Q4 2024 Mattr Corp Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to Mattr's fourth quarter, 2024 results conference call and webcast. At this time, all participants are in a listen-only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to Meghan MacEachern by President of Investor Relations and External Communications. Please go ahead.
Speaker Change: Good morning. Before we begin this morning's conference call, I would like to take a moment to remind all listeners that today's call includes forward-looking statements that involve estimates, judgments, risks and uncertainties that may cause actual results to differ materially from those projected.
Speaker Change: The complete text of matter statement on forward-looking information is included in section 4.0 of the 4th quarter of 2024 earnings press release in the MDNA that is available on Cedar Plus and on the company's website at matter.com.
Speaker Change: For those joining via webcast, you may follow the visual presentation that accompanies this call. I'll now turn it over to Mattr's president and CEO , Mike Reeves.
Speaker Change: Good morning, and thank you for attending our fourth quarter conference call. Today, Meghan and I are joined by our senior vice president of finance and CFO Tom Holloway.
Speaker Change: In 2024, Massa continued to progress favorably against our key strategic objectives.
Transforming Our Operational Footprint
Speaker Change: securing the highly accretive acquisition of AmeriCable and lowering our cost of debt.
all well navigating complex market conditions.
Speaker Change: Despite these market conditions, Matt had delivered new annual revenue records in three of our four business lines and achieved year-over-year revenue growth within our consolidated continuing operations.
Speaker Change: We ended 2024 with our North American production, modernization, expansion and optimization or MEO program largely completed. Having established and commenced operations at three U.S. manufacturing sites during the year.
Speaker Change: We expect to complete the final stage, the relocation of production activity for our shoreflex business into a new Canadian site before the middle of 2025.
Speaker Change: These new sites form the foundation of our ability to deliver long-term profitable growth across Mattr's business portfolio, while also significantly increasing our ability to serve US customers from U.S. production sites
Speaker Change: During 2024, we recognized $18 million of non-capitalizable expenses tied to our MEO strategy, which was the largest driver of a reduction in reported adjusted EBITDA from continuing operations when compared to the prior year.
Speaker Change: Late in the year, we announced a definitive agreement to acquire Amer-Cable, a transaction that closed in early January , adding a US production footprint and significantly greater scale to the wire and cable portfolio within our connection technology segment.
Speaker Change: Closure of this transaction causes connection technologies to become the larger of our two segments.
Speaker Change: Over the course of 2024, we also repurchased more than 3.3 million shares under our normal course issue of bid. In the aggregate, since the initial launch of our NCID to the end of 2024, we've bought back nearly 12% of our stock.
2024 was a transformative year for Mattr [inaudible]
Speaker Change: The year in which we reshaped our production network to better serve our North American customer base and positioned ourselves for growth in 2025 and beyond.
Speaker Change: This would not have been possible without the hard work of our talented employees to drive and embrace change in the face of elevated market uncertainty.
Speaker Change: I could not be more proud of this organization and the committed and creative individuals who work here.
Speaker Change: With our transformation effectively complete, the entire matter team are now focused on delivering maximum value from our enhanced operational footprint and our technology investments.
while efficiently onboarding and profitably growing the Amer-Cable business.
Speaker Change: Our infrastructure is now in place and we have significant opportunities to enhance efficiency over the years to come, elevating our margin profile and expanding our free cash flow.
Speaker Change: Turning to the fourth quarter, Mattr saw a normal seasonal slowing across all business lines as many customers moderated activity heading into the year end and ground conditions became less favorable for subsurface product installations.
Speaker Change: While North American critical infrastructure demand remains stable, as expected, we continue to see weakness across the North American onshore oilfield market, Eurozone industrial sector, and increasingly the global automotive market.
Speaker Change: Amidst these market dynamics, Mattr delivered $208 million in revenue and $13 million in adjusted to the EBITDA from continuing operations.
Speaker Change: The company currently expects weakness in the oil field and automotive sectors to linger throughout 2025.
Speaker Change: We took steps during the fourth quarter to lower operating costs tied to these specific end markets by approximately $20 million annually.
Speaker Change: In parallel, we completed the establishment of and initial production within our new DSG Canusa facility in Fairfield, Ohio, while also concluding the shutdown of our aged Zooksy's production facility in Anaheim, California.
Speaker Change: During the quarter, we also reopened our debt subscription receipts, closing on a private offering, which was utilized to finance the Amer-Cable acquisition subsequent to the year end.
Speaker Change: I encourage any investor seeking to better understand the amicable business and how we believe it will favorably impact matter to review the November 8th transcript of our conference call on this topic.
Speaker Change: We continue to believe that our investments in technology, operational efficiency and enhanced production capabilities will support our ambitions to deliver annual EBITDA growth above 10% while driving EBITDA margins above 20%.
Speaker Change: and that our acquisition of AmeriCable will serve to accelerate our progress towards these goals.
Speaker Change: Finally, we remain convinced that the intrinsic value of our business represents an excellent investment opportunity and as such we remain active under our normal course issue a bit throughout Q4 and expect to remain so moving forward.
Speaker Change: Q4 represented the most active purchasing period of 2024 with nearly 1.9 million shares repurchased.
Looking at each of our segments,
Speaker Change: Composite Technologies' fourth quarter revenue moved up compared to 2023, with year-over-year gains in both FlexPite and Zerxes despite normal seasonal slowing.
Speaker Change: FlexPights continued sharegames in North America and onshore oilfield markets, including further large diameter product adoption.
Speaker Change: drove fourth quarter North American revenue to move higher year-over-year, significantly outperforming North American drilling rigs and well-completion counts, which fell approximately 6% and 21% respectively in the same period.
Given Curred and Forward Strip Commodity Prices
Speaker Change: We continue to expect North America and onshore well completion activity levels in 2025 will average approximately 10% below 2024.
Speaker Change: Despite this anticipated market activity decline, our demonstrated ability to outperform key market activity indicators leads us to believe full year 2025 FlexPipe revenue will be similar to 2024, with quarterly revenue levels likely to be relatively even throughout the year.
Speaker Change: We remain confident that the substantial investments made in flex pipe technology, training and domestic operational infrastructure over the past several years have positioned the business well for the future, despite near-term industry headwinds.
Speaker Change: and we remain on schedule to deliver additional product portfolio expansions towards the end of 2025, which are expected to add 50% or more to our global addressable market.
within the Xerxes business.
Speaker Change: Q4 revenue increased versus the prior year's quarter with fuel tank shipments rising more than 25% year over year as retail fuel customers better navigated the extended permitting process than incumbent convenience store construction in late 2023 and early 2024.
