Core Insights - The company reported a significant increase in year-end backlog, which rose 122% year-over-year and 74% quarter-over-quarter, reaching the highest level in its history, driven by large multi-year projects in the data center ecosystem [1][7] - Full-year revenue for 2025 increased by 13.9% to CAD 898.3 million, with fourth-quarter revenue at CAD 254.1 million, reflecting strong performance particularly in the U.S. and Mexico [3][7] - The company is expanding its manufacturing capacity, having added over CAD 100 million of capacity at Monterrey 4 ahead of schedule and planning additional investments through 2026-27 [5][17] Revenue and Growth - The strongest sales growth was observed in the U.S. and Mexico, with an increase of 18.1%, attributed to distribution, private label programs, and custom-engineered solutions [2][7] - Canadian sales also saw an increase of 8.6%, supported by infrastructure and industrial activity, while shipments to India declined but still contributed positively to margins [2] Margin and Cost Pressures - Gross margin declined to 30.3% from 32.8% due to higher copper prices, tariffs, and unabsorbed overhead from ramping new facilities, with fourth-quarter gross margin at 29.2% [6][9][11] - Management expects factory absorption to improve as utilization rises in 2026, although tariff changes could further impact margins [9][13] Earnings and Financial Performance - The company reported net earnings of CAD 72.2 million for 2025 and adjusted EBITDA of CAD 133.3 million, reflecting stability despite margin pressures [14] - Working capital improved by CAD 9.5 million in the fourth quarter, with net debt decreasing to CAD 15 million from CAD 28 million at the end of the third quarter [16] Capacity Expansion and Acquisitions - The company is set to acquire AEG Power Solutions for CAD 365 million, which is expected to enhance its recurring services and global footprint [5][19] - Additional projects are expected to add CAD 100 million in custom transformer capacity through 2026 and early 2027 [17] Strategic Investments - The company made CAD 3 million in minority investments in power quality solutions during the fourth quarter, focusing on innovative technologies [20] - Capital expenditures for 2026 are expected to remain roughly the same as in 2025, with a focus on inventory levels as a working capital opportunity [21]

Financial Data and Key Metrics Changes - Net revenue for Q2 was $369.3 million, at the high end of guidance, up 23.5% sequentially and 36.4% year-over-year [4] - Operating margin for Q2 was 19.3%, above guidance, increasing 360 basis points quarter-over-quarter and 440 basis points year-over-year [4] - EPS was $0.22, above guidance, up $0.07 sequentially and $0.09 year-over-year [5] Business Segment Data and Key Metrics Changes - NSE revenue for Q2 was $291.5 million, at the high end of guidance, up 45.8% year-over-year due to acquisitions [6] - OSP revenue for Q2 was $77.8 million, slightly above guidance, up 9.7% year-over-year, driven by anti-counterfeiting products [7][8] - NSE gross margin was 64.7%, down 10 basis points year-over-year, while operating margin was 15.6%, up from 8.7% last year [7] Market Data and Key Metrics Changes - Strong demand in the data center ecosystem and aerospace and defense sectors contributed to revenue growth [14] - The service provider business remained stable, with some opportunistic demand from cable operators transitioning to new standards [15] Company Strategy and Development Direction - The company is focusing on operational efficiencies through a restructuring plan, impacting approximately 5% of the workforce, with expected annual savings of about $30 million [10][11] - The strategy includes reinvesting savings into higher growth areas, particularly in data center and aerospace and defense applications [11][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth driven by strong demand in the data center ecosystem and aerospace and defense sectors [14][15] - The company anticipates revenue for Q3 to be in the range of $386-$400 million, with NSE revenue expected to be between $304 and $316 million [12][13] Other Important Information - Total cash and short-term investments at the end of Q2 were $772.1 million, up from $549.1 million in Q1 [8] - The company plans to pay an earnout liability of about $75 million for Inertial Labs due to strong performance [13] Q&A Session Summary Question: Update on NSE business mix across data center, aerospace and defense, and telco - Management indicated a shift towards 45% data center, 40% service provider, and 15% aerospace and defense, with service provider showing slight recovery [21][22] Question: Visibility on demand and order book - Management confirmed improved visibility on demand, with multi-quarter commitments from hyperscalers [26][27] Question: Impact of restructuring on specific product areas - Restructuring is across multiple functions to enhance efficiency, not targeting specific areas [29][30] Question: Exciting defense and aerospace programs - Key drivers include resilient PNT systems for drones and autonomous systems, with strong growth expected [35][36] Question: Cadence of optical innovation in data centers - Demand is strong across all segments, with significant engagement from semiconductor vendors and module manufacturers [41][42] Question: Seasonal trends in service provider business - Management expects a tailwind in Q4 due to continued strength in data center and aerospace and defense sectors [88]

