OMSE

Hello, ladies and gentlemen. Thank you for standing by for OMS Energy Technologies Inc. Fiscal Year 2026 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. Before we begin, the company's financial and operational results were released through Global Newswire Services earlier today and have been made available online. You can also view the earnings press release by visiting the OMS IR website at ir.omsos.com. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, target, estimate, intent, believe, potential, continue, and other similar expressions. Forward-looking statements involve inherent risks and uncertainties.

The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which are factors beyond our control. The company, its affiliates, advisors, and representatives do not undertake any obligations to update this forward-looking information, except as required under the applicable law. I will now turn the call over to Mr. How Meng Hock. Please go ahead.

Thank you, operator, thank you everyone for joining us today. My name is How Meng Hock. I'm the CEO of OMS Energy Technologies Inc. This is our first earnings call covering a full fiscal year as a public company since our Nasdaq listing in May of last year. For investors newer to our story, OMS is a Singapore-headquartered equipment manufacturer and an engineered solution supplier of surface wellhead systems and oil country tubular goods, serving the upstream onshore and offshore oil and gas markets across Asia Pacific, the Middle East, and Africa. We operate 11 fully certified manufacturing facilities across six key markets, supplying a diverse, established customer base anchored by long-term contracts. We delivered a resilient performance in fiscal 2026 against a complex macro environment.

Before I dive into the numbers, I want to address the geopolitical situation in the Middle East because it bears on how to read our full-year results. Throughout the period, our first priority has been the safety and well-being of our employees and their families. We have taken all necessary precautions to protect our people, our Saudi facility has remained operational. At the same time, the conflict has caused some short-term logistical disruption in our business. Most notably, a shipment of specialty connectors from Singapore to the UAE, worth approximately $800,000, was delayed when the conflict broke out. We still expect to fulfill that shipment, we remain cautious given the fluid regional environment and the uncertainty around when logistics activity will fully return to normal. The seasonal slowdown around Ramadan this year coincided with heightened regional caution, compounding the effects.

That said, our business remained healthy, delivering solid profitability and record cash flow despite a year-over-year revenue decline. We also remained debt-free and ended the year with the strongest balance sheet in our history. Full-year revenue was $155.9 million, compared to $203.6 million in FY 2025. This decline was primarily driven by the timing of call-off orders under our long-term supply agreement with Saudi Aramco, set against an unusually high prior year base. As a reminder, FY 2025 included the overlap of the conclusion of our previous Aramco contract with the ramp-up of our new 10-year agreement signed in early 2024. That combination produced a revenue level in the first half of FY 2025 that we did not expect to repeat this year. Looking at the second half of 2026 in isolation tells a cleaner story.

Our second half revenue was broadly stable year-over-year, confirming that the full-year decline was largely attributable to the first half base effect, not continued deterioration in our run rate. Margins also held firm through the second half, and gross margin improved sequentially compared to the first half, benefiting from a favorable revenue mix and continued cost discipline. Let me be very clear on the Aramco contract, as I was at the half-year mark, these are deferred orders, not lost orders. Our long-term agreement with Aramco remains fully intact. Our relationship remains strong, and there has been no cancellation. The pace of call-off orders is governed by customers' inventory management, inspection schedules, and CapEx cycle. We do not control this variable, and these fluctuations are entirely normal and expected in our industry. In March, we announced an $11 million call-off from Aramco under the existing agreement.

Signaling a recovery in the pace of their procurement activity. That order is now in our backlog, expected to be recognized in FY 2027. Our backlog at year-end was $60.7 million, compared to $102 million a year ago. The decline reflects the same call-off timing dynamics, not a change in demand. To put the year-end backlog figure in context, the same independent industry forecaster informed our planning call for MENA, Middle East-North Africa, oil and gas capital spending to grow by approximately 4% in calendar 2026, and to accelerate to 6%-7% range in 2027 and 2028 as deferred projects and post-conflict repair work flow into the regional budgets. Across the region, there have been no cancellation of major projects, only delays and timing shifts, and Saudi Aramco's capital program remains on track.

