Magellan Aerospace Aktie

Hello, and welcome to the Annual Meeting of Shareholders of Magellan Aerospace Corporation. Please note that today's meeting is being recorded.

If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of the same. If you disclose personal information of another person in today's meeting, you'll be deemed to represent and warrant to Computershare and the corporation that you first obtained all required consent for the disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure.

During the meeting we will have a question-and-answer session. [Operator Instructions]

It is now my pleasure to turn today's meeting over to Murray Edwards, Chairman. Mr. Edwards, the floor is yours.

Thank you very much. Good afternoon, ladies and gentlemen. I am Murray Edwards. And as Chairman of Magellan Aerospace, I'd like to welcome you to our 2026 Annual Meeting.

The meeting will now come to order. I will ask Elena Milantoni, Corporate Secretary of the Corporation, to act as Secretary of the Meeting; and Josette Koffyberg, representative of Computershare Investor Services to act scrutineer.

In order to ensure that the formal business proceeds efficiently, we have asked certain employee shareholders to make and second motions. This is designed to facilitate the progression of the meeting and is not intended to discourage comments.

The meeting has certain forward-looking statements. And as such, before we begin, we'd like to remind everyone that, in our remarks today, we'll make statements about information that are not historically factual information. This information may be considered to be forward-looking information. Statements about forward-looking information are by their very nature not guarantees of Magellan's future operation and financial performance and are subject to risks and uncertainties. Actual results could differ materially from what is currently expected.

While Magellan Aerospace believes expectations are reasonable, they are based on risks and assumptions regarding a number of factors. Details regarding these risks, these assumptions and factors, as well as the different implications about the material factors, risk and assumptions that could cause our actual results to differ materially from what is currently expected to be found in Magellan's annual information form, which is available on SEDAR+ website. Magellan does not assume any obligation to revise any forward-looking information except in accordance with applicable securities law.

The next item is procedural matters. We have a couple of quick housekeeping points. The business matters we conduct at this meeting are the items set forth in the notice of meeting and the management proxy information of the Corporation both dated March 17, 2026, that was mailed, e-mailed or otherwise made available to shareholders. Only shareholders as of the close of business on March 17, 2026, the record date, or their duly appointed proxy holders, are entitled to submit questions and vote at this meeting.

All questions submitted related to an item of business to be voted on in the meeting will be accepted by the Secretary, and then she will forward them to us for review. Any such questions will be answered at the time the item is presented for discussion.

In addition, at the conclusion of the formal meeting, Mr. Phil Underwood, President and Chief Executive of the Corporation, will make a short presentation on Magellan's 2025 fiscal year and plans for the future.

Next, notice of the meeting. We received an affidavit from Computershare Investor Services as to the mailing of the notice and access document and the instrument of proxy to shareholders. We direct that this affidavit together with copies of the documents mailed to the shareholders be kept by the Secretary with the minutes of this meeting.

In terms of the quorum of the meeting and the bylaws of the corporation, business may be transacted at this meeting if 2 persons are present at the meeting and hold or represent by proxy no less than 10% of the total votes -- total number of issued shares of the corporation, entitled to vote in the meeting.

The scrutineer has confirmed that a quorum is present for the meeting. The scrutineer's report shows there are 61 proxies cast for shareholders representing or holding by proxy 49,130,374 shares or 86.08% of the shares which are entitled to be voted present at the meeting. The scrutineer's report will be kept with the records of this meeting.

Accordingly, there is quorum and shareholders present. I now declare the meeting is regularly called and properly constituted for the transaction of business.

For the transaction of business, all voting today will be conducted by way of a poll over the Internet. We hereby declare polling open and it will remain open until the last item of business of the meeting has been completed. You may vote by clicking the vote tab and selecting your voting direction from the options shown. Your vote has been cast when the check mark appears. You do not need to vote at the meeting if you've already voted by telephone, Internet or mail. However, if you wish to change your vote or have not placed your vote, you may vote online during the meeting while the polls are open.

Thank you to those that have voted prior to meeting. Those votes will be tabulated along with today's votes and the scrutineers will provide us with the detailed breakdown of voting after voting has closed. We will also post results on our website and at SEDAR website also.

The next item of business is the receipt of the 2025 consolidated financial statements as included in the 2025 annual report to the shareholders for the fiscal year ended December 31, 2025, and the audit report thereon. A copy of the annual report has been made available to each registered shareholder in either hard copy or electronically. The financial statements of the corporation for the fiscal year ended December 31, 2025 can be found on the corporation website or at the SEDAR+ website.

We now place before the meeting the consolidated financial statements and the audit report thereon for the year ended December 31, 2025.

