Mattr (TSX:MATR) Q3 2026 Earnings Call

0:00 Good day and thank you for standing by. Welcome to the MATA third quarter 2026 results webcast conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today. Meghan MacEachern, please go ahead.

0:29 Good morning. Before we begin this morning's conference call, I would like to remind 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. The complete text of Matter's statement on forward-looking information is included in section 4.0 of the third quarter 2026 earnings press release and in the MD&A available on CDAR Plus and the company's website at matter.com. For those joining by webcast, you may follow the visual presentation that accompanies this call. I'll now turn it over to Matters President and CEO, Mike Reeves.

1:05 Good morning and thank you for joining our third quarter conference call. Meghan and I are joined today by our Senior Vice President of Finance and CFO, Tom Holloway. Matter delivered record third quarter results with adjusted EBITDA more than doubling year over year. These results reflected strong execution across the portfolio with both connection technologies and composite technologies delivering materially higher sales and profitability compared to the prior year. Within connection technologies, our wire and cable businesses benefited from strong demand across mining, industrial data center, infrastructure, and oil field applications. In parallel, DSG Canusa continued to deliver improved productivity and efficiency, achieving its highest profit contribution of the year so far.

1:54 Within composite technologies, Xerxes continued to deliver exceptional performance, supported by rising production output, progressively higher demand in fuel and water applications, and a favorable customer and product mix. FlexPipe also delivered strong performance in the quarter, with North America and international activity rising, and early sales of newly introduced large diameter products accelerating. In consolidation, third quarter results further demonstrated the meaningful benefits of Matter's recent portfolio transformation, technology acceleration, and manufacturing infrastructure investments, with stronger output, improved mix, and higher margins across the business. These outcomes are ultimately a reflection of the talent, tenacity, and commitment of every Matter employee around the world, and I thank every team member for their continued focus on safety, customer service, and execution.

2:50 Tom will now walk through some highlights from our third quarter financial results.

2:54 Thanks, Mike. Matter delivered strong third quarter growth across the business, with continuing operations revenue greater than $400 million and increasing 34% year over year, while adjusted EBITDA more than doubled. Connection Technologies contributed meaningfully to Matter's performance, with strong growth in both revenue and adjusted EBITDA during Q3. The segment's wiring cable businesses delivered particularly strong quarterly performance, supported by higher shipping volumes and strong copper prices. Composite Technologies delivered a very strong quarter, with revenue higher by more than 40% year-over-year and adjusted EBITDA more than doubling. Xerxes delivered record revenue and adjusted EBITDA, with higher production and shipping volumes, generating improved gross profit and absorption.

3:48 FlexPipe contributed higher quarterly revenue and strong manufacturing output, which included increased deliveries of international sales. This quarter provides further evidence that Matter's underlying business and operating fundamentals are sustainable and strengthening as improved manufacturing performance, disciplined commercial choices, and an attractive portfolio mix translate into higher quality results. Cash provided by operating activities from continuing operations during the quarter was very strong at $77.8 million. This strength was driven by improved operational performance and a release of working capital during the quarter. Capital spending was $8.3 million.

4:37 We continue to expect full-year capital expenditures to be between $35 and $45 million, including approximately $15 million for maintenance needs. Aligned with our previously communicated capital allocation priorities, strong cash generation allowed Matter to pay down over $40 million of debt during the quarter. At quarter end, our net debt to adjusted EBITDA ratio was 2.38 or 1.61 times, excluding lease liabilities, providing a balance sheet that is now well positioned for strategic flexibility. Our capital allocation priorities remain balanced and disciplined. Reinvest in attractive organic opportunities, reduce debt, preserve flexibility for strategic growth, and repurchase shares opportunistically.

5:29 As earnings continue to grow, we expect cash generation and balance sheet flexibility to further improve. I will now turn the call back to Mike.

5:38 Thank you, Tom. Across each of our primary end markets, we observe strong and sustainable customer demand. Mining activity trends are favorable. and many more. Our substantial long-term investment in North American power generation and distribution continues to provide attractive opportunities across utility, nuclear and broader electrification applications. Data center construction projects are driving incremental demand across our wire and cable, heat shrink tubing and underground storage tank businesses and we continue to selectively prioritize opportunities for our technical differentiation, speed and reliability support the most attractive and sustainable margins.

