Q4 2025 Firan Technology Group Corp Earnings Call

February 19, 2026

Speaker #2: If you would like to ask a question during this time, simply press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star 2.

Speaker #2: Please note that this call is being recorded. I would now like to turn the call over to Mr. Brad Born. President and Chief Executive Officer of FTG.

Speaker #2: Mr. Born, you may proceed. Thank you. Good morning. I'm Brad Born, President and CEO of Firan Technology Group Corporation, or FTG. Also on the call today is Drew Knight, our Chief Financial Officer.

Operator: Bourne, you may proceed.

Brad Bourne: Thank you. Good morning. I'm Brad Bourne, President and CEO of Firan Technology Group Corporation, or FTG. Also on the call today is Drew Knight, our Chief Financial Officer. Before we go any further, I must caution you that this call may contain forward-looking statements. Such statements are based on the current expectations of management of the company and inherently involve numerous risks and uncertainty, known and unknown, including economic factors in the company's industry generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the company. Listeners are cautioned to consider these and other factors carefully when making decisions with respect to the company and not place undue reliance on forward-looking statements.

Speaker #2: Before we go any further, I must caution you that this call may contain forward-looking statements, such statements are based on the current expectations of management of the company and inherently involve numerous risks and uncertainty, known and unknown, including economic factors and the company's industry generally.

Speaker #2: The preceding list does not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance and actually events and results could differ materially from those expressed or implied by forward-looking statements made by the company.

Speaker #2: The listener's caution to consider these and other factors carefully when making decisions with respect to the company and not place undue reliance on forward-looking statements.

Speaker #2: The company does not undertake and has no specific intention to update any forward-looking statements written or oral that may be made from time to time by or on its behalf, whether a result of new information, future events, or otherwise.

Brad Bourne: The company does not undertake and has no specific intention to update any forward-looking statements, written or oral, that may be made from time to time by or on its behalf, whether as a result of new information, future events, or otherwise. 2025 was another successful year for FTG. We had record revenues, EBITDA, and earnings, and we made great progress in integrating FLYHT into FTG and positioning it for future success. More specifically, in 2025, FTG accomplished many financial goals, including our bookings were CAD 209.9 million a year, marking a 14% increase over 2024. Our backlog at year-end was CAD 148.5 million, a 21% increase from last year. Our revenue was CAD 191 million, an 18% increase over 2024.

Speaker #2: 2025 was another successful year for FTG. We had record revenues and earnings, and we made great progress in integrating flight into FTG and positioning it for future success.

Speaker #2: More specifically, in 2025, FTG accomplished many financial goals, including our bookings were 209.9 million a year, marking a 14% increase over 2024. Our backlog at year-end was 148.5 million, a 21% increase from last year.

Speaker #2: Our revenue was 191 million, an 18% increase over 2024. Our adjusted EBITDA was 32.7 million, and 2025 up 27% from 25.8 million last year.

Brad Bourne: Our adjusted EBITDA was CAD 32.7 million in 2025, up 27% from CAD 25.8 million last year. Our adjusted net earnings were CAD 13.5 million in 2025, an increase of 31% from 2024. Our operating cash flow less lease payments were CAD 13.7 million in the year, and we maintained a strong balance sheet with net debt of CAD 8.3 million or 0.3 times trailing twelve-month EBITDA, including CAD 11.2 million of government loans. Other accomplishments in 2025 included we took steps to grow our defense business. FTG Circuits recently qualified for two significant classified defense programs. Delivery is expected to start in 2026 and ramp up through 2027. FTG overall will also benefit from increasing customer demand on legacy defense programs. We diversified our revenue sources to reduce our exposure to UF terrorist risks for our non-US sites.

Speaker #2: Our adjusted net earnings were 13.5 million, in 2025, an increase of 31% from 2024. Our operating cash flow less lease payments were 13.7 million in the year.

Speaker #2: And we maintained a strong balance sheet with net debt of 8.3 million, or 0.3 times Including 11.2 million of government loans. Other accomplishments in 2025 included we took steps to grow our defense business.

Speaker #2: FTG circuits recently qualified for two significant classified defense programs. Delivery is expected to start in 2026 and ramp up through 2027. FTG overall will also benefit from increasing customer demand on legacy defense programs.

Speaker #2: We diversified our revenue sources to reduce our exposure to UF terrorist risks for our non-US sites. During the year, we ramped up deliveries in support of the C919, China's first domestic single-aisle passenger jet.

Brad Bourne: During the year, we ramped up deliveries in support of the C919, China's first domestic single-aisle passenger jet. Also, during the year, De Havilland Aircraft of Canada selected FTG to provide updated cockpit control panel assemblies for the new De Havilland Canadair 515 aerial water bomber. FTG completed first deliveries of some units to De Havilland on this program in late 2025. Took steps to create value from the FLYHT acquisition. We obtained supplemental type certificates or STCs for the AFIRS Edge+ program for Boeing 737 in Canada, US, and China, and for Airbus A320 in Canada, Europe, and China. The transition of AFIRS Edge to in-house production is now underway, and FTG recently delivered its first units to an airline in Asia, marking a key milestone in value creation from the FLYHT acquisition. We strengthened the FTG leadership team.

Speaker #2: Also during the year, the Havilland aircraft to Canada, selected FTG to provide updated cockpit control panel assemblies for the new Canada Air 515 aerial water bomber.

Speaker #2: FTG completed first deliveries of some units to the Havilland on this program in late 2025. We took steps to create value from the flight acquisition.

Speaker #2: We obtained supplemental type certificates, or STCs, for the AFRS Edge Plus program for the Boeing 737 in Canada, the US, and China. And for Airbus A320 in Canada, Europe, and China.

Speaker #2: The transition of AFRS Edge to in-house production is now underway, and FTG recently delivered its first units to an airline in Asia, marking key milestone in value creation from the flight acquisition.

Speaker #2: And we strengthened the FTG leadership team. We continue to bolster our leadership team, including appointing a new CFO, Drew, who's with us today; Executive Vice Presidents for both the Circuits and Aerospace segments; as well as some key site leaders, due to retirements and other organizational growth.

Brad Bourne: We continue to bolster our leadership team, including appointing a new CFO, Drew, who's with us today, Executive Vice Presidents for both the circuits and aerospace segments, as well as some key site leaders due to retirements and other organizational growth. Also, during the year, FTG appointed Russell David and Christine Forget to the FTG Board of Directors. Russell has served as a board member and senior executive of corporations and as a senior partner at Deloitte in corporate finance and M&A advisory. Christine has served as a board member and senior executive of several corporations, including as a VP, Global Procurement at Bombardier. Drew will provide more details on our 2025 and Q4 results shortly. Let me turn to some external items. Our end market demand remains strong.

Speaker #2: Also during the year, FTG appointed Russell David and Christine Forget to the FTG board of directors. Russell has served as a board member and senior executive of corporations and has and as a senior partner at Deloitte in corporate finance and M&A advisory.

Speaker #2: Christine has served as a board member and senior executive of several corporations, including as VP, Global Procurement at Bombardier. Drew will provide more details on our 2025 and Q4 results shortly.

Speaker #2: Let me turn to some external items. Our end market demand remains strong. Airbus delivered 793 aircraft in 2025. But more importantly, they're looking to ramp to over 1,000 aircraft annually in the next few years.

Brad Bourne: Airbus delivered 793 aircraft in 2025, but more importantly, they're looking to ramp to over 1,000 aircraft annually in the next few years. Airbus has a backlog of over 8,000 orders, which is over a decade worth of production at current production rates. At Boeing, they shipped 600 planes in 2025, up from 384 in 2024. 2024 was low, due in part to the safety incident on the Alaska Air 737, as well as the machinist strike they had later in the year. But looking forward, Boeing has plans to ramp their production to over 800 planes annually in the next few years. Boeing's backlog is almost 6,000 planes, so also over a decade's worth of orders at current production rates. Well, 2024 might have been a low point for Boeing.

Speaker #2: Airbus has a backlog of over 8,000 orders, which is over a decade worth of production at current production rates. At Boeing, they shipped 600 planes in 2025, up from 384 in 2024.

Speaker #2: 2024 was low due in part to the safety incident on the Alaska Air 737, as well as the machine strike they had later in the year.

Speaker #2: But looking forward, Boeing has plans to ramp their production to over 800 planes annually in the next few years. Boeing's backlog is almost 6,000 planes, so also over a decade's worth of orders at current production rates.

Speaker #2: While 2024 might have been a low point for Boeing, it has been come clear that Airbus is outperforming Boeing in the air transport market in terms of aircraft ship, and they hold a 60% market share based on order backlog.

Brad Bourne: It has become clear that Airbus is outperforming Boeing in the air transport market in terms of aircraft shipped, and they hold a 60% market share based on order backlog. This has implications for FTG's plans going forward. In the business jet market, Bombardier reported a high single-digit shipment increase for 2025. They shipped 157 aircraft in the year. They are also pushing hard to add a defense component to their business, and they've had some success to date in selling their business jets for defense applications. In the helicopter market, Bell Helicopter reported a 20% revenue increase in 2025, driven by increased defense programs. All of this bodes well for us as we look to future demand in the coming years. We've also looked at results from some key defense contractors.

Speaker #2: This has implications for FTG's plans going forward. In the business jet market, Bombardier reported a high single-digit shipment increase for 2025. They shipped 157 aircraft in the year.

Speaker #2: They are also pushing hard to add a defense component to their business, and they've had some success to date in selling their business jets for defense applications.

Speaker #2: In the helicopter market, Bell Helicopter reported a 20% revenue increase in 2025, driven by increased defense programs. All of this bodes well for us as we look to future demand in the coming years.

Speaker #2: I've also looked at results from some key defense contractors. For instance, Lockheed Martin reported a 6% revenue growth in 2025. And also related to defense, Boeing was selected to develop and produce the next generation air dominance fighter.

Brad Bourne: For instance, Lockheed Martin reported a 6% revenue growth in 2025. And also related to defense, Boeing was selected to develop and produce the next generation air dominance fighter. This is good news for them, and based on the supply chain approach on the previous air superiority fighter, the F-22, I would expect the sourcing for this will be US-only suppliers. We did have content on the F-22 when it was in production through our Chatsworth facility. We are better positioned now to increase our content on US-only procurements with our five US-based sites. Also importantly, there are new commitments from all NATO members, including Canada, to ramp defense spending to 3.5% of GDP, with another 1.5% for defense infrastructure. And Canada has said they will increase defense spending in 2025, 2026 to 2% of GDP.

Speaker #2: This is good news for them, based on the supply chain approach on the previous air superiority fighter, the F-22. I would expect the sourcing for this will be U.S.-only suppliers.

Speaker #2: We did have content on the F-22 when it was in production, through our Chatsworth facility. We are better positioned now to increase our content on US-only procurements, with our five US-based sites.

Speaker #2: Also, importantly, there are new commitments from all NATO members, including Canada, to ramp defense spending to 3.5% of GDP, with another 1.5% for defense infrastructure.

Speaker #2: And Canada said they will increase defense spending in 2025-26 to 2% of GDP. All of this indicates significant increases in defense budgets for all European countries and Canada.