Speaker Change: Demand also remains strong for very large diameter water storage and backup fuel tanks used in mission-critical applications such as the US data center market, with the segment expanding its backlog for these products.
Speaker Change: The customer mix in the fuel sector was skewed to larger lower-priced customers as expected, and as previously noted, this mix is likely to remain similar through the first quarter of 2025, the form moving favorably as we enter the second quarter construction season.
Speaker Change: We expect fuel tank shipments and related revenue during 2025 to follow a normal, weather and ground condition driven seasonal cycle, where the first quarter of the year is generally the slowest quarter of the year, followed by a step up in the second quarter, as ground conditions generally improve.
Speaker Change: Q4 saw a new FlexPite manufacturing site in Rockwall, Texas and our new Xerxes Manufacturing site in Blightwood, South Carolina continue to increase output.
Speaker Change: Both locations are expected to demonstrate progressively greater productivity as we move through 2025.
Speaker Change: The segment will continue to strategically balance production between its US and Canadian insights to optimize our total cost of delivery, including in response to any tariff impacts.
and David Ocampo, David Ocampo, David Ocampo, David Ocampo,
as noted in our Q3 2024 earnings release.
Speaker Change: The segment adjusted its fixed cost-based during the fourth quarter to reflect near-term oil-filled market conditions.
Speaker Change: Also during the fourth quarter, the segment incurred approximately $3.6 million of non-routine expenses tied both to pre-positioning of finished goods inventory in advance of possible tariff implementation and to address a discreet customer issue.
Speaker Change: With production network upgrades and fixed cost reductions within the segment now complete we are well positioned to regain revenue and margin momentum in 2025.
Speaker Change: A demonstrated ability to consistently capture market share in the FlexPite business in spite of market softness.
Speaker Change: Coupled with rising demand for our zirxies underground storage tanks and growing backlog within fuel and water markets.
gives us a strong foundation for profitable growth in 2025.
Speaker Change: Within the Zerxes business, demand for premium underground liquid fuel storage tanks continues to rise.
Speaker Change: North American fuel marketers, many of whom are private, have outlined growth initiatives which we estimate will translate to an average capital spend increase of approximately 10% versus 2024, predominantly driven by new-to-industry store construction.
Speaker Change: Retailers fuel margins remain healthy, and steady demand for liquid fuels is expected to continue, with more than 98% of vehicles on US roads relying on liquid fuel.
Speaker Change: We do not expect this percentage to change appreciably in the coming years. As adjusting consumer preferences coupled with US policy changes impacting electric vehicle subsidies and auto make-up production targets, I'm likely to have a slowing effect on EV sales growth rates.
Speaker Change: There has been a constant rise in the number of active convenience stores with fuel in the US over the last several years.
Speaker Change: Larger convenience store operators are investing to capture incremental customer share from smaller marketers by offering modern, well lit, more appealing fueling sites.
Speaker Change: Stocked with an enhanced range of food and other convenience items.
Speaker Change: Data from recent years suggests this strategy is working, with those operators controlling 500 stores or more, gradually representing a larger proportion of total active fuel
Speaker Change: When combined with rising demand for replacement tanks as the existing population further ages, we continue to believe this market will enable growth within our zirks use fuel business for years to come.
Speaker Change: Turning to connection technologies, year-over-year revenue increased by 11% marking a new Q4 record for the segment.
Speaker Change: The strong fourth quarter outcome was primarily driven by persistent demand in the North American industrial sector and continued market share gains with industrial and automotive customers.
Speaker Change: partially offset by slowing total automotive unit production and as expected, lower shipments into infrastructure applications based on project timing.
Speaker Change: During Q4, the segment's Shaw Flex highly engineered wiring cable business maintained its strong demand for stock industrial products, primarily from its Canadian distributor customers who are gradually rebuilding inventory levels as interest rates move lower and industrial
Speaker Change: As expected, sales of these stock products came at the low average margins, which caused overall margins within the business to remain at the lower end of its typical range.
Leach. [inaudible]
Speaker Change: Our nuclear customers are signaling steady rising activity levels as we move into 2025 and beyond and the business continues to invest in the qualification of incremental products to further expand its addressable nuclear market.
Speaker Change: The segments DSG Kanusa premium heat shrink tubing business secured new customers and captured incremental market share in its core industrial and automotive markets.
Speaker Change: These gains were partially offset by continued weakening of global vehicle production output, as several customers took corrective action in the face of profitability challenges, particularly related to electric vehicles.
Speaker Change: In response to these lower activity levels and in anticipation that this trend will linger throughout 2025, we took action to adjust our cost-based during the fourth quarter.
Speaker Change: Despite concerns regarding automotive market activity, our current visibility suggests DSG Canusa will deliver year-over-year revenue growth in 2025, driven by new customer capture and new product introduction, primarily in North America.
Speaker Change: We believe that electrification demands will continue to backstop momentum in North American industrial and infrastructure activity.
Speaker Change: are already favourable view of opportunities within these sectors, is further enhanced by our recent acquisition of AmeriCable, which closed on January 2nd and nearly doubles the revenue of our connection technology segment.
Speaker Change: Early views from the onboarding period have reinforced our belief in cross-selling opportunities between AmeriCable and Shoreflex, and have affirmed our optimism regarding meaningful growth potential for AmeriCable in the North American medium voltage market.
Speaker Change: We currently anticipate overall 2025 performance from Anna Cable, will approximate our pre-transaction expectations, with Q1 likely to be the strongest quarter of the year driven by specific timing of certain mining-related projects.
Speaker Change: The successful capture of market share in utility, nuclear and non-stock industrial markets is a crucial component of the segment's longer-term growth and profit expansion strategy and a key driver behind our substantial ongoing investment to modernize, expand and bifurcate the segment's North American production footprint.
Speaker Change: During the quarter, the segment's DSG Kanusa heat shrink factory relocation to Fairfield, Ohio was substantially completed.
Speaker Change: A new short-flex wire and cable factory in Bourne, Ontario also commenced production in the quarter and relocation efforts remain on track for mid-year completion.
Speaker Change: Lastly, Thermatite, our Brazilian pipe coating operation, which following our announcement of its pending sale to Valaric is now reported as discontinued operations, continued to execute safely and efficiently during the quarter, delivering sequentially higher revenue and adjusted EBITDA.
Speaker Change: Based on the sequencing of project activity, Flimatite is currently expected to deliver Q1 2025 revenue and adjusted EBITDA slightly below its level of performance in the fourth quarter of 2024. We expect to close on the sale of Flimatite in the coming months.
