5N Plus (TSX:VNP) Q3 2026 Earnings Call

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5:23 Thank you. Good morning, ladies and gentlemen. Thank you for standing by and welcome to the Five In Plus third quarter 2026 results conference call. At this time, note that all participants are in a lesson-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star, then 1

6:54 on your telephone keypad. And if you require immediate assistance for the operator, please press star 0. Je vais maintenant céder la parole à Stefano Bertolli, directeur de communication et affaires publiques. And I would like to turn the conference over to your speaker today, Stefano Bertolli, director of communications and public affairs. Please go ahead, sir.

7:17 Bonjour à tous et à toutes. Good morning, everyone, and thank you for joining us on our Q3 2026 results conference call and webcast. We will begin with a short presentation, followed by a question period with financial analysts. Joining us this morning are Richard Perron, our President and Chief Executive Officer, and Alban Fournier, our Chief Financial Officer. We issued our financial results yesterday and posted a short presentation on the investor section of our website. We would like to draw your attention to slide two of this presentation. Information presented and remarks made by the speakers today will contain statements about expected future results and events that are forward-looking and therefore subject to risks and uncertainties. A detailed description of the risk factors that may affect Future results is contained in our management discussion and analysis of 2025, dated February 24th, 2026, and available on our website and in our public filings.

8:11 In the analysis of our quarterly results, you will note that we use and discuss certain non-IAFRS measures, which definitions may differ from those used by other companies. For further information, please refer to our management discussions and analysis. We now turn the conference over to Richard Perron. Mr. Perron, the floor is yours.

8:28 Thank you, Stefano. Good morning, everyone, and thank you for joining us. Five and Plus delivered excellent results in Q3 2026 with strong revenue and adjusted EBITDA growth. This was supported by higher volumes in both segments, while adjusted gross margins remained robust and increased sequentially despite the rising cost environment. Specialty Semiconductors was the primary driver of growth, reflecting higher volumes in terrestrial renewable energy and space solar power. We also began to see initial opportunities in recycling and refining complex germanium bearing feeds. Performance materials delivered high revenue year over year, primarily on stronger volumes of business-based products, while anticipated margin normalization continued.

9:15 Both businesses are proactively managing rising input metal and consumable costs through operating efficiencies, and our commercial discipline as discussed last quarter. In Q3, our operating performance under specialty semiconductors returned to more optimal levels following inefficiencies experienced last quarter. Alongside the mitigation plans implemented in Q2 to ensure customer deliveries, we have since largely addressed the underlying causes. Most of this work was completed in Q3. Looking ahead, operating demands across our operations remain high as we expand our business lines to meet customer demands. Discipline execution, unlocking further productivity improvements, and delivering operational excellence are essential.

10:00 I want to thank teams across the business for their responsiveness, ingenuity, and teamwork. Since our last earnings call, we announced two exciting initiatives related to our operations in St. George, Utah, which I would like to highlight. First, we were selected to receive a $7.3 million U.S. Government Award to establish production of gallium arsenide components for US defense applications. The work includes adding crystal growth and gallium arsenide compounding equipment on site. We will work with an initial customer to complete product qualifications before moving to control production. The project is intended to address a critical gap in the US domestic defense supply chain, which we are uniquely positioned to capture.

10:47 but the capabilities being developed will also support future production of gallium arsenide substrate and other advanced semiconductor materials for the defense and space applications. This will broaden our addressable market over the longer term. Given the strong demand for the expertise out of our St. George facility, we're also pleased to announce plans to expand our site by approximately 50%. The added manufacturing and product development space will improve site workflows and provide room for new equipment and capacity. Construction began in Q3 with completion expected in the second half of 2027. Equipment preparation will progress alongside construction to accelerate installation and ramp up once the site is ready.

11:34 With larger operations, we can better support growing demand in defense, space, solar, medical imaging and industrial sensing. Finally, at Azure, In Elban, Germany, I'm also happy to confirm that the planned 25% increase in space solar cell production capacity for 2026, announced last February, is ramping up as planned. With the project pipeline extending well into 2030, the team is developing and evaluating scenarios for the next phase of solar cell expansion. Any additional capacity will be planned methodically and in line with anticipated and or contracted demand. Across our strategic end markets, Underlying and long-term trends remain strong. Our focus is on scaling capacity to strengthen our position in critical supply chains and improving productivity and operating performance to gain economies of scale.