Brad Bourne: All of this indicates significant increases in defense budgets for all European countries and Canada. The recent creation of a defense investment agency in Canada to accelerate and streamline future procurement activity is positive for the industry here. The US is also looking to increase defense spending next year. Looking at the longer term, Boeing's most recent 20-year forecast for commercial aerospace shows significant long-term industry growth, and it continued to show 20% of all new aircraft deliveries going to China, close to 40% to Asia, as has been the case in the recent forecast. Business jet market has also already seen traffic recover. A recent business jet market forecast from Honeywell similarly predicts growth in this market to 5% in 2026, and 3% annually over the next decade.

Speaker #2: The recent creation of a defense investment agency in Canada to accelerate and streamline future procurement activity is positive for the industry here. And the US has also looking to increase defense spending next year.

Speaker #2: Looking at the longer term, Boeing's most recent 20-year forecast for commercial aerospace shows significant long-term industry growth, and it continued to show 20% of all new aircraft deliveries going to China, close to 40% to Asia, as has been the case in the recent forecast.

Speaker #2: Business jet market has also already seen traffic recover, a recent business jet market forecast from Honeywell, similarly predicts growth in this market to 5% in 2026 and 3% annually over the next decade.

Speaker #2: So as we have said for many years, FTG's goal is to participate in all segments of the aerospace and defense markets as each moves through their independent business cycles.

Brad Bourne: So as we have said for many years, FTG's goal is to participate in all segments of the aerospace and defense markets as each moves through their independent business cycles. It is not often all segments are growing, as seems to be the case now. Beyond this, let me give you a quick update on some key metrics for FTG for our fourth quarter and full year. First, as already noted, the leading indicator of business is our bookings or new orders. Our bookings were CAD 210 million in the year. This resulted in a backlog of CAD 148 million at year-end. Full year sales were CAD 191 million, which is up 18% over last year. Two-thirds of this growth is driven by the acquisition of FLYHT earlier this year and the balance from organic growth.

Speaker #2: It is not often all segments are growing, as seems to be the case now. Beyond this, let me give you a quick update on some key metrics for FTG for our fourth quarter and full year.

Speaker #2: First, as already noted, the leading indicator of business is our bookings or new orders. Our bookings were $210 million in the year. This resulted in a backlog of $148 million at year-end.

Speaker #2: Full-year sales were 191 million, which is up 18% over last year. Two-thirds of this growth is driven by the acquisition of flight earlier this year and the balance from organic growth.

Speaker #2: In our aerospace business, sales were up 43% in 2025 compared to last year. The increase is about 90% due to the acquisition of flight this year.

Brad Bourne: In our aerospace business, sales were up 43% in 2025 compared to last year. The increase is about 90% due to the acquisition of FLYHT. ... Sales in Toronto and Tianjin were up, while activity in Chatsworth was down in the year due to timing of some orders. There was a significant ramp-up in C919 shipments in the year, as well as assemblies for both Boeing and Airbus aircraft in Q4. The C919 shipments benefited both Toronto and Tianjin, while other shipments benefited Toronto. On the circuit side of our business, sales were up 6% over last year. All of this is organic growth. Our strongest growth in the year was in our joint venture in China, followed by our Haverhill and Chatsworth sites.

Speaker #2: Sales in Toronto and Tianjin were up, while activity in Chatsworth was down in the year due to timing of some orders. There was a significant ramp-up in C919 shipments in the year, as well as assemblies for both Boeing and Airbus aircraft in Q4.

Speaker #2: The C919 shipments benefited both Toronto and Tianjin, while other shipments benefited Toronto. On the circuit side of our business, sales were up 6% over last year.

Speaker #2: All of this is organic growth. Our strongest growth in the year was in our joint venture in China, followed by our haveral and Chatsworth sites.

Speaker #2: Minnetonka had strong demand, but our ability to ramp production was constrained by adding and training new production staff. Overall at FTG, our top five customers accounted for 51.7% of total revenue in the year.

Brad Bourne: Minnetonka had strong demand, but our ability to ramp production was constrained by adding and training new production staff. Overall, at FTG, our top five customers accounted for 51.7% of total revenue in the year. This compares to 58.4% last year. It's great to see the drop in customer concentration as we add sites and expand our customer base, partly through the acquisition of FLYHT. Airlines were two of our top 20 customers in the year due to the FLYHT acquisition. Also interesting to note, of the top 10 customers, six are customers shared between Circuits and Aerospace. We like to see the shared customers as a means we're maximizing our penetration of these customers by selling both cockpit products and circuit boards.

Speaker #2: This compares to 58.4% last year. It's great to see the drop in customer concentration as we add sites and expand our customer base, partly through the acquisition of Flight.

Speaker #2: Airlines were two of our top 20 customers in the year due to the flight acquisition. Also interesting to note are the top 10 customers, six are customers shared between circuits and aerospace.

Speaker #2: We like to see the shared customers as a means we're maximizing our penetration of these customers by selling both cockpit products and circuit boards.

Speaker #2: Given the actions of the new administration in the US of implementing tariffs, it's also good to see that one of our top customers is outside of the US, and this is in China, and another eight have operations outside of the US.

Brad Bourne: Given the actions of the new administration in the US of implementing tariffs, it's also good to see that one of our top customers is outside of the US, and this is in China, and another eight have operations outside of the US. While on this topic, 69.9% of FTG sales are to US-based customers. This includes sales by US sites as well as sales from FTG sites in Canada or China. This compares to 78.3% last year. While the sales grew by 5% in the US, they grew by 46% in Asia, 140% in Europe, and by 35% in Canada, as we benefited from previous efforts to expand globally, including things like our content on the C919 aircraft in China and acquiring FLYHT sales globally.

Speaker #2: While on this topic, 69.9% of FTG sales are to US-based customers. This includes sales by US sites as well as sales from FTG sites in Canada or China.

Speaker #2: This compares to 78.3% last year. While the sales grew by 5% in the US, they grew by 46% in Asia, 140% in Europe, and by 35% in Canada.

Speaker #2: As we benefited from previous efforts to expand globally, including things like our content on the C919 aircraft in China, and acquiring flight sales globally.

Speaker #2: The increase in sales outside the US are helpful in the event of any tariffs that might impose on our non-US-based sites. Our goal is to continue to grow our non-US revenue for our non-US sites.

Brad Bourne: The increase in sales outside the US are helpful in the event of any tariffs that might impose on our non-US-based sites. Our goal is to continue to grow our non-US revenue for our non-US sites. In 2025, 36% of total revenues came from our aerospace business, compared to 29% last year. The aerospace business share increased due to the acquisition of FLYHT. I'd now like to turn the call over to Drew, who will summarize our financial results for 2025, and afterwards, I will talk about some key priorities we are working on. Drew?

Speaker #2: In 2025, 36% of total revenues came from our aerospace business, compared to 29% last year. The aerospace business share increased due to the acquisition of flight.

Speaker #2: I'd now like to turn the call over to Drew, who will summarize our financial results for 2025, and afterwards, I will talk about some key priorities we are working on.

Speaker #2: Drew? Thanks, Brad. Good morning, everyone. I would like to provide some additional detail on our financial performance for 2025 and Q4. On sales of $191 million FTG achieved a gross margin of 60.6 million or 31.7% in 2025, compared to 44.2 million or 27.3% on sales of $162 million in 2024.

Drew Knight: Thanks, Brad. Good morning, everyone. I would like to provide some additional detail on our financial performance for 2025 and Q4. On sales of CAD 191 million, FTG achieved a gross margin of CAD 60.6 million, or 31.7% in 2025, compared to CAD 44.2 million, or 27.3%, on sales of CAD 162 million in 2024. As such, gross margin in 2025 was a substantial improvement and up 430 basis points. The increase in gross margin dollars and the gross margin rate is the result of increased scale on our fixed cost base, operational improvements, the addition of our new Aero Calgary business, and favorable foreign exchange rates. Revenue per employee was CAD 254,000 in 2024, as compared to CAD 240 thou...

Speaker #2: As such, gross margin in 2025 was a substantial improvement and up 430 basis points. The increase in gross margin dollars and the gross margin rate is the result of increased scale on our fixed cost-based operational improvements, the addition of our new Aero Calgary business, and favorable foreign exchange rates.

Speaker #2: Revenue per employee was $254,000 in 2024, as compared to $240,00 or, sorry, in 2025, as compared to $240,000 in 2024, which is a 6% increase.

Drew Knight: Or sorry, in 2025, as compared to 240,000 in 2024, which is a 6% increase. Q4 2025, on sales of CAD 51.7 million, FTG achieved a gross margin of CAD 15.8 million, or 30.6%, compared to CAD 12.8 million or 28.3% on sales of CAD 45.2 million in Q4 2024. The increase in gross margin dollars for Q4 2025 as compared to Q4 2024 is a result of increased sales volumes in the aerospace segment, including the new Aero Calgary business, operational improvements, and favorable exchange rates. From a geographical standpoint, FTG's sales growth was global, as Brad noted earlier. Diversification improved as 70% of FTG's revenues were derived from customers in the US in 2025, compared to 78% in 2024.

Speaker #2: Q4 2025 on sales of $51.7 million FTG achieved a gross margin of 15.8 million or 30.6%, compared to $12.8 million or 28.3% on sales of $45.2 million in Q4 2024.

Speaker #2: The increase in gross margin dollars for Q4 2025, as compared to Q4 2024, is the result of increased sales volumes in the aerospace segment, including the new Aero Calgary business, operational improvements, and favorable exchange rates.

Speaker #2: From a geographical standpoint, FTG's sales growth was global, as Brad noted earlier. Diversification improved, as 70% of FTG's revenues were derived from customers in the US in 2025.

Speaker #2: Compared to 78% in 2024. SG&A expenses were $26.7 million or 14% of sales in 2025, as compared to $20.4 million or 12.6% of sales in the prior year.

Drew Knight: SG&A expenses were CAD 26.7 million, or 14% of sales in 2025, as compared to CAD 20.4 million, or 12.6% of sales in the prior year. The increase of CAD 6.4 million during fiscal 2025 was primarily due to the acquisition impact of CAD 4.7 million at Aero Calgary. The remaining increase included Hyderabad, India, startup expenses, restructuring costs, and acquisition expenses. Q4 2025, SG&A expense was 13.3% of sales, which is up from 12.7% in Q4 2024. Similar to the full year, this is mostly due to the Aero Calgary business, which has high margins and high SG&A, as well as restructuring costs and some India costs in 2025.

Speaker #2: The increase of $6.4 million during fiscal 2025 was primarily due to the acquisition impact of $4.7 million at Aero Calgary. The remaining increase included Hydrobat India startup expenses, restructuring costs, and acquisition expenses.

Speaker #2: Q4 2025, SG&A expense was $13.3% of sales, which is up from $12.7% in Q4 2024. Similar to the full year, this is mostly due to the Aero Calgary business, which has high margins and high SG&A, as well as restructuring costs and some India costs in 2025.

Speaker #2: R&D costs for 2025 were $10.9 million or 5.7% of sales compared to $7 million or 4.3% of revenue. In 2024, R&D efforts included product and process improvements.

