Mattr Corp Aktie

Good day, and thank you for standing by. Welcome to Mattr's Second Quarter 2026 Results Webcast and Conference Call.

[Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the conference over to your speaker for today, Meghan MacEachern.

Good morning. Before we begin this morning's conference call, I would like to remind listeners that today's call includes forward-looking statements that involve estimates, judgments, risks, and uncertainties that may cause actual results to differ materially from those projected. The complete text of Mattr's statement on forward-looking information is included in Section 4.0 of the second quarter 2026 earnings press release and the MD&A that is available on SEDAR+ and on the company's website at mattr.com. For those joining via webcast, you may follow the visual presentation that accompanies this call.

I'll now turn it over to Mattr's President and CEO, Mike Reeves.

Good morning, and thank you for attending our second quarter conference call. Today, Meghan and I are joined by our Senior Vice President of Finance and CFO, Tom Holloway.

The second quarter represented a significant step forward for Mattr. We generated a new high watermark for revenue and adjusted EBITDA as, once again, our global team delivered effectively against strategic and operational priorities.

Within Connection Technologies, our wire and cable businesses levered operational efficiency gains and particular strength in global mining markets to report substantial sequential growth. More broadly, the segment executed well against a favorable mix of mining, oil and gas, and data center demand, while capturing further share gains within North American utility and infrastructure markets.

Within Composite Technologies, Xerxes set new manufacturing efficiency and output records, which drove new quarterly revenue records in both fuel and water products, enabling year-over-year revenue growth of more than 15% during the first half of '26. Accelerating order capture across the Xerxes portfolio, including rising data center opportunities where we secured additional customer commitments during the quarter, ensured a stable quarter-end backlog at near-record levels.

Our Flexpipe team took full advantage of seasonally stronger North American activity levels and modest late-quarter project acceleration by select customers, while also delivering against a growing international backlog. In parallel, Flexpipe captured the first commercial revenue from its recently released 8-inch technology and secured incremental orders that expand our backlog into Q4 for this important growth driver.

Across Mattr, we remain focused on operational execution, technology development, and disciplined capital allocation. The actions we have taken over the past several years to modernize our manufacturing footprint and refine our portfolio to prioritize highly attractive end markets are translating into strengthening financial performance. I could not be more proud of the Mattr team members who are making this possible through their hard work, creativity, and dedication.

Lastly, we were pleased to secure a GICS code reclassification late in Q2. Mattr is now classified within the industrials sector, which we believe more appropriately reflects the critical infrastructure markets we serve and should improve comparability with a broader group of industrial peers over time.

Tom will walk us through some additional financial details.

Thanks, Mike. Revenue in the second quarter of 2026 increased significantly compared to both the prior year period and the first quarter, reflecting strong commercial execution across multiple businesses, higher production volumes, and continued operational efficiency improvements.

Adjusted EBITDA also increased substantially versus the prior year quarter, driven by improved operational performance, favorable order capture and delivery in several key end markets, and a favorable product mix.

Connection Technologies delivered strong year-over-year growth in both revenue and adjusted EBITDA, primarily attributed to its wire and cable businesses. Performance was supported by robust mining activities, continued growth in data center application sales, and ongoing share gains in utility and infrastructure markets.

Composite Technologies delivered another strong quarter with meaningful increases in revenue and adjusted EBITDA driven by record production levels, robust fuel and water demand, and continued manufacturing improvements. Higher production throughput and improved manufacturing performance also enabled Xerxes to capture additional orders and establish new records for both shipments and revenue within its water business. Overall, Mattr delivered record revenue and adjusted EBITDA in the second quarter. We are incredibly proud of the teams who have worked so hard over the years to reshape this organization and enable delivery of results like these.

Turning to cash flow, the second quarter delivered slightly negative operating cash flows as necessary working capital investments offset strong operational results. Strong late-quarter sales led to an increased accounts receivable balance, while inventories moved higher as we positioned the business for a robust second half of the year.

Cash used in investing activities was primarily capital spending on property, plant, and equipment, which was $6.3 million during the second quarter. This cash outflow includes approximately $1.6 million that was previously accrued and then paid in the second quarter of 2026. We continue to expect full-year capital spending to be in the $35 million to $45 million range.

During the quarter, our strengthened outlook resulted in lowering of the net debt to adjusted EBITDA ratio and positioned the company to resume share repurchases under our NCIB at the end of the second quarter. We expect to remain active and opportunistic on the recently renewed NCIB for the foreseeable future, albeit at modest levels, while debt repayment remains a priority. Although Q2 required modest incremental borrowings to support rapid growth and the associated working capital needs, stronger earnings and rising cash generation are expected to drive continued deleveraging as the company progresses through the second half of 2026.

And I'll turn it back over to Mike.

Thank you, Tom. As we look across our key end markets, the demand landscape remains generally favorable. Fundamentals in the mining, power generation and distribution, retail fuel, water management, and data center sectors are strong and expected to remain so. I'll address Mattr's data center exposure on the next slide. Within domestic oilfield markets, customer activity improved during the second quarter, although it remained below the prior year quarter.

Looking ahead, we currently expect North American well completion activity will increase modestly again in Q3. While global oil and refined product inventory levels point to a need for continued production growth, recent fluctuations in underlying commodity prices are likely to ensure any activity increases are gradual. We currently anticipate normal late-year slowing in North American activity as capital budgets are exhausted, although the potential remains for some clients to pull incremental capital into 2026, which would offer some upside to our current outlook.

In parallel, we continue to see encouraging customer engagement and quoting activity in certain international markets, with our backlog strengthened by the large committed order we secured in early Q2. Supported by an expanding product portfolio and enhanced production capacity, Flexpipe is well positioned to pursue international opportunities as they develop.

Automotive markets remain subdued with global production expectations continuing to face pressure, particularly in Europe. Despite these market conditions, we continue to see average electronic content in newly launched vehicle platforms increase, creating ongoing opportunities for Mattr to continue delivering year-over-year auto-related revenue growth. We constantly monitor evolving trade, commodity, and geopolitical developments and have not experienced any meaningful recent disruption to raw material availability.

While go-forward trade policy remains a source of uncertainty, particularly following early Q3 U.S. tariff announcements, Mattr is positioned with robust mitigation protocols to limit business impact under all foreseeable scenarios.

Regardless of the external environment, our priorities remain unchanged: Executing for our customers, improving operational efficiency, advancing technology development, and growing in markets where we see sustainable demand and attractive returns. These initiatives continue to strengthen the business, and were important contributors to our strong second quarter performance.

Briefly taking a closer look at the data center sector, we see that demand continues to develop positively across multiple business lines, including Xerxes, AmerCable, ShawFlex, and DSG-Canusa. Data center applications are becoming an increasingly important contributor to Mattr's near and mid-term growth, with current year sales expected to more than double versus 2025 and likely to represent around 5% of consolidated revenue this year.

Data centers are expected to be an important growth driver across both segments in the coming years. But our objective here, as in all end markets, is to pursue profitable growth, not simply market share gains. We prioritize those data center opportunities that lever our technical differentiation and yield sustainable margins, and will continue to lever our diverse end-market exposure to ensure Mattr avoids becoming overly reliant on any one source of demand.

Turning to our outlook, the company's expectations for full-year revenue and adjusted EBITDA have further increased since our last earnings release, reflecting both stronger-than-expected second-quarter performance and improving visibility for the balance of the year. We currently believe third quarter business performance will be similar to the second quarter before normal seasonal slowing takes effect in Q4. In combination, this drives a current outlook for second half adjusted EBITDA that is similar to the first half. We believe normal fluctuations will cause Connection Technologies revenue in Q3 to have a less favorable mix than Q2, with lower deliveries into mining projects and higher deliveries into data center applications.

In contrast, we anticipate Composite Technologies performance will move sequentially upwards in Q3, driven by rising shipments of Xerxes fuel and water products, improving Flexpipe domestic and international activity, and further operational efficiency gains.

Beyond Q3, we continue to have a constructive view of demand across all primary markets in both segments. Within Connections, we believe our mining, utility, nuclear, data center, and other infrastructure markets are in the early stages of multi-year upcycles. In Composites, Xerxes fuel and water customers are extending their planning horizons further than we've ever seen, with firm orders now in backlog for delivery throughout 2027. And Flexpipe's addressable market continues to expand meaningfully through our investments to develop and release new products, including the recently launched 8-inch product where customer order capture is accelerating and backlog continues to build.

These demand factors, combined with high conviction in the value our differentiated technologies bring to customers and significant remaining opportunities for increased operational efficiency, underpin our confidence that Mattr remains well positioned to deliver meaningful growth and EBITDA margin expansion over the coming years.

I'll now turn the call over to the operator and open it up for any questions you may have for myself, Tom, or Meghan.

[Operator Instructions] The first question will be coming from the line of Nathan Po of National Bank of Canada Capital Markets.

So my first one is, historically, the Composite segment's EBITDA has had a higher torque to sequential growth rates like we saw in Q2. This quarter, gross margins were up almost 300 basis points quarter-over-quarter, but EBITDA margins only 60 basis points. Could you give us some color on what was perhaps behind that and what could have been perhaps holding segment margins back?

Yes. So I think the important thing to remember about the Composite segment is that there's two fairly different businesses within there. Xerxes, where underground tanks are sold into fuel and water applications, and Flexpipe, selling into oilfield applications. And historically, Flexpipe has maintained a higher EBITDA margin than Xerxes. And as a consequence, the relative mix of revenues coming from those two businesses tends to influence the EBITDA margin for the segment overall. We've seen Xerxes margins work their way upwards over the course of the last few quarters and are very pleased with that trajectory.

But still, the relative mix of revenue makes a difference. So in Q2, we saw Xerxes become a bigger relative share of revenue in that segment versus the prior year. And at the same time, we saw Flexpipe begin to deliver into that large international order that we communicated at our last earnings call, and that order has a slightly lower margin profile than their traditional North American business.

So those are the two primary factors. I would tell you that pricing leverage in both businesses remains strong, so I am not concerned by the relative movements that I've just discussed. I think both Xerxes and Flexpipe are on trends that will yield continued margin expansion for the segment.

Okay, great. That's great color. And now, touching on Xerxes, Xerxes is delivering record sales, presumably as you continue to unlock more capacity that will just keep happening. Where are you today on achieving that 10% productive capacity gain for the year?

Yes, I think our outlook for full-year productive capacity gains in Xerxes has moved to 10% to 15% year-over-year. So the team are doing a very, very effective job of improving operational efficiency, driving higher productive output, which allows our commercial teams to win more work and deliver more work. So all in all, I think the Xerxes team is on a very good trajectory. Demand is very strong and we expect it to stay that way for multiple years.

The most important thing is that the relative improvement in productive output this year is not a one-year event. When we look across our network, we have many opportunities to continue this trajectory, and I would expect that over the next several years, we see similar rates of growth. So excited by Xerxes and to have them set new records in both revenue and EBITDA contribution in Q2, and yet have so many opportunities in front of them. I think it's an exciting moment in time for that business.

Okay, great. And the commentary on oil and gas activity picking up in Q3 from select customers is quite encouraging. Is that based on conversations you're having right now, or is that based on industry forecasts? And the reason I'm asking, or the reason for the caution is that over the last few years, we've had some head fakes with respect to activity and bottoming. So just wanted to get some clarity on that.

I think you're absolutely right. The market has been a little difficult to predict over the last several years. As we sit here today, we are well within the window where customer orders for Q3 would already be in backlog. So I think our outlook for the quarter is one that comes with high confidence. Generally speaking, what we've observed is select customers, certainly not all customers, be willing to modestly accelerate their pace of spend and activity in the U.S. land. That has pulled activity levels in Q3 to a modestly higher point than we were observing in Q4, which is good.

What we need to see is whether those same customers or others are willing to actually expand their full-year capital spending program for 2026. If they do, then we would expect to see activity at least remain stable Q3 to Q4, or perhaps move modestly upwards. If they choose to stay fully disciplined, then this acceleration into Q3 would leave a little bigger than normal air gap in late Q4 as budgets are exhausted. So the outlook that we've provided you is assuming the latter of those two scenarios. And if we see positive movement in terms of customer decision-making there, then obviously that yields some upside to the outlook we've given you.

[Operator Instructions]

And at this time, there are no more questions in the queue. I would like to turn the call back over to Mike for closing remarks. Please go ahead.

Perfect. Well, we appreciate your time today to walk through our Q2 results. Very excited to be setting new revenue and EBITDA records across the business and look forward to doing this again in 90 days and talking about what we expect to be a very strong Q3. Have a great day, everybody.

Thank you for participating in today's conference call. You may now disconnect.

Good afternoon. And on behalf of the Mattr Board and senior management, welcome to the Annual Meeting of Shareholders of Mattr Corp. My name is Kevin Nugent, I am Chair of the Board of Directors of Mattr. I will be acting as Chair of the meeting today.

The company is holding a hybrid annual meeting this year with both in-person attendance and virtual attendance by way of a live webcast. For those shareholders attending virtually, instructions on how to ask questions and the voting procedure will appear on your screens. Please feel free to submit your questions throughout the presentation. Shareholders participating in-person are required to register on arrival at the meeting.

To vote, you can sign in with your own personal device or other means of voting can be provided. If you have already voted by proxy, you will still be able to vote at the meeting and your vote on the date of the meeting will replace your vote by proxy. Shannon Glover will be monitoring the Lumi platform for any questions and will raise them for discussion either in connection with the motion to which they relate or in the case of general questions, we'll raise them for discussion upon conclusion of the formal part of the meeting. As with any technology, unexpected glitches may occur, but our service providers for this platform at Lumi are very experienced at running this type of meeting and will ensure we are fully supported.

I would like to welcome all shareholders and guests to the meeting. I'm speaking to you today from the Wentworth room at the Sheraton Center Toronto. Joining me today from the matter executive team are Michael -- Tom Holloway, Senior Vice President, Finance and CFO; and Shannon Glover, Senior Vice President, Legal and Secretary; Meghan MacEachern, Vice President, Investor Relations and External Communications; and Geoff Smith, Group President, Connection Technologies.

