Exco Technologies Limited — Call Transcript 2026

Good day, and thank you for standing by. Welcome to Exco Technologies Limited Second Quarter Results 2026 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star one one on your telephone. You will then hear an automated message advising your name is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Darren Kirk, President and CEO. Please go ahead. Thank you, Kevin, and good morning to everyone joining us. Welcome to Exco Technologies Fiscal 2026 second quarter conference call. I'll begin today with an overview of our operations and strategic progress in the quarter. I'll then turn the call over to Matthew Posno, our CFO, to walk through the financial details. Afterwards, I'll return to discuss our outlook before opening the call for your questions. Before we proceed, I'd like to remind everyone that our discussion today contains forward-looking information. I'd ask that you refer to the cautionary notes included in yesterday's news release and in our continuous disclosure filings, all of which apply to today's discussion. Turning to the quarter, our second quarter results were affected by temporary softness in large mold volumes, restructuring actions, and foreign exchange headwinds. That said, we are encouraged by the underlying momentum building across the business. Large mold order activity and backlogs continue to build, and we expect sales and profitability in this business to recover in future quarters as new programs ramp up. At the same time, our Automotive Solutions segment continues to benefit from recent program launches. Extrusion tooling demand remains solid, and our recent investment in innovation initiatives are increasingly well-positioned to contribute to stronger margins and earnings growth. Let me walk through each segment, starting with Automotive Solutions. The Automotive Solutions segment delivered another solid quarter. The industry backdrop was modestly softer year-over-year. North American light vehicle production was down approximately 2%, and Europe was down 1%. Underlying market conditions remained constructive. The U.S. seasonally adjusted annual rate of sales reached 16.3 million units in March. Dealer inventories remain below pre-pandemic levels. Vehicle fleets continue to age, and OEM incentive activity continues to pick up. Against that backdrop, our Automotive Solutions segment sales were up meaningfully on a constant currency basis, outperforming the broader industry. We benefited from a favorable vehicle mix, contributions from recent program launches, and continued progress in developing new accessory products and expanding our content per vehicle with both existing and new customers across North America and Europe. We're keeping a close eye on cost pressures within this segment. The recent rise in oil prices, driven by ongoing geopolitical tensions in the Middle East, is starting to work its way through our supply chain in the form of higher polymer, thread, yarn, and resin costs. Customer cost down requests have returned after a relatively quiet period. Nonetheless, we continue to take pricing action where feasible, particularly on new program awards, and we remain focused on lean manufacturing and automation initiatives to mitigate inflationary pressures and structural labor cost increases. Quoting activity remains healthy, and we believe there are meaningful opportunities to advance our long-term growth objectives, particularly with our innovative products, product development efforts, which continue to win new business and expand penetration on key vehicle platforms. Turning to Casting and Extrusion, the segment's results reflect two distinct dynamics this quarter. On the large mold side, sales were materially lower year-over-year, reflecting the softer order book we've been working through. As we discussed last quarter, OEMs deferred new tooling and program launches through much of last year amid softer EV demand, evolving regulatory frameworks, and tariff-related uncertainty. The good news is what we previewed in Q1 has very much come to fruition. Order activity has remained exceptionally strong this quarter. Our backlog has been rebuilt meaningfully, and quoting activity remains high. Given typical lead times of four to six months in this business, we expect this to translate into meaningful sequential and year-over-year revenue improvement in the second half of 2026. We are also seeing continued momentum in our additive manufacturing business, where year-to-date sales are running ahead of expectations. Adoption of additive solutions is broadening across the die-cast tooling industry as customers pursue greater manufacturing efficiency and increasingly complex tooling requirements, including the applications related to very large castings and faster cycle times. We hold a clear leadership position here, and customer engagement on additive solutions continues to grow. We're also making real progress diversifying large mold into the nuclear energy end market. We've leveraged the same precision machining equipment we use for very large-sized molds to pursue opportunities in the precision machining of nuclear components for the domestic Canadian energy market. Quoting activity in this area is encouraging. Orders are beginning to flow, and we view this as a promising area of diversification that could support incremental growth over time. On the closure of our large mold Mexico facility is the decision reflected limited growth opportunities in the domestic Mexican market for large die-cast tooling components, and our broader objective of consolidating production across fewer locations. As of March 31st, all employees have been notified, final customer orders have been fulfilled, and equipment relocation is underway. We don't expect this closure to materially reduce our future revenue opportunities, and we believe it will support a lower cost structure and improved profitability going forward. On the extrusion side, the picture remains constructive. Extrusion tooling demand was solid in both the Americas and in Europe, with end market dynamics that continued to feel quite resilient. Our North American operations had a particularly strong quarter, with our Michigan facility benefiting from the completion of our heat treatment vacuum equipment installation and several other capacity-enhancing additions that are now operational. End market diversity in extrusion remains one of the most attractive features of this business. While automotive extrusion demand in the North America has been somewhat soft, we are seeing strong demand from a number of other end markets, building and construction, transportation, renewable energy, electrical applications, and AI infrastructure. The build-out of AI data centers continues to drive demand for high-precision aluminum extrusions used in heat sinks and advanced cooling solutions, and that demand vector is only accelerating. New extrusion press capacity is being added by domestic and foreign extruders increasingly seeking nearshore supply. In our European extrusion operations, performance continues to bifurcate. Italian operations had a strong quarter on good cost controls and favorable overhead absorption. Our German operations remain a focus area for improvement. The German market continues to grapple with elevated energy costs and weakness in the automotive end market. Our senior leadership has been deeply engaged on the ground there, and while it's been a slow grind, we are making progress on production predictability and lead time consistency. In Castool, sales were modestly lower year-over-year, primarily reflecting lower capital equipment volumes, containers, and die ovens, which tend to be lumpy, but are expected to pick up in our second half. Excluding restructuring charges, Castool's underlying performance was ahead of last year, with margin improvement reflecting better pricing discipline and lower production input costs. Our greenfield facilities continue to mature, and we are encouraged by the trajectory of these operations. Stepping back, the broader theme this quarter is that we are working through a period of transition. Our greenfield investments are maturing. Our restructuring actions are positioning us for a leaner cost structure. Our large mold backlog has been rebuilt to a level that gives us better visibility into growth for the second half. Our innovation initiatives, particularly in additive manufacturing and in the energy diversification at large mold, are opening up new avenues for profitable growth. With that, I'll turn it over to Matthew for his review of the financials. Matthew? Thank you, Darren. Good morning, ladies and gentlemen. Consolidated sales for the second quarter ended March 31st, 2026, were CAD 157.6 million compared to CAD 166.1 million in the same quarter last year, a decrease of CAD 8.5 million or 5%. Foreign exchange movements reduced sales by approximately CAD 6.9 million in the quarter. Excluding this impact, sales were down approximately 1%. Consolidated net income for the quarter was CAD 5.8 million or CAD 0.15 per share, compared to CAD 6.4 million or CAD 0.17 per share in the prior year quarter. Results from the current period included CAD 2.4 million or CAD 0.06 per share of after-tax restructuring charges. The effective income tax rate for the quarter was 26.4% compared to 33.7% last year, reflecting the impact of geographic earning mix and foreign tax rate differentials. Quarterly consolidated EBITDA was CAD 18 million, representing 11.4% of sales, compared to CAD 19.7 million or 11.8% in the prior year period. Second quarter sales for the Automotive Solutions segment were CAD 82.4 million, down half a million dollars or 1% from the prior year quarter. Foreign exchange reduced sales by approximately CAD 4.5 million. Excluding this impact, sales increased approximately 5%. The segment benefited from stable vehicle production levels in North America and Europe, contributions from new program launches, and favorable vehicle mix. Pre-tax profit for the segment was