Drew Knight: R&D costs for 2025 were CAD 10.9 million, or 5.7% of sales, compared to CAD 7 million or 4.3% of revenue in 2024. R&D efforts included product and process improvements at the Circuit segment, as well as Aerospace segment, process improvements and product development. FTG is exposed to currency risk through transactions, assets, and liabilities in foreign currencies, primarily US dollars. The average exchange rate experienced in 2025 was 1.39, as compared to 1.36 in 2024, which equates to a weakening of the Canadian dollar of 2.2%. We estimate that for each 1% of weakening of the Canadian dollar, FTG would experience an increase in pre-tax earnings of CAD 0.8 million, absent of any hedging countermeasures.

Speaker #2: At the circuit segment, as well as aerospace segment process improvements and product development. FTG is exposed to currency risk through transactions, assets, and liabilities in foreign currencies, primarily US dollars.

Speaker #2: The average exchange rate experienced in 2025 was 1.39 as compared to 1.36 in 2024, which equates to a weakening of the Canadian dollar of 2.2%.

Speaker #2: We estimate that for each 1% of weakening of the Canadian dollar, FTG would experience an increase in pre-tax earnings of 0.8 million, absent of any hedge encounter measures.

Speaker #2: Adjusted EBITDA, as detailed in the MD&A, was 32.7 million for 2025 or 17.1% of sales compared to 25.8 million or 15.9% of sales for 2024.

Drew Knight: Adjusted EBITDA, as detailed in the MD&A, was CAD 32.7 million for 2025, or 17.1% of sales, compared to CAD 25.8 million, or 15.9% of sales for 2024. Adjusted EBITDA is up 27% over 2024 as a result of growing the top line organically and via the acquisition, operational improvements, and managing expenses. Adjusted EBITDA for Q4 2024 was CAD 7.9 million, or 15.4% of sales, as compared to CAD 7.6 million, or 16.7% of sales in Q4 2024. While adjusted EBITDA dollars grew somewhat, the percentage of sales declined due to the new Aero Calgary business, which added top line and gross margin that essentially broke even. We expect this business to scale up with new revenues on a fixed cost base to become profitable in the near future.

Speaker #2: Adjusted EBITDA is up 27% over 2024 as a result of growing the top-line organically, and via the acquisition, operational improvements, and managing expenses. Adjusted EBITDA for Q4 2024 was 7.9 million or 15.4% of sales as compared to 7.6 million or 16.7% of sales in Q4 2024.

Speaker #2: While adjusted EBITDA dollars grew somewhat, the percentage of sales declined due to the new Aero Calgary business, which added top-line and gross margin but essentially broke even.

Speaker #2: We expect this business to scale up with new revenues on a fixed cost base to become profitable in the near future. 2025 FTG recorded net earnings of $13.1 million or 52 cents per diluted share, as compared to $10.8 million or 45 cents per diluted share in 2024, for an increase of 15.6%.

Drew Knight: In 2025, FTG recorded net earnings of CAD 13.1 million or CAD 0.52 per diluted share, as compared to CAD 10.8 million or CAD 0.45 per diluted share in 2024, for an increase of 15.6%. For Q4 2025, net earnings were CAD 3.7 million versus CAD 4.4 million in Q4 2024, while adjusted net earnings were CAD 3.9 million in Q4 2024, as this is adjusted for CAD 0.8 million of reduction in contingent consideration related to the Minnetonka acquisition, which was booked as profit in Q4 2024. Q4 2025 adjusted net earnings showed a decline of CAD 0.2 million versus prior year, as reported.

Speaker #2: For Q4 2025, net earnings were $3.7 million or 4.4 million in Q4 versus $4.4 million in Q4 2024, while adjusted net earnings were $3.9 million in Q4 2024, as this is adjusted for 0.8 million of reduction in contingent consideration related to the Minnetonka acquisition, which was booked as profit.

Speaker #2: In Q4 2024. Q4 2025 adjusted net earnings showed a decline of 0.2 million versus prior year, as reported. However, 2025 was burdened by 0.3 million of intangible amortization from the flight acquisition, and there was 0.8 million of FX change from a gain in 2024 to a loss in 2025.

Drew Knight: However, 2025 was burdened by CAD 0.3 million of intangible amortization from the Flight acquisition, and there was CAD 0.8 million of FX change from a gain in 2024 to a loss in 2025. Normalizing for these differences for an apples-to-apples comparison, then Q4 2025 is CAD 0.9 million better than Q4 2024. The 2025 effective income tax rate was approximately 27.8%, as compared to 27% in 2024. I would like to remind everyone that FTG continues to have substantial tax losses available to offset future income, and the accounting benefits of these losses has not been recognized in our financial statements. These tax loss carryforwards are located in both the US and Canada, with the Canadian losses recently acquired in the acquisition of Flight in December 2024.

Speaker #2: Normalizing for these differences for an apples-to-apples comparison, then Q4 2025 is 0.9 million better than Q4 2024. The 2025 effective income tax rate was approximately 27.8% as compared to 27% in 2024.

Speaker #2: I would like to remind everyone that FTG continues to have substantial tax losses available to offset future income, and the accounting benefits of these losses have not been recognized in our financial statements.

Speaker #2: These tax loss carry-forwards are located in both the USA and Canada, with the Canadian losses recently acquired in the acquisition of flight in December 2024.

Speaker #2: Our net debt position as of Q4 2025 is 8.3 million, as compared to a net debt position of 0.7 million as of Q4 2024.

Drew Knight: Our net debt position as of Q4 2025 is CAD 8.3 million, as compared to a net debt position of CAD 0.7 million as of Q4 2024. The debt increase resulted from the acquisition of FLYHT. Cash flow from operating activities in 2025 was CAD 18.1 million, as compared to CAD 14.5 million in 2024. Full year cash flow from operating activities increased by CAD 3.6 million. Cash used for lease liability payments was CAD 4.3 million in 2025, as compared to CAD 3.7 million in 2024. Capital expenditures were CAD 4.6 million, as compared to CAD 7.2 million in 2024. Going forward, we expect CapEx to be closer to FTG's long-term target of 3% of revenue, notwithstanding any significant capacity increases.

Speaker #2: The debt increase resulted from the acquisition of flight. Cash flow from operating activities in 2025 was 18.1 million as compared to 14.5 million in 2024.

Speaker #2: Full-year cash flow from operating activities increased by $3.6 million. Cash used for lease liability payments was $4.3 million in 2025, as compared to $3.7 million in 2024.

Speaker #2: Capital expenditures were 4.6 million, as compared to 7.2 million in 2024. Going forward, we expect CapEx x to be closer to FTG's long-term target of 3% of revenue, notwithstanding any significant capacity increases.

Speaker #2: As at 2025 year-end, the corporation's primary sources of liquidity totaled $78 million, consisting of working capital of $58 million and $20 million of unused credit facilities.

Drew Knight: As at 2025 year end, the corporation's primary sources of liquidity totaled CAD 78 million, consisting of working capital of CAD 58 million and CAD 20 million of unused credit facilities. Accounts receivable days outstanding were 55 at the 2025 year end, down from 70 in the prior year. Inventory days were 105 at 2025 year end, up from 96 in 2024. Accounts payable days outstanding were 58 at the end of 2025, as compared to 68 in 2024. On to the outlook. We enter Q1 2026 with a record level of backlog of CAD 148.5 million, of which approximately 80% is expected to be converted to revenue in 2026. The new business activities in both the aerospace and defense industries are strong and continue to accelerate.

Speaker #2: Accounts receivable days outstanding were 55 at the 2025 year-end, down from 70 in the prior year. Inventory days were 105 at 2025 year-end, up from 96 in 2024.

Speaker #2: And accounts payable days outstanding were 58 at the end of 2025, as compared to 68 in 2024. On to the outlook. We enter Q1 2026 with a record level of backlog of 148.5 million, of which approximately 80% is expected to be converted to revenue in 2026.

Speaker #2: The new business activities in both the aerospace and defense industries are strong and continue to accelerate. Both the circuits business and aerospace business are winning their share of new customer RFPs, including a couple of substantial classified defense programs, as Brad mentioned.

Drew Knight: Both the circuits business and aerospace business are winning their share of new customer RFPs, including a couple of substantial classified defense programs, as Brad mentioned. We are focused on managing cash flow, improving operational efficiency, and continuing with the flight integration, which will bear fruit. Our complete set of year-end and quarterly filings are now available on SEDAR. With that, I would like to turn things back over to Brad.

Speaker #2: We are focused on managing cash flow and improving operational efficiency, and continuing with the flight integration, which will bear fruit. Our complete set of year-end and quarterly filings are now available on Cedar.

Speaker #2: With that, I would like to turn things back over to Brad.

Speaker #1: Thanks, Drew. Let me delve into some other important items for the future of FTG that will continue to build on our accomplishments from 2025.

Brad Bourne: Thanks, Drew. Let me delve into some other important items for the future of FTG that will continue to build on our accomplishments from 2025. We will continue to pursue growth in the defense markets. As noted previously, we expect defense spending to continue to grow in Canada, the US, and NATO. We've had some good success on some new programs in the US last year, and we're pursuing more new programs in 2026. Beyond this, we will look for opportunities outside of the US as well. The NATO budget was about 1/3 of the US budget a decade ago, and it is 2/3 its size today. So it's definitely a market of interest to us. As Canada ramps its defense spending and its commitment to NATO, we are hopeful that it will create new opportunities for FTG sites outside the US.

Speaker #1: We will continue to pursue growth and the defense market. As noted previously, we expect defense spending to continue to grow in Canada, the US, and NATO.

Speaker #1: We've had some good success on some new programs in the US last year, and we're pursuing more new programs in 2026. Beyond this, we will look for opportunities outside of the US as well.

Speaker #1: The NATO budget was about a third of the US budget a decade ago, and it is two-thirds its size today. So it's definitely a market of interest to us.

Speaker #1: As Canada ramps its defense spending and its commitment to NATO, we are hopeful that it will create new opportunities for FTG sites outside the U.S.

Speaker #1: After the US and NATO, the next biggest defense market is India, and as we get our site established there, we'll look to capture some market share in this market as well.

Brad Bourne: After the US and NATO, the next biggest defense market is India, and as we get our site established there, we'll look to capture some market share in this market as well. We will look to capture more work in the commercial aerospace market and grow as volumes ramp up. As part of this, we will look for ways to increase our activity with Airbus, as they are the stronger performer right now. To do this, we will leverage our Canadian and China sites, and we will continue to investigate establishing a footprint in Europe. Given the uncertainty regarding tariffs from the US, we will look to continue to diversify our revenue streams for our non-US sites. Some of the items I already mentioned will assist in this, but it will remain a priority action for us in 2025.

Speaker #1: We'll look to capture more work in the commercial aerospace market and grow as volumes ramp up. As part of this, we'll look for ways to increase our activity with Airbus as they are the stronger performer right now.

Speaker #1: To do this, we will leverage our Canadian and China sites. And we will continue to investigate establishing a footprint in Europe. Given the uncertainty regarding tariffs from the US, we will look to continue to diversify our revenue streams for our non-US sites, some of the items I already mentioned will assist in this.

