Mattr Corp.

Good day and thank you for standing by. Welcome to MATTERS' fourth quarter 2024 results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Megan McEachern, Vice President of Investor Relations and External Communications. Please go ahead.

Good morning. Before we begin this morning's conference call, I would like to take a moment to remind all listeners that today's call includes forward-looking statements that involve estimates, judgments, risks, and uncertainties that may cause actual results to differ materially from those projected. The complete text of Matter's statement on forward-looking information is included in Section 4.0 of the fourth quarter 2024 earnings press release in the MD&A that is available on CDAR Plus and on the company's website at matter.com. For those joining via webcast, you may follow the visual presentation that accompanies this call. I'll now turn it over to Matter's President and CEO, Mike Reeves.

Good morning, and thank you for attending our fourth quarter conference call. Today, Megan and I are joined by our Senior Vice President of Finance and CFO, Tom Holloway. In 2024, MATA continued to progress favorably against our key strategic objectives, transforming our operational footprint, securing the highly accretive acquisition of Ammer Cable, and lowering our cost of debt, all while navigating complex market conditions. Despite these market conditions, MATA delivered new annual revenue records in three of our four business lines and achieved year-over-year revenue growth within our consolidated continuing operations. We ended 2024 with our North American Production Modernization Expansion and Optimization, or MEO, program largely completed, having established and commenced operations at three new U.S. manufacturing sites during the year. We expect to complete the final stage, the relocation of production activity for our SureFlex business into a new Canadian site before the middle of 2025. These new sites form the foundation of our ability to deliver long-term profitable growth across Matter's business portfolio, while also significantly increasing our ability to serve U.S. customers from U.S. production sites. During 2024, we recognized $18 million of non-capitalizable expenses tied to our MEO strategy, which was the largest driver of a reduction in reported adjusted EBITDA from continuing operations when compared to the prior year. Late in the year, we announced a definitive agreement to acquire AmerCable, a transaction that closed in early January, adding a US production footprint and significantly greater scale to the wire and cable portfolio within our connection technology segment. Closure of this transaction causes connection technologies to become the larger of our two segments. Over the course of 2024, we also repurchased more than 3.3 million shares under our normal course issuer bid. In the aggregate, since the initial launch of our NCIB to the end of 2024, we've bought back nearly 12% of our stock. 2024 was a transformative year for MATA. the year in which we reshaped our production network to better serve our North American customer base and positioned ourselves for growth in 2025 and beyond. This would not have been possible without the hard work of our talented employees to drive and embrace change in the face of elevated market uncertainty. I could not be more proud of this organization and the committed and creative individuals who work here. With our transformation effectively complete, the entire MATA team are now focused on delivering maximum value from our enhanced operational footprint and our technology investments while efficiently onboarding and profitably growing the AMA cable business. Our infrastructure is now in place and we have significant opportunities to enhance efficiency over the years to come, elevating our margin profile and expanding our free cash flow. Turning to the fourth quarter, MATA saw normal seasonal slowing across all business lines as many customers moderated activity heading into the year-end, and ground conditions became less favorable for subsurface product installations. While North American critical infrastructure demand remained stable, as expected, we continued to see weakness across the North American onshore oilfield market, Eurozone industrial sector, and increasingly the global automotive market. Amidst these market dynamics, MATA delivered $208 million in revenue and $13 million in adjusted EBITDA from continuing operations. The company currently expects weakness in the oil field and automotive sectors to linger throughout 2025. Consequently, while we are confident our technology development investments will continue to enable market share capture regardless of underlying customer activity, we took steps during the fourth quarter to lower operating costs tied to these specific end markets by approximately $20 million annually. In parallel, we completed the establishment of and initial production within our new DSG Canusa facility in Fairfield, Ohio, while also concluding the shutdown of our aged Xerxes production facility in Anaheim, California. During the quarter, we also reopened our debt subscription receipts, closing