Exco Technologies Limited – Results for fourth quarter and year ended September 30, 2016

  • Record annual sales and earnings
  • Sales up 24% in the quarter; 18% for the year
  • EPS of $0.25 in the quarter compared to $0.24 prior year
  • Lesotho operations permanently closed after quarter end
  • Balance sheet and liquidity remain very strong

TORONTO, Nov. 30, 2016 /CNW/ – Exco Technologies Limited (TSX-XTC) today announced results for its fourth quarter and year ended September 30, 2016. In addition, the Company announced the quarterly dividend of $0.07 per common share which will be paid on December 29, 2016 to shareholders of record on December 14, 2016.   The dividend is an “eligible dividend” in accordance with the Income Tax Act of Canada.

(in $ millions except per share amounts) Three Months ended
September 30
Twelve Months ended
September 30
20162015 20162015
Sales $163.0$131.0 $589.0$498.3
Net income for the period $10.5$10.3 $47.6$40.8
Earnings per share from net income
Basic $0.25 $0.24 $1.12 $0.96
Diluted $0.25 $0.24 $1.11 $0.96
Total assets $452.9$342.8 $451.3$342.8
Cash dividend paid per share $0.07$0.06 $0.27$0.23
EBITDA 1 $22.2$21.9 $83.4$77.0

Consolidated sales in the quarter were $163.0 million – an increase of $32.0 million or 24% from the fourth quarter of fiscal 2015. Full year sales totalled $589.0 million – up 18% over the prior year. AFX, which was acquired in April 2016, contributed $35.9 million in sales during the quarter and $66.9 million to Exco’s fiscal 2016 results.

The Automotive Solutions segment experienced a 50% rise in sales during the quarter, to $117.7 million up from $78.5 million last year. This increase was primarily driven by contributions from AFX and to a lesser extent by higher sales at ALC, Polydesign and Neocon partially offset by modestly lower sales at Polytech. For the year, Automotive Solutions revenues were up 31%, to $396.8 million compared to $303.1 million last year. Again, the inclusion of AFX drove most of the revenue growth, however sales were higher at each of the segment’s other business units for the year.

The Casting and Extrusion segment recorded sales of $45.3 million compared to $52.5 million last year – a decrease of 14%. The lower sales were driven by a decline in the large mould business and to a lesser extent in the Extrusion group, offset by higher sales at the Castool group. For the year, revenues in the Casting and Extrusion segment were $192.2 million, down 2% from the prior year with higher sales from the Extrusion and Castool groups offsetting most of the decline in the large mould group.

The Company’s fourth quarter consolidated net income increased to $10.5 million or earnings of $0.25 per share compared to $10.3 million or earnings of $0.24 per share in the same quarter last year – an EPS increase of 4%. Consolidated net income for the year totalled $47.6 million or earnings of $1.12 per share compared to $40.8 million or earnings of $0.96 per share in fiscal 2015, an increase of 17%.

In the fourth quarter of fiscal 2016 consolidated net income was reduced by withholding taxes of $0.9 million ($0.02 per share) and an additional $0.3 million of amortization related to an adjustment of AFX’s intangible assets. Last years consolidated net income was negatively impacted by the write-off of $1.9 million ($0.05 per share) in deferred tax assets. Consolidated net income for fiscal 2016 benefited from a $3.4 million gain associated with the settlement of a commercial arbitration in the third quarter of 2016 but also included about $1.0 million of expenses (net of tax) related to the acquisition of AFX.

Fourth quarter pretax earnings in the Automotive Solutions segment totalled $14.4 million, an increase of $4.3 million or 43% over the same quarter last year. This was driven primarily by the acquisition of AFX and improved results at ALC’s South African/Lesotho operations offset by weaker performance at ALC’s Bulgarian operations. The Automotive Solutions segment recorded operating earnings of $48.0 million for the year compared to $36.6 million last year – an increase of $11.5 million or 31%. The acquisition of AFX contributed strongly to the segment’s annual results while earnings were higher at each of Polytech, Neocon and Polydesign. Combined losses at ALC’s South Africa/ Lesotho operations totalled $3.5 million for the year compared to $5.2 million in fiscal 2015.

Fourth quarter pretax earnings fell in the Casting and Extrusion segment by $5.7 million or 59% over the same quarter last year. The earnings decrease was due to lower sales and reduced absorption of fixed costs in the large mould business, margin compression in the Extrusion group due to front end investments associated with harmonizing the production processes of the various facilities, partially offset by stronger results in the Castool group. For the year, Casting and Extrusion operating earnings decreased to $24.7 million from $32.4 million in fiscal 2015 – a difference of $7.7 million or 24%.

