All right, good morning. Our next presenting company is Mattr Corp. Primary ticker is on the TSX: MATR. Here today to present on behalf of the company is the CEO, Michael E. Reeves. With him here in the audience today, Meghan MacEachern, IR, and Thomas R. Holloway, VP of Xerxes and a Strategic Advisor as well. Mike.
Perfect, thank you. Good morning. This morning I'd like to take a little time to introduce you to Mattr and talk about not really where the organization has come from, but where we are going. It's an exciting story and one that we believe will unfold over the next several years. We are a materials technology organization. We pride ourselves on taking basic materials and converting them into elegantly designed products that are used across a wide array of critical infrastructure end markets. Wherever you find the most challenging applications, temperature, pressure, radiation, you'll find our products. We're a growth-oriented organization, and we're one that's been through fundamental transformation over the last four years, including a name change, the divestiture of eight businesses, and the acquisition of three.
We operate out of two segments: connection technologies, which focuses on electrification-related products, and composite technologies, which focuses on products that allow customers to manage liquids and replace legacy steel and concrete materials with composite materials. We are a predominantly North American-oriented business. As you can see, nearly 90% of our revenue year to date is derived from the U.S. and Canada, although we are exposed to select international markets with the capacity to respond to opportunities almost anywhere in the world. An organization that benefits enormously from what we believe will be long-term massive investment in capital infrastructure to support population growth, population movement, electrification, and digitization of North America, and one that, having emerged from a three-year-long fundamental transformation, is positioned to drive growth, to drive expansion of margin, and to drive expansion of free cash flow generation.
As I mentioned earlier, two operating segments and fundamentally enabling our customers to refresh, to expand their critical infrastructure networks. I'll speak some more about the two businesses here in a moment, but at the core, we are a business that prides itself on high-quality engineering, the delivery of products that make up a very small fraction of the cost of a project, but are placed in the highest cost of failure locations, giving us the most technical differentiation and the most pricing power. When we talk about the cycles of infrastructure investment that we believe we will benefit from, we would generally categorize them into these three spaces. The infrastructure to support the broad electrification and digitization of society.
We are a manufacturer of wire and cable solutions and protective components to protect those wires and cables that are consumed across the spectrum of electrification, including in power generation sites, utility networks, in many of the electrified projects that you see out there, like data centers, etc. Within the electrification space, we also support the vehicle manufacturing side of things, where you see a constant rise in the content of electronics and the gradual introduction of battery power, whether it's in hybrid or full battery electric, all of which demand higher and higher specification components that we supply. Secondly, the refurbishment and enhancement of physical infrastructure. Utility networks, power generation, liquid fueling networks across North America, mass transit systems, communication systems. We sell into all of those end markets. Finally, environmental infrastructure. Typically, wastewater or stormwater management.
We sell products to help our customers manage those liquids and do so with materials that do not corrode and therefore lower not just their cost of construction, but their lifetime risk associated with that project. To dive slightly deeper into the two business lines. On the left, connection technologies, the largest single component of our corporation, and the largest component of connection technologies is our manufacture and sale of highly engineered wire and cable. We do that under two brand names: Shawflex, which primarily serves the Canadian market, and AmerCable, which primarily serves the U.S. market. AmerCable is a business we acquired earlier this year. We also supply heat shrink tubing, which is used to protect the interface between every wire and every cable. We do that through our DSG-Canusa brand.
On the composite technologies side, we serve liquid management applications primarily in the energy, liquid fuels, and stormwater and wastewater management markets. We do that through two brands: Flexpipe, which makes high-pressure spoolable composite pipe that is primarily sold into the North American oil and gas marketplace and is used by our customers to connect a newly completed oil or gas well to their physical infrastructure. We do it through our Xerxes brand, the largest and market-leading supplier of underground composite storage tanks in North America, where we serve the liquid fueling market. If you go to a gas station anywhere in North America, you are almost certainly standing above a Xerxes brand fuel tank. We sell into other off-grid applications. Businesses that maintain large vehicle fleets will have their own fueling solutions. We sell into those applications. We sell into government and military applications.
