TORONTO, May 14, 2024 (GLOBE NEWSWIRE) -- Mattr Corp. ("Mattr" or the "Company") (TSX:MATR) reported today its operational and financial results for the three months ended March 31, 2024. This press release should be read in conjunction with the Company's management's discussion and analysis ("MD&A") and interim consolidated financial statements for the three months ended March 31, 2024, which are available on the Company's website at www.mattr.com and on SEDAR+ at www.sedarplus.ca. Highlights from the first quarter include1: Consolidated revenue was $224 million, operating income was $8 million and Adjusted EBITDA was $30 million; Composite Technologies segment revenue was $119 million, a 10% decrease compared to the $133 million delivered in the prior year's quarter; Connection Technologies segment revenue was $91 million, a 4% decrease compared to the $95 million delivered in the prior year's quarter; On a consolidated basis, Mattr reported a Net Loss of $0.2 million, fully diluted (Losses) Earnings Per Share ("EPS") of $(0.09) and fully diluted Adjusted EPS of $0.16 during the quarter; Subsequent to the quarter, the Company closed on an upsized offering of $175 million aggregate principal amount of 7.25% senior unsecured notes due 2031 and utilized the proceeds to fund the redemption of its outstanding 9.0% senior unsecured notes due 2026, to pay related fees and expenses and for general corporate purposes; and Subsequent to the quarter, the Company amended its US$300 million senior secured revolving credit facility to, among other things, extend its term through April 2028. "During the first quarter of 2024, Mattr continued to efficiently execute its underlying business operations, delivering high-value solutions to customers as they expand and renew critical infrastructure around the world," said Mike Reeves, President and CEO of Mattr. "In parallel, we made substantial progress on our North American production footprint modernization, expansion and optimization ("MEO") strategy and expect production from the first two of our four new sites around mid-year." Mr. Reeves continued, "As several of our business lines emerge from first quarter seasonal lows, we expect a robust step-up in revenue and Adjusted EBITDA generation during the second quarter of 2024. Based on the Company's current visibility, a number of international Flexpipe orders originally anticipated to be delivered during the second quarter of 2024 now seem more likely to be delivered in the second half of 2024, and consequently the Company now anticipates revenue and Adjusted EBITDA to move upwards sequentially in both the second and third quarters of 2024. While we will continue to be impacted by one-time costs tied to our North American production footprint MEO activities, our belief is unchanged that full year 2024 revenue and underlying profitability will be higher than that of Continuing Operations in 2023." 1 EBITDA, Adjusted EBITDA and Adjusted EPS are non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See "Section 5.0 – Reconciliation of Non-GAAP Measure and Other Financial Measures" for further details and a reconciliation of these non-GAAP measures. "Our businesses serve large and growing end markets, we have a robust balance sheet, significant opportunities for investment in high return organic growth, the capacity to seek and complete meaningful, accretive acquisitions and the intention to renew our normal course issuer bid program when eligible (subject to the requirements and approvals of the Toronto Stock Exchange, which has not yet been applied for or obtained). Consequently, management believes Mattr is well positioned to deliver substantial value creation for shareholders and to meet our stated growth, profitability and free-cash-flow conversion objectives over the coming years," further added Mr. Reeves. Selected Financial Highlights   (in thousands of Canadian dollars, except per share amounts and percentages)   Three Months Ended March 31       2024       2023             $     % $     %   Revenue   224,461     238,732       Gross profit   65,348   29 % 74,098   31 %   Income from Continuing Operations(a)   7,725   3 % 30,277   13 %   Net (Loss) Income from Continuing Operations   (234 )   20,708       Net (Loss) Income from Discontinued Operations   (5,405 )   4,521       Net (Loss) Income for the period   (5,639 )     25,229       (Losses) Earnings per share:                   Basic   (0.09 )     0.36     Diluted   (0.09 )   0.36       Adjusted EBITDA from Continuing Operations (b)   30,069   13 % 40,466   17 %   Adjusted EBITDA from Discontinued Operations(b)   —   —   14,062   11 %   Total Adjusted EBITDA from Operations (b)   30,069   13 % 54,528   15 %   Total Adjusted EPS from Operations: (b)               Basic   0.16     0.37       Diluted   0.16     0.37     (a) Operating income in the three months ended March 31, 2024, includes restructuring costs of $3.2 million; while operating income in the three months ended March 31, 2023, includes no restructuring costs. (b) Adjusted EBITDA and Adjusted EPS are non-GAAP measures. Non-GAAP measures do not have standardized meanings prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See "Section 5.0 – Reconciliation of Non-GAAP Measures" for further details and a reconciliation of these non-GAAP measures.     