Good day, ladies and gentlemen, and welcome to the Omni-Lite Industries investor call. Our host for today's call is Amy Vetrano-Palmer. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host. Ms. Vetrano-Palmer, you may begin. Good morning, and thank you for joining us. With me today is our Chief Executive Officer, Dave Robbins. Our call is being recorded and will be available for playback, the details of which are in our press release issued. The purpose of today's call is to provide an update of Omni-Lite's financial performance and operations as we did file our year-end 2023 results yesterday, April 18th. Our remarks after will be open for Q&A. If you have not received a copy of the press release which was issued yesterday morning, you may find it on our website, www.omni-lite.com, or email at d.robbins@omni-lite.com to request a copy. Before we get started, I would like to remind everyone that today's discussion will or may include forward-looking statements, including information regarding Omni-Lite's performance based on our views of the company's business and the environments in which it operates, our future plans, objectives, business perspectives, and anticipated financial performance. These forward-looking statements are subject to future risk and uncertainties that could cause our results or performance to differ materially. We are also mindful of the risk and impacts and the changes in the health of the U.S. economy, including the effects of the U.S. financial market, U.S. global commercial aerospace markets, and the U.S. Department of Defense budgets. All forward-looking statements should be considered in conjunction with the cautionary statements contained in our press release and the risk factors included in the SEDAR filings. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. I'd also like to mention that in addition to reporting financial results in accordance with the International Financial Reporting Standards, or IFRS, during our call, we may also discuss or reference non-IFRS measures, such as Adjusted EBITDA, pro forma Adjusted EBITDA, free cash flow, or Adjusted Free Cash Flow. A reconciliation of the write-ins, or metrics, if applicable, is included in the available SEDAR filings and press releases. Lastly, unless noted, any reference or discussion of financial results or metrics are in U.S. dollars. I would like now to turn the call over to Dave. Dave? Thanks, Amy. Good morning, everyone, and thanks for joining us. I'd like to make a few comments about our fourth quarter 2023 year performance, followed by comments on current business. Fourth quarter 2023 revenue of $3.3 million and $12.4 million for the full year marks an increase of 11% from fiscal year 2022, a 6% increase over the fourth quarter of 2022. Adjusted EBITDA for the fourth quarter 2023 was $78,000, which is the third quarter we have produced positive EBITDA this year, and a continued improvement, an indication of our ongoing efforts of managing and planning our fixed cost allocations and product rationalization and pricing. Our fourth quarter adjusted EBITDA, although positive and a significant improvement year-over-year, still had some residual poor product mix, which is nearing its end heading into Q1 2024. We invested in inventory buildup in the quarter of the year of over $1 million in preparation for anticipated product demand heading into 2024. Bookings for the fourth quarter was $4.3 million, a 48% year-over-year, which resulted in a record-breaking backlog at quarter end of $7.0 million, a 91% increase from 2022 backlog of $3.7 million. These bookings and growing backlog numbers are significant in that they reflect strong demand for some aerospace and defense platform products, and initial production bookings for newly designed products happened at the end of 2022 and early 2023. Additionally, we expect this backlog has an improved product mix, which points to us a continued upward trajectory of revenue growth and profitability. Specific new products that are getting some traction are Inconel fasteners for high-temperature applications, Gallium Nitride sensor electronics for missile applications, and jet engine casting components. We are expecting sequential revenue growth over Q4 and Q1 of 2024 of over 30% from the $7 million backlog and new product production starts. With that, I'd like to turn the call over to Amy. Amy? Thanks, Dave. Dave has addressed revenue and outlook, so I'll make a few comments regarding our cash. Adjusted free cash flow, defined as cash flow from operations minus capital expenditure, was a source of cash of $584,000 in the year as compared to a negative cash of $639,000 in 2022. We did use approximately $153,000 of CapEx for purchases and improvements in our manufacturing process throughout this year. We did have a one-time write-off of goodwill of approximately $469,000, as well as an addition to a prior impaired loan with Cal Nano of $852,000, both which