Mattr Corp. (MATR) Earnings Call Transcript

Hello, and thank you for joining us today. Welcome to the webcast and conference call covering Mattr's fourth quarter 2025 results. Right now, everyone is in a listen-only mode. Once the speakers finish their presentation, we'll open things up for a question-and-answer session. If you'd like to ask something during that session, just press *11 on your phone. An automated message will then come on letting you know your hand has been raised. Should you want to pull your question, simply press *11 once more. Please note that this conference is being recorded today. I'll now turn the conference over to Meghan MacEachern, Vice President, Investor Relations and External Communications. Meghan, please go ahead.

Good morning, everyone. Before we get started on today's conference call, I'd like to take a moment to remind all of you listening that this morning's call contains forward-looking statements. Those statements involve estimates, judgments, risks, and uncertainties, and they may cause actual results to differ materially from what has been projected. The full text of Mattr's statement on forward-looking information appears in Section 4.0 of the fourth quarter 2025 earnings press release, as well as in the MD&A, which is available on SEDAR+ and on the company's website at mattr.com. If you're joining via webcast, you can follow along with the visual presentation that accompanies this call. I'll now hand things over to Mattr's President and CEO, Mike Reeves.

Good morning, and thanks for joining us on our fourth quarter conference call. Meghan and I are here today with Tom Holloway, our Senior Vice President of Finance and CFO. Mattr wrapped up the year on a strong note. Better operational efficiency and opportunistic sales — especially at Xerxes, Flexpipe and AmerCable — offset the usual seasonal slowdown late in the year and pushed Q4 adjusted EBITDA to more than twice what it was in the prior-year quarter. On the operational side, we pulled additional performance gains out of our newly established sites, and that trend has carried into early 2026. Our teams stay nimble, resilient and cost-conscious even as the business environment keeps shifting, and we remain focused on the variables within our control. Throughout Mattr, we consistently prioritize the actions and investments needed to support sustained technical differentiation, production flexibility and progressively greater operational efficiency. Turning to the full year: 2025 brought unprecedented disruption. While we carried out our growth, technology development and operational improvement strategies, the world around us changed rapidly — a trend that has continued into 2026. Even so, Mattr achieved meaningful year-over-year growth in revenue and adjusted EBITDA, driven mainly by the successful early-year acquisition of AmerCable and significantly improved results from Xerxes. We executed effectively on our 2025 strategic priorities, moved nimbly to mitigate direct tariff impacts, and kept advancing the initiatives that matter most to our long-term growth.

That said, certain areas saw operational execution come up short of what we expected, and softness in some end markets—especially Canadian industrial wire and cable—required us to move resources and focus faster. Those difficulties affected 2025, but the steps we took in response have already produced gains and put Mattr in position to deliver steadier performance ahead. Our Composite Technologies segment posted a modest rise in full-year adjusted EBITDA for 2025. Even with substantial drops in oilfield activity levels, Flexpipe's results held steady, since the business successfully used new, larger diameter products to bring on more customers and capture market share. At Xerxes, better manufacturing efficiency let us capture more customer spend as demand stayed strong for underground fuel and water tanks, fueling year-over-year business growth. The segment also gained from the absence of one-time modernization, expansion and optimization costs that weighed on 2024. As we enter 2026, Flexpipe is positioned to keep gaining market share, including by adding 7- and 8-inch products, for which our first commercial order is already secured, and Xerxes is expected to drive productivity further across its manufacturing network, enabling another year of profitable growth. Connection Technologies gained greatly from adding AmerCable in 2025, which drove a significant increase in full-year adjusted EBITDA.

