Good morning. Our next presenting company is Mattr Corp, trades on the Toronto Stock Exchange under the ticker MATR. Companies on the surface might seem a little complicated story, but it's not as complicated as it looks, and there's a lot of great growth prospects available for them. Here to start the presentation today is the CEO, Mike Reeves. With him is Tom Holloway, the CFO, and in the audience as well is Meghan MacEachern, the Investor Relations Representative. With that, Mike.
Thank you very much. Good morning, everybody. The forward-looking information, everybody read that, I'm sure. Let's talk about the business. Mattr is a global provider of critical infrastructure products. We are a materials technology-based organization. We specialize in the design of elegant solutions to function under the most intense conditions. If you look across a wide variety of physical infrastructure applications and you look for the most intense applications where you have extreme temperatures or pressures or radiation or corrosion, that's where you'll find our products. Where the cost of failure is highest, where the value is highest, where the competition is lowest, and the opportunity to create substantial returns for shareholders is available. You can see here we're roughly a billion dollars in revenue on a trailing 12-month basis.
We get to the end of 2025, and that number will be considerably higher because we made an acquisition in early January that is only represented in one quarter of that trailing view. Our revenue is predominantly North America, roughly 70% U.S., the rest in Canada, and then some exposure to Europe and Asia-Pacific. An organization that operates out of two reporting segments. We have our Connection Technologies segment. We'll talk a little bit more about what's in there later, but this is a segment driven by electrification and focused on enabling the use of electrical power in a wide array of industrial and infrastructure applications. Our Composite Technologies business specializes in the use of composite materials to allow customers to safely manage unpleasant liquids, whether it's fuel, polluted water, or other forms of liquids.
Our products are used in place of legacy steel or concrete solutions to lower risk and lower cost. As I mentioned earlier, really, we focus on a very wide variety of niches. Our products will make up a few percentage points of any project's cost, and we focus in the areas where the cost of failure is highest. Important to note that this is an organization that has been through fundamental transformation over the last four years. Four years ago, not only was the company name different, but we were a very complicated 12-plus business line organization, primarily focused on offshore pipeline construction activities. Incredibly volatile, over-levered, very complex. In the last four years, through 13 transactions, we have sold off non-core businesses.
We've sold off other physical assets in the process, generated over $500 million of proceeds, creating a very solid balance sheet, narrowing the focus of the organization on the businesses that I'm about to walk you through, and positioning this business to be fundamentally less volatile, higher margin, higher free cash flow. We have also invested approximately $200 million of growth capital, starting in late 2023 and concluding in the second quarter of 2025, to position our businesses for future growth. These businesses largely were starved of capital prior to 2023, were running up against productive capacity limits, had had limited R&D spend, all the things that prevent you from driving fundamental growth.
Over the last two years, we have been through a very noisy, very messy transformation of the portfolio, of aggressive organic growth capital deployment, and more recently, a large acquisition, all designed to position the organization to be able to deliver on its fundamental commitments of a 10% growth rate, greater than 20% EBITDA margin, and greater than 70% free cash flow conversion. I would tell you today, we believe the stock price represents the company we used to be, not the company we are to
day. We'll talk some more. I've mentioned already, we're organized into two operating segments. Connection Technologies is the larger of the two, following the acquisition of Amber Cable early this year. As I also said, Connections is really an electrification-driven business. It is dominated by wire and cable manufacturing.
We do not manufacture high volumes of commoditized wire and cable. We work with end customers who have very specific needs in demanding applications, and we design, build, and sell relatively small batch size wire and cable into a wide variety of applications. We support nuclear power generation. We sell into hydroelectric, natural gas-fired power plants. We sell into utility networks at the transformer stations and in the last-mile distribution. We sell into marine applications. We support the electrification of mining applications, offshore and onshore energy applications, aerospace, outer space. NASA is a customer. Canadian Space Agency is a customer. A wide variety of niches, but the common theme here is the most challenging environment for a wire and cable product. This highly engineered approach is something that most large wire and cable companies can't focus on, don't focus on. It doesn't play to their strengths.