affected our net income numbers. We finished the quarter with $1.1 million in cash and no debt, which has been consistent throughout all of 2023 and the end of 2022. We will continue to maintain a strong cash balance. This completes our prepared remarks. We would like to open the call up for questions. If you have a question at this time, please press star, then the number one on your telephone keypad. Once again, to ask a question at this time, please press star, then the number one on your telephone keypad. Your first question comes from Jason Senensky with Chapter Twelve Capital. Your line is open. Hey, hey, guys. Thanks for taking my question. I guess just on the 30% revenue growth, Dave, that you talked about, I mean, that's a pretty substantial increase. Can you give any color on sort of which operations are seeing the fallout of the increase there? And then is that kind of like a one-time quarterly thing, and then you expect to drop back down, or should we see that as the foundation for are you going to grow off that point through the balance of the year? Yeah. So in my prepared remarks, I sort of alluded to that. So a little more color there is. The bookings had steadily increased throughout 2023 and into 2024. So it's really driven from our growth comes from really sort of two primary areas. The platforms that we're on, if they're growing, we're growing. And we are on some notable platforms that are on increased build rates. And the other one is new product starts. So I had mentioned in early 2023, at the end of 2022, that we had a number of new product starts and that they don't really mature into something of the initial production in nine to it can be anywhere as nine months to as upwards of 18 months. And so we're seeing some of that kicking in as well as some interesting platforms that we're on. So it's a combination. We're looking at with a $7 million backlog and a $4.3 million, we are seeing that pipeline pretty robust. So it's not looking to us like a one-quarter thing. The bookings pipeline and our bookings have been on a positive trend. Okay. That's great. That's great, Dave. Appreciate that. Just one other one I wanted to ask was on DP Cast. I think he gave guidance for break-even EBITDA from that operation in the second or third quarter of this year. If we look at the notes of the financials, it looks like the net income from the Canadian segment deteriorated in 2023. I understand that there's head office costs. I'm not sure if the goodwill write-down would have been in there. But I mean, is there anything you can say to help us sort of bracket how much improvement we might expect in the consolidated EBITDA figure as a result of DP Cast moving towards break-even by the middle of this year? Yeah. So you got to be careful when you look at those numbers for Canada. There's a lot of costs in there that are unrelated to DP. But yeah. And Goodwill is in that number, so you got to be careful deriving too much. There was an improvement from last year to this year in DP. So I mentioned that we've mentioned that they're on a positive trajectory, and that continues. We're drawing that line of improvement, and that's how we arrive at the Q2, Q3 of this year based on the trend. And we see everything with product mix and pricing. We should be in line. That's why we mentioned Q2 and Q3 of this year. Okay. All right. All right. I appreciate it. Thanks, guys. Your next question comes from Alexandre Ryzhikov with Altervest. Your line is open. Hi, Dave. Hi, Amy. Hello. Hey. I just have a couple of questions. My first is a follow-up on DP Cast. So I think it's now been over two years since you acquired the business. You paid $5.7 million for it, and it looks like cumulatively, the business has lost probably another $2 million since your acquisition, so roughly $8 million, which is the total cost to Omni-Lite shareholders, which roughly equates to slightly under now the market cap of Omni-Lite. And I realize that we're beginning to see improvements in the business, and we hope it turns positive later in the year. But I think it's fair to say that so far, this stock allocation decision has destroyed significant shareholder value, as evidenced by the goodwill write-down that you took. So Dave, can you confirm that at the time, all four directors voted in favor of the DP Cast acquisition? Yeah, 100%. Perfect. Perfect. Just as a reminder, it's right that Cypress Associates was the advisor who presumably sourced the transaction for you and then helped you with valuation and diligence. Is that accurate too? Yeah, as we've disclosed in our financial statements and. Exactly. Exactly. No, absolutely. And Charles Samkoff, who is managing director and head of mergers and acquisitions at Cypress, is also director then, I would assume, who approved the transaction as well then. Well, yeah, as we've disclosed, yeah, nothing new there. Perfect. Nope, that's a helpful clarification. My second one relates