Therefore, we characterize this year-end figure as a point-in-time low within the normal call-off timing cycle, not a structural step-down, and we expect the backlog to rebuild as Aramco's activity recovers through FY 2027. Beyond Aramco and Saudi Arabia, our diversification efforts continue to build a more balanced footprint across the region. In specialty connectors and pipe, our revenue outside Saudi Arabia grew to $4.6 million from $2 million, driven by export sales into the UAE, Pakistan, and Indonesia. In surface wellhead system and Christmas trees, revenue grew to $10.9 million from $8.7 million, supported by Indonesia and by first wins in new markets, including Pakistan and Angola. While these markets are smaller relative to the Middle East, they represent avenues for long-term expansion.

We also continue to see encouraging growth in selected Asian markets, including a 17% revenue increase in Thailand, 16% increase in Indonesia, and 8% increase in Brunei. Furthermore, OMS has officially qualified as an approved specialty connector and pipe vendor for Kuwait Oil Company. Kuwait is the second-largest market for specialty connectors in the Middle East. While competition there is fierce, this qualification allows us to participate in future tenders and adds another country to our growth and diversification strategy. Order momentum in the surface wellhead and Christmas tree is building across our other diversification markets with approximately $1 million in Oman, $1.3 million in Indonesia, and $0.26 million in Pakistan now in our backlog. We are also in the bidding process for several surface wellhead system opportunities in Nigeria and Kazakhstan, new territories that would expand our footprint.

Meanwhile, we are advancing plans to establish a local presence in Pakistan and the UAE, in line with the broader localization trends we are seeing across the region. We expect to file those application in August. On the operational front, two recent certifications are beginning to translate into commercial activity. With OMS Saudi's API Specification 6A certification in hand, we are now working to establish a service and maintenance arrangement with a U.S.-based drilling company. Meanwhile, OMS Indonesia's API 11D1 certification allowed us to expand into equipment installation for a customer in Indonesia. Both milestones support our product and services diversification strategy. We are also advancing R&D initiatives designed to drive manufacturing efficiency and enable us to deliver higher-value, automation-based services. We recently signed a research and collaboration agreement with Nanyang Technological University focused on finite element analysis for metal, welded, and additive manufactured parts.

Separately, we are working with the Singapore Institute of Manufacturing Technology on CNC machine sensing, anomaly detection, and overall equipment effectiveness. We will further report on this program as they progress. Turning now to our broader financial metrics. This year, we are introducing two non-IFRS measures, adjusted EBITDA and adjusted free cash flow. We are adding this to better align with our peers' reporting and facilitate investors' evaluation of our business across cycles. Full reconciliations are in our earnings release. For the full year, gross profit was $47.2 million, for a gross margin of 30.3%. Margin held up well given the lower volume base, underscoring our pricing discipline and supply chain management. Adjusted EBITDA was $41.2 million. Operating profit was $34.9 million, for an operating margin of 22.4%, and net profit was $33.9 million.

Let me briefly provide context on two items affecting our year-over-year comparability so that you can update your models cleanly. First, our effective tax rate was 11.8%, down from 21.9% in fiscal 2025. This was largely attributable to one-off items, including the favorable resolution of a prior year tax matter that resulted in a return of $2.3 million and an over-provision of $0.5 million in an earlier period. Excluding this, our normalized effective tax rate will be approximately 19.1%, broadly consistent with prior years. That is the rate we would encourage you to use going forward. Second, the uptick in our selling, general, and administrative expenses reflected the first-year cost of operating as a public company, including compliance, directors and officers insurance, cybersecurity, and investor relations.

While some of these costs, such as investor relations, legal, and audit fees, are recurring, others were one-time or more elevated first-year setup costs. We expect this line to normalize toward approximately $11 million in the coming year as the one-time costs roll off. Cash conversion through working capital and collection management is a core operational discipline for us, and the team handled it well through fiscal 2026. Net cash from operating activities was $54.1 million for fiscal year 2026, and adjusted free cash flow was $52.5 million, an increase of $14.9 million or 39.4% over the prior year. In terms of composition, approximately $15.4 million of that cash came from inventory drawdown as we resize stock in line with the lower call-off cadence.

Our target inventory level is in the $20 million-$25 million range, which means some of this cash will be reinvested in working capital during fiscal 2027 to support delivery of the Aramco order and other commitments. The underlying cash conversion of profit remains strong, I would not encourage investors to model the fiscal 2026 free cash flow figure as a full-cycle run rate. Combined with the $28.9 million in IPO proceeds we received in May 2025, this cash generation drove our cash and restricted cash to a record $154.3 million as of March 31, 2026. Importantly, our balance sheet remains debt-free. Our cash reserves are contributing meaningful finance income, and our overall financial strength positions us to invest in growth. Our priority is disciplined development that builds on what we already do well.

