Metatek-Group Ltd.

Thank you for standing by. This is the conference operator. Welcome to the Meditech Group Limited fourth quarter and fiscal year 2025 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star then one on your touch-tone keypad. You'll hear a tone acknowledging your request. Should you need assistance during the conference call, you may reach an operator by pressing star, then zero. I would now like to turn the conference over to Dennis Fong, Investor Relations. Please go ahead.

Thank you, Operator. On the call today are Mark Davies, Meditech CEO, and Nick Morgan, CFO. Before we begin, Meditech would like to remind listeners that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the company's views with respect to future events. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on the risks, uncertainties, and assumptions related to the forward-looking statements, please refer to Meditech's public filings, which are available on CDAR. During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please see our MD&A for additional information regarding our non-IFRS financial measures, including for reconciliations to the nearest IFRS measures. Please note that unless otherwise stated, all references to any financial figures are in U.S. dollars. And with that, I'll hand the call over to Mark.

Good morning, everyone, and thank you for joining us. And welcome to Meditech's first earnings call as a public company. Becoming public is an important milestone for Meditech, but I view it as a continuation of the work we've been doing over many years. Fiscal 2025 was a foundational year for the company, one where the underlying operating model became much clearer as our flagship EFTG was deployed at scale. And momentum in demand aligned strongly with the long-term trends we have built to serve. We delivered record revenue, nearly doubling year over year, more than double gross profit, and achieved a long-run gross margin target of approximately 60%. Adjusted EBITDA margin was 39%, reflecting the operating leverage inherent in the model as we scale. All of this was driven primarily by the utilization of a single instrument, the EFTG, which is an important point as we look ahead. A diversified and growing logistic backlog gives us flexibility to balance work across regions, seasonal variability, and projects, which in turn drives higher utilization. That flexibility allows us to manage risk and optimize the business to produce meaningful financial outcomes. And this is central to how we think about building long-term value at Metatech. Since this is our first public earnings call, I want to briefly step back and frame the opportunity. Metatech was built to solve a very specific problem, how to bring underground wealth into view in a way that enables real economic and policy decisions. That wealth can be hydrocarbons, critical minerals, water, hydrogen, helium, or geothermal. But the common thread is that governments and national entities need high-quality subsurface data on a timely, cost-efficient basis to make informed, capital-intensive decisions. We operate in a period where energy security, critical minerals, and supply chain integrity are national priorities, not cyclical exploration themes. Once a country decides it needs to understand its subsurface, that often becomes a sovereign level program rather than a one-off exploration project. That's why our work more closely resembles mapping infrastructure than a traditional exploration deployment. Our SDG systems, are uniquely positioned to serve this need. We are able to acquire high-resolution subsurface data from the air at scale, combining data quality, speed, and economic value in a way that isn't otherwise achievable. Importantly, that means helping clients eliminate unnecessary survey work in some areas while efficiently mapping vast regions that would be impractical or impossible to cover using traditional methods. That ability to reduce uncertainty and risk early and focus investment where it matters most is what ultimately drives demand for our work. The momentum we've seen is reflected in the growth of our adjusted backlog. Since early March, adjusted backlog has increased by approximately 23 million USD to around 69 million. Importantly, that increase was driven primarily by repeat business with an existing nation-state customer in Africa. That's a pattern we see consistently. Clients typically begin with a regional survey, then return to high-grade priority areas, and over time, the work evolves into broader multi-year programs. To date, every customer we've worked with has signed up for repeat work, and our adjusted backlog continues to provide visibility into what we expect to convert over the next 12 to 18 months. Our results are driven primarily by how we deploy and sequence capacity, rather than by underlying demands. Therefore, growth in the business is not linear through the year. Activity builds as systems are deployed and projects progress, which means results tend to be weighted towards the middle and back half of the year. In early 2026, that dynamic reflects deployment timing and external factors. Our second system, the DFTG, was deployed during the second half of Q1 to its first customer contracted in the UAE. and operated as planned, completing approximately 12% of the scheduled data acquisition before the project was paused due to regional events. We have now agreed with the client to return once conditions are low, and in the meantime, the DFTG is being redeployed to another region with its next project expected to begin in the second quarter. Importantly, this kind of flexibility is fundamental to how we operate the business. as we routinely move capacity across regions as conditions evolve. The ability to redeploy systems, manage risk, and keep assets productive across regions is exactly how we nearly doubled our revenue in 2025. To summarize, fiscal 2025 was the year Metatech showed that its operating model works at scale. And this model is ready to be expanded. Today, demand is not the constraint. capacity is. With two instruments now in the field and a growing backlog driven by repeat soaring customers, the opportunity ahead is about execution and scaling that capacity against sustained demand. Through our recent IPO, we successfully raised the capital we set out to raise, giving us exactly what we need to execute our plans. That capital strengthens our balance sheet and allows us to accelerate deployment, add capacity, and convert backlog in a disciplined way as business scales. With that, I'll turn it over to Nick, who will walk through the financial results in more detail, discuss capital allocation, and provide additional color on geographic performance, margins, and costs.

