NORSK TITANIUM AS (NTI) Q2 2026 Earnings Call Transcript

using the q a tool in the webcast window and questions will be addressed after the presentation and with that i'll hand over to fabrizio thank you joachim so first of all uh good afternoon good morning everybody uh welcome uh to the north septanium uh first up presentation I think, Asher, you can move into the next slide. All right. So, you know, we started last year, we started a rigorous strategy review, followed by a definition of a roadmap linked to the strategy review. And then we started to execute on it very rigorously. And I'm happy to report that we have positive trends across the board from the financial standpoint. Revenues are increasing both on the parts manufacturing and on the development part of our business. we were able to improve our cash burner with quite a bit of rigorousness on working capital and also making sure that we have the right people on the right spot and we had a successful capital raise you know before before summer also an operation we are making progress towards our milestones. We continue to expand our relation with Airbus. We sign a new collaboration agreement at the group level with Airbus, which is very important. We placed our first machine in Farrell, Germany, which is a first for North Titanium, and it's really getting our RPD ecosystem strategy started. And we see that the lower frame fittings, which is, you know, the largest additive manufacturing parts ever produced and commercialized in aerospace, is ramping up very, very nicely. Also important, we started our first production contract with north of Grohmann. This is a landmark park on one of the crown jewels of the U.S. Air Force. We are very, very excited about that. And we were finally awarded $4.2 million by the U.S. Department of war to develop our technology for submarine and Navy applications. Last but not least, also our industrial segment is helping us with HETEC, I'd say, growing multiple fold versus last year and projecting consumption of our parts to double again next year. So all in all, a very positive trend from the financial and from the operational standpoint. Asher, move to the next slide, please. Okay, a quick refresher on our strategy. As you may remember, we structure our strategy across three different verticals, focusing on our core OEM programs, both in commercial aerospace and in defense. Focus on short-cycle sales in order to identify opportunity that we can translate into revenues, profitable revenues, in a short period of time. And again, the RPD ecosystem, which is a brand new business model that we are currently defining and structuring, which is meant to allow selected OEMs to insource our technology to be put at the core of their industrialization effort when it comes to additive manufacturing. Next slide. So we have been also completing our technology readiness level. I think we achieved at least two very important milestones in the first half of this year. So, number one, RPD and Norsk were listed in the MMPDS handbook. Just again, a quick refresher. The MMPDS handbook is the Bible for aerospace and defense engineers. So for RPD to be listed in the MMPDS, put them in the position to design parts using all the data that are certified and included on MMPDS. We can see that this is already helping to gain more business and helping the design engineers to design parts on RPD. Also, we achieved the NCAP accreditation. This is fundamentally important for aerospace and defense. So now we can claim that Plattsburgh, which is our production center in North America, is NECAP accredited. And this really puts North Titanium years ahead of competition in terms of technology readiness and accreditation with both agencies and authorities in the aerospace and defense industry. Last but not least, we were awarded the Innovation Award by Safran. This is, again, testament to who North Titanium is. We are a company based on innovation. We are a disruptive company, and we were recognized by Safran lending gears as such. So we are very proud of this achievement, and this really proves that North Titanium is gaining ground with multiple items in the aerospace industry. Asher. So now, deep diving into the three different segments. We're going to talk first about aerostructures. Again, here, we see increase in part manufacturing and sales, of course, across the border. Airbus, Boeing, Leonardo and others that we cannot disclose. they are all growing in volumes with a very positive outlook the lower frame fitting which is currently flying on the a350 received certification also from the faa it was certified by yaza now it's certified by the faa and yaza so now this can be used across the board and across the globe, you know, on any A350 that is produced. We are very active in discussing with Airbus on the Wave 3 production order, very intense discussion even across the summer with both manufacturing and procurement as anticipated by the award we continue to work with Saffron Lending Gear Systems and we are also very active on engine with one of the key OEMs where we are working really across the board to identify a number of parts that have a great fit with our technology RPD so that we can move forward introducing RPD also in engines, which, by the way, has a great potential for additive manufacturing in aerospace. So now, you know, moving forward on the fence. The fence is even more exciting than aero-structures, or as exciting as aero-structure. You know, we are now in production with two primes, Northrop and General Atomics this is great for multiple reasons, not just because we're going to generate revenues but this is because this is going to unlock the opportunity to translate across those platforms at Northrop and General Atomics number two we were awarded 4.2 millions by the Department of War this is a landmark development and it's meant to for North Titanium to develop applications and be qualified with the Department of Water so that this can open the gate to applications in the Department of Defense. And we are getting funded to do that, which is a little bit different than in the past. So we are very excited. We have started this program. It's going to last 18 months. And after that, we are going to be in a very different position within the Department of Defense. We also won an award with America Makes. This is, you know, kind of similar in nature, if you look at the Deep Edge Award, is, you know, we are here, we are going to train a number of defense departments on our PD and our technology. And we are going to achieve qualified supplier status on titanium parts at the end of the 12-month program. Very exciting. During our March investor relation presentation, we were talking about large opportunities. You can see here, we highlighted as undisclosed defense prime opportunities. I can tell you that we are in two key programs focused on the replenishment of what the U.S. has deployed in the last 12, 18 months. This is very exciting. It's very, very active discussions and technical qualifications. As I said back in May, we expect to know if we are going to win and how much we are going to win by the end of the year. And we are fully a target in order to do that. If else, this is even more exciting than a couple of months ago. So from the industrial side, again, the development that we did along with HITEC, is now bearing its fruit. We are growing this part of the business multiple fold versus previous year. We are going to double that next year. This is really proof that the RPD technology can go beyond aerospace and defense. We are in discussion with HITEC on expanding this development in semiconductor and outside is great to have partners like E-TEC and we are very excited about going beyond aerospace and defense. I mean, it's, for us, you know, these results in much shorter cycle development, which is a relief if you consider that aerospace and defense always require, you know, long development cycles. being in semiconductor, being in oil and gas, being in energy type of applications, while it's still very special and commands premium in terms of pricing and value, is much shorter to realize. So we are building a pipeline, and in the next few months, we will be able to report on that pipeline. Sure. Okay, so we talked about the third leg of our business. which is the RPD ecosystem. You know, we placed, we now have a machine in Airbus in Germany. This is a first for North Titanium. It's the first time that we place a machine outside of our premises. This comes, of course, with quite a bit of learning. But so far, I have to say, the team has been really focused than working with Airbus in order to make this a success. We expect this machine to be fully accepted on-site by Airbus by Q3. So, October, the beginning of October, November, we are going to be there. And then the process qualification process will start. This is exciting because, you know, although we are already qualified in a number of parts and today we are qualifying part by part look at the example of the lower frame fitting the goal here is to qualify our process and when our process will be qualified the qualification part by part is going to become much quicker than it is today on top of that airbus engineers will be able to design parts on rpd to start with so this is a landmark development and we are fully committed to execute that, you know, within the next, you know, 18 months in order to bring this to conclusion. Very exciting. Production, no, hold on a second. I have a couple of more messages about Airbus. We are very active in discussing Wave 3. We have been very active throughout the summertime with exchanges and very heated exchanges with both manufacturing and procurement. we responded to a number of RFQs and we're working very diligently and with a very high sense of urgency in order to translate that into the biggest package possible for North Titanium. Okay, the floor is yours, Asher.