CAD 7 million, a decrease of CAD 900,000 from the prior year quarter. The decline primarily reflects product mix, higher labor costs, and foreign exchange change impacts. Management continues to focus on lean manufacturing, automation, and pricing discipline, particularly on new program awards to support future margin expansion. While near-term conditions remain uncertain, quoting activity is healthy, and recent program launches are expected to support continued growth in content per vehicle. Second quarter sales for the Casting and Extrusion segment were CAD 75.1 million, down CAD 8.1 million or 10% from the prior year quarter. Extrusion tooling demand remained solid, supported by diversified end markets, including construction, transportation, renewable energy, and AI-related infrastructure. Die-cast tooling revenues declined year-over-year, reflecting prior delays in program launches amid softer EV demand, regulatory uncertainty, and tariff-related considerations. However, order activity has strengthened and programs are now ramping up, which is expected to support our improved performance in the second half of fiscal 2026. The segment reported pre-tax profit of CAD 3.4 million, down CAD 1 million from last year. Results were impacted by CAD 800,000 of incremental restructuring costs, along with lower volumes, product mix, and higher labor and overhead costs. Included in the restructuring cost is a CAD 1 million accrual related to the closure of the large mold facility in Mexico. This action is expected to support improved profitability going forward. Management continues to emphasize pricing initiatives, operational efficiency, process standardization, and automation. We remain confident that improving die-cast demand and strong extrusion activity will support marginal improvement. Corporate expenses for the quarter were CAD 1.6 million compared to CAD 1.4 million in the prior year quarter. The increase primarily reflects higher stock-based compensation, partially offset by foreign exchange gains. Cash provided by operating activities was CAD 11.1 million compared to CAD 8.7 million in the prior year quarter. Free cash flow for the quarter was CAD 5.9 million, up CAD 3.1 million from last year. Cash used for financing activities included CAD 4 million in dividend payments and CAD 2.5 million to repurchase shares as a normal course issuer bid. Cash used in investing activities totaled CAD 5.8 million, reflecting CAD 1.7 million in growth capital expenditures and CAD 4.1 million in maintenance capital expenditures. Following several years of elevated growth-related investments, capital spending has moderated, with fiscal 2026 expected at approximately CAD 25 million, focusing on maintenance, productivity, and select growth initiatives. Exco ended the quarter with CAD 22 and a half million in cash and approximately CAD 60 million available under its credit facility. The company remains in compliance with its financial covenants. Our balance sheet remains strong and provides flexibility to support dividends, share buybacks, and strategic investments. That concludes my comments. I will now turn the call back to Darren for his closing remarks. Thank you, Matthew. Looking ahead, the macro environment continues to be characterized by uncertainties surrounding global trade policy, including the ongoing review of the USMCA agreement and the broader geopolitical and macroeconomic backdrop. As you've all seen, the three governments are required to make a decision on USMCA by July 1st, and we've been monitoring the discussions closely. Whatever the precise form of the renewed framework, we firmly believe that products that comply with USMCA rules of origin will remain favorably positioned. Nearly all of Exco's products sold within North America comply with USMCA requirements, which we believe will be which means we are well-positioned to navigate evolving trade policy. Within our Casting and Extrusion segment, we maintain a substantial U.S. manufacturing footprint for both extrusion dies and large mold products, providing further flexibility should tariff policies evolve. To the extent that the elevated tariffs on imports from non-compliant jurisdictions, particularly China, persist, we believe Exco's competitive positioning relative to certain global peers should improve. We're also encouraged by the continuing reshoring momentum in North America industrial manufacturing. These trends are expected to support demand for both extrusion tooling and high-pressure die-cast tooling, an area where Exco has considerable strength. Combined with the structural automotive trends, an aging vehicle fleet that needs to be replaced, continued program launches, and our broadening product capabilities, these factors reinforce our confidence in Exco's long-term outlook. Beyond trade policies, the diversification we've been building in Casting Extrusion is increasingly visible. Our die-cast tooling applications have historically been used for passenger vehicles. However, we're seeing growing demand from large trucks, energy, marine, and other industrial end markets. Furthermore, our large mold group's pivot into precision machining for the Canadian nuclear energy market, leveraging the same equipment we've built up for large-sized die-cast molds, represents an important new growth avenue. In extrusion, the AI data center build-out remains a powerful secular tailwind. I want to close by thanking our shareholders for their continued support and our global team, approximately 4,500 colleagues across nine countries, for their hard work and dedication in navigating what continues to be a dynamic environment. Operator, we are now ready to take questions. Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster. First question comes from Nick Corcoran with Acumen Capital Partners. Your line is open. Morning, guys. Thanks. Take my questions. Morning, Nick. Hey, Nick. Just a few questions from me. First, on your contracts, any indication what the structure of these contracts are in terms of either duration? I'm just wondering how long it takes to pass on higher costs and what escalators are on the contracts? You're talking about the large mold buildup, or? Yeah, both the large mold and Automotive Solutions as well. Yeah. It really is, it depends. The dynamics are quite different, you know, on each side of the business. I guess I'll start with Automotive Solutions. I mean, they typically tend to be four to five year fixed price type contracts. There is limited ability to pass through cost increases for some programs. Accessory-type programs. Where basically it's our product that we've designed that the OEM almost uses a profit center and enhances the overall appeal of the vehicle. We tend to have better chances at passing those price increases through. They're not so fixed price contract in nature. I'd say that, you know, it's hard to give you a number on this, Nick. You know, whatever the impact is, we are trying to take aggressive actions on the broader cost environment to contain the inflationary impact across the segment. I guess I would say on the large mold business, you know, there is inflationary pressure there, but it's mitigated by the fact that most of the input costs would be steel, and that steel is typically acquired at the time that we sign the contract. Therefore it is, it's mitigated against the inflation risk. That's helpful. There's still a lot of uncertainty related to tariffs and high oil prices. You indicated quoting activity remains healthy. What are you hearing from the OEMs on the Automotive Solutions front? Well, I mean, I guess we're great. We continue to see decent quoting activity for, you know, for all products, accessories and non-accessory products. You know, there is just continued uncertainty out there. You know, the industry's been kind of living with this uncertain world for at least a good year now. So it's really just the new norm. I mean, life is going on, new programs are being launched, and vehicles are being refreshed. You know, anytime those things happen, there's gotta be parts associated with it. We're certainly getting our fair share of quotes and awards. Good. Maybe, switching gears. Last quarter you mentioned extrusion was used in data centers. You kind of reiterated that today. Any indication, what increase in demand you've seen over the last couple of months? It's hard to give you a number on a short-term basis like that. You know, just generally, it does seem that AI kind of infrastructure related extrusions are probably accelerating toward 10%, you know, certainly upper single digits of total extrusions. I mean, it's a very big growth driver, and it's becoming a pretty big end market. Good. Then, maybe one last question from me. Any update on the M&A pipeline and what you might be thinking there? Nothing, nothing on the front burner. I mean, we continue to look out for select and tuck-in acquisitions, but nothing to talk about at this point. We are, you know, continue to focus on organic growth. We do see a lot of that. You know, the volumes in large mold are extremely encouraging. The opportunities in nuclear seem to be very big. We've got still some underperformance in our greenfield facilities that we are seeing traction on turnaround. We think that, you know, the combination of these things will drive our profitability going forward, you know, starting in Q3 but through the second half at least. You know, to the extent that we can complement those positives with some accretive acquisition activity that, you know, is certainly something that we're focused on, but nothing to report at this time. That's great. Thanks for taking my questions. I'll pass along. Okay. Thanks, Nick. I'm not showing any further questions at this time. I turn the call back to Darren. Okay. Thanks, Kevin. Thanks everyone for joining us on the call today. We look forward to talking with you when we release our third quarter results. Take care. Ladies and gentlemen, this conclude today's presentation. You may now disconnect and have a wonderful day.