Getting that highly accretive acquisition over the finish line, running through an onboarding protocol efficiently, and putting the seasoned AmerCable leadership team in position to beat our first-year expectations was a major accomplishment. Strong results at AmerCable offset several challenges during the year in the segment's legacy DSG-Canusa and Shawflex businesses, whose performance took a hit from one-time modernization, expansion and optimization costs, from ramp-up difficulties at the newly established DSG-Canusa Ohio facility, and from softening in the Canadian industrial wire and cable market late in the year. Q4 brought solid productivity and efficiency gains at the DSG Ohio site along with accelerating U.S. utility market share capture within Shawflex, and that progress has carried into the early part of 2026. During a year of escalating and constantly shifting trade friction, our teams showed their agility by quickly realigning supply chains, which ultimately let the company avoid material direct impacts from tariffs during 2025. I want to thank our employees, who worked so hard all year to overcome these challenges. We are a stronger organization because of 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. Revenue from continuing operations in the fourth quarter came in at $312.5 million, up 50% compared with the fourth quarter of 2024, and adjusted EBITDA from continuing operations reached $31.8 million, which represents a 150% increase over the prior-year comparative period, mainly because AmerCable's results were included in 2025. In the Connection Technologies segment, fourth quarter revenue hit a new record of $190.7 million, 118% above the fourth quarter of 2024, and segment adjusted EBITDA came in $14.3 million higher than the prior year. Both of those outcomes are mainly the result of AmerCable's results being included in the segment's reported numbers. Although the Shawflex business continued to see weakness in the Canadian industrial market, DSG showed positive activity in Europe and improvement at the new Ohio facility. AmerCable benefited from a favorable sales mix and better production efficiencies during the fourth quarter, which drove overperformance relative to expectations. Revenue in the Composite Technologies segment was $121.8 million, roughly flat versus the fourth quarter of 2024, while adjusted EBITDA rose 57% over that same period. Compared with the prior-year quarter, sales in the fourth quarter of 2025 leaned more heavily toward the Xerxes business, as demand for fuel and water tanks stayed robust and the usual late-year seasonal slowdown was less pronounced than normal.

The boost in segment profitability compared with the same quarter last year came mainly from a better margin mix and greater production efficiencies across both businesses, as recently finished production facilities reach maturity and existing ones keep improving. Revenue for the full year from continuing operations totaled roughly $1.3 billion, up 43% against 2024. Adjusted EBITDA rose 43% as well versus 2024, hitting $154.8 million in 2025. That year-over-year growth was mainly credited to the AmerCable acquisition, which beat expectations, along with strong results in the Xerxes business. Flexpipe delivered a good performance that offset declining oilfield activity and finished the year about neutral to 2024, whereas Shawflex and DSG experienced declines connected to disruption from facility relocation, startup difficulties at the DSG Ohio plant, and a late-year slowdown in the Canadian industrial wire and cable market. Turning to cash flow, cash from operating activities in continuing operations during the fourth quarter was $80.2 million. Solid operating cash flow that quarter came from higher gross profit and cash generated through working capital releases. Strong collections and lower inventory were the main factors behind the reduced working capital levels. Cash used in investing activities consisted primarily of capital spending on property, plant and equipment, amounting to $13.2 million in the fourth quarter.

That capital expenditure outflow takes in sums accrued earlier that got paid during Q4 of 2025. Discontinued operations take in cash flow stemming from settling the liquidation of working capital connected to the divestiture of the Thermotite business, and that likewise fed into overall fourth-quarter cash flow. In Q4, cash used in financing activities came to $48.1 million, chiefly from $43.5 million of net repayment on the company's credit facility. Cash outflows also took in recurring payments on lease liabilities. Capital spending for the full year, net of amounts accrued in 2024, came to $52.3 million, consistent with guidance given earlier. We expect capital spending for 2026 to land between $35 and $45 million, which sits modestly under the normal run rate we communicated previously. As of quarter end, the company's ratio of net debt to adjusted EBITDA stood at 3.1 times, or 2.2 times when lease liabilities are left out. Although we still anticipate some swings in the reported ratio, we stay committed to getting back to a normal course ratio of 2 times or below, and we keep prioritizing debt reduction near term so as to ensure maximum balance sheet flexibility down the road. Although we have paused activity under our share repurchase program over the short term, that does not signal any change in long-term strategy.

Given the significant decrease in debt we've seen from the close of Q3 2025 onward, management is currently assessing the approach to share repurchases and intends to share an update on that plan when we report results for Q1 2026. At this point, I'll hand things back to Mike.