12:27 Our investments in Utah and in Germany, in addition to those completed in Montreal in recent years, all built on our Western manufacturing-based technical expertise and customer relationships in strategic sectors, from defense to renewable energy and space solar power. They support our long-term growth trajectory and our unique competitive position in a critical mineral transformation value chain. While we remain cautious in what remains a complex environment, we are pleased with our progress so far this year. We have diligently worked through operational challenges as the business has rapidly grown, and we have compelling organic growth plans in the works to capture even more customer demand.

13:13 I will now turn the call over to Alban to review the financial results in more detail. Alban.

13:18 Thank you, Richard. Bonjour à toutes et à tous. Good morning to all of you. Turning now to our strong financial performance in Q3 and year-to-date. Revenue for Q3 increased 30% to $136.4 million compared with Q3 2025. For the first nine months, Revenue was 376.6 million, also up 30% year-over-year. The increase reflected higher volumes in both segments, including terrestrial renewable energy and a more favorable space-solar product mix in specialty semiconductors, as well as higher bismuth-based product volumes in performance materials.

14:07 Adjusted gross margin increased 10% to $42.8 million in Q3. As a percentage of revenue, it came in at 31.4% compared with 36.9% a year ago and improved sequentially. Higher volumes in both segments contributed to the increase in absolute terms, while the year-over-year decline in adjusted gross margin as a percentage of revenue primarily reflected the anticipated normalization of performance materials margins. The impact of residual operational inefficiencies in our specialty semiconductor operations strongly reduced in Q3 as a result of remediation actions.

14:56 Adjusted EBDA increased by 7% to $31.1 million compared with Q3 2025. adjusted EBITDA for the first nine months was $86.8 million, up 17%, and putting us well on track to achieve our annual guidance target. Net earnings amounted to $12.3 million, or 14 cents per share, compared with 18.2 or 20 cents per share in the prior year quarter. In specialty semiconductors, revenue increased and Gervais Jacques. Higher volumes in terrestrial renewable energy and space solar supported the improvement and helped offset higher input and chemical costs.

16:15 Backlog remains at the maximum level of 365 days as per our definition, with the effective backlog for this segment continuing to well surpass the 12-month mark. In performance materials, revenue increased 20% to $35.7 million, primarily on higher business-based product volumes. As anticipated, adjusted gross margin as a percentage of revenue normalized to 31.2% compared with 53.1% in Q3 2025, reflecting higher metal input and chemical costs. Adjusted EBITDA was $9.2 million, down 31% from the prior year, in line with the lower adjusted gross margin. Backlog was 108 days, up nine days sequentially, reflecting the timing of contract signing and renewals, net of the realization of long-term contracts.

17:24 Turning now to a band sheet and cash flow. In Q3, 2026, cash used in operating activities was $2.3 million. Year-to-date, cash used in operating activities was $17.7 million, mainly reflecting the timing and scale of working capital needed to support growth. Net debt was $32.4 million at September 30th, compared with $50.3 million at December 31st, 2025. Our net debt to EBITDA ratio remained low at 0.31 times. Our financial position supports the investments required to meet demand, including the projects at our St. George and Azure businesses, which are within existing capital expenditure plan and supported in part by customers.

18:22 Turning to our outlook, on adjusted EBITDA, we expect Q4 to be stronger than Q4 2025 in absolute terms, supported by higher volumes, while keeping in mind that Q4 2025 included record quarterly performance in some of our strategic sectors. As a result, we expect to achieve the high end of our full year adjusted EBDA guidance range of between $100 million and $105 million. This outlook reflects our current visibility and the present assessment of a complex operating environment. including the demands of ongoing capacity expansion and production ramp-up.

19:09 Our near-term priorities are to meet customer commitments, expand capacity, and improve productivity. On margin, we continue to expect the adjusted gross margin as a percentage of revenue for the second half of 2026 to remain in line with the Q2 2026 level, plus or minus approximately one percentage point. In terms of proactively mitigating higher input costs across businesses, we will continue to make productivity improvements to gain efficiencies and economies of scale. We're also building in cost pass-throughs to customers, a process that should be substantially completed around mid-2027, with faster recovery in certain sectors and the specialty semiconductors, depending on customers, projects, and contractors.