6:24 North American retail fuel and water management markets remain very active, with customers committing to progressively longer-term planning horizons in our traditional applications, while demand for Xerxes tanks in less traditional applications is rising. Oil field activity remains generally stable, with elevated commodity prices driving modestly rising customer capital spending in most major U.S. basins, a trend we expect to continue over the coming quarters. Overlaying this stable market environment, technology-driven share gains from larger diameter flex pipe product adoption underpins our favorable sector outlook. Normal North American seasonal patterns will continue to be visible in both the Xerxes and flex pipe businesses.

7:12 Looking at Xerxes in more detail, Demand for their market-leading composite underground tanks remains strong across traditional end markets with opportunities to serve less traditional applications rising. Within the retail fuel sector, convenience store operators are further accelerating new-to-industry store construction. In parallel, activity to replace aging tanks is also rising, creating further tank demand. We believe these trends will prevail for many years. Our mid-term outlook for Xerxes is further strengthened by rising demand and successful market share capture in water management applications and in less traditional data center and other backup fuel and liquid storage use cases. Against this backdrop, Xerxes has successfully elevated total tank production by greater than 10% over the last 12 months, and our continued investments to enhance manufacturing automation and efficiency are expected to enable similar annual production expansion in 2027 and beyond without adding facilities in new locations.

8:17 This combination of rising demand, expanding applications, and increasing network capability gives us confidence in Xerxes' ability to deliver continued growth and margin expansion. Turning to our near and midterm outlook, normal fourth quarter seasonality is expected to drive sequentially lower activity. Consistent with our previous expectations, we anticipate Q4 adjusted EBITDA will be similar to the first quarter of 2026, despite the early impacts of recently implemented tariffs adding several million dollars to costs in the quarter. Consequently, combined with our record third quarter performance, this leads us to expect full year 2026 adjusted EBITDA modestly above the outlook we provided last quarter. Over the past two years, Matter has demonstrated an ability to adapt quickly and effectively to a rapidly changing trade environment.

9:12 While we have not been immune to tariff impacts, so far we have largely offset them through pricing actions and adjustments to sourcing and production across our network. Importantly, the footprint actions we completed in 2025 significantly reduced our tariff exposure entering this year by strengthening our U.S. manufacturing presence Moving production closer to key end markets and reducing cross-border shipments. More recently, trade tensions between the US and Canada have increased. We had initially expected these issues would be addressed through revised trade arrangements. While this may still occur, developments over the past several months have reduced our confidence in this near-term outcome.

9:57 During the third quarter, new U.S. Section 338 tariffs were imposed on a range of Canadian-made products, resulting in tariffs of 50% on certain wire, cable, and heat shrink tubing products that we manufacture in Canada and sell into the U.S. These products are reported entirely within Connection Technologies and represent approximately 9% of that segment's trailing 12-month revenue. The expected impact of these tariffs on our fourth quarter performance is relatively modest and already reflected in our Q4 outlook. If these tariffs are withdrawn in the near future, we believe Matter is positioned to deliver year-over-year adjusted EBITDA growth in 2027, underpinned by strong end-market demand and continued operational efficiency gains, although somewhat constrained by near-term production capacity limitations in AMRA cable.

10:53 If no change in tariff policy occurs, we estimate the potential full-year impact to MATAS' 2027 adjusted EBITDA would be approximately $20 million. In that scenario, we believe growth within composite technologies during 2027 would be sufficient to offset the anticipated tariff impact within connection technologies, and MATAS' adjusted EBITDA in 2027 would likely be similar to 2026. We are not waiting for policy changes to address this risk. While these tariffs could ultimately be reduced or rescinded, we are actively adjusting production within our existing manufacturing network to eliminate this risk and capture further operational efficiency. This includes leveraging and expanding capabilities at existing US facilities to manufacture affected products while redirecting Canadian production capacity towards non-US markets.