To that end, we have initiated a review of potential opportunities to extend our portfolio, mapping them to our core strength by both fit and time horizon. In the nearer term, this has pointed us to completion and production technologies adjacent to our existing portfolio, such as artificial lift and, building on our recent certification, packers. Over the longer term, we are exploring areas in the energy transition space where our subsurface and engineering expertise is relevant, such as geothermal and carbon capture and storage. This is a structured exploratory process, not a commitment to any given transaction or sector. The conversations will take time because the strategic fit and valuation both have to be right, it reflects how seriously we are approaching capital deployment. We are confident in our ability to put this balance sheet to work on long-term, high-return opportunities without the need to raise additional equity.

Looking ahead, the industry backdrop is still mixed in the near term, becoming more supportive over the medium term. The first half of calendar 2026 was slower across the Middle East as the conflict weighed on execution. As I mentioned earlier, those same independent forecasts point to regional capital spending strengthening over 2027 and 2028. Saudi Aramco's capital program remains on track, though the broader Saudi market is not immune to regional cost pressure. The recovery will not be uniform. The international oil majors continue to emphasize capital discipline, with group CapEx forecast to be approximately flat in 2026 versus 2025. We expect acceleration to be concentrated among the national oil companies and in post-conflict rehabilitation activity rather than broad-based regional search.

We also see a clear multiyear trend towards supply chain localization across the Gulf, which favor suppliers with in-region manufacturing and certification, precisely where we have been investing. Across our other markets, the picture is mixed. Indonesia remains active with intensifying tender activity. Thailand continues to be busy, and Brunei is drawing renewed interest from a broader set of operators. In Malaysia, activity has been softer as PETRONAS directs more work outside the country, and our Singapore operations are facing some near-term pressure as regional work shifts towards the Middle East. Taken together, we expect the demand environment to firm up as recovery and rehabilitation spending builds. Assuming no further material geopolitical disruption, we would expect to perform modestly better than this year on the top line, supported by Aramco call-off activity gradually picking up and continued progress in our diversification markets.

As we reinvest in capabilities and continue to absorb full-year public company costs against a more diversified mix, we will point to a normalized operating margin to settle modestly below this year's level, which benefited from a favorable revenue mix. To sum up, our top-line performance was constrained by call-off timing against a difficult macro backdrop in fiscal 2026. Disciplined execution and strategic diversification kept the underlying business strong. We closed the year with record cash, a debt-free balance sheet, and healthy margins. OMS is more stable, more globally diversified than any other point in our history. Moving forward, we'll both focus on deploying our balance sheet strength effectively to convert Aramco order recovery and expanding regional opportunities into visible growth and long-term value. Before we close, I'd like to spend a few minutes addressing some of the questions we anticipate may be on investors' minds following these results.

I know there's particular interest in how we intend to use our balance sheet, let me speak on a few of these directly. One, with over $154 million of cash and no debt, how should investors think about our capital allocation framework? We intend to preserve a strong debt-free balance sheet throughout any capital allocation activity. In our industry, financial resilience is a competitive advantage when serving large national oil company customers who value suppliers that can deliver reliably over long contract cycles. That said, our top priority is to reinvest in the core business funding capacity, certification, and in-region capabilities that drive our growth, including potential local presence initiatives in Pakistan and the U.A.E. Second, as I noted earlier, we are reviewing disciplined bolt-on opportunities adjacent to our existing product and services, assessed on strategic fit and valuation.

Our cash position allows us to pursue this without raising new capital or taking on debt. Two, many investors, particularly in Asia, have asked about dividends or share buybacks. What is our thinking on returning capital? At this stage, we believe the highest return use of our capital is investing to support growth, where we see attractive opportunities in our core markets and selective bolt-ons. We don't currently have a dividend or buyback program in place, our strong debt-free balance sheet gives us the flexibility to introduce one when the timing and conditions are right. We hear the interest clearly, and we'll be transparent with the market as our thinking evolves. Three, reported operating margin this year was around 22.4%. How should an investor think about a normalized margin going forward? To be clear, we're not providing a formal guidance.