The next item of business is the election of directors. The Board has fixed the number of directors to be elected at the meeting at 6. We'll now entertain a motion for directors of the -- entertain a motion for nomination of the directors of the corporation. Do I have a motion in that regard?

Mr. Chairman, my name is Karen Yoshiki-Gravelsins, and I am a shareholder. I nominate N. Murray Edwards, Phillip C. Underwood, Beth M. Budd Bandler, Larry G. Moeller, Steven Sommerville, James P. Veitch as directors of the corporation to hold office until the next annual election of directors or until their successors are elected or appointed, subject to the provisions of the Business Corporations Act Ontario and the bylaws of the corporation.

Thank you, Karen. Do I have a seconder for that motion?

Mr. Chairman, my name is Michael Gribe and I am a shareholder. I second the nomination.

Thank you, Michael. Are there any further nominations? Also, Secretary, could you advise if there are any questions asked in respect to the nomination of directors. Elena?

Mr. Chairman, there have been no further questions in respect of the nominations of directors.

Thank you. As there are no further nominations, we now declare nominations closed for directors.

The next item is the appointment of auditors. Do we have a motion in that regard?

Mr. Chairman, I move that the firm BDO Canada Chartered Professional Accountants be appointed auditors of the corporation until the next annual meeting or until their successor are appointed, and that their remuneration as such be fixed by the Board of Directors.

Thank you, Michael. Do I have a seconder?

I second the motion.

Thank you, Karen. Could the Secretary advise us if there are any questions asked in respect to the appointment of directors?

Mr. Chairman, there are no further questions in respect of the appointment of the auditors.

Seeing there are no questions, we will proceed with the vote. In terms of vote, again, remember that voting is only available to registered shareholders and duly appointed proxy holders using their code number and invite code on their proxy as the case may be.

If you're eligible to vote, please do so now as I will declare the voting close on the items within 1 minute. So we'll do just have a 1-minute pause so people can submit their vote in, Elena?

That's correct.

[Voting]

The minute for voting has passed. That brings us to the end of voting on the items we voted upon.

We've been advised by the scrutineers that the ballots and proxies deposited for the meeting are in favor of each of the resolutions submitted. Each of the nominees as director of the corporation have been duly elected as directors of the corporation. And BDO Canada Chartered Professional Accountants has been appointed, and the Board of Directors have been authorized to fix their remuneration.

The directors and auditor of the corporation will hold their roles and positions until the next annual election or until their successors are elected or appointed, pursuant to the provisions of the Business Corporation Act Ontario and the bylaws of the corporation.

I direct the scrutineer's report in respect to the voting be kept with the minutes of this meeting.

Now is there any other -- could the Secretary advise me if there are any other questions in respect to the business of the meeting?

Mr. Chairman, there have been no further questions in respect to the business of the meeting.

As there are no questions, I now declare the meeting terminated.

I will now pass the meeting over to Mr. Phil Underwood, who will provide a business update and presentation of Magellan. And we have some slides that will be on the screen to go through the presentation. So over to you, Phil. Thank you.

Great. Thank you, Murray. Well, good afternoon, everyone. So I'll be presenting the business and strategic highlights for 2025, with Elena Milantoni, our Chief Financial Officer, presenting the financial summary.

So starting with the business overview. So Magellan is a global business with 19 divisions and just under 4,000 employees worldwide. With 10 divisions in North America, 6 in Europe and 3 divisions in India, including 1 joint venture.

For this section, I'll provide an update on the commercial and defense market. So starting with the commercial aerospace market.

Commercial air travel continues to grow in 2025. International Air Transport Association, the IATA, reported that global travel grew by 5.3% in 2025. China and India experienced the largest domestic travel growth at 4.7% and 5.4%, respectively. The IATA forecasts growth in 2026 to be around 4.9%.

Airbus and Boeing both ended the year with strong order backlogs, with over 14,950 aircraft on order. However, supply chain delays and market disruptions continue to affect the industry's ability to capitalize on the pent-up demand.

Boeing 737 was approved by the FAA to increase from rate 38 to rate 42 per month in late 2025, and Boeing target rate 47 mid-2026. The goal is reaching rate 57 per month in 2027.

Airbus is ahead of Boeing with their single-aisle production. They plan to reach 68 A320s per month later this year and 75 per month late 2027. However, this target may move to the right with Airbus citing engine delays from Pratt & Whitney.

Whilst the industry is stabilizing and improving with 5% growth, the supply chain is exposed to continued risks, constraints and significant current geopolitical risks.