to Cal Nano and the equitization of our loan there. As part of the transactions, investors, which included a director of Omni-Lite and Cal Nano, received warrants for the shares that they bought as part of that equity raise. Do you have a sense of how much those warrants are worth today? I haven't calculated it, no. Well, by my figure, and I might be off, I think it's close to $800,000. And my understanding is that Omni-Lite, despite being the largest shareholder in Cal Nano and also being a lender, I would argue, at the low market rate, has not received anything when it comes to the portion of its consideration that is canceled for the equity that it received in Cal Nano. Is that right? Yeah, we've disclosed what we received for that transaction. Yeah, which were just shares. I don't think there were any warrants or any other type of consideration attached. And so I guess my question to you as the large shareholder, also in Omni Lite, is do you think that's fair to Omni Lite shareholders? Yeah, we're in alignment with what the exchange will allow. Yeah, I'm very happy with that transaction. Well, I'll say and I'll pass the line afterward, but I'll say I think as probably the second largest shareholder, I don't think it's fair to Omni-Lite shareholders where you have insiders who get preferential treatment on a transaction. And I think there are different ways of structuring a transaction to make sure that everyone is treated fairly, especially the largest shareholder and someone who lent money, I would argue, at the low market rates. And those rates were close to zero before I raised that question at the AGM a couple of years ago. So I'm hoping we make sure that Omni-Lite shareholders are treated fairly when it comes to their investment in Cal Nano. But thanks for taking the time to answer my question, and I'll pass the line. Your next question comes from Emanuel Kramer, a private investor. Your line is open. Thanks for the good quarter. Keep it up. With inflation still not tackled and prices of materials and labor goes up, would you anticipate having a problem keeping your margins, or are you going to have to raise prices to effectively keep on the margin that you have? Yeah, that's a good question. Part of my comment about product mix and pricing is for that very effort. It happened throughout the year, but it's ongoing in this market with long lead materials and price increases. It's a big part of our efforts that ongoing dealing with that before things get booked. So that directly relates to my comment about being able to stay on the positive trajectory is because we focus a lot on that. And it's real-time booking and looking at costs of materials as well as buying smart. So our inventory being up, as I mentioned, part of that is getting some pricing benefit of placing these on order early and getting some of that pricing. But even more importantly, it's pricing those into our product and passing that along to our customer, which is in full gear now. Also, with all the news on Boeing coming out nearly daily, what of an impact, if any, does that have on your business with Boeing? We make a lot of fasteners on Boeing and Airbus and Embraer. The fasteners tend to be more the high-performance, highly engineered fasteners, which are in specific applications, but they're across many, many platforms. We're not concentrated on any one platform like 737 or the 787. Those are two notable ones that have had some issues. Obviously, as being part of a supply chain, it could have some effect, but the broad range of platforms we're on means that we're somewhat sheltered from having a high concentration on any one particular program. Our expectation is these issues at Boeing could have a small impact but not a large impact. Build rates are still climbing. Maybe the rates are slowing a bit, but they're still climbing. The demand is very high for our fasteners. Would you say that Airbus and the other ones would pick up the slack and give you more orders? That's already starting to happen. We've seen some evidence of that already. Okay. Thanks very much. Once again, to ask a question, please press star, then the number 1 on your telephone keypad. Your next question comes from Frank Wisneski, a private investor. Your line is open. Hi. Good morning, David and Amy. A couple of questions. The inventory, you went into one of the reasons we were doing that. Certainly, with the outlook for the immediate future, it's good to have that inventory. What kind of inventory turns do you see going forward? Is inventory likely to stay at these levels as far as inventory turn, or will it come down a little? I. So if. I'm sorry. You can go, Amy. No, go ahead. Sorry. Yeah. I think you will see some ebb and flow of inventory. This specifically, and I'm commenting on it, was a specific buildup in anticipation of some orders in 2024, which we did book. It's going into that $7 million backlog number. We expect the pipeline's