Thank you, operator. Good morning, everyone, and thank you for joining Kraken Robotics's earnings call for the 3- and 12-months ended December 31st, 2025.

Joining today's call from Kraken is Greg Reid, President and CEO, and Joe MacKay, Chief Financial Officer. Before we begin, I want to remind everyone that certain statements in this call may be forward-looking in nature.

Matters discussed, including management estimates, statements involving known and unknown risks, uncertainties, and other factors could cause actual results to differ materially from those expressed or implied in our forward-looking statements, which reflect the company's judgment based on information available at the time of this call. I'd also like to refer you to forward-looking statements, risk factors, and additional detail on non-IFRS financial measures we have provided in our press release, MD&A, presentation, and AIF, which are available on SEDAR+ in addition to our website.

Unless otherwise stated, all dollar amounts mentioned during this call are denominated in Canadian dollars. I'll now pass the call over to Greg Reid, our President and CEO.

Greg?

Thanks, Shant. Good morning, everyone.

During today's call, we'll start off by reviewing our key accomplishments and financial results during the past year. We'll then review our outlook for the business, including our guidance for 2026.

Lastly, we'll revisit the strategic merits of our recently announced acquisition of the Covaelia Group, which is expected to close during the current quarter. As background, for those of you new to the Kraken story, I'll start off by summarizing that Kraken is a marine technology company focused on transforming subsea intelligence.

Our technologies are dual-use and serve customers globally, supporting the defense industry and various commercial markets such as offshore energy and scientific exploration. We're headquartered in Canada with manufacturing and services operations in Canada, the US, the UK, and Germany, and sales and R&D offices in Australia, Denmark, and Brazil.

We report across two lines of business: products and services. For our products business, it's focused on subsea power solutions such as our SeaPower batteries, platforms such as our KATFISH towed system, and advanced sensors including our Synthetic Aperture Sonar, or SAS.

We also provide services to the offshore energy and defense clients, including sub-bottom imaging, LiDAR, and KATFISH solutions for seabed and sub-seabed imaging surveys. Looking back at our annual results, 2025 was a very successful year for Kraken.

We generated record revenue and Adjusted EBITDA, which was driven by significant demand for our SeaPower batteries and SAS products, as well as growth in our subsea service business. During the past year, we've taken several steps to help facilitate additional growth in our business, including the expansion of battery manufacturing capacity with the recent completion of our new facility in Nova Scotia; continued product innovation, including a new higher-energy-density battery design with approximately a 30% improvement in energy density for large and extra-large underwater vehicles, and plans for more compact designs to address smaller and medium-sized UUVs.

We also developed a new launch and recovery system to target smaller unmanned surface vessels and a dual-frequency circular SAS that provides a higher-fidelity imagery, detection, classification, and plausible identification of objects from a single payload. We also enhanced our balance sheet strength and expanded our shareholder base through a successful equity financing, resulting in a cash position at over $120 million at year-end.

We further strengthened our leadership team, including several new senior executives and board members that bring a diverse array of experiences and relationships. Strategically, we also executed the tuck-in acquisition of 3D at Depth in 2025, expanding our service offering to include optical LiDAR technology and our geographic presence within the US.

Most recently in March, we announced the acquisition of Covaelia Group, bringing two leaders in underwater technology together to create a global marine supplier in mission-critical solutions for maritime security and critical underwater infrastructure inspection. I'll speak to this strategic acquisition in more detail later during the call.

As we look closer at some of the work our teams executed this past year, we saw continued demand from both defense and commercial customers. Within our products business, which primarily sells into the defense market, we saw record sales of SeaPower batteries and SAS units in 2025.

The number of SAS units sold in 2025 were almost equal to the total units delivered from the previous two years. In batteries, we have added multiple new UUV OEM customers since mid-2025.

This highlights the growing demand for subsea technology and the continued adoption of unmanned underwater vehicles, as well as us winning market share in the battery business. We expect this trend of increased customers continue in 2026, supporting our growth expectations and added diversification.

On KATFISH, sales were lower than expected during the past year due to the timing of expected project bids by various navies. Since year-end, we've seen an increase in demand for KATFISH-related products, including a recent order from the Polish Navy.

In total, there are currently over a dozen programs of record for towfish vehicles currently in the RFP stage or expected to go to RFP from various navies worldwide, with final selection expected over the next two to three years. In addition to these navy programs, we are seeing an uptick in inbound interest for our products given the recent developments in the Middle East, in particular related to solutions for mine countermeasures.

