Omni-Lite Industries Canada Inc.

Thank you for standing by. At this time, I would like to welcome everyone to the OmniLight Industries Investor Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. I would now like to turn the conference over to Amy Petrano Palmer, CFO. The floor is yours.

Thank you. Good afternoon, and thank you for joining us. With me today is our Interim Chief Executive Officer, David Robbins, and Board Director, Alex Rizkov. 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 OmniLight's financial performance and operation as we filed our year-end 2025 results. After the remarks, we will open the call up for Q&A. If you have not received or seen a copy of the press release, which we issued yesterday morning, you can find 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 would like to remind you that today's discussion will or may include forward-looking statements. including information regarding OmniLight's performance based on our views of the company, business, and the environments in which they operate, our future plans, objectives, business prospects, and anticipated financial performance. These forward-looking statements are subject to future risks and uncertainties that could cause our actual results or performance to differ materially. We are also mindful of the risks and impacts and changes to the health of the general economy, including the effects on the U.S. financial market, U.S. global commercial aerospace markets, the U.S. Department of Defense budgets. All forward-looking statements should be considered in conjunction with the cautionary statements issued in our press release and the risk factors included in OmniLite CDAR filings. 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 reported financial results in accordance with international financial reporting standards or IFRS, during our call we may also discuss or reference non-IFRS financial measures, specifically adjusted EBITDA, and free cash flow. A reconciliation of these non-IFRS metrics, if applicable, is included in our CDAR filings and press releases. Lastly, and less noted, any reference or discussion of our financial results or metrics are in U.S. dollar. I would like now to turn the call over to Dave. Dave?

Thank you, Amy. Good afternoon, everyone, and thanks for joining us. I'd like to make a few comments about our fourth quarter 2025 performance. followed by comments on current business. Fourth quarter 2025 revenue of $4.1 million was an increase of 18% compared to the prior year fourth quarter. For fiscal 2025, revenue of $14.9 million was down 6% compared to FY2024. The adjusted EBITDA in the quarter came in at $61,000, representing a disappointing 1.5% margin. the weak quarterly performance resulting from operating issues at the Cerritos facility, which has since been resolved, as well as shipments at Monsite and DP Cast falling into Q1. Adjusted EBITDA for the FY 2025 was approximately $890,000, which again is a disappointment compared to 2024. Bookings for the fourth quarter of $5.5 million, however, resulting in a backlog of 8.8 million, is a record for the company. Monsite bookings in the quarter were particularly strong, driven largely by reorders for electronic components used on Eurofighter and a mobile ground-based missile and drone tracking radar program. The strong bookings trend outlook and pipeline for fasteners and electronics continues into 2026. With that, I'd like to turn the call over to Amy. Amy?

Thanks, Dave. Dave has addressed our revenue and outlook, so I'd like to take a few minutes to comment in regards to cash. Adjusted free cash flow, defined as free cash flow from operations minus capital expenditures, was a source of approximately $451,000 in the quarter as compared to a source of $248,000 in the prior year to date. Free cash flow was a source of $1.1 million, which was down compared to 2024 of $1.8 million. We did use approximately $55,000 of CapEx improvements during the year. We also acquired electronic components, or e-comp, with an acquisition net cost cash usage of $272,000. We finished the year with over $2.8 million in cash and no debt, which is a slight decrease over 2024. I would like to now turn the call over to Alex. Alex?

Thank you, Amy. Before we move to Q&A, I'd like to take a moment on behalf of the board to thank Dave for his leadership and contributions since becoming CEO of OmniLight in 2018. As we have previously announced, once we retain a full-time CEO, Dave will turn his focus to our long-time business. There's a significant potential there, and I'm excited to see the progress Dave can make as he dedicates his full attention to realizing that opportunity. With that, Morgan, we're now ready to open the call to questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star, then the number 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Your first question comes from Ruga Ndugul, With Shander, your line is open.

Hi, Dave. Hi, Alex. Hi, Amy.

Hi, Alex.

Dave, you're moving to a president of Monsight, which tells us that you think that there is growth opportunity there. Can you tell us what pieces you need to put in place to generate much higher profitable revenue growth at Monsite?

Pieces to put in place. Well, you know, we are currently operating at a pretty high margin. We expect the backlog at at Monzeit is high, and as I mentioned on this call, that the bookings forecast, we're expecting and have already, you know, received a lot of strong demand. So that's the thing that needs to put in place is the orders to come through, but we've got a pretty big backlog, so it's falling into place. with the orders coming through and a high expectation for a strong book to build in 2026. That's the single biggest driver, you know, as well as the rest of the company. Specifically, it's backlog driven. If backlog's up, the orders and the profitability follow.

Thanks, Dave. That's helpful. And just to put some numbers around that, should we expect Monzite's performance in 2026 to look more like 2024 or look more like 2025? And I guess if you could split it out, how much of the 8.8 million backlog sits in Monzite?

Well, we've probably not prepared at this moment to have an exact number for you, but it's a healthy proportion of the backlog is Monsite. You know, I'm glad in the way that you referenced 2024, so if you look at the progression of revenue from 24 to 25 now to expectations in 2026, there was a lot of you know, I would call front-end loading of revenue in 2024 for Monsite. Prior to the election, prior to changes in administration, and there were some delays in orders in 2025, which you don't get the order, you can't, you know, you can't deliver. So, strong bookings for three successive quarters, four successive quarters at Monsite, and then my talking about expectations in 2026 for that to continue, you know, points towards, you know, more like 2024, but not as a, you know, as a more driven with continued need and not maybe a front-end loading a little bit that happened in 24. The reason I mention drone programs and missile programs is is that they have a lot of legs. They're very evident today in today's world. So it's a good positioning that we feel in those programs.