20:04 As we close out the year, we remain focused on supporting customers, managing costs, and executing our productivity and capacity plans. That concludes our formal remarks. I will now turn the call back to the operator for the question and answer session with financial analysts. Thank you. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star 1 on your telephone keypad. If you'd like to withdraw a question, press star 2. One moment please for your first question. Your first question comes from Baltej Sidhu from National Bank of Canada.

20:57 Please go ahead.

21:00 Hi, good morning, everyone. Guys, congrats on the quarter. Thanks. Congrats on the quarter and big beat expectations with margins retrenching sequentially. Could you just briefly elaborate on some of the factors that drove that outperformance relative to Q2? And would you just suggest that being primarily driven by Bollings and Mixed Ribbon, or are there other items that we should be considering as we look forward?

21:28 Excuse me.

21:31 Good morning. I just want to make sure I understand your question clearly. Sequentially, our gross margin as a percentage of revenue has increased between Q2 and Q3. So the same for the adjusted EBITDA percentage, it has increased sequentially between Q2-26 and Q3-26. So I just want to make sure I understand your question.

22:04 Yeah, I'm just wondering if there's any other factors that supported that outperformance. Was it just mainly volumes and mixed ribbon, or are there other items that we should be considering?

22:16 Okay, so firstly, there has been a recovery in the operational inefficiencies that we flagged in Q2. We have taken remediation actions, and we now see the fruit of that, or the product of that. And besides, the volumes have been extremely strong. We've increased our deliveries. We've managed to build up economies of scale and efficiencies through stronger deliveries.

22:49 Great. And just two follow-ups there for me. So for the remediation efforts, how much did this contribute to margins during the quarter, and how much is, quote-unquote, left to be fixed?

23:05 I would say that most of the gain came from increased deliveries. So if you take a sequential improvement of a bit more than one percentage point, that was mostly due to increased deliveries and a smaller portion due to the remediation actions.

23:30 Okay, thank you. And then the other follow-up I have is the implied Q4 guidance, which would be implied at around $18 million at the high end of the guide. I just want to better understand the magnitude of the sequential drop. You know, appreciating that Q4 is typically a seasonal low. Could you help us better understand the factors that you're seeing or that are embedded within your guidance that you did reference in the prepared remarks that you expect it to be stronger on absolute basis relative to Q4-25, which printed at around 18.5 million? Yeah.

24:04 Traditionally, you will have noted that Q4s are always softer. So that's one aspect which we have taken into consideration in the preparation of our guidance. The other aspect is we are cautious. We operate in a complex environment. There are multiple factors which could influence our results in Q4. So we are taking a cautious position.

24:35 but there's nothing very specific to ILINE that we know as of today. And just to add, if you look at this guidance, it represents an increase in revenue of somewhere between 25 and 30% and an increase in adjusted BDOV more than 15% versus last year. So it's already, for us, a superb year.

24:58 Thank you. Richard, you noted in the MD&A and the prepared remarks the refined germanium opportunity. Can you just discuss or elaborate a little bit more on how the discussions with the primes are going and timelines? I noted that we could have equipment in place, or you may need to have it in place in Q4 of 27. How are the discussions going with the primes? Are you looking to expand that customer set? And what are the other avenues for value creation that you can do outside of refining the germanium metal?

25:28 At this point in time, as you know, we are expanding the building. And in parallel, we have also leased different other areas near our site in order to put together those equipment. Essentially, we're at a point where every quarter we're adding new equipment. We're getting different feeds that we are converting into metal to our clients and then converting that metal into products. But it's going to take Somewhere around a year, year and a half to put all that capability and capacity in place to achieve the full potential of, as we referred in our press release, a capacity of about 20 tons or so of germanium-based metal.

26:14 So progressively, Recorder, we're going to be refining more metal and converting that into products. But at its full scale, we'll have to wait at least another year, year and a half, depending on how things go. But the team is obviously extremely excited to work on that, and they're doing everything to accelerate the installation of those new equipment and have that capacity in place as soon as possible. And our clients are also very anxious to see that capacity in place.

26:47 Fantastic. Thanks for answering my questions, and I will turn it over to you. Congrats once again. Your next question comes from Ammar Azat from Canaccord Generity. Please go ahead.

27:01 Good morning, Richard, Alban. Congrats on a superb quarter.

27:05 Thanks. Thank you. Richard, what stands out for me is your bookings performance. I think this is an all-time record bookings prints for the company. Can you first tell us on the speciality semi side, are the new bookings coming more from space or terrestrial? Then are we approaching the point where incremental customer commitments will require you guys to announce a meaningful round of capacity investments?