Speaker 4: Good day, and thank you for standing by. Welcome to Exco Technologies Limited Second Quarter Results 2026 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star one one on your telephone. You will then hear an automated message advising your name is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Darren Kirk, President and CEO. Please go ahead. Good day, and thank you for standing by. good day and thank you for standing by Welcome to Exco Technologies Limited Second Quarter Results 2026 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star one one on your telephone. You will then hear an automated message advising your name is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. welcome to exco technologies limited second quarter results 2026 conference call. at this time, all participants are in listen-only mode. after the speaker's presentation, there will be a question and answer session. to ask a question during the session, please press star one one on your telephone. you will then hear an automated message advising your name is raised. to withdraw your question, please press star one one again. please be advised today's conference is being recorded I would now like to turn the conference over to your speaker today, Darren Kirk, President and CEO. i would now like to turn the conference over to your speaker today darren kirk president and ceo Please go ahead. please go ahead

Speaker 1: Thank you, Kevin, and good morning to everyone joining us. Welcome to Exco Technologies Fiscal 2026 second quarter conference call. I'll begin today with an overview of our operations and strategic progress in the quarter. I'll then turn the call over to Matthew Posno, our CFO, to walk through the financial details. Afterwards, I'll return to discuss our outlook before opening the call for your questions. Before we proceed, I'd like to remind everyone that our discussion today contains forward-looking information. I'd ask that you refer to the cautionary notes included in yesterday's news release and in our continuous disclosure filings, all of which apply to today's discussion. Turning to the quarter, our second quarter results were affected by temporary softness in large mold volumes, restructuring actions, and foreign exchange headwinds. That said, we are encouraged by the underlying momentum building across the business. Thank you, Kevin, and good morning to everyone joining us. thank you kevin and good morning to everyone joining us Welcome to Exco Technologies Fiscal 2026 second quarter conference call. welcome to exco technologies fiscal 2026 second quarter conference call I'll begin today with an overview of our operations and strategic progress in the quarter. i'll begin today with an overview of our operations and strategic progress in the quarter I'll then turn the call over to Matthew Posno, our CFO, to walk through the financial details. i'll then turn the call over to matthew posno our cfo to walk through the financial details Afterwards, I'll return to discuss our outlook before opening the call for your questions. afterwards i'll return to discuss our outlook before opening the call for your questions Before we proceed, I'd like to remind everyone that our discussion today contains forward-looking information. before we proceed i'd like to remind everyone that our discussion today contains forward-looking information I'd ask that you refer to the cautionary notes included in yesterday's news release and in our continuous disclosure filings, all of which apply to today's discussion. i'd ask that you refer to the cautionary notes included in yesterday's news release and in our continuous disclosure filings all of which apply to today's discussion Turning to the quarter, our second quarter results were affected by temporary softness in large mold volumes, restructuring actions, and foreign exchange headwinds. turning to the quarter our second quarter results were affected by temporary softness in large mold volumes restructuring actions and foreign exchange headwinds That said, we are encouraged by the underlying momentum building across the business. that said we are encouraged by the underlying momentum building across the business Large mold order activity and backlogs continue to build, and we expect sales and profitability in this business to recover in future quarters as new programs ramp up. At the same time, our Automotive Solutions segment continues to benefit from recent program launches. Extrusion tooling demand remains solid, and our recent investment in innovation initiatives are increasingly well-positioned to contribute to stronger margins and earnings growth. Let me walk through each segment, starting with Automotive Solutions. The Automotive Solutions segment delivered another solid quarter. The industry backdrop was modestly softer year-over-year. North American light vehicle production was down approximately 2%, and Europe was down 1%. Underlying market conditions remained constructive. The U.S. seasonally adjusted annual rate of sales reached 16.3 million units in March. Dealer inventories remain below pre-pandemic levels. Vehicle fleets continue to age, and OEM incentive activity continues to pick up. Large mold order activity and backlogs continue to build, and we expect sales and profitability in this business to recover in future quarters as new programs ramp up. large mold order activity and backlogs continue to build and we expect sales and profitability in this business to recover in future quarters as new programs ramp up At the same time, our Automotive Solutions segment continues to benefit from recent program launches. at the same time our automotive solutions segment continues to benefit from recent program launches Extrusion tooling demand remains solid, and our recent investment in innovation initiatives are increasingly well-positioned to contribute to stronger margins and earnings growth. extrusion tooling demand remains solid and our recent investment in innovation initiatives are increasingly well-positioned to contribute to stronger margins and earnings growth Let me walk through each segment, starting with Automotive Solutions. let me walk through each segment starting with automotive solutions The Automotive Solutions segment delivered another solid quarter. the automotive solutions segment delivered another solid quarter The industry backdrop was modestly softer year-over-year. the industry backdrop was modestly softer year-over-year North American light vehicle production was down approximately 2%, and Europe was down 1%. north american light vehicle production was down approximately 2% and europe was down 1% Underlying market conditions remained constructive. underlying market conditions remained constructive The U.S. seasonally adjusted annual rate of sales reached 16.3 million units in March. the u.s seasonally adjusted annual rate of sales reached 16.3 million units in march Dealer inventories remain below pre-pandemic levels. dealer inventories remain below pre-pandemic levels Vehicle fleets continue to age, and OEM incentive activity continues to pick up. vehicle fleets continue to age and oem incentive activity continues to pick up Against that backdrop, our Automotive Solutions segment sales were up meaningfully on a constant currency basis, outperforming the broader industry. We benefited from a favorable vehicle mix, contributions from recent program launches, and continued progress in developing new accessory products and expanding our content per vehicle with both existing and new customers across North America and Europe. We're keeping a close eye on cost pressures within this segment. The recent rise in oil prices, driven by ongoing geopolitical tensions in the Middle East, is starting to work its way through our supply chain in the form of higher polymer, thread, yarn, and resin costs. Customer cost down requests have returned after a relatively quiet period. Against that backdrop, our Automotive Solutions segment sales were up meaningfully on a constant currency basis, outperforming the broader industry. against that backdrop our automotive solutions segment sales were up meaningfully on a constant currency basis outperforming the broader industry We benefited from a favorable vehicle mix, contributions from recent program launches, and continued progress in developing new accessory products and expanding our content per vehicle with both existing and new customers across North America and Europe. we benefited from a favorable vehicle mix contributions from recent program launches and continued progress in developing new accessory products and expanding our content per vehicle with both existing and new customers across north america and europe We're keeping a close eye on cost pressures within this segment. we're keeping a close eye on cost pressures within this segment The recent rise in oil prices, driven by ongoing geopolitical tensions in the Middle East, is starting to work its way through our supply chain in the form of higher polymer, thread, yarn, and resin costs. the recent rise in oil prices driven by ongoing geopolitical tensions in the middle east is starting to work its way through our supply chain in the form of higher polymer thread yarn and resin costs Customer cost down requests have returned after a relatively quiet period. customer cost down requests have returned after a relatively quiet period Nonetheless, we continue to take pricing action where feasible, particularly on new program awards, and we remain focused on lean manufacturing and automation initiatives to mitigate inflationary pressures and structural labor cost increases. Quoting activity remains healthy, and we believe there are meaningful opportunities to advance our long-term growth objectives, particularly with our innovative products, product development efforts, which continue to win new business and expand penetration on key vehicle platforms. Turning to Casting and Extrusion, the segment's results reflect two distinct dynamics this quarter. On the large mold side, sales were materially lower year-over-year, reflecting the softer order book we've been working through. As we discussed last quarter, OEMs deferred new tooling and program launches through much of last year amid softer EV demand, evolving regulatory frameworks, and tariff-related uncertainty. The good news is what we previewed in Q1 has very much come to fruition. Nonetheless, we continue to take pricing action where feasible, particularly on new program awards, and we remain focused on lean manufacturing and automation initiatives to mitigate inflationary pressures and structural labor cost increases. nonetheless we continue to take pricing action where feasible particularly on new program awards and we remain focused on lean manufacturing and automation initiatives to mitigate inflationary pressures and structural labor cost increases Quoting activity remains healthy, and we believe there are meaningful opportunities to advance our long-term growth objectives, particularly with our innovative products, product development efforts, which continue to win new business and expand penetration on key vehicle platforms. quoting activity remains healthy and we believe there are meaningful opportunities to advance our long-term growth objectives particularly with our innovative products product development efforts which continue to win new business and expand penetration on key vehicle platforms Turning to Casting and Extrusion, the segment's results reflect two distinct dynamics this quarter. turning to casting and extrusion the segment's results reflect two distinct dynamics this quarter On the large mold side, sales were materially lower year-over-year, reflecting the softer order book we've been working through. on the large mold side sales were materially lower year-over-year reflecting the softer order book we've been working through As we discussed last quarter, OEMs deferred new tooling and program launches through much of last year amid softer EV demand, evolving regulatory frameworks, and tariff-related uncertainty. as we discussed last quarter oems deferred new tooling and program launches through much of last year amid softer ev demand evolving regulatory frameworks and tariff-related uncertainty The good news is what we previewed in Q1 has very much come to fruition. the good news is what we previewed in q1 has very much come to fruition Order activity has remained exceptionally strong this quarter. Our backlog has been rebuilt meaningfully, and quoting activity remains high. Given typical lead times of four to six months in this business, we expect this to translate into meaningful sequential and year-over-year revenue improvement in the second half of 2026. We are also seeing continued momentum in our additive manufacturing business, where year-to-date sales are running ahead of expectations. Adoption of additive solutions is broadening across the die-cast tooling industry as customers pursue greater