Q1 2025 AirBoss of America Corp Earnings Call and Annual Shareholders Meeting
The AirBoss of America
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[inaudible] The AirBoss of America
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AirBoss of America
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Good morning, ladies and gentlemen, and welcome to the annual General meeting of shareholders of Airbus of America Corp.
Today's meeting are available through both the video Oh conference facilitator.
Accordingly, I would like to welcome everyone who's been able to join US today in one form or another.
I'm Grant and shocked chairman and co CEO of Airbus of America Corp.
Joining me today are Chris <unk>, President and co CEO, Frank and Tele CFO, and Christopher Gal, EVP and General counsel.
I would also like to introduce our board of directors, who are participating all electronically.
Anita Antenucci, David Campbell, Larry Joanne O'connor, Robert Mcleish, Stephen Ryan and Alan Watson.
For your information, we will start the meeting by addressing the formal agenda matters. Once all of these matters have been addressed Christmas attackers, Frank until he and I will each make a short presentation, including a discussion of our first quarter twenty-five results a brief overview of last year and an update of our strategic initiatives.
We will then follow that with a Q&A session, where we would welcome questions from participants.
In conducting the business of the meeting I would appreciate your cooperation in allowing us to move efficiently through the agenda.
In order to make the best use of our time certain shareholders have been asked to move and second the resolutions, which we will consider at the meeting.
I will call on them at the appropriate times.
I would now like to call this meeting to order.
Christmas guys, because I myself waxes co chairs of the meeting and Christopher Go will act as secretary of the meeting.
The Secretary has advised that annual report containing the audited consolidated financial statements of the corporation for the fiscal year ended December 31, 24 was mailed to the shareholders of the Corporation on April 11th 25.
The notice of this meeting the accompanying management information circular in the form of proxy were also mailed to the shareholders of the corporation on April of 'twenty five.
I direct that the proof of service be annexed to the minutes of this meeting.
Chris and myself, our Chief Financial Officer, Frank until he will be available to respond to any questions concerning the financial statements.
Question period that follows the formal business.
Before proceeding with the business of this meeting I would like to take a moment to discuss the voting procedure.
Each holder of common share of the corporation is entitled to one vote for each common share held.
There are three formal items of business to be.
<unk> dealt with today.
To receive the annual report and financial statements of the Corporation for the fiscal year ended December 31, 24, B to select each of the seven nominees elected directors to the board for the ensuing year and.
And C to Reappoint Corporation auditors KPMG LLP for the ensuing year and the authorization of the directors to fix the auditors remuneration all as described in management information circular to the corporation dated April 25.
With the consent of the meeting Representatives of Computershare Investor Services, Inc. The Corporation's Registrar and transfer agent will act as Scrutineer and report the number of shareholders present in person and the number of shares represented in person or by proxy.
I will now ask I'll ask the secretary to confirm the quorum for this meeting.
Mr. Chairman I confirm we have at least two persons present, holding or representing by proxy 25% of the eligible votes, which results in a quorum.
As a quorum is present I declare this meeting properly constituted.
The Scrutineers report on attendance be annexed to the minutes of this meeting.
As the first item of formal business I'd ask Frank until he our Chief Financial Officer at your table Air buses annual report to shareholders, which includes the audited consolidated financial statements for the Corporation for the fiscal year ended December 31st 24, together with the Auditor's report.
Mr. Chairman the Corporation's fiscal 2024 annual report is tabled.
Yeah.
Thank you Frank.
A copy of the 'twenty 'twenty four annual report has been mailed to all shareholders, who requested a copy copies can be found online under Airbus profile at SEDAR plus dot com.
We will now move to the second item of formal business the election of seven directors to Airbus as board of directors.
Eliminations I've already been proposed by management and the proxy circular.
All seven of our current directors have agreed to continue serving on the board of directors.
Details about each of the director nominees are contained in this year's proxy circular.
Shareholders are required to cast their votes for each individual director nominee rather than voting for the entire slate.