1.0 FIRST QUARTER HIGHLIGHTS The first quarter of 2024 saw the Company's Composite Technologies segment revenue and Adjusted EBITDA decrease compared to the same quarter of 2023, as the segment navigated approximately 19% lower average North American oilfield drilling rig count, normal seasonal slowness in underground storage tank installation activity and completed its final quarter of lowered underground fuel tank production in response to transient customer permitting challenges encountered earlier in 2023. The Company's Connection Technologies segment delivered first quarter revenue and Adjusted EBITDA modestly below the same quarter of 2023, with continued strength in North American infrastructure markets mostly offsetting lingering slowness in the Canadian wire and cable distribution sector and the non-recurrence of a large aerospace order which delivered substantial profitability during the first half of 2023. Consequently, the first quarter of 2024 saw the Company's consolidated revenue, operating income and Adjusted EBITDA decrease compared to the same quarter of 2023. The Company's operating income from Continuing Operations was $7.7 million and Adjusted EBITDA1 from Continuing Operations was $30.1 million in the first quarter of 2024, a decrease of $22.6 million and $10.4 million, respectively, compared to the first quarter of 2023. Operating income from Continuing Operations in the first quarter included restructuring cost of $3.2 million booked in connection with the closure of the Xerxes®' Anaheim tank manufacturing facility, whereas the comparable period for the prior year included no restructuring costs. Additionally, share-based incentive compensation of $7.6 million was recorded against operating income from Continuing Operations during the first quarter of 2024. This was driven by an increase in the Company's share price during the period. Comparatively, operating income from Continuing Operations in the prior year's first quarter was not significantly impacted by share-based incentive compensation expense. During the fourth quarter of 2023, the Company completed the sale of a substantial majority of the assets of its pipe coating business, or Pipeline Performance Group, to Tenaris S.A. ("Tenaris") The Company received total gross proceeds of $241.2 million, which included the agreed-upon purchase price of $225.4 million and an initial working capital estimate. The final net cash proceeds received by the Company in satisfaction of the contractual purchase price for the sale of the PPG business remains subject to completion of a customary final true up of the estimated working capital calculation as provided in the definitive purchase and sale agreement in respect of the transaction. The Company now expects its net cash outflow to settle the working capital adjustment to be approximately $37.4 million and therefore in the first quarter of 2024 recorded an additional $5.4 million loss from the sale of the PPG business in Discontinued Operations. The Company expects the parties to finalize the net working capital adjustment by the third quarter of 2024. As at March 31, 2024, the Company had cash and cash equivalents totaling $316.0 million, a decrease from the $334.1 million as at December 31, 2023 (March 31, 2023 – $162.0 million). The decrease in cash compared to the fourth quarter of 2023 was largely attributable to investments of $30.6 million in capital expenditures, primarily related to the Company's North American production footprint Modernization, Expansion and Optimization ("MEO") strategy, partially offset by an operating cash inflow of $10.5 million despite a $12.2 million increase in net working capital. Subsequent to the quarter, the Company closed on a private offering of $175 million aggregate principal amount of 7.25% senior unsecured notes due 2031. The proceeds were primarily used to fund the redemption of its outstanding 9.00% senior unsecured notes due 2026, to pay related fees and expenses and for general corporate purposes. Also subsequent to the quarter, the Company amended its US$300 million senior secured revolving credit facility through April 2028. Based on the actions completed and planned, the Company expects to generate sufficient cash flows and have continued access to its credit facilities; subject to covenant limitations, to fund its operations, working capital requirements and capital program including share buybacks. The Company will continue to focus on maximizing the conversion of operating income into cash, optimizing its capital structure, investing in organic and inorganic growth opportunities, and enhancing shareholder value. 