Speaker Change: Tom will now walk through the company's fourth quarter and full year financial highlights.
Thanks, Mike.
Speaker Change: The fourth quarter's revenue from continuing operations was $207.8 million, $8.5% higher than the $191.5 million in the fourth quarter of 2023.
Speaker Change: The $16.3 million increase from the fourth quarter of 2023 is reflective of increases of $8.5 million in the connection technology segment and $7.8 million in the composite technology segment.
Speaker Change: Total Consolidated Adjusted EBITDAF from Operations, which includes discontinued operations, was $21.1 million.
Speaker Change: while Adjusted EBITDA from continuing operations was $12.7 million, a 50.9% decrease from the comparative period in the prior year.
Speaker Change: This decrease of $13.2 million is primarily attributed to a decoying of $10.6 million in gross profit related to temporary impacts of unabsorbed costs at Zerks' e-m-splitening tax sites.
Speaker Change: Changes in product and customer mix, and the impact of non-routine expenses tied to pre-positioning of finished goods inventory in advance of possible tariff implementation, and to address a discreet customer issue in the composite segment.
Speaker Change: We also recorded $3.8 million related to our MEO growth activities during the quarter with $2.1 million included in selling general and administrative cost and $1.7 million in gross margin.
Speaker Change: While these NEO costs are slightly below our expected spend rate, the lower expense represents deferred spending during the fourth quarter, which will be spent in the first half of 2025. All NEO projects remain on time and on budget.
Speaker Change: In the 4th quarter of 2024, the company also incurred restructuring costs of $4.9 million, associated primarily with severance obligations tied to workforce restructuring in our automotive and oil field-related business lines completed in the quarter.
Speaker Change: Additionally, during the quarter, we incur $1.7 million of cost related to the acquisition of Emma Cable, and $2.2 million of cost associated with non-recurring Canadian pension-related obligations.
Speaker Change: These costs were partially offset by a reduction of $4.3 million in long-term share-based and cinema cruells due to share price movement.
Speaker Change: All of these items were added back to Adjust City Vida and are included in our reconciliation of non-GAAP measures .
Speaker Change: Turning to segment results, the composite technology segment revenue was $120.3 million, a 6.9% increase compared to the fourth quarter of 2023, and a just city but da was $9.4 million, a 50.1% decrease from the prior year fourth quarter.
Speaker Change: This revenue increase was primarily attributable to increased sales of FRP tanks and to retail fuel applications along with the rise in composite pipe sales in North America and the fourth quarter of 2024 compared to the same period in 2023.
Speaker Change: The Adjust City of Adar Reduction was primarily due to a decrease in gross profit of $8.1 million.
Speaker Change: This was driven by an 8.6 percentage point decrease in gross margin compared to the fourth quarter of 2023.
Speaker Change: Betributed to a $2.6 million non-routine provision related to a specific customer order, $1 million of cost related to inventory prepositioning ahead of possible tariff implementation.
Speaker Change: Lower overhead absorption within the segments manufacturing network, primarily related to the ramp up of the new facilities and a modestly less favorable mix of product sales and flex
Speaker Change: Fourth Quarter 2024, Adjusted EBITDAF also includes $0.4 million in non-capitalizable MEO costs within the segment's reported selling general and administrative expenses.
Speaker Change: The segment will not record any any-o cost beyond the end of 2024.
Speaker Change: The connection technology segment delivered a new fourth quarter revenue record of $87.5 million, which was 11% higher than the fourth quarter of 2023.
Speaker Change: Segment Adjusted EBITDA was $10 million, which was $4.1 million lower than the prior year
Primarily as a consequence of $3.5 million in EEO costs. [inaudible]
Speaker Change: and a reduction of 5.9 percentage points in gross margin due to less favorable product mix within the
Speaker Change: The increase in segment revenue was a result of higher demand for lower margin stock industrial products from Canadian distributors in Schoflex.
Speaker Change: and increased sales into automotive markets in North America and EMEA, reflecting market share games for the DSG business.
Speaker Change: This was partially offset by lower sales in US and Canadian infrastructure markets due to specific project timing.
Speaker Change: Discontinued Operations, which consists primarily of the pipe-coding operations in Brazil, reported revenue of $23.8 million.
Speaker Change: A decrease of 91.6% compared to the fourth quarter of 2023, primarily resulting from the absence of revenue from the operations sold to Teneris, late in the fourth quarter of 2023, and which contributed heavily to the comparative period.
Speaker Change: Cash provided by operating activities from continuing operations in the fourth quarter was $45.2 million compared to $3.1 million of cash used in operating activities from continuing operations in the prior year fourth quarter.
Speaker Change: This result reflects effective management of working capital during the quarter, especially around the counts receivable.
Speaker Change: Cash used an investing activities in the fourth quarter was $15.7 million, reflecting a capital spend of $16.1 million on property, plant, and equipment, primarily Emeo projects offset by $1.1 million in proceeds on disposal of assets.
Speaker Change: During the fourth quarter, cash provided by financing activities was $276.5 million.
Speaker Change: Primarily driven by $179.9 million from a drawdown of the company's credit facility and $127.3 million on issue of senior notes.
Speaker Change: to partially fund its purchase of AmeriCable, which closed on January 2, 2025.
Speaker Change: This is partially offset by $25.4 million in share repurchases under the company's normal course issue and $2.9 million in lease liability payments for continuing operations, excluding the imputed interest on leases.
Speaker Change: Net Cash generated in the fourth quarter of 2024 was $316.5 million.
Speaker Change: As of December 31st, 2024, we had a cash balance of $502.5 million net debt of $131.9 million and $34.2 million of standard letters of credit.
Speaker Change: As of the end of the quarter, the company's net debt to adjust to David Dar ratio was 1.0 times, including least liabilities, which reflects the additional debt raised to fund the acquisition of the Amer-Cable Business.
Speaker Change: Least liabilities increased to $163.1 million in the fourth quarter of 2024 due primarily to foreign exchange movements.
Speaker Change: As a reminder, we funded the early January amortable transaction through a mix of balance sheet cash, unsecured high yield debt, and our credit facility, which is expected to temporarily increase our leverage above our normal course target of two times.
Speaker Change: Proformer for this transaction, and based on the results from the fourth quarter, are trailing 12-month net debt to Adjusted EBITDA ratio at December 31, 2024, would have been approximately 2.5 times.
or 1.7 times as least liabilities were exgooted. [inaudible]
Speaker Change: As discussed previously, we remain committed to returning to a normal course ratio of two times or below.