We sell into airports, and we sell into data centers for standby fuel and other physical infrastructure that requires standby fuel for diesel-powered generators and other power generation types. Within the Xerxes business, we also serve the water market. The same tank designs are used to store and, in some cases, treat water. An extended brand of Xerxes is HydroChain, where we make and sell products that are used to manage stormwater as it runs off roofs or parking lots associated with virtually every new commercial structure that is built in North America and around the world. From a financial perspective, while we have been fundamentally changing the organization, we have also been driving growth and driving margin improvement. You can see here the EBITDA figures that have been generated by the two segments individually and the corporation itself between 2021 and the first half of 2025.
I'll linger here because it's a story that's worth noting. Across virtually all of our product lines, demand exceeds supply. There, I'm certain, will be transient moments, particularly in our tariff-crazy world, where there are brief interruptions in customer appetite. Broadly speaking, over the last four years and as we project forward over the next several decades, demand exceeds supply across every one of our product lines. I think our commercial organization is very well positioned to drive substantial growth. The underlying systems in the business are mature enough to support that type of growth. Our focus, as we stand here today, a transformed organization no longer distracted by portfolio rationalization activities, is to execute within the four walls of our manufacturing facilities.
I would tell you that across our businesses, there's a fairly broad spectrum of maturity when it comes to manufacturing efficiency, but several of our businesses are towards the lower end. The opportunity here is for a very, very narrow focus on operational execution improvement, efficiency improvement that will not require additional machines, will not require additional buildings, in large cases, will not require additional people. It's about process. It's about maturity. In that process, we will drive greater operational execution in the facilities, which will lead to higher margins on everything that we sell, and it will also lead to the ability to make more product from those facilities. If you are an investor looking for a guaranteed 60, 90, 120-day return, we're probably not the company to look at because tariffs make the world a little bit cloudy right now.
If you're an investor looking for a three, four, five-year return, I think we're the company to look at. We have all of the key components in place. Now it's about execution within the manufacturing floors. From a cash flow perspective, the last two years, we have seen cash flow challenged by very substantial capital investments. The businesses that now remain in our portfolio were businesses that largely were afterthoughts in the previous iteration of this corporation, received very little CapEx, were operating from undersized and extremely old manufacturing facilities in North America. Starting in 2023 and concluding in Q2 of 2025, we have invested approximately $200 million to drive a fundamental change in our North American manufacturing footprint. We have built four new manufacturing facilities, three in the U.S., one in Canada.
We have upgraded the equipment associated with those manufacturing footprints, and we have refurbished a fifth facility in Texas. All of this positions us now with the footprint you see on the screen in front of you. Very largely U.S., which in the current tariff circumstances is very helpful, but far more modern with greater capacity. In all four of the new facilities, we have pre-invested in the infrastructure that will allow us to add, at fairly nominal CapEx, incremental manufacturing equipment over the next several years to ensure that we can keep up with the growth that we expect to face. As we move into 2026, you will see us revert to what I would call a normalized capital spending cycle. Total capital is likely to be in the $40 million - $50 million range, considerably lower than it's been in 2023, 2024, or 2025.
Our maintenance CapEx requirements are approximately $15 million a year. Very low capital intensity on a normalized run rate and substantially greater free cash flow generation as our capital spending comes down. I mentioned it earlier, but it is worth noting. This business has been through a great deal over the last four years, from 2021 to 2025, fundamental transformation, which has resulted in a great deal of noise. If you go back and you look quarter by quarter at the reported results of the organization, there have been a lot of moving pieces. We've had discontinued operations for most of the last three years. We have been reporting non-capitalizable move costs associated with the four new factory construction activities and a number of other items that have made it a little opaque for investors to look through the numbers and see the underlying performance of the business.