27:36 Yeah, we're getting to that point as I made reference in my introduction remarks. But as you all know, over the past four years now, we've been announcing capacity expansion for our space business, particularly at the beginning of the year. of 25% to 35%, depending on the year. So for space, with all those opportunities arising in Europe and the continued growth in the North American market, we're at a point where we need to think much bigger. And we're currently evaluating different scenarios. And yes, obviously, the backlog and booking reflects that. There's a lot more to come from a booking and backlog perspective.

28:25 Then you have the sole sensing and imaging sector. While it didn't start from a high level, every quarter we're progressing and we're growing. That also is obviously being added to our backlog and bookings quarter after quarter and so on and so forth. This is our specialty semiconductors. It's no surprise. The growth perspectives are quite good, and that gets reflected by default in our backlog in bookings. But those big opportunities that you see out there in the market are left to be officially formalized yet, so there's more to come.

29:10 Okay, that's fantastic. Since you brought up big opportunities in Europe, maybe we could speak about the Iris Squared as it sort of moves into execution mode and the platforms are now largely awarded. We're getting closer to the point where power procurement decisions need to be made. Can you walk us through where those decisions typically sit in the satellite development cycle? especially given that the planned initial launches are in 2029, should we be thinking about 27 and 28 as the more relevant periods for procurement and production?

29:53 Yeah, so your reference is right. So in the case of the European market, As you can read, this is all a public domain. The projection launches in 29, 2030 and 2031. So obviously the whole supply chain needs to be organized before then. So we expect over the course of 2027 that the primaries that have been awarded portion of those big constellations will be finalizing, completing their supply chain arrangements with all of their key component suppliers.

30:27 So, and actually that's what we intend obviously to participate

30:36 If I look at the scale of some of these European constellation programs relative to Azure's existing business, is it fair to assume that winning a meaningful portion would require another step change in capacity that would look considerably different than sort of the 35, 30, 20% sort of like volume increases you've been doing, or can you support more volume through the existing footprint? Help us like think about that.

31:14 Look, those opportunities in Europe and the continued growth in North America, all together, it has the potential to drastically change our Azure space operations for the years 29, 2030, and 2031. That's how big are those opportunities and the growth currently in the satellite industry.

31:32 Okay, maybe I'll switch gears. On performance materials, the revenue performance has been quite remarkable, another record quarter, which is interesting to me given the historical seasonality of the business in the second half of the year. Can you elaborate a bit more on what is driving that growth? Then should we be thinking about the business operating now from a structurally higher RevenueBase going forward. Then related to that, there was a GMP noncompliance finding involving one of your competitors late in the quarter with the regulator explicitly recommending that affected customers evaluate alternative sources. Did that help contribute to your growth at all, or it was very late in the quarter? Can it help contribute to your Q4 growth in performance materials?

32:27 Look, I think we've been mentioning it on different other calls. Essentially for that segment, performance materials, typically Q4 and Q1 is that time of the year when we renew annual contracts. And that segment, more specifically the health and pharma portion of it, as you know, we're essentially a market leader. So going forward, We'll see over the course of Q4 and Q1 the benefits that we should obtain from the fact that our nearest competitor for pharma and health products lost its GMP certification.

33:12 So that's upcoming. So we'll see all of that impacts and we expect obviously to be a positive impact on our business forward, but it's too early to say. What it really means from a volume and a margin perspective, but we can expect it to be beneficial without any doubt. We are working on different other, obviously smaller scale opportunities than under our specialty semiconductor segment for performance materials, but we're working different other commercial opportunities to increase volume and gain market share and or get into new areas that we're not today. that will come over the course of 2027 and will be embedded into our guidance for 2027. But look, we're working on different other things to also grow that segment. That, yeah, out of our control, but most likely very beneficial, our closest competitor for pharma and health business-based products, plus the GMP certifications, which proves that, I mean, the fact that we're able to maintain Complex certifications is definitely an important bar two and three and a competitive advantage for us.

34:27 Great. Congrats again. Thanks for taking my questions. Your next question comes from Nick Boychuk from ATB Carmark Capital Markets. Please go ahead.