pretty full. We are expecting some more growth. So you do need to anticipate inventory for a growing revenue. But we're looking to, but that will ebb and flow. I don't see it. We don't see it continuing to just rise and rise. Most of that inventory buildup was for revenue, so that gives a little bit of picture. And Amy, I think you might want to add to that. You had a comment. Yeah. I was actually going to mirror pretty much what you said, that we'll probably see that come down in the first quarter due to the shipments that were in inventory or in with at the end of the year. I think it's going to continue to go up and down, up and down, depending on the timing of the quarter, the shipments, and everything in there. But we're not going to continue to see increases of $1 million year-over-year or anything like that. Okay. Thank you. The other kind of impressive thing was your SG&A expenses that went down 30%. Now, in your filings, you mentioned a couple of reasons for that. It was all in the other category. But one of the reasons was decreased headcount. Could you quantify that, and where was that headcount decreased? Yes. So we did have a handful of people within the SG&A department that we did decrease in 2023, and it was across all the organizations, not one specific organization. Some of those were higher-salary people, I'd say. Some of those took effect at the beginning of the year, so we did see a full-year effect, and some did happen towards the end of the year. So we'll actually get to see some effect of that as we go into 2024. Yeah. And can you quantify how much of the 30% decline came from decreased headcount? Or just put it another way, what's your headcount now as opposed to what it was a year ago? We're pretty consistent with where we were a year ago, but the heads that we have added is more in the direct labor than in the current, so. That's too bad. Okay. Yep. Get the product out the doors. Obviously, it increases. But the other part is the decrease in amortization. Now, I assume that's because of the write-off? No. The write-off, actually, Goodwill isn't amortized on the books. It was just we are fully amortized on the Monzite books for their intangibles, which is a real climate change. Oh, really? Okay. Good. Good. Yeah. R&D up 100% for the year. What's the go-forward rate on that? And could you go into a little bit of how do you decide what to spend the R&D on? Are you developing products that you think will be needed, or have airframe manufacturers come to you and said, "We need this. Would you develop it?" Just go into a little bit of detail on the R&D, if you would. Yeah, Frank. I would expect that this number would continue or as a percentage is a healthier one to sign. Something I spoke about a year ago was with new product starts. So the technologies, the themes that we see I mentioned it in this one, which is things like working with Inconel. So there was a lot of R&D associated with working with forming Inconel because it's high demand, a lot of products around Inconel, especially in certain areas that are high temperature. So we saw that. We invested in there. Same thing with gallium nitride is a new semiconductor that is finding its way into battery chargers, into advanced sensors, radar. It's a high-bandwidth semiconductor, so there was some R&D related to working with GaN. And it's directly helped with new products, some of those GaN sensor electronics that had some effect in the quarter as a result of that. And in casting, some technology being able to form tubular components using certain cores, again, seen as an ongoing need for thin-wall tubular kinds of casting components. So directly, what drives it is we see technologies that are directly needed for products that we are or going to develop. That's sort of the methodology. Okay. So we should sort of expect that percentage of revenues to be maintained? I would think so. Yeah. And it wasn't that we weren't before, but I think the focus on new product starts and then understanding what technologies were driving that. That's so this represents a more, yes, a level that we look to continue to invest in those areas. Good. Good. Understand. One or two more questions, if I could. Looking at, and I'm glad to see you wrote off the DP Goodwill. But looking at that Goodwill impairment by CGU, for DP, you forecast 15% growth and an EBITDA margin of 18% over a five-year period, I believe, that they require. How realistic is that? What have you done with DP to produce those kinds of forecasts, which certainly haven't been exhibited in the past? Yeah. So it's a good question, Frank. And Alex earlier mentioned it's been two years. Yeah. So when you're in the aerospace and defense business producing very high-performance products, the lifecycle is pretty long. So even to turn an order from the time, let's say, you design a new product, get it qualified, and then start producing with any real revenue, that's an 18-month