The meeting is now open for nominations for the election of seven nominees.
Mara said he would you. Please nominate the individuals listed in the proxy circular as directors for the coming year Mr.
Mr. Chairman I nominate each of the need to Antenucci, David Campbell, Larry Joanne O'connor, Robert Mcleish, Stephen Ryan P. Granville Shack and LNG Watson as directors of Airbus to hold office for the ensuing year or until their successors are elected or appointed.
Thank you Peter Garuda will you second the nominations please Mr. Chairman I second the nominations.
Thank you are there any other nominations.
I declare the nominations closed.
Morris Vad resolution please Mr. Chairman I move the following resolution be it resolved that each of the need to antenucci, David Campbell, Larry Joanne O'connor, Robert Mcleish, Stephen Ryan P. Granville shock in LNG Watson be elected as directors of Airbus for the ensuing year or until their successors are elected or appointed.
Peter is secondly resolution Mr. Chairman I second the resolution.
Thank you.
As you know management solicited proxies for the business of today's meeting on behalf of management I received proxies representing over a majority of votes cast for the election of each of the directors.
Named in our proxy circular.
Based on the proxy report received the majority of the shares voted were cast in favor of each of the management's nominees accordingly, along with myself. The following other six nominees have each been properly elected as directors for Airbus for the ensuing year.
I need to add to Nucci, David Campbell, Larry Joanne O'connor, Robert Mcleish, Stephen Ryan and Alan Watson.
If any shareholder or proxy holder is interested in an exact number of votes cast for or withheld from each nominee you can get the particulars after the meeting from the Secretary.
Our press release and report on voting results, indicating the detailed results of the vote on the direction of the directors will also be publicly filed after this meeting on SEDAR plus.
The next item of formal business of the reappointment of KPMG LLP as auditors of the corporation and the authorization of the directors the fixed remuneration of the auditors.
Morris and I have a resolution please.
Mr. Chairman I move the following resolution be it resolved that keep EMG LLP. The president auditors of the corporation are hereby reappointed auditors of the corporation to hold office until the close of the next annual meeting of shareholders or until their successors are appointed and that the directors of the corporation are hereby authorized to fix the remuneration of the art.
<unk> in such amounts as the directors may and their discretion determine for the current fiscal year.
Peter will use a second resolution Mr. Chairman I second the resolution.
Thank you on behalf of management I received proxies, representing over a majority of votes cast for reappointment of KPMG LLP as auditors of the corporation and authorization of the directors the fixed remuneration of the auditors based.
Based on the proxy report received the majority of the votes.
The shares voted were cast in favor of the resolution.
Accordingly, I declare.
Sorry.
So there is no further business for this meeting I will request a motion that the formal beam has been terminated.
Morris will you please bring a motion to terminate the meeting.
Mr Chairman I move that the meeting be terminated.
Thank you Peter will you second the motion Mr. Chairman I second the motion.
Thank you all those in favor of the motion please raise your hands.
Contrary if any.
I declare the motion carried and the.
The formal business of the meeting concluded.
With the formal meeting now over we'll move to our management presentation.
In terms of an agenda, we will start with our annual Chairman's Awards, followed by a management presentation and overview of the first quarter results, which were released last night.
And then we will take questions starting with analysts covering our company and for our band from shareholders to respect People's time, we will do our best to be expedient.
Turning to the annual Chairman's awards ever.
Every day at Airbus Theres inspirational work being done across all of our divisions in all departments with team members going above and beyond to ensure our continued success.
In 2019, we created our annual Chairman's Award program to formally recognize the special efforts by by Airbus employees. It.
It is a peer to peer recognition program that as employers identify recognize and appreciate a broad range of strong contributors, who go above and beyond for Airbus.
So that's been the chairman's recipient, we ensure that we have a strong representation of our Airbus employees by presenting an award to one peer not nominated hourly employee one parent nominated salary employee who have both shown exceptional dedication and commitment as they have gone above and beyond for boss.