1 EBITDA, Adjusted EBITDA, Adjusted EPS, and net debt-to-Adjusted EBITDA are non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See "Section 5.0 – Reconciliation of Non-GAAP Measures" for further details and a reconciliation of these non-GAAP measures. Selected Segment Financial Highlights   (in thousands of Canadian dollars, except percentages)   Three Months Ended March 31     2024       2023           $     % $     %   Revenue             Composite Technologies   119,282     132,549       Connection Technologies   90,757     94,687       Financial, Corporate, and Others   14,422     11,496       Revenue from Continuing Operations   224,461     238,732       Revenue from Discontinued Operations   —     125,673       Operating income             Composite Technologies   4,017   3.4 % 20,722   15.6 %   Connection Technologies   14,543   16.0 % 16,993   17.9 %   Financial and Corporate   (10,835 )   (7,438 )     Operating income from Continuing Operations   7,725     30,277       Operating Income from Discontinued Operations   —   —   5,353   4.3 %   Adjusted EBITDA             Composite Technologies   15,008   12.6 % 26,748   20.2 %   Connection Technologies   17,617   19.4 % 18,352   19.4 %   Financial and Corporate   (2,556 )   (4,634 )     Adjusted EBITDA from Continuing Operations (a)   30,069   13.4 % 40,466   16.9 %   Adjusted EBITDA from Discontinued Operations (a)   —   —   14,062   11.2 % (a) Adjusted EBITDA is a non-GAAP measure. Non-GAAP measures do not have a standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See "Section 5.0 – Reconciliation of Non-GAAP Measures" for further details and a reconciliation of these non-GAAP measures.     Composite Technologies segment revenue in the first quarter of 2024 was $119.3 million, a decrease of $13.3 million, or 10.0%, compared to the first quarter of 2023. Operating income in the first quarter of 2024 was $4.0 million and represented a $16.7 million decrease from the $20.7 million reported in the first quarter of 2023. The year over year decrease in revenue was entirely concentrated in the segment's Xerxes business, partially offset by growth in its Flexpipe business, despite approximately 19% lower North American drilling and completion activity. Within Xerxes, year-over-year revenue contraction was primarily the consequence of a more pronounced seasonal reduction in market activity as customers faced unfavorable ground conditions for fuel station construction and storm water product installation. Within Flexpipe, revenue expansion versus the prior year was primarily the consequence of an increase in international sales, including larger diameter products, partially offset by a modest decline in North American sales, where the Company's performance substantially exceeded a material drilling rig count decline. The segment also incurred restructuring costs associated with the closure of its Anaheim production facility of $3.2 million and non-capitalizable MEO costs of approximately $2.3 million associated with the establishment of its new North American production sites during the quarter. Adjusted EBITDA in the first quarter of 2024 was $15.0 million, a decline from the $26.7 million reported in the first quarter of 2023 primarily attributed to lower Xerxes revenue, compounded by MEO costs and higher freight costs associated with international Flexpipe sales, partially offset by cost savings associated with the closure of the Anaheim facility. The Connection Technologies segment delivered revenue of $90.8 million in the first quarter of 2024 which was a decrease of roughly $3.9 million or 4.2% compared to the first quarter of 2023. Its operating income in the first quarter of 2024 was $14.5 million compared to $17.0 million in the first quarter of 2023. This decrease in the segment is mainly attributed to the absence of a substantial wire and cable product shipment into the aerospace market, which contributed favorably in the first quarter of 2023. Substantially offsetting this decrease, the segment saw stronger demand in automotive, infrastructure and industrial markets. The segment also incurred MEO costs of less than half a million dollars associated with the relocation of its North American footprint during the quarter. The segment delivered Adjusted EBITDA1 of $17.6 million during the first quarter of 2024, a 4.0% decrease versus the prior year quarter. The Company sold its businesses formerly reported under the Pipeline and Pipe Services segment, excluding the entities not within the perimeter of the transaction, to Tenaris during the fourth quarter of 2023. As such, Discontinued Operations did not generate revenue or Adjusted EBITDA for the Company during the first quarter of 2024. 2.0 OUTLOOK The Company expects a sequential rise in quarterly consolidated revenue and Adjusted EBITDA during the second quarter of 2024, driven predominantly by increased performance of its Composite Technologies segment. Within this segment, higher production and shipment of Xerxes FRP tanks is anticipated as customer construction activity rises and the Company elevates tank production activity following completion of its multi-quarter output curtailment program. In addition, while consolidated North American onshore drilling rig count is expected to modestly decline versus the first quarter of 2024, driven primarily by break-up conditions in Canada and customer consolidation in the US, Flexpipe revenue is expected to rise in the second quarter as the timing of specific customer deliveries, continued new customer capture and larger diameter product market share gains in North America are further enhanced by another strong quarter of international shipments. Revenue in the second quarter of 2024 is expected to increase slightly on a sequential basis within the Connection Technologies segment, primarily driven by expected continued strong demand within North American industrial and infrastructure markets and anticipated share gain by the Company in North America and Europe within the segment's DSG Canusa business. While consolidated revenue in the second quarter of 2024 is expected to be modestly above the same quarter of 2023, the Company anticipates