Omni-Lite Industries Canada Inc. (OML) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Omni-Lite Industries Investor Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the call over to your host, Chief Financial Officer, Amy Vetrano-Palmer. Ma'am, the floor is yours.

Thank you. Good morning, and thank you for joining us. With me today is our Chief Executive Officer, Dave Robbins. Our call is being recorded and will be available for playback, the details of which is in our press release issued yesterday. The purpose of this call is to provide an update on Omni-Lite's financial performance and operations as we filed our first quarter 2023 results yesterday morning, May 17. After our remarks, we will open up the line for Q&A. If you have not received or seen a copy of our press release, which was issued yesterday morning, you may find it on our website at www.omni-lite.com or e-mail either of us at d.robbins@omni-lite.com or a.vetrano-palmer@omni-lite.com to request a copy. Before I get started, I would like to remind you that today's discussion will or may include forward-looking statements, including information regarding Omni-Lite's performance based on our views of the company's business and the environments in which they operate, our future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are subject to future risks and uncertainties that can cause our actual results or performance to differ materially. We are also mindful of the risks and impacts and the changes of the health of the general economy, including the U.S. and global commercial aerospace market and the U.S. Department of Defense budgets. All forward-looking statements should be considered in conjunction with the cautionary statements contained in our press release and the risk factors, including in Omni-Lite's SEDAR filings. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. I also like to mention that in addition to reporting financial results in accordance to the International Financial Reporting Standards, or IFRS, during our call, we may also discuss or reference some non-IFRS financial measures, including adjusted EBITDA, pro forma adjusted EBITDA, free cash flow. A reconciliation of all of these metrics is available and included in our applicable SEDAR filings and press releases. Lastly, unless noted, any reference or discussion of our financial results or metrics are in U.S. dollars. I would like to now turn the call over to Dave. Dave?

Thanks, Amy. Good morning, everyone, and thanks for joining us. I'd like to make a few comments about our first quarter 2023 performance, and few comments on current business. First quarter 2023 revenue of $2.7 million marks an increase of 15% from our first quarter 2022. Growth in the quarter was driven by a combination of increase in commercial air transport, fastener products, defense electronics and initial production of some new industrial casting products. Adjusted EBITDA for the first quarter of 2023 is up over $295,000 over Q1 2022, which is a significant improvement and an indication of our ongoing improvements in fixed costs and product pricing. Bookings for the first quarter increased to $3.2 million, up from $2.5 million year-over-year Q1 2022 and sequentially up from $2.9 million in Q4 2022. Backlog at quarter end was a strong $4.1 million, and expect the majority of the backlog to ship in 2023. The makeup of the bookings and backlog mirrors our growth profile and goals. 90% of that backlog is program or platform-related, and 10% is new engineering development in a preproduction stage. This 10% revenue, we expect can convert to initial and then mature production in 9 to 18 months at a 2x to 3x value. Notably, 3 new titanium structural fasteners, a development phase high-efficiency missile sensor electronic component family and some new castings for defense airborne sensors are in the mix in new and preproduction stage. In all of these examples, our ability to engineer a process to reliably produce products with exacting specifications in months, not years, was the heart of winning these orders and our competitive moat business model. With that, I'd like to turn the call over to Amy. Amy?

Thanks, Dave. Dave has addressed revenue and EBITDA in the outlook. So I will make a few comments regarding cash. Adjusted cash flow, defined as cash flow from operations minus any capital expenditures, was a source of approximately $210,000 as compared to a use of $154,000 in the first quarter 2022. We did see an increase in our inventory during the quarter, which was mainly within WIP and finished goods. We finished the quarter with $1.3 million in cash and no debt, which is consistent with how we ended the year of 2022, indicating that we do continue to maintain a strong cash balance. This does complete our prepared remarks. We would like to now open the call up for questions.

[Operator Instructions] And our first question comes from [ Emmanuel Kramer ].