I am pleased to announce that yet again, we had great employee participation. This year with a total of 300 and 302 employees nominated from across the organization and the selection on 13 divisional winners.
From these 13 divisional winners there were two employees that stood out and best exemplified Chairman Award attributes.
I'm delighted to announce today that this year's winners are Amy daily customer service representative the master schedule or from Auburn Hills, Michigan.
And William Prince team leader and the filter production from Jessup, Maryland.
Amy as housing continues to have a major impact on the people and business. She continues to be a business partner to the plant manager.
<unk> consistently towards excellent.
Excellence as the metrics continued to show.
Her deep expertise strong leadership abilities.
We had a problem solving of help resolve challenges and can continue to drive success for our customers and Airbus.
Trey.
Hey, William Pence.
[noise], leading filter production in 2024.
This challenge head on and executed at a high level to produce more than 80000 filters in the final three months of last year.
To do this you had trained more than 10, new staff members.
And manage a team of 15 our workers.
Trey made himself available to complete whatever costs are required to get the job done and did an excellent job communicating what you needed.
I'd like to congratulate both Amy and training on being the Chairman of award winners and to recognize their efforts. It will both be receiving the 2024 Chairman Award Trophy.
And a few other prizes to be given at a later date.
On behalf of the board and our shareholders I want to take this opportunity to thank.
All of our nominees and winners across the organization for their outstanding contributions to Airbus.
Before we begin with the next portion of our presentation I'll remind listeners that our remarks today contain forward looking statements included in our estimates of future developments.
We invite listeners to review the risk factors related to our business and our annual information form in our MD&A, both of which are available on SEDAR plus on our corporate website.
Also we will.
We discuss certain non-GAAP measures, including EBITDA reconciliations of these measures are available in M. DNA and finally, please note our reporting currency is in U S dollars.
References today will be in U S dollars, unless we indicate otherwise.
With that I'll now turn this call over to Chris <unk> for the operational review.
Chris Thank.
Thank you, Brian and good morning, everyone.
Airbus experienced positive traction in Q1 2025, following a challenging year in 2024, despite pronounced headwinds, which continue to impact each segment to varying degrees.
The company continued to navigate the obstacles related to economic and geopolitical challenges, including market softness tariffs inflationary pressure and the potential for further escalating and retaliatory tariffs, while maintaining focus on risk mitigation plans, including managing costs and targeting continuous improvement.
Actions to build momentum at both Airbus rubber solutions and at Airbus manufactured products.
The increased economic uncertainty disruption of trade flows increased costs and strains on supply chain, resulting from these challenges management remains focused on the successful conversion of key opportunities to support future growth aligned with its strategic plan.
The company expects further uncertainty to persist in the coming quarters with volume recovery difficult to anticipate as any recovery could be impacted by the imposition of further tariffs duties or other restrictions on trade.
A significant portion of the product manufactured by the company in Canada are sold into the United States and may be subject to the recently enacted tariffs as well as additional tariffs, which could be enacted given the cross border nature of the company's business operations.
The company continues to evaluate and execute on contingency plans and is reviewing all available options to deal with these challenges, including rebalancing production and sales activities within the U S and Canada in order to minimize the impacts on the company and its customers.
Airbus Rubber solutions had improved results compared to the fourth quarter of 2024 with both revenue growth and margin expansion driven by an overall recovery and most customer sectors. However, there was volatility within Q1 2025, driven by the shifting tariff situation as customers attempt to manage the potential.
<unk> created by tariff headwinds the segment remains committed to execution on its strategy to deliver strong results by focusing on specialized products expanded production of a broader array of compounds, both white and color and enhance flexibility and attracting and fulfilling new business as a segment <unk> continued to invest in research.
And development to support enhanced collaboration with customers.
Airbus manufactured products experienced some positive traction compared to Q4 2024, specifically in the defense products business. Overall A&P also had a notable improvement compared to the first quarter of 2024, primarily due to the defense products business continuing deliveries on previously announced contracts and additional overhead.