11:49 We expect this transition to be substantially completed during 2027. Importantly, this is not another major footprint restructuring. We do not anticipate adding new facilities. Instead, we are repositioning select production activities within our existing network using assets and capabilities we already have. These actions will require incremental investment that may cause our full-year 2027 CapEx to be modestly above MATA's normal course annual run rate. Any operating expense directly tied to the execution of tariff mitigation actions is expected to be reported as restructuring cost, which would be added back to adjusted EBITDA. We view the potential effects of near-term tariffs as a temporary disruption rather than a change in the earnings potential of the business.

12:39 Whether through changes in government policy or the completion of our mitigation actions, we expect the impact to be largely concentrated in 2027. Demand across our primary end markets remains strong. We are increasing output across the existing Xerxes factory network and investment is already underway to materially expand Amacable's capacity beginning in early 2028. Taken together, these initiatives position matter to capture the attractive long-term demand trends across our businesses and continue advancing towards our long-term growth objectives. I'm extremely proud of how our teams have responded to a volatile and rapidly changing environment. Time and again they have focused on what we can control, adapted quickly as conditions changed, and continued moving the business forward.

13:29 We expect volatility to remain part of the operating environment, but we have also demonstrated our ability to navigate it. We have a stronger manufacturing footprint, a more flexible operating platform, and a clear plan to address the challenges in front of us. At the same time, we continue to invest in businesses where we see attractive opportunities to generate long-term growth and returns. Our priorities remain unchanged, operating safely, serving our customers, improving manufacturing performance, and allocating capital with discipline. We enter the final quarter of 2026 with a stronger operating platform, a clear path through the near-term challenges, and continued confidence in matters long-term earnings potential.

14:14 I'll now turn the call over to the operator and open the line for questions for Tom, Meghan, or me. Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered or you wish to move yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Nathan Poe with National Bank of Canada Capital Markets.

14:47 Good morning, guys. Thanks for taking my questions and congratulations on a very solid quarter. My first one is related to the tariff headwind. So on that 20 million number that you're able to quantify, is this in addition to what we'd estimate to be a low single-digit million impact from the previous tariffs as well? and how much did these Section 338 tariffs impact Q3?

15:16 Morning, Nate. So as we've said before, we think that our existing business embedded in the year-to-date performance of 2026 is probably carrying around about $10 million a year of tariff expense from other different tariffs. We saw no impact in Q3 from the Section 338 tariffs. We think we will start to see some impact in Q4. And obviously, this is a scenario that's potentially going to evolve quickly. So while we've tried to provide an approximate impact for full year 2027 in our outlook here, the timing of these tariffs remaining in place or not is really not easily predicted. So we've given you something that hopefully gives you a feel for the potential impact in 2027.

16:04 but obviously we're hoping that we see those tariffs mitigate through changes in government policy well before the end of 27. But as we've noted, we're going to take action anyway because it's clear that we just can't trust the trade relationship between the US and Canada right now and we are not going to put ourselves in a position where we are uncertain about our ability to deliver our full potential. What you'll see from us is action rapidly to reposition some manufacturing capabilities from existing facilities into existing U.S. facilities to ensure that certainly by the end of 27 and hopefully sooner, this conversation about Section 33A tariffs becomes really irrelevant to our business.

16:51 Gotcha. Thank you for the color there. On specifics of this tariff mitigation plan, Amarcable new capacity is not going to be ready until early 2028. Are you guys going to be adding any incremental production or is it only the shifting and repositioning of assets? And any other specifics on what you plan to do to help mitigate the tariff impact would be much appreciated. Thank you.

17:25 Yes, so as I noted in the prepared remarks, the impact of these particular tariffs is largely going to be felt in the DSG business on some of our heat drink products. A minority of those products are still made in Canada today. And then perhaps a little more meaningfully in the SureFlex business, where our products that are directed into US utility applications are now hit by these tariffs. So we have the ability and we have the physical space to enable the production of those products in the US within the existing DSG facility in Ohio and within the Ammer Cable facility in Arkansas. So we'll be moving in that direction as quickly as we can. None of this tariff mitigation action will disrupt or delay the incremental production additions that are already scheduled to go into Ammer Cable and will come online in early 2028.