I can confirm that with all of the new facility construction projects now complete and all of the portfolio rationalization complete, Q2 of 2025 was the last quarter in which I expect there to be any meaningful noise in the numbers that we report. While we were moving through all of that portfolio change, you can see we drove substantial revenue growth, modest EBITDA margin improvement, and were able to secure a fundamental improvement to the portfolio with the acquisition of AmerCable in January of this year. AmerCable gave us a substantial U.S. wire and cable presence, a U.S. manufacturing footprint in Arkansas, a product portfolio that is highly sought after, and a footprint from which we can grow. AmerCable, I think, is a crucial component of the growth story of this organization going forward.
Standing here in the middle of 2025, with all of these large strategic actions now complete, as I mentioned, you should see us, you will see us focus very, very narrowly on operational efficiency improvement across the manufacturing base. We have what we need from a commercial perspective. We have a very strong technology funnel. You will continue to see us introduce new technologies across all of our business lines to further enhance our ability to capture market share. You will see free cash flow conversion enhanced substantially by a return to more normal course capital spending. When we talk about our aspirations, you see them here on the bottom right.
I believe this is an organization that can consistently deliver 10% growth year- over- year, an organization that can get to and move beyond a 20% EBITDA margin, and an organization that will get to and move beyond a 70% free cash flow conversion rate. Not all of these things will happen overnight, and in the current environment where tariff insanity seems to change by the day, it's difficult to predict exactly when we will cross each of these thresholds. Over the next several years, I am confident that we will meet and exceed these targets. From a balance sheet perspective, this organization was substantially overlevered back in the 2020-2021 timeframe. The sale of businesses from within the portfolio generated approximately $500 million, which we used in part to lower that debt to a net cash position at the end of 2024.
We then took on a modest amount of incremental debt in early 2025 to allow us to acquire AmerCable, and we have begun to pay that debt down. What you will see as we roll forward is a consistent deleveraging to move back into our normal comfort zone, which is a 2x trailing net debt to EBITDA ratio. I expect we reach that point during 2026. We believe in the prudent use of debt. We are comfortable moving above our normal course ratio for brief periods by modest amounts for the right opportunities. You should expect to continue to see us be thoughtful in the use of debt to ensure that we can take advantage of M&A opportunities that will be accretive to our shareholders. We also believe in returning capital to shareholders through share buybacks and have done so consistently over the last two and a half years.
In fact, we've repurchased approximately 14% of the outstanding shares of the company during that timeframe. We exhausted our 12-month NCIB in June of this year and then renewed. We are now in a position where we have the capacity to utilize the NCIB for the next 12 months, and in that timeframe, we have the right to purchase up to approximately 5 million shares. In summary, a business that's moved through fundamental transformation, our portfolio transformation is complete. We have strong drivers in every one of our business lines. I think we have proven to be a prudent deployer of capital, including in the investment to drive organic growth within our manufacturing footprints. As you can see on the right-hand side, currently trading well below industrial manufacturing peers, which is perhaps not a surprise given the noise of the last four years.
As I said earlier, the noise is now behind us. The world is a bit of a crazy place, so it's always difficult to know exactly what one quarter to the next will bring. I believe that we are now positioned to focus very narrowly on operational execution, drive revenue growth, drive margin expansion, and drive free cash flow conversion growth in 2026 and beyond. I'll pause there and just ask if anybody has any questions.
You mentioned tariffs and other claims. Can you just elaborate what it is?
