Good morning, ladies and gentlemen, Welcome to the Baylin Te chnologies second quarter 2026 financial results conference call. At this time, all lines are in listen-only mode, and following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 7th, 2026. I'll now turn the call over to Kelly Myles, Director, Investor Relations of Baylin Technologies. Please go ahead. Thank you. Hello and welcome, everyone. Thank you for joining the call this morning to review our second quarter 2026 financial results. On the call today from Baylin are Leighton Carroll, Chief Executive Officer, and Cliff Gary, Chief Financial Officer. We will be available for questions at the end of the presentation. Before we begin, let me make it clear that our comments today may include forward-looking statements and information and answers to questions that could imply future expectations about the prospects and financial performance of the business for 2026 and beyond, and could include the use of non-IFRS measures. These statements are subject to risks, uncertainties, and assumptions. Accordingly, actual performance could differ materially from statemen ts made or information provided today. You should not place undue reliance on them. We also do not intend to update forward-looking statements or information except as required by law. I ask that you read our legal disclaimers and explanation of the use of non-IFRS measures and refer you to the risks and assumptions outlined in our public disclosures. In particular, the sections entitled Forward-Looking Statements and Risk Factors in our annu al information form for the year ended December 31, 2026, and our other filings, which are available on SEDAR+. Our Q2 2026 results were released after market close yesterday. The press release, financial statements, and MD&A are available on SEDAR+ as well as our website at baylintech.com. I would now like to turn the call over to Leighton. Thank you, Kelly, and thanks everyone for being here. It's early. I appreciate you guys starting your day with us. This past quarter was one of the most important quarters in our history. It's certainly one of the busiest. In the span of a few weeks, we closed the acquisition of Kaelus, restructured our debt, and cleaned up a big piece of our capital structure. There's a lot to cover. Let me start with the headline. We ended the quarter with record backlog of CAD 61 million, the highest in Baylin's 40+ year history. This is up from CAD 20.4 million at the end of last year. This tells you a lot about where the business is headed. Underneath it, our operations held up. Revenue was CAD 22 million, essentially flat with CAD 22.5 we did a year ago. Gross margin improved to 47.1%. We delivered CAD 3 million of adjusted EBITDA, our 10th consecutive quarter of positive adjusted EBITDA. We did report a net loss of CAD 3.2 million. The loss is the cost of doing what we just did. The acquisition expenses, the higher financing costs from a new credit facility, it is not the underlying business getting weaker. The positive adjusted EBI TDA, excuse me, should be an indication of that. I want to spend some time on Kaelus because it is the most exciting thing to happen to the company in years. I will come back to take you through each of our business lines and talk about what we are seeing for the second half. On Kaelus, May 29th, we completed the acquisition. They are headquartered in Sweden, operations all over the world. Great RF technology for a net purchase price of CAD 42 million. It now operates as Kaelus, a Galtronics company. For clarity, Galtronics is one of the sub-brands underneath Baylin. Let me tell you why I am so enthusiastic about the acquisition. Kaelus brings world-class RF engineering and a portfolio of products we simply did not have. Advanced antenna systems, RF conditioning, GNSS synchronization solutions for cellular service, including an anti-jamming capability that has military capabilities associated with it, and industry-leading test and measurement tools. Critically, there is zero product overlap with our Galtronics business. This is not a deal where you buy a competitor and cut costs and talk about synergies. This is legitimately pure expansion. We roughly doubled the number of things we sell to our customers overnight. We added geography and we added engineering talent. It also deepens our relationships with Tier 1 carriers and OEMs across the world. It plugs straight into some powerful tailwinds. European defense communications and the global build-out of RF infrastructure, in particular, European RF, which is behind in the life cycle of their build-up than we are here in North America. The early proof points are real, right? In the first month with us, Kaelus booked CAD 12.6 million in new purchase orders alone and contributed strong revenue in June under the Baylin umbrella. Based on what we are seeing in orders and margins, our expectation is Kaelus will