Speaker #1: But it will remain a priority action for us in 2025. In 2025, about 58 million of sales from our Canadian sites were to the US customers.

Brad Bourne: In 2025, about CAD 58 million of sales from our Canadian sites were to US customers. The site did increase their non-US sales, but more will be done in 2026. Across FTG, sales outside the US grew from CAD 35 million in 2024 to over CAD 57 million in 2025. We will increase our sales staff outside the US in 2026 to help drive this growth. Tariffs are now impacting input costs in our circuits business. This is because a lot of materials used in our manufacturing processes originate outside of North America. The impact is highest for our US sites, but Toronto is also impacted when materials ship via the US to Canada. We estimate the overall cost impact to be in the millions of dollars in 2026.

Speaker #1: The site did increase their non-US sales but more will be done in 2026. Across FTG sales, and across FTG, sales outside the US grew from 35 million in 2024 to over 57 million in 2025.

Speaker #1: We will increase our sales staff outside the US in 2026 to help drive this growth. Tariffs are now impacting input costs in our circuits business.

Speaker #1: This is because of auto materials used in our manufacturing processes originate outside of North America. The impact is highest for our US sites, but Toronto is also impacted when materials shipped via the US to Canada.

Speaker #1: We estimate the overall cost impact to be in the millions of dollars in 2026. We have started to work with customers to pass on these increased costs to them and their end users.

Brad Bourne: We have started to work with customers to pass on these increased costs to them and their end users. We will continue to take steps to create value from our acquisition of FLYHT. As of December 1, 2025, we have renamed the business FTG Aerospace Calgary, as we amalgamated it legally into FTG. The amalgamation was done to possibly enable us to use FLYHT tax losses beyond just our operation in Calgary. But to be clear, we do not have certainty that this will be possible. In the Calgary business itself, we believe we are now well-positioned to have a strong year as a result of our product certification and STC efforts last year. We are seeing strong demand for all three products, and our pipelines look robust. The licensing revenue on our Satcom radio product has returned and should be consistent going forward.

Speaker #1: And we will continue to take steps to create value from our acquisition of Flight. As of December 1, 2025, we have renamed the business FTG Aerospace Calgary, as we amalgamated it legally into FTG.

Speaker #1: The amalgamation was done to possibly enable us to use flight tax losses beyond just our operation in Calgary. But to be clear, we do not have certainty that this will be possible.

Speaker #1: In the Calgary business itself, we believe we are now well positioned to have a strong year as a result of our product certification and STC efforts last year.

Speaker #1: We are seeing strong demand for all three products, and our pipelines look robust. The licensing revenue on our SATCOM radio product has returned and should be consistent going forward.

Speaker #1: The licensed product—and the licensed product ends up on Airbus aircraft—so we know the demand is strong. The Edge Plus WQAR has lots of STCs in place, and with our first delivery behind us, we're quoting many new opportunities in a number of geographic jurisdictions.

Brad Bourne: The licensed product ends up on Airbus aircraft, so we know the demand is strong. The Edge Plus WQAR has lots of STCs in place, and with our first delivery behind us, we're quoting many new opportunities in a number of geographic jurisdictions. We are starting to manufacture this product in our Tianjin plant to enable us to capture this margin as well. We expect sales of their weather product to ramp up in 2026 as well, with contracts in place with both NOAA in the US and UK Met in England. We are looking to manufacture both our satcom radio and the WVSS weather product in our Chatsworth facility in 2026. These actions should enable FTG Aerospace Calgary to be a positive addition to FTG and further mitigate risks from the US tariffs.

Speaker #1: And we are starting to manufacture this product in our Tianjin plant to enable us to capture this margin as well. We expect sales of their weather product to ramp up in 2026 as well, with contracts in place with both NOAA in the U.S. and UK Met in England.

Speaker #1: We are looking to manufacture both our SATCOM radio and the WVSS weather product in our Chatsworth facility in 2026. These actions should enable FTG Aerospace Calgary to be a positive addition to FTG and further mitigate risks from the U.S. tariffs.

Speaker #1: We will also open our aerospace facility in Hyderabad, India, in 2026. Our decision to expand geographically was partly to look for an insurance policy against anything negative happening to our China operations, but it was also partly to expand into new regions with gross potential.

Brad Bourne: We'll also open our aerospace facility in Hyderabad, India, in 2026. Our decision to expand geographically was partly to look for an insurance policy against anything negative happening to our China operations, but it's also partly to expand into new regions with growth potention- growth potential. As we analyze options, we concluded India is a very cost-effective place for manufacturing, and with Prime Minister Modi's Make in Indus- Make in India policy, coupled with significant defense spending, it will be an ideal place to operate. We selected Hyderabad, that is, as it has an aerospace hub, primarily focused on manufacturing. Our facility is under construction. It now looks like Q2 2026 for its completion. In the meantime, we will be sourcing the necessary equipment to be ready to go. Our estimated total investment is forecast to be approximately CAD 2 million.

Speaker #1: As we analyze options, we concluded India is a very cost-effective place for manufacturing, and with Prime Minister Modi's Macon India policy, coupled with significant defense spending, it will be an ideal place to operate.

Speaker #1: We selected Hyderabad as it has an aerospace hub primarily focused on manufacturing. Our facility is under construction. It now looks like Q2 2026 for its completion.

Speaker #1: In the meantime, we will be sourcing the necessary equipment to be ready to go. Our estimated total investment is forecast to be approximately $2 million.

Speaker #1: As we enter 2026, we see continued strong demand across most sites. All of our 148 million backlog, 80% of that is due in the year.

Brad Bourne: As we enter 2026, we see continued strong demand across most sites. All of our CAD 148 million backlog, 80% of that is due in the year. We continue to assess possible corporate development opportunities that could fit with either of our businesses. We have a few areas of interest, including establishing a footprint in Europe, growing our presence in India, or expanding our technology in a few areas. With a focus on operational excellence in all parts of FTG, our strong financial performance in 2025, our recent acquisitions, our key sales wins, we are confident we are on a strong long-term growth trajectory. This concludes our presentation. I thank you for your attention. I would now like to open the phones for any questions. Jenny?

Speaker #1: We continue to assess possible corporate development opportunities that could fit with either of our businesses. We have a few areas of interest, including establishing a footprint in Europe, growing our presence in India, or expanding our technology in a few areas.

Speaker #1: With a focus on operational excellence in all parts of FTG, our strong financial performance in 2025, our recent acquisitions, our key sales wins, we are confident we are in a strong long-term growth trajectory.

Speaker #1: This concludes our presentation. I thank you for your attention. I would now like to open the phones for any questions. Jenny?

Speaker #2: Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Did you have a question? Please press the star followed by the one on your touchstone phone.

Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. If you have a question, please press the star followed by the one on your touchtone phone. If you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one, should you wish to ask a question. Your first question is from Ben Stonkies, from Haywood Securities. Your line is now open.

Speaker #2: Would you wish to cancel your request? Please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys.

Speaker #2: Once again, that is star one. Should you wish to ask a question? Your first question is from Ben Stunkus from Haywood Securities. Your line is now open.

Speaker #3: Hi, Brad. Yeah, Ben's dialing in for John Luca here. Congrats on the quarter. Could you perhaps give us a qualitative snapshot of how the backlog looks from a defense perspective?

[Analyst] (Haywood Securities): Hi, Brad. Yeah, Ben's dialing in for Gianluca here. Congrats on the quarter. Could you perhaps give us a qualitative snapshot of how the backlog looks from a defense perspective? The feds here just announced a nice package on Tuesday, and we were wondering if you have any preliminary thoughts on how you might be looking about pursuing this and grabbing a piece of the bigger pie.

Ben Stonkus: Hi, Brad. Yeah, Ben's dialing in for Gianluca here. Congrats on the quarter. Could you perhaps give us a qualitative snapshot of how the backlog looks from a defense perspective? The feds here just announced a nice package on Tuesday, and we were wondering if you have any preliminary thoughts on how you might be looking about pursuing this and grabbing a piece of the bigger pie.

Speaker #3: The sites here just announced a nice package on Tuesday. And we were wondering if you have any preliminary thoughts on how you might be looking about pursuing this and grabbing a piece of the bigger pie.

Brad Bourne: Well, sure. I guess first, to answer your question specifically, no, I actually don't know how my backlog splits out in terms of defense activity. And what I would say is... You know, historically, we're running at about 40% defense, 60% commercial, with some of the wins that we talked about on some classified programs. So I'm not going to name names of them, but, you know, that should increase our defense percentage a little bit. But I don't have an exact number. And then, you know, with regard to Canada, you know, we're looking at it from a couple of perspectives. You know, for sure, defense spending is going up. Canada just issued a defense industrial strategy, which is good for, you know, it's going to be great for the industry.

Speaker #4: Wow. Sure. I guess first, to answer your question specifically, no. I actually don't know how my backlog splits out in terms of defense activity.

Speaker #4: What I would say is historically, we're running at about 40% defense, 60% commercial, with some of the wins that we talked about on some classified programs.

Speaker #4: So I'm not going to name names of them, but that should increase our defense percentage a little bit. But I don't have an exact number.

Speaker #4: And then with regard to Canada, we're looking at it from a couple of perspectives. For sure, defense spending is going up. Canada just issued a defense industrial strategy, which is good.

Speaker #4: It's going to be great for the industry. I think it's something we've all been looking for and waiting for and asking for for a number of years.

Brad Bourne: You know, I think it's something we've all been looking for and waiting for and asking for, for a number of years. The fact that they is great, and, you know, it talks about build, partner, buy. So, you know, they're looking for ways to have the defense spending in Canada benefit the industry and build the industry. So I think that's going to be good for us. And then beyond that, you know, as part of this, they are looking to make investments in companies or assist companies in making investments, is a better way to put it. And we're definitely looking at that as well, to see if there's funding sources to assist in investment activities we might be planning in the future.

Speaker #4: The fact that it's out is great. And it talks about build, partner, buy. So they're looking for ways to have the defense spending in Canada benefit the industry and build the industry.

Speaker #4: So I think that's going to be good for us. And then beyond that, as part of this, they are looking to make investments in companies or assist companies in making investments.

Speaker #4: It's a better way to put it. And we're definitely looking at that as well to see if there's funding sources to assist in investment activities we might be planning in the future.

Speaker #3: That's great. Thanks for the color. And I guess just for my follow-up here, are you starting to see any incremental quoting activity or program acceleration specifically in Canada for these defense initiatives, or is it too early in the cycle?

[Analyst] (Haywood Securities): That's great. Thanks for the color. And I guess just for my follow-up here, are you starting to see any incremental quoting activity or program acceleration specifically in Canada for these defense initiatives, or is it too early in the cycle?

Ben Stonkus: That's great. Thanks for the color. And I guess just for my follow-up here, are you starting to see any incremental quoting activity or program acceleration specifically in Canada for these defense initiatives, or is it too early in the cycle?