<unk> carried out in 2024 to help mitigate volume softness.
Management also maintained its focus on operational improvements during Q1 2025 and continue to work with key customers with a goal of leveraging opportunities aligned with its growth initiatives.
The company continues to work closely with the suppliers and government partners to mitigate the previously announced delays it's been the Lear program and we'll provide further updates as more information becomes available.
The rubber molded products operations were impacted by continued volume softness related to the original equipment manufacturers shuttering production due to the impact of tariffs and the automotive sector, which continues to evolve.
The business continued its focus on managing costs.
And a commitment to drive efficiencies and best in class automation as well as diversification of its product lines into adjacent sectors.
I will now pass the call over to Frank for the financial review, Frank Thanks, Chris and good morning, everyone. As a reminder, all dollar amounts presented today are in U S dollars, except for dividends per share which are in Canadian dollars percentage changes compare Q1 of 2025 to Q1 of 2024 unless otherwise noted.
To be respectful of your time today I will link to be brief in my summary of our Q1 2025 results starting from the top line Airbus Consolidated net sales for Q1, 2025, or $105 1 million an increase of one 6% from the prior year.
The increase was primarily due to higher sales at Airbus manufactured products defense business, partially offset by lower sales in the rubber molded products business and lower volumes at Airbus rubber solutions.
Solidago gross profit for Q1, 2025 increased by $4 3 million to $18 5 million compared with Q1 2024, and consolidated EBITDA for Q1, 2025 increased to $8 million from a prior year of $4 3 million in both cases, the increases were driven by improved volume and mix at Airbus manufactured.
Specifically in the defense business, partially offset by additional softness experienced that the rubber molded products operations, along with softness across the majority of Airbus rubber solutions customer sectors.
Turning now to our individual segments net sales in the Airbus rubber solution segment for Q1 2025 decreased by 12, 9% to 57 million from $65 5 million in Q1 of 2024.
Volume decreased by 19, 4% with decreases in most customer sectors pulling volume was down 76, 3%, while non tolling volume was down 16, 4%.
Gross profit at Airbus Rubber solutions for Q1, 2025 decreased to $8 5 million from $11 million in Q1 2020 for gross margin.
Percentage decreased to 14, 9% of net sales from 16, 9% of net sales in Q1 of 2020 for.
The decrease in gross margin percentage was primarily due to mix while gross profit was lower in Q1 2025 compared to Q1 2020 for a lower volume, partially driven by tariff related volatility product mix, partially offset by managing controllable overhead costs and continuous improvement initiatives net sales in the manufactured products.
Segment for Q1, 2025 increased by 26, 6% to $53 6 million from $42 3 million in Q1 of 2024.
The increase was mainly in the defense products business offset by lower sales in the rubber molded products business.
Gross profit at manufactured product segment for Q1, 2025 increased $10 million from $3 1 million in Q1 of 'twenty four.
Gross margin percentage increased 18, 7% of net sales from seven 4% of net sales in Q1 2024.
The increase was primarily the result of improvements in the defense products business operational cost improvements and reduced overhead costs, partially offset by unfavorable volume and product mix in the rubber molded products operation.
Turning again to the consolidated results free cash flow for Q1, 2025 was $4 4 million compared to negative $7 4 million at the end of Q1 2024.
During Q1 2025, the company invested $1 9 million in capital equipment versus $1 6 million in Q1 2020 for.
Capital expenditures were related to cost savings initiatives growth initiatives and minor plant upgrades within arris and A&P.
By the end of Q1 2025, our net debt balance was $96 million versus $98 9 million at the end of Q1 2024, we expect to fund the company's 2025 operating cash requirements, including required working capital investments capital expenditures and scheduled debt repayments from cash on hand cash flow from operations and.
Committed borrowing capacity.
The company has a revolving credit facility that provides for a maximum borrowing of up to $125 million with a $25 million accordion.
