website within 24 hours. I would also like to take a moment to point out that certain information set forth in this presentation contains forward-looking information, including future-oriented financial information and financial outlook, and actual results may differ materially. The risks, uncertainties, and other factors that could influence actual results are described in the presentation, in the press release, and in our MD&A filed with Canadian regulators. This presentation also contains non-IFRS measures, which are also outlined in the presentation. There is a full disclosure on page 2 of this presentation, which we encourage you to read and can be found on Vladis' investor website at investor.ca. The company considers the earnings call part of its routine disclosure to educate investors on information contained in the quarterly results and related MD&A. If you have any questions, please feel free to contact us and the Flatus Aerospace IR team at InvestorRelations at FlatusAerospace.com. Now that that is done, it is an honor to introduce Glenn Lynch, CEO and Abeno Sidney, CFO of Volatus Aerospace.

Thank you, Danielle, and thank you everyone for joining us this evening. Q1 2026 represented an important operational and strategic advancement period for Volatus. During the quarter, we continued executing across several key priorities, including activation of our Mirabelle manufacturing strategy, expansion of our proprietary autonomy and software platforms, the launch of our Skydra counter-UAS simulation and planning software, continued defense market positioning, advancement of multiple NATO and sovereign capability initiatives, and the activation of our U.S. operating base in Tulsa, Oklahoma for the American oil and gas industry. While reported revenue for the quarter was broadly consistent year over year, we believe the quarter should be viewed in the context of temporary delivery timing impacts, affecting certain defense-related programs rather than as a reflection of underlying demand. Importantly, those contracts remain active. Deliveries have now begun transitioning in Q2, and management expects to continue or continues to expect strong growth through the balance of fiscal 2026. I'll now turn the call over to our CFO, Abhinav Singhvi, to review the quarter in more detail. Abhi? Thank you, Glenn.

For Q1 2026, Volatus reported revenue of approximately $5.6 million, broadly consistent with the first quarter of the previous year. Gross margin improved to 35%, representing the strongest first quarter gross margin performance in the company's history as a consolidated entity. Working capital remained stable at approximately $36 million. We also exited the quarter with approximately 32 million in cash. Overall, the quarter reflected stable underlying demand, continued operational discipline, and deliberate investment supporting a defense, manufacturing, and autonomy growth strategy. Q1 revenue was impacted by temporary supply chain disruptions affecting the timing of deliveries associated with certain defense-related programs. This included portion of the previously disclosed NATO-aligned ISR training systems contract. These timing impacts were primarily associated with evolving geopolitical conditions and cross-border supply chain availability earlier in the quarter. Importantly, the contracts remain active, customer relationships remain strong, and we do not anticipate any reduction in contract value or the scope. Delivery activities associated with these programs have already begun and are transitioning into Q2 as supply chain conditions have normalized. We believe it is important to emphasize that this was fundamentally a timing issue affecting the revenue recognition, not a weakening of underlying demand or execution capability. Management therefore continues to expect meaningful revenue growth through the balance of fiscal year 2026. One of the most important operational highlights for the quarter was the continued margin expansion. Despite relatively flat revenue, gross margin improved from 32% to 35%. This reflected improved service mix, operational efficiency, and disciplined direct cost management. At the same time, Q1 represented a concentrated period of strategic investment. These investments included defense, business development, engineering and technical hiring, both on the hardware and the software side, manufacturing activation, platform commercialization, and continued advancement of vCortex AI and Condor Excel program. Management views, these expenditures are delivered growth stage investment designed to support the long-term scaling across defense, sovereign manufacturing, autonomy, and software commercialization initiatives. This slide highlights the EBITDA and the detailed understanding of the cost structure. So I'll take a moment walking everyone through what's driving the cost structure in Q1 because the IFRS net loss figure viewed in isolation does not fully reflect how management is operating and scaling the business. Net loss for Q1 was 6.6 million compared to 4.3 million in same quarter last year. To better understand the operational performance, we adjusted several non-cash and non-operating items. This included depreciation and amortization, interest, share with compensation, certain one-time expense and R&D were also excluded. The R&D reflects the direct investment into vCortex AI, Condor XL, and also the software layer. Initiative management views as long-term capability creation supporting the future revenue growth and expansion of its revenue pillars into the software segment. After these adjustments, adjusted EBITDA loss for Q1 was 3.1 million compared to approximately 2 million in 2025 of Q1. The year-over-year variance of approximately 1.2 million was concentrated in four categories, each directly tied to a growth strategy. First was marketing and branding investments. There was increase of approximately $353,000. primarily associated with defense sector positioning, transitioning to a major exchange, and strategic market visibility initiative. Importantly, they were milestone-driven expenditures, not a new operating project. Second were travel and engagement costs increased by approximately $200,000. These were reflection of direct engagement with NATO-aligned procurement officials, and stakeholders across the geographies. Thirdly, the external partner costs increased by almost half a million dollars, including specialized legal, technical business development, and certification costs included as we scale into the defense segment. Lastly, the personal cost increased by approximately $300,000, which was concentrated around technical and engineering hire and defense-related roles directly supporting the program execution and long-term capability expansion. More importantly, we believe that the company's path towards adjusted EBITDA improvement right now is driven primarily by revenue growth. The $4.5 million of the NATO ISR tranche has transitioned from Q1 to Q2 into delivery, and the NATO RPAS training programs and contracts, including the multi-year contract announced in April, collectively provide revenue visibility that has not been reflected in Q1. We believe that expected EBITDA performance to improve progressively as the programs convert into recognizable revenue through the balance of 2026. This slide basically highlights the overall capital deployment strategy and the balancing strength of the organization. The cash deployment during the quarter was primarily associated with activation of a made-able facility, which Glenn will highlight more deeply, engineering and platform development, production readiness, inventory preparedness, and also strategic growth initiatives aligned with the defense and autonomy roadmap. Importantly, working capital remains stable, and the company remains in compliance with all applicable debt components. We also strengthened the company's institutional capital market profile during the quarter, through graduation to TSX and continued simplification of our capital structure. Overall, we believe the company remains well positioned from a liquidity and capital flexibility perspective. With that, I will turn the call back to Glenn.