Omni-Lite Industries Canada Inc.

Ladies and gentlemen, and welcome to the OmniLight Industries Investor Conference Call. All lines have been placed on the listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach the live operator. At this time, it is my pleasure to turn the floor over to your host, Amy Petro-Palmer, CFO. Now the floor is yours.

Good afternoon, and thank you for joining us. With me today is our Chief Executive Officer, Dave Robbins. Our call is being recorded and will be available for playback, the details of which were in our press release issued yesterday. The purpose of this call is to provide an update on OmniRite's financial performance and operations as we filed our first quarter 2025 results yesterday, May 21st. After our remarks, we will open up the line for Q&A. If you have not received or seen a copy of our post release, which was issued yesterday morning, you can find a copy of it on our website at www.omni-light.com or email at d.robbins at omni-light.com to request a copy. Before we get started, I'd like to remind you that today's discussion will and may include forward-looking statements, including information regarding Omni-Light's performance based on our views of the company's business and the environment in which it operates. our future plans, objectives, business prospects, and anticipated financial performance. These forward-looking statements are subject to future risk and uncertainties that could cause our actual results or performance to differ materially. We are also mindful of the risks and impacts and the changes that help the general economy, including the effects on the current U.S. financial market, U.S. and global commercial aerospace markets, tariffs, and the U.S. Department of Defense budget. with the cautionary statements contained in our press release and the risk factors, including an omnibus to that filing. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. I'd also like to mention that in addition to financial results in accordance to International Financial Reporting Standards, or IFRS, During our call, we may also discuss or reference non-IFRS financial measures, specifically adjusted EBITDA and fee cash flow. The reconciliation of these non-IFRS metrics, if applicable, is included in our CDAR filings and press releases. Last and most noted, any reference or discussion of our financial results or metrics are in U.S. dollar. I would like to now turn the call over to Dave. Dave?

Thanks, Amy. Good afternoon, everyone, and thanks for joining us. I'd like to make a few comments about our first quarter 2025 performance, followed by comments on current business and outlook. First quarter 2025 revenue was $3.3 million, which was dominated by high production-level quantities of aerospace fastener components and a weaker electronics revenue compared to Q1 2024, which had included high levels of electronics businesses. The strong fastener revenue was driven by broad demand for aerospace fastener components and two new aerospace fastener components designed and qualified in 2024. Adjusted EBITDA for the first quarter of 2025 was $408K, which is a sequential increase over Q4 2024 and a decrease compared to Q1 2024. The sequential increase in EBITDA, most notably driven from operating leverage from good NICs and high throughput of faster components, and the Q1 2025 over Q1 2024 decrease was from reduced contributions from electronics. The Q1 2025 EBITDA level also marks another quarter that all locations have made a contribution to the positive EBITDA. Hooking for the first quarter was $5.7 million, which puts the backlog at $7.1 million as we go into the second quarter. The outlook for aerospace traction component delivery looks strong, anchored by firm order backlog that extends out to the end of 2025, and good demand signals for near-term spot buying. Demand for aerospace traction components has been and projected to continue to a single-digit percentage point higher increases. The focus on casting components continues to be screenlining its portfolio around components that have margin profile, pricing adjustments, and manufacturing efficiency versus high revenue growth in order for margin expansion. Electronic revenue and bookings have tempered some in between expected significant reorders from missile defense-related microelectronic sensor components and a new electronic system modernization switching component used on naval-based missile defense applications. With that, I'd like to turn the call over to Amy. Amy?

Thanks, Dave. Dave addressed the revenue and outlook, so I'll make a few comments regarding cash. Adjusted free cash flow, defined as cash flow from operation minus any capital expenditures, is a source of approximately $341,000. We did use approximately $14,000 for CapEx improvements in the manufacturing process during the quarter, and we do expect to continue to see a positive source of cash as we go through the year as receivables turn into cash. We finished the quarter with $3.1 million in cash and no debt, which is up $2 million over Q1 of 2024. This does complete our prepared remarks, and we would like to now open the call up for questions.

Thank you. The floor is now open for questions. If you do have a question, please press star 1 on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing 1. Again, ladies and gentlemen, that's star 1. Please hold while we poll. And the first question comes from Peter Emma. Go ahead, Peter. Your line is now live.