The point is simply that this year's reported margin was elevated by mix. We would encourage modeling a normalized level modestly below it. We have a track record of protecting margin through cost discipline, even in lower volume years, as this year's demonstrated. We would rather set a benchmark that we are confident that we can meet and to work to do better. Our mix diversifies away from peak Saudi specialty connector volume towards newer product and markets. As we carry a full year of public company costs and continue to reinvest, we think a normalized range modestly below this year's levels is the responsible way for investors to model us. 4, free cash flow was very strong this year, helped by an inventory drawdown. How sustainable is that? Is inventory now too lean to support growth?

Part of this year's cash generation came from disciplined working capital management, including converting earlier inventory built into deliveries in line with a lower call-off cadence. We wouldn't expect a working capital release of the same size every year. A normalized free cash flow level will be somewhat lower. On inventory, we manage a level aligned with expected order activity, including the 11 million Aramco call-offs scheduled for fiscal 2027, and we are comfortable it supports our delivery commitments. 5, our EPS fell more than our net profit this year. Why is that? The steeper decline in EPS than in net profit is largely mechanical. This year's result carried the full year effect of the additional shares issued in our May 2025 IPO. Our weighted average share count was higher year over year.

In other words, the wider per-share decline reflects the larger post-IPO share base, not the change in the underlying business beyond the revenue timing we discussed earlier. Importantly, the same share base means that as profit recovers alongside Aramco call-off activity, the benefit flows through per-share earnings on the way back up. With this, we conclude our prepared remarks. Thank you once again for joining us today. If you have further questions, please feel free to contact OMS or Piacente Financial Communications.

Thank you. With this concludes today's conference call. You may now disconnect. Thank you.

Hello, ladies and gentlemen. Thank you for standing by for OMS Energy Technologies Inc's first half of fiscal year 2026 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. Before we begin, the company's financial and operational results were released through GlobeNewswire Services earlier today and have been made available online. You can also view the earnings press release by visiting the OMS IR website at ir.omsos.com. Please note that today's discussions will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, target, estimate, intend, believe, potential, continue, or other similar expressions. Forward-looking statements involve inherent risks and uncertainties.

The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which are factors beyond our control. The company, its affiliates, advisors, and representatives do not undertake any obligation to update this forward-looking information except as required under the applicable law. I will now turn the call over to Mr. Haw Meng Hock. Please go ahead.

Thank you, operator, and thanks everyone for joining us today. I am How Meng Hock. I'm the CEO of OMS Energy Technologies. As this is our first earnings call as a public company following our May IPO, I want to thank our new shareholders and partners for their support and confidence in OMS. Before we dive into our first half fiscal year 2026 results, I'd like to give a quick overview of our company and broader growth strategies. OMS is a Singapore-headquartered equipment manufacturer and engineered solution supplier of surface water systems and oil country tubular goods, serving the upstream, onshore, and offshore oil and gas market across Asia Pacific, the Middle East, and Africa. Prior to 2023, OMS was a specialist oil and gas subsidiary of Japanese conglomerate Sumitomo Corporation.

The current management bought the company in 2023, believing we could drive more growth and more effectively as an independent entity, which we have subsequently accomplished. Our products include specialty connectors and pipes, surface water systems, and premium cleaning services, along with supporting inspection and maintenance solutions. Specialty connectors and pipes are currently our largest revenue segment, while our services and welding equipment provide diversification. We operate 11 fully certified manufacturing facilities across six key markets throughout Southeast Asia and the Middle East, combining precision engineering with regional proximity to deliver reliable solutions to a steady and established customer base anchored by long-term contracts. Our NASDAQ listing in May marked a key milestone for OMS, bringing greater global exposure and financial flexibility that enabled us to accelerate growth. We raised $28.9 million in our IPO, supported by disciplined capital management, strong cash generation capabilities, and a debt-free balance sheet.

