Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Omni-Lite Industries Canada Inc (OLNCF, Financial) reported a record full-year revenue of $15.9 million, marking a 29% increase over fiscal 2023.
- The company experienced growth in commercial air transport fasteners and jet engine casting programs, contributing to a strong fourth quarter.
- Adjusted EBITDA for the full year reached $1.6 million, a significant increase from $445,000 in 2023, indicating improved operating leverage.
- Omni-Lite Industries Canada Inc (OLNCF) ended the year with approximately $3 million in cash and no debt, reflecting a strong financial position.
- The company successfully converted slow-moving inventory into cash, enhancing liquidity and operational efficiency.
Negative Points
- The product mix in Q4 included a higher proportion of engineering and new product development, which typically carries lower margins.
- Several larger orders did not convert until early Q1, affecting the Q4 bookings and backlog figures.
- The DP Cast division is facing challenges with long-term agreements that limit pricing flexibility, impacting its margin performance.
- Tariffs and potential retaliatory measures could affect the DP Cast business, particularly in terms of material costs and customer buying decisions.
- The company is still working on improving the performance of its other business units, which are not contributing as significantly to overall EBITDA as the Monzite business unit.
Q & A Highlights
Q: Can you explain the inventory charge and whether it was provisioned for previously? How much aged inventory remains, and is this the final supply on the balance sheet?
A: We have a good handle on our inventory, which is very current. The inventory item in question was a remnant from a previous build, still functional but with uncertain future demand. We saw an opportunity to move it and did so.
Q: How are the different business units performing, particularly Monzite, which seems to have high margins?
A: Monzite had a revenue boost from two large programs, contributing significantly to EBITDA. DP Cast has shown incremental margin improvement and is expected to reach 40%-50% gross margins. The forging business focused on product development, which carries lower margins, but we expect higher production ratios in 2025.
Q: When do you expect to renegotiate the long-term agreement with DP Cast, which expires at the end of 2025?
A: We are in the middle of negotiations this year. Both sides see the advantage of doing it sooner rather than later, and we are putting a lot of energy into it.
Q: How are tariffs affecting your business, particularly DP Cast's supply chain?
A: We haven't seen direct effects yet, but we anticipate potential impacts on material imports from the US, which could lead to increased costs passed on to customers. Retaliatory tariffs by Canada could affect US customers buying from DP Cast, but the impact is expected to be minimal due to the specialized nature of our products.
Q: Are there any acquisition opportunities, and what size are you looking at?
A: We see opportunities with potentially more rational valuations. We are looking at smaller entities with $2 million to $5 million in revenue and around $1 million EBITDA, fitting our business model.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
