Financial Data and Key Metrics Changes - For the fourth quarter, the company generated $0.29 per share of GAAP net investment income, with Core Net Investment Income also at $0.29 per share, excluding excise taxes [5] - Total realized income for the quarter was $0.48 per share, which included realized gains of $5.5 million on five equity positions [5] - Net asset value per share decreased by $0.23 during the quarter, attributed to $0.11 per share in dividend payments exceeding earnings and net realized losses of $0.12 per share primarily from two debt investments [5] Business Line Data and Key Metrics Changes - The investment portfolio at fair value remained stable at $1.01 billion across 115 portfolio companies [6] - During the fourth quarter, the company invested $34.1 million in four new portfolio companies and received repayments totaling $37.9 million [6] - 99% of loans were secured, with 92% priced at floating rates, and the average loan per company was $8.8 million [7] Market Data and Key Metrics Changes - The company has investments in 24 separate industry sectors, with approximately 10% in high-tech industries [8] - The portfolio includes a small number of loans to software companies related to the SaaS space, comprising 6.8% of the loan portfolio [9] Company Strategy and Development Direction - The company announced a $20 million share buyback program, reflecting the current trading level of shares at approximately a 30% discount to net asset value [16] - The external manager, Stellus Capital Management, is set to join Ridgepost Capital, which is expected to open up new investment opportunities for the company [14][15] - The company focuses on direct, originated, senior secured loans to lower middle market private equity-backed companies, differentiating itself from larger private credit managers [18] Management's Comments on Operating Environment and Future Outlook - The company expects to maintain its portfolio size at approximately $996 million, with continued equity realizations of about $2 million in Q1 2026 [12] - Management expressed confidence in the private credit sector, highlighting the significant amount of dry powder available in lower middle market private equity firms [21] - The company anticipates a gradual resolution of non-accrual assets over the next 12-18 months, with a focus on restructuring and monetizing positions [60] Other Important Information - The company has paid $333 million in dividends since its IPO, representing $18.27 per share to investors [4] - The weighted average risk rate across the portfolio is approximately 2, indicating investments performing on plan [18] Q&A Session Summary Question: Will there be any change in the leverage targets for SCM? - Management confirmed that there will not be a change in the targeted leverage for SCM, which is approximately 1:1 on the regulatory test [27] Question: What is the remaining capacity in the SBA? - Management indicated that there is significant new capacity in the SBA, with $65 million of new debentures available for growth [29] Question: Can you provide details on the non-accrual investments? - Management stated that the non-accrual companies are working with others to secure additional capital during challenging periods [30] Question: What is the exposure to higher energy prices? - Management confirmed no direct exposure to the oil and gas industry and emphasized a focus on avoiding commodity price risk [52] Question: What is the expected timeline for resolution of non-accrual assets? - Management anticipates a gradual resolution over the next 12-18 months, with some assets being restructured [60] Question: Will spreads widen sustainably in the next year or two? - Management noted that public loan indices have widened, and while private markets have not yet reflected this, the conditions for widening spreads are present [62]

Financial Data and Key Metrics Changes - Oil-Dri generated EBITDA of $22 million in Q2 fiscal 2026, consistent with the same quarter a year ago [14] - Cash flows from operating activities for the first six months of fiscal 2026 exceeded $28 million, with cash and cash equivalents at $47 million at the end of Q2 [15] - Outstanding debt was $40 million, indicating a strong cash position with more cash than debt [16] Business Line Data and Key Metrics Changes - The agriculture and horticulture products segment showed strong performance, driven by increased planted acres and new customer opportunities for Verge granules [29][30] - The consumer products division launched several new products, including an antibacterial litter and health monitoring litter, which are expected to enhance market presence [35][36] Market Data and Key Metrics Changes - The broad acre market for agriculture products is experiencing growth due to increased planted acres, while the turf and ornamental market is also seeing strong demand for engineered granules [29][30] - Renewable diesel sales faced challenges due to changes in tax incentives and feedstock sourcing, but there is potential for recovery as producers adjust [39][40] Company Strategy and Development Direction - The company is focused on long-term capital allocation to sustain high uptime and optimize capacity, rather than viewing capital spending as a discrete project [22] - Continued investment in growth and infrastructure projects is planned, with new product launches expected in the second half of