Nick. Thanks, Mark. I'll spend a few minutes walking through the financials. But rather than running line by line through the income statement, I wanted to focus on what actually mattered during 2025. What drove the results, what changed structurally in that business, and how that sets us up for future. Full year revenue for 2025 was $23.7 million, up 99% year over year. From a geographic standpoint, the mix shifted materially through the year. Approximately 59% of revenue was generated in Southeast Asia compared with 2024 when Africa represented 58% of revenue. That shift reflects the greater diversification of our client base and the expanding number of regions where we're executing sovereign level programs. What 2025 clearly demonstrated is the revenue generating capacity of a single system when it's deployed consistently against sufficient backlogs. Almost 90% of the 23.7 million revenue was generated by the ESTG alone, operating across multiple regions over the course of the year. At steady utilisation, one system is capable of generating in the order of 20 to 25 million of annual revenue, depending on project mix and operating conditions. And that's not theoretical. That's what we delivered in practice in 2025. Looking specifically at the fourth quarter, revenue was 7.5 million, up 69% year-over-year, driven primarily by work in Southeast Asia. That included project activity across Malaysia and Singapore and illustrates our ability to work across multiple nation-state customers within a region and keep a system productively deployed as projects move through different phases. Achieving this level of income with one system is important, as it shows how the business grows from here. As we move into 26 and 2027, growth is driven less by changing the model, but more by adding capacity. The DFTG, as Mark described, is now in service, having deployed recently in the second half of Q1, and our older ISTG instrument, which is currently being refurbished by Lockheed Martin, and is capable of adding further revenue capacity of a similar order of magnitude is targeted for deployment at the beginning of 2027. Moving down the income statement, gross profit for the year was £14.2 million, or 60% of revenue compared to 51% for the prior year, and for the fourth quarter represented 62% of revenue. The margin expansion is primarily a function of scale and utilisation, and we are pleased to have gross profit margins already at our long-term operating targets. It's also worth noting that gross profit reflects the direct operating costs of running the aircraft and instruments, including crews, logistics, insurance, and maintenance required to keep those assets productive in the field. In addition, certain projects executed through local partners, including work in Nigeria, carry a different cost structure, where some in-country costs are borne by the partner. In those instances, reported revenues are lower, but our gross margins are higher. Adjusted EBITDA for the year was £9.2 million, representing an adjusted EBITDA margin of 39% compared with 18% in 2024. For the fourth quarter, adjusted EBITDA margin was 44%. As we add more instruments, we expect operating leverage to drive margins up towards the 50% range over time. It's also important to note that adjusted EBITDA reflects the operating cost of running the aircraft and instruments in the field. including costs that in some asset-heavy businesses are often catalyzed rather than expensed. For example, adjusted EBITDA includes maintenance costs on the aircraft and the instruments. As a result, a higher proportion of adjusted EBITDA converts to positive operating and free cash flow, which is a key feature of the model as capacity scales. In fiscal 2025, we generated 7.3 million in cash from operating activities, which compares well to the $9.2 million of adjusted EBITDA. This cash flow was used to support $1.2 million in CAPEX, the build-out of the new DSTG, and paid down $2.8 million of debt. Below EBITDA, it's worth understanding the material costs associated with the revaluation of the debentures and their associated warrants. These debentures were issued in 2024 to support the purchase of instruments, With the increasing value of the company since then, the greater the value accrued to the debentures, and this is shown as a finance cost through the profit and loss and the current liability on the balance sheet. These debentures and warrants were converted as part of the recent IPO. Now turning to the balance sheet. At December 31, 2025, we ended the year with £1.4 million of cash and borrowings of £6.5 million. With the gross proceeds from the IPO in March raising 35 million Canadian dollars, we used a portion to pay down the outstanding borrowings. The remaining capital is being directed towards the next phase of capacity expansion. This includes the initial milestone payments on two new EFTG instruments, our highest resolution system, with cash flow funding the remaining bill costs over the next two to three years. And the final use of the IPO proceeds is the refurbishment and redeployment of the ISTG into the marine environment. With this investment funding, the next stage of growth and debt paid off, the balance sheet is well positioned to support disciplined growth as additional systems come online. To sum it up, 2025 demonstrated the operating and financial model at scale. Strong revenue growth driven by utilization, expanding margins, high cash conversion, and a growing backlog to support additional capacity. Our focus now is on disciplined execution, converting backlog into profitable growth as additional capacity comes online. We're now ready to open the call for questions, operator.