34:41 Thanks. Good morning, guys. I'd like to first ask a question about specialty semiconductors. And I'm going to frame this in the context of multiple years, not necessarily looking for color on next quarter. The prepared remarks in your MD&A and press release, you specifically called out things like strong volume, contracted demand, your need for new capacity, positive mix. Is what you saw in this quarter reflective of that new normalized run rate or were there transitory impacts this quarter on that mix or elsewhere that either impacted the top line or margin? Basically, is this quarter reflective of what we should be seeing and building upon for the next two to five years?

35:19 Over the course of, let's say, two to five years, we see plenty of opportunities to further improve both the product mix, the client mix, operations efficiencies, economies of scale. Now, there's plenty of other opportunities. Q3 is not, we hope, is not going to be a representation of the upcoming years and quarters for us. Now, there are too many nice organic growth initiatives that we're working on and opportunities to capture. to say that Q3 is a typical quarter, no doubt.

35:52 Okay, understood. On the operating leverage and efficiencies, can you expand a little bit on some of the programs that you've already accomplished? Maybe how you've quantified the margin gain associated from those and the ones that you're still planning to do, again, over that same timeframe of two to five years, and what you think the impact will be on margins once those are complete?

36:11 Look, Q3, actually, little was done. It's everything upcoming. Like, we're going to be introducing further automation, We're going to be reworking some of our layouts. So there's a long list of initiatives in place in order to transform our business over the course of the next three to five years. So Q3 cannot be referred as a quarter with a lot of those in place. It's just one quarter in the history of the company. And we're now putting everything in place, bringing external resources and health to support our further growth.

36:44 Okay. And so on that multi-year outlook, Richard, are you comfortable at all? willing to share any aspirational goals around margins where you ideally would like to land once these things are complete?

36:56 It's too early to mention margins, either obviously on an absolute basis and or as a percentage of revenue, but just at a high level. Space is going to bring unique opportunities to Five In Plus and Azure Space. You're going to have Periscope that is an upcoming semiconductor materials that we're going to be participating into. You're going to see the medical imaging within a period of about two years or so, going to become obviously a much more important contributor to our business. You're going to have all of our capacity and capabilities for GE recycling and refining materials that's going to be in place within a year and a half or so. You're going to have the downstream business associated with that. You're going to have some new products around Bismuth that we're going to be slowly introducing over the course of next year and the following.

37:43 So all of that all together plus behind the scenes everything that we're doing to better industrialize our sites, all going to be very beneficial forward. But too early to put an exact figure, but they're very likely to materially change the company over the course of the next three to five

38:03 years. That's excellent. Thank you, sir. Your next question comes from Jonathan Goldman from Scotiabank. Please go ahead.

38:14 Hey, good morning, Tina, and thanks for taking my questions. Maybe we can just circle back on the guidance for a second. I just want to make sure I have the correct reference points. It looks like the guidance this year hitting the top end 105 implies about 18.2 million of EBITDA for Q4. It looks like you did about 18.5 million last year. Are those the correct reference points?

38:38 Good morning, Jonathan. So in Q4 2025, it was 18.4 to be perfectly precise, the adjusted EBDA. You're right on the implied EBDA. And, you know, I think we'll just come back to our main message here, which is traditionally Q4s are soft, softer than the rest of the year in any case, and that we operate In a complex environment, we stick to our guidance, even though we are now gearing towards the upper end of the guidance. We see 2026 as a very strong performance and increase compared to 2025 overall.

39:27 Obviously, don't get us wrong, we'll do everything to beat the guidance.

39:32 Understood. Richard, did you mention what your expectations were for the Q4 revenue growth earlier in the call or did I mishear that?

39:39 No, I referred to the whole year. I compared 26 to 25 where we should achieve an increase in revenue somewhere between 25 to 30% this year versus last year.

39:49 Understood. And when you think about the guidance this year, what would be the main risks to Q4 in the full year or upside risks even as you think about coming this late in the year? I guess maybe two months left fine it could be operational could be the typical year-end cutoff due to the holiday period it could be different different things obviously okay understood and then maybe just going back I guess I've done to your comments I mean the gross margin I still think you're talking about you know q2 levels plus or minus one percent I guess with you four at this point Is that still the expectation? Is it possible that margins could come down in Q4 relative to Q3?

40:37 And on the pass-throughs, is it still the expectation that you progress to getting those worked through the P&L the early part of next year, maybe through the first half of 27? Yeah.