As of March 31, 2025, total available borrowing capacity under the facility was $79 8 million with $54 $5 million drawn.
With that I will now turn the call over to Chris Chris. Thank you Frank.
As mentioned at the opening this meeting is being made available via conference call and via webcast. We will now take questions from individuals attending in person following which we will take questions from those who have submitted questions through the conference call line and then open up the meeting to questions from those attending via webcast for those on the conference line to join the question.
You May press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.
We will now open the floor to questions from anyone attending the meeting in person.
Hi.
Thanks for taking my question is Kevin from CIBC.
I appreciate that the recap of the Q1 results just wondering.
As you as you evaluate your portfolio like here and I guess with your improved outlook with defense spending just wondering how's.
How that might shift what you might view as core or noncore products within within within boss here. It seems like you have some good momentum across a number of your product lines.
And how has that shifted maybe some of the some of the initiatives you would've rolled out I guess at this time last year.
As you look to simplify your business.
Yes, that's a great question I'd have to say that our strategy remains intact, our view on core versus noncore Hasnt changed.
And looking at core versus noncore, we know that we have a lot of our product lines that have the potential to generate significant revenue for us the question isn't whether.
On a on a month by month or quarter by quarter basis. They are generating that revenue, but what sort of a long term view of where the corporation is going with respect to its different product lines. So we're staying steady.
Steadfast on the strategy that we developed last year.
That has been approved by the board.
And as we look at core versus noncore as noncore businesses start to do well, that's certainly a positive time to start looking at monetizing them and sticking to our original plan strategically.
That's helpful and just maybe my second question is.
You do have a manufacturing footprint.
On both sides of the border.
Any shifts in how youre thinking about your production.
Maybe one of these products are being produced to alleviate potential tariff risks or.
Or has it been challenging or maybe just the uncertainty makes it difficult to make those decisions today and until you have greater certainty on on on I guess, the the the tariff regime Youre working under just wondering how you think about shifting production between.
Canada, the U S to potentially mitigate tariff risk.
So we do have a.
Capacity in the United States to shift a certain amount of our production there if need be obviously, we've been operating under U S MCA and naphtha before that for many many years without any concerns in terms of your cross border shipments.
I'd say the one rebalancing are looking at the amount of capacity that we have in our rubber compounding just because of the flagship planters in Canada. We have two other facilities in our in the United States that also are compounding rubber.
And we just installed our new silicone line are in in Detroit as.
As well not thinking about tariffs, but just having it co located closer to its first customer right.
So I'd say, probably as we look forward here, we're going to be looking for opportunities to increase our rubber compounding capacity in the U S.
We do have a very strong mitigation plan in case.
Something.
Goes sideways, although we're feeling a little bit more optimistic that there should be some sort of trade solution validated between the U S and the Canadian governments, but we do have contingency plans in place that should be able to allow us to retain the work that we currently do in the U S of course this uncertainty is probably the biggest concern.
But I'd say in a longer term basis.
Establishing more compounding capacity in the U S is probably something that's gonna be a priority for us going forward.
Thank you.
At this time, if there are no more questions in the room I don't see any more hands.
We'll go to any questions that are queued up on the conference line.
Our first question comes from Tim James any color.
Right.
Please go ahead.
Alright, thanks, Thanks, very much good morning, everyone.
Chris maybe just looking at the first quarter here and staying on the subject of tariffs could you could you talk about what.
What youre seeing in terms of customer behavior in ordering.
On the rubber solution side of the business.
Just given sort of the uncertainty related to tariffs and again I don't know, whether there are sort of positives or negatives coming of that customers sort of ordering more product ahead of time or just sitting sidelines. Just if you could speak to the customer behavior in the last sort of weeks couple of months.
Yes, the customer behavior has been a really evolving and thanks, Tim for that for that question in the beginning there was almost kind of a.
Nonchalant approach from our customer base in the U S.