Brad Bourne: Yeah, for us, it's early in the cycle. You know, our activity in Canada historically has been remarkably small. You know, we went from 5% of sales to 6% of sales last year. But, you know, we're putting effort into it. Definitely, we're having lots of discussions with more Canadian companies about opportunities, but I wouldn't say it's converted into quoting activities yet.

Speaker #4: Yeah. For us, it's early in the cycle. Our activity in Canada historically has been remarkably small. We went from 5% of sales to 6% of sales last year.

Speaker #4: But we're putting effort into it. Definitely, we're having lots of discussions with more Canadian companies about opportunities. But I wouldn't say it's converted into quoting activities yet.

Speaker #3: Okay. I appreciate the color. I'll pass it off.

[Analyst] (Haywood Securities): Okay. I appreciate the color. I'll pass it off.

Ben Stonkus: Okay. I appreciate the color. I'll pass it off.

Speaker #4: Great. Thanks, Ben.

Brad Bourne: Great. Thanks, man.

Speaker #2: Thank you. Your next question is from Steve Hansen from Raymond James. Your line is now open.

Operator: Thank you. Your next question is from Steve Hanson, from Raymond James. Your line is now open.

Speaker #5: Yeah. Good morning, guys. Thanks for the time. Brad, just on the new defense programs, it sounds like they're going to remain unnamed. That's fine.

Steve Hansen: Yeah. Good morning, guys. Thanks for the time. Brad, just on the new defense programs, it sounds like they're going to remain unnamed. That's fine. It does sound like delivery is expected to start later this year, though, and then ramp up next year. What kind of capacity capabilities do you have right now? I think you referenced Minnetonka still having some constraints, so I'm just trying to get a sense for how that capacity plan looks relative to the ramping plan of new programs. Thanks.

Speaker #5: It does sound like delivery is expected to start later this year, though, and then ramp up next year. What kind of capacity capabilities do you have right now?

Speaker #5: I think you referenced Minnetonka still having some constraints. So I'm just trying to get a sense for how that capacity plan looks relative to the ramping of new programs.

Speaker #5: Thanks.

Speaker #4: Right. Sure. So capacity growth in FTG for all but one site is really about adding people and training people and getting them contributing. And so for Minnetonka specifically, we have tons of capacity in terms of plant and equipment.

Brad Bourne: Right. Sure. So capacity growth in FTG for all but one site is really about adding people, training people, and getting them contributing. For Minnetonka, specifically, we have tons of capacity in terms of plant and equipment, so that one's all about adding people, training people. I've said this in the past, and I'd say it again here, that, you know, adding people, getting people is easy, but the way I describe it these days is, if I add 10 people, three of them are going to leave because they don't like it, three of them are going to leave because we don't like them, and then you have a few left over that, you know, get through that training process, which, you know, is going to be at least six months, and then they're contributing to the business.

Speaker #4: So that one's all about adding people, training people. I've said this in the past, and I'd say it again here that adding people, getting people is easy, but the way I describe it these days is if I add 10 people, three of them are going to leave because they don't like it.

Speaker #4: Three of them are going to leave because we don't like them. And then you have a few left over that get through that training process, which is going to be at least six months.

Speaker #4: And then they're contributing to the business. So ramping capacity is constrained or that the rate of ramp is constrained by that process of adding and training people.

Brad Bourne: So, you know, ramping capacity is constrained or that the rate of ramp is constrained by that process of adding and training people. And that goes for all sites except one. Circuits Toronto facility, for sure, to grow that capacity, I need to add plant and equipment as well as some people. But we have added that or included that in our plan for 2026. We have a capital investment plan for that site that should add at least 30% capacity to it. So, you know, the good news is, when a plant hits capacity, it generally is not at every process in the building. There's one or two bottlenecks. So if you can add capacity in those bottleneck areas, you increase the capacity across the whole plant. So that's what we're doing in Toronto.

Speaker #4: And that goes for all sites except one. My circus Toronto facility for sure to grow that capacity. I need to add plant and equipment as well as some people.

Speaker #4: But we have added that or included that in our plan for 2026. We have a capital investment plan for that site. That should add at least 30% capacity to it.

Speaker #4: So, the good news is, when a plant hits capacity, it generally is not at every process in the building. There's one or two bottlenecks.

Speaker #4: So if you can add capacity in those bottleneck areas, you increase the capacity across the whole plant. So that's what we're doing in Toronto.

Speaker #4: We're committing to it. And as I say, at least a 30% growth in capacity is planned in that site for the end of the year.

Brad Bourne: We're committing to it, and as I say, at least a 30% growth in capacity is planned in that site for the end of the year.

Speaker #5: Okay. That's helpful. And just, I mean, rough magnitude, is there any ability to give rough magnitude on these new defense programs and what they mean for 2026 and 2027?

Steve Hansen: Okay, that's helpful. And just, I mean, rough magnitude. Is there any ability to give rough magnitude on these new defense programs and what they mean for 2026 and 2027? I presume they're relatively low-rate productions to start with, but just wanted to get a sense for what the opportunity set is there.

Speaker #5: I presume they're relatively low rate production to start with. But just wanted to get a sense for what the opportunity set is there.

Speaker #4: Yeah. And I guess activities started last year to be fair enough. Some of that was qualification, build, or initial deliveries. We're expecting it to be material amounts this year.

Brad Bourne: Yeah, and I guess, you know, activities started last year, to be fair. Now, some of that was qualification, build, or, you know, initial deliveries. We're expecting it to be material amounts this year. It's going to be in the millions of CAD. Beyond that, I just, I don't know, is my honest answer exactly how much we'll ramp this year. But for sure, the overall demand on these programs is crazy big, in the tens of millions of CAD. But whether we will be able to support all of that, is not clear yet. And whether it would be, you know, the production allocation is not 100% set, so we'll see how much of that we get, and how much of it we can support. But the demand is huge on these programs.

Speaker #4: It's going to be in the millions of dollars. Beyond that, I just don't know is my honest answer exactly how much we'll ramp this year.

Speaker #4: But for sure, the overall demand on these programs is crazy big in the tens of millions of dollars. But whether we will be able to support all of that is not clear yet.

Speaker #4: And whether it would be the production allocation is not 100% set. So we'll see how much of that we get. And how much of it we can support.

Speaker #4: But the demand is huge on these programs.

Speaker #5: Okay, that's good context, thanks. And just one last follow-up from me, if I may—it's just on the COMAC program. You've had some good success there.

Steve Hansen: Okay. That's good context. Thanks. And just one last follow-up for me is just on the COMAC program. You've had some good success there. They did stumble a little bit in their own delivery profile last year, but my understanding is they expected to ramp again next year. Just relative to the initial contract that you signed, it looks like there's just under CAD 10 million of value left there. How do you think about sort of that residual piece relative to what you delivered in 2025, and whether or not you need to renegotiate or re-up the program? And how does that outlook stand for COMAC?

Speaker #5: They did stumble a little bit in their own delivery profile last year, but my understanding is they expected to ramp again next year. Just relative to the initial contract that you signed, it looks like there's just under $10 million of value left there.

Speaker #5: How do you think about sort of that residual piece relative to what you delivered in '25? And whether or not you need to renegotiate or re-up the program?

Speaker #5: And how does that outlook stand for COMAC?

Speaker #4: Right. Yeah. A whole bunch of comments on that. I guess first one, you're right. Their deliveries were a little bit lower than their expectations last year.

Brad Bourne: Right. Yeah, a whole bunch of comments on that. I guess, first one, you know, you're right. Their deliveries were a little bit lower than their expectations last year, but that has not impacted our production rates or the demand and for our deliveries to, to them. So their build rate still seems to be strong. The contract we signed a few years ago is complete at some point later in 2026. I have every expectation that there will be a follow-on, it's not even a contract, a follow-on purchase order against the existing contract at some point this year that will carry production into the next few years. And then in addition to that, you know, two other things going on of great interest.

Speaker #4: But that has not impacted our production rates or the demand for our deliveries to them. So, their build rate still seems to be strong.

Speaker #4: The contract we signed a few years ago is complete at some point later in 2026. I have every expectation that there will be a follow-on that's not even a contract.

Speaker #4: The follow-on purchase order against the existing contract at some point this year that will carry production into the next few years. And then in addition to that, two other things going on of great interest.

Speaker #4: First, in our contract, we also supply spares to them. And so we signed a spares contract with them just a few months ago that will be delivered in 2026.

Brad Bourne: First one, you know, in our contract, we, we also supply spares to them, and so we signed a spares contract with, with them just a few months ago, that will be delivered in 2026. So that's a little bit of additional revenue. And then, not a, not a huge revenue impact for us in the year, but they're, they're looking at a handful of design changes, on our product and other products in the plane. The good news, and the interesting news on this, is they're doing this as part of their effort to get certified by EASA in Europe for enabling that plane to be sold and flown in Europe. So I don't know. Not sure how they're gonna do on that, but I think it's interesting and definitely EASA is engaged with them to go through the certification process.

Speaker #4: So it's a little bit of additional revenue. And then not a huge revenue impact for us in the year, but they're looking at a handful of design changes on our product and other products in the plane the good news and the interesting news on this is they're doing this as part of their effort to get certified by EASA in Europe for enabling that plane to be sold and flown in Europe.

Speaker #4: So I don't know. Not sure how they're going to do on that, but I think it's interesting. And definitely EASA is engaged with them to go through the certification process.

Speaker #4: So, that might create additional demand for that aircraft beyond what you see in China and the Far East.

Brad Bourne: So that might create additional demand for that aircraft beyond what you see in China and the Far East.

Speaker #5: Okay. That's great. I'll jump back into a few things.

Steve Hansen: Okay, that's great. I'll get back to you. Thanks.

Speaker #4: Okay. Thanks, Steve.

Brad Bourne: Okay, thanks, Pete.

Speaker #6: Thank you, your next question is from Russell Stanley from Beacon Securities. Your line is now open.

Operator: Thank you. Your next question is from Russell Stanley, from B.Comm Securities. Your line is now open.

Operator: Thank you. Your next question is from Russell Stanley, from Beaconm Securities. Your line is now open.

Russell Stanley: Good morning, and thanks for the questions. I guess first, just on the orders, looked particularly high and, in Q4, wondering, you know, how much the new defense programs may have contributed there, or if there's anything else you would call out behind that beyond just ordinary demand? I know simulators, simulator-related demand has contributed in the past, but I'm wondering if there's any bumpiness there that you would call out, or should we just look at this as a particularly strong quarter?

Speaker #7: Good morning, and thanks for the questions. I guess first, just on the order—so with particularly high in Q4, I'm wondering how much the new defense programs may have contributed there, or if there's anything else you would call out behind that beyond just ordinary demand.

Speaker #7: I know simulators, simulator-related demand has contributed in the past. But I'm wondering if there's any lumpiness there that you would call it out or should we just look at this as a particularly strong quarter?

Brad Bourne: Yeah, I guess first of all, specifically on the simulator, there was no big lumps of simulator orders in Q4, so that did not drive it. You know, our simulator activity is pretty constant right now. I'd love to see a lump one day, but right now, I don't see that. Beyond that, I just, I'm gonna say it's mostly just strong demand across the business in Q4. No significant single contracts of big value in the quarter, and definitely nothing of significant value in the quarter related to the two defense programs I talked about either. So the, yeah, it's just strong demand across the business.