some margin compression as a result of its MEO activities and the specific mix of product sales in each of its operating segments. During the second quarter of 2023, the Company detailed several planned capital investments into high-return growth and efficiency improvement opportunities in both segments. These investments and other MEO activities, which are currently progressing on time and on budget, include: The addition of two new manufacturing facilities and the elimination of one aging manufacturing facility within the Composite Technologies network, namely: a new Xerxes FRP tank production site in Blythewood, South Carolina that is expected to commence production in mid-2024; a new Flexpipe composite pipe production site in Rockwall, Texas that is expected to commence production in mid-2024; and the shut-down and exit of a Xerxes FRP tank production site in Anaheim, California that is expected to be largely complete by the end of 2024. The replacement of the Company's Rexdale, facility in Toronto, Ontario and the expansion of its Connection Technologies segment's North American manufacturing footprint through: a new heat-shrink tubing production site in Fairfield, Ohio that is expected to commence production in late 2024; and a new wire and cable production site in Vaughan, Ontario that is expected to commence production in late 2024. The Company expects to continue to make sizeable organic investments throughout 2024 to modernize, expand and optimize capacity in targeted geographies and improve efficiency within the North American production network of its Composite Technologies and Connection Technologies segments. Given the anticipated timing of these MEO actions, the Company continues to expect to recognize meaningful MEO costs throughout 2024, with these costs weighted towards optimization and growth activities within the Composite Technologies segment during the first half of 2024 and weighted towards the modernization and growth activities within the Connection Technologies segment during the second half of 2024. In aggregate, once completed, these planned investments are expected to result in the Company creating at least $150 million per year of incremental revenue generating capacity with comparable margins to those realized in its Composite Technologies and Connection Technologies segments. These levels of output are expected to be realized over the 3–5 year period following completion, as the facilities reach efficient utilization levels in accordance with their currently expected timelines. The Company does not expect its exit from the Xerxes production site in Anaheim, California, to alter these output expectations in light of its capital investments and MEO activities. In management's view, the underlying mid- and long-term market trends for all of Mattr's core businesses remain favourable. Despite continued elevated interest rates, demand for products in support of critical infrastructure renewal and expansion is expected to remain robust; fuel tank customers of its Xerxes business have made adjustments to accommodate elongated permitting timelines which are anticipated to result in more normalized FRP tank shipment patterns during the second quarter of 2024; and a relatively stable oil and gas commodity price environment is expected to provide opportunities for market share gains by the Company's Flexpipe business, particularly within its larger diameter product portfolio, moving through the year. More broadly, management expects that demand for its differentiated products designed to withstand harsh environments will continue to rise in the coming years as a result of the global need to renew and expand critical infrastructure, including energy generation and distribution, electrification, transportation network enhancement and storm water management, but remains alert to potential industrial market softness as a result of sustained higher interest rates and the uncertainty around the approaching US Presidential election cycle. The Company continues to closely monitor raw material and labour costs and accordingly, will continue to ensure its pricing appropriately reflects the value of its products and its cost inputs. The Company continues to explore options to divest of its Brazilian pipe coating operations ("Thermotite"), formerly part of the PPG operating unit. While the Company does not anticipate Thermotite's financial results to be material to the organization, the business is fully booked throughout 2024 and is expected to deliver increased full year 2024 financial performance when compared to 2023. The Company continues to take an "all of the above" approach to capital allocation, skewed towards investment in organic and inorganic acquisition and investment opportunities viewed as having the highest risk-adjusted return on investment potential. With substantial capacity to deploy capital and the expectation to deploy available capital over the next several quarters, the Company continues to elevate focus on inorganic opportunities, including opportunities of meaningful scale, particularly related to differentiated wire & cable sectors and water products, where long-term tailwinds are expected. The Company remains focused on ensuring any capital investments provide superior returns (both near and long-term) to shareholders in light of all available options, including the return of capital to shareholders. Additional opportunities exist to further enhance the Company's organic growth trajectory. On May 14, 2024, the Company's board of directors approved the renewal of the Company's normal course issuer bid ("NCIB"), on substantially the same terms and conditions as the current NCIB and subject to the approval of the TSX, which has not yet been applied for or obtained. If the NCIB renewal is approved, the Company will continue to repurchase its common shares on an opportunistic basis. 