CEMATRIX Corporation ($CEMX)

With us today is Randy Boomhour, President and CEO; Marie-Josee Cantin, CFO; and Jordan Wolfe, President of CEMATRIX subsidiary, MixOnSite. Before we get started, I want to remind our listeners that today's call is being recorded and will be made available later on the Investor Relations section of CEMATRIX website. The full financial statements and all disclosures related to this earnings call are also available on sedar.com. After management's formal remarks, we will conduct a Q&A. We're going to take covering analyst questions live via audio stream through the web portal and box. Prior to turning the call over to management, I will read the company's forward-looking statements, which are also available in the financial results company press release and investor presentation. This presentation contains certain statements that may be deemed forward-looking statements. All statements in this document, other than the statements of historical fact that address events or developments that Smatrix expects to occur are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always identified by words expects, plans, anticipates, believes, intends, estimates, projects, potential and similar expressions or that events or conditions will, would, may, could or should occur. Although the company believes the expressions expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results may differ materially from those in the forward-looking statements. Factors that could cause the actual results to differ materially from those forward-looking statements include failure to successfully negotiate or subsequently close transactions, inability to obtain required shareholder or regulatory approvals, uncertainty with respect to findings under exploration programs and general economic market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance, and actual results or developments may differ materially from those projected in the forward-looking statements. Our related statements are based on the beliefs, estimates and opinions of the company's management on the date the statements are made. Except as required by the law, the company undertakes no obligation to update these forward-looking statements in the event that management's believes, estimates or opinions or other factors should change. Now I'll turn the call over to Jordan Wolfe. Jordan, please go ahead.

Thank you, Glen. You are a tough act to follow. Today, I'm going to be going over some of the key investor highlights for CEMATRIX. CEMATRIX as you know, is a set of concrete specialty contractor. We are a leader of providing lightweight cost-effective and durable cellular concrete for infrastructure projects. We provide solutions to our customers for their geotechnical challenges using cellular concrete on time, on budget and on quality. Customers choose cellular concrete because one or more of its physical properties as well as its cost savings. We also have a very strong competitive advantage, which is difficult [indiscernible] combine three of the largest cellular concrete providers under one company in CEMATRIX Group companies. So -- and -- for some of the highlights on our financial strength and overall growth trend, I can say that our compounding annual growth rate for revenue is around 25% since 2017. Our last 3 years consistently provided financial results, as you can see from the chart on the right, which I won't get into, but you can look at it at your convenience. In 2025, we recorded -- had records in almost all financial metrics or KPIs. We recorded an EBITDA, cash flow from ops and EPS, or earnings per share, at record levels in 2025, and 2026 is forecasted to be another great year across the board. We have some significant market opportunities. As I mentioned before, we have a competitive advantage. So CEMATRIX is an industry leader. The global cellular concrete market is significant and is expected to continue to grow and increased infrastructure spending in Canada and U.S. provides a very strong tailwind for us, and we plan to capitalize on that. MJ, I believe we're going to skip the next few slides. Many of them have been in this presentation and are there for your review at your convenience, but we're going to skip to Slide 8, I believe. There you go. And I'll continue on our financial highlights. Some of this, I talked about briefly, but it's worth repeating. Again, we've had a record year in 2025. Our EBITDA in 2025 was higher than the previous 20 years combined. So that should kind of tell you something about where we feel we're at and the direction the company is going. Our adjusted EBITDA of $8.3 million is higher than the 2 best years combined, in 2023 and 2024. And we also are thankful that we're now meeting the general principle or rule of 40%, where we have over 40% when you combine our revenue growth. I believe that we're at 27% and 18%, that makes 45%. So we're within that compliance of the rule of 40%. Our top line growth trend and positive bottom line and generating cash is positive as well. As I've mentioned, CAGR of 25% on revenue since 2017, recorded 8.3% adjusted EBITDA in 2025, a record $8.2 million in cash flow in 2025 from operations, and we recorded a record earnings per share of $0.027 per share in 2025. We also have a healthy balance sheet with very low leverage, $11.9 million in cash with no long-term debt as of Q4 2025, and we have $15.7 million in cash as of March 31, 2026. So you can see we've been doing an excellent job with our collections. Some keys to understanding our business. Randy said this before, but it's important to reiterate that our growth revenue will be lumpy. It's not necessarily going to be a staircase growth. Financial results will be variable based on timing of when large projects start and stop. And again, that's somewhat out of our control, but we are always there when the contractor is ready to go. So that's important to us. Construction is a seasonal business. It's important to understand higher revenues come in warmer months when -- and less so in colder seasons. Our average revenue over the last 5 years is 18% in Q1; 17% in Q2; 34% in Q3; and 31% in Q4. So again, we do better in Q3 and Q4. We are a specialty contractor, as I mentioned. And as such, our margins tend to be higher than general contractors, but we have more bench time with more fixed costs. Our project size impacts our margins, the higher the project -- or the larger the project, the more competition we have and therefore, the lower margin we have to go to land the work. And it's also important to know that we have excess capacity with our equipment and manpower. We have the ability to produce significantly more revenue without increasing our staffing levels. So we're here ready for more growth, and we're striving for it.