manufacturing efficiency and increasingly complex tooling requirements, including the applications related to very large castings and faster cycle times. We hold a clear leadership position here, and customer engagement on additive solutions continues to grow. We're also making real progress diversifying large mold into the nuclear energy end market. Order activity has remained exceptionally strong this quarter. order activity has remained exceptionally strong this quarter Our backlog has been rebuilt meaningfully, and quoting activity remains high. our backlog has been rebuilt meaningfully and quoting activity remains high Given typical lead times of four to six months in this business, we expect this to translate into meaningful sequential and year-over-year revenue improvement in the second half of 2026. given typical lead times of four to six months in this business we expect this to translate into meaningful sequential and year-over-year revenue improvement in the second half of 2026 We are also seeing continued momentum in our additive manufacturing business, where year-to-date sales are running ahead of expectations. we are also seeing continued momentum in our additive manufacturing business where year-to-date sales are running ahead of expectations Adoption of additive solutions is broadening across the die-cast tooling industry as customers pursue greater manufacturing efficiency and increasingly complex tooling requirements, including the applications related to very large castings and faster cycle times. adoption of additive solutions is broadening across the die-cast tooling industry as customers pursue greater manufacturing efficiency and increasingly complex tooling requirements including the applications related to very large castings and faster cycle times We hold a clear leadership position here, and customer engagement on additive solutions continues to grow. we hold a clear leadership position here and customer engagement on additive solutions continues to grow We're also making real progress diversifying large mold into the nuclear energy end market. we're also making real progress diversifying large mold into the nuclear energy end market We've leveraged the same precision machining equipment we use for very large-sized molds to pursue opportunities in the precision machining of nuclear components for the domestic Canadian energy market. Quoting activity in this area is encouraging. Orders are beginning to flow, and we view this as a promising area of diversification that could support incremental growth over time. On the closure of our large mold Mexico facility is the decision reflected limited growth opportunities in the domestic Mexican market for large die-cast tooling components, and our broader objective of consolidating production across fewer locations. As of March 31st, all employees have been notified, final customer orders have been fulfilled, and equipment relocation is underway. We don't expect this closure to materially reduce our future revenue opportunities, and we believe it will support a lower cost structure and improved profitability going forward. On the extrusion side, the picture remains constructive. We've leveraged the same precision machining equipment we use for very large-sized molds to pursue opportunities in the precision machining of nuclear components for the domestic Canadian energy market. we've leveraged the same precision machining equipment we use for very large-sized molds to pursue opportunities in the precision machining of nuclear components for the domestic canadian energy market Quoting activity in this area is encouraging. quoting activity in this area is encouraging Orders are beginning to flow, and we view this as a promising area of diversification that could support incremental growth over time. On the closure of our large mold Mexico facility is the decision reflected limited growth opportunities in the domestic Mexican market for large die-cast tooling components, and our broader objective of consolidating production across fewer locations. orders are beginning to flow and we view this as a promising area of diversification that could support incremental growth over time. on the closure of our large mold mexico facility is the decision reflected limited growth opportunities in the domestic mexican market for large die-cast tooling components and our broader objective of consolidating production across fewer locations As of March 31st, all employees have been notified, final customer orders have been fulfilled, and equipment relocation is underway. as of march 31st all employees have been notified final customer orders have been fulfilled and equipment relocation is underway We don't expect this closure to materially reduce our future revenue opportunities, and we believe it will support a lower cost structure and improved profitability going forward. we don't expect this closure to materially reduce our future revenue opportunities and we believe it will support a lower cost structure and improved profitability going forward On the extrusion side, the picture remains constructive. on the extrusion side the picture remains constructive Extrusion tooling demand was solid in both the Americas and in Europe, with end market dynamics that continued to feel quite resilient. Our North American operations had a particularly strong quarter, with our Michigan facility benefiting from the completion of our heat treatment vacuum equipment installation and several other capacity-enhancing additions that are now operational. End market diversity in extrusion remains one of the most attractive features of this business. While automotive extrusion demand in the North America has been somewhat soft, we are seeing strong demand from a number of other end markets, building and construction, transportation, renewable energy, electrical applications, and AI infrastructure. The build-out of AI data centers continues to drive demand for high-precision aluminum extrusions used in heat sinks and advanced cooling solutions, and that demand vector is only accelerating. Extrusion tooling demand was solid in both the Americas and in Europe, with end market dynamics that continued to feel quite resilient. extrusion tooling demand was solid in both the americas and in europe with end market dynamics that continued to feel quite resilient Our North American operations had a particularly strong quarter, with our Michigan facility benefiting from the completion of our heat treatment vacuum equipment installation and several other capacity-enhancing additions that are now operational. our north american operations had a particularly strong quarter with our michigan facility benefiting from the completion of our heat treatment vacuum equipment installation and several other capacity-enhancing additions that are now operational End market diversity in extrusion remains one of the most attractive features of this business. end market diversity in extrusion remains one of the most attractive features of this business While automotive extrusion demand in the North America has been somewhat soft, we are seeing strong demand from a number of other end markets, building and construction, transportation, renewable energy, electrical applications, and AI infrastructure. while automotive extrusion demand in the north america has been somewhat soft we are seeing strong demand from a number of other end markets building and construction transportation renewable energy electrical applications and ai infrastructure The build-out of AI data centers continues to drive demand for high-precision aluminum extrusions used in heat sinks and advanced cooling solutions, and that demand vector is only accelerating. the build-out of ai data centers continues to drive demand for high-precision aluminum extrusions used in heat sinks and advanced cooling solutions and that demand vector is only accelerating New extrusion press capacity is being added by domestic and foreign extruders increasingly seeking nearshore supply. In our European extrusion operations, performance continues to bifurcate. Italian operations had a strong quarter on good cost controls and favorable overhead absorption. Our German operations remain a focus area for improvement. The German market continues to grapple with elevated energy costs and weakness in the automotive end market. Our senior leadership has been deeply engaged on the ground there, and while it's been a slow grind, we are making progress on production predictability and lead time consistency. In Castool, sales were modestly lower year-over-year, primarily reflecting lower capital equipment volumes, containers, and die ovens, which tend to be lumpy, but are expected to pick up in our second half. New extrusion press capacity is being added by domestic and foreign extruders increasingly seeking nearshore supply. new extrusion press capacity is being added by domestic and foreign extruders increasingly seeking nearshore supply In our European extrusion operations, performance continues to bifurcate. in our european extrusion operations performance continues to bifurcate Italian operations had a strong quarter on good cost controls and favorable overhead absorption. italian operations had a strong quarter on good cost controls and favorable overhead absorption Our German operations remain a focus area for improvement. our german operations remain a focus area for improvement The German market continues to grapple with elevated energy costs and weakness in the automotive end market. the german market continues to grapple with elevated energy costs and weakness in the automotive end market Our senior leadership has been deeply engaged on the ground there, and while it's been a slow grind, we are making progress on production predictability and lead time consistency. our senior leadership has been deeply engaged on the ground there and while it's been a slow grind we are making progress on production predictability and lead time consistency In Castool, sales were modestly lower year-over-year, primarily reflecting lower capital equipment volumes, containers, and die ovens, which tend to be lumpy, but are expected to pick up in our second half. in castool sales were modestly lower year-over-year primarily reflecting lower capital equipment volumes containers and die ovens which tend to be lumpy but are expected to pick up in our second half Excluding restructuring charges, Castool's underlying performance was ahead of last year, with margin improvement reflecting better pricing discipline and lower production input costs. Our greenfield facilities continue to mature, and we are encouraged by the trajectory of these operations. Stepping back, the broader theme this quarter is that we are working through a period of transition. Our greenfield investments are maturing. Our restructuring actions are positioning us for a leaner cost structure. Our large mold backlog has been rebuilt to a level that gives us better visibility into growth for the second half. Our innovation initiatives, particularly in additive manufacturing and in the energy diversification at large mold, are opening up new avenues for profitable growth. With that, I'll turn it over to Matthew for his review of the financials. Matthew? Excluding restructuring charges, Castool's underlying performance was ahead of last year, with margin improvement reflecting better pricing discipline and lower production input costs. excluding restructuring charges castool's underlying performance was ahead of last year with margin improvement reflecting better pricing discipline and lower production input costs Our greenfield facilities continue to mature, and we are encouraged by the trajectory of these operations. our greenfield facilities continue to mature and we are encouraged by the trajectory of these operations Stepping back, the broader theme this quarter is that we are working through a period of transition. stepping back the broader theme this quarter is that we are working through a period of transition Our greenfield investments are maturing. our greenfield investments are maturing Our restructuring actions are positioning us for a leaner cost structure. our restructuring actions are positioning us for a leaner cost structure Our large mold backlog has been rebuilt to a level that gives us better visibility into growth for the second half. our large mold backlog has been rebuilt to a level that gives us better visibility into growth for the second half Our innovation initiatives, particularly in additive manufacturing and in the energy diversification at large mold, are opening up new avenues for profitable growth. our innovation initiatives particularly in additive manufacturing and in the energy diversification at large mold are opening up new avenues for profitable growth With that, I'll turn it over to Matthew for his review of the financials. with that i'll turn it over to matthew for his review of the financials Matthew? matthew