Yeah. The most meaningful tariff challenge that we face is the most recent copper-related tariff announcement. All of the finished goods that we manufacture in the U.S. and Canada are USMCA compliant and therefore do not attract tariffs. Our supply chain has been adjusted appropriately. We do not rely on China for any of our supply chain. We have managed to navigate to a place where our input materials largely are either tariff-free or low tariff. I would say today our annualized direct impact from tariffs is mid-single-digit millions of dollars. Of course, that's incorporated into our reported results. The copper tariff announcement creates a new dynamic. It does not provide exceptions for USMCA compliant products. Currently, our finished goods are not subject to those tariffs, but our supply chain is, and we have had to retool that supply chain very quickly to move from some non-U.S.
sources of copper to U.S. sources of copper, and I can confirm we have successfully been able to complete that. We have a little higher frictional cost in our supply chain than we would have done before, but it's not material. The bigger challenge is a marketplace and a customer base that now has no confidence that they can predict the short or midterm future. The White House was clear that the announcement around copper tariffs in early August would be supplemented with further announcements as we roll through the rest of the year, the next of which is scheduled to occur in late October. I don't think anybody has confidence that they can predict what those announcements will be.
As I noted on our last earnings call, I think the big risk here is that we see a subset of customers who consume products from Mattr and other sources of supply who will choose to delay non-essential purchases and non-essential projects because they cannot predict what the cost to execute those projects will be. I also mentioned on the earnings call that we've already seen that happen this year. We've seen some fairly substantial mining-related projects in Canada that have been suspended because tariff uncertainty on the mined product has brought into question the economics of the projects. I think we are likely over the second half of the year to see some declining in demand for specific wire and cable products, not particular to Mattr, but across the industry.
At this point, it's difficult to predict when that uncertainty will reach a level that is low enough for customers to have confidence to deploy their capital in the way they originally had expected. I don't believe that Mattr will be disadvantaged in this space, but I do believe that there is a ceiling to some degree on near-term demand that we just have to navigate. Yes, sir.
Where are you in terms of your system? I know you don't want to manufacture any of that work, but are you on the same fine systems, same ERP, the same manufacturing systems?
Largely so, yes. The one exception is AmerCable, which obviously joined the organization in January. We are an IFS house when it comes to ERP. They are an Oracle house. Quite frankly, I think we'll leave them there for now because the pain and cost of changing ERPs is not always worth the effort. In their case, their system's very well implemented and very efficient. I would describe AmerCable as being on the upper end of the operational efficiency scale within our organization. Any other questions?
Wiring low voltage vehicles and travel routines?
Sure. The Shawflex brand, the primarily Canadian-focused brand, is low voltage. That's up to 5,000 volts. In that business, we have historically served, like I said, the Canadian market, including the Canadian nuclear market, Canadian aerospace market, and then more broadly industrial and infrastructure applications in Canada. In recent years, we have begun to sell those low voltage products into the U.S., particularly into U.S. utility and U.S. aerospace applications. The AmerCable brand offers both low and medium voltage. Medium voltage goes all the way up to about 35,000 volts. AmerCable has historically sold its products roughly 70% to U.S. customers and 30% to non-U.S. customers, most of which are Canadian miners, but also some sales into select international markets around the world.
Can you talk more about the growth? The customers that you see, the difference between the $15 million and the $15 million?
Yes, happy to do that. $15 million, I think, has consistently been proven to be the right number for maintenance for us, even with the addition of AmerCable. I think, you know, prior to AmerCable, I would have told you that it was a range of $10 million - $15 million. Now I'd tell you it's probably around $15 million with AmerCable. The growth investments that we are likely to deploy in 2026 will be fairly modest tickets of incremental equipment going into specific sites where we are seeing demand begin to outstrip our ability to supply. You will see some investments into semi-automation, particularly in our Xerxes tank manufacturing facility, which is facilities which are the most manual manufacturing facilities we own today.
You will see some investment to enable new products to be manufactured, the most substantial of which will be in our Flexpipe business, where I think in 2026 we'll be in a position to launch a new higher temperature version, which will directly serve Middle Eastern target markets and will require a very modest amount of capital to add on some functionality to existing equipment. Almost all of the capital will be going into manufacturing facility equipment. If there are no other questions, I appreciate your time and your interest in the company, and if you have anything follow-up offline, please don't hesitate to reach out to a member of the organization. Thank you very much.