Speaker #4: Yeah. I guess, first of all, specifically on the simulator, there was no big lumps of simulator orders in Q4. So that did not drive it.

Speaker #4: Our simulator activity is pretty constant right now. I'd love to see a lump one day, but right now, I don't see that. Beyond that, I'm going to say it's mostly just strong demand across the business in Q4.

Speaker #4: No significant single contracts of big value in the quarter, and definitely nothing of significant value in the quarter related to the two defense programs I talked about either.

Speaker #4: So yeah, it's just strong demand across the business.

Speaker #7: Great. Thanks for that. And how should we think about R&D spending relative to sales going forward? A little elevated in Q4. I'm wondering, can you provide any more colors to what you're working on there?

Russell Stanley: Great, thanks for that. How should we think about R&D spending relative to sales going forward? Looked a little elevated in Q4. I'm wondering, you know, can you provide any more color as to what you're working on there, and to what extent maybe the Q4 number reflected, you know, work on those two defense wins?

Speaker #7: And to what extent maybe the Q4 number reflected work on those two defense ones?

Speaker #4: Right. Yeah. It was up a little bit in the quarter. I agree with you on that. We again, nothing significant we're definitely we spent a lot of time every quarter in driving process improvements capability improvements in our circus business.

Brad Bourne: Right. It was up a little bit in the quarter. I agree with you on that. We -- you know, again, nothing significant. We're definitely -- we spend a lot of time, every quarter in, in driving process improvements, capability improvements in our circuits business. Definitely some of that related to the defense programs, but not, not some, not a material amount, but definitely we're doing some development to support those programs, and some other activities in, in other sites in, in the quarter. So, but that's definitely the, the game for our circuits business, is just keep driving capability improvements, and, be able to support the new technologies that generally are with what we see on new programs.

Speaker #4: Definitely some of that related to the defense programs, but not a material amount, but definitely we're doing some development to support those programs. And some other activities in other sites in the quarter.

Speaker #4: So, but that's definitely the game for our circus business—just keep driving capability improvements and be able to support the new technologies that generally are what we see on new programs.

Speaker #4: On the aerospace side, we did some continue to do development work on some of the products we sell. We show it in R&D. Some cases, it's customer-funded.

Brad Bourne: On the aerospace side, you know, we continue to do development work on some of the, you know, the products we sell. We show it in R&D. Some cases, it's customer funded, some cases it's not. The R&D we did in FLYHT in the year, generally, you know, we did some development on the weather, WVSS-II. That was expansion in our R&D numbers in the year. We did a lot of work around STCs in the year. That was, that's on our balance sheet as deferred development, because for sure it has future value. So that's not in the R&D number. I don't know. Hopefully, that helps.

Speaker #4: Some cases, it's not. The R&D we did in flight in the year generally we did some development on the weather WVSS-2. That was expansed in our R&D numbers in the year.

Speaker #4: We did a lot of work around STCs in the year. That was that's on our balance sheet as deferred development because for sure it has future value.

Speaker #4: So that's not in the R&D number. I don't know. Hopefully, that helps.

Speaker #6: Thank you, your next question is from Nicholas Corcon from Akamen. Your line is now open.

Operator: Thank you. Your next question is from Nicholas Corcoran, from Ackerman. Your line is now open.

Speaker #5: Good morning, guys. Thank you for asking the strong year.

Nicholas Corcoran: Good morning, guys, and congrats on the strong year.

Speaker #4: Thank you.

Brad Bourne: Thank you.

Nicholas Corcoran: Just the first question, margins were down a bit in the quarter, despite higher revenue. Can you maybe talk about what the drivers are and what we should expect for margins going forward?

Speaker #5: Just the first question, margins were down a bit in the quarter despite higher revenue. Can you maybe talk to what the drivers are and what we should expect for margins going forward?

Speaker #4: Sure. I guess I assume you're talking EBITDA margin. But assuming I got that right, let me start on that. So first one, I think, as Drew reported, our gross margin in Q4 was up, as you would expect.

Brad Bourne: ... Sure. I guess, I assume you're talking EBITDA margin. But assuming I got that right, let me, you know, let me start on that. So, you know, first one, I think as Drew reported, our gross margin in Q4 was up, as you would expect. So as revenue goes up, margins go up, gross margin goes up. But for sure, below gross margin, a couple of things to comment on. Also, Drew already mentioned this, but we had basically a revaluation of assets on the balance sheet in the quarter that showed up in the P&Ls and FX impact. You know, big, it was a CAD 600,000 hit in the quarter, CAD 800,000 variance compared to last year, so that definitely hurt.

Speaker #4: So as revenue goes up, margins go up. Gross margin goes up. But for sure, below gross margin, a couple of things. To comment on, also Drew already mentioned this, but we had a basically revaluation of assets on the balance sheet in the quarter that was showed up in the P&Ls and FX impact.

Speaker #4: It was a 600-grand hit in the quarter. 800-grand variance compared to last year. So that definitely hurt if you were going down to net income.

Brad Bourne: If you were going down to net income, we have higher intangible asset amortization this year because of the FLYHT acquisition, so that when you're trying to compare Q4 last year to this year, that hurts on net income, doesn't hurt on EBITDA. I guess the last one, which we didn't really talk about, but, you know, we do live in the real world. We definitely had a production or operational challenge in our Circuits Toronto facility in the quarter. Basically had our production or part of our production shut down for almost two weeks. It impacted revenue a little bit, and I think if you looked at it, you'd see our Circuits revenue was down in Q4, and it definitely impacted profitability.

Speaker #4: We have higher intangible asset amortization this year because of the flight acquisition. So that when you're trying to compare Q4 last year to this year, that hurts on net income.

Speaker #4: Doesn't hurt on EBITDA. And I guess the last one, which we didn't really talk about, but we do live in the real world. We definitely had a production or operational challenge in our circus Toronto facility in the quarter.

Speaker #4: We basically had our production or part of our production shut down for almost two weeks. It impacted revenue. A little bit. And I think if you looked at it, you'd see our circus revenue was down in Q4.

Speaker #4: And it definitely impacted profitability. I don't know. Yeah. It's hard to have an exact number on this because you don't know what it could have been if we had not had this challenge.

Brad Bourne: Yeah, it's hard to have an exact number on this because you don't know, don't know what it could have been if we had not had this challenge, but definitely it impacted revenue and gross margins, and therefore EBITDA margins in the quarter as well. Good news is, it was kind of in the middle of the quarter and, you know, the challenge was around; we had some contamination in our water that hurt some processes, but for sure, by, you know, by November and by the end of the year, that issue was behind us. So it happens. As I say, we live in the real world; we dealt with it. I think the people at the site dealt with it really well, and it was back under control for year-end.

Speaker #4: But definitely it impacted revenue and gross margins and therefore EBITDA margins in the quarter as well. Good news is it was kind of in the middle of the quarter and the challenge was around we had some contamination in our water that hurt some processes.

Speaker #4: But for sure, by November and by the end of the year, that issue was behind us. So it happens. As I say, we live in the real world.

Speaker #4: We dealt with it. I think the people at the site dealt with it really well. And it was back under control. For year-end.

Speaker #5: That's helpful. And maybe, can you talk about how much of it might have been driven by mix, just between Aerospace and Defense?

Nicholas Corcoran: That's helpful. And maybe can you talk about how much of it might be driven by mix, just between aerospace and defense?

Brad Bourne: Yeah, I mean, it's. I'm not sure how that impacted profitability. Definitely, it impacted revenue that... You know, if you see our revenue was up dramatically in our cockpit product business in Q4, that increase was 100% driven by commercial aerospace. You know, we had large deliveries of cockpit products for the COMAC C919 and A319 aircraft, to end the year, and we had large deliveries of some cockpit assemblies we delivered to one of the Tier One avionics companies in US, but these assemblies end up on both Boeing and Airbus aircraft. Those deliveries ramped up in Q4, but again, on the commercial aerospace side. So that drove the revenue growth. I think our margin and our profit is not really driven significantly based on whether it's commercial aerospace or defense.

Speaker #4: Yeah. I mean, I'm not sure how that impacted profitability. Definitely it impacted revenue that if you see our revenue was up dramatically in our cockpit product business in Q4, that increase was 100% driven by commercial aerospace.

Speaker #4: We had large deliveries of cockpit products for the China-Sina N1-9 aircraft. To end the year. And we had large deliveries of some cockpit assemblies we delivered to one of the Tier 1 avionics companies in US, but these assemblies end up on both Boeing and Airbus aircraft.

Speaker #4: Those deliveries ramped up in Q4. But again, on the commercial aerospace side. So that drove the revenue growth. I think our margin and our profit is not really driven significantly based on whether it's commercial aerospace or defense.

Nicholas Corcoran: That's fair. And then maybe moving on to FLYHT. With the business amalgamated, what opportunities are there to improve the margins in the business now?

Speaker #5: That's fair. And then, maybe moving on to Flight with the business amalgamated, what opportunities are there to improve the margins in the business there?

Speaker #4: Yeah. It's just we got to we have to have sales of the three products. We got to get them delivered and it's got to if we have revenue, we will have margins and profit.

Brad Bourne: Yeah, it's just we gotta have sales of the three products. We gotta get them delivered, and it's gotta, you know, if we have revenue, we will have margins and profit. And I think we will have good revenue. You know, the SATCOM radio is an existing product. There's three ways we generate revenue from that. We sell hardware, and we had some good orders on that, so I think, you know, we're gonna have some good SATCOM radio sales in 2026. We sell data, where we basically resell Iridium data for people who use the radio, so that becomes another revenue stream.

Speaker #4: And I think we will have good revenue. The SATCOM radio is an existing product. There's three ways we generate revenue from that. We sell hardware.

Speaker #4: And we have some good orders on that. So I think we're going to have some good SATCOM radio sales in 2026. We sell data, where we basically resell Iridium data for people who use the radio.

Speaker #4: So that becomes another revenue stream. And then the third one is, we license the design to a company who then sells the radio into Airbus.

Brad Bourne: And then the third one is, we license the design to a company who then sells the radio into Airbus, and that licensing revenue kicked in in Q4, and I expect it to be kind of a regular amount each quarter going forward. So that product looks good, so I think we'll have revenue, therefore, we'll have margin. The WQAR or Edge Plus product, we're seeing huge opportunities for us. You know, we're working hard to establish a market position. So, you know, there's gonna be a combination. You know, we have to win some orders, but I think we also have to have a plan to ramp margins as we go forward and capture market share, but I do expect that's gonna happen in the year.

Speaker #4: And that licensing revenue kicked in in Q4. And I expect it to be kind of a regular amount each quarter going forward. So that product looks good.

Speaker #4: So I think we'll have revenue. Therefore, we'll have margin. The WQAR or Edge Plus product we're seeing huge opportunities for us. We're working hard to establish a market position.

Speaker #4: So, there’s going to be a combination: we have to win some orders, but I think we also have to have a plan to ramp margins as we go forward and capture market share.