the fiscal year [16] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in the team's response to Winter Storm Fern, highlighting the commitment to safety and customer service [12][14] - The company anticipates continued strong performance in agriculture and horticulture, with optimism about new product introductions and market expansion [31][35] Other Important Information - The company is integrating artificial intelligence into R&D to enhance product development and operational efficiency [61] - The management team emphasized the importance of maintaining a strong cash position to support strategic initiatives [16] Q&A Session Summary Question: Progress on capital expenditure for plant upgrades - The capital spending program is progressing as intended, focusing on foundational areas and ongoing improvements rather than a defined endpoint [22][23] Question: Sales increase in agriculture and horticulture products - Strong performance in both broad acre and turf markets, with expectations for continued growth driven by new customer opportunities [29][30] Question: New product introductions in the second half - Several new products are set to launch, including expansions in the Cat's Pride litter portfolio, aimed at enhancing consumer experience and e-commerce fulfillment [35][36] Question: Weakness in renewable diesel sales - Sales were impacted by changes in tax incentives and feedstock sourcing, but recovery is expected as producers adapt to new conditions [39][40] Question: Trends in manufacturing and transportation costs - Manufacturing costs have seen volatility due to operational disruptions, while transportation costs have stabilized, aided by effective logistics management [49][50] Question: Progress with Amlan and long-term sales growth - Amlan faced challenges due to a key account loss but is working to recover and broaden its customer base in high-margin markets [54][55] Question: Headwinds and tailwinds in the oil and gas situation - Increased fuel costs are providing margin support for end users, while the company has strategies in place to manage cost fluctuations effectively [56][58] Question: Use of artificial intelligence in product development - The company is thoughtfully integrating AI into R&D to drive efficiency and innovation in product offerings [61]

Financial Data and Key Metrics Changes - In 2025, the company achieved record engine shipments approaching 800 engines and over 75 megawatts of power, representing a 38% growth in megawatts shipped compared to 2024 [3] - Full-year revenue exceeded $99 million, up 43% year-over-year, with Q4 revenue approximately $34 million, reflecting a 37% increase year-over-year [3][18] - Gross margin improved to 17% in Q4, a 30-point increase year-over-year, while full-year gross margin was positive 5%, up 37 points from 2024 [18] - Total operating expenses for the full year were approximately $109 million, 32% lower than the previous year, with expectations for 2026 operating expenses to range between $65 million and $75 million [19] Business Line Data and Key Metrics Changes - The company secured its largest marine order to date, a 6.4-MW award from eCap Marine and Samskip, and announced a significant commercial agreement with New Flyer for 50 MW [4] - The focus on product cost reduction through negotiations, execution, and innovation is expected to enhance competitiveness and improve gross margins [8][9] Market Data and Key Metrics Changes - The majority of engine shipments were directed towards Europe and North America, with particularly strong activity in Canada [3] - The company is increasingly focused on stationary power applications, aiming to replace diesel generators and power data centers, with products generating over 100,000 hours of power [12][13] Company Strategy and Development Direction - The company aims to achieve sustainable positive cash flow within the next two years by aligning its cost structure with market realities and expanding revenue and gross margins [4][16] - Five near-term focus areas include improving commercial terms, product cost reductions, enhancing fleet service offerings, expanding product reach, and innovating business models [5][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the path ahead, emphasizing the importance of disciplined spending, growing top-line revenue, and maintaining financial health [22] - The company is committed to delivering fuel cell power for a sustainable planet and is focused on leveraging its installed base for enhanced fleet services [11][16] Other Important Information - The company ended the year with nearly $530 million in cash, no bank debt, and no near or mid-term financing requirements, indicating improved financial stability [21] - The company has made decisive changes to its cost structure, reducing cash operating costs in Q4 by 41% compared to the same period last year [4] Q&A Session Summary Question: On the restructuring side, what are the key drivers of the incremental cost contraction? - Management indicated that large items have been harvested, and the focus is now on driving costs out of products through innovation initiatives and manufacturing efficiencies [24][26] Question: Has the restructuring materially altered the R&D roadmap? - Management stated that R&D is focused on extracting value from existing innovations, with longer-term innovations expected to be in the three to five-year range [28][30] Question: What is the duration of the New Flyer contract? - The contract is for 500 units, with a focus on megawatts and unit volumes rather than duration [33] Question: How does the FCmove-XD and FCveloCity-HD compare with competing offerings? - Management highlighted that the products can address the stationary market with configurations that meet customer needs for power now, emphasizing speed and cost as key factors [40][46]

