Mattr Corp.

Good day, and thank you for standing by. Welcome to the Matters Second Quarter 2025 Results Webcast Conference Call. At this time, all participants are on 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, today's conference is being recorded. I would now like to turn the conference over to your speaker today, Megan McEachern, Vice President, Investor Relations, 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 second quarter 2025 earnings press release in the MD&A that's 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 Matters President and CEO, Mike Reeves.

Good morning, and thank you for attending our second quarter conference call. Today, Megan and I are joined by our Senior Vice President of Finance and CFO, Tom Holloway. During the second quarter, Matters' continuing operations delivered 5% year-over-year adjusted EBITDA growth while navigating rising macroeconomic uncertainty and a rapidly evolving tariff landscape. In parallel, Matter successfully achieved all initial onboarding objectives surrounding our recently acquired Amacable business and concluded the final steps in our multi-year fundamental transformation with the completion of our North American production footprint, modernization, expansion, and optimization investments, and the sale of our Brazilian pipe coating business. With these key strategic initiatives behind us, MATTER is now positioned to focus intensely on enhancing our cash generation and margin profile by levering technology investments to accelerate high margin market share gains, by enhancing workforce experience and utilizing our modernized facilities to drive elevated operational efficiency, and by moving with pace to minimize any negative impacts of substantial and unpredictable U.S. tariffs. The sustained strength of our balance sheet ensures matters ability to navigate current market uncertainty. We are committed to further lowering net debt while remaining alert to capital deployment opportunities which accelerate shareholder value creation, including via organic growth investment, carefully timed accretive acquisitions, and the continued repurchase of shares under our NCIB, which we exhausted and renewed during the quarter. Looking at each of our segments, Connection Technologies achieved a new second quarter record for both revenue and adjusted EBITDA, with sales nearly doubling and adjusted EBITDA increasing by 28% compared to the previous year, despite the impact of over $7 million in non-capitalizable MEO costs tied to the final establishment of two new production facilities. Year-over-year adjusted EBITDA improvement was driven by the addition of Ammer Cable, which more than offset the final quarter of segment MEO cost recognition, temporary disruption to SureFlex product shipments as the business completed its move into a new manufacturing site, and higher manufacturing costs in DSG Canoosa as its new Ohio site continued to build workforce scale and proficiency. Wire and cable revenue moved slightly down sequentially. primarily driven by previously anticipated reductions in AMR cable sales into specific large mining projects, which concluded in late Q1, and by lower shipments of ShoreFlex products as the business navigated temporary bottlenecks tied to relocation of production activity into a new facility. With this move complete, output from the new ShoreFlex site has rebounded to pre-move levels in early Q3, and is expected to move beyond pre-move levels during the second half of 2025. While tariff and broader economic impacts caused further slowing in baseline activity from some customers in mining and onshore oilfield markets during Q2, MATA's AmerCable team were successful in securing offsetting industrial and marine orders in the quarter. In addition, Amercable and SureFlex together secured several initial orders arising from our cross-selling strategy and have already built a significant backlog of industrial and infrastructure opportunities for 2026. Looking forward, the recent introduction of U.S. tariffs on certain copper products are likely to impact SureFlex and Amercable, both directly and indirectly. Copper products and related services are MATA's largest single material input cost. with between $100 and $130 million spent annually on such items. In both businesses, we purchased raw copper from U.S. and Canadian sources, rely on third parties to provide conversion and refinement services in both the U.S. and Canada, and then consume these refined inputs in both the U.S. and Canada. We preemptively took actions to reduce the potential risk tied to tariffs prior to August and are taking further steps designed to lower the impact of tariffs moving forward. Despite these mitigating actions, it is realistic to expect incremental tariff and logistics expenses will raise the cost of our finished wire and cable products if current tariffs prevail, costs that we anticipate passing onwards to customers. While we generally believe our competitors in the wire and cable sector are likely to be similarly impacted, In certain submarkets, we may acquire a modest market advantage or disadvantage from these tariffs. It is not yet clear how customer buying behavior will be impacted by broadly higher pricing, but we anticipate some degree of non-critical order slowing or deferral during the second half of 2025 as supply chains rebalance. Given the uncertainty of future changes to current tariffs or the potential implementation of counter tariffs by Canada, It's too early to offer more specific details on future impacts. Performance in the segment's DSG Canoosa business was modestly lower year over year and similar sequentially, as continued tariff-driven disruption to North American automotive activity and weakness in Eurozone manufacturing activity was largely offset by market share gains in both industrial and automotive markets. The business's new facility in Ohio made further output and efficiency gains in Q2, and while it is slightly behind its anticipated mid-year output level, we remain confident that the facility will reach efficiency equivalent to the prior Toronto site around year-end before moving beyond these levels in 2026. During the quarter, the segment concluded its final MEO activities, with production equipment installation occurring on time and on budget, within the new ShoreFlex Ontario and DSG Canoosa Ohio sites. The company expects the segment's third quarter adjusted EBITDA will be similar to the second quarter as the contributions from first half mining projects roll off, commodity price driven declines in some mining and oil field activity