In order to proceed with the formal items of business of the meeting, I will ask Mr. Holloway and Mr. Smith to propose and second motions as necessary. Shannon

Glover will act as secretary of the meeting, Arlene Agnew of Odyssey Trust Company will act as scrutineer.

The company has elected to use the notice and access provisions under National Instrument 54-101 for this meeting in respect of the mailing of the meeting materials to registered and beneficial shareholders other than those who have explicitly rejected delivery by electronic means. The notice and access provisions are a set of rules developed by the Canadian securities administrators that reduce the volume of materials required to be physically mailed to shareholders by allowing a reporting issuer to post its proxy related meeting materials online.

The company received exemptions required under Sections 151(1) and 156 of the Canada Business Corporations Act, which enables it to rely on the notice and access system provided that amongst other conditions, the information circular is made accessible to shareholders and a notice thereof is distributed in accordance with National Instrument 54-101 and 51-102.

Registered shareholders received a notice and access notification and form of proxy and nonregistered shareholders received a notice and access notification and a voting instruction form. The Secretary has confirmed that the meeting notice, financial statements and proxy materials were made available to shareholders. We will dispense with the reading of the notice of the meeting. Proof of the mailing of the notice calling the meeting has been duly filed, and I would ask the secretary to keep a copy of the notice and the proof of mailing with the records of this meeting.

The scrutineer has advise that proxy holders holding 40,658,516 common shares represented by proxy at this meeting. This represents 66.25% of the 61,375,015 issued and outstanding common shares as of the record date for this meeting. Therefore, I declare the meeting to be regularly called and properly constituted for the transaction of business. Registered shareholders and proxy holders attending a meeting of shareholders may address the meeting when there is a call to discuss a motion before the meeting.

Should you wish to address the chair on any motion, please raise your hand if attending in-person or please type in your question or comment in the message section if attending virtually. If there is any discussion or questions, Shannon Glover will read the question a lot. We will conduct the votes on the matters before us by a poll. On a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder.

We will be concluding on the motions at the end of the meeting once we have been through all the agenda items. Voting polls on the agenda items for today's meeting will be closed together at the end of the meeting. A brief reminder for those attending virtually to submit any questions you may have in relation to a specific motion or a general matter of business through the Lumi platform. All questions submitted will be addressed in the course of the meeting.

The poll will now be opened for all resolutions at this time. This annual meeting is called to consider five matters. The first matter is the minutes of the 2025 Annual Meeting of Shareholders. Mattr Corp. is not under any obligation for shareholders to approve the minutes of annual meetings of shareholders. The Board Mattr Corp. has determined it is best to have Shannon Glover present the minutes of the meeting of shareholders held on May 15, 2025.

The minutes are there.

Thank you. Thank you, Shannon. The minutes will be available for review by any shareholder at the offices of the company. The next item of the business is the presentation of the annual financial statements and the auditor's report. In accordance with the notice and access provisions, the annual financial statements have been made available to shareholders online at the company's website and are also available at SEDAR+. We shall dispense with the reading of the auditor's report, which is available to all shareholders in the 2025 annual financial statements.

Before we proceed with the election of directors, I would like to note that Marvin Riley was originally included as a director nominee for this meeting. However, as disclosed in the company's April 30, 2026 press release, and the related amended documentation filed on SEDAR and on the company's website, Mr. Riley has advised that he will not be standing for reelection. We wish to thank Mr. Riley for his contributions to the company during his tenure. His experience and perspective, we're a great benefit to the organization and we wish him the best in his future endeavors. Consistent with the April 30 amendment to the company's management information circular filed on SEDAR + and on the company's website, any votes cast from Marvin Riley's election as a director at the meeting will be disregarded by the scrutineer.

I now declare the meeting open for nominations.

Mr. Chair, I nominate Kathleen Hall, Alan Hibben, Kevin Nugent, Michael Reeves, Katherine Rethy and Jane Skoblo as directors of the company to hold office until the next Annual Meeting of Shareholders until their resignation or until their successors are elected or appointed, subject to the provisions of the company's bylaws.

Thank you. As the company's bylaws require vast notice of additional nominees to the Board and no notices were received, I now declare the nominations closed, and Mr. Holloway will propose a motion to elect those nominated.

I move that each of the persons nominated as directors be elected as directors of the company to hold office until the next Annual Meeting of Shareholders until the resignation or until their successors are elected or appointed, subject to the provisions of the company's bylaws.

Mr. Smith will second the motion.

I second the motion.

Is there any discussion of this motion?

There are no questions from online.

Thank you. As there is no discussion, I will now call for a vote on the motion before the meeting. Would all shareholders please enter your votes in Lumi.

[Voting]

Okay. The next item of business is the appointment of the auditor for the company and Mr. Holloway has a motion in this regard.

I move that KPMG LLP be appointed auditor of the company until the next annual meeting and that the Board of Directors be authorized to fix remuneration of the auditor.

Mr. Smith will second the motion.

I second the motion.

Is there any discussion of the motion?

There is no discussion online.

Thank you. As there is no discussion, I will now call for a vote on the motion before the meeting. Would all shareholders please enter your votes in Lumi.

[Voting]

The next item of business is the advisory vote on the company's approach to executive compensation. Mr. Smith will now propose a motion.

I move on an advisory basis and not to diminish the role and responsibility of the Board of Directors that the shareholders accept the approach to executive compensation disclosed in the company's management proxy circular delivered in advance of the 26th Annual Meeting of Shareholders.

Mr. Holloway will second the motion.

I second the motion.

Is there any discussion of this motion?

There's no discussion.

Thank you. As there is no discussion, I will now call for a vote on the motion before the meeting. Would all shareholders please enter your votes in Lumi.

[Voting]

If you have not already voted, please complete the electronic ballot on Lumi. We will give you 1 more minute.

[Voting]

The polls are now closed. The scrutineers have provided their preliminary report of the results of today's voting. On the matter of the election of directors, I am advised by the scrutineer that more of the votes cast have been voted in favor of the appointment of each of Kathleen Hall, Alan Hibben, Kevin Nugent, Michael Reeves, Katherine Rethy and Jane Skoblo as directors of the company that have been voted against such appointments. Therefore, I declare that this motion is carried.

On the matter of the appointment of KPMG LLP as auditor of the company, I'm advised by the scrutineer that greater than a majority of the votes cast have been voted for the appointment of KPMG LLP and authorizing the Board to fix the auditor's remuneration. Therefore, I declare that this motion is carried.

On the matter of the advisory vote on executive compensation for our named executive officers, I am advised by the scrutineer that greater than a majority of the votes cast have been voted in favor of approving the compensation for the company's named executive officers. Therefore, I declare that this motion is carried.

As there is no further business to be brought before this meeting, the formal part of the meeting is terminated. Are there any questions from those in the boardroom or from those participating by the Lumi platform?

I'm advised by Shannon that no further questions have been submitted through the Lumi platform. And this concludes today's meeting. On behalf of the Board of Directors and the senior management of Mattr, thank you for attending today's annual meeting.

Thank you for standing by, and welcome to Mattr's First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Meghan MacEachern, Investor Relations. Please go ahead.

Good morning. Before we begin this morning's conference call, I'd like to remind listeners that today's call includes forward-looking statements that involve estimates, judgments, risks and uncertainties that may cause actual results to differ materially from those projected.

The complete text of Mattr's statement on forward-looking information is included in Section 4.0 of the first quarter 2026 earnings press release in the MD&A that is available on SEDAR+ and on the company's website at mattr.com. For those joining via webcast, you may follow the visual presentation that accompanies this call. I'll now turn it over to Mattr's President and CEO, Mike Reeves.

Good morning and thank you for attending our first quarter conference call. Today, Meghan and I are joined by our Senior Vice President of Finance and CFO, Tom Holloway.

Q1 saw Mattr's talented teams deliver sequential revenue and adjusted EBITDA growth. Normal early year seasonal slowness was largely offset by strong wire and cable sales into mining and utility applications, underground tank sales into retail fuel and water management markets and sequentially stronger operational efficiency across Mattr's newly modernized North American manufacturing network.

I was particularly pleased with the sequential margin progression delivered by our Composite Technologies segment, where Xerxes set a new first quarter performance record. Across Mattr, our focus remains on what we can control: operational execution, technology development and disciplined capital allocation, all of which strengthen the quality and durability of our earnings.

We continue to build momentum within mining, data center and utility wire and cable markets, where our unique products, delivery speed and technical support translate into accretive margins and defensible share gains. Across our manufacturing footprint, the start-up inefficiencies and onetime modernization costs that have weighed on results in recent years are largely behind us. And as volumes rise, mix improves and cost absorption increases, we expect to deliver progressively stronger margins over time.

It's worth noting that recent external events have had limited impact on our organization. Our strategic shift to a largely localized supply chain during 2025 has positioned Mattr to navigate recently updated U.S. copper tariff rules with no incremental effect on our wire and cable businesses, and we have not experienced raw material availability issues tied to the Middle East conflict. While we have observed rising costs, particularly in resins, we generally have the ability to pass these onwards. Tom will now walk us through some additional financial details.

Thanks, Mike. Revenue in the first quarter of 2026 modestly increased year-over-year and sequentially, primarily resulting from strong production and sales of Xerxes fuel and water products within the Composite Technologies segment.

Adjusted EBITDA came in below the prior year period, primarily driven by less favorable margins in the Connection Technologies segment. When compared to the fourth quarter of 2025, adjusted EBITDA improved on the strength of Composite Technologies performance. Connection Technologies segment revenue in Q1 of 2026 was roughly flat versus the prior year quarter, with segment adjusted EBITDA declining by 20% versus the same period.

This decline in profitability was expected and was primarily driven by a less favorable product mix, most notably the absence of specific project-driven mining and energy-related revenues, which drove particularly strong results within our wire and cable businesses in the prior year quarter. This was partially offset by share gains in utility and data center end markets. In addition, higher average copper prices slightly inflated Q1 wire and cable revenue with little corresponding benefit to adjusted EBITDA.

Composite Technologies segment revenue during the quarter increased slightly versus the prior year quarter, while adjusted EBITDA increased 15%. Year-over-year growth in revenue and profitability was primarily driven by increased productive output and improved operational efficiency within the Xerxes business, which dampened typical seasonal softness as fuel and water tank demand remained robust.

Turning to cash flow. Q1 is typically our largest working capital investment quarter, and this year was consistent with that pattern as we supported operational scaling and late quarter revenue acceleration. Accounts receivable increased with a strong finish to the quarter and inventories increased as we positioned the business for the seasonally stronger middle quarters.

Cash used in investing activities was primarily made up of capital spending on property, plant and equipment, which was $9 million during the first quarter. This cash outflow includes approximately $7 million that was previously accrued and then paid in the first quarter of 2026. We still expect full year capital spending to be in the $35 million to $45 million range. During the quarter, the company increased net borrowings by $10 million on the revolving credit facility.

At quarter end, the company's net debt to adjusted EBITDA ratio was 3.7x or 2.6x if lease liabilities are excluded. This ratio reflects the impact of a larger first quarter of 2025, which included a strong result in our now divested Brazilian pipe coating business being replaced by a slightly smaller first quarter of 2026. We anticipate this ratio will move lower throughout the remainder of the year and remain committed to debt reduction activities.

Our strengthened outlook, including a clearer view on likely U.S. tariff risks and impact, has positioned the company to resume share repurchases under its NCIB during the current quarter and continuing for the foreseeable future. Subsequent to the current quarter end, the company renewed its credit facility through October 2030.

This renewal provides funding stability and additional flexibility to continue growing the business while taking advantage of appropriate high-return opportunities as they may arise. We thank our banks for their continued support and partnership. I will now turn it back over to Mike.

Thank you, Tom. From a market perspective, conditions largely remain consistent with what we shared during our fourth quarter call with strong and rising demand for products serving retail and backup fuel, water management, power generation, utility and data center end markets. We've also seen constructive activity in the mining sector, particularly in Canada and certain international markets.

Mining was the largest single end market by revenue in our Connection Technologies segment during the first quarter of 2026, and I'll talk in more detail about it later. In oilfield markets, our customers have remained cautious despite the structural rise in oil prices.

We have not yet seen a meaningful change in U.S. onshore customer spending and currently anticipate U.S. activity levels will remain relatively flat during the second quarter. However, we believe the first half of 2026 represents the cyclic low for North American drilling and completion activity and anticipate a gradual upward trend commencing in the second half of 2026.

In parallel, we have seen some promising demand indications in certain international markets. With an expanding product portfolio and enhanced production capacity, Flexpipe is well positioned to benefit from these increasingly favorable market conditions. In automotive, we have observed modest downward revisions to global production expectations with particular pressure in Europe.

Despite this, we also continue to see average electronic content in newly launched vehicle platforms rise, creating an ongoing opportunity for Mattr to grow market share. We're watching the Middle East conflict closely. And as I mentioned earlier, are seeing petroleum-derived raw material costs move higher, though availability has not been an issue.

That said, the potential for broader economic impact rises the longer this conflict continues. External conditions remain dynamic, and we have appropriate contingency plans ready if needed. However, our focus is firmly on those things we can control, commercial execution, operational efficiency, technology development and targeted growth in end markets where we see durable demand and attractive returns, all of which contributed to sequential margin expansion in Q1.

If we look more closely at our mining-related business, within the surface and underground mining sector, which we serve via premium wire and cable products, our exposure spans a variety of subsectors and geographies.

We benefit from a relatively consistent baseline of maintenance and repair demand at existing mine sites in all geographies, which is often enhanced by project-specific revenue typically tied to mine extensions or new mine initiation in Canada and other international locations. This project-driven revenue tends to have less quarter-to-quarter consistency. Our current exposure skews towards U.S. and Canadian markets, although we have a long-established history beyond North America and invested last year to enhance our international commercial presence.

Within each mine site, Mattr's rugged, waterproof, crush and wear-resistant cables are used to reliably bring electrical power to heavy equipment, from massive mobile shovels in surface mines to high-speed conveyors in underground environments. Our products serve as heavy-duty extension cords for some of the largest, most demanding machines in the world and are critical to keeping production running.