Speaker Change: Speaking of capital deployment, we remind investors that since the beginning of 2021, to the end of 2024, and including the capital outflow to a choir hammer cable, matters deploying over $1 billion of capital under our all of the above strategy, while maintaining strict balance sheet distance.
Thanks for fun.
Speaker Change: In that period, we have paid down over $260 million on our credit facility, deployed over $200 million into high return organic growth initiatives, and repurchased over $115 million, or nearly 12% of our shares.
Speaker Change: Post-transaction, matter will retain financial flexibility and expect to adjust near-term capital allocation priorities to emphasize debt repayment, complete existing growth investments, and continue to share repurchases under our NCIB.
Speaker Change: We will also continue to cultivate our pipeline of acquisition opportunities primarily focused on further enhancement of our connection technology segment.
Speaker Change: Capital expenditures in the quarter were $33.1 million, including outstanding payments to suppliers, of which $26.8 million was related to growth expenditures.
Speaker Change: These were primarily related to MEO projects which are intended to increase production capacity and efficiency within both segments.
Speaker Change: Emil Projects for Composite Technologies and DSG Canusa are now online and ramping up production while our relocation of the Softlex production footprint is expected to be completed by mid-2025. All projects remain on time and on budget.
Turning to full year 2024 results.
This was a year of transformation.
Speaker Change: with strong strategic execution while also driving annual revenue records in three of our four operating business funds.
Speaker Change: Revenue from continuing operations in the year was $885.3 million, 0.5% higher than the $880.5 million in 2023.
Speaker Change: 28.2% decrease from the prior year, primarily attributed to $17.7 million in non-capitalizable
Speaker Change: The temporary impact associated with unabsorbed costs at newly established Xerxes and FlexPite sites as well as other legacy Xerxes sites that underwent significant upgrades and less favorable customer and product mix.
Speaker Change: and Solidated Results for the year also included a loss of $18.3 million on the sales of our PPG and Shaw Pipeline Services business.
Speaker Change: Of the $17.7 million of non-capitalizable MEO costs, $11.5 million was in composite technologies and $6.1 million was in connection technologies.
We also incurred $8.4 million of net restructuring costs.
Speaker Change: Non-recurring costs associated with Canadian retirement plans of $2.2 million related to the wind down of our Canadian to fine benefit plans and $1.7 million of costs associated with the acquisition of
Speaker Change: Turning to segment results, composite technology segment revenue was $528.4 million, a 1.3% decrease compared to 2023, and a just city of Adal with $72.2 million, a 36% decrease from the prior year.
Speaker Change: These results reflect lower FRP tank production and shipment activities during the first quarter of 2024, the recognition of non-capitalizable NEO costs, the temporary impact associated with unabsorbed costs in newly constructed or upgraded facilities, and a less favorable customer and product mix.
Speaker Change: This was partially offset by full-year record revenue influx pipe driven by continued market sheer gain in North America and internationally.
Speaker Change: These results reflect increased demand for the segment's products in its industrial infrastructure and automotive end markets, offset by the absence of a large shipment into the aerospace market that benefited the prior year period.
Speaker Change: an increase in non-capitalizable MEO costs and a less favorable product mix within the
Speaker Change: Both Softlex and DSG Canusa set new annual revenue records in 2024.
Speaker Change: Discontinued Operations Revenue with $74.4 million, and 92% decrease compared to 2023, primarily resulting from the absence of the pipe coding business.
Sold to Teneris in 2023.
Speaker Change: Adjusted EBITDAW was $22.5 million, and 91% decrease from the prior year, reflecting the aforementioned lower revenue.
Speaker Change: Full-year 2024 cast provided by operating activities was $51.3 million.
Speaker Change: reflecting $68.7 million in cash from net income from continuing operations after non-cash items offset by a $17.7 million increase in working capital from continuing operations.
Cashews.
Speaker Change: By investing activities in the year, was $155 million, reflecting $110.4 million of capital expenditures paid in cash, and $49.3 million paid in cash to settle the networking capital adjustment to scenarios on the sale of the PPG business.
Speaker Change: During the year, cash generated by financing activities was $259.8 million, reflecting a net debt increase of $317.4 million, including a drawdown on our credit facility, and a new issue of senior notes offset by repayment of bank indebtedness and long-term debt.
Speaker Change: Offsetting the increase in net debt was $11.1 million of lease payments and $47.3 million in share repurchases under the company's normal course issue or bid.
Net cash generated in 2024 was $168.4 million.
Speaker Change: The past year saw a matter effectively complete its transformation to become a less volatile business focused on the deployment and delivery of differentiated high-value critical infrastructure products.
Speaker Change: With our transformation now complete, we are positioned to fuel profitable growth, margin expansion and enhanced pre-cash flow conversion in 2025 and beyond.
Speaker Change: We remain committed to pursuing high-return organic growth opportunities and successfully deployed over $110 million of growth capital to optimize and enhance our production footprint
Speaker Change: slightly above our original expectation as certain projects were executed faster than anticipated.
Speaker Change: We currently anticipate $60 to $70 million of capital expenditures during 2025 with $45 to $55 million directed to growth investments, including completion of our remaining MEO projects.
Speaker Change: We continue to expect a normal annual capital spend rate of 40 to $50 million per year from 2026 onwards.
Mike Reeves: I'll now turn it back to Mike for some final comments.
Thank you, Tom.
Mike Reeves: Mattr has completed a disposition of non-core assets with the exception of the sale of rheumatite, which is expected to close around mid-year.
Mike Reeves: In addition, we have largely completed the modernization, expansion, and optimization of our North American production network, with the remaining relocation of our short flex manufacturing site expected to be complete by mid-year.
Mike Reeves: Consequently, over the course of 2025, we expect to return to more normalized operations.
Mike Reeves: with an intense focus on elevating the value delivered from our restructured operational footprint and our technology investments.
Mike Reeves: while also ensuring full integration and optimization of the AmeriCable acquisition and continuing to return capital to shareholders through our NCIB.
Mike Reeves: Normal seasonal and market cycles will continue to drive some variation in quarterly activity levels.
Mike Reeves: However, we believe the underlying long-term trends for each of Matt's primary businesses are favorable and expect them to remain so for several years.
Mike Reeves: Long-duration North American Critical Infrastructure Activity Remains robust and demand for our core products is expected to persist.
Mike Reeves: We remain vigilant towards the potential impacts of geopolitical events, supply chain risks, inflationary impacts, and interest rate movements, and continue to take steps designed to minimize our risk related to rising international trade friction.
Mike Reeves: Given the material uncertainty regarding the potential duration and scope of tariffs, our outlook does not include tariff impacts.