Thank, Jordan. I'm going to go through our Q1 2026 financial results highlights. On this slide, we published our financials. I'm not going to go through it, but it's a quick reference for you if you wish to look at our slides afterwards. And as Glen said, it's available on SEDAR+ and our website as well. So we had mixed results in Q1. We had a higher revenue, lower margins, reduced SG&A, and we have strong cash flow. Revenue has increased despite the seasonality, so it grew to $7.3 million in Q1 compared to $6.6 million. That represents an 11% increase. Gross margin was $0.7 million or [ 9% ] compared to 22% last year. This is a temporary decline. It's largely attributable to project size and execution timing. I would say that moving forward, a 30% gross margin would be a sustainable target. On the cost side, SG&A declined to $2 million, down from $2.1 million last year, while we support higher revenue. We have strong cost discipline. When you look at our operating income, so it's a $1.3 million loss compared to $0.7 million last year. It's driven by the same margin dynamics we just discussed. Adjusted EBITDA was negative at $0.6 million in Q1 compared to a negative $0.1 million in '25. That's a $0.5 million decrease. Cash flow from operations before working capital was an investment of $0.6 million in Q1 compared to $8.1 million in '25, but when you do -- when you include working capital, we have a strong cash flow position at $4.6 million in Q1 compared to an outflow of $1.6 million, 2025. That's a $6.2 million increase. And Jordan touched based on it, when we talked about cash, that's largely due to our collections. We had great collections from our Q4 balances. So again, our cash is $15.7 million at the end of Q1 compared to $11.9 million at the end of Q4. So it gives us a strong foundation to execute on our 2026 plan. We like to put [indiscernible]. So this is a good visual for you to see that our revenue line is -- the trend is growing. As a reminder, the orange box for Q1 is just for 1 quarter, while the teal boxes are for a full year. Gross margin, the trend has improved over the last 4 years. And again, the orange box is just for the quarter. But as I mentioned on the previous slide, 30% is a sustainable target for us moving forward. And the [indiscernible] in 2022 was, during the COVID pandemic, we had cement shortages and supply chain issues. When you look at debt and interest, we had a strong balance sheet. Our only debt right now is our equipment finance loans. So it's about $945,000. So we've come a long way since 2017. And then talking about our sales success and backlog, we continued our momentum in Q1. Last year, we announced $50.5 million in contractors. And in Q1, only we announced $17 million. So this backlog supports our future revenues, and our current backlog right now is at $70 million. It went up about 4% since quarter end. And the large project we have in backlog is already underway. As shown on the chart, we have delivered strong share price appreciation over the last 15 months. Our achievements are getting realized in the market. If you look at the opening market price -- share price on April 22, we were about $0.58. That's an increase of 120% since the end of 2024, where it was at $0.26. And if you look at our low in March of 2025 about a year ago where we went $0.165, that's a 250% increase. So in the past, we've [indiscernible] enterprise appreciation with new capital raises, and we have no plan to raise capital or issue shares in the near future. So that leads to our share capital structure. So we had 149.7 million shares outstanding at the end of Q1. We have 5.5 million of options, 3.2 million of RSUs and 8.2 million [indiscernible] are expiring in July, for a combined total of 166.6 instruments. And with our NCIB since the beginning of the [indiscernible] program, we have repurchased 1.4 million or 1.5 million common shares under this program, and we just renewed it for the year. I'm going to pass it to you, Randy, to do some closing remarks.