So moving to the defense market. So continued geopolitical tensions are driving increased demand in the defense aerospace market. The uncertainty relating to the USD globalization and pullback of international defense support demands new strategies globally. Defense growth is hitting ever higher levels. NATO defense spending targets have moved from 2% of GDP to now a goal of 5% GDP, which includes at least 3.5% GDP on real military kit, with the remaining 1.5% GDP on supporting efforts to the military such as infrastructure and industrial base investment.

Within the defense market, fighter aircraft represent the largest segment, the F-35 making up 40% of the total fighter demand in 2025. F-35 now has 1,300 aircraft in a worldwide fleet, with a record of 191 delivered.

There is unprecedented investment in capacity expansion for the production of missiles and munitions across NATO. Due to the war in Ukraine and the U.S. pullback, many programs are experiencing and forecasting 2 to 5x increases in quantities over the next several years. Air defense and artillery lead the way, with cheaper missiles to defeat the rise of drones receiving increased focus.

Space is becoming a contested domain. The role of the hypersonic munitions and counter-hypersonic munitions will also drive development in this sector. The proliferation of unmanned aircraft systems and drones on the battlefield has changed warfare yet again. Offensive and defensive tactics have shown the weight of investments and the mass production required globally.

Growth in the fighter market naturally drives an increase in demand for pilots, and therefore, demand for trainer aircraft, which is projected to grow significantly. So in summary, the defense aircraft market is the strongest in decades with growing segments in unmanned aircraft, trainer aircraft, missiles and munitions.

So now I'd like to provide an update on the progress on key contracts during 2025. So during the year, Magellan secured new contracts and renewed agreements totaling approximately CAD 1.3 billion in 2025, the second year where Magellan has booked significantly more orders than deliveries. The long-term revenue sharing agreement with GE Aerospace has been revised to include the production of motor of major components for the F414-GE-400K aircraft engine for the Korean KAI-21 aircraft program.

Magellan has extended contracts with Pratt & Whitney Canada for our Tumkur facility in India through to 2034. Magellan has also completed a contract renewal with GKN Aerospace for structural machining on a number of platforms through to 2030. A new machining work has been awarded to Magellan U.K. for the manufacture of long-bed aluminum parts through to 2036.

And Magellan has completed contract renewal with Raytheon Technologies, continued production of brazed assemblies and several platforms through to 2029. The U.S. government has awarded a contract to Magellan for the manufacturer of booster motors for UAV applications through to 2031. And the Canadian government has extended the CF/404 maintenance contract through to 2031.

Advanced long-lead material funding has been received to support the [ CHORUS ] space mission activities planned through to 2029. And new casting orders have been received, commercial magnesium castings on multiple platforms through to 2027. Also in 2026, we've announced that Magellan has been awarded a new contract for the production of rocket motors in support of the Canadian government's DND requirements.

So continuing with the business overview. So these charts show revenue by customer and market segments in 2025. On the left, you can see 33% of our revenue is directly with Airbus and Boeing, with Raytheon and GE accounting for another 22%.

Top right, 53% of our business is in aerostructures; 26 aeroengines -- 26% aero engines, including repair and overhaul; 13% castings; and 8% specialty products.

On the bottom right, you can see that 62% of our revenue is derived from the commercial business. And our defense business of 38% has increased from the prior year of 35%. And one of our key objectives is to build a more balanced portfolio with more defense work.

So now I'm going to hand over to Elena to present the financial summary.

Thanks, Phil. I will now provide the financial highlights for 2025. So in 2025, our consolidated revenues for the year ended were just over -- sorry, $1.045 billion, a 10.9% increase from the $942 million achieved last year. The corporation's revenues increased about 14.3% in Canada, 12.6% in the U.S. and 5.6% in Europe and India. The increase in revenues from 2025 was primarily attributable to the increase in our castings products, our propulsion products and the aeroengine and rotating engine parts, as well as some favorable foreign exchange.

Gross profit of $145 million for the year ended December 31, 2025, in comparison to the gross profit of $108 million in the prior year. The increase in profitability is mainly the result of volume increases, contract rehabilitations on certain programs and a favorable product mix, offset in part by increases we've seen on materials and supplies.

Our adjusted EBITDA increased $18.8 million or 19% to $117 million for the year ended in 2025. This was compared to $98 million in 2024, mainly as a result of our increased revenues, our follow-on of the gross margin improvement, offset by some foreign exchange movements.

Moving on, we look at our overall working capital requirements. They have continued to rise in line with our business growth, although Magellan was able to reduce inventory levels slightly from December 2024 levels. The corporation continues to experience some supplier disruptions and longer lead times, which have resulted in maintaining higher levels of safety stock.

Contract assets are a subset of inventory, recording the progress made on certain long-term contracts in the year. Decreases from 2024 represents a change in terms of one of our contracts, which have impacted the timing of billings of the work.