on a private offering which was utilized to finance the Amacable acquisition subsequent to the year end. I encourage any investor seeking to better understand the Amacable business and how we believe it will favorably impact MATA to review the November 8th transcript of our conference call on this topic. We continue to believe that our investments in technology, operational efficiency, and enhanced production capabilities will support our ambitions to deliver annual EBITDA growth above 10%, are driving EBITDA margins above 20%, and that our acquisition of AmeriCable will serve to accelerate our progress towards these goals. Finally, we remain convinced that the intrinsic value of our business represents an excellent investment opportunity, and as such, we remained active under our normal course issuer bid throughout Q4, and expect to remain so moving forward. Q4 represented the most active purchasing period of 2024, with nearly 1.9 million shares repurchased. Looking at each of our segments, composite technologies' fourth quarter revenue moved up compared to 2023, with year-over-year gains in both FlexPipe and Xerxes, despite normal seasonal slowing. FlexPipe's continued share gains in North American onshore oilfield markets, including further large-diameter product adoption drove fourth quarter North American revenue to move higher year over year, significantly outperforming North American drilling rig and well completion counts, which fell approximately 6% and 21% respectively in the same period. Given current and forward strip commodity prices, we continue to expect North American onshore well completion activity levels in 2025 will average approximately 10% below 2024. Despite this anticipated market activity decline, our demonstrated ability to outperform key market activity indicators leads us to believe full-year 2025 FlexPipe revenue will be similar to 2024, with quarterly revenue levels likely to be relatively even throughout the year. We remain confident that the substantial investments made in FlexPipe technology, training, and domestic operational infrastructure over the past several years have positioned the business well for the future, despite near-term industry headwinds, and we remain on schedule to deliver additional product portfolio expansions towards the end of 2025, which are expected to add 50% or more to our global addressable market. Within the Xerxes business, Q4 revenue increased versus the prior year's quarter, with fuel tank shipments rising more than 25% year over year, as retail fuel customers better navigated the extended permitting process that encumbered convenience store construction in late 2023 and early 2024. Demand also remained strong for very large-diameter water storage and backup fuel tanks used in mission-critical applications such as the U.S. data center market, with this segment expanding its backlog for these products. Customer mix in the fuel sector was skewed to larger, lower-priced customers, as expected, And as previously noted, this mix is likely to remain similar through the first quarter of 2025, before moving favorably as we enter the second quarter construction season. We expect fuel tank shipments and related revenue during 2025 to follow a normal weather and ground condition driven seasonal cycle, where the first quarter of the year is generally the slowest quarter of the year, followed by a step up in the second quarter as ground conditions generally improve. Q4 saw our new flex pipe manufacturing site in Rockwall, Texas, and our new Xerxes manufacturing site in Blythewood, South Carolina, continue to increase output. Both locations are expected to demonstrate progressively greater productivity as we move through 2025. The segment will continue to strategically balance production between its U.S. and Canadian sites to optimize our total cost of delivery, including in response to any tariff impacts. As noted in our Q3 2024 earnings release, the segment adjusted its fixed cost base during the fourth quarter to reflect near-term oilfield market conditions. Also during the fourth quarter, the segment incurred approximately $3.6 million of non-routine expenses tied both to pre-positioning of finished goods inventory in advance of possible tariff implementation and to address a discrete customer issue. With production network upgrades and fixed cost reductions within the segment now complete, we are well positioned to regain revenue and margin momentum in 2025. Our demonstrated ability to consistently capture market share in the flex pipe business in spite of market softness, coupled with rising demand for our Xerxes underground storage tanks and growing backlog within fuel and water markets gives us a strong foundation for profitable growth in 2025. Within the Xerxes business, demand for premium underground liquid fuel storage tanks continues to rise. North American fuel marketers, many of whom are private, have outlined growth initiatives which we estimate will translate to an average capital spend increase of approximately 10% versus 2024, predominantly driven by new-to-industry store construction. Retailers' fuel margins remain healthy and steady demand for