18:23 and another one from me. Just thinking, just taking a step back and looking at the overall outlook for 2027, it seems like without tariffs, that implied baseline would have been $230 million of adjusted EBITDA. Other than tariffs being mitigated, What specific actions or events are required for you to hit that?

18:57 So I'll talk in generalities because obviously we're not in the habit of providing numerical guidance. And this is a little earlier in the year than we normally would be providing full year indications. But given the circumstances, we thought it was appropriate. Big picture, we see very strong demand for all of the major products that we're offering to the market. We're very pleased with the performance, the growth that we've seen year to date in 26. And I would note that a substantial portion of that has been enabled by the significant investments we made in new facilities over the course of 23, 24, 25. I see nothing that shakes my confidence in the underlying demand for our products. And I think in the absence of tariffs, what you would see is a connection technologies business that is capable of eking out perhaps some modest growth in 2027, but obviously with a limit on the amount of production that we can extract from Ammer Cable, there's a bit of a ceiling there. Mix will be the governing factor on whether connection technologies in the absence of tariffs would be the range of growth that we would see from that business, or perhaps flat year over year.

20:09 Composite technologies is really in a position where it's delivering really quite substantial growth year over year and we expect that trajectory to continue as we roll forward. The demand for Xerxes and for FlexPipe products is solid. The addition of incremental large diameter FlexPipe products has given us another leg to the stool in that segment and our continued ability to extract further and further productive efficiencies in Xerxes is allowing us to sell more tanks and to address more of the market. So very excited about the opportunities for composite technologies rolling forward Very excited for the demand across the connection technologies business. We just need a little time here to make sure we can take full advantage of that demand. Tom, from a numerical perspective, anything you'd add?

20:55 Yeah, I mean, I think in the prepared remarks we said, or Mike said, that with tariff impacts, you would anticipate the year looking very similar to 2026. So, logically, if you didn't have those tariff impacts of roughly $20 million. I think your numbers are directionally correct, which would indicate very strong growth for the overall business. And as Mike said, it's mostly in composites for next year with connections having capacity constraints and some mixed potential challenges. Overall, very strong underlying macros. We still feel very good about all of our businesses and we're working very hard to mitigate these impacts once and for all and not have to have this conversation about tariffs any longer.

21:44 Thank you. I'll turn it over. One moment for our next question. Our next question comes from Ian Gillies with Stiefel. Your line is open.

21:58 Good morning, everyone. Good morning. Mike, Tom, I don't know which of you are going to want to take this, but can you talk a little bit about CapEx in 2027? Obviously, you're going to try and reorient some of the supply chains. You're probably going to expand Amber Cable. Are you able to just help us figure out what you're expecting to spend and maybe how you're thinking about the ROI on those investments?

22:23 Yeah, so directionally, as we said, you know, $40 to $50 million is kind of our normal run rate, and I would say with expansion of AmeriCable, the Xerxes business doing very well, so potential expansion there even, and some of these mitigation impacts, I would tell you that $27 probably is a little elevated from that number. It's a little early to give an exact number, but what I can tell you is that We do still look at this in terms of cash flow conversion, and we still believe we'll hit our 70% conversion, even if we do have elevated capex in 2027 or 2028. So I know there's not exact numerical guidance, and we will give that on the next call, but I would anticipate next year being a slightly elevated year.

23:20 Okay, that's helpful in and of itself. A bit of a two-part question for the second one. As it pertains to composite technologies, can you maybe frame out how you're thinking about incremental EBITDA margins moving forward? They've always been really good coming off a lower base the last number of quarters. and maybe alongside that if you want to talk a little bit about whether there's any updated views on Xerxes volume growth over the next few years and so on and so forth.