It does play to our strengths. Our competition in this space tends to be small private companies who themselves will have focused on a small subset of these niches and presents an opportunity for us to grow share and potentially to make acquisitions as time goes by. Amber Cable is the most recently acquired business. This is a U.S.-focused, U.S.-manufacturing footprint wire and cable manufacturer. ShoreFlex is a Canadian wire and cable manufacturer. North America really is our primary focus in the wire and cable business. DSG-Canusa makes heat-shrink tubing, also a highly engineered product designed to protect the connection points in wire and cable networks from that same corrosion, radiation, extremes of temperature, et cetera, et cetera. A lot of commonalities across those businesses in terms of the end markets and the end customers that they serve.
On the right-hand side, our Composite Technology segment, where we enable the safe handling of very unpleasant liquids. We are the number one provider of underground fuel storage tanks in North America through our Xerxes brand. In this business, we are largely supporting the U.S. retail fuel market. I can promise you, electric vehicles will not make that redundant. This is a business where we are sold out today and are experiencing the highest demand that we have seen in the 40-plus year history of Xerxes. The U.S. fueling network is aged. Customers are tiring of having limited access to convenience stores, of having what appear to be unsafe or at least unattractive fuel stations to go to.
Our customer base, generally the mid to large size fuel station operators, are investing at a very aggressive pace to build new fuel stations and in that process displace and retire old fuel stations. This is a long-cycle capital build program that will last beyond the end of this decade. We have one credible competitor in this space, a company called NOV. We are approximately twice their size. The Xerxes business is one where we see very strong demand. We are currently not capable of meeting the demand fully. As a part of our capital build-out program over the last two years, we added a new factory and are consistently enhancing the productive capacity and the efficiency of this business to drive ever higher output. Xerxes also enables customers to manage water.
We sell into the data center market for the underground storage of cooling water, of fire suppression liquids, also standby power, so diesel tanks. We sell into a wide variety of stormwater management applications. Anywhere that you would have a small to mid-size commercial construction project, you almost certainly need to have a way to manage stormwater runoff. We sell tanks and a variety of other composite products into those applications. Our water business is growing faster than our fuel business. Over time, I would expect that the water business rivals the fuel business in scale. FlexPipe, where we sell spoolable composite pipe, this product is used predominantly by onshore oil and gas companies to link a newly completed oil or gas well to their physical infrastructure.
This is a marketplace that historically was served by traditional steel with joints of steel welded together over the course of days or even weeks to provide that pathway. A spoolable composite product does not corrode, does not have weld points, and can be deployed in a day where steel might take a week. The cost to our customer is lower. The risk to our customer is lower. The predominant market here is North America land oil and gas. We sell to the BPs and Chevrons and Exxons of the world. There are in total, including ourselves, four credible providers of an equivalent product. The market is led by a company called FlexSteel, who are a reported segment of Cactus Wellhead, WHD. If you'd like to see what a business that's approximately twice our size looks like, that's a good place to look.
We are the second player in the market and approximately twice the size of the third and fourth. The key for FlexPipe is technology. The market is continuing to evolve from traditional steel to composites. As we sit here today, about 50% of our customer spend goes into traditional steel. It will take at least the rest of the decade for steel to be fully displaced by composites, providing a growth path for all of the players in the space. FlexPipe, in particular, was deprived of capital until about 2021, 2022, at which point we invested in R&D to expand the portfolio of products that we offer. We had historically offered small diameter solutions, which confined us to about one-third of the addressable market in North America. Three years ago, we introduced mid-size diameters, approximately six inch in size. It opened up an additional third of the market.
That product now makes up approaching 40% of our revenue. At the end of this year, we will launch large-size product, approximately eight inch in diameter, which will open up the final third of the market. While we have seen some continuous decline in oil field activity over the last several years and are likely approaching a bottom in that marketplace, FlexPipe has been setting new revenue records in North America, driven by the introduction of new technology and the capture of market share in the process. I fully expect that that will continue as we roll forward. These are our businesses. This is what they have done.