Going public has equipped us to pursue organic growth and global customer diversification, product portfolio expansion, and selective M&A and joint ventures. This balanced development strategy is designed to drive sustainable long-term growth while delivering shareholder value. Now, on our first half of fiscal year 2026 results, we delivered a resilient and strategically significant performance amid a challenging macro and industry environment, highlighted by strong cash generation, healthy profitability, and solid progress across international markets. Through prudent capital management and outstanding collection practices, we drove free cash flow of $26.4 million, up from $23.4 million in the prior year period. We continue to efficiently convert profits into cash, demonstrating our strong fundamentals and financial discipline. Along with our IPO proceeds, this impressive cash generation strengthened our balance sheet to a record high of $128.7 million as of September 30th, 2025.

Importantly, we also remained debt-free, a key contributor to our financial health and strategic flexibility. While this period's revenue reflects delays in the timing of call-up orders, our underlying performance was strong, driving continued profitability with an operating profit of $17.9 million and an operating margin of 21.6%. These remarkable results underscore our business's efficiency, marked by pricing discipline, effective cost control, and a healthy revenue mix. Our gross profit margin was 28.2%, remaining solid thanks to operational excellence and strong supply chain management. Net profit was $14.6 million. This combination of profitability, cash strength, and zero leverage makes OMS unique among NASDAQ-listed small caps in terms of stability and long-term opportunity. This positions us to accelerate investment in capability upgrades, product innovation, and new markets while maintaining capital discipline.

Our revenue for the first half of fiscal year 2026 came in at $82.8 million, softer compared to $129.2 million in the first half of fiscal 2025, but up from $74.4 million in the previous half-year period. This was due to the timing of call-up orders from a major long-term contract in Saudi Arabia, not a change in underlying demand or market share. While long-term contracts provide stability and visibility across the contract lifecycle, we do not control the pace of the call-up orders, resulting in fluctuation in revenue recognition timing. Our long-term supply agreement with Saudi Aramco remains intact. Our relationship remains strong, with a sizable and active order backlog. There was no cancellation or contract losses. These are deferred orders, not loss orders. A high base also contributed to the soft year-over-year comparison.

We realized an unusually high level of revenue from Aramco in the first half of fiscal 2025 due to an overlap of the end of our previous contract and with their new 10-year agreement signed in early 2024. This period's strong order growth across various product and services segments in Singapore, Thailand, Egypt, Oman, Indonesia, and the U.A.E. helped offset Saudi's timing effects to some degree. I want to highlight that the majority of our revenue comes from multi-year call-up contracts, making fluctuation in revenue recognition timing a standard factor in our accounting. Our customers' order pace can be influenced by inspection, CapEx cycle, operational planning, and project timing, as well as seasonal factors such as weather, maintenance window, and holidays. These variables are normal in the industry and do not indicate any reduction in the long-term opportunity.

We view periodic fluctuation in long-term contract orders as deferred order volume and not loss volume. I encourage you to refer to our earnings release earlier today for further details on our financial results. We also propelled progress across our strategic development initiatives during the period, centered on long-term growth and diversification, operational excellence, and higher quality earnings. We broadened our customer reach and deepened existing relationships, advancing our geographic diversification strategy across Africa, South Asia, and Asia Pacific. Our successful expansion into Angola and Pakistan and new Indonesian customers, including PT Seleraya Belida and Pertamina Hulu Sanga Sanga, expanded our global footprint and diversified revenue. Meanwhile, we maintain a robust and growing portfolio of long-term contracts, highlighted by a renewed three-year agreement with PTTEP, who today operate 13 offshore rigs, the highest number in their operational history, which reinforces our leadership in Thailand.

These developments strengthen our global presence and reduce revenue concentration over time, positioning OMS for more balanced and predictable growth. Preparing to accelerate growth has been a top priority since our IPO. Given our industry's inherent volatility, a resilient balance sheet and prudent debt management are essential for maintaining stability and flexibility as we expand. With this period's strong cash generation, a healthy debt-free balance sheet, and a solid order pipeline in place, we are well positioned to start deploying capital to drive long-term growth. We are currently evaluating strategic opportunities that will expand our manufacturing capability and international footprint. We also continue to strengthen our engineering teams in Singapore and Indonesia, with plans to expand to other operating jurisdictions.

Furthermore, we're in the final stages of the contract tendering process in Oman and Indonesia, where our track record, certifications, local operations, and reputation for quality, reliability, and timeliness give us an edge. The outcome of this tender will be announced once the review and clarification process is complete. On the innovation front, our investment in additive manufacturing and R&D is advancing our development of new high-performance components, promoting supply chain improvement and opening new customer acquisition pathways. Our welding refurbishment program in Indonesia is meeting increasing demand for suitable solutions, deepening our customer engagement, and reinforcing our aftermarket value proposition. We plan to expand this program to other regions as global interests in innovative, cost-effective sustainability grows.