Speaker #4: But I do expect that's going to happen in the year. And then lastly, on the WVSS2, the weather sensor that we sell, we have contracts in place we need to get through some certification processes we're trying to get that product certified on a 737 and on an Embraer 145.

Brad Bourne: And then lastly, on the WVSS-II, the weather sensor that we sell, we have contracts in place. We need to get through some certification processes. We're trying to get that product certified on a 737 and on an Embraer E145. That's just 'cause the airlines that are planning to fly this product. If we get those certifications done in 2026, which I'm sure we will, then we'll start to see some hardware sales from that product, and there's also a data or a recurring revenue stream from that product. So as we get more units installed, the data sales will go up. And so I don't know. All indications to me are that we are going to see some good revenue from that business in 2026, and for sure, that will just drive good margins as well.

Speaker #4: That's just because it's the airlines that are planning to fly this product. If we get those certifications done, in 2026, which I'm sure we will, then we'll start to see some hardware sales from that product.

Speaker #4: And there's also a data or recurring revenue stream from that product. So as we get more units installed, the data sales will go up.

Speaker #4: And so I don't know. All indications to me are that we are going to see some good revenue from that business in 2026. And for sure, that will just drive good margins as well.

Speaker #5: Great. And maybe one last question for me. I believe the Toronto Union contract is coming up for renewal. Any comment on that?

Drew Knight: ... Great. And maybe, one last question from me. I believe the Toronto union contract is coming up for renewal. Any comment on that?

Nicholas Corcoran: ... Great. And maybe, one last question from me. I believe the Toronto union contract is coming up for renewal. Any comment on that?

Speaker #4: I can comment that you are correct. It is coming up for renewal middle of this year. There has been no discussions yet, no negotiations.

Brad Bourne: I can comment that you are correct. It is coming up for renewal, middle of this year. You know, there has been no discussions yet, no negotiations. They haven't started. Typically, we do it kind of towards the end of the contract because you never settle this until, till the end. But, you know, for sure, that's a bit of a risk in 2026, but, you know, other than our one instance a couple of years ago, we've been pretty successful in getting through contracts without any disruption, so hopefully we can do that again this year.

Speaker #4: They haven't started. Typically, we do it kind of towards the end of the contract because you never settle this until the end. But for sure, that's a bit of a risk in 2026.

Speaker #4: But other than our one instance a couple of years ago, we've been pretty successful in getting through contracts without any disruption. So hopefully, we can do that again this year.

Speaker #5: Great. That's all from me. Thanks again on all past launches.

Drew Knight: Great. That's all for me. Thanks again, and I'll pass along.

Nicholas Corcoran: Great. That's all for me. Thanks again, and I'll pass along.

Speaker #4: Okay. Thanks, Nick.

Brad Bourne: Great. Thanks, Nick.

Speaker #6: Thank you. Your next question is from Sebastian Charlin from Agave Capital. Your line is now open.

Operator: Thank you. Your next question is from Sebastian Charland, from Agave Capital. Your line is now open.

Speaker #7: Good morning. Thank you for having our questions. Following up on the flipped amalgamation that happened in December, I know you said the key there is to increase the sales.

Sébastien Charland: Good morning. Thank you for having our questions. Following up on the FLYHT amalgamation that happened in December, I know you said the key there is to increase the sales, and I think I see the paths that are open for this. Wondering on the SG&A side, because sales and gross margins have been great there. On the SG&A with the amalgamation, should we expect more restructuring in terms of the sales team, perhaps combining together, or even just the admin side? I think Drew mentioned something about not being sure you can amalgamate them with the Calgary operation.

Speaker #7: And I think I see the paths that are open. For this. Wondering on the SG&A side because sales and gross margins have been great there.

Speaker #7: On the SG&A with the Omega Mission, should we expect more restructuring in terms of the sales team—perhaps combining together—or even just on the admin side?

Speaker #7: I think Drew mentioned something about not being sure. You can amalgamate them with the Calgary operation.

Speaker #4: Yeah, let me start with the sales part of it. So, I really don't see a path to integrate the sales teams of FTG with Flight.

Brad Bourne: Yeah. Let me start with the sales part of it. So, I really don't see a path to integrate the sales teams of FTG with FLYHT. And the reason I say that is FTG. We sell basically into original equipment manufacturers. You know, we sell into the Honeywells, Collins, GEs, Boeings, Bombardiers. The FLYHT products are for the aftermarket, and we sell to the airlines. So it's definitely a very different sales channel. The FTG guys are good at what they do, the FLYHT sales guys are good at what they do. So we, you know, we're not going to integrate the teams. I guess, with one exception, that Peter Demopulos runs sales and has run sales at FTG for a number of years. He's definitely also running sales at FLYHT or running the FLYHT sales team.

Speaker #4: And the reason I say that is FTG, we sell basically into original equipment manufacturers. We sell into the Honeywells, Collins, GEs, Boeings, Bombardier. The flight products are for the aftermarket.

Speaker #4: And we sell to the airlines, so it's definitely a very different sales channel. The FTG guys are good at what they do. The flight sales guys are good at what they do.

Speaker #4: So, we're not going to integrate the teams—I guess with one exception, that Peter Damopoulos runs sales and has run sales at FTG for a number of years.

Speaker #4: He's definitely also running sales at Flight, or running the Flight sales team. That's really just to bring the FTG mindset to the Flight sales process.

Brad Bourne: That's really just to bring, you know, the FTG mindset, to the FLYHT sales process. But beyond that, not really. And then on the rest of the SG&A, on the admin side, you know, we, we took a lot of costs out last year, because they were public before we acquired them, then a lot of public company costs. I don't see any real opportunity for SG&A savings going forward, so the key really is to grow the revenue number, and that will bring down the SG&A percent of sales.

Speaker #4: But beyond that, not really. And then on the rest of the SG&A, on the admin side, we took a lot of cost out last year.

Speaker #4: Because they were public before we acquired them, then a lot of public company costs. I don't see a lot. I don't see any real opportunity for SG&A savings going forward.

Speaker #4: So the key really is to grow the revenue number. And that will bring down the SG&A percent of sales.

Speaker #5: Great. Super caller. I get. So it's more going to be a referral kind of way of working together with the sales teams than integrating.

Sébastien Charland: Great. Super color I get. So it's more gonna be a, a referral kind of way of working together with the sales teams than integrating. And perhaps the next one is a little more technical for Drew. You mentioned there are, you guys have a bunch of tax loss carryforwards, especially since you acquired FLYHT. I think it's north of CAD 42 million in Canada, if I'm not mistaken. You mentioned that you will benefit from them, but they're not as a tax asset on the balance sheet yet. Should we expect those to be, at some point, considered on the balance sheet? I know the condition, they need to be likely, more likely than not to be, I'd say, harvest in the future, or is that something that's never gonna happen?

Speaker #5: And perhaps the next one is a little more technical for Drew. You mentioned there are a you guys have a bunch of tax loss carry forwards, especially since you acquired FLIT.

Speaker #5: I think it's north of 42 million dollars in Canada, if I'm not mistaken. You mentioned that you will benefit from them but they're not as a tax asset on the balance sheet yet.

Speaker #5: Should we expect those to be at some point considered on the balance sheet? I know the condition. They need to be likely more likely than not to be I'd say Arvid in the future or is that something that's never going to happen?

Speaker #4: No. So I guess it's a couple of steps. So step one, obviously, was the amalgamation. And the one certainty is the as flight becomes profitable, that should be tax-free profit.

Drew Knight: No. So, I guess it's a couple of steps. So step one, obviously, was the amalgamation. And, you know, the one certainty is, the—as FLYHT becomes profitable, that should be tax-free profit, so that's, that's certainly a good thing. But now that we have the amalgamation done, we've got some work to do just to prove that, FLYHT is a same or similar business to FTG, which it's, it's in the ballpark, but it's not exactly the same. So, you know, we've got to, we've got to document that and get a pre-ruling from CRA on, on, the fact that it's a similar business, and we can utilize and access those tax losses.

Speaker #4: So that's certainly a good thing. But now that we have the amalgamation done, we've got some work to do just to prove that flight is a same or similar business to FTG, which it's in the ballpark, but it's not exactly the same.

Speaker #4: So we've got to document that and get a pre-ruling from CRA on the fact that it's a similar business and we can utilize and access those tax losses.

Speaker #7: Oh, makes sense. And yeah, the amalgamation was December 1st, which is in the new fiscal year. Would it be reasonable to believe that work would be done by the end of this fiscal year?

Sébastien Charland: Oh, makes sense. Yeah, the amalgamation was 1 December 2024, which is in the new fiscal year.

Drew Knight: Right.

Sébastien Charland: Would it be reasonable to believe that work would be done by the end of this fiscal year?

Speaker #4: It's reasonable to believe that the work will start in this fiscal year. It's just starting now. So we're certainly targeting to get it done by the end of the year.

Drew Knight: It's reasonable to believe that the work will start in this fiscal year. It's just starting now, so, you know, we're certainly targeting to get it done by the end of the year, but it could bleed into early 2027. But, you know, I would, I would say that Flyht broke even or was slightly profitable in 2026 or 2025. And, the plans for 2026, as Brad mentioned, there's a bunch of sales opportunities and growing the top line there. We expect Flyht to be profitable, and that should be tax-free profit.

Speaker #4: But it could bleed into early 2027. But I would say that flight broke even or was slightly profitable in 2026 or 2025. And the plans for 2026, as Brad mentioned, there's a bunch of sales opportunities and growing the top line there.

Speaker #4: We expect Flight to be profitable, and that should be tax-free profit.

Speaker #5: Great. That's helpful. Perhaps the last one for Brad. You mentioned input costs of sometimes because of crossing the border input costs coming from the US, for example.

Sébastien Charland: Great, that's helpful. Perhaps a last one for Brad. You mentioned input costs, sometimes because of crossing the border, input costs coming from the US, for example, increasing-

Speaker #5: Increasing the product cost and then that you are already discussing to pass on through those to customers. More of out of curiosity, do your products, especially the circuit boards, use RAM, the memory chips, which have been on a tear recently in terms of price increase?

Drew Knight: Right

Sébastien Charland: ... the product cost, and then that you are already discussing to pass on through those to customers. Out of curiosity, do your products, especially the circuit boards, use RAM, the memory chips, which have been on a tear recently in terms of price increase, or are they not in your product?

Speaker #5: Or are they not in your product?

Speaker #4: No. We don't. So that's not our issue at all for sure. It's just it really is most of the circuit boards in the world are made in Asia.

Brad Bourne: ... No, we don't. So that's not our issue at all, for sure. It's just, it really is, most of the circuit boards in the world are made in Asia, so the supply chain really is mostly in Asia. So when we make them here, we're importing products. You know, obviously, for our US sites, we import it into the US, but even for Canada, sometimes the product comes from Asia to the US and Canada. So we are purely seeing tariff cost impacts on a lot of the raw materials for circuit boards. So we are, yes, working with customers to pass it on. They don't like it, but we don't like it either, so we're just trying to find a way to be fair. We didn't cause it, they didn't cause it.

Speaker #4: So the supply chain really is mostly in Asia. So when we make them here, we're importing products obviously for US sites, we import it into the US.