liquid fuels is expected to continue. with more than 98% of vehicles on U.S. roads relying on liquid fuel. We do not expect this percentage to change appreciably in the coming years as adjusting consumer preferences coupled with U.S. policy changes impacting electric vehicle subsidies and automaker production targets are likely to have a slowing effect on EV sales growth rates. There has been a constant rise in the number of active convenience stores with fuel in the U.S. over the last several years. Larger convenience store operators are investing to capture incremental customer share from smaller marketers by offering modern, well-lit, more appealing fueling sites stocked with an enhanced range of food and other convenience items. Data from recent years suggest this strategy is working, with those operators controlling 500 stores or more gradually representing a larger proportion of total active fueling sites. When combined with rising demand for replacement tanks as the existing population further ages, we continue to believe this market will enable growth within our Xerxes fuel business for years to come. Turning to connection technologies, year-over-year revenue increased by 11%, marking a new Q4 revenue record for the sector. This strong fourth quarter outcome was primarily driven by persistent demand in the North American industrial sector and continued market share gains with industrial and automotive customers, partially offset by slowing total automotive unit production and, as expected, lower shipments into infrastructure applications based on project timing. During Q4, the segment's SureFlex highly engineered wire and cable business maintained its strong demand for stock industrial products primarily from its Canadian distributor customers who are gradually rebuilding inventory levels as interest rates move lower and industrial activity trends higher. As expected, sales of these stock products came at below average margins, which caused overall margins within the business to remain at the lower end of its typical range. Our nuclear customers are signaling steady rising activity levels as we move into 2025 and beyond. and the business continues to invest in the qualification of incremental products to further expand its addressable nuclear market. The segment's DSG Canusa premium heat shrink tubing business secured new customers and captured incremental market share in its core industrial and automotive markets. These gains were partially offset by continued weakening of global vehicle production output as several customers took corrective action in the face of profitability challenges, particularly related to electric vehicles. In response to these lower activity levels, and in anticipation that this trend will linger throughout 2025, we took action to adjust our cost base during the fourth quarter. Despite concerns regarding automotive market activity, our current visibility suggests DSG Canoosa will deliver year-over-year revenue growth in 2025, driven by new customer capture and new product introduction, primarily in North America. We believe that electrification demands will continue to backstop momentum in North American industrial and infrastructure activity. Our already favorable view of opportunities within these sectors is further enhanced by our recent acquisition of AmeriCable, which closed on January 2nd and nearly doubles the revenue of our connection technology segment. Early views from the onboarding period have reinforced our belief in cross-selling opportunities between Ammer Cable and SureFlex and have affirmed our optimism regarding meaningful growth potential for Ammer Cable in the North American medium voltage market. We currently anticipate overall 2025 performance from Ammer Cable will approximate our pre-transaction expectations, with Q1 likely to be the strongest quarter of the year driven by specific timing of certain mining-related projects. The successful capture of market share in utility, nuclear, and non-stock industrial markets is a crucial component of the segment's longer-term growth and profit expansion strategy, and a key driver behind our substantial ongoing investment to modernize, expand, and bifurcate the segment's North American production footprint. During the quarter, the segment's DSG Canoosa heat shrink factory relocation to Fairfield, Ohio, was substantially completed. Our new shore flex wire and cable factory in Vaughan, Ontario, also commenced production in the quarter, and relocation efforts remain on track for mid-year completion. Lastly, Thermatite, our Brazilian pipe coating operation, which, following our announcement of its pending sale to Valeric, is now reported as discontinued operations, continued to execute safely and efficiently during the quarter, delivering sequentially higher revenue and adjusted EBITDA. Based on the sequencing of project activity, Thermotite is currently expected to deliver Q1 2025 revenue and adjusted EBITDA slightly below its level of performance in the fourth quarter of 2024. We expect to close on the sale of Thermotite in the coming months. Tom will now walk through the company's fourth quarter and full year financial highlights.