While being potentially distracted by the divestiture of many other businesses and assets, while being distracted by the construction of four new factories and the upgrading of equipment in several legacy factories, you can see that both segments and the corporation overall have delivered substantial growth in the 2021 to 2025 timeframe. 2024 was a relatively flat year for us. 2025 will be a year where we begin to move back into a growth mode. My expectation is that we start to hit our stride with that 10% growth rate kicking in by the time we get to 2026. I spoke earlier about our overall objectives: growth, margin, free cash flow conversion. Tom's going to talk through some more specifics here in a moment, but just to lay this out for you very clearly, we conclude our major organic capital spend program in Q2.
As we roll through the second half of this year, you will see us get to and likely hit that 70% free cash flow conversion number and expect to hit that continuously from 2026 forward. I expect that in Qs two and three of next year, which tend to be seasonally our strongest quarters, we will be at or very close to the 20% EBITDA margin as a corporation. For the full year 2027, I expect to be there. As I said earlier, I expect 2026 will be a year of 10% growth. At this point, I have no reason to doubt that we can hit that 10% growth rate from 2026 all the way through 2030, and we will reevaluate where we are at that point. All of that is organic. When and where we can find truly accretive acquisitions, they would enhance and accelerate our pathway.
Tom, would you like to talk about some of the other items here?
All right. Running through some of the investment cycle here, you can see on the left-hand side, we have put substantial amounts of capital into this business in 2023 and 2024, and we will wrap that up in 2025, as Mike spoke to. The go-forward run rate, including the acquisition we just did this year, is about $40-$50 million of CapEx a year, which accelerates our ability to get to that 70% free cash flow conversion target that Mike spoke about. As he said, I do think we hit that on an exit rate at the end of this year into next year. I think we will get to that level. You can see here, we have put substantial amounts of capital into the business.
Our hurdle rates are significant, and we are seeing ourselves hit those targets. You'll start to see that flow through the numbers as the facilities come up and running, get up to speed and fully efficient, which is in process as we speak. Moving to the debt side of things, we did see our debt metric move up in the first quarter. I would pay less attention to the first number on the right-hand side and more attention to the second number, which is the pro forma, including all of Amber Cable for a full year, which is actually the we have all the debt in one quarter of the EBITDA in the first number, the 3.6. The 2.9 net debt to adjusted EBITDA ratio is above our normal course where we would like to be.
You'll see us focus our capital allocation priorities, and I'll talk about that here in a minute, but on reducing that number back down to the two times before we would be aggressive to invest in another acquisition or something more beyond that. Moving to another capital allocation priority, over the course of the last three years, we've put $135 million generated internally, so we did not borrow to do this, into our own stock. As we saw our stock not getting the multiple we think it should get, we have put our money where our mouth is, and we've put our own dollars into this. We'll continue to do this. Despite the fact that we're looking to reduce that net debt to adjusted EBITDA leverage ratio, we see substantial opportunities still here.
We just exhausted our current NCIB program, which is the share buyback program. In Canada, you get renewed one year at a time. We're in process of renewing this, and we'll get active again in the third quarter when we're allowed to. We'll probably put about $10 million a quarter into this program. That's baked into our reduction of debt, which we expect to get back to normal ratios by the first or second quarter of 2026. We can fund all this organically. Again, we're very committed to this program. Just wrapping it all up, on the left-hand side, you see some of the metrics that Mike had talked about, the CAGR.
If you exclude the one-time costs of standing up these facilities, move costs, duplication of resources, as we've gone through this process, we've seen about a 15% CAGR on the EBITDA line since 2021. Twenty twenty-four being a little bit more of a flat year. Again, as Mike said, we do see growth starting in 2025. Then really the acceleration of that growth into 2026 and 2027 and beyond as our four new facilities really get traction. From a capital allocation priority perspective, you can see we do take in all of the above strategies. That is why it is important what I just talked about on the prior page. We are committed to returning capital to shareholders in the form of our share buyback program. We are committed to managing our debt effectively and having a conservative balance sheet so that we can be opportunistic in times of opportunities.