endeavor. So I made no bones about the fact that there was opportunities to product rationalize at DP Cast. So it was a combination of spending some and we spent some capital early on with improvements of some efficiency and getting some new product starts and pricing and product rationalization. And all of that takes some time. So would I have liked it to go a little faster? Sure. But two years was not a long period of time. But some of those efforts can't kick in. It takes some time. These products are going on jet engines. They're going in very high-value assets. There's a lot of work and a lot of qualification and buy-off that takes. So I think that's sort of maybe the time horizon looking at in such a narrow it doesn't move that fast. And it's more important about the trajectory because you're going to keep that momentum up. So that's what gives you the optimism of that. And along the way, we have some products that perform better than that, right? So they are more towards our delivering 25% EBITDA kind of target. So that's how we come to that conclusion because we see it happening now on some basis. And where the product rationalization comes in is that we don't do too much of low margin and strip that away. That's what's happened. Yeah. I was going to mention that. The EBITDA margin of 18% seems a bit pedestrian. But are your orders going out now with EBITDA inherent margins higher than 18%? We have some. Yes. Yeah. And the 18 really comes from, we're still on this path of improving, right? It's hard to improve to that point. But we feel very strongly that DP, that casting operation, can and will deliver to the same profit margins as we see in the rest of the company. Staying on the CGU for a moment, the Monzite estimate for going forward is 27% EBITDA. Is that indicative of what the EBITDA margin is currently at Monzite? It does show when putting this together, we don't want to be too aggressive in terms of really having to expand that EBITDA margin. I'd say right now, it's a little bit lower than that, but it's projected to be a bit higher than that. So it's in and around 20%-25% as we look forward through the next five years. Would the revenue growth rate of Monzite be in excess of the rest of the company? You have 14% in there. Is Monzite expected to grow faster than the rest of the company on a revenue basis? Yes. Yep. On a revenue basis. Yes. Yeah. Well, it would seem that Monzite is an unappreciated but increasingly important part of the total company. And I've mentioned this before, but when you break out your CGUs, is there any thought yet that Monzite might be broken out as a separate category of business? It's certainly different. It's electronics rather than metalwork. Well, so I'm not really sure how to comment on the underappreciated. It feels like Monzite's appreciated, so I don't know exactly what you meant there. But having said that, on the electronics, very often, our electronics, the electronics that Monzite produces, are high-value assets and platforms and very often around metal and metal, whether it's formed metal or a metal enclosure. So part of our platform of products here, they're very related. So the electronics, even though it's technically electronics, it's very much involved with the same manufacturing, the same product, same platforms as the metal in many cases. So we don't really see it as that distinct as what you may think. Right. Yeah. When I said underappreciated, I appreciate it, and I'm sure you do. I would just say when people talk about Omni-Lite, they're talking about casting and forging, not the electronics category, which is growing better and has a very fine EBITDA margin. But I'll let it go there. One final question, and that's on the Cal Nano investment. It's a reasonable percentage of your market cap now. What are your thoughts about that going forward? Anything you can share? I know you can't share everything, but what are your thoughts? Well, we're certainly happy. We've made the investment. It's an important asset for us. And as we spoke about before, so we're supportive of Cal Nano, and we're looking at it as an investment that will do what's prudent and in our interest, and we're just watching it closely. Okay. But there's no discussion on how to redirect that capital? Well, no. We're constantly evaluating potential uses and taking that under our thought process. Okay. Great day. Thanks for answering the questions. Thank you too, Amy. I'll talk to you again in the near future, hopefully. Sounds good, Frank. Thanks. At this time, there are no further questions in queue. I'd like to turn the call back to our presenters for any further remarks. Thank you so much. We appreciate everyone joining the call today, and we look forward to releasing our Q1 2024 results here within the next month. Thank you so much. This concludes today's Omni-Lite Industries investor call. Thank you for attending, and have a wonderful rest of the day.