Speaker #4: But even for Canada, sometimes the product comes from Asia to the US and are purely seeing tariff cost impacts on a lot of the raw materials for circuit boards.

Speaker #4: So we are just working with customers to pass it on. They don't like it. But we don't like it either. So we're just trying to find a way to be fair we didn't cause it.

Speaker #4: They didn't cause it. We just got to work together to manage our business.

Brad Bourne: We just got to work together to manage our business.

Speaker #5: Okay. So no RAM memory chips kind of included in the product need to be to worry about, right? Well, you guys knocked all of my questions over the previous analyst.

Russell Stanley: Okay. So no RAM memory chips kind of included in the product need to be to worry about. Great. Well, you guys knocked all of my questions over the previous analysts, so thank you very much and good job on the quarter again.

Sébastien Charland: Okay. So no RAM memory chips kind of included in the product need to be to worry about. Great. Well, you guys knocked all of my questions over the previous analysts, so thank you very much and good job on the quarter again.

Speaker #5: So thank you very much and good job on the quarter again.

Speaker #4: Great. Thank you.

Brad Bourne: Great. Thank you.

Speaker #8: Thank you. Your next question is from Steve Hansen from Raymond James. Carolinas are open.

Operator: Thank you. Your next question is from Steve Hanson, from Raymond James. Your line is now open.

Speaker #4: Yeah. Thanks, guys. Just quick follow-up. I know you referenced the India facility to be done in 2Q and you've got equipment on order. How should we think about the RAM for that facility through the back half of '26 and into '27?

Steve Hansen: Yeah, thanks, guys. Just a quick follow-up. I know you referenced the India facility to be done in Q2, and you've got equipment on order. You know, how do we think about the ramp of that facility through the back half of 2026 and into 2027? Thanks.

Speaker #4: Thanks.

Speaker #3: Yeah. So a couple of things. It's partly of what I've said for my other side. So for India, today we have two employees. We are just starting the process to staff up.

Brad Bourne: Yeah, so, you know, a couple of things. It's partly of what I've said on- for my other side. So for India, you know, today we have two employees. We are just starting the process to, to staff up. There's you know, going along with building the building, getting equipment, we got to hire the people and train the people. The revenue impact in 2026 is negligible. You know, we're gonna be spending our time training people, building product, going through government or industry certifications like AS9100, that type of thing, customer approvals. So negligible revenue this year. Hopefully, in 2027, we start to see some benefit from that, but I honestly have not tried to put a number on it for 2027 yet.

Speaker #3: There's going along with building the building, getting equipment. We got to hire the people and train the people. The revenue impact in 2026 is negligible.

Speaker #3: We're going to be spending our time training people, building product, going through government or industry certifications like AS9100, that type of thing, customer approvals.

Speaker #3: So, negligible revenue this year. Hopefully, in 2027 we start to see some benefit from that. But I honestly have not tried to put a number on it for 2027 yet.

Speaker #4: Okay, that's helpful. And then just lastly on the corp dev—you referenced you're looking at a number of different opportunities. I think you cited sort of three buckets.

Steve Hansen: Okay, that's helpful. And then just lastly, on the corp dev, you referenced you're looking at a number of different opportunities. I think you said it's sort of three buckets. Is there one in particular that you're focused on or that you think has the best opportunity set for you guys? I think you referenced Airbus exposure being one in particular, but just how do you think about that set of opportunities as they stand today?

Speaker #4: Is there one in particular that you're focused on or that you think has the best opportunity set for you guys? I think you referenced Airbus exposure being one in particular.

Speaker #4: But just how do you think about that set of opportunities as they stand today?

Speaker #3: Yeah. I mean, I always interested and always looking definitely as I've said a million times, my plan for FTG is always try to find a way to double the business every five years to do that.

Brad Bourne: Yeah, I mean, I'm always interested and always looking. You know, definitely, as I've said a million times, you know, my plan for FTG is always try to find a way to double the business every five years. To do that, I've got to have organic growth, plus I could do some acquisitions. So it's always on the table, something we're looking at. Definitely, you know, FLYHT's well under control, so we're not focused on trying to integrate that, so we can look forward into what's next. You know, yeah, Europe's of interest to me. I've said that I -- for a bunch of reasons, you know, it's of interest to me because of Airbus. It's of interest to me because NATO defense spending is ramping so much.

Speaker #3: I got to have organic growth. Plus, I could do some acquisition. So it's always on the table if something we're looking at. Definitely flights well under control.

Speaker #3: So we're not focused on trying to integrate that. So we can look forward into what's next. Yeah. Europe's of interest to me. I've said that.

Speaker #3: For a bunch of reasons, it's of interest to me because of Airbus. It's of interest to me because NATO defense spending is ramping so much.

Speaker #3: It's of interest to me jurisdiction with no real risk of tariffs. So lots of reasons why I'm interested in it. And so that's probably top of my list.

Brad Bourne: It's of interest to me because it's a jurisdiction with no real risk of tariffs, so lots of reasons why I'm interested in it. And so, you know, that's probably top of my list. But beyond that, you know, certain technologies, if the right deal became available, I'd be interested in those. And so you know, the only thing I would say, I'm not looking to expand beyond my current product base. Whatever we do would still be focused in circuits or cockpit products. And, you know, that won't change because I for sure believe we can do another couple of doubles at FTG, still staying focused in these product areas.

Speaker #3: But beyond that, certain technologies, the right deal became available. I'd be interested in those. And so I the only thing I would say, I'm not looking to expand beyond my current product base.

Speaker #3: Whatever we do would still be focused in circuits or cockpit products, and that won't change, because I for sure believe we can do another couple of doubles at FTG, still staying focused in these product areas.

Speaker #4: Okay. Great. And actually, just one last one then, if I may, and it dovetails on your last remark is just how do you think about the new platform developments out there?

Steve Hansen: Okay, great. And actually, just one last one then, if I may, and it dovetails on your last remark. It's just, how do you think about the new platform developments out there? The DoD down south has got a big new push towards new modernized technology and warfare, and just trying to think about how you decide to leverage that theme or get involved with that theme over time, recognizing that the volumes are still relatively low today.

Speaker #4: The DOW down south has got a big new push towards new, modernized technology and warfare. And just trying to think about how you decide to leverage that theme or get involved with that theme over time, recognizing that the volumes are still relatively low today.

Speaker #3: Yeah. It's important topic for us for sure that my belief is the best way for FTG to change or grow our market share is to get involved in new platforms when they're in development.

Brad Bourne: Yeah, it's an important, important topic for us for sure, that, you know, my belief is the best way for FTG to change or grow our market share is to get involved in new platforms when they're in development. And so there's lots of new platforms in development in the US, and it, you know, it could be helicopters, it's fighters, it's drones, it's-- there, there's just everywhere. There's lots of new developments going on, so we are doing whatever we can to try to secure a position on these and then, you know, ride them into production in the coming years. None of this, none of this happens quickly, but you have to be there at the beginning if you want a shot at, at that, production revenue stream. So we definitely do that, and we will continue to do it.

Speaker #3: And so there's lots of new platforms in development in the US. And it could be helicopters. It's fighters. It's drones. There's just everywhere. There's lots of new developments going on.

Speaker #3: So we are doing whatever we can to try to secure a position on these. And then ride them into production in the coming years.

Speaker #3: None of this happens quickly. But you have to be there at the beginning if you want a shot at that production revenue stream. So we definitely do that.

Speaker #3: And we will continue to do it. And I'd say particularly on the defense side right now, there's a lot of opportunities.

Brad Bourne: And I'd say, you know, particularly on the defense side right now, there's a lot of opportunities.

Speaker #4: Okay. That's great. Appreciate the time.

Steve Hansen: Okay, that's great. Appreciate the time.

Speaker #3: Okay. Thanks, Steve.

Brad Bourne: Okay. Thanks, Steve.

Speaker #8: Thank you once again. That is Star and One. Should you wish to ask a question, please press star one. Our next question is from Russell Stanley from Beacon Securities.

Operator: Thank you. Once again, that is star one, should you wish to ask a question. And your next question is from Russell Stanley from B.COM Securities. Your line is now open.

Operator: Thank you. Once again, that is star one, should you wish to ask a question. And your next question is from Russell Stanley from Beacon Securities. Your line is now open.

Speaker #8: Carolinas are open.

Speaker #9: Thanks, appreciate you taking a follow-up here. Just a question on the Circuits business. Wondering if you can talk about space—how much of a share that is now of revenue, and maybe what opportunities you're seeing there given the growth potential.

Russell Stanley: Thanks. Appreciate you taking a follow-up here. Just a question on the circuits business. Wondering if you can talk about space, you know, how much of a share that is now of revenue and, and maybe what opportunities you're seeing there, given the, the growth potential? Thanks.

Speaker #9: Thanks.

Speaker #3: Yeah. Well, we're interested. I always say I want to be in all these different market segments because they all go through their own cycles.

Brad Bourne: ... Yeah, well, we're interested, and then I guess I don't talk about it a lot. You know, I always say I wanna be in all these different market segments because they all go through their own cycles, and then I don't talk about space, but we definitely do circuit boards for space. And interestingly enough, we do cockpit products for space, too. And, you know, we have products on the Orion spacecraft that hopefully will be flying shortly. It almost took off in February, but maybe in March. But, you know, back on the circuit board side, it's of interest to us.

Speaker #3: And then I don't talk about space. But we definitely do circuit boards for space. And interestingly enough, we do cockpit products for space too.

Speaker #3: And we have products on the Orion spacecraft that hopefully will be flying shortly. It almost took off in February, but maybe in March. But back on the circuit board side, it's of interest to us.

Speaker #3: I'd say our history is we're not involved. We haven't been involved in the crazy high-volume programs like Starlink and that. But it's of interest to us.

Brad Bourne: I'd say our history is we're not involved, we haven't been involved in the crazy high volume programs like Starlink and that, but it's of interest to us, as a, you know, I can say, relatively small percentage of our overall business. We do some work with MDA in Canada. We do some work in the US. We do work with Honeywell Space. So, yeah, but it's a small percentage of our overall business.

Speaker #3: As a I can say relatively small percentage of our overall business. We do some work with MDA in Canada. We do some work in the US.

Speaker #3: We do work with Honeywell Space. So yeah. But it's a small percentage of our overall business.

Speaker #9: That's great. Appreciate the additional color. Thank you.

Russell Stanley: That's great. Appreciate the additional color. Thank you.

Speaker #3: Yeah. Thanks, Russ.

Brad Bourne: Yeah. Thanks, Russ.

Speaker #8: Thank you. There are no further questions at this time. Please proceed.

Operator: Thank you. There are no further questions at this time. Please proceed.

Speaker #3: Okay. Thank you. A replay of the call will be available until Thursday, March 19th at the numbers on our press release. A replay will also be available on our website in a few days.

Brad Bourne: Okay. Thank you. A replay of the call will be available until Thursday, March 19, at the numbers on our press release. The replay will also be available on our website in a few days. I thank you all for your interest and participation. Thank you. Bye.

Speaker #3: I thank you all for your interest in participation. Thank you.

Speaker #4: Bye.

Operator: Thank you, ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

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