Thank you, Tom. I feel a great deal of pride in how Mattr's people met the opportunities and the challenges — internal and external alike — throughout 2025. Going into 2026, outside forces keep showing themselves to be unpredictable. Even so, each business holds obvious opportunities, and certain end markets are especially strong. Our attention stays firmly on operational execution, on bringing new technology to market, and on making our commercial focus and capabilities stronger in key sectors. We are putting priority on steps that improve our business further and build resilience, so that we are well placed to win no matter what external influences arise. The work done across the past 5 years gives us a solid foundation for efficiently developing and delivering highly differentiated, critical infrastructure products from an optimized footprint. Now that the company's modernization, expansion and optimization actions are finished, capital spending will come down and is expected to land slightly below our normal range in 2026. We have finished the work of establishing an appropriate long-term production footprint able to support growth across both segments for years ahead, and we have redirected resources to speed up progressive efficiency gains from that new footprint even more. At the same time, we keep investing in developing new technology, including the recent launch of 7- and 8-inch Flexpipe products for early commercial use.

One thing that stood out to me was that a top customer in North America placed its initial order for these products, and we anticipate being able to report several additional orders when we hold our next earnings call. In our view, the biggest near-term opportunity we can control sits inside the four walls of our own manufacturing plants. During the fourth quarter, both segments managed to speed up workforce proficiency and operational efficiency at every new factory as well as at numerous legacy sites, and that momentum has carried forward into early 2026. Greater productivity should result from these gains, helping to lift margins and cash flow over the coming quarters and years. At the same time, identifying higher-value end markets and shifting toward them remains a priority for us, especially in our wire and cable businesses. That emphasis produced additional orders in the fourth quarter and into early 2026 linked to U.S. and Canadian utility and data center applications—appealing end markets with long-term demand growth drivers. After the quarter closed, we signed a multi-year frame agreement with a large Canadian nuclear operator, which strengthens our confidence that this growing end market will keep contributing over the coming decade and beyond. Underlying near-term oilfield and Canadian industrial fundamentals are unfavorable and likely to produce a lower full-year activity baseline than 2025 in our wire and cable businesses, but as a corporation we expect to offset much of that weakness through sales expansion into other targeted markets, operational efficiency improvements and new technology introduction, particularly in Composite Technologies and DSG-Canusa.

So as a result, for 2026 we presently expect reported revenue and adjusted EBITDA to come in around the same as 2025, or slightly lower. What we've seen in the early part of the year gives us confidence that seasonal effects — which usually make Q1 the weakest quarter of the year — can be largely offset, and at this point we believe first quarter revenue and adjusted EBITDA will be comparable to the fourth quarter of 2025. We remain highly convinced that our differentiated technologies — which enable greater generation, movement and use of electrical power, along with the continuing shift toward composite materials in fuel and water management applications — give Mattr considerable opportunities for long-term growth and profit expansion. With that, I'll hand the call to the operator and open things up for any questions you might have for me, Tom or Meghan.

Thanks. Just a quick reminder that if you’d like to ask a question, you can press *11 on your phone and then wait for your name to be announced. If you want to take your question back, press *11 once more. Please hold while we put together the Q&A roster. Our first question is from Yuri Lynk at Canaccord Genuity. Your line is open now.

Morning, everyone — good to have you here.

Good morning, everyone.

Good morning, everyone.

Regarding the guidance, from what I can see, it seems to suggest a 10, 11% EBITDA margin in Q1, followed by a significant improvement at some later point. First, would you say that's an accurate way to put it, and if so, what would drive any margin improvement later in the year?

Yes. Thanks for that, Yuri. I'd say your estimate for the first quarter is roughly correct. Low double digits is what we'd anticipate, and then an increase from that point, with the usual seasonal pattern in Q4 making Q4 somewhat closer to Q1, which is typically how it goes for us. The middle quarters are usually our strongest. Higher activity pushes the margin up, and keep in mind that we're making operational improvements at a number of these facilities and seeing solid progress, so that will keep lifting those margins as well.

