Omni-Lite Industries Canada Inc.

Ladies and gentlemen, and welcome to the OmniLite 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 Betrothama, 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 OmniLite's financial performance and operations as we filed our first quarter 2020 file 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 press release which was issued yesterday morning, you can find a copy of it on our website at .omnidashlight.com or email at .robbinsatomnidashlight.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 OmniLite's financial 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 targets. All forward-looking statements should be considered in conjunction with the customary statements contained in our press release and the risk factors including and OmniLite's feedback violence. The company disdains any obligations 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 C-Hash flow. The reconciliation of these non-IFRS metrics, if applicable, is included in our feedback violence 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 bathroom components and a weaker electronic revenue compared to Q1 2024, which had included high levels of electronics business. The strong fastening revenue was driven by broad demand for aerospace fastening components and two new aerospace fastening components designed and qualified in 2024. Adjusted EBITDA for the first quarter 2025 was $400.88, 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 next and high throughput of faster components and the Q1 2025 over Q1 2024 decrease was from the reduced contribution from electronics. The Q1 2025 EBITDA level also marks another quarter where all locations have made a contribution to the positive EBITDA. Hoping for the first quarter was $5.7 million, which puts the backlog at $7.1 million as we go into second quarter. The outlook for aerospace faster 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 fastening components has been and projected to continue to have single digit percentage points, higher increases. The focus on fastening components continues to be streamlining 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 the new electronic system modernization switching components 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 fee cash flow defined as cash flow from operations minus any capital expenditures is a source of approximately $341,000. We did use approximately $14,000 to cap tax improvements in the menu processing 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 to $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 one on your telephone keypad at this time. If your question has been answered, if you could remove yourself from the queue by pressing one. Again, ladies and gentlemen, that's star one. Please hold while we poll. And the first question comes from Peter Emma. Go ahead, Peter, your line is now long.

Oh, hi guys. Can you maybe just expand a little bit just on the acquisition you guys made that if I look through, it looks like they already had deals with and I'm not sure if it's referring to you guys, with Lockheed, General Dynamics and Racion, 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 and what you think the upside is of it in terms of like revenues and margins and stuff through that acquisition.

Sure. So it's a electronic component for ECOM. It's an electronic distribution that has very strong relationships in particular with several divisions of General Dynamics and Lockheed and Racion and some other defense clients. 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 Monzaid would deliver to help in the largest scope of, you know, delivering modern electronic systems and satisfying their needs, not through necessarily distribution, but, you know, as an OEM, you know, as an OEM. But having said that, we're looking to continue to expand their footprint, even as a distributor. There's ongoing need to fulfill as a lot of our, you know, aging electronic systems or just systems in general, needs to be deployed and upgraded and sustained. There's lots of need for niche, you know, electronics and subsystems and, you know, diminishing source of suppliers that, you know, know the regulations, the flowdowns to be able to, you know, put, you know, advanced electronics or other components on these systems. So it's, you know, it's a growing area in and of itself.

Yeah. And I think in the meantime, you seem fairly confident in terms of possible orders. Adam, 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 the, to get them to the finish line to get you have a better balance sheet? I'm just curious on that.

Well, yeah, so their e-com 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 Monza will be designing and building the product. So, you know, in a sense, it's a dual win. And there are, there are at least one of those that we expect to deliver in 2025.

Okay. Okay. And then just in terms of that, you just mentioned the two new design wins that were 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 follow-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 airspace 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, but these two particular ones, we expect to have ongoing continuing, you know, production levels. And it's a new product, 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 legacy product portfolio that we have ongoing delivers us.

Okay, and one of those being 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 rings or is that just something like a different time order and stuff that was a larger contract in the quarter? Well,

you know, these were developed in 2024. You know, as I mentioned earlier in other calls in general is that, you know, the time to, from qualifying to low rate of initial production or small level to production levels, you know, can 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, the star one to ask a question, please hold while we poll.

And at this time, we have no

further questions. I would now like to turn it back to Amy Vaterno Palmer for any closing remarks.

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

Thank you.