23:55 Yeah, certainly composite technologies deserves I think a lot of discussion because the business performance really has been very, very good. I think first I should say that segment will continue to see its normal seasonality. We do see a little less activity in Q4 and Q1 than we see in Q2 and Q3 just due to ground conditions. So you should continue to expect that the margin profile for that business is a little higher in the middle two quarters of the year than it will be on the shoulder quarters. But on a year-over-year basis, I fully expect to see margin growth in that segment as we move from 26 to 27. We've seen, I'd say, a fairly material catch-up in pricing on the Xerxes side this year, and perhaps the pace of pricing movement in 27 is a little less. But the pace of growth in production I don't think slows down. I think we've positioned ourselves with the investments we've made over the course of the last several years to deliver 10% or more Total output growth in Xerxes for at least the next three years and I think potentially four to five So they are very well positioned as we look into 27 and 28 and the demand for tanks continues to rise not just from retail fuel which has been the primary legacy driver but from a wide variety of other applications where we're allowing customers to store liquids in challenging conditions and on the FlexPipe side, we've seen obviously

25:27 a stabilization of oil field activity in North America. The fact that we can now offer our customers seven inch and eight inch products, which historically we've never been able to do, positions FlexPipe to have, I think, a very, very strong 2027. So all in all, I'm very confident that we're gonna see growth in the top line and growth in the margin profile of composites. It's going to come from increased production, it's going to come from new technology, and it's going to come from the continued progression of operational efficiency, particularly in Xerxes, and that process is going to continue for the next several years. So I don't think we are yet close to the ultimate margin profile of that segment.

26:12 And just to add a little bit, I mean, you see the composites Q3 margins at 22.3%. That gives you an idea of what the segment can do, and I think that's just I don't anticipate this year we finish on a full year basis above 20%, but I would not be surprised if we do next year and moving on into that low to mid-20s. The segment is doing a really nice job, both businesses, of moving their margins up and we're very bullish on that.

26:44 That's helpful. And maybe one last one for me on the composite side. You specifically called out international orders in Q3 and they're lumpy in nature. But can you maybe just provide a bit of detail on how quoting activity is for international orders right now, just as we try and figure out how to think about next year?

27:02 Yeah, so certainly quoting activity is higher than it was 12 months ago, which was really at a cyclic low. So it's solid. I think Middle East is obviously in a little bit of an interesting moment with conflict there. So we're delivering into the Middle East now on a fairly substantial order. Exactly how active our customers will be in placing incremental orders for 27 in that region is not yet clear, but we're seeing elevated activity for quoting across a number of other international markets, including in Latin America. So I think we'll see A good year internationally for FlexPipe in 2027. It may not be at a peak level, but candidly, that's okay. The margins on the specific applications we can serve internationally tend to be a little bit lower than North America. So if we see a margin profile in 2027 that's a little more North American heavy, that will bode well for the margin profile of the business.

28:01 And just a reminder, Ian, that we don't forecast large international orders in our Outlook. To the extent that those come, they'll be on top of what we've talked about. We've obviously done that in the past and we will not do that going forward.

28:18 Understood. Thanks for the reminder, Tom. Appreciate that. One moment for our next question. Our next question comes from Tim Monticello with ATB Capital Markets. Your line is open.

28:37 Hey, good morning.

28:38 Good morning.

28:39 There have already been a lot of good questions on this call, so I'm just leaving my question list. But as a follow-up to Ian's question, but more on the connections technology segment, you've seen that margin profile also expand year over year the last two quarters. Where are you in terms of the margin ramp for connection technologies, and where do you think that can get to in 27?

29:13 So, you broke up just a hair there, so I'll answer what I think you asked. I think connection technologies in 27 is likely to be in a similar range of margin than we saw in 26. It's quite dependent on mix and particularly within Ammer Cable. So as we've spoken before, if we're able to secure an elevated percentage of mining and oil and gas application work in Ammer Cable, the margins skew to the upper end of the spectrum. And if either of those were to be a little weaker and we were to have a little more industrial activity there, then we'd skew to the lower end of the spectrum. But what I would tell you is, I think connection technologies are still a long way from their ultimate potential on margin.