Following the end of the quarter, Exco reached an agreement to permanently close its ALC operations in Lesotho and remaining presence in South Africa. No related charges to earnings were incurred during the quarter and it is currently expected that any such charge will be substantially less than $1.0 million and will occur in the first quarter of fiscal 2017.

Consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the fourth quarter increased to $22.2 million compared to $21.9 million last year. For the full year, consolidated EBITDA increased to $83.4 million compared to $77.0 million last year. 

Cash provided by operating activities increased to $65.5 million for the year compared to $42.1 million last year driven by both higher net income and improved working capital management. These funds were ample to fund $23.9 million of capital expenditures for the year, $1.3 million of net interest expense and $11.5 million of dividends. Exco used the remaining amount of cash generated together with $7.5 million of its surplus cash and about $44 million of debt to acquire AFX Industries LLC for $82 million during fiscal 2016. At year end Exco’s balance sheet remained solid with net debt totalling $44.6 million.

(For further information and prior year comparison please refer to the Company’s Fourth Quarter Condensed Financial Statements in the Investor Relations section posted at www.excocorp.com.  Alternatively, please refer to www.sedar.com)

Quarterly Conference Call:
To access the live audio webcast, please log on to www.excocorp.com or http://event.on24.com/r.htm?e=1315863&s=1&k=9DFA077B26080BB1FB046506355E8795 a few minutes before the event. Real Player is required for access.  For those unable to participate on December 1, 2016, an archived version will be available on the Exco website.

About Exco Technologies Limited:
Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries. Through our 16 strategic locations in 9 countries, we employ 6,155 people and service a diverse and broad customer base.

Notice To Reader:  Forward Looking Statements
Information in this document relating to projected growth and financial performance of the Company’s business units, contribution of our start-up business units, contribution of awarded programs yet to be launched, margin performance, financial performance of acquisitions and operating efficiencies are forward-looking statements.

Readers are cautioned not to place undue reliance on forward-looking statements found mainly in the Outlook section but also elsewhere throughout this document.  These forward-looking statements are based on our plans, intentions or expectations which are based on, among other things, assumptions about the number of automobiles produced in North America and Europe, the number of extrusion dies required in North America and South America, the rate of economic growth in North America, Europe and emerging market countries, investment by OEMs in drivetrain architecture and other initiatives intended to reduce fuel consumption and/or the weight of automobiles, raw material prices, economic conditions, currency fluctuations, trade restrictions, our ability to close or otherwise dispose of unprofitable operations in a timely manner, our ability to integrate acquisitions and the rate at which our operations in Brazil, Texas and Thailand achieve sustained profitability. These forward-looking statements include known and unknown risks, uncertainties, assumptions and other factors which may cause actual results or achievements to be materially different from those expressed or implied.  For a more extensive discussion of Exco’s risks and uncertainties see the ‘Risks and Uncertainties’ section in our latest Annual Report, Annual Information Form (“AIF”) and other reports and securities filings made by the Company.  This information is available at www.sedar.com.

While Exco believes that the expectations expressed by such forward-looking statements are reasonable, we cannot assure that they will be correct.  In evaluating forward-looking information and statements, readers should carefully consider the various factors which could cause actual results or events to differ materially from those indicated in the forward-looking information and statements. Readers are cautioned that the foregoing list of important factors is not exhaustive.  Furthermore, the Company will update its disclosure upon publication of each fiscal quarter’s financial results and otherwise disclaims any obligations to update publicly or otherwise revise any such factors or any of the forward-looking information or statements contained herein to reflect subsequent information, events or developments, changes in risk factors or otherwise.

1 Non-IFRS Measures:  In this News Release, reference is made to EBITDA, which is not a measure of financial performance under International Financial Reporting Standards (“IFRS”).  Exco calculates EBITDA as earnings before other income, interest, taxes, depreciation and amortization.  EBITDA is used by management, from time to time, to facilitate period-to-period operating comparisons and we believe some investors and analysts use them as well.  This measure, as calculated by Exco, may not be comparable to similarly titled measures used by other companies.

For further information:

Source: Exco Technologies Limited (TSX-XTC)

Source:Exco Technologies Limited (TSX-XTC)
Contact:Darren Kirk, Executive Vice-President
Telephone:(905) 477-3065, Ext 7233