Perfect. Thank you, MJ. Can we go to the next one, please? Yes. Just wanted to say a really good job MJ and Jordan on talking about our company and our results. We always like it [indiscernible] the slide. It's really just sort of a reminder of why we think CEMATRIX is a great investment. So the reasons why we had a list to invest, as Jordan mentioned, we are an industry leader. We basically combine 3 of the larger companies in this space, and we're really well positioned as a result, to capitalize on the opportunity in the growing construction segment. We are a growth company. It's not going to be a staircase of growth, but the overall trend is clearly one of growth. We're growing revenue. We have positive adjusted EBITDA, positive cash flow from operations and a strong balance sheet. If you go looking for companies that are our size that have the qualities, you're not going to find very many companies in criteria. We do believe that we're currently undervalued based on traditional valuation metrics, but the gap is closing. I've been kind of saying this for 5 quarters now that we think this. And like I said, people are starting to notice our results and what we've been talking about. And so the gap is closing, but we think there's still room to go. Whether you want to value it based on a [indiscernible] multiple, EBITDA multiple or EGAS multiple, I think in all cases, you can come up with a higher number. As MJ mentioned, we got no new capital raises required or planned to fund the burn rate. The only time we introduced new capital would be in support of a very large accretive acquisition. With our cash balance in place, we're pretty confident that the next acquisition we can do -- we will do will be 100% based on our balance sheet, which would mean no no dilution and a 100% accretion to existing shareholders. And lastly, at that point, we have capital to deploy. So we're going to look to continue to grow organically, and we're going to also look for opportunities to grow the acquisition. On the right-hand side here is our Investor Relations contact. For retail shareholders, we incurred some to [indiscernible] company through the information provided there. On the institutional side, reach out to Bristol, Glen and his team. And then as you know, we have one analyst covering the company, which is Russell at Beacon Securities. And with that, we'll just kind of pause and turn back over to Glen to lead us through the Q&A.

Thank you, Randy. Again, we have covering analysts on the call. Please raise your hand if you want to raise a question. and then we'll take the balance of the questions through the Q&A portal. Russell, thank you, from Beacon Securities. You are live. Please go ahead.

You hear me?

Yes.

Maybe first, more generally, Randy. This call follows pretty closely on the Q4 call just 6, 7 weeks ago. But just wondering anyway, can you talk about any sort of market elements or any sort of trends you've seen since the last call that are informing your outlook or perhaps any color around the kind of sales opportunities that you're seeing or that have risen over the last -- over that period.

5 Yes. It's a really good question, Russell, and I appreciate you asking it. From my perspective, I wish I owned 100% of CEMATRIX because I just really believe we've never been in a better spot than we are right now. If you look at our balance sheet, our cash balance, look at our backlog and you look at the opportunities in front of us, I honestly believe we've never been in a better spot. So I always find a little frustrating as we go through the public market reporting cycles and they're sort of retail investor panic if a number is down or a retail investor if the number is up. We don't look at it that way. We look at the long-term health and viability of the business, and it's never been better. Our sales teams are finding more opportunities to bid. We're bidding more opportunities and we're winning more opportunities. So like I said, we're expecting 2026 to be a really good year for us.

And the last kind of I think dovetails into my next question. You look at the order flow year-to-date, it's been fairly strong. Obviously, your track record on prior projects probably helps, but I'm wondering what it is that your team is doing differently on the sales front? Is it more experience? You mentioned bidding more, winning more. I'm curious if there are tools, processes or best practices that you've implemented that you can talk to that are helping to kind of accelerate traction.

