Mattr Corp.

Good day and thank you for standing by. Welcome to the MATTER first quarter 2025 results conference call. 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 will need to press star one one on your telephone and wait for your name to be announced. You will also hear an automated message advising that your hand was raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Megan McAchran, VP of Investment Relations and External Communications. You may begin.

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 first quarter 2025 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. Thank you for attending our first quarter conference call. Today, Megan and I are joined by our Senior Vice President of Finance and CFO, Tom Holloway. The first quarter of 2025 saw Matter leverage its unique product portfolio to deliver strong business performance despite geopolitically driven uncertainties across many end markets. With customer adoption of recently released technologies accelerating robust performance from Amacable in its first quarter as a Matter brand, and our newly established manufacturing facilities operating at improved levels of efficiency. Q1 saw continuing operations revenue and adjusted EBITDA rise by 52 percent and 80 percent, respectively, year over year. MATA benefited modestly during the first quarter from acceleration of purchasing decisions by some customers ahead of early April U.S. tariff announcements. While MATA's own USMCA compliant products were not directly impacted by these announcements, The uncertain outlook for global trade and macroeconomic conditions has undoubtedly impacted customer confidence across much of the critical infrastructure landscape. Consequently, the company currently expects demand for its products during the second quarter of 2025 and likely beyond will be unfavorably impacted. Although the full-year business impact remains unclear, we currently anticipate the second quarter of 2025 will see matters continuing operations revenue and adjusted EBITDA move lower sequentially. While the company cannot control the business environment within which it operates, in recent history, the talented teams across our organization have proven nimble, resilient, and cost-conscious in the face of challenging conditions. As demonstrated by our first quarter performance, Matha's technology-driven products, differentiated positioning in key markets, strong customer value proposition, and rebalanced modernized manufacturing footprint create the opportunity for market outperformance regardless of prevailing conditions. Our hard-earned balance sheet strength enables MATA to navigate market uncertainties with confidence, remaining committed to technology development, to enhancing cost and operational efficiencies across the organization, to extracting commercial synergies from our newly expanded wire and cable portfolio and to creating long-term value for our shareholders, including by additional accretion acquisitions and the continued repurchase of shares under our NCIB. Looking at each of our segments, connection technologies set new segment revenue and adjusted EBITDA records in Q1, growing sales by over 100% and adjusted EBITDA by over 70% versus the prior year. These results benefited from the early quarter edition of AmeriCable and continued share gains by DSG Canusa, although segment margins were tempered by nearly $3 million of non-capitalizable NEO costs during the quarter. Market share gains in the segment's DSG Canusa premium heat shrink tubing business were achieved in both industrial and automotive markets despite declining global vehicle production as original equipment manufacturers, particularly in North America, began to curtail activity in response to tariff announcements. While the quarter benefited from stable deliveries into industrial markets, late in the quarter, the business began to observe some slowing in customer orders in response to the macroeconomic uncertainty. As expected, AmeriCable's revenue in 2025 is front-loaded. The business delivered a strong first quarter, supported by significant deliveries into specific mining projects which are not expected to recur in the coming quarters. Baseline demand for AmeriCable products entering Q2 remains stable. While AmeriCable's U.S.-made products are predominantly sold domestically, some products are exported to countries such as Canada, Chile, and China. Consequently, the business has the potential to be impacted by import duties levied by these countries in response to U.S. tariffs. and has observed some order delays from overseas customers, which will likely impact the second half of 2025. Our SureFlex business started 2025 with strong sales into nuclear applications, and based on order backlog, continues to expect nuclear sales this year will grow by low double-digit percent versus 2024, before rising further in the years to come. I'll speak more about this particular market sector later. In parallel, the business also continued to experience robust demand for stock industrial products during Q1, primarily driven by Canadian distributor customers who have gradually been replenishing their inventory levels. As anticipated, the sales of these stock products were at below average margins, resulting in overall margins within the business remaining at the lower end of the typical range for the quarter. Progress continued on the segment's final remaining MEO projects during Q1, with production equipment installation occurring on time and on budget within the new ShoreFlex Ontario and DSG Canoosa Ohio sites. Both locations are already producing, and all planned equipment installation will be completed by the end of Q2. At that time, the recognition of non-capitalizable MEO expenditures will cease. The timing of invoices related to these final activities caused MEO spend in the first quarter of 2025 to be modestly lower than previously anticipated. Consequently, MEO spend recognition is expected to be higher in the second quarter of 2025, impacting reported segment margins in the quarter. Our outlook for electrification-driven demand across the segment remains favorable, and with the acquisition of Amacable, we are even better positioned to fulfill our customers' needs. The first 90 days of AmeriCable onboarding has solidified our view of longer-term cross-selling and growth opportunities between SureFlex and