Firan Technology Group Corporation

I would like to welcome everyone to the FTG fourth quarter 2025 NLS call. All lines have been placed on mute. There will be a question and answer session following the call. If you would like to ask a question during this time, simply press star followed by one on your, sorry, telephone keypad. If you would like to withdraw your question, please press star two. Please note that this call is being recorded. I would now like to turn the call over to Mr. Brad Born, President and Chief Executive Officer of FTG. Mr. Born, you may proceed.

Thank you. Good morning. I'm Brad Born, President and CEO of Foreign Technology Group Corporation, or FTG. Also on the call today is Drew Knight, our Chief Financial Officer. Before we go any further, I must caution you that this call may contain forward-looking statements. Such statements are based on the current expectations of management of the company and inherently involve numerous risks and uncertainty, known and unknown, including economic factors and the company's industry generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the company. The listeners caution to consider these and other factors carefully when making decisions with respect to the company and not place undue reliance on forward-looking statements. The company does not undertake and has no specific intention to update any forward-looking statements, written or oral, that may be made from time to time by or on its behalf, whether it was a result of new information, future events, or otherwise. 2025 was another successful year for FTG. We had record revenues, EBITDA, and earnings. and we made great progress in integrating flight into FTG and positioning it for future success. More specifically, in 2025, FTG accomplished many financial goals, including our bookings were $209.9 million a year, marking a 14% increase over 2024. Our backlog at year-end was $148.5 million, a 21% increase from last year. Our revenue was $191 million, an 18% increase over 2024. Our adjusted EBITDA was $32.7 million in 2025, up 27% from $25.8 million last year. Our adjusted net earnings were $13.5 million in 2025, an increase of 31% from 2024. Our operating cash flow was the least payments for $13.7 million in the year. And we maintained a strong balance sheet with net debt of $8.3 million, or 0.3 times trailing 12-month EBITDA, including $11.2 million of government loans. Other accomplishments in 2025 included we took steps to grow our defense business. The FDG circuits recently qualified for two significant classified defense programs. Deliveries expected to start in 2026 and ramp up through 2027. FTG overall will also benefit from increasing customer demand on legacy defense programs. We diversified our revenue sources to reduce our exposure to U.S. terrorist risks for our non-U.S. sites. During the year, we ramped up deliveries in support of the C-919, China's first domestic single-aisle passenger jet. Also during the year, the Havilland Aircraft in Canada selected FTG to provide updated cockpit control panel assemblies for the new Canadair 515 aerial water bomber. FGG completed first deliveries of some units to de Havilland on this program in late 2025. Took steps to create value from the flight acquisition. We obtained supplemental type certificates, or STCs, for the AFERS Edge Plus program for Boeing 737 in Canada, U.S., and China, and for Airbus A320 in Canada, Europe, and China. The transition Transition of Afer's Edge to in-house production is now underway, and FTG recently delivered its first units to an airline in Asia, marking key milestones in value creation from the flight acquisition. And we strengthened the FTG leadership team. We continue to bolster our leadership team, including appointing a new CFO, Drew, who's with us today, executive vice presidents for both the circuits and aerospace segments, as well as some key site leaders, due to retirements and other organizational growth. Also during the year, FTG appointed Russell David and Christine Forget to the FTG Board of Directors. Russell has served as a board member and senior executive of corporations and as a senior partner at Deloitte in corporate finance and M&A advisory. Christine has served as a board member and senior executive of several corporations, including as VP Global Procurement at Bombardier. Drew will provide more details on our 2025 and Q4 results shortly. Let me turn to some external items. Our end market demand remains strong. Airbus delivered 793 aircraft in 2025. But more importantly, they're looking to ramp to over 1,000 aircraft annually in the next few years. Airbus has a backlog of over 8,000 orders, which is over a decade worth of production at current production rates. At Boeing, they shipped 600 planes in 2025, up from 384 in 2024. 