We are also making strides in lifecycle analysis, energy efficiency monitoring, and digital transformation through our ongoing R&D collaboration with Singapore's Agency for Science, Technology and Research and the Singapore Institute of Manufacturing Technology. Other than the Singapore Institute of Manufacturing Technology, we're also seeking global partners in AI and robotics across the broader oil and gas services sector. We aim to identify partners whose technologies complement and enhance our product and services portfolio, including areas such as pipeline inspection and monitoring, among others. This is also one of the forward-looking initiatives across manufacturing and sustainability and AI to broaden our revenue base and accelerate growth by capturing demand beyond our traditional upstream oil and gas products and services.

In terms of the broader industry outlook, the U.S. Energy Information Administration recently increased its Brent price forecast for 2025 and 2026, but still projected that oil prices will drop next year compared to 2025. In a lower price and potentially lower demand environment, OMS key strengths—cost discipline, low leverage, effective financial stewardship, and efficient operation—will serve as a crucial differentiator in maintaining margins and stability. Saudi Aramco recently raised its gas production capacity growth from 60% to around 80% over 2021's level by 2030, signaling strong confidence in long-term demand for gas. A push by the Middle East producer to shift manufacturing support from Southeast Asia to the Middle East is creating both challenges and potential for us to capture market share. Meanwhile, production slowdowns in Brunei and Malaysia are impacting major players in the region, and evolving strategic alliances are altering the global competitive landscape.

With our technical depth, operational and service agility, and financial flexibility, we are well positioned to navigate these changes and seize new opportunities worldwide. To sum up, OMS today is stronger, more stable, and more globally diversified than at any time in our company's history. With $128.7 million in cash and restricted cash, with zero debt and operational cash flow exceeding net profit of $26.4 million, our financial position is exceptionally robust. An operating margin of 21.6% and consistent profitability across market cycles underscore our ability to navigate fluctuations. This strong foundation gives OMS a clear competitive advantage. We can invest in growth, enhance our operational capabilities, and pursue selective opportunities that create long-term shareholder value, all without the need to raise capital. We are confident in the depth of our pipeline, the resilience of our business model, and the effectiveness of our capital management strategy.

We are entering the second half of fiscal 2026 with a robust momentum and a clear plan for continued innovation and expansion. Moving forward, we will continue executing with discipline, strengthening customer relationships, and building a more diversified international footprint. We will remain focused on maintaining profitability, preserving balance sheet strength, and prudently deploying capital towards long-term, high-return opportunities that support sustainable growth and build value for our stakeholders. This concludes our prepared remarks. Thank you once again for joining us today. If you have further questions, please feel free to contact OMS or Piacente Financial Communications.

This concludes this conference call. You may now disconnect your line. Thank you. Hello, ladies and gentlemen. Thank you for standing by for OMS Energy Technologies Inc's first half of fiscal year 2026 earnings conference call. At this time, all participants are in listen-only mode. Today's conference call is being recorded.

Before we begin, the company's financial and operational results were released through GlobeNewswire Services earlier today and have been made available online. You can also view the earnings press release by visiting the OMS IR website at ir.omsos.com. Please note that today's discussions will contain forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, target, estimate, intend, believe, potential, continue, or other similar expressions. Forward-looking statements involve inherent risks and uncertainties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which are factors beyond our control.

The company, its affiliates, advisors, and representatives do not undertake any obligation to update this forward-looking information except as required under the applicable law. I will now turn the call over to Mr. How Meng Hock. Please go ahead.

Thank you, operator, and thanks everyone for joining us today. I am How Meng Hock. I'm the CEO of OMS Energy Technologies. As this is our first earnings call as a public company following our May IPO, I want to thank our new shareholders and partners for their support and confidence in OMS. Before we dive into our first half fiscal year 2026 results, I'd like to give a quick overview of our company and broader growth strategies.