Speaker 2: Thank you, Darren. Good morning, ladies and gentlemen. Consolidated sales for the second quarter ended March 31st, 2026, were CAD 157.6 million compared to CAD 166.1 million in the same quarter last year, a decrease of CAD 8.5 million or 5%. Foreign exchange movements reduced sales by approximately CAD 6.9 million in the quarter. Excluding this impact, sales were down approximately 1%. Consolidated net income for the quarter was CAD 5.8 million or CAD 0.15 per share, compared to CAD 6.4 million or CAD 0.17 per share in the prior year quarter. Results from the current period included CAD 2.4 million or CAD 0.06 per share of after-tax restructuring charges. Thank you, Darren. thank you darren Good morning, ladies and gentlemen. good morning ladies and gentlemen Consolidated sales for the second quarter ended March 31st, 2026, were CAD 157.6 million compared to CAD 166.1 million in the same quarter last year, a decrease of CAD 8.5 million or 5%. consolidated sales for the second quarter ended march 31st 2026 were cad 157.6 million compared to cad 166.1 million in the same quarter last year a decrease of cad 8.5 million or 5% Foreign exchange movements reduced sales by approximately CAD 6.9 million in the quarter. foreign exchange movements reduced sales by approximately cad 6.9 million in the quarter Excluding this impact, sales were down approximately 1%. excluding this impact sales were down approximately 1% Consolidated net income for the quarter was CAD 5.8 million or CAD 0.15 per share, compared to CAD 6.4 million or CAD 0.17 per share in the prior year quarter. consolidated net income for the quarter was cad 5.8 million or cad 0.15 per share compared to cad 6.4 million or cad 0.17 per share in the prior year quarter Results from the current period included CAD 2.4 million or CAD 0.06 per share of after-tax restructuring charges. results from the current period included cad 2.4 million or cad 0.06 per share of after-tax restructuring charges The effective income tax rate for the quarter was 26.4% compared to 33.7% last year, reflecting the impact of geographic earning mix and foreign tax rate differentials. Quarterly consolidated EBITDA was CAD 18 million, representing 11.4% of sales, compared to CAD 19.7 million or 11.8% in the prior year period. Second quarter sales for the Automotive Solutions segment were CAD 82.4 million, down half a million dollars or 1% from the prior year quarter. Foreign exchange reduced sales by approximately CAD 4.5 million. Excluding this impact, sales increased approximately 5%. The segment benefited from stable vehicle production levels in North America and Europe, contributions from new program launches, and favorable vehicle mix. The effective income tax rate for the quarter was 26.4% compared to 33.7% last year, reflecting the impact of geographic earning mix and foreign tax rate differentials. the effective income tax rate for the quarter was 26.4% compared to 33.7% last year reflecting the impact of geographic earning mix and foreign tax rate differentials Quarterly consolidated EBITDA was CAD 18 million, representing 11.4% of sales, compared to CAD 19.7 million or 11.8% in the prior year period. quarterly consolidated ebitda was cad 18 million representing 11.4% of sales compared to cad 19.7 million or 11.8% in the prior year period Second quarter sales for the Automotive Solutions segment were CAD 82.4 million, down half a million dollars or 1% from the prior year quarter. second quarter sales for the automotive solutions segment were cad 82.4 million down half a million dollars or 1% from the prior year quarter Foreign exchange reduced sales by approximately CAD 4.5 million . foreign exchange reduced sales by approximately cad 4.5 million Excluding this impact, sales increased approximately 5%. excluding this impact sales increased approximately 5% The segment benefited from stable vehicle production levels in North America and Europe, contributions from new program launches, and favorable vehicle mix. the segment benefited from stable vehicle production levels in north america and europe contributions from new program launches and favorable vehicle mix Pre-tax profit for the segment was CAD 7 million, a decrease of CAD 900,000 from the prior year quarter. The decline primarily reflects product mix, higher labor costs, and foreign exchange change impacts. Management continues to focus on lean manufacturing, automation, and pricing discipline, particularly on new program awards to support future margin expansion. While near-term conditions remain uncertain, quoting activity is healthy, and recent program launches are expected to support continued growth in content per vehicle. Second quarter sales for the Casting and Extrusion segment were CAD 75.1 million, down CAD 8.1 million or 10% from the prior year quarter. Extrusion tooling demand remained solid, supported by diversified end markets, including construction, transportation, renewable energy, and AI-related infrastructure. Die-cast tooling revenues declined year-over-year, reflecting prior delays in program launches amid softer EV demand, regulatory uncertainty, and tariff-related considerations. Pre-tax profit for the segment was CAD 7 million, a decrease of CAD 900,000 from the prior year quarter. pre-tax profit for the segment was cad 7 million a decrease of cad 900,000 from the prior year quarter The decline primarily reflects product mix, higher labor costs, and foreign exchange change impacts. the decline primarily reflects product mix higher labor costs and foreign exchange change impacts Management continues to focus on lean manufacturing, automation, and pricing discipline, particularly on new program awards to support future margin expansion. management continues to focus on lean manufacturing automation and pricing discipline particularly on new program awards to support future margin expansion While near-term conditions remain uncertain, quoting activity is healthy, and recent program launches are expected to support continued growth in content per vehicle. while near-term conditions remain uncertain quoting activity is healthy and recent program launches are expected to support continued growth in content per vehicle Second quarter sales for the Casting and Extrusion segment were CAD 75.1 million, down CAD 8.1 million or 10% from the prior year quarter. second quarter sales for the casting and extrusion segment were cad 75.1 million down cad 8.1 million or 10% from the prior year quarter Extrusion tooling demand remained solid, supported by diversified end markets, including construction, transportation, renewable energy, and AI-related infrastructure. extrusion tooling demand remained solid supported by diversified end markets including construction transportation renewable energy and ai-related infrastructure Die-cast tooling revenues declined year-over-year, reflecting prior delays in program launches amid softer EV demand, regulatory uncertainty, and tariff-related considerations. die-cast tooling revenues declined year-over-year reflecting prior delays in program launches amid softer ev demand regulatory uncertainty and tariff-related considerations However, order activity has strengthened and programs are now ramping up, which is expected to support our improved performance in the second half of fiscal 2026. The segment reported pre-tax profit of CAD 3.4 million, down CAD 1 million from last year. Results were impacted by CAD 800,000 of incremental restructuring costs, along with lower volumes, product mix, and higher labor and overhead costs. Included in the restructuring cost is a CAD 1 million accrual related to the closure of the large mold facility in Mexico. This action is expected to support improved profitability going forward. Management continues to emphasize pricing initiatives, operational efficiency, process standardization, and automation. We remain confident that improving die-cast demand and strong extrusion activity will support marginal improvement. However, order activity has strengthened and programs are now ramping up, which is expected to support our improved performance in the second half of fiscal 2026. however order activity has strengthened and programs are now ramping up which is expected to support our improved performance in the second half of fiscal 2026 The segment reported pre-tax profit of CAD 3.4 million, down CAD 1 million from last year. the segment reported pre-tax profit of cad 3.4 million, down cad 1 million from last year Results were impacted by CAD 800,000 of incremental restructuring costs, along with lower volumes, product mix, and higher labor and overhead costs. results were impacted by cad 800,000 of incremental restructuring costs along with lower volumes product mix and higher labor and overhead costs Included in the restructuring cost is a CAD 1 million accrual related to the closure of the large mold facility in Mexico. included in the restructuring cost is a cad 1 million accrual related to the closure of the large mold facility in mexico This action is expected to support improved profitability going forward. this action is expected to support improved profitability going forward Management continues to emphasize pricing initiatives, operational efficiency, process standardization, and automation. management continues to emphasize pricing initiatives operational efficiency process standardization and automation We remain confident that improving die-cast demand and strong extrusion activity will support marginal improvement. we remain confident that improving die-cast demand and strong extrusion activity will support marginal improvement Corporate expenses for the quarter were CAD 1.6 million compared to CAD 1.4 million in the prior year quarter. The increase primarily reflects higher stock-based compensation, partially offset by foreign exchange gains. Cash provided by operating activities was CAD 11.1 million compared to CAD 8.7 million in the prior year quarter. Free cash flow for the quarter was CAD 5.9 million, up CAD 3.1 million from last year. Cash used for financing activities included CAD 4 million in dividend payments and CAD 2.5 million to repurchase shares as a normal course issuer bid. Cash used in investing activities totaled CAD 5.8 million, reflecting CAD 1.7 million in growth capital expenditures and CAD 4.1 million in maintenance capital expenditures. Corporate expenses for the quarter were CAD 1.6 million compared to CAD 1.4 million in the prior year quarter. corporate expenses for the quarter were cad 1.6 million compared to cad 1.4 million in the prior year quarter The increase primarily reflects higher stock-based compensation, partially offset by foreign exchange gains. the increase primarily reflects higher stock-based compensation partially offset by foreign exchange gains Cash provided by operating activities was CAD 11.1 million compared to CAD 8.7 million in the prior year quarter. cash provided by operating activities was cad 11.1 million compared to cad 8.7 million in the prior year quarter Free cash flow for the quarter was CAD 5.9 million, up CAD 3.1 million from last year. free cash flow for the quarter was cad 5.9 million up cad 3.1 million from last year Cash used for financing activities included CAD 4 million in dividend payments and CAD 2.5 million to repurchase shares as a normal course issuer bid. cash used for financing activities included cad 4 million in dividend payments and cad 2.5 million to repurchase shares as a normal course issuer bid Cash used in investing activities totaled CAD 5.8 million, reflecting CAD 1.7 million in growth capital expenditures and CAD 4.1 million in maintenance capital expenditures. cash used in investing activities totaled cad 5.8 million, reflecting cad 1.7 million in growth capital expenditures and cad 4.1 million in maintenance capital expenditures Following several years of elevated growth-related investments, capital spending has moderated, with fiscal 2026 expected at approximately CAD 25 million, focusing on maintenance, productivity, and select growth initiatives. Exco ended the quarter with CAD 22 and a half million in cash and approximately CAD 60 million available under its credit facility. The company remains in compliance with its financial covenants. Our balance sheet remains strong and provides flexibility to support dividends, share buybacks, and strategic investments. That concludes my comments. I will now turn the call back to Darren for his closing remarks. Following several years of elevated growth-related investments, capital spending has moderated, with fiscal 2026 expected at approximately CAD 25 million, focusing on maintenance, productivity, and select growth initiatives. following several years of elevated growth-related investments capital spending has moderated with fiscal 2026 expected at approximately cad 25 million focusing on maintenance productivity and select growth initiatives Exco ended the quarter with CAD 22 and a half million in cash and approximately CAD 60 million available under its credit facility. exco ended the quarter with cad 22 and a half million in cash and approximately cad 60 million available under its credit facility The company remains in compliance with its financial covenants. the company remains in compliance with its financial covenants Our balance sheet remains strong and provides flexibility to support dividends, share buybacks, and strategic investments. our balance sheet remains strong and provides flexibility to support dividends share buybacks and strategic investments That concludes my comments. that concludes my comments I will now turn the call back to Darren for his closing remarks. i will now turn the call back to darren for his closing remarks

