'Demand at an all-time high, backlog in that business is at an all-time high': Mattr CEO on Xerxes

Key Concepts

• Adjusted EBITDA: A measure of a company's operating performance, excluding non-operating expenses.
• Composite Technologies: Advanced materials used in infrastructure, specifically underground fuel storage.
• Flexpipe: A specialized product line for oil and gas transport from wells to infrastructure.
• USMCA/KUSA Compliance: Trade agreements ensuring North American manufacturing standards and tariff mitigation.
• Accretive Acquisitions: Strategic purchases intended to increase the company's earnings per share.
• Operational Efficiency: The ability to deliver products with minimal waste and maximum output.

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1. Financial Performance and Market Inflection

Matter reported a strong Q1 2026, signaling an "inflection point" following a multi-year corporate transformation.

• Adjusted EBITDA: $39.6 million, beating consensus estimates by 29%.
• Revenue: $321.9 million, beating consensus by 7%.
• Key Drivers: Improved operational efficiency, strong sales in mining and North American transportation, and favorable trends in the energy sector.

2. Composite Technologies (Xerxes Brand)

The Xerxes segment is the company’s primary growth engine, serving retail fuel stations and AI data centers.

• Performance: Achieved the strongest first quarter in the brand's history.
• Demand: Currently at an all-time high with a record backlog.
• Capacity Expansion: A new factory brought online last year is currently ramping up. The company expects a 10% year-over-year increase in tank production.
• Supply Chain: The company has localized supply chains to mitigate tariff risks. While resin costs have risen due to oil prices, these costs are successfully passed on to customers to maintain margins.

3. Flexpipe Segment

Despite a volume decline in Q1 2026, the company maintains a bullish outlook.

• Market Context: North American well completions dropped by over 10% in Q1 2026 compared to Q1 2025, impacting demand.
• Strategic Outlook: CEO Mike Reeves identified Q1 2026 as the "low point" in the cycle.
• Growth Strategy: The company has expanded its product portfolio to capture more market share. Notably, they secured a significant international order, the first in 2.5 years.
• Competitive Goal: Reeves aims to approach the scale of their largest competitor (currently twice their size) within 3 to 5 years.

4. Ammer Cable and Mining Exposure

Acquired in January 2025, Ammer Cable has exceeded performance expectations.

• Market Focus: Primarily serves the mining sector, which the company views as a high-growth area for various minerals.
• Investment: The company is investing in additional productive capacity throughout 2026 and 2027 to drive double-digit growth and margin expansion.

5. Capital Allocation and M&A Strategy

• Capital Expenditure (CapEx): After three years of heavy investment, 2026 CapEx is projected to be a more modest $35–$45 million, with the largest portion allocated to Ammer Cable.
• M&A Outlook: Having successfully integrated the Ammer Cable acquisition, the company is preparing to re-enter the M&A market. Reeves indicated that the window for "accretive, strategically aligned acquisitions" will likely reopen late in 2026.

6. Risk Management: Tariffs and Trade

The company has reconfigured its manufacturing footprint over the last three years to ensure it "manufactures where it sells." By maintaining a robust US footprint and ensuring USMCA/KUSA compliance, the company has minimized the need for cross-border logistics, effectively abating tariff-related risks.

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Synthesis and Conclusion

Matter’s Q1 2026 results demonstrate the success of a multi-year transformation strategy focused on operational efficiency and localized supply chains. By leveraging the record-breaking demand for Xerxes composite tanks and positioning for a recovery in the Flexpipe oilfield market, the company has established a solid foundation for growth. With the integration of Ammer Cable complete and a disciplined approach to capital expenditure, Matter is now pivoting toward future strategic acquisitions to further scale its operations.