Whether in the Middle East, Europe, Indo-Pacific, or the Arctic, we are seeing an increasing trend towards accelerating investment in marine technology given geopolitical tensions and the need to protect critical underwater infrastructure. In the service side of our business, we worked on a number of offshore energy projects in 2025 for both major oil and gas and renewable companies and their offshore service providers.

This work included site surveys, UXO site investigations, and cable burial assessments for our sub-bottom imaging sensors throughout Europe, US, and Asia. For example, in the Black Sea, we worked on a deepwater oil development project where Kraken's scope of work was to perform non-ferrous UXO survey support along the export pipeline routes, for which we utilized a suite of our sub-bottom imager systems.

In Taiwan, we also performed cable burial assessments during the construction of wind farms, including both the inter-array and export cables, which on a combined basis totaled almost 400 kilometers in length. Our LiDAR services group, which we acquired last April, worked on a number of projects in 2025, including subsea jumper metrologies and onshore nuclear projects located in South America, Europe, the Middle East, Australia, UK, and US.

As we look forward, we remained excited about the long-term prospects for this segment of our business given the need for global energy. This is supported by the growing number of final investment decisions expected for major offshore oil and gas projects in the coming years, as well as the forecast for global offshore wind capacity.

According to Rystad Energy, 42 deepwater final investment decisions are expected in 2026, compared to 37 in 2025, and increasing to approximately 75 in 2027. Before I pass it over to Joe to discuss our financial results and our 2026 guidance, I'd like to thank our employees for their continued hard work and execution during the quarter and throughout the past year.

Joe?

Thanks, Greg. Today I'll start by reviewing our full-year results ending December 31st, and then move on to our fourth quarter results.

Consolidated revenue in 2025 totaled $102 million, up from $91 million in 2024. This annual revenue growth was driven by significant demand for Kraken's SeaPower batteries and SAS products, which grew approximately 30% and 60% respectively in comparison to the prior year.

Revenues were also supported by strong results in the company's subsea services division, which grew over 60% in comparison to 2024, driven by the continuation from the 3D at Depth acquisition and higher utilization of service equipment fleet during the year. As previously released, our strong revenue growth was partially offset by decline in our sonar-related product revenue due to the timing of KATFISH and RMDS projects.

KATFISH project activity can vary year-to-year due to the natural procurement cycle associated with these contracts, and sonar revenue were also lowered due to the near-completion of the acquisition of the Canadian Navy RMDS project. Gross profit for the year increased 42% to $63 million, while our gross profit margin improved to 62%, up from a margin of 49% in the prior year.

This margin improvement is due in part to product mix, products sold during the year, and in addition to higher-margin service revenue from the acquisition of 3D at Depth. Adjusted EBITDA in 2024 increased 21% to $25 million, resulting in an Adjusted EBITDA margin of 24%, up from 23% in 2024.

CapEx and intangible assets purchased during the year totaled $30 million, which included significant growth capital related to our new battery manufacturing facility, in addition to new marine assets, which include sub-bottom imagers, KATFISH equipment, as well as supporting customer trials and demonstrations that will occur throughout 2026. We ended the year with a strong balance sheet.

Total assets in 2020 at the end of 2025 were $313 million, compared to $162 million the prior year, and cash stood at $120 million, and working capital of $171 million. Switching to our Q4 results, consolidated revenue in the quarter was flat at $28 million compared to the prior year.

Like our annual results, growth in batteries and SAS and subsea services were offset by declining revenue associated with the RMDS project. Gross profit in Q4 increased 48% to $20 million, implying a gross profit margin of 70% compared to 48% in the prior year.

This year-over-year improvement relates to the combination of product mix of products sold during the year, and in addition to higher-margin service revenue and lower-than-expected costs relating to one project. Adjusted EBITDA increased 36% to $9.5 million in Q4, up from $7 million in the prior year due to stronger gross profit margins.

Implied Adjusted EBITDA margin in the quarter equated to 33.5% compared to 25% in the comparable quarter. Turning to guidance, on a standalone basis, we reiterate our guidance given on March 3rd and expect revenues range from $165 million to $175 million, the midpoint of which represents 65% annual growth versus 2025.

Adjusted EBITDA is expected to be between $40 and $50 million, the midpoint of which represents 80% annual growth. This Adjusted EBITDA guidance also equates to a margin of over 26%.

CapEx will be in the range of $15 to $18 million in 2026, down significantly from the prior year due to the recent completion of our new battery manufacturing facility in Halifax. Similar to prior years, we expect revenue in 2026 to be weighted towards the second half of the year.