With rising demand for copper, precious metals, critical minerals, metallurgical coal and other mined commodities and slowly improving regulatory environments for new mine permitting in North America, we believe Mattr stands to benefit from a multi-decade mining up cycle, which is one of the reasons we are investing to increase productive capacity and efficiency in AmerCable's U.S. manufacturing facility over the next 18 months.

Our teams performed well in Q1, and our outlook continues to strengthen. The pace of operational efficiency improvement was consistent with our expectations and strong commercial execution, particularly within Xerxes and the mining and utility sectors of our wire and cable businesses helped partially offset typical early year seasonal slowness.

As we move through the year, we expect adjusted EBITDA in Q2 will improve from Q1, supported by continued commercial success, further operational efficiency gains and seasonally favorable patterns that typically make Q2 and Q3 our strongest quarters.

These factors, plus a sizable international Flexpipe order, which was secured subsequent to quarter end and a growing order book for our new 8-inch Flexpipe products support our favorable outlook for the second half of 2026. In combination, our full year 2026 adjusted EBITDA outlook has moved higher and is now expected to be similar to last year after adding back approximately $10 million of 2025 MEO expense.

In the longer term, we firmly believe that continued strong execution across internally controllable areas is the key to further expanding Mattr's EBITDA margins. Ongoing operational efficiency optimization and both higher volumes [Technical Difficulty] and an increasingly favorable revenue mix from sustained commercial execution in higher-margin end markets have the potential to propel the company towards our 20% EBITDA margin aspiration with limited help from external factors required to achieve this milestone over time.

We maintain high conviction that our differentiated technologies, which support increased generation, movement and use of electrical power and the ongoing transition to composite materials and fuel and water management applications provide Mattr with substantial long-term growth opportunities. I'll now turn the call over to the operator and open it up for any questions you may have for myself, Tom or Meg.

[Operator Instructions]

Our first question comes from the line of Arthur Nagorny of RBC.

Just wanted to start with Section 232 tariffs. It doesn't seem like you guys have any direct exposure, but wondering if the tariff update puts you in a better competitive position in any way.

So the recent tariff announcements certainly have not introduced any new negative impacts for our organization. And it's one of the reasons that we've been a little more confident in our outlook for the full year.

The most recent announcements around U.S. copper-related tariffs specifically indicated that there would be limited new products added to the tariff list going forward. So we have an elevated level of confidence that the products we make in Canada and sell into the U.S. that contain copper are likely to continue to be tariff-free.

So, in that respect, I think we were positively impacted by these announcements. Obviously, we got to be nimble. I think we have all of the right contingency plans in place in case something were to shift. But at this point, I think we have lowered our concern levels.

Got it. That's helpful. Then I guess I just want to follow up on your Canadian business. Have you seen any order improvement from kind of some of the announcements coming from the government regarding build Canada and things of that nature? Or is it kind of still too early to tell at this point?

For us, I'd say it's a little too early. We can certainly see that progress is being made. So I would hope that we will start to see some impact on demand for our products in Canada at some point over the next several quarters. But it's a little early for that demand to show up in our order book at the moment.

All right. That's helpful. And then for your 2026 outlook, specifically within the Connection Technologies segment, I think you called out some improvement in utility and data center markets. Just wondering if you're seeing meaningful increases in kind of those business lines at this point in time.

Yes. I was very pleased with the progress that we've made in the early part of the year. I think within the segment, there's a few things that have moved modestly in a favorable direction since we last spoke. We've seen a little more activity in the Canadian mining sector than we had expected to see, and that looks like it's probably going to continue.

We've seen some early, modest but early wins from the investments that we put into international commercial efforts for mining. That's been a positive. We continue to see a very positive progression of operational efficiency across the Connection Technologies segment, particularly in the newer sites, so the DSG site in Ohio and the Shawflex site in Toronto.

And then as you mentioned, utility and data center, the Shawflex brand of our wire and cable business has been very focused on growing their presence in both Canadian and U.S. utility markets and made a very positive step forward in that direction during the first quarter. And data center demand is strong.

As I've mentioned before, we are thoughtful in how much data center wire and cable business we take because the margin profile is not quite as positive as we see from mining and oilfield and certain other applications. So, we take a balanced approach there, but the demand is certainly strong.

Got it. And then last question for me. I just wanted to touch on the facility transitions. It sounds like in your press release, you kind of talked about now moving past most of the challenges that you've encountered over the past couple of years. So just curious what the path forward is from here? And could you also provide an update on the tariff exposure at DSG-Canusa with the Ohio site as well?

Yes. So broadly speaking, I would say that all of the new operating facilities that we've put into service over the last 2 years are moving in a positive direction. Most of them are now at what I would describe as kind of normalized levels of performance, positively contributing to the organization.

The one that is still working its way to that point is the DSG facility in Fairfield, but it's moving in that direction very quickly, and we'll reach that point later this year. So largely speaking, I'd say the distraction that comes from ramping up new facilities is behind us, and it's now about just constantly maturing those facilities and driving progressive improvements in overall efficiency at both new and old facilities, which we did very well over the course of Q1.

The DSG business in North America does continue to import product made outside North America. So, there is some exposure to tariffs. But with the IEEPA element of those tariffs having been removed, the tariff burden is considerably lower. So, I would say we are in a better position for DSG today than we were 90 days ago.

Our next question comes from the line of Nathan Po of National Bank Capital Markets.

So there's still a lot of volatility at the geopolitical and macro level, broadly speaking. So what gives you the confidence to step up EBITDA guidance by around 6%, even though we're not quite halfway through the year?

So, you're certainly right. The world around us continues to be an unpredictable place. But as we've said for several quarters, this is an organization where we believe we can drive growth, margin expansion, free cash flow expansion through a lot of internal efforts, and that's what you saw in Q1.

A lot of continued progress on operational efficiency across our production network, which met our expectations in Q1 and gives us confidence that we'll continue to hit those expectations as we move through the year.

We are largely a North American-focused organization. So, while the Middle East situation certainly has an impact on input costs for certain raw materials, it has not impacted our availability of raw materials. And at this point, it has not impacted our customers' demand for our products. So that, we believe, is favorable. And as I mentioned earlier, a number of tariff adjustments that have occurred over the last 90 days have generally been positive for the organization.

So while we have to remain nimble and we certainly have contingency plans in place ready to enact if something were to happen geopolitically, I think our continued focus on operational efficiency, technology development and market share capture in key target markets, primarily in North America, will be the source of strength for this organization as we roll through 2026 and beyond.

And that's what gives us the confidence to share our outlook with the market, which is a little bit more favorable today than it was 90 days ago.

Okay. I appreciate the color. And I also want to ask on the NCIB comment, to what magnitude are you anticipating to use this given your current leverage levels?

Yes. So, I think I said on the last call that we would not expect to reintroduce it at the levels we did before. So, you shouldn't expect $10 million a quarter. I would point you to kind of a mid-single-digit millions is probably where you would expect us to be. And we think that's entirely manageable within the debt levels.

Got you. And switching gears to Composites. What's the level of confidence you have in shipping that significant international order within the second half? And what are the risk factors around cancellations or delays?

I'm very confident. You didn't ask, but I suspect others are wondering, so I'll share what I can here.

This is an order for Flexpipe going into an international customer that we've worked for before. Revenue impact, we would expect it will be north of $20 million, and we would expect all or substantially all of that revenue to be recognized in the second half of the year. I'm afraid I can't give any more specific details than that because we do need to preserve some competitive information. The customer has made a firm commitment.

I have no concerns about the order being canceled. And delivery terms are such that we can recognize revenue upon completion of production. So, I am not concerned about the shipping element. Obviously, the world is a bit of a crazy place, but the pathway from us to our customer is one that does not run through the Strait of Messina. So, in that respect, I think the risk is low.

And just one last one. How does that order change the expected magnitude of revenue contribution for the 7- to 8-inch products in 2026? How is the mix effectively?

It doesn't change our expectations for 7- and 8-inch product revenue contribution. Obviously, it moves the overall revenue for the Flexpipe business up. So, on a percentage basis, 7- and 8-inch revenue will be a smaller percentage than it would otherwise have been.

But I can tell you, 7- and 8-inch order book continues to fill. I expect first revenue around midyear. So, we continue to be very positive on the 7- and 8-inch product line and our expectations for those contributions in 2026 haven't changed since the last update.

Our next question comes from the line of Tim Monachello of ATB Cormark Capital Markets.

My question is really around that international project. But as a follow-up, can you provide any more specifics on which region it's going to?

Not really. I can tell you it's the Eastern Hemisphere, but we do need to be a little thoughtful here about the competitive dynamics.

Okay. As I guess, the bid pipeline internationally for Flexpipe changed because it's been a while since we've seen one of these international awards. So is this, I guess, symptomatic of a broader trend? Or is this kind of a one-off?

No, I think this is a good indication. As I think I mentioned on the last call, we've certainly seen a higher level of inbound inquiry coming from really most of the larger onshore oilfield markets here in the first part of '26 than we had certainly at any point last year, and you probably have to go back to late '23, early '24 to find a level that's at this kind of magnitude.

I think there's pent-up demand in the international market. We've seen customers be very careful with their spending. And with oil prices where they are, I think there is a reasonable chance that it continues to move higher still. So, I have a positive outlook for the overall international marketplace.

I think large orders of this magnitude tend to be relatively infrequent, but the pace of small and midsized orders has picked up, and I think that's going to be a positive for us over the coming years. So, all in all, I think we would generally view the oilfield demand, both domestic and international, to have hit its low point in late '25, early '26.

And we would expect a gradual upward trend in terms of demand, both domestically and internationally from this point forward, which is wonderful for Flexpipe. We've invested over the last couple of years to deliver new technologies to expand the product portfolio in larger sizes and higher temperatures and of course, to establish a far larger production capability, both in Canada and the U.S. That means we are well positioned to take full advantage as the market gradually rises. So, we're excited for Flexpipe over the years to come.

Okay. And then the Xerxes business, can you talk a little bit about your backlog is looking? And I guess, and the outlook there relative to how you saw at the beginning of the year?

I think the outlook for Xerxes is quite similar to how we saw it at the beginning of the year. We were expecting that demand for retail fuel, backup fuel, water or all of the tanks that we make would be at a high level, and it is. At the end of Q1, Xerxes's backlog set a new all-time record. And Xerxes's business performance in Q1 was the best Q1 on record for the company.

So I think what I'd point out for Xerxes is we've been particularly pleased with the progress on operational efficiency in that business. As I've mentioned before, we have the ability to sell every tank we make. So this is a question of how many tanks can you make while maintaining quality and controlling cost.

And the team have done a very good job over the last several quarters of moving in the right direction on all of those metrics. And I think they'll continue to do so. So we expect Xerxes to have a very strong year, and they've certainly started well.

How many tanks do you think you can make this year relative to last year? And what do you think that, I guess, the growth and the capacity of that business is going to look like over the next couple as you put automation in some of these facilities?

Yes. As you point out, automation is going to be an important element in the midterm growth of this business. I think we have a multiyear period here where we can get somewhere on the order of a 10% improvement in tank production year-over-year. And I think that's a realistic expectation for '26 versus '25.

So, as I've said before, we've invested in Xerxes over the last 2.5 years, new facilities, new equipment. We're continuing to make more modest investments, particularly around automation. And I think all in all, Xerxes is well positioned to drive something on the order of a 10% growth rate year-over-year this year, next year and the years to follow. And we certainly do not see any anticipated slowing in demand for their products.

Got it. And then last one, just around margin progression. It sounds like you're making some nice progress in normalizing the efficiency levels within your new facilities and your revenue seems like it's getting better. So, like where do you think your consolidated EBITDA margins are going to land by the end of the year?

Yes. I mean I think last time we talked about margins being roughly similar to 2025 as we exited 2025 at 12.2%. I think with the positive Q1 and the move up in our outlook, you'll see that marginally move up. But I think the guide to similar to prior year is still intact at this point. It's marginally higher than it was last time, but not materially yet.

We would -- we're progressing down that pathway, as Mike has talked about, good operational efficiency moving in that direction, but I don't think you'll see a ton of that this year. We will -- again, as we talked about last time, we will exit this year on a higher rate than we exited last year.

Yes. I think when you look at the slope, the first half of '25 was a strong margin period. The second half of '25 was a little weaker. I think we bounced off the low point there, and we're building. So, first half of this year, I think we'll make good progress.

Second half will be stronger than the first. And that means, as Tom said, on average, I think year-over-year, the margin is similar. But obviously, we're working hard with all of the internal items we've discussed to try to drive it upwards. And I think it will certainly progress upwards from this point.

Our next question comes from the line of Yuri Lynk of Canaccord Genuity.

I just want to make sure I understand the guidance for the year. You were previously looking for, I think, flat Q1, which would have been about $31 million, $32 million of EBITDA in Q1. You beat that by about $9 million. You're taking your guidance up by about $10 million.

So is it fair to assume that your expectations for the rest of the year are relatively unchanged? And how does the international Flexpipe order kind of play into all that?

So, we -- at the last call, we indicated a full year adjusted EBITDA expectation that was similar to or slightly below the reported number for 2025. And now we're suggesting that the full year will be similar to 2025, if you were to add back the MEO costs that we absorbed in 2025.

So, I think on a full year basis, our modified outlook is a little more than a $10 million improvement from where it stood. And that improvement is a combination of Q1 being a little stronger than we thought it would. As I mentioned before, mining activity was a little higher than I thought it might be.

And our progress to capture utility market share in the wire and cable space was also a little stronger than I had expected. You add to that the international order that we've mentioned and a little bit, I'd say, lower concern around tariff impacts to the wire and cable business. And that's what gets us to the current projection for the full year.

Obviously, the oilfield market hasn't yet shown major changes domestically. If that starts to move in a positive upward direction, and there may be some room for further upward revision for the year, but it's too early for us to build that in.

So, I think we're trying to be thoughtful, balanced, recognizing that we have a lot that we can do internally to drive positive progress. The outside world sometimes gets in your way. But right now, I think let's call it, maybe more like a $15 million improvement year-over-year in the outlook is an appropriate level.

Okay. Yes, that makes sense. Just turning to Xerxes. I mean, very positive commentary there in terms of backlog and it sounds like very -- you're trying to keep up with demand there.