Speaker 1: Thank you, Matthew. Looking ahead, the macro environment continues to be characterized by uncertainties surrounding global trade policy, including the ongoing review of the USMCA agreement and the broader geopolitical and macroeconomic backdrop. As you've all seen, the three governments are required to make a decision on USMCA by July 1st, and we've been monitoring the discussions closely. Whatever the precise form of the renewed framework, we firmly believe that products that comply with USMCA rules of origin will remain favorably positioned. Nearly all of Exco's products sold within North America comply with USMCA requirements, which we believe will be which means we are well-positioned to navigate evolving trade policy. Within our Casting and Extrusion segment, we maintain a substantial U.S. manufacturing footprint for both extrusion dies and large mold products, providing further flexibility should tariff policies evolve. Thank you, Matthew. thank you matthew Looking ahead, the macro environment continues to be characterized by uncertainties surrounding global trade policy, including the ongoing review of the USMCA agreement and the broader geopolitical and macroeconomic backdrop. looking ahead the macro environment continues to be characterized by uncertainties surrounding global trade policy including the ongoing review of the usmca agreement and the broader geopolitical and macroeconomic backdrop As you've all seen, the three governments are required to make a decision on USMCA by July 1st, and we've been monitoring the discussions closely. as you've all seen the three governments are required to make a decision on usmca by july 1st and we've been monitoring the discussions closely Whatever the precise form of the renewed framework, we firmly believe that products that comply with USMCA rules of origin will remain favorably positioned. whatever the precise form of the renewed framework we firmly believe that products that comply with usmca rules of origin will remain favorably positioned Nearly all of Exco's products sold within North America comply with USMCA requirements, which we believe will be which means we are well-positioned to navigate evolving trade policy. nearly all of exco's products sold within north america comply with usmca requirements which we believe will be which means we are well-positioned to navigate evolving trade policy Within our Casting and Extrusion segment, we maintain a substantial U.S. manufacturing footprint for both extrusion dies and large mold products, providing further flexibility should tariff policies evolve. within our casting and extrusion segment we maintain a substantial u.s manufacturing footprint for both extrusion dies and large mold products providing further flexibility should tariff policies evolve To the extent that the elevated tariffs on imports from non-compliant jurisdictions, particularly China, persist, we believe Exco's competitive positioning relative to certain global peers should improve. We're also encouraged by the continuing reshoring momentum in North America industrial manufacturing. These trends are expected to support demand for both extrusion tooling and high-pressure die-cast tooling, an area where Exco has considerable strength. Combined with the structural automotive trends, an aging vehicle fleet that needs to be replaced, continued program launches, and our broadening product capabilities, these factors reinforce our confidence in Exco's long-term outlook. Beyond trade policies, the diversification we've been building in Casting Extrusion is increasingly visible. Our die-cast tooling applications have historically been used for passenger vehicles. However, we're seeing growing demand from large trucks, energy, marine, and other industrial end markets. To the extent that the elevated tariffs on imports from non-compliant jurisdictions, particularly China, persist, we believe Exco's competitive positioning relative to certain global peers should improve. to the extent that the elevated tariffs on imports from non-compliant jurisdictions particularly china persist we believe exco's competitive positioning relative to certain global peers should improve We're also encouraged by the continuing reshoring momentum in North America industrial manufacturing. we're also encouraged by the continuing reshoring momentum in north america industrial manufacturing These trends are expected to support demand for both extrusion tooling and high-pressure die-cast tooling, an area where Exco has considerable strength. these trends are expected to support demand for both extrusion tooling and high-pressure die-cast tooling an area where exco has considerable strength Combined with the structural automotive trends, an aging vehicle fleet that needs to be replaced, continued program launches, and our broadening product capabilities, these factors reinforce our confidence in Exco's long-term outlook. combined with the structural automotive trends an aging vehicle fleet that needs to be replaced continued program launches and our broadening product capabilities these factors reinforce our confidence in exco's long-term outlook Beyond trade policies, the diversification we've been building in Casting Extrusion is increasingly visible. beyond trade policies the diversification we've been building in casting extrusion is increasingly visible Our die-cast tooling applications have historically been used for passenger vehicles. our die-cast tooling applications have historically been used for passenger vehicles However, we're seeing growing demand from large trucks, energy, marine, and other industrial end markets. however we're seeing growing demand from large trucks energy marine and other industrial end markets Furthermore, our large mold group's pivot into precision machining for the Canadian nuclear energy market, leveraging the same equipment we've built up for large-sized die-cast molds, represents an important new growth avenue. In extrusion, the AI data center build-out remains a powerful secular tailwind. I want to close by thanking our shareholders for their continued support and our global team, approximately 4,500 colleagues across nine countries, for their hard work and dedication in navigating what continues to be a dynamic environment. Operator, we are now ready to take questions. Furthermore, our large mold group's pivot into precision machining for the Canadian nuclear energy market, leveraging the same equipment we've built up for large-sized die-cast molds, represents an important new growth avenue. furthermore our large mold group's pivot into precision machining for the canadian nuclear energy market leveraging the same equipment we've built up for large-sized die-cast molds represents an important new growth avenue In extrusion, the AI data center build-out remains a powerful secular tailwind. in extrusion the ai data center build-out remains a powerful secular tailwind I want to close by thanking our shareholders for their continued support and our global team, approximately 4,500 colleagues across nine countries, for their hard work and dedication in navigating what continues to be a dynamic environment. i want to close by thanking our shareholders for their continued support and our global team approximately 4,500 colleagues across nine countries for their hard work and dedication in navigating what continues to be a dynamic environment Operator, we are now ready to take questions. operator we are now ready to take questions