Financial Data and Key Metrics Changes - Net revenue for Q1 2026 was $299.1 million, exceeding guidance of $290 million to $298 million, representing a 3% sequential increase and a 25.6% year-over-year increase [4] - Operating margin for Q1 was 15.7%, above guidance of 14.6% to 15.4%, and increased by 130 basis points sequentially and 570 basis points year-over-year [4] - EPS for the quarter was $0.15, above guidance of $0.13 to $0.14, and increased by $0.02 sequentially and $0.09 year-over-year [4] Business Segment Data and Key Metrics Changes - NSC revenue was $216 million, above guidance of $208 million to $214 million, with a year-over-year increase of 35.5% driven by strong demand from the data center ecosystem and the acquisition of Inertia Labs [5] - OSB revenue was $83.1 million, in line with guidance of $82 million to $84 million, and up 5.5% year-over-year, primarily due to strength in anti-counterfeiting products [6] Market Data and Key Metrics Changes - Total cash and short-term investments at the end of Q1 were $549.1 million, compared to $429 million in the previous quarter [7] - Cash flow from operating activities for the quarter was $31 million, up from $13.5 million in the same period last year [7] Company Strategy and Development Direction - The company expects continued strong demand in NSC driven by the data center ecosystem and aerospace and defense customers, with a focus on integrating the recently acquired Spirent Communications product lines [9][10] - The company plans to report NSC as one business segment going forward, leveraging complementary product portfolios [10] Management's Comments on Operating Environment and Future Outlook - Management noted strong momentum from Q4 2025, with expectations for continued growth in NSC driven by data center demand and aerospace and defense [11][12] - The service providers' business was stable, with gradual recovery in fiber offset by soft demand for wireless products [13] Other Important Information - The company successfully refinanced $250 million in convertible notes and repurchased approximately 2.7 million shares for about $30 million [7] - The acquisition of Spirent Communications is expected to add about $200 million in annual revenue run rate, higher than the previous estimate of $188 million [8][44] Q&A Session Summary Question: Update on revenue mix between core telecom service provider and new products - Management indicated a shift in revenue mix to approximately 45% service provider, 40% data center ecosystem, and 15% aerospace and defense, with data center revenue approaching service provider levels [18][19] Question: Growth breakdown in core NSC business - Management noted strong demand from data center and aerospace and defense sectors, with traditional field instruments seeing increased demand from hyperscalers [20][22] Question: Operating margin guidance for NSC - Management expects operating margins to improve with Spirent's contribution, projecting around $165 million in quarterly revenue from Spirent [24][25] Question: Impact of wireless business recovery on earnings - Management acknowledged that recovery in the wireless segment could significantly enhance earnings, with potential for EPS to approach $1 if trends continue positively [27][28] Question: Margin profile of Spirent Communications business - Management stated that Spirent has a higher gross margin than the average NSC and is expected to be accretive post-integration [51][52]

Financial Data and Key Metrics Changes - Net revenue for Q3 2025 was $284.8 million, exceeding the guidance range of $276 million to $288 million, representing a sequential increase of 5.2% and a year-over-year increase of 15.8% [6][7] - Operating margin for the quarter was 16.7%, above the guidance range of 13% to 15%, and increased by 1.8% sequentially and 7.4% year-over-year [6][7] - EPS was $0.15, above the guidance range of $0.10 to $0.13, and increased by $0.02 sequentially and $0.09 year-over-year [7] Business Segment Data and Key Metrics Changes - NSE revenue was $208.2 million, slightly above the guidance range of $200 million to $212 million, with a year-over-year increase of 22.6% [7][8] - NE revenue was $188 million, up 23.9% year-over-year, driven by strong demand for fiber lab and production products [7][8] - SE revenue was $20.2 million, an increase of 11.6% year-over-year, aligning with expectations [8] - NSE gross margin was 63.1%, up 1.7% year-over-year, while NE gross margin was 63.4%, an increase of 190 basis points [8] - OSP revenue was $76.6 million, slightly above the guidance range, with a year-over-year increase of 0.5% [9] Market Data and Key Metrics Changes - The demand for fiber monitoring systems is being driven by service providers and hyperscale data center operators, indicating a strong recovery in the market [16] - The aerospace and defense segment is expected to be a multiyear growth driver, particularly due to the acquisition of Inertia Labs [16][45] - Wireless business demand is recovering, particularly for 5G field instruments, although infrastructure test products continue to show weakness [16] Company Strategy and Development Direction - The company is focusing on M&A, with plans to acquire Spirent's high-speed Ethernet and network security business lines, financing this with additional debt while maintaining financial discipline [12] - The company expects to realign its supply chain to mitigate tariff impacts within six months [29] - The strategy includes passing on tariff costs to customers, which is being accepted without significant pushback [34][37] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook for Q4 due to potential delays in customer orders related to tariffs, although no orders have been canceled [22][25] - The company anticipates that the overall demand will remain flat relative to Q3, with specific segments like NSE taking a more prudent outlook [13][18] - Management noted that the demand for wireless field instruments is a leading indicator for the resumption of 5G network build-out [16] Other Important Information - Total cash and short-term investments at the end of Q3 were $400.2 million, down from $512.8 million in the previous quarter, primarily due to the Inertia Labs acquisition [11] - CapEx for the quarter was $6.8 million, compared to $3.2 million in the same period last year [12] Q&A Session Summary Question: Concerns about tariff impacts on revenue - Management noted that while there are concerns about delays in approved POs, no orders have been canceled, and customers are accepting tariff increases [22][23][25] Question: Revenue sourced from regions with high tariffs - Approximately 15% of revenue is subject to tariffs, with 3% directly impacted by current tariffs, but the company is working to mitigate this through supply chain adjustments [28][29] Question: Technology domains for future growth - The data center ecosystem is expected to drive strong growth, particularly in fiber lab and production, along with aerospace and defense segments [44][46] Question: OSP business outlook - The OSP business is expected to remain stable, with strength in anti-counterfeiting products offsetting seasonal weaknesses [53][54] Question: Service provider spending trends - Management believes there is a healthy demand from service providers, with a gradual return to normal spending patterns [60][62]