Mike Reeves: to provide a relative indication of our exposure to potential North American tariff impacts in 2024, inclusive of Amicable.
Mike Reeves: Approximately 30% of our continuing operations revenue was derived from product sales that crossed the US Canadian border.
Mike Reeves: and approximately 45% of our cost of goods sold were tied to materials that crossed the border.
Mike Reeves: We currently expect to lower these exposures over the course of 2025 as our new facilities to use Elevate Production Output.
Mike Reeves: Barring potential, long-duration North American tariffs, we currently expect meaningful year-over-year growth in 2025 revenue and adjusted EBITDA, driven primarily by our connection technology segment, inclusive of the AmeriCable acquisition, and the Zerxies business within our composite technology segment.
Mike Reeves: We expect our zirxies business will follow its normal seasonal cycle, starting 2025 at its low point before stepping up in the second quarter of the year as ground conditions improve.
Mike Reeves: As I detailed earlier, the markets for both our fuel and water products remain constructive and our teams are intensely focused on elevating production output, including from our new and newly refurbished sites.
Mike Reeves: Based on our current view of the North American onshore oilfield market, we anticipate relatively flat performance year over year in our flex pipe business, with revenue likely to be evenly spread across the year as continued expected share gains are offset by gradually declining customer activity levels.
Mike Reeves: RDSG Canusa Business is expected to deliver a year-over-year growth in spite of new-toed global automotive production, driven primarily by new customer capture in North American infrastructure and industrial markets.
Mike Reeves: Madonna R.R. and cable businesses, we're expecting top line growth driven by continued sharegames and shoreflex and the addition of AmeriCable.
Mike Reeves: Given the timing of deliveries into specific mining projects, we estimate that the first quarter of the year will be the highest revenue quarter of 2025 for our wiring cable businesses.
Speaker Change: While Tariff Impact has remained a question mark for any organisation operating across borders, over the last several years, Mattr has demonstrated its ability to embrace change, to be nimble, and to act swiftly when opportunities or challenges arise.
Speaker Change: The actions we have taken to enhance our US production footprint and diversify our supply chain have better positioned the company to navigate today's unpredictable geopolitical environment.
Speaker Change: We continue to observe broadly favorable indicators of demand across the North American industrial and critical infrastructure sectors for 2025 and firmly believe the company remains well-positioned to deliver on its longer-term growth profitability and cash flow objectives.
Speaker Change: I'll now turn the call over to the operator and open it up for any questions you may have for myself, Tom or Meghan.
Speaker Change: As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.
Speaker Change: Our first question comes from a line of David Ocampo with Cornmark Securities.
Thanks good morning everyone.
Good morning, David.
Speaker Change: Michael Tupholme, I appreciate the commentary around tariffs and your disclosure on your cost-porter exposure at 30%. I'm curious if you guys are the the importer of records on your products and have you spoken to your customers about their ability to absorb some of the tariff costs or is it something that's going to be shared by both you and the customer.
Speaker Change: So, generally speaking, I would say the majority of our cross-border revenue is within the composites segment. So there's a little bit on connections, but composites is really rather bulk of it later.
Speaker Change: and it's dependent on the business line. But for FlexPipe, generally we are the main quarter of record for Zerxes, generally we are not.
Speaker Change: So, I think what we're going to see if tariffs go into place on products that we manufacture.
Speaker Change: are some interesting conversations. Obviously, those conversations have been happening and we'll continue to happen but I would anticipate
Speaker Change: that in most cases we would be causing the cost of those tariffs to our customers, and depending on the circumstances there may be one or two cases where there is a little bit of a split, but largely speaking I think this will be a cost that our customers ultimately are better positioned to absorb than we are.
Speaker Change: What I would just say is 100% of the product that we manufacture, that is sold cross-border, is USMCA compliant. So as the tariff situation stands today, none of our products are subject to tariff.
Speaker Change: but obviously that made it both. And then the last thing I'd say is, I think we've demonstrated that we are a nimble organization. We've established a formal robust U.S. manufacturing footprint over the last 18 months.
Speaker Change: We are far better positioned to navigate this set of circumstances today than we would have been two years ago and we have already pre-positioned a fairly substantial volume of finished goods, flex pipe inventory in the U.S. That's the one major business line where we are the importer of record. [inaudible]
Speaker Change: Yeah, that makes a lot of sense, Mike, but have your customers spoken to any demand destruction if they're the ones that are going to be absorbing the costs? Maybe it's too early to comment on that, but any commentary around that would be great.
I think the one the one business flying where [inaudible]
Speaker Change: If tariffs go into effect for a meaningful period of time, then one business line where we know there will be destruction of demand is in the old sex sector.
Speaker Change: and that is more to do with our customers' light checkings than it is to do with us.
Speaker Change: I would say broadly speaking and as we've discussed many times.
Speaker Change: Power Generation, Power Distribution Network in the Connections Technology segment. We make up a very small percent.
Speaker Change: digital total project cost. I think a tariff on our particular component of that cost is unlikely to cause lower activity from customers. We just have to be thoughtful and keep an eye on how our competitors are behaving, but broadly speaking I think we'll see our competitors in post business lines impacted by a similar degree.
and David O'Connor.
Speaker Change: Again, that's perfect. Maybe a last one for you if I hop back in the queue.
Speaker Change: The backlog for traditional field tanks seems quite strong heading into 2025.
Speaker Change: Just curious how many months of backlog you have today and how that compares to probably this time last year, and then within the backlog I'm guessing a lot of that has to do with larger and more complex tanks, so potentially even higher margins than we've seen in the past.
Speaker Change: So to address the last point there, we certainly have the expectation that these delivers higher, full-year margins, 25 than it did in 24.
Speaker Change: The backlog as we sit here today, well, we won't give a perfect number to you. It is as high as it's been since January of 2022. It is more than double where it was this time last year and it represents the majority.
Speaker Change: Over the revenue we expect that business to generate in 2025.
Thank you.
Speaker Change: Okay, that's perfect. I'll hop back in the kit. Thanks a lot. Thanks.
Speaker Change: Our next question comes from a line of Yuri Lynk with Canagorgenuity [inaudible]
Hey, good morning, guys. Good morning.
Um, I just wanted to chase down a couple of, um...
The Screen Items That You Called Out [inaudible]
Is that still the plan?
Speaker Change: Yeah, so Yuri, what I would say is we have executed all of the expected reductions, and as part of that program when we evaluated it, it was more of a workforce reduction program as a totality for the organization to match demand in the market.