Financial Performance - Oil-Dri generated EBITDA of $22 million in Q2 fiscal 2026, consistent with the same quarter a year ago [14] - Cash flows from operating activities for the first six months of fiscal year 2026 exceeded $28 million, with cash and cash equivalents at $47 million and outstanding debt at $40 million, indicating a strong cash position [16][14] - The company reported a one-year stock price growth rate of 36%, two-year growth of 88%, and five-year growth of 258% [18] Business Lines Performance - The agriculture and horticulture products segment has seen strong sales growth, driven by increased planted acres and new customer opportunities for Verge granules [28][31] - The renewable diesel segment experienced a slowdown due to changes in tax incentives and feedstock oil sourcing, but there is potential for growth as the market adjusts [38][39] Market Insights - The broad acre market for grains and oilseeds is expected to continue growing, while the turf and ornamental market is also showing strong performance with new application opportunities [29][31] - The company is optimistic about the long-term growth of the animal nutrition and feed additive markets, despite recent account losses in the Amlan segment [60] Company Strategy and Industry Competition - Oil-Dri is focused on ongoing capital investments to modernize and optimize its manufacturing capabilities, viewing this as a continuous process rather than a project with a defined endpoint [22][23] - The company is committed to innovation, with several new product launches planned for the second half of the fiscal year, including expansions in the Cat's Pride litter portfolio [36][37] Management Commentary on Operating Environment - Management highlighted the team's resilience during Winter Storm Fern, emphasizing safety and customer service as core values [12][10] - The company is well-positioned to navigate cost pressures and market fluctuations due to its strategic approach to natural gas purchasing and operational execution [65][66] Other Important Information - The company is integrating artificial intelligence into its R&D processes to enhance product development and operational efficiency [68][69] Q&A Session Summary Question: Progress on capital expenditure for plant upgrades - The capital spending program is progressing as intended, focusing on foundational areas and maintaining high uptime [22][23] Question: Sales increase in agriculture and horticulture products - Strong performance in both broad acre and turf markets, with expectations for continued growth [28][31] Question: New product introductions in the second half - Several new products are set to launch, including health monitoring litter and new Cat's Pride items [36][37] Question: Weakness in renewable diesel sales - Sales slowed due to tax changes and feedstock sourcing issues, but growth is expected as the market stabilizes [38][39] Question: Trends in manufacturing and transportation costs - Manufacturing costs are influenced by operational disruptions and labor-related pressures, while transportation costs have stabilized [47][53] Question: Amlan's long-term sales growth outlook - Despite recent account losses, the long-term outlook for Amlan remains positive due to the size and value of targeted markets [60] Question: Headwinds and tailwinds in the oil and gas situation - Increased fuel costs are impacting margins, but there is potential for order upticks if prices remain high [62] Question: Use of artificial intelligence in product development - The company is thoughtfully integrating AI into R&D to improve efficiency and product innovation [68][69]

Financial Data and Key Metrics Changes - For the fourth quarter, the company generated $0.29 per share of GAAP net investment income, with Core Net Investment Income also at $0.29 per share, excluding excise taxes [5] - The net asset value per share decreased by $0.23 during the quarter, attributed to $0.11 per share in dividend payments exceeding earnings and net realized losses of $0.12 per share primarily from two debt investments [5][6] - The company has invested approximately $2.8 billion in over 220 companies since its IPO, with $1.8 billion in repayments and $333 million in dividends paid to investors [4] Business Line Data and Key Metrics Changes - The investment portfolio at fair value remained stable at $1.01 billion across 115 portfolio companies [6] - During the fourth quarter, the company invested $34.1 million in four new portfolio companies and received repayments totaling $37.9 million [6][8] - 99% of loans were secured, with 92% priced at floating rates, and the average loan per company was $8.8 million [7] Market Data and Key Metrics Changes - The company has approximately 10% of its investments in high-tech industries, with a focus on industry-specific tech-enabled solutions rather than large-scale SaaS software [8][9] - The company has loans to five portfolio companies on non-accrual, comprising 7.5% of the total