Can you just talk about the pricing environment and your ability and willingness to take price because it seems like an ideal environment to do that, but I'm not sure we're necessarily seeing that in the margins. So, any color would be helpful.

Yes. We obviously have to balance what our customers can incorporate into their total project costs with what we think our product is worth. I would tell you that we have consistently moved our pricing upwards because I don't think we were as effective as we needed to be back in the, let's say, the '21, '22, '23 time frame of getting prices where they should have been.

So, I think we're being thoughtful but effective in driving prices to an appropriate level. And obviously, at the same time, working very hard to make our internal efficiencies a contributor to an improving margin in that business. And while we don't break out Xerxes specifically and we won't, I can tell you that the margin profile for that business has moved upwards quite substantially over the last several quarters, primarily as a result of all of the operational efficiency gains that we've seen.

So, I have a positive outlook that the Xerxes business will get to and move beyond our overall target level of 20% EBITDA margin here over the course of the next year or so.

[Operator Instructions]

Our next question comes from the line of Ian Gillies of Stifel.

Sorry to go back to margins. But when you think about Composite Technologies for the quarter, a bit of a loaded question here, but if you were to portray the improvement, do you think it was more Xerxes related or Flexpipe related in the quarter?

And I guess the follow-on from that, is the new Dallas Flexpipe facility and the new facility in South Carolina, would they be generating margins consistent with the division? Or is there still some work to do there to bring them up in line with the rest of the group?

Yes. So, I'll start and then Mike can add some color here. In terms of the mix between Xerxes and Flexpipe, the positivity in the Q1 margins was largely Xerxes, as Mike has talked about, very good operational performance, good production. We're very pleased with the direction of that business.

On the new facilities, I would say Rockwall is very positively contributing to the organization, and we're very pleased with that. Similar comment on Blythewood, it's still ramping in terms of the levels of production we would like to see, but it's at a productive level, and it's a good part of the portfolio. It's no longer a drag as we would have talked about it last year.

Yes. That's, I think, a fair statement. I would describe both of the new facilities as being positive contributors, but still nowhere close to their ultimate potential, which is one of the reasons that we have such an optimistic view of the growth potential within Xerxes and also Flexpipe.

From a FlexPipe perspective, Q1 is typically a slower quarter and it was. While the team did very well, and I think the margin profile in that business was as good as we could have hoped for this seasonal quarter, certainly, I think Q1 is likely to be the low point for Flexpipe from both the revenue and EBITDA contribution in the year.

So, to have a strong Q1 in the segment with Flexpipe not necessarily contributing anything over and above what we would originally have expected is a good, I think, position to be in and onwards and upwards from here.

That's helpful. Maybe switching gears to the -- to AmerCable. At the time of acquisition, I recall energy exposure being about 25% of revenue for that business, and it was primarily focused on maintenance.

But I'm just wondering in the, I guess, just over a year that you've had the business, do you think there's anything or any way you can sell any of that product to benefit for what may be increasing activity in the energy sector over the next 12 months?

So the proportion of AmerCable's revenue that's tied to traditional oilfield activity in recent quarters has been considerably lower than that percentage you just noted. The business had some fairly large orders that were oilfield oriented in the first half of 2025. It's been a little bit less busy in that front since then.

And the gap has been plugged with rising sales into data centers and more recently here, rising demand from mining, which has all been very positive. I think that our sales of products that get consumed by land frack fleets, land rigs will certainly move up as activity in that space rises. And where we see particularly large opportunities for that business tends to be new construction of LNG export facilities of offshore production platforms or new-built land rigs, which tends not to be in North America tends to be in the Middle East.

So, I do think that there's some project opportunities that might be interesting as well over the course of the next couple of years. But those larger projects, particularly offshore projects, tend to have at least a 2-year planning cycle associated with them. So we've said before, and I'll say it again, I think oilfield-related revenue in the AmerCable business in 2026 will be lower than it was in '25 simply because the larger offshore projects are clearly laid out, and there will be fewer of them this year than there were last year.

What I do think is an elevated oil price, an elevated futures curve and a growing recognition around the world that there is more instability in supply of oil than people realized is likely to spur incremental investment over the course of the coming years. And I think AmerCable is very well positioned to take advantage of that. The key is that we can increase their productive capacity.

As you probably remember, when we acquired the business, we knew that we were acquiring a business that hadn't had a lot of capital injected over the course of the decade prior. We're injecting capital now, and we'll do so over the course of the next couple of years to make sure that AmerCable is positioned to take full advantage of these growth opportunities.

Thank you. I would now like to turn the conference back to Mike Reeves for closing remarks. Sir?

Thank you all for your interest in Mattr. We were delighted with our Q1 performance, excited by the opportunities ahead of us in 2026, and we'll look forward to discussing Q2 performance at the next call with everybody. Have a great day.

Thank you for participating. You may now disconnect. This concludes today's conference call.

Good day, and thank you for standing by. Welcome to the Mattr Fourth Quarter 2025 Results Webcast and Conference Call [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Meghan MacEachern, Vice President, Investor Relations and External Communications. Please go ahead.

Good morning. Before we begin this morning's conference call, I would like to take a moment to remind all listeners that today's call includes forward-looking statements that involve estimates, judgments, risks and uncertainties that may cause actual results to differ materially from those projected. The complete text of Mattr's statement on forward-looking information is included in Section 4.0 of the fourth quarter 2025 earnings press release in the MD&A that is available on SEDAR+ and on the company's website at mattr.com. For those joining via webcast, you may follow the visual presentation that accompanies this call. I'll now turn it over to Mattr's President and CEO, Mike Reeves.

Good morning, and thank you for attending our fourth quarter conference call. Today, Meghan and I are joined by our Senior Vice President of Finance and CFO, Tom Holloway. Mattr delivered a strong finish to the year. Rising operational efficiency and opportunistic sales, particularly in Xerxes, Flexpipe and AmerCable minimized normal late year seasonal slowing and drove Q4 adjusted EBITDA to more than double versus the prior year quarter.

Operationally, we extracted further performance improvements from our newly established sites, a trend that has continued into early 2026. Our teams remain nimble, resilient and cost conscious in the face of an ever-shifting business environment, and we continue to focus on those variables we can control. Across Mattr, we are consistently prioritizing those actions and investments necessary to enable sustained technical differentiation, production flexibility and progressively greater operational efficiency.

Turning to the full year. 2025 was a year of unprecedented disruption. As we executed our growth, technology development and operational improvement strategies, the world around us rapidly evolved, a trend that has continued in 2026. Despite this, Mattr delivered meaningful year-over-year growth in revenue and adjusted EBITDA, driven primarily by the successful early year acquisition of AmerCable and significantly improved results from Xerxes. We were effective in executing our 2025 strategic priorities, nimble in mitigating direct tariff impacts and continue to advance those initiatives that matter most to our long-term growth.

However, there were some areas where operational execution fell short of our expectations and slowing in certain end markets, particularly the Canadian industrial wire and cable sector, demanded an accelerated shift of resources and focus. While these challenges impacted 2025, the actions taken in response have already driven improvements and position Mattr to deliver more consistent performance going forward.

Our Composite Technologies segment reported a modest full year adjusted EBITDA increase in 2025. Despite significant oilfield activity level declines, Flexpipe results were stable as the business successfully levered new larger diameter products to onboard additional customers and gain market share. Within Xerxes, improved manufacturing efficiency allowed greater capture of customer spend as strong demand for underground fuel and water tanks continued, driving year-over-year business growth. The segment also benefited from the absence of onetime modernization, expansion and optimization costs, which impacted 2024.

Entering 2026, Flexpipe is positioned to continue gaining market share, including through the addition of 7- and 8-inch products for which we have already secured our first commercial order and Xerxes is expected to further accelerate productivity across its manufacturing network, enabling another year of profitable growth. Connection Technologies benefited greatly from the addition of AmerCable in 2025, which drove a significant rise in full year adjusted EBITDA.

Successfully completing this highly accretive acquisition, moving efficiently through an onboarding protocol and positioning the experienced AmerCable leadership team to outperform our first year expectations was a significant accomplishment. AmerCable's strong performance offset a number of challenges within the segment's legacy DSG-Canusa and Shawflex businesses during the year, where performance was impacted by onetime modernization, expansion and optimization costs by ramp-up challenges in the newly established DSG-Canusa, Ohio facility and by late year Canadian industrial wire and cable market softening.

Q4 saw solid productivity and efficiency gains in the DSG Ohio site and accelerating U.S. utility market share capture within Shawflex, progress that has continued in the early part of 2026. In a year of escalating and constantly shifting trade friction, our teams demonstrated their agility by rapidly realigning supply chains, ultimately allowing the company to avoid material direct impacts from tariffs during 2025.

I would like to thank our employees who worked so hard throughout the year to overcome these challenges. We are a stronger organization for it, and I have confidence we are positioned to navigate whatever external factors 2026 may bring while maximizing performance by focusing on the things we can control. Tom will now walk us through some additional financial details.

Thanks, Mike. Fourth quarter revenue from continuing operations was $312.5 million, 50% higher than the fourth quarter of 2024, while adjusted EBITDA from continuing operations was $31.8 million, a 150% increase from the comparative period in the prior year, primarily attributed to the inclusion of AmerCable results in 2025. The Connection Technologies segment delivered a new fourth quarter revenue record of $190.7 million, which was 118% higher than the fourth quarter of 2024 with segment adjusted EBITDA being $14.3 million higher than the prior year.

Both outcomes are primarily driven by AmerCable's results being included within the segment's reported numbers. While the Shawflex business saw continued Canadian industrial market weakness, DSG showed positive activity in the European market and improvement in the new Ohio facility. AmerCable had a favorable sales mix and improved production efficiencies in the fourth quarter, which drove overperformance against expectations.

Composite Technologies segment revenue was $121.8 million, relatively flat compared to the fourth quarter of 2024, while adjusted EBITDA increased by 57% over the same time period. Sales in the fourth quarter of 2025 versus the prior year quarter skewed more heavily to the Xerxes business as fuel and water tank demand remained robust and late year seasonal slowing was less pronounced than normal. Improved segment profitability versus the prior year quarter was primarily driven by a favorable margin mix and increased production efficiencies in both businesses as recently completed production facilities mature and existing facilities continue to deliver improvements.

Full year revenue from continuing operations was approximately $1.3 billion, a 43% increase versus 2024. Adjusted EBITDA also increased by 43% over 2024 to reach $154.8 million in 2025. Year-over-year growth was primarily attributed to the AmerCable acquisition, which performed ahead of expectations in addition to strong results in the Xerxes business. Flexpipe performed well to offset the oilfield activity declines in the year roughly neutral to 2024, while Shawflex and DSG saw declines tied to facility relocation disruption, start-up challenges within the DSG Ohio plant and late year Canadian industrial wire and cable market slowing.

Moving to cash flow. Cash provided by operating activities from continuing operations in the fourth quarter was $80.2 million. Strong operating cash flow in the quarter was driven by higher gross profit and cash generated from working capital releases. Strong collections and reduced inventory were the key contributors to the reduced working capital levels. Cash used in investing activities was primarily made up of capital spending on property, plant and equipment, which was $13.2 million during the fourth quarter. This cash outflow for capital spend includes amounts previously accrued that were paid in the fourth quarter of 2025.

Discontinued operations includes cash flow from the settlement of the liquidation of working capital tied to the sale of the Thermotite business, which also contributed to overall fourth quarter cash flow. During the fourth quarter, cash used in financing activities was $48.1 million, primarily driven by $43.5 million of net repayment on the company's credit facility. Cash outflows also included recurring lease liability payments.

Full year capital spending, net of amounts accrued in 2024 was $52.3 million, in line with previously provided expectations. We anticipate 2026 capital spending will be between $35 million and $45 million, which is modestly below our previously communicated normal run rate. At quarter end, the company's net debt to adjusted EBITDA ratio was 3.1x or 2.2x if lease liabilities are excluded. While we continue to expect some fluctuations in the reported ratio, we remain committed to returning to a normal course ratio of 2x or below and continue to prioritize debt reduction in the near term to ensure maximum future balance sheet flexibility.

While we have paused activity under our share repurchase program in the short term, this does not represent a change in long-term strategy. With strong debt reduction since the end of Q3 2025, management is evaluating and will provide an update on the plan for share repurchases during the Q1 2026 earnings release. I will now turn it back over to Mike.

Thank you, Tom. I'm extremely proud of the manner in which Mattr's employees responded to opportunities and challenges, both internal and external during 2025. As we enter 2026, external factors continue to prove unpredictable. However, there are clear opportunities in every business and particular strength in certain end markets. We remain tightly focused on operational execution, new technology introduction and the strengthening of our commercial focus and capabilities in key sectors.

We are prioritizing actions that further enhance our business and build resiliency, ensuring we are well positioned to win regardless of external influences. The work completed over these last 5 years has provided a strong foundation from which we can efficiently develop and deliver highly differentiated critical infrastructure products from an optimized footprint. With the company's modernization, expansion and optimization actions concluded, capital spending will reduce and is expected to be slightly below our normal range in 2026.

We have concluded the work to establish an appropriate long-term production footprint capable of supporting growth across both segments for years to come and have redirected resources to further accelerate progressive efficiency gains from this new footprint. In tandem, we continue to invest in the development of new technology, including the recent release of 7- and 8-inch Flexpipe products for early commercial use. I was particularly pleased to see one of our largest North American customers issue the first order for these products and expect to report multiple incremental orders at our next earnings call.

We believe our greatest controllable near-term opportunity lays within the 4 walls of our manufacturing facilities. Both segments successfully accelerated workforce proficiency and operational efficiency across every new factory and many legacy sites during the fourth quarter and have continued to drive that progression early in 2026. These improvements will enable greater productivity and contribute to margin and cash flow enhancement in the quarters and years to come.

In parallel, we continue to prioritize identification of and migration towards higher-value end markets, particularly within our wire and cable businesses. During the fourth quarter and into early 2026, this focus led to the capture of incremental orders tied to U.S. and Canadian utility and data center applications, attractive end markets with long-term demand growth drivers. Subsequent to the quarter, we entered into a multiyear frame agreement with a large Canadian nuclear operator, further solidifying our confidence in continued contributions from this growing end market for the coming decade and beyond.