Thank you for a bit too. Just to go through some of the key financial highlights for the first half of 2026. I'll start with the income statement here. As Fabrizio mentioned, revenue and other income in first half of 2026 increased to 2.9% compared with the same period in 2025. That's approximately a 38% growth. This growth is driven by serial production revenue of about $1.1 million in the first half of 2026, which is approximately 29% growth over the same period. This zero production growth was due to increased volumes of parts in zero production with Airbus, but also recovery in the HITEC volumes in 2026. The second part of the revenue, development revenue, was $1.7 million in the first half of 2026. This is approximately 50% growth over the same period in 2025. And this is driven by activity, development activity we have ongoing with Boeing, but also additional activities that we have going on with Safran as well. On the expenditure side, we remained quite cost-disciplined. Our operating expenses came down to $15 million or negative $15 million from negative $17.2 million in the same period last year. This ended with an EBITDA loss of $12.1 million, which is an improvement of approximately $3 million when compared to the same period last year. Net losses is extremely, when compared to the same period last year, much lower. I just wanted to remind the viewers that in first half of 2025, we had a net loss on the foreign exchange, a non-cash loss on foreign exchange on the intercompanied loan between the parent company, North Titanium AS, and the subsidiary, North Titanium US. So that was a non-cash foreign exchange difference. So when you reverse those impacts out, our comprehensive income in the first half of 2026 was, or comprehensive loss in 2020, first half of 2026, was $12.2 million compared to a comprehensive loss of $14.5 million in 2025. So this is an improvement of approximately $2.3 million. On the cash flow side, we started the year with $19.3 million in cash. During the period, during the first half of 2026, we used about $11.8 million of cash in operations. This was down from $16.8 million in the first half of 2025. Net financing inflows, as Perbitzo mentioned earlier, we did a private placement. We executed and realized $13.2 million from the first crunch of that $27.3 million private placement before the end of the period on June 30th. So we ended the period with $19.6 million in cash, which represents, well, when you exclude the financing activities, this represents a $2.1 million monthly average cash burn rate, which is down from $2.9 million in the same period last year. This again shows that we are able to be disciplined in our expenditures and control our cash burn and anticipate cash burn and how we control it as we ramp up into higher volumes of sales. As I mentioned, cash balance ended at $19.6 million as of June 30th. But we also wanted to give a reflection or at least reflect on if we were able to complete the entire $27.3 million private placement in this half of the year, we would have had a pro forma cash balance of approximately $35 million if we were able to realize the entire proceeds by June 30th.