cost and 4.1% of the fair value of the total investment portfolio [8] Company Strategy and Development Direction - The company announced a $20 million share buyback program, reflecting its current trading level at approximately a 30% discount to net asset value [16] - The external manager, Stellus Capital Management, is set to join Ridgepost Capital, which is expected to enhance investment opportunities for the company [14][15] - The company focuses on direct, originated, senior secured loans to lower middle-market private equity-backed companies, differentiating itself from larger private credit managers [18][19] Management's Comments on Operating Environment and Future Outlook - The company expects to maintain its portfolio size at approximately $996 million, with continued equity realizations of about $2 million in Q1 2026 [12] - Management expressed confidence in the stability of asset quality and the potential for improved pricing in the private credit sector [39][62] - The company anticipates a gradual resolution of non-accrual assets over the next 12-18 months [60] Other Important Information - The company has a weighted average risk rate of approximately two, indicating investments performing on plan [18] - The company has a long history of equity co-investments alongside debt investments, generating approximately $98 million of net realized gains to date [20] Q&A Session Summary Question: Will there be any change in the leverage targets for SCM? - Management confirmed that there will not be a change in the targeted leverage for SCM, which is approximately 1:1 on the regulatory test and approximately 2:1 including SBIC debentures [27] Question: What is the remaining capacity in the SBA? - Management indicated that there is significant new capacity in the SBA, with $65 million of new debentures available for future growth [29] Question: Can you provide details on the non-accrual investments? - Management stated that the non-accrual companies are working with others to secure additional capital during challenging periods [30] Question: What is the exposure to higher energy prices? - Management confirmed no direct exposure to the oil and gas industry and emphasized a focus on avoiding commodity price risk [52] Question: What is the expected timeline for resolution of non-accrual assets? - Management anticipates a gradual resolution over the next 12-18 months, with some assets potentially coming off non-accrual [60]

Financial Data and Key Metrics Changes - In Q4 2025, the company generated $0.29 per share of GAAP net investment income, with Core Net Investment Income also at $0.29 per share, excluding excise taxes [5] - Total realized income for the quarter was $0.48 per share, which included gains of $5.5 million on 5 equity positions [5] - Net asset value per share decreased by $0.23 during the quarter, attributed to $0.11 per share in dividend payments exceeding earnings and net realized losses of $0.12 per share primarily from two debt investments [5][6] Business Line Data and Key Metrics Changes - The investment portfolio at fair value remained stable at $1.01 billion across 115 portfolio companies [6] - During Q4, the company invested $34.1 million in four new portfolio companies and received repayments totaling $37.9 million [6][8] - 99% of loans were secured, with 92% priced at floating rates, and the average loan per company was $8.8 million [7] Market Data and Key Metrics Changes - The company has investments in 24 separate industry sectors, with approximately 10% in high-tech industries [9] - The portfolio includes a small number of loans to software companies related to the SaaS space, comprising 6.8% of the loan portfolio [10] Company Strategy and Development Direction - The company announced a $20 million share buyback program, reflecting its shares trading at approximately a 30% discount to net asset value [18] - The external manager, Stellus Capital Management, is set to join Ridgepost Capital, which is expected to enhance investment opportunities for the company [15][17] - The company focuses on direct, originated, senior secured loans to lower middle market private equity-backed companies, differentiating itself from larger private credit managers [20] Management's Comments on Operating Environment and Future Outlook - The company expects to maintain its portfolio size at approximately $996 million, with continued equity realizations of about $2 million in Q1 2026 [13] - Management emphasized the importance of strong underwriting and being selective about opportunities in the current economic environment [38] - The company anticipates a gradual resolution of non-accrual loans over the next 12-18 months [59] Other Important Information - The company has paid $333 million in dividends since its IPO, representing $18.27 per share to initial investors [4] - The company has a weighted average risk rate of approximately 2, indicating investments performing on plan [20] Q&A Session Summary Question: Will there be any change in the leverage targets for SCM? - Management confirmed that there will not be a change in the targeted leverage for SCM, which is approximately 1:1 on the regulatory test and approximately 2:1 including SBIC debentures [28] Question: What is the remaining capacity in the SBA? - Management indicated that there is significant new capacity in the SBA, with $65 million of new debentures available for growth [29] Question: Can you provide details on the non-accrual investments? - Management stated that the companies in non-accrual are working with others to secure additional capital during challenging periods [30] Question: What is the exposure to higher energy prices? - Management confirmed no direct exposure to the oil and gas industry and stated that any impact would be more related to consumer spending rather than direct company exposure [52] Question: What is the expected timeline for resolution of non-accrual assets? - Management expects a gradual resolution over the next 12-18 months, with some companies coming off non-accrual [59]