We are committed to continuing to invest organically in our businesses, albeit at a lower level than you have seen the last couple of years, and then inorganically taking opportunities when they come, as long as there is a good tight strategic fit there. We are not going to be a serial acquirer who just goes out and acquires anything and everything. We are very tightly strategically focused here. On the right-hand side, just for informational purposes, is some comparatives of other premium industrial manufacturing companies and the multiples they are getting today compared to where we are trading. This is why we have really said we are putting our own money into this because we believe in the story and we believe in where we are going. I will pause there. Maybe turn back over to Mike for questions.
Yeah.
Any questions that we can address for you? Yes, sir.
Can you talk more in detail about the Amber Cable acquisition?
Yes. So Amber Cable, I'll take a step back. Three years ago, we began to communicate to the market that when the time was right, if we did M&A, it would likely be in the wire and cable space, and it would likely be a business that gave us greater access to the U.S. market. Prior to acquiring Amber Cable, our Canadian footprint for manufacturing of wire and cable through the ShoreFlex brand had given us full access to the Canadian market, but limited access to the U.S. market because there's a lot of critical infrastructure applications in the U.S. that have some degree of federal funding and fall under the Buy American Act, which clearly we could not satisfy from a Canadian production footprint. We spent three years looking for the right target.
Obviously, initially, we didn't have a balance sheet to do a transaction, but from late 2023 onwards, we did. We were patient. We were able to build a relationship with the previous owner, which was Nexans, and ultimately consummate that transaction in very early 2025. We paid five times EBITDA for this business. It's a premium business operating at north of 20% adjusted EBITDA, but it had been declared non-core by Nexans nearly five years prior, and they had not been willing to put growth capital into the business. The business had done its best to optimize itself around a limited production capacity, but had effectively plateaued in performance. Our thesis here was acquire a business that has a large physical footprint in the U.S., roughly 600,000 sq ft production facility in Arkansas.
Within those four walls, there is physical space to add more equipment, and we are in the process of doing so to unlock greater productive capacity and allow this business to resume its growth trajectory, giving us access to U.S.-made product that can meet the Buy American Act and over time allow us to become a more meaningful player in a broader range of U.S. critical infrastructure and markets. This is not a cost synergy opportunity. It is a growth opportunity. Some of that growth coming through the cross-sale of ShoreFlex and Amber Cable sales teams working together. Amber Cable did not just bring us a U.S. footprint. It also expanded our offering from purely low voltage wire and cable to include medium voltage wire and cable, which is something that our Canadian customers for ShoreFlex had been asking for for years.
We've already begun to see the early wins of cross-selling, providing medium voltage products to ShoreFlex customers in Canada. I'm confident that over the course of the next couple of years, we will see that drive substantial growth. Really, the limiting factor here is going to be the pace at which we can create productive capacity in that facility. At this point, I think we'll deploy roughly $3 million of CapEx in 2025, which will unlock roughly 10% growth in that business as we roll into 2026. There'll be some more CapEx in 2026 and 2027, I think, that can unlock in total something approaching 35% incremental capacity beyond what that business had when we acquired it. A lot there, I realize, but that's the business. It's performing very well. We had a light touch onboarding plan anyway, but effectively, the business is onboarding.
Q1 performance was very strong. We expected it to be, but it was actually a little stronger than we thought it would be. The management team has proven themselves to be extraordinarily capable, fully retained, and very motivated. I think we're in a great position with that business. Other questions? Yes, sir.
What are the variables that could include better performance in 2025, given all the growth opportunities that you have?
Yeah. I think the one that unfortunately, I'm sure everybody talks about is this uncertainty around tariffs. I should perhaps address that more specifically. In North America, approximately 30% of our revenue is generated by cross-border sales. They go both ways between the U.S. and Canada and vice versa, but roughly 30% of our revenue is associated with a cross-border sale.
