Omni Lite Industries Canada Inc

XTSX:OML

Earnings Call Transcript

[Operator]

Good day, ladies and gentlemen, and welcome to your Omni-Lite Industries, Inc. Second Quarter 2022 Investor Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Amy Vetrano-Palmer. Ma'am, the floor is yours.

[Amy Vetrano-Palmer, executive]

Thank you so much. Good afternoon, and thank you for joining us. With me today is our Chief Executive Officer, Dave Robbins. Our call is being recorded and will be available for playback, the details of which are in our press release issued. The purpose of this call is to provide an update on Omni-Lite's operations as we recently filed our second quarter 2022 results. After our remarks, we will open up the line for any Q&A. If you have not received or seen a copy of our press release we issued on Wednesday, you can find it on our website, www.omnilite.com.

Before we get started, I would like to remind you that today's discussion will or may include forward-looking statements, including information regarding Omni-Lite's performance based on our views of the company's business and the environments in which they operate, our future plans, objectives, business prospects and anticipated financial performance.

These forward-looking statements are subject to future risks and uncertainties that could cause our actual results or performance to differ materially. We are also mindful of the risks and impacts of the changes in the health of our general economy, the U.S. and global commercial aerospace markets and the U.S. Department of Defense budgets. All forward-looking statements should be considered in conjunction with the cautionary statements contained in our press release and the risk factors included in Omni-Lite's SEDAR filings.

The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. I'd also like to mention that in addition to the reporting financial results in accordance to International Financial Reporting Standards, or IFRS, during our call, we may also discuss or reference non-IFRS financial measures, including adjusted EBITDA, adjusted free cash flow, free cash flow and organic revenue. A reconciliation of these non-IFRS measures is included in the applicable SEDAR filings and press releases.

Lastly, unless noted, any reference or discussion of our financial results are in U.S. dollars.

At this time, I'd like to turn the call over to Dave.

[David Robbins, executive]

Thanks, Amy. Good afternoon, everyone, and thanks for joining us. I'd like to make a few comments about our second quarter 2022 performance followed by comments on our current business. Second quarter 2022 revenue of $2.46 million marks an increase from first quarter 2022 and continues our signs of growth for the remainder of 2022. Bookings of organic business in Q2 was sequentially up nearly 25% and our ending backlog of $3.7 million with the majority shippable in fiscal '22 represents another sequential increase and points towards continued revenue growth.

Supply chain and logistics pressures for raw material continues to slow some of our production throughput in the second quarter but is starting to be offset by long lead raw material purchases made months ago that are covering our production capacity. We expect this tough supply chain environment to continue, but we are purposefully managing advanced raw material purchase where we have visible demand.

Our positive outlook is not only in the bookings and backlog numbers but what they are composed of. The bookings growth is coming from several new engineered products and competitive takeaways across all of our technologies: Metal forming, metal casting and microelectronics. Two important themes persists of these new wins. Our ability to engineer a custom product solution that solves a technological problem or shifting work to us from another source due to our ability to respond quickly and reliably. Some examples that are driving our new backlog is a new engineered nut and a highly demanded titanium fastener components used in commercial aerospace.

There's a new engineered electronic component designed into a radar for a European-produced mobile missile defense platform for use in both Europe and U.S. militaries. Another win was several new cast components for industrial automation platform that were transferred from a large casting company due to nonperformance on shipping schedule and quantity.

And lastly, a new -- an engineered cast component was designed for electrical vehicle structural application where we were the design originator. We expect that these themes will continue to gain traction as we respond to solving system and platform problems with engineered components and in certain areas, replacing large footprint manufacturers where our agility and responsiveness have value.

With that, I'd like to turn the call over to Amy.

[Amy Vetrano-Palmer, executive]

Thanks, Dave. Dave has addressed revenue, so I will make a few comments regarding cash and EBITDA for the second quarter. Adjusted free cash flow, which is defined as cash flow from operations minus capital expenditures and also minus a onetime capital gains tax related to the sale of Cerritos facility last year of about $560,000. When we adjust for these amounts, the adjusted free cash flow did generate approximately $5,000 in cash as compared to a use of cash of $93,000 in the second quarter of 2021.

We continue to maintain a strong cash balance and be debt free on the balance sheet. We did see a decline in EBITDA in the quarter of about $113,000 compared to first quarter 2022, but we do expect to continue to see improvement in revenues throughout the year, which should fall to the bottom line. Cash from operations was a use of $368,000 compared to a use of $178,000 in the second quarter of 2021. However, if we do remove that onetime cash payment, we did generate approximately $192,000 in cash.

We continue to reduce our WIP and finished goods inventory and saw a reduction of approximately $183,000 in inventory as a whole in the quarter. This completes our prepared remarks. We'd like to now open up the call for any questions.

[Operator]

[Operator Instructions] And we do take our first question or comment from the line of Emmanuel Cramer, a private investor.

[Unknown Attendee]

Thanks, Dave, for a nice quarter. It looks like we're on the right track, recovering from COVID. Just wondering if you can break down the revenue between the 3 divisions: Monzite, the DP Cast and the California division.

[David Robbins, executive]

Well, we don't have exact numbers. But it's roughly 40%, 40% and 20%. So Monzite being 20% and the other 2 40% roughly.

[Operator]

[Operator Instructions] At this time, we have no further signals. We turn back to Amy Vetrano-Palmer for closing remarks.

[Amy Vetrano-Palmer, executive]

All right. Well, thank you, everyone, for joining us today, and we hope you have a wonderful afternoon.

[Operator]

Thank you. This concludes today's teleconference. We thank you for your participation. You may disconnect your lines at this time. Have a great day.

[Amy Vetrano-Palmer, executive]

Bye-bye.