AmeriCable, including meaningful growth potential for AmeriCable in the North American medium voltage market. Looking more closely at the nuclear industry, across the globe, we observe demand for lower emissions and energy security, and a consequent renaissance in nuclear power generation. Our SureFlex business has long been considered a provider of choice for highly engineered wire, cable, and assembly solutions in can-do reactors, which are primarily located in Canada. The safety critical nature of SureFlex's unique can-do product portfolio showcases the depth of technical capability within the business. Nuclear refurbishment projects are long cycle events with low risk of delay arising from economic changes. While this end market currently represents a modest percentage of Matter's revenue stream, this predictability has underpinned strong nuclear revenue growth within our wire and cable business over the last five years. And with 16 CANDU refurbishment projects expected over the next 10 years, Matter is well positioned to continue this growth trend. Beyond CANDU, the Canadian nuclear sector is experiencing a broader resurgence. with planned investments in both large-scale and small modular reactor projects in the coming decade. Major projects include Ontario Power Generation's proposed new builds at their Wesleyville site, and recently approved small modular reactor construction at their Darlington site, as well as large-scale reactors planned at Bruce Power's Site C project. The Site C project would be the first large-scale nuclear build in Canada in over three decades. Each refurbishment or new build project presents the opportunity for MATA to capture up to $15 million of premium SureFlex product revenue. SureFlex and its subsidiary, Kanata Electronic Services Limited, are proudly Ontario-based manufacturers with over 90 years of combined nuclear experience. In partnership with Atkins Realis and with Westinghouse, SureFlex remains committed to advancing Canadian nuclear technology and strengthening our role in both domestic and international nuclear supply chains, regardless of reactor technology type. We continue to invest in the development and qualification of highly engineered products suitable for non-CANDU reactor designs. And over the mid and longer term, we believe demand for our nuclear products will be a meaningful driver of growth and margin expansion. We stand ready to serve as a trusted partner to utilities large engineering contractors, and technology developers, driving value through local expertise and nuclear-grade innovation. Turning to the composite technology segment, first quarter revenue increased by 11% year-over-year, driven primarily by increased demand for Xerxes fuel storage and water management products and higher sales of FlexPipe products into the U.S. market. FlexPipe benefited from a modest degree of order acceleration from some U.S. customers who sought to de-risk potential early April tariff introductions. Segment-adjusted EBITDA rose by 40% year-over-year as the burden of prior year MEO cost recognition was eliminated and newly established production facilities continued to deliver progressively improved efficiency. Within the Xerxes business, first quarter revenue increased substantially versus the prior year, despite normal seasonal weather effects. Retail fuel customers continue to demonstrate a strong appetite for investment in new convenience stores and are successfully navigating the permitting challenges which so heavily impacted late 2023 and early 2024. The first quarter also saw sales of HydroChain stormwater management products more than double versus the prior year quarter, and continued strong demand for very large-diameter water storage and backup fuel tanks used in mission-critical applications, such as the U.S. data center market, with the segment expanding its backlog and its production capacity for these products. During the quarter, the business incurred elevated freight expense as customers requested accelerated shipment of Canadian-made tanks across the border ahead of potential tariff announcements. Xerxes products are not currently subject to any U.S. tariffs, and consequently, we expect business activity will generally follow a normal seasonal pattern in 2025, with a sequential rise in revenue expected in Q2. Q1 saw FlexPipe continue to capture new customers and gain market share in North American onshore oilfield markets, primarily through ongoing large-diameter product adoption in the U.S. Total FlexPipe revenue was modestly below the first quarter of 2024, which benefited from a large international order. However, Q1 2025 saw FlexPipe deliver a new record for U.S. revenue as the business once again significantly outperformed the U.S. well completions count, which fell approximately 7% year over year. Entering the second quarter, we have observed crude oil prices move down into a range that likely triggers further deceleration of North American onshore well completions. Our full year outlook now anticipates year over year activity declines of approximately 15%, which compares to our prior outlook of approximately 10%. We continue to anticipate further market share gains in the second quarter, but the combination of additional activity reductions and modest pull forward of revenue into Q1 yields an expectation that second quarter flex pipe business performance will be modestly lower than the first quarter. Composite technology's first quarter results reinforce our confidence that substantial recent investments in flex pipe technology and in domestic operational infrastructure for both business lines have positioned the segment for strong future performance. We remain on track to introduce additional large diameter line's global addressable market. With the segment's physical footprint transformation completed and new site productivity rising, we remain well-positioned to serve the North American market with our composite solutions in the years to come. Our thermotype business, reported as discontinued operations, delivered another strong quarter, with revenue of $23 million and adjusted EBITDA margins of 32%. Late last year, we announced a definitive agreement to sell the Thermotype business to Valeric, and we continue to expect this transaction will close around the middle of the year. Tom will now walk through the company's first quarter financial highlights.