Speaker 4: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster. First question comes from Nick Corcoran with Acumen Capital Partners. Your line is open. Thank you. thank you Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. ladies and gentlemen if you have a question or a comment at this time please press star one one on your telephone If your question has been answered and you wish to remove yourself from the queue, please press star one one again. if your question has been answered and you wish to remove yourself from the queue please press star one one again We'll pause for a moment while we compile our Q&A roster. we'll pause for a moment while we compile our q&a roster First question comes from Nick Corcoran with Acumen Capital Partners. first question comes from nick corcoran with acumen capital partners Your line is open. your line is open

Speaker 3: Morning, guys. Thanks. Take my questions. Morning, guys. morning guys Thanks. thanks Take my questions. take my questions

Speaker 1: Morning, Nick. Morning, Nick. morning nick

Speaker 2: Hey, Nick. Hey, Nick. hey nick

Speaker 3: Just a few questions from me. First, on your contracts, any indication what the structure of these contracts are in terms of either duration? I'm just wondering how long it takes to pass on higher costs and what escalators are on the contracts? Just a few questions from me. just a few questions from me First, on your contracts, any indication what the structure of these contracts are in terms of either duration? first on your contracts any indication what the structure of these contracts are in terms of either duration I'm just wondering how long it takes to pass on higher costs and what escalators are on the contracts? i'm just wondering how long it takes to pass on higher costs and what escalators are on the contracts

Speaker 1: You're talking about the large mold buildup, or? You're talking about the large mold buildup, or? you're talking about the large mold buildup or

Speaker 3: Yeah, both the large mold and Automotive Solutions as well. Yeah, both the large mold and Automotive Solutions as well. yeah both the large mold and automotive solutions as well