Financial Data and Key Metrics Changes - Oil-Dri generated EBITDA of $22 million in Q2 2026, consistent with the same quarter a year ago [9] - Cash flows from operating activities for the first six months of fiscal year 2026 exceeded $28 million, with cash and cash equivalents at $47 million at the end of Q2 [10] - Outstanding debt was reported at $40 million, indicating a strong cash position with more cash than debt [11] Business Line Data and Key Metrics Changes - The agriculture and horticulture products segment showed strong performance, driven by increased planted acres and new customer opportunities for Verge granules [20][21] - The consumer products division launched several new products, including an antibacterial litter and health monitoring litter, which are expected to enhance market presence [24][25][26] Market Data and Key Metrics Changes - The broad acre market for agriculture products has seen growth due to increased planted acres, while the turf and ornamental market is benefiting from new applications of engineered granules [21][22] - Renewable diesel sales faced challenges due to changes in tax incentives and feedstock sourcing, but there is optimism for recovery as new rebates are implemented [27][28] Company Strategy and Development Direction - The company is focused on ongoing capital investments to modernize and upgrade plant and equipment, with a long-term view on sustaining high uptime and optimizing capacity [16] - Innovation remains a priority, with a commitment to enhancing consumer experience through R&D and new product development [24] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in the team's response to Winter Storm Fern, highlighting the importance of safety and customer service during disruptions [5][9] - The company anticipates continued growth in the agriculture and horticulture segments, supported by expanding customer bases and product offerings [22][43] Other Important Information - The company has a strong cultural commitment to teamwork and customer focus, which has been crucial in navigating operational challenges [12] - The management team emphasized the importance of maintaining operational resilience and reliability in the face of cost fluctuations [39] Q&A Session Summary Question: Progress on capital expenditure for plant upgrades - The capital spending program is progressing as intended, focusing on foundational areas and ongoing improvements rather than a defined endpoint [16] Question: Sales increase in agriculture and horticulture products - Strong performance in both broad acre and turf markets, with expectations for continued growth driven by new customer opportunities [20][21] Question: New product introductions in the second half - Several new products are expected, including expansions in the Crystal litter portfolio and new health monitoring formulations [24][25][26] Question: Weakness in renewable diesel sales - Sales were impacted by changes in tax incentives and feedstock sourcing, but growth is expected as new rebates are implemented [27][28] Question: Trends in manufacturing and transportation costs - Manufacturing costs have seen volatility due to operational disruptions, while transportation costs have stabilized due to effective logistics management [36][39] Question: Amlan's performance and future growth - Amlan faced challenges due to a key account loss but is working to recover and broaden its customer base for long-term growth [40][43] Question: Oil and gas market headwinds and tailwinds - Increased fuel costs are impacting margins, but there is potential for growth in renewable diesel production if prices remain high [44][46] Question: Use of artificial intelligence in product development - The company is integrating AI into R&D to enhance efficiency and effectiveness in new product development [48]

Financial Data and Key Metrics Changes - The company is focusing on protecting profitability, maximizing cash flow, and strengthening its balance sheet rather than pursuing growth for its own sake [5][6] - The annual capital budget has been right-sized to ensure the development program stays within cash flow, even in a softer price environment [6] - The company suspended its dividend, which is expected to increase annual liquidity by an estimated $20-$25 million [6][7] - Production is averaging more than 46,000 BOE per day, which is roughly 10% above the midpoint of the 2026 guidance range [8] Business Line Data and Key Metrics Changes - The capital budget for 2026 is nearly 50% lower than the previous year, while unit lease operating expenses per BOE are modestly higher due to targeted initiatives [7][8] - The development program is built for capital efficiency, highlighted by an estimated 65% increase in production per dollar invested [8] Market Data