outperform its internal budget for the second half of the year. The work is now on to integration, cross-selling our combined customers, unifying our sales channel, and finding supply chain efficiencies. That is exactly where our focus is. To the Kaelus team joining us, many of you may be listening this morning, I want to say welcome. We did not acquire you to change who you are. We did it because of how good you are and what we can do together. Welcome to the Baylin family. Cliff, I will now turn it over to you. Hi. Thank you, Leighton, and good morning, everyone. I'll start with the second quarter 2026 financial highlights. Revenue for the second quarter was CAD 22 million compared to CAD 22.5 million in the second quarter of 2025, a decrease of CAD 500,000 or 1.9%. The decrease was primarily attributable to lower sales volume in the Satcom business line due to softer market conditions in the quarter. This was partially offset by the inclusion of one month of revenue from Kaelus following the completion of that acquisition at the end of May 2026. Gross profit was CAD 10.4 million, essentially in line with the prior year quarter. Gross margin improved to 47.1% compared to 46.3% in the second quarter of 2025. The results included the recognition of CAD 1.3 million of tariff refunds as a reduction to cost of goods sold. This was partially offset by lower gross margins in the Satcom due to the reduced sales volumes. Adjusted EBITDA was CAD 3 million compared to CAD 3.4 million in the prior year period. While adjusted EBITDA was lower year-over-year, Baylin remained adjusted EBITDA positive for the 10th consecutive quarter. We view this as a meaningful indicator of the resilience of the business, particularly given the softer demand in Satcom and the transitional activity associated with the Kaelus acquisition. Net loss for the quarter was CAD 3.2 million compared to a net income of CAD 1.1 million in the second quarter of 2025. The increase in current period net loss was driven primarily by acquisition-related expenses of CAD 2.1 million and higher foreign exchange losses included in finance expense. Operating loss was CAD 0.8 million in the quarter compared to operating income of CAD 1.8 million in the second quarter of 2025, reflecting the impact of the acquisition expenses related to the Kaelus transaction. Moving to the six months ended 30 June 2026. For the first six months of 2026, revenue was CAD 38.1 million compared to CAD 41.3 million in the same period of 2025. A decrease of CAD 3.2 million or 7.8%. The year-to-date decline was driven principally by lower Satcom sales volumes, while the positive contribution from Kaelus began only late in the second quarter. Gross profit for the six-month period was CAD 17 million, compared to CAD 18.4 million in the prior year period. Gross margin remained relatively consistent at 44.8% compared to 44.5% in the first half of 2025, supported by the same factors that benefited the second quarter margin. Adjusted EBITDA for the first six months was CAD 3.1 million, compared to CAD 4.1 million in the first half of 2025, due to the impact of the lower Satcom revenues mentioned previously. Net loss for the six-month period was CAD 5.5 million, compared to a net loss of CAD 1 million in the prior year period. With reference to liquidity on the balance sheet, net debt was CAD 11.1 million at 30th of June 2026, which was down CAD 1.3 million from December 31, 2025. During the quarter, we restructured our debt by entering into a new term credit facility with the SAF Group and retiring our revolving credit facility with Royal Bank of Canada. First advance under the new facility was drawn in May and was used to repay the RBC facility, fund a portion of the Kaelus acquisition, and support general corporate purposes. As part of the financing structure, the company remains focused on compliance with its liquidity and EBITDA covenants. The CAD 47.4 million Kaelus purchase price was made up of CAD 10.6 million of cash, CAD 21.6 million of deferred cash compensation, and the issuance of CAD 15.2 million of share capital. The deferred cash compensation is reflected as a short-term liability on our statement of financial position. The company also converted the debentures with a face value of CAD 5.1 million to shares during the quarter and exchanged the CAD 4 million Series A and Series B Preferred Shares for Common Shares. In summary, Q2 was a transformational quarter for Baylin. We completed the Kaelus acquisition and then delivered positive adjusted EBITDA for the 10th consecutive quarter. I'll now turn the call back to Leighton. Thank you, Cliff. Let me walk through each of the business lines and wh at we're seeing for the back half of the year. For Wireless Infrastructure, revenue was steady versus the first quarter and a touch below what was an extremely strong prior year. We're seeing order intake beginning to slow in the third