All right. Now, regarding a few of the challenges in Canada, in industrial, and I believe you also brought up mining — to me, mining would look quite robust. As for industrial, when I scan the companies I cover, it's hard for me to pinpoint where the softness lies. Could you give a bit more detail on that, along with any forward-looking metrics you monitor and what signal they're giving — whether that's more upbeat or downbeat?

Yes. On the mining side, during the second half of 2025 and the early portion of '26, we observed strength across numerous mining sectors, though there was an interval when potash miners in particular held back on spending to extend mines — and that is typically where our wire and cable business generates the most meaningful revenue. As we've moved into the early part of 2026, I can report that those potash miners have begun to be somewhat more active once again. Although I believe we head into 2026 with a somewhat lower activity baseline throughout the full mining spectrum for the wire and cable business, I do expect that we will see gradual improvement in that potash mining space, which clearly benefits us. On the industrial side, I share your view that the broad industrial sector is displaying reasonable stability. Keep in mind that our exposure to the industrial market in Canada is mostly concentrated in wire and cable, and as we've noted on prior calls, part of that exposure consists of what we've called industrial stock products. These are generally the less differentiated wire and cable components that distributors hold and then deploy on various projects.

That segment has been extremely, extremely battered across the past three quarters in particular. Mostly this happened because U.S. tariffs were imposed on those goods coming from overseas producers, and those overseas producers then pushed their capacity into the Canadian market instead. Pricing on industrial stock products has shifted to a level unlike anything we have witnessed in many decades. Because of that, as I said on the August conference call last year, we deliberately chose to pivot away from that market. At present I do not expect us to pivot back toward the industrial stock market in 2026. I don't believe there are returns for us in that space. It's important to note that our pivot away from the industrial stock wire and cable space was offset by a pivot toward utility opportunities in both the U.S. and Canada. In the late stages of '25 and continuing into the early part of 2026, we have seen good positive progress there. I can see in our numbers that we are capturing incremental business on both sides of the border in these utility applications, with margins that make sense for us. Through the course of 2026, I think what you'll see from our wire and cable business is that we strengthen that utility exposure, which in turn strengthens the margin profile of the business progressively as we work our way through the year.

With any luck, that gives you the picture you were after.

Excellent. I'll hand things off at this point and rejoin the line, everyone. Appreciate it.

Thanks, everyone.

The next person to ask something is Ian Gillies from Stifel. Your line is live now. Ian, we have your line open. Kindly verify that your mute button isn't engaged.

Oh, good morning, everybody. My apologies — it got disconnected right as they were saying I was the one in line.

Good morning, everyone.

On the margin side, you touched a bit on what those shoulder quarters will look like in Q1 and Q4. Could you say a little about where you expect the high watermarks might land in the middle part of the year, given somewhat more activity based on the scope of work you know as of today?

Maybe I can spend a moment on how we expect margins to develop from here. The first point to keep in mind, naturally, is that as we go into 2026, activity levels across several of our end markets sit below where they stood when 2025 began. Our market forecast, together with our ongoing penetration of key markets, plus the efforts we've already made and keep making — which are producing incremental gains in operational efficiency — I believe brings us to a point where we would clearly anticipate that our overall margin profile during the second half of 2026 compares favorably with the second half of '25. Broadly speaking, I think, on average, margins in the second half of '26 will come in above those of the first half of '26. The peak across any quarter in 2026, I think, is likely still in the low teens, though I'd note there's a substantial amount of opportunity for us to look at going beyond that level should external markets cooperate somewhat. I'm quite confident that internally we're doing all the right things, performing strongly on the operational side, driving the correct refocus and growth within the right end markets, and seizing a great many opportunities that the market is presenting to us.

Right now, the world is hard to forecast. Certain outside developments could certainly provide a bit of added tailwind, though other factors out there might create somewhat more of a headwind. Being cautious, we'll put the upper end of the range at lower teens for the time being.

Understood. On Q4 — and sorry if I missed this in the prepared remarks — was there anything worth flagging in Q4, perhaps specifically involving AmerCable, around one-time sales that gave revenue and margins a lift? It simply landed somewhat stronger than I had anticipated.