Speaker Change: and because of that, we were able to classify it as a restructuring activity, so I know that was a departure from what we thought we would be.
Speaker Change: But if you think about, I'll go ahead and adjust a couple of other points with my comments. If you think about, if you were to subtract that five millionish of severance cost.
Speaker Change: and then we had a discrete item related to one of our customers that was $2.6 million, I would add that back in terms of just getting to a normal operational result and the million dollars of tariff related cost movement across the border.
Speaker Change: You get to a roughly equivalent place, so I think the EBITDA at a reported level is roughly what an operational normalized.
Speaker Change: Ebetta would look like. So, you know, a few things embedded in that comment, but I just wanted to take the opportunity to address each of those.
and then on the on the savings site, as Tom said,
when we...
Tom Holloway: We worked our way through the middle portion of 2024. We were still a little more optimistic about the oil field and automotive markets that we would be encountering in the latter stages of 24 into 25.
Tom Holloway: Obviously, we tempered those expectations and did so late in Q3, early Q4 and therefore made the decision to take cost out of the organization. So, the way we sit today, I think we have the right cost base for the revenue levels that were anticipating in 2025.
Speaker Change: Okay. And then transaction expenses associated with AmeriCable, I think you were talking 8 to 9 million in Q4 and I saw 1.7, so are they getting pushed into Q1 and how will they be treated in your EBITDA?
Speaker Change: Yeah, great question. So, the eight to nine still a pretty good estimate. The 1.7 was just incurred in the fourth quarter And we added it back to EBITDA for the first quarter you'll see the balance of those costs hit and also be added back to EBITDA.
Speaker Change: So no departure from overall treatment just because the timing crossed the year, some of those costs crossed the year as well
Speaker Change: Okay, and last one, just MEO, given some of the deferrals, can you just update us on what we should expect in Q1 and Q2 of 25, please, thank you.
Speaker Change: Yep, of course. So we expect any cost of $78 million in 2025, roughly evenly spread across the first two quarters, I think three to four each quarter, all in the connection technology segment. I just reiterate the comments I made on the script. There will be no...
Speaker Change: MEO costs and composite technology is going forward, so we are finished with that process.
David Ocampo, David Ocampo, David Ocampo,
Thanks, I'll turn it over
Thank you.
Speaker Change: Our next question comes from Tim Monachello with ATB Capital Markets
Hey, thanks for taking my question.
Um...
Speaker Change: I'm curious on the flex pipe, your competitors, your lawyers for better, and their key floor results are signaling through lower quarter to quarter revenue in their business in Q1. Sounds like, you know, you're not seeing that or maybe market share gains are stronger for you. Can you talk a little bit about the near term outlook for last night?
Speaker Change: Certainly, so you're right when we generally look at Flex5 I think.
Speaker Change: Q4 of 24, Q1 of 25 are probably going to be similar in terms of revenue.
Speaker Change: As you've seen consistently over the course of the last year, despite a fairly aggressive reduction in total completion activity in North America, we've been able to drive incremental gains modest but incremental nonetheless.
Speaker Change: This really is an artifact of us introducing larger diameter products that effectively doubled the addressable market for that business mine. We introduced in late 21 and then into 22 and over the course of 23, 24, I'm going.
Maneu to 25, with maturing on market share.
Shove.
Speaker Change: That's really the primary driver, larger diameter products in Flex5 made up a little over one-third of total revenue during the full year 2024, so continuing to progress nicely.
Speaker Change: and in addition to being able to sell large diameter where previously we couldn't, it also gives us access to some customers who consume both large and small diameter but prefer to buy everything from a single vendor.
Speaker Change: So as we think about our revenue progression over the course of 24, it hasn't just been large diameter growing, there's also been some share gains in your customer onboarding with our traditional smaller diameter products as well.
Speaker Change: I think one of the things we're most excited about in 25 is, including not the market conditions, but our ability to perform within those markets and the rate of progress that we're making.
on being in a position to finally offer.
Speaker Change: Seven-inch and eight-inch products, so the next step up in size, which as I said on the call would be, you know, open another 50% addressable market. So I think we'll be in a position to start talking to customers about those products, very late in 25 into early 26.
Speaker Change: and the future, I think, for FlexPipe over the next several years, even in a relatively flat North American operating environment, is really quite bright.
Okay, that's so cool.
I guess in an environment where tariffs are implemented.
Speaker Change: The FlexPite business might be at a cost disadvantage to its largest competitor in the U.S.
Speaker Change: Do you expect to continue to pre-position inventory through the first quarter or until tariffs are ultimately either imposed or...
Speaker Change: for cancelled. And then secondly, if you do see a longer term duration for tariffs, are you thinking about moving production lines into the US because you have some more space available in Rockwell?
Speaker Change: Yeah, we certainly have optionality, which is a very healthy place to be, as we say, the rock wall facility is up and running and beginning to increase its output and it has substantial floor space available if we wanted to put incremental production there.
Speaker Change: I think it's a little early to be postulating on whether we would move any production lines, a thought.
Speaker Change: I'd say we continue to ensure that we have a robust volume of finished goods inventory in the US so we can respond to customer demand quickly and do so without tariff implications.
Speaker Change: I think all of our competitors in this space will have some degree of tariff impact, whether it comes from crossing borders, in our case, or it comes from tariffs that apply to steel and other metallic components in other cases.
Speaker Change: So I'm not sure we're going to find ourselves at a true cost disadvantage and certainly if we were to believe that tariffs were here for the long term.
Speaker Change: We would of course look at balancing production between our Canadians and US footprints to ensure the total cost of delivery to our customers is as low as possible.
Speaker Change: Okay. And then more broadly on the composite technology segment, when do you expect to see the underabsorption across the footprint list?
Speaker Change: You know, facilities are wrapping up in the U.S. to dissipate and marginalize.
Speaker Change: I think we are approaching a normalized condition as we roll into the second half of this year obviously progressive so and he will see improvement as we go from Q4 into Q1 and then into Q2 and then beyond
Speaker Change: So we're moving in the right direction, very pleased with the progress that the teams are making in the new sites.
Speaker Change: and specifically just call out that we were able to get up and running incremental 12-foot tank production capabilities in our Blythwood, South Carolina, Zerxes facility early in the New Year.
Speaker Change: So we have improved our ability to serve that very large tank market, which is predominantly serving AI data centers and other standby fuel and water storage markets.
Okay, that's helpful. And then, Amber Cable.
Speaker Change: He's talked a little bit about how integrations are going so far and you one-time costs if you can quantify those for...
