Atlas Engineered Products Ltd.

Good morning, everyone. Welcome and thank you for joining Atlas Engineered Products Q2 2026 earnings call. I am Jake Boma, an IR Consultant for AAP. Today on the line discussing AAP's Q2 2026 financial results and company highlights are the company's President, CEO and Founder Hadi Abassi and CFO Melissa MacRae. Following their remarks, we'll open up the call for an analyst Q&A session. Before handing over the call to Hadi, please note that information we present today could contain forward-looking information that is based on management's expectations, estimates, and projections. Please consider the risk factors, including those in the filings made by AP on CDAR when reviewing this information. Also, all amounts discussed will be in Canadian dollars unless otherwise noted. Hadi, please proceed with your remarks. Thank you, Jake.

Good morning, everyone, and thank you for joining us. The second quarter of 2026 reflected the strength and resilience of our team, delivering a stronger financial performance over the prior year and the first quarter of 2026. While the market conditions in Ontario and British Columbia remain competitive, Coating and order activities continue to be encouraging, and we are seeing benefits from the investment we have made in sales management and operational capabilities. We have made important progress in our first robotic truss manufacturing facility in Clinton, Ontario, with equipment installed and commissioning underway as of late this July. We anticipate delivering our first truss orders from this facility in September 2026. We continue to report high quoting volumes from the beginning of 2025 and continuing in 2026 up to the end of July 2026. Quotes exceeded $176 million compared to roughly $159 million and $125 million up to the end of July 2025 and 2024. respectively because of the coating activities has been significantly higher in both 2025 and early 2026 than the previous years. Order volumes have also been increasing up to the end of July 2026. Orders total over $49 million up from more than $33.7 million in the same period of 2025. However, While orders are being placed and we are noticing that there are more need time on these orders than during a higher busy market and deliveries. Maybe in the subsequent quarters instead of within the same quarter as the order was received. We are also seeing typical seasonal recovery in the market. for the summer and anticipate discontinue to in the fall of 2026. We remain cautiously optimistic that the HST relief on new housing in Ontario seeks to have a spark some market recovery but anticipate signs of long-term recovery will become more evident to the winter and early 2027 during a typically slower construction season. AEP continues to drive organic growth to expand its focus on wall panel manufacturing and offering customer complete project packages that include roof, floor trusses, wall panels, and engineered food products. Additionally, we are assessing the benefits of adding loose lumber material and wall panel installation to its offering to customers. These strategies can help reduce our exposure to recessionary pressures by increasing potential sales volume per order. In addition to its organic growth strategy, we continue to evaluate acquisition opportunities across North America. Each potential acquisition is evaluated based on its geography, results, and growth potential. With that, I would like to now turn the call over to Melissa MacRae, CFO of EAP, to provide further commentary on the financial performance and position through Q2 2020. Thank you, everybody.

Thank you, Hadi, and welcome everyone. Results for our Q2 3 and 6 months ending June 30, 2026 include revenues of $16.2 million for the quarter and $25.5 million for the year to date, gross profits of $2.8 million for the quarter and $3.1 million for the year to date, normalized EBITDA of $1.7 million for the quarter and $1.2 million for the year to date. Revenues increased due to the expansion of sales team for market growth and the acquisitions of Trustworthy and Pinterest later on last year. Gross profits increased in the quarter, driven by the increase in revenues. For the year to date, gross profits are still decreased due to the results of the first quarter, which were driven by winter weather conditions and industry market conditions in Ontario and BC. Through the winter, the company has maintained certain costs, which drive gross profits down unfortunately. But the company will typically work to offset these costs with as much winter work as possible and the ability to increase margins later in the year as seen by the increase in gross margins from 3% in the first quarter to 17% in the second quarter. These are typical seasonal trends in our industry. Normalized EBITDA continued this positive trend moving from the first quarter 2026 to the second quarter and for the second quarter of 2026 compared to the second quarter of 2025. This increase in normalized EBITDA dollars was driven by increased revenues, consistent margins, and slightly reduced operating expenses, along with the add-backs related to one-time costs of the new facility, of the new automation facility. Still, not all expansion costs have been added back if they are anticipated to be ongoing costs that are needed to scale up with an automated facility, such as the sales team and some management support. The decrease in normalized EBITDA for the year-to-date results is driven by first quarter results, the same as gross profits. The winter work costs and seasonality of our business can be seen in normalized EBITDA results already moving from the first quarter to the second quarter of 2026. Q1 2026, we had a negative 9% normalized EBITDA margin, whereas the natural seasonal increase along with organic growth moving into quarter two resulted in an 11% normalized EBITDA margin. While moving forward, the remainder of the year is typically seasonally stronger than both the first two quarters of the year. I'd now like to open up the call for your questions. Operator, please provide the appropriate instructions.