30:02 We are still building critical mass in the shore flex business. We are still working through further improvement operationally in the DSG business in North America. And clearly, Amer Cable is bouncing up against a productive ceiling, which prevents further and so on, economies of scale in that business, and we will unlock that as we roll from 27 into 28. So 27 is likely similar year over year in that segment, excluding tariffs, but I would expect that we would see further progression upwards as we roll into 28 with AmarCable having more capacity at its disposal.

30:41 Tom, anything you'd add or change? Just to put a finer point on it, a slightly finer point, 20 million dollar impact will all be in this segment. So to the extent that tariffs are the scenario we end up in, which again, there's no certainty, but if that's where we end up, then the margins could be depressed, but only for 27. We definitely see 28. Our mitigation actions will get us back onto the growth trajectory for margins.

31:12 Okay, got it. And then a couple of follow-ups on that. Can you remind us how much capacity on a revenue basis the AMR cable expansion is going to get you?

31:25 Yeah, so the equipment that's ordered and will be installed late 27 and active in early 28 will add approximately 25 to 30% to the productive capacity of that facility. So in terms of dollars, think of it as likely a hundred million of revenue support on the low end and perhaps a little more than that over time and depending on mix. So a fairly meaningful opportunity to increase the scale of that business. It won't all happen instantaneously but it will happen I think fairly quickly because demand in the sectors that Amer Cable supplies is quite robust.

32:08 Got it. And then on secondary impacts from these tariffs that you might see Is this changing your ability to bid competitively into the grid build out in the Northeast? And then you talked a little bit about moving some marketing of the Shaw Flex products into international markets. and last time there was tariffs on Canada, there's a lot of stocks that got flooded into the Canadian market and depressed pricing. Like is this having a pricing impact in international markets as other competitors are moving out of the US?

32:44 I'd say generally we see the impact constrained to the US. So to be explicit, you may recall that we were very clear and very intentional In our targeting of the U.S. utility market with the ShoreFlex business over the last couple of years, and the team have done extraordinarily well with that effort. It is that revenue stream that is most heavily impacted by the Section 338 tariffs. It certainly puts us at a disadvantage as we bid into U.S. utility markets from our Canadian manufacturing footprint. I'd say the revenue stream is unlikely to drop to zero but it is certainly likely to drop materially from where it has been recently with that tariff burden on our products and hence the mitigation actions to ensure that we can continue to serve the US utility market from a US production base over time.

33:37 The counter to the US 338 tariffs on Canadian products has been some Canadian tariffs on US made products which is That combined with some federal action in Canada against the dumping of low-cost building wire coming from Asia has resulted in a little bit of an improvement of the pricing profile that we see across the industrial wiring cable spectrum in Canada, including the stock industrial market. So while the U.S. utility market for us is now a little less favorable because of the tariff, the Canadian industrial demand and pricing has moved in a positive direction. and the ShoreFlex products that we sell internationally tend to be in the nuclear space where competition is limited and customers highly value quality and that hasn't changed.

34:30 So I do not see a negative impact to ShoreFlex and its sales into either Canada or international. It's really limited to the US.

34:41 Are you talking about the impact in the U.S. contemplating your $20 million tariff?

34:45 Yes, it is. That $20 million rough guide includes the tariff impacts across all of the products that are currently covered by Section 338. All right.

35:01 And then maybe this is the last question. Can you talk about what's included in your expectation I guess your implied expectation for $20 million growth excluding tariffs across each business line?

35:19 I think we probably don't want to get into that level of detail but I can tell you that that growth is largely in the composite segment as we said before and I think I've spoken about the drivers for both FlexPipe and Xerxes so I think we'll leave it at that level of detail for now. We may be able to offer a little more next time. That was worth a shot.

35:40 All right, I appreciate it. Thanks, Tim. One moment for our next question. Our next question comes from Michael Topol with TD Cow, and your line is open. Thank you. Just a few questions. So one's a follow-up. The discussion earlier about the AMR cable expansion, Mike, you suggested that the additional capacity could be absorbed fairly quickly. as we try to think about that hundred million dollars potentially more in the first year what's sort of the right way to think about absorption of that or utilization of that?