This guidance is based on existing and expected contracts from the company's battery, SAS, and KATFISH products. These strong orders also reflect growth in the company's customer base, including several new defense customers underpinning a strong demand environment given the recent geopolitical events.

Our 2026 guidance is also driven by expected growth in the commercial service business, including a full-year contribution from LiDAR solutions offerings from our 3D at Depth acquisition. We do plan on updating our annual guidance upon the closing of the announced acquisition of Covaelia Group, and for now I'll pass that over back to Greg for closing remarks.

Thanks, Joe. As you've heard throughout the call, we're very excited about the start to our year and our growth prospects on both the defense and the commercial lines of our business.

In addition to these organic opportunities, we're looking forward to closing our strategic combination with Covaelia Group. Where Kraken is a leader in subsea batteries and Synthetic Aperture Sonar, Covaelia is a leader in subsea navigation, positioning, monitoring, and communications, with a diversified customer base and an extensive track record of over 50 years.

In addition to expanding our product offering and competitive position, this strategic acquisition increases our scale and accelerates our growth potential, expands our total addressable market, adds significant in-house technical capabilities, including additional production capacity, and improves our financial profile. As an example, in Q1, Covaelia has seen solid order intake with total new orders of approximately $135 million from various defense and commercial customers, including products such as Sonardyne's navigation and positioning equipment and its Wavefront subsidiary's Sentinel intruder detection system and Vigilant forward-looking sonar.

Prior to turning the call over to the operator for Q&A, I want to take a moment to thank Peter Hunter, who has stepped down as our chairman for personal reasons, but will remain on our board as an independent director. Peter joined Kraken's board in 2023 and became chair in 2024.

During that period, he's provided tremendous leadership and guidance, and has played an important role in our growth to date. I also want to congratulate Shaun McEwan, who has been appointed as our new chairman.

Shaun has been with Kraken's board since 2016, and he's a seasoned executive with over 30 years of experience across technology, manufacturing, and defense. With that, we'll wrap up our prepared remarks, and I'd also point you to our website, krakenrobotics.com, for more information.

We update our website regularly, including our financial filings and other updates, and you can also find our financial filings on SEDAR+. I'll now pass the call back to the operator.

Thank you very much. Good morning, Greg.

Good morning, Joe. Congrats for the year-to-date orders for the combined entity.

It looks like that it's in excess of $200 million. Could you maybe make some comments about your overall bidding pipeline, and especially in light of the situation in Iran?

Just wondering if the $200 million in new orders year-to-date for the combined entity is kind of a sustainable run rate going forward. Thank you.

Thanks, Ben. I'll talk about a few various segments of our order portfolio.

I guess starting with batteries, as most people know, we've seen some strong demand in the XLUUV space with one very significant customer. Over the last 6 months, we've started to add several other customers that have XLUUV development efforts.

We're pleased to say we've added a number of new customers on the battery side, and obviously bringing on the new facility in Nova Scotia to add significant capacity is all tied into the growth outlook we see in the battery business. Very strong demand there.

On the KATFISH side, which as we pointed out, some orders last year had slipped at the end of the year, if we look at the existing Kraken business and we have three pillars to our business: one being sonar, two being batteries, and three being services, we could say honestly that the KATFISH business over the last year has been the disappointing one versus our original expectations. Happy to say now that we think that is turned the corner and we'll see some solid demand on the KATFISH side this year, and I'll call it really for two reasons.

One was a number of programs that have been coming down the pipeline for several years working their way from initial shaping to request for information to RFP. I characterize it, what you're going to see over the next 2 to 3 years is a number of programs coming to market that is significantly larger than what the industry has seen over the last 5 to 6 years.

That's one driver. Then the other, adding to that, is just the obviously mine countermeasures, which is the main application for the KATFISH product, is seeing a lot of attention given what's going on in the Strait of Hormuz and in the Middle East.

As a result of that, we're seeing lots of customer inquiries, and we expect to convert some of that activity, our fair share of that into revenue. KATFISH, we expect will be strong this year.

Then as I mentioned on our SAS business, we've seen a real uptick in that in the last couple of years, and this year we expect a strong continuation of that. That is really driven by the growth of underwater vehicles, AUVs, UUVs.

We're one of just a couple of merchant suppliers to AUV companies for Synthetic Aperture Sonar, and those customers are seeing pretty solid demand, strengthening demand for their vehicle sales. We'll participate along there.

As it relates to Covaelia, their business in Q1 saw a strong order activity, and that was across the board, both on the defense side and the offshore energy side. I don't want to say that look for $200 million of new orders a quarter, but just I'd say that both of our businesses are having a new orders start to the year, driven by those factors that we just talked about.