While underlying unfavorable near-term oilfield and Canadian industrial fundamentals are likely to yield a lower full year activity baseline than 2025 in our wire and cable businesses, as a corporation, we expect to largely offset this weakness through sales expansion into other targeted markets, operational efficiency improvements and new technology introduction, particularly in Composite Technologies and DSG-Canusa. Consequently, we currently anticipate 2026 reported revenue and adjusted EBITDA will be similar to or modestly below 2025.

Early year performance provides confidence that seasonal factors, which typically cause Q1 to be the slowest quarter of the year can largely be mitigated, and we currently believe the first quarter revenue and adjusted EBITDA will be similar to the fourth quarter of 2025. We maintain high conviction that our differentiated technologies, which support increased generation, movement and use of electrical power and the ongoing transition to composite materials in fuel and water management applications provide Mattr with substantial long-term growth and profit expansion opportunities. I'll now turn the call over to the operator and open it up for any questions you may have for myself, Tom or Meghan.

[Operator Instructions] Our first question comes from the line of Yuri Lynk with Canaccord.

Just on the guidance, best I can tell, it appears to be implying 10%, 11% EBITDA margin in Q1, but then a marked improvement at some point thereafter. First, is that the right characterization? And if so, what would be the drivers of any margin improvement later on in the year?

Yes. Good question, Yuri. So I think your guide on the first quarter is about right. I'd say low double digits is where we would expect to be and then a movement up from there with the normal seasonal activity in Q4 kind of causing Q4 to be a little bit more similar to Q1, which is generally what we see. Those middle quarters tend to be our best activity itself drives up the margin. And remember, we are operationally improving several of these facilities, and we're seeing good progress there. So that's also going to continue to move those margins up.

Okay. And then just on some of the headwinds in Canada, industrial, and I think you mentioned mining as well. I mean, mining to me would seem to be pretty strong. And industrial, I mean, when I look across my coverage universe, I struggle to see where the weakness is. So can you provide any more color on that and any leading indicators that you're tracking and which direction they're flashing either more positive or negative?

Yes. So on the mining side, what we've seen in the second half of 2025 and into the early part of '26 is strength across many mining sectors, but there was a period there where we saw particularly potash miners pause on investments to extend mines, which is where we typically would see the most meaningful revenue generation for our wire and cable business.

I can say that as we crossed into the early part of 2026, we've started to see those potash miners become a bit more active again. So while I think we enter 2026 on a slightly lower activity baseline across the full mining spectrum for the wire and cable business, I do think that we're going to see a progressive improvement in that potash mining space, which is obviously a good thing for us. On the industrial side, I agree with you that the broad industrial sector is showing decent stability.

Remember that our exposure to the industrial market in Canada is largely centered on wire and cable. And as we've discussed on previous calls, a portion of that exposure is to what we have termed industrial stock products. So these tend to be the less differentiated wire and cable components that are held by distributors and then used on various projects. We've seen that particular sector hit very, very hard over the course of the last 3 quarters, particularly, largely as a result of U.S. tariffs being placed on those products from foreign manufacturers and those foreign manufacturers redirecting their capacity into the Canadian market.

We've seen pricing for industrial stock products move to a point that we've not seen in many decades. And as a consequence, as I announced at the August conference call last year, we made the conscious choice to pivot away from that market. And I do not currently anticipate pivoting back towards that industrial stock market during 2026. I don't think there are returns for us in that space. What is important to note is that, that pivot away from the industrial stock wire and cable space was offset by a pivot towards both U.S. and Canadian utility opportunities.

And what we've seen in the late stages of '25 and continuing into the early part of 2026 is good positive progress there. So I can see in our numbers that we are capturing incremental business, both north and south of the border in these utility applications with margins that make sense for us. So over the course of 2026, I think what you'll see from our wire and cable business is that we strengthened that exposure to utility, which in turn strengthens the margin profile of the business progressively as we work our way through the year. Hopefully, that provides the color you're looking for.

Our next question comes from the line of Ian Gillies with Stifel.

As it pertains to margins, you've kind of talked a little bit about what the shoulder quarters are going to look like in Q1 and Q4. Can you talk a little bit about where you think the high watermarks may be in the middle part of the year as you have a bit more activity based on the scope of work you know today?

Perhaps I can talk a little bit about how we see margins evolving here. So the first thing to recognize, of course, is that we enter 2026 with activity levels in a number of our end markets at a lower place than they were when we entered 2025. But the combination of our outlook for markets and our continued penetration of key markets, combined with the work that we have done and are continuing to do, which is driving incremental improvement in operational efficiency, I think leads us to a place where we certainly would expect that our overall margin profile in the second half of 2026 is favorable to where we were in the second half of '25.

And I think largely speaking, you're going to see on average, the second half of '26 margins will be higher than they will be in the first half of '26. I think the high point in any of the quarters in 2026 is probably still in the low teens. But I would say there is a great deal of opportunity for us to explore moving above that level if the external markets cooperate a little bit. I feel very confident that we're doing all of the right things internally, executing very well operationally, driving the right refocus and growth in the right end markets and capturing many, many opportunities that the market is offering us.

It's a difficult world to predict at this point in time. There are certainly things that could evolve externally that might give us a little bit of extra help. But there's also things out there that could give us a little bit more of a headwind. So we'll be cautious and say lower teens as the upper end of the range for now.

Got it. As it pertains to Q4, and apologies if I missed this in the prepared remarks, was there anything notable in Q4, maybe specifically tied to AmerCable related to onetime sales that helped revenue and margins? It just came in a bit stronger than I was expecting.

So their revenue certainly was a nice end to the year. Obviously, there was some effect there of the run-up in copper price that inflated revenue, and that's just a typical response to that commodity movement. But we've continued to see that team be very successful in finding and taking advantage of, let's call them, nontraditional opportunities. So we spoke last quarter about the early success winning and delivering in the data center market. We saw more of that in Q4.

And we also saw some opportunistic sales into some mining applications. We've had 1 or 2 customers that ran into some issues in mines and needed to replace wire and cable, and we were in a position to move very, very quickly and help them with that. So we benefited from a few items that perhaps don't happen every quarter. But broadly speaking, I would say the AmerCable team have been very consistent in their execution. And as we roll here into 2026, I continue to expect that we will see AmerCable find and win incremental work in that data center market while we navigate what is likely to be a little bit less active oilfield market than it was in '25.

Our next question comes from the line of Tim Monachello with ATB Cormark Capital Markets.

Just with the new Shawflex facility in Vaughan and some of the headwinds that you've talked about in terms of demand for stock products and everything else, how is that facility doing in terms of utilization in the amount of lines that are running currently?

Yes. So we're definitely not fully utilized. Q3, you may recall that we talked about setting a new revenue record in Q3. Some of that was catching up from the move disruption that we experienced in the first half of 2025. I think Q4 is a fairer reflection of the current run rate of activity that, that business is experiencing. So we're below -- certainly, we're below the full capacity of the facility. I'd say we are suboptimal in terms of efficiency at this point in time, but moving in the right direction, as I mentioned on one of the earlier questions, the mix of business that's flowing through that facility is moving in the right direction, less industrial stock and more utility.

We need a little bit more volume for that facility to show its full capability. And obviously, that's the push here. We've made some investments in incremental commercial capabilities, particularly in the U.S. utility space. We've seen early success there. But we need to continue to see that. I'm confident we will. And as we see a little bit more volume flow through that facility, the margin expansion that they'll be able to deliver will certainly start to accelerate.

Are you -- do you think your cost structure is scaled correctly for the business as you see it over the next 12 months?

I think so.

Considering everything else...

I do. Yes. I think we're appropriate. We've been thoughtful about the volume of workforce that we have in facilities where demand is not as robust as we'd like to see it. And in other parts of the business, Xerxes, for example, we are adding shifts in virtually every facility. Demand continues to be extremely high in that business. Our opportunity in '26 is to take full advantage of that through producing more and more tanks.

So the actions that have been taken over the last 12 months and that are continuing to occur there in Xerxes, I think, can yield 10% or greater tank output increase year-over-year. And a lot of that is down to our ability to attract, retain, train labor where we're doing a much better job than we were 12 months ago.

The Canadian government announced a package of spending around defense and Arctic infrastructure and stuff like that. Does -- do you think that Shawflex has any exposure to cabling for anything in defense related? I know that was sort of an end market that had been targeted and probably somewhere that you're not super exposed today, but how do you think about that end market and opportunities there?

I think there's always opportunities. As you say, Shawflex hasn't historically focused defense, and we are -- we would have to work through the process of being an approved vendor for those applications. But it depends on the specific opportunity. I can tell you that we have in the past, secured fairly meaningful orders for icebreakers and other marine vessels. So I think there's opportunity there, whether it comes through the Shawflex or the AmerCable brand.

We also sell heat shrink tubing into a number of aerospace and defense applications through the DSG brand. So I think that could be interesting for us. But we'll just have to see exactly where these dollars ultimately get directed. But I can certainly assure you that the sales teams are very aware that defense broadly is an interesting market.

We have invested R&D in the DSG business, in particular, to ensure that our full portfolio is ready to take advantage of increased defense spending. We are most advanced in that journey in Europe, where we have, for many years, supported the European defense industry and expect that increased spending in that region will help us as well.

And last one. Can you just talk a little bit about the expansions that you're doing at AmerCable and what you think that does to your revenue capacity?

Yes. So spread over '26 and '27 and into the very early part of '28, we're investing in total around about CAD 30 million, which is consistent with the indications that we've provided earlier. And that will give the facility order of magnitude about 20% incremental productive capacity, but that will not become available until we are into 2028. The lead time on equipment is quite substantial in the wire and cable space.

So between now and then, the focus is on timely, safe and cost-effective execution of this expansion project while ensuring that we are optimizing productive output from the equipment that we have and ensuring that we are building a very, very robust backlog of business to ensure that, that new equipment has work to do when it comes online, and I'm very confident that it will. The AmerCable team have performed extraordinarily well in the first 12 months of our ownership. And I have every confidence that as we roll through '26, '27, they will expand their end market exposure, their customer exposure so that when we have incremental -- meaningful incremental capacity available, it will be in high demand.

Our next question comes from the line of Nathan Po with National Bank Capital Markets.

So my first question is on capital allocation. So let's say, through the execution of internal initiatives and NCIB, your multiple discount is largely addressed and you get leverage in check. Longer term, 2, 3 years out, how do you view your capital allocation?

Yes. Good question. So if we think longer term, I think a couple of points here. One, we still believe a 2x net debt to adjusted EBITDA normal course ratio makes sense for the normal business. But having said that, we're going to continue to invest organically. We're going to continue to invest inorganically if opportunities arise, as Mike has said before, we don't have to do M&A, but there likely are some M&A opportunities down the road for us that would make good strategic sense.

So I think you'll see us continue to evaluate and build our pipeline and work towards finding the right thing that may be a good fit for the business. So both of those things, organic and inorganic will be a key point of growth for us because as we've also talked about on the organic side, these factories that we put in or on the ground over the last several years, they have lots of extra capacity for us to add line. So we're not actually even talking about large dollars there. So those are 2 points.

We'll continue to keep the debt in check. And of course, the NCIB will continue to be a critical piece of returning capital to shareholders. We view that as a good long-term use of capital. And as you will have seen in the documents, we are evaluating where we are in that process, and we'll give an update in the Q1 call as to what our go-forward plans are because things have progressed quite well operationally, and we want to make sure that we're being prudent with the use of capital as we can.

And I just want to also follow up on those organic growth initiatives. So you specifically mentioned high-return growth initiatives, including the expansion of the AmerCable business. I was just wondering about other segments of your business because you did mention clear opportunities across those as well. For example, like Xerxes is running very well with an ample backlog.

Yes, I'll jump in there. The -- first, I should say that for organic investments, we continue to hold ourselves to a 20% after-tax IRR hurdle rate. So we're not making meaningful investments into anything that we don't believe will deliver at least that kind of return. We talked already about the AmerCable investment, which is the first meaningful investment that business will have received in the best part of 15 years.

As you know, we've made fairly substantial investments in each of the other businesses over the last 2 years. And as Tom mentioned, what that's given us is the physical footprint that we think is necessary to drive solid growth and margin expansion for many years to come. The infill investments will come with incremental lines and incremental automation. So specifically to Xerxes, we have opportunities to add incremental lines within the 4 walls of the facilities that we currently have.

But the big opportunity, the big lever is to take a manufacturing process that has for the last 50 years, been largely manual and migrate towards at least semi automation and perhaps in the longer term, more complete automation. So capital dollars will be fairly modest this year in that respect because that's all that's needed. But we are moving through the process of establishing prototype, more fulsome automation for the Xerxes business. And once we've proven it out and are confident that we can propagate it without interruption to the business, then that's what you'll see us do.

So I think we continue to believe that our total capital spend on an annual basis will be somewhere in the $40 million to $50 million range in most years and that about $15 million of that will be maintenance capital, the rest being growth and the kind of investments will be centered on what I've just described, infill production lines, enhanced automation, things that will allow us to not just grow the top line, but materially expand the margin profile of this business, and that's exactly what we expect to see as we move through the next 2 and 3 years.

Great color. And have North American Flexpipe customers given you any indication they're reevaluating their 2026 budgets in reaction to the closure of the [ Street ]?

Not yet. I think particularly the public oil and gas producers are -- have become very disciplined with their capital budgets. So I think it will take a little more time for them to determine whether they believe this is a longer-term uplift to commodity prices, and that might cause them to modify their capital spending for '26. I think what we should expect is that this movement up and I think probably kind of a semipermanent shift in the low end of the range that oil will trade at means we're unlikely to see any declines in U.S. activity.

And that is a helpful fact. I would say, entering this year, there were certainly some customers that indicated they might do a little less this year than they did last year. I think that's now unlikely. But I don't think we've crossed the threshold where customers have complete confidence that now is the right time to lean into incremental capital.

So let's give it another couple of months and see where this thing lands. In the event that customers choose to lean in here, I think what we will see is first attack will be to drilled, but uncompleted wells or DUCs. There are several thousand of those in U.S. land, which would allow customers to deploy a little incremental capital to complete more wells than they planned originally and extract more production. And it is that completion process where our Flexpipe products are consumed. So if we see that, that would certainly be a good thing for our business.