1 EBITDA, Adjusted EBITDA, adjusted EBITDA margins and net debt-to-Adjusted EBITDA are non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See "Section 5.0 – Reconciliation of Non-GAAP Measures" for further details and a reconciliation of these non-GAAP measures. Composite Technologies Segment Production and shipment of Xerxes' FRP tanks and storm water management products are expected to rise in the second quarter of 2024 as weather and ground conditions across much of North America improve, allowing construction activity for fuel stations and other commercial structures to accelerate. Permitting delay issues that had plagued many of the Company's fuel customers across North America over the course of 2023 appear to have been largely mitigated, and in response the Xerxes business expects to elevate its production activity during the second quarter of 2024. Although relatively stable commodity prices are expected to prevail, the Company anticipates North American onshore oil and gas drilling rig count will modestly decline in the second quarter of 2024 when compared to the first quarter of 2024, driven primarily by seasonal break-up conditions in Canada and customer consolidation in the US, which typically results in temporarily lower activity levels within the impacted organizations. Despite this market outlook, Flexpipe revenue is anticipated to rise in the second quarter of 2024 as the timing of specific customer deliveries, continued new customer capture and larger diameter product market share gains in North America are expected to be further enhanced by another strong quarter of international shipments. EBITDA margins for the Composite Technologies segment in the second quarter of 2024 are likely to be compressed compared to the prior year quarter by the impact of MEO cost recognition, a modestly elevated freight cost burden tied to Flexpipe international shipment activity and the ongoing inefficiency of transporting larger diameter pipe products from the Company's Calgary facility into West Texas. The Company expects these shipping cost inefficiencies to begin easing as its Rockwall, Texas facility commences production around mid-2024. In recent quarters the Company has been successful in securing multiple Flexpipe orders, including larger diameter product orders, for delivery into international projects. These deliveries occurred partially during the first quarter of 2024 and are expected to continue during the second quarter of 2024. Additional international opportunities for delivery during the second, third and fourth quarters of 2024 are being pursued, however, due to the somewhat unpredictable nature of international project order placement and subsequent delivery, some variability in schedules may exist and movements in the schedule between quarters could occur. Based on the Company's current visibility, several new international orders originally anticipated to be delivered during the second quarter of 2024 now are anticipated to be delivered in the second half of 2024. The segment continues to execute the establishment of two new US production sites, with its Rockwall, Texas Flexpipe and Blythewood, South Carolina Xerxes facilities progressing on-budget and currently expected to commence commercial production around mid-year. In addition, the segment continues to progress on the exit of its aging Anaheim, California Xerxes tank facility. Tank production at this site ceased early in the first quarter of 2024 and the facility is expected to be fully vacated by year end, further lowering the Company's fixed cost and operating risk base. In combination, the actions taken to modernize, expand and optimize the segment's North American production footprint are expected to lower average production costs, increase total production capacity and position the segment to deliver meaningful growth and margin expansion in subsequent years. The Company continues to expect MEO costs will lower segment EBITDA margins during the remainder of the first half of 2024. The Company expects that there will be sufficient revenues from these new facilities to absorb incremental fixed costs during the ramp up periods, and both new facilities have sufficient physical space to enable further production line additions in future years. The segment continues to closely monitor raw material and labour costs and, as a result, will continue to ensure its pricing appropriately reflects the value of its products and its cost inputs. Connection Technologies Segment The Company expects demand for its Connection Technologies segment products will remain relatively consistent in the second quarter of 2024 when compared to the first quarter. The Company is expecting to benefit from continued infrastructure spending in 2024 and beyond as new and upgraded utility and communication networks are constructed, nuclear refurbishments ...