and Key Metrics Changes - Mid-cap E&Ps are currently rewarded for durable free cash flow, balance sheet strength, and meaningful high-quality inventory depth, rather than headline production growth [8][9] - The scarcity of Tier One shale inventory across the Permian Basin is increasing the strategic value of companies that hold significant high-return drilling inventory [18][19] Company Strategy and Development Direction - The company aims to build a resilient, valuable entity that delivers for shareholders over the long term, focusing on returns and resilience rather than headline growth [20][21] - The capital allocation philosophy prioritizes high-return investments, preserving premium inventory, and generating sustainable free cash flow [11][12] - The 2026 development plan is intentionally conservative, anchored around one drilling rig and one completion crew, with plans to drill about 30 wells and bring 36-38 wells online [6][7] Management's Comments on Operating Environment and Future Outlook - The management emphasizes the importance of financial discipline and operational excellence in navigating the current geopolitical and commodity landscape [5][6] - The company is positioned to thrive not just for the next couple of quarters but for years to come, with a focus on debt reduction and liquidity improvement [6][10] - The guiding principle is that return on capital employed matters more than production growth, allowing for the preservation and expansion of high-quality inventory [9][10] Other Important Information - The company has more than 2,600 total drilling locations across various formations, representing decades of high-return inventory [18][19] - The existing production base is a reliable source of cash flow, underpinning the business today [19][20] Q&A Session Summary Question: Can you provide more details on cost reduction and production optimization efforts? - The company has implemented various optimization strategies in drilling and completion processes, leading to faster drilling and completion times, as well as cost savings [25][26] Question: What is the split of wells across development areas for 2026? - Approximately 70% of capital will be spent in the Flat Top area, with 30% in Signal Peak, primarily focusing on Wolfcamp A and Lower Spraberry [30][31] Question: What is the expected corporate decline curve for 2026? - The corporate decline rate is expected to decrease from 38% at the beginning of 2026 to around 36% by the end of the year, which will reduce the CapEx needed for maintenance [38][39] Question: Will there be any structural changes regarding water handling in 2026? - The existing water system is efficient and paid for, which helps lower capital intensity while optimizing production [40][41] Question: Any updates on planned distributions in 2026 and 2027? - The company has extended the distribution timeline to allow for a healthier market environment, with flexibility in timing throughout 2026 [45][46]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved revenue of approximately $34 million, representing a 37% year-over-year increase. Full-year revenue exceeded $99 million, up 43% from 2024, primarily driven by record engine sales approaching 800 units or over 75 megawatts of power [3][18] - The gross margin improved to 17% in Q4, a 30-point increase year-over-year, while the full-year gross margin was positive 5%, up 37 points from 2024 [18] - Total operating expenses for the full year were approximately $109 million, 32% lower than the previous year, with expectations for 2026 operating expenses to range between $65 million and $75 million [19] Business Line Data and Key Metrics Changes - The company secured its largest marine order to date, a 6.4-MW award, and announced a significant commercial agreement with New Flyer for 50 MW, indicating strong growth in the marine and commercial sectors [4][6] - The focus on product cost reduction and operational efficiency has led to a significant reduction in cash operating costs by 41% in Q4 compared to the same period last year [4] Market Data and Key Metrics Changes - The majority of engine shipments were directed towards Europe and North America, with particularly strong activity in Canada, highlighting the geographical focus of the company's market strategy [3] - The company is increasingly targeting stationary and rail markets, with expectations for additional activity in these segments in the coming months [8][12] Company Strategy and Development Direction - The company aims to achieve sustainable positive cash flow within the next two years, supported by a well-managed cost structure and improving gross margins [4][16] - Five near-term focus areas have been identified: improving commercial terms, product cost reductions, enhancing fleet service offerings, expanding product reach, and innovating business models [5][15] - The company is leveraging its installed base to expand recurring revenue through enhanced fleet services, which include long-term service agreements and operational monitoring [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the path ahead, emphasizing the importance of customer relationships and the commitment to delivering value [16] - The company is addressing financial and technical barriers to hydrogen adoption through flexible commercial structures and service-based offerings [13][15] - Management noted that the improvements in 2025 