Okay.

Fabrizio, back to you. Yeah.

Thank you, So we have the ambition to achieve a breakeven by 2028 with a 25% capacity utilization. We are also working towards achieving the first step of realizing the full value of North Titanium by 2030, achieving a significant operating leverage and driving towards 30% and be the margin on sales. So how do we do that? And how is this possible? So first of all, we are really backed by very positive dynamics in our target markets. Aerospace, defense, even semiconductor. So we are in markets that are pulling for our solutions and they are working and we are working with customers that are committed to bring our technology at the core of their industrial platforms as an enabler and as a solution to their bottlenecks. And this is a great place to be. So what are going to be the levers? So number one, obviously, volume growth. Okay, so we need to bring home what I call needle movers in terms of development in aerospace, in defense, and we already have one in industrial markets. Okay, if we will be able to do that in the next two or three years, we are going to be in the position to break even in 28 and realize the first step of the full value capturing by 2030. Second, we need to make sure that we have the right revenue mix. We believe that the LPD ecosystem will support achieving the 30% revenue on sales. So this is a CapEx-like business model and will certainly boost our profitability going forward. And then last but not least, cost efficiency, both on how we spend our cash, And I think we are making progress towards that, regularness and being very, very cautious when we spend money, but also making sure that we remain or improve competitiveness of our technology. So we believe that we have the right strategy and the right roadmap to execute on in order to achieve our 2028 ambitions and 2030 targets. All right. In summary, I hope you can see that really we are on a positive trend. We define a strategy with an associated roadmap. We are now executing, trying to be as rigorous as possible. We really focus on customers and making sure that we execute the right way. We are very positive on the financial side. We are certainly showing positive trends across the board, revenues, cash burn, and we were successful on the capital raise. So we remain committed to be very successful at one of our core development, which is Airbus. We are working across three different work streams there, production order number three, placing our machine and certainly supporting all the business we already have, which is ramping. We don't stop here. We are working with a number of other aerostratch OEMs, including Boeing, Safran, and other engine manufacturers. So very exciting there. Defense, it's a very exciting market and market dynamic. Very strong pull. We are advancing discussions with a number of primes. we are working in order to define success in the next two or three months. This will be instrumental to our success. And then RPD machine, the RPD business mode of the ecosystem is also making progress. Okay, place the first machine and now we're going to expand from there to within Airbus and with other OEMs. So small steps, small quick steps that will help us to achieve our targets in 28 and 30 and 2030 thank you and i hope this was informative open to questions thank you thank you fabrizio and ashar we have received a few questions so let's start with the first question from nicolas when is it realistic to expect actual revenue from defense customers uh okay i i'll i'll take this one okay so first of all we already have actual revenues from defense customers okay so uh these are low rate productions so you know not really meaningful uh if you ask me uh from from from the from the from the revenues that we need to achieve standpoint but still uh you know meaningful from the strategic standpoint So, we are already there. Now, we are working on large and important programs. Okay, you know, if we win, depending on how big this is going to be, but this can happen very quickly. Okay, so we are talking about in the next, to start to realize sales in the next six to 12 months. so this is going to go very very fast assuming we win and we win in a big in a big way thank you and on that topic another question from marcus cavelli are the potential contracts with the defense primes multi-year in nature or more of a short-term replenishment I think we are working on both areas. So short-term replenishment, which would mean two or three years of work, and then long-term in other areas. So we are working on both directions.

Next question, also defense-related, from Olili. You have mentioned two Patriot-related programs and previously indicated that you expected clarity on potential awards by early October. Has the timeline now shifted toward year-end for both programs, or do they have different decision timelines? And beyond these two, are there additional Patriot-related opportunities currently progressing?

So, you know, yeah, I mean, I think has not changed. It can be October. It can be a little bit later than that. Again, like aerospace, we try to influence the best of our abilities, our customers. But, you know, we don't do a very good job at that. I mean, it's at the end of the day, their decision-making is outside of our control. What we can do is really to stay focused and help them make the decision. So I still believe that October is possible, for sure, by the end of the year. On one or two big programs, we will know where we end up.

Then another question from Olille related to Airbus. You have said that there were several interesting discussions with Airbus over the summer. Is it fair to assume that the technical work is largely completed and that the dialogue is now increasingly focused on commercial terms and the path toward Wave 3? Do you feel Airbus is investing more time and resources in the process than before, potentially allowing Wave 3 to materialize relatively quickly?