And one last one for me. Just on Flexpipe again. I believe those -- the higher temperature spec pipes that were originally slated for more so international markets. How are you adjusting operations to account for any turmoil in the Middle East?

So you're right. Our new high-temperature variant will have its first use in the field in the Middle East. The product is physically there. Obviously, during a period of conflict and higher security risk, we will not be sending people into the Middle East to install it, but it was not scheduled for installation just yet. So at this point, it hasn't had any impact. If we see an extended conflict, there might be a modest impact to when that first installation happens.

But our anticipation was that we'd get one full installation done this year, give ourselves and our customer a chance to evaluate the performance of the product and assuming that it performs well, which I'm sure it will, that the first real revenue associated with that product would not have been until '27 anyway. So I'm not expecting to see a meaningful impact.

Our next question comes from the line of John Gibson with BMO Capital Markets.

In your preamble, and apologies if I missed this, you talked about some nuclear work. Is this the new work you've won? Or we've obviously seen some impacts to margins in a positive direction for historical nuclear work, but can you maybe expand on it and what the pipeline is for work on that side right now?

Yes. So the comment that I made in the preamble referenced a post-quarter contract that we executed with a large existing nuclear operator in Canada that effectively secures our position with them for greater than 10 years going forward. So I think at a minimum, what it does is derisk our position with that customer.

But it certainly creates a platform from which we can earn incremental work. There's no incremental awards associated with that contract at this time, but it creates the opportunity for that as we move forward. So I would view it as a derisking event at this point, and we'll give further updates as we roll through the year. I'm hopeful that it creates an opportunity for expansion.

Okay. Got it. And last one for me. I understand it's early stages, and you talked about the effect of higher copper prices. But just wondering, given the run in some commodities here, net-net, where does this help or hurt your businesses the most, whether it be input costs or maybe an uptick in certain end markets?

Yes. So copper obviously is at an elevated price, and we'll have to see where it goes. But if it stays somewhere in its current range, obviously, it has an inflationary impact. So we pay what we pay for copper. We pass that through to customers. It moves our cost of goods up. It moves our revenue up. It doesn't move our profit dollars very much. So if we see copper continue to move up, we will -- it will have an effect of compressing the apparent margins in the wire and cable businesses.

If it moves down, we will see an expansion of the margin in those businesses. So we'll just keep our eyes on that. But I think the hydrocarbon prices following what's happened in the Middle East, we are a fairly large consumer of plastics and resins across most of our businesses. So while it hasn't happened yet, I would not be surprised if we see some inflation on our input costs. And I think our customers recognize that we will pass that through to them. So I don't think in terms of direct impact to our business, we're anticipating anything of great substance.

I think what we have to keep our eyes on is duration and magnitude of impact here. If it's relatively short term, then I think the impact to economies around the world is somewhat limited. If it lasts a little longer, then we will start to see some economic impact, which, broadly speaking, would not necessarily be a good thing for us. But if it -- on the flip side of that, if we see it last for an extended period of time and oil prices remain high, we could see an upward movement in activity in the North American oilfields, which would be a good thing for us.

So it's difficult to say. For right now, we are viewing it as having both upside and downside. And we're ready for anything, but we're not going to try to get ahead of this thing because it could go in any direction. So we'll be thoughtful, but we're ready. And for now, we've assumed that there is a nominal impact from the Middle East in the outlook that we've given you for 2026.

Our next question is a follow-up from Tim Monachello with ATB Cormark Capital Markets.

Just a follow-up on Flexpipe. Has your expectations around large diameter pipe sales in 2026 changed? And how do you think about your, I guess, penetration and maturity in the 5- and 6-inch diameter market right now?

Yes. So I'd say, broadly speaking, our outlook for Flexpipe in '26 has not changed. I've said before, I still think Flexpipe will be a source of growth, both in terms of revenue and margin expansion for this organization in '26 versus '25. That growth will come from continued penetration with the 5-inch and 6-inch products. Obviously, they're now a meaningful part of our revenue stream, but we are not yet approaching a mature market share.

We continue to see the market generally skew towards larger diameter, which makes the addressable market for 5-inch and 6-inch bigger year-over-year. And we continue to see that while we're gaining share, we have a fairly good runway there. So I think there's a good 2, 3, 4 years of continued share gain in 5-inch and 6-inch ahead of us. 7-inch and 8-inch, obviously, we are at the very beginning of a revenue generation curve there. We've got our first order. I expect we'll have other orders in hand here shortly. We told the market to expect perhaps high single, low double-digit millions of revenue coming from that product line in 2026.

I don't think our expectations have changed. We would anticipate that it would follow an uptake curve that looks quite similar to 5-inch and 6-inch. So a modest first year and a fairly good acceleration as you move into years 2 and 3. So that's our outlook. The only other thing I'll say with Flexpipe is obviously '25 was a year where international orders for that product were near 0.

We don't want to get ahead of ourselves, but I will tell you that we are seeing a substantially higher level of bid requests from international customers as we roll into 2026. We'll have to see how the conflict in the Middle East impacts the timing of things, but I do think there are at least some green shoots there in that space, and we'll keep you updated as we make progress.

That's helpful. And then I haven't heard much on this copper tariff change. And certainly, there is some pushback from the courts in the U.S. on tariffs in general. But are you thinking about that any different, but still eye on the risk profile for Shawflex?

So I don't think our view of it has changed. Obviously, it feels like something that if a tariff were to be introduced, it could happen with short notice. We're ready for it if it happens. We know what we have to do to respond to it. For now, we will continue to operate our business as we always have with Shawflex delivering everything out of its Canadian facility.

If we have to adjust and begin to deliver some things out of the AmerCable facility in the U.S., we'll do so. You're right, the tariff world is a bit crazy right now. I'd say, broadly speaking, our outlook for '26 that we've shared with you assumes that there are some puts and takes in the tariff space, but nothing of great substance changes from where we are today. So that's our expectation, but we'll have to see what happens.

And then we haven't talked about DSG. What's your expectation and what's included in your sort of 2026 guidance for DSG?

Full year, we expect DSG is a bigger contributor to EBITDA generation in '26 than it was in '25, largely on the back of improving and continued improvement in the new Ohio facility, which now supports the North American business sector. Demand is robust in North America for DSG's products.

The facility in Ohio is already producing more than we had historically produced from our Toronto facility that it replaced, but we are still in a position where we need to import a portion of the supply from our German and Chinese sites, which obviously comes with tariff costs. So the expectation is that the progression we've seen from Q3 to Q4 to early Q1 continues all the way through this year and that DSG exits this year with an EBITDA run rate that is materially better than it entered the year.

When do you think that you're going to be able to fully -- or sorry, fulfill, I guess, the demand in North America out of that facility and not have to supplement with international?

I think there will be -- there will likely always be a very small amount of international product that we need to bring in. There's a very wide range of products that we offer to the market. Some are sold in fairly small volumes and require unique manufacturing equipment to produce. And I'm not sure it will ever be in our best interest to have those products made in the Ohio site.

But I do think that the majority of what we sell in North America can be made in the U.S. I don't think we get all the way to that outcome by the time we get to the end of '26, but we'll make good progress. And I think we probably get to a point of stabilization in 2027.

I would now like to turn the call back over to Mike Reeves for closing remarks.

So we appreciate your time and interest in Mattr. Thank you for joining us for today's quarterly conference call. We look forward to hosting you again in a couple of months. I wish everybody a great day.

This concludes today's conference. Thank you for your participation. You may now disconnect.

Thank you for standing by, and welcome to the Mattr Third Quarter 2025 Results Webcast and Conference Call. 

[Operator Instructions]

As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Meghan MacEachern, Vice President, Investor Relations, External Communications. Please go ahead.

Good morning. Before we begin this morning's conference call, I would like to take a moment to remind all listeners that today's call includes forward-looking statements that involve estimates, judgments, risks, and uncertainties that may cause actual results to differ materially from those projected. 

The complete text of Mattr's statement on forward-looking information is included in Section 4.0 of the third quarter 2025 earnings press release in the MD&A that is available on SEDAR+ and on the company's website at mattr.com.

For those joining via webcast, you may follow the visual presentation that accompanies this call. I'll now turn it over to Mattr's President and CEO, Mike Reeves.

Good morning, and thank you for attending our third-quarter conference call. Today, Meghan and I are joined by our Senior Vice President of Finance and CFO, Tom Holloway.

Q3 was the first full quarter following the conclusion of Mattr's 4-year fundamental transformation, which included the divestiture of 9 businesses, the reshaping of our North American production footprint, and the onboarding of our recently acquired AmerCable business. 

With these complex strategic activities now complete, the organization is focused on leveraging its high-value portfolio of critical infrastructure products to enable progressively greater free cash generation and profit expansion. 

During the quarter, Mattr delivered year-over-year revenue growth of 39% and adjusted EBITDA growth of 16%, primarily driven by the addition of AmerCable to our Connection Technologies segment.

The company also continued to benefit from strong demand in Composite Technologies, with the segment delivering further progress on key technology development and operational efficiency initiatives during the quarter. 

Our teams remain nimble, resilient, and cost-conscious in the face of a challenging near-term business environment, and we continue to focus on those variables we can control.

Across Mattr, we are consistently prioritizing those actions and investments necessary to enable sustained technical differentiation, production flexibility, and progressively greater operational efficiency. 

Near-term business performance is likely to be impacted by continued economic weakness in certain key geographies, which we anticipate will incrementally moderate customer buying behavior during the seasonally slow year-end period, particularly in the Canadian, European automotive, and energy extraction markets. 

As a consequence, we anticipate a typical fourth-quarter lowering of revenue, and adjusted EBITDA will be more pronounced than normal, representing a low point for the year.

Consistent with our historical approach to balance sheet management, the company expects to primarily allocate capital to debt repayment in the near term. Tom will have some further comments on capital allocation later. 

Turning to review the performance of each segment during the recently completed quarter. Connection Technologies delivered year-over-year revenue and adjusted EBITDA growth of 105% and 62%, respectively.

Wire and cable revenue moved modestly higher sequentially, with relatively stable AmerCable revenue enhanced by increased Shawflex sales, which set a new quarterly revenue record, accelerating delivery of backlog from its recently relocated manufacturing site and offering an early demonstration of the new location's productive output and efficiency potential. 

Wire and cable margins moved sequentially lower on a less favorable revenue mix, primarily the result of reduced sales into Canadian mining and global oilfield applications, partially offset by higher sales into data center and utility applications. 

In early Q3, U.S. tariffs were introduced, which directly impacted the primary copper supply chain at both Shawflex and AmerCable. Moving quickly and creatively, Mattr's wire and cable team rapidly converted this supply chain from tariff to non-tariff sources.

Although this conversion led to less favorable payment terms and an associated increase in working capital during the quarter, it avoided tens of millions of dollars in annualized tariff expense. 

Revenue from the segment's DSG-Canusa business was relatively flat sequentially. The business experienced sequential margin compression, driven primarily by higher freight and tariff expenses as the finished goods inventory proactively built prior to the relocation of the business's North American manufacturing footprint near exhaustion, and output from the new Ohio site required supplementation with internationally produced products. 

While tariff and economic impacts remain a near-term concern for the segment, our talented teams have demonstrated their ability to mitigate external effects with speed and agility.

Our commercial teams continue to offset slowing Canadian mining and industrial and global oilfield activity by successfully capturing additional sales in utility, data center, and international mining markets.

In parallel, we continue to closely watch for incremental copper-related tariff announcements, which could impact our business. 

The company expects fourth quarter revenue and adjusted EBITDA within the segment will move sequentially lower as stronger DSG-Canusa performance, driven by rising production from the Ohio site, is more than offset by significantly lower demand for wire and cable in the Canadian industrial stock and project sectors.

These sectors have been hit particularly hard by the contraction of Canada's economy, with broadly lower industrial activity compounded by an aggressive inventory reduction drive from distributors serving the sectors.

We anticipate Canadian industrial demand will remain similar to fourth quarter levels for several quarters. 

Looking past the near-term disruption of tariff-induced headwinds, we maintain our constructive long-term outlook for electrification-driven demand across the segment and are pleased with the progress of our strategic actions intended to improve operational efficiency and enhance exposure to utility, nuclear, global mining, data center, and broader U.S. industrial end markets. 

Turning to Composite Technologies. The segment's third-quarter revenue and adjusted EBITDA decreased by 4% and 2%, respectively, year-over-year.

Flexpipe revenue and adjusted EBITDA moved lower sequentially as underlying oilfield activity levels continued to decline in the face of a depressed oil price. 

Mostly offsetting this weakness, Flexpipe continued to drive customer adoption of new technology with larger diameter products nearing 50% of North American revenue generation during Q3.

This continued share gain enabled Flexpipe to limit year-over-year North American revenue contraction to 3% despite a reduction in well completion activity of 16% during the same period. 

Productivity expansion from Flexpipe's new Texas site remains on schedule, and the business continues to anticipate the release of additional larger diameter products around the year-end, expanding Flexpipe's addressable market by 50% or more over time.

Xerxes's revenue in the third quarter was modestly lower sequentially as lower-than-planned production from new and newly refurbished manufacturing sites during Q2 impacted the volume of tanks available for Q3 shipment. 

These production constraints continue to improve as workforce proficiency across the Xerxes network rises, with Q3 total tank production rising by over 10% compared to the prior quarter.

Customer demand for Xerxe's market-leading solutions remains high, with orders for products serving retail fuel, data center, fire suppression, and broader infrastructure markets exceeding revenue generation throughout the first 3 quarters of the year.

At the end of Q3, the Xerxes order backlog stood at a new record high. During the third quarter, Mattr acquired an intermediary, which had historically facilitated the supply of metallic components to the segment.

This acquisition secures a multi-decade exclusive supply agreement with the ultimate manufacturer, significantly reducing costs, lowering tariff exposure, enhancing supply chain control, and lowering business risk. 

The transaction involved minimal integration or onboarding activity and is expected to deliver an after-tax internal rate of return significantly above the company's 20% target. 