36:23 Yeah I would say realistically when you're bringing new equipment online and you're gaining experience with it and obviously you're starting to make sales that fall into that line you're not going to put yourself in a position where you're going to disappoint your customers so I think we'll Maybe, maybe half of that could be a run rate that you'd start to see within 12 months of the equipment coming online. Perhaps a little more than that, perhaps a little less, but I think that's probably a reasonable target to expect. 24 months out, I would hope that we'd be in a position where the line is running at its full capacity.

37:01 I would say I can give you just a higher level, Michael, not specifically talking about Amortable, but the segment returns to very healthy growth in 2028 from about 26 and 27. So that's another way to think about it is even without full absorption, as Mike talked about in the first year, that segment returns to very nice growth at the bottom line. Okay, that's helpful. Looking at connection technologies in the margin performance there, I think you were asked about this earlier, but more in the context of 27, but if I just look at the quarter itself, you obviously did see a very nice lift on a year-over-year basis, but margins declined sequentially by about 170 basis points.

37:52 I'm not sure if that's a seasonal dynamic or if there's any other factors behind that quarter-over-quarter pullback.

37:58 That is, I think, well within the bounds of what we'd expect of quarterly movements, largely driven by the specific mix. As I've mentioned before, Ammer Cable, which is the largest source of revenue in that business, they have a range of margin profiles, depends on the end market, and we don't always have a perfect balance. So a little less mining, a little less oil and gas in Q3 than we had in Q2, and that was the primary driver of the movement. Okay. And then I wanted to ask you about capital allocation. So there were a couple of comments both on the call and then in the release. So one of which is that You're seeing the balance sheet now well positioned for strategic flexibility. You've talked about continuing to await excess cash toward debt reduction in the near term. We've talked about CapEx on the call.

38:46 I guess I'm just looking for maybe a bit of a sort of a full rundown here of how you think about priorities kind of near term and then medium term. And I guess part of this is, you know, would you be open to buybacks here notwithstanding the comment about weighting excess cash toward debt repayment? And then secondly, when does M&A come into the picture here and is that of interest?

39:10 Yeah, so from a capital allocation perspective, I think we always think about organic growth generally first. And so that's baked into our numbers. We're very healthy there. We've got good growth prospects. We'll continue to weight that at the top. Debt reduction, we've got the credit facility under $100 million now, so we're moving in the direction, again, we're very comfortable with the balance sheet. We'll continue to weight some dollars towards that because we just think it's prudent to get that down. And with the well-positioned balance sheet, M&A comes when M&A comes, and so it's a little difficult to say timing-wise, but I would say, and I think we've said it before, our pipeline is in a good place. We feel good about the opportunities that are out there, likely of the size of kind of a tuck-in type of opportunity, but we're open to other items. We have good balance sheet flexibility, good opportunities in the pipeline, good relationship with those opportunities, and we're moving them forward. And just to say, they're likely to be in the connection segment.

40:20 There could be There could be some capacity expansion opportunities in composites, but right now we're mostly focused on the connection segment in the wiring cable and DSG businesses. And then on the NCIB and the share buyback side, we did buy back some shares in Q3. We will continue to buy back shares in Q4. So as we said before, we're being opportunistic. We're not just going to be in the market to be in the market, but we do still see lots of value and lots of ability to put dollars into that program. Again, it's not going to be massive dollars. I think we've previously said something in that kind of low single digit millions, maybe up to five-ish million a quarter or something along those lines, but still committed to that. We think it's still a great value.

41:11 We think there's still a lot of room to run on this portfolio and we will continue to be committed to that. Okay, and then just one last one, just as far as the tariff mitigation measures for the new tariffs, which I understand, you know, hopefully there are some policy changes or agreements that, you know, alleviate those pressures sooner rather than later, but nevertheless, you're moving to address the situation yourself. When could we expect you to have everything in place to sort of be fully

41:44 I think we can say with confidence we would expect to have all of the mitigation actions completed by the end of 27. I think there will be a staggered effect here. Some actions are faster than others and easier than others. But I think likely we're going to see the tariff impact in 27 if these tariffs stay in place all year. and many more. These tariff impacts are a non-event for 27, but recognizing that there's the risk, we wanted to be candid with the market about it and also make sure that we take the right actions to navigate it.