That's excellent, Greg. Joe, could you talk maybe a little bit more about the upcoming seasonality, whether Covaelia is similar to Kraken legacy, but also maybe about the working cap requirement this year as you grow the combined entity?

The seasonality would be somewhat similar to Kraken legacy. Just in general the industry does have a lower revenues in Q1 right across the industry just because of how budgets are kind of flowed down.

The second half of Covaelia is very similar to Kraken and it will be stronger. In terms of working capital, obviously, the CapEx for the combined entity intensity would be around 8%.

That's going to be coming down from what we've seen in the last year. Also, we've had that contract asset on the balance sheet for $10 or $12 million for a while.

That relates to one project that will be coming to completion, so that will convert into working capital this year. There'll be a small burn on just as we increase inventory just to meet demand, but it'll be improvement from what we've seen here in the recent past.

Okay. Last one for me: could you maybe talk about the next milestone related to the closing of the transaction, and maybe what the next steps in terms of the TSX listing?

Thank you very much.

I'll start with the closing the transaction, and Joe can talk to the TSX listing. The next milestone is you will see a press release out of us saying that we close the transaction when that happens.

As we mentioned in the past, there's a few regulatory filings that we've done, and we're making good progress on that front, and our current view is that we will close this transaction in the second quarter. Regarding the TSX, Joe will comment on that.

TSX remains, Ben, on our roadmap for 2026. The timing of actually going to the TSX is somewhat determined by the closing of the Covaelia transaction, but it continues to be a major milestone for us and on our roadmap for this year.

Okay. Thank you very much, gents.

Thanks, Ben.

Good morning, guys, and thanks for taking a couple questions here. Maybe just to drill down on the outlook and the guide for Kraken, obviously good to see the announced $87 million in orders so far just on the product side alone.

Should we interpret that as a pretty large weight in hand on the guide? Not sure if you can frame sort of the expectations for new orders versus what is in hand on the visibility front.

Morning, Mike. I'll start with that.

I think just for people that aren't aware of the nature of our business, for the product side of our business, you can see the number of orders that we've announced over the last few months, and in the order of $87, $88 million. Then if you look at our guidance of $165 to $175 for the year, we've got a full four quarters of 3D at Depth this year.

If you add in our original service business and 3D at Depth, we never announce orders for that business. That is more shorter lead-time activity, but generally we've been suggesting that's in the $50 million-ish range revenue side.

You take that plus the orders that we've announced so far, and you can kind of see what the gap is to meet our number for this year. Like every year that we've been in business, we close a lot of SAS-related business during the year and some of our other products during the year.

That should give you a little bit of color on that front.

No, that's super helpful. Appreciate that.

Then on the sonar side, you mention a lot of RFPs and significantly bigger than the previous few years. I'm kind of wondering on the non-kind of RFP, you've obviously had some orders for KATFISH, direct sales.

Is there any way to kind of give us a ballpark of that opportunity, and maybe even in light of what's gone on geopolitically recently? If that's a sizable opportunity, just any color there.

It's tough to frame a market size in the short term on it, but I think what we can say is that across both our SAS business, where there's OEM customers or navies that have vehicles in the field already and want to put a SAS payload on those vehicles, we're seeing a lot of extra interest in that, obviously in mine countermeasure vehicle. Then on the KATFISH side, there's a lot of interest.

These are urgent operational requirements for a number of navies now given the situation out there. One thing that over the last year we've done part of raising capital was the conscious decision to want to build up inventory and to have assets available to sell to customers for a situation like we see today.

We think it's an advantage. Our ability to shorter lead-time deliver to customers is going to win us some business, maybe versus some of our larger peers that might take quite a bit of time to deliver product to customers.

Overall, I just summarize it by saying stay tuned, and we expect this year to be some solid activity as a result of what you're pointing out.

Great. Appreciate that.

Maybe just a last one for me: on the battery capacity and launch of the new facility, any sense of kind of when that could get up to your full capacity of $150 million, I'm sure it takes time to kind of ramp up to that. Then I think previously you guys had mentioned opportunities to maybe unlock additional capacity beyond the total 200.

Any update on that and maybe opportunities to do so in the next couple of years?

Yep. Starting with Halifax, people have moved in, and all the equipment is in there.

Through the through this quarter, we'll start to increase production in in the current quarter, initial production there. That will ramp stead steadily throughout the year.

As to when we are, going to have that facility full up, we're I I think we're going to just say that we, we see strong demand across our customer base. We're thinking about what, what capacity needs are as we plan it out a few years out here.