Speaker Change: 2025, perhaps even for Q1 if that's possible. And then interested to know a little bit more about these cross-selling opportunities, five million of onboarding costs that you're expecting, what do you think that yields? And is that a cost that you would expect to incur?
More regularly, if you see increased.
Cross-Silling Opportunities Indicandors, that moreā¦ [inaudible]
Speaker Change: A one-time sort of setting up of some sort of manufacturing capabilities or something like that in Canada.
Speaker Change: There's a lot there. I'm going to try and cover all of that and maybe eat a little more. So, bear with me. Yeah, we're excited about Amber Cable, and I tell you that from every interaction we've had, the Amber Cable team are excited to be part of Matt.
Speaker Change: Systems were not making fundamental change in their business, we're asking them just to keep doing what they're doing.
Speaker Change: and they're doing it very, very well. So as we sit here today, I think the thesis behind the acquisition remains fully intact.
Speaker Change: and we have made enough progress to, I'd say, expand our confidence.
Speaker Change: that the cross-selling opportunities between Schrofflex and AmeriCable are there, they're real, and customers are very interested in those conversations.
It takes time.
Speaker Change: So, get to a place where you convert opportunity into revenue, but as we said on the call earlier I think.
Speaker Change: as we roll into the second half of the year and we can start to see some modest.
Revenue coming from Cross Selling.
Speaker Change: The opportunity is predominantly to bring medium-voltage cable produced by hammer cable across into some of the higher margin industrial and infrastructure opportunities that we will serve in short flex.
So, that'll be step one
Speaker Change: But the opportunity continues to progress over time, and I think we'll be quite robust as we roll into 26. We are making modest capital investments in AmeriCable during 2025.
Speaker Change: James, going to be a little bit of growth capital that goes in to ensure that we are not.
Speaker Change: Holding up the opportunity to take advantage of these cross-selling capabilities, but I think there'll be a little bit more more capex that goes into that business as we go into 26, 27 to really default their productive capabilities.
Speaker Change: in terms of the business itself. It depends on the year but some, you typically 70 to 80% of the revenue of Amart Kable is MRO.
Schoen
Speaker Change: Mindsites, offshore installations, et cetera, et cetera. This year, just looking at what we can see right now, I think the timing of those projects will mean that Q1 is the most robust quarter of the year, and Q4 is likely to be the least robust.
Speaker Change: That doesn't rely on some seasonal sequencing, it's just purely timing of projects, but very nice to have the strongest quarter of the year really here, right on the doorstep.
Speaker Change: I still think that in terms of reported EBITDA that comes from this particular business, 25 is going to be somewhere in the $65 to $70 million range, clearly we're not going to break it out in our financial reporting but just to give you a feel.
Speaker Change: and I think that that includes about $5 million plus or minus of onboarding costs that I don't believe will be repeated as we roll into 20.
Speaker Change: Lee Six, these are things that legitimately are one-time costs to get a business onto a new platform, incorporated into a new corporation. It's a variety of small things, there's no one big thing.
Hopefully that gave you what you were looking for.
Thank you.
Speaker Change: Our next question comes from a line of Ian Gillies with Steeple.
Morning everyone.
Good morning.
Thomas, this one's probably for you. Can you?
Speaker Change: Maybe provide a bit more detail on what's occurring with this inventory revaluation at transaction for Amber Cable and the headwind is going to provide to margins. And then the follow on piece into this question is.
Speaker Change: Yeah, great question. So the technical, I'll answer the second question and come back to the first one. So the technical rules require when you acquire finished goods in Ventory so that you know three stages, raw materials with finished goods, each one progressively more ready for sale.
Speaker Change: When you acquire something that's closer to finished and you have an already stated margin with the customer it's already allocated to that customer with those margins it effectively requires you to state that inventory at the value you're selling it to the customer.
Speaker Change: So it eliminates your margins that is the ultimate impact at the top level of financial reporting.
In this particular case,
Amber Cable's inventory turns very quickly.
Speaker Change: and we would anticipate that all of the items being marked up are gone by mid-year, probably even by the first quarter. So let's just say by the middle of the year all of that inventory that's marked up with reduced margins will be flushed out of the system.
from A. [inaudible]
Speaker Change: How we're going to reflect it perspective, the reported EBITDA, before adjustments will include those reductions to gross margin, but we will add it back as an EBITDA adjustment.
Speaker Change: so that you will see adjusted EBITDA reflecting the actual performance of the business, which does not include this purchase accounting adjustment. So,
Speaker Change: Hopefully I covered all of those items in there. I believe it's amounting to something like four to five million dollars of inventory that gets marked up. So it's not a material impact to the year and we'll adjust that out.
I understand that that's helpful.
Speaker Change: Mike, I acknowledge you don't want to talk too much about the Amer-Cable cadence, and you've said that revenue is going to be...
Speaker Change: is still in line with what you would have anticipated that position, but given the Q1s going to be stronger.
Speaker Change: Maybe I'll try and just see if you want to provide what percentage of you think that's full your revenue likely comes in Q1 just because I think a lot of us probably have models that show probably stronger seasonal dynamics in the middle part of the year and just to get the allocations appropriate.
Um...
Speaker Change: Yeah, I think we're going to be a little bit careful because obviously things deliveries don't always happen exactly when you think they will but I...
Speaker Change: I think you might be on the order of 30% of the full year revenue in the first quarter.
Speaker Change: Thank you. That will be helpful for us. And then Tom, last one, can you just...
Speaker Change: Repeat what you said about Proforma Leverage X-Leases, X-Vine 24, because I know we add the withleases in, but I just want to make sure I understand the commentary correctly.
Speaker Change: Yeah, of course. So the reported number is 1.0. If you were to adjust for the Emmercable Transaction, it's 2.5, including leases.
Speaker Change: If you adjust those leases out, it's about 0.8 of a turn, so you get to 1.7
So, that's how the numbers flow . . .
Speaker Change: The seasonality of the business, as you know, Q1 tends to be a little lower this year, that may be a little different for us, but I think what you should expect is that
Prima-Turjectory, that...
Speaker Change: That net that's your Justity with Dom moves up slightly into one just because we lose some big quarters.
Speaker Change: Replace with slightly smaller quarters in the calculation and then it starts to move down quite nicely from there. The other thing I'll just comment on is we have already started repaying the debt modestly at this point, but by the end of the first quarter you should expect that we will have paid down some of that debt. [inaudible]
Understood.
Speaker Change: and then last one from me, apologies if I missed it, but can we get an update on what's occurring in the stock market with respect to connection technologies? That had been a margin drag. It was supposed to stop mid-year. Is that still holding true?