Thank you. We'll now begin the analyst question and answer session. To join the question queue, you may press star then one on your telephone keypad. you'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question is from Aravinda Galapatige with Canaccord Genuity. Please go ahead.

Thanks for taking my questions and congrats on the IPO. I'll start with the backlog, you know, nice addition there up to March. Can you perhaps sort of revisit the pipeline, talk about sort of, you know, to the extent that you can, conversations that are being had and the prospect of sustaining that backlog even as you convert components of it back into revenue, perhaps start there.

Okay, maybe I'll stop on that and Nick will follow after it. Yeah, as you said, Arundhra, we added $22.5 million to that adjusted backlog. And it's safe to say that the sales process is often 12 months, 18 months. So we knew that was in our pipeline, and it was just a case of bringing that forward and executing the final bit of the contract or the final contract for that. We have an exceptionally strong kind of pipeline in the hundreds of millions of dollars. And what we're going to do is we, over the next kind of 12 months, similar-sized projects will be converted to our adjusted backlog. Nick, do you want to add anything to that?

I think the only thing to say is that that current backlog will be delivered over the next 12 to 18 months. So, as Mark said, the size of the projects dropping in during that time should allow us to keep growing the backlog as we continue and then deliver instruments against it.

Great. Thank you. And then just to get a sense of the cadence through the year, you know, given some of the realignments, you know, on account of the geopolitical tensions, can you talk about what your expectations are in terms of how kind of top line would be you know, the various, the seasonality, I guess, would play out and then connected to that, how the gross margins would move around as well. Just a sense of the cadence there, please.

So, I'll start on the geographical side of it. You know, it is something that we put mitigation measures in place and operate in procedures, not just with kind of geopolitical, you know, activity that's going on at the moment, but also from a weather standby. So operationally, we do shift the instrumentation and systems around according to geographical locations and should we have to pivot due to any events, you know, with the strong backlog that we have, we can pivot to effectively the next taxi off the rank. Nick, do you want to talk about cadence and how that converts?

Yeah, sure. I think you're absolutely right, and we've mentioned it before, that it is a lumpy project-based business. So within the sort of tight confines of quarters, you're going to get big variances. And if you look at last year, the second half of the year was much stronger than the first half of the year. That's also partly driven by the budget cycles of our clients. So we always anticipate sort of Q1 to be the lowest quarter, and then it builds throughout the year. and the margins we look at on an annual basis. So, yes, of course, there's going to be some variance alongside top-line variance on a quarter-by-quarter basis.

Thank you. And then perhaps just a quick follow-up for Nick. With respect to the CAPEX, you know, the installments that you have to make on the upcoming instruments, can you just remind us what those pieces are and potentially what the annual number could be?