It is a fact that Airbus is engaged heavily across the border, so manufacturing, procurement, at this point, even a program. So that's a fact. We had a very busy summer. I even had to fly back from my own vacation. So it is a testament that things are moving faster. there is full engagement and commitment to make to insource additive manufacturing and DED within their industrialization process this is certainly going to help, this is helping today our discussion on wave 3 which are as I said very active they've been very active over the summer they are still active as I speak so things are are certainly in a positive dynamic a question from sarah k any news on the boeing relationship can you give some color on the current development work with them yeah i mean we have multiple exchanges with boeing you can see that boeing is a big part of our development revenues for the first half so it is actually a very large part of that so of course you can see that the discussion with them continue. We are still working in order to make sure that we have the same type of discussion that we are having with the other OEMs. You know, I would say that with Airbus we are certainly much more advanced, but we are working very hard to do the same with Boeing.

A question from Jeppe Bordseth in Arctic. The first RPD machine at Airbus Varel is targeted for commissioning in q3 2026 and is described as a blueprint for further deployments what are the economics for north satanium from these machine deployments and when could we realistically see a second or third ovm deployment yeah so i i think uh uh at this point airbus is covering all the cost of the deployment on their premises, so they're covering all that.

We are working in order to define a business model to go beyond that one machine in Airbus and just Airbus, so we are going to complete the business model before the end of the year, and then we're going to start execution, because that's an integral part of our results by 2028 and 2030. I don't know, Asher, if you want to add anything on the economic model, but at this point, I would not do that.

Yeah, I mean, I think, as Fabrizio mentioned, we are still ironing out how we implement and what kind of revenues we can monetize with this. And, you know, this platform with Airbus gives us a very good and reliable case in the real world. So we're still working through it, and we will report back as we mature this business case.

Another question from Marcus Gavelli. Looking at the current scope of opportunities across sectors, could you try to rank them in terms of gross margin?

Across sectors? At this point, obviously, these are opportunities that we're looking at. Clearly, the serial production parts that we have in serial production today are not the best parts for, other than a few of them, for our process. So as we look forward and look at the pipeline that we have, you know, previously we've talked about going from a 30% contribution margin where we are today towards a 50% contribution margin, and those are the unit economics and cost efficiencies that we need to realize. So I hesitate to rank the opportunities because they vary. Right. In defense, you know, we're looking at some opportunities that are very, very, very profitable and high volume. Just given the nature of those of those parts and airbus and aerospace, sorry, rather, they're also, you know, very profitable parts there, too. It's basically just moving from where we are today and where we need to get to. So I hesitate to provide a distinct answer on the rankings because we want to provide groundless and the credibility as we transition these parts into production.

Okay, we have time for two more questions. The base case targets a ramp up towards 75 million in sales by 2028. What full-time employee count do you need to be able to deliver on your base case? And when do you need to begin scaling the organization to be ready?

Asha, you want to ask for that one?

So, you know, as we have said in the past, where we are today in terms of the operating leverage of the business, that can service us to break even for the most part. Obviously, there will be some incremental increases required from here. So not significant from where we are today. From a variable perspective, obviously, that's where we're going to focus a lot of our hiring is as we scale up into 2028. And we internally like to think of tours 2028 as a breakeven, obviously, and we start planning around that. So our main focus is going to be bringing on the direct labor side of the business. And that direct labor side of the business will scale as we scale a scale production. There are several factors that go into that. You know, we've talked about in the past having right now we're almost at two to one operators per machine. And now we're moving towards four to one operators per machine. So as we mature this technology, we grow into that into that 2028 number. And within that number, when I talk about the contribution margin and the economics improving, it's due to these types of efficiencies that we're trying to realize. So I would say majority of the 2028 staff is in place. And then we're just going to have incremental direct labor input or increases as we wrap into 2028. Thank you.

This will then be our final question before we wrap up today's Q&A. Are you financed till cash break even?

Yeah, and I think we've been clear in June and in our May discussions as well. You know, the capital we raised puts us in a very strong balance sheet position. um we haven't uh you know we we continue to look at multiple sources of of capital um to in terms of you know getting debt financing and and and um and other financing it it all depends on the upside right um uh i i will not i will today not say that we're fully funded to break even um but if the upsides come come through then we are so there is there is room maneuverability room for us. And obviously, we will look at non-dilutive sources of capital as we ramp into 2028. And those orders would give us the ability to diversify our financing resources. Thank you.

So with that, we conclude today's presentation of North Titanium's first half 2026 results and if we did not get your question please feel free to to send it to ashore by by email so thank you all for joining and have a good day thank you thank you