40:48 So just firstly, on the gross margin percentage, the guidance is that H2, so the second half of 2026, will have a gross margin percentage equivalent to what we recorded in Q2, plus or minus one percentage point. So we had 30.3% in Q2, so we should, you know, in H2, reach a gross margin percentage between 29 and 31%, roughly, right, about that. which means mathematically that we expect a slightly lower gross margin percentage in Q4 than Q3 and simply because we expect a softer water and so lower volumes. Now, of course, you know, this is, I would say, a fairly cautious position.

41:47 We've said it, we'll repeat it and if I go back to Richard's words. We'll do everything we can to build this guidance.

41:56 Okay, fair enough. And the pass-throughs, those are still on track to kind of come in?

42:03 Yeah, the pass-throughs are ongoing. Absolutely. We repeat this. They will be continuing in 2027. We particularly in specialty semiconductors We have a variety of contracts and customers, so those pass-throughs will pursue in the course of 2027 and will be substantially completed as we get into the second half of 2027.

42:33 Okay, understood. And maybe if I can squeeze one more in. Congratulations on the Gallium Arsenide Award this year. A really big achievement. You talked about kind of setting up the facilities and getting qualification with your customer. Is there a timeline to when you move into low rate production?

42:54 We already have obviously some capacity in place that we're obviously adding to it and we're adding both capabilities and capacity, which is a different thing. There's a little difference between the two. So all of that is going to increase progressively over the course of the quarter because obviously we have already a base out of which we've been awarded that grant.

43:14 Okay, perfect.

43:15 Thanks for taking my questions.

43:16 I'll get back in queue. Your next question comes from Nelson Ng from RBC Capital Markets. Please go ahead.

43:27 Great, thanks, and congrats on a good quarter. Just a quick question on just CapEx. So can you give a bit more color on, I guess, the rest of the CapEx for this year and also how it's trending next year? And also in terms of the grants related to St. George, do those grants cover a small fraction or most of the costs that you need to kind of grow your production? Can you just provide a bit more color there first?

44:03 Yeah. So firstly, thank you. On the CapEx front, year to date, we have spent about $22 million in CapEx and about 5.2 in Q3. We don't expect Q4 to deviate substantially from that level. So we should be around $5 million in Q4. So that's, I would say, what I would refer to as a normal quarter. We will expect CapEx to increase substantially from next year onwards to support the growth which Richard mentioned earlier in this call. So we'll provide additional guidance on this, but this is the direction that CapEx will be taking next year and the following years.

45:04 Okay, so Richard's comments on growing Azure, and I think the read-through is the annual 25 to 35% of capacity additions we've seen in the last few years isn't enough, so you're looking to make a much bigger...

45:32 Capacity Addition going forward? Is that the read-through? No, exactly.

45:39 What we've been announcing and implementing in the past few years, we're now looking at options to do a lot more than what we've been doing on an annual basis over the past few years. We're looking at different options to do something much more drastic in order to capture The opportunities arising in Europe for those years 29, 30, and 31. And obviously, the continued growth in North America. And we're looking at something of a much larger scale at that point, which will be in a much better position to announce later on as we finalize the reviews of our various options. And obviously, we put under contract different projects.

46:24 Okay, so this, and you're talking about organic opportunities. I know in the past you were talking about looking at M&A opportunities. Is this mainly organic that you're looking at? Yeah, when I started to list the various opportunities that we're working on, those are all referred internally as organic opportunities. So opportunities around space, around periscope, around imaging, georecycling, the infrared defense materials, and some new business products. We introduce all of that, internally refer to those as organic. That's excluding any M&A that obviously can come in play in the coming quarters and years.

47:05 And just to be clear on that, we remain also, we are still motivated by M&A. We are still looking at opportunities. It's not out of the table, just to be clear.

47:20 Okay, that's clear. Yeah, that's all for me. I'll leave it there. Thank you. Your next question comes from Frédéric Tremblay from Desjardins Securities. Please go ahead.

47:35 Thanks. Good morning and congrats on the quarter.

47:38 Thank you. Thanks. Most of my questions have been answered, but maybe on inventories, notice that that's been moving up. I'm just curious to see if that's driven by new mandates Let's say in space solar power or other segments, or is that reflective more of higher input metal costs?

48:00 Yeah, so you're right. Inventories have been increasing and that's essentially a reflection of the higher revenues and volumes and higher deliveries. Of course, to achieve 30% increase in revenue. You need to increase your working capital. You need to increase your inventory. When we look at our day's inventory outstanding, we see that we remain fairly stable in the same trend. So we don't get out of cycle on inventory, but for sure it's increasing in absolute terms to support our growth.