They werent following the tariff situation as much as we were we were the ones communicating with them talking about the necessity to qualify the production of their compounds in the U S or preparing them for having to pay the tariffs are you know on their material, but they were very non.
A lot about it because I think the assumption was that this was just a negotiating tactic by the President then probably it would be something that we wouldn't have to worry about I think as the first.
The rash of tariffs started to happen is as it related to.
Steel and aluminum and more recently the vehicle production.
It it took on a much more higher level of urgency from our customer base.
And so those customers are very quickly started working with us to qualify their material to be made in the U S. We have positioned both master batch and finished compound in the U S. In terms of a buffer so that we have inventory in the U S to be able to manage sort of a temporary.
Tariff applications, which are we haven't quite seen that yet, but we are protecting both our customers and ourselves you know from the from that perspective, and I think right now customers are working very diligently with us to make sure that they have at least they're they're they're products qualified out of our plants are out of our two plants in the in the <unk>.
<unk>.
And now it seems to have been shifted a little bit more optimistic and a little bit less intensity on from their perspective as they see a certain trade deals starting to come to the forefront theres. Some theres a report in the news today that there may be a trade deal between the U S and the U K that there could be announced soon.
I think as these trade deals start happening and I know, our our newly elected Prime Minister met with President Trump at the White House yesterday and appears to have.
Some level of optimism that we should be able to negotiate something so I think the customer sentiment has gone from almost a very nonchalant two very concerned and now somewhere in the middle a little bit more optimism that that something should be done now many of our customers.
Or some of our customers.
Have us dual sourced on certain compounds. So they have options to buy from us or other people, but we have a significant amount of customers that are using Airbus proprietary compounds and they of course are more concerned because.
We do produce a very high quality product.
Highly engineered product and it's very difficult for them, so that the prospect of them having to pay more for it is concerning.
But again I think right now of their overall concern is that the economy itself stays intact and their assumption is that there.
There should be some sort of a trade deal.
Negotiated that should protect them, but I think that's anybody's guess at this point.
Okay. That's a great answer thank you.
If I could ask a second question.
The within the manufacturing.
The products group.
As anti vibration you talk it all about in the first quarter.
Changes in margin percentages in those businesses and some high level erosion score.
Or was that specifically is it reasonable to assume that the growth in defense and the decline in A&P migration.
On a year over year basis margins kind of move Directionally.
In line with that in other words higher independent lowering antibody abrasion and then anything you can talk about.
In terms of sort of your long term expectations for margins in that segment either on a total segment basis or thinking about those two products.
Up separately.
Yes, we don't we don't give.
Information on margins product line by product line, but I think it's fair to.
Uh huh.
To say that the defense product will have a higher margin than the automotive products wood.
So having said that as the product mix shifts you'll see the margin shift as well in that particular way.
But then of course, it's not completely linear because there could be volume differences in sort of the product mix gets calculated on a on a total basis, but certainly the defense products and we are just in the process of launching the new mallow production.
Our out of our facility in in Detroit as well as some of it in our facility enact anvil.
So youll see that impact going forward.
Late Q2 and into Q3 and Q4.
Because it impacts of all of our all of our different plants.
Compounding the material in our North Carolina plant.
We're molding it in our plant in Auburn Hills, Michigan and of course, the Defense group is.
Selling and marketing and so you'll.
You'll see the defense products drive a higher margin, but the.
The products that we're making on the automotive side in the non automotive side. There has been some significant work done in automation and continuous improvement.
And we are also seeing a lot of interest in re shoring of material from China into into the U S. Right now. So so we suspect that we should be able to continue to drive margins.
Positively both on the defense and the nondefense part off of A&P.
Great. Thank you very much.
Our next question comes from.
National Bank of Canada. Please go ahead.
Hi, Thanks for taking my question.
You've highlighted a <unk> 25 volatility in your business.
Can you speak at all to how April is shaping up.
Does that volatility kind of continued into April and our customers kind of building up inventory to them.
Any potential tariff.