That revenue was definitely a pleasant way to close out the year. Clearly, part of that came from the copper price run-up, which pushed revenue higher, and that is simply a normal reaction to moves in that commodity. That team keeps proving highly effective at locating and capitalizing on what I'd describe as opportunities outside the traditional mold. On last quarter's call, we discussed the initial wins and deliveries achieved in the data center market. Q4 brought additional evidence of that. We also picked up some opportunistic sales tied to mining applications. A couple of customers encountered problems at mines and required replacement wire and cable, and we could respond extremely fast to assist them. A handful of items that may not recur each quarter worked in our favor, but overall, I'd characterize the AmerCable team's execution as highly consistent. Looking ahead as we move into 2026, my expectation remains that AmerCable will keep finding and securing additional work in the data center market, even as we manage an oilfield market that will probably be somewhat less active than it was in '25.

Got it — at this point I’ll hand the call back over.

Thanks. The next person to ask a question is Tim Monachello of ATB Cormark Capital Markets. Your line is open now.

Morning, everyone — thanks for joining.

Good morning, everyone.

Turning to the new Shawflex plant in Vaughan — given some of those headwinds you mentioned around demand for stock products and all the rest, how is that site performing when it comes to utilization and the count of lines running right now?

Yes. We are absolutely not at full utilization. You might remember that in Q3 we discussed achieving a new revenue record for that quarter. Part of that came from making up for the disruption caused by the move we went through during the first half of 2025. I believe Q4 gives a more accurate picture of the activity level that business is currently running at. Without question, we are under the facility's maximum capacity. At this moment, I would characterize our efficiency as suboptimal, though we are headed in the right direction. As I said in response to an earlier question, the business mix going through that facility is trending favorably—less industrial stock and more utility. That facility needs somewhat more volume to demonstrate its full potential, and that is clearly the objective here. We have put some investment into additional commercial capabilities, especially in the U.S. utility space. We have seen some early success there, but we need that to continue. I am confident it will, and as we get a bit more volume moving through that facility, the margin expansion they can achieve will definitely begin to speed up.

Do you believe your cost base is sized appropriately for the operations you anticipate over the coming 12 months?

Yeah, I do. That's right. I believe we're in good shape. We've taken a careful look at how many people we have working in plants where demand isn't as strong as we'd like. In other areas of the company — Xerxes is one example — we're actually adding shifts at nearly every plant. Demand in that business is still very high. Our chance in '26 is to capitalize fully on that by building more and more tanks. The steps taken during the past 12 months, and the ones still underway at Xerxes, should, I believe, deliver a tank output increase of 10% or more year over year, and much of that comes from our capacity to bring in, keep, and train workers — something we're handling far better now than we were a year ago.

Ottawa recently unveiled a spending package focused on defense, Arctic infrastructure, and similar areas. In your view, does Shawflex have any involvement in cabling tied to defense applications? I realize that's an end market the company had been aiming at and likely one where you don't have much presence at present, but what's your thinking on that market and the opportunities it presents?

There are always opportunities, in my view. Shawflex, as you mentioned, has not traditionally concentrated on defense, and becoming an approved vendor for those applications would require us to go through that process, though it hinges on the particular opportunity. I can tell you that in the past we have won reasonably substantial orders for icebreakers and other marine vessels. There is opportunity in that area, I believe, whether it comes via the Shawflex brand or AmerCable. Through the DSG brand we also sell heat shrink tubing into a number of aerospace and defense applications, which I think could be interesting for us. We will simply need to see precisely where those dollars end up being directed, but I can certainly assure you that the sales teams are very conscious that defense broadly represents an interesting market. Within the DSG business in particular we have put R&D investment in place to make sure our full portfolio is positioned to benefit from increased defense spending. In Europe we are furthest along on that journey, having supported the European defense industry there for many years, and we expect that higher spending in that region will be of help to us as well.

Finally, could you spend a moment on the expansions underway at AmerCable and share your view on what that means for your revenue capacity?