So the industrial stock demand continues to be fairly robust.
At this point, I think we're likely to see relatively
Deity, Revenue Contribution, coming from that piece of the business.
Speaker Change: and as we rolled through this year, our expectation is that we see the...
Industrial Project, [inaudible]
Speaker Change: a nuclear infrastructure revenue streams starts to become bigger percentages of total revenue. So just by that fact I think we see margin progression in a positive direction of the course of the year. As we said here today, the stock industrial marketplace is still fairly competitive.
Speaker Change: So, haven't yet seen a material move up in the margins associated with that specific...
Speaker Change: Josephic Revenue String. But I do believe that as we roll through the first half of this year, we're likely to see it start to expand as activity more broadly grows competitiveness in that space tends to decline.
Understood. Thanks very much. I'll leave it there. Nice.
Our next question comes from Michael Tupholme with Kitty Cowan.
Thank you. Good morning. Good morning.
Speaker Change: I know you've talked sort of high level about your revenue expectations and indicated that you expect.
Speaker Change: Legacy Business Lines with the exception of FlexPipe to all seed growth. I wonder if you can provide any more detail just to help us understand, sort of, order of magnitude, variances across the different areas in terms of the growth rates just.
Speaker Change: Not sure how much you can say, but any incremental detail just on revenue growth expectations for the legacy businesses.
Speaker Change: for 2025 as a set of perhaps flex pipe push, I think you've been clear on.
Speaker Change: Yeah, no problem. I'm happy to do that. At this point, and obviously still with the caveat that if Taurus come, something could change. I think an excluding flex pipe, we would expect each of the other three business lines to achieve their 10% year-over-year growth rate.
perhaps modestly better in some cases.
Tom Holloway: Tom, do you want to comment on anything below the revenue line?
Tom Holloway: Yeah, I think if you wanted to look at the full year and sort of bridge at a very high level from one year to the next, then you said, you know, we had 108 reported for 2024, Emmy O was roughly 18 million plus we had a provision we took into for and some tariff related costs.
Tom Holloway: You know, that's $21.22 million. That gets you to around $130, adjusted.
Adjusted for MEO.
Tom Holloway: that gets you into the 180s, and then there will, I'll just remind everyone, there will be a little bit of corporate cost.
Tom Holloway: Creep next year because with not hitting targets this year incentives were at a much lower level so we'll reset those from a target perspective so there's a little bit of incremental cost there and the TSA with Teneres is dwindling so the reimbursement for some of our fixed cost does go away.
Tom Holloway: So I know there was a lot of numbers I just threw at you, but I wanted to provide a little bit of a bridge so you can very quickly walk from where we reported to where we might be next year.
Tom Holloway: Okay, I know it's really helpful. I may have to go to work through some of that offline, but maybe just one quick follow up on all of that, which might be helpful for people. So...
Speaker Change: I think what you left out when you talked about the 180 is the actual growth coming from the top line growth that Mike talked about in the business lines. So the suggestion there, if we took, I think it was the one.
Speaker Change: 130, that's the the base off of which would be growing that 10% then add in a hammer cable.
Speaker Change: Yeah, I think that's a reasonable way to look at it.
Okay.
Speaker Change: Okay, perfect. And I mean, I guess we can maybe try to back into this, but maybe just to ask sort of higher level as far as margins for 2025. I mean, you spoke earlier on the call of still very much targeting.
Speaker Change: EBITDA margins around the 20% level for the business going forward.
Speaker Change: What sort of underlying margins will look like in 2025 and maybe how they kind of progressed through the year and recognizing, of course, there are the MEO costs to consider as well?
Speaker Change: So, I'll offer some perspective. Tell me, have some additional comments. I think you're likely to see...
Speaker Change: Generally, what we've seen in most of recent history, which is where the, you know, second and third quarters tend to be our most robust, just given the seasonal cycles in some of our businesses. So I think those are looking to represent the upper end of the range that we will see from a quarterly EBITDA margin perspective.
Speaker Change: 2025. Thank you one and thank you for likely to be on the lower end of the range.
Speaker Change: and then gone average, you know, we're in the mid teens for the year and obviously pushing to try to drive beyond that if we can avoid tariffs and we can execute very well in our production footprints across the company, there is absolutely upside potential.
MacEachern.
Perfect. That's so very helpful. Thank you.
Speaker Change: Probably for Tom. Question about depreciation amortization. The level we saw in 2024, is that representative of what to expect going forward, or is there much change given Amer-Cable, plus also the new facilities?
Speaker Change: Something on the order of mid-teens, maybe low-teens, amortization annually for the intangibles.
Speaker Change: so that will be an ad to the bottom line, not to the EBITDA, of course.
Speaker Change: from a depreciation on the asset perspective. The number does move up in 2025.
Speaker Change: A bit, just as you say, because we do have some new plants coming online.
Speaker Change: It's not all of that material because most of the capital has already been spent and allocated though.
Speaker Change: I can provide a little bit more detail. I'll dig that out though.
Speaker Change: That's perfect. Thank you. And then I guess sort of similar question, just least liabilities. Do they deviate much going forward from what we saw at the end of the year?
Speaker Change: They should not. So what you saw at the end of the year didn't include all of the AmeriCable, but the AmeriCable ad is pretty small and we've taken some actions to reduce a couple of leases going forward as well. So I think it'll be in the same range as we report Q1. So you should not see material moves.
Speaker Change: It's perfect. And then just lastly, here before I turn it over, can you talk about expectations for changes in non-cash working capital in 2025, including cadence throughout the year?
Speaker Change: Yeah, I think the cadence would be similar to what we've typically seen, which is a Q1 that has an outflow of working capital for a variety of reasons, you know, incentive payouts and some, especially this year, build relating to the tariffs.
Speaker Change: I think that flattened out in Q2 and Q3 and then by the fourth quarter which is what we saw on this fourth quarter, you should see a pretty good working capital release.
Speaker Change: So that's the trend, I would say. I think on the whole we'll see a relatively flat working capital profile for 2025 just simply because there's there's enough things
Speaker Change: moving with new plants and a variety of tariff actions that were taking, regardless of whether they go into effect, that are impacting our numbers slightly. So I think you should expect roughly flat for the year and the cadence as I referenced.
Speaker Change: That's all very helpful. I will leave the third. Thank you.
Thanks, Michael.
Speaker Change: That concludes today's question and answer session. I'd like to turn my call back to Mike Reeves for closing remarks.
Speaker Change: We thank you for joining us this morning and look forward to sharing an update in May for our Q1 results and have a great day.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.