Yes. We're always a bit sensitive to getting into the details of -- on what we do because we're the only public competitor in this space. We know our competitors listen and read our materials. So what I would say, Russell, is just that we've got really good people, and those really good people are sort of perfecting and refine their approaches, and we're perfecting and finding the people that we're talking to. And as a result of that, we're just getting better results. And the other thing I talked about a lot is in business, it's really important that when you get a chance to do work for a customer, you have to do a good job. And I think we've really put an increased emphasis on quality and performing in the field, is sort of paramount. It's more important to do a good job, even if you make a little bit less money because if you don't do a good job, you lose that customer for a long time, maybe forever. And so we've really prioritized putting the customer first. And I think that's another message you've heard me repeatedly says we have to serve customers first. We don't serve shareholders first.because that's backwards. You have to serve the customer first. And if we do that, we'll grow the business. And if we grow the business, shareholders will win.

Got it. That's helpful. And then maybe just in a little higher level here in the U.S., traditionally, your largest market, but I'm wondering if you're seeing or anticipating any tailwinds in Canada from the Federal government's efforts. Too early for the summer and [indiscernible] fund to make a dent, but I'm wondering were perhaps about the infrastructure component and the build community strong fund I think, $50 billion announced ounce last year. I'm wondering, are you seeing any opportunities, any money actually hit the road from funds like that in Canada that give you perhaps additional optimism for work in this country.

Yes. Good question again, Russell. And we used to get this question a lot with Biden's trillion-dollar infrastructure in the U.S. or Trump's version of that infrastructure build. And what I'd say for us is, it's really hard to connect an infrastructure bill to a specific project. Often, I think if that happens, it's happening. The conversations are happening at the owner level and the GC level. And because we interact with the GC, we don't often see that. I would just say it contributes overall to this tailwind that we've been talking about. And I think just a general understanding of how life works is just -- there's just been a deficit or a lack of investment in infrastructure. And so we've kind of relied on infrastructure that's been in place, but that infrastructure needs to be maintained. And it's just -- I think governments haven't been really focused on that because there have been other places to put their money. But if you don't maintain that infrastructure, sooner or later, it fails. And then the failure is way more expensive than maintaining it. And so we see more and more governments at all levels kind of recognizing that it's important. Even right here in [indiscernible], we've had a water met water main fail that's been -- has basically created a super expensive situation, but it's a situation that we're going to benefit from because they're putting a new feeder main in and it has to be. And so we're going to get that work. So I would just say, Russell, it's really hard for me to connect big legislation. But what I would say is that's just adding to the tailwind that we see where there's just increased focus and spending on infrastructure.

Got it. And then maybe around SG&A, congrats on the cost discipline there. I think professional fees down around $150,000 year-over-year. I'm wondering, it was such a good quarter. Do you envision having to invest in OpEx from here? Or does the Q1 number more or less represent a reasonable baseline that we should expect to continue?

So we will continue to invest in selling and sales resources. So I'm trying to spend less money on people like me, people who administer the business and more money on people that sell or support selling in our company so that we can grow revenue disproportionately to what we might have to grow OpEx. There was some disproportionate professional fees in the first quarter of last year that are making that savings maybe look a little bit better than it was. So I'm not sure I'd use that run rate for 4 quarters. But definitely, I would expect that our SG&A would trend below last year.

Maybe one last question for me because you did talk to having a balance sheet to deploy. Just wondering what you're seeing on the acquisition front given the environment we're in and the tailwinds you've observed in your business, wondering how willing acquisition targets are to talk and what level of interest you're seeing in completing a transaction.

Yes. I think most people are willing to talk. I would say the interest so far to transact has been quite low. But even if the interest to transact is low, at least we're letting people know that we're interested. We're in the market. And if they change their mind, whether that be next year and 10 years, we want them to reach out to us. And I think that's really what it is. And if you think about selling or business development, I mean, that's sort of the essence of it, right? Sometimes you're talking to somebody and it could turn into something pretty quickly. Other times, you're talking to somebody and it could not turn into something through full 4 years. And so that's really the approach we're taking. If there's nothing that makes sense from an acquisition point of view, we won't do one. There's no pressure for us in that sense to do something. I don't feel pressure like that. We're only going to do what's in the best interest long term for shareholders. And so that's really what we're focused on, just finding the right opportunity.

Thanks, Russell. I'm going to put you on mute you back, just let me know. We're going to take some questions from the audience now. I do see that there are additional questions around acquisition opportunities and pipeline. I think you just answered it with Russell's question. But perhaps just expand on it a little bit in terms of what type of businesses potentially you would be looking to add.