OMS is a Singapore-headquartered equipment manufacturer and engineered solution supplier of surface wellhead systems and oil country tubular goods, serving the upstream, onshore, and offshore oil and gas market across Asia Pacific, the Middle East, and Africa. Prior to 2023, OMS was a specialist oil and gas subsidiary of Japanese conglomerate Sumitomo Corporation. The current management bought the company in 2023, believing we could drive more growth and more effectively as an independent entity, which we have subsequently accomplished. Our products include specialty connectors and pipes, surface wellhead systems, and premium threading services, along with supporting inspection and maintenance solutions. Specialty connectors and pipes are currently our largest revenue segment, while our services and wellhead equipment provide diversification.

We operate 11 fully certified manufacturing facilities across six key markets throughout Southeast Asia and the Middle East, combining precision engineering with regional proximity to deliver reliable solutions to a steady and established customer base anchored by long-term contracts. Our NASDAQ listing in May marked a key milestone for OMS, bringing greater global exposure and financial flexibility that enabled us to accelerate growth. We raised $28.9 million in our IPO, supported by disciplined capital management, strong cash generation capabilities, and a debt-free balance sheet. Going public has equipped us to pursue organic growth and global customer diversification, product portfolio expansion, and selective M&A and joint ventures. This balanced development strategy is designed to drive sustainable long-term growth while delivering shareholder value.

Now, on our first half of fiscal year 2026 results, we delivered a resilient and strategically significant performance amid a challenging macro and industry environment, highlighted by strong cash generation, healthy profitability, and solid progress across international markets. Through prudent capital management and outstanding collection practices, we drove free cash flow of $26.4 million, up from $23.4 million in the prior year period. We continue to efficiently convert profits into cash, demonstrating our strong fundamentals and financial discipline. Along with our IPO proceeds, this impressive cash generation strengthened our balance sheet to a record high of $128.7 million as of September 30th, 2025. Importantly, we also remain debt-free, a key contributor to our financial health and strategic flexibility.

While this period's revenue reflects delays in the timing of call-up orders, our underlying performance was strong, driving continued profitability with an operating profit of $17.9 million and an operating margin of 21.6%. These remarkable results underscore our business's efficiency, marked by pricing discipline, effective cost control, and a healthy revenue mix. Our gross profit margin was 28.2%, remaining solid thanks to operational excellence and strong supply chain management. Net profit was $14.6 million. This combination of profitability, cash strength, and zero leverage makes OMS unique among NASDAQ-listed small caps in terms of stability and long-term opportunity. This positions us to accelerate investment in capability upgrades, product innovation, and new markets while maintaining capital discipline.

Our revenue for the first half of fiscal year 2026 came in at $82.8 million, softer compared to $129.2 million in the first half of fiscal 2025, but up from $74.4 million in the previous half-year period. This was due to the timing of call-up orders from a major long-term contract in Saudi Arabia, not a change in underlying demand or market share. While long-term contracts provide stability and visibility across the contract lifecycle, we do not control the pace of the call-up orders, resulting in fluctuation in revenue recognition timing. Our long-term supply agreement with Saudi Aramco remains intact. Our relationship remains strong, with a sizable and active order backlog. There was no cancellation or contract losses. These are deferred orders, not loss orders. A high base also contributed to the soft year-over-year comparison.

We realized an unusually high level of revenue from Aramco in the first half of fiscal 2025 due to an overlap of the end of our previous contract and with their new 10-year agreement signed in early 2024. This period's strong order growth across various product and services segments in Singapore, Thailand, Egypt, Oman, Indonesia, and the U.A.E. helped offset Saudi's timing effects to some degree. I want to highlight that the majority of our revenue comes from multi-year call-up contracts, making fluctuation in revenue recognition timing a standard factor in our accounting. Our customers' order pace can be influenced by inspection, CapEx cycle, operational planning, and project timing, as well as seasonal factors such as weather, maintenance window, and holidays. These variables are normal in the industry and do not indicate any reduction in the long-term opportunity.

We view periodic fluctuation in long-term contract orders as deferred order volume and not loss volume. I encourage you to refer to our earnings result release earlier today for further details on our financial results. We also propelled progress across our strategic development initiatives during the period, centered on long-term growth and diversification, operational excellence, and higher quality earnings. We broadened our customer reach and deepened existing relationships, advancing our geographic diversification strategy across Africa, South Asia, and Asia Pacific. Our successful expansion into Angola and Pakistan and new Indonesian customers, including PT Seleraya Belida and Pertamina Hulu Sanga Sanga, expanded our global footprint and diversified revenue. Meanwhile, we maintain a robust and growing portfolio of long-term contracts, highlighted by a renewed three-year agreement with PTTEP, who today operate 13 offshore rigs, the highest number in their operational history, which reinforces our leadership in Thailand.