Magellan's investment in capital in 2025 was $51 million, which was approximately 4.9% of revenues. Investing in new technology not only improves safety and lifespan, but it also can increase productivity and capacity in addition to cost reductions.

Our shareholder return has shown a steady improvement over the last 2 years, with Magellan now in line with the TSX and S&P annual returns in 2026.

That concludes the financial summary. Phil now will provide you with an update on our strategic highlights.

Thanks, Elena. So Magellan will continue to position itself as a global strategic supplier for our customers, securing revenue and profit growth in selected markets. We will maintain a solid balance sheet to support our business goals. And we will continue to drive operational excellence in all our businesses, delivering to our commitments on time with 0 defects, investing in the latest technology and utilize it in our Magellan operating system and SAP implementation tools.

We continue to direct and focus resources on employee engagement and development. And Magellan will continue to provide information critical to our sustainability efforts amidst the ever-evolving climate-related risks.

So Magellan's business has recovered from industry challenges over the last few years. And today in front of us are a number of growth opportunities. Our customers are ramping up their build rates and asking us to take on additional new business. And delivery of these will provide and lead to better utilization of our facilities and improved business performance.

Our existing contracts have now been rehabilitated, allowing us to focus on adapting our strategic growth to the changing marketplace. One specific area of growth is our sand castings business. With a lack of capacity globally and our proven expertise in this area, our customers are asking us to invest and grow with them to meet the demand. In response, we've expanded our U.S. casting facility.

An area where we are having ongoing discussions is with our government and defense customers. We are leveraging key assets in our portfolio. This includes our Rockwood propellant plant, which is our munitions supply program facility and a Department of National Defense Center of Excellence for rocket and motor production. Our depot-level maintenance facility for jet fighters and our trainer engines and the legacy at our Mississauga site where the Avro was designed and built.

In parallel to seizing the growth opportunities highlighted earlier, Magellan is focusing on margin improvement. We continue to invest and grow in India to meet both our customers' strategic needs and improve our profitability. As announced, we've signed MOUs with Aequs, our long-term joint venture partner in India, to explore and launch additional business in MRO and sand castings. SAP is now live at 5 of our divisions, and we now have an accelerated road map for all our sites. We are also investing in further automation in machining, welding and painting robotics.

To improve the utilization of our facilities, we continuously seek opportunities to optimize how our factories operate. As an example, we are launching automated processing cells to more efficiently perform post-cast activities at our sand casting facilities.

So in summary, in 2025 revenue and profit continued to grow with $102 million increase in revenue and a $37 million contribution to gross profit. Our strong balance sheet allows us to invest in existing and new programs. And within our operations, we continue to maintain a high standard of quality and improved delivery performance to meet our customers' expectations.

In the year, we renewed and secured CAD 1.3 billion of existing and new business. We also continued to see improved employee engagement through numerous initiatives in our divisions. And our ESG framework is in place, including the alignment of all our sites to ISO 45001 and certification of all our sites to ISO 14001.

So looking forward, we continue to embed our MOS principles to improve efficiencies and drive operational excellence. And we will seek to balance our portfolio by capturing further defense opportunities. We'll also be delivering on major capital projects in 2026, including facility expansions, new technology and our SAP implementation.

And we've also just launched an employee survey to enhance our engagement program. And we'll continue to monitor evolving ESG standards and reporting requirements to strengthen our path to sustainability.

So this year, Magellan Aerospace celebrates 30 years in business, and we've grown over the years through a number of strategic acquisitions and investments. Murray Edwards established Magellan Aerospace in 1996 and was Chairman and CEO until 2003, and continues to lead the company as Chairman of the Board. Richard Neill led the company as President and CEO from 2003 to 2007. Jim Butyniec then led the company as President and CEO from 2007 into 2015. And I took over from Jim as President and CEO in 2015.

So today, we believe Magellan is in a strong position to continue its growth and improvement. We have a team of approximately 4,000 people, and some of those individuals have been here through all of these events, if not a big part of them. So thank you to all of you.

Our industry is one of constant change and disruptive challenges and requires each of our leaders, employees to adapt and innovate to continue to deliver for our customers and our shareholders. So thank you for your continued support and confidence in our team.

So this concludes our presentation. I'd like to take the opportunity to thank all our stakeholders, customers and employees for their continued support and commitment to Magellan.

So we will now review any questions that we've received via the portal and attempt to answer them.

There's no questions at the moment.

Okay. Well, if there are no questions, then I will say, stay safe and have a good afternoon.

Thank you.

Thank you.

This concludes the meeting. You may now disconnect.