We anticipate segment revenue and adjusted EBITDA will move sequentially lower in the fourth quarter as unfavorable oil prices prevail and the normal holiday season slowing of U.S. onshore activity reduces the shipment of FlexPipe products, while the onset of winter season ground conditions will lower the number of Xerxes tank shipments approaching year-end. 

Looking beyond the fourth quarter, we believe the Composite Technologies segment is positioned to outperform its markets in the coming years as efficiency and increasing output from its newly established and upgraded Xerxess' facilities, combined with the introduction of new Flexpipe technology, are expected to create significant growth opportunities for the segment in the mid and long term.

Tom will now walk us through some additional financial details.

Thanks, Mike. Third quarter's revenue from continuing operations was $314.9 million, 39% higher than the third quarter of 2024, while adjusted EBITDA from continuing operations was $34 million, a 16% increase from the comparative period in the prior year, primarily attributed to the inclusion of AmerCable results in 2025. 

The Connection Technologies segment delivered a new third-quarter revenue record of $184.2 million, which was 105% higher than the third quarter of 2024, with segment adjusted EBITDA being $7.5 million higher than the prior year.

Both outcomes are primarily driven by Amer Cable's results being included within the segment's reported numbers. 

Despite the higher segment revenue, the sales mix in Amer Cable was less favorable sequentially, and elevated freight and tariff-related costs in the DSG-Canusa business impacted profitability. 

Composite Technologies segment revenue was $130.7 million, a 4% decrease compared to the third quarter of 2024, while adjusted EBITDA only decreased by 2% over the same time period. 

This decrease in revenue was primarily attributable to year-over-year declines in North American oilfield well completions, which were partially offset by FlexPipe's larger-diameter technology sales gains.

Segment adjusted EBITDA in Q3 2024 included $1.5 million of MEO-related costs that were not present in the current year. Turning to cash flow. 

Cash provided by operating activities from continuing operations in the third quarter was $6 million. This was heavily impacted by an increased investment in working capital due to a significant shift in the copper supply chain within our wire and cable businesses to mitigate tariff impacts, which resulted in shorter supplier payment terms.

This unfavorable change in the working capital cycle was more than offset by the tariff savings achieved. 

Cash used in investing activities in the third quarter was $33.1 million, which included capital spending on property, plant, and equipment of $14.6 million and the $22.5 million business acquisition discussed previously, partially offset by a receipt of a modest working capital settlement related to the AmerCable acquisition. 

During the quarter, cash provided from financing activities was $13.2 million, primarily driven by $21.7 million of net borrowings on the company's credit facility, largely related to funding the acquisition.

Cash outflows also included the repurchase of 445,000 shares under the company's normal course issuer bid and lease liability payments. 

At quarter end, the company's net debt to adjusted EBITDA ratio was 3.9x or 2.8x if lease liabilities are excluded. This reflects the impact of higher working capital tied to tariff mitigation, modest borrowings to fund the small Q3 acquisition, and a sequentially lower trailing 12-month adjusted EBITDA. 

We remain committed to returning to a normal course ratio of 2x or below, and we'll be prioritizing debt reduction in the near term to ensure maximum future balance sheet flexibility.

While we anticipate pausing activity under our share repurchase program in the short term, this does not represent a change in long-term strategy. 

Capital expenditures recognized in the quarter were $14.3 million, with $14.6 million of cash deployed, including $7.8 million of cash outflow tied to capital expenditures previously accrued.

Q3 capital expenditures included $10.8 million related to growth projects, primarily associated with new product readiness and production equipment intended to increase manufacturing capability and efficiency within both segments. 

Full year 2025 capital spending expectations have been revised down to $50 million to $60 million from our previously communicated range of $60 million to $70 million. This is driven by spending reductions and efficiencies and does not represent costs that will move into 2026. 

We anticipate that 2026 capital spending will be within the company's previously communicated normal run rate range of $40 million to $50 million. I will now turn it back over to Mike.

Thank you, Tom. Over the last 3.5 years, we have fundamentally enhanced our ability to efficiently develop and deliver highly differentiated critical infrastructure products from an optimized footprint.

Across the matter organization, we are tightly focused on accelerating workforce proficiency and operational efficiency to enable margin and cash flow enhancement. 

In parallel, we continue to exercise tight spending control, adjusting our cost base as needed to appropriately reflect activity levels.

As previously noted, given our current view of likely market conditions and customer demand, we expect our reported business performance in the fourth quarter will be below the third quarter of 2025. 

Our outlook for 2026 remains cautious, given the impact of ongoing macroeconomic and geopolitical uncertainties experienced during the second half of 2025 and the potential future impact such factors may have on certain markets the company serves.

The company remains optimistic regarding the benefits of recent investments to develop new technology, enhance manufacturing capability, improve operating efficiency, and acquire AmerCable.

We also remain optimistic that robust near-term demand for the company's products in U.S. infrastructure applications, including fueling network renewal, water management, data center construction, utility expansion, and mining, will persist for an extended period of time.

In parallel, the company is experiencing significant declines in demand for wire and cable in the Canadian industrial and mining sectors. Expects depressed commodity prices to weigh on oilfield sector activity for the foreseeable future, and cannot yet determine the potential for direct tariffs on Canadian-made wire and cable products sold into the U.S. utility market.

Consequently, the company will not be providing an outlook for the full year 2026 at this time, but anticipates providing such an outlook when it reports Q4 2025 results.

Despite the near-term turbulence associated with macroeconomic and geopolitical uncertainty, we retain high conviction that our differentiated technologies, which support increased generation, movement, and use of electrical power and the ongoing transition to composite materials and fuel and water management applications, provide Mattr with substantial long-term growth and profit expansion opportunities.

I'll now turn the call over to the operator and open it up for any questions you may have for me, Tom, or Meghan.

Certainly. And our first question comes from the line of Tim Monachello from ATB Capital Markets.

I just want to try to calibrate the level of change in the outlook across business lines. It sounds like you're taking a more conservative stance around capital allocation, and the outlook has probably become weaken relative to where you thought it was in the last cycle.

So, maybe can you talk a little bit about under-absorption trends across the 4 facilities when you expect to hit normalized capacity in each one? And then I guess, the range of growth trajectories that you think you might achieve in each business line in 2026?

Yes. I'll certainly address some of that. Obviously, we've been clear that we'll speak more about '26 when we report Q4 results.

I think we need a little more time to see how certain things will unfold, but I'll speak more about what those items are. More specifically, in the new facilities, very happy with the progress of the Flexpipe facility in the Dallas area; the Xerxes facility in South Carolina is continuing to ramp up.

And the Shawflex facility that relocated within Toronto allowed that business to deliver a new record revenue quarter in Q3. So those 3 sites either are already at or will absolutely be at a normalized level of production as we roll into the first half of 2026.

Where we've had more challenges here recently has been the DSG facility in Ohio, which is a relocation of production activity from Canada into the U.S.

We faced a number of challenges there, which I spoke about on the last earnings call. And those challenges persisted in the first part of Q3, which led to that facility falling below our expected production output levels and required us to import products made in our German and Chinese facilities to meet North American demand at levels that were above our expectations for the quarter.

So we did incur some incremental freight logistics and tariff expenses associated with plugging that gap. The production in that facility has ramped substantially as we go through the tail end of Q3 and into early Q4.

It has already surpassed the productive output of the Canadian facility that it replaced. So we are well on the way to being back on track for that facility, and I would expect that we will be at a normalized level of production there in the first half of '26 as originally anticipated.

So some short-term pain, but not something that I expect will linger for an extended period of time.

I think when we talk about our outlook, really the one thing that has meaningfully changed from our last earnings call to today is the effect of the Canadian economic slowdown on industrial demand for wire and cable in Canada.

We have seen that the demand level has dropped quite substantially from the middle of Q3 to today. And I think it's likely to stay at a relatively low level throughout Q4 and probably well into 2026.

The underlying industrial demand has absolutely lowered. And our distribution partners are, as you would expect, working hard to reduce their inventories, which further compounds the challenge.

So what you'll see from us in the wire and cable space is cost reduction actions that have effectively already been taken and an aggressive reallocation of resources to drive incremental growth of sales of wire and cable products into U.S. utility, data center, and other applications as we attempt to overcome the shortfall in Canadian industrial demand.

So I know that doesn't give you everything you've asked for, but hopefully, it gives you enough.

And understanding that it's probably difficult from your perspective to have a view on '26, but Q1 is not too far away.

There are some seasonal factors that are impacting Q4 on a sequential basis and probably overshadowing some of the absorption improvement that you might see in Q4.

So, when you think about margins in Q1 and seasonal trends and filling up those facilities, is it a reasonable expectation to think that margins should improve sequentially in Q4?

I think there is a wildcard in there that I cannot tell you the answer to right now, and that is the potential levying of tariffs on Shawflex Canadian-made wire and cable shipped into the U.S.

As you may recall, there was an expectation that the U.S. government would make further announcements on its copper-related tariffs on the 28th of October. That date has signed on.

There have been no announcements, although that could well be due to the government shutdown. So we are waiting to see if there's something announced there and if that something impacts us.

So with that one caveat, we normally see similar degrees of seasonal impact in Q4 and Q1. The businesses that are seasonally affected are largely in the composites business, where ground conditions tend to be a factor in both quarters.

So I would say I don't see macro conditions or seasonality being materially different from Q4 to Q1. There are some upside opportunities. There is this tariff thing that we're waiting to see how that settles. And at this point, I think that's about all I can tell you.

I guess the one segment where you might see some upside for seasonality would be Flexpipe, just given the exhaust in Q4?

Certainly, the potential. I think we also need to see where oil prices move to. They sit in the high 50s today, with some potential that they could move lower. So that obviously is an effect that we need to be thoughtful around.

Right now, I would expect activity levels would follow a normal seasonal track, which means we're slower as we go into the holiday season, and then we start to see activity move up as we roll into, let's say, the second half of January.

So we'll have to see how the customers respond to oil prices. I doubt there will be a material movement provided oil price stays where it is now.

And just on Canadian industrial demand for wire and cable, is that isolated to like lower-margin stock products? Or are you seeing that across some of the higher-margin product lines as well?

We've seen it across the industrial sector. So projects and stock products have been impacted very similarly.

Obviously, we don't have perfect insight into other suppliers in that space, but we can tell by quoted lead times that I think everybody working in that space is seeing exactly the same effect.

And our next question comes from the line of Ian Gillies from Stifel.

Can you talk a little bit about the margin dynamics in Connection Technologies and Composite Technologies sequentially? Just revenue is reasonably flat, and margins are down. Is it solely due to product mix? Or is there product price inflation? I'm just trying to reconcile that.

Yes. So I mean, I think I'll take the first stab at that. Are you asking Q2 to Q3, Ian? Or are you asking Q3?

Yes. Yes, specifically Q2 to Q3.

Yes. I mean I think if we look at Connection Technologies, we had let the market know that we thought AmerCable's margins would be down quarter-over-quarter given the mix, and that played out about how we expected.

We saw some good data center orders, which are great. They fill the pipeline, and it's good business, but it's slightly lower margin than some of the oil field or mining activity that we see in that business from time to time.

So that played out about how we expected. I think the big wildcard here and the big impact was the DSG business, the Ohio facility. And in Mike's prepared comments and mine, we talked about the fact that because of production struggles in that facility, we have to augment it with German and China production from our other facilities, get that across to North America to meet customer demand, which is great. 

But the cost of doing that is that we had expedited freight costs and tariffs on those products to get them over here at a much higher level than we anticipated.

That we do not anticipate persisting, which is why you will likely see DHT margins move up in Q4. But that's the biggest dynamic that was playing out in that particular Connection Technology space.

And then stepping back, looking at the balance sheet, do you feel the need to pursue asset sales or any other discrete financing to plug the balance sheet? Or do you think you can work your way through this?

No. I mean, we feel very confident with our ability to plug our way through this. I mean, our secured net debt covenant ratios are well within range.

Obviously, you see the interest coverage ratio getting a little tighter as you get EBITDA shrinking a little, but we feel very confident in our ability to manage through this.

The capital allocation pause on the NCIB is really more of let's really focus on that ratio and get it down so that we can be more aggressive in the future with allocating capital in other areas.

As I said in my remarks, that is not a long-term change. That is something we're just doing in the short term to make sure that this market dynamic that is causing the macros and therefore, our results to be impacted, doesn't create further issues. 

So just trying to get in front of that. But we don't see any significant issues or concerns. No asset sales would be required there.

And our next question comes from the line of Arthur Negorny from RBC.

I just want to touch on the large-diameter pipes within Flexpipe. I guess that's now at 50% in North America, as you mentioned.

I know you've previously outlined that as being the target. But now that we're here, is there any indication that you can get that number maybe above 50%?

Yes, absolutely. I think the market continues to evolve. Customers generally are migrating to larger and larger products.

And I think what started out three years ago as that business representing about half of our revenue as a potential is now, I think, considerably greater than that.

So as we roll forward, I think we would expect that we can continue to grow share with the current large diameter products, and they will likely move to north of 50% of our revenue generation in North America.

And then, of course, we will be supplementing that with additional large-diameter variants that we introduced early in the new year, which will open up a substantial new market opportunity that we would expect to grow into over a period of years. 

So while the underlying market for Flexpipe in North America has obviously been challenging conditions, 16% year-over-year decline in well completion activity, the business has performed extremely well.

Our revenue is just barely down year-over-year, entirely due to the success of the sales team capturing incremental share, deploying new technology, which will be enhanced as we roll into 2026.

So I think in almost any market environment, Flexpipe is going to be an outperforming business as we roll forward. And if we can see some stabilization of underlying activity levels, then obviously, the business can start to deliver some meaningful growth.

On Xerxes, I guess, last quarter, you disclosed that you, I guess, had a backlog going into mid-2026. Just curious where that stands now?

And separately, could you maybe touch on how demand is trending with data center customers specifically?

Yes. So over the last 12 months, Xerxes has added approximately $100 million to its backlog.

The backlog at the end of Q3 stood at an all-time record and represented somewhere north of six months, somewhere a little south of nine months of forward revenue. 

So the business is facing sustained and growing demand, which we believe will persist for many years to come. Hence, our very strong focus is on enhancing productive output.