quarter, mainly because some of the North American carriers are pushing out their capital spending. We expect the business to be softer in 2025, though in very solid territory. Importantly, we're maintaining very strong margins. The exciting part is also what's next. We're commercializing new derivatives of our patented multibeam technology and have already had several carriers asking for trials. When you combine our multibeams, small cells, and other products with Kaelus' base station antennas, RF conditioning, synchronization, and test and measurement, we can now go to market with a genuine end-to-end offering. We expect carriers to resume meaningful infrastructure spending in 2027, as that cycle happens, we feel that we are very well positioned. The Custom Antenna Solutions, also formerly called embedded, had a reasonable quarter, and importantly, we improved margins and adjusted EBITDA versus a year ago. Some customers are pushing out orders due to macro uncertainty, i.e., in some cases, chipset availability. We expect the second half to be a little softer than the first, but the full year should be comparable to 2025, and our active bid pipeline remains very solid. Satcom certainly had a challenging quarter on reduced demand for its specialized custom products. The irony in that is that the pipeline was always substantial, in fact, at record levels. I am optimistic because in the second quarter, doesn't turn into revenue, obviously, our backlog jumped dramatically. It literally more than doubled with the number of new orders came in. It included multimillion-dollar orders for Genesis amplifiers. This is our new technology. Repeat orders from customers who have fallen in love with the quality of the product. As customers move from our legacy products to the new Genesis line, we expect margins to improve. This helps us with high-power broadcast government and defense customers. The second half won't fully offset the first, so the full-year Satcom will be below 2025. Certainly the second half of 2025 is going to be better, and the direction of the business and the growth in their backlog gives me confidence about where this business will be going. A quick word about the macroeconomics, because it is creating an impact. Oil and fuel prices remain elevated given the situation in the Middle East. AI data center demand has driven up costs and shifted some spending with some customers. We are seeing a lot of challenges with certain electrical components. Our team has done a good job managing costs and making sure that we are disciplined in the way that we procure cost, price, protect our margins, and importantly, where we invest in R&D. On tariffs, we've mitigated the impact well, and the IEEPA refunds this quarter for the infrastructure unit were a genuine tailwind. We actually expect that Kaelus will also see IEEPA refunds in its future. Let me bring this together. The end of the second half with the strongest backlog in our history, a transformational new business in Kaelus that's already producing a cleaner balance sheet, 10 straight quarters of positive adjusted EBITDA, and the opportunity to drive growth and really see Baylin perform for the long term. Our job is now simple to say and hard to do well. We have to convert the backlog to revenue and earnings, integrate Kaelus the right way, focus on our customers, and drive our margins. To our employees, including our new colleagues at Kaelus, thank you. To our customers and shareholders, thank you for your trust. We're excited about what w e're building, and we're grateful you're along for the ride with us. That concludes our formal remarks, operator. We would be pleased to take any questions. Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should at any time you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the calling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. Your first question comes from Daniel Rosenberg from Paradigm. Please go ahead. Hi, good morning, Leighton, Cliff. My first question is just on the backlog. I was curious of how far that gives you visibility in terms of when that can convert to revenue. Just trying to understand if that's a one-year outlook or a second half outlook. Just what does that cadence look like in terms of translating to revenue? Good morning, Daniel. Nice to hear from you. The backlog in the CAD 61 million, obviously a very healthy bump of that is Kaelus. With the Kaelus acquisition and seeing these CAD 12.6 million in new purchase orders come in. Another very healthy dose of that growth was in our Satcom division and the amount of recent sales that they've had on the new product line. Kaelus is very similar to our Wireless Infrastructure line, meaning they can turn purchase orders into revenue relatively quickly. That's not an overnight thing, and certainly with some of the volumes for some of their products, it will take time. A lot of that backlog that came from