Yes, we started building some inventory in Q1, both on behalf of our customers and they also are you know the ones that we're concerned about it we're building up some of their own inventory as well.
In Q2, I'd say that we continue to see this volatility in the in our in April I think in probably early May I think now that we're getting towards the second half of Q2, we're seeing things kind of calmed down a little bit of normalize a little bit so.
Again, I think it kind of follows that same.
Answer that.
I just talked about with with Tim Tim James on the customer sentiment I think as customers are feeling better there I'm going back to a bit of a sense of normalcy now whether they're feeling normal is is justified or not I don't know, but I'd say going into the second half of <unk> of Q2.
We're seeing a little bit of that normalcy return I think the the big question right now is with some of these trade policies. What is the potential of an overall economic slowdown in the U S, which would certainly impact.
S more so than than our defense products, which are on a set schedule. Accordingly, but you know if there was a generalized a sort of a recession starting to brew.
Say that on.
The rubber compounding side on our automotive products, we may see some some headwinds there.
But at this point in time I think our.
People are feeling like.
We should return to some level of normalcy. Once these trade deals start getting put a.
Put to bed.
Okay.
And.
I mean, given all the moving pieces.
The tariff discussions in the news.
I was just wondering have you had to pay any tariffs across your product portfolio.
And.
How have.
The offset.
Make the pricing offset discussion how are these gone with customers. So far if you had to pay.
Well all of our.
Products that are currently shipped into the U S qualify under U S. N C. A so the fact that U S. MCA is still intact.
We have not seen any major financial concerns from from that perspective. However, we were very transparent with our customers and as you know Amit that we priced monthly.
To all of our customers and we were pre warning all of them that they had you know a couple of options to work with us on.
Qualifying their material in the U S.
Or be prepared to pay for whatever tariff comes about and so you can imagine how those conversations go they're not pleasant, but in.
In general our customers have been with us for years and years. Some 10 years, some 30 years.
Some new customers a little bit less but we have a very good working relationship with our customers.
And we expect you know.
That working relationship to help solve some of these pricing disputes if they arise but at this moment in time, we haven't had to go there and we're hopeful that the U S. MCA stays intact and we don't have to have those kinds of uncomfortable discussions with them and a lot of the defense products that we're making and and in Quebec to get export into the U.
We have a special clauses are in our in our defense contracts that allow them to flow duty free as well. So at this moment in time, we've not seen any major problems with it it's.
It's just that uncertainty because we don't know day after day, what new decisions are going to be made and in what could potentially happen.
Okay. Thanks for the color.
Just finally on the defense business can you give us a sense as to how your backlog for bids look like there.
And.
This.
At general size of what you're expecting.
In terms of awards this year that could materialize.
Well, we we went into 2025 with the biggest backlog that we've had on our defense product lines for a long long time and so we're.
Pretty optimistic that for the next period of time this year into next year that the that the defense products are going to be producing you know quite a bit of revenue and and contributing positively to the to the bottom line of the company.
We've stopped talking about pipeline and now just start talking about we're talking mostly about backlog. So certainly we are bidding on multiple programs all the time.
And we feel good about the general kind of trend of defense spending globally.
We announced.
Another award earlier on the <unk> side.
With a European customer and so we see a lot more inquiries that of Europe, who are really upping their defense spending we're seeing more opportunities in Canada, we're seeing more opportunities in Australia and throughout all of our NATO partners. So I'd say the pipeline is strong.
But were mostly I'm really.
Optimistic that this backlog is going to generate good revenue for us.
As New awards happen, we'll we'll be announcing them individually.
Okay. Thanks for the color.
Get back in queue. Thanks.
There are no further questions from the conference line.
Great. Thank you since we're concluding the questions from the conference call I would like to now ask Christopher Gal to read any questions that may have been submitted electronically.
Mr. Chairman that concludes all the questions.
Okay. Since there are no further questions, ladies and gentlemen, thank you for taking this time to attend this meeting.
Have a great day.
Yeah.