These developments strengthen our global presence and reduce revenue concentration over time, positioning OMS for more balanced and predictable growth. Preparing to accelerate growth has been a top priority since our IPO. Given our industry's inherent volatility, a resilient balance sheet and prudent debt management are essential for maintaining stability and flexibility as we expand. With this period's strong cash generation, a healthy debt-free balance sheet, and a solid order pipeline in place, we are well positioned to start deploying capital to drive long-term growth. We are currently evaluating strategic opportunities that will expand our manufacturing capability and international footprint. We also continue to strengthen our engineering teams in Singapore and Indonesia, with plans to expand to other operating jurisdictions.

Furthermore, we're in the final stages of the contract tendering process in Oman and Indonesia, where our track record, certifications, local operations, and reputation for quality, reliability, and timeliness give us an edge. The outcome of this tender will be announced once the review and clarification process is complete. On the innovation front, our investment in additive manufacturing and R&D are advancing our development of new high-performance components, promoting supply chain improvement and opening new customer acquisition pathways. Our wellhead refurbishment program in Indonesia is meeting increasing demand for suitable solutions, deepening our customer engagement, and reinforcing our aftermarket value proposition. We plan to expand this program to other regions as global interests in innovative, cost-effective sustainability grows.

We are also making strides in lifecycle analysis, energy efficiency monitoring, and digital transformation through our ongoing R&D collaboration with Singapore's Agency for Science, Technology and Research and the Singapore Institute of Manufacturing Technology. Other than the Singapore Institute of Manufacturing Technology, we're also seeking global partners in AI and robotics across the broader oil and gas services sector. We aim to identify partners whose technologies complement and enhance our product and services portfolio, including areas such as pipeline inspection and monitoring, among others. This is also one of the forward-looking initiatives across manufacturing and sustainability and AI to broaden our revenue base and accelerate growth by capturing demand beyond our traditional upstream oil and gas products and services.

In terms of the broader industry outlook, the U.S. Energy Information Administration recently increased its Brent Price forecast for 2025 and 2026, but still projected that oil price would drop next year compared to 2025. In a lower price and potentially lower demand environment, OMS key strengths—cost discipline, low leverage, effective financial stewardship, and efficient operation—will serve as a crucial differentiator in maintaining margins and stability. Saudi Aramco recently raised its gas production capacity growth from 60% to around 80% over 2021's level by 2030, signaling strong confidence in long-term demand for gas. A push by Middle East producers to shift manufacturing support from Southeast Asia to the Middle East is creating both challenges and potential for us to capture market share. Meanwhile, production slowdowns in Brunei and Malaysia are impacting major players in the region, and evolving strategic alliances are altering the global competitive landscape.

With our technical depth, operational and service agility, and financial flexibility, we are well positioned to navigate these changes and seize new opportunities worldwide. To sum up, OMS today is stronger, more stable, and more globally diversified than at any time in our company's history. With $128.7 million in cash and restricted cash, with zero debt and operational cash flow exceeding net profit of $26.4 million, our financial position is exceptionally robust. An operating margin of 21.6% and consistent profitability across market cycles underscore our ability to navigate fluctuations. This strong foundation gives OMS a clear competitive advantage. We can invest in growth, enhance our operational capabilities, and pursue selective opportunities that create long-term shareholder value, all without the need to raise capital. We are confident in the depth of our pipeline, the resilience of our business model, and the effectiveness of our capital management strategy.

We are entering the second half of fiscal 2026 with a robust momentum and a clear plan for continued innovation and expansion. Moving forward, we will continue executing with discipline, strengthening customer relationships, and building a more diversified international footprint. We will remain focused on maintaining profitability, preserving balance sheet strength, and prudently deploying capital towards long-term, high-return opportunities that support sustainable growth and build value for our stakeholders. This concludes our prepared remarks. Thank you once again for joining us today. If you have further questions, please feel free to contact OMS or Piacente Financial Communications.

This concludes this conference call. You may now disconnect your line. Thank you.