Everything we make is USMCA compliant, so it does not have a direct tariff. Our supply chain has largely been unimpacted by tariffs. I do not have a direct impact by tariffs, but there is a subset of my customers that make up perhaps 15%-20% of our revenue stream who are in a position where they have some flexibility on when they make buying decisions. Some of those customers are responding to this uncertainty by deferring some decisions. That is the biggest impact to 2025. In our March earnings call, Tom walked the listeners through a bridge that generally indicated a full year 2025 adjusted EBITDA that was in the $195 million range. If you look at consensus today, that number is now somewhere in the high $170s.
I'd tell you that that delta is the introduction of this really quite substantial uncertainty related to tariffs and trade friction and customer buying decisions. We're comfortable that that range of outcomes is probably the realistic range of outcomes. Our business probably has a plus or minus 5% around a center point range of outcomes for 2025. That uncertainty is there. I don't think that's going away. That's probably the biggest impact to what we could potentially deliver in 2025. Beyond that, it is all about the pace at which we can increase production in several of our businesses now that we've completed these capital investments. We built four factories. One of them was a relocation within a relatively tight geographic area, so we maintained the same workforce. No issues ramping that facility. Three new factories, all in the U.S., 100% new workforce.
It takes time to build and build proficiency within a new workforce in a factory. The pace at which we can do that will determine how much we can produce, which will ultimately determine the ultimate performance in 2025. I think that's the key variable that's in our control and obviously the one we're most focused on. You're welcome. Yes.
In the underground storage tank business, what's the useful life of those tanks? I know you said that we're going through a time of repurposing and replacement. Over a multi-year period, what are the supply and demand dynamics like?
Yeah. A composite underground fuel tank comes with a 30-year warranty. If a customer chose to use a steel tank, that would typically come with a 20-year warranty.
There were federal mandates in the U.S. that ultimately went into effect in the late 1990s that really drove a lot of tank replacement and installation activity. There are roughly 600,000 actively used underground fuel storage tanks in the U.S. today. The average age of that population is 28 years. We have two dynamics. I spoke about the one that is driving the majority of our revenue demand earlier, the new construction of sites, which universally use brand new tanks. We have a rising demand for tanks to replace previously installed tanks. It has always made up about 25% of our revenue stream, but we can see customers, particularly larger customers, beginning to allocate more of their capital to a replacement effort. I think as we roll forward, we will probably see that replacement demand rise to the point that it makes up more than 25%.
There's a lot of tanks that will need to be replaced. When a tank in use crosses that 30-year threshold, clearly, I no longer cover it with a warranty. Depending on the customer and how they finance themselves, they may well find it difficult, sometimes impossible, to get insurance for their fueling station if they've got tanks greater than 30 years. If they can get insurance, it will come with the requirement to do very extensive quality checks on that tank on a fairly frequent basis, which creates interruptions in their business and costs them. Eventually, it actually makes a lot more sense just to replace it than to keep it in the ground. We've got those two drivers of consumption.
As we sit here today, I think we are likely to be in a position where our supply fails to meet desired demand for the rest of the decade. We've tried to be responsible in our addition of productive capacity. Not my intention to flood the market. Quite frankly, it's not the easiest thing in the world to build a new factory and staff it and build proficiency in a workforce. Xerxes is a business that has had so little investment over the last 40 years that we don't just have the opportunity to build new factories. We have that fundamental opportunity to drive efficiency through process improvement within the four walls of the factories that we own. That's where you'll see some of this continuous capital investment that Tom spoke about, $40 million-$50 million a year.
Some of that will be directed to enhance the quality of the machinery, to add semi-automation, and over time to unlock far greater productive capacity from the existing physical infrastructure within that business. I think that's how we address this rising demand. You're welcome. Anything else that we can address? Tax questions for Tom? Apparently not. Thank you for your time. We appreciate you being here. Have a great day.