Thanks, Dave. That's helpful. I just had a question for Alex as well. Alex, if we move from Monsight and we look at some of the other business units, I was trying to get a sense of – sort of the growth levers at the other business units. So Q4 results showed sort of organic growth in fasteners and castings and you've renegotiated pricing at DPCast. So what pieces do you need to put in place to generate much higher profitable revenue growth at, you know, forging fasteners at DPCast and even e-comp?

Well, maybe I'll touch on DPCast first. I think In the past, we talked about the meaningful, you know, contract that was renegotiated and pricing there. You know, inherently, GP is a lumpy business. So I would say on a quarterly basis, occasionally you will not see the full benefit of this new pricing translated into better results. But I would say if you look at 2026, we still continue to expect significant improvement in GP cap. I think Cerritos, we addressed the operational issues that we saw in the quarter. We stated those have been addressed. And so you should expect sequentially to see improvement in that business. I think as in any business, you do need, you know, increased demand. And, you know, I would say you can see that in terms of underlying ad markets that the demand remains healthy. There are some additional resources that we've already brought to both DP and Cerritos that we expect to translate into improved operating results, not necessarily, you know, immediately, but over time. So I would say those are initial elements. And obviously, you know, as we, you know, look for a full-time CEO, that's going to be a large part of their responsibility as well in operating. finding the right resources to grow both of those assets where I think the growth potential, you know, is significant. So that's how I'd describe it now. And for e-comp, I'll let Dave comment on that.

Yeah, specifically with e-comp, it's a very targeted program by program. You know, the investment thesis there was that they had a position – EECOMP had a position as a qualified supplier in several divisions of General Dynamics and Raytheon, and we're looking to leverage that on a program basis. We've made announcements about opportunities on a couple of particular programs, one including Aegis, which, you know, is a named program that has a lot of future. You know, as largely a sales organization, marketing, it's all about, you know, being on the right, you know, being on the right as an approved supplier on the right programs. And so we're well positioned there just by the nature of approval and ability to support, you know, these key programs.

That's perfect. Thanks very much, David. And one last one for me, and then I'll release the floor. So, Alex, you've retained a search firm for the CEO role to lead the next chapter of GoCare. Can you give us a sense of, you know, the profile that you're looking for? Is this someone with M&A and roll-up experience? And can you give us a sense of where you are in the process? Do you expect to have someone seated by a particular point this year?

So, if I had to distill it, I would say we're looking for a really strong operator above everything else. We believe our metalworking businesses that you referenced, DPMs, readers, have significantly higher earning potential than what we've demonstrated historically. So, we want someone who knows what great looks like and can drive organizations to that level. We don't have a specific timeline. We're not in a rush. As I mentioned in my remarks to your earlier questions, we have already brought additional resources to assist GTCAP and Cerritos. So the business is moving forward as we're conducting the search process, and our objective is to find the right person for that next leg of transformation. So, no specific dates that will take our time, but we're not just sitting around waiting. We're, you know, we're putting pieces in place as we search for a full-time CEO.

Thanks very much, Alex. Those are all my questions. Thank you.

Thanks. Once again, if you would like to ask a question at this time, please press star, then the number one on your telephone keypad, to join the queue. Your next question comes from Manny Kramer, a private investor. Your line is open.

Yes, Rob and Dave can answer. How does the oil price rise affect you and can you do something to increase your sales price due to the cost of oil getting higher?

Well, energy, you know, probably has the biggest impact, you know, at our DP task facility. Energy isn't a big part of – well, maybe a bit in our fastener production, too. But, well, it's not a huge, you know, part of our business. We're pretty efficient operators. But having said that, on your pricing, you know, we are looking – to, you know, given our positioning with our customers that, you know, generally, if we're not sole source, we're a small one of two or one of three sources. So, you know, we're looking to try in this environment where costs are rising everywhere, whether it's the price of gold, whether it's the price of material, you know, we're looking to at least extract our value that we're bringing in anticipation of higher costs of materials, reflecting that in our prices to our customers. So it's something we've particularly spent a lot of time, but especially in light of these events in the last 90 days even, looking at it again. But so, you know, pricing is is right up at the top of our agenda as we bid to our customers, and energy is just one of many, you know, prices of other commodities is another, labor costs, it's right in the mix.

Also, is any, are you doing anything about AI to reduce cost of labor?

Yeah, there's pockets, especially on the administration side of things. Sales help, we're incorporating some CRM tools that utilize AI to help us reach our customers and our footprint. On the operational side, I can't really point to too much that we're doing there, but more on the front end and sales and admin side.

Okay. Thanks very much.

That concludes our Q&A session. I will now turn the conference back over to Amy Petrano Palmer, CFO, for closing remarks.

Thank you again, everyone, for joining us today. We look forward to hosting Q1 financial results here shortly. And thank you again.

Bye-bye. This concludes today's call. Thank you for attending. You may now disconnect and have a wonderful rest of your day.