persist, and copper tariff driven input cost escalation and corresponding wire and cable customer ordering behavior changes unfold. Offsetting these factors, in the third quarter, the segment will not incur NEO costs, anticipate stronger shipments of SureFlex products now that their production site relocation is complete, and expect steady demand for higher margin nuclear products. We maintain our constructive outlook on longer term electrification driven demand across the segment and are very pleased with our enhanced position to serve this demand through the union of Ammer Cable and SureFlex. In the six months since Matter acquired Ammer Cable, our teams have completed all intended back office integration efforts with a small volume of remaining actions to be completed by year end. Ammer Cable has already delivered incremental sales into industrial applications, most notably in the data center sector, where Ammer Cable previously had no direct market presence and now has a secured backlog in excess of $10 million. Close collaboration between SureFlex and Ammer Cable sales teams have established a pipeline of additional incremental opportunities, which, given the typical length of order cycles, has the potential to convert into revenue during the early part of 2026. Turning to the composite technology segment, second quarter revenue decreased by 5% year over year, driven primarily by lower sales of FlexPipe into international markets. partially offset by higher flex pipe sales in the U.S. and increased sales of Xerxes fuel products. Segment adjusted EBITDA decreased by 10% year over year, primarily a result of lower revenue, a less favorable weighting between flex pipe and Xerxes, and higher manufacturing costs tied to the segment's new and newly refurbished production facilities, which are continuing to build workforce scale and proficiencies. These impacts were partially offset by a lack of MEO-related expenses in the current quarter. Xerxes revenue in the second quarter increased both sequentially and versus the prior year, reaching a new post-COVID quarterly record as customer demand for premium fuel storage and water management products remains high. Across our retail fuel, data center, fire suppression, and broader infrastructure customer base, Orders for Xerxes market leading solutions have exceeded revenue generation throughout the first half of the year, and we currently have the highest delivery backlog in this business since 2021. I've noted in prior calls that while Xerxes benefits from one of our company's most robust demand profiles, it also faces matters most significant labor expansion requirement. Seeking to establish a new workforce in its recently established South Carolina manufacturing facility, while enhancing production teams across its site network, following the right-sizing actions taken in 2023 and 2024. Progress on this front fell short of our internal targets during Q2, limiting the pace at which tank production could accelerate and weighing on margins. Entering the third quarter, we've seen substantial improvement in hiring rates, although this will likely take until the fourth quarter to translate into meaningful output increases. Workforce development will remain a focal point within Xerxes for the remainder of 2025. While total tank production capacity is currently slightly lower than expected, customer demand is exceptionally strong, and we believe the full Xerxes manufacturing network can reach new record levels of output during 2026. Q2 saw FlexPipe continue to deliver strong performance in its primary US onshore market. onboarding incremental customers and setting a new revenue record for its large diameter product offering, despite an 8% year-over-year decline in U.S. well completions. FlexPipe's international revenue remained at the lower end of its recent historical range, leading to a modest decline in overall FlexPipe revenue versus the second quarter of 2024, which benefited from substantial international deliveries. Fruit oil has generally continued to trade in a range below 70 U.S. dollars per barrel, with OPEC Plus gradually increasing output and U.S. domestic production reaching a new all-time record in Q2. These conditions have continued to drive progressively lower customer capital spending and well completion activity in North America and have limited the initiation of large new international projects. Against this backdrop, FlexPipe has consistently outperformed its primary market measures, driven by the introduction of new product sizes and capabilities. I'll speak more about this in a moment. Productive output from FlexPipe's new Texas facility continued to elevate during the quarter, meeting internal expectations. While the business will carry elevated levels of manufacturing costs tied to this new location for the remainder of 2025, The site remains on track to reach normalized levels of efficiency during 2026, and freight savings arising from the Texas site are expected to virtually offset increased manufacturing costs by late this year. Urgent, nimble action by the FlexPipe and Xerxes teams have so far limited tariff impacts within the segment, and entering Q3, we now have access to cost-competitive, non-Chinese-origin supply chains for all of the segment's input materials. Looking forward, the company expects the segment's third quarter adjusted EBITDA will be modestly below the second quarter as further North American oil field activity declines are partially offset by continued strength in demand for Xerxes products and further technology driven FlexPipe share gains. The FlexPipe business has proven highly resilient in the face of unfavorable market conditions these last two years. The strong performance of recently introduced five and six inch product variants enabled substantial new customer capture virtually offsetting declines in u.s well completion activity between 2021 and the first half of 2025 flex pipe has more than doubled its revenue per completed well in north america despite this impressive performance the opportunity for further flex pipe growth remains robust with a majority of global gathering line applications still served by traditional steel pipes Within today's North American composite pipe market, over one-third is tied to products larger than six inches in diameter, which FlexPipe will introduce early in 2026, adding more than 50% to its immediately addressable market. Our commitment to technology development gives us confidence that FlexPipe's growth story has many years to run. Tom will now walk through the company's second quarter financial highlights.