As I mentioned in the prepared remarks, productive output rose by more than 10% from Q2 to Q3. Obviously, Q4 will be a little slower because of the ground conditions. It limits some of the shipments that we'll see.

But the business will exit this year with a productive capacity that is materially above the level that it entered this year, which sets us up for that business to have some strength in 2026 and beyond.

Data center demand continues to be very robust. We're able to take incrementally more orders as our very large molding for the tanks that data centers require continues to expand, and that's mostly in the Blythewood facility in South Carolina.

So I think Berks is all in all positioned to have good performance as we roll forward. We're still working on operational efficiency. While we've got a new site and a fully refurbished site, we still have 4 sites that have existed for nearly 40 years, with limited investment until recent years.

So the opportunities to extract incremental efficiency and production output from those sites are still there, and the teams will be incrementally extracting that as we roll through the next several quarters.

And then on AmerCable, I know you shared a little bit of color there. It sounds like things are progressing more or less as expected.

Would you say that acquisition is still on track with the guidance that you previously laid out, I guess, specifically on the adjusted EBITDA front?

Yes, great question. I would say, Arthur, that AmerCable has performed extremely well despite the market challenges in some of the end markets; they've replaced those orders with other orders as we talk about the data center piece.

And for the full year, we expect them to perform at or above their initial expectations that we had communicated to the market. So very, very pleased with the execution and the integration process and onboarding process, which is effectively complete at this point.

And then the last one for me. Is there any way that you can help us with the direct tariff impact, what that looked like across the business this quarter?

And maybe what the outlook for that is going forward, given some of the mitigating actions that you've undertaken?

Yes. I think last quarter, we had signaled that we expect it to be roughly $1 million to $2 million per quarter per segment. That's generally in line with our expectations going forward.

As I talked about the DSG dynamic going on, there were a little more tariffs in the third quarter than we anticipated. And so there might be a little uptick in that.

So if you were to say $1 million to $2 million in the Composites business per quarter, I think that's in the right range. If you were to say maybe on the upper end, closer to that 2 number for the fourth quarter in the Connections segment, and then getting back to normalized, probably 1% to 2% going forward after that.

But that's how we see it. And obviously, we're trying to bring that down as much as we can, but that's effectively what we expect.

Yes. The other element that's worth noting here is that with the announcement of tariffs on certain copper products that were issued in early August, had we not rewired our supply chain following that announcement, I think we would have been facing an annualized tariff cost on our copper supply chain that could easily have been $50 million a year.

So very, very proud of the teams within Shawflex and AmerCable that worked within a matter of weeks to rewire that supply chain. Obviously, we're carrying a little extra net working capital as a consequence of some less favorable payment terms, but that's a small price to pay to avoid up to $50 million of annual tariff costs.

So I'd say, broadly speaking, we're doing a very good job of mitigating the direct effects of tariff announcements on the company. Where we are struggling is customer effects from tariffs and knock-on economic impacts, particularly in the Canadian industrial market right now.

And our next question comes from the line of Michael Tupholme from TD Cowen.

Tom, can you talk about how we should be thinking about changes in noncash working capital in the fourth quarter, as well as any initial thoughts around the 2026 full year for that?

Yes. So, as Mike was just referring to the copper supply chain piece, we did see the third quarter move negatively, almost entirely because of that. And that negative working capital piece was really just that.

So our previously discussed trajectory for Q4 should be intact, where Q4 is an unwind quarter. We should see working capital move favorably. Our DSOs are in a good place. We're working to get inventories down, and our DPOs are in a pretty good place.

So I would expect the fourth quarter to be a release of working capital as we had signaled before. As we go into next year, our general trend over the course of the quarters is that the first quarter is our worst working capital quarter as we invest working capital for future quarters' orders.

The second quarter is trending a little bit better than that. And then the third and fourth quarters generally are more of an unwind quarter this year, being the exception because of that copper supply chain.

And just to say, that supply chain has now been adjusted, so we don't anticipate significant moves unfavorably because of that. What we're hopeful about is not committing to this yet, but what we're hopeful to be able to do is actually improve those payment terms and make that a little better over time.

And then some of the commentary around the balance sheet and leverage and pausing buybacks, focusing on debt repayment.

How should we be thinking about the evolution of the leverage ratio here, and when you would expect to be getting back within your target range, and then sort of freeing up capital to be deployed to other alternative uses?

Yes. I think if you look at what's happened in '25, I mean, we've had a couple of down quarters as you're noting here, that's what's really impacted our ratios.

So the business is still generating good, healthy working capital and cash flows, other than that. As we go into '26, again, as Mike touched on in his commentary, we see the impact of '25 moving into '26. And so we're, therefore, being cautious with the way we're managing the balance sheet.

I would tell you that the seasonality in the first quarter will mean the first quarter is a lower quarter over the course of 2026, which is normal. That's what happens in our business every year.

So, as you look at our use of cash during that period, we want to put as much as possible into reducing that debt. That's the reason for that change.

I think from a trajectory, depending on where the fourth and the first quarter end, you could see that ratio tick up just slightly because of the EBITDA numbers and then start to decline as we move through the course of 2026.

Given what we know from the macros now, it's going to take us most, if not all, of '26 to get back to a 2x ratio, and it could take us slightly longer depending how these tariffs impact our customer behaviors and those sorts of things.

But as I said previously, we don't see any need to do anything drastic here. We're just taking precautionary measures to make sure we're being proactive, getting that interest down, getting that debt down to ratios that we're comfortable with.

And then just the last one. I don't know if I missed this earlier, but the small acquisition you did, which sounds like it was really to help on the tariff side of things and supply perspective.

But can you maybe quickly speak about that, unless you've already covered that, and I can go back and review that. But secondly, like there is mention about the possibility of sort of future acquisitions and being opportunistic?

And how do we think about that and when you would have appetite and be potentially looking at something further on the M&A side?

Yes. Maybe I'll address the acquisition, and I'll pass to Tom to talk about the future. We have historically purchased metallic components to support the composites business.

We don't use a huge volume of them in the big scheme of things, but they are an important component of the supply chain for both Flexpipe and Subsea.

We made a number of changes in our supply chain over the course of the last 18 months to lower our reliance on Chinese origin products and migrate that reliance to other lower tariff, lower cost environments.

In that process, we were working with an intermediary, which was very helpful. But now as we start to see particularly Flexpipe larger diameter products come to market and the expected consumption of these metallic components rise, we felt it was a good moment to take advantage of an opportunity to acquire the intermediary, simplify the supply chain, enhance our margins, lower the tariff costs that we will have to pay going forward and take some risk out of that.

So that's the decision we made midyear, relatively modest acquisition, but one that was strategically important for the Composites segment and will pay back very healthily over the course of the next two, three, four years.

So feeling good about that decision. Tom, do you want to speak about M&A?

Yes. On the M&A front, obviously, with pausing the buybacks and putting money into debt, you shouldn't expect us to be active in the M&A space other than filling our pipeline, which we will continue to do because obviously, it takes years to do that sometimes we get good deals on the table.

But I would not expect to see anything in '26. Again, we're always opportunistic and looking for things. But from a balance sheet perspective, we really want to get that ratio down and get back into a comfortable level before we are really active again.

So likely a pause in '26, again, filling the pipeline, but not doing a deal and closing anything unless something changes materially in the market. I do think you should expect us to try to be active again as we get into '27.

Again, things have to go right, but our ratio should be getting into a range at that point where we'd be comfortable looking at something and again, expanding this business.

And our next question comes from the line of Zachary Evershed from National Bank Capital Markets.

So just continuing on the question about the small acquisition there. Internalizing a supplier obviously comes with a little bit of margin accretion. Do you think that will be noticeable on the P&L?

I do. But I think it will take until we are working our way through 2026 before we start to see the full benefits of that.

Obviously, there's certain inventory already in our system that predates the acquisition. But as we draw that down and start to see full advantage of the acquisition, we should see it in both Xerxes and Flexpipe margins.

And obviously, as Flexpipe becomes an increasingly bigger consumer of these metallic components with larger and larger diameter products and as that revenue stream starts to ramp up, we will see incremental benefit from the acquisition.

So maybe low single-digit EBITDA millions of incremental margin in 2026, perhaps a little better than that, but probably in that range. And I think we can get into double digits as we roll into '27.

And then, since we're talking about the larger diameter Flexpipe products, can you speak to your most recent expectations for the sequencing of sales for the addition of those additional large diameter products and the higher [indiscernible] Flexpipe products?

Yes. So I think the likely growth path for the new products that we will introduce right around the end of the year is probably going to follow a similar curve to that, that we experienced with the 5-inch and 6-inch products, which were released somewhere in that '21, '22 time frame.

So I think we would expect that revenue is, let's say, $10 million or perhaps a little less in 2026, but ramping quite aggressively from there as we roll forward. Obviously, there's substantial demand in the market.

We believe that we are well positioned to take that. Obviously, you have to ramp up production. And in many cases, customers will want to try it once and evaluate performance before they try it for a second time.

So there will be a gradual roll into the revenue contribution from this one. But nonetheless, the products, I think, are going to prove themselves to be very robust.

I think customer pool will be significant. And in 12 months or 18 months from now, we will find that these new products make up a material percentage of the revenue of the business.

And then on Xerxes with a two- to three-quarter backlog, why do ground conditions for installation limit your output?

Couldn't you be working with customers on terms around taking ownership so you can just be cranking out tanks during the off-season as well?

We did. So the physical installation of tanks, obviously, is impacted by the ground conditions.

We produce at full capacity all year long because we, quite frankly, are still not in a position to meet 100% of our customers' demand. So there is no incentive to back away from production at any point in the year.

Tanks that we produce during periods where customers can't physically install them will, in most cases, get invoiced upon completion and then will be stored on our own land until the customers can take them.

There is a number of accessories that are billed to customers when tanks are shipped to their final installation location. We don't get to charge for those items until we physically ship them.

So if you go back and look historically at the revenue of Xerxes and how it was really very seasonal, it is far less seasonal today because we've managed to migrate most of our customers to a bill upon completion agreement.

But there's some seasonality because not every customer has agreed to allow a bill upon completion. And if we don't ship a tank, we don't get the bill for the accessories. So that's why you see some modest but still noticeable seasonality in that business.

And then, I guess if we set the potential for incremental tariffs aside, do you think you're being overly negative in your outlook here?

Try not to be overly negative. I think we are trying to be realistic, given what we have seen unfold over the last 2 quarters.

It takes time for tariffs to work their way through supply chains and all the way to customers, and ultimately have an effect on customer behavior. And we are seeing now the effect of tariffs that were implemented in the first half of the year on the Canadian industrial market.

We've seen Canadian economic activity slow, actually turn negative in Q2. And we are seeing the effects on the industrial infrastructure in Canada. 

So that is the biggest area where I am cautious looking into 2025. There's some element of the slowing in industrial demand in Q4 that is related to distributors lowering their inventories.

How long it will take them to get to a point where their inventories are in balance is not yet clear. Whether we will see any positive impact from the recently announced Canadian federal budget and the investments into capital projects is also not yet clear. 

If we see federal dollars start to stimulate industrial activity at some point in 2026, then obviously, that would pose an upside opportunity. If we see something approaching a return to balance in the oilfield markets and we see oilfield pricing move up, that would present an upside opportunity.

I'd say while there are these macro elements that obviously we are keeping a close eye on and are not necessarily favorable for the business, there are also bright spots. 

We've spoken about Xerxes and the overwhelming demand that business has. I think Xerxes will enter 2026 with lots of opportunities. We talked about Flexpipe's large diameter.

We talked about the success that Abberable has had in penetrating the U.S. data center market. We continue to see strong demand from U.S. utilities. 

We continue to see strong demand for mining outside of Canada, nuclear, and water. There are a lot of areas where we see strong demand and think that will prevail throughout '26.

The areas where we are facing some challenges are substantial enough that they are worthy of conversation. So I am trying not to be overly negative or overly positive. Hopefully, we're presenting a balance.

And our next question is a follow-up from the line of Tim Monachello from ATB Capital Markets.

Quick follow-ups. On the freight costs from Europe on DSG, how much that contribute to the margin weakness in Q3 projections?

Yes. I mean, I would say it was an order of magnitude, a couple of million dollars. So you can probably do the math on that.

But that's the order of magnitude. And as I said, we don't anticipate that continuing at that level going forward. But yes, that's the impact for the quarter.

And then on the intermediary position, I'm just curious, strategically, what prevented you from just going straight to the...

So obviously, you have to, I think, be mindful of what experience and skill sets you have in an organization and what you don't have.

In this particular case, we were not perfectly positioned to organically execute the establishment of a production footprint and the output of these products in the case of Vietnam.

So we chose to work through a party that had that experience, and I'm very pleased that we did. 

The pace at which we were able to set up that footprint, have access to those products and those costs and those quality levels has been very beneficial over the course of the last 12 to 18 months.

So we chose a pathway that we thought would yield the highest value for the business. And at this point, I think that's going to prove to be the case.

And does that intermediary have any other customers, or are you the sole customer? Just curious if there's any other revenue that comes out of this acquisition.

We did not acquire anything that involved us supplying to a third party. So this is entirely supplied to our own business.

And do you get exclusivity?

Yes. So we have a multi-decade exclusivity arrangement, which obviously we believe will have that.

Is that one of the strategic rationales? Like, are you cornering the market on this component from Vietnam, I guess?

So I would describe these components as being proprietary components to us. But in the way we've structured the deal, we can ensure that our competitors don't get similar products from the same source.

So I think we have protected ourselves in terms of intellectual property, having a pricing advantage, and, of course, now gaining some tariff advantage as well.

And in the event that these tariffs go away, does the accretion of this deal also go away? And does it make sense if there are no tariffs?

The accretion does not go away. Obviously, if there are no tariffs anywhere in the world, then the calculation would change a little bit, but the value associated with securing this incremental margin by removing the intermediary and having direct access to the end producer is something that would have made sense regardless of the tariff environment.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Mike Reeves for any further remarks.

We appreciate everybody's time and attention here this morning. We look forward to speaking to everybody when we release our Q4 earnings results next year. Have a great rest of the day.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.