2024 was low due in part to the safety incident on the Alaska Air 737, as well as the machinist strike they had later in the year. But looking forward, Boeing has plans to ramp their production to over 800 planes annually in the next few years. Boeing's backlog is almost 6,000 planes, so also over a decade's worth of orders at current production rates. While 2024 might have been a low point for Boeing, it has become clear that Airbus is outperforming Boeing in the air transport market in terms of aircraft shipped, and they hold a 60% market share based on order backlog. This has implications for FTG's plans going forward. In the business jet market, Bombardier reported a high single-digit shipment increase for 2025. They shipped 157 aircraft in the year. They're also pushing hard to add a defense component to their business, and they've had some success to date in selling their business jets for defense applications. In the helicopter market, Bell Helicopter reported a 20% revenue increase in 2025, driven by increased defense programs. All this bodes well for us as we looked at future demand in the coming years. I also looked at results from some key defense contractors. For instance, Lockheed Martin reported a 6% revenue growth in 2025. And also related to defense, Boeing was selected to develop and produce the next generation air dominance fighter. This is good news for them. Based on the supply chain approach on the previous air superiority fighter, the F-22, I would expect the sourcing for this will be U.S.-only suppliers. We did have content on the F-22 when it was in production through our Chatsworth facility. We are better positioned now to increase our content on U.S.-only procurements with our five U.S.-based sites. Also importantly, there are new commitments from all NATO members, including Canada, to rent defense spending to 3.5% of GDP with another 1.5% for defense infrastructure. And Canada said they will increase defense spending in 2025-26 to 2% of GDP. All of this indicates significant increases in defense budgets for all European countries and Canada. The recent creation of a defense investment agency in Canada to accelerate and streamline future procurement activity is positive for the industry here. And the U.S. is also looking to increase defense spending next year. Looking at the longer term, Boeing's most recent 20-year forecast for commercial aerospace showed significant long-term industry growth, and it continued to show 20% of all new aircraft deliveries going to China and close to 40% to Asia, as has been the case in the recent forecasts. Business jet market has also already seen traffic recover. A recent business jet market forecast from Honeywell similarly predicts growth in this market by 5% in 2026 and 3% annually over the next decade. So, as we have said for many years, FTG's goal is to participate in all segments of the aerospace and defense markets as each moves through their independent business cycles. It is not often all segments are growing. That seems to be the case now. Beyond this, let me give you a quick update on some key metrics for FTG for our fourth quarter and full year. First, as already noted, the leading indicator of business is our bookings or new orders. Our bookings were $210 million in the year. This resulted in a backlog of $148 million at year end. Full year sales were $191 million, which is up 18% over last year. Two-thirds of this growth is driven by the acquisition of flight earlier this year and the balance from organic growth. In our aerospace business, sales were up 43% in 2025 compared to last year. The increase was about 90% due to the acquisition of flight. Sales in Toronto and Tianjin were up while activity in Chatsworth was down in the year due to timing of some orders. There was a significant ramp-up. and C919 shipments in the year, as well as assemblies for both Boeing and Airbus aircraft in 2004. The C919 shipments benefited both Toronto and Tianjin, while other shipments benefited Toronto. On the circuit side of our business, sales were up 6% over last year. All of this is organic growth. Our strongest growth in the year was in our joint venture in China, followed by our Haverhill and Chatsworth sites. Minnetonka had strong demand, but our ability to ramp production was constrained by adding and training new production staff. Overall at FTG, our top five customers accounted for 51.7% of total revenue in the year. This compares to 58.4% last year. It's great to see the drop in customer concentration as we add sites and expand our customer base, partly through the acquisition of Flayton. Airlines were two of our top 20 customers in the year due to the flight acquisition. Also interesting to note are the top 10 customers, six are customers shared between Circus and Aerospace. We like to see the shared customers as a means for maximizing penetration of these customers by selling both cockpit products and circuit boards. Given the actions of the new administration in the U.S. of implementing tariffs, it's also good to see that one of our top customers is outside of the U.S., and this is in China. Another eight have operations outside of the U.S. Well, on this topic, 69.9% of FTG sales are to U.S.-based customers. This includes sales by U.S. sites as well as sales from FTG sites in Canada or China. This compares to 78.3% last year. While the sales grew by 5% in the U.S., they grew by 46% in Asia, 140% in Europe, and by 35% in Canada. as we've benefited from previous efforts to expand globally, including things like our content on the C919 aircraft in China and acquiring flight sales globally. The increase in sales outside the U.S. are helpful in the event of any tariffs that might impose on our non-U.S.-based sites. Our goal is to continue to grow our non-U.S. revenue for our non-U.S. sites. In 2025, 36% of total revenues came from our aerospace business, compared to 29% last year. The aerospace business share increased due to the acquisition of flight. I'd now like to turn the call over to Drew, who will summarize our financial results for 2025, and afterwards, I will talk about some key priorities we are working on.

Drew.