We expect to see very good activity at that facility throughout the year, and and definitely into 2027. In terms of additional capacity, we did take on some additional space in our German facility.

I believe that was towards the end of last year. That gives us a little bit of additional capacity as well.

Ultimately, in the future in US or sorry, in Canada, as demand grows and we need it, we also have the opportunity to add a second shift there. Besides that, we've stated in the past that we want to have a bigger presence in the US.

We've got a variety of discussions happening with with customers and with, various opportunities that we're looking at to have a more established manufacturing presence in the US as well. Don't want to pin ourselves down on timing on that, but it's something that's important for both ourselves and Covaelia as well as combined entity.

Just in general, we just continue to see increased demand in the battery space, very good, very good trends.

One thing I would add, I guess, we're quite excited that we feel that we've been winning some share with some new customers as well, maybe some companies that might have been doing it in-house themselves or trying to do it in-house. We think that we've got good insight into who in the industry is looking to do batteries with us, and we've got a lot of positive discussions.

We said six or nine months ago that you'll see progress on the batteries in terms of other customers. We can't name names, but we can just tell you that we did land one large US defense another large US defense company as a battery customer recently, and a number of other fairly well-known names that people in the industry would know.

We're making progress there on that front.

Fantastic. Really appreciate the color, guys.

Cheers.

Thanks, Mike.

Hey there. Good morning, gentlemen.

On the strong order intake at both Kraken and Covaelia, more on Covaelia, probably not, but just curious, understanding the deal hasn't closed, what extent might you be seeing your combined scale helping there, improved sales cycles, cross-selling opportunities, and whatnot? It's still early and hasn't closed, but just kind of maybe I'm wondering what has the feedback been with customers and potential customers post the announcement as a combined entity?

I think, Kevin, morning. Overall, yeah, we're still operating as independent businesses until we close.

General feedback from everyone from our largest customers to the small customers is a great combination of two companies with complementary technology, and what's probably most exciting for our customers and for us is the ability to provide some integrated solutions in the future that allow our customers to be operational quicker, have less calibration as they put vehicles in the water, to having to deal with less suppliers, and dealing with one bigger, trusted supplier group. A lot of good feedback from our customers, both on the defense side and the commercial side as well.

Gotcha. Thanks for that.

Maybe a quick one for Joe: can you dig in on the gross margin strength that you saw in the quarter? I know there was the one-time items, maybe just comment on what happened in the quarter.

Then maybe going forward, if you can give us a view gross margin on your key product and service lines, and specifically on the battery product, what you're seeing there given some of the new innovations that you're discussing there, the 30% higher energy density battery and then your newer form factors that you're releasing this year?

In the quarter, thanks, Kevin. In the quarter, it really, there was just lower costs than anticipated on one project.

We had anticipated certain materials to be within a project throughout the year, and at the end of the year, those materials were not required, it resulted in a higher gross margin in Q4. What I would guide you on gross profit, we're not going to break down gross profit, gross margin by product.

It's just too sensitive and can become a competitive side. We'd guide folks to be gross profit will be in the 55% to 60% range in 2026, consistent with you kind of got the first three quarters of this year we're in that range, and I think we anticipate we'll be in that same range in 2026 in our guidance.

Gotcha. Maybe just the last one for me: certainly talked a lot on the call today about geopolitical news and that driving momentum for the business.

One thing that I don't think you mentioned was the Canadian government's also been stepping up their plans for increased defense spending. Just curious if you can have a comment on your conversation with the government and how you see Canada as a customer over the coming years for Kraken given just the upside and spending that the country's seeing here?

Overall we're quite positive on the activity. The intentions of the new government and the Defense Industrial Strategy are a good first start for sure.

The devil is really in the details of how quickly governments are able to execute on their strategic intentions. We expect Canada to be a growing customer for us in the future, and there's a number of different opportunities that we're always in discussion with them about.

In the grand scheme of things though, historically, Kevin, we will continue to get the majority of our business in the export markets. We are happy to see the increased acceptance that the defense customers in Canada they're starting to step up activity.

That's the same thing that's happening in other NATO countries as well. There's a growing view that countries will increase their own defense spending.

The same thing that's happening in NATO countries, we're seeing in many other countries around the world. Overall on the Canadian front, I would also say yeah, just stay tuned, and we're looking forward to future opportunities there.

Good stuff. Thanks, guys.

I'll pass the line.

Good.

Thanks, everyone, for joining the call today. If you have additional questions, you can reach out to the investor relations line, and look forward to talking to you again soon.