Speaker 1: Yeah. It really is, it depends. The dynamics are quite different, you know, on each side of the business. I guess I'll start with Automotive Solutions. I mean, they typically tend to be four to five year fixed price type contracts. There is limited ability to pass through cost increases for some programs. Accessory-type programs. Where basically it's our product that we've designed that the OEM almost uses a profit center and enhances the overall appeal of the vehicle. We tend to have better chances at passing those price increases through. They're not so fixed price contract in nature. Yeah. yeah It really is, it depends. it really is it depends The dynamics are quite different, you know, on each side of the business. the dynamics are quite different you know on each side of the business I guess I'll start with Automotive Solutions. i guess i'll start with automotive solutions I mean, they typically tend to be four to five year fixed price type contracts. i mean they typically tend to be four to five year fixed price type contracts There is limited ability to pass through cost increases for some programs. there is limited ability to pass through cost increases for some programs Accessory-type programs. accessory-type programs Where basically it's our product that we've designed that the OEM almost uses a profit center and enhances the overall appeal of the vehicle. where basically it's our product that we've designed that the oem almost uses a profit center and enhances the overall appeal of the vehicle We tend to have better chances at passing those price increases through. we tend to have better chances at passing those price increases through They're not so fixed price contract in nature. they're not so fixed price contract in nature I'd say that, you know, it's hard to give you a number on this, Nick. You know, whatever the impact is, we are trying to take aggressive actions on the broader cost environment to contain the inflationary impact across the segment. I guess I would say on the large mold business, you know, there is inflationary pressure there, but it's mitigated by the fact that most of the input costs would be steel, and that steel is typically acquired at the time that we sign the contract. Therefore it is, it's mitigated against the inflation risk. I'd say that, you know, it's hard to give you a number on this, Nick. i'd say that you know it's hard to give you a number on this nick You know, whatever the impact is, we are trying to take aggressive actions on the broader cost environment to contain the inflationary impact across the segment. you know whatever the impact is we are trying to take aggressive actions on the broader cost environment to contain the inflationary impact across the segment I guess I would say on the large mold business, you know, there is inflationary pressure there, but it's mitigated by the fact that most of the input costs would be steel, and that steel is typically acquired at the time that we sign the contract. i guess i would say on the large mold business you know there is inflationary pressure there but it's mitigated by the fact that most of the input costs would be steel and that steel is typically acquired at the time that we sign the contract Therefore it is, it's mitigated against the inflation risk. therefore it is it's mitigated against the inflation risk

Speaker 3: That's helpful. There's still a lot of uncertainty related to tariffs and high oil prices. You indicated quoting activity remains healthy. What are you hearing from the OEMs on the Automotive Solutions front? That's helpful. that's helpful There's still a lot of uncertainty related to tariffs and high oil prices. there's still a lot of uncertainty related to tariffs and high oil prices You indicated quoting activity remains healthy. you indicated quoting activity remains healthy What are you hearing from the OEMs on the Automotive Solutions front? what are you hearing from the oems on the automotive solutions front

Speaker 1: Well, I mean, I guess we're great. We continue to see decent quoting activity for, you know, for all products, accessories and non-accessory products. You know, there is just continued uncertainty out there. You know, the industry's been kind of living with this uncertain world for at least a good year now. So it's really just the new norm. I mean, life is going on, new programs are being launched, and vehicles are being refreshed. You know, anytime those things happen, there's gotta be parts associated with it. We're certainly getting our fair share of quotes and awards. Well, I mean, I guess we're great. well i mean i guess we're great We continue to see decent quoting activity for, you know, for all products, accessories and non-accessory products. we continue to see decent quoting activity for you know for all products accessories and non-accessory products You know, there is just continued uncertainty out there. you know there is just continued uncertainty out there You know, the industry's been kind of living with this uncertain world for at least a good year now. you know the industry's been kind of living with this uncertain world for at least a good year now So it's really just the new norm. so it's really just the new norm I mean, life is going on, new programs are being launched, and vehicles are being refreshed. i mean life is going on new programs are being launched and vehicles are being refreshed You know, anytime those things happen, there's gotta be parts associated with it. you know anytime those things happen there's gotta be parts associated with it We're certainly getting our fair share of quotes and awards. we're certainly getting our fair share of quotes and awards

Speaker 3: Good. Maybe, switching gears. Last quarter you mentioned extrusion was used in data centers. You kind of reiterated that today. Any indication, what increase in demand you've seen over the last couple of months? Good. good Maybe, switching gears. maybe switching gears Last quarter you mentioned extrusion was used in data centers. last quarter you mentioned extrusion was used in data centers You kind of reiterated that today. you kind of reiterated that today Any indication, what increase in demand you've seen over the last couple of months? any indication what increase in demand you've seen over the last couple of months

Speaker 1: It's hard to give you a number on a short-term basis like that. You know, just generally, it does seem that AI kind of infrastructure related extrusions are probably accelerating toward 10%, you know, certainly upper single digits of total extrusions. I mean, it's a very big growth driver, and it's becoming a pretty big end market. It's hard to give you a number on a short-term basis like that. it's hard to give you a number on a short-term basis like that You know, just generally, it does seem that AI kind of infrastructure related extrusions are probably accelerating toward 10%, you know, certainly upper single digits of total extrusions. you know just generally it does seem that ai kind of infrastructure related extrusions are probably accelerating toward 10% you know certainly upper single digits of total extrusions I mean, it's a very big growth driver, and it's becoming a pretty big end market. i mean it's a very big growth driver and it's becoming a pretty big end market

Speaker 3: Good. Then, maybe one last question from me. Any update on the M&A pipeline and what you might be thinking there? Good. good Then, maybe one last question from me. then maybe one last question from me Any update on the M&A pipeline and what you might be thinking there? any update on the m&a pipeline and what you might be thinking there

Speaker 1: Nothing, nothing on the front burner. I mean, we continue to look out for select and tuck-in acquisitions, but nothing to talk about at this point. We are, you know, continue to focus on organic growth. We do see a lot of that. You know, the volumes in large mold are extremely encouraging. The opportunities in nuclear seem to be very big. We've got still some underperformance in our greenfield facilities that we are seeing traction on turnaround. We think that, you know, the combination of these things will drive our profitability going forward, you know, starting in Q3 but through the second half at least. Nothing, nothing on the front burner. nothing nothing on the front burner I mean, we continue to look out for select and tuck-in acquisitions, but nothing to talk about at this point. i mean we continue to look out for select and tuck-in acquisitions but nothing to talk about at this point We are, you know, continue to focus on organic growth. we are you know continue to focus on organic growth We do see a lot of that. we do see a lot of that You know, the volumes in large mold are extremely encouraging. you know the volumes in large mold are extremely encouraging The opportunities in nuclear seem to be very big. the opportunities in nuclear seem to be very big We've got still some underperformance in our greenfield facilities that we are seeing traction on turnaround. we've got still some underperformance in our greenfield facilities that we are seeing traction on turnaround We think that, you know, the combination of these things will drive our profitability going forward, you know, starting in Q3 but through the second half at least. we think that you know the combination of these things will drive our profitability going forward you know starting in q3 but through the second half at least You know, to the extent that we can complement those positives with some accretive acquisition activity that, you know, is certainly something that we're focused on, but nothing to report at this time. You know, to the extent that we can complement those positives with some accretive acquisition activity that, you know, is certainly something that we're focused on, but nothing to report at this time. you know to the extent that we can complement those positives with some accretive acquisition activity that you know is certainly something that we're focused on but nothing to report at this time

Speaker 3: That's great. Thanks for taking my questions. I'll pass along. That's great. that's great Thanks for taking my questions. thanks for taking my questions I'll pass along. i'll pass along

Speaker 1: Okay. Thanks, Nick. Okay. okay Thanks, Nick. thanks nick

Speaker 4: I'm not showing any further questions at this time. I turn the call back to Darren. I'm not showing any further questions at this time. i'm not showing any further questions at this time I turn the call back to Darren. i turn the call back to darren

Speaker 1: Okay. Thanks, Kevin. Thanks everyone for joining us on the call today. We look forward to talking with you when we release our third quarter results. Take care. Okay. okay Thanks, Kevin. thanks kevin Thanks everyone for joining us on the call today. thanks everyone for joining us on the call today We look forward to talking with you when we release our third quarter results. we look forward to talking with you when we release our third quarter results Take care. take care

Speaker 4: Ladies and gentlemen, this conclude today's presentation. You may now disconnect and have a wonderful day. Ladies and gentlemen, this conclude today's presentation. ladies and gentlemen this conclude today's presentation You may now disconnect and have a wonderful day. you may now disconnect and have a wonderful day