Kaelus, it will be produced this year. In fact, they backed up their CAD 12.6 million with a very solid order intake month in July, as an example. They're seeing continued demand, and for us working with the new Kaelus team, it's going to be turning the crank as hard as we can to drive value. On the Satcom side, I would say 50% of the big bump is going to be this year. 50% will run into likely late Q1 of next year, potentially Q2. A lot of this is in our near-term future, and then obviously with the character of the Custom Antenna Solutions line, that business has a pretty good backlog number, but that tends to go over time and is constantly refreshed. I do anticipate a lot of this backlog will be produced this year, and it sets us up for a really solid beginning to 2027 as well. Thanks for that. I guess that explains kind of the outlook. You kept your 2026 outlook stable. Confidence there. I'm curious beyond that, as you think about 2027, understanding you can't give too much guidance here, but directionally, how you think about the business outlook as we look to next year? I'm excited about what we're building with Kaelus. Part of what you do when you do an acquisition like this, particularly with the lack of product overlap, is it is great to suddenly have a whole bunch of new product that we didn't have before and combine forces. You still have to introduce your new capabilities to customers. In some cases, for example, Verizon, they will want certifications on certain gear before they will purchase from you. We just closed basically at the end of May and got started at the beginning of June. It would tell you that this year is kind of backlog and execution and integration, but it's also setting the table for that cross-selling opportunity that should be in full swing by 2027. I think from the Wireless Infrastructure and the Kaelus side, it provides a really good opportunity to drive further growth off of 2026 into 2027. On the Satcom side, we obviously had a choppy first half of the year, and have been working pretty consistently to take costs out of the business, streamline things, move to a leaner both product architecture and cost structure. Given the purchase order volume that's starting to materialize and the size of the pipeline, I actually see, and maybe most importantly on the bottom line, our Satcom division, led by defense spending in many respects, seeing much, much better profitability in 2027 than it did in 2026. The Custom Antenna group, they are the ones where some of our end customers are fighting for chipsets, and that causes some slowness, but that's not going to last forever. The team has done a really remarkable job of managing cost structures and preserving margins. I see Custom Antennas returning to kind of its normal trajectory. As I've said before, it's never going to hockey stick up or down, but it makes really good margins and good money, and it should be at a bit of an elevated level next year is my guess. Great. Just on the acquisition, maybe could you speak to some of the early discoveries, surprises, expectations, just progress in bringing these two companies together as one, and how you're thinking about that? Well, this business historically has been a really nice business. To be fair, it didn't have the best Q1, and it caused us to go into an extended period of time, and we thought we would have closed this sooner. Yet, right the months that we closed, they have this explosion of backlog, CAD 12.6 million. That is a tremendously welcome surprise. The concern would be, though, "Hey, we got this huge amount of orders. Are they going to be now at a lower order flow level in the subsequent months?" The short answer is no, they haven't been. They've actually been delivering very solid order flow even after that CAD 12.6 million, which is heartening. The focus for me with them is integrating them to the team, the culture. We need to integrate them into the way that we manage data within Baylin. We're very disciplined about it. Not to say that they weren't, but there's opportunities to bring them into the fold and potentially improve things there. Margin expansion, something we've done at Baylin, is going to be a big focus for us. Finally being able to work on product development opportunities collaboratively is something I'm looking forward to. I would say this, the quality of people they had or have, excuse me, we knew that, but it is really nice to see that being demonstrated on the playing field and the order flow. Its consistency is excellent, finally, it's going to be about diversifying their customer base and growing further. Okay. Thanks for that. Lastly for me, I was just curious about some of the end markets, just demand drivers. There's a lot of stuff going on in tech with AI obviously and satellites. I was just curious if you could connect the dots on how these end markets demand has changed for you or not when it comes to