48:50 Thanks for that. And just coming back to, I guess, capital allocation priorities, you spoke about, you know, more drastic capacity increases potentially coming at Azure as well as continuing to look at acquisitions. Can you take those topics from a funding perspective? Obviously, the balance sheet is really strong at 0.3 times net debt, but just wanted to get your thoughts on I know for some equipment as well, customers have participated in the past. So if you could maybe put all those growth opportunities together and sort of take it from the angle of funding with the balance sheet and the cash flow, that'd be helpful.

49:32 Yeah, of course. So as you know, in the past, we've been very disciplined to invest based on firm commitments, not intentions or not projections. So we will remain our discipline. Besides, CAPEX has often been supported by our partners and by our customers as partners. So the growth that we project will be funded by a combination of balance sheet leverage and you've noted it rightfully, we have room on our balance sheet so we'll be able to raise debt and use our balance sheet and it will be a mix also of customer contributions and customer partnerships which will help support our growth.

50:33 Many clients under both, especially under our defense Great. Thanks for taking the questions and congrats again. Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Your next question comes from Michael Glenn from Raymond James. Please go ahead.

51:16 Hey, just a couple for me. So maybe as a starting point, as you think about costs heading into 2027, do you have a view on where Metals prices might trend to as we think about the coming year?

51:37 Hello Michael, so we don't have a specific guideline on this. You will have noted that some metals have increased in the recent past. It doesn't mean that this trend will pursue. It's a complex environment and markets can be fairly volatile, but we don't have a guidance or a view to share at this point.

52:15 Okay.

52:16 And all of this upward momentum We're seeing in space and what's happening in the US, what's happening in Europe is, and I know you're increasing your own vertical integration on germanium. Is germanium a potential bottleneck within this whole supply chain? Is there any concerns surrounding constraints on germanium that may disrupt the timing for all of these deployments?

52:51 Germanium, when looking at the space utilization, it's not the market that uses most of the germanium. Most of the germanium is actually used in fiber optics and so on and so forth. And today, there's plenty of germanium available in various areas of Europe and North America and Canada to fulfill the requirements of the space industry. So we don't anticipate Any difficulties out of normal. It's obviously more expensive, but at the same time, because it's more expensive, there's more and more primary extraction projects being put in place. You have giant players adding capacity in both Korea, the US and Canada, and Australia, and so on and so forth. So actually, the actual offering of germanium could be quite large in the horizon of a year, year and a half from now.

53:52 And it could be actually the opposite. There could be like even more margin minimum than actually required at a point in time. Okay.

54:01 And then... Maybe, Michael, just to complement, you will have noted that metal movements are part of our corporate risk. So in any case, we prepare for any movement in prices and we have plans for metal movements but we don't share a guidance on price movements.

54:27 But one thing for sure, it's more and more expensive and it's likely to continue that way over the course of the next year as all of those new primary extractions and extra and additional capacity to recycle and refine materials is all in place.

54:42 And then just my last one, can you remind us where we are with the contract process with First Solar, how we should think about growth in 2027. And I know that you were going to be adding a new layer of material for them. I'm just trying to determine for myself what type of growth in First Solar we should be thinking about in 27 relative to 26.

55:14 Well, the biggest jump from a volume perspective in regards to first solar is between 26 and 25. But after that, under our contract, there are more volume to be shipped next year and there are more volume to be shipped in the year 28 versus 27. We have not disclosed the exact percentage, but look, it's a decent percentage of increase in volume. And as you're rightfully said, we're also going to be introducing next year a new semiconductor compound to First Solar, CDC, Camium, Selenite, that will bring additional revenue starting next year, but a bit more, let's say, pronounced in the second half of the year of next year going forward.

56:01 Okay, thank you. And there are no further questions at this time. I will turn the call back over to Richard Perron for closing remarks.

56:13 Thank you, operator. To all, let me just add our near-term priorities are to meet customer commitments, keep improving productivity as we ramp up production while advancing our various capacity expansion projects. The long-term fundamentals across our markets are strong, and we are continuing to invest in the capabilities and capacity needed to capture opportunities. With our Western manufacturing base, technical expertise, and strong customer relationships, We are well positioned to advance our long-term growth strategy while maintaining disciplined execution. So to all, thank you for being with us this morning, and have a great day. Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Merci.