Oh, hi, guys. Can you maybe just expand a little bit just on the acquisition you guys made? If I look through, it looks like they already had deals with, and I'm not sure if this is referring to you guys, with Lockheed, General Dynamics, and Raytheon, but it looks like maybe they sell stuff through to Honeywell, and you guys don't have that exposure at this point in time, I believe. So maybe you can just talk about it in terms of, like, the timing or the reason behind it. What do you think the upside is of it in terms of, like, revenues and margins and stuff through that acquisition?

Sure. So, you know, it's an electronic component, saying for e-com, it's an electronic distribution that has very strong relationships, in particular with, you know, several divisions of General Dynamics. and Lockheed and Raytheon and some other defense crimes and their primary business is in satisfying you know hard to find components either through obsolescence or you know vanishing suppliers and has a profile similar to, you know, our electronics business, you know, on an OEM level in terms of margin. So it's hard to find parts, high-end performance parts, through a distribution model. And the calculus for the acquisition was that the strong relationships can be leveraged into new product designs that Monsite would um would deliver to help in the in the largest scope of um you know delivering modern uh electronic systems and satisfying their needs not through necessarily distribution but you know as an oem you know as an oem uh but having said that you know we're looking to continue to expand their footprint um even as a distributor. There's ongoing needs to fulfill as a lot of our aging electronic systems or just systems in general need to be deployed and upgraded and sustained. There's lots of need for niche electronics and subsystems and a diminishing source of of suppliers that know the regulations, the flow-downs, to be able to put advanced electronic or other components on these systems. It's a growing area in and of itself.

I think in the news release, you seemed fairly confident in terms of possible orders. So I don't know if you can give us any more clarity on that through that acquisition. Is that something that they've been working on? I'm just curious of the timing of it. Was it something where they didn't have the balance sheet or, you know, in terms of distribution or you felt like they were close on a few things and then you guys would help them push them along to get them to the finish line because you have a better balance sheet? I'm just curious on that.

Well, yeah, so their e-comp has been a customer of Monza. So there is a prior business relationship. It wasn't necessarily, you know, deep on all levels, but there was a relationship, and there has been and has and continues to be a joint effort on a couple of major programs, that, you know, that we expect to materialize. So, you know, in that sense, it's a win, you know, both for the distribution side because they're the channel, but also Monsite will be designing and building the product. So, you know, in a sense, it's a dual win. And there are at least one of those that we expect to deliver in 2025.

Okay, and then just in terms of that, you just mentioned the two new design wins that you kind of worked on in 2024 that you've seen some revenue from. Are those in nature like one-time orders, or do you think those are call-on orders, or how do you depict those two new design wins?

Yeah, we expect those to be follow-on orders and become kind of a portfolio, ongoing portfolio of aerospace fasteners. That doesn't always happen. We tend to not, by design, do any that are one-time in nature. But some have cycles that don't, you know, they're not ongoing every year, year in and year out. They might have a cycle of an on-year and then an off-year cycle. But these two particular ones we expect to have ongoing, continuing, you know, production levels. And it's a new product family. It's very similar to some of the historical parts we've made, but they are themselves a distinct new product. So in that sense, we expect them to blend in and become part of that, you know, legacy family. product portfolio that we have ongoing, you know, delivers of.

Okay. And would one of those have been one of the larger contracts in this recent quarter? Just because you had a bit of a customer concentration in this quarter. So I'm just wondering, is that one of the new ones or is that just something like a different time order and stuff that was a larger contract in the quarter?

Well, these were developed in 2024. You know, as I've mentioned earlier in other calls in general is that, you know, the time from qualifying to low rate of initial production or small level to production levels, you know, can be anywhere from, you know, 18 months down to maybe as little as six months. or it could be a little longer, but, you know, this one was a little faster, but it was a 2024 event, so, you know, I would put it right in the mix of what can happen from, you know, development phase.

Okay. Okay, that's it for me.

Thank you. Again, ladies and gentlemen, that's star one. To ask a question, please hold while we pause. And at this time, we have no further questions. I would now like to turn it back to Amy Viterano-Palmer for any closing remarks.

Thank you so much, and we appreciate everyone joining us today. Have a great afternoon.

Bye-bye. Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.