Satcom and telecom infrastructure, what you're seeing or hearing from end customers on the front lines. Yeah, sure. Within Satcom, it's pretty easy. I think we all saw this coming. There's been a very big swing towards defense. We have worked very hard to position ourselves with unique capability for Western defense applications. We are seeing order flow in support of that and a pipeline of opportunities that suggests that there will be, again, a very solid future within our satellite business. As you go back five years, there are aviation, maritime, certainly broadcast, and broadcast hasn't gone away, but defense was always a part of that. Aviation and maritime have gone away by and large, but what has exploded is the side of opportunities in defense. On the telecom side, it depen ds on the geography. Okay? Particularly in the United States, you are seeing guys like AT&T and Verizon, what do they have? They have a lot of fiber assets. What is going on? Data centers and hyperscalers. What do they need? They need fiber connectivity, right? What you're seeing in the U.S. market in particular, and to a lesser extent in Canada, certainly, a big push and rotation into fiber assets to, you can't blame the carriers for this, to make money while the sun is shining because there's all this capital flowing into that momentum. If you go to Europe and Oceania as examples, that phenomena doesn't exist, and they are behind on their 5G build-out life cycle. There is more deployment work, upgrade work going on. This is part of why Kaelus makes sense for us, because it gives us this much broader swath of geography, and you see it in the consistency of their overflow. I'm going to come back to the U.S. market for a second because this is interesting. AI, right now, a lot of it is in data centers and processing. A lot of the use cases coming for that is edge-based. Fast connectivity, processing power to the edge, more connectivity for more devices. What does that mean? It means that there will be, in my opinion, there will be a rotation back pretty heavily into wireless assets, which is good for our custom antenna unit as well as good for infrastructure in the coming years because they will need to build out. Because a lot of that tie-in, by the way, this is kind of loosely where I think parts of 6G will be, is the ability to have kind of that integrated AI and software capability with processing power on the edge. That's going to need more wireless deployment capabilities, which means Galtronics and Kaelus will be selling more gear. I'm going to squeeze one more in just on those comments and a bit of a long-term what if question. Mainly around that idea of edge connectivity. I think you kind of have this adjacency in satellites and then this infrastructure. Do those dots connect eventually? We hear of these LEO satellites going up. Do you see a future where communication over those networks is more favorable than even a fiber terrestrial? So- In some use cases, let's say? Maybe for some use cases. It's interesting. Obviously, Starlink, SpaceX, has come out with announcements that they're going to get into the wireless space, and they feel pretty confident about doing so. Conversely, all of the big three U.S. carriers as examples, and third-party analysts question the ability of them to be an active, effective player, given what the technology is, given there's something called a link budget. It basically talks about RF signal and its ability to propagate in certain use cases. It's going to be very interesting to see if there is actually a long-term play there. Most people, most analysts I've read have talked about how SpaceX will need to acquire wireless carriers to actually have a wireless product set that rivals what the wireless carriers do in their combination of fiber and obviously wireless cellular assets. I do think satellite connectivity is getting better over time. I think in some use cases it will be really interesting to see. But at least at this point, I don't see a path where satellite-based connectivity will replace or be better than what you see today in fiber and cellular connectivity in the vast majority of use cases. That is not a unique opinion. That is pretty common for people who are in telecommunications and Satcom who I talk to. Okay, great. Thanks for taking all my questions. I'll leave it there. Awesome. Thank you. There are no further questions at this time. You may please proceed with your conference. All right. Well, guys, heck of a quarter. Lots of good things in front of us. Excited about the Kaelus team, excited beyond belief at the backlog number we were able to announce. Now it's on us to go turn that backlog into money and drive value, and we're really excited about our future. Appreciate everyone joining the call today. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you very much for your participation, and you may now disconnect. Have a great day.