Yes. Sure, Glen. It's a good question. Again, we're always trying to find the balance between disclosure that shareholders want to hear and also protecting competitive information. But essentially, our first choice would be another pure play or close to pure-play cellular concrete company. That makes the most sense. It's what we know the best. It's what would fit easiest into our organization. Ideally, those companies would be in a market that we covet somewhere in the southern U.S., where there's a different seasonal revenue pattern, although I've said many times, I'm less worried about seasonality. I'm more worried about making money. So if I had an acquisition that did $50 million in July, I would do it even if it made seasonality worse because I'm interested in making money. But that said, we understand the benefits of reducing seasonality from an investor point of view and from a run the business point of view. So the southern markets are probably the most appealing. If there isn't a pure-play cellular concrete company that's available for sale, and I'm not sure there is, then we'd look to acquire a company that does something similar to what we do. Similar being a specialty construction company, similar in that they're not selling a commodity, but they're selling something that requires a technical sale process. So you're dealing with similar customers, similar sales profiles and that would be in a market that we're interested in. So an example I would use a lot is like a polyurethane routing company in the Golden Triangle in Texas. So that's a market we're interested in. They would have existing customer relationships that we could leverage and introduce cellular concrete. And then we could also take polyurethane grouting technology as an example, and move that into our businesses north. So that would be an example of something we might try to do. But first, we're going to run down all the cellular concrete company opportunities.

Super. Thank you, Randy. Again, box. Next question is, given the construction industry with constant delays in projects, how are you handling the delays? And do you foresee an end in sight?

Yes, it's a really good question. And I don't see an end in sight, honestly. I think this is just part of how construction companies work. I would say it's much rarer. It's the exception rather than the norm for a construction project to start on time and end on time. They just don't -- it just doesn't work that way. People always kind of start out optimistically and then things happen or things change, and it's just the nature of the business. So trying to change that, I think, would be impossible. It's not something we can do as a small player, and I just don't think it's something that can be done period. So for us, it's more important that we just remain flexible. And we're ready, as Jordan said many times that when our contractor phones us and our customer phones us and says, okay, we're ready for you that we're ready to go. And that's always been one of our strengths is our ability to be flexible and start when the contractor wants us to start.

Super. Thank you, Randy. There are no further questions in the queue, perhaps some closing remarks, and then we'll end the presentation. Yes, there was a question that came in, and maybe this is for MJ. If you could just give more color on the warrants.

So there is -- there's 8.2 million worth outstanding, and they're expiring on July 29, 2026 from memory.

And when the strike price?

Yes, it's $0.50 for the majority of them and the broker loans are $0.51.

Super. We now have no further questions in the queue, Randy. So maybe some closing remarks, and we'll end the call.

Okay. Just maybe to just cap off on that warrant things. I've seen some chatter on the boards about it. If we hit $0.60, all those warrants are going to get exercised. And that's just not how it works, as you know, right? Just because we hit over the exercise price, doesn't mean those warrants are going to get exercised. They need to be in the money and how much in the money really depends on each investors sort of point of view on it. So we'd have to be well above $0.60, I think, for those things to be exercised. In terms of closing remarks, like I say, I think it's really important to have a longer-term or a full year view of our business. I think trying to judge or assess it based on individual quarters is very tricky. I think you're going to make mistakes. As I said, I wish I owned all of the company. I've never been more optimistic and happy with where our company is than I am right now. And I want to make sure our investors understand that, that we're really in a great place. Q2 looks like it's going to be our best year -- best quarter ever for a second quarter. And again, I would caution some of our retail investors who sort of extrapolate my wording to mean that's the best quarter ever. That's not what I'm saying. It's the best second quarter ever. But it's going to be really good for us, and it's going to put us on [indiscernible] ahead of last year. And as everyone knows, last year was, by far our best year ever. So just lots of good things to come, and I feel pretty confident saying those things because they're based on backlog and by projects that are actually underway right now. So really confident in our second quarter and really confident in our full year for 2026. So just couldn't be more happy about where we are ahead of the company.

Super. Thank you, Randy. Thank you, MJ, and thank you, Jordan. And this concludes our Q1 call.

Thank you, Glen.