Sure, yeah. So we obviously raised capital in the IPO, and the use of those proceeds was initially, the first one was to pay down the debt, as we mentioned here, and that's actually been done. The next item was to put the first milestone payments on the new EFTG instruments. So these ones, we're in discussion with Lockheed now, and we expect to get that first payment. That's going to be sort of in the region of around $5 million in the next month or so. And then it's all about the refurbishment and redeployment of the ISTG, which will be $13 million plus. And that's expected to occur over this year. So we can deploy that instrument by first thing 2027. So in total, the capex for this year across those main items is going to be in sort of $25 million plus region.

That's helpful. And is there anything we should think about from a working capital perspective that That's material. I mean, it hasn't been in the past, but just... No.

Yeah, obviously, we keep an eye on things. We're pretty good with our clients. They are government clients, and I know that, you know, typically people start to ask questions on working capital constraints with government-type entities. But we keep milestone payments throughout our contracts. We have deliverables, and it allows us to keep a fairly tight rein. So we're not anticipating anything too bad over the year.

Okay, great. Thank you. I'll pass the line. All the best.

Thanks. The next question is from Russell Stanley with Beacon Securities. Please go ahead.

Good afternoon. Thanks for taking the question. Just with respect to the DFTG and the disruption to UAE, I'm wondering your outlook for 26. How many distinct projects do you have currently scheduled? I understand where the backlog is. I'm just wondering how many different project transitions you might need to make.

Well, the first thing is to say that in North Africa, Middle East, we only had one project, which was the one that was in UAE. The other projects are Sub-Saharan Africa, South Africa, and Southeast Asia. The size of those projects, you know, does vary. And Nick, do you want to say something on the size and the quantum?

Yeah. Looking across, I mean, broadly speaking, we always say about our projects, we're aiming to be in country and operating for sort of no more than two months. Put mobilization on that. I would always think and plan for sort of a project a quarter is a good rule of thumb. Sometimes there are longer projects. But I think with the two instruments working fully from Q2, you can sort of do the maths on how that would work out, two instruments and three quarters from that point forward. Historically, project value can vary quite a bit. So last year, I think our smallest project in value terms was about 2.4 million, 2.5 million, and our largest project was about 10 million. So again, that speaks to the lumpiness that we can get at the top line.

And I would just add one thing to that as well is that we try and enforce the duration of the project. We have these multi-phase, multi-year programs, and some of our clients would like us to get through that in one go. But what we try and do is constrain them to anywhere between four and six weeks maximum so that we can move on to our next client. But again, going back to the geographical kind of positioning, we would lump projects geographically so that we would minimize that mobilization time.

All right. That's great, Keller. Maybe my next question just around the orders for additional EFTG systems, the milestone payments, you know, coming up. I guess when would the rest of that associated CapEx be due?

Yeah, Nick, that's one for you.

Yeah, sure. Typically, we work with Lockheed, and that's what we're negotiating at the moment, to work out the milestone payments and the cadence of that investment. But from our experience previously, it's pretty steady throughout the build time. So if you're looking at two to two and a half years for an instrument, you're going to spread that, you know, $13 to $15 million relatively evenly across that period.

Got it. Maybe one more for me, and I'll hand it off just to on the year-over-year revenue growth doubled on a really modest increase in OPEX. And you talked about where your long-term EBITDA margins should come out. Just wondering what kind of OPEX increase you're expecting in 26 with, you know, cost of being a public company on top of whatever real growth you envision. Thanks. Yeah, go ahead.

Yeah, sure. So, As we said, our gross profit margin, so just look at the top of the P&L, the gross profit margin was 60% last year, and we hope to do a bit better than that, but our target is always 60%, so let's see how the year turns out on that with the increase in growth. You're absolutely right, I think, if the direction of your question was, yes, we've built in more costs as being a public company, so that's going to sit between the gross profit margin and the EBITDA line. We achieved 39% last year on our EBITDA margin. We have stated we want to get to 50%, and we believe that's possible this year. So that does take into account, yeah, those increased costs that we're going to see as a public company.

Okay. That's all for me. Thanks, and congrats again. Thank you.

As there are no further questions, this concludes the question and answer session. I'd like to turn the conference back over to Dr. Mark Davies for closing remarks.

Yes, well, thank you, everyone, for joining our first reported event, and I look forward to doing the same in mid-May for our first quarter report. Thank you, everyone.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.