42:49 But as I've said before, I say again, whatever the tariff circumstances in 27, we will navigate it, we will move past it, and the underlying demand across all of the businesses is really strong. So we feel very good about where our business is and where our business is going. notwithstanding what we hope is a temporary temp, a little bit of a headwind here. Okay, thank you. One moment for our next question. Our next question comes from John Gibson with BMO Capital Markets. Your line is open. I know you don't provide a backlog number, but I'm just wondering how much visibility you have across the four businesses now and has it improved

43:38 So you're right. We don't provide a backlog number, but I can tell you that our orders in backlog are materially higher at this point than they were 12 months ago and right at nearly the all-time high level for the current portfolio of our business. So generally speaking, I'd say we have reasonably good visibility into the first third of next year. and the second thirds are a little less visible at this point but that's normal given the lead times on the kind of products that we deliver to our customers. Are there any parts of your business that maybe have a bit longer term visibility in terms of orders or is it fairly standard?

44:19 So Xerxes, particularly given the demand profile in that industry, Xerxes tends to have the best visibility. We have, I think we have and so on. Okay, so I guess what I'm trying to get at is, you know, the tariff impacts are obviously based on very strong demand heading into early next year.

45:02 Yes, I suppose the way I'd say it is we see very strong demand across all of our businesses. The only impact that potentially lowers that demand is the presence of these tariffs that make us less commercially competitive in a certain subset of our businesses. but if those tariffs were lifted tomorrow, I think the demand for all of our products across all of our businesses would be just as robust as it has been over the last three quarters.

45:32 Great. I appreciate the clarity on all that. I'll turn it back. Thanks. One moment for our next question. Our next question is a follow-up from Tim Monticello with ATP Capital Markets. Your line is open.

45:49 Hey, I'm back. Just on the 8-inch diameter SKU that's been commercialized for, I guess, a quarter or so now, can you just talk about the uptake there and the outlook for, I think you have some high-temperature product coming online for the next little while. Is that still the case, or maybe just clarify that for me if you could?

46:15 Yeah, certainly. So we are on track with all of the new technologies that we introduced or plan to introduce with FlexByte. 8-inch products have been well received. We've got a fairly large list of customers that have either placed orders or have had product installed. Product performance has exceeded our own expectations. Installation speed has been good. So all of the things that matter to our customers are trending in a very favorable direction. and we are elevating productive output of that product as we speak to take advantage of the demand. So very happy and I think we continue to have a positive outlook for the pace of growth of 8-inch family revenue as we roll from 26 to 27. And our high temperature product in final testing phase with our customer in the Middle East.

47:05 and many more. substantial rises in underlying market activity for FlexPipe to have a very, very strong next two, three, four, five years. The technology funnel is going to drive that all by itself. If we do see meaningful uptakes in activity, that will just accelerate that growth further.

47:40 In terms of that high temperature skew, what do you think the increase in TAM that would bring would be?

47:50 I can tell you that the Middle East market spends more than a billion dollars a year on steel products to address the application that this high-temp SKU would be able to address. How quickly that market will choose to shift from steel to composites is hard to predict, but the scale is really substantial.

48:13 And will you have a dedicated line to producing that product? will come off one of the other lines just with different variation on the inputs.

48:23 Our facility in Rockwall, Texas was built to have great flexibility. The equipment there is capable of producing a wide variety of products, including this one. So if demand is sufficient, then clearly we would dedicate a full line all the time to it, but we wouldn't need separate equipment. We've got a great deal of flexibility.

48:44 Okay. Appreciate the additional commentary.

48:47 You're welcome. I'm not showing any further questions this time. I turn the call back to Mike for any further remarks.

48:55 So we appreciate your interest in MATA this quarter, a record Q3, very strong growth year over year, and lots of opportunities as we roll forward. And we'll look forward to talking more about those when we gather again in Q1. Have a great day, everybody. Thank you, ladies and gentlemen. So let's conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.