reflect the dedication and professionalism of the company's workforce [16] Other Important Information - The company ended the year with nearly $530 million in cash, indicating strong financial stability with no bank debt or near-term financing requirements [20] - The company is advancing Project Forge, which aims to reduce bipolar plate costs by up to 70% at full volume, enhancing competitiveness [9] Q&A Session Summary Question: On the restructuring side, have the large items been harvested? - Management indicated that they do not anticipate any major restructuring in 2026 and that the midpoint of the guidance range is a reasonable expectation for the overall cost structure [24][26] Question: Have these actions altered the R&D roadmap? - Management stated that the focus is on leveraging existing product portfolios and prior investments to maximize value, with a more concentrated approach on extracting value from innovations already realized [28][30] Question: What is the duration of the New Flyer contract? - The contract is for 500 units, with a focus on megawatts and unit volumes rather than duration, emphasizing a long-term partnership [33] Question: How does the FCmove-XD and FCveloCity-HD compare with competing offerings? - Management noted that the configuration and packaging of existing products can address the stationary market, with innovations aimed at increasing performance and reducing costs [34][40] Question: What are the opportunities in the stationary market? - Management highlighted a strong value proposition for fuel cells in the stationary market, particularly in addressing immediate power needs for data centers [39][40]

Financial Data and Key Metrics Changes - The fourth quarter Adjusted EBITDA was a loss of CAD 95.2 million, reflecting an Adjusted EBITDA margin of -20.9% and cash used in operating activities of CAD 3 million [13][14] - For the full year 2025, Adjusted EBITDA was a loss of CAD 261.4 million, representing an adjusted EBITDA margin of -12.5%, compared to a gain of CAD 22.4 million and a margin of 0.9% in 2024 [18] - The company finished the quarter with CAD 77 million in cash and CAD 195 million available under its revolving credit facility [14] Business Line Data and Key Metrics Changes - Shipments in the fourth quarter were 378,000 net tons, down 31% year-over-year, primarily due to the impact of U.S. tariffs [14][15] - For the full year, total shipments were 1.7 million net tons, compared to 2 million net tons in 2024 [17] - Net sales realizations averaged CAD 1,080 per ton for the full year, down from CAD 1,107 per ton in the prior year [17] Market Data and Key Metrics Changes - The Canadian dollar strengthened approximately 5% over 2025, moving from CAD 1.44 per USD at year-end 2024 to CAD 1.37 at December 31, 2025 [12] - Plate pricing remained resilient, with a premium over hot-rolled coil, while sheet pricing was approximately 40% lower than the index [36] Company Strategy and Development Direction - The company is pivoting its commercial strategy towards the Canadian market, exiting blast furnace and coke oven operations, and focusing on high-value products [6][11] - A binding MoU with Hanwha Ocean Co., Ltd. was announced, with a potential value of CAD 250 million, indicating a strategic shift towards defense and industrial supply chains [10][11] - The company aims to optimize for margin quality rather than volume, reducing exposure to tariff-distorted global markets [11] Management's Comments on Operating Environment and Future Outlook - The management acknowledged 2025 as a challenging year due to the 50% U.S. Section 232 tariff, which fundamentally altered the business model for Canadian steel producers [20] - The company is committed to exploring product diversification initiatives and applauded government measures to support the Canadian steel industry [22][23] - Management expressed confidence in the company's direction and the foundation for long-term value creation [24] Other Important Information - The company absorbed CAD 225 million in direct tariff costs for the full year, reflecting a structural shift in the industry [8] - Accelerated depreciation and stranded inventory costs were captured in the cost of sales during the quarter [16] Q&A Session Summary Question: What are the expectations for full year shipments? - The company expects total shipments between 1 and 1.2 million tons for the year, with a ramp-up in capacity at EAF [26] Question: What is the expected mix between plate and sheet? - The mix is anticipated to be roughly 50/50 between plate and sheet products [28] Question: How exposed are energy costs to the current spot market? - The company generates power from its own natural gas-fired power plant and consumes power from the grid, which is subject to Ontario's spot rate pricing [29] Question: What is the current status of plate pricing in Canada? - Plate pricing is holding up better than sheet pricing, with government initiatives helping to stabilize the market [36] Question: What are the critical milestones for the beam mill project? - The company is working on engineering, cost estimates, and timelines for the beam mill project, with demand in Canada exceeding supply [40] Question: What is the expected CapEx for the full year? - The company does not expect any change in the total project budget for the EAF, with sustaining CapEx expected to be around CAD 80 million a year [42]